Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
Yantai Changyu Pioneer Wine Co., Ltd.
2019Annual Report
Final 2020-01
April 2020
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
Contents
I、Important Notice，Contents and Definition ...... 3
II、Brief Introduction for the Company and Main Financial Indicators ...... 5
III、Summary of the Company’s Businesses ...... 10
IV、ManagementDiscussionandAnalysis ...... 14
V、Major issues ...... 37
VI、Changes in Shares and the Shareholders’ Situation ...... 55
VII、Related Situation of Preferred Shares ...... 63
VIII、Related Situation of Convertible Corporate Bonds ...... 63
IX、Situation for Directors, Supervisors, Senior Executives and Staffs ...... 64
X、Corporate Governance ...... 76
XI、Related Situation of Corporation Bonds ...... 83
XII、Financial Report ...... 84
XIII、Reference Document ...... 214
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual ReportI. Important Notice, Content and DefinitionThe board of directors，the board of Supervisors，directors, supervisors and senior executivesof the Company guarantee the truthfulness, accuracy and completeness of the contentscontained in the report with no false records, misleading statements or significant omissions,and undertake individual and joint legal liabilities.Mr. Zhou Hongjiang (Person in charge of the Company), Mr. Jiang Jianxun (Person in chargeof accounting work) and Ms. Guo Cuimei (Person in charge of accounting organ &Accountant in charge) assure the truthfulness, accuracy and completeness of the financialreport in the annual report.Except following directors, all other directors have personally attended the meeting fordeliberating the annual report.
Director name withnon-present in person
Director post withnon-present in person
non-present inperson
Name ofmandatory
| Reason for | |||
| Augusto Reina | Director | Die of illness | -- |
| Aldino Marzorati | Director | Trip blocked due |
to COVID-19
| epidemic | Zhou Hongjiang | ||
| Enrico Sivieri | Director | Trip blocked due |
to COVID-19
| epidemic | Zhou Hongjiang |
About significant risks that may be faced in production and operation process, please referto“(5) Risks likely to occur” part of “9. Expectation for the Company’s Future Development”in the Chapter Four “Management Discussion and Analysis” of the report.Investors areadvised to read carefully and pay attention to investment risks.Forward-looking statements such as future plans and development strategies covered in thisreport do not constitute a substantial commitment of the Company to investors. Investors areadvised to pay attention to investment risks.The Company’s preliminary scheme of profit distribution deliberated and passed by the boardof directors this time is shown as following:Based on the Company’s total 685,464,000shares, we plan to pay CNY7(including tax) in cash as dividends for every 10 shares to allshareholders and send 0 bonus share (including tax). Capital reserve will not be transferred toequity.
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual ReportDefinition
| Definition Item | Refers to | Definition Content |
| Company/The Company | Refers to | Yantai Changyu Pioneer Wine Co., Ltd. |
| Changyu Group/Controlling Shareholder | Refers to | Yantai Changyu Group Co., Ltd. |
| CSRC | Refers to | China Securities Regulatory Commission |
| SSE | Refers to | Shenzhen Stock Exchange |
| KPMG Huazhen | Refers to | KPMG Huazhen LLP (Limited Liability Partnership) |
| CNY | Refers to | Chinese Yuan |
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
II. Brief Introduction for the Company and Main Financial Indicators
1. Company’s information
| Stock Abbreviation | Changyu A, Changyu B | Stock Code | 000869, 200869 |
| Stock Abbreviation after Alteration | - | ||
| Place of Stock Listing | Shenzhen Stock Exchange | ||
| Legal Name in Chinese | |||
烟台张裕葡萄酿酒股份有限公司
| Abbreviation of Chinese Name |
张裕
| Legal Name in English | YANTAI CHANGYU PIONEER WINE COMPANY LIMITED |
| Abbreviation of English Name | CHANGYU |
| Legal Representative | Mr. Zhou Hongjiang |
| Registered Address | 56 Dama Road, Yantai, Shandong, China |
| Postal Code | 264000 |
| Office Address | 56 Dama Road, Yantai, Shandong, China |
| Postal Code | 264000 |
| Website | http://www.changyu.com.cn |
| webmaster@changyu.com.cn |
2. Contact person and information
Secretary to the Board of Directors Authorized Representative of Securities Affairs
| Name | Mr. Jiang Jianxun | Mr. Li Tingguo |
| Address | 56 Dama Road, Yantai, Shandong, China | 56 Dama Road, Yantai, Shandong, China |
| Tel. | 0086-535-6602761 | 0086-535-6633656 |
| Fax. | 0086-535-6633639 | 0086-535-6633639 |
| jiangjianxun@changyu.com.cn | stock@changyu.com.cn |
3. Information disclosure and filing location
| Media name for information disclosure selected by the Company | China Securities Newspaper , Securities Times and Hong Kong Commercial Daily |
| Web Site assigned by CSRC to carry the annual report |
http://www.cninfo.com.cn
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
| Filing location of the Company’s annual report | Board of Directors’ Office of the Company,56 Dama Road, Yantai, Shandong |
4. Registration changes
| Organization Code | 913700002671000358 |
Changes for the main businessesof the Company since it was listed
| The business scope determined by the Company when it was |
established on September 18
th
sales of wine, distilled liquor, healthy liquor, fruit liquor, non-
| alcohol beverage, fruit jam, packing material and winemaking machine.On |
April 17
th, 2008, approved by the
Company’s business scope is chang
| ed to production, processing and |
sales of wine, distilled liquor, medicinal liquor, fruit liqueur
non-alcohol beverage, fruit jam, packing material,
| winemaking |
machines and licensed import and export. On May12
th,
approved by the 2009 shareholders’ meeting, the Company changed
its business
distilled liquor, medicinal liquor, fruit liqueur, non-
| alcohol beverage, |
fruit jam, packing material and its products, winemaking machine
licensed import and export and
| external investment according to |
national policy. On September 23
rd, 2016, approved by
annual 1
stInterim shareholders’ meeting, the Company chang
| ed its |
operating scope to wine and fruit wine (bulk wine, processing and
liqueur) production, other liquors (other distilled liquors
| ) production, |
production, processing and sales of packing material and wine
making machinery,grape plantation and procurement
| , tourism resources development (excluding tourism), packaging design, |
activity of building rental, licensed import and export
warehouse business and
| external investment according to national |
policy.
No.
5. Other relevant information
The accounting firm appointed by the Company
Changes for all previouscontrolling shareholdersName
| Name | KPMG Huazhen LLP |
Address
| Level 8, No.2 East Wing of Dongfang Square, No.1 East Chang’an Street, Dongcheng District, Beijing | |
| Name of signatory accountants | Ms. Wang Ting, Ms. Chai Jing |
The sponsor institution appointed by the Company to perform the duty of continuoussupervision during the report period
□Available ?Not available
The financial adviser appointed by the Company to perform the duty of continuoussupervision during the report period
□Available ?Not available
6. Key accounting data and financial indicators
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
Whether the Company needs to retrospectively adjust or restate the accounting data ofprevious fiscal years.
□Yes ?No
2019 2018
2017
| More or less than Last year (%) | ||||
| Operating revenue (CNY) | 5,031,011,489 | 5,142,244,740 | -2.16% | 4,932,545,229 |
| Net profit attributed to |
shareholders of the listed
1,129,735,749
| company (CNY) |
1,042,632,929
8.35%
1,031,695,056
| Net profit attributed to |
shareholders of the listedcompany after deductingnon-recurring profits and
892,075,931
| losses (CNY) |
965,426,238
-7.60%
986,095,872
| Net cash flows from operating activities (CNY) |
837,838,024
975,978,746
-14.15%
973,243,027
| Basic earnings per share (CNY) |
1.65
1.52
8.55%
1.51
| Diluted earnings per share (CNY) |
1.65
1.52
8.55%
1.51
| Weighted average for |
earning rate of net assets
11.30%
| (CNY) |
11.23%
0.07%
12.14%
December 31st,
2019
December 31st,
2018
More or less than
Last year (%)
December 31st,
2017
Total assets (CNY)
| Total assets (CNY) | 13,647,932,568 | 13,117,729,052 | 4.04% | 12,536,755,208 |
| Net Assets attributed to |
shareholders of the listed
10,308,910,198
| company (CNY) |
9,606,099,365
7.32%
8,906,342,299
7. Differences in accounting data under PRC accounting standards and international
accounting standards
(1) Differences between net profits and net assets in the financial report disclosed
according to both international accounting standards and PRC accounting standards
□Available ?Not available
There are no differences between net profits and net assets in the financial report disclosedaccording to both international accounting standards and PRC accounting standards duringthe report period.
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
(2) Differences between net profits and net assets in the financial report disclosed
according to both foreign accounting standards and PRC accounting standards
□Available ?Not available
There are no differences between net profits and net assets in the financial report disclosedaccording to both foreign accounting standards and PRC accounting standards during thereport period.
8. Key financial indicators by quarter
Unit：CNY
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |
| Operating revenue | 1,667,424,758 | 890,850,027 | 968,100,175 | 1,504,636,529 |
| Net profit attributed to |
shareholders of the
456,381,471
| listed company |
147,022,318
125,557,834
400,774,126
| Net profit attributed to |
shareholders of thelisted company afterdeducting non-
450,709,661
| recurring profits and losses |
101,781,034
119,702,422
219,882,814
| Net cash flows from operating activities |
294,678,342
204,797,664
145,855,707
192,506,311
Whether there are significant differences between the above mentioned financial indicators ortheir sum and the related financial indicators in the quarterly reports and semi-annual reportsdisclosed by the Company.
□Yes ?No
9. Item and amount of non-recurring profit and loss
?Available □Not available
Unit：CNY
| Item | 2019 | 2018 | 2017 | Explanation |
Profits and losses on disposal ofnon-current assets, including theprovision for asset impairment write-offpart
6,272,676
11,368,355
-222,586
| Including return on investment of |
CNY 6,233,661through
| disposing equity of Mirefleurs | ||
| Government grants included in the |
current profits and losses(except forthose recurring government grants thatare closely related to the entity'soperation, in line with related regulations
84,837,581
| and have proper basis of calculation) |
87,281,434
47,638,384
| Other non-operating revenues and | 7,298,479 | 3,817,401 | 13,999,251 |
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
Other profit and loss
| expenditures in addition to the aforementioned items |
| projects conforming |
to the definition of non-recurring profitand loss
218,649,636
| Offsetting the |
trademark usefee in previousyearsFor detailedinformation,please refer to
(5)(a) of X in
| Financial Report | ||
| Less |
：
| Income tax effect | 79,367,893 | 25,157,188 | 15,523,424 | |
| Minority shareholders' equity effect (after taxes) |
30,661
103,311
292,441
| Total | 237,659,818 | 77,206,691 | 45,599,184 | -- |
The reasons shall be made clear and definitely as to the non-recurring profit and loss that theCompany has defined by virtue of the Explanatory Announcement on Public Company’sInformation Disclosure No.1 - Non-recurring Profit and Loss and as to regarding thenon-recurring profit and loss as recurrent profit and loss as specified in the ExplanatoryAnnouncement on Public Company’s Information Disclosure No.1 –Non-recurring Profit andLoss.
□Available ?Not available
There are no cases that non-recurring profit and loss is defined and specified as recurrentprofit and loss in accordance with the Explanatory Announcement on Public Company’sInformation Disclosure No.1 - Non-recurring Profit and Loss during the report period.
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual ReportIII. Summary of the Company’s Businesses
1. Main businesses during the report period
During the report period, the Company’s main businesses are production and operation of wine and brandy, thus providing domestic and foreignconsumers with healthy and fashionable alcoholic drinks. Compared with earlier stage, there are no significant changes happened to theCompany’s main businesses. The wine industry that the Company involved in is still in growth stage. Although being affected by many factorsfor the short-term, the competition in the market is fierce and the wine consumption temporarily declines. However, seen from the long term,the whole domestic wine market is on the rising trend. The Company is at the forefront in the domestic wine market.
2. Significant changes of main assets
(1) Significant changes of main assets
| Main assets | Explanation of significant changes |
Equity asset
Agreement with SC Garri du Gai to jointly establish joint venture company L&M Holdings, in which FrancsChamps Participations SAS used 100% equity of Societe Civile Argricole Du Chateau De Mirefleurs ascontribution of capital; determined the long-term equity investment of CNY 45.10 million, the carryingamount of long-term equity investment adjusted and reduced by CNY 1.12 million in accordance to theequity method at the end of the period and the ending balance with CNY 43.98 million.Fixed asset
| During the report period, this Company’s subsidiary Francs Champs Participations SAS signed Cooperation |
| The fixed assets increased by 2.51% compared with the initial stage, owing to part of constructions in process |
have been transferred to fixed asset during the report period.
| Intangible asset | There are no significant changes of intangible asset during the report period. |
Construction in process
constructions in process have been transferred to fixed asset during the report period.
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
(2) Main overseas assets situation
?Available □Not available
Unit：CNYDetails of
assets
Formation
reasons
Assets scale Location
Operation
mode
measures forsafeguarding of
| asset security |
Earningcondition
overseas assets inthe Company’s
| net assets |
Whether there are
significantimpairment risks
Hacienda Y
VinedosMarques Del
Atrio. SL
Acquisition of
equity
561,790,770 Spain
Independent
operation
participates inmakingimportantdecisionsthrough board of
directors andappoints CFO
on financial
| management. |
6,463,473 1.21% No
Indomita
WineCompanyChile, S.p.A.
Establishment
of jointventure
515,352,803 Chile
Independent
operation
participates inmakingimportantdecisionsthrough board of
directors andappoints CFOon financial
| management. |
16,279,461 3.47% No
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
KilikanoonEstate Pty.,
Ltd.
Acquisition of
equity
156,244,219 Australia
Independentoperation
participates inmakingimportantdecisionsthrough board of
| directors. |
463,409 0.79% No
FrancsChampsParticipationsSAS
Sole
establishment
229,962,968 France
Independentoperation
| proprietorship | The Company |
participates inmakingimportantdecisionsthrough board of
4,117,668 2.17% No
| directors. | ||
| Explanation |
for othersituation
No
3. Analysis of core competitiveness
Compared with the participants in the arena of the Chinese wine sector, we believe that the Company is with the following advantages:
Firstly, the Company has been enjoying a well-known wine brand since 120-odd years. “Changyu”, “Noble Dragon” and “AFIP” are all Chinafamous brand that have strong influence and good reputation.Secondly, the Company has set up a nationwide marketing network, formed a “three-level” marketing network system mainly composed of theCompany’s salesmen and dealers, with strong marketing ability and market exploitation ability.
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual ReportThirdly, the Company has strong scientific prowess and a product R&D system. Relying on the country’s only “State-level Wine R&D Center”,the Company has mastered advanced winemaking technology and production processes as well as been powerful enough in product innovationand perfect quality control system.Fourthly, the Company is in possession of a lot of grape-growing bases that are compatible with its development requirements. The Companyhas developed a great deal of vineyards in the most suitable areas for wine grape growing such as Shandong, Ningxia, Xinjiang, Liaoning, Hebeiand Shanxi, whose scale and structure have generally met the Company’s needs for development.Fifthly, products in high, medium and low-grade as well as varieties and categories are all complete. Over 100 varieties of series products suchas wine, brandy and sparkling wine covers various grades, including high, medium and low-grade, which can meet different consumer groups’demands. The Company has taken the dominant status in the domestic wine industry through rapid development in the past 10-odd yearand hascomparative advantages in the future competition.Sixthly, the Company has a relatively perfect motivation system. Most of Company’s employees indirectly hold the Company’s equity throughcontrolling shareholders. There are high consistency between employee benefits and shareholders benefits, in favor of motivating employees tocreate value for shareholders.Seventhly, the Company has set up flexible and efficient decision-making mechanism. The Company’s core management team always maintainsa working style of unity and pragmatic and flexible and efficient decision-making mechanism, which makes the Company can deal with marketchanges more calmly.Eighthly, the global production capacity layout has been basically completed. The Company has completed production capacity layout in China,France, Chile, Spain, Australia and other major wine producing countries in the world, enabling making better use of global high-quality rawmaterial resources, capital, talents and advanced production processes and technologies to provide consumers with diversified quality productsand better serve consumers.Based on the above reasons, the Company has formed relatively strong core competence and will maintain a relatively dominant position in thefuture predictable market competition.
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual ReportIV. Management Discussion and Analysis
1. Summarization
In 2019, influenced by many factors, such as the slowdown of domestic economic growth andthe increase in uncertainty resulting from Sino-US trade friction, the competition in domesticwine market was very strong. The sales volumes of both imported wine and domestic winedecreased and some wine production enterprises got into trouble.Facing quite a lot of externaldisadvantages, the Company persisted in taking the market as the center, adhered to thedevelopment strategy of “Focus on middle-and-high level, Focus on high quality, Focus onbig product” and the marketing philosophy of “obtaining growth from the terminal andnurturing consumers”, and strived to promote product sales, achieving good results andrealizing operating revenue of CNY5,031.01million with a year-on-year decrease of
2.16%and net profit of CNY1,129.74million belonging to the parent company’s shareholders
with a year-on-year increase of8.35%.
2. Analysis of main business
(1) Summarization
Description
the end of the period
| over the end of last year |
Cause of significant changes
-
| Operating revenue | 2.16% | Mainly because of decrease in sales volume |
| Operating cost | -0.74% | Mainly because of decline in wine sales |
-
| Sales expense | 17.37% | Mainly because of return of trademark use |
fee during this report period
-
| Management expense | 9.22% | Mainly because of year-on-year decrease |
in wage & welfare and depreciation
expensesR&D
expense
| R&D | 26.27% | Mainly because of increase in expenses |
for technology research and development
| in 2019 | ||
| Financial expense |
-
| 1.82% | Mainly because of decrease in loan interest expenditure |
-14.15
| Net amount of cash flow generated in operating activities | % | Mainly because of decrease in received |
cash from product sales and rendering of
serviceNet amount of cashflow generated ininvestment activities
-59.0
| Net amount of cash flow generated in investment activities | 1% |
Mainly because of decrease in paid cashfor investment activities
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
-raising
| activities | 9.06% |
Mainly because of decrease in
from capital-raising activitiesReview and summary of the process of the Company’s early-disclosed development strategyand business plan during the report periodDuring the report period, the Company realized the operating revenue ofCNY5,031.01millionwithandecrease of 2.16% compared with last year, slightly lower thanthe target fixed at the beginning of the year of realizing operating revenue no less than CNY
5.3 billion. The net profit of CNY 1,129.74 million belonging to the parent company’s
shareholders was realized with an increase of 8.35% compared with last year. The mainworks during the report period were shown as followed:
Firstly, the Company adjusted the sales structure and rationalized the marketing system,further promoting the market strategy. During the report period, the Company strengthenedthe sales structure led by alcohol product variety and streamlined the marketing system forvarious alcohol products such as wine, brandy and imported wine etc., making sales teambecome more focused and further clarifying the responsibilities, rights and benefits. Therelationship between parent brand Changyu and its subsidiary brands were rationalized. TheCompany first proposed and implemented“Brand Manager System”, highlighted the keypoints according to different brand positioning, studied different target consumer groups in atargeted manner and let dedicated people do professional things so that the branddevelopment planning became clearer. Each variety of alcohol products focused according torespective brand development trend and clarified corresponding power point. To brandy, theCompany actively changed its market positioning, strived to learn promotion experience ofhigh-end Chinese liquor in order to cut the “cake” of liquor market; to wine, the Companystudied the market strategy with the bench marking of international competitive productsbased on the characteristics of different wineries. To imported wine, the Company selectedthe best from imported wines and paid special attention to Chilean Indomita and AustralianKilikanoon. Through the “jointly building a fee pool with distributors”, an exclusive team ofChangyu under each backbone distributor system was built to ensure the properimplementation of “obtaining growth from the terminal and nurturing consumers”.Secondly, the Company insisted on product innovation, strengthened brand building andcontinuously expanded market influence. During the report period, the Company adhered tothe general principle of “not stunning, not listed” for new products and successively launcheda series of new products including new Rena Chateau, new Castel, Shartar five-star brandy,Pagese, Mminni, Long Tailed Cat, Vini Panda and limited-edition Noble Dragon and so on.These new products were well received by the market and recognized by consumers, makingthe domestic and foreign influence of “Changyu” brand increase steadily. The data from L.W.Institute of Xinhua News Agency showed that “The global brand awareness of Changyu is
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
equivalent to Lafite”. Based on the annual global wine brand influence index issued by WineIntelligence, a British wine research agency, “Changyu” ranked first in the Chinese market.Thirdly, The Company implemented precision marketing by virtue of digital technology toimprove operating efficiency. During the report period, the Company further implementedthe order-driven approach and fully realized online coding for chateau wines, Noble Dragon,and ordinary wines, basically achieving order driving of products.The identificationmanagement work “one bottle, one code” was put in place, and the anti-counterfeiting workfor high-end products is continued being promoted.The Company gradually completed thetransformation of marketing code, deeply investigated the distributor identificationmanagement and product traceability, and preliminarily made the planning of productanti-counterfeiting trackability and marketing promotion system integrating logistics code,anti-channeling code and marketing code into one code, which further strengthened the linkcontrol. The Company implemented a “comprehensive digital transformation” strategy todrive sales orders online and offline. The Company collaborated with online Tmall, JD andSuning and other digital platforms while cooperating with offline distributors to promoteAPP ordering.The Company formed strategic partnership with Tencent, JD, Tmall andSuning etc., and utilized digital means to gradually achieve “more precise user positioning,more sophisticated marketing promotion, and more efficient customer conversion”.Fourthly, the Company enhanced quality management and improved production processes,further improving product quality. During the report period, the Company strategicallydeployed global high-quality raw material bases, and laid out medium-and-long-termpremium raw material bases in China, Australia, Chile and France respectively, which hasprovided a sufficient quantity of medium- and high-grade bulk wine resources for theimplementation of the “Three Focus” strategy.The Company strengthened technicalexchanges between domestic and foreign winemakers, vigorously carried out research onnew technologies and new processes, improved traditional processes and continuouslyimproved product quality, which achieved significant results. 3 great gold medals and 34gold medals were awarded in various international competitions. Koya XO 15 years won thechampionship at the Global Brandy Blind Tasting Fair, surpassing the world’s fivewell-known XO brands. The Company also built “Koya” to be a Chinese high-end brandybrand.Changyu Koya chateau was awarded the title of “The First Brandy Chateau in China”by China Alcohol Drinks Association, and the winemaker Ms. Zhang Baochun was awardedthe title of “Chief Brandy Master in China”. The Chinese Brandy Research Institution wasformally settled in Koya chateau. Changyu Noble Dragon became “Global TOP5” in theglobal best-selling wine brands blind tasting competition, and was rated as “Asian TOP1” bythe Singapore Lianhe Zaobao.Fifthly, the Company strengthened internal audit, intensified risk prevention and control, andreduced operating costs. During the report period, the Company strengthened tax planning,conducted comprehensive audits to off-site warehouses, accounts receivable, advertising feemanagement and distributor inventory etc., and established and improved risk prevention and
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Reportcontrol system and budget dynamic management system for overseas enterprises, whicheffectively prevented operating risks and reduced operating costs.
(2) Revenue and cost
① Composition of operating revenue
Unit: CNY
| 2019 | 2018 |
Year-on-year
increase ordecrease (%)Amount
operating
| revenue |
Amount
operating
| revenue | ||
| Total operating revenue |
5,031,011,489 100% 5,142,244,740 100% -2.16%
| Sector-classified | |
| Sector of liquor | |
and alcoholicbeverage
5,031,011,489 100% 5,142,244,740 100% -2.16%
| Product-classified | |||||
| Wine | 3,833,828,384 | 76.20% | 4,000,233,434 | 77.79% | -4.16% |
| Brandy | 1,071,623,817 | 21.30% | 999,207,299 | 19.43% | 7.25% |
| Tourism | 88,716,296 | 1.76% | 101,978,938 | 1.98% | -13.01% |
| Others | 36,842,992 | 0.74% | 40,825,069 | 0.79% | -9.75% |
| Total | 5,031,011,489 | 100% | 5,142,244,740 | 100% | -2.16% |
| Area-classified | |||||
| Domestic | 4,482,413,271 | 89.10% | 4,486,387,956 | 87.25% | -0.09% |
| Overseas | 548,598,218 | 10.90% | 655,856,784 | 12.75% | -16.35% |
| Total | 5,031,011,489 | 100% | 5,142,244,740 | 100% | -2.16% |
② The cases of industry, product or area accounting for over 10% in the Company’s
operating revenue or operating profit?Available □Not available
Unit: CNY
Operatingrevenue
Operating cost
Grossmargin
increase ordecrease (%)of operating
| revenue | Year-on-year |
increase ordecrease (%)of operating
| cost | Year-on-year |
increase ordecrease (%)
of gross
| profit rate | ||
| Sector-classified | ||
| Sector of | ||
liquor andalcoholic
5,031,011,489 1,887,495,991 62.48% -2.16% -0.74% -0.54%
| beverage | |
| Product-classified | |
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
| Wine | 3,833,828,384 | 1,401,341,243 | 63.45% | -4.16% | -4.07% | -0.03% |
| Brandy | 1,071,623,817 | 436,894,314 | 59.23% | 7.25% | 8.22% | -0.37% |
| Tourism | 88,716,296 | 27,251,750 | 69.28% | -13.01% | -12.93% | -0.03% |
| Others | 36,842,992 | 22,008,684 | 40.26% | -9.75% | 282.20% | -45.63% |
| Total | 5,031,011,489 | 1,887,495,991 | 62.48% | -2.16% | -0.74% | -0.54% |
| Area-classified | ||||||
| Domestic | 4,482,413,271 | 1,523,524,727 | 66.01% | -0.09% | 3.11% | -1.05% |
| Abroad | 548,598,218 | 363,971,264 | 33.65% | -16.35% | -14.16% | -1.69% |
| Total | 5,031,011,489 | 1,887,495,991 | 62.48% | -2.16% | -0.74% | -0.54% |
Under the condition that the statistical caliber of the Company’s main business data isadjusted during the report period, the Company’s main business data adjusted on the basis ofcaliber at the end of report period in recent one year.
□Available ?Not available
③Whether the Company’s sales revenue for material object is more than labor service
revenue?Yes □No
Sector Project Unit 2019 2018
increase or
| decrease (%) | |||||
| Wine | Sales volume | Ton | 95,902 | 112,600 | -14.83% |
| Brandy | Sales volume | Ton | 38,895 | 39,315 | -1.07% |
Explanation on the causes of over 30% year-on-year changes of the related comparison data
□Available ? Not available
④ The fulfillment of major sales contract signed by the Company up to the report
period
□Available ? Not available
⑤ Composition of operating costs
Classification of sector and product
Unit: CNYSector Project
2019 2018
Year-on-year
increase ordecrease (%)Amount
the operating
cost (%)
Amount
| Proportion in | Proportion in |
the operating
cost (%)Liquorandalcoholic
Blending liquor
| 941,841,689 | 50.76% | 981,838,789 | 52.42% | -1.66% |
Packingmaterial
632,114,480 34.07% 633,281,194 33.82% 0.26%
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
beverage
Wages65,607,419 3.54% 63,385,522 3.38% 0.15%
Manufacturingexpenses
215,835,927 11.63% 194,485,534 10.38% 1.25%
Unit: CNYSector Project
| 2019 | 2018 |
Year-on-yearincrease ordecrease (%)Amount
Proportion inthe operating
cost (%)
Amount
Proportion inthe operating
cost (%)
Wine
Blending liquor711,784,892 50.79% 759,623,724 52.00% -1.21%
Packingmaterial
464,625,885 33.16% 484,791,303 33.19% -0.03%
Wages56,725,667 4.05% 54,718,770 3.75% 0.30%
Manufacturingexpenses
168,204,799 12.00% 161,721,616 11.06% 0.93%
Brandy
Blending liquor230,056,797 52.66% 217,997,239 54.00% -1.34%
Packingmaterial
167,488,596 38.34% 144,272,064 35.74% 2.60%
Wages8,881,752 2.03% 8,666,752 2.14% -0.11%
Manufacturingcost
30,467,170 6.97% 32,763,918 8.12% -1.14%ExplanationNo
⑥ Whether there are changes of consolidation scope during the report period
?Yes □NoFor detailed information about the changes in the scope of consolidated financial statementsin this year, please refer to VI“Change in consolidation scope” in Financial Report of thisreport.
⑦ Major changes or adjustments of the Company’s businesses, products or service
during the report period
□Available ?Not available
⑧Information of major sales customers and major suppliers
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual ReportThe Company’s major sales customersThe total sales amount of the top five customers（CNY）271,566,418
| The proportion that total sales amount of the top five customers accounting for the annual total sales amount |
（
）
5.40%
| The proportion that sales amount of the related party in the total sales |
amount of the top five customers accounting for the annual
（
| % |
）
0%
Information of the Company’s 5 biggest sales customersNo. Customer name
Sales amount
（CNY）
sales for the year（
| % |
）
| Changyuexin Trading Company Limited in Shenzhen city |
77,966,257.00
1.55%
| 2 | Shenzhen Ruiqi Trading Company Limited | 68,303,967.00 | 1.36% |
45,629,821.00
| Xinbaicheng Food Firm in Hanjiang district of Putian city |
0.91%
| Fuzhou Shengshihanggang Trading Company Limited |
42,902,091.00
0.85%
36,764,282.00
| Yukun Information Technology Co., Ltd. in Foshan city |
0.73%
| Total | -- | 271,566,418.00 | 5.40% |
Other situation explanations of major customers
□Available ?Not available
Information on the Company’s main suppliers
| The total purchase amount of the top 5 suppliers | 602,438,946.00 |
| The proportion of the total purchase amount of the top 5 suppliers in the annual purchase amount |
45.48%
10.08%
Information on the Company’s top 5 biggest suppliersNo. Supplier name
Purchase amount
(CNY)
The proportion of the related party purchase amount in the top 5 supplierpurchase amount in annual purchase amountProportion in total
purchase for the
| year |
（
）
139,869,748.00
| Liquan Sales Department of Shandong Yantai Winery Co.,Ltd. |
10.56%
2 Yantai Shenma Packaging Co., Ltd. 133,587,430.00
10.08%
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
3 Qixia Changyu Glass Co.,Ltd. 131,011,805.00
9.89%
4 Xinjiang Yuyuan Liquor Co.,Ltd. 127,813,447.00
9.65%
Fangcaohu Branch
70,156,516.00
| Xinjiang Tianyu Winery Co., Ltd. |
5.30%
Total -- 602,438,946.00
45.48%
Other situation explanations of main suppliers
□Available ?Not available
(3) Expense
Unit: CNY2019 2018
Year-on-year
increase ordecrease (%)
Explanation of significant
changesSalesexpense
1,053,232,024 1,274,599,146 -17.37%
| Year-on-year | |
| Mainly because of return of |
trademark use fee during this
Managementexpense
311,904,656 343,580,651 -9.22%
| report period |
| Mainly because of |
year-on-year decrease inwage & welfare and
| depreciation expenses | ||
| Financial expense |
35,290,702 35,945,302 -1.82%
Research andDevelopmentexpense
6,041,116 4,784,118 26.27%
| Mainly because of decrease in loan interest expenditure |
| Mainly because of increase in |
expenses for technologyresearch and development in2019
(4) Research and development investment
□Available ?Not available
(5) Cash flow
Unit: CNYItem 2019 2018
Year-on-year increase
Subtotal of cash inflow in
| or decrease (%) | ||
| operating activities |
4,782,456,490
5,080,363,769
-5.86%
Subtotal of cash outflow in
| operating activities |
3,944,618,466
4,104,385,023
-3.89%
Net amount of cash flow
837,838,024
975,978,746
-14.15%
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Reportgenerated in operating
Subtotal of cash inflow in
| activities |
| investment activities |
242,866,775
423,413,326
-42.64%
Subtotal of cash outflow in
| investment activities |
451,029,212
931,261,875
-51.57%
Net amount of cash flowgenerated in investment
| activities |
-208,162,437
-507,848,549
59.01%
Subtotal of cash inflow in
| capital-raising activities |
942,134,032
1,114,333,670
-15.45%
Subtotal of cash outflow in
| capital-raising activities |
1,413,600,451
1,546,641,222
-8.60%
Net amount of cash flowgenerated in capital-raising
| activities |
-471,466,419
-432,307,552
9.06%
Net increase of cash and cash
| equivalents |
158,912,341
25,971,060
511.88%
Explanation of main influence factors contributing to great changes in related data onyear-on-year basis?Available □Not availableCompared with the same period of last year, during the report period,the net amount of cashflow generated in operating activities decreased by 14.15%, mainly due to the year-on-yeardecrease in the cash received from commodity sales and rendering service; subtotal of cashinflow in investment activities decreased by 42.64%, mainly due to the decrease in receivedcash in recouping the capital outlay; subtotal of cash outflow in investment activitiesdecreased by 51.57%, mainly due to the decrease in the cash paid for acquiring fixed assets,intangible assets and other long-term assets and the cash paid for investment;net amount ofcash flow generated in investment activities increased by 59.01%, mainly due to the decreasein the cash outflow in investment activities; subtotal of cash inflow in capital-raising activitiesdecreased by 15.45%, mainly due to the decrease in received cash from loan; net increase ofcash and cash equivalents increased by 511.88%, mainly due to the decrease in cash outflowin investment activities.Explanation on the causes of major differences between the net cash flow generated by theCompany’s operating activities and net profit of this year during the report period.
□Available ?Not available
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
3. Analysis to non-main business
□Available ?Not available
4. Assets and liabilities
(1) Significant changes of assets composition
Whether the Company implements new financial instruments standard, new revenue standardor new lease standard for the first time since 2019 and adjusts related items in the financialstatement at the beginning of the execution year?Available □Not available
Unit: CNY
| At the end of 2019 | At the end of 2018 |
Proportionincrease ordecrease
| (%) | Explanation on |
significant
changesAmount
the total
| assets (%) |
Amount
the total assets
| (%) |
Monetary funds 1,565,783,980
11.47%
1,475,700,477
11.25%
0.22%
| No significant changes |
Receivables 266,218,153
1.95%
242,153,083
1.85%
0.10%
| No significant changes |
Inventory 2,872,410,407
21.05%
2,724,591,457
20.77%
0.28%
| No significant changes | |||
| Investment real estate |
29,714,586
0.22%
31,572,489
0.24%
-0.02%
| No significant changes | |||
| Long-term |
equity
43,981,130
| investments |
0.32%
0%
0.32%
| No significant |
changesFixed assets 5,894,068,898
43.19%
5,749,731,667
43.83%
-0.64%
| No significant changes | |||
| Construction in progress |
567,478,833
4.16%
759,296,591
5.79%
-1.63%
| No significant changes | |||
| Short-term borrowings |
754,313,744
5.53%
688,002,410
5.24%
0.29%
| No significant changes | |||
| Long-term borrowings |
128,892,501
0.94%
156,480,662
1.19%
-0.25%
| No significant changes |
(2) Assets and liabilities measured at fair value
□Available ?Not available
(3) Limitations of assets rights up to the end of the report period
At the end of report period, the Company has no assets sealed up, detained or frozen. Forinformation about assets mortgage and pledge, please refer to Announcement on External
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual ReportGuarantee disclosed on China Securities Journal, Securities Times and CNINFO(http://www.cninfo.com.cn/) in 2016, 2017, 2018 and 2019.
5. Investment condition
(1) Overall situation
?Available □Not available
| Investment amount during the report period (CNY) | Investment amount of the same period of last year (CNY) |
Variation
| 399,750,000 | 450,762,420 | -11.32% |
(2) Cases of acquired significant equity investments during the report period
□Available ?Not available
(3) Cases of significant ongoing non-equity investments during the report period
?Available □Not available
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report
Unit: CNY
Project name
Investmentmode
WhetherBelongsto fixedassetsinvestment
Involvedsectors ofinvestment projects
Investmentamountduringthe reportperiod
Accumulated
actualinvestmentamount upto the endofthe reportperiod
Capitalsource
Projectprogres
s
Estimatedearnings
Accumulated
realizedearningsupto the
end ofthereportpe
riod
Reasonsforunreachedplanningschedule andestimatede
arnings
Disclosureda
te (ifhave)
Disclosureindex (if have)
YantaiChangyuInternationalWineCityBlendingandCoolingCenter
Self-constructed
Yes
Liquorandalcoholicbeveragesector
250,180,000 1,626,294,100 Ownedfund 100% 0 0 — 2017.04.22
Please refer to ResolutionAnnouncement of SeventhSession Board of Directors
thMeeting, ResolutionAnnouncement of SeventhSession Board of Directors
th
Meetingand ResolutionAnnouncement of SeventhSession Board of Directors
thMeeting disclosed onChina Securities Journal,Securities Times andCNINFO(http://www.cninfo.com.cn/)
YantaiChangyuInternationalWineCityBottlingCenter
Self-constructed
Yes 91,000,000 1,004,200,000 Ownedfund 100% 0 0 — 2017.04.22
YantaiChangyuInternationalWineCityLogisticsCenter
Self-constructed
Yes 46,170,000 462,677,200 Ownedfund 100% 0 0 — 2017.04.22ChangyuVineand
Self-constructed
Yes 6,000,000 122,974,800 Owned fund 85% 0 0 — 2017.04.22
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual ReportWineResearchInstituteTreasureWineChateau
Self-constructed
Yes 0 128,820,000 Owned fund 75% 0 0 — 2017.04.22KoyaBrandyChateau
Self-constructed
Yes 0 147,329,000 Owned fund 85% 0 0 — 2017.04.22Oak barrelprocurementproject
Self-constructed
Yes 0 0 Owned fund 0% 0 0 — 2018.04.20SAPinformatizationfor industrialproduction
Self-constructed
Yes 2,600,000 40,450,000 Owned fund 100% 0 0 — 2018.04.20Project ofpurchase intrinityjointactionequipment byYantai chateau
Self-constructed
Yes 0 0 Owned fund 0% 0 0 — 2018.04.20
Project of“constanttemperatureand humidity”system inundergroundcellar of
Self-constructed
Yes 3,800,000 3,800,000 Owned fund 100% 0 0 — 2018.04.20
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual ReportResearch &DevelopmentCenterConstruction
supplierrelationshipmanagement
| platform and |
plantmaintenanceplatform
Self-constructed
Yes 0 0 Owned fund 0% 0 0 — 2018.04.20
Total -- -- -- 399,750,000.00 3,536,545,100.00 -- -- 0 0 -- -- --
(4) Financial assets investment
①Security investment situation
□Available ?Not available
There are no security investments for the Company during the report period.
②Derivatives investment
□Available ?Not available
There are no derivatives investments for the Company during the report period.
(5) The usage situation of raised capital
□Available ?Not available
There are no usage situations of raised capital for the Company during the report period.
6. Sale of significant assets and equities
(1) Sale of significant assets
?Available □Not available
Transaction party
Sold asset Sale date
Transactio
n price(CNY’0000)
Net profitcontributed by
this asset forlisted company
from the
beginning ofreport period to
sale date
Influence ofsale in listed
company(note III)
Proportion
of netprofitcontributed to listedcompanyresultingfrom asset
sale intotal net
profit
Pricingprinciplefor asset
sale
Relatedtransaction or
not
Associat
ionRelation
ship
withtransaction party
(ifapplicab
le)
Whether
thepropertyright ofinvolved
assetshas beentransferr
ed
Whetherthe creditand debthas beentransferre
d
Whetherimpleme
nted asschedule
, if not,
explain
the
reason
and
measure
s thathavebeentaken
Disclo
suredate
Disclosure
index
Yantai The April 2,411.55 0 Through this
| 0 | Contract | Yes | Parent | No | No | Yes | April | Please refer |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportChangyuPioneerWineCo., Ltd.
workshopand officebuildingofpreviousbrandymanufacturingplant andcorresponding lands
th,2019
transaction,the Companycould replaceidleworkshopand lands forthe landoccupied byXishan officebuilding sothat theCompanycould notonly betterguarantee thesafety andintegrality ofXishan officebuilding inorder torealize theassetappreciationand hedge butalso eliminatepreviousrelated
ualpricing
companyandsubsidiarycompany
| th |
,2019
toAnnouncementOnAssetReplacementdisclosed bytheCompany
2019-
| temporaty 1 |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Reporttransactionincludingland rentalfee. Thistransactionwill not affectthe continuityof businessand thestability ofmanagement.
(2) Sale of significant equities
□Available ?Not available
7. Analysis of main holding and joint stock companies
?Available □Not availableSituation of main subsidiaries and joint stock companies affecting over 10% of the Company’s net profit
Unit: CNYCompany name Company type Main business Registered capital Total assets Net assets Operating revenue Operating profit Net profitYantai ChangyuPioneer WineSales Co., Ltd.
Subsidiary Sales CNY8million 1,420,161,516 191,198,133 3,821,020,948 942,128,095 793,451,810Yantai ChangyuWine Sales Co.,Ltd.
Subsidiary Sales CNY5million 396,403,239 378,470,761 1,081,596,277 186,864,347 140,221,071Changyu Trading Subsidiary Sales CNY5million 88,463,752 233,496,494 436,530,152 173,831,064 131,639,723
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportCo., Ltd. inDevelopmentZone of YantaiLaizhouChangyuWine Sales Co.,Ltd.
Subsidiary Sales CNY1million 88,463,752 1,000,000 226,162,063 157,486,950 118,115,212
Acquisition and disposal of subsidiaries during the report period?Available □Not available
Company name
| Mode of acquisition and disposal of subsidiaries during the report period | Effect on overall production management and performance | |
| Chateau De Mirefleurs | Establishment of joint venture company for contracted |
transfer
enjoyed net asset share of this subsidiary is CNY
| 6,233,661. |
Explanation on main holding and joint stock companiesNo
8. Situation of the structured subjects controlled by the Company
□Available ??Not available
9. Expectation for the Company’s future development
On the basis of our limited experience and professional skills, the Company makes the following judgments on the wine industry and futuredevelopment:
(1) The sector competition pattern and development trend
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportUnder uncertainty effects caused by the slowdown of national macroscopic economy growth, the Sino-American trade friction and thenovelcoronaviruspneumoniaepidemic, the overall demand of Chinese wine market in 2020 will be still comparatively weak, the total wine consumptionis more likely to maintain a downward trend, and the wine industry's operating situation will be even more severe. With the rise of Chinesee-commerce and Internet generation, the scene and habits of people's consumption in wine continue to change. The mobile terminal media on the“mobile phone screen”, including WeChat, Douyin, Toutiao and Internet celebrity IP etc., has become an important channel for wine operators tocommunicate with consumers. Owing to the serious “fragmentation” of the wine market, it is more difficult to target wine consumers. Whethercompared with the per capita consumption of domestic beer and liquor, or compared with the per capita consumption of major foreign wine consumingcountries, the consumption popularizing rate and penetration rate of Chinese wine in domestic are very low. Although there are some twists and turnsduring its development period in the short term, seen from the long term, the huge development potential has not changed.In such a case of long-termcoexistence of opportunities and challenges, those enterprises that possess strong brand influence and marketing ability, catch the opportunities,actively take adjustments, make full use of newly emerging and traditional sales channels, timely satisfy the consumers’ demands and provide productswith high cost performance will have the opportunity to be the final winner of competitions, and then form a new pattern of the future Chinese winemarket.
(2) The Company’s development strategy
The Company will adhere to the development strategy of “Focus on middle-and-high level, Focus on high quality, Focus on big product” and themarketing philosophy of “obtaining growth from the terminal and nurturing consumers”,continue improving the relatively independent systemconstruction of wine, brandy, imported wine and overseas business, enhance wine, scale up brandy, improve imported wine, stabilize overseas businessand promote the all-round development of various alcohol products.
(3) Management plan for the new year
In 2020, the Company will try its best to realize operating revenue of not less than CNY3.7 billion and control the main operating costs and three periodexpenses below CNY2.8 billion.
