2019 the First Quarter Report of Yantai Changyu Pioneer Wine Co., Ltd. Yantai Changyu Pioneer Wine Co., Ltd. 2019 the First Quarter Report 2019-Final 02 April 2019 1 2019 the First Quarter Report of Yantai Changyu Pioneer Wine Co., Ltd. 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. 2 2019 the First Quarter Report 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 last year 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 The end of last year report period end 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) 3 2019 the First Quarter Report 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 45,104 shareholders with recovered shareholders at the end of report voting power at the end of re period 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 4 2019 the First Quarter Report 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) B share 5,516,796 5,516,796 LIMITED CENTRAL HUIJIN ASSET MANAGEMENT LTD. 4,761,200 A share 4,761,200 VANGUARD EMERGING MARKETS STOCK B share 3,788,487 3,788,487 INDEX 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 relationship with the other 9 listed shareholders, and the of the top 10 shareholders relationship among the other shareholders is unknown. Explanation for the top 10 common shareholders who No involved in 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 5 2019 the First Quarter Report 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 6 2019 the First Quarter Report 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 7 2019 the First Quarter Report 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 8 2019 the First Quarter Report 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. 9 2019 the First Quarter Report of Yantai Changyu Pioneer Wine Co., Ltd. Ⅳ Financial Statements 1. Financial statements 1) Consolidated balance sheet Preparation Unit: Yantai Changyu Pioneer Wine Co., Ltd. Unit: CNY st Item March 31 , 2019 December 31st, 2018 Current assets: Monetary fund 1,686,467,643 1,475,700,477 Settlement funds Trading financial assets Financial assets which are measured by fair value and which changes are recorded in current profit and loss Derivative financial liability Notes receivable and accounts receivable 712,241,039 530,821,071 Including: Notes receivable 473,671,893 288,667,988 Accounts receivable 238,569,146 242,153,083 Advance payment 1,874,421 4,219,949 Insurance premiums receivable Provision of cession receivable Other receivable 21,954,602 22,636,086 Including: Interests receivable 1,861,068 1,332,681 Dividends receivable Inventories 2,562,649,190 2,724,591,457 Assets held for sale Non-current assets due within one year Other current assets 277,964,944 258,676,396 Total current assets 5,263,151,839 5,016,645,436 Non-current assets: Financial assets for sale 467,251 Investment held to expiration Long-term account receivable Long-term equity investment Real estate for investment 31,183,889 31,572,489 Fixed assets 5,735,574,387 5,749,731,667 Construction in progress 765,770,394 759,296,591 Biological assets for production 207,109,664 209,266,373 Oil and gas assets Intangible assets 649,996,533 655,473,459 Development expenditure 10 2019 the First Quarter Report of Yantai Changyu Pioneer Wine Co., Ltd. Goodwill 165,199,111 165,199,111 Long-term deferred expenses 276,110,331 244,640,416 Assets of deferred income tax 222,801,549 285,436,259 Other non-current assets 453,642 Total non-current assets 8,054,199,500 8,101,083,616 Total assets 13,317,351,339 13,117,729,052 Current liabilities: Short-term loan 676,078,947 688,002,410 Financial liabilities which are measured by fair value and which changes are recorded in current profit and loss Derivative financial liability Notes payable and accounts payable 595,555,189 713,572,881 Advance money 232,110,538 226,075,244 Wage payable 171,926,352 212,304,217 Tax payable 100,575,817 128,912,790 Other accounts payable 530,951,517 608,479,890 Including: Interests payable 2,017,538 712,826 Dividends payable Liabilities held for sale Non-current liabilities due within one year 185,654,332 152,940,788 Other current liabilities 14,545,254 15,860,254 Total current liabilities 2,507,397,946 2,746,148,474 Non-current liabilities: Long-term loan 172,989,751 156,480,662 Bond payable Including: Preferred stock Perpetual capital securities Long-term accounts payable 203,000,000 225,000,000 Long-term wages payable Special accounts payable Deferred income 67,915,609 70,367,039 Liabilities of deferred income tax 21,290,654 22,010,647 Other non-current liabilities 7,234,853 7,234,853 Total non-current