Yantai Changyu Pioneer Wine Co. Ltd.2018 Annual Report
Final 2019-01
April 2019
Contents
I、Important Notice，Contents and Definition..............................................................................3
II、Brief Introduction for the Company and Main Financial Indicators .................................. 5
III、Summary of the Company’s Businesses .............................................................................. 10IV、Management Discussion and Analysis ................................................................................. 14V、Major issues ............................................................................................................................. 35
VI、Changes in Shares and the Shareholders’ Situation ...........................................................51
VII、Related Situation of Preferred Shares ................................................................................61VIII、Situation for Directors Supervisors Senior Executives and Staffs................................. 62
IX、Corporate Governance .......................................................................................................... 77
X、Related Situation of Corporation Bonds ............................................................................... 85
XI、Financial Report.......................................................................................................................86
XII、Reference Document .......................................................................................................... 198
I. Important Notice Content and Definition
The board of directors，the board of Supervisors，directors supervisors and senior executivesof the Company guarantee the truthfulness accuracy and completeness of the contents
contained in the report with no false records misleading statements or significant omissions
and undertake individual and joint legal liabilities.Mr. Zhou Hongjiang (Chairman of the Company) Mr. Jiang Jianxun (Chief Financial Officer
& Financial Director) assure the truthfulness accuracy and completeness of the financial
report in the annual report.
Except the following directors all other directors have personally attended the meeting for
deliberating the annual report.
Director name with
non-present in person
Director post with
non-present in person
Reason for
non-present in
person
Name of
mandatory
Sun Liqiang Director Business trip Zhou Hongjiang
Antonio Appignani Director Business trip Augusto Reina
Forward-looking statements such as future plans and development strategies covered in this
report do not constitute a substantial commitment of the Company to investors. Investors are
advised to pay attention to investment risks.
About significant risks that may be faced in production and operation process please refer
to“5. Risks likely to occur” part of “9. Expectation for the Company’s Future Development”
in the Chapter Four “Management Discussion and Analysis” of the report. Investors are
advised to read carefully and pay attention to investment risks.The Company’s preliminary scheme of profit distribution deliberated and passed by the board
of directors this time is shown as following: Based on the Company’s total 685464000
shares we plan to pay CNY6 (including tax) in cash as dividends for every 10 shares to all
shareholders and send 0 bonus share (including tax). Capital reserve will not be transferred to
equity.
Definition
Definition Item Refers to Definition Content
Company/The Company Refers to Yantai Changyu Pioneer Wine Co. Ltd.
Changyu Group/Controlling Shareholder Refers to Yantai Changyu Group Co. Ltd.
CSRC Refers to China Securities Regulatory Commission
SSE Refers to Shenzhen Stock Exchange
Deloitte Hua Yong Refers to
Deloitte Hua Yong Certified Public Accountants
Co. Ltd (special general partnership)
CNY Refers to Chinese Yuan
II. Brief Introduction for the Company and Main Financial Indicators
1. Company’s information
Stock Abbreviation Changyu A Changyu B Stock Code 000869 200869
Stock Abbreviation after Alteration -
Place of Stock Listing Shenzhen Stock Exchange
Legal Name in Chinese 烟台张裕葡萄酿酒股份有限公司
Abbreviation of Chinese Name 张裕
Legal Name in English YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
Abbreviation of English Name CHANGYU
Legal Representative Mr. Zhou Hongjiang
Registered Address 56 Dama Road Yantai Shandong China
Postal Code 264000
Office Address 56 Dama Road Yantai Shandong China
Postal Code 264000
Website http://www.changyu.com.cn
E-mail webmaster@changyu.com.cn
2. Contact person and information
Secretary to the Board of Directors Authorized Representative of Securities Affairs
Name Mr. Qu Weimin Mr. Li Tingguo
Address 56 Dama Road Yantai Shandong China 56 Dama Road Yantai Shandong China
Tel 0086-535-6633656 0086-535-6633656
Fax 0086-535-6633639 0086-535-6633639
E-mail quwm@changyu.com.cn stock@changyu.com.cn
3. Information disclosure and filing location
Media name for information disclosure
selected by the Company
China Securities Newspaper Securities Times and Hong
Kong Commercial Daily
Web Site assigned by CSRC to carry the
annual report http://www.cninfo.com.cn
Filing location of the Company’s annual
report
Board of Directors’ Office of the Company 56 Dama Road
Yantai Shandong
4. Registration changes
Organization Code 913700002671000358
Changes for the main businesses
of the Company since it was listed
The business scope determined by the Company when it was
established on September 18th 1997 is production processing and
sales of wine distilled liquor healthy liquor fruit liquor non-alcohol
beverage fruit jam packing material and winemaking machine. On
April 17th 2008 approved by the 2007 shareholders’ meeting the
Company’s business scope is changed to production processing and
sales of wine distilled liquor medicated liquor fruit liquor
non-alcohol beverage fruit jam packing material winemaking
machines and licensed import and export. On May 12th 2010
approved by the 2009 shareholders’ meeting the Company changed
its business scope to production processing and sales of wine
distilled liquor medicated liquor fruit liquor non-alcohol beverage
fruit jam packing material and its products winemaking machine
licensed import and export and external investment according to
national policy. On September 23rd 2016 approved by the 2016
annual 1st Interim shareholders’ meeting the Company changed its
operating scope to wine and fruit wine (bulk wine processing and
filling) production blending liquor and other blending liquors (grape
liqueur) production other liquors (other distilling liquors) production
production processing and sales of packing material and winemaking
machine grape plantation and procurement tourism resources
development (excluding tourism) package design activity of
building rental licensed import and export warehouse business and
external investment according to national policy.
Changes for all previous
controlling shareholders No.
5. Other relevant information
The accounting firm appointed by the Company
Name Deloitte Hua Yong Certified Public Accountants Co. Ltd (specialgeneral partnership)
Address No. 23 Zhenzhi Road Chaoyang District Beijing
Name of signatory accountants Xie Yanfeng Li Yangang
The sponsor institution appointed by the Company to perform the duty of continuous
supervision during the report period
□Available ?Not available
The financial adviser appointed by the Company to perform the duty of continuous
supervision during the report period
□Available ?Not available
6. Key accounting data and financial indicators
Whether the Company needs to retrospectively adjust or restate the accounting data of
previous fiscal years.□Yes ?No
2018 2017 More or less thanLast year (%) 2016
Operating revenue (CNY) 5142244740 4932545229 4.25% 4717596472
Net profit attributed to
shareholders of the listed
company (CNY)
1042632929 1031695056 1.06% 982460488
Net profit attributed to
shareholders of the listed
company after deducting
irregular gains and losses
(CNY)
965426238 986095872 -2.10% 941730478
Net cash flows from
operating activities (CNY) 975978746 973243027 0.28% 889911970
Basic earnings per share
(CNY) 1.52 1.51 0.66% 1.43
Diluted earnings per share
(CNY) 1.52 1.51 0.66% 1.43
Weighted average for
earning rate of net assets
(CNY)
11.23% 12.14% -0.91% 12.55%
December 31st 2018 December 31st 2017
More or less than
Last year (%)
December 31st 2016
Total assets (CNY) 13117729052 12536755208 4.63% 11528077971
Net Assets attributed to
shareholders of the listed
company (CNY)
9606099365 8906342299 7.86% 8209010989
7. Differences in accounting data under PRC accounting standards and international
accounting standards
(1) Differences of net profits and net assets in the financial report disclosed according
to both international accounting standards and PRC accounting standards
□Available ?Not available
There are no differences of net profits and net assets in the financial report disclosed
according to both international accounting standards and PRC accounting standards during
the report period.
(2) Differences of net profits and net assets in the financial report disclosed according
to both foreign accounting standards and PRC accounting standards
□Available ?Not available
There are no differences of net profits and net assets in the financial report disclosed
according to both foreign accounting standards and PRC accounting standards during the
report period.
8. Key financial indicators by quarter
Unit：CNY
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Operating revenue 1804057976 1024172088 1032328986 1281685690
Net profit attributed to
shareholders of the
listed company
479444238 156393167 133916250 272879274
Net profit attributed to
shareholders of the
listed company after
deducting irregular
gains and losses
466181564 140497155 110520695 248226824
Net cash flows from
operating activities 507263964 45489508 224087322 199137952
Whether there are significant differences between the above mentioned financial indicators or
their sum and the related financial indicators in the quarterly reports and semi-annual reports
disclosed by the Company.□Yes ?No
9. Item and amount of non-recurring profit and loss
?Available □Not available
Unit：CNY
Item 2018 2017 2016 Explanation
Profits and losses on disposal of
non-current assets including the
provision for asset impairment write-off
part
11368355 -222586 14719
Government grants included in the
current profits and losses (except for
those recurring government grants that
are closely related to the entity's
operation in line with related regulations
and have proper basis of calculation)
87281434 47638384 49130643
Other operating revenues and
expenditures except the aforementioned
items
3817401 13999251 4656972
Less: Income tax effect 25157188 15523424 13072324
Minority shareholders' equity
effect (after taxes)
103311 292441
Total 77206691 45599184 40730010 --
The reasons shall be made clear and definitely as to the non-recurring profit and loss that the
Company has defined by virtue of the Explanatory Announcement on Public Company’s
Information Disclosure No.1 - Non-recurring Profit and Loss and as to regarding the
non-recurring profit and loss as recurrent profit and loss as specified in the Explanatory
Announcement on Public Company’s Information Disclosure No.1 –Non-recurring Profit and
Loss.
□Available ?Not available
There are no cases that non-recurring profit and loss is defined and specified as recurrent
profit and loss in accordance with the Explanatory Announcement on Public Company’s
Information Disclosure No.1 - Non-recurring Profit and Loss during the report period.
III. Summary of the Company’s Businesses
1. Main businesses during the report period
Whether the Company needs to follow disclosure requirements of special industry
No
During the report period the Company’s main businesses are production and operation of wine and brandy thus providing domestic and foreign
consumers with healthy and fashionable alcoholic drinks. Compared with earlier stage there are no significant changes happened to the
Company’s main businesses. The wine industry that the Company involved in is still in growth stage and the whole domestic wine market is on
the rising trend. The Company is at the forefront in the domestic wine market.
2. Significant changes of main assets
(1) Significant changes of main assets
Main assets Explanation of significant changes
Equity asset There are no significant changes during the report period
Fixed asset
The fixed assets increased by7.89% compared with the initial stage owing to part of constructions in process
have been transferred to fixed asset during the report period.Intangible asset There are no significant changes of intangible asset during the report period.
Construction in process
The constructions in process decreased by 26% compared with the initial stage owing to part of constructions
in process have been transferred to fixed asset during the report period.
(2) Main overseas assets situation
?Available □Not available
Unit：CNY
Details of assets
Formation
reasons
Assets scale Location
Operation
mode
Control
measures for
safeguarding of
asset security
Earning
condition
Proportion of
overseas assets in
the Company’s net
assets
Whether there are
significant impairment
risks
Hacienda Y
Vinedos
Marques Del
Atrio. SL
Acquisition of
equity
563501798 Spain
Independent
operation
The Company
participates in
making
important
decisions
through board of
directors and
appoints CFO
on financial
management.
3811465 5.87% No
Indomita Wine
Company Chile
SpA
Establishment
of joint venture
515753832 Chile
Independent
operation
The Company
participates in
making
important
decisions
through board of
directors and
appoints CFO
on financial
management.
15934347 5.37% No
Kilikanoon
Estate Pty Ltd
Acquisition of
equity
151394573 Australia
Independent
operation
The Company
participates in
making
important
decisions
through board of
directors.
217869 1.58%
3. Analysis of core competitiveness
Whether the Company needs to follow disclosure requirements of special industry
No.
Compared with the participants in the arena of the Chinese wine sector we believe that the Company is with the following advantages:
Firstly the Company has been enjoying a well-known wine brand since 120-odd years. “Changyu” “Noble Dragon” and “AFIP” are all China
famous brand that have strong influence and good reputation.Secondly the Company has set up a nationwide marketing network formed a “three-level” marketing network system mainly composed of the
Company’s salesmen and dealers with strong marketing ability and market exploitation ability.
Thirdly the Company has strong research strength and a product R&D system. Relying on the country’s only “State-level Wine R&D Center”
the Company has mastered advanced winemaking technology and production processes as well as been powerful enough in product innovation
and perfect quality control system.
Fourthly the Company is in possession of a lot of grape-growing bases that are compatible with its development requirements. The Company
has developed a great deal of vineyards in the most suitable areas for wine grape growing such as Shandong Ningxia Xinjiang Liaoning Hebei
and Shanxi whose scale and structure have generally met the Company’s needs for development.
Fifthly products in high medium and low-grade as well as varieties and categories are all complete. Over 100 varieties of series products such
as wine brandy and sparkling wine covers various grades including high medium and low-grade which can meet different consumer groups’
demands. The Company has taken the dominant status in the domestic wine industry through rapid development in the past 10-odd year
and has comparative advantages in the future competition.Sixthly the Company has a relatively perfect motivation system. Most of Company’s
employees indirectly hold the Company’s equity through controlling shareholders. There are
high consistency between employee benefits and shareholders benefits in favor of motivating
employees to create value for shareholders.Seventhly the Company has set up flexible and efficient decision-making mechanism. The
Company’s core management team always maintains a working style of unity and pragmatic
and flexible and efficient decision-making mechanism which makes the Company can deal
with market changes more calmly.
Eighthly the global production capacity layout has been basically completed. The Company
has completed production capacity layout in China France Chile Spain Australia and other
major wine producing countries in the world enabling making better use of global
high-quality raw material resources capital talents and advanced production processes and
technologies to provide consumers with diversified quality products and better serve
consumers.
Based on the above reasons the Company has formed relatively strong core competence and
will maintain a relatively dominant position in the future predictable market competition.
IV. Management Discussion and Analysis
1. Summarization
In 2018 influenced by many factors such as the slowdown of domestic economic growth and
the increase in uncertainty resulting from Sino-US trade friction the overall sales amount of
domestic wine industry was relatively stable but the sales volumes of both imported wine
and domestic wine decreased. As imported wine continued occupying the market of domestic
wine the competition in domestic wine market was very strong. Furthermore the increase in
the price of raw materials and packing materials as well as increase in the depreciation of
fixed assets freight and labor cost further increased the pressure of the company’s increase in
profit. Facing quite a lot of external disadvantages the Company insisted in taking the marketas the center insisted the development strategy of “Focus on middle-and-high level Focus onhigh quality Focus on big product” intensified internal reform optimized product structure
and market layout quickened the pace of new product development and market promotion
and strived to promote product sales achieving good results and realizing operating revenue
of CNY5142.24million with an increase of 4.25% compared with last year and net profit of
CNY1042.63 million belonging to the parent company’s shareholders with an increase of
1.06% compared with last year.
2. Analysis of main business
(1) summarization
Description
Increase or decrease of
the end of the period
over the end of last year
Cause of significant changes
Operating revenue 4.25%
Mainly because of increase in average
price of products resulting from
improvement of product mix
Operating cost 13.76%
Mainly because of increase in the price of
raw materials and packing materials
Sales expense 0.16%
Mainly because of year-on-year increase
in wage & welfare
Management expense 2.12%
Mainly because of year-on-year increase
in wage & welfare and depreciation of
afforestation fees
R&D expense 10.72%
Mainly because of increase in expenses
for technology research and development
in 2018
Financial expense 93.36%
Mainly because of increase in loan
interest expenditure
Net amount of cash
flow generated in
operating activities
0.28%
Mainly because of increase in received
cash from product sales and rendering of
serdeputy
Net amount of cash
flow generated in
investment activities
38.08%
Mainly because of increase in received
cash from t recouping the investment
Net amount of cash
flow generated in
capital-raising
activities
-77.83%
Mainly because of increase in payment of
cash for debt repayment
Review and summary of the process of the Company’s early-disclosed development strategy
and business plan during the report period
During the report period the Company realized the operating revenue of
CNY5142.24million with an increase of 4.25% compared with last year slightly lower than
the target fixed at the beginning of the year of realizing operating revenue no less than
CNY5.2billion. The net profit of CNY1042.63 million belonging to the parent company’s
shareholders was realized with an increase of 1.06% compared with last year. The main work
during the report period were shown as followed:
Firstly the Company took the market as the mirror further promoted the strategy of three
Focus strengthened internal adjustment and reform intensity accelerated the launch of new
products and market expansion of core products and strived to develop E-business
achieving good results. During the report period the Company reorganized sales team
preliminarily realized the reduce in staff number and the improve of efficiency conducted
the work of “sales team jointly built by manufacturers and distributors” actively explored theexpense input management and control mode of “check and balance between manufacturersand distributors ” and received preliminary effects. Ten provincial brandy companies were
newly established. Specialized provincial wine companies and comprehensive provincial
companies were subdivided. Three business segments including provinces and cities such as
Zhejiang Fujian Guangdong Jiangsu Shandong Beijing and Shanghai etc and E-business
and so on realized authorized operation. The Company adjusted the function of VIP
customer business peeled off distribution business in direct supply system further defined
the relationship between the Changyu parent brand and its subsidiary brands formed the core
brand system of various liquors and made development planning of each brand. Series of
new products such as the ninth generation Noble Dragon new Zenithwirl 15-year Koya
10-year Koya 6-year Koya Australian Kilikanoon products and Chilean Indomita products
and so on received wide praises and the demand of partial products exceeds supply owing to
their hot sale. The Company insisted on the strategy of three Focus weeded out 134 kinds of
wine and centralized most marketing resources to be used for market promotion of
middle-to-high-end wine five-star and above brandy and imported wine with own brands
making sales revenue of wine and brandy achieve different levels of increase.
Secondly the Company took the quality as the basis regarded product quality as an
important magic weapon to defeat enemies. It conducted all-around self-examination
self-correction and optimization on the selection of grape base grape planting mode
production process and technology quality testing equipment and product quality control
system etc formulated three-year planning implementation scheme and specific measures
for product development and quality improvement in future three years strengthened
technical exchanges at home and abroad and team construction of winemakers focused on
new product development and technical difficulties improved the quality traceability system
and strengthened quality control in the whole production process making the company's
technical level and product quality reach a new level. The Company carried out 45
technology researches and completed one sub-project of national 863 project. Drafted
standards of Wine-making Grape and Oak Barrel passed the group standards assessment by
China Alcoholic Drinks Association filling in gaps of domestic wine industry. Key
Technology Research and Application in Industrialization of Domestic Oak Products was
declared for 2018 scientific and technological progress award of China Alcoholic Drinks
Association. Key Technology Research for Premium and Characteristic Wine-making Grape
Cabernet Gernischt and Wine Production won scientific and technological progress award of
China National Light Industry Council. In 2018 IWSC Kilikanoon Wines Pty Ltd in
Australia was awarded “Australian Best Wine Producer of the Year” and was the only one
chateau awarded by IWSC among more than 4000 chateaux in Australia of which 2014
Kilikanoon Estate Special Reserve Shiraz 8K won outstanding gold medal with scores of
93 points and above) as well as the trophy of “World’s Best Shiraz of the Year” while 2016
Kilikanoon Estate Wine Blend 6K won gold medal with scores of 90 to 92.9 points.Kilikanoon Wines Pty Ltd was honored with the title of “Australian Best Wine Producer ofthe Year” in 2018 Mundus Vini. 2014 Kilikanoon Estate Special Reserve Shiraz 8K won
gold medal in DAWA with the score of 95. 2015 Moser Family Cabernet Sauvignon Red
Wine 2016 Moser Legend Cabernet Sauvignon White Wine 2015 Golden-label Icewine of
Golden Icewine Valley and 2015 Blue-label Icewine of Golden Icewine Valley won gold
medal in the 22nd session of Berliner Wein Trophy. Changyu Five-star Fine Brandy won
gold medal in 2018 Spirits Selection by Concours Mondial de Bruxelles. Changyu Koya
15-years XO bradny ageing in oak barrel won the design award of luxury category in 2018
Pentawards Award Ceremony. “Water-drop Decanter” of Changyu Koya 10-years XO
Brandy won the design award of packaging category in 2018 iF Design Award Ceremony
held at BMWWelt in Munich Germany.Thirdly the Company realized online identification and order-driven mode of major products.
During the reporting period the Company issued Assessment Measures for Performance
Rate of Production Order gave full play to advantages of advanced production facilities
high automation and informationization and fast production speed optimized and adjusted
business processes and strengthened coordination of supply production and sales making
27 kinds of Noble Dragon products with high sales volume and all domestic chateau wines
achieve order-driven mode. Most domestic wine products achieved online tagging which
improved production efficiency and delivery speed dramatically reduced product and capital
backlogs and better satisfied the market needs.
Fourthly the Company enhanced financial management and established and improved the
assessment system taking profit as principal line. During the report period the Company
strengthened the management in financial budget fixed funds and overseas enterprises’
financial affairs enhanced the audit in price execution gross profit margin capital
occupation key expenses and investment projects increased the investigation of economic
responsibility scientifically allocated internal capital vigorously strived for policy-based
capital loans and continuously reduce the cost of capital. It strengthened the simulated profit
assessment of authorized business units and strived to establish a profit assessment system
covering all business segments and respective responsibilities in order to provide a basic
basis for more reasonable and efficient performance assessment and to improve profitability.
Fifthly the Company successfully completed the procurement of raw materials including
grapes and further strengthened the management in grape base. The Company
comprehensively accomplished the procurement plan of raw materials exemplified as grapes
improved the fermentation rate of premium wines further deepened sort management and
sort acquisition of grape bases and continued promoting the mechanization process in
vineyards lowering the operating costs of self-supported grape bases and making scientific
and normative management in grape base reach a higher level. It raised grape purchase
standard improved raw material quality actively conducted the introduction selective
breeding and improvement of new grape varieties and characteristic varieties and cultivated a
lot of new varieties enriching the variety resource for future product development. It also
organized orchardist to take professional training on grape planting technology which
improved their grape planting and management level.Sixthly the Company continued promoting internationalization strategy and steadily
implemented overseas acquisition. It acquired 80% equity of Kilikanoon Estate Pty Ltd in
Australia.
(2) Revenue and cost
① Composition of operating revenue
Unit: CNY
2018 2017
Year-on-year
increase or
decrease (%)
Amount
Proportion
in
operating
revenue
Amount
Proportion
in
operating
revenue
Total 5142244740.00 100% 4932545229 100% 4.25%
operating
revenue
Sector-classified
Sector of
liquor and
alcoholic
beverage
5142244740 100% 4932545229 100% 4.25%
Product-classified
Wine 4000233434 77.79% 3829326556 77.63% 0.16%
Brandy 999207299 19.43% 989889728 20.07% -0.64%
Others 142804007 2.78% 113328945 2.30% 0.48%
Area-classified
Domestic 4486387956 87.25% 4497288066 91.18% -3.93%
Abroad 655856784 12.75% 435257163 8.82% 3.93%
② The cases of industry product or area accounting for over 10% in the Company’s
operating revenue or operating profit
?Available □Not available
Whether the Company needs to follow disclosure requirements of special industry
No
Unit: CNY
Operating revenue Operating cost
Gross
profit
rate
Year-on-
year
increase
or
decrease
(%) of
operating
revenue
Year-on-
year
increase
or
decrease
(%) of
operating
cost
Year-on
-year
increase
or
decrease
(%) of
gross
profit
rate
Sector-classified
Sector of
liquor
and
alcoholic
beverage
5142244740 1901611507 63.02% 4.25% 13.76% -3.09%
Product-classified
Wine 4000233434 1460855413 63.48% 4.46% 15.36% -3.45%
Brandy 999207299 403699973 59.60% 0.94% 14.58% -4.81%
Others 142804007 37056121 74.05% 26.01% -29.91% 20.70%
Total 5142244740 1901611507 63.02% 4.25% 13.76% -3.09%
Area-classified
Domestic 4486387956 1477589238 67.07% -0.24% 7.17% -2.27%
Abroad 655856784 424022269 35.35% 50.68% 44.76% 2.65%
Under the condition that the statistical caliber of the Company’s main business data is
adjusted during the report period the Company’s main business data adjusted on the basis of
caliber at the end of report period in recent one year.
□Available ?Not available
③ Whether the Company’s sales revenue for material object is more than labor
serdeputy revenue
?Yes □No
Sector Project Unit 2018 2017
Year-on-year
increase or
decrease (%)
Wine Sales volume Ton 112600 104016 8.25%
Brandy Sales volume Ton 39315 39130 0.47%
Explanation on the causes of over 30% year-on-year changes of the related comparison data
□Available ? Not available
④ The fulfillment of major sales contract signed by the Company up to the report
period
□Available ? Not available
⑤ Composition of operating costs
Classification of sector and product
Unit: CNY
Sector Project
2018 2017 Year-on-year
increase or
decrease (%)
Amount
Proportion in the
operating cost (%)
Amount
Proportion in the
operating cost (%)
Liquor and
alcoholic
beverage
Blending liquor 981838789 52.42% 929487468 56.48% -4.06%
Packing
material
633281194 33.81% 525292149 31.92% 1.89%
Wages 63385522 3.38% 57733717 3.51% -0.12%
Manufacturing
expenses
194485534 10.38% 133177282 8.09% 2.29%
Unit: CNY
Sector Project
2018 2017 Year-on-year
increase orAmount Proportion in the Amount Proportion in the
decrease (%)operating cost (%) operating cost (%)
Wine
Blending liquor 759623724 52% 711224945 56.16% -4.16%
Packing
material
484791303 33.19% 395026889 31.19% 1.99%
Wages 54718770 3.75% 47843744 3.78% -0.03%
Manufacturing
expenses
161721616 11.07% 112295874 8.87% 2.20%
Brandy
Blending liquor 217997239 54% 204764927 58.12% -4.12%
Packing
material
144272064 35.74% 117982142 33.49% 2.25%
Wages 8666752 2.15% 9678688 2.75% -0.60%
Manufacturing
cost
32763918 8.12% 19903211 5.65% 2.47%
⑥ Whether there are changes of consolidation scope during the report period
?Yes □No
According to the Share Sale & Purchase Agreement signed by the Company and the
shareholders of Kilikanoon Estate Pty Ltd on December 5th 2017 the acquisition of 80%
equity of Kilikanoon Estate Pty Ltd is based on AUD20860825 (equivalent to
CNY107194420). The Company completed the equity transfer on January 18th 2018 and
obtained control over the financial and operating policies of Kilikanoon Estate Pty Ltd. This
company is included in the consolidate scope during the report period.⑦ Major changes or adjustments of the Company’s businesses products or serdeputys
during the report period
□Available ?Not available
⑧ Information of major sales customers and major suppliers
The Company’s major sales customers
The total sales amount of the top five customers（CNY） 183898220
The proportion that total sales amount of the top five customers accounting
for the annual total sales amount（%）
3.58%
The proportion that sales amount of the related party in the total sales
amount of the top five customers accounting for the annual total sales
amount（%）
0%
Information of the Company’s 5 biggest sales customers
No. Customer name
Sales amount
（CNY）
Proportion in total
sales for the year
（%）
Changyuexin Trading Company Limited in
Shenzhen city
55734499 1.08%
Haikou Heshunxin Trading Company
Limited
35693617 0.69%
Xinbaicheng Food Firm in Hanjiang district
of Putian city
32959410 0.64%
Fuzhou Shengshihanggang Trading
Company Limited
30794332 0.60%
5 Fengxiang Grocery Store in Hui’an town 28716363 0.56%
Total -- 183898221 3.58%
Other situation explanations of major customers
□Available ?Not available
Information on the Company’s main suppliers
The total purchase amount of the top 5 suppliers 583902258
The proportion of the total purchase amount of the top 5 suppliers in the
annual purchase amount
37.75%
The proportion of the related party purchase amount in the top 5 supplier
purchase amount in annual purchase amount
11.2%
Information on the Company’s top 5 biggest suppliers
No. Supplier name
Purchase amount
(CNY)
Proportion in total
purchase for the
year（%）
1 Yantai Shenma Packaging Co. Ltd. 173238289 11.20%
2 Yantai Changyu Glass Co.Ltd. 123686048 8%
3
Liquan Sales Department of Shandong
Yantai Winery Co.Ltd.
116840313 7.55%
4 Xinjiang Yuyuan Liquor Co.Ltd. 108763517 7.03%
The Xinjiang Production and Construction
Corps the 152thGroup of the 8th
Agricultural Division
61374092 3.97%
Total -- 583902259 37.75%
Other situation explanations of main suppliers
□Available ?Not available
(3) Expense
Unit: CNY
2018 2017
Year-on-year
increase or
decrease (%)
Explanation of significant
changes
Sales expense 1274599146 1272522443 0.16%
Mainly because of the
increase of salary and welfare
compared with last year
Management
expense
343580651 336461133 2.12%
Mainly because of the
increase of salary and welfare
as well as amortization of
amortization fees compared
with last year
Financial expense 35945302 18590259 93.36%
Mainly because of the
increase in loan interest
expenditure
Research and
Development
expense
4784118 4320825 10.72%
Mainly because of the
increase of technology
development expenditure
(4) Research and development investment
□Available ?Not available
(5) Cash flow
Unit: CNY
Item 2018 2017
Year-on-year increase
or decrease (%)
Subtotal of cash inflow in
operating activities
5080363769 4965586341 2.31%
Subtotal of cash outflow in
operating activities
4104385023 3992343314 2.81%
Net amount of cash flow
generated in operating
activities
975978746 973243027 0.28%
Subtotal of cash inflow in
investment activities
423413326 216678355 95.41%
Subtotal of cash outflow in
investment activities
931261875 1036886116 -10.19%
Net amount of cash flow -507848549 -820207761 38.08%
generated in investment
activities
Subtotal of cash inflow in
capital-raising activities
1114333670 1064892130 4.64%
Subtotal of cash outflow in
capital-raising activities
1546641222 1307993557 18.25%
Net amount of cash flow
generated in capital-raising
activities
-432307552 -243101427 -77.83%
Net increase of cash and cash
equivalents
25971060 -76053030 134.15%
Explanation of main influence factors contributing to great changes in related data on
year-on-year basis
?Available □Not available
Compared with the same period of last year during the report period the subtotal of cash
inflow in investment activities increased by 95.41% and the net amount of cash flow
generated in investment activities increased by 38.08% which is mainly due to the increase in
cash received from the recovery of investment; subtotal of cash outflow in capital-raising
activities increased by 18.25% and net amount of cash flow generated in capital-raising
activities decreased by 77.83% year-on-year which is mainly due to the increase in cash paid
for debt repayment; net increase of cash and cash equivalents increased by 134.15% which is
mainly due to the increase in cash received from the recovery of investment.
Explanation on the causes of major differences between the net cash flow generated by the
Company’s operating activities and net profit of this year during the report period.
□Available ?Not available
3. Analysis to non-main business
□Available ?Not available
4. Assets and liabilities
(1) Significant changes of assets composition
Unit: CNY
At the end of 2018 At the end of 2017 Proportion
increase or
decrease
(%)
Explanation on
significant
changes
Amount
Proportion in
the total
assets (%)
Amount
Proportion in
the total assets
(%)
Monetary funds 1475700477 11.25% 1402522509 11.19% 0.06% No significant
changes
Receivables 242153083 1.85% 263796355 2.10% -0.25%
No significant
changes
Inventory 2724591457 20.77% 2473614046 19.73% 1.04%
No significant
changes
Investment real
estate
31572489 0.24% 18467989 0.15% 0.09%
No significant
changes
Long-term
equity
investments
0% 0% 0%
No significant
changes
Fixed assets 5749731667 43.83% 5329083969 42.51% 1.32%
No significant
changes
Construction in
progress
759296591 5.79% 1026141569 8.19% -2.40%
No significant
changes
Short-term
borrowings
688002410 5.24% 714434286 5.70% -0.46%
No significant
changes
Long-term
borrowings
156480662 1.19% 156125854 1.25% -0.06%
No significant
changes
(2) Assets and liabilities measured at fair value
□Available ?Not available
(3) Limitations of assets rights up to the end of the report period
At the end of report period the Company has no assets sealed up detained or frozen. For
information about assets mortgage and pledge please refer to Announcement on External
Guarantee (announcement number: 2016-Temporary 021) Announcement on External
Guarantee (announcement number: 2017-Temporary 015) and Announcement on External
Guarantee (announcement number: 2018-Temporary 020) disclosed on China Securities
Journal Securities Times and CNINFO (http://www.cninfo.com.cn/) respectively on
December 22nd 2016 December 12th 2017 and December 5th 2018.
5. Investment condition
(1) Overall situation
?Available □Not available
Investment amount during
the report period (CNY)
Investment amount of the
same period of last year
(CNY)
Variation
450762420 634882100 -29%
(2) Cases of acquired significant equity investments during the report period
?Available □Not available
Unit: CNY
Invested
company
name
Main
business
Investment
mode
Investment
amount
Shareholding
ratio
Capital
source
Partner
Investment
horizon
Product
type
Progress
up to
balance
sheet date
Estimated
earnings
Investment
profit or
loss during
the report
period
Whether
involved
in
litigation
Disclosure
date (if
have)
Disclosur
e index (if
have)
Kilikanoon
Estate Pty
Ltd
Wine
production
and sale
Acquisition 107194420 80.00% Self-owned
PTO7 Pty
Ltd
Woodvale
Vintners
Pty Ltd
W.J.
Duthy
Holdings
Pty Ltd
Warrick
James
Duthy
50 years Wine
All
acquisition
works have
been
completed
15000000 174295 No
December
12th 2017
Please
refer to
Announce
ment on
Equity
Acquisitio
n of
Kilikanoo
n Estate
Pty Ltd in
Australi
disclosed
on
China
Securities
Journal
Securities
Times and
CNINFO
(http://w
ww.cninf
o.com.cn)
Total -- -- 107194420 -- -- -- -- -- -- 15000000 174295 -- -- --
(3) Cases of significant ongoing non-equity investments during the report period
?Available □Not available
Unit: CNY
Project name
Investment
mode
Whether
belongs to
fixed
assets
investment
Involved
sectors of
investment
projects
Investment
amount
during the
report
period
Accumulated
actual
investment
amount up to
the end of the
report period
Capital
source
Project
progress
Estimated
earnings
Accumulated
realized
earnings up
to the end of
the report
period
Reasons
for
unreached
planning
schedule
and
estimated
earnings
Disclosure
date (if have)
Disclosure index (if have)
Yantai
Changyu
International
Wine City
Blending and
Cooling Center
Self-constructed Yes
Liquor and
alcoholic
beverage
sector
217495000 1376114100
Owned
fund
100% 0.00 0.00 — 2017.04.22
Please refer to Resolution
Announcement of Seventh
Session Board of Directors
4th Meeting and Resolution
Announcement of Seventh
Session Board of Directors
8th Meeting disclosed on
China Securities Journal
Securities Times and
CNINFO
(http://www.cninfo.com.cn/)
Yantai
Changyu
International
Wine City
Bottling
Center
Self-constructed Yes 26510000 913200000
Owned
fund
100% 0.00 0.00 — 2017.04.22
Yantai
Changyu
International
Wine City
Logistics
Center
Self-constructed Yes 1300000 416507200
Owned
fund
100% 0.00 0.00 — 2017.04.22
Changyu Vine
and Wine
Research
Institute
Self-constructed Yes 1214800 116974800
Owned
fund
80% 0.00 0.00 — 2017.04.22
Treasure Wine
Chateau
Self-constructed Yes 18830000 128820000
Owned
fund
70% 0.00 0.00 — 2017.04.22
Koya Brandy
Chateau
Self-constructed Yes 11631000 147329000
Owned
fund
85% 0.00 0.00 — 2017.04.22
Greening
Investment
Self-constructed Yes 20285000 73390700
Owned
fund
100% 0.00 0.00 — 2017.04.22
SAP
informatization
for industrial
production
Self-constructed Yes 26510000 37850000 Owned fund 40% 0.00 0.00 — 2018.04.23
Fire protection Self-constructed Yes 4570000 4570000 Owned fund 50% 0.00 0.00 — 2018.04.23
engineering
project of
research
institute
Maintenance
and
reconstruction
project of
Etablissements
Roullet
Fransac
Chateau in
COGNAC
Self-
constructed
Yes 8790200 8790200 Owned fund 80% 0.00 0.00 — 2018.04.23
Oak barrel
procurement
project
Others Yes 6432000 6432000 Owned fund 60% 0.00 0.00 — 2018.04.23
Total -- -- -- 343568000 3229978000 -- -- 0.00 0.00 -- -- --
(4) Financial assets investment
① Security investment situation
□Available ?Not available
There are no security investments for the Company during the report period.
② Derivatives investment
□Available ?Not available
There are no derivatives investments for the Company during the report period.
(5) The usage situation of raised capital
□Available ?Not available
There are no usage situations of raised capital for the Company during the report period.