(4) Measures to be taken by the Company
In order to better seize the opportunities and meet the challenges, the Company will stand from the present, take a long-term perspective, forge ahead,adhere to market-oriented approach, take advantage of profit assessment, take innovation and major work as driving force and persevere in
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Reportmanagement and implementation. The Company will make every effort to do following major work in 2020 in order to strive to achieve annualbusiness target.The first is to further deepen and implement the “Three Focus” strategy. For domestic wine, the Company clearly defines the development direction of“focusing on chateau wine, strengthening Noble Dragon and scaling up ordinary wine” and will continue focusing on brands of seven chateau wines,Noble Dragon and Zenithwirl etc.. Under the premise of keeping the total investment unchanged, the Company will transfer part of offline funds toonline channels to future increase the proportion of input on online channels. For brandy, the Company will continue adhering to the strategy of“focusing on middle-and-high-end products and driving the sales of low-end products in virtue of middle-and-high-end products”, and focus on Koya,Five Star, Mminni and Pegase these four brands. The main brands will be further focused on Koya XO 15 and Fine Five-star, through which the brandycategory could be expanded, thus driving the all-round development of brandy brands. For imported wine, the Company will focus on six acquiredbrands, especially on Kilikanoon and IWCC.The second is to continue to implement business philosophy of “customer-centered, striver-based and result-oriented”. The Company will takeeffective measures to fully implement the market strategy of “let fewer people manage distributors, let more people serve terminals and consumerstogether with distributors”. Also the Company will continue increasing the salary level of sales personnel and enhancing front-line personnel’s workingenthusiasm through measures such as increasing efficiency while reducing staff and improving compensation system and so on. The Company willadvocate that“everyone is product experience officer”, “everyone is a service experience officer” and “everyone is a self-media” to comprehensivelyimprove product awareness, service awareness and marketing awareness.The third is to make efforts to expand new marketing channels. The Company will strengthen the development of online channels, new retail channels,big distributor channels and personalized-ordering group purchase channels, and establish a system of “brand team” + “outsourcing brand consultingcompany” to provide more accurate and effective marketing support. Through the innovation of marketing system, the Company will push forward 1-2chateau brands to establish an alliance company with big distributors to expand the market scale;mobilize more than 2,000 key distributors across thecountry to open their own smart retail malls;guide distributors to recruit “community partners”;promote distributors make full use of city-wideplatforms like Meituan, Eleme, 58 Tongcheng, Douyin, JingdongDaojia and Little Red Book to run their business in various new formats;promotecontactless delivery of wines among distributors through their own distribution system or courier delivery in the same city, and help them improvecontactless delivery capacity and open up sales channels;mobilize all employees to participate in short video marketing and live streaming videomarketing.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportThe fourth is to comprehensively promote the Company’s traditional business to be transferred to digitization business. The Company will strive torealize digitalization of planting, production, sales and marketing in an all-round way, thus to provide accurate service to clients and targeted marketingto consumers. In 2020, the Company will print anti-counterfeiting codes on the back and conduct the reformation of one-off marketing codes topromote distributor-driven orders in an all-round way and introduce the inbound and outbound identification management and product traceability inthe distributor link. The Company will also cooperate with Tencent and other companies to complete the digital integration of marketing to promotedigital marketing level.The fifth is to continue improving product quality. The Company will stabilize the total number of contracted bases, improve the planting level of itsown grape bases, and cultivate new wine grape varieties according to different geographical and climatic characteristics in China. Besides that, theCompany will establish long-term stabled high, medium and low raw material bases for wine and brandy to meet different product demands andcomplete wine and brandy overseas grape base layout from a global perspective. The Company will also increase the import quantity of oak barrels andformulate a three-year purchase plan of oak barrels for high-end products such as chateau wines and Koya brandy and so on, and improve the way andmethod of using oak barrels. The Company will further establish and improve the “evaluation system for brand wine-makers team”, mobilizewinemakers to go deep into the production line to improve product quality and go deep into the market line to understand consumer demand, in orderto better play the winemakers team’s technical and work capability. The Company will support and encourage the research and developmentinvestment of new technology and new process to ensure the steady improvement of product quality.The sixth is to further improve the employment mechanism. The Company will continue to implement the general policy of “strictly control theemployment and release the demission”, and strive to achieve the general goal of “control the total number and keep the income non-decreasing”. TheCompany will accelerate the reform of the selection and employment mechanism, salary distribution and incentive mechanism to open up a dualchannel for employees’ career development and salary incentive. A three-year talent development plan for management, brewing, equipment,marketing, production and other aspects will be made. The system of “management trainee” and “guidance of mentor to apprentice”will be establishedto form the talent training model of “everyone has a mentor in front and anechelon formation in back”. Meanwhile, the Company will also establish agood mechanism to reward innovation success and tolerate innovation failure and create a favorable atmosphere to encourage innovation and toleratefailure, providing reliable guarantee for the smooth development of innovation work in all aspects of the Company.The seventh is to strengthen audit supervision and internal control system construction. The Company will further strengthen the audit supervision ofeach operating unit and intensify the trinity supervision system of auditing, financing and discipline inspection commission.The Company will enhance
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Reportthe punishment level, investigate every problems discovered in auditing and not promote or appoint responsible personnel. The Company will furtherimprove the internal control system of areas prone to serious fraud, including seal, related transaction, sales advertising fee, material procurement,project construction and inventory and so on, in order to timely eliminate major hidden dangers and prevent operational risks.The eighth is to strengthen the financial management. The Company will improve the budgeting mode, timely and dynamically adjust and improve theannual budget in accordance with the major changes inside and outside of the Company, and enhance the timeliness and pertinence of budgetmanagement. The Company will improve the simulation profit assessment system for secondary enterprises to improve the overallprofitability.Meanwhile, the Company will make full use of national policy of reducing taxes and fees to rationalize tax planning and strengthenfinancial management of overseas enterprises to prevent major risks.The above business plan and business goals do not represent the listed company’s profit forecast for 2020. Whether it can be realized depends onvarious factors such as changes in market conditions and the efforts of the management team, which has great uncertainties. Please pay specialattention to this.
10. The Company’s receptions of research, communication, visit and other activities
Activity registration form for receptions of research, communication, visit and other activities during the report period?Available □Not available
| Reception time | Reception pattern | Type of reception object | Basic situation index of reception |
October 16
th, 2019 Other Individual
Wine Co., Ltd. InvestorRelations Activation Record
| Form | ||
| Times of reception | 1 | |
| Number of institution reception | 0 | |
| Number of individual reception | 6 |
| Number of other objects reception | 0 |
| Whether to disclose, reveal and leak material nonpublic information | No |
V. Major issues
1. The Company’s ordinary share profit distribution and increasing equity with capital
reserveOrdinary share profit distribution policies especially promulgation, implementation oradjustment of cash dividends policies during the report period?Available □Not availableDeliberated and passed by the 2018 Shareholders’ Meeting convened on May 17
th, 2019 bythe Company, the Company’s 2018 annual profit distribution scheme is shown as follows:
based on total 685,464,000 shares (including 453,460,800 A shares and 232,003,200 B shares)up to December 31
st, 2018, the Company would pay cash dividend to all shareholdersregistered on the share registration day: CNY6 in cash per ten shares. This time the Companywould neither dispatch bonus shares nor increase equity with capital reserve.Total amount of shares has not changed since the disclosure of the distribution plan to theimplementation period.On June 28
th
, 2019, the Company published the Implementation Announcement of2018Annual Equity Distribution on China Securities Journal, Securities Times andwww.cninfo.com.cn, determining that the share registration day and the ex-dividend dayof AShare was respectively on July 5
th
, 2019 and on July 8
th
, 2019; the last trading day, the shareregistration day and the ex-dividend dayof B Share was respectively on July 5
th, 2019, onJuly 8
th
, 2019 and on July 10
th, 2019.This time the dispatching objects contain all A Shareshareholders registered at ChinaSecurities Depository and Clearing Corporation Limited Shenzhen Company after closing ofShenzhen Stock Exchange in the afternoon of July 5
th
, 2019 and all B Shareshareholdersregistered at China Securities Depository and Clearing Corporation Limited ShenzhenCompany after closing of Shenzhen Stock Exchange in the afternoon of July 10
th
, 2019 (thelast trading day is July 5
th, 2019).This dispatching has already been completed in mid-July 2019. The profit distributionscheme implemented this time is consistent with the scheme deliberated and passed by theshareholders’ meeting. The implementation of the profit distribution scheme for this time isnot more than two months after the shareholders' meeting passing it.
| Special explanation for the cash dividends policy | |
| Whether it is in accordance with the requirements of the regulation in the Articles of Association and the resolution of shareholders | Yes |
| Whether the distribution standard and proportion is clear and definite | Yes |
| Whether the relevant decision process and mechanism is complete | Yes |
| Whether the independent directors perform their responsibilities and play the roles | Yes |
| Whether the small and middle shareholders have the chance to express their | |
addeputys and appeals, as well as their lawful right and interest is in an enough
| protection | Yes |
| Whether it is legal and transparent for the condition and process while adjusting and amending the cash dividends policy | Yes |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportThe Company’s scheme (preliminary scheme) of ordinary share profit distribution andincreasing equity with capital reserve in the recent three years (including the report period)The Company’s profit distribution scheme in 2017 is as following: Because the left amount oflegal earned surplus reserve reaches 50% of the registered capital, while making profitdistribution, the legal earned surplus reserve will not be drawn. Based on the Company’s685,464,000 shares at total up to December 31
st, 2017, the Company plans to pay CNY5 incash as dividends for every ten shares (including tax) to the Company’s all shareholders,totaling up to CNY342,732,000, accounting for 33.22% of the net profitCNY1,031,695,056attributable to the shareholders of the parent company in the consolidatedstatement, the retained and undistributed profit of CNY688,963,056 will be reserved for thedistribution of next year.The Company’s profit distribution scheme in 2018 is as following: Because the left amount oflegal earned surplus reserve reaches 50% of registered capital, while making profit distribution,the legal earned surplus reserve will not be drawn. Based on the Company’s 685,464,000shares at total up to December 31
st, 2018, the Company plans to pay CNY6 in cash asdividends for every ten share (including tax) to the Company’s all shareholders, totaling up toCNY411,278,400 accounted for 39.45% of net profits CNY1,042,632,929 attributable toshareholders of parent company in the consolidated statements. The retained andundistributed profit of CNY631,354,529 will be reserved for distribution in the next year.The Company’s profit distribution draft scheme in 2019 is as following: Because the leftamount of legal earned surplus reserve reaches 50% of registered capital, while making profitdistribution, the legal earned surplus reserve will not be drawn. Based on the Company’s685,464,000 shares at total up to December 31
st, 2019, the Company plans to pay CNY7 incash as dividends for every ten share (including tax) to the Company’s all shareholders,totaling up to CNY479,824,800 accounted for 42.47% of net profits CNY1,129,735,749attributable to shareholders of parent company in the consolidated statements. The retainedand undistributed profit of CNY649,910,949will be reserved for distribution in the next year.The Company’s ordinary share cash dividend record in recent three years (including thereport period)
Unit: CNYYear ofdistribution
Amount of cash
dividend(including tax)
to the listedcompany’sshareholders in the
consolidatedstatement of thedistribution year
| Net profit belonging | Proportion in |
the net profitbelonging tothe listedcompany’sshareholders
in theconsolidatedstatement (%)
Amount ofcashdividends
| (eg. |
sharesbuy-back) in
other ways
of cashdividendsin other
ways
Amount of cash
dividend(including other
ways)
Proportion(includingother ways)inthe net profitbelonging to
the listedcompany’sshareholders
in theconsolidatedstatement (%)
| Proportion | |||||||
| 2019 | 479,824,800.00 | 1,129,735,749.00 | 42.47% | 0.00 | 0.00% | 479,824,800.00 | 42.47% |
| 2018 | 411,278,400.00 | 1,042,632,929.00 | 39.45% | 0.00 | 0.00% | 411,278,400.00 | 39.45% |
| 2017 | 342,732,000.00 | 1,031,695,056.00 | 33.22% | 0.00 | 0.00% | 342,732,000.00 | 33.22% |
During the report period, the Company earned profit, the profit of the parent company thatcould be distributed to ordinary share shareholders was positive but without proposingordinary share cash dividend distribution preliminary scheme.
□Available ??Not available
2. The Company’s preliminary scheme of profit distribution and preliminary scheme of
increasing equity with capital reserve for the report period?Available □Not available
| Number of sending bonus shares per ten shares (share) | 0 |
| Number of dividend payout per ten shares (CNY) (including tax) | 7 |
| Number of transferring per ten shares(share) | 0 |
| The cardinal number of the capital stocks for the preliminary distribution scheme (share) |
685,464,000
（
| CNY |
）
| (including tax) | 479,824,800.00 |
| Amount of cash dividends(eg. shares buy-back) |
（
）
| in other ways | 0.00 |
| Total cash dividend distribution |
（
）
| (including other ways) | 479,824,800 |
| Attributable profit |
（
）
| 1,129,735,749.00 | |
| The proportion of cash dividend distribution in the total profit distribution(including other ways) |
100%
| Cash dividend distribution this time |
| If the Company’s development is in growth stage and major capital expenditure is arranged, |
while making profit distribution, the proportion of cash
| dividends should takes up no less than 20% in this profit distribution. |
| Detailed explanation for the preliminary scheme of profit distribution or increasing equity with capital reserve |
| According to the audit result from KMPG Huazhen LLP, the net profit belonging to the |
parent company’s stockholders in the consolidated statement in 2019 is CNY1,129,735,749and the net profit of the parent company in financial statement in 2019is CNY593,298,849.According to PRC accounting standard, the situation for attributable profits of theconsolidation and the parent company in 2019as following:
Unit: CNY
| Consolidation | Parent company | |
| Undistributed profits at the end the year | 8,719,899,359 | 8,619,977,577 |
| Including: net profits in 2019 |
1,129,735,749
593,298,849
| Undistributed profit carried forward of the beginning of the year |
8,001,442,010 8,437,957,128
411,278,400 411,278,400
| Distribution of 2018 dividends | ||
| Withdrawal legal surplus reserve | 0 | 0 |
According to regulation of 157
thitem in the Articles of Association,
Company can distribute dividends either in cash or by stock, the profit to be distributed each
| year is not less than 25% of the distributable profit realized in the same year and the accumulated sum of profit to be distributed in cash in the last three years is not less than 30% |
considering the large amount on the capital expenditure in 2020, under the condition of notinfluencing the normal prod
| uction and operation, the Company put forward preliminary |
scheme on profit distribution in 2019 as following:
Because the left amount of legal earned surplus reserve reaches 50% of registered capital,while making profit distribution, the legal earned surplus reserve will not be drawn. Based onthe Company’s 685,464,000 shares at total up to December 31
st, 2019, the Company plans topay CNY7
shareholders, totaling up to CNY479,824,800 accounted for 42.47
| % of net profits |
CNY1,129,735,749 attributabl
statements. The retained and undistributed profit of CNY649,910,949will be reserved fordistribution in the next year.The cash dividend distributed to shareholders of domestic listed foreign shares (B share) ispaid in Hongkong dollar converted based on the middle rate between CNY and Hongkongdollar issued by the People’s Bank of China on the first working day after the resolution date
| of 2019 shareholders’ meeting. |
3. Implementation of commitments
(1) Commitments that the Company’s actual controllers, shareholders, related parties,
acquirers and the Company and other related commitment parties have implementedduring the report period and have not implemented up to the end of the report period?Available □Not availableCommitments
| Commitment party | Commitment type | Commitment content | Commitment time | Commitment period |
Implementation
share reform
| Commitments at |
| Commitments made in acquisition report |
or equity changesreport
－
－
－ －
| Commitments at asset restructuring |
| Commitments at the |
initial publicoffering orrefinancing
ChangyuGroup Co.,
| Ltd. |
Solvehorizontalcompetition
Non-horizontalcompetition
May 18
th
, 1997 Forever Has been performing
YantaiChangyuGroup Co.,Ltd.
| Clear the use | |||
of trademark
royalty
TrademarkLicenseContract, thetrademarkroyalty ofChangyu and
| other trademarks |
May 18
th, 1997
From May
th
, 1997 toApril 4
th
| , 2019 | According to |
Trademark LicenseContract, thetrademark use feeannually paid by theCompany toChangyu Group shallbe mainly used
Company toYantai ChangyuGroup Co., Ltdever year ismainly used foradvertisingChangyu and
| other trademarks and this contract |
products byYantai Changyu
| Group Co., Ltd. | byChangyu Group to |
publicize trademarksand contractproducts. Except2013 to 2017 duringwhich thecommitment was notstrictly performed,YantaiChangyuGroup Co.,Ltd. has beenperforming its
| commitment. | ||
| Equity incentive commitments |
Commitments atmiddle and smallshareholders of theCompany
YantaiChangyuGroup Co.,Ltd.
Compensating
unredeemedcommitment
| The |
CNY231,768,615 that was notused forpublicity oftrademarks andcontractproducts as
offset by thefour-yeartrademark use
| fee from 2019 to |
2022. Ifinsufficient, theshortfall wouldbe filled in onetime in 2023. Ifthere is anyexcess, the
the trademark
| use fee would be |
collected fromthe year withexcessoccurrence.
April 4
th
, 2019
From April 4
th
2019 toDecember 31
st
| , |
2023
Has been performing
timelyimplementation or
No
Whether or not tohave specificreasons of theunimplementedcommitment andnext steps
| not | |
| According to t |
Trademark License Contract
promises that the trademark use fee annually paid by the Company to Changyu Group shall be mainlyused byChangyu Group to publicize trademarks and contract products. But above-mentioned ‘mainly’ isnot a specific number, which is easy to cause divergence due to different understanding and leads toproblem appearance during the implementation process.From 2013 to 2017, Changyu Group collected a total of CNY420,883,902 trademark use fee, of which51% was used to publicize trademarks including Changyu and contract products with amount ofCNY214,650,790. The amount has been used to publicize trademarks including Changyu and contractproducts is CNY50,025,181, with a balance of CNY164,625,609.In 2018 and 2019, the trademark use fee collected of 2017 and 2018 is CNY155,623,907, of which 51%is used to publicize trademarks including Changyu and contract products with amount ofCNY79,368,193. The amount has been used to publicize trademarks including Changyu and contractproducts is CNY12,225,187, with a balance of CNY67,143,006.Since 2013, the accumulated balance of Changyu Group using to publicize trademarks includingChangyu and contract products is CNY231,768,615.Changyu Group promises that the four-year trademark use fee from 2019 to 2022 will be used for offset.If insufficient, the shortfall would be filled in one time in 2023. If there is any excess, the excess portionof the trademark use fee would be collected from the year with excess occurrence. If Changyu Group isnot able to implement the above-mentioned commitment owing to various reasons, the Company willtimely supervise and urge Changyu Group to fulfill its commitment and request Changyu Group to raisefunds through bank loaning, assets sales and equity sales etc. in order to implement the commitment.For detailed information, please refer to
| Announcement on Commitment Issues of Yantai Changyu Group |
Co., Ltd disclosed on April 4
th
, 2019.
(2) The Company should make a statement on the achieved original profit forecast of
assets or projects and its reason if there is profit forecast of Company’s assets orprojects and the report period is still in the profit forecast period
□Available ?Not available
4. Non-business capital occupying of listed company by controlling shareholder and its
related parties
□Available ?Not available
There are no non-business capitals occupying of listed company by controlling shareholderand its related parties during the report period.
5. Explanation of Non-standard Audit Report given by accounting firm in the report
period from board of directors, board of supervisors and independent directors (ifhave)
□Available ?Not available
6. Compared with the last year’s financial report, explanation for the changes of
accounting policy, accounting estimation and accounting method
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report?Available □Not availableThe Company has implemented the new financial standard since January 1
st, 2019. Accordingto the transition requirements of the standard, the Company made retrospective adjustmentsto classification and measurement (including impairment) of financial instruments that werenot derecognized on the date (January 1
st, 2019) of the implementation of the New FinancialInstruments Standard. This company did not adjust the comparative financial statement data,and the difference between the original book value of financial instrument and the new bookvalue on the date of implementation of the New Financial Instruments Standard was recordedinto retained income or other comprehensive income in early 2019.The Company prepared financial statements according to the relevant requirements ofAccounting [2019] No. 6, which only affected the format of financial statements and thelisting of some items and did not have significant effects on the Company's net asset, netprofit and other related financial indexes.For other information about changes in accounting policy, please refer to Announcement onChanges in Accounting Policy disclosed by the Company in SecuritiesTimes,ChinaSecuritiesJournal and CNINFO.
7. The situation explanation for the correction of major accounting errors which need to
be retrospect and restated during the report period
□Available ?Not available
There is no situation for the correction of major accounting errors which need to be retrospect andrestated.
8. Compared with the last year’s financial report, explanation for the changes of the
consolidated statements scope?Available □Not availableFor detailed information about the changes in the scope of consolidated financial statementsin this year, please refer to VI“Change in consolidation scope” in Financial Report of thisreport.
9. The appointment and dismissal of certified public accountants
Currently appointed accounting firm
| Domestic accounting firm name | KPMG Hua Zhen LLP |
| Remuneration for domestic accounting firm (CNY‘0000) |
| Consecutive period for the audit service of domestic accounting firm |
| Name of certified public accountant for the audit service of domestic accounting firm |
Ms. Wang Ting, Ms. Chai Jing
accountant’s audit service of domestic
| accounting firm |
| Overseas accounting firm name (if have) | |
| Remuneration for overseas accounting firm (CNY‘0000) (if have) | |
| Consecutive period for the audit service of overseas accounting firm(if have) | |
| Name of certified public accountant for the audit service of overseas accounting firm(if have) | |
| Consecutive period for the certified public |
accountant’s audit service of overseas
| accounting firm (if have) |
Whether or not to employ a new accounting firm during the report period?Yes □NoWhether or not to employ a new accounting firm during the audit period
□Yes ?No
Whether the change in accounting firm fulfils approval procedure?Yes □NoDetailed explanation for employing a new accounting firm and the change in accounting firmThis Company did not continue employing Deloitte Hua Yong certified public accountantsco., Ltd. (special general partnership) to be the audit authority of 2019 annual financial reportand internal control and to employ KMPG Hua Zhen LLP to be the audit authority of 2019annual financial report and internal control. The employment period is one year and theannual audit expense (including travel expenses and total labor expenses) is CNY1.95million.To employ internal control audit accounting firms, financial adviser or sponsor.?Available □Not availableThe Company employs KMPG Hua Zhen LLP to be the audit authority of 2019 annualfinancial report and internal control. The employment period is one year and the annual auditexpense (including travel expenses and total labor expenses) is CNY1.95million.
10. Face of suspension and termination of listing after the disclosure of annual report
□Available ?Not available
11.Bankruptcy reorganization
□Available ?Not available
There is no bankruptcy reorganization during the report period.
12. Material litigation and arbitration
□Available ?Not available
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportThere are no material litigation and arbitration during the report period.
13. Penalty and rectification
?Available □Not availableName Type Reason Type of
investigationand
Decision(if have)
Disclosuredate
Disclosure index
YantaiChangyuGroup Co.,Ltd.
Shareholderholdingmore than5% ofequity
Fail toimplementcommitmentstrictly from2013 to2017
Other April 4
th
,2019
| punishment | ||
| Rectification Report on Related |
Questions inDecision on AdministrativeSupervision Measures fromChina Securities RegulatoryCommission ShandongRegulatory Authority byRelevantResponsiblePersonnel
YantaiChangyu Pioneer WineCo., Ltd. disclosed in ChinaSecurities Journal,Securities Timesand CNINFO(http://www.cninfo.com.cn/)
(announcement no.:
2019-temporaty 05)
YantaiChangyuPioneerWine Co.,
Ltd.
Other Issues of
trademarkand patent
Other April 4
th
,2019
ZhouHongjiang,QuWeimin
Seniorexecutive
ZhouHongjiangacting as thegeneralmanager atthat timeandQuWeiminacting as theboardsecretary atthat time failto beindustriousandresponsible
Other April 4
th
,2019
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportExplanation for rectification situation?Available □Not availableFor detailed information about rectification situation, please refer to Announcement onCommitments of Yantai Changyu Group Co., Ltd to Yantai Changyu Pioneer Wine Co., Ltd.andRectification Report on Related Questions in Decision on Administrative Supervision Measuresfrom China Securities Regulatory Commission Shandong Regulatory Authority byRelevantResponsiblePersonnel in Yantai Changyu Pioneer Wine Co., Ltd disclosed in ChinaSecurities Journal, Securities Times and CNINFO on April 4
th, 2019.
14. Credit of the Company, holding shareholders and actual controllers
□Available ?Not available
15. Implementation of the Company’s equity inventive plan, employee stock ownership plan
or other employee incentive measures
□Available ?Not available
There are no implementation of the Company’s equity inventive plan, employee stock ownershipplan and other employee incentive measures during the report period.
16. Significant related transactions
(1) Related transactions in relation to daily operations
?Available □Not available
(2) Related transactions in relation to acquisition and sales of assets or equity
Relatedparty
Relationship Type Content Pricing
principle
Price Amount
(CNY‘0000)
Proportionaccounting
of similartransaction
| s |
Approvedtransactionquota(CNY‘0000)
Whetherexceedapprovedtransactionquota
Clearingform
Availablemarket priceof similartransactions
Disclosuredate
Disclosureindex
YantaiShe
nmaPackagingCo., Ltd.
Controlledby the same
parentcompany
Purchase
andcommissionprocessing
Purchase
andcommissionprocessing
packingmaterials
Agreement
pricing
Determinedby agreement
13,359 15.07% 17,500No Cash No
April 20
th,2019
Announcement on 2019
AnnualRoutineRelatedTransactiondisclosed in
ChinaSecuritiesJournal,SecuritiesTimes
andCNINFO in
2019
YantaiChangyuGroup Co.
Ltd.
Parentcompany
Licensed
use ofintangible
assets
Licensed useof trademark
and patent
Agreement
pricing
Determinedby agreement
21,865 100% 21,865No Cash No
April 4
th
,2019
Total - -
| 35,224 | -- | 39,365 |
- -Details of the return of large sales NoActual performance of the estimated total amount fordaily operations related transactions by category that willoccur during this period. (if have)
NoReason for the deference between transaction price andmarket reference price(if available)
Not available
□Available ?Not available
There are no related transactions in relation to acquisition or sales of assets or equity during thereport period.
(3) Related transactions in relation to common foreign investment
□Available ?Not available
There are no related transactions in relation to common foreign investment during the reportperiod.
(4) Related current credit and debt transactions
?Available □Not available
Whether or not existing non-operating related credit and debt transactions
□Yes ?No
There are no non-operating related credit and debt transactions during the report period.
(5) Other major related transactions
?Available □Not available
Disclosure website of interim report for major related transaction
| Name of interim announcement | Disclosure date of interim announcement | Name of disclosure website for interim announcement |
| Announcement |
On AssetReplacement
| April 20th, 2020 | http://www.cninfo.com.cn |
17. Major and important contracts and execution results
(1) Trusteeship, contract and leasehold issues
? Trusteeship situation
□Available ?Not available
There is no trusteeship situation during the report period.
? Contract situation
?Available □Not availableContract situation descriptionDuring the report period, about the Company’s contract operation situation, please see “1.Thestructure of Enterprise group” in VIII “Rights and interests of other subject” in the financialreport of this report.
Project in gains and losses for the Company to achieve more than 10% of the total profit
□Available ?Not available
There are no contract projects in gains and losses for the Company to achieve more than 10%of the total profit during the report period.
? Leasehold situation
□Available ?Not available
There is no leasehold situation during the report period.
(2) Major guarantee
?Available □Not available? Guarantee situation
Unit: CNY’0000
External guarantee of the Company and its subsidiaries（excluding guarantee to subsidiaries）Guarantee objectname
Disclosure date of
relatedannouncementabout guarantee
quota
Guarantee
quota
Actual date of
of agreement)
Actualguarantee
amount
Guarantee
type
Guarantee
Period
Whether or not
completeimplementation
Whether or
| occurrence (date | not belong to |
related-
guaranteeYantai Economicand TechnologicalDevelopment
| party | ||
| Zone Management |
Council.
2016.12.22 34160 2016.12.21 34160
Mortgage;
Pledge
10years No No
Total of the external guarantee quotaapproved during the report period (A1)
Total of the actual external
| guarantee amount during the |
report period (A2)
Total of the external guarantee quotaapp
| roved by the end of the report period |
(A3)
34160
Balance of the actualexternal guarantee by theend of the report period(A4)
34160
Guarantee situations between the Company and subsidiariesGuarantee object
name
Disclosure date of
relatedannouncement a
guarantee quota
Guarantee
quota
Actual date of
| bout | occurrence (date |
of agreement)
Actualguarantee
amount
Guarantee
type
Guarantee
Period
Whether or notcompleteimplementation
Whether or
related-
| party |
guaranteeSales &MarketingCompany ofYantai ChangyuPioneer Wine
2016.10.31 10,000 2016.11.05 10,000
Joint liability
assurance
2 years No Yes
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportCompany LimitedYantai ChangyuPioneer WineCompany Limited
2016.12.22 11,984 2016.12.21 11,984
Mortgage;Pledge
10 years No YesYantai ChangyuWine Researchand DevelopmentCompany Limited
2016.12.22 72,176 2016.12.21 72,176
Jointliabilityassurance;M
ortgage
10 years No Yes
Kilikanoon EstatePty Ltd
2017.12.12 7100 2018.01.09 7100
Jointliabilityassurance
1 year No YesTotal of the guarantee quot
subsidiaries during the report period(B1)
| a approved to | Total of the actual guarantee |
amount for subsidiariesduring the report period(B2)
| Total of the guarantee quota approved to |
subsidiaries by the end of the reportperiod (B3)
89,276
Balance of the actual
| guarantee for subsidiaries by |
the end of the report period(B4)
89,276
Guarantee situations between subsidiariesGuarantee objectname
Disclosure date ofrelatedannouncementabout guaranteequota
Guaranteequota
Actual date ofoccurrence (date
of agreement)
Actualguaranteeamount
Guaranteetype
GuaranteePeriod
Whether or notcompleteimplementation
| Whether or not belong to |
related-partyguaranteeHacienda YVinedos MarquesDel Atrio. SL
2016.04.29 3,502 2015.10.08 3,502 Mortgage; Long term No NoIndomita WineCompany Chile,SpA
2018.04.23 1,986 2018.04.20 1,986 Mortgage; Long term No NoSocieteCivileArgricole Du ChateauDe Mirefleurs
854 2019.07.30 854 Mortgage; Long term No NoSCEA ChateauLiversan
5,122 2019.07.30 5,122 Mortgage; Long term No NoTotal of the guarantee quota approvedto subsidiaries during the report period(C1)
5,976
| Total of the actual guarantee |
amount for subsidiariesduring the report period(C2)
5,976
Total of the guarantee quota approvedto subsidiaries by the end of the report
11,464
Balance of the actual
11,464
| guarantee for subsidiaries by |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Reportperiod (C3) the end of the report period
(C4)Total guarantee amount of the Company（Total of above three major items）Total of the approved guarantee quotaduring the report period（A1+B1+C1）
5,976
| Total of the actual guarantee |
amount during the report
period（A2+B2+C2）
5,976
Total of the approved guarantee quotaby the end of the report period（A3+B3+C3）
134,900
Balance of the actual
guarantee by the end of the
report period（A4+B4+C4
134,900
| ） |
The proportion of actual total guarantee amount (A4+B4+C4)accounting for the Company’s net asset
Among :
The amount of guarantee for shareholders, actual controllers and their relatedparties（D）
The amount of debt guarantee for the guaranteed objects whose asset-
13.09%
liability
ratio is more than 70% directly or indirectly（E）
Total amount of guarantee of the part that exceeds 50% of net assets（F） 0Total amount of the above-mentioned three items（D+E+F） 0Explanation for undue guarantees that have happened warranty liability ormay take joint payback liabilities during the report period (if have)
NoExplanation for violating due process to provide external guarantee (if have) No
Specific explanation on adopting complex guarantee typeNo.
? Illegal external guarantee
□Available ?Not available
There is no illegal guarantee situation during the report period.
(3) Entrusting others to manage cash assets
? Financial management entrustment
□Available ?Not available
There is no financial management entrustment during the report period.
? Loan entrustment
□Available ?Not available
There is no loan entrustment during the report period.
(4) Other important contracts
□Available ?Not available
There are no other important contracts during the report period.
18. Social Responsibility
(1) Social responsibility performance
Please refer to2019 Annual Social Responsibility Report disclosed on Securities Times, ChinaSecurities Newspaperandwww.cninfo.com.cn by the Company.
(2) Targeted poverty alleviation social responsibility performance
①Targeted poverty plan
The Company has reached the mutual agreementwithZhuqiao Town Party CommitteeGovernment and Da Langya Village Committee to establish professional grapecooperative.Itplans to help to conductthe construction of 100mu of vineyard per year from 2019 to 2021with a total area of 300 m and also to sign grape purchase contract in order to help localvillagers to get rid of poverty and become better off.
②Summary of annual targeted poverty
Related leaders of the Company visited the village, held meetings with local leaders andpersonnel receiving assistance and worked on the spot to discuss and accelerate assistancemeasures. 3 motor-pumped wells have been digged to assist the target personnel in theconstruction of grape bases.
③ Targeted poverty effectiveness
At present, the Company has completed the preliminary preparations for targeted povertyalleviation in Dalangya Village, and officially started the implementation of povertyalleviation work.
④ Subsequent targeted poverty plan
No
(3) Environmental protection related situation
Whether the listed company and its subsidiaries belong to major polluterspublished by theenvironmental protection departmentYes
of
| compan | Name of |
major
| pollutants | Mod |
e of
| disch | Qua |
ntity
| of | Distributi |
on
| situation | Discha |
rge
| concen | Implemente |
dpollution
| discharge | Tota |
l
| volu | Tota |
l
| appr | Con |
ditio
subsidiary
| y or | and |
particularpollutants
| arge | disc |
hargeoutlet
dischargeoutlet
| of | tration | standard | me |
ofdischarge
volumeofdischarg
| e | exce |
ssivedischarge
ChangyuIcewineChateauCo., Ltd.
| Organize |
d exhaustgas,inorganizedexhaustgas,wasterwater,noise
hargeoutlet ofboilerchimneyanddischargeoutlet offactorywastewater
| Disc | 2 | Confirme |
d in linewithnationalstandardGraphical SignsforEnvironmentalProtection(GB1556
2.1-1995)
(GB1556
2.2-1995)
g thenationalstandards
| Meetin | Emission |
Standardfor AirPollutantsofBoiler(GB13271-2014),EmissionStandardfor OdorPollutants(GB14554-
93), 4a in
Class 2 ofEmissionStandardforEnvironmental Noise attheBoundary ofIndustrialEnterprises(GB12348-2008),,ComprehensiveWastewaterDischargeStandard ofLiaoningProvince(DB21/1627
35m3/d
m3/d
| -2008) | No |
Construction and operation of pollution prevention facilitiesThe exhaust gas, SO
and NO
Xproduced by this company's boiler are discharged throughceramic tube dust removers and bag dust removers. A wastewater treatment station has beenconstructed. The wastewater treatment process adopts thetreatment process ofhydrolysis-aerobiont. Production wastewater and domestic sewage are treated by the in-plant
wastewater treatment station and then discharged into thewastewater treatmentplantinBeidianzixiang Town.
Environmental impact assessment of construction projects and other environmentalprotection administrative permitsIt has been approved in the Huanhuanjianzi (2016) No.24 issued by the EnvironmentalProtection Bureau of Huanren Manchu Autonomous County.
Emergency plan for emergentenvironmentalincidentThe Company has formulated a comprehensive emergency plan foremergentenvironmentalincident.
Environmental self-monitoring programThe Company has formulated a complete environmental self-monitoring program.
Other environmental information that should be made publicNo
Other related environmental informationNo
19. Other Major issues
□Available ?Not available
There are no other major issues need to be explained during the report period.
20. Major issues of Company’s subsidiaries
□Available ?Not available
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportVI. Changes in Shares and the Shareholders’ Situation
1. Changes in shares
(1) Changes in shares
Unit: share
Amount before this changeChange (+, -)
Amount
| Amount after this change | |||||
| Percentage % | Allot new share | Distribute bonus share | Transfer other capital to share capital |
others Sub total Amount
1.Shares without trading
limited condition
685,464,000
| Percentage % | ||
100.00%
685,464,000
100.00%
(1). A shares 453,460,800
66.15%
453,460,800
66.15%
(2). B shares 232,003,200
33.85%
232,003,200
33.85%
2. Total shares 685,464,000
100.00%
685,464,000
100.00%
Cause of share change
□Available ?Not available
Approval of share change
□Available ?Not available
Transfer ownership of changed shares
□Available ?Not available
Implementation progress of share buy-back
□Available ?Not available
Implementation progress of reducing holding buy-back share through the way of centralized bidding
□Available ?Not available
The influence of share change on the financial indicators such as basic earnings per share, dilutedearnings per share of the latest year and thelatest period, net asset per share belonging to the Company’s common shareholders, etc.
□Available ?Not available
Other contents the Company thinks necessary or securities regulatory departments ask to make public.
□Available ?Not available
(2) Changes in restricted shares
□Available ?Not available
2. Securities issuance and listing situation
(1) Securities issuance (exclude preferred share) during report period
□Available ?Not available
(2) Explanation of change in Company’s total shares and shareholding structure and change in Company’s assets and liability structure
□Available ?Not available
(3) Current employee shares
□Available ?Not available
3. Situation for shareholders and the actual controllers
(1) The number of shareholders of the Company and the shareholdings
Unit：share
the report period
43,856
| Total shareholders in | Total number of shareholders by |
the end of last mo
disclosure day of the annual report
45,626
| Total number of preferred shareholder recovering voting power by the end of |
report period (if have) (see note 8)
| Total number of preferred shareholder recovering voting power by the end of |
last m
the annual report (if have) (see note 8)
| onth before the disclosure day of |
Shareholders holding more than 5% or the top 10 shareholders holding situationName of Shareholders Character of shareholders
Percentage(%)
Shares held until
the end of thereport period
Changes duringthe report period
Number ofrestricted
shares
Number ofunrestrictedshares
Pledged or frozenShare status AmountYANTAI CHANGYU GROUP CO.,LTD.
Domestic non-state legalperson
50.40%
| 345,473,856 |
345,473,856
GAOLING FUND, L.P. Foreign legal person 3.08%
| 21,090,219 |
21,090,219
CHINA SECURITIES FINANCE CORP State legal person 2.25%
| 15,440,794 |
15,440,794
BBH BOS S/A FIDELITY FD - CHINAFOCUS FD
Foreign legal person
2.22%
| 15,241,826 |
15,241,826
SHENWAN HONGYUANSECURITIES(HONGKONG) LIMITED
Foreign legal person
1.20%
| 8,243,333 |
-104,330
8,243,333
FIDELITY PURITAN TRUST:
FIDELITY SERIES INTRINSICOPPORTUNITIES FUND
Foreign legal person
0.93%
| 6,350,762 |
250,000
6,350,762
GUOTAI JUNANSECURITIES(HONGKONG) LIMITED
Foreign legal person
0.70%
| 4,810,345 |
-233,162
4,810,345
CENTRAL HUIJIN ASSETMANAGEMENT LIMITED
State legal person
0.69%
| 4,761,200 |
4,761,200
VANGUARD EMERGING MARKETSSTOCK INDEX FUND
Foreign legal person
0.55%
| 3,788,487 |
3,788,487
FIDELITY CHINA SPECIAL Foreign legal person 0.55%
| 3,779,202 |
3,779,202
SITUATIONS PLC
become a top 10 shareholders(if have)(see note 3)
NoThe explanation for the associated relationship and accordant action
| Strategic investors or legal result of the placement of new shares to | |
| Among the top 10 shareholders, Yantai Changyu Group Company Limited has no associated relationship or accordant |
action relationship with the other 9 listed shareholders, while the relationship among the other shareholders is unknown.The top 10 shareholders with shares without trading limited conditionName of Shareholders Number of shares without trading limited condition held until the end of the year
Type of shareType of share AmountYANTAI CHANGYU GROUP CO., LTD. 345,473,856
A 345,473,856
GAOLING FUND,L.P. 21,090,219
B 21,090,219
CHINA SECURITIES FINANCE CORP 15,440,794
A 15,440,794
BBH BOS S/A FIDELITY FD - CHINA FOCUS FD 15,241,826
B 15,241,826
SHENWAN HONGYUAN SECURITIES(HONGKONG) LIMITED 8,243,333
B 8,243,333
FIDELITY PURITAN TRUST: FIDELITY SERIES INTRINSICOPPORTUNITIES FUND
6,350,762
B 6,350,762
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED 4,810,345
B 4,810,345
CENTRAL HUIJIN ASSET MANAGEMENT LIMITED 4,761,200
A 4,761,200
VANGUARD EMERGING MARKETS STOCK INDEX FUND 3,788,487
B 3,788,487
FIDELITY CHINA SPECIAL SITUATIONS PLC 3,779,202
B 3,779,202
| The explanation for the associated relationship and accordant action of |
the top 10 shareholders with unrestricted shares, the
relationship and acc
| ordant action between the top 10 shareholders with |
unrestricted shares and the top 10 shareholders
Among the top 10 shareholders, Yantai Changyu Group Company Limited has no associated relationship or accordantaction relationship with the other 9 listed shareholders, and the relationship among the other shareholders is unknown.
activities and stock trading business (if have)(see note 4)
The top 10 shareholders do not involve in financing activities and stock trade business.
Whether or not the Company’s top 10 common shareholders and shareholders withshares without trading limited conditiontake agreedrepurchase trading during the report period
□Yes ?No
There is no agreed repurchase trading taken by the Company’s top 10 common shareholders and shareholders withshares without trading limitedconditionduring the report period.
(2) Situation for the controlling shareholders of the Company
Property of holding shareholders: Property of holding main body undefinedType of holding shareholders: Legal representativeName of controlling shareholder Legal representative Establishment date Organization code Main businessYantai Changyu Group Co., Ltd. Zhou Hongjiang 1997.04.27 913706002656458244
Production and distribution of wine, healthy liquor, distilled liquorand non-alcohol beverages, planting of agricultural products andexport business under the scope of permission.
or shared by the controlling shareholders during the report period
No.Changes in the controlling shareholder during the report period
□Available ?Not available
There are no changes in the controlling shareholder during the report period.
(3) Situation for the actual controllers of the Company
Property of actual controllers: domestic other institutions; foreign other institutionsType of actual controllers: Legal representative
Name of actual controllers Legal representative
Equity situation for the other domestic listed companies controlled
Establishment date Organization code
Main businessYantai Yuhua Investment & Development JiangHua 2004.10.28 76779294－7 Under state permission, property
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportCo., Ltd.
products excluded), hardware and electronical products, grape plantation.ILLVA Saronno Holding S.p.a. Augusto Reina 1984.07.25 －
| wholesale and retail of construction material, chemical products (chemical hazard |
| Directly or indirectly conduct the production and distribution of food products |
(alcoholic products included) as well as industrial, commercial, financial and service
activities of any other kinds through joint-stock companies and organizations.
International Finance Corporation
Philippe LEHOUEROU
1956.07.25 －
| International Finance Corporation is one of the members of World Bank, mainly dedicated to investment in private sectors of developing countries while providing |
technical support and consultation service
sectors of developing countries in order to alleviate poverty and improve people’s life.
Yantai Guofeng Investment HoldingsGroup Co., Ltd.
Rong Feng 2009.02.12 00426068-6
Operating management of state-
| . The corporation is a multilateral financial institution that ranks first in the world in terms of providing capital stock and loans to developing countries. Its purpose is to promote sustainable investments of private |
| owned property right (stock right) authorized by |
State-owned Assets Supervision a
operation (including acquisition, reintegration and transfer, etc) of state-
| owned |
property right and state-
venture investment enterprises or individuals; Partici
| pation in the establishment of venture capital investment enterprises and venture capital investment management |
consultant institutions; Investment and financing service
financing consultant business; Other business authorized by State-
| owned Assets Supervision and Administration Commission of Yantai Municipal Government.(Projects need to be authorized in accordance with the law could carry out |
business activities only after the approval of relevant departments )Equity situation fo
controller during the report period
Yantai Yuhua Investment & Development Co., Ltd. did not control
| r the other domestic listed companies controlled by the actual | the equity of other domestic and foreign listed companies except the Company |
during the reporting period; It is not clear that other actual controllers control the equity of other domestic and foreign listed companies
Company during the reporting period.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportChanges of the actual controllers during the report period
□Available ?Not available
There are no changes in actual controllers during the report period.Introduction for property right and control relations between the Company and its actual controllers
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportActual controller controls the Company through a trust or other asset management ways
□Available ?Not available
(4) Other institutional shareholders holding more than 10% shares
□Available ?Not available
(5) Shares reduction situations of holding shareholders, actual controllers, restructuring side and other commitment subjects
□Available ?Not available
VII. Related Situation of Preferred Shares
□Available ?Not available
There are no preferred shares during the report period.
VIII. Related Situation of Convertible Corporate Bonds
□Available ?Not available
There are no convertible corporate bonds during the report period.
