2019Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
Stock Code: 000869， 200869 Stock Abbreviation: Changyu A， Changyu B Announcement No.: 2020-Final01
Yantai Changyu Pioneer Wine Co. Ltd.
2019 Annual Report Abstract
1. Important Notice
This Annual Report abstract comes from the whole contents of annual report. If investors desire to
comprehensively understand the Company’s operating results, financial situation and future
development plan, please read the 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 Annual Report.
Except following directors, all other directors have personally attended the meeting for deliberating
the 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
Augusto Reina Director Die of illness --
AldinoMarzorati Director Trip blocked due to Zhou Hongjiang
COVID-19 epidemic
Enrico Sivieri Director Trip blocked due to Zhou Hongjiang
COVID-19 epidemic
Non-standard audit opinion notice
□Available Not available
The preliminary scheme of the report period’s ordinary share profit distribution or increasing equity
with reserve deliberated by the board of the directors
Available □Not available
Whether to increase equity with reserve
□Yes No
The Company’s preliminary scheme of profit distribution deliberated and passed by the board of
directors this time is shown as following: Based on the Company’s total 685,464,000 shares, we plan
to pay CNY7(including tax) in cash as dividends for every 10 shares to all shareholders and send 0
bonus share (including tax). Capital reserve will not be transferred to equity.
The draft plan of preferred share profit distribution during the report period deliberated and passed
by the board of directors
□Available Not available
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2019Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
2. Basic information of the Company
(1) Brief introduction of the Company
Changyu A, 000869,
Abbreviation of Shares: Code number of the Shares
Changyu B 200869
Place of listing of Shares Shenzhen Stock Exchange
Secretary to the Board of Authorized Representative of
Contact person and information
Directors the Securities Affairs
Name Mr. Jiang Jianxun Mr. Li Tingguo
56 Dama Road, Yantai, 56 Dama Road, Yantai,
Address
Shandong, China Shandong, China
Fax 0086-535-6602761 0086-535-6633639
Tel 0086-535-6633639 0086-535-6633656
E-mail jiangjianxun@changyu.com.cn stock@changyu.com.cn
(2) Main businesses during the report period or brief introduction of products
During the report period, the Company’s main businesses are production and operation of wine and
brandy, thus providing domestic and foreign consumers with healthy and fashionable
alcoholic drinks. Compared with earlier stage, there are no significant changes happened to the
Company’s main businesses. The wine industry that the Company involved in is still in growth stage.
Although being affected by many factors for the short-term, the competition in the market is fierce
and the wine consumption temporarily declines. However, seen from the long term, the whole
domestic wine market is on the rising trend. The Company is at the forefront in the domestic
wine market.
(3) Key accounting data and financial indicators
①Key accounting data and financial indicators in recent three years
Whether the Company makes retroactive adjustments or restates the accounting data of previous
fiscal years
□Yes No
Unit: CNY
More or less than
Item 2019 2018 2017
Last year (%)
Operation revenue 5,031,011,489 5,142,244,740 -2.16% 4,932,545,229
Net profit attributed
to the shareholders of 1,129,735,749 1,042,632,929 8.35% 1,031,695,056
the listed company
Net profit attributed
to the shareholders of 892,075,931 965,426,238 -7.60% 986,095,872
the listed company
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2019Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
after deducting the
irregular profit and
loss
Net cash flows from
the operating 837,838,024 975,978,746 -14.15% 973,243,027
activities
Basic earnings per
1.65 1.52 8.55% 1.51
share (CNY/share)
Diluted earnings per
1.65 1.52 8.55% 1.51
share (CNY/share)
Weighted average for
earning rate of the 11.30% 11.23% 0.07% 12.14%
net assets
More or less than
Dec. 31st 2019 Dec. 31st 2018 Dec. 31st 2017
Last year (%)
Total assets 13,647,932,568 13,117,729,052 4.04% 12,536,755,208
Net Assets attributed
to the shareholders of 10,308,910,198 9,606,099,365 7.32% 8,906,342,299
the listed company
②Key accounting data by quarter
Unit: CNY
st nd rd th
1 Quarter 2 Quarter 3 Quarter 4 Quarter
Operation revenue 1,667,424,758 890,850,027 968,100,175 1,504,636,529
Net profit attributed to
the shareholders of the 456,381,471 147,022,318 125,557,834 400,774,126
listed company
Net profit attributed to
the shareholders of the
listed company after 450,709,661 101,781,034 119,702,422 219,882,814
deducting the irregular
profit and loss
Net cash flows from the
294,678,342 204,797,664 145,855,707 192,506,311
operating activities
Whether there are significant differences between above-mentioned financial indicators or their sum
and the related financial indicators in the quarterly report and semi-annual report disclosed by the
Company.
