Yantai Changyu Pioneer Wine Co. Ltd.ENGLISH TRANSLATION OF FINANCIAL STATEMENTS FOR THE YEAR 1 JANUARY 2024 TO 31 DECEMBER 2024 IF THERE IS ANY CONFLICT BETWEEN THE CHINESE VERSION AND ITS ENGLISH TRANSLATION THE CHINESE VERSION WILL PREVAILAUDITOR’S REPORT KPMG Huazhen Shen Zi No. 2507683 All Shareholders of Yantai Changyu Pioneer Wine Company Limited: Opinion We have audited the accompanying financial statements of Yantai Changyu Pioneer Wine Company Limited (“Yantai Changyu”) which comprise the consolidated balance sheet and company balance sheet as at 31 December 2024 the consolidated income statement and company income statement the consolidated cash flow statement and company cash flow statement the consolidated statement of changes in shareholders’ equity and company statement of changes in shareholders’ equity for the year then ended and notes to the financial statements.In our opinion the accompanying financial statements present fairly in all material respects the consolidated financial position and company financial position of Yantai Changyu as at 31 December 2024 and of its consolidated financial performance and company financial performance and its consolidated cash flows and company cash flows for the year then ended in accordance with Accounting Standards for Business Enterprises issued by the Ministry of Finance of the People’s Republic of China.Basis for Opinion We conducted our audit in accordance with China Standards on Auditing for Certified Public Accountants (“CSAs”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.We are independent of Yantai Changyu in accordance with the China Code of Ethics for Certified Public Accountants (“the Code”) and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.Page 1 of 6AUDITOR’S REPORT (continued) KPMG Huazhen Shen Zi No. 2507683 Key Audit Matters Key audit matters are those matters that in our professional judgement were of most significance in our audit of the financial statements for the year ended 31 December 2024.These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters.Recognition of Sales Revenue from DistributorsRefer to the accounting policies set out in the notes to the financial statements “III. Significantaccounting policies and accounting estimates” 25 and “V. Notes to the consolidated financialstatements” 37.How the Matter was Addressed in Our The Key Audit Matters Audit The principal activities of Yantai Changyu and Our audit procedures to evaluate revenue its subsidiaries (hereinafter referred to as recognition of sales revenue from “Yantai Changyu Group”) include manufacture distributors included the following: and sales of wine brandy and sparkling wine.Understand and evaluate the The revenue of Yantai Changyu Group is Management’s design and operation mainly derived from sales of distributors. All effectiveness of key internal controls distributor transaction terms adopt the unified related to distributor sales revenue transaction terms formulated by Yantai recognition; Changyu Group.Selecting the sales contracts Yantai Based on the contractual agreement and the Changyu signed with distributors in business arrangement Yantai Changyu sells order to examine whether Yantai products to distributors and the transfer of Changyu has adopted the unified product ownership is completed and the transaction terms and evaluate revenue is recognised when the goods are whether the accounting policy of delivered to distributors and signed for revenue recognition meets the acceptance. requirements of the Accounting As revenue is one of the key performance Standards for Business Enterprises; indicators of Yantai Changyu Group there is a On a sampling basis reconcile the risk that management may recognise revenue revenue recorded for the year to earlier or later in order to meet specific relevant supporting files such as performance targets or expectations therefore relevant orders and signed delivery the risk of cut-off misstatement arising from notes etc. to evaluate whether distributors’ sales revenue is identified as a key revenue is recognised in accordance audit matter.with the accounting policy of Yantai Changyu; Page 2 of 6AUDITOR’S REPORT (continued) KPMG Huazhen Shen Zi No. 2507683 Key Audit Matters (continued) Recognition of Sales Revenue from Distributors (continued)Refer to the accounting policies set out in the notes to the financial statements “III.Significant accounting policies and accounting estimates” 25 and “V. Notes to theconsolidated financial statements” 37.How the Matter was Addressed in Our The Key Audit Matters Audit On a sampling basis reconcile the sales transaction before and after balance sheet date to relevant supporting files such as relevant orders signed delivery notes etc. to evaluate whether revenue is recognised in appropriate accounting period; Check the sales record after the balance sheet date to identify significant sales returns and check relevant supporting files (If applicable) in order to evaluate whether relevant revenue is recorded in the appropriate accounting period; Select revenue accounting entries that meet specific risk criteria and check related supporting documents.Page 3 of 6AUDITOR’S REPORT (continued) KPMG Huazhen Shen Zi No. 2507683 Other Information Management of Yantai Changyu is responsible for the other information. The other information comprises all the information included in the 2024 annual report other than the financial statements and our auditor’s report thereon.Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.In connection with our audit of the financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Accounting Standards for Business Enterprises and for the design implementation and maintenance of such internal control necessary to enable that the financial statements are free from material misstatement whether due to fraud or error.In preparing the financial statements management is responsible for assessing Yantai Changyu’s ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate Yantai Changyu or to cease operations or has no realistic alternative but to do so.Those charged with governance are responsible for overseeing Yantai Changyu’s financial reporting process.Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with CSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.Page 4 of 6AUDITOR’S REPORT (continued) KPMG Huazhen Shen Zi No. 2507683 Auditor’s Responsibilities for the Audit of the Financial Statements (continued) As part of an audit in accordance with CSAs we exercise professional judgement and maintain professional scepticism throughout the audit. We also: (1) Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control. (2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. (3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management. (4) Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on Yantai Changyu’s ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or if such disclosures are inadequate to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However future events or conditions may cause Yantai Changyu to cease to continue as a going concern. (5) Evaluate the overall presentation structure and content of the financial statements including the disclosures and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. (6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express our audit opinion on the financial statements. We are responsible for the direction supervision and performance of the Group audit. We remain solely responsible for our audit opinion.Page 5 of 6AUDITOR’S REPORT (continued) KPMG Huazhen Shen Zi No. 2507683 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 communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable related safeguards.From the matters communicated with those charged with governance we determine those matters that were of most significance in the audit of the financial statements of the year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.KPMG Huazhen LLP Certified Public Accountants Registered (Stamp) in the People’s Republic of China Wang Jia (Engagement Partner) (Signature and stamp) Beijing China Jiang Hui (Signature and stamp) 16 April 2025 Page 6 of 6Yantai Changyu Pioneer Wine Company Limited Consolidated balance sheet as at 31 December 2024 (Expressed in Renminbi Yuan) 31 December 31 December Note 20242023 Assets Current assets Cash at bank and on hand V.1 1797848130 2217693647 Bills receivable V.2 1036243 1260000 Accounts receivable V.3 270829601 382132334 Receivables under financing V.4 230960211 408316028 Prepayments V.5 60631575 61497933 Other receivables V.6 264598394 71496276 Inventories V.7 2904070556 2765390587 Other current assets V.8 80383241 88368542 Total current assets 5610357951 5996155347 Non-current assets Long-term equity investments V.9 34864748 38285620 Investment properties V.10 21960451 24482831 Fixed assets V.11 5551671795 5795082569 Construction in progress V.12 10177372 3323241 Bearer biological assets V.13 66483964 177461983 Right-of-use assets V.14 71761262 121745910 Intangible assets V.15 527706383 542625776 Goodwill V.16 101149082 107163616 Long-term deferred expenses V.17 298793702 306662107 Deferred tax assets V.18 221993099 221518204 Other non-current assets V.19 3554409 1760000 Total non-current assets 6910116267 7340111857 Total assets 12520474218 13336267204 The notes on pages 20 to 115 form part of these financial statements. 1Yantai Changyu Pioneer Wine Company Limited Consolidated balance sheet as at 31 December 2024 (continued) (Expressed in Renminbi Yuan) 31 December 31 December Note 20242023 Liabilities and shareholders’ equity Current liabilities Short-term loans V.20 216140346 364981445 Accounts payable V.21 417510439 473352525 Contract liabilities V.22 128090353 175278849 Employee benefits payable V.23 166704917 185331292 Taxes payable V.24 189147054 274723431 Other payables V.25 398149521 555634336 Other current liabilities V.26 40764242 44958297 Non-current liabilities due within V.27 79949769 78523993 one year Total current liabilities 1636456641 2152784168 Non-current liabilities Long-term loans V.28 50637203 66616443 Lease liabilities V.29 27542829 85038335 Deferred income V.30 25938817 32582734 Deferred tax liabilities V.18 7344165 8719729 Total non-current liabilities 111463014 192957241 Total liabilities 1747919655 2345741409 The notes on pages 20 to 115 form part of these financial statements. 2Yantai Changyu Pioneer Wine Company Limited Consolidated balance sheet as at 31 December 2024 (continued) (Expressed in Renminbi Yuan) 31 December 31 December Note 20242023 Liabilities and shareholders’ equity (continued) Shareholders’ equity Share capital V.31 671823900 692249559 Capital reserve V.32 482143547 651086707 Less：Treasury stock V.33 70704426 103411919 Other comprehensive income V.34 (39714972) (14784677) Surplus reserve V.35 342732000 342732000 Retained earnings V.36 9232928370 9273629318 Total equity attributable to shareholders of 1061920841910841500988 the Company Non-controlling interests 153346144 149024807 Total shareholders’ equity 10772554563 10990525795 Total liabilities and shareholders’ equity 12520474218 13336267204 These financial statements were approved by the Board of Directors of the Company on 16April 2025. . Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp) Legal Representative The person in charge The head of the of accounting affairs accounting department (Signature and stamp) (Signature and stamp) (Signature and stamp) The notes on pages 20 to 115 form part of these financial statements. 3Yantai Changyu Pioneer Wine Company Limited Company balance sheet as at 31 December 2024 (Expressed in Renminbi Yuan) 31 December 31 December Note 20242023 Assets Current assets Cash at bank and on hand 876557848 1242484544 Accounts receivable 226796 5189894 Receivables under financing XVII.1 13110297 36322019 Prepayments 5526029 52587 Other receivables XVII.2 952762563 576949997 Inventories 396334804 323465919 Other current assets - 147187 Total current assets 2244518337 2184612147 Non-current assets ? ? Long-term equity investments XVII.3 7689232919 7648498638 Investment properties 21960451 24482831 Fixed assets 176158046 194601612 Construction in progress - 264175 Bearer biological assets 20075933 100785279 Right-of-use assets 6985971 37025896 Intangible assets 69806357 72552201 Deferred tax assets 2624459 2327585 Other non-current assets 1864430003 1934430000 Total non-current assets 9851274139 10014968217 Total assets 12095792476 12199580364 The notes on pages 20 to 115 form part of these financial statements. 4Yantai Changyu Pioneer Wine Company Limited Company balance sheet as at 31 December 2024(continued) (Expressed in Renminbi Yuan) 31 December 31 December Note 20242023 Liabilities and shareholders’ equity Current liabilities Short-term loans 50000000 100000000 Accounts payable 92990317 63686113 Employee benefits payable 68033360 68654350 Taxes payable 2010276 6439899 Other payables 584915573 608904995 Non-current liabilities due within 21992123803910 one year Total current liabilities 800148738 851489267 Non-current liabilities Lease liabilities 5115806 42380074 Deferred income 1398701 55718 Total non-current liabilities 6514507 42435792 Total liabilities 806663245 893925059 The notes on pages 20 to 115 form part of these financial statements. 5Yantai Changyu Pioneer Wine Company Limited Company balance sheet as at 31 December 2024 (continued) (Expressed in Renminbi Yuan) 31 December 31 December Note 20242023 Liabilities and shareholders’ equity (continued) Shareholders’ equity Share capital 671823900 692249559 Capital reserve 519382073 687544350 Less：Treasury stock 70704426 103411919 Surplus reserve 342732000 342732000 Retained earnings 9825895684 9686541315 Total shareholders’ equity 11289129231 11305655305 Total liabilities and shareholders’ equity 12095792476 12199580364 These financial statements were approved by the Board of Directors of the Company on 16 April 2025. .Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp) Legal Representative The person in charge The head of the of accounting affairs accounting department (Signature and stamp) (Signature and stamp) (Signature and stamp) The notes on pages 20 to 115 form part of these financial statements. 6Yantai Changyu Pioneer Wine Company Limited Consolidated income statement for the year ended 31 December 2024 (Expressed in Renminbi Yuan) Note 2024 2023 I. Operating income V.37 3277278347 4384764335 Less: Operating costs V.37 1392602399 1786983657 Taxes and surcharges V.38 273762629 349735571 Selling and distribution V.39 1012980420 1239782776 expenses General and administrative V.40 313911881 303990858 expenses Research and development 1953824317413534 expenses Financial expenses V.41 12836073 11083459 Including: Interest expenses 34261730 35800097 Interest income 34643667 30571465 Add: Other income V.42 52613910 51523799 Investment (losses)/income V.43 (4420872) 23847450 Including: Losses from investment (4420872)(712480) associates and in joint ventures Credit reversal V.44 1818835 1397658 Impairment losses V.45 (7465500) (13506958) Gain/(losses) from disposal of V.46 132116926 (134133) assets The notes on pages 20 to 115 form part of these financial statements. 7Yantai Changyu Pioneer Wine Company Limited Consolidated income statement for the year ended 31 December 2024 (continued) (Expressed in Renminbi Yuan) Note 2024 2023 II. Operating profit 426310001 738902296 Add: Non-operating income V.47 4977930 11992270 Less: Non-operating expenses V.47 3733074 3428410 III. Profit before income tax 427554857 747466156 Less: Income tax expenses V.48 113227572 221433447 IV. Net profit 314327285 526032709 (1) Net profit classified by ?? continuity of operations: 1. Net profit from continuing 314327285526032709 operations 2. Net profit from discontinued -- operations (2) Net profit classified by ?? ownership: 1. Net profit attributable to shareholders of the 305210999 532438907 Company 2. Non-controlling net 9116286(6406198) interests/(losses) V. Other comprehensive income net of (27197923)9519495 tax (1) Other comprehensive income (net of tax) attributable to (24930295) 8975561 shareholders of the Company Translation differences arising from translation of foreign (24930295) 8975561 currency financial statements (2) Other comprehensive income (net of tax) attributable to (2267628) 543934 non-controlling interests The notes on pages 20 to 115 form part of these financial statements. 8Yantai Changyu Pioneer Wine Company Limited Consolidated income statement for the year ended 31 December 2024 (continued) (Expressed in Renminbi Yuan) Note 2024 2023 VI. Total comprehensive income for the 287129362535552204 year (1) Attributable to shareholders of 280280704541414468 the Company (2) Attributable to non-controlling 6848658(5862264) interests VII. Earnings per share: ? ? (1) Basic earnings per share V.49 0.45 0.78 (2) Diluted earnings per share V.49 0.45 0.78 These financial statements were approved by the Board of Directors of the Company on 16 April 2025. .Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp) Legal Representative The person in charge The head of the of accounting affairs accounting department (Signature and stamp) (Signature and stamp) (Signature and stamp) The notes on pages 20 to 115 form part of these financial statements. 9Yantai Changyu Pioneer Wine Company Limited Company income statement for the year ended 31 December 2024 (Expressed in Renminbi Yuan) Note 2024 2023 I. Operating income XVII.4 562078771 731158954 Less: Operating cost XVII.4 496879337 621636564 Taxes and surcharges 18450000 26163038 General and administrative 6865899760054424 expenses Research and development 8784051127242 expenses Financial net income (13673283) (2756864) Including: Interest expenses 2019519 3184460 Interest income 21038636 10213608 Add: Other income 954175 3219830 Investment income XVII.5 368167007 439250529 Credit Impairment losses (245) - Asset Impairment losses (6014534) (42274055) Proceeds from the disposal of 135896203- assets II. Operating profit 489887921 425130854 Add: Non-operating income 1246114 386193 Less: Non-operating expenses 2409239 1258048 The notes on pages 20 to 115 form part of these financial statements. 10Yantai Changyu Pioneer Wine Company Limited Company income statement for the year ended 31 December 2024 (continued) (Expressed in Renminbi Yuan) Note 2024 2023 III. Profit before income tax 488724796 424258999 Less: Income tax expenses 3458480 12118898 IV. Net profit 485266316 412140101 (i) Net profit from continuing 485266316412140101 operations (ii) Net profit from discontinued -- operations V. Other comprehensive income net of -- tax VI. Total comprehensive income for the 485266316412140101 year These financial statements were approved by the Board of Directors of the Company on 16 April 2025. .Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp) Legal Representative The person in charge The head of the of accounting affairs accounting department (Signature and stamp) (Signature and stamp) (Signature and stamp) The notes on pages 20 to 115 form part of these financial statements. 11Yantai Changyu Pioneer Wine Company Limited Consolidated cash flow statement for the year ended 31 December 2024 (Expressed in Renminbi Yuan) Note 2024 2023 I. Cash flows from operating activities: Proceeds from sale of goods and 35371138664362027268 rendering of services Refund of taxes 55276632 37827698 Proceeds from other operating V.50(1) 81036973 219385622 activities Sub-total of cash inflows 3673427471 4619240588 Payment for goods and services 1432909914 1368282215 Payment to and for employees 497180417 491419621 Payment of various taxes 704434463 910748260 Payment for other operating activities V.50(1) 641161610 675698749 Sub-total of cash outflows 3275686404 3446148845 Net cash flows from operating V.51(1) 397741067 1173091743 activities II. Cash flows from investing activities: Proceeds from disposal of V.50(2) 464200000 238200000 investments Investment returns received 4936198 3196066 Net proceeds from disposal of fixed assets intangible assets and other 42303732 10529793 long-term assets Net proceeds from disposal of -20308625 subsidiaries and other business units Net proceeds from acquisition of -657049 subsidiaries and other business units Sub-total of cash inflows 511439930 272891533 Payment for acquisition of fixed assets intangible assets and other 94561357 132032219 long-term assets Payment for acquisition of 289650000464200000 investments Sub-total of cash outflows 384211357 596232219 Net cash flows from investing 127228573(323340686) activities The notes on pages 20 to 115 form part of these financial statements. 12Yantai Changyu Pioneer Wine Company Limited Consolidated cash flow statement for the year ended 31 December 2024 (continued) (Expressed in Renminbi Yuan) Note 2024 2023 III. Cash flows from financing activities: ? Proceeds from investors - 103411919 Proceeds from borrowings 507959260 573859507 Sub-total of cash inflows 507959260 677271426 Repayments of borrowings 670128889 768253239 Payment for dividends profit 377462001341454132 distributions or interest Payment for other financing activities V.50(3) 227313486 67229123 Sub-total of cash outflows 1274904376 1176936494 Net cash flows from financing (766945116)(499665068) activities IV. Effect of foreign exchange rate changes on cash and cash (3452725) 316163 equivalents V. Net (decrease)/increase in cash and V.51(1) (245428201) 350402152 cash equivalents Add: Cash and cash equivalents at 19631557521612753600 the beginning of the year VI. Cash and cash equivalents at the V.51(2) 1717727551 1963155752 end of the year These financial statements were approved by the Board of Directors of the Company on 16 April 2025. .Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp) Legal Representative The person in charge The head of the of accounting affairs accounting department (Signature and stamp) (Signature and stamp) (Signature and stamp) The notes on pages 20 to 115 form part of these financial statements. 13Yantai Changyu Pioneer Wine Company Limited Company cash flow statement for the year ended 31 December 2024 (Expressed in Renminbi Yuan) Note 2024 2023 I. Cash flows from operating activities: Proceeds from sale of goods and 669302405673455798 rendering of services Proceeds from other operating 1479948412473241 activities Sub-total of cash inflows 684101889 685929039 Payment for goods and services 452049677 611290566 Payment to and for employees 55724885 60646447 Payment of various taxes 41659134 62523754 Payment for other operating activities 20393900 28861990 Sub-total of cash outflows 569827596 763322757 Net cash flows from operating 114274293(77393718) activities II. Cash flows from investing activities: Proceeds from disposal of 464200000262833449 investments Investment returns received 243103205 729828424 Net proceeds from disposal of fixed assets intangible assets and other 1190693 576150 long-term assets Net proceeds from disposal of subsidiaries and other business - 17965519 units Proceeds from borrowings to 14000000010000000 subsidiaries Sub-total of cash inflows 848493898 1021203542 Payment for acquisition of fixed assets intangible assets and other 5532306 7116731 long-term assets Payment for acquisition of 288650000478823400 investments Net payment for acquisition of subsidiaries and other business 65506916 5537700 units Cash paid to subsidiaries 205200000 94230000 Sub-total of cash outflows 564889222 585707831 Net cash flows from investing 283604676435495711 activities The notes on pages 20 to 115 form part of these financial statements. 14Yantai Changyu Pioneer Wine Company Limited Company cash flow statement for the year ended 31 December 2024 (continued) (Expressed in Renminbi Yuan) Note 2024 2023 III. Cash flows from financing activities: Proceeds from investors - 103411919 Proceeds from borrowings 50000000 100000000 Sub-total of cash inflows 50000000 203411919 Repayments of borrowings 100000000 100000000 Payment for dividends or interest 347931466 311643260 Payment for other financing activities 190324198 4956105 Sub-total of cash outflows 638255664 416599365 Net cash flows from financing (588255664)(213187446) activities IV. Effect of foreign exchange rate changes on cash and cash -? - equivalents V. Net (decrease)/increase in cash and (190376695)144914547 cash equivalents Add: Cash and cash equivalents at 988284544843369997 the beginning of the year VI. Cash and cash equivalents at the 797907849988284544 end of the year These financial statements were approved by the Board of Directors of the Company on 16 April 2025. .Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp) Legal Representative The person in charge The head of the of accounting affairs accounting department (Signature and stamp) (Signature and stamp) (Signature and stamp) The notes on pages 20 to 115 form part of these financial statements. 15Yantai Changyu Pioneer Wine Company Limited Consolidated statement of changes in shareholders’ equity for the year ended 31 December 2024 (Expressed in Renminbi Yuan) Attributable to shareholders of the Company Total Other Non-controlling Note Less:Treasury Retained shareholders’ Share capital Capital reserve comprehensive Surplus reserve Sub-total interests stock earnings equity income I. Balance at the beginning of the year 692249559 651086707 (103411919) (14784677) 342732000 9273629318 10841500988 149024807 10990525795 II. Changes in equity during the year ? ? ? ? ? ? ? ? 1. Total comprehensive income - - - (24930295)? -? 305210999? 280280704? 6848658? 287129362? 2. Shareholders’ contributions and decrease of capital (1). Effects of restricted share V.31 (425666) (10077952) 32707493 - - - 22203875 - 22203875 incentive plan (2). Acquisition of non- VIII.2 - (780883) - - - - (780883) (1102655) (1883538) controlling interests (3)Effects of share repurchased V.32 (19999993) (158084325) - - - - (178084318) - (178084318) 3. Appropriation of profits ? ? ? ? ? ? ? ? Distributions to shareholders V.36 - - - - - (345911947) (345911947) (1424666) (347336613) III. Balance at the end of the year 671823900 482143547 (70704426) (39714972) 342732000 9232928370 10619208419 153346144 10772554563 These financial statements were approved by the Board of Directors of the Company on 16 April 2025. .Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp) Legal Representative The person in charge of The head of the accounting accounting affairs department (Signature and stamp) (Signature and stamp) (Signature and stamp) The notes on pages 20 to 115 form part of these financial statements. 16Yantai Changyu Pioneer Wine Company Limited Consolidated statement of changes in shareholders’ equity (continued) for the year ended 31 December 2023 (Expressed in Renminbi Yuan) Attributable to shareholders of the Company Total Other Non-controlling Note Less:Treasury Retained shareholders’ Share capital Capital reserve comprehensive Surplus reserve Sub-total interests stock earnings equity income I. Balance at the beginning of the year 685464000 524968760 - (23760238) 342732000 9049649211 10579053733 246526561 10825580294 II. Changes in equity during the year ? ? ? ? ? ? ? ? 1. Total comprehensive income - - - 8975561 - 532438907 541414468 (5862264) 535552204 2. Shareholders’ contributions and decrease of capital (1). Effects of restricted share V.31 6785559 127362115 (103411919) - - - 30735755 - 30735755 incentive plan (2). Acquisition of non- VIII.2 - (1244168) - - - - (1244168) (31502609) (32746777) controlling interests 3. Appropriation of profits ? ? ? ? ? ? ? ? Distributions to shareholders V.36 - - - - - (308458800) (308458800) (1538316) (309997116) 4. Others Disposal of equities in subsidiaries - - - - - - - (58598565) (58598565) III. Balance at the end of the year 692249559 651086707 (103411919) (14784677) 342732000 9273629318 10841500988 149024807 10990525795 These financial statements were approved by the Board of Directors of the Company on 16 April 2025. .Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp) Legal Representative The person in charge of The head of the accounting accounting affairs department (Signature and stamp) (Signature and stamp) (Signature and stamp) The notes on pages 20 to 115 form part of these financial statements. 17Yantai Changyu Pioneer Wine Company Limited Company statement of changes in shareholders’ equity for the year ended 31 December 2024 (Expressed in Renminbi Yuan) Total Less:Treasury Retained Note Share capital Capital reserve Surplus reserve shareholders’ stock earnings equity I. Balance at the beginning 692249559687544350(103411919)342732000968654131511305655305 of the year II. Changes in equity during ????? the year 1. Total comprehensive -?-?--?485266316485266316 income 2. Contributions by owners (1) Effects of (425666) (10077952) 32707493 -? -? 22203875 restricted share incentive plan (2) Effects of share (19999993) (158084325) -? -? -? (178084318) repurchased 3. Appropriation of ????? profits Distributions to -?-?-?-?(345911947)(345911947) shareholders III. Balance at the end of the 671823900519382073(70704426)342732000982589568411289129231 year These financial statements were approved by the Board of Directors of the Company on 16 April 2025. .Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp) Legal Representative The person in charge The head of the of accounting affairs accounting department (Signature and stamp) (Signature and stamp) (Signature and stamp) The notes on pages 20 to 115 form part of these financial statements. 