IX. Situation for Directors, Supervisors, Senior Executives and Staff
1. Changes in shareholdings of directors, supervisors and senior executives
Name Post Status Gender Age
Beginning date
of tenure
tenure
Shares held at
| Ending date of | the beginning of |
the period
Increasedshares duringthe period
Decreasedshares duringthe period
Otherchanges ofshares held
Shares held atthe end of the
periodZhou Hongjiang ChairmanIncumbentM55 2002.05.20 2022.05.18 0
Sun Liqiang DirectorOutgoingM72 1997.09.18 2019.05.17 0
Leng Bin DirectorIncumbentM57 2000.08.22 2022.05.18 0
Sun Jian Director Incumbent M 53 2019.05.17 2022.05.18 0
Li Jiming DirectorIncumbentM53 2019.05.17 2022.05.18 0
Chen Dianxin DirectorIncumbentF53 2019.05.17 2022.05.18 0
Qu Weimin DirectorOutgoingM62 1997.09.18 2019.05.17 0
Zhang Ming DirectorOutgoingM46 2016.05.26 2019.05.17 0
Augusto Reina DirectorIncumbentM79 2006.12.07 2020.02.20 0
Aldino Marzorati DirectorIncumbentM67 2006.12.07 2020.05.18 0
| Appignani Antonio |
DirectorOutgoingM81 2006.12.07 2019.05.17 0
Enrico Sivieri DirectorIncumbentM51 2019.05.17 2022.05.18 0
Wei Anning DirectorIncumbentM56 2017.06.15 2022.05.18 0
Wang Zhuquan Independent directorIncumbentM54 2014.05.23 2022.05.18 0
Wang Shigang Independent directorOutgoingM54 2011.05.10 2019.05.17 0
Luo Fei Independent directorIncumbentM67 2016.09.23 2022.05.18 0
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportDuan Changqing Independent directorIncumbentM55 2019.05.17 2022.05.18 0
Liu Huirong Independent directorIncumbentF56 2019.05.17 2022.05.18 0
Liu Qinglin Independent directorIncumbentM56 2019.07.02 2022.05.18 0
Liu Yan Independent directorOutgoingF46 2016.09.23 2019.05.17 0
Guo Guoqing Independent directorOutgoingM57 2018.12.04 2019.07.02 0
Kong Qingkun
| Chairman of the Board of Supervisors |
IncumbentM47 2013.05.14. 2022.05.18 0
Zhang Lanlan SupervisorIncumbentF50 2013.05.14. 2020.05.18 0
Liu Zhijun SupervisorIncumbentM39 2016.05.26 2020.05.18 0
Sun Jian General managerIncumbentM53 2018.01.10 2022.05.18 0
Li Jiming Chief engineerOutgoingM53 2001.09.14 2019.05.28 0
Li Jiming Deputy general manager
IncumbentM53 2019.05.28 2022.05.29 0
Jiang Hua Deputy general manager
IncumbentM56 2001.09.14 2022.05.29 0
Peng Bin Deputy general manager
IncumbentM53 2018.01.10 2022.05.29 0
Qu Weimin Board secretaryOutgoingM62 1997.09.18 2019.05.28 0
Jiang Jianxun Chief financial officerOutgoingM53 2018.01.10 2019.05.27 0
Jiang Jianxun
| Deputy general manager and Board secretary |
IncumbentM53 2019.05.28 2022.05.29 0
Pan Jianfu
| General manager assistant |
IncumbentM44 2018.04.19 2022.05.29 0
Liu Shilu
General manager
| assistant |
IncumbentM45 2018.04.19 2022.05.29 0
Xiao Zhenbo
| General manager assistant |
IncumbentM43 2018.04.19 2022.05.29 0
Total -------- -- -- 0
2. Changes in the Company’s directors, supervisors and senior executives
?Available □Not available
Name Position Type Date ReasonSun Liqiang Director Outgoing due to the expiry of term 2019.05.17 The term of office has expired and will no longer be appointed as a
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportdirectorQu Weimin Director Outgoing due to the expiry of term 2019.05.17 The term of office has expired and will no longer be appointed as a
directorZhang Ming Director Outgoing due to the expiry of term 2019.05.17 The term of office has expired and will no longer be appointed as a
directorAppignani Antonio Director Outgoing due to the expiry of term 2019.05.17 The term of office has expired and will no longer be appointed as a
directorWang Shigang Independent director Outgoing due to the expiry of term 2019.05.17 The term of office has expired and will no longer be appointed as an
independent directorLiu Yan Independent director Outgoing due to the expiry of term 2019.05.17 The term of office has expired and will no longer be appointed as an
independent directorGuoGuoqing Independent director Outgoing 2019.07.02 Voluntary resignation prior to expiration of termLi Jiming Chief engineer Outgoing due to the expiry of term 2019.05.28 The term of office has expired and will no longer be appointed as a
chief engineerQu Weimin Board secretary Outgoing due to the expiry of term 2019.05.28 The term of office has expired and will no longer be appointed as a
board secretaryJiang Jianxun Chief financial officer Outgoing due to the expiry of term 2019.05.28 The term of office has expired and will no longer be appointed as a
chief financial officerSun Jian Director Appointment 2019.05.17 Be appointed as a director of the CompanyLi Jiming Director Appointment 2019.05.17 Be appointed as a director of the CompanyChen Dianxin Director Appointment 2019.05.17 Be appointed as a director of the CompanyEnrico Sivieri Director Appointment 2019.05.17 Be appointed as a director of the CompanyDuanChangqing Independent director Appointment 2019.05.17 Be appointed as an independent director of the CompanyLiu Huirong Independent director Appointment 2019.05.17 Be appointed as an independent director of the CompanyLiu Qinglin Independent director Appointment 2019.07.02 Be appointed as an independent director of the CompanyLi Jiming Deputy general manager Appointment 2019.05.28 Be appointed as a deputy general manager of the CompanyJiang Jianxun
Deputy general manager andBoard secretary
Appointment 2019.05.28
Be appointed as a deputy general manager of the Company and board
secretary
3. Situation for work experience
The professional background, main work experiences and present positions of the Company’sdirectors, supervisors and senior executives
(1) Members of Board of Directors
Mr. ZhouHongjiang, male, 55, Chinese, with doctoral degree, senior engineer, used to bethe General Manager of Yantai Changyu Pioneer Wine Sales Co., Ltd.,the DeputyGeneralManager, the General Manager and the Deputy Chairman of Yantai Changyu Pioneer WineCo., Ltd.. He is incumbent asthe representative of the 13
th
National People’s Congress, theChairman of Yantai Changyu Group Co., Ltd.,and the board director and the Chairman of theCompany.Mr. Leng Bin, male, 57, Chinese, with master degree, senior accountant,used to betheDeputy Section Chief and the Section Chief of Yantai Audit Bureau,the board director andthe Chief Accountant of Yantai Changyu Group Co., Ltd. and the board director and theDeputy General Manager of the Company. He is incumbent as the board director of theGroup Company and the Company, and with an additional post of the General Manager ofthe Group Company.Mr. Sun Jian,male, 53,Chinese, MBA, used to be the Deputy General Manager of theCompany. He is incumbent as the board director and the General Manager of the Company,and with an additional post of the board director of the Group Company.Mr. Li Jiming, male, 53,Chinese, with doctoral degree, application researcher, used to be theChief Engineer of the Company. He is incumbent as the board director and the DeputyGeneral Manager of the Company, and with an additional post of the board director of theGroup Company.Mrs. Chen Dianxin, female, 53,Chinese, with master degree of the Party School; from July1985 to September 2013, she successively served as staff of Yantai Chemical Purchasing andSupply Station, Yantai Bureau of Commerce for secondment, staff of Yantai Stated-ownedAssets Assessment Center, the Deputy Director of Yantai Stated-owned Assets AssessmentCenter, the Deputy Section Chief of Assets Assessment Management Department in YantaiState-owned Assets Bureau, the Deputy Section Chief of Assets Assessment ManagementDepartment in Yantai State-owned Assets Supervision and Administration Commission,full-time Deputy Secretary of Party branch in Yantai State-owned Assets Supervision andAdministration Commission, the Section Chief of Property Management Department inYantai State-owned Assets Supervision and Administration Commission. From September2013 to February 2014, she served as the Director of retired carders work office and theSection Chief of Property Management Department in Yantai State-owned AssetsSupervision and Administration Commission. From February 2014 to October 2018, sheserved as the Director of retired carders work office in Yantai State-owned AssetsSupervision and Administration Commission (During the period, she successively andconcurrently served as the Director of Yantai Moon Group Co., Ltd. and Yantai Moon Co.,Ltd., director of Yantai Tayho Advanced Materials Group Co.,Ltd., the Chairman of YantaiGuofeng Investment Holding Group Co., Ltd., the Chairman and the General Manager ofYantai Guosheng Investment Holding Co., Ltd., the Chairman of Yantai Guoxin InvestmentHolding Co., Ltd., the Vice Chairman and the Director of Yantai CIMC Raffles Offshore Co.,Ltd., the Vice chairman and the Director of Yantai CIMC Raffles Shipyard Co., Ltd. and the
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportDirector of Yantai Guoyu Lease Finance Co., Ltd. and so on). Since October 2018, she hasbeen served as the Deputy Secretary of Party branch and the General Manager of YantaiGuofeng Investment Holding Group Co., Ltd. and the current board director of the Company.Mr. Augusto Reina, male, 79 by the end of 2019, Italian, died on February 19
th,2020 (localtime) (Beijing time: February 20
th,2020) died as theChief Executive Officer of severalcompanies including Illva Saronno Holding S.p.A. and Illva Saronno Investment S.R.L., themember of the board of directors of Barberini S.p.a., the director of Federvini (ItalianAlcohols Production and Export Association), the director of Instituto Del Liquore (WineResearch Institute), the director of Assovini (Sicily Viniculture and Wine ProductionAssociation) and the board director of the Changyu Group Co., Ltd. and the Company.Mr. Aldino Marzorati, male, 67, Italian, with bachelor degree, servescurrently as theGeneral Manager of Illva Saronno Holding S.p.A, the member of the board of directors ofsome branches under the Group Company and the board director of Changyu Group Co., Ltd.and the Company.Mr. Enrico Sivieri, male, 51, Italian, with bachelor degree, served successively as thefinancial controller of ARNEG S.p.a., the commercial analyst of SPILLERS FOODSITALIA S.p.a., the trade controller of Nestle’ Purina Petcare Europe, European marketing &sales controller of Nestle’ Purina Petcare Europe, the European supply chain controller ofNestle’ Purina Petcare Europe, the Southern Europe regional controller of Nestle’ PurinaPetcare Europe and theDirector of group financial controlling of IllvaSaronno Holding S.p.A.,and currently serving as a member of the board of directors for Royal Oak Distillery Ltd. andtheGeneral Manager of Illva Saronno Holding S.p.A. and the board director of the Company.Mr. Wei Anning, male, Chinese, 56, with doctoral degree, ever served as AgriculturalEconomist of the World Bank, the Director of North East Asia Food & AgribusinessResearch of the Rabobank, China CEO of the Fortis Bank Belgium, the Executive DeputyPresident of the New Hope Group (Sichuan), the President of Shandong Liuhe Group, theDirector of Xinjiang Kuntai Group Co., Ltd., the Director of Hangzhou United RuralCommercial Bank Co., Ltd, theChairman of the Shandong Chinwhiz Group. He is good atcorporate governance, enterprise development strategy and equity investments. Now, he isserving as the Executive Director and the General Manager of Shanghai Gueva FundManagement Co., Ltd Co., Ltd, the Executive Director of both Ningxia Gueva FundManagement Co., Ltd and Ningbo Gueva Fund Management Co., Ltd, the independentdirector of Dachan Food (Asia) Co., Ltd, Orient Securities Co., Ltd and Fortune SG FundManagement Co., Ltd..He is serving as the board director of the Group Company and theCompany.Mr. Luo Fei, male, 67, Chinese, with doctoral degree, visiting scholar of University ofToronto, doctoral supervisors, Government Special Allowance expert, first batch oftrans-century subject (academic) leading personals of Financial Department. He successivelyserved as the Dean of Accounting Institute in Zhongnan University of Economics and theDean of Accounting Institute in Zhongnan University of Economics and Law. He focuses onthe study of Financial Accounting, Cost Accounting, Financial Management, and so on. Hehas worked in companies for many years and has practical working experience withcompanies. Now he is serving as independent director of the Company.Mr. Wang Zhuquan, male, 54, Chinese, with doctoral degree of Management(Accountancy), first batch of national accounting academic leading personals of FinancialDepartment, the entrant of accountant master cultivation project of Financial Department,
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Reportoutstanding teacher of Shandong province, Government Special Allowance expert, acted asindependent director of the Company from 13
th May, 2010 to 12
thMay, 2013. Now he is aprofessor and a doctoral supervisor of the Ocean University of China as well as the currentindependent director of the Company and the some listed companies which could beexemplified as Qingdao Double-Star Co., Ltd.Mr. DuanChangqing,male, 55,Chinese, with doctoral degree, professor, doctoral andmaster’s supervisor, and the national senior winemaker and senior wine taster.He currentlyserves as the chief scientist of national grape industry technology system andthe Director ofWine Processing Key Laboratory of Ministry of Agriculture and Rural Affairs. Meanwhile,he holds concurrent posts of the Director of China Wine Technology Committee, the Directorof China Wine and Fruit Wine Expert Committee, the Executive President and the SecretaryGeneral of Grape and Wine Branch of Chinese Horticultural Society and the Vice Presidentof China Agricultural Society Grape Branch. Hismajor research fields are the basictheoretical research and related high and new technology research and development as wellas application promotion work in the direction of suitability between ecology in producingarea and grape variety and liquor variety, evolvement mechanism and directional brewing ofwine flavor formation, grape fruit flavor metabolism regulation and product flavor qualityevaluation and so on. He is a current independent director of the Company.Mrs. Liu Huirong, female, 56, Chinese, with doctoral degree, the former Deputy Dean andDean of the Institute of Political Science and Law of Ocean University of China. She used toserve as an independent director of Sailun Group Co., Ltd., Longda Meatand Sacred Sun Co.,Ltd. and Shandong Sacred Sun Power Sources Co., Ltd.. Currently, she is a second-levelprofessor and doctoral supervisor of Ocean University of China and with additional post as aresearcher of the “Belt and Road Initiative” Judicial Research Center of the SupremePeople’s Court, an expert at the Supreme People’s Court for foreign-related commercial andmaritime action expert database, the Deputy Chairman of the sixth Shandong Law Societyand the Deputy Director of the Academic Committee, and the Chairman of the QingdaoLaw-based Government Research Institute. Her research fields are International Law andLegislative Science. She has won the title of Shandong Top Ten Outstanding Young andMiddle-aged Jurists, the third prize of Excellent Social Science Achievement of the Ministryof Education, the third prize of Shandong Excellent Social Science Achievement, the secondprize of Shandong Excellent Philosophy and Social Science Achievement, the first prize ofExcellent Achievement of Shandong Education Department and the Top Talent in QingdaoCity. She is a current independent director of the Company.Mr. Liu Qinglin, male, 56, doctoral degree of Management, Chinese, no overseas permanentresidence. He is currently a professor and doctoral supervisor of Economics Faculty ofShandong University, the Director of Institute for World Economy Studies of ShandongUniversity, the Executive Deputy President of Shandong Institute of Development ofShandong University, a member of a council of China Society of World Economics, anexecutive member of a council of The Association for Canadian Studies in ChinaandShandong Youth Scholars Association, a member of a council of Shandong Association forBusiness Economics and Shandong Price Association. He currently serves as an independentdirector of Shandong XinnengTaishan Power Generation Co., Ltd., an independent directorof WeihaiHuadong Automation Co., Ltd. and an independent director of the Company.
(2) Members of board of supervisors
Mr.Kong Qingkun, male, 47, Chinese, MBA and economist, successively served as a sectionmember of production department in the healthy liquor branch office, a clerk and theDeputyDirector and the Director of general manager office.Ms. Zhang Lanlan, female, 50, bachelor degree and economist, successively served as theDeputy Manager of the import and export branch of the Company and the Manager of importdepartment of the Company. She now is the Director of board of directors’ office.Mr. Liu Zhijun, male, 39, Chinese, bachelor degree, worked in foreign fund department ofEconomy and Trade Bureau in LongkouEconomic Development Zone, served as a newssection member of propaganda department in Longkou Municipal Committee, a member ofpropaganda and mass work section, a member of planning section, the Deputy DirectorMember of programming development and enterprise distribution section, the DeputyDirector Member and the Deputy Chief of programming development section. He now is asupervisor of the Company.
(3) Other senior executives
Mr. Jiang Hua, male, 56, Chinese, with master degree, senior engineer, has been serving asthe DeputyGeneral Manager of the Company since 14
thSeptember, 2001.Mr. Peng Bin, male, 53, MBA, senior engineer, ever successively served as the DeputyDirector of wine-blending workshop and the Director of wine-storage workshop of BrandyCompany under Yantai Changyu Group Co., Ltd., the DepartmentChief of TechnicalTransformation Department and the Minister of Investment and Development Department aswell as theDeputy General Manager of Yantai Changyu Group Co., Ltd. and the GeneralManager Assistant of Yantai ChangyuGroup Co., Ltd.. He serves as the Deputy GeneralManager of the Company.Mr. Jiang Jianxun, male, 53, Chinese, MBA and accountant, served as the Financial Managerof the Company from 20
th May, 2002 to 10
th
January,2018. He serves as the Deputy GeneralManager and Board Secretary of the Company.Mr. PanJianfu,male, Han ethnic, Chinese, 44, MBA and senior economist, used to serve asthe General Manager of the Jiangxi Branch of the Company, the General Manager of theShanghai marketing management company and the General Manager of Beijing marketingmanagement center. Currently, he is the General Manager Assistant of the Company and theGeneral Manager of Beijing marketing management center and Beijing Chateau AFIP.Mr. Liu Shilu,male, Han ethnic, Chinese, 45, master degree, used to be the Manager ofTianjin branch of the Company, the Competence Manager of North China market, theGeneral Manger of Beijing marketing management company, the General Manager ofGuangdong marketing management center and the General Manager of e-commerce branchof the Company. Currently, he serves as the General Manager Assistance of the Companyand the General Manager of Yantai Changyu Pioneer Wine Sales Co., Ltd..Mr. Xiao Zhenbo, male, Han ethnic, Chinese, 43, MBA, served as the Deputy Manager of theCompany’s market strategy development center, the General Manager of Shandongmarketing management company and Yantai Changyu liquor company. He currently servesas the General Manager Assistant of the Company and the General Manager of Zhejiangmarketing management company.Post in the shareholder’s company?Available □Not available
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportName Shareholder’s Company Post
Beginning dateof the post
Ending dateof the post
Paid by shareholder’s
company or notZhou Hongjiang Yantai Changyu Group Co., Ltd. Chairman 2018.01.10 2022.01.11 NoLeng Bin Yantai Changyu Group Co., Ltd. Director 2018.01.10 2022.01.11 YesLeng Bin Yantai Changyu Group Co., Ltd. General manager 2018.01.10 2022.01.11 YesSun Jian Yantai Changyu Group Co., Ltd. Director 2018.01.10 2022.01.11 NoLi Jiming Yantai Changyu Group Co., Ltd. Director 2018.01.10 2022.01.11 NoChen Dianxin Yantai Changyu Group Co., Ltd. Director 2018.11.15 2022.01.11 NoAugusto Reina Yantai Changyu Group Co., Ltd. Director 2018.01.10 2022.01.11 NoAldino Marzorati Yantai Changyu Group Co., Ltd. Director 2018.01.10 2022.01.11 NoEnrico Sivieri Yantai Changyu Group Co., Ltd. Director 2018.01.10 2022.01.11 NoStefano Battioni Yantai Changyu Group Co., Ltd. Director 2020.04.09 2022.01.11 NoWei Anning Yantai Changyu Group Co., Ltd. Director 2018.01.10 2022.01.11 NoExplanation for the post inthe shareholder’s company
No.
Post at other companies
□Available ?Not available
Disciplinary actions taken by securities regulators in recent 3 years to the Company’sdirectors, supervisors and senior management both on the job and left during the reportperiod?Available □Not AvailableDuring the report period, the Shandong Regulatory Bureau of China Securities RegulatoryCommission issued a “Decision on Measures to Issue Warning Letters to Mr. ZhouHongjiang and Mr. Qu Weimin”, but it did not impose administrative penalty on Mr. ZhouHongjiang and Mr. Qu Weimin.
4. Salary of directors, supervisors and senior executives
The situation of decision-making process, the basis of determination and the actual paymentof directors, supervisors and senior executivesThe salary for the independent directors is paid according to the resolution of shareholders’meeting. The salary for the chairman, directors with administration duty, supervisors,managers and other senior management should be paid on basis of the evaluation resultaccording to the Yantai Changyu Pioneer Wine Co., Ltd. Executive Compensation andPerformance Design, which was passed during the Board of Directors’ meeting.Salary of directors, supervisors and senior executives during the report period
Unit: CNY’0000
Name Post Gender Age Status
Company before tax
| Total reward from the | Whether get reward |
from related parties
Zhou Hongjiang Chairman M
| of the Company | ||
| 55 |
Incumbent
146.53
NoSun Liqiang Director M
Outgoing 61.06
| 72 |
NoLeng Bin Director M
Incumbent
| 57 |
YesSun Jian Director and General Manager M
| 53 |
Incumbent
132.12
NoLi Jiming Director and Deputy General Manager M
Incumbent
| 53 |
98.33
NoChen Dianxin Director F
| 53 |
Incumbent
NoQu Weimin Director and Board Secretary M
Outgoing 41.68
| 62 |
NoZhang Ming Director M
Outgoing 0
| 46 |
NoAugusto Reina Director M
Incumbent
| 79 |
NoAldino Marzorati Director M
| 67 |
Incumbent
NoAppignani Antonio Director M
Outgoing 0
| 81 |
NoEnrico Sivieri Director M
Incumbent
| 51 |
NoWei Anning Director M
| 56 |
Incumbent
NoWang Zhuquan Independent Director M
Incumbent
| 54 |
NoWang Shigang Independent Director M
| 54 |
Outgoing 4
NoLuo Fei Independent Director M
| 67 |
Incumbent
NoDuan Changqing Independent Director M
Incumbent
| 55 |
5.33
NoLiu Huirong Independent Director F
| 56 |
Incumbent
5.33
NoLiu Qinglin Independent Director M
Incumbent
| 56 |
NoLiu Yan Independent Director F
| 46 |
Outgoing 4
NoGuoGuoqing Independent Director M
| 57 |
Outgoing 8
NoKong Qingkun Chairman of the Board of Supervisors M
| 47 |
Incumbent
67.19
NoZhang Lanlan Supervisor F
Incumbent
| 50 |
21.48
NoLiu Zhijun Supervisor M
| 39 |
Incumbent
NoJiang Hua Deputy General Manager M
Incumbent
| 56 |
110.23
NoPeng Bin Deputy General Manager M
| 53 |
Incumbent
95.23
NoJiang Jianxun
Deputy General Manager and Board
M
Incumbent
| Secretary |
101.54
NoPan Jianfu General Manager Assistant M
| 44 |
Incumbent
65.47
NoLiu Shilu General Manager Assistant M
Incumbent
| 45 |
73.21
No
| Xiao Zhenbo | General Manager Assistant | M | 43 | Incumbent | 97.79 | No |
| Total | - | - | - | - | 1,158.52 | - |
The awarded equity incentives for the directors, supervisors and senior executives of theCompany during the report period
□Available ?Not available
5. Staff of the Company
(1) Staff number, specialty constitution and education degree
| Incumbent staff number of parent company (people) | 1,280 |
| Incumbent staff number of major subsidiary companies (people) | 1,399 |
| Total incumbent staff (people) | 2,679 |
| Total staff getting paid in current period (people) | 2,679 |
| Retired staff number whose expenses are undertaken by parent company or | 0 |
| subsidiary companies (people) | |
| Specialty constitution | |
| Category | Number of people (people) |
| Production staff | 873 |
| Sales staff | 1,316 |
| Technical staff | 165 |
| Financial staff | 131 |
| Administrative staff | 194 |
| Total | 2,679 |
| Education degree | |
| Category | Number (People) |
| Bachelor and above | 907 |
| Junior College | 884 |
| Technical secondary school | 495 |
| Senior high school and below | 393 |
| Total | 2,679 |
(2) Remuneration policy
The Company has established and improved the remuneration and welfare system, includingsalary system, incentive mechanism, social security and medical insurance and so on, toensurethe participation of all employees. In accordance with the law, the Company purchasessocial endowment insurance, medical insurance, occupational injury insurance,unemployment insurance and maternity insurance, and pays housing fund for the employees.Based on the principle of “distribution according to work and equal pay for equal work”, theCompany pays the staff’s remuneration timely. With the improvement of the Company’sprofitability, the Company steadily improves the staff’s remuneration and welfare, andprovides its employees the competitive salary and equal opportunity for development.
(3) Training plan
① Senior and Middle-level Managers
1) General training
By hiring professional lecturers to the Company or giving centralized lectures throughremote network videos, the Company could select training topics related to thecompany’s industrial development, business direction and management philosophy toexpand the strategic thinking of middle and senior managers, improve the businessphilosophy and improve the scientific decision-making ability and business ability.The Company takes meetings instead of training; during each meeting, to learn thecentral, national and governmental fundamental policies, to analyze the domestic andinternational political situation and economic situation, and research and interpret theinfluences of relevant policies and regulations on the development of the Company;meanwhile, through the research and analysis of domestic and foreign industryproduction, technology, management, marketing and other development trends, itprovides a basis for the Company to timely adjust the business strategy.
2)Professional training
Middle and senior management personnel determine self-study books by optional waysevery year, and submit their post-reading and suggestions for the Company’sdevelopment at the end of the year.According to the different personal responsibilities, the Company organizesmanagement team to attend high-end entrepreneurial forums and summits, and to visitand learn from successful enterprises at home and abroad.Middle-level managers are encouraged to participate in university correspondence andself-taught examination, or engage in advanced studies such as MBA and other masterdegrees. The Company organized professional managerial staffs from human resource,finance, equipment, safety and technical quality to participate in the qualificationexamination and obtain qualification certificates.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportThe Company organized managers to participate in specialized training of safety,human resource, law, technology, equipment, finance, WSET, tourism, etc. organizedby the professional management departments.
② Ordinary Management Personnel
1). General training
The Company sets courses aiming at improving employees’ management ability,innovation ability and executive ability, and hiring professional lecturers or universityteachers to teach at the Company.Ordinary management personnel are encouraged to attend the common-sense generaltrainings including enterprise culture, regulation framework and various liquor productsknowledge.The Company organizes employees’ outdoor quality development trainings in order toimprove team work and cohesion.
2). Professional training
During the year, the professional supervisors selected 2 books for their ordinarymanagement personnel for personal self-study; at the end of the year, the ordinarymanagement personnel submit post-reading and the development suggestions for theCompany.The Company encourages qualified ordinary management personnel to take universitycorrespondence and self-taught examination, or engage in advanced studies such asMBA and other master degrees. The Company organized professional managerial staffsfrom human resource, finance, equipment, safety and technical quality to participate inthe qualification examination and obtain qualification certificates.
③ First-line Production Personnel
1). General training
First-line production personnel participate in the general training on enterprise culture,rules and regulations and the knowledge of various alcoholic products of the Companyorganized by their units, and strengthen the knowledge training on human resourcemanagement, such as attendance management, labor discipline and comprehensiveevaluation and so on.
2). Professional training
For workers of different trades such as electricians, coolerman, forklift drivers,assemblers, tour guides, personalized product designers, etc., the Company organizesthem to participate in training to improve professional skills and operation levels, aswell as the special training on safety, technology, equipment and comprehensivemanagement of the unit, and participate in the vocational skills completion organizedby the City Municipal Bureau of Human Resources and Social Affairs.
④ Marketing Personnel
1). General training
Marketing personnel independently study mainly focuses on the marketing textbooks of“Growth”, as well as training materials including the Company’s related managementsystem, production knowledge, sales responsibility system, etc..
2). Professional training
Professional lecturers would be employed to the company or through remote internetvideos to give lectures about successful liquor cases, current economic trend researchfor domestic and foreign wine industry and other topic in order to take training forpersonnel whose levels are or above manager assistant in city marketing managementcompanies.Besides that, the Company takes training for city marketing managers on how toimprove marketing skill as well as executive force of sales policy by professionalmanagement cadres or hired professional lecturers.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportFor business directors and other personnel, each marketing management company shallbase itself on the local area to conduct trainings on successful marketing cases andmarketing management concepts with the combination training method of hiringlecturers and going out to visit and learn.
⑤ New Entry University Students
New entry university students are trained by middle and senior managers in the aspectsof corporate culture, rules and regulations, production safety, product quality,marketing strategy, salary and assessment system, etc.; meanwhile, professionallecturers will be hired to conduct training on role change, workplace etiquette,teamwork and other aspects, as well as interspersed the military training and qualitydevelopment training.
(4) Labor outsourcing
□Available ?Not available
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportX. Corporate Governance
1. Current Corporate Governance Situation of the Company
(1) About shareholders and shareholders’ meeting
The Company has set up the Deliberation Rules of Shareholders’ Meeting, and convened theshareholders’ meetings in strict accordance with requirements of standard opinions ofshareholders’ meeting, made the great effort to provide convenient conditions for moreshareholders to participate the shareholders’ meeting, and ensured all shareholders to enjoysame equity and well exercised their rights. The Company drew great attention to thecommunication and exchange with shareholders, actively responded the shareholders’inquiry and questions, and widely listened to the suggestions and comments fromshareholders.
(2) About the Company and holding shareholder
The Company has independent business and self-management capacity, which isindependent from the controlling shareholders in business, staffs, assets, institutions andfinance. The Board of Directors, Board of Supervisors, management teams and also internalinstitutions are able to operate independently in the Company. The controlling shareholdersof the Company could regulate their behaviors without directly or indirectly interfering in theCompany’s decision-making and business activities beyond the shareholder’s meeting;meanwhile, there is no case of encroaching on the Company’s assets and damaging theinterest of the Company and minority shareholders.
(3) About the director and board of directors
The Company strictly appoints all directors in light of Corporation Act and Articles ofAssociations. The qualifications of all directors are in line with the requirements of laws andregulations. In accordance with the requirements of Corporate Governance Guidelines, theCompany has carried out the cumulative voting system in the director selection. At present,the Company has five independent directors accounting for above one third of all directors,and the number and personnel composition of board of directors was basically in accord withrequirements of regulations as well as Articles of Associations. All directors of the Companywere able to carry out work in accordance with the Rules of Board of Directors’ Procedureand Working Rules for Independent Directors, punctually attended the board of directors’and shareholders’ meetings, actively took part in relevant knowledge training, were familiarwith the laws and regulations concerned, had a deep knowledge and long experience ofpractitioners, and performed their duties according to the law and regulations. The Board ofDirectors convened the meetings complies with relevant laws and regulations.
(4) About supervisor and board of supervisors
The Company strictly elected all supervisors in light of the procedures stipulated in theCorporation Act and Articles of Associations. At present, board of supervisors has threepeople among which one supervisor is representative for staff. The number and compositionof board of supervisor meet the requirements of regulations and laws. All supervisors of theCompany could follow the requirement of Rules of Board of Supervisors’ Procedure, insistthe principle of responsibility to all shareholders, seriously perform their duties, effectivelysupervise and present their independent opinions on important issues, interrelated deals,financial status, the duty performance of directors and managers of the Company.
(5) About performance evaluation and incentive system
The engagement of managers was open and transparent, and accorded with laws andregulations. The Company has established and gradually improved the performance
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Reportevaluation standard and formed efficient incentive system, so as to ensure the salary of staffto be linked with work performance.
(6) About stakeholders
The Company could fully respect and safeguard the legal rights of the party with relevantbenefit, cooperate actively with the stakeholders, jointly drive the Company to developcontinually and stably, pay great attention to the issues such as local environmental protectionand public utilities etc., and fully assume the due social responsibility.
(7) About the information disclosure and transparency
The Company has appointed the board secretary to be responsible as the head of investorrelation management including information disclosure, investor relations management andreception of shareholders’ visit and consultation. The Company has also assigned ChinaSecurities Newspaper, Securities Times, Honkong Commercial Daily and web sitehttp://www.cninfo.com.cn/ to disclose information, punctually, accurately and truly disclosedany information in the light of requirement of relevant laws and rules, and also ensured allshareholders to have same opportunity to acquire any information.In order to further perfect the Company’s governance system, during the report period, theCompany formulated and improved the management systems including Three-year Plan forWine and Brandy Raw Materials and Bulk Wines, Options on the Construction of theWinemaker Team of Changyu Company and so on.Whether or not there is significant variance between the Company’s actual situation ofcorporate governance and the normative documents about listed company governance issuedby China Securities Regulatory Commission.
□Yes ?No
There is no significant variance between the Company’s actual situation of corporategovernance and the normative documents about listed company governance issued by ChinaSecurities Regulatory Commission.
2. Relative to the controlling shareholder, independence of the Company on business,
personnel, assets, organization and finance
(1) Personnel Arrangement
The Company’s general manager, deputy general managers and other senior officers, all ofwhom were paid by the Company and did not hold any concurrent administrative ranks in thecontrolling units. The Company was entirely independent in personnel arrangement,conclusion and adjustment of labor contracts thanks to its sound and independent system forlabor, personal and salary management.
(2) Assets:
Tangible assets and Intangible assets including trademark, industrial property right andnon-patent technologies were all clearly divided between the Company and the controllingshareholders, and all legal formalities were completed. As an independent legal entity, theCompany operates independently in accordance with the law, and does not provide any formof guarantee with its assets for shareholders’ or individuals’ liabilities or other legal or naturalpersons. The Company owns trademarks including “黄金冰谷”, “爱斐堡”, “爱菲堡”,“爱斐” and “AFIP”, etc. However, due to some historical problems, the ownership of theintangible assets such as the trademark of “张裕” (Changyu) that the Company is licensed touse, patent and so on is still owned by the controlling shareholders. Except for partialtrademarks which cannot be separated from “张裕”(Changyu) trademark, the trademarks
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Reportand patents that could have been registered or applied by the Company but were registered orapplied by Changyu Group who then authorized the Company for usage, excluding a handfulof which are unable to transfer due to the reasons such as litigation, most of them have beentransferred to the Company by Changyu Group for free before the end of 2019 in order toensure the independence and completeness of the Company’s assets.
(3) Finance
The Company is equipped with independent finance department, financial administrator andfinancial and accounting staff, as well as a complete, independent and standardized financialaccounting system. The Company also opened its own bank accounts, independent andlegally paying taxes and workers insurance fund. All financial individuals do not hold anyconcurrent posts in associated companies and are able to make financial decisionsindependently. The Company has its own audit department, which is especially responsiblefor the internal audit work of the Company.
(4) Independent Institutions
The Company has set up a sound organizational framework, in which the Board of Directorsand Board of Supervisors operate independently, no superior and subordinate relationshipexists between the functional departments of the controlling shareholder. The Company hasits own independent production & business offices, and all functional departments areindependent to exercise their powers and carry out the production and business activitiesindependently.
(5) Operations
The operations of the Company are independent of the controlling shareholders. TheCompany owns itself completely independent systems covering research and development,financial accounting, labor and human resource, quality control, raw materials purchase,production and sales, has the independent management ability, and does not have the problemthat entrusts the controlling shareholders to buy and sell on commission, nor exist thehorizontal competition with controlling shareholders.
3. Situation for Horizontal Competition
□Available ?Not available
4. Information for the shareholders’ meeting and temporary shareholders’ meeting held
during the report period
(1) Information for the shareholders’ meeting during the report period
Session Meeting type
| Participation ratio of investors | Convening date | Disclosure date |
Disclosure Index2018 AnnualShareholders’
Meeting
Annualshareholders’
meeting
60.86% 2019.05.17 2019.05.18
http://www.cninfo.com.cn
Resolution Announcement of 2018
Annual Shareholders’ Meeting(Announcement
| no.:2019-Temporary25) |
2019 Annual First
InterimShareholders’
Meeting
InterimShareholders’
Meeting
62.36% 2019.07.02 2019.07.03
Resolution Announcement of 2019
Annual First Interim
Meeting (Notification
| no.:2019-Temporary37) |
(2) Request for convening temporary shareholders’ meeting by priority shareholders
owing recovered voting right
□Available ?Not available
5. Performance of independent directors during the report period
(1) Attendance of independent directors for the board of directors and the shareholders’
meeting
Name
Requiredattendance time
Personalattendance
Communication
attendance
Authorizedattendance
Absence
| Attendance of independent directors for the board of directors | ||
| Whether or not to | ||
attend the meetings
personally for
| successive twice | Attendance |
time for theshareholders’
| meeting | |||||||
| Wang Zhuquan | 8 | 2 | 6 | 0 | 0 | No | 0 |
| Wang Shigang | 4 | 1 | 3 | 0 | 0 | No | 0 |
| Luo Fei | 8 | 2 | 6 | 0 | 0 | No | 0 |
| DuanChangqing | 4 | 0 | 3 | 1 | 0 | No | 0 |
| Liu Huirong | 4 | 1 | 3 | 0 | 0 | No | 0 |
| Liu Qinglin | 2 | 1 | 1 | 0 | 0 | No | 1 |
| Liu Yan | 4 | 1 | 3 | 0 | 0 | No | 0 |
| GuoGuoqing | 6 | 1 | 5 | 0 | 0 | No | 0 |
Explanation for failed to personally attend the Board of Directors’ meetings for successivetwo timesDuring the report period, there were no independent directors who did not attend theshareholders’ meetings in person for two consecutive times.
(2) Any objections for the Company’s projects from the independent directors
Whether or not the independent directors raised any objection for the Company’s projects
□Yes ?No
During the report period, the independent directors did not raise any objections for theCompany’s projects.
(3) Other explanations on independent directors’ performance
Whether or not the independent directors’ propositions are accepted by the Company?Yes □NoExplanation on acceptance or refusal of the independent directors’ propositions to theCompanyDuring the report period, the independent directors suggested the Company to communicatewith all stakeholders as soon as possible to properly handle the trademark and patentregistration matters concerned by investors; as well as the charged using fee and using issues oftrademark such as “Changyu” etc.. The Company has adopted the suggestions of theindependent directors, actively coordinated with various stakeholders, and finally reached aconsensus to better solve the above issues.
6. Performance of the special committees under the Board of Directors during the
report period
①Auditing Committee: During the report period, the Company’s auditing Committee
conducted an ex-ante, in-process, and post-event review to related annual report audit workand made relevant arrangements. The auditing Committee believed that 2018 annual financialstatements issued by the Company met the requirement of Accounting Standards for BusinessEnterprises and truly and fairly reflected the balance condition up to December 31
st
, 2018 aswell as 2018 annual business performance and cash flow. There were no unsolved majordivergences in accounting and auditing or major risk issues affecting the Company'smanagement. The Company operated steadily and had the ability of continuous operations.Proposals including 2018 Annual Self-assessment Report on Internal Control,Draft proposalon 2018 Annual Profit Distribution,Appointing Certified Public Accountants Firm,Change inAccounting Policy，2018 Annual Report, 2019 Semi-annual Report and 2019 Annual AuditPlan were deliberated. Auditing committee passed above-mentioned proposals and submittedthe related proposals to board of directors for deliberation.
②Emolument Committee: Emolument Committee is responsible for assessment of the
economy responsibilities of the directors and the senior executives who receive salaries fromthe Company and examination of the salary policy and scheme designed for the Company’sdirectors and senior executives. During the report period, the Company held EmolumentCommittee meeting three times and deliberated and passed the Executive Compensation andPerformance Design, Proposal on 2018 Annual Performance Assessment Results of theCompany’s Senior Executives, and Proposal on the Election of the Convener of theCompensation Committee. The meeting considered that all the contents of the Proposal on2018 Annual Performance Assessment Results of the Company’s Senior Executives submittedto the meeting deliberation by the Company are in line with the relevant provisions of theCompany, and the Executive Compensation and Performance Designcon forms with theactual situation of the Company, in which the performance appraisal is more scientific andreasonable that could better restrain and motivate senior managers. The meeting agreed to theabove proposals and submitted them to the board of directors for deliberation. Mr. WangZhuquan was elected as the convener of the Remuneration Committee in this meeting.During the report period, the Board of Directors’ Emolument Committee also examined the2018 annual payroll records of the directors and the senior managers who receive salariesfrom the Company and believes that the salaries of the Company’s directors, supervisors andsenior managers received from the Company is strictly assessed and delivered based on theCompany’s economic responsibility assessment system. The salaries disclosed by theCompany are in conformity with the actually paid amount.
7. The work of the Board of Supervisors
Whether or not the Board of Supervisors found any existence risk to the Company inoversight activities during the report period
□Yes ?No
The Board of Supervisors has no objections to supervision matters during the report period.
8. Performance Evaluation and Incentive situations of Senior Management
The Company has already established a sound system for evaluation of achievement of seniormanagement and the related incentive system which linked the reward with the Company’sbenefit and personal achievement. The Emolument Committee under Board of Directorsassumed the responsibility of stipulating the policy and appraising the scheme for salaries andrewards. Based on the Company’s annual business planning goals, this committee examinedsenior personals and also their responsible subsidiaries or departments according to theirmanagement achievement and index and took these as criterion of awards or penalties.
During the report period, because of not finishing the annual business plan deliberated andpassed in the Board of Directors’ meeting at the beginning of the year, the total salaries andrewards of the senior management are basically equal to that of last year.
9. Internal Control
(1) Specific situations for significant defects of the internal control found during the
report period
□Yes ?No
(2) Self-assessment report on internal control
2020.04.24
| Disclosure date for full text of the internal control self-assessment report |
| Disclosure index for full text of the internal control |
self-assessment report
Report on Internal Control disclosed on Securities Times,China Securities Journal and
| www.cninfo.com.cn by the Company on April 20 |
th
th
| , 2020. | |
| Percentage of total unit assets included in scope of |
the assessment accounting for the Company’s total
89.23%
| assets of consolidated financial statements |
| Percentage of unit operating income included in |
scope of the assessment accounting for theCompany’s operating income of consolidated
91.77%
| financial statements | |||
| Standards of Defect Identification | |||
| Category | Financial report | Non-financial report | |
| Qualitative criteria | Significant defects: one defect of internal control, | ||
individually or together with
misstatements, which cannot be promptly prevented, orfound and corrected timely in the financial report. Forexample: ?
| Company’s Directors, Supervisors and |
Senior Management have fraudulent practices; ? TheCompany makes corrections for the published financialreport; ? The audit of external intermediary agent findssignificant misstatement existing in the current financialreport, but the Company does not realize it during theoperation process; ?
appears in the medias with involving a wide scope; ?
| The Company’s audit committee and internal audit |
department makes an inefficient supervision for internalcontrol; ? Other situations maybe cause significantmisdirection which guides the report users to make theright judgment.Major defects：The defect of internal control, individually
probability to cause the significant misstatements, whichcannot be promptly prevented, or found and correctedtimely in the financial report, although the misstatementsneither achieves nor exceeds the importance level but still
| arising the attention of Board of Directors and |
management team. ?
acc
| ounting regulations in accordance with generally |
accepted accounting principles; ? Failure to establish theanti-fraud procedures and control measures; ? Failure toset up corresponding control mechanism or to carry outand take corresponding compensating
accounting treatments with irregular and special deal; ?Negative news appears in the media with influencing awide scope; ? One or more defects exist in the controlduring the process of the ending financial report, and thetarget of achieving truthfulness and integrality cannot bereasonably guaranteed in the financial report; ? Generaldefects refer to the other control defects, which do not
| constitute the significant and major defects. | Significant defects: Any situations listed below |
appears, it can be regarded as significant defects. ?Operation: Unable to achieve all operation target or keybusiness index, widely out of budget in various aspects.?
person death, or more than 3 person serious injuries. ?
| Major negative effects: Negative information |
frequently appears in the medias with involving a wide
media. ?
| Environment effects: Create irreparable |
damages to environment, and cause massive publiccomplains.Major defects: Any situations listed below appears, itcan be regarded as major defects. ?Operation: Unableto achieve partly operation target, a big margin out ofbudget in various aspects. ? Safety accident effects:
Without reaching the person loss or the number ofserious injury of significant defects. ? Major negative
influencing a wide scope in the provincial mainstreammedia. ?
| Environment effects: Cause heavy |
environment damages and massive public complains,ought to carry out the significant remedial measures.General defects: Any situations listed below appears, itcan be regarded as general defects. ?Operation: Othereffects unable to constitute the significant defects ormajor defects. ?
injury less than the quantitative standards of majordefects. ? Major negative effects: Other defects unableto constitute the significant defects or major defects. ?Environment effects: Other environment effects unableto constitute the significant defects or major defects.
| Safety accident effects: Personal | ||
| Quantitative criterion | For total assets/Owner’s equity: | For direct property loss: |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report?
