Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Yantai Changyu Pioneer Wine Co. Ltd.
2018 Annual Report
Final 2019-01
April, 2019
Yantai Changyu Pioneer Wine Co. Ltd. 2018 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 ................................................................................. 14
V、Major issues ............................................................................................................................. 35
VI、Changes in Shares and the Shareholders’ Situation ...........................................................51
VII、Related Situation of Preferred Shares ................................................................................61
VIII、Situation for Directors, Supervisors, Senior Executives and Staffs................................. 62
IX、Corporate Governance .......................................................................................................... 77
X、Related Situation of Corporation Bonds ............................................................................... 85
XI、Financial Report.......................................................................................................................86
XII、Reference Document .......................................................................................................... 198
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
I. Important Notice, Content and Definition
The board of directors，the board of Supervisors，directors, supervisors and senior executives
of the Company guarantee the truthfulness, accuracy and completeness of the contents
contained in the report with no false records, misleading statements or significant omissions,
and undertake individual and joint legal liabilities.
Mr. Zhou Hongjiang (Chairman of the Company), Mr. Jiang Jianxun (Chief Financial Officer
& Financial Director) assure the truthfulness, accuracy and completeness of the financial
report in the annual report.
Except the following directors, all other directors have personally attended the meeting for
deliberating the annual report.
Reason for
Director name with Director post with Name of
non-present in
non-present in person non-present in person mandatory
person
Sun Liqiang Director Business trip Zhou Hongjiang
Antonio Appignani Director Business trip Augusto Reina
Forward-looking statements such as future plans and development strategies covered in this
report do not constitute a substantial commitment of the Company to investors. Investors are
advised to pay attention to investment risks.
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 the Chapter Four “Management Discussion and Analysis” of the report. Investors are
advised to read carefully and pay attention to investment risks.
The Company’s preliminary scheme of profit distribution deliberated and passed by the board
of directors this time is shown as following: Based on the Company’s total 685,464,000
shares, we plan to pay CNY6 (including tax) in cash as dividends for every 10 shares to all
shareholders and send 0 bonus share (including tax). Capital reserve will not be transferred to
equity.
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Definition
Definition Item Refers to Definition Content
Company/The Company Refers to Yantai Changyu Pioneer Wine Co. Ltd.
Changyu Group/Controlling Shareholder Refers to Yantai Changyu Group Co. Ltd.
CSRC Refers to China Securities Regulatory Commission
SSE Refers to Shenzhen Stock Exchange
Deloitte Hua Yong Certified Public Accountants
Deloitte Hua Yong Refers to
Co., Ltd (special general partnership)
CNY Refers to Chinese Yuan
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
II. Brief Introduction for the Company and Main Financial Indicators
1. Company’s information
Stock Abbreviation Changyu A, Changyu B Stock Code 000869, 200869
Stock Abbreviation after Alteration -
Place of Stock Listing Shenzhen Stock Exchange
Legal Name in Chinese 烟台张裕葡萄酿酒股份有限公司
Abbreviation of Chinese Name 张裕
Legal Name in English YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
Abbreviation of English Name CHANGYU
Legal Representative Mr. Zhou Hongjiang
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 Directors Authorized Representative of Securities Affairs
Name Mr. Qu Weimin Mr. Li Tingguo
Address 56 Dama Road, Yantai, Shandong, China 56 Dama Road, Yantai, 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
Media name for information disclosure China Securities Newspaper , Securities Times and Hong
selected by the Company Kong Commercial Daily
Web Site assigned by CSRC to carry the
http://www.cninfo.com.cn
annual report
Filing location of the Company’s annual Board of Directors’ Office of the Company, 56 Dama Road,
report Yantai, Shandong
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
4. Registration changes
Organization Code 913700002671000358
The business scope determined by the Company when it was
established on September 18th, 1997 is production, processing and
sales of wine, distilled liquor, healthy liquor, fruit liquor, non-alcohol
beverage,th fruit jam, packing material and winemaking machine. On
April 17 , 2008, approved by the 2007 shareholders’ meeting, the
Company’s business scope is changed to production, processing and
sales of wine, distilled liquor, medicated liquor, fruit liquor,
non-alcohol beverage, fruit jam, packing material, winemaking
machines and licensed import and export. On May 12th, 2010,
approved by the 2009 shareholders’ meeting, the Company changed
its business scope to production, processing and sales of wine,
Changes for the main businesses distilled liquor, medicated liquor, fruit liquor, non-alcohol beverage,
packing products, winemaking machine,
of the Company since it was listed fruit jam,import andmaterial and itsexternal investment according to
licensed export and rd
national stpolicy. On September 23 , 2016, approved by the 2016
annual 1 Interim shareholders’ meeting, the Company changed its
operating scope to wine and fruit wine (bulk wine, processing and
filling) production, blending liquor and other blending liquors (grape
liqueur) production, other liquors (other distilling liquors) production,
production, processing and sales of packing material and winemaking
machine, grape plantation and procurement, tourism resources
development (excluding tourism), package design, activity of
building rental, licensed import and export, warehouse business and
external investment according to national policy.
Changes for all previous
No.
controlling shareholders
5. Other relevant information
The accounting firm appointed by the Company
Deloitte Hua Yong Certified Public Accountants Co., Ltd (special
Name
general partnership)
Address No. 23 Zhenzhi Road, Chaoyang District, Beijing
Name of signatory accountants Xie Yanfeng, Li Yangang
The sponsor institution appointed by the Company to perform the duty of continuous
supervision during the report period
□Available Not available
The financial adviser appointed by the Company to perform the duty of continuous
supervision during the report period
□Available Not available
6. Key accounting data and financial indicators
Whether the Company needs to retrospectively adjust or restate the accounting data of
previous fiscal years.
□Yes No
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
More or less than
2018 2017 2016
Last year (%)
Operating revenue (CNY) 5,142,244,740 4,932,545,229 4.25% 4,717,596,472
Net profit attributed to
shareholders of the listed 1,042,632,929 1,031,695,056 1.06% 982,460,488
company (CNY)
Net profit attributed to
shareholders of the listed
company after deducting 965,426,238 986,095,872 -2.10% 941,730,478
irregular gains and losses
(CNY)
Net cash flows from
975,978,746 973,243,027 0.28% 889,911,970
operating activities (CNY)
Basic earnings per share
1.52 1.51 0.66% 1.43
(CNY)
Diluted earnings per share
1.52 1.51 0.66% 1.43
(CNY)
Weighted average for
earning rate of net assets 11.23% 12.14% -0.91% 12.55%
(CNY)
More or less than
December 31st, 2018 December 31st, 2017 December 31st, 2016
Last year (%)
Total assets (CNY) 13,117,729,052 12,536,755,208 4.63% 11,528,077,971
Net Assets attributed to
shareholders of the listed 9,606,099,365 8,906,342,299 7.86% 8,209,010,989
company (CNY)
7. Differences in accounting data under PRC accounting standards and international
accounting standards
(1) Differences of net profits and net assets in the financial report disclosed according
to both international accounting standards and PRC accounting standards
□Available Not available
There are no differences of net profits and net assets in the financial report disclosed
according to both international accounting standards and PRC accounting standards during
the report period.
(2) Differences of net profits and net assets in the financial report disclosed according
to both foreign accounting standards and PRC accounting standards
□Available Not available
There are no differences of net profits and net assets in the financial report disclosed
according to both foreign accounting standards and PRC accounting standards during the
report period.
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
8. Key financial indicators by quarter
Unit：CNY
1 Quarter
st
2 Quarter
nd
3 Quarter
rd
4th Quarter
Operating revenue 1,804,057,976 1,024,172,088 1,032,328,986 1,281,685,690
Net profit attributed to
shareholders of the 479,444,238 156,393,167 133,916,250 272,879,274
listed company
Net profit attributed to
shareholders of the
listed company after 466,181,564 140,497,155 110,520,695 248,226,824
deducting irregular
gains and losses
Net cash flows from
507,263,964 45,489,508 224,087,322 199,137,952
operating activities
Whether there are significant 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 non-recurring profit and loss
Available □Not available
Unit：CNY
Item 2018 2017 2016 Explanation
Profits and losses on disposal of
non-current assets, including the
11,368,355 -222,586 14,719
provision for asset impairment write-off
part
Government grants included in the
current profits and losses (except for
those recurring government grants that
87,281,434 47,638,384 49,130,643
are closely related to the entity's
operation, in line with related regulations
and have proper basis of calculation)
Other operating revenues and
expenditures except the aforementioned 3,817,401 13,999,251 4,656,972
items
Less: Income tax effect 25,157,188 15,523,424 13,072,324
Minority shareholders' equity 103,311 292,441
effect (after taxes)
Total 77,206,691 45,599,184 40,730,010 --
The reasons shall be made clear and definitely as to the non-recurring profit and loss that the
Company has defined by virtue of the Explanatory Announcement on Public Company’s
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Information Disclosure No.1 - Non-recurring Profit and Loss and as to regarding the
non-recurring profit and loss as recurrent profit and loss as specified in the Explanatory
Announcement on Public Company’s Information Disclosure No.1 –Non-recurring Profit and
Loss.
□Available Not available
There are no cases that non-recurring 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 - Non-recurring Profit and Loss during the report period.
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
III. Summary of the Company’s Businesses
1. Main businesses during the report period
Whether the Company needs to follow disclosure requirements of special industry
No
During the report period, the Company’s main businesses are production and operation of wine and brandy, thus providing 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 growth stage and the whole domestic wine market is on
the rising trend. The Company is at the forefront 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 There are no significant changes during the report period
The fixed assets increased by7.89% compared with the initial stage, owing to part of constructions in process
Fixed asset
have been transferred to fixed asset during the report period.
Intangible asset There are no significant changes of intangible asset during the report period.
The constructions in process decreased by 26% compared with the initial stage, owing to part of constructions
Construction in process
in process have been transferred to fixed asset during the report period.
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
(2) Main overseas assets situation
Available □Not available
Unit：CNY
Control Proportion of
Whether there are
Formation Operation measures for Earning overseas assets in
Details of assets Assets scale Location significant impairment
reasons mode safeguarding of condition the Company’s net
risks
asset security assets
The Company
participates in
making
Hacienda Y important
Vinedos Acquisition of Independent decisions
563,501,798 Spain 3,811,465 5.87% No
Marques Del equity operation through board of
Atrio. SL directors and
appoints CFO
on financial
management.
The Company
participates in
making
important
Indomita Wine
Establishment Independent decisions
Company Chile, 515,753,832 Chile 15,934,347 5.37% No
of joint venture operation through board of
SpA
directors and
appoints CFO
on financial
management.
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
The Company
participates in
making
Kilikanoon Acquisition of Independent
151,394,573 Australia important 217,869 1.58%
Estate Pty Ltd equity operation
decisions
through board of
directors.
3. Analysis of core competitiveness
Whether the Company needs to follow disclosure requirements of special industry
No.
Compared with the participants in the arena of the Chinese wine sector, we believe that the Company is with the following advantages:
Firstly, the Company has been enjoying a well-known wine brand since 120-odd years. “Changyu”, “Noble Dragon” and “AFIP” are all China
famous brand that have strong influence and good reputation.
Secondly, the Company has set up a nationwide marketing network, formed a “three-level” marketing network system mainly composed of the
Company’s salesmen and dealers, with strong marketing ability and market exploitation ability.
Thirdly, the Company has strong research strength and a product R&D system. Relying on the country’s only “State-level Wine R&D Center”,
the Company has mastered advanced winemaking technology and production processes as well as been powerful enough in product innovation
and perfect quality control system.
Fourthly, the Company is in possession of a lot of grape-growing bases that are compatible with its development requirements. The Company
has developed a great deal of vineyards in the most suitable areas for wine grape growing such as Shandong, Ningxia, Xinjiang, Liaoning, Hebei
and Shanxi, whose scale and structure have generally met the Company’s needs for development.
Fifthly, products in high, medium and low-grade as well as varieties and categories are all complete. Over 100 varieties of series products such
as wine, brandy and sparkling wine covers various grades, including high, medium and low-grade, which can meet different consumer groups’
demands. The Company has taken the dominant status in the domestic wine industry through rapid development in the past 10-odd year
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
and has comparative advantages in the future competition.
Sixthly, the Company has a relatively perfect 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.
Seventhly, the Company has set up flexible and efficient decision-making mechanism. The
Company’s core management team always maintains a working style of unity and pragmatic
and flexible and efficient decision-making mechanism, which makes the Company can deal
with market changes more calmly.
Eighthly, the global production capacity layout has been basically completed. The Company
has completed production capacity layout in China, France, Chile, Spain, Australia and other
major wine producing countries in the world, enabling making better use of global
high-quality raw material resources, capital, talents and advanced production processes and
technologies to provide consumers with diversified quality products and better serve
consumers.
Based on the above reasons, the Company has formed relatively strong core competence and
will maintain a relatively dominant position in the future predictable market competition.
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
IV. Management Discussion and Analysis
1. Summarization
In 2018, influenced by many factors, such as the slowdown of domestic economic growth and
the increase in uncertainty resulting from Sino-US trade friction, the overall sales amount of
domestic wine industry was relatively stable, but the sales volumes of both imported wine
and domestic wine decreased. As imported wine continued occupying the market of domestic
wine, the competition in domestic wine market was very strong. Furthermore, the increase in
the price of raw materials and packing materials as well as increase in the depreciation of
fixed assets, freight and labor cost further increased the pressure of the company’s increase in
profit. Facing quite a lot of external disadvantages, the Company insisted in taking the market
as the center, insisted the development strategy of “Focus on middle-and-high level, Focus on
high quality, Focus on big product”, intensified internal reform, optimized product structure
and market layout, quickened the pace of new product development and market promotion,
and strived to promote product sales, achieving good results and realizing operating revenue
of CNY5142.24million with an increase of 4.25% compared with last year and net profit of
CNY1042.63 million belonging to the parent company’s shareholders with an increase of
1.06% compared with last year.
2. Analysis of main business
(1) summarization
Increase or decrease of
Description the end of the period Cause of significant changes
over the end of last year
Mainly because of increase in average
Operating revenue 4.25% price of products resulting from
improvement of product mix
Mainly because of increase in the price of
Operating cost 13.76%
raw materials and packing materials
Mainly because of year-on-year increase
Sales expense 0.16%
in wage & welfare
Mainly because of year-on-year increase
Management expense 2.12% in wage & welfare and depreciation of
afforestation fees
Mainly because of increase in expenses
R&D expense 10.72% for technology research and development
in 2018
Mainly because of increase in loan
Financial expense 93.36%
interest expenditure
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Net amount of cash Mainly because of increase in received
flow generated in 0.28% cash from product sales and rendering of
operating activities serdeputy
Net amount of cash
Mainly because of increase in received
flow generated in 38.08%
cash from t recouping the investment
investment activities
Net amount of cash
flow generated in Mainly because of increase in payment of
-77.83%
capital-raising cash for debt repayment
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, the Company realized the operating revenue of
CNY5142.24million with an increase of 4.25% compared with last year, slightly lower than
the target fixed at the beginning of the year of realizing operating revenue no less than
CNY5.2billion. The net profit of CNY1042.63 million belonging to the parent company’s
shareholders was realized with an increase of 1.06% compared with last year. The main work
during the report period were shown as followed:
Firstly, the Company took the market as the mirror, further promoted the strategy of three
Focus, strengthened internal adjustment and reform intensity, accelerated the launch of new
products and market expansion of core products, and strived to develop E-business,
achieving good results. During the report period, the Company reorganized sales team,
preliminarily realized the reduce in staff number and the improve of efficiency, conducted
the work of “sales team jointly built by manufacturers and distributors”, actively explored the
expense input management and control mode of “check and balance between manufacturers
and distributors ”, and received preliminary effects. Ten provincial brandy companies were
newly established. Specialized provincial wine companies and comprehensive provincial
companies were subdivided. Three business segments, including provinces and cities such as
Zhejiang, Fujian, Guangdong, Jiangsu, Shandong, Beijing and Shanghai etc and E-business
and so on, realized authorized operation. The Company adjusted the function of VIP
customer business, peeled off distribution business in direct supply system, further defined
the relationship between the Changyu parent brand and its subsidiary brands, formed the core
brand system of various liquors and made development planning of each brand. Series of
new products, such as the ninth generation Noble Dragon, new Zenithwirl, 15-year Koya,
10-year Koya, 6-year Koya, Australian Kilikanoon products and Chilean Indomita products
and so on, received wide praises and the demand of partial products exceeds supply owing to
their hot sale. The Company insisted on the strategy of three Focus, weeded out 134 kinds of
wine and centralized most marketing resources to be used for market promotion of
middle-to-high-end wine, five-star and above brandy and imported wine with own brands,
making sales revenue of wine and brandy achieve different levels of increase.
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Secondly, the Company took the quality as the basis, regarded product quality as an
important magic weapon to defeat enemies. It conducted all-around self-examination,
self-correction and optimization on the selection of grape base, grape planting mode,
production process and technology, quality testing equipment and product quality control
system etc, formulated three-year planning, implementation scheme and specific measures
for product development and quality improvement in future three years, strengthened
technical exchanges at home and abroad and team construction of winemakers, focused on
new product development and technical difficulties, improved the quality traceability system
and strengthened quality control in the whole production process, making the company's
technical level and product quality reach a new level. The Company carried out 45
technology researches and completed one sub-project of national 863 project. Drafted
standards of Wine-making Grape and Oak Barrel passed the group standards assessment by
China Alcoholic Drinks Association, filling in gaps of domestic wine industry. Key
Technology Research and Application in Industrialization of Domestic Oak Products was
declared for 2018 scientific and technological progress award of China Alcoholic Drinks
Association. Key Technology Research for Premium and Characteristic Wine-making Grape
Cabernet Gernischt and Wine Production won scientific and technological progress award of
China National Light Industry Council. In 2018 IWSC, Kilikanoon Wines Pty Ltd in
Australia was awarded “Australian Best Wine Producer of the Year” and was the only one
chateau awarded by IWSC among more than 4000 chateaux in Australia, of which 2014
Kilikanoon Estate Special Reserve Shiraz 8K won outstanding gold medal with scores of
93 points and above) as well as the trophy of “World’s Best Shiraz of the Year” while 2016
Kilikanoon Estate Wine Blend 6K won gold medal with scores of 90 to 92.9 points.
Kilikanoon Wines Pty Ltd was honored with the title of “Australian Best Wine Producer of
the Year” in 2018 Mundus Vini. 2014 Kilikanoon Estate Special Reserve Shiraz 8K won
gold medal in DAWA with the score of 95. 2015 Moser Family Cabernet Sauvignon Red
Wine, 2016 Moser Legend Cabernet Sauvignon White Wine, 2015 Golden-label Icewine of
Golden Icewine Valley and 2015 Blue-label Icewine of Golden Icewine Valley won gold
medal in the 22nd session of Berliner Wein Trophy. Changyu Five-star Fine Brandy won
gold medal in 2018 Spirits Selection by Concours Mondial de Bruxelles. Changyu Koya
15-years XO bradny ageing in oak barrel won the design award of luxury category in 2018
Pentawards Award Ceremony. “Water-drop Decanter” of Changyu Koya 10-years XO
Brandy won the design award of packaging category in 2018 iF Design Award Ceremony
held at BMW Welt in Munich, Germany.
Thirdly, the Company realized online identification and order-driven mode of major products.
During the reporting period, the Company issued Assessment Measures for Performance
Rate of Production Order, gave full play to advantages of advanced production facilities,
high automation and informationization and fast production speed, optimized and adjusted
business processes, and strengthened coordination of supply, production and sales, making
27 kinds of Noble Dragon products with high sales volume and all domestic chateau wines
achieve order-driven mode. Most domestic wine products achieved online tagging, which
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
improved production efficiency and delivery speed, dramatically reduced product and capital
backlogs and better satisfied the market needs.
Fourthly, the Company enhanced financial management and established and improved the
assessment system taking profit as principal line. During the report period, the Company
strengthened the management in financial budget, fixed funds and overseas enterprises’
financial affairs, enhanced the audit in price execution, gross profit margin, capital
occupation, key expenses, and investment projects, increased the investigation of economic
responsibility, scientifically allocated internal capital, vigorously strived for policy-based
capital loans and continuously reduce the cost of capital. It strengthened the simulated profit
assessment of authorized business units and strived to establish a profit assessment system
covering all business segments and respective responsibilities in order to provide a basic
basis for more reasonable and efficient performance assessment and to improve profitability.
Fifthly, the Company successfully completed the procurement of raw materials including
grapes and further strengthened the management in grape base. The Company
comprehensively accomplished the procurement plan of raw materials exemplified as grapes,
improved the fermentation rate of premium wines, further deepened sort management and
sort acquisition of grape bases and continued promoting the mechanization process in
vineyards, lowering the operating costs of self-supported grape bases and making scientific
and normative management in grape base reach a higher level. It raised grape purchase
standard, improved raw material quality, actively conducted the introduction, selective
breeding and improvement of new grape varieties and characteristic varieties and cultivated a
lot of new varieties, enriching the variety resource for future product development. It also
organized orchardist to take professional training on grape planting technology, which
improved their grape planting and management level.
Sixthly, the Company continued promoting internationalization strategy and steadily
implemented overseas acquisition. It acquired 80% equity of Kilikanoon Estate Pty Ltd in
Australia.
(2) Revenue and cost
① Composition of operating revenue
Unit: CNY
2018 2017
Proportion Proportion Year-on-year
in in increase or
Amount Amount
operating operating decrease (%)
revenue revenue
Total 5,142,244,740.00 100% 4,932,545,229 100% 4.25%
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
operating
revenue
Sector-classified
Sector of
liquor and
5,142,244,740 100% 4,932,545,229 100% 4.25%
alcoholic
beverage
Product-classified
Wine 4,000,233,434 77.79% 3,829,326,556 77.63% 0.16%
Brandy 999,207,299 19.43% 989,889,728 20.07% -0.64%
Others 142,804,007 2.78% 113,328,945 2.30% 0.48%
Area-classified
Domestic 4,486,387,956 87.25% 4,497,288,066 91.18% -3.93%
Abroad 655,856,784 12.75% 435,257,163 8.82% 3.93%
② The cases of industry, product or area accounting for over 10% in the Company’s
operating revenue or operating profit
Available □Not available
Whether the Company needs to follow disclosure requirements of special industry
No
Unit: CNY
Year-on
Year-on- Year-on-
-year
year year
increase
increase increase
Gross or
or or
Operating revenue Operating cost profit decrease
decrease decrease
rate (%) of
(%) of (%) of
gross
operating operating
profit
revenue cost
rate
Sector-classified
Sector of 5,142,244,740 1,901,611,507 63.02% 4.25% 13.76% -3.09%
liquor
and
alcoholic
beverage
Product-classified
Wine 4,000,233,434 1,460,855,413 63.48% 4.46% 15.36% -3.45%
Brandy 999,207,299 403,699,973 59.60% 0.94% 14.58% -4.81%
Others 142,804,007 37,056,121 74.05% 26.01% -29.91% 20.70%
Total 5,142,244,740 1,901,611,507 63.02% 4.25% 13.76% -3.09%
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Area-classified
Domestic 4,486,387,956 1,477,589,238 67.07% -0.24% 7.17% -2.27%
Abroad 655,856,784 424,022,269 35.35% 50.68% 44.76% 2.65%
Under the condition that the statistical caliber of the Company’s main business data is
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
③ Whether the Company’s sales revenue for material object is more than labor
serdeputy revenue
Yes □No
Year-on-year
Sector Project Unit 2018 2017 increase or
decrease (%)
Wine Sales volume Ton 112,600 104,016 8.25%
Brandy Sales volume Ton 39,315 39,130 0.47%
Explanation on the causes of over 30% year-on-year changes of the related comparison data
□Available Not available
④ The fulfillment of major sales contract signed by the Company up to the report
period
□Available Not available
⑤ Composition of operating costs
Classification of sector and product
Unit: CNY
2018 2017 Year-on-year
Sector Project Proportion in the Proportion in the increase or
Amount Amount
operating cost (%) operating cost (%) decrease (%)
Blending liquor 981,838,789 52.42% 929,487,468 56.48% -4.06%
Packing
633,281,194 33.81% 525,292,149 31.92% 1.89%
Liquor and material
alcoholic Wages 63,385,522 3.38% 57,733,717 3.51% -0.12%
beverage
Manufacturing
194,485,534 10.38% 133,177,282 8.09% 2.29%
expenses
Unit: CNY
2018 2017 Year-on-year
Sector Project
Amount Proportion in the Amount Proportion in the increase or
19
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
operating cost (%) operating cost (%) decrease (%)
Blending liquor 759,623,724 52% 711,224,945 56.16% -4.16%
Packing
484,791,303 33.19% 395,026,889 31.19% 1.99%
material
Wine Wages 54,718,770 3.75% 47,843,744 3.78% -0.03%
Manufacturing
161,721,616 11.07% 112,295,874 8.87% 2.20%
expenses
Blending liquor 217,997,239 54% 204,764,927 58.12% -4.12%
Packing
144,272,064 35.74% 117,982,142 33.49% 2.25%
material
Brandy Wages 8,666,752 2.15% 9,678,688 2.75% -0.60%
Manufacturing
32,763,918 8.12% 19,903,211 5.65% 2.47%
cost
⑥ Whether there are changes of consolidation scope during the report period
Yes □No
According to the Share Sale & Purchase Agreement signed by the Company and the
shareholders of Kilikanoon Estate Pty Ltd on December 5th, 2017, the acquisition of 80%
equity of Kilikanoon Estate Pty Ltd is based on AUD20,860,825 (equivalent to
CNY107,194,420). The Company completed the equity transfer on January 18th, 2018, and
obtained control over the financial and operating policies of Kilikanoon Estate Pty Ltd. This
company is included in the consolidate scope during the report period.
⑦ Major changes or adjustments of the Company’s businesses, products or serdeputys
during the report period
□Available Not available
⑧ Information of major sales customers and major suppliers
The Company’s major sales customers
The total sales amount of the top five customers（CNY） 183,898,220
The proportion that total sales amount of the top five customers accounting
3.58%
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 total sales 0%
amount（%）
20
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Information of the Company’s 5 biggest sales customers
Proportion in total
Sales amount
No. Customer name sales for the year
（CNY）
（%）
Changyuexin Trading Company Limited in
1 55,734,499 1.08%
Shenzhen city
Haikou Heshunxin Trading Company
2 35,693,617 0.69%
Limited
Xinbaicheng Food Firm in Hanjiang district
3 32,959,410 0.64%
of Putian city
Fuzhou Shengshihanggang Trading
4 30,794,332 0.60%
Company Limited
5 Fengxiang Grocery Store in Hui’an town 28,716,363 0.56%
Total -- 183,898,221 3.58%
Other situation explanations of major customers
□Available Not available
Information on the Company’s main suppliers
The total purchase amount of the top 5 suppliers 583,902,258
The proportion of the total purchase amount of the top 5 suppliers in the
37.75%
annual purchase amount
The proportion of the related party purchase amount in the top 5 supplier
11.2%
purchase amount in annual purchase amount
Information on the Company’s top 5 biggest suppliers
Purchase amount Proportion in total
No. Supplier name purchase for the
(CNY) year（%）
1 Yantai Shenma Packaging Co., Ltd. 173,238,289 11.20%
2 Yantai Changyu Glass Co.,Ltd. 123,686,048 8%
Liquan Sales Department of Shandong
3 116,840,313 7.55%
Yantai Winery Co.,Ltd.
4 Xinjiang Yuyuan Liquor Co.,Ltd. 108,763,517 7.03%
The Xinjiang Production and Construction
5 Corps the 152th Group of the 8th 61,374,092 3.97%
Agricultural Division
Total -- 583,902,259 37.75%
Other situation explanations of main suppliers
□Available Not available
21
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
(3) Expense
Unit: CNY
Year-on-year
Explanation of significant
2018 2017 increase or
changes
decrease (%)
Mainly because of the
Sales expense 1,274,599,146 1,272,522,443 0.16% increase of salary and welfare
compared with last year
Mainly because of the
increase of salary and welfare
Management
343,580,651 336,461,133 2.12% as well as amortization of
expense
amortization fees compared
with last year
Mainly because of the
Financial expense 35,945,302 18,590,259 93.36% increase in loan interest
expenditure
Research and Mainly because of the
Development 4,784,118 4,320,825 10.72% increase of technology
expense development expenditure
(4) Research and development investment
□Available Not available
(5) Cash flow
Unit: CNY
Year-on-year increase
Item 2018 2017
or decrease (%)
Subtotal of cash inflow in
5,080,363,769 4,965,586,341 2.31%
operating activities
Subtotal of cash outflow in
4,104,385,023 3,992,343,314 2.81%
operating activities
Net amount of cash flow
generated in operating 975,978,746 973,243,027 0.28%
activities
Subtotal of cash inflow in
423,413,326 216,678,355 95.41%
investment activities
Subtotal of cash outflow in
931,261,875 1,036,886,116 -10.19%
investment activities
Net amount of cash flow -507,848,549 -820,207,761 38.08%
22
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
generated in investment
activities
Subtotal of cash inflow in
1,114,333,670 1,064,892,130 4.64%
capital-raising activities
Subtotal of cash outflow in
1,546,641,222 1,307,993,557 18.25%
capital-raising activities
Net amount of cash flow
generated in capital-raising -432,307,552 -243,101,427 -77.83%
activities
Net increase of cash and cash
25,971,060 -76,053,030 134.15%
equivalents
Explanation of main influence factors contributing to great changes in related data on
year-on-year basis
Available □Not available
Compared with the same period of last year, during the report period, the subtotal of cash
inflow in investment activities increased by 95.41% and the net amount of cash flow
generated in investment activities increased by 38.08%, which is mainly due to the increase in
cash received from the recovery of investment; subtotal of cash outflow in capital-raising
activities increased by 18.25% and net amount of cash flow generated in capital-raising
activities decreased by 77.83% year-on-year, which is mainly due to the increase in cash paid
for debt repayment; net increase of cash and cash equivalents increased by 134.15%, which is
mainly due to the increase in cash received from the recovery of investment.
Explanation on the causes of major differences between the net cash flow generated by the
Company’s operating activities and net profit of this year during the report period.
□Available Not available
3. Analysis to non-main business
□Available Not available
4. Assets and liabilities
(1) Significant changes of assets composition
Unit: CNY
At the end of 2018 At the end of 2017 Proportion
Explanation on
Proportion in Proportion in increase or
significant
Amount the total Amount the total assets decrease
changes
assets (%) (%) (%)
Monetary funds 1,475,700,477 11.25% 1,402,522,509 11.19% 0.06% No significant
23
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
changes
No significant
Receivables 242,153,083 1.85% 263,796,355 2.10% -0.25%
changes
No significant
Inventory 2,724,591,457 20.77% 2,473,614,046 19.73% 1.04%
changes
Investment real No significant
31,572,489 0.24% 18,467,989 0.15% 0.09%
estate changes
Long-term No significant
equity 0% 0% 0% changes
investments
No significant
Fixed assets 5,749,731,667 43.83% 5,329,083,969 42.51% 1.32%
changes
Construction in No significant
759,296,591 5.79% 1,026,141,569 8.19% -2.40%
progress changes
Short-term No significant
688,002,410 5.24% 714,434,286 5.70% -0.46%
borrowings changes
Long-term No significant
156,480,662 1.19% 156,125,854 1.25% -0.06%
borrowings changes
(2) Assets and liabilities measured at fair value
□Available Not available
(3) Limitations of assets rights up to the end of the report period
At the end of report period, the Company has no assets sealed up, detained or frozen. For
information about assets mortgage and pledge, please refer to Announcement on External
Guarantee (announcement number: 2016-Temporary 021), Announcement on External
Guarantee (announcement number: 2017-Temporary 015) and Announcement on External
Guarantee (announcement number: 2018-Temporary 020) disclosed on China Securities
Journal, Securities Times and CNINFO (http://www.cninfo.com.cn/) respectively on
December 22nd, 2016, December 12th, 2017 and December 5th, 2018.
