YANTAI CHANGYU PIONEER
WINE COMPANY LIMITED
2009 Semi-annual Report
2009.08.082
Important
The Directors ， supervisors of the Company collectively and
individually, and all the senior managers accept full responsibility for
the truthfulness, accuracy and completeness of the information
contained in this report and confirm that to the best of their
knowledge and belief there are no other facts the omission of which
would make any statement herein misleading.
Director Mr. Ju Guoyu didn’t attend the meeting because of the official
business and entrusted Mr. Geng Zhaolin on his behalf to attend the
meeting and cast votes.
The 2009 Semi-annual Financial Report has not been audited.
The chairman of the Board of Directors Mr. Sun Liqiang, the
accounting director Mr. Leng Bin and the finance principal Mr. Jiang
Jianxun assure the truth and integrity of the financial and
accounting statement in this semi-annual report.
The report is respectively written in both Chinese and English. If
there are any discrepancies between the two versions, the Chinese
version should prevail.3
Contents
1. THE BASIC INFORMATION OF THE COMPANY……………………….………………. 5
1.1 BRIEF INTRODUCTION TO THE COMPANY………………………………………………………. 5
1.2 THE MAIN ACCOUNTING AND FINANCIAL INFORMATION……………………..……… 6
2. CHANGES IN SHARE CAPITAL AND SUBSTANTIAL SHAREHOLDERS... 7
2.1 THE CHANGES IN SHARE CAPITAL…………………………………………..………. 7
2.2 THE TOTAL SHAREHOLDERS AND THE INFORMATION OF THE TOP TEN
SHAREHOLDERS AT THE END OF REPORT PERIOD…………………………………………
8
2.3 THE LIMITED SHARE HOLDING BY THE TOP TEN SHAREHOLDERS AND
LIMITATED CONDITIONS......................................................... ..... .....
9
2.4 THE CHANGES OF THE CONTROLLING SHAREHOLDER AND ACTUAL
CONTROLLER…………………………………………………………………………........................
9
3.
THE INTRODUCTION OF THE DIRECTORS, SUPERVISORS AND
SENIOR MANAGEMENT TEAM…………………………………….………………..
10
3.1
THE CHANGES ON SHARE HOLDING BY THE DIRECTORS, SUPERVISORS
AND SENIOR MANAGEMENT TEAM…………………………….…………….…………….………
10
3.2
THE APPOINTMENT INFORMATION OF THE DIRECTORS, SUPERVISORS AND
SENIOR MANAGEMENT TEAM…………………………………….…………………………………….
11
4. THE BOARD OF DIRECTORS’ REPORT….………………………………………. 11
4.1 THE ANALYSIS AND DISCUSSION ON THE BUSINESS SITUATION …………….. 11
4.2 MAIN BUSINESS SITUATION DURING THE REPORT PERIOD………………………… 12
4.3 INVESTMENT INFORMATION………………………………..……………………………………….. 14
4.4 THE ADJUSTMENT FOR THE BUSINESS PLAN……………………………………………….. 15
4.5 THE AUDIT OF THE FINANCIAL REPORT………………………………………………………… 15
5. MATERIAL EVENTS……………………………..…………………………………….. 15
5.1 THE ADMINISTRATION AND RECTIFYING SITUATION OF THE COMPANY……… 15
5.2
THE EXECUTION OF THE SCHEME ON THE COMPANY’S PROFIT
DISTRIBUTION AND TRANSFER OF PUBLIC ACCUMULATION FUND TO
SHARE CAPITAL…………………………………………………………………………………………………
16
5.3 THE PRELIMINARY PLAN ON PROFIT DISTRIBUTION FOR FIRST HALF OF
2009…………………………………………………………………………………………………………………
16
5.4 THE MATERIAL LITIGATION AND ARBITRATION………………………………………..…… 16
5.5 THE MATERIAL ACQUISITION , SALE AND MERGER ON ASSETS………………….. 17
5.6 MATERIAL RELATED PARTY TRANSACTON………………………………………………………. 17
5.7 MATERIAL CONTRACT AND ITS EXECUTION…………………………………………………… 174
5.8 MATERIAL WARRANTY………………………………………………………………………………………. 17
5.9 UNDERTAKING EVENTS OF THE COMPANY AND SHAREHOLDERS HOLDING
5% OR MORE SHARES OF THE COMPANY………………………………………………………
18
5.10 PUNISHMENT RECORDS…………………………………………..……………………………………… 18
5.11 OTHER MAJOR ISSUES, THE ANALYSIS AND EXPLANATION ON RELATED
INFLUENCE AND SOLUTIONS…………………………………………………………………………
18
5.12 THE PROPOSAL OR EXECUTION OF SHARE INCREASING BY
SHAREHOLDERS WITH 30% MORE SHARES DURING REPORT PERIOD………..
19
5.13 THE INFORMATION OF COMPENSATION FROM PARTY CONCERNED TO THE
EARNING PROMISED BY THE COMPANY FOR SHARE EQUITY REFORM AND
MAJOR ASSETS MERGER ETC…………………………………………………………………………..
19
5.14 THE RECEPTION OF INVESTIGATION, VISIT AND COMMUNICATION…………… 19
5.15 THE INDEX ON INFORMATION DISCLOSURE OF THE COMPANY …………………… 20
5.16 OTHER MAJOR ISSUES WITH GREAT INFLUENCE TO THE COMPANY DURING
THE REPORT …………………………………………………………………………………
21
6. FINANCIAL REPORT………………………………………………………………….. 22
6.1 CONSOLIDATED AND PARENT COMPANY’S BALANCE SHEET………………………… 22
6.2 CONSOLIDATED AND PARENT COMPANY’S INCOME STATEMENT………………. 24
6.3 CONSOLIDATED AND PARENT COMPANY’S CASH FLOW STATEMENT……………. 25
6.4 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY………………………... 27
6.5 PARENT COMPANY’S STATEMENT OF EQUITY CHANGES……………….. 30
7. DOCUMENTS AVAILABLE FOR INSPECTION………………………………….. 885
1. THE BASIC INFORMATION OF THE COMPANY
1.1 BRIEF INTRODUCTION TO THE COMPANY
Legal Name in Chinese: 烟台张裕葡萄酿酒股份有限公司
Legal Name in English: Yantai Changyu Pioneer Wine Company Limited
Abbreviation for the English Name: Changyu
Place of listing of the Shares: Shenzhen Stock Exchange
Abbreviation of the Shares: Changyu A, Changyu B
Code Number of the Shares: 000869, 200869
Registered Address: 56, Dama Road, Yantai City, Shandong Province, the PRC
Office Address: 56, Dama Road, Yantai City, Shandong Province, the PRC
Postal Code: 264000
Web Site: http://www.changyu.com.cn
E-Mail: webmaster@changyu.com.cn
Legal Representative: Sun Liqiang
Secretary to the Board of Directors: Qu Weimin
Contact Address: 56, Dama Road, Yantai City, Shandong Province, the PRC
Telephone: 0086-535-6633658
Fax: 0086-535-6633639
E-Mail: quwm@changyu.com.cn
Authorized Representative of the Securities Affairs: Li Tingguo
Contact Address: 56, Dama Road, Yantai City, Shandong Province, the PRC
Telephone: 0086-535-6633656
Fax: 0086-535-6633639
E-Mail: stock@changyu.com.cn
The newspapers in which the Company’s information is disclosed: “China
Securities News”, “Securities Times” in the PRC and “Hong Kong Commercial
Daily” outside the PRC.
Web Site for carrying the report: http://www.cninfo.com.cn
Semi-Annual Report kept at: Secretary department to the Board of Directors
Other relative information:
The first registration date: September 18, 1997
The original place of registration: the Business Administration Bureau of
Shandong Province
The registration amendment date: June 23, 2006
The registration amendment place: the Business Administration Bureau of
Shandong Province
The business license number: 3700001806012
The registration number of state revenue: 37060216500338-1
The registration number of local revenue: 370601267100035
The international accountant appointed by the Company: Ernst & Young Hua
Ming Certified Accounts Company Limited
Office address: Ernst & Young Building, 1 East Changan Street, Dong Cheng
District, Beijing
The Chinese accountant appointed by the Company: Ernst & Young Hua Ming6
Certified Accounts Company Limited
Office address: Ernst & Young Building, 1 East Changan Street, Dong Cheng
District, Beijing
1.2 THE MAIN ACCOUNTING AND FINANCIAL INFORMATION
1.2.1 Main accountant and Financial data
Unit: CNY
At the end of the
report period
at the end of last
year
More or less
(%)
Total assets 3,878,210,216 4,060,932,580 -4.50
Total shareholders’ equity 2,366,132,461 2,543,633,170 -6.98
Net assets value per share
attributed to shareholders of
listed company (CNY)
4.49 4.82 -6.85
At the report
period (Jan.—June)
the same period
of last year
more or less
(%)
Business profit 597,531,527 515,855,174 15.83
Total profit 605,909,928 516,024,238 17.42
Net profit 455,235,291 398,804,486 14.15
Net profit after irregular
profit & loss
449,021,486 397,236,504 13.04
Basic earnings per
share (CNY)
0.86 0.76
13.16
Diluted earnings per
share (CNY)
0.86 0.76
13.16
Return on net assets (%) 19.24 19.47 -0.23
Net cash flows from
operating activities
715,509,702 753,091,367 -4.99
Net cash flows per
share from
operating activities
1.36 1.43 -4.90
1.2.2 The items and involved amount of the irregular profit and loss
Item Unit:CNY
Net profit attributed to common shareholders of the Company 455,235,291
Add (less): item of irregular profit and loss
Profit and loss on disposal of non-liquid assets
Investment income
Net income from other non-business activities (8,378,401)
Effect index for the income tax of irregular profit and loss 2,094,600
Net profit after deducting the irregular profit and loss 448,951,490
Subtract : effect index for irregular profit and loss attributed to
minority shareholders
Net profit attributed to common shareholders of the
Company after deducting irregular profit and loss 449，021，486
1.2.3 Differences between the PRC Accounting Standards and the
International Accounting Standards
During the report period, there are no dealings or issues happened because of7
the difference between the PRC accounting standards and the inernational
accounting standards. The net profit and net asset is calculated to be the
same under the PRC accounting standards and the inernational accounting
standards.
2. CHANGES IN SHARE CAPITAL AND SUBSTANTIAL SHAREHOLDERS
2.1 Changes in Share Capital
Unit: ’0000Share
Before this change Change After this change
Amount Percentage Allot
new
share
Distribut
e bonus
share
Transfer
other
capital to
share
capital
others
Sub
total
Amount Percent
age
Limited
Shares
26575 50.40 -2636 -2636 23939 45.40
1.State share
2.State legal
person share
3.Other
domestic
corporate
share
26575 50.40 -2636 -2636 23939 45.40
Including:
Domestic
legal person
share
26575 50.40 -2636 -2636 23939 45.40
Domestic
natural
person share
4.Foreigner-h
eld share
Including:
Overseas
legal person
share
Overseas
natural
person share
Unlimited
Shares
26153 49.60 +2636 +2636 26789 54.60
1.CNY
common
share
8305 15.75 +2636 +2636 10941 20.75
2.Foreign
share listed in
PRC
17848 33.85 17848 33.85
3.Foreign
share listed
overseas
4.others
Total shares 52728 100 52728 1008
2.2 The total shareholders and the information of the top 10
shareholders at the end of report period
Total number at the end of report period The Company had 15,058 shareholders. There were 9,047
shareholders with A shares, and 6,011 shareholders with B
shares
The top 10 shareholders
Name of Shareholders The character
Of the
shareholders
Percentage
(%)
Number of
shares
Number of
limited shares
Lien or
frozen
shares
YANTAI CHANGYU GROUP
COMPANY LIMITED
A share 50.40 265,749,120 239,385,120 0
HTHK/CMG FSGUFP-CMG
FIRST STATE CHINA GROWTH
FD
B share 4.27 22,498,466
0 0
GAO-LING FUND, L.P. B share 2.74 14,467,301 0 0
BBH BOS S/A FIDELITY
FD-CHINA FOCUS FD
B share 1.40 7,399,747 0 0
HUITIANFU
BALANCED-DEVELOPING
SECURITES-ORIENTED
CAPITAL FUND
A share 1.01 5,351,416
0 0
HUITIANFU
DEVELOPING-FOCUS
SECURITES-ORIENTED
CAPITAL FUND
A share 0.98 5,179,882
0 0
JF ASIA DOMESTIC
OPPORTUNITIES FUND
B share 0.97 5,109,983 0 0
GOVERNMENT OF
SINGAPORE INV. CORP. –A/C
“C”
B share 0.91 4,780,502
0 0
TAIKANG LIFE CO.,LTD. A share 0.78 4,112,075 0 0
MIRAE ASSET CHINA
SOLOMON EQUITY
INVESTMENT TRUST 1
B share 0.76 4,012,950
0 0
The share holding of top 10 unlimited shareholders
shareholders Number of unlimited shares Share Type
YANTAI CHANGYU GROUP CO.,LTD. 26,364,000 A share
HTHK/CMG FSGUFP-CMG FIRST STATE CHINA GROWTH FD 22,498,466 B share
GAO-LING FUND, L.P. 14,467,301 B share
BBH BOS S/A FIDELITY FD-CHINA FOCUS FD 7,399,747 B share
HUITIANFU BALANCED-DEVELOPING SECURITES-ORIENTED
CAPITAL FUND
5,351,416 A share
HUITIANFU DEVELOPING-FOCUS SECURITES-ORIENTED
CAPITAL FUND
5,179,882 A share
JF ASIA DOMESTIC OPPORTUNITIES FUND 5,109,983 B share
GOVERNMENT OF SINGAPORE INV. CORP. –A/C “C” 4,780,502 B share
TAIKANG LIFE CO.,LTD. 4,112,075 A share
MIRAE ASSET CHINA SOLOMON EQUITY INVESTMENT
TRUST 1
4,012,950 B share
The explanation for the relationship and action
of the top 10 shareholders
In the top 10 shareholders, Yantai Changyu Group Company
Limited and the other 9 companies are not related parties.
Huitianfu Balanced-Developing Securites-Oriented Capital
Fund and Huitianfu Developing-Focus Securites-Oriented
Capital Fund are controlled by same fund management
company. The relationship of the other shareholders is not
detailed here.9
2.3 The limited shares holding by top 10 shareholders and limited
conditions
Unit: share
2.4 The changes of the controlling shareholder and actual controller
During the report period, there is no any change for the controlling
shareholder and actual controller. The controlling shareholder is still Yantai
Changyu Group Company Limited, and the Company is still controlled
together by Yantai State-owned Assets Supervison and Administration
Commission, Italy Illva Saronno Investments S.r.l, USA International Finance
Corporation and Yantai Yuhua Investment & Development Company Limited.
No. Limited
shareholder
Limited shares
amount
Date of
listing
Newly added
tradable
Shares
Limited conditions
2010.
03.21
26,363,800
1
Yantai Changyu
Group Company
Limited
239,385,120
2011.
03.21
213,021,520
1.Changyu Group, as from the
day of being granted the right of
circulation on stock market as
March 21,2006, can’t transact or
transfer its holding within 36
months.
2.Within 12 months after the
expiry of the afore-said promising
period, the amount of the former
non-circulating stock that
Changyu Group may list for
transaction at Stock Exchange
can’t be over 5% of its total and
within 24 months after the period,
can’t be over 10% of its total.
3.Changyu Group will propose
during the shareholders’ meeting
2005, 2006 and 2007 that the
profit distribution in cash shall not
be lower than 65% of the
distributable profits made in that
year and promise to cast an
affirmative vote for it.10
Remark: There is no single shareholder holding over 5% shares for Yantai
Yusheng Investment & Development Co.,ltd. Mr. Reina Augusto is the director
of the Company, while Mr. Reina Riccardo, Mr. Reina Marina and Mr. Reina
Lodovico are all family member of Mr. Reina Augusto.
3. THE INTRODUCTION OF THE DIRECTORS, SUPERVISORS AND
SENIOR MANAGEMENT TEAM
3.1 The changes on share holding by the directors, supervisors and
senior management team
Unit: Share
Name Post Shares hold
at the
beginning of
this year
Shares
increased
during report
period
Shares
decreased
during report
period
Shares hold
at the end of
this year
Reason
for
change
Sun Liqiang Chairman to the
Board of Directors
0 0 0 0 -
Zhou
Hongjiang
Vice-chairman to
the Board of
Directors and
general manager
0 0 0 0 -
Leng Bin Director, vicegeneral
manager
0 0 0 0 -
5% 25% 25% 25%
33% 12%
5% 55%
10%
50.40%
37.78%
15.75% 33.85%
100%
45%
Changyu Group and 27 persons for middium-level of the Company
Yantai Yusheng Investment & Development Co.,ltd.
Yantai Yuhua Investment & Development
Changyu Group and 148 commone stafff of the Comapny
Changyu Group
the Company
current shareholders for A share current shareholders for B share
IFC Illva Saronno Investment
24% 6% 5%
US
A
REINA
AUGUSTO
25%
REINA
RICCARDO
REINA
MARINA
REINA
LODOVICO
SASAC Yantai
5%
J
AP
A
N
F
R
ANC
E
GE
R
MANY
U.K
.
OT
HE
R
C
OUN
T
62.22%11
Qu Weimin Director,
Vice-general
manager and
Secretary to the
Board of Directors
0 0 0 0 -
Jiang Jinqiang Director 0 0 0 0 -
Augusto Reina Director 0 0 0 -
Aldino
Marzorati
Director 0 0 0 0 -
Antonio
Appignanni
Director 0 0 0 0 -
Jean-Paul
Pinard
Director 0 0 0 0 -
Geng Zhaolin Independent
director
0 0 0 0 -
Ju Guoyu Independent
director
0 0 0 0 -
Wang Shigang Independent
director
0 0 0 0 -
Wang Zhuquan Independent
director
0 0 0 0 -
Fu Mingzhi Chairman to
the Board of
Supervisors
0 0 0 0 -
Zhang Hongxia supervisor 0 0 0 0 -
Lian Zhendian supervisor 0 0 0 0 -
Yang Ming Vice general
manager
0 0 0 0 -
Li Jiming General Engineer 0 0 0 0 -
Jiang Hua Vice general
manager
0 0 0 0 -
Sun Jian Vice general
manager
0 0 0 0 -
Jiang Jianxun Finance principal 0 0 0 0 -
3.2 The appointment information of the directors, supervisors and
senior management team during the report period
During the report period, Mr. Wang Gongtang submitted his request that he
will not take the post as counselor due to his age, it is approved by the 15th
meeting of the 4th session of Board of Directors that Mr. Wang Gongtang
resigned his position from the Company. And there is no any other change in
directors, supervisors or senior managers.
4. THE BOARD OF DIRECTORS’ REPORT
4.1 The analysis and discussion on the business situation
During the report period, the Company’s main operations have consistently
kept sustainable growth and sales revenue of the main products of wine and
brandy, all increased by different margins, making the Company’s principal
sales CNY1969.43 million and net profit CNY455.24million, 8.14% and
14.15% up over the same period of last year respectively. During the report
period, the company made efforts mostly in the following aspects.
First of all, strengthened the brand propaganda and promotion for the12
Changyu AFIP and Jiebaina, so as to further establish and secure the brand
advantage for the high and middle quality products of the company. Changyu
Jiebaina was awarded as the Brand Contribution and the Leader Brand of
China in 2008-2009 by 2009 China Brand and Communication Convention.
Changyu brand was also appraised as one of the five food & beverage brands
which will become the global brand with great possibility by the famous brand
consultant firm Wolff Olins (with more details please see the UK Financial
Times dated 19th July 2009).
Secondly, wholly started the market differentiating and distribution by
category and realized primary achievement. During report period, the
Company accomplished the differentiating on products, sales staff and
distributor team, carried out the selling by category so as to made good
outcome.
Thirdly, set up and improved the circulating system, boosted the wine sales for
medium and lower level. During report period, the Company intensified the
layout for sales and distributor team in circulating system, all the sales staff
were basically assigned for the market, the number of distributors were
exceeded 3 times from the beginning of this year, the primary sales network
for circulating system has been founded, therefore completely turned the
adverse situation as continual decline for lower level wine sales during years in
the past, and both increased the average sales price and volume for lower
level wines.
