YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
ENGLISH TRANSLATION OF FINANCIAL STATEMENTS
FOR THE YEAR 1 JANUARY 2019 TO 31 DECEMBER 2019
IF THERE IS ANY CONFLICT BETWEEN THE CHINESE VERSION AND ITS ENGLISH
TRANSLATION, THE CHINESE VERSION WILL PREVAIL
AUDITOR’S REPORT
KPMG Huazhen Shen Zi No. 2001809
All Shareholders of Yantai Changyu Pioneer Wine Company Limited:
Opinion
We have audited the accompanying financial statements of Yantai Changyu Pioneer Wine
Company Limited (“Yantai Changyu”), which comprise the consolidated balance sheet and
company balance sheet as at 31 December 2019, the consolidated income statement and
company income statement, the consolidated cash flow statement and company cash flow
statement, the consolidated statement of changes in shareholders’ equity and company
statement of changes in shareholders’ equity for the year then ended, and notes to the
financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects,
the consolidated financial position and financial position of Yantai Changyu as at 31
December 2019, and of its consolidated financial performance and company financial
performance and its consolidated cash flows and company cash flows for the year then
ended in accordance with Accounting Standards for Business Enterprises issued by the
Ministry of Finance of the People’s Republic of China.
Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing for Certified Public
Accountants (“CSAs”). Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We
are independent of Yantai Changyu in accordance with the China Code of Ethics for Certified
Public Accountants (“the Code”), and we have fulfilled our other ethical responsibilities in
accordance with the Code. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Page 1 of 6
AUDITOR’S REPORT (continued)
KPMG Huazhen Shen Zi No. 2001809
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial statements for the year. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Recognition of Sales Revenue from Distributors
Refer to the accounting policies set out in the notes to the financial statements “III.
Significant accounting policies and accounting estimates” 22 and “V. Notes to the
consolidated financial statements” 35.
How the Matter was Addressed in Our
Key Audit Matters
Audit
The principal activities of Yantai Changyu and Our audit procedures to evaluate revenue
its subsidiaries (hereinafter referred to as recognition of sales revenue from
“Yantai Changyu Group”) include manufacture distributors included the following:
and sales of wine, brandy and sparkling wine.
Understand and evaluate the
The revenue of Yantai Changyu Group is Management’s design and operation
mainly derived from sales of sidtributors. All effectiveness of key internal controls
distributor transaction terms adopt the unified related to distributor sales revenue
transaction terms formulated by Yantai recognition;
Changyu Group.
Selecting samples, review sales
Sales revenue from distributors is recognised contracts Yantai Changyu Group
when Yantai Changyu Group transfers the signed with distributors in order to
major risks and rewards of product ownership examine whether the Group has
to the distributors, and these transfers are adopted the unified transaction terms,
completed when the goods are delivered to and evaluate whether the accounting
distributors and signed for acceptance. policy of revenue recognition meets
As revenue is one of the key performance the requirements of the Accounting
indicators of Yantai Changyu Group, there is Standards for Business Enterprises;
an inherent risk that the management will On a sampling basis, reconcile the
manipulate revenue in order to achieve specific revenue to relevant supporting files
performance objectives or expectations. such as relevant orders and signed
Therefore, we recognise sales revenue from delivery notes, etc. to evaluate
distributors as a key audit matter. whether revenue is recognised in
accordance with the accounting policy
of Yantai Changyu Group;
Page 2 of 6
AUDITOR’S REPORT (continued)
KPMG Huazhen Shen Zi No. 2001809
Key Audit Matters (continued)
Recognition of Sales Revenue from Distributors (continued)
Refer to the accounting policies set out in the notes to the financial statements “III.
Significant accounting policies and accounting estimates” 22 and “V. Notes to the
consolidated financial statements” 35.
How the matter was addressed in our
The Key Audit Matters
audit
On a sampling basis, reconcile the
sales transaction before and after
balance sheet date to relevant
supporting files such as relevant
orders, signed delivery notes, etc. to
evaluate whether revenue is
recognised in appropriate accounting
period;
Selecting samples, perform
confirmation procedures to the
balances of current accounts on
balance sheet date and the amount of
sales transaction for the year;
Check whether significant sales
returns exist in sales record after the
balance sheet date and check relevant
supporting files in order to evaluate
whether relevant revenue is recorded
in the appropriate accounting period;
Select revenue accounting entries that
meet specific risk criteria and check
related supporting documents.
Page 3 of 6
AUDITOR’S REPORT (continued)
KPMG Huazhen Shen Zi No. 2001809
Other Information
Management of Yantai Changyu is responsible for the other information. The other
information comprises all the information included in the 2019 annual report, other than the
financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears to
be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report in this
regard.
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
Management is responsible for the preparation and fair presentation of the financial
statements in accordance with the Accounting Standards for Business Enterprises, and for
the design, implementation and maintenance of such internal control necessary to enable
that the financial statements are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is responsible for assessing Yantai
Changyu’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless management either
intends to liquidate Yantai Changyu or to cease operations, or has no realistic alternative but
to do so.
Those charged with governance are responsible for overseeing Yantai Changyu’s financial
reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with CSAs will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
Page 4 of 6
AUDITOR’S REPORT (continued)
KPMG Huazhen Shen Zi No. 2001809
Auditor’s Responsibilities for the Audit of the Financial Statement (continued)
As part of an audit in accordance with CSAs, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the management.
(4) Conclude on the appropriateness of management’s use of the going concern basis of
accounting and, basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast
significant doubt on Yantai Changyu’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause Yantai Changyu to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express our audit opinion on the
financial statements. We are responsible for the direction, supervision and performance
of the group audit. We remain solely responsible for our audit opinion.
Page 5 of 6
AUDITOR’S REPORT (continued)
KPMG Huazhen Shen Zi No. 2001809
Auditor’s Responsibilities for the Audit of the Financial Statement (continued)
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence
and, where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the financial statements of the year and
are therefore the key audit matters. We describe these matters in our auditor’s report unless
law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh
the public interest benefits of such communication.
KPMG Huazhen LLP Certified Public Accountants Registered
in the People’s Republic of China
(Stamp)
Wang Ting (Engagement Partner)
(Signature and stamp)
Beijing, China Chai Jing
(Signature and stamp)
Date:22/04/2020
Page 6 of 6
Yantai Changyu Pioneer Wine Company Limited
Consolidated balance sheet
as at 31 December 2019
(Expressed in Renminbi Yuan)
Note 2019 2018
Assets
Current assets
Cash at bank and on hand V. 1 1,565,783,980 1,475,700,477
Bills receivable V. 2 - 288,667,988
Accounts receivable V. 3 266,218,153 242,153,083
Receivables under financing V. 4 316,470,229 -
Prepayments V. 5 67,707,537 4,219,949
Other receivables V. 6 24,246,812 22,636,086
Inventories V. 7 2,872,410,407 2,724,591,457
Other current assets V. 8 267,424,938 258,676,396
Total current assets 5,380,262,056 5,016,645,436
Non-current assets
Available-for-sale financial assets - 467,251
Long-term equity investments V. 9 43,981,130 -
Investment properties V. 10 29,714,586 31,572,489
Fixed assets V. 11 5,894,068,898 5,749,731,667
Construction in progress V. 12 567,478,833 759,296,591
Bearer biological assets V. 13 202,425,286 209,266,373
Intangible assets V. 14 651,946,355 655,473,459
Goodwill V. 15 141,859,193 165,199,111
Long-term deferred expenses V. 16 277,595,408 244,640,416
Deferred tax assets V. 17 264,926,503 285,436,259
Other non-current assets V. 18 193,674,320 -
Total non-current assets 8,267,670,512 8,101,083,616
Total assets 13,647,932,568 13,117,729,052
The notes on pages 20 to 122 form part of these financial statements.
Page 1
Yantai Changyu Pioneer Wine Company Limited
Consolidated balance sheet
as at 31 December 2019 (continued)
(Expressed in Renminbi Yuan)
Note 2019 2018
Liabilities and shareholders’ equity
Current liabilities
Short-term loans V. 19 754,313,744 688,002,410
Accounts payable V. 20 570,252,612 713,572,881
Advance payments received V. 21 120,609,499 226,075,244
Employee benefits payable V. 22 234,459,116 212,304,217
Taxes payable V. 23 375,169,971 128,912,790
Other payables V. 24 450,532,485 608,479,890
Non-current liabilities due within
V. 25 150,826,221 152,940,788
one year
Total current liabilities 2,656,163,648 2,730,288,220
Non-current liabilities
Long-term loans V. 26 128,892,501 156,480,662
Long-term payables V. 27 191,000,000 225,000,000
Deferred income V. 28 70,701,288 86,227,293
Deferred tax liabilities V. 17 14,691,424 22,010,647
Other non-current liabilities V. 29 7,645,777 7,234,853
Total non-current liabilities 412,930,990 496,953,455
Total liabilities 3,069,094,638 3,227,241,675
The notes on pages 20 to 122 form part of these financial statements.
Page 2
Yantai Changyu Pioneer Wine Company Limited
Consolidated balance sheet
as at 31 December 2019 (continued)
(Expressed in Renminbi Yuan)
Note 2019 2018
Liabilities and shareholders’ equity
(continued)
Shareholders’ equity
Share capital V. 30 685,464,000 685,464,000
Capital reserve V. 31 565,050,422 565,955,441
Other comprehensive income V. 32 (4,235,583) 2,965,377
Surplus reserve V. 33 342,732,000 342,732,000
Retained earnings V. 34 8,719,899,359 8,008,982,547
Total equity attributable to
10,308,910,198 9,606,099,365
shareholders of the Company
Non-controlling interests 269,927,732 284,388,012
Total owners’ equity 10,578,837,930 9,890,487,377
Total liabilities and shareholders’ equity 13,647,932,568 13,117,729,052
These financial statements were approved by the Board of Directors of the Company on 22
April 2020.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal The person in The head of the
Representative charge accounting
of accounting affairs department
(Signature and (Signature and (Signature and
stamp) stamp) stamp)
The notes on pages 20 to 122 form part of these financial statements.
Page 3
Yantai Changyu Pioneer Wine Company Limited
Company balance sheet
as at 31 December 2019
(Expressed in Renminbi Yuan)
Note 2019 2018
Assets
Current assets
Cash at bank and on hand 710,505,269 624,588,809
Bills receivable - 39,885,254
Accounts receivable XV.1 1,988,326 1,447,973
Receivables under financing XV.2 41,679,635 -
Prepayments 776,539 227
Other receivables XV.3 586,424,958 1,025,643,356
Inventories 434,007,808 385,154,740
Other current assets 39,130,466 24,704,844
Total current assets 1,814,513,001 2,101,425,203
Non-current assets
Long-term equity investments XV.4 7,432,422,621 7,420,803,069
Investment properties 29,714,586 31,572,489
Fixed assets 261,137,072 265,311,274
Construction in progress - 6,311,701
Bearer biological assets 121,414,096 125,002,793
Intangible assets 64,864,913 67,244,066
Deferred tax assets 16,255,870 24,194,967
Other non-current assets 1,427,700,000 972,700,000
Total non-current assets 9,353,509,158 8,913,140,359
Total assets 11,168,022,159 11,014,565,562
The notes on pages 20 to 122 form part of these financial statements.
Page 4
Yantai Changyu Pioneer Wine Company Limited
Company balance sheet
as at 31 December 2019 (continued)
(Expressed in Renminbi Yuan)
Note 2019 2018
Liabilities and shareholders’ equity
Current liabilities
Short-term loans 150,000,000 150,000,000
Accounts payable 63,655,240 132,704,304
Employee benefits payable 70,445,847 72,345,179
Taxes payable 6,052,456 13,111,431
Other payables 660,149,563 607,974,519
Total current liabilities 950,303,106 976,135,433
Non-current liabilities
Deferred income 9,176,315 12,343,972
Other non-current liabilities 3,146,707 2,710,575
Total non-current liabilities 12,323,022 15,054,547
Total liabilities 962,626,128 991,189,980
The notes on pages 20 to 122 form part of these financial statements.
Page 5
Yantai Changyu Pioneer Wine Company Limited
Company balance sheet
as at 31 December 2019 (continued)
(Expressed in Renminbi Yuan)
Note 2019 2018
Liabilities and shareholders’ equity
(continued)
Shareholders’ equity
Share capital 685,464,000 685,464,000
Capital reserve 557,222,454 557,222,454
Surplus reserve 342,732,000 342,732,000
Retained earnings 8,619,977,577 8,437,957,128
Total owners’ equity 10,205,396,031 10,023,375,582
Total liabilities and shareholders’ equity 11,168,022,159 11,014,565,562
These financial statements were approved by the Board of Directors of the Company on 22
April 2020.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal The person in The head of the
Representative charge accounting
of accounting affairs department
(Signature and (Signature and (Signature and
stamp) stamp) stamp)
The notes on pages 20 to 122 form part of these financial statements.
Page 6
Yantai Changyu Pioneer Wine Company Limited
Consolidated Income statement
for the year ended 31 December 2019
(Expressed in Renminbi Yuan)
Note 2019 2018
I. Operating income V. 35 5,031,011,489 5,142,244,740
Less: Operating cost V. 35 1,887,495,991 1,901,611,507
Taxes and surcharges V. 36 268,462,378 276,491,674
Selling and distribution
V. 37 1,053,232,024 1,274,599,146
expenses
General and administrative
V. 38 311,904,656 343,580,651
expenses
Research and development
6,041,116 4,784,118
expenses
Financial expenses V. 39 35,290,702 35,945,302
Including: Interest expenses 41,570,794 46,354,902
Interest income 12,327,441 12,086,007
Add: Other income V. 40 77,337,581 87,281,434
Investment income V. 41 5,112,733 -
Including: Losses from
investment in (1,120,928) -
joint ventures
Credit losses V. 42 (7,304,777) -
Impairment (losses) /
V. 43 (20,552,916) 912,166
reversal
Gains from disposal of
V. 44 39,015 11,368,355
assets
The notes on pages 20 to 122 form part of these financial statements.
Page 7
Yantai Changyu Pioneer Wine Company Limited
Consolidated Income statement
for the year ended 31 December 2019 (continued)
(Expressed in Renminbi Yuan)
Note 2019 2018
II. Operating profit 1,523,216,258 1,404,794,297
Add: Non-operating income V. 45 10,921,748 7,353,309
Less: Non-operating expenses V. 45 3,623,269 3,535,908
III. Total profit 1,530,514,737 1,408,611,698
Less: Income tax expenses V. 46 400,806,109 367,127,522
IV. Net profit 1,129,708,628 1,041,484,176
(1) Net profit classified by
continuity of operations:
1. Net profit from continuing
1,129,708,628 1,041,484,176
operations
2. Net profit from discontinued
- -
operations
(2) Net profit classified by
ownership (“-” for net loss):
1. Net profit attributable to
1,129,735,749 1,042,632,929
owners of the company
2. Non-controlling losses (27,121) (1,148,753)
V. Other comprehensive income, net
(8,542,792) (376,524)
of tax
(1) Other comprehensive income
(net of tax) attributable to
shareholders of the
Company
Translation differences arising
from translation of foreign
(7,200,960) (143,863)
currency financial
statements
(2) Other comprehensive income
(net of tax) attributable to (1,341,832) (232,661)
non-controlling interests
The notes on pages 20 to 122 form part of these financial statements.
Page 8
Yantai Changyu Pioneer Wine Company Limited
Consolidated Income statement
for the year ended 31 December 2019 (continued)
(Expressed in Renminbi Yuan)
Note 2019 2018
VI. Total comprehensive income for
1,121,165,836 1,041,107,652
the year
(1) Attributable to shareholders of
1,122,534,789 1,042,489,066
the company
(2) Attributable to non-controlling
(1,368,953) (1,381,414)
interests
VII. Earnings per share:
(1) Basic earnings per share V. 47 1.65 1.52
(2) Diluted earnings per share V. 47 1.65 1.52
These financial statements were approved by the Board of Directors of the Company on 22
April 2020.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal The person in The head of the
Representative charge accounting
of accounting affairs department
(Signature and (Signature and (Signature and
stamp) stamp) stamp)
The notes on pages 20 to 122 form part of these financial statements.
Page 9
Yantai Changyu Pioneer Wine Company Limited
Company income statement
for the year ended 31 December 2019
(Expressed in Renminbi Yuan)
Note 2019 2018
I. Operating income XV.5 740,856,362 876,447,070
Less: Operating cost XV.5 655,504,063 774,487,031
Taxes and surcharges 25,045,041 38,346,761
General and administrative
86,481,192 90,505,208
expenses
Research and development
815,233 887,355
expenses
Net financial income (4,798,485) (20,292,737)
Including: Interest expenses 497,277 16,075,353
Interest income 5,843,698 41,821,372
Add: Other income 3,953,002 4,237,655
Investment income XV.6 621,620,723 964,128,659
Credit impairment losses (601,610) -
Gains from disposal of
22,297 12,411,962
assets
II. Operating profit 602,803,730 973,291,728
Add: Non-operating income 1,840,062 1,483,478
Less: Non-operating expenses 1,118,124 593,694
The notes on pages 20 to 122 form part of these financial statements.
Page 10
Yantai Changyu Pioneer Wine Company Limited
Income statement of the company
for the year ended 31 December 2019 (continued)
(Expressed in Renminbi Yuan)
Note 2019 2018
III. Total profit 603,525,668 974,181,512
Less: Income tax expenses 10,226,819 4,592,939
IV. Net profit 593,298,849 969,588,573
(i) Net profit from continuing
593,298,849 969,588,573
operations
(ii) Net profit from discontinued
- -
operations
V. Other comprehensive income, net
- -
of tax
VI. Total comprehensive income for
593,298,849 969,588,573
the year
These financial statements were approved by the Board of Directors of the Company on 22
April 2020.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal The person in The head of the
Representative charge accounting
of accounting affairs department
(Signature and (Signature and (Signature and
stamp) stamp) stamp)
The notes on pages 20 to 122 form part of these financial statements.
Page 11
Yantai Changyu Pioneer Wine Company Limited
Consolidated cash flow statement
for the year ended 31 December 2019
(Expressed in Renminbi Yuan)
Note 2019 2018
I. Cash flows from operating activities:
Proceeds from sale of goods and
4,647,970,683 4,950,603,207
rendering of services
Refund of taxes and surcharges 40,741,286 57,056,690
Proceeds from other operating
V. 48(1) 93,744,521 72,703,872
activities
Sub-total of cash inflows 4,782,456,490 5,080,363,769
Payment for goods and services 1,338,542,601 1,383,945,233
Payment to and for employees 576,928,850 544,742,974
Payment of various taxes 1,115,582,679 1,111,980,499
Payment for other operating
V. 48(2) 913,564,336 1,063,716,317
activities
Sub-total of cash outflows 3,944,618,466 4,104,385,023
Net cash flows from operating
V. 49(1) 837,838,024 975,978,746
activities
II. Cash flows from investing activities:
Proceeds from disposal of
234,722,614 400,000,000
investments
Investment returns received 1,809,786 3,445,895
Net proceeds from disposal of
fixed assets, intangible assets 6,334,375 19,967,431
and other long-term assets
Sub-total of cash inflows 242,866,775 423,413,326
Payment for acquisition of fixed
assets, intangible assets and 281,005,768 347,384,820
other long-term assets
Payment for acquisition of
169,618,600 478,042,400
investments
Net cash paid for the acquisition of
subsidiaries and other business 404,844 105,834,655
units
Sub-total of cash outflows 451,029,212 931,261,875
Net cash flows from investing
(208,162,437) (507,848,549)
activities
The notes on pages 20 to 122 form part of these financial statements.
Page 12
Yantai Changyu Pioneer Wine Company Limited
Consolidated cash flow statement
for the year ended 31 December 2019 (continued)
(Expressed in Renminbi Yuan)
Note 2019 2018
III. Cash flows from financing activities:
Proceeds from investors - 2,050,000
Including: Cash received from
minority shareholders - 2,050,000
of subsidiaries
Proceeds from borrowings 942,134,032 1,049,815,411
Proceeds from other financing
V. 48(3) - 62,468,259
activities
Sub-total of cash inflows 942,134,032 1,114,333,670
Repayments of borrowings 939,525,426 1,103,189,409
Payment for dividends, profit
462,455,473 397,351,813
distributions or interest
Payment for other financing
V. 48(4) 11,619,552 46,100,000
activities
Sub-total of cash outflows 1,413,600,451 1,546,641,222
Net cash flows from financing
(471,466,419) (432,307,552)
activities
IV. Effect of foreign exchange rate
changes on cash and cash 703,173 (9,851,585)
equivalents
V. Net increase in cash and cash
V. 49(1) 158,912,341 25,971,060
equivalents
Add: Cash and cash equivalents
at the beginning of the 1,206,860,334 1,180,889,274
year
VI. Cash and cash equivalents at the
V. 49(2) 1,365,772,675 1,206,860,334
end of the year
These financial statements were approved by the Board of Directors of the Company on 22
April 2020.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal The person in The head of the
Representative charge accounting
of accounting affairs department
(Signature and (Signature and (Signature and
stamp) stamp) stamp)
The notes on pages 20 to 122 form part of these financial statements.
Page 13
Yantai Changyu Pioneer Wine Company Limited
Company cash flow statement
for the year ended 31 December 2019
(Expressed in Renminbi Yuan)
Note 2019 2018
I. Cash flows from operating
activities:
Proceeds from sale of goods and
737,920,018 817,341,175
rendering of services
Proceeds from other operating
211,049,689 177,786,322
activities
Sub-total of cash inflows 948,969,707 995,127,497
Payment for goods and services 710,601,952 608,241,452
Payment to and for employees 91,738,062 107,256,441
Payment of various taxes 48,817,363 62,066,449
Payment for other operating
28,434,079 74,357,324
activities
Sub-total of cash outflows 879,591,456 851,921,666
Net cash flows from operating
69,378,251 143,205,831
activities
II. Cash flows from investing activities:
Proceeds from disposal of
131,133,236 370,000,000
investments
Investment returns received 922,250,025 874,520,633
Net proceeds from disposal of
fixed assets, intangible assets 1,354,733 11,212,195
and other long-term assets
Proceeds from borrowings to
8,000,000 -
subsidiaries
Sub-total of cash inflows 1,062,737,994 1,255,732,828
Payment for acquisition of fixed
assets, intangible assets and 21,417,387 28,842,911
other long-term assets
Payment for acquisition of
138,566,890 410,000,000
investments
Net cash paid for the acquisition of
subsidiaries and other business - 107,194,420
units
Cash paid to subsidiaries 463,000,000 -
Sub-total of cash outflows 622,984,277 546,037,331
Net cash flows from investing
439,753,717 709,695,497
activities
The notes on pages 20 to 122 form part of these financial statements.
Page 14
Yantai Changyu Pioneer Wine Company Limited
Company cash flow statement
for the year ended 31 December 2019 (continued)
(Expressed in Renminbi Yuan)
Note 2019 2018
III. Cash flows from financing activities:
Proceeds from borrowings 150,000,000 200,000,000
Sub-total of cash inflows 150,000,000 200,000,000
Repayments of borrowings 150,000,000 650,000,000
Payment for dividends or interest 418,400,308 364,085,312
Sub-total of cash outflows 568,400,308 1,014,085,312
Net cash flows from financing
(418,400,308) (814,085,312)
activities
IV. Effect of foreign exchange rate
changes on cash and cash - -
equivalents
V. Net increase in cash and cash
90,731,660 38,816,016
equivalents
Add: Cash and cash equivalents
532,384,882 493,568,866
at the beginning of the year
VI. Cash and cash equivalents at the
623,116,542 532,384,882
end of the year
These financial statements were approved by the Board of Directors of the Company on 22
April 2020.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal The person in The head of the
Representative charge accounting
of accounting affairs department
(Signature and (Signature and (Signature and
stamp) stamp) stamp)
The notes on pages 20 to 122 form part of these financial statements.
Page 15
Yantai Changyu Pioneer Wine Company Limited
Consolidated statement of changes in shareholders’ equity
for the year ended 31 December 2019
(Expressed in Renminbi Yuan)
Attributable to shareholders of the Company
Other Non-controlling Total owners’
Note Retained
Share capital Capital reserve comprehensive Surplus reserve Sub-total interests equity
earnings
income
I. Balance at the
685,464,000 565,955,441 2,965,377 342,732,000 8,008,982,547 9,606,099,365 284,388,012 9,890,487,377
beginning of the year
Add: Changes in
III. 32 - - - - (7,540,537) (7,540,537) - (7,540,537)
accounting policies
Adjusted balance at the
685,464,000 565,955,441 2,965,377 342,732,000 8,001,442,010 9,598,558,828 284,388,012 9,882,946,840
beginning of the year
II. Changes in equity during
the year
(1) Total
comprehensive - - (7,200,960) - 1,129,735,749 1,122,534,789 (1,368,953) 1,121,165,836
income
(2) Contribution by
owners
Acquisitions of
non-controlling - (905,019) - - - (905,019) (10,714,533) (11,619,552)
interests
(3) Appropriation of
V. 34
profits
Distributions to
- - - - (411,278,400) (411,278,400) (2,376,794) (413,655,194)
shareholders
III. Balance at the end of the
685,464,000 565,050,422 (4,235,583) 342,732,000 8,719,899,359 10,308,910,198 269,927,732 10,578,837,930
year
These financial statements were approved by the Board of Directors of the Company on 22 April 2020.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal Representative The person in charge of The head of the accounting
accounting affairs department
(Signature and stamp) (Signature and stamp) (Signature and stamp)
The notes on pages 20 to 122 form part of these financial statements.
