2019 Semi-annual Report Abstract of Yantai Changyu Pioneer Wine Co., Ltd.
Shares Code: 000869， 200869 Shares Abbreviation: Changyu A， Changyu B Notice No.: 2019-Final03
Yantai Changyu Pioneer Wine Co., Ltd.
2019 Semi-annual Report Abstract
1. Important Warning
This semi-annual report abstract comes from the whole contents of semi-annual report. If investors
desire to comprehend the Company’s operating results, financial situation and future development
plan, please carefully read the semi-annual report on the media specified by the China Securities
Regulatory Commission.
No directors, supervisors or senior executives issue a statement of objection to 2019 semi-annual
report.
Except the following directors, all other directors have personally attended the meeting for
deliberating the semi-annual report.
Director name with Director post with Reason for non-present
Name of mandatory
non-present in person non-present in person in person
Duan Changqing Independent director On a business trip Wang Zhuquan
Non-standard audit opinion notice
□Available Not available
The preliminary scheme of the report period’s common stock profit distribution or increasing equity
with reserve deliberated by the board of the directors
□Available Not available
The Company has no plan to distribute cash dividends and bonus shares; capital reserve will not be
transferred to equity.
The preliminary scheme of this report period’s preferred share profit distribution deliberated and
passed by the board
□Available Not available
2. Brief Introduction of the Company
1) Company introduction
Changyu A, 000869,
Abbreviation of the Shares: Code number of the Shares
Changyu B 200869
Place of listing of the Shares Shenzhen Stock Exchange
Abbreviation of the Shares after -
alteration
Secretary to the Board of Authorized Representative of
Contact person and information
Directors the Securities Affairs
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2019 Semi-annual Report Abstract of Yantai Changyu Pioneer Wine Co., Ltd.
Name Mr. Jiang Jianxun Mr. Li Tingguo
56 Dama Road, Yantai, 56 Dama Road, Yantai,
Address
Shandong, China Shandong, China
Tel 0086-535-6602761 0086-535-6633656
E- mail jiangjianxun@changyu.com.cn stock@changyu.com.cn
2) Key accounting data and financial indicators
Whether the Company makes retroactive adjustments or restates the accounting data of previous
fiscal years.
□Yes No
In the same period of More or less than last
In the report period
last year year (%)
Business revenue (CNY) 2,558,274,785 2,828,230,064 -9.55%
Net profit attributed to the
shareholders of the listed 603,403,789 635,837,405 -5.10%
company (CNY)
Net profit attributed to the
shareholders of the listed
company after deducting 552,490,695 606,678,719 -8.93%
the irregular profit and loss
(CNY)
Net cash flows from the
499,476,006 552,753,472 -9.64%
operating activities (CNY)
Basic earnings per share
0.88 0.93 -5.38%
(CNY/share)
Diluted earnings per share
0.88 0.93 -5.38%
(CNY/share)
Weighted average for
6.13% 6.89% -0.76%
earning rate of the net assets
The end of the report More or less than last
The end of last year
period year (%)
Total assets (CNY) 13,383,093,433 13,117,729,052 2.02%
Net Assets attributed to the
shareholders of the listed 9,791,885,091 9,606,099,365 1.93%
company (CNY)
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2019 Semi-annual Report Abstract of Yantai Changyu Pioneer Wine Co., Ltd.