Fourthly, continued to strengthen the market control, strictly eliminated
counterfeit products and hazardous transshipments in order to preserve and
protect market order. During report period, the Company ferreted out several
cases for counterfeit products and also hazardous transshipments, the related
responsible persons were strctly punished, so as to enhance the supervision
on market price system, effectly stopped the impact to market by counterfeit
products and hazardous transshipments, and also ensure the stable price
system and smooth sales channels.
Fifthly, launched the new projects and technical innoviation so as to privide
sound foundation for future development of the Company. Please find the
details in section 4.3 Investment Information.
4.2 The Main Business Situation during the Report Period
4.2.1 General information of operation
Unit: CNY
Item Amount of this year Amount of last year More or less (%)
Principal sales 1,969,426,161 1,821,247,310 8.14
Principal profit 597,531,527 515,855,174 15.83
Net profit 455,235,291 398,804,486 14.1513
The reason for such change is as following: during the report period, the
Company’s principal sales increased by 8.14% over the same period of last
year, mainly resulting from the stable products demand and the steady sales
quantity, especially because of the increase of products’ average sales price
casued by the increase of sales volume of medium-level and high-end wine led
by Chateau Wine and Cabernet dry red. The Company’s principal profit
increased by 15.83% over the same period of last year, mainly resulting from
rapid increase of the Company’s principal sales, effective control of period
expense and the decrease of sales tax and affixation. The net profit increased
by 14.15% over the same period of last year, mainly because of the increase
of principal profit.
4.2.2 The Scope and Condition of Principal Business
The Company is a light industrial manufacturer of which the principal business
is the distilling, producing and distributing of wine, brandy, sparkling wine and
healthy liquor, and its major products include dry red wine, dry white wine,
XO brandy, VSOP brandy, VO brandy, VS brandy, Tzepao Sanpien Jiu, Special
Quality Sanpien Jiu, Vermouth and sparkling wine. The Key products taking
over 10% of the Company’s sales and profit was as following:
Unit: CNY
Product Principal sales Principal Cost Gross
Profit
Ratio(%)
More or
less
than last
year
of the
principal
sales(%)
More or
less than
last year of
the
principal
cost(%)
More or
less than
last of the
profit
ratio(%)
Wine 1,586,727,785 441,780,513 72.16 9.77 9.19 +0.3
Brandy 289,617,482 105,149,687 63.69 5.18 6.64 -0.5
Total 1,876,345,267 546,930,200 70.85 9.03 8.36 +0.2
Among
which,
Related party
transaction
3,548,107 - - -26.92 - -
4.2.3 Explanations of significant changes in principal business and/or
structure of the Company
During the report period, no great change occurred for the profit structure,
principal business and its structure, profit earning capability from principal
business.
4.2.4 Other Business with Great Influence on Net Profit
During the report period, there was no other business with great influence on
net profit.14
4.2.5 Management of Major Shareholding Companies
Unit: CNY’0000
Company Name
Sharing
Ratio
Business Scope
Major Products or
Services
Registered
Capital
Total Assets
Net Profit
Yantai
Changyu-Castle
Wine Chateau
Co. LTD.
70%
To research,
produce and sell
wine and
sparkling wine
Dry red wine, dry
white wine and
sparking wine of
Changyu-Castle
USD5
million
16,201 1,897
Longfang
Castel-Changyu
Wine Co. LTD.
49%
To produce
and sell wine
Dry red wine,
Dry white wine
USD3
million
5,165 1,244
Yantai Kylin
Packaging Co.
LTD.
50%
To produce and
sell packaging
material
Cork, aluminum
cap, PVC capsule
and so on.
USD1.4
million
5,907 194
Chateau
Changyu AFIP
Global
70%
To research,
produce and sell
brandy and wine
Brandy, premium
dry red wine and
white wine
11,000 40,388 2
Chateau Liaoning
Changyu Ice
Wine Co., Ltd.
51%
To produce ice
wine
Ice wine 2,630 7,146 44
4.2.6 Problems and Difficulties in Operation
First, due to the macro-economy situation of China during report period, the
wine consumption has been restrained to some extent, thus obstructed the
fast and continuable development of the Company, and caused the Company
to face more pressure on accomplishing the annual business target.
Secondly, since the major sales income still came from wine and brandy, the
sales of part of key category for development lagged behind the anticipation,
especially the lack increase of the distribution for middle quality wine
products, and brought rather pressure for the Company to realize the annual
sales target.
Thirdly, the Company’s brand influence was not strong enough yet in some of
domestic markets, market occupancy was not high, and the phenomenon of
market imbalance has not been fundamentally changed. During the report period,
the Company realized increase by different margins almost in all markets
nationwide, especially well marked in Zhejiang, Jiangsu and Shanghai, but in
some markets, the sales indicators were not fulfilled. And the increase of income
mostly still relies on east coastal areas.
Fourthly, the current management style and mode of the Company can not
match completely the requirement for market development, and the personal
qualification of whole staff need to be improved.
Facing the above problems and difficulties, the Company will set practical
measures, try to get over those difficulties and ensure to realize all the
budgetary target.
4.3 Investment Information
4.3.1 The Uses of the Collected Proceeds15
The Company did not make any proceeds collection from 2001 till now. And
the proceeds from a public offering of 32 million A Shares for capital
increase in October of 2000 were all put into projects as promised in the
Prospectus and obtained better yield. There is no any change for projects
invested. .
4.3.2 Investment Situations of Non-collected Capital
1) Continual construction of the European Town in Beijing Changyu-AFIP
Chateau. The project budget for r 2009 is CNY 37.50 million and so far CNY
38.60 million has been input during report period. The principle part of this
project has been completed and start the operation,. Now the project is under
final accounting and auditing precedure.
2) The office building purchase for sales company. The budget is CNY10.70
million in 2009, and CNY5.21 million was invested during report period for
Shanghai and Suzhou city, the decoration for office buildings is ongoing at
present. It is investigating and selecting the office buildings in Xiamen and
Haikou and is expected to finish by end of October.
3) Project of Ningxia Wine Company. The budget for the project is
CNY62.20million for 2009 and CNY60million has been input during the report
period. The principle part for 5000 t bulk wine fermentation capacity has been
completed, and now it is under installation and commissioning of equipments.
All the project is anticipated to finish and put into production by end of this
August.
4) Project of production and fermentation capacity reform of Changyu
(Jingyang) wine company. The budget is CNY 23.54million for 2009, and
CNY6.1 million was invested during report period to complete land acquisition,
most production capacity alteration, blending and freezing tank, installation
for room fermentation tank for 5000t bulk wine and the construction of
principle frame for buildings. The whole project is expected to complete by
end of this August.
4.4 The Adjustment for The Business Plan
During the report period, the Company did not make any adjustment in the
business plan.
4.5 The Audit of the Financial Report
The Financial Report for first half of 2009 has not been audited.
5. MATERIAL EVENTS
5.1 The Administration and Rectifying Situation of The Company
The Company has, according to relevant national laws and rules including the
“Company Law of the People’s Republic of China”, “Securities Law of the
People’s Republic of China” and “Guidelines on Listed Companies Internal16
Control”, established and improved its legal entity structure and legally
conducted its activities within the scope of that structure.At present, there is
almost no difference between the corporate governance of the Company and
the normative documents about the governance of the listed company issued
by China Securities Regulatory Commission, which could better meet the
development requirement.
5.2 The execution of the scheme on the Company’s profit
distribution
The scheme on profit distribution for 2008 was deliberated and passed
during “2008 Shareholders’ Meeting” as following:
The Company’s total 527.28 million shares on Dec. 31th,2008 were taken as
cardinal number to distribute CNY12.00 in cash for every 10 shares to all
the shareholders (tax included, the actual after-tax dividend distributed to
the individual shareholders for A share, investment fund and qualified
foreign insitution investors is CNY10.80 per 10 shares, and the tax is not
deducted for B share for the moment ). For other non-resident enterprises,
the Company did not authorize the income tax with holding and collection,
the income tax was paid by the taxpayers at the place where the tax
occurred. And according to the Articles of Associations, the dividends in
favor of the foreign-currency shareholders was paid in HKD at the middle
exchange rate of RMB to HKD (1HKD = CNY0.8803) listed by the People’s
Bank of China on the first working day after the day ( May 4th, 2009) when
the resolutions of 2008 Shareholders’ Meeting were made.
The execution announcement of the profit distribution was made public in
“China Securities News”, “Securities Times” and “Hong Kong Commercial
Daily” on May 25th , 2009. The registration date of Share A ownership was
June 3rd , 2009 and the ex dividend date was June 4th , 2009, and the last
trading date of Share B was June 3rd , 2009, the ex dividend date was June
4th , 2009 and the registration date of Share B ownership was June 8th ,
2009. The said profit distribution was completed at the middle of June
2009.
The Company did not make any plan to transfer public accumulation fund
to share capital in 2008.
5.3 The Preliminary Plan on Profit Distribution for first half of 2009
According to the resolution of 17th Meeting of the 4th Board of Directors, the
Company did not distribute profit or convert public funds of capital to
equivalent shares for first half of 2009.
5.4 Material Litigation and arbitration
The Company did not make any major lawsuit and arbitration, and had no
major remaining lawsuit and arbitration during the report period.17
5.5 Material Acquisition, Sales or Merger on Assets
The Company has no any acquisition and sales of assets, or any merger, or
any remaining acquisition and sales of assets, or any merger during the
report period, or such activities occurred in previous period and lasted to the
report period.
5.6 Material Related Party Transactions
5.6.1 Products Transaction and Service Supply
During the report period, the total amounts on products supply are CNY3.165
million and CNY0.383million respectively from the Company to the controlling
shareholder’s subsidiary companies-Yantai Changyu Tour Co.,Ltd.,and Yantai
Changyu International Wine City Co., Ltd, CNY3.048million and CNY58000 for
productis purchase respectively from the Company to two companies
mentioned above. There is no service supply between the Company and any
related party.
5.6.2 The Related Creditor’s Right and Liability
During the report period, as per the relevant agreement made by and between the
Company and the controlling stockholder Yantai Changyu Group Co., Ltd., the
Company must pay service charge, patent use charge, house and site rents every
year to the group company in addition to paying 2% of its sales revenue realized in
the current period as trademark use fee, which resulted in an accumulated amount
of CNY 40.79million during the report period. By the end of the report period, the
receivable and payable routine operating balance in the current account were
respectively CNY0.31 million from the controlling stockholder’s subsidiary
companies-Yantai Changyu Tour Co.,Ltd.,and Yantai Changyu International
Wine City Co., Ltd, and CNY5.57 million to the controlling stockholder-Yantai
Changyu Group Co., Ltd.
5.7 Material contract and its execution
5.7.1 Material transaction, trusting, contracting and assets leasing
During the report period, according to the Buildings and Ground Lease, the
Company leased buildings and ground from the controlling shareholder with
lease fee of CNY6.383million every year.
Besides, during the report period, the Company had no other significant
property trust, contract, leasing, nor any activity which occurred before and
lasted to the report period.
5.7.2 Material Cash Assets Management
The Company did not entrust any others to manage the cash assets, nor
remaining entrusting on cash assets during the report period.
5.8 Material Warranty
During the report period, there was no any material warranty or guarantee
occurred before and lasted to the report period for the Company.18
5.9 Undertaking Events by the Company and Any Shareholder
Holding 5% or More Shares of the Company
5.9.1 The Company or the shareholders holding more than 5% (including
5%) of the Company’s total shares didn’t make any promises that may
generate deep impact on the Company’s operating result and financial
condition.
5.9.2 The controlling stockholder- Yantai Changyu Group Co., Ltd. has kept its
promise made during the stock ownership reform and voted for the annual profit
distribution scheme at Shareholders’ meeting for year 2005, 2006 and 2007.
5.9.3 Yantai Changyu Group Co., Ltd. released the limit condition to 26.364
million shares of the Company on March 25th,2009, and made the promise that
Group company will issue the suggestive announcement through the Company
within two transaction days before the first decreasing of shares by Group
Company, disclosed information will include but not only limit to the planned
transaction quantity, transaction time, transaction price range and reason for
share decreasing as required by Shenzhen Stock Exchange, if Group company
intends to sell the current shares of the Company after releasing the limit
condition and the total quantity for share decreasing is up to 5% within 6 months
from the first transaction. Yantai Changyu Group Co., Ltd. has not realized its
above commitments as those promised issues have not entered into the set
time frame.
5.10 Punishment Records
During the report period, none of the Company, the Board of Directors,
directors was checked by CSRC, or punished and criticized by CSRC, or
punished by other administrative departments, or openly criticized by the
Stock Exchange.
5.11 The Analysis and Explanation on Other Major Issues, Related
Influence and Solutions
5.11.1 Securities Investment
The Company had no investment in securities by the end of the report period.
5.11.2 Share Holding of Other Listed Company
The Company did not hold any share of other listed company.
5.11.3 Independent Directors’ Specific Statement and Independent
Opinions on The Company’S Controlling Stockholder and/or Other
Related Parties’ Occupation of Capital and on The Company’S External
Guarantees
According to relevant regulations of China Securities Regulatory Commission,19
we the independent directors, holding a conscientious and duty-bound attitude,
made an investigation of the controlling stockholder and/or other related
parties’ occupation of capital and the Company’s guarantees for any other
party. Now, we state as follows:
By June 30th, 2009, the capital flow between the Company and the controlling
stockholder was entirely for operating activities and the capital was duly
settled. Neither occupation of capital for non-operating purpose nor influence
of the Company’s independency and illegal use of capital in any other form or
in a disguised form was found. The Company and its subsidiaries or affiliates
didn’t provide guarantees for any other individuals and/or units.
We believe that the capital flow between the Company and the controlling
stockholder was only for necessary marketing and there was no phenomenon
of occupation of capital for non-operating purposes. Moreover, the Company
has strictly followed relevant regulations and requirements, never provided
guarantees to any units (including its subsidiaries) and individuals, and not
infringed upon the interests of the company itself and its stockholders,
especially the medium/small-sized stockholders.
Independent director: Geng Zhaolin, Ju Guoyu,Wang Shigang, Wang
Zhuquan
5.12 The proposal or execution of share increasing by shareholders
with 30% more shares during report period
During report period, the shareholder with 30% more shares of the Company,
or Yantai Changyu Group Co., Ltd. did not propose or carry out any plan for
share increasing.
5.13 The information of compensation from party concerned to the
earning promised by the Company for share equity reform and major
assets merger etc.
It is not applicable for the Company.
5.14 The Reception of Investigation, Visit and Communication
Reception date Reception
place
Reception way Visitor Main content
and material
introduced
Feb.17th,2009 Meeting room
of the
Company
Field survey Morgan Stanley Principal
operation,
future
development
Feb.19th,2009 Meeting room
of the
Company
Field survey China Galaxy
Securities
Principal
operation,
future
development
Feb.21st ,2009 Meeting room
of the
Company
Field survey China Universal
Asset
Management
Principal
operation,
future
development
March 7th,2009 Meeting room Field survey Nomura Principal20
of the
Company
Securities operation,
future
development
March 10th,2009 Meeting room
of the
Company
Field survey China
International
Capital
Principal
operation,
future
development
March 14th,2009 Meeting room
of the
Company
Field survey Nomura
International
Principal
operation,
future
development
April 11th,2009 Meeting room
of the
Company
Field survey Shanghai
Shenergy Asset
Principal
operation,
future
development
May 13rd,2009 Meeting room
of the
Company
Field survey Kangtai Asset Principal
operation,
future
development
May 15th,2009 Meeting room
of the
Company
Field survey Shanghai Kaishi
Investment
Principal
operation,
future
development
May 23th,2009 Meeting room
of the
Company
Field survey China Life Asset Principal
operation,
future
development
June 3rd,2009 Meeting room
of the
Company
Field survey Greatwall
Securities
Principal
operation,
future
development
June 15th,2009 Meeting room
of the
Company
Field survey Shoucheng
Investment
Principal
operation,
future
development
5.15 The Index on Information Disclosure of the Company
Announcement
number
Title Publication Date Publication address
2009-Lin001 suggestive announcement
on releasing the limit
condition on limit share
March 23rd,2009 “China Securities News”,
“Securities Times”
2009-Lin002 Clarifying announcement April 7th,2009 “China Securities News”,
“Securities Times” “Hong
Kong Commercial Daily”
2009-Lin003 Latest Information about
2008 Business Achievement
April 7th, 2009 “China Securities News”,
“Securities Times” “Hong
Kong Commercial Daily”
2009-Lin004 Announcement on The
Resolution of 15th Meeting of
The Fourth Board of
Directors
April 10th,2009 “China Securities News”,
“Securities Times” “Hong
Kong Commercial Daily”
2005-Lin005 Announcement on The
Resolution of The 14th
Meeting of The Third Board
of Supervisors
April 10th,2009 “China Securities News”,
“Securities Times” and
“Hong Kong Commercial
Daily”
2009-Lin006 Announcement on Daily
Related Transaction for 2009
April 10th,2009 “China Securities News”,
“Securities Times” and
“Hong Kong Commercial
Daily”
2009-Lin007 The Notice on Opening of
2008 Shareholders meeting
April 10th,2009 “China Securities News”,
“Securities Times” and21
“Hong Kong Commercial
Daily”
2009-ding001 The Annual Report 2008 and
its Summary
April 10th,2009 “China Securities News”,
“Securities Times” and
“Hong Kong Commercial
Daily”
2009-Ding002 The Report for First Quarter
of 2009
April 24th,2009 “China Securities News”,
“Securities Times” and
“Hong Kong Commercial
Daily”
2009-Lin008 The Announcement on The
Resolution of 2008
Shareholders’ Meeting
May 4th,2009 “China Securities News”,
“Securities Times” and
“Hong Kong Commercial
Daily”
2009-Lin009 The Announcement on
Execution of Profit
Distribution 2008
May 25th, 2009 “China Securities News”,
“Securities Times” and
“Hong Kong Commercial
Daily”
2009-Lin010 The Appendix
Announcement to Annual
Report of 2008
June 27th, 2009
“China Securities News”,
“Securities Times” and
“Hong Kong Commercial
Daily”
All above-mentioned information has also been disclosed in web site
http://www.cninfo.com.cn
5.16 Other Major Issues with Great Influence to the Company during
the Report Period
During the report period, there is no other major issues with great influence
to the Company.22
6. FINANCE REPORT
6.1 Consolidated And Parent Company’S Balance Sheet （1）
Yantai Changyu Wine Poineer Co., Ltd. Unit: yuan
At 30 June 2009 At 31 December 2008
Assets Note
Consolidated
amount
Parent
company
amount
Consolidated
amount
Parent
company
amount
Current assets：
Monetary fund 1,693,719,560 1,058,486,856 1,748,573,840 1,199,543,976
Financial assets for trade
Notes receivable 27,503,326 11,374,417 13,378,706 5,215,800
Account receivable 54,858,028 9,800,168 82,343,029 13,271,136
Advance money 3,301,149 278,032 5,278,985 2,942,070
Interest receivalbe 15,873,945 15,873,945 19,176,250 19,176,250
Dividend receivable 406,972,236
Other account receivable 23,772,346 648,535,783 23,713,826 361,305,380
Inventories 787,249,144 416,023,745 997,942,600 438,936,622
Non-current assets due within one year 15,000,000 15,000,000 15,000,000 15,000,000
Other current assets 253,935
Total current assets 2,621,277,498 2,175,372,946 2,905,661,171 2,462,363,470
Non-current assets：
Financial assets for sale
Investment held to expiration
Long-term account receivable
Long-term equity investment 10,000,000 169,077,178 10,000,000 169,077,178
Real estate for investment
fixed assets 718,927,958 340,494,412 728,229,135 351,548,553
Construction in progress 253,086,536 6,642,464 154,490,715 8,263,910
Project material
Liquidation of fixed assets
Biological assets for production 41,179,787 11,738,099 40,675,990 11,738,099
Oil and gas assets
Intangible assets 140,931,093 92,113,846 101,426,926 93,648,384
Development expenditure
Goodwill
Long-term deferred expenses 24,817,006 21,452,595
Assets of deferred income tax 61,609,218 14,318,883 91,950,794 14,950,351
Other non-current assets 6,381,120 6,191,222 7,045,254 6,747,847
Total non-current assets 1,256,932,718 640,576,104 1,155,271,409 655,974,322
Total assets 3,878,210,216 2,815,949,050 4,060,932,580 3,118,337,792
Legal representative: Sun Liqiang Person in charge of accounting: Leng Bin Person in charge of accounting organ: Jiang Jianxun23
Consolidated And Parent Company’S Balance Sheet （2）
Yantai Changyu Wine Poineer Co., Ltd. Unit: yuan
At 30 June 2009 At 31 December 2008
Liabilites, rights and interests of
shareholders Note
Consolidated
amount
Parent
company
amount
Consolidated
amount
Parent
company
amount
Current liabilities:
Short-term loan
Financial liabilities for trade
Notes payable
Accounts payable 170,644,008 115,912,340 220,708,265 169,592,563
Advance money 299,885,046 188,709,167
Wage payable 157,780,509 93,872,674 151,849,547 105,145,026
Tax payable 367,289,926 55,996,003 457,714,254 68,218,327
Interest payable
dividend payable
Other accounts payable 430,034,742 505,092,117 412,923,817 266,834,580
Non-current liabilities due within
one year
Other current liabilities
Total current liabilities 1,425,634,231 770,873,134 1,431,905,050 609,790,496
Non-current liabilities：
Long-term loan
Bond payable
Long-term accounts payable
Special accounts payable
Estimated liabilities
Liabilities of deferred income tax
Oterh non-current liabilities
Total non-current liabilities
Total liabilities 1,425,634,231 770,873,134 1,431,905,050 609,790,496
Shareholder rights and interests：
Capital stock 527,280,000 527,280,000 527,280,000 527,280,000
Capital reserve 557,222,454 557,222,454 557,222,454 557,222,454
Less: treasury stock
Surplus reserve 295,942,630 295,942,630 295,942,630 295,942,630
Undistributed profit 985,687,377 664,630,832 1,163,188,086 1,128,102,212
Total shareholder rights and interests of
parent company
2,366,132,461 2,045,075,916 2,543,633,170 2,508,547,296
Minority shareholder rights and interests
86,443,524 85,394,360
Total shareholder rights and interests
2,452,575,985 2,045,075,916 2,629,027,530 2,508,547,296
Liabilites and total shareholders rights
and interests
3,878,210,216 2,815,949,050 4,060,932,580 3,118,337,792
Legal representative: Sun Liqiang Person in charge of accounting: Leng Bin Person in charge of accounting organ:Jiang Jianxun24
6.2 Consolidated And Parent Company’S Profit Statement
Yantai Changyu Wine Poineer Co., Ltd. Unit: yuan
Six months ended 30 June
2009
Six months ended 30 June
2008
Item Note
Consolidated
amount
Parent
company
amount
Consolidated
amount
Parent
company
amount
Business income 1,969,426,161 469,406,241 1,821,247,310 640,333,589
Less: business cost 589,412,209 352,370,936 547,526,272 479,918,430
Business tax and associate charges 106,802,530 55,875,039 126,205,217 85,323,790
Sales expenses 584,340,983 543,383,731
Management expenses 106,461,274 56,630,246 109,918,625 84,017,633
Financial expenses -15,122,362 -19,247,321 -19,839,061 -21,684,246
Assets depreciation loss 153,484
Add: fair value charge profit (loss is listed
with "-")
Investment profit ((loss is listed with "-")
151,717,059 1,956,132 181,779,094
Including: investment profit for joint-run
business and joint venture
Operating profit 597,531,527 175,494,400 515,855,174 194,537,076
Add: Non-operating income 8,424,754 669,244 3,357,188 192,883
less: non-operating expenditures 46,353 20,770 3,188,124 100,000
Including: non-current assets disposing
loss
Total profit 605,909,928 176,142,874 516,024,238 194,629,959
Less: income tax expenses 149,625,473 6,878,254 114,416,540 4,617,193
Net profit 456,284,455 169,264,620 401,607,698 190,012,766
Net profit of parent company's
owners
455,235,291 169,264,620 398,804,486 190,012,766
Minority shareholder profit
and loss
1,049,164 2,803,212
EPS
Basic EPS 0.86 0.32 0.76 0.36
Diluted EPS 0.86 0.32 0.76 0.36
Legal representative: Sun Liqiang Person in charge of accounting:Leng Bin Person in charge of accounting organ: Jiang
Jianxun25
6.3 Consolidated and Parent Company’s Cash Flow Statement
Yantai Changyu Wine Poineer Co., Ltd.
