YANTAI CHANGYU PIONEER
WINE COMPANY LIMITED
2010 Semi-annual Report
2010.08.072
Important
The Board of Directors，Board of Supervisors, directors, supervisors
and senior managers of the Company collectively and individually,
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.
The 2010 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……………………..……… 5
2. CHANGES IN SHARE CAPITAL AND SUBSTANTIAL SHAREHOLDERS... 6
2.1 THE CHANGES IN SHARE CAPITAL…………………………………………..………. ………… 6
2.2 THE TOTAL SHAREHOLDERS AND THE TOP TEN SHAREHOLDERS AT THE
END OF REPORT PERIOD…………………………………………………………………………
7
2.3 THE TOP TEN SHAREHOLDERS FOR LIMITED SHARE AND LIMITATED
CONDITIONS......................................................... ..... .....
8
2.4 THE CHANGES OF THE CONTROLLING SHAREHOLDER OR ACTUAL
CONTROLLER…………………………………………………………………………........................
8
3.
INFORMATION OF THE DIRECTORS, SUPERVISORS AND SENIOR
MANAGEMENT TEAM…………………………………….……………….. …………
9
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…………………………………….…………………………………….
10
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 CORPORATE GOVERNANCE OF THE COMPANY……… 15
5.2 THE EXECUTION OF THE COMPANY’S PROFIT DISTRIBUTION PLAN………… 15
5.3 THE PRELIMINARY PLAN ON PROFIT DISTRIBUTION FOR FIRST HALF OF
2010…………………………………………………………………………………………………………………
16
5.4 THE MATERIAL LITIGATION AND ARBITRATION………………………………………..…… 16
5.5 THE MATERIAL ACQUISITION , SALE AND MERGER ON ASSETS………………….. 16
5.6 MATERIAL RELATED PARTY TRANSACTION………………………………………… 16
5.7 MATERIAL CONTRACT AND ITS EXECUTION…………………………………………………… 17
5.8 MATERIAL WARRANTY………………………………………………………………………………………. 17
5.9 UNDERTAKING EVENTS OF THE COMPANY AND SHAREHOLDERS HOLDING 174
5% OR MORE SHARES OF THE COMPANY………………………………………………………
5.10 PUNISHMENT RECORDS…………………………………………..……………………………………… 17
5.11 OTHER MAJOR ISSUES, THE ANALYSIS AND EXPLANATION ON RELATED
INFLUENCE AND SOLUTIONS…………………………………………………………………………
18
5.12 THE PROPOSAL OR EXECUTION ON SHARE INCREASE BY SHAREHOLDERS
HOLDING 30% OR MORE SHARES DURING REPORT PERIOD …………………
18
5.13 COMPENSATION FROM RELATED PARTY FOR THE PROCEEDS PROMISED BY
THE COMPANY ON SHARE REFORM AND MAJOR MERGER ON ASSETS………
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 PERIOD……………………………………………………………………
20
6. FINANCIAL REPORT………………………………………………………………….. 21
6.1 CONSOLIDATED AND PARENT COMPANY’S BALANCE SHEET………………………… 21
6.2 CONSOLIDATED AND PARENT COMPANY’S INCOME STATEMENT………………… 23
6.3 CONSOLIDATED AND PARENT COMPANY’S CASH FLOW STATEMENT…………… 24
6.4 CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY CHANGES………… 26
6.5 STATEMENT OF EQUITY CHANGES FOR PARENT COMPANY’S
SHAREHOLDERS …………………………………………………………………………
29
6.6 NOTES TO FINANCIAL REPORT……………………………………………………… 32
7. DOCUMENTS AVAILABLE FOR INSPECTION………………………………….. 1155
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
Office Address: 56, Dama Road, Yantai City, Shandong Province
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
Authorized Representative of
the Securities Affairs
Name Qu Weimin Li Tingguo
Contact Address 56, Dama Road, Yantai City,
Shandong Province
56, Dama Road, Yantai City,
Shandong Province
Telephone 0086-535-6633658 0086-535-6633656
Fax 0086-535-6633639 0086-535-6633639
E-Mail quwm@changyu.com.cn stock@changyu.com.cn
The newspapers to disclose
the Company’s information
“China Securities News”, “Securities Times” in the PRC and “Hong
Kong Commercial Daily” outside the PRC
Web Site for carrying this 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 Chinese 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,
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 5,310,990,020 5,364,160,798 -0.99
Total owners’ equity (or shareholders’ equity) 2,991,164,492 3,038,226,013 -1.55
Net assets value per share attributed to shareholders of listed
company
5.67 5.76 -1.56
At the report
period (Jan.—June)
the same period
of last year
more or
less (%)
Business revenue 2,481,885,134 1,969,426,161 26.02
Business profit 774,791,010 597,531,527 29.67
Total profit
779,242,762 605,909,928 28.61
Net profit attributed to the shareholders of the listed company 585,674,479 455,235,291 28.65
Net profit after irregular profit & loss 582,953,418 455,235,291 28.06
Basic earnings per share (CNY) 1.11 0.86 29.07
Diluted earnings per share (CNY) 1.11 0.86 29.07
Return on shareholder’ s equity (%) 19.51 19.24 0.27
Net cash flows from operating activities 639,706,842 715,509,702 -10.59
Net cash flows per share from operating activities 1.21 1.36 -11.036
1.2.2 The irregular profit and loss
1.2.3 Differences between the PRC Accounting Standards and the
International Accounting Standards
During the report period, the Company had no transaction or issue with any
difference between the PRC Accounting Standards and the International
Accounting Standards, the net profit and the net asset was confirmed to be
same according to the PRC Accounting Standards and the International
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
Distribute
bonus
share
Transfer
other
capital to
share
capital
others
Sub
total
21302 Percen
tage
Limited Shares 23939 45.40 -2636 -2636 23939 40.40
1.State share
2.State legal
person share
3.Other domestic
corporate share
23939 45.40 -2636 -2636 23939 40.40
Including:
Domestic legal
person share
23939 45.40 -2636 -2636 23939 40.40
Domestic natural
person share
4.Foreigner-held
share
Including:
Overseas legal
person share
Overseas natural
person share
Unlimited
Shares
28789 54.60 +2636 +263 314259 59.60
1.CNY common
share
10941 20.75 +2636 +2636 13577 25.75
2.Foreign share
listed in PRC
17848 33.85 17848 33.85
3.Foreign share
listed overseas
4.others
Total shares 52728 100 52728 1007
2.2 The total shareholders and the top 10 shareholders at the end of
report period
Total number at the end of report period The Company had 11,185 shareholders. There were
6,459shareholders with A shares, and 4,726shareholders
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% 265,749,120 213,021,12
0
0
HTHK/CMG FSGUFP-CMG FIRST STATE
CHINA GROWTH FD
B share 4.17% 21,996,470 0 0
GAO-LING FUND,L.P. B share 2.60% 13,719,554 0 0
BBH BOS S/A FIDELITY FD - CHINA
FOCUS FD
B share 1.44% 7,606,147 0 0
GOVERNMENT OF SINGAPORE INV.
CORP.- A/C "C"
B share 0.93% 4,882,121 0 0
UBS (LUXEMBOURG) S.A. B share 0.85% 4,468,030 0 0
MIRAE ASSET CHINA SOLOMON EQUITY
INVESTMENT TRUST 1
B share 0.75% 3,974,716 0 0
TAIKANG LIFE CO.,LTD. A share 0.74% 3,921,441 0 0
GF HYBRID OPTIMIZATION
STRATEGY FOR SECURITIES
INVESTMENT FUND
A share 0.72%
3,811,150
0 0
CHINA UNIVERSAL GROWTH
FOCUS SECURITIES-ORIENTED
CAPITAL FUND
A share 0.71% 3,727,633 0 0
The share holding of top 10 unlimited shareholders
shareholders Number of unlimited shares Share Type
YANTAI CHANGYU GROUP CO.,LTD. 52,728,000 A share
HTHK/CMG FSGUFP-CMG FIRST STATE CHINA GROWTH FD 21,996,470 B share
GAO-LING FUND,L.P. 13,719,554 B share
BBH BOS S/A FIDELITY FD - CHINA FOCUS FD 7,606,147 B share
GOVERNMENT OF SINGAPORE INV. CORP.- A/C "C" 4,882,121 B share
UBS (LUXEMBOURG) S.A. 4,468,030 B share
MIRAE ASSET CHINA SOLOMON EQUITY INVESTMENT TRUST 1 3,974,716 B share
GF HYBRID OPTIMIZATION STRATEGY FOR SECURITIES
INVESTMENT FUND
3,921,441 A share
CHINA UNIVERSAL GROWTH FOCUS SECURITIES-ORIENTED
CAPITAL FUND 3,811,150
A share
GF HYBRID OPTIMIZATION STRATEGY FOR SECURITIES
INVESTMENT FUND
3,727,633 A share
The explanation for the relationship and action of
the top 10 shareholders
Among 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.8
2.3 The top 10 shareholders for limited shares 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
1
Yantai Changyu
Group Company
Limited
213,021,120
2011.
03.21
213,021,120
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.9
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. INFORMATION OF THE DIRECTORS, SUPERVISORS AND
SENIOR MANAGEMENT TEAM
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 &
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%10
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, vice- general
manager
0 0 0 0 -
Qu Weimin Director, Vice-general
manager and Secretary to
the Board of Directors
0 0 0 0 -
Chen Jizong 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 -
Jiang Jinqiang supervisor 0 0 0 0 -
Yang Ming Vice general manager 0 0 0 0 -
Li Jiming Chief 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, approved by 2009 shareholders’ meeting, nine
people were appointed to be the directors of 5th session of Board of Directors
of the Company including Mr. Chen Jizong, Mr. Augusto Reina, Mr. Aldino
Marzorati, Mr. Antonio Appignanni, Mr. Jean-Paul Pinard, Mr. Sun Liqiang, Mr.
Zhou Hongjiang, Mr. Leng Bin and Mr. Qu Weimin, Mr. Wang Zhuquan was
appointed to be the independent directors of 5th session of Board of Directors
of the Company while Mr. Jiang Jinqiang will not take the post as director of
the Company, Mr. Fu Mingzhi, Mrs. Zhang Hongxia and Mr. Jiang Jinqiang
were appointed to be supervisors of 4th session of Board of Supervisors while
Mr. Lian Zhendian will not take the post as supervisor. And there is no any
other change in directors, supervisors or senior managers during report
period.11
4. BOARD OF DIRECTOR’S 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, the sales revenue of main products for wine, brandy,
healthy liquor and sparkling wine all increased by different margins, making
the Company’s principal sales CNY2481.89million and net profit
CNY585.67million attributed to the Company’s shareholders, or 26.02% and
28.65% up over the same period of last year respectively, the growth of
middle to high quality wine was especially significant which contributed 1.81%
more to consolidated gross profit marginso as to help the Company realized
gross profit 71.88% . During the report period, the Company made efforts
mostly in the following aspects.
First of all, continually strengthen the brand and products promotion focusing
on the Changyu AFIP and Jiebaina wine, so as to let the Company keep fast
development on those products. During report period, the sales for Changyu
AFIP and Jiebaina wine respectively increased 200% and 30% compared with
same period of last year.
Secondly, continue to enhance the market differentiating and distribution by
category and realized rather good achievements. During report period, the
Company continue to launch the differentiating on products, sales staff and
distributor teams, carried out the selling by category so as to made good
outcome, especially reversed the early disadvantage for poor increase of
brandy, sparkling wine and healthy liquor, thus realized large increase and
accelerated the growth on principal products for promotion.
Thirdly, 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 imporved the
machnism for examining and punishment for counterfeit products and
hazardous transshipments, enhanced the supervision system on market price,
effectly stopped the impact to market by counterfeit products and hazardous
transshipments, and also guaranteed the stable price system and smooth
sales channels.
Fourthly, stably enlarged the construction area and also imporved the
management of vineyard bases, so as to ensure the sufficient supply on good
quality grapes for the Company. During report period, the Company continued
to increase the vineyard base area at Yantai, Xinjiang , Ningxia and Shaanxi,
developed the management system on grape sorting, introduced advanced
cultivation techniques and launched the information management for vineyard
bases so as to realize the rather large improvement on total yield and grape
quality.
Fively, 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.12
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 2,481,885,134 1,969,426,161 26.02
Principal profit 774,791,010 597,531,527 29.67
Net profit 585,674,479 455,235,291 28.65
The reason for such change is as following:
During report period, the Company’s principal sales increased by 26.02% over
the same period of last year, mainly resulting from stable demand for the
Company’s products and also sales increase, especially because of remarkable
increase of high-end wine led by Chateau wine and Jiebaina wine, so as to
scale up the average selling price over same period of last year. The principal
profit increased by 29.67% over the same period of last year, mainly
contributed by principal sales growth, and effective control on overhead
expenses and decrease of management cost. The net profit increased by
28.65% over the same period of last year, mainly due to 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 204,276 53,153 73.98 28.74 20.32 ↑1.8
Brandy 33,443 12,792 61.75 15.47 21.65 ↓1.9
Total 237,719 65,945 72.26 26.69 20.57 ↑1.4
Among which, Related
party transaction
378 - - 6.78 - -
4.2.3 Explanations of significant changes in principal business and/or
structure of the Company
During 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 report period, there was no other business with great influence on net
profit.13
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
17,057 2,746
Longfang
Castel-Changyu Wine
Co. LTD.
49%
To produce
and sell wine
Dry red wine,
Dry white wine
USD3
million
5,493 227
Yantai Kylin
Packaging Co. LTD. 50%
To produce and
sell packaging
material
Cork, aluminum
cap, PVC capsule
and so on.
USD1.4
million
4,207 490
Chateau Changyu
AFIP Global 70%
To research,
produce and sell
brandy and wine
Brandy, premium
dry red wine and
white wine
11,000 43,941 426
Chateau Liaoning
Changyu Ice Wine
Co., Ltd.
51%
To produce ice
wine
Ice wine 2,630 8,354 97
4.2.6 Problems and Difficulties in Operation
During report period, in despite of rather successful operation and good
achievements, the Company still had some problems as following:
First, the major sales income still came from high-end wine and brandy while
other products contributed little to the sales increase, especially for normal
dry red wine with the biggest sales volume which had no obvious advantage
on the price and market share compared with major competitors. In view of
intense competition during report period, the sales volume dropped a little
even though sales income realized small increase, which will bring lots of
pressure for the Company to accomplish the sales target for whole year.
Secondly, despite the continuous and fast development in some advantageous
markets such as Zhejiang, Jiangsu, Shanghai and Shandong etc, yet in some
weak markets such as southwest and northeast area, the Company had
some disadvantage of poor brand influence, incomplete sales network and low
market share, which led those markets lag behind the Company’s anticipated
sales achivement.
Thirdly, stable marketing staff was necessary for few markets so that the cost
was increased for recruiting and training. Along with the continuous development
of marketing system, the current management mode and skill should be
developed so as to meet the market demand, and the staff talent should be
further improved in particular.
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 targets.14
4.3 Investment Information
4.3.1 The Uses of the Collected Proceeds
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
During report period, the Company totally invested self-owned capital of
CNY179 million for six projects as following:
1) Project of oak barrel purchasing. The budget for this project is CNY 31.83
million, planning to import 4,493 pieces of oak barrels, in order to meet the
company’s demand for production of high-end and medium-range wine. During
report period, CNY33million was totally invested, the oak barrels will arrive in
the near future and put into production during the fermantation season this
year.
2) Purchase of a piece of land of 60 hectares at Shihezi city in Xinjiang province
and construction of a high-end wine production base. The budget for this project
is CNY75 million in order to purchase a piece of land of 60 hectares at Shihezi
city in Xinjiang province and to build a quality demonstration vineyard of 800
mus and for fermentation capacity of 5,000 tons quality bulk wine and
production of 500 tons high-end wine. During report period, CNY59.80million
was invested for this project so as to finish the land purchase, part construction
for civil work and growing of 400mus vine.
3) Purchase of offices for sales companies.The budget for this project is
CNY106.35 million, consisting of CNY 53 million to be input in 2010 and CNY
53.35 million in 2011, to buy offices in 54 major cities nationwide for local sales
company. During report period, the real estate price might face certain
adjustment due to the regulating by the state, the Company only investigated
the housing resources and did not buy any office for prudent investment
purpose.
