YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
ENGLISH TRANSLATION OF FINANCIAL STATEMENTS
FOR THE YEAR 1 JANUARY 2020 TO 31 DECEMBER 2020
IF THERE IS ANY CONFLICT BETWEEN THE CHINESE VERSION AND ITS ENGLISH
TRANSLATION, THE CHINESE VERSION WILL PREVAIL
AUDITOR’S REPORT
KPMG Huazhen Shen Zi No. 2103362
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 2020, 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 company financial position of Yantai Changyu as at 31
December 2020, and of its consolidated financial performance and company financial
performance and its consolidated cash flows and company cash flows for the year then
ended in accordance with Accounting Standards for Business Enterprises issued by the
Ministry of Finance of the People’s Republic of China.
Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing for Certified Public
Accountants (“CSAs”). Our responsibilities under those standards are further described in
the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.
We are independent of Yantai Changyu in accordance with the China Code of Ethics for
Certified Public Accountants (“the Code”), and we have fulfilled our other ethical
responsibilities in accordance with the Code. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Page 1 of 6
AUDITOR’S REPORT (continued)
KPMG Huazhen Shen Zi No. 2103362
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” 36.
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 distributors. 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 the sales contracts Yantai
Starting from 1 January 2020, Yantai Changyu Changyu signed with distributors in
has implemented the Accounting Standards for order to examine whether Yantai
Business Enterprises No.14 “Revenue Changyu has adopted the unified
(Revised)" and sales revenue is recognised transaction terms, and evaluate
when the customer obtains control of the whether the accounting policy of
relevant goods. Based on the contractual revenue recognition meets the
agreement and the business arrangement, requirements of the Accounting
Yantai Changyu sells products to distributors Standards for Business Enterprises;
and the transfer of product ownership is
completed and the revenue is recognised when On a sampling basis, reconcile the
the goods are delivered to distributors and revenue recorded for the year to
signed for acceptance. relevant supporting files such as
relevant orders and signed delivery
As revenue is one of the key performance notes, etc. to evaluate whether
indicators of Yantai Changyu Group, there is revenue is recognised in accordance
an inherent risk that the management will with the accounting policy of Yantai
manipulate revenue in order to achieve specific Changyu;
performance objectives or expectations.
Therefore, we recognise sales revenue from
distributors as a key audit matter.
Page 2 of 6
AUDITOR’S REPORT (continued)
KPMG Huazhen Shen Zi No. 2103362
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” 36.
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 the balances of current
accounts on balance sheet date and the
amount of sales transaction for the year
to perform confirmation procedures;
Check the sales record after the balance
sheet date to identify significant sales
returns and check relevant supporting
files (If applicable) in order to evaluate
whether relevant revenue is recorded in
the appropriate accounting period;
Select revenue accounting entries that
meet specific risk criteria and check
related supporting documents.
Page 3 of 6
AUDITOR’S REPORT (continued)
KPMG Huazhen Shen Zi No. 2103362
Other Information
Management of Yantai Changyu is responsible for the other information. The other
information comprises all the information included in the 2020 annual report, other than the
financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears to
be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report in this
regard.
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
Management is responsible for the preparation and fair presentation of the financial
statements in accordance with the Accounting Standards for Business Enterprises, and for
the design, implementation and maintenance of such internal control necessary to enable
that the financial statements are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is responsible for assessing Yantai
Changyu’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless management either
intends to liquidate Yantai Changyu or to cease operations, or has no realistic alternative but
to do so.
Those charged with governance are responsible for overseeing Yantai Changyu’s financial
reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with CSAs will
always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of these
financial statements.
Page 4 of 6
AUDITOR’S REPORT (continued)
KPMG Huazhen Shen Zi No. 2103362
Auditor’s Responsibilities for the Audit of the Financial Statement (continued)
As part of an audit in accordance with CSAs, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the management.
(4) Conclude on the appropriateness of management’s use of the going concern basis of
accounting and, basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast
significant doubt on Yantai Changyu’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s report. However, future events
or conditions may cause Yantai Changyu to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express our audit opinion on the
financial statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.
Page 5 of 6
AUDITOR’S REPORT (continued)
KPMG Huazhen Shen Zi No. 2103362
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
(Stamp) in the People’s Republic of China
Wang Ting (Engagement Partner)
(Signature and stamp)
Beijing, China Chai Jing
(Signature and stamp)
Date:26 April 2021
Page 6 of 6
Yantai Changyu Pioneer Wine Company Limited
Consolidated balance sheet
as at 31 December 2020
(Expressed in Renminbi Yuan)
31 December 31 December 31 January
Note
2020 2019 2019
(Restated) (Restated)
Assets
Current assets
Cash at bank and on hand V.1 1,194,214,929 1,597,410,775 1,505,126,258
Accounts receivable V.2 183,853,362 265,730,156 230,711,055
Receivables under
V.3 338,090,187 317,270,229 288,998,115
financing
Prepayments V.4 71,296,416 67,764,156 4,682,354
Other receivables V.5 22,428,956 24,350,228 22,815,697
Inventories V.6 2,945,548,651 2,901,651,555 2,748,419,225
Other current assets V.7 234,118,715 269,002,321 259,602,897
Total current assets 4,989,551,216 5,443,179,420 5,060,355,601
Non-current assets
Long-term equity
V.8 48,263,507 43,981,130 -
investments
Available-for-sale financial
- - 467,251
assets
Investment properties V.9 27,057,730 29,714,586 31,572,489
Fixed assets V.10 5,724,935,846 5,943,969,099 5,799,345,351
Construction in progress V.11 635,495,152 567,478,833 759,296,591
Bearer biological assets V.12 192,173,536 202,425,286 209,266,373
Intangible assets V.13 660,989,065 652,543,848 655,663,382
Goodwill V.14 132,938,212 141,859,193 165,199,111
Long-term deferred
V.15 314,465,855 280,478,194 247,942,506
expenses
Deferred tax assets V.16 206,241,275 265,551,343 288,561,790
Other non-current assets V.17 170,370,147 193,674,320 -
Total non-current assets 8,112,930,325 8,321,675,832 8,157,314,844
Total assets 13,102,481,541 13,764,855,252 13,217,670,445
The notes on pages 20 to 107 form part of these financial statements.
1
Yantai Changyu Pioneer Wine Company Limited
Consolidated balance sheet
as at 31 December 2020 (continued)
(Expressed in Renminbi Yuan)
31 December 31 December 31 January
Note
2020 2019 2019
(Restated) (Restated)
Liabilities and shareholders’
equity
Current liabilities
Short-term loans V.18 689,090,715 754,313,744 688,002,410
Accounts payable V.19 484,347,958 570,849,779 713,641,568
Advance payments
V.20 - 128,907,605 232,793,208
received
Contract liabilities V.21 135,073,280 - -
Employee benefits payable V.22 188,779,911 240,801,344 216,787,066
Taxes payable V.23 213,412,813 375,620,295 129,280,966
Other payables V.24 386,105,526 456,480,389 612,334,263
Other current liabilities V.25 14,820,653 - -
Non-current liabilities due
V.26 133,311,890 150,826,221 152,940,786
within one year
Total current liabilities 2,244,942,746 2,677,799,377 2,745,780,267
Non-current liabilities
Long-term loans V.27 200,352,968 128,892,501 156,480,662
Long-term payables V.28 86,000,000 191,000,000 225,000,000
Deferred income V.29 52,653,609 70,701,288 86,227,293
Deferred tax liabilities V.16 12,022,613 14,691,424 22,010,647
Other non-current liabilities V.30 2,078,971 7,645,777 7,234,853
Total non-current liabilities 353,108,161 412,930,990 496,953,455
Total liabilities 2,598,050,907 3,090,730,367 3,242,733,722
The notes on pages 20 to 107 form part of these financial statements.
2
Yantai Changyu Pioneer Wine Company Limited
Consolidated balance sheet
as at 31 December 2020 (continued)
(Expressed in Renminbi Yuan)
31 December 31 December 31 January
Note
2020 2019 2019
(Restated) (Restated)
Liabilities and shareholders’
equity (continued)
Shareholders’ equity
Share capital V.31 685,464,000 685,464,000 685,464,000
Capital reserve V.32 524,968,760 642,775,360 643,680,379
Other comprehensive
V.33 576,129 (4,235,583) 2,965,377
income
Surplus reserve V.34 342,732,000 342,732,000 342,732,000
Retained earnings V.35 8,714,091,755 8,735,513,044 8,013,924,148
Total equity attributable to
shareholders of the 10,267,832,644 10,402,248,821 9,688,765,904
Company
Non-controlling interests 236,597,990 271,876,064 286,170,819
Total owners’ equity 10,504,430,634 10,674,124,885 9,974,936,723
Total liabilities and
13,102,481,541 13,764,855,252 13,217,670,445
shareholders’ equity
These financial statements were approved by the Board of Directors of the Company on 26
April 2021.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal The person in The head of the
Representative charge accounting
of accounting affairs department
(Signature and (Signature and (Signature and
stamp) stamp) stamp)
The notes on pages 20 to 107 form part of these financial statements.
3
Yantai Changyu Pioneer Wine Company Limited
Company balance sheet
as at 31 December 2020
(Expressed in Renminbi Yuan)
31 December 31 December 31 January
Note
2020 2019 2019
(Restated) (Restated)
Assets
Current assets
Cash at bank and on hand 267,548,326 710,505,269 624,588,809
Accounts receivable - 1,988,326 1,447,973
Receivables under
XV.1 13,920,000 41,679,635 39,885,254
financing
Prepayments 171,709 776,539 227
Other receivables XV.2 580,131,798 586,424,958 1,025,643,356
Inventories 482,442,935 434,007,808 385,154,740
Other current assets 24,842,325 39,130,466 24,704,844
Total current assets 1,369,057,093 1,814,513,001 2,101,425,203
Non-current assets
Long-term equity
XV.3 7,599,778,880 7,432,422,621 7,420,803,069
investments
Investment properties - 29,714,586 31,572,489
Fixed assets 270,692,477 261,137,072 265,311,274
Construction in progress 2,865,243 - 6,311,701
Bearer biological assets 115,103,753 121,414,096 125,002,793
Intangible assets 80,789,731 64,864,913 67,244,066
Deferred tax assets 18,285,685 16,255,870 24,194,967
Other non-current assets 1,530,700,000 1,427,700,000 972,700,000
Total non-current assets 9,618,215,769 9,353,509,158 8,913,140,359
Total assets 10,987,272,862 11,168,022,159 11,014,565,562
The notes on pages 20 to 107 form part of these financial statements.
4
Yantai Changyu Pioneer Wine Company Limited
Company balance sheet
as at 31 December 2020 (continued)
(Expressed in Renminbi Yuan)
31 December 31 December 31 January
Note
2020 2019 2019
(Restated) (Restated)
Liabilities and shareholders’
equity
Current liabilities
Short-term loans 150,000,000 150,000,000 150,000,000
Accounts payable 76,470,081 63,655,240 132,704,304
Employee benefits payable 67,808,910 70,445,847 72,345,179
Taxes payable 9,123,959 6,052,456 13,111,431
Other payables 521,505,947 660,149,563 607,974,519
Total current liabilities 824,908,897 950,303,106 976,135,433
Non-current liabilities
Deferred income 5,507,708 9,176,315 12,343,972
Other non-current liabilities 1,164,471 3,146,707 2,710,575
Total non-current liabilities 6,672,179 12,323,022 15,054,547
Total liabilities 831,581,076 962,626,128 991,189,980
The notes on pages 20 to 107 form part of these financial statements.
5
Yantai Changyu Pioneer Wine Company Limited
Company balance sheet
as at 31 December 2020 (continued)
(Expressed in Renminbi Yuan)
31 December 31 December 31 January
Note
2020 2019 2019
(Restated) (Restated)
Liabilities and shareholders’
equity (continued)
Shareholders’ equity
Share capital 685,464,000 685,464,000 685,464,000
Capital reserve 560,182,235 557,222,454 557,222,454
Surplus reserve 342,732,000 342,732,000 342,732,000
Retained earnings 8,567,313,551 8,619,977,577 8,437,957,128
Total owners’ equity 10,155,691,786 10,205,396,031 10,023,375,582
Total liabilities and
10,987,272,862 11,168,022,159 11,014,565,562
shareholders’ equity
These financial statements were approved by the Board of Directors of the Company on 26
April 2021.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal The person in The head of the
Representative charge accounting
of accounting affairs department
(Signature and (Signature and (Signature and
stamp) stamp) stamp)
The notes on pages 20 to 107 form part of these financial statements.
6
Yantai Changyu Pioneer Wine Company Limited
Consolidated income statement
for the year ended 31 December 2020
(Expressed in Renminbi Yuan)
Note 2020 2019
(Restated)
I. Operating income V.36 3,395,402,001 5,074,025,899
Less: Operating cost V.36 1,503,877,407 1,877,658,738
Taxes and surcharges V.37 203,789,274 269,888,681
Selling and distribution
V.38 788,252,485 1,088,305,385
expenses
General and administrative
V.39 290,646,466 311,904,656
expenses
Research and development
4,531,418 6,041,116
expenses
Financial expenses V.40 20,441,713 35,302,229
Including: Interest expenses 32,890,621 41,570,794
Interest income 14,247,274 12,327,441
Add: Other income V.41 73,063,620 77,370,841
Investment (losses)/income V.42 (2,217,623) 5,112,733
Including: Losses from
investment in joint
(2,217,623) (1,120,928)
ventures and
associates
Credit reversal/ (losses) V.43 4,348,309 (6,678,498)
Impairment losses V.44 (3,215,978) (20,552,916)
(Losses)/ Gains from disposal
V.45 (1,180,655) 39,015
of assets
The notes on pages 20 to 107 form part of these financial statements.
7
Yantai Changyu Pioneer Wine Company Limited
Consolidated income statement
for the year ended 31 December 2020 (continued)
(Expressed in Renminbi Yuan)
Note 2020 2019
(Restated)
II. Operating profit 654,660,911 1,540,216,269
Add: Non-operating income V.46 11,908,510 11,021,303
Less: Non-operating expenses V.46 1,702,858 3,634,552
III. Total profit 664,866,563 1,547,603,020
Less: Income tax expenses V.47 191,804,500 405,597,320
IV. Net profit 473,062,063 1,142,005,700
(1) Net profit classified by
continuity of operations:
1. Net profit from continuing
473,062,063 1,142,005,700
operations
2. Net profit from discontinued
- -
operations
(2) Net profit classified by
ownership:
1. Net profit attributable to
470,860,587 1,141,367,296
owners of the Company
2. Non-controlling interests 2,201,476 638,404
V. Other comprehensive income, net of
5,171,635 (8,542,792)
tax
(1) Other comprehensive income
(net of tax) attributable to 4,811,712 (7,200,960)
shareholders of the Company
Translation differences arising
from translation of foreign 4,811,712 (7,200,960)
currency financial statements
(2) Other comprehensive income
(net of tax) attributable to non- 359,923 (1,341,832)
controlling interests
The notes on pages 20 to 107 form part of these financial statements.
8
Yantai Changyu Pioneer Wine Company Limited
Consolidated income statement
for the year ended 31 December 2020 (continued)
(Expressed in Renminbi Yuan)
Note 2020 2019
(Restated)
VI. Total comprehensive income for the
478,233,698 1,133,462,908
year
(1) Attributable to shareholders of
475,672,299 1,134,166,336
the Company
(2) Attributable to non-controlling
2,561,399 (703,428)
interests
VII. Earnings per share:
(1) Basic earnings per share V.48 0.69 1.67
(2) Diluted earnings per share V.48 0.69 1.67
Note 1: The Group had a business combination under common control in 2020. The net
profit realised by the combining party before the combination was RMB10,730,129
and the net profit realised by the combining party in 2019 was RMB11,709,978.
These financial statements were approved by the Board of Directors of the Company on 26
April 2021.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal The person in The head of the
Representative charge accounting
of accounting affairs department
(Signature and (Signature and (Signature and
stamp) stamp) stamp)
The notes on pages 20 to 107 form part of these financial statements.
