Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
Yantai Changyu Pioneer Wine Co., Ltd.
2019Annual Report
Final 2020-01
April 2020
1
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
Contents
I、Important Notice，Contents and Definition ............................................................................. 3
II、Brief Introduction for the Company and Main Financial Indicators .................................. 5
III、Summary of the Company’s Businesses .............................................................................. 10
IV、ManagementDiscussionandAnalysis .................................................................................... 14
V、Major issues ............................................................................................................................. 37
VI、Changes in Shares and the Shareholders’ Situation .......................................................... 55
VII、Related Situation of Preferred Shares ............................................................................... 63
VIII、Related Situation of Convertible Corporate Bonds .......................................................... 63
IX、Situation for Directors, Supervisors, Senior Executives and Staffs.................................... 64
X、Corporate Governance ........................................................................................................... 76
XI、Related Situation of Corporation Bonds ............................................................................... 83
XII、Financial Report..................................................................................................................... 84
XIII、Reference Document .......................................................................................................... 214
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Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
I. Important Notice, Content and Definition
The board of directors，the board of Supervisors，directors, supervisors and senior executives
of the Company guarantee the truthfulness, accuracy and completeness of the contents
contained in the report with no false records, misleading statements or significant omissions,
and undertake individual and joint legal liabilities.
Mr. Zhou Hongjiang (Person in charge of the Company), Mr. Jiang Jianxun (Person in charge
of accounting work) and Ms. Guo Cuimei (Person in charge of accounting organ &
Accountant in charge) assure the truthfulness, accuracy and completeness of the financial
report in the annual report.
Except following directors, all other directors have personally attended the meeting for
deliberating the annual report.
Reason for
Director name with Director post with Name of
non-present in
non-present in person non-present in person mandatory
person
Augusto Reina Director Die of illness --
Aldino Marzorati Director Trip blocked due Zhou Hongjiang
to COVID-19
epidemic
Enrico Sivieri Director Trip blocked due Zhou Hongjiang
to COVID-19
epidemic
About significant risks that may be faced in production and operation process, please refer
to“(5) Risks likely to occur” part of “9. Expectation for the Company’s Future Development”
in the Chapter Four “Management Discussion and Analysis” of the report.Investors are
advised to read carefully and pay attention to investment risks.
Forward-looking statements such as future plans and development strategies covered in this
report do not constitute a substantial commitment of the Company to investors. Investors are
advised to pay attention to investment risks.
The Company’s preliminary scheme of profit distribution deliberated and passed by the board
of directors this time is shown as following:Based on the Company’s total 685,464,000
shares, we plan to pay CNY7(including tax) in cash as dividends for every 10 shares to all
shareholders and send 0 bonus share (including tax). Capital reserve will not be transferred to
equity.
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Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
Definition
Definition Item Refers to Definition Content
Company/The Company Refers to Yantai Changyu Pioneer Wine Co., Ltd.
Changyu Group/Controlling Shareholder Refers to Yantai Changyu Group Co., Ltd.
CSRC Refers to China Securities Regulatory Commission
SSE Refers to Shenzhen Stock Exchange
KPMG Huazhen Refers to KPMG Huazhen LLP (Limited Liability Partnership)
CNY Refers to Chinese Yuan
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Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
II. Brief Introduction for the Company and Main Financial Indicators
1. Company’s information
Stock Abbreviation Changyu A, Changyu B Stock Code 000869, 200869
Stock Abbreviation after Alteration -
Place of Stock Listing Shenzhen Stock Exchange
Legal Name in Chinese 烟台张裕葡萄酿酒股份有限公司
Abbreviation of Chinese Name 张裕
Legal Name in English YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
Abbreviation of English Name CHANGYU
Legal Representative Mr. Zhou Hongjiang
Registered Address 56 Dama Road, Yantai, Shandong, China
Postal Code 264000
Office Address 56 Dama Road, Yantai, Shandong, China
Postal Code 264000
Website http://www.changyu.com.cn
E-mail webmaster@changyu.com.cn
2. Contact person and information
Secretary to the Board of Directors Authorized Representative of Securities Affairs
Name Mr. Jiang Jianxun Mr. Li Tingguo
Address 56 Dama Road, Yantai, Shandong, China 56 Dama Road, Yantai, Shandong, China
Tel. 0086-535-6602761 0086-535-6633656
Fax. 0086-535-6633639 0086-535-6633639
E-mail jiangjianxun@changyu.com.cn stock@changyu.com.cn
3. Information disclosure and filing location
Media name for information disclosure China Securities Newspaper , Securities Times and Hong
selected by the Company Kong Commercial Daily
Web Site assigned by CSRC to carry the
http://www.cninfo.com.cn
annual report
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Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
Filing location of the Company’s annual Board of Directors’ Office of the Company,56 Dama Road,
report Yantai, Shandong
4. Registration changes
Organization Code 913700002671000358
The business scope determined by the Company when it was
established on September 18th, 1997 is production, processing and
sales of wine, distilled liquor, healthy liquor, fruit liquor, non-alcohol
beverage,th fruit jam, packing material and winemaking machine.On
April 17 , 2008, approved by the 2007 shareholders’ meeting, the
Company’s business scope is changed to production, processing and
sales of wine, distilled liquor, medicinal liquor, fruit liqueur,
non-alcohol beverage, fruit jam, packing material, winemaking
machines and licensed import and export. On May12th, 2010,
approved by the 2009 shareholders’ meeting, the Company changed
its business scope to production, processing and sales of wine,
Changes for the main businesses distilled liquor, medicinal liquor, fruit liqueur, non-alcohol beverage,
fruit jam, packing material and its products, winemaking machinery,
of the Company since it was listed licensed import and export and external investment according to
national stpolicy. On September 23rd, 2016, approved by the 2016
annual 1 Interim shareholders’ meeting, the Company changed its
operating scope to wine and fruit wine (bulk wine, processing and
filling) production, blending liquor and other blending liquors (grape
liqueur) production, other liquors (other distilled liquors) production,
production, processing and sales of packing material and wine
making machinery,grape plantation and procurement, tourism
resources development (excluding tourism), packaging design,
activity of building rental, licensed import and export,
warehouse business and external investment according to national
policy.
Changes for all previous
No.
controlling shareholders
5. Other relevant information
The accounting firm appointed by the Company
Name KPMG Huazhen LLP
Level 8, No.2 East Wing of Dongfang Square, No.1 East Chang’an
Address
Street, Dongcheng District, Beijing
Name of signatory accountants Ms. Wang Ting, Ms. Chai Jing
The sponsor institution appointed by the Company to perform the duty of continuous
supervision during the report period
□Available Not available
The financial adviser appointed by the Company to perform the duty of continuous
supervision during the report period
□Available Not available
6. Key accounting data and financial indicators
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Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
Whether the Company needs to retrospectively adjust or restate the accounting data of
previous fiscal years.
□Yes No
More or less than
2019 2018 2017
Last year (%)
Operating revenue (CNY) 5,031,011,489 5,142,244,740 -2.16% 4,932,545,229
Net profit attributed to
shareholders of the listed 1,129,735,749 1,042,632,929 8.35% 1,031,695,056
company (CNY)
Net profit attributed to
shareholders of the listed
company after deducting 892,075,931 965,426,238 -7.60% 986,095,872
non-recurring profits and
losses (CNY)
Net cash flows from
837,838,024 975,978,746 -14.15% 973,243,027
operating activities (CNY)
Basic earnings per share
1.65 1.52 8.55% 1.51
(CNY)
Diluted earnings per share
1.65 1.52 8.55% 1.51
(CNY)
Weighted average for
earning rate of net assets 11.30% 11.23% 0.07% 12.14%
(CNY)
December 31st, December 31st, More or less than December 31st,
2019 2018 Last year (%) 2017
Total assets (CNY) 13,647,932,568 13,117,729,052 4.04% 12,536,755,208
Net Assets attributed to
shareholders of the listed 10,308,910,198 9,606,099,365 7.32% 8,906,342,299
company (CNY)
7. Differences in accounting data under PRC accounting standards and international
accounting standards
(1) Differences between net profits and net assets in the financial report disclosed
according to both international accounting standards and PRC accounting standards
□Available Not available
There are no differences between net profits and net assets in the financial report disclosed
according to both international accounting standards and PRC accounting standards during
the report period.
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Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
(2) Differences between net profits and net assets in the financial report disclosed
according to both foreign accounting standards and PRC accounting standards
□Available Not available
There are no differences between net profits and net assets in the financial report disclosed
according to both foreign accounting standards and PRC accounting standards during the
report period.
8. Key financial indicators by quarter
Unit：CNY
st nd rd
1 Quarter 2 Quarter 3 Quarter 4th Quarter
Operating revenue 1,667,424,758 890,850,027 968,100,175 1,504,636,529
Net profit attributed to
shareholders of the 456,381,471 147,022,318 125,557,834 400,774,126
listed company
Net profit attributed to
shareholders of the
listed company after 450,709,661 101,781,034 119,702,422 219,882,814
deducting non-recurring
profits and losses
Net cash flows from
294,678,342 204,797,664 145,855,707 192,506,311
operating activities
Whether there are significant differences between the above mentioned financial indicators or
their sum and the related financial indicators in the quarterly reports and semi-annual reports
disclosed by the Company.
□Yes No
9. Item and amount of non-recurring profit and loss
Available □Not available
Unit：CNY
Item 2019 2018 2017 Explanation
Including return
Profits and losses on disposal of on investment of
non-current assets, including the CNY 6,233,661
6,272,676 11,368,355 -222,586
provision for asset impairment write-off through
part disposing equity
of Mirefleurs
Government grants included in the
current profits and losses(except for
those recurring government grants that
84,837,581 87,281,434 47,638,384
are closely related to the entity's
operation, in line with related regulations
and have proper basis of calculation)
Other non-operating revenues and 7,298,479 3,817,401 13,999,251
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Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
expenditures in addition to the
aforementioned items
Offsetting the
trademark use
fee in previous
Other profit and loss projects conforming years
to the definition of non-recurring profit 218,649,636 For detailed
and loss information,
please refer to
(5)(a) of X in
Financial Report
Less：Income tax effect 79,367,893 25,157,188 15,523,424
Minority shareholders' equity
30,661 103,311 292,441
effect (after taxes)
Total 237,659,818 77,206,691 45,599,184 --
The reasons shall be made clear and definitely as to the non-recurring profit and loss that the
Company has defined by virtue of the Explanatory Announcement on Public Company’s
Information Disclosure No.1 - Non-recurring Profit and Loss and as to regarding the
non-recurring profit and loss as recurrent profit and loss as specified in the Explanatory
Announcement on Public Company’s Information Disclosure No.1 –Non-recurring Profit and
Loss.
□Available Not available
There are no cases that non-recurring profit and loss is defined and specified as recurrent
profit and loss in accordance with the Explanatory Announcement on Public Company’s
Information Disclosure No.1 - Non-recurring Profit and Loss during the report period.
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Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
III. Summary of the Company’s Businesses
1. Main businesses during the report period
During the report period, the Company’s main businesses are production and operation of wine and brandy, thus providing domestic and foreign
consumers with healthy and fashionable alcoholic drinks. Compared with earlier stage, there are no significant changes happened to the
Company’s main businesses. The wine industry that the Company involved in is still in growth stage. Although being affected by many factors
for the short-term, the competition in the market is fierce and the wine consumption temporarily declines. However, seen from the long term,
the whole domestic wine market is on the rising trend. The Company is at the forefront in the domestic wine market.
2. Significant changes of main assets
(1) Significant changes of main assets
Main assets Explanation of significant changes
During the report period, this Company’s subsidiary Francs Champs Participations SAS signed Cooperation
Agreement with SC Garri du Gai to jointly establish joint venture company L&M Holdings, in which Francs
Champs Participations SAS used 100% equity of Societe Civile Argricole Du Chateau De Mirefleurs as
Equity asset
contribution of capital; determined the long-term equity investment of CNY 45.10 million, the carrying
amount of long-term equity investment adjusted and reduced by CNY 1.12 million in accordance to the
equity method at the end of the period and the ending balance with CNY 43.98 million.
The fixed assets increased by 2.51% compared with the initial stage, owing to part of constructions in process
Fixed asset
have been transferred to fixed asset during the report period.
Intangible asset There are no significant changes of intangible asset during the report period.
The constructions in process decreased by 25.26% compared with the initial stage, owing to part of
Construction in process
constructions in process have been transferred to fixed asset during the report period.
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Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
(2) Main overseas assets situation
Available □Not available
Unit：CNY
Control Proportion of
Whether there are
Details of Formation Operation measures for Earning overseas assets in
Assets scale Location significant
assets reasons mode safeguarding of condition the Company’s
impairment risks
asset security net assets
The Company
participates in
making
Hacienda Y important
Vinedos Acquisition of Independent decisions
561,790,770 Spain 6,463,473 1.21% No
Marques Del equity operation through board of
Atrio. SL directors and
appoints CFO
on financial
management.
The Company
participates in
making
Indomita important
Establishment
Wine Independent decisions
of joint 515,352,803 Chile 16,279,461 3.47% No
Company operation through board of
venture
Chile, S.p.A. directors and
appoints CFO
on financial
management.
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Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
The Company
participates in
Kilikanoon making
Acquisition of Independent
Estate Pty., 156,244,219 Australia important 463,409 0.79% No
equity operation
Ltd. decisions
through board of
directors.
The Company
participates in
FrancsChamps Sole making
Independent
Participations proprietorship 229,962,968 France important 4,117,668 2.17% No
operation
SAS establishment decisions
through board of
directors.
Explanation
for other No
situation
3. Analysis of core competitiveness
Compared with the participants in the arena of the Chinese wine sector, we believe that the Company is with the following advantages:
Firstly, the Company has been enjoying a well-known wine brand since 120-odd years. “Changyu”, “Noble Dragon” and “AFIP” are all China
famous brand that have strong influence and good reputation.
Secondly, the Company has set up a nationwide marketing network, formed a “three-level” marketing network system mainly composed of the
Company’s salesmen and dealers, with strong marketing ability and market exploitation ability.
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Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
Thirdly, the Company has strong scientific prowess and a product R&D system. Relying on the country’s only “State-level Wine R&D Center”,
the Company has mastered advanced winemaking technology and production processes as well as been powerful enough in product innovation
and perfect quality control system.
Fourthly, the Company is in possession of a lot of grape-growing bases that are compatible with its development requirements. The Company
has developed a great deal of vineyards in the most suitable areas for wine grape growing such as Shandong, Ningxia, Xinjiang, Liaoning, Hebei
and Shanxi, whose scale and structure have generally met the Company’s needs for development.
Fifthly, products in high, medium and low-grade as well as varieties and categories are all complete. Over 100 varieties of series products such
as wine, brandy and sparkling wine covers various grades, including high, medium and low-grade, which can meet different consumer groups’
demands. The Company has taken the dominant status in the domestic wine industry through rapid development in the past 10-odd yearand has
comparative advantages in the future competition.
Sixthly, the Company has a relatively perfect motivation system. Most of Company’s employees indirectly hold the Company’s equity through
controlling shareholders. There are high consistency between employee benefits and shareholders benefits, in favor of motivating employees to
create value for shareholders.
Seventhly, the Company has set up flexible and efficient decision-making mechanism. The Company’s core management team always maintains
a working style of unity and pragmatic and flexible and efficient decision-making mechanism, which makes the Company can deal with market
changes more calmly.
Eighthly, the global production capacity layout has been basically completed. The Company has completed production capacity layout in China,
France, Chile, Spain, Australia and other major wine producing countries in the world, enabling making better use of global high-quality raw
material resources, capital, talents and advanced production processes and technologies to provide consumers with diversified quality products
and better serve consumers.
Based on the above reasons, the Company has formed relatively strong core competence and will maintain a relatively dominant position in the
future predictable market competition.
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Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
IV. Management Discussion and Analysis
1. Summarization
In 2019, influenced by many factors, such as the slowdown of domestic economic growth and
the increase in uncertainty resulting from Sino-US trade friction, the competition in domestic
wine market was very strong. The sales volumes of both imported wine and domestic wine
decreased and some wine production enterprises got into trouble.Facing quite a lot of external
disadvantages, the Company persisted in taking the market as the center, adhered to the
development strategy of “Focus on middle-and-high level, Focus on high quality, Focus on
big product” and the marketing philosophy of “obtaining growth from the terminal and
nurturing consumers”, and strived to promote product sales, achieving good results and
realizing operating revenue of CNY5,031.01million with a year-on-year decrease of
2.16%and net profit of CNY1,129.74million belonging to the parent company’s shareholders
with a year-on-year increase of8.35%.
