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张裕B:2018年年度报告(英文版) 下载公告
公告日期:2019-04-20

YantaiChangyuPioneerWineCo.Ltd.

2018AnnualReport

Final2019-01

April,2019

Contents

I、ImportantNotice,

ContentsandDefinition ...... 3II、BriefIntroductionfortheCompanyandMainFinancialIndicators ...... 5

III、SummaryoftheCompany’sBusinesses ...... 10

IV、ManagementDiscussionandAnalysis ...... 14

V、Majorissues ...... 35

VI、ChangesinSharesandtheShareholders’Situation ...... 51VII、RelatedSituationofPreferredShares ...... 61

VIII、SituationforDirectors,Supervisors,SeniorExecutivesandStaffs ...... 62

IX、CorporateGovernance ...... 77

X、RelatedSituationofCorporationBonds ...... 85

XI、FinancialReport ...... 86

XII、ReferenceDocument ...... 198

I.ImportantNotice,ContentandDefinition

Theboardofdirectors,theboardofSupervisors,directors,supervisorsandseniorexecutivesoftheCompanyguaranteethetruthfulness,accuracyandcompletenessofthecontentscontainedinthereportwithnofalserecords,misleadingstatementsorsignificantomissions,andundertakeindividualandjointlegalliabilities.Mr.ZhouHongjiang(ChairmanoftheCompany),Mr.JiangJianxun(ChiefFinancialOfficer&FinancialDirector)assurethetruthfulness,accuracyandcompletenessofthefinancialreportintheannualreport.Exceptthefollowingdirectors,allotherdirectorshavepersonallyattendedthemeetingfordeliberatingtheannualreport.

Directornamewithnon-presentinpersonDirectorpostwithnon-presentinpersonReasonfornon-presentinpersonNameofmandatory
SunLiqiangDirectorBusinesstripZhouHongjiang
AntonioAppignaniDirectorBusinesstripAugustoReina

Forward-lookingstatementssuchasfutureplansanddevelopmentstrategiescoveredinthisreportdonotconstituteasubstantialcommitmentoftheCompanytoinvestors.Investorsareadvisedtopayattentiontoinvestmentrisks.Aboutsignificantrisksthatmaybefacedinproductionandoperationprocess,pleasereferto“5.Riskslikelytooccur”partof“9.ExpectationfortheCompany’sFutureDevelopment”intheChapterFour“ManagementDiscussionandAnalysis”ofthereport.Investorsareadvisedtoreadcarefullyandpayattentiontoinvestmentrisks.TheCompany’spreliminaryschemeofprofitdistributiondeliberatedandpassedbytheboardofdirectorsthistimeisshownasfollowing:BasedontheCompany’stotal685,464,000shares,weplantopayCNY6(includingtax)incashasdividendsforevery10sharestoallshareholdersandsend0bonusshare(includingtax).Capitalreservewillnotbetransferredtoequity.

Definition

DefinitionItemReferstoDefinitionContent
Company/TheCompanyReferstoYantaiChangyuPioneerWineCo.Ltd.
ChangyuGroup/ControllingShareholderReferstoYantaiChangyuGroupCo.Ltd.
CSRCReferstoChinaSecuritiesRegulatoryCommission
SSEReferstoShenzhenStockExchange
DeloitteHuaYongReferstoDeloitteHuaYongCertifiedPublicAccountantsCo.,Ltd(specialgeneralpartnership)
CNYReferstoChineseYuan

II.BriefIntroductionfortheCompanyandMainFinancialIndicators

1.Company’sinformation

StockAbbreviationChangyuA,ChangyuBStockCode000869,200869
StockAbbreviationafterAlteration-
PlaceofStockListingShenzhenStockExchange
LegalNameinChinese烟台张裕葡萄酿酒股份有限公司
AbbreviationofChineseName张裕
LegalNameinEnglishYANTAICHANGYUPIONEERWINECOMPANYLIMITED
AbbreviationofEnglishNameCHANGYU
LegalRepresentativeMr.ZhouHongjiang
RegisteredAddress56DamaRoad,Yantai,Shandong,China
PostalCode264000
OfficeAddress56DamaRoad,Yantai,Shandong,China
PostalCode264000
Websitehttp://www.changyu.com.cn
E-mailwebmaster@changyu.com.cn

2.Contactpersonandinformation

SecretarytotheBoardofDirectorsAuthorizedRepresentativeofSecuritiesAffairs
NameMr.QuWeiminMr.LiTingguo
Address56DamaRoad,Yantai,Shandong,China56DamaRoad,Yantai,Shandong,China
Tel0086-535-66336560086-535-6633656
Fax0086-535-66336390086-535-6633639
E-mailquwm@changyu.com.cnstock@changyu.com.cn

3.Informationdisclosureandfilinglocation

MedianameforinformationdisclosureselectedbytheCompanyChinaSecuritiesNewspaper,SecuritiesTimesandHongKongCommercialDaily
WebSiteassignedbyCSRCtocarrytheannualreporthttp://www.cninfo.com.cn
FilinglocationoftheCompany’sannualreportBoardofDirectors’OfficeoftheCompany,56DamaRoad,Yantai,Shandong

4.Registrationchanges

OrganizationCode913700002671000358
ChangesforthemainbusinessesoftheCompanysinceitwaslistedThebusinessscopedeterminedbytheCompanywhenitwasestablishedonSeptember18th,1997isproduction,processingandsalesofwine,distilledliquor,healthyliquor,fruitliquor,non-alcoholbeverage,fruitjam,packingmaterialandwinemakingmachine.OnApril17th,2008,approvedbythe2007shareholders’meeting,theCompany’sbusinessscopeischangedtoproduction,processingandsalesofwine,distilledliquor,medicatedliquor,fruitliquor,non-alcoholbeverage,fruitjam,packingmaterial,winemakingmachinesandlicensedimportandexport.OnMay12th,2010,approvedbythe2009shareholders’meeting,theCompanychangeditsbusinessscopetoproduction,processingandsalesofwine,distilledliquor,medicatedliquor,fruitliquor,non-alcoholbeverage,fruitjam,packingmaterialanditsproducts,winemakingmachine,licensedimportandexportandexternalinvestmentaccordingtonationalpolicy.OnSeptember23rd,2016,approvedbythe2016annual1stInterimshareholders’meeting,theCompanychangeditsoperatingscopetowineandfruitwine(bulkwine,processingandfilling)production,blendingliquorandotherblendingliquors(grapeliqueur)production,otherliquors(otherdistillingliquors)production,production,processingandsalesofpackingmaterialandwinemakingmachine,grapeplantationandprocurement,tourismresourcesdevelopment(excludingtourism),packagedesign,activityofbuildingrental,licensedimportandexport,warehousebusinessandexternalinvestmentaccordingtonationalpolicy.
ChangesforallpreviouscontrollingshareholdersNo.

5.OtherrelevantinformationTheaccountingfirmappointedbytheCompany

NameDeloitteHuaYongCertifiedPublicAccountantsCo.,Ltd(specialgeneralpartnership)
AddressNo.23ZhenzhiRoad,ChaoyangDistrict,Beijing
NameofsignatoryaccountantsXieYanfeng,LiYangang

ThesponsorinstitutionappointedbytheCompanytoperformthedutyofcontinuoussupervisionduringthereportperiod□Available?NotavailableThefinancialadviserappointedbytheCompanytoperformthedutyofcontinuoussupervisionduringthereportperiod□Available?Notavailable6.KeyaccountingdataandfinancialindicatorsWhethertheCompanyneedstoretrospectivelyadjustorrestatetheaccountingdataofpreviousfiscalyears.□Yes?No

20182017MoreorlessthanLastyear(%)2016
Operatingrevenue(CNY)5,142,244,7404,932,545,2294.25%4,717,596,472
Netprofitattributedtoshareholdersofthelistedcompany(CNY)1,042,632,9291,031,695,0561.06%982,460,488
Netprofitattributedtoshareholdersofthelistedcompanyafterdeductingirregulargainsandlosses(CNY)965,426,238986,095,872-2.10%941,730,478
Netcashflowsfromoperatingactivities(CNY)975,978,746973,243,0270.28%889,911,970
Basicearningspershare(CNY)1.521.510.66%1.43
Dilutedearningspershare(CNY)1.521.510.66%1.43
Weightedaverageforearningrateofnetassets(CNY)11.23%12.14%-0.91%12.55%
December31st,2018December31st,2017MoreorlessthanLastyear(%)December31st,2016
Totalassets(CNY)13,117,729,05212,536,755,2084.63%11,528,077,971
NetAssetsattributedtoshareholdersofthelistedcompany(CNY)9,606,099,3658,906,342,2997.86%8,209,010,989

7.DifferencesinaccountingdataunderPRCaccountingstandardsandinternationalaccountingstandards

(1)DifferencesofnetprofitsandnetassetsinthefinancialreportdisclosedaccordingtobothinternationalaccountingstandardsandPRCaccountingstandards□Available?NotavailableTherearenodifferencesofnetprofitsandnetassetsinthefinancialreportdisclosedaccordingtobothinternationalaccountingstandardsandPRCaccountingstandardsduringthereportperiod.

(2)DifferencesofnetprofitsandnetassetsinthefinancialreportdisclosedaccordingtobothforeignaccountingstandardsandPRCaccountingstandards□Available?NotavailableTherearenodifferencesofnetprofitsandnetassetsinthefinancialreportdisclosedaccordingtobothforeignaccountingstandardsandPRCaccountingstandardsduringthereportperiod.

8.Keyfinancialindicatorsbyquarter

Unit:

CNY

1stQuarter2ndQuarter3rdQuarter4thQuarter
Operatingrevenue1,804,057,9761,024,172,0881,032,328,9861,281,685,690
Netprofitattributedtoshareholdersofthelistedcompany479,444,238156,393,167133,916,250272,879,274
Netprofitattributedtoshareholdersofthelistedcompanyafterdeductingirregulargainsandlosses466,181,564140,497,155110,520,695248,226,824
Netcashflowsfromoperatingactivities507,263,96445,489,508224,087,322199,137,952

Whethertherearesignificantdifferencesbetweentheabovementionedfinancialindicatorsortheirsumandtherelatedfinancialindicatorsinthequarterlyreportsandsemi-annualreportsdisclosedbytheCompany.□Yes?No9.Itemandamountofnon-recurringprofitandloss?Available□Notavailable

Unit:

CNY

Item201820172016Explanation
Profitsandlossesondisposalofnon-currentassets,includingtheprovisionforassetimpairmentwrite-offpart11,368,355-222,58614,719
Governmentgrantsincludedinthecurrentprofitsandlosses(exceptforthoserecurringgovernmentgrantsthatarecloselyrelatedtotheentity'soperation,inlinewithrelatedregulationsandhaveproperbasisofcalculation)87,281,43447,638,38449,130,643
Otheroperatingrevenuesandexpendituresexcepttheaforementioneditems3,817,40113,999,2514,656,972
Less:Incometaxeffect25,157,18815,523,42413,072,324
Minorityshareholders'equityeffect(aftertaxes)103,311292,441
Total77,206,69145,599,18440,730,010--

Thereasonsshallbemadeclearanddefinitelyastothenon-recurringprofitandlossthattheCompanyhasdefinedbyvirtueoftheExplanatoryAnnouncementonPublicCompany’s

InformationDisclosureNo.1-Non-recurringProfitandLossandastoregardingthenon-recurringprofitandlossasrecurrentprofitandlossasspecifiedintheExplanatoryAnnouncementonPublicCompany’sInformationDisclosureNo.1–Non-recurringProfitandLoss.□Available?NotavailableTherearenocasesthatnon-recurringprofitandlossisdefinedandspecifiedasrecurrentprofitandlossinaccordancewiththeExplanatoryAnnouncementonPublicCompany’sInformationDisclosureNo.1-Non-recurringProfitandLossduringthereportperiod.

III.SummaryoftheCompany’sBusinesses

1.MainbusinessesduringthereportperiodWhethertheCompanyneedstofollowdisclosurerequirementsofspecialindustryNoDuringthereportperiod,theCompany’smainbusinessesareproductionandoperationofwineandbrandy,thusprovidingdomesticandforeignconsumerswithhealthyandfashionablealcoholicdrinks.Comparedwithearlierstage,therearenosignificantchangeshappenedtotheCompany’smainbusinesses.ThewineindustrythattheCompanyinvolvedinisstillingrowthstageandthewholedomesticwinemarketisontherisingtrend.TheCompanyisattheforefrontinthedomesticwinemarket.2.Significantchangesofmainassets(1)Significantchangesofmainassets

MainassetsExplanationofsignificantchanges
EquityassetTherearenosignificantchangesduringthereportperiod
FixedassetThefixedassetsincreasedby7.89%comparedwiththeinitialstage,owingtopartofconstructionsinprocesshavebeentransferredtofixedassetduringthereportperiod.
IntangibleassetTherearenosignificantchangesofintangibleassetduringthereportperiod.
ConstructioninprocessTheconstructionsinprocessdecreasedby26%comparedwiththeinitialstage,owingtopartofconstructionsinprocesshavebeentransferredtofixedassetduringthereportperiod.

(2)Mainoverseasassetssituation?Available□Notavailable

Unit:CNY

DetailsofassetsFormationreasonsAssetsscaleLocationOperationmodeControlmeasuresforsafeguardingofassetsecurityEarningconditionProportionofoverseasassetsintheCompany’snetassetsWhethertherearesignificantimpairmentrisks
HaciendaYVinedosMarquesDelAtrio.SLAcquisitionofequity563,501,798SpainIndependentoperationTheCompanyparticipatesinmakingimportantdecisionsthroughboardofdirectorsandappointsCFOonfinancialmanagement.3,811,4655.87%No
IndomitaWineCompanyChile,SpAEstablishmentofjointventure515,753,832ChileIndependentoperationTheCompanyparticipatesinmakingimportantdecisionsthroughboardofdirectorsandappointsCFOonfinancialmanagement.15,934,3475.37%No
KilikanoonEstatePtyLtdAcquisitionofequity151,394,573AustraliaIndependentoperationTheCompanyparticipatesinmakingimportantdecisionsthroughboardofdirectors.217,8691.58%

3.AnalysisofcorecompetitivenessWhethertheCompanyneedstofollowdisclosurerequirementsofspecialindustryNo.ComparedwiththeparticipantsinthearenaoftheChinesewinesector,webelievethattheCompanyiswiththefollowingadvantages:

Firstly,theCompanyhasbeenenjoyingawell-knownwinebrandsince120-oddyears.“Changyu”,“NobleDragon”and“AFIP”areallChinafamousbrandthathavestronginfluenceandgoodreputation.Secondly,theCompanyhassetupanationwidemarketingnetwork,formeda“three-level”marketingnetworksystemmainlycomposedoftheCompany’ssalesmenanddealers,withstrongmarketingabilityandmarketexploitationability.Thirdly,theCompanyhasstrongresearchstrengthandaproductR&Dsystem.Relyingonthecountry’sonly“State-levelWineR&DCenter”,theCompanyhasmasteredadvancedwinemakingtechnologyandproductionprocessesaswellasbeenpowerfulenoughinproductinnovationandperfectqualitycontrolsystem.Fourthly,theCompanyisinpossessionofalotofgrape-growingbasesthatarecompatiblewithitsdevelopmentrequirements.TheCompanyhasdevelopedagreatdealofvineyardsinthemostsuitableareasforwinegrapegrowingsuchasShandong,Ningxia,Xinjiang,Liaoning,HebeiandShanxi,whosescaleandstructurehavegenerallymettheCompany’sneedsfordevelopment.Fifthly,productsinhigh,mediumandlow-gradeaswellasvarietiesandcategoriesareallcomplete.Over100varietiesofseriesproductssuchaswine,brandyandsparklingwinecoversvariousgrades,includinghigh,mediumandlow-grade,whichcanmeetdifferentconsumergroups’demands.TheCompanyhastakenthedominantstatusinthedomesticwineindustrythroughrapiddevelopmentinthepast10-oddyear

andhascomparativeadvantagesinthefuturecompetition.Sixthly,theCompanyhasarelativelyperfectmotivationsystem.MostofCompany’semployeesindirectlyholdtheCompany’sequitythroughcontrollingshareholders.Therearehighconsistencybetweenemployeebenefitsandshareholdersbenefits,infavorofmotivatingemployeestocreatevalueforshareholders.Seventhly,theCompanyhassetupflexibleandefficientdecision-makingmechanism.TheCompany’scoremanagementteamalwaysmaintainsaworkingstyleofunityandpragmaticandflexibleandefficientdecision-makingmechanism,whichmakestheCompanycandealwithmarketchangesmorecalmly.Eighthly,theglobalproductioncapacitylayouthasbeenbasicallycompleted.TheCompanyhascompletedproductioncapacitylayoutinChina,France,Chile,Spain,Australiaandothermajorwineproducingcountriesintheworld,enablingmakingbetteruseofglobalhigh-qualityrawmaterialresources,capital,talentsandadvancedproductionprocessesandtechnologiestoprovideconsumerswithdiversifiedqualityproductsandbetterserveconsumers.Basedontheabovereasons,theCompanyhasformedrelativelystrongcorecompetenceandwillmaintainarelativelydominantpositioninthefuturepredictablemarketcompetition.

IV.ManagementDiscussionandAnalysis

1.SummarizationIn2018,influencedbymanyfactors,suchastheslowdownofdomesticeconomicgrowthandtheincreaseinuncertaintyresultingfromSino-UStradefriction,theoverallsalesamountofdomesticwineindustrywasrelativelystable,butthesalesvolumesofbothimportedwineanddomesticwinedecreased.Asimportedwinecontinuedoccupyingthemarketofdomesticwine,thecompetitionindomesticwinemarketwasverystrong.Furthermore,theincreaseinthepriceofrawmaterialsandpackingmaterialsaswellasincreaseinthedepreciationoffixedassets,freightandlaborcostfurtherincreasedthepressureofthecompany’sincreaseinprofit.Facingquitealotofexternaldisadvantages,theCompanyinsistedintakingthemarketasthecenter,insistedthedevelopmentstrategyof“Focusonmiddle-and-highlevel,Focusonhighquality,Focusonbigproduct”,intensifiedinternalreform,optimizedproductstructureandmarketlayout,quickenedthepaceofnewproductdevelopmentandmarketpromotion,andstrivedtopromoteproductsales,achievinggoodresultsandrealizingoperatingrevenueofCNY5142.24millionwithanincreaseof4.25%comparedwithlastyearandnetprofitofCNY1042.63millionbelongingtotheparentcompany’sshareholderswithanincreaseof1.06%comparedwithlastyear.2.Analysisofmainbusiness

(1)summarization

DescriptionIncreaseordecreaseoftheendoftheperiodovertheendoflastyearCauseofsignificantchanges
Operatingrevenue4.25%Mainlybecauseofincreaseinaveragepriceofproductsresultingfromimprovementofproductmix
Operatingcost13.76%Mainlybecauseofincreaseinthepriceofrawmaterialsandpackingmaterials
Salesexpense0.16%Mainlybecauseofyear-on-yearincreaseinwage&welfare
Managementexpense2.12%Mainlybecauseofyear-on-yearincreaseinwage&welfareanddepreciationofafforestationfees
R&Dexpense10.72%Mainlybecauseofincreaseinexpensesfortechnologyresearchanddevelopmentin2018
Financialexpense93.36%Mainlybecauseofincreaseinloaninterestexpenditure
Netamountofcashflowgeneratedinoperatingactivities0.28%Mainlybecauseofincreaseinreceivedcashfromproductsalesandrenderingofserdeputy
Netamountofcashflowgeneratedininvestmentactivities38.08%Mainlybecauseofincreaseinreceivedcashfromtrecoupingtheinvestment
Netamountofcashflowgeneratedincapital-raisingactivities-77.83%Mainlybecauseofincreaseinpaymentofcashfordebtrepayment

ReviewandsummaryoftheprocessoftheCompany’searly-discloseddevelopmentstrategyandbusinessplanduringthereportperiodDuringthereportperiod,theCompanyrealizedtheoperatingrevenueofCNY5142.24millionwithanincreaseof4.25%comparedwithlastyear,slightlylowerthanthetargetfixedatthebeginningoftheyearofrealizingoperatingrevenuenolessthanCNY5.2billion.ThenetprofitofCNY1042.63millionbelongingtotheparentcompany’sshareholderswasrealizedwithanincreaseof1.06%comparedwithlastyear.Themainworkduringthereportperiodwereshownasfollowed:

Firstly,theCompanytookthemarketasthemirror,furtherpromotedthestrategyofthreeFocus,strengthenedinternaladjustmentandreformintensity,acceleratedthelaunchofnewproductsandmarketexpansionofcoreproducts,andstrivedtodevelopE-business,achievinggoodresults.Duringthereportperiod,theCompanyreorganizedsalesteam,preliminarilyrealizedthereduceinstaffnumberandtheimproveofefficiency,conductedtheworkof“salesteamjointlybuiltbymanufacturersanddistributors”,activelyexploredtheexpenseinputmanagementandcontrolmodeof“checkandbalancebetweenmanufacturersanddistributors”,andreceivedpreliminaryeffects.Tenprovincialbrandycompanieswerenewlyestablished.Specializedprovincialwinecompaniesandcomprehensiveprovincialcompaniesweresubdivided.Threebusinesssegments,includingprovincesandcitiessuchasZhejiang,Fujian,Guangdong,Jiangsu,Shandong,BeijingandShanghaietcandE-businessandsoon,realizedauthorizedoperation.TheCompanyadjustedthefunctionofVIPcustomerbusiness,peeledoffdistributionbusinessindirectsupplysystem,furtherdefinedtherelationshipbetweentheChangyuparentbrandanditssubsidiarybrands,formedthecorebrandsystemofvariousliquorsandmadedevelopmentplanningofeachbrand.Seriesofnewproducts,suchastheninthgenerationNobleDragon,newZenithwirl,15-yearKoya,10-yearKoya,6-yearKoya,AustralianKilikanoonproductsandChileanIndomitaproductsandsoon,receivedwidepraisesandthedemandofpartialproductsexceedssupplyowingtotheirhotsale.TheCompanyinsistedonthestrategyofthreeFocus,weededout134kindsofwineandcentralizedmostmarketingresourcestobeusedformarketpromotionofmiddle-to-high-endwine,five-starandabovebrandyandimportedwinewithownbrands,makingsalesrevenueofwineandbrandyachievedifferentlevelsofincrease.

Secondly,theCompanytookthequalityasthebasis,regardedproductqualityasanimportantmagicweapontodefeatenemies.Itconductedall-aroundself-examination,self-correctionandoptimizationontheselectionofgrapebase,grapeplantingmode,productionprocessandtechnology,qualitytestingequipmentandproductqualitycontrolsystemetc,formulatedthree-yearplanning,implementationschemeandspecificmeasuresforproductdevelopmentandqualityimprovementinfuturethreeyears,strengthenedtechnicalexchangesathomeandabroadandteamconstructionofwinemakers,focusedonnewproductdevelopmentandtechnicaldifficulties,improvedthequalitytraceabilitysystemandstrengthenedqualitycontrolinthewholeproductionprocess,makingthecompany'stechnicallevelandproductqualityreachanewlevel.TheCompanycarriedout45technologyresearchesandcompletedonesub-projectofnational863project.DraftedstandardsofWine-makingGrapeandOakBarrelpassedthegroupstandardsassessmentbyChinaAlcoholicDrinksAssociation,fillingingapsofdomesticwineindustry.KeyTechnologyResearchandApplicationinIndustrializationofDomesticOakProductswasdeclaredfor2018scientificandtechnologicalprogressawardofChinaAlcoholicDrinksAssociation.KeyTechnologyResearchforPremiumandCharacteristicWine-makingGrapeCabernetGernischtandWineProductionwonscientificandtechnologicalprogressawardofChinaNationalLightIndustryCouncil.In2018IWSC,KilikanoonWinesPtyLtdinAustraliawasawarded“AustralianBestWineProduceroftheYear”andwastheonlyonechateauawardedbyIWSCamongmorethan4000chateauxinAustralia,ofwhich2014KilikanoonEstateSpecialReserveShiraz8Kwonoutstandinggoldmedalwithscoresof93pointsandabove)aswellasthetrophyof“World’sBestShirazoftheYear”while2016KilikanoonEstateWineBlend6Kwongoldmedalwithscoresof90to92.9points.KilikanoonWinesPtyLtdwashonoredwiththetitleof“AustralianBestWineProduceroftheYear”in2018MundusVini.2014KilikanoonEstateSpecialReserveShiraz8KwongoldmedalinDAWAwiththescoreof95.2015MoserFamilyCabernetSauvignonRedWine,2016MoserLegendCabernetSauvignonWhiteWine,2015Golden-labelIcewineofGoldenIcewineValleyand2015Blue-labelIcewineofGoldenIcewineValleywongoldmedalinthe22ndsessionofBerlinerWeinTrophy.ChangyuFive-starFineBrandywongoldmedalin2018SpiritsSelectionbyConcoursMondialdeBruxelles.ChangyuKoya15-yearsXObradnyageinginoakbarrelwonthedesignawardofluxurycategoryin2018PentawardsAwardCeremony.“Water-dropDecanter”ofChangyuKoya10-yearsXOBrandywonthedesignawardofpackagingcategoryin2018iFDesignAwardCeremonyheldatBMWWeltinMunich,Germany.Thirdly,theCompanyrealizedonlineidentificationandorder-drivenmodeofmajorproducts.Duringthereportingperiod,theCompanyissuedAssessmentMeasuresforPerformanceRateofProductionOrder,gavefullplaytoadvantagesofadvancedproductionfacilities,highautomationandinformationizationandfastproductionspeed,optimizedandadjustedbusinessprocesses,andstrengthenedcoordinationofsupply,productionandsales,making27kindsofNobleDragonproductswithhighsalesvolumeandalldomesticchateauwinesachieveorder-drivenmode.Mostdomesticwineproductsachievedonlinetagging,which

improvedproductionefficiencyanddeliveryspeed,dramaticallyreducedproductandcapitalbacklogsandbettersatisfiedthemarketneeds.Fourthly,theCompanyenhancedfinancialmanagementandestablishedandimprovedtheassessmentsystemtakingprofitasprincipalline.Duringthereportperiod,theCompanystrengthenedthemanagementinfinancialbudget,fixedfundsandoverseasenterprises’financialaffairs,enhancedtheauditinpriceexecution,grossprofitmargin,capitaloccupation,keyexpenses,andinvestmentprojects,increasedtheinvestigationofeconomicresponsibility,scientificallyallocatedinternalcapital,vigorouslystrivedforpolicy-basedcapitalloansandcontinuouslyreducethecostofcapital.Itstrengthenedthesimulatedprofitassessmentofauthorizedbusinessunitsandstrivedtoestablishaprofitassessmentsystemcoveringallbusinesssegmentsandrespectiveresponsibilitiesinordertoprovideabasicbasisformorereasonableandefficientperformanceassessmentandtoimproveprofitability.Fifthly,theCompanysuccessfullycompletedtheprocurementofrawmaterialsincludinggrapesandfurtherstrengthenedthemanagementingrapebase.TheCompanycomprehensivelyaccomplishedtheprocurementplanofrawmaterialsexemplifiedasgrapes,improvedthefermentationrateofpremiumwines,furtherdeepenedsortmanagementandsortacquisitionofgrapebasesandcontinuedpromotingthemechanizationprocessinvineyards,loweringtheoperatingcostsofself-supportedgrapebasesandmakingscientificandnormativemanagementingrapebasereachahigherlevel.Itraisedgrapepurchasestandard,improvedrawmaterialquality,activelyconductedtheintroduction,selectivebreedingandimprovementofnewgrapevarietiesandcharacteristicvarietiesandcultivatedalotofnewvarieties,enrichingthevarietyresourceforfutureproductdevelopment.Italsoorganizedorchardisttotakeprofessionaltrainingongrapeplantingtechnology,whichimprovedtheirgrapeplantingandmanagementlevel.Sixthly,theCompanycontinuedpromotinginternationalizationstrategyandsteadilyimplementedoverseasacquisition.Itacquired80%equityofKilikanoonEstatePtyLtdinAustralia.

(2)Revenueandcost

①Compositionofoperatingrevenue

Unit:CNY

20182017Year-on-yearincreaseordecrease(%)
AmountProportioninoperatingrevenueAmountProportioninoperatingrevenue
Total5,142,244,740.00100%4,932,545,229100%4.25%
operatingrevenue
Sector-classified
Sectorofliquorandalcoholicbeverage5,142,244,740100%4,932,545,229100%4.25%
Product-classified
Wine4,000,233,43477.79%3,829,326,55677.63%0.16%
Brandy999,207,29919.43%989,889,72820.07%-0.64%
Others142,804,0072.78%113,328,9452.30%0.48%
Area-classified
Domestic4,486,387,95687.25%4,497,288,06691.18%-3.93%
Abroad655,856,78412.75%435,257,1638.82%3.93%

②Thecasesofindustry,productorareaaccountingforover10%intheCompany’soperatingrevenueoroperatingprofit?Available□NotavailableWhethertheCompanyneedstofollowdisclosurerequirementsofspecialindustryNo

Unit:CNY

OperatingrevenueOperatingcostGrossprofitrateYear-on-yearincreaseordecrease(%)ofoperatingrevenueYear-on-yearincreaseordecrease(%)ofoperatingcostYear-on-yearincreaseordecrease(%)ofgrossprofitrate
Sector-classified
Sectorofliquorandalcoholicbeverage5,142,244,7401,901,611,50763.02%4.25%13.76%-3.09%
Product-classified
Wine4,000,233,4341,460,855,41363.48%4.46%15.36%-3.45%
Brandy999,207,299403,699,97359.60%0.94%14.58%-4.81%
Others142,804,00737,056,12174.05%26.01%-29.91%20.70%
Total5,142,244,7401,901,611,50763.02%4.25%13.76%-3.09%
Area-classified
Domestic4,486,387,9561,477,589,23867.07%-0.24%7.17%-2.27%
Abroad655,856,784424,022,26935.35%50.68%44.76%2.65%

UndertheconditionthatthestatisticalcaliberoftheCompany’smainbusinessdataisadjustedduringthereportperiod,theCompany’smainbusinessdataadjustedonthebasisofcaliberattheendofreportperiodinrecentoneyear.□Available?Notavailable③WhethertheCompany’ssalesrevenueformaterialobjectismorethanlaborserdeputyrevenue?Yes□No

SectorProjectUnit20182017Year-on-yearincreaseordecrease(%)
WineSalesvolumeTon112,600104,0168.25%
BrandySalesvolumeTon39,31539,1300.47%

Explanationonthecausesofover30%year-on-yearchangesoftherelatedcomparisondata□Available?Notavailable④ThefulfillmentofmajorsalescontractsignedbytheCompanyuptothereportperiod□Available?Notavailable⑤CompositionofoperatingcostsClassificationofsectorandproduct

Unit:CNY

SectorProject20182017Year-on-yearincreaseordecrease(%)
AmountProportionintheoperatingcost(%)AmountProportionintheoperatingcost(%)
LiquorandalcoholicbeverageBlendingliquor981,838,78952.42%929,487,46856.48%-4.06%
Packingmaterial633,281,19433.81%525,292,14931.92%1.89%
Wages63,385,5223.38%57,733,7173.51%-0.12%
Manufacturingexpenses194,485,53410.38%133,177,2828.09%2.29%

Unit:CNY

SectorProject20182017Year-on-yearincreaseor
AmountProportionintheAmountProportioninthe
operatingcost(%)operatingcost(%)decrease(%)
WineBlendingliquor759,623,72452%711,224,94556.16%-4.16%
Packingmaterial484,791,30333.19%395,026,88931.19%1.99%
Wages54,718,7703.75%47,843,7443.78%-0.03%
Manufacturingexpenses161,721,61611.07%112,295,8748.87%2.20%
BrandyBlendingliquor217,997,23954%204,764,92758.12%-4.12%
Packingmaterial144,272,06435.74%117,982,14233.49%2.25%
Wages8,666,7522.15%9,678,6882.75%-0.60%
Manufacturingcost32,763,9188.12%19,903,2115.65%2.47%

⑥Whethertherearechangesofconsolidationscopeduringthereportperiod?Yes□NoAccordingtotheShareSale&PurchaseAgreementsignedbytheCompanyandtheshareholdersofKilikanoonEstatePtyLtdonDecember5

th

,2017,theacquisitionof80%equityofKilikanoonEstatePtyLtdisbasedonAUD20,860,825(equivalenttoCNY107,194,420).TheCompanycompletedtheequitytransferonJanuary18

th

,2018,andobtainedcontroloverthefinancialandoperatingpoliciesofKilikanoonEstatePtyLtd.Thiscompanyisincludedintheconsolidatescopeduringthereportperiod.⑦MajorchangesoradjustmentsoftheCompany’sbusinesses,productsorserdeputysduringthereportperiod□Available?Notavailable⑧InformationofmajorsalescustomersandmajorsuppliersTheCompany’smajorsalescustomers

Thetotalsalesamountofthetopfivecustomers(CNY)183,898,220
Theproportionthattotalsalesamountofthetopfivecustomersaccountingfortheannualtotalsalesamount(%)3.58%
Theproportionthatsalesamountoftherelatedpartyinthetotalsalesamountofthetopfivecustomersaccountingfortheannualtotalsalesamount(%)0%

InformationoftheCompany’s5biggestsalescustomers

No.CustomernameSalesamount(CNY)Proportionintotalsalesfortheyear(%)
1ChangyuexinTradingCompanyLimitedinShenzhencity55,734,4991.08%
2HaikouHeshunxinTradingCompanyLimited35,693,6170.69%
3XinbaichengFoodFirminHanjiangdistrictofPutiancity32,959,4100.64%
4FuzhouShengshihanggangTradingCompanyLimited30,794,3320.60%
5FengxiangGroceryStoreinHui’antown28,716,3630.56%
Total--183,898,2213.58%

Othersituationexplanationsofmajorcustomers□Available?NotavailableInformationontheCompany’smainsuppliers

Thetotalpurchaseamountofthetop5suppliers583,902,258
Theproportionofthetotalpurchaseamountofthetop5suppliersintheannualpurchaseamount37.75%
Theproportionoftherelatedpartypurchaseamountinthetop5supplierpurchaseamountinannualpurchaseamount11.2%

InformationontheCompany’stop5biggestsuppliers

No.SuppliernamePurchaseamount(CNY)Proportionintotalpurchasefortheyear(%)
1YantaiShenmaPackagingCo.,Ltd.173,238,28911.20%
2YantaiChangyuGlassCo.,Ltd.123,686,0488%
3LiquanSalesDepartmentofShandongYantaiWineryCo.,Ltd.116,840,3137.55%
4XinjiangYuyuanLiquorCo.,Ltd.108,763,5177.03%
5TheXinjiangProductionandConstructionCorpsthe152thGroupofthe8thAgriculturalDivision61,374,0923.97%
Total--583,902,25937.75%

Othersituationexplanationsofmainsuppliers□Available?Notavailable

(3)Expense

Unit:CNY

20182017Year-on-yearincreaseordecrease(%)Explanationofsignificantchanges
Salesexpense1,274,599,1461,272,522,4430.16%Mainlybecauseoftheincreaseofsalaryandwelfarecomparedwithlastyear
Managementexpense343,580,651336,461,1332.12%Mainlybecauseoftheincreaseofsalaryandwelfareaswellasamortizationofamortizationfeescomparedwithlastyear
Financialexpense35,945,30218,590,25993.36%Mainlybecauseoftheincreaseinloaninterestexpenditure
ResearchandDevelopmentexpense4,784,1184,320,82510.72%Mainlybecauseoftheincreaseoftechnologydevelopmentexpenditure

(4)Researchanddevelopmentinvestment□Available?Notavailable

(5)Cashflow

Unit:CNY

Item20182017Year-on-yearincreaseordecrease(%)
Subtotalofcashinflowinoperatingactivities5,080,363,7694,965,586,3412.31%
Subtotalofcashoutflowinoperatingactivities4,104,385,0233,992,343,3142.81%
Netamountofcashflowgeneratedinoperatingactivities975,978,746973,243,0270.28%
Subtotalofcashinflowininvestmentactivities423,413,326216,678,35595.41%
Subtotalofcashoutflowininvestmentactivities931,261,8751,036,886,116-10.19%
Netamountofcashflow-507,848,549-820,207,76138.08%
generatedininvestmentactivities
Subtotalofcashinflowincapital-raisingactivities1,114,333,6701,064,892,1304.64%
Subtotalofcashoutflowincapital-raisingactivities1,546,641,2221,307,993,55718.25%
Netamountofcashflowgeneratedincapital-raisingactivities-432,307,552-243,101,427-77.83%
Netincreaseofcashandcashequivalents25,971,060-76,053,030134.15%

Explanationofmaininfluencefactorscontributingtogreatchangesinrelateddataonyear-on-yearbasis?Available□NotavailableComparedwiththesameperiodoflastyear,duringthereportperiod,thesubtotalofcashinflowininvestmentactivitiesincreasedby95.41%andthenetamountofcashflowgeneratedininvestmentactivitiesincreasedby38.08%,whichismainlyduetotheincreaseincashreceivedfromtherecoveryofinvestment;subtotalofcashoutflowincapital-raisingactivitiesincreasedby18.25%andnetamountofcashflowgeneratedincapital-raisingactivitiesdecreasedby77.83%year-on-year,whichismainlyduetotheincreaseincashpaidfordebtrepayment;netincreaseofcashandcashequivalentsincreasedby134.15%,whichismainlyduetotheincreaseincashreceivedfromtherecoveryofinvestment.ExplanationonthecausesofmajordifferencesbetweenthenetcashflowgeneratedbytheCompany’soperatingactivitiesandnetprofitofthisyearduringthereportperiod.□Available?Notavailable3.Analysistonon-mainbusiness□Available?Notavailable4.Assetsandliabilities(1)Significantchangesofassetscomposition

Unit:CNY

Attheendof2018Attheendof2017Proportionincreaseordecrease(%)Explanationonsignificantchanges
AmountProportioninthetotalassets(%)AmountProportioninthetotalassets(%)
Monetaryfunds1,475,700,47711.25%1,402,522,50911.19%0.06%Nosignificant
changes
Receivables242,153,0831.85%263,796,3552.10%-0.25%Nosignificantchanges
Inventory2,724,591,45720.77%2,473,614,04619.73%1.04%Nosignificantchanges
Investmentrealestate31,572,4890.24%18,467,9890.15%0.09%Nosignificantchanges
Long-termequityinvestments0%0%0%Nosignificantchanges
Fixedassets5,749,731,66743.83%5,329,083,96942.51%1.32%Nosignificantchanges
Constructioninprogress759,296,5915.79%1,026,141,5698.19%-2.40%Nosignificantchanges
Short-termborrowings688,002,4105.24%714,434,2865.70%-0.46%Nosignificantchanges
Long-termborrowings156,480,6621.19%156,125,8541.25%-0.06%Nosignificantchanges

(2)Assetsandliabilitiesmeasuredatfairvalue□Available?Notavailable(3)LimitationsofassetsrightsuptotheendofthereportperiodAttheendofreportperiod,theCompanyhasnoassetssealedup,detainedorfrozen.Forinformationaboutassetsmortgageandpledge,pleaserefertoAnnouncementonExternalGuarantee(announcementnumber:2016-Temporary021),AnnouncementonExternalGuarantee(announcementnumber:2017-Temporary015)andAnnouncementonExternalGuarantee(announcementnumber:2018-Temporary020)disclosedonChinaSecuritiesJournal,SecuritiesTimesandCNINFO(http://www.cninfo.com.cn/)respectivelyonDecember22

nd

,2016,December12

th

,2017andDecember5

th

,2018.5.Investmentcondition

(1)Overallsituation

?Available□Notavailable

Investmentamountduringthereportperiod(CNY)Investmentamountofthesameperiodoflastyear(CNY)Variation
450,762,420634,882,100-29%

(2)Casesofacquiredsignificantequityinvestmentsduringthereportperiod?Available□Notavailable

Unit:CNY

InvestedcompanynameMainbusinessInvestmentmodeInvestmentamountShareholdingratioCapitalsourcePartnerInvestmenthorizonProducttypeProgressuptobalancesheetdateEstimatedearningsInvestmentprofitorlossduringthereportperiodWhetherinvolvedinlitigationDisclosuredate(ifhave)Disclosureindex(ifhave)
KilikanoonEstatePtyLtdWineproductionandsaleAcquisition107,194,42080.00%Self-ownedPTO7PtyLtd,WoodvaleVintnersPtyLtd,W.J.DuthyHoldingsPtyLtd,WarrickJamesDuthy50yearsWineAllacquisitionworkshavebeencompleted15,000,000174,295NoDecember12th,2017PleaserefertoAnnouncementonEquityAcquisitionofKilikanoonEstatePtyLtdinAustralidisclosedonChinaSecuritiesJournal,SecuritiesTimesandCNINFO
(http://www.cninfo.com.cn)
Total----107,194,420------------15,000,000174,295------

(3)Casesofsignificantongoingnon-equityinvestmentsduringthereportperiod?Available□Notavailable

Unit:CNY

ProjectnameInvestmentmodeWhetherbelongstofixedassetsinvestmentInvolvedsectorsofinvestmentprojectsInvestmentamountduringthereportperiodAccumulatedactualinvestmentamountuptotheendofthereportperiodCapitalsourceProjectprogressEstimatedearningsAccumulatedrealizedearningsuptotheendofthereportperiodReasonsforunreachedplanningscheduleandestimatedearningsDisclosuredate(ifhave)Disclosureindex(ifhave)
YantaiChangyuInternationalWineCityBlendingandCoolingCenterSelf-constructedYesLiquorandalcoholicbeveragesector217,495,0001,376,114,100Ownedfund100%0.000.002017.04.22PleaserefertoResolutionAnnouncementofSeventhSessionBoardofDirectors4thMeetingandResolutionAnnouncementofSeventhSessionBoardofDirectors
YantaiChangyuInternationalWineCityBottlingCenterSelf-constructedYes26,510,000913,200,000Ownedfund100%0.000.002017.04.228thMeetingdisclosedonChinaSecuritiesJournal,SecuritiesTimesandCNINFO(http://www.cninfo.com.cn/)
YantaiChangyuInternationalWineCityLogisticsCenterSelf-constructedYes1,300,000416,507,200Ownedfund100%0.000.002017.04.22
ChangyuVineandWineResearchInstituteSelf-constructedYes1,214,800116,974,800Ownedfund80%0.000.002017.04.22
TreasureWineChateauSelf-constructedYes18,830,000128,820,000Ownedfund70%0.000.002017.04.22
KoyaBrandyChateauSelf-constructedYes11,631,000147,329,000Ownedfund85%0.000.002017.04.22
GreeningInvestmentSelf-constructedYes20,285,00073,390,700Ownedfund100%0.000.002017.04.22
SAPinformatizationforindustrialproductionSelf-constructedYes26,510,00037,850,000Ownedfund40%0.000.002018.04.23
FireprotectionSelf-constructedYes4,570,0004,570,000Ownedfund50%0.000.002018.04.23
engineeringprojectofresearchinstitute
MaintenanceandreconstructionprojectofEtablissementsRoulletFransacChateauinCOGNACSelf-constructedYes8,790,2008,790,200Ownedfund80%0.000.002018.04.23
OakbarrelprocurementprojectOthersYes6,432,0006,432,000Ownedfund60%0.000.002018.04.23
Total------343,568,0003,229,978,000----0.000.00------

(4)Financialassetsinvestment①Securityinvestmentsituation□Available?NotavailableTherearenosecurityinvestmentsfortheCompanyduringthereportperiod.