□Yes No
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2019Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
(4) Capital stock and shareholders’ situation
① Number of ordinary shareholder and preferred shareholder recovering voting power, and situation of shares held by top ten
shareholders
Unit: share
Total number of preferred shareholder
Total number of shareholders by Total number of preferred shareholder
Total shareholders in recovering voting power by the end of
43,856 the end of last month before the 45,626 recovering voting power by the end of 0 0
the report period last month before the disclosure day of
disclosure day of the annual report report period (if have) (see note 8)
the annual report (if have) (see note 8)
Shareholders holding more than 5% or the top 10 shareholders holding situation
Pledged or frozen
Name of Shareholders Character of shareholders Percentage (%) Amount of holding shares Number of restricted shares
Share status Amount
YANTAI CHANGYU GROUP CO., LTD. Domestic non-state legal person 50.40% 345,473,856 0 - 0
GAOLING FUND, L.P. Foreign legal person 3.08% 21,090,219 0 -
CHINA SECURITIES FINANCE CORP State legal person 2.25% 15,440,794 0 - 0
BBH BOS S/A FIDELITY FD - CHINA
Foreign legal person 2.22% 15,241,826 0 - 0
FOCUS FD
SHENWAN HONGYUAN SECURITIES Foreign legal person
1.20% 8,243,333 0 - 0
(HONGKONG) LIMITED
FIDELITY PURITAN TRUST: FIDELITY
Foreign legal person 0.93% 6,350,762 0 - 0
SERIES INTRINSIC OPPORTUNITIES FUND
GUOTAI JUNAN SECURITIES
Foreign legal person 0.70% 4,810,345 0 - 0
(HONGKONG) LIMITED
CENTRAL HUIJIN ASSET MANAGEMENT State legal person 0.69% 4,761,200 0 - 0
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2019Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
LIMITED
VANGUARD EMERGING MARKETS 0
Foreign legal person 0.55% 3,788,487 - 0
STOCK INDEX FUND
FIDELITY CHINA SPECIAL SITUATIONS
Foreign legal person 0.55% 3,779,202 0 - 0
PLC
Among the top 10 shareholders, Yantai Changyu Group Company Limited has no associated relationship or
The explanation for the associated relationship and accordant action accordant action relationship with the other 9 listed shareholders, while the relationship among the other
shareholders is unknown.
Explanation for the top 10 shareholders who involved in financing activities and
The top 10 shareholders do not involve in financing activities and stock trade business.
stock trading business (if have)
②Number of preferred shareholder and situation of preferred shares held by top ten preferred shareholders
□Available Not available
There are no shares held by preferred shareholders during the report period.
③Introduction for property right and control relations between the Company and its actual controllers
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2019Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
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2019Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
(5) Company Bonds
Whether or not the Company has the corporation bonds issued in public, listed in the stock exchange,
not due on the annual report’s authorized issue date or failed to pay in full on the due date.
No.
3. Management Discussion and Analysis
(1) Brief introduction of operation situation during the report period
①Summary
In 2019, influenced by many factors, such as the slowdown of domestic economic growth and the
increase in uncertainty resulting from Sino-US trade friction, the competition in domestic wine
market was very strong. The sales volumes of both imported wine and domestic wine decreased
continued from 2018 and some wine production enterprises got into trouble. Facing quite a lot of
external disadvantages, the Company persisted in taking the market as the center, adhered to the
development strategy of “Focus on middle-and-high level, Focus on high quality, Focus on big
product” and the marketing philosophy of “obtaining growth from the terminal and nurturing
consumers”, and strived to promote product sales, achieving good results and realizing operating
revenue of CNY 5,031.01 million with a year-on-year decrease of 2.16% and net profit of CNY
1,129.74 million belonging to the parent company’s shareholders with a year-on-year increase of
8.35%.