2. Analysis of main business
(1) Summarization
Increase or decrease of
Description the end of the period Cause of significant changes
over the end of last year
Mainly because of decrease in sales
Operating revenue -2.16%
volume
Operating cost -0.74% Mainly because of decline in wine sales
Mainly because of return of trademark use
Sales expense -17.37%
fee during this report period
Mainly because of year-on-year decrease
Management expense -9.22% in wage & welfare and depreciation
expenses
Mainly because of increase in expenses
R&D expense 26.27% for technology research and development
in 2019
Mainly because of decrease in loan
Financial expense -1.82%
interest expenditure
Net amount of cash Mainly because of decrease in received
flow generated in -14.15% cash from product sales and rendering of
operating activities service
Net amount of cash
Mainly because of decrease in paid cash
flow generated in -59.01%
for investment activities
investment activities
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Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
Net amount of cash
flow generated in Mainly because of decrease in cash inflow
9.06%
capital-raising from capital-raising activities
activities
Review and summary of the process of the Company’s early-disclosed development strategy
and business plan during the report period
During the report period, the Company realized the operating revenue of
CNY5,031.01millionwithandecrease of 2.16% compared with last year, slightly lower than
the target fixed at the beginning of the year of realizing operating revenue no less than CNY
5.3 billion. The net profit of CNY 1,129.74 million belonging to the parent company’s
shareholders was realized with an increase of 8.35% compared with last year. The main
works during the report period were shown as followed:
Firstly, the Company adjusted the sales structure and rationalized the marketing system,
further promoting the market strategy. During the report period, the Company strengthened
the sales structure led by alcohol product variety and streamlined the marketing system for
various alcohol products such as wine, brandy and imported wine etc., making sales team
become more focused and further clarifying the responsibilities, rights and benefits. The
relationship between parent brand Changyu and its subsidiary brands were rationalized. The
Company first proposed and implemented“Brand Manager System”, highlighted the key
points according to different brand positioning, studied different target consumer groups in a
targeted manner and let dedicated people do professional things so that the brand
development planning became clearer. Each variety of alcohol products focused according to
respective brand development trend and clarified corresponding power point. To brandy, the
Company actively changed its market positioning, strived to learn promotion experience of
high-end Chinese liquor in order to cut the “cake” of liquor market; to wine, the Company
studied the market strategy with the bench marking of international competitive products
based on the characteristics of different wineries. To imported wine, the Company selected
the best from imported wines and paid special attention to Chilean Indomita and Australian
Kilikanoon. Through the “jointly building a fee pool with distributors”, an exclusive team of
Changyu under each backbone distributor system was built to ensure the proper
implementation of “obtaining growth from the terminal and nurturing consumers”.
Secondly, the Company insisted on product innovation, strengthened brand building and
continuously expanded market influence. During the report period, the Company adhered to
the general principle of “not stunning, not listed” for new products and successively launched
a series of new products including new Rena Chateau, new Castel, Shartar five-star brandy,
Pagese, Mminni, Long Tailed Cat, Vini Panda and limited-edition Noble Dragon and so on.
These new products were well received by the market and recognized by consumers, making
the domestic and foreign influence of “Changyu” brand increase steadily. The data from L.W.
Institute of Xinhua News Agency showed that “The global brand awareness of Changyu is
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Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
equivalent to Lafite”. Based on the annual global wine brand influence index issued by Wine
Intelligence, a British wine research agency, “Changyu” ranked first in the Chinese market.
Thirdly, The Company implemented precision marketing by virtue of digital technology to
improve operating efficiency. During the report period, the Company further implemented
the order-driven approach and fully realized online coding for chateau wines, Noble Dragon,
and ordinary wines, basically achieving order driving of products.The identification
management work “one bottle, one code” was put in place, and the anti-counterfeiting work
for high-end products is continued being promoted.The Company gradually completed the
transformation of marketing code, deeply investigated the distributor identification
management and product traceability, and preliminarily made the planning of product
anti-counterfeiting trackability and marketing promotion system integrating logistics code,
anti-channeling code and marketing code into one code, which further strengthened the link
control. The Company implemented a “comprehensive digital transformation” strategy to
drive sales orders online and offline. The Company collaborated with online Tmall, JD and
Suning and other digital platforms while cooperating with offline distributors to promote
APP ordering.The Company formed strategic partnership with Tencent, JD, Tmall and
Suning etc., and utilized digital means to gradually achieve “more precise user positioning,
more sophisticated marketing promotion, and more efficient customer conversion”.
Fourthly, the Company enhanced quality management and improved production processes,
further improving product quality. During the report period, the Company strategically
deployed global high-quality raw material bases, and laid out medium-and-long-term
premium raw material bases in China, Australia, Chile and France respectively, which has
provided a sufficient quantity of medium- and high-grade bulk wine resources for the
implementation of the “Three Focus” strategy.The Company strengthened technical
exchanges between domestic and foreign winemakers, vigorously carried out research on
new technologies and new processes, improved traditional processes and continuously
improved product quality, which achieved significant results. 3 great gold medals and 34
gold medals were awarded in various international competitions. Koya XO 15 years won the
championship at the Global Brandy Blind Tasting Fair, surpassing the world’s five
well-known XO brands. The Company also built “Koya” to be a Chinese high-end brandy
brand.Changyu Koya chateau was awarded the title of “The First Brandy Chateau in China”
by China Alcohol Drinks Association, and the winemaker Ms. Zhang Baochun was awarded
the title of “Chief Brandy Master in China”. The Chinese Brandy Research Institution was
formally settled in Koya chateau. Changyu Noble Dragon became “Global TOP5” in the
global best-selling wine brands blind tasting competition, and was rated as “Asian TOP1” by
the Singapore Lianhe Zaobao.
Fifthly, the Company strengthened internal audit, intensified risk prevention and control, and
reduced operating costs. During the report period, the Company strengthened tax planning,
conducted comprehensive audits to off-site warehouses, accounts receivable, advertising fee
management and distributor inventory etc., and established and improved risk prevention and
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Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
control system and budget dynamic management system for overseas enterprises, which
effectively prevented operating risks and reduced operating costs.
(2) Revenue and cost
① Composition of operating revenue
Unit: CNY
2019 2018
Year-on-year
Proportion in Proportion in
increase or
Amount operating Amount operating
decrease (%)
revenue revenue
Total operating
5,031,011,489 100% 5,142,244,740 100% -2.16%
revenue
Sector-classified
Sector of liquor
and alcoholic 5,031,011,489 100% 5,142,244,740 100% -2.16%
beverage
Product-classified
Wine 3,833,828,384 76.20% 4,000,233,434 77.79% -4.16%
Brandy 1,071,623,817 21.30% 999,207,299 19.43% 7.25%
Tourism 88,716,296 1.76% 101,978,938 1.98% -13.01%
Others 36,842,992 0.74% 40,825,069 0.79% -9.75%
Total 5,031,011,489 100% 5,142,244,740 100% -2.16%
Area-classified
Domestic 4,482,413,271 89.10% 4,486,387,956 87.25% -0.09%
Overseas 548,598,218 10.90% 655,856,784 12.75% -16.35%
Total 5,031,011,489 100% 5,142,244,740 100% -2.16%
② The cases of industry, product or area accounting for over 10% in the Company’s
operating revenue or operating profit
Available □Not available
Unit: CNY
Year-on-year Year-on-year Year-on-year
increase or increase or increase or
Operating Gross
Operating cost decrease (%) decrease (%) decrease (%)
revenue margin
of operating of operating of gross
revenue cost profit rate
Sector-classified
Sector of
liquor and
5,031,011,489 1,887,495,991 62.48% -2.16% -0.74% -0.54%
alcoholic
beverage
Product-classified
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Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
Wine 3,833,828,384 1,401,341,243 63.45% -4.16% -4.07% -0.03%
Brandy 1,071,623,817 436,894,314 59.23% 7.25% 8.22% -0.37%
Tourism 88,716,296 27,251,750 69.28% -13.01% -12.93% -0.03%
Others 36,842,992 22,008,684 40.26% -9.75% 282.20% -45.63%
Total 5,031,011,489 1,887,495,991 62.48% -2.16% -0.74% -0.54%
Area-classified
Domestic 4,482,413,271 1,523,524,727 66.01% -0.09% 3.11% -1.05%
Abroad 548,598,218 363,971,264 33.65% -16.35% -14.16% -1.69%
Total 5,031,011,489 1,887,495,991 62.48% -2.16% -0.74% -0.54%
Under the condition that the statistical caliber of the Company’s main business data is
adjusted during the report period, the Company’s main business data adjusted on the basis of
caliber at the end of report period in recent one year.
□Available Not available
③Whether the Company’s sales revenue for material object is more than labor service
revenue
Yes □No
Year-on-year
Sector Project Unit 2019 2018 increase or
decrease (%)
Wine Sales volume Ton 95,902 112,600 -14.83%
Brandy Sales volume Ton 38,895 39,315 -1.07%
Explanation on the causes of over 30% year-on-year changes of the related comparison data
□Available Not available
④ The fulfillment of major sales contract signed by the Company up to the report
period
□Available Not available
⑤ Composition of operating costs
Classification of sector and product
Unit: CNY
2019 2018
Year-on-year
Proportion in Proportion in
Sector Project increase or
Amount the operating Amount the operating
decrease (%)
cost (%) cost (%)
Liquor Blending liquor 941,841,689 50.76% 981,838,789 52.42% -1.66%
and Packing
632,114,480 34.07% 633,281,194 33.82% 0.26%
alcoholic material
18
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
beverage Wages 65,607,419 3.54% 63,385,522 3.38% 0.15%
Manufacturing
215,835,927 11.63% 194,485,534 10.38% 1.25%
expenses
Unit: CNY
2019 2018
Year-on-year
Proportion in Proportion in
Sector Project increase or
Amount the operating Amount the operating
decrease (%)
cost (%) cost (%)
Blending liquor 711,784,892 50.79% 759,623,724 52.00% -1.21%
Packing
464,625,885 33.16% 484,791,303 33.19% -0.03%
material
Wine Wages 56,725,667 4.05% 54,718,770 3.75% 0.30%
Manufacturing
168,204,799 12.00% 161,721,616 11.06% 0.93%
expenses
Blending liquor 230,056,797 52.66% 217,997,239 54.00% -1.34%
Packing
167,488,596 38.34% 144,272,064 35.74% 2.60%
material
Brandy Wages 8,881,752 2.03% 8,666,752 2.14% -0.11%
Manufacturing
30,467,170 6.97% 32,763,918 8.12% -1.14%
cost
Explanation
No
⑥ Whether there are changes of consolidation scope during the report period
Yes □No
For detailed information about the changes in the scope of consolidated financial statements
in this year, please refer to VI“Change in consolidation scope” in Financial Report of this
report.
⑦ Major changes or adjustments of the Company’s businesses, products or service
during the report period
□Available Not available
⑧Information of major sales customers and major suppliers
19
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
The Company’s major sales customers
The total sales amount of the top five customers（CNY） 271,566,418
The proportion that total sales amount of the top five customers accounting
5.40%
for the annual total sales amount（%）
The proportion that sales amount of the related party in the total sales
amount of the top five customers accounting for the annual total sales 0%
amount（%）
Information of the Company’s 5 biggest sales customers
Proportion in total
Sales amount
No. Customer name sales for the year
（CNY）
（%）
Changyuexin Trading Company Limited in
1 77,966,257.00 1.55%
Shenzhen city
2 Shenzhen Ruiqi Trading Company Limited 68,303,967.00 1.36%
Xinbaicheng Food Firm in Hanjiang district
3 45,629,821.00 0.91%
of Putian city
Fuzhou Shengshihanggang Trading
4 42,902,091.00 0.85%
Company Limited
Yukun Information Technology Co., Ltd. in
5 36,764,282.00 0.73%
Foshan city
Total -- 271,566,418.00 5.40%
Other situation explanations of major customers
□Available Not available
Information on the Company’s main suppliers
The total purchase amount of the top 5 suppliers 602,438,946.00
The proportion of the total purchase amount of the top 5 suppliers in the
45.48%
annual purchase amount
The proportion of the related party purchase amount in the top 5 supplier
10.08%
purchase amount in annual purchase amount
Information on the Company’s top 5 biggest suppliers
Purchase amount Proportion in total
No. Supplier name purchase for the
(CNY) year（%）
Liquan Sales Department of Shandong
1 139,869,748.00 10.56%
Yantai Winery Co.,Ltd.
2 Yantai Shenma Packaging Co., Ltd. 133,587,430.00 10.08%
20
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
3 Qixia Changyu Glass Co.,Ltd. 131,011,805.00 9.89%
4 Xinjiang Yuyuan Liquor Co.,Ltd. 127,813,447.00 9.65%
Xinjiang Tianyu Winery Co., Ltd.
5 70,156,516.00 5.30%
Fangcaohu Branch
Total -- 602,438,946.00 45.48%
Other situation explanations of main suppliers
□Available Not available
(3) Expense
Unit: CNY
Year-on-year
Explanation of significant
2019 2018 increase or
changes
decrease (%)
Mainly because of return of
Sales
1,053,232,024 1,274,599,146 -17.37% trademark use fee during this
expense
report period
Mainly because of
Management year-on-year decrease in
311,904,656 343,580,651 -9.22%
expense wage & welfare and
depreciation expenses
Financial Mainly because of decrease
35,290,702 35,945,302 -1.82%
expense in loan interest expenditure
Mainly because of increase in
Research and
expenses for technology
Development 6,041,116 4,784,118 26.27%
research and development in
expense
2019
(4) Research and development investment
□Available Not available
(5) Cash flow
Unit: CNY
Year-on-year increase
Item 2019 2018
or decrease (%)
Subtotal of cash inflow in
4,782,456,490 5,080,363,769 -5.86%
operating activities
Subtotal of cash outflow in
3,944,618,466 4,104,385,023 -3.89%
operating activities
Net amount of cash flow 837,838,024 975,978,746 -14.15%
21
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
generated in operating
activities
Subtotal of cash inflow in
242,866,775 423,413,326 -42.64%
investment activities
Subtotal of cash outflow in
451,029,212 931,261,875 -51.57%
investment activities
Net amount of cash flow
generated in investment -208,162,437 -507,848,549 59.01%
activities
Subtotal of cash inflow in
942,134,032 1,114,333,670 -15.45%
capital-raising activities
Subtotal of cash outflow in
1,413,600,451 1,546,641,222 -8.60%
capital-raising activities
Net amount of cash flow
generated in capital-raising -471,466,419 -432,307,552 9.06%
activities
Net increase of cash and cash
158,912,341 25,971,060 511.88%
equivalents
Explanation of main influence factors contributing to great changes in related data on
year-on-year basis
Available □Not available
Compared with the same period of last year, during the report period,the net amount of cash
flow generated in operating activities decreased by 14.15%, mainly due to the year-on-year
decrease in the cash received from commodity sales and rendering service; subtotal of cash
inflow in investment activities decreased by 42.64%, mainly due to the decrease in received
cash in recouping the capital outlay; subtotal of cash outflow in investment activities
decreased by 51.57%, mainly due to the decrease in the cash paid for acquiring fixed assets,
intangible assets and other long-term assets and the cash paid for investment;net amount of
cash flow generated in investment activities increased by 59.01%, mainly due to the decrease
in the cash outflow in investment activities; subtotal of cash inflow in capital-raising activities
decreased by 15.45%, mainly due to the decrease in received cash from loan; net increase of
cash and cash equivalents increased by 511.88%, mainly due to the decrease in cash outflow
in investment activities.
Explanation on the causes of major differences between the net cash flow generated by the
Company’s operating activities and net profit of this year during the report period.
□Available Not available
22
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
3. Analysis to non-main business
□Available Not available
4. Assets and liabilities
(1) Significant changes of assets composition
Whether the Company implements new financial instruments standard, new revenue standard
or new lease standard for the first time since 2019 and adjusts related items in the financial
statement at the beginning of the execution year
Available □Not available
Unit: CNY
At the end of 2019 At the end of 2018 Proportion
Explanation on
Proportion in Proportion in increase or
significant
Amount the total Amount the total assets decrease
changes
assets (%) (%) (%)
No significant
Monetary funds 1,565,783,980 11.47% 1,475,700,477 11.25% 0.22%
changes
No significant
Receivables 266,218,153 1.95% 242,153,083 1.85% 0.10%
changes
No significant
Inventory 2,872,410,407 21.05% 2,724,591,457 20.77% 0.28%
changes
Investment real No significant
29,714,586 0.22% 31,572,489 0.24% -0.02%
estate changes
Long-term No significant
equity 43,981,130 0.32% 0 0% 0.32% changes
investments
No significant
Fixed assets 5,894,068,898 43.19% 5,749,731,667 43.83% -0.64%
changes
Construction in No significant
567,478,833 4.16% 759,296,591 5.79% -1.63%
progress changes
Short-term No significant
754,313,744 5.53% 688,002,410 5.24% 0.29%
borrowings changes
Long-term No significant
128,892,501 0.94% 156,480,662 1.19% -0.25%
borrowings changes
(2) Assets and liabilities measured at fair value
□Available Not available
(3) Limitations of assets rights up to the end of the report period
At the end of report period, the Company has no assets sealed up, detained or frozen. For
information about assets mortgage and pledge, please refer to Announcement on External
23
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
Guarantee disclosed on China Securities Journal, Securities Times and CNINFO
(http://www.cninfo.com.cn/) in 2016, 2017, 2018 and 2019.