≧
| 1% |
? Major defects: 0.5%≦misstatements<1%? General defects: misstatements<0.5%For operation revenue:
? significant defects: misstatements ≧1%? Major defects: 0.5%≦misstatements<1%? General defects: misstatements<0.5%For pretax profit:
? Significant defects: misstatements≧5%? Major defects: 2%≦misstatements<5%
| ? General defects: misstatements<2% | ? Significant defects: More than CNY10 million |
? Major defects: CNY1 million-CNY10 million(including 1 million)? General defects: Less than CNY1 million
| Number of significant defect in financial report | 0 |
| Number of significant defect in non-financial report | 0 |
| Number of major defect in financial report | 0 |
| Number of major defect in non-financial report | 0 |
10. Internal control audit report
?Available □Not available
| Audit opinions of the internal control audit report |
| We believe that Yantai Changyu Pioneer Wine Co., Ltd. kept effective internal control to financial report in all significant aspects in accordance with General Criteria of Company’s Internal Control and other related rules on December 31 |
st
| , 2019. | |
| Disclosure of the internal control audit report | Disclosure |
| Disclosure date for the full text of the internal control audit report | |
April 24
th, 2020Disclosure index for the full text of the internal control auditreport
Securities Times, China Securities Journal and www.cninfo.com.cn by the
| Company. | |
| Opinion type of the internal control audit report | Standard without reserved opinion |
| Whether or not exists significant defects in non-financial reports |
NoWhether or not the accounting firm issued non-standard opinions for the audit report ofinternal control
□Yes ?No
Whether the audit report of internal control issued by the accounting firm is in consistencywith the self-assessment report of the board of directors?Yes?No
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportXI. Related Situation of Corporation BondsWhether the Company has the corporation bonds issued publicly and listed on the stockexchange, which has not matured or has matured but failed to fully redeem on the date ofapproval of the annual reportNo
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportXII. Financial Report
1. Audit Report
| Type of audit opinion | Standard unqualified audit opinion |
| Date signed on audit report | April 22nd, 2020 |
Audit agency name
Audit report No. KPMG Huazhen ShenZi No. 2001809
KPMG HuazhenCertified Public AccountantsCo., Ltd. (special general partnership)Certified public accountant's name
| Certified public accountant's name | Ms. Wang Ting, Ms. Chai Jing |
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
ENGLISH TRANSLATION OF FINANCIAL STATEMENTSFOR THE YEAR 1 JANUARY 2019 TO 31 DECEMBER 2019IF THERE IS ANY CONFLICT BETWEEN THE CHINESE VERSION AND ITS ENGLISH
TRANSLATION, THE CHINESE VERSION WILL PREVAIL
AUDITOR’S REPORT
KPMG Huazhen Shen Zi No. 2001809
All Shareholders of Yantai Changyu Pioneer Wine Company Limited:
Opinion
We have audited the accompanying financial statements of Yantai Changyu Pioneer WineCompany Limited (“Yantai Changyu”), which comprise the consolidated balance sheet andcompany balance sheet as at 31 December 2019, the consolidated income statement andcompany income statement, the consolidated cash flow statement and company cash flowstatement, the consolidated statement of changes in shareholders’ equity and companystatement of changes in shareholders’ equity for the year then ended, and notes to thefinancial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects,the consolidated financial position and financial position of Yantai Changyu as at 31December 2019, and of its consolidated financial performance and company financialperformance and its consolidated cash flows and company cash flows for the year then endedin accordance with Accounting Standards for Business Enterprises issued by the Ministry ofFinance of the People’s Republic of China.
Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing for Certified PublicAccountants (“CSAs”). Our responsibilities under those standards are further described in theAuditor’s Responsibilities for the Audit of the Financial Statements section of our report. Weare independent of Yantai Changyu in accordance with the China Code of Ethics for CertifiedPublic Accountants (“the Code”), and we have fulfilled our other ethical responsibilities inaccordance with the Code. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.
AUDITOR’S REPORT (continued)
KPMG Huazhen Shen Zi No. 2001809
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of mostsignificance in our audit of the financial statements for the year. These matters wereaddressed in the context of our audit of the financial statements as a whole, and in formingour opinion thereon, and we do not provide a separate opinion on these matters.
Recognition of Sales Revenue from DistributorsRefer to the accounting policies set out in the notes to the financial statements “III.Significant accounting policies and accounting estimates” 22 and “V. Notes to theconsolidated financial statements” 35.Key Audit Matters
How the Matter was Addressed in OurAuditThe principal activities of Yantai Changyu andits subsidiaries (hereinafter referred to as“Yantai Changyu Group”) include manufactureand sales of wine, brandy and sparkling wine.The revenue of Yantai Changyu Group ismainly derived from sales of sidtributors. Alldistributor transaction terms adopt the unifiedtransaction terms formulated by YantaiChangyu Group.Sales revenue from distributors is recognisedwhen Yantai Changyu Group transfers themajor risks and rewards of product ownershipto the distributors, and these transfers arecompleted when the goods are delivered todistributors and signed for acceptance.As revenue is one of the key performanceindicators of Yantai Changyu Group, there is aninherent risk that the management willmanipulate revenue in order to achieve specificperformance objectives or expectations.Therefore, we recognise sales revenue fromdistributors as a key audit matter.
Our audit procedures to evaluate revenuerecognition of sales revenue fromdistributors included the following:
? Understand and evaluate theManagement’s design and operationeffectiveness of key internal controlsrelated to distributor sales revenuerecognition;? Selecting samples, review sales
contracts Yantai Changyu Groupsigned with distributors in order toexamine whether the Group hasadopted the unified transaction terms,and evaluate whether the accountingpolicy of revenue recognition meetsthe requirements of the AccountingStandards for Business Enterprises;
? On a sampling basis, reconcile the
revenue to relevant supporting filessuch as relevant orders and signeddelivery notes, etc. to evaluatewhether revenue is recognised inaccordance with the accounting policyof Yantai Changyu Group;
AUDITOR’S REPORT (continued)
KPMG Huazhen Shen Zi No. 2001809
Key Audit Matters (continued)
Recognition of Sales Revenue from Distributors (continued)Refer to the accounting policies set out in the notes to the financial statements “III.Significant accounting policies and accounting estimates” 22 and “V. Notes to theconsolidated financial statements” 35.The Key Audit Matters
How the matter was addressed in ouraudit
? On a sampling basis, reconcile thesales transaction before and afterbalance sheet date to relevantsupporting files such as relevantorders, signed delivery notes, etc. toevaluate whether revenue isrecognised in appropriate accountingperiod;? Selecting samples, perform
confirmation procedures to thebalances of current accounts onbalance sheet date and the amount ofsales transaction for the year;? Check whether significant sales
returns exist in sales record after thebalance sheet date and check relevantsupporting files in order to evaluatewhether relevant revenue is recordedin the appropriate accounting period;? Select revenue accounting entries that
meet specific risk criteria and checkrelated supporting documents.
AUDITOR’S REPORT (continued)
KPMG Huazhen Shen Zi No. 2001809
Other Information
Management of Yantai Changyu is responsible for the other information. The otherinformation comprises all the information included in the 2019 annual report, other than thefinancial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do notexpress any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistentwith the financial statements or our knowledge obtained in the audit or otherwise appears tobe materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatementof this other information, we are required to report that fact. We have nothing to report in thisregard.
Responsibilities of Management and Those Charged with Governance for the FinancialStatements
Management is responsible for the preparation and fair presentation of the financialstatements in accordance with the Accounting Standards for Business Enterprises, and forthe design, implementation and maintenance of such internal control necessary to enable thatthe financial statements are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing YantaiChangyu’s ability to continue as a going concern, disclosing, as applicable, matters related togoing concern and using the going concern basis of accounting unless management eitherintends to liquidate Yantai Changyu or to cease operations, or has no realistic alternative butto do so.
Those charged with governance are responsible for overseeing Yantai Changyu’s financialreporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements asa whole are free from material misstatement, whether due to fraud or error, and to issue anauditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,but is not a guarantee that an audit conducted in accordance with CSAs will always detect amaterial misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these financial statements.
AUDITOR’S REPORT (continued)
KPMG Huazhen Shen Zi No. 2001809
Auditor’s Responsibilities for the Audit of the Financial Statement (continued)
As part of an audit in accordance with CSAs, we exercise professional judgement andmaintain professional scepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to thoserisks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error, as fraud may involve collusion, forgery,intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the management.
(4) Conclude on the appropriateness of management’s use of the going concern basis of
accounting and, basis of accounting and, based on the audit evidence obtained,whether a material uncertainty exists related to events or conditions that may castsignificant doubt on Yantai Changyu’s ability to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in ourauditor’s report to the related disclosures in the financial statements or, if suchdisclosures are inadequate, to modify our opinion. Our conclusions are based on theaudit evidence obtained up to the date of our auditor’s report. However, future events orconditions may cause Yantai Changyu to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express our audit opinion on thefinancial statements. We are responsible for the direction, supervision and performanceof the group audit. We remain solely responsible for our audit opinion.
AUDITOR’S REPORT (continued)
KPMG Huazhen Shen Zi No. 2001809
Auditor’s Responsibilities for the Audit of the Financial Statement (continued)
We communicate with those charged with governance regarding, among other matters, theplanned scope and timing of the audit and significant audit findings, including any significantdeficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied withrelevant ethical requirements regarding independence, and communicate with them allrelationships and other matters that may reasonably be thought to bear on our independenceand, where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine thosematters that were of most significance in the audit of the financial statements of the year andare therefore the key audit matters. We describe these matters in our auditor’s report unlesslaw or regulation precludes public disclosure about the matter or when, in extremely rarecircumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweighthe public interest benefits of such communication.
KPMG Huazhen LLP Certified Public Accountants Registered
in the People’s Republic of China(Stamp)
Wang Ting (Engagement Partner)(Signature and stamp)
Beijing, China Chai Jing(Signature and stamp)
Date:22/04/2020
Yantai Changyu Pioneer Wine Company LimitedConsolidated balance sheetas at 31 December 2019(Expressed in Renminbi Yuan)
Note 2019 2018
| Assets |
Current assets
| Cash at bank and on hand | V. 1 | 1,565,783,980 | 1,475,700,477 |
| Bills receivable | V. 2 | - | 288,667,988 |
| Accounts receivable | V. 3 | 266,218,153 | 242,153,083 |
| Receivables under financing | V. 4 | 316,470,229 | - |
Prepayments V. 5 67,707,537 4,219,949
| Other receivables | V. 6 | 24,246,812 | 22,636,086 |
| Inventories | V. 7 | 2,872,410,407 | 2,724,591,457 |
| Other current assets | V. 8 | 267,424,938 | 258,676,396 |
| Total current assets | 5,380,262,056 | 5,016,645,436 |
Non-current assets
| Available-for-sale financial assets | - | 467,251 | |
| Long-term equity investments | V. 9 | 43,981,130 | - |
| Investment properties | V. 10 | 29,714,586 | 31,572,489 |
| Fixed assets | V. 11 | 5,894,068,898 | 5,749,731,667 |
Construction in progress V. 12 567,478,833 759,296,591
| Bearer biological assets | V. 13 | 202,425,286 | 209,266,373 |
| Intangible assets | V. 14 | 651,946,355 | 655,473,459 |
| Goodwill | V. 15 | 141,859,193 | 165,199,111 |
| Long-term deferred expenses | V. 16 | 277,595,408 | 244,640,416 |
Deferred tax assets V. 17 264,926,503
285,436,259
| Other non-current assets | V. 18 | 193,674,320 | - |
| Total non-current assets | 8,267,670,512 | 8,101,083,616 | |
| Total assets | 13,647,932,568 | 13,117,729,052 |
The notes on pages 111 to 213 form part of these financial statements.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedConsolidated balance sheetas at 31 December 2019 (continued)(Expressed in Renminbi Yuan)
Note 2019 2018
| Liabilities and shareholders’ equity |
Current liabilities
| Short-term loans | V. 19 | 754,313,744 | 688,002,410 |
| Accounts payable | V. 20 | 570,252,612 | 713,572,881 |
| Advance payments received | V. 21 | 120,609,499 | 226,075,244 |
| Employee benefits payable | V. 22 | 234,459,116 | 212,304,217 |
Taxes payable V. 23 375,169,971
128,912,790
| Other payables | V. 24 | 450,532,485 | 608,479,890 |
| Non-current liabilities due within one year |
V. 25 150,826,221 152,940,788
| Total current liabilities | 2,656,163,648 | 2,730,288,220 | |
| Non-current liabilities |
Long-term loans V. 26 128,892,501 156,480,662
| Long-term payables | V. 27 | 191,000,000 | 225,000,000 |
| Deferred income | V. 28 | 70,701,288 | 86,227,293 |
| Deferred tax liabilities | V. 17 | 14,691,424 | 22,010,647 |
| Other non-current liabilities | V. 29 | 7,645,777 | 7,234,853 |
Total non-current liabilities 412,930,990 496,953,455
| Total liabilities | 3,069,094,638 | 3,227,241,675 |
The notes on pages 111 to 213 form part of these financial statements.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedConsolidated balance sheetas at 31 December 2019 (continued)(Expressed in Renminbi Yuan)
Note 2019 2018
| Liabilities and shareholders’ equity (continued) |
Shareholders’ equity
| Share capital | V. 30 | 685,464,000 | 685,464,000 |
| Capital reserve | V. 31 | 565,050,422 | 565,955,441 |
| Other comprehensive income | V. 32 | (4,235,583) | 2,965,377 |
| Surplus reserve | V. 33 | 342,732,000 | 342,732,000 |
Retained earnings V. 34 8,719,899,359 8,008,982,547
10,308,910,198 9,606,099,365
| Total equity attributable to shareholders of the Company | |||
| Non-controlling interests | 269,927,732 | 284,388,012 | |
| Total owners’ equity | 10,578,837,930 | 9,890,487,377 |
Total liabilities and shareholders’ equity 13,647,932,568 13,117,729,052
These financial statements were approved by the Board of Directors of the Company on 22April 2020.
| Zhou Hongjiang Legal Representative |
| Jiang Jianxun The person in charge |
| of accounting affairs | Guo Cuimei The head of the accounting department | (Company stamp) | ||||
| (Signature and stamp) | (Signature and stamp) | (Signature and stamp) |
The notes on pages 111 to 213 form part of these financial statements.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedCompany balance sheetas at 31 December 2019(Expressed in Renminbi Yuan)
| Note | 2019 | 2018 | |
| Assets | |||
| Current assets | |||
| Cash at bank and on hand | 710,505,269 | 624,588,809 | |
| Bills receivable | - | 39,885,254 | |
| Accounts receivable | XV.1 | 1,988,326 | 1,447,973 |
| Receivables under financing | XV.2 | 41,679,635 | - |
| Prepayments | 776,539 | 227 | |
| Other receivables | XV.3 | 586,424,958 | 1,025,643,356 |
| Inventories | 434,007,808 | 385,154,740 | |
| Other current assets | 39,130,466 | 24,704,844 | |
| Total current assets | 1,814,513,001 | 2,101,425,203 | |
| Non-current assets | |||
| Long-term equity investments | XV.4 | 7,432,422,621 | 7,420,803,069 |
| Investment properties | 29,714,586 | 31,572,489 | |
| Fixed assets | 261,137,072 | 265,311,274 | |
| Construction in progress | - | 6,311,701 | |
| Bearer biological assets | 121,414,096 | 125,002,793 | |
| Intangible assets | 64,864,913 | 67,244,066 | |
| Deferred tax assets | 16,255,870 | 24,194,967 | |
| Other non-current assets | 1,427,700,000 | 972,700,000 | |
| Total non-current assets | 9,353,509,158 | 8,913,140,359 | |
| Total assets | 11,168,022,159 | 11,014,565,562 |
The notes on pages 111 to 213 form part of these financial statements.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedCompany balance sheetas at 31 December 2019 (continued)(Expressed in Renminbi Yuan)
| Note | 2019 | 2018 | |
| Liabilities and shareholders’ equity | |||
| Current liabilities | |||
| Short-term loans | 150,000,000 | 150,000,000 | |
| Accounts payable | 63,655,240 | 132,704,304 | |
| Employee benefits payable | 70,445,847 | 72,345,179 | |
| Taxes payable | 6,052,456 | 13,111,431 | |
| Other payables | 660,149,563 | 607,974,519 | |
| Total current liabilities | 950,303,106 | 976,135,433 | |
| Non-current liabilities | |||
| Deferred income | 9,176,315 | 12,343,972 | |
| Other non-current liabilities | 3,146,707 | 2,710,575 | |
| Total non-current liabilities | 12,323,022 | 15,054,547 | |
| Total liabilities | 962,626,128 | 991,189,980 |
The notes on pages 111 to 213 form part of these financial statements.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedCompany balance sheetas at 31 December 2019 (continued)(Expressed in Renminbi Yuan)
| Note | 2019 | 2018 | |
| Liabilities and shareholders’ equity (continued) |
| Shareholders’ equity | |||
| Share capital | 685,464,000 | 685,464,000 | |
| Capital reserve | 557,222,454 | 557,222,454 | |
| Surplus reserve | 342,732,000 | 342,732,000 | |
| Retained earnings | 8,619,977,577 | 8,437,957,128 | |
| Total owners’ equity | 10,205,396,031 | 10,023,375,582 | |
| Total liabilities and shareholders’ equity | 11,168,022,159 | 11,014,565,562 |
These financial statements were approved by the Board of Directors of the Company on 22April 2020.
| Zhou Hongjiang Legal Representative |
| Jiang Jianxun The person in charge |
| of accounting affairs | Guo Cuimei The head of the accounting department | (Company stamp) | ||||
| (Signature and stamp) | (Signature and stamp) | (Signature and stamp) |
The notes on pages 111 to 213 form part of these financial statements.
Yantai Changyu Pioneer Wine Company LimitedConsolidated Income statementfor the year ended 31 December 2019(Expressed in Renminbi Yuan)
| Note | 2019 | 2018 | |
| I. Operating income | V. 35 | 5,031,011,489 | 5,142,244,740 |
| Less: Operating cost | V. 35 | 1,887,495,991 | 1,901,611,507 |
| Taxes and surcharges | V. 36 | 268,462,378 | 276,491,674 |
| Selling and distribution expenses |
V. 37 1,053,232,024 1,274,599,146
V. 38 311,904,656 343,580,651
| General and administrative expenses |
| Research and development expenses |
6,041,116 4,784,118
| Financial expenses | V. 39 | 35,290,702 | 35,945,302 |
| Including: Interest expenses | 41,570,794 | 46,354,902 | |
| Interest income | 12,327,441 | 12,086,007 | |
| Add: Other income | V. 40 | 77,337,581 | 87,281,434 |
Investment income V. 41 5,112,733 -
investment in
| joint ventures |
(1,120,928)
-
| Credit losses | V. 42 | (7,304,777) | - |
| Impairment (losses) / reversal |
V. 43
912,166
| (20,552,916) | ||
| Gains from disposal of assets |
V. 44 39,015 11,368,355
The notes on pages 111 to 213 form part of these financial statements.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedConsolidated Income statementfor the year ended 31 December 2019 (continued)(Expressed in Renminbi Yuan)
| Note | 2019 | 2018 | |
| II. Operating profit | 1,523,216,258 | 1,404,794,297 | |
| Add: Non-operating income | V. 45 | 10,921,748 | 7,353,309 |
| Less: Non-operating expenses | V. 45 | 3,623,269 | 3,535,908 |
| III. Total profit | 1,530,514,737 | 1,408,611,698 | |
| Less: Income tax expenses | V. 46 | 400,806,109 | 367,127,522 |
| IV. Net profit | 1,129,708,628 | 1,041,484,176 | |
| (1) Net profit classified by continuity of operations: |
| 1. Net profit from continuing operations |
1,129,708,628 1,041,484,176
- -
| 2. Net profit from discontinued operations |
| (2) Net profit classified by ownership (“-” for net loss): |
1,129,735,749 1,042,632,929
| 1. Net profit attributable to owners of the company | |||
| 2. Non-controlling losses | (27,121) | (1,148,753) | |
| V. Other comprehensive income, net of tax |
(376,524)
| (8,542,792) | |||
| (1) Other comprehensive income |
(net of tax) attributable toshareholders of the
| Company |
| Translation differences arising |
from translation of fo
currency financial
| statements |
(143,863)
| (7,200,960) | |||
| (2) Other comprehensive income |
(net of tax) attributable to
(1,341,832)
| non-controlling interests |
(232,661)
The notes on pages 111 to 213 form part of these financial statements.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedConsolidated Income statementfor the year ended 31 December 2019 (continued)(Expressed in Renminbi Yuan)
| Note | 2019 | 2018 | |
| VI. Total comprehensive income for the year |
1,121,165,836 1,041,107,652
1,122,534,789 1,042,489,066
| (1) Attributable to shareholders of the company |
| (2) Attributable to non-controlling interests |
(1,368,953)
(1,381,414)
| VII. Earnings per share: | |||
| (1) Basic earnings per share | V. 47 | 1.65 | 1.52 |
| (2) Diluted earnings per share | V. 47 | 1.65 | 1.52 |
These financial statements were approved by the Board of Directors of the Company on 22April 2020.
| Zhou Hongjiang Legal Representative |
| Jiang Jianxun The person in charge |
| of accounting affairs | Guo Cuimei The head of the accountin |
g
| department | (Company stamp) | |||||
| (Signature and stamp) | (Signature and stamp) | (Signature and stamp) |
The notes on pages 111 to 213 form part of these financial statements.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedCompany income statementfor the year ended 31 December 2019(Expressed in Renminbi Yuan)
| Note | 2019 | 2018 | |
| I. Operating income | XV.5 | 740,856,362 | 876,447,070 |
| Less: Operating cost | XV.5 | 655,504,063 | 774,487,031 |
| Taxes and surcharges | 25,045,041 | 38,346,761 | |
| General and administrative expenses |
86,481,192 90,505,208
815,233 887,355
| Research and development expenses | |||
| Net financial income | (4,798,485) | (20,292,737) | |
| Including: Interest expenses | 497,277 | 16,075,353 | |
| Interest income | 5,843,698 | 41,821,372 | |
| Add: Other income | 3,953,002 | 4,237,655 | |
| Investment income | XV.6 | 621,620,723 | 964,128,659 |
| Credit impairment losses | (601,610) | - | |
| Gains from disposal of assets |
22,297 12,411,962
| II. Operating profit | 602,803,730 | 973,291,728 | |
| Add: Non-operating income | 1,840,062 | 1,483,478 | |
| Less: Non-operating expenses | 1,118,124 | 593,694 |
The notes on pages 111 to 213 form part of these financial statements.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedIncome statement of the companyfor the year ended 31 December 2019 (continued)(Expressed in Renminbi Yuan)
| Note | 2019 | 2018 | |
| III. Total profit | 603,525,668 | 974,181,512 | |
| Less: Income tax expenses | 10,226,819 | 4,592,939 | |
| IV. Net profit | 593,298,849 | 969,588,573 | |
| (i) Net profit from continuing operations |
593,298,849
969,588,573
| (ii) Net profit from discontinued operations |
- -
- -
| V. Other comprehensive income, net of tax |
| VI. Total comprehensive income for the year |
593,298,849
969,588,573
These financial statements were approved by the Board of Directors of the Company on 22April 2020.
| Zhou Hongjiang Legal Representative |
| Jiang Jianxun The person in charge |
| of accounting affairs | Guo Cuimei The head of the accounting department | (Company stamp) | ||||
| (Signature and stamp) | (Signature and stamp) | (Signature and stamp) |
The notes on pages 111 to 213 form part of these financial statements.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedConsolidated cash flow statementfor the year ended 31 December 2019(Expressed in Renminbi Yuan)
| Note | 2019 | 2018 | |
| I. Cash flows from operating activities: | |||
| Proceeds from sale of goods and rendering of services |
4,647,970,683 4,950,603,207
| Refund of taxes and surcharges | 40,741,286 | 57,056,690 | |
| Proceeds from other operating activities |
V. 48(1) 93,744,521 72,703,872
| Sub-total of cash inflows | 4,782,456,490 | 5,080,363,769 | |
| Payment for goods and services | 1,338,542,601 | 1,383,945,233 | |
| Payment to and for employees | 576,928,850 | 544,742,974 | |
| Payment of various taxes | 1,115,582,679 | 1,111,980,499 | |
| Payment for other operating activities |
V. 48(2) 913,564,336 1,063,716,317
| Sub-total of cash outflows | 3,944,618,466 | 4,104,385,023 | |
| Net cash flows from operating activities |
V. 49(1) 837,838,024 975,978,746
| II. Cash flows from investing activities: | |||
| Proceeds from disposal of investments |
234,722,614 400,000,000
| Investment returns received | 1,809,786 | 3,445,895 | |
| Net proceeds from disposal of fixed |
assets, intangible assets and
6,334,375 19,967,431
| other long-term assets | |||
| Sub-total of cash inflows | 242,866,775 | 423,413,326 | |
| Payment for acquisition of fixed |
assets, intangible assets and
281,005,768 347,384,820
| other long-term assets |
| Payment for acquisition of investments |
169,618,600 478,042,400
404,844 105,834,655
| Net cash paid for the acquisition of subsidiaries and other business units | |||
| Sub-total of cash outflows | 451,029,212 | 931,261,875 | |
| Net cash flows from investing activities |
(208,162,437)
(507,848,549)
The notes on pages 111 to 213 form part of these financial statements.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedConsolidated cash flow statementfor the year ended 31 December 2019 (continued)(Expressed in Renminbi Yuan)
| Note | 2019 | 2018 | |
| III. Cash flows from financing activities: | |||
| Proceeds from investors | - | 2,050,000 | |
| Including: Cash received from |
minority shareholders
- 2,050,000
| of subsidiaries | |||
| Proceeds from borrowings | 942,134,032 | 1,049,815,411 | |
| Proceeds from other financing activities |
V. 48(3) - 62,468,259
| Sub-total of cash inflows | 942,134,032 | 1,114,333,670 | |
| Repayments of borrowings | 939,525,426 | 1,103,189,409 | |
| Payment for dividends, profit distributions or interest |
462,455,473 397,351,813
V. 48(4) 11,619,552 46,100,000
| Payment for other financing activities | |||
| Sub-total of cash outflows | 1,413,600,451 | 1,546,641,222 | |
| Net cash flows from financing activities |
(471,466,419)
(432,307,552)
| IV. Effect of foreign exchange rate |
changes on cash and cash
703,173 (9,851,585)
| equivalents | ||
| V. Net increase in cash and cash equivalents |
V. 49(1) 158,912,341 25,971,060
1,206,860,334 1,180,889,274
| Add: Cash and cash equivalents at the beginning of the year |
| VI. Cash and cash equivalents at the end of the year |
V. 49(2) 1,365,772,675 1,206,860,334
These financial statements were approved by the Board of Directors of the Company on 22April 2020.
| Zhou Hongjiang Legal Representative |
| Jiang Jianxun The person in charge |
| of accounting affairs | Guo Cuimei The head of the accounting department | (Company stamp) | ||||
| (Signature and stamp) | (Signature and stamp) | (Signature and stamp) |
The notes on pages 111 to 213 form part of these financial statements.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedCompany cash flow statementfor the year ended 31 December 2019(Expressed in Renminbi Yuan)
| Note | 2019 | 2018 | |
| I. Cash flows from operating activities: |
737,920,018 817,341,175
| Proceeds from sale of goods and rendering of services |
| Proceeds from other operating activities |
211,049,689 177,786,322
| Sub-total of cash inflows | 948,969,707 | 995,127,497 | |
| Payment for goods and services | 710,601,952 | 608,241,452 | |
| Payment to and for employees | 91,738,062 | 107,256,441 | |
| Payment of various taxes | 48,817,363 | 62,066,449 | |
| Payment for other operating activities |
28,434,079 74,357,324
| Sub-total of cash outflows | 879,591,456 | 851,921,666 | |
| Net cash flows from operating activities |
69,378,251 143,205,831
| II. Cash flows from investing activities: | |||
| Proceeds from disposal of investments |
131,133,236 370,000,000
| Investment returns received | 922,250,025 | 874,520,633 | |
| Net proceeds from disposal of fixed |
assets, intangible assets and
1,354,733 11,212,195
| other long-term assets |
| Proceeds from borrowings to subsidiaries |
8,000,000 -
| Sub-total of cash inflows | 1,062,737,994 | 1,255,732,828 | |
| Payment for acquisition of fixed |
assets, intangible assets and
21,417,387 28,842,911
| other long-term assets |
| Payment for acquisition of investments |
138,566,890 410,000,000
- 107,194,420
| Net cash paid for the acquisition of subsidiaries and other business units | |||
| Cash paid to subsidiaries | 463,000,000 | - | |
| Sub-total of cash outflows | 622,984,277 | 546,037,331 | |
| Net cash flows from investing activities |
439,753,717
709,695,497
The notes on pages 111 to 213 form part of these financial statements.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedCompany cash flow statementfor the year ended 31 December 2019 (continued)(Expressed in Renminbi Yuan)
| Note | 2019 | 2018 | |
| III. Cash flows from financing activities: | |||
| Proceeds from borrowings | 150,000,000 | 200,000,000 | |
| Sub-total of cash inflows | 150,000,000 | 200,000,000 | |
| Repayments of borrowings | 150,000,000 | 650,000,000 | |
| Payment for dividends or interest | 418,400,308 | 364,085,312 | |
| Sub-total of cash outflows | 568,400,308 | 1,014,085,312 | |
| Net cash flows from financing activities |
(418,400,308)
(814,085,312)
| IV. Effect of foreign exchange rate |
changes on cash and cash
- -
| equivalents |
| V. Net increase in cash and cash equivalents |
90,731,660 38,816,016
532,384,882 493,568,866
| Add: Cash and cash equivalents at the beginning of the year |
| VI. Cash and cash equivalents at the end of the year |
623,116,542 532,384,882
These financial statements were approved by the Board of Directors of the Company on 22April 2020.
| Zhou Hongjiang Legal Representative |
| Jiang Jianxun The person in charge |
| of accounting affairs | Guo Cuimei The head of the accounting department | (Company stamp) | ||||
| (Signature and stamp) | (Signature and stamp) | (Signature and stamp) |
The notes on pages 111 to 213 form part of these financial statements.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedConsolidated statement of changes in shareholders’ equityfor the year ended 31 December 2019(Expressed in Renminbi Yuan)
Note
Non-controlling
interests
Total owners’
equityShare capital Capital reserve
| Attributable to shareholders of the Company | ||
| Other | ||
comprehensive
Surplus reserve
Retainedearnings
Sub-total
| income | ||
| I. Balance at the beginning of the year |
685,464,000 565,955,441 2,965,377 342,732,000 8,008,982,547 9,606,099,365 284,388,012 9,890,487,377
III. 32 - - - -
| Add: Changes in accounting policies | (7,540,537) |
(7,540
-
| ,537) | (7,540,537) | |||
| Adjusted balance at the beginning of the year |
685,464,000 565,955,441 2,965,377 342,732,000 8,001,442,010
9,598,558,828
284,388,012 9,882,946,840
| II. Changes in equity during the year |
| (1) Total |
comprehensive
- - (
| income | 7,200,960) |
- 1,129,735,749 1,122,534,789 (1,368,953)
1,121,165,836
| (2) Contribution by owners |
non-controlling
| interests |
- (905,019)
- - -
| (905,019) |
(10,714,533)
(11,619,552)
| (3) Appropriation of profits |
V. 34
- - - - (411,278,400)
| Distributions to shareholders |
(411,278,400)
(2,376,794)
(413,655,194)
| III. Balance at the end of the year |
685,464,000 565,050,422 (4,235,583)
342,732,000 8,719,899,359 10,308,910,198 269,927,732 10,578,837,930
These financial statements were approved by the Board of Directors of the Company on 22 April 2020.
| Zhou Hongjiang Legal Representative |
| Jiang Jianxun The person in charge of accounting affairs | Guo Cuimei The head of the accounting department | (Company stamp) | ||||
| (Signature and stamp) | (Signature and stamp) | (Signature and stamp) |
The notes on pages 111 to 213 form part of these financial statements.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedConsolidated statement of changes in shareholders’ equityfor the year ended 31 December 2018(Expressed in Renminbi Yuan)
Note
Non-controlling
interests
Totalshareholders’
equityShare capital Capital reserve
| Attributable to shareholders of the Company | ||
| Other | ||
comprehensive
Surplus reserve
Retainedearnings
Sub-total
| income | ||
| I. Balance at the beginning of the year |
| 685,464,000 | 565,955,441 | 3,109,240 | 342,732,000 | 7,309,081,618 | 8,906,342,299 |
271,636,379 9,177,978,678
| II. Changes in equity during the year |
| (1) Total comprehensive income | - | - |
(143,863)
| - | 1,042,632,929 | 1,042,489,066 |
(1,381,414)
1,041,107,652
| (2) Shareholders’ |
contributions and
| decrease of capital |
| Acquired as subsidiaries | - | - | - | - | - | - | 17,532,823 | 17,532,823 | |
| (3) Appropriation of profits | V. 34 | ||||||||
| Distributions to shareholders |
| - | - | - | - |
(342,732,000)
(342,732,000)
(3,399,776)
(346,131,776)
| III. Balance at the end of the year | 685,464,000 | 565,955,441 | 2,965,377 | 342,732,000 | 8,008,982,547 | 9,606,099,365 | 284,388,012 | 9,890,487,377 |
These financial statements were approved by the Board of Directors of the Company on 22 April 2020.
| Zhou Hongjiang Legal Representative |
| Jiang Jianxun The person in charge of accounting affairs | Guo Cuimei The head of the accounting department | (Company stamp) | ||||
| (Signature and stamp) | (Signature and stamp) | (Signature and stamp) |
The notes on pages 111 to 213 form part of these financial statements.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedCompany statement of changes in shareholders’ equityfor the year ended 31 December 2019(Expressed in Renminbi Yuan)
Note Share capital Capital reserve Surplus reserve
Retainedearnings
shareholders’
| equity |
I、 Balance at the
685,464,000 557,222,454 342,732,000 8,437,957,128 10,023,375,582
| beginning of the year |
| Add: Changes in accounting policies |
III. 32 - - - - -
685,464,000 557,222,454 342,732,000 8,437,957,128 10,023,375,582II、 Changes in equity for
| Adjusted balance at the beginning of the year |
| the year |
comprehensive
| income |
- - - 593,298,849 593,298,849
| 2. Appropriation of profits |
| Distributions to shareholders |
- - - (411,278,400)
(411,278,400)
III、 Balance at the end of
685,464,000 557,222,454 342,732,000 8,619,977,577 10,205,396,031
These financial statements were approved by the Board of Directors of the Company on 22April 2020.
the year
| Zhou Hongjiang Legal Representative |
| Jiang Jianxun The person in charge |
| of accounting affairs | Guo Cuimei The head of the accounting department | (Company stamp) | ||||
| (Signature and stamp) | (Signature and stamp) | (Signature and stamp) |
The notes on pages 111 to 213 form part of these financial statements.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedCompany statement of changes in shareholders’ equityfor the year ended 31 December 2018 (continued)(Expressed in Renminbi Yuan)
Note Share capital Capital reserve Surplus reserve
Retainedearnings
shareholders’
| equity |
IV、 Balance at the
685,464,000 557,222,454 342,732,000 7,811,100,555 9,396,519,009V、 Changes in equity for
| beginning of the year |
| the year |
comprehensive
| income |
- - - 969,588,573
969,588,573
| 2. Appropriation of profits |
- - - (342,732,000)
| Distributions to shareholders |
(342,732,000)
VI、 Balance at the end of
| the year |
685,464,000
557,222,454
342,732,000
8,437,957,128
10,023,375,582
These financial statements were approved by the Board of Directors of the Company on 22April 2020.
| Zhou Hongjiang Legal Representative |
| Jiang Jianxun The person in charge |
| of accounting affairs | Guo Cuimei The head of the account |
ing
| department | (Company stamp) | |||||
| (Signature and stamp) | (Signature and stamp) | (Signature and stamp) |
The notes on pages 111 to 213 form part of these financial statements.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedNotes to the financial statements(Expressed in Renminbi Yuan unless otherwise indicated)
I. Company status
Yantai Changyu Pioneer Wine Co., Ltd. (the "Company” or the “Joint Stock Company”) wasincorporated as a joint stock limited company in accordance with the Company Law of thePeople's Republic of China (the "PRC") in a reorganisation carried out by Yantai ChangyuGroup Co., Ltd. ("Changyu Group"), in which Changyu Group Company injected certainassets and liabilities in relation to the brandy, wine, and sparkling wine production and salesbusinesses to the Company. The Company and its subsidiaries (the "Group") are principallyengaged in the production and sales of wine, brandy, sparkling wine, grape growing andacquisition, as well as travel resource development, etc. Registration place of the Company isYantai, Shandong. Headquarter of the Company is located at No. 56 Da Ma Lu, Zhifu District,Yantai, Shandong, PRC.
As at 31 December 2019 the total shares issued by the Company amounts to 685,464,000shares. Please refer to Note VI. 30 in detail.
The holding company of the Group is Changyu Group Company, which is jointly controlled byYantai GuoFeng Investment Holding Group Co., Ltd., ILLVA SARONNO HOLDING SPA,International Finance Corporation and Yantai Yuhua Investment and Development CompanyLimited.
The financial statements have been authorised by the board of directors on 22 April 2020.According to the Company's articles of association, the financial statements will be reviewedby shareholders on the shareholder's meeting.
For consolidation scope of the year, please refer to Note VII "Equity in other entities" in detail.For detail of changes in consolidation scope of the year, please refer to Note VI "Change inconsolidation scope".
II. Basis of preparation
The financial statements have been prepared on the going concern basis.
Since 1 January 2019, the Company has adopted new financial instrument standards revisedby MOF in 2017, including CAS 22 — Recognition and Measurement of Financial Instruments(See Note III. 32(1)).
The Group has not adopted CAS No.14 — Revenue and CAS No. 22 — Lease revised in2017 and 2018 respectively.
III. Significant accounting policies and accounting estimates
1 Statement of compliance
The financial statements have been prepared in accordance with the requirements ofAccounting Standards for Business Enterprises or referred to as China Accounting Standards(“CAS”) issued by the MOF. These financial statements present truly and completely theconsolidated financial position and financial position of the Company as at 31 December2019, and the consolidated financial performance and financial performance and theconsolidated cash flows and cash flows of the Company for the year then ended.
These financial statements also comply with the disclosure requirements of “Regulation onthe Preparation of Information Disclosures by Companies Issuing Securities, No. 15: GeneralRequirements for Financial Reports” as revised by the China Securities RegulatoryCommission (“CSRC”) in 2014.
2 Accounting period
The accounting period is from 1 January to 31 December.
3 Operating cycle
The Company takes the period from the acquisition of assets for processing to until theultimate realisation of cash or cash equivalents as a normal operating cycle. The operatingcycle of the Company is 12 months.
4 Functional currency
Renminbi ("RMB") is the currency of the primary economic environment in which theCompany and its domestic subsidiaries operate. Therefore, the Company and its domesticsubsidiaries choose RMB as their functional currency. Overseas subsidiaries of the Companyadopt Euro, Chilean Peso and Australian Dollar as their functional currencies on the basis ofthe primary economic environment in which they operate. The Company adopts RMB toprepare its financial statements.
5 Accounting treatments for business combinations involving entities under common control and
not under common control
(1) Business combinations involving entities under common control
A business combination involving entities under common control is a business combination inwhich all of the combining entities are ultimately controlled by the same party or parties bothbefore and after the business combination, and that control is not transitory. The assetsacquired and liabilities assumed are measured based on their carrying amounts in theconsolidated financial statements of the ultimate controlling party at the combination date.The difference between the carrying amount of the net assets acquired and the considerationpaid for the combination (or the total par value of shares issued) is adjusted against sharepremium in the capital reserve, with any excess adjusted against retained earnings. Any costsdirectly attributable to the combination are recognised in profit or loss when incurred. Thecombination date is the date on which one combining entity obtains control of other combiningentities.
(2) Business combinations involving entities not under common control
A business combination involving entities not under common control is a businesscombination in which all of the combining entities are not ultimately controlled by the sameparty or parties both before and after the business combination. Where (1) the aggregate ofthe acquisition-date fair value of assets transferred (including the acquirer’s previously heldequity interest in the acquiree), liabilities incurred or assumed, and equity securities issued bythe acquirer, in exchange for control of the acquiree, exceeds (2) the acquirer’s interest in theacquisition-date fair value of the acquiree’s identifiable net assets, the difference isrecognised as goodwill (see Note III.18). If (1) is less than (2), the difference is recognised inprofit or loss for the current period. Other acquisition-related costs are expensed whenincurred. The acquiree’s identifiable asset, liabilities and contingent liabilities, if therecognition criteria are met, are recognised by the Group at their acquisition-date fair value.The acquisition date is the date on which the acquirer obtains control of the acquiree.
For a business combination involving entities not under common control and achieved instages, the Group remeasures its previously-held equity interest in the acquiree to itsacquisition-date fair value and recognises any resulting difference between the fair value andthe carrying amount as investment income or other comprehensive income for the currentperiod. In addition, any amount recognised in other comprehensive income that may bereclassified to profit or loss, in prior reporting periods relating to the previously-held equityinterest, and any other changes in the owners’ equity under equity accounting, are transferredto investment income in the period in which the acquisition occurs (see Note III.11(2)(b)). Ifequity interests of the acquiree held before acquisition-date were equity instrumentinvestments measured at fair value through other comprehensive income, othercomprehensive income recognised shall be moved to retained earnings on acquisition-date.
6 Consolidated financial statements
(1) General principles
The scope of consolidated financial statements is based on control and the consolidatedfinancial statements comprise the Company and its subsidiaries. Control exists when theinvestor has all of following: power over the investee; exposure, or rights, to variable returnsfrom its involvement with the investee and has the ability to affect those returns through itspower over the investee. When assessing whether the Group has power, only substantiverights (held by the Group and other parties) are considered. The financial position, financialperformance and cash flows of subsidiaries are included in the consolidated financialstatements from the date that control commences until the date that control ceases.
Non-controlling interests are presented separately in the consolidated balance sheet withinshareholders’ equity. Net profit or loss attributable to non-controlling shareholders ispresented separately in the consolidated income statement below the net profit line item.Total comprehensive income attributable to non-controlling shareholders is presentedseparately in the consolidated income statement below the total comprehensive income lineitem.
When the amount of loss for the current period attributable to the non-controlling shareholdersof a subsidiary exceeds the non-controlling shareholders’ share of the opening owners’ equityof the subsidiary, the excess is still allocated against the non-controlling interests.
When the accounting period or accounting policies of a subsidiary are different from those ofthe Company, the Company makes necessary adjustments to the financial statements of thesubsidiary based on the Company’s own accounting period or accounting policies. Intra-groupbalances and transactions, and any unrealised profit or loss arising from intra-grouptransactions, are eliminated when preparing the consolidated financial statements. Unrealisedlosses resulting from intra-group transactions are eliminated in the same way as unrealisedgains, unless they represent impairment losses that are recognised in the financialstatements.
(2) Subsidiaries acquired through a business combination
Where a subsidiary was acquired during the reporting period, through a business combinationinvolving entities under common control, the financial statements of the subsidiary areincluded in the consolidated financial statements based on the carrying amounts of the assetsand liabilities of the subsidiary in the financial statements of the ultimate controlling party as ifthe combination had occurred at the date that the ultimate controlling party first obtainedcontrol. The opening balances and the comparative figures of the consolidated financialstatements are also restated.
Where a subsidiary was acquired during the reporting period, through a business combinationinvolving entities not under common control, the identifiable assets and liabilities of theacquired subsidiaries are included in the scope of consolidation from the date that controlcommences, based on the fair value of those identifiable assets and liabilities at theacquisition date.
(3) Disposal of subsidiaries
When the Group loses control over a subsidiary, any resulting disposal gains or losses arerecognised as investment income for the current period. The remaining equity investment isre-measured at its fair value at the date when control is lost, any resulting gains or losses arealso recognised as investment income for the current period.
When the Group loses control of a subsidiary in multiple transactions in which it disposes ofits long-term equity investment in the subsidiary in stages, the following are considered todetermine whether the Group should account for the multiple transactions as a bundledtransaction:
- arrangements are entered into at the same time or in contemplation of each other;- arrangements work together to achieve an overall commercial effect;- the occurrence of one arrangement is dependent on the occurrence of at least one other
arrangement;- one arrangement considered on its own is not economically justified, but it is economicallyjustified when considered together with other arrangements.
If each of the multiple transactions does not form part of a bundled transaction, thetransactions conducted before the loss of control of the subsidiary are accounted for inaccordance with the accounting policy for partial disposal of equity investment in subsidiarieswhere control is retained (see Note III.6(4)).
If each of the multiple transactions forms part of a bundled transaction which eventuallyresults in the loss of control in the subsidiary, these multiple transactions are accounted for asa single transaction. In the consolidated financial statements, the difference between theconsideration received and the corresponding proportion of the subsidiary’s net assets(calculated continuously from the acquisition date) in each transaction prior to the loss ofcontrol shall be recognised in other comprehensive income and transferred to profit or losswhen the parent eventually loses control of the subsidiary.
(4) Changes in non-controlling interests
Where the Company acquires a non-controlling interest from a subsidiary’s non-controllingshareholders or disposes of a portion of an interest in a subsidiary without a change in control,the difference between the proportion interests of the subsidiary’s net assets being acquiredor disposed and the amount of the consideration paid or received is adjusted to the capitalreserve (share premium) in the consolidated balance sheet, with any excess adjusted toretained earnings.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report7 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits that can be readily withdraw ondemand, and short-term, highly liquid investments that are readily convertible into knownamounts of cash and are subject to an insignificant risk of change in value.