②Derivativesinvestment□Available?NotavailableTherearenoderivativesinvestmentsfortheCompanyduringthereportperiod.(5)Theusagesituationofraisedcapital□Available?NotavailableTherearenousagesituationsofraisedcapitalfortheCompanyduringthereportperiod.(6)Saleofsignificantassetsandequities①Saleofsignificantassets□Available?NotavailableTherearenosalesofsignificantassetsduringthereportperiod.②Saleofsignificantequities□Available?Notavailable(7)Analysisofmainholdingandjointstockcompanies?Available□NotavailableSituationofmainsubsidiariesandjointstockcompaniesaffectingover10%oftheCompany’snetprofit

Unit:CNY

CompanynameCompanytypeMainbusinessRegisteredcapitalTotalassetsNetassetsOperatingrevenueOperatingprofitNetprofit
YantaiChangyu-CastelWineChateauCo.,LtdSubsidiaryDevelopment,productionandsaleofwineandsparklingwineandtouristserdeputyUSD5million255,992,19184,122,529121,235,2785,168,6513,710,124
ChateauChangyuAFIPGlobalSubsidiaryDevelopment,productionandsaleofwineandbrandyCNY642.75million681,088,671618,490,126159,369,78320,194,89216,555,846
DicotPartners,S.L.HaciendaYVinedosMarquesDelAtrio.slSubsidiaryProductionandoperationofwineandotherliquorsEUR2,385,732563,501,798127,321,546327,550,5452,162,4043,811,465
IndomitaWineCompanyChile,SpASubsidiaryProductionandoperationofwineandotherliquorsUSD47.19million515,753,832362,418,343262,104,56321,066,61415,934,347

Acquisitionanddisposalofsubsidiariesduringthereportperiod?Available□Notavailable

CompanynameModeofacquisitionanddisposalofsubsidiariesduringthereportperiodEffectonoverallproductionmanagementandperformance
KilikanoonEstatePtyLtdEquityacquisition174,295

ExplanationonmainholdingandjointstockcompaniesTheconsolidatedincomeofKilikanoonEstatePtyLtdshowninmainfinancialinformationoftheimportantnon-whollyownedsubsidiarieslistedinfinancialstatement’snote“8.Equitiesinothersubjects”isaloss.Thisisduetothe“Premium”acquisitionwhentheCompanyacquiredKilikanoonEstatePtyLtd.Thevalue-addedportionoftheassetvaluationinthepurchasepriceissubjecttothe“Amortization”oftheasset'susefullife(3-20

years)inaccordancewiththecurrentaccountingstandardswhenChangyuconsolidatingstatements.TheCompany’smainoverseascompanieshavegoodearningsperformanceoftheirown.(8)SituationofthestructuredsubjectscontrolledbytheCompany□Available?Notavailable(9)ExpectationfortheCompany’sfuturedevelopmentOnthebasisofourlimitedexperienceandprofessionalskills,theCompanymakesthefollowingjudgmentsonthewineindustryandfuturedevelopment:

1)ThesectorcompetitionpatternanddevelopmenttrendUnderuncertaintyeffectscausedbytheslowdownofnationalmacroscopiceconomygrowthandtheSino-Americantradefriction,theoveralldemandofChinesewinemarketisstillcomparativelyweak,thesalesgrowthisweak,andtheoperationformoftheCompanyisstillcomparativelysevere.Thechangesofthealcoholconsumptionenvironmentmakethe“fragmentation”ofwinemarketbecomeserious,leadingtodifficultiesinsellinghigh-endproducts.Consumerstendtobemorerational,whichrequiresChangyutomakemoreeffortsinimprovingthecostperformanceofproducts.OwingthatinfluxofplentyofimportedwineswouldfurthercompressthedomesticwinemarketsharesandthenewchannelssuchasE-commercecausesagreatimpactonthetraditionalsaleschannels,thecompetitioninthedomesticwineindustrywillstillbefierceatpresentandinthefuturelongtime.Rawmaterialcost,freightanddepreciationexpenseandotherexpensesarelikelytoincrease,bringingbigpressuretotheCompany’sprofitability.Butinthelongrun,thankstoincreaseintheirincome,moreandmorepeoplewouldpursuehealthandfashionlifemodeandthepeoplewouldbeinmorefavorofwineswhichfitquitewellwiththetrendofconsumption.Thefixedconsumerpopulationofwineisnolongerlimitedtothemiddleclassandhigh-endpeople.Moreandmoreyoungpeoplewilljointhewineconsumptionarmy,andmiddle-agedandoldconsumerswillgraduallyshifttotheranksofdrinkingwineforhealthandhealthconsiderations.“Lessdrinking,drinkinggoodwine,healthydrinking”willbecomethefuturedevelopmenttrend,andthuscontinuouslyexpandthedemandforqualitywine,whichdeterminesthehugemarketdevelopmentpotentialofChinesewineindustry,especiallyforbrandyandwinewithbettercostperformance,whichmaygrowfaster.China'spost-90semergingconsumergroupshavegraduallyrisen,andtheirstronglocalawarenesswillmakedomesticwinespopularwithmoreyoungconsumers.Affectedbytheheadeffect,thecapacityofcontrollingwholeindustrialchainoflarge-scaleenterpriseswillbefurtherenhanced,andtheproductsegmentationspacewillbelargerandlarger,largeandstrong,smallandbeautifulwillcoexistharmoniously.Accuratemarketingrepresentedbycircle-layersocialcontact,private-sphereE-business,membershipsystemwillbethemosteffectivemarketingmode.Insuchacaseoflong-termcoexistenceofopportunitiesandchallenges,thoseenterprisesthatpossessstrongbrandinfluenceandmarketingability,catchtheopportunities,activelytakeadjustments,makefulluseofnewlyemergingandtraditionalsaleschannels,timelysatisfytheconsumers’demandsandprovideproductswithhighcost

performancewillhavetheopportunitytobethefinalwinnerofcompetitions,andthenformanewpatternofthefutureChinesewinemarket.2)TheCompany’sdevelopmentstrategyTheCompanywillinsistthedevelopmentdirectionof“Focusonmiddle-and-highlevel,Focusonhighquality,Focusonbigproduct”,comprehensivelyimplementthedevelopmentstrategyofsameimportancebetweenwineandbrandy,endeavourtopromotetheharmoniousdevelopmentofvariousliquors,activelyexpandthescopeofconsumptionfieldandmarketingmode,industriouslydevelopmiddle-and--high-endwinesandbrandy,strengthenthemarketinglevelofimportedwineandstrivetoprovideconsumerswitharichvarietyofproductswithhighcostperformance.3)ManagementplanforthenewyearIn2019,theCompanywilltryitsbesttorealizeoperatingrevenueofnotlessthanCNY5.3billionandcontrolthemainoperatingcostsandthreeperiodexpensesbelowCNY3.7billion.4)MeasurestobetakenbytheCompanyInordertobettercatchopportunitiesandfacechallenges,theCompanywilltakefulladvantageofself-ownedadvantages,meetchallenges,adheretomarket-orientation,intensifyinternaladjustmentandreformationdegree,acceleratethelaunchofnewproductsandthepaceofmarketdevelopment,implementtheperformanceassessmentmodeofmainlyfocusingongrossprofitrateandprofit,putattentiontodowellinfollowingworksin2019andstrivetoachieveannualoperationtargets.Thefirstistoaroundthedevelopmentstrategyoffocusingonmid-to-highend,focusingonhighquality,andfocusingonbigproduct,acceleratetheinternalreform,andfurtherenhanceprofitability.TheCompanywillfirmlyconsolidatethedominantstatusindomesticwine,establishtheleadingpositionindomesticbrandy,bringtheadvantageofbackwardnessinimportedwine,ensuretriplefocusingstrategycanbeimplementedonthegroundby“constantly,everywhereandeveryone”,andpromotethecomprehensivedevelopmentofvariousbrands,includingwine,brandyandimportedliquor.Besides,theCompanywillfurtherimprovesalesorganizationstructure,improverelativelyindependentsalessystemofeachliquorcategory,establishcompetitivebenchmarkofeachliquorcategoryanddeterminecatch-uptarget.Furthermore,theCompanywillintegrateandoptimizetheorganizationstructureofsalessystem,completethetransformationfrommanagementdealerstoserdeputydealersassoonaspossible,futureclosetomarketandcustomers,uselesspeopletomanagedealers,enablemorepeopletoserveterminalsandcustomerswithdealers,askterminalsforsalesvolumeandaskcultivatingeducatingforgrowth.Dealerteambuildingwillbefurtherstrengthened,constructionofsalesteamwithdealerswillbepromotedandmarkingabilityofdealerswillbeenhanced.“Fundpool”willbebuiltwithdealerstoguaranteemarketinvestmentinplace.Newproductdevelopmentwillbeaccelerated.NewproductsintroducedforwineincludesthenewRena,Castel,AFIP,Tinlotandrepresentativebrandsofwineintermofmidandlow-end,whilenewproductsintroducedforbrandyincludes“KOYA1915”,mid-endChangyuFineBrandyof5starandlow-endPEGASE.Moreover,theCompanywillfurtherimproveauthorizedmanagementsystemofpartialsecondaryunitsandpromoterapid

developmentofauthorizedmanagementunits,establishasimulationprofitassessmentsystematalllevels,strengthengrossprofitrateassessment,andimprovesalesprofitability.Thesecondistoinsiston“originality”spirit,strengthenqualitymanagementandproducethebestproducts.TheCompanywillco-ordinatedomesticandforeignrawmaterialresources,increasethescaleofhigh-qualityrawmaterialbases,establishaquality“lifelong”investigationsystemforrawmaterialsuppliers,andfurtherimproverawmaterialquality.Besides,theCompanywillmakeintellectualizationandinformationtransformationofproductionsystem,strengtheneffortsontechnologicalinnovation,andcomprehensivelyimproveresearchanddevelopmentcapabilities.Furthermore,theCompanywillstrengthentheconstructionofwinemakerteam,establishqualityresponsibilitysystemofwinemakerforbrandsandwiththehelpofoverseasacquisitionofenterpriseplatforms,enhanceexchangesandlearningofwinemakers,improvebrewingtechniquelevel,andrealizebigbreakthroughsofkeylinkssuchasinternalqualityofproducts.Thethirdistofurtheroptimizestaffstructure,compressthescaleofproductionpersonnelandmanagementpersonnel.TheCompanywillimproveincentivemodel,adheretostruggleoriented,resultorientedandinlinewiththeprincipleof“SmallAdjustmentandBigIncentive”,andintensifytheincentivesofkeyemployeesandstrivers.Besides,theCompanywillfurtherestablishandimprovetalentteam,enhancethetrainingandintroductionofprofessionaltalents,createalearningorganization,vigorouslysupportandencourageinnovation,andenhancetheoverallenthusiasm,creativityandcombateffectivenessofstaff.Thefourthistostrictlycontrolthescaleofcapitalexpenditure,insistonnotinvestinginothernewprojectsexceptsafetyproduction,qualityimprovementandstartedprojects.TheCompanywillfurtherrevitalizecurrentassets,makefulluseofadvancedproductioncapacity,moderatelyeliminatebackwardproductioncapacity,optimizeproductioncapacitylayout,strivetoimproveproductionefficiencyandassetutilization,furtherreduceproductioncosts,andbettercreatevalueforshareholders.Thefifthistointensifyauditsupervision,improveinternalcontrolsystem,andpreventoperationalrisks.TheCompanywillpromotethereformofauditsystem,adjustthesetofauditinstitutions,improvedepartureaudit,andimprovetheevaluationsystemforcadres.Besides,theCompanywillintensifytheaudittopriceimplementation,grossprofitmargin,capitaloccupation,keyexpensesandauditoftechnicaltransformationprojects,andincreaseeffortstoeconomicresponsibilityinvestigation.Furthermore,theCompanywillimprovetheassessmentmethodsforresponsibilitysystemofleadinggroupsatalllevelsandstrengthenprofitoriented.Moreover,theCompanywillestablishandimprovethethree-in-onesupervisionsystemofauditing,financeanddisciplinecommitteeandachieve“check”and“prevent”simultaneouslytoreducemanagementrisks.10.TheCompany’sreceptionsofresearch,communication,visitandotheractivitiesActivityregistrationformforreceptionsofresearch,communication,visitandotheractivitiesduringthereportperiod?Available□Notavailable

ReceptiontimeReceptionpatternTypeofreceptionobjectBasicsituationindexofreception
July2nd,2018FieldresearchInstitutionYantaiChangyuPioneerWineCo.,Ltd.InvestorRelationsActivationRecordFormoftheCompany’s“InvestorRelationsInformation”onCNINFO(http://www.cninfo.com.cn/)
October20th,2018FieldresearchIndividual
October26th,2018FieldresearchIndividual
Timesofreception3
Numberofinstitutionreception7
Numberofindividualreception21
Numberofotherobjectsreception0
Whethertodisclose,revealandleakmaterialnonpublicinformationNo

V.Majorissues

1.TheCompany’sordinaryshareprofitdistributionandincreasingequitywithcapitalreserveOrdinaryshareprofitdistributionpoliciesespeciallypromulgation,implementationoradjustmentofcashdividendspoliciesduringthereportperiod?Available□NotavailableDeliberatedandpassedbythe2017Shareholders’MeetingconvenedonMay24

th

,2018bytheCompany,theCompany’s2017annualprofitdistributionschemeisshownasfollows:

basedontotal685,464,000shares(including453,460,800Asharesand232,003,200Bshares)uptoDecember31

st

,2017,theCompanywouldpaycashdividendtoallshareholdersregisteredontheshareregistrationday:CNY5incashpertenshares.ThistimetheCompanywouldneitherdispatchbonussharesnorincreaseequitywithcapitalreserve.Totalamountofshareshasnotchangedsincethedisclosureofthedistributionplantotheimplementationperiod.OnJune30

th

,2018,theCompanypublishedtheImplementationAnnouncementof2017AnnualEquityDistributiononChinaSecuritiesJournal,SecuritiesTimesandwww.cninfo.com.cn,determiningthattheshareregistrationdayandtheex-dividenddayofASharewasrespectivelyonJuly6

th

,2018andonJuly9

th

,2018;thelasttradingday,theshareregistrationdayandtheex-dividenddayofBSharewasrespectivelyonJuly6

th

,2018,onJuly9

th

,2018andonJuly11

th

,2018.ThistimethedispatchingobjectscontainallAShareshareholdersregisteredatChinaSecuritiesDepositoryandClearingCorporationLimitedShenzhenCompanyafterclosingofShenzhenStockExchangeintheafternoonofJuly6

th

,2018andallBShareshareholdersregisteredatChinaSecuritiesDepositoryandClearingCorporationLimitedShenzhenCompanyafterclosingofShenzhenStockExchangeintheafternoonofJuly11

th

,2018.Thisdispatchinghasalreadybeencompletedinmid-July2018.Theprofitdistributionschemeimplementedthistimeisconsistentwiththeschemedeliberatedandpassedbytheshareholders’meeting.Theimplementationoftheprofitdistributionschemeforthistimeisnotmorethantwomonthsaftertheshareholders'meetingpassingit.

Specialexplanationforthecashdividendspolicy
WhetheritisinaccordancewiththerequirementsoftheregulationintheArticlesofAssociationandtheresolutionofshareholdersYes
WhetherthedistributionstandardandproportionisclearanddefiniteYes
WhethertherelevantdecisionprocessandmechanismiscompleteYes
WhethertheindependentdirectorsperformtheirresponsibilitiesandplaytherolesYes
Whetherthesmallandmiddleshareholdershavethechancetoexpresstheiraddeputysandappeals,aswellastheirlawfulrightandinterestisinanenoughprotectionYes
WhetheritislegalandtransparentfortheconditionandprocesswhileadjustingandamendingthecashdividendspolicyYes

TheCompany’sscheme(preliminaryscheme)ofordinaryshareprofitdistributionandincreasingequitywithcapitalreserveintherecentthreeyears(includingthereportperiod)TheCompany’sprofitdistributionschemein2016isasfollowing:Becausetheleftamountoflegalearnedsurplusreservereaches50%oftheregisteredcapital,whilemakingprofitdistribution,thelegalearnedsurplusreservewillbenotdrawn.BasedontheCompany’s685,464,000sharesattotaluptoDecember31

st

,2016,weplantopayCNY5incashasdividendsforeverytenshares(includingtax)totheCompany’sallshareholders,totalinguptoCNY342,732,000accountingfor34.89%ofthenetprofitCNY982,460,488attributabletotheshareholdersoftheparentcompanyintheconsolidatedstatement,theretainedandundistributedprofitofCNY639,728,488willbereservedforthedistributionofnextyear.TheCompany’sprofitdistributionschemein2017isasfollowing:Becausetheleftamountoflegalearnedsurplusreservereaches50%oftheregisteredcapital,whilemakingprofitdistribution,thelegalearnedsurplusreservewillnotbedrawn.BasedontheCompany’s685,464,000sharesattotaluptoDecember31

st

,2017,weplantopayCNY5incashasdividendsforeverytenshares(includingtax)totheCompany’sallshareholders,totalinguptoCNY342,732,000,accountingfor33.22%ofthenetprofitCNY1,031,695,056attributabletotheshareholdersoftheparentcompanyintheconsolidatedstatement,theretainedandundistributedprofitofCNY688,963,056willbereservedforthedistributionofnextyear.TheCompany’sprofitdistributionschemein2018isasfollowing:Becausetheleftamountoflegalearnedsurplusreservereaches50%ofregisteredcapital,whilemakingprofitdistribution,thelegalearnedsurplusreservewillnotbedrawn.BasedontheCompany’s685,464,000sharesattotaluptoDecember31

st

,2018,weplantopayCNY6incashasdividendsforeverytenshare(includingtax)totheCompany’sallshareholders,totalinguptoCNY411,278,400accountedfor39.45%ofnetprofitsCNY1,042,632,929attributabletoshareholdersofparentcompanyintheconsolidatedstatements.TheretainedandundistributedprofitofCNY631,354,529willbereservedfordistributioninthenextyear.TheCompany’sordinarysharecashdividendrecordinrecentthreeyears(includingthereportperiod)

Unit:CNY

YearofdistributionAmountofcashdividend(includingtax)Netprofitbelongingtothelistedcompany’sshareholdersintheconsolidatedstatementofthedistributionyearProportioninthenetprofitbelongingtothelistedcompany’sshareholdersintheconsolidatedstatement(%)Amountofcashdividends(eg.sharesbuy-back)inotherwaysProportionofcashdividendsinotherwaysAmountofcashdividend(includingotherways)Proportion(includingotherways)inthenetprofitbelongingtothelistedcompany’sshareholdersintheconsolidatedstatement(%)
2018411,278,400.001,042,632,929.0039.45%0.000.00%411,278,400.0039.45%
2017342,732,000.001,031,695,056.0033.22%0.000.00%342,732,000.0033.22%
2016342,732,000.00982,460,488.0034.89%0.000.00%342,732,000.0034.89%

Duringthereportperiod,theCompanyearnedprofit,theprofitoftheparentcompanythatcouldbedistributedtoordinaryshareshareholderswaspositivebutwithoutproposingordinarysharecashdividenddistributionpreliminaryscheme.□Available?Notavailable2.TheCompany’spreliminaryschemeofprofitdistributionandpreliminaryschemeofincreasingequitywithcapitalreserveforthereportperiod?Available□Notavailable

Numberofsendingbonussharespertenshares(share)0
Numberofdividendpayoutpertenshares(CNY)(includingtax)6
Numberoftransferringpertenshares(share)0
Thecardinalnumberofthecapitalstocksforthepreliminarydistributionscheme(share)685,464,000
Totalcashdividenddistribution(CNY)(includingtax)411,278,400
Amountofcashdividends(eg.sharesbuy-back)(CNY)inotherways0
Totalcashdividenddistribution(CNY)(includingotherways)411,278,400
Attributableprofit(CNY)1,042,632,929
Theproportionofcashdividenddistributioninthetotalprofitdistribution(includingotherways)100%
Cashdividenddistributionthistime
IftheCompany’sdevelopmentisingrowthstageandmajorcapitalexpenditureisarranged,whilemakingprofitdistribution,theproportionofcashdividendsshouldtakesupnolessthan20%inthisprofitdistribution.
Detailedexplanationforthepreliminaryschemeofprofitdistributionorincreasingequitywithcapitalreserve
Accordingtoregulationof157thitemintheArticlesofAssociation,whichisthat“theCompanycandistributedividendseitherincashorbystock,theprofittobedistributedeachyearisnotlessthan25%ofthedistributableprofitrealizedinthesameyearandtheaccumulatedsumofprofittobedistributedincashinthelastthreeyearsisnotlessthan30%oftheyearlyaveragedistributableprofittoberealizedinthelastthreeyears”.Meanwhile,consideringthelargeamountonthecapitalexpenditurein2019,undertheconditionofnotinfluencingthenormalproductionandoperation,theCompanyputforwardpreliminaryschemeonprofitdistributionin2018asfollowing:Becausetheleftamountoflegalearnedsurplusreservereaches50%oftheregisteredcapital,whilemakingprofitdistribution,thelegalearnedsurplusreservewillnotbedrawn.ThenbasedontheCompany’s685,464,000sharesattotaluptoDecember31st,2018,weplantopayCNY6incashasdividendsforeverytenshares(includingtax)totheCompany’sall

3.Implementationofcommitments(1)CommitmentsthattheCompany’sactualcontrollers,shareholders,relatedparties,acquirersandtheCompanyandotherrelatedcommitmentpartieshaveimplementedduringthereportperiodandhavenotimplementeduptotheendofthereportperiod?Available□Notavailable

stockholders,totalinguptoCNY411,278,400,accountingfor39.45%ofthenetprofitCNY1,042,632,929attributabletotheshareholdersoftheparentcompanyintheconsolidatedstatement;theretainedundistributedprofitofCNY631,354,529willbereservedforthedistributionofnextyear.Thecashdividenddistributedtoshareholdersofdomesticlistedforeignshares(Bshare)ispaidinHongkongdollarconvertedbasedonthemiddleratebetweenCNYandHongkongdollarissuedbythePeople’sBankofChinaonthefirstworkingdayaftertheresolutiondateof2018shareholders’meeting.

Commitments

CommitmentsCommitmentpartyCommitmenttypeCommitmentcontentCommitmenttimeCommitmentperiodImplementation
Commitmentsatsharereform
Commitmentsmadeinacquisitionreportorequitychangesreport
Commitmentsatassetrestructuring
CommitmentsattheinitialpublicofferingorrefinancingYantaiChangyuGroupCo.Ltd.SolvehorizontalcompetitionNon-horizontalcompetitionMay18th,1997ForeverHasbeenperformingstrictly
YantaiChangyuGroupCo.,Ltd.CleartheuseoftrademarkroyaltyAccordingtoTrademarkLicenseContract,thetrademarkroyaltyofChangyuandothertrademarkspaidbytheCompanytoYantaiChangyuGroupCo.,LtdeveryearismainlyusedforadvertisingChangyuandothertrademarksandthiscontractMay18th,1997ForeverAccordingtoTrademarkLicenseContract,thetrademarkusefeeannuallypaidbytheCompanytoChangyuGroupshallbemainlyusedbyChangyuGrouptopublicizetrademarksandcontractproducts.Except2013to2017duringwhichthecommitmentwasnotstrictlyperformed,YantaiChangyuGroupCo.,Ltd.has
productsbyYantaiChangyuGroupCo.,Ltd.beenperformingitscommitment.
Equityincentivecommitments
CommitmentsatmiddleandsmallshareholdersoftheCompany
CommitmentundertimelyimplementationornotNo
WhetherornottohavespecificreasonsoftheunimplementedcommitmentandnextstepsAccordingtotTrademarkLicenseContract(hereafterreferredtoas“theContract”),ChangyuGrouppromisesthatthetrademarkusefeeannuallypaidbytheCompanytoChangyuGroupshallbemainlyusedbyChangyuGrouptopublicizetrademarksandcontractproducts.Butabove-mentioned‘mainly’isnotaspecificnumber,whichiseasytocausedivergenceduetodifferentunderstandingandleadstoproblemappearanceduringtheimplementationprocess.From2013to2017,ChangyuGroupcollectedatotalofCNY420,883,902trademarkusefee,ofwhich51%wasusedtopublicizetrademarksincludingChangyuandcontractproductswithamountofCNY214,650,790.TheamounthasbeenusedtopublicizetrademarksincludingChangyuandcontractproductsisCNY50,025,181,withabalanceofCNY164,625,609.In2018and2019,thetrademarkusefeecollectedof2017and2018isCNY155,623,907,ofwhich51%isusedtopublicizetrademarksincludingChangyuandcontractproductswithamountofCNY79,368,193.TheamounthasbeenusedtopublicizetrademarksincludingChangyuandcontractproductsisCNY12,225,187,withabalanceofCNY67,143,006.Since2013,theaccumulatedbalanceofChangyuGroupusingtopublicizetrademarksincludingChangyuandcontractproductsisCNY231,768,615.ChangyuGrouppromisesthatthefour-yeartrademarkusefeefrom2019to2022willbeusedforoffset.Ifinsufficient,theshortfallwouldbefilledinonetimein2023.Ifthereisanyexcess,theexcessportionofthetrademarkusefeewouldbecollectedfromtheyearwithexcessoccurrence.IfChangyuGroupisnotabletoimplementtheabove-mentionedcommitmentowingtovariousreasons,theCompanywilltimelysuperviseandurgeChangyuGrouptofulfillitscommitmentandrequestChangyuGrouptoraisefundsthroughbankloaning,assetssalesandequitysalesetcinordertoimplementthecommitment.

(2)TheCompanyshouldmakeastatementontheachievedoriginalprofitforecastofassetsorprojectsanditsreasonifthereisprofitforecastofCompany’sassetsorprojectsandthereportperiodisstillintheprofitforecastperiod□Available?Notavailable4.Non-businesscapitaloccupyingoflistedcompanybycontrollingshareholderanditsrelatedparties

□Available?NotavailableTherearenonon-businesscapitalsoccupyingoflistedcompanybycontrollingshareholderanditsrelatedpartiesduringthereportperiod.5.ExplanationofNon-standardAuditReportgivenbyaccountingfirminthereportperiodfromboardofdirectors,boardofsupervisorsandindependentdirectors(ifhave)□Available?Notavailable6.Comparedwiththelastyear’sfinancialreport,explanationforthechangesofaccountingpolicy,accountingestimationandaccountingmethod□Available?NotavailableThereisnosituationforthechangesofaccountingpolicy,accountingestimationandaccountingmethod.7.Thesituationexplanationforthecorrectionofmajoraccountingerrorswhichneedtoberetrospectandrestatedduringthereportperiod□Available?NotavailableThereisnosituationforthecorrectionofmajoraccountingerrorswhichneedtoberetrospectandrestated.8.Comparedwiththelastyear’sfinancialreport,explanationforthechangesoftheconsolidatedstatementsscope?Available□NotavailableAccordingtoShareSale&PurchaseAgreementsignedonDecember5

th

,2017betweentheCompanyandshareholdersofKilikanoonEstatePtyLtd,theCompanyacquired80%equityofKilikanoonEstatePtyLtdwiththepriceofAUD20,860,825(equivalenceCNY107,194,420)to.TheCompanyhascompletedequitytransferonJanuary18

th

,2018,obtainingcontrolrightsoffinanceandbusinesspolicyforKilikanoonEstatePtyLtd.Duringthereportperiod,thiscompanyhasbeenincludedinthescopeofconsolidatedstatements.9.TheappointmentanddismissalofcertifiedpublicaccountantsCurrentlyappointedaccountingfirm

DomesticaccountingfirmnameDeloitteHuaYongCertifiedPublicAccountants
Firm(specialgeneralpartnership)
Remunerationfordomesticaccountingfirm(CNY‘0000)198
Consecutiveperiodfortheauditserdeputysofdomesticaccountingfirm6
NameofcertifiedpublicaccountantfortheauditserdeputysofdomesticaccountingfirmXieYanfeng,LiYangang
Consecutiveperiodforthecertifiedpublicaccountant’sauditserdeputysofdomesticaccountingfirm
Overseasaccountingfirmname(ifhave)0
Remunerationforoverseasaccountingfirm(CNY‘0000)(ifhave)0
Consecutiveperiodfortheauditserdeputysofoverseasaccountingfirm(ifhave)
Nameofcertifiedpublicaccountantfortheauditserdeputysofoverseasaccountingfirm(ifhave)
Consecutiveperiodforthecertifiedpublicaccountant’sauditserdeputysofoverseasaccountingfirm(ifhave)

Whetherornottodismisstheaccountingfirmduringthereportperiod□Yes?NoToemployinternalcontrolauditaccountingfirms,financialadviserorsponsor.□Available?Notavailable10.Faceofsuspensionandterminationoflistingafterthedisclosureofannualreport□Available?Notavailable11.Bankruptcyreorganization□Available?NotavailableThereisnobankruptcyreorganizationduringthereportperiod.12.Materiallitigationandarbitration□Available?NotavailableTherearenomateriallitigationandarbitrationduringthereportperiod.

13.Penaltyandrectification□Available?NotavailableTherearenopenaltiesorrectificationsduringthereportperiod.14.CreditoftheCompany,holdingshareholdersandactualcontrollers□Available?Notavailable15.ImplementationoftheCompany’sequityinventiveplan,employeestockownershipplanorotheremployeeincentivemeasures□Available?NotavailableTherearenoimplementationoftheCompany’sequityinventiveplan,employeestockownershipplanandotheremployeeincentivemeasuresduringthereportperiod.16.Significantrelatedtransactions(1)Relatedtransactionsinrelationtodailyoperations?Available□Notavailable

(2)Relatedtransactionsinrelationtoacquisitionandsalesofassetsorequity□Available?NotavailableTherearenorelatedtransactionsinrelationtoacquisitionorsalesofassetsorequityduringthereportperiod.

RelatedpartyRelationshipTypeContentPricingprinciplePriceAmount(CNY‘0000)ProportionaccountingforamountofsimilartransactionsApprovedtransactionquota(CNY‘0000)WhetherexceedapprovedtransactionquotaClearingformAvailablemarketpriceofsimilartransactionsDisclosuredateDisclosureindex
YantaiShenmaPackagingCo.,Ltd.ControlledbythesameparentcompanyPurchaseandcommissionprocessingPurchaseandcommissionprocessingpackingmaterialsAgreementpricingDeterminedbyagreement17,3249.08%18,000NoCashNoApril23rd,2018-
YantaiChangyuGroupCo.Ltd.ParentcompanyLicenseduseofintangibleassetsLicenseduseoftrademarkandpatentAgreementpricingDeterminedbyagreement7,398100.00%7,600NoCashNoApril23rd,2018-
Total--24,722--25,600-----
DetailsofthereturnoflargesalesNo
Actualperformanceoftheestimatedtotalamountfordailyoperationsrelatedtransactionsbycategorythatwilloccurduringthisperiod.(ifhave)No
Reasonforthedeferencebetweentransactionpriceandmarketreferenceprice(ifavailable)Notavailable

(3)Relatedtransactionsinrelationtocommonforeigninvestment□Available?NotavailableTherearenorelatedtransactionsinrelationtocommonforeigninvestmentduringthereportperiod.(4)Relatedcurrentcreditanddebttransactions?Available□NotavailableWhetherornotexistingnon-operatingrelatedcreditanddebttransactions□Yes?NoTherearenonon-operatingrelatedcreditanddebttransactionsduringthereportperiod.(5)Othermajorrelatedtransactions□Available?NotavailableTherearenoothermajorrelatedtransactionsduringthereportperiod.17.Majorandimportantcontractsandexecutionresults(1)Trusteeship,contractandleaseholdissues?Trusteeshipsituation□Available?NotavailableThereisnotrusteeshipsituationduringthereportperiod.?Contractsituation?Available□NotavailableContractsituationdescriptionDuringthereportperiod,abouttheCompany’scontractoperationsituation,pleasesee“1.ThestructureofEnterprisegroup”inAnnex8“Rightsandinterestsofothersubject”inthefinancialreportofthisreport.ProjectingainsandlossesfortheCompanytoachievemorethan10%ofthetotalprofit□Available?NotavailableTherearenocontractprojectsingainsandlossesfortheCompanytoachievemorethan10%ofthetotalprofitduringthereportperiod.?Leaseholdsituation?Available□Notavailable

LeaseholdsituationdescriptionOnJanuary1

st

,2017,theCompanyrenewedtheSpaceLeaseAgreementwiththecontrollingshareholderChangyuGroup.TheCompanyleasedthespacewith15196.94squaremeterslocatedat174ShihuiyaoRoad,ZhifuDistrict,YantaiCity.TherentperyearisCNY1.4645millionwitharentalperiodof5yearsfromJanuary1

st

,2017toDecember31

st

,2021.OnJanuary1

st

,2017,theCompany’ssubordinateSales&MarketingCo.ofYantaiChangyuPioneerWineCompanyLimited.BrandSalesDepartmentrenewedtheSpaceLeaseAgreementwiththecontrollingshareholderChangyuGroup,leasingthespacewith42552.83squaremeterslocatedat1JichangRoad,ZhifuDistrict,YantaiCityandthespacewith3038squaremeterslocatedat56DamaRoad,ZhifuDistrict,YantaiCity,whichareallunderthenameofcontrollingshareholder.TherentoftheabovespacesperyearisCNY4.3935millionwitharentalperiodof5yearsfromJanuary1st,2017toDecember31

st

,2021.OnJuly1

st

,2017,thiscompanysignedahouse-leasingcontractwithYantaiShenmaPackagingCompanyLimited.Accordingtothiscontract,sinceJuly1

st

,2017,thiscompanyleasedpropertytoYantaiShenmaPackagingCompanyLimitedforabusinesspurposewiththeannualrentofCNY1,626,880.ThiscontractexpiresonJune30

th

,2022.Forotherleaseholdsituation,pleaserefertofinancialreport.notes.ProjectingainsandlossesfortheCompanytoachievemorethan10%ofthetotalprofit□Available?NotavailableTherearenoleaseholdprojectsingainsandlossesfortheCompanytoachievemorethan10%ofthetotalprofitduringthereportperiod.

(2)Majorguarantee

?Available□Notavailable?Guaranteesituation

Unit:CNY’0000

ExternalguaranteeoftheCompanyanditssubsidiaries(excludingguaranteetosubsidiaries)
GuaranteeobjectnameDisclosuredateofrelatedannouncementaboutguaranteequotaGuaranteequotaActualdateofoccurrence(dateofagreement)ActualguaranteeamountGuaranteetypeGuaranteePeriodWhetherornotcompleteimplementationWhetherornotbelongtorelated-partyguarantee
YantaiEconomicandTechnologicalDevelopmentZoneManagementCouncil.2016.12.22341602016.12.2134160Mortgage;Pledge10yearsNoNo
Totaloftheexternalguaranteequotaapprovedduringthereportperiod(A1)0Totaloftheactualexternalguaranteeamountduringthereportperiod(A2)0
Totaloftheexternalguaranteequotaapprovedbytheendofthereportperiod(A3)34160Balanceoftheactualexternalguaranteebytheendofthereportperiod(A4)34160
GuaranteesituationsbetweentheCompanyandsubsidiaries
GuaranteeobjectnameDisclosuredateofrelatedannouncementaboutguaranteequotaGuaranteequotaActualdateofoccurrence(dateofagreement)ActualguaranteeamountGuaranteetypeGuaranteePeriodWhetherornotcompleteimplementationWhetherornotbelongtorelated-partyguarantee
Sales&MarketingCompanyofYantaiChangyu2016.10.3110,0002016.11.0510,000Jointliabilityassurance2yearsNoYes
PioneerWineCompanyLimited
YantaiChangyuPioneerWineCompanyLimited2016.12.2211,9842016.12.2111,984Mortgage;Pledge10yearsNoYes
YantaiChangyuWineResearchandDevelopmentCompanyLimited2016.12.2272,1762016.12.2172,176Jointliabilityassurance;Mortgage10yearsNoYes
KilikanoonEstatePtyLtd2017.12.1271002018.01.097100Jointliabilityassurance1yearNoYes
Totaloftheguaranteequotaapprovedtosubsidiariesduringthereportperiod(B1)0Totaloftheactualguaranteeamountforsubsidiariesduringthereportperiod(B2)7,100
Totaloftheguaranteequotaapprovedtosubsidiariesbytheendofthereportperiod(B3)89,276Balanceoftheactualguaranteeforsubsidiariesbytheendofthereportperiod(B4)89,276
Guaranteesituationsbetweensubsidiaries
GuaranteeobjectnameDisclosuredateofrelatedannouncementaboutguaranteequotaGuaranteequotaActualdateofoccurrence(dateofagreement)ActualguaranteeamountGuaranteetypeGuaranteePeriodWhetherornotcompleteimplementationWhetherornotbelongtorelated-partyguarantee
HaciendaYVinedosMarquesDelAtrio.SL2016.04.293,5022015.10.083,502Mortgage;LongtermNoNo
IndomitaWineCompanyChile,SpA2018.04.231,9862018.04.201,986Mortgage;LongtermNoNo
Totaloftheguaranteequotaapprovedtosubsidiariesduringthereportperiod(C1)0Totaloftheactualguaranteeamountforsubsidiariesduringthereportperiod(C2)5,488
Totaloftheguaranteequotaapprovedtosubsidiariesbytheendofthereportperiod(C3)5,488Balanceoftheactualguaranteeforsubsidiariesbytheendofthereportperiod(C4)5,488
TotalguaranteeamountoftheCompany(Totalofabovethreemajoritems)
Totaloftheapprovedguaranteequotaduringthereportperiod(A1+B1+C1)0Totaloftheactualguaranteeamountduringthereportperiod(A2+B2+C2)12,588
Totaloftheapprovedguaranteequotabytheendofthereportperiod(A3+B3+C3)128,924Balanceoftheactualguaranteebytheendofthereportperiod(A4+B4+C4)128,924
Theproportionofactualtotalguaranteeamount(A4+B4+C4)accountingfortheCompany’snetasset13.42%
Among:
Theamountofguaranteeforshareholders,actualcontrollersandtheirrelatedparties(D)0
Theamountofdebtguaranteefortheguaranteedobjectswhoseasset-liabilityratioismorethan70%directlyorindirectly(E)0
Totalamountofguaranteeofthepartthatexceeds50%ofnetassets(F)0
Totalamountoftheabove-mentionedthreeitems(D+E+F)0
ExplanationforundueguaranteesthathavehappenedwarrantyliabilityorNo
maytakejointpaybackliabilitiesduringthereportperiod(ifhave)
Explanationforviolatingdueprocesstoprovideexternalguarantee(ifhave)No

SpecificexplanationonadoptingcomplexguaranteetypeNo.

?Illegalexternalguarantee□Available?NotavailableThereisnoillegalguaranteesituationduringthereportperiod.(3)Entrustingotherstomanagecashassets?Financialmanagemententrustment□Available?NotavailableThereisnofinancialmanagemententrustmentduringthereportperiod.?Loanentrustment□Available?NotavailableThereisnoloanentrustmentduringthereportperiod.

(4)Otherimportantcontracts

□Available?NotavailableTherearenootherimportantcontractsduringthereportperiod.18.SocialResponsibility

(1)SocialresponsibilityperformancePleasereferto2018AnnualSocialResponsibilityReportdisclosedonSecuritiesTimes,ChinaSecuritiesNewspaperandwww.cninfo.com.cnbytheCompany.(2)Targetedpovertyalleviationsocialresponsibilityperformance①TargetedpovertyplanTheCompanyhasreachedthemutualagreementwithZhuqiaoTownPartyCommitteeGovernmentandDaLangyaVillageCommitteetoestablishprofessionalgrapecooperative.Itplanstohelptoconducttheconstructionof100muofvineyardperyearfrom2019to2021withatotalareaof300mandalsotosigngrapepurchasecontractinordertohelplocalvillagerstogetridofpovertyandbecomebetteroff.②SummaryofannualtargetedpovertyRelatedleadersoftheCompanyvisitedthevillagethreetimes,heldmeetingsthreetimesandassistedtodrillthreewells.③TargetedpovertyeffectivenessTheCompanyhascompletedinitialpreparationworkoftargetedpovertyeffectivenessforDaLangyaVillage.④SubsequenttargetedpovertyplanNo(3)EnvironmentalprotectionrelatedsituationWhetherthelistedcompanyanditssubsidiariesbelongtomajorpolluterspublishedbytheenvironmentalprotectiondepartment□Available?NotavailableThemainlypollutantoftheCompanyisthesewagegeneratedintheproductiveprocess,whichhasbeendischargedwithreachedstandards.Thereisnopollutionsituationoccurredduringthisreportperiod.19.OtherMajorissues□Available?NotavailableTherearenoothermajorissuesneedtobeexplainedduringthereportperiod.20.MajorissuesofCompany’ssubsidiaries□Available?Notavailable

VI.ChangesinSharesandtheShareholders’Situation

1.Changesinshares

(1)Changesinshares

Unit:share

AmountbeforethischangeChange(+,-)Amountafterthischange
AmountPercentage%AllotnewshareDistributebonusshareTransferothercapitaltosharecapitalothersSubtotalAmountPercentage%
1、Unrestrictedshares685,464,000100.00%685,464,000100.00%
(1)、Ashares453,460,80066.15%453,460,80066.15%
(2)、Bshares232,003,20033.85%232,003,20033.85%
2、Totalshares685,464,000100.00%685,464,000100.00%

Causeofsharechange□Available?NotavailableApprovalofsharechange□Available?NotavailableTransferofchangedshares□Available?NotavailableImplementationprogressofsharebuy-back

□Available?NotavailableImplementationprogressofreducingholdingrepurchasedsharethroughthewayofcentralizedbidding□Available?NotavailableTheinfluenceofsharechangeonthefinancialindicatorssuchasbasicearningspershare,dilutedearningspershareofthelatestyearandthelatestperiod,netassetpersharebelongingtotheCompany’scommonshareholders,etc.□Available?NotavailableOthercontentstheCompanythinksnecessaryorsecuritiesregulatorydepartmentsasktomakepublic.□Available?Notavailable(2)Changesinrestrictedshares□Available?Notavailable2.Securitiesissuanceandlistingsituation(1)Securitiesissuance(excludepreferredshare)duringreportperiod□Available?Notavailable(2)ExplanationofchangeinCompany’stotalsharesandshareholdingstructureandchangeinCompany’sassetsandliabilitystructure□Available?Notavailable

(3)Currentemployeeshares

□Available?Notavailable3.Situationforshareholdersandtheactualcontrollers(1)ThenumberofshareholdersoftheCompanyandtheshareholdings

Unit:share

Totalshareholdersinthereportperiod42,980Totalnumberofshareholdersbytheendoflastmonthbeforethedisclosuredayoftheannualreport45,104Totalnumberofpreferredshareholderrecoveringvotingpowerbytheendofreportperiod(ifhave)(seenote8)0Totalnumberofpreferredshareholderrecoveringvotingpowerbytheendoflastmonthbeforethedisclosuredayoftheannualreport(ifhave)(seenote8)0
Shareholdersholdingmorethan5%orthetop10shareholdersholdingsituation
NameofShareholdersCharacterofshareholdersPercentage(%)ShareshelduntiltheendofthereportperiodChangesduringthereportperiodNumberofrestrictedsharesNumberofunrestrictedsharesPledgedorfrozen
SharestatusAmount
YANTAICHANGYUGROUPCO.LTD.Domesticnon-state-ownedlegalperson50.40%345,473,856345,473,8560
GAOLINGFUND,L.P.Foreignlegalperson3.08%21,090,21921,090,2190
CHINAState-ownedlegalperson2.25%15,440,79415,440,7940
SECURITIESFINANCECORP
BBHBOSS/AFIDELITYFD-CHINAFOCUSFDForeignlegalperson2.22%15,241,82615,241,8260
SHENWANHONGYUANSECURITIES(HONGKONG)LIMITEDForeignlegalperson1.22%8,347,6638,347,6630
FIDELITYPURITANTRUST:FIDELITYSERIESINTRINSICOPPORTUNITIESFUNDForeignlegalperson0.89%6,100,7626,100,7620
TAIKANGLIFEINSURANCELIMITEDLIABILITYCOMPANY--UNIT–LINKED--INDUSTRYCONFIGURATIONDomesticnon-state-ownedlegalperson0.75%5,159,7575,159,7570
GUOTAIJUNANSECURITIES(HONGKONG)LIMITEDForeignlegalperson0.74%5,043,5075,043,5070
CENTRALHUIJINState-ownedlegalperson0.69%4,761,2004,761,2000
ASSETMANAGEMENTLIMITED
TAIKANGLIFEINSURANCELIMITEDLIABILITYCOMPANY-DIVIDEND-PERSONALDIVIDEND-019L-FH002SHENDomesticnon-state-ownedlegalperson0.69%4,746,9544,746,9540
Strategicinvestorsorlegalresultoftheplacementofnewsharestobecomeatop10shareholders(ifhave)(seenote3)No
TheexplanationfortheassociatedrelationshipandaccordantactionAmongthetop10shareholders,thereisassociatedrelationshipbetweenTaikangLifeInsuranceLimitedLiabilityCompany-Unit-linked-IndustryConfigurationandTaikangLifeInsuranceLimitedLiabilityCompany-Dividend-Personaldividend-019L-FH002Shen.YantaiChangyuGroupCompanyLimitedhasnoassociatedrelationshiporaccordantactionrelationshipwiththeother9listedshareholders,andtherelationshipamongtheothershareholdersisunknown.
Thetop10shareholderswithunrestrictedshares
NameofShareholdersNumberofunrestrictedshareshelduntiltheendoftheyearTypeofshare
TypeofshareAmount
YANTAICHANGYUGROUPCO.LTD.345,473,856A345,473,856
GAOLINGFUND,L.P.21,090,219B21,090,219
CHINASECURITIESFINANCECORP15,440,794A15,440,794
BBHBOSS/AFIDELITYFD-CHINAFOCUSFD15,241,826B15,241,826
SHENWANHONGYUANSECURITIES(HONGKONG)LIMITED8,347,663B8,347,663
FIDELITYPURITANTRUST:FIDELITYSERIESINTRINSICOPPORTUNITIESFUND6,100,762B6,100,762
TAIKANGLIFEINSURANCELIMITEDLIABILITYCOMPANY--UNIT–LINKED--INDUSTRYCONFIGURATION5,159,757A5,159,757
GUOTAIJUNANSECURITIES(HONGKONG)LIMITED5,043,507B5,043,507
CENTRALHUIJINASSETMANAGEMENTLIMITED4,761,200A4,761,200
TAIKANGLIFEINSURANCELIMITEDLIABILITYCOMPANY-DIVIDEND-PERSONALDIVIDEND-019L-FH002SHEN4,746,954A4,746,954
Theexplanationfortheassociatedrelationshipandaccordantactionofthetop10shareholderswithunrestrictedshares,thetheassociatedrelationshipandaccordantactionbetweenthetop10shareholderswithunrestrictedsharesandthetop10shareholdersAmongthetop10shareholders,thereistheassociatedrelationshipbetweenTaikangLifeInsuranceLimitedLiabilityCompany-Unit-linked-IndustryConfigurationandTaikangLifeInsuranceLimitedLiabilityCompany-Dividend-Personaldividend-019L-FH002Shen.YantaiChangyuGroupCompanyLimitedhasnoassociatedrelationshiporaccordantactionrelationshipwiththeother9listedshareholders,andtherelationshipamongtheothershareholdersisunknown.
Explanationforthetop10shareholderswhoinvolvedinfinancingactivitiesandstocktradingbusiness(ifhave)(seenote4)Thetop10shareholdersdonotinvolveinfinancingactivitiesandstocktradebusiness.

WhetherornottheCompany’stop10commonshareholdersandshareholderswithunrestrictedsharestakeagreedrepurchasetradingduringthereportperiod□Yes?NoThereisnoagreedrepurchasetradingtakenbytheCompany’stop10commonshareholdersandshareholderswithunrestrictedsharesduringthereportperiod.(2)SituationforthecontrollingshareholdersoftheCompany

Propertyofholdingshareholders:PropertyofholdingmainbodyundefinedTypeofholdingshareholders:Legalrepresentative

NameofcontrollingshareholderLegalrepresentativeEstablishmentdateOrganizationcodeMainbusiness
YantaiChangyuGroupCo.Ltd.ZhouHongjiang1997.04.27913706002656458244Productionanddistributionofwine,healthyliquor,distilledliquorandnon-alcoholbeverages,plantingofagriculturalproductsandexportbusinessunderthescopeofpermission.
EquitysituationfortheotherdomesticlistedcompaniescontrolledorsharedbythecontrollingshareholdersduringthereportperiodNo.