5. Investment condition
(1) Overall situation
Available □Not available
Investment amount during the Investment amount of the same
Variation
report period (CNY) period of last year (CNY)
399,750,000 450,762,420 -11.32%
(2) Cases of acquired significant equity investments during the report period
□Available Not available
(3) Cases of significant ongoing non-equity investments during the report period
Available □Not available
24
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
Unit: CNY
Accumulated
Whether Reasonsfor
Accumulated realized
Belongs Involveds Investment unreachedp
actual Project earnings
Investment to fixed ectors of amountduring Capitalsour Estimated lanningsch Disclosureda
Project name investmentamoun progres upto the Disclosureindex (if have)
mode assets investmen the report ce earnings edule and te (ifhave)
t upto the endof s end of
investmen t projects period estimatede
the reportperiod thereportpe
t arnings
riod
Yantai
ChangyuIntern
ationalWine Self-constru Please refer to Resolution
Yes 250,180,000 1,626,294,100 Ownedfund 100% 0 0 — 2017.04.22
CityBlending cted Announcement of Seventh
andCoolingCe Session Board of Directors
nter 4th Meeting, Resolution
Yantai Announcement of Seventh
ChangyuIntern Liquor Session Board of Directors
Self-constru
ationalWine Yes andalcoho 91,000,000 1,004,200,000 Ownedfund 100% 0 0 — 2017.04.22 8th Meetingand Resolution
cted
CityBottlingCe licbevera Announcement of Seventh
nter gesector Session Board of Directors
Yantai 10th Meeting disclosed on
ChangyuIntern China Securities Journal,
Self-constru
ationalWine Yes 46,170,000 462,677,200 Ownedfund 100% 0 0 — 2017.04.22 Securities Times and
cted
CityLogisticsC CNINFO
enter (http://www.cninfo.com.cn/)
Changyu Self-constru
Yes 6,000,000 122,974,800 Owned fund 85% 0 0 — 2017.04.22
Vineand cted
25
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
WineResearchI
nstitute
TreasureWine Self-constru
Yes 0 128,820,000 Owned fund 75% 0 0 — 2017.04.22
Chateau cted
Koya
Self-constru
BrandyChate Yes 0 147,329,000 Owned fund 85% 0 0 — 2017.04.22
cted
au
Oak barrel
Self-constru
procurement Yes 0 0 Owned fund 0% 0 0 — 2018.04.20
cted
project
SAP
informatization Self-constru
Yes 2,600,000 40,450,000 Owned fund 100% 0 0 — 2018.04.20
for industrial cted
production
Project of
purchase in
trinityjoint Self-constru
Yes 0 0 Owned fund 0% 0 0 — 2018.04.20
action cted
equipment by
Yantai chateau
Project of
“constant
temperature
Self-constru
and humidity” Yes 3,800,000 3,800,000 Owned fund 100% 0 0 — 2018.04.20
cted
system in
underground
cellar of
26
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
Research &
Development
Center
Construction
project of
supplier
relationship
Self-constru
management Yes 0 0 Owned fund 0% 0 0 — 2018.04.20
cted
platform and
plant
maintenance
platform
Total -- -- -- 399,750,000.00 3,536,545,100.00 -- -- 0 0 -- -- --
(4) Financial assets investment
①Security investment situation
□Available Not available
There are no security investments for the Company during the report period.
27
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
②Derivatives investment
□Available Not available
There are no derivatives investments for the Company during the report period.
(5) The usage situation of raised capital
□Available Not available
There are no usage situations of raised capital for the Company during the report period.
6. Sale of significant assets and equities
(1) Sale of significant assets
Available □Not available
Associat Whether Whether Whether Disclo Disclosure
ion the the credit impleme sure index
Proportion
Relation property and debt nted as date
of net
Net profit ship right of has been schedule
profit
contributed by with involved transferre , if not,
contribute
Transactio this asset for Influence of Pricing Related transacti assets d explain
d to listed
Transacti n price listed company sale in listed principle transacti on party has been the
Sold asset Sale date company
on party (CNY’000 from the company for asset on or (if transferr reason
resulting
0) beginning of (note III) sale not applicab ed and
from asset
report period to le) measure
sale in
sale date s that
total net
have
profit
been
taken
Yantai The April 2,411.55 0 Through this 0 Contract Yes Parent No No Yes April Please refer
28
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
Changyu workshop 20th, transaction, ual company 20th, to
Pioneer and office 2019 the Company pricing and 2019 Announcement
Wine building could replace subsidiar OnAsset
Co., Ltd. of idle y Replacement
previous workshop company disclosed by
brandy and lands for the
manufact the land Company
uring occupied by (announcement
plant and Xishan office 2019-temporaty 1
correspon building so
ding lands that the
Company
could not
only better
guarantee the
safety and
integrality of
Xishan office
building in
order to
realize the
asset
appreciation
and hedge but
also eliminate
previous
related
29
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
transaction
including
land rental
fee. This
transaction
will not affect
the continuity
of business
and the
stability of
management.
(2) Sale of significant equities
□Available Not available
7. Analysis of main holding and joint stock companies
Available □Not available
Situation of main subsidiaries and joint stock companies affecting over 10% of the Company’s net profit
Unit: CNY
Company name Company type Main business Registered capital Total assets Net assets Operating revenue Operating profit Net profit
Yantai Changyu
Pioneer Wine Subsidiary Sales CNY8million 1,420,161,516 191,198,133 3,821,020,948 942,128,095 793,451,810
Sales Co., Ltd.
Yantai Changyu
Wine Sales Co., Subsidiary Sales CNY5million 396,403,239 378,470,761 1,081,596,277 186,864,347 140,221,071
Ltd.
Changyu Trading Subsidiary Sales CNY5million 88,463,752 233,496,494 436,530,152 173,831,064 131,639,723
30
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
Co., Ltd. in
Development
Zone of Yantai
LaizhouChangyu
Wine Sales Co., Subsidiary Sales CNY1million 88,463,752 1,000,000 226,162,063 157,486,950 118,115,212
Ltd.
Acquisition and disposal of subsidiaries during the report period
Available □Not available
Mode of acquisition and disposal of subsidiaries during the Effect on overall production management and
Company name
report period performance
Chateau De Mirefleurs Establishment of joint venture company for contracted The difference between the disposal price and the
transfer enjoyed net asset share of this subsidiary is CNY
6,233,661.
Explanation on main holding and joint stock companies
No
8. Situation of the structured subjects controlled by the Company
□Available Not available
9. Expectation for the Company’s future development
On the basis of our limited experience and professional skills, the Company makes the following judgments on the wine industry and future
development:
(1) The sector competition pattern and development trend
31
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
Under uncertainty effects caused by the slowdown of national macroscopic economy growth, the Sino-American trade friction and the
novelcoronaviruspneumoniaepidemic, the overall demand of Chinese wine market in 2020 will be still comparatively weak, the total wine consumption
is more likely to maintain a downward trend, and the wine industry's operating situation will be even more severe. With the rise of Chinese
e-commerce and Internet generation, the scene and habits of people's consumption in wine continue to change. The mobile terminal media on the
“mobile phone screen”, including WeChat, Douyin, Toutiao and Internet celebrity IP etc., has become an important channel for wine operators to
communicate with consumers. Owing to the serious “fragmentation” of the wine market, it is more difficult to target wine consumers. Whether
compared with the per capita consumption of domestic beer and liquor, or compared with the per capita consumption of major foreign wine consuming
countries, the consumption popularizing rate and penetration rate of Chinese wine in domestic are very low. Although there are some twists and turns
during its development period in the short term, seen from the long term, the huge development potential has not changed.In such a case of long-term
coexistence of opportunities and challenges, those enterprises that possess strong brand influence and marketing ability, catch the opportunities,
actively take adjustments, make full use of newly emerging and traditional sales channels, timely satisfy the consumers’ demands and provide products
with high cost performance will have the opportunity to be the final winner of competitions, and then form a new pattern of the future Chinese wine
market.
(2) The Company’s development strategy
The Company will adhere to the development strategy of “Focus on middle-and-high level, Focus on high quality, Focus on big product” and the
marketing philosophy of “obtaining growth from the terminal and nurturing consumers”,continue improving the relatively independent system
construction of wine, brandy, imported wine and overseas business, enhance wine, scale up brandy, improve imported wine, stabilize overseas business
and promote the all-round development of various alcohol products.
(3) Management plan for the new year
In 2020, the Company will try its best to realize operating revenue of not less than CNY3.7 billion and control the main operating costs and three period
expenses below CNY2.8 billion.
(4) Measures to be taken by the Company
In order to better seize the opportunities and meet the challenges, the Company will stand from the present, take a long-term perspective, forge ahead,
adhere to market-oriented approach, take advantage of profit assessment, take innovation and major work as driving force and persevere in
32
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
management and implementation. The Company will make every effort to do following major work in 2020 in order to strive to achieve annual
business target.
The first is to further deepen and implement the “Three Focus” strategy. For domestic wine, the Company clearly defines the development direction of
“focusing on chateau wine, strengthening Noble Dragon and scaling up ordinary wine” and will continue focusing on brands of seven chateau wines,
Noble Dragon and Zenithwirl etc.. Under the premise of keeping the total investment unchanged, the Company will transfer part of offline funds to
online channels to future increase the proportion of input on online channels. For brandy, the Company will continue adhering to the strategy of
“focusing on middle-and-high-end products and driving the sales of low-end products in virtue of middle-and-high-end products”, and focus on Koya,
Five Star, Mminni and Pegase these four brands. The main brands will be further focused on Koya XO 15 and Fine Five-star, through which the brandy
category could be expanded, thus driving the all-round development of brandy brands. For imported wine, the Company will focus on six acquired
brands, especially on Kilikanoon and IWCC.
The second is to continue to implement business philosophy of “customer-centered, striver-based and result-oriented”. The Company will take
effective measures to fully implement the market strategy of “let fewer people manage distributors, let more people serve terminals and consumers
together with distributors”. Also the Company will continue increasing the salary level of sales personnel and enhancing front-line personnel’s working
enthusiasm through measures such as increasing efficiency while reducing staff and improving compensation system and so on. The Company will
advocate that“everyone is product experience officer”, “everyone is a service experience officer” and “everyone is a self-media” to comprehensively
improve product awareness, service awareness and marketing awareness.
The third is to make efforts to expand new marketing channels. The Company will strengthen the development of online channels, new retail channels,
big distributor channels and personalized-ordering group purchase channels, and establish a system of “brand team” + “outsourcing brand consulting
company” to provide more accurate and effective marketing support. Through the innovation of marketing system, the Company will push forward 1-2
chateau brands to establish an alliance company with big distributors to expand the market scale;mobilize more than 2,000 key distributors across the
country to open their own smart retail malls;guide distributors to recruit “community partners”;promote distributors make full use of city-wide
platforms like Meituan, Eleme, 58 Tongcheng, Douyin, JingdongDaojia and Little Red Book to run their business in various new formats;promote
contactless delivery of wines among distributors through their own distribution system or courier delivery in the same city, and help them improve
contactless delivery capacity and open up sales channels;mobilize all employees to participate in short video marketing and live streaming video
marketing.
33
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
The fourth is to comprehensively promote the Company’s traditional business to be transferred to digitization business. The Company will strive to
realize digitalization of planting, production, sales and marketing in an all-round way, thus to provide accurate service to clients and targeted marketing
to consumers. In 2020, the Company will print anti-counterfeiting codes on the back and conduct the reformation of one-off marketing codes to
promote distributor-driven orders in an all-round way and introduce the inbound and outbound identification management and product traceability in
the distributor link. The Company will also cooperate with Tencent and other companies to complete the digital integration of marketing to promote
digital marketing level.
The fifth is to continue improving product quality. The Company will stabilize the total number of contracted bases, improve the planting level of its
own grape bases, and cultivate new wine grape varieties according to different geographical and climatic characteristics in China. Besides that, the
Company will establish long-term stabled high, medium and low raw material bases for wine and brandy to meet different product demands and
complete wine and brandy overseas grape base layout from a global perspective. The Company will also increase the import quantity of oak barrels and
formulate a three-year purchase plan of oak barrels for high-end products such as chateau wines and Koya brandy and so on, and improve the way and
method of using oak barrels. The Company will further establish and improve the “evaluation system for brand wine-makers team”, mobilize
winemakers to go deep into the production line to improve product quality and go deep into the market line to understand consumer demand, in order
to better play the winemakers team’s technical and work capability. The Company will support and encourage the research and development
investment of new technology and new process to ensure the steady improvement of product quality.
The sixth is to further improve the employment mechanism. The Company will continue to implement the general policy of “strictly control the
employment and release the demission”, and strive to achieve the general goal of “control the total number and keep the income non-decreasing”. The
Company will accelerate the reform of the selection and employment mechanism, salary distribution and incentive mechanism to open up a dual
channel for employees’ career development and salary incentive. A three-year talent development plan for management, brewing, equipment,
marketing, production and other aspects will be made. The system of “management trainee” and “guidance of mentor to apprentice”will be established
to form the talent training model of “everyone has a mentor in front and anechelon formation in back”. Meanwhile, the Company will also establish a
good mechanism to reward innovation success and tolerate innovation failure and create a favorable atmosphere to encourage innovation and tolerate
failure, providing reliable guarantee for the smooth development of innovation work in all aspects of the Company.
The seventh is to strengthen audit supervision and internal control system construction. The Company will further strengthen the audit supervision of
each operating unit and intensify the trinity supervision system of auditing, financing and discipline inspection commission.The Company will enhance
34
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
the punishment level, investigate every problems discovered in auditing and not promote or appoint responsible personnel. The Company will further
improve the internal control system of areas prone to serious fraud, including seal, related transaction, sales advertising fee, material procurement,
project construction and inventory and so on, in order to timely eliminate major hidden dangers and prevent operational risks.
The eighth is to strengthen the financial management. The Company will improve the budgeting mode, timely and dynamically adjust and improve the
annual budget in accordance with the major changes inside and outside of the Company, and enhance the timeliness and pertinence of budget
management. The Company will improve the simulation profit assessment system for secondary enterprises to improve the overall
profitability.Meanwhile, the Company will make full use of national policy of reducing taxes and fees to rationalize tax planning and strengthen
financial management of overseas enterprises to prevent major risks.
The above business plan and business goals do not represent the listed company’s profit forecast for 2020. Whether it can be realized depends on
various factors such as changes in market conditions and the efforts of the management team, which has great uncertainties. Please pay special
attention to this.
10. The Company’s receptions of research, communication, visit and other activities
Activity registration form for receptions of research, communication, visit and other activities during the report period
Available □Not available
Reception time Reception pattern Type of reception Basic situation index of
object reception
Yantai Changyu Pioneer
Wine Co., Ltd. Investor
October 16th, 2019 Other Individual
Relations Activation Record
Form
Times of reception 1
Number of institution reception 0
35
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
Number of individual reception 6
Number of other objects reception 0
Whether to disclose, reveal and leak No
material nonpublic information
36
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
V. Major issues
1. The Company’s ordinary share profit distribution and increasing equity with capital
reserve
Ordinary share profit distribution policies especially promulgation, implementation or
adjustment of cash dividends policies during the report period
Available □Not available
Deliberated and passed by the 2018 Shareholders’ Meeting convened on May 17th, 2019 by
the Company, the Company’s 2018 annual profit distribution scheme is shown as follows:
based on total 685,464,000 shares (including 453,460,800 A shares and 232,003,200 B shares)
up to December 31st, 2018, the Company would pay cash dividend to all shareholders
registered on the share registration day: CNY6 in cash per ten shares. This time the Company
would neither dispatch bonus shares nor increase equity with capital reserve.
Total amount of shares has not changed since the disclosure of the distribution plan to the
implementation period.
On June 28th, 2019, the Company published the Implementation Announcement of
2018Annual Equity Distribution on China Securities Journal, Securities Times and
www.cninfo.com.cn, determining that the share registration day and the ex-dividend dayof A
Share was respectively on July 5th, 2019 and on July 8th, 2019; the last trading day, the share
registration day and the ex-dividend dayof B Share was respectively on July 5th, 2019, on
July 8th, 2019 and on July 10th, 2019.
This time the dispatching objects contain all A Shareshareholders registered at China
Securities Depository and Clearing Corporation Limited Shenzhen Company after closing of
Shenzhen Stock Exchange in the afternoon of July 5th, 2019 and all B Shareshareholders
registered at China Securities Depository and Clearing Corporation Limited Shenzhen
Company after closing of Shenzhen Stock Exchange in the afternoon of July 10th, 2019 (the
last trading day is July 5th, 2019).
This dispatching has already been completed in mid-July 2019. The profit distribution
scheme implemented this time is consistent with the scheme deliberated and passed by the
shareholders’ meeting. The implementation of the profit distribution scheme for this time is
not more than two months after the shareholders' meeting passing it.
Special explanation for the cash dividends policy
Whether it is in accordance with the requirements of the regulation in the Articles Yes
of Association and the resolution of shareholders
Whether the distribution standard and proportion is clear and definite Yes
Whether the relevant decision process and mechanism is complete Yes
Whether the independent directors perform their responsibilities and play the roles Yes
Whether the small and middle shareholders have the chance to express their Yes
addeputys and appeals, as well as their lawful right and interest is in an enough
protection
Whether it is legal and transparent for the condition and process while adjusting Yes
and amending the cash dividends policy
37
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
The Company’s scheme (preliminary scheme) of ordinary share profit distribution and
increasing equity with capital reserve in the recent three years (including the report period)
The Company’s profit distribution scheme in 2017 is as following: Because the left amount of
legal earned surplus reserve reaches 50% of the registered capital, while making profit
distribution, the legal earned surplus reserve will not be drawn. Based on the Company’s
685,464,000 shares at total up to December 31st, 2017, the Company plans to pay CNY5 in
cash as dividends for every ten shares (including tax) to the Company’s all shareholders,
totaling up to CNY342,732,000, accounting for 33.22% of the net profit
CNY1,031,695,056attributable to the shareholders of the parent company in the consolidated
statement, the retained and undistributed profit of CNY688,963,056 will be reserved for the
distribution of next year.
The Company’s profit distribution scheme in 2018 is as following: Because the left amount of
legal earned surplus reserve reaches 50% of registered capital, while making profit distribution,
the legal earned surplus reserve will not be drawn. Based on the Company’s 685,464,000
shares at total up to December 31st, 2018, the Company plans to pay CNY6 in cash as
dividends for every ten share (including tax) to the Company’s all shareholders, totaling up to
CNY411,278,400 accounted for 39.45% of net profits CNY1,042,632,929 attributable to
shareholders of parent company in the consolidated statements. The retained and
undistributed profit of CNY631,354,529 will be reserved for distribution in the next year.