Page 16
Yantai Changyu Pioneer Wine Company Limited
Consolidated statement of changes in shareholders’ equity
for the year ended 31 December 2018
(Expressed in Renminbi Yuan)
Attributable to shareholders of the Company
Total
Other Non-controlling
Note Retained shareholders’
Share capital Capital reserve comprehensive Surplus reserve Sub-total interests
earnings equity
income
I. Balance at the beginning of
685,464,000 565,955,441 3,109,240 342,732,000 7,309,081,618 8,906,342,299 271,636,379 9,177,978,678
the year
II. Changes in equity during the
year
(1) Total comprehensive
- - (143,863) - 1,042,632,929 1,042,489,066 (1,381,414) 1,041,107,652
income
(2) Shareholders’
contributions and
decrease of capital
Acquired as subsidiaries - - - - - - 17,532,823 17,532,823
(3) Appropriation of profits V. 34
Distributions to
- - - - (342,732,000) (342,732,000) (3,399,776) (346,131,776)
shareholders
III. Balance at the end of the year 685,464,000 565,955,441 2,965,377 342,732,000 8,008,982,547 9,606,099,365 284,388,012 9,890,487,377
These financial statements were approved by the Board of Directors of the Company on 22 April 2020.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal Representative The person in charge of The head of the accounting
accounting affairs department
(Signature and stamp) (Signature and stamp) (Signature and stamp)
The notes on pages 20 to 122 form part of these financial statements.
Page 17
Yantai Changyu Pioneer Wine Company Limited
Company statement of changes in shareholders’ equity
for the year ended 31 December 2019
(Expressed in Renminbi Yuan)
Total
Retained
Note Share capital Capital reserve Surplus reserve shareholders’
earnings
equity
I、 Balance at the 685,464,000 557,222,454 342,732,000 8,437,957,128 10,023,375,582
beginning of the year
Add: Changes in
III. 32 - - - - -
accounting policies
Adjusted balance at
the beginning of the 685,464,000 557,222,454 342,732,000 8,437,957,128 10,023,375,582
year
II、 Changes in equity for
the year
1. Total
comprehensive - - - 593,298,849 593,298,849
income
2. Appropriation of
profits
Distributions to
- - - (411,278,400) (411,278,400)
shareholders
III、 Balance at the end of 685,464,000 557,222,454 342,732,000 8,619,977,577 10,205,396,031
the year
These financial statements were approved by the Board of Directors of the Company on 22
April 2020.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal The person in The head of the
Representative charge accounting
of accounting affairs department
(Signature and (Signature and (Signature and
stamp) stamp) stamp)
The notes on pages 20 to 122 form part of these financial statements.
Page 18
Yantai Changyu Pioneer Wine Company Limited
Company statement of changes in shareholders’ equity
for the year ended 31 December 2018 (continued)
(Expressed in Renminbi Yuan)
Total
Retained
Note Share capital Capital reserve Surplus reserve shareholders’
earnings
equity
IV、 Balance at the 685,464,000 557,222,454 342,732,000 7,811,100,555 9,396,519,009
beginning of the year
V、 Changes in equity for
the year
1. Total
comprehensive - - - 969,588,573 969,588,573
income
2. Appropriation of
profits
Distributions to
- - - (342,732,000) (342,732,000)
shareholders
VI、 Balance at the end of 685,464,000 557,222,454 342,732,000 8,437,957,128 10,023,375,582
the year
These financial statements were approved by the Board of Directors of the Company on 22
April 2020.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal The person in The head of the
Representative charge accounting
of accounting affairs department
(Signature and (Signature and (Signature and
stamp) stamp) stamp)
The notes on pages 20 to 122 form part of these financial statements.
Page 19
Yantai Changyu Pioneer Wine Company Limited
Notes to the financial statements
(Expressed in Renminbi Yuan unless otherwise indicated)
I. Company status
Yantai Changyu Pioneer Wine Co., Ltd. (the "Company” or the “Joint Stock Company”) was
incorporated as a joint stock limited company in accordance with the Company Law of the
People's Republic of China (the "PRC") in a reorganisation carried out by Yantai Changyu
Group Co., Ltd. ("Changyu Group"), in which Changyu Group Company injected certain
assets and liabilities in relation to the brandy, wine, and sparkling wine production and sales
businesses to the Company. The Company and its subsidiaries (the "Group") are principally
engaged in the production and sales of wine, brandy, sparkling wine, grape growing and
acquisition, as well as travel resource development, etc. Registration place of the Company
is Yantai, Shandong. Headquarter of the Company is located at No. 56 Da Ma Lu, Zhifu
District, Yantai, Shandong, PRC.
As at 31 December 2019 the total shares issued by the Company amounts to 685,464,000
shares. Please refer to Note VI. 30 in detail.
The holding company of the Group is Changyu Group Company, which is jointly controlled by
Yantai GuoFeng Investment Holding Ltd, ILLVA SARONNO HOLDING SPA, International
Finance Corporation and Yantai Yuhua Investment and Development Company Limited.
The financial statements have been authorised by the board of directors on 22 April 2020.
According to the Company's articles of association, the financial statements will be reviewed
by shareholders on the shareholder's meeting.
For consolidation scope of the year, please refer to Note VII "Equity in other entities" in detail.
For detail of changes in consolidation scope of the year, please refer to Note VI "Change in
consolidation scope".
II. Basis of preparation
The financial statements have been prepared on the going concern basis.
Since 1 January 2019, the Company has adopted new financial instrument standards revised
by MOF in 2017, including CAS 22 — Recognition and Measurement of Financial
Instruments (See Note III. 32(1)).
The Group has not adopted CAS No.14 — Revenue and CAS No. 22 — Lease revised in
2017 and 2018 respectively.
Page 20
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
III. Significant accounting policies and accounting estimates
1 Statement of compliance
The financial statements have been prepared in accordance with the requirements of
Accounting Standards for Business Enterprises or referred to as China Accounting Standards
(“CAS”) issued by the MOF. These financial statements present truly and completely the
consolidated financial position and financial position of the Company as at 31 December
2019, and the consolidated financial performance and financial performance and the
consolidated cash flows and cash flows of the Company for the year then ended.
These financial statements also comply with the disclosure requirements of “Regulation on
the Preparation of Information Disclosures by Companies Issuing Securities, No. 15: General
Requirements for Financial Reports” as revised by the China Securities Regulatory
Commission (“CSRC”) in 2014.
2 Accounting period
The accounting period is from 1 January to 31 December.
3 Operating cycle
The Company takes the period from the acquisition of assets for processing to until the
ultimate realisation of cash or cash equivalents as a normal operating cycle. The operating
cycle of the Company is 12 months.
4 Functional currency
Renminbi ("RMB") is the currency of the primary economic environment in which the
Company and its domestic subsidiaries operate. Therefore, the Company and its domestic
subsidiaries choose RMB as their functional currency. Overseas subsidiaries of the Company
adopt Euro, Chilean Peso and Australian Dollar as their functional currencies on the basis of
the primary economic environment in which they operate. The Company adopts RMB to
prepare its financial statements.
5 Accounting treatments for business combinations involving entities under common control
and not under common control
(1) Business combinations involving entities under common control
A business combination involving entities under common control is a business combination in
which all of the combining entities are ultimately controlled by the same party or parties both
before and after the business combination, and that control is not transitory. The assets
acquired and liabilities assumed are measured based on their carrying amounts in the
consolidated financial statements of the ultimate controlling party at the combination date.
The difference between the carrying amount of the net assets acquired and the consideration
paid for the combination (or the total par value of shares issued) is adjusted against share
premium in the capital reserve, with any excess adjusted against retained earnings. Any
costs directly attributable to the combination are recognised in profit or loss when incurred.
The combination date is the date on which one combining entity obtains control of other
combining entities.
Page 21
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(2) Business combinations involving entities not under common control
A business combination involving entities not under common control is a business
combination in which all of the combining entities are not ultimately controlled by the same
party or parties both before and after the business combination. Where (1) the aggregate of
the acquisition-date fair value of assets transferred (including the acquirer’s previously held
equity interest in the acquiree), liabilities incurred or assumed, and equity securities issued
by the acquirer, in exchange for control of the acquiree, exceeds (2) the acquirer’s interest in
the acquisition-date fair value of the acquiree’s identifiable net assets, the difference is
recognised as goodwill (see Note III.18). If (1) is less than (2), the difference is recognised in
profit or loss for the current period. Other acquisition-related costs are expensed when
incurred. The acquiree’s identifiable asset, liabilities and contingent liabilities, if the
recognition criteria are met, are recognised by the Group at their acquisition-date fair value.
The acquisition date is the date on which the acquirer obtains control of the acquiree.
For a business combination involving entities not under common control and achieved in
stages, the Group remeasures its previously-held equity interest in the acquiree to its
acquisition-date fair value and recognises any resulting difference between the fair value and
the carrying amount as investment income or other comprehensive income for the current
period. In addition, any amount recognised in other comprehensive income that may be
reclassified to profit or loss, in prior reporting periods relating to the previously-held equity
interest, and any other changes in the owners’ equity under equity accounting, are
transferred to investment income in the period in which the acquisition occurs (see Note
III.11(2)(b)). If equity interests of the acquiree held before acquisition-date were equity
instrument investments measured at fair value through other comprehensive income, other
comprehensive income recognised shall be moved to retained earnings on acquisition-date.
6 Consolidated financial statements
(1) General principles
The scope of consolidated financial statements is based on control and the consolidated
financial statements comprise the Company and its subsidiaries. Control exists when the
investor has all of following: power over the investee; exposure, or rights, to variable returns
from its involvement with the investee and has the ability to affect those returns through its
power over the investee. When assessing whether the Group has power, only substantive
rights (held by the Group and other parties) are considered. The financial position, financial
performance and cash flows of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that control ceases.
Non-controlling interests are presented separately in the consolidated balance sheet within
shareholders’ equity. Net profit or loss attributable to non-controlling shareholders is
presented separately in the consolidated income statement below the net profit line item.
Total comprehensive income attributable to non-controlling shareholders is presented
separately in the consolidated income statement below the total comprehensive income line
item.
When the amount of loss for the current period attributable to the non-controlling
shareholders of a subsidiary exceeds the non-controlling shareholders’ share of the opening
owners’ equity of the subsidiary, the excess is still allocated against the non-controlling
interests.
When the accounting period or accounting policies of a subsidiary are different from those of
the Company, the Company makes necessary adjustments to the financial statements of the
subsidiary based on the Company’s own accounting period or accounting policies. Intra-
group balances and transactions, and any unrealised profit or loss arising from intra-group
transactions, are eliminated when preparing the consolidated financial statements.
Unrealised losses resulting from intra-group transactions are eliminated in the same way as
unrealised gains, unless they represent impairment losses that are recognised in the financial
statements.
Page 22
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(2) Subsidiaries acquired through a business combination
Where a subsidiary was acquired during the reporting period, through a business
combination involving entities under common control, the financial statements of the
subsidiary are included in the consolidated financial statements based on the carrying
amounts of the assets and liabilities of the subsidiary in the financial statements of the
ultimate controlling party as if the combination had occurred at the date that the ultimate
controlling party first obtained control. The opening balances and the comparative figures of
the consolidated financial statements are also restated.
Where a subsidiary was acquired during the reporting period, through a business
combination involving entities not under common control, the identifiable assets and liabilities
of the acquired subsidiaries are included in the scope of consolidation from the date that
control commences, based on the fair value of those identifiable assets and liabilities at the
acquisition date.
(3) Disposal of subsidiaries
When the Group loses control over a subsidiary, any resulting disposal gains or losses are
recognised as investment income for the current period. The remaining equity investment is
re-measured at its fair value at the date when control is lost, any resulting gains or losses are
also recognised as investment income for the current period.
When the Group loses control of a subsidiary in multiple transactions in which it disposes of
its long-term equity investment in the subsidiary in stages, the following are considered to
determine whether the Group should account for the multiple transactions as a bundled
transaction:
- arrangements are entered into at the same time or in contemplation of each other;
- arrangements work together to achieve an overall commercial effect;
- the occurrence of one arrangement is dependent on the occurrence of at least one other
arrangement;
- one arrangement considered on its own is not economically justified, but it is economically
justified when considered together with other arrangements.
If each of the multiple transactions does not form part of a bundled transaction, the
transactions conducted before the loss of control of the subsidiary are accounted for in
accordance with the accounting policy for partial disposal of equity investment in subsidiaries
where control is retained (see Note III.6(4)).
If each of the multiple transactions forms part of a bundled transaction which eventually
results in the loss of control in the subsidiary, these multiple transactions are accounted for
as a single transaction. In the consolidated financial statements, the difference between the
consideration received and the corresponding proportion of the subsidiary’s net assets
(calculated continuously from the acquisition date) in each transaction prior to the loss of
control shall be recognised in other comprehensive income and transferred to profit or loss
when the parent eventually loses control of the subsidiary.
(4) Changes in non-controlling interests
Where the Company acquires a non-controlling interest from a subsidiary’s non-controlling
shareholders or disposes of a portion of an interest in a subsidiary without a change in
control, the difference between the proportion interests of the subsidiary’s net assets being
acquired or disposed and the amount of the consideration paid or received is adjusted to the
capital reserve (share premium) in the consolidated balance sheet, with any excess adjusted
to retained earnings.
Page 23
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
7 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits that can be readily withdraw on
demand, and short-term, highly liquid investments that are readily convertible into known
amounts of cash and are subject to an insignificant risk of change in value.
8 Foreign currency transactions and translation of foreign currency financial statements
When the Group receives capital in foreign currencies from investors, the capital is translated
to Renminbi at the spot exchange rate at the date of the receipt. Other foreign currency
transactions are, on initial recognition, translated to Renminbi at the spot exchange rates.
Monetary items denominated in foreign currencies are translated to Renminbi at the spot
exchange rate at the balance sheet date. The resulting exchange differences are generally
recognised in profit or loss, unless they arise from the re-translation of the principal and
interest of specific borrowings for the acquisition and construction of qualifying assets (see
Note III. 15)). Non-monetary items that are measured at historical cost in foreign currencies
are translated to Renminbi using the exchange rate at the transaction date.
In translating the financial statements of a foreign operation, assets and liabilities of foreign
operation are translated to Renminbi at the spot exchange rate at the balance sheet date.
Equity items, excluding retained earnings and the translation differences in other
comprehensive income, are translated to Renminbi at the spot exchange rates at the
transaction dates. Income and expenses in the income statement are translated to Renminbi
at the spot exchange rates at the transaction dates. The resulting translation differences are
recognised in other comprehensive income. The translation differences accumulated in other
comprehensive income with respect to a foreign operation are transferred to profit or loss in
the period when the foreign operation is disposed.
9 Financial instruments
Financial instruments include cash at bank and on hand, investments in debt and equity
securities other than those classified as long-term equity investments (see Note III.11),
receivables, payables, loans and borrowings and share capital.
(1) Recognition and initial measurement of financial assets and financial liabilities
A financial asset or financial liability is recognised in the balance sheet when the Group
becomes a party to the contractual provisions of a financial instrument.
A financial assets (unless it is a trade receivable without a significant financing component)
and financial liabilities is measured initially at fair value. For financial assets and financial
liabilities at fair value through profit or loss, any related directly attributable transaction costs
are charged to profit or loss; for other categories of financial assets and financial liabilities,
any related directly attributable transaction costs are included in their initial costs. Accounts
receivable containing no significant financing component are measured initially at transaction
prices determined by the accounting policies set out in Note III.22.
Page 24
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(2) Classification and subsequent measurement of financial assets
(a) Classification of financial assets
The classification of financial assets is generally based on the business model in which
a financial asset is managed and its contractual cash flow characteristics. On initial
recognition, a financial asset is classified as measured at amortised cost, at fair value
through other comprehensive income (“FVOCI”), or at fair value through profit or loss
(“FVTPL”).
Financial assets are not reclassified subsequent to their initial recognition unless the
Group changes its business model for managing financial assets in which case all
affected financial assets are reclassified on the first day of the first reporting period
following the change in the business model.
A financial asset is measured at amortised cost if it meets both of the following
conditions and is not designated as at FVTPL:
- it is held within a business model whose objective is to hold assets to collect
contractual cash flows; and
- its contractual terms give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and
is not designated as at FVTPL:
- it is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets; and
- its contractual terms give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Group may
irrevocably elect to present subsequent changes in the investment’s fair value in other
comprehensive income. This election is made on an investment-by-investment basis.
The instrument meets the definition of equity from the perspective of the issuer.
All financial assets not classified as measured at amortised cost or FVOCI as
described above are measured at FVTPL. On initial recognition, the Group may
irrevocably designate a financial asset that otherwise meets the requirements to be
measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or
significantly reduces an accounting mismatch that would otherwise arise.
Page 25
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
The business model refers to how the Group manages its financial assets in order to
generate cash flows. That is, the Group’s business model determines whether cash
flows will result from collecting contractual cash flows, selling financial assets or both.
The Group determines the business model for managing the financial assets according
to the facts and based on the specific business objective for managing the financial
assets determined by the Group’s key management personnel.
In assessing whether the contractual cash flows are solely payments of principal and
interest, the Group considers the contractual terms of the instrument. For the purposes
of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial
recognition. ‘Interest’ is defined as consideration for the time value of money and for
the credit risk associated with the principal amount outstanding during a particular
period of time and for other basic lending risks and costs, as well as a profit margin.
The Group also assesses whether the financial asset contains a contractual term that
could change the timing or amount of contractual cash flows such that it would not
meet this condition.
(b) Subsequent measurement of financial assets
- Financial assets at FVTPL
These financial assets are subsequently measured at fair value. Net gains and
losses, including any interest or dividend income, are recognised in profit or loss
unless the financial assets are part of a hedging relationship.
- Financial assets at amortised cost
These assets are subsequently measured at amortised cost using the effective
interest method. A gain or loss on a financial asset that is measured at amortised
cost and is not part of a hedging relationship shall be recognised in profit or loss
when the financial asset is derecognised, through the amortisation process or in
order to recognise impairment gains or losses.
- Debt investments at FVOCI
These assets are subsequently measured at fair value. Interest income calculated
using the effective interest method, impairment and foreign exchange gains and
losses are recognised in profit or loss. Other net gains and losses are recognised in
other comprehensive income. On derecognition, gains and losses accumulated in
other comprehensive income are reclassified to profit or loss.
- Equity investments at FVOCI
These assets are subsequently measured at fair value. Dividends are recognised as
income in profit or loss. Other net gains and losses are recognised in other
comprehensive income. On derecognition, gains and losses accumulated in other
comprehensive income are reclassified to retained earnings.
Page 26
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(3) Classification and subsequent measurement of financial liabilities
Financial liabilities are classified as measured at FVTPL or amortised cost by the Group.
- Financial liabilities at FVTPL
A financial liability is classified as at FVTPL if it is classified as held-for-trading (including
derivative financial liability) or it is designated as such on initial recognition.
Financial liabilities at FVTPL are subsequently measured at fair value and net gains and
losses, including any interest expense, are recognised in profit or loss, unless the financial
liabilities are part of a hedging relationship.
- Financial liabilities at amortised cost
These financial liabilities are subsequently measured at amortised cost using the effective
interest method.
(4) Offsetting
Financial assets and financial liabilities are generally presented separately in the balance
sheet, and are not offset. However, a financial asset and a financial liability are offset and the
net amount is presented in the balance sheet when both of the following conditions are
satisfied:
- The Group currently has a legally enforceable right to set off the recognised amounts；
- The Group intends either to settle on a net basis, or to realise the financial asset and
settle the financial liability simultaneously.
(5) Derecognition of financial assets and financial liabilities
Financial asset is derecognised when one of the following conditions is met:
- the Group’s contractual rights to the cash flows from the financial asset expire;
- the financial asset has been transferred and the Group transfers substantially all of the
risks and rewards of ownership of the financial asset; or；
- the financial asset has been transferred, although the Group neither transfers nor retains
substantially all of the risks and rewards of ownership of the financial asset, it does not
retain control over the transferred asset.
Where a transfer of a financial asset in its entirety meets the criteria for derecognition, the
difference between the two amounts below is recognised in profit or loss:
- the carrying amount of the financial asset transferred measured at the date of
derecognition;
- the sum of the consideration received from the transfer and, when the transferred financial
asset is a debt investment at FVOCI, any cumulative gain or loss that has been
recognised directly in other comprehensive income for the part derecognised.
Page 27
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
The Group derecognises a financial liability (or part of it) only when its contractual obligation
(or part of it) is extinguished.
(6) Impairment
The Group recognises loss allowances for expected credit loss (ECL) on:
- financial assets measured at amortised cost;
- financial investments at fair value through other comprehensive income
Financial assets measured at fair value, including debt investments or equity securities at
FVPL, equity securities designated at FVOCI and derivative financial assets, are not subject
to the ECL assessment.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the
present value of all cash shortfalls (i.e. the difference between the cash flows due to the
entity in accordance with the contract and the cash flows that the Group expects to receive).
The maximum period considered when estimating ECLs is the maximum contractual period
(including extension options) over which the Group is exposed to credit risk.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life
of a financial instrument.
12-month ECLs are the portion of ECLs that result from default events that are possible
within the 12 months after the balance sheet date (or a shorter period if the expected life of
the instrument is less than 12 months).
For accounts receivable, loss allowance always measured at an amount equal to lifetime
ECLs. ECLs on these financial assets are estimated using a provision matrix based on the
Group’s historical credit loss experience, adjusted for factors that are specific to the debtors
and an assessment of both the current and forecast general economic conditions at the
balance sheet date.
For assets other than accounts receivable that meet one of the following conditions, loss
allowance are measured at an amount equal to 12-month ECLs. For all other financial
instruments, the Group recognises a loss allowance equal to lifetime ECLs:
- If the financial instrument is determined to have low credit risk at the balance sheet date;
- If the credit risk on a financial instrument has not increased significantly since initial
recognition.
Page 28
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
Financial instruments that have low credit risk
The credit risk on a financial instrument is considered low if the financial instrument has a low
risk of default, the borrower has a strong capacity to meet its contractual cash flow
obligations in the near term and adverse changes in economic and business conditions in the
longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its
contractual cash flow obligations.
Significant increases in credit risk
In assessing whether the credit risk of a financial instrument has increased significantly since
initial recognition, the Group compares the risk of default occurring on the financial
instrument assessed at the balance sheet date with that assessed at the date of initial
recognition.
When determining whether the credit risk of a financial asset has increased significantly
since initial recognition and when estimating ECL, the Group considers reasonable and
supportable information that is relevant and available without undue cost or effort, including
forward-looking information. In particular, the following information is taken into account:
- failure to make payments of principal or interest on their contractually due dates;
- an actual or expected significant deterioration in a financial instrument’s external or
internal credit rating (if available);
- an actual or expected significant deterioration in the operating results of the debtor; and
- existing or forecast changes in the technological, market, economic or legal environment
that have a significant adverse effect on the debtor’s ability to meet its obligation to the
Group.
Depending on the nature of the financial instruments, the assessment of a significant
increase in credit risk is performed on either an individual basis or a collective basis. When
the assessment is performed on a collective basis, the financial instruments are grouped
based on shared credit risk characteristics, such as past due status and credit risk ratings.
The Group assumes that the credit risk on a financial asset has increased significantly if it is
more than 30 days past due.
Credit-impaired financial assets
At each balance sheet date, the Group assesses whether financial assets carried at
amortised cost and debt investments at FVOCI are credit-impaired. A financial asset is
‘credit-impaired’ when one or more events that have a detrimental impact on the estimated
future cash flows of the financial asset have occurred. Evidence that a financial asset is
credit-impaired includes the following observable data:
- significant financial difficulty of the borrower or issuer;
- a breach of contract, such as a default or delinquency in interest or principal payments;
- for economic or contractual reasons relating to the borrower’s financial difficulty, the
Group having granted to the borrower a concession that would not otherwise consider;
- it is probable that the borrower will enter bankruptcy or other financial reorganisation; or
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Financial statements for the year ended 31 December 2019
- the disappearance of an active market for that financial asset because of financial
difficulties.
Presentation of allowance for ECL
ECLs are remeasured at each balance sheet date to reflect changes in the financial
instrument’s credit risk since initial recognition. Any change in the ECL amount is recognised
as an impairment gain or loss in profit or loss. The Group recognises an impairment gain or
loss for all financial instruments with a corresponding adjustment to their carrying amount
through a loss allowance account, except for debt investments that are measured at FVOCI,
for which the loss allowance is recognised in other comprehensive income.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the
extent that there is no realistic prospect of recovery. A write-off constitutes a derecognition
event. This is generally the case when the Group determines that the debtor does not have
assets or sources of income that could generate sufficient cash flows to repay the amounts
subject to the write-off. However, financial assets that are written off could still be subject to
enforcement activities in order to comply with the Group’s procedures for recovery of
amounts due.
Subsequent recoveries of an asset that was previously written off are recognised as a
reversal of impairment in profit or loss in the period in which the recovery occurs.
(7) Equity instrument
The consideration received from the issuance of equity instruments net of transaction costs is
recognised in shareholders’ equity. Consideration and transaction costs paid by the Company
for repurchasing self-issued equity instruments are deducted from shareholders’ equity.
When the Company repurchases its own shares, those shares are treated as treasury
shares. All expenditure relating to the repurchase is recorded in the cost of the treasury
shares, with the transaction recording in the share register. Treasury shares are excluded
from profit distributions and are presented as a deduction under shareholders’ equity in the
balance sheet.
10 Inventories
(1) Classification and cost
Inventories include raw materials, work in progress and reusable materials. Inventories are
initially measured at cost. Cost of inventories comprises all costs of purchase, costs of
conversion and other expenditure incurred in bringing the inventories to their present location
and condition. In addition to the purchase cost of raw materials, work in progress and
finished goods include direct labour costs and an appropriate allocation of production
overheads.
Agricultural products harvested are reported in accordance with the CAS No.1 - Inventories.
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(2) Measurement method of cost of inventories
Cost of inventories is calculated using the weighted average method.
Consumables including low-value consumables and packaging materials are amortised when
they are used. The amortisation charge is included in the cost of the related assets or
recognised in profit or loss for the current period.
(3) Basis for determining the net realisable value and method for provision for obsolete
inventories
At the balance sheet date, inventories are carried at the lower of cost and net realisable
value.
Net realisable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale and
relevant taxes. The net realisable value of materials held for use in the production is
measured based on the net realisable value of the finished goods in which they will be
incorporated. The net realisable value of the inventory held to satisfy sales or service
contracts is measured based on the contract price, to the extent of the quantities specified in
sales contracts, and the excess portion of inventories is measured based on general selling
prices.