liabilities 472,430,867 481,093,201 Total liabilities 2,979,828,813 3,227,241,675 Shareholder rights and interests: Share capital 685,464,000 685,464,000 Other equity instrument Including: Preferred stock Perpetual capital securities Capital reserve 565,955,441 565,955,441 Less: Inventory shares 11 2019 the First Quarter Report of Yantai Changyu Pioneer Wine Co., Ltd. Other comprehensive Income -4,320,704 2,965,377 Reasonable reserve Surplus reserve 342,732,000 342,732,000 Retained profit 8,465,364,018 8,008,982,547 Total owner’s equity attributable to parent company 10,055,194,755 9,606,099,365 Minority interests 282,327,771 284,388,012 Total owner's equity 10,337,522,526 9,890,487,377 Total liabilities and owner's equity 13,317,351,339 13,117,729,052 Legal representative: Zhou Hongjiang Person in charge of accounting: Jiang Jianxun Person in charge of accounting organ: Jiang Jianxun 12 2019 the First Quarter Report of Yantai Changyu Pioneer Wine Co., Ltd. 2) Balance sheet of parent company Unit: CNY Item March 31st, 2019 December 31st, 2018 Current assets: Monetary fund 898,617,027 624,588,809 Financial assets which are measured by fair value and which changes are recorded in current profit and loss Derivative financial liability Notes receivable and accounts receivable 53,248,347 41,333,227 Including: Notes receivable 52,028,187 39,885,254 Accounts receivable 1,220,160 1,447,973 Advance money 121,922 227 Other receivable 529,375,393 1,025,643,356 Including: Interests receivable 506,337 254,088 Dividends receivable 152,136,162 500,000,000 Inventories 450,274,793 385,154,740 Assets held for sale Non-current assets due within one year Other current assets 28,853,540 24,704,844 Total current assets 1,960,491,022 2,101,425,203 Non-current assets: Financial assets for sale Investment held to expiration Long-term account receivable Long-term equity investment 7,420,803,068 7,420,803,069 Real estate for investment 31,183,889 31,572,489 fixed assets 265,196,149 265,311,274 Construction in progress 7,129,202 6,311,701 Biological assets for production 123,016,068 125,002,793 Oil and gas assets Intangible assets 66,649,278 67,244,066 Development expenditure Goodwill Long-term deferred expenses Assets of deferred income tax 20,799,602 24,194,967 Other non-current assets 985,700,000 972,700,000 Total non-current assets 8,920,477,256 8,913,140,359 Total assets 10,880,968,278 11,014,565,562 Current liabilities: Short-term loan 150,000,000 150,000,000 13 2019 the First Quarter Report of Yantai Changyu Pioneer Wine Co., Ltd. Financial liabilities which are measured by fair value and which changes are recorded in current profit and loss Derivative financial liability Notes payable and accounts payable 102,401,642 132,704,304 Advance money Wage payable 62,212,233 72,345,179 Tax payable 2,552,051 13,111,431 Other accounts payable 522,292,133 607,974,519 Including: Interests payable 181,250 181,250 Dividends payable Liabilities held for sale Non-current liabilities due within one year Other current liabilities 3,433,054 3,433,054 Total current liabilities 842,891,113 979,568,487 Non-current liabilities: Long-term loan - Bond payable Including: Preferred stock Perpetual capital securities Long-term accounts payable Long-term wages payable Special accounts payable Deferred income 8,318,053 8,910,918 Liabilities of deferred income tax Other non-current liabilities 2,710,575 2,710,575 Total non-current liabilities 11,028,628 11,621,493 Total liabilities 853,919,741 991,189,980 Shareholder rights and interests: Share capital 685,464,000 685,464,000 Other equity instrument Including: Preferred stock Perpetual capital securities Capital reserve 557,222,454 557,222,454 Less: Inventory shares Other comprehensive Income Reasonable reserve Surplus reserve 342,732,000 342,732,000 Retained profit 8,441,630,083 8,437,957,128 Total owner's equity 10,027,048,537 10,023,375,582 Total liabilities and owner's equity 10,880,968,278 11,014,565,562 14 2019 the First Quarter Report of Yantai Changyu Pioneer Wine Co., Ltd. 3) Consolidated profit statement Unit: CNY Amount incurred in current Amount incurred in Item period previous period 1. Revenue 1,667,424,758 1,804,057,976 Including: Operating income 1,667,424,758 1,804,057,976 Interest income Earned premium Handling fees and commission income 2. Total operating costs 1,061,511,440 1,184,474,700 Including: Operating costs 601,688,193 625,431,208 Interest expenditure Handling fees and commission expenditure Premium rebate Net amount of indemnity expenditure Net amount of insurance contract reserve fund withdrawal