The Company’s profit distribution draft scheme in 2019 is as following: Because the left
amount of legal earned surplus reserve reaches 50% of registered capital, while making profit
distribution, the legal earned surplus reserve will not be drawn. Based on the Company’s
685,464,000 shares at total up to December 31st, 2019, the Company plans to pay CNY7 in
cash as dividends for every ten share (including tax) to the Company’s all shareholders,
totaling up to CNY479,824,800 accounted for 42.47% of net profits CNY1,129,735,749
attributable to shareholders of parent company in the consolidated statements. The retained
and undistributed profit of CNY649,910,949will be reserved for distribution in the next year.
The Company’s ordinary share cash dividend record in recent three years (including the
report period)
Unit: CNY
Year of Amount of cash Net profit belonging Proportion in Amount of Proportion Amount of cash Proportion
distribution dividend to the listed the net profit cash of cash dividend (including
(including tax) company’s belonging to dividends(eg. dividends (including other other ways)in
shareholders in the the listed shares in other ways) the net profit
consolidated company’s buy-back) in ways belonging to
statement of the shareholders other ways the listed
distribution year in the company’s
consolidated shareholders
statement (%) in the
consolidated
statement (%)
2019 479,824,800.00 1,129,735,749.00 42.47% 0.00 0.00% 479,824,800.00 42.47%
2018 411,278,400.00 1,042,632,929.00 39.45% 0.00 0.00% 411,278,400.00 39.45%
2017 342,732,000.00 1,031,695,056.00 33.22% 0.00 0.00% 342,732,000.00 33.22%
38
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
During the report period, the Company earned profit, the profit of the parent company that
could be distributed to ordinary share shareholders was positive but without proposing
ordinary share cash dividend distribution preliminary scheme.
□Available Not available
2. The Company’s preliminary scheme of profit distribution and preliminary scheme of
increasing equity with capital reserve for the report period
Available □Not available
Number of sending bonus shares per ten shares (share) 0
Number of dividend payout per ten shares (CNY) (including tax) 7
Number of transferring per ten shares(share) 0
The cardinal number of the capital stocks for the preliminary distribution
685,464,000
scheme (share)
Total cash dividend distribution（CNY）(including tax) 479,824,800.00
Amount of cash dividends(eg. shares buy-back)（CNY）in other ways 0.00
Total cash dividend distribution（CNY）(including other ways) 479,824,800
Attributable profit（CNY） 1,129,735,749.00
The proportion of cash dividend distribution in the total profit
100%
distribution(including other ways)
Cash dividend distribution this time
If the Company’s development is in growth stage and major capital expenditure is arranged,
while making profit distribution, the proportion of cash dividends should takes up no less
than 20% in this profit distribution.
Detailed explanation for the preliminary scheme of profit distribution or increasing equity
with capital reserve
According to the audit result from KMPG Huazhen LLP, the net profit belonging to the
parent company’s stockholders in the consolidated statement in 2019 is CNY1,129,735,749
and the net profit of the parent company in financial statement in 2019is CNY593,298,849.
According to PRC accounting standard, the situation for attributable profits of the
consolidation and the parent company in 2019as following:
Unit: CNY
Consolidation Parent company
Undistributed profits at the end the year 8,719,899,359 8,619,977,577
Including: net profits in 2019 1,129,735,749 593,298,849
Undistributed profit carried forward of the 8,001,442,010 8,437,957,128
beginning of the year
Distribution of 2018 dividends 411,278,400 411,278,400
Withdrawal legal surplus reserve 0 0
th
According to regulation of 157 item in the Articles of Association, which is that “the
Company can distribute dividends either in cash or by stock, the profit to be distributed each
year is not less than 25% of the distributable profit realized in the same year and the
accumulated sum of profit to be distributed in cash in the last three years is not less than 30%
39
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
of the yearly average distributable profit to be realized in the last three years”.Meanwhile,
considering the large amount on the capital expenditure in 2020, under the condition of not
influencing the normal production and operation, the Company put forward preliminary
scheme on profit distribution in 2019 as following:
Because the left amount of legal earned surplus reserve reaches 50% of registered capital,
while making profit distribution, the legal earned surplus reserve will not be drawn. Based on
the Company’s 685,464,000 shares at total up to December 31st, 2019, the Company plans to
pay CNY7 in cash as dividends for every ten share (including tax) to the Company’s all
shareholders, totaling up to CNY479,824,800 accounted for 42.47% of net profits
CNY1,129,735,749 attributable to shareholders of parent company in the consolidated
statements. The retained and undistributed profit of CNY649,910,949will be reserved for
distribution in the next year.
The cash dividend distributed to shareholders of domestic listed foreign shares (B share) is
paid in Hongkong dollar converted based on the middle rate between CNY and Hongkong
dollar issued by the People’s Bank of China on the first working day after the resolution date
of 2019 shareholders’ meeting.
3. Implementation of commitments
(1) Commitments that the Company’s actual controllers, shareholders, related parties,
acquirers and the Company and other related commitment parties have implemented
during the report period and have not implemented up to the end of the report period
Available □Not available
Commitment Commitment Commitment Commitment Commitment
Commitments Implementation
party type content time period
Commitments at
share reform
Commitments made
in acquisition report
or equity changes
report
Commitments at
－ － － －
asset restructuring
Yantai
Solve
Changyu Non-horizontal
Commitments at the horizontal May 18th, 1997 Forever Has been performing
Group Co., competition
initial public competition
Ltd.
offering or
Clear the use According to According to
refinancing
of trademark Trademark Trademark License
royalty License Contract, the
Yantai From May
Contract, the trademark use fee
Changyu th
May 18 , 1997 18th, 1997 to
trademark annually paid by the
Group Co.,Ltd. April 4th, 2019
royalty of Company to
Changyu and Changyu Group shall
other trademarks be mainly used
40
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
paid by the byChangyu Group to
Company to publicize trademarks
Yantai Changyu and contract
Group Co., Ltd products. Except
ever year is 2013 to 2017 during
mainly used for which the
advertising commitment was not
Changyu and strictly performed,
other trademarks Yantai
and this contract ChangyuGroup Co.,
products by Ltd. has been
Yantai Changyu performing its
Group Co., Ltd. commitment.
Equity incentive
commitments
The
CNY231,768,61
5 that was not
used for
publicity of
trademarks and
contract
products as
promised will be
offset by the
four-year
trademark use
Commitments at From April 4th,
Yantai Compensating fee from 2019 to
middle and small 2019 to
Changyu unredeemed 2022. If April 4th, 2019 Has been performing
shareholders of the December 31st,
Group Co.,Ltd. commitment insufficient, the
Company 2023
shortfall would
be filled in one
time in 2023. If
there is any
excess, the
excess portion of
the trademark
use fee would be
collected from
the year with
excess
occurrence.
Commitment under
timely No
implementation or
41
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
not
According to t Trademark License Contract (hereafter referred to as “the Contract”),Changyu Group
promises that the trademark use fee annually paid by the Company to Changyu Group shall be mainly
used byChangyu Group to publicize trademarks and contract products. But above-mentioned ‘mainly’ is
not a specific number, which is easy to cause divergence due to different understanding and leads to
problem appearance during the implementation process.
From 2013 to 2017, Changyu Group collected a total of CNY420,883,902 trademark use fee, of which
51% was used to publicize trademarks including Changyu and contract products with amount of
CNY214,650,790. The amount has been used to publicize trademarks including Changyu and contract
products is CNY50,025,181, with a balance of CNY164,625,609.
Whether or not to
In 2018 and 2019, the trademark use fee collected of 2017 and 2018 is CNY155,623,907, of which 51%
have specific
is used to publicize trademarks including Changyu and contract products with amount of
reasons of the
CNY79,368,193. The amount has been used to publicize trademarks including Changyu and contract
unimplemented
products is CNY12,225,187, with a balance of CNY67,143,006.
commitment and
Since 2013, the accumulated balance of Changyu Group using to publicize trademarks including
next steps
Changyu and contract products is CNY231,768,615.
Changyu Group promises that the four-year trademark use fee from 2019 to 2022 will be used for offset.
If insufficient, the shortfall would be filled in one time in 2023. If there is any excess, the excess portion
of the trademark use fee would be collected from the year with excess occurrence. If Changyu Group is
not able to implement the above-mentioned commitment owing to various reasons, the Company will
timely supervise and urge Changyu Group to fulfill its commitment and request Changyu Group to raise
funds through bank loaning, assets sales and equity sales etc. in order to implement the commitment.
For detailed information, please refer to Announcement on Commitment Issues of Yantai Changyu Group
Co., Ltd disclosed on April 4th, 2019.
(2) The Company should make a statement on the achieved original profit forecast of
assets or projects and its reason if there is profit forecast of Company’s assets or
projects and the report period is still in the profit forecast period
□Available Not available
4. Non-business capital occupying of listed company by controlling shareholder and its
related parties
□Available Not available
There are no non-business capitals occupying of listed company by controlling shareholder
and its related parties during the report period.
5. Explanation of Non-standard Audit Report given by accounting firm in the report
period from board of directors, board of supervisors and independent directors (if
have)
□Available Not available
6. Compared with the last year’s financial report, explanation for the changes of
accounting policy, accounting estimation and accounting method
42
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
Available □Not available
The Company has implemented the new financial standard since January 1st, 2019. According
to the transition requirements of the standard, the Company made retrospective adjustments
to classification and measurement (including impairment) of financial instruments that were
not derecognized on the date (January 1st, 2019) of the implementation of the New Financial
Instruments Standard. This company did not adjust the comparative financial statement data,
and the difference between the original book value of financial instrument and the new book
value on the date of implementation of the New Financial Instruments Standard was recorded
into retained income or other comprehensive income in early 2019.
The Company prepared financial statements according to the relevant requirements of
Accounting [2019] No. 6, which only affected the format of financial statements and the
listing of some items and did not have significant effects on the Company's net asset, net
profit and other related financial indexes.
For other information about changes in accounting policy, please refer to Announcement on
Changes in Accounting Policy disclosed by the Company in SecuritiesTimes,
ChinaSecuritiesJournal and CNINFO.
7. The situation explanation for the correction of major accounting errors which need to
be retrospect and restated during the report period
□Available Not available
There is no situation for the correction of major accounting errors which need to be retrospect and
restated.
8. Compared with the last year’s financial report, explanation for the changes of the
consolidated statements scope
Available □Not available
For detailed information about the changes in the scope of consolidated financial statements
in this year, please refer to VI“Change in consolidation scope” in Financial Report of this
report.
9. The appointment and dismissal of certified public accountants
Currently appointed accounting firm
Domestic accounting firm name KPMG Hua Zhen LLP
Remuneration for domestic accounting firm
195
(CNY‘0000)
Consecutive period for the audit service of
1
domestic accounting firm
Name of certified public accountant for the audit
Ms. Wang Ting, Ms. Chai Jing
service of domestic accounting firm
Consecutive period for the certified public
accountant’s audit service of domestic 1
accounting firm
43
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
Overseas accounting firm name (if have)
Remuneration for overseas accounting firm
(CNY‘0000) (if have)
Consecutive period for the audit service of
overseas accounting firm(if have)
Name of certified public accountant for the audit
service of overseas accounting firm(if have)
Consecutive period for the certified public
accountant’s audit service of overseas accounting
firm (if have)
Whether or not to employ a new accounting firm during the report period
Yes □No
Whether or not to employ a new accounting firm during the audit period
□Yes No
Whether the change in accounting firm fulfils approval procedure
Yes □No
Detailed explanation for employing a new accounting firm and the change in accounting firm
This Company did not continue employing Deloitte Hua Yong certified public accountants
co., Ltd. (special general partnership) to be the audit authority of 2019 annual financial report
and internal control and to employ KMPG Hua Zhen LLP to be the audit authority of 2019
annual financial report and internal control. The employment period is one year and the
annual audit expense (including travel expenses and total labor expenses) is CNY1.95million.
To employ internal control audit accounting firms, financial adviser or sponsor.
Available □Not available
The Company employs KMPG Hua Zhen LLP to be the audit authority of 2019 annual
financial report and internal control. The employment period is one year and the annual audit
expense (including travel expenses and total labor expenses) is CNY1.95million.
10. Face of suspension and termination of listing after the disclosure of annual report
□Available Not available
11.Bankruptcy reorganization
□Available Not available
There is no bankruptcy reorganization during the report period.
12. Material litigation and arbitration
□Available Not available
44
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
There are no material litigation and arbitration during the report period.
13. Penalty and rectification
Available □Not available
Name Type Reason Type of Decision Disclosure Disclosure index
investigation (if have) date
and
punishment
Yantai Shareholder Fail to Other April 4th, Rectification Report on Related
Questions in
Changyu holding implement 2019
Decision on Administrative
Group Co., more than commitment Supervision Measures from
Ltd. 5% of strictly from China Securities Regulatory
Commission Shandong
equity 2013 to
Regulatory Authority by
2017 RelevantResponsiblePersonnel
Yantai Other Issues of Other April 4th, Yantai
Changyu trademark 2019 Changyu Pioneer Wine
Co., Ltd. disclosed in China
Pioneer and patent
Securities Journal,
Wine Co., Securities Timesand CNINFO
Ltd. (http://www.cninfo.com.cn/)
(announcement no.:
Zhou Senior Zhou Other April 4th,
2019-temporaty 05)
Hongjiang, executive Hongjiang 2019
QuWeimin acting as the
general
manager at
that time
and
QuWeimin
acting as the
board
secretary at
that time fail
to be
industrious
and
responsible
45
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
Explanation for rectification situation
Available □Not available
For detailed information about rectification situation, please refer to Announcement on
Commitments of Yantai Changyu Group Co., Ltd to Yantai Changyu Pioneer Wine Co., Ltd.and
Rectification Report on Related Questions in Decision on Administrative Supervision Measures
from China Securities Regulatory Commission Shandong Regulatory Authority by
RelevantResponsiblePersonnel in Yantai Changyu Pioneer Wine Co., Ltd disclosed in China
Securities Journal, Securities Times and CNINFO on April 4th, 2019.
14. Credit of the Company, holding shareholders and actual controllers
□Available Not available
15. Implementation of the Company’s equity inventive plan, employee stock ownership plan
or other employee incentive measures
□Available Not available
There are no implementation of the Company’s equity inventive plan, employee stock ownership
plan and other employee incentive measures during the report period.
16. Significant related transactions
(1) Related transactions in relation to daily operations
Available □Not available
46
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
Related Relationship Type Content Pricing Price Amount Proportion Approved Whether Clearing Available Disclosure Disclosure
party principle (CNY‘0000) accounting transaction exceed form market price date index
for amount quota approved of similar
of similar (CNY‘0000) transaction transactions
transactions quota
Purchase Announcem
YantaiShe Controlled Purchase and ent on 2019
th
nma by the same and commission Agreement Determined April 20 , Annual
13,359 15.07% 17,500 No Cash No
Packaging parent commission processing pricing by agreement 2019 Routine
Co., Ltd. company processing packing Related
materials Transaction
disclosed in
China
Yantai Licensed Securities
Licensed use th
Changyu Parent use of Agreement Determined April 4 , Journal,Sec
of trademark 21,865 100% 21,865 No Cash No
Group Co. company intangible pricing by agreement 2019 uritiesTimes
and patent
Ltd. assets and
CNINFO in
2019
Total - - 35,224 -- 39,365 - -
Details of the return of large sales No
Actual performance of the estimated total amount for
daily operations related transactions by category that will No
occur during this period. (if have)
Reason for the deference between transaction price and Not available
market reference price(if available)
(2) Related transactions in relation to acquisition and sales of assets or equity
47
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
□Available Not available
There are no related transactions in relation to acquisition or sales of assets or equity during the
report period.
(3) Related transactions in relation to common foreign investment
□Available Not available
There are no related transactions in relation to common foreign investment during the report
period.
(4) Related current credit and debt transactions
Available □Not available
Whether or not existing non-operating related credit and debt transactions
□Yes No
There are no non-operating related credit and debt transactions during the report period.
(5) Other major related transactions
Available □Not available
Disclosure website of interim report for major related transaction
Name of interim Disclosure date of interim Name of disclosure website for interim
announcement announcement announcement
th
Announcement April 20 , 2020 http://www.cninfo.com.cn
On Asset
Replacement
17. Major and important contracts and execution results
(1) Trusteeship, contract and leasehold issues
Trusteeship situation
□Available Not available
There is no trusteeship situation during the report period.
Contract situation
Available □Not available
Contract situation description
During the report period, about the Company’s contract operation situation, please see “1.The
structure of Enterprise group” in VIII “Rights and interests of other subject” in the financial
report of this report.
48
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
Project in gains and losses for the Company to achieve more than 10% of the total profit
□Available Not available
There are no contract projects in gains and losses for the Company to achieve more than 10%
of the total profit during the report period.
Leasehold situation
□Available Not available
There is no leasehold situation during the report period.
(2) Major guarantee
Available □Not available
Guarantee situation
Unit: CNY’0000
External guarantee of the Company and its subsidiaries（excluding guarantee to subsidiaries）
Disclosure date of
Whether or
related Actual date of Actual Whether or not
Guarantee object Guarantee Guarantee Guarantee not belong to
announcement occurrence (date guarantee complete
name quota type Period related-party
about guarantee of agreement) amount implementation
guarantee
quota
Yantai Economic
and Technological
Mortgage;
Development 2016.12.22 34160 2016.12.21 34160 10years No No
Pledge
Zone Management
Council.