(6) Sale of significant assets and equities
① Sale of significant assets
□Available ?Not available
There are no sales of significant assets during the report period.② Sale of significant equities
□Available ?Not available
(7) Analysis of main holding and joint stock companies
?Available □Not available
Situation of main subsidiaries and joint stock companies affecting over 10% of the Company’s net profit
Unit: CNY
Company name Company type Main business Registered capital Total assets Net assets Operating revenue Operating profit Net profit
Yantai
Changyu-Castel
Wine Chateau
Co. Ltd
Subsidiary
Development
production and sale
of wine and
sparkling wine and
tourist serdeputy
USD5million 255992191 84122529 121235278 5168651 3710124
Chateau
Changyu AFIP
Global
Subsidiary
Development
production and sale
of wine and brandy
CNY642.75million 681088671 618490126 159369783 20194892 16555846
Dicot Partners
S.L. Hacienda Y
Vinedos Marques
Del Atrio. sl
Subsidiary
Production and
operation of wine
and other liquors
EUR2385732 563501798 127321546 327550545 2162404 3811465
Indomita Wine
Company Chile
SpA
Subsidiary
Production and
operation of wine
and other liquors
USD47.19million 515753832 362418343 262104563 21066614 15934347
Acquisition and disposal of subsidiaries during the report period
?Available □Not available
Company name
Mode of acquisition and disposal of subsidiaries during the
report period
Effect on overall production management and
performance
Kilikanoon Estate Pty Ltd Equity acquisition 174295
Explanation on main holding and joint stock companies
The consolidated income of Kilikanoon Estate Pty Ltd shown in main financial information of the important non-wholly owned subsidiaries listed in
financial statement’s note “8. Equities in other subjects” is a loss. This is due to the “Premium” acquisition when the Company acquired Kilikanoon
Estate Pty Ltd. The value-added portion of the asset valuation in the purchase price is subject to the “Amortization” of the asset's useful life (3-20
years) in accordance with the current accounting standards when Changyu consolidating
statements. The Company’s main overseas companies have good earnings performance of
their own.
(8) Situation of the structured subjects controlled by the Company
□Available ?Not available
(9) Expectation for the Company’s future development
On the basis of our limited experience and professional skills the Company makes the
following judgments on the wine industry and future development:
1) The sector competition pattern and development trend
Under uncertainty effects caused by the slowdown of national macroscopic economy growth
and the Sino-American trade friction the overall demand of Chinese wine market is still
comparatively weak the sales growth is weak and the operation form of the Company is still
comparatively severe. The changes of the alcohol consumption environment make the
“fragmentation” of wine market become serious leading to difficulties in selling high-end
products. Consumers tend to be more rational which requires Changyu to make more efforts
in improving the cost performance of products. Owing that influx of plenty of imported wines
would further compress the domestic wine market shares and the new channels such as
E-commerce causes a great impact on the traditional sales channels the competition in the
domestic wine industry will still be fierce at present and in the future long time. Raw material
cost freight and depreciation expense and other expenses are likely to increase bringing big
pressure to the Company’s profitability. But in the long run thanks to increase in their
income more and more people would pursue health and fashion life mode and the people
would be in more favor of wines which fit quite well with the trend of consumption. The
fixed consumer population of wine is no longer limited to the middle class and high-end
people. More and more young people will join the wine consumption army and middle-aged
and old consumers will gradually shift to the ranks of drinking wine for health and health
considerations. “Less drinking drinking good wine healthy drinking” will become the future
development trend and thus continuously expand the demand for quality wine which
determines the huge market development potential of Chinese wine industry especially for
brandy and wine with better cost performance which may grow faster. China's post-90s
emerging consumer groups have gradually risen and their strong local awareness will make
domestic wines popular with more young consumers. Affected by the head effect the
capacity of controlling whole industrial chain of large-scale enterprises will be further
enhanced and the product segmentation space will be larger and larger large and strong
small and beautiful will coexist harmoniously. Accurate marketing represented by
circle-layer social contact private-sphere E-business membership system will be the most
effective marketing mode. In such a case of long-term coexistence of opportunities and
challenges those enterprises that possess strong brand influence and marketing ability catch
the opportunities actively take adjustments make full use of newly emerging and traditional
sales channels timely satisfy the consumers’ demands and provide products with high cost
performance will have the opportunity to be the final winner of competitions and then form a
new pattern of the future Chinese wine market.
2) The Company’s development strategyThe Company will insist the development direction of “Focus on middle-and-high level
Focus on high quality Focus on big product” comprehensively implement the development
strategy of same importance between wine and brandy endeavour to promote the harmonious
development of various liquors actively expand the scope of consumption field and
marketing mode industriously develop middle-and--high-end wines and brandy strengthen
the marketing level of imported wine and strive to provide consumers with a rich variety of
products with high cost performance.
3) Management plan for the new year
In 2019 the Company will try its best to realize operating revenue of not less than CNY5.3
billion and control the main operating costs and three period expenses below CNY3.7 billion.
4) Measures to be taken by the Company
In order to better catch opportunities and face challenges the Company will take full
advantage of self-owned advantages meet challenges adhere to market-orientation intensify
internal adjustment and reformation degree accelerate the launch of new products and the
pace of market development implement the performance assessment mode of mainly
focusing on gross profit rate and profit put attention to do well in following works in 2019
and strive to achieve annual operation targets.The first is to around the development strategy of focusing on mid-to-high end focusing on
high quality and focusing on big product accelerate the internal reform and further enhance
profitability. The Company will firmly consolidate the dominant status in domestic wine
establish the leading position in domestic brandy bring the advantage of backwardness in
imported wine ensure triple focusing strategy can be implemented on the ground by
“constantly everywhere and everyone” and promote the comprehensive development of
various brands including wine brandy and imported liquor. Besides the Company will
further improve sales organization structure improve relatively independent sales system of
each liquor category establish competitive benchmark of each liquor category and determine
catch-up target. Furthermore the Company will integrate and optimize the organization
structure of sales system complete the transformation from management dealers to serdeputy
dealers as soon as possible future close to market and customers use less people to manage
dealers enable more people to serve terminals and customers with dealers ask terminals for
sales volume and ask cultivating educating for growth. Dealer team building will be further
strengthened construction of sales team with dealers will be promoted and marking ability of
dealers will be enhanced. “Fund pool” will be built with dealers to guarantee market
investment in place. New product development will be accelerated. New products introduced
for wine includes the new Rena Castel AFIP Tinlot and representative brands of wine in
term of mid and low-end while new products introduced for brandy includes “KOYA 1915”
mid-end Changyu Fine Brandy of 5 star and low-end PEGASE. Moreover the Company will
further improve authorized management system of partial secondary units and promote rapid
development of authorized management units establish a simulation profit assessment system
at all levels strengthen gross profit rate assessment and improve sales profitability.The second is to insist on “originality” spirit strengthen quality management and produce the
best products. The Company will co-ordinate domestic and foreign raw material resources
increase the scale of high-quality raw material bases establish a quality “lifelong”
investigation system for raw material suppliers and further improve raw material quality.
Besides the Company will make intellectualization and information transformation of
production system strengthen efforts on technological innovation and comprehensively
improve research and development capabilities. Furthermore the Company will strengthen
the construction of winemaker team establish quality responsibility system of winemaker for
brands and with the help of overseas acquisition of enterprise platforms enhance exchanges
and learning of wine makers improve brewing technique level and realize big breakthroughs
of key links such as internal quality of products.The third is to further optimize staff structure compress the scale of production personnel and
management personnel. The Company will improve incentive model adhere to struggleoriented result oriented and in line with the principle of “Small Adjustment and BigIncentive” and intensify the incentives of key employees and strivers. Besides the Company
will further establish and improve talent team enhance the training and introduction of
professional talents create a learning organization vigorously support and encourage
innovation and enhance the overall enthusiasm creativity and combat effectiveness of staff.The fourth is to strictly control the scale of capital expenditure insist on not investing in other
new projects except safety production quality improvement and started projects. The
Company will further revitalize current assets make full use of advanced production capacity
moderately eliminate backward production capacity optimize production capacity layout
strive to improve production efficiency and asset utilization further reduce production costs
and better create value for shareholders.The fifth is to intensify audit supervision improve internal control system and prevent
operational risks. The Company will promote the reform of audit system adjust the set of
audit institutions improve departure audit and improve the evaluation system for cadres.
Besides the Company will intensify the audit to price implementation gross profit margin
capital occupation key expenses and audit of technical transformation projects and increase
efforts to economic responsibility investigation. Furthermore the Company will improve the
assessment methods for responsibility system of leading groups at all levels and strengthen
profit oriented. Moreover the Company will establish and improve the three-in-one
supervision system of auditing finance and discipline committee and achieve “check” and
“prevent” simultaneously to reduce management risks.
10. The Company’s receptions of research communication visit and other activities
Activity registration form for receptions of research communication visit and other activities
during the report period
?Available □Not available
Reception time Reception pattern Type of reception
object
Basic situation index of
reception
July 2nd 2018 Field research Institution Yantai Changyu Pioneer
Wine Co. Ltd. Investor
Relations Activation Record
Form of the Company’s“Investor RelationsInformation” on CNINFO
(http://www.cninfo.com.cn/)
October 20th 2018 Field research Individual
October 26th 2018 Field research Individual
Times of reception 3
Number of institution reception 7
Number of individual reception 21
Number of other objects reception 0
Whether to disclose reveal and leak
material nonpublic information
No
V. Major issues
1. The Company’s ordinary share profit distribution and increasing equity with capital
reserve
Ordinary share profit distribution policies especially promulgation implementation or
adjustment of cash dividends policies during the report period
?Available □Not available
Deliberated and passed by the 2017 Shareholders’ Meeting convened on May 24th 2018 by
the Company the Company’s 2017 annual profit distribution scheme is shown as follows:
based on total 685464000 shares (including 453460800 A shares and 232003200 B shares)
up to December 31st 2017 the Company would pay cash dividend to all shareholders
registered on the share registration day: CNY5 in cash per ten shares. This time the Company
would neither dispatch bonus shares nor increase equity with capital reserve.Total amount of shares has not changed since the disclosure of the distribution plan to the
implementation period.On June 30th 2018 the Company published the Implementation Announcement of 2017
Annual Equity Distribution on China Securities Journal Securities Times and
www.cninfo.com.cn determining that the share registration day and the ex-dividend day of A
Share was respectively on July 6th 2018 and on July 9th 2018; the last trading day the share
registration day and the ex-dividend day of B Share was respectively on July 6th 2018 on
July 9th 2018 and on July 11th 2018.This time the dispatching objects contain all A Share shareholders registered at China
Securities Depository and Clearing Corporation Limited Shenzhen Company after closing of
Shenzhen Stock Exchange in the afternoon of July 6th 2018 and all B Share shareholders
registered at China Securities Depository and Clearing Corporation Limited Shenzhen
Company after closing of Shenzhen Stock Exchange in the afternoon of July 11th 2018.
This dispatching has already been completed in mid-July 2018. The profit distribution
scheme implemented this time is consistent with the scheme deliberated and passed by the
shareholders’ meeting. The implementation of the profit distribution scheme for this time is
not more than two months after the shareholders' meeting passing it.Special explanation for the cash dividends policy
Whether it is in accordance with the requirements of the regulation in the Articles
of Association and the resolution of shareholders
Yes
Whether the distribution standard and proportion is clear and definite Yes
Whether the relevant decision process and mechanism is complete Yes
Whether the independent directors perform their responsibilities and play the roles Yes
Whether the small and middle shareholders have the chance to express their
addeputys and appeals as well as their lawful right and interest is in an enough
protection
Yes
Whether it is legal and transparent for the condition and process while adjusting
and amending the cash dividends policy
Yes
The Company’s scheme (preliminary scheme) of ordinary share profit distribution and
increasing equity with capital reserve in the recent three years (including the report period)
The Company’s profit distribution scheme in 2016 is as following: Because the left amount
of legal earned surplus reserve reaches 50% of the registered capital while making profit
distribution the legal earned surplus reserve will be not drawn. Based on the Company’s
685464000 shares at total up to December 31st 2016 we plan to pay CNY5 in cash as
dividends for every ten shares (including tax) to the Company’s all shareholders totaling up
to CNY342732000 accounting for 34.89% of the net profit CNY982460488 attributable to
the shareholders of the parent company in the consolidated statement the retained and
undistributed profit of CNY639728488 will be reserved for the distribution of next year.The Company’s profit distribution scheme in 2017 is as following: Because the left amount
of legal earned surplus reserve reaches 50% of the registered capital while making profit
distribution the legal earned surplus reserve will not be drawn. Based on the Company’s
685464000 shares at total up to December 31st 2017 we plan to pay CNY5 in cash as
dividends for every ten shares (including tax) to the Company’s all shareholders totaling up
to CNY342732000 accounting for 33.22% of the net profit CNY1031695056 attributable
to the shareholders of the parent company in the consolidated statement the retained and
undistributed profit of CNY688963056 will be reserved for the distribution of next year.The Company’s profit distribution scheme in 2018 is as following: Because the left amount
of legal earned surplus reserve reaches 50% of registered capital while making profit
distribution the legal earned surplus reserve will not be drawn. Based on the Company’s
685464000 shares at total up to December 31st 2018 we plan to pay CNY6 in cash as
dividends for every ten share (including tax) to the Company’s all shareholders totaling up to
CNY411278400 accounted for 39.45% of net profits CNY1042632929 attributable to
shareholders of parent company in the consolidated statements. The retained and
undistributed profit of CNY631354529 will be reserved for distribution in the next year.The Company’s ordinary share cash dividend record in recent three years (including the
report period)
Unit: CNY
Year of
distribution
Amount of cash
dividend
(including tax)
Net profit belonging
to the listed
company’s
shareholders in the
consolidated
statement of the
distribution year
Proportion in
the net profit
belonging to
the listed
company’s
shareholders
in the
consolidated
statement (%)
Amount of
cash
dividends(eg.shares
buy-back) in
other ways
Proportion
of cash
dividends
in other
ways
Amount of cash
dividend
(including other
ways)
Proportion
(including
other ways) in
the net profit
belonging to
the listed
company’s
shareholders
in the
consolidated
statement (%)
2018 411278400.00 1042632929.00 39.45% 0.00 0.00% 411278400.00 39.45%
2017 342732000.00 1031695056.00 33.22% 0.00 0.00% 342732000.00 33.22%
2016 342732000.00 982460488.00 34.89% 0.00 0.00% 342732000.00 34.89%
During the report period the Company earned profit the profit of the parent company that
could be distributed to ordinary share shareholders was positive but without proposing
ordinary share cash dividend distribution preliminary scheme.
□Available ?Not available
2. The Company’s preliminary scheme of profit distribution and preliminary scheme of
increasing equity with capital reserve for the report period
?Available □Not available
Number of sending bonus shares per ten shares (share) 0
Number of dividend payout per ten shares (CNY) (including tax) 6
Number of transferring per ten shares(share) 0
The cardinal number of the capital stocks for the preliminary distribution
scheme (share) 685464000
Total cash dividend distribution（CNY）(including tax) 411278400
Amount of cash dividends(eg. shares buy-back) （CNY）in other ways 0
Total cash dividend distribution（CNY）(including other ways) 411278400
Attributable profit（CNY） 1042632929
The proportion of cash dividend distribution in the total profit
distribution(including other ways) 100%
Cash dividend distribution this time
If the Company’s development is in growth stage and major capital expenditure is arranged
while making profit distribution the proportion of cash dividends should takes up no less
than 20% in this profit distribution.
Detailed explanation for the preliminary scheme of profit distribution or increasing equity
with capital reserve
According to the audit result from Deloitte Hua Yong Certified Public Accountants Firm the
net profit belonging to the parent company’s stockholders in the consolidated statement in
2018 is CNY1042632929 and the net profit of the parent company in financial statement in
2018 is CNY969588573.
According to PRC accounting standard the situation for attributable profits of the
consolidation and the parent company in 2018 as following:
Unit: CNY
Consolidation Parent company
Undistributed profits at the end the year 8008982547 8437957128
Including: net profits in 2018 1042632929 969588573
Undistributed profit carried forward of the
beginning of the year
7309081618 7811100555
Distribution of 2017 dividends 342732000 342732000
Withdrawal legal surplus reserve 0 0
According to regulation of 157th item in the Articles of Association which is that “the
Company can distribute dividends either in cash or by stock the profit to be distributed each
year is not less than 25% of the distributable profit realized in the same year and the
accumulated sum of profit to be distributed in cash in the last three years is not less than 30%of the yearly average distributable profit to be realized in the last three years”. Meanwhile
considering the large amount on the capital expenditure in 2019 under the condition of not
influencing the normal production and operation the Company put forward preliminary
scheme on profit distribution in 2018 as following:
Because the left amount of legal earned surplus reserve reaches 50% of the registered capital
while making profit distribution the legal earned surplus reserve will not be drawn. Then
based on the Company’s 685464000 shares at total up to December 31st 2018 we plan to
pay CNY 6 in cash as dividends for every ten shares (including tax) to the Company’s all
stockholders totaling up to CNY411278400 accounting for 39.45% of the net profit
CNY1042632929 attributable to the shareholders of the parent company in the consolidated
statement; the retained undistributed profit of CNY631354529 will be reserved for the
distribution of next year. The cash dividend distributed to shareholders of domestic listed
foreign shares (B share) is paid in Hongkong dollar converted based on the middle rate
between CNY and Hongkong dollar issued by the People’s Bank of China on the first
working day after the resolution date of 2018 shareholders’ meeting.
3. Implementation of commitments
(1) Commitments that the Company’s actual controllers shareholders related parties
acquirers and the Company and other related commitment parties have implemented
during the report period and have not implemented up to the end of the report period
?Available □Not available
Commitments Commitmentparty
Commitment
type
Commitment
content
Commitment
time
Commitment
period Implementation
Commitments at
share reform
Commitments made
in acquisition report
or equity changes
report
Commitments at
asset restructuring
－ － － －
Commitments at the
initial public
offering or
refinancing
Yantai
Changyu
Group Co. Ltd.Solve
horizontal
competition
Non-horizontal
competition
May 18th 1997 Forever
Has been performing
strictly
Yantai
Changyu
Group Co.Ltd.
Clear the use
of trademark
royalty
According to
Trademark
License
Contract the
trademark
royalty of
Changyu and
other trademarks
paid by the
Company to
Yantai Changyu
Group Co. Ltd
ever year is
mainly used for
advertising
Changyu and
other trademarks
and this contract
May 18th 1997 Forever
According to
Trademark License
Contract the
trademark use fee
annually paid by the
Company to
Changyu Group shall
be mainly used by
Changyu Group to
publicize trademarks
and contract
products. Except
2013 to 2017 during
which the
commitment was not
strictly performed
Yantai Changyu
Group Co. Ltd. has
products by
Yantai Changyu
Group Co. Ltd.been performing its
commitment.
Equity incentive
commitments
Commitments at
middle and small
shareholders of the
Company
Commitment under
timely
implementation or
not
No
Whether or not to
have specific
reasons of the
unimplemented
commitment and
next steps
According to t Trademark License Contract (hereafter referred to as “the Contract”) Changyu Group
promises that the trademark use fee annually paid by the Company to Changyu Group shall be mainly
used by Changyu Group to publicize trademarks and contract products. But above-mentioned ‘mainly’ is
not a specific number which is easy to cause divergence due to different understanding and leads to
problem appearance during the implementation process.
From 2013 to 2017 Changyu Group collected a total of CNY420883902 trademark use fee of which
51% was used to publicize trademarks including Changyu and contract products with amount of
CNY214650790. The amount has been used to publicize trademarks including Changyu and contract
products is CNY50025181 with a balance of CNY164625609.
In 2018 and 2019 the trademark use fee collected of 2017 and 2018 is CNY155623907 of which 51%
is used to publicize trademarks including Changyu and contract products with amount of
CNY79368193. The amount has been used to publicize trademarks including Changyu and contract
products is CNY12225187 with a balance of CNY67143006.Since 2013 the accumulated balance of Changyu Group using to publicize trademarks including
Changyu and contract products is CNY231768615.
Changyu Group promises that the four-year trademark use fee from 2019 to 2022 will be used for offset.
If insufficient the shortfall would be filled in one time in 2023. If there is any excess the excess portion
of the trademark use fee would be collected from the year with excess occurrence. If Changyu Group is
not able to implement the above-mentioned commitment owing to various reasons the Company will
timely supervise and urge Changyu Group to fulfill its commitment and request Changyu Group to raise
funds through bank loaning assets sales and equity sales etc in order to implement the commitment.
(2) The Company should make a statement on the achieved original profit forecast of
assets or projects and its reason if there is profit forecast of Company’s assets or
projects and the report period is still in the profit forecast period
□Available ?Not available
4. Non-business capital occupying of listed company by controlling shareholder and its
related parties
□Available ?Not available
There are no non-business capitals occupying of listed company by controlling shareholder
and its related parties during the report period.
5. Explanation of Non-standard Audit Report given by accounting firm in the report
period from board of directors board of supervisors and independent directors (if
have)
□Available ?Not available
6. Compared with the last year’s financial report explanation for the changes of
accounting policy accounting estimation and accounting method
□Available ?Not available
There is no situation for the changes of accounting policy accounting estimation and accounting
method.
7. The situation explanation for the correction of major accounting errors which need to
be retrospect and restated during the report period
□Available ?Not available
There is no situation for the correction of major accounting errors which need to be retrospect and
restated.
8. Compared with the last year’s financial report explanation for the changes of the
consolidated statements scope
?Available □Not available
According to Share Sale & Purchase Agreement signed on December 5th 2017 between the
Company and shareholders of Kilikanoon Estate Pty Ltd the Company acquired 80% equity
of Kilikanoon Estate Pty Ltd with the price of AUD20860825 (equivalence
CNY107194420) to. The Company has completed equity transfer on January 18th 2018
obtaining control rights of finance and business policy for Kilikanoon Estate Pty Ltd. During
the report period this company has been included in the scope of consolidated statements.
9. The appointment and dismissal of certified public accountants
Currently appointed accounting firm
Domestic accounting firm name Deloitte Hua Yong Certified Public Accountants
Firm (special general partnership)
Remuneration for domestic accounting firm
(CNY‘0000) 198
Consecutive period for the audit serdeputys of
domestic accounting firm 6
Name of certified public accountant for the audit
serdeputys of domestic accounting firm Xie Yanfeng Li Yangang
Consecutive period for the certified public
accountant’s audit serdeputys of domestic
accounting firm
－
Overseas accounting firm name (if have) 0
Remuneration for overseas accounting firm
(CNY‘0000) (if have) 0
Consecutive period for the audit serdeputys of
overseas accounting firm (if have) －
Name of certified public accountant for the audit
serdeputys of overseas accounting firm (if have) －
Consecutive period for the certified public
accountant’s audit serdeputys of overseas
accounting firm (if have)
－
Whether or not to dismiss the accounting firm during the report period
□Yes ? No
To employ internal control audit accounting firms financial adviser or sponsor.
□Available ?Not available
10. Face of suspension and termination of listing after the disclosure of annual report
□Available ?Not available
11. Bankruptcy reorganization
□Available ?Not available
There is no bankruptcy reorganization during the report period.
12. Material litigation and arbitration
□Available ?Not available
There are no material litigation and arbitration during the report period.
13. Penalty and rectification
□Available ?Not available
There are no penalties or rectifications during the report period.
14. Credit of the Company holding shareholders and actual controllers
□Available ?Not available
15. Implementation of the Company’s equity inventive plan employee stock ownership plan
or other employee incentive measures
□Available ?Not available
There are no implementation of the Company’s equity inventive plan employee stock ownership
plan and other employee incentive measures during the report period.
16. Significant related transactions
(1) Related transactions in relation to daily operations
?Available □Not available
(2) Related transactions in relation to acquisition and sales of assets or equity
□Available ?Not available
There are no related transactions in relation to acquisition or sales of assets or equity during the report period.Related
party
Relationship Type Content Pricing
principle
Price Amount
(CNY‘0000)
Proportion
accounting
for amount
of similar
transactions
Approved
transaction
quota
(CNY‘0000)
Whether
exceed
approved
transaction
quota
Clearing
form
Available
market price
of similar
transactions
Disclosure
date
Disclosur
e index
Yantai
Shenma
Packaging
Co. Ltd.
Controlled
by the same
parent
company
Purchase
and
commission
processing
Purchase
and
commission
processing
packing
materials
Agreement
pricing
Determined
by agreement
17324 9.08% 18000
No Cash No
April 23rd
2018
-
Yantai
Changyu
Group Co.Ltd.Parent
company
Licensed
use of
intangible
assets
Licensed use
of trademark
and patent
Agreement
pricing
Determined
by agreement
7398 100.00% 7600
No Cash No
April 23rd
2018
-
Total - - 24722 -- 25600 - - - - -
Details of the return of large sales No
Actual performance of the estimated total amount for
daily operations related transactions by category that will
occur during this period. (if have)
No
Reason for the deference between transaction price and
market reference price(if available)
Not available
(3) Related transactions in relation to common foreign investment
□Available ?Not available
There are no related transactions in relation to common foreign investment during the report
period.
(4) Related current credit and debt transactions
?Available □Not available
Whether or not existing non-operating related credit and debt transactions
□Yes ?No
There are no non-operating related credit and debt transactions during the report period.
(5) Other major related transactions
□Available ?Not available
There are no other major related transactions during the report period.
17. Major and important contracts and execution results
(1) Trusteeship contract and leasehold issues
? Trusteeship situation
□Available ?Not available
There is no trusteeship situation during the report period.
? Contract situation
?Available □Not available
Contract situation description
During the report period about the Company’s contract operation situation please see “1.Thestructure of Enterprise group” in Annex 8 “Rights and interests of other subject” in thefinancial report of this report.Project in gains and losses for the Company to achieve more than 10% of the total profit
□Available ?Not available
There are no contract projects in gains and losses for the Company to achieve more than 10%
of the total profit during the report period.? Leasehold situation
?Available □Not available
Leasehold situation description
On January 1st 2017 the Company renewed the Space Lease Agreement with the controlling
shareholder Changyu Group. The Company leased the space with 15196.94 square meters
located at 174 Shihuiyao Road Zhifu DistrictYantai City. The rent per year is CNY1.4645
million with a rental period of 5 years from January 1st 2017 to December 31st 2021. On
January 1st 2017 the Company’s subordinate Sales&Marketing Co. of Yantai Changyu
Pioneer Wine Company Limited. Brand Sales Department renewed the Space Lease
Agreement with the controlling shareholder Changyu Group leasing the space with 42552.83
square meters located at 1 Jichang Road Zhifu DistrictYantai City and the space with 3038
square meters located at 56 Dama Road Zhifu District Yantai City which are all under the
name of controlling shareholder. The rent of the above spaces per year is CNY4.3935million
with a rental period of 5 years from January 1st 2017 to December 31st 2021.On July 1st 2017 this company signed a house-leasing contract with Yantai Shenma
Packaging Company Limited. According to this contract since July 1st 2017 this company
leased property to Yantai Shenma Packaging Company Limited for a business purpose with
the annual rent of CNY1626880. This contract expires on June 30th 2022.
For other leasehold situation please refer to financial report.notes.
Project in gains and losses for the Company to achieve more than 10% of the total profit
□Available ?Not available
There are no leasehold projects in gains and losses for the Company to achieve more than
10% of the total profit during the report period.
(2) Major guarantee
?Available □Not available
? Guarantee situation
Unit: CNY’0000
External guarantee of the Company and its subsidiaries（excluding guarantee to subsidiaries）
Guarantee object
name
Disclosure date of
related
announcement
about guarantee
quota
Guarantee
quota
Actual date of
occurrence (date
of agreement)
Actual
guarantee
amount
Guarantee
type
Guarantee
Period
Whether or not
complete
implementation
Whether or
not belong to
related-party
guarantee
Yantai Economic
and Technological
Development
Zone Management
Council.
2016.12.22 34160 2016.12.21 34160
Mortgage;
Pledge
10years No No
Total of the external guarantee quota
approved during the report period (A1) 0
Total of the actual external
guarantee amount during the
report period (A2)
0
Total of the external guarantee quota
approved by the end of the report period
(A3)
34160
Balance of the actual
external guarantee by the
end of the report period
(A4)
34160
Guarantee situations between the Company and subsidiaries
Guarantee object
name
Disclosure date of
related
announcement about
guarantee quota
Guarantee
quota
Actual date of
occurrence (date
of agreement)
Actual
guarantee
amount
Guarantee
type
Guarantee
Period
Whether or not
complete
implementation
Whether or
not belong to
related-party
guarantee
Sales &
Marketing
Company of
Yantai Changyu
2016.10.31 10000 2016.11.05 10000 Joint liabilityassurance 2 years No Yes
Pioneer Wine
Company Limited
Yantai Changyu
Pioneer Wine
Company Limited
2016.12.22 11984 2016.12.21 11984
Mortgage;
Pledge
10 years No Yes
Yantai Changyu
Wine Research
and Development
Company Limited
2016.12.22 72176 2016.12.21 72176
Joint
liability
assurance;
Mortgage
10 years No Yes
Kilikanoon Estate
Pty Ltd 2017.12.12 7100 2018.01.09 7100
Joint
liability
assurance
1 year No Yes
Total of the guarantee quota approved to
subsidiaries during the report period
(B1)
0
Total of the actual guarantee
amount for subsidiaries
during the report period
(B2)
7100
Total of the guarantee quota approved to
subsidiaries by the end of the report
period (B3)
89276
Balance of the actual
guarantee for subsidiaries by
the end of the report period
(B4)
89276
Guarantee situations between subsidiaries
Guarantee object
name
Disclosure date of
related
announcement
about guarantee
quota
Guarantee
quota
Actual date of
occurrence (date
of agreement)
Actual
guarantee
amount
Guarantee
type
Guarantee
Period
Whether or not
complete
implementation
Whether or
not belong to
related-party
guarantee
Hacienda Y
Vinedos Marques
Del Atrio. SL
2016.04.29 3502 2015.10.08 3502
Mortgage;
Long term No No
Indomita Wine
Company Chile
SpA
2018.04.23 1986 2018.04.20 1986
Mortgage;
Long term No No
Total of the guarantee quota approved
to subsidiaries during the report period
(C1)
0
Total of the actual guarantee
amount for subsidiaries
during the report period
(C2)
5488
Total of the guarantee quota approved
to subsidiaries by the end of the report
period (C3)
5488
Balance of the actual
guarantee for subsidiaries by
the end of the report period
(C4)
5488
Total guarantee amount of the Company（Total of above three major items）
Total of the approved guarantee quota
during the report period（A1+B1+C1） 0
Total of the actual guarantee
amount during the report
period（A2+B2+C2）
12588
Total of the approved guarantee quota
by the end of the report period
（A3+B3+C3）
128924
Balance of the actual
guarantee by the end of the
report period（A4+B4+C4）
128924
The proportion of actual total guarantee amount (A4+B4+C4)
accounting for the Company’s net asset 13.42%
Among :
The amount of guarantee for shareholders actual controllers and their related
parties（D） 0
The amount of debt guarantee for the guaranteed objects whose asset-liability
ratio is more than 70% directly or indirectly（E） 0
Total amount of guarantee of the part that exceeds 50% of net assets（F） 0
Total amount of the above-mentioned three items（D+E+F） 0
Explanation for undue guarantees that have happened warranty liability or No
may take joint payback liabilities during the report period (if have)
Explanation for violating due process to provide external guarantee (if have) No
Specific explanation on adopting complex guarantee type
No.
? Illegal external guarantee
□Available ?Not available
There is no illegal guarantee situation during the report period.
(3) Entrusting others to manage cash assets
? Financial management entrustment
□Available ?Not available
There is no financial management entrustment during the report period.? Loan entrustment
□Available ?Not available
There is no loan entrustment during the report period.
(4) Other important contracts
□Available ?Not available
There are no other important contracts during the report period.
18. Social Responsibility
(1) Social responsibility performance
Please refer to 2018 Annual Social Responsibility Report disclosed on Securities Times China Securities Newspaper and www.cninfo.com.cn by
the Company.
(2) Targeted poverty alleviation social responsibility performance
① Targeted poverty plan
The Company has reached the mutual agreement with Zhuqiao Town Party Committee Government and Da Langya Village Committee to
establish professional grape cooperative. It plans to help to conduct the construction of 100 mu of vineyard per year from 2019 to 2021 with a
total area of 300 m and also to sign grape purchase contract in order to help local villagers to get rid of poverty and become better off.② Summary of annual targeted poverty
Related leaders of the Company visited the village three times held meetings three times and assisted to drill three wells.③ Targeted poverty effectiveness
The Company has completed initial preparation work of targeted poverty effectiveness for Da Langya Village.④ Subsequent targeted poverty plan
No
(3) Environmental protection related situation
Whether the listed company and its subsidiaries belong to major polluters published by the environmental protection department
□Available ?Not available
The mainly pollutant of the Company is the sewage generated in the productive process which has been discharged with reached standards.There is no pollution situation occurred during this report period.
19. Other Major issues
□Available ?Not available
There are no other major issues need to be explained during the report period.
20. Major issues of Company’s subsidiaries
□Available ?Not available
VI. Changes in Shares and the Shareholders’ Situation
1. Changes in shares
(1) Changes in shares
Unit: share
Amount before this change Change (+ -) Amount after this change
Amount
Percentage
%
Allot
new
share
Distribute
bonus share
Transfer
other
capital to
share
capital
others Sub total Amount Percentage%
1、Unrestricted shares 685464000 100.00% 685464000 100.00%
(1)、A shares 453460800 66.15% 453460800 66.15%
(2)、B shares 232003200 33.85% 232003200 33.85%
2、Total shares 685464000 100.00% 685464000 100.00%
Cause of share change
□Available ?Not available
Approval of share change
□Available ?Not available
Transfer of changed shares
□Available ?Not available
Implementation progress of share buy-back
□Available ?Not available
Implementation progress of reducing holding repurchased share through the way of centralized bidding
□Available ?Not available
The influence of share change on the financial indicators such as basic earnings per share diluted earnings per share of the latest year and the
latest period net asset per share belonging to the Company’s common shareholders etc.
□Available ?Not available
Other contents the Company thinks necessary or securities regulatory departments ask to make public.
□Available ?Not available
(2) Changes in restricted shares
□Available ?Not available
2. Securities issuance and listing situation
(1) Securities issuance (exclude preferred share) during report period
□Available ?Not available
(2) Explanation of change in Company’s total shares and shareholding structure and change in Company’s assets and liability structure
□Available ?Not available
(3) Current employee shares
□Available ?Not available
3. Situation for shareholders and the actual controllers
(1) The number of shareholders of the Company and the shareholdings
Unit：share
Total shareholders in
the report period
42980
Total number of
shareholders by the end of
last month before the
disclosure day of the
annual report
45104
Total number of preferred
shareholder recovering
voting power by the end
ofreport period (if have)
(see note 8)
0
Total number of preferred
shareholder recovering
voting power by the end of
last month before the
disclosure day of the annual
report (if have) (see note 8)
0
Shareholders holding more than 5% or the top 10 shareholders holding situation
Name of Shareholders Character of shareholders Percentage(%)
Shares held until the
end of the report period
Changes
during the
report
period
Number
of
restricte
d
shares
Number of
unrestricted
shares
Pledged or frozen
Share
status
Amount
YANTAI
CHANGYU GROUP
CO. LTD.
Domestic non-state-owned
legal person
50.40% 345473856 345473856 0
GAOLING
FUNDL.P.