9
Yantai Changyu Pioneer Wine Company Limited
Company income statement
for the year ended 31 December 2020
(Expressed in Renminbi Yuan)
Note 2020 2019
(Restated)
I. Operating income XV.4 512,303,553 740,856,362
Less: Operating cost XV.4 452,368,512 655,504,063
Taxes and surcharges 19,841,835 25,045,041
General and administrative
74,929,302 86,481,192
expenses
Research and development
728,793 815,233
expenses
Net financial income (602,459) (4,798,485)
Including: Interest expenses 4,875,912 497,277
Interest income 5,594,285 5,843,698
Add: Other income 5,339,898 3,953,002
Investment income XV.5 449,504,721 621,620,723
Credit reversal/ (losses) 601,610 (601,610)
Gains from disposal of assets - 22,297
II. Operating profit 420,483,799 602,803,730
Add: Non-operating income 3,961,267 1,840,062
Less: Non-operating expenses 1,050,415 1,118,124
The notes on pages 20 to 107 form part of these financial statements.
10
Yantai Changyu Pioneer Wine Company Limited
Company income statement
for the year ended 31 December 2020 (continued)
(Expressed in Renminbi Yuan)
Note 2020 2019
(Restated)
III. Total profit 423,394,651 603,525,668
Less: Income tax expenses (3,766,123) 10,226,819
IV. Net profit 427,160,774 593,298,849
(i) Net profit from continuing
427,160,774 593,298,849
operations
(ii) Net profit from discontinued
- -
operations
V. Other comprehensive income, net of
- -
tax
VI. Total comprehensive income for the
427,160,774 593,298,849
year
These financial statements were approved by the Board of Directors of the Company on 26
April 2021.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal The person in The head of the
Representative charge accounting
of accounting affairs department
(Signature and (Signature and (Signature and
stamp) stamp) stamp)
The notes on pages 20 to 107 form part of these financial statements.
11
Yantai Changyu Pioneer Wine Company Limited
Consolidated cash flow statement
for the year ended 31 December 2020
(Expressed in Renminbi Yuan)
Note 2020 2019
(Restated)
I. Cash flows from operating activities:
Proceeds from sale of goods and
3,259,057,195 4,698,813,366
rendering of services
Refund of taxes and surcharges 45,642,498 40,944,192
Proceeds from other operating
V.49(1) 81,197,248 96,517,766
activities
Sub-total of cash inflows 3,385,896,941 4,836,275,324
Payment for goods and services 1,095,500,438 1,342,960,997
Payment to and for employees 529,304,037 594,680,599
Payment of various taxes 704,054,796 1,127,433,460
Payment for other operating activities V.49(2) 551,890,997 922,347,908
Sub-total of cash outflows 2,880,750,268 3,987,422,964
Net cash flows from operating
V.50(1) 505,146,673 848,852,360
activities
II. Cash flows from investing activities:
Proceeds from disposal of
135,647,402 234,632,139
investments
Investment returns received 1,730,511 1,809,786
Net proceeds from disposal of fixed
assets, intangible assets and other 49,200,301 6,334,375
long-term assets
Sub-total of cash inflows 186,578,214 242,776,300
Payment for acquisition of fixed
assets, intangible assets and other 155,918,502 281,228,617
long-term assets
Payment for acquisition of
83,508,393 170,023,444
investments
Net cash paid for the acquisition of
subsidiaries and other business V.50(2) 89,519,789 -
units
Sub-total of cash outflows 328,946,684 451,252,061
Net cash flows from investing
(142,368,470) (208,475,761)
activities
The notes on pages 20 to 107 form part of these financial statements.
12
Yantai Changyu Pioneer Wine Company Limited
Consolidated cash flow statement
for the year ended 31 December 2020 (continued)
(Expressed in Renminbi Yuan)
Note 2020 2019
(Restated)
III. Cash flows from financing activities:
Proceeds from borrowings 987,668,379 942,134,032
Sub-total of cash inflows 987,668,379 942,134,032
Repayments of borrowings 1,098,773,637 939,525,426
Payment for dividends, profit
531,697,065 470,955,473
distributions or interest
Payment for other financing activities V.49(3) 62,966,747 11,619,552
Sub-total of cash outflows 1,693,437,449 1,422,100,451
Net cash flows from financing
(705,769,070) (479,966,419)
activities
IV. Effect of foreign exchange rate
changes on cash and cash (1,743,498) 703,173
equivalents
V. Net increase in cash and cash
V.50(1) (344,734,365) 161,113,353
equivalents
Add: Cash and cash equivalents at
1,397,399,470 1,236,286,117
the beginning of the year
VI. Cash and cash equivalents at the end
V.50(3) 1,052,665,105 1,397,399,470
of the year
These financial statements were approved by the Board of Directors of the Company on 26
April 2021.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal The person in The head of the
Representative charge accounting
of accounting affairs department
(Signature and (Signature and (Signature and
stamp) stamp) stamp)
The notes on pages 20 to 107 form part of these financial statements.
13
Yantai Changyu Pioneer Wine Company Limited
Company cash flow statement
for the year ended 31 December 2020
(Expressed in Renminbi Yuan)
Note 2020 2019
(Restated)
I. Cash flows from operating activities:
Proceeds from sale of goods and
365,804,968 737,920,018
rendering of services
Proceeds from other operating
19,507,538 211,049,689
activities
Sub-total of cash inflows 385,312,506 948,969,707
Payment for goods and services 261,854,964 710,601,952
Payment to and for employees 65,247,752 91,738,062
Payment of various taxes 6,778,231 48,817,363
Payment for other operating activities 139,442,785 28,434,079
Sub-total of cash outflows 473,323,732 879,591,456
Net cash flows from operating
(88,011,226) 69,378,251
activities
II. Cash flows from investing activities:
Proceeds from disposal of
58,238,750 131,133,236
investments
Investment returns received 450,538,570 922,250,025
Net proceeds from disposal of fixed
assets, intangible assets and other 131,260 1,354,733
long-term assets
Proceeds from borrowings to
9,000,000 8,000,000
subsidiaries
Sub-total of cash inflows 517,908,580 1,062,737,994
Payment for acquisition of fixed
assets, intangible assets and other 51,762,211 21,417,387
long-term assets
Payment for acquisition of
131,408,115 138,566,890
investments
Net cash paid for the acquisition of
subsidiaries and other business 89,519,789 -
units
Cash paid to subsidiaries 112,000,000 463,000,000
Sub-total of cash outflows 384,690,115 622,984,277
Net cash flows from investing
133,218,465 439,753,717
activities
The notes on pages 20 to 107 form part of these financial statements.
14
Yantai Changyu Pioneer Wine Company Limited
Company cash flow statement
for the year ended 31 December 2020 (continued)
(Expressed in Renminbi Yuan)
Note 2020 2019
(Restated)
III. Cash flows from financing
activities:
Proceeds from borrowings 150,000,000 150,000,000
Sub-total of cash inflows 150,000,000 150,000,000
Repayments of borrowings 150,000,000 150,000,000
Payment for dividends or interest 486,200,712 418,400,308
Sub-total of cash outflows 636,200,712 568,400,308
Net cash flows from financing
(486,200,712) (418,400,308)
activities
IV. Effect of foreign exchange rate
changes on cash and cash - -
equivalents
V. Net decrease/(increase) in cash
(440,993,473) 90,731,660
and cash equivalents
Add: Cash and cash equivalents
at the beginning of the 623,116,542 532,384,882
year
VI. Cash and cash equivalents at the
182,123,069 623,116,542
end of the year
These financial statements were approved by the Board of Directors of the Company on 26
April 2021.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal The person in The head of the
Representative charge accounting
of accounting affairs department
(Signature and (Signature and (Signature and
stamp) stamp) stamp)
The notes on pages 20 to 107 form part of these financial statements.
15
Yantai Changyu Pioneer Wine Company Limited
Consolidated statement of changes in shareholders’ equity
for the year ended 31 December 2020
(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 the
685,464,000 642,775,360 (4,235,583) 342,732,000 8,735,513,044 10,402,248,821 271,876,064 10,674,124,885
year
II. Changes in equity during the year
(1) Total comprehensive income - - 4,811,712 - 470,860,587 475,672,299 2,561,399 478,233,698
(2) Shareholders’ contributions
Acquisitions of non-controlling
- (28,286,811) - - - (28,286,811) (34,679,936) (62,966,747)
interests
(3) Appropriation of profits V.35
Distributions to shareholders - - - - (492,281,876) (492,281,876) (3,159,537) (495,441,413)
(4) Business combination under
VI.(1) - (89,519,789) - - - (89,519,789) - (89,519,789)
common control
III. Balance at the end of the year 685,464,000 524,968,760 576,129 342,732,000 8,714,091,755 10,267,832,644 236,597,990 10,504,430,634
These financial statements were approved by the Board of Directors of the Company on 26 April 2021.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal Representative The person in charge of The head of the accounting
accounting affairs department
(Signature and stamp) (Signature and stamp) (Signature and stamp)
The notes on pages 20 to 107 form part of these financial statements.
16
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
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 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
year
Add: Changes in accounting
III.33 - - - - (7,540,537) (7,540,537) - (7,540,537)
policies
Business combination under
- 77,724,938 - - 12,482,138 90,207,076 1,782,807 91,989,883
common control
Adjusted balance at the beginning
685,464,000 643,680,379 2,965,377 342,732,000 8,013,924,148 9,688,765,904 286,170,819 9,974,936,723
of the year
II. Changes in equity during the year
(1) Total comprehensive income - - (7,200,960) - 1,141,367,296 1,134,166,336 (703,428) 1,133,462,908
(2) Contribution by owners
Acquisitions of non-controlling
- (905,019) - - - (905,019) (10,714,533) (11,619,552)
interests
(3) Appropriation of profits V.35
Distributions to shareholders - - - - (419,778,400) (419,778,400) (2,876,794) (422,655,194)
III. Balance at the end of the year 685,464,000 642,775,360 (4,235,583) 342,732,000 8,735,513,044 10,402,248,821 271,876,064 10,674,124,885
These financial statements were approved by the Board of Directors of the Company on 26 April 2021.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal Representative The person in charge of The head of the accounting
accounting affairs department
(Signature and stamp) (Signature and stamp) (Signature and stamp)
The notes on pages 20 to 107 form part of these financial statements.
17
Yantai Changyu Pioneer Wine Company Limited
Company statement of changes in shareholders’ equity
for the year ended 31 December 2020
(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 8,619,977,577 10,205,396,031
beginning of the year
II. Changes in equity
during the year
(1) Total
comprehensive - - - 427,160,774 427,160,774
income
(2) Shareholders’
contributions
Purchase of share
equity of Yantai
Changyu Culture
VII.1 - 2,959,781 - - 2,959,781
Development Co.,
Ltd (“Culture
Development”)
(3) Appropriation of
profits
Distributions to
- - - (479,824,800) (479,824,800)
shareholders
III. Balance at the end of
685,464,000 560,182,235 342,732,000 8,567,313,551 10,155,691,786
the year
These financial statements were approved by the Board of Directors of the Company on 26
April 2021.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal The person in The head of the
Representative charge accounting
of accounting affairs department
(Signature and (Signature and (Signature and
stamp) stamp) stamp)
The notes on pages 20 to 107 form part of these financial statements.
18
Yantai Changyu Pioneer Wine Company Limited
Company statement of changes in shareholders’ equity
for the year ended 31 December 2019 (continued)
(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
accounting III. 33 - - - - -
policies
Adjusted balance
at the beginning 685,464,000 557,222,454 342,732,000 8,437,957,128 10,023,375,582
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 26
April 2021.
Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp)
Legal The person in The head of the
Representative charge accounting
of accounting affairs department
(Signature and (Signature and (Signature and
stamp) stamp) stamp)
The notes on pages 20 to 107 form part of these financial statements.
19
Yantai Changyu Pioneer Wine Company Limited
Notes to the financial statements
(Expressed in Renminbi Yuan unless otherwise indicated)
I. Company status
Yantai Changyu Pioneer Wine Co., Ltd. (the "Company” or the “Joint Stock Company”) was
incorporated as a joint stock limited company in accordance with the Company Law of the
People's Republic of China (the "PRC") in a reorganisation carried out by Yantai Changyu
Group Co., Ltd. ("Changyu Group"), in which Changyu Group Company injected certain
assets and liabilities in relation to the brandy, wine, and sparkling wine production and sales
businesses to the Company. The Company and its subsidiaries (the "Group") are principally
engaged in the production and sales of wine, brandy, sparkling wine, grape growing and
acquisition, as well as travel resource development, etc. Registration place of the Company
is Yantai, Shandong. Headquarter of the Company is located at No. 56 Da Ma Lu, Zhifu
District, Yantai, Shandong, PRC.
As at 31 December 2020 the total shares issued by the Company amounts to 685,464,000
shares. Please refer to Note V. 31 in detail.
The holding company of the Group is Changyu Group Company, which is jointly controlled by
Yantai GuoFeng Investment Holding Ltd, ILLVA SARONNO HOLDING SPA, International
Finance Corporation and Yantai Yuhua Investment and Development Company Limited.
The financial statements have been authorised by the board of directors on 26 April 2021.
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 Group has adopted new financial instrument standards revised by
MOF in 2017, including CAS 22 — Recognition and Measurement of Financial Instruments.
Since 1 January 2020, the Group has adopted new revenue standards revised by MOF in
2017, including CAS 14 — Revenue (See Note III. 33).
The Group has not adopted CAS No. 21 — Lease revised in 2018 respectively.
20
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
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
2020, 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
A transaction constitutes a business combination when the Group obtains control of one or
more entities (or a group of assets or net assets). Business combination is classified as
either business combinations involving enterprises under common control or business
combinations not involving enterprises under common control.
For a transaction not involving enterprises under common control, the acquirer determines
whether acquired set of assets constitute a business. The Group may elect to apply the
simplified assessment method, the concentration test, to determine whether an acquired set
of assets is not a business. If the concentration test is met and the set of assets is
determined not to be a business, no further assessment is needed. If the concentration test
is not met, the Group shall perform the assessment according to the guidance on the
determination of a business.
21
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
When the set of assets the group acquired does not constitute a business, acquisition costs
should be allocated to each identifiable assets and liabilities at their acquisitiondate fair
values. It is not required to apply the accounting of business combination described as
below.
(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.
(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.
22
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
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.
(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.
23
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(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.
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.
24
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
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. A trade
receivable, without significant financing component or practical expedient applied for one
year or less contracts, is initially measured at the transaction price in accordance with Note
III.22.
(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.
25
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
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.
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.
26
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
- 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, reclassified, 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.
(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.
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Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(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.
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).
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Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
For accounts receivable, loss allowance are 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.
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.
29
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
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
- 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.
30
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
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.
(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.
31
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
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.
- 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. 28). 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.
32
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
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) Investment in joint ventures and associates
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.
Associated enterprises refer to enterprises to which the Group can exercise significant
influence (see Note III.11(3)).
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.28).
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.
33
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
- 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.
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.28). For the impairment of the investment
properties, refer to Note III.20.
Estimated useful Residual value rate Depreciation rate
Category
life (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.
34
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
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.28).
The estimated useful lives, residual value rates and depreciation rates of each class of fixed
assets are as follows:
Estimated useful Residual value rate Depreciation rate
Class
life (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.
35
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
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.
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.
36
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
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 Estimated net Depreciation rate
Category
life (years) residual value rate (%)
Vines 20 years 0% 5.0%
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 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.28).
37
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
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 years
Useful lives and amortisation methods of intangible asset with finite useful life are reviewed
at least at each year-end.
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.
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
38
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
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.
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.
39
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
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 when the Group satisfies the performance obligation in the contract
by transferring the control over relevant goods or services to the customers.
Where a contract has two or more performance obligations, the Group determines the stand-
alone selling price at contract inception of the distinct good or service underlying each
performance obligation in the contract and allocates the transaction price in proportion to
those stand-alone selling prices. The Group recognises as revenue the amount of the
transaction price that is allocated to each performance obligation. The stand-alone selling
price is the price at which the Group would sell a promised good or service separately to a
customer. If a stand-alone selling price is not directly observable, the Group considers all
information that is reasonably available to the entity, maximises the use of observable inputs
to estimate the stand-alone selling price.