②Analysis of main business
1) Summary
Increase or decrease of the
Description end of the period over the Cause of significant changes
end of last year
Operating revenue -2.16% Mainly because of decrease in sales volume
Operating cost -0.74% Mainly because of decline in wine sales
Mainly because of return of trademark use fee
Sales expense -17.37%
during this report period
Mainly because of year-on-year decrease in wage &
Management expense -9.22%
welfare and depreciation expenses
Mainly because of increase in expenses for
R&D expense 26.27%
technology research and development in 2019
Mainly because of decrease in loan interest
Financial expense -1.82%
expenditure
Net amount of cash flow Mainly because of decrease in received cash from
-14.15%
generated in operating activities product sales and rendering of service
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2019Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
Net amount of cash flow Mainly because of decrease in paid cash for
-59.01%
generated in investment activities investment activities
Net amount of cash flow
Mainly because of decrease in cash inflow from
generated in capital-raising 9.06%
capital-raising activities
activities
Review and summary of the process of the Company’s early-disclosed development strategy and
business plan during the report period
During the report period, the Company realized the operating revenue of CNY 5,031.01 million with
a decrease of 2.16% compared with last year, slightly lower than the target fixed at the beginning of
the year of realizing operating revenue no less than CNY 5.3 billion. The net profit of CNY 1,129.74
million belonging to the parent company’s shareholders was realized with an increase of 8.35%
compared with last year. The main works during the report period were shown as followed:
Firstly, the Company adjusted the sales structure and rationalized the marketing system, further
promoting the market strategy. During the report period, the Company strengthened the sales
structure led by alcohol product variety and streamlined the marketing system for various alcohol
products such as wine, brandy and imported wine etc., making sales team become more focused and
further clarifying the responsibilities, rights and benefits. The relationship between parent brand
Changyu and its subsidiary brands were rationalized. The Company first proposed and implemented
“Brand Manager System”, highlighted the key points according to different brand positioning,
studied different target consumer groups in a targeted manner and let dedicated people do
professional things so that the brand development planning became clearer. Each variety of alcohol
products focused according to respective brand development trend and clarified corresponding
power point. To brandy, the Company actively changed its market positioning, strived to learn
promotion experience of high-end Chinese liquor in order to cut the “cake” of liquor market; to wine,
the Company studied the market strategy with the benchmarking of international competitive
products based on the characteristics of different wineries. To imported wine, the Company selected
the best from imported wines and paid special attention to Chilean Indomita and Australian
Kilikanoon. Through the “jointly building a fee pool with distributors”, an exclusive team of
Changyu under each backbone distributor system was built to ensure the proper implementation of
“obtaining growth from the terminal and nurturing consumers”.
Secondly, the Company insisted on product innovation, strengthened brand building and
continuously expanded market influence. During the report period, the Company adhered to the
general principle of “not stunning, not listed” for new products and successively launched a series of
new products including new Rena Chateau, new Castel, Shartar five-star brandy, Pagese, Mminni,
Long Tailed Cat, Vini Panda and limited-edition Noble Dragon and so on. These new products were
well received by the market and recognized by consumers, making the domestic and foreign
influence of “Changyu” brand increase steadily. The data from L.W. Institute of Xinhua News
Agency showed that “The global brand awareness of Changyu is equivalent to Lafite”. Based on the
annual global wine brand influence index issued by Wine Intelligence, a British wine research
agency, “Changyu” ranked first in the Chinese market.
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2019Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
Thirdly, The Company implemented precision marketing by virtue of digital technology to improve
operating efficiency. During the report period, the Company further implemented the order-driven
approach and fully realized online coding for chateau wines, Noble Dragon, and ordinary wines,
basically achieving order driving of products. The identification management work “one bottle, one
code” was put in place, and the anti-counterfeiting work for high-end products is continued being
promoted. The Company gradually completed the transformation of marketing code, deeply
investigated the distributor identification management and product traceability, and preliminarily
made the planning of product anti-counterfeiting traceability and marketing promotion system
integrating logistics code, anti-channeling code and marketing code into one code, which further
strengthened the link control. The Company implemented a “comprehensive digital transformation”
strategy to drive sales orders online and offline. The Company collaborated with online Tmall, JD
and Suning and other digital platforms while cooperating with offline distributors to promote APP
ordering. The Company formed strategic partnership with Tencent, JD, Tmall and Suning etc., and
utilized digital means to gradually achieve “more precise user positioning, more sophisticated
marketing promotion, and more efficient customer conversion”.
Fourthly, the Company enhanced quality management and improved production processes, further
improving product quality. During the report period, the Company strategically deployed global
high-quality raw material bases, and laid out medium-and-long-term premium raw material bases in
China, Australia, Chile and France respectively, which has provided a sufficient quantity of medium-
and high-grade bulk wine resources for the implementation of the “Three Focus” strategy. The
Company strengthened technical exchanges between domestic and foreign winemakers, vigorously
carried out research on new technologies and new processes, improved traditional processes and
continuously improved product quality, which achieved significant results. 3 great gold medals and
34 gold medals were awarded in various international competitions. Koya XO 15 years won the
championship at the Global Brandy Blind Tasting Fair, surpassing the world’s five well-known XO
brands. The Company also built “Koya” to be a Chinese high-end brandy brand. Changyu Koya
chateau was awarded the title of “The First Brandy Chateau in China” by China Alcohol Drinks
Association, and the winemaker Ms. Zhang Baochun was awarded the title of “Chief Brandy Master
in China”. The Chinese Brandy Research Institution was formally settled in Koya chateau. Changyu
Noble Dragon became “Global TOP5” in the global best-selling wine brands blind tasting
competition, and was rated as “Asian TOP1” by the Singapore Lianhe Zaobao.