Foreign legal person
3.08% 21090219 21090219 0
CHINA State-owned legal person 2.25% 15440794 15440794 0
SECURITIES
FINANCE CORP
BBH BOS S/A
FIDELITY FD -
CHINA FOCUS FD
Foreign legal person 2.22% 15241826 15241826 0
SHENWAN
HONGYUAN
SECURITIES(HONG
KONG) LIMITED
Foreign legal person
1.22% 8347663 8347663 0
FIDELITY
PURITAN TRUST:
FIDELITY SERIES
INTRINSIC
OPPORTUNITIES
FUND
Foreign legal person 0.89% 6100762 6100762 0
TAIKANG LIFE
INSURANCE
LIMITED
LIABILITY
COMPANY-- UNIT
–LINKED--
INDUSTRY
CONFIGURATION
Domestic non-state-owned
legal person
0.75% 5159757 5159757 0
GUOTAI JUNAN
SECURITIES(HONG
KONG) LIMITED
Foreign legal person 0.74% 5043507 5043507 0
CENTRAL HUIJIN State-owned legal person 0.69% 4761200 4761200 0
ASSET
MANAGEMENT
LIMITED
TAIKANG LIFE
INSURANCE
LIMITED
LIABILITY
COMPANY-DIVIDE
ND-PERSONAL
DIVIDEND-019L-FH
002 SHEN
Domestic non-state-owned
legal person
0.69% 4746954 4746954 0
Strategic investors or legal result of the placement of new
shares to become a top 10 shareholders(if have)(see note 3)
No
The explanation for the associated relationship and
accordant action
Among the top 10 shareholders there is associated relationship between Taikang Life
Insurance Limited Liability Company- Unit-linked- Industry Configuration and Taikang
Life Insurance Limited Liability Company- Dividend- Personal dividend-019L-FH002
Shen. Yantai Changyu Group Company Limited has no associated relationship or
accordant action relationship with the other 9 listed shareholders and the relationship
among the other shareholders is unknown.The top 10 shareholders with unrestricted shares
Name of Shareholders
Number of unrestricted
shares held until the end of
the year
Type of share
Type of share Amount
YANTAI CHANGYU GROUP CO. LTD. 345473856 A 345473856
GAOLING FUNDL.P. 21090219 B 21090219
CHINA SECURITIES FINANCE CORP 15440794 A 15440794
BBH BOS S/A FIDELITY FD - CHINA FOCUS FD 15241826 B 15241826
SHENWAN HONGYUAN SECURITIES(HONGKONG) LIMITED 8347663 B 8347663
FIDELITY PURITAN TRUST: FIDELITY SERIES INTRINSIC
OPPORTUNITIES FUND
6100762 B 6100762
TAIKANG LIFE INSURANCE LIMITED LIABILITY COMPANY-- UNIT
–LINKED-- INDUSTRY CONFIGURATION
5159757 A 5159757
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED 5043507 B 5043507
CENTRAL HUIJIN ASSET MANAGEMENT LIMITED 4761200 A 4761200
TAIKANG LIFE INSURANCE LIMITED LIABILITY
COMPANY-DIVIDEND-PERSONAL DIVIDEND-019L-FH002 SHEN
4746954 A 4746954
The explanation for the associated relationship and accordant action of the top 10
shareholders with unrestricted shares the the associated relationship and
accordant action between the top 10 shareholders with unrestricted shares and the
top 10 shareholders
Among the top 10 shareholders there is the associated relationship
between Taikang Life Insurance Limited Liability Company-
Unit-linked- Industry Configuration and Taikang Life Insurance
Limited Liability Company- Dividend- Personal
dividend-019L-FH002 Shen. Yantai Changyu Group Company
Limited has no associated relationship or accordant action
relationship with the other 9 listed shareholders and the relationship
among the other shareholders is unknown.
Explanation for the top 10 shareholders who involved in financing activities and
stock trading business (if have)(see note 4)
The top 10 shareholders do not involve in financing activities and
stock trade business.Whether or not the Company’s top 10 common shareholders and shareholders with unrestricted shares take agreed repurchase trading during the
report period
□Yes ?No
There is no agreed repurchase trading taken by the Company’s top 10 common shareholders and shareholders with unrestricted shares during the
report period.
(2) Situation for the controlling shareholders of the Company
Property of holding shareholders: Property of holding main body undefined
Type of holding shareholders: Legal representative
Name of controlling shareholder
Legal
representative
Establishment
date
Organization
code
Main business
Yantai Changyu Group Co. Ltd.Zhou
Hongjiang
1997.04.27
91370600265645
8244
Production and distribution of wine healthy
liquor distilled liquor and non-alcohol
beverages planting of agricultural products
and export business under the scope of
permission.
Equity situation for the other domestic listed
companies controlled or shared by the
controlling shareholders during the report
period
No.
Changes in the controlling shareholder during the report period
□Available ?Not available
There are no changes in the controlling shareholder during the report period.
(3) Situation for the actual controllers of the Company
Property of actual controllers: domestic other institutions; foreign other institutions
Type of actual controllers: Legal representative
Name of actual
controllers
Legal
representative
Establishment
date
Organization
code
Main business
Yantai Yuhua Investment Jiang Hua 2004.10.28 76779294－7 Under state permission property investment tenancy of machine and facility
& Development Co. Ltd wholesale and retail of construction material chemical products (chemical
hazard products excluded) hardware and electronical products grape
plantation.ILLVA Saronno Holding
Spa
Augusto
Reina
1984.07.25 －
Directly or indirectly conduct the production and distribution of food
products (alcoholic products included) as well as industrial commercial
financial and serdeputy activities of any other kinds through joint-stock
companies and organizations
International Finance
Corporation
Philippe LE
HOUEROU 1956.07.25 －
International Finance Corporation is one of the members of World Bank
mainly dedicated to investment in private sectors of developing countries
while providing technical support and consultation serdeputy. The
corporation is a multilateral financial institution that ranks first in the world
in terms of providing capital stock and loans to developing countries. Its
purpose is to promote sustainable investments of private sectors of
developing countries in order to alleviate poverty and improve people’s life.Yantai Guofeng
Investment Holdings Co.Ltd
Rong Feng 2009.02.12 00426068-6
Operating management of state-owned property right (stock right) authorized
by State-owned Assets Supervision and Administration Commission of
Yantai Municipal Government; Financing investment and operating
management of government projects such as strategic investment and
industrial investment and so on; Capital operation (including acquisition
reintegration and transfer etc) of state-owned property right and state-owned
stock right within the scope of authorization; Venture capital investment
business; Agency of venture capital investment business of other venture
investment enterprises or individuals; Participation in the establishment of
venture capital investment enterprises and venture capital investment
management consultant institutions; Investment and financing serdeputy
business; Investment and financing consultant business; Other business
authorized by State-owned Assets Supervision and Administration
Commission of Yantai Municipal Government.(Projects need to be
authorized in accordance with the law could carry out business activities only
after the approval of relevant departments )
Equity situation for the
other domestic listed
companies controlled by
the actual controller
during the report period
No
Changes of the actual controllers during the report period
□Available ?Not available
There are no changes in actual controllers during the report period.
Introduction for property right and control relations between the Company and its actual controllers
Actual controller controls the Company through a trust or other asset management ways
□Available ?Not available
(4) Other institutional shareholders holding more than 10% shares
□Available ?Not available
(5) Shares reduction situations of holding shareholders actual controllers restructuring side and other commitment subjects
□Available ?Not available
VII. Related Situation of Preferred Shares
□Available ?Not available
There are no preferred shares during the report period.
VIII. Situation for Directors Supervisors Senior Executives and Staff
1. Changes in shareholdings of directors supervisors and senior executives
Name Post Status
Gen
der
Age
Beginning
date of the
post
Ending
date of the
post
Shares
held at the
beginning
of the
period
Increased
shares
during
the
period
Decreased
shares
during the
period
Other
changes of
shares held
Shares held at
the end of the
period
Zhou
Hongjiang Chairman
present
incumbent
M 54 2002.05.20 2019.05.27 0 0 0 0 0
Sun Liqiang Director present
incumbent
M 71 1997.09.18 2019.05.27 0 0 0 0 0
Leng Bin Director present
incumbent
M 56 2000.08.22 2019.05.27 0 0 0 0 0
Sun Jian General manager present
incumbent
M 52 2006.03.22 2019.05.27 0 0 0 0 0
Qu Weimin
Director and
Secretary to the
Board of Directors
present
incumbent
M 61 1997.09.18 2019.05.27 0 0 0 0 0
Zhang Ming Director present
incumbent
M 45 2016.05.26 2019.05.27 0 0 0 0 0
Augusto
Reina Director
present
incumbent
M 78 2006.12.07 2019.05.27 0 0 0 0 0
Aldino
Marzorati Director present M 66 2006.12.07 2019.05.27 0 0 0 0 0
incumbent
Antonio
Appignani Director
present
incumbent
M 80 2006.12.07 2019.05.27 0 0 0 0 0
Wei Anning Director present
incumbent
M 55 2017.06.15 2019.05.27 0 0 0 0 0
Wang
Zhuquan
Independent
director
present
incumbent
M 53 2014.05.23 2019.05.27 0 0 0 0 0
Wang Shigang Independentdirector
Present
incumbent
M 53 2011.05.10 2019.05.27 0 0 0 0 0
Luo Fei Independentdirector
Present
incumbent
M 66 2016.09.23 2019.05.27 0 0 0 0 0
Liu Yan Independentdirector
Present
incumbent
F 45 2016.09.23 2019.05.27 0 0 0 0 0
Guo Guoqing Independentdirector
Present
incumbent
M 56 2018.12.04 2019.05.27 0 0 0 0 0
Kong
Qingkun
Chairman to the
Board of
Supervisors
present
incumbent
M 46 2013.05.14. 2019.05.27 0 0 0 0 0
Zhang Lanlan Supervisor present
incumbent
F 49 2013.05.14. 2019.05.27 0 0 0 0 0
Liu Zhijun Supervisor present
incumbent
M 38 2016.05.26 2019.05.27 0 0 0 0 0
Yang Ming Deputy generalmanager
Leaving the
post
M 60 1998.08.12 2018.02.28 0 0 0 0 0
Li Jiming Chief engineer present
incumbent
M 52 2001.09.14 2019.05.27 0 0 0 0 0
Jiang Hua Deputy generalmanager
present
incumbent
M 55 2001.09.14 2019.05.27 0 0 0 0 0
Peng Bin Deputy generalmanager
present
incumbent
M 52 2018.01.10 2019.05.27 0 0 0 0 0
Jiang Jianxun Chief financialofficer
present
incumbent
M 52 2018.01.10 2019.05.27 0 0 0 0 0
Pan Jianfu General managerassistant
present
incumbent
M 43 2018.04.19 2019.05.27 0 0 0 0 0
Liu Shilu General managerassistant
present
incumbent
M 44 2018.04.19 2019.05.27 0 0 0 0 0
Xiao Zhenbo General managerassistant
present
incumbent
M 42 2018.04.19 2019.05.27 0 0 0 0 0
Total -- -- -- -- -- -- 0 0 0 0 0
2. Changes in the Company’s directors supervisors and senior executives
?Available □Not available
Name Position Type Date Reason
Sun Liqiang Chairman Leaving the post 2017.12.08 Volunteer to resign
as chairman and no
longer serve as
chairman; currently
serve as director of
the Company
Zhou Hongjiang Deputy
Chairman
Leaving the post 2018.01.10 Volunteer to resign
as deputy chairman
no longer serve as
deputy chairman and
be elected as
chairman; currently
serve as chairman of
the Company
Zhou Hongjiang General
Manager
Dismission 2018.01.10 Volunteer to resign
as general manager
and no longer serve
as general manager;
currently serve as
chairman of the
Company
Zhou Hongjiang Chairman Appointment and
dismission
2018.01.10 Be elected as
chairman of the
Company
Leng Bin Deputy
general
manager
Dismission 2018.01.10 Volunteer to resign
as deputy general
manager and no
longer serve as
deputy general
manager; currently
serve as director of
the Company
Sun Jian Deputy
general
manager
Appointment and
dismission
2018.01.10 Be appointed as
general manager and
dismissed from the
post of deputy
general manager;
currently serve as
general manager of
the Company
Peng Bin Deputy
general
manager
Appointment and
dismission
2018.01.10 Be appointed as
deputy general
manager and
currently serve as
deputy general
manager of the
Company
Jiang Jianxun Chief
financial
officer
Appointment and
dismission
2018.01.10 Be appointed as
chief financial
officer and currently
serve as chief
financial officer and
financial manager of
the Company
Guo Guoqing Independent director
Appointment and
dismission 2018.12.04
Be appointed as
independent director.
3. Situation for work experience
The professional background main work experiences and present positions of the Company’s
directors supervisors and senior executives
(1) Members of Board of Directors
Mr. Zhou Hongjiang male 54 Chinese with doctor degree senior engineer was the
representative of the 12th National People’s Congress deputy general manager of the
Company and general manager of the Sale Company. From 20th May 2002 to 10th January
2018 he served as director deputy chairman and general manager of the Company and
concurrently deputy chairman of Changyu Group. He is the representative of the 13th
National People’s Congress chairman of the Company chairman and party secretary of
Changyu Group now.
Mr. Sun Liqiang male 71 Chinese with college degree senior economist was the
representative of the 10th and 11th National People’s Congress. From 18th September 1997 to
10th January 2018 he served as chairman of the Company and concurrently chairman and
general manager of Changyu Group. He is director of the Company now.Mr. Leng Bin male 56 Chinese with master degree senior accountant was deputy section
chief and section chief of Yantai Audit Bureau he served as director and deputy general
manager of the Company from 15th June 2000 to 10th January 2018. He is director of the
Company and concurrently deputy party secretary director and general manager of Changyu
Group now.Mr. Qu Weimin male 61 Chinese bachelor of engineering，senior economist worked atYantai Commission for Restructuring the Economic System and Research Office of Yantai
Government and has more than 20 years of experience in the aspect of macroeconomic study
and enterprise operation and management he was deputy general manager of the Company.He has served as director and concurrently secretary to the board of directors of the Company
since 18th September 1997.
Mr. Zhang Ming male 45 Chinese with bachelor degree senior engineer was planner of
Yantai Synthetic Leather General Factory plan specialist of business department deputy
section chief of plan and statistic section in assets management department and section chief
of plan and statistic section in assets management department in Yantai Wanhua Synthetic
Leather Group Co. Ltd risk control section chief of Yantai Guofeng Investment Holding Co.Ltd. and concurrently director and deputy general manager of Yantai Guoyu Finance Lease
Co. Ltd deputy general manager and secretary to the board of directors of Wanhua Efficient
Technology Group Co. Ltd. and general manager of Yantai State-owned Asset Management
Co. Ltd. chairman of Yantai Guofeng Investment Holding Co. Ltd. He is director of the
Company.
Mr. Augusto Reina male 78 Italian is now serving as chief executive officer of several
companies including Illva Saronno Holding SpA and Illva Saronno Investment SRL member
of the board of directors of Barberini Spa director of Federvini (Italian Alcohols Production
and Export Association) director of Istituto Del Liquore (Wine Research Institute) director
of Assovini (Sicily Viniculture and Wine Production Association) and director of Changyu
Group. He has been director of the Company since 27th April 2006.Mr. Aldino Marzorati male 66 Italian with bachelor degree is now the general manager of
Illva Saronno Holding SpA and director of the board of directors of some branches under the
group company and the director of Changyu Group. He has been director of the Company
since 27th April 2006.Mr. Antonio Appignani male 80 Italian with bachelor degree is deputy chairman of Italian
Business Consultation Committee chief of Professional Ethics Committee teacher of
vocational training course of Industrial and Commercial Consultation Committee member of
Economic and Commercial Committee of the public university “G. D Annunzio” and
concurrently serving as member of the board of directors of different companies and member
of the board of directors of several companies under Illva Group and the director of Changyu
Group.Mr. Wei Anning male Chinese 55 with doctor degree ever served as agricultural
economist of the World Bank director of North East Asia Food & Agribusiness Research of
the Rabobank China CEO of the Fortis Bank Belgium executive deputy president of the
New Hope Group (Sichuan) president of Shandong Liuhe Group director of Hangzhou
United Rural Commercial Bank Co. Ltd director of Xinjiang Kuntai Group Co. Ltd.chairman of the Shandong Chinwhiz Group. He is good at corporate governance enterprise
development strategy and equity investments. Now he is serving as executive director and
general manager of Shanghai Gueva Fund Management Co. Ltd Co. Ltd executive director
of both Ningxia Gueva Fund Management Co. Ltd and Ningbo Gueva Fund Management
Co. Ltd independent director of Dachan Food (Asia) Co. Ltd Orient Securities Co. Ltd and
Fortune SG Fund Management Co. Ltd. director of Jiangsu Financial leasing Co. Ltd. He is
serving as director of the Company.Mr. Wang Shigang male 53 Chinese MBA and Certified Public Accountant is now the
board chairman of Shandong Tianhengxin Construction Cost Consultation Co. Ltd.. He
previously served as independent director of the Company. He acts as the independent
director again from 14th May 2013.Mr. Wang Zhuquan male 53 Chinese doctor of management (accountancy) first batch of
national accounting academic leading personals of Financial Department the entrant of
accountant master cultivation project of Financial Department outstanding teacher of
Shandong province Government Special Allowance expert acted as independent director
from 13th May 2010 to 12th May 2013. Now he is the professor and the doctoral supervisors
of the Ocean University of China as well as independent director of the some listed
companies which could be exemplified as Qingdao DoubleStar Co. Ltd. He acts as the
independent director of the Company again from 23rd May 2014.Mr. Luo Fei male 66 Chinese with doctor degree visiting scholar of University of Toronto
doctoral supervisors Government Special Allowance expert first batch of trans-century
subject (academic) leading personals of Financial Department. He successively served as the
dean of accounting college in Zhongnan University of Economics and the dean of accounting
college in Zhongnan University of Economics and Law. He focuses on the study of financial
accounting cost accounting financial management and so on. He has worked in companies
for many years and has practical working experience with companies. Now he is serving as
independent director of the Company.Ms. Liu Yan female 45 Chinese with master degree was honored as national outstanding
lawyer in 2005. Her main practice areas include issuing and listing of domestic and foreign
stocks merger and acquisition and foreign investment. She now is the partner of Tian Yuan
Law Firm and serving as independent director of the Company.Mr. Guo Guoqing male 56 Chinese winner of the special allowance of the State Council.He served as a committee member of the 7th All-China Youth Federation committee member
of the 8th 9th and 10th National Committee of the Chinese People's Political Consultative
Conference representative of the 11th National People's Congress deputy dean of School of
Business Administration of Renmin University of China deputy secretary general of Zhuhai
Municipal People's Government of Guangdong Province independent director of China
Everbright Bank evaluation expert of the Department of Management Science of the
National Natural Science Foundation of China associate editor of the Journal of Chinese
Marking and independent director of China-Tin Group. He currently serves as a professor and
doctoral supervisor at the School of Business of Renmin University of China director of the
China Marketing Research Center of Renmin University deputy president of the China
Business History Society director of the Brand Professional Committee of the China
Business History Society international researcher of Corporate Reputation Center of The
University of Oxford side-bar doctoral tutor and professor of Panyapiwat Institute of
Management consultant of China University Marketing Research Association director of
Gree Real Estate and independent director of Minjiakefeng Information Technology Co. Ltd
Nan Yue Fund Zhejiang Fengrun Biotech Co. Ltd Vats Liquor Chain Store Management
Joint Stock Co. Ltd. and Livzon Pharmaceutical Group Inc. He serves as independent
director of the Company.
(2) Members of board of supervisors
Mr. Kong Qingkun male 46 Chinese MBA and economist served as the section member of
production department in the healthy liquor branch office clerk and deputy director and
director of general manager office.Ms. Zhang Lanlan female 49 with bachelor degree and economist served as
deputy-manager of the Company’s import/export company manager of import department.She now is director of board of directors’ office.
Mr. Liu Zhijun male 38 Chinese with bachelor degree worked in foreign fund section of
Economy and Trade Bureau in Longkou economic development zone served as news section
member of propaganda department in Longkou Municipal Committee member of
propaganda and mass work section member of planning section deputy director member of
programming development and enterprise distribution section deputy director member and
deputy chief of programming development section. He now is supervisor of the Company.
(3) Other senior executives
Mr. Sun Jian male 52 Chinese MBA served as deputy general manager of the Company
from 22nd March 2006 to 10th January 2018. He serves as general manager of the Company
and director of Changyu Group.Mr. Li Jiming male 52 Chinese with doctor degree application researcher has been
serving as chief engineer of the Company since 14th September 2001 and concurrently
director of Changyu Group.Mr. Jiang Hua male 55 Chinese with master degree senior engineer has been serving as
deputy general manager of the Company since 14th September 2001.Mr. Peng Bin male 52 MBA senior engineer ever successively served as deputy director of
wine-blending workshop and director of wine-storage workshop of Brandy Company under
Yantai Changyu Group Company Limited section chief of Technical Transformation
Department and minister of Investment and Development Department as well as deputy
general manager of Yantai Changyu Group Company Limited general manager assistant of
Yantai Changyu Pioneer Wine Company Limited. He serves as deputy general manager of
the Company.Mr. Jiang Jianxun male 52 Chinese MBA and accountant served as Financial Manager of
the Company from 20th May 2002 to 10th January2018. He serves as chief financial officer
of the Company.
Post in the shareholder’s company
?Available □Not available
Name Shareholder’s Company Post
Beginning date
of the post
Ending date of
the post
Paid by
shareholder’s
company or not
Sun Liqiang Yantai Changyu Group Co. Ltd. Chairman andgeneral manager 2013.10.08 2018.01.10 No
Zhou Hongjiang Yantai Changyu Group Co. Ltd. Deputy chairman 2013.10.08 2018.01.10 No
Zhou Hongjiang Yantai Changyu Group Co. Ltd. Chairman 2018.01.10 2022.01.10 No
Leng Bin Yantai Changyu Group Co. Ltd. Director andgeneral manager 2018.01.10 2022.01.10 Yes
Li Jiming Yantai Changyu Group Co. Ltd. Director 2013.10.08 2022.01.10 No
Sun Jian Yantai Changyu Group Co. Ltd. Director 2013.10.08 2022.01.10 No
Zhang Ming Yantai Changyu Group Co. Ltd. Director 2013.10.08 2018.11.15 No
Augusto Reina Yantai Changyu Group Co. Ltd. Director 2013.10.08 2022.01.10 No
Aldino Marzorati Yantai Changyu Group Co. Ltd. Director 2013.10.08 2022.01.10 No
Antonio Appignani Yantai Changyu Group Co. Ltd. Director 2013.10.08 2022.01.10 No
Wei Anning Yantai Changyu Group Co. Ltd. Director 2017.04.18 2022.01.10 No
Explanation for the post in the
shareholder’s company
Mr. Zhou Hongjiang serves as the position of chairman in the shareholders company from 10th January
2018 to 10th January 2022. Mr. Leng Bin serves as the position of general manager in the shareholders
company from 10th January 2018 to 10th January 2022.
Post at other companies
?Available □Not Available
Name Other’s company Post at other company
Beginning
date of the
post
Ending date of
the post
Paid by other
company or not
Leng Bin
Yantai Changyu Zhongya
Medicine & Healthy Liquor Co.Ltd
Director and
legal representative
2012.09.10 No
Explanation for the post in the
shareholder’s company
No.
Disciplinary actions taken by securities regulators in recent 3 years to the Company’s directors supervisors and senior management both on the
job and left during the report period
□Available ?Not available
4. Salary of directors supervisors and senior executives
Decision-making process the basis of determination the actual payment of directors supervisors and senior executives
The salary for the independent directors is paid according to the resolution of shareholders’ meeting. The salary for the chairman directors with
administration duty supervisors managers and other senior management should be paid on basis of the evaluation result according to the
Proposal on Assessment Methods of the Company’s Senior Officers’ Performance from 2014 to 2017 which was passed during the Board of
Directors’ meeting.
Salary of directors supervisors and senior executives during the report period
Unit: CNY’0000
Name Post Gender Age Status
Total reward from
the Company
before tax
Whether get
reward from
related parties of
the Company
Zhou Hongjiang Chairman M 54 present incumbent 154.81 No
Sun Liqiang Director M 71 present incumbent 138.89 No
Leng Bin Director M 56 present incumbent 0 Yes
Sun Jian General manager M 52 present incumbent 140.41 No
Qu Weimin Director and Secretary to theBoard of Directors M 61 present incumbent 94.31 No
Zhang Ming Director M 45 present incumbent 0 No
Augusto Reina Director M 78 present incumbent 0 No
Aldino Marzorati Director M 66 present incumbent 0 No
Antonio Appignani Director M 80 present incumbent 0 No
Wei Anning Director M 55 present incumbent 0 No
Wang Zhuquan Independent Director M 53 present incumbent 8 No
Wang Shigang Independent Director M 53 present incumbent 8 No
Luo Fei Independent Director M 66 present incumbent 8 No
Liu Yan Independent Director F 45 present incumbent 8 No
Guo Guoqing Independent Director M 56 present incumbent 0.67 No
Kong Qingkun Chairman to the Board ofsupervisors M 46 present incumbent 71.29 No
Zhang Lanlan supervisor F 49 present incumbent 21.06 No
Liu Zhijun supervisor M 38 present incumbent 0 No
Yang Ming Deputy-general manager M 60 leaving the post 17.92 No
Li Jiming Chief Engineer M 52 present incumbent 107.19 No
Jiang Hua Deputy-general manager M 55 present incumbent 101.19 No
Peng Bin Deputy-general manager M 52 present incumbent 105.17 No
Jiang Jianxun Chief financial officer M 52 present incumbent 106.84 No
Pan Jianfu General manager assistant M 43 present incumbent 78.26 No
Liu Shilu General manager assistant M 44 present incumbent 48.32 No
Xiao Zhenbo General manager assistant M 42 present incumbent 91.88 No
Total - - - - 1310.21 -
The awarded equity incentives for the directors supervisors and senior executives of the Company during the report period
□Available ?Not available
5. Staff of the Company
(1) Staff number specialty constitution and education degree
Incumbent staff number of parent company (people) 1339
Incumbent staff number of major subsidiary companies (people) 1894
Total incumbent staff (people) 3233
Total staff getting paid in current period (people) 3233
Retired staff number whose expenses are undertaken by parent
company or subsidiary companies (people)
0
Specialty constitution
Category Number of people (people)
Administrative staff 263
Technical staff 165
Financial staff 152
Production staff 1000
Sales staff 1653
Total 3233
Education degree
Category Number (People)
Bachelor and above 1125
Junior College 1118
Technical secondary school 546
Senior high school and below 444
Total 3233
(2) Remuneration policy
The Company builds and improves the remuneration and welfare system including salary system incentive mechanism social security and
health insurance and so on to make sure that all staff could be insured. In accordance with the law the Company buys social old-age insurance
medical insurance occupational injury insurance unemployment insurance and maternity insurance and pay housing fund for staff. Based on
the principle of “distribution according to work equal pay for equal work” the Company pays the staff’s remuneration timely. With the increase
of the Company’s profitability the Company steadily improves the staff’s remuneration
and welfare and provides the competitive salary income and development space of equal
opportunity for staff.
(3) Training plan
In order to further improve the employees’ comprehensive quality and professional skill
the Company plans to invest CNY3.02million in 2019 for employee training plan which
is shown as follows:
① Senior and Middle-level Managers
1) General training
Employ professional lecturers to the company or through remote network video for
centralized lectures could be as methods of training. During the year four topics will be
arranged for middle and senior management staff once for each quarter and one to two
days for each training.
2) Professional training
Based on their respective work organize them to attend Entrepreneur High-end Forum
and Summit Meeting and go to domestic and foreign successful enterprise for visit and
study; attend university correspondence self-study examination MBA or other further
education for master degree; organize professional management cadres to attend
vocational qualification examination for professional certificate; to attend special
training at least twice a year such as safety technology facility finance WSET
tourism etc which are organized by special management department.② Marketing personnel
1) General training
Independently study marketing textbooks mainly focusing on ‘Growth’ as well as
training materials including the company’s related management system production
knowledge sales responsibility system etc.
2) Professional training
Professional lecturers would be employed to the company or through remote internet
videos to give lectures about successful liquor cases current economic trend research
for domestic and foreign wine industry and other topic in order to take training for
personnel whose level is or above manager assistant in city marketing management
company once a quarter and one day for each time; take closed training for city
marketing manager on how to improve marketing skill as well as executive force of
sales policy once at the start of each month and one day for each time. For business
directors and other personnel take a combination training method of hiring lecturers and
going out to visit for studying they could be trained successful marketing cases and
marketing management concepts. This training is conducted once a quarter and one day
for each time.③ Production and management personnel whose level are below section chief
1) General training
Set courses that are aiming at improving employee management ability innovation
ability and executive ability hire a professional lecturer or university teacher to teach at
the company two times a year and one day per course; attend common-sense general
training including company culture regulatory framework and various liquor products
knowledge reinforce training in the aspect of human resources management;
independently study training materials provided by the company such as Growth and
Employee Handbook; attend outdoor quality expansion training once a year.
2) Professional training
Attend university correspondence self-study examination MBA or other further
education for master degree; attend vocational qualification examination for
professional certificate; based on personnel work attend special training at least twice a
year which are organized by special management department; for different types of
work the Company will organize to attend training which can improve professional
skill and operation level; technology backbones would be selected to attend overseas
training and learning exchange.
(4) Labor outsourcing
□Available ?Not available
IX. Corporate Governance
1. Current Corporate Governance Situation of the Company
(1) About shareholders and shareholders’ meeting
The Company has set up the Deliberation Rules of Shareholders’ Meeting and convened the
shareholders’ meetings in strict accordance with requirements of standard opinion of
shareholders’ meeting made the great effort to provide convenient conditions for more
shareholders to participate the shareholders’ meeting and ensured all shareholders to enjoy
same equity and well exercised their rights. The Company drew great attention to the
communication and exchange with shareholders actively responded the shareholders’
inquiry and questions and widely listened to the suggestions and comments from
shareholders.
(2) About the Company and holding shareholder
The Company has independent power on business and self-management and also be
independent of its holding shareholder on business staff assets organization and finance.The Board of Directors Board of Supervisors management team and also internal
organizations operated independently in the Company. The holding shareholder of the
Company could regulate its activities no other behavior was found that surpassed the
shareholders’ meeting to directly or indirectly interfere with the decision-making and
business activities of the Company or occupied any assets of the Company which damaged
the Company’s and medium & small shareholders’ interests.
(3) About the director and board of directors
The Company strictly appoints all directors in light of Company Law and Articles of
Associations. The qualifications of all directors are in line with the requirements of laws and
regulations. In accordance with the requirements of Corporate Governance Guidelines the
Company has carried out the cumulative voting system. At present the Company has four
independent directors accounting for about one three of all directors and the number and
composition of board of directors was basically in accord with requirements of regulations
and also Articles and Associations. All directors of the Company could work in the light of
regulations including Rules of Board of Directors’ Procedure and Working Rules for
Independent Directors punctually attended board of directors’ and shareholders’ meetings
actively took part in relevant knowledge training knew very well about the laws and
regulations concerned had a deep knowledge and long experience of practitioners and
performed their duties according to the law and regulations. The Board of Directors
convened the meetings in accordance with related rules and regulations.
(4) About supervisor and board of supervisors
The Company strictly elected all supervisors in light of Company Laws and Articles of
Associations. At present board of supervisors has three people among which one supervisor
is representative for staff the number and composition of board of supervisor was in accord
with requirements of regulations and rules. All supervisors of the Company could follow the
requirement of Rules of Board of Supervisors’ Procedure insist the principle of
responsibility to all shareholders seriously perform their duties effectively supervise and
present their independent opinion on important issues interrelated deals financial status the
duty performance of directors and managers of the Company.
(5) About performance evaluation and incentive system
The engagement of managers was open and transparent and accorded with laws and
regulations. The Company has established and gradually improved the performance
evaluation standard and formed efficient incentive system so as to ensure the salary of staff
to be linked with job performance.
(6) About stakeholders
The Company could fully respect and safeguard the legal rights of the party with relevant
benefit cooperate actively with the stakeholders jointly drive the Company to develop
continually and stably pay great attention to the issues such as local environmental
protection and public utilities etc. and assume full responsibilities for the social
responsibility.
(7) About the information disclosure and transparency
The Company has appointed the secretary to Board of Directors to be responsible for
investor relation management including information disclosure investor relations
management and reception of shareholders’ visit and consultation. The Company has also
assigned China Securities Newspaper Securities Times Honkong Commercial Daily and
web site http://www.cninfo.com.cn/ to disclose information punctually accurately and truly
disclosed any information in the light of requirement of relevant laws and rules and also
ensured all shareholders to have same opportunity to acquire any information.In order to further perfect the Company’s governance system during the report period the
Company formulates and improves Opinion of Brand Positioning Assessment Method of
Production Order Fulfillment Rate Assessment Method of Safety Management
Implementation Plan of Brandy Internal Quality Improvement and Technological Innovation
Project Implementation Opinion of Building Technical Communication Platform with
Overseas Enterprises Assessment and Evaluation Method of Contracted Bases in 2018
Assessment and Evaluation Method of Self-supporting Vineyards and so on.
Whether or not there is significant variance between the Company’s actual situation of
corporate governance and the normative documents about listed company governance issued
by China Securities Regulatory Commission.
□Yes ?No
There is no significant variance between the Company’s actual situation of corporate
governance and the normative documents about listed company governance issued by China
Securities Regulatory Commission.
2. Relative to the controlling shareholder independence of the Company on business
personnel assets organization and finance
(1) Personnel Arrangement
The Company’s general manager deputy general managers and other senior officers all of
whom were paid by the Company and did not hold any post in the controlling parties. The
Company was entirely independent in personnel arrangement conclusion and adjustment of
labor contracts thanks to its sound and independent system for labor personal and salary
management.
(2) Assets:
Tangible assets and Intangible assets including trademark industrial property right and
non-patent technologies were all clearly divided between the Company and the controlling
shareholder and all legal formalities were completed. The Company being a legal
independent entity consistently conducted business activities legally and provided no
guarantee in any form with its assets for its shareholders or individuals’ liabilities or any
other legal persons or natural persons. The Company owns trademarks including “黄金冰谷”
“爱斐堡” “爱菲堡” “爱斐” and “AFIP” etc. However due to some issues from the past
the Company permitted to use “Changyu” etc the intangible assets such as part of trademark
ownership and patent still held by the controlling shareholders. Except partial trademarks
which can not be peeled off “张裕”(Changyu) trademark trademarks and patents that could
have been registered or applied by the Company but were registered or applied by Changyu
Group who then authorized the Company for usage will be transferred to the Company by
Changyu Group for free before the end of 2019 in order to ensure the independence and
completeness of the Company’s assets.
(3) Finance
The Company has independent finance department chief account and financial staff and also
complete independent and standardized accounting system. The Company has also
established its own bank accounts duly and legally paying taxes workers insurance fund. All
financial individuals do not hold any concurrent posts in associated companies and are able to
make financial decisions independently. The Company has its own audit department which is
especially responsible for the internal audit work of the Company.
(4) Offices
The Company has set up a sound organizational framework in which the Board of Directors
and Board of Supervisors operate independently no superior and subordinate relationship
exists between the functional departments of the controlling shareholder. The Company has
its own independent production & business offices all functional departments are
independent to exercise their powers and carry out the production and business activities
independently.
(5) Operations
The operations of the Company are independent of the controlling shareholder. The Company
owns itself completely independent systems covering research and development accounting
workforce and labor quality control raw materials purchase production and sales and is
possessed of self-run capabilities and has neither relationship with the controlling
shareholder in terms of supply and sales by proxy nor competition with the other.
3. Situation for Horizontal Competition
□Available ?Not available
4. Information for the shareholders’ meeting and temporary shareholders’ meeting held
during the report period
(1) Information for the shareholders’ meeting during the report period
Session Meeting type
Participation
ratio of
investors
Convening
date
Disclosure
date Disclosure Index
2017 Annual
Shareholders’
Meeting
Annual
shareholders’
meeting
63.87% 2018.05.24 2018.05.25
http://www.cninfo.com.cn
Resolution
Announcement of 2017
Annual
Shareholders’ Meeting
(Announcement
no.:2018-Temporary15)
2018 Annual
First Interim
Shareholders’
Meeting
Interim
Shareholders’
Meeting
64.86% 2018.12.26 2018.12.27
http://www.cninfo.com.cn
Resolution
Announcement of 2018
Annual
First Interim
Shareholders’ Meeting
(Notification
no.:2018-Temporary22)
(2) Request for convening temporary shareholders’ meeting by priority shareholders
owing recovered voting right
□Available ?Not available
5. Performance of independent directors during the report period
(1) Attendance of independent directors for the board of directors and the shareholders’
meeting
Attendance of independent directors for the board of directors
Name
Required
attendance
time
Personal
attendance
Communication
attendance
Authorized
attendance Absence
Whether
or not to
attend the
meetings
personally
for
successive
twice
Attendance
time for the
shareholders’
meeting
Wang Shigang 6 1 4 1 0 No 0
Wang Zhuquan 6 2 4 0 0 No 0
Luo Fei 6 2 4 0 0 No 0
Liu Yan 6 2 4 0 0 No 0
Guo Guoqing 0 0 0 0 0 No 0
Explanation for failed to personally attend the Board of Directors’ meetings for successive
two times
No
(2) Any objections for the Company’s projects from the independent directors
Whether or not the independent directors raised any objection for the Company’s projects
□Yes ?No
During the report period the independent directors did not raise any objections for the
Company’s projects.
(3) Other explanations on independent directors’ performance
Whether or not the independent directors’ propositions are accepted by the Company
?Yes □No
Explanation on acceptance or refusal of the independent directors’ propositions to the
Company
During the report period some independent directors propose suggestions on prudent
investment in tourism project of Changyu International Wine City. They thought that it is a
higher risk in the current background of slower growth of domestic economy. The Company
accepted the independent directors’ opinions and decided to suspend construction of the project.
6. Performance of the special committees under the Board of Directors during the
report period
① Auditing Committee: During the report period the Company’s auditing Committee
conducted an ex-ante in-process and post-event review to related annual report audit work
and made relevant arrangements. The auditing Committee believed that 2017 annual financial
statements issued by the Company met the requirement of Accounting Standards for Business
Enterprises and truly and fairly reflected the balance condition up to December 31st 2017 as
well as 2017 annual business performance and cash flow. There were no unsolved major
divergences in accounting and auditing or major risk issues affecting the Company's
management. The Company operated steadily and had the ability of continuous operations.Proposals including 2017 Annual Self-assessment Report on Internal Control Draft proposal
on 2017 Annual Profit Distribution Appointing Certified Public Accountants Firm Change
in Accounting Policy，2017 Annual Report 2018 Semi-annual Report and 2018 Annual Audit
Plan were deliberated. Auditing committee passed above-mentioned proposals and submitted
the related proposals to board of directors for deliberation.