4) Purchase of a piece of land of 110 hectares at Yantai economic and
technological development zone. The budget for this project in 2010 is CNY 165
million to purchase a piece of land of 110 hectares at Yantai economic and
technological development zone in order to build Changyu Industrial Park.
During report period, CNY1.2million was invested, the land exploriation
procedure and scheme design is under way now.
5) Project of expansion of production scale of Changyu-Afip Chateau Beijing.
The Company plans to input in 2010 CNY92.5million to rent a piece of land of
600mu around the Chateau for wine grape growing and construction of
production facilities base. During report period, CNY15million was totally
invested so as to finish the land rent and part vine growing.
6) Project of construction of Xianyang Changyu Chang’an Chateau in Xianyang15
City, Shaanxi Province. This Company plans to invest CNY 250 million to build a
chateau comprised of grape growing, wine production and research, biological
sightseeing, cultural exhibition, etc. in Xianyang City in the northern outskirt of
Xi’an City. During report period, CNY70milion was invested for this project so as
to finish the company registration, the land expropriation procedures is under
way now.
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 2010 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 Internal
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 2009 deliberated and passed by “2009
Shareholders’ Meeting” was as following:
The Company’s total 527.28 million shares on Dec. 31th, 2009 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, qualified foreign
insitution investors and the non-resident enterprises shareholders for B
share is CNY10.80 per 10 shares). 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 = CNY0.8772) listed by
the People’s Bank of China on the first working day after the day ( May 13th,
2010) when the resolutions of 2009 Shareholders’ Meeting were made.
The execution announcement of the profit distribution was made public in
“China Securities News” and “Securities Times” on June 30th , 2010. The
registration date of Share A ownership was July 6th, 2010 and the ex16
dividend date was July 7th, 2010, and the last trading date of Share B was
July 6th, 2010, the ex dividend date was July 7th, 2010 and the registration
date of Share B ownership was July 9th, 2010. The said profit distribution
was completed in the first ten-day period of July 2010.
The Company did not make any plan to transfer public accumulation fund
to share capital in 2009.
5.3 The Preliminary Plan on Profit Distribution for first half of 2010
According to the resolution of 2nd Meeting of the 5th Board of Directors, the
Company did not distribute profit or convert public funds of capital to
equivalent shares for first half of 2010.
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.
5.5 Material Acquisition, Sales or Merger on Assets
During the report period, the company decided to subscribe in cash 0.34
billion shares of Evergrowing Bank, the price for per share is CNY 3.00, and
the toal amount is CNY 1.02 billion, which accounts 5% among the 6.8
billion shares of Evergrowing Bank after the increased investments. As a
significant purchase of assets, the project has already been deliberated and
passed in the meeting of Board of Directors and Shareholders’ meeting of
the company. Now it is under the approval of China’s Securities Regulatory
Commission.
Besides, 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 amount on products sales is seperately CNY
2.087 million and CNY 1.695 million, and the amount on products purchase is
seperately CNY1.271 million and CNY 4000.00 from the Company to the
controlling shareholder’s subsidiary company-Yantai Changyu Tour Co.,Ltd.
and Yantai Changyu Window of International Wine City Co. Ltd., and there is
no service supply between the Company and any related parties.
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 53.647 million during the report period. Besides, there are no other related
creditor’s right and liability.17
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 CNY6.383 million 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.
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 who held 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 party Yantai Changyu Group Co., Ltd. has kept its promise
made during the company’s reform of stock ownership, and voted for the annual
profit distribution scheme at 2005 Shareholders meeting, 2006 shareholders
meeting and 2007 shareholders meeting.
5.9.3 Yantai Changyu Group Co., Ltd. released the limit condition to 26.364
million shares of the Company on 25th March,2010, and released the limit
condition to 26.364 million shares of the Company on 1st April,2010, 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. During the report period, Yantai Changyu Group Co.,
Ltd. did not decrease the shares of the Company.
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.18
5.11 The Analysis and Explanation on Other Major Issues, Related
Influence and Solutions
5.11.1 Securities Investment
During the report period, the company participated in new shares
subscription and got the investment returns of CNY 429.1 thousand.
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,
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, 2010, 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 increase by shareholders
holding 30% or 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.19
5.13 Compensation from related party for the proceeds promised by
the Company on share reform and major merger on assets
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
January 5th 2010 Meeting room
of the
Company
Field survey Morgan
Stanley
Principal operation,
future development
January 26th 2010 Meeting room
of the
Company
Field survey China Galaxy
Securities
Principal operation,
future development
January 26th 2010 Meeting room
of the
Company
Field survey China
Universal
Asset
Management
Principal operation,
future development
January 26th 2010 Meeting room
of the
Company
Field survey Nomura
Securities
Principal operation,
future development
March 7th 2010 Meeting room
of the
Company
Field survey IFC Principal operation,
future development
March 13th 2010 Meeting room
of the
Company
Field survey Nomura
International
Principal operation,
future development
March 18th 2010 Meeting room
of the
Company
Field survey Shanghai
Shenergy
Asset
Principal operation,
future development
April 16th 2010 Meeting room
of the
Company
Field survey Guotai Junan
Securities
Principal operation,
future development
April 25th 2010 Meeting room
of the
Company
Conference
call
Capital
Securities
Principal operation,
future development
May 12th 2010 Meeting room
of the
Company
Field survey Haitong
Securities
Principal operation,
future development
May 23rd 2010 Meeting room
of the
Company
Field survey ICBC Credit
Suisse
Asset
Principal operation,
future development
June 3rd 2010 Meeting room
of the
Company
Field survey Guangfa Fund Principal operation,
future development
June 30th 2010 Meeting room
of the
Company
Field survey AVIC
Securities
Principal operation,
future development
June 30th 2010 Meeting room
of the
Company
Field survey Soochow Asset Principal operation,
future development
June 30th 2010 Meeting room
of the
Company
Field survey Boshi Fund Principal operation,
future development
June 30th 2010 Meeting room
of the
Company
Field survey Penghua Fund Principal operation,
future development20
5.15 The Index on Information Disclosure of the Company
Announcement
number
Title Publication Date Publication address
2010-Lin001 Major issues and suspension
notice
2010.01.08 “China Securities News”,
“Securities Times”
2010-Lin002 Announcement on the
resolution of 2010 first interim
meeting of the board of
directors
2010.01.20 “China Securities News”,
“Securities Times”
2010-Lin003 Announcement on “Jiebaina" 2010.01.20 “China Securities News”,
“Securities Times”
2010-Lin004 Preparatory plan on the
purchase of significate assets
2010.01.20 “China Securities News”,
“Securities Times”
2010-Lin005 Announcement on releasing the
limited shares
2010.03.30 “China Securities News”,
“Securities Times”
2010-Lin006 Announcement on the
resolution of 2010 second
interim meeting of the board of
directors
2010.04.14 “China Securities News”,
“Securities Times”
2010-Lin007 Notice of opening 2010 first
interim shareholders’ meeting
2010.04.14 “China Securities News”,
“Securities Times”
2010-Lin008 Announcement on the
resolution of the 20th meeting of
the fourth session of board of
directors
2010.04.16 “China Securities News”,
“Securities Times” and
2010-Lin009 Notice of opening 2009
shareholders’ meeting
2010.04.16 “China Securities News”,
“Securities Times” and
2010-Lin010 Announcement on the
resolution of the 17th meeting of
the third session of board of
supervisors
2010.04.16 “China Securities News”,
“Securities Times” and
2010-Lin011 Announcement on nomination
of independent directors
2010.04.16 “China Securities News”,
“Securities Times” and
2010-Lin012 Announcement on the related
transaction 2010
2010.04.16 “China Securities News”,
“Securities Times” and
2010-Ding001 2009 Annual report and its
summary
2010.04.16 “China Securities News”,
“Securities Times” and “Hong
Kong Commercial Daily”
2010-Ding002 2010 First-quarter report 2010.04.26 “China Securities News”,
“Securities Times”
2010-Lin013 Announcement on the
resolution of 2010 first interim
shareholders’ meeting
2010.05.04 “China Securities News”,
“Securities Times”
2010-Lin014 Announcement on the
resolution of 2009 shareholders’
meeting
2010.05.13 “China Securities News”,
“Securities Times” and
2010-Lin015 Announcement on the
resolution of the 1st meeting of
the fifth session of board of
directors
2010.05.13 “China Securities News”,
“Securities Times” and
2010-Lin016 Announcement on the
resolution of the 1st meeting of
the fourth session of board of
supervisors
2010.05.13 “China Securities News”,
“Securities Times” and
2010-Lin017 Announcement on “Jiebaina" 2010.06.24 “China Securities News”,
“Securities Times” and
2010-Lin018 Announcement on the
implementation of rights
distribution in 2009
2010.06.30 “China Securities News”,
“Securities Times” and
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.21
6. FINANCE REPORT
6.1 Consolidated And Parent Company’S Balance Sheet （1）
Yantai Changyu Wine Poineer Co., Ltd. Unit: CNY
At 30 June 2010 At 31 December 2009
Assets Note
Consolidated
amount
Parent
company
amount
Consolidated
amoutn
Parent
company
amount
Current assets：
Monetary fund 2,625,771,144 2,132,697,648 2,545,210,286 1,701,195,926
Financial assets for trade
Notes receivable 32,735,374 11,834,225 38,107,831 12,294,221
Account receivable 75,491,906 10,244,534 98,022,443 13,163,722
Advance money 41,457,252 27,633,464 31,885,027 19,918,724
Interest receivalbe 5,928,423 5,928,423 8,969,343 8,969,343
Dividend receivable 447,429,274
Other account receivable 27,460,356 635,671,051 22,424,303 633,416,634
Inventories 922,392,524 415,509,923 1,131,240,892 467,402,171
Non-current assets due within one year
Other current assets 765,422 1,104,453
Total current assets 3,732,002,401 3,239,519,268 3,876,964,578 3,303,790,015
Non-current assets：
Financial assets for sale
Investment held to expiration
Long-term account receivable
Long-term equity investment 10,000,000 335,077,178 10,000,000 229,077,178
Real estate for investment
fixed assets 1,074,324,621 315,886,692 996,792,865 331,281,278
Construction in progress 92,042,627 6,731,011 109,372,318 2,234,216
Project material 395,114
Liquidation of fixed assets
Biological assets for production 39,915,061 11,151,194 39,717,396 11,444,646
Oil and gas assets
Intangible assets 163,192,467 94,941,190 147,509,555 90,579,308
Development expenditure
Goodwill
Long-term deferred expenses 106,723,335 38,956,022
Assets of deferred income tax 87,400,709 15,057,723 139,267,274 26,315,465
Other non-current assets 4,993,685 5,052,421 5,580,790 5,544,630
Total non-current assets 1,578,987,619 783,897,409 1,487,196,220 696,476,721
Total assets 5,310,990,020 4,023,416,677 5,364,160,798 4,000,266,736
Legal representative: Sunliqiang Person in charge of accounting :Lengbin Person in charge of accounting
organ:Jiangjianxun22
Consolidated And Parent Company’S Balance Sheet （2）
Yantai Changyu Wine Poineer Co., Ltd. Unit: CNY
At 30 June 2010 At 31 December 2009
Liabilites, rights and interests of
shareholders Note
Consolidated
amoutn
Parent
company
amount
Consolidated
amoutn
Parent
company
amount
Current liabilities:
Short-term loan 4,500,000 224,500,000 220,000,000
Financial liabilities for trade
Notes payable
Accounts payable 227,188,399 142,535,480 343,079,052 232,881,603
Advance money 310,568,658 371,221,002
Wage payable 175,446,568 106,727,122 176,980,999 112,116,156
Tax payable 378,502,355 76,201,492 556,959,447 115,867,141
Interest payable 605,030 605,030
dividend payable 488,326,000 482,736,000
Other accounts payable 557,079,469 728,057,663 477,048,092 219,943,753
Non-current liabilities due within one
year
Other current liabilities
Total current liabilities 2,141,611,449 1,536,257,756 2,150,393,622 901,413,683
Non-current liabilities：
Long-term loan 6,000,000 10,500,000
Bond payable
Long-term accounts payable
Special accounts payable
Estimated liabilities
Liabilities of deferred income tax 5,336,115 5,336,115
Oterh non-current liabilities 23,250,000 13,350,000 23,250,000 13,350,000
Total non-current liabilities 34,586,115 13,350,000 39,086,115 13,350,000
Total liabilities 2,176,197,564 1,549,607,756 2,189,479,737 914,763,683
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 1,610,719,408 1,093,363,837 1,657,780,929 1,705,057,969
Total shareholder rights and interests of
parent company
2,991,164,492 2,473,808,921 3,038,226,013 3,085,503,053
Minority shareholder rights and interests 143,627,964 136,455,048
Total shareholder rights and interests 3,134,792,456 2,473,808,921 3,174,681,061 3,085,503,053
Liabilites and total shareholders rights and
interests
5,310,990,020 4,023,416,677 5,364,160,798 4,000,266,736
Legal representative: Sunliqiang Person in charge of accounting :Lengbin Person in charge of
accounting organ:Jiangjianxun23
6.2 Consolidated And Parent Company’S Profit Statement
Yantai Changyu Wine Poineer Co., Ltd. Unit: CNY
Six months ended 30 June
2010
Six months ended 30 June
2009
Item Note
Consolidated
amoutn
Parent
company
amount
Consolidated
amoutn
Parent
company
amount
Business income 2,481,885,134 746,408,137 1,969,426,161 469,406,241
Less: business cost 697,904,404 554,127,550 589,412,209 352,370,936
Business tax and associate charges 143,954,547 84,288,354 106,802,530 55,875,039
Sales expenses 760,912,413 584,340,983
Management expenses 110,222,160 75,329,206 106,461,274 56,630,246
Financial expenses -5,470,293 -9,672,089 -15,122,362 -19,247,321
Assets depreciation loss
Add: fair value charge profit (loss is listed with
"-")
Investment profit ((loss is listed with "-") 429,107 429,107 151,717,059
Including: investment profit for joint-run
business and joint venture
Operating profit 774,791,010 42,764,223 597,531,527 175,494,400
Add: Non-operating income 5,023,942 209,453 8,424,754 669,244
less: non-operating expenditures 572,190 5,231 46,353 20,770
Including: non-current assets disposing loss
Total profit 779,242,762 42,968,445 605,909,928 176,142,874
Less: income tax expenses 186,395,367 21,926,577 149,625,473 6,878,254
Net profit 592,847,395 21,041,868 456,284,455 169,264,620
Net profit of parent company's owners 585,674,479 21,041,868 455,235,291 169,264,620
Minority shareholder profit and loss 7,172,916 1,049,164
EPS
Basic EPS 1.11 0.87
Diluted EPS 1.11 0.87
Other Comprehensive Income
Comprehensive Income 592,847,395 21,041,868 456,284,455 169,264,620
Comprehensive Income of parent company 585,674,479 21,041,868 455,235,291 169,264,620
Comprehensive Income of minority
shareholders
7,172,916 1,049,164
Legal representative: Sunliqiang Person in charge of accounting :Lengbin Person in charge of
accounting organ:Jiangjianxun24
6.3 Consolidated and Parent Company’s Cash Flow Statement (1)
Yantai Changyu Wine Poineer Co., Ltd.