Unit: yuan
Six months ended 30 June
2009
Six months ended 30 June
2008
Item Cosolidated
amount
Parent
company
amount
Cosolidated
amount
Parent
company
amount
1. Cash flows from operating activities:
Cash received from sales of goods and rending of
services 2,557,840,868 546,517,653 2,293,070,301 746,184,598
Tax refund received 3,640,000 2,946,277
Other cash received related to operating
activities 129,209,081 469,948,185 225,517,735 437,732,636
Subtotal of cash flows of operating activities 2,690,689,949 1,016,465,838 2,521,534,313 1,183,917,234
Cash paid for goods and services 887,528,120 494,094,422 704,035,353 512,763,297
Cash paid to and on behalf of employees 130,038,803 58,784,850 133,521,314 72,783,243
Cash paid for taxes and expenses 593,407,859 110,109,459 564,429,508 154,867,141
Other cash paid related to operating activities 364,205,465 27,879,344 366,456,771 14,628,987
Sub-total of cash outflows of operating
activities 1,975,180,247 690,868,075 1,768,442,946 755,042,668
Net cash flow from operating activities 715,509,702 325,597,763 753,091,367 428,874,566
2. Cash flow from investing activities:
Cash received from return of investment
Fixed deposit with the term of
over 3 months 202,419,840 180,419,840
Cash received from obtaining investment profit 151,717,059 1,956,132 181,779,094
Cash received from interest income 21,581,967 21,530,217 18,053,319 18,053,319
Net cash received from disposal of fixed assets,
intangible assets and other long-term assets
Net cash received from disposal of branch and
other business unit
Other cash received related to investing
activities
Subtotal of cash flows of investment activities
224,001,807 353,667,116 20,009,451 199,832,413
Cash paid to acquire fixed assets, intangible
assets and other long-term assets 159,261,663 7,217,873 108,141,873 18,289,033
Fixed deposit with the term of over 3 months 383,403,359 383,403,359
Cash for investment 1,350,000
Net cash paid to acquire branch and other
business unit
Other cash paid related to investment activities
Subtotal of cash outflows of investment
activities 159,261,663 7,217,873 491,545,232 403,042,392
Net cash flow from investing activites 64,740,144 346,449,243 -471,535,781 -203,209,979
3.Cash flow from financing activites
Cash received from acquiring investment 150,000
Including: cash received from acquiring
minority shareholders investment by branch 150,00026
Cash received from acquiring loans
Other cash received related to finaning activities
Subtotal cash flows of financing activities 150,000
Cash paid to pay debts
Cash paid to distribute dividend, profit or pay
interest 632,736,000 632,736,000 580,008,000 580,008,000
Including: dividend and profit paid to minority
shareholders by branch
Other cash paid related to financing activities
Subtotal of cash outflows of financing
activities 632,736,000 632,736,000 580,008,000 580,008,000
Net cash flow from financing activites -632,736,000 -632,736,000 -579,858,000 -580,008,000
4. Influences of exchange rate fluctuation on
cash and cash equivalents
5. Net Increase in cash and cash equivalents 147,513,846 39,311,006 -298,302,414 -354,343,413
Add: balance at the beginning of the period
of cash and cash equivalents 792,724,722 265,694,858 856,534,631 608,642,980
6.Balance at the end of the period of cash and
cash equivalents 940,238,568 305,005,864 558,232,217 254,299,567
Legal representative: Sun Liqiang Person in charge of accounting: Leng Bin Person in charge of accounting organ: Jiang
Jianxun27
6.4 Consolidated Statement of Equity Changes
Yantai Changyu Wine Poineer Co., Ltd.
Unit:yuan
Item Six months ended 30 June 2009
Shareholders' equity of parent company
Minority
stockholders
' Equity
Total
shareholders'
equity
Capital stock Capital
reserves
Less:
Treasury
stock
Surplus
reserves
Undistributed
profits
Others
1.Banlance at the end of last year 527,280,000 557,222,454 295,942,630 1,163,188,086 85,394,360 2,629,027,530
Plus: Accounting policies changing
Previous error correction
2.Banlance at the beginning of this year 527,280,000 557,222,454 295,942,630 1,163,188,086 85,394,360 2,629,027,530
3.Increasing or reducing amount of this year (reducing
amount is listed with "-") -177,500,709 1,049,164 -176,451,545
3.1 Net profits
455,235,291 1,049,164 456,284,455
3.2 Gains and Losses directly reckoned in owners'
equity
3.2.1 Net changing amount of financial assets fair value for
sale
3.2.2 Influence of other owners' equity changing of
invested unit under Equity Law
3.2.3 Influence of income tax related to the reckoned
owners' equity items
3.2.4 Others
Subtotal of above 3.1 and 3.2
455,235,291 1,049,164 456,284,455
3.3 Owners' invested and reduced capital
3.3.1 Owners' invested capital
3.3.2 Amount of shares paid and reckoned in owners'28
equity
3.3.3 Others
3.4 Profit distribution
-632,736,000 -632,736,000
3.4.1Drew surplus reserves
3.4.2 Distribution to owners (or shareholders) -632,736,000 -632,736,000
3.4.3 Others
3.5 Internal transfer of owners' equity
3.5.1 Capital reserves transferred and increased capital (or
capital stock)
3.5.2 Surpuls reserves transferred and increased capital (or
capital stock)
3.5.3 Surpuls reserves covering deficit
3.5.4 Others
4.Banlance at the end of this year 527,280,000 557,222,454 295,942,630 985,687,377 86,443,524 2,452,575,985
The attached Accounting Statement Annotations is a component of this Accounting Statement.
Legal representative: Sun Liqiang Person in charge of accounting: Leng Bin Person in charge of accountingorgan: Jiang Jianxun
Item Year 2008
Shareholders' equity of parent company
Minority
stockholders'
Equity
Total
shareholders'
equity
Capital stock Capital
reserves
Less:
Treasury
stock
Surplus
reserves
Undistributed
profits
Others
1.Banlance at the end of last year 527,280,000 557,222,454 295,942,630 848,575,292 85,358,694 2,314,379,070
Plus: Accounting policies changing
Previous error correction
2.Banlance at the beginning of this year 527,280,000 557,222,454 295,942,630 848,575,292 85,358,694 2,314,379,07029
3.Increasing or reducing amount of this year (reducing amount
is listed with "-") 314,612,794 35,666 314,648,460
3.1 Net profits 894,620,794 -114,334 894,506,460
3.2 Gains and Losses directly reckoned in owners'
equity
3.2.1 Net changing amount of financial assets fair value for sale
3.2.2 Influence of other owners' equity changing of invested
unit under Equity Law
3.2.3 Influence of income tax related to the reckoned owners'
equity items
3.2.4 Others
Subtotal of above 3.1 and 3.2 894,620,794 -114,334 894,506,460
3.3 Owners' invested and reduced capital 150,000 150,000
3.3.1 Owners' invested capital 150,000 150,000
3.3.2 Amount of shares paid and reckoned in owners' equity
3.3.3 Others
3.4 Profit distribution -580,008,000 -580,008,000
3.4.1Drew surplus reserves
3.4.2 Distribution to owners (or shareholders) -580,008,000 -580,008,000
3.4.3 Others
3.5 Internal transfer of owners' equity
3.5.1 Capital reserves transferred and increased capital (or
capital stock)
3.5.2 Surpuls reserves transferred and increased capital (or
capital stock)
3.5.3 Surpuls reserves covering deficit
3.5.4 Others
4.Banlance at the end of this year 527,280,000 557,222,454 295,942,630 1,163,188,086 85,394,360 2,629,027,530
The attached Accounting Statement Annotations is a component of this Accounting Statement.
Legal representative: Sun Liqiang Person in charge of accounting: Leng Bin Person in charge of accountingorgan: Jiang Jianxun30
6.5 Parent Company’s Statement of Equity Changes
Yantai Changyu Wine Poineer Co., Ltd.
Unit:yuan
Item Six months ended 30 June 2009
Shareholders' equity of parent company
Minority
stockholders'
Equity
Total
shareholders'
equity
Capital stock Capital
reserves
Less:
Treasury
stock
Surplus
reserves
Undistributed
profits
Others
1.Banlance at the end of last year 527,280,000 557,222,454 295,942,630 1,128,102,212 2,508,547,296
Plus: Accounting policies changing
Previous error correction
2.Banlance at the beginning of this year 527,280,000 557,222,454 295,942,630 1,128,102,212 2,508,547,296
3.Increasing or reducing amount of this year (reducing amount
is listed with "-") -463,471,380 -463,471,380
3.1 Net profits
169,264,620 169,264,620
3.2 Gains and Losses directly reckoned in owners'
equity
3.2.1 Net changing amount of financial assets fair value for sale
3.2.2 Influence of other owners' equity changing of invested
unit under Equity Law
3.2.3 Influence of income tax related to the reckoned owners'
equity items
3.2.4 Others
Subtotal of above 3.1 and 3.2
169,264,620 169,264,620
3.3 Owners' invested and reduced capital
3.3.1 Owners' invested capital
3.3.2 Amount of shares paid and reckoned in owners' equity31
3.3.3 Others
3.4 Profit distribution
-632,736,000 -632,736,000
3.4.1Drew surplus reserves
3.4.2 Distribution to owners (or shareholders) -632,736,000 -632,736,000
3.4.3 Others
3.5 Internal transfer of owners' equity
3.5.1 Capital reserves transferred and increased capital (or
capital stock)
3.5.2 Surpuls reserves transferred and increased capital (or
capital stock)
3.5.3 Surpuls reserves covering deficit
3.5.4 Others
4.Banlance at the end of this year 527,280,000 557,222,454 295,942,630 664,630,832 2,045,075,916
The attached Accounting Statement Annotations is a component of this Accounting Statement.
Legal representative: Sun Liqiang Person in charge of accounting: Leng Bin Person in charge of accountingorgan: Jiang Jianxun
Item Year 2008
Shareholders' equity of parent company
Minority
stockholders'
Equity
Total
shareholders'
equity
Capital stock Capital
reserves
Less:
Treasury
stock
Surplus
reserves
Undistributed
profits
Others
1.Banlance at the end of last year 527,280,000 557,222,454 295,942,630 715,281,206 2,095,726,290
Plus: Accounting policies changing
Previous error correction
2.Banlance at the beginning of this year 527,280,000 557,222,454 295,942,630 715,281,206 2,095,726,290
3.Increasing or reducing amount of this year (reducing amount
is listed with "-") 412,821,006 412,821,00632
3.1 Net profits
992,829,006 992,829,006
3.2 Gains and Losses directly reckoned in owners'
equity
3.2.1 Net changing amount of financial assets fair value for sale
3.2.2 Influence of other owners' equity changing of invested
unit under Equity Law
3.2.3 Influence of income tax related to the reckoned owners'
equity items
3.2.4 Others
Subtotal of above 3.1 and 3.2
992,829,006 992,829,006
3.3 Owners' invested and reduced capital
3.3.1 Owners' invested capital
3.3.2 Amount of shares paid and reckoned in owners' equity
3.3.3 Others
3.4 Profit distribution
-580,008,000 -580,008,000
3.4.1Drew surplus reserves
3.4.2 Distribution to owners (or shareholders) -580,008,000 -580,008,000
3.4.3 Others
3.5 Internal transfer of owners' equity
3.5.1 Capital reserves transferred and increased capital (or
capital stock)
3.5.2 Surpuls reserves transferred and increased capital (or
capital stock)
3.5.3 Surpuls reserves covering deficit
3.5.4 Others
4.Banlance at the end of this year 527,280,000 557,222,454 295,942,630 1,128,102,212 2,508,547,296
The attached Accounting Statement Annotations is a component of this Accounting Statement.
Legal representative: Sun Liqiang Person in charge of accounting: Leng Bin Person in charge of accountingorgan: Jiang Jianxun33
Financial Statement Annotation
From 1 January 2009 to 30 June 2009
(Unless otherwise stated, the unit of all currency listed in this annotation is RMB yuan)
1. BASIC INFORMATION OF THIS GROUP
Yantai Changyu Pioneer Wine Co., Ltd. (the “Company”) was incorporated as a limited liability
company in accordance with the Company Law of the People’s Republic of China (the “PRC”)
in a reorganization carried out by Yantai Changyu Group Co., Ltd. (“Changyu Group
Company”), in which Changyu Group Company injected certain assets and liabilities in relation
to the 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 and healthy liquor.
Pursuant to the approval from the People’s Government of Shandong Province (Luzheng
[1997]119), the Company was reorganized as a limited liability company on 10 April 1997. On
23 September 1997, the Company was approved by China Securities Regulatory Commission
(the “CSRC”) ([1997] No. 52) to issue 88,000,000 domestically listed foreign shares (“B
shares”) on Shenzhen Stock Exchange. On 18 September 1997, the Company obtained the
business license with the registered number No. 26718011-9.
In October 2000, the Company was approved by CSRC Zheng Jian Zi [2000] No.148 to issue
32,000,000 domestically listed Common Shares (“A Shares”). The A shares were listed on
Shenzhen Stock Exchange on 26 October 2000.
Pursuant to the share reform notices issued by the Company in February 2006, Changyu Group
Company transferred its 13,977,600 shares to the shareholders of A share of the Company. After
the reform, percentage of equity attributable to Changyu Group Company decreased from
53.8% to 50.4%. At 30 June 2009, the total shares issued by the Company amounts to
527,280,000. Please refer to No.23 of Notes 6 in detail.
The holding company of the Group is Changyu Group Company, which was ultimately
controlled by Yantai SASAC, ILLVA Saronno Investment Italy, International Finance
Corporation and Yaitai Yuhua Investment and Development Company Limited.
2 BASIS OF PREPARATION OF FINANCIAL STATEMENT
These financial statements have been prepared in accordance with Chinese Accounting
Standards---Basic Standards (“CAS”) published by Ministry of Finance in February 2006 and
38 detailed accounting standards, guidelines, interpretations and other regulations (generally
called “Chinese Accounting Standards”).
The financial statements are prepared on a going concern basis.
STATEMENT ON COMPLIANCE WITH CAS
The financial statements fulfill the requirement of CAS and give a true and fair view of the
financial position of the Company and of the Group as at 30 June 2009, and of the operating
results and cash flows for January- June 2009.34
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES
The financial statement of this company and group dated on 30 June 2009 is compiled according
to the main accounting policies and accounting assessments, which are made out per Chinese
Accounting Standards.
(1) Accounting year
The accounting year of the Group is from 1 January to 31 December.
(2) Reporting currency
The Group reporting and presentation currency is the Renminbi (“RMB”). Unless otherwise
stated, the unit of the currency is Yuan.
(3) Basis of accounting and measurement basis
Except for certain financial instruments, the Group accounts have been prepared on an accrual basis
using the historical cost as the basis of measurement. Held noncurrent assets for sales shall be
valuated according to the lower one between the amount got by deducting estimated disbursement
from fair value and the original book value under the conditions for sales. Subsequently, if the assets
are impaired, impairment provisions are made in accordance with the relevant requirements.
(4) Business combination
A business combination is the bringing together of separate entities or businesses into one reporting
entity, classifying into the business combination under common control and business combination
under non-common control.
Business combination under common control
A business combination involving entities or businesses under common control is a business
combination in which all of the combining entities or businesses are ultimately controlled by the
same party or parties both before and after the business combination, and that control is not
transitory. The combining entity that obtains control of the other combining entities or businesses is
the acquirer, and the other entities involved are the acquirees. The combination date is when the
acquirer effectively obtains the control of the acquiree.
The assets and liabilities obtained by the acquirer shall be measured on the basis of the carrying
amount in the acquiree's accounts as at the date of combination. Where there is a difference between
the carrying amount of the net assets acquired by the acquirer and the carrying amount of the
consideration paid by it (or the total par value of the shares issued), the balance of stock premium in
capital surplus and transfer-in capital surplus under original policies shall be adjusted. If the amount
is not sufficient to offset the value of the net assets acquired, retained earnings shall be adjusted.
Any costs directly attributable to the combination are recognised as expenses when incurred.