② Emolument Committee: Emolument Committee is responsible for assessment of the
economy responsibilities of the directors and the senior executives who receive salaries from
the Company and examination of the salary policy and scheme designed for the Company’s
directors and senior executives. During the report period the Company held Emolument
Committee meeting once. Proposal on 2017 Annual Performance Assessment Results of the
Company’s Senior Executives was deliberated and passed by the meeting who thought that
this document was in compliance with Performance Assessment Methods for Company’s
Senior Executive from 2014 to 2017. Emolument Committee agreed to submit the related
proposals to Board of Directors for deliberation.
During the report period the Board of Directors’ Emolument Committee also examined the
2017 annual payroll records of the directors and the senior managers who receive salaries
from the Company and believes that the salaries of the Company’s directors supervisors and
senior managers received from the Company is strictly assessed and delivered based on the
Company’s economic responsibility assessment system. The salaries disclosed by the
Company are in conformity with the actually paid amount.
7. The work of the Board of Supervisors
Whether or not the Board of Supervisors found any existence risk to the Company in
oversight activities during the report period
□Yes ?No
The Board of Supervisors has no objections to supervision matters during the report period.
8. Performance Evaluation and Incentive situations of Senior Management
The Company has already established a sound system for evaluation of achievement of senior
management and the related incentive system which linked the reward with the Company’s
benefit and personal achievement. The Emolument Committee under Board of Directors
assumed the responsibility of stipulating the policy and appraising the scheme for salaries and
rewards. Based on the Company’s annual business planning goals this committee examined
senior personals and also their responsible subsidiaries or departments according to their
management achievement and index and took these as criterion of awards or penalties.
During the report period because of not finishing the annual business plan deliberated and
passed in the Board of Directors’ meeting at the beginning of the year the total salaries and
rewards of the senior management are basically equal to that of last year.
9. Internal Control
(1) Specific situations for significant defects of the internal control found during the
report period
□Yes ?No
(2) Self-assessment report on internal control
Disclosure date for full text of the
internal control self-assessment report
2019.04.20
Disclosure index for full text of the
internal control self-assessment report
2017 Annual Self Assessment Report on Internal Control and 2018
Annual Self Assessment Report on Internal Control disclosed on
Securities Times China Securities Journal and www.cninfo.com.cn
by the Company on April 23rd 2018 and April 20th 2019.Percentage of total unit assets included
in scope of the assessment accounting
for the Company’s total assets of
consolidated financial statements
88.34%
Percentage of unit operating income 90.38%
included in scope of the assessment
accounting for the Company’s operating
income of consolidated financial
statements
Standards of Defect Identification
Category Financial report Non-financial report
Qualitative criteria Significant defects: one defect of internal
control individually or together with other
defects has the reasonable probability to cause
the significant misstatements which can not be
promptly prevented or found and corrected
timely in the financial report. For example: ?
Company’s Directors Supervisors and Senior
Management have fraudulent practices; ? The
Company makes corrections for the published
financial report; ? The audit of external
intermediary agent finds significant
misstatement existing in the current financial
report but the Company does not realize it
during the operation process; ? Negative
information frequently appears in the medias
with involving a wide scope; ? The
Company’s audit committee and internal audit
department makes an inefficient supervision for
internal control; ? Other situations maybe
cause significant misdirection which guides the
report users to make the right judgment.Major defects：The defect of internal control
individually or together with other defects has
the reasonable probability to cause the
significant misstatements which can not be
promptly prevented or found and corrected
timely in the financial report although the
misstatements neither achieves nor exceeds the
importance level but still arising the attention
of Board of Directors and management team.
? Failure to select and apply accounting
regulations in accordance with generally
accepted accounting principles; ? Failure to
establish the anti-fraud procedures and control
measures; ? Failure to set up corresponding
control mechanism or to carry out and take
corresponding compensating control for the
accounting treatments with irregular and
special deal; ? Negative news appears in the
Significant defects: Any situations listed
below appears it can be regarded as
significant defects. ? Operation: Unable to
achieve all operation target or key business
index widely out of budget in various
aspects. ? Safety accident effects: Cause no
less than one person death or more than 3
person serious injuries. ? Major negative
effects: Negative information frequently
appears in the medias with involving a wide
scope in the international and national
mainstream media. ? Environment effects:
Create irreparable damages to environment
and cause massive public complains.Major defects: Any situations listed below
appears it can be regarded as major defects.? Operation: Unable to achieve partly
operation target a big margin out of budget in
various aspects. ? Safety accident effects:
Without reaching the person loss or the
number of serious injury of significant
defects. ? Major negative effects: Negative
news appears in the media with influencing a
wide scope in the provincial mainstream
media. ? Environment effects: Cause heavy
environment damages and massive public
complains ought to carry out the significant
remedial measures.General defects: Any situations listed below
appears it can be regarded as general defects.? Operation: Other effects unable to
constitute the significant defects or major
defects. ? Safety accident effects: Personal
injury less than the quantitative standards of
major defects. ? Major negative effects:
Other defects unable to constitute the
significant defects or major defects. ?
Environment effects: Other environment
effects unable to constitute the significant
media with influencing a wide scope;? One or
more defects exist in the control during the
process of the ending financial report and the
target of achieving truthfulness and integrality
cannot be reasonably guaranteed in the
financial report; ? General defects refer to the
other control defects which do not constitute
the significant and major defects.defects or major defects.Quantitative criterion For total assets/Owner’s equity:
? Significant defects: misstatements ≧1%
?Major defects: 0.5%≦misstatements<1%
? General defects: misstatements<0.5%
For operation revenue:
? significant defects: misstatements ≧1%
?Major defects: 0.5%≦misstatements<1%
? General defects: misstatements<0.5%
For pretax profit:
? Significant defects: misstatements ≧5%
?Major defects: 2%≦misstatements<5%
? General defects: misstatements<2%
For direct property loss:
? Significant defects: More than CNY10
million
?Major defects: CNY1 million-CNY10
million (including 1 million)
? General defects: Less than CNY1 million
Number of significant
defect in financial
report
0
Number of significant
defect in non-financial
report
0
Number of major
defect in financial
report
0
Number of major
defect in non-financial
report
0
10. Internal control audit report
?Available □Not available
Audit opinions of the internal control audit report
We believe that Yantai Changyu Pioneer Wine Co. Ltd. kept effective internal control to financial
report in all significant aspects in accordance with General Criteria of Company’s Internal Control
and other related rules on December 31st 2018.
Disclosure of the internal control audit
report
Disclosure
Disclosure date for the full text of the
internal control audit report
April 20th 2019
Disclosure index for the full text of the
internal control audit report
2018 Annual Self Assessment Report on Internal Control
disclosed on Securities TimesChina Securities Journal
and www.cninfo.com.cn by the Company.Opinion type of the internal control audit
report
Standard without reserved opinion
Whether or not exists significant defects in
non-financial reports
No
Whether or not the accounting firm issued non-standard opinions for the audit report of
internal control
□Yes ?No
Whether the audit report of internal control issued by the accounting firm is in consistency
with the self-assessment report of the board of directors
? Yes ?No
X. Related Situation of Corporation Bonds
Whether or not the Company has the corporation bonds issued in public listed in the stock
exchange not due on the annual report’s authorized issue date or failed to pay in full on the
due date.No.
XI. Financial Report
1. Audit Report
Type of audit opinion Standard unqualified audit opinion
Date signed on audit report April 18th 2019
Audit agency name
Deloitte Hua Yong certified public accountants co.
Ltd. (special general partnership)
Audit report No. De Shi Bao (Shen) Zi (19) No. P02452
Certified public accountant's name Jie Yanfeng Li Yangang
AUDITOR'S REPORT
De Shi Bao (Shen) Zi (19) No. P02452
(Page 1 of 5)
TO THE SHAREHOLDERS OF
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
1. Opinion
We have audited the financial statements of Yantai Changyu Pioneer Wine Company Limited
("Yantai Changyu Company") which comprise the consolidated and Company's balance sheets as at
31 December 2018 and the consolidated and Company's income statements the consolidated and
Company's cash flow statements and the consolidated and Company's statements of changes in
owners' equity for the year then ended and the notes to the financial statements.In our opinion the accompanying financial statements of Yantai Changyu Pioneer Wine Company
Limited is prepared and present fairly in all material respects the consolidated and Company's
financial position as of 31 December 2018 and the consolidated and the Company's results of
operations and cash flows for the year then ended in accordance with Accounting Standards for
Business Enterprises.
2. Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing. 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 Company in accordance
with the code of ethics for Chinese Certified Public Accountants 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.
3. Key Audit Matters
Key audit matters are those matters that in our professional judgment were of most significance in
our audit of the financial statements of the current 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. We determine the followings are key audit matters in
need of communication in our report.
AUDITORS’ REPORT - continued
De Shi Bao (Shen) Zi (19) No. P02452
(Page 2 of 5)
3. Key Audit Matters - continued
Impairment assessment of certain long-term assets
1. Item description
As stated in Note IV “Impairment of long-term assets” the Production of Yantai Changyu
Pioneer Wine Company Limited Research and Development Co. Ltd. ("R&D Centre")
subsidiary of the Company as well as a new main production base of the Company accounts for
more than 60% of the Group’s production in 2018. As at 31 December 2018 the book values of
long-term assets including fixed assets construction in progress and intangible of "R&D Centre
amounted to RMB 3.5 billion accounting for 26.6% of the total assets in the consolidated
financial statements which exerts significant influence on the consolidated financial statements.
As there is little space for the development of the domestic wine market the management of the
Company faces great operating pressures with certain risks of impairment of related long-term
assets. The management performs the impairment test by determining if the recoverable amount is
less than the book value of long-term assets and determines the recoverable amount based on the
present value of expected future cash flows. In the estimate of the present value of future cash
flows the management is required to make significant judgements in the assumptions including
the sales growth rate future selling price production cost operating expenses and discount rate.
For the above reasons we identified the valuation of the impairment of long-term assets as a key
audit matter.
2. How our audit addressed the key audit matter
Our procedures in relation to the key audit matter mainly included:
(1) Test and evaluate the effectiveness of the design and implementation of the internal
control related to the valuation of the impairment of long-term assets;
(2) Review and evaluate the reasonableness of key assumptions and judgements used in the
estimate of the present value of expected future cash flows in the impairment test based on
the historical records of the Company and our understanding of the business and industry
in which the Company operates.
(3) Using our internal valuation specialists reviewing the appropriateness of the future cash
flows discount model prepared by the management and the rationality of the discount rate
used;
(4) Performing the recalculation procedure checking the accuracy of calculations in the
discount future cash flows model.
AUDITORS’ REPORT - continued
De Shi Bao (Shen) Zi (19) No. P02452
(Page 3 of 5)
4. Other Information
The management of Yantai Changyu Pioneer Wine Company Limited is responsible for other
information. The other information comprises the information included in the Yantai Changyu 2018
annual report but does not include 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.
5. Responsibilities of the Management and Those Charged with Governance for the Financial
Statements
The management of Yantai Changyu Pioneer Wine Company Limited is responsible for the
preparation and fair presentation of the financial statements in accordance with Accounting Standards
for Business Enterprises and designing implementing and maintaining internal control that is
necessary to enable the financial statements that are free from material misstatement whether due to
fraud or error.In preparing the financial statements the management is responsible for assessing Yantai Changyu
Company’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 the management either intends to
liquidate Yantai Changyu Company or to cease operations or have no realistic alternative but to do
so.Those charged with governance are responsible for overseeing Yantai Changyu Company’s financial
reporting process.
6. 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 solely to you. Reasonable assurance is a high level of assurance but is not a
guarantee that an audit conducted in accordance with China Standards on Auditing 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.
AUDITORS’ REPORT - continued
De Shi Bao (Shen) Zi (19) No. P02452
(Page 4 of 5)
6. Auditor's Responsibilities for the Audit of the Financial Statements - continued
As part of an audit in accordance with China Standards on Auditing we exercise professional
judgment and maintain professional skepticism 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 but not for the purpose of expressing an
opinion on the effectiveness of the internal control.
(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 the management's use of the going concern 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 Company’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 the Yantai Changyu Company 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 Yantai Changyu Company to express an 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.
AUDITORS’ REPORT - continued
De Shi Bao (Shen) Zi (19) No. P02452
(Page 5 of 5)
6. Auditor's Responsibilities for the Audit of the Financial Statements - 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 to 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 current 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.
Deloitte Touche Tohmatsu CPA LLP Chinese Certified Public Accountant: Xie Yanfeng
Shanghai China (Engagement partner)
Chinese Certified Public Accountant: Li Yangang
18 April 2019
CONSOLIDATED BALANCE SHEETS
YEAR ENDED 31 DECEMBER 2018
ASSETS Notes 31/12/2018 31/12/2017
RMB RMB
CURRENT ASSETS
Cash and bank VI-1 1475700477 1402522509
Notes and accounts receivable VI-2 530821071 508593173
Including: Notes receivable VI-2.2 288667988 244796818
Accounts receivable VI-2.3 242153083 263796355
Prepayments VI-3 4219949 2417931
Other receivables VI-4 22636086 18978422
Including: Interest receivable VI-4.2 1332681 240968
Inventories VI-5 2724591457 2473614046
Non-current assets held for sale - 2000197
Other current assets VI-6 258676396 230822759_____________ _____________
Total current assets 5016645436 4638949037_____________ _____________
NON-CURRENT ASSETS
Available-for-sale financial assets VI-7 467251 467251
Investment properties VI-8 31572489 18467989
Fixed assets VI-9 5749731667 5329083969
Construction in progress VI-10 759296591 1026141569
Bearer biological assets VI-11 209266373 201929888
Intangible assets VI-12 655473459 655448897
Goodwill VI-13 165199111 128135981
Long-term prepaid expenses VI-14 244640416 230009231
Deferred tax assets VI-15 285436259 308121396_____________ _____________
Total non-current assets 8101083616 7897806171_____________ _____________
Total assets 13117729052 12536755208_____________ _____________
CONSOLIDATED BALANCE SHEETS
YEAR ENDED 31 DECEMBER 2018 - continued
LIABILITIES AND EQUITY Notes 31/12/2018 31/12/2017
RMB RMB
CURRENT LIABILITIES
Short-term borrowings VI-16 688002410 714434286
Notes and accounts payable VI-17 713572881 666442879
Receipts in advance VI-18 226075244 350894156
Employee benefits payable VI-19 212304217 210824234
Taxes payable VI-20 128912790 145094156
Other payables VI-21 608479890 603735569
Including: Interest payable 712826 771250
Other payables VI-21.2 607767064 602964319
Deferred income VI-22 15860254 16878199
Non-current liabilities due within one year VI-23 152940788 110954827_____________ _____________
Total current liabilities 2746148474 2819258306_____________ _____________
NON-CURRENT LIABILITIES
Long-term borrowings VI-24 156480662 156125854
Long-term payables VI-25 225000000 259000000
Deferred income VI-22 70367039 92918855
Deferred tax liabilities VI-15 22010647 24264203
Other non-current liabilities VI-26 7234853 7209312_____________ _____________
Total non-current liabilities 481093201 539518224_____________ _____________
Total liabilities 3227241675 3358776530_____________ _____________
CONSOLIDATED BALANCE SHEETS
YEAR ENDED 31 DECEMBER 2018 - continued
LIABILITIES AND EQUITY Notes 31/12/2018 31/12/2017
RMB RMB
EQUITY
Share capital VI-27 685464000 685464000
Capital reserve VI-28 565955441 565955441
Other comprehensive income VI-29 2965377 3109240
Surplus reserve VI-30 342732000 342732000
Retained earnings VI-31 8008982547 7309081618_____________ _____________
Equity attributable to shareholders
of the Company 9606099365 8906342299
Non-controlling interests 284388012 271636379_____________ _____________
Total equity 9890487377 9177978678_____________ _____________
Total liabilities and equity 13117729052 12536755208_____________ _____________
The accompanying notes form an integral part of these financial statements.The financial statements on pages 6 to 107 were signed by the following:
Legal Representative Person in Charge of the
Accounting Body
Chief Accountant
BALANCE SHEET OF THE COMPANY
YEAR ENDED 31 DECEMBER 2018
ASSETS Notes 31/12/2018 31/12/2017
RMB RMB
CURRENT ASSETS
Cash and bank XIV-1 624588809 559174466
Notes and accounts receivable XIV-2 41333227 49450536
Including: Notes receivable XIV-2.2 39885254 41645203
Accounts receivable XIV-2.3 1447973 7805333
Prepayments 227 99673
Other receivables XIV-3 1025643356 999846643
Including: Interest receivable 254088 76646
Dividend receivables XIV-3.2 500000000 407495922
Inventories XIV- 4 385154740 348042053
Non-current assets held for sale - 2000197
Other current assets 24704844 29706058_____________ _____________
Total current assets 2101425203 1988319626_____________ _____________
NON-CURRENT ASSETS
Long-term equity investments XIV- 5 7420803069 4511202204
Investment properties VI-8 31572489 18467989
Fixed assets XIV- 6 265311274 288150901
Construction in progress XIV- 7 6311701 6756349
Construction in progress XIV- 8 125002793 119572539
Intangible assets XIV- 9 67244066 69623219
Deferred tax assets XIV- 10 24194967 28787907
Other non-current assets XIV- 11 972700000 3718674166_____________ _____________
Total non-current assets 8913140359 8761235274_____________ _____________
Total assets 11014565562 10749554900_____________ _____________
BALANCE SHEET OF THE COMPANY
YEAR ENDED 31 DECEMBER 2018 - continued
LIABILITIES AND EQUITY Notes 31/12/2018 31/12/2017
RMB RMB
CURRENT LIABILITIES
Short-term borrowings XIV- 12 150000000 600000000
Notes and accounts payable XIV- 13 132704304 97833124
Advances from customers - 6000000
Employee benefits payable XIV- 14 72345179 70108076
Taxes payable XIV- 15 13111431 14569690
Other payables XIV- 16 607974519 545365672
Including: Interest payable 181250 652500
Other payables XIV- 16.2 607793269 544713172
Deferred income 3433054 3953054_____________ _____________
Total current liabilities 979568487 1337829616_____________ _____________
NON-CURRENT LIABILITIES
Deferred income 8910918 12628573
Other non-current liabilities XIV- 14 2710575 2577702_____________ _____________
Total non-current liabilities 11621493 15206275_____________ _____________
Total liability 991189980 1353035891_____________ _____________
EQUITY
Share capital VI-27 685464000 685464000
Capital reserve XIV- 17 557222454 557222454
Surplus reserve VI-30 342732000 342732000
Retained earnings 8437957128 7811100555_____________ _____________
Total equity 10023375582 9396519009_____________ _____________
Total liabilities and equity 11014565562 10749554900_____________ _____________
CONSOLIDATED INCOME STATEMENT
YEAR ENDED 31 DECEMBER 2018
Notes 2018 2017
RMB RMB
I. Revenue VI-32 5142244740 4932545229
Less: Cost of sales VI-32 1901611507 1671592279
Taxes and surcharges VI-33 276491674 310252023
Selling expenses VI-34 1274599146 1272522443
Administrative expenses VI-35 343580651 336461133
Research and development expenses 4784118 4320825
Financial expenses VI-36 35945302 18590259
Including: Interest income 12086007 9168772
Interest expenses 46354902 26095487
(Reversal of)Impairment loss of assets VI-37 (912166) 8293553
Add: Income (loss) from disposal of assets 11368355 (222586)
Other income VI-38 87281434 46038384____________ ____________
II. Operating profit 1404794297 1356328512
Add: Non-operating income VI-39 7353309 17230727
Less: Non-operating expenses VI-40 3535908 1631476____________ ____________
III. Profit before tax 1408611698 1371927763
Less: Income tax VI-41 367127522 338134245____________ ____________
IV. Profit for the year 1041484176 1033793518____________ ____________
(I) Categorized by the nature of continuing operation
1. Net profit from continuing operations 1041484176 1033793518____________ ____________
(II) Categorized by ownership:
1. Profit or loss attributable to non-controlling interests (1148753) 2098462
2. Net profit attributable to owners of the Company 1042632929 1031695056____________ ____________
V. Other comprehensive income (post-tax) (376524) 9863872____________ ____________
Other comprehensive income attributable
to shareholders of the Company
Other comprehensive income
to be reclassified to profit and loss
Foreign currency statement translation difference (143863) 8368254
Other comprehensive income attributable
to non-controlling interest (232661) 1495618____________ ____________
VI. Total comprehensive income 1041107652 1043657390____________ ____________
Attribute to shareholders of the Company 1042489066 1040063310
Attribute to non-controlling interest of the Company (1381414) 3594080____________ ____________
VII. Earnings per share
(I) Basic earnings per share VI-42 1.52 1.51____________ ____________
(II) Diluted earnings per share VI-42 N/A N/A____________ ____________
INCOME STATEMENT OF THE COMPANY
YEAR ENDED 31 DECEMBER 2018
Notes 2018 2017
RMB RMB
I. Revenue XIV-18 876447070 1311256854
Less: Cost of sales XIV-18 774487031 1165953408
Taxes and surcharges XIV-19 38346761 76570225
Administrative expenses XIV-20 90505208 79119135
Research and development expenses 887355 1573909
Financial expenses XIV-21 (20292737) 637568
Including: Interest income 41821372 18602199
Interest expenses 16075353 17414181
Add:Investment income XIV-22 964128659 798877905
Income (loss) from disposal of assets 12411962 (29625)
Other income 4237655 5219126____________ ____________
II. Operating Profit 973291728 791470015
Add: Non-operating income 1483478 686646
Less: Non-operating expenses 593694 335237____________ ____________
III. Profit before tax 974181512 791821424
Less: Income tax 4592939 (1776586)____________ ____________
IV. Profit for the year 969588573 793598010____________ ____________
Net profit from continuing operations 969588573 793598010____________ ____________
V. Total comprehensive income 969588573 793598010____________ ____________
CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 DECEMBER 2018
Notes 2018 2017
RMB RMB
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from the sale of goods
and the rendering of services 4950603207 4827152526
Receipts of tax refunds 57056690 53196910
Other cash receipts relating to operating activities VI-43(1) 72703872 85236905___________ ___________
Sub-total of cash inflows from operating activities 5080363769 4965586341___________ ___________
Cash payments for goods purchased and services received 1383945233 1143840915
Cash payments to and on behalf of employees 544742974 512777815
Payment of various types of taxes 1111980499 1260813596
Other cash payments relating to operating activities VI-43(2) 1063716317 1074910988___________ ___________
Sub-total of cash outflows from operating activities 4104385023 3992343314___________ ___________
Net cash flows from operating activities VI-44(1) 975978746 973243027___________ ___________
CASH FLOWS FROM INVESTING ACTIVITIES
Cash receipts from disposals and recovery of investments 400000000 205000000
Proceeds from return on investments 3445895 4084350
Net cash receipts from disposals of fixed assets
intangible assets and other long-term assets 19967431 7594005___________ ___________
Sub-total of cash inflows from investing activities 423413326 216678355___________ ___________
Cash paid for acquisition of properties plants and equipment
intangible assets and other long-term assets 347384820 435960357
Cash payments to acquire investments 478042400 297129216
Cash paid for the purchase subsidiaries and other equity VI-43(3) 105834655 303796543___________ ___________
Sub-total of cash outflows from investing activities 931261875 1036886116___________ ___________
Net cash flows from investing activities (507848549) (820207761)___________ ___________
CASH FLOWS FROM FINANCING ACTIVITIES
Cash receipts from capital contributions 2050000 48396726
Including: cash receipts from capital contributions
from minority owners of subsidiaries 2050000 48396726
Cash receipts from borrowings 1049815411 963564600
Other cash received from financing activities VI-43(4) 62468259 52930804___________ ___________
Sub-total of cash inflows from financing activities 1114333670 1064892130___________ ___________
Cash paid for borrowings 1103189409 876502273
Cash paid for dividends profits and interests 397351813 369791284
Cash paid from other financing activities VI-43(5) 46100000 61700000___________ ___________
Sub-total of cash outflows from financing activities 1546641222 1307993557___________ ___________
Net cash flows from financing activities (432307552) (243101427)___________ ___________
Effect of foreign exchange rate changes
on cash and cash equivalents (9851585) 14013131
NET INCREASE (DECREASE) OF CASH
AND CASH EQUIVALENTS 25971060 (76053030)
Add: cash and cash equivalents at beginning of the year VI-44(3) 1180889274 1256942304___________ ___________
CASH AND CASH EQUIVALENTS AT END OF THE YEAR VI-44(3) 1206860334 1180889274___________ ___________
CASH FLOW STATEMENT OF THE COMPANY
YEAR ENDED 31 DECEMBER 2018
Notes 2018 2017
RMB RMB
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from the sale of goods
and the rendering of services 817341175 984103489
Other cash receipts relating to operating activities 177786322 431983092___________ ___________
Sub-total of cash inflows from operating activities 995127497 1416086581___________ ___________
Cash payments for goods purchased and services received 608241452 398827772
Cash payments to and on behalf of employees 107256441 89894049
Payment of various types of taxes 62066449 207917864
Other cash payments relating to operating activities 74357324 121377127___________ ___________
Sub-total of cash outflows from operating activities 851921666 818016812___________ ___________
Net cash flows from operating activities XIV-23(1) 143205831 598069769___________ ___________
CASH FLOWS FROM INVESTING ACTIVITIES
Cash receipts from disposals and recovery of investments 370000000 103000000
Proceeds from return on investments 874520633 827218467
Net cash receipts from disposals of fixed assets
intangible assets and other long-term assets 11212195 26760929___________ ___________
Sub-total of cash inflows from investing activities 1255732828 956979396___________ ___________
Cash paid for acquisition of properties plants and equipment
intangible assets and other long-term assets 28842911 22527073
Cash payments to acquire investments 410000000 105000000
Cash paid for the purchase subsidiaries and other equity 107194420 881056220___________ ___________
Sub-total of cash outflows from investing activities 546037331 1008583293___________ ___________
Net cash flows from investing activities 709695497 (51603897)___________ ___________
CASH FLOWS FROM FINANCING ACTIVITIES
Cash receipts from borrowings 200000000 600000000___________ ___________
Sub-total of cash inflows from financing activities 200000000 600000000___________ ___________
Cash paid for borrowings 650000000 530339600
Cash paid for dividends profits and interests 364085312 360560604___________ ___________
Sub-total of cash outflows from financing activities 1014085312 890900204___________ ___________
Net cash flows from financing activities (814085312) (290900204)___________ ___________
NET INCREASE OF CASH
AND CASH EQUIVALENTS 38816016 255565668
Add: cash and cash equivalents at beginning of the year XIV-24 493568866 238003198___________ ___________
CASH AND CASH EQUIVALENTS AT END
OF THE YEAR XIV-24 532384882 493568866___________ ___________
CONSOLIDATED SATATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2018
2018
Attributable to shareholders of the Company
Issued Capital Other comprehensive Surplus Retained Non-controlling
capital surplus income reserve earnings interests Total
RMB RMB RMB RMB RMB RMB RMB
I. 1/1/2018 685464000 565955441 3109240 342732000 7309081618 271636379 9177978678_______ _______ _______ ________ ________ _______ ________
II. Changes for the year
(I) Total comprehensive income - - (143863) - 1042632929 (1381414) 1041107652
(II) Owners’ contributions and
reduction in capital
Acquisition of
subsidiaries (VIII-2) - - - - - 17532823 17532823
(III) Profit distribution
Distributions to
shareholders (VI-31 VIII-2 ) - - - - (342732000) (3399776) (346131776)_______ _______ _______ ________ ________ _______ ________
III. 31/12/2018 685464000 565955441 2965377 342732000 8008982547 284388012 9890487377_______ _______ _______ ________ ________ _______ ________
2017
Attributable to shareholders of the Company
Issued Capital Other comprehensive Surplus Retained Non-controlling
capital surplus income reserve earnings interests Total
RMB RMB RMB RMB RMB RMB RMB
I. 1/1/2017 685464000 565955441 (5259014) 342732000 6620118562 190473697 8399484686_______ _______ _______ _______ ________ _______ ________
II. Changes for the year
(I) Total comprehensive income - - 8368254 - 1031695056 3594080 1043657390
(II) Owners’ contributions and
reduction in capital
Non-controlling interests' capital
contribution - - - - - 78236726 78236726
(III) Profit distribution
Distributions to
shareholders (VI-31) - - - - (342732000) (668124) (343400124)_______ _______ _______ _______ ________ _______ ________
III. 31/12/2017 685464000 565955441 3109240 342732000 7309081618 271636379 9177978678_______ _______ _______ _______ ________ _______ ________
STATEMENT OF CHANGES IN EQUITY OF THE COMPANY
YEAR ENDED 31 DECEMBER 2018
2018
Issued capital Capital reserve Surplus reserve Retained earnings Total
RMB RMB RMB RMB RMB
I. 1/1/2018 685464000 557222454 342732000 7811100555 9396519009________ ________ ________ _________ __________
II. Changes for the year
(I) Total comprehensive income - - - 969588573 969588573
(II) Profit distribution
Distributions to shareholders (VI-31) - - - (342732000) (342732000)________ ________ ________ _________ __________
III. 31/12/2018 685464000 557222454 342732000 8437957128 10023375582________ ________ ________ _________ __________
2017
Issued capital Capital reserve Surplus reserve Retained earnings Total
RMB RMB RMB RMB RMB
I. 1/1/2017 685464000 557222454 342732000 7360234545 8945652999________ ________ ________ _________ _________
II. Changes for the year
(I) Total comprehensive income - - - 793598010 793598010
(II) Profit distribution
Distributions to shareholders (VI-31) - - - (342732000) (342732000)________ ________ ________ _________ _________
III. 31/12/2017 685464000 557222454 342732000 7811100555 9396519009________ ________ ________ _________ _________
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2018
I. CORPORATE INFORMATION
Yantai Changyu Pioneer Wine Co. Ltd. (the "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 reorganization carried out by Yantai Changyu Group Co. Ltd. ("Changyu Group
Company") 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 2018 the total shares issued by the Company amounts to 685464000 shares.
Please refer to Note VI-27 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 authorized by the board of directors on 18 April 2019.
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 VIII "Equity in other entities" in detail.
For detail of changes in consolidation scope of the year please refer to Note VII "Change in
consolidation scope".II. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
1. Basis of preparation
The Group has adopted the Accounting Standards for Business Enterprises ("ASBE") issued by
the Ministry of Finance ("MoF"). In addition the Group has disclosed relevant financial
information in accordance with Information Disclosure and Presentation Rules for Companies
Offering Securities to the Public No. 15 - General Provisions on Financial Reporting (Revised in
2014).
2. Basis of accounting and principle of measurement
The Group has adopted the accrual basis of accounting. The Group adopts the historical cost as
the principle of measurement in the financial statements. Where assets are impaired provisions
for asset impairment are made in accordance with relevant requirements.Under the historical cost measurement an asset is measured at the fair value of consideration paid
in cash and cash equivalents at the date of the purchase. Liability is measured at the value of asset
received through taking current obligation the contract value for taking current obligation or the
cash and cash equivalents value estimated for repaying debt in daily business activity.
II. BASIS OF PREPARATION OF FINANCIAL STATEMENTS - continued
2. Basis of accounting and principle of measurement - continued
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 regardless of whether
that price is directly observable or estimated using another valuation technique. Fair value for
measurement and/or disclosure purposes in these consolidated financial statements is determined
on such a basis.
Fair value measurements are categorised into Level 1 2 or 3 based on the degree to which the
inputs to the fair value measurements are observable and the significance of the inputs to the fair
value measurement in its entirety which are described as follows:
1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are
observable for the asset or liability either directly or indirectly; and
3) Level 3 inputs are unobservable inputs for the asset or liability.
3. Going concern
As at 31 December 2018 the Group evaluated the profitability ability in the foreseeable 12
months and did not notice any event or circumstance that would constitute significant doubt on
going concern ability of the Group. Therefore the financial statements have been prepared on a
going concern basis.III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
1. Declaration for implementing CAS
The financial statements are prepared in accordance with CAS which showing a true and fair
view of the financial position on 31 December 2018 financial performance and cash flow in 2018
of the Company and the Group.
2. Accounting year
The accounting year of the Group is from 1 January to 31 December of each calendar year.
3. Business cycle
Business cycle refers to the period from purchasing assets to be processed to receiving cash or
cash equivalents by the Company. The business cycle of the Company is 12 months.
4. Reporting 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 Currency
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.
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
5. Business combination
5.1Business combinations not involving enterprises under common control and goodwill
A business combination not involving enterprises under common control is a business
combination in which all of the combining enterprises are not ultimately controlled by the same
party or parties before and after the combination.The cost of combination is the aggregate of the fair values at the acquisition date of the assets
given liabilities incurred or assumed and equity securities issued by the acquirer in exchange for
control of the acquiree. The intermediary expenses incurred by the acquirer in respect of auditing
legal services valuation and consultancy services etc. and other associated administrative
expenses attributable to the business combination are recognised in profit or loss when they are
incurred.Qualified identifiable assets liabilities and contingent liabilities obtained by acquirer in the
acquisition are measured using fair value at the acquisition date.Where the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s
identifiable net assets the difference is treated as an asset and recognized as goodwill which is
measured at cost on initial recognition. Where the cost of combination is less than the acquirer’s
interest in the fair value of the acquiree’s identifiable net assets the acquirer firstly reassesses the
measurement of the fair values of the acquiree’s identifiable assets liabilities and contingent
liabilities and measurement of the cost of combination. If after that reassessment the cost of
combination is still less than the acquirer’s interest in the fair value of the acquiree’s identifiable
net assets the acquirer recognizes the remaining difference immediately in profit or loss for the
current period.Goodwill arising on a business combination is measured at cost less accumulated impairment
losses and is presented separately in the consolidated financial statements.
6. Preparation of consolidated financial statements
6.1 Preparation of consolidated financial statements
The scope of consolidation in the consolidated financial statements is determined on the basis of
control. Control is the power to govern the financial and operating policies of an enterprise so as
to obtain benefits from its operating activities. The Group will re-evaluate if changes in relevant
facts and circumstances results in changes in relevant factors involved in the above definition of
control.
Consolidation of subsidiary starts from the control on the subsidiary by the Group and ends at the
loss of control on the subsidiary by the Group.
For the subsidiaries through business combination not involving enterprises under common
control the results of operations and cash flows from the acquisition day were properly included
in the consolidated income statements and consolidated cash flow statements.
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
6. Preparation of consolidated financial statements - continued
6.1 Preparation of consolidated financial statements - continued
The significant accounting policies and accounting periods adopted by the subsidiaries are
determined based on the uniform accounting policies and accounting periods set out by the
Company.
All significant intra-group balances and transactions are eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the Company is treated as
non-controlling interests and presented as "non-controlling interests" in the consolidated balance
sheet within shareholders' equity. The portion of net profits or losses of subsidiaries for the period
attributable to non-controlling interests is presented as "non-controlling interests" in the
consolidated income statement below the net profit line item.When the amount of loss for the period attributable to the non-controlling shareholders of a
subsidiary exceeds the non-controlling shareholders' portion of the opening balance of owners'
equity of the subsidiary the excess amount are still allocated against non-controlling interests.
7. Cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash
equivalents are the Group's short-term highly liquid investments that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value.
8. Translation of transactions and financial statements denominated in foreign currencies
8.1 Transactions denominated in foreign currencies
A foreign currency transaction is recorded on initial recognition by applying the spot exchange
rate on the date of the transaction.
At the balance sheet date foreign currency monetary items are translated into RMB using the spot
exchange rates at the balance sheet date. Exchange differences arising from the differences
between the spot exchange rates prevailing at the balance sheet date and those on initial
recognition or at the previous balance sheet date are recognised in profit or loss for the period
except that (1) exchange differences related to a specific-purpose borrowing denominated in
foreign currency that qualify for capitalisation are capitalised as part of the cost of the qualifying
asset during the capitalisation period; (2) exchange differences related to hedging instruments for
the purpose of hedging against foreign currency risks are accounted for using hedge accounting;
(3) exchange differences arising from available-for-sale non-monetary items denominated in
foreign currencies and changes in the carrying amounts of available-for-sale monetary items are
recognised as other comprehensive income and included in capital reserve.