3) Number of shareholder and shareholding situation
Unit: share
Total number of preferred
Total common shareholders at the end of shareholder recovering
42,531 0
report period voting power at the end of report period
(if have)
The top 10 shareholders holding situation
Number of Pledged or frozen
Percentage Number of Shares
Name of Shareholders Character of shareholders restricted Share
(%) held Amount
shares status
YANTAI CHANGYU GROUP CO. LTD. Domestic non-state-owned 50.40% 345,473,856 0
legal person
GAOLING FUND,L.P. Foreign legal person 3.08% 21,090,219 0
CHINA SECURITIES FINANCE CORP State-owned legal person 2.25% 15,440,794 0
BBH BOS S/A FIDELITY FD - CHINA Foreign legal person 2.22% 15,241,826
FOCUS FD 0
SHENWAN HONGYUAN Foreign legal person 1.28% 8,798,233 0
SECURITIES(HONG KONG) LIMITED
FIDELITY PURITAN TRUST: FIDELITY
SERIES INTRINSIC OPPORTUNITIES Foreign legal person 0.93% 6,350,762 0
FUND
GUOTAI JUNAN Foreign legal person 0.76% 5,229,016
SECURITIES(HONGKONG) LIMITED 0
CENTRAL HUIJIN ASSET State-owned legal person 0.69% 4,761,200
MANAGEMENT LTD. 0
VANGUARD EMERGING MARKETS
STOCK INDEX FUND Foreign legal person 0.55% 3,788,487 0
FIDELITY CHINA SPECIAL Foreign legal person 0.55% 3,779,202
SITUATIONS PLC 0
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2019 Semi-annual Report Abstract of Yantai Changyu Pioneer Wine Co., Ltd.
Among the top 10 shareholders, Yantai Changyu Group Company
The explanation for the associated relationship and accordant action of the top 10 Limited has no associated relationship or accordant action
shareholders mentioned above relationship with the other 9 listed shareholders, and the
relationship among the other shareholders is unknown.
Explanation for shareholders who involved in financing activities and stock trading The top 10 shareholders do not involve in financing activities and
business (if have) stock trade business.
4) Changes of controlling shareholders or actual controlle rs
Changes of controlling shareholders during the report period
□Available Not available
There is no change to controlling shareholders during the report period.
Changes of actual controllers during the report period
□Available Not available
There is no change to actual controllers during the report period
5) Number of preferred share holder and shareholding of preferred shares of top ten preferred shareholde rs
□Available Not available
There are no shareholdings of preferred shareholders during the report period.
6) Company Bonds
Whether the Company exists public offering and lists on the Stock Exchange, and the Company is unable to fully pay company bonds in the
approved announcement date of this Semi-annual report before maturity or in the maturity date.
No.
3. Management Discussion and Analysis
1) Brief introduction of operation situation during the report period
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2019 Semi-annual Report Abstract of Yantai Changyu Pioneer Wine Co., Ltd.
Whether the Company needs to follow the disclosure requirement of special business
No.
(1) Summarization
During the report period, influenced by the slowdown of domestic economic growth, the overall
demand of domestic wine industry was relatively weak. Both domestic and imported wine had
experienced decline at varying degrees in sales volume and sales revenue. The competition in
domestic wine market, especially for middle-and- low-level wines, was very fierce. Due to
continuously influences such as increase in the prices of raw materials and packaging materials,
depreciation of fixed assets and increase in freight and labor costs, the Company’s profitability was
under greater pressure. Facing quite a lot of unfavorable factors, the Company insisted in taking the
market as the center, insisted the development strategy of “Focus on middle-and-high level, Focus on
high quality, Focus on big product” (the strategy of “Three Focuses”) without wavering, continued
intensifying internal reform, further optimized product structure and market layout. Through product
innovation, management innovation and marketing innovation, the Company strived to promote
product sales and achieved certain effects, under the background of the market that both domestic
wine and imported wine show a large decrease wholly in China market, realizing the business
income of CNY2558.27million in the first half year with a decrease of 9.55% compared with last
year and the net profit attributable to the parent company’s shareholders of CNY603.4million in the
first half year with a decrease of 5.1% compared with last year.
During the report period, the Company mainly did following work:
Firstly, the Company's Board of Directors, Board of Supervisors and senior executives were
successfully re-elected, injecting new forces, optimizing staff structure, enhancing the management
level and decision- making ability of the management team and providing a reliable organizational
guarantee for the Company’s sustainable and healthy development in the future.
Secondly, the "Three Focuses" strategy was steadily advanced and initial results were achieved.
During the report period, among the three core business segments of domestic wine, brandy and
imported wine, the Company concentrated its main resources to focus on the three domestic wine
brands such as MOSER, Noble Dragon and ZENITHWIRL; the two brandy brands “KOYA” and
“Changyu Superior Five-star Special Fine Brandy” and the two imported wine brands Kilikanoon
and INDOMITA achieved good results, which slowed down the Company’s wine decline and
achieved a small increase in brandy sales revenue.