Unit: CNY
Six months ended 30 June
2010
Six months ended 30 June
2009
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 2,871,056,257 876,676,704 2,557,840,868 546,517,653
Tax refund received 4,117,244 3,640,000
Other cash received related to operating activities 17,298,076 506,068,946 129,209,081 469,948,185
Subtotal of cash flows of operating activities 2,892,471,577 1,382,745,650 2,690,689,949 1,016,465,838
Cash paid for goods and services 733,563,534 637,851,952 887,528,120 494,094,422
Cash paid to and on behalf of employees 174,512,763 85,341,019 130,038,803 58,784,850
Cash paid for taxes and expenses 764,530,299 176,043,602 593,407,859 110,109,459
Other cash paid related to operating activities 580,158,139 20,391,456 364,205,465 27,879,344
Sub-total of cash outflows of operating activities
2,252,764,735 919,628,029 1,975,180,247 690,868,075
Net cash flow from operating activities 639,706,842 463,117,621 715,509,702 325,597,763
2. Cash flow from investing activities:
Cash received from return of investment
Fixed deposit with the term of over 3 months 64,671,946 59,671,946 202,419,840 180,419,840
Cash received from obtaining investment profit 429,107 447,858,381 151,717,059
Cash received from interest income 7,514,257 7,514,257 21,581,967 21,530,217
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
72,615,310 515,044,584 224,001,807 353,667,116
Cash paid to acquire fixed assets, intangible assets
and other long-term assets 189,217,153 9,221,963 159,261,663 7,217,873
Fixed deposit with the term of over 3 months
Cash for investment 106,000,000
Net cash paid to acquire branch and other business
unit
Other cash paid related to investment activities
Subtotal of cash outflows of investment activities 189,217,153 115,221,963 159,261,663 7,217,873
Net cash flow from investing activites -116,601,843 399,822,621 64,740,144 346,449,243
3.Cash flow from financing activites
Cash received from acquiring investment
Including: cash received from acquiring minority
shareholders investment by branch25
Cash received from acquiring loans
Other cash received related to finaning activities
Subtotal cash flows of financing activities
Cash paid to pay debts 224,500,000 220,000,000
Cash paid to distribute dividend, profit or pay
interest 153,384,471 151,778,850 632,736,000 632,736,000
Including: dividend and profit paid to minority
shareholders by branch
Other cash paid related to financing activities
Subtotal of cash outflows of financing activities 377,884,471 371,778,850 632,736,000 632,736,000
Net cash flow from financing activites -377,884,471 -371,778,850 -632,736,000 -632,736,000
4. Influences of exchange rate fluctuation on cash
and cash equivalents
5. Net Increase in cash and cash equivalents 145,220,528 491,161,392 147,513,846 39,311,006
Add: balance at the beginning of the period of
cash and cash equivalents 1,998,681,278 1,159,666,918 792,724,722 265,694,858
6.Balance at the end of the period of cash and cash
equivalents 2,143,901,806 1,650,828,310 940,238,568 305,005,864
Legal representative: Sunliqiang Person in charge of accounting :Lengbin Person in
charge of accounting organ:Jiangjianxun26
6.4 Consolidated Statement of Shareholders’ Equity Changes
Yantai Changyu Wine Poineer Co., Ltd.
Unit:CNY
Item Six months ended 30 June 2010
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 527,280,000.00 557,222,454.00 295,942,630.00 1,657,780,929.00 136,455,048.00 3,174,681,061.00
Plus: Accounting policies changing
Previous error correction
2.Banlance at the beginning of this year 527,280,000.00 557,222,454.00 295,942,630.00 1,657,780,929.00 136,455,048.00 3,174,681,061.00
3.Increasing or reducing amount of this year (reducing
amount is listed with "-") -47,061,520.99 7,172,916.00 -39,888,604.99
3.1 Net profits 585,674,479.01 7,172,916.00 592,847,395.01
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 3.2 585,674,479.01 7,172,916.00 592,847,395.01
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 Others27
3.4 Profit distribution -632,736,000.00 -632,736,000.00
3.4.1Drew surplus reserves
3.4.2 Distribution to owners (or shareholders) -632,736,000.00 -632,736,000.00
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 527,280,000.00 557,222,454.00 295,942,630.00 1,610,719,408.01 143,627,964.00 3,134,792,456.01
Legal representative: Sunliqiang Person in charge of accounting :Lengbin Person in charge of accounting organ:Jiangjianxun
Item Year 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 527,280,000.00 557,222,454.00 295,942,630.00 1,163,188,086.00 85,394,360.00 2,629,027,530.00
Plus: Accounting policies changing
Previous error correction
2.Banlance at the beginning of this year 527,280,000.00 557,222,454.00 295,942,630.00 1,163,188,086.00 85,394,360.00 2,629,027,530.00
3.Increasing or reducing amount of this year
(reducing amount is listed with "-") 494,592,843.00 51,060,688.00 545,653,531.00
3.1 Net profits 1,127,328,843.00 8,656,625.00 1,135,985,468.00
3.2 Gains and Losses directly reckoned
in owners' equity28
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 1,127,328,843.00 8,656,625.00 1,135,985,468.00
3.3 Owners' invested and reduced capital 42,404,063.00 42,404,063.00
3.3.1 Owners' invested capital 42,404,063.00 42,404,063.00
3.3.2 Amount of shares paid and reckoned in
owners' equity
3.3.3 Others
3.4 Profit distribution -632,736,000.00 -632,736,000.00
3.4.1Drew surplus reserves
3.4.2 Distribution to owners (or shareholders) -632,736,000.00 -632,736,000.00
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 527,280,000.00 557,222,454.00 295,942,630.00 1,657,780,929.00 136,455,048.00 3,174,681,061.00
Legal representative: Sunliqiang Person in charge of accounting :Lengbin Person in charge of accounting organ:Jiangjianxun29
6.5 Statement of Equity Changes for Parent Company’s Shareholders
Yantai Changyu Wine Poineer Co., Ltd.
Unit:CNY
Item Six months ended 30 June 2010
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 527,280,000.00 557,222,454.00 295,942,630.00 1,705,057,969.00 3,085,503,053.00
Plus: Accounting policies changing
Previous error correction
2.Banlance at the beginning of this year 527,280,000.00 557,222,454.00 295,942,630.00 1,705,057,969.00 3,085,503,053.00
3.Increasing or reducing amount of this year
(reducing amount is listed with "-") -611,694,132.48 -611,694,132.48
3.1 Net profits 21,041,867.52 21,041,867.52
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 21,041,867.52 21,041,867.52
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 Others30
3.4 Profit distribution -632,736,000.00 -632,736,000.00
3.4.1Drew surplus reserves
3.4.2 Distribution to owners (or shareholders) -632,736,000.00 -632,736,000.00
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 527,280,000.00 557,222,454.00 295,942,630.00 1,093,363,836.52 2,473,808,920.52
Legal representative: Sunliqiang Person in charge of accounting :Lengbin Person in charge of accounting organ:Jiangjianxun
Item Year 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 527,280,000.00 557,222,454.00 295,942,630.00 1,128,102,212.00 2,508,547,296.00
Plus: Accounting policies changing
Previous error correction
2.Banlance at the beginning of this year 527,280,000.00 557,222,454.00 295,942,630.00 1,128,102,212.00 2,508,547,296.00
3.Increasing or reducing amount of this year
(reducing amount is listed with "-") 576,955,757.00 576,955,757.00
3.1 Net profits 1,209,691,757.00 1,209,691,757.00
3.2 Gains and Losses directly reckoned
in owners' equity31
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 1,209,691,757.00 1,209,691,757.00
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 -632,736,000.00 -632,736,000.00
3.4.1Drew surplus reserves
3.4.2 Distribution to owners (or shareholders) -632,736,000.00 -632,736,000.00
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 527,280,000.00 557,222,454.00 295,942,630.00 1,705,057,969.00 3,085,503,053.00
Legal representative: Sunliqiang Person in charge of accounting :Lengbin Person in charge of accounting organ:JiangjianxunYANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS
30 June 2010
32
6.6 Supplementary Information
(Unless otherwise stated, the unit of all currency listed in this annotation is CNY)
1. CORPORATE INFORMATION
Yantai Changyu Pioneer Wine Co., Ltd. (the “Company”) was incorporated as a joint stock
limited company in accordance with the Company Law of the People’s Republic of China
(the “PRC”) in a reorganization carried out by Yantai Changyu Group Co., Ltd. (“Changyu
Group Company”), in which Changyu Group Company injected certain assets and
liabilities in relation to the brandy, wine, sparkling wine, and tonic 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 tonic
wine.
Pursuant to the approval from the Government of Shandong Province (Luzheng [1997]119),
the Company was reorganized as a joint stock limited company on 10th April 1997. On
23rd September 1997, the Company was approved by China Securities Regulatory
Commission (the “CSRC”) ([1997] No. 52) to issue 88,000,000 domestically listed foreign
investment shares (“B shares”) on Shenzhen Stock Exchange. On 18th September 1997,
the Company obtained the business license with the registered number No. 26718011-9.
In October 2000, the Company was approved by CSRC to issue 32,000,000 domestically
listed Shares (“A Shares”). The A shares were listed on Shenzhen Stock Exchange on 26th
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 31st July 2010, the total shares issued by the
Company amounts to 527,280,000 shares. Please refer to No.25 of Notes 5 in detail.
The holding company of the Group is Changyu Group Company, which was jointly
controlled by Yantai SASAC, ILLVA Saronno Investment Italy, International Finance
Corporation and Yantai Yuhua Investment and Development Company Limited.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
33
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES
(1) Preparation of Financial Statements
The financial statements are prepared in according with “Corporate Accounting Standards –
The Principles” which was published by Ministry of Finance in February 2006, and “the 38
specific accounting standards”, its application guide, interpretations for accounting
standards, and other relevant regulations (collectively “CAS”).
The financial statements are prepared on a going concern basis.
Except for certain financial instrument, the measurement basis adopted by the group in
preparing its financial statement is historical cost. Subsequently, if the assets are impaired,
impairment provisions are made in accordance with the relevant accounting standards.
(2) Declaration for Implementing CAS
The financial statements are prepared in accordance with CAS, which showing a true and
fair view of the financial position on 31 July 2010, financial performance and cash flow in
2010 of the Company and the Group.
(3) Accounting Year
The accounting year of the Group is from 1 January to 31 December
(4) Reporting Currency
The Group reporting and presentation currency is the Renminbi (“RMB”). Unless
otherwise stated, the unit of the currency is Yuan.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
34
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(5) Business Combination
A business combination is the bringing together of separate entities or businesses into one
reporting entity, classified 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 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 acquirees.
The assets and liabilities obtained by the acquirer shall be measured at 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 of the acquiree and the cost of combination, capital surplus
shall be adjusted. Where the capital surplus is not sufficient to offset the value of the net assets
acquired, retained earnings shall be adjusted.
Any costs directly attributable to the business combination are charged to profit and loss 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 not ultimately
controlled by the same party or parties both before and after the business combination. The
combining entity that obtains control of 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 acquirees.
For business combination under non-common control, cost of business combination is the
aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or
assumed, and equity instruments issued by the acquirer, in exchange for control of the acquiree
plus any cost directly attributable to the business combination. For business combination
impalement through more than one exchange, the cost of business combination is the sum of
each exchange. When a business combination agreement provides for an adjustment to the cost
of the combination contingent on future events, the acquirer shall include the amount of that
adjustment in the cost of the combination at the acquisition date if the adjustment is probable
and can be measured reliably.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
35
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(5) Business Combination (Continued)
For business combination under non-common control, the assets and liabilities and contingent
liabilities obtained by the acquirer shall be measured at fair value as at the date of combination.
Where the cost of combination is greater than the fair value of assets and liabilities and
contingent liabilities, the difference should be recognized as goodwill. Where the cost of
combination is smaller than the fair value of acquiree’s assets and liabilities and contingent
liabilities, and cost of combination should be reevaluated. Where cost of combination is still
smaller than fair value of acquiree’s net assets, the difference should be recognized in income
statement.
(6) 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 31st July 2010. The subsidiaries are entities
that are controlled by the Company.
The subsidiaries adopt the same accounting year and accounting policies as the Company
adopted. All inter-company balances, transactions, income and expenses within the Group
are eliminated in full on consolidation.
The position of profit or loss and net assets of a subsidiary attributable to equity interests
that are not owned, directly or indirectly through subsidiaries, by the Company refers to
“Minority Interests”, which is presented separately in the consolidated financial statements.
For the subsidiaries acquired through business combination under non-common control,
their financial performance and cash flow shall be included in the consolidated financial
statements from the combination date, as long as they are under control by the Company. In
preparation of the consolidated financial statements, the subsidiaries’ identifiable assets,
liabilities and contingent liabilities are adjusted by their fair value on the acquisition date.
For the subsidiaries acquired through business combination under common control, their
financial performance and cash flow shall be included in the consolidated financial
statements. When preparing comparative consolidated financial statements, the
pre-combination adjustment of the subsidiary’s financial statements is considered as it has
existed before the business combination from the beginning of the reporting period.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
36
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(7) Cash and cash Equivalents
Cash comprises cash on hand and demand deposit. Cash equivalents refers to short-term,
highly liquid investments that are readily convertible into known amounts of cash and
which are subject to an insignificant risk of changes in value.
(8) Foreign Currency Transactions and Foreign Currencies Reporting
For any foreign currency transactions, they are recorded in functional currency. Transactions in
currencies other than the reporting currency are translated into the reporting currency at the
exchange rates prevailing on the transaction dates.
Monetary assets and liabilities denominated in foreign currencies are restated into the reporting
currency using the rates of exchange ruling at the balance sheet date. The exchange gains or
losses are dealt with in the income statement for the year. The exchange gains or losses arising
from foreign currency borrowings in relation to the acquisition or construction of a fixed asset
are accounted for according to the requirements relating to the capitalization of borrowing costs.
Non-monetary items denominated in foreign currencies which are measured at historical cost
are translated using the exchange rates on their transaction dates. Non-monetary foreign items
denominated in foreign currencies which are measured at fair value are translated using the
exchange rates on balance sheet date, and any difference is recognized in income statement or
other comprehensive income.
(9) Inventories
Inventories comprise raw materials, work in progress, finished goods and transitory materials.
The inventories are initially measured at cost. The cost of inventories comprises all costs of
purchase, cost of conversion and other costs. When inventories are sold, the cost of sale is
calculated on a weighted-average basis.
Agricultural products harvested from the entity’s biological assets are measured on a
weighted-average basis, which comprises all material, labor and other indirect expense
incurred in producing and gathering the agricultural assets.
Agricultural products harvested are reported in accordance with the CAS 1 Inventories.
The Company adopts perpetual inventory system.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
37
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(9) Inventories (Continued)
Inventories are measured at the lower of cost and net realizable value at the balance sheet
date. If the cost of inventories is higher than the net realizable value, the impairment of
inventories is accrued and recognized in income statement. If the factors causing any
impairment of the inventories do not exist, where the net realizable value is higher than the
cost, the amount of impairment is reversed and the reversed amount is recognized in the
income statement.
The net realizable value is estimated selling prices in ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale. The inventory
provision for raw materials is assessed by categories of inventories, where finished goods are
assessed by items. For the homogeneous products which are produced and sold in the same
region and are inseparable from other inventories, the inventory provision is accrued
collectively.
(10) Long Term Equity Investments
Long term equity investments comprise investments in subsidiaries, joint ventures, associates
and any investment whose fair value cannot be reliably measured, with which the Company
cannot exert control, joint control or significant influence over the investee.
The investment is initially measured at cost. For business combination under common control,
the investment cost is recorded at the book value of the acquiree’s equity acquired. For business
combination under non-common control, the investment cost is recorded at combination cost.
Long term equity investments other than business combination, the investment cost is recorded
at cash paid plus any direct expense, tax or other expenditures associate with the investment, or
the fair value of the equity instruments issued, or value agreed in the investment contract,
except for the value agreed in the investment contract is not a fair market value.
Cost method is adopted for the investments whose fair value cannot be reliably measured, with
which the Group does not exert control, joint control or significant influence over the investees.
Cost method is also adopted for the investments in subsidiaries in the Company’s balance sheet.
When cost method is adopted, the long term equity investments are measured at its initial
investment cost, except that the initial investment cost contains declared dividend. The
dividend declared by the investee is recorded as investment income in income statement.
Impairment is assessed according to relevant policies.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
38
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(10) Long Term Equity Investments (Continued)
The invested entities over which the Group has joint control or significant influence are
measured by equity method. Joint control is the contractually agreed sharing of control over an
economic activity, and exists only when the strategic financial and operating decisions relating
to the activity require the unanimous consent of the parties sharing control. Significant
influences refers to the power to participate in making decisions on the financial and operating
of an enterprise but not to control or joint control together with other parties over the
formulation of the policies.
By equity method, where initial cost of investment excesses the fair value of identifiable net
assets of investee, the difference should be recognized in initial investment cost. Where initial
cost of investment is smaller than the fair value of identifiable net assets of investee, the
difference should be recognized in income statement and the investment cost should be adjusted
accordingly.