Any excess of the cost over the net realisable value of each item of inventories is recognised
as a provision for impairment, and is recognised in profit or loss.
(4) Inventory count system
The Group maintains a perpetual inventory system.
11 Long-term equity investments
(1) Investment cost of long-term equity investments
(a) Long-term equity investments acquired through a business combination
- The initial cost of a long-term equity investment acquired through a business
combination involving entities under common control is the Company’s share of the
carrying amount of the subsidiary’s equity in the consolidated financial statements of
the ultimate controlling party at the combination date. The difference between the
initial investment cost and the carrying amount of the consideration given is adjusted
to the share premium in the capital reserve, with any excess adjusted to retained
earnings. For a long-term equity investment in a subsidiary acquired through a
business combination achieved in stages which do not form a bundled transaction
and involving entities under common control, the Company determines the initial
cost of the investment in accordance with the above policies. The difference
between this initial cost and the sum of the carrying amount of previously-held
investment and the consideration paid for the shares newly acquired is adjusted to
capital premium in the capital reserve, with any excess adjusted to retained
earnings.
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- For a long-term equity investment obtained through a business combination not
involving enterprises under common control, the initial cost comprises the aggregate
of the fair value of assets transferred, liabilities incurred or assumed, and equity
securities issued by the Company, in exchange for control of the acquiree. For a
long-term equity investment obtained through a business combination not involving
entities under common control and achieved through multiple transactions in stages
which do not form a bundled transaction, the initial cost comprises the carrying
amount of the previously-held equity investment in the acquiree immediately before
the acquisition date, and the additional investment cost at the acquisition date.
(b) Long-term equity investments acquired other than through a business combination
- A long-term equity investment acquired other than through a business combination
is initially recognised at the amount of cash paid if the Group acquires the
investment by cash, or at the fair value of the equity securities issued if an
investment is acquired by issuing equity securities.
(2) Subsequent measurement of long-term equity investment
(a) Investments in subsidiaries
In the Company’s separate financial statements, long-term equity investments in
subsidiaries are accounted for using the cost method unless the investment is
classified as held for sale (See Note III. 27). Except for cash dividends or profit
distributions declared but not yet distributed that have been included in the price or
consideration paid in obtaining the investments, the Company recognises its share of
the cash dividends or profit distributions declared by the investee as investment income
for the current period.
The investments in subsidiaries are stated in the balance sheet at cost less
accumulated impairment losses.
For the impairment of the investments in subsidiaries, refer to Note III.20.
In the Group’s consolidated financial statements, subsidiaries are accounted for in
accordance with the policies described in Note III.6.
(b) Investments in joint ventures
A joint venture is an arrangement whereby the Group and other parties have joint
control (see Note III.11(3)) and rights to the net assets of the arrangement.
A long-term equity investment in a joint venture is accounted for using the equity
method for subsequent measurement, unless the investment is classified as held for
sale (see Note III.27).
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The accounting treatments under the equity method adopted by the Group are as
follows:
- Where the initial cost of a long-term equity investment exceeds the Group’s interest
in the fair value of the investee’s identifiable net assets at the date of acquisition, the
investment is initially recognised at cost. Where the initial investment cost is less
than the Group’s interest in the fair value of the investee’s identifiable net assets at
the date of acquisition, the investment is initially recognised at the investor’s share
of the fair value of the investee’s identifiable net assets, and the difference is
recognised in profit or loss.
- After the acquisition of the investment, the Group recognises its share of the
investee’s profit or loss and other comprehensive income as investment income or
losses and other comprehensive income respectively, and adjusts the carrying
amount of the investment accordingly. Once the investee declares any cash
dividends or profit distributions, the carrying amount of the investment is reduced by
the amount attributable to the Group. Changes in the Group’s share of the
investee’s owners’ equity, other than those arising from the investee’s net profit or
loss, other comprehensive income or profit distribution (referred to as “other
changes in owners’ equity”), is recognised directly in the Group’s equity, and the
carrying amount of the investment is adjusted accordingly.
- In calculating its share of the investee’s net profits or losses, other comprehensive
income and other changes in owners’ equity, the Group recognises investment
income and other comprehensive income after making appropriate adjustments to
align the accounting policies or accounting periods with those of the Group based on
the fair value of the investee’s identifiable net assets at the date of acquisition.
Unrealised profits and losses resulting from transactions between the Group and its
associates or joint ventures are eliminated to the extent of the Group’s interest in the
associates or joint ventures. Unrealised losses resulting from transactions between
the Group and its associates or joint ventures are eliminated in the same way as
unrealised gains but only to the extent that there is no impairment.
- The Group discontinues recognising its share of further losses of the investee after
the carrying amount of the long-term equity investment and any long-term interest
that in substance forms part of the Group’s net investment in the associate is
reduced to zero, except to the extent that the Group has an obligation to assume
additional losses. If the joint venture subsequently reports net profits, the Group
resumes recognising its share of those profits only after its share of the profits
equals the share of losses not recognised.
For the impairment of the investments in joint ventures and associates, refer to Note
III.20.
(3) Criteria for determining the existence of joint control over an investee
Joint control is the contractually agreed sharing of control of an arrangement, which exists
only when decisions about the relevant activities (activities with significant impact on the
returns of the arrangement) require the unanimous consent of the parties sharing control.
The following factors are usually considered when assessing whether the Group can
exercise joint control over an investee:
- Whether no single participant party is in a position to control the investee’s related
activities unilaterally;
- Whether strategic decisions relating to the investee’s related activities require the
unanimous consent of all participant parties that sharing of control.
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Significant influence is the power to participate in the financial and operating policy decisions
of an investee but does not have control or joint control over those policies.
12 Investment properties
Investment properties are properties held either to earn rental income or for capital
appreciation or for both. Investment properties are accounted for using the cost model and
stated in the balance sheet at cost less accumulated depreciation, amortisation and
impairment losses, and adopts a depreciation or amortisation policy for the investment
property which is consistent with that for buildings or land use rights, unless the investment
property is classified as held for sale (see Note III.27). For the impairment of the investment
properties, refer to Note III.20.
Estimated useful life Residual value rate Depreciation rate
Category
(years) (%) (%)
Plant and buildings 20-40 years 0 - 5% 2.4%-5.0%
13 Fixed assets
(1) Recognition of fixed assets
Fixed assets represent the tangible assets held by the Group for use in production of goods,
supply of services, for rental or for administrative purposes with useful lives over one
accounting year.
The cost of a purchased fixed asset comprises the purchase price, related taxes, and any
directly attributable expenditure for bringing the asset to working condition for its intended
use. The cost of self-constructed assets is measured in accordance with the policy set out in
Note III.14.
Where the parts of an item of fixed assets have different useful lives or provide benefits to
the Group in a different pattern, thus necessitating use of different depreciation rates or
methods, each part is recognised as a separate fixed asset.
Any subsequent costs including the cost of replacing part of an item of fixed assets are
recognised as assets when it is probable that the economic benefits associated with the
costs will flow to the Group, and the carrying amount of the replaced part is derecognised.
The costs of the day-to-day maintenance of fixed assets are recognised in profit or loss as
incurred.
Fixed assets are stated in the balance sheet at cost less accumulated depreciation and
impairment losses.
(2) Depreciation of fixed assets
The cost of a fixed asset, less its estimated residual value and accumulated impairment
losses, is depreciated using the straight-line method over its estimated useful life, unless the
fixed asset is classified as held for sale (see Note III.27).
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Financial statements for the year ended 31 December 2019
The estimated useful lives, residual value rates and depreciation rates of each class of fixed
assets are as follows:
Estimated useful life Residual value rate Depreciation rate
Class
(years) (%) (%)
Plant and buildings 20-40 years 0 - 5% 2.4%-5.0%
Machinery equipment 5-30 years 0 - 5% 3.2%-20.0%
Motor vehicles 4-12 years 0 - 5% 7.9%-25.0%
Useful lives, estimated residual values and depreciation methods are reviewed at least at
each year-end.
(3) For the impairment of the fixed assets, refer to Note III.20.
(4) Disposal of fixed assets
The carrying amount of a fixed asset is derecognised:
- when the fixed asset is holding for disposal; or
- when no future economic benefit is expected to be generated from its use or disposal.
Gains or losses arising from the retirement or disposal of an item of fixed asset are
determined as the difference between the net disposal proceeds and the carrying amount of
the item, and are recognised in profit or loss on the date of retirement or disposal.
14 Construction in progress
The cost of self-constructed assets includes the cost of materials, direct labour, capitalised
borrowing costs (see Note III.15), and any other costs directly attributable to bringing the
asset to working condition for its intended use.
A self-constructed asset is classified as construction in progress and transferred to fixed
asset when it is ready for its intended use. No depreciation is provided against construction
in progress.
Construction in progress is stated in the balance sheet at cost less accumulated impairment
losses (see Note III.20).
15 Borrowing costs
Borrowing costs incurred directly attributable to the acquisition, and construction or
production of a qualifying asset are capitalised as part of the cost of the asset. Other
borrowing costs are recognised as financial expenses when incurred.
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Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
During the capitalisation period, the amount of interest (including amortisation of any
discount or premium on borrowing) to be capitalised in each accounting period is determined
as follows:
- Where funds are borrowed specifically for the acquisition and construction or production of
a qualifying asset, the amount of interest to be capitalised is the interest expense
calculated using effective interest rates during the period less any interest income earned
from depositing the borrowed funds or any investment income on the temporary
investment of those funds before being used on the asset.
- To the extent that the Group borrows funds generally and uses them for the acquisition
and construction or production of a qualifying asset, the amount of borrowing costs eligible
for capitalisation is determined by applying a capitalisation rate to the weighted average of
the excess amounts of cumulative expenditure on the asset over the above amounts of
specific borrowings. The capitalisation rate is the weighted average of the interest rates
applicable to the general-purpose borrowings.
The effective interest rate is determined as the rate that exactly discounts estimated future
cash flow through the expected life of the borrowing or, when appropriate, a shorter period to
the initially recognised amount of the borrowings.
During the capitalisation period, exchange differences related to the principal and interest on
a specific-purpose borrowing denominated in foreign currency are capitalised as part of the
cost of the qualifying asset. The exchange differences related to the principal and interest on
foreign currency borrowings other than a specific-purpose borrowing are recognised as a
financial expense when incurred.
The capitalisation period is the period from the date of commencement of capitalisation of
borrowing costs to the date of cessation of capitalisation, excluding any period over which
capitalisation is suspended. Capitalisation of borrowing costs commences when expenditure
for the asset is being incurred, borrowing costs are being incurred and activities of
acquisition, construction or production that are necessary to prepare the asset for its
intended use are in progress, and ceases when the assets become ready for their intended
use. Capitalisation of borrowing costs should cease when the qualifying asset being
constructed or produced has reached its expected usable or saleable condition.
Capitalisation of borrowing costs is suspended when the acquisition, construction or
production activities are interrupted abnormally for a period of more than three months.
16. Biological assets
The Group's biological assets are bearer biological assets.
Bearer biological assets are those that are held for the purposes of producing agricultural
produce, rendering of services or rental. Bearer biological assets in the Group are vines.
Bearer biological assets are initially measured at cost. The cost of self-grown or self-bred
bearer biological assets represents the necessary directly attributable expenditure incurred
before satisfying the expected production and operating purpose, including capitalised
borrowing costs.
Bearer biological assets, after reaching the expected production and operating purpose, are
depreciated using the straight-line method over its estimated useful life. The estimated useful
lives, estimated net residual value rates and depreciation rates of bearer biological assets
are as follows:
Estimated useful life Estimated net Depreciation rate
Category
(years) residual value rate (%)
Vines 20 years 0% 5.0%
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Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
The Group evaluates the useful life and expected net salvage value by considering the
normal producing life of the bearer biological assets.
Useful lives, estimated residual values and depreciation methods of bearer biological assets
are reviewed at least at each year-end. Any changes should be treated as changes in
accounting estimates.
For a bearer biological asset that has been sold, damaged, dead or destroyed, any
difference between the disposal proceeds and the carrying amount of the asset (after tax
deduction) should be recognised in profit or loss for the period in which it arises.
17 Intangible assets
Intangible assets are stated in the balance sheet at cost less accumulated amortization
(where the estimated useful life is finite) and impairment losses (see Note III.20). For an
intangible asset with finite useful life, its cost estimated less residual value and accumulated
impairment losses is amortised on the straight-line method over its estimated useful life,
unless the intangible asset is classified as held for sale (see Note III.27).
The respective amortisation periods for intangible assets are as follows:
Item Amortisation period (years)
Land use rights 40-50 years
Software licenses 5-10 years
Trademarks 10
An intangible asset is regarded as having an indefinite useful life and is not amortised when
there is no foreseeable limit to the period over which the asset is expected to generate
economic benefits for the Group. At the balance sheet date, the Group had intangible assets
with infinite useful lives including the land use rights and trademarks. Land use rights with
infinite useful lives are permanent land use rights with permanent ownership held by the
Group under the relevant Chile and Australian laws arising from the Group’s acquisition of
Via Indómita, S.A., Via Dos Andes, S.A., and Bodegas Santa Alicia SPA. (collectively
referred to as the "Chile Indomita Wine Group"), and the acquisition of Kilikanoon Estate Pty
Ltd.( hereinafter referred to as the "Australia Kilikanoon Estate"), therefore there was no
amortisation. The right to use trademark refers to the trademark held by the Group arising
from the acquisition of the Chile Indomita Wine Group and the Australia Kilikanoon Estate
with infinite useful lives. The valuation of trademark was based on the trends in the market
and competitive environment, product cycle, and managing long-term development strategy.
Those basis indicated the trademark will provide net cash flows to the Group within an
uncertain period. The useful life is indefinite as it was hard to predict the period that the
trademark would bring economic benefits to the Group.
18 Goodwill
The initial cost of goodwill represents the excess of cost of acquisition over the acquirer’s
interest in the fair value of the identifiable net assets of the acquiree under a business
combination not involving entities under common control.
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Financial statements for the year ended 31 December 2019
Goodwill is not amortised and is stated in the balance sheet at cost less accumulated
impairment losses (see Note III.20). On disposal of an asset group or a set of asset groups,
any attributable goodwill is written off and included in the calculation of the profit or loss on
disposal.
19 Long-term deferred expenses
Long-term deferred expenses are amortised using a straight-line method within the benefit
period. The respective amortisation periods for such expenses are as follows:
Item Amortisation period
Land requisition fee 50 years
Land lease prepayment 50 years
Greening fee 5-20 years
Leasehold improvement 3-5 years
Others 3 years
20 Impairment of assets other than inventories and financial assets
The carrying amounts of the following assets are reviewed at each balance sheet date based
on internal and external sources of information to determine whether there is any indication
of impairment:
- fixed assets
- construction in progress
- intangible assets
- Bearer biological assets
- investment properties measured using a cost model
- long-term equity investments
- goodwill
- long-term deferred expenses, etc.
If any indication exists, the recoverable amount of the asset is estimated. In addition, the
Group estimates the recoverable amounts of goodwill and intangible assets with infinite
useful lives at each year-end, irrespective of whether there is any indication of impairment.
Goodwill is allocated to each asset group, or set of asset groups, that is expected to benefit
from the synergies of the combination for the purpose of impairment testing.
The recoverable amount of an asset (or asset group, set of asset groups) is the higher of its
fair value (see Note III.21) less costs to sell and its present value of expected future cash
flows.
An asset group is composed of assets directly related to cash-generation and is the smallest
identifiable group of assets that generates cash inflows that are largely independent of the
cash inflows from other assets or asset groups.
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Financial statements for the year ended 31 December 2019
The present value of expected future cash flows of an asset is determined by discounting the
future cash flows, estimated to be derived from continuing use of the asset and from its
ultimate disposal, to their present value using an appropriate pre-tax discount rate.
An impairment loss is recognised in profit or loss when the recoverable amount of an asset is
less than its carrying amount. A provision for impairment of the asset is recognised
accordingly. Impairment losses related to an asset group or a set of asset groups are
allocated first to reduce the carrying amount of any goodwill allocated to the asset group or
set of asset groups, and then to reduce the carrying amount of the other assets in the asset
group or set of asset groups on a pro rata basis. However, such allocation would not reduce
the carrying amount of an asset below the highest of its fair value less costs to sell (if
measurable), its present value of expected future cash flows (if determinable) and zero.
Once an impairment loss is recognised, it is not reversed in a subsequent period.
21 Fair value measurement
Unless otherwise specified, the Group measures fair value as follows:
Fair value is the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date.
When measuring fair value, the Group takes into account the characteristics of the particular
asset or liability (including the condition and location of the asset and restrictions, if any, on
the sale or use of the asset) that market participants would consider when pricing the asset
or liability at the measurement date, and uses valuation techniques that are appropriate in
the circumstances and for which sufficient data and other information are available to
measure fair value. Valuation techniques mainly include the market approach, the income
approach and the cost approach.
22 Revenue recognition
Revenue is the gross inflow of economic benefits arising in the course of the Group’s
ordinary activities when the inflows result in increase in shareholders’ equity, other than
increase relating to contributions from shareholders. Revenue is recognised in profit or loss
when it is probable that the economic benefits will flow to the Group, the revenue and costs
can be measured reliably and the following conditions are met:
(1) Sale of goods
Revenue is recognised when the general conditions stated above and the following
conditions are satisfied:
- Significant risks and rewards of ownership of goods have been transferred to the buyer;
- The Group retains neither continuing managerial involvement to the degree usually
associated with ownership nor effective control over the goods sold.
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Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
Revenue from the sale of goods is measured at the fair value of the consideration received
or receivable under the sales contract or agreement.
Sales of the Group are mainly conducted by distributors. The sales are generally completed
when the goods are delivered to distributors and are signed for acceptance.
(2) Rendering of services
Revenue is measured at the fair value of the consideration received or receivable under the
contract or agreement.
Where the outcome of a transaction involving the rendering of services can be estimated
reliably at the balance sheet date, revenue is recognised by reference to the stage of
completion based on the proportion of services performed to date to the total services to be
performed.
Where the outcome cannot be estimated reliably, revenues are recognised to the extent of
the costs incurred that are expected to be recoverable, and an equivalent amount is charged
to profit or loss as service cost; otherwise, the costs incurred are recognised in profit or loss
and no service revenue is recognised.
(3) Interest income
Interest income is recognised on a time proportion basis with reference to the principal
outstanding and the applicable effective interest rate.
23 Employee benefits
(1) Short-term employee benefits
Employee wages or salaries, bonuses, social security contributions such as medical
insurance, work injury insurance, maternity insurance and housing fund, measured at the
amount incurred or accured at the applicable benchmarks and rates, are recognised as a
liability as the employee provides services, with a corresponding charge to profit or loss or
included in the cost of assets where appropriate.
(2) Post-employment benefits – defined contribution plans
Pursuant to the relevant laws and regulations of the People’s Republic of China, the Group
participated in a defined contribution basic pension insurance plan in the social insurance
system established and managed by government organisations. The Group makes
contributions to basic pension insurance plans based on the applicable benchmarks and
rates stipulated by the government. Basic pension insurance contributions payable are
recognised as a liability as the employee provides services, with a corresponding charge to
profit or loss or included in the cost of assets where appropriate.
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Financial statements for the year ended 31 December 2019
(3) Termination benefits
When the Group terminates the employment with employees before the employment
contracts expire, or provides compensation under an offer to encourage employees to accept
voluntary redundancy, a provision is recognised with a corresponding expense in profit or
loss at the earlier of the following dates:
- When the Group cannot unilaterally withdraw the offer of termination benefits because of
an employee termination plan or a curtailment proposal;
- When the Group has a formal detailed restructuring plan involving the payment of
termination benefits and has raised a valid expectation in those affected that it will carry
out the restructuring by starting to implement that plan or announcing its main features to
those affected by it.
24 Government grants
Government grants are non-reciprocal transfers of monetary or non-monetary assets from
the government to the Group except for capital contributions from the government in the
capacity as an investor in the Group.
A government grant is recognised when there is reasonable assurance that the grant will be
received and that the Group will comply with the conditions attaching to the grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the
amount received or receivable. If a government grant is in the form of a transfer of a non-
monetary asset, it is measured at fair value.
Government grants related to assets are grants whose primary condition is that the Group
qualifying for them should purchase, construct or otherwise acquire long-term assets.
Government grants related to income are grants other than those related to assets. A
government grant related to an asset is recognised as deferred income and amortised over
the useful life of the related asset on a reasonable and systematic manner as other income
or non-operating income. A grant that compensates the Company for expenses or losses to
be incurred in the future is recognised as deferred income, and included in other income or
non-operating income in the periods in which the expenses or losses are recognised. Or
included in other income or non-operating income directly.
25 Income tax
Current tax and deferred tax are recognised in profit or loss except to the extent that they
relate to a business combination or items recognised directly in equity (including other
comprehensive income).
Current tax is the expected tax payable calculated at the applicable tax rate on taxable
income for the year, plus any adjustment to tax payable in respect of previous years.
At the balance sheet date, current tax assets and liabilities are offset only if the Group has a
legally enforceable right to set them off and also intends either to settle on a net basis or to
realise the asset and settle the liability simultaneously.
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Financial statements for the year ended 31 December 2019
Deferred tax assets and deferred tax liabilities arise from deductible and taxable temporary
differences respectively, being the differences between the carrying amounts of assets and
liabilities for financial reporting purposes and their tax bases, which include the deductible
losses and tax credits carried forward to subsequent periods. Deferred tax assets are
recognised to the extent that it is probable that future taxable profits will be available against
which deductible temporary differences can be utilised.
Deferred tax is not recognised for the temporary differences arising from the initial
recognition of assets or liabilities in a transaction that is not a business combination and that
affects neither accounting profit nor taxable profit (or deductible loss). Deferred tax is not
recognised for taxable temporary differences arising from the initial recognition of goodwill.
At the balance sheet date, deferred tax is measured based on the tax consequences that
would follow from the expected manner of recovery or settlement of the carrying amounts of
the assets and liabilities, using tax rates enacted at the balance sheet date that are expected
to be applied in the period when the asset is recovered or the liability is settled.
The carrying amount of a deferred tax asset is reviewed at each balance sheet date, and is
reduced to the extent that it is no longer probable that the related tax benefits will be utilised.
Such reduction is reversed to the extent that it becomes probable that sufficient taxable
profits will be available.
At the balance sheet date, deferred tax assets and deferred tax liabilities are offset if all of
the following conditions are met:
- the taxable entity has a legally enforceable right to offset current tax liabilities and current
tax assets;
- they relate to income taxes levied by the same tax authority on either:
- the same taxable entity; or
- different taxable entities which intend either to settle the current tax liabilities and
current tax assets on a net basis, or to realise the assets and settle the liabilities
simultaneously, in each future period in which significant amounts of deferred tax
liabilities or deferred tax assets are expected to be settled or recovered.
26 Operating leases and finance leases
A lease is classified as either a finance lease or an operating lease. A finance lease is a
lease that transfers substantially all the risks and rewards incidental to ownership of a leased
asset to the lessee, irrespective of whether the legal title to the asset is eventually
transferred. An operating lease is a lease other than a finance lease.
(1) Operating lease charges
Rental payments under operating leases are recognised as part of the cost of another related
asset or as expenses on a straight-line basis over the lease term. Contingent rental
payments are expensed as incurred.
Page 42
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(2) Assets leased out under operating leases
Fixed assets leased out under operating leases, except for investment properties (see Note
III.12), are depreciated in accordance with the Group’s depreciation policies described in
Note III.13(2). Impairment losses are recognised in accordance with the accounting policy
described in Note III.20. Income derived from operating leases is recognised in profit or loss
using the straight-line method over the lease term. If initial direct costs incurred in respect of
the assets leased out are material, the costs are initially capitalised and subsequently
amortised in profit or loss over the lease term on the same basis as the lease income.
Otherwise, the costs are charged to profit or loss immediately.
27 Assets held for sale
The Group classified a non-current asset or disposal group as held for sale when the
carrying amount of a non-current asset or disposal group will be recovered through a sale
transaction rather than through continuing use,.
A disposal group refers to a group of assets to be disposed of, by sale or otherwise, together
as a whole in a single transaction and liabilities directly associated with those assets that will
be transferred in the transaction.
A non-current asset or disposal group is classified as held for sale when all the following
criteria are met:
- According to the customary practices of selling such asset or disposal group in similar
transactions, the non-current asset or disposal group must be available for immediate sale
in their present condition subject to terms that are usual and customary for sales of such
assets or disposal groups;
- Its sale is highly probable, that is, the Group has made a resolution on a sale plan and has
obtained a firm purchase commitment. The sale is to be completed within one year.
Non-current assets or disposal groups held for sale are stated at the lower of carrying
amount and fair value (see Note III.21) less costs to sell (except financial assets (see Note
III.9), deferred tax assets (see Note III.25) and investment properties subsequent measured
at fair value (see Note III. 12) initially and subsequently. Any excess of the carrying amount
over the fair value (see Note III.21) less costs to sell is recognised as an impairment loss in
profit or loss.
28 Profit distributions
Dividends or profit distributions proposed in the profit appropriation plan, which will be
approved after the balance sheet date, are not recognised as a liability at the balance sheet
date but are disclosed in the notes separately.
29 Related parties
If a party has the power to control, jointly control or exercise significant influence over
another party, or vice versa, or where two or more parties are subject to common control or
joint control from another party, they are considered to be related parties. Related parties
may be individuals or enterprises. Enterprises with which the Company is under common
control only from the State and that have no other related party relationships are not
regarded as related parties.
Page 43
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
In addition to the related parties stated above, the Company determines related parties
based on the disclosure requirements of Administrative Procedures on the Information
Disclosures of Listed Companies issued by the CSRC.