Thirdly, the organization structure of sales system was basically completed in terms of adjustment
and optimization. The transformation from management dealers to serving dealers was actively
promoted and the construction of “Fund pool” with dealers was energetically developed. During the
report period, the Company eliminated, adjusted, rotated and supplemented some of the provincial
and municipal sales personnel, further rationalized the sales management system and enhanced the
fighting capacity of the sales team. The authorized operation was deeply advanced, which further
mobilized the enthusiasm and initiative of sales personnel. Besides, the Company improved the
performance appraisal mode and work focus, which promoted sales personnel to be closer to the
market and clients and better served terminals and consumers. Moreover, the construction of sales
team and “Fund pool” with dealers was intensified, which alleviated the contradiction of insufficient
market input.
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2019 Semi-annual Report Abstract of Yantai Changyu Pioneer Wine Co., Ltd.
Fourthly, the Company actively coordinated controlling shareholders and other relevant parties. After
repeated communication and full argumentation, the Company re-determined the proportion of
trademark use fee of "张裕"(Changyu) and other trademarks, revised and improved Trademark
License Contract and eliminated defects in the contract. In addition, the Company cooperated closely
with the controlling shareholders and was freely transferred part of trademarks and patents from the
controlling shareholders, which better guaranteed the integrity of the Company’s assets and reduced
related transactions.
Fifthly, the Company optimized the layout of raw material bases, strengthened quality management,
strived to reduce raw material costs and improved product quality. During the report period, the
Company carried out an overall planning for domestic and foreign raw material supply bases and laid
out medium and long-term raw material bases in Australia, Chile and France. In addition, the
Company increased a large number of high-quality raw material bases in Xinjiang, Ningxia and
Yantai, strengthened the assessments of basic management, profit and key work to the raw material
bases, and use internal self-examination, random sampling, third-party inspection, flight inspection
and other means to strengthen product quality monitoring and control. Moreover, the Company
re-approved supplier list, eliminated unqualified suppliers and continuously improved the quality of
raw material and packaging. As these measures become effective, the product quality and reduce raw
material costs will be fundamentally improved.
Sixthly, it was to strengthen financial management and audit supervision, strive to reduce capital
costs and operational risks, and improve the Company’s operational efficiency. During the report
period, after repeated communication and negotiation, the Company further reduced the bank loan
interest rate and financing cost. In addition, the Company used the SAP system to monitor and
allocate cash flow in real time, strictly implemented two- line management of financial revenues and
expenditures and paid use system of funds, which accelerated capital turnover, improved funds use
efficiency and reduced funds occupation. Moreover, the Company intensified the audit work of key
areas such as the authenticity of financial revenues and expenditures, channel inventory, unsalable
products, advertising fees and economic responsibility of outgoing personnel, and timely investigated
and punished illegal acts, which effectively prevented significant operational risks.
Seventhly, scientific dispatch, carefully organization and close cooperation guaranteed the good
quality and smooth progress of investment projects. During the report period, all projects under
construction of the Company progressed as planned and the project quality was excellent.
Eighthly, it was to continue implementing the internationalization strategy and actively carry out
joint venture and cooperation with strong foreign peers. During the report period, in order to reduce
operating costs of a single winery and play a synergistic effect, the Company used its wholly-owned
subsidiary in France Francs Champs Participations SAS to establish a joint venture company L&M
HOLDINGS together with Advini SA’s subsidiary SC Garri du Gai in France, promoting the
management and operation level of the French wine business segment.
In order to achieve the business objectives set by the Company at the beginning of the year, the
Company will focus on the following work in the second half of 2019:
Firstly, the current market situation has determined that the Company must unswervingly promote
the development strategy of “Three Focus”. The Company will continue classifying products,
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2019 Semi-annual Report Abstract of Yantai Changyu Pioneer Wine Co., Ltd.
compressing the number of products, centralizing superior resources and focusing on market
exploration and marketing work.
