YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
ENGLISH TRANSLATION OF FINANCIAL STATEMENTS
FOR THE YEAR 1 JANUARY 2021 TO 31 DECEMBER 2021
IF THERE IS ANY CONFLICT BETWEEN THE CHINESE VERSION AND ITS ENGLISH
TRANSLATION, THE CHINESE VERSION WILL PREVAIL
AUDITOR’S REPORT
KPMG Huazhen Shen Zi No. 2205034
All Shareholders of Yantai Changyu Pioneer Wine Company Limited:
Opinion
We have audited the accompanying financial statements of Yantai Changyu Pioneer Wine
Company Limited (“Yantai Changyu”), which comprise the consolidated balance sheet and
company balance sheet as at 31 December 2021, the consolidated income statement and
company income statement, the consolidated cash flow statement and company cash flow
statement, the consolidated statement of changes in shareholders’ equity and company
statement of changes in shareholders’ equity for the year then ended, and notes to the
financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects,
the consolidated financial position and company financial position of Yantai Changyu as at 31
December 2021, and of its consolidated financial performance and company financial
performance and its consolidated cash flows and company cash flows for the year then
ended in accordance with Accounting Standards for Business Enterprises issued by the
Ministry of Finance of the People’s Republic of China.
Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing for Certified Public
Accountants (“CSAs”). 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 in accordance with the China Code of Ethics for
Certified Public Accountants (“the Code”), 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.
Page 1 of 6
AUDITOR’S REPORT (continued)
KPMG Huazhen Shen Zi No. 2205034
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial statements for the 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.
Recognition of Sales Revenue from Distributors
Refer to the accounting policies set out in the notes to the financial statements “III.
Significant accounting policies and accounting estimates” 22 and “V. Notes to the
consolidated financial statements” 37.
How the Matter was Addressed in Our
Key Audit Matters
Audit
The principal activities of Yantai Changyu and Our audit procedures to evaluate revenue
its subsidiaries (hereinafter referred to as recognition of sales revenue from
“Yantai Changyu Group”) include manufacture distributors included the following:
and sales of wine, brandy and sparkling wine.
Understand and evaluate the
The revenue of Yantai Changyu Group is Management’s design and operation
mainly derived from sales of distributors. All effectiveness of key internal controls
distributor transaction terms adopt the unified related to distributor sales revenue
transaction terms formulated by Yantai recognition;
Changyu Group.
Selecting the sales contracts Yantai
Based on the contractual agreement and the Changyu signed with distributors in
business arrangement, Yantai Changyu sells order to examine whether Yantai
products to distributors and the transfer of Changyu has adopted the unified
product ownership is completed and the transaction terms, and evaluate
revenue is recognised when the goods are whether the accounting policy of
delivered to distributors and signed for revenue recognition meets the
acceptance. requirements of the Accounting
Standards for Business Enterprises;
As revenue is one of the key performance
indicators of Yantai Changyu Group, there is a On a sampling basis, reconcile the
risk that management may recognise revenue revenue recorded for the year to
earlier or later in order to meet specific relevant supporting files such as
performance targets or expectations, therefore, relevant orders and signed delivery
the risk of cut-off misstatement arising from notes, etc. to evaluate whether
distributors’ sales revenue is identified as a key revenue is recognised in accordance
audit matter. with the accounting policy of Yantai
Changyu;
Page 2 of 6
AUDITOR’S REPORT (continued)
KPMG Huazhen Shen Zi No. 2205034
Key Audit Matters (continued)
Recognition of Sales Revenue from Distributors (continued)
Refer to the accounting policies set out in the notes to the financial statements “III.
Significant accounting policies and accounting estimates” 22 and “V. Notes to the
consolidated financial statements” 37.
How the matter was addressed in our
The Key Audit Matters
audit
On a sampling basis, reconcile the sales
transaction before and after balance
sheet date to relevant supporting files
such as relevant orders, signed delivery
notes, etc. to evaluate whether revenue is
recognised in appropriate accounting
period;
Check the sales record after the balance
sheet date to identify significant sales
returns and check relevant supporting
files (If applicable) in order to evaluate
whether relevant revenue is recorded in
the appropriate accounting period;
Select revenue accounting entries that
meet specific risk criteria and check
related supporting documents.
Page 3 of 6
AUDITOR’S REPORT (continued)
KPMG Huazhen Shen Zi No. 2205034
Other Information
Management of Yantai Changyu is responsible for the other information. The other
information comprises all the information included in the 2021 annual report, other than 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.
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
Management is responsible for the preparation and fair presentation of the financial
statements in accordance with the Accounting Standards for Business Enterprises, and for
the design, implementation and maintenance of such internal control necessary to enable
that the financial statements are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is responsible for assessing Yantai
Changyu’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 management either
intends to liquidate Yantai Changyu or to cease operations, or has no realistic alternative but
to do so.
Those charged with governance are responsible for overseeing Yantai Changyu’s financial
reporting process.
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. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with CSAs 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.
Page 4 of 6
AUDITOR’S REPORT (continued)
KPMG Huazhen Shen Zi No. 2205034
Auditor’s Responsibilities for the Audit of the Financial Statement (continued)
As part of an audit in accordance with CSAs, we exercise professional judgement and
maintain professional scepticism 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.
(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 management’s use of the going concern basis of
accounting and, 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’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 Yantai Changyu 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 Group to express our audit 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.
Page 5 of 6
AUDITOR’S REPORT (continued)
KPMG Huazhen Shen Zi No. 2205034
Auditor’s Responsibilities for the Audit of the Financial Statement (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 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 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.
KPMG Huazhen LLP Certified Public Accountants Registered
(Stamp) in the People’s Republic of China
Wang Ting (Engagement Partner)
(Signature and stamp)
Beijing, China Xu Weiran
(Signature and stamp)
Date: 25 April 2022
Page 6 of 6
Yantai Changyu Pioneer Wine Company Limited
Consolidated balance sheet
as at 31 December 2021
(Expressed in Renminbi Yuan)
31 December 31 December
Note
2021 2020
Assets
Current assets
Cash at bank and on hand V.1 1,567,095,993 1,194,214,929
Bills receivable V.2 42,827,666 -
Accounts receivable V.3 291,006,410 183,853,362
Receivables under financing V.4 364,457,497 338,090,187
Prepayments V.5 75,235,879 71,296,416
Other receivables V.6 30,125,270 22,428,956
Inventories V.7 2,802,622,520 2,945,548,651
Other current assets V.8 217,152,601 234,118,715
Total current assets 5,390,523,836 4,989,551,216
Non-current assets
Long-term equity investments V.9 46,496,510 48,263,507
Investment properties V.10 24,502,258 27,057,730
Fixed assets V.11 5,687,867,314 5,724,935,846
Construction in progress V.12 590,172,099 635,495,152
Bearer biological assets V.13 193,712,942 192,173,536
Right-of-use assets V.14 134,569,039 -
Intangible assets V.15 617,866,879 660,989,065
Goodwill V.16 112,374,541 132,938,212
Long-term deferred expenses V.17 284,593,163 314,465,855
Deferred tax assets V.18 245,210,731 206,241,275
Other non-current assets V.19 144,120,442 170,370,147
Total non-current assets 8,081,485,918 8,112,930,325
Total assets 13,472,009,754 13,102,481,541
The notes on pages 20 to 111 form part of these financial statements.
1
Yantai Changyu Pioneer Wine Company Limited
Consolidated balance sheet
as at 31 December 2021 (continued)
(Expressed in Renminbi Yuan)
31 December 31 December
Note
2021 2020
Liabilities and shareholders’ equity
Current liabilities
Short-term loans V.20 622,066,457 689,090,715
Accounts payable V.21 493,453,816 484,347,958
Contract liabilities V.22 147,120,716 135,073,280
Employee benefits payable V.23 195,019,441 188,779,911
Taxes payable V.24 342,322,300 213,412,813
Other payables V.25 453,033,491 386,105,526
Other current liabilities V.26 18,374,193 14,820,653
Non-current liabilities due within
V.27 110,865,126 133,311,890
one year
Total current liabilities 2,382,255,540 2,244,942,746
Non-current liabilities
Long-term loans V.28 176,047,043 200,352,968
Lease liabilities V.14 101,811,588 -
Long-term payables V.29 64,000,000 86,000,000
Deferred income V.30 41,295,338 52,653,609
Deferred tax liabilities V.18 11,803,970 12,022,613
Other non-current liabilities V.31 2,119,671 2,078,971
Total non-current liabilities 397,077,610 353,108,161
Total liabilities 2,779,333,150 2,598,050,907
The notes on pages 20 to 111 form part of these financial statements.
2
Yantai Changyu Pioneer Wine Company Limited
Consolidated balance sheet
as at 31 December 2021 (continued)
(Expressed in Renminbi Yuan)
31 December 31 December
Note
2021 2020
Liabilities and shareholders’ equity
(continued)
Shareholders’ equity
Share capital V.32 685,464,000 685,464,000
Capital reserve V.33 524,968,760 524,968,760
Other comprehensive income V.34 (34,707,177) 576,129
Surplus reserve V.35 342,732,000 342,732,000
Retained earnings V.36 8,929,426,600 8,714,091,755
Total equity attributable to shareholders of
10,447,884,183 10,267,832,644
the Company
Non-controlling interests 244,792,421 236,597,990
Total owners’ equity 10,692,676,604 10,504,430,634
Total liabilities and shareholders’ equity 13,472,009,754 13,102,481,541
These financial statements were approved by the Board of Directors of the Company on 25
April 2022.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal Representative The person in charge The head of the
of accounting affairs accounting department
(Signature and stamp) (Signature and stamp) (Signature and stamp)
The notes on pages 20 to 111 form part of these financial statements.
3
Yantai Changyu Pioneer Wine Company Limited
Company balance sheet
as at 31 December 2021
(Expressed in Renminbi Yuan)
31 December 31 December
Note
2021 2020
Assets
Current assets
Cash at bank and on hand 562,588,819 267,548,326
Bills receivable XIV.1 9,800,000 -
Receivables under financing XIV.2 62,411,636 13,920,000
Prepayments 406,500 171,709
Other receivables XIV.3 398,072,976 580,131,798
Inventories 383,294,208 482,442,935
Other current assets 20,637,860 24,842,325
Total current assets 1,437,211,999 1,369,057,093
Non-current assets
Long-term equity investments XIV.4 7,599,421,494 7,599,778,880
Investment properties 24,502,258 -
Fixed assets 231,284,799 270,692,477
Construction in progress 255,996 2,865,243
Bearer biological assets 114,753,306 115,103,753
Right-of-use assets 36,826,342 -
Intangible assets 78,043,888 80,789,731
Deferred tax assets 18,033,185 18,285,685
Other non-current assets 2,023,500,000 1,530,700,000
Total non-current assets 10,126,621,268 9,618,215,769
Total assets 11,563,833,267 10,987,272,862
The notes on pages 20 to 111 form part of these financial statements.
4
Yantai Changyu Pioneer Wine Company Limited
Company balance sheet
as at 31 December 2021 (continued)
(Expressed in Renminbi Yuan)
31 December 31 December
Note
2021 2020
Liabilities and shareholders’ equity
Current liabilities
Short-term loans 150,000,000 150,000,000
Accounts payable 90,339,903 76,470,081
Employee benefits payable 66,770,838 67,808,910
Taxes payable 32,588,429 9,123,959
Other payables 445,874,937 521,505,947
Non-current liabilities due within
1,485,190 -
one year
Total current liabilities 787,059,297 824,908,897
Non-current liabilities
Lease liabilities 43,312,517 -
Deferred income 2,268,527 5,507,708
Deferred tax liabilities 88,555 -
Other non-current liabilities 1,164,471 1,164,471
Total non-current liabilities 46,834,070 6,672,179
Total liabilities 833,893,367 831,581,076
The notes on pages 20 to 111 form part of these financial statements.
5
Yantai Changyu Pioneer Wine Company Limited
Company balance sheet
as at 31 December 2021 (continued)
(Expressed in Renminbi Yuan)
31 December 31 December
Note
2021 2020
Liabilities and shareholders’ equity
(continued)
Shareholders’ equity
Share capital 685,464,000 685,464,000
Capital reserve 560,182,235 560,182,235
Surplus reserve 342,732,000 342,732,000
Retained earnings 9,141,561,665 8,567,313,551
Total owners’ equity 10,729,939,900 10,155,691,786
Total liabilities and shareholders’ equity 11,563,833,267 10,987,272,862
These financial statements were approved by the Board of Directors of the Company on 25
April 2022.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal Representative The person in charge The head of the
of accounting affairs accounting department
(Signature and stamp) (Signature and stamp) (Signature and stamp)
The notes on pages 20 to 111 form part of these financial statements.
6
Yantai Changyu Pioneer Wine Company Limited
Consolidated income statement
for the year ended 31 December 2021
(Expressed in Renminbi Yuan)
Note 2021 2020
I. Operating income V.37 3,953,067,583 3,395,402,001
Less: Operating cost V.37 1,647,789,874 1,503,877,407
Taxes and surcharges V.38 264,057,570 203,789,274
Selling and distribution
V.39 998,954,105 788,252,485
expenses
General and administrative
V.40 299,076,376 290,646,466
expenses
Research and development
10,919,262 4,531,418
expenses
Financial expenses V.41 21,178,727 20,441,713
Including: Interest expenses 28,851,606 32,890,621
Interest income 19,558,354 14,247,274
Add: Other income V.42 48,240,741 73,063,620
Investment losses V.43 (2,784,997) (2,217,623)
Including: Losses from
investment in joint
(2,784,997) (2,217,623)
ventures and
associates
Credit (losses)/reversal V.44 (7,937,144) 4,348,309
Impairment losses V.45 (19,874,251) (3,215,978)
Losses from disposal of assets V.46 (11,939,284) (1,180,655)
The notes on pages 20 to 111 form part of these financial statements.
7
Yantai Changyu Pioneer Wine Company Limited
Consolidated income statement
for the year ended 31 December 2021 (continued)
(Expressed in Renminbi Yuan)
Note 2021 2020
II. Operating profit 716,796,734 654,660,911
Add: Non-operating income V.47 5,214,304 11,908,510
Less: Non-operating expenses V.47 6,311,844 1,702,858
III. Total profit 715,699,194 664,866,563
Less: Income tax expenses V.48 209,020,821 191,804,500
IV. Net profit 506,678,373 473,062,063
(1) Net profit classified by
continuity of operations:
1. Net profit from continuing
506,678,373 473,062,063
operations
2. Net profit from discontinued
- -
operations
(2) Net profit classified by
ownership:
1. Net profit attributable to
500,102,606 470,860,587
owners of the Company
2. Non-controlling interests 6,575,767 2,201,476
V. Other comprehensive income, net of
(39,307,949) 5,171,635
tax
(1) Other comprehensive income
(net of tax) attributable to (35,283,306) 4,811,712
shareholders of the Company
Translation differences arising
from translation of foreign (35,283,306) 4,811,712
currency financial statements
(2) Other comprehensive income
(net of tax) attributable to non- (4,024,643) 359,923
controlling interests
The notes on pages 20 to 111 form part of these financial statements.
8
Yantai Changyu Pioneer Wine Company Limited
Consolidated income statement
for the year ended 31 December 2021 (continued)
(Expressed in Renminbi Yuan)
Note 2021 2020
VI. Total comprehensive income for the
467,370,424 478,233,698
year
(1) Attributable to shareholders of
464,819,300 475,672,299
the Company
(2) Attributable to non-controlling
2,551,124 2,561,399
interests
VII. Earnings per share:
(1) Basic earnings per share V.49 0.73 0.69
(2) Diluted earnings per share V.49 0.73 0.69
These financial statements were approved by the Board of Directors of the Company on 25
April 2022.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal Representative The person in charge The head of the
of accounting affairs accounting department
(Signature and stamp) (Signature and stamp) (Signature and stamp)
The notes on pages 20 to 111 form part of these financial statements.
9
Yantai Changyu Pioneer Wine Company Limited
Company income statement
for the year ended 31 December 2021
(Expressed in Renminbi Yuan)
Note 2021 2020
I. Operating income XIV.5 578,895,802 512,303,553
Less: Operating cost XIV.5 472,158,738 452,368,512
Taxes and surcharges 38,263,612 19,841,835
General and administrative
74,948,200 74,929,302
expenses
Research and development
907,975 728,793
expenses
Financial expenses 2,193,348 (602,459)
Including: Interest expenses 5,870,092 4,875,912
Interest income 7,122,455 5,594,285
Add: Other income 6,108,832 5,339,898
Investment income XIV.6 867,523,178 449,504,721
Credit reversal - 601,610
II. Operating profit 864,055,939 420,483,799
Add: Non-operating income 997,416 3,961,267
Less: Non-operating expenses 3,295,694 1,050,415
The notes on pages 20 to 111 form part of these financial statements.
10
Yantai Changyu Pioneer Wine Company Limited
Company income statement
for the year ended 31 December 2021 (continued)
(Expressed in Renminbi Yuan)
Note 2021 2020
III. Total profit 861,757,661 423,394,651
Less: Income tax expenses 6,703,679 (3,766,123)
IV. Net profit 855,053,982 427,160,774
(i) Net profit from continuing
855,053,982 427,160,774
operations
(ii) Net profit from discontinued
- -
operations
V. Other comprehensive income, net of
- -
tax
VI. Total comprehensive income for the
855,053,982 427,160,774
year
These financial statements were approved by the Board of Directors of the Company on 25
April 2022.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal Representative The person in charge The head of the
of accounting affairs accounting department
(Signature and stamp) (Signature and stamp) (Signature and stamp)
The notes on pages 20 to 111 form part of these financial statements.
11
Yantai Changyu Pioneer Wine Company Limited
Consolidated cash flow statement
for the year ended 31 December 2021
(Expressed in Renminbi Yuan)
Note 2021 2020
I. Cash flows from operating activities:
Proceeds from sale of goods and
3,674,741,084 3,259,057,195
rendering of services
Refund of taxes and surcharges 48,716,047 45,642,498
Proceeds from other operating
V.50(1) 89,142,251 81,197,248
activities
Sub-total of cash inflows 3,812,599,382 3,385,896,941
Payment for goods and services 957,499,905 1,095,500,438
Payment to and for employees 507,532,110 529,304,037
Payment of various taxes 659,986,692 704,054,796
Payment for other operating activities V.50(2) 562,198,017 551,890,997
Sub-total of cash outflows 2,687,216,724 2,880,750,268
Net cash flows from operating
V.51(1) 1,125,382,658 505,146,673
activities
II. Cash flows from investing activities:
Proceeds from disposal of
93,553,062 135,647,402
investments
Investment returns received 2,587,932 1,730,511
Net proceeds from disposal of fixed
assets, intangible assets and other 7,923,724 49,200,301
long-term assets
Sub-total of cash inflows 104,064,718 186,578,214
Payment for acquisition of fixed
assets, intangible assets and other 225,502,766 155,918,502
long-term assets
Payment for acquisition of
54,218,000 83,508,393
investments
Net cash paid for the acquisition of
subsidiaries and other business V.51(2) - 89,519,789
units
Sub-total of cash outflows 279,720,766 328,946,684
Net cash flows from investing
(175,656,048) (142,368,470)
activities
The notes on pages 20 to 111 form part of these financial statements.
12
Yantai Changyu Pioneer Wine Company Limited
Consolidated cash flow statement
for the year ended 31 December 2021 (continued)
(Expressed in Renminbi Yuan)
Note 2021 2020
III. Cash flows from financing activities:
Proceeds from investors 7,840,000 -
Proceeds from borrowings 847,358,786 987,668,379
Sub-total of cash inflows 855,198,786 987,668,379
Repayments of borrowings 1,036,788,771 1,098,773,637
Payment for dividends, profit
302,051,763 531,697,065
distributions or interest
Payment for other financing activities V.50(3) 15,904,567 62,966,747
Sub-total of cash outflows 1,354,745,101 1,693,437,449
Net cash flows from financing
(499,546,315) (705,769,070)
activities
IV. Effect of foreign exchange rate
changes on cash and cash (518,371) (1,743,498)
equivalents
V. Net increase/(decrease) in cash and
V.51(1) 449,661,924 (344,734,365)
cash equivalents
Add: Cash and cash equivalents at
1,052,665,105 1,397,399,470
the beginning of the year
VI. Cash and cash equivalents at the
V.51(3) 1,502,327,029 1,052,665,105
end of the year
These financial statements were approved by the Board of Directors of the Company on 25
April 2022.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal Representative The person in charge The head of the
of accounting affairs accounting department
(Signature and stamp) (Signature and stamp) (Signature and stamp)
The notes on pages 20 to 111 form part of these financial statements.
13
Yantai Changyu Pioneer Wine Company Limited
Company cash flow statement
for the year ended 31 December 2021
(Expressed in Renminbi Yuan)
Note 2021 2020
I. Cash flows from operating activities:
Proceeds from sale of goods and
514,762,698 365,804,968
rendering of services
Proceeds from other operating
47,112,100 19,507,538
activities
Sub-total of cash inflows 561,874,798 385,312,506
Payment for goods and services 313,397,323 261,854,964
Payment to and for employees 76,053,780 65,247,752
Payment of various taxes 39,248,076 6,778,231
Payment for other operating activities 71,110,685 139,442,785
Sub-total of cash outflows 499,809,864 473,323,732
Net cash flows from operating
62,064,934 (88,011,226)
activities
II. Cash flows from investing activities:
Proceeds from disposal of
38,200,000 58,238,750
investments
Investment returns received 1,068,448,220 450,538,570
Net proceeds from disposal of fixed
assets, intangible assets and other 408,885 131,260
long-term assets
Proceeds from borrowings to
162,200,000 9,000,000
subsidiaries
Sub-total of cash inflows 1,269,257,105 517,908,580
Payment for acquisition of fixed
assets, intangible assets and other 22,919,289 51,762,211
long-term assets
Payment for acquisition of
38,200,000 131,408,115
investments
Net cash paid for the acquisition of
subsidiaries and other business - 89,519,789
units
Cash paid to subsidiaries 655,000,000 112,000,000
Sub-total of cash outflows 716,119,289 384,690,115
Net cash flows from investing
553,137,816 133,218,465
activities
The notes on pages 20 to 111 form part of these financial statements.
14
Yantai Changyu Pioneer Wine Company Limited
Company cash flow statement
for the year ended 31 December 2021 (continued)
(Expressed in Renminbi Yuan)
Note 2021 2020
III. Cash flows from financing activities:
Proceeds from borrowings 150,000,000 150,000,000
Sub-total of cash inflows 150,000,000 150,000,000
Repayments of borrowings 150,000,000 150,000,000
Payment for dividends or interest 280,055,692 486,200,712
Payment for other financing
3,460,687 -
activities
Sub-total of cash outflows 433,516,379 636,200,712
Net cash flows from financing
(283,516,379) (486,200,712)
activities
IV. Effect of foreign exchange rate
changes on cash and cash - -
equivalents
V. Net increase/(decrease) in cash and
331,686,371 (440,993,473)
cash equivalents
Add: Cash and cash equivalents at
182,123,069 623,116,542
the beginning of the year
VI. Cash and cash equivalents at the
513,809,440 182,123,069
end of the year
These financial statements were approved by the Board of Directors of the Company on 25
April 2022.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal Representative The person in charge The head of the
of accounting affairs accounting department
(Signature and stamp) (Signature and stamp) (Signature and stamp)
The notes on pages 20 to 111 form part of these financial statements.
15
Yantai Changyu Pioneer Wine Company Limited
Consolidated statement of changes in shareholders’ equity
for the year ended 31 December 2021
(Expressed in Renminbi Yuan)
Attributable to shareholders of the Company
Total
Other Non-controlling
Note Retained shareholders’
Share capital Capital reserve comprehensive Surplus reserve Sub-total interests
earnings equity
income
I. Balance at the beginning of the
685,464,000 524,968,760 576,129 342,732,000 8,714,091,755 10,267,832,644 236,597,990 10,504,430,634
year
Add: Changes in accounting
- - - - (10,582,161) (10,582,161) - (10,582,161)
policies
Adjusted balance at the beginning
685,464,000 524,968,760 576,129 342,732,000 8,703,509,594 10,257,250,483 236,597,990 10,493,848,473
of the year
II. Changes in equity during the year
(1) Total comprehensive income - - (35,283,306) - 500,102,606 464,819,300 2,551,124 467,370,424
(2) Shareholders’ contributions
Establishment of subsidiaries - - - - - - 7,840,000 7,840,000
(3) Appropriation of profits V.36
Distributions to shareholders - - - - (274,185,600) (274,185,600) (2,196,693) (276,382,293)
III. Balance at the end of the year 685,464,000 524,968,760 (34,707,177) 342,732,000 8,929,426,600 10,447,884,183 244,792,421 10,692,676,604
These financial statements were approved by the Board of Directors of the Company on 25 April 2022.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal Representative The person in charge of The head of the accounting
accounting affairs department
(Signature and stamp) (Signature and stamp) (Signature and stamp)
The notes on pages 20 to 111 form part of these financial statements.