30 Segment reporting
The Group is principally engaged in the production and sales of wine, brandy, and sparkling
wine in China, France, Spain, Chile and Australia. In accordance with the Group's internal
organisation structure, management requirements and internal reporting system, the Group's
operation is divided into four parts: China, Spain, France, Chile and Australia. The
management periodically evaluates segment results, in order to allocate resources and
evaluate performances. In 2019, over 89% of revenue, more than 98% of profit and over
92% of non-current assets derived from China / are located in China. Therefore the Group
does not need to disclose additional segment report information.
31 Significant accounting estimates and judgements
The preparation of the financial statements requires management to make estimates and
assumptions that affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates as well as underlying assumptions and uncertainties involved are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in any future periods affected.
(1) Significant accounting estimates
Except for accounting estimates relating to depreciation and amortisation of assets such as
investment properties, fixed assets, bearer biological assets and intangible assets (see
Notes III. 12, 13, 16 and 17) and provision for impairment of various types of assets (see
Notes V.3, 6, 7, 11, 12, 13, 14, 15 and Note XV.1 and 3). Other significant accounting
estimates are as follows:
(i) Note V. 17 – Recognition of deferred tax asset;
(ii) Note IX. – Fair value measurements of financial instruments.
32 Changes in significant accounting policies and accounting estimates
(1) Description and reasons of changes in accounting policies
In 2019, the Group has adopted the following revised accounting standards issued by the
MOF recently:
- Accounting Standard for Business Enterprises No. 22 — Recognition and Measurement of
Financial Instruments (revised), Accounting Standard for Business Enterprises No. 23 —
Transfer of Financial Instruments (revised), Accounting Standard for Business Enterprises
No. 22 — Hedging Accounting (revised) and Accounting Standard for Business
Enterprises No. 37 — Presentation of Financial Instruments (revised) (hereinafter referred
to as “new financial instrument standard”)
- Notice on Revision of the 2019 Illustrative Financial Statements (Caikuai [2019] No.6)
- Notice on Revision of Illustrative Consolidated Financial Statements (2019 version) (Cai
Kuai [2019] No. 16).
Page 44
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
- CAS No.7 – Exchange of Non-monetary Assets (Revised) (“CAS 7 (2019)”)
- CAS No.12 – Debt Restructuring (Revised) (“CAS 12 (2019)”)
(a) Presentation of financial statements
The Group has prepared financial statements for the year ended 31 December 2019 in
accordance with the financial statement format specified in Caikuai [2019] No.6 and
Caikuai [2019] No.16. The Group has applied the new presentation requirements
retrospectively.
Affected assets and liabilities items in the consolidated and company balance sheets
as at 31 December 2018:
The Group
Before After
Adjustments
adjustments adjustments
Bills and accounts receivable 530,821,071 (530,821,071) -
Bills receivable - 288,667,988 288,667,988
Accounts receivable - 242,153,083 242,153,083
Bills and accounts payable 713,572,881 (713,572,881) -
Accounts payable - 713,572,881 713,572,881
Deferred income due within one year 15,860,254 (15,860,254) -
Deferred income 70,367,039 15,860,254 86,227,293
Total 1,330,621,245 - 1,330,621,245
The Company
Before After
Adjustments
adjustments adjustments
Bills and accounts receivable 41,333,227 (41,333,227) -
Bills receivable - 39,885,254 39,885,254
Accounts receivable - 1,447,973 1,447,973
Bills and accounts payable 132,704,304 (132,704,304) -
Accounts payable - 132,704,304 132,704,304
Deferred income due within one year 3,433,054 (3,433,054) -
Deferred income 8,910,918 3,433,054 12,343,972
Total 186,381,503 - 186,381,503
Page 45
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(b) New financial instrument standards
The new financial instrument standards revise the Accounting Standard for Business
Enterprises No. 22 — Recognition and Measurement of Financial Instruments ,
Accounting Standard for Business Enterprises No. 23 — Transfer of Financial
Instruments, Accounting Standard for Business Enterprises No. 24 — Hedging and
Accounting Standard for Business Enterprises No. 37 — Presentation of Financial
Instruments issued by the MOF in 2006 (hereinafter referred to as “previous financial
instrument standards”).
The new financial instrument standards classify financial assets into three basic
categories: (1) financial assets measured at amortised cost; (2) financial assets
measured at FVOCI;(3) financial assets at FVTPL. The classification of financial assets
under new financial instruments standards is generally based on the business model in
which a financial asset is managed and its contractual cash flow characteristics. New
financial instruments standards cancel the previous categories of held to maturity
investments, loans and receivables and available for sale financial assets under
previous financial instruments standards. Under new financial instruments standards,
derivatives embedded in contracts where the host is a financial asset are never
separated. Instead, the hybrid financial instrument as a whole is assessed for
classification.
New financial instruments standards replace the “incurred loss” model in previous
financial instruments standards with the ECL model. The ECL model requires an
ongoing measurement of credit risk associated with a financial asset and therefore
recognises ECLs earlier than under the “incurred loss” accounting model in previous
financial instruments standards.
Retrospective adjustments were made to classification and measurement (including
impairment) of financial instruments not derecognised on the date of effectiveness of
the standards (i.e. 1 January 2019) according to transition requirements of the new
financial instrument standards. The Group has not yet adjusted the financial statement
and recognises the difference between the previous carrying amount of financial
instruments and the new carrying amount on the date of effectiveness of the standards
as retained earnings or other comprehensive income at the beginning 2019.
Page 46
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(i) The impact of adoption new financial instrument standards on the consolidated
and company balance sheets as at 31 December 2018 after retrospective
adjustments in accordance with Caikuai [2019] No.6 and Caikuai [2019] No.16
are summarised as follows:
The Group
31 December 2018 1 January 2019 Adjustments
Assets
Current assets
Bills receivable 288,667,988 - (288,667,988)
Accounts receivable 242,153,083 232,099,034 (10,054,049)
Receivables under financing - 288,667,988 288,667,988
Available-for-sale financial assets 467,251 - (467,251)
Other non-current financial
- 467,251 467,251
assets
Deferred tax assets 285,436,259 287,949,771 2,513,512
The Company
31 December 2018 1 January 2019 Adjustments
Assets
Bills receivable 39,885,254 - (39,885,254)
Receivables under financing - 39,885,254 39,885,254
(ii) Impact of classification of financial instruments
The Group endorses some bank acceptance bills according to its daily capital
management needs. Bank acceptance bills of the Group are managed within a
business model whose objective is to collect contractual cash flows and sell
the financial asset. As at 1 January 2019, the Group reclassified bank
acceptance bills of its subsidiaries of RMB288,667,988 to financial assets at
fair value through other comprehensive income and presented as receivables
under financing.
As at 31 December 2018, the carrying amount of unlisted equity investment
measured at cost held by the Group was RMB467,251. As at 1 January 2019,
the Group designated the equity investment as financial assets at fair value
through profit or loss and presented as other non-current financial assets.
Page 47
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
Based on balance sheets as at 31 December 2018 after retrospective adjustments in accordance with Caikuai [2019] No.6 and
Caikuai [2019] No.16, results of the classification and measurement of financial assets in accordance with the previous financial
instrument standards and the new financial instrument standards are summarised as follows:
The Group
Previous financial instrument standards New financial instrument standards
(31 December 2018) (1 January 2019)
Item Type of measurement Carrying amount Item Type of measurement Carrying amount
Cash at bank and on Amortised cost (loans and Cash at bank and on
1,475,700,477 Amortised cost 1,475,700,477
hand receivables) hand
Measured at fair value
Amortised cost (loans and Receivables under
Bills receivable 288,667,988 through other 288,667,988
receivables) financing
comprehensive income
Amortised cost (loans and
Accounts receivable 242,153,083 Accounts receivable Amortised cost 232,099,034
receivables)
Amortised cost (loans and
Other receivables 22,636,086 Other receivables Amortised cost 22,636,086
receivables)
Measured at fair value
Available-for-sale Measured at cost (equity Other non-current
467,251 through profit or loss 467,251
financial assets instrument) financial assets
(standard requirements)
Amortised cost (loans and
Other current assets 258,676,396 Other current assets Amortised cost 258,676,396
receivables)
Page 48
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
The Company
Previous financial instrument standards New financial instrument standards
(31 December 2018) (1 January 2019)
Item Type of measurement Carrying amount Item Type of measurement Carrying amount
Cash at bank and on Amortised cost (loans and Cash at bank and on
624,588,809 Amortised cost 624,588,809
hand receivables) hand
Measured at fair value
Amortised cost (loans and Receivables under
Bills receivable 39,885,254 through other 39,885,254
receivables) financing
comprehensive income
Amortised cost (loans and
Accounts receivable 1,447,973 Accounts receivable Amortised cost 1,447,973
receivables)
Amortised cost (loans and
Other receivables 1,025,643,356 Other receivables Amortised cost 1,025,643,356
receivables)
Amortised cost (loans and
Other current assets 24,704,844 Other current assets Amortised cost 24,704,844
receivables)
Page 49
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
Based on balance sheets as at 31 December 2018 after retrospective
adjustments in accordance with Caikuai [2019] No.6 and Caikuai [2019] No.16,
adjustment of the carrying amount of the Previous financial assets to the carrying
amount of the new financial assets classified and measured in accordance with
the new financial instruments standards is as follows:
The Group
Carrying amount Carrying amount
under original under new financial
financial instruments Reclassification Remeasurement instruments
standards (31 standards (31
December 2018) December 2019)
Amortised cost
Receivables
Balance under previous
financial instruments 242,153,083 - - -
standards
Re-measurement: ECL
- - (10,054,049) -
allowance
Balance under new financial
- - - 232,099,034
instruments standards
Bills receivable
Balance under previous
financial instruments 288,667,988 - - -
standards
Less: transferred to FVOCI
(new financial - (288,667,988) - -
instrument standards)
Balance under new financial
- - - -
instruments standards
Available-for-sale financial
assets
Balance under previous
financial instruments 467,251 - - -
standards
Less: transferred to FVTPL
(new financial - (467,251) - -
instrument standards)
Balance under new financial
- - - -
instruments standards
FVOCI
Receivables under financing
Balance under previous
financial instruments - - - -
standards
Add: Transferred from bills
receivable (under
- 288,667,988 - -
previous financial
instrument standards)
Balance under new financial
- - - 288,667,988
instruments standards
FVTPL
Financial assets held for
trading (including other
non-current financial
assets)
Balance under previous
financial instruments - - - -
standards
Add: transferred from
available-for-sale
financial assets (under - 467,251 - -
previous financial
instrument standards)
Balance under new financial
- - - 467,251
instruments standards
Page 50
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
The Company
Carrying amount
Balance under
under new financial
previous financial
Reclassification Remeasurement instruments
instruments standards
standards (31
(31 December 2018)
December 2019)
Amortised cost
Bills receivable
Balance under previous
financial instruments 39,885,254 - - -
standards
Less: transferred to FVOCI
(new financial - (39,885,254) - -
instrument standards)
Balance under new financial
- - - -
instruments standards
FVOCI
Receivables under financing
Balance under previous
financial instruments - - - -
standards
Add: Transferred from bills
receivable (under
- 39,885,254 - -
previous financial
instrument standards)
按新金融工具准则列示的余额 - - - 39,885,254
(iii) Impacts of adoption of ECL measurement
The Group applies the new ECL model to the following items:
- financial assets measured at amortised cost;
- financial investments at fair value through other comprehensive income.
The new ECL model do not apply to investments in equity instruments.
Based on balance sheets as at 31 December 2018 after retrospective
adjustments in accordance with Caikuai [2019] No.6 and Caikuai [2019] No.16,
adjustment of the closing amount of the previous financial instrument provision
for impairments to the new provision for impairments classified and measured in
accordance with the new financial instrument standards is as follows:
The Group
Provision for losses
under previous financial
Loss allowance
instrument standards /
under new financial
Estimated liabilities
Type of measurement Reclassification Remeasurement instruments
recognised in
standards
accordance with
(1 January 2019)
contingency standard
(31 December 2018)
Loans and receivables
(previous financial
instrument standards) /
financial assets
measured at amortised
cost
(new financial instrument
standards)
Accounts receivable - - 10,054,049 10,054,049
Total - - 10,054,049 10,054,049
Page 51
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(c) CAS 7 (2019)
The CAS 7 (2019) specifies the applicability of standard for exchange of non-monetary
assets and clarifies the accounting treatment for the situation in which the recognising
timing of assets received is inconsistent with the derecognising timing of assets given
up. The standard also revises the measurement principle for several assets to be
received or given up at the same time during exchange of non-monetary assets at fair
value. Additionally, the standard includes disclosure requirements on whether the
exchange of non-monetary assets has commercial substance and the reasons behind
this determination.
The effective date of CAS 7 (2019) is 10 June 2019. Exchanges of non-monetary
assets that occurred between 1 January 2019 and the effective date shall be adjusted
according to CAS 7 (2019). Retrospective adjustment is not required for exchanges of
non-monetary assets prior to 1 January 2019. The adoption of the Standard did not
have any material impact on the financial position and financial performance of the
Group.
(d) CAS 12 (2019)
CAS 12 (2019) modifies the definition of debt restructuring to specify the scope of this
standard, as well as the application of relevant financial instruments standards with
respect to the recognition, measurement and presentation of financial instruments
involved in debt restructuring. For debt restructuring in which a debt is settled by the
transfer of assets, CAS 12 (2019) modifies the principle of measurement for initial
recognition of non-financial assets received by the creditor, and gains or losses of the
debtor from debt restructuring are recognised without distinguishing whether they are
gains or losses from asset transfer or debt restructuring. For debt restructuring in which
a debt is settled by the issuance of equity instruments to the creditor, CAS 12 (2019)
revises the principle of measurement for initial recognition of its share of equity by the
creditor, and provides more guidance on the principle of measurement for initial
recognition of equity instruments by the debtor.
The effective date of CAS 12 (2019) is 17 June 2019. Debt restructuring that occurred
between 1 January 2019 and the effective date shall be adjusted according to CAS 12
(2019). Retrospective adjustment is not required for debt restructuring prior to 1
January 2019. The adoption of the Standard did not have any material impact on the
financial position and financial performance of the Group.
Page 52
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
IV. Taxation
1 Main types of taxes and corresponding tax rates
Tax type Tax basis Tax rate
Output VAT is calculated on 13%, 9%, 6% (China, after 1 April
product sales and taxable 2019), 16%, 10%, 6% (China, 1 May
Value-added tax services revenue. The basis for 2018 to 31 March 2019), 17%, 13%,
(VAT) VAT payable is to deduct input 6% (China, before 1 May 2018), 20%
VAT from the output VAT for the (France), 21% (Spain), 19% (Chile)
period and 10% (Australia)
10% of the price, 20% of the price and
Consumption tax Based on taxable revenue
RMB1,000 each ton (China)
Urban
maintenance and Based on VAT paid 7% (China)
construction tax
Corporate 25% (China), 28% (France), 28%
Based on taxable profits
income tax (Spain), 27% (Chile), 30% (Australia)
Other than tax incentives stated in Note IV. 2, applicable tax rates of the Group in 2019 and
2018 are all stated as above.
2 Tax preferential treatments
Ningxia Changyu Grape Growing Co., Ltd.("Ningxia Growing"), a subsidiary of the Group,
whose principal activity is grape growing is incorporated in Ningxia Huizu Autonomous
Region. According to clause 27 of the Corporate Income Tax Law of the People’s Republic of
China and clause 86 of the Implementation Rules of Enterprise Income Tax Law of the
People’s Republic of China, Ningxia Growing enjoys an exemption of corporate income tax.
Yantai Changyu Grape Growing Co., Ltd.(" Grape Growing "), a branch of the Company,
whose principal activity is grape growing is incorporated in Zhifu District, Yantai City,
Shandong Province. According to clause 27 of the Corporate Income Tax Law of the
People’s Republic of China and clause 86 of the Implementation Rules of Enterprise Income
Tax Law of the People’s Republic of China, Grape Growing enjoys an exemption of
corporate income tax.
Beijing Changyu AFIP Agriculture Development Co., Ltd ("Agriculture Development"), a
subsidiary of the Group, whose principal activity is grape growing is incorporated in Miyun,
Beijing. According to clause 27 of the Corporate Income Tax Law of the People’s Republic of
China and clause 86 of the Implementation Rules of Enterprise Income Tax Law of the
People’s Republic of China, Agriculture Development enjoys an exemption of corporate
income tax.
Page 53
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
Xinjiang Tianzhu Wine Co., Ltd. ("Xinjiang Tianzhu"), a subsidiary of the Company, is an
enterprise of wine production and sales incorporated in Shihezi city, Xinjiang Weizu
Autonomous. In accordance with the Notice on Tax Policy Issues concerning Further
Implementation of the Western China Development Strategy (Cai Shui [2011] No.58),
Xinjiang Tianzhu is qualified to enjoy preferential taxation policies, which means it can pay
corporate income tax at a preferential rate of 15% for the period from 2015 to 2020.
Xinjiang Chateau Changyu Baron Balboa Co., Ltd. ("Chateau Shihezi"), a subsidiary of the
Company, is an enterprise of wine production and sales incorporated in Shihezi city, Xinjiang
Weizu Autonomous. In accordance with the Notice on Tax Policy Issues concerning Further
Implementation of the Western China Development Strategy (Cai Shui [2011] No.58), Shihezi
Chateau is qualified to enjoy preferential taxation policies, which means it can pay corporate
income tax at a preferential rate of 15% for the period from 2015 to 2020.
V. Notes to the consolidated financial statements
1 Cash at bank and on hand
Item 2019 2018
Cash on hand 59,975 114,335
Bank deposits 1,474,489,177 1,382,399,749
Other monetary funds 91,234,828 93,186,393
Total 1,565,783,980 1,475,700,477
Including: Total overseas deposits 42,752,630 22,664,704
As at 31 December 2019, the balance of restricted cash of the Group is as follows:
Item 2019 2018
House maintenance funds 2,647,877 2,611,350
As at 31 December 2019, the Group's other monetary assets is as follows:
Item 2019 2018
Yantai Changyu Pioneer Wine Company Limited
Research and Development Co., Ltd. ("R&D 46,100,000 46,100,000
Centre") pledged deposit for long-term payables
Deposits for letters of credit 44,540,850 44,540,850
Alipay account balance 583,978 2,483,816
Deposit for Company cards - 51,727
Deposit for ICBC platform 10,000 10,000
Total 91,234,828 93,186,393
As at 31 December 2019, the Group's term deposits with previous maturity of more than
three months is RMB106,128,600 with interest rate 1.10%-2.75% (31 December 2018:
RMB173,042,400).
Page 54
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
2 Bills receivable
Classification of bills receivable
Item 31 December 2019 31 December 2018
Bank acceptance bills - 288,667,988
Total - 288,667,988
3 Accounts receivable
(1) Accounts receivable by customer type are as follows:
Type 31 December 2019 1 January 2019 31 December 2018
Amounts due from related parties 5,902,871 4,696,685 4,696,685
Amounts due from other
277,619,657 237,456,398 237,456,398
customers
Sub-total 283,522,528 242,153,083 242,153,083
Less: Provision for bad and
(17,304,375) (10,054,049) -
doubtful debts
Total 266,218,153 232,099,034 242,153,083
As at 31 December 2019, ownership restricted accounts receivable is RMB54,663,422 (31
December 2018: RMB52,015,032), referring to Note V. 50.
(2) The ageing analysis of accounts receivable is as follows:
Ageing 2019 2018
Within 1 year (inclusive) 275,693,658 240,312,773
Over 1 year but within 2 years (inclusive) 7,354,262 1,566,622
Over 2 years but within 3 years (inclusive) 308,950 273,688
Over 3 years 165,658 -
Sub-total 283,522,528 242,153,083
Less: Provision for bad and doubtful debts (17,304,375) -
Total 266,218,153 242,153,083
The ageing is counted starting from the date when accounts receivable are recognised.
Page 55
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(3) Accounts receivable by provisioning method
(a) Assessment of ECLs on accounts receivable in 2019:
At all times the Group measures the impairment loss for accounts receivable at an
amount equal to lifetime ECLs, and the ECLs are based on the number of overdue
days and the loss given default. According to the historical experience of the Group,
there are no significant differences in the losses of different customer groups.
Therefore, different customer groups are not further distinguished when calculating
impairment loss based on the overdue information.
Carrying amount at Impairment loss at the
Loss given default
the end of the year end of the year
Current 0.5% 212,429,920 1,039,698
Overdue for 1 to 30 days 3.4% 30,728,775 1,047,549
Overdue for 31 to 60 days 7.1% 11,523,509 814,636
Overdue for 61 to 90 days 12.1% 5,764,703 700,190
Overdue for 91 to 120
17.4% 1,590,671 276,279
days
Overdue for 121 to 150
22.4% 2,311,625 517,066
days
Overdue for 151 to 180
28.5% 661,492 188,571
days
Overdue for 181 to 210
33.3% 2,583,362 861,027
days
Overdue for 211 to 240
39.4% 6,296,727 2,478,756
days
Overdue for 241 to 270
72.9% 588,355 428,627
days
Overdue for 271 to 300
87.8% 583,701 512,581
days
Overdue for 331 to 330
97.3% 753,239 732,946
days
Overdue for 330 to 360
100.0% 1,491,202 1,491,202
days
Overdue for 360 days 100.0% 6,215,247 6,215,247
Total 6.1% 283,522,528 17,304,375
The loss given default is measured based on the actual credit loss experience in the
past 12 months, and is adjusted taking into consideration the differences among the
economic conditions during the historical data collection period, the current economic
conditions and the economic conditions during the expected lifetime.
(b) Impairment of account receivables in 2018
Under previous financial instruments standards, provision for impairments is mde when
there is objective evidence of impairment.
Page 56
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(4) Movements of provisions for bad and doubtful debts:
2019 2018
Balance under the previous financial instruments
- -
standards
Adjustment on initial application of the new financial
(10,054,049) -
instruments standards
Balance at the beginning of the year after
(10,054,049) -
adjustment
Charge for the year (7,304,777) -
Written-off during the year 54,451 -
Balance at the end of the year (17,304,375) -
(5) Five largest accounts receivable by debtor at the end of the year:
Ending
Percentage of balance of
Relationship Balance at the
Name Ageing ending balance provision for
with the Group end of the year
of others (%) bad and
doubtful debts
Within
THE CO-OP FOOD GROUP Third party 14,953,492 5.6% 817,989
1 year
Lianhua Supermarket Within
Third party 13,988,131 5.3% 636,038
Holdings Co., Ltd. 1 year
NGS Supermarket (Group) Within
Third party 9,278,350 3.3% 1,916,366
Co., Ltd. 1 year
Within
Jiajiayue Group Co., Ltd. Third party 8,437,439 3.0% 45,468
1 year
Within
MARKS AND SPENCER Third party 7,427,424 2.6% 406,296
1 year
Total 54,084,836 19.2% 3,822,157
4 Receivables under financing
Item Note 2019 2018
Bills receivable (1) 316,470,229 -
(1) The pledged bills receivable of the Group at the end of the year
As at 31 December 2018, there was no pledged bills receivable (31 December 2018: Nil).
(2) Outstanding endorsed bills that have not matured at the end of the year
Amount derecognised at
Item
year end
Bank acceptance bills 265,759,455
Total 265,759,455
Page 57
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
As at 31 December 2019, bills endorsed by the Group to other parties which are not yet due
at the end of the period is RMB265,759,455 (31 December 2018: RMB182,829,674). The
notes are used for payment to suppliers and constructions. The Group believes that due to
good reputation of bank, the risk of notes not accepting by bank on maturity is very low,
therefore derecognise the note receivables endorsed. If the bank is unable to pay the notes
on maturity, according to the relevant laws and regulations of China, the Group would
undertake limited liability for the notes.
5 Prepayments
(1) Prepayments by category:
Item 2019 2018
Prepayments 66,807,537 4,219,949
Other prepayments 900,000 -
Total 67,707,537 4,219,949
(2) The ageing analysis of prepayments is as follows:
2019 2018
Ageing Percentage Percentage
Amount Amount
(%) (%)
Within 1 year (inclusive) 67,441,713 100% 4,219,949 100%
Over 1 year but within 2 years
265,824 - - -
(inclusive)
Total 67,707,537 100% 4,219,949 100%
The ageing is counted starting from the date when prepayments are recognised.
(3) Five largest prepayments by debtor at the end of the year:
Ending
Percentage of balance of
Nature of the Balance at the
Name Ageing ending balance of provision for
receivable end of the year
others (%) bad and
doubtful debts
Beijing Aod Investment Group Co., Prepayment Within 1
49,396,000 73.0% -
Ltd. s year
Prepayment Within 1
Xinjiang Yuyuan Wine Co., Ltd. 11,749,019 17.3% -
s year
Prepaid
State Grid Shandong Electronic Within 1
electricity 1,229,571 1.8% -
Power Yantai Company year
fees
Yantai Mingyuan Refrigeration and Prepayment
Within 1
Air-conditioning Equipment Co., s for the 600,000 0.9% -
year
Ltd. equipment
Prepayment
Yantai Huibao Artware Within 1
s for the 533,855 0.8% -
Manufacturing Co., Ltd. year
equipment
Total 63,508,445 93.8% -
Page 58
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
6 Other receivables
Note 31 December 2019 31 December 2018
Interest receivable (1) 148,927 1,332,681
Others (2) 24,097,885 21,303,405
Total 24,246,812 22,636,086
(1) Interest receivable
(a) Interest receivable by category:
Item 31 December 2019 31 December 2018
Interest receivable on bank deposits 148,927 1,332,681
(b) Significant overdue interest:
As at 31 December 2019, there was no overdue interest receivable (31 December
2018: Nil).
(2) Others
(a) Others by customer type:
Customer type 31 December 2019 31 December 2018
Amounts due from related parties 813,440 813,440
Amounts due from other companies 23,284,445 20,489,965
Sub-total 24,097,885 21,303,405
Less: Provision for bad and doubtful debts - -
Total 24,097,885 21,303,405
Page 59
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(b) The ageing analysis is as follows:
Ageing 2019 2018
Within 1 year (inclusive) 16,052,916 11,293,908
Over 1 year but within 2 years (inclusive) 940,668 6,693,702
Over 2 years but within 3 years (inclusive) 6,547,178 1,922,998
Over 3 years 557,123 1,392,797
Sub-total 24,097,885 21,303,405
Less: Provision for bad and doubtful debts - -
Total 24,097,885 21,303,405
The ageing is counted starting from the date when other receivables are recognised.