For the contract with a warranty, the Group analyses the nature of the warranty provided, if
the warranty provides the customer with a distinct service in addition to the assurance that
the product complies with agreed-upon specifications, the Group recognises for the promised
warranty as a performance obligation. Otherwise, the Group accounts for the warranty in
accordance with the requirements of CAS No.13 – Contingencies.
The transaction price is the amount of consideration to which the Group expects to be
entitled in exchange for transferring promised goods or services to a customer, excluding
amounts collected on behalf of third parties. The Group recognises the transaction price only
to the extent that it is highly probable that a significant reversal in the amount of cumulative
revenue recognised will not occur when the uncertainty associated with the variable
consideration is subsequently resolved. Where the contract contains a significant financing
component, the Group recognises the transaction price at an amount that reflects the price
that a customer would have paid for the promised goods or services if the customer had paid
cash for those goods or services when (or as) they transfer to the customer. The difference
between the amount of promised consideration and the cash selling price is amortised using
an effective interest method over the contract term. The Group does not adjust the
consideration for any effects of a significant financing component if it expects, at contract
inception, that the period between when the Group transfers a promised good or service to a
customer and when the customer pays for that good or service will be one year or less.
40
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
The Group satisfies a performance obligation over time if one of the following criteria is met;
or otherwise, a performance obligation is satisfied at a point in time:
- the customer simultaneously receives and consumes the benefits provided by the Group’s
performance as the Group performs;
- the customer can control the asset created or enhanced during the Group’s performance;
or
- the Group’s performance does not create an asset with an alternative use to it and the
Group has an enforceable right to payment for performance completed to date.
For performance obligation satisfied over time, the Group recognises revenue over time by
measuring the progress towards complete satisfaction of that performance obligation. When
the outcome of that performance obligation cannot be measured reasonably, but the Group
expects to recover the costs incurred in satisfying the performance obligation, the Group
recognises revenue only to the extent of the costs incurred until such time that it can
reasonably measure the outcome of the performance obligation.
For performance obligation satisfied at a point in time, the Group recognises revenue at the
point in time at which the customer obtains control of relevant goods or services. To
determine whether a customer has obtained control of goods or services, the Group
considers the following indicators:
- the Group has a present right to payment for the goods or services;
- the Group has transferred physical possession of the goods to the customer;
- the Group has transferred the legal title of the goods or the significant risks and rewards of
ownership of the goods to the customer; and
- the customer has accepted the goods or services.
For the sale of a product with a right of return, the Group recognises revenue when the
Group obtains control of that product, in the amount of consideration to which the Group
expects to be entitled in exchange for the product transferred (i.e. excluding the amount of
which expected to be returned), and recognises a refund liability for the products expected to
be returned. Meanwhile, an asset is recognised in the amount of carrying amount of the
product expected to be returned less any expected costs to recover those products (including
potential decreases in the value of returned products), and carry forward to cost in the
amount of carrying amount of the transferred products less the above costs. At the end of
each reporting period, the Group updates its assessment of future sales return. If there is
any change, it is accounted for as a change in accounting estimate.
A contract asset is the Group’s right to consideration in exchange for goods or services that it
has transferred to a customer when that right is conditional on something other than the
passage of time. The Group recognises loss allowances for expected credit loss on contract
assets (see Note III.9(6)). Accounts receivable is the Group’s right to consideration that is
unconditional (only the passage of time is required). A contract liability is the Group’s
obligation to transfer goods or services to a customer for which the Group has received
consideration (or an amount of consideration is due) from the customer.
The following is the description of accounting policies regarding revenue from the Group’s
principal activities:
The Group's sales revenue is mainly derived from dealer sales. Revenue is recognised
when the Group transfers control of the related products to the customer. Based on the
business contract, the Group recognised the sales revenue of these transfers when the
product is confirmed and signed for acceptance by the customers.
41
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
23 Contract costs
Contract costs are either the incremental costs of obtaining a contract with a customer or the
costs to fulfil a contract with a customer.
Incremental costs of obtaining a contract are those costs that the Group incurs to obtain a
contract with a customer that it would not have incurred if the contract had not been obtained
e.g. an incremental sales commission. The Group recognises as an asset the incremental
costs of obtaining a contract with a customer if it expects to recover those costs. Other costs
of obtaining a contract are expensed when incurred.
If the costs to fulfil a contract with a customer are not within the scope of inventories or other
accounting standards, the Group recognises an asset from the costs incurred to fulfil a
contract only if those costs meet all of the following criteria:
- the costs relate directly to an existing contract or to a specifically identifiable anticipated
contract, including direct labour, direct materials, allocations of overheads (or similar
costs), costs that are explicitly chargeable to the customer and other costs that are
incurred only because the Group entered into the contract
- the costs generate or enhance resources of the Group that will be used in satisfying (or in
continuing to satisfy) performance obligations in the future; and
- the costs are expected to be recovered.
Assets recognised for the incremental costs of obtaining a contract and assets recognised for
the costs to fulfil a contract (the “assets related to contract costs”) are amortised on a
systematic basis that is consistent with the transfer to the customer of the goods or services
to which the assets relate and recognised in profit or loss for the current period. The Group
recognises the incremental costs of obtaining a contract as an expense when incurred if the
amortisation period of the asset that the entity otherwise would have recognised is one year
or less.
The Group recognises an impairment loss in profit or loss to the extent that the carrying
amount of an asset related to contract costs exceeds:
- remaining amount of consideration that the Group expects to receive in exchange for the
goods or services to which the asset relates; less
- the costs that relate directly to providing those goods or services that have not yet been
recognised as expenses.
24 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.
42
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(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.
(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.
25 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.
26 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).
43
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
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.
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.
27 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.
44
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(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.
28 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.26) 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.
29 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.
30 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.
45
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
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.
31 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 five parts: China, Spain, France, Chile and Australia. The
management periodically evaluates segment results, in order to allocate resources and
evaluate performances. In 2020, over 85% of revenue, more than 93% 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.
32 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. 13 and 16) and provision for impairment of various types of assets (see Notes V.2,
6, 10, 13 and 14). Other significant accounting estimates are as follows:
(i) Note V. 16 – Recognition of deferred tax asset;
(ii) Note IX. – Fair value measurements of financial instruments.
33 Changes in significant accounting policies and accounting estimates
(1) Description and reasons of changes in accounting policies
In 2020, the Group has adopted the following revised accounting standards issued by the
MOF recently:
- CAS No.14 - Revenue (Revised) (“new revenue standard”)
- CAS Bulletin No.13 (Caikuai [2019] No.21) (“Bulletin No.13”)
- Accounting Treatment of COVID-19-Related Rent Concessions (Caikuai [2020] No.10)
(a) New revenue standard
New revenue standard replaces CAS No.14 – Revenue and CAS No.15 - Construction
Contracts issued by the MOF in 2006 (collectively referred to as “previous revenue
standard”).
46
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
Under previous revenue standard, the Group recognised revenue when the risks and
rewards had passed to the customers. The Group's revenue from sales of goods was
recognised when the following conditions were met: the significant risks and rewards of
ownership of the goods had been transferred to the customer, the amount of revenue
and related costs could be reliably measured, the relevant economic benefits would
probably flow to the Group and the Group retained neither continuing managerial
involvement to the degree usually associated with ownership nor effective control over
the goods sold.
Under new revenue standard, revenue is recognised when the customer obtains
control of the promised goods or services in the contract. Please refer to Note III.22 for
relevant accounting policies.
The effects of new revenue standard on each of the line items in the consolidated
balance sheet and company balance sheet as at 1 January 2020 are analysed as
follows:
Increase/(decrease) in the line items as
a result of applying new accounting
policies
The Group Parent
Liabilities:
Advance payments received (128,907,604) -
Other payables (11,855,592) -
Contract liabilities 126,910,470 -
Other current liabilities 13,852,726 -
The Group adjusts the amount of contractual consideration received before the transfer
of goods to customers or the right to unconditionally receive contractual consideration
from advance payments received and other payables to contract liabilities, and any
amounts involving value-added tax will be adjusted to other current liabilities.
The following tables provide information of the impact on each of the line items in the
consolidated income statement and company income statement, and the consolidated
balance sheet and company balance sheet for the year ended 31 December 2020 had
the previous policies still been applied in the year.
The effects on each of the line items in the consolidated income statement and
company income statement for the year ended 31 December 2020 are analysed as
follows:
Increase/(decrease) in the line items for
the year as a result of applying new
accounting policies
The Group Parent
Operating costs 87,534,630 -
Selling and distribution expenses (87,534,630) -
The Group considers the transportation expenses incurred before the transfer of
control to the customer as contractual performance costs, which has been adjusted
from sales expenses to operating costs.
47
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
The effects on each of the line items in the consolidated balance sheet and company
balance sheet as at 31 December 2020 are analysed as follows:
Increase/(decrease) in the line items as
a result of applying new accounting
policies
The Group Parent
Liabilities:
Advance payments received (133,031,452) -
Other payables (16,862,481) -
Contract liabilities 135,073,280 -
Other current liabilities 14,820,653 -
There is no significant impact on each of the line items in the consolidated cash flow
statement and company cash flow statement for the year ended 31 December 2020
had the previous policies still been applied in the year.
(2) The Group completed the acquisition of Culture Development in July 2020 and made
corresponding adjustments to the comparative financial information in accordance with the
relevant regulations on business combination under common control (Note VI).
IV. Taxation
1 Main types of taxes and corresponding tax rates
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 2018 to 31 March 2019), 17%, 13%,
(VAT) for VAT payable is to deduct 6% (China, before 1 May 2018), 20%
input VAT from the output (France), 21% (Spain), 19% (Chile)
VAT for 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 construction Based on VAT paid 7% (China)
tax
Corporate income 25% (China), 28% (France), 28%
Based on taxable profits
tax (Spain), 27% (Chile), 30% (Australia)
Other than tax incentives stated in Note IV. 2, applicable tax rates of the Group in 2020 and
2019 are all stated as above.
48
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
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.
Yantai Changyu Wine Research & Development Centre Co., Ltd. (“R&D Centre”), a branch
of the Company, is an enterprise engaged in grape growing in the Economic and
Technological Development Zone of Yantai City, Shandong Province. Pursuant to Article 27
of the Enterprise Income Tax Law of the People’s Republic of China and Article 86 of the
Implementation Regulations of the Enterprise Income Tax Law of the People's Republic of
China, R&D Centre enjoys the preferential policy of exemption of enterprise income tax on
income from grape growing.
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.
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.
Pursuant to the Announcement on Taxation Policies Supporting the Prevention and Control
of the Pneumonia Epidemic related to Covid-19" (Announcement from the Ministry of
Finance and the State Taxation Administration [2020] No.8), from 1 January 2020, income
from providing public transportation services and daily life services to taxpayers and
providing express delivery service of daily necessities to residents are exempt from value-
added tax. The Company has branches and subsidiaries such as Yantai Changyu Wine
Culture Museum Co., Ltd. ("Museum") that provide catering, accommodation, tourism and
other daily services. The income from their provision of daily life services will be exempted
from value-added tax from 1 January 2020.
49
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
Based on the Notice of the Department of Finance of Shaanxi Province and the Shaanxi
Provincial Taxation Bureau under the State Taxation Administration on Matters Concerning
the Relief and Exemption of Urban Land Use Tax and Real Estate Tax in Fighting the
Epidemic (Shaan Cai Shui [2020] No.4), the Department of Finance and the Taxation Bureau
shall approve the application for tax relief and exemption submitted by taxpayers who have
difficulties to pay urban land use tax and real estate tax owing to the suspension of
production and business for more than 30 days (inclusive) arising from the epidemic.
Shaanxi Chateau Changyu Rena Co., Ltd. and Changyu (Jingyang) Wine Co., Ltd., two
subsidiaries of the Company, meet the application requirements and will be exempted from
real estate tax and urban land use tax in the first quarter of 2020.
Pursuant to the Notice of the Taxation Bureau in Ningxia Hui Autonomous Region under the
State Taxation Administration and the Department of Finance in Ningxia Hui Autonomous
Region on Implementing the Policies of Real Estate Tax and Urban Land Use Tax by the
People’s Government in Autonomous Region in response to the impact from Covid-19
Epidemic (Ning Shui Han [2020] No.19), the Taxation Bureau shall approve the application
for tax relief submitted by enterprises that have difficulties to pay real estate tax and urban
land use tax owing to the epidemic. Shaanxi Chateau Changyu Rena Co., Ltd. and Changyu
(Ningxia) Wine Co., Ltd., two subsidiaries of the Company, meet the application requirements
and will be exempted from real estate tax and urban land use tax for five months in 2020.
V. Notes to the consolidated financial statements
1 Cash at bank and on hand
Item 2020 2019
Cash on hand 19,637 65,195
Bank deposits 1,128,882,937 1,506,110,752
Other monetary funds 65,312,355 91,234,828
Total 1,194,214,929 1,597,410,775
Including: Total overseas deposits 47,674,019 42,752,630
As at 31 December 2020, the balance of restricted cash of the Group is as follows:
Item 2020 2019
House maintenance funds 2,684,407 2,647,877
As at 31 December 2020, the Group's term deposits with previous maturity of more than
three months is RMB73,553,062 with interest rate 1.50%-2.75% (31 December 2019:
RMB106,128,600).
As at 31 December 2020, the Group's other monetary assets is as follows:
Item 2020 2019
Yantai Changyu Pioneer Wine Company Limited
Research and Development Co., Ltd. ("R&D 20,000,000 46,100,000
Centre") pledged deposit for long-term payables
Deposits for letters of credit 44,540,850 44,540,850
Alipay account balance 761,505 583,978
Deposit for ICBC platform 10,000 10,000
Total 65,312,355 91,234,828
50
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
2 Accounts receivable
(1) Accounts receivable by customer type are as follows:
31 December 31 December
Type
2020 2019
Amounts due from related parties 2,268,311 4,292,387
Amounts due from other customers 193,911,657 278,112,684
Sub-total 196,179,968 282,405,071
Less: Provision for bad and doubtful debts (12,326,606) (16,674,915)
Total 183,853,362 265,730,156
As at 31 December 2020, ownership restricted accounts receivable is RMB28,557,991 (31
December 2019: RMB54,663,422), referring to Note V. 51.
(2) The ageing analysis of accounts receivable is as follows:
Ageing 2020 2019
Within 1 year (inclusive) 190,047,491 276,186,686
Over 1 year but within 2 years (inclusive) 5,581,750 5,743,777
Over 2 years but within 3 years (inclusive) 366,053 308,950
Over 3 years 184,674 165,658
Sub-total 196,179,968 282,405,071
Less: Provision for bad and doubtful debts (12,326,606) (16,674,915)
Total 183,853,362 265,730,156
The ageing is counted starting from the date when accounts receivable are recognised.
(3) Accounts receivable by provisioning method
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.
51
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
2020
Carrying amount at Impairment loss at
Loss given default
the end of the year the end of the year
Current 0.4% 146,425,314 650,298
Overdue for 1 to 30 days 3.4% 14,631,174 495,839
Overdue for 31 to 60 days 6.4% 6,678,504 424,266
Overdue for 61 to 90 days 10.3% 5,582,357 574,675
Overdue for 91 to 120 days 12.9% 2,054,400 265,530
Overdue for 121 to 150 days 15.6% 2,769,171 431,319
Overdue for 151 to 180 days 21.7% 3,970,361 859,903
Overdue for 181 to 210 days 30.3% 1,417,385 429,287
Overdue for 211 to 240 days 32.0% 5,413,890 1,731,246
Overdue for 241 to 270 days 35.7% 993,299 354,988
Overdue for 271 to 300 days 54.6% 111,636 60,963
Overdue for 301 to 330 days 88.7% 748,270 664,085
Overdue for 331 to 360 days 100.0% 323,563 323,563
Overdue for 360 days 100.0% 5,060,644 5,060,644
Total 6.3% 196,179,968 12,326,606
2019
Carrying amount at Impairment loss at
Loss given default
the end of the year the end of the year
Current 0.5% 212,907,296 1,042,035
Overdue for 1 to 30 days 3.4% 30,742,719 1,048,024
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 days 22.4% 2,311,625 517,066
Overdue for 151 to 180 days 28.5% 661,492 188,571
Overdue for 181 to 210 days 33.3% 2,583,362 861,027
Overdue for 211 to 240 days 39.4% 4,686,242 1,844,776
Overdue for 241 to 270 days 72.9% 588,355 428,627
Overdue for 271 to 300 days 87.8% 583,701 512,581
Overdue for 301 to 330 days 97.3% 753,239 732,946
Overdue for 331 to 360 days 100.0% 1,491,202 1,491,202
Overdue for 360 days 100.0% 6,216,955 6,216,955
Total 5.9% 282,405,071 16,674,915
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.