By equity method, after investment, The Group recognizes the investment profits or losses and
adjusts the book value of the long term equity investment based on the share of the net profits or
losses of the investee. The share of the net profits and losses of the investee should be
recognized at 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 investees and
the Group shall be eliminated in proportion to the Group’s equity interest in the investees after
making adjustments on the net profits of the investees’(the loss shall be recognized in full in
case impairment is recognized from the inter-company transactions). For the investment in
associate and joint ventures before the first time adoption of CAS, the debit balance of the
investment differences, 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 invested entity should be recognized until the book value of the long term
equity investment and other long term rights and interests which substantially from 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 upon disposal of the long term equity investment.
When disposing of a long term equity investment, the difference between its book value and the
proceeds is recognized in the income statement in the corresponding period.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
39
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(10) Long Term Equity Investments (Continued)
Details for the impairment test and impairment loss recognition for the long term equity
investments in subsidiaries, associates and joint ventures, please refer to Note 2 (18).
Details for the impairment test and impairment loss recognition for other long term equity
investment, which fair value not available in active market and cannot be reliably measured,
please refer to Note 2 (17).
(11) Biological Assets
The biological assets of the Group are vines.
Biological assets should be recognized when and only when:
(i) The Group controls the asset as a result of past events,
(ii) It is probable that future economic benefits associate with the asset will flow to the
entity, and
(iii) The cost of the asset can be measured reliably.
Biological assets comprise consumptive biological assets, productive biological assets, and
not for profit biological assets. Biological assets are initially measured at its cost.
The Group charge deprecation for productive biological assets which satisfy expected
production, and record the deprecation in balance sheet and income statement. The Group
uses straight line method to calculate the deprecation, and details as follows:
Category Estimated Useful
Life
Estimated Residual
Rate
Annual
Depreciation Rate
Vines 20 years - 5%
Consumptive biological assets and productive biological assets are measured as at each
balance sheet date. Where reliable evidence shows there is natural disaster, plant diseases,
insect pests, animal disease or change of market demand that make the realizable net value
of any consumptive biological asset or the recoverable amount of any productive biological
asset is lower than its book value, provision or impairment should be recognized in income
statement in according to the difference. Where the factors which cause any provision of a
consumptive biological asset are not exist, the amount of provision are reversed limited to
the provision which has been made. The reversed amounts are recognized in the income
statement of the current period. Impairment on productive biological assets cannot be
reversed.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
40
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(11) Biological Assets (Continued)
No provision should be made for not for profit biological assets.
The Group evaluates the useful life, expected net salvage value, and the depreciation
method of the property, plant and equipment at the end of each year.
Agricultural produce harvested from the entity’s biological assets are measured at its
weighted-average book value. The book value comprises all material, labor and other
indirect expense occurred in producing and gathering the agricultural assets. Agricultural
produce harvested are reported in accordance with the CAS 1 Inventories.
When biological assets are sold, lost, dead, or damaged, the carrying amount is recognized
in the income statement after deduction of relevant taxes.
(12) Property, Plant and Equipment
Property, plant and equipment defines as the assets held for use in the production or supply
of goods or services, for rental to others, or for administrative purpose, and are expected to
be used for more than one year.
Property, plant and equipment should be recognized as an asset if, and only if:
(i) It is probable that future economic benefits associated with the item will flow to the
entity; and
(ii) The cost of the item can be measured reliably.
Subsequent expenditure related to property, plant and equipment under the recognition
principle could be recognized as asset in balance sheet, otherwise is recognized in income
statement.
Property, plant and equipments are initially measured at cost. The cost of an item of
property, plant and equipment comprises its purchase price, including import duties and
non-refundable purchase taxes, after deducting trade discounts and rebates; and any costs
directly attributable to bringing the asset to the location and condition necessary for it to be
capable of operating in the manner intended by management.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
41
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(12) Property, Plant and Equipment (Continued)
Depreciation is calculated on a straight line basis. The estimated useful life and residual
value rate are as follows:
Estimated Useful
Life
Estimated Residual
Rate
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%
A variety of depreciation rate can be used for different components of an item of property,
plant and equipment according to its different useful lives or nature.
The Group evaluates the useful life, expected net residual value, and the depreciation
method of the property, plant and equipment every year, and makes adjustment where
necessary.
For details of the impairment test and impairment loss recognition for property, plant and
equipment, please refer to Note 2 (18).
(13) Construction in Progress
Construction in progress are measured on actual construction costs, including the direct
costs of construction, capitalized borrowing costs during the period of construction and
other expenditures.
Construction in progress is reclassified to the property, plant and equipment when
completed and ready for use.
Details for the impairment test and impairment loss recognition for construction in progress,
please refer to Note 2 (18).YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
42
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(14) Borrowing Costs
Borrowing costs are interest and other costs incurred by the Group in connection with the
borrowing of funds, which includes interests, amortization of discounts or premiums,
ancillary costs, and exchange differences arising from foreign currency borrowings.
Borrowing costs that are directly attributable to the acquisition, construction or production
of a qualifying asset shall be capitalized as part of the cost of that asset. A qualifying asset
is an asset that necessarily takes a substantial period of time to get ready for its intended use
or sale.
The capitalization of borrowing costs as part of the cost of a qualifying asset shall
commence when:
(i) Expenditures of the asset are being incurred;
(ii) Borrowing costs are being incurred; and
(iii) Activities that are necessary to prepare the asset for its intended use of sale are in
progress.
Capitalization of borrowing costs shall cease when all the activities necessary to prepare the
qualifying asset for its intended use of sale are substantially complete. Any borrowing costs
incurred after this should be recognized in income statement.
During the capitalization period, the amount of borrowing costs eligible for capitalization
on a qualifying asset for each accounting period shall be determined by:
(i) The actual borrowing costs incurred on that borrowing during the period less any
investment income on the temporary investment of those borrowing for specifically
purpose borrowing; or
(ii) Applying a capitalization rate to the expenditures on that asset. The capitalization
rate shall be the weighted average of the borrowing coasts applicable to the
borrowings of the entity for general purpose borrowing.
When the acquisition, construction or production of a qualifying asset is abnormally
interrupted before it necessarily takes a substantial period of time to get ready for its
intended use or sale, and the interruption period exceed three months, the capitalization of
borrowing coasts shall be temporally ceased. During the cessation of capitalization, the
borrowing costs should be recognized in income statement, until the construction resume.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
43
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(15) Intangible Assets
Intangible assets are measured initially at 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.
The useful lives of the intangible assets are as follows:
Land Use Rights 50 years
Software 5 years
The land use rights obtained by purchase or payment of land lease prepayment are recorded
as intangible assets. For self-constructed buildings, the land use rights and plants are
recorded as intangible assets and property, plant and equipment, respectively. Purchased
buildings are allocated between land use rights and buildings based on actual payments,
and are totally recorded as property, plant and equipment when it is difficult to allocate.
Intangible assets with finite lives are amortized over the useful life on the straight line basis.
The amortization period and amortization method for an intangible asset with a finite useful life
are reevaluated at each year end.
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.
For details for the impairment test and impairment loss recognition for intangible assets,
please refer to Note 2 (18).YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
44
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(16) Long Term Prepaid Expenses
Long term prepaid expenses refer to the prepaid expenses which are amortized over 1 year.
Long term prepaid expenses are amortized over the useful economic life on a straight line basis.
Amortization period:
Land Requisition Fees 50 years
Land Leasing Fees 50 years
Others 50 years
(17) 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 Derecognizing of Financial Instruments
The Group recognizes the financial assets or financial liabilities as it contracted in financial
instruments agreements.
If a financial asset meets any of the following requirements, it is derecognized:
(i) If the contractual rights for collecting the cash flow of the said financial asset are
terminated; or
(ii) Transferred the ownership of receive the cash flow form financial assets, or with the
responsibility of transferred all cash flow received form financial assets to the third
parties; And (a) actually transferred out all the risk and reward related to the
financial assets, or (b) actually neither remained nor transferred out almost of the
risk and reward of financial assets, but lost the control of the financial assets.
A financial liability is derecognized when the obligation under the liability is discharged or
cancelled or expires. When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as a derecognizing 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.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
45
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(17) Financial Instruments (Continued)
In a regular way purchase or sale financial instrument, the financial instrument should be
recognized or derecognized on transaction date. A regular way purchase or sale is a purchase or
sale of a financial asset under a contract whose terms require delivery of the asset within the
time frame established generally by regulation of convention in the marketplace concerned.
Transaction date is the date that the Group commits to purchase or disposal a financial
instrument.
Classification and Measurement of Financial Assets
Financial assets are classified 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, and hedging instrument. Financial assets 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.
Subsequent measurement of financial assets depends on its classification
Financial Assets at Fair Value 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. 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. Gains or losses on these financial assets are recognized in the income statement whenever
they are realized or not realized. Dividend or interest associate with financial instrument which
measured at fair value and changes recorded in income statement, should be recorded in income
statement.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
46
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(17) Financial Instruments (Continued)
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 derecognized 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 derecognized or impaired, as well as through the
amortization process.
Available for Sale Financial Assets
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 derecognized 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.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
47
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(17) Financial Instruments (Continued)
Classification and Measurement of Financial Liabilities
Financial liabilities are classified into financial liabilities at fair through profits and losses, other
financial liabilities and hedging instrument 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.
Subsequent measurement of financial liability depends on its classification
Financial Liabilities at Fair Value 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. 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 is 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.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
48
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(17) Financial Instruments (Continued)
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.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
49
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(17) Financial Instruments (Continued)
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 accumulative 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 the 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. Fair
value increase after impairment is recognized in comprehensive income.
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 are not 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 derecognized and
the assets and liabilities are recognized accordingly; if the Group did not waive the control ofYANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
50
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.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(18) 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 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 being 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 each
year. Intangible assets which are not ready to use also need perform impairment test every 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 as 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.
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.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
51
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(18) Impairment of Assets (continued)
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 Company 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.
(19) Contingent Liabilities
Contingent liabilities 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 evaluation can be made of the obligation.
The contingent 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.
The acquiree’s contingent liabilities through business combination is initial recognized at fair
value, and its subsequent measurement is recognized at the higher of estimated value and the
initial cost less any accumulated amortization.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
52
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(20) 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. The amount of revenue arising on sale of goods is determined by
agreement between the entity and the buyer or user of the asset. It is measured at the fair
value of the consideration received or receivable.
Rendering of service
When the outcome of a transaction involving the rendering of services can be estimated
reliably, revenue associated with the transaction shall be recognized by reference the stage
of completion of the transaction at the reporting date. The outcome of a transaction can be
estimated reliably when all the following conditions are satisfied:
(i) The amount of revenue can be measured reliably;
(ii) It is probable that the economic benefit associated with the transaction will flow to the
entity;
(iii) The stage of completion of the transaction at the reporting date can be measured
reliably; and
(iv) The costs incurred for the transaction and the costs to complete the transaction can
be measured reliably.
Interest income
Interest income is measured based on the borrowing periods and actual interest rate.
(21) Leases
Leases that substantially transfer all the rewards and risks of ownership of assets are accounted
for as finance leases, otherwise are accounted for as operating leases.
As a lessee
Rental expenses under the operating leases are charged to related costs of the assets or the
income statement on a straight line basis over the lease period.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
53
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(22) Employee Benefits
Employee benefits refer to all kinds of remunerations and other relevant reimbursements
made by the Group to its employees in exchange for services of employees. During
accounting periods wherein an employee renders services to the Group, 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.
Medical insurance, pensions, unemployment insurance, other social insurance and housing
fund are recorded as cost of relevant assets or expenses for the relevant 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 periods from the
employee’s termination of service and the normal retirement of these staffs are recognized
as employee benefits payable when meeting the aforesaid retirement benefits recognition
requirements, and recognized to income statement of relevant period.
(23) Income Tax
Income tax comprises current and deferred tax. Income tax is recognized in the income
statement, except for goodwill arises from business combination, or transactions directly
recorded in equity of which the related income is recorded in equity.
The Group recognizes the income tax assets or liabilities related to current period and prior
period by calculating the expected payable or refundable amount in accordance with the tax
law.
Deferred tax is provided on balances sheet approach on all temporary differences between
tax basis and accounting basis at each balance sheet date.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
54
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(23) Income Tax (Continued)
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. At each reporting date,
the entity re-assesses unrecognized deferred tax assets. The entity recognizes a previously
unrecognized deferred tax asset to the extent that it has become probable that future taxable
profit will allow the deferred tax asset to be recovered.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
55
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(24) 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 fair value cannot be measure reliably, the grants are measured based on
nominal amount. 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. Grant which measured at nominal amount,
should be recorded in income statement.
(25) Significant Accounting Judgments and Accounting Estimates
Preparing financial statements requires management make judgment and estimates, which
could affect the amount of revenue, expense, asset, liabilities and the disclosure of
contingent liabilities. However, those uncertainties of estimate may cause significant
adjustment on the book value of assets and liabilities.
Estimation Uncertainty
The following are key assumptions for after balance sheet date event and other factors of
uncertain estimation. They may cause material adjustment on balance sheet in following
accounting period.
Fair value of equity investment on private company
The evaluation of equity investment is calculated by future cash flow and discount rate of
other financial instrument with similar contract terms and risks. This requires the company
estimate the future cash flow, credit risk, fluctuation and discount rate, and it contains
uncertainty.
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.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
56
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(25) Significant Accounting Judgments and Accounting Estimates (Continued)
Depreciation
As set out in No.2 (12), the depreciation is calculated on the straight line basis to write-off
the cost of each item of fixed assets to its residual value over its estimated useful life. The
Group’s management determines the estimated useful lives for its property, plant and
equipment. This estimate is based on the historical experience of the actual useful lives of
property, plant and equipment 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 the intangible assets
The estimated useful lives of the intangible assets are determined based on the historical
experience of the actual useful lives of intangible assets of similar nature and functions as
well as considering the contractual rights and statutory rights applicable to the intangible
assets.
When the estimated useful lives of finite intangible assets are shortened or extended, the
amortization periods should be adjusted accordingly. When there is evidence indicating the
useful lives of intangible assets with indefinite useful lives becomes finite, the useful lives
should be estimated and the intangible assets should be accounted for in accordance with
the standards for the intangible assets with finite useful lives.
Impairment of biological assets
As set out in No. 2 (11), 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.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
57
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
ESTIMATES (CONTINUED)
(25) Significant Accounting Judgments and Accounting Estimates (Continued)
Impairment of non-current assets
As set out in No.2 (22), 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 in reasonable
and supportable assumptions.
Estimated 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 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.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
58
3. TAXES
(1) 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.
Consumption Tax Consumption tax of the tonic wine and part brandy is
levied at quantity and certain tax rate of gross turnover,
namely levied at 20% of total turnover and RMB 1000
per ton. For all other product, consumption tax is levied
on gross revenue at rates ranging from 10% to 20%.
Business Tax The Group is subject to a business tax of 5% on its
taxable revenue.
City Development Tax Levied at 7% of total business tax payment.
Corporate Income Tax The Group is subject to a corporate income tax rate of
25% on its taxable income.
(2) Tax incentives and relative permit
According to Cai Zhu iZi [1994] permit No.1, a subsidiary of the Company, Huanren
Changyu Wine National Wines Sales Co., Ltd., is exempt from corporate income tax from
2007 to 2009 under Ben Min Wei Fa [2007] permit No. 36, Liao Cai Shui [2008] permit No.
636, and Liao Guo Shui Han [2008] Permit No. 201, respectively.
A subsidiary of the Company, Liaoning Changyu Ice Wine Chateau Co., Ltd. which is a
productive foreign-invested enterprise was incorporated in Huanren Manzu Autonomous
County. In accordance with PRC Income Tax of Foreign Investment and Foreign Enterprises
and Notice of the State Council’s Implementation of the Transitionally Preferential Policies
(GuoFa [2007] permit No.39), the productive foreign-invested company, from the first
profit-making year, exempts from corporate income tax in 2007 and 2008, and enjoys a
favorable corporate income tax rate of 12.5% from 2009 to 2011.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
59
4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS
(1) Particulars of the subsidiaries
Name Place and date
of registration
Legal
representative
Business
nature
Registered
capital
Principle
activities
Incorporate
code
Subsidiary acquired from a corporation combination: under non-common control
Xinjiang Tianzhu Wine
Co.,Ltd.,(Xinjiang
Tianzhu) (a)
11 April 2006
Shihezi in Xinjiang
Province,China
Zhou
Hongjiang
Manufact
oring
RMB
75,000,000
Production and
sales of wine
787 604 261
Subsidiaries acquired by establishment:
Yantai Changyu Pioneer
Vehicular Transport
Co., Ltd. (“Vehicular
Transportation”)
1 December 1992
Yantai in Shandong
Province, China
Zhang
Lixian
Transport
ation
RMB
300,000
Transportation
service
165 031 729
Beijing Changyu Sales
and Distribution Co.,
Ltd. (“Beijing Sales”)
14 July 1998
Beijing, China
Sun
Liqiang
Sales RMB
500,000
Sales of wine 634 377 029
Yantai Kylin Packaging
Co., Ltd. (“Kylin
Packaging”) (b)
29 September 1999
Yantai in Shandong
Province, China
Yang
Ming
Manufact
oring
USD
1,400,000
Production of
packaging
materials
863 052 455
Yantai Changyu-Castel
Wine Chateau Co., Ltd.