[(c) Movements of provisions for bad and doubtful debts
As at 31 December 2019, no bad and doubtful debt provision was made for other
receivables (31 December 2018: Nil).
As at 31 December 2019, the Group has no other receivables written off (31 December
2018: Nil).
(d) Others categorised by nature
Nature of other receivables Note 2019 2018
Deposit 9,812,027 10,453,624
Refund of consumption tax and
8,937,164 6,273,882
VAT
Petty cash receivable 1,741,147 2,274,038
Others 3,607,547 2,301,861
Sub-total 24,097,885 21,303,405
Less: Provision for bad and
- -
doubtful debts
Total 24,097,885 21,303,405
(a) Five largest others-by debtor at the end of the year
Percentage of Ending balance of
Nature of the Balance at the
Name Ageing ending balance of provision for bad
receivable end of the year
others (%) and doubtful debts
Within 1
Sercicio de Impuestos Internos Refund of VAT 7,710,362 32.0% -
year
Finance Bureau of Yantai Economic
Over 2
and Technological Development Deposits 5,262,324 21.8% -
years
Area
Yantai Economic and Technological
Construction Over 2
Development Zone Construction 1,143,500 4.7% -
deposit years
Industry Federation
Lease Within 1
Yantai Shenma Packaging Co., Ltd. 813,440 3.4% -
receivables year
Yantai Municipal Tax Service, State Within 1
Refund of VAT 736,946 3.1% -
Taxation Administration year
Total 15,666,572 65.0% -
Page 60
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
7 Inventories
(1) Inventories by category:
2019 2018
Provision for Provision for
Item
Book value impairment of Carrying amount Book value impairment of Carrying amount
inventories inventories
Raw materials 71,681,418 - 71,681,418 67,267,035 - 67,267,035
Work in progress 2,102,781,536 - 2,102,781,536 1,787,819,923 - 1,787,819,923
Finished goods 718,127,090 (20,179,637) 697,947,453 894,187,725 (24,683,226) 869,504,499
Total 2,892,590,044 (20,179,637) 2,872,410,407 2,749,274,683 (24,683,226) 2,724,591,457
(2) Provision for impairment of inventories:
Increase during Decrease during
Item Opening balance the year the year Closing balance
Recognised Reversal
Finished goods 24,683,226 20,179,637 (24,683,226) 20,179,637
8 Other current assets
Item 2019 2018
Prepaid income taxes 16,854,091 24,077,323
Input tax to be credited 248,975,183 233,087,707
Prepaid rent 1,595,664 1,511,366
Total 267,424,938 258,676,396
9 Long-term equity investments
(1) Long-term equity investments by category:
Item 2019 2018
Investments in joint ventures 43,981,130 -
Less: Provision for impairment - -
Total 43,981,130 -
Page 61
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(2) Movements of long-term equity investments during the year are as follows:
2018 Movements during the year
Balance at the Losses from 2019 Shareholding
Investee
beginning of the Increase in capital investments under Closing balance percentage
year equity-method
Joint ventures
SAS L&M Holdings (“L&M Holdings”) - 45,102,058 (1,120,928) 43,981,130 55%
Total - 45,102,058 (1,120,928) 43,981,130
On 22 February 2019, Francs Champs Participations SAS (“Francs Champs”), a subsidiary of the Group, signed the Cooperation Agreement
with SC Garri du Gai to establish L&M Holdings, a joint venture. Francs Champs contributed 100% of the equity of its subsidiary, Societe Civile
Argricole Du Chateau De Mirefleurs (“Mirefleurs”), with a fair value of RMB45,102,058, accounting for 55% of the shares of L&M Holdings. As
per the Agreement and the Articles of Association, L&M Holdings is jointly controlled by shareholders of both parties.
Page 62
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
10 Investment properties
Buildings and plants
Cost
Balance as at 31 December 2018 and 31 December 2019 70,954,045
Accumulated depreciation
31 December 2018 (39,381,556)
Charge for the year (1,857,903)
31 December 2019 (41,239,459)
Carrying amount
Carrying amount at 31 December 2019 29,714,586
Carrying amount at 31 December 2018 31,572,489
11 Fixed assets
(1) Fixed assets
Machinery &
Item Plant & buildings Motor vehicles Total
equipment
Cost
31 December 2018 4,761,426,425 2,665,798,814 26,580,639 7,453,805,878
Additions during the year
- Purchases 14,592,625 114,964,123 2,963,537 132,520,285
- Transfers from
335,319,537 8,856,929 - 344,176,466
construction in progress
Disposals or written-offs
(6,035,224) (59,313,825) (2,874,020) (68,223,069)
during the year
Disposal of subsidiaries (11,674,567) - - (11,674,567)
31 December 2019 5,093,628,796 2,730,306,041 26,670,156 7,850,604,993
Accumulated depreciation
31 December 2018 (621,266,769) (1,062,064,237) (20,743,205) (1,704,074,211)
Charge for the year (143,711,571) (156,813,823) (2,260,577) (302,785,971)
Disposals or written-offs
5,930,965 55,080,117 2,859,001 63,870,083
during the year
Disposal of subsidiaries 3,932,031 - - 3,932,031
31 December 2019 (755,115,344) (1,163,797,943) (20,144,781) (1,939,058,068)
Provision for impairment
31 December 2018 - - - -
Charge for the year - (17,478,027) - (17,478,027)
31 December 2019 - (17,478,027) - (17,478,027)
Carrying amount
31 December 2019 4,338,513,452 1,549,030,071 6,525,375 5,894,068,898
31 December 2018 4,140,159,656 1,603,734,577 5,837,434 5,749,731,667
Page 63
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
As at 31 December 2019, ownership restricted net value of fixed assets is RMB344,670,852
(31 December 2018: RMB412,006,421), referring to Note V. 50.
(2) Temporarily idle fixed assets
Accumulated Provision for
Item Cost Carrying amount
depreciation impairment
Buildings 47,821,026 (14,796,008) - 33,025,018
Machinery equipment 73,592,531 (52,434,878) (17,478,027) 3,679,626
Other equipment 3,344,518 (3,173,906) - 170,612
Total 124,758,075 (70,404,792) (17,478,027) 36,875,256
(3) Fixed assets leased out under operating leases
Carrying amount at
Item
the end of the year
RMB
Machinery equipment 102,608
Total 102,608
(4) Fixed assets pending certificates of ownership
Reason why the
Item Carrying amount certificates are
pending
Industry Production Centre of R&D Centre 1,761,265,190 Processing
Dormitories, main building and reception
287,560,490 Processing
building of Changan Chateau
European town, main building and service
181,809,121 Processing
building of Chateau Beijing
Main building of Chateau Tinlot of Yantai
79,992,032 Processing
Changyu
Fermentation shop and warehouse of Xinjiang
17,124,481 Processing
Tianzhu
Office and packaging shop of Golden Icewine
8,890,557 Processing
Valley
Fermentation shop of Zhangyu (Jingyang) 3,862,118 Processing
Office, experiment building and workshop of
3,484,107 Processing
Fermentation Centre
Finished goods warehouse and workshop of
2,306,172 Processing
Kylin Packaging
Office of Sales Company 981,632 Processing
The buildings without property certificate above have no significant impact on the Group's
management.
Page 64
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
12 Construction in progress
(1) Construction in progress
2019 2018
Project Provision for Provision for
Book value Carrying amount Book value Carrying amount
impairment impairment
R&D Centre ("Changyu
Wine Complex") 485,017,326 - 485,017,326 608,553,618 - 608,553,618
Project
Ningxia Chateau
46,448,561 - 46,448,561 47,163,862 - 47,163,862
Construction Project
Sales Company
6,313,962 - 6,313,962 17,985,881 - 17,985,881
Construction Project
Changan Chateau
4,052,839 - 4,052,839 39,793,898 - 39,793,898
Construction Project
Shihezi Chateau
877,348 - 877,348 23,664,126 - 23,664,126
Construction Project
Other Companies’
24,768,797 - 24,768,797 22,135,206 - 22,135,206
Construction Project
Total 567,478,833 - 567,478,833 759,296,591 - 759,296,591
Page 65
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(2) Movements of major construction projects in progress during the year
Attributable to:
Transfers to long- Percentage of Accumulated Interest rate for
Additions during Transfers to fixed Interest
Item Budget Opening balance term deferred Closing balance actual cost to capitalised capitalisation in Sources of funding
the year assets capitalised for the
expenses budget (%) interest 2019 (%)
year
Loans from
Changyu Wine 1.2% and financial
4,505,780,000 608,553,618 150,740,457 (268,583,246) (5,693,503) 485,017,326 77.6% 15,413,102 1,141,265
Complex 4.3% institutions and
self-raised
Ningxia Chateau
Construction 414,150,000 47,163,862 306,115 (1,021,416) - 46,448,561 102.2% - - - Self-raised
Project
Changan Chateau
Construction 620,740,000 39,793,898 10,349,914 (44,440,973) (1,650,000) 4,052,839 110.4% - - - Self-raised
Project
Shihezi Chateau
Construction 780,000,000 23,664,126 905,888 (276,666) (23,416,000) 877,348 96.4% - - - Self-raised
Project
Sales Company
Construction 161,350,000 17,985,881 4,236,485 (15,908,404) - 6,313,962 100.3% - - - Self-raised
Project
Page 66
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
13. Bearer biological assets
Bearer biological assets are vines, which measured in cost method.
Immature biological Mature biological
Item Total
assets assets
Original book value
31 December 2018 13,837,608 235,246,042 249,083,650
Additions during the year
- Increase in cultivated 7,824,116 - 7,824,116
- Transferred to mature (8,832,902) 8,832,902 -
Disposals during the year - (3,560,972) (3,560,972)
31 December 2019 12,828,822 240,517,972 253,346,794
Accumulated amortisation
31 December 2018 - (39,817,277) (39,817,277)
Charge for the year - (12,722,828) (12,722,828)
Disposals during the year - 1,618,597 1,618,597
31 December 2019 - (50,921,508) (50,921,508)
Carrying amount
31 December 2019 12,828,822 189,596,464 202,425,286
31 December 2018 13,837,608 195,428,765 209,266,373
As at 31 December 2019, there is no biological asset with ownership restricted (31
December 2018: Nil).
As at 31 December 2019, no provision for impairment of biological asset of the Group was
recognised as there is no any indication exists (31 December 2018: Nil).
Page 67
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
14 Intangible assets
Intangible assets
Item Land use rights Software licenses Trademarks Total
Original book value
31 December 2018 528,252,911 75,822,057 170,068,735 774,143,703
Additions during the year
- Purchase 3,502,791 12,436,424 704,531 16,643,746
31 December 2019 531,755,702 88,258,481 170,773,266 790,787,449
Accumulated amortisation
31 December 2018 (78,070,910) (26,722,815) (13,876,519) (118,670,244)
Additions during the year
- Charge for the year (11,262,596) (8,442,975) (465,279) (20,170,850)
Decrease during the year - - - -
31 December 2019 (89,333,506) (35,165,790) (14,341,798) (138,841,094)
Carrying amount
31 December 2019 442,422,196 53,092,691 156,431,468 651,946,355
31 December 2018 450,182,001 49,099,242 156,192,216 655,473,459
As at 31 December 2019, the Group has land use right with infinite useful lives of
RMB30,589,474 ( 31 December 2018: RMB30,881,409), representing the freehold land held
by Chile Indomita Wine Group and Australia Kilikanoon Estate under relevant Chile and
Australia laws, on which the amortisation is not required.
As at 31 December 2019, the Group has trademark with infinite useful lives of
RMB154,674,985 (31 December 2018: RMB154,150,933), which is held by Chile Indomita
Wine Group and Australia Kilikanoon Estate. The recoverable amount of the trademark is
determined according to the present value of the expected future cash flows generated from
the asset group to which the single assets of trademark right belongs. The management
prepares the cash flow projection for future 5 years (the "projecting period") based on the
latest financial budget assumption, and estimates the cash flows after the future 5 years (the
"subsequent period"). The pretax discount rates used in the cash flow projections are 11.6%
and 12.8%, respectively. A key assumption in the estimate of future cash flows is the revenue
growth rate in the projecting period. Such revenue growth rate is determined based on the
industry and the expected growth rate of Chile Indomita Wine Group and Australia Kilikanoon
Estate.
The Group recognises the trademark with infinite useful lives as intangible assets, the
impairment assessment of which is made at the end of each reporting year. The
management believes that any reasonable change of the above assumptions will not result in
the total book value of the asset group to which the single assets of trademark right belongs
exceeding its recoverable amount.
According to the result of impairment assessment, by the end of 31 December 2019, the
management believes there is no impairment loss on those trademarks with infinite useful
lives of the Group.
Page 68
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
As at 31 December 2019, ownership restricted net value of intangible assets is
RMB212,495,435 (31 December 2018: RMB218,070,414), referring to Note V. 50.
15 Goodwill
(1) Changes in goodwill
Name of investee or events from which Additions during the Disposals during
Note 31 December 2018 31 December 2019
goodwill arose year the year
Original book value
Etablissements Roullet Fransac
(a) 13,112,525 - - 13,112,525
(“Roullet Fransac”)
Dicot Partners, S.L (“Dicot”) (a) 92,391,901 - - 92,391,901
Societe Civile Argricole Du Chateau
(b) 15,761,440 - (15,761,440) -
De Mirefleurs (“Mirefleurs”)
Chile Indomita Wine Group (a) 6,870,115 - - 6,870,115
Australia Kilikanoon Estate (a) 37,063,130 - - 37,063,130
Sub-total 165,199,111 - (15,761,440) 149,437,671
Impairment provision - (7,578,478) - (7,578,478)
Carrying amount 165,199,111 (7,578,478) (15,761,440) 141,859,193
(a) The Group acquired Fransac Sales, Dicot and Mirefleurs and Chile Indomita Wine
Group in December 2013, September 2015 January 2016 and July 2017 respectively,
resulting in respective goodwill amounting to RMB 13,112,525, RMB 92,391,901, RMB
15,761,440 and RMB 6,870,115. The Group acquired Australia Kilikanoon Estate in
January 2018, resulting goodwill amounting to RMB 37,063,130, which have been
allocated to corresponding asset groups for impairment testing.
(b) On 22 February 2019, Francs Champs, a subsidiary of the Group, signed the
Cooperation Agreement with SC Garri du Gai to contribute 100% of the equity of
Mirefleurs to establish L&M Holdings, a joint venture. The Group lost control of
Mirefleurs this year, and the goodwill decreased by RMB15,761,440 accordingly.
(2) Provision for impairment of goodwill
The Group has allocated the above goodwill to relevant asset groups for impairment testing.
The recoverable amount of the asset group is determined according to the present value of
the expected future cash flows. The management prepares the cash flow projection for future
5 years (the "projecting period") based on the latest financial budget assumption, and
estimates the cash flows after the future 5 years (the "subsequent period"). The pretax
discount rate used in calculating the recoverable amounts of Fransac Sales, Dicot,
Mirefleurs, Indomita Wine and Australia Kilikanoon Estate are 14.2%, 11.4%, 11.6% and
12.8%, respectively (2018: 16.6%, 12.4%, 16.6 %, 12.3% and 13.1%). The key assumption is
the growth rate of annual revenue growth rate of relevant subsidiaries, which is computed
based on the expected growth rate of each subsidiary and long-term average growth rates of
relevant industries. Other relevant key assumption is budget gross profit margin, which is
determined based on the historical performance of each subsidiary and its expectations for
market development. According to the results of the impairment test, the Group found that
the recoverable amount of the asset group including goodwill of Australia Kilikanoon Estate is
lower than its book value. Therefore, on 31 December 2019, the provision for impairment of
goodwill was RMB7,578,478. The impairment loss was recognised in asset impairment loss.
Page 69
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
16 Long-term deferred expenses
Additions during the Amortisation for the
Item 31 December 2018 Other decreases 31 December 2019
year year
Land lease
54,217,763 753,161 (1,472,473) (1,369,037) 52,129,414
prepayment
Land requisition fee 43,427,739 - (1,967,479) - 41,460,260
Greening fee 141,224,472 13,983,448 (9,255,420) - 145,952,500
Leasehold
775,647 33,568,156 (1,354,917) - 32,988,886
improvement
Others 4,994,795 1,075,628 (1,006,075) - 5,064,348
Total 244,640,416 49,380,393 (15,056,364) (1,369,037) 277,595,408
17 Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets and liabilities
31 December 2019 1 January 2019 31 December 2018
Deductible or Deductible or Deductible or
Item Deferred tax Deferred tax Deferred tax
taxable taxable taxable
assets / assets / assets /
temporary temporary temporary
(liabilities) (liabilities) (liabilities)
differences differences differences
Deferred tax assets:
Provision for
impairment of 54,771,519 13,692,880 34,737,276 8,684,319 24,683,226 6,170,807
assets
Unrealised profits
of intra-group 479,898,175 119,974,545 602,476,583 150,619,145 602,476,583 150,619,145
transactions
Unpaid bonus 184,674,946 46,168,736 141,808,257 35,485,814 141,808,257 35,485,814
Termination
24,833,512 6,208,378 26,186,243 6,546,561 26,186,243 6,546,561
benefits
Deductible tax
247,147,752 63,459,305 262,937,999 67,566,387 262,937,999 67,566,387
losses
Deferred income 70,643,437 15,422,659 86,227,293 18,868,963 86,227,293 18,868,963
Assets
assessment - - 661,415 178,582 661,415 178,582
impairment
Sub-total 1,061,969,341 264,926,503 1,155,035,066 287,949,771 1,144,981,016 285,436,259
Deferred tax
liabilities:
Revaluation due to
business
combinations
(51,829,561) (14,691,424) (81,338,130) (22,010,647) (81,338,130) (22,010,647)
involving entities
not under
common control
(2) Details of unrecognised deferred tax assets
Item 2019 2018
Deductible tax losses 132,081,819 171,430,831
Page 70
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(3) Expiration of deductible tax losses for unrecognised deferred tax assets
Year 2019 2018
2019 - 7,311,273
2020 5,718,454 45,960,766
2021 36,741,465 82,685,213
2022 26,609,674 14,362,787
2023 31,350,376 21,110,792
2024 31,661,850 -
Total 132,081,819 171,430,831
18 Other non-current assets
Item 2019 2018
Royalty 193,674,320 -
Pursuant to a royalty agreement dated 18 May 1997, starting from 18 September 1997, the
Company may use certain trademarks of Changyu Group Company, which have been
registered with the PRC Trademark Office. An annual royalty fee at 2% of the Group's annual
sales is payable to Changyu Group. The license is effective until the expiry of the registration
of the trademarks.
According to the above royalty agreement, Changyu Group collected a total of
RMB576,507,809 for royalty from 2013 to 2019, of which 51% was used to promote
trademarks such as Changyu and the product of this contract, totalling RMB294,018,093.
The amount is used for promotion of Changyu and other trademarks and the products of this
contract, totalling RMB62,250,368, the difference is RMB231,768,615.
On 18 May 2019, the general meeting of shareholders approved the proposal of the
amendment to the royalty agreement. Article 6.1 of the royalty agreement with Changyu
Group was amended to: During the validity period of this contract, the Group pays Changyu
Group royalty on an annual basis. The royalty is calculated based on 0.98% of the sales
volume of the Group ’s contract products using this trademark. The article is amended to:
The royalty paid to the Changyu Group by the Group shall not be used to promote this
trademark and the contract products.
Changyu Group promised to offset the difference of RMB231,768,615 above with the royalty
for four years, i.e. from 2019 to 2022.If it is not sufficient for deduction, the rest will be repaid
in a one-off manner in 2023. If there is surplus, the surplus part of the royalty will be charged
from the year when the surplus occurs. As the amount is a long-term prerpayment, the
Company recognises the amount as other non-current assets and meanwhile offset the
sales fee, i.e. royalty.
As at 31 December 2019, the Group's royalty in 2019 was RMB38,094,295. When the
difference is deducted by the above-mentioned amount, the balance of royalty due from
Changyu Group was RMB193,674,320.
Page 71
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
19 Short-term loans
Short-term loans by category:
Item 2019 2018
Unsecured loans 661,067,617 605,202,708
Mortgaged loans 82,568,222 79,467,832
Guaranteed loans 10,677,905 3,331,870
Total 754,313,744 688,002,410
As at 31 December 2019, details of short-term borrowings were as follows:
Interest rate at
Exchange Nature of
Amount Amount Interest rate the
rate interest rate
end of the year
RMB % %
1-year
Credit loans (RMB) 150,000,000 1.0000 150,000,000 Floating 4.35%
LPR+0.04%
Annual benchmark
Credit loans (RMB) 400,000,000 1.0000 400,000,000 Floating 4.35%
interest rate (%)
Credit loans (EUR) 6,632,932 7.8155 51,839,679 Fixed 0.85%-2.0% 0.85%-2.0%
Credit loans (USD) 8,490,000 6.9762 59,227,938 Fixed 2.81%-4.90% 2.81%-4.90%
Mortgaged loans
6,994,232 7.8155 54,663,422 Fixed 0.35%-2.86% 0.35%-2.86%
(EUR)
Mortgaged loans
4,000,000 6.9762 27,904,800 Fixed 2.86% 2.86%
(USD)
Guaranteed loans
2,186,169 4.8843 10,677,905 Fixed 3% 3%
(AUD)
754,313,744
As at 31 December 2019, mortgaged loans were Hacienda y Viedos Marques del Atrio,
S.L.U (" Atrio ") factoring of accounts receivable from banks including Banco de Sabadell,
S.A. of EUR6,994,232 (equivalent of RMB54,663,422) (31 December 2018:
RMB52,015,032). Mortgaged loans were Indomita Wine mortgaged USD4,000,000
(equivalent of RMB27,904,800) of its fixed assets to BBVA (31 December 2018:
RMB27,452,800). Australia Kilikanoon Estate has guaranteed loans of AUD2,186,169
(equivalent of RMB10,677,905) (31 December 2018: RMB3,331,870).
Page 72
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
20 Accounts payable
Ageing 2019 2018
Within 1 year (inclusive) 564,803,430 710,208,269
Over 1 year but within 2 years (inclusive) 2,255,083 3,091,659
Over 2 years but within 3 years (inclusive) 3,007,686 121,598
Over 3 years 186,413 151,355
Total 570,252,612 713,572,881
There is no significant account payable with ageing of more than one year.
21 Advance payments received
Details of advances from customers are as follows:
Item 2019 2018
Advances from customers 120,609,499 226,075,244
There is no significant advances from customers with ageing of more than one year:
22 Employee benefits payable
(1) Employee benefits payable:
Additions during the Decrease during the
Note 31 December 2018 31 December 2019
year year
Short-term employee
(2) 185,893,109 530,648,082 (507,651,734) 208,889,457
benefits
Post-employment benefits -
defined contribution (3) 224,865 56,303,607 (55,792,325) 736,147
plans
Termination benefits 26,186,243 12,542,984 (13,895,715) 24,833,512
Total 212,304,217 599,494,673 (577,339,774) 234,459,116
Page 73
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(2) Short-term employee benefits
Additions during the Decrease during the
31 December 2018 31 December 2019
year year
Salaries, bonuses,
187,685,990 481,363,315 (457,031,510) 212,017,795
allowances
Staff welfare 3,014,288 13,807,921 (14,820,620) 2,001,589
Social insurance 461,095 20,088,329 (19,981,978) 567,446
Medical insurance 460,440 17,829,589 (17,722,583) 567,446
Work-related injury
655 1,131,235 (1,131,890) -
insurance
Maternity insurance - 1,127,505 (1,127,505) -
Housing fund 52,510 11,993,406 (12,031,721) 14,195
Labour union fee, staff and
1,914,079 3,806,035 (3,785,905) 1,934,209
workers’ education fee
Sub-total 193,127,962 531,059,006 (507,651,734) 216,535,234
Less: Non-current liabilities 7,234,853 410,924 - 7,645,777
Total 185,893,109 530,648,082 (507,651,734) 208,889,457
(3) Post-employment benefits - defined contribution plans
Additions during the Decrease during the
31 December 2018 31 December 2019
year year
Basic pension insurance 224,533 55,054,748 (54,543,144) 736,137
Unemployment insurance 332 1,248,859 (1,249,181) 10
Total 224,865 56,303,607 (55,792,325) 736,147
23 Taxes payable
Item 2019 2018
Value-added tax 88,590,035 36,442,868
Consumption tax 48,497,550 28,636,646
Corporate income tax 216,958,309 40,869,507
Individual income tax 840,997 2,476,527
Tax on the use of urban land 2,216,390 5,669,099
Education surcharges 4,858,904 4,337,712
Urban maintenance and construction tax 6,731,772 5,165,128
Others 6,476,014 5,315,303
Total 375,169,971 128,912,790
Page 74
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
24 Other payables
Note 31 December 2019 31 December 2018
Interest payable 758,047 712,826
Dividends payable 1,366,559 -
Others (1) 448,407,879 607,767,064
Total 450,532,485 608,479,890
(1) Others
(a) Details of others by nature are as follows:
Item 2019 2018
Deposit payable to dealer 164,649,995 159,191,138
Advertising fee payable 90,741,404 80,715,461
Equipment and construction fee payable 72,004,009 152,825,734
Freight charges payable 31,842,443 38,867,725
Contracting fee payable 16,997,685 27,070,584
Deposits due to suppliers 13,990,900 15,901,210
Staff deposit 1,866,765 2,806,766
Royalty due to Changyu Group - 78,414,978
Others 56,314,678 51,973,468
Total 448,407,879 607,767,064
(b) Significant others aged over one year:
Balance at the end Reasons why not
Item
of the year settled
VASF Company Payables for
4,877,876
contracting fee
Total 4,877,876
Page 75
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
25 Non-current liabilities due within one year
Non-current liabilities due within one year by category are as follows:
Item 2019 2018
Long-term loans due within one year 116,826,221 118,940,788
Long-term payables due within one year 34,000,000 34,000,000
Total 150,826,221 152,940,788
26 Long-term loans
(1) Long-term loans by category
Item 2019 2018
Credit loans 136,749,730 139,171,506
Guaranteed loans 105,093,000 129,500,000
Mortgaged loans 3,875,992 6,749,944
Less: Long-term loans due within one year 116,826,221 118,940,788
Total 128,892,501 156,480,662
As at 31 December 2019, details of long-term borrowings were as follows:
Nature of Interest rate at Long-term loans Long-term loans
Exchan
Amount Amount interest Interest rate the end of the due within one due after one
ge rate
rate year year year
RMB % %
Credit loans
17,497,246 7.8155 136,749,730 Fixed 1.0%-1.7% 1.0%-1.7% 88,740,091 48,009,639
(EUR)
Guaranteed loans 90% of 5-year
56,250,000 1 56,250,000 Floating 4.275% 25,000,000 31,250,000
(RMB) LPR
Guaranteed loans
10,000,000 4.8843 48,843,000 Fixed 2.5% 2.5% - 48,843,000
(AUD)
Mortgaged loans
495,937 7.8155 3,875,992 Fixed 1.8% 1.8% 3,086,130 789,862
(EUR)
Total 245,718,722 116,826,221 128,892,501
As at 31 December 2019, Credit loans were EUR17,497,246 borrowed by Atrio from Bankia,
Banco Santander, BBVA and Caja Rural de Navarr etc. (equivalent of RMB136,749,730) (31
December 2018: RMB139,171,506). Mortgaged loans (RMB) were long-term borrowings of
RMB56,250,000 of the R&D Centre, a subsidiary of the Company (31 December 2018:
RMB81,250,000). Australia Kilikanoon Estate has borrowed AUD10,000,000(equivalent of
RMB48,843,000) (31 December 2018: RMB48,250,000) from ANZ Bank and its guaranteed
by the Company. Mortgaged loans were borrowings of EUR495,937 (equivalent of
RMB3,875,992) form Popular Espaol, pledged with its land which valued EUR2,931,722
(equivalent of RMB22,912,873) (31 December 2018: RMB6,749,944).