Changesinthecontrollingshareholderduringthereportperiod□Available?NotavailableTherearenochangesinthecontrollingshareholderduringthereportperiod.(3)SituationfortheactualcontrollersoftheCompanyPropertyofactualcontrollers:domesticotherinstitutions;foreignotherinstitutionsTypeofactualcontrollers:Legalrepresentative

NameofactualcontrollersLegalrepresentativeEstablishmentdateOrganizationcodeMainbusiness
YantaiYuhuaInvestmentJiangHua2004.10.2876779294-7Understatepermission,propertyinvestment,tenancyofmachineandfacility,
&DevelopmentCo.Ltdwholesaleandretailofconstructionmaterial,chemicalproducts(chemicalhazardproductsexcluded),hardwareandelectronicalproducts,grapeplantation.
ILLVASaronnoHoldingSpaAugustoReina1984.07.25Directlyorindirectlyconducttheproductionanddistributionoffoodproducts(alcoholicproductsincluded)aswellasindustrial,commercial,financialandserdeputyactivitiesofanyotherkindsthroughjoint-stockcompaniesandorganizations
InternationalFinanceCorporationPhilippeLEHOUEROU1956.07.25InternationalFinanceCorporationisoneofthemembersofWorldBank,mainlydedicatedtoinvestmentinprivatesectorsofdevelopingcountrieswhileprovidingtechnicalsupportandconsultationserdeputy.Thecorporationisamultilateralfinancialinstitutionthatranksfirstintheworldintermsofprovidingcapitalstockandloanstodevelopingcountries.Itspurposeistopromotesustainableinvestmentsofprivatesectorsofdevelopingcountriesinordertoalleviatepovertyandimprovepeople’slife.
YantaiGuofengInvestmentHoldingsCo.,LtdRongFeng2009.02.1200426068-6Operatingmanagementofstate-ownedpropertyright(stockright)authorizedbyState-ownedAssetsSupervisionandAdministrationCommissionofYantaiMunicipalGovernment;Financing,investmentandoperatingmanagementofgovernmentprojects,suchasstrategicinvestmentandindustrialinvestmentandsoon;Capitaloperation(includingacquisition,reintegrationandtransfer,etc)ofstate-ownedpropertyrightandstate-ownedstockrightwithinthescopeofauthorization;Venturecapitalinvestmentbusiness;Agencyofventurecapitalinvestmentbusinessofotherventureinvestmententerprisesorindividuals;Participationintheestablishmentofventurecapitalinvestmententerprisesandventurecapitalinvestmentmanagementconsultantinstitutions;Investmentandfinancingserdeputybusiness;Investmentandfinancingconsultantbusiness;OtherbusinessauthorizedbyState-ownedAssetsSupervisionandAdministrationCommissionofYantaiMunicipalGovernment.(Projectsneedtobe
authorizedinaccordancewiththelawcouldcarryoutbusinessactivitiesonlyaftertheapprovalofrelevantdepartments)
EquitysituationfortheotherdomesticlistedcompaniescontrolledbytheactualcontrollerduringthereportperiodNo

Changesoftheactualcontrollersduringthereportperiod□Available?NotavailableTherearenochangesinactualcontrollersduringthereportperiod.

IntroductionforpropertyrightandcontrolrelationsbetweentheCompanyanditsactualcontrollers

ActualcontrollercontrolstheCompanythroughatrustorotherassetmanagementways□Available?Notavailable(4)Otherinstitutionalshareholdersholdingmorethan10%shares

□Available?Notavailable(5)Sharesreductionsituationsofholdingshareholders,actualcontrollers,restructuringsideandothercommitmentsubjects□Available?Notavailable

VII.RelatedSituationofPreferredShares

□Available?NotavailableTherearenopreferredsharesduringthereportperiod.

VIII.SituationforDirectors,Supervisors,SeniorExecutivesandStaff1.Changesinshareholdingsofdirectors,supervisorsandseniorexecutives

NamePostStatusGenderAgeBeginningdateofthepostEndingdateofthepostSharesheldatthebeginningoftheperiodIncreasedsharesduringtheperiodDecreasedsharesduringtheperiodOtherchangesofsharesheldSharesheldattheendoftheperiod
ZhouHongjiangChairmanpresentincumbentM542002.05.202019.05.2700000
SunLiqiangDirectorpresentincumbentM711997.09.182019.05.2700000
LengBinDirectorpresentincumbentM562000.08.222019.05.2700000
SunJianGeneralmanagerpresentincumbentM522006.03.222019.05.2700000
QuWeiminDirectorandSecretarytotheBoardofDirectorspresentincumbentM611997.09.182019.05.2700000
ZhangMingDirectorpresentincumbentM452016.05.262019.05.2700000
AugustoReinaDirectorpresentincumbentM782006.12.072019.05.2700000
AldinoMarzoratiDirectorpresentM662006.12.072019.05.2700000
incumbent
AntonioAppignaniDirectorpresentincumbentM802006.12.072019.05.2700000
WeiAnningDirectorpresentincumbentM552017.06.152019.05.2700000
WangZhuquanIndependentdirectorpresentincumbentM532014.05.232019.05.2700000
WangShigangIndependentdirectorPresentincumbentM532011.05.102019.05.2700000
LuoFeiIndependentdirectorPresentincumbentM662016.09.232019.05.2700000
LiuYanIndependentdirectorPresentincumbentF452016.09.232019.05.2700000
GuoGuoqingIndependentdirectorPresentincumbentM562018.12.042019.05.2700000
KongQingkunChairmantotheBoardofSupervisorspresentincumbentM462013.05.14.2019.05.2700000
ZhangLanlanSupervisorpresentincumbentF492013.05.14.2019.05.2700000
LiuZhijunSupervisorpresentincumbentM382016.05.262019.05.2700000
YangMingDeputygeneralmanagerLeavingthepostM601998.08.122018.02.2800000
LiJimingChiefengineerpresentincumbentM522001.09.142019.05.2700000
JiangHuaDeputygeneralmanagerpresentincumbentM552001.09.142019.05.2700000
PengBinDeputygeneralmanagerpresentincumbentM522018.01.102019.05.2700000
JiangJianxunChieffinancialofficerpresentincumbentM522018.01.102019.05.2700000
PanJianfuGeneralmanagerassistantpresentincumbentM432018.04.192019.05.2700000
LiuShiluGeneralmanagerassistantpresentincumbentM442018.04.192019.05.2700000
XiaoZhenboGeneralmanagerassistantpresentincumbentM422018.04.192019.05.2700000
Total------------00000

2.ChangesintheCompany’sdirectors,supervisorsandseniorexecutives?Available□Notavailable

NamePositionTypeDateReason
SunLiqiangChairmanLeavingthepost2017.12.08Volunteertoresignaschairmanandnolongerserveaschairman;currentlyserveasdirectoroftheCompany
ZhouHongjiangDeputyChairmanLeavingthepost2018.01.10Volunteertoresignasdeputychairman,nolongerserveasdeputychairmanandbeelectedaschairman;currentlyserveaschairmanoftheCompany
ZhouHongjiangGeneralManagerDismission2018.01.10Volunteertoresignasgeneralmanagerandnolongerserveasgeneralmanager;currentlyserveaschairmanoftheCompany
ZhouHongjiangChairmanAppointmentanddismission2018.01.10BeelectedaschairmanoftheCompany
LengBinDeputygeneralmanagerDismission2018.01.10Volunteertoresignasdeputygeneralmanagerandnolongerserveasdeputygeneralmanager;currentlyserveasdirectoroftheCompany
SunJianDeputygeneralmanagerAppointmentanddismission2018.01.10Beappointedasgeneralmanageranddismissedfromthepostofdeputygeneralmanager;currentlyserveasgeneralmanageroftheCompany
PengBinDeputygeneralmanagerAppointmentanddismission2018.01.10BeappointedasdeputygeneralmanagerandcurrentlyserveasdeputygeneralmanageroftheCompany
JiangJianxunChieffinancialofficerAppointmentanddismission2018.01.10BeappointedaschieffinancialofficerandcurrentlyserveaschieffinancialofficerandfinancialmanageroftheCompany
GuoGuoqingIndependentdirectorAppointmentanddismission2018.12.04Beappointedasindependentdirector.

3.SituationforworkexperienceTheprofessionalbackground,mainworkexperiencesandpresentpositionsoftheCompany’sdirectors,supervisorsandseniorexecutives(1)MembersofBoardofDirectorsMr.ZhouHongjiang,male,54,Chinese,withdoctordegree,seniorengineer,wastherepresentativeofthe12

th

NationalPeople’sCongress,deputygeneralmanageroftheCompanyandgeneralmanageroftheSaleCompany.From20

th

May,2002to10

th

January,2018,heservedasdirector,deputychairmanandgeneralmanageroftheCompanyandconcurrentlydeputychairmanofChangyuGroup.Heistherepresentativeofthe13

th

NationalPeople’sCongress,chairmanoftheCompany,chairmanandpartysecretaryofChangyuGroupnow.Mr.SunLiqiang,male,71,Chinese,withcollegedegree,senioreconomist,wastherepresentativeofthe10

th

and11

th

NationalPeople’sCongress.From18

th

September,1997to

th

January,2018,heservedaschairmanoftheCompany,andconcurrentlychairmanandgeneralmanagerofChangyuGroup.HeisdirectoroftheCompanynow.Mr.LengBin,male,56,Chinese,withmasterdegree,senioraccountant,wasdeputysectionchiefandsectionchiefofYantaiAuditBureau,heservedasdirectoranddeputygeneralmanageroftheCompanyfrom15

th

June,2000to10

th

January,2018.HeisdirectoroftheCompany,andconcurrentlydeputypartysecretary,directorandgeneralmanagerofChangyuGroupnow.Mr.QuWeimin,male,61,Chinese,bachelorofengineering,senioreconomist,workedatYantaiCommissionforRestructuringtheEconomicSystemandResearchOfficeofYantaiGovernmentandhasmorethan20yearsofexperienceintheaspectofmacroeconomicstudyandenterpriseoperationandmanagement,hewasdeputygeneralmanageroftheCompany.HehasservedasdirectorandconcurrentlysecretarytotheboardofdirectorsoftheCompanysince18

th

September,1997.

Mr.ZhangMing,male,45,Chinese,withbachelordegree,seniorengineer,wasplannerofYantaiSyntheticLeatherGeneralFactory,planspecialistofbusinessdepartment,deputysectionchiefofplanandstatisticsectioninassetsmanagementdepartmentandsectionchiefofplanandstatisticsectioninassetsmanagementdepartmentinYantaiWanhuaSyntheticLeatherGroupCo.,Ltd,riskcontrolsectionchiefofYantaiGuofengInvestmentHoldingCo.,Ltd.andconcurrentlydirectoranddeputygeneralmanagerofYantaiGuoyuFinanceLeaseCo.,Ltd,deputygeneralmanagerandsecretarytotheboardofdirectorsofWanhuaEfficientTechnologyGroupCo.,Ltd.andgeneralmanagerofYantaiState-ownedAssetManagementCo.,Ltd.,chairmanofYantaiGuofengInvestmentHoldingCo.,Ltd.HeisdirectoroftheCompany.Mr.AugustoReina,male,78,Italian,isnowservingaschiefexecutiveofficerofseveralcompaniesincludingIllvaSaronnoHoldingSpAandIllvaSaronnoInvestmentSRL,memberoftheboardofdirectorsofBarberiniSpa,directorofFedervini(ItalianAlcoholsProductionandExportAssociation),directorofIstitutoDelLiquore(WineResearchInstitute),directorofAssovini(SicilyVinicultureandWineProductionAssociation)anddirectorofChangyuGroup.HehasbeendirectoroftheCompanysince27

th

April,2006.Mr.AldinoMarzorati,male,66,Italian,withbachelordegree,isnowthegeneralmanagerofIllvaSaronnoHoldingSpAanddirectoroftheboardofdirectorsofsomebranchesunderthegroupcompanyandthedirectorofChangyuGroup.HehasbeendirectoroftheCompanysince27

th

April,2006.Mr.AntonioAppignani,male,80,Italian,withbachelordegree,isdeputychairmanofItalianBusinessConsultationCommittee,chiefofProfessionalEthicsCommittee,teacherofvocationaltrainingcourseofIndustrialandCommercialConsultationCommittee,memberofEconomicandCommercialCommitteeofthepublicuniversity“G.DAnnunzio”andconcurrentlyservingasmemberoftheboardofdirectorsofdifferentcompaniesandmemberoftheboardofdirectorsofseveralcompaniesunderIllvaGroupandthedirectorofChangyuGroup.Mr.WeiAnning,male,Chinese,55,withdoctordegree,everservedasagriculturaleconomistoftheWorldBank,directorofNorthEastAsiaFood&AgribusinessResearchoftheRabobank,ChinaCEOoftheFortisBankBelgium,executivedeputypresidentoftheNewHopeGroup(Sichuan),presidentofShandongLiuheGroup,directorofHangzhouUnitedRuralCommercialBankCo.,Ltd,directorofXinjiangKuntaiGroupCo.,Ltd.,chairmanoftheShandongChinwhizGroup.Heisgoodatcorporategovernance,enterprisedevelopmentstrategyandequityinvestments.Now,heisservingasexecutivedirectorandgeneralmanagerofShanghaiGuevaFundManagementCo.,LtdCo.,Ltd,executivedirectorofbothNingxiaGuevaFundManagementCo.,LtdandNingboGuevaFundManagementCo.,Ltd,independentdirectorofDachanFood(Asia)Co.,Ltd,OrientSecuritiesCo.,LtdandFortuneSGFundManagementCo.,Ltd.,directorofJiangsuFinancialleasingCo.,Ltd.HeisservingasdirectoroftheCompany.Mr.WangShigang,male,53,Chinese,MBAandCertifiedPublicAccountant,isnowtheboardchairmanofShandongTianhengxinConstructionCostConsultationCo.Ltd..HepreviouslyservedasindependentdirectoroftheCompany.Heactsastheindependentdirectoragainfrom14

th

May,2013.Mr.WangZhuquan,male,53,Chinese,doctorofmanagement(accountancy),firstbatchofnationalaccountingacademicleadingpersonalsofFinancialDepartment,theentrantof

accountantmastercultivationprojectofFinancialDepartment,outstandingteacherofShandongprovince,GovernmentSpecialAllowanceexpert,actedasindependentdirectorfrom13

th

May,2010to12

th

May,2013.NowheistheprofessorandthedoctoralsupervisorsoftheOceanUniversityofChinaaswellasindependentdirectorofthesomelistedcompanieswhichcouldbeexemplifiedasQingdaoDoubleStarCo.,Ltd.HeactsastheindependentdirectoroftheCompanyagainfrom23

rd

May,2014.Mr.LuoFei,male,66,Chinese,withdoctordegree,visitingscholarofUniversityofToronto,doctoralsupervisors,GovernmentSpecialAllowanceexpert,firstbatchoftrans-centurysubject(academic)leadingpersonalsofFinancialDepartment.HesuccessivelyservedasthedeanofaccountingcollegeinZhongnanUniversityofEconomicsandthedeanofaccountingcollegeinZhongnanUniversityofEconomicsandLaw.Hefocusesonthestudyoffinancialaccounting,costaccounting,financialmanagement,andsoon.Hehasworkedincompaniesformanyyearsandhaspracticalworkingexperiencewithcompanies.NowheisservingasindependentdirectoroftheCompany.Ms.LiuYan,female,45,Chinese,withmasterdegree,washonoredasnationaloutstandinglawyerin2005.Hermainpracticeareasincludeissuingandlistingofdomesticandforeignstocks,mergerandacquisitionandforeigninvestment.ShenowisthepartnerofTianYuanLawFirmandservingasindependentdirectoroftheCompany.Mr.GuoGuoqing,male,56,Chinese,winnerofthespecialallowanceoftheStateCouncil.Heservedasacommitteememberofthe7

th

All-ChinaYouthFederation,committeememberofthe8

th

,9

th

and10

th

NationalCommitteeoftheChinesePeople'sPoliticalConsultativeConference,representativeofthe11

th

NationalPeople'sCongress,deputydeanofSchoolofBusinessAdministrationofRenminUniversityofChina,deputysecretarygeneralofZhuhaiMunicipalPeople'sGovernmentofGuangdongProvince,independentdirectorofChinaEverbrightBank,evaluationexpertoftheDepartmentofManagementScienceoftheNationalNaturalScienceFoundationofChina,associateeditoroftheJournalofChineseMarkingandindependentdirectorofChina-TinGroup.HecurrentlyservesasaprofessoranddoctoralsupervisorattheSchoolofBusinessofRenminUniversityofChina,directoroftheChinaMarketingResearchCenterofRenminUniversity,deputypresidentoftheChinaBusinessHistorySociety,directoroftheBrandProfessionalCommitteeoftheChinaBusinessHistorySociety,internationalresearcherofCorporateReputationCenterofTheUniversityofOxford,side-bardoctoraltutorandprofessorofPanyapiwatInstituteofManagement,consultantofChinaUniversityMarketingResearchAssociation,directorofGreeRealEstateandindependentdirectorofMinjiakefengInformationTechnologyCo.,Ltd,NanYueFund,ZhejiangFengrunBiotechCo.,Ltd,VatsLiquorChainStoreManagementJointStockCo.,Ltd.andLivzonPharmaceuticalGroupInc.HeservesasindependentdirectoroftheCompany.(2)MembersofboardofsupervisorsMr.KongQingkun,male,46,Chinese,MBAandeconomist,servedasthesectionmemberofproductiondepartmentinthehealthyliquorbranchoffice,clerkanddeputydirectoranddirectorofgeneralmanageroffice.Ms.ZhangLanlan,female,49,withbachelordegreeandeconomist,servedasdeputy-manageroftheCompany’simport/exportcompany,managerofimportdepartment.Shenowisdirectorofboardofdirectors’office.

Mr.LiuZhijun,male,38,Chinese,withbachelordegree,workedinforeignfundsectionofEconomyandTradeBureauinLongkoueconomicdevelopmentzone,servedasnewssectionmemberofpropagandadepartmentinLongkouMunicipalCommittee,memberofpropagandaandmassworksection,memberofplanningsection,deputydirectormemberofprogrammingdevelopmentandenterprisedistributionsection,deputydirectormemberanddeputychiefofprogrammingdevelopmentsection.HenowissupervisoroftheCompany.

(3)Otherseniorexecutives

Mr.SunJian,male,52,Chinese,MBA,servedasdeputygeneralmanageroftheCompanyfrom22

nd

March,2006to10

th

January,2018.HeservesasgeneralmanageroftheCompanyanddirectorofChangyuGroup.Mr.LiJiming,male,52,Chinese,withdoctordegree,applicationresearcher,hasbeenservingaschiefengineeroftheCompanysince14

th

September,2001andconcurrentlydirectorofChangyuGroup.Mr.JiangHua,male,55,Chinese,withmasterdegree,seniorengineer,hasbeenservingasdeputygeneralmanageroftheCompanysince14

th

September,2001.Mr.PengBin,male,52,MBA,seniorengineer,eversuccessivelyservedasdeputydirectorofwine-blendingworkshopanddirectorofwine-storageworkshopofBrandyCompanyunderYantaiChangyuGroupCompanyLimited,sectionchiefofTechnicalTransformationDepartmentandministerofInvestmentandDevelopmentDepartmentaswellasdeputygeneralmanagerofYantaiChangyuGroupCompanyLimited,generalmanagerassistantofYantaiChangyuPioneerWineCompanyLimited.HeservesasdeputygeneralmanageroftheCompany.Mr.JiangJianxun,male,52,Chinese,MBAandaccountant,servedasFinancialManageroftheCompanyfrom20

th

May,2002to10

th

January,2018.HeservesaschieffinancialofficeroftheCompany.

Postintheshareholder’scompany

?Available□Notavailable

NameShareholder’sCompanyPostBeginningdateofthepostEndingdateofthepostPaidbyshareholder’scompanyornot
SunLiqiangYantaiChangyuGroupCo.Ltd.Chairmanandgeneralmanager2013.10.082018.01.10No
ZhouHongjiangYantaiChangyuGroupCo.Ltd.Deputychairman2013.10.082018.01.10No
ZhouHongjiangYantaiChangyuGroupCo.Ltd.Chairman2018.01.102022.01.10No
LengBinYantaiChangyuGroupCo.Ltd.Directorandgeneralmanager2018.01.102022.01.10Yes
LiJimingYantaiChangyuGroupCo.Ltd.Director2013.10.082022.01.10No
SunJianYantaiChangyuGroupCo.Ltd.Director2013.10.082022.01.10No
ZhangMingYantaiChangyuGroupCo.Ltd.Director2013.10.082018.11.15No
AugustoReinaYantaiChangyuGroupCo.Ltd.Director2013.10.082022.01.10No
AldinoMarzoratiYantaiChangyuGroupCo.Ltd.Director2013.10.082022.01.10No
AntonioAppignaniYantaiChangyuGroupCo.Ltd.Director2013.10.082022.01.10No
WeiAnningYantaiChangyuGroupCo.Ltd.Director2017.04.182022.01.10No
Explanationforthepostintheshareholder’scompanyMr.ZhouHongjiangservesasthepositionofchairmanintheshareholderscompanyfrom10thJanuary,2018to10thJanuary,2022.Mr.LengBinservesasthepositionofgeneralmanagerintheshareholderscompanyfrom10thJanuary,2018to10thJanuary,2022.

Postatothercompanies

?Available□NotAvailable

NameOther’scompanyPostatothercompanyBeginningdateofthepostEndingdateofthepostPaidbyothercompanyornot
LengBinYantaiChangyuZhongyaMedicine&HealthyLiquorCo.,LtdDirectorandlegalrepresentative2012.09.10No
Explanationforthepostintheshareholder’scompanyNo.

Disciplinaryactionstakenbysecuritiesregulatorsinrecent3yearstotheCompany’sdirectors,supervisorsandseniormanagementbothonthejobandleftduringthereportperiod□Available?Notavailable4.Salaryofdirectors,supervisorsandseniorexecutivesDecision-makingprocess,thebasisofdetermination,theactualpaymentofdirectors,supervisorsandseniorexecutivesThesalaryfortheindependentdirectorsispaidaccordingtotheresolutionofshareholders’meeting.Thesalaryforthechairman,directorswithadministrationduty,supervisors,managersandotherseniormanagementshouldbepaidonbasisoftheevaluationresultaccordingtotheProposalonAssessmentMethodsoftheCompany’sSeniorOfficers’Performancefrom2014to2017whichwaspassedduringtheBoardofDirectors’meeting.Salaryofdirectors,supervisorsandseniorexecutivesduringthereportperiod

Unit:CNY’0000

NamePostGenderAgeStatusTotalrewardfromtheCompanybeforetaxWhethergetrewardfromrelatedpartiesoftheCompany
ZhouHongjiangChairmanM54presentincumbent154.81No
SunLiqiangDirectorM71presentincumbent138.89No
LengBinDirectorM56presentincumbent0Yes
SunJianGeneralmanagerM52presentincumbent140.41No
QuWeiminDirectorandSecretarytotheBoardofDirectorsM61presentincumbent94.31No
ZhangMingDirectorM45presentincumbent0No
AugustoReinaDirectorM78presentincumbent0No
AldinoMarzoratiDirectorM66presentincumbent0No
AntonioAppignaniDirectorM80presentincumbent0No
WeiAnningDirectorM55presentincumbent0No
WangZhuquanIndependentDirectorM53presentincumbent8No
WangShigangIndependentDirectorM53presentincumbent8No
LuoFeiIndependentDirectorM66presentincumbent8No
LiuYanIndependentDirectorF45presentincumbent8No
GuoGuoqingIndependentDirectorM56presentincumbent0.67No
KongQingkunChairmantotheBoardofsupervisorsM46presentincumbent71.29No
ZhangLanlansupervisorF49presentincumbent21.06No
LiuZhijunsupervisorM38presentincumbent0No
YangMingDeputy-generalmanagerM60leavingthepost17.92No
LiJimingChiefEngineerM52presentincumbent107.19No
JiangHuaDeputy-generalmanagerM55presentincumbent101.19No
PengBinDeputy-generalmanagerM52presentincumbent105.17No
JiangJianxunChieffinancialofficerM52presentincumbent106.84No
PanJianfuGeneralmanagerassistantM43presentincumbent78.26No
LiuShiluGeneralmanagerassistantM44presentincumbent48.32No
XiaoZhenboGeneralmanagerassistantM42presentincumbent91.88No
Total----1,310.21-

Theawardedequityincentivesforthedirectors,supervisorsandseniorexecutivesoftheCompanyduringthereportperiod□Available?Notavailable5.StaffoftheCompany(1)Staffnumber,specialtyconstitutionandeducationdegree

Incumbentstaffnumberofparentcompany(people)1,339
Incumbentstaffnumberofmajorsubsidiarycompanies(people)1,894
Totalincumbentstaff(people)3,233
Totalstaffgettingpaidincurrentperiod(people)3,233
Retiredstaffnumberwhoseexpensesareundertakenbyparentcompanyorsubsidiarycompanies(people)0
Specialtyconstitution
CategoryNumberofpeople(people)
Administrativestaff263
Technicalstaff165
Financialstaff152
Productionstaff1,000
Salesstaff1,653
Total3,233
Educationdegree
CategoryNumber(People)
Bachelorandabove1,125
JuniorCollege1,118
Technicalsecondaryschool546
Seniorhighschoolandbelow444
Total3,233

(2)Remunerationpolicy

TheCompanybuildsandimprovestheremunerationandwelfaresystem,includingsalarysystem,incentivemechanism,socialsecurityandhealthinsuranceandsoon,tomakesurethatallstaffcouldbeinsured.Inaccordancewiththelaw,theCompanybuyssocialold-ageinsurance,medicalinsurance,occupationalinjuryinsurance,unemploymentinsuranceandmaternityinsurance,andpayhousingfundforstaff.Basedontheprincipleof“distributionaccordingtowork,equalpayforequalwork”,theCompanypaysthestaff’sremunerationtimely.Withtheincrease

oftheCompany’sprofitability,theCompanysteadilyimprovesthestaff’sremunerationandwelfare,andprovidesthecompetitivesalaryincomeanddevelopmentspaceofequalopportunityforstaff.

(3)Trainingplan

Inordertofurtherimprovetheemployees’comprehensivequalityandprofessionalskill,theCompanyplanstoinvestCNY3.02millionin2019foremployeetrainingplanwhichisshownasfollows:

①SeniorandMiddle-levelManagers1)GeneraltrainingEmployprofessionallecturerstothecompanyorthroughremotenetworkvideoforcentralizedlecturescouldbeasmethodsoftraining.Duringtheyear,fourtopicswillbearrangedformiddleandseniormanagementstaffonceforeachquarterandonetotwodaysforeachtraining.2)ProfessionaltrainingBasedontheirrespectivework,organizethemtoattendEntrepreneurHigh-endForumandSummitMeetingandgotodomesticandforeignsuccessfulenterpriseforvisitandstudy;attenduniversitycorrespondence,self-studyexamination,MBAorotherfurthereducationformasterdegree;organizeprofessionalmanagementcadres,toattendvocationalqualificationexaminationforprofessionalcertificate;toattendspecialtrainingatleasttwiceayear,suchassafety,technology,facility,finance,WSET,tourismetcwhichareorganizedbyspecialmanagementdepartment.②Marketingpersonnel1)GeneraltrainingIndependentlystudymarketingtextbooks,mainlyfocusingon‘Growth’,aswellastrainingmaterialsincludingthecompany’srelatedmanagementsystem,productionknowledge,salesresponsibilitysystemetc.2)ProfessionaltrainingProfessionallecturerswouldbeemployedtothecompanyorthroughremoteinternetvideostogivelecturesaboutsuccessfulliquorcases,currenteconomictrendresearchfordomesticandforeignwineindustryandothertopicinordertotaketrainingforpersonnelwhoselevelisorabovemanagerassistantincitymarketingmanagementcompanyonceaquarterandonedayforeachtime;takeclosedtrainingforcitymarketingmanageronhowtoimprovemarketingskillaswellasexecutiveforceofsalespolicyonceatthestartofeachmonthandonedayforeachtime.Forbusinessdirectorsandotherpersonneltakeacombinationtrainingmethodofhiringlecturersandgoingouttovisitforstudying,theycouldbetrainedsuccessfulmarketingcasesandmarketingmanagementconcepts.Thistrainingisconductedonceaquarterandonedayforeachtime.③Productionandmanagementpersonnelwhoselevelarebelowsectionchief1)GeneraltrainingSetcoursesthatareaimingatimprovingemployeemanagementability,innovationabilityandexecutiveability,hireaprofessionallectureroruniversityteachertoteachatthecompanytwotimesayearandonedaypercourse;attendcommon-sensegeneral

trainingincludingcompanyculture,regulatoryframeworkandvariousliquorproductsknowledge,reinforcetrainingintheaspectofhumanresourcesmanagement;independentlystudytrainingmaterialsprovidedbythecompany,suchasGrowthandEmployeeHandbook;attendoutdoorqualityexpansiontrainingonceayear.2)ProfessionaltrainingAttenduniversitycorrespondence,self-studyexamination,MBAorotherfurthereducationformasterdegree;attendvocationalqualificationexaminationforprofessionalcertificate;basedonpersonnelwork,attendspecialtrainingatleasttwiceayear,whichareorganizedbyspecialmanagementdepartment;fordifferenttypesofwork,theCompanywillorganizetoattendtrainingwhichcanimproveprofessionalskillandoperationlevel;technologybackboneswouldbeselectedtoattendoverseastrainingandlearningexchange.

(4)Laboroutsourcing

□Available?Notavailable

IX.CorporateGovernance

1.CurrentCorporateGovernanceSituationoftheCompany(1)Aboutshareholdersandshareholders’meetingTheCompanyhassetuptheDeliberationRulesofShareholders’Meeting,andconvenedtheshareholders’meetingsinstrictaccordancewithrequirementsofstandardopinionofshareholders’meeting,madethegreatefforttoprovideconvenientconditionsformoreshareholderstoparticipatetheshareholders’meeting,andensuredallshareholderstoenjoysameequityandwellexercisedtheirrights.TheCompanydrewgreatattentiontothecommunicationandexchangewithshareholders,activelyrespondedtheshareholders’inquiryandquestions,andwidelylistenedtothesuggestionsandcommentsfromshareholders.(2)AbouttheCompanyandholdingshareholderTheCompanyhasindependentpoweronbusinessandself-management,andalsobeindependentofitsholdingshareholderonbusiness,staff,assets,organizationandfinance.TheBoardofDirectors,BoardofSupervisors,managementteamandalsointernalorganizationsoperatedindependentlyintheCompany.TheholdingshareholderoftheCompanycouldregulateitsactivities,nootherbehaviorwasfoundthatsurpassedtheshareholders’meetingtodirectlyorindirectlyinterferewiththedecision-makingandbusinessactivitiesoftheCompany,oroccupiedanyassetsoftheCompanywhichdamagedtheCompany’sandmedium&smallshareholders’interests.(3)AboutthedirectorandboardofdirectorsTheCompanystrictlyappointsalldirectorsinlightofCompanyLawandArticlesofAssociations.Thequalificationsofalldirectorsareinlinewiththerequirementsoflawsandregulations.InaccordancewiththerequirementsofCorporateGovernanceGuidelines,theCompanyhascarriedoutthecumulativevotingsystem.Atpresent,theCompanyhasfourindependentdirectorsaccountingforaboutonethreeofalldirectors,andthenumberandcompositionofboardofdirectorswasbasicallyinaccordwithrequirementsofregulationsandalsoArticlesandAssociations.AlldirectorsoftheCompanycouldworkinthelightofregulationsincludingRulesofBoardofDirectors’ProcedureandWorkingRulesforIndependentDirectors,punctuallyattendedboardofdirectors’andshareholders’meetings,activelytookpartinrelevantknowledgetraining,knewverywellaboutthelawsandregulationsconcerned,hadadeepknowledgeandlongexperienceofpractitioners,andperformedtheirdutiesaccordingtothelawandregulations.TheBoardofDirectorsconvenedthemeetingsinaccordancewithrelatedrulesandregulations.(4)AboutsupervisorandboardofsupervisorsTheCompanystrictlyelectedallsupervisorsinlightofCompanyLawsandArticlesofAssociations.Atpresent,boardofsupervisorshasthreepeopleamongwhichonesupervisorisrepresentativeforstaff,thenumberandcompositionofboardofsupervisorwasinaccordwithrequirementsofregulationsandrules.AllsupervisorsoftheCompanycouldfollowtherequirementofRulesofBoardofSupervisors’Procedure,insisttheprincipleofresponsibilitytoallshareholders,seriouslyperformtheirduties,effectivelysuperviseand

presenttheirindependentopiniononimportantissues,interrelateddeals,financialstatus,thedutyperformanceofdirectorsandmanagersoftheCompany.(5)AboutperformanceevaluationandincentivesystemTheengagementofmanagerswasopenandtransparent,andaccordedwithlawsandregulations.TheCompanyhasestablishedandgraduallyimprovedtheperformanceevaluationstandardandformedefficientincentivesystem,soastoensurethesalaryofstafftobelinkedwithjobperformance.

(6)Aboutstakeholders

TheCompanycouldfullyrespectandsafeguardthelegalrightsofthepartywithrelevantbenefit,cooperateactivelywiththestakeholders,jointlydrivetheCompanytodevelopcontinuallyandstably,paygreatattentiontotheissuessuchaslocalenvironmentalprotectionandpublicutilitiesetc.,andassumefullresponsibilitiesforthesocialresponsibility.(7)AbouttheinformationdisclosureandtransparencyTheCompanyhasappointedthesecretarytoBoardofDirectorstoberesponsibleforinvestorrelationmanagementincludinginformationdisclosure,investorrelationsmanagementandreceptionofshareholders’visitandconsultation.TheCompanyhasalsoassignedChinaSecuritiesNewspaper,SecuritiesTimes,HonkongCommercialDailyandwebsitehttp://www.cninfo.com.cn/todiscloseinformation,punctually,accuratelyandtrulydisclosedanyinformationinthelightofrequirementofrelevantlawsandrules,andalsoensuredallshareholderstohavesameopportunitytoacquireanyinformation.InordertofurtherperfecttheCompany’sgovernancesystem,duringthereportperiod,theCompanyformulatesandimprovesOpinionofBrandPositioning,AssessmentMethodofProductionOrderFulfillmentRate,AssessmentMethodofSafetyManagement,ImplementationPlanofBrandyInternalQualityImprovementandTechnologicalInnovationProject,ImplementationOpinionofBuildingTechnicalCommunicationPlatformwithOverseasEnterprises,AssessmentandEvaluationMethodofContractedBasesin2018,AssessmentandEvaluationMethodofSelf-supportingVineyardsandsoon.WhetherornotthereissignificantvariancebetweentheCompany’sactualsituationofcorporategovernanceandthenormativedocumentsaboutlistedcompanygovernanceissuedbyChinaSecuritiesRegulatoryCommission.□Yes?NoThereisnosignificantvariancebetweentheCompany’sactualsituationofcorporategovernanceandthenormativedocumentsaboutlistedcompanygovernanceissuedbyChinaSecuritiesRegulatoryCommission.2.Relativetothecontrollingshareholder,independenceoftheCompanyonbusiness,personnel,assets,organizationandfinance

(1)PersonnelArrangement

TheCompany’sgeneralmanager,deputygeneralmanagersandotherseniorofficers,allofwhomwerepaidbytheCompanyanddidnotholdanypostinthecontrollingparties.TheCompanywasentirelyindependentinpersonnelarrangement,conclusionandadjustmentof

laborcontractsthankstoitssoundandindependentsystemforlabor,personalandsalarymanagement.

(2)Assets:

TangibleassetsandIntangibleassetsincludingtrademark,industrialpropertyrightandnon-patenttechnologieswereallclearlydividedbetweentheCompanyandthecontrollingshareholder,andalllegalformalitieswerecompleted.TheCompanybeingalegalindependententityconsistentlyconductedbusinessactivitieslegallyandprovidednoguaranteeinanyformwithitsassetsforitsshareholdersorindividuals’liabilitiesoranyotherlegalpersonsornaturalpersons.TheCompanyownstrademarksincluding“黄金冰谷”,“爱斐堡”,“爱菲堡”,“爱斐”and“AFIP”,etc.However,duetosomeissuesfromthepast,theCompanypermittedtouse“Changyu”etctheintangibleassetssuchaspartoftrademarkownershipandpatentstillheldbythecontrollingshareholders.Exceptpartialtrademarkswhichcannotbepeeledoff“张裕”(Changyu)trademark,trademarksandpatentsthatcouldhavebeenregisteredorappliedbytheCompanybutwereregisteredorappliedbyChangyuGroupwhothenauthorizedtheCompanyforusagewillbetransferredtotheCompanybyChangyuGroupforfreebeforetheendof2019inordertoensuretheindependenceandcompletenessoftheCompany’sassets.

(3)Finance

TheCompanyhasindependentfinancedepartment,chiefaccountandfinancialstaff,andalsocomplete,independentandstandardizedaccountingsystem.TheCompanyhasalsoestablisheditsownbankaccounts,dulyandlegallypayingtaxes,workersinsurancefund.Allfinancialindividualsdonotholdanyconcurrentpostsinassociatedcompaniesandareabletomakefinancialdecisionsindependently.TheCompanyhasitsownauditdepartment,whichisespeciallyresponsiblefortheinternalauditworkoftheCompany.

(4)Offices

TheCompanyhassetupasoundorganizationalframework,inwhichtheBoardofDirectorsandBoardofSupervisorsoperateindependently,nosuperiorandsubordinaterelationshipexistsbetweenthefunctionaldepartmentsofthecontrollingshareholder.TheCompanyhasitsownindependentproduction&businessoffices,allfunctionaldepartmentsareindependenttoexercisetheirpowersandcarryouttheproductionandbusinessactivitiesindependently.

(5)Operations

TheoperationsoftheCompanyareindependentofthecontrollingshareholder.TheCompanyownsitselfcompletelyindependentsystemscoveringresearchanddevelopment,accounting,workforceandlabor,qualitycontrol,rawmaterialspurchase,productionandsales,andispossessedofself-runcapabilities,andhasneitherrelationshipwiththecontrollingshareholderintermsofsupplyandsalesbyproxynorcompetitionwiththeother.3.SituationforHorizontalCompetition□Available?Notavailable4.Informationfortheshareholders’meetingandtemporaryshareholders’meetingheldduringthereportperiod

(1)Informationfortheshareholders’meetingduringthereportperiod

SessionMeetingtypeParticipationratioofinvestorsConveningdateDisclosuredateDisclosureIndex
2017AnnualShareholders’MeetingAnnualshareholders’meeting63.87%2018.05.242018.05.25http://www.cninfo.com.cnResolutionAnnouncementof2017AnnualShareholders’Meeting(Announcementno.:2018-Temporary15)
2018AnnualFirstInterimShareholders’MeetingInterimShareholders’Meeting64.86%2018.12.262018.12.27http://www.cninfo.com.cnResolutionAnnouncementof2018AnnualFirstInterimShareholders’Meeting(Notificationno.:2018-Temporary22)

(2)Requestforconveningtemporaryshareholders’meetingbypriorityshareholdersowingrecoveredvotingright□Available?Notavailable5.Performanceofindependentdirectorsduringthereportperiod(1)Attendanceofindependentdirectorsfortheboardofdirectorsandtheshareholders’meeting

Attendanceofindependentdirectorsfortheboardofdirectors
NameRequiredattendancetimePersonalattendanceCommunicationattendanceAuthorizedattendanceAbsenceWhetherornottoattendthemeetingspersonallyforsuccessivetwiceAttendancetimefortheshareholders’meeting
WangShigang61410No0
WangZhuquan62400No0
LuoFei62400No0
LiuYan62400No0
GuoGuoqing00000No0

ExplanationforfailedtopersonallyattendtheBoardofDirectors’meetingsforsuccessivetwotimesNo(2)AnyobjectionsfortheCompany’sprojectsfromtheindependentdirectorsWhetherornottheindependentdirectorsraisedanyobjectionfortheCompany’sprojects□Yes?NoDuringthereportperiod,theindependentdirectorsdidnotraiseanyobjectionsfortheCompany’sprojects.(3)Otherexplanationsonindependentdirectors’performanceWhetherornottheindependentdirectors’propositionsareacceptedbytheCompany?Yes□NoExplanationonacceptanceorrefusaloftheindependentdirectors’propositionstotheCompanyDuringthereportperiod,someindependentdirectorsproposesuggestionsonprudentinvestmentintourismprojectofChangyuInternationalWineCity.Theythoughtthatitisahigherriskinthecurrentbackgroundofslowergrowthofdomesticeconomy.TheCompanyacceptedtheindependentdirectors’opinionsanddecidedtosuspendconstructionoftheproject.6.PerformanceofthespecialcommitteesundertheBoardofDirectorsduringthereportperiod①AuditingCommittee:Duringthereportperiod,theCompany’sauditingCommitteeconductedanex-ante,in-process,andpost-eventreviewtorelatedannualreportauditworkandmaderelevantarrangements.TheauditingCommitteebelievedthat2017annualfinancialstatementsissuedbytheCompanymettherequirementofAccountingStandardsforBusinessEnterprisesandtrulyandfairlyreflectedthebalanceconditionuptoDecember31

st

,2017aswellas2017annualbusinessperformanceandcashflow.TherewerenounsolvedmajordivergencesinaccountingandauditingormajorriskissuesaffectingtheCompany'smanagement.TheCompanyoperatedsteadilyandhadtheabilityofcontinuousoperations.Proposalsincluding2017AnnualSelf-assessmentReportonInternalControl,Draftproposalon2017AnnualProfitDistribution,AppointingCertifiedPublicAccountantsFirm,ChangeinAccountingPolicy,2017AnnualReport,2018Semi-annualReportand2018AnnualAuditPlanweredeliberated.Auditingcommitteepassedabove-mentionedproposalsandsubmittedtherelatedproposalstoboardofdirectorsfordeliberation.②EmolumentCommittee:EmolumentCommitteeisresponsibleforassessmentoftheeconomyresponsibilitiesofthedirectorsandtheseniorexecutiveswhoreceivesalariesfromtheCompanyandexaminationofthesalarypolicyandschemedesignedfortheCompany’sdirectorsandseniorexecutives.Duringthereportperiod,theCompanyheldEmolumentCommitteemeetingonce.Proposalon2017AnnualPerformanceAssessmentResultsoftheCompany’sSeniorExecutiveswasdeliberatedandpassedbythemeeting,whothoughtthatthisdocumentwasincompliancewithPerformanceAssessmentMethodsforCompany’sSeniorExecutivefrom2014to2017.EmolumentCommitteeagreedtosubmittherelatedproposalstoBoardofDirectorsfordeliberation.Duringthereportperiod,theBoardofDirectors’EmolumentCommitteealsoexaminedthe2017annualpayrollrecordsofthedirectorsandtheseniormanagerswhoreceivesalariesfromtheCompanyandbelievesthatthesalariesoftheCompany’sdirectors,supervisorsand

seniormanagersreceivedfromtheCompanyisstrictlyassessedanddeliveredbasedontheCompany’seconomicresponsibilityassessmentsystem.ThesalariesdisclosedbytheCompanyareinconformitywiththeactuallypaidamount.7.TheworkoftheBoardofSupervisorsWhetherornottheBoardofSupervisorsfoundanyexistencerisktotheCompanyinoversightactivitiesduringthereportperiod□Yes?NoTheBoardofSupervisorshasnoobjectionstosupervisionmattersduringthereportperiod.8.PerformanceEvaluationandIncentivesituationsofSeniorManagementTheCompanyhasalreadyestablishedasoundsystemforevaluationofachievementofseniormanagementandtherelatedincentivesystemwhichlinkedtherewardwiththeCompany’sbenefitandpersonalachievement.TheEmolumentCommitteeunderBoardofDirectorsassumedtheresponsibilityofstipulatingthepolicyandappraisingtheschemeforsalariesandrewards.BasedontheCompany’sannualbusinessplanninggoals,thiscommitteeexaminedseniorpersonalsandalsotheirresponsiblesubsidiariesordepartmentsaccordingtotheirmanagementachievementandindexandtooktheseascriterionofawardsorpenalties.Duringthereportperiod,becauseofnotfinishingtheannualbusinessplandeliberatedandpassedintheBoardofDirectors’meetingatthebeginningoftheyear,thetotalsalariesandrewardsoftheseniormanagementarebasicallyequaltothatoflastyear.9.InternalControl(1)Specificsituationsforsignificantdefectsoftheinternalcontrolfoundduringthereportperiod□Yes?No(2)Self-assessmentreportoninternalcontrol

Disclosuredateforfulltextoftheinternalcontrolself-assessmentreport2019.04.20
Disclosureindexforfulltextoftheinternalcontrolself-assessmentreport2017AnnualSelfAssessmentReportonInternalControland2018AnnualSelfAssessmentReportonInternalControldisclosedonSecuritiesTimes,ChinaSecuritiesJournalandwww.cninfo.com.cnbytheCompanyonApril23rd,2018andApril20th,2019.
PercentageoftotalunitassetsincludedinscopeoftheassessmentaccountingfortheCompany’stotalassetsofconsolidatedfinancialstatements88.34%
Percentageofunitoperatingincome90.38%
includedinscopeoftheassessmentaccountingfortheCompany’soperatingincomeofconsolidatedfinancialstatements
StandardsofDefectIdentification
CategoryFinancialreportNon-financialreport
QualitativecriteriaSignificantdefects:onedefectofinternalcontrol,individuallyortogetherwithotherdefects,hasthereasonableprobabilitytocausethesignificantmisstatements,whichcannotbepromptlyprevented,orfoundandcorrectedtimelyinthefinancialreport.Forexample:?Company’sDirectors,SupervisorsandSeniorManagementhavefraudulentpractices;?TheCompanymakescorrectionsforthepublishedfinancialreport;?Theauditofexternalintermediaryagentfindssignificantmisstatementexistinginthecurrentfinancialreport,buttheCompanydoesnotrealizeitduringtheoperationprocess;?Negativeinformationfrequentlyappearsinthemediaswithinvolvingawidescope;?TheCompany’sauditcommitteeandinternalauditdepartmentmakesaninefficientsupervisionforinternalcontrol;?Othersituationsmaybecausesignificantmisdirectionwhichguidesthereportuserstomaketherightjudgment.Majordefects:Thedefectofinternalcontrol,individuallyortogetherwithotherdefects,hasthereasonableprobabilitytocausethesignificantmisstatements,whichcannotbepromptlyprevented,orfoundandcorrectedtimelyinthefinancialreport,althoughthemisstatementsneitherachievesnorexceedstheimportancelevelbutstillarisingtheattentionofBoardofDirectorsandmanagementteam.?Failuretoselectandapplyaccountingregulationsinaccordancewithgenerallyacceptedaccountingprinciples;?Failuretoestablishtheanti-fraudproceduresandcontrolmeasures;?Failuretosetupcorrespondingcontrolmechanismortocarryoutandtakecorrespondingcompensatingcontrolfortheaccountingtreatmentswithirregularandspecialdeal;?NegativenewsappearsintheSignificantdefects:Anysituationslistedbelowappears,itcanberegardedassignificantdefects.?Operation:Unabletoachievealloperationtargetorkeybusinessindex,widelyoutofbudgetinvariousaspects.?Safetyaccidenteffects:Causenolessthanonepersondeath,ormorethan3personseriousinjuries.?Majornegativeeffects:Negativeinformationfrequentlyappearsinthemediaswithinvolvingawidescopeintheinternationalandnationalmainstreammedia.?Environmenteffects:Createirreparabledamagestoenvironment,andcausemassivepubliccomplains.Majordefects:Anysituationslistedbelowappears,itcanberegardedasmajordefects.?Operation:Unabletoachievepartlyoperationtarget,abigmarginoutofbudgetinvariousaspects.?Safetyaccidenteffects:Withoutreachingthepersonlossorthenumberofseriousinjuryofsignificantdefects.?Majornegativeeffects:Negativenewsappearsinthemediawithinfluencingawidescopeintheprovincialmainstreammedia.?Environmenteffects:Causeheavyenvironmentdamagesandmassivepubliccomplains,oughttocarryoutthesignificantremedialmeasures.Generaldefects:Anysituationslistedbelowappears,itcanberegardedasgeneraldefects.?Operation:Othereffectsunabletoconstitutethesignificantdefectsormajordefects.?Safetyaccidenteffects:Personalinjurylessthanthequantitativestandardsofmajordefects.?Majornegativeeffects:Otherdefectsunabletoconstitutethesignificantdefectsormajordefects.?Environmenteffects:Otherenvironmenteffectsunabletoconstitutethesignificant
mediawithinfluencingawidescope;?Oneormoredefectsexistinthecontrolduringtheprocessoftheendingfinancialreport,andthetargetofachievingtruthfulnessandintegralitycannotbereasonablyguaranteedinthefinancialreport;?Generaldefectsrefertotheothercontroldefects,whichdonotconstitutethesignificantandmajordefects.defectsormajordefects.
QuantitativecriterionFortotalassets/Owner’sequity:?Significantdefects:misstatements≧1%?Majordefects:0.5%≦misstatements<1%?Generaldefects:misstatements<0.5%Foroperationrevenue:?significantdefects:misstatements≧1%?Majordefects:0.5%≦misstatements<1%?Generaldefects:misstatements<0.5%Forpretaxprofit:?Significantdefects:misstatements≧5%?Majordefects:2%≦misstatements<5%?Generaldefects:misstatements<2%Fordirectpropertyloss:?Significantdefects:MorethanCNY10million?Majordefects:CNY1million-CNY10million(including1million)?Generaldefects:LessthanCNY1million
Numberofsignificantdefectinfinancialreport0
Numberofsignificantdefectinnon-financialreport0
Numberofmajordefectinfinancialreport0
Numberofmajordefectinnon-financialreport0

10.Internalcontrolauditreport?Available□Notavailable

Auditopinionsoftheinternalcontrolauditreport
WebelievethatYantaiChangyuPioneerWineCo.,Ltd.kepteffectiveinternalcontroltofinancialreportinallsignificantaspectsinaccordancewithGeneralCriteriaofCompany’sInternalControlandotherrelatedrulesonDecember31st,2018.
DisclosureoftheinternalcontrolauditreportDisclosure
DisclosuredateforthefulltextoftheinternalcontrolauditreportApril20th,2019
Disclosureindexforthefulltextoftheinternalcontrolauditreport2018AnnualSelfAssessmentReportonInternalControldisclosedonSecuritiesTimes,ChinaSecuritiesJournalandwww.cninfo.com.cnbytheCompany.
OpiniontypeoftheinternalcontrolauditreportStandardwithoutreservedopinion
Whetherornotexistssignificantdefectsinnon-financialreportsNo

Whetherornottheaccountingfirmissuednon-standardopinionsfortheauditreportofinternalcontrol□Yes?NoWhethertheauditreportofinternalcontrolissuedbytheaccountingfirmisinconsistencywiththeself-assessmentreportoftheboardofdirectors?Yes?No

X.RelatedSituationofCorporationBonds

WhetherornottheCompanyhasthecorporationbondsissuedinpublic,listedinthestockexchange,notdueontheannualreport’sauthorizedissuedateorfailedtopayinfullontheduedate.No.