(“Changyu-Castel”) (c)
3 September 2001
Yantai in Shandong
Province, China
Sun
Liqiang
Manufact
oring
USD
5,000,000
Production and
sales of wine
730 682 613
Changyu (Jingyang)
Pioneer Wine Co., Ltd.
(“Jingyang Wine”)
5 December 2001
Jingyang in Shanxi
Province, China
Cai
Jianshe
Manufact
oring
RMB
1,000,000
Production and
sales of wine
732 663 643
Yantai Changyu Pioneer
Wine Sales Co., Ltd.
(“Sales Company”)
24 December 2001
Yantai in Shandong
Province, China
Jiang
Hua
Sales RMB
8,000,000
Sales of wine 746 576 380
Langfang Development
Zone Castel-Changyu
Wine Co., Ltd. (“Langfang
Castel”) (d)
1 March 2002
Langang in Hebei
Province, China
Mige
Balu
Manufact
oring
USD
3,000,000
Production and
sales of wine
735 624 56X
Changyu (Jingyang)
Pioneer Wine Sales Co.,
Ltd. (“Jingyang Sales”)
8 April 2002
Jingyang in Shanxi
Province, China
Zhou
Mingqiang
Sales RMB
1,000,000
Sales of wine 735 379 154YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
60
4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(1) Particulars of the subsidiaries (Continued)
Name Place and date
of registration
Legal
represe-nt
ative
Business
nature
Registered
capital
Principle
activities
Incorporate
code
Langfang Changyu Pioneer
Wine Sales Co.,Ltd.
(“Langfang Sales”).
19 April 2002
Langfang in
Hebei Province,
China
Liu
Wanqiang
Sales RMB
1,000,000
Sales of wine 737 388 150
Shanghai Changyu Sales
and Distribution Co.,
Ltd.(“Shanghai Sales”)
28 April 2004
Shanghai, China
Zhou
Hongjiang
Sales RMB
1,000,000
Sales of wine 749 571 075
Beijing Changyu AFIP Wine
Chateau Co., Ltd. (“Beijing
Chateau”)
27 October 2005
Beijing, China
Sun
Liqiang
Manufact
oring
RMB
110,000,000
Production and
sales of wine
780 953 469
Yantai Changyu Wine Sales
Co., Ltd.( “Wines Sales”)
9 January 2006
Yantai in Shandong
Province, China
Jiang
Hua
Sales RMB
5,000,000
Sales of wine 783 487 627
Yantai Changyu Pioneer
International Co.,
Ltd.(“Pioneer
International”)
29 September 2005
Yantai in Shandong
Province, China
Zhou
Hongjiang
Sales RMB
5,000,000
Import and
export of wine and
technology
780 766 161
Hangzhou Changyu Wine
Sales Co., Ltd.(“Hangzhou
Changyu”)
14 June 2006
Hangzhou in
Zhejinag
Province ,China
Jiang
Hua
Sales RMB
500,000
Whole-sale and
retail of packaging
food
788 283 631
Ningxia Changyu
Grape-Growing Co.,
Ltd.(“Ningxia Growing”)
16 November 2006
Yinchuang in
Ningxia, China
Shao
Chunsheng
Planting RMB
1,000,000
Plant and
purchase of
grape
788 200 410
Huanren Changyu National
Wines Sales Co.,
Ltd.(“National Wines”)
16 November 2006
Huanren in
Liaoning ,China
Leng
Bin
Sales RMB
2,000,000
Sales of wine,
healthy liquor,
liqueur，
non-alcohol
beverages
794 822 179
Liaoning Changyu Ice Wine
Chateau Co., Ltd.(“Ice
Chateau”) (e)
20 November 2006
Benxi in Liaoning
Province, China
Zhou
Hongjiang
Manufact
oring
RMB
26,300,000
Production and
sales of ice wine
747 128 301
Yantai Development Zone
Changyu Trade Co.,
Ltd.(“Development Zone
Trade”)
4 December 2006
Yantai in Shandong
Province, China
Zhou
Hongjiang
Sales RMB
5,000,000
Whole-sale and
retail of wine
796 183 411
Shenzhen Changyu Wine
Marketing Ltd.(“Shenzhen
Marketing”)
31 July 2007
Futian in Shenzhen
Province, China
Lin
Pu
Sales RMB
500,000
Whole-sale and
retail of wine
664 195 20XYANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
61
4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(1) Particulars of the subsidiaries (Continued)
Name
Place and date of
registration
Legal
represe-nt
ative
Business
nature
Registered
capital
Principle
activities
Incorporate
code
Yantai Changyu Trading
Company (“Changyu
Trading”)
27 March 2007
Yantai in Shandong
Province, China
Zhou
Hongjiang
Sales RMB
5,000,000
Whole-sale and
retail of wine
660 176 044
Beijing AFIP Meeting
Center (“Meeting Center”)
9 October 2007
Miyun in Beijing ,
China
Sun
Hongbo
Services RMB
500,000
Meeting service,
foods,
accommodation,
tourism and sales
of souvenir
669 926 612
Beijing AFIP Tourism and
Culture Company (“AFIP
Tourism”)
4 June 2008
Miyun in Beijing ,
China
Liu
Shilu
Tourism RMB
500,000
Tourism and
culture
communication,
development of
tourist resources,
meeting service
676 627 372
Ningxia Changyu
Pioneer Wine Co., Ltd.
(“Ningxia Wine”)
2 April 2008
Yinchuang in
Ningxia, China
Li
Jiming
Manufact
uring
RMB
1,000,000
Manufacturing
and sales of wine,
packing material,
plant, process and
purchase of
grapes
670 408 275
Yantai Changyu Pioneer
Wine Research and
Develop Co.,
Ltd.(Research & Develop
Co., Ltd)
29 March 2010
Yantai in Shandong
Province, China
Liqiang
Sun
Manufact
uring
RMB500,000,00
0
Brandy,Wine,S
parkling Wine
Manufacturing,
Preparation of
Marketing
project
555 235 76X
Shihezi Changyu Wine
Chateau Co., Ltd
(Shihezi Wine Chateau)
2 April 2010
Shihezi in XinJIang
Province, China
Liqiang
Sun
Manufact
uring
RMB
2,000,000
Production and
Sale of Wine
(base liquor)
552 414 949
Xianyang Changyu
Changan Wine Chateau
Co., Ltd (Changan Wine
Chateau)
12 April 2010
Weicheng District
Xianyang, China
Liqiang
Sun
Manufact
uring
RMB
2,000,000
Under Constru
-ction
552 180 142
Changyu (Ningxia) Wine
Chateau Co., Ltd (Ningxia
Wine Chateau)
26 April 2010
Yinchuan in
Ningxia, China
Hongjiang
Zhou
Manufact
uring
RMB
2,000,000
Production and
sale Wine,Frui
t Jam, Packagi
ng Material, To
urism
694 349 740YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
62
4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(1) Particulars of the subsidiaries (Continued)
Equity interest owned
by the Company
Name Paid in capital
at 31 June 2010
Direct
control
Indirect
control
Voting
power
Consolidate
financial
statements
Non-controlli
ng interest
Subsidiary acquired in corporation combination :under non-common control
Xinjiang Tianzhu (a) RMB
60,000,000
60% - 60% Yes RMB
46,038,270
Subsidiaries acquired by establishment:
Vehicular Transportation RMB
300,000
100% - 100% Yes -
Beijing Sales RMB
500,000
70% 30% 100% Yes -
Kylin Packaging (a) RMB
5,953,878
50% - 62.5% Yes RMB
24,008,886
Changyu-Castel (b) RMB
28,968,100
70% - 100% Yes RMB
12,174,645
Jingyang Wine RMB
1,000,000
90% 10% 100% Yes -
Sales Company RMB
8,000,000
90% 10% 100% Yes -
Langfang Castel (c) RMB
12,142,200
49% - 100% Yes RMB
12,640,000
Jingyang Sales RMB
1,000,000
10% 90% 100% Yes -YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
63
4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(1) Particulars of the subsidiaries (Continued)
Equity interest owned
by the Company
Name Paid in capital
at 31 December
2009
Direct
control
Indirect
control
Voting
power
Consolidate
financial
statements
Non-controlli
ng interest
Langfang Sales RMB
1,000,000
10% 90% 100% Yes -
Shanghai Sales RMB
1,000,000
30% 70% 100% Yes -
Beijing Chateau RMB
77,000,000
70% - 70% Yes RMB
31,104,842
Wines Sales RMB
5,000,000
90% 10% 100% Yes -
Pioneer International RMB
5,000,000
70% 30% 100% Yes -
Hangzhou Changyu RMB
500,000
- 100% 100% Yes -
Ningxia Growing RMB
1,000,000
100% - 100% Yes -
National Wines RMB
2,000,000
100% - 100% Yes -
Ice Chateau (d) RMB
13,413,000
51% - 100% Yes RMB
16,959,292
Development Zone Trade RMB
5,000,000
- 100% 100% Yes -
Shenzhen Marketing RMB
500,000
- 100% 100% Yes -YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
64
4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(1) Particulars of the subsidiaries (Continued)
Equity interest owned
by the Company
Name Paid in capital
at 31 December
2009
Direct
control
Indirect
control
Voting
power
Consolidate
financial
statements
Non-controlli
ng interest
Changyu Trading RMB
5,000,000
- 100% 100% Yes -
Meeting Center RMB
500,000
- 100% 100% Yes -
AFIP Tourism RMB
350,000
70% - 70% Yes RMB
702,029
Ningxia Wine RMB
1,000,000
100% - 100% Yes
Research and Develop
Manufacturing Co., Ltd
RMB
100,000,000
100% 100% Yes
Shihezi Wine Chateau RMB
2,000,000
100% 100% Yes
Changan Wine Chateau RMB
2,000,000
100% 100% Yes
Ningxia Wine Chateau RMB
2,000,000
100% - 100% Yes -
Note: There was no operating loss attributed to minority interest at the end of June 2010.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
65
4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(1) Particulars of the subsidiaries (Continued)
(a) Kylin Packaging is a Sino-foreign joint venture. Pursuant to the agreement, the
Company has invested USD 700,000 (about RMB 5,794,000), accounting for 50%
of Kylin’s equity interest. By 31st June 2010, the Company has completed the capital
contribution by property, plant and equipment and inventories of RMB 5,953,878.
For the Company have over half of the voting power and therefore has the power to
control its strategic 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 and a
foreign investor. Pursuant 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 full power to control its strategic operating,
investing and financing policies.
(c) Langfang Castel is a Sino-foreign joint venture established by the Company and a
foreign investor. Pursuant to the agreement signed by the Company, Langfang Castel
and the foreign investor, the Company is entrusted to manage Langfang Castel and
therefore has the full 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. Pursuant to the agreement signed by the Company, Ice Chateau and the
foreign investor, the Company is entrusted to manage Ice Chateau and therefore has
the full power to control its strategic operating, investing and financing policies.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
66
4. SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(2) Changes in the scope of consolidated financial statement.
Except for New establishing Research and develop manufacturing Co.,Ltd, Shihezi Wine
Chateau,Changan Wine Chateau and Ningxia Chateau, the scope of consolidated financial
statements was same with last year.
(3) A subsidiary newly included in the scope of consolidation
By 30 June 2010, a subsidiary is acquired from a business combination as follows:
Net assets at Net Profit from Jan to June
30 June 2010 2010
Research and Develop manufacturing Co., Ltd 100,000,000
Shihezi Wine Chateau 2,000,000
Changan Wine Chateau 2,000,000
Ningxia Wine Chateau 2,000,000
Total 106,000,000YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
67
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Cash and Bank
At 30 June 2010 At 31 Dec 2009
Cash on hand 102,126 218,086
Cash in bank 1,076,258,443 2,521,339,000
Others 1,549,410,575 23,653,200
2,625,771,144 2,545,210,286
At 30 June 2010, the balance of cash and bank with its ownership restricted of the Group is
RMB 2,462,124 (31 December 2009：RMB 2,449,848).
At 30 June 2010, the Group has no cash and bank overseas deposit (31 December 2009：
Nil).
Interest income of current deposit is earned based on bank interest rates. The periods of
short-term deposits range from 3 months to 1 year in based on the demands of the Group.
The balance of term deposits over three months as at 30 June 2010 of the Group is RMB
479,407,214 (31 December 2009: RMB 544,079,160) with interest rates ranging from
1.98% to 2.25% , which will mature from 3 months to 1 year.
(2) Bills Receivable
At 30 June 2010 At 31 December 2009
Bank acceptance bills 32,735,374 38,107,831
At 30 June 2010, there was no pledged bills receivable (31 December 2009: nil), and no
bills receivable were reclassified as accounts receivable due to the default of drawer (31
December 2009: Nil).
At 30 June 2010, the notes receivable endorsed to third party but not yet expired is as
follows(31 December 2009: Nil):
Drawer Issuing Date Maturity Date Amount
Diaoyutai Economic 10/3/2010 10/9/2010 600,000
Development Co., Ltd
Chenxin Sale Department,
ChenGuan, Huoqiu 4/1/2010 4/7/2010 209,861
Total 809,861
As at 30 June 2010, there was no notes receivable discounted to obtain short-term loan. (31
December 2009: Nil).YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
68
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) Trade Receivables
The normal credit term of trade receivables is one month, which can be extended to three
months for certain major customers. The trade receivables are interest free.
The aged analysis is as follows:
At 30 June 2010 At 31 Dec 2009
Within 1 year 75,491,906 98,022,443
Less:Provision For bad debt
Total 75,491,906 98,022,443
At 30 June 2010, there was no bad debt provision for trade receivables (31 December 2009:
Nil). There was no bad debt provision made or reversed by the management until 30 June
2010 (2009: Nil).