Page 76
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
27 Long-term payables
Item 2019 2018
Agricultural Development Fund of China ("CADF") 225,000,000 259,000,000
Less: Long-term payables due within one year 34,000,000 34,000,000
Balance of long-term payables 191,000,000 225,000,000
In 2016, RMB 305,000,000 from CADF was invested in R&D Centre, CADF accounted for
37.9% of the registered capital. According to the investment agreement, CADF will recovery
investment funds over 10 years, the investment income received equal to 1.2% of the
remaining unpaid principal per annum. In addition to the fixed income, CADF will no longer
enjoy other profits or bear the loss of R&D Centre. Therefore, although the investment in
R&D Centre, nominally equity investment, is actually a debt investment (financial discount
loan). The Group take this investment as long-term payables, which measured in amortized
cost. The Group repays the principal of RMB 34,000,000 in 2019. Refer to Note V. 50 for
details of mortgaged and pledged assets.
Return
Termination
Balance of long- on Investment Due within one Mortgaged and
date of Due after one year
term payables investm date year pledged assets
repayment
ent
RMB RMB RMB
Cash at bank and on
12 January 24 December
57,000,000 1.2% 10,000,000 47,000,000 hand and intangible
2016 2025
assets
29 February 28 February Fixed assets and
154,000,000 1.2% 22,000,000 132,000,000
2016 2026 intangible assets
Cash at bank and on
14,000,000 1.2% 16 June 2016 22 May 2026 2,000,000 12,000,000
hand
225,000,000 34,000,000 191,000,000
28 Deferred income
Additions during the Decrease during the
Item 31 December 2018 31 December 2019
year year
Government grants 86,227,293 7,833,097 (23,359,102) 70,701,288
Page 77
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
Government grants:
Additions of Amounts recognised
Related to
Liability 31 December 2018 government grants in other income 31 December 2019
assets/income
during the year during the year
Industrial development support Government
project 32,800,000 - (4,100,000) 28,700,000 grants related
to assets
Xinjiang industrial revitalisation Government
and technological 15,642,000 - (1,422,000) 14,220,000 grants related
transformation project to assets
Fixed asset investment reward Government
of Shihezi Chateau project 6,996,600 - (2,280,000) 4,716,600 grants related
to assets
Shandong Peninsula Blue Government
Economic Area construction 6,000,000 - (2,000,000) 4,000,000 grants related
funds to assets
Special government grant for Government
infrastructure 4,240,000 - (1,060,000) 3,180,000 grants related
to assets
Raw wine fermentation project Government
3,304,500 - (1,434,900) 1,869,600 grants related
to assets
Wine fermentation capacity Government
construction (Huanren) 3,200,000 - (400,000) 2,800,000 grants related
project to assets
Engineering technology Government
transformation of information 2,900,000 - (580,000) 2,320,000 grants related
system project to assets
Liquor electronic tracking Government
project 2,525,257 - (667,054) 1,858,203 grants related
to assets
Infrastructure construction Government
project 1,718,750 - (1,368,750) 350,000 grants related
to assets
Special fund for efficient water- Government
saving irrigation project 1,639,000 500,000 (262,000) 1,877,000 grants related
to assets
Subsidy for economic and Government
energy-saving technological 1,026,400 - (128,300) 898,100 grants related
transformation projects to assets
Wine industry development Government
project 558,000 - (186,000) 372,000 grants related
to assets
Subsidy for mechanic Government
development of Penglai - 265,397 - 265,397 grants related
Daliuhang Base to assets
Coal subsidy Government
- 260,000 (58,500) 201,500 grants related
to assets
Introduction fund for service Related to
2,000,000 400,000 (2,400,000) -
industry development income
Cross-border e-commerce Related to
880,256 29,000 (69,298) 839,958
project income
Travelling development fund Related to
500,000 60,000 - 560,000
subsidy project income
Water pollution control project Related to
206,530 - (113,600) 92,930
fund income
Subsidy for boiler
Related to
reconstruction and 90,000 - (10,000) 80,000
income
demolition
Special funds for the Related to
- 6,318,700 (4,818,700) 1,500,000
development of enterprises income
Total 86,227,293 7,833,097 (23,359,102) 70,701,288
29 Other non-current liabilities
Item 31 December 2019 31 December 2018
Employee benefits payable 7,645,777 7,234,853
As at 31 December 2019, employee benefit represents deposit from bonus accrued for
managers and above. The bonus is expected to be paid during 2021 to 2023.
Page 78
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
30 Share capital
At 31 December 2018 and
31 December 2019
Unrestricted A shares 453,460,800
B shares 232,003,200
Total of unrestricted shares 685,464,000
31 Capital reserve
Additions during the Decrease during the
Item 31 December 2018 31 December 2019
year year
Share premium 560,038,853 - (905,019) 559,133,834
Others 5,916,588 - - 5,916,588
Total 565,955,441 - (905,019) 565,050,422
The balance between the long-term equity investment acquired due to the purchase of
minority shareholding and the share of net assets continuously calculated since the date of
acquisition by the subsidiary based on the proportion of newly increased shareholding shall
be offset against the capital reserve. Details of non-controlling interests acquired during the
year, see Note- VII. 2.
32 Other comprehensive income
Accrued during the year
Balance at the Less: Balance at the
Net-of-tax Net-of-tax
beginning of the year Previously end of the year
Less: amount amount
Item attributable to Before-tax recognised attributable to
Income tax attributable to attributable to
shareholders of the amount amount shareholders of
expenses shareholders of non-controlling
Company transferred to the Company
the Company interests
profit or loss
Items that may be
reclassified to profit or
loss
Translation
differences arising
from translation of
2,965,377 (8,542,792) - - (7,200,960) (1,341,832) (4,235,583)
foreign currency
financial
statements
33 Surplus reserve
Item 31 December 2019 31 December 2018
Statutory surplus reserve 342,732,000 342,732,000
In accordance with the Company Law and the Articles of Association Company, the Company
appropriated 10% of its net profit to statutory surplus reserve. The appropriation to the
statutory surplus reserve may be ceased when the accumulated appropriation reaches over
50% of the registered capital of the Company. The Company does not appropriate net profit
to the surplus reserve in 2019 as surplus reserve of the Company is above 50% of the
registered capital.
The Company can appropriate discretionary surplus reserve after appropriation of the
statutory surplus reserve. Discretionary surplus reserve can be utilised to offset the deficit or
increase the share capital after approval.
Page 79
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
34 Retained earnings
Item Note 2019 2018
Retained earnings at the beginning of the
8,008,982,547 7,309,081,618
year (before adjustment)
Total adjustments for opening retained
(1) (7,540,537) -
earnings
Retained earnings at the beginning of the
8,001,442,010 7,309,081,618
year (after adjustment)
Add: Net profits for the year attributable to
1,129,735,749 1,042,632,929
shareholders of the Company
Less: Dividends to ordinary shares (2) 411,278,400 342,732,000
Retained earnings at the end of the year (3) 8,719,889,359 8,008,982,547
(1) Adjustments on beginning retained earnings are as follows:
Retrospective adjustments of RMB7,540,537 made on beginning retained earnings in
accordance with CAS and related new regulations (See Note III. 32).
(2) Dividends in respect of ordinary shares declared during the year
Pursuant to the shareholders’ approval at the shareholders’ general meeting on 17 May
2019, a cash dividend of RMB0.6 per share (2018: RMB0.5 per share), totalling
RMB411,278,40 (2018: RMB342,732,000), was declared and paid to the Company’s ordinary
shareholders on 8 July 2019 and 10 July 2019.
(3) Retained earnings at the end of the year
As at 31 December 2019, the consolidated retained earnings attributable to the Company
included an appropriation of RMB56,059,538 (2018: RMB54,336,543) to surplus reserve
made by the subsidiaries.
35 Operating income and operating costs
2019 2018
Item
Income Cost Income Cost
Principal activities 4,944,119,295 1,855,399,515 5,066,265,044 1,872,991,039
Other operating activities 86,892,194 32,096,476 75,979,696 28,620,468
Total 5,031,011,489 1,887,495,991 5,142,244,740 1,901,611,507
Page 80
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
Details of operating income:
2019 2018
Operating income from principal activities
- Sale of goods 4,944,119,295 5,066,265,044
Sub-total 4,944,119,295 5,066,265,044
Income from other business 86,892,194 75,979,696
Total 5,031,011,489 5,142,244,740
36 Taxes and surcharges
Item 2019 2018
Consumption tax 159,206,181 157,037,382
Urban maintenance and construction tax 36,159,526 39,655,738
Education surcharges 26,463,129 28,762,507
Property tax 29,984,237 31,461,708
Tax on the use of urban land 11,033,252 12,098,790
Stamp duty 3,088,747 4,507,785
Others 2,527,306 2,967,764
Total 268,462,378 276,491,674
Page 81
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
37 Selling and distribution expenses
Item 2019 2018
Marketing fee 376,428,191 386,519,123
Salaries and benefits 353,390,023 297,489,665
Transport charges 121,007,566 141,756,007
Labour service fee 72,788,245 72,036,252
Advertising fee 45,359,135 35,857,276
Conference fee 42,272,189 32,731,215
Depreciation expense 40,227,482 41,410,740
Storage rental 37,586,638 45,668,613
Design and production fee 26,471,703 29,437,757
Travelling expenses 26,010,813 27,176,277
Water, electricity and gas fee 14,136,779 11,297,244
Royalty (182,711,622) 73,976,395
Others 80,264,882 79,242,582
Total 1,053,232,024 1,274,599,146
38 General and administrative expenses
Item 2019 2018
Salaries and benefits 90,477,287 114,473,209
Depreciation expenses 61,831,915 71,978,485
Repair costs 28,555,032 25,189,384
Administrative expenses 23,101,636 23,766,176
Amortisation expenses 18,373,495 18,187,049
Amortisation of greening fee 18,409,031 14,730,804
Contracting fee 13,377,255 13,364,835
Rental charge 12,938,864 13,012,167
Safety production costs 9,510,828 9,692,574
Security and cleaning fee 8,124,135 8,659,405
Others 27,205,178 30,526,563
Total 311,904,656 343,580,651
Page 82
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
39 Financial expenses
Item 2019 2018
Interest expenses from loans and payables 50,212,059 52,198,774
Less: Borrowing costs capitalised 1,141,265 5,843,872
Less: Financial expenses offset by fiscal interest
7,500,000 -
subsidy
Interest income from deposits and receivables (12,327,441) (12,086,007)
Net exchange (gains) / losses 3,611,536 (666,323)
Other financial expenses 2,435,813 2,342,730
Total 35,290,702 35,945,302
Fiscal interest subsidy during reporting period has been included in non-recurring gains and
losses.
40 Other income
Item 2019 2018 Related to assets/income
Reward on the fixed asset Government grants
2,280,000 2,280,000
investment related to assets
Shandong Peninsula Blue
Government grants
Economic Area construction 2,000,000 2,000,000
related to assets
funds
Industrial development support Government grants
4,100,000 4,100,000
project related to assets
Others - Government grants Government grants
7,567,504 8,579,199
related to assets related to assets
Special funds for the development
37,449,390 42,953,900 Related to income
of enterprises
Tax refunds 8,724,775 6,587,773 Related to income
Strong industrial city special funds 2,518,700 4,750,000 Related to income
Others - Government grants
12,697,212 16,030,562 Related to income
related to income
Total 77,337,581 87,281,434
Other income during reporting period has been included in non-recurring gains and losses.
41 Investment income
Investment income by item
Item Note 2019 2018
Long-term equity investment losses
(1,120,928) -
under equity method
Investment income from disposal of (1)
6,233,661 -
long-term equity investments
Total 5,112,733 -
Page 83
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(1) On 22 February 2019, Francs Champs, a subsidiary of the Group, signed the Cooperation
Agreement with SC Garri du Gai to establish L&M Holdings, a joint venture. Francs Champs
contributed 100% of the equity of its subsidiary, Mirefleurs, with a fair value of
RMB45,102,058. The deference of RMB6,233,661 between the book value of fair value of
net asset of Mirefleurs and the goodwill of Mirefleurswas when it was acquired by the Group
was included in investment income.
42 Credit losses
Item 2019
Accounts receivable 7,304,777
Total 7,304,777
43 Impairment losses / (reversal)
Item 2019 2018
Inventories (4,503,589) (912,166)
Fixed assets 17,478,027 -
Goodwill 7,578,478 -
Total 20,552,916 (912,166)
44 Gains from asset disposals
Item 2019 2018
Gains from disposal of fixed assets 39,015 11,368,355
Gains from disposal of assets during reporting period has been included in non-recurring
gains and losses.
45 Non-operating income and non-operating expenses
(1) Non-operating income by item is as follows:
Item 2019 2018
Net penalty income 2,593,116 1,901,530
Others 8,328,632 5,451,779
Total 10,921,748 7,353,309
Non-operating income during reporting period has been included in non-recurring gains and
losses.
Page 84
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(2) Non-operating expenses
Item 2019 2018
Compensation, penalty and fine expenses 403,975 1,445,721
Donations provided 699,296 593,819
Others 2,519,998 1,496,368
Total 3,623,269 3,535,908
Non-operating expenses during reporting period has been included in non-recurring gains
and losses.
46 Income tax expenses
Item Note 2019 2018
Current tax expense for the year based
385,102,064 352,598,370
on tax law and regulations
Changes in deferred tax assets/liabilities (1) 15,704,045 14,529,152
Total 400,806,109 367,127,522
(1) The analysis of changes in deferred tax is set out below:
Item 2019 2018
Origination of temporary differences 15,704,045 14,529,152
Total 15,704,045 14,529,152
(2) Reconciliation between income tax expenses and accounting profit:
Item 2019 2018
Profit before taxation 1,530,514,737 1,408,611,698
Estimated income tax at 25% 382,628,684 352,152,925
Effect of different tax rates applied by subsidiaries (707,938) (949,634)
Effect of non-deductible costs, expense and losses 6,705,569 5,496,292
Effect of deductible losses of deferred tax assets
7,397,810 4,642,727
not recognised for the year
Deferred tax assets written-off 4,781,984 5,785,212
Income tax expenses 400,806,109 367,127,522
Page 85
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
47 Basic earnings per share and diluted earnings per share
(1) Basic earnings per share
Basic earnings per share is calculated as dividing consolidated net profit attributable to
ordinary shareholders of the Company by the weighted average number of ordinary shares
outstanding:
2019 2018
Consolidated net profit attributable to ordinary
1,129,735,749 1,042,632,929
shareholders of the Company
Weighted average number of ordinary shares
685,464,000 685,464,000
outstanding
Basic earnings per share (RMB/share) 1.65 1.52
Weighted average number of ordinary shares is calculated as follows:
2019 2018
Issued ordinary shares at the beginning of the year 685,464,000 685,464,000
Weighted average number of ordinary shares at the
685,464,000 685,464,000
end of the year
(2) The Group does not have any potential dilutive ordinary shares for the listed years.
48 Cash flow statement
(1) Proceeds relating to other operating activities:
Item 2019 2018
Government grants 69,311,576 57,123,900
Penalty income 2,593,116 1,901,530
Interest income from bank 12,327,441 7,871,853
Others 9,512,388 5,806,589
Total 93,744,521 72,703,872
(2) Payments relating to other operating activities:
Item 2019 2018
Selling and distribution expenses 761,969,906 918,966,855
General and administrative expenses 138,738,416 140,112,380
Others 12,856,014 4,637,082
Total 913,564,336 1,063,716,317
Page 86
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(3) Proceeds relating to other financing activities:
Item 2019 2018
R&D Centre pledged deposit for long-term payables - 61,700,000
Interest income from R&D Centre pledged deposit
- 768,259
for long-term payables
Total - 62,468,259
(4) Payments relating to other financing activities:
Item 2019 2018
Proceed from acquisitions of non-controlling
11,619,552 -
interests’ distributions or interest
R&D Centre pledged deposit for long-term payables - 46,100,000
Total 11,619,552 46,100,000
Page 87
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
49 Supplementary information on cash flow statement
(1) Supplement to cash flow statement
a. Reconciliation of net profit to cash flows from operating activities:
Item 2019 2018
Net profit 1,129,708,628 1,041,484,176
Add: Provisions for impairment of assets /
20,552,916 (912,166)
(reversal)
Credit losses 7,304,777 -
Depreciation of fixed assets and
304,643,874 299,696,260
investment property
Amortisation of intangible assets 20,170,850 19,018,740
Amortisation of long-term deferred
15,056,364 12,082,117
expenses
Amortisation of biological assets 12,722,828 12,034,812
Gains from disposal of fixed assets,
intangible assets, and other long-term (39,015) (11,368,355)
assets
Financial expenses 49,508,886 45,855,744
Royalty (182,711,622) -
Investment income (5,112,733) -
Decrease in deferred tax assets 23,023,268 22,685,137
Decrease in deferred tax liabilities (7,319,223) (8,155,985)
Decrease in gross inventories (158,274,938) (180,452,933)
Increase in operating receivables (290,520,189) (137,899,294)
Decrease in operating payables (100,876,647) (138,089,507)
Net cash flows from operating activities 837,838,024 975,978,746
b. Significant investing and financing activities not requiring the use of cash:
Item 2019 2018
Payment of intangible assets and other long-
165,716,961 109,378,598
term assets by bank acceptances
Page 88
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
c. Change in cash and cash equivalents:
Item 2019 2018
Cash equivalents at the end of the year 1,365,772,675 1,206,860,334
Less: Cash equivalents at the beginning of
1,206,860,334 1,180,889,274
the year
Net increase in cash and cash equivalents 158,912,341 25,971,060
(2) Details of cash and cash equivalents
Item 2019 2018
Cash at bank and on hand
Including: Cash on hand 59,975 114,335
Bank deposits available on demand 1,365,712,700 1,206,745,999
Closing balance of cash and cash equivalents 1,365,772,675 1,206,860,334
50 Assets with restrictive ownership title or right of use
Additions during Decrease during Balance at the end Reason for
Item Opening balance
the year the year of the year restriction
Cash at R&D Centre
bank and 95,797,743 - (1,915,038) 93,882,705 mortgage for long-
on hand term payables etc.
Short-term
Account
borrowings
receivable 52,015,032 183,997,103 (181,348,713) 54,663,422
mortgage from
(i)
Atrio
R&D Centre
mortgage for long-
term payables and
Fixed assets 412,006,421 - (67,335,569) 344,670,852
long-term and
short-term
borrowings
R&D Centre
Intangible
218,070,414 - (5,574,979) 212,495,435 mortgage for long-
assets
term payables
Total 777,889,610 183,997,103 (256,174,299) 705,712,414
(i) As at 31 December 2019, the amount of accounts receivable with restricted ownership
is EUR 6,994,232 (equivalent of RMB54,663,422), which refers to accounts receivable
Atrio conducted for factoring from Banco de Sabadell, S.A. Etc. (31 December 2018:
EUR6,628,399, equivalent of RMB52,015,032)
Page 89
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
VI. Change of consolidation scope
Disposal of subsidiaries
Disposal of investments in subsidiaries through a single transaction resulting in loss of
control
Difference between
Shareholding consideration received
Basis for
being Disposal Date of losing and the related share
Name Consideration determining date
disposed method control of net assets in
of losing control
(%) consolidated financial
statements
Transfer by Asset delivery
Mirefleurs 45,102,058 100 30/03/2019 6,233,661
agreement date
The Group recognised a gain of RMB6,233,661 on disposal of Mirefleurs resulting in loss
of control, which has been included in investment income of consolidated financial
statements.