Business combination under non-common control
A business combination involving entities or businesses under non-common control is a business
combination in which all of the combining entities or businesses are ultimately controlled by the35
different party or same parties before and after the business combination. The combining entity that
obtains control of the other combining entities or businesses is the acquirer, and the other entities
involved are the acquirees. The acquisition date is when the acquirer effectively obtains the control
of the acquiree.
As for business combination under non-common control, combination cost include the assets of
acquirer paid for getting the control right to the acquiree on the acquisition day, the liabilities
incurred or assumed, the fair value of equity securities issued and each direct related expense
incurred for business combination. For the business combination realized by many exchanging
and transacting steps, combination cost is the sum of each transaction cost. Combination cost
also include the cost agreed in combination contract for the subsequent item may influence
combination cost and the sum of money can be measured correctly caused by subsequent item
that is estimated in acquisition day and would influence the combination cost.
Under business combination under non-common control, the acquiree may recognize the fair
value of assets, liabilities and contingent liabilities.
Good will is the value of combination cost larger than acquiree recognizable net assets fair
value acquired in combination. If combination cost is smaller than acquiree recognizable net
assets fair value acquired in combination, the fair value of each recognizable assets, liabilities
and contingent liabilities of acquiree and the measurement of combination cost shall be
rechecked firstly. After rechecking, if combination cost is still smaller than acquiree
recognizable net assets fair value acquired in combination, the difference shall be counted into
current profits and losses.
(5) Consolidated financial statements
The consolidation scope of consolidated financial statements is determined on the basis of
control. The consolidated financial statements include the financial statements of the Company
and its subsidiaries for the year ended 30 June 2009. Subsidiary refers to the enterprise or main
body controlled by this company.
Accounting policies adopted by the subsidiaries are in consistency with the policies adopted by
the Company. All significant profits, losses and unrealized gains or losses accrued from
intercompany transactions within the Group are eliminated on consolidation.
The share of the owner's equity of subsidiaries not enjoyed by the Company are treated as
minority interest and be listed as "minority interest" separately under the owner's equity item
of a consolidated balance sheet.
For the subsidiaries acquired through business combination under non-common control, their
operating result and cash flow shall be included in the Group from the date the parent company
obtains the control. In preparation of the consolidated financial statements, the financial
statements of the subsidiary shall be adjusted on the basis of the fair value of the identifiable
assets and liabilities and contingent liabilities determined on the acquisition date.
For the subsidiaries acquired through business combination under common control, their
operating result and cash flow shall be included in the opening balances of the Group in the
acquisition period. When compiling comparison consolidated financial statement, related items
of previous financial statement shall be adjusted. It shall be deemed that the reported main body
formed by consolidation exists after the final controlling party begins to control.36
(6) Cash equivalents
Cash equivalents refers to short term highly liquid investments which are readily convertible
into known amounts of cash and which are subject to an insignificant risk of changes in value.
(7) Foreign currencies
Foreign currency transactions are initially recorded using the booking standard money at the date of
the transactions.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the booking
standard money of exchange ruling at the balance sheet date. All differences are taken to the income
statement with the exception of differences on specified foreign currency in accordance with the
capitalisation treatment permitted in Borrowing Costs. Non-monetary items that are measured in
terms of historical cost in a foreign currency are translated using the exchange rates at the dates of
the initial transactions. Non-monetary items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair value was determined.
(8) Inventories
Inventories comprised raw materials, goods in process, commodity stocks and turnover materials,
which refers to finished products or merchandise possessed by an enterprise for sale in the daily of
business, or work in progress in the process of production, or materials and supplies to be consumed
in the process of production or offering labor service.
The inventories are initially measured in cost. The cost of inventory consists of purchase costs,
processing costs and other costs.
The actual cost of sending out inventories are determined the weighted average method.
The harvest cost of agricultural products of a productive biological asset are determined on the
basis of the expenses of the materials and labor, indirect expenses to be apportioned, and other
necessary disbursements incurred during the course of output or gathering. The carrying
amounts of the productive biological assets are carried over as the cost of agricultural products
on weighted average basis.
The agricultural products after the harvest are measured in accordance with the CAS. 1-
Inventories.
Perpetual inventory system is adopted by the Company.
Inventories are stated at the lower of cost and net realisable value at the balance sheet date. If
the cost of inventories is higher than the net realizable value, the provision for the loss on
decline in value of inventories are made and be recognized in income statement. If the factors
causing any impairment of the inventories have disappeared, the amount of impairment are
resumed and be reversed from the provision for the loss on decline in value of inventories that
has been made. The reversed amount is recognised in the income statement of current year.
The net realisable value is determined based on the estimated selling prices less any estimated
costs to be incurred to disposal. The inventory provision for finished goods are assessed on the
ground of each item of inventories, and that for raw materials are made on the ground of the37
categories of inventories. Inventories that are relevant to products produced and sold in the
same region, have the same or similar end use or purpose and difficult to be measured
separately from other items shall be accrued for inventory depreciation provision.
(9) Long-term equity investments
Long-term equity investments comprise investments in subsidiaries, investments in joint ventures,
investments in associates and rights and interests investment that has no controls, has no joint
control or significant influence to the invested entity, has no quoted market price in an active market
and the fair value cannot be reliably measured. Long-term equity investments are initially measured
at initial investment cost.
Long-term equity investments by which Group has no controls, has no joint control or significant
influence to invested entities, has no quoted market price in an active market and the fair value
cannot be reliably measured are measured on cost method basis. Long-term equity investments by
which the company has control to the invested entities shall be measured on cost method basis in
separate financial statement of this company.
The long term equity investments are measured at its initial investment cost by employing the cost
method. The dividends or profits declared to distribute by the invested entity are recognized as the
current investment income. The investment income recognized by the Group is limited to the
amount received from the accumulative net profits that arise after the invested entity has accepted
the investment. Where the amount of profits or cash dividends obtained by the Group exceeds the
aforesaid amount, it is regarded as recovery of initial investment cost.
The invested entities over which the Group has joint control or significant influence are measured on
equity method basis. Joint control refers to the mutual control to a certain economic activity
according to contract agreement and exists only when the investing parties who need to share the
control power agree unanimously for making important financial and operating decisions related to
such economic activity. Significant influence refers to the right to take part in decision making of
financial and operating policies of an enterprise, but can’t control the formulation of such policies
independently or with other parties.
Excess of the initial cost of investment over the Group’s interest in the fair value of the identifiable
net assets of the invested entity should be included in the initial cost of long-term equity investment;
Excess of the Group’s interest in the fair value of identifiable net assets of the invested entities over
the initial cost of investment should be recognized in income statement.
The Group will recognize the investment profits or losses and adjust the book value of the long-term
equity investment in accordance with the attributable share of the net profits or losses of the invested
entity on equity method basis. The attributable share of the net profits and losses of the invested
entity should be recognised on the ground of the fair value of all identifiable assets in accordance
with the accounting policy and accounting period of the Group, and the inter-company transactions
between the associate and joint ventures attributable to the Group on the ground of the interest in
invested entities should be eliminated after making adjustments on the net profits of the invested
entities. For the investment in associate and joint ventures before the first-time adoption date, the
debit balance of the investments, if any, also should be deducted from the investment income. The
Group will reduce the book value of the long-term equity investment in accordance with the share of
profits or cash dividends declared to distribute by the invested entities. The net losses of the invested38
entity should be recognized until the book value of the long-term equity investment and other
long-term rights and interests which substantially form the net investment made to the invested
entities are reduced to zero, unless the Group has the obligation to assume extra losses. Where any
change is made to the owner's equity other than the net profits and losses of the invested entity, the
book value of the long-term equity investment are adjusted and be included in the owner's equity,
which will be transferred to the income statement according to a certain proportion when disposing
of the long-term equity investment. While dealing with long-term equity investment on equity
method basis, the part that is accrued into shareholder’s rights and interests shall be transferred into
current profits and losses according to relevant proportion.
(10) Biological assets
The biological assets of the Group are vines.
No biological asset may be recognized unless it satisfies the following conditions
simultaneously:
(i) The Group possesses or controls this biological asset due to past transaction or event,
(ii) The economic benefits or services potential related to this biological asset is likely to flow
into the Group, and
(iii) The cost of this biological asset can be measured reliably.
Biological assets comprise consumptive biological assets, productive biological assets, and
public welfare biological assets. Biological assets are initially measured at its cost.
The Group made deprecation for whose expected production and business purpose has been
realized, and recorded as costs of relevant assets or expenses to the income statement of the
current year. The depreciation method of productive biological asset is yearly average method.
The useful life, expected net residual value and annual depreciation rate are as follows:
Category Estimated useful life Estimated residual value Annual depreciation rate
Vines 20years - 5%
Consumptive biological assets and productive biological assets are examined as at each balance
sheet date. If any reliable evidence shows that the realizable net value of any consumptive
biological asset or the recoverable amount of any productive biological asset is lower than its
book value due to natural disaster, plant diseases and insect pests, animal disease or change of
market demand, provision should be made on the basis of the difference between the realizable
net value or the recoverable amount and the book value and be recorded in the income
statement of the current period. If the factors which cause any impairment of a consumptive
biological asset have disappeared, the amount of impairment are resumed and reversed limited
to the provision which has been made. The reversed amounts are recoginised in the income
statement of the current period. After accrual, productive biological assets depreciation
preparation shouldn’t be reversed.
No provision should be made for public welfare biological assets.
The Group reviewed the useful life, expected net salvage value, and the depreciation method of
the productive biological assets at the end of each year.
The costs of productive biological assets at the time of harvest are calculated by the total of
materials expenses, labor fee and allocated overheads, and transferred to costs of agriculture39
products based on weighted average method. The costs of agriculture products before the
harvest of productive biological asset are measured based on CAS1- Inventories.
At the time of sale, loss, death, damage or destroy of a biological asset, the balance after
deducting the carrying amount and the relevant taxes from the disposal income are recognised
in the income statement of the current period.
(11) Fixed assets
Fixed assets refers to the assets held for the purpose of producing commodities, providing labor
service, renting or business management, and the useful life exceeds one fiscal year.
No fixed assets may be recognized unless it simultaneously satisfies the following conditions:
(i) The economic benefits relating to the Fixed assets are likely to flow into the Group, and
(ii) The cost of the Fixed assets can be measured reliably.
Expenditure incurred on fixed assets meet the aforesaid recognition standards is capitalised as
an additional cost of that asset, otherwise is normally charged to the income statement in the
period in which it is incurred.
Fixed assets are initially measured at its cost. The cost of purchased fixed assets includes the
purchase price, relevant taxes, freight, loading and unloading fees, professional service fees and
other expenditures attributed to the fixed assets before they have been put into operation.
Depreciation is calculated on the fixed year average method basis. The estimated useful life,
residual value and annual depreciation rate are as follows:
Estimated useful life Estimated residual value Annual depreciation rate
Buildings 30-40years 5%-40% 2%-3.2%
Machinery 10-20years 5% 4.8%-9.5%
Motor vehicles 6-12years 5% 7.9%-15.8%
If the components of fixed assets have different useful lives or provide economic benefits to the
Group in different patterns, different depreciation rates should be used.
The Group reviewed the useful life, expected net salvage value, and the depreciation method of
the fixed assets at least at the end of each year, and made adjustment on if necessary.
(12) Construction in progress
Construction in progress are measured on actual construction costs, including the direct costs of
construction, capitalised borrowing costs during the period of construction and other
expenditures.
Construction in progress is reclassified to the fixed assets when completed and ready for use.
(13) Intangible assets
Intangible assets are initially measured at its cost.
The estimated useful lives are determined on the periods during which it can bring economic
benefits to the Group. If the periods cannot be reliably determined, the intangible assets are
classified as intangible assets with indefinite useful life.40
The useful lives of the intangible assets are as follows:
Item Useful life
Land use rights 50years
Software 5years
The land use rights obtained by this group are recorded as intangible assets. For
self-constructed buildings, the land use rights and plants are recorded as intangible assets and
Fixed assets respectively. Purchased buildings are allocated between land use rights and
buildings based on actual payments, and are totally recorded as fixed assets when it is difficult
to allocate.
Intangible assets with finite lives are amortised over the useful life on the straight-line basis. The
amortisation period and amortisation method for an intangible asset with a finite useful life are
reviewed at least at each balance sheet date and carry out regulation as required.
Intangible assets with indefinite lives are assed for impairment every year whenever there is an
indication that the intangible asset may be impaired. If there is evidence that the useful lives of the
intangible assets are finite, the change in the useful life assessment from infinite to finite is
accounted for on a prospective basis.
(14) Long term prepaid expenses
Long term prepaid expenses refer to the prepaid expenses which are amortized over 1 year. Long
term prepaid expenses are amortised over the useful economic life on the straight-line basis.
(15) Financial instruments
Financial instruments refer to the contracts whereby the financial assets of an enterprise are formed,
and whereby the financial liabilities or right instruments of any other entity are formed.
Recognition and final recognition of financial instruments
The Group recognizes the financial assets or financial liabilities as it contracted in financial
instruments agreements.
If the following conditions are met, the recognition of financial asset shall be terminated (or part of
financial asset, or part of a group of similar financial assets):
(i) If the right for collecting the cash flow of the said financial asset is terminated; or
(ii) If the right for collecting the cash flow of the said financial asset is maintained, but the
obligation of paying all the collected cash flow to the third party is borne under “handling over”
agreement; or
(iii) If the right for collecting the cash flow of the said financial asset is transferred, and (a)
almost all the risks and rewards on financial asset ownership are transferred actually, or (B)
although the risks and rewards on financial asset ownership aren’t transferred actually or
maintained, the control to such financial asset has been given up.
A financial liability is finally recognized when the obligation under the liability is discharged or
cancelled or expires. When an existing financial liability is replaced by another from the same lender41
on substantially different terms, or the terms of an existing liability are substantially modified, such
an exchange or modification is treated as a final recognition of the original liability and a
recognition of a new liability, and the difference between the respective carrying amounts is
recognized in the income statement.
Classification and measurement of financial assets
Financial assets are classified into four categories when they are initially recognized, including
financial assets at fair through profits or losses, held to maturity investments, loans and receivables
and available for sale financial assets. Financial assets and financial liabilities initially recognized at
fair value. For financial assets measured at fair value through profits or losses, the transaction
expenses thereof are directly included in the current profits or losses; for other categories of
financial assets and financial liabilities, the transaction expenses thereof are included in the initial
costs.
Financial assets at fair through profits and losses
Financial assets at fair value through profit or loss include financial assets held for trading and
financial assets designated upon initial recognition as at fair value through profit or loss. Financial
assets are classified as held for trading if they meet any of the following requirements: (i) The
financial assets being acquired mainly for the purpose of selling or repurchase in the near future; (ii)
Forming a part of the identifiable combination of financial instruments, which are managed in a
centralized way, and for which there is objective evidence that the enterprise will manage the
combination by way of short-term profit-making in the near future; (iii) Being a derivative
instrument, except for the derivative instrument being appointed as effective arbitrage tool,
derivative instrument that belongs to financial assurance contract and derivative instrument that
links with equity tools with no quoted market price in an active market and the fair value cannot be
reliably measured and be settled by delivering such equity tool. Theses financial assets are
subsequently measured at fair value, and all the realized and unrealized profits and losses are
included in profits and losses of the current year.
Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity are
classified as held-to-maturity when the Group has the positive intention and ability to hold to
maturity. Held-to-maturity investments are subsequently measured at carried amortized cost using
the effective interest method. Gains and losses are recognized in the income statement when the
investments are finally recognized or impaired, as well as through the amortization.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. Such assets are subsequently carried at amortized cost using the
effective interest method. Gains and losses are recognized in the income statement when the loans
and receivables are finally recognized or impaired, as well as through the amortization process.
Available-for-sale financial assets42
Available-for-sale financial assets are non-derivative financial that are initially designated as
available for sale or are not classified into any of the other three categories. After initial recognition,
available-for-sale financial assets are measured at fair value, with gains or losses recognized as
capital surplus reserve until the investment is finally recognized or until the investment is
determined to be impaired, at which time the cumulative gain or loss previously reported in equity
are recognized in the income statement. Amortized cost is calculated taking into account any
discount or premium on acquisition and includes fees that are an integral part of the effective interest
rate and transaction costs. Interest and dividends earned are recoded as interest income and dividend
income, respectively and are recognized in the income statement.
Available-for-sale financial assets which have no quoted price and fair value cannot be reliably
measured are measured at cost.
Classification and measurement of financial liabilities
Financial liabilities are classified into financial liabilities at fair through profits and losses and other
financial liabilities when they are initially recognized. For financial liabilities at fair through profits
and losses, the transaction expenses thereof are directly included in the current profits or losses,
while the transaction expenses of other financial liabilities are include in the initially recognized
amounts.
Financial liabilities at fair through profits and losses
Financial liabilities at fair through profits and losses include transaction financial liabilities, and the
designated financial liabilities measured at fair value upon initial recognition, and whose variation is
recognized in the income statement of the current year.
Financial liabilities that meet any of the following requirements are classified as transaction
financial liabilities: (i) The financial liability being undertaken mainly for the purpose of selling or
repurchase in the near future; (ii) Forming a part of the identifiable combination of financial
instruments, which are managed in a centralized way, and for which there is objective evidence that
the enterprise will manage the combination by way of short-term profit-making in the near future;
(iii) Being a derivative instrument, except for the derivative instrument being appointed as effective
arbitrage tool, derivative instrument that belongs to financial assurance contract and derivative
instrument that links with equity tools with no quoted market price in an active market and the fair
value cannot be reliably measured and be settled by delivering such equity tool. Theses financial
liabilities are subsequently measured at fair value, and all the realized and unrealized profits and
losses are recognized in the income statement of the current year.
Other financial liabilities
The financial liabilities are subsequently measured at amortized cost by adopting effective interest
rate method.
Fair value of financial instruments
The fair value of investments that are actively traded in organized financial markets is determined by
reference to quoted market prices. For investments where there is no active market, fair value is43
determined using valuation techniques. Such techniques include using recent arm’s length market
transactions; reference to the current market value of another instrument, which is substantially the
same; a discounted cash flow analysis; option pricing models and other valuation models.
Impairment of financial assets
The Group assesses at each balance sheet date whether there is any objective evidence that a
financial asset or a group of financial assets is impaired. Positive evidences refer to those occurred
after the initial recognition, have effect on estimated future cash flows of the financial assets, and
can be measured reliably.
Assets carried at amortized cost
If there is objective evidence that an impairment loss on financial assets carried at amortized cost
has been incurred, the amount of the loss is measured as the difference between the assets’ carrying
amount and the present value of estimated future cash flows (excluding future credit losses that have
not been incurred) discounted at the financial asset’s original effective interest rate after taking into
account of the collateral over these balances.
The Group first assesses whether objective evidence of impairment exists individually for financial
assets that are individually significant. If it is determined that objective evidence of impairment
exists for an individually assessed financial asset, the impairment losses are recognized in the
income statement of the current year. Not individually significant financial assets are assessed
individually or collectively included in a group of financial assets with similar credit risk
characteristics. Assets that are individually assessed for impairment and for which an impairment
loss is or continues to be recognized are not included in a collective assessment of impairment.
If, in a subsequent period, the amount of impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognized, the previously recognized
impairment loss is reversed. Any subsequent reversal of an impairment loss is recognized in the
income statement, to the extent that the carrying value of asset does not exceed its amortized cost at
the reversal date.
Available-for-sale financial assets
When a decline in the fair value of an available-for-sale financial asset has been recognized directly
in equity and there is objective evidence that the asset is impaired the cumulative loss that had been
recognized directly in capital surplus are removed from equity and recognized in profit or loss of the
current period. The amount of the cumulative loss that is removed from equity and recognized in the
income statement is be difference between the acquisition cost (net of any principal repayment and
amortization) and current fair value, less any impairment loss on that financial asset previously
recognized in the income statement.
Impairment losses on debt instruments are reversed through the profits or losses, if the increase in
fair value of the instrument can be objectively related to an event occurring after the impairment loss
was recognized in the income statement. Impairment losses on equity instruments classified as
available for sale are not reversed through the income statement.44
Financial assets carried at cost
If there is objective evidence that the financial assets have been impaired, the amount of the
impairment loss is measured as the difference between the carrying amount of the financial asset and
the present value of estimated future cash flows discounted at the current market rate of return for a
similar financial asset, and recognized in the income statement of the current year. Such impairment
losses will not be reversed.