Fifthly, the Company strengthened internal audit, intensified risk prevention and control, and
reduced operating costs. During the report period, the Company strengthened tax planning,
conducted comprehensive audits to off-site warehouses, accounts receivable, advertising fee
management and distributor inventory etc., and established and improved risk prevention and control
system and budget dynamic management system for overseas enterprises, which effectively
prevented operating risks and reduced operating costs.
2) Revenue and cost
a. Composition of operation revenue
Unit: CNY
2019 2018 Year-on-year
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2019Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
Proportion in Proportion in increase or
Amount operating Amount operating decrease (%)
revenue revenue
Total operating
5,031,011,489 100% 5,142,244,740 100% -2.16%
revenue
Sector-classified
Sector of liquor
and alcoholic 5,031,011,489 100% 5,142,244,740 100% -2.16%
beverage
Product-classified
Wine 3,833,828,384 76.20% 4,000,233,434 77.79% -4.16%
Brandy 1,071,623,817 21.30% 999,207,299 19.43% 7.25%
Tourism 88,716,296 1.76% 101,978,938 1.98% -13.01%
Others 36,842,992 0.74% 40,825,069 0.79% -9.75%
Total 5,031,011,489 100% 5,142,244,740 100% -2.16%
Area-classified
Domestic 4,482,413,271 89.10% 4,486,387,956 87.25% -0.09%
Overseas 548,598,218 10.90% 655,856,784 12.75% -16.35%
Total 5,031,011,489 100% 5,142,244,740 100% -2.16%
b. Whether major business has significant changes during the report period?
Yes □No
Unit: CNY
Year-on-year increase
Sector Project Unit 2019 2018
or decrease (%)
Wine Sales volume Ton 95,902 112,600 -14.83%
Brandy Sales volume Ton 38,895 39,315 -1.07%
Explanation on the causes of over 30% year-on-year changes of the related comparison data
□Available Not available
c. The fulfillment of major sales contract signed by the Company up to the report period
□Available Not available
d. Composition of operating costs
Classification of sector and product
Unit: CNY
2019 2018
Year-on-year
Proportion in Proportion in
Sector Project increase or
Amount the operating Amount the operating
decrease (%)
cost (%) cost (%)
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2019Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
Blending liquor 941,841,689 50.76% 981,838,789 52.42% -1.66%
Packing
Liquor 632,114,480 34.07% 633,281,194 33.82% 0.26%
material
and
Wages 65,607,419 3.54% 63,385,522 3.38% 0.15%
alcoholic
beverage Manufacturing
215,835,927 11.63% 194,485,534 10.38% 1.25%
expenses
Unit: CNY
2019 2018
Year-on-year
Proportion in Proportion in
Sector Project increase or
Amount the operating Amount the operating
decrease (%)
cost (%) cost (%)
Blending liquor 711,784,892 50.79% 759,623,724 52.00% -1.21%
Packing
464,625,885 33.16% 484,791,303 33.19% -0.03%
material
Wine Wages 56,725,667 4.05% 54,718,770 3.75% 0.30%
Manufacturing
168,204,799 12.00% 161,721,616 11.06% 0.93%
expenses
Blending liquor 230,056,797 52.66% 217,997,239 54.00% -1.34%
Packing
167,488,596 38.34% 144,272,064 35.74% 2.60%
material
Brandy Wages 8,881,752 2.03% 8,666,752 2.14% -0.11%
Manufacturing
30,467,170 6.97% 32,763,918 8.12% -1.14%
cost
Explanation
No
e. Whether there are changes of consolidation scope during the report period
Yes □No
For detailed information about the changes in the scope of consolidated financial statements in this
year, please refer to VI “Change in consolidation scope” in Financial Report of this report.