16
Yantai Changyu Pioneer Wine Company Limited
Consolidated statement of changes in shareholders’ equity
for the year ended 31 December 2020
(Expressed in Renminbi Yuan)
Attributable to shareholders of the Company
Total
Other Non-controlling
Note Retained shareholders’
Share capital Capital reserve comprehensive Surplus reserve Sub-total interests
earnings equity
income
I. Balance at the beginning of the
685,464,000 642,775,360 (4,235,583) 342,732,000 8,735,513,044 10,402,248,821 271,876,064 10,674,124,885
year
II. Changes in equity during the year
(1) Total comprehensive income - - 4,811,712 - 470,860,587 475,672,299 2,561,399 478,233,698
(2) Shareholders’ contributions
Acquisitions of non-controlling
- (28,286,811) - - - (28,286,811) (34,679,936) (62,966,747)
interests
(3) Appropriation of profits V.36
Distributions to shareholders - - - - (492,281,876) (492,281,876) (3,159,537) (495,441,413)
(4) Business combination under
- (89,519,789) - - - (89,519,789) - (89,519,789)
common control
III. Balance at the end of the year 685,464,000 524,968,760 576,129 342,732,000 8,714,091,755 10,267,832,644 236,597,990 10,504,430,634
These financial statements were approved by the Board of Directors of the Company on 25 April 2022.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal Representative The person in charge of The head of the accounting
accounting affairs department
(Signature and stamp) (Signature and stamp) (Signature and stamp)
The notes on pages 20 to 111 form part of these financial statements.
17
Yantai Changyu Pioneer Wine Company Limited
Company statement of changes in shareholders’ equity
for the year ended 31 December 2021
(Expressed in Renminbi Yuan)
Total
Retained
Note Share capital Capital reserve Surplus reserve shareholders’
earnings
equity
I. Balance at the
685,464,000 560,182,235 342,732,000 8,567,313,551 10,155,691,786
beginning of the year
Add: Changes in
III.33 (6,620,268) (6,620,268)
accounting policies
Adjusted balance at the
685,464,000 560,182,235 342,732,000 8,560,693,283 10,149,071,518
beginning of the year
II. Changes in equity
during the year
(1) Total
comprehensive - - - 855,053,982 855,053,982
income
(2) Appropriation of
profits
Distributions to
- - - (274,185,600) (274,185,600)
shareholders
III. Balance at the end of
685,464,000 560,182,235 342,732,000 9,141,561,665 10,729,939,900
the year
These financial statements were approved by the Board of Directors of the Company on 25
April 2022.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal Representative The person in charge The head of the
of accounting affairs accounting department
(Signature and stamp) (Signature and stamp) (Signature and stamp)
The notes on pages 20 to 111 form part of these financial statements.
18
Yantai Changyu Pioneer Wine Company Limited
Company statement of changes in shareholders’ equity
for the year ended 31 December 2020 (continued)
(Expressed in Renminbi Yuan)
Total
Retained
Note Share capital Capital reserve Surplus reserve shareholders’
earnings
equity
I. Balance at the
685,464,000 557,222,454 342,732,000 8,619,977,577 10,205,396,031
beginning of the year
II. Changes in equity
during the year
(1) Total
comprehensive - - - 427,160,774 427,160,774
income
(2) Shareholders’
contributions
Purchase of share
equity of Yantai
Changyu Culture
- 2,959,781 - - 2,959,781
Development Co.,
Ltd (“Culture
Development”)
(3) Appropriation of
profits
Distributions to
- - - (479,824,800) (479,824,800)
shareholders
III. Balance at the end of
685,464,000 560,182,235 342,732,000 8,567,313,551 10,155,691,786
the year
These financial statements were approved by the Board of Directors of the Company on 25
April 2022.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal Representative The person in charge The head of the
of accounting affairs accounting department
(Signature and stamp) (Signature and stamp) (Signature and stamp)
The notes on pages 20 to 111 form part of these financial statements.
19
Yantai Changyu Pioneer Wine Company Limited
Notes to the financial statements
(Expressed in Renminbi Yuan unless otherwise indicated)
I. Company status
Yantai Changyu Pioneer Wine Co., Ltd. (the "Company” or the “Joint Stock 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 reorganisation carried out by Yantai Changyu
Group Co., Ltd. ("Changyu Group"), 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 2021 the total shares issued by the Company amounts to 685,464,000
shares. Please refer to Note V. 32 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 authorised by the board of directors on 25 April 2022.
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 VI "Equity in other entities" in detail.
II. Basis of preparation
The financial statements have been prepared on the going concern basis.
The Group has adopted the revised “Accounting Standard for Business Enterprises No. 22 –
Financial Instruments: Recognition and Measurement” and related new financial instruments
standards and “Accounting Standard for Business Enterprises No. 14 – Revenue”, issued by
the Ministry of Finance (“MOF”) of the People’s Republic of China in 2017, since 1 January
2019 and 1 January 2020 respectively. In addition, it has adopted the revised “Accounting
Standard for Business Enterprises No. 21 – Leases” issued by the MOF in 2018 since 1
January 2021 (see Note III.33(1)).
20
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
III. Significant accounting policies and accounting estimates
1 Statement of compliance
The financial statements have been prepared in accordance with the requirements of
Accounting Standards for Business Enterprises or referred to as China Accounting Standards
(“CAS”) issued by the MOF. These financial statements present truly and completely the
consolidated financial position and financial position of the Company as at 31 December
2021, and the consolidated financial performance and financial performance and the
consolidated cash flows and cash flows of the Company for the year then ended.
These financial statements also comply with the disclosure requirements of “Regulation on
the Preparation of Information Disclosures by Companies Issuing Securities, No. 15: General
Requirements for Financial Reports” as revised by the China Securities Regulatory
Commission (“CSRC”) in 2014.
2 Accounting period
The accounting period is from 1 January to 31 December.
3 Operating cycle
The Company takes the period from the acquisition of assets for processing to until the
ultimate realisation of cash or cash equivalents as a normal operating cycle. The operating
cycle of the Company is 12 months.
4 Functional 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 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.
5 Accounting treatments for business combinations involving entities under common control
and not under common control
A transaction constitutes a business combination when the Group obtains control of one or
more entities (or a group of assets or net assets). Business combination is classified as
either business combinations involving enterprises under common control or business
combinations not involving enterprises under common control.
For a transaction not involving enterprises under common control, the acquirer determines
whether acquired set of assets constitute a business. The Group may elect to apply the
simplified assessment method, the concentration test, to determine whether an acquired set
of assets is not a business. If the concentration test is met and the set of assets is
determined not to be a business, no further assessment is needed. If the concentration test
is not met, the Group shall perform the assessment according to the guidance on the
determination of a business.
21
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
When the set of assets the group acquired does not constitute a business, acquisition costs
should be allocated to each identifiable assets and liabilities at their acquisitiondate fair
values. It is not required to apply the accounting of business combination described as
below.
(1) Business combinations involving entities under common control
A business combination involving entities under common control is a business combination in
which all of the combining entities are ultimately controlled by the same party or parties both
before and after the business combination, and that control is not transitory. The assets
acquired and liabilities assumed are measured based on their carrying amounts in the
consolidated financial statements of the ultimate controlling party at the combination date.
The difference between the carrying amount of the net assets acquired and the consideration
paid for the combination (or the total par value of shares issued) is adjusted against share
premium in the capital reserve, with any excess adjusted against retained earnings. Any
costs directly attributable to the combination are recognised in profit or loss when incurred.
The combination date is the date on which one combining entity obtains control of other
combining entities.
(2) Business combinations involving entities not under common control
A business combination involving entities not under common control is a business
combination in which all of the combining entities are not ultimately controlled by the same
party or parties both before and after the business combination. Where (1) the aggregate of
the acquisition-date fair value of assets transferred (including the acquirer’s previously held
equity interest in the acquiree), liabilities incurred or assumed, and equity securities issued
by the acquirer, in exchange for control of the acquiree, exceeds (2) the acquirer’s interest in
the acquisition-date fair value of the acquiree’s identifiable net assets, the difference is
recognised as goodwill (see Note III.18). If (1) is less than (2), the difference is recognised in
profit or loss for the current period. Other acquisition-related costs are expensed when
incurred. The acquiree’s identifiable asset, liabilities and contingent liabilities, if the
recognition criteria are met, are recognised by the Group at their acquisition-date fair value.
The acquisition date is the date on which the acquirer obtains control of the acquiree.
For a business combination involving entities not under common control and achieved in
stages, the Group remeasures its previously-held equity interest in the acquiree to its
acquisition-date fair value and recognises any resulting difference between the fair value and
the carrying amount as investment income or other comprehensive income for the current
period. In addition, any amount recognised in other comprehensive income that may be
reclassified to profit or loss, in prior reporting periods relating to the previously-held equity
interest, and any other changes in the owners’ equity under equity accounting, are
transferred to investment income in the period in which the acquisition occurs (see Note
III.11(2)(b)). If equity interests of the acquiree held before acquisition-date were equity
instrument investments measured at fair value through other comprehensive income, other
comprehensive income recognised shall be moved to retained earnings on acquisition-date.
22
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
6 Consolidated financial statements
(1) General principles
The scope of consolidated financial statements is based on control and the consolidated
financial statements comprise the Company and its subsidiaries. Control exists when the
investor has all of following: power over the investee; exposure, or rights, to variable returns
from its involvement with the investee and has the ability to affect those returns through its
power over the investee. When assessing whether the Group has power, only substantive
rights (held by the Group and other parties) are considered. The financial position, financial
performance and cash flows of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that control ceases.
Non-controlling interests are presented separately in the consolidated balance sheet within
shareholders’ equity. Net profit or loss attributable to non-controlling shareholders is
presented separately in the consolidated income statement below the net profit line item.
Total comprehensive income attributable to non-controlling shareholders is presented
separately in the consolidated income statement below the total comprehensive income line
item.
When the amount of loss for the current period attributable to the non-controlling
shareholders of a subsidiary exceeds the non-controlling shareholders’ share of the opening
owners’ equity of the subsidiary, the excess is still allocated against the non-controlling
interests.
When the accounting period or accounting policies of a subsidiary are different from those of
the Company, the Company makes necessary adjustments to the financial statements of the
subsidiary based on the Company’s own accounting period or accounting policies. Intra-
group balances and transactions, and any unrealised profit or loss arising from intra-group
transactions, are eliminated when preparing the consolidated financial statements.
Unrealised losses resulting from intra-group transactions are eliminated in the same way as
unrealised gains, unless they represent impairment losses that are recognised in the financial
statements.
(2) Subsidiaries acquired through a business combination
Where a subsidiary was acquired during the reporting period, through a business
combination involving entities under common control, the financial statements of the
subsidiary are included in the consolidated financial statements based on the carrying
amounts of the assets and liabilities of the subsidiary in the financial statements of the
ultimate controlling party as if the combination had occurred at the date that the ultimate
controlling party first obtained control. The opening balances and the comparative figures of
the consolidated financial statements are also restated.
Where a subsidiary was acquired during the reporting period, through a business
combination involving entities not under common control, the identifiable assets and liabilities
of the acquired subsidiaries are included in the scope of consolidation from the date that
control commences, based on the fair value of those identifiable assets and liabilities at the
acquisition date.
23
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
(3) Disposal of subsidiaries
When the Group loses control over a subsidiary, any resulting disposal gains or losses are
recognised as investment income for the current period. The remaining equity investment is
re-measured at its fair value at the date when control is lost, any resulting gains or losses are
also recognised as investment income for the current period.
When the Group loses control of a subsidiary in multiple transactions in which it disposes of
its long-term equity investment in the subsidiary in stages, the following are considered to
determine whether the Group should account for the multiple transactions as a bundled
transaction:
- arrangements are entered into at the same time or in contemplation of each other;
- arrangements work together to achieve an overall commercial effect;
- the occurrence of one arrangement is dependent on the occurrence of at least one other
arrangement;
- one arrangement considered on its own is not economically justified, but it is economically
justified when considered together with other arrangements.
If each of the multiple transactions does not form part of a bundled transaction, the
transactions conducted before the loss of control of the subsidiary are accounted for in
accordance with the accounting policy for partial disposal of equity investment in subsidiaries
where control is retained (see Note III.6(4)).
If each of the multiple transactions forms part of a bundled transaction which eventually
results in the loss of control in the subsidiary, these multiple transactions are accounted for
as a single transaction. In the consolidated financial statements, the difference between the
consideration received and the corresponding proportion of the subsidiary’s net assets
(calculated continuously from the acquisition date) in each transaction prior to the loss of
control shall be recognised in other comprehensive income and transferred to profit or loss
when the parent eventually loses control of the subsidiary.
(4) Changes in non-controlling interests
Where the Company acquires a non-controlling interest from a subsidiary’s non-controlling
shareholders or disposes of a portion of an interest in a subsidiary without a change in
control, the difference between the proportion interests of the subsidiary’s net assets being
acquired or disposed and the amount of the consideration paid or received is adjusted to the
capital reserve (share premium) in the consolidated balance sheet, with any excess adjusted
to retained earnings.
7 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits that can be readily withdraw on
demand, and short-term, highly liquid investments that are readily convertible into known
amounts of cash and are subject to an insignificant risk of change in value.
8 Foreign currency transactions and translation of foreign currency financial statements
When the Group receives capital in foreign currencies from investors, the capital is translated
to Renminbi at the spot exchange rate at the date of the receipt. Other foreign currency
transactions are, on initial recognition, translated to Renminbi at the spot exchange rates.
24
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
Monetary items denominated in foreign currencies are translated to Renminbi at the spot
exchange rate at the balance sheet date. The resulting exchange differences are generally
recognised in profit or loss, unless they arise from the re-translation of the principal and
interest of specific borrowings for the acquisition and construction of qualifying assets (see
Note III. 15). Non-monetary items that are measured at historical cost in foreign currencies
are translated to Renminbi using the exchange rate at the transaction date.
In translating the financial statements of a foreign operation, assets and liabilities of foreign
operation are translated to Renminbi at the spot exchange rate at the balance sheet date.
Equity items, excluding retained earnings and the translation differences in other
comprehensive income, are translated to Renminbi at the spot exchange rates at the
transaction dates. Income and expenses in the income statement are translated to Renminbi
at the spot exchange rates at the transaction dates. The resulting translation differences are
recognised in other comprehensive income. The translation differences accumulated in other
comprehensive income with respect to a foreign operation are transferred to profit or loss in
the period when the foreign operation is disposed.
9 Financial instruments
Financial instruments include cash at bank and on hand, investments in debt and equity
securities other than those classified as long-term equity investments (see Note III.11),
receivables, payables, loans and borrowings and share capital.
(1) Recognition and initial measurement of financial assets and financial liabilities
A financial asset or financial liability is recognised in the balance sheet when the Group
becomes a party to the contractual provisions of a financial instrument.
A financial assets (unless it is a trade receivable without a significant financing component)
and financial liabilities is measured initially at fair value. For financial assets and financial
liabilities at fair value through profit or loss, any related directly attributable transaction costs
are charged to profit or loss; for other categories of financial assets and financial liabilities,
any related directly attributable transaction costs are included in their initial costs. A trade
receivable, without significant financing component or practical expedient applied for one
year or less contracts, is initially measured at the transaction price in accordance with Note
III.22.
(2) Classification and subsequent measurement of financial assets
(a) Classification of financial assets
The classification of financial assets is generally based on the business model in which
a financial asset is managed and its contractual cash flow characteristics. On initial
recognition, a financial asset is classified as measured at amortised cost, at fair value
through other comprehensive income (“FVOCI”), or at fair value through profit or loss
(“FVTPL”).
Financial assets are not reclassified subsequent to their initial recognition unless the
Group changes its business model for managing financial assets in which case all
affected financial assets are reclassified on the first day of the first reporting period
following the change in the business model.
25
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
A financial asset is measured at amortised cost if it meets both of the following
conditions and is not designated as at FVTPL:
- it is held within a business model whose objective is to hold assets to collect
contractual cash flows; and
- its contractual terms give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and
is not designated as at FVTPL:
- it is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets; and
- its contractual terms give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Group may
irrevocably elect to present subsequent changes in the investment’s fair value in other
comprehensive income. This election is made on an investment-by-investment basis.
The instrument meets the definition of equity from the perspective of the issuer.
All financial assets not classified as measured at amortised cost or FVOCI as
described above are measured at FVTPL. On initial recognition, the Group may
irrevocably designate a financial asset that otherwise meets the requirements to be
measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or
significantly reduces an accounting mismatch that would otherwise arise.
The business model refers to how the Group manages its financial assets in order to
generate cash flows. That is, the Group’s business model determines whether cash
flows will result from collecting contractual cash flows, selling financial assets or both.
The Group determines the business model for managing the financial assets according
to the facts and based on the specific business objective for managing the financial
assets determined by the Group’s key management personnel.
In assessing whether the contractual cash flows are solely payments of principal and
interest, the Group considers the contractual terms of the instrument. For the purposes
of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial
recognition. ‘Interest’ is defined as consideration for the time value of money and for
the credit risk associated with the principal amount outstanding during a particular
period of time and for other basic lending risks and costs, as well as a profit margin.
The Group also assesses whether the financial asset contains a contractual term that
could change the timing or amount of contractual cash flows such that it would not
meet this condition.
(b) Subsequent measurement of financial assets
- Financial assets at FVTPL
These financial assets are subsequently measured at fair value. Net gains and
losses, including any interest or dividend income, are recognised in profit or loss
unless the financial assets are part of a hedging relationship.
26
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
- Financial assets at amortised cost
These assets are subsequently measured at amortised cost using the effective
interest method. A gain or loss on a financial asset that is measured at amortised
cost and is not part of a hedging relationship shall be recognised in profit or loss
when the financial asset is derecognised, reclassified, through the amortisation
process or in order to recognise impairment gains or losses.
- Debt investments at FVOCI
These assets are subsequently measured at fair value. Interest income calculated
using the effective interest method, impairment and foreign exchange gains and
losses are recognised in profit or loss. Other net gains and losses are recognised in
other comprehensive income. On derecognition, gains and losses accumulated in
other comprehensive income are reclassified to profit or loss.
- Equity investments at FVOCI
These assets are subsequently measured at fair value. Dividends are recognised
as income in profit or loss. Other net gains and losses are recognised in other
comprehensive income. On derecognition, gains and losses accumulated in other
comprehensive income are reclassified to retained earnings.
(3) Classification and subsequent measurement of financial liabilities
Financial liabilities are classified as measured at FVTPL or amortised cost by the Group.
- Financial liabilities at FVTPL
A financial liability is classified as at FVTPL if it is classified as held-for-trading (including
derivative financial liability) or it is designated as such on initial recognition.
Financial liabilities at FVTPL are subsequently measured at fair value and net gains and
losses, including any interest expense, are recognised in profit or loss, unless the financial
liabilities are part of a hedging relationship.
- Financial liabilities at amortised cost
These financial liabilities are subsequently measured at amortised cost using the effective
interest method.
(4) Offsetting
Financial assets and financial liabilities are generally presented separately in the balance
sheet, and are not offset. However, a financial asset and a financial liability are offset and
the net amount is presented in the balance sheet when both of the following conditions are
satisfied:
- The Group currently has a legally enforceable right to set off the recognised amounts;
- The Group intends either to settle on a net basis, or to realise the financial asset and
settle the financial liability simultaneously.
27
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
(5) Derecognition of financial assets and financial liabilities
Financial asset is derecognised when one of the following conditions is met:
- the Group’s contractual rights to the cash flows from the financial asset expire;
- the financial asset has been transferred and the Group transfers substantially all of the
risks and rewards of ownership of the financial asset; or;
- the financial asset has been transferred, although the Group neither transfers nor retains
substantially all of the risks and rewards of ownership of the financial asset, it does not
retain control over the transferred asset.
Where a transfer of a financial asset in its entirety meets the criteria for derecognition, the
difference between the two amounts below is recognised in profit or loss:
- the carrying amount of the financial asset transferred measured at the date of
derecognition;
- the sum of the consideration received from the transfer and, when the transferred financial
asset is a debt investment at FVOCI, any cumulative gain or loss that has been
recognised directly in other comprehensive income for the part derecognised.
The Group derecognises a financial liability (or part of it) only when its contractual obligation
(or part of it) is extinguished.
(6) Impairment
The Group recognises loss allowances for expected credit loss (ECL) on:
- financial assets measured at amortised cost;
- financial investments at fair value through other comprehensive income
Financial assets measured at fair value, including debt investments or equity securities at
FVPL, equity securities designated at FVOCI and derivative financial assets, are not subject
to the ECL assessment.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as
the present value of all cash shortfalls (i.e. the difference between the cash flows due to the
entity in accordance with the contract and the cash flows that the Group expects to receive).
The maximum period considered when estimating ECLs is the maximum contractual period
(including extension options) over which the Group is exposed to credit risk.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life
of a financial instrument.
12-month ECLs are the portion of ECLs that result from default events that are possible
within the 12 months after the balance sheet date (or a shorter period if the expected life of
the instrument is less than 12 months).
28
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
For accounts receivable, loss allowance are always measured at an amount equal to lifetime
ECLs. ECLs on these financial assets are estimated using a provision matrix based on the
Group’s historical credit loss experience, adjusted for factors that are specific to the debtors
and an assessment of both the current and forecast general economic conditions at the
balance sheet date.
For assets other than accounts receivable that meet one of the following conditions, loss
allowance are measured at an amount equal to 12-month ECLs. For all other financial
instruments, the Group recognises a loss allowance equal to lifetime ECLs:
- If the financial instrument is determined to have low credit risk at the balance sheet date;
- If the credit risk on a financial instrument has not increased significantly since initial
recognition.
Financial instruments that have low credit risk
The credit risk on a financial instrument is considered low if the financial instrument has a low
risk of default, the borrower has a strong capacity to meet its contractual cash flow
obligations in the near term and adverse changes in economic and business conditions in the
longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its
contractual cash flow obligations.
Significant increases in credit risk
In assessing whether the credit risk of a financial instrument has increased significantly since
initial recognition, the Group compares the risk of default occurring on the financial
instrument assessed at the balance sheet date with that assessed at the date of initial
recognition.
When determining whether the credit risk of a financial asset has increased significantly
since initial recognition and when estimating ECL, the Group considers reasonable and
supportable information that is relevant and available without undue cost or effort, including
forward-looking information. In particular, the following information is taken into account:
- failure to make payments of principal or interest on their contractually due dates;
- an actual or expected significant deterioration in a financial instrument’s external or
internal credit rating (if available);
- an actual or expected significant deterioration in the operating results of the debtor; and
- existing or forecast changes in the technological, market, economic or legal environment
that have a significant adverse effect on the debtor’s ability to meet its obligation to the
Group.
Depending on the nature of the financial instruments, the assessment of a significant
increase in credit risk is performed on either an individual basis or a collective basis. When
the assessment is performed on a collective basis, the financial instruments are grouped
based on shared credit risk characteristics, such as past due status and credit risk ratings.
The Group assumes that the credit risk on a financial asset has increased significantly if it is
more than 30 days past due.
29
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
Credit-impaired financial assets
At each balance sheet date, the Group assesses whether financial assets carried at
amortised cost and debt investments at FVOCI are credit-impaired. A financial asset is
‘credit-impaired’ when one or more events that have a detrimental impact on the estimated
future cash flows of the financial asset have occurred. Evidence that a financial asset is
credit-impaired includes the following observable data:
- significant financial difficulty of the borrower or issuer;
- a breach of contract, such as a default or delinquency in interest or principal payments;
- for economic or contractual reasons relating to the borrower’s financial difficulty, the
Group having granted to the borrower a concession that would not otherwise consider;
- it is probable that the borrower will enter bankruptcy or other financial reorganisation; or
- the disappearance of an active market for that financial asset because of financial
difficulties.
Presentation of allowance for ECL
ECLs are remeasured at each balance sheet date to reflect changes in the financial
instrument’s credit risk since initial recognition. Any change in the ECL amount is recognised
as an impairment gain or loss in profit or loss. The Group recognises an impairment gain or
loss for all financial instruments with a corresponding adjustment to their carrying amount
through a loss allowance account, except for debt investments that are measured at FVOCI,
for which the loss allowance is recognised in other comprehensive income.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the
extent that there is no realistic prospect of recovery. A write-off constitutes a derecognition
event. This is generally the case when the Group determines that the debtor does not have
assets or sources of income that could generate sufficient cash flows to repay the amounts
subject to the write-off. However, financial assets that are written off could still be subject to
enforcement activities in order to comply with the Group’s procedures for recovery of
amounts due.
Subsequent recoveries of an asset that was previously written off are recognised as a
reversal of impairment in profit or loss in the period in which the recovery occurs.
(7) Equity instrument
The consideration received from the issuance of equity instruments net of transaction costs is
recognised in shareholders’ equity. Consideration and transaction costs paid by the
Company for repurchasing self-issued equity instruments are deducted from shareholders’
equity.
When the Company repurchases its own shares, those shares are treated as treasury
shares. All expenditure relating to the repurchase is recorded in the cost of the treasury
shares, with the transaction recording in the share register. Treasury shares are excluded
from profit distributions and are presented as a deduction under shareholders’ equity in the
balance sheet.
30
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
10 Inventories
(1) Classification and cost
Inventories include raw materials, work in progress and reusable materials. Inventories are
initially measured at cost. Cost of inventories comprises all costs of purchase, costs of
conversion and other expenditure incurred in bringing the inventories to their present location
and condition. In addition to the purchase cost of raw materials, work in progress and
finished goods include direct labour costs and an appropriate allocation of production
overheads.