Policy bonus payment Amortized reinsurance expenditures Taxes and surcharges 67,002,049 101,766,053 Selling expenses 318,512,447 374,283,098 Administrative expenses 81,023,493 80,493,010 Research and development expenditure 990,219 1,120,457 Financial expenses -2,640,255 4,711,493 Including: Interest expenses 1,827,791 6,578,902 Interest income 2,420,094 2,272,889 Loss for impairment of assets -5,064,706 -3,330,619 Loss of credit impairment Plus: Other income 6,172,178 16,861,473 Investment profit (loss is listed with "-") Including: Investment profit for joint-run business and joint venture Net exposure hedging income (Loss islisted with “-”) Fair value charge profit (loss is listed with "-") Assets disposal income (loss is listed with "-") 1,138 84,719 Exchange income (loss is listed with "-") 3. Operating profit (loss is listed with "-") 612,086,634 636,529,468 Plus: Non-operating income 1,262,992 936,426 Minus: Non-operating expenditure 3,429 411,037 4. Total profits (total loss is listed with "-") 613,346,197 637,054,857 Minus: Income taxes 157,428,397 158,539,458 5. Net profit (net loss is listed with "-") 455,917,800 478,515,399 (一)Classification by continuous operation 1.Net profit from continuous operation(net loss is listed with "-") 455,917,800 478,515,399 2.Net profit from terminational operation(net loss is listed with "-") 15 2019 the First Quarter Report of Yantai Changyu Pioneer Wine Co., Ltd. (二)Classification by ownership 1. Minority interests -463,671 -928,839 2.Net profits attribute to equity holders of the company 456,381,471 479,444,238 6. Net value of other comprehensive income after tax -8,882,651 -6,819,043 6.1 Net value of other comprehensive income after tax of holding company's owners -7,286,081 -5,547,374 6.1.1 Other comprehensive income that will not be classified into the profit and loss 6.1.1.1 Changes of the defined benefit plans that re- measured 6.1.1.2 Other comprehensive income under equity method that cannot be transfer to gain/loss 6.1.1.3 Change of fair value of investment in other equity instrument 6.1.1.4 Fair value change of enterprise's credit risk 6.1.1.5 Other 6.1.2 Other comprehensive income that will be classified into the profit and loss -7,286,081 -5,547,374 6.1.2.1 Other comprehensive income under equity method that can transfer to gain/loss 6.1.2.2 Change of fair value of other debt investment 6.1.2.3 gain/loss of fair value changes for available-for- sale financial assets 6.1.2.4 Amount of financial assets re-classify to other comprehensive income 6.1.2.5 Gain/loss of held-to-maturity investments that re- classify to ailable-for-sale financial asset 6.1.2.6 Credit impairment provision for other debt investment 6.1.2.7 Cash flow hedging reserve 6.1.2.8 Translation differences arising on translation of foreign currency financial statements -7,286,081 -5,547,374 6.1.2.9 Other 6.2 Net value of other comprehensive income after tax of minority shareholders -1,596,570 -1,271,669 7.Total comprehensive Income 447,035,149 471,696,356 Total comprehensive income of holding company 449,095,390 473,896,864 Total comprehensive income of minority shareholders -2,060,241 -2,200,508 8. Earnings per share 8.1 Basic earnings per share 0.67 0.70 8.2 Diluted earnings per share 0.67 0.70 During this report period, the issue relates to company consolidation under common control, consolidated party completes net profit amount of CNY 0 before being consolidated, and consolidated party completes net profit amount of CNY 0 in the same period of last year. Legal representative: Zhou Hongjiang Person in charge of accounting: Jiang Jianxun Person in charge of accounting organ: Jiang Jianxun 16 2019 the First Quarter Report of Yantai Changyu Pioneer Wine Co., Ltd. 4) Profit statement of parent company Unit: CNY Amount incurred in current Amount incurred in previous Item period period 1. Revenue 242,003,808 262,548,732 Minus: Operating costs 213,607,081 223,847,815 Taxes and surcharges 8,712,074 14,257,566 Selling expenses Administrative expenses 20,122,062 20,301,162 Research and development expenditure 219,892 208,742 Financial expenses -4,343,667 5,548,315 Including: Interest expenses -4,311,896 5,872,648 Interest income 489,663 975,383 Loss for impairment of assets Loss of credit impairment Plus: Other income 858,264 1,059,414 Investment profit (loss is listed with "-") 20,000,000 Including: Investment profit for joint-run business and joint venture Net exposure hedging income (Loss islisted with “-”) Fair value charge profit (loss is listed with "-") Assets disposal income (loss is listed with "-") 