18Yantai Changyu Pioneer Wine Company Limited Company statement of changes in shareholders’ equity for the year ended 31 December 2023 (continued) (Expressed in Renminbi Yuan) Total Less:Treasury Retained Note Share capital Capital reserve Surplus reserve shareholders’ stock earnings equity I. Balance at the beginning 685464000560182235-342732000958286001411171238249 of the year II. Changes in equity during ????? the year 1. Total comprehensive ----412140101412140101 income 2. Contribution by owners (1) Effects of restricted share 6785559 127362115 (103411919) - - 30735755 incentive plan 3. Appropriation of ????? profits Distributions to ----(308458800)(308458800) shareholders III. Balance at the end of the 692249559687544350(103411919)342732000968654131511305655305 year These financial statements were approved by the Board of Directors of the Company on 16 April 2025. .Zhou Hongjiang Jiang Jianxun Guo Cuimei (Company stamp) Legal Representative The person in charge The head of the of accounting affairs accounting department (Signature and stamp) (Signature and stamp) (Signature and stamp) The notes on pages 20 to 115 form part of these financial statements. 19Yantai Changyu Pioneer Wine Company Limited Notes to the financial statements (Expressed in Renminbi Yuan unless otherwise indicated) I. Company status Yantai Changyu Pioneer Wine Co. Ltd. (the “Company” or the “Joint Stock Company”) was incorporated as a joint stock limited company in accordance with the Company Law of the People’s Republic of China (the “PRC”) in a reorganisation carried out by Yantai Changyu Group Co. Ltd. (“Changyu Group”) in which Changyu Group Company injected certain assets and liabilities in relation to the wine brandy 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 2024 the total shares issued by the Company amounts to 671823900 shares. Please refer to Note V. 31 in detail.The holding company of the Group is Changyu Group Company which is jointly controlled by Yantai GuoFeng Investment Holding Ltd. ILLVA SARONNO HOLDING SPA International Finance Corporation and Yantai Yuhua Investment and Development Company Limited.The financial statements have been authorised by the board of directors on 16 April 2025.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.II. Basis of preparation The financial statements have been prepared on the going concern basis.III. Significant accounting policies and accounting estimates 1 Statement of compliance The financial statements have been prepared in accordance with the requirements of Accounting Standards for Business Enterprises or referred to as China Accounting Standards (“CAS”) issued by the MOF. These financial statements present truly and completely the consolidated financial position and financial position of the Company as at 31 December 2024 and the consolidated financial performance and financial performance and the consolidated cash flows and cash flows of the Company for the year then ended.These financial statements also comply with the disclosure requirements of “Regulation onthe Preparation of Information Disclosures by Companies Issuing Securities No. 15: GeneralRequirements for Financial Reports” as revised by the China Securities Regulatory Commission (“CSRC”) in 2024. 20Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 2 Accounting period The accounting period is from 1 January to 31 December. 3 Operating cycle The Company takes the period from the acquisition of assets for processing to until the ultimate realisation of cash or cash equivalents as a normal operating cycle. The operating cycle of the Company is 12 months. 4 Functional currency Renminbi (“RMB”) is the currency of the primary economic environment in which the Company and its domestic subsidiaries operate. Therefore the Company and its domestic subsidiaries choose RMB as their functional currency. Overseas subsidiaries of the Company adopt Euro Chilean Peso and Australian Dollar as their functional currencies on the basis of the primary economic environment in which they operate. The Company adopts RMB to prepare its financial statements. The foreign currency financial statements of overseas subsidiaries have been translated based on the accounting policy set out in Note III.9 in preparing these financial statements. 5 Method used to determine the materiality threshold and the basis for selection Item Materiality threshold Amount of the individual other payables/accounts payable with Significant other payables/accounts payable with ageing ageing of more than 1 year of more than one year exceeds 0.5% of the Group’s total liabilities Carrying amount of the individual construction in progress exceeds Significant construction projects in progress 0.5% of the Group’s total non- current assets Carrying amount of net assets attributable to non-controlling Significant non-wholly-owned subsidiaries shareholders of the non-wholly- owned subsidiaries exceeds 0.5% of the Group’s net assets The carrying amount of long-term equity investments of an Significant joint arrangements or associates individual joint arrangement or an associate exceeds 0.5% of the Group’s net assets Amount of the individual cash Significant investing and financing activities not requiring flow exceeds exceeds 0.5% of the use of cash the Group’s total assets 6 Accounting treatments for business combinations involving entities under common control and not under common control A transaction constitutes a business combination when the Group obtains control of one or more entities (or a group of assets or net assets). Business combination is classified as 21Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 either business combinations involving enterprises under common control or business combinations not involving enterprises under common control.For a transaction not involving enterprises under common control the acquirer determines whether acquired set of assets constitute a business. The Group may elect to apply the simplified assessment method the concentration test to determine whether an acquired set of assets is not a business. If the concentration test is met and the set of assets is determined not to be a business no further assessment is needed. If the concentration test is not met the Group shall perform the assessment according to the guidance on the determination of a business.When the set of assets the group acquired does not constitute a business acquisition costs should be allocated to each identifiable assets and liabilities at their acquisition?date fair values. It is not required to apply the accounting of business combination described as below. (1) Business combinations involving entities under common control A business combination involving entities under common control is a business combination in which all of the combining entities are ultimately controlled by the same party or parties both before and after the business combination and that control is not transitory. The assets acquired and liabilities assumed are measured based on their carrying amounts in the consolidated financial statements of the ultimate controlling party at the combination date.The difference between the carrying amount shares of the net assets acquired and the consideration paid for the combination (or the total par value of shares issued) is adjusted against share premium in the capital reserve with any excess adjusted against the surplus reserves and retained earnings sequentially. Any costs directly attributable to the combination are recognised in profit or loss when incurred. The combination date is the date on which one combining entity obtains control of other combining entities. (2) Business combinations involving entities not under common control A business combination involving entities not under common control is a business combination in which all of the combining entities are not ultimately controlled by the same party or parties both before and after the business combination. Where (1) the aggregate of the acquisition-date fair value of assets transferred (including the acquirer’s previously held equity interest in the acquiree) liabilities incurred or assumed and equity securities issued by the acquirer in exchange for control of the acquiree exceeds (2) the acquirer’s interest in the acquisition-date fair value of the acquiree’s identifiable net assets after considering the impact of relevant deferred income tax the difference is recognised as goodwill (see Note III.19). If (1) is less than (2) the difference is recognised in profit or loss for the current period. Other acquisition-related costs are expensed when incurred. The acquiree’s identifiable asset liabilities and contingent liabilities if the recognition criteria are met are recognised by the Group at their acquisition-date fair value. The acquisition date is the date on which the acquirer obtains control of the acquiree.For a business combination involving entities not under common control and achieved in stages the Group remeasures its previously-held equity interest in the acquiree to its acquisition-date fair value and recognises any resulting difference between the fair value and the carrying amount as investment income or other comprehensive income for the current period. In addition any amount recognised in other comprehensive income that may be reclassified to profit or loss in prior reporting periods relating to the previously-held equity interest and any other changes in the owners’ equity under equity accounting are 22Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 transferred to investment income in the period in which the acquisition occurs (see Note III.12(2)(b)). If equity interests of the acquiree held before acquisition-date were equity instrument investments measured at fair value through other comprehensive income other comprehensive income recognised shall be moved to retained earnings on acquisition-date. 7 Criteria of control and preparation of consolidated financial statements (1) General principles The scope of consolidated financial statements is based on control and the consolidated financial statements comprise the Company and its subsidiaries. Control exists when the investor has all of following: power over the investee; exposure or rights to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. When assessing whether the Group has power only substantive rights (held by the Group and other parties) are considered. The financial position financial performance and cash flows of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Non- controlling interests are presented separately in the consolidated balance sheet within shareholders’ equity. Net profit or loss attributable to non-controlling shareholders is presented separately in the consolidated income statement below the net profit line item.Total comprehensive income attributable to non-controlling shareholders is presented separately in the consolidated income statement below the total comprehensive income line item.When the amount of loss for the current period attributable to the non-controlling shareholders of a subsidiary exceeds the non-controlling shareholders’ share of the opening owners’ equity of the subsidiary the excess is still allocated against the non-controlling interests.When the accounting period or accounting policies of a subsidiary are different from those of the Company the Company makes necessary adjustments to the financial statements of the subsidiary based on the Company’s own accounting period or accounting policies. Intra- group balances and transactions and any unrealised profit or loss arising from intra-group transactions are eliminated when preparing the consolidated financial statements.Unrealised losses resulting from intra-group transactions are eliminated in the same way as unrealised gains unless they represent impairment losses that are recognised in the financial statements. (2) Subsidiaries acquired through a business combination Where a subsidiary was acquired during the reporting period through a business combination involving entities under common control the financial statements of the subsidiary are included in the consolidated financial statements based on the carrying amounts of the assets and liabilities of the subsidiary in the financial statements of the ultimate controlling party as if the combination had occurred at the date that the ultimate controlling party first obtained control. The opening balances and the comparative figures of the consolidated financial statements are also restated.Where a subsidiary was acquired during the reporting period through a business combination involving entities not under common control the identifiable assets and liabilities of the acquired subsidiaries are included in the scope of consolidation from the date that control commences based on the fair value of those identifiable assets and liabilities at the acquisition date. 23Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 (3) Disposal of subsidiaries When the Group loses control over a subsidiary any resulting disposal gains or losses are recognised as investment income for the current period. The remaining equity investment is re-measured at its fair value at the date when control is lost any resulting gains or losses are also recognised as investment income for the current period.When the Group loses control of a subsidiary in multiple transactions in which it disposes of its long-term equity investment in the subsidiary in stages the following are considered to determine whether the Group should account for the multiple transactions as a bundled transaction: - arrangements are entered into at the same time or in contemplation of each other; - arrangements work together to achieve an overall commercial effect; - the occurrence of one arrangement is dependent on the occurrence of at least one other arrangement; - one arrangement considered on its own is not economically justified but it is economically justified when considered together with other arrangements.If each of the multiple transactions does not form part of a bundled transaction the transactions conducted before the loss of control of the subsidiary are accounted for in accordance with the accounting policy for partial disposal of equity investment in subsidiaries where control is retained (see Note III.7(4)).If each of the multiple transactions forms part of a bundled transaction which eventually results in the loss of control in the subsidiary these multiple transactions are accounted for as a single transaction. In the consolidated financial statements the difference between the consideration received and the corresponding proportion of the subsidiary’s net assets (calculated continuously from the acquisition date) in each transaction prior to the loss of control shall be recognised in other comprehensive income and transferred to profit or loss when the parent eventually loses control of the subsidiary. (4) Changes in non-controlling interests Where the Company acquires a non-controlling interest from a subsidiary’s non-controlling shareholders or disposes of a portion of an interest in a subsidiary without a change in control the difference between the proportion interests of the subsidiary’s net assets being acquired or disposed and the amount of the consideration paid or received is adjusted to the capital reserve (share premium) in the consolidated balance sheet with any excess adjusted to the surplus reserves and retained earnings sequentially. 8 Cash and cash equivalents Cash and cash equivalents comprise cash on hand deposits that can be readily withdraw on demand and short-term highly liquid investments that are readily convertible into known amounts of cash and are subject to an insignificant risk of change in value. 9 Foreign currency transactions and translation of foreign currency financial statements When the Group receives capital in foreign currencies from investors the capital is translated to Renminbi at the spot exchange rate at the date of the receipt. Other foreign currency transactions are on initial recognition translated to Renminbi at the spot exchange rates. 24Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 Monetary items denominated in foreign currencies are translated to Renminbi at the spot exchange rate at the balance sheet date. The resulting exchange differences are generally recognised in profit or loss unless they arise from the re-translation of the principal and interest of specific borrowings for the acquisition and construction of qualifying assets (see Note III. 16). Non-monetary items that are measured at historical cost in foreign currencies are translated to Renminbi using the exchange rate at the transaction date.In translating the financial statements of a foreign operation assets and liabilities of foreign operation are translated to Renminbi at the spot exchange rate at the balance sheet date.Equity items excluding retained earnings and the translation differences in other comprehensive income are translated to Renminbi at the spot exchange rates at the transaction dates. Income and expenses in the income statement are translated to Renminbi at the spot exchange rates at the transaction dates. The resulting translation differences are recognised in other comprehensive income. The translation differences accumulated in other comprehensive income with respect to a foreign operation are transferred to profit or loss in the period when the foreign operation is disposed. 10 Financial instruments Financial instruments include cash at bank and on hand investments in debt and equity securities other than those classified as long-term equity investments (see Note III.12) receivables payables and borrowings and share capital. (1) Recognition and initial measurement of financial assets and financial liabilities A financial asset or financial liability is recognised in the balance sheet when the Group becomes a party to the contractual provisions of a financial instrument.A financial assets and financial liabilities is measured initially at fair value. For financial assets and financial liabilities at fair value through profit or loss any related directly attributable transaction costs are charged to profit or loss; for other categories of financial assets and financial liabilities any related directly attributable transaction costs are included in their initial costs. A trade receivable without significant financing component or practical expedient applied for one year or less contracts is initially measured at the transaction price in accordance with Note III.25. (2) Classification and subsequent measurement of financial assets (a) Classification of financial assets The classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. On initial recognition a financial asset is classified as measured at amortised cost at fair value through other comprehensive income (“FVOCI”) or at fair value through profit or loss (“FVTPL”).Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model. 25Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL: - it is held within a business model whose objective is to hold assets to collect contractual cash flows; and - its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL: - it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and - its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.On initial recognition of an equity investment that is not held for trading the Group may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an investment-by-investment basis.The instrument meets the definition of equity from the perspective of the issuer.All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. On initial recognition the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.The business model refers to how the Group manages its financial assets in order to generate cash flows. That is the Group’s business model determines whether cash flows will result from collecting contractual cash flows selling financial assets or both.The Group determines the business model for managing the financial assets according to the facts and based on the specific business objective for managing the financial assets determined by the Group’s key management personnel.In assessing whether the contractual cash flows are solely payments of principal and interest the Group considers the contractual terms of the instrument. For the purposes of this assessment ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs as well as a profit margin.The Group also assesses whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition.(b) Subsequent measurement of financial assets - Financial assets at FVTPL These financial assets are subsequently measured at fair value. Net gains and losses including any interest or dividend income are recognised in profit or loss unless the financial assets are part of a hedging relationship. 26Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 - Financial assets at amortised cost These assets are subsequently measured at amortised cost using the effective interest method. A gain or loss on a financial asset that is measured at amortised cost and is not part of a hedging relationship shall be recognised in profit or loss when the financial asset is derecognised reclassified through the amortisation process or in order to recognise impairment gains or losses.- Debt investments at FVOCI These assets are subsequently measured at fair value. Interest income calculated using the effective interest method impairment and foreign exchange gains and losses are recognised in profit or loss. Other net gains and losses are recognised in other comprehensive income. On derecognition gains and losses accumulated in other comprehensive income are reclassified to profit or loss.- Equity investments at FVOCI These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss. Other net gains and losses are recognised in other comprehensive income. On derecognition gains and losses accumulated in other comprehensive income are reclassified to retained earnings. (3) Classification and subsequent measurement of financial liabilities Financial liabilities are classified as measured at FVTPL or amortised cost by the Group.- Financial liabilities at FVTPL A financial liability is classified as at FVTPL if it is classified as held-for-trading (including derivative financial liability) or it is designated as such on initial recognition.Financial liabilities at FVTPL are subsequently measured at fair value and net gains and losses including any interest expense are recognised in profit or loss unless the financial liabilities are part of a hedging relationship.- Financial liabilities at amortised cost These financial liabilities are subsequently measured at amortised cost using the effective interest method. (4) Offsetting Financial assets and financial liabilities are generally presented separately in the balance sheet and are not offset. However a financial asset and a financial liability are offset and the net amount is presented in the balance sheet when both of the following conditions are satisfied: - The Group currently has a legally enforceable right to set off the recognised amounts; - The Group intends either to settle on a net basis or to realise the financial asset and settle the financial liability simultaneously. 27Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 (5) Derecognition of financial assets and financial liabilities Financial asset is derecognised when one of the following conditions is met: - the Group’s contractual rights to the cash flows from the financial asset expire; - the financial asset has been transferred and the Group transfers substantially all of the risks and rewards of ownership of the financial asset; or; - the financial asset has been transferred although the Group neither transfers nor retains substantially all of the risks and rewards of ownership of the financial asset it does not retain control over the transferred asset.Where a transfer of a financial asset in its entirety meets the criteria for derecognition the difference between the two amounts below is recognised in profit or loss: - the carrying amount of the financial asset transferred measured at the date of derecognition; - the sum of the consideration received from the transfer and when the transferred financial asset is a debt investment at FVOCI any cumulative gain or loss that has been recognised directly in other comprehensive income for the part derecognised.The Group derecognises a financial liability (or part of it) only when its contractual obligation (or part of it) is extinguished. (6) Impairment The Group recognises loss allowances for expected credit loss (ECL) on: - financial assets measured at amortised cost; - financial investments at fair value through other comprehensive income.Financial assets measured at fair value including debt investments or equity securities at FVPL equity securities designated at FVOCI and derivative financial assets are not subject to the ECL assessment.Measurement of ECLs ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive).The maximum period considered when estimating ECLs is the maximum contractual period (including extension options) over which the Group is exposed to credit risk.Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument. 12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the balance sheet date (or a shorter period if the expected life of the instrument is less than 12 months). 28Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 Loss allowances for bills receivable accounts receivable and receivables under financing arising from oridinary business activities such as sale of goods and provision of services are always measured at an amount equal to lifetime ECLs. ECLs on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience adjusted for factors that are specific to the debtors and an assessment of both the current and forecast general economic conditions at the balance sheet date.Except for bills receivable accounts receivable receivables under financing the Group measures loss allowances at an amount equal to 12-month ECLs for the following financial instruments and at an amount equal to lifetime ECLs for all other financial instruments: - If the financial instrument is determined to have low credit risk at the balance sheet date; - If the credit risk on a financial instrument has not increased significantly since initial recognition.Provisions for bad and doubtful debts arising from receivables (a) Categories of groups for collective assessment based on credit risk characteristics and basis for determination Based on the different credit risk characteristics of acceptors Bills receivable the Group classifies bills receivable into two groups: bank acceptance bills and commercial acceptance bills.Historically there is no significant difference in terms of occurrence of losses among different customer types for the Group. Therefore the Group makes provisions for bad and Accounts receivable doubtful debts arising from accounts receivable on the basis of all customers being one group without further segmentation by different customer types.The Group’s receivables under financing are bank Receivables under acceptance bills held for dual purposes. As the accepting financing banks have high credit ratings the Group considers all receivables under financing as a group.The Group’s other receivables mainly include deposits and guarantees receivableect. Based on the nature of receivables and the credit risk characteristics of different Other receivables counterparties the Group classifies other receivables into 2 groups specifically: the group of deposits and guarantees receivable and the group of other receivables. 29Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 (b) Criteria for individual assessment Bills receivable accounts receivable receivables under financing and other receivables are usually assessed collectively as a group based on credit risk characteristics to make provisions. When a counterparty is significantly different from other counterparties in the group in terms of credit risk characteristics or if there has been a significant change in its credit risk characteristics the individual approach is adopted for receivables due from this counterparty. For example when a counterparty is in serious financial difficulties and the expected credit loss ratio of receivables due from this counterparty is significantly higher than the average expected credit loss ratio of the relevant ageing range it should be individualy assessed for provisioning purposes.Financial instruments that have low credit risk The credit risk on a financial instrument is considered low if the financial instrument has a low risk of default the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and adverse changes in economic and business conditions in the longer term may but will not necessarily reduce the ability of the borrower to fulfil its contractual cash flow obligations.Significant increases in credit risk In assessing whether the credit risk of a financial instrument has increased significantly since initial recognition the Group compares the risk of default occurring on the financial instrument assessed at the balance sheet date with that assessed at the date of initial recognition.When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL the Group considers reasonable and supportable information that is relevant and available without undue cost or effort including forward-looking information. In particular the following information is taken into account: - failure to make payments of principal and interest on their contractual due dates; - an actual or expected significant deterioration in a financial instrument’s external or internal credit rating (if available); - an actual or expected significant deterioration in the operating results of the debtor; and - existing or forecast changes in the technological market economic or legal environment that have a significant adverse effect on the debtor’s ability to meet its obligation to the Group.The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. 30Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 Credit-impaired financial assets At each balance sheet date the Group assesses whether financial assets carried at amortised cost and debt investments at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data: - significant financial difficulty of the borrower or issuer; - a breach of contract such as a default or delinquency in interest or principal payments; - for economic or contractual reasons relating to the borrower’s financial difficulty the Group having granted to the borrower a concession that would not otherwise consider; - it is probable that the borrower will enter bankruptcy or other financial reorganisation; or - the disappearance of an active market for that financial asset because of financial difficulties.Presentation of allowance for ECL ECLs are remeasured at each balance sheet date to reflect changes in the financial instrument’s credit risk since initial recognition. Any change in the ECL amount is recognised as an impairment gain or loss in profit or loss. The Group recognises an impairment gain or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account except for debt investments that are measured at FVOCI for which the loss allowance is recognised in other comprehensive income.Write-off The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. A write-off constitutes a derecognition event. This is generally the case when the Group determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.Subsequent recoveries of an asset that was previously written off are recognised as a reversal of impairment in profit or loss in the period in which the recovery occurs. (7) Equity instrument The consideration received from the issuance of equity instruments net of transaction costs is recognised at the actual issue price in shareholders’ equity relevant transaction costs are deducted from shareholders’ equity (capital reserve) with any excess deducted from surplus reserve and retained earnings sequentially. Consideration and transaction costs paid by the Company for repurchasing self-issued equity instruments are deducted from shareholders’ equity.When the Company repurchases its own shares those shares are treated as treasury shares. All expenditure relating to the repurchase is recorded in the cost of the treasury shares with the transaction recording in the share register. Treasury shares are excluded from profit distributions and are presented as a deduction under shareholders’ equity in the balance sheet. 31Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 When treasury shares are cancelled the share capital should be reduced to the extent of the total par value of the treasury shares cancelled. Where the cost of the treasury shares cancelled exceeds the total par value the excess is deducted from capital reserve (share premium) surplus reserve and retained earnings sequentially. If the cost of treasury shares cancelled is less than the total par value the difference is credited to the capital reserve (share premium). 11 Inventories (1) Categories Inventories 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 expenditure incurred in bringing the inventories to their present location and condition. In addition to the purchase cost of raw materials work in progress and finished goods include direct labour costs and an appropriate allocation of production overheads based on normal capacity.Agricultural products harvested are reported in accordance with the CAS No.1 - Inventories. (2) Measurement method of cost of inventories Cost of inventories is calculated using the weighted average method. (3) Inventory count system The Group maintains a perpetual inventory system. (4) Amortisation method for low-value consumables and packaging materials Consumables including low-value consumables and packaging materials are charged to profit or loss upon receipt. The amortisation charge is included in the cost of the related assets or recognised in profit or loss for the current period. (5) Criteria and method for provision for obsolete inventories At the balance sheet date inventories are carried at the lower of cost and net realisable value.Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale and relevant taxes. The net realisable value of materials held for use in production is measured based on the net realisable value of the finished goods in which they will be incorporated.The net realisable value of inventory held to satisfy sales or service contracts is measured based on the contract price. If the quantities of inventories held by the Group exceed the quantities specified in sales contracts the net realisable value of the excess portion of inventories is based on general selling prices.Any excess of the cost over the net realisable value of each item of inventories is recognised as a provision for obsolete inventories and is recognised in profit or loss. 32Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 12 Long-term equity investments (1) Investment cost of long-term equity investments (a) Long-term equity investments acquired through a business combination - The initial cost of a long-term equity investment acquired through a business combination involving entities under common control is the Company’s share of the carrying amount of the subsidiary’s equity in the consolidated financial statements of the ultimate controlling party at the combination date. The difference between the initial investment cost and the carrying amount of the consideration given is adjusted to the share premium in the capital reserve with any excess adjusted to the surplus reserves and retained earnings sequentially. For a long-term equity investment in a subsidiary acquired through a business combination achieved in stages which do not form a bundled transaction and involving entities under common control the Company determines the initial cost of the investment in accordance with the above policies. The difference between this initial cost and the sum of the carrying amount of previously-held investment and the consideration paid for the shares newly acquired is adjusted to capital premium in the capital reserve with any excess adjusted to the surplus reserves and retained earnings sequentially.- For a long-term equity investment obtained through a business combination not involving enterprises under common control the initial cost comprises the aggregate of the fair value of assets transferred liabilities incurred or assumed and equity securities issued by the Company in exchange for control of the acquiree. For a long-term equity investment obtained through a business combination not involving entities under common control and achieved through multiple transactions in stages which do not form a bundled transaction the initial cost comprises the carrying amount of the previously-held equity investment in the acquiree immediately before the acquisition date and the additional investment cost at the acquisition date.(b) Long-term equity investments acquired other than through a business combination - A long-term equity investment acquired other than through a business combination is initially recognised at the amount of cash paid if the Group acquires the investment by cash or at the fair value of the equity securities issued if an investment is acquired by issuing equity securities. (2) Subsequent measurement of long-term equity investment (a) Investments in subsidiaries In the Company’s separate financial statements long-term equity investments in subsidiaries are accounted for using the cost method unless the investment is classified as held for sale (See Note III. 31). Except for cash dividends or profit distributions declared but not yet distributed that have been included in the price or consideration paid in obtaining the investments the Company recognises its share of the cash dividends or profit distributions declared by the investee as investment income for the current period.The investments in subsidiaries are stated in the balance sheet at cost less accumulated impairment losses. 33Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 For the impairment of the investments in subsidiaries refer to Note III.21.In the Group’s consolidated financial statements subsidiaries are accounted for in accordance with the policies described in Note III.7.(b) Investment in joint ventures and associates A joint venture is an arrangement whereby the Group and other parties have joint control (see Note III.12(3)) and rights to the net assets of the arrangement.Associated enterprises refer to enterprises to which the Group can exercise significant influence (see Note III.12(3)).A long-term equity investment in a joint venture or an associate is accounted for using the equity method for subsequent measurement unless the investment is classified as held for sale (see Note III.31).The accounting treatments under the equity method adopted by the Group are as follows: - Where the initial cost of a long-term equity investment exceeds the Group’s interest in the fair value of the investee’s identifiable net assets at the date of acquisition the investment is initially recognised at cost. Where the initial investment cost is less than the Group’s interest in the fair value of the investee’s identifiable net assets at the date of acquisition the investment is initially recognised at the investor’s share of the fair value of the investee’s identifiable net assets and the difference is recognised in profit or loss.- After the acquisition of the investment the Group recognises its share of the investee’s profit or loss and other comprehensive income as investment income or losses and other comprehensive income respectively and adjusts the carrying amount of the investment accordingly. Once the investee declares any cash dividends or profit distributions the carrying amount of the investment is reduced by the amount attributable to the Group. Changes in the Group’s share of the investee’s owners’ equity other than those arising from the investee’s net profit orloss other comprehensive income or profit distribution (referred to as “otherchanges in owners’ equity”) is recognised directly in the Group’s equity and the carrying amount of the investment is adjusted accordingly.- In calculating its share of the investee’s net profits or losses other comprehensive income and other changes in owners’ equity the Group recognises investment income and other comprehensive income after making appropriate adjustments to align the accounting policies or accounting periods with those of the Group based on the fair value of the investee’s identifiable net assets at the date of acquisition.Unrealised profits and losses resulting from transactions between the Group and its associates or joint ventures are eliminated to the extent of the Group’s interest in the associates or joint ventures. Unrealised losses resulting from transactions between the Group and its associates or joint ventures are eliminated in the same way as unrealised gains but only to the extent that there is no impairment. 34Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 - The Group discontinues recognising its share of further losses of the investee after the carrying amount of the long-term equity investment and any long-term interest that in substance forms part of the Group’s net investment in the associate is reduced to zero except to the extent that the Group has an obligation to assume additional losses. If the joint venture or the associate subsequently reports net profits the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.For the impairment of the investments in joint ventures and associates refer to Note III.21. (3) Criteria for determining the existence of joint control over an investee Joint control is the contractually agreed sharing of control of an arrangement which exists only when decisions about the relevant activities (activities with significant impact on the returns of the arrangement) require the unanimous consent of the parties sharing control.The following factors are usually considered when assessing whether the Group can exercise joint control over an investee: - Whether no single participant party is in a position to control the investee’s related activities unilaterally; - Whether strategic decisions relating to the investee’s related activities require the unanimous consent of all participant parties that sharing of control.Significant influence is the power to participate in the financial and operating policy decisions of an investee but does not have control or joint control over those policies. 13 Investment properties Investment properties are properties held either to earn rental income or for capital appreciation or for both. Investment properties are accounted for using the cost model and stated in the balance sheet at cost less accumulated depreciation amortisation and impairment losses and adopts a depreciation or amortisation policy for the investment property which is consistent with that for buildings or land use rights unless the investment property is classified as held for sale (see Note III.31). For the impairment of the investment properties refer to Note III.21.Estimated useful Residual value rate Depreciation rate Category life (years) (%) (%) Plant and buildings 20 - 40 years 0 - 5% 2.4% - 5.0% 35Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 14 Fixed assets (1) Recognition of fixed assets Fixed assets represent the tangible assets held by the Group for use in production of goods supply of services for rental or for administrative purposes with useful lives over one accounting year.The cost of a purchased fixed asset comprises the purchase price related taxes and any directly attributable expenditure for bringing the asset to working condition for its intended use. The cost of self-constructed assets is measured in accordance with the policy set out in Note III.15.Where the parts of an item of fixed assets have different useful lives or provide benefits to the Group in a different pattern thus necessitating use of different depreciation rates or methods each part is recognised as a separate fixed asset.Any subsequent costs including the cost of replacing part of an item of fixed assets are recognised as assets when it is probable that the economic benefits associated with the costs will flow to the Group and the carrying amount of the replaced part is derecognised.The costs of the day-to-day maintenance of fixed assets are recognised in profit or loss as incurred.Fixed assets are stated in the balance sheet at cost less accumulated depreciation and impairment losses. (2) Depreciation of fixed assets The cost of a fixed asset less its estimated residual value and accumulated impairment losses is depreciated using the straight-line method over its estimated useful life unless the fixed asset is classified as held for sale (see Note III.31).The estimated useful lives residual value rates and depreciation rates of each class of fixed assets are as follows: Estimated useful Residual value rate Depreciation rate Class life (years) (%) (%) Plant and buildings 20 - 40 years 0 - 5% 2.4% - 5.0% Machinery equipment 5 - 30 years 0 - 5% 3.2% - 20.0% Motor vehicles 4 - 12 years 0 - 5% 7.9% - 25.0% Useful lives estimated residual values and depreciation methods are reviewed at least at each year-end. (3) For the impairment of the fixed assets refer to Note III.21. (4) Disposal of fixed assets The carrying amount of a fixed asset is derecognised: - when the fixed asset is holding for disposal; or - when no future economic benefit is expected to be generated from its use or disposal. 36Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 Gains or losses arising from the retirement or disposal of an item of fixed asset are determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognised in profit or loss on the date of retirement or disposal. 15 Construction in progress The cost of self-constructed assets includes the cost of materials direct labour capitalised borrowing costs (see Note III.16) and any other costs directly attributable to bringing the asset to working condition for its intended use.A self-constructed asset is classified as construction in progress and transferred to fixed asset when it is ready for its intended use. No depreciation is provided against construction in progress.Criteria and timing for the transfer to fixed assets： Category Criteria and timing for the transfer to fixed assets (1) The main construction projects and ancillary projects have been substantially completed; (2) the construction projects have been checked and accepted by the survey design construction and supervision units after meeting the pre-determined design requirements; (3) the construction projects have been checked and accepted by Plant and buildings external departments such as the fire department the land and resources department and the planning department; (4) if a construction project is available for its intended use but its final account has not yet been finalised the construction project will be transferred to fixed assets at its estimated value from the date it is available for its intended use based on the its estimated value of construction. (1) The relevant equipment and other supporting facilities have been installed; (2) the equipment can operate normally and stably for a period Machinery and after commissioning; equipment (3) the production equipment is capable of producing qualified products stably for a period; (4) the equipment has been checked and accepted by asset management personnel and users.Construction in progress is stated in the balance sheet at cost less accumulated impairment losses (see Note III.21).When an enterprise sells products or by-products produced before a fixed asset is available for its intended use the proceeds and related cost are accounted for in accordance with CAS 14 – Revenue and CAS 1 – Inventories respectively and recognised in profit or loss for the current period. 37Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 16 Borrowing costs Borrowing costs incurred directly attributable to the acquisition and construction or production of a qualifying asset are capitalised as part of the cost of the asset. Other borrowing costs are recognised as financial expenses when incurred.During the capitalisation period the amount of interest (including amortisation of any discount or premium on borrowing) to be capitalised in each accounting period is determined as follows: - Where funds are borrowed specifically for the acquisition and construction or production of a qualifying asset the amount of interest to be capitalised is the interest expense calculated using effective interest rates during the period less any interest income earned from depositing the borrowed funds or any investment income on the temporary investment of those funds before being used on the asset.- To the extent that the Group borrows funds generally and uses them for the acquisition and construction or production of a qualifying asset the amount of borrowing costs eligible for capitalisation is determined by applying a capitalisation rate to the weighted average of the excess amounts of cumulative expenditure on the asset over the above amounts of specific borrowings. The capitalisation rate is the weighted average of the interest rates applicable to the general-purpose borrowings.The effective interest rate is determined as the rate that exactly discounts estimated future cash flow through the expected life of the borrowing or when appropriate a shorter period to the initially recognised amount of the borrowings.During the capitalisation period exchange differences related to the principal and interest on a specific-purpose borrowing denominated in foreign currency are capitalised as part of the cost of the qualifying asset. The exchange differences related to the principal and interest on foreign currency borrowings other than a specific-purpose borrowing are recognised as a financial expense when incurred.The capitalisation period is the period from the date of commencement of capitalisation of borrowing costs to the date of cessation of capitalisation excluding any period over which capitalisation is suspended. Capitalisation of borrowing costs commences when expenditure for the asset is being incurred borrowing costs are being incurred and activities of acquisition construction or production that are necessary to prepare the asset for its intended use are in progress and ceases when the assets become ready for their intended use. Capitalisation of borrowing costs should cease when the qualifying asset being constructed or produced has reached its expected usable or saleable condition.Capitalisation of borrowing costs is suspended when the acquisition construction or production activities are interrupted abnormally for a period of more than three months. 17 Biological assets The Group’s biological assets are bearer biological assets.Bearer biological assets are those that are held for the purposes of producing agricultural produce rendering of services or rental. Bearer biological assets in the Group are vines.Bearer biological assets are initially measured at cost. The cost of self-grown or self-bred bearer biological assets represents the necessary directly attributable expenditure incurred before satisfying the expected production and operating purpose including capitalised borrowing costs. 38Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 Bearer biological assets after reaching the expected production and operating purpose are depreciated using the straight-line method over its estimated useful life. The estimated useful lives estimated net residual value rates and depreciation rates of bearer biological assets are as follows: Estimated net Estimated useful Depreciation rate Category residual value life (years) (%) rate(%) Vines 20 years 0% 5.0% The Group evaluates the useful life and expected net salvage value by considering the normal producing life of the bearer biological assets.Useful lives estimated residual values and depreciation methods of bearer biological assets are reviewed at least at each year-end. Any changes should be treated as changes in accounting estimates.For a bearer biological asset that has been sold damaged dead or destroyed any difference between the disposal proceeds and the carrying amount of the asset should be recognised in profit or loss for the period in which it arises. 18 Intangible assets Useful life and amortisation methods Intangible assets are stated in the balance sheet at cost less accumulated amortization (where the estimated useful life is finite) and impairment losses (see Note III.21). For an intangible asset with finite useful life its cost estimated less residual value and accumulated impairment losses is amortised on the straight-line method over its estimated useful life unless the intangible asset is classified as held for sale.The estimated useful lives basis for determination and amortisation methods of intangible assets are as follows: Amortisation Amortisation Item Basis for determination period (years) methods Stright-line Land use rights 40 - 50 years Terms of land use rights Method Shorter of the term of Stright-line Software licenses 5 - 10 years software or the estimated Method useful life of software Shorter of the term of trademark rights or the Stright-line Trademarks 10 years estimated useful life of Method trademark rights Useful lives and amortisation methods of intangible asset with finite useful life are reviewed at least at each year-end. 39Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 An intangible asset is regarded as having an indefinite useful life and is not amortised when there is no foreseeable limit to the period over which the asset is expected to generate economic benefits for the Group. At the balance sheet date the Group had intangible assets with infinite useful lives including the land use rights and trademarks. Land use rights with infinite useful lives are permanent land use rights with permanent ownership held by the Group under the relevant Chile and Australian laws arising from the Group’s acquisition of 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. (the “Australia Kilikanoon Estate”) therefore there was no amortisation. The right to use trademark refers to the trademark held by the Group arising from the acquisition of the Chile Indomita Wine Group and the Australia Kilikanoon Estate with infinite useful lives. The valuation of trademark was based on the trends in the market and competitive environment product cycle and managing long-term development strategy. Those basis indicated the trademark will provide net cash flows to the Group within an uncertain period. The useful life is indefinite as it was hard to predict the period that the trademark would bring economic benefits to the Group. 19 Goodwill The initial cost of goodwill represents the excess of cost of acquisition over the acquirer’s interest in the fair value of the identifiable net assets of the acquiree under a business combination not involving entities under common control.Goodwill is not amortised and is stated in the balance sheet at cost less accumulated impairment losses (see Note III.21). On disposal of an asset group or a set of asset groups any attributable goodwill is written off and included in the calculation of the profit or loss on disposal. 20 Long-term deferred expenses Expenditures incurred with a beneficial period of over one year are recognised as long-term deferred expenses.Long-term deferred expenses are amortised using a straight-line method within the benefit period. The respective amortisation periods for such expenses are as follows: Item Amortisation period Land requisition fee 50 years Greening fee 5 - 20 years Renovation Fee 3 - 20 years Others 3 years 40Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 21 Impairment of assets other than inventories and financial assets The carrying amounts of the following assets are reviewed at each balance sheet date based on internal and external sources of information to determine whether there is any indication of impairment: - fixed assets - construction in progress - right-of-use assets - intangible assets - bearer biological assets - investment properties measured using a cost model - long-term equity investments - goodwill - long-term deferred expenses etc.If any indication exists the recoverable amount of the asset is estimated. In addition the Group estimates the recoverable amounts of goodwill and intangible assets with infinite useful lives at each year-end irrespective of whether there is any indication of impairment.Goodwill is allocated to each asset group or set of asset groups that is expected to benefit from the synergies of the combination for the purpose of impairment testing.The recoverable amount of an asset (or asset group set of asset groups) is the higher of its fair value (see Note III.22) less costs to sell and its present value of expected future cash flows.An asset group is composed of assets directly related to cash-generation and is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or asset groups.The present value of expected future cash flows of an asset is determined by discounting the future cash flows estimated to be derived from continuing use of the asset and from its ultimate disposal to their present value using an appropriate pre-tax discount rate.An impairment loss is recognised in profit or loss when the recoverable amount of an asset is less than its carrying amount. A provision for impairment of the asset is recognised accordingly.Impairment losses related to an asset group or a set of asset groups are allocated first to reduce the carrying amount of any goodwill allocated to the asset group or set of asset groups and then to reduce the carrying amount of the other assets in the asset group or set of asset groups on a pro rata basis. However such allocation would not reduce the carrying amount of an asset below the highest of its fair value less costs to sell (if measurable) its present value of expected future cash flows (if determinable) and zero.Once an impairment loss is recognised it is not reversed in a subsequent period. 41Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 22 Fair value measurement Unless otherwise specified the Group measures fair value as follows: Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.When measuring fair value the Group takes into account the characteristics of the particular asset or liability (including the condition and location of the asset and restrictions if any on the sale or use of the asset) that market participants would consider when pricing the asset or liability at the measurement date and uses valuation techniques that are appropriate in the circumstances and for which sufficient data and other information are available to measure fair value. Valuation techniques mainly include the market approach the income approach and the cost approach. 