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
8. Translation of transactions and financial statements denominated in foreign currencies - continued
8.2 Translation of financial statements denominated in foreign currencies - continued
For the purpose of preparing the consolidated financial statements financial statements of a
foreign operation are translated from the foreign currency into RMB using the following method:
assets and liabilities on the balance sheet are translated at the spot exchange rate prevailing at the
balance sheet date; shareholders' equity items except for retained earnings are translated at the
spot exchange rates at the dates on which such items arose; all items in the income statement as
well as items reflecting the distribution of profits are translated at the spot exchange rates on the
dates of the transactions; the opening balance of retained earnings is the translated closing balance
of the previous year's retained earnings; the closing balance of retained earnings is calculated and
presented on the basis of each translated income statement and profit distribution item. The
difference between the translated assets and the aggregate of liabilities and shareholders' equity
items is separately presented as the exchange differences arising on translation of financial
statements denominated in foreign currencies of other comprehensive income under the
shareholders' equity in the balance sheet.
Cash flows arising from a transaction in foreign currency and the cash flows of a foreign
subsidiary are translated at the spot exchange rate on the date of the cash flows. The effect of
exchange rate changes on cash and cash equivalents is regarded as a reconciling item and
presented separately in the cash flow statement as "effect of exchange rate changes on cash and
cash equivalents".The opening balances and the comparative figures of previous year are presented at the translated
amounts in the previous year's financial statements.
9. Financial instruments
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions of the instrument. Financial assets and financial liabilities are initially
measured at fair value. For other financial assets and financial liabilities transaction costs are
included in their initial recognised amounts.
9.1 Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset or a
financial liability (or a group of financial assets or financial liabilities) and of allocating the
interest income or interest expense over the relevant period using the effective interest rate. The
effective interest rate is the rate that exactly discounts estimated future cash flows through the
expected life of the financial asset or financial liability or where appropriate a shorter period to
the net carrying amount of the financial asset or financial liability.When calculating the effective interest rate the Group estimates future cash flows considering all
contractual terms of the financial asset or financial liability (without considering future credit
losses) and also considers all fees paid or received between the parties to the contract giving rise
to the financial asset and financial liability that are an integral part of the effective interest rate
transaction costs and premiums or discounts etc.
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
9. Financial instruments - continued
9.2 Classification recognition and measurement of financial assets
On initial recognition the Group's financial assets are classified into one of the four categories
including financial assets at fair value through profit or loss held-to-maturity investments loans
and receivables and available-for-sale financial assets. All regular way purchases or sales of
financial assets are recognised and derecognised on a trade date basis. The Group's financial
assets are bought in a conventional way and recognized and terminated according to the
accounting transaction date. Financial assets of the Group are loans and receivables and
available-for-sale financial assets.
9.2.1 Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. Financial assets classified as loans and receivables by the
Group include cash and bank notes and accounts receivable and other receivables etc.Loans and receivables are subsequently measured at amortised cost using the effective interest
method. Gain or loss arising from derecognition impairment or amortisation is recognised in
profit or loss.
9.2.2 Available-for-sale financial assets
Available-for-sale financial assets include non-derivative financial assets that are designated on
initial recognition as available for sale and financial assets that are not classified as financial
assets at fair value through profit or loss loans and receivables or held-to-maturity investments.
For investments in equity instruments that do not have a quoted market price in an active market
and whose fair value cannot be reliably measured they are measured at cost.
9.3 Impairment of financial assets
The Group assesses at each balance sheet date the carrying amounts of financial assets other than
those at fair value through profit or loss. If there is objective evidence that a financial asset is
impaired the Group determines the amount of any impairment loss. Objective evidence that a
financial asset is impaired is evidence that arising from one or more events that occurred after the
initial recognition of the asset the estimated future cash flows of the financial asset which can be
reliably measured have been affected.Objective evidence that a financial asset is impaired includes the following observable events:
(1) Significant financial difficulty of the issuer or obligor;
(2) A breach of contract by the borrower such as a default or delinquency in interest or
principal payments;
(3) The Group for economic or legal reasons relating to the borrower's financial difficulty
granting a concession to the borrower;
(4) It becoming probable that the borrower will enter bankruptcy or other financial
reorganisations;
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
9. Financial instruments - continued
9.3 Impairment of financial assets - continued
(5) The disappearance of an active market for that financial asset because of financial
difficulties of the issuer;
(6) Upon an overall assessment of a group of financial assets observable data indicates that
there is a measurable decrease in the estimated future cash flows from the group of
financial assets since the initial recognition of those assets although the decrease cannot
yet be identified with the individual financial assets in the group. Such observable data
includes:
- Adverse changes in the payment status of borrower in the group of assets;
- Economic conditions in the country or region of the borrower which may lead to a
failure to pay the group of assets;
(7) Significant adverse changes in the technological market economic or legal environment
in which the issuer operates indicating that the cost of the investment in the equity
instrument may not be recovered by the investor;
(8) A significant or prolonged decline in the fair value of an investment in an equity
instrument below its cost; namely at the balance sheet date if the initial cost of an equity
instrument investment is more than 50%(inclusive) in excess of the fair value of such
investment or the period in which the initial cost of an equity instrument investment
exceeds the fair value of such investment is over 12 months(inclusive);
(9) Other objective evidence indicating there is an impairment of a financial asset.
- Impairment of financial assets measured at amortised cost
If financial assets carried at amortised cost are impaired the carrying amounts of the financial
assets are reduced to the present value of estimated future cash flows (excluding future credit
losses that have not been incurred) discounted at the financial asset's original effective interest
rate. The amount of reduction is recognised as an impairment loss in profit or loss. If
subsequent to the recognition of an impairment loss on financial assets carried at amortised cost
there is objective evidence of a recovery in value of the financial assets which can be related
objectively to an event occurring after the impairment is recognised the previously recognised
impairment loss is reversed. However the reversal is made to the extent that the carrying amount
of the financial asset at the date the impairment is reversed does not exceed what the amortised
cost would have been had the impairment not been recognised.
For a financial asset that is individually the Group assesses the asset individually for impairment.
- Impairment of available for sale assets measured at cost
If an impairment loss has been incurred on an investment in unquoted equity instrument (without
a quoted price in an active market) whose fair value cannot be reliably measured or on a
derivative financial asset that is linked to and must be settled by delivery of such an unquoted
equity instrument the carrying amount of the financial asset is reduced to the present value of
estimated future cash flows discounted at the current market rate of return for a similar financial
asset. The amount of reduction is recognised as an impairment loss in profit or loss. The
impairment loss on such financial asset is not reversed once it is recognised.
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
9. Financial instruments - continued
9.4 Transfer of financial assets
The Group derecognises a financial asset if one of the following conditions is satisfied: (1) the
contractual rights to the cash flows from the financial asset expire; or (2) the financial asset has
been transferred and substantially all the risks and rewards of ownership of the financial asset is
transferred to the transferee; or (3) although the financial asset has been transferred the Group
neither transfers nor retains substantially all the risks and rewards of ownership of the financial
asset but has not retained control of the financial asset.
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria the
difference between (1) the carrying amount of the financial asset transferred; and (2) the sum of
the consideration received from the transfer and any cumulative gain or loss that has been
recognised in other comprehensive income is recognised in profit or loss.
9.5 Classification recognition and measurement of financial liabilities
Debt and equity instruments issued by the Group are classified into financial liabilities or equity
on the basis of the substance of the contractual arrangements and definitions of financial liability
and equity instrument.On initial recognition financial liabilities are classified into financial liabilities at fair value
through profit or loss and other financial liabilities. The financial liabilities in group are other
financial liabilities including short-term borrowings notes payable account payables other
payables non-current liabilities due within one year and long-term payables etc.
9.5.1 Other financial liabilities
Other financial liabilities are subsequently measured at amortised cost using the effective interest
method with gain or loss arising from derecognition or amortisation recognised in profit or loss.
9.6 Derecognition of financial liabilities
The Group derecognises a financial liability (or part of it) only when the underlying present
obligation (or part of it) is discharged.When the Group derecognises a financial liability or a part of it it recognises the difference
between the carrying amount of the financial liability (or part of the financial liability)
derecognised and the consideration paid (including any non-cash assets transferred or new
financial liabilities assumed) in profit or loss.
9.7 Offsetting financial assets and financial liabilities
Where the Group has a legal right that is currently enforceable to set off the recognised financial
assets and financial liabilities and intends either to settle on a net basis or to realise the financial
asset and settle the financial liability simultaneously a financial asset and a financial liability shall
be offset and the net amount is presented in the balance sheet. Except for the above circumstances
financial assets and financial liabilities shall be presented separately in the balance sheet and shall
not be offset.
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
9. Financial instruments - continued
9.8 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group
after deducting all of its liabilities. The Group does not recognise any changes in the fair value of
equity instruments. The equity instruments transaction expenses deducted from equity.The Group treats distribution to equity instrument holders as profit distributions. Shareholder
equity is not affected by share dividend distributed.
10. Accounts Receivable
The Group believes that the individual receivables are all significant and the corresponding
receivables are individually tested for impairment and individual recognition method is used to
confirm bad debt provision.
11. Inventories
11.1 Categories of inventories
The Group's inventories mainly include raw materials work in progress and finished goods.Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase
costs of conversion and other expenditures incurred in bringing the inventories to their present
location and condition.
Agricultural products harvested are reported in accordance with the CAS 1 Inventories.
11.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the weighted average method.
11.3 Basis for determining net realisable value of inventories and provision methods for decline in
value of inventories
At the balance sheet date inventories are measured at the lower of cost and net realisable value.
If the net realisable value is below the cost of inventories a provision for decline in value of
inventories is made. Net realisable value is the estimated selling price in the ordinary course of
business less the estimated costs of completion the estimated costs necessary to make the sale and
relevant taxes. Net realisable value is determined on the basis of clear evidence obtained and
takes into consideration the purposes of holding inventories and effect of post balance sheet
events.Provision for decline in value of other inventories is made based on the excess of cost of
inventory over its net realisable value based on categories of inventories.
After the provision for decline in value of inventories is made if the circumstances that
previously caused inventories to be written down below cost no longer exist so that the net
realisable value of inventories is higher than their cost the original provision for decline in value
is reversed and the reversal is included in profit or loss for the period.
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
11. Inventories - continued
11.4 Inventory count system
The perpetual inventory system is maintained for stock system.
11.5 Amortisation method for low cost and short-lived consumable items and packaging materials
Packaging materials and low cost and short-lived consumable items are amortised using the
immediate write-off method.
12. Non-current assets held for sale
Non-current assets and disposal groups are classified as held for sale category when the Group
recovers the book value through a sale (including an exchange of nonmonetary assets that has
commercial substance) rather than continuing use.Non-current assets or disposal groups classified as held for sale are required to satisfy the
following conditions: (1) the asset or disposal group is available for immediate sale in its present
condition subject only to terms that are usual and customary for sales of such asset or disposal
group; (2) the sale is highly probable i.e. the Group has made a resolution about selling plan and
obtained a confirmed purchase commitment and the sale is expected to be completed within one
year.The Group measures the no-current assets or disposal groups classified as held for sale at the
lower of their carrying amount and fair value less costs to sell. Where the carrying amount is
higher than the net amount of fair value less costs to sell carrying amount should be reduced to
the net amount of fair value less costs to sell and such reduction is recognized in impairment loss
of assets and included in profit or loss for the period. Meanwhile provision for impairment of
held-for-sale assets are made. When there is increase in the net amount of fair value of
non-current assets held for sale less costs to sell at the balance sheet date the original deduction
should be reversed in impairment loss of assets recognized after the classification of held-for-sale
category and the reverse amount is include in profit or loss for the period.Non-current assets held for sale in non-current assets are not subject to depreciation or
amortization.
13. Long term equity investments
13.1 Basis for determining control joint control and significant influence
Control is the power to govern the financial and operating policies of an entity so as to obtain
benefits from its activities. Joint control is the contractually agreed sharing of control over an
economic activity and exists only when the strategic financial and operating policy decisions
relating to the activity require the unanimous consent of the parties sharing control. Significant
influence is the power to participate in the financial and operating policy decisions of the investee
but is not control or joint control over those policies. When determining whether an investing
enterprise is able to exercise control or significant influence over an investee the effect of
potential voting rights of the investee (for example warrants and convertible debts) held by the
investing enterprises or other parties that are currently exercisable or convertible shall be
considered.
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
13. Long term equity investments - continued
13.2 Determination of initial investment cost
For a long-term equity investment acquired not involving enterprises under common control the
investment cost of the long-term equity investment is the cost of acquisition.
Audit fee legal services consulting fees and other related management costs in acquisition are
expensed in profits and losses when happened.Other long-term equity investments acquired from other than acquisitions are recognised using
original cost.
13.3 Subsequent measurement and recognition of profit or loss
13.3.1 Long-term equity investment accounted for using the cost method
The Group accounts for long-term equity investment using the cost method. A subsidiary is an
investee that is controlled by the Group.Under the cost method a long-term equity investment is measured at initial investment cost.Long-term equity investment is adjusted when capital is added or recollected. Investment income
is recognised in the period in accordance with the attributable share of cash dividends or profit
distributions declared by the investee.
13.4 Disposal of long-term equity investments
On disposal of a long term equity investment the difference between the proceeds actually
received and receivable and the carrying amount is recognised in profit or loss for the period.
14. Investment properties
Investment property is property held to earn rentals or for capital appreciation or both.
An investment property is measured initially at cost. Subsequent expenditures incurred for such
investment property are included in the cost of the investment property if it is probable that
economic benefits associated with an investment property will flow to the Group and the
subsequent expenditures can be measured reliably. Other subsequent expenditures are recognized
in profit or loss in the period in which they are incurred.The Group uses the cost model for subsequent measurement of investment property and adopts a
depreciation or amortization policy for the investment property which is consistent with that for
buildings or land use rights.When an investment property is sold transferred retired or damaged the Group recognizes the
amount of any proceeds on disposal net of the carrying amount and related taxes in profit or loss
for the period.
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
15. Fixed assets
15.1 Recognition criteria for fixed assets
Fixed assets are tangible assets that are held for use in the production or supply of goods or
services for rental to others or for administrative purposes and have useful lives of more than
one accounting year. A fixed asset is recognised only when it is probable that economic benefits
associated with the asset will flow to the Group and the cost of the asset can be measured reliably.
Fixed assets are initially measured at cost.
Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset and
if it is probable that economic benefits associated with the asset will flow to the Group and the
subsequent expenditures can be measured reliably. Meanwhile the carrying amount of the
replaced part is derecognised. Other subsequent expenditures are recognised in profit or loss in the
period in which they are incurred.
15.2 Depreciation of each category of fixed assets
A fixed asset is depreciated over its useful life using the straight-line method since the month
subsequent to the one in which it is ready for intended use. The useful life estimated net
residual value rate and annual depreciation rate of each category of fixed assets are as follows:
Estimated Estimated Annual
useful life residual rate depreciation rate
Buildings 20-40years 0-5% 2.4%-5.0%
Machinery 5-30years 0-5% 3.2%-20.0%
Motor Vehicles 4-12years 0-5% 7.9%-25.0%
Estimated net residual value assumes the situation where a fixed asset expire for its estimated
useful life and is in its expected final status. Estimated net residual value is the amount that the
Group can obtain from the disposal less expected disposal fees.
15.3 Other explanations
If a fixed asset is upon disposal or no future economic benefits are expected to be generated from
its use or disposal the fixed asset is derecognised. When a fixed asset is sold transferred retired
or damaged the amount of any proceeds on disposal of the asset net of the carrying amount and
related taxes are recognised in profit or loss for the period.The Group reviews the useful life and estimated net residual value of a fixed asset and the
depreciation method applied at least once at each financial year-end and account for any change
as a change in an accounting estimate.
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
16. Construction in progress
Construction in progress is measured at its actual costs. The actual costs include various
construction expenditures during the construction period borrowing costs capitalised before it is
ready for intended use and other relevant costs. Construction in progress is not depreciated.
Construction in progress is transferred to a fixed asset when it is ready for intended use.
17. Borrowing costs
Borrowing costs directly attributable to the acquisition construction or production of qualifying
asset are capitalised when expenditures for such asset and borrowing costs are incurred and
activities relating to the acquisition construction or production of the asset that are necessary to
prepare the asset for its intended use or sale have commenced. Capitalisation of borrowing costs
ceases when the qualifying asset being acquired constructed or produced becomes ready for its
intended use or sale. Other borrowing costs are recognised as an expense in the period in which
they are incurred.Where funds are borrowed under a specific-purpose borrowing the amount of interest to be
capitalized is the actual interest expense incurred on that borrowing for the period less any bank
interest earned from depositing the borrowed funds before being used on the asset or any
investment income on the temporary investment of those funds.
18. Biological assets
The Group's biological assets are bearer biological assets.
18.1 Bearer biological assets
Bearer biological assets are biological assets for example held for the production of agricultural
produce provision of services or rental Bearer biological assets in the Group are vines. A bearer
biological asset is initially measured at cost. The cost of a bearer biological asset self-grown or
self-bred comprises those costs necessarily incurred and directly attributable to the asset before
the asset becomes available for its intended production and operating purposes and any
borrowing cost meeting the capitalisation criteria.The Group charge deprecation for productive biological assets which satisfy expected production
and record the deprecation in balance sheet and income statement. The Group uses straight line
method to calculate the deprecation and details as follows:
Estimated Estimated Annual
Category useful life residual rate depreciation rate
Vines 20 years - 5.0%
The Group evaluates the useful life and expected net salvage value by considering the normal
producing life of the bearer biological assets.
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
18. Biological assets - continued
18.1 Bearer biological assets - continued
The Group reviews the useful life and estimated net residual value of bearer biological assets and
the depreciation method applied at least once at each financial year-end and account for any
change as a change in an accounting estimate.On the sale identification of any shortages during stocktaking death or damage of biological
asset the proceeds on disposal net of the carrying amount and relevant taxes is recognised in
profit or loss for the current period.
19. Intangible assets
Intangible assets include land use rights software and trademark etc.
An intangible asset is measured initially at cost method. When an intangible asset with a finite
useful life is available for use its original cost less net residual value and any accumulated
impairment losses is amortised over its estimated useful life using the straight-line method.Intangible assets with indefinite useful lives are not amortized. The useful lives of the intangible
assets are as follows:
Annual
Item Useful life Net residual value amortization rate
Land use rights 40-50 years - 2.0%-2.5%
Software 5-10 years - 10.0%-20.0%
Trademark 10 years - 10.0%
Except for the above intangible assets with finite useful lives the Group had also intangible assets
with infinite useful lives including the land use right and trademark. 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 Vi?a Indómita S.A.Vi?a 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 amortization. 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.
For an intangible asset with a definite useful life the Group reviews the useful life and
amortisation method at the end of the period and makes adjustments when necessary.
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
20. Impairment of long-term assets
The Group and the Company review the impairment status of long-term equity investments fixed
assets investment properties construction in progress bearer biological asset and intangible
assets with finite useful life at the end of each year. If there is any indication for impairment the
Group estimates the recoverable amount of the asset.Intangible assets with indefinite useful life
and goodwill are tested for impairment annually irrespective of whether there is any indication
that the assets may be impaired.Recoverable amount is estimated on individual basis. If it is not practical to estimate the
recoverable amount of an individual asset the recoverable amount of the asset group to which the
asset belongs will be estimated. The recoverable amount of an asset is the higher of its fair value
less costs of disposal and the present value of the future cash flows expected to be derived from
the asset.If recoverable amount of assets is less than book value the difference is recognised as impairment
provision and expensed in current period.Goodwill is tested for impairment at least at the end of each year. For the purpose of impairment
testing goodwill is considered together with the related assets group(s) i.e. goodwill is
reasonably allocated to the related assets group(s) or each of assets group(s) expected to benefit
from the synergies of the combination. An impairment loss is recognised if the recoverable
amount of the assets group or sets of assets groups (including goodwill) is less than its carrying
amount. The impairment loss is firstly allocated to reduce the carrying amount of any goodwill
allocated to such assets group or sets of assets groups and then to the other assets of the group
pro-rata on the basis of the carrying amount of each asset (other than goodwill) in the group.The impairment is recognised in profit or loss for the period in which it is incurred and will not be
reversed in any subsequent period.
21. Long term prepaid expenses
Long-term prepaid expenses are amortized equally over the period of projected earnings. The
amortization period are as follows:
Amortization period
Land requisition fee 50 years
Land lease prepayment 50 years
Greening fee 5-20 years
Leasehold improvement 3-5years
Others 3 years
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
22. Employee benefits
22.1 Short-term employee benefits
In an accounting period in which an employee has rendered service to the Group the Group
recognises the actual employee benefits for that service as a liability. The employee benefits of
the Group are either included in cost of related assets or charged to profit or loss in the period
when they are incurred. Non-monetary employee benefits are measured at fair value.Social insurances such as medical insurance injury insurance and pregnancy insurance housing
funds labor union and employee education fees paid by the Group for employees are recognised
as relevant liability in the period in which the employees provide service in accordance with the
regulated recognition basis and percentage. The related expenditures are either included in cost of
related assets or charged to profit or loss in the period when they are incurred.
22.2 Accounting treatments of retired benefits
Retired benefits of the Group are all predetermined provision plan.In the period in which the employees provide service the Group recognise liability in accordance
with the amounts to be paid calculated according to the predetermined provision plan and the
related expenditures are either included in cost of related assets or charged to profit or loss in the
period when they are incurred.
22.3 Accounting treatments of termination benefits
When providing termination benefits to employees the Group recognise employee benefits
payroll resulting from termination benefits at the earlier of: the Group cannot unilaterally
withdraw from the termination plan or the redundancy offer; the Group recognise relevant costs
and expenses related to the payment of termination benefits in restructuring.
23. Revenue
23.1 Revenue from sale of goods
Revenue from sale of goods is recognised when the Group has transferred to the buyer the
significant risks and rewards of ownership of the goods. The Group retains neither continuing
managerial involvement to the degree usually associated with ownership nor effective control
over the goods sold. The amount of revenue can be measured reliably and it is probable that the
associated economic benefits will flow to the Group. The associated costs incurred or to be
incurred can be measured reliably.
23.2 Revenue from rendering of services
When the outcome of a transaction involving the rendering of services can be estimated reliably
revenue associated with the transaction shall be recognized by reference the stage of completion
of the transaction at the reporting date. The outcome of a transaction can be estimated reliably.
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
23. Revenue - continued
23.2 Revenue from rendering of services - continued
When the outcome of the transaction involving the rendering of services cannot be estimated
reliably revenue is recognised only to the extent of the costs incurred that will be recoverable
and the costs incurred are recognised as expenses for the period. When it is not probable that the
costs incurred will be recovered revenue is not recognised.
24. Government grants
Government grants are transfer of monetary assets and non-monetary assets from the government
to the Group at no consideration. A government grant is recognised only when the Group can
comply with the conditions attaching to the grant and the Group will receive the grant.Monetary government grants are measured by the amount received or receivable.
24.1 Government grant related to an asset
A government grant related to an asset is recognised as deferred income and amortised to profit
or loss over the useful life of the related asset on a straight line basis.
24.2 Government grant related to income
For a government grant related to income if the grant is a compensation for related expenses or
losses to be incurred in subsequent periods the grant is recognised as deferred income and
recognised in profit or loss over the periods in which the related costs are recognised. If the grant
is a compensation for related expenses or losses already incurred the grant is recognised
immediately in profit or loss for the period.
A government grant related to the Group's daily activities is recognized in other income based on
the nature of economic activities; a government grant is not related to the Group's daily activities
is recognized in non-operating income.The Company's government loans with below-market rate of interest are directly paid to the
Company and the related low rate interest will write off related borrowing costs. The government
loans with below-market rate of interest obtained by other subsidiaries of the Group are
government loans which is provided by local bureau of finance through bank with below-market
rate of interest. The actual amount of the loan received by the Group recognized as borrowings
and the related borrowing costs are calculated according to the principal of the loan and the
below-market rate.
25. Deferred tax assets/deferred tax liabilities
The income tax expenses include current income tax and deferred income tax.
25.1 Current income tax
At the balance sheet date current income tax liabilities (or assets) for the current and prior periods
are measured at the amount expected to be paid (or recovered) according to the requirements of
tax laws.
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
25. Deferred tax assets/deferred tax liabilities - continued
25.2 Deferred tax assets and deferred tax liabilities
For temporary differences between the carrying amounts of certain assets or liabilities and their
tax base or between the nil carrying amount of those items that are not recognised as assets or
liabilities and their tax base that can be determined according to tax laws deferred tax assets and
liabilities are recognised using the balance sheet liability method.
Deferred tax is generally recognised for all temporary differences. Deferred tax assets for
deductible temporary differences are recognised to the extent that it is probable that taxable
profits will be available against which the deductible temporary differences can be utilised.However for temporary differences associated with the initial recognition of goodwill and the
initial recognition of an asset or liability arising from a transaction (not a business combination)
that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of
transaction no deferred tax asset or liability is recognised.
For deductible losses and tax credits that can be carried forward deferred tax assets are
recognised to the extent that it is probable that future taxable profits will be available against
which the deductible losses and tax credits can be utilised.
Deferred tax liabilities are recognised for taxable temporary differences associated with
investments in subsidiaries and associates and interests in joint ventures except where the Group
is able to control the timing of the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from
deductible temporary differences associated with such investments and interests are only
recognised to the extent that it is probable that there will be taxable profits against which to utilise
the benefits of the temporary differences and they are expected to reverse in the foreseeable
future.
At the balance sheet date deferred tax assets and liabilities are measured at the tax rates
according to tax laws that are expected to apply in the period in which the asset is realised or the
liability is settled.
Current and deferred tax expenses or income are recognised in profit or loss for the period except
when they arise from transactions or events that are directly recognised in other comprehensive
income or in shareholders' equity in which case they are recognised in other comprehensive
income or in shareholders' equity; and when they arise from business combinations in which case
they adjust the carrying amount of goodwill.
At the balance sheet date the carrying amount of deferred tax assets is reviewed and reduced if it
is no longer probable that sufficient taxable profits will be available in the future to allow the
benefit of deferred tax assets to be utilised. Such reduction in amount is reversed when it becomes
probable that sufficient taxable profits will be available.
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
25. Deferred tax assets/deferred tax liabilities - continued
25.3 Net off of income taxes
When the Group has a legal right to settle on a net basis and intends either to settle on a net basis
or to realise the assets and settle the liabilities simultaneously current tax assets and current tax
liabilities are offset and presented on a net basis.When the Group has a legal right to settle current tax assets and liabilities on a net basis and
deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable entities which intend either to settle
current tax assets and liabilities on a net basis or to realise the assets and liabilities simultaneously
in each future period in which significant amounts of deferred tax assets or liabilities are expected to
be reversed deferred tax assets and deferred tax liabilities are offset and presented on a net basis.
26. Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the
risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
26.1. Operating lease accounting methods
26.1.1 The Group as lessee under operating leases
Operating lease payments are recognized on a straight-line basis over the term of the relevant
lease and are either included in the cost of related asset or charged to profit or loss for the period.Initial direct costs incurred are charged to profit or loss for the period.
26.1.2 The Group as lessor under operating leases
Rental income from operating leases is recognized in profit or loss on a straight-line basis over the
term of the relevant lease. Initial direct costs with more than an insignificant amount are
capitalized when incurred and are recognized in profit or loss on the same basis as rental income
over the lease term. Other initial direct costs with an insignificant amount are charged to profit or
loss in the period in which they are incurred. Contingent rents are charged to profit or loss in the
period in which they actually arise.
27. Changes in accounting policies
The Group has adopted the Notice of the Revised Format of Financial Statements for General
Business Enterprise in 2018 (Cai Kuai (2018) No. 15 hereinafter referred to as the "Cai Kuai
No.15 Document") released by the MoF on 15 June 2018 since the preparation of the financial
statements for 2018.
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
- continued
27. Changes in accounting policies - continued
Cai Kuai No.15 Document revised the presentation items on the balance sheet and the income
statement which are as follows: add the line items of "notes and accounts receivable" "notes and
accounts payable" "research and development expenses"; revise the presentation of "other
payables" "fixed assets" "construction in progress" "other payables" "long-term payables" and
"administrative expenses"; less the line items of "notes receivable" "accounts receivable"
"dividends receivable" and "interest receivable" "disposal of fixed assets" "materials for
construction of fixed assets" "notes payable" "accounts payable" "dividends payable" and
"special payables" add the line items of "including: interest expenses" and "interest income"
under the item of "financial expenses"; and adjust the presentation location of certain items in the
income statements.
For changes of the presentation items stated above the Group has applied retrospectively for
accounting treatments and adjusted the comparable data of the prior year for comparable periods.IV. CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY
ASSUMPTIONS AND UNCERTAINTIES IN ACCOUNTING ESTIMATES
In the application of accounting policies as set out in Note III the Group is required to make
judgments estimates and assumptions about the carrying amounts of items in the financial
statements that cannot be measured accurately due to the internal uncertainties of the operating
activities. These judgments estimates and assumptions are based on historical experience of the
Group's management as well as other factors that are considered to be relevant. Actual results
may differ from these estimates.The Group periodically review the judgments estimates and assumptions above on a going
concern basis. For those changes in accounting policies that only affect current financial
statements the influences are recognized in current period. For those changes in accounting
policies that affect both current and future financial statements the influences are recognized in
both current and prospective periods.Key assumptions and uncertainties in accounting estimates
The following are the key assumptions and uncertainties in accounting estimates at the end of the
reporting period that may have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities in the future period.
Deferred tax assets recognized for deductible losses
Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that
taxable profit will be available against which the losses can be utilized. Significant management
judgment is required to determine the amount of deferred tax assets that can be recognized based
upon the likely timing and level of future taxable profits together with future tax planning
strategies.
IV. CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY
ASSUMPTIONS AND UNCERTAINTIES IN ACCOUNTING ESTIMATES - continued
Significant accounting judgments and accounting estimates - continued
Depreciation of fixed assets
As set out in Note III-15 the depreciation is calculated on the straight line basis to write-off the
cost of each item of fixed assets to its residual value over its estimated useful life. The Group's
management determines the estimated useful lives for its fixed assets. This estimate is based on
the historical experience of the actual useful lives of fixed assets of similar nature and functions.If the previous estimates have significant changes and depreciation expenses will be adjusted in
the future periods.Impairment of long-term assets
The Group assesses whether the recoverable amount is lower than the book value. If there are any
indicators that the book value of non-current assets cannot be fully recoverable impairment losses
should be recorded.The recoverable amount is the higher of the fair value of a long-term asset less costs of disposal
and the present value of the future cash flows expected to be derived from the asset. As it is
difficult for the Group to obtain the quoted market price of the long-term assets concerned the fair
value of the assets cannot be reliably estimated. In assessing the present value of future cash flows
the management of the Group is required to make significant judgements on the assumptions
including sales growth rate future selling price production cost operating expenses and discount
rate which are of high uncertainty.Yantai Changyu Pioneer Wine Company Limited Research and Development Co. Ltd. ("R&D
Centre") subsidiary of the Company started production at the end of 2017 being as a new main
production base of the Company. In 2018 the production of R&D Centre accounts for more than
60% of the Group’s production. R&D Centre’s total investment budget in its long-term assets
approximates RMB 4.5 billion which is a large-scale investment. As at 31 December 2018 the
book values of relevant long-term assets including fixed assets construction in progress and
intangible amounted to RMB 3.5 billion accounting for 26.6% of the total assets in the
consolidated financial statements which exerts significant influence on the consolidated financial
statements. As there is little space for the development of the domestic wine market the
management of the Company faces great operating pressures to apply the off-take potential of the
new production base in an efficient way. In addition there are certain risks of impairment for such
long-term assets. The management performs the impairment test by determining if the recoverable
amount is less than the book value of long-term assets and determines the recoverable amount
based on the present value of expected future cash flows. In the assessment of the future cash
flows the management is required to based on a reasonable and supportable basis assess the cash
flows for the future 5 years (“projecting period”) and cash flows after the projecting period
(“subsequent period”) and make significant judgements and accounting estimates in the discount
rate sales growth rate future selling price production cost operating expenses and other key
assumptions.
According to the result of the impairment test the management believes that as at 31 December
2018 the above long-term assets of the Group were not impaired. Therefore no impairment
provision is made.
IV. CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY
ASSUMPTIONS AND UNCERTAINTIES IN ACCOUNTING ESTIMATES - continued
Significant accounting judgments and accounting estimates - continued
Inventory provision based on net realizable value
The inventories are measured on the lower of carrying value and net realizable value and
provision should be made for impairment on obsolete and slow moving inventories. The group
will reassess whether the net realizable value is lower than the carrying cost at the end of each
year.The determination of the fair value of identifiable assets and liabilities associated with business
combination.
For the cost of business combination the Group allocates the purchase price based on fair value of
relatively identifiable assets and liabilities. When the fair value of relatively identifiable assets
and liabilities are evaluated by the present value of its future cash flows The management need
estimate the growth rate of sales based on future market supply and demand to predict cash flows
and considered the proper discount rate for calculating management need use major accounting
estimates and judgments in the progress.
V. TAXES
1. The main taxes and tax rate are as follows:
(1) China
Value added tax VAT is levied at 6% 10% 11% 16% and 17% on the invoiced
amount after deduction of eligible input VAT.
Consumption tax The consumption tax of the group is levied on gross revenue
at rates ranging from 10% to 20%.
City development tax Levied at 7% of total business tax payment.
Corporate income tax The Group is subject to a corporate income tax rate of 25%
on its taxable income.
(2) France
Value added tax VAT is levied at 20% on the invoiced amount after deduction
of eligible input VAT.
Corporate income tax The Group is subject to a corporate income tax rate of 33.3%
on its taxable income.
(3) Spain
Value added tax VAT is levied at 21% on the invoiced amount after deduction
of eligible input VAT.
Corporate income tax The Group is subject to a corporate income tax rate of 28%
on its taxable income.
(4) Chile
Value added tax VAT is levied at 19% on the invoiced amount after deduction
of eligible input VAT.
Corporate income tax The Group is subject to a corporate income tax rate of 27%
on its taxable income.
(5) Australia
Value added tax VAT is levied at 10% on the invoiced amount after deduction
of eligible input VAT.
Corporate income tax The Group is subject to a corporate income tax rate of 30%
on its taxable income.Other than tax incentives stated in Note V-2 applicable tax rates of the Group in 2018 and 2017
are all stated as above.
V. TAXES - continued
2. Tax incentives and relative permit
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 PRC Corporate Income Tax and clause 86 of PRC Corporate Income
Tax Measures for Implementation 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 PRC Corporate Income Tax and clause 86 of PRC Corporate
Income Tax Measures for Implementation Grape Growing enjoys an exemption of corporate
income tax.Xinjiang Tianzhu 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 Babao Baron Chateau Co. Ltd. ("Shihezi Chateau") 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.VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Cash and bank
31/12/2018 31/12/2017
RMB RMB
Cash 114335 136973
Bank balance 1382399749 1278397711
Other currency fund 93186393 123987825____________ ____________
Total 1475700477 1402522509____________ ____________
At 31 December 2018 the balance of restricted cash of the Group is as follows:
31/12/2018 31/12/2017
RMB RMB
Home maintenance funds 2611350 2645410____________ ____________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
1. Cash and bank - continued
As at 31 December 2018 the Group's other monetary assets is as follows:
31/12/2018 31/12/2017
RMB RMB
Research and Development Co. Ltd ("R&D Centre")
pledged deposit for long-term payables 46100000 61700000
Deposit for letter of credit 44540850 57946190
Alipay account balance 2483816 4317635
Deposit for Company cards 51727 14000
Deposit for ICBC platform 10000 10000____________ ____________
93186393 123987825____________ ____________
As at 31 December 2018 the Group's term deposits with original maturity of more than three
months when acquired is RMB 173042400 with interest rate 1.50%-3.80% (31 December
2017:RMB 95000000).
2. Notes and accounts receivable
2.1 Presented by categories
31/12/2018 31/12/2017
RMB RMB
Notes receivable 288667988 244796818
Accounts receivable 242153083 263796355____________ ____________
Total 530821071 508593173____________ ____________
2.2 Notes receivable
(1) Categories of notes receivable
31/12/2018 31/12/2017
RMB RMB
Bank acceptances 288667988 244796818____________ ____________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
2. Notes and accounts receivable - continued
2.2 Notes receivable- continued
(2) Notes receivable which have been pledged as security at the end of the period
As at 31 December 2018 there was no pledged notes receivable (31 December 2017: Nil).
(3) Notes receivable endorsed but are not yet due at the balance sheet date
31/12/2018 31/12/2017
RMB RMB
Bank acceptances 182829674 188855843____________ ____________
As at 31 December 2018 notes endorsed by the Group to other parties which are not yet due at
the end of the period is RMB 182829674 (31 December 2017: RMB 188855843). 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.
(4) Notes receivable reclassified to accounts receivable due to the drawers' inability to settle the note
on maturity
As at 31 December 2018 no notes receivable were reclassified as accounts receivable due to the
default of drawer (31 December 2017: Nil).
2.3 Accounts receivable
(1) Disclosure of accounts receivable by categories:
31/12/2018 31/12/2017
Bad debts Carrying Bad debts Carrying
Amount provision amount Amount provision amount
Amount Proportion Amount Ratio Amount Amount Proportion Amount Ratio Amount
RMB % RMB % RMB RMB % RMB % RMB
Accounts receivable for which
bad debt provision has been
assessed individually 242153083 100.0 - - 242153083 263796355 100.0 - - 263796355______ ___ ____ ____ ______ ______ ___ ____ ____ ______
The normal credit term is one month which can be extended to one year for certain customers.The accounts receivable are interest-free.