75,000 2. Operating profit (loss is listed with "-") 4,544,630 19,519,546 Plus: Non-operating income 539,265 47,479 Minus: Non-operating expenses 3. Total profits (total loss is listed with "-") 5,083,895 19,567,025 Minus: Income tax 1,410,940 23,498 4. Net profit (net loss is listed with "-") 3,672,955 19,543,527 1.Net profit from continuous operation(net loss is listed with "-") 3,672,955 19,543,527 2.Net profit from terminational operation(net loss is listed with "-") 5. Net value of other comprehensive income after tax 5.1 Other comprehensive income that will not be classified into the profit and loss 5.1.1 Remeasure the changes in net assets or liabilities of defined benefit plans 5.1.2 Shares of other comprehensive income from investee which cannot be reclassified into profit and loss under the equity method 5.1.3 Change of fair value of investment in other equity instrument 5.1.4 Fair value change of enterprise's credit risk 5.1.5 Other 5.2 Other comprehensive income that will be classified 17 2019 the First Quarter Report of Yantai Changyu Pioneer Wine Co., Ltd. into the profit and loss 5.2.1 Other comprehensive income under equity method that can transfer to gain/loss 5.2.2 Change of fair value of other debt investment 5.2.3 gain/loss of fair value changes for available- for-sale financial assets 5.2.4 Amount of financial assets re-classify to other comprehensive income 5.2.5 Gain/loss of held-to-maturity investments that re-classify to ailable-for-sale financial asset 5.2.6 Credit impairment provision for other debt investmen 5.2.7 Cash flow hedging reserve 5.2.8 Translation differences arising on translation of foreign currency financial statements 5.2.9 Other 6. Total comprehensive income 3,672,955 19,543,527 7. Earnings per share 7.1 Basic earnings per share 0.01 0.03 7.2 Diluted earnings per share 0.01 0.03 18 2019 the First Quarter Report of Yantai Changyu Pioneer Wine Co., Ltd. 5) Consolidated cash flow statement Unit: CNY Amount incurred in Amount incurred in Item current period previous period 1. Cash flows from operating activities: Cash received from sales of goods and rending of services 1,542,378,382 1,766,530,391 Net increase in customer and interbank deposits Net increase in borrowings from central bank Net increase in borrowings from other financial institutions Cash received from receiving insurance premium of original insurance contract Net cash received from reinsurance business Net increase of deposit of insured and investment fund Net increase in disposing of financial assets that measured by fair value with changes recorded into the current profit and loss Cash received from collecting interest, handling fees and commission Net increase in borrowings Net increase in repurchasement business funds Tax refund received 9,948,082 6,890,085 Other cash received related to operating activities 11,283,776 18,289,974 Sub-total of cash inflows of operating activities 1,563,610,240 1,791,710,450 Cash paid for goods and services 461,343,969 418,799,244 Net increase in customer loans and advances Net increase in deposits in central bank and interbank deposits Cash paid to original insurance contract payments Cash paid to interest, handling fees and commission Cash paid to policy bonus Cash paid to and on behalf of employees 162,305,720 152,403,775 Cash paid for taxes and expenses 401,268,381 486,679,596 Other cash paid related to operating activities 244,013,828 226,563,871 Sub-total of cash outflows of operating activities 1,268,931,898 1,284,446,486 Net cash flow from operating activities 294,678,342 507,263,964 2. Cash flow from investing activities: Cash received from return of investment 0 Cash received from return of fixed deposit 26,755,750 Cash received from obtaining investment profit Cash received from interest income 484,857 35,723 Cash received from disposal of fixed assets, intangible assets and other long-term assets 21,379 261,737 Net cash received from disposal of branch and other business unit Other cash received related to investing activities Subtotal of cash inflows of investment activities 27,261,986 297,460 19 2019 the First Quarter Report of Yantai Changyu Pioneer Wine Co., Ltd. Cash paid to acquire fixed assets, intangible assets and other long-term assets 114,280,901 110,862,244 Cash for investments Cash paid for fixed deposit 20,458,100 300,000,000 Net cash received from disposal of branch and other business unit Net cash paid to acquire branch and other business unit 104,566,419 Other cash paid related to investment activities Subtotal of cash outflows of investment activities 