23 Provisions A provision is recognised for an obligation related to a contingency if the Group has a present obligation that can be estimated reliably and it is probable that an outflow of economic benefits will be required to settle the obligation.A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation. Where the effect of the time value of money is material provisions are determined by discounting the expected future cash flows. Factors pertaining to a contingency such as the risks uncertainties and time value of money are taken into account as a whole in reaching the best estimate. Where there is a continuous range of possible outcomes for the expenditure required and each possible outcome in that range is as likely as any other the best estimate is the mid-point of that range. In other cases the best estimate is determined as follows: - Where the contingency involves a single item the best estimate is the most likely outcome.- Where the contingency involves a large population of items the best estimate is determined by weighting all possible outcomes by their associated probabilities.The Group reviews the carrying amounts of provisions at the balance sheet date and adjusts their carrying amounts to the current best estimates. 24 Share-based payments (1) Classification of share-based payments Share-based payment transactions in the Group are equity-settled share-based payments.. 42Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 (2) Accounting treatment of share-based payments - Equity-settled share-based payments Where the Group uses shares or other equity instruments as consideration for services received from employees the payment is measured at the fair value of the equity instruments granted to employees at the grant date. If the equity instruments granted to employees vest immediately the fair value of the equity instruments granted is fully recognised as costs or expenses on the grant date with a corresponding increase in capital reserve. If the equity instruments granted do not vest until the completion of services for a period or until the achievement of a specified performance condition the Group recognises an amount at each balance sheet date during the vesting period based on the best estimate of the number of equity instruments expected to vest according to newly obtained subsequent information regarding changes in the number of employees expected to vest the equity instruments. The Group measures the services received at the grant-date fair value of the equity instruments and recognises the costs or expenses as the services are received with a corresponding increase in capital reserve.When the Group receives services but has no obligation to settle the transaction because the relevant equity instruments are issued by the Company’s ultimate parent or its subsidiaries outside the Group the Group also classifies the transaction as equity-settled. 25 Revenue recognition Revenue is the gross inflow of economic benefits arising in the course of the Group’s ordinary activities when the inflows result in increase in shareholders’ equity other than increase relating to contributions from shareholders.Revenue is recognised when the Group satisfies the performance obligation in the contract by transferring the control over relevant goods or services to the customers.Where a contract has two or more performance obligations the Group determines the stand- alone selling price at contract inception of the distinct good or service underlying each performance obligation in the contract and allocates the transaction price in proportion to those stand-alone selling prices. The Group recognises as revenue the amount of the transaction price that is allocated to each performance obligation. The stand-alone selling price is the price at which the Group would sell a promised good or service separately to a customer. If a stand-alone selling price is not directly observable the Group considers all information that is reasonably available to the entity maximises the use of observable inputs to estimate the stand-alone selling price.For the contract with a warranty the Group analyses the nature of the warranty provided if the warranty provides the customer with a distinct service in addition to the assurance that the product complies with agreed-upon specifications the Group recognises for the promised warranty as a performance obligation. Otherwise the Group accounts for the warranty in accordance with the requirements of CAS No.13 – Contingencies. 43Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 The transaction price is the amount of consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to a customer excluding amounts collected on behalf of third parties. The Group recognises the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Where the contract contains a significant financing component the Group recognises the transaction price at an amount that reflects the price that a customer would have paid for the promised goods or services if the customer had paid cash for those goods or services when (or as) they transfer to the customer. The difference between the amount of promised consideration and the cash selling price is amortised using an effective interest method over the contract term. The Group does not adjust the consideration for any effects of a significant financing component if it expects at contract inception that the period between when the Group transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.The Group satisfies a performance obligation over time if one of the following criteria is met; or otherwise a performance obligation is satisfied at a point in time: - the customer simultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs; - the customer can control the asset created or enhanced during the Group’s performance; or - the Group’s performance does not create an asset with an alternative use to it and the Group has an enforceable right to payment for performance completed to date.For performance obligation satisfied over time the Group recognises revenue over time by measuring the progress towards complete satisfaction of that performance obligation. When the outcome of that performance obligation cannot be measured reasonably but the Group expects to recover the costs incurred in satisfying the performance obligation the Group recognises revenue only to the extent of the costs incurred until such time that it can reasonably measure the outcome of the performance obligation.For performance obligation satisfied at a point in time the Group recognises revenue at the point in time at which the customer obtains control of relevant goods or services. To determine whether a customer has obtained control of goods or services the Group considers the following indicators: - the Group has a present right to payment for the goods or services; - the Group has transferred physical possession of the goods to the customer; - the Group has transferred the legal title of the goods or the significant risks and rewards of ownership of the goods to the customer; and - the customer has accepted the goods or services.For the sale of a product with a right of return the Group recognises revenue when the Group obtains control of that product in the amount of consideration to which the Group expects to be entitled in exchange for the product transferred (i.e. excluding the amount of which expected to be returned) and recognises a refund liability for the products expected to be returned. Meanwhile an asset is recognised in the amount of carrying amount of the product expected to be returned less any expected costs to recover those products (including potential decreases in the value of returned products) and carry forward to cost in the amount of carrying amount of the transferred products less the above costs. At the end of each reporting period the Group updates its assessment of future sales return. If there is any change it is accounted for as a change in accounting estimate. 44Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 A contract asset is the Group’s right to consideration in exchange for goods or services that it has transferred to a customer when that right is conditional on something other than the passage of time. The Group recognises loss allowances for expected credit loss on contract assets. Accounts receivable is the Group’s right to consideration that is unconditional (only the passage of time is required). A contract liability is the Group’s obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer.The following is the description of accounting policies regarding revenue from the Group’s principal activities: The Group’s sales revenue is mainly derived from dealer sales. Revenue is recognised when the Group transfers control of the related products to the customer. Based on the business contract the Group recognised the sales revenue of these transfers when the product is confirmed and signed for acceptance by the customers. 26 Contract costs Contract costs are either the incremental costs of obtaining a contract with a customer or the costs to fulfil a contract with a customer.Incremental costs of obtaining a contract are those costs that the Group incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained e.g. an incremental sales commission. The Group recognises as an asset the incremental costs of obtaining a contract with a customer if it expects to recover those costs. Other costs of obtaining a contract are expensed when incurred.If the costs to fulfil a contract with a customer are not within the scope of inventories or other accounting standards the Group recognises an asset from the costs incurred to fulfil a contract only if those costs meet all of the following criteria: - the costs relate directly to an existing contract or to a specifically identifiable anticipated contract including direct labour direct materials allocations of overheads (or similar costs) costs that are explicitly chargeable to the customer and other costs that are incurred only because the Group entered into the contract - the costs generate or enhance resources of the Group that will be used in satisfying (or in continuing to satisfy) performance obligations in the future; and - the costs are expected to be recovered.Assets recognised for the incremental costs of obtaining a contract and assets recognised for the costs to fulfil a contract (the “assets related to contract costs”) are amortised on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the assets relate and recognised in profit or loss for the current period. The Group recognises the incremental costs of obtaining a contract as an expense when incurred if the amortisation period of the asset that the entity otherwise would have recognised is one year or less.The Group recognises an impairment loss in profit or loss to the extent that the carrying amount of an asset related to contract costs exceeds: - remaining amount of consideration that the Group expects to receive in exchange for the goods or services to which the asset relates; less - the costs that relate directly to providing those goods or services that have not yet been recognised as expenses. 45Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 27 Employee benefits (1) Short-term employee benefits Employee wages or salaries bonuses social security contributions such as medical insurance work injury insurance maternity insurance and housing fund measured at the amount incurred or accured at the applicable benchmarks and rates are recognised as a liability as the employee provides services with a corresponding charge to profit or loss or included in the cost of assets where appropriate. (2) Post-employment benefits – defined contribution plans Pursuant to the relevant laws and regulations of the People’s Republic of China the Group participated in a defined contribution basic pension insurance plan in the social insurance system established and managed by government organisations. The Group makes contributions to basic pension insurance plans based on the applicable benchmarks and rates stipulated by the government. Basic pension insurance contributions payable are recognised as a liability as the employee provides services with a corresponding charge to profit or loss or included in the cost of assets where appropriate. (3) Termination benefits When the Group terminates the employment with employees before the employment contracts expire or provides compensation under an offer to encourage employees to accept voluntary redundancy a provision is recognised with a corresponding expense in profit or loss at the earlier of the following dates: - When the Group cannot unilaterally withdraw the offer of termination benefits because of an employee termination plan or a curtailment proposal; - When the Group has a formal detailed restructuring plan involving the payment of termination benefits and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it. 28 Government grants Government grants are non-reciprocal transfers of monetary or non-monetary assets from the government to the Group except for capital contributions from the government in the capacity as an investor in the Group.A government grant is recognised when there is reasonable assurance that the grant will be received and that the Group will comply with the conditions attaching to the grant.If a government grant is in the form of a transfer of a monetary asset it is measured at the amount received or receivable. If a government grant is in the form of a transfer of a non- monetary asset it is measured at fair value. 46Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 Government grants related to assets are grants whose primary condition is that the Group qualifying for them should purchase construct or otherwise acquire long-term assets.Government grants related to income are grants other than those related to assets. A government grant related to an asset is recognised as deferred income and amortised over the useful life of the related asset on a reasonable and systematic manner as other income or non-operating income. A grant that compensates the Group for expenses or losses to be incurred in the future is recognised as deferred income and included in other income or non- operating income in the periods in which the expenses or losses are recognised. Or included in other income or non-operating income directly. 29 Income tax Current tax and deferred tax are recognised in profit or loss except to the extent that they relate to a business combination or items recognised directly in equity (including other comprehensive income).Current tax is the expected tax payable calculated at the applicable tax rate on taxable income for the year plus any adjustment to tax payable in respect of previous years.At the balance sheet date current tax assets and liabilities are offset only if the Group has a legally enforceable right to set them off and also intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.Deferred tax assets and deferred tax liabilities arise from deductible and taxable temporary differences respectively being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases which include deductible losses and tax credits carried forward to subsequent periods. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which deductible temporary differences can be utilised.Deferred tax is not recognised for temporary differences arising from the initial recognition of assets or liabilities in a single transaction that is not a business combination affects neither accounting profit nor taxable profit (or deductible loss) and does not give rise to equal taxable and deductible temporary differences. Deferred tax is also not recognised for taxable temporary differences arising from the initial recognition of goodwill.At the balance sheet date deferred tax is measured based on the tax consequences that would follow from the expected manner of recovery or settlement of the carrying amounts of the assets and liabilities using tax rates enacted at the balance sheet date that are expected to be applied in the period when the asset is recovered or the liability is settled.The carrying amount of a deferred tax asset is reviewed at each balance sheet date and is reduced to the extent that it is no longer probable that the related tax benefits will be utilised.Such reductions are reversed to the extent that it becomes probable that sufficient taxable profits will be available.At the balance sheet date deferred tax assets and deferred tax liabilities are offset if all of the following conditions are met: - the taxable entity has a legally enforceable right to offset current tax liabilities and current tax assets; - they relate to income taxes levied by the same tax authority on either: 47Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 - the same taxable entity; or - different taxable entities which intend either to settle the current tax liabilities and current tax assets on a net basis or to realise the assets and settle the liabilities simultaneously in each future period in which significant amounts of deferred tax liabilities or deferred tax assets are expected to be settled or recovered. 30 Leases A contract is lease if the lessor conveys the right to control the use of an identified asset to lessee for a period of time in exchange for consideration.At inception of a contract the Group assesses whether a contract is or contains a lease. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.To assess whether a contract conveys the right to control the use of an identified asset the Group assesses whether: - the contract involves the use of an identified asset. An identified asset may be specified explicitly or implicitly speicied in a contrat and should be physically distinct or capacity portion or other portion of an asset that is not physically distinct but it represents substantially all of the capacity of the asset and thereby provides the customer with the right to obtain substantially all of the ecomonic benefits from the use of the asset. If the supplier has a substantive substitution right throughout the period of use then the asset is not identified; - the lessee has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; - the lessee has the right to direct the use of the asset.For a contract that contains more separate lease componets the lessee and the lessor separate lease components and account for each lease component as a lease separately.For a contract that contains lease and non-lease components the lessee and the lessor separate lease components from non-lease components. For a contract that contains lease and non-lease components the lessee allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The lessor allocates the consideration in the contract in accordance with the accounting policy in Note III.25. (1) As a lessee The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost which comprises the initial amount of the lease liability any lease payments made at or before the commencement date (less any lease incentives received) any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease. 48Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 The right-of-use asset is depreciated using the straight-line method. If the lessee is reasonably certain to exercise a purchase option by the end of the lease term the right-of- use asset is depreciated over the remaining useful lives of the underlying asset. Otherwise the right-of-use asset is depreciated from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. Impairment losses of right-of-use assets are accounted for in accordance with the accounting policy described in Note III.21.The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date discounted using the interest rate implicit in the lease or if that rate cannot be readily determined the Group’s incremental borrowing rate.A constant periodic rate is used to calculate the interest on the lease liability in each period during the lease term with a corresponding charge to profit or loss or included in the cost of assets where appropriate. Variable lease payments not included in the measurement of the lease liability is charged to profit or loss or included in the cost of assets where appropriate as incurred.Under the following circumstances after the commencement date the Group remeasures lease liabilities based on the present value of revised lease payments: - there is a change in the amounts expected to be payable under a residual value guarantee; - there is a change in future lease payments resulting from a change in an index or a rate used to determine those payments; - there is a change in the assessment of whether the Group will exercise a purchase extension or termination option or there is a change in the exercise of the extension or termination option.When the lease liability is remeasured a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Group recognises the lease payments associated with these leases in profit or loss or as the cost of the assets where appropriate using the straight-line method over the lease term. (2) As a lessor The Group determines at lease inception whether each lease is a finance lease or an operating lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset irrespective of whether the legal title to the asset is eventually transferred. An operating lease is a lease other than a finance lease.When the Group is a sub-lessor it assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies practical expedient described above then it classifies the sub-lease as an operating lease. 49Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 Under a finance lease at the commencement date the Group recognises the finance lease receivable and derecognises the finance lease asset. The finance lease receivable is initially measured at an amount equal to the net investment in the lease. The net investment in the lease is measured at the aggregate of the unguaranteed residual value and the present value of the lease receivable that are not received at the commencement date discounted using the interest rate implicit in the lease.The Group recognises finance income over the lease term based on a pattern reflecting a constant periodic rate of return. The derecognition and impairment of the finance lease receivable are recognised in accordance with the accounting policy in Note III.10. Variable lease payments not included in the measurement of net investment in the lease are recognised as income as they are earned.Lease receipts from operating leases is recognised as income using the straight-line method over the lease term. The initial direct costs incurred in respect of the operating lease are initially capitalised and subsequently amortised in profit or loss over the lease term on the same basis as the lease income. Variable lease payments not included in lease receipts are recognised as income as they are earned. 31 Assets held for sale The Group classified a non-current asset or disposal group as held for sale when the carrying amount of a non-current asset or disposal group will be recovered through a sale transaction rather than through continuing use.A disposal group refers to a group of assets to be disposed of by sale or otherwise together as a whole in a single transaction and liabilities directly associated with those assets that will be transferred in the transaction.A non-current asset or disposal group is classified as held for sale when all the following criteria are met: - According to the customary practices of selling such asset or disposal group in similar transactions the non-current asset or disposal group must be available for immediate sale in their present condition subject to terms that are usual and customary for sales of such assets or disposal groups; - Its sale is highly probable that is the Group has made a resolution on a sale plan and has obtained a firm purchase commitment. The sale is to be completed within one year.Non-current assets or disposal groups held for sale are stated at the lower of carrying amount and fair value (see Note III.22) less costs to sell (except financial assets (see Note III.10) deferred tax assets (see Note III.29) and investment properties subsequent measured at fair value (see Note III. 13) initially and subsequently. Any excess of the carrying amount over the fair value (see Note III.22) less costs to sell is recognised as an impairment loss in profit or loss. 32 Profit distributions Dividends or profit distributions proposed in the profit appropriation plan which will be approved after the balance sheet date are not recognised as a liability at the balance sheet date but are disclosed in the notes separately. 50Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 33 Related parties If a party has the power to control jointly control or exercise significant influence over another party or vice versa or where two or more parties are subject to common control or joint control from another party they are considered to be related parties. Related parties may be individuals or enterprises. Enterprises with which the Company is under common control only from the State and that have no other related party relationships are not regarded as related parties.In addition to the related parties stated above the Company determines related parties based on the disclosure requirements of Administrative Procedures on the Information Disclosures of Listed Companies issued by the CSRC. 34 Segment reporting The Group is principally engaged in the production and sales of wine brandy and sparkling wine in China France Spain Chile and Australia. In accordance with the Group’s internal organisation structure management requirements and internal reporting system the Group’s operation is divided into five parts: China Spain France Chile and Australia. The management periodically evaluates segment results in order to allocate resources and evaluate performances. In 2024 over 82% of revenue more than 93% of profit and over 91% of non-current assets derived from China/are located in China. Therefore the Group does not need to disclose additional segment report information. 35 Significant accounting estimates and judgements The preparation of the financial statements requires management to make estimates and assumptions that affect the application of accounting policies and the reported amounts of assets liabilities income and expenses. Actual results may differ from these estimates. The management estimates as well as underlying assumptions and uncertainties involved are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.Significant accounting estimates see Notes V.3 7 11 and 16. 36 Changes in significant accounting policies In 2024 the Group has adopted the following newly revised accounting standards and implementation guidance and illustrative examples issued by the MOF: The “classification of liabilities as current or non-current” in CAS Bulletin No. 17 (Caikuai [2023] No. 21)(“CAS Bulletin No. 17”).The requirements on the “presentation of assurance-type warranty expenses” in the Compilation of Application Guidance to Accounting Standards for Business Enterprises for 2024. (a) Main effects of the Group’s adoption of the above requirements and guidance (i) Requirements on the classification of liabilities as current or non-current: According to CAS Bulletin No. 17 only the Group’s substantive right to defer the settlementof liabilities for more than one year after the balance sheet date (“the right to defer the 51Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024settlement of liabilities”) is considered when classifying the liquidity of liabilities; the subjective possibility of exercising the above right is not considered.For liabilities arising from the Group’s loan arrangements if the Group’s right to defer the settlement of liabilities is subject to compliance with covenants specified in the loan arrangements (“covenants”) only the covenants on or before the balance sheet date when classifying the liquidity of liabilities are considered; the effect of covenants after the balance sheet date is not considered.If the Group settles its liabilities by delivering its own equity instruments at the option of the counterparty and classifies the above options as equity instruments and recognises them separately as the equity component of a compound financial instrument in accordance with CAS 37 Presentation of Financial Instruments there will be no effect on the classification of the liquidity of the liabilities. However there will be effects on the classification if the above options cannot be classified as equity instruments.The adoption of this requirement does not have a significant effect on the financial position and financial performance of the Group.