5. Investment condition
(1) Overall situation
Available □Not available
Investment amount of the
Investment amount during
same period of last year Variation
the report period (CNY)
(CNY)
450,762,420 634,882,100 -29%
24
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
(2) Cases of acquired significant equity investments during the report period
Available □Not available
Unit: CNY
Investment
Progress Whether
Invested profit or Disclosure Disclosur
Main Investment Investment Shareholding Capital Investment Product up to Estimated involved
company Partner loss during date (if e index (if
business mode amount ratio source horizon type balance earnings in
name the report have) have)
sheet date litigation
period
Please
refer to
Announce
ment on
PTO7 Pty
Equity
Ltd,
Acquisitio
Woodvale
n of
Vintners
All Kilikanoo
Pty Ltd,
Kilikanoon Wine acquisition n Estate
W.J. December
Estate Pty production Acquisition 107,194,420 80.00% Self-owned 50 years Wine works have 15,000,000 174,295 No Pty Ltd in
Duthy 12th, 2017
Ltd and sale been Australi
Holdings
completed disclosed
Pty Ltd,
on
Warrick
China
James
Securities
Duthy
Journal,
Securities
Times and
CNINFO
25
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
(http://w
ww.cninf
o.com.cn)
Total -- -- 107,194,420 -- -- -- -- -- -- 15,000,000 174,295 -- -- --
(3) Cases of significant ongoing non-equity investments during the report period
Available □Not available
Unit: CNY
Reasons
Accumulated Accumulated for
Whether Investment
Involved actual realized unreached
belongs to amount
Investment sectors of investment Capital Project Estimated earnings up planning Disclosure
Project name fixed during the Disclosure index (if have)
mode investment amount up to source progress earnings to the end of schedule date (if have)
assets report
projects the end of the the report and
investment period
report period period estimated
earnings
Yantai Please refer to Resolution
Changyu Liquor and Announcement of Seventh
International alcoholic Owned Session Board of Directors
Self-constructed Yes 217,495,000 1,376,114,100 100% 0.00 0.00 — 2017.04.22
Wine City beverage fund 4th Meeting and Resolution
Blending and sector Announcement of Seventh
Cooling Center Session Board of Directors
26
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Yantai 8th Meeting disclosed on
Changyu China Securities Journal,
International Owned Securities Times and
Self-constructed Yes 26,510,000 913,200,000 100% 0.00 0.00 — 2017.04.22
Wine City fund CNINFO
Bottling (http://www.cninfo.com.cn/)
Center
Yantai
Changyu
International Owned
Self-constructed Yes 1,300,000 416,507,200 100% 0.00 0.00 — 2017.04.22
Wine City fund
Logistics
Center
Changyu Vine
and Wine Owned
Self-constructed Yes 1,214,800 116,974,800 80% 0.00 0.00 — 2017.04.22
Research fund
Institute
Treasure Wine Owned
Self-constructed Yes 18,830,000 128,820,000 70% 0.00 0.00 — 2017.04.22
Chateau fund
Koya Brandy Owned
Self-constructed Yes 11,631,000 147,329,000 85% 0.00 0.00 — 2017.04.22
Chateau fund
Greening Owned
Self-constructed Yes 20,285,000 73,390,700 100% 0.00 0.00 — 2017.04.22
Investment fund
SAP
informatization
Self-constructed Yes 26,510,000 37,850,000 Owned fund 40% 0.00 0.00 — 2018.04.23
for industrial
production
Fire protection Self-constructed Yes 4,570,000 4,570,000 Owned fund 50% 0.00 0.00 — 2018.04.23
27
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
engineering
project of
research
institute
Maintenance
and
reconstruction
project of
Self-
Etablissements Yes 8,790,200 8,790,200 Owned fund 80% 0.00 0.00 — 2018.04.23
constructed
Roullet
Fransac
Chateau in
COGNAC
Oak barrel
procurement Others Yes 6,432,000 6,432,000 Owned fund 60% 0.00 0.00 — 2018.04.23
project
Total -- -- -- 343,568,000 3,229,978,000 -- -- 0.00 0.00 -- -- --
(4) Financial assets investment
① Security investment situation
□Available Not available
There are no security investments for the Company during the report period.
28
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
② Derivatives investment
□Available Not available
There are no derivatives investments for the Company during the report period.
(5) The usage situation of raised capital
□Available Not available
There are no usage situations of raised capital for the Company during the report period.
(6) Sale of significant assets and equities
① Sale of significant assets
□Available Not available
There are no sales of significant assets during the report period.
② Sale of significant equities
□Available Not available
(7) Analysis of main 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
29
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Unit: CNY
Company name Company type Main business Registered capital Total assets Net assets Operating revenue Operating profit Net profit
Development,
Yantai
production and sale
Changyu-Castel
Subsidiary of wine and USD5million 255,992,191 84,122,529 121,235,278 5,168,651 3,710,124
Wine Chateau
sparkling wine and
Co., Ltd
tourist serdeputy
Chateau Development,
Changyu AFIP Subsidiary production and sale CNY642.75million 681,088,671 618,490,126 159,369,783 20,194,892 16,555,846
Global of wine and brandy
Dicot Partners,
Production and
S.L. Hacienda Y
Subsidiary operation of wine EUR2,385,732 563,501,798 127,321,546 327,550,545 2,162,404 3,811,465
Vinedos Marques
and other liquors
Del Atrio. sl
Indomita Wine Production and
Company Chile, Subsidiary operation of wine USD47.19million 515,753,832 362,418,343 262,104,563 21,066,614 15,934,347
SpA and other liquors
Acquisition and disposal of subsidiaries during the report period
Available □Not available
Mode of acquisition and disposal of subsidiaries during the Effect on overall production management and
Company name
report period performance
Kilikanoon Estate Pty Ltd Equity acquisition 174,295
Explanation on main holding and joint stock companies
The consolidated income of Kilikanoon Estate Pty Ltd shown in main financial information of the important non-wholly owned subsidiaries listed in
financial statement’s note “8. Equities in other subjects” is a loss. This is due to the “Premium” acquisition when the Company acquired Kilikanoon
Estate Pty Ltd. The value-added portion of the asset valuation in the purchase price is subject to the “Amortization” of the asset's useful life (3-20
30
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
years) in accordance with the current accounting standards when Changyu consolidating
statements. The Company’s main overseas companies have good earnings performance of
their own.
(8) Situation of the structured subjects controlled by the Company
□Available Not available
(9) Expectation for the Company’s future development
On the basis of our limited experience and professional skills, the Company makes the
following judgments on the wine industry and future development:
1) The sector competition pattern and development trend
Under uncertainty effects caused by the slowdown of national macroscopic economy growth
and the Sino-American trade friction, the overall demand of Chinese wine market is still
comparatively weak, the sales growth is weak, and the operation form of the Company is still
comparatively severe. The changes of the alcohol consumption environment make the
“fragmentation” of wine market become serious, 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 causes a 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. The
fixed consumer population of wine is no longer limited to the middle class and high-end
people. More and more young people will join the wine consumption army, and middle-aged
and old consumers will gradually shift to the ranks of drinking wine for health and health
considerations. “Less drinking, drinking good wine, healthy drinking” will become the future
development trend, and thus continuously expand the demand for quality wine, which
determines the huge market development potential of Chinese wine industry, especially for
brandy and wine with better cost performance, which may grow faster. China's post-90s
emerging consumer groups have gradually risen, and their strong local awareness will make
domestic wines popular with more young consumers. Affected by the head effect, the
capacity of controlling whole industrial chain of large-scale enterprises will be further
enhanced, and the product segmentation space will be larger and larger, large and strong,
small and beautiful will coexist harmoniously. Accurate marketing represented by
circle-layer social contact, private-sphere E-business, membership system will be the most
effective marketing mode. 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 cost
31
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
performance will have the opportunity to be the final winner of competitions, and then form a
new pattern of the future Chinese wine market.
2) The Company’s development strategy
The Company will insist the development direction of “Focus on middle-and-high level,
Focus on high quality, Focus on big product”, comprehensively implement the development
strategy of same importance between wine and brandy, endeavour to promote the harmonious
development of various liquors, 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 with high cost performance.
3) Management plan for the new year
In 2019, the Company will try its best to realize operating revenue of not less than CNY5.3
billion and control the main operating costs and three period expenses below CNY3.7 billion.
4) Measures to be taken by the Company
In order to better catch opportunities and face challenges, the Company will take full
advantage of self-owned advantages, meet challenges, adhere to market-orientation, intensify
internal adjustment and reformation degree, accelerate the launch of new products and the
pace of market development, implement the performance assessment mode of mainly
focusing on gross profit rate and profit, put attention to do well in following works in 2019
and strive to achieve annual operation targets.
The first is to around the development strategy of focusing on mid-to-high end, focusing on
high quality, and focusing on big product, accelerate the internal reform, and further enhance
profitability. The Company will firmly consolidate the dominant status in domestic wine,
establish the leading position in domestic brandy, bring the advantage of backwardness in
imported wine, ensure triple focusing strategy can be implemented on the ground by
“constantly, everywhere and everyone”, and promote the comprehensive development of
various brands, including wine, brandy and imported liquor. Besides, the Company will
further improve sales organization structure, improve relatively independent sales system of
each liquor category, establish competitive benchmark of each liquor category and determine
catch-up target. Furthermore, the Company will integrate and optimize the organization
structure of sales system, complete the transformation from management dealers to serdeputy
dealers as soon as possible, future close to market and customers, use less people to manage
dealers, enable more people to serve terminals and customers with dealers, ask terminals for
sales volume and ask cultivating educating for growth. Dealer team building will be further
strengthened, construction of sales team with dealers will be promoted and marking ability of
dealers will be enhanced. “Fund pool” will be built with dealers to guarantee market
investment in place. New product development will be accelerated. New products introduced
for wine includes the new Rena, Castel, AFIP, Tinlot and representative brands of wine in
term of mid and low-end, while new products introduced for brandy includes “KOYA 1915”,
mid-end Changyu Fine Brandy of 5 star and low-end PEGASE. Moreover, the Company will
further improve authorized management system of partial secondary units and promote rapid
32
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
development of authorized management units, establish a simulation profit assessment system
at all levels, strengthen gross profit rate assessment, and improve sales profitability.
The second is to insist on “originality” spirit, strengthen quality management and produce the
best products. The Company will co-ordinate domestic and foreign raw material resources,
increase the scale of high-quality raw material bases, establish a quality “lifelong”
investigation system for raw material suppliers, and further improve raw material quality.
Besides, the Company will make intellectualization and information transformation of
production system, strengthen efforts on technological innovation, and comprehensively
improve research and development capabilities. Furthermore, the Company will strengthen
the construction of winemaker team, establish quality responsibility system of winemaker for
brands and with the help of overseas acquisition of enterprise platforms, enhance exchanges
and learning of wine makers, improve brewing technique level, and realize big breakthroughs
of key links such as internal quality of products.
The third is to further optimize staff structure, compress the scale of production personnel and
management personnel. The Company will improve incentive model, adhere to struggle
oriented, result oriented and in line with the principle of “Small Adjustment and Big
Incentive”, and intensify the incentives of key employees and strivers. Besides, the Company
will further establish and improve talent team, enhance the training and introduction of
professional talents, create a learning organization, vigorously support and encourage
innovation, and enhance the overall enthusiasm, creativity and combat effectiveness of staff.
The fourth is to strictly control the scale of capital expenditure, insist on not investing in other
new projects except safety production, quality improvement and started projects. The
Company will further revitalize current assets, make full use of advanced production capacity,
moderately eliminate backward production capacity, optimize production capacity layout,
strive to improve production efficiency and asset utilization, further reduce production costs,
and better create value for shareholders.
The fifth is to intensify audit supervision, improve internal control system, and prevent
operational risks. The Company will promote the reform of audit system, adjust the set of
audit institutions, improve departure audit, and improve the evaluation system for cadres.
Besides, the Company will intensify the audit to price implementation, gross profit margin,
capital occupation, key expenses and audit of technical transformation projects, and increase
efforts to economic responsibility investigation. Furthermore, the Company will improve the
assessment methods for responsibility system of leading groups at all levels and strengthen
profit oriented. Moreover, the Company will establish and improve the three-in-one
supervision system of auditing, finance and discipline committee and achieve “check” and
“prevent” simultaneously to reduce management risks.
10. The Company’s receptions of research, communication, visit and other activities
Activity registration form for receptions of research, communication, visit and other activities
during the report period
Available □Not available
33
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Reception time Reception pattern Type of reception Basic situation index of
object reception
July 2nd, 2018 Field research Institution Yantai Changyu Pioneer
October 20th, 2018 Field research Individual Wine Co., Ltd. Investor
Relations Activation Record
Form of the Company’s
October 26th, 2018 Field research Individual “Investor Relations
Information” on CNINFO
(http://www.cninfo.com.cn/)
Times of reception 3
Number of institution reception 7
Number of individual reception 21
Number of other objects reception 0
Whether to disclose, reveal and leak No
material nonpublic information
34
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
V. Major issues
1. The Company’s ordinary share profit distribution and increasing equity with capital
reserve
Ordinary share profit distribution policies especially promulgation, implementation or
adjustment of cash dividends policies during the report period
Available □Not available
Deliberated and passed by the 2017 Shareholders’ Meeting convened on May 24th, 2018 by
the Company, the Company’s 2017 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 December 31st, 2017, 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.
Total amount of shares has not changed since the disclosure of the distribution plan to the
implementation period.
On June 30th, 2018, the Company published the Implementation Announcement of 2017
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 July 6th, 2018 and on July 9th, 2018; the last trading day, the share
registration day and the ex-dividend day of B Share was respectively on July 6th, 2018, on
July 9th, 2018 and on July 11th, 2018.
This time the dispatching objects contain all A Share shareholders registered at China
Securities Depository and Clearing Corporation Limited Shenzhen Company after closing of
Shenzhen Stock Exchange in the afternoon of July 6th, 2018 and all B Share shareholders
registered at China Securities Depository and Clearing Corporation Limited Shenzhen
Company after closing of Shenzhen Stock Exchange in the afternoon of July 11th, 2018.
This dispatching has already been completed in mid-July 2018. The profit distribution
scheme implemented this time is consistent with the scheme deliberated and passed by the
shareholders’ meeting. The implementation of the profit distribution scheme for this time is
not more than two months after the shareholders' meeting passing it.
Special explanation for the cash dividends policy
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 relevant 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
addeputys 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 policy
35
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
The Company’s scheme (preliminary scheme) of ordinary share profit distribution and
increasing equity with capital reserve in the recent three years (including the report period)
The Company’s profit distribution scheme 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 be not drawn. Based on the Company’s
685,464,000 shares at total up to December 31st, 2016, we plan to pay CNY5 in cash as
dividends for every ten shares (including tax) to the Company’s all shareholders, totaling up
to CNY342,732,000 accounting for 34.89% of the net profit CNY982,460,488 attributable to
the shareholders of the parent company in the consolidated statement, the retained and
undistributed profit of CNY639,728,488 will be reserved for the distribution of next year.
The Company’s profit distribution scheme in 2017 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. Based on the Company’s
685,464,000 shares at total up to December 31st, 2017, we plan to pay CNY5 in cash as
dividends for every ten shares (including tax) to the Company’s all shareholders, totaling up
to CNY342,732,000, accounting for 33.22% of the net profit CNY1,031,695,056 attributable
to the shareholders of the parent company in the consolidated statement, the retained and
undistributed profit of CNY688,963,056 will be reserved for the distribution of next year.
The Company’s profit distribution scheme in 2018 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 not be drawn. Based on the Company’s
685,464,000 shares at total up to December 31st, 2018, we plan to pay CNY6 in cash as
dividends for every ten share (including tax) to the Company’s all shareholders, totaling up to
CNY411,278,400 accounted for 39.45% of net profits CNY1,042,632,929 attributable to
shareholders of parent company in the consolidated statements. The retained and
undistributed profit of CNY631,354,529 will be reserved for distribution in the next year.
The Company’s ordinary share cash dividend record in recent three years (including the
report period)
Unit: CNY
Year of Amount of cash Net profit belonging Proportion in Amount of Proportion Amount of cash Proportion
distribution dividend to the listed the net profit cash of cash dividend (including
(including tax) company’s belonging to dividends(eg. dividends (including other other ways) in
shareholders in the the listed shares in other ways) the net profit
consolidated company’s buy-back) in ways belonging to
statement of the shareholders other ways the listed
distribution year in the company’s
consolidated shareholders
statement (%) in the
consolidated
statement (%)
2018 411,278,400.00 1,042,632,929.00 39.45% 0.00 0.00% 411,278,400.00 39.45%
2017 342,732,000.00 1,031,695,056.00 33.22% 0.00 0.00% 342,732,000.00 33.22%
2016 342,732,000.00 982,460,488.00 34.89% 0.00 0.00% 342,732,000.00 34.89%
36
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
During the report period, the Company earned profit, the profit of the parent company that
could be distributed to ordinary share shareholders was positive but without proposing
ordinary share cash dividend distribution preliminary scheme.
□Available Not available
2. The Company’s preliminary scheme of profit distribution and preliminary scheme of
increasing equity with capital reserve for the report period
Available □Not available
37
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Number of sending bonus shares per ten shares (share) 0
Number of dividend payout per ten shares (CNY) (including tax) 6
Number of transferring per ten shares(share) 0
The cardinal number of the capital stocks for the preliminary distribution
685,464,000
scheme (share)
Total cash dividend distribution（CNY）(including tax) 411,278,400
Amount of cash dividends(eg. shares buy-back) （CNY）in other ways 0
Total cash dividend distribution（CNY）(including other ways) 411,278,400
Attributable profit（CNY） 1,042,632,929
The proportion of cash dividend distribution in the total profit
100%
distribution(including other ways)
Cash dividend distribution this time
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 Certified Public Accountants Firm, the
net profit belonging to the parent company’s stockholders in the consolidated statement in
2018 is CNY1,042,632,929 and the net profit of the parent company in financial statement in
2018 is CNY969,588,573.
According to PRC accounting standard, the situation for attributable profits of the
consolidation and the parent company in 2018 as following:
Unit: CNY
Consolidation Parent company
Undistributed profits at the end the year 8,008,982,547 8,437,957,128
Including: net profits in 2018 1,042,632,929 969,588,573
Undistributed profit carried forward of the 7,309,081,618 7,811,100,555
beginning of the year
Distribution of 2017 dividends 342,732,000 342,732,000
Withdrawal legal surplus reserve 0 0
According to regulation of 157 item in the Articles of Association, which is that “the
th
Company can distribute dividends either in cash or by stock, the profit to be distributed each
year is not less than 25% of the distributable profit realized in the same year and the
accumulated sum of profit to be distributed in cash in the last three years is not less than 30%
of the yearly average distributable profit to be realized in the last three years”. Meanwhile,
considering the large amount on the capital expenditure in 2019, under the condition of not
influencing the normal production and operation, the Company put forward preliminary
scheme on profit distribution in 2018 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 31st, 2018, we plan to
pay CNY 6 in cash as dividends for every ten shares (including tax) to the Company’s all
38
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
stockholders, totaling up to CNY411,278,400, accounting for 39.45% of the net profit
CNY1,042,632,929 attributable to the shareholders of the parent company in the consolidated
statement; the retained undistributed profit of CNY631,354,529 will be reserved for the
distribution of next year. The cash dividend distributed to shareholders of domestic listed
foreign shares (B share) is paid in Hongkong dollar converted based on 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 2018 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 Commitment
Commitments Implementation
party type content time period
Commitments at
share reform
Commitments made
in acquisition report
or equity changes
report
Commitments at
－ － － －
asset restructuring
Yantai Solve
Non-horizontal Has been performing
Commitments at the Changyu horizontal May 18th, 1997 Forever
competition strictly
initial public Group Co. Ltd. competition
offering or Clear the use According to According to
refinancing of trademark Trademark Trademark License
royalty License Contract, the
Contract, the trademark use fee
trademark annually paid by the
royalty of Company to
Changyu and Changyu Group shall
other trademarks be mainly used by
Yantai
paid by the Changyu Group to
Changyu May 18th, 1997 Forever
Company to publicize trademarks
Group Co.,Ltd.
Yantai Changyu and contract
Group Co., Ltd products. Except
ever year is 2013 to 2017 during
mainly used for which the
advertising commitment was not
Changyu and strictly performed,
other trademarks Yantai Changyu
and this contract Group Co., Ltd. has
39
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
products by been performing its
Yantai Changyu commitment.
Group Co., Ltd.
Equity incentive
commitments
Commitments at
middle and small
shareholders of the
Company
Commitment under
timely
No
implementation or
not
According to t Trademark License Contract (hereafter referred to as “the Contract”), Changyu Group
promises that the trademark use fee annually paid by the Company to Changyu Group shall be mainly
used by Changyu Group to publicize trademarks and contract products. But above-mentioned ‘mainly’ is
not a specific number, which is easy to cause divergence due to different understanding and leads to
problem appearance during the implementation process.
From 2013 to 2017, Changyu Group collected a total of CNY420,883,902 trademark use fee, of which
51% was used to publicize trademarks including Changyu and contract products with amount of
CNY214,650,790. The amount has been used to publicize trademarks including Changyu and contract
Whether or not to
products is CNY50,025,181, with a balance of CNY164,625,609.
have specific
In 2018 and 2019, the trademark use fee collected of 2017 and 2018 is CNY155,623,907, of which 51%
reasons of the
is used to publicize trademarks including Changyu and contract products with amount of
unimplemented
CNY79,368,193. The amount has been used to publicize trademarks including Changyu and contract
commitment and
products is CNY12,225,187, with a balance of CNY67,143,006.
next steps
Since 2013, the accumulated balance of Changyu Group using to publicize trademarks including
Changyu and contract products is CNY231,768,615.
Changyu Group promises that the four-year trademark use fee from 2019 to 2022 will be used for offset.
If insufficient, the shortfall would be filled in one time in 2023. If there is any excess, the excess portion
of the trademark use fee would be collected from the year with excess occurrence. If Changyu Group is
not able to implement the above-mentioned commitment owing to various reasons, the Company will
timely supervise and urge Changyu Group to fulfill its commitment and request Changyu Group to raise
funds through bank loaning, assets sales and equity sales etc in order to implement the commitment.
(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
4. Non-business capital occupying of listed company by controlling shareholder and its
related parties
40
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
□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 last year’s financial report, explanation for the changes of
accounting policy, accounting estimation and accounting method
□Available Not available
There is no situation for the changes of accounting policy, accounting estimation and accounting
method.
7. The situation explanation for the correction of major accounting errors which need to
be retrospect and restated during the report period
□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 last year’s financial report, explanation for the changes of the
consolidated statements scope
Available □Not available
According to Share Sale & Purchase Agreement signed on December 5th, 2017 between the
Company and shareholders of Kilikanoon Estate Pty Ltd, the Company acquired 80% equity
of Kilikanoon Estate Pty Ltd with the price of AUD20,860,825 (equivalence
CNY107,194,420) to. The Company has completed equity transfer on January 18th, 2018,
obtaining control rights of finance and business policy for Kilikanoon Estate Pty Ltd. During
the report period, this company has been included in the scope of consolidated statements.
9. The appointment and dismissal of certified public accountants
Currently appointed accounting firm
Domestic accounting firm name Deloitte Hua Yong Certified Public Accountants
41
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Firm (special general partnership)
Remuneration for domestic accounting firm
198
(CNY‘0000)
Consecutive period for the audit serdeputys of
6
domestic accounting firm
Name of certified public accountant for the audit
Xie Yanfeng, Li Yangang
serdeputys of domestic accounting firm
Consecutive period for the certified public
accountant’s audit serdeputys of domestic －
accounting firm
Overseas accounting firm name (if have) 0
Remuneration for overseas accounting firm
0
(CNY‘0000) (if have)
Consecutive period for the audit serdeputys of
－
overseas accounting firm (if have)
Name of certified public accountant for the audit
－
serdeputys of overseas accounting firm (if have)
Consecutive period for the certified public －
accountant’s audit serdeputys of overseas
accounting firm (if have)
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
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.
12. Material litigation and arbitration
□Available Not available
There are no material litigation and arbitration during the report period.
42
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
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 during the report period.
16. Significant related transactions
(1) Related transactions in relation to daily operations
Available □Not available
43
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Related Relationship Type Content Pricing Price Amount Proportion Approved Whether Clearing Available Disclosure Disclosur
party principle (CNY‘0000) accounting transaction exceed form market price date e index
for amount quota approved of similar
of similar (CNY‘0000) transaction transactions
transactions quota
Purchase 17,324 9.08% 18,000
Yantai Controlled Purchase and
Shenma by the same and commission Agreement Determined April 23rd,
No Cash No -
Packaging parent commission processing pricing by agreement 2018
Co., Ltd. company processing packing
materials
Yantai Licensed 7,398 100.00% 7,600
Licensed use
Changyu Parent use of Agreement Determined April 23rd,
of trademark No Cash No -
Group Co. company intangible pricing by agreement 2018
and patent
Ltd. assets
Total - - 24,722 -- 25,600 - - - - -
Details of the return of large sales No
Actual performance of the estimated total amount for
daily operations related transactions by category that will No
occur during this period. (if have)
Reason for the deference between transaction price and Not available
market reference price(if available)
(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.
44
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
(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 transactions
Available □Not available
Whether or not existing non-operating related credit and debt transactions
□Yes No
There are no non-operating related credit and debt transactions during the report period.
(5) Other major related transactions
□Available Not available
There are no other major related transactions during the report period.
17. Major and important contracts and execution results
(1) Trusteeship, contract and leasehold issues
Trusteeship situation
□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
45
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Leasehold situation description
On January 1st, 2017, the Company renewed the Space Lease Agreement with the controlling
shareholder Changyu Group. The Company leased the space with 15196.94 square meters
located at 174 Shihuiyao Road, Zhifu District,Yantai City. The rent per year is CNY1.4645
million with a rental period of 5 years from January 1st, 2017 to December 31st, 2021. On
January 1st, 2017, the Company’s subordinate Sales&Marketing Co. of Yantai Changyu
Pioneer Wine Company Limited. Brand Sales Department renewed the Space Lease
Agreement with the controlling shareholder Changyu Group, leasing the space with 42552.83
square meters located at 1 Jichang 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 CNY4.3935million
with a rental period of 5 years from January 1st, 2017 to December 31st, 2021.
On July 1st, 2017, this company signed a house-leasing contract with Yantai Shenma
Packaging Company Limited. According to this contract, since July 1st, 2017, this company
leased property to Yantai Shenma Packaging Company Limited for a business purpose with
the annual rent of CNY1,626,880. This contract expires on June 30th, 2022.
For other leasehold situation, please refer to financial report.notes.
Project in gains and losses for the Company to achieve more than 10% of the total profit
□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 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 implementation
guarantee
quota
Yantai Economic
and Technological Mortgage;
Development 2016.12.22 34160 2016.12.21 34160 10years No No
Zone Management Pledge
Council.
Total of the actual external
Total of the external guarantee quota
0 guarantee amount during the 0
approved during the report period (A1)
report period (A2)
Balance of the actual
Total of the external guarantee quota
external guarantee by the
approved by the end of the report period 34160 34160
end of the report period
(A3)
(A4)
Guarantee situations between the Company and subsidiaries
Disclosure date of Whether or
Actual date of Actual Whether or not
Guarantee object related Guarantee Guarantee Guarantee not belong to
occurrence (date guarantee complete
name announcement about quota type Period related-party
of agreement) amount implementation
guarantee quota guarantee
Sales &
Marketing 2016.10.31 10,000 2016.11.05 10,000
Joint liability
2 years No Yes
Company of assurance
Yantai Changyu
46
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Pioneer Wine
Company Limited
Yantai Changyu Mortgage;
Pioneer Wine 2016.12.22 11,984 2016.12.21 11,984 10 years No Yes
Company Limited Pledge
Yantai Changyu Joint
Wine Research liability
2016.12.22 72,176 2016.12.21 72,176 10 years No Yes
and Development assurance;
Company Limited Mortgage
Joint
Kilikanoon Estate
2017.12.12 7100 2018.01.09 7100 liability 1 year No Yes
Pty Ltd
assurance
Total of the actual guarantee
Total of the guarantee quota approved to
amount for subsidiaries
subsidiaries during the report period 0 7,100
during the report period
(B1)
(B2)
Balance of the actual
Total of the guarantee quota approved to
guarantee for subsidiaries by
subsidiaries by the end of the report 89,276 89,276
the end of the report period
period (B3)
(B4)
Guarantee situations between subsidiaries
Disclosure date of
Whether or
related Actual date of Actual Whether 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 implementation
guarantee
quota
Hacienda Y Mortgage;
Vinedos Marques 2016.04.29 3,502 2015.10.08 3,502 Long term No No
Del Atrio. SL
Indomita Wine Mortgage;
Company Chile, 2018.04.23 1,986 2018.04.20 1,986 Long term No No
SpA
Total of the actual guarantee
Total of the guarantee quota approved
amount for subsidiaries
to subsidiaries during the report period 0 5,488
during the report period
(C1)
(C2)
Balance of the actual
Total of the guarantee quota approved
guarantee for subsidiaries by
to subsidiaries by the end of the report 5,488 5,488
the end of the report period
period (C3)
(C4)
Total guarantee amount of the Company（Total of above three major items）
Total of the actual guarantee
Total of the approved guarantee quota
0 amount during the report 12,588
during the report period（A1+B1+C1）
period（A2+B2+C2）
Total of the approved guarantee quota Balance of the actual
by the end of the report period 128,924 guarantee by the end of the 128,924
（A3+B3+C3） report period（A4+B4+C4）
The proportion of actual total guarantee amount (A4+B4+C4)
13.42%
accounting for the Company’s net asset
Among :
The amount of guarantee for shareholders, actual controllers and their related
0
parties（D）
The amount of debt guarantee for the guaranteed objects whose asset-liability
0
ratio is more than 70% directly or indirectly（E）
Total amount of guarantee of the part 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 No
47
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
may take joint payback liabilities during the report period (if have)
Explanation for violating due process to provide external guarantee (if have) No
Specific explanation on adopting complex guarantee type
No.
48
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
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
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
49
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
(1) Social responsibility performance
Please refer to 2018 Annual Social Responsibility Report disclosed on Securities Times, China Securities Newspaper and www.cninfo.com.cn by
the Company.
(2) Targeted poverty alleviation social responsibility performance
① Targeted poverty plan
The Company has reached the mutual agreement with Zhuqiao Town Party Committee Government and Da Langya Village Committee to
establish professional grape cooperative. It plans to help to conduct the construction of 100 mu of vineyard per year from 2019 to 2021 with a
total area of 300 m and also to sign grape purchase contract in order to help local villagers to get rid of poverty and become better off.
② Summary of annual targeted poverty
Related leaders of the Company visited the village three times, held meetings three times and assisted to drill three wells.
③ Targeted poverty effectiveness
The Company has completed initial preparation work of targeted poverty effectiveness for Da Langya Village.