XI.FinancialReport

1.AuditReport

TypeofauditopinionStandardunqualifiedauditopinion
DatesignedonauditreportApril18th,2019
AuditagencynameDeloitteHuaYongcertifiedpublicaccountantsco.,Ltd.(specialgeneralpartnership)
AuditreportNo.DeShiBao(Shen)Zi(19)No.P02452
Certifiedpublicaccountant'snameJieYanfeng,LiYangang

AUDITOR'SREPORT

DeShiBao(Shen)Zi(19)No.P02452

(Page1of5)TOTHESHAREHOLDERSOFYANTAICHANGYUPIONEERWINECOMPANYLIMITED1.OpinionWehaveauditedthefinancialstatementsofYantaiChangyuPioneerWineCompanyLimited("YantaiChangyuCompany"),whichcomprisetheconsolidatedandCompany'sbalancesheetsasat31December2018,andtheconsolidatedandCompany'sincomestatements,theconsolidatedandCompany'scashflowstatementsandtheconsolidatedandCompany'sstatementsofchangesinowners'equityfortheyearthenended,andthenotestothefinancialstatements.Inouropinion,theaccompanyingfinancialstatementsofYantaiChangyuPioneerWineCompanyLimitedispreparedandpresentfairly,inallmaterialrespects,theconsolidatedandCompany'sfinancialpositionasof31December2018,andtheconsolidatedandtheCompany'sresultsofoperationsandcashflowsfortheyearthenendedinaccordancewithAccountingStandardsforBusinessEnterprises.2.BasisforOpinionWeconductedourauditinaccordancewithChinaStandardsonAuditing.OurresponsibilitiesunderthosestandardsarefurtherdescribedintheAuditor'sResponsibilitiesfortheAuditoftheFinancialStatementssectionofourreport.WeareindependentofYantaiChangyuCompanyinaccordancewiththecodeofethicsforChineseCertifiedPublicAccountants,andwehavefulfilledourotherethicalresponsibilitiesinaccordancewiththeCode.Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion.3.KeyAuditMattersKeyauditmattersarethosemattersthat,inourprofessionaljudgment,wereofmostsignificanceinourauditofthefinancialstatementsofthecurrentyear.Thesematterswereaddressedinthecontextofourauditofthefinancialstatementsasawhole,andinformingouropinionthereon,andwedonotprovideaseparateopiniononthesematters.Wedeterminethefollowingsarekeyauditmattersinneedofcommunicationinourreport.

AUDITORS’REPORT-continued

DeShiBao(Shen)Zi(19)No.P02452

(Page2of5)3.KeyAuditMatters-continued

Impairmentassessmentofcertainlong-termassets1.Itemdescription

AsstatedinNoteIV“Impairmentoflong-termassets”,theProductionofYantaiChangyu

PioneerWineCompanyLimitedResearchandDevelopmentCo.,Ltd.("R&DCentre"),

subsidiaryoftheCompanyaswellasanewmainproductionbaseoftheCompany,accountsfor

morethan60%oftheGroup’sproductionin2018.Asat31December2018,thebookvaluesof

long-termassetsincludingfixedassets,constructioninprogressandintangibleof"R&DCentre

amountedtoRMB3.5billion,accountingfor26.6%ofthetotalassetsintheconsolidated

financialstatements,whichexertssignificantinfluenceontheconsolidatedfinancialstatements.

Asthereislittlespaceforthedevelopmentofthedomesticwinemarket,themanagementofthe

Companyfacesgreatoperatingpressureswithcertainrisksofimpairmentofrelatedlong-term

assets.Themanagementperformstheimpairmenttestbydeterminingiftherecoverableamountis

lessthanthebookvalueoflong-termassetsanddeterminestherecoverableamountbasedonthe

presentvalueofexpectedfuturecashflows.Intheestimateofthepresentvalueoffuturecash

flows,themanagementisrequiredtomakesignificantjudgementsintheassumptionsincluding

thesalesgrowthrate,futuresellingprice,productioncost,operatingexpensesanddiscountrate.

Fortheabovereasons,weidentifiedthevaluationoftheimpairmentoflong-termassetsasakey

auditmatter.2.Howourauditaddressedthekeyauditmatter

Ourproceduresinrelationtothekeyauditmattermainlyincluded:

(1)Testandevaluatetheeffectivenessofthedesignandimplementationoftheinternal

controlrelatedtothevaluationoftheimpairmentoflong-termassets;

(2)Reviewandevaluatethereasonablenessofkeyassumptionsandjudgementsusedinthe

estimateofthepresentvalueofexpectedfuturecashflowsintheimpairmenttestbasedonthehistoricalrecordsoftheCompanyandourunderstandingofthebusinessandindustryinwhichtheCompanyoperates.

(3)Usingourinternalvaluationspecialists,reviewingtheappropriatenessofthefuturecash

flowsdiscountmodelpreparedbythemanagementandtherationalityofthediscountrateused;

(4)Performingtherecalculationprocedure,checkingtheaccuracyofcalculationsinthe

discountfuturecashflowsmodel.

AUDITORS’REPORT-continued

DeShiBao(Shen)Zi(19)No.P02452

(Page3of5)4.OtherInformationThemanagementofYantaiChangyuPioneerWineCompanyLimitedisresponsibleforotherinformation.TheotherinformationcomprisestheinformationincludedintheYantaiChangyu2018annualreport,butdoesnotincludethefinancialstatementsandourauditor'sreportthereon.Ouropiniononthefinancialstatementsdoesnotcovertheotherinformationandwedonotexpressanyformofassuranceconclusionthereon.Inconnectionwithourauditofthefinancialstatements,ourresponsibilityistoreadtheotherinformationand,indoingso,considerwhethertheotherinformationismateriallyinconsistentwiththefinancialstatementsorourknowledgeobtainedintheauditorotherwiseappearstobemateriallymisstated.If,basedontheworkwehaveperformed,weconcludethatthereisamaterialmisstatementofthisotherinformation,wearerequiredtoreportthatfact.Wehavenothingtoreportinthisregard.5.ResponsibilitiesoftheManagementandThoseChargedwithGovernancefortheFinancial

StatementsThemanagementofYantaiChangyuPioneerWineCompanyLimitedisresponsibleforthepreparationandfairpresentationofthefinancialstatementsinaccordancewithAccountingStandardsforBusinessEnterprises,anddesigning,implementingandmaintaininginternalcontrolthatisnecessarytoenablethefinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.Inpreparingthefinancialstatements,themanagementisresponsibleforassessingYantaiChangyuCompany’sabilitytocontinueasagoingconcern,disclosing,asapplicable,mattersrelatedtogoingconcernandusingthegoingconcernbasisofaccountingunlessthemanagementeitherintendstoliquidateYantaiChangyuCompanyortoceaseoperations,orhavenorealisticalternativebuttodoso.ThosechargedwithgovernanceareresponsibleforoverseeingYantaiChangyuCompany’sfinancialreportingprocess.6.Auditor'sResponsibilitiesfortheAuditoftheFinancialStatementsOurobjectivesaretoobtainreasonableassuranceaboutwhetherthefinancialstatementsasawholearefreefrommaterialmisstatement,whetherduetofraudorerror,andtoissueanauditor'sreportthatincludesouropinionsolelytoyou.Reasonableassuranceisahighlevelofassurance,butisnotaguaranteethatanauditconductedinaccordancewithChinaStandardsonAuditingwillalwaysdetectamaterialmisstatementwhenitexists.Misstatementscanarisefromfraudorerrorandareconsideredmaterialif,individuallyorintheaggregate,theycouldreasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisofthesefinancialstatements.

AUDITORS’REPORT-continued

DeShiBao(Shen)Zi(19)No.P02452

(Page4of5)6.Auditor'sResponsibilitiesfortheAuditoftheFinancialStatements-continuedAspartofanauditinaccordancewithChinaStandardsonAuditing,weexerciseprofessionaljudgmentandmaintainprofessionalskepticismthroughouttheaudit.Wealso:

(1)Identifyandassesstherisksofmaterialmisstatementofthefinancialstatements,whetherdue

tofraudorerror,designandperformauditproceduresresponsivetothoserisks,andobtainauditevidencethatissufficientandappropriatetoprovideabasisforouropinion.Theriskofnotdetectingamaterialmisstatementresultingfromfraudishigherthanforoneresultingfromerror,asfraudmayinvolvecollusion,forgery,intentionalomissions,misrepresentations,ortheoverrideofinternalcontrol.(2)Obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignaudit

proceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheinternalcontrol.(3)Evaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccounting

estimatesandrelateddisclosuresmadebythemanagement.(4)Concludeontheappropriatenessofthemanagement'suseofthegoingconcernbasisof

accountingand,basedontheauditevidenceobtained,whetheramaterialuncertaintyexists

relatedtoeventsorconditionsthatmaycastsignificantdoubtonYantaiChangyuCompany’s

abilitytocontinueasagoingconcern.Ifweconcludethatamaterialuncertaintyexists,weare

requiredtodrawattentioninourauditor'sreporttotherelateddisclosuresinthefinancial

statementsor,ifsuchdisclosuresareinadequate,tomodifyouropinion.Ourconclusionsare

basedontheauditevidenceobtaineduptothedateofourauditor'sreport.However,future

eventsorconditionsmaycausetheYantaiChangyuCompanytoceasetocontinueasagoing

concern.(5)Evaluatetheoverallpresentation,structureandcontentofthefinancialstatements(including

thedisclosures),andwhetherthefinancialstatementsrepresenttheunderlyingtransactionsand

eventsinamannerthatachievesfairpresentation.(6)Obtainsufficientappropriateauditevidenceregardingthefinancialinformationoftheentities

orbusinessactivitieswithintheYantaiChangyuCompanytoexpressanopiniononthe

financialstatements.Weareresponsibleforthedirection,supervisionandperformanceofthe

groupaudit.Weremainsolelyresponsibleforourauditopinion.

AUDITORS’REPORT-continued

DeShiBao(Shen)Zi(19)No.P02452

(Page5of5)6.Auditor'sResponsibilitiesfortheAuditoftheFinancialStatements-continuedWecommunicatewiththosechargedwithgovernanceregarding,amongothermatters,theplannedscopeandtimingoftheauditandsignificantauditfindings,includinganysignificantdeficienciesininternalcontrolthatweidentifyduringouraudit.Wealsoprovidethosechargedwithgovernancewithastatementthatwehavecompliedwithrelevantethicalrequirementsregardingindependence,andtocommunicatewiththemallrelationshipsandothermattersthatmayreasonablybethoughttobearonourindependence,andwhereapplicable,relatedsafeguards.Fromthematterscommunicatedwiththosechargedwithgovernance,wedeterminethosemattersthatwereofmostsignificanceintheauditofthefinancialstatementsofthecurrentyearandarethereforethekeyauditmatters.Wedescribethesemattersinourauditor'sreportunlesslaworregulationprecludespublicdisclosureaboutthematterorwhen,inextremelyrarecircumstances,wedeterminethatamattershouldnotbecommunicatedinourreportbecausetheadverseconsequencesofdoingsowouldreasonablybeexpectedtooutweighthepublicinterestbenefitsofsuchcommunication.DeloitteToucheTohmatsuCPALLPChineseCertifiedPublicAccountant:XieYanfeng

Shanghai,China(Engagementpartner)

ChineseCertifiedPublicAccountant:LiYangang

18April2019

CONSOLIDATEDBALANCESHEETSYEARENDED31DECEMBER2018ASSETSNotes31/12/201831/12/2017

RMBRMBCURRENTASSETS

CashandbankVI-11,475,700,4771,402,522,509NotesandaccountsreceivableVI-2530,821,071508,593,173Including:NotesreceivableVI-2.2288,667,988244,796,818

AccountsreceivableVI-2.3242,153,083263,796,355PrepaymentsVI-34,219,9492,417,931OtherreceivablesVI-422,636,08618,978,422Including:InterestreceivableVI-4.21,332,681240,968InventoriesVI-52,724,591,4572,473,614,046Non-currentassetsheldforsale-2,000,197OthercurrentassetsVI-6258,676,396230,822,759

__________________________Totalcurrentassets5,016,645,4364,638,949,037

__________________________NON-CURRENTASSETS

Available-for-salefinancialassetsVI-7467,251467,251InvestmentpropertiesVI-831,572,48918,467,989FixedassetsVI-95,749,731,6675,329,083,969ConstructioninprogressVI-10759,296,5911,026,141,569BearerbiologicalassetsVI-11209,266,373201,929,888IntangibleassetsVI-12655,473,459655,448,897GoodwillVI-13165,199,111128,135,981Long-termprepaidexpensesVI-14244,640,416230,009,231DeferredtaxassetsVI-15285,436,259308,121,396

__________________________Totalnon-currentassets8,101,083,6167,897,806,171

__________________________Totalassets13,117,729,05212,536,755,208

____________________________________________________

CONSOLIDATEDBALANCESHEETSYEARENDED31DECEMBER2018-continuedLIABILITIESANDEQUITYNotes31/12/201831/12/2017

RMBRMBCURRENTLIABILITIES

Short-termborrowingsVI-16688,002,410714,434,286NotesandaccountspayableVI-17713,572,881666,442,879ReceiptsinadvanceVI-18226,075,244350,894,156EmployeebenefitspayableVI-19212,304,217210,824,234TaxespayableVI-20128,912,790145,094,156OtherpayablesVI-21608,479,890603,735,569Including:Interestpayable712,826771,250

OtherpayablesVI-21.2607,767,064602,964,319DeferredincomeVI-2215,860,25416,878,199Non-currentliabilitiesduewithinoneyearVI-23152,940,788110,954,827

__________________________Totalcurrentliabilities2,746,148,4742,819,258,306

__________________________NON-CURRENTLIABILITIES

Long-termborrowingsVI-24156,480,662156,125,854Long-termpayablesVI-25225,000,000259,000,000DeferredincomeVI-2270,367,03992,918,855DeferredtaxliabilitiesVI-1522,010,64724,264,203Othernon-currentliabilitiesVI-267,234,8537,209,312

__________________________Totalnon-currentliabilities481,093,201539,518,224

__________________________Totalliabilities3,227,241,6753,358,776,530

__________________________

CONSOLIDATEDBALANCESHEETSYEARENDED31DECEMBER2018-continuedLIABILITIESANDEQUITYNotes31/12/201831/12/2017

RMBRMBEQUITY

SharecapitalVI-27685,464,000685,464,000CapitalreserveVI-28565,955,441565,955,441OthercomprehensiveincomeVI-292,965,3773,109,240SurplusreserveVI-30342,732,000342,732,000RetainedearningsVI-318,008,982,5477,309,081,618

__________________________Equityattributabletoshareholders

oftheCompany9,606,099,3658,906,342,299Non-controllinginterests284,388,012271,636,379

__________________________Totalequity9,890,487,3779,177,978,678

__________________________Totalliabilitiesandequity13,117,729,05212,536,755,208

__________________________

__________________________Theaccompanyingnotesformanintegralpartofthesefinancialstatements.Thefinancialstatementsonpages6to107weresignedbythefollowing:

LegalRepresentativePersoninChargeoftheAccountingBodyChiefAccountant

BALANCESHEETOFTHECOMPANYYEARENDED31DECEMBER2018ASSETSNotes31/12/201831/12/2017

RMBRMBCURRENTASSETS

CashandbankXIV-1624,588,809559,174,466NotesandaccountsreceivableXIV-241,333,22749,450,536Including:NotesreceivableXIV-2.239,885,25441,645,203

AccountsreceivableXIV-2.31,447,9737,805,333Prepayments22799,673OtherreceivablesXIV-31,025,643,356999,846,643Including:Interestreceivable254,08876,646

DividendreceivablesXIV-3.2500,000,000407,495,922InventoriesXIV-4385,154,740348,042,053Non-currentassetsheldforsale-2,000,197Othercurrentassets24,704,84429,706,058

__________________________Totalcurrentassets2,101,425,2031,988,319,626

__________________________NON-CURRENTASSETS

Long-termequityinvestmentsXIV-57,420,803,0694,511,202,204InvestmentpropertiesVI-831,572,48918,467,989FixedassetsXIV-6265,311,274288,150,901ConstructioninprogressXIV-76,311,7016,756,349ConstructioninprogressXIV-8125,002,793119,572,539IntangibleassetsXIV-967,244,06669,623,219DeferredtaxassetsXIV-1024,194,96728,787,907Othernon-currentassetsXIV-11972,700,0003,718,674,166

__________________________Totalnon-currentassets8,913,140,3598,761,235,274

__________________________Totalassets11,014,565,56210,749,554,900

____________________________________________________

BALANCESHEETOFTHECOMPANYYEARENDED31DECEMBER2018-continuedLIABILITIESANDEQUITYNotes31/12/201831/12/2017

RMBRMBCURRENTLIABILITIES

Short-termborrowingsXIV-12150,000,000600,000,000NotesandaccountspayableXIV-13132,704,30497,833,124Advancesfromcustomers-6,000,000EmployeebenefitspayableXIV-1472,345,17970,108,076TaxespayableXIV-1513,111,43114,569,690OtherpayablesXIV-16607,974,519545,365,672Including:Interestpayable181,250652,500

OtherpayablesXIV-16.2607,793,269544,713,172Deferredincome3,433,0543,953,054

__________________________Totalcurrentliabilities979,568,4871,337,829,616

__________________________NON-CURRENTLIABILITIES

Deferredincome8,910,91812,628,573Othernon-currentliabilitiesXIV-142,710,5752,577,702

__________________________Totalnon-currentliabilities11,621,49315,206,275

__________________________Totalliability991,189,9801,353,035,891

__________________________EQUITY

SharecapitalVI-27685,464,000685,464,000CapitalreserveXIV-17557,222,454557,222,454SurplusreserveVI-30342,732,000342,732,000Retainedearnings8,437,957,1287,811,100,555

__________________________Totalequity10,023,375,5829,396,519,009

__________________________Totalliabilitiesandequity11,014,565,56210,749,554,900

__________________________

__________________________

CONSOLIDATEDINCOMESTATEMENTYEARENDED31DECEMBER2018

Notes20182017

RMBRMBI.RevenueVI-325,142,244,7404,932,545,229

Less:CostofsalesVI-321,901,611,5071,671,592,279

TaxesandsurchargesVI-33276,491,674310,252,023SellingexpensesVI-341,274,599,1461,272,522,443AdministrativeexpensesVI-35343,580,651336,461,133Researchanddevelopmentexpenses4,784,1184,320,825FinancialexpensesVI-3635,945,30218,590,259Including:Interestincome12,086,0079,168,772

Interestexpenses46,354,90226,095,487(Reversalof)ImpairmentlossofassetsVI-37(912,166)8,293,553Add:Income(loss)fromdisposalofassets11,368,355(222,586)

OtherincomeVI-3887,281,43446,038,384

________________________II.Operatingprofit1,404,794,2971,356,328,512

Add:Non-operatingincomeVI-397,353,30917,230,727Less:Non-operatingexpensesVI-403,535,9081,631,476

________________________III.Profitbeforetax1,408,611,6981,371,927,763

Less:IncometaxVI-41367,127,522338,134,245

________________________IV.Profitfortheyear1,041,484,1761,033,793,518

________________________(I)Categorizedbythenatureofcontinuingoperation1.Netprofitfromcontinuingoperations1,041,484,1761,033,793,518

________________________(II)Categorizedbyownership:

1.Profitorlossattributabletonon-controllinginterests(1,148,753)2,098,4622.NetprofitattributabletoownersoftheCompany1,042,632,9291,031,695,056

________________________V.Othercomprehensiveincome(post-tax)(376,524)9,863,872

________________________Othercomprehensiveincomeattributable

toshareholdersoftheCompanyOthercomprehensiveincome

tobereclassifiedtoprofitandloss

Foreigncurrencystatementtranslationdifference(143,863)8,368,254Othercomprehensiveincomeattributabletonon-controllinginterest(232,661)1,495,618

________________________VI.Totalcomprehensiveincome1,041,107,6521,043,657,390

________________________AttributetoshareholdersoftheCompany1,042,489,0661,040,063,310Attributetonon-controllinginterestoftheCompany(1,381,414)3,594,080

________________________

________________________VII.Earningspershare

(I)BasicearningspershareVI-421.521.51

________________________

________________________(II)DilutedearningspershareVI-42N/AN/A

________________________

________________________

INCOMESTATEMENTOFTHECOMPANYYEARENDED31DECEMBER2018

Notes20182017

RMBRMBI.RevenueXIV-18876,447,0701,311,256,854

Less:CostofsalesXIV-18774,487,0311,165,953,408

TaxesandsurchargesXIV-1938,346,76176,570,225AdministrativeexpensesXIV-2090,505,20879,119,135Researchanddevelopmentexpenses887,3551,573,909FinancialexpensesXIV-21(20,292,737)637,568Including:Interestincome41,821,37218,602,199

Interestexpenses16,075,35317,414,181Add:InvestmentincomeXIV-22964,128,659798,877,905

Income(loss)fromdisposalofassets12,411,962(29,625)Otherincome4,237,6555,219,126

________________________II.OperatingProfit973,291,728791,470,015

Add:Non-operatingincome1,483,478686,646Less:Non-operatingexpenses593,694335,237

________________________III.Profitbeforetax974,181,512791,821,424

Less:Incometax4,592,939(1,776,586)

________________________IV.Profitfortheyear969,588,573793,598,010

________________________________________________Netprofitfromcontinuingoperations969,588,573793,598,010

________________________V.Totalcomprehensiveincome969,588,573793,598,010

________________________________________________

CONSOLIDATEDCASHFLOWSTATEMENTYEARENDED31DECEMBER2018

Notes20182017

RMBRMBCASHFLOWSFROMOPERATINGACTIVITIES

Cashreceiptsfromthesaleofgoods

andtherenderingofservices4,950,603,2074,827,152,526Receiptsoftaxrefunds57,056,69053,196,910OthercashreceiptsrelatingtooperatingactivitiesVI-43(1)72,703,87285,236,905

______________________

Sub-totalofcashinflowsfromoperatingactivities5,080,363,7694,965,586,341

______________________

Cashpaymentsforgoodspurchasedandservicesreceived1,383,945,2331,143,840,915Cashpaymentstoandonbehalfofemployees544,742,974512,777,815Paymentofvarioustypesoftaxes1,111,980,4991,260,813,596OthercashpaymentsrelatingtooperatingactivitiesVI-43(2)1,063,716,3171,074,910,988

______________________

Sub-totalofcashoutflowsfromoperatingactivities4,104,385,0233,992,343,314

______________________

NetcashflowsfromoperatingactivitiesVI-44(1)975,978,746973,243,027

______________________

CASHFLOWSFROMINVESTINGACTIVITIES

Cashreceiptsfromdisposalsandrecoveryofinvestments400,000,000205,000,000Proceedsfromreturnoninvestments3,445,8954,084,350Netcashreceiptsfromdisposalsoffixedassets,intangibleassetsandotherlong-termassets19,967,4317,594,005

______________________

Sub-totalofcashinflowsfrominvestingactivities423,413,326216,678,355

______________________

Cashpaidforacquisitionofproperties,plantsandequipment,

intangibleassetsandotherlong-termassets347,384,820435,960,357Cashpaymentstoacquireinvestments478,042,400297,129,216CashpaidforthepurchasesubsidiariesandotherequityVI-43(3)105,834,655303,796,543

______________________

Sub-totalofcashoutflowsfrominvestingactivities931,261,8751,036,886,116

______________________

Netcashflowsfrominvestingactivities(507,848,549)(820,207,761)

______________________

CASHFLOWSFROMFINANCINGACTIVITIES

Cashreceiptsfromcapitalcontributions2,050,00048,396,726

Including:cashreceiptsfromcapitalcontributions

fromminorityownersofsubsidiaries2,050,00048,396,726Cashreceiptsfromborrowings1,049,815,411963,564,600OthercashreceivedfromfinancingactivitiesVI-43(4)62,468,25952,930,804

______________________

Sub-totalofcashinflowsfromfinancingactivities1,114,333,6701,064,892,130

______________________

Cashpaidforborrowings1,103,189,409876,502,273Cashpaidfordividends,profitsandinterests397,351,813369,791,284CashpaidfromotherfinancingactivitiesVI-43(5)46,100,00061,700,000

______________________

Sub-totalofcashoutflowsfromfinancingactivities1,546,641,2221,307,993,557

______________________

Netcashflowsfromfinancingactivities(432,307,552)(243,101,427)

______________________

Effectofforeignexchangeratechanges

oncashandcashequivalents(9,851,585)14,013,131NETINCREASE(DECREASE)OFCASH

ANDCASHEQUIVALENTS25,971,060(76,053,030)Add:cashandcashequivalentsatbeginningoftheyearVI-44(3)1,180,889,2741,256,942,304

______________________

CASHANDCASHEQUIVALENTSATENDOFTHEYEARVI-44(3)1,206,860,3341,180,889,274

____________________________________________

CASHFLOWSTATEMENTOFTHECOMPANYYEARENDED31DECEMBER2018

Notes20182017

RMBRMBCASHFLOWSFROMOPERATINGACTIVITIES

Cashreceiptsfromthesaleofgoods

andtherenderingofservices817,341,175984,103,489Othercashreceiptsrelatingtooperatingactivities177,786,322431,983,092

______________________

Sub-totalofcashinflowsfromoperatingactivities995,127,4971,416,086,581

______________________

Cashpaymentsforgoodspurchasedandservicesreceived608,241,452398,827,772Cashpaymentstoandonbehalfofemployees107,256,44189,894,049Paymentofvarioustypesoftaxes62,066,449207,917,864Othercashpaymentsrelatingtooperatingactivities74,357,324121,377,127

______________________

Sub-totalofcashoutflowsfromoperatingactivities851,921,666818,016,812

______________________

NetcashflowsfromoperatingactivitiesXIV-23(1)143,205,831598,069,769

______________________

CASHFLOWSFROMINVESTINGACTIVITIES

Cashreceiptsfromdisposalsandrecoveryofinvestments370,000,000103,000,000Proceedsfromreturnoninvestments874,520,633827,218,467Netcashreceiptsfromdisposalsoffixedassets,intangibleassetsandotherlong-termassets11,212,19526,760,929

______________________

Sub-totalofcashinflowsfrominvestingactivities1,255,732,828956,979,396

______________________

Cashpaidforacquisitionofproperties,plantsandequipment,

intangibleassetsandotherlong-termassets28,842,91122,527,073Cashpaymentstoacquireinvestments410,000,000105,000,000Cashpaidforthepurchasesubsidiariesandotherequity107,194,420881,056,220

______________________

Sub-totalofcashoutflowsfrominvestingactivities546,037,3311,008,583,293

______________________

Netcashflowsfrominvestingactivities709,695,497(51,603,897)

______________________

CASHFLOWSFROMFINANCINGACTIVITIES

Cashreceiptsfromborrowings200,000,000600,000,000

______________________

Sub-totalofcashinflowsfromfinancingactivities200,000,000600,000,000

______________________

Cashpaidforborrowings650,000,000530,339,600Cashpaidfordividends,profitsandinterests364,085,312360,560,604

______________________

Sub-totalofcashoutflowsfromfinancingactivities1,014,085,312890,900,204

______________________

Netcashflowsfromfinancingactivities(814,085,312)(290,900,204)

______________________

NETINCREASEOFCASH

ANDCASHEQUIVALENTS38,816,016255,565,668Add:cashandcashequivalentsatbeginningoftheyearXIV-24493,568,866238,003,198

______________________

CASHANDCASHEQUIVALENTSATENDOFTHEYEARXIV-24532,384,882493,568,866

____________________________________________

CONSOLIDATEDSATATEMENTOFCHANGESINEQUITYYEARENDED31DECEMBER2018

2018AttributabletoshareholdersoftheCompanyIssuedCapitalOthercomprehensiveSurplusRetainedNon-controllingcapitalsurplusincomereserveearningsinterestsTotalRMBRMBRMBRMBRMBRMBRMBI.1/1/2018685,464,000565,955,4413,109,240342,732,0007,309,081,618271,636,3799,177,978,678

____________________________________________________

II.Changesfortheyear

(I)Totalcomprehensiveincome--(143,863)-1,042,632,929(1,381,414)1,041,107,652(II)Owners’contributionsandreductionincapital

Acquisitionofsubsidiaries(VIII-2)-----17,532,82317,532,823(III)Profitdistribution

Distributionstoshareholders(VI-31,VIII-2)----(342,732,000)(3,399,776)(346,131,776)

____________________________________________________

III.31/12/2018685,464,000565,955,4412,965,377342,732,0008,008,982,547284,388,0129,890,487,377

________________________________________________________________________________________________________

2017AttributabletoshareholdersoftheCompanyIssuedCapitalOthercomprehensiveSurplusRetainedNon-controllingcapitalsurplusincomereserveearningsinterestsTotalRMBRMBRMBRMBRMBRMBRMBI.1/1/2017685,464,000565,955,441(5,259,014)342,732,0006,620,118,562190,473,6978,399,484,686

___________________________________________________

II.Changesfortheyear

(I)Totalcomprehensiveincome--8,368,254-1,031,695,0563,594,0801,043,657,390(II)Owners’contributionsandreductionincapital

Non-controllinginterests'capitalcontribution-----78,236,72678,236,726(III)Profitdistribution

Distributionstoshareholders(VI-31)----(342,732,000)(668,124)(343,400,124)

___________________________________________________

III.31/12/2017685,464,000565,955,4413,109,240342,732,0007,309,081,618271,636,3799,177,978,678

______________________________________________________________________________________________________

STATEMENTOFCHANGESINEQUITYOFTHECOMPANYYEARENDED31DECEMBER2018

2018IssuedcapitalCapitalreserveSurplusreserveRetainedearningsTotal

RMBRMBRMBRMBRMBI.1/1/2018685,464,000557,222,454342,732,0007,811,100,5559,396,519,009

___________________________________________

II.Changesfortheyear(I)Totalcomprehensiveincome---969,588,573969,588,573(II)Profitdistribution

Distributionstoshareholders(VI-31)---(342,732,000)(342,732,000)

___________________________________________

III.31/12/2018685,464,000557,222,454342,732,0008,437,957,12810,023,375,582

______________________________________________________________________________________

2017IssuedcapitalCapitalreserveSurplusreserveRetainedearningsTotal

RMBRMBRMBRMBRMBI.1/1/2017685,464,000557,222,454342,732,0007,360,234,5458,945,652,999

__________________________________________

II.Changesfortheyear(I)Totalcomprehensiveincome---793,598,010793,598,010(II)Profitdistribution

Distributionstoshareholders(VI-31)---(342,732,000)(342,732,000)

__________________________________________

III.31/12/2017685,464,000557,222,454342,732,0007,811,100,5559,396,519,009

____________________________________________________________________________________

NOTESTOFINANCIALSTATEMENTSYEARENDED31DECEMBER2018I.CORPORATEINFORMATION

YantaiChangyuPioneerWineCo.,Ltd.(the"Company")wasincorporatedasajointstocklimitedcompanyinaccordancewiththeCompanyLawofthePeople'sRepublicofChina(the"PRC")inareorganizationcarriedoutbyYantaiChangyuGroupCo.,Ltd.("ChangyuGroupCompany"),inwhichChangyuGroupCompanyinjectedcertainassetsandliabilitiesinrelationtothebrandy,wine,andsparklingwineproductionandsalesbusinessestotheCompany.TheCompanyanditssubsidiaries(the"Group")areprincipallyengagedintheproductionandsalesofwine,brandy,sparklingwine,grapegrowingandacquisition,aswellastravelresourcedevelopment,etc..RegistrationplaceoftheCompanyisYantai,Shandong.HeadquarteroftheCompanyislocatedatNo.56DaMaLu,ZhifuDistrict,Yantai,Shandong,PRC.Asat31December2018thetotalsharesissuedbytheCompanyamountsto685,464,000shares.PleaserefertoNoteVI-27indetail.TheholdingcompanyoftheGroupisChangyuGroupCompany,whichisjointlycontrolledbyYantaiGuoFengInvestmentHoldingLtd,ILLVASARONNOHOLDINGSPA,InternationalFinanceCorporationandYantaiYuhuaInvestmentandDevelopmentCompanyLimited.Thefinancialstatementshavebeenauthorizedbytheboardofdirectorson18April2019.AccordingtotheCompany'sarticlesofassociation,thefinancialstatementswillbereviewedbyshareholdersontheshareholder'smeeting.Forconsolidationscopeoftheyear,pleaserefertoNoteVIII"Equityinotherentities"indetail.Fordetailofchangesinconsolidationscopeoftheyear,pleaserefertoNoteVII"Changeinconsolidationscope".II.BASISOFPREPARATIONOFFINANCIALSTATEMENTS1.Basisofpreparation

TheGrouphasadoptedtheAccountingStandardsforBusinessEnterprises("ASBE")issuedbytheMinistryofFinance("MoF").Inaddition,theGrouphasdisclosedrelevantfinancialinformationinaccordancewithInformationDisclosureandPresentationRulesforCompaniesOfferingSecuritiestothePublicNo.15-GeneralProvisionsonFinancialReporting(Revisedin2014).2.Basisofaccountingandprincipleofmeasurement

TheGrouphasadoptedtheaccrualbasisofaccounting.TheGroupadoptsthehistoricalcostastheprincipleofmeasurementinthefinancialstatements.Whereassetsareimpaired,provisionsforassetimpairmentaremadeinaccordancewithrelevantrequirements.Underthehistoricalcostmeasurement,anassetismeasuredatthefairvalueofconsiderationpaidincashandcashequivalentsatthedateofthepurchase.Liabilityismeasuredatthevalueofassetreceivedthroughtakingcurrentobligation,thecontractvaluefortakingcurrentobligation,orthecashandcashequivalentsvalueestimatedforrepayingdebtindailybusinessactivity.

II.BASISOFPREPARATIONOFFINANCIALSTATEMENTS-continued2.Basisofaccountingandprincipleofmeasurement-continued

Fairvalueisthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsatthemeasurementdate,regardlessofwhetherthatpriceisdirectlyobservableorestimatedusinganothervaluationtechnique.Fairvalueformeasurementand/ordisclosurepurposesintheseconsolidatedfinancialstatementsisdeterminedonsuchabasis.FairvaluemeasurementsarecategorisedintoLevel1,2or3basedonthedegreetowhichtheinputstothefairvaluemeasurementsareobservableandthesignificanceoftheinputstothefairvaluemeasurementinitsentirety,whicharedescribedasfollows:

1)Level1inputsarequotedprices(unadjusted)inactivemarketsforidenticalassetsor

liabilitiesthattheentitycanaccessatthemeasurementdate;2)Level2inputsareinputs,otherthanquotedpricesincludedwithinLevel1,thatare

observablefortheassetorliability,eitherdirectlyorindirectly;and3)Level3inputsareunobservableinputsfortheassetorliability.3.Goingconcern

Asat31December2018,theGroupevaluatedtheprofitabilityabilityintheforeseeable12monthsanddidnotnoticeanyeventorcircumstancethatwouldconstitutesignificantdoubtongoingconcernabilityoftheGroup.Therefore,thefinancialstatementshavebeenpreparedonagoingconcernbasis.III.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTING1.DeclarationforimplementingCAS

ThefinancialstatementsarepreparedinaccordancewithCAS,whichshowingatrueandfairviewofthefinancialpositionon31December2018,financialperformanceandcashflowin2018oftheCompanyandtheGroup.2.Accountingyear

TheaccountingyearoftheGroupisfrom1Januaryto31Decemberofeachcalendaryear.3.Businesscycle

Businesscyclereferstotheperiodfrompurchasingassetstobeprocessedtoreceivingcashor

cashequivalentsbytheCompany.ThebusinesscycleoftheCompanyis12months.4.Reportingcurrency

Renminbi("RMB")isthecurrencyoftheprimaryeconomicenvironmentinwhichtheCompany

anditsdomesticsubsidiariesoperate.Therefore,theCompanyanditsdomesticsubsidiaries

chooseRMBastheirfunctionalcurrency.OverseassubsidiariesoftheCompanyadoptCurrency

Euro,ChileanPesoandAustralianDollarastheirfunctionalcurrenciesonthebasisoftheprimary

economicenvironmentinwhichtheyoperate.TheCompanyadoptsRMBtoprepareitsfinancial

statements.

III.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTING

-continued5.Businesscombination

5.1BusinesscombinationsnotinvolvingenterprisesundercommoncontrolandgoodwillAbusinesscombinationnotinvolvingenterprisesundercommoncontrolisabusinesscombinationinwhichallofthecombiningenterprisesarenotultimatelycontrolledbythesamepartyorpartiesbeforeandafterthecombination.Thecostofcombinationistheaggregateofthefairvalues,attheacquisitiondate,oftheassetsgiven,liabilitiesincurredorassumed,andequitysecuritiesissuedbytheacquirerinexchangeforcontroloftheacquiree.Theintermediaryexpensesincurredbytheacquirerinrespectofauditing,legalservices,valuationandconsultancyservices,etc.andotherassociatedadministrativeexpensesattributabletothebusinesscombinationarerecognisedinprofitorlosswhentheyareincurred.Qualifiedidentifiableassets,liabilitiesandcontingentliabilitiesobtainedbyacquirerintheacquisitionaremeasuredusingfairvalueattheacquisitiondate.Wherethecostofcombinationexceedstheacquirer’sinterestinthefairvalueoftheacquiree’sidentifiablenetassets,thedifferenceistreatedasanassetandrecognizedasgoodwill,whichismeasuredatcostoninitialrecognition.Wherethecostofcombinationislessthantheacquirer’sinterestinthefairvalueoftheacquiree’sidentifiablenetassets,theacquirerfirstlyreassessesthemeasurementofthefairvaluesoftheacquiree’sidentifiableassets,liabilitiesandcontingentliabilitiesandmeasurementofthecostofcombination.Ifafterthatreassessment,thecostofcombinationisstilllessthantheacquirer’sinterestinthefairvalueoftheacquiree’sidentifiablenetassets,theacquirerrecognizestheremainingdifferenceimmediatelyinprofitorlossforthecurrentperiod.Goodwillarisingonabusinesscombinationismeasuredatcostlessaccumulatedimpairmentlosses,andispresentedseparatelyintheconsolidatedfinancialstatements.6.Preparationofconsolidatedfinancialstatements

6.1PreparationofconsolidatedfinancialstatementsThescopeofconsolidationintheconsolidatedfinancialstatementsisdeterminedonthebasisofcontrol.Controlisthepowertogovernthefinancialandoperatingpoliciesofanenterprisesoastoobtainbenefitsfromitsoperatingactivities.TheGroupwillre-evaluateifchangesinrelevantfactsandcircumstancesresultsinchangesinrelevantfactorsinvolvedintheabovedefinitionofcontrol.ConsolidationofsubsidiarystartsfromthecontrolonthesubsidiarybytheGroupandendsatthelossofcontrolonthesubsidiarybytheGroup.Forthesubsidiariesthroughbusinesscombinationnotinvolvingenterprisesundercommoncontrol,theresultsofoperationsandcashflowsfromtheacquisitiondaywereproperlyincludedintheconsolidatedincomestatementsandconsolidatedcashflowstatements.