f. Major changes or adjustments of the Company’s businesses, products or service during the
report period
□Available Not available
g. Information of major sales customers and major suppliers
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2019Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
The Company’s major sales customers
The total sales amount of the top five customers（CNY） 271,566,418
The proportion that total sales amount of the top five customers accounting for the
5.40%
annual total sales amount（%）
The proportion that sales amount of the related party in the total sales amount of the
0%
top five customers accounting for the annual total sales amount（%）
Information of the Company’s 5 biggest sales customers
Sales amount Proportion in total
No. Customer name
（CNY） sales for the year（%）
Changyuexin Trading Company Limited in
1 77,966,257 1.55%
Shenzhen city
2 Shenzhen Ruiqi Trading Company Limited 68,303,967 1.36%
Xinbaicheng Food Firm in Hanjiang district of
3 45,629,821 0.91%
Putian city
Fuzhou Shengshihanggang Trading Company
4 42,902,091 0.85%
Limited
Yukun Information Technology Co., Ltd. in
5 36,764,282 0.73%
Foshan city
Total -- 271,566,418 5.40%
Other situation explanations of major customers
□Available Not available
Information on the Company’s main suppliers
The total purchase amount of the top 5 suppliers 602,438,946.00
The proportion of the total purchase amount of the top 5 suppliers in the annual
45.48%
purchase amount
The proportion of the related party purchase amount in the top 5 supplier purchase
10.08%
amount in annual purchase amount
Information on the Company’s top 5 biggest suppliers
Purchase amount Proportion in total
No. Supplier name purchase for the year
(CNY) （%）
Liquan Sales Department of Shandong Yantai
1 139,869,748 10.56%
Winery Co., Ltd.
2 YantaiShenma Packaging Co., Ltd. 133,587,430 10.08%
3 QixiaChangyu Glass Co., Ltd. 131,011,805 9.89%
4 Xinjiang Yuyuan Liquor Co.,Ltd. 127,813,447 9.65%
Xinjiang Tianyu Winery Co., Ltd. Fangcaohu
5 70,156,516 5.30%
Branch
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2019Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
Total -- 602,438,946 45.48%
Other situation explanations of main suppliers
□Available Not available
3) Expense
Unit: CNY
Year-on-year
Explanation of significant
2019 2018 increase or
changes
decrease (%)
Mainly because of return of
Sales expense 1,053,232,024 1,274,599,146 -17.37% trademark use fee during this
report period
Mainly because of year-on-year
Management
311,904,656 343,580,651 -9.22% decrease in wage & welfare and
expense
depreciation expenses
Financial Mainly because of decrease in
35,290,702 35,945,302 -1.82%
expense loan interest expenditure
Research and Mainly because of increase in
Development 6,041,116 4,784,118 26.27% expenses for technology research
expense and development in 2019
4) Cash flow
Unit: CNY
Year-on-year increase or
Item 2019 2018
decrease (%)
Subtotal of cash inflow in operating
4,782,456,490 5,080,363,769 -5.86%
activities
Subtotal of cash outflow in
3,944,618,466 4,104,385,023 -3.89%
operating activities
Net amount of cash flow generated
837,838,024 975,978,746 -14.15%
in operating activities
Subtotal of cash inflow in
242,866,775 423,413,326 -42.64%
investment activities
Subtotal of cash outflow in
451,029,212 931,261,875 -51.57%
investment activities
Net amount of cash flow generated
-208,162,437 -507,848,549 59.01%
in investment activities
Subtotal of cash inflow in
942,134,032 1,114,333,670 -15.45%
capital-raising activities
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2019Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
Subtotal of cash outflow in
1,413,600,451 1,546,641,222 -8.60%
capital-raising activities
Net amount of cash flow generated
-471,466,419 -432,307,552 9.06%
in capital-raising activities
Net increase of cash and cash
158,912,341 25,971,060 511.88%
equivalents
Explanation of main influence factors contributing to great changes in related data on year-on-year
basis
Available □Not available
Compared with the same period of last year, during the report period,the net amount of cash flow
generated in operating activities decreased by 14.15%, mainly due to the year-on-year decrease in
the cash received from commodity sales and rendering service; subtotal of cash inflow in investment
activities decreased by 42.64%, mainly due to the decrease in received cash in recouping the capital
outlay; subtotal of cash outflow in investment activities decreased by 51.57%, mainly due to the
decrease in the cash paid for acquiring fixed assets, intangible assets and other long-term assets and
the cash paid for investment;net amount of cash flow generated in investment activities increased by
59.01%, mainly due to the decrease in the cash outflow in investment activities; subtotal of cash
inflow in capital-raising activities decreased by 15.45%, mainly due to the decrease in received cash
from loan; net increase of cash and cash equivalents increased by 511.88%, mainly due to the
decrease in cash outflow in investment activities.
Explanation on the causes of major differences between the net cash flow generated by the
Company’s operating activities and net profit of this year during the report period.