As at 31 December 2018 ownership restricted accounts receivable is RMB 52015032 (31
December 2017: RMB 46337062) referring to Note VI-45.
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
2. Notes and accounts receivable - continued
2.3 Accounts receivable - continued
(1) Disclosure of accounts receivable by categories - continued
The aging analysis is as follows:
31/12/2018 31/12/2017
RMB RMB
Within 1 year 240312773 263112714
1 to 2 years 1566622 683641
2 to 3 years 273688 -____________ ____________
242153083 263796355____________ ____________
(2) Recognitions collections and reversals during the current year:
As at 31 December 2018 there was no bad debt provision for accounts receivable (31 December
2017: Nil). There was no bad debt provision made reversed or written-off by management in
2018 (2017: Nil).
(3) Top five entities with the largest balances of accounts receivable:
Relationship Percentage of
Name with the Group Amount Aging total receivables
RMB %
Sainsbury's supermarkets Ltd Third party 17428889 Within 1 year 7.2
Nongongshang Supermarket
(Group) Co. Ltd Third party 10928458 Within 1 year 4.5
SLIGRO B.V. Third party 6732175 Within 1 year 2.8
Vi?edosy Bodegas Las Pircas Third party 6430387 Within 1 year 2.7
Suguo Supermarket Co. Ltd. Third party 6415505 Within 1 year 2.6________ ___
47935414 19.8________ ___
3. Prepayments
(1) The aging analysis is as follows:
31/12/2018 31/12/2017
Amount Ratio Amount Ratio
RMB % RMB %
Within 1 year 4219949 100.0 2417931 100.0_________ _____ _________ _____
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
3. Prepayments - continued
(2) As at 31 December 2018 the top five of prepayments were as follows:
Reason Percentage of
Relationship for being total advances
with the Group Amount Aging outstanding to suppliers
RMB %
Shanghai Benchu
Trade&Development Co. Ltd. Third party 345600 Within 1 year Goods not received 8.2
Carrington Estate T/A Karikari Esta Third party 340498 Within 1 year Goods not received 8.1
DONELLI VINI S.P.A. Third party 304204 Within 1 year Goods not received 7.2
Yantai Economic and Technological
Development Zone Thermal Co. Ltd Third party 250000 Within 1 year Prepaid heating fees 5.9
Yantai Cihang International Freight
Agent Co. Ltd. Third party 186392 Within 1 year Prepaid agency fees 4.4_______ ___
1426694 33.8_______ ___
4. Other receivables
4.1 Presented by categories
31/12/2018 31/12/2017
RMB RMB
Interest receivable 1332681 240968
Other receivables 21303405 18737454___________ ___________
Total 22636086 18978422___________ ___________
(1) Categories of interest receivable
31/12/2018 31/12/2017
RMB RMB
Interest receivable on bank deposits 1332681 240968_________ ________
(2) Overdue interest
As at 31 December 2018 there was no overdue interest receivable (31 December 2017: Nil).
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
4. Other receivables- continued
4.2 Other receivables
(1) Disclosure of other receivables by categories
31/12/2018 31/12/2017
Bad debts Carrying Bad debts Carrying
Amount provision amount Amount provision amount
Amount Proportion Amount Ratio Amount Amount Proportion Amount Ratio Amount
RMB % RMB % RMB RMB % RMB % RMB
Other receivable for which
bad debt provision has been
assessed individually 21303405 100.0 - - 21303405 18737454 100.0 - - 18737454______ ___ _____ ___ ______ ______ ___ _____ ___ ______
The aging analysis is as follows：
31/12/2018 31/12/2017
Bad debts Carrying Bad debts Carrying
Amount provision amount Amount provision amount
Amount Proportion Amount Amount Amount Proportion Amount Amount
RMB % RMB RMB RMB % RMB RMB
Within 1 year 11293908 53.0 - 11293908 13214301 70.5 - 13214301
1 to 2 years 6693702 31.5 - 6693702 1937961 10.3 - 1937961
2 to 3 years 1922998 9.0 - 1922998 2273591 12.2 - 2273591
Over 3 years 1392797 6.5 - 1392797 1311601 7.0 - 1311601_______ ____ ______ _______ _______ ____ ______ _______
21303405 100.0 - 21303405 18737454 100.0 - 18737454_______ ____ ______ _______ _______ ____ ______ _______
(2) Accrual reversal and written-off during the current year
As at 31 December 2018 no bad debt provision was made for other receivables (2017: RMB
354805).
(3) Other receivables written off in the current year
As at 31 December 2018 the Group has no other receivables written off (31 December 2017:
RMB 354805).
(4) Disclosure of other receivables by categories
31/12/2018 31/12/2017
RMB RMB
Deposit 10453624 10075901
Petty cash receivable 2274038 2215146
Investment fund - 2050000
Refund of consumption tax real estate tax 6273882 2451188
Others 2301861 1945219____________ ____________
21303405 18737454____________ ____________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
4. Other receivables- continued
4.2 Other receivables- continued
(5) Five entities with the largest balances of other receivables
As at 31 December 2018 the top five of other receivables are as follows:
Percentage of total Bad debt
Nature Amount Aging other receivables Closing balance
RMB % RMB
Yantai Development Zone
Construction Industry Association Construction deposit 7709477 Within 3 years 36.1 -
Zhejiang Tmall Technology Co. Ltd. Shop deposits 867426 Within 1 year 4.1 -
Yantai Shenma Packaging Co. Ltd.("Shenma Packaging") Lease receivables 813440 Within 1 year 3.8 -
Yantai Development Zone
Power Company Deposit 140000 Within 3 years 0.7 -
Yantai Development Zone
Heat Company Deposit 130000 Within 3 years 0.6 -_________ ____ _________
9660343 45.3 -_________ ____ _________
5. Inventories
(1) Disclosure of inventories by categories
31/12/2018 31/12/2017
Net carrying Net carrying
Balance Provision amount Balance Provision amount
RMB RMB RMB RMB RMB RMB
Raw material 67267035 - 67267035 66881090 - 66881090
Work in progress 1787819923 - 1787819923 1568230851 - 1568230851
Finished goods 894187725 (24683226) 869504499 864097497 (25595392) 838502105_________ ________ _________ _________ ________ _________
2749274683 (24683226) 2724591457 2499209438 (25595392) 2473614046_________ ________ _________ _________ ________ _________
(2) Inventory provision
Closing balance Recognized Reversal Written off Opening balance
RMB RMB RMB RMB RMB
Provision for decline in
value of inventories 25595392 749134 (1661300) - 24683226_________ ________ ________ ________ _________
6. Other current assets
31/12/2018 31/12/2017
RMB RMB
Prepaid taxes 24077323 22911298
Pending deduct VAT on purchase 233087707 206529504
Prepaid rent 1511366 1381957___________ ____________
258676396 230822759___________ ____________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
7. Available-for-sale financial assets
(1) Available-for-sale financial assets
31/12/2018 31/12/2017
Amount Impairment Carrying amount Amount Impairment Carrying amount
RMB RMB RMB RMB RMB RMB
Available-for-sale
equity instruments
measured at cost 467251 - 467251 467251 - 467251_______ _______ ______ _______ _______ ______
(2) Available-for-sale financial assets measured at cost
Carrying amount Provision for impairment losses Proportion of Cash
voting power dividend
in the for the
Investee Opening Increase Decrease Closing Opening Increase Decrease Closing investee period
RMB RMB RMB RMB RMB RMB RMB RMB (%) RMB
Other 467251 - - 467251 - - - -____ ____ ____ ____ ____ ____ ____ ____ ____ ____
The Group holding equity ratios of investment companies are less than 1%. Investment companies
are all unlisted companies and their fair value cannot be measured reliably therefore the Group
uses cost method to measure these available-for-sale financial assets.
8. Investment properties
Investment properties measured by cost method
Buildings
RMB
Total original carrying amount
31/12/2017 38347283
Increase
Transfer from fixed assets 32606762____________
31/12/2018 70954045____________
Total accumulated depreciation
31/12/2017 19879294
Increase
Transfer from fixed assets 17644360
Additions 1857902____________
31/12/2018 39381556____________
Total carrying amount
31/12/2018 31572489____________
31/12/2017 18467989____________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
9. Fixed assets
(1) Details of fixed assets
Buildings Machinery Motor Vehicles Total
RMB RMB RMB RMB
Total original carrying amount
31/12/2017 4508868684 2247350293 28689415 6784908392
Increase
Purchase 4490675 235607780 923222 241021677
Transfer from CIP 252035224 202251634 1708803 455995661
Acquisition increase (VII-1) 33048307 15981692 - 49029999
Decrease
Disposal (4409703) (35392585) (4740801) (44543089)
Transfer to Investment
properties (VI-8) (32606762) - - (32606762)__________ __________ ________ __________
31/12/2018 4761426425 2665798814 26580639 7453805878__________ __________ ________ __________
Total accumulated depreciation
31/12/2017 512643486 922944520 20236417 1455824423
Increase
Additions 126510348 168695471 2632539 297838358
Decrease
Disposal (242705) (29575754) (2125751) (31944210)
Transfer to Investment
properties (VI-8) (17644360) - - (17644360)__________ __________ ________ __________
31/12/2018 621266769 1062064237 20743205 1704074211__________ __________ ________ __________
Total carrying amount
31/12/2018 4140159656 1603734577 5837434 5749731667__________ __________ ________ __________
31/12/2017 3996225198 1324405773 8452998 5329083969__________ __________ ________ __________
As at 31 December 2018 fixed assets with ownership restricted are RMB 412006421 (31
December 2017: RMB 145009923). Please refer to Note VI-45 in detail.
As at 31 December 2018 the Group has net fixed assets that are temporarily idle of RMB
59718155(31 December 2017: Nil). The Group has no fixed assets acquired under finance leases
or fixed assets classified as held for sale (31 December 2017: RMB 2000197).
(2) Fixed assets through operating lease
Amount
RMB
Machinery 134111_______
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
9. Fixed assets - continued
(3) Fixed assets of which certificates of title have not been obtained
As at 31 December 2018 buildings without property certificate are as follows:
Reasons why certificates
Amount of title have not been obtained
RMB
Research and Development Co Ltd
Industry Production Centre 1755472791 Processing
Changan Chateau Dormitory building main building 284890228 Processing
Beijing Chateau European town main service building 187565493 Processing
Ding Luo Te Chateau main building 83218432 Processing
Xinjiang Tianzhu fermentations and storage warehouse 17768840 Processing
Ice Wine Chateau office building and packing workshop 9198373 Processing
Jingyang factory fermentation building 4171918 Processing
Fermentation centre office experiment building and workshop 3653494 Processing
Kylin Packaging finished goods warehouse and workshop 2396850 Processing
Sales Company office buildings 1123984 Processing__________
2349460403__________
The buildings without property certificate above have no significant influence on the group's
management.
10. Construction in progress
(1) Construction in progress:
31/12/2018 31/12/2017
RMB RMB
R&D Centre ("Changyu Wine integrational
Construction") Project 608553617 883731540
Changan Chateau Construction Project 39793893 53290036
Ningxia Chateau Construction Project 47163863 35711269
Shihezi Chateau Construction Project 23664124 25463724
Sales Company construction project 17985882 11355685
Other companies construction Project 22135212 16589315____________ ____________
759296591 1026141569____________ ____________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
10. Construction in progress- continued
(2) Changes in significant construction in progress:
Budget 31/12/2017 Addition
Transfer to
PPE
Transfer to
31/12/2018 Status
Total accumulated
Capitalizing
interest
Capitalizing
interest
for this period
Interest
capitalization
rate Financed by
Lone-term
prepaid
expense
RMB RMB RMB RMB RMB RMB RMB RMB %
Changyu Wine integrational
Construction" 4505780000 883731540 118142779 (372914273) (20406429) 608553617 74.3 14271837 5843872 1.2%及 4.3%
Loans from
financial
institutions
and Self-raised
Changan Chateau Construction
Project 620740000 53290036 12149197 (25645340)
-
39793893 108.7
- - -
Self-raised
Shihezi Chateau Construction
Project 780000000 25463724 37629835 (39429435)
-
23664124 96.3
- - -
Self-raised
Ningxia Chateau Construction
Project 414150000 35711269 14307265 (2854671)
-
47163863 102.1
- - -
Self-raised
Sales Company construction project 161350000 11355685 6893191 (262994) - 17985882 97.7 - - - Self-raised
The interest capitalized in construction in progress is RMB 5843872 in 2018(2017: RMB 6138242).
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Bearer biological assets
Bearer biological assets are Vines which measured in cost method
Immature Mature
biological assets biological assets Total
RMB RMB RMB
Total original carrying amount
31/12/2017 12175000 217537353 229712353
Increase
Cultivated increase 19371297 - 19371297
Transfer to mature assets (17708689) 17708689 -__________ ___________ ___________
31/12/2018 13837608 235246042 249083650__________ ___________ ___________
Total accumulated depreciation
31/12/2017 - 27782465 27782465
Increase
Additions - 12034812 12034812__________ ___________ ___________
31/12/2018 - 39817277 39817277__________ ___________ ___________
Total net carrying amount
31/12/2018 13837608 195428765 209266373__________ ___________ ___________
31/12/2017 12175000 189754888 201929888__________ ___________ ___________
As at 31 December 2018 there is no biological asset with ownership restricted. (31 December
2017:Nil)
As at 31 December 2018 there is no indication that biological assets may be impaired and no
provision is made. (31 December 2017:Nil)
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
12. Intangible assets
(1) Intangible assets
Land use rights Software use rights Trademark Total
RMB RMB RMB RMB
Total original carrying amount
31/12/2017 521731139 73666754 159702508 755100401
Increase
Purchase 1596780 922809 105827 2625416
Acquisition increase(VII-1) 4924992 1232494 10260400 16417886__________ __________ _________ __________
31/12/2018 528252911 75822057 170068735 774143703__________ __________ _________ __________
Total accumulated depreciation
31/12/2017 67547772 21516741 10586991 99651504
Increase
Additions 10523138 5206074 3289528 19018740__________ __________ _________ __________
31/12/2018 78070910 26722815 13876519 118670244__________ __________ _________ __________
Total carrying amount
31/12/2018 450182001 49099242 156192216 655473459__________ __________ _________ __________
31/12/2017 454183367 52150013 149115517 655448897__________ __________ _________ __________
(2) Land use right's location and years are as follows:
Item 31/12/2018 31/12/2017
RMB RMB
In the PRC( within 50 years) 419300592 428226950
Out of the PRC (more than 50 years) 30881409 25956417___________ ____________
450182001 454183367___________ ____________
As at 31 December 2018 the Group has land use right with infinite useful lives of RMB
30881409( 31 December 2017: RMB 25956417) representing the freehold land held by Chile
Indomita Wine Group and Australia Kilikanoon Estate under relevant Chile and Australia laws
on which the amortization is not required.
As at 31 December 2018 the Group has trademark with infinite useful lives of RMB 154150933
(31 December 2017: 143890533) 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 discount rates used in the cash
flow projections are 9.0% and 10.1% 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 revenue growth rates in the subsequent period are 3.0% and
2.5% respectively.
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
12. Intangible assets - continued
(2) Land use right's location and years are as follows:- continued
The Group recognizes 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 2018 the
management believes there is no impairment loss on those trademark with infinite useful lives of
the Group.
As at 31 December 2018 the intangible asset with restricted ownership is RMB 218070414
(December 31 2017:RMB 164051996) Please refer to Note VI-45 in detail.
13. Goodwill
Investee 31/12/2017 Increase Decrease 31/12/2018
RMB RMB RMB RMB
Etablissements Roullet Fransac
("Fransac Sales") 13112525 - - 13112525
Dicot Partners S.L
(" Dicot") 92391901 - - 92391901
Societe Civile Argricole Du Chateau
De Mirefleurs ("Mirefleurs") 15761440 - - 15761440
Indomita Wine 6870115 - - 6870115
Australia Kilikanoon Estate - 37063130 - 37063130_________ ________ ______ _________
Total 128135981 37063130 - 165199111_________ ________ ______ _________
The Group acquired Fransac Sales Dicot and Mirefleurs and Chile Indomita Wine Group in
December 2013 September 2015 January 2016 and July 2017 respectively resulting in respective
goodwill amounting to RMB 13112525 RMB 92391901 RMB 15761440 and RMB
6870115. The Group acquired Australia Kilikanoon Estate in January 2018 resulting goodwill
amounting to RMB 37063130 which have been allocated to corresponding asset groups for
impairment testing.The recoverable amount of the group of assets is determined by the present value of its future cash
flows. Future cash flow projections are made based on the recently financial budgets for the future
5 years period (projecting period) and presume that cash flows after the projecting period
(subsequent period). Discount rate used in calculating the recoverable amounts of Fransac Sales
Dicot Mirefleurs Indomita Wine and Australia Kilikanoon Estate are 11.1% 8.9% 11.1 % 9.0%
and 10.1%(2017: 10.3% 8.5% 10.3% 9.6% and N/A) respectively. One key assumption in
projecting future cash flows is the growth rate of sales in projecting period which is computed
based on the expected growth rate of the industry and each group of assets. Growth rate of sales in
subsequent period of Fransac Sales Dicot Mirefleurs Indomita Wine and Australia Kilikanoon
Estate is 2.0% 2.0% 2.0% 3.0%2.5% (2017: 2% 2% 2% 3% and N/A)respectively.
Management of the Group believes that any reasonable changes in the above assumptions will not
cause book values of these subsidiaries exceeds their recoverable amounts.
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. Goodwill- continued
According to the assessment the Group believes that no impairment provision need to be made
for goodwill in the reporting period.
14. Long-term prepaid expenses
31/12/2017 Increase Amortization 31/12/2018
RMB RMB RMB RMB
Land lease prepayments 56365385 - (2147622) 54217763
Land requisition fee 43976036 - (548297) 43427739
Greening fee 125628334 24511623 (8915485) 141224472
Leasehold improvement 873263 3306 (100922) 775647
Others 3166213 2198373 (369791) 4994795__________ _________ _________ __________
230009231 26713302 (12082117) 244640416__________ _________ _________ __________
Note: The greening fee transferred from CIP to long-term prepaid expenses amounted to RMB
20406429 refer to Note VI-10 for details.
15. Deferred tax assets/liabilities
Deferred tax assets and deferred tax liabilities are not related to income tax of the same tax
authorities of the same tax subjects thus not presented with the net amount after netting.
(1) Deferred tax assets:
31/12/2018 31/12/2017
Temporary
differences
Deferred tax
assets
Temporary
differences
Deferred tax
assets
RMB RMB RMB RMB
Unrealized profit from intra
- company transactions 602476583 150619145 618591681 154647920
Unpaid bonus 141808257 35485814 94462722 23671611
Retirement benefit 26186243 6546561 27980857 6995214
Asset impairment provision 24683226 6170807 25595392 6398848
Deductible losses 262937999 67566387 345639059 88584337
Deferred income 86227293 18868963 109797054 24285203
Assets impairment loss 661415 178582 684622 184848
Accrued rebate - - 13413655 3353415
1144981016 285436259 1236165042 308121396
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
15. Deferred tax assets/liabilities - continued
(2) Deferred tax liabilities
Item
31/12/2018 31/12/2017
Taxable temporary
difference
Deferred
tax liability
Taxable temporary
difference
Deferred
tax liability
RMB RMB RMB RMB
Revaluation surplus in
business combination not
under common control 81338130 22010647 89316823 24264203
(3) Deferred tax assets and liabilities not recognized
31/12/2018 31/12/2017
RMB RMB
Deductible losses 171430831 150320039___________ ____________
(4) Deductible losses not recognized as deferred tax assets will expire in:
31/12/2018 31/12/2017
RMB RMB
2018 - -
2019 7311273 7311273
2020 45960766 45960766
2021 82685213 82685213
2022 14362787 14362787
2023 21110792 -____________ ____________
171430831 150320039____________ ____________
16. Short-term borrowings
31/12/2018 31/12/2017
RMB RMB
Credit loans 605202708 648494624
Mortgaged loans 79467832 65939662
Guaranteed loan 3331870 -____________ ____________
688002410 714434286____________ ____________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
16. Short-term borrowings - continued
As at 31 December 2018 short-term borrowings detail were as follows:
Nature of Interest rate Year ended
Loans amount Exchange rate RMB interest in contract Interest rate
% %
Credit loans (RMB) 400000000 1.0000 400000000 Floating 1 year LPR- 0.04(Note 1) 4.35
Credit loans (RMB) 150000000 1.0000 150000000 Floating Annual benchmark rate 4.35
Credit loans (EUR) 912455 7.8473 7160308 Fixed 0.86~2.53 0.86~2.53
Credit loans (USD) 7000000 6.8632 48042400 Fixed 3.97~4.90 3.97~4.90
Mortgaged loans (EUR) 6628399 7.8473 52015032 Fixed 0.35~0.95 0.35~0.95
Mortgaged loans (USD) 4000000 6.8632 27452800 Fixed 4.22~4.38 4.22~4.38
Guaranteed loan(AUD) 690543 4.8250 3331870 Fixed 3.00 3.00_________
688002410_________
Note 1:LPR is the basic interest rate of the People's Bank of China.
As at 31 December 2018 mortgaged loans were Hacienda y Vinedos Marques del Atrio S.L.U ("
Atrio ") factoring of accounts receivable from Banco de Sabadell S.A. etc. EUR 6628399
(translated as RMB 52015032)(31 December 2017:RMB 46337062). Mortgaged loans were
Indomita Wine mortgaged Peso 7642470000 (translated as RMB 75601849 ) fixed assets from
BBVA bank USD 4000000 (translated as RMB 27452800 )( December 31 2017: RMB
19602600 ). Australia Kilikanoon Estate has guaranteed loans of 690543 Australian dollars
(equivalent to RMB 3331870)(31 December 2017: Nil).
17. Notes and accounts payable
The aging analysis of accounts payable are as follows
31/12/2018 31/12/2017
RMB RMB
Within 1 year 710208269 664020176
1 to 2 years 3091659 2051592
2 to 3 years 121598 371111
Over 3 years 151355 -____________ ____________
713572881 666442879____________ ____________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
18. Advances from customers
The aging analysis of advances from customers are as follows
31/12/2018 31/12/2017
RMB RMB
Within 1 year 221022547 340025690
1 to 2 years 1155555 7072254
2 to 3 years 1032609 381463
Over 3 years 2864533 3414749____________ ____________
226075244 350894156____________ ____________
19. Employee benefits payable
(1) Employee benefits payable as follows:
31/12/2017 Increase Decrease 31/12/2018
RMB RMB RMB RMB
Short-term payroll 182545284 481042461 (477694636) 185893109
Post-demission benefits
- predetermined provision plan 298093 51503280 (51576508) 224865
Termination benefits 27980857 13677216 (15471830) 26186243_________ _________ _________ _________
210824234 546222957 (544742974) 212304217_________ _________ _________ _________
(2) Employee benefits payable:
31/12/2017 Increase Decrease 31/12/2018
RMB RMB RMB RMB
Salaries and bonus 185014318 428052734 (425381062) 187685990
Staff benefit 2116475 17783378 (16885565) 3014288
Staff welfare 524316 20677314 (20740535) 461095
Includes:
Medical insurance 524316 19045528 (19109404) 460440
Injury insurance - 895750 (895095) 655
Maternity insurance - 736036 (736036) -
Housing fund 39256 10444925 (10431671) 52510
Union fee and education fee 2060231 4109651 (4255803) 1914079_________ _________ _________ _________
Total 189754596 481068002 (477694636) 193127962_________ _________ _________ _________
Less: Non-current liabilities 7209312 7234853_________ _________
Short-term payroll 182545284 185893109_________ _________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
19. Employee benefits payable - continued
(3) Predetermined provision plan
31/12/2017 Increase Decrease 31/12/2018
RMB RMB RMB RMB
Pension 297591 50534986 (50608044) 224533
Unemployment insurance 502 968294 (968464) 332_______ __________ __________ _______
298093 51503280 (51576508) 224865_______ __________ __________ _______
The Group participates in pension insurance and unemployment insurance plans established by
government institution. According to those plans the Group pays pension and unemployment
insurance each month on the basis of 12%-32% and 0.5%-3% last period salary respectively.
Apart from these monthly expenses the Group does not bear any further payment obligation. This
year the Group should pay RMB 50534986 and RMB 968294 (2017: RMB 48834066 and
RMB 1141605 ) respectively into pension insurance and unemployment insurance. As at 31
December 2018 the Group has unpaid pension and unemployment insurance of RMB 224533
and RMB 332 respectively (31 December 2017: RMB 297591 and RMB 502 ) which is due to
the pension insurance and unemployment insurance plan at the end of the reporting period. These
payments have been paid after the end of the reporting period.
20. Taxes payable
31/12/2018 31/12/2017
RMB RMB
Value added tax 36442868 35681696
Consumption tax 28636646 44961022
Corporation income tax 40869507 38834293
Urban land use tax 2476527 2645687
Individual income tax 5669099 7805917
City construction tax 4337712 5669280
Property tax 5165128 4647644
Others 5315303 4848617____________ ____________
128912790 145094156____________ ____________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
21. Other payables
21.1 Presented by categories
31/12/2018 31/12/2017
RMB RMB
Interest payable 712826 771250
Other payables 607767064 602964319____________ ____________
608479890 603735569____________ ____________
21.2 Other payables
(1) Natures of other payables are as follows
31/12/2018 31/12/2017
RMB RMB
Payable to dealer deposit 159191138 139710963
Payables for equipment and construction 152825734 130706777
Payables for transportation 38867725 27847092
Royalty fee 78414978 77208929
Advertising costs 80715461 118834960
Withholding promotion costs 15714400 13413655
Employee deposit 2806766 13327132
Deposits from suppliers 15901210 3082595
Payables for contracting fee 27070584 38070571
Others 36259068 40761645____________ ____________
607767064 602964319____________ ____________
(2) Description of significant other payables aged more than one year
Company Amount Reasons
RMB
Beijing Qinglang Agriculture Science
and Technology Development Limited
Company ("Beijing Qinglang") 9493506 Payables for contracting fee
VASF Company 4878866 Payables for contracting fee_________
14372372_________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
22. Deferred income
31/12/2018 31/12/2017
RMB RMB
Government grants
Current liabilities 15860254 16878199
Non-current liabilities 70367039 92918855____________ ____________
86227293 109797054____________ ____________
Government grants:
Recognized in Related to
Opening Addition non-operating income Closing Assets/Income
/other income
RMB RMB RMB RMB RMB
Wine base liquor brewage project 4739400 - (1434900) 3304500 Assets
Shihezi chateau project funds 9276600 - (2280000) 6996600 Assets
Xinjiang Industrial Rejuvenation and
Technological Reconstruction Project 17064000 - (1422000) 15642000 Assets
Special support for infrastructure facilities 5300000 - (1060000) 4240000 Assets
Ningxia industry revitalization and
technology reconstruction funds 1086000 - (1086000) - Assets
Tourism Development Fund Subsidy Project 500000 - - 500000 Income
Support enterprise development special funds 10200000 - (10200000) - Income
(Huanren) wine production construction funds 3600000 - (400000) 3200000 Assets
Wine electronic tracking system
specific funds 3192311 - (667054) 2525257 Assets
Miyun Propaganda Department transfer 888945 - (888945) - Assets
Wine industry specific funds 744000 - (186000) 558000 Assets
Shandong Peninsula Blue Economic
Area construction funds 8000000 - (2000000) 6000000 Assets
Information system construction
project technology funds 3480000 - (580000) 2900000 Assets
Cross-border e-Business projects subsidies 702615 300000 (122359) 880256 Income
Red wine phenolics research projects funds 284601 - (284601) - Income
Grape base construction project 520000 - (520000) - Assets
Water pollution abatement project 320132 - (113602) 206530 Income
Infrastructure construction project 1843750 - (125000) 1718750 Assets
Industrial development support project 36900000 - (4100000) 32800000 Assets
Subsidy for updating of economic and
energy-saving technology 1154700 - (128300) 1026400 Assets
Special funds for efficient water saving
irrigation project - 1720000 (81000) 1639000 Assets
Guidance funds for service industry development - 2000000 - 2000000 Income
Relocation allowance for boiler renovation - 100000 (10000) 90000 Income_______ _______ _______ _______
Total 109797054 4120000 (27689761) 86227293_______ _______ _______ _______
Less: Non-current liabilities due within one year 16878199 15860254_______ _______
Other non-current liabilities 92918855 70367039_______ _______
As at 31 December 2018 the Group recognise current liability for deferred income to be
accounted in profit or loss within one year and recognise non-current liability for deferred income
to be accounted in profit or loss over one year.
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
23. Non-current liabilities due within one year
31/12/2018 31/12/2017
RMB RMB
Long-term borrowings due within one year 118940788 76954827
Long-term payables due within one year 34000000 34000000____________ ____________
152940788 110954827____________ ____________
As at 31 December 2018 Long-term borrowings due within one year refers to Note VI-24
Long-term payables due within one year refers to Note VI-25.
24. Long-term borrowings
31/12/2018 31/12/2017
RMB RMB
Credit loan 41805746 68182310
Mortgaged loan 3924916 6693544
Guaranteed loan 110750000 81250000____________ ____________
156480662 156125854____________ ____________
As at 31 December 2018 loans detail is as follows:
Nature Year-end Due within Due over
Loans amount Exchange rate Amount of interest Interest rate borrowing rate one year one year
RMB % %
Guaranteed loan (RMB) (Note) 81250000 1.0000 81250000 Floating 5 year LPR- 0.9 4.275 18750000 62500000
Credit loan (EUR) 17734954 7.8473 139171506 Fixed 1.00-2.53 1.00-2.53 97365760 41805746
Mortgaged loan (EUR)(Note) 860161 7.8473 6749944 Fixed 1.80 1.80 2825028 3924916
Guaranteed loan(AUD)(Note) 10000000 4.8250 48250000 Fixed 3.00 3.00 - 48250000_______ _______ _______
275421450 118940788 156480662_______ _______ _______
Note:As at 31 December 2018 The secured loan is the long-term loan borrowed by the company
for R&D Centre credit guarantee RMB 81250000 (31 December 2017: RMB 100000000)
mortgaged loans were Atrio using fixed assets EUR 4264170 (translated as RMB 33462225) as
collateral for loans from Popular Espa?ol EUR 860161 (translated as RMB 6749944) (31
December 2017: RMB 9502372).The guaranteed loan(AUD) is the loan of AUD 10000000
borrowed by Australia Kilikanoon Estate from Australia & New Zealand banking( translated as
RMB 48250000)(31 December 2017:Nil) which was guaranteed by the Company.
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
25. Long-term payables
31/12/2018 31/12/2017
RMB RMB
Agricultural Development
Fund of China ("CADF") 225000000 259000000____________ ____________
In 2016 RMB 305000000 from CADF was invested in R&D Centre CADF accounted for
37.9% of the registered capital. According to the investment agreement CADF will recovery
investment funds over 10 years the investment income received equal to 1.2% of the remaining
unpaid principal per annum. In addition to the fixed income CADF will no longer enjoy other
profits or bear the loss of R&D Centre .Therefore although the investment in R&D Centre
nominally equity investment is actually a debt investment (Financial discount loan). The group
take this investment as long-term payables which measured in amortized cost. The Group
repays the principal of RMB 34000000 in 2018. Refer to Note VI-45 for details of mortgaged
and pledged assets.Long-term Termination date Mortgaged
payables Yield rate Investment date of repayment Due within 1 year Due after 1 year and pledged assets
RMB RMB RMB
67000000 1.2% 12 January 2016 24 December 2025 10000000 57000000 Cash and bank and
intangible assets
176000000 1.2% 29 February 2016 28 February 2026 22000000 154000000 Fixed assets and intangible assets
16000000 1.2% 16 June 2016 22 May 2026 2000000 14000000 Cash and bank___________ __________ ___________
259000000 34000000 225000000___________ __________ ___________
26. Other non-current liabilities
31/12/2018 31/12/2017
RMB RMB
Employee benefit 7234853 7209312_________ _________
As at 31 December 2018 employee benefit represents deposit from bonus accrued for managers
and above. According to the bonus payment schedule of 2018 the bonus is expected to be paid
during 2020 to 2022.
27. Share capital
31/12/2017 Increase Decrease 31/12/2018
RMB RMB RMB RMB
Unrestricted shares
A shares 453460800 - - 453460800
B shares 232003200 - - 232003200__________ ______ ______ __________
Total of unrestricted shares
and total shares 685464000 - - 685464000__________ ______ ______ __________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
28. Capital reserve
31/12/2017 Increase Decrease 31/12/2018
RMB RMB RMB RMB
Share premium 560038853 - - 560038853
Other 5916588 - - 5916588__________ ______ ______ __________
Total 565955441 - - 565955441__________ ______ ______ __________
29. Other comprehensive income
2018
2018 Less: last year other Post-tax Post-tax
Opening Before-tax comprehensive income Less: attributable attributable Closing
balance amount in P/L current year tax expense to parent to NCI balance
Other comprehensive
income to be reclassified
to profit and loss 3109240 (376524) - - (143863) (232661) 2965377
Foreign currency statement
translation difference 3109240 (376524) - - (143863) (232661) 2965377______ _____ ____ ____ _____ _____ ______
30. Surplus reserve
31/12/2017 Increase Decrease 31/12/2018
RMB RMB RMB RMB
Statutory surplus reserve 342732000 - - 342732000__________ ______ ______ __________
In accordance with the Company Law of the People's Republic of China and the Articles of
Association of the Company the Company is required to appropriate 10% of the net profit to the
statutory surplus reserve until the accumulated balance of the statutory surplus reserve reaches
50% of the registered share capital. The Company does not appropriate net profit to the surplus
reserve in 2018.The Company can appropriate discretionary surplus reserve after appropriation of the statutory
surplus reserve. Discretionary surplus reserve can be utilized to offset the deficit or increase the
share capital after approval.
31. Retained earnings
31/12/2018 31/12/2017
RMB RMB
Retained earnings brought forward 7309081618 6620118562
Profit attributable to shareholders of the Company 1042632929 1031695056
Less: Dividends paid in respect prior year's profit (342732000) (342732000)____________ ____________
Retained earnings carried forward 8008982547 7309081618____________ ____________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
31. Retained earnings - continued
(1) Appropriation to surplus reserve by subsidiaries
As at 31 December 2018 the balance of the Group's unappropriated profits include appropriation
to surplus reserve by subsidiaries amounting to RMB 54336543 (31 December 2017: RMB
51994942).
(2) Cash dividends approved by general meeting
According to the annual general meeting on 25 May 2018 dividends distribution plan has been
made. On the basis of 685464000 issued share capital RMB 5.0 (including taxes) for every 10
shares was distributed to shareholders in total RMB 342732000 cash dividends.
(3) Profit distribution decided after the balance sheet date
According to a proposal of the board of directors approved on 18 April 2019 on the basis of
685464000 issued shares in 2018 cash dividends of RMB 6.0 (including taxes) for every 10 share
will be distributed to all the shareholders. The aggregate amount of cash dividend is RMB
411278400. The above proposal regarding dividends distribution is yet to be approved in a
shareholders' meeting.
32. Operating income and costs
Operating income is analysed as follows:
2018 2017
RMB RMB
Principal operating income 5066265044 4856168699
Other operating income 75979696 76376530____________ ____________
5142244740 4932545229____________ ____________
Operating cost is analysed as follows:
2018 2017
RMB RMB
Principal operating cost 1872991039 1645690616
Other operating cost 28620468 25901663____________ ____________
1901611507 1671592279____________ ____________
The operating income for the Group is mainly from the sales of wine brandy and sparkling wine.
In 2018 Over 87% (2017: over 91%) of the sales generated in PRC.
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
33. Taxes and surcharges
2018 2017
RMB RMB
Consumption tax 157037382 177879324
City construction tax 39655738 52247915
Education fee and surcharges 28762507 35831575
Property tax 31461708 23113211
Land use tax 12098790 11874984
Stamp tax 4507785 3945731
Others 2967764 5359283____________ ____________
276491674 310252023____________ ____________
For detail standards of tax rate please refer to Note V.