(ii) Presentation of assurance-type warranty expenses According to the Compilation of Application Guidance to Accounting Standards for Business Enterprises for 2024 the Group has presented assurance-type warranty expenses accrued by the Group as “operating cost from principal activities” and no longer as “selling anddistribution expenses”.The adoption of this requirement does not have a significant effect on the financial position and financial performance of the Group.IV. Taxation 1 Main types of taxes and corresponding tax rates Type of tax Taxation basis Tax rate Output VAT is calculated on product sales and taxable 13% 9% 6% (China) 20% (France) Value-added tax services revenue. The basis 21% (Spain) 19% (Chile) and 10% (VAT) for VAT payable is to deduct (Australia) input VAT from the output VAT for the period 10% of the price 20% of the price and Consumption tax Based on taxable revenue RMB1000 each ton (China) Urban maintenance and construction Based on VAT paid 7% (China) tax Corporate income 25% (China) 25% (France) 28% Based on taxable profits tax (Spain) 27% (Chile) 30% (Australia) Other than tax incentives stated in Note IV. 2 applicable tax rates of the Group in 2024 and 2023 are all stated as above. 2 Tax preferential treatments 52Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 Ningxia Changyu Grape Growing Co. Ltd. (“Ningxia Growing”) a subsidiary of the Group whose principal activity is grape growing is incorporated in Ningxia Huizu Autonomous Region. According to clause 27 of the Corporate Income Tax Law of the People’s Republic of China and clause 86 of the Implementation Rules of Enterprise Income Tax Law of the People’s Republic of China Ningxia Growing enjoys an exemption of corporate income tax.Yantai Changyu Grape Growing Co. Ltd. (“Grape Growing”) a branch of the Company whose principal activity is grape growing is incorporated in Zhifu District Yantai City Shandong Province. According to clause 27 of the Corporate Income Tax Law of the People’s Republic of China and clause 86 of the Implementation Rules of Enterprise Income Tax Law of the People’s Republic of China Grape Growing enjoys an exemption of corporate income tax.Yantai Changyu Wine Research & Development Centre Co. Ltd. (“R&D Centre”) a branch of the Company is an enterprise engaged in grape growing in the Economic and Technological Development Zone of Yantai City Shandong Province. Pursuant to Article 27 of the Enterprise Income Tax Law of the People’s Republic of China and Article 86 of the Implementation Regulations of the Enterprise Income Tax Law of the People’s Republic of China R&D Centre enjoys the preferential policy of exemption of enterprise income tax on income from grape growing.Beijing Changyu AFIP Agriculture Development Co. Ltd. (“Agriculture Development”) a subsidiary of the Group whose principal activity is grape growing is incorporated in Miyun Beijing. According to clause 27 of the Corporate Income Tax Law of the People’s Republic of China and clause 86 of the Implementation Rules of Enterprise Income Tax Law of the People’s Republic of China Agriculture Development enjoys an exemption of corporate income tax.Xinjiang Chateau Changyu Baron Balboa Co. Ltd. (“Chateau Shihezi”) a subsidiary of the Company is an enterprise of wine production and sales incorporated in Shihezi city Xinjiang Weizu Autonomous. In accordance with relevant provisions of the Announcement on Continuation of CIT Policies for Large-scale Development in the Western Region (Announcement [2020] No.23 of the Ministry of Finance) the Company is entitled to preferential tax policies. Therefore during the period from 2021 to 2030 its corporate income tax shall be levied at a reduced tax rate of 15%.Ningxia Changyu Longyu Chateau Co. Ltd. (“Ningxia Chateau”) a subsidiary of the Company is an enterprise of wine production and sales incorporated in Yinchuan Ningxia Hui Autonomous Region. In accordance with the Notice on Continuing the Enterprise Income Tax Policies for the Large-Scale Development of Western China (Notice of the Ministry of Finance [2020] No. 23) Ningxia 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 2021 to 2030. Changyu (Ningxia) Wine Co. Ltd. (“Ningxia Wine”) a subsidiary of the Company is an enterprise engaged in wine production and sales incorporated in Shihezi City Xinjiang Uygur Autonomous Region. In accordance with relevant provisions of the Announcement on Continuation of CIT Policies for Large-scale Development in the Western Region (Announcement [2020] No.23 of the Ministry of Finance) Changyu (Ningxia) Wine is entitled to preferential tax policies. Therefore during the period from 2021 to 2030 its corporate income tax shall be levied at a reduced tax rate of 15%.In accordance with the PRC Enterprise Income Tax Law and its implementing regulations the Announcement on Further Implementation of Income Tax Incentives for Small Enterprises 53Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 with Meagre Profits (Announcement [2022] No. 13 of the Ministry of Finance and the State Taxation Administration) and the Notice of the Ministry of Finance and the State Administration of Taxation on Further Support the Inclusive Tax Expenses Policies for Micro and Small Enterprises for micro and small enterprises Development (Announcement [2023] No. 12 of the Ministry of Finance and the State Taxation Administration) for micro and small enterprises meet the application requirements that the amount of taxable income shall be reduced by 25% and the applicable rate of enterprise income tax shall be 20%. Beijing Changyu Wine Marketing Co. Ltd. (“Beijing Marketing”) a subsidiary of the Company was identified as a qualified small enterprise with meagre profits.Pursuant to the Announcement on Clarifying VAT Relief and Other Policies for Small-scale VAT Taxpayers (Announcement [2023] No.19 of the Ministry of Finance and the State Taxation Administration) the taxable sales revenue of small-scale VAT taxpayers to which a levy rate of 3% is applicable shall be subject to VAT at a reduced levy rate of 1%; and the prepaid VAT items to which a pre-levy rate of 3% is applicable shall be subject to a reduced pre-levy rate of 1% from the period from 1 January 2024 to 31 December 2027. Xinjiang Changyu Sales Co. Ltd. Weimeisi Tasting Centre Branch is entitled to the above preferential tax policies.In accordance with the Notice of the Ministry of Finance and the State Administration of Taxation on Further Stepping up the Implementation of the Policy for the Refund of Term-End Excess Input Value-Added Tax Credits (Notice of the Ministry of Finance and State Taxation Administration [2022] No. 14) the government should further step up the implementation of the policy for the refund of term-end excess input value-added tax credits and expand the scope of industries applicable to this policy. The Company and its qualified subsidiaries have enjoyed this policy.In accordance with the Notice of the Ministry of Finance and the State Administration of Taxation on the Further Implementation of Reduction and Exemption in Six Taxes and Two Fees for Small-Scale and Micro Enterprises (Notice of the Ministry of Finance and State Taxation Administration [2022] No. 10) from 1 January 2022 to 31 December 2024 People’s Governments of all provinces autonomous regions and municipalities can reduce the resource tax urban maintenance and construction tax property tax Urban and township land use tax stamp duty (excluding stamp duty on securities transaction) farmland occupation tax education surcharges and local education surcharges within a 50% tax range for small-scale VAT taxpayers small-scale and low-profit enterprises and individually- owned businesses based on the actual situation in the region. Shandong Xinjiang NingxiaShaanxi and other provinces (regions cities) are all subject to a 50% reduction in “six taxesand two fees” and some subsidiaries of the Company are qualified to enjoy the tax reduction. 54Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 V. Notes to the consolidated financial statements 1 Cash at bank and on hand Item 2024 2023 Cash on hand 27228 74951 Bank deposits 1797503539 2217280801 Other monetary funds 317363 337895 Total 1797848130 2217693647 Including: Total overseas deposits 33384691 24317469 As at 31 December 2024 details of restricted bank deposits are as follows： Item 2024 2023 Escrow account for migrant workers' wages 1153216 - ? As at 31 December 2024 the Group’s term deposits with previous maturity of more than three months is RMB 78650000 with interest rate 1.70% - 2.25% (31 December 2023: 254200000). As at 31 December 2024 the Group’s other monetary assets is as follows: Item 2024 2023 Alipay account balance 158894 192997 Deposits for the customs 134076 134898 Deposit for ICBC platform 24393 10000 Total 317363 337895 As at 31 December 2024 the Group did not have any special interest arrangements such as the establishment of joint fund management accounts with related parties. 2 Bills receivable Classification of bills receivable Item 2024 2023 Bank acceptance bills 1036243 1260000 Total 1036243 1260000 All of the above bills are due within one year. 55Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 3 Accounts receivable (1) Accounts receivable by customer type are as follows: 31 December 31 December Type 20242023 Amounts due from related parties 1458339 4401307 Amounts due from other customers 276983985 390889475 Sub-total 278442324 395290782 Less: Provision for bad and doubtful debts (7612723) (13158448) Total 270829601 382132334 As at 31 December 2024 ownership restricted accounts receivable is RMB 35917860 (31 December 2023: RMB73628265) referring to Note V. 52. (2) The ageing analysis of accounts receivable is as follows: Ageing 2024 2023 Within 1 year (inclusive) 274048512 387161172 Over 1 year but within 2 years (inclusive) 747104 2367283 Over 2 years but within 3 years (inclusive) 2122990 5396673 Over 3 years 1523718 365654 Sub-total 278442324 395290782 Less: Provision for bad and doubtful debts (7612723) (13158448) Total 270829601 382132334 The ageing is counted starting from the date when accounts receivable are recognised. (3) Accounts receivable by provisioning method At all times the Group measures the impairment loss for accounts receivable at an amount equal to lifetime ECLs and the ECLs are based on the number of overdue days and the loss given default. According to the historical experience of the Group there are no significant differences in the losses of different customer groups. Therefore different customer groups are not further distinguished when calculating impairment loss based on the overdue information. 56Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 2024 Carrying amount at Impairment loss at Loss given default the end of the year the end of the year Current 0.1% 245292444 265047 Overdue for 1 to 30 days 1.5% 19549341 293143 Overdue for 31 to 60 days 6.0% 4278753 256562 Overdue for 61 to 90 days 15.4% 432734 66747 Overdue for 91 to 120 days 23.5% 605044 142111 Overdue for 121 to 150 days 30.7% 1337986 410793 Overdue for 151 to 180 days 38.2% 558511 213620 Overdue for 181 to 210 days 46.0% 492202 226407 Overdue for 211 to 240 days 57.1% 56462 32224 Overdue for 241 to 270 days 83.6% 793827 663562 Overdue for 271 to 300 days 92.5% 33343 30830 Overdue for 301 to 330 days 100.0% 898444 898444 Overdue for 331 to 360 days 100.0% 780 780 Overdue for 360 days 100.0% 4112453 4112453 Total 2.7% 278442324 7612723 2023 Carrying amount at Impairment loss at Loss given default the end of the year the end of the year Current 0.2% 365010895 660099 Overdue for 1 to 30 days 2.7% 14276606 384812 Overdue for 31 to 60 days 10.8% 1939270 208908 Overdue for 61 to 90 days 20.8% 443199 92141 Overdue for 91 to 120 days 37.2% 880565 328007 Overdue for 121 to 150 days 55.4% 874822 485022 Overdue for 151 to 180 days 55.4% 499866 277137 Overdue for 181 to 210 days 72.1% 497356 358689 Overdue for 211 to 240 days 77.1% 693596 534607 Overdue for 241 to 270 days 82.9% 980610 812545 Overdue for 271 to 300 days 88.9% 1596409 1418894 Overdue for 301 to 330 days 100.0% 9150 9150 Overdue for 331 to 360 days 100.0% 82541 82541 Overdue for 360 days 100.0% 7505897 7505896 Total 3.3% 395290782 13158448 The loss given default is measured based on the actual credit loss experience in the past 12 months and is adjusted taking into consideration the differences among the economic conditions during the historical data collection period the current economic conditions and the economic conditions during the expected lifetime. (4) Movements of provisions for bad and doubtful debts: 20242023 Balance at the beginning of the year (13158448) (14556106) Charge for the year (3956483) (7361616) Recoveries or reversals during the year 9502208 8759274 Balance at the end of the year (7612723) (13158448) 57Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 (5) Five largest accounts receivable by debtor at the end of the year: Ending balance Percentage of Relationship with Balance at the of provision for Name Ageing ending balance the Group end of the year bad and doubtful of others (%) debts Debtor One Third party 71881360 Within 1 year 25.8% 77670 Debtor Two Third party 16123936 Within 1 year 5.8% 150769 Debtor Three Third party 12590397 Within 1 year 4.5% 117729 Debtor Four Third party 9460951 Within 1 year 3.4% 88466 Debtor Five Third party 7218304 Within 1 year 2.6% 67496 Total 117274948 42.1% 502130 4 Receivables under financing Item Note 2024 2023 Bills receivable (1) 230960211 408316028 (1) Pledged bills receivable by the Group at the end of the year: As at 31 December 2024 there was no pledged bills receivable (31 December 2023: Nil). (2) Outstanding endorsed or discounted bills that have not matured at the end of the year Amount Item derecognised at year end Bank acceptance bills 261965866 As at 31 December 2024 bills endorsed by the Group to other parties which are not yet due at the end of the period is RMB 261965866 (31 December 2022: RMB 394923505 ). The notes are used for payment to suppliers and constructions. The Group believes that due to good reputation of bank the risk of notes not accepting by bank on maturity is very low therefore derecognise the note receivables endorsed. If the bank is unable to pay the notes on maturity according to the relevant laws and regulations of China the Group would undertake limited liability for the notes. 5 Prepayments (1) Prepayments by category: Item 2024 2023 Prepayments 60631575 61497933 (2) The ageing analysis of prepayments is as follows: 20242023 Ageing Percentage Percentage Amount Amount (%)(%) Within 1 year (inclusive) 59383101 97.9% 61468643 99.9% Over 1 year but within 2 years 12484742.1%292900.1% (inclusive) Total 60631575 100.0% 61497933 100.0% The ageing is counted starting from the date when prepayments are recognised. 58Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 (3) Five largest prepayments by debtor at the end of the year: Ending balance Percentage of Nature of the Balance at the of provision for Name Ageing ending balance receivable end of the year bad and doubtful of others (%) debts Debtor One Prepayments 28736338 Within 1 year 47.4% - Debtor Two Prepayments 7486368 Within 1 year 12.3% - Debtor Three Prepayments 5965968 Within 1 year 9.8% - Debtor Four Prepayments 5876264 Within 1 year 9.7% - Debtor Five Prepayments 5344237 Within 1 year 8.8% - Total 53409175 88.0% -? 6 Other receivables 31 December 31 December 20242023 Others 264598394 71496276 (1) Others by customer type: 31 December 31 December Customer type 20242023 Amounts due from other companies 268325284 71496276 Sub-total 268325284 71496276 Less: Provision for bad and doubtful debts (3726890) - Total 264598394 71496276 (2) The ageing analysis is as follows: Ageing 2024 2023 Within 1 year (inclusive) 227970834 29551266 Over 1 year but within 2 years (inclusive) 583562 39753227 Over 2 years but within 3 years (inclusive) 38599235 160000 Over 3 years 1171653 2031783 Sub-total 268325284 71496276 Less: Provision for bad and doubtful debts (3726890) - Total 264598394 71496276 The ageing is counted starting from the date when other receivables are recognised. (3) Movements of provisions for bad and doubtful debts 20242023 Balance at the beginning of the year - - Charge for the year (3726890) - Balance at the end of the year (3726890) - As at 31 December 2024 the Group has no other receivables written off (31 December 2023: Nil). 59Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 (4) Others categorised by nature Nature of other receivables 2024 2023 Compensation receivable for the disposal of 200666088- a vineyard (Note) Land purchases and reserves receivable 37268902 37768902 Refund of consumption tax and VAT 15560239 19104008 Deposit 6163682 5429202 Housing maintenance funds 2640911 2670094 Petty cash receivable 28781 154354 Others 5996681 6369716 Sub-total 268325284 71496276 Less: Provision for bad and doubtful debts (3726890) - Total 264598394 71496276 Note: The Company signed a Compensation Agreement with the People's Government of Zhuqiao Town Laizhou City and the People's Government of Yidao Town Laizhou City (both collectively referred to as the “Transferees”) in December 2024. Pursuant to the Compensation Agreement the Company transferred assets related to the vineyard in Zhuqiao Town to the Transferees at an estimated valuation of RMB 221284768 as consideration (compensation). After deducting compensation totalling RMB 19618680 that have been paid to farmers and collectively owned assets the actual compensation receivable by the Company amounts to RMB 201666088 (tax inclusive). The transaction resulted in a decrease in the carrying value of the Company's bearer biological assets and fixed assets of RMB 71792304 and RMB 36629 respectively and recognition of gains or losses from disposal of assets of RMB 127400859. As of 15 April 2025 the Company has received a total of RMB 101000000 in compensation. (5) Five largest others-by debtor at the end of the year Ending balance Percentage of Nature of the Balance at the of provision for Name Ageing ending balance receivable end of the year bad and doubtful of others (%) debts Compensation receivable for the Debtor One 200666088 Within 1 year 74.8% - disposal of a vineyard Land purchases Debtor Two and reserves 37268902 2-3 years 13.9% 3726890? receivable Debtor Three Refund of VAT 14350724 Within 1 year 5.3% ?- Housing Debtor Four maintenance 2640911 1-2 years 1.0% ?- funds Debtor Five Others 1650000 Within 1 year 0.6% ?- Total 256576625 95.6% 3726890 60Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 7 Inventories (1) Inventories by category: 20242023 Provision for Provision for Item Carrying Carrying Book value impairment of Book value impairment of amount amount inventories inventories Raw materials 287082056 - 287082056 241961713 - 241961713 Work in progress 1921142415 - 1921142415 1915860327 - 1915860327 Finished goods 714804585 (18958500) 695846085 625076081 (17507534) 607568547 Total 2923029056 (18958500) 2904070556 2782898121 (17507534) 2765390587 (2) Provision for impairment of inventories: Increase during Decrease during Item Opening balance the year the year Closing balance Recognised Reversal Finished 17507534(18958500)1750753418958500 goods 8 Other current assets Item 2024 2023 Input tax to be credited 63225758 65228189 Right to recover returned goods 13866802 16876869 Prepaid income taxes 1408482 4438001 Deferred expenses 1882199 1825483 Sub-total 80383241 88368542 Less: Provision for bad and doubtful debts - - Total 80383241 88368542 9 Long-term equity investments (1) Long-term equity investments by category: Item 2024 2023 Investments in joint ventures 32797631 37018893 Investments in associates 2067117 1266727 Sub-total 34864748 38285620 Less: Provision for impairment -? - Total 34864748 38285620 61Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 (2) Movements of long-term equity investments during the year are as follows: Movements during the year 2024 (Losses)/Profits Balance at the 2024 Shareholding Investee from investments beginning of the New Investment Closing balance percentage under equity- year method l Joint ventures ? ? ? ? SAS L&M Holdings (“L&M Holdings”) 37018893 - (4221262) 32797631 55% Associates ? ? ? ? ? Shanghai Yufeng Brand Management Co. Ltd. (Note1) 365362 ?- 18358 383720 10% Yantai Guolong Wine Industry Co. Ltd. (Note1) 901365 ?- (144364) 757001 10%? Taizhou Changyu Winery Wine Sales Co. Ltd.("Taizhou -1000000(73604)92639610%Changyu”). (Note2) Sub-total 1266727 1000000 (199610) 2067117 Total 38285620 1000000 (4420872) 34864748 Note 1: The Group has appointed one director to each of these investees.Note 2: The Group has appointed two directors to this investee. 62Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2023 10 Investment properties Plants and buildings Cost 31 December 2023 and 31 December 2024 81165619 Accumulated depreciation ? 31 December 2023 (56682788) Charge for the year (2522380) 31 December 2024 (59205168) Carrying amount ? 31 December 2024 21960451 31 December 2023 24482831 11 Fixed assets (1) Fixed assets Machinery & Item Plant & buildings Motor vehicles Total equipment Cost 31 December 2023 5882104759 2811522051 24268214 8717895024 Additions during the year ? ? ? ? ? - Purchases 4453135 61995235 2257884 68706254 - Transfers from construction 50578871074995-6132882 in progress Disposals or written-offs during (33999075)(24820992)(4414088)(63234155) the year 31 December 2024 5857616706 2849771289 22112010 8729500005 Accumulated depreciation ? ? ? ? 31 December 2023 (1312265801) (1577413953) (22769318) (2912449072) Charge for the year (157070918) (141017363) (1418191) (299506472) Disposals or written-offs during 1861841322052343381996144490717 the year 31 December 2024 (1450718306) (1696378973) (20367548) (3167464827) Provision for impairment ? ? ? ? 31 December 2023 and 31 -(10363383)-(10363383) December 2024 Carrying amount ? ? ? ? 31 December 2024 4406898400 1143028933 1744462 5551671795 31 December 2023 4569838958 1223744715 1498896 5795082569 As at 31 December 2024 ownership restricted net value of fixed assets is RMB 32467803 (31 December 2023: 37985117) referring to Note V. 52. 63Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2023 (2) Temporarily idle fixed assets Accumulated Provision for Item Cost Carrying amount depreciation impairment Machinery equipment 29423698 (19060315) (10363383) - Total 29423698 (19060315) (10363383) - (3) Fixed assets leased out under operating leases Carrying amount at Item the end of the year Plant & buildings 85545955 Machinery equipment 931 Fixed assets pending certificates of ownership Reason why the Item Carrying amount certificates are pending Dormitories main building and reception 252909228 Processing building of Changan Chateau European town main building and service 153027262 Processing building of AFIP Fermentation shop and workshop of Zhangyu 5849794 Processing (Ningxia) Office experiment building and workshop of 3704745 Processing Fermentation Centre Fermentation shop of Zhangyu (Jingyang) 3893174 Processing Finished goods warehouse and workshop of 1852782 Processing Kylin Packaging Others 563097 Processing The buildings without property certificate above have no significant impact on the Group’s management. 12 Construction in progress (1) Construction in progress 20242023 Project Provision for Carrying Provision for Carrying Book value Book value impairment amount impairment amount Upgrade of the production line of Noble 7202959 -? 7202959 -? -? -? Dragon Upgrade of main building 1128971-?1128971-?-?-? of AFIP Nnigxia Chateau museum construction - -? - 1376147 - 1376147 project Shihezi Chateau -?-?-?700000-?700000 Construction Project Other Companies’ 1845442-?18454421247094-1247094 Construction Project Total 10177372 - 10177372 3323241 - 3323241 64Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 (2) Movements of major construction projects in progress during the year Attributable to: Interest Percentage of Accumulated Budget Opening Additions Transfers to Other Closing Interest rate for Sources of Item actual cost to capitalised (RMB million) balance during the year fixed assets transfers out balance capitalised for capitalisation funding budget (%) interest the year in 2024 (%) Upgrade of the production line of 9 - 7202959 - - 7202959 85% -? -? -? Self-raised Noble Dragon Upgrade of main building of AFIP 3 - 1128971 - - 1128971 37% - -? -? Self-raised Fermentation workshop and 5 - 5057887 (5057887) - - 100% - -? -? Self-raised warehouse of Zhangyu (Ningxia) Shihezi Chateau Construction Project 780 700000 - - (700000) - 100% -? -? -? Self-raised 65Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 13 Bearer biological assets Bearer biological assets are vines which measured in cost method.Immature Mature biological Item Total biological assets assets Original book value 31 December 2023 32791446 248838320 281629766 Additions during the year ? ? ? - Increase in cultivated 1999035 347445 2346480 - Transferred to mature (10035518) 10035518 - Decrease during the year (8158622)(152105687)(160264309) (Note) 31 December 2024 16596341 107115596 123711937 Accumulated amortisation ? ? ? 31 December 2023 - (104167783) (104167783) Charge for the year - (13833533) (13833533) Decrease during the year -6077334360773343 (Note) 31 December 2024 - (57227973) (57227973) Carrying amount ? ? ? 31 December 2024 16596341 49887623 66483964 31 December 2023 32791446 144670537 177461983 Note: A decrease in bearer biological assets during the year is mainly due to the Group's disposal of the vineyard in Zhuqiao Town and the Mouziguo grape-growing base. (1) The carrying value of the Group's bearer biological assets decreased by RMB 71792304 as a result of the disposal of the vineyard in Zhuqiao Town. See Note V. 6 (4) for details. (2) The Group signed a Compensation Agreement with Yantai Zhihai Agricultural Professional Cooperative (“Zhihai Cooperative”) in December 2024 whereby the Group transferred the Mouziguo grape-growing base at a consideration of RMB 30000000 (tax inclusive) to Zhihai Cooperative. The transaction resulted in a decrease in the Company’s bearer biological assets and fixed assets of RMB 17159765 and RMB 16651622 respectively and recognition of losses from disposal of assets of RMB 4183849.As at 31 December 2024 there is no biological asset with ownership restricted (31 December 2023: Nil).As at 31 December 2024 no provision for impairment of biological asset of the Group was recognised as there is no any indication exists (31 December 2023: Nil). 66Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 14 Right-of-use assets As a lessee Item Plant&buildings Lands Others Total Cost Balance at the beginning of 804253841379804091697986220103779 the year Additions during the year 2184052 - - 2184052 Decreases during the year (53842) (53299318) - (53353160) Balance at the end of the year 82555594 84681091 1697986 168934671 Accumulated depreciation ? ? ? ? Balance at the beginning of (41596011)(55403469)(1358389)(98357869) the year Charge for the year (15966192) (4438690) (339597) (20744479) Decreases during the year - 21928939 - 21928939 Balance at the end of the year (57562203) (37913220) (1697986) (97173409) Carrying amounts ? ? ? ? At the end of the year 24993391 46767871 - 71761262 At the beginning of the year 38829373 82576940 339597 121745910 15 Intangible assets Item Land use rights Software licenses Trademarks Total Original book value 31 December 2023 444520847 102888216 189715738 737124801 Additions during the year ? ? ? ? - Purchase - 2286226 1534621 3820847 31 December 2024 444520847 105174442 191250359 740945648 Accumulated amortisation ? ? ? ? 31 December 2023 (108815810) (69678463) (16004752) (194499025) Additions during the year - Charge for the year (5867776) (12287382) (585082) (18740240) 31 December 2024 (114683586) (81965845) (16589834) (213239265) Carrying amount ? ? ? ? 31 December 2024 329837261 23208597 174660525 527706383 31 December 2023 335705037 33209753 173710986 542625776 As at 31 December 2024 the Group has land use right with infinite useful lives of RMB 32503590 (31 December 2023: RMB32863731) representing the freehold land held by Chile Indomita Wine Group and Australia Kilikanoon Estate under relevant Chile and Australia laws on which the amortisation is not required.As at 31 December 2024 the Group has trademark with infinite useful lives of RMB 156740196 (31 December 2023: RMB155447037) which is held by Chile Indomita Wine Group and Australia Kilikanoon Estate. The recoverable amount of the trademark is determined according to the present value of the expected future cash flows generated from the asset group to which the single assets of trademark right belongs. The management prepares the cash flow projection for future 5 years (the “projecting period”) based on the latest financial budget assumption and estimates the cash flows after the future 5 years (the “subsequent period”). The pretax discount rates used in the cash flow projections are 12.5% and 13.6%（2023：13.3%-13.9%）. The estimated long-term average growth rate of cash flows after 5 years is 0.0% - 2.0% (2023: 0.0% - 2.5%) which represents the long-term average growth rate for the industry or the region in which the company operates. 67Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 According to the result of impairment assessment by the end of 31 December 2024 the management believes there is no impairment loss on those trademarks with infinite useful lives of the Group (31 December 2023: Nil).As at 31 December 2024 there is no ownership restricted net value of intangible assets. (31 December 2023: Nil ). 