□Available Not available
5) Assets and liabilities
a. Significant changes of assets composition
Whether the Company implements new financial instruments standard, new revenue standard or new
lease standard for the first time since 2019 and adjusts related items in the financial statement at the
beginning of the execution year
Available □Not available
Unit: CNY
At the end of 2019 At the end of 2018 Proportion
Explanation on
Proportion in increase or
Proportion in the significant
Amount the total assets Amount decrease
total assets (%) changes
(%) (%)
No significant
Monetary funds 1,565,783,980 11.47% 1,475,700,477 11.25% 0.22%
changes
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2019Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
No significant
Receivables 266,218,153 1.95% 242,153,083 1.85% 0.10%
changes
No significant
Inventory 2,872,410,407 21.05% 2,724,591,457 20.77% 0.28%
changes
Investment real No significant
29,714,586 0.22% 31,572,489 0.24% -0.02%
estate changes
Long-term equity No significant
43,981,130 0.32% 0 0% 0.32%
investments changes
No significant
Fixed assets 5,894,068,898 43.19% 5,749,731,667 43.83% -0.64%
changes
Construction in No significant
567,478,833 4.16% 759,296,591 5.79% -1.63%
progress changes
Short-term No significant
754,313,744 5.53% 688,002,410 5.24% 0.29%
borrowings changes
Long-term No significant
128,892,501 0.94% 156,480,662 1.19% -0.25%
borrowings changes
b. Assets and liabilities measured at fair value
□Available Not available
c. Limitations of assets rights up to the end of the report period
At the end of report period, the Company has no assets sealed up, detained or frozen. For
information about assets mortgage and pledge, please refer to Announcement on External Guarantee
disclosed on China Securities Journal, Securities Times and CNINFO (http://www.cninfo.com.cn/)
in 2016, 2017, 2018 and 2019.
③ Expectation for the Company’s future development
On the basis of our limited experience and professional skills, the Company makes the following
judgments on the wine industry and future development:
1) The sector competition pattern and development trend
Under uncertainty effects caused by the slowdown of national macroscopic economy growth, the
Sino-American trade friction and the novelcoronaviruspneumoniaepidemic, the overall demand of
Chinese wine market in 2020 will be still comparatively weak, the total wine consumption is more
likely to maintain a downward trend, and the wine industry's operating situation will be even more
severe. With the rise of Chinese e-commerce and Internet generation, the scene and habits of people's
consumption in wine continue to change. The mobile terminal media on the “mobile phone screen”,
including WeChat, Douyin, Toutiao and Internet celebrity IP etc., has become an important channel
for wine operators to communicate with consumers. Owing to the serious “fragmentation” of the
wine market, it is more difficult to target wine consumers. Whether compared with the per capita
consumption of domestic beer and liquor, or compared with the per capita consumption of major
foreign wine consuming countries, the consumption popularizing rate and penetration rate of Chinese
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2019Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
wine in domestic are very low. Although there are some twists and turns during its development
period in the short term, seen from the long term, the huge development potential has not changed. In
such a case of long-term coexistence of opportunities and challenges, those enterprises that possess
strong brand influence and marketing ability, catch the opportunities, actively take adjustments,
make full use of newly emerging and traditional sales channels, timely satisfy the consumers’
demands and provide products with high cost performance will have the opportunity to be the final
winner of competitions, and then form a new pattern of the future Chinese wine market.
2) The Company’s development strategy
The Company will adhere to the development strategy of “Focus on middle-and-high level, Focus on
high quality, Focus on big product” and the marketing philosophy of “obtaining growth from the
terminal and nurturing consumers”, continue improving the relatively independent system
construction of wine, brandy, imported wine and overseas business, enhance wine, scale up brandy,
improve imported wine, stabilize overseas business and promote the all-round development of
various alcohol products.
3) Management plan for the new year
In 2020, the Company will try its best to realize operating revenue of not less than CNY 3.7 billion
and control the main operating costs and three period expenses below CNY 2.8 billion.
4) Measures to be taken by the Company
In order to better seize the opportunities and meet the challenges, the Company will stand from the
present, take a long-term perspective, forge ahead, adhere to market-oriented approach, take
advantage of profit assessment, take innovation and major work as driving force and persevere in
management and implementation. The Company will make every effort to do following major work
in 2020 in order to strive to achieve annual business target.