34. Selling expenses
2018 2017
RMB RMB
Marketing expenses 386519123 428828931
Salary and employee benefit 297489665 272148620
Freight 141756007 139218637
Trademark fee 73976395 72838612
Labor fee 72036252 67860856
Warehouse leasing expenses 45668613 53075132
Depreciation cost 41410740 34963089
Advertising fees 35857276 34753090
Conference expenses 32731215 31609123
Design cost 29437757 27226277
Travelling expenses 27176277 27709534
Security and sanitation fee 12896986 12659228
Water and electricity fee 11297244 11247163
Office allowance 9707518 6165561
Packing cost 8195160 7163930
Taxes 7113764 6771337
Amortization of low-value consumables 5756602 4028573
Business entertainment 5665336 4403750
Others 29907216 29851000____________ ____________
1274599146 1272522443____________ ____________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
35. Administrative expense
2018 2017
RMB RMB
Salary and employee benefit 114473209 106342126
Depreciation 71978485 71558307
Maintenance fee 25189384 21665024
Administrative expenses 23766176 22173925
Amortization 18187049 22438364
Greening fee amortization 14730804 10667941
Contracting fee 13364835 21162623
Rental fees 13012167 12414249
Safe production cost 9692574 7840215
Security and sanitation fee 8659405 6317723
Service fee 6556258 12118257
Entertainment fee 5300526 5470001
Travelling expenses 3630225 4747256
Others 15039554 11545122____________ ____________
343580651 336461133____________ ____________
36. Financial expense
2018 2017
RMB RMB
Interest income (12086007) (9168772)
Exchange income (666323) (182610)
Interest expenses 52198774 32233729
Less: Capitalization of interests 5843872 6138242
Bank charges 2342730 1846154____________ ____________
35945302 18590259____________ ____________
37. (Reversal of)Impairment loss of assets
2018 2017
RMB RMB
(Reversal of) Inventory impairment (912166) 7938748
Impairment losses from other receivables - 354805________ __________
(912166) 8293553________ __________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
38. Other income
2018 2017 Assets/income related
Project Subsidy RMB RMB
Tax refund 6587773 17765560 Income
Special funds for manufacturing industry 4750000 4100000 Income
Industrial development support project 4100000 - Assets
Ningxia industry revitalization and
technology reconstruction funds 1086000 3295000 Assets
Project funds 2280000 2280000 Assets
Shandong Peninsula Blue Economic
Area construction funds 2000000 2000000 Assets
Special funds for the development
of enterprises 42953900 - Income
Others 7493199 6352199 Assets
Others 16030562 10245625 Income__________ __________
87281434 46038384__________ __________
39. Non-operation income
Recognized in
extraordinary
2018 2017 profit and loss
RMB RMB RMB
Government grants - 1600000 -
Penalty income 1901530 7993571 1901530
Others 5451779 7637156 5451779__________ __________ __________
7353309 17230727 7353309__________ __________ __________
40. Non-operation expenses
Recognized in
extraordinary
2018 2017 profit and loss
RMB RMB RMB
Compensation and penalty loss 2576838 347528 2576838
Donation 293819 294899 293819
Others 665251 989049 665251__________ __________ __________
3535908 1631476 3535908__________ __________ __________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
41. Income tax
2018 2017
RMB RMB
Current income tax 352598370 330784002
Deferred income tax 14529152 7350243____________ ____________
367127522 338134245____________ ____________
Reconciliation between income tax expenses and profits is as follows:
2018 2017
RMB RMB
Profit before tax 1408611698 1371927763
Income tax expense at statutory tax rate 25% (2017:25%) 352152925 342981941
Effect of different tax rates applied by certain subsidiaries (949634) (9600821)
Changes in opening balances of deferred tax
liabilities due to tax rate adjustment - (1342916)
Unrecognised Deductible loss 4642727 3590697
Utilization of Deductible losses which were not
recognized previously - (6157735)
Non-deductible expenses 5496292 7550095
Write-off of deferred tax assets 5785212 1112984____________ ____________
Income tax expenses 367127522 338134245____________ ____________
42. Basic and dilutive earnings per share
The calculation of basic earnings per share is based on the consolidated profit attributable to
ordinary shareholders of the Company during the year and the weighted average number of
outstanding ordinary shares.
2018 2017
RMB RMB
Earnings
Consolidated profit attributable to ordinary
shareholders of the Company 1042632929 1031695056____________ ____________
Shares
Weighted average number of outstanding
ordinary shares 685464000 685464000____________ ____________
Basic earnings per share 1.52 1.51____________ ____________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
42. Basic and dilutive earnings per share - continued
The Company does not have potential dilutive ordinary shares.
From the balance sheet date to the date of approval of this report there are no subsequent events
which would affect the numbers of the weighted average number of outstanding of ordinary
shares.
43. Notes to consolidated cash flow statement
(1) Cash received relating to other operating activities:
2018 2017
RMB RMB
Government grants 57123900 20930752
Interest income 7871853 3839079
Penalty income 1901530 7993571
Refundable deposits of notes payable - 46900000
Others 5806589 5573503____________ ____________
72703872 85236905____________ ____________
(2) Cash paid relating to other operating activities:
2018 2017
RMB RMB
Selling expenses 918966855 956902163
General and administrative expenses 140112380 107905766
Refundable deposits of notes payable - 8000000
Others 4637082 2103059____________ ____________
1063716317 1074910988____________ ____________
(3) Cash paid for the purchase subsidiaries and other equity:
2018 2017
RMB RMB
Cash paid for acquisition of Australia Kilikanoon Estate 107194420 -
Less: Cash and bank for Australia Kilikanoon Estate
at acquisition date 1359765 -
Cash paid for acquisition of Indomita Wine - 318867650
Less: Cash and bank for Indomita
Wine at acquisition date - 15071107____________ ____________
105834655 303796543____________ ____________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
43. Notes to consolidated cash flow statement - continued
(4) Cash received relating to other financing activities:
2018 2017
RMB RMB
Received government grants related to assets - 5800000
R&D Centre long-term payables pledged time deposit 61700000 46100000
Interest income from R&D Centre long-term payables
pledged time deposit 768259 1030804____________ ____________
62468259 52930804____________ ____________
(5) Cash paid relating to other financing activities:
2018 2017
RMB RMB
R&D Centre long-term payables pledged time deposit 46100000 61700000__________ __________
44. Supplementary information to consolidated cash flow statement
(1) Supplementary information to consolidated cash flow statement
2018 2017
RMB RMB
Cash flows from operating activities
calculated by adjusting the net profit:
Net profit 1041484176 1033793518
Add:Loss for (reversal of) impairment of assets (912166) 8293553
Depreciation of investment properties 1857902 590610
Depreciation of fixed assets 297838358 250264403
Amortization of intangible assets 19018740 24098781
Depreciation of biological assets 12034812 10160981
Amortization of long-term prepaid expenses 12082117 13911581
(Gains) losses on disposal of assets (11368355) 222586
Finance expense 45855744 22381504
Decrease in deferred tax assets 22685137 13315979
Decrease in deferred tax liabilities (8155985) (5965736)
Increase in inventories (180452933) (138995031)
Increase in operating receivables (137899294) (180593570)
Decrease in operating payables (138089507) (78236132)____________ ____________
Net cash flows from operating activities 975978746 973243027____________ ____________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
44. Supplementary information to consolidated cash flow statement - continued
(2) Significant investing and financing activities not involving cash receipts and payments.
2018 2017
RMB RMB
Payment of intangible assets and other
long-term assets by bank acceptances 109378598 140493507____________ ____________
(3) Cash and cash equivalents
31/12/2018 31/12/2017
RMB RMB
Closing balance of Cash and bank 1475700477 1402522509
Less:
Restricted bank deposits 2611350 2645410
Restricted other monetary funds 93186393 123987825
Deposit with a period of over three months 173042400 95000000____________ ____________
Closing balance of cash and cash equivalents 1206860334 1180889274____________ ____________
31/12/2018 31/12/2017
RMB RMB
Cash 1206860334 1180889274
Including: Cash on hand 114335 136973
Bank deposits on demand 1206745999 1180752301____________ ____________
Closing balance of cash and cash equivalents 1206860334 1180889274____________ ____________
45. Assets with restriction of ownership
31/12/2018 31/12/2017
RMB RMB
Cash and bank 95797743 126633235
Account receivable 52015032 46337062
Fixed assets 412006421 145009923
Intangible assets 218070414 164051996____________ ____________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
45 Assets with restriction of ownership - continued
As at 31 December 2018 Cash and bank with restriction of ownership as follows:
31/12/2018 31/12/2017
RMB RMB
R&D Centre long-term payables pledged time deposit 46100000 61700000
Refundable deposits of letter of credit 44540850 57946190
Balance in Alipay account 2483816 4317635
Home maintenance funds 2611350 2645410
Margin for entity card 51727 14000
Deposit for ICBC platform 10000 10000____________ ____________
Total 95797743 126633235____________ ____________
Among the aforementioned items the amount of RMB 2483816 which is the blocked balances
of goods payment in Alipay account can be unlocked after 15 days.
As at 31 December 2018 the amount of accounts receivable with restricted ownership is EUR
6628399 (translated as RMB 52015032) which refers to accounts receivable Atrio
conducted for factoring from Banco de Sabadell S.A. etc.
As at 31 December 2018 fixed assets with restriction of ownership as follows:
Restricted reasons 31/12/2018
Company RMB
The Company Long-term payable collateral from R&D Centre 34246887
Sales Company Long-term payable collateral from R&D Centre 39557304
Sales Company Long-term borrowings collateral 33462225
Indomita Wine Short-term borrowings collateral 75601849
Ningxia Moser 15th Changyu
Wine Chateau Co. Ltd.(" Ningxia Chateau") Long-term payable collateral from R&D Centre 184678629
Ningxia Wine Co.Ltd.("Ningxia Wine"). Long-term payable collateral from R&D Centre 44459527___________
Total 412006421___________
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
45 Assets with restriction of ownership - continued
As at 31 December 2018 Intangible assets with restriction of ownership as follows:
Restricted reasons 31/12/2018
Company RMB
The Company Long-term payable collateral from R&D Centre 50902950
R&D Centre Long-term payable collateral from R&D Centre 108913538
Ningxia Chateau Long-term payable collateral from R&D Centre 8906611
Ningxia Wine Long-term payable collateral from R&D Centre 49347315___________
Total 218070414___________
46. Foreign monetary items
(1) Foreign monetary items
The foreign monetary items located within China are as follows:
Closing foreign Exchange Closing translated
currency balance rate RMB balance
Cash and bank
EUR 127 7.8473 997
HKD 213 0.8762 187
USD 7196107 6.8632 49388322__________ ______ ___________
(2) Overseas business entities
The Company’s overseas subsidiaries determine bookkeeping currency based on the primary
economic environment. The bookkeeping base currency of Atrio and Francs Champs
Participations SAS ("Francs Champs") are all in Euro and the bookkeeping base currency of
Indomita Wine is Chilean peso. The functional currency of Australia Kilikanoon Estate is AUD.The foreign monetary assets and liabilities of the overseas subsidiaries are as follows:
Closing foreign Exchange Closing translated
currency balance rate RMB balance
Cash and bank
EUR 25328 7.8473 198756
USD 276196 6.8632 1895588
Short-term borrowings
USD 11000000 6.8632 75495200__________ ______ ___________
VII. CHANGE IN CONSOLIDATION SCOPE
1. Business combination under different control
(1) Business combination under different control in current period
Name of acquisition
company
Equity
acquisitio
n date
Equity
acquisition cost
Equity
acquisitio
n ratio
(%)
Equity
acquisitio
n method
Acquisitio
n date
Basis of
acquisition date
Revenue from
acquisition
date to year
end
Net profit
from
acquisition
date to year
end
RMB RMB
Australia Kilikanoon Estate 18 January
2018
AUD
20860825 80% Purchase
18 January
2018
Finish payment
and acquire
equity 57648905 217869
Other detail information:
Pursuant to the Agreement on the delivery of transferred equities entered into between the
shareholders of the Company and Australia Kilikanoon Estate on 5 December 2017 the Company
acquired 80% equity interests of Australia Kilikanoon Estate at the consideration of AUD
20860825( translated as RMB 107194420). The Company completed the equity transfer on 18
January 2018 and obtained the control of financial and operating policies over Australia
Kilikanoon Estate.
(2) Consideration and Goodwill
Consideration
Australia Kilikanoon Estate
RMB
Cash 107194420
Total consideration 107194420
Less: acquired provisional value of net assets 70131290___________
Goodwill 37063130___________
(3) Recognised assets and liabilities of mergee at acquisition date
Australia Kilikanoon Estate
Fair value Book value
at acquisition date at acquisition date
RMB RMB
Assets
Cash and bank 1359765 1359765
Accounts receivable 10366281 10366281
Prepayment 237174 237174
Other receivables 187720 187720
Inventories 69612312 57946312
Fixed assets 49029999 38696709
Intangible assets 16417886 7461624____________ ____________
Total assets 147211137 116255585____________ ____________
VII. CHANGE IN CONSOLIDATION SCOPE - continued
1. Business combination under different control - continued
(3) Recognised assets and liabilities of acquiree at acquisition date- continued
Australia Kilikanoon Estate
Fair value Book value
at acquisition date at acquisition date
RMB RMB
Liabilities
Short-term borrowings 1282550 1282550
Accounts payable 6198846 6198846
Employee benefits payable 876987 876987
Taxes payable 1789093 1789093
Long-term borrowings 43497119 43497119
Deferred tax liabilities 5902429 -____________ ____________
Total liabilities 59547024 53644595____________ ____________
Net assets 87664113 62610990
Less：Non-controlling interests 17532823 12522198____________ ____________
Acquired net assets 70131290 50088792____________ ____________
VIII. INTERESTS IN OTHER ENTITIES
1. Structure of the Group
Name Address Place of registration Nature
Equity interest owned
by the company Acquisition method
Direct Indirect
Xinjiang Tianzhu (a) Shihezi Xinjiang China Shihezi Xinjiang China Manufacturing 60% - Subsidiary acquired in business
combination under
non-common control
Fransac Sales Cognac France Cognac France Trading - 100% Subsidiary acquired in business
combination under
non-common control
Mirefleurs Bordeaux France Bordeaux France Trading - 100% Subsidiary acquired in business
combination under
non-common control
Atrio Navarra Spain Navarra Spain Sales 75% - Subsidiary acquired in business
combination under
non-common control
IWCC Santiago Chile Santiago Chile Sales 85% - Subsidiaries acquired byestablishment
Australia Kilikanoon Estate Adelaide Australia Adelaide Australia Sales 80% -
Subsidiary acquired in business
combination under
non-common control
Beijing Changyu Sales and distribution Co. Ltd ("Beijing Sales") Beijing China Beijing China Sales 100% - Subsidiaries acquired by
establishment
Yantai Kylin Packaging Co. Ltd.("Kylin Packaging")
Yantai Shandong China Yantai Shandong China Manufacturing 100% - Subsidiaries acquired by
establishment
Yantai Changyu-Castel Wine Chateau Co. Ltd ("Changyu Chateau") (b) Yantai Shandong China Yantai Shandong China Manufacturing 70% - Subsidiaries acquired by
establishment
Changyu (Jingyang) Wine Co. Ltd.
("Jingyang Wine")
Xianyang Shanxi China Xianyang Shanxi China Manufacturing 90% 10% Subsidiaries acquired by
establishment
Yantai Changyu Pioneer Wine Sales Co. Ltd. ("Sales Company") Yantai Shandong China Yantai Shandong China Sales 100% - Subsidiaries acquired by
establishment
Langfang Development Zone Castel-Changyu Wine Co. Ltd ("Langfang
Castel") (c)
Lanfang Hebei China Lanfang Hebei China Manufacturing 39% 10% Subsidiaries acquired by
establishment
VIII. INTERESTS IN OTHER ENTITIES - continued
1. Structure of the Group - continued
Name Address Place of registration Nature
Equity interest owned
by the company Acquisition method
Direct Indirect
Changyu (Jingyang) Wine Sales Co. Ltd. ("Jingyang Sales") Xianyang Shanxi China Xianyang Shanxi China Sales 10% 90% Subsidiaries acquired by
establishment
Langfang Changyu Pioneer Wine Sales Co. Ltd ("Langfang Sales") Lanfang Hebei China Lanfang Hebei China Sales 10% 90% Subsidiaries acquired by
establishment
Shanghai Changyu Sales and distribution Co. Ltd. ("Shanghai Sales") Shanghai China Shanghai China Sales 30% 70% Subsidiaries acquired by
establishment
Beijing Changyu AFIP Agriculture development Co. Ltd ("Agriculture
Development")
Miyun Beijing China Miyun Beijing China Sales - 100% Subsidiaries acquired by
establishment
Beijing Chateau (d) Beijing China Beijing China Manufacturin
g
90% - Subsidiaries acquired by
establishment
Yantai ("Beijing Chateau") Changyu Wine Sales Co. Ltd. ("Wines
Sales")
Yantai Shandong China Yantai Shandong China Sales 90% 10% Subsidiaries acquired by
establishment
Yantai Changyu Pioneer International Co. Ltd. ("Pioneer International") Yantai Shandong China Yantai Shandong China Sales 70% 30% Subsidiaries acquired by
establishment
Hangzhou Changyu Wine Sales Co. Ltd. ("Hangzhou Changyu") Hangzhou Zhejiang China Hangzhou Zhejiang China Sales - 100% Subsidiaries acquired by
establishment
Ningxia Growing Yinchuang Ningxia China Yinchuang Ningxia China Planting 100% - Subsidiaries acquired by
establishment
Huanren Changyu National Wines Sales Co. Ltd. ("National Wines") Benxi Liaoning China Benxi Liaoning China Sales 100% - Subsidiaries acquired by
establishment
Liaoning Changyu Ice Wine Chateau Co. Ltd. ("Ice Chateau") (e) Benxi Liaoning China Benxi Liaoning China Manufacturin
g
51% - Subsidiaries acquired by
establishment
Yantai Development Zone Changyu Trading Co. Ltd ("Development
Zone Trading")
Yantai Shandong China Yantai Shandong China Sales - 100% Subsidiaries acquired by
establishment
Shenzhen Changyu Wine Marketing Ltd. ("Shenzhen Marketing") Shenzhen Guangdong China Shenzhen Guangdong China Sales - 100% Subsidiaries acquired by
establishment
Yantai Changyu Fushan Trading Company("Fushan Trading") Yantai Shandong China Yantai Shandong China Sales - 100% Subsidiaries acquired by
establishment
Beijing AFIP Meeting Center ("Meeting Center") Miyun Beijing China Miyun Beijing China Service - 100% Subsidiaries acquired by
establishment
Beijing AFIP Tourism and Culture ("AFIP Tourism") Miyun Beijing China Miyun Beijing China Tourism - 100% Subsidiaries acquired by
establishment
Ningxia Wine Yinchuan Ningxia China Yinchuan Ningxia China Manufacturin
g
100% - Subsidiaries acquired by
establishment
Yantai Changyu DingLuoTe Chateau.
("Ding Luo Te Chateau")
Yantai Shandong China Yantai Shandong China Retail and
Sales
65% 35% Subsidiaries acquired by
establishment
Qing Tong Xia Changyu Wine Marketing Ltd("Qing Tong Xia Sales") Qing Tong Xia Ningxia China Qing Tong Xia Ningxia China Sales - 100% Subsidiaries acquired by
establishment
Shihezi Chateau Shihezi Xinjiang China Shihezi Xinjiang China Manufacturin
g
100% - Subsidiaries acquired by
establishment
Ningxia Chateau Yinchuan Ningxia China Yinchuan Ningxia China Manufacturin
g
100% - Subsidiaries acquired by
establishment
Shanxi Changyu Rina Castle Chateau Co. Ltd.
(" Chang'an Chateau")
Xianyang Shanxi China Xianyang Shanxi China Manufacturin
g
100% - Subsidiaries acquired by
establishment
R&D Centre (f) Yantai Shandong China Yantai Shandong China Manufacturin
g
72% - Subsidiaries acquired by
establishment
Changyu (HuanRen) Wine Co. Ltd
("Huan Ren Wine")
Benxi LiaoNing China Benxi LiaoNing China Wine
production
Projecting
100% - Subsidiaries acquired by
establishment
Xinjiang Changyu Sales Co. Ltd
("Xinjiang Sales")
Shihezi Xinjiang China Shihezi Xinjiang China Sales - 100% Subsidiaries acquired by
establishment
Ningxia Changyu Trading Co. Ltd
("Ningxia Trading")
Yinchuan Ningxia China Yinchuan Ningxia China Sales - 100% Subsidiaries acquired by
establishment
Shanxi Changyu Rina Wine Sales Co. Ltd ("Shanxi Sales") Xianyang Shanxi China Xianyang Shanxi China Sales - 100% Subsidiaries acquired by
establishment
Penglai Changyu Wine Sales Co. Ltd
("Penglai Sales")
Penglai Shandong China Penglai Shandong China Sales - 100% Subsidiaries acquired by
establishment
Laizhou Changyu Wine Sales Co. Ltd
("Laizhou Sales")
Laizhou Shandong China Laizhou Shandong China Sales - 100% Subsidiaries acquired by
establishment
Francs Champs Cognac France Cognac France Investment
and trading
100% - Subsidiaries acquired by
establishment
Lanzhou Changyu Wine Sales Co. Ltd ("Lanzhou Sales") Lanzhou Gansu China Lanzhou Gansu China Sales - 100% Subsidiaries acquired by
establishment
Beijing Retailing Co. Ltd("Beijing Retailing") Beijing China Beijing China Sales - 100% Subsidiaries acquired by
establishment
Tianjin Changyu Pioneer Sales Co. Ltd ("Tianjin Pioneer") Tianjin China Tianjin China Sales - 100% Subsidiaries acquired by
establishment
Fuzhou Changyu Pioneer Sales Co. Ltd ("Fuzhou Pioneer") Fuzhou Fujian China Fuzhou Fujian China Sales - 100% Subsidiaries acquired by
establishment
Nanjing Changyu Pioneer Sales Co. Ltd ("Nanjing Pioneer") Nanjing Jiangsu China Nanjing Jiangsu China Sales - 100% Subsidiaries acquired by
establishment
Xianyang Changyu Pioneer Sales Co. Ltd ("Xianyang Pioneer") Xianyang Shanxi China Xianyang Shanxi China Sales - 100% Subsidiaries acquired by
establishment
Shenyang Changyu Pioneer Sales Co. Ltd ("Shenyang Pioneer") Shenyang Liaoning China Shenyang Liaoning China Sales - 100% Subsidiaries acquired by
establishment
Jinan Changyu Pioneer Sales Co. Ltd ("Jinan Pioneer") Jinan Shandong China Jinan Shandong China Sales - 100% Subsidiaries acquired by
establishment
Shanghai Changyu Pioneer Sales Co. Ltd ("Shanghai Pioneer") Shanghai China Shanghai China Sales - 100% Subsidiaries acquired by
establishment
Fuzhou Changyu Pioneer Sales Co. Ltd ("Fuzhou Pioneer") Fuzhou Jiangxi China Fuzhou Jiangxi China Sales - 100% Subsidiaries acquired by
establishment
Shijiazhuang Changyu Pioneer Sales Co. Ltd ("Shijiazhuang Pioneer") Shijiazhuang Hebei China Shijiazhuang Hebei China Sales - 100% Subsidiaries acquired by
establishment
Hangzhou Yuzefeng Sales Co. Ltd ("Hangzhou Yuzefeng") Hangzhou Zhejiang China Hangzhou Zhejiang China Sales - 100% Subsidiaries acquired by
establishment
Jilin Changyu Pioneer Sales Co. Ltd ("Jilin Pioneer") Changchun Jilin China Changchun Jilin China Sales - 100% Subsidiaries acquired by
establishment
VIII. INTERESTS IN OTHER ENTITIES - continued
1. Structure of the Group - continued
Name Address Place of registration Nature
Equity interest owned
by the company Acquisition method
Direct Indirect
Beijing Changyu Pioneer Sales Co. Ltd ("Beijing Pioneer") Beijing China Beijing China Sales - 100% Subsidiaries acquired by
establishment
Harbin Changyu Pioneer Sales Co. Ltd ("Harbin Pioneer") Harbin Heilongjiang China Harbin Heilongjiang China Sales - 100% Subsidiaries acquired by
establishment
Hunan Changyu Pioneer Sales Co. Ltd ("Hunan Pioneer") Changsha Hunan China Changsha Hunan China Sales - 100% Subsidiaries acquired by
establishment
Yinchuan Changyu Pioneer Sales Co. Ltd ("Yinchuan Pioneer") Yinchuan Ningxia China Yinchuan Ningxia China Sales - 100% Subsidiaries acquired by
establishment
Kunming Changyu Pioneer Sales Co. Ltd ("Kunming Pioneer") Kunming Yunnan China Kunming Yunnan China Sales - 100% Subsidiaries acquired by
establishment
Chongqing Changyu Pioneer Sales Co. Ltd ("Chongqing Pioneer") Chongqing China Chongqing China Sales - 100% Subsidiaries acquired by
establishment
Wuhan Changyu Pioneer Sales Co. Ltd ("Wuhan Pioneer") Wuhan Hubei China Wuhan Hubei China Sales - 100% Subsidiaries acquired by
establishment
Hohhot Changyu Pioneer Sales Co. Ltd ("Hohhot Pioneer") Hohhot Inner Mongolia China Hohhot Inner Mongolia China Sales - 100% Subsidiaries acquired by
establishment
Chengdu Changyu Pioneer Sales Co. Ltd ("Chengdu Pioneer") Chengdu Sichuan China Chengdu Sichuan China Sales - 100% Subsidiaries acquired by
establishment
Nanning Changyu Pioneer Sales Co. Ltd ("Nanning Pioneer") Nanning Guangxi China Nanning Guangxi China Sales - 100% Subsidiaries acquired by
establishment
Lanzhou Changyu Pioneer Sales Co. Ltd ("Lanzhou Pioneer") Lanzhou Gansu China Lanzhou Gansu China Sales - 100% Subsidiaries acquired by
establishment
Yantai Fulangduo Yantai Shandong China Yantai Shandong China Sales - 100% Subsidiaries acquired by
establishment
Hefei Changyu Pioneer Sales Co. Ltd ("Hefei Pioneer") Hefei Anhui China Hefei Anhui China Sales - 100% Subsidiaries acquired by
establishment
Urumchi Changyu Pioneer Sales Co. Ltd ("Urumchi Pioneer") Urumchi Xinjiang China Urumchi Xinjiang China Sales - 100% Subsidiaries acquired by
establishment
Guangzhou Changyu Pioneer Sales Co. Ltd ("Guangzhou Pioneer") Guangzhou Guangdong China Guangzhou Guangdong China Sales - 100% Subsidiaries acquired by
establishment
Grape Wine Marketing Ltd. Yantai Shandong China Yantai Shandong China Sales 100% - Subsidiaries acquired byestablishment
Explanation in difference between holding interests and voting rights in subsidiaries:
(a) Xinjiang Tianzhu was acquired by the Company accounting for 60% of Xinjiang Tianzhu's equity
interest. Through agreement arrangement the Company has the full power to control Xinjiang
Tianzhu's strategic operating investing and financing policies. The agreement arrangement will
be terminated on 6 August 2017. Upon the expiry of the agreement arrangement the
non-controlling interests of Xinjiang Tianzhu will normally enjoy/commit all the rights and
obligations of the shareholders as stipulated in the Articles of Association.(b) Changyu Chateau 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.
(c) Langfang Chateau is a Sino-foreign joint venture established by the Company and a foreign
investor accounting for 49% of Langfang Chateau's equity interest by the Company and
subsidiaries. Through agreement arrangement the Company has the full power to control
Langfang Chateau's strategic operating investing and financing policies. The agreement
arrangement was terminated on 31 December 2017. Minority shareholders of Langfang Chateau
will be entitled to/abided by the rights/obligations of the shareholders as agreed in the Articles of
Association upon the due date of the agreement arrangement.
(d) Beijing Chateau is a joint venture established by the Company Yantai De'an and Beijing
Qinglang and the Company increases the capital contribution RMB 502910000 in this period
Yantai De'an and Beijing Qinglang together increase the capital contribution RMB29840000.
Beijing Chateau has compelled the business registration on 22 December 2017. After capital
contribution increased the Company is accounting for 90% of Beijing Chateau's equity interest.The Company gets the control over operation investment and financial decision of Beijing
Chateau through agreement arrangement which will terminate on 2 September 2019.
VIII. INTERESTS IN OTHER ENTITIES - continued
1. Structure of the Group - continued
(e) Ice Chateau is a Sino-foreign joint venture established by the Company and a foreign investor
accounting for 51% of Ice Chateau's equity interest. Through agreement arrangement the
Company has the full power to control Ice Chateau's strategic operating investing and financing
policies. The agreement arrangement will be terminated on 31 December 2021.(f) R&D Centre is a joint venture established by the Company and CADF accounting for 72% of
R&D Centre's equity interest at 31 December 2018. The Company has complete control over the
operation investment and financial policies of the R&D Centre subject to the contract
arrangement as described in Note VI-25. The contract arrangement will expire on 22 May 2026.
As at 31 December 2018 the remaining investment of IFAD accounted for 28% of the registered
capital.
2. Non-wholly owned subsidiaries
Profit and loss belongs 31/12/2018
Minority to non-controlling Distributions to Assimilate non-controlling
Name interest shareholder ratio interest shareholders non-controlling interest interest
Xinjiang Tianzhu 40% (2760804) - - 50612648
Atrio 25% 844190 (744149) - 31726931
Changyu Chateau 30% - - - 12365016
Langfang Castel 51% (1774541) - - 20927981
Beijing Chateau 10% - - - 65133868
Ice Chateau 49% - - - 33319062
IWCC 15% 2619885 (2655627) - 53079827
Australia Kilikanoon Estate 20% (310144) - 17532823 17222679_________ _________ _________ _________
(1381414) (3399776) 17532823 284388012_________ _________ _________ _________
VIII. INTERESTS IN OTHER ENTITIES - continued
3. Key financial information of important non-wholly owned subsidiaries
Name
31/12/2018 31/12/2017
Current
assets
Non-current
assets
Total
assets
Current
liabilities
Non-current
liabilities
Total
liabilities
Current
assets
Non-current
assets Total assets
Current
liabilities
Non-current
liabilities
Total
liabilities
Xinjiang Tianzhu 27390495 66486795 93877290 - 5336114 5336114 30264441 71323940 101588381 809080 5336114 6145194
Changyu Chateau 141298023 114694168 255992191 171869662 - 171869662 140038021 115435985 255474006 175061601 - 175061601
Langfang Castel 17659511 16001682 33661193 3358322 - 3358322 22728536 17973719 40702255 6133909 - 6133909
Beijing Chateau 219973582 461115089 681088671 62598545 - 62598545 214079274 481668050 695747324 73963043 - 73963043
Ice Chateau 45194591 23920890 69115481 14974458 100000 15074458 38657358 25484359 64141717 10871695 100000 10971695
Atrio 464421130 99080668 563501798 381659315 54520937 436180252 398835959 116299504 515135463 299030002 89336338 388366340
IWCC 214784490 300969342 515753832 148359328 4976161 153335489 175669256 305664706 481333962 122023764 5206406 127230170
Australia Kilikanoon Estate 87634707 63759866 151394573 13387942 51893171 65281113 N/A N/A N/A N/A N/A N/A
Name
2018 2017
Revenue Net profit (loss) Total comprehensiveincome
Operating activities
cash flows Revenue Net profit (loss)
Total comprehensive
income
Operating activities
cash flows
Xinjiang Tianzhu 18803 (6902010) (6902010) 43112 116555588 15531513 15531513 32224800
Changyu Chateau 121235278 3710124 3710124 16096447 68964230 985910 985910 19629212
Langfang Castel 5038281 (3479492) (3479492) 673422 39165527 (1616638) (1616638) (1554380)
Beijing Chateau 159369783 16555846 16555846 19627933 145103200 17475647 17475647 49964881
Ice Chateau 57290490 870994 870994 289782 49643396 1241699 1241699 (1748535)
Atrio 327550545 3811465 3376761 6129923 281007167 2000682 7701416 (32148326)
IWCC 262104563 15934347 17465900 3584648 157953467 28791684 31458952 16482765
Australia Kilikanoon Estate 57648905 217869 (1550720) (1522151) N/A N/A N/A N/A
* This is amount incurred in the period between acquisition date and 31 December 2018.
IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT
The Group's major financial instruments include cash and bank notes and account receivable
other receivables available-for-sale financial assets other non-current assets short-term
borrowings accounts payable other payables interest payables and long-term borrowings.
Details of these financial instruments are disclosed in Note VI. The risks associated with these
financial instruments and the policies on how to mitigate these risks are set out below.Management manages and monitors these exposures to ensure the risks are monitored at a certain
level.The Group adopts sensitivity analysis technique to analyse how the profit and loss for the period
and shareholders' equity would have been affected by reasonably possible changes in the relevant
risk variables. As it is unlikely that risk variables will change in an isolated manner and the
interdependence among risk variables will have significant effect on the amount ultimately
influenced by the changes in a single risk variable the following are based on the assumption that
the change in each risk variable is on a stand-alone basis.The Group's risk management objectives are to achieve a proper balance between risks and yield
minimise the adverse impacts of risks on the Group's operation performance and maximise the
benefits of the shareholders and other stakeholders. Based on these risk management objectives
the Group's basic risk management strategy is to identify and analyse the Group's exposure to
various risks establish an appropriate maximum tolerance to risk implement risk management
and monitors regularly and effectively these exposures to ensure the risks are monitored at a
certain level.
1. Risk management objectives and policies
1.1 Market risk
1.1.1 Currency risk
Currency risk is the risk that losses will occur because of changes in foreign exchange rates. The
Group's exposure to the currency risk is primarily associated with EUR and USD. Several of the
Group's subsidiaries have purchases and sales denominated in EUR Chilean peso and Australia
dollar borrowings denominated in USD while the Group's other principal activities are
denominated and settled in RMB.As at 31 December 2018 except that the assets and liabilities
stated in the table below are foreign currency deposits or excess of borrowings the assets and
liabilities of each entity of the Group are settled in their respective functional currencies.
31/12/2018 31/12/2017
RMB RMB
Bank and cash (EUR) 199753 1190459
Bank and cash (USD) 51283910 34843968
Short-term borrowings (USD) 75495200 58807800____________ ____________
Currency risk arising from the assets and liabilities denominated in foreign currencies may have
impact on the Group's performance. The Group closely monitors the effects of changes in the
foreign exchange rates on the Group's currency risk exposures. The Group currently does not take
any measures to hedge currency risk exposures.
IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT - continued
1. Risk management objectives and policies - continued
1.1 Market risk- continued
1.1.1 Currency risk - continued
Sensitivity analysis on currency risk
Where all other variables are held constant the reasonably possible changes in the foreign
exchange rate may have the following pre-tax effect on the profit or loss for the period and
shareholders' equity:
Domestic entities:
Current year Prior year
Effect on Effect on
shareholders' shareholders'
Change in exchange rate Effect on profit equity Effect on profit equity
RMB RMB RMB RMB
EUR 5% increase against RMB 50 50 50 50
EUR 5% decrease against RMB (50) (50) (50) (50)
USD 5% increase against RMB 2469416 2469416 1456525 1456525
USD 5% increase against RMB (2469416) (2469416) (1456525) (1456525)_________ ________ ________ ________
Overseas entities:
Current year Prior year
Effect on Effect on
shareholders' shareholders'
Change in exchange rate Effect on profit equity Effect on profit equity
RMB RMB RMB RMB
USD 5% increase against EUR 900 900 52695 52695
USD 5% decrease against EUR (900) (900) (52695) (52695)
USD 15% increase against Chile Peso (11042641) (11042641) (5275651) (5275651)
USD 15% decrease against Chile Peso 11042641 11042641 5275651 5275651
EUR 10% increase against Chile Peso 19876 19876 58350 58350
EUR 10% decrease against Chile Peso (19876) (19876) (58350) (58350)_________ ________ ________ ________
Note: As at 31 December 2018 the Group's management anticipated a change of 5% in
exchange rate for USD to EUR 10% in exchange rate for EUR to Chilean Peso and 15%
in exchange rate for USD to Chilean Peso.
IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT - continued
1. Risk management objectives and policies - continued
1.1 Market risk- continued
1.1.2 Interest rate risk - risk of changes in cash flows
The Group's cash flow interest rate risk of financial instruments relates primarily to variable-rate
bank borrowings (Refer to Note VI-1 Note VI-16 and Note VI-24 for details). It is the Group's
policy to keep its borrowings at floating rate of interests so as to eliminate the fair value interest
rate risk.The sensitivity analysis on interest rate risk
The sensitivity analysis on interest rate risk is based on the changes in the market interest rate may
influence the interest income or expense of the variable rate financial instruments.Management of the Group believes interest rate risk on bank deposit is not significant therefore
does not disclose sensitivity analysis for interest rate risk.Where all other variables are held constant the reasonably possible changes in the interest rate
may have the following pre-tax effect on the profit or loss for the period and shareholders' equity
Current year Prior year
Effect on Effect on
shareholders' shareholders'
Change in interest rate Effect on profit equity Effect on profit equity
Bank borrowings 50% increase (2016667) (2016667) (2046646) (2046646)
Bank borrowings 50% decrease 2016667 2016667 2046646 2046646________ ________ ________ ________
Note: As at 13 December 2018 the Group's management anticipated a change of 50 basis points
in the bank's variable interest rate.