The impairment on long term equity investment which are measured by employing cost method in
accordance with CAS2-Long term equity investments, have no quoted market price in an active
market and the fair value cannot be reliably measured are recorded according to the aforesaid
requirements.
Transfers of financial assets
If the Group has transferred substantially all the risks and rewards of the asset and waived the
control of the asset, the asset is derecognized. If the Group has retained substantially all the risks and
rewards of the asset, the assets are not de recognized.
Where the Group has neither transferred nor retained substantially all the risks and rewards of the
asset, if the Group waived the control of the assets, the financial assets are derecognised and the
assets and liabilities are recognized accordingly; if the Group did not waive the control of the assets,
the financial assets are recognized to the extent of the Group's continuing involvement in the asset,
and the liabilities are recognized accordingly.
(16) Impairment of assets
Impairments on assets other than inventories, deferred tax, financial assets and long term equity
investments without quoted market price in active market and the fair value cannot be reliably
measured are determined according to the following methods:
On each balance sheet date, the Group made assessment on whether or not there is any indication of
potential asset impairment. If there is any evidence that indicates the possibility of asset impairment,
the recoverable amount of the asset is estimated. Independent of whether there are indication of
potential impairment, the goodwill from an enterprise merger and intangible assets whose useful
lives are indefinite are subjected to impairment testing at the end of each year.
The recoverable amount of an asset is the higher of the asset's or cash-generating unit's value in use
and its fair value less costs to sell, and is determined for an individual asset. If it is difficult to
determine the recoverable amount individually, the recoverable amount is determined for the
cash-generating unit to which the asset belongs. Cash generating unit is determined on the ground of
the asset generate cash inflows that are largely independent of those from other assets or groups of
assets.
An impairment loss is recognized only if the carrying amount of an asset exceeds its recoverable
amount. An impairment loss is charged to the income statement and provision is made
accordingly.45
For the purpose of impairment testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group's cash-generating units, or groups of cash-generating
units, that are expected to benefit from the synergies of the combination, and not larger than the
reportable segment determined by the Group.
When conducting impairment testing on relevant cash-generating units or groups of cash-generating
units that have related goodwill, if there is any evidence indicating that impairment of the
cash-generating units or groups of units has occurred, the enterprise first carries out impairment
testing on the cash-generating units or groups of units excluding goodwill, calculating the
recoverable amount, comparing it with the corresponding carrying amount and recognizing any
resulting impairment loss. Then impairment testing are conducted on the cash-generating units or
groups of units with goodwill included, the carrying amount of these cash-generating units or
combinations of cash-generating units (including the carrying amount of the goodwill allocated
thereto) compared to the recoverable amount; if the recoverable amount of said cash-generating
units or groups of units is below the carrying amount thereof, The impairment loss are first deducted
from the carrying amount of the corporate assets and goodwill which have been allocated to the
cash-generating unit or group of units, and then deducted from the carrying amount of the remaining
assets pro rata with goodwill excluded from consideration.
After a loss of asset impairment has been recognized, it is not be reversed in future accounting
periods.
(17) Estimated liabilities
The Standard defines provisions as liabilities of uncertain timing or amount. A provision should
be recognized when, and only when:
(i) The group has a present obligation as a result of a past event;
(ii) It is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation; and
(iii) A reliable estimate can be made of the amount of the obligation.
The estimated liabilities are measured at the best estimate of the expenditure required to settle
the present obligation at the balance sheet date, taking into consideration of the risks,
uncertainties and time value of money. The book value of contingent liabilities is reviewed at
each balance sheet date. Whether there is any objective evidence indicating that the book value
cannot reflect the best estimated amount, adjustments should be make to the book value.
(18) Revenue
Revenue is recognized when it is probable that the economic benefits will flow to the Group and
when the revenue can be measured reliably, on the following bases:
Revenue from the sale of goods
When the significant risks and rewards of ownership have been transferred to the buyer, provided
that the Group maintains neither managerial involvement to the degree usually associated with
ownership, nor effective control over the goods sold, and cost of sales can be measured reliably.
Interest income46
Interest income is measured based on the borrowing periods and effective interest rate.
(19) Leases
Leases that transfer substantially all the rewards and risks of ownership of assets to the Group, are
accounted for as finance leases, otherwise are accounted for as operating leases.
As a lessee to operate leasing business
Rental expenses under the operating leases are credited to related costs of the assets or the income
statement on the straight-line basis over the lease terms.
(20) Employee benefits
Employee benefits refer to all kinds of remunerations and other relevant reimbursements made
by enterprises to their employees in exchange for services of employees. During accounting
periods wherein an employee renders services to an enterprise, the Group recognized the
benefits payable as a liability. The benefits payable which will be matured over 1 year are
discounted when it is material.
Pensions, medical insurance, unemployment insurance, other social insurance and housing fund
are recorded as cost of relevant assets or expenses for the current period.
If an Group terminates the labor relationship with any employee prior to the expiration of the
relevant labor contract or makes a severance package proposal with the purpose of enticing the
employees to willingly accept such a termination, the Group recognized the contingent
liabilities to be incurred due to severance pay, and recorded them in income statement of the
current period.
The treatment for the early retirement planning is on the same basis to that of the termination
benefits. The salaries and the social insurance expenses for the period from the employee’s
termination of service and the normal retirement of these staffs are recognized as employee
benefits payable when meeting the above said retirement benefits recognition requirements, and
recognized to income statement of the current period.
(21) Income tax
Income tax comprises current and deferred tax. Income tax is recognized in the income
statement, or in equity if it relates to goodwill generated from merger or affairs causing
recognition to equity.
Current income tax for the current and prior periods is measured at the amount expected to be
recovered from or paid to the taxation authorities. Taxable income is adjusted profit before tax
in accordance with the corporate income tax law.
Current income tax liabilities or assets for the current and prior periods of this group are
measured according to the income tax amount to be paid or returned that calculated as the
regulation of tax law.
Deferred income tax is provided, using the liability method, on all temporary differences at the
balance sheet date between the tax bases of assets and liabilities or items not recognized as
assets or liabilities but can be measure at tax bases and their carrying amounts.47
Deferred tax liabilities are recognized for all taxable temporary difference, except:
(i) where the deferred tax liability arises from goodwill or the initial recognition of an asset or
liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss; and
(ii) in respect of taxable temporary differences associated with interests in subsidiaries,
associates and joint ventures, where the timing of the reversal of the temporary differences
can be controlled and it is probable that the temporary differences will not reverse in the
foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, carry forward of
unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will
be available against which the deductible temporary differences, and the carry forward of
unused tax credits and unused tax losses can be utilized except:
(i) where the deferred tax asset relating to the deductible temporary differences arises from
the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; and
(ii) in respect of deductible temporary differences associated with interests in subsidiaries,
associates and joint ventures, deferred tax assets are only recognized to the extent that it is
probable that the temporary differences will reverse in the foreseeable future and taxable
profit will be available against which the temporary differences can be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the
period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the balance sheet date.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to allow
all or part of the deferred tax asset to be utilized. Conversely, previously unrecognized deferred
tax assets are reassessed at each balance sheet date and are recognized to the extent that it is
probable that sufficient taxable profit will be available to allow all or part of the deferred tax
asset to be utilized.
(22) Government grants
Government grants refers to monetary or non-monetary assets received by an enterprise from
the government, but excludes capital invested in the Group by the government that gives the
government ownership rights.
Government grants are recognized where there is reasonable assurance that the grant will be
received and all attaching conditions will be complied with.
Monetary grants are measured on the basis of the amount received or the amount receivable.
Non-monetary grants are measured based on the fair value of relevant assets.
Where the grant relates to an asset, the fair value is credited to a deferred income account and is
released to the income statement over the expected useful life of the relevant asset by equal
annual installments. Those to be used as compensation for future expenses or losses are
recognized as deferred income and are be recorded in the profit and loss account for the period
where the relevant expenses are recognized; or Those to be used as compensation for relevant48
expenses or losses already incurred are recorded directly in the profit and loss account for the
current period.
(23) Profits distribution
Profits after tax are distributed after appropriation of statutory surplus reserves and
discretionary common reserve.
In accordance with the Company Law of the PRC and the Company’s articles of association, the
Company is required to appropriate 10% of the net profit reported in the statutory accounts
(after offsetting prior years’ losses) to the statutory surplus reserve fund (“SRF”) until the
balance of SRF reaches 50% of the Company’s share capital. The SRF can be transferred to
shares. However, SRF is maintained at a minimum of 25% of the registered capital after the
transfer.
The proposed dividends or profits after the balance sheet date is not recognized as liability and
shall be disclosed in the notes to the financial statements.
(24) Significant accounting judgments and accounting estimates
Estimation uncertainty
The critical assumptions about future on the date of Balance Sheet and other critical sources to
estimate uncertainties are as follows and may lead major regulations in assets and liabilities
book value during future accounting period.
Deferred tax assets
Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that
taxable profit will be available against which the losses can be utilized. Significant
management judgment is required to determine the amount of deferred tax assets that can be
recognized, based upon the likely timing and level of future taxable profits together with future
tax planning strategies.
Depreciation
As set out in No.11 of note 3, the depreciation is calculated on the straight-line basis to write
off the cost of each item of fixed assts to its residual value over its estimated useful life. The
Group’s management determines the estimated useful lives for the assets. This estimate is
based on the historical experience of the actual useful lives of assets of similar nature and
functions. If the previous estimates have significant changes, and depreciation expenses will be
adjusted in the future periods.
Useful life of intangible assets
The assessment of expected useful life of intangible assets shall be based on the actual useful
life of intangible assets with similar nature or function, according to the past experiences and
consider the terms of applicable contractual rights or other legal rights of such intangible asset.
If the useful life of these intangible assets is shortened and prolonged, the amortization term of
intangible assets with limited useful life shall be altered. As for the intangible assets with
uncertain useful life, if it is proven that the useful life is limited, the useful life shall be
estimated and the asset shall be treated according to treatment principles for intangible assets
with limited useful life.49
Useful life of the biological assets
The useful life of biological assets is determined based on the industries practice and estimated
productive life. If the previous estimates have significant changes, the depreciation expenses
will be adjusted in the future periods.
Impairment of biological assets
As set out in No. 10 of note 3, the Group examined the consumptive biological assets and
productive biological assets at each balance sheet date. If any reliable evidence shows that the
realizable net value of any consumptive biological asset or the recoverable amount of any
productive biological asset is lower than its book value due to natural disaster, plant diseases
and insect pests, animal disease or change of market demand, the Group, on the basis of the
difference between the realizable net value or the recoverable amount and the book value, make
provision for the loss on decline in value of or for the impairment of the biological asset and are
recorded it in the profits and losses of the current period. The aforesaid realizable net value and
recoverable amount is determined according to the CAS 1-Inventories and CAS 8-Asset
Impairment, respectively.
Impairment of non-current assets
As set out in No.16 of note 3, the Group assesses whether the recoverable amount is lower than
the book value. If there are any indicators that the book value of non-current assets cannot be
fully recoverable, impairment losses should be recorded.
The recoverable amount is the higher of an asset’s fair value less costs to sell and the present
value of the future cash flows expected to be derived from an asset. As it is difficult for the
Group to obtain the quoted market price of the assets (or assts group), the fair value of the
assets cannot be reliably estimated. When the management make estimation on the expected
future cash flows from the asset or cash-generating unit, estimates should be made on choosing
a suitable production volume, selling price and related operating costs discount rate in order to
calculate the present value of those cash flows. When recoverable amounts are undertaken,
management may use all available for use information, including the forecast on production
volume, selling price and related operating costs on the ground of the reasonable and
supportable assumptions.
Bad accounts provision for trade and other receivables
A provision for impairment of trade receivables is established when there is objective evidence
that the Group will not be able to collect all amounts due according to the original terms of
receivables (Significant financial difficulties of the debtor, probability that the debtor will enter
bankruptcy are considered indicators that the trade receivable is impaired) The provision is
reassessed at the end of each year.
Inventory depreciation provision based on net realizable value
The inventory are measured on the lower of carrying value and net realizable value, and
provision should be made for impairment on obsolete and slow-moving inventories. The group
will reassess whether the net realizable value is lower than the carrying cost at the end of each
year.
Corporate income tax
The Company and its subsidiaries are required to pay corporate income tax separately for they50
are located in different provinces. Because certain affairs have not been confirmed by the tax
bureau when income tax expenses are provided, the management should make reliable
estimates and judgments based on prevailing tax laws and other related policies. If the final
results confirmed by the tax bureau are different from the recorded amounts, the difference will
have an impact on income tax expenses provided for the current period.
4. TAXES
The main taxes and tax rate are as follows:
Value added tax - VAT is levied at 17% on the invoiced amount after deduction
of eligible input VAT.
The subsidiary of the Company, Huanren Changyu Wine
National Wines Sales Co., Ltd. was incorporated in Liaoning
Huanren Manchus Autonomous Country. According to
Caishui[2006] No. 103 Notice on continuing to implementing
VAT preferential policy to goods sold by nationality trading
enterprises which are closed to frontier or in nationality areas,
the nationality trading enterprise in nationality area is exempt
from VAT.
Consumption tax - Consumption tax of the healthy liquor is levied at quantity and
certain tax rate of gross turnover, namely levied at 20% of
total turnover and RMB 1000 per ton. Except for healthy
liquor, other taxable products are levied on the gross turnover
of products at rates ranging from 10% to 20%,
Business tax - levied at 5% of taxable income,
City development tax - levied at 7% of total turnover tax actually paid,
Education supplementary tax - levied at 4% of total turnover tax actually paid.
Corporate income tax - According to Business Tax Law implemented on 1 January 2008,
business income tax shall be levied at 25% of taxable income and
the rate for business income tax shall be 25%.
The subsidiary of the Company, Huanren Changyu Wine National Wines
Sales Co., Ltd. was incorporated in Liaoning Huanren Manchus
Autonomous Country. According to Liao Guo Shui Han [2008] No.201
Reply of State Taxation Bureau of Liaoning Province on the Exemption
of Huanren Changyu Wine National Wines Sales Co., Ltd., etc. from
Business Income Tax, Huanren Changyu Wine National Wines Sales
Co., Ltd. is exempt from business income tax in 2009.
The subsidiary of the Company, Liaoning Changyu Ice Wine Chateau
Co., Ltd. is a productive foreign invested enterprise that is incorporated
in Liaoning Huanren Manchus Autonomous Country. According to
Income Tax Law of the Peoples Republic of China for Enterprises with
Foreign Investment and Foreign Enterprises and Notice of the State
Council on the Implementation of the Transitional Preferential Policies
in Respect of Business IncomeTax (Guo Fa [2007] No.39), productive51
foreign invested enterprises with operating periods of over ten years
shall be exempt from business income tax in the first and second year
from the beginning year of gaining profits and shall pay half of the
business income tax from the third year to the fifth year. 2009 is the
first year of this company paying half of the business income tax.
The Company and other subsidiaries are subject to the income
tax of 25%.
5. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS
Percentage of equity
attributable to the
Company
Name of invested
unit
Place and date of
registration
Registered capital Directly Indirect Investment
amount
Proportion
of voting
power
Incorporate
d code
Principle
activities
Yantai Changyu
Pioneer Vehicular
Transport Co., Ltd.
1 December 1992
Yantai in Shandong
Province, China
RMB300,000 100% - RMB
300,000
100% 165 031 729 Transportation
service
Beijing Changyu Sales
and Distribution Co.,
Ltd.
14 July 1998
Beijing, China
RMB500,000 70% 30% RMB
500,000
100% 634 377 029 Sales of wine
Yantai Kylin Packaging
Co., Ltd. (“Kylin
Packaging”) (a)
29 September 1999
Yantai in Shandong
Province, China
USD1,400,000 50% - RMB
5,953,878
62.5% 863 052 455 Production of
packaging
materials
Yantai Changyu-Castel
Wine Chateau Co., Ltd.
(“Changyu-Castel”) (b)
3 September 2001
Yantai in Shandong
Province, China
USD5,000,000 70% - RMB
28,968,100
100% 730 682 613 Production and
sales of wine
Changyu (Jingyang)
Pioneer Wine Co., Ltd.
5 December 2001
Jingyang in Shanxi
Province, China
RMB1,000,000 90% 10% RMB
1,000,000
100% 732 663 643 Production and
sales of wine
Yantai Changyu
Pioneer Wine Sales
Co., Ltd.
24 December 2001
Yantai in Shandong
Province, China
RMB8,000,000 90% 10% RMB
8,000,000
100% 746 576 380 Sales of wine
Langfang Development
Zone Castel-Changyu
Wine Co., Ltd.
(“Langfang Castel”) (c)
1 March 2002
Langfang in Hebei
Province, China
USD3,000,000 49% - RMB
12,142,200
100% 735 624 56X Production
and sales of
wine
Changyu (Jingyang)
Pioneer Wine Sales Co.,
Ltd. (“Jingyang Sales”)
8 April 2002
Jingyang in Shanxi
Province, China
RMB1,000,000 10% 90% RMB
1,000,000
100% 735 379 154 Sales of wine
Langfang Changyu Pioneer
Wine Sales Co.,Ltd. (“Langfang
Sales”).
19 April 2002
Langfang in Hebei
Province, China
RMB1,000,000 10% 90% RMB
1,000,000
100% 737 388 150 Sales of wine
Shanghai Changyu Sales
and Distribution Co., Ltd.
(“Shanghai Sales and
Distribution”)
28 April 2004
Shanghai, China
RMB1,000,000
30%
RMB
1,000,000
100% 749 571 075 Sales of wine52
Beijing Changyu
Castel Wine Chateau
Co., Ltd. (“Beijing
Chateau”)
27 October 2005
Beijing, China
RMB 110,000,000 70% RMB
77,000,000
70% 780 953
469
Production and
sales of wine
Yantai Changyu Wine
Sales Co., Ltd. (“Wines
Sales”)
9 January 2006
Yantai in Shandong
Province, China
RMB5,000,000 90% 10% RMB
5,000,000
100% 783 487 627 Sales of wine
Yantai Changyu Pioneer
International Co., Ltd.
(“Pioneer International”)
29 September 2005
Yantai in Shandong
Province, China
RMB5,000,000 70% 30% RMB
5,000,000
100% 780 766
161
Import and export
of goods and
technologies
Hangzhou Changyu
Wine Sales Co., Ltd.
14 June 2006
Hangzhou in Zhejiang
Province ,China
RMB 500,000 - 100% RMB
500,000
100% 788 283 631 Wholesale and
retail of
packing food
Ningxia Changyu
Grape-Growing Co.,
Ltd.(“Ningxia
Growing”)
16 November 2006
Yinchuan in Ningxia,
China
RMB 1,000,000 100% - RMB
1,000,000
100% 788 200 410 Plant and
purchase of
grape
Huanren Changyu Wine
National Wines Sales
Co., Ltd. (“National
Wines”)
16 November 2006
Huanren in
Liaoning ,China
RMB 2,000,000 100% - RMB
2,000,000
100% 794 822 179 Sales of wine,
healthy liquid, spirit
and non-spirituous
drinks
Liaoning Changyu
Ice Wine Chateau
Co., Ltd.(“Ice
Chateau”)
20 November 2006
Benxi in Liaoning
Province, China
RMB 26,300,000 51% - RMB
13,413,000
100% 747 128 301 Production and
sales of ice
wine
Yantai Development Zone
Changyu Trade Co., Ltd.
(“ Development Zone
Trade”)
4 December 2006
Yantai in Shandong
Province, China
RMB 5,000,000 - 100% RMB
5,000,000
100% 796 183 411 Wholesale and
retail of wine
Shenzhen Changyu
Wine Marketing Ltd.
31 July 2007
Futian District,
Shenzhen, China
RMB 500,000 - 100% RMB 500,000 100% 664 195 20X Wholesale and
retail of wine
Yantai Fushan
District Changyu
Trading Company
27 March 2007
Yantai in Shandong
Province, China
RMB 5,000,000 - 100% RMB
5,000,000
100% 660 176 044 Wholesale and
retail of wine
Beijing Chateau
Changyu AFIP
Global Meeting
Center Co., Ltd.
9 October 2007
Miyun District,
Beijing, China
RMB 500,000 - 100% RMB
500,000
100% 669 926 612 Meeting service, food
and drink,
accommodation,
sales of traveling
souvenir.
