2019 the First Quarter Report Main Body of Yantai Changyu Pioneer Wine Co., Ltd. Stock Code: 000869. 200869 Stock Abbreviation: Changyu A, Changyu B Notice No.: 2019-Final 02 Yantai Changyu Pioneer Wine Co., Ltd. 2019 the First Quarter Report Main Body I. Important Notice The Company’s board of directors, board of supervisors, directors, supervisors and senior executives guarantee the truthfulness, accuracy and completeness of contents contained in this quarter report as well as no unfaithful facts, misleading statements or significant omissions and undertake individual and collective legal liabilities. All directors attended the board meeting for deliberating this quarter report. Mr. Zhou Hongjiang (person in charge of the Company) and Mr. Jiang Jianxun (person in charge of accounting work, person in charge of accounting organization and person in charge of accounting) declare to assure the truthfulness, accuracy and completeness of the financial statement in this quarter report. 1 2019 the First Quarter Report Main Body of Yantai Changyu Pioneer Wine Co., Ltd. II、Corporate Information 1. Key accounting data and financial indicators Whether the Company need to make retroactive adjustments or restate the accounting data of previous fiscal years. □ Yes √ No More or less than the The same period of Item This report period same period of last year last year (%) Operating revenue (CNY) 1,667,424,758 1,804,057,976 -7.57% Net profit attributed to the shareholders of the listed 456,381,471 479,444,238 -4.81% company (CNY) Net profit attributed to the shareholders of the listed 450,709,661 466,181,564 -3.32% company after deducting the irregular profit and loss (CNY) Net cash flows from the 294,678,342 507,263,964 -41.91% operating activities (CNY) Basic earnings per share 0.67 0.70 -4.29% (CNY) Diluted earnings per share 0.67 0.70 -4.29% (CNY) Weighted average for earning 4.75% 5.24% -0.49% rate of the net assets The end of this More or less than the end The end of last year report period of last year (%) Total assets (CNY) 13,317,351,339 13,117,729,052 1.52% Net Assets attributed to the shareholders of the listed 10,055,194,755 9,606,099,365 4.68% company (CNY) Details of irregular profit and loss V Yes □ No Unit:CNY From beginning of year Item Explanation to end of report period Gain on disposal of non-current assets, including 1,138 the reversal of accrued impairment provision Government grants credited in profit and loss (except for those recurring government grants that are closely related to the entity's operation, 6,172,178 in line with related regulations and have proper basis of calculation) 2 2019 the First Quarter Report Main Body of Yantai Changyu Pioneer Wine Co., Ltd. Other non-operating income and expenses 1,259,563 Less: Income tax effect 1,741,770 Minority interests effect(after-tax) 19,299 Total 5,671,810 -- 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 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 is no situation 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. 2. The total number of shareholders and top 10 shareholders at the end of the report period 1) The number of the common shareholders and preferred shareholders with recovered voting power as well as the shareholding of top 10 shareholders Unit: share Total number of preferred 0 Total number of common shareholders 45,104 shareholders with recovered at the end of report period voting power at the end of re port period Shareholding of top 10 shareholders Number Pledged or Character of Percentage of frozen Name of Shareholders Shares held shareholders (%) restricted Share Amount shares status Domestic non- YANTAI CHANGYU GROUP state-owned 50.40% 345,473,856 0 0 COMPANY LIMITED legal person Foreign legal GAOLING FUND,L.P. 3.08% 21,090,219 0 0 person CHINA SECURITIES FINANCE State-owned 2.25% 15,440,794 0 CORP legal person BBH BOS S/A FIDELITY FD - Foreign legal 2.22% 15,241,826 0 0 CHINA FOCUS FD person SHENWAN HONGYUAN Foreign legal SECURITIES(HONGKONG) person 1.24% 8,492,763 0 0 LIMITED FIDELITY PURITAN TRUST: Foreign legal FIDELITY SERIES INTRINSIC person 0.93% 6,350,762 0 0 OPPORTUNITIES FUND GUOTAI JUNAN Foreign legal SECURITIES(HONGKONG) person 0.80% 5,516,796 0 0 LIMITED CENTRAL HUIJIN ASSET State-owned 0.69% 4,761,200 0 0 MANAGEMENT LTD. legal person 3 2019 the First Quarter Report Main Body of Yantai Changyu Pioneer Wine Co., Ltd. VANGUARD EMERGING Foreign legal MARKETS STOCK INDEX person 0.55% 3,788,487 0 0 FUND FIDELITY CHINA SPECIAL Foreign legal 0.55% 3,779,202 0 0 SITUATIONS PLC person Shareholding of top 10 shareholders with unrestricted shares Name of Shareholders Number of Type of share unrestricted Type of Amount shares held share YANTAI CHANGYU GROUP COMPANY LIMITED 345,473,856 A share 345,473,856 GAOLING FUND,L.P. 21,090,219 B share 21,090,219 CHINA SECURITIES FINANCE CORP 15,440,794 A share 15,440,794 BBH BOS S/A FIDELITY FD - CHINA FOCUS FD 