16 Goodwill (1) Changes in goodwill Name of investee or events from 31 December Additions during Disposals during 31 December Note which goodwill arose 2023 the year the year 2024 Original book value Etablissements Roullet Fransac (a) 13112525 -? -? 13112525 (“Roullet Fransac”) Dicot Partners S.L (“Dicot”) (a) 92391901 -? -? 92391901 Chile Indomita Wine Group (a) 6870115 -? -? 6870115 Australia Kilikanoon Estate (a) 37063130 -? -? 37063130 Sub-total 149437671 - - 149437671 Impairment provision ? ? ? ? Australia Kilikanoon Estate (37063130) -? -? (37063130) Dicot Partners S.L (“Dicot”) (5210925) (6014534)? -? (11225459) Sub-total (42274055) (6014534)? - (48288589) Carrying amount 107163616 (6014534)? - 101149082 (a) The Group acquired Fransac Sales Dicot and Mirefleurs Chile Indomita Wine Group and Australia Kilikanoon Estate in December 2013 September 2015 July 2017 and January 2018 respectively resulting in respective goodwill amounting to RMB13112525 RMB92391901 RMB 6870115 and RMB37063130. The goodwill had been allocated to corresponding asset groups for impairment testing. (2) Provision for impairment of goodwill The Group has allocated the above goodwill to relevant asset groups for impairment testing.As at 31 December 2024 Australia Kilikanoon Estate has made full provision for impairment of goodwill and Atrio has made provision for impairment amounted to RMB 11225459 for the current period.The recoverable amount of the asset group is determined according to the present value of the expected future cash flows. The management prepares the cash flow projection for future 5 years (the “projecting period”) based on the latest financial budget assumption and estimates the cash flows after the future 5 years (the “subsequent period”). The pretax discount rate used in calculating the recoverable amounts of Roullet Fransac Dicot and Mirefleurs Indomita Wine are 11.8% 11.7% and 12.5% respectively (2023: 10.7% 9.1% and 13.3%). The key assumption is the growth rate of annual revenue of relevant subsidiaries which is computed based on the expected growth rate of each subsidiary and long-term average growth rates of relevant industries. The annual revenue growth rate for Roullet Fransac Dicot and Mirefleurs Indomita Wine during the projecting period is 4.9% - 18.5% and the revenue growth rate during the subsequent period is 0.0% - 2.5%. Other relevant key assumption is budget gross profit margin which is determined based on the historical performance of each subsidiary and its expectations for market development. The average gross profit margin for the projecting period of Roullet Fransac Dicot and Mirefleurs Indomita Wine is 40.9% - 44.8% and the average gross profit margin during the subsequent period is 40.9% - 45.6%. 68Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 17 Long-term deferred expenses Additions Amortisation Item 31 December 2023 31 December 2024 during the year for the year Land requisition fee 43264838 - (1778943) 41485895 Greening fee 110315085 - (8579904) 101735181 Leasehold improvement 146637493 12776010 (10092888) 149320615 Others 6444691 1014007 (1206687) 6252011 Total 306662107 13790017 (21658422) 298793702 18 Deferred tax assets and deferred tax liabilities (1) Deferred tax assets and liabilities 31 December 2024 31 December 2023 Item Deductible or taxable Deferred tax assets/ Deductible or taxable Deferred tax assets/ temporary differences (liabilities) temporary differences (liabilities) Deferred tax assets: Provision for impairment of 40661496104377754102936510563366 assets Unrealised profits of intra- 417770236104442560403653124100913281 group transactions Unpaid bonus 123258072 30814518 138873637 34718409 Termination benefits 6739412 1684853 8475845 2118961 Deductible tax losses 280061166 68206780 261937563 61634797 Deferred income 25938817 5540954 32582734 7021304 Effects of Restricted Share -?? -?? 17614180 4370992 Incentive Plan Effect of the lease standard 3462626 865659 708367 177094 Sub-total 897891825 221993099 904874815 221518204 Deferred tax liabilities: ? ? ? ? Revaluation due to business combinations involving 244477907076871266595307718480 entities not under common control Effect of the lease standard 1069168 267294 3995628 1001249 Sub-total 25516958 7344165 30655158 8719729 (2) Details of unrecognised deferred tax assets Item 2024 2023 Deductible tax losses 478477359 420651124 (3) Expiration of deductible tax losses for unrecognised deferred tax assets Year 2024 2023 2024-?36171778 20257052851070528510 20266027485668479171 2027123557586128025572 2028117444729117446093 2029106671678-? Total 478477359 420651124 69Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 19 Other non-current assets Item 2024 2023 Prepaid for Construction fee 3554409 1760000 20 Short-term loans Item 2024 2023 Unsecured loans 63222270 178605850 Mortgaged loans 126552126 163103275 Guaranteed loans 26365950 23272320 Total 216140346 364981445 As at 31 December 2024 details of short-term borrowings were as follows: Interest rate at the Amount Nature of Interest rate Amount end of the year interest rate RMB % % Mortgaged loans (USD) 12375000 90634266 Fixed 5.53% ~ 5.94% 5.53% ~ 5.94% Credit loans (RMB) 50000000 50000000 Floating 1 YEAR LPR-0.95% 2.27% Mortgaged loans (EUR) 4772694 35917860 Floating 3.41% ~4.65% 3.41% ~4.65% Secured loan (AUD) 5850000 26365950 Floating BBSW+1.5% 5.9% Credit loans (USD) 1000000 7323981 Fixed 5.61% 5.61% Credit loans (EUR) 783753 5898289 Floating 3.41% ~4.65% 3.41% ~4.65% Total ? 216140346 ? ? ? As at 31 December 2024 mortgaged loans (EUR) were Hacienda y Vi?edos Marques delAtrio S.L.U (“ Atrio “) factoring of accounts receivable from banks including BancoANTANDER、BBVA、CAIXABANK of EUR 4772694 (equivalent of RMB 35917860) (31 December 2023: EUR 9368417 (equivalent of RMB 73628264). On 31 December 2024 Chile Indomita Wine Group pledged its fixed assets to Banco Scotiabank and Banco de Chile to borrow USD 12375000 (equivalent to RMB 90634266) (31 December 2023: USD 12625000 (equivalent to RMB 89475011 ). On 31 December 2024 the secured loan represented the secured loan of Australia Kilikanoon Estate of AUD5850000 (equivalent to RMB 26365950) (31 December 2023: AUD 4800000 equivalent to RMB 23272320). 21 Accounts payable (1) Details of accounts payable are as follows: Ageing 2024 2023 Within 1 year (inclusive) 413307306 459106370 Over 1 year but within 2 years (inclusive) 2486147 10654983 Over 2 years but within 3 years (inclusive) 372036 990316 Over 3 years 1344950 2600856 Total 417510439 473352525 (2) There is no significant accounts payable with ageing of more than one year. 70Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 22 Contract liabilities As at As at Item 31 December 2024 31 December 2023 Receipt in advance 127855694 174757233 Withholding sales rebates 234659 521616 Total 128090353 175278849 Contract liabilities primarily relate to the Group’s advances from sales contracts of specific customers and the withholding sales rebates. Relevant contract liabilities are recognised as revenue when the control of the goods is transferred to the customer. 23 Employee benefits payable (1) Employee benefits payable: Additions during Decrease during Note 31 December 2023 31 December 2024 the year the year Short-term employee (2)176534963433947987(450840565)159642385 benefits Post-employment benefits - defined (3) 320484 42565593 (42562957) 323120 contribution plans Termination benefits 8475845 2040462 (3776895) 6739412 Total 185331292 478554042 (497180417) 166704917 (2) Short-term employee benefits Additions during Decrease during 31 December 2023 31 December 2024 the year the year Salaries bonuses 173350251383410051(400269302)156491000 allowances Staff welfare 1247367 14763504 (14740774) 1270097 Social insurance 295016 19202639 (19195603) 302052 Medical insurance 295016 17600108 (17593104) 302020 Work-related injury -1387614(1387582)32 insurance Maternity insurance - 214917 (214917) - Housing fund 38582 12564213 (12564214) 38581 Labour union fee staff and 16037474007580(4070672)1540655 workers’ education fee Total 176534963 433947987 (450840565) 159642385 (3) Post-employment benefits - defined contribution plans 31 December Additions during Decrease during 31 December 2023 the year the year 2024 Basic pension insurance 319251 41355245 (41352689) 321807 Unemployment insurance 1233 1210348 (1210268) 1313 Total 320484 42565593 (42562957) 323120 71Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 24 Taxes payable Item 2024 2023 Value-added tax 39051407 65545854 Consumption tax 40806933 50879210 Corporate income tax 88479855 134574175 Individual income tax 828712 1414309 Tax on the use of urban land 2301066 1730986 Education surcharges 3857746 5072436 Urban maintenance and construction tax 5372605 6787018 Others 8448730 8719443 Total 189147054 274723431 25 Other payables 31 December 31 December Note 20242023 Others (1) 398149521 555634336 Total 398149521 555634336 (1) Others (a) Details of others by nature are as follows: Item 2024 2023 Deposit payable to dealer 170639777 194060993 Advertising fee payable 44729221 104815517 Payables for repurchase of treasury shares 70704426 103411919 Trademarks 18630742 27515798 Freight charges payable 21041131 22301368 Deposits due to suppliers 16515150 18284971 Equipment and construction fee payable 13160841 14832439 Payables for equities - 14623377 Contracting fee payable 3179094 3360355 Staff deposit 735016 462672 Others 38814123 51964927 Total 398149521 555634336 (b) There are no significant others aged over one year accured this year. 26 Other current liabilities Item 2024 2023 Refund liabilities arising from rights of return 16425141 24869246 Tax to be transferred out as sales 24339101 20089051 Total 40764242 44958297 72Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 27 Non-current liabilities due within one year Non-current liabilities due within one year by category are as follows: Item 2024 2023 Long-term loans due within one year 61161578 58510868 Lease liabilities due within one year 18788191 20013125 Total 79949769 78523993 28 Long-term loans Long-term loans by category Item Note 2024 2023 Credit loans 111798781 125127311 Less: Long-term loans due V.27 61161578 58510868 within one year Total 50637203 66616443 As at 31 December 2024 details of long-term borrowings were as follows: Interest rate Long-term Long-term Nature of Amount Interest rate at the end of loans due loans due Amount interest the year within one after one rate year year RMB % % 2.80%-2.80%- Credit loans (EUR) 842761 6342368 Fixed 2394178 3948190 4.65%4.65% 3.41%-3.41%- Credit loans (EUR) 14012838 105456413 Floating 58767400 46689013 7.59%7.59% Total 111798781 61161578 50637203 As at 31 December 2024 Credit loans (EUR) were EUR 14855599 borrowed by Banco Santander BBVA Caja Rural de Navarr Caixa Bank etc. (equivalent of RMB 111798781 (31 December 2023: EUR15921126 equivalent of RMB 125127311). 29 Lease liabilities Item Note 2024 2023 Long-term lease liabilities ? 46331020 105051460 Less: Lease liabilities due within one V.27 18788191 20013125 year Total ? 27542829 85038335 The specific arrangement of leases activities of the Group refers to Note 53. 73Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 30 Deferred income 31 December Additions during Decrease during 31 December Item 2023 the year the year 2024 Government grants 32582734 3174000 (9817917) 25938817 Government grants: Amounts Additions of recognised in other Related to Liability 31 December 2023 government grants 31 December 2024 income during assets/income during the year the year Government Industrial development support 12300000 - (4100000) 8200000 grants related project to assets Government Retaining wall subsidies 8835333 - (988000) 7847333 grants related to assets Xinjiang industrial revitalisation Government and technological 8532000 - (1422000) 7110000 grants related transformation project to assets Government Wine fermentation capacity 1200000 - (1200000) - grants related construction project to assets Government Special fund for efficient water- 829000 - (162000) 667000 grants related saving irrigation project to assets Subsidy for economic and Government energy-saving technological 384900 - (128300) 256600 grants related transformation projects to assets Government Subsidies for construction of 245784 - (50600) 195184 grants related scenic spots to assets Subsidy for mechanic Government development of Penglai 55717 - (55717) - grants related Daliuhang Base to assets Government Improvement of service facilities -? 264000 -? 264000 grants related in scenic spots to assetsThe “Ten-Hundred-ThousandProgram” leisure agriculture Related to 200000150000(350000)- subsidies from Jugezhuang income government Technology research and industrial subsidies for utilizing Related to -?2760000(1361300)1398700 China-produced oak for income winemaking Total 32582734 3174000 (9817917) 25938817 74Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 31 Share capital Changes during the year Balance at the Cancellation of Balance at the beginning of the Release of lock-up year repurchased end of the year shares shares Unrestricted RMB ordinary 453460800 1720495 -? 455181295 shares Restricted RMB ordinary 6785559 (1720495) (425666) 4639398 shares (Note1) Foreign shares listed 232003200-?(19999993)212003207 domestically (Note2) Total shares 692249559 - (20425659) 671823900 Note1: The Proposal on the Company’s 2023 Restricted Share Incentive Plan (Draft) and Relevant Summary and the Proposal on the Request for the Authorisation to the Board of Directors by the General Meetings of Shareholders to Handle Matters related to the Company’s 2023 Restricted Share Incentive Plan were passed by resolutions in the Group’s 2022 General Meetings of Shareholders held on 26 May 2023. In addition the Proposal on the Adjustments to Matters related to 2023 Restricted Share Incentive Plan and the Proposal on the Granting of Restricted Shares to Incentive Objects under the 2023 Restricted Share Incentive Plan were reviewed and passed in the 2023 first extraordinary Board meeting held on 26 June 2023 (hereinafter referred to as the “Restricted Share Incentive Plan” see Note XIII for details). The Group determined to grant 6850000 restricted shares to 204 incentive objects at a grant price of RMB15.24 per share on 26 June 2023 (the grant date). A total of 203 incentive objects of the Group actually subscribed for 6785559 restricted shares at a grant price of RMB15.24 per share. The transaction increased the Company’s registered capital by RMB6785559 increased the capital reserve by RMB96626360 and recognised the repurchase obligation on restricted shares of RMB103411919.The Group convened the Second Meeting of the Remuneration Committee of the Board of Directors for 2024 the Fourth Extraordinary Board Meeting for 2024 and the Second Extraordinary Supervisory Committee Meeting for 2024 on 22 July 2024 at which the Proposal on Satisfaction of the Release of Lock-up Shares Granted under the Company’s 2023 Restricted Share Incentive Plan in the First Unlocking Period and the Proposal on the Repurchase and Cancellation of Certain Restricted Shares Granted under the Company’s 2023 Restricted Share Incentive Plan and Adjustment of Repurchase Price were reviewed and approved. The Proposal on the Repurchase and Cancellation of Certain Restricted Shares Granted under the Company’s 2023 Restricted Share Incentive Plan and Adjustment of Repurchase Price was reviewed and approved according to the resolution of the Third Extraordinary General Meeting on 8 August 2024. 172 incentive participants held the first tranche of restricted shares eligible for unlocking in 2024 and the total number of restricted shares unlocked was 1720495. These unlocked shares were listed and traded on 6 August 2024. Some incentive participants no longer met the conditions of the Company’s 2023 Restricted Share Incentive Plan as they have left the Company due to individual reasons or got job transfer and 157790 restricted shares that have been granted to them but not yet unlocked were repurchased and cancelled. 267876 restricted shares that cannot be 75Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 unlocked during the first unlocking period due to personal performance appraisal results were repurchased and cancelled. The number of restricted shares that have been repurchased and cancelled were 425666 in total. The transaction resulted in a decrease of RMB425666 in the Group’s share capital a decrease of RMB6061484 in capital reserve.Note2: The Group convened the First Extraordinary Board Meeting for 2024 on 22 February 2024 and the First Extraordinary General Meeting for 2024 on 11 March 2024 to review and approve the Proposal on Repurchasing Certain Domestically Listed Foreign Shares (B Shares) of the Company. As of 17 July 2024 the Group repurchased a total of 19999993 B shares by way of call auction through the special account for repurchase totalling RMB178084318. The Group completed the cancellation of the repurchased shares with the Shenzhen Branch of China Securities Depository and Clearing Co. Ltd. on 8 November 2024. The transaction resulted in a decrease of RMB 19999993 in the Group's share capital and a decrease of RMB 158084325 in capital reserve. 32 Capital reserve Additions Decrease 31 December 31 December Items Note during during the 20232024 the year year Share premium (1) 615678532 - (164145809) 451532723 Others (2) 35408175 ?- (4797351) 30610824 Total ? 651086707 - (168943160) 482143547 (1) During the reporting period the Group repurchased and cancelled 19999993 B shares of the Company resulting in a decrease of RMB 158084325 in share premium. Refer to Note V. 31 for details.During the reporting period the Group repurchased and cancelled 425666 restricted shares resulting in a decrease of RMB 6061484 in share premium. See Note V. 31 for details. (2) During the reporting period based on the best estimate of the number of equity instruments granted under the Group’s Restricted Share Incentive Plan capital reserve decreased by RMB 4016468 due to confirmation of amortization expenses refer to NoteXIII.1.During the reporting period the difference between the long-term equity investments obtained by the Group due to the purchase of minority equity and the share of net assets of the subsidiary calculated continuously since the purchase date according to the newly increased shareholding ratio reduced the capital reserve by RMB 780883 refer to NoteVIII.2.. 76Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 33 Treasury shares Balance at the Additions during Decrease during Balance at the Item beginning of the the year the year end of the year year Treasury shares 103411919 178084318 (210791811) 70704426 Total 103411919 178084318 (210791811) 70704426 During the reporting period the Group's treasury shares decreased by RMB 26220343 due to the unlocking of shares granted under the Group’s Restricted Share Incentive Plan. The Group's treasury shares also decreased by RMB 6487150 as some incentive participants have left the Company due to individual reasons or got job transfer and no longer met the conditions of the Company's 2023 Restricted Share Incentive Plan.The Group repurchased and cancelled 19999993 B shares resulting in an increase and decrease in treasury shares of RMB 178084318 respectively during the period. Please refer to note V.31. 34 Other comprehensive income Balance at the Accrued during the year Balance at the beginning of Less: Net-of-tax Net-of-tax end of the the year Previously amount amount year Less: Item attributable to Before-tax recognised attributable to attributable to attributable to Income tax shareholders amount amount shareholders non- shareholders expenses of the transferred to of the controlling of the Company profit or loss Company interests Company Items that may be reclassified to profit or loss Translation differences arising from translation of (14784677) (27197923) - - (24930295) (2267628) (39714972) foreign currency financial statements 35 Surplus reserve 31 December 31 December Item 20242023 Statutory surplus reserve 342732000 342732000 In accordance with the Company Law and the Articles of Association Company the Company appropriated 10% of its net profit to statutory surplus reserve. The appropriation to the statutory surplus reserve may be ceased when the accumulated appropriation reaches over 50% of the registered capital of the Company. The Company does not appropriate net profit to the surplus reserve in 2024 as surplus reserve of the Company is above 50% of the registered capital.The Company can appropriate discretionary surplus reserve after appropriation of the statutory surplus reserve. Discretionary surplus reserve can be utilised to offset the deficit or increase the share capital after approval. 77Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 36 Retained earnings Item Note 2024 2023 Retained earnings at the beginning of the 92736293189049649211 year Add: Net profits for the year attributable to 305210999532438907 shareholders of the Company Less: Dividends to ordinary shares (1) (345911947) (308458800) Retained earnings at the end of the year (2) 9232928370 9273629318 (1) Dividends in respect of ordinary shares declared during the year As approved by the general meeting of shareholders on May 17 2024 the Company distributed cash dividends of RMB 0.5 per share (2023: RMB 0.45 per share) to common shareholders on June 17 2024 and June 19 2024 totaling RMB346124780 (2023: RMB308458800).During the reporting period the Group repurchased and cancelled 425666 restricted shares granted under the Group’s Restricted Share Incentive Plan and recovered cash dividends of RMB 212833. (2) Retained earnings at the end of the year As at 31 December 2024 the consolidated retained earnings attributable to the Company included an appropriation of RMB 64459076 (2023: RMB 55900659 ) to surplus reserve made by the subsidiaries. 37 Operating income and operating costs 20242023 Item Income Cost Income Cost Principal activities 3196761585 1360000070 4309556631 1754792956 Other operating activities 80516762 32602329 75207704 32190701 Total 3277278347 1392602399 4384764335 1786983657 Including: Revenue from contracts with 3271223512 1387836538 4380255840 1783149498 customers Rent income 6054835 4765861 4508495 3834159 (1) Disaggregation of revenue from contracts with customers: Type of contract 2024 2023 By type of goods or services - Liquor 3196761585 4309556631 - Others 74461927 70699209 By timing of transferring goods or services ? - Revenue recognised at a point in time 3271223512 4380255840 78Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 (2) Geographical regions of operating income and operating costs： 20242023 Type of contract Income Cost Income Cost By geographical regions - China 2685914511 1031980984 3761534793 1378286484 - Other countries and regions 591363836 360621415 623229542 408697173 Total 3277278347 1392602399 4384764335 1786983657 38 Taxes and surcharges Item 2024 2023 Consumption tax 185547704 239887676 Urban maintenance and construction tax 23268173 35197172 Education surcharges 16775249 23177137 Property tax 33918780 34003219 Tax on the use of urban land 9869535 10331175 Stamp duty 4022461 5289257 Others 360727 1849935 Total 273762629 349735571 39 Selling and distribution expenses Item 2024 2023 Marketing fee 322040390 490535793 Salaries and benefits 294724158 313083923 Labour service fee 86440275 93243814 Advertising fee 63037709 75527637 Depreciation expense 51846831 48882915 Design and production fee 19561846 32182656 Travelling expenses 29989425 29318913 Trademarks expenses 17770743 27515798 Storage rental 25233942 27290488 Conference fee 16578022 19309557 Water electricity and gas fee 12987461 16830073 Others 72769618 66061209 Total 1012980420 1239782776 79Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 40 General and administrative expenses Item 2024 2023 Salaries and benefits 96337276 87857355 Depreciation expenses 99816234 89486538 Repair costs 12001516 11978855 Administrative expenses 19512898 19929523 Amortisation of greening fee 17550658 17409398 Amortisation expenses 15903477 16202523 Safety production costs 9793378 10743063 Security and cleaning fee 8593907 8326301 Contracting fee 3913648 4337738 Others 30488889 37719564 Total 313911881 303990858 41 Financial expenses Item 2024 2023 Interest expenses from loans and payables 30125387 31297810 Interest expenses from lease liabilities 4136343 4502287 Interest income from deposits (34643667) (30571465) Exchange losses 10911603 5002117 Other financial expenses 2306407 852710 Total 12836073 11083459 80Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 42 Other income Related to Item 2024 2023 assets/income Government grants Industrial development support project 4100000 4100000 related to assets Xinjiang Industrial Revitalization and Government grants 14220001422000 Technological Transformation Project related to assets Wine production capacity construction Government grants 1200000400000 project related to assets Government grants Subsidies for retaining wall 988000 638000 related to assets Special funds for the maintenance of Government grants -2079711 wine cellars related to assets Engineering technology transformation Government grants -580000 of information system project related to asse Others - Government grants related to Government grants 396617329207 assets related to assets Special funds for the development of 16700000 9237716 Related to income enterprises Tax rebates 13297771 19533196 Related to income Regional sales incentive fund 2800000 - Related to income Talent development funds from Shihezi 2200000 1500000 Related to income government Wine Industry Development Project 1224301 2684281 Related to income Funds for the integration development 536000 1000000 Related to income project of agricultural industry Others - Government grants related to 7749221 8019688 Related to income income Total 52613910 51523799 Other income during reporting period has been included in non-recurring gains and losses. 81Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 43 Investment (losses) /income Investment (losses) /income by items Item 2024 2023 Long-term equity investment losses under (4420872)(712480) equity method Investment profit/(loss) arising from disposal of subsidiaries and long-term equity - 24559930 investments Total (4420872) 23847450 44 Credit reversal Item 2024 2023 Accounts receivable 5545725 1397658 Other receivable (3726890) -? Total 1818835 1397658 45 Impairment losses Item 2024 2023 Fixed assets -? 10363383 Inventories 1450966 3143575 Goodwill 6014534 - Total 7465500 13506958 46 Gains/(loss) from asset disposals Item 2024 2023 Gains/(loss) from asset disposals 132116926 (134133) Note: The Group's gains on disposal of assets in 2024 mainly include proceeds of RMB 127400859 from the disposal of the vineyard in Zhuqiao Town. please refer to Note V.6. Gains from disposal of assets during reporting period has been included in non-recurring gains and losses. 47 Non-operating income and non-operating expenses (1) Non-operating income by item is as follows: Item 2024 2023 Insurance compensation 1709700 452242 Net income from fine 1501900 9325229 Others 1766330 2214799 Total 4977930 11992270 Non-operating income during reporting period has been included in non-recurring gains and losses. 82Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 (2) Non-operating expenses Item 2024 2023 Losses from disposal of non-current assets 1868546 573560 Donations provided 1416240 1212015 Compensation penalty and fine expenses 127736 80403 Losses from scrapping of packaging materials - 1137256 Others 320552 425176 Total 3733074 3428410 Non-operating expenses during reporting period has been included in non-recurring gains and losses. 48 Income tax expenses Item Note 2024 2023 Current tax expense for the year based 115078031216588992 on tax law and regulations Changes in deferred tax assets/liabilities (1) (1850459) 4844455 Total 113227572 221433447 (1) The analysis of changes in deferred tax is set out below: Item 2024 2023 Origination of temporary differences (1850459) 4844455 Total (1850459) 4844455 (2) Reconciliation between income tax expenses and accounting profit: Item 2024 2023 Profit before taxation 427554857 747466156 Estimated income tax at 25% 106888714 186866539 Effect of different tax rates applied by subsidiaries 1503486 2070828 Effect of non-taxable income (Note) (25961339) - Effect of non-deductible costs expense and losses 6891065 4978035 Effect of using deductible losses for which no deferred tax asset was recognized in previous periods (3134547) - Effect of deductible losses of deferred tax assets not recognised for the year 25217629 25756996 Deferred tax assets written-off 1822564 1761049 Income tax expenses 113227572 221433447 Note: In December 2024 the Company recognized gains or losses from disposal of assets of RMB 127400859 due to the disposal of assets related to the vineyard in Zhuqiao Town among which gains from disposal of biological assets amounted to RMB103845356. See Note V. 6 for details. 83Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 49 Basic earnings per share and diluted earnings per share (1) Basic earnings per share Basic earnings per share is calculated as dividing consolidated net profit attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding: 20242023 Consolidated net profit attributable to ordinary 305210999532438907 shareholders of the Company Weighted average number of ordinary shares 684370832685464000 outstanding Basic earnings per share (RMB/share) 0.45 0.78 Weighted average number of ordinary shares is calculated as follows: 20242023 Issued ordinary shares at the beginning of the year 685464000 685464000 Effect of repurchasing shares (1666666) - Effects of unlocking of ordinary shares subject to 573498- sales restrictions Weighted average number of ordinary shares at the 684370832685464000 end of the year (2) Diluted earnings per share Diluted earnings per share is calculated by dividing consolidated net profit (diluted) attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding (diluted): ? Note 2024 2023 Consolidated net profit attributable to ordinary shareholders of the Company (a) 305210999 532438907 (Dilute) Weighted average number of ordinary (b) 684370832 685670893 shares outstanding (Dilute) Diluted earnings per share (RMB/share) 0.45 0.78 (a) Consolidated net profit attributable to ordinary shareholders of the Company (diluted) is calculated as follows: 20242023 Consolidated net profit attributable to 305210999532438907 ordinary shareholders of the Company Consolidated net profit attributable to ordinary shareholders of the Company 305210999 532438907 (diluted) 84Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 (b) The weighted average number of the Company’s ordinary shares (diluted) is calculated as follows: ?20242023 Weighted average number of ordinary 684370832685464000 shares at 31 December Diluted adjustments: ? ? Effects of restricted shares - 206893 Weighted average number of ordinary 684370832685670893 shares (diluted) at the end of the year 50 Cash flow statement (1) Cash relating to operating activities a. Proceeds relating to other operating activities: Item 2024 2023 Government grants 45969993 45677242 Interest income from bank 29707469 27375399 Penalty income 1501900 9325229 Recovery of prior years’ trademarks right -120930641 receivables Others 3857611 16077111 Total 81036973 219385622 b. Payments relating to other operating activities: Item 2024 2023 Selling and distribution expenses 512511750 539874320 General and administrative expenses 105557429 99254521 Others 23092431 36569908 Total 641161610 675698749 (2) Cash relating to investing activities a. Proceeds relating to significant investing activities: Item 2024 2023 Recovery of fixed deposits 464200000 238200000 b. Payments relating to significant investing activities: Item 2024 2023 Investments in fixed deposits 288650000 464200000 Acquisition of fixed assets and construction in 74604013110067855 progress Total 363254013 574267855 85Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 (3) Cash relating to financing activities a. Proceeds relating to other financing activities: Item 2024 2023 Repurchase of treasury shares(Note V.33) 178084318 - Cancellation of restricted shares (Note V.33) 6487150 - Cash paid for lease 26235103 31931214 Payment for acquisition of non-controlling 1650691514623400 interests Payment of capital reduction - 20674509 Total 227313486 67229123 b. Changes in liabilities arising from financing activities Balance at the Additions during the year Decreases during the year Balance at the beginning of end of the year Cash Non-cash Cash Non-cash the year Short-term loan 364981445 459993522 - (608834621) - 216140346 Long-term loan 66616443 47965738 - - (63944978) 50637203 Lease liabilities 85038335 - 2184052 (2085636) (57593922) 27542829 Non-current liabilities due 78523993-82733169(81307393)-79949769 within one year Other accounts payable - --347336613(347336613)-- dividends payable Other accounts payable - --34261730(34261730)-- interest payable Other accounts payable - 14623377-1883538(16506915)-- payables for equities Other accounts payable - payables for repurchase of 103411919 - - (6487150) (26220343) 70704426 treasury shares Total 713195512 507959260 468399102 (1096820058) (147759243) 444974573 86Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 51 Supplementary information on cash flow statement (1) Supplement to cash flow statement a. Reconciliation of net profit to cash flows from operating activities: Item 2024 2023 Net profit 314327285 526032709 Add: Credit/asset impairment losses 5646665 12109300 Depreciation of fixed assets and 302028852317061135 investment property Amortisation of intangible assets 18740240 16932862 Amortisation of long-term deferred 2165842218514442 expenses Amortisation of productive biological 1383353313800290 assets Depreciation of ROU assets 20744479 22107603 (Profits)/losses from disposal of fixed assets intangible assets and other (132116926) 707693 long-term assets Financial expenses 32778256 32287868 Equity incentive (reversal)/expenses (4016467) 30735755 Investment losses/(profits) 4420872 (23847450) (Increase)/decrease in deferred tax (474895)5174683 assets Decrease in deferred tax liabilities (1375564) (330228) (Increase)/decrease in gross inventories (140130935) 131877015 Decrease/(increase) in operating 268230903(54231481) receivables (Decrease)/increase in operating (326553653)124159547 payables Net cash flows from operating activities 397741067 1173091743 b. Significant investing and financing activities not requiring the use of cash: Item 2024 2023 Payment of construction in progress and 37753184?13226592 other long-term assets by bank acceptances c. Change in cash and cash equivalents: Item 2024 2023 Cash equivalents at the end of the year 1717727551 1963155752 Less: Cash equivalents at the beginning of 19631557521612753600 the year Net (decrease)/increase in cash and cash (245428201)350402152 equivalents 87Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 (2) Details of cash and cash equivalents Item 2024 2023 Cash at bank and on hand Including: Cash on hand 27228 74951 Bank deposits available on demand 1718853539 1963080801 Closing balance of cash and cash equivalents 1718880767 1963155752 52 Assets with restrictive ownership title or right of use Balance at the Item Opening balance Reason for restriction end of the year The Company deposits and Cash at bank and on hand 337895 1470579 Escrow account for migrant workers' wages etc.Short-term borrowings Account receivable (i) 73628265 35917860? mortgage from Atrio Short-term borrowings from Fixed assets 37985117 32467803? Dicot Total 111951277 69856242 (i) As at 31 December 2024 the amount of accounts receivable with restricted ownership is EUR 4772694 equivalent of RMB 35917860 hich refers to accounts receivable Atrio conducted for factoring from Banco de Sabadell S.A. Etc. (31 December 2023: EUR 9368417 equivalent of RMB 73628265). 53 Leases (1) As a lessee Item 2024 2023 Short-term lease expenses for which the 386346?527463 practical expedient has been applied Total cash outflow for leases 26621449? 32458677 The Group leases buildings and motor vehicles with the lease terms of 1 year or less and all of these leases are short-term leases. The Group has elected not to recognise right-of-use assets and lease liabilities for these leases. (2) As a lessor Item 2024 2023 Lease income 6054835 4508495 The Group leased out some machineries in 2023 and 2024 with a lease term within 1 year. The Group has classified these leases as operating leases because they do not transfer substantially all of the risks and rewards incidental to the ownership of the assets.The undiscounted lease receipts to be received by the Group after the balance sheet date are as follows: 88Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 Item 2024 2023 Within 1 year (inclusive) 5872890 5958604 Over 1 year but within 2 years (inclusive) 5872890 5872890 Over 2 years but within 3 years (inclusive) 5850872 5872890 Over 3 years but within 4 years (inclusive) 1941507 5850872 Over 4 years but within 5 years (inclusive) - 1941507 Total 19538159 25496763 VI. Research and development expenses Presentation by nature Item 2024 2023 Salaries 7362919 6564884 Diagnostic test fees 2600375 3448000 Consultancy fee 1412609 3039519 Material consumption 4242275 2212169 Others 3920065 2148962 Total 19538243 17413534 Including: research and development expenditures 1953824317413534 that are expensed 89Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 VII. Change of consolidation scope The Group’s subsidiaries - Liaoning Changyu Ice Wine Winery Co. Ltd.merged Changyu (Huanren) Grape Wine Co. Ltd. ("Huanren Wine") in December 2024.VIII. Interests in other entities 1 Interests in subsidiaries (1) Composition of the Group Shareholding ratio Principal place of Business (%) Name of the Subsidiary Registered place Registered capital Acquisition method business nature (or similar equity interest) Business combinations Etablissements Roullet Fransac Cognac France Cognac France Trading EUR29000 - 100 involving entities not under (“Roullet Fransac”) common control Business combinations Marketing and Dicot Partners S.L (“Dicot”) Navarre Spain Navarre Spain EUR2000000 90 - involving entities not under sales common control Vi?a Indómita S.A. Vi?a Dos Andes S.A.Marketing and Acquired throughand BodegasSantaAlicia SpA.. (“Chile Santiago Chile Santiago Chile CLP31100000000 85 -sales establishment or investmentIndomita Wine Group”) Business combinations Kilikanoon Estate Pty Ltd. Marketing and Adelaide Australia Adelaide Australia AUD6420000 99 - involving entities not under (“Australia Kilikanoon Estate”) sales common control Beijing Changyu Sales and Distribution Marketing and Acquired through Beijing China Beijing China RMB1000000 100 - Co. Ltd. (“Beijing Sales”) sales establishment or investment Yantai Kylin Packaging Co. Ltd. Yantai Shandong Yantai Shandong Acquired through Manufacturing RMB15410000 100 - (“Kylin Packaging”) China China establishment or investment Yantai Chateau Changyu-Castel Co. Yantai Shandong Yantai Shandong Acquired through Manufacturing USD5000000 70 - Ltd.(“Chateau Changyu”) (a) China China establishment or investment Changyu (Jingyang) Wine Co. Ltd. Xianyang Shaanxi Xianyang Shaanxi Acquired through Manufacturing RMB1000000 90 10 (“Jingyang Wine”) China China establishment or investment Yantai Changyu Pioneer Wine Sales Yantai Shandong Yantai Shandong Marketing and Acquired through RMB8000000 100 - Co. Ltd. (“Sales Company”) China China sales establishment or investment Shanghai Changyu Sales and Distribution Marketing and Acquired through Shanghai China Shanghai China RMB1000000 100 - Co. Ltd. (“Shanghai Sales”) sales establishment or investment 90Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 Shareholding ratio Principal place of Business (%) Name of the Subsidiary Registered place Registered capital Acquisition method business nature (or similar equity interest)Yantai Changyu Wine Sales Co. Ltd. (“Wines Yantai Shandong Yantai Shandong Marketing and Acquired throughRMB5000000 90 10Sales”) China China sales establishment or investment Yantai Changyu Pioneer International Yantai Shandong Yantai Shandong Marketing and Acquired through RMB5000000 70 30 Co. Ltd. (“Pioneer International”) China China sales establishment or investment Hangzhou Changyu Wine Sales Co. Ltd. Hangzhou Zhejiang Hangzhou Zhejiang Marketing and Acquired through RMB500000 - 100 (“Hangzhou Changyu”) China China sales establishment or investment Ningxia Changyu Grape Growing Co. Ltd. Yinchuan Ningxia Acquired through Ningxia China Plating RMB1000000 100 - (“Ningxia Growing”) China establishment or investment Huanren Changyu National Wines Sales Co. Benxi Liaoning Marketing and Acquired through Benxi Liaoning China RMB2000000 100 - Ltd. (“National Wines”) China sales establishment or investment Liaoning Changyu Golden Icewine Valley Co. Benxi Liaoning Acquired through Benxi Liaoning China Manufacturing RMB64687300 100 - Ltd. (“Golden Icewine Valley”) China establishment or investment Yantai Development Zone Changyu Trading Yantai Shandong Yantai Shandong Marketing and Acquired through RMB5000000 - 100 Co. Ltd. (“Development Zone Trading”) China China sales establishment or investment Beijing AFIP Meeting Center Miyun Beijing Acquired through Miyun Beijing China Services RMB500000 - 100 (“Meeting Center”) China establishment or investment Beijing AFIP Tourism and Culture Miyun Beijing Acquired through Miyun Beijing China Tourism RMB500000 - 100 (“AFIP Tourism”) China establishment or investment Changyu (Ningxia) Wine Co. Ltd. Acquired through Ningxia China Ningxia China Manufacturing RMB1000000 100 - (“Ningxia Wine”) establishment or investment Yantai Changyu Chateau Tinlot Co. Ltd. Yantai Shandong Yantai Shandong Wholesale and Acquired through RMB400000000 65 35 (“Chateau Tinlot”) China China retail establishment or investment Xinjiang Chateau Changyu Baron Balboa Shihezi Xinjiang Shihezi Xinjiang Acquired through Manufacturing RMB550000000 100 - Co. Ltd. (“Chateau Shihezi”) China China establishment or investment Ningxia Chateau Changyu Moser XV Yinchuan Ningxia Yinchuan Ningxia Acquired through Manufacturing RMB2000000 100 - Co. Ltd. (“Chateau Ningxia”) China China establishment or investment Shaanxi Chateau Changyu Rena Co. Ltd. Xianyang Shaanxi Xianyang Shaanxi Acquired through Manufacturing RMB20000000 100 - (“Chateau Changan”) China China establishment or investment Yantai Changyu Wine Research & Yantai Shandong Yantai Shandong Acquired through Development Centre Co. Ltd. Manufacturing RMB805000000 100 - China China establishment or investment (“R&D Centre”) Xinjiang Changyu Sales Co. Ltd. Shihezi Xinjiang Shihezi Xinjiang Marketing and Acquired through RMB10000000 - 100 (“Xinjiang Sales”) China China sales establishment or investment Ningxia Changyu Trading Co. Ltd. Yinchuan Ningxia Yinchuan Ningxia Marketing and Acquired through RMB1000000 - 100 (“Ningxia Trading”) China China sales establishment or investment Shaanxi Changyu Rena Wine Sales Xianyang Shaanxi Xianyang Shaanxi Marketing and Acquired through RMB3000000 - 100 Co. Ltd. (“Shanxi Sales”) China China sales establishment or investment Penglai Changyu Wine Sales Co. Penglai Shandong Penglai Shandong Marketing and Acquired through RMB5000000 - 100 Ltd.(“Penglai Sales”) China China sales establishment or investment 91Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 Shareholding ratio Principal place of Business (%) Name of the Subsidiary Registered place Registered capital Acquisition method business nature (or similar equity interest) Laizhou Changyu Wine Sales Co. Ltd. Laizhou Shandong Laizhou Shandong Marketing and Acquired through RMB1000000 - 100 (“Laizhou Sales”) China China sales establishment or investment Francs Champs Participations SAS Investment Acquired through Cognac France Cognac France EUR32000000 100 - (“Francs Champs”) and trading establishment or investment Yantai Roullet Fransac Wine Sales Co. Ltd. Yantai Shandong Yantai Shandong Marketing and Acquired through RMB1000000 - 100 (“Yantai Roullet Fransac”) China China sales establishment or investmentYantai Changyu Wine Sales Co. Ltd. (“Wine Yantai Shandong Yantai Shandong Marketing and Acquired throughRMB5000000 100 -Sales Company”) China China sales establishment or investment Shaanxi Chateau Changyu Rena Tourism Xianxin Shaanxi Xianxin Shaanxi Acquired through Tourism RMB1000000 - 100 Co. Ltd. (“Chateau Tourism”) China China establishment or investment Longkou Changyu Wine Sales Co. Ltd. Yantai Shandong Yantai Shandong Marketing and Acquired through RMB1000000 - 100 (“Longkou Sales”) China China sales establishment or investment Yantai Changyu Cultural Tourism Yantai Shandong Yantai Shandong Acquired through Development Co. Ltd. Tourism RMB10000000 100 - China China establishment or investment(“Culture Development “)Beijing Changyu AFIP Agriculture Miyun Beijing Marketing and Acquired throughdevelopment Co. Ltd. (“Agriculture Miyun Beijing China RMB1000000 - 100China sales establishment or investmentDevelopment”) Beijing Chateau Changyu AFIP Global Acquired through Beijing China Beijing China Manufacturing RMB642750000 92 - Co. Ltd. (“AFIP”) (b) establishment or investment Yantai Changyu Wine Culture Museum Co. Yantai Shandong Yantai Shandong Acquired through Tourism RMB500000 - 100 Ltd. (“Museum”) China China establishment or investment Yantai Changyu Culture Tourism Production Yantai Shandong Yantai Shandong Acquired through Tourism RMB5000000 - 100 Sales Co. Ltd. (“Culture Sales”) China China establishment or investment Yantai Changyu International Window of the Yantai Shandong Yantai Shandong Acquired through Wine City Co. Ltd. Tourism RMB60000000 - 100 China China establishment or investment (“Window of the Wine City”) Yantai KOYA Brandy Chateau Co. Ltd. Yantai Shandong Yantai Shandong Acquired through Manufacturing RMB10000000 100 - (“Chateau KOYA”) China China establishment or investment Changyu (Shanghai) International Digital Marketing and Acquired through Marketing Center Limited Shanghai China Shanghai China RMB50000000 100 - sales establishment or investment (“Digital Marketing”) Shanghai Changyu Guoqu Digital Technology Marketing and Acquired through Co. Ltd. Shanghai China Shanghai China RMB6000000 - 51 sales establishment or investment (“Shanghai Guoqu”) Tianjin Changyu Yixin Digital Technology Co. Marketing and Acquired through Tianjin China Tianjin China RMB10000000 - 51 Ltd. (“Tianjin Yixin”) sales establishment or investment Shanghai Changyu Yixin Digital Technology Marketing and Acquired through Shanghai China Shanghai China RMB10000000 - 51 Co. Ltd. (“Shanghai Yixin”) sales establishment or investment 92Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 Shareholding ratio Principal place of Business (%) Name of the Subsidiary Registered place Registered capital Acquisition method business nature (or similar equity interest) Yantai Creighton Catering Company Limited Yantai Shandong Yantai Shandong Acquired through Services RMB1000000 - 100 (“Creighton Catering”) China China establishment or investment Weimeisi (Shanghai) Enterprise Development Marketing and Acquired through Shanghai China Shanghai China RMB10000000 100 - Co. Ltd (“Weimeisi Shanghai”) sales establishment or investment Ningxia Longyu Food Trading Co. Ltd. Yinchuan Ningxia Yinchuan Ningxia Marketing and Acquired through RMB500000 100 - ("Ningxia Longyu") China China sales establishment or investment Beijing Changyu Trading Co. Ltd. ("Beijing Miyun Beijing Marketing and Acquired through Miyun Beijing China RMB500000 100 - Trading") China sales establishment or investment Reasons for the inconsistency between the proportion of shareholdings in a subsidiary and the proportion of voting rights: (a) Chateau Changyu is a Sino-foreign joint venture established by the Company and a foreign investor accounting for 70% of Changyu Chateau’s equity interest. Through agreement arrangement the Company has the full power to control Changyu Chateau’s strategic operating investing and financing policies. The agreement arrangement is terminated on 31 December 2027.(b) AFIP is a limited liability company established by Yantai De'an Investment Co. Ltd and Beijing Qinglang Ecological Agricultural Technology Development Co. Ltd. After the equity change the Company holds 91.53% of its equity. Through agreement arrangement the Company has the full power to control AFIP’s strategic operating investing and financing policies. The agreement arrangement will be terminated on 2 September 2027. (2) Material non-wholly owned subsidiaries Comprehensive income Dividend declared to Proportion of ownership Balance of non- attributable to non- non-controlling Name of the Subsidiary interest held by non- controlling interests controlling interests shareholders controlling interests at the end of the year for the year during the year AFIP 8.47% - - 56409393 IWCC 15.00% 364279 1039338 56686379 93Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 (3) Key financial information about material non-wholly owned subsidiaries The following table sets out the key financial information of the above subsidiaries without offsetting internal transactions but with adjustments made for the fair value adjustment at the acquisition date and any differences in accounting policies: AFIP Chile Indomita Wine Group 2024202320242023 Current assets 256982569 268602777 237880401 252718459 Non-current assets 373266371 384948572 306022908 314112626 Total assets 630248940 653551349 543903309 566831085 Current liabilities 16704310 26013757 150938775 167265413 Non-current liabilities 3708917 3603886 7497696 9598445 Total liabilities 20413227 29617643 158436471 176863858 Operating income 81045348 198426991 222156497 232778304 Net profit/(loss) (8859147) 2636577 11847093 11018541 Total comprehensive (8859147) 2636577 2428528 8322765 income Cash flows from operating activities 12596851 10320219 19487568 22541317 2 Transactions that cause changes in the Group’s interests in subsidiaries that do not result in loss of control (1) Changes in the Group’s interests in subsidiaries: Percentage of Name of minority Fiscal year Purchase date Subsidiary shareholdings acquired Kilikanoon Estate 20241.5%12/01/2024 PtyLtd. (2) Impact of transactions on non-controlling interests and equity attributable to the shareholders of the Company: KilikanoonEstatePt yLtd.Acquisition cost consideration - Cash 1883538 Less: Share of net assets in subsidiaries based on the 1102655 shares acquired Difference (780883)?? Including: Adjustment to capital reserve (780883)? 94Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 IX. Risk related to financial instruments The Group has exposure to the following main risks from its use of financial instruments in the normal course of the Group’s operations: - Credit risk - Liquidity risk - Interest rate risk - Foreign currency risk The following mainly presents information about the Group’s exposure to each of the above risks and their sources their changes during the year and the Group’s objectives policies and processes for measuring and managing risks and their changes during the year.The Group aims to seek appropriate balance between the risks and benefits from its use of financial instruments and to mitigate the adverse effects that the risks of financial instruments have on the Group’s financial performance. Based on such objectives the Group’s risk management policies are established to identify and analyse the risks faced by the Group to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. 1 Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Group’s credit risk is primarily attributable to cash at bank receivables debt investments and derivative financial instruments entered into for hedging purposes. Exposure to these credit risks are monitored by management on an ongoing basis.The cash at bank of the Group is mainly held with well-known financial institutions.Management does not foresee any significant credit risks from these deposits and does not expect that these financial institutions may default and cause losses to the Group.The Group's maximum credit risk exposure is the carrying amount of each financial asset (including derivative financial instruments) in the balance sheet.In order to minimise the credit risk the Group has adopted a policy to ensure that all sales customers have good credit records. According to the policy of the Group credit review is required for clients who require credit transactions. In addition the Group continuously monitors the balance of account receivable to ensure there’s no exposure to significant bad debt risks. For transactions that are not denominated in the functional currency of the relevant operating unit the Group does not offer credit terms without the specific approval of the Department of Credit Control in the Group. In addition the Group reviews the recoverable amount of each individual trade debt at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard the management of the Group considers that the Group’s credit risk is significantly reduced. 95Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 Since the Group trades only with recognised and creditworthy third parties there is no requirement for collateral. Concentrations of credit risk are managed by customer/counterparty by geographical region and by industry sector. As at 31 December 2024 42.1% of the Group trade receivables are due from top five customers (31 December 2023: 49.0%). There is no collateral or other credit enhancement on the balance of the trade receivables of the Group. 2 Liquidity risk Liquidity risk is the risk that an enterprise will encounter difficulty in meeting obligations that are settled by delivering cash or another financial asset. The Company and its individual subsidiaries are responsible for their own cash management including short-term investment of cash surpluses and the raising of loans to cover expected cash demands (subject to approval by the Company’s board when the borrowings exceed certain predetermined levels). The Group’s policy is to regularly monitor its liquidity requirements and its compliance with lending covenants to ensure that it maintains sufficient reserves of cash readily realisable marketable securities and adequate committed lines of funding from major financial institutions to meet its liquidity requirements in the short and longer term.The following tables set out the remaining contractual maturities at the balance sheet date of the Group’s financial liabilities which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates or if floating based on rates current at the balance sheet date) and the earliest date the Group can be required to pay: 2024 Contractual undiscounted cash flow Carrying More than amount at Item Within 1 year or More than 1 to 2 years 2 years but less Total balance sheet on demand 5 years than 5 years date Short-term loans 219471784 - - - 219471784 216140346 Accounts payable 417510439 - - - 417510439 417510439 Other payables 398149521 - - - 398149521 398149521 Long-term loans (including the 344421562132729666175216-121944668111798781 portion due within one year) Lease liability (including the 201087121058566711049349151554225689915046331020 portion due within one year) Total 1089682612 31912963 77224565 15155422 1213975562 1189930107 2023 Contractual undiscounted cash flow Carrying amount at Item More than Within 1 year or More than 1 to 2 years 2 years but less Total balance sheet on demand 5 years than 5 years date Short-term loans 378707190 - - - 378707190 364981445 Accounts payable 473352525 - - - 473352525 473352525 Other payables 555634336 - - - 555634336 555634336 Long-term loans (including the 62702857945518361890894-134048934125127311 portion due within one year) Lease liability (including the 24050888232154842100714362047723130321238105051460 portion due within one year) Total 1494447796 32670667 82898037 62047723 1672064223 1624147077 96Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 3 Interest rate risk Interest-bearing financial instruments at variable rates and at fixed rates expose the Group to cash flow interest rate risk and fair value interest risk respectively. The Group determines the appropriate weightings of the fixed and floating rate interest-bearing instruments based on the current market conditions and performs regular reviews and monitoring to achieve an appropriate mix of fixed and floating rate exposure. (1) As at 31 December the Group held the following interest-bearing financial instruments: Fixed rate instruments: 20242023 Item Effective interest Effective interest Amounts Amounts rate rate Financial assets - Cash at bank 1.70% - 2.25% 78650000 1.45% - 2.25% 579200000 Financial liabilities ? ? ? ? - Short-term loans 5.53% - 5.94% (97958247) 6.83% - 7.30% (96562141) - Long-term loans (including the 2.80%-4.65%(6342368)1.50%-3.28%(5860499) portion due within one year) - Lease liability (including the 4.65%(46331020)4.65%(105051460) portion due within one year) Total ? (71981635) ? 371725900 Variable rate instruments: 20242023 Item Effective interest Effective interest Amounts Amounts rate rate Financial assets - Cash at bank 0.20% - 0.35% 1718853538 0.20% - 1.61% 1638418696 Financial liabilities ? ? 1Year LPR - 1 year LPR - Short-term loans (50000000) (100000000) 0.95%0.95% - Short-term loans BBSW+1.5% (26365950) 1.81% - 2.54% (23272320) - Short-term loans 3.41% - 4.65% (41816149) 3.90% - 6.95% (145146984) - Long-term loans (including the 3.41%-7.59%(105456413)2.00%-7.59%(119266812) portion due within one year) Total ? 1495215026 ? 1250732580 (2) Sensitivity analysis Management of the Group believes interest rate risk on bank deposit is not significant therefore does not disclose sensitivity analysis for interest rate risk. 97Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 As at 31 December 2024 based on assumptions above it is estimated that a general increase of 50 basis points in interest rates with all other variables held constant would decrease the Group’s equity by RMB 838644 (2023: RMB1453823) and net profit by RMB 838644 (2023: RMB1453823). The sensitivity analysis above indicates the instantaneous change in the net profit and equity that would arise assuming that the change in interest rates had occurred at the balance sheet date and had been applied to re-measure those financial instruments held by the Group which expose the Group to fair value interest rate risk at the balance sheet date. In respect of the exposure to cash flow interest rate risk arising from floating rate non-derivative instruments held by the Group at the balance sheet date the impact on the net profit and equity is estimated as an annualised impact on interest expense or income of such a change in interest rates. 