Page 90
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
VII. Interests in other entities
1 Interests in subsidiaries
(1) Composition of the Group
Shareholding ratio
Principal place of Business (%)
Name of the Subsidiary Registered place Registered capital Acquisition method
business nature (or similar equity
interest)
Business combinations
Xinjiang Tianzhu Wine Co., Ltd. (“Xinajing Shihezi, Xinjiang, Shihezi, Xinjiang,
Manufacturing RMB75,000,000 60 - involving entities not under
Tianzhu”) China China
common control
Business combinations
Etablissements Roullet Fransac
Cognac, France Cognac, France Trading EUR2,900,000 - 100 involving entities not under
(“Roullet Fransac”)
common control
Business combinations
Marketing and
Dicot Partners, S.L (“Dicot”) Navarre, Spain Navarre, Spain EUR2,000,000 75 - involving entities not under
sales
common control
Via Indómita, S.A.,Via Dos Andes,S.A.,
Marketing and Acquired through
and Bodegas Santa Alicia SpA. (“Chile Santiago, Chile Santiago, Chile CLP31,100,000,000 85 -
sales establishment or investment
Indomita Wine Group”)
Business combinations
Kilikanoon Estate Pty Ltd Marketing and
Adelaide, Australia Adelaide, Australia AUD6,420,000 82.5 - involving entities not under
(“Australia Kilikanoon Estate”) sales
common control
Beijing Changyu Sales and Distribution Co., Marketing and Acquired through
Beijing, China Beijing, China RMB1,000,000 100 -
Ltd ("Beijing Sales") sales establishment or investment
Yantai Kylin Packaging Co., Ltd. ("Kylin Yantai, Shandong, Yantai, Shandong, Acquired through
Manufacturing RMB15,410,000 100 -
Packaging") China China establishment or investment
Yantai Chateau Changyu-Castel Co., Ltd Yantai, Shandong, Yantai, Shandong, Acquired through
Manufacturing RMB5,000,000 70 -
("Chateau Changyu") (c) China China establishment or investment
Changyu (Jingyang) Wine Co., Ltd. Xianyang, Shaanxi, Xianyang, Shaanxi, Acquired through
Manufacturing RMB1,000,000 90 10
("Jingyang Wine") China China establishment or investment
Yantai Changyu Pioneer Wine Sales Co., Yantai, Shandong, Yantai, Shandong, Marketing and RMB8,000,000 100 - Acquired through
Page 91
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
Shareholding ratio
Principal place of Business (%)
Name of the Subsidiary Registered place Registered capital Acquisition method
business nature (or similar equity
interest)
Ltd. ("Sales Company") China China sales establishment or investment
Langfang Development Zone Castel-
Langfang, Hebei, Langfang, Hebei, Acquired through
Changyu Wine Co., Ltd ("Langfang Manufacturing RMB6,108,818 39 10
China China establishment or investment
Castel")
Changyu (Jingyang) Wine Sales Co., Ltd. Xianyang, Shaanxi, Xianyang, Shaanxi, Marketing and Acquired through
RMB1,000,000 10 90
("Jingyang Sales") China China sales establishment or investment
Langfang Changyu Pioneer Wine Sales Co., Langfang, Hebei, Langfang, Hebei, Marketing and Acquired through
RMB1,000,000 10 90
Ltd ("Langfang Sales") China China sales establishment or investment
Shanghai Changyu Sales and Distribution Marketing and Acquired through
Shanghai, China Shanghai, China RMB1,000,000 30 70
Co., Ltd. ("Shanghai Sales") sales establishment or investment
Beijing Changyu AFIP Agriculture
Miyun, Beijing, Marketing and Acquired through
development Co., Ltd ("Agriculture Miyun, Beijing, China RMB1,000,000 - 100
China sales establishment or investment
Development")
Beijing Chateau Changyu AFIP Global Co., Acquired through
Beijing, China Beijing, China Manufacturing RMB 64,2750,000 91.53 -
Ltd. (“AFIP”) (d) establishment or investment
Yantai Changyu Wine Sales Co., Ltd. Yantai, Shandong, Yantai, Shandong, Marketing and Acquired through
RMB5,000,000 90 10
("Wines Sales") China China sales establishment or investment
Yantai Changyu Pioneer International Co., Yantai, Shandong, Yantai, Shandong, Marketing and Acquired through
RMB5,000,000 70 30
Ltd. ("Pioneer International") China China sales establishment or investment
Hangzhou Changyu Wine Sales Co., Ltd. Hangzhou, Zhejiang, Hangzhou, Zhejiang, Marketing and Acquired through
RMB500,000 - 100
("Hangzhou Changyu") China China sales establishment or investment
Ningxia Changyu Grape Growing Co., Ltd. Yinchuan, Ningxia, Acquired through
Ningxia, China Plating RMB1,000,000 100 -
(“Ningxia Growing”) China establishment or investment
Huanren Changyu National Wines Sales Benxi, Liaoning, Marketing and Acquired through
Benxi, Liaoning, China RMB2,000,000 100 -
Co., Ltd. ("National Wines") China sales establishment or investment
Liaoning Changyu Golden Icewine Valley Benxi, Liaoning, Acquired through
Benxi, Liaoning, China Manufacturing RMB59,687,300 51 -
Co., Ltd. ("Golden Icewine Valley") (e) China establishment or investment
Yantai Development Zone Changyu Trading Yantai, Shandong, Yantai, Shandong, Marketing and Acquired through
RMB5,000,000 - 100
Co., Ltd ("Development Zone Trading") China China sales establishment or investment
Page 92
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
Shareholding ratio
Principal place of Business (%)
Name of the Subsidiary Registered place Registered capital Acquisition method
business nature (or similar equity
interest)
Shenzhen Changyu Wine Marketing Ltd. Shenzhen, Shenzhen, Marketing and Acquired through
RMB500,000 - 100
("Shenzhen Marketing") (a) Guangdong, China Guangdong, China sales establishment or investment
Yantai Changyu Fushan Trading Company Yantai, Shandong, Yantai, Shandong, Marketing and Acquired through
RMB5,000,000 - 100
("Fushan Trading") China China sales establishment or investment
Beijing AFIP Meeting Center ("Meeting Miyun, Beijing, Acquired through
Miyun, Beijing, China Services RMB500,000 - 100
Center") China establishment or investment
Beijing AFIP Tourism and Culture ("AFIP Miyun, Beijing, Acquired through
Miyun, Beijing, China Tourism RMB500,000 - 100
Tourism") China establishment or investment
Changyu (Ningxia) Wine Co., Ltd. (“Ningxia Acquired through
Ningxia, China Ningxia, China Manufacturing RMB1,000,000 100 -
Wine”) establishment or investment
Yantai Changyu Chateau Tinlot Co., Ltd. Yantai, Shandong, Yantai, Shandong, Wholesale and Acquired through
RMB400,000,000 65 35
("Chateau Tinlot") China China retail establishment or investment
Qing Tong Xia Changyu Wine Marketing Ltd. Marketing and Acquired through
Ningxia, China Ningxia, China RMB500,000 - 100
("Qing Tong Xia Sales") sales establishment or investment
Xinjiang Chateau Changyu Baron Balboa Shihezi, Xinjiang, Shihezi, Xinjiang, Acquired through
Manufacturing RMB550,000,000 100 -
Co., Ltd. (“Chateau Shihezi”) China China establishment or investment
Ningxia Chateau Changyu Moser XV Co., Yinchuan, Ningxia, Yinchuan, Ningxia, Acquired through
Manufacturing RMB2,000,000 100 -
Ltd. (“Chateau Ningxia”) China China establishment or investment
Shaanxi Chateau Changyu Rena Co., Ltd. Xianyang, Shaanxi, Xianyang, Shaanxi, Acquired through
Manufacturing RMB20,000,000 100 -
(“Chateau Changan”) China China establishment or investment
Yantai Changyu Wine Research &
Yantai, Shandong, Yantai, Shandong, Acquired through
Development Centre Co., Ltd. (“R&D Manufacturing RMB805,000,000 68.97 -
China China establishment or investment
Centre”) (f)
Wine
Changyu (HuanRen) Wine Co., Ltd ("Huan Benxi, Liaoning, Acquired through
Benxi, Liaoning, China production RMB5,000,000 100 -
Ren Wine") China establishment or investment
projecting
Xinjiang Changyu Sales Co., Ltd ("Xinjiang Shihezi, Xinjiang, Shihezi, Xinjiang, Marketing and Acquired through
RMB10,000,000 - 100
Sales") China China sales establishment or investment
Ningxia Changyu Trading Co., Ltd ("Ningxia Yinchuan, Ningxia, Yinchuan, Ningxia, Marketing and Acquired through
RMB1,000,000 - 100
Trading") China China sales establishment or investment
Page 93
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
Shareholding ratio
Principal place of Business (%)
Name of the Subsidiary Registered place Registered capital Acquisition method
business nature (or similar equity
interest)
Shaanxi Changyu Rena Wine Sales Co., Ltd Xianyang, Shaanxi, Xianyang, Shaanxi, Marketing and Acquired through
RMB3,000,000 - 100
("Shaanxi Sales") China China sales establishment or investment
Penglai Changyu Wine Sales Co., Ltd Penglai, Shandong, Penglai, Shandong, Marketing and Acquired through
RMB5,000,000 - 100
("Penglai Sales") China China sales establishment or investment
Laizhou Changyu Wine Sales Co., Ltd Laizhou, Shandong, Laizhou, Shandong, Marketing and Acquired through
RMB1,000,000 - 100
("Laizhou Sales") China China sales establishment or investment
Francs Champs Participations SAS (“Francs Investment Acquired through
Cognac, France Cognac, France EUR32,000,000 100 -
Champs”) and trading establishment or investment
Lanzhou Changyu Wine Sales Co., Ltd Lanzhou Gansu, Lanzhou Gansu, Marketing and Acquired through
RMB100,000 - 100
("Lanzhou Sales") (a) China China sales establishment or investment
Marketing and Acquired through
Beijing Retailing Co. Ltd ("Beijing Retailing") Beijing, China Beijing, China RMB500,000 - 100
sales establishment or investment
Tianjin Changyu Pioneer Sales Co., Ltd Marketing and Acquired through
Tianjin, China Tianjin, China RMB500,000 - 100
("Tianjin Pioneer") sales establishment or investment
Fuzhou Changyu Pioneer Sales Co., Ltd Fuzhou, Fujian, Marketing and Acquired through
Fuzhou, Fujian, China RMB500,000 - 100
("Fuzhou Pioneer") (a) China sales establishment or investment
Nanjing Changyu Pioneer Sales Co., Ltd Nanjing, Jiangsu, Nanjing, Jiangsu, Marketing and Acquired through
RMB500,000 - 100
("Nanjing Pioneer") (a) China China sales establishment or investment
Xianyang Changyu Pioneer Sales Co., Ltd Xianyang, Shaanxi, Xianyang, Shaanxi, Marketing and Acquired through
RMB500,000 - 100
("Xianyang Pioneer") (a) China China sales establishment or investment
Shenyang Changyu Pioneer Sales Co., Ltd Shenyang, Liaoning, Shenyang, Liaoning, Marketing and Acquired through
RMB500,000 - 100
("Shenyang Pioneer") (a) China China sales establishment or investment
Jinan Changyu Pioneer Sales Co., Ltd Jinan, Shandong, Jinan, Shandong, Marketing and Acquired through
RMB500,000 - 100
("Jinan Pioneer") (a) China China sales establishment or investment
Shanghai Changyu Pioneer Sales Co., Ltd Marketing and Acquired through
Shanghai, China Shanghai, China RMB500,000 - 100
("Shanghai Pioneer") (a) sales establishment or investment
Fuzhou Changyu Pioneer Sales Co., Ltd Fuzhou, Jiangxi, Fuzhou, Jiangxi, Marketing and Acquired through
RMB500,000 - 100
("Fuzhou Pioneer") (a) China China sales establishment or investment
Shijiazhuang Changyu Pioneer Sales Co., Shijiazhuang, Hebei, Shijiazhuang, Hebei, Marketing and RMB500,000 - 100 Acquired through
Page 94
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
Shareholding ratio
Principal place of Business (%)
Name of the Subsidiary Registered place Registered capital Acquisition method
business nature (or similar equity
interest)
Ltd ("Shijiazhuang Pioneer") (a) China China sales establishment or investment
Hangzhou Yuzefeng Sales Co., Ltd Hangzhou, Zhejiang, Hangzhou, Zhejiang, Marketing and Acquired through
RMB500,000 - 100
("Hangzhou Yuzefeng") (a) China China sales establishment or investment
Jilin Changyu Pioneer Sales Co., Ltd ("Jilin Changchun, Jilin, Changchun, Jilin, Marketing and Acquired through
RMB500,000 - 100
Pioneer") (a) China China sales establishment or investment
Beijing Changyu Pioneer Sales Co., Ltd Marketing and Acquired through
Beijing, China Beijing, China RMB500,000 - 100
("Beijing Pioneer") sales establishment or investment
Harbin Changyu Pioneer Sales Co., Ltd Marketing and Acquired through
Heilongjiang, China Heilongjiang, China RMB500,000 - 100
("Harbin Pioneer") (a) sales establishment or investment
Hunan Changyu Pioneer Sales Co., Ltd Changsha, Hunan, Changsha, Hunan, Marketing and Acquired through
RMB2,000,000 - 100
("Hunan Pioneer") (a) China China sales establishment or investment
Yinchuan Changyu Pioneer Sales Co., Ltd Marketing and Acquired through
Ningxia, China Ningxia, China RMB500,000 - 100
("Yinchuan Pioneer") (a) sales establishment or investment
Kunming Changyu Pioneer Sales Co., Ltd Kunming, Yunnan, Kunming, Yunnan, Marketing and Acquired through
RMB500,000 - 100
("Kunming Pioneer") (a) China China sales establishment or investment
Chongqing Changyu Pioneer Sales Co., Ltd Marketing and Acquired through
Chongqing, China Chongqing, China RMB500,000 - 100
("Chongqing Pioneer") (a) sales establishment or investment
Wuhan Changyu Pioneer Sales Co., Ltd Wuhan, Hubei, Marketing and Acquired through
Wuhan, Hubei, China RMB500,000 - 100
("Wuhan Pioneer") (a) China sales establishment or investment
Hohhot Changyu Pioneer Sales Co., Ltd Hohhot, Inner Hohhot, Inner Marketing and Acquired through
RMB500,000 - 100
("Hohhot Pioneer") (a) Mongolia, China Mongolia, China sales establishment or investment
Chengdu Changyu Pioneer Sales Co., Ltd Chengdu, Sichuan, Chengdu, Sichuan, Marketing and Acquired through
RMB500,000 - 100
("Chengdu Pioneer") (a) China China sales establishment or investment
Nanning Changyu Pioneer Sales Co., Ltd Nanning, Guangxi, Nanning, Guangxi, Marketing and Acquired through
RMB500,000 - 100
("Nanning Pioneer") (a) China China sales establishment or investment
Lanzhou Changyu Pioneer Sales Co., Ltd Lanzhou, Gansu, Lanzhou, Gansu, Marketing and Acquired through
RMB500,000 - 100
("Lanzhou Pioneer") (a) China China sales establishment or investment
Page 95
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
Shareholding ratio
Principal place of Business (%)
Name of the Subsidiary Registered place Registered capital Acquisition method
business nature (or similar equity
interest)
Yantai Roullet Fransac Wine Sales Co., Ltd. Yantai, Shandong, Yantai, Shandong, Marketing and Acquired through
RMB1,000,000 - 100
(“Yantai Roullet Fransac”) China China sales establishment or investment
Hefei Changyu Pioneer Sales Co., Ltd Marketing and Acquired through
Hefei, Anhui, China Hefei, Anhui, China RMB500,000 - 100
("Hefei Pioneer") (a) sales establishment or investment
Urumchi Changyu Pioneer Sales Co., Ltd Marketing and Acquired through
Xinjiang, China Xinjiang, China RMB500,000 - 100
("Urumchi Pioneer") (a) sales establishment or investment
Guangzhou Changyu Pioneer Sales Co., Guanghzou, Guanghzou, Marketing and Acquired through
RMB11,000,000 - 100
Ltd ("Guangzhou Pioneer") (a) Guangdong, China Guangdong, China sales establishment or investment
Yantai Changyu Wine Sales Co., Ltd. ("Wine Yantai, Shandong, Yantai, Shandong, Marketing and Acquired through
RMB5,000,000 100 -
Sales Company") China China sales establishment or investment
Shaanxi Chateau Changyu Rena Tourism Xianxin, Shaanxi, Xianxin, Shaanxi, Acquired through
Tourism RMB1,000,000 - 100
Co., Ltd ("Chateau Tourism") China China establishment or investment
Longkou Changyu Wine Sales Co., Ltd Yantai, Shandong, Yantai, Shandong, Marketing and Acquired through
RMB1,000,000 - 100
("Longkou Sales") China China sales establishment or investment
Business combinations
Societe Civile Argricole Du Chateau De
Bordeaux, France Bordeaux, France Trading EUR30,000 - 100 involving entities not under
Mirefleurs (“Mirefleurs”) (b)
common control
(a) Companies above were deregistered in 2019.
(b) Mirefleurs was disposed as the contribution of L&M Holdings for the year.
Page 96
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
Reasons for the inconsistency between the proportion of shareholdings in a subsidiary and the proportion of voting rights:
(c) Chateau Changyu is a Sino-foreign joint venture established by the Company and a foreign investor, accounting for 70% of Changyu
Chateau's equity interest. Through agreement arrangement, the Company has the full power to control Changyu Chateau's strategic
operating, investing and financing policies. The agreement arrangement will be terminated on 31 December 2022.
(d) AFIP is a limited liability company established by [English Full Name] (“Yantai Dean”) and [English Full Name] (“Beijing Qinglang”). In
June 2019, Yantai Dean transferred 1.31% of its equity to Yantai Changyu.After the equity change, the Company holds 91.53% of its
equity. Through agreement arrangement, the Company has the full power to control AFIP's strategic operating, investing and financing
policies. The agreement arrangement will be terminated on 2 September 2024.
(e) Golden Icewine Valley is a Sino-foreign joint venture established by the Company and a foreign investor, accounting for 51% of Golden
Icewine Valley's equity interest. Through agreement arrangement, the Company has the full power to control Golden Icewine Valley's
strategic operating, investing and financing policies. The agreement arrangement will be terminated on 31 December 2021.
(f) R&D Centre is a joint venture established by the Company and CADF, accounting for 68.97% of R&D Centre's equity interest. Through
agreement arrangement in Note V. 27, the Company has the full power to control R&D Centre's strategic operating, investing and
financing policies. The agreement arrangement will be terminated on 22 May 2026. As at 31 December 2019, remaining investment of
CADF accounts for 31.03% of the registered capital.
Page 97
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(2) Material non-wholly owned subsidiaries
Proportion of Comprehensive
Dividend declared Balance of non-
ownership income attributable
to non-controlling controlling interests
Name of the Subsidiary interest held by to non-controlling
shareholders during at the end of the
non-controlling interests for the
the year year
interests year
Xinjiang Tianzhu 40% 3,028,510 - (47,584,138)
Dicot 25% (1,509,224) 1,366,691 (31,869,464)
Chateau Changyu 30% - - (12,365,016)
Langfang Castel 51% 1,288,873 - (19,639,108)
AFIP 8% - - (56,409,393)
Golden Icewine Valley 49% - - (33,319,062)
IWCC 15% (1,697,700) 846,398 (53,931,129)
Australia Kilikanoon Estate 17% 258,494 163,705 (14,810,422)
Total 1,368,953 2,376,794 (269,927,732)
Page 98
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(3) Key financial information about material non-wholly owned subsidiaries
The following table sets out the key financial information of the above subsidiaries without offsetting internal transactions, but with adjustments
made for the fair value adjustment at the acquisition date and any differences in accounting policies:
Xinjiang Tianzhu Dicot Chateau Changyu Langfang Castel
2019 2018 2019 2018 2019 2018 2019 2018
Current assets 24,829,435 27,390,495 470,219,326 464,421,130 142,525,011 141,298,023 19,021,766 17,659,511
Non-current assets 61,886,751 66,486,795 91,571,444 99,080,668 113,168,202 114,694,168 14,958,223 16,001,682
Total assets 86,716,186 93,877,290 561,790,770 563,501,798 255,693,213 255,992,191 33,979,989 33,661,193
Current liabilities 36,185 - 380,788,880 381,659,315 174,843,671 171,869,662 4,023,101 3,358,322
Non-current liabilities 5,336,114 5,336,114 53,110,213 54,520,937 400,000 - - -
Total liabilities 5,372,299 5,336,114 433,899,093 436,180,252 175,243,671 171,869,662 4,023,101 3,358,322
Operating income - 18,803 289,273,434 327,550,545 87,051,981 121,235,278 - 5,038,281
Net profit (7,571,274) (6,902,010) 6,463,473 3,811,465 611,622 3,710,124 (123,706) (3,479,492)
Total comprehensive income (7,571,274) (6,902,010) 6,036,896 3,376,761 611,622 3,710,124 (123,706) (3,479,492)
Cash flows from operating
20,457 43,112 (8,744,451) 6,129,923 6,919,481 16,096,447 7,875 673,422
activities
Page 99
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
AFIP Golden Icewine Valley Chile Indomita Wine Group Australia Kilikanoon Estate
2019 2018 2019 2018 2019 2018 2019 2018
Current assets 251,829,164 219,973,582 38,234,720 45,194,591 223,722,688 214,784,490 94,473,620 87,634,707
Non-current assets 452,444,880 461,115,089 23,291,375 23,920,890 291,630,115 300,969,342 61,770,599 63,759,866
Total assets 704,274,044 681,088,671 61,526,095 69,115,481 515,352,803 515,753,832 156,244,219 151,394,573
Current liabilities 45,607,611 62,598,545 12,077,206 14,974,458 142,365,749 148,359,328 21,801,347 13,387,942
Non-current liabilities 201,500 - 100,000 100,000 5,152,974 4,976,161 50,741,981 51,893,171
Total liabilities 45,809,111 62,598,545 12,177,206 15,074,458 147,518,723 153,335,489 72,543,328 65,281,113
Operating income 266,347,444 159,369,783 32,223,734 57,290,490 253,543,171 262,104,563 56,399,115 57,648,905
Net profit 30,398,744 16,555,846 (5,764,649) 870,994 16,279,461 15,934,347 463,409 217,869
Total comprehensive income 30,398,744 16,555,846 (5,764,649) 870,994 10,322,810 17,465,900 (1,477,115) (1,550,720)
Cash flows from operating
27,503,336 19,627,933 1,655,465 289,782 5,073,408 3,584,648 479,624 (1,522,151)
activities
Page 100
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
2 Transactions that cause changes in interests in subsidiaries that do not result in loss of
control
(1) Changes in interests in subsidiaries:
Proportion of ownership
interest held by non-
Year Name of the Subsidiary Acquisition date
controlling interests
acquired
2019 AFIP 1.31% 21 June 2019
Australia Kilikanoon
2019 2.5% 08 October 2019
Estate
(2) Impact from transactions with non-controlling interests and equity attributable to the
shareholders of the Company:
Australia Kilikanoon
AFIP
Estate
Purchase cost
- Cash 8,479,444 3,140,108
Total 8,479,444 3,140,108
Less: share of net assets in subsidiaries based on
8,724,476 1,990,057
the shares acquired
Difference
Including: Adjustment on capital reserve (245,032) 1,150,051
VIII. Risk related to financial instruments
The Group has exposure to the following main risks from its use of financial instruments in
the normal course of the Group’s operations:
- Credit risk
- Liquidity risk
- Interest rate risk
- Foreign currency risk
The following mainly presents information about the Group’s exposure to each of the above
risks and their sources, their changes during the year, and the Group’s objectives, policies
and processes for measuring and managing risks, and their changes during the year.
The Group aims to seek appropriate balance between the risks and benefits from its use of
financial instruments and to mitigate the adverse effects that the risks of financial instruments
have on the Group’s financial performance. Based on such objectives, the Group’s risk
management policies are established to identify and analyse the risks faced by the Group, to
set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed regularly to reflect changes in market
conditions and the Group’s activities.
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Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
1 Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the
other party by failing to discharge an obligation. The Group’s credit risk is primarily
attributable to cash at bank, receivables, debt investments and derivative financial
instruments entered into for hedging purposes. Exposure to these credit risks are monitored
by management on an ongoing basis.
The cash at bank of the Group is mainly held with well-known financial institutions.
Management does not foresee any significant credit risks from these deposits and does not
expect that these financial institutions may default and cause losses to the Group.
As at 31 December 2019, the Group's maximum exposure to credit risk which will cause a
financial loss to the Group due to failure to discharge an obligation by the counterparties.
In order to minimise the credit risk, the Group has adopted a policy to ensure that all sales
customers have good credit records. According to the policy of the Group, credit review is
required for clients who require credit transactions. In addition, the Group continuously
monitors the balance of account receivable to ensure there’s no exposure to significant bad
debt risks. For transactions that are not denominated in the functional currency of the
relevant operating unit, the Group does not offer credit terms without the specific approval of
the Department of Credit Control in the Group. In addition, the Group reviews the recoverable
amount of each individual trade debt at each balance sheet date to ensure that adequate
impairment losses are made for irrecoverable amounts. In this regard, the management of
the Group considers that the Group's credit risk is significantly reduced.
Since the Group trades only with recognised and creditworthy third parties, there is no
requirement for collateral. Concentrations of credit risk are managed by
customer/counterparty, by geographical region and by industry sector. As at 31 December
2019, 20.3% of the Group trade receivables are due from top five customers (31 December
2018: 19.8%). There is no collateral or other credit enhancement on the balance of the trade
receivables of the Group.
2 Liquidity risk
Liquidity risk is the risk that an enterprise will encounter difficulty in meeting obligations that
are settled by delivering cash or another financial asset. The Company and its individual
subsidiaries are responsible for their own cash management, including short-term investment
of cash surpluses and the raising of loans to cover expected cash demands (subject to
approval by the Company’s board when the borrowings exceed certain predetermined
levels). The Group’s policy is to regularly monitor its liquidity requirements and its compliance
with lending covenants, to ensure that it maintains sufficient reserves of cash, readily
realisable marketable securities and adequate committed lines of funding from major
financial institutions to meet its liquidity requirements in the short and longer term.
Page 102
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
The following tables set out the remaining contractual maturities at the balance sheet date of
the Group’s financial liabilities, which are based on contractual undiscounted cash flows
(including interest payments computed using contractual rates or, if floating, based on rates
current at the balance sheet date) and the earliest date the Group can be required to pay:
2019 Contractual undiscounted cash flow Carrying amount
at balance sheet
Item Within 1 year or on More than 2 years date
demand 1 to 2 years but less than 5 More than 5 years Total
years
Short-term loans 768,403,432 - - - 768,403,432 754,313,744
Accounts payable 570,252,612 - - - 570,252,612 570,252,612
Other payables 450,532,485 - - - 450,532,485 450,532,485
Long-term loans (including the
121,077,261 51,214,719 77,814,096 5,577,899 255,683,975 245,718,722
portion due within one year)
Long-term payables (including
the portion due within one 36,462,109 36,054,170 106,374,904 55,473,753 234,364,936 225,000,000
year)
Total 1,946,727,899 87,268,889 184,189,000 61,051,652 2,279,237,440 2,245,817,563
2018 Contractual undiscounted cash flow Carrying amount
at balance sheet
Item Within 1 year or on More than 2 years date
demand 1 to 2 years but less than 5 More than 5 years Total
years
Short-term loans 701,861,292 - - - 701,861,292 688,002,410
Accounts payable 713,572,881 - - - 713,572,881 713,572,881
Other payables 608,479,890 - - - 608,479,890 608,479,890
Long-term loans (including the
126,176,001 121,080,909 47,493,128 - 294,750,038 275,421,450
portion due within one year)
Long-term payables (including
the portion due within one 36,921,367 36,462,109 107,093,324 90,356,300 270,833,100 259,000,000
year)
Total 2,187,011,431 157,543,018 154,586,452 90,356,300 2,589,497,201 2,544,476,631
3 Interest rate risk
Interest-bearing financial instruments at variable rates and at fixed rates expose the Group to
cash flow interest rate risk and fair value interest risk, respectively. The Group determines the
appropriate weightings of the fixed and floating rate interest-bearing instruments based on
the current market conditions and performs regular reviews and monitoring to achieve an
appropriate mix of fixed and floating rate exposure.
(1) As at 31 December, the Group held the following interest-bearing financial instruments:
Fixed rate instruments:
2019 2018
Item Effective interest Effective interest
Amounts Amounts
rate rate
Financial assets
- Cash at bank 1.1%-2.75% 106,128,600 1.5%-3.8% 173,042,400
Financial liabilities
- Short-term loans 0.35%-4.9% (204,313,744) 0.35%-4.9% (138,002,410)
- Long-term loans (including the
1%-2.5% (189,468,722) 1%-3% (194,171,450)
portion due within one year)
- Long-term payables (including
the portion due within one 1.20% (225,000,000) 1.20% (259,000,000)
year)
Total (512,653,866) (418,131,460)
Page 103
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
Variable rate instruments:
2019 2018
Item Effective interest Effective interest
Amounts Amounts
rate rate
Financial assets
- Cash at bank 0.3%-1.75% 1,459,595,405 0.3%-1.75% 1,302,543,742
Financial liabilities
- Short-term loans LPR (550,000,000) LPR (550,000,000)
- Long-term loans (including the 90% of 5-year 90% of 5-year
(56,250,000) (81,250,000)
portion due within one year) LPR LPR
Total 853,345,405 671,293,742
(2) Sensitivity analysis
Management of the Group believes interest rate risk on bank deposit is not significant,
therefore does not disclose sensitivity analysis for interest rate risk.
As at 31 December 2019, based on assumptions above, it is estimated that a general
increase of 50 basis points in interest rates, with all other variables held constant, would
decrease the Group’s equity by RMB2,273,438 (2018: RMB2,016,667), and net profit by
RMB2,273,438 (2018: RMB2,016,667).
The sensitivity analysis above indicates the instantaneous change in the net profit and equity
that would arise assuming that the change in interest rates had occurred at the balance
sheet date and had been applied to re-measure those financial instruments held by the
Group which expose the Group to fair value interest rate risk at the balance sheet date. In
respect of the exposure to cash flow interest rate risk arising from floating rate non-derivative
instruments held by the Group at the balance sheet date, the impact on the net profit and
equity is estimated as an annualised impact on interest expense or income of such a change
in interest rates.