Total of the actual external
Total of the external guarantee quota
0 guarantee amount during the 0
approved during the report period (A1)
report period (A2)
Balance of the actual
Total of the external guarantee quota
external guarantee by the
approved by the end of the report period 34160 34160
end of the report period
(A3)
(A4)
Guarantee situations between the Company and subsidiaries
Disclosure date of Whether or
Actual date of Actual Whether or not
Guarantee object related Guarantee Guarantee Guarantee not belong to
occurrence (date guarantee complete
name announcement about quota type Period related-party
of agreement) amount implementation
guarantee quota guarantee
Sales &
Marketing
Joint liability
Company of 2016.10.31 10,000 2016.11.05 10,000 2 years No Yes
assurance
Yantai Changyu
Pioneer Wine
49
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
Company Limited
Yantai Changyu
Mortgage;
Pioneer Wine 2016.12.22 11,984 2016.12.21 11,984 10 years No Yes
Pledge
Company Limited
Yantai Changyu Joint
Wine Research liability
2016.12.22 72,176 2016.12.21 72,176 10 years No Yes
and Development assurance;M
Company Limited ortgage
Joint
Kilikanoon Estate
2017.12.12 7100 2018.01.09 7100 liability 1 year No Yes
Pty Ltd
assurance
Total of the actual guarantee
Total of the guarantee quota approved to
amount for subsidiaries
subsidiaries during the report period 0 0
during the report period
(B1)
(B2)
Balance of the actual
Total of the guarantee quota approved to
guarantee for subsidiaries by
subsidiaries by the end of the report 89,276 89,276
the end of the report period
period (B3)
(B4)
Guarantee situations between subsidiaries
Disclosure date of
Whether or
related Actual date of Actual Whether or not
Guarantee object Guarantee Guarantee Guarantee not belong to
announcement occurrence (date guarantee complete
name quota type Period related-party
about guarantee of agreement) amount implementation
guarantee
quota
Hacienda Y
Vinedos Marques 2016.04.29 3,502 2015.10.08 3,502 Mortgage; Long term No No
Del Atrio. SL
Indomita Wine
Company Chile, 2018.04.23 1,986 2018.04.20 1,986 Mortgage; Long term No No
SpA
SocieteCivileArgr
icole Du Chateau 854 2019.07.30 854 Mortgage; Long term No No
De Mirefleurs
SCEA Chateau
5,122 2019.07.30 5,122 Mortgage; Long term No No
Liversan
Total of the actual guarantee
Total of the guarantee quota approved
amount for subsidiaries
to subsidiaries during the report period 5,976 5,976
during the report period
(C1)
(C2)
Total of the guarantee quota approved Balance of the actual
11,464 11,464
to subsidiaries by the end of the report guarantee for subsidiaries by
50
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
period (C3) the end of the report period
(C4)
Total guarantee amount of the Company（Total of above three major items）
Total of the actual guarantee
Total of the approved guarantee quota
5,976 amount during the report 5,976
during the report period（A1+B1+C1）
period（A2+B2+C2）
Total of the approved guarantee quota Balance of the actual
by the end of the report period 134,900 guarantee by the end of the 134,900
（A3+B3+C3） report period（A4+B4+C4）
The proportion of actual total guarantee amount (A4+B4+C4)
13.09%
accounting for the Company’s net asset
Among :
The amount of guarantee for shareholders, actual controllers and their related
0
parties（D）
The amount of debt guarantee for the guaranteed objects whose asset-liability
0
ratio is more than 70% directly or indirectly（E）
Total amount of guarantee of the part that exceeds 50% of net assets（F） 0
Total amount of the above-mentioned three items（D+E+F） 0
Explanation for undue guarantees that have happened warranty liability or
No
may take joint payback liabilities during the report period (if have)
Explanation for violating due process to provide external guarantee (if have) No
Specific explanation on adopting complex guarantee type
No.
Illegal external guarantee
□Available Not available
There is no illegal guarantee situation during the report period.
(3) Entrusting others to manage cash assets
Financial management entrustment
□Available Not available
There is no financial management entrustment during the report period.
Loan entrustment
□Available Not available
51
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
There is no loan entrustment during the report period.
(4) Other important contracts
□Available Not available
There are no other important contracts during the report period.
18. Social Responsibility
(1) Social responsibility performance
Please refer to2019 Annual Social Responsibility Report disclosed on Securities Times, China
Securities Newspaperandwww.cninfo.com.cn by the Company.
(2) Targeted poverty alleviation social responsibility performance
①Targeted poverty plan
The Company has reached the mutual agreementwithZhuqiao Town Party Committee
Government and Da Langya Village Committee to establish professional grapecooperative.
Itplans to help to conductthe construction of 100mu of vineyard per year from 2019 to 2021
with a total area of 300 m and also to sign grape purchase contract in order to help local
villagers to get rid of poverty and become better off.
②Summary of annual targeted poverty
Related leaders of the Company visited the village, held meetings with local leaders and
personnel receiving assistance and worked on the spot to discuss and accelerate assistance
measures. 3 motor-pumped wells have been digged to assist the target personnel in the
construction of grape bases.
③ Targeted poverty effectiveness
At present, the Company has completed the preliminary preparations for targeted poverty
alleviation in Dalangya Village, and officially started the implementation of poverty
alleviation work.
④ Subsequent targeted poverty plan
No
(3) Environmental protection related situation
Whether the listed company and its subsidiaries belong to major polluterspublished by the
environmental protection department
Yes
Name Name of Mod Qua Distributi Discha Implemente Tota Tota Con
of major e of ntity on rge dpollution l l ditio
compan pollutants disch of situation concen discharge volu appr n of
52
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
y or and arge disc of tration standard me oved exce
subsidia particular harg discharge of volu ssive
ry pollutants e outlet disc me disc
outle harg of harg
t e disc e
harg
e
Liaoning Organize Disc 2 Confirme Meetin Emission No
Changyu d exhaust harg d in line g the Standard
Icewine gas, e with nation for Air
Chateau inorganiz outle national al Pollutants
Co., Ltd. edexhaust t of standard standa of
gas, boile Graphica rds Boiler(GB1
waster r l Signs 3271-2014),
water, chim for Emission
noise ney Environm Standard
and ental for Odor
disch Protectio Pollutants
arge n (GB14554-
outle (GB1556 93), 4a in
t of 2.1-1995) Class 2 of
facto (GB1556 Emission
ry 2.2-1995) Standard
120
wast for 35m
m3/
e Environmen 3/d
d
wate tal Noise at
r the
Boundary of
Industrial
Enterprises
(GB12348-
2008),,
Comprehen
sive
Wastewater
Discharge
Standard of
Liaoning
Province
(DB21/1627
-2008)
Construction and operation of pollution prevention facilities
The exhaust gas, SO2 and NOX produced by this company's boiler are discharged through
ceramic tube dust removers and bag dust removers. A wastewater treatment station has been
constructed. The wastewater treatment process adopts thetreatment process of
hydrolysis-aerobiont. Production wastewater and domestic sewage are treated by the in-plant
53
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
wastewater treatment station and then discharged into thewastewater treatment
plantinBeidianzixiang Town.
Environmental impact assessment of construction projects and other environmental
protection administrative permits
It has been approved in the Huanhuanjianzi (2016) No.24 issued by the Environmental
Protection Bureau of Huanren Manchu Autonomous County.
Emergency plan for emergentenvironmentalincident
The Company has formulated a comprehensive emergency plan for
emergentenvironmentalincident.
Environmental self-monitoring program
The Company has formulated a complete environmental self-monitoring program.
Other environmental information that should be made public
No
Other related environmental information
No
19. Other Major issues
□Available Not available
There are no other major issues need to be explained during the report period.
20. Major issues of Company’s subsidiaries
□Available Not available
54
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
VI. Changes in Shares and the Shareholders’ Situation
1. Changes in shares
(1) Changes in shares
Unit: share
Amount before this change Change (+, -) Amount after this change
Percentage Allot new Distribute Transfer other capital Percentage
Amount others Sub total Amount
% share bonus share to share capital %
1.Shares without trading
685,464,000 100.00% 685,464,000 100.00%
limited condition
(1). A shares 453,460,800 66.15% 453,460,800 66.15%
(2). B shares 232,003,200 33.85% 232,003,200 33.85%
2. Total shares 685,464,000 100.00% 685,464,000 100.00%
Cause of share change
□Available Not available
Approval of share change
□Available Not available
Transfer ownership of changed shares
□Available Not available
Implementation progress of share buy-back
55
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
□Available Not available
Implementation progress of reducing holding buy-back share through the way of centralized bidding
□Available Not available
The influence of share change on the financial indicators such as basic earnings per share, dilutedearnings per share of the latest year and the
latest period, net asset per share belonging to the Company’s common shareholders, etc.
□Available Not available
Other contents the Company thinks necessary or securities regulatory departments ask to make public.
□Available Not available
(2) Changes in restricted shares
□Available Not available
2. Securities issuance and listing situation
(1) Securities issuance (exclude preferred share) during report period
□Available Not available
(2) Explanation of change in Company’s total shares and shareholding structure and change in Company’s assets and liability structure
□Available Not available
(3) Current employee shares
□Available Not available
3. Situation for shareholders and the actual controllers
(1) The number of shareholders of the Company and the shareholdings
56
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
Unit：share
Total number of preferred shareholder
Total number of shareholders by Total number of preferred shareholder
Total shareholders in recovering voting power by the end of
43,856 the end of last month before the 45,626 recovering voting power by the end of 0 0
the report period last month before the disclosure day of
disclosure day of the annual report report period (if have) (see note 8)
the annual report (if have) (see note 8)
Shareholders holding more than 5% or the top 10 shareholders holding situation
Shares held until Number of Number of Pledged or frozen
Percentage Changes during
Name of Shareholders Character of shareholders the end of the restricted unrestricted
(%) the report period Share status Amount
report period shares shares
YANTAI CHANGYU GROUP CO., Domestic non-state legal
50.40% 345,473,856 0 345,473,856
LTD. person
GAOLING FUND, L.P. Foreign legal person 3.08% 21,090,219 0 21,090,219
CHINA SECURITIES FINANCE CORP State legal person 2.25% 15,440,794 0 15,440,794
BBH BOS S/A FIDELITY FD - CHINA
Foreign legal person 2.22% 15,241,826 0 15,241,826
FOCUS FD
SHENWAN HONGYUAN Foreign legal person
1.20% 8,243,333 -104,330 8,243,333
SECURITIES(HONGKONG) LIMITED
FIDELITY PURITAN TRUST:
FIDELITY SERIES INTRINSIC Foreign legal person 0.93% 6,350,762 250,000 6,350,762
OPPORTUNITIES FUND
GUOTAI JUNAN
Foreign legal person 0.70% 4,810,345 -233,162 4,810,345
SECURITIES(HONGKONG) LIMITED
CENTRAL HUIJIN ASSET
State legal person 0.69% 4,761,200 0 4,761,200
MANAGEMENT LIMITED
VANGUARD EMERGING MARKETS
Foreign legal person 0.55% 3,788,487 0 3,788,487
STOCK INDEX FUND
FIDELITY CHINA SPECIAL Foreign legal person 0.55% 3,779,202 0 3,779,202
57
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
SITUATIONS PLC
Strategic investors or legal result of the placement of new shares to
No
become a top 10 shareholders(if have)(see note 3)
Among the top 10 shareholders, Yantai Changyu Group Company Limited has no associated relationship or accordant
The explanation for the associated relationship and accordant action
action relationship with the other 9 listed shareholders, while the relationship among the other shareholders is unknown.
The top 10 shareholders with shares without trading limited condition
Type of share
Name of Shareholders Number of shares without trading limited condition held until the end of the year
Type of share Amount
YANTAI CHANGYU GROUP CO., LTD. 345,473,856 A 345,473,856
GAOLING FUND,L.P. 21,090,219 B 21,090,219
CHINA SECURITIES FINANCE CORP 15,440,794 A 15,440,794
BBH BOS S/A FIDELITY FD - CHINA FOCUS FD 15,241,826 B 15,241,826
SHENWAN HONGYUAN SECURITIES(HONGKONG) LIMITED 8,243,333 B 8,243,333
FIDELITY PURITAN TRUST: FIDELITY SERIES INTRINSIC 6,350,762 B 6,350,762
OPPORTUNITIES FUND
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED 4,810,345 B 4,810,345
CENTRAL HUIJIN ASSET MANAGEMENT LIMITED 4,761,200 A 4,761,200
VANGUARD EMERGING MARKETS STOCK INDEX FUND 3,788,487 B 3,788,487
FIDELITY CHINA SPECIAL SITUATIONS PLC 3,779,202 B 3,779,202
The explanation for the associated relationship and accordant action of
the top 10 shareholders with unrestricted shares, the the associated Among the top 10 shareholders, Yantai Changyu Group Company Limited has no associated relationship or accordant
relationship and accordant action between the top 10 shareholders with action relationship with the other 9 listed shareholders, and the relationship among the other shareholders is unknown.
unrestricted shares and the top 10 shareholders
Explanation for the top 10 shareholders who involved in financing
The top 10 shareholders do not involve in financing activities and stock trade business.
activities and stock trading business (if have)(see note 4)
58
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
Whether or not the Company’s top 10 common shareholders and shareholders withshares without trading limited conditiontake agreed
repurchase trading during the report period
□Yes No
There is no agreed repurchase trading taken by the Company’s top 10 common shareholders and shareholders withshares without trading limited
conditionduring the report period.
(2) Situation for the controlling shareholders of the Company
Property of holding shareholders: Property of holding main body undefined
Type of holding shareholders: Legal representative
Name of controlling shareholder Legal representative Establishment date Organization code Main business
Production and distribution of wine, healthy liquor, distilled liquor
Yantai Changyu Group Co., Ltd. Zhou Hongjiang 1997.04.27 913706002656458244 and non-alcohol beverages, planting of agricultural products and
export business under the scope of permission.
Equity situation for the other domestic listed companies controlled
No.
or shared by the controlling shareholders during the report period
Changes in the controlling shareholder during the report period
□Available Not available
There are no changes in the controlling shareholder during the report period.
(3) Situation for the actual controllers of the Company
Property of actual controllers: domestic other institutions; foreign other institutions
Type of actual controllers: Legal representative
Name of actual controllers Legal representative Establishment date Organization code Main business
Yantai Yuhua Investment & Development JiangHua 2004.10.28 76779294－7 Under state permission, property investment, tenancy of machine and facility,
59
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
Co., Ltd. wholesale and retail of construction material, chemical products (chemical hazard
products excluded), hardware and electronical products, grape plantation.
Directly or indirectly conduct the production and distribution of food products
ILLVA Saronno Holding S.p.a. Augusto Reina 1984.07.25 － (alcoholic products included) as well as industrial, commercial, financial and service
activities of any other kinds through joint-stock companies and organizations.
International Finance Corporation is one of the members of World Bank, mainly
dedicated to investment in private sectors of developing countries while providing
Philippe LE technical support and consultation service. The corporation is a multilateral financial
International Finance Corporation 1956.07.25 －
HOUEROU institution that ranks first in the world in terms of providing capital stock and loans to
developing countries. Its purpose is to promote sustainable investments of private
sectors of developing countries in order to alleviate poverty and improve people’s life.
Operating management of state-owned property right (stock right) authorized by
State-owned Assets Supervision and Administration Commission of Yantai Municipal
Government; Financing, investment and operating management of government
projects, such as strategic investment and industrial investment and so on; Capital
operation (including acquisition, reintegration and transfer, etc) of state-owned
property right and state-owned stock right within the scope of authorization; Venture
Yantai Guofeng Investment Holdings capital investment business; Agency of venture capital investment business of other
Rong Feng 2009.02.12 00426068-6
Group Co., Ltd. venture investment enterprises or individuals; Participation in the establishment of
venture capital investment enterprises and venture capital investment management
consultant institutions; Investment and financing service business; Investment and
financing consultant business; Other business authorized by State-owned Assets
Supervision and Administration Commission of Yantai Municipal
Government.(Projects need to be authorized in accordance with the law could carry out
business activities only after the approval of relevant departments )
Equity situation for the other domestic Yantai Yuhua Investment & Development Co., Ltd. did not control the equity of other domestic and foreign listed companies except the Company
listed companies controlled by the actual during the reporting period; It is not clear that other actual controllers control the equity of other domestic and foreign listed companies other than the
controller during the report period Company during the reporting period.
60
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
Changes of the actual controllers during the report period
□Available Not available
There are no changes in actual controllers during the report period.
Introduction for property right and control relations between the Company and its actual controllers
61
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
Actual controller controls the Company through a trust or other asset management ways
□Available Not available
(4) Other institutional shareholders holding more than 10% shares
□Available Not available
(5) Shares reduction situations of holding shareholders, actual controllers, restructuring side and other commitment subjects
□Available Not available
62
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
VII. Related Situation of Preferred Shares
□Available Not available
There are no preferred shares during the report period.
VIII. Related Situation of Convertible Corporate Bonds
□Available Not available
There are no convertible corporate bonds during the report period.
