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张裕B:2023年年度财务报告(英文版) 下载公告
公告日期:2024-04-12

YANTAI CHANGYU PIONEER WINE COMPANY LIMITED

ENGLISH TRANSLATION OF FINANCIAL STATEMENTSFOR THE YEAR 1 JANUARY 2023 TO 31 DECEMBER 2023IF THERE IS ANY CONFLICT BETWEEN THE CHINESE VERSION AND ITS ENGLISH

TRANSLATION, THE CHINESE VERSION WILL PREVAIL

Page 1 of 6

AUDITOR’S REPORT

KPMG Huazhen Shen Zi No. 2405429

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 2023, 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 company financial position of Yantai Changyu as at 31December 2023, and of its consolidated financial performance and company financialperformance and its consolidated cash flows and company cash flows for the year thenended in accordance with Accounting Standards for Business Enterprises issued by theMinistry of Finance of the People’s Republic of China.

Basis for Opinion

We conducted our audit in accordance with China Standards on Auditing for Certified PublicAccountants (“CSAs”). Our responsibilities under those standards are further described inthe Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.We are independent of Yantai Changyu in accordance with the China Code of Ethics forCertified Public Accountants (“the Code”), and we have fulfilled our other ethicalresponsibilities in accordance with the Code. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

Page 2 of 6

AUDITOR’S REPORT (continued)

KPMG Huazhen Shen Zi No. 2405429

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 Distributors
Refer to the accounting policies set out in the notes to the financial statements “III. Significant accounting policies and accounting estimates” 25 and “V. Notes to the consolidated financial statements” 38.
The Key Audit MattersHow the Matter was Addressed in Our Audit
The principal activities of Yantai Changyu and its subsidiaries (hereinafter referred to as “Yantai Changyu Group”) include manufacture and sales of wine, brandy and sparkling wine. The revenue of Yantai Changyu Group is mainly derived from sales of distributors. All distributor transaction terms adopt the unified transaction terms formulated by Yantai Changyu Group. Based on the contractual agreement and the business arrangement, Yantai Changyu sells products to distributors and the transfer of product ownership is completed and the revenue is recognised when the goods are delivered to distributors and signed for acceptance. As revenue is one of the key performance indicators of Yantai Changyu Group, there is a risk that management may recognise revenue earlier or later in order to meet specific performance targets or expectations, therefore, the risk of cut-off misstatement arising from distributors’ sales revenue is identified as a key audit matter.Our audit procedures to evaluate revenue recognition of sales revenue from distributors included the following: ? Understand and evaluate the Management’s design and operation effectiveness of key internal controls related to distributor sales revenue recognition; ? Selecting the sales contracts Yantai Changyu signed with distributors in order to examine whether Yantai Changyu has adopted the unified transaction terms, and evaluate whether the accounting policy of revenue recognition meets the requirements of the Accounting Standards for Business Enterprises; ? On a sampling basis, reconcile the revenue recorded for the year to relevant supporting files such as relevant orders and signed delivery notes, etc. to evaluate whether revenue is recognised in accordance with the accounting policy of Yantai Changyu;

Page 3 of 6

AUDITOR’S REPORT (continued)

KPMG Huazhen Shen Zi No. 2405429

Key Audit Matters (continued)

Recognition of Sales Revenue from Distributors (continued)
Refer to the accounting policies set out in the notes to the financial statements “III. Significant accounting policies and accounting estimates” 25 and “V. Notes to the consolidated financial statements” 38.
The Key Audit MattersHow the Matter was Addressed in Our Audit
? On a sampling basis, reconcile the sales transaction before and after balance sheet date to relevant supporting files such as relevant orders, signed delivery notes, etc. to evaluate whether revenue is recognised in appropriate accounting period; ? Check the sales record after the balance sheet date to identify significant sales returns and check relevant supporting files (If applicable) in order to evaluate whether relevant revenue is recorded in the appropriate accounting period; ? Select revenue accounting entries that meet specific risk criteria and check related supporting documents.