④ Subsequent targeted poverty plan
No
(3) Environmental protection related situation
Whether the listed company and its subsidiaries belong to major polluters published by the environmental protection department
□Available Not available
The mainly pollutant of the Company is the sewage generated in the productive process, which has been discharged with reached standards.
There is no pollution situation occurred during this report period.
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
50
Yantai Changyu Pioneer Wine Co. Ltd. 2018 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 685,464,000 100.00% 685,464,000 100.00%
(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 685,464,000 100.00% 685,464,000 100.00%
Cause of share change
□Available Not available
Approval of share change
□Available Not available
Transfer of changed shares
□Available Not available
Implementation progress of share buy-back
51
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
□Available Not available
Implementation progress of reducing holding repurchased share through the way of centralized bidding
□Available Not available
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
52
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
(3) Current employee shares
□Available Not available
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
42,980 last month before the 45,104 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
of Number of
Percentage Shares held until the during the
Name of Shareholders Character of shareholders (%) end of the report period report restricte unrestricted Share
Amount
d shares status
period
shares
YANTAI
Domestic non-state-owned
CHANGYU GROUP 50.40% 345,473,856 345,473,856 0
legal person
CO. LTD.
GAOLING Foreign legal person
3.08% 21,090,219 21,090,219 0
FUND,L.P.
CHINA State-owned legal person 2.25% 15,440,794 15,440,794 0
53
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
SECURITIES
FINANCE CORP
BBH BOS S/A
FIDELITY FD - Foreign legal person 2.22% 15,241,826 15,241,826 0
CHINA FOCUS FD
SHENWAN Foreign legal person
HONGYUAN
1.22% 8,347,663 8,347,663 0
SECURITIES(HONG
KONG) LIMITED
FIDELITY
PURITAN TRUST:
FIDELITY SERIES
Foreign legal person 0.89% 6,100,762 6,100,762 0
INTRINSIC
OPPORTUNITIES
FUND
TAIKANG LIFE
INSURANCE
LIMITED
LIABILITY Domestic non-state-owned
0.75% 5,159,757 5,159,757 0
COMPANY-- UNIT legal person
–LINKED--
INDUSTRY
CONFIGURATION
GUOTAI JUNAN
SECURITIES(HONG Foreign legal person 0.74% 5,043,507 5,043,507 0
KONG) LIMITED
CENTRAL HUIJIN State-owned legal person 0.69% 4,761,200 4,761,200 0
54
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
ASSET
MANAGEMENT
LIMITED
TAIKANG LIFE
INSURANCE
LIMITED
LIABILITY Domestic non-state-owned
0.69% 4,746,954 4,746,954 0
COMPANY-DIVIDE legal person
ND-PERSONAL
DIVIDEND-019L-FH
002 SHEN
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, there is associated relationship between Taikang Life
Insurance Limited Liability Company- Unit-linked- Industry Configuration and Taikang
The explanation for the associated relationship and Life Insurance Limited Liability Company- Dividend- Personal dividend-019L-FH002
accordant action Shen. Yantai Changyu Group Company Limited has no associated relationship or
accordant action relationship with the other 9 listed shareholders, and the relationship
among the other shareholders is unknown.
The top 10 shareholders with unrestricted shares
Number of unrestricted Type of share
Name of Shareholders shares held until the end of
Type of share Amount
the year
YANTAI CHANGYU GROUP CO. LTD. 345,473,856 A 345,473,856
GAOLING FUND,L.P. 21,090,219 B 21,090,219
CHINA SECURITIES FINANCE CORP 15,440,794 A 15,440,794
BBH BOS S/A FIDELITY FD - CHINA FOCUS FD 15,241,826 B 15,241,826
55
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
SHENWAN HONGYUAN SECURITIES(HONGKONG) LIMITED 8,347,663 B 8,347,663
FIDELITY PURITAN TRUST: FIDELITY SERIES INTRINSIC 6,100,762 B 6,100,762
OPPORTUNITIES FUND
TAIKANG LIFE INSURANCE LIMITED LIABILITY COMPANY-- UNIT 5,159,757 A 5,159,757
–LINKED-- INDUSTRY CONFIGURATION
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED 5,043,507 B 5,043,507
CENTRAL HUIJIN ASSET MANAGEMENT LIMITED 4,761,200 A 4,761,200
TAIKANG LIFE INSURANCE LIMITED LIABILITY 4,746,954 A 4,746,954
COMPANY-DIVIDEND-PERSONAL DIVIDEND-019L-FH002 SHEN
Among the top 10 shareholders, there is the associated relationship
between Taikang Life Insurance Limited Liability Company-
The explanation for the associated relationship and accordant action of the top 10 Unit-linked- Industry Configuration and Taikang Life Insurance
shareholders with unrestricted shares, the the associated relationship and Limited Liability Company- Dividend- Personal
accordant action between the top 10 shareholders with unrestricted shares and the dividend-019L-FH002 Shen. Yantai Changyu Group Company
top 10 shareholders Limited has no associated relationship or accordant action
relationship with the other 9 listed shareholders, and the relationship
among the other shareholders is unknown.
Explanation for the top 10 shareholders who involved in financing activities and The top 10 shareholders do not involve in financing activities 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
56
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Property of holding shareholders: Property of holding main body undefined
Type of holding shareholders: Legal representative
Legal Establishment Organization
Name of controlling shareholder Main business
representative date code
Production and distribution of wine, healthy
liquor, distilled liquor and non-alcohol
Zhou 91370600265645
Yantai Changyu Group Co. Ltd. 1997.04.27 beverages, planting of agricultural products
Hongjiang 8244
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
Yantai Yuhua Investment Jiang Hua 2004.10.28 76779294－7 Under state permission, property investment, tenancy of machine and facility,
57
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
& Development Co. Ltd wholesale and retail of construction material, chemical products (chemical
hazard products excluded), hardware and electronical products, grape
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 serdeputy 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 serdeputy. The
Corporation HOUEROU 1956.07.25 － corporation 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
Yantai Guofeng
stock right within the scope of authorization; Venture capital investment
Investment Holdings Co., Rong Feng 2009.02.12 00426068-6
business; Agency of venture capital investment business of other venture
Ltd
investment enterprises or individuals; Participation in the establishment of
venture capital investment enterprises and venture capital investment
management consultant institutions; Investment and financing serdeputy
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
58
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
authorized in accordance with the law could carry out business activities only
after the approval of relevant departments )
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.
59
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Introduction for property right and control relations between the Company and its actual controllers
Actual controller controls the Company through a trust or other asset management ways
□Available Not available
(4) Other institutional shareholders holding more than 10% shares
60
Yantai Changyu Pioneer Wine Co. Ltd. 2018 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.
61
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
VIII. Situation for Directors, Supervisors, Senior Executives and Staff
1. Changes in shareholdings of directors, supervisors and senior executives
Shares Increased
Decreased
Beginning Ending held at the shares Other Shares held at
Gen shares
Name Post Status Age date of the date of the beginning during changes of the end of the
der during the
post post of the the shares held period
period
period period
Zhou present
Hongjiang Chairman M 54 2002.05.20 2019.05.27 0 0 0 0 0
incumbent
present
Sun Liqiang Director M 71 1997.09.18 2019.05.27 0 0 0 0 0
incumbent
present
Leng Bin Director M 56 2000.08.22 2019.05.27 0 0 0 0 0
incumbent
Sun Jian General manager present M 52 2006.03.22 2019.05.27 0 0 0 0 0
incumbent
Director and present
Qu Weimin Secretary to the M 61 1997.09.18 2019.05.27 0 0 0 0 0
Board of Directors incumbent
present
Zhang Ming Director M 45 2016.05.26 2019.05.27 0 0 0 0 0
incumbent
Augusto present
Reina Director M 78 2006.12.07 2019.05.27 0 0 0 0 0
incumbent
Aldino Director M
Marzorati present 66 2006.12.07 2019.05.27 0 0 0 0 0
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
incumbent
Antonio present
Appignani Director M 80 2006.12.07 2019.05.27 0 0 0 0 0
incumbent
present
Wei Anning Director M 55 2017.06.15 2019.05.27 0 0 0 0 0
incumbent
Wang Independent present
Zhuquan director M 53 2014.05.23 2019.05.27 0 0 0 0 0
incumbent
Present
Wang Shigang Independent
director M 53 2011.05.10 2019.05.27 0 0 0 0 0
incumbent
Independent Present
Luo Fei director M 66 2016.09.23 2019.05.27 0 0 0 0 0
incumbent
Independent Present
Liu Yan director F 45 2016.09.23 2019.05.27 0 0 0 0 0
incumbent
Present
Guo Guoqing Independent
director M 56 2018.12.04 2019.05.27 0 0 0 0 0
incumbent
Kong Chairman to the present
Qingkun Board of M 46 2013.05.14. 2019.05.27 0 0 0 0 0
Supervisors incumbent
present
Zhang Lanlan Supervisor F 49 2013.05.14. 2019.05.27 0 0 0 0 0
incumbent
present
Liu Zhijun Supervisor M 38 2016.05.26 2019.05.27 0 0 0 0 0
incumbent
Deputy general Leaving the
Yang Ming manager M 60 1998.08.12 2018.02.28 0 0 0 0 0
post
present
Li Jiming Chief engineer M 52 2001.09.14 2019.05.27 0 0 0 0 0
incumbent
Deputy general present
Jiang Hua manager M 55 2001.09.14 2019.05.27 0 0 0 0 0
incumbent
63
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Deputy general present
Peng Bin manager M 52 2018.01.10 2019.05.27 0 0 0 0 0
incumbent
present
Jiang Jianxun Chief financial
officer M 52 2018.01.10 2019.05.27 0 0 0 0 0
incumbent
General manager present
Pan Jianfu assistant M 43 2018.04.19 2019.05.27 0 0 0 0 0
incumbent
General manager present
Liu Shilu assistant M 44 2018.04.19 2019.05.27 0 0 0 0 0
incumbent
present
Xiao Zhenbo General manager
assistant M 42 2018.04.19 2019.05.27 0 0 0 0 0
incumbent
Total -- -- -- -- -- -- 0 0 0 0 0
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
2. Changes in the Company’s directors, supervisors and senior executives
Available □Not available
Name Position Type Date Reason
Sun Liqiang Chairman Leaving the post 2017.12.08 Volunteer to resign
as chairman and no
longer serve as
chairman; currently
serve as director of
the Company
Zhou Hongjiang Deputy Leaving the post 2018.01.10 Volunteer to resign
Chairman as deputy chairman,
no longer serve as
deputy chairman and
be elected as
chairman; currently
serve as chairman of
the Company
Zhou Hongjiang General Dismission 2018.01.10 Volunteer to resign
Manager as general manager
and no longer serve
as general manager;
currently serve as
chairman of the
Company
Zhou Hongjiang Chairman Appointment and 2018.01.10 Be elected as
dismission chairman of the
Company
Leng Bin Deputy Dismission 2018.01.10 Volunteer to resign
general as deputy general
manager manager and no
longer serve as
deputy general
manager; currently
serve as director of
the Company
Sun Jian Deputy Appointment and 2018.01.10 Be appointed as
general dismission general manager and
manager dismissed from the
post of deputy
general manager;
currently serve as
general manager of
the Company
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Peng Bin Deputy Appointment and 2018.01.10 Be appointed as
general dismission deputy general
manager manager and
currently serve as
deputy general
manager of the
Company
Jiang Jianxun Chief Appointment and 2018.01.10 Be appointed as
financial dismission chief financial
officer officer and currently
serve as chief
financial officer and
financial manager of
the Company
Independe Appointment and Be appointed as
Guo Guoqing 2018.12.04
nt director dismission independent director.
3. Situation for work experience
The professional background, main work experiences and present positions of the Company’s
directors, supervisors and senior executives
(1) Members of Board of Directors
Mr. Zhou Hongjiang, male, 54, Chinese, with doctor degree, senior engineer, was the
representative of the 12th National People’s Congress, deputy general manager of the
Company and general manager of the Sale Company. From 20th May, 2002 to 10th January,
2018, he served as director, deputy chairman and general manager of the Company and
concurrently deputy chairman of Changyu Group. He is the representative of the 13th
National People’s Congress, chairman of the Company, chairman and party secretary of
Changyu Group now.
Mr. Sun Liqiang, male, 71, Chinese, with college degree, senior economist, was the
representative of the 10th and 11th National People’s Congress. From 18th September, 1997 to
10th January, 2018, he served as chairman of the Company, and concurrently chairman and
general manager of Changyu Group. He is director of the Company now.
Mr. Leng Bin, male, 56, Chinese, with master degree, senior accountant, was deputy section
chief and section chief of Yantai Audit Bureau, he served as director and deputy general
manager of the Company from 15th June, 2000 to 10th January, 2018. He is director of the
Company, and concurrently deputy party secretary, director and general manager of Changyu
Group now.
Mr. Qu Weimin, male, 61, Chinese, bachelor of engineering ， senior economist, worked at
Yantai Commission for Restructuring the Economic System and Research Office of Yantai
Government and has more than 20 years of experience in the aspect of macroeconomic study
and enterprise operation and management, he was deputy general manager of the Company.
He has served as director and concurrently secretary to the board of directors of the Company
since 18th September, 1997.
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Mr. Zhang Ming, male, 45, Chinese, with bachelor degree, senior engineer, 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., Ltd, risk control section chief of Yantai Guofeng Investment Holding Co.,
Ltd. and concurrently director and deputy general manager of Yantai Guoyu Finance Lease
Co., Ltd, deputy 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., chairman of Yantai Guofeng Investment Holding Co., Ltd. He is director of the
Company.
Mr. Augusto Reina, male, 78, 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, 66, 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, 80, Italian, with bachelor degree, is deputy 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.
Mr. Wei Anning, male, Chinese, 55, with doctor degree, ever served as agricultural
economist of the World Bank, director of North East Asia Food & Agribusiness Research of
the Rabobank, China CEO of the Fortis Bank Belgium, executive deputy president of the
New Hope Group (Sichuan), president of Shandong Liuhe Group, director of Hangzhou
United Rural Commercial Bank Co., Ltd, director of Xinjiang Kuntai Group Co., Ltd.,
chairman of the Shandong Chinwhiz Group. He is good at corporate governance, enterprise
development strategy and equity investments. Now, he is serving as executive director and
general manager of Shanghai Gueva Fund Management Co., Ltd Co., Ltd, executive director
of both Ningxia Gueva Fund Management Co., Ltd and Ningbo Gueva Fund Management
Co., Ltd, independent director of Dachan Food (Asia) Co., Ltd, Orient Securities Co., Ltd and
Fortune SG Fund Management Co., Ltd., director of Jiangsu Financial leasing Co., Ltd. He is
serving as director of the Company.
Mr. Wang Shigang, male, 53, 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, 53, Chinese, doctor of management (accountancy), first batch of
national accounting academic leading personals of Financial Department, the entrant of
67
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
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, 66, 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
for many years and has practical working experience with companies. Now he is serving as
independent director of the Company.
Ms. Liu Yan, female, 45, 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.
Mr. Guo Guoqing, male, 56, Chinese, winner of the special allowance of the State Council.
He served as a committee member of the 7th All-China Youth Federation, committee member
of the 8th, 9th and 10th National Committee of the Chinese People's Political Consultative
Conference, representative of the 11th National People's Congress, deputy dean of School of
Business Administration of Renmin University of China, deputy secretary general of Zhuhai
Municipal People's Government of Guangdong Province, independent director of China
Everbright Bank, evaluation expert of the Department of Management Science of the
National Natural Science Foundation of China, associate editor of the Journal of Chinese
Marking and independent director of China-Tin Group. He currently serves as a professor and
doctoral supervisor at the School of Business of Renmin University of China, director of the
China Marketing Research Center of Renmin University, deputy president of the China
Business History Society, director of the Brand Professional Committee of the China
Business History Society, international researcher of Corporate Reputation Center of The
University of Oxford, side-bar doctoral tutor and professor of Panyapiwat Institute of
Management, consultant of China University Marketing Research Association, director of
Gree Real Estate and independent director of Minjiakefeng Information Technology Co., Ltd,
Nan Yue Fund, Zhejiang Fengrun Biotech Co., Ltd, Vats Liquor Chain Store Management
Joint Stock Co., Ltd. and Livzon Pharmaceutical Group Inc. He serves as independent
director of the Company.
(2) Members of board of supervisors
Mr. Kong Qingkun, male, 46, Chinese, MBA and economist, served as the section member of
production department in the healthy liquor branch office, clerk and deputy director and
director of general manager office.
Ms. Zhang Lanlan, female, 49, with bachelor degree and economist, served as
deputy-manager of the Company’s import/export company, manager of import department.
She now is director of board of directors’ office.
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Mr. Liu Zhijun, male, 38, 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, deputy director member of
programming development and enterprise distribution section, deputy director member and
deputy chief of programming development section. He now is supervisor of the Company.
(3) Other senior executives
Mr. Sun Jian, male, 52, Chinese, MBA, served as deputy general manager of the Company
from 22nd March, 2006 to 10th January, 2018. He serves as general manager of the Company
and director of Changyu Group.
Mr. Li Jiming, male, 52, Chinese, with doctor degree, application researcher, has been
serving as chief engineer of the Company since 14th September, 2001 and concurrently
director of Changyu Group.
Mr. Jiang Hua, male, 55, Chinese, with master degree, senior engineer, has been serving as
deputy general manager of the Company since 14th September, 2001.
Mr. Peng Bin, male, 52, MBA, senior engineer, ever successively served as deputy director of
wine-blending workshop and director of wine-storage workshop of Brandy Company under
Yantai Changyu Group Company Limited, section chief of Technical Transformation
Department and minister of Investment and Development Department as well as deputy
general manager of Yantai Changyu Group Company Limited, general manager assistant of
Yantai Changyu Pioneer Wine Company Limited. He serves as deputy general manager of
the Company.
Mr. Jiang Jianxun, male, 52, Chinese, MBA and accountant, served as Financial Manager of
the Company from 20th May, 2002 to 10th January,2018. He serves as chief financial officer
of the Company.
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 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 2018.01.10 No
Zhou Hongjiang Yantai Changyu Group Co. Ltd. Deputy chairman 2013.10.08 2018.01.10 No
Zhou Hongjiang Yantai Changyu Group Co. Ltd. Chairman 2018.01.10 2022.01.10 No
Leng Bin Director and Yes
Yantai Changyu Group Co. Ltd. general manager 2018.01.10 2022.01.10
Li Jiming Yantai Changyu Group Co. Ltd. Director 2013.10.08 2022.01.10 No
Sun Jian Yantai Changyu Group Co. Ltd. Director 2013.10.08 2022.01.10 No
Zhang Ming Yantai Changyu Group Co. Ltd. Director 2013.10.08 2018.11.15 No
Augusto Reina Yantai Changyu Group Co. Ltd. Director 2013.10.08 2022.01.10 No
Aldino Marzorati Yantai Changyu Group Co. Ltd. Director 2013.10.08 2022.01.10 No
Antonio Appignani Yantai Changyu Group Co. Ltd. Director 2013.10.08 2022.01.10 No
Wei Anning Yantai Changyu Group Co. Ltd. Director 2017.04.18 2022.01.10 No
Mr. Zhou Hongjiang serves as the position of chairman in the shareholders company from 10th January,
Explanation for the post in the
2018 to 10th January, 2022. Mr. Leng Bin serves as the position of general manager in the shareholders
shareholder’s company
company from 10th January, 2018 to 10th January, 2022.
70
Yantai Changyu Pioneer Wine Co. Ltd. 2018 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 executives
Decision-making process, the basis of determination, the actual payment of directors, supervisors and senior executives
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.
Salary of directors, supervisors and senior executives during the report period
Unit: CNY’0000
71
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Whether get
Total reward from
reward from
Name Post Gender Age Status the Company
related parties of
before tax
the Company
Zhou Hongjiang Chairman M 54 present incumbent 154.81 No
Sun Liqiang Director M 71 present incumbent 138.89 No
Leng Bin Director M 56 present incumbent 0 Yes
Sun Jian General manager M 52 present incumbent 140.41 No
Qu Weimin Director and Secretary to the M
Board of Directors 61 present incumbent 94.31 No
Zhang Ming Director M 45 present incumbent 0 No
Augusto Reina Director M 78 present incumbent 0 No
Aldino Marzorati Director M 66 present incumbent 0 No
Antonio Appignani Director M 80 present incumbent 0 No
Wei Anning Director M 55 present incumbent 0 No
Wang Zhuquan Independent Director M 53 present incumbent 8 No
Wang Shigang Independent Director M 53 present incumbent 8 No
Luo Fei Independent Director M 66 present incumbent 8 No
Liu Yan Independent Director F 45 present incumbent 8 No
Guo Guoqing Independent Director M 56 present incumbent 0.67 No
72
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Kong Qingkun Chairman to the Board of M
supervisors 46 present incumbent 71.29 No
Zhang Lanlan supervisor F 49 present incumbent 21.06 No
Liu Zhijun supervisor M 38 present incumbent 0 No
Yang Ming Deputy-general manager M 60 leaving the post 17.92 No
Li Jiming Chief Engineer M 52 present incumbent 107.19 No
Jiang Hua Deputy-general manager M 55 present incumbent 101.19 No
Peng Bin Deputy-general manager M 52 present incumbent 105.17 No
Jiang Jianxun Chief financial officer M 52 present incumbent 106.84 No
Pan Jianfu General manager assistant M 43 present incumbent 78.26 No
Liu Shilu General manager assistant M 44 present incumbent 48.32 No
Xiao Zhenbo General manager assistant M 42 present incumbent 91.88 No
Total - - - - 1,310.21 -
The awarded equity incentives for the directors, supervisors and senior executives 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) 1,339
Incumbent staff number of major subsidiary companies (people) 1,894
Total incumbent staff (people) 3,233
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Total staff getting paid in current period (people) 3,233
Retired staff number whose expenses are undertaken by parent 0
company or subsidiary companies (people)
Specialty constitution
Category Number of people (people)
Administrative staff 263
Technical staff 165
Financial staff 152
Production staff 1,000
Sales staff 1,653
Total 3,233
Education degree
Category Number (People)
Bachelor and above 1,125
Junior College 1,118
Technical secondary school 546
Senior high school and below 444
Total 3,233
(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
74
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
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.
(3) Training plan
In order to further improve the employees’ comprehensive quality and professional skill,
the Company plans to invest CNY3.02million in 2019 for employee training plan which
is shown as follows:
① Senior and Middle-level Managers
1) General training
Employ professional lecturers to the company or through remote network video for
centralized lectures could be as methods of training. During the year, four topics will be
arranged for middle and senior management staff once for each quarter and one to two
days for each training.
2) Professional training
Based on their respective work, organize them to attend Entrepreneur High-end Forum
and Summit Meeting and go to domestic and foreign successful enterprise for visit and
study; attend university correspondence, self-study examination, MBA or other further
education for master degree; organize professional management cadres, to attend
vocational qualification examination for professional certificate; to attend special
training at least twice a year, such as safety, technology, facility, finance, WSET,
tourism etc which are organized by special management department.
② Marketing personnel
1) General training
Independently study marketing textbooks, mainly focusing on ‘Growth’, as well as
training materials including the company’s related management system, production
knowledge, sales responsibility system etc.
2) Professional training
Professional lecturers would be employed to the company or through remote internet
videos to give lectures about successful liquor cases, current economic trend research
for domestic and foreign wine industry and other topic in order to take training for
personnel whose level is or above manager assistant in city marketing management
company once a quarter and one day for each time; take closed training for city
marketing manager on how to improve marketing skill as well as executive force of
sales policy once at the start of each month and one day for each time. For business
directors and other personnel take a combination training method of hiring lecturers and
going out to visit for studying, they could be trained successful marketing cases and
marketing management concepts. This training is conducted once a quarter and one day
for each time.
③ Production and management personnel whose level are below section chief
1) General training
Set courses that are aiming at improving employee management ability, innovation
ability and executive ability, hire a professional lecturer or university teacher to teach at
the company two times a year and one day per course; attend common-sense general
75
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
training including company culture, regulatory framework and various liquor products
knowledge, reinforce training in the aspect of human resources management;
independently study training materials provided by the company, such as Growth and
Employee Handbook; attend outdoor quality expansion training once a year.
2) Professional training
Attend university correspondence, self-study examination, MBA or other further
education for master degree; attend vocational qualification examination for
professional certificate; based on personnel work, attend special training at least twice a
year, which are organized by special management department; for different types of
work, the Company will organize to attend training which can improve professional
skill and operation level; technology backbones would be selected to attend overseas
training and learning exchange.
(4) Labor outsourcing
□Available Not available
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
IX. Corporate Governance
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
77
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
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
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 Opinion of Brand Positioning, Assessment Method of
Production Order Fulfillment Rate, Assessment Method of Safety Management,
Implementation Plan of Brandy Internal Quality Improvement and Technological Innovation
Project, Implementation Opinion of Building Technical Communication Platform with
Overseas Enterprises, Assessment and Evaluation Method of Contracted Bases in 2018,
Assessment and Evaluation Method of Self-supporting Vineyards and so on.
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, deputy 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
Company was entirely independent in personnel arrangement, conclusion and adjustment of
78
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
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. Except partial trademarks
which can not be peeled off “张裕”(Changyu) trademark, trademarks and patents that could
have been registered or applied by the Company but were registered or applied by Changyu
Group who then authorized the Company for usage will be transferred to the Company by
Changyu Group for free before the end of 2019 in order to ensure the independence and
completeness of the Company’s assets.
(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
79
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
(1) Information for the shareholders’ meeting during the report period
Participation
Convening Disclosure
Session Meeting type ratio of Disclosure Index
date date
investors
http://www.cninfo.com.cn
Resolution
2017 Annual Annual Announcement of 2017
Shareholders’ shareholders’ 63.87% 2018.05.24 2018.05.25 Annual
Meeting meeting Shareholders’ Meeting
(Announcement
no.:2018-Temporary15)
http://www.cninfo.com.cn
Resolution
2018 Annual Announcement of 2018
Interim
First Interim Annual
Shareholders’ 64.86% 2018.12.26 2018.12.27
Shareholders’ First Interim
Meeting
Meeting Shareholders’ Meeting
(Notification
no.:2018-Temporary22)
(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 Attendance
or not to time for the
attend the shareholders’
Required
Personal Communication Authorized meetings meeting
Name attendance Absence
attendance attendance attendance personally
time
for
successive
twice
Wang Shigang 6 1 4 1 0 No 0
Wang Zhuquan 6 2 4 0 0 No 0
Luo Fei 6 2 4 0 0 No 0
Liu Yan 6 2 4 0 0 No 0
Guo Guoqing 0 0 0 0 0 No 0
80
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
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
□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 Auditing Committee: During the report period, the Company’s auditing Committee
conducted an ex-ante, in-process, and post-event review to related annual report audit work
and made relevant arrangements. The auditing Committee believed that 2017 annual financial
statements issued by the Company met the requirement of Accounting Standards for Business
Enterprises and truly and fairly reflected the balance condition up to December 31st, 2017 as
well as 2017 annual business performance and cash flow. There were no unsolved major
divergences in accounting and auditing or major risk issues affecting the Company's
management. The Company operated steadily and had the ability of continuous operations.
Proposals including 2017 Annual Self-assessment Report on Internal Control, Draft proposal
on 2017 Annual Profit Distribution, Appointing Certified Public Accountants Firm, Change
in Accounting Policy，2017 Annual Report, 2018 Semi-annual Report and 2018 Annual Audit
Plan were deliberated. Auditing committee passed above-mentioned proposals and submitted
the related proposals to board of directors for deliberation.
② Emolument Committee: Emolument Committee is responsible for assessment of the
economy responsibilities of the directors and the senior executives who receive salaries from
the Company and examination of the salary policy and scheme designed for the Company’s
directors and senior executives. During the report period, the Company held Emolument
Committee meeting once. Proposal on 2017 Annual Performance Assessment Results of the
Company’s Senior Executives was deliberated and passed by the meeting, who thought that
this document was in compliance with Performance Assessment Methods for Company’s
Senior Executive from 2014 to 2017. Emolument Committee agreed to submit the related
proposals to Board of Directors for deliberation.
During the report period, the Board of Directors’ Emolument Committee also examined the
2017 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
81
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
senior managers received from the Company is strictly assessed and delivered based on the
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
2019.04.20
internal control self-assessment report
Disclosure index for full text of the 2017 Annual Self Assessment Report on Internal Control and 2018
internal control self-assessment report Annual Self Assessment Report on Internal Control disclosed on
Securities Times, China Securities Journal and www.cninfo.com.cn
by the Company on April 23rd, 2018 and April 20th, 2019.
Percentage of total unit assets included
in scope of the assessment accounting
88.34%
for the Company’s total assets of
consolidated financial statements
Percentage of unit operating income 90.38%
82
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
included in scope of the assessment
accounting for the Company’s operating
income of consolidated financial
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
83
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
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
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 December 31st, 2018.
Disclosure of the internal control audit
Disclosure
report
84
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Disclosure date for the full text of the
April 20th, 2019
internal control audit report
2018 Annual Self Assessment Report on Internal Control
Disclosure index for the full text of the
disclosed on Securities Times,China Securities Journal
internal control audit report
and www.cninfo.com.cn by the Company.
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.
No.
85
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
XI. Financial Report
1. Audit Report
Type of audit opinion Standard unqualified audit opinion
Date signed on audit report April 18th , 2019
Deloitte Hua Yong certified public accountants co.,
Audit agency name
Ltd. (special general partnership)
Audit report No. De Shi Bao (Shen) Zi (19) No. P02452
Certified public accountant's name Jie Yanfeng, Li Yangang
86
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
AUDITOR'S REPORT
De Shi Bao (Shen) Zi (19) No. P02452
(Page 1 of 5)
TO THE SHAREHOLDERS OF
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
1. Opinion
We have audited the financial statements of Yantai Changyu Pioneer Wine Company Limited
("Yantai Changyu Company"), which comprise the consolidated and Company's balance sheets as at
31 December 2018, 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
owners' equity for the year then ended, and the notes to the financial statements.
In our opinion, the accompanying financial statements of Yantai Changyu Pioneer Wine Company
Limited is prepared and present fairly, in all material respects, the consolidated and Company's
financial position as of 31 December 2018, and the consolidated and the Company's results of
operations and cash flows for the year then ended in accordance with Accounting Standards for
Business Enterprises.
2. Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing. Our responsibilities under
those standards are further described in the Auditor's Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of Yantai Changyu Company in accordance
with the code of ethics for Chinese Certified Public Accountants, and we have fulfilled our other
ethical responsibilities in accordance with the Code. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
3. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current year. These matters were addressed in the context
of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. We determine the followings are key audit matters in
need of communication in our report.
87
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
AUDITORS’ REPORT - continued
De Shi Bao (Shen) Zi (19) No. P02452
(Page 2 of 5)
3. Key Audit Matters - continued
Impairment assessment of certain long-term assets
1. Item description
As stated in Note IV “Impairment of long-term assets”, the Production of Yantai Changyu
Pioneer Wine Company Limited Research and Development Co., Ltd. ("R&D Centre"),
subsidiary of the Company as well as a new main production base of the Company, accounts for
more than 60% of the Group’s production in 2018. As at 31 December 2018, the book values of
long-term assets including fixed assets, construction in progress and intangible of "R&D Centre
amounted to RMB 3.5 billion, accounting for 26.6% of the total assets in the consolidated
financial statements, which exerts significant influence on the consolidated financial statements.