Agricultural products harvested are reported in accordance with the CAS No.1 - Inventories.
(2) Measurement method of cost of inventories
Cost of inventories is calculated using the weighted average method.
Consumables including low-value consumables and packaging materials are amortised when
they are used. The amortisation charge is included in the cost of the related assets or
recognised in profit or loss for the current period.
(3) Basis for determining the net realisable value and method for provision for obsolete
inventories
At the balance sheet date, inventories are carried at the lower of cost and net realisable
value.
Net realisable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale and
relevant taxes. The net realisable value of materials held for use in the production is
measured based on the net realisable value of the finished goods in which they will be
incorporated. The net realisable value of the inventory held to satisfy sales or service
contracts is measured based on the contract price, to the extent of the quantities specified in
sales contracts, and the excess portion of inventories is measured based on general selling
prices.
Any excess of the cost over the net realisable value of each item of inventories is recognised
as a provision for impairment, and is recognised in profit or loss.
(4) Inventory count system
The Group maintains a perpetual inventory system.
31
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
11 Long-term equity investments
(1) Investment cost of long-term equity investments
(a) Long-term equity investments acquired through a business combination
- The initial cost of a long-term equity investment acquired through a business
combination involving entities under common control is the Company’s share of the
carrying amount of the subsidiary’s equity in the consolidated financial statements of
the ultimate controlling party at the combination date. The difference between the
initial investment cost and the carrying amount of the consideration given is adjusted
to the share premium in the capital reserve, with any excess adjusted to retained
earnings. For a long-term equity investment in a subsidiary acquired through a
business combination achieved in stages which do not form a bundled transaction
and involving entities under common control, the Company determines the initial
cost of the investment in accordance with the above policies. The difference
between this initial cost and the sum of the carrying amount of previously-held
investment and the consideration paid for the shares newly acquired is adjusted to
capital premium in the capital reserve, with any excess adjusted to retained
earnings.
- For a long-term equity investment obtained through a business combination not
involving enterprises under common control, the initial cost comprises the aggregate
of the fair value of assets transferred, liabilities incurred or assumed, and equity
securities issued by the Company, in exchange for control of the acquiree. For a
long-term equity investment obtained through a business combination not involving
entities under common control and achieved through multiple transactions in stages
which do not form a bundled transaction, the initial cost comprises the carrying
amount of the previously-held equity investment in the acquiree immediately before
the acquisition date, and the additional investment cost at the acquisition date.
(b) Long-term equity investments acquired other than through a business combination
- A long-term equity investment acquired other than through a business combination
is initially recognised at the amount of cash paid if the Group acquires the
investment by cash, or at the fair value of the equity securities issued if an
investment is acquired by issuing equity securities.
(2) Subsequent measurement of long-term equity investment
(a) Investments in subsidiaries
In the Company’s separate financial statements, long-term equity investments in
subsidiaries are accounted for using the cost method unless the investment is
classified as held for sale (See Note III. 28). Except for cash dividends or profit
distributions declared but not yet distributed that have been included in the price or
consideration paid in obtaining the investments, the Company recognises its share of
the cash dividends or profit distributions declared by the investee as investment income
for the current period.
The investments in subsidiaries are stated in the balance sheet at cost less
accumulated impairment losses.
32
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
For the impairment of the investments in subsidiaries, refer to Note III.20.
In the Group’s consolidated financial statements, subsidiaries are accounted for in
accordance with the policies described in Note III.6.
(b) Investment in joint ventures and associates
A joint venture is an arrangement whereby the Group and other parties have joint
control (see Note III.11(3)) and rights to the net assets of the arrangement.
Associated enterprises refer to enterprises to which the Group can exercise significant
influence (see Note III.11(3)).
A long-term equity investment in a joint venture is accounted for using the equity
method for subsequent measurement, unless the investment is classified as held for
sale (see Note III.28).
The accounting treatments under the equity method adopted by the Group are as
follows:
- Where the initial cost of a long-term equity investment exceeds the Group’s interest
in the fair value of the investee’s identifiable net assets at the date of acquisition, the
investment is initially recognised at cost. Where the initial investment cost is less
than the Group’s interest in the fair value of the investee’s identifiable net assets at
the date of acquisition, the investment is initially recognised at the investor’s share
of the fair value of the investee’s identifiable net assets, and the difference is
recognised in profit or loss.
- After the acquisition of the investment, the Group recognises its share of the
investee’s profit or loss and other comprehensive income as investment income or
losses and other comprehensive income respectively, and adjusts the carrying
amount of the investment accordingly. Once the investee declares any cash
dividends or profit distributions, the carrying amount of the investment is reduced by
the amount attributable to the Group. Changes in the Group’s share of the
investee’s owners’ equity, other than those arising from the investee’s net profit or
loss, other comprehensive income or profit distribution (referred to as “other
changes in owners’ equity”), is recognised directly in the Group’s equity, and the
carrying amount of the investment is adjusted accordingly.
- In calculating its share of the investee’s net profits or losses, other comprehensive
income and other changes in owners’ equity, the Group recognises investment
income and other comprehensive income after making appropriate adjustments to
align the accounting policies or accounting periods with those of the Group based on
the fair value of the investee’s identifiable net assets at the date of acquisition.
Unrealised profits and losses resulting from transactions between the Group and its
associates or joint ventures are eliminated to the extent of the Group’s interest in the
associates or joint ventures. Unrealised losses resulting from transactions between
the Group and its associates or joint ventures are eliminated in the same way as
unrealised gains but only to the extent that there is no impairment.
33
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
- The Group discontinues recognising its share of further losses of the investee after
the carrying amount of the long-term equity investment and any long-term interest
that in substance forms part of the Group’s net investment in the associate is
reduced to zero, except to the extent that the Group has an obligation to assume
additional losses. If the joint venture subsequently reports net profits, the Group
resumes recognising its share of those profits only after its share of the profits
equals the share of losses not recognised.
For the impairment of the investments in joint ventures and associates, refer to Note
III.20.
(3) Criteria for determining the existence of joint control over an investee
Joint control is the contractually agreed sharing of control of an arrangement, which exists
only when decisions about the relevant activities (activities with significant impact on the
returns of the arrangement) require the unanimous consent of the parties sharing control.
The following factors are usually considered when assessing whether the Group can
exercise joint control over an investee:
- Whether no single participant party is in a position to control the investee’s related
activities unilaterally;
- Whether strategic decisions relating to the investee’s related activities require the
unanimous consent of all participant parties that sharing of control.
Significant influence is the power to participate in the financial and operating policy decisions
of an investee but does not have control or joint control over those policies.
12 Investment properties
Investment properties are properties held either to earn rental income or for capital
appreciation or for both. Investment properties are accounted for using the cost model and
stated in the balance sheet at cost less accumulated depreciation, amortisation and
impairment losses, and adopts a depreciation or amortisation policy for the investment
property which is consistent with that for buildings or land use rights, unless the investment
property is classified as held for sale (see Note III.28). For the impairment of the investment
properties, refer to Note III.20.
Estimated useful Residual value rate Depreciation rate
Category
life (years) (%) (%)
Plant and buildings 20 - 40 years 0 - 5% 2.4% - 5.0%
13 Fixed assets
(1) Recognition of fixed assets
Fixed assets represent the tangible assets held by the Group for use in production of goods,
supply of services, for rental or for administrative purposes with useful lives over one
accounting year.
34
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
The cost of a purchased fixed asset comprises the purchase price, related taxes, and any
directly attributable expenditure for bringing the asset to working condition for its intended
use. The cost of self-constructed assets is measured in accordance with the policy set out in
Note III.14.
Where the parts of an item of fixed assets have different useful lives or provide benefits to
the Group in a different pattern, thus necessitating use of different depreciation rates or
methods, each part is recognised as a separate fixed asset.
Any subsequent costs including the cost of replacing part of an item of fixed assets are
recognised as assets when it is probable that the economic benefits associated with the
costs will flow to the Group, and the carrying amount of the replaced part is derecognised.
The costs of the day-to-day maintenance of fixed assets are recognised in profit or loss as
incurred.
Fixed assets are stated in the balance sheet at cost less accumulated depreciation and
impairment losses.
(2) Depreciation of fixed assets
The cost of a fixed asset, less its estimated residual value and accumulated impairment
losses, is depreciated using the straight-line method over its estimated useful life, unless the
fixed asset is classified as held for sale (see Note III.28).
The estimated useful lives, residual value rates and depreciation rates of each class of fixed
assets are as follows:
Estimated useful Residual value rate Depreciation rate
Class
life (years) (%) (%)
Plant and buildings 20 - 40 years 0 - 5% 2.4% - 5.0%
Machinery equipment 5 - 30 years 0 - 5% 3.2% - 20.0%
Motor vehicles 4 - 12 years 0 - 5% 7.9% - 25.0%
Useful lives, estimated residual values and depreciation methods are reviewed at least at
each year-end.
(3) For the impairment of the fixed assets, refer to Note III.20.
(4) Disposal of fixed assets
The carrying amount of a fixed asset is derecognised:
- when the fixed asset is holding for disposal; or
- when no future economic benefit is expected to be generated from its use or disposal.
Gains or losses arising from the retirement or disposal of an item of fixed asset are
determined as the difference between the net disposal proceeds and the carrying amount of
the item, and are recognised in profit or loss on the date of retirement or disposal.
35
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
14 Construction in progress
The cost of self-constructed assets includes the cost of materials, direct labour, capitalised
borrowing costs (see Note III.15), and any other costs directly attributable to bringing the
asset to working condition for its intended use.
A self-constructed asset is classified as construction in progress and transferred to fixed
asset when it is ready for its intended use. No depreciation is provided against construction
in progress.
Construction in progress is stated in the balance sheet at cost less accumulated impairment
losses (see Note III.20).
15 Borrowing costs
Borrowing costs incurred directly attributable to the acquisition, and construction or
production of a qualifying asset are capitalised as part of the cost of the asset. Other
borrowing costs are recognised as financial expenses when incurred.
During the capitalisation period, the amount of interest (including amortisation of any
discount or premium on borrowing) to be capitalised in each accounting period is determined
as follows:
- Where funds are borrowed specifically for the acquisition and construction or production of
a qualifying asset, the amount of interest to be capitalised is the interest expense
calculated using effective interest rates during the period less any interest income earned
from depositing the borrowed funds or any investment income on the temporary
investment of those funds before being used on the asset.
- To the extent that the Group borrows funds generally and uses them for the acquisition
and construction or production of a qualifying asset, the amount of borrowing costs eligible
for capitalisation is determined by applying a capitalisation rate to the weighted average of
the excess amounts of cumulative expenditure on the asset over the above amounts of
specific borrowings. The capitalisation rate is the weighted average of the interest rates
applicable to the general-purpose borrowings.
The effective interest rate is determined as the rate that exactly discounts estimated future
cash flow through the expected life of the borrowing or, when appropriate, a shorter period to
the initially recognised amount of the borrowings.
During the capitalisation period, exchange differences related to the principal and interest on
a specific-purpose borrowing denominated in foreign currency are capitalised as part of the
cost of the qualifying asset. The exchange differences related to the principal and interest on
foreign currency borrowings other than a specific-purpose borrowing are recognised as a
financial expense when incurred.
36
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
The capitalisation period is the period from the date of commencement of capitalisation of
borrowing costs to the date of cessation of capitalisation, excluding any period over which
capitalisation is suspended. Capitalisation of borrowing costs commences when expenditure
for the asset is being incurred, borrowing costs are being incurred and activities of
acquisition, construction or production that are necessary to prepare the asset for its
intended use are in progress, and ceases when the assets become ready for their intended
use. Capitalisation of borrowing costs should cease when the qualifying asset being
constructed or produced has reached its expected usable or saleable condition.
Capitalisation of borrowing costs is suspended when the acquisition, construction or
production activities are interrupted abnormally for a period of more than three months.
16. Biological assets
The Group's biological assets are bearer biological assets.
Bearer biological assets are those that are held for the purposes of producing agricultural
produce, rendering of services or rental. Bearer biological assets in the Group are vines.
Bearer biological assets are initially measured at cost. The cost of self-grown or self-bred
bearer biological assets represents the necessary directly attributable expenditure incurred
before satisfying the expected production and operating purpose, including capitalised
borrowing costs.
Bearer biological assets, after reaching the expected production and operating purpose, are
depreciated using the straight-line method over its estimated useful life. The estimated
useful lives, estimated net residual value rates and depreciation rates of bearer biological
assets are as follows:
Estimated useful Estimated net Depreciation rate
Category
life (years) residual value rate (%)
Vines 20 years 0% 5.0%
The Group evaluates the useful life and expected net salvage value by considering the
normal producing life of the bearer biological assets.
Useful lives, estimated residual values and depreciation methods of bearer biological assets
are reviewed at least at each year-end. Any changes should be treated as changes in
accounting estimates.
For a bearer biological asset that has been sold, damaged, dead or destroyed, any
difference between the disposal proceeds and the carrying amount of the asset should be
recognised in profit or loss for the period in which it arises.
17 Intangible assets
Intangible assets are stated in the balance sheet at cost less accumulated amortization
(where the estimated useful life is finite) and impairment losses (see Note III.20). For an
intangible asset with finite useful life, its cost estimated less residual value and accumulated
impairment losses is amortised on the straight-line method over its estimated useful life,
unless the intangible asset is classified as held for sale (see Note III.28).
37
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
The respective amortisation periods for intangible assets are as follows:
Item Amortisation period (years)
Land use rights 40 - 50 years
Software licenses 5 - 10 years
Trademarks 10 years
Useful lives and amortisation methods of intangible asset with finite useful life are reviewed
at least at each year-end.
An intangible asset is regarded as having an indefinite useful life and is not amortised when
there is no foreseeable limit to the period over which the asset is expected to generate
economic benefits for the Group. At the balance sheet date, the Group had intangible assets
with infinite useful lives including the land use rights and trademarks. 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
amortisation. 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.
18 Goodwill
The initial cost of goodwill represents the excess of cost of acquisition over the acquirer’s
interest in the fair value of the identifiable net assets of the acquiree under a business
combination not involving entities under common control.
Goodwill is not amortised and is stated in the balance sheet at cost less accumulated
impairment losses (see Note III.20). On disposal of an asset group or a set of asset groups,
any attributable goodwill is written off and included in the calculation of the profit or loss on
disposal.
19 Long-term deferred expenses
Long-term deferred expenses are amortised using a straight-line method within the benefit
period. The respective amortisation periods for such expenses are as follows:
Item Amortisation period
Land requisition fee 50 years
Land lease prepayment 50 years
Greening fee 5 - 20 years
Leasehold improvement 3 - 5 years
Others 3 years
38
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
20 Impairment of assets other than inventories and financial assets
The carrying amounts of the following assets are reviewed at each balance sheet date based
on internal and external sources of information to determine whether there is any indication
of impairment:
- fixed assets
- construction in progress
- right-of-use assets
- intangible assets
- bearer biological assets
- investment properties measured using a cost model
- long-term equity investments
- goodwill
- long-term deferred expenses, etc.
If any indication exists, the recoverable amount of the asset is estimated. In addition, the
Group estimates the recoverable amounts of goodwill and intangible assets with infinite
useful lives at each year-end, irrespective of whether there is any indication of impairment.
Goodwill is allocated to each asset group, or set of asset groups, that is expected to benefit
from the synergies of the combination for the purpose of impairment testing.
The recoverable amount of an asset (or asset group, set of asset groups) is the higher of its
fair value (see Note III.21) less costs to sell and its present value of expected future cash
flows.
An asset group is composed of assets directly related to cash-generation and is the smallest
identifiable group of assets that generates cash inflows that are largely independent of the
cash inflows from other assets or asset groups.
The present value of expected future cash flows of an asset is determined by discounting the
future cash flows, estimated to be derived from continuing use of the asset and from its
ultimate disposal, to their present value using an appropriate pre-tax discount rate.
An impairment loss is recognised in profit or loss when the recoverable amount of an asset is
less than its carrying amount. A provision for impairment of the asset is recognised
accordingly. Impairment losses related to an asset group or a set of asset groups are
allocated first to reduce the carrying amount of any goodwill allocated to the asset group or
set of asset groups, and then to reduce the carrying amount of the other assets in the asset
group or set of asset groups on a pro rata basis. However, such allocation would not reduce
the carrying amount of an asset below the highest of its fair value less costs to sell (if
measurable), its present value of expected future cash flows (if determinable) and zero.
Once an impairment loss is recognised, it is not reversed in a subsequent period.
21 Fair value measurement
Unless otherwise specified, the Group measures fair value as follows:
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.
39
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
When measuring fair value, the Group takes into account the characteristics of the particular
asset or liability (including the condition and location of the asset and restrictions, if any, on
the sale or use of the asset) that market participants would consider when pricing the asset
or liability at the measurement date, and uses valuation techniques that are appropriate in
the circumstances and for which sufficient data and other information are available to
measure fair value. Valuation techniques mainly include the market approach, the income
approach and the cost approach.
22 Revenue recognition
Revenue is the gross inflow of economic benefits arising in the course of the Group’s
ordinary activities when the inflows result in increase in shareholders’ equity, other than
increase relating to contributions from shareholders.
Revenue is recognised when the Group satisfies the performance obligation in the contract
by transferring the control over relevant goods or services to the customers.
Where a contract has two or more performance obligations, the Group determines the stand-
alone selling price at contract inception of the distinct good or service underlying each
performance obligation in the contract and allocates the transaction price in proportion to
those stand-alone selling prices. The Group recognises as revenue the amount of the
transaction price that is allocated to each performance obligation. The stand-alone selling
price is the price at which the Group would sell a promised good or service separately to a
customer. If a stand-alone selling price is not directly observable, the Group considers all
information that is reasonably available to the entity, maximises the use of observable inputs
to estimate the stand-alone selling price.
For the contract with a warranty, the Group analyses the nature of the warranty provided, if
the warranty provides the customer with a distinct service in addition to the assurance that
the product complies with agreed-upon specifications, the Group recognises for the promised
warranty as a performance obligation. Otherwise, the Group accounts for the warranty in
accordance with the requirements of CAS No.13 – Contingencies.
The transaction price is the amount of consideration to which the Group expects to be
entitled in exchange for transferring promised goods or services to a customer, excluding
amounts collected on behalf of third parties. The Group recognises the transaction price only
to the extent that it is highly probable that a significant reversal in the amount of cumulative
revenue recognised will not occur when the uncertainty associated with the variable
consideration is subsequently resolved. Where the contract contains a significant financing
component, the Group recognises the transaction price at an amount that reflects the price
that a customer would have paid for the promised goods or services if the customer had paid
cash for those goods or services when (or as) they transfer to the customer. The difference
between the amount of promised consideration and the cash selling price is amortised using
an effective interest method over the contract term. The Group does not adjust the
consideration for any effects of a significant financing component if it expects, at contract
inception, that the period between when the Group transfers a promised good or service to a
customer and when the customer pays for that good or service will be one year or less.
40
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
The Group satisfies a performance obligation over time if one of the following criteria is met;
or otherwise, a performance obligation is satisfied at a point in time:
- the customer simultaneously receives and consumes the benefits provided by the Group’s
performance as the Group performs;
- the customer can control the asset created or enhanced during the Group’s performance;
or
- the Group’s performance does not create an asset with an alternative use to it and the
Group has an enforceable right to payment for performance completed to date.
For performance obligation satisfied over time, the Group recognises revenue over time by
measuring the progress towards complete satisfaction of that performance obligation. When
the outcome of that performance obligation cannot be measured reasonably, but the Group
expects to recover the costs incurred in satisfying the performance obligation, the Group
recognises revenue only to the extent of the costs incurred until such time that it can
reasonably measure the outcome of the performance obligation.
For performance obligation satisfied at a point in time, the Group recognises revenue at the
point in time at which the customer obtains control of relevant goods or services. To
determine whether a customer has obtained control of goods or services, the Group
considers the following indicators:
- the Group has a present right to payment for the goods or services;
- the Group has transferred physical possession of the goods to the customer;
- the Group has transferred the legal title of the goods or the significant risks and rewards of
ownership of the goods to the customer; and
- the customer has accepted the goods or services.
For the sale of a product with a right of return, the Group recognises revenue when the
Group obtains control of that product, in the amount of consideration to which the Group
expects to be entitled in exchange for the product transferred (i.e. excluding the amount of
which expected to be returned), and recognises a refund liability for the products expected to
be returned. Meanwhile, an asset is recognised in the amount of carrying amount of the
product expected to be returned less any expected costs to recover those products (including
potential decreases in the value of returned products), and carry forward to cost in the
amount of carrying amount of the transferred products less the above costs. At the end of
each reporting period, the Group updates its assessment of future sales return. If there is
any change, it is accounted for as a change in accounting estimate.
A contract asset is the Group’s right to consideration in exchange for goods or services that it
has transferred to a customer when that right is conditional on something other than the
passage of time. The Group recognises loss allowances for expected credit loss on contract
assets (see Note III.9(6)). Accounts receivable is the Group’s right to consideration that is
unconditional (only the passage of time is required). A contract liability is the Group’s
obligation to transfer goods or services to a customer for which the Group has received
consideration (or an amount of consideration is due) from the customer.
The following is the description of accounting policies regarding revenue from the Group’s
principal activities:
The Group's sales revenue is mainly derived from dealer sales. Revenue is recognised
when the Group transfers control of the related products to the customer. Based on the
business contract, the Group recognised the sales revenue of these transfers when the
product is confirmed and signed for acceptance by the customers.
41
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
23 Contract costs
Contract costs are either the incremental costs of obtaining a contract with a customer or the
costs to fulfil a contract with a customer.
Incremental costs of obtaining a contract are those costs that the Group incurs to obtain a
contract with a customer that it would not have incurred if the contract had not been obtained
e.g. an incremental sales commission. The Group recognises as an asset the incremental
costs of obtaining a contract with a customer if it expects to recover those costs. Other costs
of obtaining a contract are expensed when incurred.
If the costs to fulfil a contract with a customer are not within the scope of inventories or other
accounting standards, the Group recognises an asset from the costs incurred to fulfil a
contract only if those costs meet all of the following criteria:
- the costs relate directly to an existing contract or to a specifically identifiable anticipated
contract, including direct labour, direct materials, allocations of overheads (or similar
costs), costs that are explicitly chargeable to the customer and other costs that are
incurred only because the Group entered into the contract
- the costs generate or enhance resources of the Group that will be used in satisfying (or in
continuing to satisfy) performance obligations in the future; and
- the costs are expected to be recovered.
Assets recognised for the incremental costs of obtaining a contract and assets recognised for
the costs to fulfil a contract (the “assets related to contract costs”) are amortised on a
systematic basis that is consistent with the transfer to the customer of the goods or services
to which the assets relate and recognised in profit or loss for the current period. The Group
recognises the incremental costs of obtaining a contract as an expense when incurred if the
amortisation period of the asset that the entity otherwise would have recognised is one year
or less.
The Group recognises an impairment loss in profit or loss to the extent that the carrying
amount of an asset related to contract costs exceeds:
- remaining amount of consideration that the Group expects to receive in exchange for the
goods or services to which the asset relates; less
- the costs that relate directly to providing those goods or services that have not yet been
recognised as expenses.
24 Employee benefits
(1) Short-term employee benefits
Employee wages or salaries, bonuses, social security contributions such as medical
insurance, work injury insurance, maternity insurance and housing fund, measured at the
amount incurred or accured at the applicable benchmarks and rates, are recognised as a
liability as the employee provides services, with a corresponding charge to profit or loss or
included in the cost of assets where appropriate.
42
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
(2) Post-employment benefits – defined contribution plans
Pursuant to the relevant laws and regulations of the People’s Republic of China, the Group
participated in a defined contribution basic pension insurance plan in the social insurance
system established and managed by government organisations. The Group makes
contributions to basic pension insurance plans based on the applicable benchmarks and
rates stipulated by the government. Basic pension insurance contributions payable are
recognised as a liability as the employee provides services, with a corresponding charge to
profit or loss or included in the cost of assets where appropriate.
(3) Termination benefits
When the Group terminates the employment with employees before the employment
contracts expire, or provides compensation under an offer to encourage employees to accept
voluntary redundancy, a provision is recognised with a corresponding expense in profit or
loss at the earlier of the following dates:
- When the Group cannot unilaterally withdraw the offer of termination benefits because of
an employee termination plan or a curtailment proposal;
- When the Group has a formal detailed restructuring plan involving the payment of
termination benefits and has raised a valid expectation in those affected that it will carry
out the restructuring by starting to implement that plan or announcing its main features to
those affected by it.
25 Government grants
Government grants are non-reciprocal transfers of monetary or non-monetary assets from
the government to the Group except for capital contributions from the government in the
capacity as an investor in the Group.
A government grant is recognised when there is reasonable assurance that the grant will be
received and that the Group will comply with the conditions attaching to the grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the
amount received or receivable. If a government grant is in the form of a transfer of a non-
monetary asset, it is measured at fair value.
Government grants related to assets are grants whose primary condition is that the Group
qualifying for them should purchase, construct or otherwise acquire long-term assets.
Government grants related to income are grants other than those related to assets. A
government grant related to an asset is recognised as deferred income and amortised over
the useful life of the related asset on a reasonable and systematic manner as other income
or non-operating income. A grant that compensates the Company for expenses or losses to
be incurred in the future is recognised as deferred income, and included in other income or
non-operating income in the periods in which the expenses or losses are recognised. Or
included in other income or non-operating income directly.