4 Foreign currency risk
In respect of cash at bank and on hand, accounts receivable and payable, short-term loans
denominated in foreign currencies other than the functional currency, the Group ensures that
its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot
rates when necessary to address short-term imbalances.
(1) As at 31 December, the Group’s exposure to currency risk arising from recognised assets or
liabilities denominated in foreign currencies is presented in the following tables. For
presentation purposes, the amounts of the exposure are shown in Renminbi, translated using
the spot rate at the balance sheet date. Differences resulting from the translation of the
financial statements denominated in foreign currency are excluded.
Page 104
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
2019 2018
Balance at foreign Balance at RMB Balance at foreign Balance at RMB
currency equivalent currency equivalent
Cash at bank and on hand 6,662,525 46,592,414 7,497,971 51,483,850
- USD 6,525,673 45,524,399 7,472,303 51,283,910
- EUR 136,628 1,067,814 25,455 199,753
- HKD 224 201 213 187
Short-term loans 12,490,000 87,132,738 11,000,000 75,495,200
- USD 12,490,000 87,132,738 11,000,000 75,495,200
(2) The following are the exchange rates for Renminbi against foreign currencies applied by the
Group:
Balance sheet date mid-spot
Average rate
rate
2019 2018 2019 2018
USD 6.8948 6.7158 6.9762 6.8632
EUR 7.7161 7.8113 7.8155 7.8473
HKD 0.8801 0.8464 0.8958 0.8762
(3) Sensitivity analysis
Assuming all other risk variables remained constant, a 5% strengthening of the Renminbi
against the US dollar, Euro and Hong Kong dollar at 31 December would have impact on the
Group’s equity and net profit by the amount shown below. whose effect is in Renminbi and
translated using the spot rate at the year-end date:
Equity Net profit
31 December 2019
USD 2,080,417 2,080,417
EUR (53,391) (53,391)
HKD (10) (10)
Total 2,027,016 2,027,016
31 December 2018
USD 1,210,565 1,210,565
EUR (53,391) (53,391)
HKD - -
Total 1,157,174 1,157,174
A 5% weakening of the Renminbi against the US dollar, Euro and Hong Kong dollar at 31
December would have had the equal but opposite effect to the amounts shown above, on the
basis that all other variables remained constant.
Page 105
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
IX. Fair value disclosure
All financial assets and financial liabilities held by the Group are carried at amounts not materially different from their fair value at 31 December
2019 and 31 December 2018.
X. Related parties and related party transactions
1 Information about the parent of the Company
Registered Shareholding Percentage of voting
Company name Business nature Registered capital Ultimate controlling party of the Company
place percentage (%) rights (%)
Jointly controlled by Yantai GuoFeng
Investment Holding Ltd, ILLVA
SARONNO HOLDING SPA,
Changyu Group Yantai Manufacturing 50,000,000 50.4% 50.4%
International Finance Corporation and
Yantai Yuhua Investment and
Development Company Limited.
There are no changes on the registered capital and shareholding percentage / percentage of voting rights of the parent company.
Page 106
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
2 Information about the subsidiaries of the Company
For information about the subsidiaries of the Company, refer to Note VII.1.
3 Information about joint ventures and associates of the Company
For information about the joint ventures and associates of the Company, refer to Note VII.3.
Joint ventures and associates that have related party transactions with the Group during this
year or the previous year are as follows:
Name of entity Relationship with the Company
L&M Holdings Joint venture of the Group
4 Information on other related parties
Name of other related parties Related party relationship
Yantai Changyu Wine Culture Museum Co., Controlled by the same parent
Ltd.("Wine Culture Museum") company
Yantai Changyu International Window of the Wine Controlled by the same parent
City Co., Ltd.("Window of the Wine City”) company
Yantai Shenma Packaging Co., Ltd. (“Shenma Controlled by the same parent
Packaging”) company
Yantai Zhongya Pharmaceutical Tonic Wine Co., Controlled by the same parent
Ltd.("Zhongya Pharmaceutical") company
Yantai Changyu Culture Tourism Production Sales Controlled by the same parent
Co., Ltd.(" Culture Sales") company
Yantai Changyu Culture Tourism Development Co., Controlled by the same parent
Ltd.(" Culture Development ") company
L&M Holdings Joint ventures
Mirefleurs Subsidiaries of the joint venture
CHATEAU DE LIVERSAN (“LIVERSAN”） Subsidiaries of the joint venture
Page 107
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
5 Transactions with related parties
(1) Product procurement
Related parties Nature of transaction 2019 2018
Shenma Packaging Product procurement 133,587,430 173,238,289
Zhongya Pharmaceutical Product procurement 1,244,991 15,690,930
Wine Culture Museum Product procurement 10,832,751 16,784,711
Window of the Wine City Product procurement 8,556,698 7,913,342
Culture sales Product procurement 573,849 35,857
Culture development Product procurement 2,820,545 -
Mirefleurs Product procurement 6,429,542 -
L&M Holdings Product procurement 1,632,941 -
Total 165,678,747 213,663,129
(2) Sales of goods
Related parties Nature of transaction 2019 2018
Culture development Sales of goods 9,592,510 -
Wine Culture Museum Sales of goods 8,305,228 23,515,379
Window of the Wine City Sales of goods 7,723,602 13,821,555
Zhongya Pharmaceutical Sales of goods 4,474,004 4,552,269
Culture sales Sales of goods 3,840,804 2,914,686
Shenma Packaging Sales of goods 347,453 348,247
Total 34,283,601 45,152,136
(3) Leases
(a) As the lessor
Lease income Lease income
Type of assets
Name of lessee recognised in recognised in
leased
2019 2018
Shenma Packaging Offices and plants 1,492,550 1,478,982
Zhongya Pharmaceutical Offices and plants 522,936 518,182
Total 2,015,486 1,997,164
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Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(b) As the lessee
Type of assets Lease expense Lease expense
Name of lessor
leased recognised in 2019 recognised in 2018
Changyu Group Office buildings 1,612,118 1,538,840
Changyu Group Offices and plants 1,394,762 1,331,364
Changyu Group Offices and plants 4,184,286 3,994,091
Total 7,191,166 6,864,295
(4) Remuneration of key management personnel
Item 2019 2018
Remuneration of key management personnel 12,297,689 13,102,005
(5) Other related party transactions
Related parties Nature of transaction Note 2019 2018
Changyu Group Royalty (a) 35,938,014 73,976,395
Royalty deducted in the
Changyu Group (a) (218,649,636) -
previous years
Changyu Group Patent fee - 50,000
Total (182,711,622) 74,026,395
(a) Contract of trademarks usage
Pursuant to a royalty agreement dated 18 May 1997, starting from 18 September 1997,
the Company may use certain trademarks of Changyu Group Company, which have
been registered with the PRC Trademark Office. An annual royalty fee at 2% of the
Group's annual sales is payable to Changyu Group. The license is effective until the
expiry of the registration of the trademarks.
According to the above royalty agreement, Changyu Group collected a total of
RMB576,507,809 for royalty from 2013 to 2019, of which 51% was used to promote
trademarks such as Changyu and the product of this contract, totalling
RMB294,018,093. The amount is used for promotion of Changyu and other trademarks
and the products of this contract, totalling RMB62,250,368, the difference is
RMB231,768,615.
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Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
On 18 May 2019, the general meeting of shareholders approved the proposal of the
amendment to the royalty agreement. Article 6.1 of the royalty agreement with
Changyu Group was amended to: During the validity period of this contract, the Group
pays Changyu Group royalty on an annual basis. The royalty is calculated based on
0.98% of the sales volume of the Group ’s contract products using this trademark. The
article is amended to: The royalty paid to the Changyu Group by the Group shall not be
used to promote this trademark and the contract products.
In addition, in accordance with agreement the Group signed with Changyu Group in
November 2019, Changyu Group promised to offset the difference of RMB231,768,615
above with the royalty for four years, i.e. from 2019 to 2022.If it is not sufficient for
deduction, the rest will be repaid in a one-off manner in 2023. If there is surplus, the
surplus part of the royalty will be charged from the year when the surplus occurs.
As at 31 December 2019, the Group offset the royalty for the year of RMB182,711,622,
including the royalty of RMB35,938,014 occurred in 2019 and the deduction of the
previous year's sales expenses of RMB218,649,636 (exclusive of tax).
6 Receivables from and payables to related parties
Receivables from related parties
2019 2018
Provision for Provision for
Item Related party
Book value bad and Book value bad and
doubtful debts doubtful debts
Zhongya
Accounts receivable Pharmaceutica 4,292,386 909,935 2,768,391 -
l
Shenma
Accounts receivable - - 17,137 -
Packaging
Window of the
Accounts receivable 1,610,485 633,980 1,911,157 -
Wine City
Changyu
Other non-current assets 193,674,320 - - -
Group
Shenma
Other receivables 813,400 - 813,400 -
Packaging
Payables to related parties
Item Related party 2019 2018
Accounts payable Shenma Packaging 39,893,538 55,366,785
Accounts payable Zhongya
1,024,310 6,722,667
Pharmaceutical
Accounts payable Wine Culture Museum 4,874,963 4,646,731
Accounts payable Window of the Wine
3,758,054 4,789,600
City
Accounts payable Culture sales 297,956 -
Accounts payable Culture development 142,610 -
Other payables Shenma Packaging 450,000 450,000
Other payables Changyu Group - 78,414,978
Page 110
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
XI. Capital management
The Group’s primary objectives when managing capital are to safeguard its ability to continue
as a going concern, so that it can continue to provide returns for shareholders, by pricing
products and services commensurately with the level of risk and by securing access to
finance at a reasonable cost.
The Group’s capital structure is regularly reviewed and managed to achieve an optimal
structure and return for shareholders. Factors for the Group’s consideration include: its future
funding requirements, capital efficiency, actual and expected profitability, expected cash
flows, and expected capital expenditure. Adjustments are made to the capital structure in
light of changes in economic conditions affecting the Group.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital
requirements.
XII. Commitments and contingencies
1 Significant commitment
(1) Capital commitments
Item 2019 2018
Long-term assets acquisition commitment 679,980,000 996,675,000
Total 679,980,000 996,675,000
(2) Operating lease commitments
As at 31 December, the total future minimum lease payments under non-cancellable
operating leases of the Group’s properties were payable as follows:
Item 2019 2018
Within 1 year (inclusive) 17,756,000 20,576,000
Over 1 year but within 2 years (inclusive) 16,189,000 11,757,000
Over 2 years but within 3 years (inclusive) 9,757,000 10,064,000
Over 3 years 89,550,940 84,095,000
Total 133,252,940 126,492,000
2 Contingencies
The Group do not have any significant contingencies as at balance sheet date.
Page 111
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
XIII. Subsequent events
1 Distribution of dividends on ordinary shares approved after the balance sheet date
According to the proposal of the Board of Directors on 22 April 2020, the Company intends to
distribute cash dividend totaling RMB479,824,800 to all shareholders of 685,464,000 capital
shares for the year ended 31 December 2019 on the basis of RMB7.0 (including tax) for
every 10 shares. The proposal is subject to the approval by the Shareholders’ meeting. This
distribution of profit in cash has not been recognised as a liability at the balance sheet date.
2 Impact of COVID-19
Since the outbreak of COVID-19in January 2020, the Company has been proactively
performing prevention and control measures internally. The Company has also fulfilled its
social responsibility while conducting prevention and control measures and operation. After
the outbreak, the Company has analysed the possible impact, and sorted out all business
objectives and adjusted operation contingency plans to make sure the normal business
operations.
The Company will closely follow the development of COVID-19, assess and proactively react
to the possible impacts on the financial position and financial performance etc.
XIV. Other significant items
1 Segment reporting
The Group is principally engaged in the production and sales of wine, brandy, and sparkling
wine in China, France, Spain, Chile and Australia. In accordance with the Group's internal
organisation structure, management requirements and internal reporting system, the Group's
operation is divided into four parts: China, Spain, France, Chile and Australia. The
management periodically evaluates segment results, in order to allocate resources and
evaluate performances. In 2019, over 89% of revenue, more than 98% of profit and over
92% of non-current assets derived from China / are located in China. Therefore, the Group
does not need to disclose additional segment report information.
Page 112
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
XV. Notes to the Company’s financial statements
1 Accounts receivable
(1) Accounts receivable by customer type are as follows:
Type 31 December 2019 31 December 2018
Amounts due from related parties 2,589,936 1,447,973
Sub-total 2,589,936 1,447,973
Less: Provision for bad and doubtful debts 601,610 -
Total 1,988,326 1,447,973
(2) The ageing analysis of accounts receivable is as follows:
Ageing 2019 2018
Within 1 year (inclusive) 2,019,936 1,447,973
Over 1 year but within 2 years (inclusive) 570,000 -
Sub-total 2,589,936 1,447,973
Less: Provision for bad and doubtful debts 601,610 -
Total 1,988,326 1,447,973
The ageing is counted starting from the date when account receivables are recognised.
(3) Accounts receivable by provisioning method
(a) Assessment of ECLs on accounts receivable in 2019:
At all times the Company measures the impairment loss for accounts receivable at an
amount equal to lifetime ECLs, and the ECLs are based on the number of overdue
days and the loss given default. According to the historical experience of the Company,
there are no significant differences in the losses of different customer groups.
Therefore, different customer groups are not further distinguished when calculating
impairment loss based on the overdue information.
Carrying amount at Impairment loss at
Loss given default
the end of the year the end of the year
Current 0.8% 1,449,936 12,179
Overdue for 1 to 30
3.4% 570,000 19,431
days
Overdue for 330 to 360
100.0% 570,000 570,000
days
Total 23.2% 2,589,936 601,610
Page 113
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
The loss given default is measured based on the actual credit loss experience in the
past 12 months, and is adjusted taking into consideration the differences among the
economic conditions during the historical data collection period, the current economic
conditions and the economic conditions during the expected lifetime.
(b) Impairment of account receivables in 2018
Under previous financial instruments standards, provision for impairments is mde when
there is objective evidence of impairment.
(4) Accounts receivable by debtor at the end of the year:
Provisio
Percentage of n for bad
Relationship with the Balance of account
Name Ageing total and
Group receivable
receivables doubtful
debts
Zhongya
Pharmaceutica Other related parties of Within 1
l the Company 2,589,936 year 100% 601,610
2 Receivables under financing
Item Note 2019 2018
Bills receivable (1) 41,679,635 -
Total 41,679,635 -
(1) The pledged bills receivable of the Company at the end of the year
As at 31 December 2019, there was no pledged bills receivable (31 December 2018: Nil).
(2) Outstanding endorsed bills that have not matured at the end of the year
Amount derecognised at
Item
year end
Bank acceptance bills 65,303,181
Total 65,303,181
As at 31 December 2019, bills endorsed by the Company to other parties which are not yet
due at the end of the period is RMB65,303,181 (31 December 2018: RMB94,755,124). The
notes are used for payment to suppliers. The Company believes that due to good reputation
of bank, the risk of notes not accepting by bank on maturity is very low, therefore
derecognise the note receivables endorsed. If the bank is unable to pay the notes on
maturity, according to the relevant laws and regulations of China, the Company would
undertake limited liability for the notes.
Page 114
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
3 Other receivables
Note 31 December 2019 31 December 2018
Interest receivable (1) 90,355 254,088
Dividends receivable (2) 200,000,000 500,000,000
Others (3) 386,334,603 525,389,268
Total 586,424,958 1,025,643,356
(1) Interest receivable
(a) Interest receivable by category:
Item 31 December 2019 31 December 2018
Interest receivable on bank deposits 90,355 254,088
Total 90,355 254,088
(b) Significant overdue interest: N/A
(2) Dividends receivable
Item 31 December 2019 31 December 2018
Dividends to subsidiaries 200,000,000 500,000,000
Total 200,000,000 500,000,000
(3) Others
(a) Others by customer type:
Customer type 31 December 2019 31 December 2018
Amounts due from subsidiaries 385,328,319 523,579,831
Amounts due from related parties 813,440 813,440
Others 192,844 995,997
Sub-total 386,334,603 525,389,268
Less: Provision for bad and doubtful debts - -
Total 386,334,603 525,389,268
Page 115
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(b) The ageing analysis is as follows:
Ageing 2019 2018
Within 1 year (inclusive) 386,314,603 525,362,872
Over 1 year but within 2 years (inclusive) - 26,396
Over 2 years but within 3 years (inclusive) 20,000 -
Sub-total 386,334,603 525,389,268
Less: Provision for bad and doubtful debts - -
Total 386,334,603 525,389,268
The ageing is counted starting from the date when other receivables are recognised.
(c) Others by method of provisioning
2019 2018
Provision for bad and Provision for bad and Carrying
Book value Book value
Category doubtful debts doubtful debts amount
Carrying amount
Percentage Percentag Percentage Percentage
Amount Amount Amount Amount
(%) e (%) (%) (%)
Individual
assessment
- Total other
- - - - - 525,389,268 100 - - 525,389,268
receivables
Collective
assessment
- Amounts due
from 385,328,319 99.7 - - 385,328,319 523,579,831 99.7 - - 523,579,831
subsidiaries
- Amounts due
from related 813,440 0.2 - - 813,440 813,440 0.1 - - 813,440
parties
- Amounts due
from third 192,844 0.1 - - 192,844 995,997 0.2 - - 995,997
parties
Total 386,334,603 100.0 - - 386,334,603 525,389,268 100 - - 525,389,268
(d) Movements of provisions for bad and doubtful debts
As at 31 December 2019, no bad and doubtful debt provision was made for other
receivables (31 December 2018: Nil).
As at 31 December 2019, the Company has no other receivables written off (31
December 2018: Nil).
Page 116
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(e) Others categorised by nature
Nature of other receivables 2019 2018
Amounts due from subsidiaries 385,328,319 523,579,831
Amounts due from related parties 813,440 813,440
Others 192,844 995,997
Sub-total 386,334,603 525,389,268
Less: Provision for bad and doubtful debts - -
Total 386,334,603 525,389,268
(f) Five largest others-by debtor at the end of the year
Percentage of Ending balance of
Nature of the Balance at the
Debtor Ageing ending balance of provision for bad
receivable end of the year
others (%) and doubtful debts
Amounts due Within 1
Sales Company 292,380,248 75.7% -
from subsidiaries year
Amounts due Within 1
R&D Centre 65,016,104 16.8% -
from subsidiaries year
Amounts due Within 1
Laizhou Sales 12,469,834 3.2% -
from subsidiaries year
Amounts due Within 1
Dicot 3,692,043 1.0% -
from subsidiaries year
Amounts due Within 1
AFIP 1,680,926 0.4% -
from subsidiaries year
Total 375,239,155 97.1%
4 Long-term equity investments
(1) Long-term equity investments by category:
2019 2018
Item Provision for Provision for
Book value Carrying amount Book value Carrying amount
impairment impairment
Investments in
7,432,422,621 - 7,432,422,621 7,420,803,069 - 7,420,803,069
subsidiaries
Total 7,432,422,621 - 7,432,422,621 7,420,803,069 - 7,420,803,069
Page 117
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(2) Investments in subsidiaries:
Balance at the
Additions during Decrease during Balance at the end
Subsidiary beginning of the
the year the year of the year
year
Xinjiang Tianzhu 60,000,000 - - 60,000,000
Kylin Packaging 23,176,063 - - 23,176,063
Chateau Changyu 28,968,100 - - 28,968,100
Pioneer International 3,500,000 - - 3,500,000
Ningxia Growing 36,573,247 - - 36,573,247
National Wines 2,000,000 - - 2,000,000
Golden Icewine Valley 30,440,500 - - 30,440,500
Chateau Beijing 579,910,000 8,479,444 - 588,389,444
Sales Company 7,200,000 - - 7,200,000
Langfang Sales 100,000 - - 100,000
Langfang Castel 19,835,730 - - 19,835,730
Wine Sales 4,500,000 - - 4,500,000
Shanghai Marketing 300,000 - - 300,000
Beijing Sales 850,000 - - 850,000
Jingyang Sales 100,000 - - 100,000
Jingyang Wine 900,000 - - 900,000
Ningxia Wine 222,309,388 - - 222,309,388
Chateau Ningxia 453,463,500 - - 453,463,500
Chateau Tinlot 212,039,586 - - 212,039,586
Chateau Shihezi 812,019,770 - - 812,019,770
Chateau Changan 803,892,258 - - 803,892,258
R&D Centre 3,288,906,445 - - 3,288,906,445
Huanren Wine 22,200,000 - - 22,200,000
Wine Sales Company - - - -
Francs Champs 236,025,404 - - 236,025,404
Dicot 190,150,544 - - 190,150,544
Chile Indomita Wine
274,248,114 - - 274,248,114
Group
Australia Kilikanoon
107,194,420 3,140,108 - 110,334,528
Estate
Total 7,420,803,069 11,619,552 - 7,432,422,621
For information about the subsidiaries of the Company, refer to Note VII.
Page 118
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
5 Operating income and operating costs
2019 2018
Item
Income Cost Income Cost
Principal activities 738,011,458 653,860,504 874,292,088 772,497,769
Other operating activities 2,844,904 1,643,559 2,154,982 1,989,262
Total 740,856,362 655,504,063 876,447,070 774,487,031
Details of operating income:
2019 2018
Operating income from principal activities
- Sale of goods 738,011,458 874,292,088
Sub-total 738,011,458 874,292,088
Income from other business
- Rental income 2,844,904 2,154,982
Total 740,856,362 876,447,070
6 Investment income
Item 2019 2018
Income from long-term equity investments accounted
621,620,723 964,128,659
for using cost method
7 Transactions with related parties
(1) Product procurement
Related parties Nature of transaction 2019 2018
Subsidiary of the parent
Product procurement 161,271,826 209,808,816
company
Other related parties of the
Product procurement 60,154,605 88,897,126
Company
Total 221,426,431 298,705,942
(2) Sales of goods
Related parties Nature of transaction 2019 2018
Subsidiary of the parent
Sales of goods 731,092,089 867,995,960
company
Other related parties of the
Sales of goods 9,764,273 8,451,110
Company
Total 740,856,362 876,447,070
Page 119
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(3) Guarantee
The Company as the guarantor
Amount of Inception date of Maturity date of Guarantee
Guarantee holder
guarantee guarantee guarantee expired (Y/N)
R&D Centre 500,000,000 08 March 2017 08 March 2022 No
Australia Kilikanoon
17,000,000 13 December 2018 13 December 2023 No
Estate
Total 517,000,000
(4) Sale of fixed assets
Related parties of the
Nature of transaction 2019 2018
Company
Subsidiary of the parent
Sale of fixed assets - 134,445
company
Total - 134,445
(5) Interest income occupied by capital
Related parties Nature of transaction 2019 2018
Subsidiary of the parent Interest income
- 35,823,556
company occupied by capital
Total - 35,823,556
(6) Leases
(a) As the lessor
Lease income Lease income
Name of lessee Type of assets leased
recognised in 2019 recognised in 2018
Other related parties
Offices and plants 2,015,486 1,997,164
of the Company
Total 2,015,486 1,997,164
(b) As the lessee
Lease expense Lease expense
Name of lessor Type of assets leased
recognised in 2019 recognised in 2018
Other related parties
Office buildings 1,394,762 1,331,364
of the Company
Total Office buildings 1,394,762 1,331,364
Page 120
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
(8) Other related party transactions
Related parties Nature of transaction 2019 2018
Changyu Group Patent fee - 50,000
Total - 50,000
8 Receivables from and payables to related parties
Receivables from related parties
2019 2018
Provision for Provision for
Item Related party
Book value bad and Book value bad and
doubtful debts doubtful debts
Other related parties
Accounts receivable 2,589,936 601,610 1,447,973 -
of the Company
Subsidiary of the
Other receivables 385,328,319 - 523,579,831 -
parent company
Other related parties
Other receivables 813,440 - 813,440 -
of the Company
Subsidiary of the
Other non-current assets 1,427,700,000 - 972,700,000 -
parent company
Payables to related parties
Item Related party 2019 2018
Accounts Other related parties of
11,630,361 28,892,583
payable the Company
Other Subsidiary of the parent
381,487,360 585,044,038
payables company
Other related parties of
Other payables 450,000 450,000
the Company
XVI. Non-recurring profit and loss statement in 2019
Item Amount Note
Gain from disposal of equity
(1) Profit and loss from disposal of non-current assets 6,272,676 investment of Mirefleurs is
RMB 6,233,661.
Government grants recognised through profit or loss
(excluding those having close relationships with the
(2) 84,837,581
Group’s operation and enjoyed in fixed amount or
quantity according to uniform national standard)
Detail of royalty deducted in
(3) Other items qualified as extraordinary gain and loss 218,649,636 the previous years, see Note
X. 5 (5) (a)
Other non-operating income and expenses besides
(4) 7,298,479
items above
Sub-total 317,058,372
(5) Tax effect (79,367,893)
(6) Effect on non-controlling interests after taxation (30,661)
Total 237,659,818
Note: Extraordinary gain and loss items (1) to (4) listed above are presented in the amount
before taxation.
Page 121
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2019
XVII. Return on net assets and earnings per share
In accordance with “Regulation on the Preparation of Information Disclosures by Companies
Issuing Securities No.9 – Calculation and Disclosure of the Return on Net Assets and
Earnings Per Share” (2010 revised) issued by the CSRC and relevant accounting standards,
the Group’s return on net assets and earnings per share are calculated as follows:
2019
Weighted average
Basic earnings per Diluted earnings per
Profit for the reporting period return on net assets
share share
(%)
Net profit attributable to the
Company’s ordinary equity 11.30 1.65 1.65
shareholders
Net profit excluding extraordinary gain
and loss attributable to the
8.92 1.30 1.30
Company’s ordinary equity
shareholders
2018
Weighted average
Basic earnings per Diluted earnings per
Profit for the reporting period return on net assets
share share
(%)
Net profit attributable to the
Company’s ordinary equity 11.23 1.52 1.52
shareholders
Net profit excluding extraordinary gain
and loss attributable to the
10.40 1.41 1.41
Company’s ordinary equity
shareholders
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