15,241,826 B share 15,241,826 SHENWAN HONGYUAN SECURITIES(HONGKONG) B share 8,492,763 8,492,763 LIMITED FIDELITY PURITAN TRUST: FIDELITY SERIES B share 6,350,762 6,350,762 INTRINSIC OPPORTUNITIES FUND GUOTAI JUNAN SECURITIES (HONGKONG) LIMITED 5,516,796 B share 5,516,796 CENTRAL HUIJIN ASSET MANAGEMENT LTD. 4,761,200 A share 4,761,200 VANGUARD EMERGING MARKETS STOCK INDEX B share 3,788,487 3,788,487 FUND FIDELITY CHINA SPECIAL SITUATIONS PLC 3,779,202 B share 3,779,202 Among the top 10 shareholders, Yantai Changyu Group Company The explanation for the associated Limited has no associated relationship or accordant action relationship and accordant action of relationship with the other 9 listed shareholders, and the the top 10 shareholders relationship among the other shareholders is unknown. Explanation for the top 10 common shareholders who involved in No financing activities and stock trading business(if any) Whether or not the Company’s top 10 common shareholders and top 10 common shareholders with unrestricted shares promise to buy back trading during the report period □ Yes √ No There are no top 10 common shareholders and top 10 common shareholders with unrestricted shares in the Company promise to buy back trading during the report period. 2) The total number of the preferred shareholders and top 10 preferred shareholders at the end of the report period □Available √Not available 4 2019 the First Quarter Report Main Body of Yantai Changyu Pioneer Wine Co., Ltd. III Major Issue 1. Situation and reason of change in major financial data and financial index during the report period √Available □Not available Compared the end of the report period with the beginning of the report period: Monetary fund increased by 14.28%, mainly due to the reduce in cash outflow for investment activities and increase in bank deposit. Notes receivable increased by 64.09%, mainly due to increased amount of bank acceptances. Advance payment decreased by 55.58%, mainly due to the decrease in advance payment for raw material procurement. Interest receivable increased by 39.65%, mainly due to the increased interest of bank term deposits. Non-current liabilities due within one year increased by 21.39%, mainly due to the transfer of long-term account payable. Compared with the same period of last year: operating revenue decreased by 7.57%, which was caused by four reasons. Firstly, in order to implement the strategy of “Focus on high quality, Focus on mid-to-high end and Focus on big product”, the prices of low-end wines were raised at the end of November 2018. Due to the pressure-bearing process of the market, the low-end wines have fallen sharply. Secondly, due to aging of products as well as relatively concentrated markets, the low-end brandy has shown a downward trend since last year. However, the growth of mid-to-high- end brandy is not enough to make up for the decline of low-end brandy. Thirdly, the sales policy of imported wines has further focused on the acquisition brands including Kilikanoon and Indomita etc, which results in a decline in non-acquisition brands in imported wines and drags down the overall growth of imported wines. Fourthly, listed company adjusted about 20% of provincial managers and marketing personnel in February, which also had a certain impact on current indicators. Compared with the same period of last year: sales expense decreased by 14.9%, mainly due to decrease in advertising expense. Financial expense decreased by 156.04%, mainly due to offset of financial expense by received loan with discounted interest. Net profit attributable to parent company decreased by 4.81%, mainly due to decrease in income. Net cash flow from operating activities decreased by 41.91%, mainly due to reduce in received cash of selling products and providing service. Cash inflow from investment activities increased by 9064.93%, mainly due to increase in withdrawal of fixed term deposit. Cash outflow for investment activities decreased by 73.86% and net cash flow from investment activities increased by 79.14%, mainly due to the reduce in the cash paid for purchasing fixed term deposit. Net increase in cash and cash equivalents increased by 24149.03%, mainly due to reduce in cash outflow for investment activities. 