III.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTING

-continued6.Preparationofconsolidatedfinancialstatements-continued

6.1Preparationofconsolidatedfinancialstatements-continuedThesignificantaccountingpoliciesandaccountingperiodsadoptedbythesubsidiariesaredeterminedbasedontheuniformaccountingpoliciesandaccountingperiodssetoutbytheCompany.Allsignificantintra-groupbalancesandtransactionsareeliminatedonconsolidation.Theportionofsubsidiaries'equitythatisnotattributabletotheCompanyistreatedasnon-controllinginterestsandpresentedas"non-controllinginterests"intheconsolidatedbalancesheetwithinshareholders'equity.Theportionofnetprofitsorlossesofsubsidiariesfortheperiodattributabletonon-controllinginterestsispresentedas"non-controllinginterests"intheconsolidatedincomestatementbelowthenetprofitlineitem.Whentheamountoflossfortheperiodattributabletothenon-controllingshareholdersofasubsidiaryexceedsthenon-controllingshareholders'portionoftheopeningbalanceofowners'equityofthesubsidiary,theexcessamountarestillallocatedagainstnon-controllinginterests.7.Cashandcashequivalents

Cashcomprisescashonhandanddepositsthatcanbereadilywithdrawnondemand.CashequivalentsaretheGroup'sshort-term,highlyliquidinvestmentsthatarereadilyconvertibletoknownamountsofcashandwhicharesubjecttoaninsignificantriskofchangesinvalue.8.Translationoftransactionsandfinancialstatementsdenominatedinforeigncurrencies

8.1TransactionsdenominatedinforeigncurrenciesAforeigncurrencytransactionisrecorded,oninitialrecognition,byapplyingthespotexchangerateonthedateofthetransaction.Atthebalancesheetdate,foreigncurrencymonetaryitemsaretranslatedintoRMBusingthespotexchangeratesatthebalancesheetdate.Exchangedifferencesarisingfromthedifferencesbetweenthespotexchangeratesprevailingatthebalancesheetdateandthoseoninitialrecognitionoratthepreviousbalancesheetdatearerecognisedinprofitorlossfortheperiod,exceptthat(1)exchangedifferencesrelatedtoaspecific-purposeborrowingdenominatedinforeigncurrencythatqualifyforcapitalisationarecapitalisedaspartofthecostofthequalifyingassetduringthecapitalisationperiod;(2)exchangedifferencesrelatedtohedginginstrumentsforthepurposeofhedgingagainstforeigncurrencyrisksareaccountedforusinghedgeaccounting;(3)exchangedifferencesarisingfromavailable-for-salenon-monetaryitemsdenominatedinforeigncurrenciesandchangesinthecarryingamountsofavailable-for-salemonetaryitemsarerecognisedasothercomprehensiveincomeandincludedincapitalreserve.

III.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTING

-continued8.Translationoftransactionsandfinancialstatementsdenominatedinforeigncurrencies-continued

8.2Translationoffinancialstatementsdenominatedinforeigncurrencies-continuedForthepurposeofpreparingtheconsolidatedfinancialstatements,financialstatementsofaforeignoperationaretranslatedfromtheforeigncurrencyintoRMBusingthefollowingmethod:

assetsandliabilitiesonthebalancesheetaretranslatedatthespotexchangerateprevailingatthebalancesheetdate;shareholders'equityitemsexceptforretainedearningsaretranslatedatthespotexchangeratesatthedatesonwhichsuchitemsarose;allitemsintheincomestatementaswellasitemsreflectingthedistributionofprofitsaretranslatedatthespotexchangeratesonthedatesofthetransactions;theopeningbalanceofretainedearningsisthetranslatedclosingbalanceofthepreviousyear'sretainedearnings;theclosingbalanceofretainedearningsiscalculatedandpresentedonthebasisofeachtranslatedincomestatementandprofitdistributionitem.Thedifferencebetweenthetranslatedassetsandtheaggregateofliabilitiesandshareholders'equityitemsisseparatelypresentedastheexchangedifferencesarisingontranslationoffinancialstatementsdenominatedinforeigncurrenciesofothercomprehensiveincomeundertheshareholders'equityinthebalancesheet.Cashflowsarisingfromatransactioninforeigncurrencyandthecashflowsofaforeignsubsidiaryaretranslatedatthespotexchangerateonthedateofthecashflows.Theeffectofexchangeratechangesoncashandcashequivalentsisregardedasareconcilingitemandpresentedseparatelyinthecashflowstatementas"effectofexchangeratechangesoncashandcashequivalents".Theopeningbalancesandthecomparativefiguresofpreviousyeararepresentedatthetranslatedamountsinthepreviousyear'sfinancialstatements.9.Financialinstruments

FinancialassetsandfinancialliabilitiesarerecognisedwhentheGroupbecomesapartytothecontractualprovisionsoftheinstrument.Financialassetsandfinancialliabilitiesareinitiallymeasuredatfairvalue.Forotherfinancialassetsandfinancialliabilities,transactioncostsareincludedintheirinitialrecognisedamounts.9.1EffectiveinterestmethodTheeffectiveinterestmethodisamethodofcalculatingtheamortisedcostofafinancialassetorafinancialliability(oragroupoffinancialassetsorfinancialliabilities)andofallocatingtheinterestincomeorinterestexpenseovertherelevantperiod,usingtheeffectiveinterestrate.Theeffectiveinterestrateistheratethatexactlydiscountsestimatedfuturecashflowsthroughtheexpectedlifeofthefinancialassetorfinancialliabilityor,whereappropriate,ashorterperiodtothenetcarryingamountofthefinancialassetorfinancialliability.Whencalculatingtheeffectiveinterestrate,theGroupestimatesfuturecashflowsconsideringallcontractualtermsofthefinancialassetorfinancialliability(withoutconsideringfuturecreditlosses),andalsoconsidersallfeespaidorreceivedbetweenthepartiestothecontractgivingrisetothefinancialassetandfinancialliabilitythatareanintegralpartoftheeffectiveinterestrate,transactioncosts,andpremiumsordiscounts,etc.

III.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTING

-continued9.Financialinstruments-continued

9.2Classification,recognitionandmeasurementoffinancialassetsOninitialrecognition,theGroup'sfinancialassetsareclassifiedintooneofthefourcategories,includingfinancialassetsatfairvaluethroughprofitorloss,held-to-maturityinvestments,loansandreceivables,andavailable-for-salefinancialassets.Allregularwaypurchasesorsalesoffinancialassetsarerecognisedandderecognisedonatradedatebasis.TheGroup'sfinancialassetsareboughtinaconventionalway,andrecognizedandterminatedaccordingtotheaccountingtransactiondate.FinancialassetsoftheGroupareloansandreceivablesandavailable-for-salefinancialassets.9.2.1LoansandreceivablesLoansandreceivablesarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarket.FinancialassetsclassifiedasloansandreceivablesbytheGroupincludecashandbank,notesandaccountsreceivableandotherreceivables,etc.Loansandreceivablesaresubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod.Gainorlossarisingfromderecognition,impairmentoramortisationisrecognisedinprofitorloss.9.2.2Available-for-salefinancialassetsAvailable-for-salefinancialassetsincludenon-derivativefinancialassetsthataredesignatedoninitialrecognitionasavailableforsale,andfinancialassetsthatarenotclassifiedasfinancialassetsatfairvaluethroughprofitorloss,loansandreceivablesorheld-to-maturityinvestments.Forinvestmentsinequityinstrumentsthatdonothaveaquotedmarketpriceinanactivemarketandwhosefairvaluecannotbereliablymeasured,theyaremeasuredatcost.9.3ImpairmentoffinancialassetsTheGroupassessesateachbalancesheetdatethecarryingamountsoffinancialassetsotherthanthoseatfairvaluethroughprofitorloss.Ifthereisobjectiveevidencethatafinancialassetisimpaired,theGroupdeterminestheamountofanyimpairmentloss.Objectiveevidencethatafinancialassetisimpairedisevidencethat,arisingfromoneormoreeventsthatoccurredaftertheinitialrecognitionoftheasset,theestimatedfuturecashflowsofthefinancialasset,whichcanbereliablymeasured,havebeenaffected.Objectiveevidencethatafinancialassetisimpairedincludesthefollowingobservableevents:

(1)Significantfinancialdifficultyoftheissuerorobligor;(2)Abreachofcontractbytheborrower,suchasadefaultordelinquencyininterestor

principalpayments;(3)TheGroup,foreconomicorlegalreasonsrelatingtotheborrower'sfinancialdifficulty,

grantingaconcessiontotheborrower;(4)Itbecomingprobablethattheborrowerwillenterbankruptcyorotherfinancial

reorganisations;

III.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTING

-continued9.Financialinstruments-continued

9.3Impairmentoffinancialassets-continued(5)Thedisappearanceofanactivemarketforthatfinancialassetbecauseoffinancial

difficultiesoftheissuer;(6)Uponanoverallassessmentofagroupoffinancialassets,observabledataindicatesthat

thereisameasurabledecreaseintheestimatedfuturecashflowsfromthegroupof

financialassetssincetheinitialrecognitionofthoseassets,althoughthedecreasecannot

yetbeidentifiedwiththeindividualfinancialassetsinthegroup.Suchobservabledata

includes:

-Adversechangesinthepaymentstatusofborrowerinthegroupofassets;

-Economicconditionsinthecountryorregionoftheborrowerwhichmayleadtoa

failuretopaythegroupofassets;(7)Significantadversechangesinthetechnological,market,economicorlegalenvironment

inwhichtheissueroperates,indicatingthatthecostoftheinvestmentintheequityinstrumentmaynotberecoveredbytheinvestor;(8)Asignificantorprolongeddeclineinthefairvalueofaninvestmentinanequity

instrumentbelowitscost;namely,atthebalancesheetdate,iftheinitialcostofanequityinstrumentinvestmentismorethan50%(inclusive)inexcessofthefairvalueofsuchinvestment,ortheperiodinwhichtheinitialcostofanequityinstrumentinvestmentexceedsthefairvalueofsuchinvestmentisover12months(inclusive);(9)Otherobjectiveevidenceindicatingthereisanimpairmentofafinancialasset.

-ImpairmentoffinancialassetsmeasuredatamortisedcostIffinancialassetscarriedatamortisedcostareimpaired,thecarryingamountsofthefinancialassetsarereducedtothepresentvalueofestimatedfuturecashflows(excludingfuturecreditlossesthathavenotbeenincurred)discountedatthefinancialasset'soriginaleffectiveinterestrate.Theamountofreductionisrecognisedasanimpairmentlossinprofitorloss.If,subsequenttotherecognitionofanimpairmentlossonfinancialassetscarriedatamortisedcost,thereisobjectiveevidenceofarecoveryinvalueofthefinancialassetswhichcanberelatedobjectivelytoaneventoccurringaftertheimpairmentisrecognised,thepreviouslyrecognisedimpairmentlossisreversed.However,thereversalismadetotheextentthatthecarryingamountofthefinancialassetatthedatetheimpairmentisreverseddoesnotexceedwhattheamortisedcostwouldhavebeenhadtheimpairmentnotbeenrecognised.Forafinancialassetthatisindividually,theGroupassessestheassetindividuallyforimpairment.-ImpairmentofavailableforsaleassetsmeasuredatcostIfanimpairmentlosshasbeenincurredonaninvestmentinunquotedequityinstrument(withoutaquotedpriceinanactivemarket)whosefairvaluecannotbereliablymeasured,oronaderivativefinancialassetthatislinkedtoandmustbesettledbydeliveryofsuchanunquotedequityinstrument,thecarryingamountofthefinancialassetisreducedtothepresentvalueofestimatedfuturecashflowsdiscountedatthecurrentmarketrateofreturnforasimilarfinancialasset.Theamountofreductionisrecognisedasanimpairmentlossinprofitorloss.Theimpairmentlossonsuchfinancialassetisnotreversedonceitisrecognised.

III.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTING

-continued9.Financialinstruments-continued

9.4TransferoffinancialassetsTheGroupderecognisesafinancialassetifoneofthefollowingconditionsissatisfied:(1)thecontractualrightstothecashflowsfromthefinancialassetexpire;or(2)thefinancialassethasbeentransferredandsubstantiallyalltherisksandrewardsofownershipofthefinancialassetistransferredtothetransferee;or(3)althoughthefinancialassethasbeentransferred,theGroupneithertransfersnorretainssubstantiallyalltherisksandrewardsofownershipofthefinancialassetbuthasnotretainedcontrolofthefinancialasset.Foratransferofafinancialassetinitsentiretythatsatisfiesthederecognitioncriteria,thedifferencebetween(1)thecarryingamountofthefinancialassettransferred;and(2)thesumoftheconsiderationreceivedfromthetransferandanycumulativegainorlossthathasbeenrecognisedinothercomprehensiveincome,isrecognisedinprofitorloss.9.5Classification,recognitionandmeasurementoffinancialliabilitiesDebtandequityinstrumentsissuedbytheGroupareclassifiedintofinancialliabilitiesorequityonthebasisofthesubstanceofthecontractualarrangementsanddefinitionsoffinancialliabilityandequityinstrument.Oninitialrecognition,financialliabilitiesareclassifiedintofinancialliabilitiesatfairvaluethroughprofitorlossandotherfinancialliabilities.Thefinancialliabilitiesingroupareotherfinancialliabilities,includingshort-termborrowings,notespayable,accountpayables,otherpayables,non-currentliabilitiesduewithinoneyearandlong-termpayablesetc.9.5.1OtherfinancialliabilitiesOtherfinancialliabilitiesaresubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod,withgainorlossarisingfromderecognitionoramortisationrecognisedinprofitorloss.9.6DerecognitionoffinancialliabilitiesTheGroupderecognisesafinancialliability(orpartofit)onlywhentheunderlyingpresentobligation(orpartofit)isdischarged.WhentheGroupderecognisesafinancialliabilityorapartofit,itrecognisesthedifferencebetweenthecarryingamountofthefinancialliability(orpartofthefinancialliability)derecognisedandtheconsiderationpaid(includinganynon-cashassetstransferredornewfinancialliabilitiesassumed)inprofitorloss.9.7OffsettingfinancialassetsandfinancialliabilitiesWheretheGrouphasalegalrightthatiscurrentlyenforceabletosetofftherecognisedfinancialassetsandfinancialliabilities,andintendseithertosettleonanetbasis,ortorealisethefinancialassetandsettlethefinancialliabilitysimultaneously,afinancialassetandafinancialliabilityshallbeoffsetandthenetamountispresentedinthebalancesheet.Exceptfortheabovecircumstances,financialassetsandfinancialliabilitiesshallbepresentedseparatelyinthebalancesheetandshallnotbeoffset.

III.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTING

-continued9.Financialinstruments-continued

9.8EquityinstrumentsAnequityinstrumentisanycontractthatevidencesaresidualinterestintheassetsoftheGroupafterdeductingallofitsliabilities.TheGroupdoesnotrecogniseanychangesinthefairvalueofequityinstruments.Theequityinstrumentstransactionexpensesdeductedfromequity.TheGrouptreatsdistributiontoequityinstrumentholdersasprofitdistributions.Shareholderequityisnotaffectedbysharedividenddistributed.10.AccountsReceivable

TheGroupbelievesthattheindividualreceivablesareallsignificant,andthecorrespondingreceivablesareindividuallytestedforimpairment,andindividualrecognitionmethodisusedtoconfirmbaddebtprovision.11.Inventories

11.1CategoriesofinventoriesTheGroup'sinventoriesmainlyincluderawmaterials,workinprogressandfinishedgoods.Inventoriesareinitiallymeasuredatcost.Costofinventoriescomprisesallcostsofpurchase,costsofconversionandotherexpendituresincurredinbringingtheinventoriestotheirpresentlocationandcondition.AgriculturalproductsharvestedarereportedinaccordancewiththeCAS1Inventories.11.2ValuationmethodofinventoriesupondeliveryTheactualcostofinventoriesupondeliveryiscalculatedusingtheweightedaveragemethod.11.3BasisfordeterminingnetrealisablevalueofinventoriesandprovisionmethodsfordeclineinvalueofinventoriesAtthebalancesheetdate,inventoriesaremeasuredatthelowerofcostandnetrealisablevalue.Ifthenetrealisablevalueisbelowthecostofinventories,aprovisionfordeclineinvalueofinventoriesismade.Netrealisablevalueistheestimatedsellingpriceintheordinarycourseofbusinesslesstheestimatedcostsofcompletion,theestimatedcostsnecessarytomakethesaleandrelevanttaxes.Netrealisablevalueisdeterminedonthebasisofclearevidenceobtained,andtakesintoconsiderationthepurposesofholdinginventoriesandeffectofpostbalancesheetevents.Provisionfordeclineinvalueofotherinventoriesismadebasedontheexcessofcostofinventoryoveritsnetrealisablevaluebasedoncategoriesofinventories.Aftertheprovisionfordeclineinvalueofinventoriesismade,ifthecircumstancesthatpreviouslycausedinventoriestobewrittendownbelowcostnolongerexistsothatthenetrealisablevalueofinventoriesishigherthantheircost,theoriginalprovisionfordeclineinvalueisreversedandthereversalisincludedinprofitorlossfortheperiod.

III.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTING

-continued11.Inventories-continued

11.4InventorycountsystemTheperpetualinventorysystemismaintainedforstocksystem.11.5Amortisationmethodforlowcostandshort-livedconsumableitemsandpackagingmaterialsPackagingmaterialsandlowcostandshort-livedconsumableitemsareamortisedusingtheimmediatewrite-offmethod.12.Non-currentassetsheldforsale

Non-currentassetsanddisposalgroupsareclassifiedasheldforsalecategorywhentheGrouprecoversthebookvaluethroughasale(includinganexchangeofnonmonetaryassetsthathascommercialsubstance)ratherthancontinuinguse.Non-currentassetsordisposalgroupsclassifiedasheldforsalearerequiredtosatisfythefollowingconditions:(1)theassetordisposalgroupisavailableforimmediatesaleinitspresentconditionsubjectonlytotermsthatareusualandcustomaryforsalesofsuchassetordisposalgroup;(2)thesaleishighlyprobable,i.e.theGrouphasmadearesolutionaboutsellingplanandobtainedaconfirmedpurchasecommitmentandthesaleisexpectedtobecompletedwithinoneyear.TheGroupmeasurestheno-currentassetsordisposalgroupsclassifiedasheldforsaleattheloweroftheircarryingamountandfairvaluelesscoststosell.Wherethecarryingamountishigherthanthenetamountoffairvaluelesscoststosell,carryingamountshouldbereducedtothenetamountoffairvaluelesscoststosell,andsuchreductionisrecognizedinimpairmentlossofassetsandincludedinprofitorlossfortheperiod.Meanwhile,provisionforimpairmentofheld-for-saleassetsaremade.Whenthereisincreaseinthenetamountoffairvalueofnon-currentassetsheldforsalelesscoststosellatthebalancesheetdate,theoriginaldeductionshouldbereversedinimpairmentlossofassetsrecognizedaftertheclassificationofheld-for-salecategory,andthereverseamountisincludeinprofitorlossfortheperiod.Non-currentassetsheldforsaleinnon-currentassetsarenotsubjecttodepreciationoramortization.13.Longtermequityinvestments

13.1Basisfordeterminingcontrol,jointcontrolandsignificantinfluenceControlisthepowertogovernthefinancialandoperatingpoliciesofanentitysoastoobtainbenefitsfromitsactivities.Jointcontrolisthecontractuallyagreedsharingofcontroloveraneconomicactivity,andexistsonlywhenthestrategicfinancialandoperatingpolicydecisionsrelatingtotheactivityrequiretheunanimousconsentofthepartiessharingcontrol.Significantinfluenceisthepowertoparticipateinthefinancialandoperatingpolicydecisionsoftheinvesteebutisnotcontrolorjointcontroloverthosepolicies.Whendeterminingwhetheraninvestingenterpriseisabletoexercisecontrolorsignificantinfluenceoveraninvestee,theeffectofpotentialvotingrightsoftheinvestee(forexample,warrantsandconvertibledebts)heldbythe

investingenterprisesorotherpartiesthatarecurrentlyexercisableorconvertibleshallbeconsidered.

III.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTING

-continued13.Longtermequityinvestments-continued

13.2DeterminationofinitialinvestmentcostForalong-termequityinvestmentacquirednotinvolvingenterprisesundercommoncontrol,theinvestmentcostofthelong-termequityinvestmentisthecostofacquisition.Auditfee,legalservices,consultingfeesandotherrelatedmanagementcostsinacquisitionareexpensedinprofitsandlosseswhenhappened.Otherlong-termequityinvestmentsacquiredfromotherthanacquisitionsarerecognisedusingoriginalcost.13.3Subsequentmeasurementandrecognitionofprofitorloss13.3.1Long-termequityinvestmentaccountedforusingthecostmethodTheGroupaccountsforlong-termequityinvestmentusingthecostmethod.AsubsidiaryisaninvesteethatiscontrolledbytheGroup.Underthecostmethod,along-termequityinvestmentismeasuredatinitialinvestmentcost.Long-termequityinvestmentisadjustedwhencapitalisaddedorrecollected.Investmentincomeisrecognisedintheperiodinaccordancewiththeattributableshareofcashdividendsorprofitdistributionsdeclaredbytheinvestee.13.4Disposaloflong-termequityinvestmentsOndisposalofalongtermequityinvestment,thedifferencebetweentheproceedsactuallyreceivedandreceivableandthecarryingamountisrecognisedinprofitorlossfortheperiod.14.Investmentproperties

Investmentpropertyispropertyheldtoearnrentalsorforcapitalappreciationorboth.Aninvestmentpropertyismeasuredinitiallyatcost.SubsequentexpendituresincurredforsuchinvestmentpropertyareincludedinthecostoftheinvestmentpropertyifitisprobablethateconomicbenefitsassociatedwithaninvestmentpropertywillflowtotheGroupandthesubsequentexpenditurescanbemeasuredreliably.Othersubsequentexpendituresarerecognizedinprofitorlossintheperiodinwhichtheyareincurred.TheGroupusesthecostmodelforsubsequentmeasurementofinvestmentproperty,andadoptsadepreciationoramortizationpolicyfortheinvestmentpropertywhichisconsistentwiththatforbuildingsorlanduserights.Whenaninvestmentpropertyissold,transferred,retiredordamaged,theGrouprecognizestheamountofanyproceedsondisposalnetofthecarryingamountandrelatedtaxesinprofitorlossfortheperiod.

III.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTING

-continued15.Fixedassets

15.1RecognitioncriteriaforfixedassetsFixedassetsaretangibleassetsthatareheldforuseintheproductionorsupplyofgoodsorservices,forrentaltoothers,orforadministrativepurposes,andhaveusefullivesofmorethanoneaccountingyear.AfixedassetisrecognisedonlywhenitisprobablethateconomicbenefitsassociatedwiththeassetwillflowtotheGroupandthecostoftheassetcanbemeasuredreliably.Fixedassetsareinitiallymeasuredatcost.SubsequentexpendituresincurredforthefixedassetareincludedinthecostofthefixedassetandifitisprobablethateconomicbenefitsassociatedwiththeassetwillflowtotheGroupandthesubsequentexpenditurescanbemeasuredreliably.Meanwhilethecarryingamountofthereplacedpartisderecognised.Othersubsequentexpendituresarerecognisedinprofitorlossintheperiodinwhichtheyareincurred.15.2DepreciationofeachcategoryoffixedassetsAfixedassetisdepreciatedoveritsusefullifeusingthestraight-linemethodsincethemonthsubsequenttotheoneinwhichitisreadyforintendeduse.Theusefullife,estimatednetresidualvaluerateandannualdepreciationrateofeachcategoryoffixedassetsareasfollows:

EstimatedEstimatedAnnualusefulliferesidualratedepreciationrateBuildings20-40years0-5%2.4%-5.0%Machinery5-30years0-5%3.2%-20.0%MotorVehicles4-12years0-5%7.9%-25.0%Estimatednetresidualvalueassumesthesituationwhereafixedassetexpireforitsestimatedusefullifeandisinitsexpectedfinalstatus.EstimatednetresidualvalueistheamountthattheGroupcanobtainfromthedisposallessexpecteddisposalfees.15.3OtherexplanationsIfafixedassetisupondisposalornofutureeconomicbenefitsareexpectedtobegeneratedfromitsuseordisposal,thefixedassetisderecognised.Whenafixedassetissold,transferred,retiredordamaged,theamountofanyproceedsondisposaloftheassetnetofthecarryingamountandrelatedtaxesarerecognisedinprofitorlossfortheperiod.TheGroupreviewstheusefullifeandestimatednetresidualvalueofafixedassetandthedepreciationmethodappliedatleastonceateachfinancialyear-end,andaccountforanychangeasachangeinanaccountingestimate.

III.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTING

-continued16.Constructioninprogress

Constructioninprogressismeasuredatitsactualcosts.Theactualcostsincludevariousconstructionexpendituresduringtheconstructionperiod,borrowingcostscapitalisedbeforeitisreadyforintendeduseandotherrelevantcosts.Constructioninprogressisnotdepreciated.Constructioninprogressistransferredtoafixedassetwhenitisreadyforintendeduse.17.Borrowingcosts

Borrowingcostsdirectlyattributabletotheacquisition,constructionorproductionofqualifyingassetarecapitalisedwhenexpendituresforsuchassetandborrowingcostsareincurredandactivitiesrelatingtotheacquisition,constructionorproductionoftheassetthatarenecessarytopreparetheassetforitsintendeduseorsalehavecommenced.Capitalisationofborrowingcostsceaseswhenthequalifyingassetbeingacquired,constructedorproducedbecomesreadyforitsintendeduseorsale.Otherborrowingcostsarerecognisedasanexpenseintheperiodinwhichtheyareincurred.Wherefundsareborrowedunderaspecific-purposeborrowing,theamountofinteresttobecapitalizedistheactualinterestexpenseincurredonthatborrowingfortheperiodlessanybankinterestearnedfromdepositingtheborrowedfundsbeforebeingusedontheassetoranyinvestmentincomeonthetemporaryinvestmentofthosefunds.18.Biologicalassets

TheGroup'sbiologicalassetsarebearerbiologicalassets.18.1BearerbiologicalassetsBearerbiologicalassetsarebiologicalassets,forexample,heldfortheproductionofagriculturalproduce,provisionofservicesorrental,BearerbiologicalassetsintheGrouparevines.Abearerbiologicalassetisinitiallymeasuredatcost.Thecostofabearerbiologicalassetself-grownorself-bredcomprisesthosecostsnecessarilyincurredanddirectlyattributabletotheassetbeforetheassetbecomesavailableforitsintendedproductionandoperatingpurposes,andanyborrowingcostmeetingthecapitalisationcriteria.TheGroupchargedeprecationforproductivebiologicalassetswhichsatisfyexpectedproduction,andrecordthedeprecationinbalancesheetandincomestatement.TheGroupusesstraightlinemethodtocalculatethedeprecation,anddetailsasfollows:

EstimatedEstimatedAnnualCategoryusefulliferesidualratedepreciationrateVines20years-5.0%TheGroupevaluatestheusefullifeandexpectednetsalvagevaluebyconsideringthenormalproducinglifeofthebearerbiologicalassets.

III.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTING

-continued18.Biologicalassets-continued

18.1Bearerbiologicalassets-continuedTheGroupreviewstheusefullifeandestimatednetresidualvalueofbearerbiologicalassetsandthedepreciationmethodappliedatleastonceateachfinancialyear-end,andaccountforanychangeasachangeinanaccountingestimate.Onthesale,identificationofanyshortagesduringstocktaking,deathordamageofbiologicalasset,theproceedsondisposalnetofthecarryingamountandrelevanttaxesisrecognisedinprofitorlossforthecurrentperiod.19.Intangibleassets

Intangibleassetsincludelanduserights,softwareandtrademark,etc.Anintangibleassetismeasuredinitiallyatcostmethod.Whenanintangibleassetwithafiniteusefullifeisavailableforuse,itsoriginalcostlessnetresidualvalueandanyaccumulatedimpairmentlossesisamortisedoveritsestimatedusefullifeusingthestraight-linemethod.Intangibleassetswithindefiniteusefullivesarenotamortized.Theusefullivesoftheintangibleassetsareasfollows:

AnnualItemUsefullifeNetresidualvalueamortizationrateLanduserights40-50years-2.0%-2.5%Software5-10years-10.0%-20.0%Trademark10years-10.0%Exceptfortheaboveintangibleassetswithfiniteusefullives,theGrouphadalsointangibleassetswithinfiniteusefullivesincludingthelanduserightandtrademark.LanduserightswithinfiniteusefullivesarepermanentlanduserightswithpermanentownershipheldbytheGroupundertherelevantChileandAustralianlawsarisingfromtheGroup’sacquisitionofVi?aIndómita,S.A.,Vi?aDosAndes,S.A.,andBodegasSantaAliciaSPA.(collectivelyreferredtoasthe"ChileIndomitaWineGroup"),andtheacquisitionofKilikanoonEstatePtyLtd.(hereinafterreferredtoasthe"AustraliaKilikanoonEstate"),thereforetherewasnoamortization.TherighttousetrademarkreferstothetrademarkheldbytheGrouparisingfromtheacquisitionoftheChileIndomitaWineGroupandtheAustraliaKilikanoonEstatewithinfiniteusefullives.Thevaluationoftrademarkwasbasedonthetrendsinthemarketandcompetitiveenvironment,productcycle,andmanaginglong-termdevelopmentstrategy.ThosebasisindicatedthetrademarkwillprovidenetcashflowstotheGroupwithinanuncertainperiod.TheusefullifeisindefiniteasitwashardtopredicttheperiodthatthetrademarkwouldbringeconomicbenefitstotheGroup.Foranintangibleassetwithadefiniteusefullife,theGroupreviewstheusefullifeandamortisationmethodattheendoftheperiod,andmakesadjustmentswhennecessary.

III.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTING

-continued20.Impairmentoflong-termassets

TheGroupandtheCompanyreviewtheimpairmentstatusoflong-termequityinvestments,fixedassets,investmentproperties,constructioninprogress,bearerbiologicalassetandintangibleassetswithfiniteusefullifeattheendofeachyear.Ifthereisanyindicationforimpairment,theGroupestimatestherecoverableamountoftheasset.Intangibleassetswithindefiniteusefullifeandgoodwillaretestedforimpairmentannually,irrespectiveofwhetherthereisanyindicationthattheassetsmaybeimpaired.Recoverableamountisestimatedonindividualbasis.Ifitisnotpracticaltoestimatetherecoverableamountofanindividualasset,therecoverableamountoftheassetgrouptowhichtheassetbelongswillbeestimated.Therecoverableamountofanassetisthehigherofitsfairvaluelesscostsofdisposalandthepresentvalueofthefuturecashflowsexpectedtobederivedfromtheasset.Ifrecoverableamountofassetsislessthanbookvalue,thedifferenceisrecognisedasimpairmentprovisionandexpensedincurrentperiod.Goodwillistestedforimpairmentatleastattheendofeachyear.Forthepurposeofimpairmenttesting,goodwillisconsideredtogetherwiththerelatedassetsgroup(s),i.e.,goodwillisreasonablyallocatedtotherelatedassetsgroup(s)oreachofassetsgroup(s)expectedtobenefitfromthesynergiesofthecombination.Animpairmentlossisrecognisediftherecoverableamountoftheassetsgrouporsetsofassetsgroups(includinggoodwill)islessthanitscarryingamount.Theimpairmentlossisfirstlyallocatedtoreducethecarryingamountofanygoodwillallocatedtosuchassetsgrouporsetsofassetsgroups,andthentotheotherassetsofthegrouppro-rataonthebasisofthecarryingamountofeachasset(otherthangoodwill)inthegroup.Theimpairmentisrecognisedinprofitorlossfortheperiodinwhichitisincurredandwillnotbereversedinanysubsequentperiod.21.Longtermprepaidexpenses

Long-termprepaidexpensesareamortizedequallyovertheperiodofprojectedearnings.Theamortizationperiodareasfollows:

AmortizationperiodLandrequisitionfee50yearsLandleaseprepayment50yearsGreeningfee5-20yearsLeaseholdimprovement3-5yearsOthers3years

III.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTING

-continued22.Employeebenefits

22.1Short-termemployeebenefitsInanaccountingperiodinwhichanemployeehasrenderedservicetotheGroup,theGrouprecognisestheactualemployeebenefitsforthatserviceasaliability.TheemployeebenefitsoftheGroupareeitherincludedincostofrelatedassetsorchargedtoprofitorlossintheperiodwhentheyareincurred.Non-monetaryemployeebenefitsaremeasuredatfairvalue.Socialinsurancessuchasmedicalinsurance,injuryinsuranceandpregnancyinsurance,housingfunds,laborunionandemployeeeducationfeespaidbytheGroupforemployees,arerecognisedasrelevantliabilityintheperiodinwhichtheemployeesprovideservice,inaccordancewiththeregulatedrecognitionbasisandpercentage.Therelatedexpendituresareeitherincludedincostofrelatedassetsorchargedtoprofitorlossintheperiodwhentheyareincurred.22.2AccountingtreatmentsofretiredbenefitsRetiredbenefitsoftheGroupareallpredeterminedprovisionplan.Intheperiodinwhichtheemployeesprovideservice,theGrouprecogniseliabilityinaccordancewiththeamountstobepaidcalculatedaccordingtothepredeterminedprovisionplan,andtherelatedexpendituresareeitherincludedincostofrelatedassetsorchargedtoprofitorlossintheperiodwhentheyareincurred.22.3AccountingtreatmentsofterminationbenefitsWhenprovidingterminationbenefitstoemployees,theGrouprecogniseemployeebenefitspayrollresultingfromterminationbenefitsattheearlierof:theGroupcannotunilaterallywithdrawfromtheterminationplanortheredundancyoffer;theGrouprecogniserelevantcostsandexpensesrelatedtothepaymentofterminationbenefitsinrestructuring.23.Revenue

23.1RevenuefromsaleofgoodsRevenuefromsaleofgoodsisrecognisedwhentheGrouphastransferredtothebuyerthesignificantrisksandrewardsofownershipofthegoods.TheGroupretainsneithercontinuingmanagerialinvolvementtothedegreeusuallyassociatedwithownershipnoreffectivecontroloverthegoodssold.TheamountofrevenuecanbemeasuredreliablyanditisprobablethattheassociatedeconomicbenefitswillflowtotheGroup.Theassociatedcostsincurredortobeincurredcanbemeasuredreliably.23.2RevenuefromrenderingofservicesWhentheoutcomeofatransactioninvolvingtherenderingofservicescanbeestimatedreliably,revenueassociatedwiththetransactionshallberecognizedbyreferencethestageofcompletionofthetransactionatthereportingdate.Theoutcomeofatransactioncanbeestimatedreliably.

III.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTING

-continued23.Revenue-continued

23.2Revenuefromrenderingofservices-continuedWhentheoutcomeofthetransactioninvolvingtherenderingofservicescannotbeestimatedreliably,revenueisrecognisedonlytotheextentofthecostsincurredthatwillberecoverable,andthecostsincurredarerecognisedasexpensesfortheperiod.Whenitisnotprobablethatthecostsincurredwillberecovered,revenueisnotrecognised.24.Governmentgrants

Governmentgrantsaretransferofmonetaryassetsandnon-monetaryassetsfromthegovernmenttotheGroupatnoconsideration.AgovernmentgrantisrecognisedonlywhentheGroupcancomplywiththeconditionsattachingtothegrantandtheGroupwillreceivethegrant.Monetarygovernmentgrantsaremeasuredbytheamountreceivedorreceivable.24.1GovernmentgrantrelatedtoanassetAgovernmentgrantrelatedtoanassetisrecognisedasdeferredincome,andamortisedtoprofitorlossovertheusefullifeoftherelatedassetonastraightlinebasis.24.2GovernmentgrantrelatedtoincomeForagovernmentgrantrelatedtoincome,ifthegrantisacompensationforrelatedexpensesorlossestobeincurredinsubsequentperiods,thegrantisrecognisedasdeferredincome,andrecognisedinprofitorlossovertheperiodsinwhichtherelatedcostsarerecognised.Ifthegrantisacompensationforrelatedexpensesorlossesalreadyincurred,thegrantisrecognisedimmediatelyinprofitorlossfortheperiod.AgovernmentgrantrelatedtotheGroup'sdailyactivitiesisrecognizedinotherincomebasedonthenatureofeconomicactivities;agovernmentgrantisnotrelatedtotheGroup'sdailyactivitiesisrecognizedinnon-operatingincome.TheCompany'sgovernmentloanswithbelow-marketrateofinterestaredirectlypaidtotheCompany,andtherelatedlowrateinterestwillwriteoffrelatedborrowingcosts.Thegovernmentloanswithbelow-marketrateofinterestobtainedbyothersubsidiariesoftheGrouparegovernmentloans,whichisprovidedbylocalbureauoffinancethroughbankwithbelow-marketrateofinterest.TheactualamountoftheloanreceivedbytheGrouprecognizedasborrowings,andtherelatedborrowingcostsarecalculatedaccordingtotheprincipaloftheloanandthebelow-marketrate.25.Deferredtaxassets/deferredtaxliabilities

Theincometaxexpensesincludecurrentincometaxanddeferredincometax.25.1CurrentincometaxAtthebalancesheetdate,currentincometaxliabilities(orassets)forthecurrentandpriorperiodsaremeasuredattheamountexpectedtobepaid(orrecovered)accordingtotherequirementsoftaxlaws.

III.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTING

-continued25.Deferredtaxassets/deferredtaxliabilities-continued

25.2DeferredtaxassetsanddeferredtaxliabilitiesFortemporarydifferencesbetweenthecarryingamountsofcertainassetsorliabilitiesandtheirtaxbase,orbetweenthenilcarryingamountofthoseitemsthatarenotrecognisedasassetsorliabilitiesandtheirtaxbasethatcanbedeterminedaccordingtotaxlaws,deferredtaxassetsandliabilitiesarerecognisedusingthebalancesheetliabilitymethod.Deferredtaxisgenerallyrecognisedforalltemporarydifferences.Deferredtaxassetsfordeductibletemporarydifferencesarerecognisedtotheextentthatitisprobablethattaxableprofitswillbeavailableagainstwhichthedeductibletemporarydifferencescanbeutilised.However,fortemporarydifferencesassociatedwiththeinitialrecognitionofgoodwillandtheinitialrecognitionofanassetorliabilityarisingfromatransaction(notabusinesscombination)thataffectsneithertheaccountingprofitnortaxableprofits(ordeductiblelosses)atthetimeoftransaction,nodeferredtaxassetorliabilityisrecognised.Fordeductiblelossesandtaxcreditsthatcanbecarriedforward,deferredtaxassetsarerecognisedtotheextentthatitisprobablethatfuturetaxableprofitswillbeavailableagainstwhichthedeductiblelossesandtaxcreditscanbeutilised.Deferredtaxliabilitiesarerecognisedfortaxabletemporarydifferencesassociatedwithinvestmentsinsubsidiariesandassociates,andinterestsinjointventures,exceptwheretheGroupisabletocontrolthetimingofthereversalofthetemporarydifferenceanditisprobablethatthetemporarydifferencewillnotreverseintheforeseeablefuture.Deferredtaxassetsarisingfromdeductibletemporarydifferencesassociatedwithsuchinvestmentsandinterestsareonlyrecognisedtotheextentthatitisprobablethattherewillbetaxableprofitsagainstwhichtoutilisethebenefitsofthetemporarydifferencesandtheyareexpectedtoreverseintheforeseeablefuture.Atthebalancesheetdate,deferredtaxassetsandliabilitiesaremeasuredatthetaxrates,accordingtotaxlaws,thatareexpectedtoapplyintheperiodinwhichtheassetisrealisedortheliabilityissettled.Currentanddeferredtaxexpensesorincomearerecognisedinprofitorlossfortheperiod,exceptwhentheyarisefromtransactionsoreventsthataredirectlyrecognisedinothercomprehensiveincomeorinshareholders'equity,inwhichcasetheyarerecognisedinothercomprehensiveincomeorinshareholders'equity;andwhentheyarisefrombusinesscombinations,inwhichcasetheyadjustthecarryingamountofgoodwill.Atthebalancesheetdate,thecarryingamountofdeferredtaxassetsisreviewedandreducedifitisnolongerprobablethatsufficienttaxableprofitswillbeavailableinthefuturetoallowthebenefitofdeferredtaxassetstobeutilised.Suchreductioninamountisreversedwhenitbecomesprobablethatsufficienttaxableprofitswillbeavailable.

III.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTING

-continued25.Deferredtaxassets/deferredtaxliabilities-continued

25.3NetoffofincometaxesWhentheGrouphasalegalrighttosettleonanetbasisandintendseithertosettleonanetbasisortorealisetheassetsandsettletheliabilitiessimultaneously,currenttaxassetsandcurrenttaxliabilitiesareoffsetandpresentedonanetbasis.WhentheGrouphasalegalrighttosettlecurrenttaxassetsandliabilitiesonanetbasis,anddeferredtaxassetsanddeferredtaxliabilitiesrelatetoincometaxesleviedbythesametaxationauthorityoneitherthesametaxableentityordifferenttaxableentitieswhichintendeithertosettlecurrenttaxassetsandliabilitiesonanetbasisortorealisetheassetsandliabilitiessimultaneously,ineachfutureperiodinwhichsignificantamountsofdeferredtaxassetsorliabilitiesareexpectedtobereversed,deferredtaxassetsanddeferredtaxliabilitiesareoffsetandpresentedonanetbasis.26.Leases

Leasesareclassifiedasfinanceleaseswheneverthetermsoftheleasetransfersubstantiallyalltherisksandrewardsofownershiptothelessee.Allotherleasesareclassifiedasoperatingleases.26.1.Operatingleaseaccountingmethods26.1.1TheGroupaslesseeunderoperatingleasesOperatingleasepaymentsarerecognizedonastraight-linebasisoverthetermoftherelevantlease,andareeitherincludedinthecostofrelatedassetorchargedtoprofitorlossfortheperiod.Initialdirectcostsincurredarechargedtoprofitorlossfortheperiod.26.1.2TheGroupaslessorunderoperatingleasesRentalincomefromoperatingleasesisrecognizedinprofitorlossonastraight-linebasisoverthetermoftherelevantlease.Initialdirectcostswithmorethananinsignificantamountarecapitalizedwhenincurred,andarerecognizedinprofitorlossonthesamebasisasrentalincomeovertheleaseterm.Otherinitialdirectcostswithaninsignificantamountarechargedtoprofitorlossintheperiodinwhichtheyareincurred.Contingentrentsarechargedtoprofitorlossintheperiodinwhichtheyactuallyarise.27.Changesinaccountingpolicies

TheGrouphasadoptedtheNoticeoftheRevisedFormatofFinancialStatementsforGeneralBusinessEnterprisein2018(CaiKuai(2018)No.15,hereinafterreferredtoasthe"CaiKuaiNo.15Document")releasedbytheMoFon15June2018sincethepreparationofthefinancialstatementsfor2018.

III.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTING

-continued27.Changesinaccountingpolicies-continued

CaiKuaiNo.15Documentrevisedthepresentationitemsonthebalancesheetandtheincomestatement,whichareasfollows:addthelineitemsof"notesandaccountsreceivable","notesandaccountspayable","researchanddevelopmentexpenses";revisethepresentationof"otherpayables","fixedassets","constructioninprogress","otherpayables","long-termpayables"and"administrativeexpenses";lessthelineitemsof"notesreceivable","accountsreceivable","dividendsreceivable"and"interestreceivable","disposaloffixedassets","materialsforconstructionoffixedassets","notespayable","accountspayable","dividendspayable",and"specialpayables",addthelineitemsof"including:interestexpenses"and"interestincome"undertheitemof"financialexpenses";andadjustthepresentationlocationofcertainitemsintheincomestatements.Forchangesofthepresentationitemsstatedabove,theGrouphasappliedretrospectivelyforaccountingtreatmentsandadjustedthecomparabledataoftheprioryearforcomparableperiods.IV.CRITICALJUDGMENTSINAPPLYINGACCOUNTINGPOLICIESANDKEY

ASSUMPTIONSANDUNCERTAINTIESINACCOUNTINGESTIMATESIntheapplicationofaccountingpoliciesassetoutinNoteIII,theGroupisrequiredtomakejudgments,estimatesandassumptionsaboutthecarryingamountsofitemsinthefinancialstatementsthatcannotbemeasuredaccurately,duetotheinternaluncertaintiesoftheoperatingactivities.Thesejudgments,estimatesandassumptionsarebasedonhistoricalexperienceoftheGroup'smanagementaswellasotherfactorsthatareconsideredtoberelevant.Actualresultsmaydifferfromtheseestimates.TheGroupperiodicallyreviewthejudgments,estimatesandassumptionsaboveonagoingconcernbasis.Forthosechangesinaccountingpoliciesthatonlyaffectcurrentfinancialstatements,theinfluencesarerecognizedincurrentperiod.Forthosechangesinaccountingpoliciesthataffectbothcurrentandfuturefinancialstatements,theinfluencesarerecognizedinbothcurrentandprospectiveperiods.KeyassumptionsanduncertaintiesinaccountingestimatesThefollowingarethekeyassumptionsanduncertaintiesinaccountingestimatesattheendofthereportingperiod,thatmayhaveasignificantriskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitiesinthefutureperiod.DeferredtaxassetsrecognizedfordeductiblelossesDeferredtaxassetsarerecognizedforallunusedtaxlossestotheextentthatitisprobablethattaxableprofitwillbeavailableagainstwhichthelossescanbeutilized.Significantmanagementjudgmentisrequiredtodeterminetheamountofdeferredtaxassetsthatcanberecognized,baseduponthelikelytimingandleveloffuturetaxableprofitstogetherwithfuturetaxplanningstrategies.