As there is little space for the development of the domestic wine market, the management of the
Company faces great operating pressures with certain risks of impairment of related long-term
assets. The management performs the impairment test by determining if the recoverable amount is
less than the book value of long-term assets and determines the recoverable amount based on the
present value of expected future cash flows. In the estimate of the present value of future cash
flows, the management is required to make significant judgements in the assumptions including
the sales growth rate, future selling price, production cost, operating expenses and discount rate.
For the above reasons, we identified the valuation of the impairment of long-term assets as a key
audit matter.
2. How our audit addressed the key audit matter
Our procedures in relation to the key audit matter mainly included:
(1) Test and evaluate the effectiveness of the design and implementation of the internal
control related to the valuation of the impairment of long-term assets;
(2) Review and evaluate the reasonableness of key assumptions and judgements used in the
estimate of the present value of expected future cash flows in the impairment test based on
the historical records of the Company and our understanding of the business and industry
in which the Company operates.
(3) Using our internal valuation specialists, reviewing the appropriateness of the future cash
flows discount model prepared by the management and the rationality of the discount rate
used;
(4) Performing the recalculation procedure, checking the accuracy of calculations in the
discount future cash flows model.
88
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
AUDITORS’ REPORT - continued
De Shi Bao (Shen) Zi (19) No. P02452
(Page 3 of 5)
4. Other Information
The management of Yantai Changyu Pioneer Wine Company Limited is responsible for other
information. The other information comprises the information included in the Yantai Changyu 2018
annual report, but does not include the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
5. Responsibilities of the Management and Those Charged with Governance for the Financial
Statements
The management of Yantai Changyu Pioneer Wine Company Limited is responsible for the
preparation and fair presentation of the financial statements in accordance with Accounting Standards
for Business Enterprises, and designing, implementing and maintaining internal control that is
necessary to enable the financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the management is responsible for assessing Yantai Changyu
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the management either intends to
liquidate Yantai Changyu Company or to cease operations, or have no realistic alternative but to do
so.
Those charged with governance are responsible for overseeing Yantai Changyu Company’s financial
reporting process.
6. Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that
includes our opinion solely to you. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with China Standards on Auditing will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
89
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
AUDITORS’ REPORT - continued
De Shi Bao (Shen) Zi (19) No. P02452
(Page 4 of 5)
6. Auditor's Responsibilities for the Audit of the Financial Statements - continued
As part of an audit in accordance with China Standards on Auditing, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
(2) Obtain an understanding of internal control relevant to the audit 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.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the management.
(4) Conclude on the appropriateness of the management's use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on Yantai Changyu Company’s
ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor's report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor's report. However, future
events or conditions may cause the Yantai Changyu Company to cease to continue as a going
concern.
(5) Evaluate the overall presentation, structure and content of the financial statements (including
the disclosures), and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Yantai Changyu Company to express an opinion on the
financial statements. We are responsible for the direction, supervision and performance of the
group audit. We remain solely responsible for our audit opinion.
90
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
AUDITORS’ REPORT - continued
De Shi Bao (Shen) Zi (19) No. P02452
(Page 5 of 5)
6. Auditor's Responsibilities for the Audit of the Financial Statements - continued
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the financial statements of the current year and are therefore
the key audit matters. We describe these matters in our auditor's report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.
Deloitte Touche Tohmatsu CPA LLP Chinese Certified Public Accountant: Xie Yanfeng
Shanghai, China (Engagement partner)
Chinese Certified Public Accountant: Li Yangang
18 April 2019
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
CONSOLIDATED BALANCE SHEETS
YEAR ENDED 31 DECEMBER 2018
ASSETS Notes 31/12/2018 31/12/2017
RMB RMB
CURRENT ASSETS
Cash and bank VI-1 1,475,700,477 1,402,522,509
Notes and accounts receivable VI-2 530,821,071 508,593,173
Including: Notes receivable VI-2.2 288,667,988 244,796,818
Accounts receivable VI-2.3 242,153,083 263,796,355
Prepayments VI-3 4,219,949 2,417,931
Other receivables VI-4 22,636,086 18,978,422
Including: Interest receivable VI-4.2 1,332,681 240,968
Inventories VI-5 2,724,591,457 2,473,614,046
Non-current assets held for sale - 2,000,197
Other current assets VI-6 258,676,396
_____________ 230,822,759
_____________
Total current assets 5,016,645,436
_____________ 4,638,949,037
_____________
NON-CURRENT ASSETS
Available-for-sale financial assets VI-7 467,251 467,251
Investment properties VI-8 31,572,489 18,467,989
Fixed assets VI-9 5,749,731,667 5,329,083,969
Construction in progress VI-10 759,296,591 1,026,141,569
Bearer biological assets VI-11 209,266,373 201,929,888
Intangible assets VI-12 655,473,459 655,448,897
Goodwill VI-13 165,199,111 128,135,981
Long-term prepaid expenses VI-14 244,640,416 230,009,231
Deferred tax assets VI-15 285,436,259
_____________ 308,121,396
_____________
Total non-current assets 8,101,083,616
_____________ 7,897,806,171
_____________
Total assets 13,117,729,052
_____________ 12,536,755,208
_____________
92
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
CONSOLIDATED BALANCE SHEETS
YEAR ENDED 31 DECEMBER 2018 - continued
LIABILITIES AND EQUITY Notes 31/12/2018 31/12/2017
RMB RMB
CURRENT LIABILITIES
Short-term borrowings VI-16 688,002,410 714,434,286
Notes and accounts payable VI-17 713,572,881 666,442,879
Receipts in advance VI-18 226,075,244 350,894,156
Employee benefits payable VI-19 212,304,217 210,824,234
Taxes payable VI-20 128,912,790 145,094,156
Other payables VI-21 608,479,890 603,735,569
Including: Interest payable 712,826 771,250
Other payables VI-21.2 607,767,064 602,964,319
Deferred income VI-22 15,860,254 16,878,199
Non-current liabilities due within one year VI-23 152,940,788
_____________ 110,954,827
_____________
Total current liabilities 2,746,148,474
_____________ 2,819,258,306
_____________
NON-CURRENT LIABILITIES
Long-term borrowings VI-24 156,480,662 156,125,854
Long-term payables VI-25 225,000,000 259,000,000
Deferred income VI-22 70,367,039 92,918,855
Deferred tax liabilities VI-15 22,010,647 24,264,203
Other non-current liabilities VI-26 7,234,853
_____________ 7,209,312
_____________
Total non-current liabilities 481,093,201
_____________ 539,518,224
_____________
Total liabilities 3,227,241,675
_____________ 3,358,776,530
_____________
93
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
CONSOLIDATED BALANCE SHEETS
YEAR ENDED 31 DECEMBER 2018 - continued
LIABILITIES AND EQUITY Notes 31/12/2018 31/12/2017
RMB RMB
EQUITY
Share capital VI-27 685,464,000 685,464,000
Capital reserve VI-28 565,955,441 565,955,441
Other comprehensive income VI-29 2,965,377 3,109,240
Surplus reserve VI-30 342,732,000 342,732,000
Retained earnings VI-31 8,008,982,547
_____________ 7,309,081,618
_____________
Equity attributable to shareholders
of the Company 9,606,099,365 8,906,342,299
Non-controlling interests 284,388,012
_____________ 271,636,379
_____________
Total equity 9,890,487,377
_____________ 9,177,978,678
_____________
Total liabilities and equity 13,117,729,052
_____________ 12,536,755,208
_____________
The accompanying notes form an integral part of these financial statements.
The financial statements on pages 6 to 107 were signed by the following:
Legal Representative Person in Charge of the Chief Accountant
Accounting Body
94
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
BALANCE SHEET OF THE COMPANY
YEAR ENDED 31 DECEMBER 2018
ASSETS Notes 31/12/2018 31/12/2017
RMB RMB
CURRENT ASSETS
Cash and bank XIV-1 624,588,809 559,174,466
Notes and accounts receivable XIV-2 41,333,227 49,450,536
Including: Notes receivable XIV-2.2 39,885,254 41,645,203
Accounts receivable XIV-2.3 1,447,973 7,805,333
Prepayments 227 99,673
Other receivables XIV-3 1,025,643,356 999,846,643
Including: Interest receivable 254,088 76,646
Dividend receivables XIV-3.2 500,000,000 407,495,922
Inventories XIV- 4 385,154,740 348,042,053
Non-current assets held for sale - 2,000,197
Other current assets 24,704,844
_____________ 29,706,058
_____________
Total current assets 2,101,425,203
_____________ 1,988,319,626
_____________
NON-CURRENT ASSETS
Long-term equity investments XIV- 5 7,420,803,069 4,511,202,204
Investment properties VI-8 31,572,489 18,467,989
Fixed assets XIV- 6 265,311,274 288,150,901
Construction in progress XIV- 7 6,311,701 6,756,349
Construction in progress XIV- 8 125,002,793 119,572,539
Intangible assets XIV- 9 67,244,066 69,623,219
Deferred tax assets XIV- 10 24,194,967 28,787,907
Other non-current assets XIV- 11 972,700,000
_____________ 3,718,674,166
_____________
Total non-current assets 8,913,140,359
_____________ 8,761,235,274
_____________
Total assets 11,014,565,562
_____________ 10,749,554,900
_____________
95
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
BALANCE SHEET OF THE COMPANY
YEAR ENDED 31 DECEMBER 2018 - continued
LIABILITIES AND EQUITY Notes 31/12/2018 31/12/2017
RMB RMB
CURRENT LIABILITIES
Short-term borrowings XIV- 12 150,000,000 600,000,000
Notes and accounts payable XIV- 13 132,704,304 97,833,124
Advances from customers - 6,000,000
Employee benefits payable XIV- 14 72,345,179 70,108,076
Taxes payable XIV- 15 13,111,431 14,569,690
Other payables XIV- 16 607,974,519 545,365,672
Including: Interest payable 181,250 652,500
Other payables XIV- 16.2 607,793,269 544,713,172
Deferred income 3,433,054
_____________ 3,953,054
_____________
Total current liabilities 979,568,487
_____________ 1,337,829,616
_____________
NON-CURRENT LIABILITIES
Deferred income 8,910,918 12,628,573
Other non-current liabilities XIV- 14 2,710,575
_____________ 2,577,702
_____________
Total non-current liabilities 11,621,493
_____________ 15,206,275
_____________
Total liability 991,189,980
_____________ 1,353,035,891
_____________
EQUITY
Share capital VI-27 685,464,000 685,464,000
Capital reserve XIV- 17 557,222,454 557,222,454
Surplus reserve VI-30 342,732,000 342,732,000
Retained earnings 8,437,957,128
_____________ 7,811,100,555
_____________
Total equity 10,023,375,582
_____________ 9,396,519,009
_____________
Total liabilities and equity 11,014,565,562
_____________ 10,749,554,900
_____________
96
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
CONSOLIDATED INCOME STATEMENT
YEAR ENDED 31 DECEMBER 2018
Notes 2018 2017
RMB RMB
I. Revenue VI-32 5,142,244,740 4,932,545,229
Less: Cost of sales VI-32 1,901,611,507 1,671,592,279
Taxes and surcharges VI-33 276,491,674 310,252,023
Selling expenses VI-34 1,274,599,146 1,272,522,443
Administrative expenses VI-35 343,580,651 336,461,133
Research and development expenses 4,784,118 4,320,825
Financial expenses VI-36 35,945,302 18,590,259
Including: Interest income 12,086,007 9,168,772
Interest expenses 46,354,902 26,095,487
(Reversal of)Impairment loss of assets VI-37 (912,166) 8,293,553
Add: Income (loss) from disposal of assets 11,368,355 (222,586)
Other income VI-38 87,281,434
____________ 46,038,384
____________
II. Operating profit 1,404,794,297 1,356,328,512
Add: Non-operating income VI-39 7,353,309 17,230,727
Less: Non-operating expenses VI-40 3,535,908
____________ 1,631,476
____________
III. Profit before tax 1,408,611,698 1,371,927,763
Less: Income tax VI-41 367,127,522
____________ 338,134,245
____________
IV. Profit for the year 1,041,484,176
____________ 1,033,793,518
____________
(I) Categorized by the nature of continuing operation
1. Net profit from continuing operations 1,041,484,176
____________ 1,033,793,518
____________
(II) Categorized by ownership:
1. Profit or loss attributable to non-controlling interests (1,148,753) 2,098,462
2. Net profit attributable to owners of the Company 1,042,632,929
____________ 1,031,695,056
____________
V. Other comprehensive income (post-tax) (376,524)
____________ 9,863,872
____________
Other comprehensive income attributable
to shareholders of the Company
Other comprehensive income
to be reclassified to profit and loss
Foreign currency statement translation difference (143,863) 8,368,254
Other comprehensive income attributable
to non-controlling interest (232,661)
____________ 1,495,618
____________
VI. Total comprehensive income 1,041,107,652
____________ 1,043,657,390
____________
Attribute to shareholders of the Company 1,042,489,066 1,040,063,310
Attribute to non-controlling interest of the Company (1,381,414)
____________ 3,594,080
____________
VII. Earnings per share
(I) Basic earnings per share VI-42 1.52
____________ 1.51
____________
(II) Diluted earnings per share VI-42 N/A
____________ N/A
____________
97
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
INCOME STATEMENT OF THE COMPANY
YEAR ENDED 31 DECEMBER 2018
Notes 2018 2017
RMB RMB
I. Revenue XIV-18 876,447,070 1,311,256,854
Less: Cost of sales XIV-18 774,487,031 1,165,953,408
Taxes and surcharges XIV-19 38,346,761 76,570,225
Administrative expenses XIV-20 90,505,208 79,119,135
Research and development expenses 887,355 1,573,909
Financial expenses XIV-21 (20,292,737) 637,568
Including: Interest income 41,821,372 18,602,199
Interest expenses 16,075,353 17,414,181
Add:Investment income XIV-22 964,128,659 798,877,905
Income (loss) from disposal of assets 12,411,962 (29,625)
Other income 4,237,655
____________ 5,219,126
____________
II. Operating Profit 973,291,728 791,470,015
Add: Non-operating income 1,483,478 686,646
Less: Non-operating expenses 593,694
____________ 335,237
____________
III. Profit before tax 974,181,512 791,821,424
Less: Income tax 4,592,939
____________ (1,776,586)
____________
IV. Profit for the year 969,588,573
____________ 793,598,010
____________
Net profit from continuing operations 969,588,573
____________ 793,598,010
____________
V. Total comprehensive income 969,588,573
____________ 793,598,010
____________
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 DECEMBER 2018
Notes 2018 2017
RMB RMB
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from the sale of goods
and the rendering of services 4,950,603,207 4,827,152,526
Receipts of tax refunds 57,056,690 53,196,910
Other cash receipts relating to operating activities VI-43(1) 72,703,872
___________ 85,236,905
___________
Sub-total of cash inflows from operating activities 5,080,363,769
___________ 4,965,586,341
___________
Cash payments for goods purchased and services received 1,383,945,233 1,143,840,915
Cash payments to and on behalf of employees 544,742,974 512,777,815
Payment of various types of taxes 1,111,980,499 1,260,813,596
Other cash payments relating to operating activities VI-43(2) 1,063,716,317
___________ 1,074,910,988
___________
Sub-total of cash outflows from operating activities 4,104,385,023
___________ 3,992,343,314
___________
Net cash flows from operating activities VI-44(1) 975,978,746
___________ 973,243,027
___________
CASH FLOWS FROM INVESTING ACTIVITIES
Cash receipts from disposals and recovery of investments 400,000,000 205,000,000
Proceeds from return on investments 3,445,895 4,084,350
Net cash receipts from disposals of fixed assets,
intangible assets and other long-term assets 19,967,431
___________ 7,594,005
___________
Sub-total of cash inflows from investing activities 423,413,326
___________ 216,678,355
___________
Cash paid for acquisition of properties, plants and equipment,
intangible assets and other long-term assets 347,384,820 435,960,357
Cash payments to acquire investments 478,042,400 297,129,216
Cash paid for the purchase subsidiaries and other equity VI-43(3) 105,834,655
___________ 303,796,543
___________
Sub-total of cash outflows from investing activities 931,261,875
___________ 1,036,886,116
___________
Net cash flows from investing activities (507,848,549)
___________ (820,207,761)
___________
CASH FLOWS FROM FINANCING ACTIVITIES
Cash receipts from capital contributions 2,050,000 48,396,726
Including: cash receipts from capital contributions
from minority owners of subsidiaries 2,050,000 48,396,726
Cash receipts from borrowings 1,049,815,411 963,564,600
Other cash received from financing activities VI-43(4) 62,468,259
___________ 52,930,804
___________
Sub-total of cash inflows from financing activities 1,114,333,670
___________ 1,064,892,130
___________
Cash paid for borrowings 1,103,189,409 876,502,273
Cash paid for dividends, profits and interests 397,351,813 369,791,284
Cash paid from other financing activities VI-43(5) 46,100,000
___________ 61,700,000
___________
Sub-total of cash outflows from financing activities 1,546,641,222
___________ 1,307,993,557
___________
Net cash flows from financing activities (432,307,552)
___________ (243,101,427)
___________
Effect of foreign exchange rate changes
on cash and cash equivalents (9,851,585) 14,013,131
NET INCREASE (DECREASE) OF CASH
AND CASH EQUIVALENTS 25,971,060 (76,053,030)
Add: cash and cash equivalents at beginning of the year VI-44(3) 1,180,889,274
___________ 1,256,942,304
___________
CASH AND CASH EQUIVALENTS AT END OF THE YEAR VI-44(3) 1,206,860,334
___________ 1,180,889,274
___________
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
CASH FLOW STATEMENT OF THE COMPANY
YEAR ENDED 31 DECEMBER 2018
Notes 2018 2017
RMB RMB
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from the sale of goods
and the rendering of services 817,341,175 984,103,489
Other cash receipts relating to operating activities 177,786,322
___________ 431,983,092
___________
Sub-total of cash inflows from operating activities 995,127,497
___________ 1,416,086,581
___________
Cash payments for goods purchased and services received 608,241,452 398,827,772
Cash payments to and on behalf of employees 107,256,441 89,894,049
Payment of various types of taxes 62,066,449 207,917,864
Other cash payments relating to operating activities 74,357,324
___________ 121,377,127
___________
Sub-total of cash outflows from operating activities 851,921,666
___________ 818,016,812
___________
Net cash flows from operating activities XIV-23(1) 143,205,831
___________ 598,069,769
___________
CASH FLOWS FROM INVESTING ACTIVITIES
Cash receipts from disposals and recovery of investments 370,000,000 103,000,000
Proceeds from return on investments 874,520,633 827,218,467
Net cash receipts from disposals of fixed assets,
intangible assets and other long-term assets 11,212,195
___________ 26,760,929
___________
Sub-total of cash inflows from investing activities 1,255,732,828
___________ 956,979,396
___________
Cash paid for acquisition of properties, plants and equipment,
intangible assets and other long-term assets 28,842,911 22,527,073
Cash payments to acquire investments 410,000,000 105,000,000
Cash paid for the purchase subsidiaries and other equity 107,194,420
___________ 881,056,220
___________
Sub-total of cash outflows from investing activities 546,037,331
___________ 1,008,583,293
___________
Net cash flows from investing activities 709,695,497
___________ (51,603,897)
___________
CASH FLOWS FROM FINANCING ACTIVITIES
Cash receipts from borrowings 200,000,000
___________ 600,000,000
___________
Sub-total of cash inflows from financing activities 200,000,000
___________ 600,000,000
___________
Cash paid for borrowings 650,000,000 530,339,600
Cash paid for dividends, profits and interests 364,085,312
___________ 360,560,604
___________
Sub-total of cash outflows from financing activities 1,014,085,312
___________ 890,900,204
___________
Net cash flows from financing activities (814,085,312)
___________ (290,900,204)
___________
NET INCREASE OF CASH
AND CASH EQUIVALENTS 38,816,016 255,565,668
Add: cash and cash equivalents at beginning of the year XIV-24 493,568,866
___________ 238,003,198
___________
CASH AND CASH EQUIVALENTS AT END
OF THE YEAR XIV-24 532,384,882
___________ 493,568,866
___________
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
CONSOLIDATED SATATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2018
2018
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. 1/1/2018 _______
685,464,000 _______
565,955,441 _______
3,109,240 ________
342,732,000 ________
7,309,081,618 _______
271,636,379 ________
9,177,978,678
II. Changes for the year
(I) Total comprehensive income - - (143,863) - 1,042,632,929 (1,381,414) 1,041,107,652
(II) Owners’ contributions and
reduction in capital
Acquisition of
subsidiaries (VIII-2) - - - - - 17,532,823 17,532,823
(III) Profit distribution
Distributions to
shareholders (VI-31, VIII-2 ) _______
- _______
- _______
- ________
- ________
(342,732,000) _______
(3,399,776) ________
(346,131,776)
III. 31/12/2018
_______
685,464,000
_______
565,955,441
_______
2,965,377
________
342,732,000
________
8,008,982,547
_______
284,388,012
________
9,890,487,377
2017
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. 1/1/2017 _______
685,464,000 _______
565,955,441 _______
(5,259,014) _______
342,732,000 ________
6,620,118,562 _______
190,473,697 ________
8,399,484,686
II. Changes for the year
(I) Total comprehensive income - - 8,368,254 - 1,031,695,056 3,594,080 1,043,657,390
(II) Owners’ contributions and
reduction in capital
Non-controlling interests' capital
contribution - - - - - 78,236,726 78,236,726
(III) Profit distribution
Distributions to
shareholders (VI-31) _______
- _______
- _______
- _______
- ________
(342,732,000) _______
(668,124) ________
(343,400,124)
III. 31/12/2017
_______
685,464,000
_______
565,955,441
_______
3,109,240
_______
342,732,000
________
7,309,081,618
_______
271,636,379
________
9,177,978,678
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
STATEMENT OF CHANGES IN EQUITY OF THE COMPANY
YEAR ENDED 31 DECEMBER 2018
2018
Issued capital Capital reserve Surplus reserve Retained earnings Total
RMB RMB RMB RMB RMB
I. 1/1/2018 685,464,000
________ 557,222,454
________ 342,732,000
________ 7,811,100,555 9,396,519,009
_________ __________
II. Changes for the year
(I) Total comprehensive income - - - 969,588,573 969,588,573
(II) Profit distribution
-
Distributions to shareholders (VI-31)________ -
________ -
________ (342,732,000)
_________ (342,732,000)
__________
III. 31/12/2018 685,464,000
________ 557,222,454
________ 342,732,000
________ 8,437,957,128
_________ 10,023,375,582
__________
_________
2017
Issued capital Capital reserve Surplus reserve Retained earnings Total
RMB RMB RMB RMB RMB
I. 1/1/2017 685,464,000
________ 557,222,454
________ 342,732,000
________ 7,360,234,545
_________ 8,945,652,999
_________
II. Changes for the year
(I) Total comprehensive income - - - 793,598,010 793,598,010
(II) Profit distribution
-
Distributions to shareholders (VI-31)________ -
________ -
________ (342,732,000)
_________ (342,732,000)
_________
III. 31/12/2017 685,464,000
________ 557,222,454
________ 342,732,000
________ 7,811,100,555
_________ 9,396,519,009
_________
_________
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2018
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 2018 the total shares issued by the Company amounts to 685,464,000 shares.
Please refer to Note VI-27 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 18 April 2019.
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 Note VIII "Equity in other entities" in detail.
For detail of changes in consolidation scope of the year, please refer to Note 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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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
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 2018, 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 2018, financial performance and cash flow in 2018
of the Company and the Group.
2. Accounting year
The accounting year of the Group is from 1 January to 31 December of each calendar year.
3. Business cycle
Business cycle refers to the period from purchasing assets to be processed to receiving cash or
cash equivalents by the Company. The business cycle of the Company is 12 months.
4. Reporting currency
Renminbi ("RMB") is the currency of the primary economic environment in which the Company
and its domestic subsidiaries operate. Therefore, the Company and its domestic subsidiaries
choose RMB as their functional currency. Overseas subsidiaries of the Company adopt Currency
Euro, Chilean Peso and Australian Dollar as their functional currencies on the basis of the primary
economic environment in which they operate. The Company adopts RMB to prepare its financial
statements.
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
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.
Where 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 recognized as goodwill, which is
measured at cost on initial recognition. Where the cost of combination is less than the acquirer’s
interest in the fair value of the acquiree’s identifiable net assets, the acquirer firstly reassesses the
measurement of the fair values of the acquiree’s identifiable assets, liabilities and contingent
liabilities and measurement of the cost of combination. If after that reassessment, the cost of
combination is still less than the acquirer’s interest in the fair value of the acquiree’s identifiable
net assets, the acquirer recognizes the remaining difference immediately in profit or loss for the
current period.
Goodwill arising on a business combination is measured at cost less accumulated impairment
losses, and is presented separately in the consolidated financial statements.
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.
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 the subsidiaries through business combination not involving enterprises under common
control, the results of operations and cash flows from the acquisition day were properly included
in the consolidated income statements and consolidated cash flow statements.
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6. Preparation of consolidated financial statements - continued
6.1 Preparation of consolidated financial statements - continued
The significant accounting policies and accounting periods adopted by the subsidiaries are
determined based on the uniform accounting policies and accounting periods set out by the
Company.
All significant intra-group balances and transactions are eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the Company is treated as
non-controlling interests and presented as "non-controlling interests" in the consolidated balance
sheet within shareholders' equity. The portion of net profits or losses of subsidiaries for the period
attributable to non-controlling interests is presented as "non-controlling interests" in the
consolidated income statement below the net profit line item.
When the amount of loss for the period attributable to the non-controlling shareholders of a
subsidiary exceeds the non-controlling shareholders' portion of the opening balance of owners'
equity of the subsidiary, the excess amount are still allocated against non-controlling interests.
7. Cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash
equivalents are the Group's short-term, highly liquid investments that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value.
8. Translation of transactions and financial statements denominated in foreign currencies
8.1 Transactions denominated in foreign currencies
A foreign currency transaction is recorded, on initial recognition, by applying the spot exchange
rate on the date of the transaction.
At the balance sheet date, foreign currency monetary items are translated into RMB using the spot
exchange rates at the balance sheet date. Exchange differences arising from the differences
between the spot exchange rates prevailing at the balance sheet date and those on initial
recognition or at the previous balance sheet date are recognised in profit or loss for the period,
except that (1) exchange differences related to a specific-purpose borrowing denominated in
foreign currency that qualify for capitalisation are capitalised as part of the cost of the qualifying
asset during the capitalisation period; (2) exchange differences related to hedging instruments for
the purpose of hedging against foreign currency risks are accounted for using hedge accounting;
(3) exchange differences arising from available-for-sale non-monetary items denominated in
foreign currencies and changes in the carrying amounts of available-for-sale monetary items are
recognised as other comprehensive income and included in capital reserve.
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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
8.2 Translation of financial statements denominated in foreign currencies - continued
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.
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.
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9. Financial instruments - continued
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. The Group's financial
assets are bought in a conventional way, and recognized and terminated according to the
accounting transaction date. 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 and accounts receivable and other receivables, etc.
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.
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;
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9. Financial instruments - continued
9.3 Impairment of financial assets - continued
(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; namely, at the balance sheet date, if the initial cost of an equity
instrument investment is more than 50%(inclusive) in excess of the fair value of such
investment, or the period in which the initial cost of an equity instrument investment
exceeds the fair value of such investment is over 12 months(inclusive);
(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.
For a financial asset that is individually, the Group assesses the asset individually for impairment.
- Impairment of available for sale assets measured at cost
If an impairment loss has been incurred on an investment in unquoted equity instrument (without
a quoted price in an active market) whose fair value cannot be reliably measured, or on a
derivative financial asset that is linked to and must be settled by delivery of such an unquoted
equity instrument, the carrying amount of the financial asset is reduced to the present value of
estimated future cash flows discounted at the current market rate of return for a similar financial
asset. The amount of reduction is recognised as an impairment loss in profit or loss. The
impairment loss on such financial asset is not reversed once it is recognised.
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9. Financial instruments - continued
9.4 Transfer of financial assets
The Group derecognises a financial asset if one of the following conditions is satisfied: (1) the
contractual rights to the cash flows from the financial asset expire; or (2) the financial asset has
been transferred and substantially all the risks and rewards of ownership of the financial asset is
transferred to the transferee; or (3) although the financial asset has been transferred, the Group
neither transfers nor retains substantially all the risks and rewards of ownership of the financial
asset but has not retained control of the financial asset.
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, the
difference between (1) the carrying amount of the financial asset transferred; and (2) the sum of
the consideration received from the transfer and any cumulative gain or loss that has been
recognised in other comprehensive income, is recognised in profit or loss.
9.5 Classification, recognition and measurement of financial liabilities
Debt and equity instruments issued by the Group are classified into financial liabilities or equity
on the basis of the substance of the contractual arrangements and definitions of financial liability
and equity instrument.
On initial recognition, financial liabilities are classified into financial liabilities at fair value
through profit or loss and other financial liabilities. The financial liabilities in group are other
financial liabilities, including short-term borrowings, notes payable, account payables, other
payables, non-current liabilities due within one year and long-term payables etc.
9.5.1 Other financial liabilities
Other financial liabilities are subsequently measured at amortised cost using the effective interest
method, with gain or loss arising from derecognition or amortisation recognised in profit or loss.
9.6 Derecognition of financial liabilities
The Group derecognises a financial liability (or part of it) only when the underlying present
obligation (or part of it) is discharged.
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.
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9. Financial instruments - continued
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
The Group believes that the individual receivables are all significant, and the corresponding
receivables are individually tested for impairment, and individual recognition method is used to
confirm bad debt provision.
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.
Agricultural products harvested are reported in accordance with the CAS 1 Inventories.
11.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the weighted average method.
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 based on categories of inventories.
After the provision for decline in value of inventories is made, if the circumstances that
previously caused inventories to be written down below cost no longer exist so that the net
realisable value of inventories is higher than their cost, the original provision for decline in value
is reversed and the reversal is included in profit or loss for the period.
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11. Inventories - continued
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
Non-current assets and disposal groups are classified as held for sale category when the Group
recovers the book value through a sale (including an exchange of nonmonetary assets that has
commercial substance) rather than continuing use.
Non-current assets or disposal groups classified as held for sale are required to satisfy the
following conditions: (1) the asset or disposal group is available for immediate sale in its present
condition subject only to terms that are usual and customary for sales of such asset or disposal
group; (2) the sale is highly probable, i.e. the Group has made a resolution about selling plan and
obtained a confirmed purchase commitment and the sale is expected to be completed within one
year.
The Group measures the no-current assets or disposal groups classified as held for sale at the
lower of their carrying amount and fair value less costs to sell. Where the carrying amount is
higher than the net amount of fair value less costs to sell, carrying amount should be reduced to
the net amount of fair value less costs to sell, and such reduction is recognized in impairment loss
of assets and included in profit or loss for the period. Meanwhile, provision for impairment of
held-for-sale assets are made. When there is increase in the net amount of fair value of
non-current assets held for sale less costs to sell at the balance sheet date, the original deduction
should be reversed in impairment loss of assets recognized after the classification of held-for-sale
category, and the reverse amount is include in profit or loss for the period.
Non-current assets held for sale in non-current assets are not subject to depreciation or
amortization.
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
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investing enterprises or other parties that are currently exercisable or convertible shall be
considered.
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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.
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. Investment properties
Investment property is property held to earn rentals or for capital appreciation or both.