8 Foreign currency transactions and translation of foreign currency financial statements
When the Group receives capital in foreign currencies from investors, the capital is translatedto Renminbi at the spot exchange rate at the date of the receipt. Other foreign currencytransactions are, on initial recognition, translated to Renminbi at the spot exchange rates.
Monetary items denominated in foreign currencies are translated to Renminbi at the spotexchange rate at the balance sheet date. The resulting exchange differences are generallyrecognised in profit or loss, unless they arise from the re-translation of the principal andinterest of specific borrowings for the acquisition and construction of qualifying assets (seeNote III. 15)). Non-monetary items that are measured at historical cost in foreign currenciesare translated to Renminbi using the exchange rate at the transaction date.
In translating the financial statements of a foreign operation, assets and liabilities of foreignoperation are translated to Renminbi at the spot exchange rate at the balance sheet date.Equity items, excluding retained earnings and the translation differences in othercomprehensive income, are translated to Renminbi at the spot exchange rates at thetransaction dates. Income and expenses in the income statement are translated toRenminbi at the spot exchange rates at the transaction dates. The resulting translationdifferences are recognised in other comprehensive income. The translation differencesaccumulated in other comprehensive income with respect to a foreign operation aretransferred to profit or loss in the period when the foreign operation is disposed.
9 Financial instruments
Financial instruments include cash at bank and on hand, investments in debt and equitysecurities other than those classified as long-term equity investments (see Note III.11),receivables, payables, loans and borrowings and share capital.
(1) Recognition and initial measurement of financial assets and financial liabilities
A financial asset or financial liability is recognised in the balance sheet when the Groupbecomes a party to the contractual provisions of a financial instrument.
A financial assets (unless it is a trade receivable without a significant financing component)and financial liabilities is measured initially at fair value. For financial assets and financialliabilities at fair value through profit or loss, any related directly attributable transaction costsare charged to profit or loss; for other categories of financial assets and financial liabilities,any related directly attributable transaction costs are included in their initial costs. Accountsreceivable containing no significant financing component are measured initially at transactionprices determined by the accounting policies set out in Note III.22.
(2) Classification and subsequent measurement of financial assets
(a) Classification of financial assets
The classification of financial assets is generally based on the business model in whicha financial asset is managed and its contractual cash flow characteristics. On initialrecognition, a financial asset is classified as measured at amortised cost, at fair valuethrough other comprehensive income (“FVOCI”), or at fair value through profit or loss(“FVTPL”).
Financial assets are not reclassified subsequent to their initial recognition unless theGroup changes its business model for managing financial assets in which case allaffected financial assets are reclassified on the first day of the first reporting periodfollowing the change in the business model.
A financial asset is measured at amortised cost if it meets both of the followingconditions and is not designated as at FVTPL:
- it is held within a business model whose objective is to hold assets to collectcontractual cash flows; and- its contractual terms give rise on specified dates to cash flows that are solelypayments of principal and interest on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions andis not designated as at FVTPL:
- it is held within a business model whose objective is achieved by both collectingcontractual cash flows and selling financial assets; and- its contractual terms give rise on specified dates to cash flows that are solelypayments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Group mayirrevocably elect to present subsequent changes in the investment’s fair value in othercomprehensive income. This election is made on an investment-by-investment basis.The instrument meets the definition of equity from the perspective of the issuer.
All financial assets not classified as measured at amortised cost or FVOCI as describedabove are measured at FVTPL. On initial recognition, the Group may irrevocablydesignate a financial asset that otherwise meets the requirements to be measured atamortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reducesan accounting mismatch that would otherwise arise.
The business model refers to how the Group manages its financial assets in order togenerate cash flows. That is, the Group’s business model determines whether cashflows will result from collecting contractual cash flows, selling financial assets or both.The Group determines the business model for managing the financial assets accordingto the facts and based on the specific business objective for managing the financialassets determined by the Group’s key management personnel.
In assessing whether the contractual cash flows are solely payments of principal andinterest, the Group considers the contractual terms of the instrument. For the purposesof this assessment, ‘principal’ is defined as the fair value of the financial asset on initialrecognition. ‘Interest’ is defined as consideration for the time value of money and for thecredit risk associated with the principal amount outstanding during a particular period oftime and for other basic lending risks and costs, as well as a profit margin. The Groupalso assesses whether the financial asset contains a contractual term that could changethe timing or amount of contractual cash flows such that it would not meet this condition.
(b) Subsequent measurement of financial assets
- Financial assets at FVTPL
These financial assets are subsequently measured at fair value. Net gains andlosses, including any interest or dividend income, are recognised in profit or lossunless the financial assets are part of a hedging relationship.
- Financial assets at amortised cost
These assets are subsequently measured at amortised cost using the effectiveinterest method. A gain or loss on a financial asset that is measured at amortisedcost and is not part of a hedging relationship shall be recognised in profit or losswhen the financial asset is derecognised, through the amortisation process or inorder to recognise impairment gains or losses.
- Debt investments at FVOCI
These assets are subsequently measured at fair value. Interest income calculatedusing the effective interest method, impairment and foreign exchange gains andlosses are recognised in profit or loss. Other net gains and losses are recognised inother comprehensive income. On derecognition, gains and losses accumulated inother comprehensive income are reclassified to profit or loss.
- Equity investments at FVOCI
These assets are subsequently measured at fair value. Dividends are recognised asincome in profit or loss. Other net gains and losses are recognised in othercomprehensive income. On derecognition, gains and losses accumulated in othercomprehensive income are reclassified to retained earnings.
(3) Classification and subsequent measurement of financial liabilities
Financial liabilities are classified as measured at FVTPL or amortised cost by the Group.
- Financial liabilities at FVTPL
A financial liability is classified as at FVTPL if it is classified as held-for-trading (includingderivative financial liability) or it is designated as such on initial recognition.
Financial liabilities at FVTPL are subsequently measured at fair value and net gains andlosses, including any interest expense, are recognised in profit or loss, unless the financialliabilities are part of a hedging relationship.
- Financial liabilities at amortised cost
These financial liabilities are subsequently measured at amortised cost using the effectiveinterest method.
(4) Offsetting
Financial assets and financial liabilities are generally presented separately in the balancesheet, and are not offset. However, a financial asset and a financial liability are offset and thenet amount is presented in the balance sheet when both of the following conditions aresatisfied:
- The Group currently has a legally enforceable right to set off the recognised amounts；- The Group intends either to settle on a net basis, or to realise the financial asset and settlethe financial liability simultaneously.
(5) Derecognition of financial assets and financial liabilities
Financial asset is derecognised when one of the following conditions is met:
- the Group’s contractual rights to the cash flows from the financial asset expire;- the financial asset has been transferred and the Group transfers substantially all of the
risks and rewards of ownership of the financial asset; or；- the financial asset has been transferred, although the Group neither transfers nor retains
substantially all of the risks and rewards of ownership of the financial asset, it does not
retain control over the transferred asset.
Where a transfer of a financial asset in its entirety meets the criteria for derecognition, thedifference between the two amounts below is recognised in profit or loss:
- the carrying amount of the financial asset transferred measured at the date of
derecognition;- the sum of the consideration received from the transfer and, when the transferred financial
asset is a debt investment at FVOCI, any cumulative gain or loss that has been recognised
directly in other comprehensive income for the part derecognised.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportThe Group derecognises a financial liability (or part of it) only when its contractual obligation(or part of it) is extinguished.
(6) Impairment
The Group recognises loss allowances for expected credit loss (ECL) on:
- financial assets measured at amortised cost;- financial investments at fair value through other comprehensive income
Financial assets measured at fair value, including debt investments or equity securities atFVPL, equity securities designated at FVOCI and derivative financial assets, are not subjectto the ECL assessment.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as thepresent value of all cash shortfalls (i.e. the difference between the cash flows due to the entityin accordance with the contract and the cash flows that the Group expects to receive).
The maximum period considered when estimating ECLs is the maximum contractual period(including extension options) over which the Group is exposed to credit risk.
Lifetime ECLs are the ECLs that result from all possible default events over the expected lifeof a financial instrument.
12-month ECLs are the portion of ECLs that result from default events that are possible withinthe 12 months after the balance sheet date (or a shorter period if the expected life of theinstrument is less than 12 months).
For accounts receivable, loss allowance always measured at an amount equal to lifetimeECLs. ECLs on these financial assets are estimated using a provision matrix based on theGroup’s historical credit loss experience, adjusted for factors that are specific to the debtorsand an assessment of both the current and forecast general economic conditions at thebalance sheet date.
For assets other than accounts receivable that meet one of the following conditions, lossallowance are measured at an amount equal to 12-month ECLs. For all other financialinstruments, the Group recognises a loss allowance equal to lifetime ECLs:
- If the financial instrument is determined to have low credit risk at the balance sheet date;- If the credit risk on a financial instrument has not increased significantly since initial
recognition.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportFinancial instruments that have low credit risk
The credit risk on a financial instrument is considered low if the financial instrument has a lowrisk of default, the borrower has a strong capacity to meet its contractual cash flow obligationsin the near term and adverse changes in economic and business conditions in the longer termmay, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flowobligations.
Significant increases in credit risk
In assessing whether the credit risk of a financial instrument has increased significantly sinceinitial recognition, the Group compares the risk of default occurring on the financial instrumentassessed at the balance sheet date with that assessed at the date of initial recognition.
When determining whether the credit risk of a financial asset has increased significantly sinceinitial recognition and when estimating ECL, the Group considers reasonable and supportableinformation that is relevant and available without undue cost or effort, includingforward-looking information. In particular, the following information is taken into account:
- failure to make payments of principal or interest on their contractually due dates;- an actual or expected significant deterioration in a financial instrument’s external or internal
credit rating (if available);- an actual or expected significant deterioration in the operating results of the debtor; and- existing or forecast changes in the technological, market, economic or legal environment
that have a significant adverse effect on the debtor’s ability to meet its obligation to the
Group.
Depending on the nature of the financial instruments, the assessment of a significant increasein credit risk is performed on either an individual basis or a collective basis. When theassessment is performed on a collective basis, the financial instruments are grouped basedon shared credit risk characteristics, such as past due status and credit risk ratings.
The Group assumes that the credit risk on a financial asset has increased significantly if it ismore than 30 days past due.
Credit-impaired financial assets
At each balance sheet date, the Group assesses whether financial assets carried atamortised cost and debt investments at FVOCI are credit-impaired. A financial asset is‘credit-impaired’ when one or more events that have a detrimental impact on the estimatedfuture cash flows of the financial asset have occurred. Evidence that a financial asset iscredit-impaired includes the following observable data:
- significant financial difficulty of the borrower or issuer;- a breach of contract, such as a default or delinquency in interest or principal payments;- for economic or contractual reasons relating to the borrower’s financial difficulty, the Group
having granted to the borrower a concession that would not otherwise consider;- it is probable that the borrower will enter bankruptcy or other financial reorganisation; or
- the disappearance of an active market for that financial asset because of financialdifficulties.
Presentation of allowance for ECL
ECLs are remeasured at each balance sheet date to reflect changes in the financialinstrument’s credit risk since initial recognition. Any change in the ECL amount is recognisedas an impairment gain or loss in profit or loss. The Group recognises an impairment gain orloss for all financial instruments with a corresponding adjustment to their carrying amountthrough a loss allowance account, except for debt investments that are measured at FVOCI,for which the loss allowance is recognised in other comprehensive income.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to theextent that there is no realistic prospect of recovery. A write-off constitutes a derecognitionevent. This is generally the case when the Group determines that the debtor does not haveassets or sources of income that could generate sufficient cash flows to repay the amountssubject to the write-off. However, financial assets that are written off could still be subject toenforcement activities in order to comply with the Group’s procedures for recovery of amountsdue.
Subsequent recoveries of an asset that was previously written off are recognised as areversal of impairment in profit or loss in the period in which the recovery occurs.
(7) Equity instrument
The consideration received from the issuance of equity instruments net of transaction costs isrecognised in shareholders’ equity. Consideration and transaction costs paid by the Companyfor repurchasing self-issued equity instruments are deducted from shareholders’ equity.
When the Company repurchases its own shares, those shares are treated as treasury shares.All expenditure relating to the repurchase is recorded in the cost of the treasury shares, withthe transaction recording in the share register. Treasury shares are excluded from profitdistributions and are presented as a deduction under shareholders’ equity in the balancesheet.
10 Inventories
(1) Classification and cost
Inventories include raw materials, work in progress and reusable materials. Inventories areinitially measured at cost. Cost of inventories comprises all costs of purchase, costs ofconversion and other expenditure incurred in bringing the inventories to their present locationand condition. In addition to the purchase cost of raw materials, work in progress and finishedgoods include direct labour costs and an appropriate allocation of production overheads.
Agricultural products harvested are reported in accordance with the CAS No.1 - Inventories.
(2) Measurement method of cost of inventories
Cost of inventories is calculated using the weighted average method.
Consumables including low-value consumables and packaging materials are amortised whenthey are used. The amortisation charge is included in the cost of the related assets orrecognised in profit or loss for the current period.
(3) Basis for determining the net realisable value and method for provision for obsolete
inventories
At the balance sheet date, inventories are carried at the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business less theestimated costs of completion and the estimated costs necessary to make the sale andrelevant taxes. The net realisable value of materials held for use in the production ismeasured based on the net realisable value of the finished goods in which they will beincorporated. The net realisable value of the inventory held to satisfy sales or servicecontracts is measured based on the contract price, to the extent of the quantities specified insales contracts, and the excess portion of inventories is measured based on general sellingprices.
Any excess of the cost over the net realisable value of each item of inventories is recognisedas a provision for impairment, and is recognised in profit or loss.
(4) Inventory count system
The Group maintains a perpetual inventory system.
11 Long-term equity investments
(1) Investment cost of long-term equity investments
(a) Long-term equity investments acquired through a business combination
- The initial cost of a long-term equity investment acquired through a business
combination involving entities under common control is the Company’s share of thecarrying amount of the subsidiary’s equity in the consolidated financial statements ofthe ultimate controlling party at the combination date. The difference between theinitial investment cost and the carrying amount of the consideration given is adjustedto the share premium in the capital reserve, with any excess adjusted to retainedearnings. For a long-term equity investment in a subsidiary acquired through abusiness combination achieved in stages which do not form a bundled transactionand involving entities under common control, the Company determines the initial costof the investment in accordance with the above policies. The difference between thisinitial cost and the sum of the carrying amount of previously-held investment and theconsideration paid for the shares newly acquired is adjusted to capital premium in thecapital reserve, with any excess adjusted to retained earnings.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report- For a long-term equity investment obtained through a business combination not
involving enterprises under common control, the initial cost comprises the aggregateof the fair value of assets transferred, liabilities incurred or assumed, and equitysecurities issued by the Company, in exchange for control of the acquiree. For along-term equity investment obtained through a business combination not involvingentities under common control and achieved through multiple transactions in stageswhich do not form a bundled transaction, the initial cost comprises the carryingamount of the previously-held equity investment in the acquiree immediately beforethe acquisition date, and the additional investment cost at the acquisition date.
(b) Long-term equity investments acquired other than through a business combination
- A long-term equity investment acquired other than through a business combination isinitially recognised at the amount of cash paid if the Group acquires the investmentby cash, or at the fair value of the equity securities issued if an investment is acquiredby issuing equity securities.
(2) Subsequent measurement of long-term equity investment
(a) Investments in subsidiaries
In the Company’s separate financial statements, long-term equity investments insubsidiaries are accounted for using the cost method unless the investment is classifiedas held for sale (See Note III. 27). Except for cash dividends or profit distributionsdeclared but not yet distributed that have been included in the price or considerationpaid in obtaining the investments, the Company recognises its share of the cashdividends or profit distributions declared by the investee as investment income for thecurrent period.
The investments in subsidiaries are stated in the balance sheet at cost lessaccumulated impairment losses.
For the impairment of the investments in subsidiaries, refer to Note III.20.
In the Group’s consolidated financial statements, subsidiaries are accounted for inaccordance with the policies described in Note III.6.
(b) Investments in joint ventures
A joint venture is an arrangement whereby the Group and other parties have joint control(see Note III.11(3)) and rights to the net assets of the arrangement.
A long-term equity investment in a joint venture is accounted for using the equity methodfor subsequent measurement, unless the investment is classified as held for sale (seeNote III.27).
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportThe accounting treatments under the equity method adopted by the Group are asfollows:
- Where the initial cost of a long-term equity investment exceeds the Group’s interestin the fair value of the investee’s identifiable net assets at the date of acquisition, theinvestment is initially recognised at cost. Where the initial investment cost is less thanthe Group’s interest in the fair value of the investee’s identifiable net assets at thedate of acquisition, the investment is initially recognised at the investor’s share of thefair value of the investee’s identifiable net assets, and the difference is recognised inprofit or loss.
- After the acquisition of the investment, the Group recognises its share of theinvestee’s profit or loss and other comprehensive income as investment income orlosses and other comprehensive income respectively, and adjusts the carryingamount of the investment accordingly. Once the investee declares any cashdividends or profit distributions, the carrying amount of the investment is reduced bythe amount attributable to the Group. Changes in the Group’s share of the investee’sowners’ equity, other than those arising from the investee’s net profit or loss, othercomprehensive income or profit distribution (referred to as “other changes in owners’equity”), is recognised directly in the Group’s equity, and the carrying amount of theinvestment is adjusted accordingly.
- In calculating its share of the investee’s net profits or losses, other comprehensiveincome and other changes in owners’ equity, the Group recognises investmentincome and other comprehensive income after making appropriate adjustments toalign the accounting policies or accounting periods with those of the Group based onthe fair value of the investee’s identifiable net assets at the date of acquisition.Unrealised profits and losses resulting from transactions between the Group and itsassociates or joint ventures are eliminated to the extent of the Group’s interest in theassociates or joint ventures. Unrealised losses resulting from transactions betweenthe Group and its associates or joint ventures are eliminated in the same way asunrealised gains but only to the extent that there is no impairment.
- The Group discontinues recognising its share of further losses of the investee after thecarrying amount of the long-term equity investment and any long-term interest that insubstance forms part of the Group’s net investment in the associate is reduced tozero, except to the extent that the Group has an obligation to assume additionallosses. If the joint venture subsequently reports net profits, the Group resumesrecognising its share of those profits only after its share of the profits equals theshare of losses not recognised.
For the impairment of the investments in joint ventures and associates, refer to NoteIII.20.
(3) Criteria for determining the existence of joint control over an investee
Joint control is the contractually agreed sharing of control of an arrangement, which existsonly when decisions about the relevant activities (activities with significant impact on thereturns of the arrangement) require the unanimous consent of the parties sharing control.
The following factors are usually considered when assessing whether the Group can exercisejoint control over an investee:
- Whether no single participant party is in a position to control the investee’s related activities
unilaterally;- Whether strategic decisions relating to the investee’s related activities require theunanimous consent of all participant parties that sharing of control.
Significant influence is the power to participate in the financial and operating policy decisionsof an investee but does not have control or joint control over those policies.
12 Investment properties
Investment properties are properties held either to earn rental income or for capitalappreciation or for both. Investment properties are accounted for using the cost model andstated in the balance sheet at cost less accumulated depreciation, amortisation andimpairment losses, and adopts a depreciation or amortisation policy for the investmentproperty which is consistent with that for buildings or land use rights, unless the investmentproperty is classified as held for sale (see Note III.27). For the impairment of the investmentproperties, refer to Note III.20.
Category
| Estimated useful life (years) | Residual value rate (%) | Depreciation rate (%) | |
| Plant and buildings | 20-40 years | 0 - 5% | 2.4%-5.0% |
13 Fixed assets
(1) Recognition of fixed assets
Fixed assets represent the tangible assets held by the Group for use in production of goods,supply of services, for rental or for administrative purposes with useful lives over oneaccounting year.
The cost of a purchased fixed asset comprises the purchase price, related taxes, and anydirectly attributable expenditure for bringing the asset to working condition for its intended use.The cost of self-constructed assets is measured in accordance with the policy set out in NoteIII.14.
Where the parts of an item of fixed assets have different useful lives or provide benefits to theGroup in a different pattern, thus necessitating use of different depreciation rates or methods,each part is recognised as a separate fixed asset.
Any subsequent costs including the cost of replacing part of an item of fixed assets arerecognised as assets when it is probable that the economic benefits associated with the costswill flow to the Group, and the carrying amount of the replaced part is derecognised. The costsof the day-to-day maintenance of fixed assets are recognised in profit or loss as incurred.
Fixed assets are stated in the balance sheet at cost less accumulated depreciation andimpairment losses.
(2) Depreciation of fixed assets
The cost of a fixed asset, less its estimated residual value and accumulated impairmentlosses, is depreciated using the straight-line method over its estimated useful life, unless thefixed asset is classified as held for sale (see Note III.27).
The estimated useful lives, residual value rates and depreciation rates of each class of fixedassets are as follows:
Class
| Estimated useful life (years) | Residual value rate (%) | Depreciation rate (%) | |
| Plant and buildings | 20-40 years | 0 - 5% | 2.4%-5.0% |
| Machinery equipment | 5-30 years | 0 - 5% | 3.2%-20.0% |
| Motor vehicles | 4-12 years | 0 - 5% | 7.9%-25.0% |
Useful lives, estimated residual values and depreciation methods are reviewed at least ateach year-end.
(3) For the impairment of the fixed assets, refer to Note III.20.
(4) Disposal of fixed assets
The carrying amount of a fixed asset is derecognised:
- when the fixed asset is holding for disposal; or- when no future economic benefit is expected to be generated from its use or disposal.
Gains or losses arising from the retirement or disposal of an item of fixed asset aredetermined as the difference between the net disposal proceeds and the carrying amount ofthe item, and are recognised in profit or loss on the date of retirement or disposal.
14 Construction in progress
The cost of self-constructed assets includes the cost of materials, direct labour, capitalisedborrowing costs (see Note III.15), and any other costs directly attributable to bringing the assetto working condition for its intended use.
A self-constructed asset is classified as construction in progress and transferred to fixed assetwhen it is ready for its intended use. No depreciation is provided against construction inprogress.
Construction in progress is stated in the balance sheet at cost less accumulated impairmentlosses (see Note III.20).
15 Borrowing costs
Borrowing costs incurred directly attributable to the acquisition, and construction or productionof a qualifying asset are capitalised as part of the cost of the asset. Other borrowing costs arerecognised as financial expenses when incurred.
During the capitalisation period, the amount of interest (including amortisation of any discountor premium on borrowing) to be capitalised in each accounting period is determined asfollows:
- Where funds are borrowed specifically for the acquisition and construction or production of
a qualifying asset, the amount of interest to be capitalised is the interest expensecalculated using effective interest rates during the period less any interest income earnedfrom depositing the borrowed funds or any investment income on the temporary investmentof those funds before being used on the asset.
- To the extent that the Group borrows funds generally and uses them for the acquisition andconstruction or production of a qualifying asset, the amount of borrowing costs eligible forcapitalisation is determined by applying a capitalisation rate to the weighted average of theexcess amounts of cumulative expenditure on the asset over the above amounts of specificborrowings. The capitalisation rate is the weighted average of the interest rates applicableto the general-purpose borrowings.
The effective interest rate is determined as the rate that exactly discounts estimated futurecash flow through the expected life of the borrowing or, when appropriate, a shorter period tothe initially recognised amount of the borrowings.
During the capitalisation period, exchange differences related to the principal and interest on aspecific-purpose borrowing denominated in foreign currency are capitalised as part of the costof the qualifying asset. The exchange differences related to the principal and interest onforeign currency borrowings other than a specific-purpose borrowing are recognised as afinancial expense when incurred.
The capitalisation period is the period from the date of commencement of capitalisation ofborrowing costs to the date of cessation of capitalisation, excluding any period over whichcapitalisation is suspended. Capitalisation of borrowing costs commences when expenditurefor the asset is being incurred, borrowing costs are being incurred and activities of acquisition,construction or production that are necessary to prepare the asset for its intended use are inprogress, and ceases when the assets become ready for their intended use. Capitalisation ofborrowing costs should cease when the qualifying asset being constructed or produced hasreached its expected usable or saleable condition. Capitalisation of borrowing costs issuspended when the acquisition, construction or production activities are interruptedabnormally for a period of more than three months.
16. Biological assets
The Group's biological assets are bearer biological assets.
Bearer biological assets are those that are held for the purposes of producing agriculturalproduce, rendering of services or rental. Bearer biological assets in the Group are vines.Bearer biological assets are initially measured at cost. The cost of self-grown or self-bredbearer biological assets represents the necessary directly attributable expenditure incurredbefore satisfying the expected production and operating purpose, including capitalisedborrowing costs.Bearer biological assets, after reaching the expected production and operating purpose, aredepreciated using the straight-line method over its estimated useful life. The estimated usefullives, estimated net residual value rates and depreciation rates of bearer biological assets areas follows:
Category
| Estimated useful life (years) | Estimated net residual value rate | Depreciation rate (%) | |
| Vines | 20 years | 0% | 5.0% |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportThe Group evaluates the useful life and expected net salvage value by considering the normalproducing life of the bearer biological assets.
Useful lives, estimated residual values and depreciation methods of bearer biological assetsare reviewed at least at each year-end. Any changes should be treated as changes inaccounting estimates.
For a bearer biological asset that has been sold, damaged, dead or destroyed, any differencebetween the disposal proceeds and the carrying amount of the asset (after tax deduction)should be recognised in profit or loss for the period in which it arises.
17 Intangible assets
Intangible assets are stated in the balance sheet at cost less accumulated amortization(where the estimated useful life is finite) and impairment losses (see Note III.20). For anintangible asset with finite useful life, its cost estimated less residual value and accumulatedimpairment losses is amortised on the straight-line method over its estimated useful life,unless the intangible asset is classified as held for sale (see Note III.27).
The respective amortisation periods for intangible assets are as follows:
| Item | Amortisation period (years) |
| Land use rights | 40-50 years |
| Software licenses | 5-10 years |
| Trademarks | 10 |
An intangible asset is regarded as having an indefinite useful life and is not amortised whenthere is no foreseeable limit to the period over which the asset is expected to generateeconomic benefits for the Group. At the balance sheet date, the Group had intangible assetswith infinite useful lives including the land use rights and trademarks. Land use rights withinfinite useful lives are permanent land use rights with permanent ownership held by theGroup under the relevant Chile and Australian laws arising from the Group’s acquisition ofVi?a Indómita, S.A., Vi?a Dos Andes, S.A., and Bodegas Santa Alicia SPA. (collectivelyreferred to as the "Chile Indomita Wine Group"), and the acquisition of Kilikanoon Estate PtyLtd.( hereinafter referred to as the "Australia Kilikanoon Estate"), therefore there was noamortisation. The right to use trademark refers to the trademark held by the Group arisingfrom the acquisition of the Chile Indomita Wine Group and the Australia Kilikanoon Estate withinfinite useful lives. The valuation of trademark was based on the trends in the market andcompetitive environment, product cycle, and managing long-term development strategy.Those basis indicated the trademark will provide net cash flows to the Group within anuncertain period. The useful life is indefinite as it was hard to predict the period that thetrademark would bring economic benefits to the Group.
18 Goodwill
The initial cost of goodwill represents the excess of cost of acquisition over the acquirer’sinterest in the fair value of the identifiable net assets of the acquiree under a businesscombination not involving entities under common control.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportGoodwill is not amortised and is stated in the balance sheet at cost less accumulatedimpairment losses (see Note III.20). On disposal of an asset group or a set of asset groups,any attributable goodwill is written off and included in the calculation of the profit or loss ondisposal.
19 Long-term deferred expenses
Long-term deferred expenses are amortised using a straight-line method within the benefitperiod. The respective amortisation periods for such expenses are as follows:
| Item | Amortisation period |
| Land requisition fee | 50 years |
| Land lease prepayment | 50 years |
| Greening fee | 5-20 years |
| Leasehold improvement | 3-5 years |
| Others | 3 years |
20 Impairment of assets other than inventories and financial assets
The carrying amounts of the following assets are reviewed at each balance sheet date basedon internal and external sources of information to determine whether there is any indication ofimpairment:
- fixed assets- construction in progress- intangible assets- Bearer biological assets- investment properties measured using a cost model- long-term equity investments- goodwill- long-term deferred expenses, etc.
If any indication exists, the recoverable amount of the asset is estimated. In addition, theGroup estimates the recoverable amounts of goodwill and intangible assets with infiniteuseful lives at each year-end, irrespective of whether there is any indication of impairment.Goodwill is allocated to each asset group, or set of asset groups, that is expected to benefitfrom the synergies of the combination for the purpose of impairment testing.
The recoverable amount of an asset (or asset group, set of asset groups) is the higher of itsfair value (see Note III.21) less costs to sell and its present value of expected future cashflows.
An asset group is composed of assets directly related to cash-generation and is the smallestidentifiable group of assets that generates cash inflows that are largely independent of thecash inflows from other assets or asset groups.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportThe present value of expected future cash flows of an asset is determined by discounting thefuture cash flows, estimated to be derived from continuing use of the asset and from itsultimate disposal, to their present value using an appropriate pre-tax discount rate.
An impairment loss is recognised in profit or loss when the recoverable amount of an asset isless than its carrying amount. A provision for impairment of the asset is recognisedaccordingly. Impairment losses related to an asset group or a set of asset groups areallocated first to reduce the carrying amount of any goodwill allocated to the asset group or setof asset groups, and then to reduce the carrying amount of the other assets in the asset groupor set of asset groups on a pro rata basis. However, such allocation would not reduce thecarrying amount of an asset below the highest of its fair value less costs to sell (ifmeasurable), its present value of expected future cash flows (if determinable) and zero.
Once an impairment loss is recognised, it is not reversed in a subsequent period.
21 Fair value measurement
Unless otherwise specified, the Group measures fair value as follows:
Fair value is the price that would be received to sell an asset or paid to transfer a liability in anorderly transaction between market participants at the measurement date.
When measuring fair value, the Group takes into account the characteristics of the particularasset or liability (including the condition and location of the asset and restrictions, if any, onthe sale or use of the asset) that market participants would consider when pricing the asset orliability at the measurement date, and uses valuation techniques that are appropriate in thecircumstances and for which sufficient data and other information are available to measurefair value. Valuation techniques mainly include the market approach, the income approachand the cost approach.
22 Revenue recognition
Revenue is the gross inflow of economic benefits arising in the course of the Group’s ordinaryactivities when the inflows result in increase in shareholders’ equity, other than increaserelating to contributions from shareholders. Revenue is recognised in profit or loss when it isprobable that the economic benefits will flow to the Group, the revenue and costs can bemeasured reliably and the following conditions are met:
(1) Sale of goods
Revenue is recognised when the general conditions stated above and the following conditionsare satisfied:
- Significant risks and rewards of ownership of goods have been transferred to the buyer;- The Group retains neither continuing managerial involvement to the degree usuallyassociated with ownership nor effective control over the goods sold.
Revenue from the sale of goods is measured at the fair value of the consideration received orreceivable under the sales contract or agreement.
Sales of the Group are mainly conducted by distributors. The sales are generally completedwhen the goods are delivered to distributors and are signed for acceptance.
(2) Rendering of services
Revenue is measured at the fair value of the consideration received or receivable under thecontract or agreement.
Where the outcome of a transaction involving the rendering of services can be estimatedreliably at the balance sheet date, revenue is recognised by reference to the stage ofcompletion based on the proportion of services performed to date to the total services to beperformed.
Where the outcome cannot be estimated reliably, revenues are recognised to the extent of thecosts incurred that are expected to be recoverable, and an equivalent amount is charged toprofit or loss as service cost; otherwise, the costs incurred are recognised in profit or loss andno service revenue is recognised.
(3) Interest income
Interest income is recognised on a time proportion basis with reference to the principaloutstanding and the applicable effective interest rate.
23 Employee benefits
(1) Short-term employee benefits
Employee wages or salaries, bonuses, social security contributions such as medicalinsurance, work injury insurance, maternity insurance and housing fund, measured at theamount incurred or accured at the applicable benchmarks and rates, are recognised as aliability as the employee provides services, with a corresponding charge to profit or loss orincluded in the cost of assets where appropriate.
(2) Post-employment benefits – defined contribution plans
Pursuant to the relevant laws and regulations of the People’s Republic of China, the Groupparticipated in a defined contribution basic pension insurance plan in the social insurancesystem established and managed by government organisations. The Group makescontributions to basic pension insurance plans based on the applicable benchmarks and ratesstipulated by the government. Basic pension insurance contributions payable are recognisedas a liability as the employee provides services, with a corresponding charge to profit or lossor included in the cost of assets where appropriate.
(3) Termination benefits
When the Group terminates the employment with employees before the employmentcontracts expire, or provides compensation under an offer to encourage employees to acceptvoluntary redundancy, a provision is recognised with a corresponding expense in profit or lossat the earlier of the following dates:
- When the Group cannot unilaterally withdraw the offer of termination benefits because of
an employee termination plan or a curtailment proposal;- When the Group has a formal detailed restructuring plan involving the payment oftermination benefits and has raised a valid expectation in those affected that it will carry outthe restructuring by starting to implement that plan or announcing its main features to thoseaffected by it.
24 Government grants
Government grants are non-reciprocal transfers of monetary or non-monetary assets from thegovernment to the Group except for capital contributions from the government in the capacityas an investor in the Group.
A government grant is recognised when there is reasonable assurance that the grant will bereceived and that the Group will comply with the conditions attaching to the grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at theamount received or receivable. If a government grant is in the form of a transfer of anon-monetary asset, it is measured at fair value.
Government grants related to assets are grants whose primary condition is that the Groupqualifying for them should purchase, construct or otherwise acquire long-term assets.Government grants related to income are grants other than those related to assets. Agovernment grant related to an asset is recognised as deferred income and amortised overthe useful life of the related asset on a reasonable and systematic manner as other income ornon-operating income. A grant that compensates the Company for expenses or losses to beincurred in the future is recognised as deferred income, and included in other income ornon-operating income in the periods in which the expenses or losses are recognised. Orincluded in other income or non-operating income directly.
25 Income tax
Current tax and deferred tax are recognised in profit or loss except to the extent that theyrelate to a business combination or items recognised directly in equity (including othercomprehensive income).
Current tax is the expected tax payable calculated at the applicable tax rate on taxableincome for the year, plus any adjustment to tax payable in respect of previous years.
At the balance sheet date, current tax assets and liabilities are offset only if the Group has alegally enforceable right to set them off and also intends either to settle on a net basis or torealise the asset and settle the liability simultaneously.
Deferred tax assets and deferred tax liabilities arise from deductible and taxable temporarydifferences respectively, being the differences between the carrying amounts of assets andliabilities for financial reporting purposes and their tax bases, which include the deductiblelosses and tax credits carried forward to subsequent periods. Deferred tax assets arerecognised to the extent that it is probable that future taxable profits will be available againstwhich deductible temporary differences can be utilised.
Deferred tax is not recognised for the temporary differences arising from the initial recognitionof assets or liabilities in a transaction that is not a business combination and that affectsneither accounting profit nor taxable profit (or deductible loss). Deferred tax is not recognisedfor taxable temporary differences arising from the initial recognition of goodwill.
At the balance sheet date, deferred tax is measured based on the tax consequences thatwould follow from the expected manner of recovery or settlement of the carrying amounts ofthe assets and liabilities, using tax rates enacted at the balance sheet date that are expectedto be applied in the period when the asset is recovered or the liability is settled.
The carrying amount of a deferred tax asset is reviewed at each balance sheet date, and isreduced to the extent that it is no longer probable that the related tax benefits will be utilised.Such reduction is reversed to the extent that it becomes probable that sufficient taxable profitswill be available.
At the balance sheet date, deferred tax assets and deferred tax liabilities are offset if all of thefollowing conditions are met:
- the taxable entity has a legally enforceable right to offset current tax liabilities and currenttax assets;- they relate to income taxes levied by the same tax authority on either:
- the same taxable entity; or- different taxable entities which intend either to settle the current tax liabilities and current
tax assets on a net basis, or to realise the assets and settle the liabilities simultaneously,in each future period in which significant amounts of deferred tax liabilities or deferredtax assets are expected to be settled or recovered.
26 Operating leases and finance leases
A lease is classified as either a finance lease or an operating lease. A finance lease is a leasethat transfers substantially all the risks and rewards incidental to ownership of a leased assetto the lessee, irrespective of whether the legal title to the asset is eventually transferred. Anoperating lease is a lease other than a finance lease.
(1) Operating lease charges
Rental payments under operating leases are recognised as part of the cost of another relatedasset or as expenses on a straight-line basis over the lease term. Contingent rental paymentsare expensed as incurred.
(2) Assets leased out under operating leases
Fixed assets leased out under operating leases, except for investment properties (see NoteIII.12), are depreciated in accordance with the Group’s depreciation policies described in NoteIII.13(2). Impairment losses are recognised in accordance with the accounting policydescribed in Note III.20. Income derived from operating leases is recognised in profit or lossusing the straight-line method over the lease term. If initial direct costs incurred in respect ofthe assets leased out are material, the costs are initially capitalised and subsequentlyamortised in profit or loss over the lease term on the same basis as the lease income.Otherwise, the costs are charged to profit or loss immediately.
27 Assets held for sale
The Group classified a non-current asset or disposal group as held for sale when the carryingamount of a non-current asset or disposal group will be recovered through a sale transactionrather than through continuing use,.
A disposal group refers to a group of assets to be disposed of, by sale or otherwise, togetheras a whole in a single transaction and liabilities directly associated with those assets that willbe transferred in the transaction.
A non-current asset or disposal group is classified as held for sale when all the followingcriteria are met:
- According to the customary practices of selling such asset or disposal group insimilar transactions, the non-current asset or disposal group must be available forimmediate sale in their present condition subject to terms that are usual and customary forsales of such assets or disposal groups;
- Its sale is highly probable, that is, the Group has made a resolution on a sale planand has obtained a firm purchase commitment. The sale is to be completed within oneyear.
Non-current assets or disposal groups held for sale are stated at the lower of carrying amountand fair value (see Note III.21) less costs to sell (except financial assets (see Note III.9),deferred tax assets (see Note III.25) and investment properties subsequent measured at fairvalue (see Note III. 12) initially and subsequently. Any excess of the carrying amount over thefair value (see Note III.21) less costs to sell is recognised as an impairment loss in profit orloss.
28 Profit distributions
Dividends or profit distributions proposed in the profit appropriation plan, which will beapproved after the balance sheet date, are not recognised as a liability at the balance sheetdate but are disclosed in the notes separately.
29 Related parties
If a party has the power to control, jointly control or exercise significant influence over anotherparty, or vice versa, or where two or more parties are subject to common control or jointcontrol from another party, they are considered to be related parties. Related parties may beindividuals or enterprises. Enterprises with which the Company is under common control onlyfrom the State and that have no other related party relationships are not regarded as relatedparties.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportIn addition to the related parties stated above, the Company determines related parties basedon the disclosure requirements of Administrative Procedures on the Information Disclosures ofListed Companies issued by the CSRC.
30 Segment reporting
The Group is principally engaged in the production and sales of wine, brandy, and sparklingwine in China, France, Spain, Chile and Australia. In accordance with the Group's internalorganisation structure, management requirements and internal reporting system, the Group'soperation is divided into four parts: China, Spain, France, Chile and Australia. Themanagement periodically evaluates segment results, in order to allocate resources andevaluate performances. In 2019, over 89% of revenue, more than 98% of profit and over 92%of non-current assets derived from China / are located in China. Therefore the Group does notneed to disclose additional segment report information.
31 Significant accounting estimates and judgements
The preparation of the financial statements requires management to make estimates andassumptions that affect the application of accounting policies and the reported amounts ofassets, liabilities, income and expenses. Actual results may differ from these estimates.Estimates as well as underlying assumptions and uncertainties involved are reviewed on anongoing basis. Revisions to accounting estimates are recognised in the period in which theestimate is revised and in any future periods affected.
(1) Significant accounting estimates
Except for accounting estimates relating to depreciation and amortisation of assets such asinvestment properties, fixed assets, bearer biological assets and intangible assets (see NotesIII. 12, 13, 16 and 17) and provision for impairment of various types of assets (see Notes V.3,6, 7, 11, 12, 13, 14, 15 and Note XV.1 and 3). Other significant accounting estimates are asfollows:
(i) Note V. 17 – Recognition of deferred tax asset;(ii) Note IX. – Fair value measurements of financial instruments.
32 Changes in significant accounting policies and accounting estimates
(1) Description and reasons of changes in accounting policies
In 2019, the Group has adopted the following revised accounting standards issued by theMOF recently:
- Accounting Standard for Business Enterprises No. 22 — Recognition and Measurement ofFinancial Instruments (revised), Accounting Standard for Business Enterprises No. 23 —Transfer of Financial Instruments (revised), Accounting Standard for Business EnterprisesNo. 22 — Hedging Accounting (revised) and Accounting Standard for Business EnterprisesNo. 37 — Presentation of Financial Instruments (revised) (hereinafter referred to as “newfinancial instrument standard”)- Notice on Revision of the 2019 Illustrative Financial Statements (Caikuai [2019] No.6)- Notice on Revision of Illustrative Consolidated Financial Statements (2019 version) (Cai
Kuai [2019] No. 16).
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report- CAS No.7 – Exchange of Non-monetary Assets (Revised) (“CAS 7 (2019)”)- CAS No.12 – Debt Restructuring (Revised) (“CAS 12 (2019)”)
(a) Presentation of financial statements
The Group has prepared financial statements for the year ended 31 December 2019 inaccordance with the financial statement format specified in Caikuai [2019] No.6 andCaikuai [2019] No.16. The Group has applied the new presentation requirementsretrospectively.
Affected assets and liabilities items in the consolidated and company balance sheets asat 31 December 2018:
The GroupBeforeadjustments
Adjustments
| Before adjustments | After adjustments |
Bills and accounts receivable 530,821,071 (530,821,071)
-
| Bills receivable | - | 288,667,988 | 288,667,988 |
Accounts receivable - 242,153,083 242,153,083
Bills and accounts payable 713,572,881 (713,572,881)
-
Accounts payable - 713,572,881 713,572,881
Deferred income due within one year 15,860,254 (15,860,254)
-
| Deferred income | 70,367,039 | 15,860,254 | 86,227,293 |
Total 1,330,621,245 - 1,330,621,245
| The Company | |
| Before adjustments | |
Adjustments
Bills and accounts receivable 41,333,227 (41,333,227)
| After adjustments | |
-
Bills receivable - 39,885,254 39,885,254
Accounts receivable - 1,447,973 1,447,973
Bills and accounts payable 132,704,304 (132,704,304)
-
Accounts payable - 132,704,304 132,704,304
Deferred income due within one year
| Deferred income due within one year | 3,433,054 | (3,433,054) | - |
Deferred income 8,910,918 3,433,054 12,343,972
Total 186,381,503 - 186,381,503
(b) New financial instrument standards
The new financial instrument standards revise the Accounting Standard for BusinessEnterprises No. 22 — Recognition and Measurement of Financial Instruments ,Accounting Standard for Business Enterprises No. 23 — Transfer of FinancialInstruments, Accounting Standard for Business Enterprises No. 24 — Hedging andAccounting Standard for Business Enterprises No. 37 — Presentation of FinancialInstruments issued by the MOF in 2006 (hereinafter referred to as “previous financialinstrument standards”).
The new financial instrument standards classify financial assets into three basiccategories: (1) financial assets measured at amortised cost; (2) financial assetsmeasured at FVOCI;(3) financial assets at FVTPL. The classification of financial assetsunder new financial instruments standards is generally based on the business model inwhich a financial asset is managed and its contractual cash flow characteristics. Newfinancial instruments standards cancel the previous categories of held to maturityinvestments, loans and receivables and available for sale financial assets underprevious financial instruments standards. Under new financial instruments standards,derivatives embedded in contracts where the host is a financial asset are neverseparated. Instead, the hybrid financial instrument as a whole is assessed forclassification.
New financial instruments standards replace the “incurred loss” model in previousfinancial instruments standards with the ECL model. The ECL model requires anongoing measurement of credit risk associated with a financial asset and thereforerecognises ECLs earlier than under the “incurred loss” accounting model in previousfinancial instruments standards.
Retrospective adjustments were made to classification and measurement (includingimpairment) of financial instruments not derecognised on the date of effectiveness of thestandards (i.e. 1 January 2019) according to transition requirements of the new financialinstrument standards. The Group has not yet adjusted the financial statement andrecognises the difference between the previous carrying amount of financial instrumentsand the new carrying amount on the date of effectiveness of the standards as retainedearnings or other comprehensive income at the beginning 2019.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report(i) The impact of adoption new financial instrument standards on the consolidated
and company balance sheets as at 31 December 2018 after retrospectiveadjustments in accordance with Caikuai [2019] No.6 and Caikuai [2019] No.16 aresummarised as follows:
| The Group | |||
| 31 December 2018 | 1 January 2019 | Adjustments | |
| Assets | |||
| Current assets | |||
| Bills receivable | 288,667,988 | - | (288,667,988) |
| Accounts receivable | 242,153,083 | 232,099,034 | (10,054,049) |
| Receivables under financing | - | 288,667,988 | 288,667,988 |
| Available-for-sale financial assets | 467,251 | - | (467,251) |
| Other non-current financial assets | - | 467,251 | 467,251 |
| Deferred tax assets | 285,436,259 | 287,949,771 | 2,513,512 |
| The Company | |||
| 31 December 2018 | 1 January 2019 | Adjustments | |
| Assets | |||
| Bills receivable | 39,885,254 | - | (39,885,254) |
| Receivables under financing | - | 39,885,254 | 39,885,254 |
(ii) Impact of classification of financial instruments
? The Group endorses some bank acceptance bills according to its daily capitalmanagement needs. Bank acceptance bills of the Group are managed within abusiness model whose objective is to collect contractual cash flows and sell thefinancial asset.As at 1 January 2019, the Group reclassified bank acceptancebills of its subsidiaries of RMB288,667,988 to financial assets at fair valuethrough other comprehensive income and presented as receivables underfinancing.