IV.CRITICALJUDGMENTSINAPPLYINGACCOUNTINGPOLICIESANDKEY

ASSUMPTIONSANDUNCERTAINTIESINACCOUNTINGESTIMATES-continuedSignificantaccountingjudgmentsandaccountingestimates-continuedDepreciationoffixedassetsAssetoutinNoteIII-15,thedepreciationiscalculatedonthestraightlinebasistowrite-offthecostofeachitemoffixedassetstoitsresidualvalueoveritsestimatedusefullife.TheGroup'smanagementdeterminestheestimatedusefullivesforitsfixedassets.Thisestimateisbasedonthehistoricalexperienceoftheactualusefullivesoffixedassetsofsimilarnatureandfunctions.Ifthepreviousestimateshavesignificantchanges,anddepreciationexpenseswillbeadjustedinthefutureperiods.Impairmentoflong-termassetsTheGroupassesseswhethertherecoverableamountislowerthanthebookvalue.Ifthereareanyindicatorsthatthebookvalueofnon-currentassetscannotbefullyrecoverable,impairmentlossesshouldberecorded.Therecoverableamountisthehigherofthefairvalueofalong-termassetlesscostsofdisposalandthepresentvalueofthefuturecashflowsexpectedtobederivedfromtheasset.AsitisdifficultfortheGrouptoobtainthequotedmarketpriceofthelong-termassetsconcerned,thefairvalueoftheassetscannotbereliablyestimated.Inassessingthepresentvalueoffuturecashflows,themanagementoftheGroupisrequiredtomakesignificantjudgementsontheassumptionsincludingsalesgrowthrate,futuresellingprice,productioncost,operatingexpensesanddiscountrate,whichareofhighuncertainty.YantaiChangyuPioneerWineCompanyLimitedResearchandDevelopmentCo.,Ltd.("R&DCentre"),subsidiaryoftheCompanystartedproductionattheendof2017beingasanewmainproductionbaseoftheCompany.In2018,theproductionofR&DCentreaccountsformorethan60%oftheGroup’sproduction.R&DCentre’stotalinvestmentbudgetinitslong-termassetsapproximatesRMB4.5billion,whichisalarge-scaleinvestment.Asat31December2018,thebookvaluesofrelevantlong-termassetsincludingfixedassets,constructioninprogressandintangibleamountedtoRMB3.5billion,accountingfor26.6%ofthetotalassetsintheconsolidatedfinancialstatements,whichexertssignificantinfluenceontheconsolidatedfinancialstatements.Asthereislittlespaceforthedevelopmentofthedomesticwinemarket,themanagementoftheCompanyfacesgreatoperatingpressurestoapplytheoff-takepotentialofthenewproductionbaseinanefficientway.Inaddition,therearecertainrisksofimpairmentforsuchlong-termassets.Themanagementperformstheimpairmenttestbydeterminingiftherecoverableamountislessthanthebookvalueoflong-termassetsanddeterminestherecoverableamountbasedonthepresentvalueofexpectedfuturecashflows.Intheassessmentofthefuturecashflows,themanagementisrequiredto,basedonareasonableandsupportablebasis,assessthecashflowsforthefuture5years(“projectingperiod”)andcashflowsaftertheprojectingperiod(“subsequentperiod”)andmakesignificantjudgementsandaccountingestimatesinthediscountrate,salesgrowthrate,futuresellingprice,productioncost,operatingexpensesandotherkeyassumptions.Accordingtotheresultoftheimpairmenttest,themanagementbelievesthatasat31December2018,theabovelong-termassetsoftheGroupwerenotimpaired.Therefore,noimpairmentprovisionismade.

IV.CRITICALJUDGMENTSINAPPLYINGACCOUNTINGPOLICIESANDKEY

ASSUMPTIONSANDUNCERTAINTIESINACCOUNTINGESTIMATES-continuedSignificantaccountingjudgmentsandaccountingestimates-continuedInventoryprovisionbasedonnetrealizablevalueTheinventoriesaremeasuredonthelowerofcarryingvalueandnetrealizablevalue,andprovisionshouldbemadeforimpairmentonobsoleteandslowmovinginventories.Thegroupwillreassesswhetherthenetrealizablevalueislowerthanthecarryingcostattheendofeachyear.Thedeterminationofthefairvalueofidentifiableassetsandliabilitiesassociatedwithbusinesscombination.Forthecostofbusinesscombination,theGroupallocatesthepurchasepricebasedonfairvalueofrelativelyidentifiableassetsandliabilities.Whenthefairvalueofrelativelyidentifiableassetsandliabilitiesareevaluatedbythepresentvalueofitsfuturecashflows,Themanagementneedestimatethegrowthrateofsalesbasedonfuturemarketsupplyanddemandtopredictcashflows,andconsideredtheproperdiscountrateforcalculating,managementneedusemajoraccountingestimatesandjudgmentsintheprogress.

V.TAXES1.Themaintaxesandtaxrateareasfollows:

(1)China

ValueaddedtaxVATisleviedat6%,10%,11%,16%and17%ontheinvoiced

amountafterdeductionofeligibleinputVAT.ConsumptiontaxTheconsumptiontaxofthegroupisleviedongrossrevenue

atratesrangingfrom10%to20%.CitydevelopmenttaxLeviedat7%oftotalbusinesstaxpayment.CorporateincometaxTheGroupissubjecttoacorporateincometaxrateof25%

onitstaxableincome.

(2)France

ValueaddedtaxVATisleviedat20%ontheinvoicedamountafterdeduction

ofeligibleinputVAT.CorporateincometaxTheGroupissubjecttoacorporateincometaxrateof33.3%

onitstaxableincome.(3)Spain

ValueaddedtaxVATisleviedat21%ontheinvoicedamountafterdeduction

ofeligibleinputVAT.CorporateincometaxTheGroupissubjecttoacorporateincometaxrateof28%

onitstaxableincome.(4)Chile

ValueaddedtaxVATisleviedat19%ontheinvoicedamountafterdeduction

ofeligibleinputVAT.CorporateincometaxTheGroupissubjecttoacorporateincometaxrateof27%

onitstaxableincome.

(5)Australia

ValueaddedtaxVATisleviedat10%ontheinvoicedamountafterdeduction

ofeligibleinputVAT.CorporateincometaxTheGroupissubjecttoacorporateincometaxrateof30%

onitstaxableincome.OtherthantaxincentivesstatedinNoteV-2,applicabletaxratesoftheGroupin2018and2017areallstatedasabove.

V.TAXES-continued2.Taxincentivesandrelativepermit

NingxiaChangyuGrapeGrowingCo.,Ltd.("NingxiaGrowing"),asubsidiaryoftheGroup,whoseprincipalactivityisgrapegrowingisincorporatedinNingxiaHuizuAutonomousRegion.Accordingtoclause27ofPRCCorporateIncomeTaxandclause86ofPRCCorporateIncomeTaxMeasuresforImplementation,NingxiaGrowingenjoysanexemptionofcorporateincometax.YantaiChangyuGrapeGrowingCo.,Ltd.("GrapeGrowing"),abranchoftheCompany,whoseprincipalactivityisgrapegrowingisincorporatedinZhifuDistrict,YantaiCity,ShandongProvince.Accordingtoclause27ofPRCCorporateIncomeTaxandclause86ofPRCCorporateIncomeTaxMeasuresforImplementation,GrapeGrowingenjoysanexemptionofcorporateincometax.XinjiangTianzhuCo.,Ltd("XinjiangTianzhu"),asubsidiaryoftheCompany,isanenterpriseofwineproductionandsalesincorporatedinShihezicity,XinjiangWeizuAutonomous.InaccordancewiththeNoticeonTaxPolicyIssuesconcerningFurtherImplementationoftheWesternChinaDevelopmentStrategy(CaiShui[2011]No.58),XinjiangTianzhuisqualifiedtoenjoypreferentialtaxationpolicies,whichmeansitcanpaycorporateincometaxatapreferentialrateof15%fortheperiodfrom2015to2020.XinjiangBabaoBaronChateauCo.,Ltd.("ShiheziChateau"),asubsidiaryoftheCompany,isanenterpriseofwineproductionandsalesincorporatedinShihezicity,XinjiangWeizuAutonomous.InaccordancewiththeNoticeonTaxPolicyIssuesconcerningFurtherImplementationoftheWesternChinaDevelopmentStrategy(CaiShui[2011]No.58),ShiheziChateauisqualifiedtoenjoypreferentialtaxationpolicies,whichmeansitcanpaycorporateincometaxatapreferentialrateof15%fortheperiodfrom2015to2020.VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS1.Cashandbank

31/12/201831/12/2017

RMBRMBCash114,335136,973Bankbalance1,382,399,7491,278,397,711Othercurrencyfund93,186,393123,987,825

________________________Total1,475,700,4771,402,522,509

________________________

________________________At31December2018,thebalanceofrestrictedcashoftheGroupisasfollows:

31/12/201831/12/2017

RMBRMBHomemaintenancefunds2,611,3502,645,410

________________________________________________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued1.Cashandbank-continued

Asat31December2018,theGroup'sothermonetaryassetsisasfollows:

31/12/201831/12/2017

RMBRMBResearchandDevelopmentCo.,Ltd("R&DCentre")

pledgeddepositforlong-termpayables46,100,00061,700,000Depositforletterofcredit44,540,85057,946,190Alipayaccountbalance2,483,8164,317,635DepositforCompanycards51,72714,000DepositforICBCplatform10,00010,000

________________________

93,186,393123,987,825________________________________________________Asat31December2018,theGroup'stermdepositswithoriginalmaturityofmorethanthreemonthswhenacquiredisRMB173,042,400withinterestrate1.50%-3.80%(31December2017:RMB95,000,000).2.Notesandaccountsreceivable2.1Presentedbycategories

31/12/201831/12/2017

RMBRMBNotesreceivable288,667,988244,796,818Accountsreceivable242,153,083263,796,355

________________________Total530,821,071508,593,173

________________________________________________2.2Notesreceivable(1)Categoriesofnotesreceivable

31/12/201831/12/2017

RMBRMBBankacceptances288,667,988244,796,818

________________________________________________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued2.Notesandaccountsreceivable-continued2.2Notesreceivable-continued(2)Notesreceivablewhichhavebeenpledgedassecurityattheendoftheperiod

Asat31December2018,therewasnopledgednotesreceivable(31December2017:Nil).(3)Notesreceivableendorsedbutarenotyetdueatthebalancesheetdate

31/12/201831/12/2017

RMBRMB

Bankacceptances182,829,674188,855,843

________________________________________________

Asat31December2018,notesendorsedbytheGrouptootherpartieswhicharenotyetdueat

theendoftheperiodisRMB182,829,674(31December2017:RMB188,855,843).Thenotesare

usedforpaymenttosuppliersandconstructions.TheGroupbelievesthatduetogoodreputation

ofbank,theriskofnotesnotacceptingbybankonmaturityisverylow,thereforederecognisethe

notereceivablesendorsed.Ifthebankisunabletopaythenotesonmaturity,accordingtothe

relevantlawsandregulationsofChina,theGroupwouldundertakelimitedliabilityforthenotes.(4)Notesreceivablereclassifiedtoaccountsreceivableduetothedrawers'inabilitytosettlethenote

onmaturity

Asat31December2018,nonotesreceivablewerereclassifiedasaccountsreceivableduetothe

defaultofdrawer(31December2017:Nil).2.3Accountsreceivable(1)Disclosureofaccountsreceivablebycategories:

31/12/201831/12/2017

BaddebtsCarryingBaddebtsCarryingAmountprovisionamountAmountprovisionamountAmountProportionAmountRatioAmountAmountProportionAmountRatioAmount

RMB%RMB%RMBRMB%RMB%RMBAccountsreceivableforwhich

baddebtprovisionhasbeenassessedindividually242,153,083100.0--242,153,083263,796,355100.0--263,796,355

____________________________________________________________________________________________Thenormalcredittermisonemonth,whichcanbeextendedtooneyearforcertaincustomers.Theaccountsreceivableareinterest-free.Asat31December2018,ownershiprestrictedaccountsreceivableisRMB52,015,032(31December2017:RMB46,337,062),referringtoNoteVI-45.

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued2.Notesandaccountsreceivable-continued2.3Accountsreceivable-continued(1)Disclosureofaccountsreceivablebycategories-continued

Theaginganalysisisasfollows:

31/12/201831/12/2017

RMBRMBWithin1year240,312,773263,112,7141to2years1,566,622683,6412to3years273,688-

________________________

242,153,083263,796,355________________________________________________(2)Recognitions,collectionsandreversalsduringthecurrentyear:

Asat31December2018,therewasnobaddebtprovisionforaccountsreceivable(31December2017:Nil).Therewasnobaddebtprovisionmade,reversedorwritten-offbymanagementin2018(2017:Nil).(3)Topfiveentitieswiththelargestbalancesofaccountsreceivable:

RelationshipPercentageofNamewiththeGroupAmountAgingtotalreceivables

RMB%

Sainsbury'ssupermarketsLtdThirdparty17,428,889Within1year7.2NongongshangSupermarket

(Group)Co.,LtdThirdparty10,928,458Within1year4.5SLIGROB.V.Thirdparty6,732,175Within1year2.8Vi?edosyBodegasLasPircasThirdparty6,430,387Within1year2.7SuguoSupermarketCo.,Ltd.Thirdparty6,415,505Within1year2.6

___________

47,935,41419.8

______________________

3.Prepayments(1)Theaginganalysisisasfollows:

31/12/201831/12/2017AmountRatioAmountRatio

RMB%RMB%Within1year4,219,949100.02,417,931100.0

________________________________________________________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued3.Prepayments-continued(2)Asat31December2018,thetopfiveofprepaymentswereasfollows:

ReasonPercentageofRelationshipforbeingtotaladvanceswiththeGroupAmountAgingoutstandingtosuppliers

RMB%ShanghaiBenchu

Trade&DevelopmentCo.,Ltd.Thirdparty345,600Within1yearGoodsnotreceived8.2CarringtonEstateT/AKarikariEstaThirdparty340,498Within1yearGoodsnotreceived8.1DONELLIVINIS.P.A.Thirdparty304,204Within1yearGoodsnotreceived7.2YantaiEconomicandTechnologicalDevelopmentZoneThermalCo.,LtdThirdparty250,000Within1yearPrepaidheatingfees5.9YantaiCihangInternationalFreight

AgentCo.,Ltd.Thirdparty186,392Within1yearPrepaidagencyfees4.4

__________

1,426,69433.8

____________________4.Otherreceivables4.1Presentedbycategories

31/12/201831/12/2017

RMBRMBInterestreceivable1,332,681240,968Otherreceivables21,303,40518,737,454

______________________Total22,636,08618,978,422

______________________

______________________(1)Categoriesofinterestreceivable

31/12/201831/12/2017

RMBRMBInterestreceivableonbankdeposits1,332,681240,968

__________________________________

(2)Overdueinterest

Asat31December2018,therewasnooverdueinterestreceivable(31December2017:Nil).

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued4.Otherreceivables-continued4.2Otherreceivables(1)Disclosureofotherreceivablesbycategories

31/12/201831/12/2017

BaddebtsCarryingBaddebtsCarryingAmountprovisionamountAmountprovisionamountAmountProportionAmountRatioAmountAmountProportionAmountRatioAmount

RMB%RMB%RMBRMB%RMB%RMBOtherreceivableforwhich

baddebtprovisionhasbeenassessedindividually21,303,405100.0--21,303,40518,737,454100.0--18,737,454

____________________________________________________________________________________________Theaginganalysisisasfollows:

31/12/201831/12/2017

BaddebtsCarryingBaddebtsCarryingAmountprovisionamountAmountprovisionamountAmountProportionAmountAmountAmountProportionAmountAmount

RMB%RMBRMBRMB%RMBRMBWithin1year11,293,90853.0-11,293,90813,214,30170.5-13,214,3011to2years6,693,70231.5-6,693,7021,937,96110.3-1,937,9612to3years1,922,9989.0-1,922,9982,273,59112.2-2,273,591Over3years1,392,7976.5-1,392,7971,311,6017.0-1,311,601

________________________________________________

21,303,405100.0-21,303,40518,737,454100.0-18,737,454

________________________________________________________________________________________________(2)Accrual,reversalandwritten-offduringthecurrentyear

Asat31December2018,nobaddebtprovisionwasmadeforotherreceivables(2017:RMB354,805).(3)Otherreceivableswrittenoffinthecurrentyear

Asat31December2018,theGrouphasnootherreceivableswrittenoff(31December2017:

RMB354,805).(4)Disclosureofotherreceivablesbycategories

31/12/201831/12/2017

RMBRMB

Deposit10,453,62410,075,901

Pettycashreceivable2,274,0382,215,146

Investmentfund-2,050,000

Refundofconsumptiontax,realestatetax6,273,8822,451,188

Others2,301,8611,945,219

________________________

21,303,40518,737,454________________________________________________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued4.Otherreceivables-continued4.2Otherreceivables-continued(5)Fiveentitieswiththelargestbalancesofotherreceivables

Asat31December2018,thetopfiveofotherreceivablesareasfollows:

PercentageoftotalBaddebtNatureAmountAgingotherreceivablesClosingbalance

RMB%RMBYantaiDevelopmentZoneConstructionIndustryAssociationConstructiondeposit7,709,477Within3years36.1-ZhejiangTmallTechnologyCo.,Ltd.Shopdeposits867,426Within1year4.1-YantaiShenmaPackagingCo.,Ltd.("ShenmaPackaging")Leasereceivables813,440Within1year3.8-YantaiDevelopmentZone

PowerCompanyDeposit140,000Within3years0.7-YantaiDevelopmentZone

HeatCompanyDeposit130,000Within3years0.6-

______________________

9,660,34345.3-

____________________________________________

5.Inventories(1)Disclosureofinventoriesbycategories

31/12/201831/12/2017

NetcarryingNetcarryingBalanceProvisionamountBalanceProvisionamount

RMBRMBRMBRMBRMBRMBRawmaterial67,267,035-67,267,03566,881,090-66,881,090Workinprogress1,787,819,923-1,787,819,9231,568,230,851-1,568,230,851Finishedgoods894,187,725(24,683,226)869,504,499864,097,497(25,595,392)838,502,105

____________________________________________________

2,749,274,683(24,683,226)2,724,591,4572,499,209,438(25,595,392)2,473,614,046

________________________________________________________________________________________________________

(2)Inventoryprovision

ClosingbalanceRecognizedReversalWrittenoffOpeningbalance

RMBRMBRMBRMBRMBProvisionfordeclinein

valueofinventories25,595,392749,134(1,661,300)-24,683,226

____________________________________________________________________________________6.Othercurrentassets

31/12/201831/12/2017

RMBRMBPrepaidtaxes24,077,32322,911,298PendingdeductVATonpurchase233,087,707206,529,504Prepaidrent1,511,3661,381,957

_______________________

258,676,396230,822,759______________________________________________VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued

7.Available-for-salefinancialassets(1)Available-for-salefinancialassets

31/12/201831/12/2017AmountImpairmentCarryingamountAmountImpairmentCarryingamount

RMBRMBRMBRMBRMBRMBAvailable-for-sale

equityinstrumentsmeasuredatcost467,251-467,251467,251-467,251

________________________________________________________________________________(2)Available-for-salefinancialassetsmeasuredatcost

CarryingamountProvisionforimpairmentlossesProportionofCash

votingpowerdividend

inthefortheInvesteeOpeningIncreaseDecreaseClosingOpeningIncreaseDecreaseClosinginvesteeperiod

RMBRMBRMBRMBRMBRMBRMBRMB(%)RMBOther467,251--467,251----

________________________________________________________________________________TheGroupholdingequityratiosofinvestmentcompaniesarelessthan1%.Investmentcompaniesareallunlistedcompanies,andtheirfairvaluecannotbemeasuredreliably,therefore,theGroupusescostmethodtomeasuretheseavailable-for-salefinancialassets.8.Investmentproperties

Investmentpropertiesmeasuredbycostmethod

Buildings

RMBTotaloriginalcarryingamount31/12/201738,347,283IncreaseTransferfromfixedassets32,606,762

____________31/12/201870,954,045

____________Totalaccumulateddepreciation31/12/201719,879,294IncreaseTransferfromfixedassets17,644,360Additions1,857,902

____________31/12/201839,381,556

____________Totalcarryingamount31/12/201831,572,489

________________________31/12/201718,467,989

________________________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued9.Fixedassets

(1)Detailsoffixedassets

BuildingsMachineryMotorVehiclesTotal

RMBRMBRMBRMBTotaloriginalcarryingamount31/12/20174,508,868,6842,247,350,29328,689,4156,784,908,392IncreasePurchase4,490,675235,607,780923,222241,021,677TransferfromCIP252,035,224202,251,6341,708,803455,995,661Acquisitionincrease(VII-1)33,048,30715,981,692-49,029,999DecreaseDisposal(4,409,703)(35,392,585)(4,740,801)(44,543,089)TransfertoInvestment

properties(VI-8)(32,606,762)--(32,606,762)

______________________________________

31/12/20184,761,426,4252,665,798,81426,580,6397,453,805,878

______________________________________

Totalaccumulateddepreciation31/12/2017512,643,486922,944,52020,236,4171,455,824,423IncreaseAdditions126,510,348168,695,4712,632,539297,838,358DecreaseDisposal(242,705)(29,575,754)(2,125,751)(31,944,210)TransfertoInvestment

properties(VI-8)(17,644,360)--(17,644,360)

______________________________________

31/12/2018621,266,7691,062,064,23720,743,2051,704,074,211

______________________________________

Totalcarryingamount31/12/20184,140,159,6561,603,734,5775,837,4345,749,731,667

____________________________________________________________________________

31/12/20173,996,225,1981,324,405,7738,452,9985,329,083,969

____________________________________________________________________________Asat31December2018,fixedassetswithownershiprestrictedareRMB412,006,421(31December2017:RMB145,009,923).PleaserefertoNoteVI-45indetail.Asat31December2018,theGrouphasnetfixedassetsthataretemporarilyidleofRMB59,718,155(31December2017:Nil).TheGrouphasnofixedassetsacquiredunderfinanceleasesorfixedassetsclassifiedasheldforsale(31December2017:RMB2,000,197).(2)Fixedassetsthroughoperatinglease

Amount

RMBMachinery134,111

______________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued9.Fixedassets-continued(3)Fixedassetsofwhichcertificatesoftitlehavenotbeenobtained

Asat31December2018,buildingswithoutpropertycertificateareasfollows:

ReasonswhycertificatesAmountoftitlehavenotbeenobtained

RMBResearchandDevelopmentCo,LtdIndustryProductionCentre1,755,472,791ProcessingChanganChateauDormitorybuilding,mainbuilding284,890,228ProcessingBeijingChateauEuropeantown,main,servicebuilding187,565,493ProcessingDingLuoTeChateaumainbuilding83,218,432ProcessingXinjiangTianzhufermentationsandstoragewarehouse17,768,840ProcessingIceWineChateauofficebuildingandpackingworkshop9,198,373ProcessingJingyangfactoryfermentationbuilding4,171,918ProcessingFermentationcentreoffice,experimentbuildingandworkshop3,653,494ProcessingKylinPackagingfinishedgoodswarehouseandworkshop2,396,850ProcessingSalesCompanyofficebuildings1,123,984Processing

__________

2,349,460,403

____________________Thebuildingswithoutpropertycertificateabovehavenosignificantinfluenceonthegroup'smanagement.10.Constructioninprogress

(1)Constructioninprogress:

31/12/201831/12/2017

RMBRMBR&DCentre("ChangyuWineintegrational

Construction")Project608,553,617883,731,540ChanganChateauConstructionProject39,793,89353,290,036NingxiaChateauConstructionProject47,163,86335,711,269ShiheziChateauConstructionProject23,664,12425,463,724SalesCompanyconstructionproject17,985,88211,355,685OthercompaniesconstructionProject22,135,21216,589,315

________________________

759,296,5911,026,141,569________________________________________________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued10.Constructioninprogress-continued(2)Changesinsignificantconstructioninprogress:

Budget31/12/2017AdditionTransfertoPPETransferto31/12/2018StatusTotalaccumulatedCapitalizinginterestCapitalizinginterestforthisperiodInterestcapitalizationrateFinancedby
Lone-termprepaidexpense
RMBRMBRMBRMBRMBRMBRMBRMB%
ChangyuWineintegrationalConstruction"4,505,780,000883,731,540118,142,779(372,914,273)(20,406,429)608,553,61774.314,271,8375,843,8721.2%及4.3%LoansfromfinancialinstitutionsandSelf-raised
ChanganChateauConstructionProject620,740,00053,290,03612,149,197(25,645,340)-39,793,893108.7---Self-raised
ShiheziChateauConstructionProject780,000,00025,463,72437,629,835(39,429,435)-23,664,12496.3---Self-raised
NingxiaChateauConstructionProject414,150,00035,711,26914,307,265(2,854,671)-47,163,863102.1---Self-raised
SalesCompanyconstructionproject161,350,00011,355,6856,893,191(262,994)-17,985,88297.7---Self-raised

TheinterestcapitalizedinconstructioninprogressisRMB5,843,872in2018(2017:RMB6,138,242).

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued11.Bearerbiologicalassets

BearerbiologicalassetsareVines,whichmeasuredincostmethod

ImmatureMaturebiologicalassetsbiologicalassetsTotal

RMBRMBRMBTotaloriginalcarryingamount31/12/201712,175,000217,537,353229,712,353IncreaseCultivatedincrease19,371,297-19,371,297Transfertomatureassets(17,708,689)17,708,689-

________________________________31/12/201813,837,608235,246,042249,083,650

________________________________Totalaccumulateddepreciation31/12/2017-27,782,46527,782,465IncreaseAdditions-12,034,81212,034,812

________________________________31/12/2018-39,817,27739,817,277

________________________________Totalnetcarryingamount31/12/201813,837,608195,428,765209,266,373

________________________________

________________________________31/12/201712,175,000189,754,888201,929,888

________________________________

________________________________Asat31December2018,thereisnobiologicalassetwithownershiprestricted.(31December2017:Nil)Asat31December2018,thereisnoindicationthatbiologicalassetsmaybeimpaired,andnoprovisionismade.(31December2017:Nil)

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued12.Intangibleassets

(1)Intangibleassets

LanduserightsSoftwareuserightsTrademarkTotal

RMBRMBRMBRMB

Totaloriginalcarryingamount31/12/2017521,731,13973,666,754159,702,508755,100,401IncreasePurchase1,596,780922,809105,8272,625,416Acquisitionincrease(VII-1)4,924,9921,232,49410,260,40016,417,886

_______________________________________

31/12/2018528,252,91175,822,057170,068,735774,143,703

_______________________________________

Totalaccumulateddepreciation31/12/201767,547,77221,516,74110,586,99199,651,504Increase

Additions10,523,1385,206,0743,289,52819,018,740

_______________________________________

31/12/201878,070,91026,722,81513,876,519118,670,244

_______________________________________

Totalcarryingamount31/12/2018450,182,00149,099,242156,192,216655,473,459

______________________________________________________________________________

31/12/2017454,183,36752,150,013149,115,517655,448,897

______________________________________________________________________________(2)Landuseright'slocationandyearsareasfollows:

Item31/12/201831/12/2017

RMBRMBInthePRC(within50years)419,300,592428,226,950OutofthePRC(morethan50years)30,881,40925,956,417

_______________________

450,182,001454,183,367______________________________________________Asat31December2018,theGrouphaslanduserightwithinfiniteusefullivesofRMB30,881,409(31December2017:RMB25,956,417),representingthefreeholdlandheldbyChileIndomitaWineGroupandAustraliaKilikanoonEstateunderrelevantChileandAustralialaws,onwhichtheamortizationisnotrequired.Asat31December2018,theGrouphastrademarkwithinfiniteusefullivesofRMB154,150,933(31December2017:143,890,533),whichisheldbyChileIndomitaWineGroupandAustraliaKilikanoonEstate.Therecoverableamountofthetrademarkisdeterminedaccordingtothepresentvalueoftheexpectedfuturecashflowsgeneratedfromtheassetgrouptowhichthesingleassetsoftrademarkrightbelongs.Themanagementpreparesthecashflowprojectionforfuture5years(the"projectingperiod")basedonthelatestfinancialbudgetassumption,andestimatesthecashflowsafterthefuture5years(the"subsequentperiod").Thediscountratesusedinthecashflowprojectionsare9.0%and10.1%,respectively.Akeyassumptionintheestimateoffuturecashflowsistherevenuegrowthrateintheprojectingperiod.SuchrevenuegrowthrateisdeterminedbasedontheindustryandtheexpectedgrowthrateofChileIndomitaWineGroupandAustraliaKilikanoonEstate.Therevenuegrowthratesinthesubsequentperiodare3.0%and2.5%,respectively.

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued12.Intangibleassets-continued(2)Landuseright'slocationandyearsareasfollows:-continued

TheGrouprecognizesthetrademarkwithinfiniteusefullivesasintangibleassets,theimpairmentassessmentofwhichismadeattheendofeachreportingyear.Themanagementbelievesthatanyreasonablechangeoftheaboveassumptionswillnotresultinthetotalbookvalueoftheassetgrouptowhichthesingleassetsoftrademarkrightbelongsexceedingitsrecoverableamount.Accordingtotheresultofimpairmentassessment,bytheendof31December2018,themanagementbelievesthereisnoimpairmentlossonthosetrademarkwithinfiniteusefullivesoftheGroup.Asat31December2018,theintangibleassetwithrestrictedownershipisRMB218,070,414(December31,2017:RMB164,051,996),PleaserefertoNoteVI-45indetail.13.Goodwill

Investee31/12/2017IncreaseDecrease31/12/2018

RMBRMBRMBRMBEtablissementsRoulletFransac

("FransacSales")13,112,525--13,112,525DicotPartners,S.L

("Dicot")92,391,901--92,391,901SocieteCivileArgricoleDuChateau

DeMirefleurs("Mirefleurs")15,761,440--15,761,440IndomitaWine6,870,115--6,870,115AustraliaKilikanoonEstate-37,063,130-37,063,130

________________________________

Total128,135,98137,063,130-165,199,111

________________________________________________________________TheGroupacquiredFransacSales,DicotandMirefleursandChileIndomitaWineGroupinDecember2013,September2015January2016andJuly2017respectively,resultinginrespectivegoodwillamountingtoRMB13,112,525,RMB92,391,901,RMB15,761,440andRMB6,870,115.TheGroupacquiredAustraliaKilikanoonEstateinJanuary2018,resultinggoodwillamountingtoRMB37,063,130,whichhavebeenallocatedtocorrespondingassetgroupsforimpairmenttesting.Therecoverableamountofthegroupofassetsisdeterminedbythepresentvalueofitsfuturecashflows.Futurecashflowprojectionsaremadebasedontherecentlyfinancialbudgetsforthefuture5yearsperiod(projectingperiod)andpresumethatcashflowsaftertheprojectingperiod(subsequentperiod).DiscountrateusedincalculatingtherecoverableamountsofFransacSales,DicotMirefleurs,IndomitaWineandAustraliaKilikanoonEstateare11.1%,8.9%,11.1%,9.0%and10.1%(2017:10.3%,8.5%,10.3%,9.6%andN/A)respectively.Onekeyassumptioninprojectingfuturecashflowsisthegrowthrateofsalesinprojectingperiod,whichiscomputedbasedontheexpectedgrowthrateoftheindustryandeachgroupofassets.GrowthrateofsalesinsubsequentperiodofFransacSales,Dicot,Mirefleurs,IndomitaWineandAustraliaKilikanoonEstateis2.0%,2.0%,2.0%,3.0%,2.5%(2017:2%,2%,2%,3%andN/A)respectively.ManagementoftheGroupbelievesthatanyreasonablechangesintheaboveassumptionswillnotcausebookvaluesofthesesubsidiariesexceedstheirrecoverableamounts.

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued13.Goodwill-continued

Accordingtotheassessment,theGroupbelievesthatnoimpairmentprovisionneedtobemadeforgoodwillinthereportingperiod.14.Long-termprepaidexpenses

31/12/2017IncreaseAmortization31/12/2018

RMBRMBRMBRMBLandleaseprepayments56,365,385-(2,147,622)54,217,763Landrequisitionfee43,976,036-(548,297)43,427,739Greeningfee125,628,33424,511,623(8,915,485)141,224,472Leaseholdimprovement873,2633,306(100,922)775,647Others3,166,2132,198,373(369,791)4,994,795

______________________________________

230,009,23126,713,302(12,082,117)244,640,416

____________________________________________________________________________Note:ThegreeningfeetransferredfromCIPtolong-termprepaidexpensesamountedtoRMB20,406,429,refertoNoteVI-10fordetails.15.Deferredtaxassets/liabilities

Deferredtaxassetsanddeferredtaxliabilitiesarenotrelatedtoincometaxofthesametaxauthoritiesofthesametaxsubjects,thusnotpresentedwiththenetamountafternetting.

(1)Deferredtaxassets:

31/12/201831/12/2017
TemporarydifferencesDeferredtaxassetsTemporarydifferencesDeferredtaxassets
RMBRMBRMBRMB
Unrealizedprofitfromintra-companytransactions602,476,583150,619,145618,591,681154,647,920
Unpaidbonus141,808,25735,485,81494,462,72223,671,611
Retirementbenefit26,186,2436,546,56127,980,8576,995,214
Assetimpairmentprovision24,683,2266,170,80725,595,3926,398,848
Deductiblelosses262,937,99967,566,387345,639,05988,584,337
Deferredincome86,227,29318,868,963109,797,05424,285,203
Assetsimpairmentloss661,415178,582684,622184,848
Accruedrebate--13,413,6553,353,415
1,144,981,016285,436,2591,236,165,042308,121,396

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued15.Deferredtaxassets/liabilities-continued

(2)Deferredtaxliabilities

Item31/12/201831/12/2017
TaxabletemporarydifferenceDeferredtaxliabilityTaxabletemporarydifferenceDeferredtaxliability
RMBRMBRMBRMB
Revaluationsurplusinbusinesscombinationnotundercommoncontrol81,338,13022,010,64789,316,82324,264,203

(3)Deferredtaxassetsandliabilitiesnotrecognized

31/12/201831/12/2017

RMBRMBDeductiblelosses171,430,831150,320,039

______________________________________________(4)Deductiblelossesnotrecognizedasdeferredtaxassetswillexpirein:

31/12/201831/12/2017

RMBRMB2018--20197,311,2737,311,273202045,960,76645,960,766202182,685,21382,685,213202214,362,78714,362,787202321,110,792-

________________________

171,430,831150,320,039________________________________________________16.Short-termborrowings

31/12/201831/12/2017

RMBRMBCreditloans605,202,708648,494,624Mortgagedloans79,467,83265,939,662Guaranteedloan3,331,870-

________________________

688,002,410714,434,286________________________________________________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued16.Short-termborrowings-continued

Asat31December2018,short-termborrowingsdetailwereasfollows:

NatureofInterestrateYearendedLoansamountExchangerateRMBinterestincontractInterestrate

%%Creditloans(RMB)400,000,0001.0000400,000,000Floating1yearLPR-0.04(Note1)4.35Creditloans(RMB)150,000,0001.0000150,000,000FloatingAnnualbenchmarkrate4.35Creditloans(EUR)912,4557.84737,160,308Fixed0.86~2.530.86~2.53Creditloans(USD)7,000,0006.863248,042,400Fixed3.97~4.903.97~4.90Mortgagedloans(EUR)6,628,3997.847352,015,032Fixed0.35~0.950.35~0.95Mortgagedloans(USD)4,000,0006.863227,452,800Fixed4.22~4.384.22~4.38Guaranteedloan(AUD)690,5434.82503,331,870Fixed3.003.00

_________

688,002,410

__________________Note1:LPRisthebasicinterestrateofthePeople'sBankofChina.Asat31December2018,mortgagedloanswereHaciendayVinedosMarquesdelAtrio,S.L.U("Atrio")factoringofaccountsreceivablefromBancodeSabadell,S.A.etc.EUR6,628,399(translatedasRMB52,015,032)(31December2017:RMB46,337,062).MortgagedloanswereIndomitaWinemortgagedPeso7,642,470,000(translatedasRMB75,601,849)fixedassetsfromBBVAbankUSD4,000,000(translatedasRMB27,452,800)(December31,2017:RMB19,602,600).AustraliaKilikanoonEstatehasguaranteedloansof690,543Australiandollars(equivalenttoRMB3,331,870)(31December2017:Nil).17.Notesandaccountspayable

Theaginganalysisofaccountspayableareasfollows

31/12/201831/12/2017

RMBRMBWithin1year710,208,269664,020,1761to2years3,091,6592,051,5922to3years121,598371,111Over3years151,355-

________________________

713,572,881666,442,879________________________________________________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued18.Advancesfromcustomers

Theaginganalysisofadvancesfromcustomersareasfollows

31/12/201831/12/2017

RMBRMBWithin1year221,022,547340,025,6901to2years1,155,5557,072,2542to3years1,032,609381,463Over3years2,864,5333,414,749

________________________

226,075,244350,894,156________________________________________________19.Employeebenefitspayable(1)Employeebenefitspayableasfollows:

31/12/2017IncreaseDecrease31/12/2018

RMBRMBRMBRMBShort-termpayroll182,545,284481,042,461(477,694,636)185,893,109Post-demissionbenefits

-predeterminedprovisionplan298,09351,503,280(51,576,508)224,865Terminationbenefits27,980,85713,677,216(15,471,830)26,186,243

____________________________________

210,824,234546,222,957(544,742,974)212,304,217

________________________________________________________________________

(2)Employeebenefitspayable:

31/12/2017IncreaseDecrease31/12/2018

RMBRMBRMBRMBSalariesandbonus185,014,318428,052,734(425,381,062)187,685,990Staffbenefit2,116,47517,783,378(16,885,565)3,014,288Staffwelfare524,31620,677,314(20,740,535)461,095Includes:

Medicalinsurance524,31619,045,528(19,109,404)460,440Injuryinsurance-895,750(895,095)655Maternityinsurance-736,036(736,036)-Housingfund39,25610,444,925(10,431,671)52,510Unionfeeandeducationfee2,060,2314,109,651(4,255,803)1,914,079

____________________________________

Total189,754,596481,068,002(477,694,636)193,127,962

____________________________________

Less:Non-currentliabilities7,209,3127,234,853

__________________

Short-termpayroll182,545,284185,893,109

____________________________________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued19.Employeebenefitspayable-continued(3)Predeterminedprovisionplan

31/12/2017IncreaseDecrease31/12/2018

RMBRMBRMBRMBPension297,59150,534,986(50,608,044)224,533Unemploymentinsurance502968,294(968,464)332

__________________________________

298,09351,503,280(51,576,508)224,865

____________________________________________________________________TheGroupparticipatesinpensioninsuranceandunemploymentinsuranceplansestablishedbygovernmentinstitution.Accordingtothoseplans,theGrouppayspensionandunemploymentinsuranceeachmonthonthebasisof12%-32%and0.5%-3%lastperiodsalaryrespectively.Apartfromthesemonthlyexpenses,theGroupdoesnotbearanyfurtherpaymentobligation.ThisyeartheGroupshouldpayRMB50,534,986andRMB968,294(2017:RMB48,834,066andRMB1,141,605)respectivelyintopensioninsuranceandunemploymentinsurance.Asat31December2018,theGrouphasunpaidpensionandunemploymentinsuranceofRMB224,533andRMB332respectively(31December2017:RMB297,591andRMB502),whichisduetothepensioninsuranceandunemploymentinsuranceplanattheendofthereportingperiod.Thesepaymentshavebeenpaidaftertheendofthereportingperiod.20.Taxespayable

31/12/201831/12/2017

RMBRMBValueaddedtax36,442,86835,681,696Consumptiontax28,636,64644,961,022Corporationincometax40,869,50738,834,293Urbanlandusetax2,476,5272,645,687Individualincometax5,669,0997,805,917Cityconstructiontax4,337,7125,669,280Propertytax5,165,1284,647,644Others5,315,3034,848,617

________________________

128,912,790145,094,156________________________________________________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued21.Otherpayables21.1Presentedbycategories

31/12/201831/12/2017

RMBRMBInterestpayable712,826771,250Otherpayables607,767,064602,964,319

________________________

608,479,890603,735,569________________________________________________21.2Otherpayables(1)Naturesofotherpayablesareasfollows

31/12/201831/12/2017

RMBRMBPayabletodealerdeposit159,191,138139,710,963Payablesforequipmentandconstruction152,825,734130,706,777Payablesfortransportation38,867,72527,847,092Royaltyfee78,414,97877,208,929Advertisingcosts80,715,461118,834,960Withholdingpromotioncosts15,714,40013,413,655Employeedeposit2,806,76613,327,132Depositsfromsuppliers15,901,2103,082,595Payablesforcontractingfee27,070,58438,070,571Others36,259,06840,761,645

________________________

607,767,064602,964,319________________________________________________(2)Descriptionofsignificantotherpayablesagedmorethanoneyear

CompanyAmountReasons

RMBBeijingQinglangAgricultureScienceandTechnologyDevelopmentLimitedCompany("BeijingQinglang")9,493,506PayablesforcontractingfeeVASFCompany4,878,866Payablesforcontractingfee

_________

14,372,372

__________________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued22.Deferredincome

31/12/201831/12/2017

RMBRMBGovernmentgrantsCurrentliabilities15,860,25416,878,199Non-currentliabilities70,367,03992,918,855

________________________

86,227,293109,797,054________________________________________________Governmentgrants:

RecognizedinRelatedtoOpeningAdditionnon-operatingincomeClosingAssets/Income

/otherincomeRMBRMBRMBRMBRMBWinebaseliquorbrewageproject4,739,400-(1,434,900)3,304,500AssetsShihezichateauprojectfunds9,276,600-(2,280,000)6,996,600AssetsXinjiangIndustrialRejuvenationandTechnologicalReconstructionProject17,064,000-(1,422,000)15,642,000AssetsSpecialsupportforinfrastructurefacilities5,300,000-(1,060,000)4,240,000AssetsNingxiaindustryrevitalizationand

technologyreconstructionfunds1,086,000-(1,086,000)-AssetsTourismDevelopmentFundSubsidyProject500,000--500,000IncomeSupportenterprisedevelopmentspecialfunds10,200,000-(10,200,000)-Income(Huanren)wineproductionconstructionfunds3,600,000-(400,000)3,200,000AssetsWineelectronictrackingsystem

specificfunds3,192,311-(667,054)2,525,257AssetsMiyunPropagandaDepartmenttransfer888,945-(888,945)-AssetsWineindustryspecificfunds744,000-(186,000)558,000AssetsShandongPeninsulaBlueEconomic

Areaconstructionfunds8,000,000-(2,000,000)6,000,000AssetsInformationsystemconstruction

projecttechnologyfunds3,480,000-(580,000)2,900,000AssetsCross-bordere-Businessprojectssubsidies702,615300,000(122,359)880,256IncomeRedwinephenolicsresearchprojectsfunds284,601-(284,601)-IncomeGrapebaseconstructionproject520,000-(520,000)-AssetsWaterpollutionabatementproject320,132-(113,602)206,530IncomeInfrastructureconstructionproject1,843,750-(125,000)1,718,750AssetsIndustrialdevelopmentsupportproject36,900,000-(4,100,000)32,800,000AssetsSubsidyforupdatingofeconomicand

energy-savingtechnology1,154,700-(128,300)1,026,400AssetsSpecialfundsforefficientwatersaving

irrigationproject-1,720,000(81,000)1,639,000AssetsGuidancefundsforserviceindustrydevelopment-2,000,000-2,000,000IncomeRelocationallowanceforboilerrenovation-100,000(10,000)90,000Income

____________________________

Total109,797,0544,120,000(27,689,761)86,227,293

________________________________________________________

Less:Non-currentliabilitiesduewithinoneyear16,878,19915,860,254

______________

Othernon-currentliabilities92,918,85570,367,039

____________________________Asat31December2018,theGrouprecognisecurrentliabilityfordeferredincometobeaccountedinprofitorlosswithinoneyear,andrecognisenon-currentliabilityfordeferredincometobeaccountedinprofitorlossoveroneyear.

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued23.Non-currentliabilitiesduewithinoneyear

31/12/201831/12/2017

RMBRMBLong-termborrowingsduewithinoneyear118,940,78876,954,827Long-termpayablesduewithinoneyear34,000,00034,000,000

________________________

152,940,788110,954,827________________________________________________Asat31December2018,Long-termborrowingsduewithinoneyearreferstoNoteVI-24,Long-termpayablesduewithinoneyearreferstoNoteVI-25.24.Long-termborrowings

31/12/201831/12/2017

RMBRMBCreditloan41,805,74668,182,310Mortgagedloan3,924,9166,693,544Guaranteedloan110,750,00081,250,000

________________________

156,480,662156,125,854________________________________________________Asat31December2018,loansdetailisasfollows:

NatureYear-endDuewithinDueoverLoansamountExchangerateAmountofinterestInterestrateborrowingrateoneyearoneyear

RMB%%Guaranteedloan(RMB)(Note)81,250,0001.000081,250,000Floating5yearLPR-0.94.27518,750,00062,500,000Creditloan(EUR)17,734,9547.8473139,171,506Fixed1.00-2.531.00-2.5397,365,76041,805,746Mortgagedloan(EUR)(Note)860,1617.84736,749,944Fixed1.801.802,825,0283,924,916Guaranteedloan(AUD)(Note)10,000,0004.825048,250,000Fixed3.003.00-48,250,000

_____________________

275,421,450118,940,788156,480,662

__________________________________________Note:Asat31December2018,Thesecuredloanisthelong-termloanborrowedbythecompanyforR&DCentrecreditguarantee,RMB81,250,000(31December2017:RMB100,000,000),mortgagedloanswereAtriousingfixedassetsEUR4,264,170(translatedasRMB33,462,225)ascollateralforloansfromPopularEspa?ol,EUR860,161(translatedasRMB6,749,944),(31December2017:RMB9,502,372).Theguaranteedloan(AUD)istheloanofAUD10,000,000borrowedbyAustraliaKilikanoonEstatefromAustralia&NewZealandbanking(translatedasRMB48,250,000)(31December2017:Nil),whichwasguaranteedbytheCompany.

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued25.Long-termpayables

31/12/201831/12/2017

RMBRMBAgriculturalDevelopmentFundofChina("CADF")225,000,000259,000,000

________________________________________________In2016,RMB305,000,000fromCADFwasinvestedinR&DCentre,CADFaccountedfor37.9%oftheregisteredcapital.Accordingtotheinvestmentagreement,CADFwillrecoveryinvestmentfundsover10years,theinvestmentincomereceivedequalto1.2%oftheremainingunpaidprincipalperannum.Inadditiontothefixedincome,CADFwillnolongerenjoyotherprofitsorbearthelossofR&DCentre.ThereforealthoughtheinvestmentinR&DCentre,nominallyequityinvestment,isactuallyadebtinvestment(Financialdiscountloan).Thegrouptakethisinvestmentaslong-termpayables,whichmeasuredinamortizedcost.TheGrouprepaystheprincipalofRMB34,000,000in2018.RefertoNoteVI-45fordetailsofmortgagedandpledgedassets.