52
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(4) Movements of provisions for bad and doubtful debts:
2020 2019
Balance under the previous financial instruments
- -
standards
Adjustment on initial application of the new financial
- (10,050,869)
instruments standards
Balance at the beginning of the year after
(16,674,915) (10,050,869)
adjustment
Charge for the year (11,591,483) (6,678,498)
Recoveries or reversals during the year 15,939,792 -
Written-off during the year - 54,452
Balance at the end of the year (12,326,606) (16,674,915)
(5) Five largest accounts receivable by debtor at the end of the year:
Ending balance
Percentage of
Relationship with Balance at the of provision for
Name Ageing ending balance
the Group end of the year bad and doubtful
of others (%)
debts
Lianhua Supermarket
Third party 14,891,601 Within 1 year 7.6% 817,856
Holdings Co., Ltd.
NGS Supermarket (Group)
Third party 6,703,398 Within 1 year 3.4% 1,945,399
Co., Ltd.
Concord Investment (China)
Third party 6,363,346 Within 1 year 3.2% 27,264
Co., Ltd.
THE CO-OP FOOD GROUP Third party 6,045,716 Within 1 year 3.1% 129,588
SLIGRO B.V. Third party 5,861,893 Within 1 year 3.0% 125,648
Total 39,865,954 20.3% 3,045,755
3 Receivables under financing
Item Note 2020 2019
Bills receivable (1) 338,090,187 317,270,229
(1) The pledged bills receivable of the Group at the end of the year:
As at 31 December 2020, there was no pledged bills receivable (31 December 2019: Nil).
(2) Outstanding endorsed bills that have not matured at the end of the year:
Amount
Item derecognised at
year end
Bank acceptance bills 260,721,441
Total 260,721,441
As at 31 December 2020, bills endorsed by the Group to other parties which are not yet due
at the end of the period is RMB260,721,441 (31 December 2019: RMB265,759,455). 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.
53
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
4 Prepayments
(1) Prepayments by category:
Item 2020 2019
Prepayments 71,296,416 66,864,156
Other prepayments - 900,000
Total 71,296,416 67,764,156
(2) The ageing analysis of prepayments is as follows:
2020 2019
Ageing Percentage Percentage
Amount Amount
(%) (%)
Within 1 year (inclusive) 70,977,636 99.6% 67,498,332 99.6%
Over 1 year but within 2 years
318,780 0.4% 265,824 0.4%
(inclusive)
Total 71,296,416 100.0% 67,764,156 100.0%
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 balance
Percentage of
Nature of the Balance at the of provision for
Name Ageing ending balance
receivable end of the year bad and doubtful
of others (%)
debts
Xinjiang Yuyuan Wine Co., Ltd. Prepayments 32,791,457 Within 1 year 46.0% -
Fang Cao Hu Branch of
Xinjiang Tianyu grape wine Prepayments 18,885,867 Within 1 year 26.5% -
making Co., Ltd
Wine-World.com Co., Ltd. Prepayments 6,812,267 Within 1 year 9.6% -
RR WINE LTDA Prepayments 4,459,064 Within 1 year 6.3% -
Yantai power supply company
of State Grid Shandong Prepayments 1,229,571 Within 1 year 1.7% -
electric power company
Total 64,178,226 90.0% -
5 Other receivables
31 December 31 December
Note
2020 2019
Interest receivable (1) - 148,927
Others (2) 22,428,956 24,201,301
Total 22,428,956 24,350,228
(1) Interest receivable
(a) Interest receivable by category:
31 December 31 December
Item
2020 2019
Interest receivable on bank deposits - 148,927
54
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(b) Significant overdue interest:
As at 31 December 2020, there was no overdue interest receivable (31 December
2019: Nil).
(2) Others
(a) Others by customer type:
31 December 31 December
Customer type
2020 2019
Amounts due from related parties 522,936 813,440
Amounts due from other companies 21,906,020 23,387,861
Sub-total 22,428,956 24,201,301
Less: Provision for bad and doubtful debts - -
Total 22,428,956 24,201,301
(b) The ageing analysis is as follows:
Ageing 2020 2019
Within 1 year (inclusive) 10,738,225 16,156,330
Over 1 year but within 2 years (inclusive) 3,927,625 940,668
Over 2 years but within 3 years (inclusive) 787,908 6,547,178
Over 3 years 6,975,198 557,125
Sub-total 22,428,956 24,201,301
Less: Provision for bad and doubtful debts - -
Total 22,428,956 24,201,301
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 2020, no bad and doubtful debt provision was made for other
receivables (31 December 2019: Nil).
As at 31 December 2020, the Group has no other receivables written off (31 December
2019: Nil).
55
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(d) Others categorised by nature
Nature of other receivables 2020 2019
Deposit 10,287,959 9,915,442
Refund of consumption tax and VAT 8,254,195 8,937,164
Petty cash receivable 124,878 1,741,147
Others 3,761,924 3,607,548
Sub-total 22,428,956 24,201,301
Less: Provision for bad and doubtful debts - -
Total 22,428,956 24,201,301
(e) Five largest others-by debtor at the end of the year
Ending balance
Percentage of
Nature of the Balance at the of provision for
Name Ageing ending balance
receivable end of the year bad and doubtful
of others (%)
debts
Sercicio de Impuestos
Refund of VAT 7,044,680 Within 1 year 31.4% -
Internos
Finance Bureau of
Yantai Economic and
Deposits 5,262,324 Over 3 years 23.5% -
Technological
Development Area
Yantai Economic and
Technological
Construction
Development Zone 1,143,500 Over 3 years 5.1% -
deposit
Construction Industry
Federation
Municipalidad de
Deposits 920,000 Within 1 year 4.1% -
Casablanca
Yantai Municipal Tax
Service, State Over 1 year but
Refund of VAT 736,946 3.3% -
Taxation within 2 years
Administration
Total 15,107,450 67.4% -
6 Inventories
(1) Inventories by category:
2020 2019
Provision for Provision for
Item Carrying Carrying
Book value impairment of Book value impairment of
amount amount
inventories inventories
Raw materials 70,165,666 - 70,165,666 72,140,633 - 72,140,633
Work in progress 2,236,815,423 - 2,236,815,423 2,105,226,082 - 2,105,226,082
Finished goods 653,042,196 (14,474,634) 638,567,562 744,464,477 (20,179,637) 724,284,840
Total 2,960,023,285 (14,474,634) 2,945,548,651 2,921,831,192 (20,179,637) 2,901,651,555
(2) Provision for impairment of inventories:
Increase during Decrease during
Item Opening balance the year the year Closing balance
Recognised Reversal
Finished goods 20,179,637 14,474,634 (20,179,637) 14,474,634
56
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
7 Other current assets
Item 2020 2019
Prepaid income taxes 16,087,815 16,854,091
Input tax to be credited 215,812,506 250,552,566
Prepaid rent 2,218,394 1,595,664
Total 234,118,715 269,002,321
8 Long-term equity investments
(1) Long-term equity investments by category:
Item 2020 2019
Investments in joint ventures 42,019,654 43,981,130
Investments in associates 6,243,853 -
Sub-total 48,263,507 43,981,130
Less: Provision for impairment - -
Total 48,263,507 43,981,130
(2) Movements of long-term equity investments during the year are as follows:
Movements during the year
2020
Losses from
Balance at the 2020 Shareholding
Investee Increase in investments
beginning of the Closing balance percentage
capital under equity-
year
method
Joint ventures
SAS L&M Holdings (“L&M
43,981,130 - (1,961,476) 42,019,654 55%
Holdings”)
Associates
WEMISS (Shanghai)
Enterprise Development Co., - 3,000,000 (256,110) 2,743,890 30%
Ltd (“WEMISS Shanghai”)
Yantai Santai Real Estate
- 3,500,000 (37) 3,499,963 35%
Development Co., Ltd
Sub-total - 6,500,000 (256,147) 6,243,853
Total 43,981,130 6,500,000 (2,217,623) 48,263,507
9 Investment properties
Buildings and
plants
Cost
Balance as at 31 December 2019 and 31 December 2020 70,954,045
Accumulated depreciation
31 December 2019 (41,239,459)
Charge for the year (2,656,856)
31 December 2020 (43,896,315)
Carrying amount
31 December 2020 27,057,730
31 December 2019 29,714,586
57
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
10 Fixed assets
(1) Fixed assets
Machinery &
Item Plant & buildings Motor vehicles Total
equipment
Cost
31 December 2019 5,157,724,379 2,741,954,286 26,777,052 7,926,455,717
Additions during the year
- Purchases 38,183,113 76,184,901 1,292,028 115,660,042
- Transfers from construction in
5,962,066 5,450,980 - 11,413,046
progress
Disposals or written-offs during
(65,110,863) (36,280,680) (502,488) (101,894,031)
the year
31 December 2020 5,136,758,695 2,787,309,487 27,566,592 7,951,634,774
Accumulated depreciation
31 December 2019 (774,068,821) (1,170,786,526) (20,153,244) (1,965,008,591)
Charge for the year (138,522,840) (154,702,790) (2,341,841) (295,567,471)
Disposals or written-offs during
20,009,805 30,842,868 502,488 51,355,161
the year
31 December 2020 (892,581,856) (1,294,646,448) (21,992,597) (2,209,220,901)
Provision for impairment
31 December 2019 - (17,478,027) - (17,478,027)
Charge for the year - - - -
31 December 2020 - (17,478,027) - (17,478,027)
Carrying amount
31 December 2020 4,244,176,839 1,475,185,012 5,573,995 5,724,935,846
31 December 2019 4,383,655,558 1,553,689,733 6,623,808 5,943,969,099
As at 31 December 2020, ownership restricted net value of fixed assets is RMB333,748,819
(31 December 2019: RMB344,670,852), referring to Note V. 51.
(2) Fixed assets leased out under operating leases
Accumulated Provision for
Item Cost Carrying amount
depreciation impairment
Buildings 47,821,026 (16,328,522) - 31,492,504
Machinery equipment 73,592,531 (52,434,878) (17,478,027) 3,679,626
Motor vehicles 3,344,518 (3,179,606) - 164,912
Total 124,758,075 (71,943,006) (17,478,027) 35,337,042
(3) Fixed assets leased out under operating leases
Carrying amount at
Item
the end of the year
Machinery equipment 15,825
58
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(4) Fixed assets pending certificates of ownership
Reason why the
Item Carrying amount certificates are
pending
Industry Production Centre of R&D Centre 1,606,465,153 Processing
Dormitories, main building and reception
283,897,062 Processing
building of Changan Chateau
European town, main building and service
176,052,749 Processing
building of Chateau Beijing
Fermentation shop and warehouse of Xinjiang
16,480,122 Processing
Tianzhu
Office and packaging shop of Golden Icewine
9,360,274 Processing
Valley
Fermentation shop of Zhangyu (Jingyang) 5,504,822 Processing
Office, experiment building and workshop of
2,585,022 Processing
Fermentation Centre
Finished goods warehouse and workshop of
2,215,494 Processing
Kylin Packaging
Others 1,118,794 Processing
The buildings without property certificate above have no significant impact on the Group's
management.
11 Construction in progress
(1) Construction in progress
2020 2019
Project Provision for Carrying Provision for Carrying
Book value Book value
impairment amount impairment amount
R&D Centre ("Changyu
589,010,299 - 589,010,299 485,017,326 - 485,017,326
Wine Complex") Project
Ningxia Chateau
420,440 - 420,440 46,448,561 - 46,448,561
Construction Project
Sales Company
738,462 - 738,462 6,313,962 - 6,313,962
Construction Project
Changan Chateau
7,626,393 - 7,626,393 4,052,839 - 4,052,839
Construction Project
Shihezi Chateau
5,000 - 5,000 877,348 - 877,348
Construction Project
Other Companies’
37,694,558 - 37,694,558 24,768,797 - 24,768,797
Construction Project
Total 635,495,152 - 635,495,152 567,478,833 - 567,478,833
59
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(2) Movements of major construction projects in progress during the year
Attributable
Transfers to Percentage Interest rate
Transfers to Accumulated to:
Budget Opening Additions Transfers to long-term Closing of actual for Sources of
Item Intangible capitalised Interest
(RMB million) balance during the year fixed assets deferred balance cost to capitalisation funding
assets interest capitalised for
expenses budget (%) in 2020 (%)
the year
Loans from
financial
Changyu Wine
4,506 485,017,326 105,934,721 (1,941,748) - - 589,010,299 80.0% 16,210,123 797,021 1.2%及 4.3% institutions
Complex
and self-
raised
Ningxia Chateau
428 46,448,561 4,995,252 (2,294,265) - (48,729,108) 420,440 100.0% - - - Self-raised
Construction Project
Changan Chateau
698 4,052,839 9,823,371 (6,249,817) - - 7,626,393 99.6% - - - Self-raised
Construction Project
Shihezi Chateau
780 877,348 39,484 (911,832) - - 5,000 96.4% - - - Self-raised
Construction Project
Sales Company
165 6,313,962 2,079,500 - (7,655,000) - 738,462 99.6% - - - Self-raised
Construction Project
60
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
12 Bearer biological assets
Bearer biological assets are vines, which measured in cost method.
Immature Mature biological
Item Total
biological assets assets
Original book value
31 December 2019 12,828,822 240,517,972 253,346,794
Additions during the year
- Increase in cultivated 3,018,864 - 3,018,864
- Transferred to mature (8,240,129) 8,240,129 -
31 December 2020 7,607,557 248,758,101 256,365,658
Accumulated amortisation
31 December 2019 - (50,921,508) (50,921,508)
Charge for the year - (13,270,614) (13,270,614)
31 December 2020 - (64,192,122) (64,192,122)
Carrying amount
31 December 2020 7,607,557 184,565,979 192,173,536
31 December 2019 12,828,822 189,596,464 202,425,286
As at 31 December 2020, there is no biological asset with ownership restricted (31
December 2019: Nil).
As at 31 December 2020, no provision for impairment of biological asset of the Group was
recognised as there is no any indication exists (31 December 2019: Nil).
13 Intangible assets
Item Land use rights Software licenses Trademarks Total
Original book value
31 December 2019 531,755,702 88,927,195 170,773,266 791,456,163
Additions during the year
- Purchase 314,211 2,393,612 18,496,021 21,203,844
- Transfers from construction
- 7,655,000 - 7,655,000
in progress
31 December 2020 532,069,913 98,975,807 189,269,287 820,315,007
Accumulated amortisation
31 December 2019 (89,333,506) (35,237,011) (14,341,798) (138,912,315)
Additions during the year
- Charge for the year (11,164,963) (9,088,033) (160,631) (20,413,627)
Decrease during the year
31 December 2020 (100,498,469) (44,325,044) (14,502,429) (159,325,942)
Carrying amount
31 December 2020 431,571,444 54,650,763 174,766,858 660,989,065
31 December 2019 442,422,196 53,690,184 156,431,468 652,543,848
As at 31 December 2020, the Group has land use right with infinite useful lives of
RMB30,746,186 (31 December 2019: RMB30,589,474), 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.
61
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
As at 31 December 2020, the Group has trademark with infinite useful lives of
RMB154,901,004 (31 December 2019: RMB154,674,985), 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 11.5%
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 2020, the
management believes there is no impairment loss on those trademarks with infinite useful
lives of the Group.