134,739,001 515,428,663 Net cash flow from investing activities -107,477,015 -515,131,203 3. Cash flow from financing activities Cash received from acquiring investment Cash received from acquiring minority shareholders' investment by branch Cash received from acquiring loans 78,214,913 96,644,015 Cash received from issuing bonds Other cash received related to financing activities Sub-total cash inflows of financing activities 78,214,913 96,644,015 Cash paid to repay debts 64,904,847 79,119,513 Cash paid to distribute dividend, profit or pay interest 8,203,612 8,294,731 Dividend and profit paid to minority shareholders by branch Other cash paid related to financing activities Sub-total of cash outflows of financing activities 73,108,459 87,414,244 Net cash flow from financing activities 5,106,454 9,229,771 4. Influences of exchange rate fluctuation on cash and cash equivalents -468,104 -571,409 5. Net Increase of cash and cash equivalents 191,839,677 791,123 Plus: balance at the beginning of the period of cash and cash equivalents 1,206,860,334 1,180,889,274 6. Balance at the end of the period of cash and cash equivalents 1,398,700,011 1,181,680,397 20 2019 the First Quarter Report of Yantai Changyu Pioneer Wine Co., Ltd. 6) Cash flow statement of parent company Unit: CNY Amount incurred in Amount incurred in Item current period previous period 1. Cash flows from operating activities: Cash received from sales of goods and rending of services 171,139,612 156,753,252 Tax refund received Other cash received related to operating activities 13,968,773 42,356,221 Sub-total of cash inflows of operating activities 185,108,385 199,109,473 Cash paid for goods and services 115,043,734 83,858,780 Cash paid to and on behalf of employees 28,667,432 35,076,108 Cash paid for taxes and expenses 17,016,423 27,242,412 Other cash paid related to operating activities 75,568,493 13,004,908 Sub-total of cash outflows of operating activities 236,296,082 159,182,208 Net cash flow from operating activities -51,187,697 39,927,265 2. Cash flow from investing activities: Cash received from return of investment Fixed deposit with the term of over 3 months Cash received from obtaining investment profit 347,863,838 140,000,000 Cash received from interest income 35,723 Cash received from disposal of fixed assets, intangible assets and other long-term assets 538,055 Net cash received from disposal of branch and other business unit Other cash received related to investing activities Sub-total of cash inflows of investment activities 347,863,838 140,573,778 Cash paid to acquire fixed assets, intangible asset and other long-term assets 8,209,927 8,617,593 Cash for investments 13,000,000 105,926,184 Cash paid to acquire fixed deposit 12,200,000 300,000,000 Net cash paid to acquire branch and other busines unit Other cash paid related to investment activities Subtotal of cash outflows of investment activities 33,409,927 414,543,777 Net cash flow from investing activities 314,453,911 -273,969,999 3. Cash flow from financing activities Cash received from acquiring investment Cash received from acquiring loans Cash received from issuing bonds Other cash received related to financing activities Sub-total cash inflows of financing activities Cash paid to repay debts Cash paid to distribute dividend, profit or pay interest 1,631,250 5,872,500 Other cash paid related to financing activities Sub-total of cash outflows of financing activities 1,631,250 5,872,500 Net cash flow from financing activities -1,631,250 -5,872,500 4. Influences of exchange rate fluctuation on cash and cash equivalents 21 2019 the First Quarter Report of Yantai Changyu Pioneer Wine Co., Ltd. 5. Net Increase of cash and cash equivalents 261,634,964 -239,915,234 Plus: balance at the beginning of the period of cash and cash equivalents 532,384,882 493,568,866 6. Balance at the end of the period of cash and cash equivalents 794,019,846 253,653,632 2. Notes on financial statement adjustments 1) Relevant situations of adjustment in financial statement at the beginning of the year when the new financial instrument standards, new income standards and new lease standards are first implemented □Available Not available 2) Explanation on retrospective adjustments in the previous comparison data for the first implementation of new financial instrument standards and new lease standards □Available Not available 3. Audit report Whether the first quarter report has been audited. □Yes √No The first quarter report has not been audited. Yantai Changyu Pioneer Wine Co., Ltd. Board of Directors April 27th 2019 22