? As at 31 December 2018, the carrying amount of unlisted equity investment
measured at cost held by the Group was RMB467,251. As at 1 January 2019,the Group designated the equity investment as financial assets at fair valuethrough profit or loss and presented as other non-current financial assets.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportBased on balance sheets as at 31 December 2018 after retrospective adjustments in accordance with Caikuai [2019] No.6 andCaikuai [2019] No.16, results of the classification and measurement of financial assets in accordance with the previous financialinstrument standards and the new financial instrument standards are summarised as follows:
The Group
| Previous financial instrument standards (31 December 2018) | New financial instrument standards (1 January 2019) | ||||
| Item | Type of measurement | Carrying amount | Item | Type of measurement | Carrying amount |
| Cash at bank and on hand | Amortised cost (loans and receivables) | ||||
1,475,700,477
Amortised cost 1,475,700,477Bills receivable
Amortised cost (loans and
receivables)
288,667,988
Receivables under
financing
| Cash at bank and on hand | |
| Measured at fair value |
through other
288,667,988Accounts receivable
| comprehensive income | ||
| Amortised cost (loans and receivables) |
242,153,083 Accounts receivable Amortised cost 232,099,034Other receivables
22,636,086 Other receivables Amortised cost 22,636,086Available-for-sale
financial assets
Measured at cost (equity
instrument)
467,251
Other non-current
financial assets
| Amortised cost (loans and receivables) | ||
| Measured at fair value |
through profit or loss
467,251Other current assets
| (standard requirements) | ||
| Amortised cost (loans and receivables) |
258,676,396 Other current assets Amortised cost 258,676,396
The Company
| Previous financial instrument standards (31 December 2018) | New financial instrument standards (1 January 2019) | ||||
| Item | Type of measurement | Carrying amount | Item | Type of measurement | Carrying amount |
| Cash at bank and on hand | Amortised cost (loans and receivables) | ||||
624,588,809
Amortised cost 624,588,809Bills receivable
Amortised cost (loans and
receivables)
39,885,254
Receivables under
financing
| Cash at bank and on hand | |
| Measured at fair value |
through other
39,885,254Accounts receivable
| comprehensive income | ||
| Amortised cost (loans and receivables) |
1,447,973 Accounts receivable Amortised cost 1,447,973Other receivables
1,025,643,356 Other receivables Amortised cost 1,025,643,356Other current assets
| Amortised cost (loans and receivables) |
| Amortised cost (loans and receivables) |
24,704,844 Other current assets Amortised cost 24,704,844
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportBased on balance sheets as at 31 December 2018 after retrospectiveadjustments in accordance with Caikuai [2019] No.6 and Caikuai [2019] No.16,adjustment of the carrying amount of the Previous financial assets to the carryingamount of the new financial assets classified and measured in accordance withthe new financial instruments standards is as follows:
The Group
under original
| financial instruments |
standards (31
Reclassification Remeasurement
| December 2018) | Carrying amount under new financial |
instrumentsstandards (31
| December 2019) | ||||
| Amortised cost | ||||
| Receivables | ||||
| Balance under previous |
financial instruments
242,153,083 - - -
| standards |
| Re-measurement: ECL allowance |
- - (10,054,049)
-
| Balance under new financial instruments standards |
- - - 232,099,034
| Bills receivable | ||||
| Balance under previous |
financial instruments
288,667,988 - - -
| standards |
| Less: transferred to FVOCI |
(new financial
- (288,667,988)
| instrument standards) |
- -
- - - -
| Balance under new financial instruments standards |
| Available-for-sale financial assets |
financial instruments
| standards |
467,251 - - -
(new financial
| instrument standards) |
- (467,251)
- -
| Balance under new financial instruments standards |
- - - -
| FVOCI | ||||
| Receivables under financing | ||||
| Balance under previous |
financial instruments
- - - -
| standards |
| Add: Transferred from bills |
receivable (underprevious financial
- 288,667,988 - -
| instrument standards) |
| Balance under new financial instruments standards |
- - - 288,667,988
| FVTPL | ||||
| Financial assets held for |
trading (including othernon-current financial
| assets) |
| Balance under previous |
financial instruments
- - - -
| standards |
| Add: transferred from |
available-for-salefinancial assets (underprevious financial
- 467,251 - -
| instrument standards) |
| Balance under new financial instruments standards |
- - - 467,251
The Company
Balance underprevious financial
(31 December 2018)
Reclassification Remeasurement
instrumentsstandards (31
| December 2019) | ||||
| Amortised cost | ||||
| Bills receivable | ||||
| Balance under previous |
financial instruments
39,885,254 - - -
| standards |
| Less: transferred to FVOCI |
(new financial
- (39,885,254)
| instrument standards) |
- -
- - - -
| Balance under new financial instruments standards | ||||
| FVOCI | ||||
| Receivables under financing | ||||
| Balance under previous |
financial instruments
- - - -
| standards |
| Add: Transferred from bills |
receivable (underprevious financial
- 39,885,254 - -按新金融工具准则列示的余额- - - 39,885,254
(iii) Impacts of adoption of ECL measurement
The Group applies the new ECL model to the following items:
- financial assets measured at amortised cost;- financial investments at fair value through other comprehensive income.
The new ECL model do not apply to investments in equity instruments.
Based on balance sheets as at 31 December 2018 after retrospective adjustmentsin accordance with Caikuai [2019] No.6 and Caikuai [2019] No.16, adjustment ofthe closing amount of the previous financial instrument provision for impairmentsto the new provision for impairments classified and measured in accordance withthe new financial instrument standards is as follows:
The Group
Type of measurement
instrument standards)
Provision for losses
under
| previous financial |
instrument standards /
Estimated liabilities
recognised inaccordance withcontingency standard
Reclassification Remeasurement
| (31 December 2018) |
Loss allowance
instrumentsstandards(1 January 2019)
| under new financial | ||
| Loans and receivables |
(previous financialinstrument standards) /financial assetsmeasured at amortisedcost(new financial instrument
| standards) | ||||
| Accounts receivable | - | - | 10,054,049 | 10,054,049 |
| Total | - | - | 10,054,049 | 10,054,049 |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report(c) CAS 7 (2019)
The CAS 7 (2019) specifies the applicability of standard for exchange of non-monetaryassets and clarifies the accounting treatment for the situation in which the recognisingtiming of assets received is inconsistent with the derecognising timing of assets givenup. The standard also revises the measurement principle for several assets to bereceived or given up at the same time during exchange of non-monetary assets at fairvalue. Additionally, the standard includes disclosure requirements on whether theexchange of non-monetary assets has commercial substance and the reasons behindthis determination.
The effective date of CAS 7 (2019) is 10 June 2019. Exchanges of non-monetary assetsthat occurred between 1 January 2019 and the effective date shall be adjustedaccording to CAS 7 (2019). Retrospective adjustment is not required for exchanges ofnon-monetary assets prior to 1 January 2019. The adoption of the Standard did nothave any material impact on the financial position and financial performance of theGroup.
(d) CAS 12 (2019)
CAS 12 (2019) modifies the definition of debt restructuring to specify the scope of thisstandard, as well as the application of relevant financial instruments standards withrespect to the recognition, measurement and presentation of financial instrumentsinvolved in debt restructuring. For debt restructuring in which a debt is settled by thetransfer of assets, CAS 12 (2019) modifies the principle of measurement for initialrecognition of non-financial assets received by the creditor, and gains or losses of thedebtor from debt restructuring are recognised without distinguishing whether they aregains or losses from asset transfer or debt restructuring. For debt restructuring in whicha debt is settled by the issuance of equity instruments to the creditor, CAS 12 (2019)revises the principle of measurement for initial recognition of its share of equity by thecreditor, and provides more guidance on the principle of measurement for initialrecognition of equity instruments by the debtor.
The effective date of CAS 12 (2019) is 17 June 2019. Debt restructuring that occurredbetween 1 January 2019 and the effective date shall be adjusted according to CAS 12(2019). Retrospective adjustment is not required for debt restructuring prior to 1 January2019. The adoption of the Standard did not have any material impact on the financialposition and financial performance of the Group.
IV. Taxation
1 Main types of taxes and corresponding tax rates
| Tax type | Tax basis | Tax rate |
Value-added tax(VAT)
product sales and taxableservices revenue. The basis forVAT payable is to deduct inputVAT from the output VAT for
| the period | 13%, 9%, 6% (China, after 1 April |
2019), 16%, 10%, 6% (China, 1 May2018 to 31 March 2019), 17%, 13%,6% (China, before 1 May 2018), 20%(France), 21% (Spain), 19% (Chile)
Consumption tax
| and 10% (Australia) | ||
Based on taxable revenue
| 10% of the price, 20% of the price and RMB1,000 each ton (China) | ||
| Urban maintenance and construction tax |
Based on VAT paid 7% (China)
Based on taxable profits
| Corporate income tax | 25% (China), 28% (France), 28% (Spain), 27% (Chile), 30% (Australia) |
Other than tax incentives stated in Note IV. 2, applicable tax rates of the Group in 2019 and2018 are all stated as above.
2 Tax preferential treatments
Ningxia Changyu Grape Growing Co., Ltd.("Ningxia Growing"), a subsidiary of the Group,whose principal activity is grape growing is incorporated in Ningxia Huizu AutonomousRegion. According to clause 27 of the Corporate Income Tax Law of the People’s Republic ofChina and clause 86 of the Implementation Rules of Enterprise Income Tax Law of thePeople’s Republic of China, Ningxia Growing enjoys an exemption of corporate income tax.
Yantai Changyu Grape Growing Co., Ltd.(" Grape Growing "), a branch of the Company,whose principal activity is grape growing is incorporated in Zhifu District, Yantai City,Shandong Province. According to clause 27 of the Corporate Income Tax Law of the People’sRepublic of China and clause 86 of the Implementation Rules of Enterprise Income Tax Lawof the People’s Republic of China, Grape Growing enjoys an exemption of corporate incometax.
Beijing Changyu AFIP Agriculture Development Co., Ltd ("Agriculture Development"), asubsidiary of the Group, whose principal activity is grape growing is incorporated in Miyun,Beijing. According to clause 27 of the Corporate Income Tax Law of the People’s Republic ofChina and clause 86 of the Implementation Rules of Enterprise Income Tax Law of thePeople’s Republic of China, Agriculture Development enjoys an exemption of corporateincome tax.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportXinjiang Tianzhu Wine Co., Ltd. ("Xinjiang Tianzhu"), a subsidiary of the Company, is anenterprise of wine production and sales incorporated in Shihezi city, Xinjiang WeizuAutonomous. In accordance with the Notice on Tax Policy Issues concerning FurtherImplementation of the Western China Development Strategy (Cai Shui [2011] No.58), XinjiangTianzhu is qualified to enjoy preferential taxation policies, which means it can pay corporateincome tax at a preferential rate of 15% for the period from 2015 to 2020.
Xinjiang Chateau Changyu Baron Balboa Co., Ltd. ("Chateau Shihezi"), a subsidiary of theCompany, is an enterprise of wine production and sales incorporated in Shihezi city, XinjiangWeizu Autonomous. In accordance with the Notice on Tax Policy Issues concerning FurtherImplementation of the Western China Development Strategy (Cai Shui [2011] No.58), ShiheziChateau is qualified to enjoy preferential taxation policies, which means it can pay corporateincome tax at a preferential rate of 15% for the period from 2015 to 2020.
V. Notes to the consolidated financial statements
1 Cash at bank and on hand
| Item | 2019 | 2018 |
| Cash on hand | 59,975 | 114,335 |
| Bank deposits | 1,474,489,177 | 1,382,399,749 |
| Other monetary funds | 91,234,828 | 93,186,393 |
| Total | 1,565,783,980 | 1,475,700,477 |
| Including: Total overseas deposits | 42,752,630 | 22,664,704 |
As at 31 December 2019, the balance of restricted cash of the Group is as follows:
| Item | 2019 | 2018 |
| House maintenance funds | 2,647,877 | 2,611,350 |
As at 31 December 2019, the Group's other monetary assets is as follows:
| Item | 2019 | 2018 |
| Yantai Changyu Pioneer Wine Company Limited |
Research and Development Co., Ltd. ("R&D
46,100,000 46,100,000
| Centre") pledged deposit for long-term payables | ||
| Deposits for letters of credit | 44,540,850 | 44,540,850 |
| Alipay account balance | 583,978 | 2,483,816 |
| Deposit for Company cards | - | 51,727 |
| Deposit for ICBC platform | 10,000 | 10,000 |
| Total | 91,234,828 | 93,186,393 |
As at 31 December 2019, the Group's term deposits with previous maturity of more than threemonths is RMB106,128,600 with interest rate 1.10%-2.75% (31 December 2018:
RMB173,042,400).
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report2 Bills receivable
Classification of bills receivable
Item31 December 2019
31 December 2018
Bank acceptance bills - 288,667,988Total - 288,667,988
3 Accounts receivable
(1) Accounts receivable by customer type are as follows:
| Type | 31 December 2019 | 1 January 2019 | 31 December 2018 |
| Amounts due from related parties | 5,902,871 | 4,696,685 | 4,696,685 |
| Amounts due from other customers |
277,619,657
237,456,398 237,456,398
| Sub-total | 283,522,528 | 242,153,083 | 242,153,083 |
| Less: Provision for bad and doubtful debts |
(17,304,375)
(10,054,049)
-
| Total | 266,218,153 | 232,099,034 | 242,153,083 |
As at 31 December 2019, ownership restricted accounts receivable is RMB54,663,422 (31December 2018: RMB52,015,032), referring to Note V. 50.
(2) The ageing analysis of accounts receivable is as follows:
| Ageing | 2019 | 2018 |
| Within 1 year (inclusive) | 275,693,658 | 240,312,773 |
| Over 1 year but within 2 years (inclusive) | 7,354,262 | 1,566,622 |
| Over 2 years but within 3 years (inclusive) | 308,950 | 273,688 |
| Over 3 years | 165,658 | - |
| Sub-total | 283,522,528 | 242,153,083 |
| Less: Provision for bad and doubtful debts | (17,304,375) | - |
| Total | 266,218,153 | 242,153,083 |
The ageing is counted starting from the date when accounts receivable are recognised.
(3) Accounts receivable by provisioning method
(a) Assessment of ECLs on accounts receivable in 2019:
At all times the Group measures the impairment loss for accounts receivable at anamount equal to lifetime ECLs, and the ECLs are based on the number of overdue daysand the loss given default. According to the historical experience of the Group, there areno significant differences in the losses of different customer groups. Therefore, differentcustomer groups are not further distinguished when calculating impairment loss basedon the overdue information.
Loss given default
| Carrying amount at the end of the year | Impairment loss at the end of the year | ||
| Current | 0.5% | 212,429,920 | 1,039,698 |
| Overdue for 1 to 30 days | 3.4% | 30,728,775 | 1,047,549 |
| Overdue for 31 to 60 days | 7.1% | 11,523,509 | 814,636 |
| Overdue for 61 to 90 days | 12.1% | 5,764,703 | 700,190 |
| Overdue for 91 to 120 days | 17.4% | 1,590,671 | 276,279 |
| Overdue for 121 to 150 days |
22.4% 2,311,625 517,066
28.5% 661,492 188,571
| Overdue for 151 to 180 days |
| Overdue for 181 to 210 days |
33.3% 2,583,362 861,027
39.4% 6,296,727 2,478,756
| Overdue for 211 to 240 days |
| Overdue for 241 to 270 days |
72.9% 588,355 428,627
87.8% 583,701 512,581
| Overdue for 271 to 300 days |
| Overdue for 331 to 330 days |
97.3% 753,239 732,946
100.0% 1,491,202 1,491,202
| Overdue for 330 to 360 days | |||
| Overdue for 360 days | 100.0% | 6,215,247 | 6,215,247 |
| Total | 6.1% | 283,522,528 | 17,304,375 |
The loss given default is measured based on the actual credit loss experience in thepast 12 months, and is adjusted taking into consideration the differences among theeconomic conditions during the historical data collection period, the current economicconditions and the economic conditions during the expected lifetime.
(b) Impairment of account receivables in 2018
Under previous financial instruments standards, provision for impairments is mde whenthere is objective evidence of impairment.
(4) Movements of provisions for bad and doubtful debts:
2019 2018
- -
| Balance under the previous financial instruments standards |
| Adjustment on initial application of the new financial instruments standards |
(10,054,049)
-
| Balance at the beginning of the year after adjustment |
(10,054,049)
-Charge for the year (7,304,777)
-Written-off during the year 54,451 -Balance at the end of the year (17,304,375)
-
(5) Five largest accounts receivable by debtor at the end of the year:
Name
Relationshipwith the Group
Balance at theend of the year
Ageing
Percentage ofending balance
of others (%)
Ending
balance ofprovision for
bad and
| doubtful debts |
THE CO-OP FOOD GROUP Third party 14,953,492
5.6% 817,989
| Within 1 year | ||
| Lianhua Supermarket Holdings Co., Ltd. |
Third party 13,988,131
5.3% 636,038
| Within 1 year | ||
| NGS Supermarket (Group) Co., Ltd. |
Third party 9,278,350
3.3% 1,916,366
Jiajiayue Group Co., Ltd. Third party 8,437,439
| Within 1 year |
| Within 1 year |
3.0% 45,468
MARKS AND SPENCER Third party 7,427,424
2.6% 406,296
Total 54,084,836 19.2% 3,822,157
4 Receivables under financing
Item
Within1 yearNote
2019 2018Bills receivable (1) 316,470,229 -
(1) The pledged bills receivable of the Group at the end of the year
As at 31 December 2018, there was no pledged bills receivable (31 December 2018: Nil).
(2) Outstanding endorsed bills that have not matured at the end of the year
Item
NoteAmount derecognised at
year end
| Amount derecognised at year end | |
| Bank acceptance bills | 265,759,455 |
| Total | 265,759,455 |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportAs at 31 December 2019, bills endorsed by the Group to other parties which are not yet due atthe end of the period is RMB265,759,455 (31 December 2018: RMB182,829,674). The notesare used for payment to suppliers and constructions. The Group believes that due to goodreputation of bank, the risk of notes not accepting by bank on maturity is very low, thereforederecognise the note receivables endorsed. If the bank is unable to pay the notes on maturity,according to the relevant laws and regulations of China, the Group would undertake limitedliability for the notes.
5 Prepayments
(1) Prepayments by category:
| Item | 2019 | 2018 |
| Prepayments | 66,807,537 | 4,219,949 |
| Other prepayments | 900,000 | - |
| Total | 67,707,537 | 4,219,949 |
(2) The ageing analysis of prepayments is as follows:
Ageing
| 2019 | 2018 |
Amount
Amount
| Percentage (%) | Percentage (%) | |||
| Within 1 year (inclusive) | 67,441,713 | 100% | 4,219,949 | 100% |
| Over 1 year but within 2 years (inclusive) |
265,824 - - -
| Total | 67,707,537 | 100% | 4,219,949 | 100% |
The ageing is counted starting from the date when prepayments are recognised.
(3) Five largest prepayments by debtor at the end of the year:
Name
receivable
Balance at theend of the year
Ageing
Percentage ofending balance of
others (%)
| Nature of the | Ending |
balance ofprovision for
bad and
| doubtful debts | |||
| Beijing Aod Investment Group Co., Ltd. | Prepayments |
49,396,000
73.0% -
Xinjiang Yuyuan Wine Co., Ltd.
| Within 1 year | ||
| Prepayments |
11,749,019
17.3% -
State Grid Shandong ElectronicPower Yantai Company
| Within 1 year | ||
| Prepaid |
electricity
1,229,571
Within 1
year
1.8% -
| fees | |
| Yantai Mingyuan Refrigeration and |
Air-conditioning Equipment Co.,
| Ltd. | Prepayment |
s for the
600,000
Within 1year
0.9% -
Yantai Huibao Artware
Manufacturing Co., Ltd.
| equipment |
| Prepayment |
s for the
533,855
Within 1
year
0.8% -
| equipment | |||||
| Total | 63,508,445 | 93.8% | - |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report6 Other receivables
| Note | 31 December 2019 | 31 December 2018 | |
| Interest receivable | (1) | 148,927 | 1,332,681 |
Others (2) 24,097,885 21,303,405
| Total | 24,246,812 | 22,636,086 |
(1) Interest receivable
(a) Interest receivable by category:
Item31 December 2019
31 December 2018
Interest receivable on bank deposits 148,927 1,332,681
(b) Significant overdue interest:
As at 31 December 2019, there was no overdue interest receivable (31 December2018: Nil).
(2) Others
(a) Others by customer type:
Customer type31 December 2019
31 December 2018
| Amounts due from related parties | 813,440 | 813,440 |
Amounts due from other companies 23,284,445 20,489,965Sub-total 24,097,885 21,303,405Less: Provision for bad and doubtful debts - -Total 24,097,885 21,303,405
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report(b) The ageing analysis is as follows:
| Ageing | 2019 | 2018 |
| Within 1 year (inclusive) | 16,052,916 | 11,293,908 |
| Over 1 year but within 2 years (inclusive) | 940,668 | 6,693,702 |
| Over 2 years but within 3 years (inclusive) | 6,547,178 | 1,922,998 |
| Over 3 years | 557,123 | 1,392,797 |
| Sub-total | 24,097,885 | 21,303,405 |
| Less: Provision for bad and doubtful debts | - | - |
| Total | 24,097,885 | 21,303,405 |
The ageing is counted starting from the date when other receivables are recognised.
[(c) Movements of provisions for bad and doubtful debts
As at 31 December 2019, no bad and doubtful debt provision was made for otherreceivables (31 December 2018: Nil).
As at 31 December 2019, the Group has no other receivables written off (31 December2018: Nil).
(d) Others categorised by nature
| Nature of other receivables | Note | 2019 | 2018 |
| Deposit | 9,812,027 | 10,453,624 | |
| Refund of consumption tax and VAT |
8,937,164 6,273,882
| Petty cash receivable | 1,741,147 | 2,274,038 | |
| Others | 3,607,547 | 2,301,861 | |
| Sub-total | 24,097,885 | 21,303,405 | |
| Less: Provision for bad and doubtful debts |
- -
| Total | 24,097,885 | 21,303,405 |
(a) Five largest others-by debtor at the end of the year
Name
Nature of the
receivable
Balance at theend of the year
Ageing
| Percentage of ending balance of others (%) | Ending balance of |
provision for bad
Sercicio de Impuestos Internos Refund of VAT 7,710,362
| and doubtful debts | ||
| Within 1 year |
32.0% -
Deposits 5,262,324
Over 2
years
21.8% -
| Finance Bureau of Yantai Economic and Technological Development Area |
| Yantai Economic and Technological Development Zone Construction Industry Federation |
Construction
deposit
1,143,500
Over 2
years
4.7% -
| Yantai Shenma Packaging Co., Ltd. | Lease receivables |
813,440
3.4% -
| Within 1 year | ||
| Yantai Municipal Tax Service, State Taxation Administration |
Refund of VAT 736,946
3.1% -
| Within 1 year | |||||
| Total | 15,666,572 | 65.0% | - |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report7 Inventories
(1) Inventories by category:
Item
| 2019 | 2018 |
Book value
impairment of
| inventories |
Carrying amount
Book value
| Provision for |
impairment of
Carrying amount
| inventories | ||||||
| Raw materials | 71,681,418 | - | 71,681,418 | 67,267,035 | - | 67,267,035 |
| Work in progress | 2,102,781,536 | - | 2,102,781,536 | 1,787,819,923 | - | 1,787,819,923 |
| Finished goods | 718,127,090 | (20,179,637) | 697,947,453 | 894,187,725 | (24,683,226) | 869,504,499 |
| Total | 2,892,590,044 | (20,179,637) | 2,872,410,407 | 2,749,274,683 | (24,683,226) | 2,724,591,457 |
(2) Provision for impairment of inventories:
Item Opening balance
| Increase during the year | Decrease during the year |
Closing balance
| Recognised | Reversal | |||
| Finished goods | 24,683,226 | 20,179,637 | (24,683,226) | 20,179,637 |
8 Other current assets
| Item | 2019 | 2018 |
| Prepaid income taxes | 16,854,091 | 24,077,323 |
| Input tax to be credited | 248,975,183 | 233,087,707 |
| Prepaid rent | 1,595,664 | 1,511,366 |
| Total | 267,424,938 | 258,676,396 |
9 Long-term equity investments
(1) Long-term equity investments by category:
| Item | 2019 | 2018 |
| Investments in joint ventures | 43,981,130 | - |
| Less: Provision for impairment | - | - |
| Total | 43,981,130 | - |
(2) Movements of long-term equity investments during the year are as follows:
Investee
2018Balance at thebeginning of the
| year | Movements during the year |
2019Closing balance
Shareholding
percentageIncrease in capital
investments under
| equity-method | |||||
| Joint ventures |
SAS L&M Holdings (“L&M Holdings”) - 45,102,058 (1,120,928)
43,981,130 55%
| Total | - | 45,102,058 | (1,120,928) | 43,981,130 |
On 22 February 2019, Francs Champs Participations SAS (“Francs Champs”), a subsidiary of the Group, signed the Cooperation Agreement withSC Garri du Gai to establish L&M Holdings, a joint venture. Francs Champs contributed 100% of the equity of its subsidiary, Societe CivileArgricole Du Chateau De Mirefleurs (“Mirefleurs”), with a fair value of RMB45,102,058, accounting for 55% of the shares of L&M Holdings. As perthe Agreement and the Articles of Association, L&M Holdings is jointly controlled by shareholders of both parties.
10 Investment properties
| Buildings and plants | |
| Cost | |
| Balance as at 31 December 2018 and 31 December 2019 | 70,954,045 |
| Accumulated depreciation | |
| 31 December 2018 | (39,381,556) |
| Charge for the year | (1,857,903) |
| 31 December 2019 | (41,239,459) |
| Carrying amount | |
| Carrying amount at 31 December 2019 | 29,714,586 |
| Carrying amount at 31 December 2018 | 31,572,489 |
11 Fixed assets
(1) Fixed assets
Item Plant & buildings
Motor vehicles Total
| Machinery & equipment | ||||
| Cost | ||||
| 31 December 2018 | 4,761,426,425 | 2,665,798,814 | 26,580,639 | 7,453,805,878 |
| Additions during the year | ||||
| - Purchases | 14,592,625 | 114,964,123 | 2,963,537 | 132,520,285 |
| - Transfers from construction in progress |
335,319,537 8,856,929 - 344,176,466
(6,035,224) (59,313,825)
| Disposals or written-offs during the year |
(2,874,020)
(68,223,069)
| Disposal of subsidiaries | (11,674,567) | - | - | (11,674,567) |
| 31 December 2019 | 5,093,628,796 | 2,730,306,041 | 26,670,156 | 7,850,604,993 |
| Accumulated depreciation | ||||
| 31 December 2018 | (621,266,769) | (1,062,064,237) | (20,743,205) | (1,704,074,211) |
| Charge for the year | (143,711,571) | (156,813,823) | (2,260,577) | (302,785,971) |
| Disposals or written-offs during the year |
5,930,965 55,080,117 2,859,001 63,870,083
| Disposal of subsidiaries | 3,932,031 | - | - | 3,932,031 |
| 31 December 2019 | (755,115,344) | (1,163,797,943) | (20,144,781) | (1,939,058,068) |
| Provision for impairment | ||||
| 31 December 2018 | - | - | - | - |
| Charge for the year | - | (17,478,027) | - | (17,478,027) |
| 31 December 2019 | - | (17,478,027) | - | (17,478,027) |
| Carrying amount | ||||
| 31 December 2019 | 4,338,513,452 | 1,549,030,071 | 6,525,375 | 5,894,068,898 |
| 31 December 2018 | 4,140,159,656 | 1,603,734,577 | 5,837,434 | 5,749,731,667 |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportAs at 31 December 2019, ownership restricted net value of fixed assets is RMB344,670,852(31 December 2018: RMB412,006,421), referring to Note V. 50.
(2) Temporarily idle fixed assets
Item Cost
| Accumulated depreciation | Provision for impairment |
Carrying amount
| Buildings | 47,821,026 | (14,796,008) | - | 33,025,018 |
| Machinery equipment | 73,592,531 | (52,434,878) | (17,478,027) | 3,679,626 |
| Other equipment | 3,344,518 | (3,173,906) | - | 170,612 |
| Total | 124,758,075 | (70,404,792) | (17,478,027) | 36,875,256 |
(3) Fixed assets leased out under operating leases
Item
| Carrying amount at the end of the year | |
| RMB | |
| Machinery equipment | 102,608 |
| Total | 102,608 |
(4) Fixed assets pending certificates of ownership
Item Carrying amount
| Reason why the certificates are pending | ||
| Industry Production Centre of R&D Centre | 1,761,265,190 | Processing |
| Dormitories, main building and reception building of Changan Chateau |
287,560,490 Processing
181,809,121 Processing
| European town, main building and service building of Chateau Beijing |
| Main building of Chateau Tinlot of Yantai Changyu |
79,992,032 Processing
17,124,481 Processing
| Fermentation shop and warehouse of Xinjiang Tianzhu |
| Office and packaging shop of Golden Icewine Valley |
8,890,557 Processing
| Fermentation shop of Zhangyu (Jingyang) | 3,862,118 | Processing |
| Office, experiment building and workshop of Fermentation Centre |
3,484,107 Processing
2,306,172 Processing
| Finished goods warehouse and workshop of Kylin Packaging | ||
| Office of Sales Company | 981,632 | Processing |
The buildings without property certificate above have no significant impact on the Group'smanagement.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report12 Construction in progress
(1) Construction in progress
Project
| 2019 | 2018 |
Book value
| Provision for impairment | Carrying amount |
Book value
| Provision for impairment | Carrying amount | ||
| R&D Centre ("Changyu |
Wine Complex")
485,017,326 - 485,017,326 608,553,618 - 608,553,618
| Project |
| Ningxia Chateau Construction Project |
46,448,561 - 46,448,561 47,163,862 - 47,163,862
6,313,962 - 6,313,962 17,985,881 - 17,985,881
| Sales Company Construction Project |
| Changan Chateau Construction Project |
4,052,839 - 4,052,839 39,793,898 - 39,793,898
877,348 - 877,348 23,664,126 - 23,664,126
| Shihezi Chateau Construction Project |
| Other Companies’ Construction Project |
24,768,797 - 24,768,797 22,135,206 - 22,135,206
| Total | 567,478,833 | - | 567,478,833 | 759,296,591 | - | 759,296,591 |
(2) Movements of major construction projects in progress during the year
Item Budget Opening balance
Additions duringthe year
| Transfers to fixed |
assets
long-termdeferred
| expenses |
Closing balance
Percentage ofactual cost to
budget (%)
Accumulated
capitalised
interest
Interest
| capitalised for the year | Interest rate for capitalisation in |
2019 (%)
Sources of funding
Changyu WineComplex
4,505,780,000 608,553,618 150,740,457 (268,583,246) (5,693,503) 485,017,326 77.6% 15,413,102 1,141,265
1.2% and
4.3%
| Loans from |
financialinstitutions and
| self-raised | ||
| Ningxia Chateau |
Construction
414,150,000 47,163,862 306,115 (1,021,416) - 46,448,561 102.2% - - - Self-raised
| Project |
| Changan Chateau |
Construction
620,740,000 39,793,898 10,349,914 (44,440,973) (1,650,000) 4,052,839 110.4% - - - Self-raised
| Project |
| Shihezi Chateau |
Construction
780,000,000 23,664,126 905,888 (276,666) (23,416,000) 877,348 96.4% - - - Self-raised
| Project |
| Sales Company |
Construction
161,350,000 17,985,881 4,236,485 (15,908,404) - 6,313,962 100.3% - - - Self-raised
13. Bearer biological assets
Bearer biological assets are vines, which measured in cost method.
Item
| Immature biological assets | Mature biological assets |
TotalOriginal book value
| 31 December 2018 | 13,837,608 | 235,246,042 | 249,083,650 |
| Additions during the year |
- Increase in cultivated 7,824,116 - 7,824,116- Transferred to mature (8,832,902) 8,832,902 -
| Disposals during the year | - | (3,560,972) | (3,560,972) |
| 31 December 2019 | 12,828,822 | 240,517,972 | 253,346,794 |
| Accumulated amortisation | |||
| 31 December 2018 | - | (39,817,277) | (39,817,277) |
| Charge for the year | - | (12,722,828) | (12,722,828) |
| Disposals during the year | - | 1,618,597 | 1,618,597 |
| 31 December 2019 | - | (50,921,508) | (50,921,508) |
| Carrying amount | |||
| 31 December 2019 | 12,828,822 | 189,596,464 | 202,425,286 |
31 December 2018 13,837,608 195,428,765 209,266,373
As at 31 December 2019, there is no biological asset with ownership restricted (31 December2018: Nil).
As at 31 December 2019, no provision for impairment of biological asset of the Group wasrecognised as there is no any indication exists (31 December 2018: Nil).
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report14 Intangible assets
Intangible assets
| Item | Land use rights | Software licenses | Trademarks | Total |
Original book value31 December 2018 528,252,911 75,822,057 170,068,735 774,143,703Additions during the year
- Purchase
| 3,502,791 |
12,436,424 704,531
| 16,643,746 |
31 December 2019 531,755,702
88,258,481 170,773,266
790,787,449
Accumulated amortisation
31 December 2018 (78,070,910) (26,722,815) (13,876,519) (118,670,244)Additions during the year
- Charge for the year (11,262,596)
(8,442,975) (465,279) (20,170,850)
Decrease during the year
- - - -31 December 2019 (89,333,506)
(35,165,790)
(14,341,798)
(138,841,094)
Carrying amount
31 December 2019 442,422,196
53,092,691 156,431,468
651,946,35531 December 2018 450,182,001 49,099,242 156,192,216 655,473,459
As at 31 December 2019, the Group has land use right with infinite useful lives ofRMB30,589,474 ( 31 December 2018: RMB30,881,409), representing the freehold land heldby Chile Indomita Wine Group and Australia Kilikanoon Estate under relevant Chile andAustralia laws, on which the amortisation is not required.
As at 31 December 2019, the Group has trademark with infinite useful lives ofRMB154,674,985 (31 December 2018: RMB154,150,933), which is held by Chile IndomitaWine Group and Australia Kilikanoon Estate. The recoverable amount of the trademark isdetermined according to the present value of the expected future cash flows generated fromthe asset group to which the single assets of trademark right belongs. The managementprepares the cash flow projection for future 5 years (the "projecting period") based on thelatest financial budget assumption, and estimates the cash flows after the future 5 years (the"subsequent period"). The pretax discount rates used in the cash flow projections are 11.6%and 12.8%, respectively. A key assumption in the estimate of future cash flows is the revenuegrowth rate in the projecting period. Such revenue growth rate is determined based on theindustry and the expected growth rate of Chile Indomita Wine Group and Australia KilikanoonEstate.
The Group recognises the trademark with infinite useful lives as intangible assets, theimpairment assessment of which is made at the end of each reporting year. The managementbelieves that any reasonable change of the above assumptions will not result in the total bookvalue of the asset group to which the single assets of trademark right belongs exceeding itsrecoverable amount.
According to the result of impairment assessment, by the end of 31 December 2019, themanagement believes there is no impairment loss on those trademarks with infinite usefullives of the Group.
As at 31 December 2019, ownership restricted net value of intangible assets isRMB212,495,435 (31 December 2018: RMB218,070,414), referring to Note V. 50.
15 Goodwill
(1) Changes in goodwill
Note 31 December 2018
| Name of investee or events from which goodwill arose | Additions during the year | Disposals during the year |
31 December 2019
| Original book value | |||||
| Etablissements Roullet Fransac (“Roullet Fransac”) |
(a) 13,112,525 - - 13,112,525
| Dicot Partners, S.L (“Dicot”) | (a) | 92,391,901 | - | - | 92,391,901 |
| Societe Civile Argricole Du Chateau De Mirefleurs (“Mirefleurs”) |
(b) 15,761,440 - (15,761,440) -
| Chile Indomita Wine Group | (a) | 6,870,115 | - | - | 6,870,115 |
| Australia Kilikanoon Estate | (a) | 37,063,130 | - | - | 37,063,130 |
| Sub-total | 165,199,111 | - | (15,761,440) | 149,437,671 | |
| Impairment provision | - | (7,578,478) | - | (7,578,478) | |
| Carrying amount | 165,199,111 | (7,578,478) | (15,761,440) | 141,859,193 |
(a) The Group acquired Fransac Sales, Dicot and Mirefleurs and Chile Indomita Wine Group
in December 2013, September 2015 January 2016 and July 2017 respectively, resultingin respective goodwill amounting to RMB 13,112,525, RMB 92,391,901, RMB15,761,440 and RMB 6,870,115. The Group acquired Australia Kilikanoon Estate inJanuary 2018, resulting goodwill amounting to RMB 37,063,130, which have beenallocated to corresponding asset groups for impairment testing.
(b) On 22 February 2019, Francs Champs, a subsidiary of the Group, signed the
Cooperation Agreement with SC Garri du Gai to contribute 100% of the equity ofMirefleurs to establish L&M Holdings, a joint venture. The Group lost control ofMirefleurs this year, and the goodwill decreased by RMB15,761,440 accordingly.
(2) Provision for impairment of goodwill
The Group has allocated the above goodwill to relevant asset groups for impairment testing.
The recoverable amount of the asset group is determined according to the present value ofthe expected future cash flows. The management prepares the cash flow projection for future5 years (the "projecting period") based on the latest financial budget assumption, andestimates the cash flows after the future 5 years (the "subsequent period"). The pretaxdiscount rate used in calculating the recoverable amounts of Fransac Sales, Dicot, Mirefleurs,Indomita Wine and Australia Kilikanoon Estate are 14.2%, 11.4%, 11.6% and 12.8%,respectively (2018: 16.6%, 12.4%, 16.6 %, 12.3% and 13.1%). The key assumption is thegrowth rate of annual revenue growth rate of relevant subsidiaries, which is computed basedon the expected growth rate of each subsidiary and long-term average growth rates ofrelevant industries. Other relevant key assumption is budget gross profit margin, which isdetermined based on the historical performance of each subsidiary and its expectations formarket development. According to the results of the impairment test, the Group found that therecoverable amount of the asset group including goodwill of Australia Kilikanoon Estate islower than its book value. Therefore, on 31 December 2019, the provision for impairment ofgoodwill was RMB7,578,478. The impairment loss was recognised in asset impairment loss.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report16 Long-term deferred expenses
Item 31 December 2018
| Additions during the year | Amortisation for the year |
Other decreases 31 December 2019
54,217,763 753,161 (1,472,473) (1,369,037) 52,129,414
| Land lease prepayment | |||||
| Land requisition fee | 43,427,739 | - | (1,967,479) | - | 41,460,260 |
| Greening fee | 141,224,472 | 13,983,448 | (9,255,420) | - | 145,952,500 |
| Leasehold improvement |
775,647 33,568,156 (1,354,917) - 32,988,886
| Others | 4,994,795 | 1,075,628 | (1,006,075) | - | 5,064,348 |
| Total | 244,640,416 | 49,380,393 | (15,056,364) | (1,369,037) | 277,595,408 |
17 Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets and liabilities
Item
| 31 December 2019 | 1 January 2019 | 31 December 2018 | |
| Deductible or | |||
taxabletemporary
Deferred tax
assets /(liabilities)
| differences | Deductible or |
taxabletemporary
Deferred tax
assets /(liabilities)
| differences | Deductible or |
taxabletemporary
Deferred tax
assets /(liabilities)
| differences | ||||||
| Deferred tax assets: | ||||||
| Provision for |
impairment of
54,771,519 13,692,880 34,737,276 8,684,319 24,683,226 6,170,807
| assets |
| Unrealised profits |
of intra-group
479,898,175 119,974,545 602,476,583 150,619,145 602,476,583 150,619,145Unpaid bonus 184,674,946 46,168,736 141,808,257 35,485,814 141,808,257 35,485,814
transactionsTermination
benefits
24,833,512 6,208,378 26,186,243 6,546,561 26,186,243 6,546,561
| Termination benefits |
| Deductible tax losses |
247,147,752 63,459,305 262,937,999 67,566,387 262,937,999 67,566,387
| Deferred income | 70,643,437 | 15,422,659 | 86,227,293 | 18,868,963 | 86,227,293 | 18,868,963 |
| Assets |
assessment
- - 661,415 178,582 661,415 178,582
| impairment | ||||||
| Sub-total | 1,061,969,341 | 264,926,503 | 1,155,035,066 | 287,949,771 | 1,144,981,016 | 285,436,259 |
| Deferred tax liabilities: |
businesscombinations
| involving entities |
not under
(51,829,561)
| common control |
(14,691,424) (81,338,130) (22,010,647) (81,338,130) (22,010,647)
(2) Details of unrecognised deferred tax assets
| Item | 2019 | 2018 |
| Deductible tax losses | 132,081,819 | 171,430,831 |
(3) Expiration of deductible tax losses for unrecognised deferred tax assets
Year 2019 20182019 - 7,311,2732020 5,718,454 45,960,7662021 36,741,465 82,685,2132022 26,609,674 14,362,7872023 31,350,376 21,110,7922024 31,661,850 -
| Total | 132,081,819 | 171,430,831 |
18 Other non-current assets
| Item | 2019 | 2018 |
| Royalty | 193,674,320 | - |
Pursuant to a royalty agreement dated 18 May 1997, starting from 18 September 1997, the
Company may use certain trademarks of Changyu Group Company, which have beenregistered with the PRC Trademark Office. An annual royalty fee at 2% of the Group's annualsales is payable to Changyu Group. The license is effective until the expiry of the registrationof the trademarks.
According to the above royalty agreement, Changyu Group collected a total ofRMB576,507,809 for royalty from 2013 to 2019, of which 51% was used to promotetrademarks such as Changyu and the product of this contract, totalling RMB294,018,093.The amount is used for promotion of Changyu and other trademarks and the products of thiscontract, totalling RMB62,250,368, the difference is RMB231,768,615.
On 18 May 2019, the general meeting of shareholders approved the proposal of theamendment to the royalty agreement. Article 6.1 of the royalty agreement with ChangyuGroup was amended to: During the validity period of this contract, the Group pays ChangyuGroup royalty on an annual basis. The royalty is calculated based on 0.98% of the salesvolume of the Group ’s contract products using this trademark. The article is amended to:
The royalty paid to the Changyu Group by the Group shall not be used to promote thistrademark and the contract products.
Changyu Group promised to offset the difference of RMB231,768,615 above with the royaltyfor four years, i.e. from 2019 to 2022.If it is not sufficient for deduction, the rest will be repaidin a one-off manner in 2023. If there is surplus, the surplus part of the royalty will be chargedfrom the year when the surplus occurs. As the amount is a long-term prerpayment, theCompany recognises the amount as other non-current assets and meanwhile offset the salesfee, i.e. royalty.
As at 31 December 2019, the Group's royalty in 2019 was RMB38,094,295. When thedifference is deducted by the above-mentioned amount, the balance of royalty due fromChangyu Group was RMB193,674,320.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report19 Short-term loans
Short-term loans by category:
| Item | 2019 | 2018 |
| Unsecured loans | 661,067,617 | 605,202,708 |
| Mortgaged loans | 82,568,222 | 79,467,832 |
| Guaranteed loans | 10,677,905 | 3,331,870 |
| Total | 754,313,744 | 688,002,410 |
As at 31 December 2019, details of short-term borrowings were as follows:
Amount
Exchange
rate
Amount
Nature ofinterest rate
Interest rate
| Interest rate at |
the
| end of the year | ||||||
| RMB | % | % | ||||
| Credit loans (RMB) |
150,000,000 1.0000 150,000,000 Floating
4.35%
| 1-year LPR+0.04% | ||
| Credit loans (RMB) |
400,000,000 1.0000 400,000,000 Floating
benchmark
| interest rate (%) |
4.35%
| Credit loans (EUR) | 6,632,932 | 7.8155 | 51,839,679 | Fixed | 0.85%-2.0% | 0.85%-2.0% |
| Credit loans (USD) | 8,490,000 | 6.9762 | 59,227,938 | Fixed | 2.81%-4.90% | 2.81%-4.90% |
| Mortgaged loans (EUR) |
6,994,232 7.8155 54,663,422 Fixed 0.35%-2.86% 0.35%-2.86%
4,000,000 6.9762 27,904,800 Fixed 2.86% 2.86%
| Mortgaged loans (USD) |
| Guaranteed loans (AUD) |
2,186,169 4.8843 10,677,905 Fixed 3% 3%
| 754,313,744 |
As at 31 December 2019, mortgaged loans were Hacienda y Vi?edos Marques del Atrio,S.L.U (" Atrio ") factoring of accounts receivable from banks including Banco de Sabadell,S.A. of EUR6,994,232 (equivalent of RMB54,663,422) (31 December 2018: RMB52,015,032).Mortgaged loans were Indomita Wine mortgaged USD4,000,000 (equivalent ofRMB27,904,800) of its fixed assets to BBVA (31 December 2018: RMB27,452,800). AustraliaKilikanoon Estate has guaranteed loans of AUD2,186,169 (equivalent of RMB10,677,905) (31December 2018: RMB3,331,870).