Page 4 of 6

AUDITOR’S REPORT (continued)

KPMG Huazhen Shen Zi No. 2405429

Other Information

Management of Yantai Changyu is responsible for the other information. The otherinformation comprises all the information included in the 2023 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 enablethat the financial statements are free from material misstatement, whether due to fraud orerror.

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 ofassurance, but is not a guarantee that an audit conducted in accordance with CSAs willalways detect a material misstatement when it exists. Misstatements can arise from fraud orerror and are considered material if, individually or in the aggregate, they could reasonablybe expected to influence the economic decisions of users taken on the basis of thesefinancial statements.

Page 5 of 6

AUDITOR’S REPORT (continued)

KPMG Huazhen Shen Zi No. 2405429

Auditor’s Responsibilities for the Audit of the Financial Statements (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 eventsor conditions may cause Yantai Changyu to cease to continue as a going concern.

(5) Evaluate the overall presentation, structure and content of the financial statements,

including the disclosures, and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

(6) Obtain sufficient appropriate audit evidence regarding the financial information of the

entities or business activities within the Group to express our audit opinion on thefinancial statements. We are responsible for the direction, supervision andperformance of the Group audit. We remain solely responsible for our audit opinion.

Page 6 of 6

AUDITOR’S REPORT (continued)

KPMG Huazhen Shen Zi No. 2405429

Auditor’s Responsibilities for the Audit of the Financial Statements (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(Stamp) in the People’s Republic of China

Wang Ting (Engagement Partner)(Signature and stamp)

Beijing, China Jiang Hui(Signature and stamp)

Date: 10 April 2024

Yantai Changyu Pioneer Wine Company LimitedConsolidated balance sheetas at 31 December 2023

(Expressed in Renminbi Yuan)

Note31 December 202331 December 2022
Assets
Current assets
Cash at bank and on handV.12,217,693,6471,651,454,115
Bills receivableV.21,260,0002,712,460
Accounts receivableV.3382,132,334343,982,985
Receivables under financingV.4408,316,028309,329,918
PrepaymentsV.561,497,93360,415,508
Other receivablesV.671,496,27670,542,398
InventoriesV.72,765,390,5872,903,398,515
Other current assetsV.888,368,542185,337,393
Total current assets5,996,155,3475,527,173,292
Non-current assets
Long-term equity investmentsV.938,285,62041,371,385
Investment propertiesV.1024,482,83122,115,318
Fixed assetsV.115,795,082,5696,028,137,972
Construction in progressV.123,323,24140,934,161
Bearer biological assetsV.13177,461,983184,420,741
Right-of-use assetsV.14121,745,910139,887,159
Intangible assetsV.15542,625,776578,240,846
GoodwillV.16107,163,616107,163,616
Long-term deferred expensesV.17306,662,107274,699,232
Deferred tax assetsV.18221,518,204227,362,656
Other non-current assetsV.191,760,000-
Total non-current assets7,340,111,8577,644,333,086
Total assets13,336,267,20413,171,506,378

The notes on pages 20 to 117 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedConsolidated balance sheetas at 31 December 2023 (continued)

(Expressed in Renminbi Yuan)

Note31 December 202331 December 2022
Liabilities and shareholders’ equity
Current liabilities
Short-term loansV.20364,981,445389,378,480
Accounts payableV.21473,352,525503,323,746
Contract liabilitiesV.22175,278,849165,727,991
Employee benefits payableV.23185,331,292182,951,538
Taxes payableV.24274,723,431239,695,902
Other payablesV.25555,634,336372,608,689
Other current liabilitiesV.2644,958,29718,945,706
Non-current liabilities due within one yearV.2778,523,993144,020,834
Total current liabilities2,152,784,1682,016,652,886
Non-current liabilities
Long-term loansV.2866,616,443128,112,115
Lease liabilitiesV.2985,038,335109,505,093
Long-term payablesV.30-42,000,000
Deferred incomeV.3132,582,73438,389,058
Deferred tax liabilitiesV.188,719,72911,266,932
Total non-current liabilities192,957,241329,273,198
Total liabilities2,345,741,4092,345,926,084