63
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
IX. Situation for Directors, Supervisors, Senior Executives and Staff
1. Changes in shareholdings of directors, supervisors and senior executives
Shares held at Increased Decreased Other Shares held at
Beginning date Ending date of
Name Post Status Gender Age the beginning of shares during shares during changes of the end of the
of tenure tenure
the period the period the period shares held period
Zhou Hongjiang Chairman Incumbent M 55 2002.05.20 2022.05.18 0 0 0 0 0
Sun Liqiang Director Outgoing M 72 1997.09.18 2019.05.17 0 0 0 0 0
Leng Bin Director Incumbent M 57 2000.08.22 2022.05.18 0 0 0 0 0
Sun Jian Director Incumbent M 53 2019.05.17 2022.05.18 0 0 0 0 0
Li Jiming Director Incumbent M 53 2019.05.17 2022.05.18 0 0 0 0 0
Chen Dianxin Director Incumbent F 53 2019.05.17 2022.05.18 0 0 0 0 0
Qu Weimin Director Outgoing M 62 1997.09.18 2019.05.17 0 0 0 0 0
Zhang Ming Director Outgoing M 46 2016.05.26 2019.05.17 0 0 0 0 0
Augusto Reina Director Incumbent M 79 2006.12.07 2020.02.20 0 0 0 0 0
Aldino Marzorati Director Incumbent M 67 2006.12.07 2020.05.18 0 0 0 0 0
Appignani
Director Outgoing M 81 2006.12.07 2019.05.17 0 0 0 0 0
Antonio
Enrico Sivieri Director Incumbent M 51 2019.05.17 2022.05.18 0 0 0 0 0
Wei Anning Director Incumbent M 56 2017.06.15 2022.05.18 0 0 0 0 0
Wang Zhuquan Independent director Incumbent M 54 2014.05.23 2022.05.18 0 0 0 0 0
Wang Shigang Independent director Outgoing M 54 2011.05.10 2019.05.17 0 0 0 0 0
Luo Fei Independent director Incumbent M 67 2016.09.23 2022.05.18 0 0 0 0 0
64
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
Duan Changqing Independent director Incumbent M 55 2019.05.17 2022.05.18 0 0 0 0 0
Liu Huirong Independent director Incumbent F 56 2019.05.17 2022.05.18 0 0 0 0 0
Liu Qinglin Independent director Incumbent M 56 2019.07.02 2022.05.18 0 0 0 0 0
Liu Yan Independent director Outgoing F 46 2016.09.23 2019.05.17 0 0 0 0 0
Guo Guoqing Independent director Outgoing M 57 2018.12.04 2019.07.02 0 0 0 0 0
Chairman of the Board
Kong Qingkun Incumbent M 47 2013.05.14. 2022.05.18 0 0 0 0 0
of Supervisors
Zhang Lanlan Supervisor Incumbent F 50 2013.05.14. 2020.05.18 0 0 0 0 0
Liu Zhijun Supervisor Incumbent M 39 2016.05.26 2020.05.18 0 0 0 0 0
Sun Jian General manager Incumbent M 53 2018.01.10 2022.05.18 0 0 0 0 0
Li Jiming Chief engineer Outgoing M 53 2001.09.14 2019.05.28 0 0 0 0 0
Li Jiming Deputy general manager Incumbent M 53 2019.05.28 2022.05.29 0 0 0 0 0
Jiang Hua Deputy general manager Incumbent M 56 2001.09.14 2022.05.29 0 0 0 0 0
Peng Bin Deputy general manager Incumbent M 53 2018.01.10 2022.05.29 0 0 0 0 0
Qu Weimin Board secretary Outgoing M 62 1997.09.18 2019.05.28 0 0 0 0 0
Jiang Jianxun Chief financial officer Outgoing M 53 2018.01.10 2019.05.27 0 0 0 0 0
Deputy general manager
Jiang Jianxun Incumbent M 53 2019.05.28 2022.05.29 0 0 0 0 0
and Board secretary
General manager
Pan Jianfu Incumbent M 44 2018.04.19 2022.05.29 0 0 0 0 0
assistant
General manager
Liu Shilu Incumbent M 45 2018.04.19 2022.05.29 0 0 0 0 0
assistant
General manager
Xiao Zhenbo Incumbent M 43 2018.04.19 2022.05.29 0 0 0 0 0
assistant
Total -- -- -- -- -- -- 0 0 0 0 0
2. Changes in the Company’s directors, supervisors and senior executives
Available □Not available
Name Position Type Date Reason
Sun Liqiang Director Outgoing due to the expiry of term 2019.05.17 The term of office has expired and will no longer be appointed as a
65
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
director
Qu Weimin Director Outgoing due to the expiry of term 2019.05.17 The term of office has expired and will no longer be appointed as a
director
Zhang Ming Director Outgoing due to the expiry of term 2019.05.17 The term of office has expired and will no longer be appointed as a
director
Appignani Antonio Director Outgoing due to the expiry of term 2019.05.17 The term of office has expired and will no longer be appointed as a
director
Wang Shigang Independent director Outgoing due to the expiry of term 2019.05.17 The term of office has expired and will no longer be appointed as an
independent director
Liu Yan Independent director Outgoing due to the expiry of term 2019.05.17 The term of office has expired and will no longer be appointed as an
independent director
GuoGuoqing Independent director Outgoing 2019.07.02 Voluntary resignation prior to expiration of term
Li Jiming Chief engineer Outgoing due to the expiry of term 2019.05.28 The term of office has expired and will no longer be appointed as a
chief engineer
Qu Weimin Board secretary Outgoing due to the expiry of term 2019.05.28 The term of office has expired and will no longer be appointed as a
board secretary
Jiang Jianxun Chief financial officer Outgoing due to the expiry of term 2019.05.28 The term of office has expired and will no longer be appointed as a
chief financial officer
Sun Jian Director Appointment 2019.05.17 Be appointed as a director of the Company
Li Jiming Director Appointment 2019.05.17 Be appointed as a director of the Company
Chen Dianxin Director Appointment 2019.05.17 Be appointed as a director of the Company
Enrico Sivieri Director Appointment 2019.05.17 Be appointed as a director of the Company
DuanChangqing Independent director Appointment 2019.05.17 Be appointed as an independent director of the Company
Liu Huirong Independent director Appointment 2019.05.17 Be appointed as an independent director of the Company
Liu Qinglin Independent director Appointment 2019.07.02 Be appointed as an independent director of the Company
Li Jiming Deputy general manager Appointment 2019.05.28 Be appointed as a deputy general manager of the Company
Deputy general manager and Be appointed as a deputy general manager of the Company and board
Jiang Jianxun Appointment 2019.05.28
Board secretary secretary
66
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
3. Situation for work experience
The professional background, main work experiences and present positions of the Company’s
directors, supervisors and senior executives
(1) Members of Board of Directors
Mr. ZhouHongjiang, male, 55, Chinese, with doctoral degree, senior engineer, used to be
the General Manager of Yantai Changyu Pioneer Wine Sales Co., Ltd.,the DeputyGeneral
Manager, the General Manager and the Deputy Chairman of Yantai Changyu Pioneer Wine
Co., Ltd.. He is incumbent asthe representative of the 13thNational People’s Congress, the
Chairman of Yantai Changyu Group Co., Ltd.,and the board director and the Chairman of the
Company.
Mr. Leng Bin, male, 57, Chinese, with master degree, senior accountant,used to be
theDeputy Section Chief and the Section Chief of Yantai Audit Bureau,the board director and
the Chief Accountant of Yantai Changyu Group Co., Ltd. and the board director and the
Deputy General Manager of the Company. He is incumbent as the board director of the
Group Company and the Company, and with an additional post of the General Manager of
the Group Company.
Mr. Sun Jian,male, 53,Chinese, MBA, used to be the Deputy General Manager of the
Company. He is incumbent as the board director and the General Manager of the Company,
and with an additional post of the board director of the Group Company.
Mr. Li Jiming, male, 53,Chinese, with doctoral degree, application researcher, used to be the
Chief Engineer of the Company. He is incumbent as the board director and the Deputy
General Manager of the Company, and with an additional post of the board director of the
Group Company.
Mrs. Chen Dianxin, female, 53,Chinese, with master degree of the Party School; from July
1985 to September 2013, she successively served as staff of Yantai Chemical Purchasing and
Supply Station, Yantai Bureau of Commerce for secondment, staff of Yantai Stated-owned
Assets Assessment Center, the Deputy Director of Yantai Stated-owned Assets Assessment
Center, the Deputy Section Chief of Assets Assessment Management Department in Yantai
State-owned Assets Bureau, the Deputy Section Chief of Assets Assessment Management
Department in Yantai State-owned Assets Supervision and Administration Commission,
full-time Deputy Secretary of Party branch in Yantai State-owned Assets Supervision and
Administration Commission, the Section Chief of Property Management Department in
Yantai State-owned Assets Supervision and Administration Commission. From September
2013 to February 2014, she served as the Director of retired carders work office and the
Section Chief of Property Management Department in Yantai State-owned Assets
Supervision and Administration Commission. From February 2014 to October 2018, she
served as the Director of retired carders work office in Yantai State-owned Assets
Supervision and Administration Commission (During the period, she successively and
concurrently served as the Director of Yantai Moon Group Co., Ltd. and Yantai Moon Co.,
Ltd., director of Yantai Tayho Advanced Materials Group Co.,Ltd., the Chairman of Yantai
Guofeng Investment Holding Group Co., Ltd., the Chairman and the General Manager of
Yantai Guosheng Investment Holding Co., Ltd., the Chairman of Yantai Guoxin Investment
Holding Co., Ltd., the Vice Chairman and the Director of Yantai CIMC Raffles Offshore Co.,
Ltd., the Vice chairman and the Director of Yantai CIMC Raffles Shipyard Co., Ltd. and the
67
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
Director of Yantai Guoyu Lease Finance Co., Ltd. and so on). Since October 2018, she has
been served as the Deputy Secretary of Party branch and the General Manager of Yantai
Guofeng Investment Holding Group Co., Ltd. and the current board director of the Company.
Mr. Augusto Reina, male, 79 by the end of 2019, Italian, died on February 19th,2020 (local
time) (Beijing time: February 20th,2020) died as theChief Executive Officer of several
companies including Illva Saronno Holding S.p.A. and Illva Saronno Investment S.R.L., the
member of the board of directors of Barberini S.p.a., the director of Federvini (Italian
Alcohols Production and Export Association), the director of Instituto Del Liquore (Wine
Research Institute), the director of Assovini (Sicily Viniculture and Wine Production
Association) and the board director of the Changyu Group Co., Ltd. and the Company.
Mr. Aldino Marzorati, male, 67, Italian, with bachelor degree, servescurrently as the
General Manager of Illva Saronno Holding S.p.A, the member of the board of directors of
some branches under the Group Company and the board director of Changyu Group Co., Ltd.
and the Company.
Mr. Enrico Sivieri, male, 51, Italian, with bachelor degree, served successively as the
financial controller of ARNEG S.p.a., the commercial analyst of SPILLERS FOODS
ITALIA S.p.a., the trade controller of Nestle’ Purina Petcare Europe, European marketing &
sales controller of Nestle’ Purina Petcare Europe, the European supply chain controller of
Nestle’ Purina Petcare Europe, the Southern Europe regional controller of Nestle’ Purina
Petcare Europe and theDirector of group financial controlling of IllvaSaronno Holding S.p.A.,
and currently serving as a member of the board of directors for Royal Oak Distillery Ltd. and
theGeneral Manager of Illva Saronno Holding S.p.A. and the board director of the Company.
Mr. Wei Anning, male, Chinese, 56, with doctoral degree, ever served as Agricultural
Economist of the World Bank, the Director of North East Asia Food & Agribusiness
Research of the Rabobank, China CEO of the Fortis Bank Belgium, the Executive Deputy
President of the New Hope Group (Sichuan), the President of Shandong Liuhe Group, the
Director of Xinjiang Kuntai Group Co., Ltd., the Director of Hangzhou United Rural
Commercial Bank Co., Ltd, theChairman of the Shandong Chinwhiz Group. He is good at
corporate governance, enterprise development strategy and equity investments. Now, he is
serving as the Executive Director and the General Manager of Shanghai Gueva Fund
Management Co., Ltd Co., Ltd, the Executive Director of both Ningxia Gueva Fund
Management Co., Ltd and Ningbo Gueva Fund Management Co., Ltd, the independent
director of Dachan Food (Asia) Co., Ltd, Orient Securities Co., Ltd and Fortune SG Fund
Management Co., Ltd..He is serving as the board director of the Group Company and the
Company.
Mr. Luo Fei, male, 67, Chinese, with doctoral degree, visiting scholar of University of
Toronto, doctoral supervisors, Government Special Allowance expert, first batch of
trans-century subject (academic) leading personals of Financial Department. He successively
served as the Dean of Accounting Institute in Zhongnan University of Economics and the
Dean of Accounting Institute in Zhongnan University of Economics and Law. He focuses on
the study of Financial Accounting, Cost Accounting, Financial Management, and so on. He
has worked in companies for many years and has practical working experience with
companies. Now he is serving as independent director of the Company.
Mr. Wang Zhuquan, male, 54, Chinese, with doctoral degree of Management
(Accountancy), first batch of national accounting academic leading personals of Financial
Department, the entrant of accountant master cultivation project of Financial Department,
68
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
outstanding teacher of Shandong province, Government Special Allowance expert, acted as
independent director of the Company from 13th May, 2010 to 12th May, 2013. Now he is a
professor and a doctoral supervisor of the Ocean University of China as well as the current
independent director of the Company and the some listed companies which could be
exemplified as Qingdao Double-Star Co., Ltd.
Mr. DuanChangqing,male, 55,Chinese, with doctoral degree, professor, doctoral and
master’s supervisor, and the national senior winemaker and senior wine taster.He currently
serves as the chief scientist of national grape industry technology system andthe Director of
Wine Processing Key Laboratory of Ministry of Agriculture and Rural Affairs. Meanwhile,
he holds concurrent posts of the Director of China Wine Technology Committee, the Director
of China Wine and Fruit Wine Expert Committee, the Executive President and the Secretary
General of Grape and Wine Branch of Chinese Horticultural Society and the Vice President
of China Agricultural Society Grape Branch. Hismajor research fields are the basic
theoretical research and related high and new technology research and development as well
as application promotion work in the direction of suitability between ecology in producing
area and grape variety and liquor variety, evolvement mechanism and directional brewing of
wine flavor formation, grape fruit flavor metabolism regulation and product flavor quality
evaluation and so on. He is a current independent director of the Company.
Mrs. Liu Huirong, female, 56, Chinese, with doctoral degree, the former Deputy Dean and
Dean of the Institute of Political Science and Law of Ocean University of China. She used to
serve as an independent director of Sailun Group Co., Ltd., Longda Meatand Sacred Sun Co.,
Ltd. and Shandong Sacred Sun Power Sources Co., Ltd.. Currently, she is a second-level
professor and doctoral supervisor of Ocean University of China and with additional post as a
researcher of the “Belt and Road Initiative” Judicial Research Center of the Supreme
People’s Court, an expert at the Supreme People’s Court for foreign-related commercial and
maritime action expert database, the Deputy Chairman of the sixth Shandong Law Society
and the Deputy Director of the Academic Committee, and the Chairman of the Qingdao
Law-based Government Research Institute. Her research fields are International Law and
Legislative Science. She has won the title of Shandong Top Ten Outstanding Young and
Middle-aged Jurists, the third prize of Excellent Social Science Achievement of the Ministry
of Education, the third prize of Shandong Excellent Social Science Achievement, the second
prize of Shandong Excellent Philosophy and Social Science Achievement, the first prize of
Excellent Achievement of Shandong Education Department and the Top Talent in Qingdao
City. She is a current independent director of the Company.
Mr. Liu Qinglin, male, 56, doctoral degree of Management, Chinese, no overseas permanent
residence. He is currently a professor and doctoral supervisor of Economics Faculty of
Shandong University, the Director of Institute for World Economy Studies of Shandong
University, the Executive Deputy President of Shandong Institute of Development of
Shandong University, a member of a council of China Society of World Economics, an
executive member of a council of The Association for Canadian Studies in Chinaand
Shandong Youth Scholars Association, a member of a council of Shandong Association for
Business Economics and Shandong Price Association. He currently serves as an independent
director of Shandong XinnengTaishan Power Generation Co., Ltd., an independent director
of WeihaiHuadong Automation Co., Ltd. and an independent director of the Company.
(2) Members of board of supervisors
69
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
Mr.Kong Qingkun, male, 47, Chinese, MBA and economist, successively served as a section
member of production department in the healthy liquor branch office, a clerk and the
DeputyDirector and the Director of general manager office.
Ms. Zhang Lanlan, female, 50, bachelor degree and economist, successively served as the
Deputy Manager of the import and export branch of the Company and the Manager of import
department of the Company. She now is the Director of board of directors’ office.
Mr. Liu Zhijun, male, 39, Chinese, bachelor degree, worked in foreign fund department of
Economy and Trade Bureau in LongkouEconomic Development Zone, served as a news
section member of propaganda department in Longkou Municipal Committee, a member of
propaganda and mass work section, a member of planning section, the Deputy Director
Member of programming development and enterprise distribution section, the Deputy
Director Member and the Deputy Chief of programming development section. He now is a
supervisor of the Company.
(3) Other senior executives
Mr. Jiang Hua, male, 56, Chinese, with master degree, senior engineer, has been serving as
the DeputyGeneral Manager of the Company since 14th September, 2001.
Mr. Peng Bin, male, 53, MBA, senior engineer, ever successively served as the Deputy
Director of wine-blending workshop and the Director of wine-storage workshop of Brandy
Company under Yantai Changyu Group Co., Ltd., the DepartmentChief of Technical
Transformation Department and the Minister of Investment and Development Department as
well as theDeputy General Manager of Yantai Changyu Group Co., Ltd. and the General
Manager Assistant of Yantai ChangyuGroup Co., Ltd.. He serves as the Deputy General
Manager of the Company.