As at 31 December 2020, ownership restricted net value of intangible assets is
RMB206,920,456 (31 December 2019: RMB212,495,435), referring to Note V. 51.
14 Goodwill
(1) Changes in goodwill
Name of investee or events from 31 December Additions during Disposals during 31 December
Note
which goodwill arose 2019 the year the year 2020
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
Chile Indomita Wine Group (a) 6,870,115 - - 6,870,115
Australia Kilikanoon Estate (a) 37,063,130 - - 37,063,130
Sub-total 149,437,671 - - 149,437,671
Impairment provision (7,578,478) (8,920,981) - (16,499,459)
Carrying amount 141,859,193 (8,920,981) - 132,938,212
(a) The Group acquired Fransac Sales, Dicot and Mirefleurs, Chile Indomita Wine Group
and Australia Kilikanoon Estate in December 2013, September 2015, July 2017 and
January 2018 respectively, resulting in respective goodwill amounting to
RMB13,112,525, RMB92,391,901, RMB 6,870,115 and RMB37,063,130. The goodwill
had been allocated to corresponding asset groups for impairment testing.
62
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(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 12.6%, 11.2%, 11.5% and
12.8%, respectively (2019: 14.2%, 11.4%, 11.6% and 12.8%). 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 2020, the provision for impairment of
goodwill was RMB16,499,459. The impairment loss amounting to RMB8,920,981 was
recognised in asset impairment loss in 2020.
15 Long-term deferred expenses
31 December Additions during Amortisation for 31 December
Item
2019 the year the year 2020
Land lease prepayment 52,129,414 - (788,199) 51,341,215
Land requisition fee 41,460,260 - (1,880,339) 39,579,921
Greening fee 145,952,499 1,287,402 (9,054,648) 138,185,253
Leasehold improvement 35,871,673 48,910,962 (4,336,456) 80,446,179
Others 5,064,348 367,762 (518,823) 4,913,287
Total 280,478,194 50,566,126 (16,578,465) 314,465,855
16 Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets and liabilities
31 December 2020 31 December 2019
Deductible or Deductible or
Deferred tax Deferred tax
Item taxable taxable
assets/ assets/
temporary temporary
(liabilities) (liabilities)
differences differences
Deferred tax assets:
Provision for impairment of assets 44,279,268 9,732,098 54,774,331 13,693,583
Unrealised profits of intra-group
313,043,226 78,260,807 482,394,726 120,598,682
transactions
Unpaid bonus 147,824,610 36,956,152 184,674,946 46,168,736
Termination benefits 16,274,352 4,068,588 24,833,512 6,208,378
Deductible tax losses 268,074,301 65,844,999 247,147,752 63,459,305
Deferred income 52,653,609 11,378,631 70,643,437 15,422,659
Sub-total 842,149,366 206,241,275 1,064,468,704 265,551,343
Deferred tax liabilities:
Revaluation due to business
combinations involving entities not 49,156,771 (12,022,613) 51,829,561 (14,691,424)
under common control
63
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(2) Details of unrecognised deferred tax assets
Item 2020 2019
Deductible tax losses 187,130,828 132,081,819
(3) Expiration of deductible tax losses for unrecognised deferred tax assets
Year 2020 2019
2020 - 5,718,454
2021 25,008,263 36,741,465
2022 21,367,869 26,609,674
2023 22,801,737 31,350,376
2024 42,088,453 31,661,850
2025 75,864,506 -
Total 187,130,828 132,081,819
17 Other non-current assets
Item 2020 2019
Royalty 170,370,147 193,674,320
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 (including tax).
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 2020, the Group's royalty in 2020 was RMB23,304,173 (VAT included).
When the difference is deducted by the above-mentioned amount, the balance of royalty
due from Changyu Group was RMB170,370,147.
64
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
18 Short-term loans
Short-term loans by category:
Item 2020 2019
Unsecured loans 619,149,908 661,067,617
Mortgaged loans 55,724,891 82,568,222
Guaranteed loans 14,215,916 10,677,905
Total 689,090,715 754,313,744
As at 31 December 2020, details of short-term borrowings were as follows:
Exchange Nature of Interest rate at the
Amount Amount Interest rate
rate interest rate end of the year
RMB % %
Credit loans (RMB) 150,000,000 1.0000 150,000,000 Floating 1-year LPR-0.005 3.35%
Annual benchmark
Credit loans (RMB) 400,000,000 1.0000 400,000,000 Floating 3.35%
interest rate
Credit loans (EUR) 1,697,075 8.0250 13,619,024 Fixed 1% - 3.28% 1% - 3.28%
Credit loans (USD) 8,490,000 6.5407 55,530,884 Fixed 1.26% - 1.38% 1.26% - 1.38%
Mortgaged loans (EUR) 3,683,730 8.0250 29,561,931 Fixed 0.35% - 0.9% 0.35% - 0.9%
Mortgaged loans (USD) 4,000,000 6.5407 26,162,960 Fixed 1.32% 1.32%
Guaranteed loans (AUD) 2,833,945 5.0163 14,215,916 Fixed 2.50% 2.50%
Total 689,090,715
As at 31 December 2020, mortgaged loans (EUR) were Hacienda y Viedos Marques del
Atrio, S.L.U (" Atrio ") factoring of accounts receivable from banks including Banco de
Sabadell, S.A. of EUR3,558,629 (equivalent of RMB28,557,993) (31 December 2019:
RMB54,663,422). Mortgaged loans were Atrio mortgaged EUR2,929,628 (equivalent of
RMB23,510,265) of its land to Popular Espaol of EUR125,101 (equivalent of
RMB1,003,938) (31 December 2019: RMB3,875,992).
On 31 December 2020, Chile Indomita Wine Group pledged its fixed assets to Banco
Scotiabank to borrow USD4,000,000 (equivalent to RMB26,162,960) (31 December 2019:
RMB27,904,800).
On 31 December 2020, the secured loan represented the secured loan of Australia
Kilikanoon Estate of AUD2,833,945 (equivalent to RMB14,215,916) (31 December 2019:
RMB10,677,905).
19 Accounts payable
Ageing 2020 2019
Within 1 year (inclusive) 477,926,275 565,400,597
Over 1 year but within 2 years (inclusive) 2,173,356 2,255,083
Over 2 years but within 3 years (inclusive) 1,277,767 3,007,686
Over 3 years 2,970,560 186,413
Total 484,347,958 570,849,779
There is no significant accounts payable with ageing of more than one year.
65
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
20 Advance payments received
Details of advances from customers are as follows:
Item 2020 2019
Advances from customers - 128,907,605
There is no significant advances from customers with ageing of more than one year.
21 Contract liabilities
As at 31 As at 1 January
Item
December 2020 2020
Receipt in advance 118,210,799 115,054,878
Withholding sales rebates 16,862,481 11,855,592
Total 135,073,280 126,910,470
Contract liabilities primarily relate to the Group’s advances from sales contracts of specific
customers and the withholding sales rebates. Relevant contract liabilities are recognised as
revenue when the control of the goods is transferred to the customer.
22 Employee benefits payable
(1) Employee benefits payable:
Additions during Decrease during
Note 31 December 2019 31 December 2020
the year the year
Short-term employee
(2) 215,231,685 439,138,855 (482,194,455) 172,176,085
benefits
Post-employment
benefits - defined (3) 736,147 36,601,589 (37,008,262) 329,474
contribution plans
Termination benefits 24,833,512 1,542,160 (10,101,320) 16,274,352
Total 240,801,344 477,282,604 (529,304,037) 188,779,911
(2) Short-term employee benefits
Additions during Decrease during
31 December 2019 31 December 2020
the year the year
Salaries, bonuses,
218,360,023 391,442,192 (439,524,904) 170,277,311
allowances
Staff welfare 2,001,589 13,058,813 (13,325,679) 1,734,723
Social insurance 567,446 18,919,443 (19,146,156) 340,733
Medical insurance 567,446 18,085,064 (18,311,777) 340,733
Work-related injury
- 699,316 (699,316) -
insurance
Maternity insurance - 135,063 (135,063) -
Housing fund 14,195 12,761,086 (12,747,784) 27,497
Labour union fee, staff and
1,934,209 2,957,321 (3,016,738) 1,874,792
workers’ education fee
Sub-total 222,877,462 439,138,855 (487,761,261) 174,255,056
Less: Non-current liabilities 7,645,777 - (5,566,806) 2,078,971
Total 215,231,685 439,138,855 (482,194,455) 172,176,085
66
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(3) Post-employment benefits - defined contribution plans
Additions during Decrease during
31 December 2019 31 December 2020
the year the year
Basic pension insurance 736,137 35,667,206 (36,073,879) 329,464
Unemployment insurance 10 934,383 (934,383) 10
Total 736,147 36,601,589 (37,008,262) 329,474
Pursuant to the Notice of the Ministry of Human Resources and Social Security, the Ministry
of Finance and the State Taxation Administration on Extending the Implementation Period of
the Phased Reduction and Exemption of the Policy of Corporate Social Insurance Premiums
(Ren She Bu Fa [2020] No.49), from February 2020 to the end of June 2020, all provinces
(except Hubei Province) implemented the policy of halving the payment of three types of
social insurances (i.e. basic endowment insurance, unemployment insurance and work-
related injury insurance) for insured entities of large enterprises; from February 2020 to the
end of December 2020, all provinces implemented the exemption policy for the payment of
three types of social insurances for insured entitles of medium, small and micro enterprises.
The Company’s branches and subsidiaries, such as Yantai Changyu Pioneer Wine Sales
Co., Ltd., applied the preferential policies for large enterprises from February 2020 to the end
of June 2020 and the payment of three types of social insurances was levied by half; the
Company’s branches and subsidiaries, such as Hangzhou Changyu Wine Sales Co., Ltd.
applied the preferential policies for medium, small and micro enterprises from February 2020
to the end of December 2020 and the payment of three types of social insurances was
exempted.
23 Taxes payable
Item 2020 2019
Value-added tax 25,853,102 88,590,035
Consumption tax 42,076,231 48,497,550
Corporate income tax 130,621,524 217,226,553
Individual income tax 614,344 843,601
Tax on the use of urban land 2,327,666 2,263,012
Education surcharges 2,498,374 4,858,987
Urban maintenance and construction tax 3,429,038 6,726,425
Others 5,992,534 6,614,132
Total 213,412,813 375,620,295
24 Other payables
31 December 31 December
Note
2020 2019
Interest payable 553,471 758,047
Dividends payable 1,003,125 1,866,559
Others (1) 384,548,930 453,855,783
Total 386,105,526 456,480,389
67
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(1) Others
(a) Details of others by nature are as follows:
Item 2020 2019
Deposit payable to dealer 177,129,582 164,994,995
Advertising fee payable 50,444,091 91,091,404
Equipment and construction fee payable 51,381,563 72,004,009
Freight charges payable 26,061,359 31,960,557
Deposits due to suppliers 14,836,302 14,081,530
Contracting fee payable 9,656,066 16,997,685
Staff deposit 359,282 1,866,765
Others 54,680,685 60,858,838
Total 384,548,930 453,855,783
(b) Significant others aged over one year:
Balance at the end Reasons why not
Item
of the year settled
Weicheng Branch of Bureau of Land and Project subject to
16,508,909
Resources in Xianyang City acceptance
25 Other current liabilities
As at 31 As at 1 January As at 31
Item
December 2020 2020 December 2019
Tax to be transferred out as sales 14,820,653 13,852,726 -
26 Non-current liabilities due within one year
Non-current liabilities due within one year by category are as follows:
Item 2020 2019
Long-term loans due within one year 111,311,890 116,826,221
Long-term payables due within one year 22,000,000 34,000,000
Total 133,311,890 150,826,221
27 Long-term loans
(1) Long-term loans by category
Item 2020 2019
Credit loans 220,219,258 136,749,730
Guaranteed loans 91,445,600 105,093,000
Mortgaged loans - 3,875,992
Less: Long-term loans due within one year 111,311,890 116,826,221
Total 200,352,968 128,892,501
68
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
As at 31 December 2020, details of long-term borrowings were as follows:
Interest rate at the Long-term Long-term
Exchange Amount Nature of Interest rate
Amount end of the year loans due loans due after
rate interest rate
RMB % % within one year one year
Credit loans
27,441,652 8.0250 220,219,258 Fixed 1.0%-1.7% 1.25%-3.28% 86,311,890 133,907,368
(EUR)
Guaranteed
31,250,000 1.0000 31,250,000 Floating 90% of 5-year LPR 4.275% 25,000,000 6,250,000
loans (RMB)
Guaranteed
12,000,000 5.0163 60,195,600 Fixed 2.50% 2.50% - 60,195,600
loans (AUD)
Total 311,664,858 111,311,890 200,352,968
As at 31 December 2020, Credit loans(EUR) were EUR27,441,652 borrowed by Banco
Sabadell, Bankia, Banco Santander, BBVA, Caja Rural de Navarr etc. (equivalent of
RMB220,219,258) (31 December 2019: RMB136,749,730). Guaranteed loans (RMB) were
long-term borrowings of RMB31,250,000 of the R&D Centre, a subsidiary of the Company
(31 December 2019: RMB56,250,000). Australia Kilikanoon Estate has borrowed
AUD12,000,000(equivalent of RMB60,195,600) (31 December 2019: RMB48,843,000) from
ANZ Bank and it was guaranteed by the Company.
28 Long-term payables
Item 2020 2019
Agricultural Development Fund of China ("CADF") 108,000,000 225,000,000
Less: Long-term payables due within one year 22,000,000 34,000,000
Balance of long-term payables 86,000,000 191,000,000
In 2016, RMB305,000,000 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 RMB117,000,000 in 2020. Refer to Note V. 51 for
details of mortgaged and pledged assets.
Balance of long-term Return on Termination date Mortgaged and pledged
Investment date Due within one year Due after one year
payables investment of repayment assets
RMB RMB RMB
29 February 28 February Fixed assets and
108,000,000 1.2% 22,000,000 86,000,000
2016 2025 intangible assets
29 Deferred income
Additions during the Decrease during
Item 31 December 2019 31 December 2020
year the year
Government grants 70,701,288 1,367,400 (19,415,079) 52,653,609
69
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
Government grants:
Amounts
Additions of
recognised in other Related to
Liability 31 December 2019 government grants 31 December 2020
income during the assets/income
during the year
year
Government
Industrial development support
28,700,000 - (4,100,000) 24,600,000 grants related
project
to assets
Government
Fixed asset investment reward
4,716,600 - (2,280,000) 2,436,600 grants related
of Shihezi Chateau project
to assets
Shandong Peninsula Blue Government
Economic Area construction 4,000,000 - (2,000,000) 2,000,000 grants related
funds to assets
Xinjiang industrial revitalisation Government
and technological 14,220,000 - (1,422,000) 12,798,000 grants related
transformation project to assets
Government
Special government grant for
3,180,000 - (1,060,000) 2,120,000 grants related
infrastructure
to assets
Government
Raw wine fermentation project 1,869,600 - (1,434,900) 434,700 grants related
to assets
Wine fermentation capacity Government
construction (Huanren) 2,800,000 - (400,000) 2,400,000 grants related
project to assets
Engineering technology Government
transformation of information 2,320,000 - (580,000) 1,740,000 grants related
system project to assets
Government
Liquor electronic tracking
1,858,203 - (667,053) 1,191,150 grants related
project
to assets
Government
Infrastructure construction
350,000 - (350,000) - grants related
project
to assets
Government
Special fund for efficient water-
1,877,000 - (562,000) 1,315,000 grants related
saving irrigation project
to assets
Subsidy for economic and Government
energy-saving technological 898,100 - (128,300) 769,800 grants related
transformation projects to assets
Government
Wine industry development
372,000 - (186,000) 186,000 grants related
project
to assets
Subsidy for mechanic Government
development of Penglai 265,397 - (26,539) 238,858 grants related
Daliuhang Base to assets
Government
Coal subsidy 201,500 - (201,500) - grants related
to assets
Cross-border e-commerce Related to
project
839,958 - (638,157) 201,801 income
Travelling development fund Related to
subsidy project
560,000 - (560,000) - income
Water pollution control project Related to
fund
92,930 - (92,930) - income
Subsidy for boiler Related to
80,000 - (10,000) 70,000
reconstruction and demolition income
Special funds for the Related to
1,500,000 - (1,500,000) -
development of enterprises income
Prize from Industrial Design
Related to
Competition of Yantai - 100,000 (50,000) 50,000 income
Mayor's Cup
Special Funds for Innovation-
Related to
Driven Development of Yantai - 500,000 (398,300) 101,700 income
City
Total 70,701,288 600,000 (18,647,679) 52,653,609
70
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
30 Other non-current liabilities
31 December 31 December
Item
2020 2019
Employee benefits payable 2,078,971 7,645,777
As at 31 December 2020, employee benefit represents deposit from bonus accrued for
managers and above. The bonus is expected to be paid in 2022.