The notes on pages 20 to 117 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedConsolidated balance sheetas at 31 December 2023 (continued)

(Expressed in Renminbi Yuan)

Note31 December 202331 December 2022
Liabilities and shareholders’ equity (continued)
Shareholders’ equity
Share capitalV.32692,249,559685,464,000
Capital reserveV.33651,086,707524,968,760
Less:Treasury stockV.34103,411,919-
Other comprehensive incomeV.35(14,784,677)(23,760,238)
Surplus reserveV.36342,732,000342,732,000
Retained earningsV.379,273,629,3189,049,649,211
Total equity attributable to shareholders of the Company10,841,500,98810,579,053,733
Non-controlling interests149,024,807246,526,561
Total shareholders’ equity10,990,525,79510,825,580,294
Total liabilities and shareholders’ equity13,336,267,20413,171,506,378

These financial statements were approved by the Board of Directors of the Company on 10April 2024. .

Zhou Hongjiang Legal RepresentativeJiang Jianxun The person in charge of accounting affairsGuo Cuimei The head of the accounting department(Company stamp)
(Signature and stamp)(Signature and stamp)(Signature and stamp)

The notes on pages 20 to 117 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedCompany balance sheetas at 31 December 2023(Expressed in Renminbi Yuan)

Note31 December 202331 December 2022
Assets
Current assets
Cash at bank and on hand1,242,484,544874,241,771
Accounts receivable5,189,8942,301,505
Receivables under financingXVII.136,322,01941,061,417
Prepayments52,5873,518,783
Other receivablesXVII.2576,949,997720,176,320
Inventories323,465,919335,031,522
Other current assets147,18720,080,844
Total current assets2,184,612,1471,996,412,162
Non-current assets
Long-term equity investmentsXVII.37,648,498,6387,705,853,378
Investment properties24,482,83122,115,318
Fixed assets194,601,612216,651,596
Construction in progress264,175375,969
Bearer biological assets100,785,279108,370,882
Right-of-use assets37,025,89636,153,799
Intangible assets72,552,20175,298,044
Deferred tax assets2,327,58512,120,605
Other non-current assets1,934,430,0001,850,200,000
Total non-current assets10,014,968,21710,027,139,591
Total assets12,199,580,36412,023,551,753

The notes on pages 20 to 117 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedCompany balance sheetas at 31 December 2023 (continued)

(Expressed in Renminbi Yuan)

Note31 December 202331 December 2022
Liabilities and shareholders’ equity
Current liabilities
Short-term loans100,000,000100,000,000
Accounts payable63,686,113100,583,550
Employee benefits payable68,654,35068,112,832
Taxes payable6,439,89939,101,259
Other payables608,904,995499,751,275
Non-current liabilities due within one year3,803,9105,129,607
Total current liabilities851,489,267812,678,523
Non-current liabilities
Lease liabilities42,380,07438,757,167
Deferred income55,718877,814
Total non-current liabilities42,435,79239,634,981
Total liabilities893,925,059852,313,504

The notes on pages 20 to 117 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedCompany balance sheetas at 31 December 2023 (continued)(Expressed in Renminbi Yuan)

Note31 December 202331 December 2022
Liabilities and shareholders’ equity (continued)
Shareholders’ equity
Share capital692,249,559685,464,000
Capital reserve687,544,350560,182,235
Less:Treasury stock103,411,919-
Surplus reserve342,732,000342,732,000
Retained earnings9,686,541,3159,582,860,014
Total shareholders’ equity11,305,655,30511,171,238,249
Total liabilities and shareholders’ equity12,199,580,36412,023,551,753

These financial statements were approved by the Board of Directors of the Company on 10April 2024. .