An investment property is measured initially at cost. Subsequent expenditures incurred for such
investment property are included in the cost of the investment property if it is probable that
economic benefits associated with an investment property will flow to the Group and the
subsequent expenditures can be measured reliably. Other subsequent expenditures are recognized
in profit or loss in the period in which they are incurred.
The Group uses the cost model for subsequent measurement of investment property, and adopts a
depreciation or amortization policy for the investment property which is consistent with that for
buildings or land use rights.
When an investment property is sold, transferred, retired or damaged, the Group recognizes the
amount of any proceeds on disposal net of the carrying amount and related taxes in profit or loss
for the period.
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15. Fixed assets
15.1 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.
15.2 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 5-30years 0-5% 3.2%-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.
15.3 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 are 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.
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16. 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.
17. 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. 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.
18. Biological assets
The Group's biological assets are bearer biological assets.
18.1 Bearer biological assets
Bearer biological assets are biological assets, for example, held for the production of agricultural
produce, provision of services or rental, Bearer biological assets in the Group are vines. A bearer
biological asset is initially measured at cost. The cost of a bearer biological asset self-grown or
self-bred comprises those costs necessarily incurred and directly attributable to the asset before
the asset becomes available for its intended production and operating purposes, and any
borrowing cost meeting the capitalisation criteria.
The Group charge deprecation for productive biological assets which satisfy expected production,
and record the deprecation in balance sheet and income statement. The Group uses straight line
method to calculate the deprecation, and details as follows:
Estimated Estimated Annual
Category useful life residual rate depreciation rate
Vines 20 years - 5.0%
The Group evaluates the useful life and expected net salvage value by considering the normal
producing life of the bearer biological assets.
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18. Biological assets - continued
18.1 Bearer biological assets - continued
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.
19. Intangible assets
Intangible assets include land use rights, software and trademark, 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.
Intangible assets with indefinite useful lives are not amortized. 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%
Except for the above intangible assets with finite useful lives, the Group had also intangible assets
with infinite useful lives including the land use right and trademark. Land use rights with infinite
useful lives are permanent land use rights with permanent ownership held by the Group under the
relevant Chile and Australian laws arising from the Group’s acquisition of Via Indómita, S.A.,
Via Dos Andes, S.A., and Bodegas Santa Alicia SPA. (collectively referred to as the "Chile
Indomita Wine Group"), and the acquisition of Kilikanoon Estate Pty Ltd.( hereinafter referred to
as the "Australia Kilikanoon Estate"), therefore there was no amortization. The right to use
trademark refers to the trademark held by the Group arising from the acquisition of the Chile
Indomita Wine Group and the Australia Kilikanoon Estate with infinite useful lives. The valuation
of trademark was based on the trends in the market and competitive environment, product cycle,
and managing long-term development strategy. Those basis indicated the trademark will provide
net cash flows to the Group within an uncertain period. The useful life is indefinite as it was hard
to predict the period that the trademark would bring economic benefits to the Group.
For an intangible asset with a definite useful life, the Group reviews the useful life and
amortisation method at the end of the period, and makes adjustments when necessary.
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20. Impairment of long-term assets
The Group and the Company review the impairment status of long-term equity investments, fixed
assets, investment properties, construction in progress, bearer biological asset and intangible
assets with finite useful life at the end of each year. If there is any indication for impairment, the
Group estimates the recoverable amount of the asset.Intangible assets with indefinite useful life
and goodwill are tested for impairment annually, irrespective of whether there is any indication
that the assets may be impaired.
Recoverable amount is estimated on individual basis. If it is not practical to estimate the
recoverable amount of an individual asset, the recoverable amount of the asset group to which the
asset belongs will be estimated. The recoverable amount of an asset is the higher of its fair value
less costs of disposal and the present value of the future cash flows expected to be derived from
the asset.
If recoverable amount of assets is less than book value, the difference is recognised as impairment
provision and expensed in current period.
Goodwill is tested for impairment at least at the end of each year. For the purpose of impairment
testing, goodwill is considered together with the related assets group(s), i.e., goodwill is
reasonably allocated to the related assets group(s) or each of assets group(s) expected to benefit
from the synergies of the combination. An impairment loss is recognised if the recoverable
amount of the assets group or sets of assets groups (including goodwill) is less than its carrying
amount. The impairment loss is firstly allocated to reduce the carrying amount of any goodwill
allocated to such assets group or sets of assets groups, and then to the other assets of the group
pro-rata on the basis of the carrying amount of each asset (other than goodwill) in the group.
The impairment is recognised in profit or loss for the period in which it is incurred and will not be
reversed in any subsequent period.
21. Long term prepaid expenses
Long-term prepaid expenses are amortized equally over the period of projected earnings. The
amortization period are as follows:
Amortization period
Land requisition fee 50 years
Land lease prepayment 50 years
Greening fee 5-20 years
Leasehold improvement 3-5years
Others 3 years
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22. Employee benefits
22.1 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.
22.2 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.
22.3 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 restructuring.
23. Revenue
23.1 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.
23.2 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.
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III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
23. Revenue - continued
23.2 Revenue from rendering of services - continued
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.
24. Government grants
Government grants are transfer of monetary assets and non-monetary assets from the government
to the Group at no consideration. 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.
24.1 Government grant related to an asset
A government grant related to an asset is recognised as deferred income, and amortised to profit
or loss over the useful life of the related asset on a straight line basis.
24.2 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.
A government grant related to the Group's daily activities is recognized in other income based on
the nature of economic activities; a government grant is not related to the Group's daily activities
is recognized in non-operating income.
The Company's government loans with below-market rate of interest are directly paid to the
Company, and the related low rate interest will write off related borrowing costs. The government
loans with below-market rate of interest obtained by other subsidiaries of the Group are
government loans, which is provided by local bureau of finance through bank with below-market
rate of interest. The actual amount of the loan received by the Group recognized as borrowings,
and the related borrowing costs are calculated according to the principal of the loan and the
below-market rate.
25. Deferred tax assets/deferred tax liabilities
The income tax expenses include current income tax and deferred income tax.
25.1 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.
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III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
25. Deferred tax assets/deferred tax liabilities - continued
25.2 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.
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.
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III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
25. Deferred tax assets/deferred tax liabilities - continued
25.3 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.
26. 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.
26.1. Operating lease accounting methods
26.1.1 The Group as lessee under operating leases
Operating lease payments are recognized 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.
26.1.2 The Group as lessor under operating leases
Rental income from operating leases is recognized in profit or loss on a straight-line basis over the
term of the relevant lease. Initial direct costs with more than an insignificant amount are
capitalized when incurred, and are recognized in profit or loss on the same basis as rental income
over the lease term. Other initial direct costs with an insignificant amount are charged to profit or
loss in the period in which they are incurred. Contingent rents are charged to profit or loss in the
period in which they actually arise.
27. Changes in accounting policies
The Group has adopted the Notice of the Revised Format of Financial Statements for General
Business Enterprise in 2018 (Cai Kuai (2018) No. 15, hereinafter referred to as the "Cai Kuai
No.15 Document") released by the MoF on 15 June 2018 since the preparation of the financial
statements for 2018.
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III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
27. Changes in accounting policies - continued
Cai Kuai No.15 Document revised the presentation items on the balance sheet and the income
statement, which are as follows: add the line items of "notes and accounts receivable", "notes and
accounts payable", "research and development expenses"; revise the presentation of "other
payables", "fixed assets", "construction in progress", "other payables" , "long-term payables" and
"administrative expenses"; less the line items of "notes receivable", "accounts receivable",
"dividends receivable" and "interest receivable", "disposal of fixed assets", "materials for
construction of fixed assets", "notes payable", "accounts payable", "dividends payable", and
"special payables", add the line items of "including: interest expenses" and "interest income"
under the item of "financial expenses"; and adjust the presentation location of certain items in the
income statements.
For changes of the presentation items stated above, the Group has applied retrospectively for
accounting treatments and adjusted the comparable data of the prior year for comparable periods.
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.
Key assumptions and uncertainties in accounting estimates
The following are the key assumptions and uncertainties in accounting estimates at the end of the
reporting period, that may have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities in the future period.
Deferred tax assets recognized for deductible losses
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.
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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
Depreciation of fixed assets
As set out in Note III-15, 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.
Impairment of long-term 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 the fair value of a long-term asset less costs of disposal
and the present value of the future cash flows expected to be derived from the asset. As it is
difficult for the Group to obtain the quoted market price of the long-term assets concerned, the fair
value of the assets cannot be reliably estimated. In assessing the present value of future cash flows,
the management of the Group is required to make significant judgements on the assumptions
including sales growth rate, future selling price, production cost, operating expenses and discount
rate, which are of high uncertainty.
Yantai Changyu Pioneer Wine Company Limited Research and Development Co., Ltd. ("R&D
Centre"), subsidiary of the Company started production at the end of 2017 being as a new main
production base of the Company. In 2018, the production of R&D Centre accounts for more than
60% of the Group’s production. R&D Centre’s total investment budget in its long-term assets
approximates RMB 4.5 billion, which is a large-scale investment. As at 31 December 2018, the
book values of relevant long-term assets including fixed assets, construction in progress and
intangible amounted to RMB 3.5 billion, accounting for 26.6% of the total assets in the
consolidated financial statements, which exerts significant influence on the consolidated financial
statements. As there is little space for the development of the domestic wine market, the
management of the Company faces great operating pressures to apply the off-take potential of the
new production base in an efficient way. In addition, there are certain risks of impairment for such
long-term assets. The management performs the impairment test by determining if the recoverable
amount is less than the book value of long-term assets and determines the recoverable amount
based on the present value of expected future cash flows. In the assessment of the future cash
flows, the management is required to, based on a reasonable and supportable basis, assess the cash
flows for the future 5 years (“projecting period”) and cash flows after the projecting period
(“subsequent period”) and make significant judgements and accounting estimates in the discount
rate, sales growth rate, future selling price, production cost, operating expenses and other key
assumptions.
According to the result of the impairment test, the management believes that as at 31 December
2018, the above long-term assets of the Group were not impaired. Therefore, no impairment
provision is made.
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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
Inventory provision based on net realizable value
The inventories 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.
The determination of the fair value of identifiable assets and liabilities associated with business
combination.
For the cost of business combination, the Group allocates the purchase price based on fair value of
relatively identifiable assets and liabilities. When the fair value of relatively identifiable assets
and liabilities are evaluated by the present value of its future cash flows, The management need
estimate the growth rate of sales based on future market supply and demand to predict cash flows,
and considered the proper discount rate for calculating, management need use major accounting
estimates and judgments in the progress.
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V. TAXES
1. The main taxes and tax rate are as follows:
(1) China
Value added tax VAT is levied at 6%, 10%, 11%, 16% 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%.
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.
(2) France
Value added tax VAT is levied at 20% on the invoiced amount after deduction
of eligible input VAT.
Corporate income tax The Group is subject to a corporate income tax rate of 33.3%
on its taxable income.
(3) Spain
Value added tax VAT is levied at 21% on the invoiced amount after deduction
of eligible input VAT.
Corporate income tax The Group is subject to a corporate income tax rate of 28%
on its taxable income.
(4) Chile
Value added tax VAT is levied at 19% on the invoiced amount after deduction
of eligible input VAT.
Corporate income tax The Group is subject to a corporate income tax rate of 27%
on its taxable income.
(5) Australia
Value added tax VAT is levied at 10% on the invoiced amount after deduction
of eligible input VAT.
Corporate income tax The Group is subject to a corporate income tax rate of 30%
on its taxable income.
Other than tax incentives stated in Note V-2, applicable tax rates of the Group in 2018 and 2017
are all stated as above.
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V. TAXES - continued
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 Growing enjoys an exemption of corporate income
tax.
Yantai Changyu Grape Growing Co., Ltd.(" Grape Growing "), a branch of the Company, whose
principal activity is grape growing is incorporated in Zhifu District, Yantai City, Shandong
Province. According to clause 27 of PRC Corporate Income Tax and clause 86 of PRC Corporate
Income Tax Measures for Implementation, Grape Growing 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.
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Cash and bank
31/12/2018 31/12/2017
RMB RMB
Cash 114,335 136,973
Bank balance 1,382,399,749 1,278,397,711
Other currency fund 93,186,393
____________ 123,987,825
____________
Total 1,475,700,477
____________ 1,402,522,509
____________
At 31 December 2018, the balance of restricted cash of the Group is as follows:
31/12/2018 31/12/2017
RMB RMB
Home maintenance funds 2,611,350
____________ 2,645,410
____________
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VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
1. Cash and bank - continued
As at 31 December 2018, the Group's other monetary assets is as follows:
31/12/2018 31/12/2017
RMB RMB
Research and Development Co., Ltd ("R&D Centre")
pledged deposit for long-term payables 46,100,000 61,700,000
Deposit for letter of credit 44,540,850 57,946,190
Alipay account balance 2,483,816 4,317,635
Deposit for Company cards 51,727 14,000
Deposit for ICBC platform 10,000
____________ 10,000
____________
93,186,393
____________ 123,987,825
____________
As at 31 December 2018, the Group's term deposits with original maturity of more than three
months when acquired is RMB 173,042,400 with interest rate 1.50%-3.80% (31 December
2017:RMB 95,000,000).
2. Notes and accounts receivable
2.1 Presented by categories
31/12/2018 31/12/2017
RMB RMB
Notes receivable 288,667,988 244,796,818
Accounts receivable 242,153,083
____________ 263,796,355
____________
Total 530,821,071
____________ 508,593,173
____________
2.2 Notes receivable
(1) Categories of notes receivable
31/12/2018 31/12/2017
RMB RMB
Bank acceptances 288,667,988
____________ 244,796,818
____________
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VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
2. Notes and accounts receivable - continued
2.2 Notes receivable- continued
(2) Notes receivable which have been pledged as security at the end of the period
As at 31 December 2018, there was no pledged notes receivable (31 December 2017: Nil).
(3) Notes receivable endorsed but are not yet due at the balance sheet date
31/12/2018 31/12/2017
RMB RMB
Bank acceptances 182,829,674
____________ 188,855,843
____________
As at 31 December 2018, notes endorsed by the Group to other parties which are not yet due at
the end of the period is RMB 182,829,674 (31 December 2017: RMB 188,855,843). The notes are
used for payment to suppliers and constructions. The Group believes that due to good reputation
of bank, the risk of notes not accepting by bank on maturity is very low, 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 2018, no notes receivable were reclassified as accounts receivable due to the
default of drawer (31 December 2017: Nil).
2.3 Accounts receivable
(1) Disclosure of accounts receivable by categories:
31/12/2018 31/12/2017
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 for which
bad debt provision has been
assessed individually
______ ___
242,153,083
100.0
____- ______ ______ 100.0
____- 242,153,083 263,796,355 ___ ____- ____- ______
263,796,355
The normal credit term is one month, which can be extended to one year for certain customers.
The accounts receivable are interest-free.
As at 31 December 2018, ownership restricted accounts receivable is RMB 52,015,032 (31
December 2017: RMB 46,337,062), referring to Note VI-45.
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VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
2. Notes and accounts receivable - continued
2.3 Accounts receivable - continued
(1) Disclosure of accounts receivable by categories - continued
The aging analysis is as follows:
31/12/2018 31/12/2017
RMB RMB
Within 1 year 240,312,773 263,112,714
1 to 2 years 1,566,622 683,641
2 to 3 years 273,688
____________ -
____________
242,153,083
____________ 263,796,355
____________
(2) Recognitions, collections and reversals during the current year:
As at 31 December 2018, there was no bad debt provision for accounts receivable (31 December
2017: Nil). There was no bad debt provision made, reversed or written-off by management in
2018 (2017: Nil).
(3) Top five entities with the largest balances of accounts receivable:
Relationship Percentage of
Name with the Group Amount Aging total receivables
RMB %
Sainsbury's supermarkets Ltd Third party 17,428,889 Within 1 year 7.2
Nongongshang Supermarket
(Group) Co., Ltd Third party 10,928,458 Within 1 year 4.5
SLIGRO B.V. Third party 6,732,175 Within 1 year 2.8
Viedosy Bodegas Las Pircas Third party 6,430,387 Within 1 year 2.7
Suguo Supermarket Co., Ltd. Third party 6,415,505
________ Within 1 year 2.6
___
47,935,414
________ 19.8
___
3. Prepayments
(1) The aging analysis is as follows:
31/12/2018 31/12/2017
Amount Ratio Amount Ratio
RMB % RMB %
Within 1 year 4,219,949
_________ 100.0
_____ 2,417,931
_________ 100.0
_____
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VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
3. Prepayments - continued
(2) As at 31 December 2018, the top five of prepayments were as follows:
Reason Percentage of
Relationship for being total advances
with the Group Amount Aging outstanding to suppliers
RMB %
Shanghai Benchu
Trade&Development Co., Ltd. Third party 345,600 Within 1 year Goods not received 8.2
Carrington Estate T/A Karikari Esta Third party 340,498 Within 1 year Goods not received 8.1
DONELLI VINI S.P.A. Third party 304,204 Within 1 year Goods not received 7.2
Yantai Economic and Technological
Development Zone Thermal Co., Ltd Third party 250,000 Within 1 year Prepaid heating fees 5.9
Yantai Cihang International Freight
Agent Co., Ltd. Third party 186,392
_______ Within 1 year Prepaid agency fees 4.4
___
1,426,694
_______ 33.8
___
4. Other receivables
4.1 Presented by categories
31/12/2018 31/12/2017
RMB RMB
Interest receivable 1,332,681 240,968
Other receivables 21,303,405
___________ 18,737,454
___________
Total 22,636,086
___________ 18,978,422
___________
(1) Categories of interest receivable
31/12/2018 31/12/2017
RMB RMB
Interest receivable on bank deposits 1,332,681
_________ 240,968
________
(2) Overdue interest
As at 31 December 2018, there was no overdue interest receivable (31 December 2017: Nil).
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VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
4. Other receivables- continued
4.2 Other receivables
(1) Disclosure of other receivables by categories
31/12/2018 31/12/2017
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 receivable for which
bad debt provision has been
assessed individually
______ ___ _____
21,303,405 100.0 -
___ ______ ______ ___ _____
- 21,303,405 18,737,454 100.0 -
___ ______
- 18,737,454
The aging analysis is as follows：
31/12/2018 31/12/2017
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 11,293,908 53.0 - 11,293,908 13,214,301 70.5 - 13,214,301
1 to 2 years 6,693,702 31.5 - 6,693,702 1,937,961 10.3 - 1,937,961
2 to 3 years 1,922,998 9.0 - 1,922,998 2,273,591 12.2 - 2,273,591
Over 3 years _______
1,392,797 ____6.5 ______
- _______
1,392,797 _______
1,311,601 ____7.0 ______
- _______
1,311,601
21,303,405 100.0 - 21,303,405 18,737,454 100.0 - 18,737,454
_______ ____ ______ _______ _______ ____ ______ _______
(2) Accrual, reversal and written-off during the current year
As at 31 December 2018, no bad debt provision was made for other receivables (2017: RMB
354,805).
(3) Other receivables written off in the current year
As at 31 December 2018, the Group has no other receivables written off (31 December 2017:
RMB 354,805).
(4) Disclosure of other receivables by categories
31/12/2018 31/12/2017
RMB RMB
Deposit 10,453,624 10,075,901
Petty cash receivable 2,274,038 2,215,146
Investment fund - 2,050,000
Refund of consumption tax, real estate tax 6,273,882 2,451,188
Others 2,301,861
____________ 1,945,219
____________
21,303,405
____________ 18,737,454
____________
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VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
4. Other receivables- continued
4.2 Other receivables- continued
(5) Five entities with the largest balances of other receivables
As at 31 December 2018, the top five of other receivables are as follows:
Percentage of total Bad debt
Nature Amount Aging other receivables Closing balance
RMB % RMB
Yantai Development Zone
Construction Industry Association Construction deposit 7,709,477 Within 3 years 36.1 -
Zhejiang Tmall Technology Co., Ltd. Shop deposits 867,426 Within 1 year 4.1 -
Yantai Shenma Packaging Co., Ltd.
("Shenma Packaging") Lease receivables 813,440 Within 1 year 3.8 -
Yantai Development Zone
Power Company Deposit 140,000 Within 3 years 0.7 -
Yantai Development Zone
Heat Company Deposit 130,000
_________ Within 3 years 0.6
____ -
_________
9,660,343
_________ 45.3
____ -
_________
5. Inventories
(1) Disclosure of inventories by categories
31/12/2018 31/12/2017
Net carrying Net carrying
Balance Provision amount Balance Provision amount
RMB RMB RMB RMB RMB RMB
Raw material 67,267,035 - 67,267,035 66,881,090 - 66,881,090
Work in progress 1,787,819,923 - 1,787,819,923 1,568,230,851 - 1,568,230,851
Finished goods 894,187,725
_________ (24,683,226)
________ 869,504,499
_________ 864,097,497
_________ (25,595,392)
________ 838,502,105
_________
2,749,274,683 (24,683,226)
_________ ________ 2,724,591,457
_________ 2,499,209,438 (25,595,392)
_________ ________ 2,473,614,046
_________
(2) Inventory provision
Closing balance Recognized Reversal Written off Opening balance
RMB RMB RMB RMB RMB
Provision for decline in
value of inventories 25,595,392
_________ 749,134
________ (1,661,300)
________ -
________ 24,683,226
_________
________
6. Other current assets
31/12/2018 31/12/2017
RMB RMB
Prepaid taxes 24,077,323 22,911,298
Pending deduct VAT on purchase 233,087,707 206,529,504
Prepaid rent 1,511,366
___________ 1,381,957
____________
258,676,396
___________ 230,822,759
____________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
133
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
7. Available-for-sale financial assets
(1) Available-for-sale financial assets
31/12/2018 31/12/2017
Amount Impairment Carrying amount Amount Impairment Carrying amount
RMB RMB RMB RMB RMB RMB
Available-for-sale
equity instruments
measured at cost 467,251
_______ -
_______ 467,251
______ 467,251
_______ -
_______ 467,251
______
(2) Available-for-sale financial assets measured at cost
Carrying amount Provision for impairment losses Proportion of Cash
voting power dividend
in the for the
Investee Opening Increase Decrease Closing Opening Increase Decrease Closing investee period
RMB RMB RMB RMB RMB RMB RMB RMB (%) RMB
Other
____
467,251
____- ____- ____
467,251
____- ____- ____- ____- ____ ____
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.
8. Investment properties
Investment properties measured by cost method
Buildings
RMB
Total original carrying amount
31/12/2017 38,347,283
Increase
Transfer from fixed assets 32,606,762
____________
31/12/2018 70,954,045
____________
Total accumulated depreciation
31/12/2017 19,879,294
Increase
Transfer from fixed assets 17,644,360
Additions 1,857,902
____________
31/12/2018 39,381,556
____________
Total carrying amount
31/12/2018 31,572,489
____________
31/12/2017 18,467,989
____________
134
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
9. Fixed assets
(1) Details of fixed assets
Buildings Machinery Motor Vehicles Total
RMB RMB RMB RMB
Total original carrying amount
31/12/2017 4,508,868,684 2,247,350,293 28,689,415 6,784,908,392
Increase
Purchase 4,490,675 235,607,780 923,222 241,021,677
Transfer from CIP 252,035,224 202,251,634 1,708,803 455,995,661
Acquisition increase (VII-1) 33,048,307 15,981,692 - 49,029,999
Decrease
Disposal (4,409,703) (35,392,585) (4,740,801) (44,543,089)
Transfer to Investment
properties (VI-8) (32,606,762)
__________ -
__________ -
________ (32,606,762)
__________
31/12/2018 4,761,426,425
__________ 2,665,798,814
__________ 26,580,639
________ 7,453,805,878
__________
Total accumulated depreciation
31/12/2017 512,643,486 922,944,520 20,236,417 1,455,824,423
Increase
Additions 126,510,348 168,695,471 2,632,539 297,838,358
Decrease
Disposal (242,705) (29,575,754) (2,125,751) (31,944,210)
Transfer to Investment
properties (VI-8) (17,644,360)
__________ -
__________ -
________ (17,644,360)
__________
31/12/2018 621,266,769
__________ 1,062,064,237
__________ 20,743,205
________ 1,704,074,211
__________
Total carrying amount
31/12/2018 4,140,159,656
__________ 1,603,734,577
__________ 5,837,434
________ 5,749,731,667
__________
__________
31/12/2017 3,996,225,198
__________ 1,324,405,773
__________ 8,452,998
________ 5,329,083,969
__________
__________
As at 31 December 2018, fixed assets with ownership restricted are RMB 412,006,421 (31
December 2017: RMB 145,009,923). Please refer to Note VI-45 in detail.
As at 31 December 2018, the Group has net fixed assets that are temporarily idle of RMB
59,718,155(31 December 2017: Nil). The Group has no fixed assets acquired under finance leases
or fixed assets classified as held for sale (31 December 2017: RMB 2,000,197).
(2) Fixed assets through operating lease
Amount
RMB
Machinery 134,111
_______
135
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
9. Fixed assets - continued
(3) Fixed assets of which certificates of title have not been obtained
As at 31 December 2018, 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 1,755,472,791 Processing
Changan Chateau Dormitory building, main building 284,890,228 Processing
Beijing Chateau European town, main, service building 187,565,493 Processing
Ding Luo Te Chateau main building 83,218,432 Processing
Xinjiang Tianzhu fermentations and storage warehouse 17,768,840 Processing
Ice Wine Chateau office building and packing workshop 9,198,373 Processing
Jingyang factory fermentation building 4,171,918 Processing
Fermentation centre office, experiment building and workshop 3,653,494 Processing
Kylin Packaging finished goods warehouse and workshop 2,396,850 Processing
Sales Company office buildings 1,123,984
__________ Processing
2,349,460,403
__________
The buildings without property certificate above have no significant influence on the group's
management.
10. Construction in progress
(1) Construction in progress:
31/12/2018 31/12/2017
RMB RMB
R&D Centre ("Changyu Wine integrational
Construction") Project 608,553,617 883,731,540
Changan Chateau Construction Project 39,793,893 53,290,036
Ningxia Chateau Construction Project 47,163,863 35,711,269
Shihezi Chateau Construction Project 23,664,124 25,463,724
Sales Company construction project 17,985,882 11,355,685
Other companies construction Project 22,135,212
____________ 16,589,315
____________
759,296,591
____________ 1,026,141,569
____________
136
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
10. Construction in progress- continued
(2) Changes in significant construction in progress:
Transfer to
Lone-term Total accumulated Capitalizing Interest
Transfer to prepaid Capitalizing interest capitalization
Budget 31/12/2017 Addition PPE expense 31/12/2018 Status interest for this period rate Financed by
RMB RMB RMB RMB RMB RMB RMB RMB %
Loans from
financial
Changyu Wine integrational institutions
Construction" 4,505,780,000 883,731,540 118,142,779 (372,914,273) (20,406,429) 608,553,617 74.3 14,271,837 5,843,872 1.2%及 4.3% and Self-raised
Changan Chateau Construction - - - -
Project 620,740,000 53,290,036 12,149,197 (25,645,340) 39,793,893 108.7 Self-raised
Shihezi Chateau Construction - - - -
Project 780,000,000 25,463,724 37,629,835 (39,429,435) 23,664,124 96.3 Self-raised
Ningxia Chateau Construction - - - -
Project 414,150,000 35,711,269 14,307,265 (2,854,671) 47,163,863 102.1 Self-raised
Sales Company construction project 161,350,000 11,355,685 6,893,191 (262,994) - 17,985,882 97.7 - - - Self-raised
The interest capitalized in construction in progress is RMB 5,843,872 in 2018(2017: RMB 6,138,242).
137
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Bearer biological assets
Bearer biological assets are Vines, which measured in cost method
Immature Mature
biological assets biological assets Total
RMB RMB RMB
Total original carrying amount
31/12/2017 12,175,000 217,537,353 229,712,353
Increase
Cultivated increase 19,371,297 - 19,371,297
Transfer to mature assets (17,708,689)
__________ 17,708,689
___________ -
___________
31/12/2018 13,837,608
__________ 235,246,042
___________ 249,083,650
___________
Total accumulated depreciation
31/12/2017 - 27,782,465 27,782,465
Increase
Additions -
__________ 12,034,812
___________ 12,034,812
___________
31/12/2018 -
__________ 39,817,277
___________ 39,817,277
___________
Total net carrying amount
31/12/2018 13,837,608
__________ 195,428,765
___________ 209,266,373
___________
31/12/2017 12,175,000
__________ 189,754,888
___________ 201,929,888
___________
As at 31 December 2018, there is no biological asset with ownership restricted. (31 December
2017:Nil)
As at 31 December 2018, there is no indication that biological assets may be impaired, and no
provision is made. (31 December 2017:Nil)
138
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
12. Intangible assets
(1) Intangible assets
Land use rights Software use rights Trademark Total
RMB RMB RMB RMB
Total original carrying amount
31/12/2017 521,731,139 73,666,754 159,702,508 755,100,401
Increase
Purchase 1,596,780 922,809 105,827 2,625,416
Acquisition increase(VII-1) 4,924,992
__________ 1,232,494
__________ 10,260,400
_________ 16,417,886
__________
31/12/2018 528,252,911
__________ 75,822,057
__________ 170,068,735
_________ 774,143,703
__________
Total accumulated depreciation
31/12/2017 67,547,772 21,516,741 10,586,991 99,651,504
Increase
Additions 10,523,138
__________ 5,206,074
__________ 3,289,528
_________ 19,018,740
__________
31/12/2018 78,070,910
__________ 26,722,815
__________ 13,876,519
_________ 118,670,244
__________
Total carrying amount
31/12/2018 450,182,001
__________ 49,099,242
__________ 156,192,216
_________ 655,473,459
__________
31/12/2017 454,183,367
__________ 52,150,013
__________ 149,115,517
_________ 655,448,897
__________
(2) Land use right's location and years are as follows:
Item 31/12/2018 31/12/2017
RMB RMB
In the PRC( within 50 years) 419,300,592 428,226,950
Out of the PRC (more than 50 years) 30,881,409
___________ 25,956,417
____________
450,182,001
___________ 454,183,367
____________
As at 31 December 2018, the Group has land use right with infinite useful lives of RMB
30,881,409( 31 December 2017: RMB 25,956,417), representing the freehold land held by Chile
Indomita Wine Group and Australia Kilikanoon Estate under relevant Chile and Australia laws,
on which the amortization is not required.
As at 31 December 2018, the Group has trademark with infinite useful lives of RMB 154,150,933
(31 December 2017: 143,890,533), which is held by Chile Indomita Wine Group and Australia
Kilikanoon Estate. The recoverable amount of the trademark is determined according to the
present value of the expected future cash flows generated from the asset group to which the single
assets of trademark right belongs. The management prepares the cash flow projection for future 5
years (the "projecting period") based on the latest financial budget assumption, and estimates the
cash flows after the future 5 years (the "subsequent period"). The discount rates used in the cash
flow projections are 9.0% and 10.1%, respectively. A key assumption in the estimate of future
cash flows is the revenue growth rate in the projecting period. Such revenue growth rate is
determined based on the industry and the expected growth rate of Chile Indomita Wine Group and
Australia Kilikanoon Estate. The revenue growth rates in the subsequent period are 3.0% and
2.5%, respectively.
139
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
12. Intangible assets - continued
(2) Land use right's location and years are as follows:- continued
The Group recognizes the trademark with infinite useful lives as intangible assets, the impairment
assessment of which is made at the end of each reporting year. The management believes that any
reasonable change of the above assumptions will not result in the total book value of the asset
group to which the single assets of trademark right belongs exceeding its recoverable amount.