31 Share capital
At 31 December
2019 and
31 December
2020
Unrestricted A shares 453,460,800
B shares 232,003,200
Total of unrestricted shares 685,464,000
32 Capital reserve
Additions during Decrease during
Item 31 December 2019 31 December 2020
the year the year
Share premium 636,858,772 - (117,806,600) 519,052,172
Others 5,916,588 - - 5,916,588
Total 642,775,360 - (117,806,600) 524,968,760
The balance amounting to RMB28,286,811 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.
During the reporting period, the Group purchased the equity of Culture Development, which
constituted a business combination involving entities under common control. The Group
reduced the capital reserve by RMB89,519,789 based on the consideration of combination
paid on the date of combination. Please refer to Note VI for details.
33 Other comprehensive income
Balance at the Accrued during the year
Balance at the
beginning of Less: Net-of-tax
Net-of-tax end of the year
the year Previously amount
Less: amount attributable to
Item attributable to Before-tax recognised attributable to
Income tax attributable to shareholders
shareholders amount amount shareholders
expenses non-controlling of the
of the transferred to of the
interests Company
Company profit or loss Company
Items that may be
reclassified to profit or
loss
Translation
differences arising
from translation of
(4,235,583) 5,171,635 - - 4,811,712 359,923 576,129
foreign currency
financial
statements
71
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
34 Surplus reserve
31 December 31 December
Item
2020 2019
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.
35 Retained earnings
Item Note 2020 2019
Retained earnings at the beginning of the
8,735,513,044 8,008,982,547
year (before adjustment)
Impact of retrospective adjustment of
(1)(a) - (7,540,537)
accounting standards
Impact of business combination involving
(1)(b) - 12,482,138
entities under common control
Retained earnings at the beginning of the
8,735,513,044 8,013,924,148
year (after adjustment)
Add: Net profits for the year attributable to
470,860,587 1,141,367,296
shareholders of the Company
Less: Dividends to ordinary shares (2) (479,824,800) (411,278,400)
Distribution of dividends to existing
shareholders from Culture (12,457,076) (8,500,000)
Development
Retained earnings at the end of the year (3) 8,714,091,755 8,735,513,044
(1) Adjustments on beginning retained earnings are as follows:
(a) As a result of the implementation of the new financial instrument standards by the
Group in 2019, the undistributed profit at the beginning of 2019 was reduced by
RMB7,540,537.
(b) Since the acquisition of the equity of Culture Development constituted a combination
under common control, the undistributed profit at the beginning of 2019 increased by
RMB12,482,138 (see Note VI).
(2) Dividends in respect of ordinary shares declared during the year
Pursuant to the shareholders’ approval at the shareholders’ general meeting on 27 May
2020, a cash dividend of RMB0.7 per share (2019: RMB0.6 per share), totalling
RMB479,824,800 (2019: RMB411,278,400), was declared and paid to the Company’s
ordinary shareholders on 10 July 2020.
72
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(3) Retained earnings at the end of the year
As at 31 December 2020, the consolidated retained earnings attributable to the Company
included an appropriation of RMB58,021,644 (2019: RMB56,059,538) to surplus reserve
made by the subsidiaries.
36 Operating income and operating costs
2020 2019
Item
Income Cost Income Cost
Principal activities 3,325,812,768 1,479,923,326 4,964,988,674 1,839,985,387
Other operating activities 69,589,233 23,954,081 109,037,225 37,673,351
Total 3,395,402,001 1,503,877,407 5,074,025,899 1,877,658,738
(1) Details of 2020 operating income:
2020
Item
Income Cost
Principal activities 3,325,812,768 1,479,923,326
Other operating activities 69,589,233 23,954,081
Total 3,395,402,001 1,503,877,407
Including: Revenue from contracts with customers 3,393,386,515 1,502,467,908
Rent income 2,015,486 1,409,499
Disaggregation of revenue from contracts with customers:
Type of contract 2020
By type of goods or services
- Liquor 3,325,812,768
- Others 67,573,747
By timing of transferring goods or services
- Revenue recognised at a point in time 3,393,386,515
(2) Details of 2019 operating income:
2019
Principal activities
- Selling goods 4,964,988,674
Other operating activities
- Rent income 2,015,486
- Others 107,021,739
Total 5,074,025,899
73
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
37 Taxes and surcharges
Item 2020 2019
Consumption tax 120,563,955 159,206,181
Urban maintenance and construction tax 23,169,608 36,525,428
Education surcharges 16,756,851 26,728,398
Property tax 26,843,414 30,538,234
Tax on the use of urban land 11,332,778 11,219,740
Stamp duty 3,650,250 3,117,257
Others 1,472,418 2,553,443
Total 203,789,274 269,888,681
38 Selling and distribution expenses
Item 2020 2019
Salaries and benefits 289,527,114 372,247,597
Marketing fee 200,259,537 378,706,496
Labour service fee 58,723,298 72,851,229
Depreciation expense 41,224,340 42,943,495
Storage rental 35,744,058 38,773,610
Advertising fee 22,724,095 47,339,106
Royalty 21,985,068 (182,711,622)
Travelling expenses 20,065,075 26,383,799
Design and production fee 15,427,023 27,238,641
Conference fee 15,387,699 42,369,153
Water, electricity and gas fee 13,427,340 14,773,735
Transport charges - 122,802,027
Others 53,757,838 84,588,119
Total 788,252,485 1,088,305,385
39 General and administrative expenses
Item 2020 2019
Salaries and benefits 73,329,053 90,477,287
Depreciation expenses 72,637,754 61,831,915
Repair costs 23,714,008 28,555,032
Administrative expenses 20,927,794 23,101,636
Amortisation expenses 19,568,760 18,373,495
Amortisation of greening fee 18,187,244 18,409,031
Rental charge 9,969,494 12,938,864
Safety production costs 7,831,443 9,510,828
Security and cleaning fee 7,650,813 8,124,135
Contracting fee 7,603,536 13,377,255
Others 29,226,567 27,205,178
Total 290,646,466 311,904,656
74
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
40 Financial expenses
Item 2020 2019
Interest expenses from loans and payables 35,187,642 50,212,059
Less: Borrowing costs capitalised 797,021 1,141,265
Less: Financial expenses offset by fiscal interest
1,500,000 7,500,000
subsidy
Interest income from deposits and receivables (14,247,274) (12,327,441)
Net exchange (gains)/losses (274,140) 3,611,536
Other financial expenses 2,072,506 2,447,340
Total 20,441,713 35,302,229
Fiscal interest subsidy during reporting period has been included in non-recurring gains and
losses.
41 Other income
Related to
Item 2020 2019
assets/income
Government grants
Reward on the fixed asset investment 2,280,000 2,280,000
related to assets
Shandong Peninsula Blue Economic Government grants
2,000,000 2,000,000
Area construction funds related to assets
Industrial development support Government grants
4,100,000 4,100,000
project related to assets
Others - Government grants related Government grants
7,018,292 7,567,504
to assets related to assets
Special funds for the development of
23,068,826 37,449,390 Related to income
enterprises
Tax refunds 12,324,440 8,724,775 Related to income
Strong industrial city special funds 792,600 2,518,700 Related to income
Others - Government grants related
21,479,462 12,730,472 Related to income
to income
Total 73,063,620 77,370,841
Other income during reporting period has been included in non-recurring gains and losses.
42 Investment (losses)/income
Investment (losses)/income by item
Item 2020 2019
Long-term equity investment losses under equity
(2,217,623) (1,120,928)
method
Investment income from disposal of long-term
- 6,233,661
equity investments
Total (2,217,623) 5,112,733
43 Credit reversal/(losses)
Item 2020 2019
Accounts receivable 4,348,309 (6,678,498)
Total 4,348,309 (6,678,498)
75
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
44 Impairment losses
Item 2020 2019
Inventories 5,705,003 4,503,589
Fixed assets - (17,478,027)
Goodwill (8,920,981) (7,578,478)
Total (3,215,978) (20,552,916)
45 (Loss)/Gains from asset disposals
Item 2020 2019
(Loss)/Gains from disposal of fixed assets (1,180,655) 39,015
Gains from disposal of assets during reporting period has been included in non-recurring
gains and losses.
46 Non-operating income and non-operating expenses
(1) Non-operating income by item is as follows:
Item 2020 2019
Inventory stocktake surplus 3,823,905 134,563
Insurance compensation 3,067,670 90,000
Net income from fine 3,098,877 2,593,116
Others 1,918,058 8,203,624
Total 11,908,510 11,021,303
Non-operating income during reporting period has been included in non-recurring gains and
losses.
(2) Non-operating expenses
Item 2020 2019
Compensation, penalty and fine expenses 347,635 403,975
Donations provided 1,048,300 699,296
Others 306,923 2,531,281
Total 1,702,858 3,634,552
Non-operating expenses during reporting period has been included in non-recurring gains
and losses.
47 Income tax expenses
Item Note 2020 2019
Current tax expense for the year based
135,163,243 389,906,096
on tax law and regulations
Changes in deferred tax assets/liabilities (1) 56,641,257 15,691,224
Total 191,804,500 405,597,320
76
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(1) The analysis of changes in deferred tax is set out below:
Item 2020 2019
Origination of temporary differences 56,641,257 15,691,224
Total 56,641,257 15,691,224
(2) Reconciliation between income tax expenses and accounting profit:
Item 2020 2019
Profit before taxation 664,866,563 1,547,603,020
Estimated income tax at 25% 166,216,641 386,900,755
Effect of different tax rates applied by subsidiaries 1,310,363 (707,938)
Effect of non-deductible costs, expense and losses 7,185,074 7,224,709
Effect of deductible losses of deferred tax assets
16,417,337 7,397,810
not recognised for the year
Deferred tax assets written-off 675,085 4,781,984
Income tax expenses 191,804,500 405,597,320
48 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:
2020 2019
Consolidated net profit attributable to ordinary
470,860,587 1,141,367,296
shareholders of the Company
Weighted average number of ordinary shares
685,464,000 685,464,000
outstanding
Basic earnings per share (RMB/share) 0.69 1.67
Weighted average number of ordinary shares is calculated as follows:
2020 2019
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.
49 Cash flow statement
(1) Proceeds relating to other operating activities:
Item 2020 2019
Government grants 56,515,941 69,311,576
Penalty income 3,098,877 2,593,116
Interest income from bank 14,396,201 12,463,811
Others 7,186,229 12,149,263
Total 81,197,248 96,517,766
77
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(2) Payments relating to other operating activities:
Item 2020 2019
Selling and distribution expenses 399,973,695 770,753,478
General and administrative expenses 127,666,411 138,738,416
Others 24,250,891 12,856,014
Total 551,890,997 922,347,908
(3) Proceeds relating to other financing activities:
Item 2020 2019
Cash paid for acquisition of minority interests 62,966,747 11,619,552
50 Supplementary information on cash flow statement
(1) Supplement to cash flow statement
a. Reconciliation of net profit to cash flows from operating activities:
Item 2020 2019
Net profit 473,062,063 1,142,005,700
Add: Provisions for impairment of assets 3,215,978 20,552,916
Credit (reversal)/ losses (4,348,309) 6,678,498
Depreciation of fixed assets and
298,224,327 306,907,536
investment property
Amortisation of intangible assets 20,413,627 20,194,590
Amortisation of long-term deferred
16,578,465 15,475,669
expenses
Amortisation of biological assets 13,270,614 12,722,828
Losses/(Gains) from disposal of fixed
assets, intangible assets, and other 1,338,570 (39,015)
long-term assets
Financial expenses 36,134,118 49,520,411
Royalty 21,985,068 (182,711,622)
Investment losses/(income) 2,217,623 (5,112,733)
Decrease in deferred tax assets 59,310,068 23,010,447
Decrease in deferred tax liabilities (2,668,811) (7,319,223)
Increase in gross inventories (38,192,093) (163,688,318)
Increase in operating receivables (41,443,296) (288,772,895)
Decrease in operating payables (353,951,339) (100,572,429)
Net cash flows from operating activities 505,146,673 848,852,360
b. Significant investing and financing activities not requiring the use of cash:
Item 2020 2019
Payment of intangible assets and other long-
141,440,165 165,716,961
term assets by bank acceptances
78
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
c. Change in cash and cash equivalents:
Item 2020 2019
Cash equivalents at the end of the year 1,052,665,105 1,397,399,470
Less: Cash equivalents at the beginning of
1,397,399,470 1,236,286,117
the year
Net (dercrease)/increase in cash and cash
(344,734,365) 161,113,353
equivalents
(2) Information on acquisition or disposal of subsidiaries and other business units during the
year:
Information on acquisition of subsidiaries and other business units:
2020 2019
Consideration for acquiring subsidiaries and other
89,519,789 -
business units
Cash or cash equivalents paid during the year
for acquiring subsidiaries and other business units 89,519,789 -
during the year
Including: Culture Development 89,519,789 -
Less: Cash and cash equivalents held by
disposed subsidiaries and other business - -
units
Net cash paid for the acquisition 89,519,789 -
(3) Details of cash and cash equivalents
Item 2020 2019
Cash at bank and on hand
Including: Cash on hand 19,637 65,195
Bank deposits available on demand 1,052,645,468 1,397,334,275
Closing balance of cash and cash equivalents 1,052,665,105 1,397,399,470
51 Assets with restrictive ownership title or right of use
Balance at the
Item Opening balance Reason for restriction
end of the year
R&D Centre mortgage for long-
Cash at bank and on hand 93,882,705 67,996,762
term payables etc.
Short-term borrowings
Account receivable (i) 54,663,422 28,557,991
mortgage from Atrio
R&D Centre mortgage for long-
Fixed assets 344,670,852 333,748,819 term payables and long-term
and short-term borrowings
R&D Centre mortgage for long-
Intangible assets 212,495,435 206,920,456
term payables
Total 705,712,414 637,224,028
(i) As at 31 December 2020, the amount of accounts receivable with restricted ownership
is EUR 3,558,628 (equivalent of RMB28,557,991), which refers to accounts receivable
Atrio conducted for factoring from Banco de Sabadell, S.A. Etc. (31 December 2019:
EUR6,994,232, equivalent of RMB54,663,422)
79
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
VI Change of consolidation scope
Business combination involving entities under common control
(1) Business combinations involving entities under common control during the year
Proportion From the beginning of the year to the
2019
of equity acquisition date
Basis for business Basis for
Name of interests Acquisition
combination under determination of
acquiree acquired in Date Net cash
common control acquisition date Income Net profit Income Net profit
business outflow
combination
The Company and
Culture Development
Culture were controlled by As at 1 Acquisition of
100% 39,533,385 10,730,129 3,057,305 82,390,613 11,709,978
Development Changyu Group before July 2020 effective control
the combination on a
non-transitional basis
Culture Development is a company established in Zhifu District, Yantai City on 18 May 2018.
Its headquarters is based in Zhifu District, Yantai City. It is mainly engaged in the
management of tourist attractions, the development of tourism resources and the provision of
cultural tourism services.