The first is to further deepen and implement the “Three Focus” strategy. For domestic wine, the
Company clearly defines the development direction of “focusing on chateau wine, strengthening
Noble Dragon and scaling up ordinary wine” and will continue focusing on brands of seven chateau
wines, Noble Dragon and Zenithwirl etc.. Under the premise of keeping the total investment
unchanged, the Company will transfer part of offline funds to online channels to future increase the
proportion of input on online channels. For brandy, the Company will continue adhering to the
strategy of “focusing on middle-and-high-end products and driving the sales of low-end products in
virtue of middle-and-high-end products”, and focus on Koya, Five Star, Mminni and Pegase these
four brands. The main brands will be further focused on Koya XO 15 and Fine Five-star, through
which the brandy category could be expanded, thus driving the all-round development of brandy
brands. For imported wine, the Company will focus on six acquired brands, especially on Kilikanoon
and IWCC.
The second is to continue to implement business philosophy of “customer-centered, striver-based
and result-oriented”. The Company will take effective measures to fully implement the market
strategy of “let fewer people manage distributors, let more people serve terminals and consumers
together with distributors”. Also the Company will continue increasing the salary level of sales
personnel and enhancing front-line personnel’s working enthusiasm through measures such as
increasing efficiency while reducing staff and improving compensation system and so on. The
Company will advocate that “everyone is product experience officer”, “everyone is a service
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2019Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
experience officer” and “everyone is a self-media” to comprehensively improve product awareness,
service awareness and marketing awareness.
The third is to make efforts to expand new marketing channels. The Company will strengthen the
development of online channels, new retail channels, big distributor channels and
personalized-ordering group purchase channels, and establish a system of “brand team” +
“outsourcing brand consulting company” to provide more accurate and effective marketing support.
Through the innovation of marketing system, the Company will push forward 1-2 chateau brands to
establish an alliance company with big distributors to expand the market scale; mobilize more than
2,000 key distributors across the country to open their own smart retail malls; guide distributors to
recruit “community partners”; promote distributors make full use of city-wide platforms like Meituan,
Eleme, 58 Tongcheng, Douyin, JingdongDaojia and Little Red Book to run their business in various
new formats; promote contactless delivery of wines among distributors through their own
distribution system or courier delivery in the same city, and help them improve contactless delivery
capacity and open up sales channels; mobilize all employees to participate in short video marketing
and live streaming video marketing.
The fourth is to comprehensively promote the Company’s traditional business to be transferred to
digitization business. The Company will strive to realize digitalization of planting, production, sales
and marketing in an all-round way, thus to provide accurate service to clients and targeted marketing
to consumers. In 2020, the Company will print anti-counterfeiting codes on the back and conduct the
reformation of one-off marketing codes to promote distributor-driven orders in an all-round way and
introduce the inbound and outbound identification management and product traceability in the
distributor link. The Company will also cooperate with Tencent and other companies to complete the
digital integration of marketing to promote digital marketing level.
The fifth is to continue improving product quality. The Company will stabilize the total number of
contracted bases, improve the planting level of its own grape bases, and cultivate new wine grape
varieties according to different geographical and climatic characteristics in China. Besides that, the
Company will establish long-term stabled high, medium and low raw material bases for wine and
brandy to meet different product demands and complete wine and brandy overseas grape base layout
from a global perspective. The Company will also increase the import quantity of oak barrels and
formulate a three-year purchase plan of oak barrels for high-end products such as chateau wines and
Koya brandy and so on, and improve the way and method of using oak barrels. The Company will
further establish and improve the “evaluation system for brand wine-makers team”, mobilize
winemakers to go deep into the production line to improve product quality and go deep into the
market line to understand consumer demand, in order to better play the winemakers team’s technical
and work capability. The Company will support and encourage the research and development
investment of new technology and new process to ensure the steady improvement of product quality.
The sixth is to further improve the employment mechanism. The Company will continue to
implement the general policy of “strictly control the employment and release the demission”, and
strive to achieve the general goal of “control the total number and keep the income non-decreasing”.
The Company will accelerate the reform of the selection and employment mechanism, salary
distribution and incentive mechanism to open up a dual channel for employees’ career development
and salary incentive. A three-year talent development plan for management, brewing, equipment,
marketing, production and other aspects will be made. The system of “management trainee” and
“guidance of mentor to apprentice” will be established to form the talent training model of “everyone
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2019Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
has a mentor in front and an echelon formation in back”. Meanwhile, the Company will also
establish a good mechanism to reward innovation success and tolerate innovation failure and create a
favorable atmosphere to encourage innovation and tolerate failure, providing reliable guarantee for
the smooth development of innovation work in all aspects of the Company.