26 Income tax
Current tax and deferred tax are recognised in profit or loss except to the extent that they
relate to a business combination or items recognised directly in equity (including other
comprehensive income).
43
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
Current tax is the expected tax payable calculated at the applicable tax rate on taxable
income for the year, plus any adjustment to tax payable in respect of previous years.
At the balance sheet date, current tax assets and liabilities are offset only if the Group has a
legally enforceable right to set them off and also intends either to settle on a net basis or to
realise the asset and settle the liability simultaneously.
Deferred tax assets and deferred tax liabilities arise from deductible and taxable temporary
differences respectively, being the differences between the carrying amounts of assets and
liabilities for financial reporting purposes and their tax bases, which include the deductible
losses and tax credits carried forward to subsequent periods. Deferred tax assets are
recognised to the extent that it is probable that future taxable profits will be available against
which deductible temporary differences can be utilised.
Deferred tax is not recognised for the temporary differences arising from the initial
recognition of assets or liabilities in a transaction that is not a business combination and that
affects neither accounting profit nor taxable profit (or deductible loss). Deferred tax is not
recognised for taxable temporary differences arising from the initial recognition of goodwill.
At the balance sheet date, deferred tax is measured based on the tax consequences that
would follow from the expected manner of recovery or settlement of the carrying amounts of
the assets and liabilities, using tax rates enacted at the balance sheet date that are expected
to be applied in the period when the asset is recovered or the liability is settled.
The carrying amount of a deferred tax asset is reviewed at each balance sheet date, and is
reduced to the extent that it is no longer probable that the related tax benefits will be utilised.
Such reduction is reversed to the extent that it becomes probable that sufficient taxable
profits will be available.
At the balance sheet date, deferred tax assets and deferred tax liabilities are offset if all of
the following conditions are met:
- the taxable entity has a legally enforceable right to offset current tax liabilities and current
tax assets;
- they relate to income taxes levied by the same tax authority on either:
- the same taxable entity; or
- different taxable entities which intend either to settle the current tax liabilities and
current tax assets on a net basis, or to realise the assets and settle the liabilities
simultaneously, in each future period in which significant amounts of deferred tax
liabilities or deferred tax assets are expected to be settled or recovered.
27 Leases
A contract is lease if the lessor conveys the right to control the use of an identified asset to
lessee for a period of time in exchange for consideration.
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A
contract is, or contains, a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration.
44
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
To assess whether a contract conveys the right to control the use of an identified asset, the
Group assesses whether:
- the contract involves the use of an identified asset. An identified asset may be specified
explicitly or implicitly speicied in a contrat and should be physically distinct, or capacity
portion or other portion of an asset that is not physically distinct but it represents
substantially all of the capacity of the asset and thereby provides the customer with the
right to obtain substantially all of the ecomonic benefits from the use of the asset. If the
supplier has a substantive substitution right throughout the period of use, then the asset is
not identified;
- the lessee has the right to obtain substantially all of the economic benefits from use of the
asset throughout the period of use;
- the lessee has the right to direct the use of the asset.
For a contract that contains more separate lease componets, the lessee and the lessor
separate lease components and account for each lease component as a lease separately.
For a contract that contains lease and non-lease components, the lessee and the lessor
separate lease components from non-lease components. For a contract that contains lease
and non-lease components, the lessee allocates the consideration in the contract to each
lease component on the basis of the relative stand-alone price of the lease component and
the aggregate stand-alone price of the non-lease components. The lessor allocates the
consideration in the contract in accordance with the accounting policy in Note III.22.
(1) As a lessee
The Group recognises a right-of-use asset and a lease liability at the lease commencement
date. The right-of-use asset is initially measured at cost, which comprises the initial amount
of the lease liability, any lease payments made at or before the commencement date (less
any lease incentives received), any initial direct costs incurred and an estimate of costs to
dismantle and remove the underlying asset or to restore the site on which it is located or
restore the underlying asset to the condition required by the terms and conditions of the
lease.
The right-of-use asset is depreciated using the straight-line method. If the lessee is
reasonably certain to exercise a purchase option by the end of the lease term, the right-of-
use asset is depreciated over the remaining useful lives of the underlying asset. Otherwise,
the right-of-use asset is depreciated from the commencement date to the earlier of the end of
the useful life of the right-of-use asset or the end of the lease term. Impairment losses of
right-of-use assets are accounted for in accordance with the accounting policy described in
Note III.20.
The lease liability is initially measured at the present value of the lease payments that are not
paid at the commencement date, discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Group’s incremental borrowing rate.
A constant periodic rate is used to calculate the interest on the lease liability in each period
during the lease term with a corresponding charge to profit or loss or included in the cost of
assets where appropriate. Variable lease payments not included in the measurement of the
lease liability is charged to profit or loss or included in the cost of assets where appropriate
as incurred.
45
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
Under the following circumstances after the commencement date, the Group remeasures
lease liabilities based on the present value of revised lease payments:
- there is a change in the amounts expected to be payable under a residual value
guarantee;
- there is a change in future lease payments resulting from a change in an index or a rate
used to determine those payments;
- there is a change in the assessment of whether the Group will exercise a purchase,
extension or termination option, or there is a change in the exercise of the extension or
termination option.
When the lease liability is remeasured, a corresponding adjustment is made to the carrying
amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the
right-of-use asset has been reduced to zero.
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term
leases that have a lease term of 12 months or less and leases of low-value assets. The
Group recognises the lease payments associated with these leases in profit or loss or as the
cost of the assets where appropriate using the straight-line method over the lease term.
(2) As a lessor
The Group determines at lease inception whether each lease is a finance lease or an
operating lease. A lease is classified as a finance lease if it transfers substantially all the
risks and rewards incidental to ownership of an underlying asset irrespective of whether the
legal title to the asset is eventually transferred. An operating lease is a lease other than a
finance lease.
When the Group is a sub-lessor, it assesses the lease classification of a sub-lease with
reference to the right-of-use asset arising from the head lease, not with reference to the
underlying asset. If a head lease is a short-term lease to which the Group applies practical
expedient described above, then it classifies the sub-lease as an operating lease.
Under a finance lease, at the commencement date, the Group recognises the finance lease
receivable and derecognises the finance lease asset. The finance lease receivable is initially
measured at an amount equal to the net investment in the lease. The net investment in the
lease is measured at the aggregate of the unguaranteed residual value and the present
value of the lease receivable that are not received at the commencement date, discounted
using the interest rate implicit in the lease.
The Group recognises finance income over the lease term, based on a pattern reflecting a
constant periodic rate of return. The derecognition and impairment of the finance lease
receivable are recognised in accordance with the accounting policy in Note III.9. Variable
lease payments not included in the measurement of net investment in the lease are
recognised as income as they are earned.
Lease receipts from operating leases is recognised as income using the straight-line method
over the lease term. The initial direct costs incurred in respect of the operating lease are
initially capitalised and subsequently amortised in profit or loss over the lease term on the
same basis as the lease income. Variable lease payments not included in lease receipts are
recognised as income as they are earned.
46
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
28 Assets held for sale
The Group classified a non-current asset or disposal group as held for sale when the
carrying amount of a non-current asset or disposal group will be recovered through a sale
transaction rather than through continuing use.
A disposal group refers to a group of assets to be disposed of, by sale or otherwise, together
as a whole in a single transaction and liabilities directly associated with those assets that will
be transferred in the transaction.
A non-current asset or disposal group is classified as held for sale when all the following
criteria are met:
- According to the customary practices of selling such asset or disposal group in similar
transactions, the non-current asset or disposal group must be available for immediate sale
in their present condition subject to terms that are usual and customary for sales of such
assets or disposal groups;
- Its sale is highly probable, that is, the Group has made a resolution on a sale plan and has
obtained a firm purchase commitment. The sale is to be completed within one year.
Non-current assets or disposal groups held for sale are stated at the lower of carrying
amount and fair value (see Note III.21) less costs to sell (except financial assets (see Note
III.9), deferred tax assets (see Note III.26) and investment properties subsequent measured
at fair value (see Note III. 12) initially and subsequently. Any excess of the carrying amount
over the fair value (see Note III.21) less costs to sell is recognised as an impairment loss in
profit or loss.
29 Profit distributions
Dividends or profit distributions proposed in the profit appropriation plan, which will be
approved after the balance sheet date, are not recognised as a liability at the balance sheet
date but are disclosed in the notes separately.
30 Related parties
If a party has the power to control, jointly control or exercise significant influence over
another party, or vice versa, or where two or more parties are subject to common control or
joint control from another party, they are considered to be related parties. Related parties
may be individuals or enterprises. Enterprises with which the Company is under common
control only from the State and that have no other related party relationships are not
regarded as related parties.
In addition to the related parties stated above, the Company determines related parties
based on the disclosure requirements of Administrative Procedures on the Information
Disclosures of Listed Companies issued by the CSRC.
47
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
31 Segment reporting
The Group is principally engaged in the production and sales of wine, brandy, and sparkling
wine in China, France, Spain, Chile and Australia. In accordance with the Group's internal
organisation structure, management requirements and internal reporting system, the Group's
operation is divided into five parts: China, Spain, France, Chile and Australia. The
management periodically evaluates segment results, in order to allocate resources and
evaluate performances. In 2021, over 87% of revenue, more than 94% of profit and over
92% of non-current assets derived from China/are located in China. Therefore the Group
does not need to disclose additional segment report information.
32 Significant accounting estimates and judgements
The preparation of the financial statements requires management to make estimates and
assumptions that affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates as well as underlying assumptions and uncertainties involved are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in any future periods affected.
(1) Significant accounting estimates
Except for accounting estimates relating to depreciation and amortisation of assets such as
investment properties, fixed assets, bearer biological assets and intangible assets (see
Notes III. 13 and 16) and provision for impairment of various types of assets (see Notes V.3,
7, 11, 15 and 16). Other significant accounting estimates are as follows:
(i) Note V. 18 - Recognition of deferred tax asset;
(ii) Note VIII. - Fair value measurements of financial instruments.
33 Changes in significant accounting policies and accounting estimates
(1) Description and reasons of changes in accounting policies
In 2021, the Group has adopted the following newly revised accounting standards and
implementation guidance and illustrative examples issued by the MOF:
- CAS No.21 - Lease (Revised) (Caikuai [2018] No.35) (“the new leases standard”)
- The Accounting Treatment of COVID-19-Related Rent Concessions (Caikuai [2020]
No.10) and Notice of Extending the Applicable Period of ‘Accounting Treatment of COVID-
19 Related Rent Concessions’ (Caikuai [2021] No.9)
- CAS Bulletin No.14 (Caikuai [2021] No.1) (“Bulletin No. 14”)
(a) New leases standard
New leases standard has revised CAS No.21 - Leases issued by the MOF in 2006
(“previous leases standard”). The Group has applied new leases standard since 1
January 2021 and has adjusted the related accounting policies.
New leases standard refines the definition of a lease. The Group assesses whether a
contract is or contains a lease in accordance with the definition in new leases standard.
For contracts which existed before the date of initial application, the Group has elected
not to reassess whether a contract is or contains a lease at the date of initial
application.
48
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
As a lessee
Under previous leases standard, the Group classifies leases as operating or finance
leases based on its assessment of whether the lease transfers significantly all of the
risks and rewards incidental to ownership of the underlying asset to the Group.
Under new leases standard, the Group no longer distinguishes between operating
leases and finance leases. The Group recognises right-of-use assets and lease
liabilities for all leases (except for short-term leases and leases of low-value assets
which are accounted for using the practical expedient).
For a contract that contains lease and non-lease components, the Group allocates
the consideration in the contract to each lease component on the basis of the
relative stand-alone price of the lease component and the aggregate stand-alone
price of the non-lease components.
The Group has elected to recognise the cumulative effect of adopting new leases
standard as an adjustment to the opening balances of retained earnings and other
related items in the financial statements in the initial year of application.
Comparative information has not been restated.
For leases classified as operating leases before the date of initial application, lease
liabilities were measured at the present value of the remaining lease payments,
discounted using the Group’s incremental borrowing rate at the date of initial
application. Right-of-use assets are measured at either:
- their carrying amount as if new leases standard had been applied since the
commencement date, discounted using the Group’s incremental borrowing rate at
the date of initial application; or
The Group uses the following practical expedients to account for leases classified as
operating leases before the date of initial application:
- accounted for the leases for which the lease term ends within 12 months of the
date of initial application as short-term leases;
- applied a single discount rate to leases with similar characteristics when
measuring lease liabilities;
- excluded initial direct costs from measuring the right-of-use assets;
- determined the lease term according to the actual implementation or other
updates of options before the date of initial application if the contract contains
options to extend or terminate the lease;
- As an alternative to the impairment test of the right-of-use assets, the right-of-use
assets shall be adjusted according to the amount of loss provision from onerous
contracts included in the balance sheet in accordance with Accounting Standards
for Business Enterprises No. 13 - Contingencies before the date of initial
application;
- No retrospective adjustment shall be made to the lease changes that occurred
before the beginning of the year when the new leases standard is initially applied,
and instead, the new leases standard shall be applicable for the accounting
treatment based on the final arrangement of the lease changes.
49
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
For leases classified as finance leases before the date of initial application, the right-
of-use asset and the lease liability are measured at the original carrying amount of
the assets under finance lease and obligations under finance leases at the date of
initial application.
As a lessor
The Group is not required to make any adjustments to the opening balances of
retained earnings and other related items in the financial statements in the initial
year of application and surplus for leases for which it acts as a lessor. The Group
has applied new leases standard since the date of initial application.
Effect of the application of new leases standard since 1 January 2021 on financial
statements
When measuring lease liabilities, the Group discounted lease payments using its
incremental borrowing rate at 1 January 2021. The weighted-average rate applied
by the Group and the Company is 4.65%.
The impact of the adoption of the new leases standard on the consolidated and
company balance sheets as at 1 January 2021 are summarised as follows:
The Group
The amounts of
31 December 2020 1 January 2021
adjustments
Assets
Non-current assets:
Right-of-use assets - 130,293,427 130,293,427
Long-term deferred
314,465,855 273,547,599 (40,918,256)
expenses
Deferred tax assets 206,241,275 207,199,400 958,125
Total non-current assets 520,707,130 611,040,426 90,333,296
Total assets 520,707,130 611,040,426 90,333,296
The Group
The amounts of
31 December 2020 1 January 2021
adjustments
Liabilities and shareholders’
equity
Current liabilities:
Accounts payable 484,347,958 479,305,382 (5,042,576)
Non-current liabilities due
133,311,890 140,629,742 7,317,852
within one year
Total current liabilities 617,659,848 619,935,124 2,275,276
Non-current liabilities:
Lease liabilities - 98,401,900 98,401,900
Deferred tax liabilities 12,022,613 12,260,894 238,281
Total non-current liabilities 12,022,613 110,662,794 98,640,181
Total liabilities 629,682,461 730,597,918 100,915,457
Shareholders’ equity:
Retained earnings 8,714,091,755 8,703,509,594 (10,582,161)
Total equity attributable to
shareholders of the 8,714,091,755 8,703,509,594 (10,582,161)
Company
Total owners’ equity 8,714,091,755 8,703,509,594 (10,582,161)
Total liabilities and
9,343,774,216 9,434,107,512 90,333,296
shareholders’ equity
50
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
The Company
The amounts of
31 December 2020 1 January 2021
adjustments
Assets
Non-current assets:
Right-of-use assets - 39,589,486 39,589,486
Total non-current assets - 39,589,486 39,589,486
Total assets - 39,589,486 39,589,486
Liabilities and shareholders’
equity
Current liabilities:
Non-current liabilities due
- 2,048,380 2,048,380
within one year
Total current liabilities - 2,048,380 2,048,380
Non-current liabilities:
Lease liabilities - 44,072,819 44,072,819
Deferred tax liabilities - 88,555 88,555
Total non-current liabilities - 44,161,374 44,161,374
Total liabilities - 46,209,754 46,209,754
Shareholders’ equity:
Retained earnings 8,567,313,551 8,560,693,283 (6,620,268)
Total equity attributable to
shareholders of the 8,567,313,551 8,560,693,283 (6,620,268)
Company
Total owners’ equity 8,567,313,551 8,560,693,283 (6,620,268)
Total liabilities and
8,567,313,551 8,606,903,037 39,589,486
shareholders’ equity
(b) Caikuai [2020] No.10 and Caikuai [2021] No.9
The Accounting Treatment of COVID-19 Related Rent Concessions (Caikuai [2020]
No.10) provides practical expedient under certain conditions for rent concessions
occurring as a direct consequence of the COVID-19 pandemic. If the company chooses
to adopt the practical expedient, then there is no need to assess whether there is a
lease change or reassess the lease classification. In combination of the requirements
of Caikuai [2021] No.9, such practical expedient is only applicable to any reduction in
lease payments due before 30 June 2022. Cumulative effects of adopting the above
regulations are adjusted to the opening retained earnings or other comprehensive
income for the year 2021. Comparative information is not restated.
The adoption of the above regulations does not have significant effect on the financial
position and financial performance of the Group.
(c) Bulletin No.14
Bulletin No.14 takes effect on 26 January 2021 (implementation date).
(i) “Public-private partnership” (PPP) arrangements
Bulletin No.14 and the Q&A and practical examples for accounting treatment of
PPP project contract social capital clarifies the features and conditions of PPP
arrangements, sets out the accounting and disclosure requirements of a private
entity in PPP arrangements. Item 5 of CAS Bulletin No.2 (Caikuai [2008] No.11)
on “How to account for entities participating in public infrastructure construction
businesses under build-operate-transfer arrangement” is repealed accordingly.
51
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
PPP arrangements which are commenced before 31 December 2020 and not
completed on the implementation date and new PPP arrangements occurred
during 1 January 2021 to the implementation date are subject to retrospective
adjustments. Cumulative effects are adjusted to the opening retained earnings
and other relevant line items in the financial statements for the year 2021.
Comparative information is not restated.
The adoption of Bulletin No.14 does not have significant effect on the financial
position and financial performance of the Group.
(ii) Benchmark interest rate reform
Bulletin No.14 introduces the accounting and disclosure requirements for the
modification of financial instruments and lease liabilities resulting from the
benchmark interest rate reform. Transactions related to the benchmark interest
rate reform that occurred before 31 December 2020 and during 1 January 2021
to the implementation date are subject to retrospective adjustments. Cumulative
effects are adjusted to the opening retained earnings or other comprehensive
income for the year 2021. Comparative information is not restated.
The adoption of Bulletin No.14 does not have significant effect on the financial position
and financial performance of the Group.
IV. Taxation
1 Main types of taxes and corresponding tax rates
Output VAT is calculated on
product sales and taxable
13%, 9%, 6% (China), 20% (France),
Value-added tax services revenue. The basis
21% (Spain), 19% (Chile) and 10%
(VAT) for VAT payable is to deduct
(Australia)
input VAT from the output
VAT for the period
10% of the price, 20% of the price and
Consumption tax Based on taxable revenue
RMB1,000 each ton (China)
Urban maintenance
and construction Based on VAT paid 7% (China)
tax
25% (China), 26.5% (France, 2021),
Corporate income
Based on taxable profits 28% (France, 2020), 28% (Spain),
tax
27% (Chile), 30% (Australia)
Other than tax incentives stated in Note IV. 2, applicable tax rates of the Group in 2021 and
2020 are all stated as above.
52
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
2 Tax preferential treatments
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 the Corporate Income Tax Law of the People’s Republic of
China and clause 86 of the Implementation Rules of Enterprise Income Tax Law of the
People’s Republic of China, 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 the Corporate Income Tax Law of the
People’s Republic of China and clause 86 of the Implementation Rules of Enterprise Income
Tax Law of the People’s Republic of China, Grape Growing enjoys an exemption of
corporate income tax.
Yantai Changyu Wine Research & Development Centre Co., Ltd. (“R&D Centre”), a branch
of the Company, is an enterprise engaged in grape growing in the Economic and
Technological Development Zone of Yantai City, Shandong Province. Pursuant to Article 27
of the Enterprise Income Tax Law of the People’s Republic of China and Article 86 of the
Implementation Regulations of the Enterprise Income Tax Law of the People’s Republic of
China, R&D Centre enjoys the preferential policy of exemption of enterprise income tax on
income from grape growing.
Beijing Changyu AFIP Agriculture Development Co., Ltd (“Agriculture Development”), a
subsidiary of the Group, whose principal activity is grape growing is incorporated in Miyun,
Beijing. According to clause 27 of the Corporate Income Tax Law of the People’s Republic
of China and clause 86 of the Implementation Rules of Enterprise Income Tax Law of the
People’s Republic of China, Agriculture Development enjoys an exemption of corporate
income tax.
Xinjiang Tianzhu Wine 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 relevant provisions of the Announcement on Continuation
of CIT Policies for Large-scale Development in the Western Region (Announcement [2020]
No.23 of the Ministry of Finance), Ningxia Chateau Changyu Moser is entitled to preferential
tax policies. Therefore, during the period from 1 January 2021 to 31 December 2030, its
corporate income tax shall be levied at a reduced tax rate of 15%.
Xinjiang Chateau Changyu Baron Balboa Co., Ltd. (“Chateau Shihezi”), a subsidiary of the
Company, is an enterprise of wine production and sales incorporated in Shihezi city, Xinjiang
Weizu Autonomous. In accordance with relevant provisions of the Announcement on
Continuation of CIT Policies for Large-scale Development in the Western Region
(Announcement [2020] No.23 of the Ministry of Finance), Ningxia Chateau Changyu Moser is
entitled to preferential tax policies. Therefore, during the period from 1 January 2021 to 31
December 2030, its corporate income tax shall be levied at a reduced tax rate of 15%.
53
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
Ningxia Chateau Changyu Moser XV Co., Ltd. (“Chateau Ningxia”), a subsidiary of the
Company, is an enterprise engaged in wine production and sales, incorporated in Shihezi
City, Xinjiang Uygur Autonomous Region. In accordance with relevant provisions of the
Announcement on Continuation of CIT Policies for Large-scale Development in the Western
Region (Announcement [2020] No.23 of the Ministry of Finance), Ningxia Chateau Changyu
Moser is entitled to preferential tax policies. Therefore, during the period from 1 January
2021 to 31 December 2030, its corporate income tax shall be levied at a reduced tax rate of
15%.
Changyu (Ningxia) Wine Co., Ltd. (“Ningxia Wine”), a subsidiary of the Company, is an
enterprise engaged in wine production and sales, incorporated in Shihezi City, Xinjiang Uygur
Autonomous Region. In accordance with relevant provisions of the Announcement on
Continuation of CIT Policies for Large-scale Development in the Western Region
(Announcement [2020] No.23 of the Ministry of Finance), Changyu (Ningxia) Wine is entitled
to preferential tax policies. Therefore, during the period from 1 January 2021 to 31 December
2030, its corporate income tax shall be levied at a reduced tax rate of 15%.
Pursuant to the Announcement on Tax Policies to Support Prevention and Control of Covid-
19 Pandemic (Announcement [2020] No.8 of the Ministry of Finance and the State
Administration of Taxation), from 1 January 2020, income derived by taxpayers from
provision of public transportation services and living services, as well as express delivery
services involving residents' necessities, shall be exempted from VAT. Furthermore,
according to the Announcement on Continued Implementation of Some Preferential Tax/Fee
Policies for Responding to the COVID-19 Pandemic (Announcement [2021] No. 7 of the
Ministry of Finance and the State Administration of Taxation), the above tax preferential tax
policy is extended to 31 March 2021. The Company has certain subsidiaries, such as Yantai
Zhangyu Wine Culture Museum Co., Ltd. ("the Museum"), which provides catering,
accommodation, tourism and other living services, so, the income obtained from the
provision of such living services shall be exempted from VAT, from 1 January 2020 to 31
March 2021.
Xinjiang Changyu Sales Co., Ltd. Vermouth Tasting Centre Branch (“Xinjiang Vermouth
Tasting Centre”), a subsidiary of the Company, is an enterprise engaged in large-scale
restaurant services, located in Shihezi City, Xinjiang Uygur Autonomous Region. According to
the Announcement on Value-added Tax Policies for Supporting Individual Businesses in
Resumption of Business (Announcement [2020] No.13 of the Ministry of Finance and the
State Taxation Administration) and the Announcement on Continued Implementation of Some
Preferential Tax/Fee Policies for Responding to the COVID-19 Pandemic (Announcement
[2021] No. 7 of the Ministry of Finance State Taxation Administration), Xinjiang Vermouth
Tasting Centre, qualified as a small-scale VAT taxpayer, is entitled to pay VAT at the reduced
levy rate of 1% for the year ended 31 December 2021.
Based on the Notice of the Department of Finance of Shaanxi Province and the Shaanxi
Provincial Taxation Bureau under the State Taxation Administration on Matters Concerning
the Relief and Exemption of Urban Land Use Tax and Real Estate Tax in Fighting the
Epidemic (Shaan Cai Shui [2020] No.4), the Department of Finance and the Taxation Bureau
shall approve the application for tax relief and exemption submitted by taxpayers who have
difficulties to pay urban land use tax and real estate tax owing to the suspension of
production and business for more than 30 days (inclusive) arising from the epidemic.