4 Foreign currency risk In respect of cash at bank and on hand accounts receivable and payable short-term loans denominated in foreign currencies other than the functional currency the Group ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances. (1) As at 31 December the Group’s exposure to main currency risk arising from recognised assets or liabilities denominated in foreign currencies is presented in the following tables.For presentation purposes the amounts of the exposure are shown in Renminbi translated using the spot rate at the balance sheet date. Differences resulting from the translation of the financial statements denominated in foreign currency are excluded. 20242023 Balance at Balance at RMB Balance at Balance at RMB foreign currency equivalent foreign currency equivalent Cash at bank and on hand - USD 906574 6516817 308229 2184232 - EUR 62611 471195 67 523 - HKD 2 1 217 196 Short-term loans ? ? ? ? - USD 13375000 97958247 13625000 96562141 (2) The following are the exchange rates for Renminbi against foreign currencies applied by the Group: Balance sheet date Average rate mid-spot rate 2024202320242023 USD 7.1217 7.0558 7.1884 7.0871 EUR 7.7248 7.6689 7.5257 7.8592 HKD 0.9127 0.9011 0.9260 0.9062 98Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 (3) Sensitivity analysis Assuming all other risk variables remained constant a 5% strengthening of the Renminbi against the US dollar Euro dollar and HK dollar at 31 December would have impact on the Group’s equity and net profit by the amount shown below. whose effect is in Renminbi and translated using the spot rate at the year-end date: Equity Net profit 31 December 2024 USD 3433649 3433649 EUR (17200) (17200) HKD - - Total 3416449 3416449 31 December 2023 USD 3539172 3539172 EUR (20) (20) HKD (7) (7) Total 3539145 3539145 A 5% weakening of the Renminbi against the US dollar Euro dollar and HK dollar at 31 December would have had the equal but opposite effect to the amounts shown above on the basis that all other variables remained constant.X. Fair value disclosure All financial assets and financial liabilities held by the Group are carried at amounts not materially different from their fair value at 31 December 2024 and 31 December 2023. 99Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2024 XI. Related parties and related party transactions 1 Information about the parent of the Company Registered Shareholding Percentage of Ultimate controlling party of the Company name Business nature Registered capital place percentage (%) voting rights (%) Company Jointly controlled by Yantai GuoFeng Investment Holding Ltd ILLVA SARONNO HOLDING SPA Changyu Group Yantai Manufacturing 50000000 51.4% 51.4% International Finance Corporation and Yantai Yuhua Investment and Development Company Limited.The registered capital of the parent company did not change in 2024 while the parent company’s shareholding percentage and proportion of voting rights changed from 49.9% to 51.4%. 100Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2023 2 Information about the subsidiaries of the Company For information about the subsidiaries of the Company refer to Note VIII.1. 3 Information on other related parties Name of other related parties Related party relationship Yantai Shenma Packaging Co. Ltd. Controlled by the same parent (“Shenma Packaging”) company Information on the Group’s Yantai Zhongya Zhibao Pharmaceutical Co. Ltd.directors supervisors and the senior (“Zhongya Zhibao”) management Shanghai Yufeng Brand Management Co.Associate of the GroupLtd.("Shanghai Yufeng”) Taizhou Changyu Winery Wine Sales Co.Associate of the GroupLtd.("Taizhou Changyu”)Yantai Guolong Wine Industry Co. Ltd (“YantaiAssociate of the GroupGuolong”) Societe Civile Argricole Du Chateau De Mirefleurs Subsidiaries of the joint venture (“Mirefleurs”) CHATEAU DE LIVERSAN (“LIVERSAN”) Subsidiaries of the joint venture Non profit organizations associated Yantai Changyu Wine Culture Museum ("Museum") with the company 4 Transactions with related parties (1) Product procurement Related parties Nature of transaction 2024 2023 Shenma Packaging Product procurement 67118462 83991232 Zhongya Zhibao Product procurement 63910 152932 Mirefleurs Product procurement 5940476 7844108 LIVERSAN Product procurement 2997312 2602967 Total 76120160 94591239 (2) Sales of goods Related parties Nature of transaction 2024 2023 Zhongya Zhibao Sales of goods 4977296 4306827 Shanghai Yufeng Sales of goods 1747006 5691239 Shenma Packaging Sales of goods 119317 121548 Yantai Guolong Sales of goods 13221519 9152265 Taizhou Changyu Sales of goods 4329478 - Total 24394616 19271879 101Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2023 (3) Purchase of fixed assets Related parties of the Company Nature of transaction 2024 2023 Purchase of fixed Shenma Packaging 219821 1592698 assets Total 219821 1592698 (4) Leases (a) As the lessor Type of assets Lease income Lease income Name of lessee leased recognised in 2024 recognised in 2023 Shenma Packaging Offices and plants 1549410 1549410 Zhongya Zhibao Offices and plants 963810 963810 Museum Offices 382110 - Total 2895330 2513220 (b) As the lessee Type of assets Lease expense Lease expense Name of lessor leased recognised in 2024 recognised in 2023 Changyu Group Office buildings 1548899 1612118 Changyu Group Offices and plants 1396340 1394762 Changyu Group Offices and plants 4189020 4184286 Offices and Changyu Group 6484558 7057143 commercial building Total 13618817 14248309 (5) Remuneration of key management personnel Item 2024 2023 Remuneration of key management personnel 10298399 12846007 (6) Other related party transactions Related parties Nature of transaction 2024 2023 Changyu Group Trademarks 17770743 27515798 Pursuant to a royalty agreement dated 18 May 1997 starting from 18 September 1997 the Group may use certain trademarks of Changyu Group which have been registered with the PRC Trademark Office. An annual royalty fee at 2% of the Group’s annual sales is payable to Changyu Group. The license is effective until the expiry of the registration of the trademarks.On 18 May 2019 the general meeting of shareholders approved the proposal of the amendment to the royalty agreement. Article 6.1 of the royalty agreement with Changyu Group was amended to: During the validity period of this contract the Group pays Changyu Group royalty on an annual basis. The royalty is calculated based on 0.98% of the sales volume of the Group ‘s contract products using this trademark. The article 6.3 is amended to: The royalty paid to the Changyu Group by the Group shall not be used to promote this trademark and the contract products. 102Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2023 The Group incurred a trademark usage fee of RMB17770743 this year. 5 Receivables from and payables to related parties Receivables from related parties 20242023 Provision for Provision for Item Related party Book value bad and Book value bad and doubtful debts doubtful debts Accounts receivable Zhongya Zhibao 1041839 1126 1476262 2670 Accounts receivable Museum 416500 450 - - Accounts receivable Shanghai Yufeng -? -? 2925045 5290 Prepayments Mirefleurs 5346651 -? 6642165 - Prepayments Shenma Packaging 112579 -? - - Payables to related parties Item Related party 2024 2023 Accounts payable Shenma Packaging 20649261 27358723 Accounts payable Zhongya Zhibao 1133362 2066 Accounts payable Shanghai Yufeng 7318 - Contract liabilities Taizhou Changyu 5927230 - Contract liabilities Yantai Guolong 51696 14840000 Contract liabilities Shenma Packaging 11835 - Other payables Changyu Group 18630742 27515798 Other payables Shenma Packaging 400000 400000 Other payables Yantai Guolong 50000 - XII. Capital management The Group’s primary objectives when managing capital are to safeguard its ability to continue as a going concern so that it can continue to provide returns for shareholders by pricing products and services commensurately with the level of risk and by securing access to finance at a reasonable cost.The Group’s capital structure is regularly reviewed and managed to achieve an optimal structure and return for shareholders. Factors for the Group’s consideration include: its future funding requirements capital efficiency actual and expected profitability expected cash flows and expected capital expenditure. Adjustments are made to the capital structure in light of changes in economic conditions affecting the Group.Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. 103Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2023 XIII. Share-based payments 1 Equity instruments (1) Share options or other equity instruments outstanding at the end of the year Granted during the year Exercised during the year Unlocked during the year Forfeited during the year Type of grantees Quantity Amount Quantity Amount Quantity Amount Quantity Amount Some directors the senior management the middle - - - - 1720495 26220343 425666 6487150 management and core technical (operational) cadre (2) Equity-settled share-based payments Pursuant to the Proposal on the Company’s 2023 Restricted Share Incentive Plan (Draft) and Relevant Summary and the Proposal on the Request for the Authorisation to the Board of Directors by the General Meetings of Shareholders to Handle Matters related to the Company’s 2023 Restricted Share Incentive Plan passed by resolutions in the Group’s 2022 General Meetings of Shareholders held on 26 May 2023 as well as the Proposal on the Adjustments to Matters related to 2023 Restricted Share Incentive Plan and the Proposal on the Granting of Restricted Shares to Incentive Objects under the 2023 Restricted Share Incentive Plan reviewed and passed in the 2023 first extraordinary Board meeting held on 26 June 2023 the Group determined to grant 6850000 restricted shares to 204 incentive objects at a grant price of RMB15.24 per share on 26 June 2023 (the grant date). A total of 203 incentive objects of the Group actually subscribed for 6785559 restricted shares at a grant price of RMB15.24 per share. The transaction increased the Company’s registered capital by RMB6785559 increased the capital reserve by RMB96626360.All restricted shares granted to incentive objects are subject to different restricted sales periods which are respectively 12 months 24 months and 36 months from the date of completion of the grant registration of the restricted shares granted to the incentive objects.The restricted shares granted to the incentive objects under the Restricted Share Incentive Plan shall not be transferred pledged as collateral or to repay debts during the restricted sales periods. All restricted shares granted to incentive objects will be unlocked in three phases after 12 months from the grant date with the proportion of unlocking in each phase being 30% 30% and 40% respectively corresponding to unlocking dates of one year two years and three years from the grant date. The actual unlocked shares shall be linked to the performance appraisal for each year.When the Company’s performance meets the corresponding criteria the unlocking proportion of the above-mentioned restricted shares is determined based on the business performance of the incentive object’s operation and the contribution value of the incentive object. The Company will repurchase the locked restricted shares at the granted price of the incentive objects if the unlocked criteria stipulated in this plan are not met and the incentive object shall not unlock the restricted shares for the current period. 104Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2023 The Group convened the Second Meeting of the Remuneration Committee of the Board of Directors for 2024 the Fourth Extraordinary Board Meeting for 2024 and the Second Extraordinary Supervisory Committee Meeting for 2024 on 22 July 2024 at which the Proposal on Satisfaction of the Release of Lock-up Shares Granted under the Company’s 2023 Restricted Share Incentive Plan in the First Unlocking Period and the Proposal on the Repurchase and Cancellation of Certain Restricted Shares Granted under the Company’s 2023 Restricted Share Incentive Plan and Adjustment of Repurchase Price were reviewed and approved. The Proposal on the Repurchase and Cancellation of Certain Restricted Shares Granted under the Company’s 2023 Restricted Share Incentive Plan and Adjustment of Repurchase Price was reviewed and approved according to the resolution of the Third Extraordinary General Meeting on 8 August 2024. 172 incentive participants held the first tranche of restricted shares eligible for unlocking in 2024 and the total number of restricted shares unlocked was 1720495. These unlocked shares were listed and traded on 6 August 2024. The transaction resulted in a decrease of RMB26220343 in treasury shares. Some incentive participants no longer met the conditions of the Company’s 2023 Restricted Share Incentive Plan as they have left the Company due to individual reasons or got job transfer and 157790 restricted shares that have been granted to them but not yet unlocked were repurchased and cancelled. 267876 restricted shares that cannot be unlocked during the first unlocking period due to personal performance appraisal results were repurchased and cancelled. The number of restricted shares that have been repurchased and cancelled were 425666 in total. The transaction resulted in a decrease of RMB425666 in the Group’s share capital a decrease of RMB6061484 in capital reserve and a decrease of RMB 6487150 in treasury shares.As at 31 December 2024 the total costs of equity-settled share-based payments in the consolidate financial statements for the year were RMB4016468 and the accumulated amount of equity-settled share-based payments recognised in the capital reserve for the year amounted to RMB26719287.XIV. Commitments and contingencies 1 Significant commitment (1) Capital commitments Item 2024 2023 Long-term assets acquisition commitment 41228000? 50057140 Total 41228000? 50057140 (2) Operating lease commitments As at 31 December the total future minimum lease payments under non-cancellable operating leases of the Group’s properties were payable as follows: Item 2024 2023 Within 1 year (inclusive) -? 50000 Total -? 50000 2 Contingencies The Group do not have any significant contingencies as at balance sheet date. 105Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2023 XV. Subsequent events 1 Distribution of dividends on ordinary shares approved after the balance sheet date According to the proposal of the Board of Directors on 16 April 2025 the Company intends to distribute cash dividend totaling RMB268729560 to all shareholders of 671823900 capital shares for the year ended 31 December 2024 on the basis of RMB 4 (including tax) for every 10 shares. The proposal is subject to the approval by the Shareholders’ meeting.This distribution of profit in cash has not been recognised as a liability at the balance sheet date.XVI. Other significant items 1 Segment reporting The Group is principally engaged in the production and sales of wine brandy and sparkling wine in China France Spain Chile and Australia. In accordance with the Group’s internal organisation structure management requirements and internal reporting system the Group’s operation is divided into five parts: China Spain France Chile and Australia. The management periodically evaluates segment results in order to allocate resources and evaluate performances. In 2024 over 82% of revenue more than 93% of profit and over 91% of non-current assets derived from China/are located in China. Therefore the Group does not need to disclose additional segment report information. 106Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2023 XVII. Notes to the Company’s financial statements 1 Receivables under financing Item Note 2024 2023 Bills receivable (1) 13110297 36322019 Total 13110297 36322019 (1) The pledged bills receivable of the Company at the end of the year As at 31 December 2024 there was no pledged bills receivable (31 December 2023: Nil). (2) Outstanding derecognised endorsed bills that have not matured at the end of the year Amount Item recognised at year end Bank acceptance bills 60323326 Total 60323326 As at 31 December 2024 derecognised bills endorsed by the Company to other parties which are not yet due at the end of the period is RMB 60323326 (31 December 2023: RMB 53825102). The notes are used for payment to suppliers. The Company believes that due to good reputation of bank the risk of notes not accepting by bank on maturity is very low therefore derecognise the note receivables endorsed. If the bank is unable to pay the notes on maturity according to the relevant laws and regulations of China the Company would undertake limited liability for the notes. 2 Other receivables 31 December 31 December Note 20242023 Dividends receivable (1) 130000000 - Others (2) 822762563 576949997 Total 952762563 576949997 (1) Dividends receivable 31 December 31 December Item 20242023 Dividends to subsidiaries 130000000 - Total 130000000? - 107Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2023 (2) Others (a) Others by customer type: 31 December 31 December Customer type 20242023 Amounts due from subsidiaries 615371507 574127885 Amounts due from related parties 207391056 2822112 Sub-total 822762563 576949997 Less: Provision for bad and doubtful debts -? - Total 822762563 576949997 (b) The ageing analysis is as follows: Ageing 2024 2023 Within 1 year (inclusive) 822658091 576845525 Over 1 year but within 2 years (inclusive) -? - Over 2 years but within 3 years (inclusive) -? - Over 3 years 104472 104472 Sub-total 822762563 576949997 Less: Provision for bad and doubtful debts - - Total 822762563 576949997 The ageing is counted starting from the date.(c) Movements of provisions for bad and doubtful debts As at 31 December 2024 no bad and doubtful debt provision was made for other receivables (31 December 2023: Nil).As at 31 December 2024 the Company has no other receivables written off (31 December 2023: Nil).(d) Others categorised by nature Nature of other receivables 2024 2023 Amounts due from subsidiaries 615371507 574127885 Compensation receivable for the disposal of a 200666088- vineyard (Note V.6) Others 6724968 2822112 Sub-total 822762563 576949997 Less: Provision for bad and doubtful debts -? - Total 822762563 576949997 108Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2023 (e) Five largest others-by debtor at the end of the year Ending balance Percentage of Nature of the Balance at the of provision for Debtor Ageing ending balance receivable end of the year bad and doubtful of others (%) debts Compensation receivable for the Company I 200666088 Within 1 year 24.4% - disposal of a vineyard Amounts due Dicot 138187227 Within 1 year 16.8% - from subsidiaries Amounts due Sales Company 135160033 Within 1 year 16.4% - from subsidiaries Amounts due Within 1 year and Kilikanoon Australia 56668527 6.9% - from subsidiaries 1-2 years Amounts due Pioneer International 12290287 Within 1 year 1.5% - from subsidiaries Total 542972162 66.0% - 3 Long-term equity investments (1) Long-term equity investments by category: 20242023 Item Provision for Carrying Provision for Carrying Book value Book value impairment amount impairment amount Investments in 7737521508(48288589)76892329197690772693(42274055)7648498638 subsidiaries Total 7737521508 (48288589) 7689232919 7690772693 (42274055) 7648498638 109Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2023 (2) Investments in subsidiaries: Additions Additions/ Balance of Balance at the during the (Decrease) Decrease Balance at the provision for Subsidiary beginning of year- during the during the end of the impairment at the year Purchase of year - Equity year year the end of the equity Incentives year Kylin Packaging 23543435 - 10496 - 23553931 - Chateau Changyu 29273059 - 8713 - 29281772 - Pioneer International 5934696 - (1469982) - 4464714 - Ningxia Growing 36573247 - - - 36573247 - National Wines 2000000 - - - 2000000 - Golden Icewine Valley 63431494 22200000 6978 - 85638472 - Chateau Beijing 588633661 - 14554 - 588648215 - Sales Company 21259694 - (2307582) - 18952112 - Wine Sales 5333190 - (224024) - 5109166 - Shanghai Marketing 1000000 - - - 1000000 - Beijing Sales 850000 - - - 850000 - Jingyang Wine 900000 - - - 900000 - Ningxia Wine 222309388 - - - 222309388 - Chateau Ningxia 453747514 - 12770 - 453760284 - Chateau Tinlot 212039586 - - - 212039586 - Chateau Shihezi 812303784 - 8115 - 812311899 - Chateau Changan 804197217 - 8713 - 804205930 - R&D Centre 3290230714 - 37836 - 3290268550 - Huanren Wine 22200000 - - (22200000) - - Wine Sales Company 5102210 - 2920 - 5105130 - Francs Champs 236025404 - - - 236025404 - Dicot 233142269 - - - 233142269 11225459 Chile Indomita Wine Group 274248114 - - - 274248114 - Australia Kilikanoon Estate 129275639 1883538 - - 131159177 37063130 Digital Marketing 1186121 49000000 5318 - 50191439 - Chateau Koya 110328128 - 9375 - 110337503 - Shanghai Weimeisi 7910985 - - - 7910985 - Culture Development 92621574 - 27986 - 92649560 - Development Zone Trading 861192 - (23587) - 837605 - Penglai sales 1104339 - (272727) - 831612 - Longkou sales 1611286 - - - 1611286 - Laizhou sales 84916 - 2426 - 87342 - Yantai Roullet Fransac 244217 - 6979 - 251196 - Museum 265162 - - - 265162 - Window of the Wine City 470134 - - - 470134 - AFIP Tourism 162952 - - - 162952 - Meeting Center 102210 - - - 102210 - Ningxia Trading 162952 - - - 162952 - Creighton Catering 102210 - - - 102210 - Total 7690772693 73083538 (4134723) (22200000) 7737521508 48288589 For information about the subsidiaries of the Company refer to Note VIII. 110Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2023 4 Operating income and operating costs 20242023 Item Income Cost Income Cost Principal activities 557517562 494323439 723412525 615998040 Other operating activities 4561209 2555898 7746429 5638524 Total 562078771 496879337 731158954 621636564 Including: Revenue from contracts 557517562494323439723412525615998040 with customers Rent income 4561209 2555898 7746429 5638524 Disaggregation of revenue from contracts with customers: Type of contract 2024 2023 By type of goods or services - Liquor 557517562 723412525 By timing of transferring goods or services ? ? - Revenue recognised at a point in time 557517562 723412525 5 Investment income Item 2024 2023 Income from long-term equity investments 368167007476632356 accounted for using cost method Income from long-term equity investments -54935 accounted for using equity method Loss from disposal of subsidiaries and long-term -(37436762) equity investment Total 368167007 439250529 6 Transactions with related parties (1) Product procurement Related parties Nature of transaction 2024 2023 Subsidiary of the parent Product procurement 214788248 292073183 company Other related parties of the Product procurement 36256009 43934847 Company Total 251044257 336008030 111Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2023 (2) Sales of goods Related parties Nature of transaction 2024 2023 Subsidiary of the parent Sales of goods 590568772 787731546 company Other related parties of the Sales of goods 3626159 3184145 Company Total 594194931 790915691 (3) Guarantee The Company as the guarantor Amount of Inception date of Maturity date of Guarantee Guarantee holder Currency guarantee guarantee guarantee expired (Y/N) Australia Kilikanoon Estate AUD 5850000 1 September 2023 2 March 2026 N (4) Leases (a) As the lessor Lease income Lease income Name of lessee Type of assets leased recognised in 2024 recognised in 2023 Other related parties of Offices and plants 2513220 2513220 the Company Subsidiary of the parent Offices buildings 85714 85714 company Total 2598934 2598934 (b) As the lessee Lease expense Lease expense Name of lessor Type of assets leased recognised in 2024 recognised in 2023 Other related parties of Office buildings 1396340 1394762 the Company Total Office buildings 1396340 1394762 7 Receivables from and payables to related parties Receivables from related parties 20242023 Provision for Provision for Item Related party Book value bad and Book value bad and doubtful debts doubtful debts Other related parties Accounts receivables 227042 245 727123 1298 of the Company Other related parties Prepayments 5344237 -? 4472159 - of the Company Subsidiary of the Other receivables 745371507 -? 574127885 - parent company Subsidiary of the Other non-current assets 1864430000 -? 1934430000 - parent company 112Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2023 Payables to related parties Item Related party 2024 2023 Other related parties of Accounts payable 5528108 13895970 the Company Subsidiary of the Other payables 441845995 441681129 parent company Other related parties of Other payables 400000 400000 the Company XVIII. Extraordinary gains and losses in 2024 Item Amount (1) Profit and loss from disposal of non-current assets 132116926 Government grants recognised through profit or loss (except for those which are closely related to the company’s normal operations which the company is entitled to under established ? (2) standards in accordance with government policies and which 52613910 have a continuing impact on the profits and losses of the company) (3) Other non-operating income and expenses besides items above 1244856 Sub-total 185975692 (4) Tax effect (6873074) (5) Effect on non-controlling interests after taxation (4956976)? Total 174145642? Note: Extraordinary gain and loss items (1) to (3) listed above are presented in the amount before taxation.XIX. Return on net assets and earnings per share 1 Calculation of earnings per share (1) Basic earnings per share For calculation of the basic earnings per share please refer to Note V.49. 113Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2023 (2) Basic earnings per share excluding extraordinary gain and loss Basic earnings per share excluding extraordinary gain and loss is calculated as dividing consolidated net profit excluding extraordinary gain and loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding: 20242023 Consolidated net profit attributable to ordinary 305210999532438907 shareholders of the Company Extraordinary gains and losses attributable to 17414564268365214 ordinary shareholders of the Company Consolidated net profit excluding extraordinary gain and loss attributable to the Company’s ordinary 131065357 464073693 equity shareholders Weighted average number of ordinary shares 684370832685464000 outstanding Basic earnings per share excluding extraordinary 0.190.68 gain and loss (RMB/share) (3) Diluted earnings per share For calculation of the diluted earnings per share please refer to Note V.49. (4) Diluted earnings per share excluding extraordinary gains and losses Diluted earnings per share excluding extraordinary gains and losses is calculated by dividing consolidated net profit excluding extraordinary gains and losses attributable to ordinary shareholders of the Company (diluted) by the weighted average number of ordinary shares outstanding (diluted): 20242023 Consolidated net profit attributable to ordinary 305210999532438907 shareholders of the Company (diluted) Extraordinary gains and losses attributable to 17414564268365214 ordinary shareholders of the Company Consolidated net profit excluding extraordinary gains and losses attributable to the Company’s 131065357 464073693 ordinary equity shareholders (diluted) Weighted average number of ordinary shares 684370832685670893 outstanding (diluted) Diluted earnings per share excluding extraordinary 0.190.68 gains and losses (RMB/share) 114Yantai Changyu Pioneer Wine Company Limited Financial statements for the year ended 31 December 2023 2 Calculation of weighted average return on net assets (1) Weighted average return on net assets Weighted average return on net assets is calculated as dividing consolidated net profit attributable to ordinary shareholders of the Company by the weighted average amount of consolidated net assets: 20242023 Consolidated net profit attributable to ordinary 305210999532438907 shareholders of the Company Weighted average amount of consolidated net 1077355481710684054057 assets Weighted average return on net assets 2.83% 4.98% Calculation of weighted average amount of consolidated net assets is as follows: 20242023 Consolidated net assets at the beginning of the 1084150098810579053733 year Effect of consolidated net profit attributable to 140140353270707233 ordinary shareholders of the Company Effects of Restricted Share Incentive Plan 9251615 15367878 Acquisition of non-controlling interests (Note VIII.2) (715809) (1140487) Effect of shares repurchased (Note V.32) (14840361) - Effect of cash dividends (Note V.36) (201781969) (179934300) Weighted average amount of consolidated net 1077355481710684054057 assets (2) Weighted average return on net assets excluding extraordinary gain and loss Weighted average return on net assets excluding extraordinary gain and loss is calculated as dividing consolidated net profit excluding extraordinary gain and loss attributable to ordinary shareholders of the Company by the weighted average amount of consolidated net assets: 20242023 Consolidated net profit excluding extraordinary gain and loss attributable to the Company’s ordinary 131065357 464073693 equity shareholders Weighted average amount of consolidated net 1077355481710684054057 assets Weighted average return on net assets excluding 1.22%4.34% extraordinary gain and loss 115