Mr. Jiang Jianxun, male, 53, Chinese, MBA and accountant, served as the Financial Manager
of the Company from 20th May, 2002 to 10th January,2018. He serves as the Deputy General
Manager and Board Secretary of the Company.
Mr. PanJianfu,male, Han ethnic, Chinese, 44, MBA and senior economist, used to serve as
the General Manager of the Jiangxi Branch of the Company, the General Manager of the
Shanghai marketing management company and the General Manager of Beijing marketing
management center. Currently, he is the General Manager Assistant of the Company and the
General Manager of Beijing marketing management center and Beijing Chateau AFIP.
Mr. Liu Shilu,male, Han ethnic, Chinese, 45, master degree, used to be the Manager of
Tianjin branch of the Company, the Competence Manager of North China market, the
General Manger of Beijing marketing management company, the General Manager of
Guangdong marketing management center and the General Manager of e-commerce branch
of the Company. Currently, he serves as the General Manager Assistance of the Company
and the General Manager of Yantai Changyu Pioneer Wine Sales Co., Ltd..
Mr. Xiao Zhenbo, male, Han ethnic, Chinese, 43, MBA, served as the Deputy Manager of the
Company’s market strategy development center, the General Manager of Shandong
marketing management company and Yantai Changyu liquor company. He currently serves
as the General Manager Assistant of the Company and the General Manager of Zhejiang
marketing management company.
Post in the shareholder’s company
Available □Not available
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
Beginning date Ending date Paid by shareholder’s
Name Shareholder’s Company Post
of the post of the post company or not
Zhou Hongjiang Yantai Changyu Group Co., Ltd. Chairman 2018.01.10 2022.01.11 No
Leng Bin Yantai Changyu Group Co., Ltd. Director 2018.01.10 2022.01.11 Yes
Leng Bin Yantai Changyu Group Co., Ltd. General manager 2018.01.10 2022.01.11 Yes
Sun Jian Yantai Changyu Group Co., Ltd. Director 2018.01.10 2022.01.11 No
Li Jiming Yantai Changyu Group Co., Ltd. Director 2018.01.10 2022.01.11 No
Chen Dianxin Yantai Changyu Group Co., Ltd. Director 2018.11.15 2022.01.11 No
Augusto Reina Yantai Changyu Group Co., Ltd. Director 2018.01.10 2022.01.11 No
Aldino Marzorati Yantai Changyu Group Co., Ltd. Director 2018.01.10 2022.01.11 No
Enrico Sivieri Yantai Changyu Group Co., Ltd. Director 2018.01.10 2022.01.11 No
Stefano Battioni Yantai Changyu Group Co., Ltd. Director 2020.04.09 2022.01.11 No
Wei Anning Yantai Changyu Group Co., Ltd. Director 2018.01.10 2022.01.11 No
Explanation for the post in
No.
the shareholder’s company
Post at other companies
□Available Not available
Disciplinary actions taken by securities regulators in recent 3 years to the Company’s
directors, supervisors and senior management both on the job and left during the report
period
Available □Not Available
During the report period, the Shandong Regulatory Bureau of China Securities Regulatory
Commission issued a “Decision on Measures to Issue Warning Letters to Mr. Zhou
Hongjiang and Mr. Qu Weimin”, but it did not impose administrative penalty on Mr. Zhou
Hongjiang and Mr. Qu Weimin.
4. Salary of directors, supervisors and senior executives
The situation of decision-making process, the basis of determination and the actual payment
of directors, supervisors and senior executives
The salary for the independent directors is paid according to the resolution of shareholders’
meeting. The salary for the chairman, directors with administration duty, supervisors,
managers and other senior management should be paid on basis of the evaluation result
according to the Yantai Changyu Pioneer Wine Co., Ltd. Executive Compensation and
Performance Design, which was passed during the Board of Directors’ meeting.
Salary of directors, supervisors and senior executives during the report period
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
Unit: CNY’0000
Whether get reward
Total reward from the
Name Post Gender Age Status from related parties
Company before tax
of the Company
Zhou Hongjiang Chairman M 55 Incumbent 146.53 No
Sun Liqiang Director M 72 Outgoing 61.06 No
Leng Bin Director M 57 Incumbent 0 Yes
Sun Jian Director and General Manager M 53 Incumbent 132.12 No
Li Jiming Director and Deputy General Manager M 53 Incumbent 98.33 No
Chen Dianxin Director F 53 Incumbent 0 No
Qu Weimin Director and Board Secretary M 62 Outgoing 41.68 No
Zhang Ming Director M 46 Outgoing 0 No
Augusto Reina Director M 79 Incumbent 0 No
Aldino Marzorati Director M 67 Incumbent 0 No
Appignani Antonio Director M 81 Outgoing 0 No
Enrico Sivieri Director M 51 Incumbent 0 No
Wei Anning Director M 56 Incumbent 0 No
Wang Zhuquan Independent Director M 54 Incumbent 8 No
Wang Shigang Independent Director M 54 Outgoing 4 No
Luo Fei Independent Director M 67 Incumbent 8 No
Duan Changqing Independent Director M 55 Incumbent 5.33 No
Liu Huirong Independent Director F 56 Incumbent 5.33 No
Liu Qinglin Independent Director M 56 Incumbent 4 No
Liu Yan Independent Director F 46 Outgoing 4 No
GuoGuoqing Independent Director M 57 Outgoing 8 No
Kong Qingkun Chairman of the Board of Supervisors M 47 Incumbent 67.19 No
Zhang Lanlan Supervisor F 50 Incumbent 21.48 No
Liu Zhijun Supervisor M 39 Incumbent 0 No
Jiang Hua Deputy General Manager M 56 Incumbent 110.23 No
Peng Bin Deputy General Manager M 53 Incumbent 95.23 No
Deputy General Manager and Board 53
Jiang Jianxun M Incumbent 101.54 No
Secretary
Pan Jianfu General Manager Assistant M 44 Incumbent 65.47 No
Liu Shilu General Manager Assistant M 45 Incumbent 73.21 No
Xiao Zhenbo General Manager Assistant M 43 Incumbent 97.79 No
Total - - - - 1,158.52 -
The awarded equity incentives for the directors, supervisors and senior executives of the
Company during the report period
□Available Not available
5. Staff of the Company
(1) Staff number, specialty constitution and education degree
Incumbent staff number of parent company (people) 1,280
Incumbent staff number of major subsidiary companies (people) 1,399
Total incumbent staff (people) 2,679
Total staff getting paid in current period (people) 2,679
Retired staff number whose expenses are undertaken by parent company or 0
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
subsidiary companies (people)
Specialty constitution
Category Number of people (people)
Production staff 873
Sales staff 1,316
Technical staff 165
Financial staff 131
Administrative staff 194
Total 2,679
Education degree
Category Number (People)
Bachelor and above 907
Junior College 884
Technical secondary school 495
Senior high school and below 393
Total 2,679
(2) Remuneration policy
The Company has established and improved the remuneration and welfare system, including
salary system, incentive mechanism, social security and medical insurance and so on, to
ensurethe participation of all employees. In accordance with the law, the Company purchases
social endowment insurance, medical insurance, occupational injury insurance,
unemployment insurance and maternity insurance, and pays housing fund for the employees.
Based on the principle of “distribution according to work and equal pay for equal work”, the
Company pays the staff’s remuneration timely. With the improvement of the Company’s
profitability, the Company steadily improves the staff’s remuneration and welfare, and
provides its employees the competitive salary and equal opportunity for development.
(3) Training plan
① Senior and Middle-level Managers
1) General training
By hiring professional lecturers to the Company or giving centralized lectures through
remote network videos, the Company could select training topics related to the
company’s industrial development, business direction and management philosophy to
expand the strategic thinking of middle and senior managers, improve the business
philosophy and improve the scientific decision-making ability and business ability.
The Company takes meetings instead of training; during each meeting, to learn the
central, national and governmental fundamental policies, to analyze the domestic and
international political situation and economic situation, and research and interpret the
influences of relevant policies and regulations on the development of the Company;
meanwhile, through the research and analysis of domestic and foreign industry
production, technology, management, marketing and other development trends, it
provides a basis for the Company to timely adjust the business strategy.
2)Professional training
Middle and senior management personnel determine self-study books by optional ways
every year, and submit their post-reading and suggestions for the Company’s
development at the end of the year.
According to the different personal responsibilities, the Company organizes
management team to attend high-end entrepreneurial forums and summits, and to visit
and learn from successful enterprises at home and abroad.
Middle-level managers are encouraged to participate in university correspondence and
self-taught examination, or engage in advanced studies such as MBA and other master
degrees. The Company organized professional managerial staffs from human resource,
finance, equipment, safety and technical quality to participate in the qualification
examination and obtain qualification certificates.
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
The Company organized managers to participate in specialized training of safety,
human resource, law, technology, equipment, finance, WSET, tourism, etc. organized
by the professional management departments.
② Ordinary Management Personnel
1). General training
The Company sets courses aiming at improving employees’ management ability,
innovation ability and executive ability, and hiring professional lecturers or university
teachers to teach at the Company.
Ordinary management personnel are encouraged to attend the common-sense general
trainings including enterprise culture, regulation framework and various liquor products
knowledge.
The Company organizes employees’ outdoor quality development trainings in order to
improve team work and cohesion.
2). Professional training
During the year, the professional supervisors selected 2 books for their ordinary
management personnel for personal self-study; at the end of the year, the ordinary
management personnel submit post-reading and the development suggestions for the
Company.
The Company encourages qualified ordinary management personnel to take university
correspondence and self-taught examination, or engage in advanced studies such as
MBA and other master degrees. The Company organized professional managerial staffs
from human resource, finance, equipment, safety and technical quality to participate in
the qualification examination and obtain qualification certificates.
③ First-line Production Personnel
1). General training
First-line production personnel participate in the general training on enterprise culture,
rules and regulations and the knowledge of various alcoholic products of the Company
organized by their units, and strengthen the knowledge training on human resource
management, such as attendance management, labor discipline and comprehensive
evaluation and so on.
2). Professional training
For workers of different trades such as electricians, coolerman, forklift drivers,
assemblers, tour guides, personalized product designers, etc., the Company organizes
them to participate in training to improve professional skills and operation levels, as
well as the special training on safety, technology, equipment and comprehensive
management of the unit, and participate in the vocational skills completion organized
by the City Municipal Bureau of Human Resources and Social Affairs.
④ Marketing Personnel
1). General training
Marketing personnel independently study mainly focuses on the marketing textbooks of
“Growth”, as well as training materials including the Company’s related management
system, production knowledge, sales responsibility system, etc..
2). Professional training
Professional lecturers would be employed to the company or through remote internet
videos to give lectures about successful liquor cases, current economic trend research
for domestic and foreign wine industry and other topic in order to take training for
personnel whose levels are or above manager assistant in city marketing management
companies.
Besides that, the Company takes training for city marketing managers on how to
improve marketing skill as well as executive force of sales policy by professional
management cadres or hired professional lecturers.
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
For business directors and other personnel, each marketing management company shall
base itself on the local area to conduct trainings on successful marketing cases and
marketing management concepts with the combination training method of hiring
lecturers and going out to visit and learn.
⑤ New Entry University Students
New entry university students are trained by middle and senior managers in the aspects
of corporate culture, rules and regulations, production safety, product quality,
marketing strategy, salary and assessment system, etc.; meanwhile, professional
lecturers will be hired to conduct training on role change, workplace etiquette,
teamwork and other aspects, as well as interspersed the military training and quality
development training.
(4) Labor outsourcing
□Available Not available
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
X. Corporate Governance
1. Current Corporate Governance Situation of the Company
(1) About shareholders and shareholders’ meeting
The Company has set up the Deliberation Rules of Shareholders’ Meeting, and convened the
shareholders’ meetings in strict accordance with requirements of standard opinions of
shareholders’ meeting, made the great effort to provide convenient conditions for more
shareholders to participate the shareholders’ meeting, and ensured all shareholders to enjoy
same equity and well exercised their rights. The Company drew great attention to the
communication and exchange with shareholders, actively responded the shareholders’
inquiry and questions, and widely listened to the suggestions and comments from
shareholders.
(2) About the Company and holding shareholder
The Company has independent business and self-management capacity, which is
independent from the controlling shareholders in business, staffs, assets, institutions and
finance. The Board of Directors, Board of Supervisors, management teams and also internal
institutions are able to operate independently in the Company. The controlling shareholders
of the Company could regulate their behaviors without directly or indirectly interfering in the
Company’s decision-making and business activities beyond the shareholder’s meeting;
meanwhile, there is no case of encroaching on the Company’s assets and damaging the
interest of the Company and minority shareholders.
(3) About the director and board of directors
The Company strictly appoints all directors in light of Corporation Act and Articles of
Associations. The qualifications of all directors are in line with the requirements of laws and
regulations. In accordance with the requirements of Corporate Governance Guidelines, the
Company has carried out the cumulative voting system in the director selection. At present,
the Company has five independent directors accounting for above one third of all directors,
and the number and personnel composition of board of directors was basically in accord with
requirements of regulations as well as Articles of Associations. All directors of the Company
were able to carry out work in accordance with the Rules of Board of Directors’ Procedure
and Working Rules for Independent Directors, punctually attended the board of directors’
and shareholders’ meetings, actively took part in relevant knowledge training, were familiar
with the laws and regulations concerned, had a deep knowledge and long experience of
practitioners, and performed their duties according to the law and regulations. The Board of
Directors convened the meetings complies with relevant laws and regulations.
(4) About supervisor and board of supervisors
The Company strictly elected all supervisors in light of the procedures stipulated in the
Corporation Act and Articles of Associations. At present, board of supervisors has three
people among which one supervisor is representative for staff. The number and composition
of board of supervisor meet the requirements of regulations and laws. All supervisors of the
Company could follow the requirement of Rules of Board of Supervisors’ Procedure, insist
the principle of responsibility to all shareholders, seriously perform their duties, effectively
supervise and present their independent opinions on important issues, interrelated deals,
financial status, the duty performance of directors and managers of the Company.
(5) About performance evaluation and incentive system
The engagement of managers was open and transparent, and accorded with laws and
regulations. The Company has established and gradually improved the performance
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
evaluation standard and formed efficient incentive system, so as to ensure the salary of staff
to be linked with work performance.
(6) About stakeholders
The Company could fully respect and safeguard the legal rights of the party with relevant
benefit, cooperate actively with the stakeholders, jointly drive the Company to develop
continually and stably, pay great attention to the issues such as local environmental protection
and public utilities etc., and fully assume the due social responsibility.
(7) About the information disclosure and transparency
The Company has appointed the board secretary to be responsible as the head of investor
relation management including information disclosure, investor relations management and
reception of shareholders’ visit and consultation. The Company has also assigned China
Securities Newspaper, Securities Times, Honkong Commercial Daily and web site
http://www.cninfo.com.cn/ to disclose information, punctually, accurately and truly disclosed
any information in the light of requirement of relevant laws and rules, and also ensured all
shareholders to have same opportunity to acquire any information.
In order to further perfect the Company’s governance system, during the report period, the
Company formulated and improved the management systems including Three-year Plan for
Wine and Brandy Raw Materials and Bulk Wines, Options on the Construction of the
Winemaker Team of Changyu Company and so on.
Whether or not there is significant variance between the Company’s actual situation of
corporate governance and the normative documents about listed company governance issued
by China Securities Regulatory Commission.
□Yes No
There is no significant variance between the Company’s actual situation of corporate
governance and the normative documents about listed company governance issued by China
Securities Regulatory Commission.
2. Relative to the controlling shareholder, independence of the Company on business,
personnel, assets, organization and finance
(1) Personnel Arrangement
The Company’s general manager, deputy general managers and other senior officers, all of
whom were paid by the Company and did not hold any concurrent administrative ranks in the
controlling units. The Company was entirely independent in personnel arrangement,
conclusion and adjustment of labor contracts thanks to its sound and independent system for
labor, personal and salary management.
(2) Assets:
Tangible assets and Intangible assets including trademark, industrial property right and
non-patent technologies were all clearly divided between the Company and the controlling
shareholders, and all legal formalities were completed. As an independent legal entity, the
Company operates independently in accordance with the law, and does not provide any form
of guarantee with its assets for shareholders’ or individuals’ liabilities or other legal or natural
persons. The Company owns trademarks including “黄金冰谷”, “爱斐堡”, “爱菲堡”,
“爱斐” and “AFIP” etc. However, due to some historical problems, the ownership of the
intangible assets such as the trademark of “张裕” (Changyu) that the Company is licensed to
use, patent and so on is still owned by the controlling shareholders. Except for partial
trademarks which cannot be separated from “张裕”(Changyu) trademark, the trademarks
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
and patents that could have been registered or applied by the Company but were registered or
applied by Changyu Group who then authorized the Company for usage, excluding a handful
of which are unable to transfer due to the reasons such as litigation, most of them have been
transferred to the Company by Changyu Group for free before the end of 2019 in order to
ensure the independence and completeness of the Company’s assets.
(3) Finance
The Company is equipped with independent finance department, financial administrator and
financial and accounting staff, as well as a complete, independent and standardized financial
accounting system. The Company also opened its own bank accounts, independent and
legally paying taxes and workers insurance fund. All financial individuals do not hold any
concurrent posts in associated companies and are able to make financial decisions
independently. The Company has its own audit department, which is especially responsible
for the internal audit work of the Company.
(4) Independent Institutions
The Company has set up a sound organizational framework, in which the Board of Directors
and Board of Supervisors operate independently, no superior and subordinate relationship
exists between the functional departments of the controlling shareholder. The Company has
its own independent production & business offices, and all functional departments are
independent to exercise their powers and carry out the production and business activities
independently.