At 30 June 2010 At 31 Dec 2009
Amount % Provision % Amount % Provision %
Individually
significant 14,596,922 23.97 - - 47,841,785 48.8
- -
Others 60,894,984 76.03 - - 50,180,658 51.2 - -
75,491,906 100.0 - - 98,022,443 100.0 - -
At 30 June 2010, there was no trade receivable due from the Company’s shareholders with
voting rights of 5% or above. (31 December 2009: Nil)
At 30 June 2010, the particulars of top 5 trade receivables are as follows:
Relationship
with the
group
Amount Aging Ratio of
total
receivables
%
First Third party 5,600,027 Within 1 year 7.42
Second Third party 5,568,057 Within 1 year 7.38
Third Third party 3,428,838 Within 1 year 4.54
Fourth Third party 1,578,056 Within 1 year 2.09
Fifth Third party 1,000,000 Within 1 year 1.32
17,174,978 22.75YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
69
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) Trade Receivables (Continued)
At 31 December 2009, the particulars of top 5 trade receivables are as follows:
Relationship
with the
group
Amount Aging Ratio of
total
receivables
%
First Third party 8,396,320 Within 1 year 8.6
Second Third party 7,573,193 Within 1 year 7.7
Third Third party 7,191,107 Within 1 year 7.3
Fourth Third party 6,068,277 Within 1 year 6.2
Fifth Third party 3,790,528 Within 1 year 3.9
33,019,425 33.7
At 30 June 2010, there was no trade receivables due from related parties (31 December
2009: Nil).YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
70
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(4) Advances to Suppliers
The aged analysis is as follows:
At 30 June 2010 At 31 December 2009
Balance % Balance %
Within 1 year 41,457,252 100.0 31,885,027 100.0
At 30 June 2010, the particulars of top 5 advances to suppliers are as follows:
Relationship
with the
Group
Amount Aging Ratio of total
advances to
suppliers%
First Third party 4,853,239 Within 1 year 19.37
Second Third party 3,501,650 Within 1 year 19.30
Third Third party 3,000,000 Within 1 year 11.15
Fourth Third party 3,000,000 Within 1 year 9.38
Fifth Third party 2,917,610 Within 1 year 9.18
17,272,499 68.37
At 31 December 2009, the particulars of top 5 advances to suppliers are as follows:
Relationship
with the
group
Amount Aging Ratio of total
advances to
suppliers
%
First Third party 4,853,239 Within 1 year 15.2
Second Third party 3,501,650 Within 1 year 11.0
Third Third party 3,000,000 Within 1 year 9.4
Fourth Third party 3,000,000 Within 1 year 9.4
Fifth Third party 2,917,610 Within 1 year 9.2
17,272,499 54.2
At 30 June 2010, there were no advances paid to the shareholders with voting rights of 5%
or above (31 December 2009: Nil).YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
71
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) Interest Receivable
Jan.-June 2010
Opening
balance Increase Decrease
Closing
balance
Bank fixed deposits
interest 8,969,343 4,473,337 7,514,257 5,928,423
2009
Opening
balance Increase Decrease
Closing
balance
Bank fixed deposits
interest 19,176,250 21,751,738 (31,958,645) 8,969,343YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
72
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(6) Other Receivables
The aging analysis is as follows:
At 30June,2010 At 31 December 2009
Balance Bad Debts
Provision
Balance Bad Debts
Provision
Amount % Amount % Amount % Amount %
Individually
significant 27,584,743 77.79 8,000,000 29.00 11,584,743 38.1
8,000,000 69.1
Others 7,875,613 22.21 18,839,560 61.9
- -
35,460,356 100 8,000,000 22.56 30,424,303 100.0 8,000,000 26.29
The bad debt provision of other receivables is as follows:
Opening Balance Accrued Decreased
Ending
Balance
At 30 June
2010 8,000,000 8,000,000
2009 8,000,000 8,000,000
At 30 June 2010, there were no other receivables due from shareholders with voting rights
of 5% or above (31 December 2009: Nil).
At 30 June 2010
At 31 December 2009
Balance
Bad debt
Provision
Net Carrying
Amount
Balance Bad debt
Provision
Net Carrying
Amount
Within 1 year 23,578,840 23,578,840 18,634,887 - 18,634,887
1 to 2 years 168,047 168,047 86,571 - 86,571
2 to 3 years 3,249,326 3,249,326 3,238,702 - 3,238,702
Over 3 years
8,464,143 8,000,000 464,143 8,464,143 8,000,000 464,143
35,460,356 8,000,000 27,460,356 30,424,303 8,000,000 22,424,303YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
73
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(6) Other Receivables (Continued)
At 30 June 2010, the particulars of top 5 other receivables are as follows:
Relationship
with the
Group
Amount Aging Ratio of
total other
receivables%
First Third party 15,000,000 Within 1 year 42.30
Second Third party 8,464,143 Within 1 year 23.87
Third Third party 4,120,600 Within 1 year 11.62
Fourth Third party 1,810,000 Within 1 year 5.10
Fifth Third party 846,762 Within 1 year 2.39
30,241,505 85.28
At 31 December 2009, the particulars of top 5 other receivables are as follows:
Relationship
with the
Group
Amount Aging Ratio of
total other
receivables%
First Third party 3,120,600 2-3 years 13.9
Second Third party 846,762 Within 1 year 3.8
Third Third party 534,996 Within 1 year 2.4
Fourth Third party 437,263 Within 1 year 2.0
Fifth Third party 375,000 Within 1 year 1.7
5,314,621 23.8
At 30 June 2010, there was no other receivable due from related parties (31 December 2009:
Nil).YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
74
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(7) Inventories
Analysis of inventory provision is as follows:
Jan-Jun 2010
Opening
Balance
Increase Decrease
Closing
Balance
Inventories 10,274,687 10,274,687
2009
Opening
Balance
Increase Decrease
Closing
Balance
Inventories 8,817,146 1,457,541
- 10,274,687
At 30 June 2010, no ownership of inventory was restricted (31 December 2009: Nil).
At 30 June 2010 At 31 December 2009
Balance Provision
Net Carrying
Amount Balance Provision
Net Carrying
Amount
Raw
material 42,048,180 42,048,180 78,468,949 - 78,468,949
Finished
goods 502,410,529 10,274,687 492,135,842 493,924,195 10,274,687 483,649,508
Inventories
in progress 388,208,502 388,208,502 569,122,435 - 569,122,435
932,667,211 10,274,687 922,392,524 1,141,515,579 10,274,6871,131,240,892YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
75
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(8) Long-Term Equity Investment
Jan-Jun 2010
Initial
Cost
Opening
Balance
Movement
for the year
Closing
Balance
Equity
Interest
Voting
Power
Provision
% %
Cost Method:
Yantai Dingtao Construction
and Development Co., Ltd.
(“Yantai Dingtao”) 10,000,000 10,000,000 - 10,000,000 18 18 -
10,000,000 10,000,000 - 10,000,000
-
2009
Initial
Cost
Opening
Balance
Movement
for the year
Closing
Balance
Equity
Interest
Voting
Power Provision
% %
Cost Method:
Yantai Dingtao Construction
and Development Co., Ltd.
10,000,000 10,000,000 - 10,000,000 18 18 -
10,000,000 10,000,000 - 10,000,000
-
At 30 June 2010 and 31 December 2009, the initial investment to Yantai Dingtao is RMB10,
000,000, and the Group hold 18% of its equity interests.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
76
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(9) Property, Plant and Equipment
30 June 2010 Opening
Balance
Increase Decrease
Closing
Balance
Cost:
Buildings 698,714,336 86,789,665 481,141 785,022,860
Machineries and
Equipments 737,132,083 24,053,138 2,875,196 758,310,025
Motor Vehicles 17,488,406 1,221,411 18,709,817
Total 1,453,334,825 112,064,214 3,356,337 1,562,042,702
Accumulated
depreciation:
Buildings 108,526,523 9,196,980 197,186 117,526,317
Machineries and
Equipments 336,801,458 23,953,329 2,566,942 358,187,845
Motor Vehicles 11,213,979 789,940 12,003,919
Total 456,541,960 33,940,249 2,764,128 487,718,081
-
Net carrying
amount: -
Buildings 590,187,813 77,592,685 283,955 667,496,543
Machineries and
Equipments 400,330,625 99,809 308,254 400,122,180
Motor Vehicles 6,274,427 431,471 6,705,898
Total 996,792,865 78,123,965 592,209 1,074,324,621YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
77
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(9) Property, Plant and Equipment (Continued)
2009 Opening
Balance
Increased
for the year
Decreased
for the year
Closing
Balance
Cost:
Buildings 495,533,405 203,180,931 - 698,714,336
Machineries and
Equipments 619,780,868 117,771,847 (420,632 ) 737,132,083
Motor Vehicles 3,080,246
1,129,722,433 324,033,024 (420,632 ) 1,453,334,825
Accumulated
depreciation:
Buildings 92,094,253 16,432,270 - 108,526,523
Machineries and
Equipments 299,734,197 37,436,051 (368,790 ) 336,801,458
Motor Vehicles 9,664,848 1,549,131
- 11,213,979
401,493,298 55,417,452 (368,790 ) 456,541,960
Net carrying
amount:
Buildings 403,439,152 186,748,661 - 590,187,813
Machineries and
Equipments 320,046,671 80,335,796 ( 51,842 ) 400,330,625
Motor Vehicles 4,743,312 1,531,115
- 6,274,427
728,229,135 268,615,572 ( 51,842 ) 996,792,865
Depreciation for Jan-June 2010 is RMB 33,829,734 (2008: RMB 55,417,452). The value of
property, plant and equipment transferred from construction in progress is RMB 85,329,280
(2009: RMB 248,443,966).
At 30 June 2010, the book value of Property, Plant and Equipment with ownership
restricted is RMB 1,439,022 (31 December 2009: RMB1,439,022), which is pledged to
obtain a short-term bank loan RMB 4,500,000 and a long term bank loan BMB 10,500,000.
Please refer to Note 5 (16) and (24) for details.
At 30 June 2010, no property, plant and equipment are idle, held for disposal, or under
finance or operating lease (31 December 2009: Nil).YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
78
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(9) Property, Plant and Equipment (Continued)
At 30 June 2010, buildings without property certificate are as follow:
Reason for not receive
a property certificate
Ice Wine Chateau Office Tower waiting for completion report
Ice Wine Chateau Packing Factory waiting for completion report
Beijing AFIP European Town waiting for completion report
Beijing AFIP Office Town waiting for completion report
Beijing AFIP Main Building waiting for completion report
Beijing AFIP Production Factory waiting for completion report
Changsha Hunan Representative Office Processing
Taiyuan Shanxi Representative Office Processing
Xi’an Shaanxi Representative Office Processing
Changchun Representative Office Processing
Harbin Representative Office Processing
Sales Company Office Tower Processing
(10) Construction in Progress
At 30 June 2010 31 December 2009
Book Value Book Value
Sparkling wine reconstruction project 2,234,216
Beijing Castel Chateau Project 21,341,970 11,714,331
Plants for Ice Wine in Liaoning 3,119,556 3,119,556
Ningxia united workshop 2,951,985 60,394,418
Plants for Xinjiangtianzhu 10,972,778 9,179,267
Plants for Jingyang Wine 11,130,864 9,271,105
Sales Company Plant 14,288,100 13,459,425
Oak Aged Icewine 3,289,637
Central ferment refrigeration plant 3,441,373
Shihezi Wine Chateau 21,141,000
Xianyang Changan Wine Chateau 365,364
92,042,627 109,372,318YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
79
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(10) Construction in Progress (Continued)
Jan-Jun 2010 Budget 1 January
2010
Addition Transferred
to property,
plant and
equipment
30 June 2010 Financed
by
Accumulated
expenditure
/budget
%
Sparkling Wine
Reconstruction Project 42,000,000 2,234,216 - 2,234,216 Self-raised 129.60
Beijing AFIP Chateau
Project 256,250,000 11,714,331
9,627,639
Self-raised 21,341,970 Self-raised 136.16
Ice Wine Chateau Workshop
Project 24,000,000 3,119,556 3,119,556 Self-raised 102.10
Ningxia United Workshop 162,200,000 60,394,418 25,652,631 83,095,064 2,951,985 Self-raised 61.32
XinJiangTianZhu
Reconstruction project 29,000,000 9,179,267 1,793,511 10,972,778 Self-raised 57.88
Jingyang Ferment
Workshop Reconstruction 23,540,000 9,271,105 1,859,759 11,130,864 Self-raised 47.30
Sales Company Plant 18,381,767 13,459,425 828,675 14,288,100 Self-raised 77.71
Oak Aged Wine 3,289,637 3,289,637 Self-raised 10.34
Central ferment
refrigeration plant 3,441,373
3,441,373
Self-raised
98.32
Shihezi Wine Chateau 21,141,000 21,141,000 Self-raised 28.19
Xianyang Changan Wine
Chateau 365,364 365,364 Self-raised 0.15
Total
915,701,767 109,372,318
- 67,999,589
85,329,280
- 92,042,627
7.433YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
80
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(10) Construction in Progress (Continued)
2009 Budget 1 January
2009
Addition Transferred
to property,
plant and
equipment
31December
2009
Financed
by
Accumulated
expenditure
/budget
%
Sparkling Wine
Reconstruction
Project 42,000,000 8,263,910 -( 6,029,694 ) 2,234,216 Self-raised 129.6
Beijing AFIP Chateau
Project 256,250,000 98,880,689 84,275,462 (171,441,820 ) 11,714,331 Self-raised 132.4
Ice Wine Chateau
Workshop Project 24,000,000 1,754,791 21,292,132( 19,927,367 ) 3,119,556 Self-raised 102.1
Ningxia United
Workshop 162,200,000 26,079,028 47,642,850 ( 13,327,460) 60,394,418 Self-raised 45.5
Ningxia ferment
project 29,210,425 19,512,297 9,698,128 ( 29,210,425) - Self-raised 100.0
XinJiangTianZhu
Reconstruction
project 29,000,000 - 15,004,929 ( 5,825,662) 9,179,267 Self-raised 51.7
Jingyang Ferment
Workshop
Reconstruction 23,540,000 - 9,271,105 - 9,271,105 Self-raised 39.4
Vineyard
Reconstruction
Project 2,681,538 - 2,681,538 (2,681,538) - Self-raised 100.0
Sales Company Plant 18,381,767 - 13,459,425 -
13,459,425 Self-raised 73.2
154,490,715 203,325,569 (248,443,966) 109,372,318
No interest capitalized from January to June 2010 (in 2009: Nil).
At 30 June 2010, there is no provision was made for the constructions in process (31
December 2009: Nil).YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
81
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(11) Biological Assets
Jan- Jun 2010 2009
Opening Balance 39,717,396 40,675,990
Addition Due to Self-cultivation 1,216,060 59,800
Depreciation 1,018,395 1,018,394
Closing Balance 39,915,061 39,717,396
At 30June 2010, no ownership of the biological asset is restricted (31 December 2009: 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.
At 30 June 2010, there is no indication that biological assets may be impaired, and no
provision was made (31 December 2009: Nil).
(12) Intangible Assets
Jan-Jun 2010 1 January 2010 Increase Decrease 30 June 2010
Cost:
Land Use Right 155,444,429 18,199,758
- 173,644,187
Software 3,480,000 3,480,000
158,924,429 18,199,758
- 177,124,187
Accumulated
Amortization
Land Use Right 10,022,874 2,168,846
- 12,191,720
Software 1,392,000 348,000
- 1,740,000
11,414,874 2,516,846
- 13,931,720
Net Carrying
Amount:
Land Use Right 145,421,555 16,030,912
- 161,452,467
Software 2,088,000 （348,000）
- 1,740,000
147,509,555 15,682,912
- 163,192,467YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
82
2009 1 January 2009 Increase Decrease 31 December
2009
Cost:
Land Use Right 105,515,923 49,928,506 155,444,429
Software 3,480,000 3,480,000
108,995,923 49,928,506 158,924,429
Accumulated
Amortization
Land Use Right 6,872,997 3,149,877 10,022,874
Software 696,000 696,000 1,392,000
7,568,997 3,845,877 11,414,874
Net Carrying
Amount:
Land Use Right 98,642,926 46,778,629 145,421,555
Software 2,784,000 (696,000) 2,088,000
101,426,926 46,082,629 147,509,555
The amortization of intangible asset in first half year 2010 is RMB 2,516,846 (in 2009:
RMB 3,845,877).
At 30 June 2010, the amount of intangible assets with restricted ownership is RMB
8,882,146 (31 December 2009: 8,882,146). The Group pledged the land use right to obtain a
short-term bank loan of RMB 4,500,000 and long-term bank loan of RMB 10,500,000. By
30 June 2010, the amortization of this land use right is RMB 41,857 (in 2009: 83,714).YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
83
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(13) Long Term Prepaid Expenses
Jan-Jun 2010 Opening
Balance
Increase Amortization Closing
balance
Land Lease Prepayments 19,029,488 68,068,400 496,561 86,601,327
Land Acquisition Fee 17,921,630 230,320 17,691,310
Others 2,004,904 482,925 57,131 2,430,698
38,956,022 68,551,325 784,012 106,723,335
2009 Opening
Balance
Increase Amortization Closing
balance
Land Lease Prepayments 19,380,988 351,500 19,029,488
Land Acquisition Costs 18,314,837 393,207 17,921,630
Others 2,071,607 39,088 105,791 2,004,904
21,452,595 18,353,925 850,498 38,956,022YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
84
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(14) Deferred Tax Assets
Deferred tax assets and liabilities are presented separately.