2. Analysis explanation of major issue’s process, influence and solution □Available √ Not available 5 2019 the First Quarter Report Main Body of Yantai Changyu Pioneer Wine Co., Ltd. Implementation progress of share repurchase □Available √ Not available Implementation progress of reducing or repurchasing shares by the way of centralized bidding □Available √ Not available 3. The commitments that the Company’s actual controllers, shareholders, related parties, purchasers, the Company and other related parties do not implement completely exceeding the time limit within 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 Changyu Solve Has been Non-horizontal Group Co., horizontal 1997.05.18 Permanent fulfilling the competition Ltd. competition commitment According to According to Trademark Trademark License License Contract, the Contract, the annual annual trademark use trademark use Commitments at fee of fee charged by the initial public trademarks Yantai Changyu offering or Yantai Define the including “ 张 Group Co., Ltd. refinancing Changyu should be use of 裕 ” (Changyu) Group Co., 1997.05.18 Permanent mainly used to trademark use paid by the Ltd. publicize fee Company to Yantai Changyu trademarks Group Co., Ltd. including “ 张 should be 裕 ” (Changyu) mainly used by and contractual Yantai Changyu products. Except Group Co., Ltd. the period from to publicize 2013 to 2017 trademarks when Yantai 6 2019 the First Quarter Report Main Body of Yantai Changyu Pioneer Wine Co., Ltd. including “ 张 Changyu Group 裕 ” (Changyu) Co., Ltd. didn’t and contractual strictly fulfill the products. commitment, Yantai Changyu Group Co., Ltd. has been fulfilling the commitment. Equity incentive commitments Commitments made to the minority - - - - shareholders of the Company Commitment under timely No implementation or not According to Trademark License Contract (hereafter referred to as “this Contract”), Changyu Group promised that the annual trademark use fee paid by the Company to Changyu Group would be mainly used by Changyu Group to publicize these trademarks and contractual products. However, the above- mentioned "mainly" is not a specific number. During the implementation process, due to inconsistent understanding, it is easy to cause divergence and leads to problems. Changyu Group totally charged trademark use fee of CNY420,883,902 from 2013 to 2017. Based on this Contract, the amount (51% of trademark use fee) used for publicity of trademarks including “张裕” (Changyu) and contractual products involved in this Contract should be CNY214,650,790, compared to which, the amount that has already been used for publicity of trademarks For commitments that exceed including “张裕” (Changyu) and contractual products involved in this the time limit and are not Contract is CNY50,025,181 with a balance of CNY164,625,609. In addition, completed, specific reasons of Changyu Group totally charged 2017 annual and 2018 annual trademark use not completing the fee of CNY155,623,907 in 2018 and 2019. Based on This Contract, the implementation and the next amount (51% of trademark use fee) used for publicity of trademarks including step “张裕” (Changyu) and contractual products involved in this Contract should be CNY79,368,193, compared to which, the amount that has already been used for publicity of trademarks including “张裕” (Changyu) and contractual products involved in This Contract is CNY12,225,187 with a balance of CNY67,143,006. From 2013 to now, the total balance of trademark use fee used for publicity of trademarks including “张裕” (Changyu) and contractual products involved in this Contract is CNY231,768,615. Changyu Group promised that Changyu Group would use the trademark use fee that would be charged for 2019 annual to 2022 annual to offset above- mentioned total balance. If it is not enough, the insufficient amount will be complemented for one time in 2023; if it is sufficient, Changyu Group will 7 2019 the First Quarter Report Main Body of Yantai Changyu Pioneer Wine Co., Ltd. begin to charge the excess trademark use fee from the year when there generates excess trademark use fee. 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. For detailed information, please refer to the Company’s Announcement of Commitment Issues of Yantai Changyu Group Co., Ltd disclosed on April 4th, 2019. 4. Forecast on the operating performance in the period from January to June of 2019 Warning and explanation for the estimation on the possible loss of cumulative net profit in the period from the beginning of this year to the end of the next report period or the great change comparing with same period of last year. □Available √ Not available 5. Situation of security investment □Available √ Not available There is no security investment during the report period. 6. Situation of derivative investment □Available √ Not available There is no derivative investment during the report period. 7. The activities registration form of receptions, communication and interview etc. during the report period □Available √ Not available There are no activities of receptions, communication and interview etc. during the report period. 8. Situation of illegal external guarantee □Available √ Not available There is no illegal external guarantee during the report period. 9. Situation of non-operating fund occupation of controlling shareholders and related parties □Available √ Not available There is no non-operating fund occupation of controlling shareholders and related parties during the report period. Yantai Changyu Pioneer Wine Co., Ltd. Board of Directors April 27th 2019 8