Shaanxi Chateau Changyu Rena Co., Ltd. and Changyu (Jingyang) Wine Co., Ltd., two
subsidiaries of the Company, meet the application requirements and will be exempted from
real estate tax and urban land use tax in the first quarter of 2020.
54
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
Pursuant to the Notice of the Taxation Bureau in Ningxia Hui Autonomous Region under the
State Taxation Administration and the Department of Finance in Ningxia Hui Autonomous
Region on Implementing the Policies of Real Estate Tax and Urban Land Use Tax by the
People’s Government in Autonomous Region in response to the impact from Covid-19
Epidemic (Ning Shui Han [2020] No.19), the Taxation Bureau shall approve the application
for tax relief submitted by enterprises that have difficulties to pay real estate tax and urban
land use tax owing to the epidemic. Shaanxi Chateau Changyu Rena Co., Ltd. and Changyu
(Ningxia) Wine Co., Ltd., two subsidiaries of the Company, meet the application requirements
and will be exempted from real estate tax and urban land use tax for five months in 2020.
V. Notes to the consolidated financial statements
1 Cash at bank and on hand
Item 2021 2020
Cash on hand 71,486 19,637
Bank deposits 1,558,134,072 1,128,882,937
Other monetary funds 8,890,435 65,312,355
Total 1,567,095,993 1,194,214,929
Including: Total overseas deposits 28,691,521 47,674,019
As at 31 December 2021, the balance of restricted cash of the Group is as follows:
Item 2021 2020
House maintenance funds 2,678,529 2,684,407
As at 31 December 2021, the Group’s term deposits with previous maturity of more than
three months is RMB53,200,000 with interest rate 1.75% - 2.25% (31 December 2020:
RMB73,553,062).
As at 31 December 2021, the Group’s other monetary assets is as follows:
Item 2021 2020
Yantai Changyu Pioneer Wine Company Limited
Research and Development Co., Ltd. (“R&D - 20,000,000
Centre”) pledged deposit for long-term payables
Deposits for letters of credit 7,900,850 44,540,850
Alipay account balance 859,558 761,505
Deposit for ICBC platform 10,000 10,000
Deposits for the customs 120,027 -
Total 8,890,435 65,312,355
As at 31 December 2021, the Group did not have any special interest arrangements such as
the establishment of joint fund management accounts with related parties.
55
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
2 Bills receivable
Classification of bills receivable
Item 2021 2020
Bank acceptance bills 42,827,666 -
Total 42,827,666 -
All of the above bills are due within one year.
3 Accounts receivable
(1) Accounts receivable by customer type are as follows:
31 December 31 December
Type
2021 2020
Amounts due from related parties 287,788 2,268,311
Amounts due from other customers 310,982,372 193,911,657
Sub-total 311,270,160 196,179,968
Less: Provision for bad and doubtful debts (20,263,750) (12,326,606)
Total 291,006,410 183,853,362
As at 31 December 2021, ownership restricted accounts receivable is RMB49,061,015 (31
December 2020: RMB28,557,991), referring to Note V. 52.
(2) The ageing analysis of accounts receivable is as follows:
Ageing 2021 2020
Within 1 year (inclusive) 302,602,474 190,047,491
Over 1 year but within 2 years (inclusive) 6,450,290 5,581,750
Over 2 years but within 3 years (inclusive) 1,830,913 366,053
Over 3 years 386,483 184,674
Sub-total 311,270,160 196,179,968
Less: Provision for bad and doubtful debts (20,263,750) (12,326,606)
Total 291,006,410 183,853,362
The ageing is counted starting from the date when accounts receivable are recognised.
(3) Accounts receivable by provisioning method
At all times the Group measures the impairment loss for accounts receivable at an amount
equal to lifetime ECLs, and the ECLs are based on the number of overdue days and the loss
given default. According to the historical experience of the Group, there are no significant
differences in the losses of different customer groups. Therefore, different customer groups
are not further distinguished when calculating impairment loss based on the overdue
information.
56
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
2021
Carrying amount at Impairment loss at
Loss given default
the end of the year the end of the year
Current 0.4% 266,055,047 951,403
Overdue for 1 to 30 days 3.3% 13,013,133 434,869
Overdue for 31 to 60 days 10.9% 8,115,584 886,023
Overdue for 61 to 90 days 23.9% 2,554,438 610,844
Overdue for 91 to 120 days 28.9% 531,696 153,780
Overdue for 121 to 150 days 40.0% 627,641 251,314
Overdue for 151 to 180 days 41.8% 1,670,068 698,131
Overdue for 181 to 210 days 50.0% 1,129,949 565,460
Overdue for 211 to 240 days 65.6% 1,415,345 928,263
Overdue for 241 to 270 days 65.7% 3,439,721 2,261,159
Overdue for 271 to 300 days 85.4% 1,340,055 1,145,021
Overdue for 301 to 330 days 100.0% 638,848 638,848
Overdue for 331 to 360 days 100.0% 244,178 244,178
Overdue for 360 days 100.0% 10,494,457 10,494,457
Total 6.5% 311,270,160 20,263,750
2020
Carrying amount at Impairment loss at
Loss given default
the end of the year the end of the year
Current 0.4% 146,425,314 650,298
Overdue for 1 to 30 days 3.4% 14,631,174 495,839
Overdue for 31 to 60 days 6.4% 6,678,504 424,266
Overdue for 61 to 90 days 10.3% 5,582,357 574,675
Overdue for 91 to 120 days 12.9% 2,054,400 265,530
Overdue for 121 to 150 days 15.6% 2,769,171 431,319
Overdue for 151 to 180 days 21.7% 3,970,361 859,903
Overdue for 181 to 210 days 30.3% 1,417,385 429,287
Overdue for 211 to 240 days 32.0% 5,413,890 1,731,246
Overdue for 241 to 270 days 35.7% 993,299 354,988
Overdue for 271 to 300 days 54.6% 111,636 60,963
Overdue for 301 to 330 days 88.7% 748,270 664,085
Overdue for 331 to 360 days 100.0% 323,563 323,563
Overdue for 360 days 100.0% 5,060,644 5,060,644
Total 6.3% 196,179,968 12,326,606
The loss given default is measured based on the actual credit loss experience in the past 12
months, and is adjusted taking into consideration the differences among the economic
conditions during the historical data collection period, the current economic conditions and
the economic conditions during the expected lifetime.
57
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
(4) Movements of provisions for bad and doubtful debts:
2021 2020
Balance at the beginning of the year after
(12,326,606) (16,674,915)
adjustment
Charge for the year (17,855,222) (11,591,483)
Recoveries or reversals during the year 9,918,078 15,939,792
Balance at the end of the year (20,263,750) (12,326,606)
(5) Five largest accounts receivable by debtor at the end of the year:
Ending balance
Percentage of
Relationship with Balance at the of provision for
Name Ageing ending balance
the Group end of the year bad and doubtful
of others (%)
debts
Debtor One Third party 101,943,773 Within 1 year 32.8% 364,547
Debtor Two Third party 8,935,591 Within 1 year 2.9% 162,166
Debtor Three Third party 8,589,195 Within 1 year 2.8% 2,381,463
Debtor Four Third party 7,028,678 Within 1 year 2.3% 148,535
Over 1 year but
Debtor Five Third party 6,161,123 2.0% 6,082,785
within 2 years
Total 132,658,360 42.8% 9,139,496
4 Receivables under financing
Item Note 2021 2020
Bills receivable (1) 364,457,497 338,090,187
(1) The pledged bills receivable of the Group at the end of the year:
As at 31 December 2021, there was no pledged bills receivable (31 December 2020: Nil).
(2) Outstanding derecognised endorsed bills that have not matured at the end of the year:
Amount
Item derecognised at
year end
Bank acceptance bills 449,373,119
Total 449,373,119
As at 31 December 2021, derecognised bills endorsed by the Group to other parties which
are not yet due at the end of the period is RMB449,373,119 (31 December 2020:
RMB260,721,441). 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.
58
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
5 Prepayments
(1) Prepayments by category:
Item 2021 2020
Prepayments 75,235,879 71,296,416
Total 75,235,879 71,296,416
(2) The ageing analysis of prepayments is as follows:
2021 2020
Ageing Percentage Percentage
Amount Amount
(%) (%)
Within 1 year (inclusive) 75,207,094 99.9% 70,977,636 99.6%
Over 1 year but within 2 years
28,785 0.1% 318,780 0.4%
(inclusive)
Total 75,235,879 100.0% 71,296,416 100.0%
The ageing is counted starting from the date when prepayments are recognised.
(3) Five largest prepayments by debtor at the end of the year:
Ending balance
Percentage of
Nature of the Balance at the of provision for
Name Ageing ending balance
receivable end of the year bad and doubtful
of others (%)
debts
Debtor One Prepayments 27,057,504 Within 1 year 36.0% -
Debtor Two Prepayments 23,934,593 Within 1 year 31.8% -
Debtor Three Prepayments 5,813,616 Within 1 year 7.7% -
Debtor Four Prepayments 2,311,027 Within 1 year 3.1% -
Debtor Five Prepayments 1,743,620 Within 1 year 2.3% -
Total 60,860,360 80.9% -
6 Other receivables
31 December 31 December
2021 2020
Others 30,125,270 22,428,956
Total 30,125,270 22,428,956
59
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
(1) Interest receivable
(a) Others by customer type:
31 December 31 December
Customer type
2021 2020
Amounts due from related parties 341,880 522,936
Amounts due from other companies 29,783,390 21,906,020
Sub-total 30,125,270 22,428,956
Less: Provision for bad and doubtful debts - -
Total 30,125,270 22,428,956
(b) The ageing analysis is as follows:
Ageing 2021 2020
Within 1 year (inclusive) 27,191,986 10,738,225
Over 1 year but within 2 years (inclusive) 70,480 3,927,625
Over 2 years but within 3 years (inclusive) 190,857 787,908
Over 3 years 2,671,947 6,975,198
Sub-total 30,125,270 22,428,956
Less: Provision for bad and doubtful debts - -
Total 30,125,270 22,428,956
The ageing is counted starting from the date when other receivables are recognised.
(c) Movements of provisions for bad and doubtful debts
As at 31 December 2021, no bad and doubtful debt provision was made for other
receivables (31 December 2020: Nil).
As at 31 December 2021, the Group has no other receivables written off (31 December
2020: Nil).
(d) Others categorised by nature
Nature of other receivables 2021 2020
Deposit 4,568,157 10,287,959
Refund of consumption tax and VAT 7,204,557 8,254,195
Petty cash receivable 252,481 124,878
Land purchases and reserves receivable 11,550,000
Others 6,550,075 3,761,924
Sub-total 30,125,270 22,428,956
Less: Provision for bad and doubtful debts - -
Total 30,125,270 22,428,956
60
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
(e) Five largest others-by debtor at the end of the year
Ending balance
Percentage of
Nature of the Balance at the of provision for
Name Ageing ending balance
receivable end of the year bad and doubtful
of others (%)
debts
Land purchases
Debtor One and reserves 11,550,000 Within 1 year 38.3% -
receivable
Debtor Two Refund of VAT 5,995,042 Within 1 year 19.9% -
Debtor Three Refund of VAT 1,209,515 Within 1 year 4.0% -
Over 1 year but
Debtor Four Deposits 675,000 2.2% -
within 2 years
Debtor Five Insurance 602,705 Within 1 year 2.0% -
Total 20,032,262 66.4% -
7 Inventories
(1) Inventories by category:
2021 2020
Provision for Provision for
Item Carrying Carrying
Book value impairment of Book value impairment of
amount amount
inventories inventories
Raw materials 245,114,403 - 245,114,403 70,165,666 - 70,165,666
Work in progress 1,937,081,109 - 1,937,081,109 2,236,815,423 - 2,236,815,423
Finished goods 634,212,222 (13,785,214) 620,427,008 653,042,196 (14,474,634) 638,567,562
Total 2,816,407,734 (13,785,214) 2,802,622,520 2,960,023,285 (14,474,634) 2,945,548,651
(2) Provision for impairment of inventories:
Increase during Decrease during
Item Opening balance the year the year Closing balance
Recognised Reversal
Finished goods 14,474,634 13,785,214 (14,474,634) 13,785,214
8 Other current assets
Item 2021 2020
Prepaid income taxes 16,697,663 16,087,815
Input tax to be credited 198,516,812 215,812,506
Deferred expenses 1,938,126 2,218,394
Total 217,152,601 234,118,715
61
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
9 Long-term equity investments
(1) Long-term equity investments by category:
Item 2021 2020
Investments in joint ventures 39,652,834 42,019,654
Investments in associates 6,843,676 6,243,853
Sub-total 46,496,510 48,263,507
Less: Provision for impairment - -
Total 46,496,510 48,263,507
(2) Movements of long-term equity investments during the year are as follows:
Movements during the year
2021
Losses from
Balance at the 2021 Shareholding
Investee Increase in investments
beginning of the Closing balance percentage
capital under equity-
year
method
Joint ventures
SAS L&M Holdings (“L&M
42,019,654 - (2,366,820) 39,652,834 55%
Holdings”)
Associates
WEMISS (Shanghai)
Enterprise Development Co., 2,743,890 - (377,079) 2,366,811 30%
Ltd (“WEMISS Shanghai”)
Yantai Santai Real Estate
3,499,963 - 19,693 3,519,656 35%
Development Co., Ltd
Chengdu Yufeng Brand
518,000 (36,528) 481,472 10%
Management Co., Ltd. (Note)
Yantai Guolong Wine Industry
500,000 (24,263) 475,737 10%
Co., Ltd. (Note)
Sub-total 6,243,853 1,018,000 (418,177) 6,843,676
Total 48,263,507 1,018,000 (2,784,997) 46,496,510
Note: The Group has appointed one director to each of these investees.
10 Investment properties
Buildings and
plants
Cost
Balance as at 31 December 2020 and 31 December 2021 70,954,045
Accumulated depreciation
31 December 2020 (43,896,315)
Charge for the year (2,555,472)
31 December 2021 (46,451,787)
Carrying amount
31 December 2021 24,502,258
31 December 2020 27,057,730
62
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
11 Fixed assets
(1) Fixed assets
Machinery &
Item Plant & buildings Motor vehicles Total
equipment
Cost
31 December 2020 5,136,758,695 2,787,309,487 27,566,592 7,951,634,774
Additions during the year
- Purchases 42,575,416 73,522,777 1,308,231 117,406,424
- Transfers from construction
115,583,725 6,463,487 - 122,047,212
in progress
Decrease during the year - - - -
Disposals or written-offs during
- (46,386,188) (1,692,947) (48,079,135)
the year
31 December 2021 5,294,917,836 2,820,909,563 27,181,876 8,143,009,275
Accumulated depreciation
31 December 2020 (892,581,856) (1,294,646,448) (21,992,597) (2,209,220,901)
Charge for the year (125,310,315) (141,287,142) (2,001,135) (268,598,592)
Disposals or written-offs during
- 38,769,695 1,385,864 40,155,559
the year
31 December 2021 (1,017,892,171) (1,397,163,895) (22,607,868) (2,437,663,934)
Provision for impairment
31 December 2020 - (17,478,027) - (17,478,027)
Charge for the year - - - -
31 December 2021 - (17,478,027) - (17,478,027)
Carrying amount
31 December 2021 4,277,025,665 1,406,267,641 4,574,008 5,687,867,314
31 December 2020 4,244,176,839 1,475,185,012 5,573,995 5,724,935,846
As at 31 December 2021, ownership restricted net value of fixed assets is RMB313,012,605
(31 December 2020: RMB333,748,819), referring to Note V. 52.
(2) Fixed assets leased out under operating leases
Accumulated Provision for
Item Cost Carrying amount
depreciation impairment
Buildings 47,821,026 (17,759,826) - 30,061,200
Machinery equipment 73,592,531 (55,620,641) (17,478,027) 493,863
Motor vehicles 3,344,518 (3,185,307) - 159,211
Total 124,758,075 (76,565,774) (17,478,027) 30,714,274
(3) Fixed assets leased out under operating leases
Carrying amount at
Item
the end of the year
Machinery equipment 8,627
63
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
(4) Fixed assets pending certificates of ownership
Reason why the
Item Carrying amount certificates are
pending
Dormitories, main building and reception
276,574,493 Processing
building of Changan Chateau
European town, main building and service
170,296,377 Processing
building of Chateau Beijing
Fermentation shop and warehouse of Xinjiang
15,835,763 Processing
Tianzhu
Office and packaging shop of Golden Icewine
9,073,335 Processing
Valley
Fermentation shop of Zhangyu (Jingyang) 5,101,910 Processing
Office, experiment building and workshop of
3,147,779 Processing
Fermentation Centre
Finished goods warehouse and workshop of
2,124,816 Processing
Kylin Packaging
Others 284,591 Processing
The buildings without property certificate above have no significant impact on the Group’s
management.
12 Construction in progress
(1) Construction in progress
2021 2020
Project Provision for Carrying Provision for Carrying
Book value Book value
impairment amount impairment amount
R&D Centre (“Changyu
577,328,351 - 577,328,351 589,010,299 - 589,010,299
Wine Complex”) Project
Ningxia Chateau
2,835,598 - 2,835,598 420,440 - 420,440
Construction Project
Sales Company
- - - 738,462 - 738,462
Construction Project
Changan Chateau
1,245,742 - 1,245,742 7,626,393 - 7,626,393
Construction Project
Shihezi Chateau
1,028,512 - 1,028,512 5,000 - 5,000
Construction Project
Other Companies’
7,733,896 - 7,733,896 37,694,558 - 37,694,558
Construction Project
Total 590,172,099 - 590,172,099 635,495,152 - 635,495,152
64
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
(2) Movements of major construction projects in progress during the year
Percentage Attributable to: Interest
Accumulated
Budget Opening Additions Transfers to Other transfers Closing of actual Interest rate for Sources of
Item capitalised
(RMB million) balance during the year fixed assets out balance cost to capitalised for capitalisation funding
interest
budget (%) the year in 2020 (%)
Loans from
financial
Changyu Wine Complex 4,506 589,010,299 102,663,881 (114,345,829) - 577,328,351 82.2% 17,155,308 945,185 1.2%and4.3% institutions
and self-
raised
Ningxia Chateau Construction Project 428 420,440 2,415,158 - - 2,835,598 100.0% Self-raised
Changan Chateau Construction
698 7,626,393 6,419,524 (3,197,455) (9,602,720) 1,245,742 100.0% Self-raised
Project
Shihezi Chateau Construction Project 780 5,000 2,662,193 (1,638,681) - 1,028,512 96.7% Self-raised
65
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
13 Bearer biological assets
Bearer biological assets are vines, which measured in cost method.
Immature Mature biological
Item Total
biological assets assets
Original book value
31 December 2020 7,607,557 248,758,101 256,365,658
Additions during the year
- Increase in cultivated 17,215,775 - 17,215,775
- Transferred to mature (6,913,350) 6,913,350 -
Decrease during the year - (3,317,500) (3,317,500)
31 December 2021 17,909,982 252,353,951 270,263,933
Accumulated amortisation
31 December 2020 - (64,192,122) (64,192,122)
Charge for the year - (13,721,424) (13,721,424)
Decrease during the year - 1,362,555 1,362,555
31 December 2021 - (76,550,991) (76,550,991)
Carrying amount
31 December 2021 17,909,982 175,802,960 193,712,942
31 December 2020 7,607,557 184,565,979 192,173,536
As at 31 December 2021, there is no biological asset with ownership restricted (31
December 2020: Nil).
As at 31 December 2021, no provision for impairment of biological asset of the Group was
recognised as there is no any indication exists (31 December 20120: Nil).
14 Leases
(1) As a lessee
Right-of-use assets
Item Plant&buildings Lands Others Total
Cost
Balance at the beginning of
42,159,688 132,140,502 1,697,986 175,998,176
the year
Additions during the year 15,209,132 5,839,907 - 21,049,039
Balance at the end of the year 57,368,820 137,980,409 1,697,986 197,047,215
Accumulated depreciation
Balance at the beginning of
(7,201,147) (38,164,005) (339,597) (45,704,749)
the year
Charge for the year (10,697,382) (5,736,448) (339,597) (16,773,427)
Balance at the end of the year (17,898,529) (43,900,453) (679,194) (62,478,176)
Carrying amounts
At the end of the year 39,470,291 94,079,956 1,018,792 134,569,039
At the beginning of the year 34,958,541 93,976,497 1,358,389 130,293,427
66
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
Lease liabilities
Item Note 31 December 2021 1 January 2021
Long-term lease liabilities 116,156,677 105,719,752
Less: lease liabilities due within
V,27 14,345,089 7,317,852
one year
Total 101,811,588 98,401,900
(2) As a lessor
Operating lease
Item 2021
Lease income 2,015,486
15 Intangible assets
Item Land use rights Software licenses Trademarks Total
Original book value
31 December 2020 532,069,913 98,975,807 189,269,287 820,315,007
Additions during the year
- Purchase 1,796,701 1,688,892 222,331 3,707,924
- Transfers from construction
(33,299,900) - - (33,299,900)
in progress
31 December 2021 500,566,714 100,664,699 189,491,618 790,723,031
Accumulated amortisation
31 December 2020 (100,498,469) (44,325,044) (14,502,429) (159,325,942)
Additions during the year
- Charge for the year (10,508,435) (9,200,894) (205,640) (19,914,969)
Decrease during the year 6,384,759 - - 6,384,759
31 December 2021 (104,622,145) (53,525,938) (14,708,069) (172,856,152)
Carrying amount
31 December 2021 395,944,569 47,138,761 174,783,549 617,866,879
31 December 2020 431,571,444 54,650,763 174,766,858 660,989,065
As at 31 December 2021, the Group has land use right with infinite useful lives of
RMB32,640,119 (31 December 2020: RMB30,746,186), representing the freehold land held
by Chile Indomita Wine Group and Australia Kilikanoon Estate under relevant Chile and
Australia laws, on which the amortisation is not required.
67
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
As at 31 December 2021, the Group has trademark with infinite useful lives of
RMB155,355,846 (31 December 2020: RMB154,901,004), 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 pretax discount rates used in the cash flow projections are 11.0%
and 12.8%, 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 Group recognises 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 2021, the
management believes there is no impairment loss on those trademarks with infinite useful
lives of the Group.
As at 31 December 2021, ownership restricted net value of intangible assets is
RMB201,345,477 (31 December 2020: RMB206,920,456), referring to Note V. 52.
16 Goodwill
(1) Changes in goodwill
Name of investee or events from 31 December Additions during Disposals during 31 December
Note
which goodwill arose 2020 the year the year 2021
Original book value
Etablissements Roullet Fransac
(a) 13,112,525 - - 13,112,525
(“Roullet Fransac”)
Dicot Partners, S.L (“Dicot”) (a) 92,391,901 - - 92,391,901
Chile Indomita Wine Group (a) 6,870,115 - - 6,870,115
Australia Kilikanoon Estate (a) 37,063,130 - - 37,063,130
Sub-total 149,437,671 - - 149,437,671
Impairment provision (16,499,459) (20,563,671) - (37,063,130)
Carrying amount 132,938,212 (20,563,671) - 112,374,541
(a) The Group acquired Fransac Sales, Dicot and Mirefleurs, Chile Indomita Wine Group
and Australia Kilikanoon Estate in December 2013, September 2015, July 2017 and
January 2018 respectively, resulting in respective goodwill amounting to
RMB13,112,525, RMB92,391,901, RMB 6,870,115 and RMB37,063,130. The goodwill
had been allocated to corresponding asset groups for impairment testing.
68
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
(2) Provision for impairment of goodwill
The Group has allocated the above goodwill to relevant asset groups for impairment testing.
The recoverable amount of the asset group is determined according to the present value of
the expected future cash flows. 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 pretax
discount rate used in calculating the recoverable amounts of Fransac Sales, Dicot,
Mirefleurs, Indomita Wine and Australia Kilikanoon Estate are 12.1%, 11.2%, 11.0% and
12.8%, respectively (2020: 12.6%, 11.2%, 11.5% and 12.8%). The key assumption is the
growth rate of annual revenue growth rate of relevant subsidiaries, which is computed based
on the expected growth rate of each subsidiary and long-term average growth rates of
relevant industries. Other relevant key assumption is budget gross profit margin, which is
determined based on the historical performance of each subsidiary and its expectations for
market development. According to the results of the impairment test, the Group found that
the recoverable amount of the asset group including goodwill of Australia Kilikanoon Estate is
lower than its book value. Therefore, on 31 December 2021, the provision for impairment of
goodwill was RMB37,063,130. The impairment loss amounting to RMB20,563,671 was
recognised in asset impairment loss in 2021.