Deferred tax assets and liabilities recognized:
At 30 June 2010 31 Dec 2009
Deferred tax assets
Unrealized profit from intra-company transactions 64,182,500 89,817,849
Unpaid bonus 8,048,496 30,985,074
Retirement benefit 10,391,385 11,192,840
Asset impairment provision 4,568,672 4,568,672
Deductable losses 2,423,353
Start-up costs 209,656 279,486
87,400,709 139,267,274
Deferred tax liabilities
Corporate combination under non common control 5,336,115 5,336,115
5,336,115 5,336,115
Deductable losses of deferred tax assets and liabilities not recognized will expire at:
At 30 June 2010 At 31 Dec 2009
2011 8,710,674
2012 85,340
2013 64,997
2014 15,482,676 19,077,494
Total 15,482,676 27,938,505YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
85
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(15) Provision for Impairment of Assets
Jan-Jun 2010
Decrease Closing
balance
Opening
balance
Accrual
Reversal Write-off
Bad debt provision 8,000,000 - - - 8,000,000
Inventory provision 10,274,687 - - 10,274,687
18,274,687 -
- 18,274,687
2009
Decrease Closing
balance
Opening
balance
Accrual
Reversal Write-off
Bad debt provision 8,000,000 - - - 8,000,000
Inventory provision 8,817,146 1,457,541 - - 10,274,687
16,817,146 1,457,541 -
- 18,274,687
(16) Short-Term Loans
At 30 June 2010 At 31 Dec 2009
Guaranteed Loan 4,500,000 4,500,000
Credit Loan 220,000,000
4,500,000 224,500,000
At 30 June 2010, the interest rate is 5.4 % (31 December 2009: 4.78 %-5.4 %).
At 30 June 2010, the Group has no unpaid matured short-term loan. (31 December 2009:
Nil).YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
86
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(17) 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.
At 30 June 2010 At 31 Dec 2009
Within 1 year 227,188,399 343,079,052
227,188,399 343,079,052
At 30 June 2010, the Group has no outstanding balance is payable to related parties or
shareholders who have 5% or above of voting rights (31 December 2009: Nil).
At 30 June 2010, the Group has no significant outstanding balances aged more than one
year (31 December 2009: Nil)..
(18) Advances from Customers
At 30 June 2010 At 31 Dec 2009
Within 1 year 310,568,658 371,221,002
310,568,658 371,221,002
As at 30 June 2010, The Group has no outstanding balance is payable to the related parties
or shareholders who have 5% or above of voting rights (31 December 2009: Nil).YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
87
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(19) Employee Benefit
At 30 June 2010
Opening
Balance Increase Decrease
Closing
Balance
Salaries and Bonus 97,044,478 150,025,716
147,410,938 ) 99,659,256
Staff Benefit - 1,293,165 1,293,165 )
Staff Welfare 2,895,754 19,774,622 19,884,640 ) 2,785,736
Includes: Medical
insurance 2,101,580 13,780,224 13,906,011 ) 1,975,793
Pension 588,777 4,134,067 4,150,321 ) 572,523
Unemployment
Insurance 96,560 689,011 681,728 ) 103,843
Injury Insurance 105,868 620,110 655,261 ) 70,717
Maternity
Insurance 2,969 551,209 491,318 ) 62,860
Housing Fund 389,545 1,484,863 1,653,251 ) 221,157
Union Fee and Education
Fee 2,288,240 2,033,591 2,698,572 ) 1,623,259
Termination benefits 44,771,363 3,205,822 ) 41,565,541
Other Allowances 29,591,619
)
29,591,619
176,980,999 174,611,957
176,146,388 ) 175,446,568
31 December 2009
Opening
Balance
Increased for
the year
Decreased for
the year
Closing
Balance
Salaries and Bonus 53,230,543 278,390,877 234,576,942 97,044,478
Staff Benefit - 8,303,237 8,303,237 -
Staff Welfare 7,855,995 11,777,294 16,737,535 2,895,754
Includes: Medical Insurance 4,447,021 10,009,738 12,355,179 2,101,580
Pension 2,730,109 1,469,081 3,610,413 588,777
Unemployment
Insurance 555,723 193,924 653,087 96,560
Injury Insurance 64,628 103,498 62,258 105,868
Maternity Insurance 58,514 1,053 56,598 2,969
Housing Fund 1,464,029 3,449,836 4,524,320 389,545
Union Fee and Education Fee 2,839,358 1,410,718 1,961,836 2,288,240
Termination Benefits 55,838,433 - 11,067,070 44,771,363
Other Allowances 30,621,189
1,466,414 2,495,984
29,591,619
151,849,547 304,798,376 279,666,924 176,980,999YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
88
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(19) Employee Benefits (Continued)
At 30 June 2010, no payment of any employee benefits is delayed (December 2009: Nil).
In 2010, the amount union fee and education fee paid is RMB 2,698,572 (in 2009: RMB:
1,961,836), the amount of termination benefit paid is RMB 3,205,822 (in 2009: RMB
11,067,070). No non-monetary benefit was distributed in 2010 (2009: Nil).
(20) Taxes Payable
At 30 June 2010 At 31 Dec 2009
Value Added Tax 8,877,412 70,436,105
Consumption Tax 11,160,472 41,009,401
Business Tax 38,078 265,448
Corporation Income Tax 359,152,940 425,211,960
Individual Income Tax 7,577,064 6,570,739
City DevelopmentTax (7,388,457) 6,756,307
Others (915,154) 6,709,487
378,502,355 556,959,447
(21) Interest Payable
At 30 June 2010 At 31 Dec 2009
Interest of short-term Bank Loan 605,030
605,030
(22) Dividend Payable
At 30 June 2010 At 31 Dec 2009
Dividend Payable for Non-Common Control
Shareholder 319,427,056
Dividend Payable for Common Control
Shareholder 168,898,944
Total 488,326,000YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
89
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(23) Other Payables
At 30 June 2010 At 31 Dec 2009
Advertising expenses payable 248,636,311 232,011,818
Distributors deposit payable 163,763,205 126,114,730
Equipment and construction payable 31,582,541 34,987,670
Royalty fee 17,235,091 17,219,809
Supplier deposit payable 10,344,842 6,111,395
Others 85,517,479 60,602,670
557,079,469 477,048,092
At 30 June 2010, the balance due to the shareholders with voting right of 5% or above is
as follows:
At 30 June 2010 At 31 Dec 2009
Royalty fee payable to parent company 17,235,091 17,219,809
17,235,091 17,219,809
At 30 June 2010, significant outstanding balances aged over than one year are as follows:
Amount payable Reasons for
outstanding
Deposits from suppliers 110,324,356 Deposits
Deposits from distributors 3,802,880 Deposits
114,127,236
There was no repayment of the above balances after the balance sheet date.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
90
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(24) At 31 May 2009, the group obtained a loan (RMB 15,,000,000) From China Development
Bank (Xinjiang Branch) by pledging a land use right with book value of RMB 8,882,146,
and a building with book value of RMB 1,439,022. Meanwhile, a guarantee of
RMB8,000,000 was provided by Shihezi Fort Farm, a minority interest holder of a
subsidiary, among RMB 4,500,000 paid back at 31 May 2010, RMB 4,500,000 will be pay
back at 25 May 2011, and the rest loan 6,000,000 will be paid off at 25 May 2012 with the
interest rate 5.4%
At 30 June 2010, no matured long-term loan has outstanding balance.
(25) Other Long-Term Liabilities
At 30 June 2010 At 31 Dec 2009
Employee Benefit 23,250,000 23,250,000
The other long-term liability represented bonus accrued for management based on
performance of 2009. According to the bonus payment schedule, the bonus is expected to
be paid off in 2011.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
91
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(26) Share Capital
At 30 June 2010 At 31 Dec 2009
Restricted Shares
State owned shares - -
State owned shares held through legal
persons - -
Shares held by domestic investors - -
Including： - -
Shares held by non-state owned legal
persons 213,021,120 239,385,120
Domestic individuals -
Shares held by foreign investors -
Including： -
Shares held by foreign legal persons -
Shares held by foreign individuasl
-
Total of Restricted Shares 213,021,120 239,385,120
Unrestricted Shares
A Shares 135,774,600 109,430,880
B Shares 178,484,280 178,464,000
Shares listed in overseas markets -
Others
-
Total of Unrestricted Shares 314,258,880 287,894,880
Total shares 527,280,000 527,280,000
Changyu Group Company as a shareholder has been relieved for restriction, with
26,364,000 shares account for 5% of total shares issued. The relieved shares can be traded
sine 1 April 2010 (Jan-Jun 2009: 26,364,000 shares).YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
92
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(27) Capital Reserve
By 30 June 2010
Opening Balance Increased Decreased Closing Balance
Share Premium 557,222,454 557,222,454
2009
Opening Balance Increased Decreased Closing Balance
Share Premium 557,222,454 -
- 557,222,454
(28) Surplus Reserve
By 30 June 2010
Opening Balance Increased Decreased Closing Balance
Statutory surplus reserve 295,942,630 295,942,630
2009
Opening Balance Increased Decreased Closing Balance
Statutory surplus reserve 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 to the statutory surplus reserve fund (“SRF”) until the balance of SRF reaches 50%
of the Company’s share capital.
After fully appropriate SRF, the company is free to appropriate discretionary surplus reserve
fund, which can be used to offset prior years’ losses, expend company’s operating scope or
transfer to shares.
Since 31 December 2006, the statutory surplus reserve fund has reached 50% of the issued
capital. The board of directors approved that no appropriation of surplus reserve should be
appropriated since 2007.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
93
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(29) Retained Profits
At 30 June 2010 At 31 Dec 2009
Ending balance of the prior year 1,657,780,929 1,163,188,086
Add: net profits for the year 585,674,479 1,127,328,843
Less: Final dividends 632,736,000) ( 632,736,000)
Ending balance of retained profits 1,610,719,408 1,657,780,929
Pursuant to the meeting of board of directors held on 14 April 2010, the proposed cash
dividend for 2009 is RMB1.20 per share (based on the total 527,280,000 shares),
amounting to a total cash dividend of RMB632,736,000.
(30) The Interest of Minority shareholder:
At 30 June 2010 At 31 Dec 2009
Xinjiang TianZhu 46,038,270 42,973,732
Kylin Packaging 24,008,886 22,874,284
Changyu Wine Chateau 12,174,645 12,174,645
Langfang Castel 12,640,000 12,640,000
Beijing Wine Chateau 31,104,842 28,256,916
Ice Wine Chateau 16,959,292 16,959,292
AFIP Tourism 702,029 576,179
Total 143,627,964 136,455,048
(31) Revenue and Cost of Sales
Operating Income is as follows:
At 30 June 2010 At 30 June 2009
Income from principal operations 2,474,442,243 1,965,440,939
Other operating income 7,442,891 3,985,222
2,481,885,134 1,969,426,161
At 30 June 2010 At 30 June 2009
Cost from principal operations 695,022,637 585,855,716
Other operating cost 2,881,767 3,556,493
697,904,404 589,412,209YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
94
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(31) Revenue and Cost of Sales (Continued)
By 30 June 2010, top 5 customers of operating income are as follows:
Amount Percentage of
total revenue
%
First 15,580,071 0.63
Second 13,096,091 0.53
Third 13,039,167 0.53
Fourth 12,813,415 0.52
Fifth 12,391,493 0.50
66,920,237 2.70
By 30 June 2009, top 5 customers of operating income are as follows:
Amount
Percentage of
total revenue
%
First 19,849,108 1.01
Second 18,190,098 0.92
Third 17,252,645 0.88
Fourth 16,441,761 0.83
Fifth 12,979,645 0.66
84,713,257 4.30
Revenue details are as follows:
At 30 June 2010 At 30 June 2009
Sales of goods 2,474,442,243 1,965,440,939
Rendering services 7,442,891 3,985,222
2,481,885,134 1,969,426,161YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
95
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(32) Taxes and Surcharges
At 30 June 2010 At 30 June 2009
Consumption tax 103,452,256 73,077,383
Business Tax 1,430,805 24,718
City construction tax 24,877,924 21,446,482
Education surcharges 14,193,562 12,253,947
Total 143,954,547 106,802,530
(33) Finance Income
At 30 June 2010 At 30 June 2009
Interest income 10,834,926 17,563,777
Less: interest cost 6,182,749
bank charges 337,877 2,441,415
Gains or Loss on Exchange 1,155,993
Total 5,470,293 15,122,362YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
96
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(34) Investment Income
At 30 June 2010 At 30 June 2009
Gain on disposal of trading financial assets 429,107
Total 429,107
By 30 June 2010, no restriction on collect profit from the investment.
(35) Non-Operation Income
At 30 June 2010 At 30 June 2009
Gains on disposal of non-current assets 64,128
Including: disposal of plant property and
equipments 64,128
Government Grant 4,507,854 500,000
Penalty 19,094
Others
516,088
7,841,532
5,023,942 8,424,754
Detail of government grant is as follows:
At 30 June 2010 At 30 June 2009
Funding to support major projects
Special funds for SME development
Tax return 4,117,244
Others 390,610 500,000
4,507,854 500,000YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
97
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(36) Non-Operation Expenses
At 30 June 2010 At 30 June 2009
Loss on disposal of non-current assets 283,954
Including: loss on disposal of property plant
and equipments 283,954
Donation 212,431
Others 75,805
46,353
572,190 46,353
(37) Income Tax
At 30 June 2010 At 30 June 2009
Current income tax 134,528,802 119,283,897
Deferred income tax 51,866,565 30,341,576 )
186,395,367 149,625,473YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
98
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(38) Earnings per Share
Basic Earning per Share is the profit of a company made divide the Weighted Average
Number of Ordinary shares issued.
At 30 June 2010 At 30 June 2009
Earnings
Earnings per share attributable to ordinary
shareholders 585,674,479 455,235,291
Shares
Weighted average number of ordinary shares issued 527,280,000 527,280,000
Basic earnings per share 1.11 0.86
Diluted earnings per share 1.11 0.86
The company does not have dilutive potential ordinary shares.
After balance sheet date to the reporting date, no subsequent events took place which
affects the number of the issued ordinary shares or potential ordinary shares.
(39) Notes to Subjects in Cash flow statement
Other cash received related to operation:
At 30 June 2010 At 30 June 2009
Government Grant 390,610 500,000
Dealers deposit 12,797,190 37,648,474
Others 4,110,276 91,060,607
17,298,076 129,209,081
Other cash paid related to operation:
At 30 June 2010 At 30 June 2009
Selling Expense 551,486,246 330,978,326
G&A Expense 28,383,657 28,269,103
Others 288,236 4,958,036
580,158,139 364,205,465YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
99
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(40) Supplemental Material to Cash flow Statement
Supplemental Material to Cash flow Statements
(1) Reconciled the net profit to Cash flow from operating activities
At 30 June 2010 At 30 June 2009
Net profit 592,847,395 456,284,455
Less: Gain on acquisition of subsidiary
Add: Provision for impairment of assets
Depreciation 34,848,129 23,067,657
Intangible assets amortization 2,516,846 1,618,087
Amortization of long term prepaid
expenses 784,012 293,728
Losses on disposal of property, plant and
equipments 283,954
Finance costs （7,514,257） （21,581,967））
Investment income （429,107）
Increase in deferred tax assets 51,866,565 30,341,576
Increase in inventories 208,848,368 210,693,456
Increase in operating receivables 13,633,747 21,063,529
Increase in operating payables （257,978,810） （6,270,819）
Net cash flows from operating activities 639,706,842 715,509,702YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
100
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(40) Supplemental Material to Cash flow Statement (Continued)
(2) Cash and Cash Equivalents
At 30 June 2010 At 31 Dec 2009
Cash 2,143,901,806 1,998,681,278
Including：
Petty cash 102,126 218,086
Bank deposit that can be
Immediately used to pay 1,076,258,443 1,977,259,840
Other monetary capital that
can be immediately used to pay 1,067,541,237 21,203,352
Closing balance of cash and
Cash equivalents 2,143,901,806 1,998,681,278YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
101
6. RELATED PARTY AND RELATED PARTY TRANSACTIONS
(1) Parent Company
Name of
Parent
Company
Type of
Enterprise
Place of
Registration
Legal
Representative
Scope of
business
Registered
Capital
Percentage
of Shares
Percentage
of Voting
Rights
Code of the
Organization
Changyu
Group
Company
Limited
Company Yantai
Liqiang
Sun Manufacturing 50,000,000 50.4% 50.4% 265 645 824
By 30 June 2010, there is no change in parent company’s registered capital, holding shares
or voting rights.