(2) Acquisition cost
Culture
Acquisition cost
Development
Cash 89,519,789
Total 89,519,789
(3) Carrying values of assets and liabilities of the acquiree at the acquisition date
Culture Development
31 December
Acquisition date
2019
Assets
Cash at bank and on hand 8,238,501 11,295,806
Receivables 4,932,103 493,028
Receivables under financing 50,000 800,000
Prepayments 41,339 56,619
Other receivables 74,448,103 25,334,395
Inventories 20,656,182 31,737,700
Fixed assets 4,379,150 49,900,202
Construction in progress 560,463 597,493
Long-term deferred expenses 2,673,135 2,882,786
Liabilities:
Payables 3,994,056 9,251,396
Receipt in advance 4,131,134 8,298,105
Taxes payable 1,893,962 (1,127,059)
Other payables 13,480,254 10,146,379
Net asset 92,479,570 96,529,208
Less: Non-controlling interests - 1,948,333
Net assets acquired 92,479,570 94,580,875
Culture Development adopted accounting policies different from those adopted in the
preparation of the Company’s financial statements before combination. On the acquisition
date, the Company adjusted the financial statements prepared by Culture Development
under the accounting policies adopted in the preparation of the Company’s financial
statements.
80
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
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 90 - 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 97.5 - 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 USD5,000,000 70 -
("Chateau Changyu") (d) 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 Acquired through
RMB8,000,000 100 -
Ltd. ("Sales Company") China China sales establishment or investment
Langfang Development Zone Castel-
Langfang, Hebei, Langfang, Hebei, Acquired through
Changyu Wine Co., Ltd ("Langfang Manufacturing USD6,108,818 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
81
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
Shareholding ratio
Principal place of Business (%)
Name of the Subsidiary Registered place Registered capital Acquisition method
business nature (or similar equity
interest)
Shanghai Changyu Sales and Distribution Marketing and Acquired through
Shanghai, China Shanghai, China RMB1,000,000 100 -
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 RMB642,750,000 91.53 -
Ltd. (“AFIP”) (e) 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
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 Marketing and Acquired through
Ningxia, China Ningxia, China RMB500,000 - 100
Ltd. ("Qing Tong Xia Sales") (a) 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
82
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
Shareholding ratio
Principal place of Business (%)
Name of the Subsidiary Registered place Registered capital Acquisition method
business nature (or similar equity
interest)
Yantai Changyu Wine Research &
Yantai, Shandong, Yantai, Shandong, Acquired through
Development Centre Co., Ltd. (“R&D Manufacturing RMB805,000,000 82.24 -
China China establishment or investment
Centre”) (g)
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
Shaanxi Changyu Rena Wine Sales Co., Xianyang, Shaanxi, Xianyang, Shaanxi, Marketing and Acquired through
RMB3,000,000 - 100
Ltd ("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
Tianjin Changyu Pioneer Sales Co., Ltd Marketing and Acquired through
Tianjin, China Tianjin, China RMB500,000 - 100
("Tianjin Pioneer") sales establishment or investment
Beijing Changyu Pioneer Sales Co., Ltd Marketing and Acquired through
Beijing, China Beijing, China RMB500,000 - 100
("Beijing Pioneer") (a) sales establishment or investment
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
Guangzhou Changyu Pioneer Sales Co., Guanghzou, Guanghzou, Marketing and Acquired through
RMB11,000,000 - 100
Ltd ("Guangzhou Pioneer") (a) Guangdong, China Guangdong, China sales establishment or investment
Yantai Changyu Wine Sales Co., Ltd. Yantai, Shandong, Yantai, Shandong, Marketing and Acquired through
RMB5,000,000 100 -
("Wine 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
Yantai, Shandong, Yantai, Shandong, Acquired through
Culture Development (b) Tourism RMB10,000,000 100 -
China China establishment or investment
Yantai, Shandong, Yantai, Shandong, Acquired through
Museum (b) Tourism RMB500,000 - 100
China China establishment or investment
Yantai Changyu Culture Tourism Production Yantai, Shandong, Yantai, Shandong, Acquired through
Tourism RMB5,000,000 - 100
Sales Co., Ltd. ("Culture Sales") (b) China China establishment or investment
83
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
Shareholding ratio
Principal place of Business (%)
Name of the Subsidiary Registered place Registered capital Acquisition method
business nature (or similar equity
interest)
Yantai Changyu International Window of the
Yantai, Shandong, Yantai, Shandong, Acquired through
Wine City Co., Ltd. ("Window of the Wine Tourism RMB60,000,000 - 100
China China establishment or investment
City”) (b)
Yantai KOYA Brandy Chateau Co., Ltd Yantai, Shandong, Yantai, Shandong, Acquired through
Manufacturing RMB10,000,000 100 -
(“Chateau KOYA”) (c) China China establishment or investment
Changyu (Shanghai) International Digital
Marketing and Acquired through
Marketing Center Limited Shanghai, China Shanghai, China RMB50,000,000 100 -
sales establishment or investment
(“Digital Marketing”) (c)
(a) Companies above were deregistered in 2020.
(b) On 1 July 2020, Changyu Group and the Company signed the Equity Transfer Agreement of Culture Development pursuant to which
Changyu Group shall transfer its 100% equity in Culture Development at a consideration of RMB89,519,789 to the Company. The
Company adjusted the difference between the book value of Culture Development’s net assets and the equity transfer price on the
acquisition date to the Company’s capital reserve of RMB2,959,781. Musuem, Culture Sales and Window of the Wine City are all wholly-
owned subsidiaries of Culture Development.
(c) The companies above are newly established companies in 2020.
84
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
Reasons for the inconsistency between the proportion of shareholdings in a subsidiary and the proportion of voting rights:
(d) 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.
(e) 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.
(f) 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.
(g) R&D Centre is a joint venture established by the Company and CADF, accounting for 82.24% of R&D Centre's equity interest. Through
agreement arrangement in Note V. 28, 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 28 February 2025. As at 31 December 2020, remaining investment
of CADF accounts for 17.76% of the registered capital.
85
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(2) Material non-wholly owned subsidiaries
Comprehensive
Proportion of
income Dividend declared Balance of non-
ownership
attributable to non- to non-controlling controlling
Name of the Subsidiary interest held by
controlling shareholders interests at the
non-controlling
interests for the during the year end of the year
interests
year
Xinjiang Tianzhu 40% 1,466,038 - (46,118,100)
AFIP 8.47% - - (56,409,393)
Golden Icewine Valley 49% - - (33,319,062)
IWCC 15% (2,763,125) 684,907 (56,009,346)
86
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(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 AFIP Golden Icewine Valley Chile Indomita Wine Group
2020 2019 2020 2019 2020 2019 2020 2019
Current assets 24,223,370 24,829,435 248,357,550 251,829,164 27,638,263 38,234,720 231,503,343 223,722,688
Non-current assets 45,465,308 61,886,751 434,045,076 452,444,880 24,246,983 23,291,375 291,345,642 291,630,115
Total assets 69,688,678 86,716,186 682,402,626 704,274,044 51,885,246 61,526,095 522,848,985 515,352,803
Current liabilities (17,583) 36,185 41,910,462 45,607,611 9,967,686 12,077,206 132,100,755 142,365,749
Non-current liabilities 5,336,115 5,336,114 - 201,500 - 100,000 9,794,949 5,152,974
Total liabilities 5,318,532 5,372,299 41,910,462 45,809,111 9,967,686 12,177,206 141,895,704 147,518,723
Operating income - - 168,184,273 266,347,444 20,488,946 32,223,734 225,121,450 253,543,171
Net (loss)/ profit (3,665,095) (7,571,274) 2,092,230 30,398,744 (7,431,328) (5,764,649) 18,196,663 16,279,461
Total comprehensive income (3,665,095) (7,571,274) 2,092,230 30,398,744 (7,431,328) (5,764,649) 18,420,833 10,322,810
Cash flows from operating
(105,873) 20,457 3,821,964 27,503,336 4,654,744 1,655,465 37,132,027 5,073,408
activities
87
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
2 Transactions that cause changes in interests in subsidiaries that do not result in loss of
control
(1) Changes in interests in subsidiaries:
Proportion of ownership
interest held by non-
Year Name of the Subsidiary Acquisition date
controlling interests
acquired
2020 Museum 10.00% 27 March 2020
2020 Dicot 15.00% 31 August 2020
Australia Kilikanoon
2020 15.00% 26 November 2020
Estate
(2) Impact from transactions with non-controlling interests and equity attributable to the
shareholders of the Company:
Australia
Museum Dicot
Kilikanoon Estate
Purchase cost
- Cash 1,033,911 42,991,725 18,941,111
Total 1,033,911 42,991,725 18,941,111
Less: share of net assets in
subsidiaries based on the 655,653 21,241,590 12,782,693
shares acquired
Difference
Including: Adjustment on capital
378,258 21,750,135 6,158,418
reserve
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.
88
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
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 2020, 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
2020, 20.3% of the Group trade receivables are due from top five customers (31 December
2019: 20.5%). 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.
89
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
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:
2020 Contractual undiscounted cash flow
Carrying amount
Item More than at balance sheet
Within 1 year or More than
1 to 2 years 2 years but less Total date
on demand 5 years
than 5 years
Short-term loans 698,571,997 - - - 698,571,997 689,090,715
Accounts payable 484,347,958 - - - 484,347,958 484,347,958
Other payables 386,105,526 - - - 386,105,526 386,105,526
Long-term loans (including the
33,175,345 24,182,478 149,719,792 135,013,150 342,090,765 311,664,858
portion due within one year)
Long-term payables (including
the portion due within one 23,074,674 22,810,674 64,868,800 - 110,754,148 108,000,000
year)
Total 1,625,275,500 46,993,152 214,588,592 135,013,150 2,021,870,394 1,979,209,057
2019 Contractual undiscounted cash flow
Carrying amount
Item More than at balance sheet
Within 1 year or More than
1 to 2 years 2 years but less Total date
on demand 5 years
than 5 years
Short-term loans 768,403,432 - - - 768,403,432 754,313,744
Accounts payable 570,849,779 - - - 570,849,779 570,849,779
Other payables 456,480,389 - - - 456,480,389 456,480,389
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 1,953,272,970 87,268,889 184,189,000 61,051,652 2,285,782,511 2,252,362,634
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:
2020 2019
Item Effective interest Effective interest
Amounts Amounts
rate rate
Financial assets
- Cash at bank 1.5% - 2.75% 93,553,062 1.1% - 2.75% 154,364,265
Financial liabilities
- Short-term loans 0.35% - 3.28% (139,090,715) 0.35% - 4.9% (204,313,744)
- Long-term loans (including the
1% - 3.28% (280,414,858) 1% - 2.5% (189,468,722)
portion due within one year)
- Long-term payables (including the
1.20% (108,000,000) 1.20% (225,000,000)
portion due within one year)
Total (433,952,511) (464,418,201)
90
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
Variable rate instruments:
2020 2019
Item Effective interest Effective interest
Amounts Amounts
rate rate
Financial assets
- Cash at bank 0.3% - 1.0% 1,100,642,230 0.3% - 1.75% 1,442,981,317
Financial liabilities
- Short-term loans 1 year LPR 0.005 (550,000,000) LPR (550,000,000)
- Long-term loans (including the 90% of 90% of
(31,250,000) (56,250,000)
portion due within one year) 5 year LPR 5 year LPR
Total 519,392,230 836,731,317
(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 2020, 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 RMB2,179,688 (2019: RMB2,273,438), and net profit by
RMB2,179,688 (2019: RMB2,273,438).
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 main 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.
2020 2019
Balance at Balance at RMB Balance at Balance at RMB
foreign currency equivalent foreign currency equivalent
Cash at bank and on hand 2,029,849 14,053,435 6,662,301 46,592,213
- USD 1,492,923 9,744,604 6,525,673 45,524,399
- EUR 536,926 4,308,831 136,628 1,067,814
Short-term loans 12,490,000 81,524,728 12,490,000 87,132,738
- USD 12,490,000 81,524,728 12,490,000 87,132,738
91
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(2) The following are the exchange rates for Renminbi against foreign currencies applied by the
Group:
Balance sheet date mid-spot
Average rate
rate
2020 2019 2020 2019
USD 6.8884 6.8948 6.5272 6.9762
EUR 7.9065 7.7161 8.0250 7.8155
(3) Sensitivity analysis
Assuming all other risk variables remained constant, a 5% strengthening of the Renminbi
against the US dollar and Euro 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 2020
USD 3,589,006 3,589,006
EUR (215,442) (215,442)
Total 3,373,564 3,373,564
31 December 2019
USD 2,080,417 2,080,417
EUR (53,391) (53,391)
Total 2,027,026 2,027,026
A 5% weakening of the Renminbi against the US dollar and Euro 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.
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 2020 and 31 December 2019.
92
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
X. Related parties and related party transactions
1 Information about the parent of the Company
Registered Shareholding Percentage of Ultimate controlling party of the
Company name Business nature Registered capital
place percentage (%) voting rights (%) Company
Jointly controlled by Yantai GuoFeng
Investment Holding Ltd, ILLVA
SARONNO HOLDING SPA,
Changyu Group Yantai Manufacturing 50,000,000 50.4% 50.4%
International Finance Corporation and
Yantai Yuhua Investment and
Development Company Limited.
There are no changes on the registered capital and shareholding percentage/percentage of voting rights of the parent company.
Page 93
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
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
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
WEMISS Shanghai Associate of the Group
L&M Holdings Joint venture of the Group
4 Information on other related parties
Name of other related parties Related party relationship
Yantai Shenma Packaging Co., Ltd. (“Shenma Controlled by the same parent
Packaging”) company
Yantai Zhongya Pharmaceutical Tonic Wine Co., Ltd. Controlled by the same parent
("Zhongya Pharmaceutical") company
Mirefleurs Subsidiaries of the joint venture
CHATEAU DE LIVERSAN (“LIVERSAN”) Subsidiaries of the joint venture
5 Transactions with related parties
(1) Product procurement
Related parties Nature of transaction 2020 2019
Shenma Packaging Product procurement 78,520,694 134,044,857
Zhongya Pharmaceutical Product procurement 850,478 1,244,991
Mirefleurs Product procurement 9,261,722 6,429,542
LIVERSAN Product procurement 3,746,069 1,632,941
Total 92,378,963 143,352,331
(2) Sales of goods
Related parties Nature of transaction 2020 2019
Zhongya Pharmaceutical Sales of goods 3,920,047 4,474,004
WEMISS Shanghai Sales of goods 1,374,616 -
Shenma Packaging Sales of goods 293,488 347,453
Total 5,588,151 4,821,457
(3) Services
Related parties Nature of transaction 2020 2019
Shenma Packaging Services 106,195 -
Total 106,195 -
Page 94
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(4) Purchase of fixed assets
Related parties of the Company Nature of transaction 2020 2019
Purchase of fixed
Changyu Group - 1,897,126
assets
Total - 1,897,126
(5) Sale of fixed assets
Related parties of the Company Nature of transaction 2020 2019
Changyu Group Sale of fixed assets 44,845,989 -
Total 44,845,989 -
(6) Leases
(a) As the lessor
Lease income Lease income
Name of lessee Type of assets leased
recognised in 2020 recognised in 2019
Shenma Packaging Offices and plants 1,492,550 1,492,550
Zhongya Pharmaceutical Offices and plants 522,936 522,936
Total 2,015,486 2,015,486
(b) As the lessee
Type of assets Lease expense Lease expense
Name of lessor
leased recognised in 2020 recognised in 2019
Changyu Group Office buildings 1,612,118 1,612,118
Changyu Group Offices and plants 1,394,762 1,394,762
Changyu Group Offices and plants 4,184,286 4,184,286
Offices and
Changyu Group 1,050,000 -
commercial building
Changyu Group Office buildings 714,286 -
Total 8,955,452 7,191,166
(7) Remuneration of key management personnel
Item 2020 2019
Remuneration of key management personnel 6,975,110 12,297,689
(8) Other related party transactions
Related parties Nature of transaction Note 2020 2019
Changyu Group Royalty (a) 21,985,068 35,938,014
Royalty deducted in the
Changyu Group (a) - (218,649,636)
previous years
Transfer of trademark use
Changyu Group (b) 18,334,528 -
rights
Transfer of Culture
Changyu Group VI 89,519,789 -
Development
Zhongya Equity transfer of Changyu
VII 1,033,912 -
Pharmaceutical Museum
Page 95
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(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(tax inclusive).