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report20 Accounts payable
| Ageing | 2019 | 2018 |
| Within 1 year (inclusive) | 564,803,430 | 710,208,269 |
| Over 1 year but within 2 years (inclusive) | 2,255,083 | 3,091,659 |
| Over 2 years but within 3 years (inclusive) | 3,007,686 | 121,598 |
| Over 3 years | 186,413 | 151,355 |
| Total | 570,252,612 | 713,572,881 |
There is no significant account payable with ageing of more than one year.
21 Advance payments received
Details of advances from customers are as follows:
| Item | 2019 | 2018 |
| Advances from customers | 120,609,499 | 226,075,244 |
There is no significant advances from customers with ageing of more than one year:
22 Employee benefits payable
(1) Employee benefits payable:
Note 31 December 2018
| Additions during the year | Decrease during the year |
31 December 2019
(2) 185,893,109 530,648,082 (507,651,734) 208,889,457
| Short-term employee benefits |
| Post-employment benefits - |
defined contribution
(3) 224,865 56,303,607 (55,792,325) 736,147
| plans | |||||
| Termination benefits | 26,186,243 | 12,542,984 | (13,895,715) | 24,833,512 | |
| Total | 212,304,217 | 599,494,673 | (577,339,774) | 234,459,116 |
(2) Short-term employee benefits
31 December 2018
| Additions during the year | Decrease during the year |
31 December 2019
187,685,990 481,363,315 (457,031,510) 212,017,795Staff welfare 3,014,288 13,807,921 (14,820,620) 2,001,589Social insurance 461,095 20,088,329 (19,981,978) 567,446Medical insurance 460,440 17,829,589 (17,722,583) 567,446
Salaries, bonuses,
allowancesWork-related injury
insurance
655 1,131,235 (1,131,890) -Maternity insurance - 1,127,505 (1,127,505) -
Work-related injury
insuranceHousing fund
| Housing fund | 52,510 | 11,993,406 | (12,031,721) | 14,195 |
| Labour union fee, staff and workers’ education fee |
1,914,079 3,806,035 (3,785,905) 1,934,209Sub-total 193,127,962 531,059,006 (507,651,734) 216,535,234Less: Non-current liabilities 7,234,853 410,924 - 7,645,777Total 185,893,109 530,648,082 (507,651,734)
208,889,457
(3) Post-employment benefits - defined contribution plans
31 December 2018
Additions during the
year
| Additions during the year | Decrease during the year |
31 December 2019
| Basic pension insurance | 224,533 | 55,054,748 | (54,543,144) | 736,137 |
| Unemployment insurance | 332 | 1,248,859 | (1,249,181) | 10 |
| Total | 224,865 | 56,303,607 | (55,792,325) | 736,147 |
23 Taxes payable
| Item | 2019 | 2018 |
| Value-added tax | 88,590,035 | 36,442,868 |
| Consumption tax | 48,497,550 | 28,636,646 |
| Corporate income tax | 216,958,309 | 40,869,507 |
| Individual income tax | 840,997 | 2,476,527 |
| Tax on the use of urban land | 2,216,390 | 5,669,099 |
| Education surcharges | 4,858,904 | 4,337,712 |
| Urban maintenance and construction tax | 6,731,772 | 5,165,128 |
| Others | 6,476,014 | 5,315,303 |
| Total | 375,169,971 | 128,912,790 |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report24 Other payables
| Note | 31 December 2019 | 31 December 2018 | |
| Interest payable | 758,047 | 712,826 | |
| Dividends payable | 1,366,559 | - | |
| Others | (1) | 448,407,879 | 607,767,064 |
| Total | 450,532,485 | 608,479,890 |
(1) Others
(a) Details of others by nature are as follows:
| Item | 2019 | 2018 |
| Deposit payable to dealer | 164,649,995 | 159,191,138 |
| Advertising fee payable | 90,741,404 | 80,715,461 |
| Equipment and construction fee payable | 72,004,009 | 152,825,734 |
| Freight charges payable | 31,842,443 | 38,867,725 |
| Contracting fee payable | 16,997,685 | 27,070,584 |
| Deposits due to suppliers | 13,990,900 | 15,901,210 |
| Staff deposit | 1,866,765 | 2,806,766 |
| Royalty due to Changyu Group | - | 78,414,978 |
| Others | 56,314,678 | 51,973,468 |
| Total | 448,407,879 | 607,767,064 |
(b) Significant others aged over one year:
Item
| Balance at the end of the year | Reasons why not settled | |
| VASF Company |
4,877,876
| Payables for contracting fee | ||
| Total | 4,877,876 |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report25 Non-current liabilities due within one year
Non-current liabilities due within one year by category are as follows:
| Item | 2019 | 2018 |
| Long-term loans due within one year | 116,826,221 | 118,940,788 |
| Long-term payables due within one year | 34,000,000 | 34,000,000 |
| Total | 150,826,221 | 152,940,788 |
26 Long-term loans
(1) Long-term loans by category
| Item | 2019 | 2018 |
| Credit loans | 136,749,730 | 139,171,506 |
| Guaranteed loans | 105,093,000 | 129,500,000 |
| Mortgaged loans | 3,875,992 | 6,749,944 |
| Less: Long-term loans due within one year | 116,826,221 | 118,940,788 |
| Total | 128,892,501 | 156,480,662 |
As at 31 December 2019, details of long-term borrowings were as follows:
Amount
| Exchan |
ge rate
Amount
interest
| rate |
Interest rate
the end of the
| year | Long-term loans |
due within one
| year | Long-term loans |
due after one
| year | ||||||||
| RMB | % | % | ||||||
| Credit loans (EUR) | 17,497,246 | 7.8155 | 136,749,730 | Fixed | 1.0%-1.7% | 1.0%-1.7% | 88,740,091 | 48,009,639 |
| Guaranteed loans (RMB) |
56,250,000 1 56,250,000 Floating
4.275% 25,000,000 31,250,000
| 90% of 5-year LPR | ||
| Guaranteed loans (AUD) |
10,000,000 4.8843 48,843,000 Fixed 2.5% 2.5% - 48,843,000
495,937 7.8155 3,875,992 Fixed 1.8% 1.8% 3,086,130 789,862
| Mortgaged loans (EUR) | ||||||||
| Total | 245,718,722 | 116,826,221 | 128,892,501 |
As at 31 December 2019, Credit loans were EUR17,497,246 borrowed by Atrio from Bankia,Banco Santander, BBVA and Caja Rural de Navarr etc. (equivalent of RMB136,749,730) (31December 2018: RMB139,171,506). Mortgaged loans (RMB) were long-term borrowings ofRMB56,250,000 of the R&D Centre, a subsidiary of the Company (31 December 2018:
RMB81,250,000). Australia Kilikanoon Estate has borrowed AUD10,000,000(equivalent ofRMB48,843,000) (31 December 2018: RMB48,250,000) from ANZ Bank and its guaranteedby the Company. Mortgaged loans were borrowings of EUR495,937 (equivalent ofRMB3,875,992) form Popular Espa?ol, pledged with its land which valued EUR2,931,722(equivalent of RMB22,912,873) (31 December 2018: RMB6,749,944).
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report27 Long-term payables
Item 2019 2018Agricultural Development Fund of China ("CADF") 225,000,000 259,000,000Less: Long-term payables due within one year 34,000,000 34,000,000Balance of long-term payables 191,000,000 225,000,000
In 2016, RMB 305,000,000 from CADF was invested in R&D Centre, CADF accounted for
37.9% of the registered capital. According to the investment agreement, CADF will recovery
investment funds over 10 years, the investment income received equal to 1.2% of theremaining unpaid principal per annum. In addition to the fixed income, CADF will no longerenjoy other profits or bear the loss of R&D Centre. Therefore, although the investment in R&DCentre, nominally equity investment, is actually a debt investment (financial discount loan).The Group take this investment as long-term payables, which measured in amortized cost.The Group repays the principal of RMB 34,000,000 in 2019. Refer to Note V. 50 for details ofmortgaged and pledged assets.
Balance oflong-termpayables
oninvestm
| ent |
Investmentdate
Termination
date ofrepayment
Due within one
year
Due after one year
Mortgaged andpledged assets
| RMB | RMB | RMB |
57,000,000 1.2%
12 January
2016
24 December
2025
10,000,000 47,000,000
hand and intangible
| assets |
154,000,000 1.2%
| 29 February 2016 | 28 February 2026 |
22,000,000 132,000,000
14,000,000 1.2% 16 June 2016 22 May 2026 2,000,000 12,000,000
| Fixed assets and intangible assets | ||||||
| Cash at bank and on hand | ||||||
| 225,000,000 | 34,000,000 | 191,000,000 |
28 Deferred income
Item 31 December 2018
| Additions during the year | Decrease during the year |
31 December 2019Government grants 86,227,293 7,833,097 (23,359,102)
70,701,288
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportGovernment grants:
Liability 31 December 2018
government grants
| during the year | Amounts recognised |
in other income
31 December 2019
Related toassets/income
| during the year | ||
| Industrial development support |
project 32,800,000 - (4,100,000) 28,700,000
grants related
| to assets | ||
| Xinjiang industrial revitalisation |
and technological
15,642,000 - (1,422,000) 14,220,000
| transformation project | Government |
grants related
| to assets | ||
| Fixed asset investment reward |
of Shihezi Chateau project 6,996,600 - (2,280,000) 4,716,600
grants related
| to assets | ||
| Shandong Peninsula Blue |
Economic Area construction
6,000,000 - (2,000,000) 4,000,000
| funds | Government |
grants related
| to assets | ||
| Special government grant for |
infrastructure 4,240,000 - (1,060,000) 3,180,000
grants related
| to assets | ||
| Raw wine fermentation project |
3,304,500 - (1,434,900) 1,869,600
grants related
| to assets | ||
| Wine fermentation capacity |
construction (Huanren)
3,200,000 - (400,000) 2,800,000
| project | Government |
grants related
| to assets | ||
| Engineering technology transformation of information system project |
2,900,000 - (580,000) 2,320,000
grants related
| to assets | ||
| Liquor electronic tracking |
project 2,525,257 - (667,054) 1,858,203
grants related
| to assets | ||
| Infrastructure construction |
project 1,718,750 - (1,368,750) 350,000
grants related
| to assets | ||
| Special fund for efficient |
water-saving irrigation
1,639,000 500,000 (262,000) 1,877,000
| project | Government |
grants related
| to assets | ||
| Subsidy for economic and |
energy-saving technological
1,026,400 - (128,300) 898,100
| transformation projects | Government |
grants related
| to assets | ||
| Wine industry development |
project 558,000 - (186,000) 372,000
grants related
| to assets | ||
| Subsidy for mechanic |
development of Penglai
- 265,397 - 265,397
| Daliuhang Base | Government |
grants related
| to assets | ||
| Coal subsidy |
- 260,000 (58,500) 201,500
grants related
| to assets | ||
| Introduction fund for service industry development |
2,000,000 400,000 (2,400,000) -
| Related to income | ||
| Cross-border e-commerce project |
880,256 29,000 (69,298) 839,958
| Related to income | ||
| Travelling development fund subsidy project |
500,000 60,000 - 560,000
| Related to income | ||
| Water pollution control project fund |
206,530 - (113,600) 92,930
| Related to income | ||
| Subsidy for boiler |
reconstruction and
90,000 - (10,000) 80,000
Related toincome
| demolition |
| Special funds for the development of enterprises |
- 6,318,700 (4,818,700) 1,500,000
Total 86,227,293 7,833,097 (23,359,102) 70,701,288
29 Other non-current liabilities
Related to
incomeItem
| Item | 31 December 2019 | 31 December 2018 |
| Employee benefits payable | 7,645,777 | 7,234,853 |
As at 31 December 2019, employee benefit represents deposit from bonus accrued formanagers and above. The bonus is expected to be paid during 2021 to 2023.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report30 Share capital
| At 31 December 2018 and 31 December 2019 | |
| Unrestricted A shares | 453,460,800 |
| B shares | 232,003,200 |
| Total of unrestricted shares | 685,464,000 |
31 Capital reserve
Item 31 December 2018
| Additions during the year | Decrease during the year |
31 December 2019
| Share premium | 560,038,853 | - | (905,019) | 559,133,834 |
| Others | 5,916,588 | - | - | 5,916,588 |
| Total | 565,955,441 | - | (905,019) | 565,050,422 |
The balance between the long-term equity investment acquired due to the purchase ofminority shareholding and the share of net assets continuously calculated since the date ofacquisition by the subsidiary based on the proportion of newly increased shareholding shallbe offset against the capital reserve. Details of non-controlling interests acquired during theyear, see Note- VII. 2.
32 Other comprehensive income
Item
Balance at thebeginning of the yearattributable toshareholders of the
Company
| Accrued during the year | Balance at the end of the year |
attributable to
the CompanyBefore-taxamount
shareholders of
Less:
Previouslyrecognised
amounttransferred to
| profit or loss |
Less:
Income taxexpenses
Net-of-tax
amountattributable to
the Company
Net-of-taxamountattributable tonon-
| shareholders of | controlling |
interests
| Items that may be reclassified to profit or loss |
| Translation |
differences arisingfrom translation offoreign currencyfinancial
2,965,377 (8,542,792) - - (7,200,960) (1,341,832) (4,235,583)
33 Surplus reserve
statementsItem
| Item | 31 December 2019 | 31 December 2018 |
| Statutory surplus reserve | 342,732,000 | 342,732,000 |
In accordance with the Company Law and the Articles of Association Company, the Companyappropriated 10% of its net profit to statutory surplus reserve. The appropriation to thestatutory surplus reserve may be ceased when the accumulated appropriation reaches over50% of the registered capital of the Company. The Company does not appropriate net profit tothe surplus reserve in 2019 as surplus reserve of the Company is above 50% of the registeredcapital.
The Company can appropriate discretionary surplus reserve after appropriation of thestatutory surplus reserve. Discretionary surplus reserve can be utilised to offset the deficit orincrease the share capital after approval.
34 Retained earnings
| Item | Note | 2019 | 2018 |
| Retained earnings at the beginning of the year (before adjustment) |
8,008,982,547 7,309,081,618
(1) (7,540,537)
| Total adjustments for opening retained earnings |
-
8,001,442,010 7,309,081,618
| Retained earnings at the beginning of the year (after adjustment) |
| Add: Net profits for the year attributable to shareholders of the Company |
1,129,735,749 1,042,632,929
| Less: Dividends to ordinary shares | (2) | 411,278,400 | 342,732,000 |
| Retained earnings at the end of the year | (3) | 8,719,889,359 | 8,008,982,547 |
(1) Adjustments on beginning retained earnings are as follows:
Retrospective adjustments of RMB7,540,537 made on beginning retained earnings inaccordance with CAS and related new regulations (See Note III. 32).
(2) Dividends in respect of ordinary shares declared during the year
Pursuant to the shareholders’ approval at the shareholders’ general meeting on 17 May 2019,a cash dividend of RMB0.6 per share (2018: RMB0.5 per share), totalling RMB411,278,40(2018: RMB342,732,000), was declared and paid to the Company’s ordinary shareholders on8 July 2019 and 10 July 2019.
(3) Retained earnings at the end of the year
As at 31 December 2019, the consolidated retained earnings attributable to the Companyincluded an appropriation of RMB56,059,538 (2018: RMB54,336,543) to surplus reservemade by the subsidiaries.
35 Operating income and operating costs
Item
2019 2018Income Cost Income CostPrincipal activities 4,944,119,295 1,855,399,515 5,066,265,044 1,872,991,039Other operating activities 86,892,194 32,096,476 75,979,696 28,620,468
| Total | 5,031,011,489 | 1,887,495,991 | 5,142,244,740 | 1,901,611,507 |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportDetails of operating income:
| 2019 | 2018 | |
| Operating income from principal activities | ||
| - Sale of goods | 4,944,119,295 | 5,066,265,044 |
| Sub-total | 4,944,119,295 | 5,066,265,044 |
| Income from other business | 86,892,194 | 75,979,696 |
| Total | 5,031,011,489 | 5,142,244,740 |
36 Taxes and surcharges
| Item | 2019 | 2018 |
| Consumption tax | 159,206,181 | 157,037,382 |
| Urban maintenance and construction tax | 36,159,526 | 39,655,738 |
| Education surcharges | 26,463,129 | 28,762,507 |
| Property tax | 29,984,237 | 31,461,708 |
| Tax on the use of urban land | 11,033,252 | 12,098,790 |
| Stamp duty | 3,088,747 | 4,507,785 |
| Others | 2,527,306 | 2,967,764 |
| Total | 268,462,378 | 276,491,674 |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report37 Selling and distribution expenses
| Item | 2019 | 2018 |
| Marketing fee | 376,428,191 | 386,519,123 |
| Salaries and benefits | 353,390,023 | 297,489,665 |
| Transport charges | 121,007,566 | 141,756,007 |
| Labour service fee | 72,788,245 | 72,036,252 |
| Advertising fee | 45,359,135 | 35,857,276 |
| Conference fee | 42,272,189 | 32,731,215 |
| Depreciation expense | 40,227,482 | 41,410,740 |
| Storage rental | 37,586,638 | 45,668,613 |
| Design and production fee | 26,471,703 | 29,437,757 |
| Travelling expenses | 26,010,813 | 27,176,277 |
| Water, electricity and gas fee | 14,136,779 | 11,297,244 |
| Royalty | (182,711,622) | 73,976,395 |
| Others | 80,264,882 | 79,242,582 |
| Total | 1,053,232,024 | 1,274,599,146 |
38 General and administrative expenses
| Item | 2019 | 2018 |
| Salaries and benefits | 90,477,287 | 114,473,209 |
| Depreciation expenses | 61,831,915 | 71,978,485 |
| Repair costs | 28,555,032 | 25,189,384 |
| Administrative expenses | 23,101,636 | 23,766,176 |
| Amortisation expenses | 18,373,495 | 18,187,049 |
| Amortisation of greening fee | 18,409,031 | 14,730,804 |
| Contracting fee | 13,377,255 | 13,364,835 |
| Rental charge | 12,938,864 | 13,012,167 |
| Safety production costs | 9,510,828 | 9,692,574 |
| Security and cleaning fee | 8,124,135 | 8,659,405 |
| Others | 27,205,178 | 30,526,563 |
| Total | 311,904,656 | 343,580,651 |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report39 Financial expenses
Item 2019 2018Interest expenses from loans and payables 50,212,059 52,198,774Less: Borrowing costs capitalised 1,141,265 5,843,872
7,500,000 -Interest income from deposits and receivables (12,327,441)
| Less: Financial expenses offset by fiscal interest subsidy | |
(12,086,007)
Net exchange (gains) / losses 3,611,536 (666,323)
Other financial expenses 2,435,813 2,342,730Total 35,290,702 35,945,302
Fiscal interest subsidy during reporting period has been included in non-recurring gains andlosses.
40 Other income
| Item | 2019 | 2018 | Related to assets/income |
| Reward on the fixed asset investment |
2,280,000 2,280,000
| Government grants related to assets | ||
| Shandong Peninsula Blue |
Economic Area construction
2,000,000 2,000,000
Government grants
related to assets
| funds |
| Industrial development support project |
4,100,000 4,100,000
| Government grants related to assets | ||
| Others - Government grants related to assets |
7,567,504 8,579,199
| Government grants related to assets | ||
| Special funds for the development of enterprises |
37,449,390 42,953,900 Related to income
| Tax refunds | 8,724,775 | 6,587,773 | Related to income |
| Strong industrial city special funds | 2,518,700 | 4,750,000 | Related to income |
| Others - Government grants related to income |
12,697,212 16,030,562 Related to income
| Total | 77,337,581 | 87,281,434 |
Other income during reporting period has been included in non-recurring gains and losses.
41 Investment income
Investment income by item
| Item | Note | 2019 | 2018 |
| Long-term equity investment losses under equity method |
(1,120,928)
-
| Investment income from disposal of long-term equity investments | (1) |
6,233,661 -
| Total | 5,112,733 | - |
(1) On 22 February 2019, Francs Champs, a subsidiary of the Group, signed the Cooperation
Agreement with SC Garri du Gai to establish L&M Holdings, a joint venture. Francs Champscontributed 100% of the equity of its subsidiary, Mirefleurs, with a fair value ofRMB45,102,058. The deference of RMB6,233,661 between the book value of fair value of netasset of Mirefleurs and the goodwill of Mirefleurswas when it was acquired by the Group wasincluded in investment income.
42 Credit losses
| Item | 2019 |
| Accounts receivable | 7,304,777 |
| Total | 7,304,777 |
43 Impairment losses / (reversal)
| Item | 2019 | 2018 |
| Inventories | (4,503,589) | (912,166) |
| Fixed assets | 17,478,027 | - |
| Goodwill | 7,578,478 | - |
| Total | 20,552,916 | (912,166) |
44 Gains from asset disposals
| Item | 2019 | 2018 |
| Gains from disposal of fixed assets | 39,015 | 11,368,355 |
Gains from disposal of assets during reporting period has been included in non-recurringgains and losses.
45 Non-operating income and non-operating expenses
(1) Non-operating income by item is as follows:
Item 2019 2018Net penalty income 2,593,116 1,901,530Others 8,328,632 5,451,779Total 10,921,748 7,353,309
Non-operating income during reporting period has been included in non-recurring gains andlosses.
(2) Non-operating expenses
| Item | 2019 | 2018 |
| Compensation, penalty and fine expenses | 403,975 | 1,445,721 |
| Donations provided | 699,296 | 593,819 |
| Others | 2,519,998 | 1,496,368 |
| Total | 3,623,269 | 3,535,908 |
Non-operating expenses during reporting period has been included in non-recurring gains andlosses.
46 Income tax expenses
| Item | Note | 2019 | 2018 |
| Current tax expense for the year based on tax law and regulations |
385,102,064
352,598,370
| Changes in deferred tax assets/liabilities | (1) | 15,704,045 | 14,529,152 |
| Total | 400,806,109 | 367,127,522 |
(1) The analysis of changes in deferred tax is set out below:
| Item | 2019 | 2018 |
| Origination of temporary differences | 15,704,045 | 14,529,152 |
| Total | 15,704,045 | 14,529,152 |
(2) Reconciliation between income tax expenses and accounting profit:
| Item | 2019 | 2018 |
| Profit before taxation | 1,530,514,737 | 1,408,611,698 |
| Estimated income tax at 25% | 382,628,684 | 352,152,925 |
| Effect of different tax rates applied by subsidiaries | (707,938) | (949,634) |
| Effect of non-deductible costs, expense and losses | 6,705,569 | 5,496,292 |
| Effect of deductible losses of deferred tax assets not recognised for the year |
7,397,810 4,642,727Deferred tax assets written-off 4,781,984 5,785,212
| Income tax expenses | 400,806,109 | 367,127,522 |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report47 Basic earnings per share and diluted earnings per share
(1) Basic earnings per share
Basic earnings per share is calculated as dividing consolidated net profit attributable toordinary shareholders of the Company by the weighted average number of ordinary sharesoutstanding:
| 2019 | 2018 | |
| Consolidated net profit attributable to ordinary shareholders of the Company |
1,129,735,749 1,042,632,929
685,464,000 685,464,000
| Weighted average number of ordinary shares outstanding | ||
| Basic earnings per share (RMB/share) | 1.65 | 1.52 |
Weighted average number of ordinary shares is calculated as follows:
| 2019 | 2018 | |
| Issued ordinary shares at the beginning of the year | 685,464,000 | 685,464,000 |
| Weighted average number of ordinary shares at the end of the year |
685,464,000 685,464,000
(2) The Group does not have any potential dilutive ordinary shares for the listed years.
48 Cash flow statement
(1) Proceeds relating to other operating activities:
| Item | 2019 | 2018 |
| Government grants | 69,311,576 | 57,123,900 |
| Penalty income | 2,593,116 | 1,901,530 |
| Interest income from bank | 12,327,441 | 7,871,853 |
| Others | 9,512,388 | 5,806,589 |
| Total | 93,744,521 | 72,703,872 |
(2) Payments relating to other operating activities:
| Item | 2019 | 2018 |
| Selling and distribution expenses | 761,969,906 | 918,966,855 |
| General and administrative expenses | 138,738,416 | 140,112,380 |
| Others | 12,856,014 | 4,637,082 |
| Total | 913,564,336 | 1,063,716,317 |
(3) Proceeds relating to other financing activities:
| Item | 2019 | 2018 |
| R&D Centre pledged deposit for long-term payables | - | 61,700,000 |
| Interest income from R&D Centre pledged deposit for long-term payables |
- 768,259
| Total | - | 62,468,259 |
(4) Payments relating to other financing activities:
| Item | 2019 | 2018 |
| Proceed from acquisitions of non-controlling interests’ distributions or interest |
11,619,552 -
| R&D Centre pledged deposit for long-term payables | - | 46,100,000 |
| Total | 11,619,552 | 46,100,000 |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report49 Supplementary information on cash flow statement
(1) Supplement to cash flow statement
a. Reconciliation of net profit to cash flows from operating activities:
| Item | 2019 | 2018 |
| Net profit | 1,129,708,628 | 1,041,484,176 |
| Add: Provisions for impairment of assets / (reversal) |
20,552,916 (912,166)
| Credit losses | 7,304,777 | - |
| Depreciation of fixed assets and investment property |
304,643,874 299,696,260
| Amortisation of intangible assets | 20,170,850 | 19,018,740 |
| Amortisation of long-term deferred expenses |
15,056,364 12,082,117
| Amortisation of biological assets | 12,722,828 | 12,034,812 |
| Gains from disposal of fixed assets, |
intangible assets, and other long-term
(39,015)
| assets |
(11,368,355)
| Financial expenses | 49,508,886 | 45,855,744 |
| Royalty | (182,711,622) | - |
| Investment income | (5,112,733) | - |
| Decrease in deferred tax assets | 23,023,268 | 22,685,137 |
| Decrease in deferred tax liabilities | (7,319,223) | (8,155,985) |
| Decrease in gross inventories | (158,274,938) | (180,452,933) |
| Increase in operating receivables | (290,520,189) | (137,899,294) |
| Decrease in operating payables | (100,876,647) | (138,089,507) |
| Net cash flows from operating activities | 837,838,024 | 975,978,746 |
b. Significant investing and financing activities not requiring the use of cash:
| Item | 2019 | 2018 |
| Payment of intangible assets and other long-term assets by bank acceptances |
165,716,961 109,378,598
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Reportc. Change in cash and cash equivalents:
| Item | 2019 | 2018 |
| Cash equivalents at the end of the year | 1,365,772,675 | 1,206,860,334 |
| Less: Cash equivalents at the beginning of the year |
1,206,860,334
1,180,889,274
| Net increase in cash and cash equivalents | 158,912,341 | 25,971,060 |
(2) Details of cash and cash equivalents
| Item | 2019 | 2018 |
| Cash at bank and on hand | ||
| Including: Cash on hand | 59,975 | 114,335 |
| Bank deposits available on demand | 1,365,712,700 | 1,206,745,999 |
| Closing balance of cash and cash equivalents | 1,365,772,675 | 1,206,860,334 |
50 Assets with restrictive ownership title or right of use
Item Opening balance
| Additions during the year | Decrease during the year | Balance at the end of the year | Reason for restriction |
Cash at
bank andon hand
95,797,743 - (1,915,038) 93,882,705
mortgage forlong-term payables
| etc. |
Account
receivable(i)
52,015,032 183,997,103 (181,348,713) 54,663,422
borrowingsmortgage from
| Atrio |
Fixed assets 412,006,421 - (67,335,569) 344,670,852
mortgage forlong-term payablesand long-term and
short-term
| borrowings |
Intangibleassets
218,070,414 - (5,574,979) 212,495,435
mortgage for
| long-term payables | |||||
| Total | 777,889,610 | 183,997,103 | (256,174,299) | 705,712,414 |
(i) As at 31 December 2019, the amount of accounts receivable with restricted ownership
is EUR 6,994,232 (equivalent of RMB54,663,422), which refers to accounts receivableAtrio conducted for factoring from Banco de Sabadell, S.A. Etc. (31 December 2018:
EUR6,628,399, equivalent of RMB52,015,032)
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportVI. Change of consolidation scope
Disposal of subsidiaries
Disposal of investments in subsidiaries through a single transaction resulting in loss of
control
Name Consideration
beingdisposed(%)
Disposalmethod
Date of losingcontrol
Basis for
| Shareholding | determining date |
of losing control
of net assets in
| consolidated financial statements |
Mirefleurs 45,102,058 100
30/03/2019
| Transfer by agreement | Asset delivery date |
6,233,661
The Group recognised a gain of RMB6,233,661 on disposal of Mirefleurs resulting in lossof control, which has been included in investment income of consolidated financialstatements.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportVII. Interests in other entities
1 Interests in subsidiaries
(1) Composition of the Group
Name of the Subsidiary
Principal place ofbusiness
Registered place
Business
nature
Registered capital
Shareholding ratio(%)
Acquisition method(or similar equity
interest)Xinjiang Tianzhu Wine Co., Ltd. (“Xinajing
Tianzhu”)
Shihezi, Xinjiang,
China
Shihezi, Xinjiang,
China
Manufacturing RMB75,000,000 60 -
Business combinationsinvolving entities not under
common controlEtablissements Roullet Fransac
(“Roullet Fransac”)
Cognac, France Cognac, France Trading EUR2,900,000 - 100
Business combinationsinvolving entities not under
common controlDicot Partners, S.L (“Dicot”) Navarre, Spain Navarre, Spain
Marketing and
sales
EUR2,000,000 75 -
Business combinationsinvolving entities not under
common controlVi?a Indómita, S.A.,Vi?a Dos Andes,S.A.,
and Bodegas Santa Alicia SpA. (“ChileIndomita Wine Group”)
Santiago, Chile Santiago, Chile
Marketing and
sales
CLP31,100,000,000 85 -
Acquired throughestablishment or investmentKilikanoon Estate Pty Ltd
(“Australia Kilikanoon Estate”)
Adelaide, Australia Adelaide, Australia
Marketing and
sales
AUD6,420,000 82.5 -
Business combinationsinvolving entities not under
common controlBeijing Changyu Sales and Distribution Co.,
Ltd ("Beijing Sales")
Beijing, China Beijing, China
Marketing and
sales
RMB1,000,000 100 -
Acquired throughestablishment or investmentYantai Kylin Packaging Co., Ltd. ("Kylin
Packaging")
Yantai, Shandong,
China
Yantai, Shandong,
China
Manufacturing RMB15,410,000 100 -
Acquired throughestablishment or investmentYantai Chateau Changyu-Castel Co., Ltd
("Chateau Changyu") (c)
Yantai, Shandong,
China
Yantai, Shandong,
China
Manufacturing RMB5,000,000 70 -
Acquired throughestablishment or investmentChangyu (Jingyang) Wine Co., Ltd.("Jingyang Wine")
Xianyang, Shaanxi,
China
Xianyang, Shaanxi,
China
Manufacturing RMB1,000,000 90 10
Acquired throughestablishment or investmentYantai Changyu Pioneer Wine Sales Co., Yantai, Shandong, Yantai, Shandong, Marketing and
RMB8,000,000 100 -
Acquired through
Name of the Subsidiary
Principal place ofbusiness
Registered place
Business
nature
Registered capital
Shareholding ratio
(%)
Acquisition method(or similar equityinterest)
| Ltd. ("Sales Company") | China | China | sales | establishment or investment |
Langfang Development Zone
Castel-Changyu Wine Co., Ltd ("LangfangCastel")
Langfang, Hebei,
China
Langfang, Hebei,
China
Manufacturing RMB6,108,818 39 10
Acquired throughestablishment or investmentChangyu (Jingyang) Wine Sales Co., Ltd.("Jingyang Sales")
Xianyang, Shaanxi,
China
Xianyang, Shaanxi,
China
Marketing and
sales
RMB1,000,000 10 90
Acquired throughestablishment or investmentLangfang Changyu Pioneer Wine Sales Co.,Ltd ("Langfang Sales")
Langfang, Hebei,
China
Langfang, Hebei,
China
Marketing and
sales
RMB1,000,000 10 90
Acquired throughestablishment or investmentShanghai Changyu Sales and DistributionCo., Ltd. ("Shanghai Sales")
Shanghai, China Shanghai, China
Marketing and
sales
RMB1,000,000 30 70
Acquired throughestablishment or investmentBeijing Changyu AFIP Agriculture
development Co., Ltd ("AgricultureDevelopment")
Miyun, Beijing, China
Miyun, Beijing,
China
Marketing and
sales
RMB1,000,000 - 100
Acquired throughestablishment or investmentBeijing Chateau Changyu AFIP Global Co.,Ltd. (“AFIP”) (d)
Beijing, China Beijing, China Manufacturing RMB 64,2750,000 91.53 -
Acquired throughestablishment or investmentYantai Changyu Wine Sales Co., Ltd.
("Wines Sales")
Yantai, Shandong,
China
Yantai, Shandong,
China
Marketing and
sales
RMB5,000,000 90 10
Acquired throughestablishment or investmentYantai Changyu Pioneer International Co.,
Ltd. ("Pioneer International")
Yantai, Shandong,
China
Yantai, Shandong,
China
Marketing and
sales
RMB5,000,000 70 30
Acquired throughestablishment or investmentHangzhou Changyu Wine Sales Co., Ltd.("Hangzhou Changyu")
Hangzhou, Zhejiang,
China
Hangzhou, Zhejiang,
China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentNingxia Changyu Grape Growing Co., Ltd.
(“Ningxia Growing”)
Yinchuan, Ningxia,
China
Ningxia, China Plating RMB1,000,000 100 -
Acquired throughestablishment or investmentHuanren Changyu National Wines SalesCo., Ltd. ("National Wines")
Benxi, Liaoning, China
Benxi, Liaoning,
China
Marketing and
sales
RMB2,000,000 100 -
Acquired throughestablishment or investmentLiaoning Changyu Golden Icewine Valley
Co., Ltd. ("Golden Icewine Valley") (e)
| Benxi, Liaoning, China |
| Benxi, Liaoning, China |
Benxi, Liaoning,
China
Manufacturing RMB59,687,300 51 -
Acquired throughestablishment or investmentYantai Development Zone Changyu Trading
Co., Ltd ("Development Zone Trading")
Yantai, Shandong,
China
Yantai, Shandong,
China
Marketing and
sales
RMB5,000,000 - 100
Acquired throughestablishment or investment
Name of the Subsidiary
Principal place of
business
Registered place
Business
nature
Registered capital
Shareholding ratio(%)
Acquisition method(or similar equityinterest)Shenzhen Changyu Wine Marketing Ltd.("Shenzhen Marketing") (a)
Shenzhen,Guangdong, China
Shenzhen,Guangdong, China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentYantai Changyu Fushan Trading Company("Fushan Trading")
Yantai, Shandong,
China
Yantai, Shandong,
China
Marketing and
sales
RMB5,000,000 - 100
Acquired throughestablishment or investmentBeijing AFIP Meeting Center ("MeetingCenter")
Miyun, Beijing, China
Miyun, Beijing,
China
Services RMB500,000 - 100
Acquired throughestablishment or investmentBeijing AFIP Tourism and Culture ("AFIP
Tourism")
Miyun, Beijing, China
Miyun, Beijing,
China
Tourism RMB500,000 - 100
Acquired throughestablishment or investmentChangyu (Ningxia) Wine Co., Ltd. (“Ningxia
Wine”)
Ningxia, China Ningxia, China Manufacturing RMB1,000,000 100 -
Acquired throughestablishment or investmentYantai Changyu Chateau Tinlot Co., Ltd.("Chateau Tinlot")
Yantai, Shandong,
China
Yantai, Shandong,
China
retail
RMB400,000,000 65 35
Acquired throughestablishment or investmentQing Tong Xia Changyu Wine Marketing Ltd.
("Qing Tong Xia Sales")
Ningxia, China Ningxia, China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentXinjiang Chateau Changyu Baron BalboaCo., Ltd. (“Chateau Shihezi”)
Shihezi, Xinjiang,
China
Shihezi, Xinjiang,
China
Manufacturing RMB550,000,000 100 -
Acquired throughestablishment or investmentNingxia Chateau Changyu Moser XV Co.,
Ltd. (“Chateau Ningxia”)
Yinchuan, Ningxia,
China
Yinchuan, Ningxia,
China
Manufacturing RMB2,000,000 100 -
Acquired throughestablishment or investmentShaanxi Chateau Changyu Rena Co., Ltd.(“Chateau Changan”)
Xianyang, Shaanxi,
China
Xianyang, Shaanxi,
China
Manufacturing RMB20,000,000 100 -
Acquired throughestablishment or investmentYantai Changyu Wine Research &Development Centre Co., Ltd. (“R&DCentre”) (f)
Yantai, Shandong,
China
Yantai, Shandong,
China
Manufacturing RMB805,000,000 68.97 -
Acquired throughestablishment or investmentChangyu (HuanRen) Wine Co., Ltd ("Huan
Ren Wine")
Wholesale andBenxi, Liaoning, China
Benxi, Liaoning,
China
Wineproductionprojecting
RMB5,000,000 100 -
Acquired throughestablishment or investmentXinjiang Changyu Sales Co., Ltd ("Xinjiang
Sales")
Shihezi, Xinjiang,
China
Shihezi, Xinjiang,
China
Marketing and
sales
RMB10,000,000 - 100
Acquired throughestablishment or investmentNingxia Changyu Trading Co., Ltd ("NingxiaTrading")
Yinchuan, Ningxia,
China
Yinchuan, Ningxia,
China
Marketing and
sales
RMB1,000,000 - 100
Acquired throughestablishment or investment
Name of the Subsidiary
Principal place of
business
Registered place
Business
nature
Registered capital
Shareholding ratio(%)
Acquisition method(or similar equityinterest)Shaanxi Changyu Rena Wine Sales Co., Ltd("Shaanxi Sales")
Xianyang, Shaanxi,
China
Xianyang, Shaanxi,
China
Marketing and
sales
RMB3,000,000 - 100
Acquired throughestablishment or investmentPenglai Changyu Wine Sales Co., Ltd("Penglai Sales")
Penglai, Shandong,
China
Penglai, Shandong,
China
Marketing and
sales
RMB5,000,000 - 100
Acquired throughestablishment or investmentLaizhou Changyu Wine Sales Co., Ltd
("Laizhou Sales")
Laizhou, Shandong,
China
Laizhou, Shandong,
China
Marketing and
sales
RMB1,000,000 - 100
Acquired throughestablishment or investmentFrancs Champs Participations SAS (“Francs
Champs”)
Cognac, France Cognac, France
Investmentand trading
EUR32,000,000 100 -
Acquired throughestablishment or investmentLanzhou Changyu Wine Sales Co., Ltd
("Lanzhou Sales") (a)
Lanzhou Gansu,
China
Lanzhou Gansu,
China
Marketing and
sales
RMB100,000 - 100
Acquired throughestablishment or investmentBeijing Retailing Co. Ltd ("Beijing Retailing") Beijing, China Beijing, China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentTianjin Changyu Pioneer Sales Co., Ltd
("Tianjin Pioneer")
Tianjin, China Tianjin, China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentFuzhou Changyu Pioneer Sales Co., Ltd("Fuzhou Pioneer") (a)
Fuzhou, Fujian, China
Fuzhou, Fujian,
China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentNanjing Changyu Pioneer Sales Co., Ltd
("Nanjing Pioneer") (a)
Nanjing, Jiangsu,
China
Nanjing, Jiangsu,
China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentXianyang Changyu Pioneer Sales Co., Ltd("Xianyang Pioneer") (a)
Xianyang, Shaanxi,
China
Xianyang, Shaanxi,
China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentShenyang Changyu Pioneer Sales Co., Ltd("Shenyang Pioneer") (a)
Shenyang, Liaoning,
China
Shenyang, Liaoning,
China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentJinan Changyu Pioneer Sales Co., Ltd("Jinan Pioneer") (a)
Jinan, Shandong,
China
Jinan, Shandong,
China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentShanghai Changyu Pioneer Sales Co., Ltd("Shanghai Pioneer") (a)
Shanghai, China Shanghai, China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentFuzhou Changyu Pioneer Sales Co., Ltd
("Fuzhou Pioneer") (a)
Fuzhou, Jiangxi,
China
Fuzhou, Jiangxi,
China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentShijiazhuang Changyu Pioneer Sales Co., Shijiazhuang, Hebei, Shijiazhuang, Hebei, Marketing andRMB500,000 - 100Acquired through
Name of the Subsidiary
Principal place of
business
Registered place
Businessnature
Registered capital
Shareholding ratio
(%)
Acquisition method(or similar equityinterest)
| Ltd ("Shijiazhuang Pioneer") (a) | China | China | sales | establishment or investment |
Hangzhou Yuzefeng Sales Co., Ltd("Hangzhou Yuzefeng") (a)
Hangzhou, Zhejiang,
China
Hangzhou, Zhejiang,
China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentJilin Changyu Pioneer Sales Co., Ltd ("JilinPioneer") (a)
Changchun, Jilin,
China
Changchun, Jilin,
China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentBeijing Changyu Pioneer Sales Co., Ltd
("Beijing Pioneer")
Beijing, China Beijing, China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentHarbin Changyu Pioneer Sales Co., Ltd
("Harbin Pioneer") (a)
Heilongjiang, China Heilongjiang, China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentHunan Changyu Pioneer Sales Co., Ltd
("Hunan Pioneer") (a)
Changsha, Hunan,
China
Changsha, Hunan,
China
Marketing and
sales
RMB2,000,000 - 100
Acquired throughestablishment or investmentYinchuan Changyu Pioneer Sales Co., Ltd
("Yinchuan Pioneer") (a)
Ningxia, China Ningxia, China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentKunming Changyu Pioneer Sales Co., Ltd
("Kunming Pioneer") (a)
Kunming, Yunnan,
China
Kunming, Yunnan,
China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentChongqing Changyu Pioneer Sales Co., Ltd("Chongqing Pioneer") (a)
Chongqing, China Chongqing, China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentWuhan Changyu Pioneer Sales Co., Ltd("Wuhan Pioneer") (a)
Wuhan, Hubei, China
Wuhan, Hubei,
China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentHohhot Changyu Pioneer Sales Co., Ltd
("Hohhot Pioneer") (a)
Hohhot, InnerMongolia, China
Hohhot, InnerMongolia, China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentChengdu Changyu Pioneer Sales Co., Ltd("Chengdu Pioneer") (a)
Chengdu, Sichuan,
China
Chengdu, Sichuan,
China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentNanning Changyu Pioneer Sales Co., Ltd("Nanning Pioneer") (a)
Nanning, Guangxi,
China
Nanning, Guangxi,
China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentLanzhou Changyu Pioneer Sales Co., Ltd("Lanzhou Pioneer") (a)
Lanzhou, Gansu,
China
Lanzhou, Gansu,
China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investment
Name of the Subsidiary
Principal place of
business
Registered place
Businessnature
Registered capital
Shareholding ratio
(%)
Acquisition method(or similar equityinterest)Yantai Roullet Fransac Wine Sales Co., Ltd.(“Yantai Roullet Fransac”)
Yantai, Shandong,
China
Yantai, Shandong,
China
Marketing and
sales
RMB1,000,000 - 100
Acquired throughestablishment or investmentHefei Changyu Pioneer Sales Co., Ltd("Hefei Pioneer") (a)
Hefei, Anhui, China Hefei, Anhui, China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentUrumchi Changyu Pioneer Sales Co., Ltd("Urumchi Pioneer") (a)
Xinjiang, China Xinjiang, China
Marketing and
sales
RMB500,000 - 100
Acquired throughestablishment or investmentGuangzhou Changyu Pioneer Sales Co., Ltd
("Guangzhou Pioneer") (a)
Guanghzou,Guangdong, China
Guanghzou,Guangdong, China
Marketing and
sales
RMB11,000,000 - 100
Acquired throughestablishment or investmentYantai Changyu Wine Sales Co., Ltd. ("Wine
Sales Company")
Yantai, Shandong,
China
Yantai, Shandong,
China
Marketing and
sales
RMB5,000,000 100 -
Acquired throughestablishment or investmentShaanxi Chateau Changyu Rena Tourism
Co., Ltd ("Chateau Tourism")
Xianxin, Shaanxi,
China
Xianxin, Shaanxi,
China
Tourism RMB1,000,000 - 100
Acquired throughestablishment or investmentLongkou Changyu Wine Sales Co., Ltd("Longkou Sales")
Yantai, Shandong,
China
Yantai, Shandong,
China
Marketing and
sales
RMB1,000,000 - 100
Acquired throughestablishment or investmentSociete Civile Argricole Du Chateau DeMirefleurs (“Mirefleurs”) (b)
Bordeaux, France Bordeaux, France Trading EUR30,000 - 100
Business combinationsinvolving entities not under
common control
(a) Companies above were deregistered in 2019.(b) Mirefleurs was disposed as the contribution of L&M Holdings for the year.