17 Long-term deferred expenses
Adjustments
Additions Written back
31 December at the 1 January Amortisation 31 December
Item during the during the
2020 beginning of 2021 for the year 2021
year year
the period
Land lease prepayment 40,918,256 (40,918,256) - - - - -
Land requisition fee 48,601,667 - 48,601,667 - (1,778,943) - 46,822,724
Greening fee 138,185,253 - 138,185,253 211,223 (8,748,458) (1,961,912) 127,686,106
Leasehold improvement 80,446,179 - 80,446,179 32,052,432 (8,218,980) - 104,279,631
Others 6,314,500 - 6,314,500 - (509,798) - 5,804,702
Total 314,465,855 (40,918,256) 273,547,599 32,263,655 (19,256,179) (1,961,912) 284,593,163
18 Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets and liabilities
31 December 2021 31 December 2020
Deductible or Deductible or
Deferred tax Deferred tax
Item taxable taxable
assets/ assets/
temporary temporary
(liabilities) (liabilities)
differences differences
Deferred tax assets:
Provision for impairment of assets 51,526,991 11,522,575 44,279,268 9,732,098
Unrealised profits of intra-group
481,484,528 120,371,131 313,043,226 78,260,807
transactions
Unpaid bonus 150,325,085 37,581,271 147,824,610 36,956,152
Termination benefits 14,132,191 3,533,048 16,274,352 4,068,588
Deductible tax losses 266,833,106 63,160,456 268,074,301 65,844,999
Deferred income 41,295,338 8,642,716 52,653,609 11,378,631
Others 1,598,132 399,534 - -
Sub-total 1,007,195,371 245,210,731 842,149,366 206,241,275
Deferred tax liabilities:
Revaluation due to business
combinations involving entities 46,411,478 11,300,970 49,156,771 12,022,613
not under common control
Others 2,012,000 503,000 - -
Sub-total 48,423,478 11,803,970 49,156,771 12,022,613
69
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
(2) Details of unrecognised deferred tax assets
Item 2021 2020
Deductible tax losses 234,250,359 187,130,828
(3) Expiration of deductible tax losses for unrecognised deferred tax assets
Year 2021 2020
2021 - 25,008,263
2022 21,367,869 21,367,869
2023 22,801,737 22,801,737
2024 42,088,453 42,088,453
2025 75,794,409 75,864,506
2026 72,197,891 -
Total 234,250,359 187,130,828
19 Other non-current assets
Item 2021 2020
Royalty 144,120,442 170,370,147
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. The license is effective until the expiry of the
registration of the trademarks.
According to the above royalty agreement, Changyu Group collected a total of
RMB576,507,809 for royalty from 2013 to 2019, of which 51% was used to promote
trademarks such as Changyu and the product of this contract, totalling RMB294,018,093.
The amount is used for promotion of Changyu and other trademarks and the products of this
contract, totalling RMB62,250,368, the difference is RMB231,768,615 (including tax).
On 18 May 2019, the general meeting of shareholders approved the proposal of the
amendment to the royalty agreement. Article 6.1 of the royalty agreement with Changyu
Group was amended to: During the validity period of this contract, the Group pays Changyu
Group royalty on an annual basis. The royalty is calculated based on 0.98% of the sales
volume of the Group ‘s contract products using this trademark. The article is amended to:
The royalty paid to the Changyu Group by the Group shall not be used to promote this
trademark and the contract products.
Changyu Group promised to offset the difference of RMB231,768,615 above with the royalty
for four years, i.e. from 2019 to 2022.If it is not sufficient for deduction, the rest will be repaid
in a one-off manner in 2023. If there is surplus, the surplus part of the royalty will be
charged from the year when the surplus occurs. As the amount is a long-term prerpayment,
the Company recognises the amount as other non-current assets and meanwhile offset the
sales fee, i.e. royalty.
As at 31 December 2021, the Group’s royalty in 2021 was RMB26,249,705 (VAT included).
When the difference is deducted by the above-mentioned amount, the balance of royalty
due from Changyu Group was RMB144,120,442.
70
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
20 Short-term loans
Short-term loans by category:
Item 2021 2020
Unsecured loans 478,331,156 619,149,908
Mortgaged loans 118,469,193 55,724,891
Guaranteed loans 25,266,108 14,215,916
Total 622,066,457 689,090,715
As at 31 December 2021, details of short-term borrowings were as follows:
Interest rate at the
Exchange Amount Nature of Interest rate
Amount end of the year
rate interest rate
RMB % %
1 year
Credit loans (RMB) 150,000,000 1.0000 150,000,000 Floating 3.35%
LPR-0.005
Annual benchmark
Credit loans (RMB) 300,000,000 1.0000 300,000,000 Floating 3.35%
interest rate
Credit loans (USD) 4,490,000 6.3098 28,331,156 Fixed 1.48% 1.48%
Mortgaged loans
6,795,437 7.2197 49,061,015 Fixed 0.35% - 0.9% 0.35% - 0.9%
(EUR)
Mortgaged loans
11,000,000 6.3098 69,408,178 Fixed 1.12% - 1.55% 1.12% - 1.55%
(USD)
Guaranteed loans
5,466,488 4.6220 25,266,108 Fixed 2.50% 2.50%
(AUD)
Total 622,066,457
As at 31 December 2021, mortgaged loans (EUR) were Hacienda y Viedos Marques del
Atrio, S.L.U (“ Atrio “) factoring of accounts receivable from banks including Banco de
Sabadell, S.A. of EUR6,795,437 (equivalent of RMB49,061,015) (31 December 2020:
EUR3,558,629, equivalent of RMB28,557,993.
On 31 December 2021, Chile Indomita Wine Group pledged its fixed assets to Banco
Scotiabank to borrow USD11,000,000 (equivalent to RMB69,408,178) (31 December
2020: USD4,000,000, equivalent to RMB26,162,960).
On 31 December 2021, the secured loan represented the secured loan of Australia
Kilikanoon Estate of AUD5,466,488 (equivalent to RMB25,266,108) (31 December 2020:
AUD2,833,945, equivalent to RMB14,215,916).
21 Accounts payable
Ageing 2021 2020
Within 1 year (inclusive) 486,006,974 477,926,275
Over 1 year but within 2 years (inclusive) 4,435,786 2,173,356
Over 2 years but within 3 years (inclusive) 1,405,133 1,277,767
Over 3 years 1,605,923 2,970,560
Total 493,453,816 484,347,958
There is no significant accounts payable with ageing of more than one year.
71
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
22 Contract liabilities
As at As at
Item
31 December 2021 1 January 2021
Receipt in advance 144,013,594 118,210,799
Withholding sales rebates 3,107,122 16,862,481
Total 147,120,716 135,073,280
Contract liabilities primarily relate to the Group’s advances from sales contracts of specific
customers and the withholding sales rebates. Relevant contract liabilities are recognised as
revenue when the control of the goods is transferred to the customer.
23 Employee benefits payable
(1) Employee benefits payable:
Additions during Decrease during
Note 31 December 2020 31 December 2021
the year the year
Short-term employee
(2) 172,176,085 463,134,665 (454,752,853) 180,557,897
benefits
Post-employment
benefits - defined (3) 329,474 45,027,626 (45,027,747) 329,353
contribution plans
Termination benefits 16,274,352 5,609,349 (7,751,510) 14,132,191
Total 188,779,911 513,771,640 (507,532,110) 195,019,441
(2) Short-term employee benefits
Additions during Decrease during
31 December 2020 31 December 2021
the year the year
Salaries, bonuses,
170,277,311 414,204,352 (405,639,128) 178,842,535
allowances
Staff welfare 1,734,723 17,963,364 (18,057,122) 1,640,965
Social insurance 340,733 15,251,455 (15,288,352) 303,836
Medical insurance 340,733 13,693,635 (13,730,532) 303,836
Work-related injury
- 1,534,970 (1,534,970) -
insurance
Maternity insurance - 22,850 (22,850) -
Housing fund 27,497 12,722,935 (12,711,850) 38,582
Labour union fee, staff and
1,874,792 3,033,259 (3,056,401) 1,851,650
workers’ education fee
Sub-total 174,255,056 463,175,365 (454,752,853) 182,677,568
Less: Non-current liabilities 2,078,971 40,700 - 2,119,671
Total 172,176,085 463,134,665 (454,752,853) 180,557,897
(3) Post-employment benefits - defined contribution plans
Additions during Decrease during
31 December 2020 31 December 2021
the year the year
Basic pension insurance 329,464 43,803,058 (43,804,402) 328,120
Unemployment insurance 10 1,224,568 (1,223,345) 1,233
Total 329,474 45,027,626 (45,027,747) 329,353
72
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
24 Taxes payable
Item 2021 2020
Value-added tax 54,103,944 25,853,102
Consumption tax 70,563,701 42,076,231
Corporate income tax 194,566,746 130,621,524
Individual income tax 872,252 614,344
Tax on the use of urban land 2,441,121 2,327,666
Education surcharges 5,199,891 2,498,374
Urban maintenance and construction tax 7,128,647 3,429,038
Others 7,445,998 5,992,534
Total 342,322,300 213,412,813
25 Other payables
31 December 31 December
Note
2021 2020
Interest payable 323,074 553,471
Dividends payable 68,392 1,003,125
Others (1) 452,642,025 384,548,930
Total 453,033,491 386,105,526
(1) Others
(a) Details of others by nature are as follows:
Item 2021 2020
Deposit payable to dealer 241,414,134 177,129,582
Advertising fee payable 41,264,460 50,444,091
Equipment and construction fee payable 44,345,312 51,381,563
Freight charges payable 29,192,798 26,061,359
Deposits due to suppliers 12,966,789 14,836,302
Contracting fee payable 8,668,872 9,656,066
Staff deposit 5,037,925 359,282
Others 69,751,735 54,680,685
Total 452,642,025 384,548,930
(b) There are no significant others aged over one year accured this year.
26 Other current liabilities
As at 31 December As at 31 December
Item
2021 2020
Tax to be transferred out as sales 18,374,193 14,820,653
73
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
27 Non-current liabilities due within one year
Non-current liabilities due within one year by category are as follows:
Item 2021 2020
Long-term loans due within one year 74,520,037 111,311,890
Long-term payables due within one year 22,000,000 22,000,000
Long-term lease liabilities due within one year 14,345,089 -
Total 110,865,126 133,311,890
28 Long-term loans
(1) Long-term loans by category
Item 2021 2020
Credit loans 193,475,080 220,219,258
Guaranteed loans 57,092,000 91,445,600
Less: Long-term loans due within one year 74,520,037 111,311,890
Total 176,047,043 200,352,968
As at 31 December 2021, details of long-term borrowings were as follows:
Interest rate at the Long-term Long-term
Exchange Amount Nature of Interest rate
Amount end of the year loans due loans due after
rate interest rate
RMB % % within one year one year
Credit loans (EUR) 26,798,216 7.2197 193,475,080 Fixed 0.95% - 3.28% 0.95% - 3.28% 68,270,037 125,205,043
90% of 5-year
Guaranteed loans (RMB) 6,250,000 1.0000 6,250,000 Floating 4.275% 6,250,000 -
LPR
Guaranteed loans (AUD) 11,000,000 4.6220 50,842,000 Floating BBSY+1.10% 1.40% - 50,842,000
Total 250,567,080 74,520,037 176,047,043
As at 31 December 2021, Credit loans (EUR) were EUR26,798,216 borrowed by Banco
Sabadell, Bankia, Banco Santander, BBVA, Caja Rural de Navarr etc. (equivalent of
RMB193,475,080) (31 December 2020: EUR27,441,652, equivalent of RMB220,219,258).
Guaranteed loans (RMB) were long-term borrowings of RMB6,250,000 of the R&D Centre, a
subsidiary of the Company (31 December 2020: RMB31,250,000). Australia Kilikanoon
Estate has borrowed AUD11,000,000 (equivalent of RMB50,842,000) (31 December 2020:
AUD12,000,000, equivalent of RMB60,195,600) from ANZ Bank and it was guaranteed by
the Company.
29 Long-term payables
Item 2021 2020
Agricultural Development Fund of China (“CADF”) 86,000,000 108,000,000
Less: Long-term payables due within one year 22,000,000 22,000,000
Balance of long-term payables 64,000,000 86,000,000
In 2016, RMB305,000,000 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 RMB22,000,000in 2021. Refer to Note V. 52 for
details of mortgaged and pledged assets.
74
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
Balance of long-term
Return on Termination date Due within one year Due after one year Mortgaged and
payables Investment date
investment of repayment pledged assets
RMB RMB RMB
29 February 28 February Fixed assets and
86,000,000 1.2%
2016 2025
22,000,000 64,000,000 intangible assets
30 Deferred income
Additions during Decrease during
Item 31 December 2020 31 December 2021
the year the year
Government grants 52,653,609 2,452,011 (13,810,282) 41,295,338
Government grants:
Amounts
Additions of
recognised in other Related to
Liability 31 December 2020 government grants 31 December 2021
income during assets/income
during the year
the year
Government
Industrial development support
24,600,000 - (4,100,000) 20,500,000 grants related
project
to assets
Government
Fixed asset investment reward
2,436,600 - (2,280,000) 156,600 grants related
of Shihezi Chateau project
to assets
Shandong Peninsula Blue Government
Economic Area construction 2,000,000 - (2,000,000) - grants related
funds to assets
Xinjiang industrial revitalisation Government
and technological 12,798,000 - (1,422,000) 11,376,000 grants related
transformation project to assets
Government
Special government grant for
2,120,000 - (1,060,000) 1,060,000 grants related
infrastructure
to assets
Government
Raw wine fermentation project 434,700 - (434,700) - grants related
to assets
Wine fermentation capacity Government
construction (Huanren) 2,400,000 - (400,000) 2,000,000 grants related
project to assets
Engineering technology Government
transformation of information 1,740,000 - (580,000) 1,160,000 grants related
system project to assets
Government
Liquor electronic tracking
1,191,150 - (667,055) 524,095 grants related
project
to assets
Government
Special fund for efficient water-
1,315,000 - (162,000) 1,153,000 grants related
saving irrigation project
to assets
Subsidy for economic and Government
energy-saving technological 769,800 - (128,300) 641,500 grants related
transformation projects to assets
Government
Wine industry development
186,000 - (186,000) - grants related
project
to assets
Subsidy for mechanic Government
development of Penglai 238,858 - (13,270) 225,588 grants related
Daliuhang Base to assets
Government
Coal subsidy - 2,079,711 - 2,079,711 grants related
to assets
Cross-border e-commerce Related to
201,801 - (201,801) -
project income
Subsidy for boiler Related to
70,000 - (10,000) 60,000
reconstruction and demolition income
Prize from Industrial Design
Related to
Competition of Yantai 50,000 50,000 (50,000) 50,000
income
Mayor’s Cup
Special Funds for Innovation-
Related to
Driven Development of Yantai 101,700 322,300 (115,156) 308,844
income
City
Total 52,653,609 2,452,011 (13,810,282) 41,295,338
75
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
31 Other non-current liabilities
31 December 31 December
Item
2021 2020
Employee benefits payable 2,119,671 2,078,971
As at 31 December 2021, employee benefit represents deposit from bonus accrued for
managers and above. The bonus is expected to be paid in 2023.
32 Share capital
At 31 December
2020 and
31 December
2021
Unrestricted A shares 453,460,800
B shares 232,003,200
Total of unrestricted shares 685,464,000
33 Capital reserve
Additions during Decrease during
Item 31 December 2020 31 December 2021
the year the year
Share premium 519,052,172 - - 519,052,172
Others 5,916,588 - - 5,916,588
Total 524,968,760 - - 524,968,760
34 Other comprehensive income
Balance at the Accrued during the year
Balance at the
beginning of Less: Net-of-tax
Net-of-tax end of the year
the year Previously amount
Less: amount attributable to
Item attributable to Before-tax recognised attributable to
Income tax attributable to shareholders
shareholders amount amount shareholders
expenses non-controlling of the
of the transferred to of the
interests Company
Company profit or loss Company
Items that may be
reclassified to profit
or loss
Translation
differences arising
from translation of
576,129 (39,307,949) - - (35,283,306) (4,024,643) (34,707,177)
foreign currency
financial
statements
76
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
35 Surplus reserve
31 December 31 December
Item
2021 2020
Statutory surplus reserve 342,732,000 342,732,000
In accordance with the Company Law and the Articles of Association Company, the Company
appropriated 10% of its net profit to statutory surplus reserve. The appropriation to the
statutory surplus reserve may be ceased when the accumulated appropriation reaches over
50% of the registered capital of the Company. The Company does not appropriate net profit
to the surplus reserve in 2021 as surplus reserve of the Company is above 50% of the
registered capital.
The Company can appropriate discretionary surplus reserve after appropriation of the
statutory surplus reserve. Discretionary surplus reserve can be utilised to offset the deficit or
increase the share capital after approval.
36 Retained earnings
Item Note 2021 2020
Retained earnings at the beginning of the
8,714,091,755 8,735,513,044
year (before adjustment)
Impact of retrospective adjustment of
(1) (10,582,161) -
accounting standards
Retained earnings at the beginning of the
8,703,509,594 8,735,513,044
year (after adjustment)
Add: Net profits for the year attributable to
500,102,606 470,860,587
shareholders of the Company
Less: Dividends to ordinary shares (2) (274,185,600) (479,824,800)
Distribution of dividends to existing
shareholders from Culture - (12,457,076)
Development
Retained earnings at the end of the year (3) 8,929,426,600 8,714,091,755
(1) Adjustments on beginning retained earnings are as follows:
As a result of the implementation of the new financial instrument standards by the Group in
2021, the undistributed profit at the beginning of 2021 was reduced by RMB10,582,161.
(2) Dividends in respect of ordinary shares declared during the year
Pursuant to the shareholders’ approval at the shareholders’ general meeting on 27 May
2021, a cash dividend of RMB0.4 per share (2020: RMB0.7 per share), totalling
RMB274,185,600 (2020: RMB479,824,800).
(3) Retained earnings at the end of the year
As at 31 December 2021, the consolidated retained earnings attributable to the Company
included an appropriation of RMB58,041,628 (2020: RMB58,021,644) to surplus reserve
made by the subsidiaries.
77
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
37 Operating income and operating costs
2021 2020
Item
Income Cost Income Cost
Principal activities 3,879,875,396 1,604,954,772 3,325,812,768 1,479,923,326
Other operating activities 73,192,187 42,835,102 69,589,233 23,954,081
Total 3,953,067,583 1,647,789,874 3,395,402,001 1,503,877,407
Including:Revenue from
contracts with 3,951,052,097 1,646,424,782 3,393,386,515 1,502,467,908
customers
Rent income 2,015,486 1,365,092 2,015,486 1,409,499
(1) Disaggregation of revenue from contracts with customers:
Type of contract 2021 2020
By type of goods or services
- Liquor 3,879,875,396 3,325,812,768
- Others 71,176,701 67,573,747
By timing of transferring goods or services
- Revenue recognised at a point in time 3,951,052,097 3,393,386,515
38 Taxes and surcharges
Item 2021 2020
Consumption tax 164,791,894 120,563,955
Urban maintenance and construction tax 30,604,422 23,169,608
Education surcharges 22,147,840 16,756,851
Property tax 28,005,705 26,843,414
Tax on the use of urban land 11,654,759 11,332,778
Stamp duty 6,488,829 3,650,250
Others 364,121 1,472,418
Total 264,057,570 203,789,274
78
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
39 Selling and distribution expenses
Item 2021 2020
Salaries and benefits 308,876,899 289,527,114
Marketing fee 251,443,176 200,259,537
Labour service fee 96,864,855 58,723,298
Depreciation expense 48,014,605 41,224,340
Storage rental 28,110,876 35,744,058
Advertising fee 91,168,885 22,724,095
Royalty 24,763,872 21,985,068
Travelling expenses 21,624,100 20,065,075
Design and production fee 30,247,672 15,427,023
Conference fee 20,088,371 15,387,699
Water, electricity and gas fee 14,988,125 13,427,340
Others 62,762,669 53,757,838
Total 998,954,105 788,252,485
40 General and administrative expenses
Item 2021 2020
Salaries and benefits 73,920,103 73,329,053
Depreciation expenses 79,928,195 72,637,754
Repair costs 16,467,478 23,714,008
Administrative expenses 26,124,859 20,927,794
Amortisation expenses 19,354,205 19,568,760
Amortisation of greening fee 19,186,231 18,187,244
Rental charge 5,735,121 9,969,494
Safety production costs 11,190,158 7,831,443
Security and cleaning fee 7,455,965 7,650,813
Contracting fee 9,192,907 7,603,536
Others 30,521,154 29,226,567
Total 299,076,376 290,646,466
41 Financial expenses
Item 2021 2020
Interest expenses from loans and payables 24,504,339 35,187,642
Interest expenses from lease liabilities 5,292,452 -
Less: Borrowing costs capitalised 945,185 797,021
Less: Financial expenses offset by fiscal interest
- 1,500,000
subsidy
Interest income from deposits and receivables (19,558,354) (14,247,274)
Net exchange losses/(gains) 8,296,888 (274,140)
Other financial expenses 3,588,587 2,072,506
Total 21,178,727 20,441,713
Fiscal interest subsidy during reporting period has been included in non-recurring gains and
losses.
79
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
42 Other income
Related to
Item 2021 2020
assets/income
Government grants
Reward on the fixed asset investment - 2,280,000
related to assets
Shandong Peninsula Blue Economic Government grants
2,000,000 2,000,000
Area construction funds related to assets
Government grants
Industrial development support project 4,100,000 4,100,000
related to assets
Others - Government grants related to Government grants
7,333,325 7,018,292
assets related to assets
Special funds for the development of
6,815,339 23,068,826 Related to income
enterprises
Tax refunds 13,747,870 12,324,440 Related to income
Strong industrial city special funds - 792,600 Related to income
Others - Government grants related to
14,244,207 21,479,462 Related to income
income
Total 48,240,741 73,063,620
Other income during reporting period has been included in non-recurring gains and losses.
43 Investment losses
Investment losses by item
Item 2021 2020
Long-term equity investment losses under equity
(2,784,997) (2,217,623)
method
Total (2,784,997) (2,217,623)
44 Credit (losses)/reversal
Item 2021 2020
Accounts receivable (7,937,144) 4,348,309
Total (7,937,144) 4,348,309
45 Impairment losses
Item 2021 2020
Inventories 689,420 5,705,003
Goodwill (20,563,671) (8,920,981)
Total (19,874,251) (3,215,978)
46 Loss from asset disposals
Item 2021 2020
Loss from disposal of fixed assets 11,939,284 1,180,655
Loss from disposal of assets during reporting period has been included in non-recurring
gains and losses.
80
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
47 Non-operating income and non-operating expenses
(1) Non-operating income by item is as follows:
Item 2021 2020
Inventory stocktake surplus 1,019,314 3,823,905
Insurance compensation 1,069,670 3,067,670
Net income from fine 1,068,169 3,098,877
Others 2,057,151 1,918,058
Total 5,214,304 11,908,510
Non-operating income during reporting period has been included in non-recurring gains and
losses.
(2) Non-operating expenses
Item 2021 2020
Compensation, penalty and fine expenses 1,761,266 347,635
Donations provided 900,000 1,048,300
Losses from damage or scrapping of non current
3,425,709 -
assets
Others 224,869 306,923
Total 6,311,844 1,702,858
Non-operating expenses during reporting period has been included in non-recurring gains
and losses.
48 Income tax expenses
Item Note 2021 2020
Current tax expense for the year based
248,208,920 135,163,243
on tax law and regulations
Changes in deferred tax assets/liabilities (1) (39,188,099) 56,641,257
Total 209,020,821 191,804,500
(1) The analysis of changes in deferred tax is set out below:
Item 2021 2020
Origination of temporary differences (39,188,099) 56,641,257
Total (39,188,099) 56,641,257
81
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
(2) Reconciliation between income tax expenses and accounting profit:
Item 2021 2020
Profit before taxation 715,699,194 664,866,563
Estimated income tax at 25% 178,924,799 166,216,641
Effect of different tax rates applied by subsidiaries 7,223,819 1,310,363
Effect of non-deductible costs, expense and losses 9,480,180 7,185,074
Effect of deductible losses of deferred tax assets
12,159,985 16,417,337
not recognised for the year
Deferred tax assets written-off 1,232,038 675,085
Income tax expenses 209,020,821 191,804,500
49 Basic earnings per share and diluted earnings per share
(1) Basic earnings per share
Basic earnings per share is calculated as dividing consolidated net profit attributable to
ordinary shareholders of the Company by the weighted average number of ordinary shares
outstanding:
2021 2020
Consolidated net profit attributable to ordinary
500,102,606 470,860,587
shareholders of the Company
Weighted average number of ordinary shares
685,464,000 685,464,000
outstanding
Basic earnings per share (RMB/share) 0.73 0.69
Weighted average number of ordinary shares is calculated as follows:
2021 2020
Issued ordinary shares at the beginning of the year 685,464,000 685,464,000
Weighted average number of ordinary shares at the
685,464,000 685,464,000
end of the year
(2) The Group does not have any potential dilutive ordinary shares for the listed years.