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.
The Group incurred a trademark usage fee of RMB21,985,068 this year.
(b) Transfer of trademark use rights
On 22 April 2020, the Fourth Meeting of the Eighth Board of Directors of the Group
reviewed and approved the Proposal on Transferring the "KOYA" and Other
Trademarks of Yantai Changyu Group Co., Ltd.. On 16 June 2020, the Group and
Changyu Group signed the Trademark Transfer Agreement to transfer the ownership of
43 trademarks owned by Changyu Group, including KOYA, ZENITHWIRL, FRANLLET,
WEMISS and PIONEER at an estimated price of RMB19,434,600 (tax inclusive).
Page 96
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
6 Receivables from and payables to related parties
Receivables from related parties
2020 2019
Provision for Provision for
Item Related party
Book value bad and Book value bad and
doubtful debts doubtful debts
Zhongya
Accounts receivable 714,995 3,175 4,292,387 909,935
Pharmaceutical
WEMISS
Accounts receivable 1,553,316 6,898 - -
Shanghai
Shenma
Prepayments 126,818 - - -
Packaging
Other non-current assets Changyu Group 170,370,147 - 193,674,320 -
Zhongya
Other receivables 522,936 - - -
Pharmaceutical
Shenma
Other receivables - - 813,440 -
Packaging
Payables to related parties
Item Related party 2020 2019
Accounts payable Shenma Packaging 33,421,165 40,072,151
Accounts payable Zhongya
455,176 1,024,310
Pharmaceutical
Accounts payable Changyu Group 19,434,600 2,143,752
Other payables Shenma Packaging 450,000 450,000
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 2020 2019
Long-term assets acquisition commitment 249,379,500 679,980,000
Total 249,379,500 679,980,000
Page 97
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(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 2020 2019
Within 1 year (inclusive) 24,076,000 17,756,000
Over 1 year but within 2 years (inclusive) 17,735,000 16,189,000
Over 2 years but within 3 years (inclusive) 15,564,000 9,757,000
Over 3 years 106,278,000 89,550,940
Total 163,653,000 133,252,940
2 Contingencies
The Group do not have any significant contingencies as at balance sheet date.
XIII. Subsequent events
Distribution of dividends on ordinary shares approved after the balance sheet date
According to the proposal of the Board of Directors on 26 April 2021, the Company intends to
distribute cash dividend totaling RMB274,185,600 to all shareholders of 685,464,000 capital
shares for the year ended 31 December 2020 on the basis of RMB4.0 (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.
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 five parts: China, Spain, France, Chile and Australia. The
management periodically evaluates segment results, in order to allocate resources and
evaluate performances. In 2020, over 85% of revenue, more than 93% 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.
XV. Notes to the Company’s financial statements
1 Receivables under financing
Item Note 2020 2019
Bills receivable (1) 13,920,000 41,679,635
Total 13,920,000 41,679,635
(1) The pledged bills receivable of the Company at the end of the year
As at 31 December 2020, there was no pledged bills receivable (31 December 2019: Nil).
Page 98
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(2) Outstanding endorsed bills that have not matured at the end of the year
Amount
Item derecognised at
year end
Bank acceptance bills 49,849,895
Total 49,849,895
As at 31 December 2020, bills endorsed by the Company to other parties which are not yet
due at the end of the period is RMB49,849,895 (31 December 2019: RMB65,303,181). 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.
2 Other receivables
31 December 31 December
Note
2020 2019
Interest receivable (1) - 90,355
Dividends receivable (2) 200,000,000 200,000,000
Others (3) 380,131,798 386,334,603
Total 580,131,798 586,424,958
(1) Interest receivable
(a) Interest receivable by category:
31 December 31 December
Item
2020 2019
Interest receivable on bank deposits - 90,355
Total - 90,355
(b) Significant overdue interest: N/A
(2) Dividends receivable
31 December 31 December
Item
2020 2019
Dividends to subsidiaries 200,000,000 200,000,000
Total 200,000,000 200,000,000
Page 99
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(3) Others
(a) Others by customer type:
31 December 31 December
Customer type
2020 2019
Amounts due from subsidiaries 379,375,427 385,328,319
Amounts due from related parties 522,936 813,440
Others 233,435 192,844
Sub-total 380,131,798 386,334,603
Less: Provision for bad and doubtful debts - -
Total 380,131,798 386,334,603
(b) The ageing analysis is as follows:
Ageing 2020 2019
Within 1 year (inclusive) 378,307,160 386,314,603
Over 1 year but within 2 years (inclusive) 1,804,638 -
Over 2 years but within 3 years (inclusive) - 20,000
Over 3 years 20,000 -
Sub-total 380,131,798 386,334,603
Less: Provision for bad and doubtful debts - -
Total 380,131,798 386,334,603
The ageing is counted starting from the date when other receivables are recognised.
(c) Others by method of provisioning
2020 2019
Provision for bad and doubtful Provision for bad and doubtful
Category Book value Book value
debts Carrying debts Carrying
Percentage Percentage amount Percentage Percentage amount
Amount Amount Amount Amount
(%) (%) (%) (%)
Individual
assessment
- Total other
- - - - - - - - - -
receivables
Collective
assessment
- Amounts due
from 379,375,427 99.8 - - 379,375,427 385,328,319 99.7 - - 385,328,319
subsidiaries
- Amounts due
from related 522,936 0.1 - - 522,936 813,440 0.2 - - 813,440
parties
- Amounts due
from third 233,435 0.1 - - 233,435 192,844 0.1 - - 192,844
parties
Total 380,131,798 100.0 - - 380,131,798 386,334,603 100.0 - - 386,334,603
(d) Movements of provisions for bad and doubtful debts
As at 31 December 2020, no bad and doubtful debt provision was made for other
receivables (31 December 2019: Nil).
As at 31 December 2020, the Company has no other receivables written off (31
December 2019: Nil).
Page 100
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(e) Others categorised by nature
Nature of other receivables 2020 2019
Amounts due from subsidiaries 379,375,427 385,328,319
Amounts due from related parties 522,936 813,440
Others 233,435 192,844
Sub-total 380,131,798 386,334,603
Less: Provision for bad and doubtful debts - -
Total 380,131,798 386,334,603
(f) Five largest others-by debtor at the end of the year
Ending balance
Percentage of
Nature of the Balance at the of provision for
Debtor Ageing ending balance
receivable end of the year bad and doubtful
of others (%)
debts
Amounts due
Sales Company 68,221,331 Within 1 year 17.9 -
from subsidiaries
Amounts due
R&D Centre 58,134,999 Within 1 year 15.3 -
from subsidiaries
Amounts due
Longkou Sales 10,270,021 Within 1 year 2.7 -
from subsidiaries
Amounts due
Laizhou Sales 9,177,937 Within 1 year 2.4 -
from subsidiaries
Amounts due
Chateau Changyu 6,136,795 Within 1 year 1.6 -
from subsidiaries
Total 151,941,083 39.9
3 Long-term equity investments
(1) Long-term equity investments by category:
2020 2019
Item Provision for Carrying Provision for Carrying
Book value Book value
impairment amount impairment amount
Investments in
7,593,535,027 - 7,593,535,027 7,432,422,621 - 7,432,422,621
subsidiaries
Investments in
6,243,853 - 6,243,853 - - -
associates
Total 7,599,778,880 - 7,599,778,880 7,432,422,621 - 7,432,422,621
Page 101
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(2) Investments in subsidiaries:
Balance at the
Additions during Decrease during Balance at the
Subsidiary beginning of the
the year the year end 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 588,389,444 - - 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 300,000 700,000 - 1,000,000
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 - 5,000,000 - 5,000,000
Francs Champs 236,025,404 - - 236,025,404
Dicot 190,150,544 42,991,725 - 233,142,269
Chile Indomita Wine
274,248,114 - - 274,248,114
Group
Australia Kilikanoon
110,334,528 18,941,111 - 129,275,639
Estate
Digital Marketing - 1,000,000 - 1,000,000
Culture Development - 92,479,570 - 92,479,570
Total 7,432,422,621 161,112,406 - 7,593,535,027
For information about the subsidiaries of the Company, refer to Note VII.
(3) Investments in associates:
Balance at the
Additions during Decrease during Balance at the
Subsidiary beginning of the
the year the year end of the year
year
WEMISS Shanghai - 3,000,000 (256,110) 2,743,890
Yantai Santai Real
Estate Development - 3,500,000 (37) 3,499,963
Co., Ltd
Total - 6,500,000 (256,147) 6,243,853
Page 102
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
4 Operating income and operating costs
2020 2019
Item
Income Cost Income Cost
Principal activities 510,205,498 450,876,445 738,011,458 653,860,504
Other operating activities 2,098,055 1,492,067 2,844,904 1,643,559
Total 512,303,553 452,368,512 740,856,362 655,504,063
(1) Details of operating income of 2020
2020
Item
Income Cost
Principal activities 510,205,498 450,876,445
Other operating activities 2,098,055 1,492,067
Total 512,303,553 452,368,512
Including: revenue from contracts with customers 510,205,498 450,876,445
Rent income 2,098,055 1,492,067
Disaggregation of revenue from contracts with customers:
Type of contract 2020
By type of goods or services
- Liquor 510,205,498
By timing of transferring goods or services
- Revenue recognised at a point in time 510,205,498
(2) Details of operating income of 2019
2019
Operating income from principal activities
- Sale of goods 738,011,458
Income from other business
- Rental income 2,844,904
Total 740,856,362
5 Investment income
Item 2020 2019
Income from long-term equity investments
449,760,868 621,620,723
accounted for using cost method
Loss from long-term equity investments accounted
(256,147) -
for using equity method
Total 449,504,721 621,620,723
Page 103
Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
6 Transactions with related parties
(1) Product procurement
Related parties Nature of transaction 2020 2019
Subsidiary of the parent
Product procurement 107,663,061 161,501,245
company
Other related parties of the
Product procurement 36,249,251 59,925,186
Company
Total 143,912,312 221,426,431
(2) Sales of goods
Related parties Nature of transaction 2020 2019
Subsidiary of the parent
Sales of goods 504,080,073 738,594,682
company
Other related parties of the
Sales of goods 2,952,493 2,261,680
Company
Total 507,032,566 740,856,362
(3) Guarantee
The Company as the guarantor
Amount of Inception date of Maturity date of Guarantee
Guarantee holder Currency
guarantee guarantee guarantee expired (Y/N)
R&D Centre RMB 500,000,000 08 March 2017 08 March 2022 N
Australia Kilikanoon
AUD 17,000,000 13 December 2018 13 December 2023 N
Estate
(4) Leases
(a) As the lessor
Lease income Lease income
Name of lessee Type of assets leased
recognised in 2020 recognised in 2019
Other related parties of
Offices and plants 2,015,486 2,015,486
the Company
Subsidiary of the parent
Offices buildings 82,569 -
company
Total 2,098,055 2,015,486
(b) As the lessee
Lease expense Lease expense
Name of lessor Type of assets leased
recognised in 2020 recognised in 2019
Other related parties of
Office buildings 1,394,762 1,394,762
the Company
Total Office buildings 1,394,762 1,394,762
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Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
(5) Other related party transactions
Related parties Nature of transaction 2020 2019
Transfer of trademark
Changyu Group 18,334,528 -
use rights
Transfer of Culture
Changyu Group 89,519,789 -
Development
7 Receivables from and payables to related parties
Receivables from related parties
2020 2019
Provision for Provision for
Item Related party
Book value bad and Book value bad and
doubtful debts doubtful debts
Other related parties
Accounts receivable - - 2,589,936 601,610
of the Company
Other related parties
Prepayments 126,818 - - -
of the Company
Subsidiary of the
Other receivables 379,375,427 - 385,328,319 -
parent company
Other related parties
Other receivables 522,936 - 813,440 -
of the Company
Subsidiary of the
Other non-current assets 1,530,700,000 - 1,427,700,000 -
parent company
Payables to related parties
Item Related party 2020 2019
Other related parties of
Accounts payable 29,634,723 11,630,361
the Company
Subsidiary of the
Other payables 319,936,973 381,487,360
parent company
Other related parties of
Other payables 450,000 450,000
the Company
XVI. Non-recurring profit and loss statement in 2020
Item Amount
(1) Profit and loss from disposal of non-current assets (1,165,162)
Government grants recognised through profit or loss (excluding those having close
(2) relationships with the Group’s operation and enjoyed in fixed amount or quantity 73,180,848
according to uniform national standard)
Profit or loss of subsidiaries generated before acquisition date of a business
(3) 12,715,544
combination involving entities under common control (Note 2)
(4) Other non-operating income and expenses besides items above 10,098,551
Sub-total 94,829,781
(5) Tax effect (21,595,671)
(6) Effect on non-controlling interests after taxation (28,710)
Total 73,205,400
Note 1: Extraordinary gain and loss items (1) to (4) listed above are presented in the amount
before taxation.
Note 2: The non-recurring gains and losses of the combining party from 1 January 2020 to
the acquisition date have been deducted from the corresponding non-recurring gains
and losses.
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Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
XVII. Return on net assets and earnings per share
1 Calculation of earnings per share
(1) Basic earnings per share
For calculation of the basic earnings per share, please refer to Note V.48.
(2) Basic earnings per share excluding extraordinary gain and loss
Basic earnings per share excluding extraordinary gain and loss is calculated as dividing
consolidated net profit excluding extraordinary gain and loss attributable to ordinary
shareholders of the Company by the weighted average number of ordinary shares
outstanding:
2020 2019
Consolidated net profit attributable to ordinary
470,860,587 1,141,367,296
shareholders of the Company
Extraordinary gains and losses attributable to
73,205,400 248,870,652
ordinary shareholders of the Company
Consolidated net profit excluding extraordinary gain
and loss attributable to the Company’s ordinary 397,655,187 892,496,644
equity shareholders
Weighted average number of ordinary shares
685,464,000 685,464,000
outstanding
Basic earnings per share excluding extraordinary
0.58 1.30
gain and loss (RMB/share)
(3) Diluted earnings per share
During the reporting period, the Company did not have dilutive potential ordinary shares.
2 Calculation of weighted average return on net assets
(1) Weighted average return on net assets
Weighted average return on net assets is calculated as dividing consolidated net profit
attributable to ordinary shareholders of the Company by the weighted average amount of
consolidated net assets:
2020 2019
Consolidated net profit attributable to ordinary
470,860,587 1,141,367,296
shareholders of the Company
Weighted average amount of consolidated net
10,304,733,743 10,010,909,180
assets
Weighted average return on net assets 4.57% 11.40%
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Yantai Changyu Pioneer Wine Company Limited
Financial statements for the year ended 31 December 2020
Calculation of weighted average amount of consolidated net assets is as follows:
2020 2019
Consolidated net assets at the beginning of
10,402,248,821 9,688,765,904
the year
Business combination involving entities
(37,299,912) -
under common control
Effect of consolidated net profit attributable
237,836,150 567,083,168
to ordinary shareholders of the Company
The impact of the purchase of minority
(8,046,940) (69,159)
shareholders' equity
Effect of shares repurchased (Note V.35) (290,004,376) (244,870,733)
Weighted average amount of consolidated
10,304,733,743 10,010,909,180
net assets
(2) Weighted average return on net assets excluding extraordinary gain and loss
Weighted average return on net assets excluding extraordinary gain and loss is calculated as
dividing consolidated net profit excluding extraordinary gain and loss attributable to ordinary
shareholders of the Company by the weighted average amount of consolidated net assets:
2020 2019
Consolidated net profit excluding extraordinary gain
and loss attributable to the Company’s ordinary 397,655,187 892,496,144
equity shareholders
Weighted average amount of consolidated net
10,243,190,738 9,914,886,331
assets (Note)
Weighted average return on net assets excluding
3.88% 9.00%
extraordinary gain and loss
Note: When a business combination under common control occurs during the reporting
period, the net assets of the combining party shall be weighted from the month
following the acquisition date when calculating the weighted average return on net
assets after deducting non-recurring gains and losses. When calculating the
weighted average return on net assets after deducting non-recurring gains and losses
during the comparative period, the net assets of the combining party shall not be
weighted.
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