According to the result of impairment assessment, by the end of 31 December 2018, the
management believes there is no impairment loss on those trademark with infinite useful lives of
the Group.
As at 31 December 2018, the intangible asset with restricted ownership is RMB 218,070,414
(December 31, 2017:RMB 164,051,996), Please refer to Note VI-45 in detail.
13. Goodwill
Investee 31/12/2017 Increase Decrease 31/12/2018
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
Indomita Wine 6,870,115 - - 6,870,115
Australia Kilikanoon Estate -
_________ 37,063,130
________ -
______ 37,063,130
_________
Total 128,135,981
_________ 37,063,130
________ -
______ 165,199,111
_________
The Group acquired Fransac Sales, Dicot and Mirefleurs and Chile Indomita Wine Group in
December 2013, September 2015 January 2016 and July 2017 respectively, resulting in respective
goodwill amounting to RMB 13,112,525, RMB 92,391,901, RMB 15,761,440 and RMB
6,870,115. The Group acquired Australia Kilikanoon Estate in January 2018, resulting goodwill
amounting to RMB 37,063,130, which have been allocated to corresponding asset groups for
impairment testing.
The recoverable amount of the group of assets is determined by the present value of its future cash
flows. Future cash flow projections are made based on the recently financial budgets for the future
5 years period (projecting period) and presume that cash flows after the projecting period
(subsequent period). Discount rate used in calculating the recoverable amounts of Fransac Sales,
Dicot Mirefleurs, Indomita Wine and Australia Kilikanoon Estate are 11.1%, 8.9%, 11.1 %, 9.0%
and 10.1%(2017: 10.3%, 8.5%, 10.3%, 9.6% and N/A) respectively. One key assumption in
projecting future cash flows is the growth rate of sales in projecting period, which is computed
based on the expected growth rate of the industry and each group of assets. Growth rate of sales in
subsequent period of Fransac Sales, Dicot, Mirefleurs, Indomita Wine and Australia Kilikanoon
Estate is 2.0%, 2.0%, 2.0%, 3.0%,2.5% (2017: 2%, 2%, 2%, 3% and N/A)respectively.
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.
140
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VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. Goodwill- continued
According to the assessment, the Group believes that no impairment provision need to be made
for goodwill in the reporting period.
14. Long-term prepaid expenses
31/12/2017 Increase Amortization 31/12/2018
RMB RMB RMB RMB
Land lease prepayments 56,365,385 - (2,147,622) 54,217,763
Land requisition fee 43,976,036 - (548,297) 43,427,739
Greening fee 125,628,334 24,511,623 (8,915,485) 141,224,472
Leasehold improvement 873,263 3,306 (100,922) 775,647
Others 3,166,213
__________ 2,198,373
_________ (369,791)
_________ 4,994,795
__________
230,009,231
__________ 26,713,302
_________ (12,082,117)
_________ 244,640,416
__________
_________
Note: The greening fee transferred from CIP to long-term prepaid expenses amounted to RMB
20,406,429, refer to Note VI-10 for details.
15. Deferred tax assets/liabilities
Deferred tax assets and deferred tax liabilities are not related to income tax of the same tax
authorities of the same tax subjects, thus not presented with the net amount after netting.
(1) Deferred tax assets:
31/12/2018 31/12/2017
Temporary Deferred tax Temporary Deferred tax
differences assets differences assets
RMB RMB RMB RMB
Unrealized profit from intra
602,476,583 150,619,145 618,591,681 154,647,920
- company transactions
Unpaid bonus 141,808,257 35,485,814 94,462,722 23,671,611
Retirement benefit 26,186,243 6,546,561 27,980,857 6,995,214
Asset impairment provision 24,683,226 6,170,807 25,595,392 6,398,848
Deductible losses 262,937,999 67,566,387 345,639,059 88,584,337
Deferred income 86,227,293 18,868,963 109,797,054 24,285,203
Assets impairment loss 661,415 178,582 684,622 184,848
Accrued rebate - - 13,413,655 3,353,415
1,144,981,016 285,436,259 1,236,165,042 308,121,396
141
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
15. Deferred tax assets/liabilities - continued
(2) Deferred tax liabilities
31/12/2018 31/12/2017
Item Taxable temporary Deferred Taxable temporary Deferred
difference tax liability difference tax liability
RMB RMB RMB RMB
Revaluation surplus in
business combination not
under common control 81,338,130 22,010,647 89,316,823 24,264,203
(3) Deferred tax assets and liabilities not recognized
31/12/2018 31/12/2017
RMB RMB
Deductible losses 171,430,831
___________ 150,320,039
____________
(4) Deductible losses not recognized as deferred tax assets will expire in:
31/12/2018 31/12/2017
RMB RMB
2018 - -
2019 7,311,273 7,311,273
2020 45,960,766 45,960,766
2021 82,685,213 82,685,213
2022 14,362,787 14,362,787
2023 21,110,792
____________ -
____________
171,430,831
____________ 150,320,039
____________
16. Short-term borrowings
31/12/2018 31/12/2017
RMB RMB
Credit loans 605,202,708 648,494,624
Mortgaged loans 79,467,832 65,939,662
Guaranteed loan 3,331,870
____________ -
____________
688,002,410
____________ 714,434,286
____________
142
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
16. Short-term borrowings - continued
As at 31 December 2018, short-term borrowings detail were as follows:
Nature of Interest rate Year ended
Loans amount Exchange rate RMB interest in contract Interest rate
% %
Credit loans (RMB) 400,000,000 1.0000 400,000,000 Floating 1 year LPR- 0.04(Note 1) 4.35
Credit loans (RMB) 150,000,000 1.0000 150,000,000 Floating Annual benchmark rate 4.35
Credit loans (EUR) 912,455 7.8473 7,160,308 Fixed 0.86~2.53 0.86~2.53
Credit loans (USD) 7,000,000 6.8632 48,042,400 Fixed 3.97~4.90 3.97~4.90
Mortgaged loans (EUR) 6,628,399 7.8473 52,015,032 Fixed 0.35~0.95 0.35~0.95
Mortgaged loans (USD) 4,000,000 6.8632 27,452,800 Fixed 4.22~4.38 4.22~4.38
Guaranteed loan(AUD) 690,543 4.8250 3,331,870
_________ Fixed 3.00 3.00
688,002,410
_________
Note 1:LPR is the basic interest rate of the People's Bank of China.
As at 31 December 2018, mortgaged loans were Hacienda y Vinedos Marques del Atrio, S.L.U ("
Atrio ") factoring of accounts receivable from Banco de Sabadell, S.A. etc. EUR 6,628,399
(translated as RMB 52,015,032)(31 December 2017:RMB 46,337,062). Mortgaged loans were
Indomita Wine mortgaged Peso 7,642,470,000 (translated as RMB 75,601,849 ) fixed assets from
BBVA bank USD 4,000,000 (translated as RMB 27,452,800 )( December 31, 2017: RMB
19,602,600 ). Australia Kilikanoon Estate has guaranteed loans of 690,543 Australian dollars
(equivalent to RMB 3,331,870)(31 December 2017: Nil).
17. Notes and accounts payable
The aging analysis of accounts payable are as follows
31/12/2018 31/12/2017
RMB RMB
Within 1 year 710,208,269 664,020,176
1 to 2 years 3,091,659 2,051,592
2 to 3 years 121,598 371,111
Over 3 years 151,355
____________ -
____________
713,572,881
____________ 666,442,879
____________
143
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VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
18. Advances from customers
The aging analysis of advances from customers are as follows
31/12/2018 31/12/2017
RMB RMB
Within 1 year 221,022,547 340,025,690
1 to 2 years 1,155,555 7,072,254
2 to 3 years 1,032,609 381,463
Over 3 years 2,864,533
____________ 3,414,749
____________
226,075,244
____________ 350,894,156
____________
19. Employee benefits payable
(1) Employee benefits payable as follows:
31/12/2017 Increase Decrease 31/12/2018
RMB RMB RMB RMB
Short-term payroll 182,545,284 481,042,461 (477,694,636) 185,893,109
Post-demission benefits
- predetermined provision plan 298,093 51,503,280 (51,576,508) 224,865
Termination benefits 27,980,857
_________ 13,677,216
_________ (15,471,830)
_________ 26,186,243
_________
210,824,234
_________ 546,222,957
_________ (544,742,974)
_________ 212,304,217
_________
_________
(2) Employee benefits payable:
31/12/2017 Increase Decrease 31/12/2018
RMB RMB RMB RMB
Salaries and bonus 185,014,318 428,052,734 (425,381,062) 187,685,990
Staff benefit 2,116,475 17,783,378 (16,885,565) 3,014,288
Staff welfare 524,316 20,677,314 (20,740,535) 461,095
Includes:
Medical insurance 524,316 19,045,528 (19,109,404) 460,440
Injury insurance - 895,750 (895,095) 655
Maternity insurance - 736,036 (736,036) -
Housing fund 39,256 10,444,925 (10,431,671) 52,510
Union fee and education fee 2,060,231
_________ 4,109,651
_________ (4,255,803)
_________ 1,914,079
_________
Total 189,754,596
_________ 481,068,002
_________ (477,694,636)
_________ 193,127,962
_________
Less: Non-current liabilities 7,209,312
_________ 7,234,853
_________
Short-term payroll 182,545,284
_________ 185,893,109
_________
144
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VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
19. Employee benefits payable - continued
(3) Predetermined provision plan
31/12/2017 Increase Decrease 31/12/2018
RMB RMB RMB RMB
Pension 297,591 50,534,986 (50,608,044) 224,533
Unemployment insurance 502
_______ 968,294
__________ (968,464)
__________ 332
_______
298,093
_______ 51,503,280
__________ (51,576,508)
__________ 224,865
_______
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 12%-32% and 0.5%-3% 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 50,534,986 and RMB 968,294 (2017: RMB 48,834,066 and
RMB 1,141,605 ) respectively into pension insurance and unemployment insurance. As at 31
December 2018, the Group has unpaid pension and unemployment insurance of RMB 224,533
and RMB 332 respectively (31 December 2017: RMB 297,591 and RMB 502 ), 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.
20. Taxes payable
31/12/2018 31/12/2017
RMB RMB
Value added tax 36,442,868 35,681,696
Consumption tax 28,636,646 44,961,022
Corporation income tax 40,869,507 38,834,293
Urban land use tax 2,476,527 2,645,687
Individual income tax 5,669,099 7,805,917
City construction tax 4,337,712 5,669,280
Property tax 5,165,128 4,647,644
Others 5,315,303
____________ 4,848,617
____________
128,912,790
____________ 145,094,156
____________
145
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
21. Other payables
21.1 Presented by categories
31/12/2018 31/12/2017
RMB RMB
Interest payable 712,826 771,250
Other payables 607,767,064
____________ 602,964,319
____________
608,479,890
____________ 603,735,569
____________
21.2 Other payables
(1) Natures of other payables are as follows
31/12/2018 31/12/2017
RMB RMB
Payable to dealer deposit 159,191,138 139,710,963
Payables for equipment and construction 152,825,734 130,706,777
Payables for transportation 38,867,725 27,847,092
Royalty fee 78,414,978 77,208,929
Advertising costs 80,715,461 118,834,960
Withholding promotion costs 15,714,400 13,413,655
Employee deposit 2,806,766 13,327,132
Deposits from suppliers 15,901,210 3,082,595
Payables for contracting fee 27,070,584 38,070,571
Others 36,259,068
____________ 40,761,645
____________
607,767,064
____________ 602,964,319
____________
(2) Description of significant other payables aged more than one year
Company Amount Reasons
RMB
Beijing Qinglang Agriculture Science
and Technology Development Limited
Company ("Beijing Qinglang") 9,493,506 Payables for contracting fee
VASF Company 4,878,866
_________ Payables for contracting fee
14,372,372
_________
146
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
22. Deferred income
31/12/2018 31/12/2017
RMB RMB
Government grants
Current liabilities 15,860,254 16,878,199
Non-current liabilities 70,367,039
____________ 92,918,855
____________
86,227,293 109,797,054
____________ ____________
Government grants:
Recognized in Related to
Opening Addition non-operating income Closing Assets/Income
/other income
RMB RMB RMB RMB RMB
Wine base liquor brewage project 4,739,400 - (1,434,900) 3,304,500 Assets
Shihezi chateau project funds 9,276,600 - (2,280,000) 6,996,600 Assets
Xinjiang Industrial Rejuvenation and
Technological Reconstruction Project 17,064,000 - (1,422,000) 15,642,000 Assets
Special support for infrastructure facilities 5,300,000 - (1,060,000) 4,240,000 Assets
Ningxia industry revitalization and
technology reconstruction funds 1,086,000 - (1,086,000) - Assets
Tourism Development Fund Subsidy Project 500,000 - - 500,000 Income
Support enterprise development special funds 10,200,000 - (10,200,000) - Income
(Huanren) wine production construction funds 3,600,000 - (400,000) 3,200,000 Assets
Wine electronic tracking system
specific funds 3,192,311 - (667,054) 2,525,257 Assets
Miyun Propaganda Department transfer 888,945 - (888,945) - Assets
Wine industry specific funds 744,000 - (186,000) 558,000 Assets
Shandong Peninsula Blue Economic
Area construction funds 8,000,000 - (2,000,000) 6,000,000 Assets
Information system construction
project technology funds 3,480,000 - (580,000) 2,900,000 Assets
Cross-border e-Business projects subsidies 702,615 300,000 (122,359) 880,256 Income
Red wine phenolics research projects funds 284,601 - (284,601) - Income
Grape base construction project 520,000 - (520,000) - Assets
Water pollution abatement project 320,132 - (113,602) 206,530 Income
Infrastructure construction project 1,843,750 - (125,000) 1,718,750 Assets
Industrial development support project 36,900,000 - (4,100,000) 32,800,000 Assets
Subsidy for updating of economic and
energy-saving technology 1,154,700 - (128,300) 1,026,400 Assets
Special funds for efficient water saving
irrigation project - 1,720,000 (81,000) 1,639,000 Assets
Guidance funds for service industry development - 2,000,000 - 2,000,000 Income
Relocation allowance for boiler renovation _______
- _______
100,000 _______
(10,000) _______
90,000 Income
Total 109,797,054 4,120,000 (27,689,761) 86,227,293
_______ _______ _______ _______
Less: Non-current liabilities due within one year _______
16,878,199 _______
15,860,254
Other non-current liabilities 92,918,855 70,367,039
_______ _______
As at 31 December 2018, 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.
147
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
23. Non-current liabilities due within one year
31/12/2018 31/12/2017
RMB RMB
Long-term borrowings due within one year 118,940,788 76,954,827
Long-term payables due within one year 34,000,000
____________ 34,000,000
____________
152,940,788
____________ 110,954,827
____________
As at 31 December 2018, Long-term borrowings due within one year refers to Note VI-24,
Long-term payables due within one year refers to Note VI-25.
24. Long-term borrowings
31/12/2018 31/12/2017
RMB RMB
Credit loan 41,805,746 68,182,310
Mortgaged loan 3,924,916 6,693,544
Guaranteed loan 110,750,000
____________ 81,250,000
____________
156,480,662
____________ 156,125,854
____________
As at 31 December 2018, loans detail is as follows:
Nature Year-end Due within Due over
Loans amount Exchange rate Amount of interest Interest rate borrowing rate one year one year
RMB % %
Guaranteed loan (RMB) (Note) 81,250,000 1.0000 81,250,000 Floating 5 year LPR- 0.9 4.275 18,750,000 62,500,000
Credit loan (EUR) 17,734,954 7.8473 139,171,506 Fixed 1.00-2.53 1.00-2.53 97,365,760 41,805,746
Mortgaged loan (EUR)(Note) 860,161 7.8473 6,749,944 Fixed 1.80 1.80 2,825,028 3,924,916
Guaranteed loan(AUD)(Note) 10,000,000 4.8250 _______
48,250,000 Fixed 3.00 3.00 _______ - _______
48,250,000
275,421,450 118,940,788 156,480,662
_______ _______ _______
Note:As at 31 December 2018, The secured loan is the long-term loan borrowed by the company
for R&D Centre credit guarantee, RMB 81,250,000 (31 December 2017: RMB 100,000,000),
mortgaged loans were Atrio using fixed assets EUR 4,264,170 (translated as RMB 33,462,225) as
collateral for loans from Popular Espaol, EUR 860,161 (translated as RMB 6,749,944), (31
December 2017: RMB 9,502,372).The guaranteed loan(AUD) is the loan of AUD 10,000,000
borrowed by Australia Kilikanoon Estate from Australia & New Zealand banking( translated as
RMB 48,250,000)(31 December 2017:Nil), which was guaranteed by the Company.
148
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VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
25. Long-term payables
31/12/2018 31/12/2017
RMB RMB
Agricultural Development
Fund of China ("CADF") 225,000,000
____________ 259,000,000
____________
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 (Financial discount loan). The group
take this investment as long-term payables, which measured in amortized cost. The Group
repays the principal of RMB 34,000,000 in 2018. Refer to Note VI-45 for details of mortgaged
and pledged assets.
Long-term Termination date Mortgaged
payables Yield rate Investment date of repayment Due within 1 year Due after 1 year and pledged assets
RMB RMB RMB
67,000,000 1.2% 12 January 2016 24 December 2025 10,000,000 57,000,000 Cash and bank and
intangible assets
176,000,000 1.2% 29 February 2016 28 February 2026 22,000,000 154,000,000 Fixed assets and intangible assets
16,000,000
___________ 1.2% 16 June 2016 22 May 2026 2,000,000
__________ 14,000,000
___________ Cash and bank
259,000,000
___________ 34,000,000
__________ 225,000,000
___________
26. Other non-current liabilities
31/12/2018 31/12/2017
RMB RMB
Employee benefit 7,234,853
_________ 7,209,312
_________
As at 31 December 2018, employee benefit represents deposit from bonus accrued for managers
and above. According to the bonus payment schedule of 2018, the bonus is expected to be paid
during 2020 to 2022.
27. Share capital
31/12/2017 Increase Decrease 31/12/2018
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
__________
__________
149
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VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
28. Capital reserve
31/12/2017 Increase Decrease 31/12/2018
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
__________
29. Other comprehensive income
2018
2018 Less: last year other Post-tax Post-tax
Opening Before-tax comprehensive income Less: attributable attributable Closing
balance amount in P/L current year tax expense to parent to NCI balance
Other comprehensive
income to be reclassified
to profit and loss 3,109,240 (376,524) - - (143,863) (232,661) 2,965,377
Foreign currency statement
translation difference
______
3,109,240
_____
(376,524)
____
-
____
-
_____
(143,863)
_____
(232,661)
______
2,965,377
30. Surplus reserve
31/12/2017 Increase Decrease 31/12/2018
RMB RMB RMB RMB
Statutory surplus reserve 342,732,000
__________ -
______ -
______ 342,732,000
__________
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 2018.
The Company can appropriate discretionary surplus reserve after appropriation of the statutory
surplus reserve. Discretionary surplus reserve can be utilized to offset the deficit or increase the
share capital after approval.
31. Retained earnings
31/12/2018 31/12/2017
RMB RMB
Retained earnings brought forward 7,309,081,618 6,620,118,562
Profit attributable to shareholders of the Company 1,042,632,929 1,031,695,056
Less: Dividends paid in respect prior year's profit (342,732,000)
____________ (342,732,000)
____________
Retained earnings carried forward 8,008,982,547
____________ 7,309,081,618
____________
150
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VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
31. Retained earnings - continued
(1) Appropriation to surplus reserve by subsidiaries
As at 31 December 2018, the balance of the Group's unappropriated profits include appropriation
to surplus reserve by subsidiaries amounting to RMB 54,336,543 (31 December 2017: RMB
51,994,942).
(2) Cash dividends approved by general meeting
According to the annual general meeting on 25 May 2018, 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 18 April 2019, on the basis of
685,464,000 issued shares in 2018, cash dividends of RMB 6.0 (including taxes) for every 10 share
will be distributed to all the shareholders. The aggregate amount of cash dividend is RMB
411,278,400. The above proposal regarding dividends distribution is yet to be approved in a
shareholders' meeting.
32. Operating income and costs
Operating income is analysed as follows:
2018 2017
RMB RMB
Principal operating income 5,066,265,044 4,856,168,699
Other operating income 75,979,696
____________ 76,376,530
____________
5,142,244,740
____________ 4,932,545,229
____________
Operating cost is analysed as follows:
2018 2017
RMB RMB
Principal operating cost 1,872,991,039 1,645,690,616
Other operating cost 28,620,468
____________ 25,901,663
____________
1,901,611,507
____________ 1,671,592,279
____________
The operating income for the Group is mainly from the sales of wine, brandy and sparkling wine.
In 2018, Over 87% (2017: over 91%) of the sales generated in PRC.
151
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VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
33. Taxes and surcharges
2018 2017
RMB RMB
Consumption tax 157,037,382 177,879,324
City construction tax 39,655,738 52,247,915
Education fee and surcharges 28,762,507 35,831,575
Property tax 31,461,708 23,113,211
Land use tax 12,098,790 11,874,984
Stamp tax 4,507,785 3,945,731
Others 2,967,764
____________ 5,359,283
____________
276,491,674
____________ 310,252,023
____________
For detail standards of tax rate please refer to Note V.
34. Selling expenses
2018 2017
RMB RMB
Marketing expenses 386,519,123 428,828,931
Salary and employee benefit 297,489,665 272,148,620
Freight 141,756,007 139,218,637
Trademark fee 73,976,395 72,838,612
Labor fee 72,036,252 67,860,856
Warehouse leasing expenses 45,668,613 53,075,132
Depreciation cost 41,410,740 34,963,089
Advertising fees 35,857,276 34,753,090
Conference expenses 32,731,215 31,609,123
Design cost 29,437,757 27,226,277
Travelling expenses 27,176,277 27,709,534
Security and sanitation fee 12,896,986 12,659,228
Water and electricity fee 11,297,244 11,247,163
Office allowance 9,707,518 6,165,561
Packing cost 8,195,160 7,163,930
Taxes 7,113,764 6,771,337
Amortization of low-value consumables 5,756,602 4,028,573
Business entertainment 5,665,336 4,403,750
Others 29,907,216
____________ 29,851,000
____________
1,274,599,146
____________ 1,272,522,443
____________
152
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VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
35. Administrative expense
2018 2017
RMB RMB
Salary and employee benefit 114,473,209 106,342,126
Depreciation 71,978,485 71,558,307
Maintenance fee 25,189,384 21,665,024
Administrative expenses 23,766,176 22,173,925
Amortization 18,187,049 22,438,364
Greening fee amortization 14,730,804 10,667,941
Contracting fee 13,364,835 21,162,623
Rental fees 13,012,167 12,414,249
Safe production cost 9,692,574 7,840,215
Security and sanitation fee 8,659,405 6,317,723
Service fee 6,556,258 12,118,257
Entertainment fee 5,300,526 5,470,001
Travelling expenses 3,630,225 4,747,256
Others 15,039,554
____________ 11,545,122
____________
343,580,651
____________ 336,461,133
____________
36. Financial expense
2018 2017
RMB RMB
Interest income (12,086,007) (9,168,772)
Exchange income (666,323) (182,610)
Interest expenses 52,198,774 32,233,729
Less: Capitalization of interests 5,843,872 6,138,242
Bank charges 2,342,730
____________ 1,846,154
____________
35,945,302 18,590,259
____________ ____________
37. (Reversal of)Impairment loss of assets
2018 2017
RMB RMB
(Reversal of) Inventory impairment (912,166) 7,938,748
Impairment losses from other receivables -
________ 354,805
__________
(912,166)
________ 8,293,553
__________
153
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VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
38. Other income
2018 2017 Assets/income related
Project Subsidy RMB RMB
Tax refund 6,587,773 17,765,560 Income
Special funds for manufacturing industry 4,750,000 4,100,000 Income
Industrial development support project 4,100,000 - Assets
Ningxia industry revitalization and
technology reconstruction funds 1,086,000 3,295,000 Assets
Project funds 2,280,000 2,280,000 Assets
Shandong Peninsula Blue Economic
Area construction funds 2,000,000 2,000,000 Assets
Special funds for the development
of enterprises 42,953,900 - Income
Others 7,493,199 6,352,199 Assets
Others 16,030,562
__________ 10,245,625
__________ Income
87,281,434
__________ 46,038,384
__________
39. Non-operation income
Recognized in
extraordinary
2018 2017 profit and loss
RMB RMB RMB
Government grants - 1,600,000 -
Penalty income 1,901,530 7,993,571 1,901,530
Others 5,451,779
__________ 7,637,156
__________ 5,451,779
__________
7,353,309
__________ 17,230,727
__________ 7,353,309
__________
40. Non-operation expenses
Recognized in
extraordinary
2018 2017 profit and loss
RMB RMB RMB
Compensation and penalty loss 2,576,838 347,528 2,576,838
Donation 293,819 294,899 293,819
Others 665,251
__________ 989,049
__________ 665,251
__________
3,535,908
__________ 1,631,476
__________ 3,535,908
__________
154
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
41. Income tax
2018 2017
RMB RMB
Current income tax 352,598,370 330,784,002
Deferred income tax 14,529,152
____________ 7,350,243
____________
367,127,522
____________ 338,134,245
____________
Reconciliation between income tax expenses and profits is as follows:
2018 2017
RMB RMB
Profit before tax 1,408,611,698 1,371,927,763
Income tax expense at statutory tax rate 25% (2017:25%) 352,152,925 342,981,941
Effect of different tax rates applied by certain subsidiaries (949,634) (9,600,821)
Changes in opening balances of deferred tax
liabilities due to tax rate adjustment - (1,342,916)
Unrecognised Deductible loss 4,642,727 3,590,697
Utilization of Deductible losses which were not
recognized previously - (6,157,735)
Non-deductible expenses 5,496,292 7,550,095
Write-off of deferred tax assets 5,785,212
____________ 1,112,984
____________
Income tax expenses 367,127,522
____________ 338,134,245
____________
42. 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.
2018 2017
RMB RMB
Earnings
Consolidated profit attributable to ordinary
shareholders of the Company 1,042,632,929
____________ 1,031,695,056
____________
Shares
Weighted average number of outstanding
ordinary shares 685,464,000
____________ 685,464,000
____________
Basic earnings per share 1.52
____________ 1.51
____________
155
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VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
42. Basic and dilutive earnings per share - continued
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.
43. Notes to consolidated cash flow statement
(1) Cash received relating to other operating activities:
2018 2017
RMB RMB
Government grants 57,123,900 20,930,752
Interest income 7,871,853 3,839,079
Penalty income 1,901,530 7,993,571
Refundable deposits of notes payable - 46,900,000
Others 5,806,589
____________ 5,573,503
____________
72,703,872 85,236,905
____________ ____________
(2) Cash paid relating to other operating activities:
2018 2017
RMB RMB
Selling expenses 918,966,855 956,902,163
General and administrative expenses 140,112,380 107,905,766
Refundable deposits of notes payable - 8,000,000
Others 4,637,082
____________ 2,103,059
____________
1,063,716,317
____________ 1,074,910,988
____________
(3) Cash paid for the purchase subsidiaries and other equity:
2018 2017
RMB RMB
Cash paid for acquisition of Australia Kilikanoon Estate 107,194,420 -
Less: Cash and bank for Australia Kilikanoon Estate
at acquisition date 1,359,765 -
Cash paid for acquisition of Indomita Wine - 318,867,650
Less: Cash and bank for Indomita
Wine at acquisition date -
____________ 15,071,107
____________
105,834,655 303,796,543
____________ ____________
156
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VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
43. Notes to consolidated cash flow statement - continued
(4) Cash received relating to other financing activities:
2018 2017
RMB RMB
Received government grants related to assets - 5,800,000
R&D Centre long-term payables pledged time deposit 61,700,000 46,100,000
Interest income from R&D Centre long-term payables
pledged time deposit 768,259
____________ 1,030,804
____________
62,468,259
____________ 52,930,804
____________
(5) Cash paid relating to other financing activities:
2018 2017
RMB RMB
R&D Centre long-term payables pledged time deposit 46,100,000
__________ 61,700,000
__________
44. Supplementary information to consolidated cash flow statement
(1) Supplementary information to consolidated cash flow statement
2018 2017
RMB RMB
Cash flows from operating activities
calculated by adjusting the net profit:
Net profit 1,041,484,176 1,033,793,518
Add:Loss for (reversal of) impairment of assets (912,166) 8,293,553
Depreciation of investment properties 1,857,902 590,610
Depreciation of fixed assets 297,838,358 250,264,403
Amortization of intangible assets 19,018,740 24,098,781
Depreciation of biological assets 12,034,812 10,160,981
Amortization of long-term prepaid expenses 12,082,117 13,911,581
(Gains) losses on disposal of assets (11,368,355) 222,586
Finance expense 45,855,744 22,381,504
Decrease in deferred tax assets 22,685,137 13,315,979
Decrease in deferred tax liabilities (8,155,985) (5,965,736)
Increase in inventories (180,452,933) (138,995,031)
Increase in operating receivables (137,899,294) (180,593,570)
Decrease in operating payables (138,089,507)
____________ (78,236,132)
____________
Net cash flows from operating activities 975,978,746
____________ 973,243,027
____________
157
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VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
44. Supplementary information to consolidated cash flow statement - continued
(2) Significant investing and financing activities not involving cash receipts and payments.
2018 2017
RMB RMB
Payment of intangible assets and other
long-term assets by bank acceptances 109,378,598
____________ 140,493,507
____________
(3) Cash and cash equivalents
31/12/2018 31/12/2017
RMB RMB
Closing balance of Cash and bank 1,475,700,477 1,402,522,509
Less:
Restricted bank deposits 2,611,350 2,645,410
Restricted other monetary funds 93,186,393 123,987,825
Deposit with a period of over three months 173,042,400
____________ 95,000,000
____________
Closing balance of cash and cash equivalents 1,206,860,334
____________ 1,180,889,274
____________
31/12/2018 31/12/2017
RMB RMB
Cash 1,206,860,334 1,180,889,274
Including: Cash on hand 114,335 136,973
Bank deposits on demand 1,206,745,999
____________ 1,180,752,301
____________
Closing balance of cash and cash equivalents 1,206,860,334
____________ 1,180,889,274
____________
45. Assets with restriction of ownership
31/12/2018 31/12/2017
RMB RMB
Cash and bank 95,797,743 126,633,235
Account receivable 52,015,032 46,337,062
Fixed assets 412,006,421 145,009,923
Intangible assets 218,070,414
____________ 164,051,996
____________
158
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VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
45 Assets with restriction of ownership - continued
As at 31 December 2018, Cash and bank with restriction of ownership as follows:
31/12/2018 31/12/2017
RMB RMB
R&D Centre long-term payables pledged time deposit 46,100,000 61,700,000
Refundable deposits of letter of credit 44,540,850 57,946,190
Balance in Alipay account 2,483,816 4,317,635
Home maintenance funds 2,611,350 2,645,410
Margin for entity card 51,727 14,000
Deposit for ICBC platform 10,000
____________ 10,000
____________
Total 95,797,743
____________ 126,633,235
____________
Among the aforementioned items, the amount of RMB 2,483,816 which is the blocked balances
of goods payment in Alipay account can be unlocked after 15 days.
As at 31 December 2018, the amount of accounts receivable with restricted ownership is EUR
6,628,399 (translated as RMB 52,015,032) , which refers to accounts receivable Atrio
conducted for factoring from Banco de Sabadell, S.A. etc.