(2) Subsidiaries
Please refer to Note 4 (1).
(3) Other Related Parties
Nature of related parties
Code of the
organization
Yantai Changyu Travelling
Company Limited Fellow subsidiary 258 258 654
Yantai Changyu International
Window of the Wine City
Company Limited Fellow subsidiary 672 208 146
Yantai Shenma Packaging
Co., Ltd Fellow subsidiary 553 393 350
(4) Significant related party transactions
(i) Sales to Related Party
All related party transactions are based on the negotiated price.
Till 30 June 2010, sales to related parties are account for less than 1% of the Group’s total
sales (for 30 June 2009: less than 1%).
At 30 June 2010 At 30 June 2009
Yantai Changyu Travelling Co. Ltd. 2,086,866 3,165,176
Yantai Changyu International Window of the
Wine City Company Limited 1,694,723 382,931
3,781,589 3,548,107YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
102
6. RELATED PARTY AND RELATED PARTY TRANSACTIONS (CONTINUED)
(4) Significant related party transactions (Continued)
(ii) Purchases from Related Party
All related party transactions are based on the negotiated price.
Till 30 June 2010, sales to related parties are account for less than 1% of the Group’s total
sales (for 30 June 2009: less than 1%).
(iii) Property leasing agreements
Jan-June 2010 Note lessee
Assets
leased
Amount of
assets leased
Beginning
Date
Ending
Date
Contract
Amount
Changyu Group
Company
(a)
Yantai Changyu
Pioneer Wine
Company
Limited
Warehouse
and Office
building
6,383,000 2007/1/1 2011/12/31 3,191,500
Jan-June 2009 Note lessee
Assets
leased
Amount of
assets leased
Beginning
Date
Ending
Date
Contract
Amount
Changyu Group
Company
(a)
Yantai Changyu
Pioneer Wine
Company
Limited
Warehouse
and Office
building
6,383,000 2007/1/1 2011/12/31 3,191,500
(a) Pursuant to a patents implementation license dated 28 November 2006, starting from 1
January 2007, 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 half year ended 30 June 2010, the rental expenses payable to
Changyu Group Company amounted to RMB 3,191,500 (2008: RMB 3,191,500).
By 30 June 2010, leasing expenses paid to related company are account for 16.63% of the
Group (By 30 June 2009: 20.95%).
At 30 June 2010 At 30 June 2009
Yantai Changyu Travelling Co. Ltd. 1,271,103 3,047,745
Yantai Changyu International Window of the
Wine City Company Limited 3,807 58,402
1,274,910 3,106,147YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
103
6. RELATED PARTY AND RELATED PARTY TRANSACTIONS (CONTINUED)
(iv) Other Significant Related Party Transactions
Note At 30 June 2010 At 30 June 2009
Amount Amount
Trademark license fee （a） 50,430,025 37,573,091
Patent fee （b） 25,000 25,000
Total 50,455,025 37,598,091
All related party transactions are based on the negotiated price.
(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.
By 30 June 2010, trademark license fee paid to related company are account for 100% of
the Group (By 30 June 2009: 100%).
(b) Patents
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 RMB
50,000. The contract was expired on 20 December 2005. The Company renewed the
contract on 20 August 2006 for 10 years, the annual patents usage fee payable by the
Company to Changyu Group Company is still RMB 50,000. For the year ended 30 June
2010, the patents usage fee payable to Changyu Group Company amounted to RMB 25,000
(By 30 June 2009: RMB 25,000).
By 30 June 2010, patent fee paid to related company are account for 100% of the Group
(By 30 June 2009: 100%).
(v) Payroll to the Management by the Board of directors
At 30 June 2010 At 30 June 2009
Payroll to the management 2,945,163 3,044,976YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
104
6. RELATED PARTY AND RELATED PARTY TRANSACTIONS (CONTINUED)
(5) Balance of account receivable/other payable of the related parties
At 30 June 2010 At 30 June 2009
Account payable
Yantai Changyu Travelling Co. Ltd. 114,900
Yantai Changyu International Window of
the Wine City Company Limited 45,982
Other payable
Trademark license paid to parent company 17,235,091 16,224,881
Yantai Changyu Travelling Co. Ltd 59,180
These balances are from daily operating activities, and interest free, no determined
repayment date.
7. CONTINGENT LIABILITIES
The Group and the Company did not have any significant contingent liabilities as at balance
sheet date.
8. COMMITMENT
At 30 June 2010 At 31 Dec 2009
Capital Commitments
Authorized by the board of directors but not
contracted 488,000,000 17,030,443
At 30 June 2010, the Company fulfilled capital commitments in 2009.
9. POST BALANCE SHEET DATE EVENTS
There are no any events to be disclosed at the post Balance sheet date.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
105
10. OTHER SIGNIFICANT EVENTS
(1) Lease
As Lessee
Significant operating lease: the company has total future minimal lease payments under
non-cancelable contract with leasor are as follow:
At 30 June 2010 At 31 Dec 2009
Within One Year 20,726,057 20,454,169
One Year to Two Years 15,619,272 15,468,241
Two Years to Three Years 3,796,729 3,562,622
Three Years and above 10,731,968 12,258,047
50,874,026 51,743,079
(2) Segment Report
Over 99% of the Group’s revenue is generated from domestic customers, and 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.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
106
11. NOTES TO COMPANY FINANCIAL STATEMENTS
(1) Trade Receivables
The normal credit term of trade receivables is one month, which can be extended to three
months for certain major customers. The trade receivables are interest free.
The ageing analysis is as follows:
At 30 June 2010 At 31 Dec 2009
Within 1 year 10,244,534 13,163,722
At 30 June 2010, there was no account receivable provision (31 December 2009: Nil).There
was no bad debt provision accrued or reversed by the management in 2010 (31 December
2009: Nil)
At 30 June 2010 At 31 Dec 2009
Amount % Provision Amount % Provision
Individually significant 10,244,534 100 13,163,722 100.0
Others
10,244,534 100 13,163,722 100.0
As at 30 June 2010, there was no account receivable due from the Company’s shareholders
with voting rights of 5% or above. (31 December 2009: Nil)
As at 30 June 2010, summary of top account receivables amount is as follows:
Relationship
with the
group Amount Aging
Ratio of total
receivables %
First Third party 10,244,534 Within 1 year 100.0
10,244,534 100.0YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
107
11. NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
(1) Trade Receivables (continued)
As 31 December 2009, summary of top account receivable amount is as follows:
Relationship
with the
group Amount Aging
Ratio of total
receivables %
First Third party 7,573,194 Within 1 year 57.5
Second Third party 3,790,528 Within 1 year 28.8
Third Third party 1,800,000 13.7
13,163,722 100.0
At 30 June 2010, no outstanding balance was received from related parties (31 December
2009: Nil).
(2) Other Receivables
The aging analysis is as follows:
At 30 June 2010 At 31 Dec 2009
Amount % Bed debt
provision
% Amount % Bed debt
provision
%
Individually significant 630,640,783 97.97 8,000,000 1.27 610,311,334 95.1 8,000,000 1.3
Others 13,030,268 2.03 - 31,105,300
4.9 - -
643,671,051 100 8,000,000 1.24-
641,416,634 100.0
8,000,000-
1.25-
At 30 June 2010 At 31 Dec 2009
Book Value
Bad debt
Provision
Account
Balance
Book
Value
Bad debt
Provision
Account
Balance
Within 1 year 256,833,088 303,587,507 - 303,587,507
1 to 2 years 375,135,118 325,731,990 - 325,731,990
2 to 3 years 3,238,702 3,632,994 - 3,632,994
Over 3 years 8,464,143 8,000,000 464,143 8,464,143
8,000,000 464,143
643,671,051 8,000,000 635,671,051 641,416,634 8,000,000 633,416,634YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
108
11. NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
(2) Other Receivables (continued)
The movement of bad debt provision of other receivables is as follows:
At
beginning of
year
Accrual At end of
year
Jan-Jun 2010 8,000,000 8,000,000
2009 8,000,000 8,000,000
As at 30 June 2010, there was no other receivable due from the shareholders with voting
rights of 5% or above. (31 December 2009: Nil)
As at 30 June 2010, summary of top 5 other receivables amount is as follows:
Relationship
with the group
Amount Aging Ratio of total
advances to
suppliers %
First related party 247,041,640 Within 1 year 38.86
Second related party 213,535,000 Within 1 year 33.59
Third related party 60,000,000 Within 1 year 9.44
Fourth related party 48,000,000 Within 1 year 7.55
Fifth related party 39,600,000 Within 1 year 6.23
608,176,640 95.67
As at 31 December 2009, summary of top 5 other receivables amount is as follows:
Relationship
with the group
Amount Aging Ratio of total
advances to
suppliers %
First related party 324,566,508 Within 1 year 50.6
Second related party 150,658,194 Within 1 year 23.4
Third related party 50,283,910 Within 1 year 7.9
Fourth related party 37,644,733 Within 1 year 5.9
Fifth third party 35,573,246 Within 1 year 5.6
598,726,591 93.4
At 30 June 2010, the balance of other receivable from related parties is RMB
622,176,640.about 97.88% of total other receivables. These were all from subsidiaries of
the Company (2009: the balance of other receivable from related parties is RMB598,
726,591, about 93.4% of total other receivables).YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
109
11. NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
(3) Long-Term Equity Investment
Initial Cost
Opening
Balance
Movement
for the year
Closing
Balance
Share
Holding
%
Voting
Right
%
Cash
Dividends for
the year
Cost Method:
Xinjiang Tianzhu 60,000,000 - 60,000,000 60,000,000 60 60 -
Vehicular
Transportation 300,000 300,000 - 300,000 100 100 -
Kylin Packaging 5,953,878 5,953,878 - 5,953,878 50 62.5 -
Changyu-Castel 28,968,100 28,968,100 - 28,968,100 70 100 -
AFIP Tourism 350,000 350,000 - 350,000 70 70 -
Pioneer International 3,500,000 3,500,000 - 3,500,000 70 100 -
Ningxia Growing 1,000,000 1,000,000 - 1,000,000 100 100 -
National Wines 2,000,000 2,000,000 - 2,000,000 100 100 -
Ice Chateau 13,413,000 13,413,000 - 13,413,000 51 100 -
Beijing Chateau 77,000,000 77,000,000 - 77,000,000 70 70 -
Sales Company 7,200,000 7,200,000 - 7,200,000 90 100
Langfang Sales 100,000 100,000 - 100,000 10 100 -
Langfang Castel 12,142,200 12,142,200 - 12,142,200 49 100 -
Wines Sales 4,500,000 4,500,000 - 4,500,000 90 100 -
Shanghai Sales 300,000 300,000 - 300,000 30 100 -
Beijing Sales 350,000 350,000 - 350,000 70 100 -
Jingyang Sales 100,000 100,000 - 100,000 10 100 -
Jingyang Wine 900,000 900,000 - 900,000 90 100 -
Ningxia Wine 1,000,000 1,000,000 - 1,000,000 100 100 -
Yantai Dingtao 10,000,000 10,000,000 - 10,000,000 18 18 -
Research & Develop
Manufacturing Co.,
Ltd
100,000,000 100,000,000 100,000,000 100 100
Ningxia Wine Chateau 2,000,000 2,000,000 2,000,000 100 100
Shihezi Wine Chateau 2,000,000 2,000,000 2,000,000 100 100
Changan Wine
Chateau 2,000,000 2,000,000 2,000,000 100 100
235,077,178 229,077,178 106,000,000 335,077,178 0
By 30 June 2010, the ability of transfer of funds from the invested subsidiaries and joint
ventures to the Company was not restricted.
At 30 June 2010, there was no impairment provision accrued for these long-term equity
investments (31 December 2009: Nil).YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
110
11. NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
(4) Revenue and Cost of Sales
Revenue is as follows:
At 30 June 2010
At 30 June 2009
Income from principal activities 743,849,060 458,755,309
Other operating income 2,559,077 10,650,932
746,408,137 469,406,241
Cost of sales is as follows:
At 30 June 2010 At 30 June 2009
Cost from principal activities 552,783,117 341,841,565
Other operating cost 1,344,433 10,529,371
554,127,550 352,370,936
By 30 June 2010, top 5 customers are as follows:
Amount Percentage of total
revenue
%
First 633,479,816 84.87
Second 20,486,604 2.74
Third 9,997,800 1.34
Fourth 5,123,414 0.69
Fifth 1,072,634 0.14
670,160,268 89.78
In 2010, top 5 customers of the Company are all subsidiaries.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
111
11. NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
(4) Revenue and Cost of Sales (Continued)
By the first half year of 2009, top 5 customers are as follows:
Amount
Percentage of total
revenue
%
First 369,093,962 78.63
Second 6,009,929 1.28
Third 2,562,530 0.55
Fourth 1,709,143 0.36
Fifth 795,152 0.17
380,170,716 80.99
By 30 June 2009, top 5 customers of the Company are all subsidiaries.
Revenue and Cost of Sales are as follows:
At 30 June 2010 At 30 June 2009
Sales of goods 743,849,060 458,755,309
Rendering services 2,559,077 10,650,932
746,408,137 469,406,241
(5) Gain on Investment
At 30 June 2010 At 30 June 2009
Gain on equity investment under cost method 151,717,059
Gain on disposal of trading financial assets 429,107
429,107 151,717,059
At 30 June 2010, collecting profit from the investment has no restriction.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
30 June 2010
112
11. NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
(6) Supplemental Material to Cash flow Statements
Reconciled the net profit to Cash flow from operating activities
At 30 June 2010 At 30 June 2009
Net profit 21,041,868 169,264,620
Add: Depreciation 14,610,287 14,486,185
Intangible assets amortization 1,523,705 1,534,538
Biological assets amortization
Losses on disposal of property, plant and
equipments
Finance costs （7,514,257） （21,530,217）
Investment income （429,107） （151,717,059）
Increase in deferred tax assets 11,257,742 631,468
Increase in inventories 51,892,248 22,912,877
Increase in operating receivables （6,589,973） （154,444,226）
Increase in operating payables 377,325,108 444,459,577
Net cash flows from operating activities 463,117,621 325,597,763
(7) Cash and Cash Equivalents
At 30 June 2010 At 31 Dec 2009
Cash and bank 1,650,828,310 1,159,666,918
Including: Petty Cash 41,758 46,731
Bank that can be readily used to pay 583,248,676 1,138,420,187
Other monetary capital that can be
readily used to pay 1,067,537,876
21,200,000
Cash and cash equivalents at end of year 1,650,828,310 1,159,666,918YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT
Year ended 31 December 2009
A-1
1. DETAILS OF NON-CURRING PROFIT AND LOSS
Jan-Jun 2010 Jan-Jun 2009
Gain on disposal of non-current assets, including
the reversal of accrued impairment provision （283,954） 64,128
Tax return or relief ultra vires approved, without formal
documented or occasionally happened 4,507,854 500,000
Government grant accounted in profit and loss this year
(except for those that closely related to the operation,
under national laws or in accordance with certain criteria)
Gain on fair value change of trading financial assets,
Trading financial liabilities except for effective hedges
that closely related to the operation and gain on disposal
of trading financial assets, trading financial liabilities
and available for sale financial assets 429,107
Other non-operating income 227,852 7,814,273
Amount affected on CIT （1,220,215） (2,094,600)
Amount affected on non-controlling interest （939,583） (69,996)
Total 2,721,061 6,213,805YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT (Continued)
Year ended 31 December 2009
A-2
2. RETRUN ON NET ASSETS AND EARNINGS PRE SHARE
Jan-Jun 2010 Weighted Average
return on net assets
(%)
Basic earnings
per share
(RMB)
Net profit attributable to shareholders of the
Company 17.04 1.11
Net profit attributable to shareholders of the
Company deduct Non-incidental profits 16.97 1.11
There are no potential dilutive shares outstanding.
Jan-Jun 2009 Weighted Average
return on net assets
(%)
Basic earnings
per share
(RMB)
Net profit attributable to shareholders of the
Company 15.82 0.86
Net profit attributable to shareholders of the
Company deduct Non-incidental profits 15.63 0.85
There is no potential dilutive share outstanding.YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
SUPPLEMENTARY INFORMATION FOR FINANCIAL STATEMENT (Continued)
Year ended 31 December 2009
A-2
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 7th, 2010