Beijing Chateau
Changyu AFIP
Tourism and Culture
Co., Ltd. (“AFIP
Tourism”)
4 June 2008
Miyun District,
Beijing, China
RMB 500,000 70% RMB
350,000
70% 676 627 372 Tourism
cultural
communication
, tourism
resource
development,
conference
service
Changyu (Ningxia)
Pioneer Wine Co.,
Ltd. (“Ningxia
Pioneer Wine”)
2 April 2008
Yinchuan Economic
and Technical
Development Zone
RMB 1,000,000 100% RMB
1,000,000
100% 670 408 275 Production and
sales of wine
and package;
grape
plantation,
processing and
purchase53
(a) Kylin Packaging is a sino-foreign joint venture of this company. According to the altered joint
venture contract, the company shall input USD 700,000 (about 5,794,000 yuan) as paid-in
capital, which takes 50% rights and interests of Kylin Packaging. Up to 30 June 2009, this
company has input fixed assets and inventories of 5,953,878 yuan as paid-in capital and the
contribution has been finished according to joint venture contract. For the Company have over
half of the voting rights and therefore has the power to control its operating, investing and
financing policies, the financial statements of Kylin Packaging are consolidated in the Group’s
financial statements.
(b) Changyu-Castel is a sino-foreign joint venture established by the Company investor.
According to an operation contract signed by the Company, Changyu-Castel and the foreign
investor, the Company is entrusted to manage Changyu-Castel and therefore has the power to
control its strategic operating, investing and financing policies, therefore the financial
statements of this company are consolidated in the Group’s financial statements.
(c) Langfang Castel is a sino-foreign joint venture established by the Company and a foreign
investor. According to an operation contract signed by the Company, Langfang Castel and the
foreign investor, the Company is entrusted to manage Langfang Castel and therefore has the
power to control its strategic operating, investing and financing policies, therefore the
financial statements of Langfang Castel are consolidated in the Group’s financial statements.
(d) Ice Chateau is a sino-foreign joint venture established by the Company and a foreign investor.
According to an operation contract signed by the Company, Ice Chateau and the foreign
investor, the Company is entrusted to manage Ice Chateau and therefore has the power to
control its strategic operating, investing and financing policies, therefore the financial
statements of Ice Chateau are consolidated in the Group’s financial statements.
6. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Monetary fund
30 June
2009
31 December
2008
Cash on hand 171,269 129,612
Cash in bank 1,691,047,459 1,745,992,613
Others 2,500,832 2,451,615
Total 1,693,719,560 1,748,573,840
The monetary fund with restricted ownership as at 30 June 2009 of the Group is RMB
2,500,832 yuan. See annex 6-17 for details.
On 30 June 2009, the Group has no monetary fund that is deposited beyond the boundaries.
The interest income of bank current deposit shall be calculated according to the interest rate of
current deposit. The maturity terms of short-term time deposit range from 3 months to 1 year,
which shall be determined according to the cash demand of the Group. The interest income
shall be calculated according to the interest rate of time deposit.54
The balance of time deposits over three months as at 30 June 2009 of the Group is RMB
750,980,160（The 31 December 2008: RMB 953,400,000）, with maturity terms ranging from 3
months to 1 year, and interest rates ranging from 2.25%-4.14%.
(2) Bills receivable
30 June 2009 31 December 2008
Bank acceptance bill 27,503,326 13,378,706
As at 30 June 2009, there isn’t any bills receivable due from the Company’s shareholders with
voting rights of 5% or above. (31 December 2008: nil)
As at 30 June 2009, there isn’t any bills receivable discounted to get a short-term loan. (31
December 2008: nil)
(3) Trade receivable
The credit term of account receivable is normally one month. Major customers can be granted a
credit term up to three months. The trade receivable balances are interest free.
The aged analysis is as follows:
30 June 2009
31 December
2008
Within 1 year 54,858,028 82,343,029
Less: bad account provision
Total 54,858,028 82,343,029
Classification according to risks:
30 June 2009 31 December 2008
Trade receivable % Bad debt
provision
Accrual
%
Trade receivable % Bad debt
provision
Accrual
%
Individually
significant 12,731,007 23.2 41,100,907 49.9
Other insignificant 42,127,021 76.8 41,242,122 50.1
54,858,028 100 82,343,029 100.0
30 June 2009 31 December 2008
Top five of trade receivables 10,056,979 24,519,023
Proportion of total trade receivables 18.33% 29.8%
Period of arrearage Within one year Within one year
As at 30 June 2009, there aren't any trade receivables due from the shareholders with voting55
rights of 5% or above. (31 December 2008: nil)
(4) Advanced payment
All Advanced payment is aged within one year.
At 30 June 2009, there aren't any outstanding balances due from the shareholders with voting
rights of 5% or above. (31 December 2008: nil)
(5) Interest receivable
30 June 2009 31 December 2008
Within one year 15,873,945 19,176,250
15,873,945 19,176,250
(6) Other receivables
The age analysis of other receivables is as follows:
30 June
2009
31 December
2008
Within 1 year 23,308,203 19,813,906
1 to 2 year 3,435,777
2-3 years 8,464,143
More than 3 years 8,464,143
31,772,346 31,713,826
Less: Bad debt provision of other receivables (8,000,000) (8,000,000)
23,772,346 23,713,826
Classification according to risks:
30 June 2009 31 December 2008
Trade
receivable
% Bad debt
provision
Accrual
%
Trade
receivable
% Bad debt
provision
Accrual
%
Individually
significant 12,584,743 39.6 8,000,000 63.6 15,355,044 48.4 8,000,000 52.1
Other
insignificant 19,187,603 60.4 16,358,782 51.6
31,772,346 100 8,000,000 31,713,826 100.0 8,000,000
Bad debt provision changing of other receivables is as follows:
At the beginning of year Accrual Decrease At the end of term
Reversal
Write off
January-June 2009 8,000,000 8,000,000
2008 8,000,000 8,000,000
30 June 2009 31 December 2008
Top five of other receivables 12,584,743 16,556,424
Proportion of total other receivables 39.6% 52.2%
Period of arrearage Within one year or above 3 years Within one year or 1-2 year56
At 30 June 2009, there aren't any other receivables due from the shareholders with voting rights
of 5% or above. (31 December 2008: nil)
(7) Inventories
The movement of inventory provision is as follow:
January-June 2009
At the beginning of
year
Accrual
Write off
At the end of term
Storage goods 8,817,146 8,817,146
2008 At the beginning of year Accrual Write off At the end of term
Storage goods 7,182,132 1,635,014 8,817,146
As at 30 June 2009, no ownership of inventory was restricted. (31 December 2008: nil)
(8) Held-to-maturity investment
30 June
2009
31 December
2008
Bond investment 15,000,000 15,000,000
Less: non current assets mature within one year 15,000,000 15,000,000
Less: investment depreciation provision held to maturity
The Group hasn’t sold any unexpired investment held to maturity as at 30 June 2009. (31
December 2008: nil)
The Group has evaluated on the intention and capability of holding. This bond investment will
be due on 31 December 2009, so the Group will classify it into non current assets mature
within one year on the date of balance sheet.
(9) Long-term equity investment
January-June 2009
Initial
amount
At the
beginning
of year
Increase
Including:
distributed
cash dividend
At the end
of term
Cost method
Yantai Dingtao Construction an
Development Co., Ltd.
(“Yantai Dingtao”)
10,000,000 10,000,000
Less: depreciation provision for
long-term equity investment
10,000,000 10,000,000
30 June 2009 31 December 2008
Raw materials 41,964,907 61,258,927
Storage goods 404,600,198 452,646,099
Products in process 349,501,185 492,854,720
796,066,290 1,006,759,746
Less: inventory provision (8,817,146) (8,817,146 )
787,249,144 997,942,60057
2008
Initial
amount
At the
beginning
of year
Increase
Including:
distributed
cash dividend
At the end
of term
Cost method
Yantai Dingtao Construction an
Development Co., Ltd.
(“Yantai Dingtao”)
10,000,000 10,000,000
Less: depreciation provision
for long-term equity
investment
10,000,000 10,000,000
As at 30 June 2009 and 31 December 2008, the issued capital of Yantai Dingtao is RMB
10,000,000, and the Group hold 18% of its’ equity interests.
(10) Fixed assets
January-June 2009 Buildings Machineries and equipments Motor vehicles Total
Cost
At the beginning of year 495,533,405 619,780,868 14,408,160 1,129,722,433
Purchase 10,569,833 1,424,240 500,000 12,494,073
Transferred from construction in progress 1,320,640 1,320,640
Discard and sales 1,101,200 1,101,200
At the end of term 506,103,238 621,424,548 14,908,160 1,142,435,946
Accumulated depreciation
At the beginning of year 92,094,253 299,734,197 9,664,848 401,493,298
Accrual 8,415,616 13,916,696 735,345 23,067,657
Transfer 1,052,967 1,052,967
At the end of term 100,509,869 312,597,926 10,400,193 423,507,988
Book value
At the end of term 405,593,369 308,826,622 4,507,967 718,927,958
At the beginning of year 403,439,152 320,046,671 4,743,312 728,229,135
2008 Buildings Machineries and equipments Motor vehicles Total
Cost
At the beginning of year 430,582,587 545,169,393 13,968,034 989,720,014
Purchase 36,766,972 45,867,790 812,226 83,446,988
Transferred from construction in progress 36,645,289 28,902,716 - 65,548,005
Discard and sales (8,461,443 ) ( 159,031 ) (372,100 ) (8,992,574)
At the end of term 495,533,405 619,780,868 14,408,160 1,129,722,433
Accumulated depreciation
At the beginning of year 80,510,352 259,869,996 8,629,507 349,009,855
Accrual 12,592,386 39,943,370 1,388,836 53,924,592
Transfer ( 1,008,485 ) (79,169 ) (353,495 ) (1,441,149)
At the end of term 92,094,253 299,734,197 9,664,848 401,493,29858
Book value
At the end of term 403,439,152 320,046,671 4,743,312 728,229,135
At the beginning of year 350,072,235 285,299,397 5,338,527 640,710,159
As at 30 June 2009, no ownership of fixed assets was restricted. (31 December 2008: nil)
As at 30 June 2009, no idle machineries, no fixed assets held for disposal, and no fixed assets
under finance lease and fixed assets held under operating lease. (31 December 2008: nil)
As at 30 June 2009, the cost and book value of fully depreciated fixed assets still in use is
RMB131,776,521 yuan and RMB4,744,282 yuan respectively.
As at 30 June 2009, the buildings with net book value of approximately RMB165,660,723
are without relevant building ownership certificates. The management of the Group believes
that the above mentioned affairs have no significant unfavorable impacts on the financial
statements on 30 June 2009.
(11) Construction in progress
January-June 2009
Budget At the
beginning
of year
Addition Transferred
to fixed
assets
At the end
of term
Financing
by
% of project input in
budget
Production of 20 thousand
tons wine with low
alcohol content
(champagne
reconstruction) 42,000,000 8,263,910 3,484,852 1,320,640 10,428,122Own funds 137.9%
Beijing Jiuzhuang Project
(European town) 267,500,000 98,880,689 63,512,660 162,393,349Own funds 111.5%
Ice Wine Chateau Building
Construction 5,000,000 1,754,791 2,495,311 4,250,102 Own funds 85%
Project of Ningxia Pioneer
Wine Combined
Workshop 100,000,000 26,079,028 14,444,389 40,523,417 Own funds 40.5%
Project of Ningxia Pioneer
Wine Fermenter 29,210,425 19,512,297 15,979,249 35,491,546Own funds 121.5%
154,490,715 99,916,461 1,320,640 253,086,536
2008 Budget At the
beginning
of year
Addition Transferred
to fixed
assets
At the end of
term
Financing by % of project inp
ut in budget
Cabernet Manufacturing
center reconstruction
project 31,000,000 316,743 1,380,001 ( 1,696,744 ) - Own funds 101.5%
Wine matching system
reconstruction in
Brandy Company 4,950,000 1,390,870 487,021 ( 1,877,891 ) - Own funds 38.0%
Production of 20
thousand tons wine
with low alcohol
content (champagne
reconstruction) 42,000,000 787,360 23,998,502 ( 16,521,952 ) 8,263,910 Own funds 129.6%
Beijing Jiuzhuang
Project (European
town) 230,000,000 30,691,242 97,320,427( 29,130,980 ) 98,880,689 Own funds 102.1%59
Kylin Packaging’s
purchase of equipments 3,511,481 3,511,481 124,535 ( 3,636,016 ) - Own funds 103.5%
Changyu-Castel
construction project 10,000,000 7,508,224 2,436,522 ( 9,944,746 ) - Own funds 99.5%
麒Ice Wine Chateau
Building Construction 5,000,000 3,210,141 - ( 1,455,350 ) 1,754,791 Own funds 64.2%
Video Management
System 2,460,000 1,230,000 54,326 ( 1,284,326 )
- Own funds 52.2%
Project of Ningxia
Pioneer Wine Combined
Workshop 100,000,000 - 26,079,028 - 26,079,028 Own funds 26.1%
Project of Ningxia Pioneer
Wine Fermenter 29,210,425 - 19,512,297 - 19,512,297 Own funds 66.8%
48,646,061 171,392,659( 65,548,005 ) 154,490,715
No capitalized interest was included in the addition of construction in progress from
January-June 2009.
At 30 June 2009, there are no indications for the impairment of construction in progress, and no
provision was made.
(12) Intangible assets
January-June 2009 Land use right Software Total
Cost
At the beginning of year 105,515,923 3,480,000 108,995,923
Increase 41,122,254 41,122,254
At the end of term 146,638,177 3,480,000 150,118,177
Accumulated amortization
At the beginning of year 6,872,997 696,000 7,568,997
Accrual 1,270,087 348,000 1,618,087
At the end of term 8,143,084 1,044,000 9,187,084
Book value
At the end of term 138,495,093 2,436,000 140,931,093
At the beginning of year 98,642,926 2,784,000 101,426,926
2008 Land use right Software Total
Cost
At the beginning of year 100,484,337 3,480,000 103,964,337
Increase 5,031,586 5,031,586
At the end of term 105,515,923 3,480,000 108,995,923
Accumulated amortization
At the beginning of year 3,371,589 3,371,589
Accrual 3,501,408 696,000 4,197,408
At the end of term 6,872,997 696,000 7,568,997
Book value
At the end of term 98,642,926 2,784,000 101,426,926
At the beginning of year 97,112,748 3,480,000 100,592,748
As at 30 June 2009, no ownership of fixed assets was restricted. (31 December 2008: nil)60
(13) Biological assets
30 June 2009 31 December 2008
At the beginning of year 40,675,990 19,821,941
Addition 503,797 20,854,049
Depreciation
Provision
At end of year 41,179,787 40,675,990
As at 30 June 2009, no ownership of biological assets was restricted. (31 December 2008: nil)
The productive biological assets are vines. The vines may suffer from scourge, plant diseases
and insect pests, market demand and other risk factors, which lead to impairment on assets. The
Group will adopt effective procedures to prevent plant diseases and insect pests, and strengthen
the management of trees and soils to safeguard the biological assets.
(14) Long term prepaid expenses
30 June,2009 31 December 2008
Land lease prepayments 17,913,396 19,380,988
Others 6,903,608 2,071,607
24,817,006 21,452,595
(15) Deferred tax assets
The confirmed deferred tax assets are as follows:
January-June 2009
Unrealized
profits from
intercompany
transactions
Retirement
benefits
Provision for
impairment
of assets
Pre-operating expenses Total
At the beginning of year 73,367,762 13,959,609 4,204,286 419,137 91,950,794
Profit and loss accrued (29,394,874) (876,872) (69,830) (30,341,576)
At the end of term 43,972,888 13,082,737 4,204,286 349,307 61,609,218
2008
Unrealized
profits from
intercompany
transactions
Retirement
benefits
Provision for
impairment of
assets
Pre-operating expenses Total
At the beginning of year 48,962,631 16,489,697 3,795,533 558,788 69,806,649
Profit and loss accrued 24,405,131 (2,530,088 ) 408,753 (139,651 ) 22,144,145
At the end of term 73,367,762 13,959,609 4,204,286 419,137 91,950,794
As at 30 June 2009, no deductable provisional difference of deferred tax assets was confirmed.
(31 December 2008: nil)61
(16) Provision for impairment of assets
January-June 2009
At the beginning of year Accrual Decrease At the end of term
Reversal Write
off
Bad debt provision 8,000,000 8,000,000
Inventory provision 8,817,146 8,817,146
16,817,146 16,817,146
2008
At the beginning of year Accrual Decrease At the end of term
Reversal Write
off
Bad debt provision 8,000,000 8,000,000
Inventory provision 7,182,132 1,635,014 8,817,146
15,182,132 1,635,014 16,817,146
(17) Assets with restricted ownership
January-June 2009
Assets with restricted ownership caused by other reasons
At the beginning of
year
Increase Decrease At the end of
term
Special deposit for housing
fund 2,449,118 51,714 2,500,832
2,449,118 51,714 2,500,832
2008
Assets with restricted ownership caused by other reasons
At the beginning of
year
Increase Decrease At the end of
term
Special deposit for housing
fund 2,363,969 85,149 2,449,118
2,363,969 85,149 2,449,118
(18) Trade payables
The trade payables are interest free. The Group is normally granted a credit period of not more
than three months from its suppliers.
As at 30 June 2009, there aren't any outstanding balances due to the shareholders with 5% or
above of voting rights. (31 December 2008: nil)
As at 30 June 2009, no significant outstanding balances are aged over one year.62
(19) Advance from customers
As at 30 June 2009, there aren't any outstanding balances due to the shareholders with 5% or
above of voting rights or other related parties. (31 December 2008: nil)
As at 30 June 2009, no significant outstanding balances due to customer are aged over one year.
(20) Employee benefits payable
January-June 2009
At the
beginning of
year Addition Reversal Payment
At the end
of term
Salaries and bonus 53,230,543 116,634,797 99,287,438 70,577,902
Staff welfare 3,507,489 3,507,489
Social insurance 7,855,995 12,054,963 19,910,958
Including: Medical Insurance 2,730,109 2,620,644 5,350,753
Pension 4,447,021 8,063,520 12,510,541
Unemployment insurance 555,723 604,764 1,160,487
Injury insurance 64,628 403,176 467,804
Pregnant insurance 58,514 362,858 421,372
Compensation for release of employees 55,838,433 3,507,489 52,330,944
Housing fund 1,464,029 2,419,056 3,883,085
Union fee and education fee 2,839,358 1,411,116 4,250,474
Allowances 30,621,189 30,621,189
151,849,547 136,027,421 130,096,459 157,780,509
2008
At the beginning
of year Addition Reversal Payment At end of year
Salaries and bonus 30,742,836 216,455,419 (193,967,712 ) 53,230,543
Staff welfare 6,298,968 ( 6,298,968 ) -
Social insurance 34,985,025 ( 27,129,030 ) 7,855,995
Including: Medical Insurance 9,838,306 ( 7,108,197 ) 2,730,109
Pension 21,046,564 ( 16,599,543 ) 4,447,021
Unemployment insurance 2,338,790 ( 1,783,067 ) 555,723
Injury insurance 922,745 ( 858,117 ) 64,628
Pregnant insurance 838,620 ( 780,106 ) 58,514
Compensation for release of employees 65,958,788 ( 10,120,355 ) 55,838,433
Housing fund 8,275,699 ( 6,811,670 ) 1,464,029
Union fee and education fee 5,445,098 ( 2,605,740 ) 2,839,358
Allowances 29,754,615 3,375,555 ( 2,508,981 ) 30,621,189
126,456,239 274,835,764 (249,442,456 ) 151,849,54763
(21) Tax Payables
30 June
2009
31 December
2008
Value added tax 30,560,051 46,660,776
Consumption tax 10,322,244 22,164,073
Corporation income tax 312,624,953 366,301,998
City construction tax -9,234,336 5,979,432
Others 23,017,014 16,607,975
367,289,926 457,714,254
(22) Other Payables
30 June
2009
31 December
2008
Payables for advertising expenses 157,473,691 138,938,687
Payables for deposition of selling agencies 140,483,507 188,657,721
Payables for deposition of supplies 13,299,802 19,215,534
Payable for trademark usage 5,573,091 16,209,426
Payables for equipment purchases, construction costs and
transportation charges 13,526,445 19,605,721
Others 99,678,206 30,296,728
430,034,742 412,923,817
At 30 June 2009, the balance due to the shareholders with voting right of 5% or above is RMB
5,573,091 (31 December 2008: RMB 16,209,426)
As at 30 June 2009, large sum of fund with age over 1 year in other payables balance is as follows:
Unit name Payable amount Reason for
unsettlement
Security deposit of suppliers 7,325,716 Security deposit
Security deposit to distributors 75,611,429 Security deposit
82,937,145
(23) Share capital
Up to 30 June 2009, the issued capital of the Company is RMB527, 280, 000, with a par value
of RMB1.00 each. Share type and structure is as follows:
At 30 June 2009 and 31 December 2008
shares %
Shares with restricted sales condition
State owned shares
Domestic legal person held
Other shares held with inner capital 239,385,120 45.40%
Including: Domestic non-state owned legal person shares 239,385,120 45.40%
Domestic natural person shares
Foreign capital shares
Including: Foreign legal person shares
Foreign natural person shares
Total shares with restricted sales condition 239,385,120 45.40%64
Shares with unrestricted sales condition
RMB common shares 109,410,600 20.75%
Domestic listed foreign capital shares 178,484,280 33.85%
Oversea listed foreign capital shares
Others
Total shares with unrestricted sales condition 287,894,880 54.60%
Total shares 527,280,000 100.00%
(24) Capital surplus
January-June 2009
At the beginning of year Increase Decrease At the end of term
Share premium 557,222,454 - 557,222,454
2008
At the beginning of year Increase Decrease At the end of term
Share premium 557,222,454 - 557,222,454
(25) Surplus reserve
January-June 2009
At the
beginning of
year
Increase Decrease At the end of term
Statutory surplus reserve fund 295,942,630 - 295,942,630
2008
At the beginning of year Increase Decrease At the end of term
Statutory surplus reserve fund 295,942,630 - 295,942,630
In accordance with the Company Law of the PRC and the Company’s articles of association, the
Company is required to appropriate 10% of the net profit reported in the statutory accounts (after
offsetting prior years’ losses) to the statutory surplus reserve fund (“SRF”) until the balance of
SRF reaches 50% of the Company’s share capital. The SRF can be transferred to shares.