As at 31 December 2018, fixed assets with restriction of ownership as follows:
Restricted reasons 31/12/2018
Company RMB
The Company Long-term payable collateral from R&D Centre 34,246,887
Sales Company Long-term payable collateral from R&D Centre 39,557,304
Sales Company Long-term borrowings collateral 33,462,225
Indomita Wine Short-term borrowings collateral 75,601,849
Ningxia Moser 15th Changyu
Wine Chateau Co., Ltd.
(" Ningxia Chateau") Long-term payable collateral from R&D Centre 184,678,629
Ningxia Wine Co.Ltd.
("Ningxia Wine"). Long-term payable collateral from R&D Centre 44,459,527
___________
Total 412,006,421
___________
159
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
45 Assets with restriction of ownership - continued
As at 31 December 2018, Intangible assets with restriction of ownership as follows:
Restricted reasons 31/12/2018
Company RMB
The Company Long-term payable collateral from R&D Centre 50,902,950
R&D Centre Long-term payable collateral from R&D Centre 108,913,538
Ningxia Chateau Long-term payable collateral from R&D Centre 8,906,611
Ningxia Wine Long-term payable collateral from R&D Centre 49,347,315
___________
Total 218,070,414
___________
46. 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 127 7.8473 997
HKD 213 0.8762 187
USD 7,196,107
__________ 6.8632
______ 49,388,322
___________
(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 the bookkeeping base currency of
Indomita Wine is Chilean peso. The functional currency of Australia Kilikanoon Estate is AUD.
The foreign monetary assets and liabilities of the overseas subsidiaries are as follows:
Closing foreign Exchange Closing translated
currency balance rate RMB balance
Cash and bank
EUR 25,328 7.8473 198,756
USD 276,196 6.8632 1,895,588
Short-term borrowings
USD 11,000,000
__________ 6.8632
______ 75,495,200
___________
160
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
VII. CHANGE IN CONSOLIDATION SCOPE
1. Business combination under different control
(1) Business combination under different control in current period
Net profit
Equity Revenue from from
Equity acquisitio Equity acquisition acquisition
Name of acquisition acquisitio Equity n ratio acquisitio Acquisitio Basis of date to year date to year
company n date acquisition cost (%) n method n date acquisition date end end
RMB RMB
Finish payment
Australia Kilikanoon Estate 18 January AUD 18 January and acquire
2018 20,860,825 80% Purchase 2018 equity 57,648,905 217,869
Other detail information:
Pursuant to the Agreement on the delivery of transferred equities entered into between the
shareholders of the Company and Australia Kilikanoon Estate on 5 December 2017, the Company
acquired 80% equity interests of Australia Kilikanoon Estate at the consideration of AUD
20,860,825( translated as RMB 107,194,420). The Company completed the equity transfer on 18
January 2018 and obtained the control of financial and operating policies over Australia
Kilikanoon Estate.
(2) Consideration and Goodwill
Consideration
Australia Kilikanoon Estate
RMB
Cash 107,194,420
Total consideration 107,194,420
Less: acquired provisional value of net assets 70,131,290
___________
Goodwill 37,063,130
___________
(3) Recognised assets and liabilities of mergee at acquisition date
Australia Kilikanoon Estate
Fair value Book value
at acquisition date at acquisition date
RMB RMB
Assets
Cash and bank 1,359,765 1,359,765
Accounts receivable 10,366,281 10,366,281
Prepayment 237,174 237,174
Other receivables 187,720 187,720
Inventories 69,612,312 57,946,312
Fixed assets 49,029,999 38,696,709
Intangible assets 16,417,886
____________ 7,461,624
____________
Total assets 147,211,137 116,255,585
____________ ____________
161
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
VII. CHANGE IN CONSOLIDATION SCOPE - continued
1. Business combination under different control - continued
(3) Recognised assets and liabilities of acquiree at acquisition date- continued
Australia Kilikanoon Estate
Fair value Book value
at acquisition date at acquisition date
RMB RMB
Liabilities
Short-term borrowings 1,282,550 1,282,550
Accounts payable 6,198,846 6,198,846
Employee benefits payable 876,987 876,987
Taxes payable 1,789,093 1,789,093
Long-term borrowings 43,497,119 43,497,119
Deferred tax liabilities 5,902,429
____________ -
____________
Total liabilities 59,547,024
____________ 53,644,595
____________
Net assets 87,664,113 62,610,990
Less：Non-controlling interests 17,532,823
____________ 12,522,198
____________
Acquired net assets 70,131,290
____________ 50,088,792
____________
VIII. INTERESTS IN OTHER ENTITIES
1. Structure of the Group
Equity interest owned
by the company Acquisition method
Name Address Place of registration Nature Direct Indirect
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 Navarra, Spain Navarra, Spain Sales 75% - Subsidiary acquired in business
combination under
non-common control
Subsidiaries acquired by
IWCC Santiago, Chile Santiago, Chile Sales 85% -
establishment
Subsidiary acquired in business
Australia Kilikanoon Estate Adelaide Australia Adelaide Australia Sales 80% - combination under
non-common control
Beijing Changyu Sales and distribution Co., Ltd ("Beijing Sales") Beijing, China Beijing, China Sales 100% - Subsidiaries acquired by
establishment
Yantai Kylin Packaging Co., Ltd. Yantai, Shandong, China Yantai, Shandong, China Manufacturing 100% - Subsidiaries acquired by
("Kylin Packaging") establishment
Yantai Changyu-Castel Wine Chateau Co., Ltd ("Changyu Chateau") (b) Yantai, Shandong, China Yantai, Shandong, China Manufacturing 70% - Subsidiaries acquired by
establishment
Changyu (Jingyang) Wine Co., Ltd. Xianyang, Shanxi, China Xianyang, Shanxi, China Manufacturing 90% 10% Subsidiaries acquired by
("Jingyang Wine") establishment
Yantai Changyu Pioneer Wine Sales Co., Ltd. ("Sales Company") Yantai, Shandong, China Yantai, Shandong, China Sales 100% - Subsidiaries acquired by
establishment
Langfang Development Zone Castel-Changyu Wine Co., Ltd ("Langfang Lanfang, Hebei, China Lanfang, Hebei, China Manufacturing 39% 10% Subsidiaries acquired by
Castel") (c) establishment
162
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
VIII. INTERESTS IN OTHER ENTITIES - continued
1. Structure of the Group - continued
Equity interest owned
by the company Acquisition method
Name Address Place of registration Nature Direct Indirect
Changyu (Jingyang) Wine Sales Co., Ltd. ("Jingyang Sales") Xianyang, Shanxi, China Xianyang, Shanxi, China Sales 10% 90% Subsidiaries acquired by
establishment
Langfang Changyu Pioneer Wine Sales Co., Ltd ("Langfang Sales") Lanfang, Hebei, China Lanfang, Hebei, China Sales 10% 90% Subsidiaries acquired by
establishment
Shanghai Changyu Sales and distribution Co., Ltd. ("Shanghai Sales") Shanghai, China Shanghai, China Sales 30% 70% Subsidiaries acquired by
establishment
Beijing Changyu AFIP Agriculture development Co., Ltd ("Agriculture Miyun, Beijing, China Miyun, Beijing, China Sales - 100% Subsidiaries acquired by
Development") establishment
Beijing Chateau (d) Beijing, China Beijing, China Manufacturin 90% - Subsidiaries acquired by
g establishment
Yantai ("Beijing Chateau") Changyu Wine Sales Co., Ltd. ("Wines Yantai, Shandong, China Yantai, Shandong, China Sales 90% 10% Subsidiaries acquired by
Sales") establishment
Yantai Changyu Pioneer International Co., Ltd. ("Pioneer International") Yantai, Shandong, China Yantai, Shandong, China Sales 70% 30% Subsidiaries acquired by
establishment
Hangzhou Changyu Wine Sales Co., Ltd. ("Hangzhou Changyu") Hangzhou, Zhejiang, China Hangzhou, Zhejiang, China Sales - 100% Subsidiaries acquired by
establishment
Ningxia Growing Yinchuang, Ningxia, China Yinchuang, Ningxia, China Planting 100% - Subsidiaries acquired by
establishment
Huanren Changyu National Wines Sales Co., Ltd. ("National Wines") Benxi, Liaoning, China Benxi, Liaoning, China Sales 100% - Subsidiaries acquired by
establishment
Liaoning Changyu Ice Wine Chateau Co., Ltd. ("Ice Chateau") (e) Benxi, Liaoning, China Benxi, Liaoning, China Manufacturin 51% - Subsidiaries acquired by
g establishment
Yantai Development Zone Changyu Trading Co., Ltd ("Development Yantai, Shandong, China Yantai, Shandong, China Sales - 100% Subsidiaries acquired by
Zone Trading") establishment
Shenzhen Changyu Wine Marketing Ltd. ("Shenzhen Marketing") Shenzhen, Guangdong, China Shenzhen, Guangdong, China Sales - 100% Subsidiaries acquired by
establishment
Yantai Changyu Fushan Trading Company("Fushan Trading") Yantai, Shandong, China Yantai, Shandong, China Sales - 100% Subsidiaries acquired by
establishment
Beijing AFIP Meeting Center ("Meeting Center") Miyun, Beijing, China Miyun, Beijing, China Service - 100% Subsidiaries acquired by
establishment
Beijing AFIP Tourism and Culture ("AFIP Tourism") Miyun, Beijing, China Miyun, Beijing, China Tourism - 100% Subsidiaries acquired by
establishment
Ningxia Wine Yinchuan, Ningxia, China Yinchuan, Ningxia, China Manufacturin 100% - Subsidiaries acquired by
g establishment
Yantai Changyu DingLuoTe Chateau. Yantai, Shandong China Yantai, Shandong China Retail and 65% 35% Subsidiaries acquired by
("Ding Luo Te Chateau") Sales establishment
Qing Tong Xia Changyu Wine Marketing Ltd("Qing Tong Xia Sales") Qing Tong Xia, Ningxia, China Qing Tong Xia, Ningxia, China Sales - 100% Subsidiaries acquired by
establishment
Shihezi Chateau Shihezi, Xinjiang, China Shihezi, Xinjiang, China Manufacturin 100% - Subsidiaries acquired by
g establishment
Ningxia Chateau Yinchuan, Ningxia, China Yinchuan, Ningxia, China Manufacturin 100% - Subsidiaries acquired by
g establishment
Shanxi Changyu Rina Castle Chateau Co., Ltd. Xianyang, Shanxi, China Xianyang, Shanxi, China Manufacturin 100% - Subsidiaries acquired by
(" Chang'an Chateau") g establishment
R&D Centre (f) Yantai, Shandong China Yantai, Shandong China Manufacturin 72% - Subsidiaries acquired by
g establishment
Changyu (HuanRen) Wine Co., Ltd Benxi LiaoNing China Benxi LiaoNing China Wine 100% - Subsidiaries acquired by
("Huan Ren Wine") production establishment
Projecting
Xinjiang Changyu Sales Co., Ltd Shihezi Xinjiang China Shihezi Xinjiang China Sales - 100% Subsidiaries acquired by
("Xinjiang Sales") establishment
Ningxia Changyu Trading Co., Ltd Yinchuan Ningxia China Yinchuan Ningxia China Sales - 100% Subsidiaries acquired by
("Ningxia Trading") establishment
Shanxi Changyu Rina Wine Sales Co., Ltd ("Shanxi Sales") Xianyang Shanxi China Xianyang Shanxi China Sales - 100% Subsidiaries acquired by
establishment
Penglai Changyu Wine Sales Co., Ltd Penglai Shandong China Penglai Shandong China Sales - 100% Subsidiaries acquired by
("Penglai Sales") establishment
Laizhou Changyu Wine Sales Co., Ltd Laizhou Shandong China Laizhou Shandong China Sales - 100% Subsidiaries acquired by
("Laizhou Sales") establishment
Francs Champs Cognac, France Cognac, France Investment 100% - Subsidiaries acquired by
and trading establishment
Lanzhou Changyu Wine Sales Co., Ltd ("Lanzhou Sales") Lanzhou Gansu, China Lanzhou Gansu, China Sales - 100% Subsidiaries acquired by
establishment
Beijing Retailing Co. Ltd("Beijing Retailing") Beijing, China Beijing, China Sales - 100% Subsidiaries acquired by
establishment
Tianjin Changyu Pioneer Sales Co., Ltd ("Tianjin Pioneer") Tianjin, China Tianjin, China Sales - 100% Subsidiaries acquired by
establishment
Fuzhou Changyu Pioneer Sales Co., Ltd ("Fuzhou Pioneer") Fuzhou Fujian, China Fuzhou Fujian, China Sales - 100% Subsidiaries acquired by
establishment
Nanjing Changyu Pioneer Sales Co., Ltd ("Nanjing Pioneer") Nanjing, Jiangsu, China Nanjing, Jiangsu, China Sales - 100% Subsidiaries acquired by
establishment
Xianyang Changyu Pioneer Sales Co., Ltd ("Xianyang Pioneer") Xianyang, Shanxi, China Xianyang, Shanxi, China Sales - 100% Subsidiaries acquired by
establishment
Shenyang Changyu Pioneer Sales Co., Ltd ("Shenyang Pioneer") Shenyang, Liaoning, China Shenyang, Liaoning, China Sales - 100% Subsidiaries acquired by
establishment
Jinan Changyu Pioneer Sales Co., Ltd ("Jinan Pioneer") Jinan, Shandong, China Jinan, Shandong, China Sales - 100% Subsidiaries acquired by
establishment
Shanghai Changyu Pioneer Sales Co., Ltd ("Shanghai Pioneer") Shanghai, China Shanghai, China Sales - 100% Subsidiaries acquired by
establishment
Fuzhou Changyu Pioneer Sales Co., Ltd ("Fuzhou Pioneer") Fuzhou, Jiangxi, China Fuzhou, Jiangxi, China Sales - 100% Subsidiaries acquired by
establishment
Shijiazhuang Changyu Pioneer Sales Co., Ltd ("Shijiazhuang Pioneer") Shijiazhuang, Hebei, China Shijiazhuang, Hebei, China Sales - 100% Subsidiaries acquired by
establishment
Hangzhou Yuzefeng Sales Co., Ltd ("Hangzhou Yuzefeng") Hangzhou, Zhejiang, China Hangzhou, Zhejiang, China Sales - 100% Subsidiaries acquired by
establishment
Jilin Changyu Pioneer Sales Co., Ltd ("Jilin Pioneer") Changchun, Jilin, China Changchun, Jilin, China Sales - 100% Subsidiaries acquired by
establishment
163
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
VIII. INTERESTS IN OTHER ENTITIES - continued
1. Structure of the Group - continued
Equity interest owned
by the company Acquisition method
Name Address Place of registration Nature Direct Indirect
Beijing Changyu Pioneer Sales Co., Ltd ("Beijing Pioneer") Beijing, China Beijing, China Sales - 100% Subsidiaries acquired by
establishment
Harbin Changyu Pioneer Sales Co., Ltd ("Harbin Pioneer") Harbin, Heilongjiang, China Harbin, Heilongjiang, China Sales - 100% Subsidiaries acquired by
establishment
Hunan Changyu Pioneer Sales Co., Ltd ("Hunan Pioneer") Changsha, Hunan, China Changsha, Hunan, China Sales - 100% Subsidiaries acquired by
establishment
Yinchuan Changyu Pioneer Sales Co., Ltd ("Yinchuan Pioneer") Yinchuan, Ningxia, China Yinchuan, Ningxia, China Sales - 100% Subsidiaries acquired by
establishment
Kunming Changyu Pioneer Sales Co., Ltd ("Kunming Pioneer") Kunming, Yunnan, China Kunming, Yunnan, China Sales - 100% Subsidiaries acquired by
establishment
Chongqing Changyu Pioneer Sales Co., Ltd ("Chongqing Pioneer") Chongqing, China Chongqing, China Sales - 100% Subsidiaries acquired by
establishment
Wuhan Changyu Pioneer Sales Co., Ltd ("Wuhan Pioneer") Wuhan, Hubei, China Wuhan, Hubei, China Sales - 100% Subsidiaries acquired by
establishment
Hohhot Changyu Pioneer Sales Co., Ltd ("Hohhot Pioneer") Hohhot Inner Mongolia, China Hohhot Inner Mongolia, China Sales - 100% Subsidiaries acquired by
establishment
Chengdu Changyu Pioneer Sales Co., Ltd ("Chengdu Pioneer") Chengdu, Sichuan, China Chengdu, Sichuan, China Sales - 100% Subsidiaries acquired by
establishment
Nanning Changyu Pioneer Sales Co., Ltd ("Nanning Pioneer") Nanning, Guangxi, China Nanning, Guangxi, China Sales - 100% Subsidiaries acquired by
establishment
Lanzhou Changyu Pioneer Sales Co., Ltd ("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 Changyu Pioneer Sales Co., Ltd ("Hefei Pioneer") Hefei, Anhui, China Hefei, Anhui, China Sales - 100% Subsidiaries acquired by
establishment
Urumchi Changyu Pioneer Sales Co., Ltd ("Urumchi Pioneer") Urumchi Xinjiang, China Urumchi Xinjiang, China Sales - 100% Subsidiaries acquired by
establishment
Guangzhou Changyu Pioneer Sales Co., Ltd ("Guangzhou Pioneer") Guangzhou Guangdong, China Guangzhou Guangdong, China Sales - 100% Subsidiaries acquired by
establishment
Grape Wine Marketing Ltd. Sales 100% - Subsidiaries acquired by
Yantai Shandong China Yantai Shandong China
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 6 August 2017. Upon the expiry of the agreement arrangement, the
non-controlling interests of Xinjiang Tianzhu will normally enjoy/commit all the rights and
obligations of the shareholders as stipulated in the Articles of Association.
(b) Changyu Chateau is a Sino-foreign joint venture established by the Company and a foreign
investor, accounting for 70% of Changyu Chateau's equity interest. Through agreement
arrangement, the Company has the full power to control Changyu Chateau's strategic operating,
investing and financing policies. The agreement arrangement will be terminated on 31
December 2022.
(c) Langfang Chateau is a Sino-foreign joint venture established by the Company and a foreign
investor, accounting for 49% of Langfang Chateau's equity interest by the Company and
subsidiaries. Through agreement arrangement, the Company has the full power to control
Langfang Chateau's strategic operating, investing and financing policies. The agreement
arrangement was terminated on 31 December 2017. Minority shareholders of Langfang Chateau
will be entitled to/abided by the rights/obligations of the shareholders as agreed in the Articles of
Association upon the due date of the agreement arrangement.
(d) Beijing Chateau is a joint venture established by the Company, Yantai De'an and Beijing
Qinglang, and the Company increases the capital contribution RMB 502,910,000 in this period,
Yantai De'an and Beijing Qinglang together increase the capital contribution RMB29,840,000.
Beijing Chateau has compelled the business registration on 22 December 2017. After capital
contribution increased, the Company is accounting for 90% of Beijing Chateau's equity interest.
The Company gets the control over operation, investment, and financial decision of Beijing
Chateau through agreement arrangement, which will terminate on 2 September 2019.
164
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
VIII. INTERESTS IN OTHER ENTITIES - continued
1. Structure of the Group - continued
(e) Ice Chateau is a Sino-foreign joint venture established by the Company and a foreign investor,
accounting for 51% of Ice Chateau's equity interest. Through agreement arrangement, the
Company has the full power to control Ice Chateau's strategic operating, investing and financing
policies. The agreement arrangement will be terminated on 31 December 2021.
(f) R&D Centre is a joint venture established by the Company and CADF, accounting for 72% of
R&D Centre's equity interest at 31 December 2018. The Company has complete control over the
operation, investment and financial policies of the R&D Centre subject to the contract
arrangement as described in Note VI-25. The contract arrangement will expire on 22 May 2026.
As at 31 December 2018, the remaining investment of IFAD accounted for 28% of the registered
capital.
2. Non-wholly owned subsidiaries
Profit and loss belongs 31/12/2018
Minority to non-controlling Distributions to Assimilate non-controlling
Name interest shareholder ratio interest shareholders non-controlling interest interest
Xinjiang Tianzhu 40% (2,760,804) - - 50,612,648
Atrio 25% 844,190 (744,149) - 31,726,931
Changyu Chateau 30% - - - 12,365,016
Langfang Castel 51% (1,774,541) - - 20,927,981
Beijing Chateau 10% - - - 65,133,868
Ice Chateau 49% - - - 33,319,062
IWCC 15% 2,619,885 (2,655,627) - 53,079,827
Australia Kilikanoon Estate 20% (310,144)
_________ _________- 17,532,823
_________ 17,222,679
_________
(1,381,414)
_________ (3,399,776)
_________ 17,532,823
_________ 284,388,012
_________
165
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
VIII. INTERESTS IN OTHER ENTITIES - continued
3. Key financial information of important non-wholly owned subsidiaries
31/12/2018 31/12/2017
Current Non-current Total Current Non-current Total Current Non-current Current Non-current Total
Total assets
Name assets assets assets liabilities liabilities liabilities assets assets liabilities liabilities liabilities
Xinjiang Tianzhu 27,390,495 66,486,795 93,877,290 - 5,336,114 5,336,114 30,264,441 71,323,940 101,588,381 809,080 5,336,114 6,145,194
Changyu Chateau 141,298,023 114,694,168 255,992,191 171,869,662 - 171,869,662 140,038,021 115,435,985 255,474,006 175,061,601 - 175,061,601
Langfang Castel 17,659,511 16,001,682 33,661,193 3,358,322 - 3,358,322 22,728,536 17,973,719 40,702,255 6,133,909 - 6,133,909
Beijing Chateau 219,973,582 461,115,089 681,088,671 62,598,545 - 62,598,545 214,079,274 481,668,050 695,747,324 73,963,043 - 73,963,043
Ice Chateau 45,194,591 23,920,890 69,115,481 14,974,458 100,000 15,074,458 38,657,358 25,484,359 64,141,717 10,871,695 100,000 10,971,695
Atrio 464,421,130 99,080,668 563,501,798 381,659,315 54,520,937 436,180,252 398,835,959 116,299,504 515,135,463 299,030,002 89,336,338 388,366,340
IWCC 214,784,490 300,969,342 515,753,832 148,359,328 4,976,161 153,335,489 175,669,256 305,664,706 481,333,962 122,023,764 5,206,406 127,230,170
Australia Kilikanoon Estate 87,634,707 63,759,866 151,394,573 13,387,942 51,893,171 65,281,113 N/A N/A N/A N/A N/A N/A
2018 2017
Total comprehensive Operating activities Total comprehensive Operating activities
Revenue Net profit (loss) Revenue Net profit (loss)
Name income cash flows income cash flows
Xinjiang Tianzhu 18,803 (6,902,010) (6,902,010) 43,112 116,555,588 15,531,513 15,531,513 32,224,800
Changyu Chateau 121,235,278 3,710,124 3,710,124 16,096,447 68,964,230 985,910 985,910 19,629,212
Langfang Castel 5,038,281 (3,479,492) (3,479,492) 673,422 39,165,527 (1,616,638) (1,616,638) (1,554,380)
Beijing Chateau 159,369,783 16,555,846 16,555,846 19,627,933 145,103,200 17,475,647 17,475,647 49,964,881
Ice Chateau 57,290,490 870,994 870,994 289,782 49,643,396 1,241,699 1,241,699 (1,748,535)
Atrio 327,550,545 3,811,465 3,376,761 6,129,923 281,007,167 2,000,682 7,701,416 (32,148,326)
IWCC 262,104,563 15,934,347 17,465,900 3,584,648 157,953,467 28,791,684 31,458,952 16,482,765
Australia Kilikanoon Estate 57,648,905 217,869 (1,550,720) (1,522,151) N/A N/A N/A N/A
* This is amount incurred in the period between acquisition date and 31 December 2018.
166
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IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT
The Group's major financial instruments include cash and bank, notes and account receivable,
other receivables, available-for-sale financial assets, other non-current assets, short-term
borrowings, 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.
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. Risk management objectives and policies
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 USD. Several of the
Group's subsidiaries have purchases and sales denominated in EUR, Chilean peso and Australia
dollar, borrowings denominated in USD, while the Group's other principal activities are
denominated and settled in RMB.As at 31 December 2018, except that the assets and liabilities
stated in the table below are foreign currency deposits or excess of borrowings, the assets and
liabilities of each entity of the Group are settled in their respective functional currencies.
31/12/2018 31/12/2017
RMB RMB
Bank and cash (EUR) 199,753 1,190,459
Bank and cash (USD) 51,283,910 34,843,968
Short-term borrowings (USD) 75,495,200 58,807,800
____________ ____________
Currency risk arising from the assets and liabilities denominated in foreign currencies may have
impact on the Group's performance. 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.
167
Yantai Changyu Pioneer Wine Co. Ltd. 2018 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:
Domestic entities:
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
EUR 5% increase against RMB 50 50 50 50
EUR 5% decrease against RMB (50) (50) (50) (50)
USD 5% increase against RMB 2,469,416 2,469,416 1,456,525 1,456,525
USD 5% increase against RMB (2,469,416)
_________ (2,469,416)
________ (1,456,525)
________ (1,456,525)
________
_________ ________ ________ ________
Overseas entities:
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
USD 5% increase against EUR 900 900 52,695 52,695
USD 5% decrease against EUR (900) (900) (52,695) (52,695)
USD 15% increase against Chile Peso (11,042,641) (11,042,641) (5,275,651) (5,275,651)
USD 15% decrease against Chile Peso 11,042,641 11,042,641 5,275,651 5,275,651
EUR 10% increase against Chile Peso 19,876 19,876 58,350 58,350
EUR (19,876)
10% decrease against Chile Peso _________ (19,876)
________ (58,350)
________ (58,350)
________
_________ ________ ________ ________
Note: As at 31 December 2018, the Group's management anticipated a change of 5% in
exchange rate for USD to EUR, 10% in exchange rate for EUR to Chilean Peso and 15%
in exchange rate for USD to Chilean Peso.
168
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT - continued
1. Risk management objectives and policies - continued
1.1 Market risk- continued
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-16 and Note VI-24 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
shareholders' shareholders'
Change in interest rate Effect on profit equity Effect on profit equity
Bank borrowings 50% increase (2,016,667) (2,016,667) (2,046,646) (2,046,646)
Bank borrowings 50% decrease 2,016,667
________ 2,016,667
________ 2,046,646
________ 2,046,646
________
________ ________ ________ ________
Note: As at 13 December 2018, the Group's management anticipated a change of 50 basis points
in the bank's variable interest rate.
1.2 Credit risk
As at 31 December 2018, 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.
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IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT - continued
1. Risk management objectives and policies - continued
1.2 Credit risk - continued
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 2018, 19.8% of the Group trade
receivables are due from top five customers (31 December 2017: 20.7%). 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 2,338,698 57,691,463 641,831,131 - - 701,861,292
Accounts payable 163,879,578 327,759,156 221,934,147 - - 713,572,881
Other payables 155,842,255 179,896,318 256,314,091 - - 592,052,664
Interest payable 712,826 - - - - 712,826
Long-term borrowings 8,382,996 31,970,170 85,822,835 168,574,037 - 294,750,038
Long-term payables _________- ________
22,762,934 _________
14,158,433 _________
143,555,433 ________
90,356,300 _________
270,833,100
331,156,353 620,080,041
_________ ________ 1,220,060,637
_________ 312,129,470 90,356,300
_________ ________ 2,573,782,801
_________
1.4 Fair value disclosure - Financial assets and liabilities not measured using fair value
Fair value
Carrying amount Level 1 Level 2 Level 3 Total
of fair value of fair value of fair value
Long-term payables measured
at amortized cost 259,000,000
________ -
_______ 223,263,886
________ -
________ 223,263,886
________
As at 31 December 2018, The management of the Group believes that, apart from the
aforementioned long-term payables, the carrying amounts of other financial assets and financial
liabilities measured at amortised cost in the financial statements are close to the fair values of
these assets and liabilities.
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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 % %
Changyu Group Parent Limited Zhou Manufactu
Yantai 50,000,000 50.4 50.4 265645824
Company Company Company Hongjiang ring
During the year ended 31 December 2018, there is no change in parent company's registered
capital, shares holding or voting power.
2. Subsidiaries: Please refer to Note 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
Yantai Changyu Culture Tourism Production Company controlled 91370602MA3N7A877P
Sales Co., Ltd.(" Culture Sales") by the same parent
Yantai Changyu Culture Tourism Development Company controlled 91370602MA3N59J300
Co., Ltd.(" Culture Development ") by the same parent
4. Significant related party transactions
(1) Purchases from and sales to related parties
Purchase from related parties
The content of related 2018 2017
party transactions RMB RMB
ShenMa Packing product purchase 173,238,289 145,872,001
Zhongya Pharmaceutical product purchase 15,690,930 9,279,380
Wine Culture Museum product purchase 16,784,711 6,336,832
Window of the Wine City product purchase 7,913,342 2,756,050
Culture Sales product purchase 35,857
___________ ___________
213,663,129
___________ 164,244,263
___________
All related party transactions are based on the negotiated price.
In 2018, purchases from related parties accounted for 11.2% of the Group's total purchase (2016:
10.9%)
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X. RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
4. Significant related party transactions - continued
(1) Purchases from and sales to related parties- continued
Sales to related parties
The content of related 2018 2017
party transactions RMB RMB
Wine Culture Museum goods sales 23,515,379 8,235,520
Window of the Wine City goods sales 13,821,555 12,205,247
Zhongya Pharmaceutical goods sales 4,552,269 2,035,003
Culture Sales goods sales 2,914,686 -
ShenMa Packing goods sales 348,247
___________ 1,634,883
___________
45,152,136
___________ 24,110,653
___________
All related party transactions are based on the negotiated price. In 2018, sales to related parties
accounted for less than 1% of the Group's total sales (2017: less than 1%).
(2) Property leased from a related party
The Group as Lessee
2018 Assets leased Beginning date Ending date Rental expense
RMB
Changyu Group Company office building 1 January 2016 31 December 2020 1,538,840
Changyu Group Company office building and factory 1 January 2017 31 December 2021 1,331,364
Changyu Group Company office building and factory 1 January 2017 31 December 2021 3,994,091
_______
6,864,295
_______
All related party transactions are based on the negotiated price.
The Group as Lessor
2018 Assets leased Beginning date Ending date Rental income
RMB
ShenMa Packing office building and factory 1 July 2017 30 June 2022 1,478,982
Zhongya Pharmaceutical office building and factory 1 January 2018 31 December 2018 518,182
_______
1,997,164
_______
All related party transactions are based on the negotiated price.
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X. RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
4. Significant related party transactions - continued
(3) Other significant related party transactions
The content of related
party transactions Note 2018 2017
RMB RMB
Changyu Group Company Royalty fee (a) 73,976,395 72,838,612
Changyu Group Company Patents fee (b) 50,000
__________ 50,000
__________
All related party transactions are based on the negotiated price.
(a) Royalty fee
Pursuant to a royalty agreement dated 18 May 1997, starting from 18 September 1997, the
Company may use certain trademarks of Changyu Group Company, which have been
registered with the PRC Trademark Office. An annual royalty fee at 2% of the Group's
annual sales is payable to Changyu Group Company. The license is effective until the
expiry of the registration of the trademarks.
During 2018, royalty fee paid to related company accounted for 100% of the Group (2017:
100%).
(b) Patents fee
The Company renewed the contract on 20 August 2016 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 2018, the patents usage fee payable to Changyu
Group Company is amounted to RMB 50,000(2017:RMB 50,000).
During 2018, patent fee paid to related company accounted for 100% of the Group (2017:
100%).