Secondly, considering that the main contradiction for future development lies in the market, the
Company will continue focusing on the construction of two teams of backbone distributors and
full-time sales personnel and further establish and improve the sales system to extend market
coverage. The Company will also make deep penetration into key markets and strive to achieve
breakthrough. In addition, the marketing innovation will be strengthened and the communications
media will be optimized in order to improve the marketing level. A systematic brand manager system
will also be established and a full-time marketing team will be set up for providing systemic
marketing solutions to boost brands by virtue of the top outsourcing companies in the industry. The
Company will take full advantage and integrate online advantageous platform and explore the digital
marketing mode in line with Changyu to provide consumers with a more perfect consumer
experience and enhance user stickiness.
Thirdly, continuous improvement in product quality is the most fundamental thing to win the market
competition. While strictly implementing various quality management measures, the Company will
establish a systematic brand winemaker system, give full play to the main responsibility of
winemakers at all levels and propose clear requirements of salary, appointment, selection, promotion
and exit for winemakers at different levels in order to stimulate winemakers' enthusiasm and sense of
responsibility and promote the significant improvement in product quality.
Fourthly, the establishment of a talent team that is compatible with the Company's development to
the core to achieve sustained and rapid development. The Company will focus on cultivating 60
high- level provincial general managers and 600 outstanding city managers comprehensively
optimize talent echelon and strive to make up the weakness in talents. Moreover, the Company will
further optimize performance appraisal methods, establish and improve various flexible and efficient
incentive mechanisms with the combination of long-term mechanism and short-term mechanism as
well as complementary advantages, and further stimulate the Company’s vitality to enhance the
attraction and centripetal force to the outstanding talents.
Fifthly, the Company will reasonably arrange the production schedule, do well the connection
between production and sales, make full use of sales peak season including Mid-Autumn Festival,
National Day and Spring Festival, increase marketing efforts and promote product sales, providing
important guarantee for achieving annual sales targets.
Sixthly, the Company will scientifically make procurement plan for raw materials such as grapes,
rationally arrange procurement progress and fully complete the procurement work of grape raw
material, providing core raw materials with sufficient quantity, complete varieties, high quality and
low price for future development.
In short, we preliminarily judge that in the second half of this year, with the cumulative effects of
various reform measures in the past year starting to appear, although the downward pressure on the
domestic wine market is increasing, the sales situation of our company may actually gradually go out
of the trough, and revenue may also begin to enter the growth track. The Company will strive to
complete the established revenue target of not lower than CNY5.3 billion at the beginning of the year.
In addition, affected by the double favorable factors of the national cutting taxes and fees policies
and the controlling shareholder's offset of trademark use fee, the Company's profit level may be
improved compared with the same period of last year.
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2019 Semi-annual Report Abstract of Yantai Changyu Pioneer Wine Co., Ltd.
(2) Analysis of main business
See “1. Summarization” in “Management Discussion and Analysis”.
Period comparison of main financial data
Unit: CNY
In the same
In the report More or
period of last Reason for changes
period less (%)
year
Mainly owing to the year-on-year
Operating revenue 2,558,274,785 2,828,230,064 -9.55%
decrease in sales volume
Mainly owing to the year-on-year
Operating costs 936,252,225 974,557,292 -3.93% increase in the price of grape
material
Mainly owing to the year-on-year
Sales expenses 591,970,801 710,659,033 -16.70% decrease in marketing expense
and trademark use fee
Administration
155,552,312 157,964,882 -1.53% No major change
expense
Mainly owing to the year-on-year
Financial expense 8,789,583 13,085,942 -32.83%
decrease in interest expenditure
Income tax expense 210,281,578 211,979,735 -0.80% No major change
Research &
Mainly owing to the increased
Development 2,706,811 2,127,006 27.26%
investment in scientific research
Investment
Mainly owing to the decrease in
Net cash flow from received cash from selling
499,476,006 552,753,472 -9.64%
operating activities products and providing labor
service
Mainly owing to the decrease in
the cash paid for purchasing fixed
Net cash flow from
-114,534,608 -291,217,548 60.67% term deposit and the net cash paid
investment activities
by subsidiaries and other business
units
Mainly owing to the year-on-year
Net cash flow from decrease in received fixed term
-18,128,357 -6,350,537 -185.46%
financing activities deposit used for pledge of
long-term loan
Net increased Mainly owing to the year-on-year
amount of cash and 366,866,743 247,781,188 48.06% decrease in the cash outflow of
cash equivalents investment activities
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2019 Semi-annual Report Abstract of Yantai Changyu Pioneer Wine Co., Ltd.