However, SRF is maintained at a minimum of 25% of the registered capital after the transfer.
At 30 June 2009, the statutory surplus reserve fund has reached 50% of the issued capital. The
board of directors approved that no appropriation of SRF.
(26) Retained profits
January- June
2009
2008
Retained profits at the beginning of year 1,163,188,086 848,575,292
Add: net profits for the year 455,235,291 894,620,794
Less: common dividend payable （632,736,000） ( 580,008,000)
Ending balance of retained profits 985,687,377 1,163,188,086
Based on the profits distribution schedule of 2008 reached in the Shareholders’ Meeting on 30
April 2009, a issued capital in respect of RMB1.2 per share (based on the total 527,280,000
shares), amounting to a total cash dividend of 632,736,000.65
(27) Minority interest
The minority interest of the subsidiaries of the Group is as follows:
30 June 2009 2008
Beijing Castel 26,037,222 25,951,824
Ice Chateau 14,505,226 14,505,226
Changyu-Castel 12,174,645 12,174,645
Langfang Castel 12,640,000 12,640,000
Others 21,086,431 20,122,665
86,443,524 85,394,360
(28) Revenue and cost of sales
Revenue is as follows:
January- June 2009 January- June 2008
Sale of merchandise and produce 1,965,440,939 1,817,343,778
Other operating income 3,985,222 3,903,532
1,969,426,161 1,821,247,310
Main revenues and costs are as follows:
January-June 2009 January-June 2008
Revenue Cost Revenue Cost
Merchandising 1,965,440,939 585,855,716 1,817,343,778 544,029,381
Rendering of service 3,985,222 3,556,493 3,903,532 3,496,891
1,969,426,161 589,412,209 1,821,247,310 547,526,272
Total revenue of the top five customers 82,746,472 129,134,000
Proportion of total revenue 4.2% 7.09%
(29) Taxes and surcharges
January-June 2009 January-June 2008
Consumption tax 73,077,383 95,166,979
Business tax 24,718 34,733
City construction tax 21,446,482 20,583,301
Education surcharges 12,253,947 10,420,204
Total 106,802,530 126,205,21766
(30) Provision for impairment of assets
January-June 2009 January-June 2008
Bad debt provision 153,484
Inventory provision (called back)
153,484
(31) Finance income
January-June 2009 January-June 2008
Interest income 17,563,777 21,079,115
Less: bank charges (2,441,415) (1,240,054)
15,122,362 19,839,061
(32) Investment income
January-June 2009 January-June 2008
Bond investment income
Loss of subsidiary disposal
Other investment income 1,956,13
1,956,13
At the date of balance sheet, there is no significant restrict to return of the Group’s yield.
(33) Non-operation income
January-June 2009 January-June 2008
Gains on disposal of non-current assets 64,128
Penalty net income 19,094
Governmental subsidy 500,000 2,946,227
Inventory profits and gains
Security of price difference 7,525,698
Others 315,834 410,961
8,424,754 3,357,188
(34) Non-operation expenses
January-June 2009 January-June 2008
Loss on disposal of non-current assets
Donation 3,047,459
Others 46,353 140,665
46,353 3,188,12467
(35) Income tax expense
January-June 2009 January-June 2008
Current income tax expense 119,283,897 117,980,002
Deferred income tax expense 30,341,576 (3,563,462)
149,625,473 114,416,540
(36) Earnings per-share
January-June 2009 January-June 2008
Earnings
Earnings per share attributable to ordinary shareholders 455,235,291 398,804,486
Shares
Weighted average number of ordinary shares issued 527,280,000 527,280,000
Basic earnings per share (RMB yuan) 0.86 0.76
Diluted earnings per share 0.86 0.76
This company doesn’t have dilutive potential common share.
During the period from the balance sheet date to the reporting date, the are no subsequent
events taken place which may impact the number of the ordinary shares issued or potential
ordinary shares.
(37) Cash payments on other operating activities
The cash outflow with large amounts is as follows:
January-June 2009 January-June 2008
Transportation expenses 55,713,623 61,937,636
Trademark license fee 48,209,426 42,000,000
Traveling fee 10,770,831 9,339,701
Advertising fee 216,284,446 216,782,305
Office suppliers 17,963,592 10,968,462
Storage expenses 10,305,511 8,076,496
Others 4,958,036 17,352,171
364,205,465 366,456,771
(38) Cash flow from operating activities
January-June 2009 January-June 2008
Reconciled the net profit to Cash flow from operating activities
Net profit 456,284,455 401,607,698
Plus-Provision for impairment of assets 153,484
-Depreciation of fixed assets 23,067,657 26,042,57668
-Intangible assets amortization 1,618,087 1,567,131
-Amortization of long term prepaid expenses 293,728 327,849
-Losses on disposal of fixed assets
-Finance costs -21,581,967 (18,053,319)
-Investment income (1,956,132)
-Decrease in deferred tax assets/(addition) 30,341,576 (3,563,462)
-Decrease in inventories 210,693,456 (72,448,925)
-Decrease in operating receivables 21,063,529 54,367,151
-Increase in operating payables -6,270,819 365,047,316
Net cash flow from operating activities 715,509,702 753,091,367
(39) Cash and cash equivalents
30 June 2009 31 December 200
8
Cash and bank (No.1 of Note 6) 1,693,719,560 1,748,573,840
Less: restricted bank deposits 2,500,832 2,449,118
Time deposits with original maturity of more than
three months 750,980,160 953,400,000
Cash and cash equivalents at end of year 940,238,568 792,724,722
7. SEGMENT INFORMATION
Over 99% of the Group’s revenue is generated from domestic customers, and over 100%
assets of the Group are located in mainland China. Since the major customers and operating
activities are located in mainland China, it is not necessary to disclose detailed geographical
segment information. The business of the Group is all related to the manufacturing and sales
of wines, so it is not necessary to disclose business segment information.
8. RELATED PARTY TRANSACTIONS
(1) Definition for related parties
One party having control, common control or significant influence on the counterparties, and
two or more than two parties which are subject to control, common control or significant
influence of one party are defined as related parties.
The following parties are the related parties of the Group:
(i) the parent of the Group,
(ii) the subsidiary of the Group,
(iii) fellow subsidiaries under the common control,
(iv) investors having common control on the Group,
(v) investors having significant influence on the Group,
(vi) joint-ventures,
(vii) associates,
(viii) key investors and their closely families,
(ix) key investors and key management person of the Group and their closely families, and
(x) other enterprises controlled, common controlled or significantly influenced by key
investors and key management person of the Group and their closely families.
(2) Parent and subsidiary69
Parent Place of
registration
Scope of business Percentage of
shares
Percentage of
voting rights
Code of the
organization
Registered
capital
Changyu Group
Company
Yantai Manufacturing 50.4% 50.4% 265 645 824 50,000,000
During 2008, there are no fluctuations in registered capital of the parent company and its share
of equity interest and share of voting rights.
The subsidiaries of the Company are disclosed in note 5 and No.1 of notes 15.
(3) Other related parties
Name of related party Code of the organization Nature of related parties
Yantai Changyu Travelling
Company Limited 258 258 654 Company controlled by the same
parent company
Yantai Changyu International
Wine City Window Co., Ltd. 672 208 146 Company controlled by the same
parent company
(4) Significant related party transactions
All related party transactions are based on the negotiated price.
(1)Purchase goods from related parties
January-June
2009
January-June
2008
Yantai Changyu Travelling Company Limited 3,047,745 2,144,277
Yantai Changyu International Wine City Window
Co., Ltd. 58,402
3,106,147 2,144,277
(2) Sale goods to related parties
January-June
2009
January-June
2008
Yantai Changyu Travelling Company Limited 3,165,176 4,115,408
Yantai Changyu International Wine City Window
Co., Ltd. 382,931 739,628
3,548,107 4,855,036
From January to June 2009, the amount of goods sold to related parties took up 0.18% in the
total amount of sales of the Group (January-June 2008: 0.27%).
(3) Other transactions with main related parties
January-June
2009
January-June
200870
Trademark use fee （a） 37,573,091 36,346,876
Service fee
Patent expenses （b） 25,000 25,000
Rental expenses （c） 3,191,500 3,191,500
Key management person’s emoluments 3,044,976 3,315,089
(a) Trademarks license
Pursuant to a trademark’s license 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 fee at 2% of the
Group’s annual sales is payable to Changyu Group Company. The license is effective until
the expiry of the registration of the trademarks. For the period from January to June 2009,
the Group paid trademarks fee of RMB37,573,091 to Changyu Group Company
(January-June 2008: RMB36,346,876).
(b) Patents contract
Pursuant to a patents implementation license dated 18 May 1997, starting from 18
September 1997, the Company may use the patents of Changyu Group Company. The
annual patents usage fee payable by the Company to Changyu Group Company is
RMB50,000. The contract was expired on 20 December 2005. The Company renewed the
contract on 20 August 2006 and the expire date is 19 August 2016, the annual patents
usage fee payable by the Company to Changyu Group Company is still RMB50,000. For
the period from January to June 2009, the patents usage fee payable to Changyu Group
Company amounted to RMB25,000 (January-June 2008: RMB25, 000).
(c) Property leasing agreements
Pursuant to a patents implementation licence dated 28 November 2006, starting from the
beginning of year, the Company may rent properties from Changyu Group Company for
operation purposes at a basic annual rental of RMB 6,383,000, and the expired date is 31
December 2011. For the period from January to June 2009, the rental expenses payable to
Changyu Group Company amounted to RMB3,191,500.00 (January-June 2008:
RMB3,191,500.00).
(5) Amounts due to /from related parties
30 June 2009 December 31 2008
Trade receivables
Yantai Changyu Travelling Company Limited 3,599
Yantai Changyu International Wine City Window Co., Ltd. 304,976 727,691
Payables
Yantai Changyu Travelling Company Limited 644,092
Other payables
Changyu Group Company ---Trademark service fee
payable 5,573,091 17,597,63171
The amounts due to/ from related parties are daily operation current accounts. It was interest
-free, unsecured and with no specified repayment date.
9. OPERATING LEASE ARRANGEMENTS
As lessee
Significant operating lease: According to the leasing contract signed with the lesser, the
minimum lease receivables under non-cancellable operating leases are as follows:
30 June 2009 December 31 2008
Within one year, inclusive 13,292,010 14,235,372
In second years, inclusive 10,835,398 11,204,647
In the third years, inclusive 12,795,985 9,590,248
Over three years 10,269,169 15,464,635
47,192,562 50,494,902
10. COMMITMENTS
30 June
2009
December 31
2008
Capital commitments
Authorized by the board of directors but not
contracted 60,660,000 197,292,660
As at 30 June 2009, the company has performed the capital commitments of 2008 as planed.
11. FINANCIAL INSTRUMENTS AND RISK ANALYSIS
The Group’s principal financial instruments comprise of cash and held to maturity investments.
The main purpose of these financial instruments is to raise funds for the Group’s operations.
The Group has other financial assets and liabilities such as trade receivables, and trade and bills
payables, which arise directly from its various operations.
The main risks arising from the Group’s financial instruments are credit risk, liquidity risk, and
market risk.
1. Classification of financial instruments
At the date of balance sheet, the book values of kinds of financial instruments are as follows:72
30 June 2009
Financial assets
Held-to-maturity
investment Loan and receivables Total
Monetary fund 1,693,719,560 1,693,719,560
Bills receivable 27,503,326 27,503,326
Trade receivable 54,858,028 54,858,028
Other receivables 23,772,346 23,772,346
Interest receivable 15,873,945 15,873,945
Long-term equity
investment
15,000,000
15,000,000
15,000,000 1,815,727,205 1,830,727,205
Financial liabilities
Other financial liabilities Total
Trade receivable 170,644,008 170,644,008
Other receivables 430,034,742 430,034,742
600,678,750 600,678,750
31 December 2008
Financial assets
Held-to-maturity
investment
Loan and receiva
bles Total
Monetary fund 1,748,573,840 1,748,573,840
Bills receivable 13,378,706 13,378,706
Trade receivable 82,343,029 82,343,029
Other receivables 23,713,826 23,713,826
Interest receivable 19,176,250 19,176,250
Long-term equity
investment 15,000,000
15,000,000
15,000,000
1,887,185,651 1,902,185,651
Financial liabilities
Other financial liabilities Total
Trade receivable 220,708,265 220,708,265
Other receivables 412,923,817 412,923,817
633,632,082 633,632,082
2.Credit risk
Credit risk arises mainly from the risk that counterparties defaulting on the terms of their
agreements.
The Group trades only with recognized and creditworthy third parties. In addition, receivable
balances are monitored on an ongoing basis with the result that the Group’s exposure to bad
debts is not significant. For transactions that are not denominated in the functional currency, the
Group does not offer credit terms without the specific approval of the Head of Credit Control.
Other financial assets comprise of cash and bank, held to maturity investment and other
receivables. The credit risks of the financial assets arise from default of the counterparty and the73
maximum exposure is equal to the carrying amounts of these instruments.
Since the Group trades only with recognized and creditworthy third parties, there is no
requirement for collateral. Credit risk shall be managed according to client/transaction opponent,
geographic area and trade. Due to the nature of the business of the Group, the risks are
decentralized to customers, there was no significant concentration of credit risk.
Please see No.3 and 6 of annex 6 for data of credit risk exposure caused by trade receivables
and other receivables.
Analysis on the period of financial assets with no depreciation is as follows:
30 June 2009
Undue Overdue
Total
With no
depreciation
Within
1
month
1-3
months
3-6
months
Over 6
months
Trade
receivable 54,858,028 54,858,028
Other
receivables 23,772,346 23,308,203 464,143
Bills
receivables 27,503,326 27,503,326
Interest
receivable 15,873,945 15,873,945
Long-term
equity
investment 15,000,000 15,000,000
137,007,645 136,543,502 464,143
31 December 2008
Undue Overdue
Total
With no
depreciation
Within
1 month
1-3
months
3-6
months
Over 6
months
Trade
receivable 82,343,029 82,343,029
Other
receivables 23,713,826 23,249,683 464,143
Bills
receivables 13,378,706 13,378,706
Interest
receivable 19,176,250 19,176,250
Long-term
equity
investment 15,000,000 15,000,000
153,611,811 153,147,668 464,143
3.Liquidity risk
Liquidity risk refers the risk for shortage of fund when the enterprise performs obligations
related to financial liabilities.
This Group manages the risk for shortage of fund by circulation flow planning tool. This tool74
considers both the maturity of financial tools and the expected cash flow caused by the operation
of this Group.
The below list generalizes the analysis to maturity of financial assets and financial liabilities
according to the undiscounted cash flow of contract.
June 30, 2009
Financial assets
1-3 months
3 months to
1 year 1-5 years Total
Monetary fund 156,000,000 1,537,719,560 1,693,719,560
Bills receivable 27,503,326 27,503,326
Trade receivable 54,858,028 54,858,028
Other receivables 23,308,203 464,143 23,772,346
Held-to-maturity
investment 15,000,000 15,000,000
261,669,557 1,552,719,560 464,143 1,814,853,260
Financial liabilities:
1-3 months 3 months to 1 year 1-5 years Total
Trade receivable 170,644,008 170,644,008
Other receivables 347,097,597 82,937,145 430,034,742
517,741,605 82,937,145 600,678,750
31 December 2008
Financial assets
1-3 months 3 months to 1 year 1-5 years Total
Monetary fund 370,000,000 1,378,573,840 1,748,573,840
Bills receivable 13,378,706 13,378,706
Trade receivable 82,343,029 82,343,029
Other receivables 19,813,906 3,899,920 23,713,826
Held-to-maturity
investment 15,000,000 15,000,000
485,535,641 1,393,573,840 3,899,920 1,883,009,401
Financial liabilities:
1-3 months 3 months to 1 year 1-5 years Total
Trade receivable 215,645,069 5,063,196 220,708,265
Other receivables 331,506,683 81,417,134 412,923,817
547,151,752 86,480,330 633,632,082
This Group carries out financing by increasing capital stock. The financial liabilities of this
Group mainly include the items received in advance that is caused by operation directly and
trade receivable and other receivables that shall be paid off in 3 months (except for security
deposits and securities). The book value is equal to the fair value. The company think that this
Group may carry out cash realization in time by above financial assets and raise enough capital
to pay kinds of due financial liabilities, so there is no significant liquidity risk.
4.Market risk75
Market risk represents the fair value of financial instruments or the present value of future cash
flows may vary by the market price. Market risk includes interest rate risk and foreign currency
risk.
Interest rate risk
Interest rate risk represents the fair value of financial instruments of the present value cash flows
may vary by the change of interest rate.
The earnings and cash flow from operating activities are generally independent with fluctuation
of market interest rate, and there were no significant interest bearing assets and liabilities except
for cash in bank. The company believed that the Group has no significant concentration of
interest rate risks, and no interest rate swaps are designated to hedge against interest rate risks.
Foreign currency risk
Foreign currency risk represents the risks on fluctuation of fair value of financial instruments or
the future cash flow as a result of the fluctuation in foreign exchange.
The group’s business is principally conducted in PRC and most transactions are denominated in
RMB.
5.Fair value
The main financial assets of the Group comprise of cash and bank, trade receivables, other
receivables and held to maturity financial instruments. As at 30 June 2009, the Group have no
other financial assets with significant liquidation restriction except or certain cash and bank
(refer to No.1 of note 6). The Group has no financial assets impaired or overdue except for other
receivables.
12. CONTINGENT LIABILITIES
The Group and the Company did not have any significant contingent liabilities as at 30 June
2009.
13. POST BALANCE SHEET EVENTS
Based on the profits distribution schedule of 2008 reached in the Shareholders’ Meeting on 30
April 2009, a issued capital in respect of RMB1.2 per share (based on the total 527,280,000
shares), amounting to a total cash dividend of 632,736,000.
14. NOTES TO FINANCIAL STATEMENTS
(1) Monetary fund
30 June 2009 31 December 2008
Cash on hand 53,419 43,844
Cash in bank 1,055,932,605 1,197,051,014
Other monetary fund 2,500,832 2,449,118
1,058,486,856 1,199,543,976
As at 30 June 2009, the monetary fund with restricted ownership of this company was RMB76
2,500,832 yuan.
As at 30 June 2009, no monetary fund was deposited in oversea countries.