(5) Operations
The operations of the Company are independent of the controlling shareholders. The
Company owns itself completely independent systems covering research and development,
financial accounting, labor and human resource, quality control, raw materials purchase,
production and sales, has the independent management ability, and does not have the problem
that entrusts the controlling shareholders to buy and sell on commission, nor exist the
horizontal competition with controlling shareholders.
3. Situation for Horizontal Competition
□Available Not available
4. Information for the shareholders’ meeting and temporary shareholders’ meeting held
during the report period
(1) Information for the shareholders’ meeting during the report period
Participation ratio Convening Disclosure
Session Meeting type Disclosure Index
of investors date date
http://www.cninfo.com.cn
2018 Annual Annual Resolution Announcement of 2018
Shareholders’ shareholders’ 60.86% 2019.05.17 2019.05.18 Annual Shareholders’ Meeting
Meeting meeting (Announcement
no.:2019-Temporary25)
http://www.cninfo.com.cn
2019 Annual First
Interim Resolution Announcement of 2019
Interim
Shareholders’ 62.36% 2019.07.02 2019.07.03 Annual First Interim Shareholders’
Shareholders’
Meeting Meeting (Notification
Meeting
no.:2019-Temporary37)
78
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(2) Request for convening temporary shareholders’ meeting by priority shareholders
owing recovered voting right
□Available Not available
5. Performance of independent directors during the report period
(1) Attendance of independent directors for the board of directors and the shareholders’
meeting
Attendance of independent directors for the board of directors
Whether or not to Attendance
Required Personal Communication Authorized attend the meetings time for the
Name Absence
attendance time attendance attendance attendance personally for shareholders’
successive twice meeting
Wang Zhuquan 8 2 6 0 0 No 0
Wang Shigang 4 1 3 0 0 No 0
Luo Fei 8 2 6 0 0 No 0
DuanChangqing 4 0 3 1 0 No 0
Liu Huirong 4 1 3 0 0 No 0
Liu Qinglin 2 1 1 0 0 No 1
Liu Yan 4 1 3 0 0 No 0
GuoGuoqing 6 1 5 0 0 No 0
Explanation for failed to personally attend the Board of Directors’ meetings for successive
two times
During the report period, there were no independent directors who did not attend the
shareholders’ meetings in person for two consecutive times.
(2) Any objections for the Company’s projects from the independent directors
Whether or not the independent directors raised any objection for the Company’s projects
□Yes No
During the report period, the independent directors did not raise any objections for the
Company’s projects.
(3) Other explanations on independent directors’ performance
Whether or not the independent directors’ propositions are accepted by the Company
Yes □No
Explanation on acceptance or refusal of the independent directors’ propositions to the
Company
During the report period, the independent directors suggested the Company to communicate
with all stakeholders as soon as possible to properly handle the trademark and patent
registration matters concerned by investors; as well as the charged using fee and using issues of
trademark such as “Changyu” etc.. The Company has adopted the suggestions of the
independent directors, actively coordinated with various stakeholders, and finally reached a
consensus to better solve the above issues.
6. Performance of the special committees under the Board of Directors during the
report period
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
① Auditing Committee: During the report period, the Company’s auditing Committee
conducted an ex-ante, in-process, and post-event review to related annual report audit work
and made relevant arrangements. The auditing Committee believed that 2018 annual financial
statements issued by the Company met the requirement of Accounting Standards for Business
Enterprises and truly and fairly reflected the balance condition up to December 31st, 2018 as
well as 2018 annual business performance and cash flow. There were no unsolved major
divergences in accounting and auditing or major risk issues affecting the Company's
management. The Company operated steadily and had the ability of continuous operations.
Proposals including 2018 Annual Self-assessment Report on Internal Control,Draft proposal
on 2018 Annual Profit Distribution,Appointing Certified Public Accountants Firm,Change in
Accounting Policy，2018 Annual Report, 2019 Semi-annual Report and 2019 Annual Audit
Plan were deliberated. Auditing committee passed above-mentioned proposals and submitted
the related proposals to board of directors for deliberation.
②Emolument Committee: Emolument Committee is responsible for assessment of the
economy responsibilities of the directors and the senior executives who receive salaries from
the Company and examination of the salary policy and scheme designed for the Company’s
directors and senior executives. During the report period, the Company held Emolument
Committee meeting three times and deliberated and passed the Executive Compensation and
Performance Design, Proposal on 2018 Annual Performance Assessment Results of the
Company’s Senior Executives, and Proposal on the Election of the Convener of the
Compensation Committee. The meeting considered that all the contents of the Proposal on
2018 Annual Performance Assessment Results of the Company’s Senior Executives submitted
to the meeting deliberation by the Company are in line with the relevant provisions of the
Company, and the Executive Compensation and Performance Designcon forms with the
actual situation of the Company, in which the performance appraisal is more scientific and
reasonable that could better restrain and motivate senior managers. The meeting agreed to the
above proposals and submitted them to the board of directors for deliberation. Mr. Wang
Zhuquan was elected as the convener of the Remuneration Committee in this meeting.
During the report period, the Board of Directors’ Emolument Committee also examined the
2018 annual payroll records of the directors and the senior managers who receive salaries
from the Company and believes that the salaries of the Company’s directors, supervisors and
senior managers received from the Company is strictly assessed and delivered based on the
Company’s economic responsibility assessment system. The salaries disclosed by the
Company are in conformity with the actually paid amount.
7. The work of the Board of Supervisors
Whether or not the Board of Supervisors found any existence risk to the Company in
oversight activities during the report period
□Yes No
The Board of Supervisors has no objections to supervision matters during the report period.
8. Performance Evaluation and Incentive situations of Senior Management
The Company has already established a sound system for evaluation of achievement of senior
management and the related incentive system which linked the reward with the Company’s
benefit and personal achievement. The Emolument Committee under Board of Directors
assumed the responsibility of stipulating the policy and appraising the scheme for salaries and
rewards. Based on the Company’s annual business planning goals, this committee examined
senior personals and also their responsible subsidiaries or departments according to their
management achievement and index and took these as criterion of awards or penalties.
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
During the report period, because of not finishing the annual business plan deliberated and
passed in the Board of Directors’ meeting at the beginning of the year, the total salaries and
rewards of the senior management are basically equal to that of last year.
9. Internal Control
(1) Specific situations for significant defects of the internal control found during the
report period
□Yes No
(2) Self-assessment report on internal control
Disclosure date for full text of the internal control
2020.04.24
self-assessment report
Disclosure index for full text of the internal control 2018 Annual Self-Assessment Report on Internal Control and2019 Annual Self-Assessment
self-assessment report Report on Internal Control disclosed on Securities Times,China Securities Journal and
www.cninfo.com.cn by the Company on April 20th, 2019 and April 24th, 2020.
Percentage of total unit assets included in scope of
the assessment accounting for the Company’s total 89.23%
assets of consolidated financial statements
Percentage of unit operating income included in
scope of the assessment accounting for the
91.77%
Company’s operating income of consolidated
financial statements
Standards of Defect Identification
Category Financial report Non-financial report
Qualitative criteria Significant defects: one defect of internal control, Significant defects: Any situations listed below
individually or together with other defects, has the appears, it can be regarded as significant defects.
reasonable probability to cause the significant Operation: Unable to achieve all operation target or key
misstatements, which cannot be promptly prevented, or business index, widely out of budget in various aspects.
found and corrected timely in the financial report. For Safety accident effects: Cause no less than one
example: Company’s Directors, Supervisors and person death, or more than 3 person serious injuries.
Senior Management have fraudulent practices; The Major negative effects: Negative information
Company makes corrections for the published financial frequently appears in the medias with involving a wide
report; The audit of external intermediary agent finds scope in the international and national mainstream
significant misstatement existing in the current financial media. Environment effects: Create irreparable
report, but the Company does not realize it during the damages to environment, and cause massive public
operation process; Negative information frequently complains.
appears in the medias with involving a wide scope; Major defects: Any situations listed below appears, it
The Company’s audit committee and internal audit can be regarded as major defects. Operation: Unable
department makes an inefficient supervision for internal to achieve partly operation target, a big margin out of
control; Other situations maybe cause significant budget in various aspects. Safety accident effects:
misdirection which guides the report users to make the Without reaching the person loss or the number of
right judgment. serious injury of significant defects. Major negative
Major defects：The defect of internal control, individually effects: Negative news appears in the media with
or together with other defects, has the reasonable influencing a wide scope in the provincial mainstream
probability to cause the significant misstatements, which media. Environment effects: Cause heavy
cannot be promptly prevented, or found and corrected environment damages and massive public complains,
timely in the financial report, although the misstatements ought to carry out the significant remedial measures.
neither achieves nor exceeds the importance level but still General defects: Any situations listed below appears, it
arising the attention of Board of Directors and can be regarded as general defects. Operation: Other
management team. Failure to select and apply effects unable to constitute the significant defects or
accounting regulations in accordance with generally major defects. Safety accident effects: Personal
accepted accounting principles; Failure to establish the injury less than the quantitative standards of major
anti-fraud procedures and control measures; Failure to defects. Major negative effects: Other defects unable
set up corresponding control mechanism or to carry out to constitute the significant defects or major defects.
and take corresponding compensating control for the Environment effects: Other environment effects unable
accounting treatments with irregular and special deal; to constitute the significant defects or major defects.
Negative news appears in the media with influencing a
wide scope; One or more defects exist in the control
during the process of the ending financial report, and the
target of achieving truthfulness and integrality cannot be
reasonably guaranteed in the financial report; General
defects refer to the other control defects, which do not
constitute the significant and major defects.
Quantitative criterion For total assets/Owner’s equity: For direct property loss:
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
Significant defects: misstatements ≧1% Significant defects: More than CNY10 million
Major defects: 0.5%≦misstatements<1% Major defects: CNY1 million-CNY10 million
General defects: misstatements<0.5% (including 1 million)
For operation revenue: General defects: Less than CNY1 million
significant defects: misstatements ≧1%
Major defects: 0.5%≦misstatements<1%
General defects: misstatements<0.5%
For pretax profit:
Significant defects: misstatements≧5%
Major defects: 2%≦misstatements<5%
General defects: misstatements<2%
Number of significant defect 0
in financial report
Number of significant defect 0
in non-financial report
Number of major defect in 0
financial report
Number of major defect in 0
non-financial report
10. Internal control audit report
Available □Not available
Audit opinions of the internal control audit report
We believe that Yantai Changyu Pioneer Wine Co., Ltd. kept effective internal control to financial report in all significant aspects in
accordance with General Criteria of Company’s Internal Control and other related rules on December 31st, 2019.
Disclosure of the internal control audit report Disclosure
Disclosure date for the full text of the internal control audit
April 24th, 2020
report
2019 Annual Self-Assessment Report on Internal Control disclosed on
Disclosure index for the full text of the internal control audit
Securities Times, China Securities Journal and www.cninfo.com.cn by the
report
Company.
Opinion type of the internal control audit report Standard without reserved opinion
Whether or not exists significant defects in non-financial
No
reports
Whether or not the accounting firm issued non-standard opinions for the audit report of
internal control
□Yes No
Whether the audit report of internal control issued by the accounting firm is in consistency
with the self-assessment report of the board of directors
YesNo
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
XI. Related Situation of Corporation Bonds
Whether the Company has the corporation bonds issued publicly and listed on the stock
exchange, which has not matured or has matured but failed to fully redeem on the date of
approval of the annual report
No
83
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
XII. Financial Report
1. Audit Report
Type of audit opinion Standard unqualified audit opinion
Date signed on audit report April 22nd, 2020
KPMG HuazhenCertified Public Accountants
Audit agency name
Co., Ltd. (special general partnership)
Audit report No. KPMG Huazhen ShenZi No. 2001809
Certified public accountant's name Ms. Wang Ting, Ms. Chai Jing
84
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
85
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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.
86
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 an Standards for Business Enterprises;
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;
87
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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.
88
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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.
89
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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.
90
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
91
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 111 to 213 form part of these financial statements.
92
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 111 to 213 form part of these financial statements.
93
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 111 to 213 form part of these financial statements.
94
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 111 to 213 form part of these financial statements.
95
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 111 to 213 form part of these financial statements.
96
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 111 to 213 form part of these financial statements.
97
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 111 to 213 form part of these financial statements.
98
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 111 to 213 form part of these financial statements.
99
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 111 to 213 form part of these financial statements.
100
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 111 to 213 form part of these financial statements.
101
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 111 to 213 form part of these financial statements.
102
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 and 6,334,375 19,967,431
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 111 to 213 form part of these financial statements.
103
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
1,206,860,334 1,180,889,274
at the beginning of the 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 111 to 213 form part of these financial statements.
104
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 and 1,354,733 11,212,195
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 111 to 213 form part of these financial statements.
105
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 111 to 213 form part of these financial statements.
106
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 111 to 213 form part of these financial statements.
107
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 111 to 213 form part of these financial statements.
108
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
685,464,000 557,222,454 342,732,000 8,437,957,128 10,023,375,582
beginning of the 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 111 to 213 form part of these financial statements.
109
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 111 to 213 form part of these financial statements.
110
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 Group Co., 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.
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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.
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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.
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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.
114
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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.
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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.
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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.
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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.
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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.
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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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- 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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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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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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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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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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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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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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(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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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.
133
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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.
134
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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).
135
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
- 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
136
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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.
137
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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 assets - 467,251 467,251
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.
138
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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)
139
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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)
140
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
141
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
142
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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.
143
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 (France), 21% (Spain), 19% (Chile)
the 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.
144
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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).
145
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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.
146
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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 days 17.4% 1,590,671 276,279
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.
147
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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
148
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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% -
149
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
150
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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% -
151
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 -
152
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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.
153
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
154
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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.
155
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
156
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(2) Movements of major construction projects in progress during the year
Transfers to Attributable to:
Percentage of Accumulated Interest rate for
Additions during Transfers to fixed long-term Interest
Item Budget Opening balance Closing balance actual cost to capitalised capitalisation in Sources of funding
the year assets deferred capitalised for the
budget (%) interest 2019 (%)
expenses 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
157
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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).
158
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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.
159
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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.
160
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
161
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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.
162
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
Credit loans (RMB) 400,000,000 1.0000 400,000,000 Floating benchmark 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).
163
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
164
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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
165
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
166
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 (EUR) 17,497,246 7.8155 136,749,730 Fixed 1.0%-1.7% 1.0%-1.7% 88,740,091 48,009,639
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).
167
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
Balance of Termination
on Investment Due within one Mortgaged and
long-term date of Due after one year
investm date year pledged assets
payables 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
168
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 Government
water-saving irrigation 1,639,000 500,000 (262,000) 1,877,000 grants related
project 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.
169
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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.
170
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
171
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
172
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
173
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 -
174
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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.
175
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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 on
385,102,064 352,598,370
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 not
7,397,810 4,642,727
recognised for the year
Deferred tax assets written-off 4,781,984 5,785,212
Income tax expenses 400,806,109 367,127,522
176
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
177
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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
178
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
165,716,961 109,378,598
long-term assets by bank acceptances
179
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
R&D Centre
Cash at
mortgage for
bank and 95,797,743 - (1,915,038) 93,882,705
long-term payables
on hand
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
Fixed assets 412,006,421 - (67,335,569) 344,670,852
and long-term and
short-term
borrowings
R&D Centre
Intangible
218,070,414 - (5,574,979) 212,495,435 mortgage for
assets
long-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)
180
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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.
181
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
182
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
Langfang, Hebei, Langfang, Hebei, Acquired through
Castel-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
183
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
184
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
185
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
186
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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., Ltd Guanghzou, Guanghzou, Marketing and Acquired through
RMB11,000,000 - 100
("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.
187
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 [ ] (“Yantai Dean”) and [ ] (“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.
188
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(2) Material non-wholly owned subsidiaries
Proportion of Comprehensive
Dividend declared Balance of
ownership income attributable
to non-controlling non-controlling
Name of the Subsidiary interest held by to non-controlling
shareholders during interests at the end
non-controlling interests for the
the year of the 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)
189
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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 inco (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
190
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 inco 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
191
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
Year Name of the Subsidiary Acquisition date
non-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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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.
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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)
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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.
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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.
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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 Group Co., 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.
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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 City Controlled by the same parent
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
198
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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
Type of assets Lease income Lease income
Name of lessee
leased recognised in 2019recognised in 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
199
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(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.
200
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 doubtful Book value bad and doubtful
debts 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
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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.
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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.
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 days 3.4% 570,000 19,431
Overdue for 330 to 360
100.0% 570,000 570,000
days
Total 23.2% 2,589,936 601,610
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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.
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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).
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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 end
Debtor Ageing ending balance of provision for bad
receivable 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
208
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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.
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Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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
210
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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
211
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
(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 doubtful Book value bad and doubtful
debts 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.
212
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
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 g
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 g
and loss attributable to the
10.40 1.41 1.41
Company’s ordinary equity
shareholders
213
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report
XIII. Reference Documents
(1)The original of Annual Report autographed by the chairman.
(2)The Financial Statements autographed and signed by the chairman, chief accountant and
accountants in charge.
(3)The Prospectus and Public Offering Announcement for Stock B in 1997; The Prospectus
and The Shares’ Change & Public Offering Announcement for Stock A in 2000.
(4) The originals of all documents and announcements that the Company made public during
the report period in the newspapers designated by China Securities Regulatory Commission.
Yantai Changyu Pioneer Wine Co., Ltd.
Board of Directors
April 22nd, 2019
214