Long-termTerminationdateMortgagedpayablesYieldrateInvestmentdateofrepaymentDuewithin1yearDueafter1yearandpledgedassets

RMBRMBRMB

67,000,0001.2%12January201624December202510,000,00057,000,000Cashandbankand

intangibleassets

176,000,0001.2%29February201628February202622,000,000154,000,000Fixedassetsandintangibleassets16,000,0001.2%16June201622May20262,000,00014,000,000Cashandbank

________________________________

259,000,00034,000,000225,000,000________________________________________________________________

26.Othernon-currentliabilities

31/12/201831/12/2017

RMBRMBEmployeebenefit7,234,8537,209,312

____________________________________Asat31December2018,employeebenefitrepresentsdepositfrombonusaccruedformanagersandabove.Accordingtothebonuspaymentscheduleof2018,thebonusisexpectedtobepaidduring2020to2022.27.Sharecapital

31/12/2017IncreaseDecrease31/12/2018

RMBRMBRMBRMBUnrestrictedsharesAshares453,460,800--453,460,800Bshares232,003,200--232,003,200

________________________________

Totalofunrestrictedshares

andtotalshares685,464,000--685,464,000

________________________________________________________________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued28.Capitalreserve

31/12/2017IncreaseDecrease31/12/2018

RMBRMBRMBRMBSharepremium560,038,853--560,038,853Other5,916,588--5,916,588

________________________________

Total565,955,441--565,955,441

________________________________________________________________29.Othercomprehensiveincome

20182018Less:lastyearotherPost-taxPost-tax

OpeningBefore-taxcomprehensiveincomeLess:attributableattributableClosingbalanceamountinP/LcurrentyeartaxexpensetoparenttoNCIbalanceOthercomprehensive

incometobereclassifiedtoprofitandloss3,109,240(376,524)--(143,863)(232,661)2,965,377Foreigncurrencystatement

translationdifference3,109,240(376,524)--(143,863)(232,661)2,965,377

______________________________________________________________________30.Surplusreserve

31/12/2017IncreaseDecrease31/12/2018

RMBRMBRMBRMBStatutorysurplusreserve342,732,000--342,732,000

________________________________________________________________InaccordancewiththeCompanyLawofthePeople'sRepublicofChinaandtheArticlesofAssociationoftheCompany,theCompanyisrequiredtoappropriate10%ofthenetprofittothestatutorysurplusreserveuntiltheaccumulatedbalanceofthestatutorysurplusreservereaches50%oftheregisteredsharecapital.TheCompanydoesnotappropriatenetprofittothesurplusreservein2018.TheCompanycanappropriatediscretionarysurplusreserveafterappropriationofthestatutorysurplusreserve.Discretionarysurplusreservecanbeutilizedtooffsetthedeficitorincreasethesharecapitalafterapproval.31.Retainedearnings

31/12/201831/12/2017

RMBRMBRetainedearningsbroughtforward7,309,081,6186,620,118,562ProfitattributabletoshareholdersoftheCompany1,042,632,9291,031,695,056Less:Dividendspaidinrespectprioryear'sprofit(342,732,000)(342,732,000)

________________________Retainedearningscarriedforward8,008,982,5477,309,081,618

________________________

________________________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued31.Retainedearnings-continued(1)Appropriationtosurplusreservebysubsidiaries

Asat31December2018,thebalanceoftheGroup'sunappropriatedprofitsincludeappropriationtosurplusreservebysubsidiariesamountingtoRMB54,336,543(31December2017:RMB51,994,942).(2)Cashdividendsapprovedbygeneralmeeting

Accordingtotheannualgeneralmeetingon25May2018,dividendsdistributionplanhasbeenmade.Onthebasisof685,464,000issuedsharecapital,RMB5.0(includingtaxes)forevery10shareswasdistributedtoshareholders,intotalRMB342,732,000cashdividends.(3)Profitdistributiondecidedafterthebalancesheetdate

Accordingtoaproposaloftheboardofdirectorsapprovedon18April2019,onthebasisof685,464,000issuedsharesin2018,cashdividendsofRMB6.0(includingtaxes)forevery10sharewillbedistributedtoalltheshareholders.TheaggregateamountofcashdividendisRMB411,278,400.Theaboveproposalregardingdividendsdistributionisyettobeapprovedinashareholders'meeting.32.Operatingincomeandcosts

Operatingincomeisanalysedasfollows:

20182017RMBRMBPrincipaloperatingincome5,066,265,0444,856,168,699Otheroperatingincome75,979,69676,376,530

________________________5,142,244,7404,932,545,229________________________________________________Operatingcostisanalysedasfollows:

20182017RMBRMBPrincipaloperatingcost1,872,991,0391,645,690,616Otheroperatingcost28,620,46825,901,663

________________________1,901,611,5071,671,592,279________________________________________________TheoperatingincomefortheGroupismainlyfromthesalesofwine,brandyandsparklingwine.In2018,Over87%(2017:over91%)ofthesalesgeneratedinPRC.

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued33.Taxesandsurcharges

20182017RMBRMBConsumptiontax157,037,382177,879,324Cityconstructiontax39,655,73852,247,915Educationfeeandsurcharges28,762,50735,831,575Propertytax31,461,70823,113,211Landusetax12,098,79011,874,984Stamptax4,507,7853,945,731Others2,967,7645,359,283

________________________

276,491,674310,252,023________________________________________________FordetailstandardsoftaxratepleaserefertoNoteV.34.Sellingexpenses

20182017RMBRMBMarketingexpenses386,519,123428,828,931Salaryandemployeebenefit297,489,665272,148,620Freight141,756,007139,218,637Trademarkfee73,976,39572,838,612Laborfee72,036,25267,860,856Warehouseleasingexpenses45,668,61353,075,132Depreciationcost41,410,74034,963,089Advertisingfees35,857,27634,753,090Conferenceexpenses32,731,21531,609,123Designcost29,437,75727,226,277Travellingexpenses27,176,27727,709,534Securityandsanitationfee12,896,98612,659,228Waterandelectricityfee11,297,24411,247,163Officeallowance9,707,5186,165,561Packingcost8,195,1607,163,930Taxes7,113,7646,771,337Amortizationoflow-valueconsumables5,756,6024,028,573Businessentertainment5,665,3364,403,750Others29,907,21629,851,000

________________________1,274,599,1461,272,522,443________________________________________________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued35.Administrativeexpense

20182017RMBRMBSalaryandemployeebenefit114,473,209106,342,126Depreciation71,978,48571,558,307Maintenancefee25,189,38421,665,024Administrativeexpenses23,766,17622,173,925Amortization18,187,04922,438,364Greeningfeeamortization14,730,80410,667,941Contractingfee13,364,83521,162,623Rentalfees13,012,16712,414,249Safeproductioncost9,692,5747,840,215Securityandsanitationfee8,659,4056,317,723Servicefee6,556,25812,118,257Entertainmentfee5,300,5265,470,001Travellingexpenses3,630,2254,747,256Others15,039,55411,545,122

________________________

343,580,651336,461,133________________________________________________36.Financialexpense

20182017RMBRMBInterestincome(12,086,007)(9,168,772)Exchangeincome(666,323)(182,610)Interestexpenses52,198,77432,233,729Less:Capitalizationofinterests5,843,8726,138,242Bankcharges2,342,7301,846,154

________________________

35,945,30218,590,259________________________________________________37.(Reversalof)Impairmentlossofassets

20182017RMBRMB(Reversalof)Inventoryimpairment(912,166)7,938,748Impairmentlossesfromotherreceivables-354,805

__________________

(912,166)8,293,553

__________________

__________________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued38.Otherincome

20182017Assets/incomerelatedProjectSubsidyRMBRMBTaxrefund6,587,77317,765,560IncomeSpecialfundsformanufacturingindustry4,750,0004,100,000IncomeIndustrialdevelopmentsupportproject4,100,000-AssetsNingxiaindustryrevitalizationand

technologyreconstructionfunds1,086,0003,295,000AssetsProjectfunds2,280,0002,280,000AssetsShandongPeninsulaBlueEconomic

Areaconstructionfunds2,000,0002,000,000AssetsSpecialfundsforthedevelopment

ofenterprises42,953,900-IncomeOthers7,493,1996,352,199AssetsOthers16,030,56210,245,625Income

____________________

87,281,43446,038,384________________________________________39.Non-operationincome

Recognizedinextraordinary20182017profitandlossRMBRMBRMBGovernmentgrants-1,600,000-Penaltyincome1,901,5307,993,5711,901,530Others5,451,7797,637,1565,451,779

______________________________

7,353,30917,230,7277,353,309____________________________________________________________40.Non-operationexpenses

Recognizedinextraordinary20182017profitandlossRMBRMBRMBCompensationandpenaltyloss2,576,838347,5282,576,838Donation293,819294,899293,819Others665,251989,049665,251

______________________________

3,535,9081,631,4763,535,908____________________________________________________________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued41.Incometax

20182017RMBRMBCurrentincometax352,598,370330,784,002Deferredincometax14,529,1527,350,243

________________________

367,127,522338,134,245________________________________________________Reconciliationbetweenincometaxexpensesandprofitsisasfollows:

20182017RMBRMBProfitbeforetax1,408,611,6981,371,927,763Incometaxexpenseatstatutorytaxrate25%(2017:25%)352,152,925342,981,941Effectofdifferenttaxratesappliedbycertainsubsidiaries(949,634)(9,600,821)Changesinopeningbalancesofdeferredtaxliabilitiesduetotaxrateadjustment-(1,342,916)UnrecognisedDeductibleloss4,642,7273,590,697UtilizationofDeductiblelosseswhichwerenotrecognizedpreviously-(6,157,735)Non-deductibleexpenses5,496,2927,550,095Write-offofdeferredtaxassets5,785,2121,112,984

________________________Incometaxexpenses367,127,522338,134,245

________________________________________________42.Basicanddilutiveearningspershare

ThecalculationofbasicearningspershareisbasedontheconsolidatedprofitattributabletoordinaryshareholdersoftheCompanyduringtheyearandtheweightedaveragenumberofoutstandingordinaryshares.

20182017RMBRMBEarnings

Consolidatedprofitattributabletoordinary

shareholdersoftheCompany1,042,632,9291,031,695,056

________________________Shares

Weightedaveragenumberofoutstanding

ordinaryshares685,464,000685,464,000

________________________Basicearningspershare1.521.51

________________________

________________________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued42.Basicanddilutiveearningspershare-continued

TheCompanydoesnothavepotentialdilutiveordinaryshares.Fromthebalancesheetdatetothedateofapprovalofthisreport,therearenosubsequenteventswhichwouldaffectthenumbersoftheweightedaveragenumberofoutstandingofordinaryshares.43.Notestoconsolidatedcashflowstatement(1)Cashreceivedrelatingtootheroperatingactivities:

20182017RMBRMBGovernmentgrants57,123,90020,930,752Interestincome7,871,8533,839,079Penaltyincome1,901,5307,993,571Refundabledepositsofnotespayable-46,900,000Others5,806,5895,573,503

________________________

72,703,87285,236,905________________________________________________(2)Cashpaidrelatingtootheroperatingactivities:

20182017RMBRMBSellingexpenses918,966,855956,902,163Generalandadministrativeexpenses140,112,380107,905,766Refundabledepositsofnotespayable-8,000,000Others4,637,0822,103,059

________________________1,063,716,3171,074,910,988________________________________________________(3)Cashpaidforthepurchasesubsidiariesandotherequity:

20182017RMBRMBCashpaidforacquisitionofAustraliaKilikanoonEstate107,194,420-Less:CashandbankforAustraliaKilikanoonEstate

atacquisitiondate1,359,765-CashpaidforacquisitionofIndomitaWine-318,867,650Less:CashandbankforIndomita

Wineatacquisitiondate-15,071,107

________________________

105,834,655303,796,543________________________________________________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued43.Notestoconsolidatedcashflowstatement-continued(4)Cashreceivedrelatingtootherfinancingactivities:

20182017RMBRMBReceivedgovernmentgrantsrelatedtoassets-5,800,000R&DCentrelong-termpayablespledgedtimedeposit61,700,00046,100,000InterestincomefromR&DCentrelong-termpayables

pledgedtimedeposit768,2591,030,804

________________________

62,468,25952,930,804________________________________________________(5)Cashpaidrelatingtootherfinancingactivities:

20182017RMBRMBR&DCentrelong-termpayablespledgedtimedeposit46,100,00061,700,000

________________________________________44.Supplementaryinformationtoconsolidatedcashflowstatement(1)Supplementaryinformationtoconsolidatedcashflowstatement

20182017RMBRMBCashflowsfromoperatingactivities

calculatedbyadjustingthenetprofit:

Netprofit1,041,484,1761,033,793,518Add:Lossfor(reversalof)impairmentofassets(912,166)8,293,553

Depreciationofinvestmentproperties1,857,902590,610Depreciationoffixedassets297,838,358250,264,403Amortizationofintangibleassets19,018,74024,098,781Depreciationofbiologicalassets12,034,81210,160,981Amortizationoflong-termprepaidexpenses12,082,11713,911,581(Gains)lossesondisposalofassets(11,368,355)222,586Financeexpense45,855,74422,381,504Decreaseindeferredtaxassets22,685,13713,315,979Decreaseindeferredtaxliabilities(8,155,985)(5,965,736)Increaseininventories(180,452,933)(138,995,031)Increaseinoperatingreceivables(137,899,294)(180,593,570)Decreaseinoperatingpayables(138,089,507)(78,236,132)

________________________Netcashflowsfromoperatingactivities975,978,746973,243,027

________________________

________________________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued44.Supplementaryinformationtoconsolidatedcashflowstatement-continued(2)Significantinvestingandfinancingactivitiesnotinvolvingcashreceiptsandpayments.

20182017RMBRMBPaymentofintangibleassetsandother

long-termassetsbybankacceptances109,378,598140,493,507

________________________________________________

(3)Cashandcashequivalents

31/12/201831/12/2017

RMBRMBClosingbalanceofCashandbank1,475,700,4771,402,522,509Less:

Restrictedbankdeposits2,611,3502,645,410Restrictedothermonetaryfunds93,186,393123,987,825Depositwithaperiodofoverthreemonths173,042,40095,000,000

________________________Closingbalanceofcashandcashequivalents1,206,860,3341,180,889,274

________________________

________________________

31/12/201831/12/2017

RMBRMBCash1,206,860,3341,180,889,274Including:Cashonhand114,335136,973

Bankdepositsondemand1,206,745,9991,180,752,301

________________________Closingbalanceofcashandcashequivalents1,206,860,3341,180,889,274

________________________

________________________45.Assetswithrestrictionofownership

31/12/201831/12/2017

RMBRMBCashandbank95,797,743126,633,235Accountreceivable52,015,03246,337,062Fixedassets412,006,421145,009,923Intangibleassets218,070,414164,051,996

________________________________________________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued45Assetswithrestrictionofownership-continued

Asat31December2018,Cashandbankwithrestrictionofownershipasfollows:

31/12/201831/12/2017

RMBRMBR&DCentrelong-termpayablespledgedtimedeposit46,100,00061,700,000Refundabledepositsofletterofcredit44,540,85057,946,190BalanceinAlipayaccount2,483,8164,317,635Homemaintenancefunds2,611,3502,645,410Marginforentitycard51,72714,000DepositforICBCplatform10,00010,000

________________________Total95,797,743126,633,235

________________________

________________________Amongtheaforementioneditems,theamountofRMB2,483,816whichistheblockedbalancesofgoodspaymentinAlipayaccountcanbeunlockedafter15days.Asat31December2018,theamountofaccountsreceivablewithrestrictedownershipisEUR6,628,399(translatedasRMB52,015,032),whichreferstoaccountsreceivableAtrioconductedforfactoringfromBancodeSabadell,S.A.etc.Asat31December2018,fixedassetswithrestrictionofownershipasfollows:

Restrictedreasons31/12/2018CompanyRMBTheCompanyLong-termpayablecollateralfromR&DCentre34,246,887SalesCompanyLong-termpayablecollateralfromR&DCentre39,557,304SalesCompanyLong-termborrowingscollateral33,462,225IndomitaWineShort-termborrowingscollateral75,601,849NingxiaMoser15thChangyuWineChateauCo.,Ltd.("NingxiaChateau")Long-termpayablecollateralfromR&DCentre184,678,629NingxiaWineCo.Ltd.("NingxiaWine").Long-termpayablecollateralfromR&DCentre44,459,527

___________Total412,006,421

______________________

VI.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS-continued45Assetswithrestrictionofownership-continued

Asat31December2018,Intangibleassetswithrestrictionofownershipasfollows:

Restrictedreasons31/12/2018CompanyRMBTheCompanyLong-termpayablecollateralfromR&DCentre50,902,950R&DCentreLong-termpayablecollateralfromR&DCentre108,913,538NingxiaChateauLong-termpayablecollateralfromR&DCentre8,906,611NingxiaWineLong-termpayablecollateralfromR&DCentre49,347,315

___________Total218,070,414

___________

___________46.Foreignmonetaryitems

(1)Foreignmonetaryitems

TheforeignmonetaryitemslocatedwithinChinaareasfollows:

ClosingforeignExchangeClosingtranslatedcurrencybalancerateRMBbalanceCashandbank

EUR1277.8473997HKD2130.8762187USD7,196,1076.863249,388,322

______________________________________________________

(2)Overseasbusinessentities

TheCompany’soverseassubsidiariesdeterminebookkeepingcurrencybasedontheprimaryeconomicenvironment.ThebookkeepingbasecurrencyofAtrioandFrancsChampsParticipationsSAS("FrancsChamps")areallinEuro,andthebookkeepingbasecurrencyofIndomitaWineisChileanpeso.ThefunctionalcurrencyofAustraliaKilikanoonEstateisAUD.Theforeignmonetaryassetsandliabilitiesoftheoverseassubsidiariesareasfollows:

ClosingforeignExchangeClosingtranslatedcurrencybalancerateRMBbalanceCashandbank

EUR25,3287.8473198,756USD276,1966.86321,895,588Short-termborrowings

USD11,000,0006.863275,495,200

______________________________________________________

VII.CHANGEINCONSOLIDATIONSCOPE1.Businesscombinationunderdifferentcontrol(1)Businesscombinationunderdifferentcontrolincurrentperiod

NameofacquisitioncompanyEquityacquisitiondateEquityacquisitioncostEquityacquisitionratio(%)EquityacquisitionmethodAcquisitiondateBasisofacquisitiondateRevenuefromacquisitiondatetoyearendNetprofitfromacquisitiondatetoyearend
RMBRMB
AustraliaKilikanoonEstate18January2018AUD20,860,82580%Purchase18January2018Finishpaymentandacquireequity57,648,905217,869

Otherdetailinformation:

PursuanttotheAgreementonthedeliveryoftransferredequitiesenteredintobetweentheshareholdersoftheCompanyandAustraliaKilikanoonEstateon5December2017,theCompanyacquired80%equityinterestsofAustraliaKilikanoonEstateattheconsiderationofAUD20,860,825(translatedasRMB107,194,420).TheCompanycompletedtheequitytransferon18January2018andobtainedthecontroloffinancialandoperatingpoliciesoverAustraliaKilikanoonEstate.

(2)ConsiderationandGoodwill

Consideration

AustraliaKilikanoonEstate

RMBCash107,194,420Totalconsideration107,194,420Less:acquiredprovisionalvalueofnetassets70,131,290

___________Goodwill37,063,130

___________

___________(3)Recognisedassetsandliabilitiesofmergeeatacquisitiondate

AustraliaKilikanoonEstateFairvalueBookvalueatacquisitiondateatacquisitiondate

RMBRMBAssetsCashandbank1,359,7651,359,765Accountsreceivable10,366,28110,366,281Prepayment237,174237,174Otherreceivables187,720187,720Inventories69,612,31257,946,312Fixedassets49,029,99938,696,709Intangibleassets16,417,8867,461,624

________________________Totalassets147,211,137116,255,585

________________________

________________________

VII.CHANGEINCONSOLIDATIONSCOPE-continued1.Businesscombinationunderdifferentcontrol-continued(3)Recognisedassetsandliabilitiesofacquireeatacquisitiondate-continued

AustraliaKilikanoonEstateFairvalueBookvalueatacquisitiondateatacquisitiondate

RMBRMBLiabilitiesShort-termborrowings1,282,5501,282,550Accountspayable6,198,8466,198,846Employeebenefitspayable876,987876,987Taxespayable1,789,0931,789,093Long-termborrowings43,497,11943,497,119Deferredtaxliabilities5,902,429-

________________________Totalliabilities59,547,02453,644,595

________________________

________________________Netassets87,664,11362,610,990Less:Non-controllinginterests17,532,82312,522,198

________________________Acquirednetassets70,131,29050,088,792

________________________________________________VIII.INTERESTSINOTHERENTITIES1.StructureoftheGroup

NameAddressPlaceofregistrationNatureEquityinterestownedbythecompanyAcquisitionmethod
DirectIndirect
XinjiangTianzhu(a)Shihezi,Xinjiang,ChinaShihezi,Xinjiang,ChinaManufacturing60%-Subsidiaryacquiredinbusinesscombinationundernon-commoncontrol
FransacSalesCognac,FranceCognac,FranceTrading-100%Subsidiaryacquiredinbusinesscombinationundernon-commoncontrol
MirefleursBordeaux,FranceBordeaux,FranceTrading-100%Subsidiaryacquiredinbusinesscombinationundernon-commoncontrol
AtrioNavarra,SpainNavarra,SpainSales75%-Subsidiaryacquiredinbusinesscombinationundernon-commoncontrol
IWCCSantiago,ChileSantiago,ChileSales85%-Subsidiariesacquiredbyestablishment
AustraliaKilikanoonEstateAdelaideAustraliaAdelaideAustraliaSales80%-Subsidiaryacquiredinbusinesscombinationundernon-commoncontrol
BeijingChangyuSalesanddistributionCo.,Ltd("BeijingSales")Beijing,ChinaBeijing,ChinaSales100%-Subsidiariesacquiredbyestablishment
YantaiKylinPackagingCo.,Ltd.("KylinPackaging")Yantai,Shandong,ChinaYantai,Shandong,ChinaManufacturing100%-Subsidiariesacquiredbyestablishment
YantaiChangyu-CastelWineChateauCo.,Ltd("ChangyuChateau")(b)Yantai,Shandong,ChinaYantai,Shandong,ChinaManufacturing70%-Subsidiariesacquiredbyestablishment
Changyu(Jingyang)WineCo.,Ltd.("JingyangWine")Xianyang,Shanxi,ChinaXianyang,Shanxi,ChinaManufacturing90%10%Subsidiariesacquiredbyestablishment
YantaiChangyuPioneerWineSalesCo.,Ltd.("SalesCompany")Yantai,Shandong,ChinaYantai,Shandong,ChinaSales100%-Subsidiariesacquiredbyestablishment
LangfangDevelopmentZoneCastel-ChangyuWineCo.,Ltd("LangfangCastel")(c)Lanfang,Hebei,ChinaLanfang,Hebei,ChinaManufacturing39%10%Subsidiariesacquiredbyestablishment

VIII.INTERESTSINOTHERENTITIES-continued1.StructureoftheGroup-continued

NameAddressPlaceofregistrationNatureEquityinterestownedbythecompanyAcquisitionmethod
DirectIndirect
Changyu(Jingyang)WineSalesCo.,Ltd.("JingyangSales")Xianyang,Shanxi,ChinaXianyang,Shanxi,ChinaSales10%90%Subsidiariesacquiredbyestablishment
LangfangChangyuPioneerWineSalesCo.,Ltd("LangfangSales")Lanfang,Hebei,ChinaLanfang,Hebei,ChinaSales10%90%Subsidiariesacquiredbyestablishment
ShanghaiChangyuSalesanddistributionCo.,Ltd.("ShanghaiSales")Shanghai,ChinaShanghai,ChinaSales30%70%Subsidiariesacquiredbyestablishment
BeijingChangyuAFIPAgriculturedevelopmentCo.,Ltd("AgricultureDevelopment")Miyun,Beijing,ChinaMiyun,Beijing,ChinaSales-100%Subsidiariesacquiredbyestablishment
BeijingChateau(d)Beijing,ChinaBeijing,ChinaManufacturing90%-Subsidiariesacquiredbyestablishment
Yantai("BeijingChateau")ChangyuWineSalesCo.,Ltd.("WinesSales")Yantai,Shandong,ChinaYantai,Shandong,ChinaSales90%10%Subsidiariesacquiredbyestablishment
YantaiChangyuPioneerInternationalCo.,Ltd.("PioneerInternational")Yantai,Shandong,ChinaYantai,Shandong,ChinaSales70%30%Subsidiariesacquiredbyestablishment
HangzhouChangyuWineSalesCo.,Ltd.("HangzhouChangyu")Hangzhou,Zhejiang,ChinaHangzhou,Zhejiang,ChinaSales-100%Subsidiariesacquiredbyestablishment
NingxiaGrowingYinchuang,Ningxia,ChinaYinchuang,Ningxia,ChinaPlanting100%-Subsidiariesacquiredbyestablishment
HuanrenChangyuNationalWinesSalesCo.,Ltd.("NationalWines")Benxi,Liaoning,ChinaBenxi,Liaoning,ChinaSales100%-Subsidiariesacquiredbyestablishment
LiaoningChangyuIceWineChateauCo.,Ltd.("IceChateau")(e)Benxi,Liaoning,ChinaBenxi,Liaoning,ChinaManufacturing51%-Subsidiariesacquiredbyestablishment
YantaiDevelopmentZoneChangyuTradingCo.,Ltd("DevelopmentZoneTrading")Yantai,Shandong,ChinaYantai,Shandong,ChinaSales-100%Subsidiariesacquiredbyestablishment
ShenzhenChangyuWineMarketingLtd.("ShenzhenMarketing")Shenzhen,Guangdong,ChinaShenzhen,Guangdong,ChinaSales-100%Subsidiariesacquiredbyestablishment
YantaiChangyuFushanTradingCompany("FushanTrading")Yantai,Shandong,ChinaYantai,Shandong,ChinaSales-100%Subsidiariesacquiredbyestablishment
BeijingAFIPMeetingCenter("MeetingCenter")Miyun,Beijing,ChinaMiyun,Beijing,ChinaService-100%Subsidiariesacquiredbyestablishment
BeijingAFIPTourismandCulture("AFIPTourism")Miyun,Beijing,ChinaMiyun,Beijing,ChinaTourism-100%Subsidiariesacquiredbyestablishment
NingxiaWineYinchuan,Ningxia,ChinaYinchuan,Ningxia,ChinaManufacturing100%-Subsidiariesacquiredbyestablishment
YantaiChangyuDingLuoTeChateau.("DingLuoTeChateau")Yantai,ShandongChinaYantai,ShandongChinaRetailandSales65%35%Subsidiariesacquiredbyestablishment
QingTongXiaChangyuWineMarketingLtd("QingTongXiaSales")QingTongXia,Ningxia,ChinaQingTongXia,Ningxia,ChinaSales-100%Subsidiariesacquiredbyestablishment
ShiheziChateauShihezi,Xinjiang,ChinaShihezi,Xinjiang,ChinaManufacturing100%-Subsidiariesacquiredbyestablishment
NingxiaChateauYinchuan,Ningxia,ChinaYinchuan,Ningxia,ChinaManufacturing100%-Subsidiariesacquiredbyestablishment
ShanxiChangyuRinaCastleChateauCo.,Ltd.("Chang'anChateau")Xianyang,Shanxi,ChinaXianyang,Shanxi,ChinaManufacturing100%-Subsidiariesacquiredbyestablishment
R&DCentre(f)Yantai,ShandongChinaYantai,ShandongChinaManufacturing72%-Subsidiariesacquiredbyestablishment
Changyu(HuanRen)WineCo.,Ltd("HuanRenWine")BenxiLiaoNingChinaBenxiLiaoNingChinaWineproductionProjecting100%-Subsidiariesacquiredbyestablishment
XinjiangChangyuSalesCo.,Ltd("XinjiangSales")ShiheziXinjiangChinaShiheziXinjiangChinaSales-100%Subsidiariesacquiredbyestablishment
NingxiaChangyuTradingCo.,Ltd("NingxiaTrading")YinchuanNingxiaChinaYinchuanNingxiaChinaSales-100%Subsidiariesacquiredbyestablishment
ShanxiChangyuRinaWineSalesCo.,Ltd("ShanxiSales")XianyangShanxiChinaXianyangShanxiChinaSales-100%Subsidiariesacquiredbyestablishment
PenglaiChangyuWineSalesCo.,Ltd("PenglaiSales")PenglaiShandongChinaPenglaiShandongChinaSales-100%Subsidiariesacquiredbyestablishment
LaizhouChangyuWineSalesCo.,Ltd("LaizhouSales")LaizhouShandongChinaLaizhouShandongChinaSales-100%Subsidiariesacquiredbyestablishment
FrancsChampsCognac,FranceCognac,FranceInvestmentandtrading100%-Subsidiariesacquiredbyestablishment
LanzhouChangyuWineSalesCo.,Ltd("LanzhouSales")LanzhouGansu,ChinaLanzhouGansu,ChinaSales-100%Subsidiariesacquiredbyestablishment
BeijingRetailingCo.Ltd("BeijingRetailing")Beijing,ChinaBeijing,ChinaSales-100%Subsidiariesacquiredbyestablishment
TianjinChangyuPioneerSalesCo.,Ltd("TianjinPioneer")Tianjin,ChinaTianjin,ChinaSales-100%Subsidiariesacquiredbyestablishment
FuzhouChangyuPioneerSalesCo.,Ltd("FuzhouPioneer")FuzhouFujian,ChinaFuzhouFujian,ChinaSales-100%Subsidiariesacquiredbyestablishment
NanjingChangyuPioneerSalesCo.,Ltd("NanjingPioneer")Nanjing,Jiangsu,ChinaNanjing,Jiangsu,ChinaSales-100%Subsidiariesacquiredbyestablishment
XianyangChangyuPioneerSalesCo.,Ltd("XianyangPioneer")Xianyang,Shanxi,ChinaXianyang,Shanxi,ChinaSales-100%Subsidiariesacquiredbyestablishment
ShenyangChangyuPioneerSalesCo.,Ltd("ShenyangPioneer")Shenyang,Liaoning,ChinaShenyang,Liaoning,ChinaSales-100%Subsidiariesacquiredbyestablishment
JinanChangyuPioneerSalesCo.,Ltd("JinanPioneer")Jinan,Shandong,ChinaJinan,Shandong,ChinaSales-100%Subsidiariesacquiredbyestablishment
ShanghaiChangyuPioneerSalesCo.,Ltd("ShanghaiPioneer")Shanghai,ChinaShanghai,ChinaSales-100%Subsidiariesacquiredbyestablishment
FuzhouChangyuPioneerSalesCo.,Ltd("FuzhouPioneer")Fuzhou,Jiangxi,ChinaFuzhou,Jiangxi,ChinaSales-100%Subsidiariesacquiredbyestablishment
ShijiazhuangChangyuPioneerSalesCo.,Ltd("ShijiazhuangPioneer")Shijiazhuang,Hebei,ChinaShijiazhuang,Hebei,ChinaSales-100%Subsidiariesacquiredbyestablishment
HangzhouYuzefengSalesCo.,Ltd("HangzhouYuzefeng")Hangzhou,Zhejiang,ChinaHangzhou,Zhejiang,ChinaSales-100%Subsidiariesacquiredbyestablishment
JilinChangyuPioneerSalesCo.,Ltd("JilinPioneer")Changchun,Jilin,ChinaChangchun,Jilin,ChinaSales-100%Subsidiariesacquiredbyestablishment

VIII.INTERESTSINOTHERENTITIES-continued1.StructureoftheGroup-continued

NameAddressPlaceofregistrationNatureEquityinterestownedbythecompanyAcquisitionmethod
DirectIndirect
BeijingChangyuPioneerSalesCo.,Ltd("BeijingPioneer")Beijing,ChinaBeijing,ChinaSales-100%Subsidiariesacquiredbyestablishment
HarbinChangyuPioneerSalesCo.,Ltd("HarbinPioneer")Harbin,Heilongjiang,ChinaHarbin,Heilongjiang,ChinaSales-100%Subsidiariesacquiredbyestablishment
HunanChangyuPioneerSalesCo.,Ltd("HunanPioneer")Changsha,Hunan,ChinaChangsha,Hunan,ChinaSales-100%Subsidiariesacquiredbyestablishment
YinchuanChangyuPioneerSalesCo.,Ltd("YinchuanPioneer")Yinchuan,Ningxia,ChinaYinchuan,Ningxia,ChinaSales-100%Subsidiariesacquiredbyestablishment
KunmingChangyuPioneerSalesCo.,Ltd("KunmingPioneer")Kunming,Yunnan,ChinaKunming,Yunnan,ChinaSales-100%Subsidiariesacquiredbyestablishment
ChongqingChangyuPioneerSalesCo.,Ltd("ChongqingPioneer")Chongqing,ChinaChongqing,ChinaSales-100%Subsidiariesacquiredbyestablishment
WuhanChangyuPioneerSalesCo.,Ltd("WuhanPioneer")Wuhan,Hubei,ChinaWuhan,Hubei,ChinaSales-100%Subsidiariesacquiredbyestablishment
HohhotChangyuPioneerSalesCo.,Ltd("HohhotPioneer")HohhotInnerMongolia,ChinaHohhotInnerMongolia,ChinaSales-100%Subsidiariesacquiredbyestablishment
ChengduChangyuPioneerSalesCo.,Ltd("ChengduPioneer")Chengdu,Sichuan,ChinaChengdu,Sichuan,ChinaSales-100%Subsidiariesacquiredbyestablishment
NanningChangyuPioneerSalesCo.,Ltd("NanningPioneer")Nanning,Guangxi,ChinaNanning,Guangxi,ChinaSales-100%Subsidiariesacquiredbyestablishment
LanzhouChangyuPioneerSalesCo.,Ltd("LanzhouPioneer")LanzhouGansu,ChinaLanzhouGansu,ChinaSales-100%Subsidiariesacquiredbyestablishment
YantaiFulangduoYantaiShandong,ChinaYantaiShandong,ChinaSales-100%Subsidiariesacquiredbyestablishment
HefeiChangyuPioneerSalesCo.,Ltd("HefeiPioneer")Hefei,Anhui,ChinaHefei,Anhui,ChinaSales-100%Subsidiariesacquiredbyestablishment
UrumchiChangyuPioneerSalesCo.,Ltd("UrumchiPioneer")UrumchiXinjiang,ChinaUrumchiXinjiang,ChinaSales-100%Subsidiariesacquiredbyestablishment
GuangzhouChangyuPioneerSalesCo.,Ltd("GuangzhouPioneer")GuangzhouGuangdong,ChinaGuangzhouGuangdong,ChinaSales-100%Subsidiariesacquiredbyestablishment
GrapeWineMarketingLtd.YantaiShandongChinaYantaiShandongChinaSales100%-Subsidiariesacquiredbyestablishment

Explanationindifferencebetweenholdinginterestsandvotingrightsinsubsidiaries:

(a)XinjiangTianzhuwasacquiredbytheCompany,accountingfor60%ofXinjiangTianzhu'sequity

interest.Throughagreementarrangement,theCompanyhasthefullpowertocontrolXinjiangTianzhu'sstrategicoperating,investingandfinancingpolicies.Theagreementarrangementwillbeterminatedon6August2017.Upontheexpiryoftheagreementarrangement,thenon-controllinginterestsofXinjiangTianzhuwillnormallyenjoy/commitalltherightsandobligationsoftheshareholdersasstipulatedintheArticlesofAssociation.(b)ChangyuChateauisaSino-foreignjointventureestablishedbytheCompanyandaforeign

investor,accountingfor70%ofChangyuChateau'sequityinterest.Throughagreementarrangement,theCompanyhasthefullpowertocontrolChangyuChateau'sstrategicoperating,investingandfinancingpolicies.Theagreementarrangementwillbeterminatedon31December2022.(c)LangfangChateauisaSino-foreignjointventureestablishedbytheCompanyandaforeign

investor,accountingfor49%ofLangfangChateau'sequityinterestbytheCompanyandsubsidiaries.Throughagreementarrangement,theCompanyhasthefullpowertocontrolLangfangChateau'sstrategicoperating,investingandfinancingpolicies.Theagreementarrangementwasterminatedon31December2017.MinorityshareholdersofLangfangChateauwillbeentitledto/abidedbytherights/obligationsoftheshareholdersasagreedintheArticlesofAssociationupontheduedateoftheagreementarrangement.(d)BeijingChateauisajointventureestablishedbytheCompany,YantaiDe'anandBeijing

Qinglang,andtheCompanyincreasesthecapitalcontributionRMB502,910,000inthisperiod,YantaiDe'anandBeijingQinglangtogetherincreasethecapitalcontributionRMB29,840,000.BeijingChateauhascompelledthebusinessregistrationon22December2017.Aftercapitalcontributionincreased,theCompanyisaccountingfor90%ofBeijingChateau'sequityinterest.TheCompanygetsthecontroloveroperation,investment,andfinancialdecisionofBeijingChateauthroughagreementarrangement,whichwillterminateon2September2019.

VIII.INTERESTSINOTHERENTITIES-continued1.StructureoftheGroup-continued(e)IceChateauisaSino-foreignjointventureestablishedbytheCompanyandaforeigninvestor,

accountingfor51%ofIceChateau'sequityinterest.Throughagreementarrangement,theCompanyhasthefullpowertocontrolIceChateau'sstrategicoperating,investingandfinancingpolicies.Theagreementarrangementwillbeterminatedon31December2021.(f)R&DCentreisajointventureestablishedbytheCompanyandCADF,accountingfor72%of

R&DCentre'sequityinterestat31December2018.TheCompanyhascompletecontrolovertheoperation,investmentandfinancialpoliciesoftheR&DCentresubjecttothecontractarrangementasdescribedinNoteVI-25.Thecontractarrangementwillexpireon22May2026.Asat31December2018,theremaininginvestmentofIFADaccountedfor28%oftheregisteredcapital.2.Non-whollyownedsubsidiaries

Profitandlossbelongs31/12/2018Minoritytonon-controllingDistributionstoAssimilatenon-controllingNameinterestshareholderratiointerestshareholdersnon-controllinginterestinterestXinjiangTianzhu40%(2,760,804)--50,612,648Atrio25%844,190(744,149)-31,726,931ChangyuChateau30%---12,365,016LangfangCastel51%(1,774,541)--20,927,981BeijingChateau10%---65,133,868IceChateau49%---33,319,062IWCC15%2,619,885(2,655,627)-53,079,827AustraliaKilikanoonEstate20%(310,144)-17,532,82317,222,679

____________________________________

(1,381,414)(3,399,776)17,532,823284,388,012

________________________________________________________________________

VIII.INTERESTSINOTHERENTITIES-continued3.Keyfinancialinformationofimportantnon-whollyownedsubsidiaries

Name31/12/201831/12/2017
CurrentassetsNon-currentassetsTotalassetsCurrentliabilitiesNon-currentliabilitiesTotalliabilitiesCurrentassetsNon-currentassetsTotalassetsCurrentliabilitiesNon-currentliabilitiesTotalliabilities
XinjiangTianzhu27,390,49566,486,79593,877,290-5,336,1145,336,11430,264,44171,323,940101,588,381809,0805,336,1146,145,194
ChangyuChateau141,298,023114,694,168255,992,191171,869,662-171,869,662140,038,021115,435,985255,474,006175,061,601-175,061,601
LangfangCastel17,659,51116,001,68233,661,1933,358,322-3,358,32222,728,53617,973,71940,702,2556,133,909-6,133,909
BeijingChateau219,973,582461,115,089681,088,67162,598,545-62,598,545214,079,274481,668,050695,747,32473,963,043-73,963,043
IceChateau45,194,59123,920,89069,115,48114,974,458100,00015,074,45838,657,35825,484,35964,141,71710,871,695100,00010,971,695
Atrio464,421,13099,080,668563,501,798381,659,31554,520,937436,180,252398,835,959116,299,504515,135,463299,030,00289,336,338388,366,340
IWCC214,784,490300,969,342515,753,832148,359,3284,976,161153,335,489175,669,256305,664,706481,333,962122,023,7645,206,406127,230,170
AustraliaKilikanoonEstate87,634,70763,759,866151,394,57313,387,94251,893,17165,281,113N/AN/AN/AN/AN/AN/A
Name20182017
RevenueNetprofit(loss)TotalcomprehensiveincomeOperatingactivitiescashflowsRevenueNetprofit(loss)TotalcomprehensiveincomeOperatingactivitiescashflows
XinjiangTianzhu18,803(6,902,010)(6,902,010)43,112116,555,58815,531,51315,531,51332,224,800
ChangyuChateau121,235,2783,710,1243,710,12416,096,44768,964,230985,910985,91019,629,212
LangfangCastel5,038,281(3,479,492)(3,479,492)673,42239,165,527(1,616,638)(1,616,638)(1,554,380)
BeijingChateau159,369,78316,555,84616,555,84619,627,933145,103,20017,475,64717,475,64749,964,881
IceChateau57,290,490870,994870,994289,78249,643,3961,241,6991,241,699(1,748,535)
Atrio327,550,5453,811,4653,376,7616,129,923281,007,1672,000,6827,701,416(32,148,326)
IWCC262,104,56315,934,34717,465,9003,584,648157,953,46728,791,68431,458,95216,482,765
AustraliaKilikanoonEstate57,648,905217,869(1,550,720)(1,522,151)N/AN/AN/AN/A

*Thisisamountincurredintheperiodbetweenacquisitiondateand31December2018.

IX.FINANCIALINSTRUMENTANDRISKMANAGEMENT

TheGroup'smajorfinancialinstrumentsincludecashandbank,notesandaccountreceivable,otherreceivables,available-for-salefinancialassets,othernon-currentassets,short-termborrowings,accountspayable,otherpayables,interestpayables,andlong-termborrowings.DetailsofthesefinancialinstrumentsaredisclosedinNoteVI.Therisksassociatedwiththesefinancialinstrumentsandthepoliciesonhowtomitigatetheserisksaresetoutbelow.Managementmanagesandmonitorstheseexposurestoensuretherisksaremonitoredatacertainlevel.TheGroupadoptssensitivityanalysistechniquetoanalysehowtheprofitandlossfortheperiodandshareholders'equitywouldhavebeenaffectedbyreasonablypossiblechangesintherelevantriskvariables.Asitisunlikelythatriskvariableswillchangeinanisolatedmanner,andtheinterdependenceamongriskvariableswillhavesignificanteffectontheamountultimatelyinfluencedbythechangesinasingleriskvariable,thefollowingarebasedontheassumptionthatthechangeineachriskvariableisonastand-alonebasis.TheGroup'sriskmanagementobjectivesaretoachieveaproperbalancebetweenrisksandyield,minimisetheadverseimpactsofrisksontheGroup'soperationperformance,andmaximisethebenefitsoftheshareholdersandotherstakeholders.Basedontheseriskmanagementobjectives,theGroup'sbasicriskmanagementstrategyistoidentifyandanalysetheGroup'sexposuretovariousrisks,establishanappropriatemaximumtolerancetorisk,implementriskmanagement,andmonitorsregularlyandeffectivelytheseexposurestoensuretherisksaremonitoredatacertainlevel.1.Riskmanagementobjectivesandpolicies1.1Marketrisk1.1.1Currencyrisk

Currencyriskistheriskthatlosseswilloccurbecauseofchangesinforeignexchangerates.TheGroup'sexposuretothecurrencyriskisprimarilyassociatedwithEURandUSD.SeveraloftheGroup'ssubsidiarieshavepurchasesandsalesdenominatedinEUR,ChileanpesoandAustraliadollar,borrowingsdenominatedinUSD,whiletheGroup'sotherprincipalactivitiesaredenominatedandsettledinRMB.Asat31December2018,exceptthattheassetsandliabilitiesstatedinthetablebelowareforeigncurrencydepositsorexcessofborrowings,theassetsandliabilitiesofeachentityoftheGrouparesettledintheirrespectivefunctionalcurrencies.

31/12/201831/12/2017

RMBRMBBankandcash(EUR)199,7531,190,459Bankandcash(USD)51,283,91034,843,968Short-termborrowings(USD)75,495,20058,807,800

________________________________________________CurrencyriskarisingfromtheassetsandliabilitiesdenominatedinforeigncurrenciesmayhaveimpactontheGroup'sperformance.TheGroupcloselymonitorstheeffectsofchangesintheforeignexchangeratesontheGroup'scurrencyriskexposures.TheGroupcurrentlydoesnottakeanymeasurestohedgecurrencyriskexposures.

IX.FINANCIALINSTRUMENTANDRISKMANAGEMENT-continued1.Riskmanagementobjectivesandpolicies-continued1.1Marketrisk-continued1.1.1Currencyrisk-continued

SensitivityanalysisoncurrencyriskWhereallothervariablesareheldconstant,thereasonablypossiblechangesintheforeignexchangeratemayhavethefollowingpre-taxeffectontheprofitorlossfortheperiodandshareholders'equity:

Domesticentities:

CurrentyearPrioryear

EffectonEffectonshareholders'shareholders'ChangeinexchangerateEffectonprofitequityEffectonprofitequity

RMBRMBRMBRMBEUR5%increaseagainstRMB50505050EUR5%decreaseagainstRMB(50)(50)(50)(50)USD5%increaseagainstRMB2,469,4162,469,4161,456,5251,456,525USD5%increaseagainstRMB(2,469,416)(2,469,416)(1,456,525)(1,456,525)

__________________________________________________________________Overseasentities:

CurrentyearPrioryear

EffectonEffectonshareholders'shareholders'ChangeinexchangerateEffectonprofitequityEffectonprofitequity

RMBRMBRMBRMBUSD5%increaseagainstEUR90090052,69552,695USD5%decreaseagainstEUR(900)(900)(52,695)(52,695)USD15%increaseagainstChilePeso(11,042,641)(11,042,641)(5,275,651)(5,275,651)USD15%decreaseagainstChilePeso11,042,64111,042,6415,275,6515,275,651EUR10%increaseagainstChilePeso19,87619,87658,35058,350EUR10%decreaseagainstChilePeso(19,876)(19,876)(58,350)(58,350)

__________________________________________________________________Note:Asat31December2018,theGroup'smanagementanticipatedachangeof5%in

exchangerateforUSDtoEUR,10%inexchangerateforEURtoChileanPesoand15%inexchangerateforUSDtoChileanPeso.