(4) Remuneration of the management
2018 2017
RMB RMB
Remuneration of the management 13,102,005
____________ 10,309,409
____________
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
X. RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
5. Balance due from/to related parties
(1) Balance due from related parties
31/12/2018 31/12/2017
Accounts receivable Balance Provision Balance Provision
RMB RMB RMB RMB
Zhongya Pharmaceutical 2,768,391 - 8,134,150 -
Shen Ma Packing. 17,137 - 1,342,348 -
Window of the Wine City 1,911,157 - 3,196,095 -
Wine Culture Museum -
_________ -
________ 34,280
_________ -
________
4,696,685
_________ -
________ 12,706,873
_________ -
________
31/12/2018 31/12/2017
Other receivable Balance Provision Balance Provision
RMB RMB RMB RMB
Shen Ma Packing. 813,440
_________ -
_______ 813,440
________ -
_______
(2) Balance due to related parties
Accounts payable 31/12/2018 31/12/2017
RMB RMB
Shen Ma Packing. 55,366,785 52,403,056
Zhongya Pharmaceutical 6,722,667 2,051,991
Wine Culture Museum 4,646,731 2,040,860
Window of the Wine City 4,789,600
____________ 1,485,766
____________
71,525,783
____________ 57,981,673
____________
Other payable 31/12/2018 31/12/2017
RMB RMB
Shen Ma Packing. 450,000 -
Changyu Group Company 78,414,978
____________ 77,208,929
____________
78,864,978
____________ 77,208,929
____________
The above amounts due to related parties are unsecured and interest-free.
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XI. COMMITMENT
1. Important commitments
(1) Capital commitments
31/12/2018 31/12/2017
RMB'000 RMB'000
Capital commitment for
purchasing non-current assets 996,675
____________ 1,246,506
____________
(2) Operating lease commitment
As lessee
Significant operating lease: Total future minimal lease payments under non-cancelable contract
with lessor are as follow:
31/12/2018 31/12/2017
RMB'000 RMB'000
Within 1 year 20,576 32,236
1 to 2 years 11,757 19,116
2 to 3 years 10,064 11,943
3 years and above 84,095
____________ 95,342
____________
126,492
____________ 158,637
____________
2. Contingent liability
The Group do not have any significant contingent liabilities as at balance sheet date.
XII. POST BALANCE SHEET DATE EVENT
1. Profit appropriation
According to the board of the director resolution raised on 18 April 2019, the Company proposed
a cash dividend of RMB 6.0 (including taxes) for every 10 shares in respect of 2018 based on the
issued shares of 685,464,000. The aggregate amount of cash dividend is RMB 411,278,400. The
resolution is to be approved by the annual general meeting.
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XIII. OTHER SIGNIFICANT EVENTS
Capital management
The main target of the capital management of the group is to ensure the continuous operation of
the group, optimize the portfolio structure of equity financing and debt financing, so as to achieve
the goal of maximizing shareholder benefits. The capital structure of the group consists of the
following parts:
(1) Cash and cash equivalents
(2) Share capital, capital reserve, surplus reserve and retained earnings
The management reviews the group's capital structure according to the interim or year-end
financial reports and considers the cost of capital and the corresponding risks of various capital
types. Based on the choice of the management, the group optimizes the overall capital structure by
issuing additional shares and borrowing or repaying loans.
Segment report
The Group is principally engaged in the production and sales of wine, brandy, and champagne in
China, France, Spain, Chile and Australia. In accordance with the Group's internal organization
structure, management requirements and internal reporting system, the Group's operation is
divided into four parts: China, Spain, France, Chile and Australia. The management periodically
evaluates segment results, in order to allocate resources and evaluate performances. In 2018, more
than 87% revenue and more than 99% profit derived from China, and more than 92% non-current
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
31/12/2018 31/12/2017
RMB RMB
Cash 3,177 5,280
Bank balance 579,993,055 501,208,996
Other currency fund 44,592,577
____________ 57,960,190
____________
Total 624,588,809
____________ 559,174,466
____________
As at 31 December 2018, the balance of restricted cash of the Company is RMB 2,611,350 (31
December 2017: RMB 2,645,410), which is home maintenance funds.
As at 31 December 2018, other currency fund of the Company include: deposit of RMB
44,540,850 for letter of credit (31 December 2017: RMB 57,946,190) and deposit of RMB 51,727
for entity card (31 December 2017: RMB 14,000).
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XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
1. Cash and bank - continued
As at 31 December 2018, the Company's time deposits include the short-term deposits with
original maturity from six months to twelve months amounting to RMB 45,000,000 (31 December
2017: RMB 5,000,000 ) with interest rate ranging from 1.55% to 2.03%.
2. Notes and account receivable
2.1 Presented by categories
31/12/2018 31/12/2017
RMB RMB
Notes receivable 39,885,254 41,645,203
Accounts receivable 1,447,973
____________ 7,805,333
____________
Total 41,333,227
____________ 49,450,536
____________
2.2 Notes receivable
(1) Categories of notes receivable
31/12/2018 31/12/2017
RMB RMB
Bank acceptances 39,885,254
____________ 41,645,203
____________
(2) Pledged notes receivable
As of 31 December 2018, there was no pledged notes receivable (31 December 2017: Nil).
(3) Notes endorsed by the Group to other parties which are not yet due at the end of the period
31/12/2018 31/12/2017
RMB RMB
Bank acceptances 94,755,124
____________ 72,316,589
____________
As at 31 December 2018, notes endorsed by the Company to other parties which are not yet due at
the end of the period is RMB 94,755,124 (31 December 2017: RMB 72,316,589). 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, 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.
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XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
2. Notes and accounts receivable- continued
2.2 Notes receivable - continued
(4) Notes receivable were reclassified as accounts receivable due to the default of drawer
As at 31 December 2018, there was no notes receivable were reclassified as accounts receivable
due to the default of drawer (31 December 2017: Nil).
2.3 Accounts receivable
(1) Disclosure of accounts receivable by categories:
31/12/2018 31/12/2017
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
for which bad debt
provision has been
assessed individually
______ ___
1,447,973 100.0
____ ____ ______
- - 1,447,973
______ ___
7,805,333 100.0
____ ____ ______
- - 7,805,333
The normal credit term of trade receivables is one month. The trade receivables are interest free.
The aging analysis is as follows:
31/12/2018 31/12/2017
RMB RMB
Within 1 year 1,447,973
____________ 7,805,333
____________
(2) Provision, reversals and collections during the current period:
As at 31 December 2018, there was no provision provided for trade receivables (31 December
2017: Nil). The Company did not provide, reverse or write off any provision during 2018 (31
December 2017: Nil).
(3) The balance of accounts receivable at the end of the year
Relationship Proportion of
with the Group Amount Aging total receivables
Zhongya Pharmaceutical Other related parties 1,447,973
_________ Within 1 year 100.0
_____
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
3. Other receivables
3.1 Presented by categories
31/12/2018 31/12/2017
RMB RMB
Interest receivable 254,088 76,646
Dividend receivables 500,000,000 407,495,922
Other receivables 525,389,268
____________ 592,274,075
____________
Total 1,025,643,356
____________ 999,846,643
____________
3.2 Dividend receivables
31/12/2017 Increase Decrease 31/12/2018 RMB
RMB RMB RMB
Within 1 year
Including: Sales Company 402,595,884 867,404,116 (770,000,000) 500,000,000
Wines Sales - 30,000,000 (30,000,000) -
Langfang Castel - 785,986 (785,986) -
Beijing Chateau - 19,850,000 (19,850,000) -
Shihezi Chateau 4,900,038 15,531,228 (20,431,266) -
National Wines - 20,000,000 (20,000,000) -
Langfang sales - 1,981,410 (1,981,410) -
Atrio - 2,080,191 (2,080,191) -
Chile Indomita
Wine Group _________ __________ __________
- 6,495,728 (6,495,728) _________
-
Total 407,495,922 964,128,659 (871,624,581)
_________ __________ __________ 500,000,000
_________
3.3 Other receivables
(1) Disclosure of other receivables by categories:
31/12/2018 31/12/2017
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 for
which bad debt
provision has been
assessed individually
_____ ___ ____-
525,389,268 100.0
___- _____ _____ ___ _____- ___-
525,389,268 592,274,075 100.0
_____
592,274,075
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XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
3. Other receivables - continued
3.3 Other receivables - continued
(1) Disclosure of other receivables by categories: - continued
The aging analysis is as follows:
31/12/2018 31/12/2017
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 491,483,881 93.5 - 491,483,881 589,011,103 99.5 - 589,011,103
1 to 2 years 33,897,084 6.5 - 33,897,084 3,006,488 0.5 - 3,006,488
2 to 3 years 8,303 - - 8,303 53,794 - - 53,794
Over 3 years ________- ____- _______
- ________- ________
202,690 ____- ______
- ________
202,690
525,389,268 100.0 - 525,389,268 592,274,075 100.0 - 592,274,075
________ ____ _______ ________ ________ ____ ______ ________
(2) Accrual, reversal and written-off during the current period
No bad debt accrued or reversed in 2018 (2017:Nil.).
(3) Other receivables written off current year
No other receivables written in 2018 (2017:Nil.).
(4) Disclosure of other receivables by nature
31/12/2018 31/12/2017
RMB RMB
Receivable from subsidiary 523,579,831 589,897,407
Receivable deposit 12,500 2,500
Others 1,796,937
____________ 2,374,168
____________
525,389,268
____________ 592,274,075
____________
(5) Top five entities with the largest balances of other receivables
As at 31 December 2018, the particulars of top five other receivables are as follows:
Proportion of total
Nature Amount Aging prepayments
RMB %
Sales Company Internal balance 369,060,579 Within 1 year 70.2
R&D Centre Internal balance 120,589,826 Within 1 year 23.0
Yantai Castel Chateau Internal balance 12,404,563 Within 1 year 2.4
Pioneer International Internal balance 10,704,391 Within 1 year 2.0
Ningxia Chateau Internal balance _________
7,085,540 Within 1 year ___1.3
519,844,899
_________ 98.9
___
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XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
4. Inventories
31/12/2018 31/12/2017
Net carrying Net carrying
Balance Provision amount Balance Provision amount
RMB RMB RMB RMB RMB RMB
Raw material 1,200,528 - 1,200,528 1,841,216 - 1,841,216
Work in progress 358,230,774 - 358,230,774 307,104,357 - 307,104,357
Finished goods 25,723,438
_________ -
_______ 25,723,438
_________ 39,096,480
_________ -
_______ 39,096,480
_________
385,154,740
_________ -
_______ 385,154,740
_________ 348,042,053
_________ -
_______ 348,042,053
_________
5. Long-term equity investments
2018 Cost 31/12/2017 for the year 31/12/2018 Share holding Voting power for the year
RMB RMB RMB RMB % % RMB
Cost Method
Xinjiang Tianzhu (a) 60,000,000 60,000,000 - 60,000,000 60 100 -
Kylin Packaging 23,176,063 23,176,063 - 23,176,063 100 100 -
Changyu Chateau (a) 28,968,100 28,968,100 - 28,968,100 70 100 -
Changyu Chateau (a) 3,500,000 3,500,000 - 3,500,000 70 100 -
Ningxia Growing 36,573,247 36,573,247 - 36,573,247 100 100 -
National Wines 2,000,000 2,000,000 - 2,000,000 100 100 20,000,000
Ice Chateau (a) 30,440,500 30,440,500 - 30,440,500 51 100 -
Beijing Chateau (a) 579,910,000 579,910,000 - 579,910,000 90 100 19,850,000
Sales Company 7,200,000 7,200,000 - 7,200,000 100 100 867,404,116
Langfang Sales (b) 100,000 100,000 - 100,000 10 100 1,981,410
Langfang Castel(a) 19,835,730 19,835,730 - 19,835,730 39 100 785,986
Wine Sales 4,500,000 4,500,000 - 4,500,000 100 100 30,000,000
Shanghai Sales(b) 300,000 300,000 - 300,000 30 100 -
Beijing Sales 850,000 850,000 - 850,000 100 100 -
Jingyang Sales (b) 100,000 100,000 - 100,000 10 100 -
Jingyang Wine (b) 900,000 900,000 - 900,000 90 100 -
Ningxia Wine 222,309,388 222,309,388 - 222,309,388 100 100 -
Ningxia Chateau 443,463,500 443,463,500 10,000,000 453,463,500 100 100 -
Dingluote Chateau (b) 212,039,586 212,039,586 - 212,039,586 65 100 -
Shihezi Chateau 809,019,770 809,019,770 3,000,000 812,019,770 100 100 15,531,228
Changan Chateau 803,892,258 803,892,258 - 803,892,258 100 100 -
R&D Centre (a) 500,000,000 500,000,000 2,788,906,445 3,288,906,445 72 100 -
Huanren Wine 21,700,000 21,700,000 500,000 22,200,000 100 100 -
Grape Wine Sales Co., 5,000,000 - - - - 100 -
Francs Champs 236,025,404 236,025,404 - 236,025,404 100 100 -
Atrio 190,150,544 190,150,544 - 190,150,544 75 75 2,080,191
IWCC 274,248,114 274,248,114 - 274,248,114 85 85 6,495,728
Australia Kilikanoon
Estate _______ - _______ - _______
107,194,420 _______
107,194,420 80 80 _______ -
4,516,202,204 4,511,202,204 2,909,600,865 7,420,803,069 964,128,659
_______ _______ _______ _______ _______
(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 2018, there was no significant restriction on the remittance of fund from the investees to
the Company.
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
6. Fixed assets
(1) Fixed assets
Buildings Machinery Motor vehicles Total
RMB RMB RMB RMB
Total original carrying amount
31/12/2017 265,340,049 475,569,634 10,129,313 751,038,996
Increase
Purchase - 9,345,433 - 9,345,433
CIP transfer 8,887,802 139,665 - 9,027,467
Decrease
Disposal - (13,137,771) (3,479,487) (16,617,258)
Transfer to Investment
property (VI-8) (32,606,762)
_________ -
_________ -
_________ (32,606,762)
_________
31/12/2018 241,621,089
_________ 471,916,961
_________ 6,649,826
_________ 720,187,876
_________
Total accumulated depreciation
31/12/2017 111,607,494 346,413,532 4,867,069 462,888,095
Increase
Additions 7,784,794 15,133,656 531,639 23,450,089
Decrease
Disposal (227,951) (12,642,520) (946,751) (13,817,222)
Transfer to Investment
property (VI-8) (17,644,360)
_________ -
_________ -
_________ (17,644,360)
_________
31/12/2018 101,519,977
_________ 348,904,668
_________ 4,451,957
_________ 454,876,602
_________
Total net carrying amount
31/12/2018 140,101,112
_________ 123,012,293
_________ 2,197,869
_________ 265,311,274
_________
_________ _________
31/12/2017 153,732,555
_________ 129,156,102
_________ 5,262,244
_________ 288,150,901
_________
_________
As at 31 December 2018, fixed assets with restricted ownership is RMB 34,246,887 (December
31, 2017:RMB 36,349,289 ), referring to Note VI-45 for details.
As at 31 December 2018, the Company has no fixed assets classified as held for sale ( 31
December 2017:RMB 2,000,197), and the Company has no temporary idle fixed assets and fixed
assets under finance leases.
(2) Fixed assets through operating lease
Amount
RMB
Machinery 134,111
________
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
6. Fixed assets - continued
(3) Fixed assets of which certificates of title have not been obtained
As at 31 December 2018, 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 3,653,494
__________ Processing
7. Construction in progress
(1) Construction in progress
31/12/2018 31/12/2017
RMB RMB
Reconstruction of boiler heating systems - 3,556,349
Drainage project - 3,200,000
Non-dry sticker labeling machine project 4,105,264 -
Others 2,206,437
____________ -
____________
6,311,701 6,756,349
____________ ____________
(2) Current year movement on important construction:
The
Accumulated progress of
Transfer to expenditure/ constructio
Budget 31/12/2017 Addition PPE 31/12/2018 budget n Financed by
RMB RMB RMB RMB RMB %
Reconstruction of boiler
heating systems 13,000,000 3,556,349 - (3,556,349) - 100.0 100.0 Self-raised
Non-dry sticker labeling
machine project 6,920,000 - 5,431,516 (1,326,252) 4,105,264 78.5 78.5 Self-raised
There was no interest capitalized in construction in progress in 2018.
(3) As at 31 December 2018, there was no provision was made for the construction in process, and no
provision was made (31 December 2017:Nil).
183
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XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
8 Bearer biological assets
Bearer biological assets are grape trees，which measured in cost method.
Immature Mature
biological assets biological assets Total
RMB RMB RMB
Total original carrying amount
31/12/2017 6,306,963 130,929,124 137,236,087
Increase
Cultivated increase 12,930,423 - 12,930,423
Transfer to mature assets
from immature assets (9,802,191)
__________ 9,802,191
___________ -
__________
31/12/2018 9,435,195
__________ 140,731,315
___________ 150,166,510
__________
Total accumulated depreciation
31/12/2017 - 17,663,548 17,663,548
Increase
Additions -
__________ 7,500,169
___________ 7,500,169
__________
31/12/2018 -
__________ 25,163,717
___________ 25,163,717
__________
Total net carrying amount
31/12/2018 9,435,195
__________ 115,567,598
___________ 125,002,793
__________
31/12/2017 6,306,963
__________ 113,265,576
___________ 119,572,539
__________
As at 31 December 2018, there is no biological asset with ownership restricted (31 December
2017: Nil).
As at 31 December 2018, there is no indication that biological assets may be impaired, and no
provision was made. (31 December 2017: Nil).
184
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XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
9. Intangible assets
Intangible assets
Land use right
RMB
Total original carrying amount
31/12/2017 and 31/12/2018 96,594,766
__________
Total accumulated depreciation
31/12/2017 26,971,547
Increase
Additions 2,379,153
__________
31/12/2018 29,350,700
__________
Total net carrying amount
31/12/2018 67,244,066
__________
31/12/2017 69,623,219
__________
As at 31 December 2018, Intangible assets with restricted ownership are RMB 50,902,950
(December 31, 2017: RMB 52,720,912), Please refer to Note VI-45 in detail.
10. Deferred tax assets
Recognised deferred tax assets not presented at the net amount after offset
31/12/2018 31/12/2017
Item Deductible Deferred Deductible Deferred
temporary difference tax assets temporary difference tax assets
RMB RMB RMB RMB
Unrealized profit from intra
5,897,436 1,474,359 7,163,828 1,790,957
- company transactions
Unpaid bonus 37,973,000 9,493,249 35,822,735 8,955,683
Retirement benefit 10,143,950 2,535,988 10,057,113 2,514,278
Deductible losses 30,421,511 7,605,378 45,526,327 11,381,582
Deferred income 12,343,972 3,085,993 16,581,627 4,145,407
96,779,869 24,194,967 115,151,630 28,787,907
11. Other non-current assets
31/12/2018 31/12/2017
RMB RMB
Receivables from subsidiaries 972,700,000
____________ 3,718,674,166
____________
185
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XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
12. Short-term borrowings
31/12/2018 31/12/2017
RMB RMB
Credit loans 150,000,000
____________ 600,000,000
____________
As at 31 December 2018, credit loans detail are as follows:
Loan bank Loans amount Loan term Interest rate in contract Interest rat
RMB % %
ICBC Yantai branch 150,000,00024
_________ May 2018 – 24 May 2019 Annual benchmark rate 4.35
13. Notes and accounts payable
The aging analysis of accounts payable are as follows
31/12/2018 31/12/2017
RMB RMB
Within 1 year 132,664,195 97,036,146
1 to 2 years - 556,883
2 to 3 years 395 240,095
Over 3 years 39,714
____________ -
____________
132,704,304
____________ 97,833,124
____________
14. Employee benefits payable
(1) Employee benefits payable
31/12/2017 Increase Decrease 31/12/2018
RMB RMB RMB RMB
Short-term salaries and welfare 60,050,963 97,491,895 (95,341,628) 62,201,230
Post-demission benefits
- predetermined provision plan - 6,785,401 (6,785,401) -
Termination benefit 10,057,113
_________ 5,216,248
_________ (5,129,412)
_________ 10,143,949
_________
70,108,076
_________ 109,493,544
_________ (107,256,441)
_________ 72,345,179
_________
_________
186
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XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
14. Employee benefits payable - continued
(2) Short-term salaries and welfare
31/12/2017 Increase Decrease 31/12/2018
RMB RMB RMB RMB
Salaries and bonus 60,694,620 83,892,951 (81,609,810) 62,977,761
Staff benefit 37,173 6,191,811 (6,191,811) 37,173
Staff welfare - 4,004,223 (4,004,223) -
Includes:
Medical insurance - 3,476,931 (3,476,931) -
Injury insurance - 289,904 (289,904) -
Maternity insurance - 237,388 (237,388) -
Housing fund - 3,005,993 (3,005,993) -
Union fee and education fee 1,896,872
_________ 529,790
_________ (529,791)
_________ 1,896,871
_________
Total 62,628,665
_________ 97,624,768
_________ (95,341,628)
_________ 64,911,805
_________
Less: Non-current liabilities 2,577,702
_________ 2,710,575
_________
Short-term salaries and welfare 60,050,963
_________ 62,201,230
_________
(3) Predetermined provision plan
31/12/2017 Increase Decrease 31/12/2018
RMB RMB RMB RMB
Pension - 6,534,445 (6,534,445) -
Unemployment insurance -
_____ 250,956
_________ (250,956)
_________ -
_____
-
_____ 6,785,401
_________ (6,785,401)
_________ -
_____
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 0.7% 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 6,534,445 and RMB 250,956 (2017: RMB 8,595,215 and RMB
323,852) respectively into pension insurance and unemployment insurance. As at 31 December
2018, the Company does not have unpaid pension and unemployment insurance (31 December
2017: Nil) which is due to the pension insurance and unemployment insurance plan and not paid
at the end of the reporting period.
187
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XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
15. Taxes payable
31/12/2018 31/12/2017
RMB RMB
Value added tax 1,686,599 -
Consumption tax 3,902,791 6,450,962
Corporation income tax - 26,069
Urban land use tax 685,626 784,627
Individual income tax 6,316,001 6,630,393
City construction tax 36,314 345,138
Property tax 243,814 82,669
Others 240,286
____________ 249,832
____________
13,111,431
____________ 14,569,690
____________
16. Other payables
16.1 Presented by categories
31/12/2018 31/12/2017
RMB RMB
Interest payable 181,250 652,500
Other payables 607,793,269
____________ 544,713,172
____________
607,974,519
____________ 545,365,672
____________
16.2 Other payables
(1) Natures of other payables are as follows
31/12/2018 31/12/2017
RMB RMB
Payable to subsidiaries 585,044,038 534,530,323
Payables for equipment and construction 10,554,451 8,538,687
Deposits from suppliers 5,982,500 183,000
Others 6,212,280
____________ 1,461,162
____________
607,793,269
____________ 544,713,172
____________
(2) As at 31 December 2018, there were no significant outstanding balance aged over than one year.
188
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XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
17. Capital reserve
2018 31/12/2017 Increase Decrease 31/12/2018
RMB RMB RMB RMB
Share premium 557,222,454
___________ -
______ -
______ 557,222,454
___________
18. Operating income and costs
Operating income is analysed as follows:
2018 2017
RMB RMB
Principal operating income 874,292,088 1,310,443,414
Other operating income 2,154,982
____________ 813,440
____________
876,447,070
____________ 1,311,256,854
____________
Operating cost is analysed as follows:
2018 2017
RMB RMB
Principal operating cost 772,497,769 1,165,362,798
Other operating cost 1,989,262
____________ 590,610
____________
774,487,031
____________ 1,165,953,408
____________
19. Taxes and surcharges
2018 2017
RMB RMB
Consumption tax 27,262,209 53,236,697
City construction tax 3,214,543 10,190,867
Education fee and surcharges 2,159,612 5,817,116
Property tax 1,854,486 2,267,901
Land use tax 3,168,559 3,168,559
Stamp tax 310,835 603,461
Others 376,517
____________ 1,285,624
____________
38,346,761
____________ 76,570,225
____________
189
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XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
20. General and administrative expense
2018 2017
RMB RMB
Salary and employee benefit 55,580,888 38,430,904
Maintenance fee 8,396,432 6,192,525
Office fee 3,641,210 3,881,091
Service fee 3,495,328 9,194,005
Depreciation 3,375,180 4,286,164
Property insurance fees 2,961,742 3,080,521
Leasing expenses 2,790,358 2,276,896
Amortization 2,379,153 2,695,110
Shuttle bus 1,442,340 1,719,660
Security and sanitation fee 763,792 941,434
Travelling expenses 324,566 527,464
Greening fee amortization 312,080 394,604
Others 5,042,139
____________ 5,498,757
____________
90,505,208
____________ 79,119,135
____________
21. Financial Expense
2018 2017
RMB RMB
Interest income (41,821,372) (18,602,199)
Exchange loss 4,443,175 1,040,832
Interest expenses 16,075,353 17,414,181
Bank charges 1,010,107
____________ 784,754
____________
(20,292,737)
____________ 637,568
____________
22. Investment income
2018 2017
RMB RMB
Long-term equity investment income accounted
for by using the cost method 964,128,659
____________ 798,877,905
____________
190
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XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
22. Investment income - continued
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 2018 2017
RMB RMB
Sales Company 867,404,116 577,813,022
Beijing Chateau - 87,000,000
Wine Sales - 53,461,029
Xinjiang Tianzhu -
____________ 48,620,373
____________
867,404,116
____________ 766,894,424
____________
As at 31 December 2018 and at 31 December 2017, there are no significant restriction on the
remittance of investment income to the Company.
23. Supplement to cash flow statement
2018 2017
RMB RMB
(1) Cash flows from operating activities calculated by
adjusting the net profit:
Net profit 969,588,573 793,598,010
Add: Depreciation of investment properties 1,857,902 590,610
Depreciation of fixed assets 23,450,089 32,201,177
Amortization of intangible assets 2,379,153 2,379,153
Depreciation of biological assets 7,500,169 6,781,447
(Gains)Losses on disposal of assets (12,411,962) 29,625
Finance expenses 17,808,569 18,614,396
Investment income (964,128,659) (798,877,905)
Decrease/(increase) in deferred tax assets 4,592,940 (1,802,655)
Increase / (decrease) in inventories (37,112,687) 444,690,365
Decrease in trade receivables 37,072,169 103,406,898
Increase / (decrease) in trade payables 92,609,575
____________ (3,541,352)
____________
Net cash flows from operating activities 143,205,831
____________ 598,069,769
____________
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XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
23. Supplement to cash flow statement - continued
(2) Significant investing and financing activities not involving cash receipts and payments
2018 2017
RMB RMB
Change the claim on subsidiaries into Long-term
equity investments 2,802,406,445 2,386,907,749
Increase the investment in subsidiaries
with bank acceptances - 96,345,678
Recover the investment in subsidiaries
with bank acceptances -
____________ (96,345,678)
____________
2,802,406,445
____________ 2,386,907,749
____________
24. Cash and cash equivalents
2018 2017
RMB RMB
Closing balance of Cash and bank 624,588,809 559,174,466
Less:
Restricted bank deposits 2,611,350 2,645,410
Restricted other monetary assets 44,592,577 57,960,190
Deposit with a period of over three months 45,000,000
____________ 5,000,000
____________
Closing balance of cash and cash equivalents 532,384,882
____________ 493,568,866
____________
2018 2017
RMB RMB
Cash and bank 532,384,882 493,568,866
Including: Cash and bank 3,177 5,280
Bank deposits on demand 532,381,705
____________ 493,563,586
____________
Closing balance of cash and cash equivalents 532,384,882
____________ 493,568,866
____________
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XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
25. Related party transactions
(1) Purchase of materials
2018 2017
RMB RMB
Subsidiaries 209,808,816 352,495,622
Other related parties 88,897,126
____________ 82,394,392
____________
298,705,942
____________ 434,890,014
____________
(2) Sales of goods
2018 2017
RMB RMB
Subsidiaries 867,995,960 1,302,056,254
Other related parties 8,451,110
____________ 9,200,600
____________
876,447,070
____________ 1,311,256,854
____________
(3) Sales of Fixed assets
2018 2017
RMB RMB
Subsidiaries 134,445 47,843,203
Other related parties -
____________ 3,934,643
____________
134,445
____________ 51,777,846
____________
(4) Interest income from occupation of funds
2018 2017
RMB RMB
Subsidiaries 35,823,556
____________ 14,912,649
____________
(5) Lease income
2018 2017
RMB RMB
Subsidiaries 1,997,164
____________ 739,491
____________
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XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
25. Related party transactions - continued
(6) Guarantees
Whether
guarantees are
Guaranteed party Currency Amount Beginning date Due date fulfilled completely
R&D Center RMB 500,000,000 8 March 2017 8 March 2022 No
Australian Kilikanoon
Estate AUD 17,000,000 13 December 2018 13 December 2023 No
26. Receivables and payables to related parties
(1) Trade receivables
Trade receivables 31/12/2018 31/12/2017
Bad debts Bad debts
Balance provision Balance provision
RMB RMB RMB RMB
Other related parties 1,447,973
__________ -
_______ 7,805,333
__________ -
_______
Other receivables 31/12/2018 31/12/2017
Bad debts Bad debts
Balance provision Balance provision
RMB RMB RMB RMB
Subsidiaries 523,579,831 - 589,897,407 -
Other related parties 813,440
__________ -
_______ 813,440
__________ -
_______
524,393,271
__________ -
_______ 590,710,847
__________ -
_______
Other non-current assets 31/12/2018 31/12/2017
Bad debts Bad debts
Balance provision Balance provision
RMB RMB RMB RMB
Subsidiaries 972,700,000
__________ -
_______ 3,718,674,166
__________ -
_______
The above receivables due from related parties are unsecured, have no interest or fixed date of
repayment.
194
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XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
26. Receivables and payables to related parties - continued
(2) Trade payables
Trade payables 31/12/2018 31/12/2017
RMB RMB
Other related parties 28,892,583
____________ 29,145,914
____________
Other payables 31/12/2018 31/12/2017
RMB RMB
Subsidiaries 585,044,038 534,530,323
Other related parties 450,000
____________ -
____________
585,494,038
____________ 534,530,323
____________
The above payables due to related parties are unsecured, have no interest or fixed date of
repayment.
195
Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
APPENDIX I SUPPLEMENTARY INFORMATION TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2018
I. DETAILS OF EXTRAORDINARY PROFIT AND LOSS
2018
RMB
Corporate income tax effect 11,368,355
Government grants credited in profit and loss
(except for those recurring government grants
that are closely related to the Group's operation
and have proper basis of calculation) 87,281,434
Other non-operating income and expense 3,817,401
Corporate income tax effect (25,157,188)
The impact of non-controlling interests' equity (103,311)
__________
77,206,691
__________
__________
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).
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
2018 ROE Basic EPS
% RMB
Net profit attributable to shareholders of the Company 11.23 1.52
Net profit attributable to shareholders
of the Company deducting extraordinary profit and loss 10.40 1.41
_____ ____
_____ ____
The Company did not have any potential dilutive shares.
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Yantai Changyu Pioneer Wine Co. Ltd. 2018 Annual Report
Weighted average
2017 ROE Basic EPS
% RMB
Net profit attributable to shareholders of the Company 12.14 1.51
Net profit attributable to shareholders
of the Company deducting extraordinary profit and loss 11.60 1.44
_____ ____
_____ ____
The Company did not have any potential dilutive shares.
197
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198
Yantai Changyu Pioneer Wine Co. Ltd. 2018 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
April 20th, 2019
199