Reasons for the inconsistency between the proportion of shareholdings in a subsidiary and the proportion of voting rights:
(c) Chateau Changyu is a Sino-foreign joint venture established by the Company and a foreign investor, accounting for 70% of Changyu
Chateau's equity interest. Through agreement arrangement, the Company has the full power to control Changyu Chateau's strategicoperating, investing and financing policies. The agreement arrangement will be terminated on 31 December 2022.
(d) AFIP is a limited liability company established by [ ] (“Yantai Dean”) and [ ] (“Beijing Qinglang”). In June 2019, Yantai Dean
transferred 1.31% of its equity to Yantai Changyu.After the equity change, the Company holds 91.53% of its equity. Through agreementarrangement, the Company has the full power to control AFIP's strategic operating, investing and financing policies. The agreementarrangement will be terminated on 2 September 2024.
(e) Golden Icewine Valley is a Sino-foreign joint venture established by the Company and a foreign investor, accounting for 51% of Golden
Icewine Valley's equity interest. Through agreement arrangement, the Company has the full power to control Golden Icewine Valley'sstrategic operating, investing and financing policies. The agreement arrangement will be terminated on 31 December 2021.
(f) R&D Centre is a joint venture established by the Company and CADF, accounting for 68.97% of R&D Centre's equity interest. Through
agreement arrangement in Note V. 27, the Company has the full power to control R&D Centre's strategic operating, investing and financingpolicies. The agreement arrangement will be terminated on 22 May 2026. As at 31 December 2019, remaining investment of CADFaccounts for 31.03% of the registered capital.
(2) Material non-wholly owned subsidiaries
Name of the Subsidiary
ownershipinterest held bynon-controlling
| interests | Comprehensive income attributable |
to non-controllinginterests for the
Dividend declaredto non-controlling
| year | shareholders during |
the year
Balance ofnon-controlling
of the year
| interests at the end | ||||
| Xinjiang Tianzhu | 40% | 3,028,510 | - | (47,584,138) |
| Dicot | 25% | (1,509,224) | 1,366,691 | (31,869,464) |
| Chateau Changyu | 30% | - | - | (12,365,016) |
| Langfang Castel | 51% | 1,288,873 | - | (19,639,108) |
| AFIP | 8% | - | - | (56,409,393) |
| Golden Icewine Valley | 49% | - | - | (33,319,062) |
| IWCC | 15% | (1,697,700) | 846,398 | (53,931,129) |
| Australia Kilikanoon Estate | 17% | 258,494 | 163,705 | (14,810,422) |
| Total | 1,368,953 | 2,376,794 | (269,927,732) |
(3) Key financial information about material non-wholly owned subsidiaries
The following table sets out the key financial information of the above subsidiaries without offsetting internal transactions, but with adjustmentsmade for the fair value adjustment at the acquisition date and any differences in accounting policies:
| Xinjiang Tianzhu | Dicot | Chateau Changyu | Langfang Castel | |||||
| 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |
| Current assets | 24,829,435 | 27,390,495 | 470,219,326 | 464,421,130 | 142,525,011 | 141,298,023 | 19,021,766 | 17,659,511 |
| Non-current assets | 61,886,751 | 66,486,795 | 91,571,444 | 99,080,668 | 113,168,202 | 114,694,168 | 14,958,223 | 16,001,682 |
| Total assets | 86,716,186 | 93,877,290 | 561,790,770 | 563,501,798 | 255,693,213 | 255,992,191 | 33,979,989 | 33,661,193 |
| Current liabilities | 36,185 | - | 380,788,880 | 381,659,315 | 174,843,671 | 171,869,662 | 4,023,101 | 3,358,322 |
| Non-current liabilities | 5,336,114 | 5,336,114 | 53,110,213 | 54,520,937 | 400,000 | - | - | - |
| Total liabilities | 5,372,299 | 5,336,114 | 433,899,093 | 436,180,252 | 175,243,671 | 171,869,662 | 4,023,101 | 3,358,322 |
| Operating income | - | 18,803 | 289,273,434 | 327,550,545 | 87,051,981 | 121,235,278 | - | 5,038,281 |
| Net profit | (7,571,274) | (6,902,010) | 6,463,473 | 3,811,465 | 611,622 | 3,710,124 | (123,706) | (3,479,492) |
| Total comprehensive inco | (7,571,274) | (6,902,010) | 6,036,896 | 3,376,761 | 611,622 | 3,710,124 | (123,706) | (3,479,492) |
| Cash flows from operating activities | ||||||||
20,457 43,112 (8,744,451) 6,129,923 6,919,481 16,096,447 7,875 673,422
| AFIP | Golden Icewine Valley | Chile Indomita Wine Group | Australia Kilikanoon Estate | |||||
| 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |
| Current assets | 251,829,164 | 219,973,582 | 38,234,720 | 45,194,591 | 223,722,688 | 214,784,490 | 94,473,620 | 87,634,707 |
| Non-current assets | 452,444,880 | 461,115,089 | 23,291,375 | 23,920,890 | 291,630,115 | 300,969,342 | 61,770,599 | 63,759,866 |
| Total assets | 704,274,044 | 681,088,671 | 61,526,095 | 69,115,481 | 515,352,803 | 515,753,832 | 156,244,219 | 151,394,573 |
| Current liabilities | 45,607,611 | 62,598,545 | 12,077,206 | 14,974,458 | 142,365,749 | 148,359,328 | 21,801,347 | 13,387,942 |
| Non-current liabilities | 201,500 | - | 100,000 | 100,000 | 5,152,974 | 4,976,161 | 50,741,981 | 51,893,171 |
| Total liabilities | 45,809,111 | 62,598,545 | 12,177,206 | 15,074,458 | 147,518,723 | 153,335,489 | 72,543,328 | 65,281,113 |
| Operating income | 266,347,444 | 159,369,783 | 32,223,734 | 57,290,490 | 253,543,171 | 262,104,563 | 56,399,115 | 57,648,905 |
| Net profit | 30,398,744 | 16,555,846 | (5,764,649) | 870,994 | 16,279,461 | 15,934,347 | 463,409 | 217,869 |
| Total comprehensive inco | 30,398,744 | 16,555,846 | (5,764,649) | 870,994 | 10,322,810 | 17,465,900 | (1,477,115) | (1,550,720) |
| Cash flows from operating activities | ||||||||
27,503,336 19,627,933 1,655,465 289,782 5,073,408 3,584,648 479,624 (1,522,151)
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report2 Transactions that cause changes in interests in subsidiaries that do not result in loss of control
(1) Changes in interests in subsidiaries:
Year Name of the Subsidiary
interest held by
non-
| controlling interests acquired |
Acquisition date
| 2019 | AFIP | 1.31% | 21 June 2019 |
2019
2.5% 08 October 2019
(2) Impact from transactions with non-controlling interests and equity attributable to the
shareholders of the Company:
AFIP
Australia Kilikanoon
EstateAustralia Kilikanoon
Estate
| Australia Kilikanoon Estate | ||
| Purchase cost | ||
| - Cash | 8,479,444 | 3,140,108 |
| Total | 8,479,444 | 3,140,108 |
| Less: share of net assets in subsidiaries based on the shares acquired |
8,724,476 1,990,057
| Difference | ||
| Including: Adjustment on capital reserve | (245,032) | 1,150,051 |
VIII. Risk related to financial instruments
The Group has exposure to the following main risks from its use of financial instruments in thenormal course of the Group’s operations:
- Credit risk- Liquidity risk- Interest rate risk- Foreign currency risk
The following mainly presents information about the Group’s exposure to each of the aboverisks and their sources, their changes during the year, and the Group’s objectives, policiesand processes for measuring and managing risks, and their changes during the year.
The Group aims to seek appropriate balance between the risks and benefits from its use offinancial instruments and to mitigate the adverse effects that the risks of financial instrumentshave on the Group’s financial performance. Based on such objectives, the Group’s riskmanagement policies are established to identify and analyse the risks faced by the Group, toset appropriate risk limits and controls, and to monitor risks and adherence to limits. Riskmanagement policies and systems are reviewed regularly to reflect changes in marketconditions and the Group’s activities.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report1 Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for theother party by failing to discharge an obligation. The Group’s credit risk is primarily attributableto cash at bank, receivables, debt investments and derivative financial instruments enteredinto for hedging purposes. Exposure to these credit risks are monitored by management onan ongoing basis.
The cash at bank of the Group is mainly held with well-known financial institutions.Management does not foresee any significant credit risks from these deposits and does notexpect that these financial institutions may default and cause losses to the Group.
As at 31 December 2019, the Group's maximum exposure to credit risk which will cause afinancial loss to the Group due to failure to discharge an obligation by the counterparties.
In order to minimise the credit risk, the Group has adopted a policy to ensure that all salescustomers have good credit records. According to the policy of the Group, credit review isrequired for clients who require credit transactions. In addition, the Group continuouslymonitors the balance of account receivable to ensure there’s no exposure to significant baddebt risks. For transactions that are not denominated in the functional currency of the relevantoperating unit, the Group does not offer credit terms without the specific approval of theDepartment of Credit Control in the Group. In addition, the Group reviews the recoverableamount of each individual trade debt at each balance sheet date to ensure that adequateimpairment losses are made for irrecoverable amounts. In this regard, the management of theGroup considers that the Group's credit risk is significantly reduced.
Since the Group trades only with recognised and creditworthy third parties, there is norequirement for collateral. Concentrations of credit risk are managed bycustomer/counterparty, by geographical region and by industry sector. As at 31 December2019, 20.3% of the Group trade receivables are due from top five customers (31 December2018: 19.8%). There is no collateral or other credit enhancement on the balance of the tradereceivables of the Group.
2 Liquidity risk
Liquidity risk is the risk that an enterprise will encounter difficulty in meeting obligations thatare settled by delivering cash or another financial asset. The Company and its individualsubsidiaries are responsible for their own cash management, including short-term investmentof cash surpluses and the raising of loans to cover expected cash demands (subject toapproval by the Company’s board when the borrowings exceed certain predetermined levels).The Group’s policy is to regularly monitor its liquidity requirements and its compliance withlending covenants, to ensure that it maintains sufficient reserves of cash, readily realisablemarketable securities and adequate committed lines of funding from major financialinstitutions to meet its liquidity requirements in the short and longer term.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportThe following tables set out the remaining contractual maturities at the balance sheet date ofthe Group’s financial liabilities, which are based on contractual undiscounted cash flows(including interest payments computed using contractual rates or, if floating, based on ratescurrent at the balance sheet date) and the earliest date the Group can be required to pay:
Item
2019 Contractual undiscounted cash flow
date
demand
1 to 2 years
but less than 5
| years | More than 5 years |
TotalShort-term loans 768,403,432 - - - 768,403,432 754,313,744Accounts payable 570,252,612 - - - 570,252,612 570,252,612Other payables 450,532,485 - - - 450,532,485 450,532,485
121,077,261 51,214,719 77,814,096 5,577,899 255,683,975 245,718,722
| Long-term loans (including the portion due within one year) |
| Long-term payables (including |
the portion due within one
36,462,109 36,054,170 106,374,904 55,473,753 234,364,936 225,000,000Total 1,946,727,899 87,268,889 184,189,000 61,051,652 2,279,237,440 2,245,817,563
Item
2018 Contractual undiscounted cash flow
year)Carrying amountat balance sheet
date
demand
1 to 2 years
but less than 5
| years |
More than 5 year
TotalShort-term loans 701,861,292 - - - 701,861,292 688,002,410Accounts payable 713,572,881 - - - 713,572,881 713,572,881Other payables 608,479,890 - - - 608,479,890 608,479,890
sLong-term loans (including theportion due within one year)
126,176,001 121,080,909 47,493,128 - 294,750,038 275,421,450
| Long-term loans (including the portion due within one year) |
| Long-term payables (including |
the portion due within one
36,921,367 36,462,109 107,093,324 90,356,300 270,833,100 259,000,000Total 2,187,011,431 157,543,018 154,586,452 90,356,300 2,589,497,201 2,544,476,631
3 Interest rate risk
Interest-bearing financial instruments at variable rates and at fixed rates expose the Group tocash flow interest rate risk and fair value interest risk, respectively. The Group determines theappropriate weightings of the fixed and floating rate interest-bearing instruments based on thecurrent market conditions and performs regular reviews and monitoring to achieve anappropriate mix of fixed and floating rate exposure.
(1) As at 31 December, the Group held the following interest-bearing financial instruments:
Fixed rate instruments:
Item
year)2019
| 2019 | 2018 | |
| Effective interest rate | ||
Amounts
Amounts
| Effective interest rate | ||||
| Financial assets | ||||
| - Cash at bank | 1.1%-2.75% | 106,128,600 | 1.5%-3.8% | 173,042,400 |
| Financial liabilities | ||||
| - Short-term loans | 0.35%-4.9% | (204,313,744) | 0.35%-4.9% | (138,002,410) |
| - Long-term loans (including the portion due within one year) |
1%-2.5% (189,468,722)
1%-3% (194,171,450)
| - Long-term payables (including |
the portion due within one
1.20% (225,000,000)
| year) |
1.20% (259,000,000)
| Total | (512,653,866) | (418,131,460) |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportVariable rate instruments:
Item
| 2019 | 2018 | |
| Effective interest rate | ||
Amounts
Amounts
| Effective interest rate | ||||
| Financial assets | ||||
| - Cash at bank | 0.3%-1.75% | 1,459,595,405 | 0.3%-1.75% | 1,302,543,742 |
| Financial liabilities | ||||
| - Short-term loans | LPR | (550,000,000) | LPR | (550,000,000) |
| - Long-term loans (including the portion due within one year) | 90% of 5-year LPR |
(56,250,000)
| 90% of 5-year LPR |
(81,250,000)
| Total | 853,345,405 | 671,293,742 |
(2) Sensitivity analysis
Management of the Group believes interest rate risk on bank deposit is not significant,therefore does not disclose sensitivity analysis for interest rate risk.
As at 31 December 2019, based on assumptions above, it is estimated that a general increaseof 50 basis points in interest rates, with all other variables held constant, would decrease theGroup’s equity by RMB2,273,438 (2018: RMB2,016,667), and net profit by RMB2,273,438(2018: RMB2,016,667).
The sensitivity analysis above indicates the instantaneous change in the net profit and equitythat would arise assuming that the change in interest rates had occurred at the balance sheetdate and had been applied to re-measure those financial instruments held by the Group whichexpose the Group to fair value interest rate risk at the balance sheet date. In respect of theexposure to cash flow interest rate risk arising from floating rate non-derivative instrumentsheld by the Group at the balance sheet date, the impact on the net profit and equity isestimated as an annualised impact on interest expense or income of such a change in interestrates.
4 Foreign currency risk
In respect of cash at bank and on hand, accounts receivable and payable, short-term loansdenominated in foreign currencies other than the functional currency, the Group ensures thatits net exposure is kept to an acceptable level by buying or selling foreign currencies at spotrates when necessary to address short-term imbalances.
(1) As at 31 December, the Group’s exposure to currency risk arising from recognised assets or
liabilities denominated in foreign currencies is presented in the following tables. Forpresentation purposes, the amounts of the exposure are shown in Renminbi, translated usingthe spot rate at the balance sheet date. Differences resulting from the translation of thefinancial statements denominated in foreign currency are excluded.
| 2019 | 2018 | |||
| Balance at foreign currency | Balance at RMB equivalent | Balance at foreign currency | Balance at RMB equivalent | |
| Cash at bank and on hand | 6,662,525 | 46,592,414 | 7,497,971 | 51,483,850 |
| - USD | 6,525,673 | 45,524,399 | 7,472,303 | 51,283,910 |
| - EUR | 136,628 | 1,067,814 | 25,455 | 199,753 |
| - HKD | 224 | 201 | 213 | 187 |
| Short-term loans | 12,490,000 | 87,132,738 | 11,000,000 | 75,495,200 |
| - USD | 12,490,000 | 87,132,738 | 11,000,000 | 75,495,200 |
(2) The following are the exchange rates for Renminbi against foreign currencies applied by the
Group:
Average rate
| Balance sheet date mid-spot rate | ||||
| 2019 | 2018 | 2019 | 2018 | |
| USD | 6.8948 | 6.7158 | 6.9762 | 6.8632 |
| EUR | 7.7161 | 7.8113 | 7.8155 | 7.8473 |
| HKD | 0.8801 | 0.8464 | 0.8958 | 0.8762 |
(3) Sensitivity analysis
Assuming all other risk variables remained constant, a 5% strengthening of the Renminbiagainst the US dollar, Euro and Hong Kong dollar at 31 December would have impact on theGroup’s equity and net profit by the amount shown below. whose effect is in Renminbi andtranslated using the spot rate at the year-end date:
| Equity | Net profit | |
| 31 December 2019 | ||
| USD | 2,080,417 | 2,080,417 |
| EUR | (53,391) | (53,391) |
| HKD | (10) | (10) |
| Total | 2,027,016 | 2,027,016 |
| 31 December 2018 | ||
| USD | 1,210,565 | 1,210,565 |
| EUR | (53,391) | (53,391) |
| HKD | - | - |
| Total | 1,157,174 | 1,157,174 |
A 5% weakening of the Renminbi against the US dollar, Euro and Hong Kong dollar at 31December would have had the equal but opposite effect to the amounts shown above, on thebasis that all other variables remained constant.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportIX. Fair value disclosure
All financial assets and financial liabilities held by the Group are carried at amounts not materially different from their fair value at 31 December2019 and 31 December 2018.
X. Related parties and related party transactions
1 Information about the parent of the Company
Company name
Business nature Registered capital
| Registered place | Shareholding percentage (%) | Percentage of voting rights (%) |
Ultimate controlling party of the Company
Changyu Group Yantai Manufacturing 50,000,000 50.4% 50.4%
| Jointly controlled by Yantai GuoFeng |
Investment Holding Group Co., Ltd.,ILLVA SARONNO HOLDING SPA,International Finance Corporation andYantai Yuhua Investment and
There are no changes on the registered capital and shareholding percentage / percentage of voting rights of the parent company.
2 Information about the subsidiaries of the Company
For information about the subsidiaries of the Company, refer to Note VII.1.
3 Information about joint ventures and associates of the Company
For information about the joint ventures and associates of the Company, refer to Note VII.3.
Joint ventures and associates that have related party transactions with the Group during thisyear or the previous year are as follows:
| Name of entity | Relationship with the Company |
| L&M Holdings | Joint venture of the Group |
4 Information on other related parties
| Name of other related parties | Related party relationship |
| Yantai Changyu Wine Culture Museum Co., Ltd.("Wine Culture Museum") | Controlled by the same parent company |
| Yantai Changyu International Window of the Wine City Co., Ltd.("Window of the Wine City”) | Controlled by the same parent company |
| Yantai Shenma Packaging Co., Ltd. (“Shenma Packaging”) | Controlled by the same parent company |
| Yantai Zhongya Pharmaceutical Tonic Wine Co., Ltd.("Zhongya Pharmaceutical") | Controlled by the same parent company |
| Yantai Changyu Culture Tourism Production Sales Co., Ltd.(" Culture Sales") | Controlled by the same parent company |
| Yantai Changyu Culture Tourism Development Co., Ltd.(" Culture Development ") | Controlled by the same parent company |
| L&M Holdings | Joint ventures |
| Mirefleurs | Subsidiaries of the joint venture |
| CHATEAU DE LIVERSAN (“LIVERSAN” |
）
| Subsidiaries of the joint venture |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report5 Transactions with related parties
(1) Product procurement
| Related parties | Nature of transaction | 2019 | 2018 |
| Shenma Packaging | Product procurement | 133,587,430 | 173,238,289 |
| Zhongya Pharmaceutical | Product procurement | 1,244,991 | 15,690,930 |
| Wine Culture Museum | Product procurement | 10,832,751 | 16,784,711 |
| Window of the Wine City | Product procurement | 8,556,698 | 7,913,342 |
| Culture sales | Product procurement | 573,849 | 35,857 |
| Culture development | Product procurement | 2,820,545 | - |
| Mirefleurs | Product procurement | 6,429,542 | - |
| L&M Holdings | Product procurement | 1,632,941 | - |
| Total | 165,678,747 | 213,663,129 |
(2) Sales of goods
| Related parties | Nature of transaction | 2019 | 2018 |
| Culture development | Sales of goods | 9,592,510 | - |
| Wine Culture Museum | Sales of goods | 8,305,228 | 23,515,379 |
| Window of the Wine City | Sales of goods | 7,723,602 | 13,821,555 |
| Zhongya Pharmaceutical | Sales of goods | 4,474,004 | 4,552,269 |
| Culture sales | Sales of goods | 3,840,804 | 2,914,686 |
| Shenma Packaging | Sales of goods | 347,453 | 348,247 |
| Total | 34,283,601 | 45,152,136 |
(3) Leases
(a) As the lessor
Name of lessee
| Type of assets leased | Lease income recognised in 2019 | Lease income recognised in 2018 | |
| Shenma Packaging | Offices and plants | 1,492,550 | 1,478,982 |
| Zhongya Pharmaceutical | Offices and plants | 522,936 | 518,182 |
| Total | 2,015,486 | 1,997,164 |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report(b) As the lessee
Name of lessor
| Type of assets leased | Lease expense recognised in 2019 | Lease expense recognised in 2018 | |
| Changyu Group | Office buildings | 1,612,118 | 1,538,840 |
| Changyu Group | Offices and plants | 1,394,762 | 1,331,364 |
| Changyu Group | Offices and plants | 4,184,286 | 3,994,091 |
| Total | 7,191,166 | 6,864,295 |
(4) Remuneration of key management personnel
| Item | 2019 | 2018 |
| Remuneration of key management personnel | 12,297,689 | 13,102,005 |
(5) Other related party transactions
Related parties Nature of transaction
2019 2018
| Note | ||||
| Changyu Group | Royalty | (a) | 35,938,014 | 73,976,395 |
Changyu Group
(a) (218,649,636)
| Royalty deducted in the previous years |
-Changyu Group Patent fee - 50,000Total
(182,711,622)
74,026,395
(a) Contract of trademarks usage
Pursuant to a royalty agreement dated 18 May 1997, starting from 18 September 1997,the Company may use certain trademarks of Changyu Group Company, which havebeen registered with the PRC Trademark Office. An annual royalty fee at 2% of theGroup's annual sales is payable to Changyu Group. The license is effective until theexpiry of the registration of the trademarks.
According to the above royalty agreement, Changyu Group collected a total ofRMB576,507,809 for royalty from 2013 to 2019, of which 51% was used to promotetrademarks such as Changyu and the product of this contract, totallingRMB294,018,093. The amount is used for promotion of Changyu and other trademarksand the products of this contract, totalling RMB62,250,368, the difference isRMB231,768,615.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportOn 18 May 2019, the general meeting of shareholders approved the proposal of theamendment to the royalty agreement. Article 6.1 of the royalty agreement with ChangyuGroup was amended to: During the validity period of this contract, the Group paysChangyu Group royalty on an annual basis. The royalty is calculated based on 0.98% ofthe sales volume of the Group ’s contract products using this trademark. The article isamended to: The royalty paid to the Changyu Group by the Group shall not be used topromote this trademark and the contract products.
In addition, in accordance with agreement the Group signed with Changyu Group inNovember 2019, Changyu Group promised to offset the difference of RMB231,768,615above with the royalty for four years, i.e. from 2019 to 2022.If it is not sufficient fordeduction, the rest will be repaid in a one-off manner in 2023. If there is surplus, thesurplus part of the royalty will be charged from the year when the surplus occurs.
As at 31 December 2019, the Group offset the royalty for the year of RMB182,711,622,including the royalty of RMB35,938,014 occurred in 2019 and the deduction of theprevious year's sales expenses of RMB218,649,636 (exclusive of tax).
6 Receivables from and payables to related parties
Receivables from related parties
Item Related party
| 2019 | 2018 |
Book value
Book value
| Provision for bad and doubtful debts | Provision for bad and doubtful debts |
Accounts receivable
Pharmaceutica
| l |
4,292,386 909,935 2,768,391 -Accounts receivable
- - 17,137 -Accounts receivable
| Shenma Packaging |
| Window of the Wine City |
1,610,485 633,980 1,911,157 -Other non-current assets
193,674,320 - - -Other receivables
| Changyu Group |
| Shenma Packaging |
813,400 - 813,400 -
Payables to related parties
| Item | Related party | 2019 | 2018 |
| Accounts payable | Shenma Packaging | 39,893,538 | 55,366,785 |
| Accounts payable | Zhongya Pharmaceutical |
1,024,310 6,722,667
| Accounts payable | Wine Culture Museum | 4,874,963 | 4,646,731 |
| Accounts payable | Window of the Wine City |
3,758,054 4,789,600
| Accounts payable | Culture sales | 297,956 | - |
| Accounts payable | Culture development | 142,610 | - |
| Other payables | Shenma Packaging | 450,000 | 450,000 |
| Other payables | Changyu Group | - | 78,414,978 |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportXI. Capital management
The Group’s primary objectives when managing capital are to safeguard its ability to continueas a going concern, so that it can continue to provide returns for shareholders, by pricingproducts and services commensurately with the level of risk and by securing access tofinance at a reasonable cost.
The Group’s capital structure is regularly reviewed and managed to achieve an optimalstructure and return for shareholders. Factors for the Group’s consideration include: its futurefunding requirements, capital efficiency, actual and expected profitability, expected cashflows, and expected capital expenditure. Adjustments are made to the capital structure in lightof changes in economic conditions affecting the Group.
Neither the Company nor any of its subsidiaries are subject to externally imposed capitalrequirements.
XII. Commitments and contingencies
1 Significant commitment
(1) Capital commitments
| Item | 2019 | 2018 |
| Long-term assets acquisition commitment | 679,980,000 | 996,675,000 |
| Total | 679,980,000 | 996,675,000 |
(2) Operating lease commitments
As at 31 December, the total future minimum lease payments under non-cancellableoperating leases of the Group’s properties were payable as follows:
| Item | 2019 | 2018 |
| Within 1 year (inclusive) | 17,756,000 | 20,576,000 |
| Over 1 year but within 2 years (inclusive) | 16,189,000 | 11,757,000 |
| Over 2 years but within 3 years (inclusive) | 9,757,000 | 10,064,000 |
| Over 3 years | 89,550,940 | 84,095,000 |
| Total | 133,252,940 | 126,492,000 |
2 Contingencies
The Group do not have any significant contingencies as at balance sheet date.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportXIII. Subsequent events
1 Distribution of dividends on ordinary shares approved after the balance sheet date
According to the proposal of the Board of Directors on 22 April 2020, the Company intends todistribute cash dividend totaling RMB479,824,800 to all shareholders of 685,464,000 capitalshares for the year ended 31 December 2019 on the basis of RMB7.0 (including tax) for every10 shares. The proposal is subject to the approval by the Shareholders’ meeting. Thisdistribution of profit in cash has not been recognised as a liability at the balance sheet date.
2 Impact of COVID-19
Since the outbreak of COVID-19in January 2020, the Company has been proactivelyperforming prevention and control measures internally. The Company has also fulfilled itssocial responsibility while conducting prevention and control measures and operation. Afterthe outbreak, the Company has analysed the possible impact, and sorted out all businessobjectives and adjusted operation contingency plans to make sure the normal businessoperations.
The Company will closely follow the development of COVID-19, assess and proactively reactto the possible impacts on the financial position and financial performance etc.
XIV. Other significant items
1 Segment reporting
The Group is principally engaged in the production and sales of wine, brandy, and sparklingwine in China, France, Spain, Chile and Australia. In accordance with the Group's internalorganisation structure, management requirements and internal reporting system, the Group'soperation is divided into four parts: China, Spain, France, Chile and Australia. Themanagement periodically evaluates segment results, in order to allocate resources andevaluate performances. In 2019, over 89% of revenue, more than 98% of profit and over 92%of non-current assets derived from China / are located in China. Therefore, the Group doesnot need to disclose additional segment report information.
XV. Notes to the Company’s financial statements
1 Accounts receivable
(1) Accounts receivable by customer type are as follows:
| Type | 31 December 2019 | 31 December 2018 |
| Amounts due from related parties | 2,589,936 | 1,447,973 |
| Sub-total | 2,589,936 | 1,447,973 |
| Less: Provision for bad and doubtful debts | 601,610 | - |
| Total | 1,988,326 | 1,447,973 |
(2) The ageing analysis of accounts receivable is as follows:
| Ageing | 2019 | 2018 |
| Within 1 year (inclusive) | 2,019,936 | 1,447,973 |
| Over 1 year but within 2 years (inclusive) | 570,000 | - |
| Sub-total | 2,589,936 | 1,447,973 |
| Less: Provision for bad and doubtful debts | 601,610 | - |
| Total | 1,988,326 | 1,447,973 |
The ageing is counted starting from the date when account receivables are recognised.
(3) Accounts receivable by provisioning method
(a) Assessment of ECLs on accounts receivable in 2019:
At all times the Company measures the impairment loss for accounts receivable at anamount equal to lifetime ECLs, and the ECLs are based on the number of overdue daysand the loss given default. According to the historical experience of the Company, thereare no significant differences in the losses of different customer groups. Therefore,different customer groups are not further distinguished when calculating impairmentloss based on the overdue information.
Loss given default
| Carrying amount at the end of the year | Impairment loss at the end of the year | ||
| Current | 0.8% | 1,449,936 | 12,179 |
| Overdue for 1 to 30 days | 3.4% | 570,000 | 19,431 |
| Overdue for 330 to 360 days |
100.0%
570,000 570,000
| Total | 23.2% | 2,589,936 | 601,610 |
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportThe loss given default is measured based on the actual credit loss experience in thepast 12 months, and is adjusted taking into consideration the differences among theeconomic conditions during the historical data collection period, the current economicconditions and the economic conditions during the expected lifetime.
(b) Impairment of account receivables in 2018
Under previous financial instruments standards, provision for impairments is mde whenthere is objective evidence of impairment.
(4) Accounts receivable by debtor at the end of the year:
Name
Relationship with the
Group
Balance of account
receivable
Ageing
Percentage of
totalreceivables
n for bad
anddoubtful
| debts | ||
| Zhongya |
Pharmaceutica
Other related parties of
| l | the Company | 2,589,936 |
Within 1
| year | 100% | 601,610 |
2 Receivables under financing
| Item | Note | 2019 | 2018 |
| Bills receivable | (1) | 41,679,635 | - |
| Total | 41,679,635 | - |
(1) The pledged bills receivable of the Company at the end of the year
As at 31 December 2019, there was no pledged bills receivable (31 December 2018: Nil).
(2) Outstanding endorsed bills that have not matured at the end of the year
Item
| Amount derecognised at year end | |
| Bank acceptance bills | 65,303,181 |
| Total | 65,303,181 |
As at 31 December 2019, bills endorsed by the Company to other parties which are not yetdue at the end of the period is RMB65,303,181 (31 December 2018: RMB94,755,124). Thenotes are used for payment to suppliers. The Company believes that due to good reputationof bank, the risk of notes not accepting by bank on maturity is very low, therefore derecognisethe note receivables endorsed. If the bank is unable to pay the notes on maturity, according tothe relevant laws and regulations of China, the Company would undertake limited liability forthe notes.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report3 Other receivables
| Note | 31 December 2019 | 31 December 2018 | |
| Interest receivable | (1) | 90,355 | 254,088 |
| Dividends receivable | (2) | 200,000,000 | 500,000,000 |
| Others | (3) | 386,334,603 | 525,389,268 |
| Total | 586,424,958 | 1,025,643,356 |
(1) Interest receivable
(a) Interest receivable by category:
| Item | 31 December 2019 | 31 December 2018 |
| Interest receivable on bank deposits | 90,355 | 254,088 |
| Total | 90,355 | 254,088 |
(b) Significant overdue interest: N/A
(2) Dividends receivable
| Item | 31 December 2019 | 31 December 2018 |
| Dividends to subsidiaries | 200,000,000 | 500,000,000 |
| Total | 200,000,000 | 500,000,000 |
(3) Others
(a) Others by customer type:
| Customer type | 31 December 2019 | 31 December 2018 |
| Amounts due from subsidiaries | 385,328,319 | 523,579,831 |
| Amounts due from related parties | 813,440 | 813,440 |
| Others | 192,844 | 995,997 |
| Sub-total | 386,334,603 | 525,389,268 |
| Less: Provision for bad and doubtful debts | - | - |
| Total | 386,334,603 | 525,389,268 |
(b) The ageing analysis is as follows:
| Ageing | 2019 | 2018 |
| Within 1 year (inclusive) | 386,314,603 | 525,362,872 |
| Over 1 year but within 2 years (inclusive) | - | 26,396 |
| Over 2 years but within 3 years (inclusive) | 20,000 | - |
| Sub-total | 386,334,603 | 525,389,268 |
| Less: Provision for bad and doubtful debts | - | - |
| Total | 386,334,603 | 525,389,268 |
The ageing is counted starting from the date when other receivables are recognised.
(c) Others by method of provisioning
Category
2019 2018Book value
Carrying amount
Book value
| Provision for bad and doubtful debts | Provision for bad and doubtful debts | Carrying amount |
Amount
Percentage
(%)
Amount
Percentag
e (%)
Amount
Percentage
(%)
Amount
Percentage
(%)
| Individual assessment |
- - -
| - Total other receivables |
- - 525,389,268 100 - -
| 525,389,268 | ||
| Collective assessment |
| - Amounts due |
from
385,328,319 99.7 - - 385,328,319 523,579,831 99.7 - -
| subsidiaries | 523,579,831 | |
| - Amounts due |
from related
813,440 0.2 - - 813,440 813,440 0.1 - -
| parties | 813,440 | |
| - Amounts due |
from third
192,844 0.1 - - 192,844 995,997 0.2 - -
| parties | 995,997 |
Total 386,334,603 100.0 - - 386,334,603 525,389,268 100 - -
(d) Movements of provisions for bad and doubtful debts
As at 31 December 2019, no bad and doubtful debt provision was made for otherreceivables (31 December 2018: Nil).
As at 31 December 2019, the Company has no other receivables written off (31December 2018: Nil).
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report(e) Others categorised by nature
| Nature of other receivables | 2019 | 2018 |
| Amounts due from subsidiaries | 385,328,319 | 523,579,831 |
| Amounts due from related parties | 813,440 | 813,440 |
| Others | 192,844 | 995,997 |
| Sub-total | 386,334,603 | 525,389,268 |
| Less: Provision for bad and doubtful debts | - | - |
| Total | 386,334,603 | 525,389,268 |
(f) Five largest others-by debtor at the end of the year
Debtor
Nature of the
receivable
of the year
Ageing
| Balance at the end | Percentage of ending balance of others (%) | Ending balance of |
provision for bad
Sales Company
| and doubtful debts | ||
| Amounts due from subsidiaries |
292,380,248
75.7% -
R&D Centre
| Within 1 year | ||
| Amounts due from subsidiaries |
65,016,104
16.8% -
Laizhou Sales
| Within 1 year | ||
| Amounts due from subsidiaries |
12,469,834
3.2% -
Dicot
| Within 1 year | ||
| Amounts due from subsidiaries |
3,692,043
1.0% -
AFIP
| Within 1 year | ||
| Amounts due from subsidiaries |
1,680,926
0.4% -
| Within 1 year | |||||
| Total | 375,239,155 | 97.1% |
4 Long-term equity investments
(1) Long-term equity investments by category:
Item
| 2019 | 2018 |
Book value
Carrying amount
| Provision for impairment |
Book value
Carrying amount
| Provision for impairment | |||
| Investments in subsidiaries |
7,432,422,621 - 7,432,422,621 7,420,803,069 - 7,420,803,069
| Total | 7,432,422,621 | - | 7,432,422,621 | 7,420,803,069 | - | 7,420,803,069 |
(2) Investments in subsidiaries:
Subsidiary
beginning of the
| year |
Additions during
the year
Decrease duringthe year
of the year
| Balance at the end | ||||
| Xinjiang Tianzhu | 60,000,000 | - | - | 60,000,000 |
| Kylin Packaging | 23,176,063 | - | - | 23,176,063 |
| Chateau Changyu | 28,968,100 | - | - | 28,968,100 |
| Pioneer International | 3,500,000 | - | - | 3,500,000 |
| Ningxia Growing | 36,573,247 | - | - | 36,573,247 |
| National Wines | 2,000,000 | - | - | 2,000,000 |
| Golden Icewine Valley | 30,440,500 | - | - | 30,440,500 |
| Chateau Beijing | 579,910,000 | 8,479,444 | - | 588,389,444 |
| Sales Company | 7,200,000 | - | - | 7,200,000 |
| Langfang Sales | 100,000 | - | - | 100,000 |
| Langfang Castel | 19,835,730 | - | - | 19,835,730 |
| Wine Sales | 4,500,000 | - | - | 4,500,000 |
| Shanghai Marketing | 300,000 | - | - | 300,000 |
| Beijing Sales | 850,000 | - | - | 850,000 |
| Jingyang Sales | 100,000 | - | - | 100,000 |
| Jingyang Wine | 900,000 | - | - | 900,000 |
| Ningxia Wine | 222,309,388 | - | - | 222,309,388 |
| Chateau Ningxia | 453,463,500 | - | - | 453,463,500 |
| Chateau Tinlot | 212,039,586 | - | - | 212,039,586 |
| Chateau Shihezi | 812,019,770 | - | - | 812,019,770 |
| Chateau Changan | 803,892,258 | - | - | 803,892,258 |
| R&D Centre | 3,288,906,445 | - | - | 3,288,906,445 |
| Huanren Wine | 22,200,000 | - | - | 22,200,000 |
| Wine Sales Company | - | - | - | - |
| Francs Champs | 236,025,404 | - | - | 236,025,404 |
| Dicot | 190,150,544 | - | - | 190,150,544 |
| Chile Indomita Wine Group |
274,248,114 - - 274,248,114
107,194,420 3,140,108 - 110,334,528
| Australia Kilikanoon Estate | ||||
| Total | 7,420,803,069 | 11,619,552 | - | 7,432,422,621 |
For information about the subsidiaries of the Company, refer to Note VII.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report5 Operating income and operating costs
Item
2019 2018Income Cost Income CostPrincipal activities 738,011,458 653,860,504 874,292,088 772,497,769Other operating activities 2,844,904 1,643,559 2,154,982 1,989,262Total 740,856,362 655,504,063 876,447,070 774,487,031
Details of operating income:
| 2019 | 2018 | |
| Operating income from principal activities | ||
| - Sale of goods | 738,011,458 | 874,292,088 |
| Sub-total | 738,011,458 | 874,292,088 |
| Income from other business | ||
| - Rental income | 2,844,904 | 2,154,982 |
| Total | 740,856,362 | 876,447,070 |
6 Investment income
| Item | 2019 | 2018 |
| Income from long-term equity investments accounted for using cost method |
621,620,723 964,128,659
7 Transactions with related parties
(1) Product procurement
| Related parties | Nature of transaction | 2019 | 2018 |
| Subsidiary of the parent company |
Product procurement 161,271,826 209,808,816
Product procurement 60,154,605 88,897,126
| Other related parties of the Company | |||
| Total | 221,426,431 | 298,705,942 |
(2) Sales of goods
| Related parties | Nature of transaction | 2019 | 2018 |
| Subsidiary of the parent company |
Sales of goods 731,092,089 867,995,960
Sales of goods 9,764,273 8,451,110
| Other related parties of the Company | |||
| Total | 740,856,362 | 876,447,070 |
(3) Guarantee
The Company as the guarantor
Guarantee holder
| Amount of guarantee | Inception date of guarantee | Maturity date of guarantee | Guarantee expired (Y/N) | |
| R&D Centre | 500,000,000 | 08 March 2017 | 08 March 2022 | No |
| Australia Kilikanoon Estate |
17,000,000 13 December 2018 13 December 2023 No
| Total | 517,000,000 |
(4) Sale of fixed assets
Nature of transaction
| Related parties of the Company |
2019 2018
Sale of fixed assets - 134,445
| Subsidiary of the parent company | |||
| Total | - | 134,445 |
(5) Interest income occupied by capital
| Related parties | Nature of transaction | 2019 | 2018 |
| Subsidiary of the parent company | Interest income occupied by capital |
- 35,823,556
| Total | - | 35,823,556 |
(6) Leases
(a) As the lessor
Name of lesseeType of assets leased
| Lease income recognised in 2019 | Lease income recognised in 2018 | ||
| Other related parties of the Company |
Offices and plants 2,015,486 1,997,164
| Total | 2,015,486 | 1,997,164 |
(b) As the lessee
Name of lessorType of assets leased
| Lease expense recognised in 2019 | Lease expense recognised in 2018 | ||
| Other related parties of the Company |
Office buildings 1,394,762 1,331,364
| Total | Office buildings | 1,394,762 | 1,331,364 |
(8) Other related party transactions
| Related parties | Nature of transaction | 2019 | 2018 |
| Changyu Group | Patent fee | - | 50,000 |
| Total | - | 50,000 |
8 Receivables from and payables to related parties
Receivables from related parties
Item Related party
| 2019 | 2018 |
Book value
Book value
| Provision for bad and doubtful debts | Provision for bad and doubtful debts |
Accounts receivable
2,589,936 601,610 1,447,973 -Other receivables
| Other related parties of the Company |
| Subsidiary of the parent company |
385,328,319 - 523,579,831 -Other receivables
813,440 - 813,440 -Other non-current assets
| Other related parties of the Company |
| Subsidiary of the parent company |
1,427,700,000 - 972,700,000 -
Payables to related parties
| Item | Related party | 2019 | 2018 |
| Accounts payable | Other related parties of the Company |
11,630,361 28,892,583
| Other payables | Subsidiary of the parent company |
381,487,360 585,044,038Other payables
450,000 450,000
XVI. Non-recurring profit and loss statement in 2019
Other related parties of
the CompanyItem
| Item | Amount | Note |
(1) Profit and loss from disposal of non-current assets 6,272,676
| Gain from disposal of equity |
investment of Mirefleurs is
(2)
| RMB 6,233,661. | ||
| Government grants recognised through profit or loss |
(excluding those having close relationships with theGroup’s operation and enjoyed in fixed amount or
84,837,581
| quantity according to uniform national standard) |
(3) Other items qualified as extraordinary gain and loss 218,649,636
the previous years, see Note
| X. 5 (5) (a) |
(4)
7,298,479
| Other non-operating income and expenses besides items above |
| Sub-total | 317,058,372 | ||
| (5) | Tax effect | (79,367,893) | |
| (6) | Effect on non-controlling interests after taxation | (30,661) | |
| Total | 237,659,818 |
Note: Extraordinary gain and loss items (1) to (4) listed above are presented in the amount
before taxation.
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportXVII. Return on net assets and earnings per share
In accordance with “Regulation on the Preparation of Information Disclosures by CompaniesIssuing Securities No.9 – Calculation and Disclosure of the Return on Net Assets andEarnings Per Share” (2010 revised) issued by the CSRC and relevant accounting standards,the Group’s return on net assets and earnings per share are calculated as follows:
2019
Profit for the reporting period
return on net assets
| (%) |
Basic earnings per
share
Diluted earnings per
share
Company’s ordinary equity
| shareholders |
11.30 1.65 1.65
and loss attributable to theCompany’s ordinary equity
| shareholders |
8.92 1.30 1.30
2018
Profit for the reporting period
return on net assets
| (%) |
Basic earnings per
share
Diluted earnings per
share
Company’s ordinary equity
| shareholders |
11.23 1.52 1.52
and loss attributable to theCompany’s ordinary equity
| shareholders |
10.40 1.41 1.41
Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportXIII. Reference Documents
(1)The original of Annual Report autographed by the chairman.
(2)The Financial Statements autographed and signed by the chairman, chief accountant and
accountants in charge.
(3)The Prospectus and Public Offering Announcement for Stock B in 1997; The Prospectus
and The Shares’ Change & Public Offering Announcement for Stock A in 2000.
(4) The originals of all documents and announcements that the Company made public during
the report period in the newspapers designated by China Securities Regulatory Commission.
Yantai Changyu Pioneer Wine Co., Ltd.
Board of Directors April 22
nd
, 2019