The interest income of bank current deposit shall be calculated according to the interest rate of
current deposit. The maturity terms of short-term time deposit range from 6 months to 1 year,
which shall be determined according to the cash demand of the Group. The interest income
shall be calculated according to the interest rate of time deposit.
The balance of time deposits over three months as at 30 June 2009 of the Company is RMB
750,980,160（31 December 2008: RMB 931,400,000）, with maturity terms ranging from 6
months to 1 year, and interest rates ranging from2.25% to 4.14%.
(2) Trade receivables
The credit term of account receivable is normally one month, and the major customers can be
granted a credit term up to three months. The trade receivable balances are interest free.
The aged analysis is as follows:
30 June 2009 31 December 2008
Within 1 year 9,800,168 13,271,136
Less: bad account provision
9,800,168 13,271,136
Classification according to risks:
30 June 2009 31 December 2008
Trade
receivable
% Bad debt
provision
Accrual
%
Trade receivable % Bad debt
provision
Accrual
%
Individually
significant 9,800,168 100.0 13,271,136
100.0
Other
insignificant
9,800,168 100.0 13,271,136 100.0
30 June 2009 31 December 2008
Top five of trade receivables 9,800,168 13,271,136
Proportion of total trade receivables 100% 100%
Period of arrearage Within one year Within one year
As at 30 June 2009, there aren't any trade receivables due from the shareholders with voting
rights of 5% or above. (31 December 2008: nil)
(3) Other receivables
The age analysis of other receivables is as follows:
30 June
2009
31 December
2008
Within 1 year 648,071,640 357,013,168
1 to 2 year 3,828,069
2-3 years 8,464,14377
More than 3 years 8,464,143
656,535,783 369,305,380
Less: Bad debt provision of other receivables (8,000,000) (8,000,000)
648,535,783 361,305,380
Classification according to risks:
30 June 2009 31 December 2008
Trade
receivable
% Bad debt
provision
Accrual
%
Trade receivable % Bad debt
provision Accrual
%
Individually
significant 634,998,909 96.7 8,000,000 1.2 362,947,856
98.3 8,000,000 2.2
Other
insignificant 21,536,874 3.3 6,357,524
1.7
656,535,783 8,000,000 369,305,380 100.0 8,000,000
Bad debt provision changing of other receivables is as follows:
At the beginning
of year
Accrual
Decrease
At the end
of term
Reversal
Write off
January-June 2009 80,000,000 80,000,000
2008 80,000,000 80,000,000
30 June 2009 31 December 2008
Top five of other receivables 543,089,339 325,731,990
Proportion of total other receivables 82.7% 88.2%
At 30 June 2009, there aren't any other receivables due from the shareholders with voting rights
of 5% or above. (31 December 2008: nil)
(4) Inventories
There weren’t any depreciation provisions for inventories.
30 June 2009 31 December 2008
Raw materials 18,470,006 36,040,016
Storage goods 109,283,877 14,985,941
Products in process 288,269,862 387,910,665
416,023,745 438,936,622
Less: inventory provision
416,023,745 438,936,62278
(5) Long-term equity investment
January-June 2009
Note At the beginning
of year
Additions Reduction At the end
of term
Equity investment by
cost method
-subsidiaries (1) 159,077,178 159,077,178
-other investments (2) 10,000,000 10,000,000
169,077,178 169,077,178
2008
Note At the beginning
of year
Additions Reduction At the end
of term
Equity investment
by cost method
-subsidiaries (1) 158,027,178 1,350,000 (300,000) 159,077,178
-other
investments (2) 10,000,000 10,000,000
168,027,178 1,350,000 (300,000) 169,077,178
(i) Investments in subsidiaries
January-June 2009
Percentage of
equity interest
Name of the company to be invested
Direct
control
Indirect
control
At the beginning of
year Additions Reduction
At the end
of term
Vehicular Transportation 100% 300,000 300,000
Beijing Changyu Sales and Distribution
Co.,Ltd. 70% 30% 350,000 350,000
Kylin Packaging 50% 5,953,878 5,953,878
Changyu-Castel 70% 28,968,100 28,968,100
Changyu (Jingyang) Pioneer Wine Co., Ltd. 90% 10% 900,000 900,000
Yantai Changyu Pioneer Wine Sales Co., Ltd. 90% 10% 7,200,000 7,200,000
Langfang Castel 49% 12,142,200 12,142,200
Jingyang Sales 10% 90% 100,000 100,000
Langfang Sales 10% 90% 100,000 100,000
Shanghai Changyu Sales and Distribution
Co., Ltd 30% 70% 300,000 300,000
Pioneer International 70% 30% 3,500,000 3,500,000
Beijing Chateau 70% 77,000,000 77,000,000
Wine sales 90% 10% 4,500,000 4,500,000
Ningxia Growing 100% 1,000,000 1,000,000
National Wine 100% 2,000,000 2,000,000
Ice Wine Chateau 51% 13,413,000 13,413,000
Beijing Chateau Changyu AFIP Tourism and
Culture Co., Ltd. 70% 350,000 350,000
Ningxia brewing 100% 1,000,000 1,000,000
159,077,178 159,077,17879
(ii) Other investments
Invested entity
Percentage of
equity interest
At the beginning of
year Additions Reduction At the end of term
Yantai Dingtao 18% 10,000,000 10,000,000
10,000,000 10,000,000
(6) Fixed assets
January-June 2009 Buildings Machineries and equipments Motor vehicles Total
Cost
At the beginning of year 195,508,852 486,170,627 9,967,689 691,647,168
Purchase 73,193 3,315,005 500,000 3,888,198
Transferred from construction in progress 1,320,640 1,320,640
Discard and sales 2,822,934 2,822,934
At the end of term 195,582,045 487,983,338 10,467,689 694,033,072
Accumulated depreciation
At the beginning of year 64,850,222 268,907,829 6,340,564 340,098,615
Accrual 2,079,020 11,908,206 498,959 14,486,185
Disposal 1,046,140 1,046,140
At the end of term 66,929,242 279,769,895 6,839,523 353,538,660
Book value
At the end of term 128,652,803 208,213,443 3,628,166 340,494,412
At the beginning of year 130,658,630 217,262,798 3,627,125 351,548,553
2008 Buildings Machineries and equipments Motor vehicles Total
Cost
At the beginning of year 224,846,337 450,128,112 8,866,270 683,840,719
Purchase 4,751,681 12,959,881 1,101,419 18,812,981
Transferred from construction in progress 2,494,965 23,098,805 - 25,593,770
Discard and sales ( 36,584,131 ( 16,171) ( 36,600,302
At the end of term 195,508,852 486,170,627 9,967,689 691,647,168
Accumulated depreciation
At the beginning of year 65,782,665 236,619,892 5,356,434 307,758,991
Accrual 4,159,847 32,300,688 984,130 37,444,665
Disposal ( 5,092,290 ( 12,751 )
- ( 5,105,041
At the end of term 64,850,222 268,907,829 6,340,564 340,098,615
Book value
At the end of term 130,658,630 217,262,798 3,627,125 351,548,553
At the beginning of year 159,063,672 213,508,220 3,509,836 376,081,728
As at 30 June 2009, no ownership of fixed assets was restricted. (31 December 2008: nil)80
As at 30 June 2009, no idle machineries, no fixed assets held for disposal, and no fixed assets
under finance lease and no fixed assets held under operating lease.
As at 30 June 2009, the cost and book value of fully depreciated fixed assets still in use is RMB
127,277,452 and net book value is RMB4,436,003.
As at the date of this financial report, the buildings with net book value of approximately
RMB25,277,435 have not obtained the relevant building ownership certificates. The
management of the Group believes that the above mentioned affairs have no significant
unfavorable impacts on the financial statements as at 30 June 2009.
(7) Intangible assets
January-June 2009 Land use right Software Total
Cost
At the beginning of year 96,594,766 3,480,000 100,074,766
Increase
Decrease
At the end of term 96,594,766 3,480,000 100,074,766
Accumulated amortization
At the beginning of year 5,730,382 696,000 6,426,382
Accrual 1,186,538 348,000 1,534,538
At the end of term 6,916,920 1,044,000 7,960,920
Book value
At the end of term 89,677,846 2,436,000 92,113,846
At the beginning of year 90,864,384 2,784,000 93,648,384
2008 Land use right Software Total
Cost
At the beginning of year 96,594,766 3,480,000 100,074,766
Increase
Decrease
At the end of term 96,594,766 3,480,000 100,074,766
Accumulated amortization
At the beginning of year 3,357,306 3,357,306
Accrual 2,373,076 696,000 3,069,076
At the end of term 5,730,382 696,000 6,426,382
Book value
At the end of term 90,864,384 2,784,000 93,648,384
At the beginning of year 93,237,460 3,480,000 96,717,460
As at 30 June 2009, no ownership of fixed assets was restricted. (31 December 2008: nil)
(8) Deferred tax assets
The confirmed deferred tax assets are as follows:81
January-June 2009
Unrealized profits
from
intercompany
transactions
Retirement
benefits
Provision for
impairment
of assets
Total
At the beginning of year
12,950,351 2,000,000 14,950,351
Profit and loss accrued
117,662 （749,130） （631,468）
At the end of term
117,662 12,201,221 2,000,000 14,318,883
2008
Retirement benefits Provision for
impairment of assets
Total
At the beginning of year
15,089,266 2,000,000 17,089,266
Profit and loss accrued
( 2,138,915 ) ( 2,138,915 )
At the end of term
12,950,351 2,000,000 14,950,351
As at 30 June 2009, no deductable provisional difference of deferred tax assets was confirmed.
(31 December 2008: nil)
(9) Assets Appreciation Provision
January-June 2009
Decrease
At the
beginning of
year
Accrual reversal Write off At the end of
term
Bad debt provision
Trade receivables -
Other receivables 8,000,000 8,000,000
8,000,000 8,000,000
2008
Accrual Decrease
At the
beginning of
year reversal Write off
At the end
of term
Bad debt provision
Trade receivables
Other receivables 8,000,000 8,000,000
8,000,000 8,000,000
(10) Trade payables
The Company is normally granted a credit period of not more than three months from its
suppliers.82
As at 30 June 2009, there aren’t any outstanding balances due to the shareholders with 5% of
voting rights or above. (31 December 2008: nil)
As at 30 June 2009, no significant outstanding balances are aged over one year.
(11) Employee benefits payable
January-June 2009
At the begin
ning of year Addition Reversal Payment
At the end of
term
Salaries and bonus 18,149,999 30,378,497 43,121,983 14,474,560
Staff welfare 3,244,439 3,105,051
Social insurance 2,342,098 10,540,927 34,053,936
Including: Medical
insurance 1,546,453 2,291,506 3244439
Pension 526,618 7,050,787 12,883,025
Unemployment
insurance 150,170 528,809 3,837,959
Injury insurance 62,258 352,539 7,577,405
Pregnant
insurance 56,599 317,285 678,979
Compensation for
release of
employees 51,801,405 414,797 48,804,884
Housing fund 129,139 2,115,236 373,884
Union fee and
education fee 2,129,155 1,233,888 2,996,521
Allowances 30,593,230 2,244,375 30,593,230
105,145,026 47,512,987 3,363,043 93,872,674
2008
At the beginning of
this year Addition Reversal Payment
At the end of
this term
Salaries and bonus 19,164,878 122,417,570 - (123,432,449 ) 18,149,999
Staff welfare - 5,743,868 - ( 5,743,868 ) -
Social insurance - 12,373,976 - ( 10,031,878 ) 2,342,098
Including: Medical insurance - 7,878,030 - ( 6,331,577 ) 1,546,453
Pension - 2,318,328 - ( 1,791,710 ) 526,618
Unemployment
insurance - 420,538
-
( 270,368 ) 150,170
Injury insurance - 920,375 - ( 858,117 ) 62,258
Pregnant insurance - 836,705 - (780,106) 56,599
Compensation for release of
employees 60,357,061 - - ( 8,555,656 ) 51,801,405
Housing fund - 6,108,411 - ( 5,979,272 ) 129,139
Union fee and education fee - 4,034,693 - ( 1,905,538 ) 2,129,155
Allowances 29,754,614 3,347,597
- ( 2,508,981) 30,593,230
109,276,553 169,026,115 (28,420,330) (158,157,642 ) 105,145,02683
(12) Tax Payables
30 June 2009
31 December
2008
Value added tax 3,784,760 7,682,342
Consumption tax 8,359,029 16,408,240
Corporation income tax 27,216,131 28,116,289
City construction tax 943,224 2,135,350
Others 15,692,859 13,876,106
55,996,003 68,218,327
(13) Other payables
30 June 2009
31 December
2008
Running fund 482,718,172 230,336,025
Payables for deposit of suppliers 11,912,004 15,001,565
Payables for equipment purchases, construction
costs and transportation charges 103,877 8,954,505
Others 10,358,064 12,542,485
505,092,117 266,834,580
As at 30 June 2009, large sum of fund with age over 1 year in other payables balance is as follows:
Unit name Payable amount Reason for unsettlement
Security deposit of suppliers 4,326,485 Security deposit
(14) Retained profits
January- June 2009 2008
Retained profits at the end of last year 1,128,102,212 715,281,206
Add: net profits for the year 169,264,620 992,829,006
Less: common dividend payable （632,736,000） (580,008,000)
Ending balance of retained profits 664,630,832 1,128,102,212)
Based on the profits distribution schedule of 2008 reached in the Shareholders’ Meeting on 30
April 2009, a issued capital in respect of RMB1.2 per share (based on the total 527,280,000
shares), amounting to a total cash dividend of 632,736,000.
(15) Revenue and cost of sales
January-June
2009
January-June
2008
Sale of merchandise and products 458,755,309 616,970,63284
Other operating income 10,650,932 23,362,957
469,406,241 640,333,589
Main revenues and costs are as follows:
January-June 2009 January-June 2008
Revenue Cost Revenue Cost
Merchandising 458,755,309 341,841,565 616,970,632 455,886,890
Rendering of
service
10,650,932
10,529,371
23,362,957 24,031,540
469,406,241 352,370,936 640,333,589 479,918,430
Top revenue of top five customers 453,616,514 606,742,779
Proportion of total revenue 96.64% 94.75%
(16) Investment income
January-June
2009 January-June 2008
Investment income on cost basis 151,717,059 179,822,962
Income for purchasing new share 1,956,132
151,717,059 181,779,094
At the date of balance sheet, there is no significant restrict to return of the Group’s yield.
From January to June 2009, the total distributed dividend of subsidiaries was RMB 151,717,059 yuan,
which was gotten by monetary form.
(17) Cash flow from operating activities
Reconciled the net profit to Cash flow from operating
activities
January-June
2009
January-June
2008
Net profit 169,264,620 190,012,766
Add :provision for impairment of assets
Fixed assets depreciation 14,486,185 19,293,656
Intangible assets amortization 1,534,538 1,542,432
Losses on disposal of fixed assets 293,994
Finance expense -21,530,217 -18,053,319
Investment income -151,717,059 -181,779,094
Decrease in deferred tax assets 631,468 915,439
Decrease in inventories 22,912,877 38,568,783
Decrease /(increase) in operating receivables -154,444,226 -236,785,836
Increase in operating payables 444,459,577 615,159,739
Net cash flow from operating activities 325,597,763 428,874,56685
(18) Cash and cash equivalents
30 June 2009 31 December 2008
Monetary fund (No. 1 of note 14) 1,058,486,856 1,199,543,976
Less: restricted bank deposits 2,500,832 2,449,118
time deposits with original maturity of more
than three months when acquired 750,980,160 931,400,000
Cash and cash equivalents at end of year 305,005,864 265,694,858
(19) Related party transactions
19.1 Sales to related parties
January-June 2009 January-June 2008
Pioneer International 157,409 5,123,297
Pioneer Import and Export 676,173
Beijing Chateau 53,200 1,584,744
Yantai Changyu Pioneer Wine Sales Co. Ltd. 442,274,478 581,325,635
Langfang Castel 6,379,938 5,085,293
Changyu (Jingyang) Pioneer Wine Co. Ltd. 2,799,160 3,468,228
Yantai Changyu Traveling Co. Ltd. 1,709,142 2,851,447
Yantai Changyu International Wine City
Window Co., Ltd. 88,444
Castel Chateau 12,357,107
Wine Sales 70,353
National Wines 708,566
Liaoning Ice Wine 453,796
454,662,093 612,504,317
Total revenue 469,406,241 616,970,632
Proportion of total revenue 96.86% 99.28%
19.2 Purchase from related parties
January-June 2009 January-June 2008
Kylin Packaging 24,452,706 33,344,478
24,452,706 33,344,478
19.3 Other related party transactions
January-June 2009 January-June 2008
Service fee 250,000
Rental expenses 3,191,500 3,191,500
Patent fee 25,000 25,000
Key management person’s
emoluments
3,216,500 3,466,500
Please refer to No. 4 of note 8 for the detailed content of the contract.86
(20) Related party receivables and payables
30 June 2009
31 December
2008
Other receivables
Changyu (Ningxia) Pioneer Wine Co., Ltd. 85,914,500 52,432,295
Kylin Packaging 1,556,785 2,223,331
Ningxia Growing 43,573,247 35,270,498
Ice Chateau 39,709,434 16,978,245
Beijing Chateau 297,050,000 218,827,621
Jingyang Plant 276,857
Langfang Plant 432,911
Yantai Castel Chateau 65,284,657
533,798,391 325,731,990
Dividend receivable
Yantai Changyu Pioneer Wine Sales Co. Ltd. 116,085,055
Other payables
Changyu Vehicle Transportation Company 2,866,794 4,417,323
Yantai Castel Chateau 157,867,224
Pioneer International 8,444,962 11,665,499
Hengren National Wines 152,209 25,128,717
Langfang Sales Company 126,614
Langfang Plant 10,640,113
Jingyang Plant 19,106,097
Jingyang Sales Department 1,414,901
Yantai Changyu Pioneer Wine Sales Co. Ltd. 471,254,207
Parent company-Right to use trademark 5,573,091 16,209,426
488,291,263 246,575,914
15. PPROVAL OF THE FINANCIAL STATEMENTS
The financial statements have been authorized by the board of directors on Aug.6th, 2009.87
Annex 1: Supplementary data for financial statement
1. RETRUN ON NET ASSETS AND EARNINGS PRE SHARE
January-June 2009
Return on net assets (%) Earnings per share (RMB)
Fully diluted Weighted Average Basis diluted
Net profit attributable to
shareholders of the Company 19.24 15.82 0.86 0.86
Net profit attributable to
shareholders of the Company
deduct Non-incidental
profits/(losses) 18.98 15.63
0.85 0.85
This company doesn’t have dilutive potential common share.
January-June 2008
Return on net assets (%) Earnings per share (RMB)
Fully diluted Weighted Average Basis diluted
Net profit attributable to
shareholders of the Company
19.47 16.42 0.76 0.76
Net profit attributable to
shareholders of the Company
deduct Non-incidental
profits/(losses)
19.40 16.36 0.75 0.75
This company doesn’t have dilutive potential common share.
Net profit attributable to ordinary shareholders of the Company deducting incidental
income/expenses
January-June
2009
January-June
2008
Net profit attributable to shareholders
of the Company 455,235,291 398,804,486
Add/(Less): incidental (profits)/losses
Profit/loss form disposal of non-current assets
Investment income （1,956,132）
Other non-operating income (8,378,401) （169,064）
Tax effect of incidental (profits)/expense 2,094,600 531,299
Net profit deducting incidental (profits)/expenses 448,951,490 397,210,589
Add :attributable to minority shareholders 69,996 25,915
Net profit deducting incidental income/expenses attributable
to the ordinary shareholders of the Company 449,021,487 397,236,504
The confirmation of incidental (profits)/losses is based on No.1 regulation of
explanation to information disclosures regulations on Public securities issuing Corporate,
CRSC [2007] No.9.88
7. DOCUMENTS AVAILABLE FOR INSPECTION
1. Original copy of the Semi-annual Report signed by the Chairman of the
Board of Directors;
2. Financial Statements signed by and under the seal of the Chairman of the
Board of Directors, the General Manager and the Chief of the Accounting
Department;
3. All the originals of the Company’s documents and public notice disclosed in
the newspapers designated by the Securities Supervision Committee of
China in the report period;
4. Original copy of the Articles of Association;
5. Other related documents.
Yantai Changyu Pioneer Wine Company Limited
Board of Directors
August 8th, 2009