1.2 Credit risk
As at 31 December 2018 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. The Group has delegated a team responsible for
determination of credit limits credit approvals and other monitoring procedures to ensure that
follow-up action is taken to recover overdue debts. 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.
IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT - continued
1. Risk management objectives and policies - continued
1.2 Credit risk - continued
Since the Group trades only with recognized 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 2018 19.8% of the Group trade
receivables are due from top five customers (31 December 2017: 20.7%). There is no collateral or
other credit enhancement on the balance of the trade receivables of the Group.
1.3 Liquidity risk
In the management of the liquidity risk the Group monitors and maintains a level of cash and
cash equivalents deemed adequate by the management to finance the Group's operations and
mitigate the effects of fluctuations in cash flows. The management monitors the utilisation of
bank borrowings and ensures compliance with loan covenants.The following is the maturity analysis for financial assets and financial liabilities held by the
Group which is based on undiscounted remaining contractual obligations:
Non-derivative financial liabilities
Less than one month 1-3 months 3-12 months 1-5 years More than five years Total
RMB RMB RMB RMB RMB RMB
Short-term borrowings 2338698 57691463 641831131 - - 701861292
Accounts payable 163879578 327759156 221934147 - - 713572881
Other payables 155842255 179896318 256314091 - - 592052664
Interest payable 712826 - - - - 712826
Long-term borrowings 8382996 31970170 85822835 168574037 - 294750038
Long-term payables - 22762934 14158433 143555433 90356300 270833100_________ ________ _________ _________ ________ _________
331156353 620080041 1220060637 312129470 90356300 2573782801_________ ________ _________ _________ ________ _________
1.4 Fair value disclosure - Financial assets and liabilities not measured using fair value
Fair value
Carrying amount Level 1 Level 2 Level 3 Total
of fair value of fair value of fair value
Long-term payables measured
at amortized cost 259000000 - 223263886 - 223263886________ _______ ________ ________ ________
As at 31 December 2018 The management of the Group believes that apart from the
aforementioned long-term payables the carrying amounts of other financial assets and financial
liabilities measured at amortised cost in the financial statements are close to the fair values of
these assets and liabilities.
X. RELATED PARTY AND RELATED PARTY TRANSACTIONS
1. Parent company
Name of Type of Place of Legal Scope Registered Percentage Percentage Incorporate
parent company Relation enterprise registration representative of business capital of shares of voting rights Code
RMB % %
Changyu Group
Company
Parent
Company
Limited
Company Yantai
Zhou
Hongjiang
Manufactu
ring 50000000 50.4 50.4 265645824
During the year ended 31 December 2018 there is no change in parent company's registered
capital shares holding or voting power.
2. Subsidiaries: Please refer to Note VIII.
3. Other related parties
Name of related parities Nature of related parties Incorporate code
Yantai Changyu Wine Culture Museum Company controlled 913706007582586548
Co. Ltd.("Wine Culture Museum") by the same parent
Yantai Changyu International Window of the Company controlled 91370600672208146X
Wine City Co. Ltd.("Window of the Wine City) by the same parent
Yantai ShenMa Packing Co. Ltd. Company controlled 91370600553393350J
("ShenMa Packing") by the same parent
Yantai Zhongya Pharmaceutical Tonic Company controlled 91370600726203923M
Wine Co. Ltd.("Zhongya Pharmaceutical") by the same parent
Yantai Changyu Culture Tourism Production Company controlled 91370602MA3N7A877P
Sales Co. Ltd.(" Culture Sales") by the same parent
Yantai Changyu Culture Tourism Development Company controlled 91370602MA3N59J300
Co. Ltd.(" Culture Development ") by the same parent
4. Significant related party transactions
(1) Purchases from and sales to related parties
Purchase from related parties
The content of related 2018 2017
party transactions RMB RMB
ShenMa Packing product purchase 173238289 145872001
Zhongya Pharmaceutical product purchase 15690930 9279380
Wine Culture Museum product purchase 16784711 6336832
Window of the Wine City product purchase 7913342 2756050
Culture Sales product purchase 35857___________ ___________
213663129 164244263___________ ___________
All related party transactions are based on the negotiated price.
In 2018 purchases from related parties accounted for 11.2% of the Group's total purchase (2016:
10.9%)
X. RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
4. Significant related party transactions - continued
(1) Purchases from and sales to related parties- continued
Sales to related parties
The content of related 2018 2017
party transactions RMB RMB
Wine Culture Museum goods sales 23515379 8235520
Window of the Wine City goods sales 13821555 12205247
Zhongya Pharmaceutical goods sales 4552269 2035003
Culture Sales goods sales 2914686 -
ShenMa Packing goods sales 348247 1634883___________ ___________
45152136 24110653___________ ___________
All related party transactions are based on the negotiated price. In 2018 sales to related parties
accounted for less than 1% of the Group's total sales (2017: less than 1%).
(2) Property leased from a related party
The Group as Lessee
2018 Assets leased Beginning date Ending date Rental expense
RMB
Changyu Group Company office building 1 January 2016 31 December 2020 1538840
Changyu Group Company office building and factory 1 January 2017 31 December 2021 1331364
Changyu Group Company office building and factory 1 January 2017 31 December 2021 3994091_______
6864295_______
All related party transactions are based on the negotiated price.
The Group as Lessor
2018 Assets leased Beginning date Ending date Rental income
RMB
ShenMa Packing office building and factory 1 July 2017 30 June 2022 1478982
Zhongya Pharmaceutical office building and factory 1 January 2018 31 December 2018 518182_______
1997164_______
All related party transactions are based on the negotiated price.
X. RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
4. Significant related party transactions - continued
(3) Other significant related party transactions
The content of related
party transactions Note 2018 2017
RMB RMB
Changyu Group Company Royalty fee (a) 73976395 72838612
Changyu Group Company Patents fee (b) 50000 50000__________ __________
All related party transactions are based on the negotiated price.
(a) Royalty fee
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 Company. The license is effective until the
expiry of the registration of the trademarks.
During 2018 royalty fee paid to related company accounted for 100% of the Group (2017:
100%).
(b) Patents fee
The Company renewed the contract on 20 August 2016 for 10 years. The annual patents
usage fee payable by the Company to Changyu Group Company remained RMB
50000.For the year ended 31 December 2018 the patents usage fee payable to Changyu
Group Company is amounted to RMB 50000(2017:RMB 50000).
During 2018 patent fee paid to related company accounted for 100% of the Group (2017:
100%).
(4) Remuneration of the management
2018 2017
RMB RMB
Remuneration of the management 13102005 10309409____________ ____________
X. RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
5. Balance due from/to related parties
(1) Balance due from related parties
31/12/2018 31/12/2017
Accounts receivable Balance Provision Balance Provision
RMB RMB RMB RMB
Zhongya Pharmaceutical 2768391 - 8134150 -
Shen Ma Packing. 17137 - 1342348 -
Window of the Wine City 1911157 - 3196095 -
Wine Culture Museum - - 34280 -_________ ________ _________ ________
4696685 - 12706873 -_________ ________ _________ ________
31/12/2018 31/12/2017
Other receivable Balance Provision Balance Provision
RMB RMB RMB RMB
Shen Ma Packing. 813440 - 813440 -_________ _______ ________ _______
(2) Balance due to related parties
Accounts payable 31/12/2018 31/12/2017
RMB RMB
Shen Ma Packing. 55366785 52403056
Zhongya Pharmaceutical 6722667 2051991
Wine Culture Museum 4646731 2040860
Window of the Wine City 4789600 1485766____________ ____________
71525783 57981673____________ ____________
Other payable 31/12/2018 31/12/2017
RMB RMB
Shen Ma Packing. 450000 -
Changyu Group Company 78414978 77208929____________ ____________
78864978 77208929____________ ____________
The above amounts due to related parties are unsecured and interest-free.
XI. COMMITMENT
1. Important commitments
(1) Capital commitments
31/12/2018 31/12/2017
RMB'000 RMB'000
Capital commitment for
purchasing non-current assets 996675 1246506____________ ____________
(2) Operating lease commitment
As lessee
Significant operating lease: Total future minimal lease payments under non-cancelable contract
with lessor are as follow:
31/12/2018 31/12/2017
RMB'000 RMB'000
Within 1 year 20576 32236
1 to 2 years 11757 19116
2 to 3 years 10064 11943
3 years and above 84095 95342____________ ____________
126492 158637____________ ____________
2. Contingent liability
The Group do not have any significant contingent liabilities as at balance sheet date.XII. POST BALANCE SHEET DATE EVENT
1. Profit appropriation
According to the board of the director resolution raised on 18 April 2019 the Company proposed
a cash dividend of RMB 6.0 (including taxes) for every 10 shares in respect of 2018 based on the
issued shares of 685464000. The aggregate amount of cash dividend is RMB 411278400. The
resolution is to be approved by the annual general meeting.
XIII. OTHER SIGNIFICANT EVENTS
Capital management
The main target of the capital management of the group is to ensure the continuous operation of
the group optimize the portfolio structure of equity financing and debt financing so as to achieve
the goal of maximizing shareholder benefits. The capital structure of the group consists of the
following parts:
(1) Cash and cash equivalents
(2) Share capital capital reserve surplus reserve and retained earnings
The management reviews the group's capital structure according to the interim or year-end
financial reports and considers the cost of capital and the corresponding risks of various capital
types. Based on the choice of the management the group optimizes the overall capital structure by
issuing additional shares and borrowing or repaying loans.Segment report
The Group is principally engaged in the production and sales of wine brandy and champagne in
China France Spain Chile and Australia. In accordance with the Group's internal organization
structure management requirements and internal reporting system the Group's operation is
divided into four parts: China Spain France Chile and Australia. The management periodically
evaluates segment results in order to allocate resources and evaluate performances. In 2018 more
than 87% revenue and more than 99% profit derived from China and more than 92% non-current
assets are located in China. Therefore the Group does not need to disclose additional segment
report information.XIV. NOTES TO COMPANY FINANCIAL STATEMENTS
1. Cash and bank
31/12/2018 31/12/2017
RMB RMB
Cash 3177 5280
Bank balance 579993055 501208996
Other currency fund 44592577 57960190____________ ____________
Total 624588809 559174466____________ ____________
As at 31 December 2018 the balance of restricted cash of the Company is RMB 2611350 (31
December 2017: RMB 2645410) which is home maintenance funds.
As at 31 December 2018 other currency fund of the Company include: deposit of RMB
44540850 for letter of credit (31 December 2017: RMB 57946190) and deposit of RMB 51727
for entity card (31 December 2017: RMB 14000).
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
1. Cash and bank - continued
As at 31 December 2018 the Company's time deposits include the short-term deposits with
original maturity from six months to twelve months amounting to RMB 45000000 (31 December
2017: RMB 5000000 ) with interest rate ranging from 1.55% to 2.03%.
2. Notes and account receivable
2.1 Presented by categories
31/12/2018 31/12/2017
RMB RMB
Notes receivable 39885254 41645203
Accounts receivable 1447973 7805333____________ ____________
Total 41333227 49450536____________ ____________
2.2 Notes receivable
(1) Categories of notes receivable
31/12/2018 31/12/2017
RMB RMB
Bank acceptances 39885254 41645203____________ ____________
(2) Pledged notes receivable
As of 31 December 2018 there was no pledged notes receivable (31 December 2017: Nil).
(3) Notes endorsed by the Group to other parties which are not yet due at the end of the period
31/12/2018 31/12/2017
RMB RMB
Bank acceptances 94755124 72316589____________ ____________
As at 31 December 2018 notes endorsed by the Company to other parties which are not yet due at
the end of the period is RMB 94755124 (31 December 2017: RMB 72316589). It is for the
payment to suppliers. The Company believes that due to bank good reputation the risk of
maturity cannot be cashed is very low therefore confirm the termination of the endorsement notes
receivable. If bank is unable to settle the notes on maturity according to the relevant laws and
regulations of China the Group would undertake limited liability for the notes.
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
2. Notes and accounts receivable- continued
2.2 Notes receivable - continued
(4) Notes receivable were reclassified as accounts receivable due to the default of drawer
As at 31 December 2018 there was no notes receivable were reclassified as accounts receivable
due to the default of drawer (31 December 2017: Nil).
2.3 Accounts receivable
(1) Disclosure of accounts receivable by categories:
31/12/2018 31/12/2017
Balance Bad debts provisions Carrying Amount Balance Bad debts provisions Carrying Amount
Amount Proportion Amount Proportion Amount Amount Proportion Amount Proportion Amount
RMB (%) RMB (%) RMB RMB (%) RMB (%) RMB
Accounts receivable
for which bad debt
provision has been
assessed individually 1447973 100.0 - - 1447973 7805333 100.0 - - 7805333______ ___ ____ ____ ______ ______ ___ ____ ____ ______
The normal credit term of trade receivables is one month. The trade receivables are interest free.The aging analysis is as follows:
31/12/2018 31/12/2017
RMB RMB
Within 1 year 1447973 7805333____________ ____________
(2) Provision reversals and collections during the current period:
As at 31 December 2018 there was no provision provided for trade receivables (31 December
2017: Nil). The Company did not provide reverse or write off any provision during 2018 (31
December 2017: Nil).
(3) The balance of accounts receivable at the end of the year
Relationship Proportion of
with the Group Amount Aging total receivables
Zhongya Pharmaceutical Other related parties 1447973 Within 1 year 100.0_________ _____
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
3. Other receivables
3.1 Presented by categories
31/12/2018 31/12/2017
RMB RMB
Interest receivable 254088 76646
Dividend receivables 500000000 407495922
Other receivables 525389268 592274075____________ ____________
Total 1025643356 999846643____________ ____________
3.2 Dividend receivables
31/12/2017 Increase Decrease 31/12/2018RMB
RMB RMB RMB
Within 1 year
Including: Sales Company 402595884 867404116 (770000000) 500000000
Wines Sales - 30000000 (30000000) -
Langfang Castel - 785986 (785986) -
Beijing Chateau - 19850000 (19850000) -
Shihezi Chateau 4900038 15531228 (20431266) -
National Wines - 20000000 (20000000) -
Langfang sales - 1981410 (1981410) -
Atrio - 2080191 (2080191) -
Chile Indomita
Wine Group - 6495728 (6495728) -_________ __________ __________ _________
Total 407495922 964128659 (871624581) 500000000_________ __________ __________ _________
3.3 Other receivables
(1) Disclosure of other receivables by categories:
31/12/2018 31/12/2017
Balance Bad debts provisions Carrying Amount Balance Bad debts provisions Carrying Amount
Amount Proportion Amount Proportion Amount Amount Proportion Amount Proportion Amount
RMB (%) RMB (%) RMB RMB (%) RMB (%) RMB
Other receivables for
which bad debt
provision has been
assessed individually 525389268 100.0 - - 525389268 592274075 100.0 - - 592274075_____ ___ ____ ___ _____ _____ ___ _____ ___ _____
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
3. Other receivables - continued
3.3 Other receivables - continued
(1) Disclosure of other receivables by categories: - continued
The aging analysis is as follows:
31/12/2018 31/12/2017
Bad debts Carrying Bad debts Carrying
Balance provision amount Balance provision amount
Amount Proportion Amount Amount Amount Proportion Amount Amount
RMB % RMB RMB RMB % RMB RMB
Within 1 year 491483881 93.5 - 491483881 589011103 99.5 - 589011103
1 to 2 years 33897084 6.5 - 33897084 3006488 0.5 - 3006488
2 to 3 years 8303 - - 8303 53794 - - 53794
Over 3 years - - - - 202690 - - 202690________ ____ _______ ________ ________ ____ ______ ________
525389268 100.0 - 525389268 592274075 100.0 - 592274075________ ____ _______ ________ ________ ____ ______ ________
(2) Accrual reversal and written-off during the current period
No bad debt accrued or reversed in 2018 (2017:Nil.).
(3) Other receivables written off current year
No other receivables written in 2018 (2017:Nil.).
(4) Disclosure of other receivables by nature
31/12/2018 31/12/2017
RMB RMB
Receivable from subsidiary 523579831 589897407
Receivable deposit 12500 2500
Others 1796937 2374168____________ ____________
525389268 592274075____________ ____________
(5) Top five entities with the largest balances of other receivables
As at 31 December 2018 the particulars of top five other receivables are as follows:
Proportion of total
Nature Amount Aging prepayments
RMB %
Sales Company Internal balance 369060579 Within 1 year 70.2
R&D Centre Internal balance 120589826 Within 1 year 23.0
Yantai Castel Chateau Internal balance 12404563 Within 1 year 2.4
Pioneer International Internal balance 10704391 Within 1 year 2.0
Ningxia Chateau Internal balance 7085540 Within 1 year 1.3_________ ___
519844899 98.9_________ ___
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
4. Inventories
31/12/2018 31/12/2017
Net carrying Net carrying
Balance Provision amount Balance Provision amount
RMB RMB RMB RMB RMB RMB
Raw material 1200528 - 1200528 1841216 - 1841216
Work in progress 358230774 - 358230774 307104357 - 307104357
Finished goods 25723438 - 25723438 39096480 - 39096480_________ _______ _________ _________ _______ _________
385154740 - 385154740 348042053 - 348042053_________ _______ _________ _________ _______ _________
5. Long-term equity investments
2018 Cost 31/12/2017 for the year 31/12/2018 Share holding Voting power for the year
RMB RMB RMB RMB % % RMB
Cost Method
Xinjiang Tianzhu (a) 60000000 60000000 - 60000000 60 100 -
Kylin Packaging 23176063 23176063 - 23176063 100 100 -
Changyu Chateau (a) 28968100 28968100 - 28968100 70 100 -
Changyu Chateau (a) 3500000 3500000 - 3500000 70 100 -
Ningxia Growing 36573247 36573247 - 36573247 100 100 -
National Wines 2000000 2000000 - 2000000 100 100 20000000
Ice Chateau (a) 30440500 30440500 - 30440500 51 100 -
Beijing Chateau (a) 579910000 579910000 - 579910000 90 100 19850000
Sales Company 7200000 7200000 - 7200000 100 100 867404116
Langfang Sales (b) 100000 100000 - 100000 10 100 1981410
Langfang Castel(a) 19835730 19835730 - 19835730 39 100 785986
Wine Sales 4500000 4500000 - 4500000 100 100 30000000
Shanghai Sales(b) 300000 300000 - 300000 30 100 -
Beijing Sales 850000 850000 - 850000 100 100 -
Jingyang Sales (b) 100000 100000 - 100000 10 100 -
Jingyang Wine (b) 900000 900000 - 900000 90 100 -
Ningxia Wine 222309388 222309388 - 222309388 100 100 -
Ningxia Chateau 443463500 443463500 10000000 453463500 100 100 -
Dingluote Chateau (b) 212039586 212039586 - 212039586 65 100 -
Shihezi Chateau 809019770 809019770 3000000 812019770 100 100 15531228
Changan Chateau 803892258 803892258 - 803892258 100 100 -
R&D Centre (a) 500000000 500000000 2788906445 3288906445 72 100 -
Huanren Wine 21700000 21700000 500000 22200000 100 100 -
Grape Wine Sales Co. 5000000 - - - - 100 -
Francs Champs 236025404 236025404 - 236025404 100 100 -
Atrio 190150544 190150544 - 190150544 75 75 2080191
IWCC 274248114 274248114 - 274248114 85 85 6495728
Australia Kilikanoon
Estate - - 107194420 107194420 80 80 -_______ _______ _______ _______ _______
4516202204 4511202204 2909600865 7420803069 964128659_______ _______ _______ _______ _______
(a) The Company has 100% voting power of those subsidiaries by the way of indirect
controlling referring to Note VIII-1.(b) The Company has 100% voting power of these subsidiaries by the way of indirect
controlling through wholly owned subsidiaries.
During 2018 there was no significant restriction on the remittance of fund from the investees to
the Company.
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
6. Fixed assets
(1) Fixed assets
Buildings Machinery Motor vehicles Total
RMB RMB RMB RMB
Total original carrying amount
31/12/2017 265340049 475569634 10129313 751038996
Increase
Purchase - 9345433 - 9345433
CIP transfer 8887802 139665 - 9027467
Decrease
Disposal - (13137771) (3479487) (16617258)
Transfer to Investment
property (VI-8) (32606762) - - (32606762)_________ _________ _________ _________
31/12/2018 241621089 471916961 6649826 720187876_________ _________ _________ _________
Total accumulated depreciation
31/12/2017 111607494 346413532 4867069 462888095
Increase
Additions 7784794 15133656 531639 23450089
Decrease
Disposal (227951) (12642520) (946751) (13817222)
Transfer to Investment
property (VI-8) (17644360) - - (17644360)_________ _________ _________ _________
31/12/2018 101519977 348904668 4451957 454876602_________ _________ _________ _________
Total net carrying amount
31/12/2018 140101112 123012293 2197869 265311274_________ _________ _________ _________
31/12/2017 153732555 129156102 5262244 288150901_________ _________ _________ _________
As at 31 December 2018 fixed assets with restricted ownership is RMB 34246887 (December
31 2017:RMB 36349289 ) referring to Note VI-45 for details.
As at 31 December 2018 the Company has no fixed assets classified as held for sale ( 31
December 2017:RMB 2000197) and the Company has no temporary idle fixed assets and fixed
assets under finance leases.
(2) Fixed assets through operating lease
Amount
RMB
Machinery 134111________
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
6. Fixed assets - continued
(3) Fixed assets of which certificates of title have not been obtained
As at 31 December 2018 buildings without property certificate are as follows：
Reasons why
certificates of title have
Amount not been obtained
RMB
Fermentation centre office
experiment building and workshop 3653494 Processing__________
7. Construction in progress
(1) Construction in progress
31/12/2018 31/12/2017
RMB RMB
Reconstruction of boiler heating systems - 3556349
Drainage project - 3200000
Non-dry sticker labeling machine project 4105264 -
Others 2206437 -____________ ____________
6311701 6756349____________ ____________
(2) Current year movement on important construction:
Budget 31/12/2017 Addition
Transfer to
PPE 31/12/2018
Accumulated
expenditure/
budget
The
progress of
constructio
n Financed by
RMB RMB RMB RMB RMB %
Reconstruction of boiler
heating systems 13000000 3556349 - (3556349) - 100.0 100.0 Self-raised
Non-dry sticker labeling
machine project 6920000 - 5431516 (1326252) 4105264 78.5 78.5 Self-raised
There was no interest capitalized in construction in progress in 2018.
(3) As at 31 December 2018 there was no provision was made for the construction in process and no
provision was made (31 December 2017:Nil).
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
8 Bearer biological assets
Bearer biological assets are grape trees，which measured in cost method.
Immature Mature
biological assets biological assets Total
RMB RMB RMB
Total original carrying amount
31/12/2017 6306963 130929124 137236087
Increase
Cultivated increase 12930423 - 12930423
Transfer to mature assets
from immature assets (9802191) 9802191 -__________ ___________ __________
31/12/2018 9435195 140731315 150166510__________ ___________ __________
Total accumulated depreciation
31/12/2017 - 17663548 17663548
Increase
Additions - 7500169 7500169__________ ___________ __________
31/12/2018 - 25163717 25163717__________ ___________ __________
Total net carrying amount
31/12/2018 9435195 115567598 125002793__________ ___________ __________
31/12/2017 6306963 113265576 119572539__________ ___________ __________
As at 31 December 2018 there is no biological asset with ownership restricted (31 December
2017: Nil).
As at 31 December 2018 there is no indication that biological assets may be impaired and no
provision was made. (31 December 2017: Nil).
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
9. Intangible assets
Intangible assets
Land use right
RMB
Total original carrying amount
31/12/2017 and 31/12/2018 96594766__________
Total accumulated depreciation
31/12/2017 26971547
Increase
Additions 2379153__________
31/12/2018 29350700__________
Total net carrying amount
31/12/2018 67244066__________
31/12/2017 69623219__________
As at 31 December 2018 Intangible assets with restricted ownership are RMB 50902950
(December 31 2017: RMB 52720912) Please refer to Note VI-45 in detail.
10. Deferred tax assets
Recognised deferred tax assets not presented at the net amount after offset
Item
31/12/2018 31/12/2017
Deductible
temporary difference
RMB
Deferred
tax assets
RMB
Deductible
temporary difference
RMB
Deferred
tax assets
RMB
Unrealized profit from intra
- company transactions 5897436 1474359 7163828 1790957
Unpaid bonus 37973000 9493249 35822735 8955683
Retirement benefit 10143950 2535988 10057113 2514278
Deductible losses 30421511 7605378 45526327 11381582
Deferred income 12343972 3085993 16581627 4145407
96779869 24194967 115151630 28787907
11. Other non-current assets
31/12/2018 31/12/2017
RMB RMB
Receivables from subsidiaries 972700000 3718674166____________ ____________
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
12. Short-term borrowings
31/12/2018 31/12/2017
RMB RMB
Credit loans 150000000 600000000____________ ____________
As at 31 December 2018 credit loans detail are as follows:
Loan bank Loans amount Loan term Interest rate in contract Interest rat
RMB % %
ICBC Yantai branch 15000000024 May 2018 – 24 May 2019 Annual benchmark rate 4.35_________
13. Notes and accounts payable
The aging analysis of accounts payable are as follows
31/12/2018 31/12/2017
RMB RMB
Within 1 year 132664195 97036146
1 to 2 years - 556883
2 to 3 years 395 240095
Over 3 years 39714 -____________ ____________
132704304 97833124____________ ____________
14. Employee benefits payable
(1) Employee benefits payable
31/12/2017 Increase Decrease 31/12/2018
RMB RMB RMB RMB
Short-term salaries and welfare 60050963 97491895 (95341628) 62201230
Post-demission benefits
- predetermined provision plan - 6785401 (6785401) -
Termination benefit 10057113 5216248 (5129412) 10143949_________ _________ _________ _________
70108076 109493544 (107256441) 72345179_________ _________ _________ _________
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
14. Employee benefits payable - continued
(2) Short-term salaries and welfare
31/12/2017 Increase Decrease 31/12/2018
RMB RMB RMB RMB
Salaries and bonus 60694620 83892951 (81609810) 62977761
Staff benefit 37173 6191811 (6191811) 37173
Staff welfare - 4004223 (4004223) -
Includes:
Medical insurance - 3476931 (3476931) -
Injury insurance - 289904 (289904) -
Maternity insurance - 237388 (237388) -
Housing fund - 3005993 (3005993) -
Union fee and education fee 1896872 529790 (529791) 1896871_________ _________ _________ _________
Total 62628665 97624768 (95341628) 64911805_________ _________ _________ _________
Less: Non-current liabilities 2577702 2710575_________ _________
Short-term salaries and welfare 60050963 62201230_________ _________
(3) Predetermined provision plan
31/12/2017 Increase Decrease 31/12/2018
RMB RMB RMB RMB
Pension - 6534445 (6534445) -
Unemployment insurance - 250956 (250956) -_____ _________ _________ _____
- 6785401 (6785401) -_____ _________ _________ _____
The Company participates in pension insurance and unemployment insurance plans established by
government institution. According to those plans the Company pays pension and unemployment
insurance each month on the basis of 18% and 0.7% last period salary respectively. Apart from
these monthly expenses the Company does not bear any further payment obligation. This year the
Company should pay RMB 6534445 and RMB 250956 (2017: RMB 8595215 and RMB
323852) respectively into pension insurance and unemployment insurance. As at 31 December
2018 the Company does not have unpaid pension and unemployment insurance (31 December
2017: Nil) which is due to the pension insurance and unemployment insurance plan and not paid
at the end of the reporting period.
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
15. Taxes payable
31/12/2018 31/12/2017
RMB RMB
Value added tax 1686599 -
Consumption tax 3902791 6450962
Corporation income tax - 26069
Urban land use tax 685626 784627
Individual income tax 6316001 6630393
City construction tax 36314 345138
Property tax 243814 82669
Others 240286 249832____________ ____________
13111431 14569690____________ ____________
16. Other payables
16.1 Presented by categories
31/12/2018 31/12/2017
RMB RMB
Interest payable 181250 652500
Other payables 607793269 544713172____________ ____________
607974519 545365672____________ ____________
16.2 Other payables
(1) Natures of other payables are as follows
31/12/2018 31/12/2017
RMB RMB
Payable to subsidiaries 585044038 534530323
Payables for equipment and construction 10554451 8538687
Deposits from suppliers 5982500 183000
Others 6212280 1461162____________ ____________
607793269 544713172____________ ____________
(2) As at 31 December 2018 there were no significant outstanding balance aged over than one year.
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
17. Capital reserve
2018 31/12/2017 Increase Decrease 31/12/2018
RMB RMB RMB RMB
Share premium 557222454 - - 557222454___________ ______ ______ ___________
18. Operating income and costs
Operating income is analysed as follows:
2018 2017
RMB RMB
Principal operating income 874292088 1310443414
Other operating income 2154982 813440____________ ____________
876447070 1311256854____________ ____________
Operating cost is analysed as follows:
2018 2017
RMB RMB
Principal operating cost 772497769 1165362798
Other operating cost 1989262 590610____________ ____________
774487031 1165953408____________ ____________
19. Taxes and surcharges
2018 2017
RMB RMB
Consumption tax 27262209 53236697
City construction tax 3214543 10190867
Education fee and surcharges 2159612 5817116
Property tax 1854486 2267901
Land use tax 3168559 3168559
Stamp tax 310835 603461
Others 376517 1285624____________ ____________
38346761 76570225____________ ____________
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
20. General and administrative expense
2018 2017
RMB RMB
Salary and employee benefit 55580888 38430904
Maintenance fee 8396432 6192525
Office fee 3641210 3881091
Service fee 3495328 9194005
Depreciation 3375180 4286164
Property insurance fees 2961742 3080521
Leasing expenses 2790358 2276896
Amortization 2379153 2695110
Shuttle bus 1442340 1719660
Security and sanitation fee 763792 941434
Travelling expenses 324566 527464
Greening fee amortization 312080 394604
Others 5042139 5498757____________ ____________
90505208 79119135____________ ____________
21. Financial Expense
2018 2017
RMB RMB
Interest income (41821372) (18602199)
Exchange loss 4443175 1040832
Interest expenses 16075353 17414181
Bank charges 1010107 784754____________ ____________
(20292737) 637568____________ ____________
22. Investment income
2018 2017
RMB RMB
Long-term equity investment income accounted
for by using the cost method 964128659 798877905____________ ____________
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
22. Investment income - continued
Among the long-term equity investment income accounted for by using cost method the investees
with investment income accounting for more than 5% of the Company's total profit before tax are
as follows:
Investees 2018 2017
RMB RMB
Sales Company 867404116 577813022
Beijing Chateau - 87000000
Wine Sales - 53461029
Xinjiang Tianzhu - 48620373____________ ____________
867404116 766894424____________ ____________
As at 31 December 2018 and at 31 December 2017 there are no significant restriction on the
remittance of investment income to the Company.
23. Supplement to cash flow statement
2018 2017
RMB RMB
(1) Cash flows from operating activities calculated by
adjusting the net profit:
Net profit 969588573 793598010
Add: Depreciation of investment properties 1857902 590610
Depreciation of fixed assets 23450089 32201177
Amortization of intangible assets 2379153 2379153
Depreciation of biological assets 7500169 6781447
(Gains)Losses on disposal of assets (12411962) 29625
Finance expenses 17808569 18614396
Investment income (964128659) (798877905)
Decrease/(increase) in deferred tax assets 4592940 (1802655)
Increase / (decrease) in inventories (37112687) 444690365
Decrease in trade receivables 37072169 103406898
Increase / (decrease) in trade payables 92609575 (3541352)____________ ____________
Net cash flows from operating activities 143205831 598069769____________ ____________
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
23. Supplement to cash flow statement - continued
(2) Significant investing and financing activities not involving cash receipts and payments
2018 2017
RMB RMB
Change the claim on subsidiaries into Long-term
equity investments 2802406445 2386907749
Increase the investment in subsidiaries
with bank acceptances - 96345678
Recover the investment in subsidiaries
with bank acceptances - (96345678)____________ ____________
2802406445 2386907749____________ ____________
24. Cash and cash equivalents
2018 2017
RMB RMB
Closing balance of Cash and bank 624588809 559174466
Less:
Restricted bank deposits 2611350 2645410
Restricted other monetary assets 44592577 57960190
Deposit with a period of over three months 45000000 5000000____________ ____________
Closing balance of cash and cash equivalents 532384882 493568866____________ ____________
2018 2017
RMB RMB
Cash and bank 532384882 493568866
Including: Cash and bank 3177 5280
Bank deposits on demand 532381705 493563586____________ ____________
Closing balance of cash and cash equivalents 532384882 493568866____________ ____________
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
25. Related party transactions
(1) Purchase of materials
2018 2017
RMB RMB
Subsidiaries 209808816 352495622
Other related parties 88897126 82394392____________ ____________
298705942 434890014____________ ____________
(2) Sales of goods
2018 2017
RMB RMB
Subsidiaries 867995960 1302056254
Other related parties 8451110 9200600____________ ____________
876447070 1311256854____________ ____________
(3) Sales of Fixed assets
2018 2017
RMB RMB
Subsidiaries 134445 47843203
Other related parties - 3934643____________ ____________
134445 51777846____________ ____________
(4) Interest income from occupation of funds
2018 2017
RMB RMB
Subsidiaries 35823556 14912649____________ ____________
(5) Lease income
2018 2017
RMB RMB
Subsidiaries 1997164 739491____________ ____________
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
25. Related party transactions - continued
(6) Guarantees
Whether
guarantees are
Guaranteed party Currency Amount Beginning date Due date fulfilled completely
R&D Center RMB 500000000 8 March 2017 8 March 2022 No
Australian Kilikanoon
Estate AUD 17000000 13 December 2018 13 December 2023 No
26. Receivables and payables to related parties
(1) Trade receivables
Trade receivables 31/12/2018 31/12/2017
Bad debts Bad debts
Balance provision Balance provision
RMB RMB RMB RMB
Other related parties 1447973 - 7805333 -__________ _______ __________ _______
Other receivables 31/12/2018 31/12/2017
Bad debts Bad debts
Balance provision Balance provision
RMB RMB RMB RMB
Subsidiaries 523579831 - 589897407 -
Other related parties 813440 - 813440 -__________ _______ __________ _______
524393271 - 590710847 -__________ _______ __________ _______
Other non-current assets 31/12/2018 31/12/2017
Bad debts Bad debts
Balance provision Balance provision
RMB RMB RMB RMB
Subsidiaries 972700000 - 3718674166 -__________ _______ __________ _______
The above receivables due from related parties are unsecured have no interest or fixed date of
repayment.
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
26. Receivables and payables to related parties - continued
(2) Trade payables
Trade payables 31/12/2018 31/12/2017
RMB RMB
Other related parties 28892583 29145914____________ ____________
Other payables 31/12/2018 31/12/2017
RMB RMB
Subsidiaries 585044038 534530323
Other related parties 450000 -____________ ____________
585494038 534530323____________ ____________
The above payables due to related parties are unsecured have no interest or fixed date of
repayment.
APPENDIX I SUPPLEMENTARY INFORMATION TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2018
I. DETAILS OF EXTRAORDINARY PROFIT AND LOSS
2018
RMB
Corporate income tax effect 11368355
Government grants credited in profit and loss
(except for those recurring government grants
that are closely related to the Group's operation
and have proper basis of calculation) 87281434
Other non-operating income and expense 3817401
Corporate income tax effect (25157188)
The impact of non-controlling interests' equity (103311)
__________
77206691
__________
__________
The Company's extraordinary profit and loss items are recognized in accordance with
the regulations of the "public offering of securities of the Company Disclosure
Explanatory Notice No. 1 - non-recurring profit and losses" (SFC [2008] No. 43).
II. RETRUN ON EQUITY ("ROE") AND EARNINGS PRE SHARE ("EPS")
The Company's ROE and EPS are calculated in accordance with the CSRC
regulations of the "Information Preparing and Disclosure Rules of Public Company
No. 9 - calculation and disclosure of ROE and EPS" (Revised 2010).Weighted average
2018 ROE Basic EPS
% RMB
Net profit attributable to shareholders of the Company 11.23 1.52
Net profit attributable to shareholders
of the Company deducting extraordinary profit and loss 10.40 1.41
_____ ____
_____ ____
The Company did not have any potential dilutive shares.
Weighted average
2017 ROE Basic EPS
% RMB
Net profit attributable to shareholders of the Company 12.14 1.51
Net profit attributable to shareholders
of the Company deducting extraordinary profit and loss 11.60 1.44
_____ ____
_____ ____
The Company did not have any potential dilutive shares.
XII. Reference Documents
(1)The original of Annual Report autographed by the chairman.
(2)The Financial Statements autographed and signed by the chairman chief accountant and
accountants in charge.
(3)The Prospectus and Public Offering Announcement for Stock B in 1997; The Prospectus
and The Shares’ Change & Public Offering Announcement for Stock A in 2000.
(4) The originals of all documents and announcements that the Company made public during
the report period in the newspapers designated by China Securities Regulatory Commission.Yantai Changyu Pioneer Wine Co. Ltd.
Board of Directors
April 20th 2019