50 Cash flow statement
(1) Proceeds relating to other operating activities:
Item 2021 2020
Government grants 36,882,470 56,515,941
Penalty income 1,068,169 3,098,877
Interest income from bank 19,558,354 14,396,201
Others 31,633,258 7,186,229
Total 89,142,251 81,197,248
82
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
(2) Payments relating to other operating activities:
Item 2021 2020
Selling and distribution expenses 430,962,311 399,973,695
General and administrative expenses 128,747,237 127,666,411
Others 2,488,469 24,250,891
Total 562,198,017 551,890,997
(3) Proceeds relating to other financing activities:
Item 2021 2020
Cash paid for acquisition of minority interests - 62,966,747
Cash paid for lease 15,904,567 -
Total 15,904,567 62,966,747
51 Supplementary information on cash flow statement
(1) Supplement to cash flow statement
a. Reconciliation of net profit to cash flows from operating activities:
Item 2021 2020
Net profit 506,678,373 473,062,063
Add: Provisions for impairment of assets 19,874,251 3,215,978
Credit losses/(reversal) 7,937,144 (4,348,309)
Depreciation of fixed assets and
271,154,064 298,224,327
investment property
Amortisation of intangible assets 19,914,969 20,413,627
Amortisation of long-term deferred
19,256,179 16,578,465
expenses
Amortisation of biological assets 13,721,424 13,270,614
Depreciation of ROU assets 16,773,427 -
Losses from disposal of fixed assets,
intangible assets, and other long-term 15,364,993 1,338,570
assets
Financial expenses 26,782,042 36,134,118
Royalty 24,763,872 21,985,068
Investment losses 2,784,997 2,217,623
(Increase)/Decrease in deferred tax
(38,969,456) 59,310,068
assets
Decrease in deferred tax liabilities (218,643) (2,668,811)
Decrease/(Increase) in gross
143,615,551 (38,192,093)
inventories
Increase in operating receivables (187,412,623) (41,443,296)
Increase/(Decrease) in operating
263,362,094 (353,951,339)
payables
Net cash flows from operating activities 1,125,382,658 505,146,673
83
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
b. Significant investing and financing activities not requiring the use of cash:
Item 2021 2020
Payment of construction in progress and
60,224,230 141,440,165
other long-term assets by bank acceptances
c. Change in cash and cash equivalents:
Item 2021 2020
Cash equivalents at the end of the year 1,502,327,029 1,052,665,105
Less: Cash equivalents at the beginning of
1,052,665,105 1,397,399,470
the year
Net increase/(dercrease) in cash and cash
449,661,924 (344,734,365)
equivalents
(2) Information on acquisition or disposal of subsidiaries and other business units during the
year:
Information on acquisition of subsidiaries and other business units:
2021 2020
Consideration for acquiring subsidiaries and other
- 89,519,789
business units
Cash or cash equivalents paid during the year
for acquiring subsidiaries and other business units - 89,519,789
during the year
Including: Culture Development - 89,519,789
Less: Cash and cash equivalents held by
disposed subsidiaries and other business - -
units
Net cash paid for the acquisition - 89,519,789
(3) Details of cash and cash equivalents
Item 2021 2020
Cash at bank and on hand
Including: Cash on hand 71,486 19,637
Bank deposits available on demand 1,502,255,543 1,052,645,468
Closing balance of cash and cash equivalents 1,502,327,029 1,052,665,105
84
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
52 Assets with restrictive ownership title or right of use
Balance at the
Item Opening balance Reason for restriction
end of the year
The Company deposits for
Cash at bank and on hand 67,996,762 11,568,964
letters of credit etc.
Short-term borrowings
Account receivable (i) 28,557,991 49,061,015
mortgage from Atrio
R&D Centre mortgage for long-
Fixed assets 333,748,819 313,012,605 term payables and long-term
and short-term borrowings
R&D Centre mortgage for
Intangible assets 206,920,456 201,345,477
long-term payables
Total 637,224,028 574,988,061
(i) As at 31 December 2021, the amount of accounts receivable with restricted ownership
is EUR6,795,436, which refers to accounts receivable Atrio conducted for factoring
from Banco de Sabadell, S.A. Etc. (31 December 2020: EUR3,558,628, equivalent of
RMB28,557,991)
85
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
VI. Interests in other entities
1 Interests in subsidiaries
(1) Composition of the Group
Shareholding ratio
Principal place of Business (%)
Name of the Subsidiary Registered place Registered capital Acquisition method
business nature (or similar equity
interest)
Business combinations
Xinjiang Tianzhu Wine Co., Ltd. Shihezi, Xinjiang, Shihezi, Xinjiang,
Manufacturing RMB75,000,000 60 - involving entities not under
(“Xinajing Tianzhu”) China China
common control
Business combinations
Etablissements Roullet Fransac
Cognac, France Cognac, France Trading EUR2,900,000 - 100 involving entities not under
(“Roullet Fransac”)
common control
Business combinations
Marketing and
Dicot Partners, S.L (“Dicot”) Navarre, Spain Navarre, Spain EUR2,000,000 90 - involving entities not under
sales
common control
Via Indómita, S.A., Via Dos Andes, S.A.,
Marketing and Acquired through
and Bodegas Santa Alicia SpA. (“Chile Santiago, Chile Santiago, Chile CLP31,100,000,000 85 -
sales establishment or investment
Indomita Wine Group”)
Business combinations
Kilikanoon Estate Pty Ltd. Marketing and
Adelaide, Australia Adelaide, Australia AUD6,420,000 97.5 - involving entities not under
(“Australia Kilikanoon Estate”) sales
common control
Beijing Changyu Sales and Distribution Marketing and Acquired through
Beijing, China Beijing, China RMB1,000,000 100 -
Co., Ltd (“Beijing Sales”) sales establishment or investment
Yantai Kylin Packaging Co., Ltd. Yantai, Shandong, Yantai, Shandong, Acquired through
Manufacturing RMB15,410,000 100 -
(“Kylin Packaging”) China China establishment or investment
Yantai Chateau Changyu-Castel Co., Ltd Yantai, Shandong, Yantai, Shandong, Acquired through
Manufacturing USD5,000,000 70 -
(“Chateau Changyu”) (c) China China establishment or investment
Changyu (Jingyang) Wine Co., Ltd. Xianyang, Shaanxi, Xianyang, Shaanxi, Acquired through
Manufacturing RMB1,000,000 90 10
(“Jingyang Wine”) China China establishment or investment
Yantai Changyu Pioneer Wine Sales Yantai, Shandong, Yantai, Shandong, Marketing and Acquired through
RMB8,000,000 100 -
Co., Ltd. (“Sales Company”) China China sales establishment or investment
Langfang Development Zone Castel-
Langfang, Hebei, Langfang, Hebei, Acquired through
Changyu Wine Co., Ltd Manufacturing USD6,108,818 39 10
China China establishment or investment
(“Langfang Castel”)
Changyu (Jingyang) Wine Sales Co., Ltd. Xianyang, Shaanxi, Xianyang, Shaanxi, Marketing and Acquired through
RMB1,000,000 10 90
(“Jingyang Sales”) China China sales establishment or investment
Langfang Changyu Pioneer Wine Sales Langfang, Hebei, Langfang, Hebei, Marketing and Acquired through
RMB1,000,000 10 90
Co., Ltd (“Langfang Sales”) China China sales establishment or investment
86
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
Shareholding ratio
Principal place of Business (%)
Name of the Subsidiary Registered place Registered capital Acquisition method
business nature (or similar equity
interest)
Shanghai Changyu Sales and Distribution Marketing and Acquired through
Shanghai, China Shanghai, China RMB1,000,000 100 -
Co., Ltd. (“Shanghai Sales”) sales establishment or investment
Beijing Changyu AFIP Agriculture
Miyun, Beijing, Marketing and Acquired through
development Co., Ltd (“Agriculture Miyun, Beijing, China RMB1,000,000 - 100
China sales establishment or investment
Development”)
Beijing Chateau Changyu AFIP Global Acquired through
Beijing, China Beijing, China Manufacturing RMB642,750,000 91.53 -
Co., Ltd. (“AFIP”) (d) establishment or investment
Yantai Changyu Wine Sales Co., Ltd. Yantai, Shandong, Yantai, Shandong, Marketing and Acquired through
RMB5,000,000 90 10
(“Wines Sales”) China China sales establishment or investment
Yantai Changyu Pioneer International Yantai, Shandong, Yantai, Shandong, Marketing and Acquired through
RMB5,000,000 70 30
Co., Ltd. (“Pioneer International”) China China sales establishment or investment
Hangzhou Changyu Wine Sales Co., Ltd. Hangzhou, Zhejiang, Hangzhou, Zhejiang, Marketing and Acquired through
RMB500,000 - 100
(“Hangzhou Changyu”) China China sales establishment or investment
Ningxia Changyu Grape Growing Co., Ltd. Yinchuan, Ningxia, Acquired through
Ningxia, China Plating RMB1,000,000 100 -
(“Ningxia Growing”) China establishment or investment
Huanren Changyu National Wines Sales Benxi, Liaoning, Marketing and Acquired through
Benxi, Liaoning, China RMB2,000,000 100 -
Co., Ltd. (“National Wines”) China sales establishment or investment
Liaoning Changyu Golden Icewine Valley Benxi, Liaoning, Acquired through
Benxi, Liaoning, China Manufacturing RMB59,687,300 51 -
Co., Ltd. (“Golden Icewine Valley”) (e) China establishment or investment
Yantai Development Zone Changyu Trading Yantai, Shandong, Yantai, Shandong, Marketing and Acquired through
RMB5,000,000 - 100
Co., Ltd (“Development Zone Trading”) China China sales establishment or investment
Yantai Changyu Fushan Trading Company Yantai, Shandong, Yantai, Shandong, Marketing and Acquired through
RMB5,000,000 - 100
(“Fushan Trading”)(a) China China sales establishment or investment
Beijing AFIP Meeting Center Miyun, Beijing, Acquired through
Miyun, Beijing, China Services RMB500,000 - 100
(“Meeting Center”) China establishment or investment
Beijing AFIP Tourism and Culture Miyun, Beijing, Acquired through
Miyun, Beijing, China Tourism RMB500,000 - 100
(“AFIP Tourism”) China establishment or investment
Changyu (Ningxia) Wine Co., Ltd. Acquired through
Ningxia, China Ningxia, China Manufacturing RMB1,000,000 100 -
(“Ningxia Wine”) establishment or investment
Yantai Changyu Chateau Tinlot Co., Ltd. Yantai, Shandong, Yantai, Shandong, Wholesale and Acquired through
RMB400,000,000 65 35
(“Chateau Tinlot”) China China retail establishment or investment
Xinjiang Chateau Changyu Baron Balboa Shihezi, Xinjiang, Shihezi, Xinjiang, Acquired through
Manufacturing RMB550,000,000 100 -
Co., Ltd. (“Chateau Shihezi”) China China establishment or investment
Ningxia Chateau Changyu Moser XV Yinchuan, Ningxia, Yinchuan, Ningxia, Acquired through
Manufacturing RMB2,000,000 100 -
Co., Ltd. (“Chateau Ningxia”) China China establishment or investment
Shaanxi Chateau Changyu Rena Co., Ltd. Xianyang, Shaanxi, Xianyang, Shaanxi, Acquired through
Manufacturing RMB20,000,000 100 -
(“Chateau Changan”) China China establishment or investment
87
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
Shareholding ratio
Principal place of Business (%)
Name of the Subsidiary Registered place Registered capital Acquisition method
business nature (or similar equity
interest)
Yantai Changyu Wine Research &
Yantai, Shandong, Yantai, Shandong, Acquired through
Development Centre Co., Ltd. Manufacturing RMB805,000,000 85.32 -
China China establishment or investment
(“R&D Centre”) (f)
Wine
Changyu (HuanRen) Wine Co., Ltd Benxi, Liaoning, Acquired through
Benxi, Liaoning, China production RMB5,000,000 100 -
(“Huan Ren Wine”) China establishment or investment
projecting
Xinjiang Changyu Sales Co., Ltd Shihezi, Xinjiang, Shihezi, Xinjiang, Marketing and Acquired through
RMB10,000,000 - 100
(“Xinjiang Sales”) China China sales establishment or investment
Ningxia Changyu Trading Co., Ltd Yinchuan, Ningxia, Yinchuan, Ningxia, Marketing and Acquired through
RMB1,000,000 - 100
(“Ningxia Trading”) China China sales establishment or investment
Shaanxi Changyu Rena Wine Sales Xianyang, Shaanxi, Xianyang, Shaanxi, Marketing and Acquired through
RMB3,000,000 - 100
Co., Ltd (“Shaanxi Sales”) China China sales establishment or investment
Penglai Changyu Wine Sales Co., Ltd Penglai, Shandong, Penglai, Shandong, Marketing and Acquired through
RMB5,000,000 - 100
(“Penglai Sales”) China China sales establishment or investment
Laizhou Changyu Wine Sales Co., Ltd Laizhou, Shandong, Laizhou, Shandong, Marketing and Acquired through
RMB1,000,000 - 100
(“Laizhou Sales”) China China sales establishment or investment
Francs Champs Participations SAS Investment Acquired through
Cognac, France Cognac, France EUR32,000,000 100 -
(“Francs Champs”) and trading establishment or investment
Yantai Roullet Fransac Wine Sales Co., Ltd. Yantai, Shandong, Yantai, Shandong, Marketing and Acquired through
RMB1,000,000 - 100
(“Yantai Roullet Fransac”) China China sales establishment or investment
Yantai Changyu Wine Sales Co., Ltd. (“Wine Yantai, Shandong, Yantai, Shandong, Marketing and Acquired through
RMB5,000,000 100 -
Sales Company”) China China sales establishment or investment
Shaanxi Chateau Changyu Rena Tourism Xianxin, Shaanxi, Xianxin, Shaanxi, Acquired through
Tourism RMB1,000,000 - 100
Co., Ltd (“Chateau Tourism”) China China establishment or investment
Longkou Changyu Wine Sales Co., Ltd Yantai, Shandong, Yantai, Shandong, Marketing and Acquired through
RMB1,000,000 - 100
(“Longkou Sales”) China China sales establishment or investment
Yantai, Shandong, Yantai, Shandong, Acquired through
Culture Development Tourism RMB10,000,000 100 -
China China establishment or investment
Yantai, Shandong, Yantai, Shandong, Acquired through
Museum Tourism RMB500,000 - 100
China China establishment or investment
Yantai Changyu Culture Tourism Production Yantai, Shandong, Yantai, Shandong, Acquired through
Tourism RMB5,000,000 - 100
Sales Co., Ltd. (“Culture Sales”) China China establishment or investment
Yantai Changyu International Window of the
Yantai, Shandong, Yantai, Shandong, Acquired through
Wine City Co., Ltd. (“Window of the Wine Tourism RMB60,000,000 - 100
China China establishment or investment
City”)
Yantai KOYA Brandy Chateau Co., Ltd Yantai, Shandong, Yantai, Shandong, Acquired through
Manufacturing RMB10,000,000 100 -
(“Chateau KOYA”) China China establishment or investment
88
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
Shareholding ratio
Principal place of Business (%)
Name of the Subsidiary Registered place Registered capital Acquisition method
business nature (or similar equity
interest)
Changyu (Shanghai) International Digital
Marketing and Acquired through
Marketing Center Limited Shanghai, China Shanghai, China RMB50,000,000 100 -
sales establishment or investment
(“Digital Marketing”)
Shanghai Changyu Guoqu Digital
Marketing and Acquired through
Technology Co., Ltd. Shanghai, China Shanghai, China RMB6,000,000 - 51
sales establishment or investment
(“Shanghai Guoqu”)(b)
Tianjin Changyu Yixin Digital Technology Marketing and Acquired through
Tianjin, China Tianjin, China RMB10,000,000 - 51
Co., Ltd. (“Tianjin Yixin”)(b) sales establishment or investment
Shanghai Changyu Yixin Digital Technology Marketing and Acquired through
Shanghai, China Shanghai, China RMB10,000,000 - 51
Co., Ltd. (“Shanghai Yixin”)(b) sales establishment or investment
(a) Companies above were deregistered in 2021.
(b) The companies above are newly established companies in 2021.
Reasons for the inconsistency between the proportion of shareholdings in a subsidiary and the proportion of voting rights:
(c) Chateau Changyu is a Sino-foreign joint venture established by the Company and a foreign investor, accounting for 70% of Changyu
Chateau’s equity interest. Through agreement arrangement, the Company has the full power to control Changyu Chateau’s strategic
operating, investing and financing policies. The agreement arrangement will be terminated on 31 December 2022.
(d) AFIP is a limited liability company established by Yantai Dean and Beijing Qinglang. In June 2019, Yantai Dean transferred 1.31% of its
equity to Yantai Changyu.After the equity change, the Company holds 91.53% of its equity. Through agreement arrangement, the
Company has the full power to control AFIP’s strategic operating, investing and financing policies. The agreement arrangement will be
terminated on 2 September 2024.
(e) Golden Icewine Valley is a Sino-foreign joint venture established by the Company and a foreign investor, accounting for 51% of Golden
Icewine Valley’s equity interest. Through agreement arrangement, the Company has the full power to control Golden Icewine Valley’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 85.32% of R&D Centre’s equity interest. Through
agreement arrangement in Note V. 28, the Company has the full power to control R&D Centre’s strategic operating, investing and
financing policies. The agreement arrangement will be terminated on 28 February 2025. As at 31 December 2021, remaining investment
of CADF accounts for 14.68% of the registered capital.
89
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
(2) Material non-wholly owned subsidiaries
Comprehensive
Proportion of
income Dividend declared Balance of non-
ownership
attributable to non- to non-controlling controlling
Name of the Subsidiary interest held by
controlling shareholders interests at the
non-controlling
interests for the during the year end of the year
interests
year
Xinjiang Tianzhu 40% 1,392,110 - (44,725,990)
AFIP 8.47% - - (56,409,393)
Golden Icewine Valley 49% - - (33,319,062)
IWCC 15% (492,609) 1,788,975 (54,712,980)
90
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
(3) Key financial information about material non-wholly owned subsidiaries
The following table sets out the key financial information of the above subsidiaries without offsetting internal transactions, but with
adjustments made for the fair value adjustment at the acquisition date and any differences in accounting policies:
Xinjiang Tianzhu AFIP Golden Icewine Valley Chile Indomita Wine Group
2021 2020 2021 2020 2021 2020 2021 2020
Current assets 22,333,906 24,223,370 249,865,391 248,357,550 24,018,451 27,638,263 196,488,084 231,503,343
Non-current assets 43,852,510 45,465,308 414,851,163 434,045,076 24,450,344 24,246,983 314,756,823 291,345,642
Total assets 66,186,416 69,688,678 664,716,554 682,402,626 48,468,795 51,885,246 511,244,907 522,848,985
Current liabilities (39,567) (17,583) 27,459,352 41,910,462 12,976,418 9,967,686 130,027,677 132,100,755
Non-current liabilities 5,336,114 5,336,115 - - - - 8,906,387 9,794,949
Total liabilities 5,296,547 5,318,532 27,459,352 41,910,462 12,976,418 9,967,686 138,934,064 141,895,704
Operating income - - 191,463,783 168,184,273 24,236,758 20,488,946 226,856,381 225,121,450
Net (loss)/ profit (3,480,276) (3,665,095) 2,326,063 2,092,230 (6,425,183) (7,431,328) 19,716,978 18,196,663
Total comprehensive income (3,480,276) (3,665,095) 2,326,063 2,092,230 (6,425,183) (7,431,328) 3,284,057 18,420,833
Cash flows from operating
(1,292,713) (105,873) (4,754,748) 3,821,964 4,744,413 4,654,744 99,234,532 37,132,027
activities
91
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
VII. Risk related to financial instruments
The Group has exposure to the following main risks from its use of financial instruments in
the normal course of the Group’s operations:
- Credit risk
- Liquidity risk
- Interest rate risk
- Foreign currency risk
The following mainly presents information about the Group’s exposure to each of the above
risks and their sources, their changes during the year, and the Group’s objectives, policies
and processes for measuring and managing risks, and their changes during the year.
The Group aims to seek appropriate balance between the risks and benefits from its use of
financial instruments and to mitigate the adverse effects that the risks of financial instruments
have on the Group’s financial performance. Based on such objectives, the Group’s risk
management policies are established to identify and analyse the risks faced by the Group, to
set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed regularly to reflect changes in market
conditions and the Group’s activities.
1 Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the
other party by failing to discharge an obligation. The Group’s credit risk is primarily
attributable to cash at bank, receivables, debt investments and derivative financial
instruments entered into for hedging purposes. Exposure to these credit risks are monitored
by management on an ongoing basis.
The cash at bank of the Group is mainly held with well-known financial institutions.
Management does not foresee any significant credit risks from these deposits and does not
expect that these financial institutions may default and cause losses to the Group.
As at 31 December 2021, 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. According to the policy of the Group, credit review is
required for clients who require credit transactions. In addition, the Group continuously
monitors the balance of account receivable to ensure there’s no exposure to significant bad
debt risks. 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.
92
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
Since the Group trades only with recognised 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
2021, 42.8% of the Group trade receivables are due from top five customers (31 December
2020: 20.3%). There is no collateral or other credit enhancement on the balance of the trade
receivables of the Group.
2 Liquidity risk
Liquidity risk is the risk that an enterprise will encounter difficulty in meeting obligations that
are settled by delivering cash or another financial asset. The Company and its individual
subsidiaries are responsible for their own cash management, including short-term investment
of cash surpluses and the raising of loans to cover expected cash demands (subject to
approval by the Company’s board when the borrowings exceed certain predetermined
levels). The Group’s policy is to regularly monitor its liquidity requirements and its
compliance with lending covenants, to ensure that it maintains sufficient reserves of cash,
readily realisable marketable securities and adequate committed lines of funding from major
financial institutions to meet its liquidity requirements in the short and longer term.
The following tables set out the remaining contractual maturities at the balance sheet date of
the Group’s financial liabilities, which are based on contractual undiscounted cash flows
(including interest payments computed using contractual rates or, if floating, based on rates
current at the balance sheet date) and the earliest date the Group can be required to pay:
2021 Contractual undiscounted cash flow
Carrying amount
Item More than at balance sheet
Within 1 year or More than
1 to 2 years 2 years but less Total date
on demand 5 years
than 5 years
Short-term loans 630,717,486 - - - 630,717,486 622,066,457
Accounts payable 493,453,816 - - - 493,453,816 493,453,816
Other payables 452,642,025 - - - 452,642,025 452,642,025
Long-term loans (including the
20,586,762 125,114,353 112,380,675 15,506,135 273,587,925 250,567,080
portion due within one year)
Long-term payables (including
the portion due within one 22,810,674 22,546,674 42,322,126 - 87,679,474 86,000,000
year)
Lease liability (including the
19,753,555 17,690,615 39,763,489 75,510,332 152,717,991 116,156,677
portion due within one year)
Total 1,639,964,318 165,351,642 194,466,290 91,016,467 2,090,798,717 2,020,886,055
2020 Contractual undiscounted cash flow
Carrying amount
Item More than at balance sheet
Within 1 year or More than
1 to 2 years 2 years but less Total date
on demand 5 years
than 5 years
Short-term loans 698,571,997 - - - 698,571,997 689,090,715
Accounts payable 484,347,958 - - - 484,347,958 484,347,958
Other payables 386,105,526 - - - 386,105,526 386,105,526
Long-term loans (including the
33,175,345 24,182,478 149,719,792 135,013,150 342,090,765 311,664,858
portion due within one year)
Long-term payables (including
the portion due within one 23,074,674 22,810,674 64,868,800 - 110,754,148 108,000,000
year)
Total 1,625,275,500 46,993,152 214,588,592 135,013,150 2,021,870,394 1,979,209,057
93
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
3 Interest rate risk
Interest-bearing financial instruments at variable rates and at fixed rates expose the Group to
cash flow interest rate risk and fair value interest risk, respectively. The Group determines
the appropriate weightings of the fixed and floating rate interest-bearing instruments based
on the current market conditions and performs regular reviews and monitoring to achieve an
appropriate mix of fixed and floating rate exposure.
(1) As at 31 December, the Group held the following interest-bearing financial instruments:
Fixed rate instruments:
2021 2020
Item Effective interest Effective interest
Amounts Amounts
rate rate
Financial assets
- Cash at bank 1.75% - 2.25% 53,200,000 1.5% - 2.75% 93,553,062
Financial liabilities
- Short-term loans 0.35% - 3.35% (172,066,457) 0.35% - 3.28% (139,090,715)
- Long-term loans (including the
0.95% - 3.28% (193,475,080) 1% - 3.28% (280,414,858)
portion due within one year)
- Long-term payables (including the
1.20% (86,000,000) 1.20% (108,000,000)
portion due within one year)
- Lease liability (including the
4.65% (116,156,677) - -
portion due within one year)
Total (514,498,214) (433,952,511)
Variable rate instruments:
2021 2020
Item Effective interest Effective interest
Amounts Amounts
rate rate
Financial assets
- Cash at bank 0.3% - 1.82% 1,513,824,507 0.3% - 1.0% 1,100,642,230
Financial liabilities
- Short-term loans 1 year LPR 0.005 (450,000,000) 1 year LPR 0.005 (550,000,000)
- Long-term loans (including the 90% of 90% of
(6,250,000) (31,250,000)
portion due within one year) 5 year LPR 5 year LPR
- Long-term loans (including the
BBSY+1.10% (50,842,000) - -
portion due within one year)
Total 1,006,732,507 519,392,230
(2) Sensitivity analysis
Management of the Group believes interest rate risk on bank deposit is not significant,
therefore does not disclose sensitivity analysis for interest rate risk.
94
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
As at 31 December 2021, based on assumptions above, it is estimated that a general
increase of 50 basis points in interest rates, with all other variables held constant, would
decrease the Group’s equity by RMB1,901,595 (2020: RMB2,179,688), and net profit by
RMB1,901,595 (2020: RMB2,179,688).
The sensitivity analysis above indicates the instantaneous change in the net profit and equity
that would arise assuming that the change in interest rates had occurred at the balance
sheet date and had been applied to re-measure those financial instruments held by the
Group which expose the Group to fair value interest rate risk at the balance sheet date. In
respect of the exposure to cash flow interest rate risk arising from floating rate non-derivative
instruments held by the Group at the balance sheet date, the impact on the net profit and
equity is estimated as an annualised impact on interest expense or income of such a change
in interest rates.