The seventh is to strengthen audit supervision and internal control system construction. The
Company will further strengthen the audit supervision of each operating unit and intensify the trinity
supervision system of auditing, financing and discipline inspection commission. The Company will
enhance the punishment level, investigate every problems discovered in auditing and not promote or
appoint responsible personnel. The Company will further improve the internal control system of
areas prone to serious fraud, including seal, related transaction, sales advertising fee, material
procurement, project construction and inventory and so on, in order to timely eliminate major hidden
dangers and prevent operational risks.
The eighth is to strengthen the financial management. The Company will improve the budgeting
mode, timely and dynamically adjust and improve the annual budget in accordance with the major
changes inside and outside of the Company, and enhance the timeliness and pertinence of budget
management. The Company will improve the simulation profit assessment system for secondary
enterprises to improve the overall profitability. Meanwhile, the Company will make full use of
national policy of reducing taxes and fees to rationalize tax planning and strengthen financial
management of overseas enterprises to prevent major risks.
The above business plan and business goals do not represent the listed company’s profit forecast for
2020. Whether it can be realized depends on various factors such as changes in market conditions
and the efforts of the management team, which has great uncertainties. Please pay special attention to
this.
(2) Whether there are significant changes in the main business during the reporting period
□Yes No
(3) The cases of industry, product or area accounting for over 10% in the Company’s
operating revenue or operating profit
Available □Not available
Unit: CNY
Year-on-year
Year-on-year Year-on-year
increase or
Operating Gross increase or increase or
Operating cost decrease (%) of
revenue margin decrease (%) of decrease (%) of
operating
operating cost gross profit rate
revenue
Sector-classified
Sector of
liquor and
5,031,011,489 1,887,495,991 62.48% -2.16% -0.74% -0.54%
alcoholic
beverage
Product-classified
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2019Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
Wine 3,833,828,384 1,401,341,243 63.45% -4.16% -4.07% -0.03%
Brandy 1,071,623,817 436,894,314 59.23% 7.25% 8.22% -0.37%
Tourism 88,716,296 27,251,750 69.28% -13.01% -12.93% -0.03%
Others 36,842,992 22,008,684 40.26% -9.75% 282.20% -45.63%
Total 5,031,011,489 1,887,495,991 62.48% -2.16% -0.74% -0.54%
Area-classified
Domestic 4,482,413,271 1,523,524,727 66.01% -0.09% 3.11% -1.05%
Abroad 548,598,218 363,971,264 33.65% -16.35% -14.16% -1.69%
Total 5,031,011,489 1,887,495,991 62.48% -2.16% -0.74% -0.54%
Under the condition that the statistical caliber of the Company’s main business data is adjusted
during the report period, the Company’s main business data adjusted on the basis of caliber at the
end of report period in recent one year.
□Available Not available
(4) Whether there is seasonality or periodicity operating features required special attention
□Yes No
(5) Explanation for significant changes in operation revenue, operating cost, total net profit or
constitution attributable to the ordinary shareholders of the listed company compared with
last report period
□Available Not available
(6) Condition of Facing listing suspension and termination
□Available Not available
(7) Items related to financial report
①Compared with the last year’s financial report, explanation for the changes of accounting
policy, accounting estimation and accounting method
Available □Not available
The Company has implemented the new financial standard since January 1st, 2019. According to the
transition requirements of the standard, the Company made retrospective adjustments to
classification and measurement (including impairment) of financial instruments that were not
derecognized on the date (January 1st, 2019) of the implementation of the New Financial
Instruments Standard. This company did not adjust the comparative financial statement data, and the
difference between the original book value of financial instrument and the new book value on the
date of implementation of the New Financial Instruments Standard was recorded into retained
income or other comprehensive income in early 2019.
The Company prepared financial statements according to the relevant requirements of Accounting
[2019] No. 6, which only affected the format of financial statements and the listing of some items
and did not have significant effects on the Company's net asset, net profit and other related financial
indexes.
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2019Annual Report Abstract of Yantai Changyu Pioneer Wine Co. Ltd.
For other information about changes in accounting policy, please refer to Announcement on Changes
in Accounting Policy disclosed by the Company in SecuritiesTimes, ChinaSecuritiesJournal and
CNINFO.
②The situation explanation for the correction of major accounting errors which need to be
retrospect and restated during the report period
□Available Not available
There is no situation for the correction of major accounting errors which need to be retrospect and
restated.
③ Compared with the last year’s financial report, explanation for the changes of the
consolidated statements scope
Available □Not available
For detailed information about the changes in the scope of consolidated financial statements in this
year, please refer to VI “Change in consolidation scope” in Financial Report of this report.
Yantai Changyu Pioneer Wine Co., Ltd.
Board of Directors
April 24th, 2020
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