IX.FINANCIALINSTRUMENTANDRISKMANAGEMENT-continued1.Riskmanagementobjectivesandpolicies-continued1.1Marketrisk-continued1.1.2Interestraterisk-riskofchangesincashflows

TheGroup'scashflowinterestrateriskoffinancialinstrumentsrelatesprimarilytovariable-ratebankborrowings(RefertoNoteVI-1,NoteVI-16andNoteVI-24fordetails).ItistheGroup'spolicytokeepitsborrowingsatfloatingrateofinterestssoastoeliminatethefairvalueinterestraterisk.ThesensitivityanalysisoninterestrateriskThesensitivityanalysisoninterestrateriskisbasedonthechangesinthemarketinterestratemayinfluencetheinterestincomeorexpenseofthevariableratefinancialinstruments.ManagementoftheGroupbelievesinterestrateriskonbankdepositisnotsignificant,thereforedoesnotdisclosesensitivityanalysisforinterestraterisk.Whereallothervariablesareheldconstant,thereasonablypossiblechangesintheinterestratemayhavethefollowingpre-taxeffectontheprofitorlossfortheperiodandshareholders'equity

CurrentyearPrioryear

EffectonEffectonshareholders'shareholders'ChangeininterestrateEffectonprofitequityEffectonprofitequityBankborrowings50%increase(2,016,667)(2,016,667)(2,046,646)(2,046,646)Bankborrowings50%decrease2,016,6672,016,6672,046,6462,046,646

________________________________________________________________Note:Asat13December2018,theGroup'smanagementanticipatedachangeof50basispoints

inthebank'svariableinterestrate.1.2Creditrisk

Asat31December2018,theGroup'smaximumexposuretocreditriskwhichwillcauseafinanciallosstotheGroupduetofailuretodischargeanobligationbythecounterparties.Inordertominimisethecreditrisk,theGrouphasadoptedapolicytoensurethatallsalescustomershavegoodcreditrecords.TheGrouphasdelegatedateamresponsiblefordeterminationofcreditlimits,creditapprovalsandothermonitoringprocedurestoensurethatfollow-upactionistakentorecoveroverduedebts.Fortransactionsthatarenotdenominatedinthefunctionalcurrencyoftherelevantoperatingunit,theGroupdoesnotoffercredittermswithoutthespecificapprovaloftheDepartmentofCreditControlintheGroup.Inaddition,theGroupreviewstherecoverableamountofeachindividualtradedebtateachbalancesheetdatetoensurethatadequateimpairmentlossesaremadeforirrecoverableamounts.Inthisregard,themanagementoftheGroupconsidersthattheGroup'screditriskissignificantlyreduced.

IX.FINANCIALINSTRUMENTANDRISKMANAGEMENT-continued1.Riskmanagementobjectivesandpolicies-continued1.2Creditrisk-continued

SincetheGrouptradesonlywithrecognizedandcreditworthythirdparties,thereisnorequirementforcollateral.Concentrationsofcreditriskaremanagedbycustomer/counterparty,bygeographicalregionandbyindustrysector.Asat31December2018,19.8%oftheGrouptradereceivablesareduefromtopfivecustomers(31December2017:20.7%).ThereisnocollateralorothercreditenhancementonthebalanceofthetradereceivablesoftheGroup.1.3Liquidityrisk

Inthemanagementoftheliquidityrisk,theGroupmonitorsandmaintainsalevelofcashandcashequivalentsdeemedadequatebythemanagementtofinancetheGroup'soperationsandmitigatetheeffectsoffluctuationsincashflows.Themanagementmonitorstheutilisationofbankborrowingsandensurescompliancewithloancovenants.ThefollowingisthematurityanalysisforfinancialassetsandfinancialliabilitiesheldbytheGroupwhichisbasedonundiscountedremainingcontractualobligations:

Non-derivativefinancialliabilities

Lessthanonemonth1-3months3-12months1-5yearsMorethanfiveyearsTotal

RMBRMBRMBRMBRMBRMBShort-termborrowings2,338,69857,691,463641,831,131--701,861,292Accountspayable163,879,578327,759,156221,934,147--713,572,881Otherpayables155,842,255179,896,318256,314,091--592,052,664Interestpayable712,826----712,826Long-termborrowings8,382,99631,970,17085,822,835168,574,037-294,750,038Long-termpayables-22,762,93414,158,433143,555,43390,356,300270,833,100

____________________________________________________

331,156,353620,080,0411,220,060,637312,129,47090,356,3002,573,782,801

________________________________________________________________________________________________________1.4Fairvaluedisclosure-Financialassetsandliabilitiesnotmeasuredusingfairvalue

FairvalueCarryingamountLevel1Level2Level3Total

offairvalueoffairvalueoffairvalueLong-termpayablesmeasured

atamortizedcost259,000,000-223,263,886-223,263,886

______________________________________________________________________________Asat31December2018,ThemanagementoftheGroupbelievesthat,apartfromtheaforementionedlong-termpayables,thecarryingamountsofotherfinancialassetsandfinancialliabilitiesmeasuredatamortisedcostinthefinancialstatementsareclosetothefairvaluesoftheseassetsandliabilities.

X.RELATEDPARTYANDRELATEDPARTYTRANSACTIONS1.Parentcompany

NameofTypeofPlaceofLegalScopeRegisteredPercentagePercentageIncorporate
parentcompanyRelationenterpriseregistrationrepresentativeofbusinesscapitalofsharesofvotingrightsCode
RMB%%
ChangyuGroupCompanyParentCompanyLimitedCompanyYantaiZhouHongjiangManufacturing50,000,00050.450.4265645824

Duringtheyearended31December2018,thereisnochangeinparentcompany'sregisteredcapital,sharesholdingorvotingpower.2.Subsidiaries:PleaserefertoNoteVIII.3.Otherrelatedparties

NameofrelatedparitiesNatureofrelatedpartiesIncorporatecodeYantaiChangyuWineCultureMuseumCompanycontrolled913706007582586548

Co.,Ltd.("WineCultureMuseum")bythesameparentYantaiChangyuInternationalWindowoftheCompanycontrolled91370600672208146X

WineCityCo.,Ltd.("WindowoftheWineCity)bythesameparentYantaiShenMaPackingCo.,Ltd.Companycontrolled91370600553393350J

("ShenMaPacking")bythesameparentYantaiZhongyaPharmaceuticalTonicCompanycontrolled91370600726203923M

WineCo.,Ltd.("ZhongyaPharmaceutical")bythesameparentYantaiChangyuCultureTourismProductionCompanycontrolled91370602MA3N7A877P

SalesCo.,Ltd.("CultureSales")bythesameparentYantaiChangyuCultureTourismDevelopmentCompanycontrolled91370602MA3N59J300

Co.,Ltd.("CultureDevelopment")bythesameparent

4.Significantrelatedpartytransactions(1)Purchasesfromandsalestorelatedparties

Purchasefromrelatedparties

Thecontentofrelated20182017

partytransactionsRMBRMBShenMaPackingproductpurchase173,238,289145,872,001ZhongyaPharmaceuticalproductpurchase15,690,9309,279,380WineCultureMuseumproductpurchase16,784,7116,336,832WindowoftheWineCityproductpurchase7,913,3422,756,050CultureSalesproductpurchase35,857

______________________

213,663,129164,244,263____________________________________________Allrelatedpartytransactionsarebasedonthenegotiatedprice.In2018,purchasesfromrelatedpartiesaccountedfor11.2%oftheGroup'stotalpurchase(2016:

10.9%)

X.RELATEDPARTYANDRELATEDPARTYTRANSACTIONS-continued4.Significantrelatedpartytransactions-continued(1)Purchasesfromandsalestorelatedparties-continued

Salestorelatedparties

Thecontentofrelated20182017

partytransactionsRMBRMBWineCultureMuseumgoodssales23,515,3798,235,520WindowoftheWineCitygoodssales13,821,55512,205,247ZhongyaPharmaceuticalgoodssales4,552,2692,035,003CultureSalesgoodssales2,914,686-ShenMaPackinggoodssales348,2471,634,883

______________________

45,152,13624,110,653____________________________________________Allrelatedpartytransactionsarebasedonthenegotiatedprice.In2018,salestorelatedpartiesaccountedforlessthan1%oftheGroup'stotalsales(2017:lessthan1%).(2)Propertyleasedfromarelatedparty

TheGroupasLessee

2018AssetsleasedBeginningdateEndingdateRentalexpense

RMBChangyuGroupCompanyofficebuilding1January201631December20201,538,840ChangyuGroupCompanyofficebuildingandfactory1January201731December20211,331,364ChangyuGroupCompanyofficebuildingandfactory1January201731December20213,994,091

_______

6,864,295

______________Allrelatedpartytransactionsarebasedonthenegotiatedprice.TheGroupasLessor

2018AssetsleasedBeginningdateEndingdateRentalincome

RMBShenMaPackingofficebuildingandfactory1July201730June20221,478,982ZhongyaPharmaceuticalofficebuildingandfactory1January201831December2018518,182

_______

1,997,164

______________Allrelatedpartytransactionsarebasedonthenegotiatedprice.

X.RELATEDPARTYANDRELATEDPARTYTRANSACTIONS-continued4.Significantrelatedpartytransactions-continued(3)Othersignificantrelatedpartytransactions

Thecontentofrelated

partytransactionsNote20182017

RMBRMBChangyuGroupCompanyRoyaltyfee(a)73,976,39572,838,612ChangyuGroupCompanyPatentsfee(b)50,00050,000

________________________________________Allrelatedpartytransactionsarebasedonthenegotiatedprice.(a)Royaltyfee

Pursuanttoaroyaltyagreementdated18May1997,startingfrom18September1997,theCompanymayusecertaintrademarksofChangyuGroupCompany,whichhavebeenregisteredwiththePRCTrademarkOffice.Anannualroyaltyfeeat2%oftheGroup'sannualsalesispayabletoChangyuGroupCompany.Thelicenseiseffectiveuntiltheexpiryoftheregistrationofthetrademarks.During2018,royaltyfeepaidtorelatedcompanyaccountedfor100%oftheGroup(2017:

100%).(b)Patentsfee

TheCompanyrenewedthecontracton20August2016for10years.Theannualpatents

usagefeepayablebytheCompanytoChangyuGroupCompanyremainedRMB

50,000.Fortheyearended31December2018,thepatentsusagefeepayabletoChangyu

GroupCompanyisamountedtoRMB50,000(2017:RMB50,000).

During2018,patentfeepaidtorelatedcompanyaccountedfor100%oftheGroup(2017:

100%).(4)Remunerationofthemanagement

20182017RMBRMBRemunerationofthemanagement13,102,00510,309,409

________________________________________________

X.RELATEDPARTYANDRELATEDPARTYTRANSACTIONS-continued5.Balanceduefrom/torelatedparties(1)Balanceduefromrelatedparties

31/12/201831/12/2017AccountsreceivableBalanceProvisionBalanceProvision

RMBRMBRMBRMBZhongyaPharmaceutical2,768,391-8,134,150-ShenMaPacking.17,137-1,342,348-WindowoftheWineCity1,911,157-3,196,095-WineCultureMuseum--34,280-

__________________________________

4,696,685-12,706,873-

____________________________________________________________________

31/12/201831/12/2017OtherreceivableBalanceProvisionBalanceProvision

RMBRMBRMBRMBShenMaPacking.813,440-813,440-

______________________________________________________________(2)Balanceduetorelatedparties

Accountspayable31/12/201831/12/2017

RMBRMBShenMaPacking.55,366,78552,403,056ZhongyaPharmaceutical6,722,6672,051,991WineCultureMuseum4,646,7312,040,860WindowoftheWineCity4,789,6001,485,766

________________________

71,525,78357,981,673________________________________________________Otherpayable31/12/201831/12/2017

RMBRMBShenMaPacking.450,000-ChangyuGroupCompany78,414,97877,208,929

________________________

78,864,97877,208,929________________________________________________Theaboveamountsduetorelatedpartiesareunsecuredandinterest-free.

XI.COMMITMENT1.Importantcommitments

(1)Capitalcommitments

31/12/201831/12/2017

RMB'000RMB'000Capitalcommitmentfor

purchasingnon-currentassets996,6751,246,506

________________________________________________

(2)Operatingleasecommitment

AslesseeSignificantoperatinglease:Totalfutureminimalleasepaymentsundernon-cancelablecontractwithlessorareasfollow:

31/12/201831/12/2017

RMB'000RMB'000Within1year20,57632,2361to2years11,75719,1162to3years10,06411,9433yearsandabove84,09595,342

________________________

126,492158,637________________________________________________2.Contingentliability

TheGroupdonothaveanysignificantcontingentliabilitiesasatbalancesheetdate.XII.POSTBALANCESHEETDATEEVENT1.Profitappropriation

Accordingtotheboardofthedirectorresolutionraisedon18April2019,theCompanyproposed

acashdividendofRMB6.0(includingtaxes)forevery10sharesinrespectof2018basedonthe

issuedsharesof685,464,000.TheaggregateamountofcashdividendisRMB411,278,400.The

resolutionistobeapprovedbytheannualgeneralmeeting.

XIII.OTHERSIGNIFICANTEVENTS

CapitalmanagementThemaintargetofthecapitalmanagementofthegroupistoensurethecontinuousoperationofthegroup,optimizetheportfoliostructureofequityfinancinganddebtfinancing,soastoachievethegoalofmaximizingshareholderbenefits.Thecapitalstructureofthegroupconsistsofthefollowingparts:

(1)Cashandcashequivalents

(2)Sharecapital,capitalreserve,surplusreserveandretainedearningsThemanagementreviewsthegroup'scapitalstructureaccordingtotheinterimoryear-endfinancialreportsandconsidersthecostofcapitalandthecorrespondingrisksofvariouscapitaltypes.Basedonthechoiceofthemanagement,thegroupoptimizestheoverallcapitalstructurebyissuingadditionalsharesandborrowingorrepayingloans.SegmentreportTheGroupisprincipallyengagedintheproductionandsalesofwine,brandy,andchampagneinChina,France,Spain,ChileandAustralia.InaccordancewiththeGroup'sinternalorganizationstructure,managementrequirementsandinternalreportingsystem,theGroup'soperationisdividedintofourparts:China,Spain,France,ChileandAustralia.Themanagementperiodicallyevaluatessegmentresults,inordertoallocateresourcesandevaluateperformances.In2018,morethan87%revenueandmorethan99%profitderivedfromChina,andmorethan92%non-currentassetsarelocatedinChina.ThereforetheGroupdoesnotneedtodiscloseadditionalsegmentreportinformation.XIV.NOTESTOCOMPANYFINANCIALSTATEMENTS1.Cashandbank

31/12/201831/12/2017

RMBRMBCash3,1775,280Bankbalance579,993,055501,208,996Othercurrencyfund44,592,57757,960,190

________________________Total624,588,809559,174,466

________________________

________________________Asat31December2018,thebalanceofrestrictedcashoftheCompanyisRMB2,611,350(31December2017:RMB2,645,410),whichishomemaintenancefunds.Asat31December2018,othercurrencyfundoftheCompanyinclude:depositofRMB44,540,850forletterofcredit(31December2017:RMB57,946,190)anddepositofRMB51,727forentitycard(31December2017:RMB14,000).

XIV.NOTESTOCOMPANYFINANCIALSTATEMENTS-continued1.Cashandbank-continued

Asat31December2018,theCompany'stimedepositsincludetheshort-termdepositswithoriginalmaturityfromsixmonthstotwelvemonthsamountingtoRMB45,000,000(31December2017:RMB5,000,000)withinterestraterangingfrom1.55%to2.03%.2.Notesandaccountreceivable2.1Presentedbycategories

31/12/201831/12/2017

RMBRMBNotesreceivable39,885,25441,645,203Accountsreceivable1,447,9737,805,333

________________________Total41,333,22749,450,536

________________________

________________________2.2Notesreceivable(1)Categoriesofnotesreceivable

31/12/201831/12/2017

RMBRMBBankacceptances39,885,25441,645,203

________________________________________________

(2)Pledgednotesreceivable

Asof31December2018,therewasnopledgednotesreceivable(31December2017:Nil).(3)NotesendorsedbytheGrouptootherpartieswhicharenotyetdueattheendoftheperiod

31/12/201831/12/2017

RMBRMB

Bankacceptances94,755,12472,316,589

________________________________________________

Asat31December2018,notesendorsedbytheCompanytootherpartieswhicharenotyetdueat

theendoftheperiodisRMB94,755,124(31December2017:RMB72,316,589).Itisforthe

paymenttosuppliers.TheCompanybelievesthatduetobankgoodreputation,theriskof

maturitycannotbecashedisverylow,thereforeconfirmtheterminationoftheendorsementnotes

receivable.Ifbankisunabletosettlethenotesonmaturity,accordingtotherelevantlawsand

regulationsofChina,theGroupwouldundertakelimitedliabilityforthenotes.

XIV.NOTESTOCOMPANYFINANCIALSTATEMENTS-continued2.Notesandaccountsreceivable-continued2.2Notesreceivable-continued(4)Notesreceivablewerereclassifiedasaccountsreceivableduetothedefaultofdrawer

Asat31December2018,therewasnonotesreceivablewerereclassifiedasaccountsreceivableduetothedefaultofdrawer(31December2017:Nil).2.3Accountsreceivable(1)Disclosureofaccountsreceivablebycategories:

31/12/201831/12/2017BalanceBaddebtsprovisionsCarryingAmountBalanceBaddebtsprovisionsCarryingAmountAmountProportionAmountProportionAmountAmountProportionAmountProportionAmount

RMB(%)RMB(%)RMBRMB(%)RMB(%)RMBAccountsreceivable

forwhichbaddebtprovisionhasbeenassessedindividually1,447,973100.0--1,447,9737,805,333100.0--7,805,333

____________________________________________________________________________________________Thenormalcredittermoftradereceivablesisonemonth.Thetradereceivablesareinterestfree.Theaginganalysisisasfollows:

31/12/201831/12/2017

RMBRMBWithin1year1,447,9737,805,333

________________________________________________(2)Provision,reversalsandcollectionsduringthecurrentperiod:

Asat31December2018,therewasnoprovisionprovidedfortradereceivables(31December2017:Nil).TheCompanydidnotprovide,reverseorwriteoffanyprovisionduring2018(31December2017:Nil).(3)Thebalanceofaccountsreceivableattheendoftheyear

RelationshipProportionofwiththeGroupAmountAgingtotalreceivablesZhongyaPharmaceuticalOtherrelatedparties1,447,973Within1year100.0

____________________________

XIV.NOTESTOCOMPANYFINANCIALSTATEMENTS-continued3.Otherreceivables3.1Presentedbycategories

31/12/201831/12/2017

RMBRMBInterestreceivable254,08876,646Dividendreceivables500,000,000407,495,922Otherreceivables525,389,268592,274,075

________________________Total1,025,643,356999,846,643

________________________

________________________3.2Dividendreceivables

31/12/2017IncreaseDecrease31/12/2018RMB

RMBRMBRMBWithin1year

Including:SalesCompany402,595,884867,404,116(770,000,000)500,000,000

WinesSales-30,000,000(30,000,000)-LangfangCastel-785,986(785,986)-BeijingChateau-19,850,000(19,850,000)-ShiheziChateau4,900,03815,531,228(20,431,266)-NationalWines-20,000,000(20,000,000)-Langfangsales-1,981,410(1,981,410)-Atrio-2,080,191(2,080,191)-ChileIndomitaWineGroup-6,495,728(6,495,728)-

______________________________________

Total407,495,922964,128,659(871,624,581)500,000,000

____________________________________________________________________________

3.3Otherreceivables(1)Disclosureofotherreceivablesbycategories:

31/12/201831/12/2017BalanceBaddebtsprovisionsCarryingAmountBalanceBaddebtsprovisionsCarryingAmountAmountProportionAmountProportionAmountAmountProportionAmountProportionAmount

RMB(%)RMB(%)RMBRMB(%)RMB(%)RMBOtherreceivablesforwhichbaddebtprovisionhasbeenassessedindividually525,389,268100.0--525,389,268592,274,075100.0--592,274,075

__________________________________________________________________________________

XIV.NOTESTOCOMPANYFINANCIALSTATEMENTS-continued3.Otherreceivables-continued3.3Otherreceivables-continued(1)Disclosureofotherreceivablesbycategories:-continued

Theaginganalysisisasfollows:

31/12/201831/12/2017

BaddebtsCarryingBaddebtsCarryingBalanceprovisionamountBalanceprovisionamountAmountProportionAmountAmountAmountProportionAmountAmount

RMB%RMBRMBRMB%RMBRMBWithin1year491,483,88193.5-491,483,881589,011,10399.5-589,011,1031to2years33,897,0846.5-33,897,0843,006,4880.5-3,006,4882to3years8,303--8,30353,794--53,794Over3years----202,690--202,690

_____________________________________________________

525,389,268100.0-525,389,268592,274,075100.0-592,274,075

__________________________________________________________________________________________________________(2)Accrual,reversalandwritten-offduringthecurrentperiod

Nobaddebtaccruedorreversedin2018(2017:Nil.).(3)Otherreceivableswrittenoffcurrentyear

Nootherreceivableswrittenin2018(2017:Nil.).(4)Disclosureofotherreceivablesbynature

31/12/201831/12/2017

RMBRMB

Receivablefromsubsidiary523,579,831589,897,407

Receivabledeposit12,5002,500

Others1,796,9372,374,168

________________________

525,389,268592,274,075________________________________________________(5)Topfiveentitieswiththelargestbalancesofotherreceivables

Asat31December2018,theparticularsoftopfiveotherreceivablesareasfollows:

ProportionoftotalNatureAmountAgingprepayments

RMB%SalesCompanyInternalbalance369,060,579Within1year70.2R&DCentreInternalbalance120,589,826Within1year23.0YantaiCastelChateauInternalbalance12,404,563Within1year2.4PioneerInternationalInternalbalance10,704,391Within1year2.0NingxiaChateauInternalbalance7,085,540Within1year1.3

____________

519,844,89998.9

________________________

XIV.NOTESTOCOMPANYFINANCIALSTATEMENTS-continued4.Inventories

31/12/201831/12/2017

NetcarryingNetcarryingBalanceProvisionamountBalanceProvisionamount

RMBRMBRMBRMBRMBRMBRawmaterial1,200,528-1,200,5281,841,216-1,841,216Workinprogress358,230,774-358,230,774307,104,357-307,104,357Finishedgoods25,723,438-25,723,43839,096,480-39,096,480

__________________________________________________

385,154,740-385,154,740348,042,053-348,042,053

____________________________________________________________________________________________________5.Long-termequityinvestments

2018Cost31/12/2017fortheyear31/12/2018ShareholdingVotingpowerfortheyear

RMBRMBRMBRMB%%RMBCostMethod

XinjiangTianzhu(a)60,000,00060,000,000-60,000,00060100-KylinPackaging23,176,06323,176,063-23,176,063100100-ChangyuChateau(a)28,968,10028,968,100-28,968,10070100-ChangyuChateau(a)3,500,0003,500,000-3,500,00070100-NingxiaGrowing36,573,24736,573,247-36,573,247100100-NationalWines2,000,0002,000,000-2,000,00010010020,000,000IceChateau(a)30,440,50030,440,500-30,440,50051100-BeijingChateau(a)579,910,000579,910,000-579,910,0009010019,850,000SalesCompany7,200,0007,200,000-7,200,000100100867,404,116LangfangSales(b)100,000100,000-100,000101001,981,410LangfangCastel(a)19,835,73019,835,730-19,835,73039100785,986WineSales4,500,0004,500,000-4,500,00010010030,000,000ShanghaiSales(b)300,000300,000-300,00030100-BeijingSales850,000850,000-850,000100100-JingyangSales(b)100,000100,000-100,00010100-JingyangWine(b)900,000900,000-900,00090100-NingxiaWine222,309,388222,309,388-222,309,388100100-NingxiaChateau443,463,500443,463,50010,000,000453,463,500100100-DingluoteChateau(b)212,039,586212,039,586-212,039,58665100-ShiheziChateau809,019,770809,019,7703,000,000812,019,77010010015,531,228ChanganChateau803,892,258803,892,258-803,892,258100100-R&DCentre(a)500,000,000500,000,0002,788,906,4453,288,906,44572100-HuanrenWine21,700,00021,700,000500,00022,200,000100100-GrapeWineSalesCo.,5,000,000----100-FrancsChamps236,025,404236,025,404-236,025,404100100-Atrio190,150,544190,150,544-190,150,54475752,080,191IWCC274,248,114274,248,114-274,248,11485856,495,728AustraliaKilikanoon

Estate--107,194,420107,194,4208080-

___________________________________

4,516,202,2044,511,202,2042,909,600,8657,420,803,069964,128,659

______________________________________________________________________(a)TheCompanyhas100%votingpowerofthosesubsidiariesbythewayofindirect

controlling,referringtoNoteVIII-1.(b)TheCompanyhas100%votingpowerofthesesubsidiariesbythewayofindirect

controllingthroughwhollyownedsubsidiaries.During2018,therewasnosignificantrestrictionontheremittanceoffundfromtheinvesteestotheCompany.

XIV.NOTESTOCOMPANYFINANCIALSTATEMENTS-continued6.Fixedassets

(1)Fixedassets

BuildingsMachineryMotorvehiclesTotal

RMBRMBRMBRMBTotaloriginalcarryingamount31/12/2017265,340,049475,569,63410,129,313751,038,996IncreasePurchase-9,345,433-9,345,433CIPtransfer8,887,802139,665-9,027,467DecreaseDisposal-(13,137,771)(3,479,487)(16,617,258)TransfertoInvestment

property(VI-8)(32,606,762)--(32,606,762)

____________________________________

31/12/2018241,621,089471,916,9616,649,826720,187,876

____________________________________

Totalaccumulateddepreciation31/12/2017111,607,494346,413,5324,867,069462,888,095IncreaseAdditions7,784,79415,133,656531,63923,450,089DecreaseDisposal(227,951)(12,642,520)(946,751)(13,817,222)TransfertoInvestment

property(VI-8)(17,644,360)--(17,644,360)

____________________________________

31/12/2018101,519,977348,904,6684,451,957454,876,602

____________________________________

Totalnetcarryingamount31/12/2018140,101,112123,012,2932,197,869265,311,274

________________________________________________________________________

31/12/2017153,732,555129,156,1025,262,244288,150,901

________________________________________________________________________Asat31December2018,fixedassetswithrestrictedownershipisRMB34,246,887(December31,2017:RMB36,349,289),referringtoNoteVI-45fordetails.Asat31December2018,theCompanyhasnofixedassetsclassifiedasheldforsale(31December2017:RMB2,000,197),andtheCompanyhasnotemporaryidlefixedassetsandfixedassetsunderfinanceleases.(2)Fixedassetsthroughoperatinglease

Amount

RMB

Machinery134,111

________________

XIV.NOTESTOCOMPANYFINANCIALSTATEMENTS-continued6.Fixedassets-continued(3)Fixedassetsofwhichcertificatesoftitlehavenotbeenobtained

Asat31December2018,buildingswithoutpropertycertificateareasfollows:

ReasonswhycertificatesoftitlehaveAmountnotbeenobtained

RMBFermentationcentreoffice,

experimentbuildingandworkshop3,653,494Processing

____________________7.Constructioninprogress

(1)Constructioninprogress

31/12/201831/12/2017

RMBRMBReconstructionofboilerheatingsystems-3,556,349Drainageproject-3,200,000Non-drystickerlabelingmachineproject4,105,264-Others2,206,437-

________________________

6,311,7016,756,349________________________________________________(2)Currentyearmovementonimportantconstruction:

Budget31/12/2017AdditionTransfertoPPE31/12/2018Accumulatedexpenditure/budgetTheprogressofconstructionFinancedby
RMBRMBRMBRMBRMB%
Reconstructionofboilerheatingsystems13,000,0003,556,349-(3,556,349)-100.0100.0Self-raised
Non-drystickerlabelingmachineproject6,920,000-5,431,516(1,326,252)4,105,26478.578.5Self-raised

Therewasnointerestcapitalizedinconstructioninprogressin2018.(3)Asat31December2018,therewasnoprovisionwasmadefortheconstructioninprocess,andno

provisionwasmade(31December2017:Nil).

XIV.NOTESTOCOMPANYFINANCIALSTATEMENTS-continued8Bearerbiologicalassets

Bearerbiologicalassetsaregrapetrees,whichmeasuredincostmethod.

ImmatureMaturebiologicalassetsbiologicalassetsTotal

RMBRMBRMBTotaloriginalcarryingamount31/12/20176,306,963130,929,124137,236,087IncreaseCultivatedincrease12,930,423-12,930,423Transfertomatureassets

fromimmatureassets(9,802,191)9,802,191-

_______________________________31/12/20189,435,195140,731,315150,166,510

_______________________________Totalaccumulateddepreciation31/12/2017-17,663,54817,663,548IncreaseAdditions-7,500,1697,500,169

_______________________________31/12/2018-25,163,71725,163,717

_______________________________Totalnetcarryingamount31/12/20189,435,195115,567,598125,002,793

______________________________________________________________31/12/20176,306,963113,265,576119,572,539

______________________________________________________________Asat31December2018,thereisnobiologicalassetwithownershiprestricted(31December2017:Nil).Asat31December2018,thereisnoindicationthatbiologicalassetsmaybeimpaired,andnoprovisionwasmade.(31December2017:Nil).

XIV.NOTESTOCOMPANYFINANCIALSTATEMENTS-continued9.Intangibleassets

Intangibleassets

Landuseright

RMBTotaloriginalcarryingamount31/12/2017and31/12/201896,594,766

__________Totalaccumulateddepreciation31/12/201726,971,547IncreaseAdditions2,379,153

__________31/12/201829,350,700

__________Totalnetcarryingamount31/12/201867,244,066

__________

__________31/12/201769,623,219

____________________Asat31December2018,IntangibleassetswithrestrictedownershipareRMB50,902,950(December31,2017:RMB52,720,912),PleaserefertoNoteVI-45indetail.10.Deferredtaxassets

Recogniseddeferredtaxassetsnotpresentedatthenetamountafteroffset

Item31/12/201831/12/2017
DeductibletemporarydifferenceRMBDeferredtaxassetsRMBDeductibletemporarydifferenceRMBDeferredtaxassetsRMB
Unrealizedprofitfromintra-companytransactions5,897,4361,474,3597,163,8281,790,957
Unpaidbonus37,973,0009,493,24935,822,7358,955,683
Retirementbenefit10,143,9502,535,98810,057,1132,514,278
Deductiblelosses30,421,5117,605,37845,526,32711,381,582
Deferredincome12,343,9723,085,99316,581,6274,145,407
96,779,86924,194,967115,151,63028,787,907

11.Othernon-currentassets

31/12/201831/12/2017

RMBRMBReceivablesfromsubsidiaries972,700,0003,718,674,166

________________________________________________

XIV.NOTESTOCOMPANYFINANCIALSTATEMENTS-continued12.Short-termborrowings

31/12/201831/12/2017

RMBRMBCreditloans150,000,000600,000,000

________________________________________________Asat31December2018,creditloansdetailareasfollows:

LoanbankLoansamountLoantermInterestrateincontractInterestrat

RMB%%ICBCYantaibranch150,000,00024May2018–24May2019Annualbenchmarkrate4.35

__________________

13.Notesandaccountspayable

Theaginganalysisofaccountspayableareasfollows

31/12/201831/12/2017

RMBRMBWithin1year132,664,19597,036,1461to2years-556,8832to3years395240,095Over3years39,714-

________________________

132,704,30497,833,124________________________________________________14.Employeebenefitspayable

(1)Employeebenefitspayable

31/12/2017IncreaseDecrease31/12/2018

RMBRMBRMBRMBShort-termsalariesandwelfare60,050,96397,491,895(95,341,628)62,201,230Post-demissionbenefits

-predeterminedprovisionplan-6,785,401(6,785,401)-Terminationbenefit10,057,1135,216,248(5,129,412)10,143,949

____________________________________

70,108,076109,493,544(107,256,441)72,345,179

________________________________________________________________________

XIV.NOTESTOCOMPANYFINANCIALSTATEMENTS-continued14.Employeebenefitspayable-continued(2)Short-termsalariesandwelfare

31/12/2017IncreaseDecrease31/12/2018

RMBRMBRMBRMBSalariesandbonus60,694,62083,892,951(81,609,810)62,977,761Staffbenefit37,1736,191,811(6,191,811)37,173Staffwelfare-4,004,223(4,004,223)-Includes:

Medicalinsurance-3,476,931(3,476,931)-Injuryinsurance-289,904(289,904)-Maternityinsurance-237,388(237,388)-Housingfund-3,005,993(3,005,993)-Unionfeeandeducationfee1,896,872529,790(529,791)1,896,871

____________________________________

Total62,628,66597,624,768(95,341,628)64,911,805

____________________________________

Less:Non-currentliabilities2,577,7022,710,575

__________________

Short-termsalariesandwelfare60,050,96362,201,230

____________________________________(3)Predeterminedprovisionplan

31/12/2017IncreaseDecrease31/12/2018

RMBRMBRMBRMBPension-6,534,445(6,534,445)-Unemploymentinsurance-250,956(250,956)-

____________________________

-6,785,401(6,785,401)-

________________________________________________________TheCompanyparticipatesinpensioninsuranceandunemploymentinsuranceplansestablishedbygovernmentinstitution.Accordingtothoseplans,theCompanypayspensionandunemploymentinsuranceeachmonthonthebasisof18%and0.7%lastperiodsalaryrespectively.Apartfromthesemonthlyexpenses,theCompanydoesnotbearanyfurtherpaymentobligation.ThisyeartheCompanyshouldpayRMB6,534,445andRMB250,956(2017:RMB8,595,215andRMB323,852)respectivelyintopensioninsuranceandunemploymentinsurance.Asat31December2018,theCompanydoesnothaveunpaidpensionandunemploymentinsurance(31December2017:Nil)whichisduetothepensioninsuranceandunemploymentinsuranceplanandnotpaidattheendofthereportingperiod.

XIV.NOTESTOCOMPANYFINANCIALSTATEMENTS-continued15.Taxespayable

31/12/201831/12/2017

RMBRMBValueaddedtax1,686,599-Consumptiontax3,902,7916,450,962Corporationincometax-26,069Urbanlandusetax685,626784,627Individualincometax6,316,0016,630,393Cityconstructiontax36,314345,138Propertytax243,81482,669Others240,286249,832

________________________

13,111,43114,569,690________________________________________________16.Otherpayables16.1Presentedbycategories

31/12/201831/12/2017

RMBRMBInterestpayable181,250652,500Otherpayables607,793,269544,713,172

________________________

607,974,519545,365,672________________________________________________16.2Otherpayables(1)Naturesofotherpayablesareasfollows

31/12/201831/12/2017

RMBRMBPayabletosubsidiaries585,044,038534,530,323Payablesforequipmentandconstruction10,554,4518,538,687Depositsfromsuppliers5,982,500183,000Others6,212,2801,461,162

________________________

607,793,269544,713,172________________________________________________(2)Asat31December2018,therewerenosignificantoutstandingbalanceagedoverthanoneyear.

XIV.NOTESTOCOMPANYFINANCIALSTATEMENTS-continued17.Capitalreserve

201831/12/2017IncreaseDecrease31/12/2018

RMBRMBRMBRMBSharepremium557,222,454--557,222,454

____________________________________________________________________18.Operatingincomeandcosts

Operatingincomeisanalysedasfollows:

20182017RMBRMBPrincipaloperatingincome874,292,0881,310,443,414Otheroperatingincome2,154,982813,440

________________________

876,447,0701,311,256,854________________________________________________Operatingcostisanalysedasfollows:

20182017RMBRMBPrincipaloperatingcost772,497,7691,165,362,798Otheroperatingcost1,989,262590,610

________________________

774,487,0311,165,953,408________________________________________________19.Taxesandsurcharges

20182017RMBRMBConsumptiontax27,262,20953,236,697Cityconstructiontax3,214,54310,190,867Educationfeeandsurcharges2,159,6125,817,116Propertytax1,854,4862,267,901Landusetax3,168,5593,168,559Stamptax310,835603,461Others376,5171,285,624

________________________

38,346,76176,570,225________________________________________________

XIV.NOTESTOCOMPANYFINANCIALSTATEMENTS-continued20.Generalandadministrativeexpense

20182017RMBRMBSalaryandemployeebenefit55,580,88838,430,904Maintenancefee8,396,4326,192,525Officefee3,641,2103,881,091Servicefee3,495,3289,194,005Depreciation3,375,1804,286,164Propertyinsurancefees2,961,7423,080,521Leasingexpenses2,790,3582,276,896Amortization2,379,1532,695,110Shuttlebus1,442,3401,719,660Securityandsanitationfee763,792941,434Travellingexpenses324,566527,464Greeningfeeamortization312,080394,604Others5,042,1395,498,757

________________________

90,505,20879,119,135________________________________________________21.FinancialExpense

20182017RMBRMBInterestincome(41,821,372)(18,602,199)Exchangeloss4,443,1751,040,832Interestexpenses16,075,35317,414,181Bankcharges1,010,107784,754

________________________

(20,292,737)637,568

________________________________________________22.Investmentincome

20182017RMBRMBLong-termequityinvestmentincomeaccounted

forbyusingthecostmethod964,128,659798,877,905

________________________________________________

XIV.NOTESTOCOMPANYFINANCIALSTATEMENTS-continued22.Investmentincome-continued

Amongthelong-termequityinvestmentincomeaccountedforbyusingcostmethod,theinvesteeswithinvestmentincomeaccountingformorethan5%oftheCompany'stotalprofitbeforetaxareasfollows:

Investees20182017

RMBRMBSalesCompany867,404,116577,813,022BeijingChateau-87,000,000WineSales-53,461,029XinjiangTianzhu-48,620,373

________________________

867,404,116766,894,424________________________________________________Asat31December2018andat31December2017,therearenosignificantrestrictionontheremittanceofinvestmentincometotheCompany.23.Supplementtocashflowstatement

20182017RMBRMB(1)Cashflowsfromoperatingactivitiescalculatedby

adjustingthenetprofit:

Netprofit969,588,573793,598,010Add:Depreciationofinvestmentproperties1,857,902590,610

Depreciationoffixedassets23,450,08932,201,177Amortizationofintangibleassets2,379,1532,379,153Depreciationofbiologicalassets7,500,1696,781,447(Gains)Lossesondisposalofassets(12,411,962)29,625Financeexpenses17,808,56918,614,396Investmentincome(964,128,659)(798,877,905)Decrease/(increase)indeferredtaxassets4,592,940(1,802,655)Increase/(decrease)ininventories(37,112,687)444,690,365Decreaseintradereceivables37,072,169103,406,898Increase/(decrease)intradepayables92,609,575(3,541,352)

________________________Netcashflowsfromoperatingactivities143,205,831598,069,769

________________________________________________

XIV.NOTESTOCOMPANYFINANCIALSTATEMENTS-continued23.Supplementtocashflowstatement-continued(2)Significantinvestingandfinancingactivitiesnotinvolvingcashreceiptsandpayments

20182017RMBRMBChangetheclaimonsubsidiariesintoLong-term

equityinvestments2,802,406,4452,386,907,749Increasetheinvestmentinsubsidiaries

withbankacceptances-96,345,678Recovertheinvestmentinsubsidiaries

withbankacceptances-(96,345,678)

________________________2,802,406,4452,386,907,749________________________________________________24.Cashandcashequivalents

20182017RMBRMBClosingbalanceofCashandbank624,588,809559,174,466Less:

Restrictedbankdeposits2,611,3502,645,410Restrictedothermonetaryassets44,592,57757,960,190Depositwithaperiodofoverthreemonths45,000,0005,000,000

________________________Closingbalanceofcashandcashequivalents532,384,882493,568,866

________________________________________________

20182017RMBRMBCashandbank532,384,882493,568,866Including:Cashandbank3,1775,280

Bankdepositsondemand532,381,705493,563,586

________________________Closingbalanceofcashandcashequivalents532,384,882493,568,866

________________________

________________________

XIV.NOTESTOCOMPANYFINANCIALSTATEMENTS-continued25.Relatedpartytransactions

(1)Purchaseofmaterials

20182017RMBRMBSubsidiaries209,808,816352,495,622Otherrelatedparties88,897,12682,394,392

________________________

298,705,942434,890,014________________________________________________

(2)Salesofgoods

20182017RMBRMBSubsidiaries867,995,9601,302,056,254Otherrelatedparties8,451,1109,200,600

________________________

876,447,0701,311,256,854________________________________________________

(3)SalesofFixedassets

20182017RMBRMBSubsidiaries134,44547,843,203Otherrelatedparties-3,934,643

________________________

134,44551,777,846________________________________________________(4)Interestincomefromoccupationoffunds

20182017RMBRMBSubsidiaries35,823,55614,912,649

________________________________________________

(5)Leaseincome

20182017RMBRMBSubsidiaries1,997,164739,491

________________________________________________

XIV.NOTESTOCOMPANYFINANCIALSTATEMENTS-continued25.Relatedpartytransactions-continued

(6)Guarantees

WhetherguaranteesareGuaranteedpartyCurrencyAmountBeginningdateDuedatefulfilledcompletelyR&DCenterRMB500,000,0008March20178March2022NoAustralianKilikanoon

EstateAUD17,000,00013December201813December2023No

26.Receivablesandpayablestorelatedparties

(1)Tradereceivables

Tradereceivables31/12/201831/12/2017

BaddebtsBaddebtsBalanceprovisionBalanceprovision

RMBRMBRMBRMBOtherrelatedparties1,447,973-7,805,333-

____________________________________________________________________Otherreceivables31/12/201831/12/2017

BaddebtsBaddebtsBalanceprovisionBalanceprovision

RMBRMBRMBRMBSubsidiaries523,579,831-589,897,407-Otherrelatedparties813,440-813,440-

__________________________________524,393,271-590,710,847-____________________________________________________________________Othernon-currentassets31/12/201831/12/2017

BaddebtsBaddebtsBalanceprovisionBalanceprovision

RMBRMBRMBRMBSubsidiaries972,700,000-3,718,674,166-

____________________________________________________________________Theabovereceivablesduefromrelatedpartiesareunsecured,havenointerestorfixeddateofrepayment.

XIV.NOTESTOCOMPANYFINANCIALSTATEMENTS-continued26.Receivablesandpayablestorelatedparties-continued

(2)Tradepayables

Tradepayables31/12/201831/12/2017

RMBRMBOtherrelatedparties28,892,58329,145,914

________________________________________________Otherpayables31/12/201831/12/2017

RMBRMBSubsidiaries585,044,038534,530,323Otherrelatedparties450,000-

________________________

585,494,038534,530,323________________________________________________Theabovepayablesduetorelatedpartiesareunsecured,havenointerestorfixeddateofrepayment.

APPENDIXISUPPLEMENTARYINFORMATIONTOFINANCIALSTATEMENTSYEARENDED31DECEMBER2018I.DETAILSOFEXTRAORDINARYPROFITANDLOSS

2018RMBCorporateincometaxeffect11,368,355Governmentgrantscreditedinprofitandloss

(exceptforthoserecurringgovernmentgrantsthatarecloselyrelatedtotheGroup'soperationandhaveproperbasisofcalculation)87,281,434Othernon-operatingincomeandexpense3,817,401Corporateincometaxeffect(25,157,188)Theimpactofnon-controllinginterests'equity(103,311)

__________

77,206,691____________________TheCompany'sextraordinaryprofitandlossitemsarerecognizedinaccordancewiththeregulationsofthe"publicofferingofsecuritiesoftheCompanyDisclosureExplanatoryNoticeNo.1-non-recurringprofitandlosses"(SFC[2008]No.43).II.RETRUNONEQUITY("ROE")ANDEARNINGSPRESHARE("EPS")

TheCompany'sROEandEPSarecalculatedinaccordancewiththeCSRCregulationsofthe"InformationPreparingandDisclosureRulesofPublicCompanyNo.9-calculationanddisclosureofROEandEPS"(Revised2010).

Weightedaverage2018ROEBasicEPS

%RMBNetprofitattributabletoshareholdersoftheCompany11.231.52Netprofitattributabletoshareholders

oftheCompanydeductingextraordinaryprofitandloss10.401.41

__________________TheCompanydidnothaveanypotentialdilutiveshares.

Weightedaverage2017ROEBasicEPS

%RMBNetprofitattributabletoshareholdersoftheCompany12.141.51Netprofitattributabletoshareholders

oftheCompanydeductingextraordinaryprofitandloss11.601.44

__________________TheCompanydidnothaveanypotentialdilutiveshares.

XII.ReferenceDocuments

(1)TheoriginalofAnnualReportautographedbythechairman.(2)TheFinancialStatementsautographedandsignedbythechairman,chiefaccountantandaccountantsincharge.(3)TheProspectusandPublicOfferingAnnouncementforStockBin1997;TheProspectusandTheShares’Change&PublicOfferingAnnouncementforStockAin2000.(4)TheoriginalsofalldocumentsandannouncementsthattheCompanymadepublicduringthereportperiodinthenewspapersdesignatedbyChinaSecuritiesRegulatoryCommission.

YantaiChangyuPioneerWineCo.Ltd.

BoardofDirectors

April20

th

,2019


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