4 Foreign currency risk
In respect of cash at bank and on hand, accounts receivable and payable, short-term loans
denominated in foreign currencies other than the functional currency, the Group ensures that
its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot
rates when necessary to address short-term imbalances.
(1) As at 31 December, the Group’s exposure to main currency risk arising from recognised
assets or liabilities denominated in foreign currencies is presented in the following tables.
For presentation purposes, the amounts of the exposure are shown in Renminbi, translated
using the spot rate at the balance sheet date. Differences resulting from the translation of
the financial statements denominated in foreign currency are excluded.
2021 2020
Balance at Balance at RMB Balance at Balance at RMB
foreign currency equivalent foreign currency equivalent
Cash at bank and on hand 2,090,539 13,406,984 2,029,849 14,053,435
- USD 1,984,323 12,640,136 1,492,923 9,744,604
- EUR 106,216 766,848 536,926 4,308,831
Short-term loans 15,490,000 98,759,593 12,490,000 81,524,728
- USD 15,490,000 98,759,593 12,490,000 81,524,728
(2) The following are the exchange rates for Renminbi against foreign currencies applied by the
Group:
Balance sheet date
Average rate
mid-spot rate
2021 2020 2021 2020
USD 6.4512 6.8884 6.3757 6.5272
EUR 7.6186 7.9065 7.2197 8.0250
95
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
(3) Sensitivity analysis
Assuming all other risk variables remained constant, a 5% strengthening of the Renminbi
against the US dollar and Euro dollar at 31 December would have impact on the Group’s
equity and net profit by the amount shown below. whose effect is in Renminbi and translated
using the spot rate at the year-end date:
Equity Net profit
31 December 2021
USD 4,305,973 4,305,973
EUR (38,342) (38,342)
Total 4,267,631 4,267,631
31 December 2020
USD 3,589,006 3,589,006
EUR (215,442) (215,442)
Total 3,373,564 3,373,564
A 5% weakening of the Renminbi against the US dollar and Euro dollar at 31 December
would have had the equal but opposite effect to the amounts shown above, on the basis that
all other variables remained constant.
VIII. Fair value disclosure
All financial assets and financial liabilities held by the Group are carried at amounts not
materially different from their fair value at 31 December 2021 and 31 December 2020.
96
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
IX. Related parties and related party transactions
1 Information about the parent of the Company
Registered Shareholding Percentage of Ultimate controlling party of the
Company name Business nature Registered capital
place percentage (%) voting rights (%) Company
Jointly controlled by Yantai GuoFeng
Investment Holding Ltd, ILLVA
SARONNO HOLDING SPA,
Changyu Group Yantai Manufacturing 50,000,000 50.4% 50.4%
International Finance Corporation and
Yantai Yuhua Investment and
Development Company Limited.
There are no changes on the registered capital and shareholding percentage/percentage of voting rights of the parent company.
Page 97
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
2 Information about the subsidiaries of the Company
For information about the subsidiaries of the Company, refer to Note VI.1.
3 Information on other related parties
Name of other related parties Related party relationship
Yantai Shenma Packaging Co., Ltd. Controlled by the same parent
(“Shenma Packaging”) company
Yantai Zhongya Pharmaceutical Tonic Wine Co., Ltd. Controlled by the same parent
(“Zhongya Pharmaceutical”) company
WEMISS Shanghai Associate of the Group
Chengdu Yufeng Associate of the Group
Mirefleurs Subsidiaries of the joint venture
CHATEAU DE LIVERSAN (“LIVERSAN”) Subsidiaries of the joint venture
4 Transactions with related parties
(1) Product procurement
Related parties Nature of transaction 2021 2020
Shenma Packaging Product procurement 80,754,599 78,520,694
Zhongya Pharmaceutical Product procurement 591,522 850,478
Mirefleurs Product procurement 6,822,330 9,261,722
LIVERSAN Product procurement 3,269,146 3,746,069
Total 91,437,597 92,378,963
(2) Sales of goods
Related parties Nature of transaction 2021 2020
Zhongya Pharmaceutical Sales of goods 3,872,660 3,920,047
WEMISS Shanghai Sales of goods 2,677,707 1,374,616
Chengdu Yufeng Sales of goods 5,365,061 -
Shenma Packaging Sales of goods 287,930 293,488
Total 12,203,358 5,588,151
(3) Services
Related parties Nature of transaction 2021 2020
Shenma Packaging Services - 106,195
Total - 106,195
Page 98
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
(4) Purchase of fixed assets
Related parties of the Company Nature of transaction 2021 2020
Purchase of fixed
Shenma Packaging 4,101,232 -
assets
Total 4,101,232 -
(5) Sale of fixed assets
Related parties of the Company Nature of transaction 2021 2020
Changyu Group Sale of fixed assets - 44,845,989
Total - 44,845,989
(6) Leases
(a) As the lessor
Lease income Lease income
Name of lessee Type of assets leased
recognised in 2021 recognised in 2020
Shenma Packaging Offices and plants 1,492,550 1,492,550
Zhongya Pharmaceutical Offices and plants 522,936 522,936
Total 2,015,486 2,015,486
(b) As the lessee
Type of assets Lease expense Lease expense
Name of lessor
leased recognised in 2021 recognised in 2020
Changyu Group Office buildings 1,612,118 1,612,118
Changyu Group Offices and plants 1,394,762 1,394,762
Changyu Group Offices and plants 4,184,286 4,184,286
Offices and
Changyu Group 7,057,143 1,050,000
commercial building
Changyu Group Office buildings - 714,286
Total 14,248,309 8,955,452
(7) Remuneration of key management personnel
Item 2021 2020
Remuneration of key management personnel 12,495,933 6,975,110
(8) Other related party transactions
Related parties Nature of transaction Note 2021 2020
Changyu Group Royalty (a) 24,763,872 21,985,068
Transfer of trademark use
Changyu Group
rights
(b) - 18,334,528
Transfer of Culture
Changyu Group
Development
- 89,519,789
Zhongya Equity transfer of Changyu
Pharmaceutical Museum
- 1,033,912
Page 99
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
(a) Contract of trademarks usage
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. The license is effective until the
expiry of the registration of the trademarks.
According to the above royalty agreement, Changyu Group collected a total of
RMB576,507,809 for royalty from 2013 to 2019, of which 51% was used to promote
trademarks such as Changyu and the product of this contract, totalling
RMB294,018,093. The amount is used for promotion of Changyu and other
trademarks and the products of this contract, totalling RMB62,250,368, the difference is
RMB231,768,615(tax inclusive).
On 18 May 2019, the general meeting of shareholders approved the proposal of the
amendment to the royalty agreement. Article 6.1 of the royalty agreement with
Changyu Group was amended to: During the validity period of this contract, the Group
pays Changyu Group royalty on an annual basis. The royalty is calculated based on
0.98% of the sales volume of the Group ‘s contract products using this trademark. The
article 6.3 is amended to: The royalty paid to the Changyu Group by the Group shall
not be used to promote this trademark and the contract products.
In addition, in accordance with agreement the Group signed with Changyu Group in
November 2019, Changyu Group promised to offset the difference of RMB231,768,615
above with the royalty for four years, i.e. from 2019 to 2022.If it is not sufficient for
deduction, the rest will be repaid in a one-off manner in 2023. If there is surplus, the
surplus part of the royalty will be charged from the year when the surplus occurs.
The Group incurred a trademark usage fee of RMB24,763,872 this year.
(b) Transfer of trademark use rights
On 22 April 2020, the Fourth Meeting of the Eighth Board of Directors of the Group
reviewed and approved the Proposal on Transferring the “KOYA” and Other
Trademarks of Yantai Changyu Group Co., Ltd.. On 16 June 2020, the Group and
Changyu Group signed the Trademark Transfer Agreement to transfer the ownership of
43 trademarks owned by Changyu Group, including KOYA, ZENITHWIRL, FRANLLET,
WEMISS and PIONEER at an estimated price of RMB19,434,600 (tax inclusive).
Page 100
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
5 Receivables from and payables to related parties
Receivables from related parties
2021 2020
Provision for Provision for
Item Related party
Book value bad and Book value bad and
doubtful debts doubtful debts
Zhongya
Accounts receivable 287,788 956 714,995 3,175
Pharmaceutical
WEMISS
Accounts receivable - - 1,553,316 6,898
Shanghai
Shenma
Prepayments - - 126,818 -
Packaging
Other non-current assets Changyu Group 144,120,442 - 170,370,147 -
Shenma
Other receivables 341,880 - - -
Packaging
Zhongya
Other receivables - - 522,936 -
Pharmaceutical
Payables to related parties
Item Related party 2021 2020
Accounts payable Shenma Packaging 30,184,072 33,421,165
Accounts payable Zhongya
Pharmaceutical
- 455,176
Accounts payable Chengdu Yufeng 344,464 -
Accounts payable Changyu Group 19,434,600 19,434,600
Zhongya
Contract liability 653 -
Pharmaceutical
Other payables Shenma Packaging - 450,000
X. Capital management
The Group’s primary objectives when managing capital are to safeguard its ability to continue
as a going concern, so that it can continue to provide returns for shareholders, by pricing
products and services commensurately with the level of risk and by securing access to
finance at a reasonable cost.
The Group’s capital structure is regularly reviewed and managed to achieve an optimal
structure and return for shareholders. Factors for the Group’s consideration include: its
future funding requirements, capital efficiency, actual and expected profitability, expected
cash flows, and expected capital expenditure. Adjustments are made to the capital structure
in light of changes in economic conditions affecting the Group.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital
requirements.
Page 101
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
XI. Commitments and contingencies
1 Significant commitment
(1) Capital commitments
Item 2021 2020
Long-term assets acquisition commitment 84,963,700 249,379,500
Total 84,963,700 249,379,500
(2) Operating lease commitments
As at 31 December, the total future minimum lease payments under non-cancellable
operating leases of the Group’s properties were payable as follows:
Item 2021 2020
Within 1 year (inclusive) 651,000 24,076,000
Over 1 year but within 2 years (inclusive) - 17,735,000
Over 2 years but within 3 years (inclusive) - 15,564,000
Over 3 years - 106,278,000
Total 651,000 163,653,000
2 Contingencies
The Group do not have any significant contingencies as at balance sheet date.
XII. Subsequent events
Distribution of dividends on ordinary shares approved after the balance sheet date
According to the proposal of the Board of Directors on 25 April 2022, the Company intends to
distribute cash dividend totaling RMB308,458,800 to all shareholders of 685,464,000 capital
shares for the year ended 31 December 2021 on the basis of RMB4.5 (including tax) for
every 10 shares. The proposal is subject to the approval by the Shareholders’ meeting. This
distribution of profit in cash has not been recognised as a liability at the balance sheet date.
XIII. Other significant items
1 Segment reporting
The Group is principally engaged in the production and sales of wine, brandy, and sparkling
wine in China, France, Spain, Chile and Australia. In accordance with the Group’s internal
organisation structure, management requirements and internal reporting system, the Group’s
operation is divided into five parts: China, Spain, France, Chile and Australia. The
management periodically evaluates segment results, in order to allocate resources and
evaluate performances. In 2021, over 87% of revenue, more than 94% of profit and over
92% of non-current assets derived from China/are located in China. Therefore, the Group
does not need to disclose additional segment report information.
Page 102
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
XIV. Notes to the Company’s financial statements
1 Bills receivable
Classification of bills receivable
Item 2021 2020
Bank acceptance bills 9,800,000 -
Total 9,800,000 -
All of the above bills are due within one year.
2 Receivables under financing
Item Note 2021 2020
Bills receivable (1) 62,411,636 13,920,000
Total 62,411,636 13,920,000
(1) The pledged bills receivable of the Company at the end of the year
As at 31 December 2021, there was no pledged bills receivable (31 December 2020: Nil).
(2) Outstanding derecognised endorsed bills that have not matured at the end of the year
Amount
Item derecognised at
year end
Bank acceptance bills 65,893,889
Total 65,893,889
As at 31 December 2021, derecognised bills endorsed by the Company to other parties
which are not yet due at the end of the period is RMB65,893,889 (31 December 2020:
RMB49,849,895). The notes are used for payment to suppliers. The Company 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 Company
would undertake limited liability for the notes.
3 Other receivables
31 December 31 December
Note
2021 2020
Dividends receivable (1) - 200,000,000
Others (2) 398,072,976 380,131,798
Total 398,072,976 580,131,798
(1) Dividends receivable
31 December 31 December
Item
2021 2020
Dividends to subsidiaries - 200,000,000
Total - 200,000,000
Page 103
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
(2) Others
(a) Others by customer type:
31 December 31 December
Customer type
2021 2020
Amounts due from subsidiaries 397,998,281 379,375,427
Amounts due from related parties - 522,936
Others 74,695 233,435
Sub-total 398,072,976 380,131,798
Less: Provision for bad and doubtful debts - -
Total 398,072,976 380,131,798
(b) The ageing analysis is as follows:
Ageing 2021 2020
Within 1 year (inclusive) 397,936,651 378,307,160
Over 1 year but within 2 years (inclusive) 11,853 1,804,638
Over 2 years but within 3 years (inclusive) 104,472 -
Over 3 years 20,000 20,000
Sub-total 398,072,976 380,131,798
Less: Provision for bad and doubtful debts - -
Total 398,072,976 380,131,798
The ageing is counted starting from the date when other receivables are recognised.
(c) Others by method of provisioning
2021 2020
Provision for bad and doubtful Provision for bad and doubtful
Book value Book value
debts Carrying debts Carrying
Category
Percentage Percentage amount Percentage Percentage amount
Amount Amount Amount Amount
(%) (%) (%) (%)
Individual
assessment
- Total other
- - - - - - - - - -
receivables
Collective
assessment
- Amounts due
from 397,998,281 99.98 - - 397,998,281 379,375,427 99.80 - - 379,375,427
subsidiaries
- Amounts due
from related - - - - - 522,936 0.14 - - 522,936
parties
- Amounts due
from third 74,695 0.02 - - 74,695 233,435 0.06 - - 233,435
parties
Total 398,072,976 100.00 - - 398,072,976 380,131,798 100.00 - - 380,131,798
(d) Movements of provisions for bad and doubtful debts
As at 31 December 2021, no bad and doubtful debt provision was made for other
receivables (31 December 2020: Nil).
As at 31 December 2021, the Company has no other receivables written off (31
December 2020: Nil).
Page 104
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
(e) Others categorised by nature
Nature of other receivables 2021 2020
Amounts due from subsidiaries 397,998,281 379,375,427
Amounts due from related parties - 522,936
Others 74,695 233,435
Sub-total 398,072,976 380,131,798
Less: Provision for bad and doubtful debts - -
Total 398,072,976 380,131,798
(f) Five largest others-by debtor at the end of the year
Ending balance
Percentage of
Nature of the Balance at the of provision for
Debtor Ageing ending balance
receivable end of the year bad and doubtful
of others (%)
debts
Amounts due
Sales Company 113,621,178 Within 1 year 28.5 -
from subsidiaries
Amounts due
R&D Centre 36,611,978 Within 1 year 9.2 -
from subsidiaries
Amounts due
Digital Marketing 14,925,497 Within 1 year 3.7 -
from subsidiaries
Amounts due
Chateau KOYA 1,458,255 Within 1 year 0.4 -
from subsidiaries
Amounts due
Chateau Changyu 419,481 Within 1 year 0.1 -
from subsidiaries
Total 167,036,389 41.9 -
4 Long-term equity investments
(1) Long-term equity investments by category:
2021 2020
Item Provision for Carrying Provision for Carrying
Book value Book value
impairment amount impairment amount
Investments in
7,593,535,027 - 7,593,535,027 7,593,535,027 - 7,593,535,027
subsidiaries
Investments in
5,886,467 - 5,886,467 6,243,853 - 6,243,853
associates
Total 7,599,421,494 - 7,599,421,494 7,599,778,880 - 7,599,778,880
Page 105
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
(2) Investments in subsidiaries:
Balance at the
Additions during Decrease during Balance at the
Subsidiary beginning of
the year the year end of the year
the year
Xinjiang Tianzhu 60,000,000 - - 60,000,000
Kylin Packaging 23,176,063 - - 23,176,063
Chateau Changyu 28,968,100 - - 28,968,100
Pioneer International 3,500,000 - - 3,500,000
Ningxia Growing 36,573,247 - - 36,573,247
National Wines 2,000,000 - - 2,000,000
Golden Icewine Valley 30,440,500 - - 30,440,500
Chateau Beijing 588,389,444 - - 588,389,444
Sales Company 7,200,000 - - 7,200,000
Langfang Sales 100,000 - - 100,000
Langfang Castel 19,835,730 - - 19,835,730
Wine Sales 4,500,000 - - 4,500,000
Shanghai Marketing 1,000,000 - - 1,000,000
Beijing Sales 850,000 - - 850,000
Jingyang Sales 100,000 - - 100,000
Jingyang Wine 900,000 - - 900,000
Ningxia Wine 222,309,388 - - 222,309,388
Chateau Ningxia 453,463,500 - - 453,463,500
Chateau Tinlot 212,039,586 - - 212,039,586
Chateau Shihezi 812,019,770 - - 812,019,770
Chateau Changan 803,892,258 - - 803,892,258
R&D Centre 3,288,906,445 - - 3,288,906,445
Huanren Wine 22,200,000 - - 22,200,000
Wine Sales Company 5,000,000 - - 5,000,000
Francs Champs 236,025,404 - - 236,025,404
Dicot 233,142,269 - - 233,142,269
Chile Indomita Wine Group 274,248,114 - - 274,248,114
Australia Kilikanoon Estate 129,275,639 - - 129,275,639
Digital Marketing 1,000,000 - - 1,000,000
Culture Development 92,479,570 - - 92,479,570
Total 7,593,535,027 - - 7,593,535,027
For information about the subsidiaries of the Company, refer to Note VI.
(3) Investments in associates:
Balance at the
Additions during Decrease during Balance at the
Subsidiary beginning of the
the year the year end of the year
year
WEMISS Shanghai 2,743,890 - (377,079) 2,366,811
Yantai Santai Real Estate
3,499,963 19,693 - 3,519,656
Development Co., Ltd
Total 6,243,853 19,693 (377,079) 5,886,467
Page 106
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
5 Operating income and operating costs
2021 2020
Item
Income Cost Income Cost
Principal activities 576,706,055 470,719,232 510,205,498 450,876,445
Other operating activities 2,189,747 1,439,506 2,098,055 1,492,067
Total 578,895,802 472,158,738 512,303,553 452,368,512
Including:Revenue from contracts
576,706,055 470,719,232 510,205,498 450,876,445
with customers
Rent income 2,189,747 1,439,506 2,098,055 1,492,067
(1) Disaggregation of revenue from contracts with customers:
Type of contract 2021 2020
By type of goods or services
- Liquor 576,706,055 510,205,498
By timing of transferring goods or services
- Revenue recognised at a point in time 576,706,055 510,205,498
6 Investment income
Item 2021 2020
Income from long-term equity investments
867,880,564 449,760,868
accounted for using cost method
Loss from long-term equity investments accounted
(357,386) (256,147)
for using equity method
Total 867,523,178 449,504,721
Page 107
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
7 Transactions with related parties
(1) Product procurement
Related parties Nature of transaction 2021 2020
Subsidiary of the parent
Product procurement 117,808,977 107,663,061
company
Other related parties of the
Product procurement 30,002,566 36,249,251
Company
Total 147,811,543 143,912,312
(2) Sales of goods
Related parties Nature of transaction 2021 2020
Subsidiary of the parent
Sales of goods 576,708,399 504,080,073
company
Other related parties of the
Sales of goods 3,017,548 2,952,493
Company
Total 579,725,947 507,032,566
(3) Guarantee
The Company as the guarantor
Amount of Inception date of Maturity date of Guarantee
Guarantee holder Currency
guarantee guarantee guarantee expired (Y/N)
R&D Centre RMB 500,000,000 08 March 2017 08 March 2022 N
Australia Kilikanoon
AUD 25,000,000 13 December 2018 13 December 2023 N
Estate
(4) Leases
(a) As the lessor
Lease income Lease income
Name of lessee Type of assets leased
recognised in 2021 recognised in 2020
Other related parties of
Offices and plants 2,015,486 2,015,486
the Company
Subsidiary of the parent
Offices buildings 85,714 82,569
company
Total 2,101,200 2,098,055
(b) As the lessee
Lease expense Lease expense
Name of lessor Type of assets leased
recognised in 2021 recognised in 2020
Other related parties of
Office buildings 1,394,762 1,394,762
the Company
Total Office buildings 1,394,762 1,394,762
Page 108
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
(5) Other related party transactions
Related parties Nature of transaction 2021 2020
Transfer of trademark
Changyu Group - 18,334,528
use rights
Transfer of Culture
Changyu Group - 89,519,789
Development
8 Receivables from and payables to related parties
Receivables from related parties
2021 2020
Provision for Provision for
Item Related party
Book value bad and Book value bad and
doubtful debts doubtful debts
Other related parties
Prepayments - - 126,818 -
of the Company
Subsidiary of the
Other receivables 397,998,281 - 379,375,427 -
parent company
Other related parties
Other receivables - - 522,936 -
of the Company
Subsidiary of the
Other non-current assets 2,023,500,000 - 1,530,700,000 -
parent company
Payables to related parties
Item Related party 2021 2020
Other related parties of
Accounts payable 28,014,000 29,634,723
the Company
Subsidiary of the
Other payables 362,651,747 319,936,973
parent company
Other related parties of
Other payables - 450,000
the Company
XV. Non-recurring profit and loss statement in 2021
Item Amount
(1) Profit and loss from disposal of non-current assets (15,364,993)
Government grants recognised through profit or loss (excluding those
(2) having close relationships with the Group’s operation and enjoyed in 48,240,741
fixed amount or quantity according to uniform national standard)
(3) Other non-operating income and expenses besides items above 2,328,169
Sub-total 35,203,917
(4) Tax effect (7,306,787)
(5) Effect on non-controlling interests after taxation (30,486)
Total 27,866,644
Note 1: Extraordinary gain and loss items (1) to (3) listed above are presented in the amount
before taxation.
Page 109
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
XVI. Return on net assets and earnings per share
1 Calculation of earnings per share
(1) Basic earnings per share
For calculation of the basic earnings per share, please refer to Note V.49.
(2) Basic earnings per share excluding extraordinary gain and loss
Basic earnings per share excluding extraordinary gain and loss is calculated as dividing
consolidated net profit excluding extraordinary gain and loss attributable to ordinary
shareholders of the Company by the weighted average number of ordinary shares
outstanding:
2021 2020
Consolidated net profit attributable to ordinary
500,102,606 470,860,587
shareholders of the Company
Extraordinary gains and losses attributable to
27,866,644 73,205,400
ordinary shareholders of the Company
Consolidated net profit excluding extraordinary gain
and loss attributable to the Company’s ordinary 472,235,962 397,655,187
equity shareholders
Weighted average number of ordinary shares
685,464,000 685,464,000
outstanding
Basic earnings per share excluding extraordinary
0.69 0.58
gain and loss (RMB/share)
(3) Diluted earnings per share
During the reporting period, the Company did not have dilutive potential ordinary shares.
2 Calculation of weighted average return on net assets
(1) Weighted average return on net assets
Weighted average return on net assets is calculated as dividing consolidated net profit
attributable to ordinary shareholders of the Company by the weighted average amount of
consolidated net assets:
2021 2020
Consolidated net profit attributable to ordinary
500,102,606 470,860,587
shareholders of the Company
Weighted average amount of consolidated net
10,329,718,533 10,304,733,743
assets
Weighted average return on net assets 4.84% 4.57%
Page 110
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2021
Calculation of weighted average amount of consolidated net assets is as follows:
2021 2020
Consolidated net assets at the beginning of the
10,267,832,644 10,402,248,821
year
Impact of changes in accounting policies (10,582,161) -
Business combination involving entities under
- (37,299,912)
common control
Effect of consolidated net profit attributable to
232,409,650 237,836,150
ordinary shareholders of the Company
The impact of the purchase of minority
- (8,046,940)
shareholders’ equity
Effect of shares repurchased (Note V.36) (159,941,600) (290,004,376)
Weighted average amount of consolidated net
10,329,718,533 10,304,733,743
assets
(2) Weighted average return on net assets excluding extraordinary gain and loss
Weighted average return on net assets excluding extraordinary gain and loss is calculated as
dividing consolidated net profit excluding extraordinary gain and loss attributable to ordinary
shareholders of the Company by the weighted average amount of consolidated net assets:
2021 2020
Consolidated net profit excluding extraordinary gain
and loss attributable to the Company’s ordinary 472,235,962 397,655,187
equity shareholders
Weighted average amount of consolidated net
10,329,718,533 10,243,190,738
assets (Note)
Weighted average return on net assets excluding
4.57% 3.88%
extraordinary gain and loss
Note: When a business combination under common control occurs during the reporting
period, the net assets of the combining party shall be weighted from the month
following the acquisition date when calculating the weighted average return on net
assets after deducting non-recurring gains and losses. When calculating the
weighted average return on net assets after deducting non-recurring gains and losses
during the comparative period, the net assets of the combining party shall not be
weighted.
Page 111