Whether there is any great change for the Company’s profit structure or profit source during the report period
□Available Not available
There is no great change for the Company’s profit structure or profit source during the report period.
Structure of main businesses
Unit: CNY
Increase or decrease of Increase or decrease of
Increase or decrease of
Operating operating revenue over operating cost over the
Operating cost Gross profit (%) gross profit over the same
revenue the same period of last same period of last year
period of last year
year (%) (%)
By sector
Manufacturing of
liquor and
2,558,274,785 936,252,225 63.40% -9.55% -3.93% -2.14%
alcoholic
beverages
By product
Wine 1,928,554,268 680,125,496 64.73% -13.01% -9.65% -1.31%
Brandy 563,451,068 229,703,175 59.23% 3.33% 18.50% -5.22%
Tourism 42,604,382 12,307,699 71.11% -7.44% -12.47% 1.66%
Other 23,665,067 14,115,855 40.35% 19.01% 1.95% 9.98%
Total 2,558,274,785 936,252,225 63.40% -9.55% -3.93% -2.14%
Region
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2019 Semi-annual Report Abstract of Yantai Changyu Pioneer Wine Co., Ltd.
Domestic business 2,330,780,056 791,113,867 66.06% -9.92% -2.36% -2.63%
Overseas business 227,494,729 145,138,358 36.20% -5.50% -11.69% 4.47%
Total 2,558,274,785 936,252,225 63.40% -9.55% -3.93% -2.14%
2) Related items involving financial report
(1) Explanation for the changes of the accounting policy, accounting estimation and accounting method, compared with the last
accounting period’s financial report
Available □Not available
In 2017, the Ministry of Finance published the revised Accounting Standard for Enterprises No.22 - Recognition and Measurement of Financial
Instruments，Accounting Standard for Enterprises No.23 -Financial Assets Transfer，Accounting Standard for Enterprises No.24 - Hedge
Accounting，and Accounting Standard for Enterprises No.37 - Presentation of Financial Instruments (“New Financial Instruments Standard”
for short). The Company began the accounting treatment in accordance with the new revised standards started from January 1st , 2019.
According to connection requirements, data in comparable duration shall not be adjusted, and d ifferences between the implementation of the
new standard on the first day and the current standard retrospectively adjust the undistributed profit at the beginning of the report period.
Affected by this, regarding the balance sheet consolidation on January 1st , 2019, accounts receivable changed from CNY242,153,083 to
CNY237,781,161, deferred income tax assets changed from CNY285,436,259 to CNY286,529,2239, and undistributed profit changed from
CNY8,008,982,547 to CNY8,005,703,605.
Based on the requirement of Notification on Revising and Issuing Financial Statement Format for General Enterprises in 2019（Accounting
[2019] No. 6）, in the balance sheet, the item “Notes receivable and accounts receivable” is divided into “Notes receivable” and “Accounts
receivable”, and the item “Notes payable and accounts payable” is divided into “Notes payable” and “Accounts payable”. In the income
statement, regarding the item “Research and development expenses”, in addition to reflecting the expenses incurred during the research and
development process, it also includes the amortization of self-developed intangible assets originally listed in the item “Administrative
expenses”. The changes in accounting policy have no effect on consolidation and the Company's net profit and owner's equity.
(2) During the report period, the situation explanation for the correction of major accounting errors which need to be retros pect and
restated
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2019 Semi-annual Report Abstract of Yantai Changyu Pioneer Wine Co., Ltd.
□Available Not available
There is no situation for the correction of major accounting errors which need to be retrospect and restated.
(3) Compare d with the previous year’s financial report, explanation for the changes of the consolidated statements scope.
□Available Not available
There is no change in the consolidated statements scope during the report period.
Yantai Changyu Pioneer Wine Co. Ltd.
Board of Directors
August 28th , 2019
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