Zhou Hongjiang Legal RepresentativeJiang Jianxun The person in charge of accounting affairsGuo Cuimei The head of the accounting department(Company stamp)
(Signature and stamp)(Signature and stamp)(Signature and stamp)

The notes on pages 20 to 117 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedConsolidated income statementfor the year ended 31 December 2023(Expressed in Renminbi Yuan)

Note20232022
I. Operating incomeV.384,384,764,3353,918,941,160
Less: Operating costsV.381,786,983,6571,680,794,732
Taxes and surchargesV.39349,735,571289,656,627
Selling and distribution expensesV.401,239,782,7761,028,966,138
General and administrative expensesV.41303,990,858287,605,531
Research and development expenses17,413,53415,431,310
Financial expensesV.4211,083,4597,256,207
Including: Interest expenses35,800,09726,856,890
Interest income30,571,46524,186,351
Add: Other incomeV.4351,523,79933,145,440
Investment income/(losses)V.4423,847,450(3,447,794)
Including: Losses from investment associates and in joint ventures(712,480)(1,605,469)
Credit reversalV.451,397,6584,752,797
Impairment lossesV.46(13,506,958)(5,789,670)
Losses from disposal of assetsV.47(134,133)(16,191,903)

The notes on pages 20 to 117 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedConsolidated income statementfor the year ended 31 December 2023 (continued)(Expressed in Renminbi Yuan)

Note20232022
II. Operating profit738,902,296621,699,485
Add: Non-operating incomeV.4811,992,2706,832,809
Less: Non-operating expensesV.483,428,4102,949,991
III. Profit before income tax747,466,156625,582,303
Less: Income tax expensesV.49221,433,447194,233,589
IV. Net profit526,032,709431,348,714
(1) Net profit classified by continuity of operations:
1. Net profit from continuing operations526,032,709431,348,714
2. Net profit from discontinued operations--
(2) Net profit classified by ownership:
1. Net profit attributable to shareholders of the Company532,438,907428,681,411
2. Non-controlling net (losses)/interests(6,406,198)2,667,303
V. Other comprehensive income, net of tax9,519,49512,282,545
(1) Other comprehensive income (net of tax) attributable to shareholders of the Company8,975,56110,946,939
Translation differences arising from translation of foreign currency financial statements8,975,56110,946,939
(2) Other comprehensive income (net of tax) attributable to non-controlling interests543,9341,335,606

The notes on pages 20 to 117 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedConsolidated income statementfor the year ended 31 December 2023 (continued)(Expressed in Renminbi Yuan)

Note20232022
VI. Total comprehensive income for the year535,552,204443,631,259
(1) Attributable to shareholders of the Company541,414,468439,628,350
(2) Attributable to non-controlling interests(5,862,264)4,002,909
VII. Earnings per share:
(1) Basic earnings per shareV.500.780.63
(2) Diluted earnings per shareV.500.780.63

These financial statements were approved by the Board of Directors of the Company on 10April 2024. .

Zhou Hongjiang Legal RepresentativeJiang Jianxun The person in charge of accounting affairsGuo Cuimei The head of the accounting department(Company stamp)
(Signature and stamp)(Signature and stamp)(Signature and stamp)

The notes on pages 20 to 117 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedCompany income statementfor the year ended 31 December 2023(Expressed in Renminbi Yuan)

Note20232022
I. Operating incomeXVII.4731,158,954675,062,421
Less: Operating costXVII.4621,636,564577,316,851
Taxes and surcharges26,163,03827,984,695
General and administrative expenses60,054,42458,441,386
Research and development expenses1,127,2422,674,191
Financial expenses(2,756,864)(4,912,837)
Including: Interest expenses3,184,4603,238,235
Interest income10,213,60810,840,336
Add: Other income3,219,8305,318,209
Investment incomeXVII.5439,250,529736,516,479
Impairment losses(42,274,055)-
Proceeds from the disposal of assets-33,453
II. Operating profit425,130,854755,426,276
Add: Non-operating income386,1933,665,752
Less: Non-operating expenses1,258,0481,281,047

The notes on pages 20 to 117 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedCompany income statementfor the year ended 31 December 2023 (continued)

(Expressed in Renminbi Yuan)

Note20232022
III. Profit before income tax424,258,999757,810,981
Less: Income tax expenses12,118,8988,053,832
IV. Net profit412,140,101749,757,149
(i) Net profit from continuing operations412,140,101749,757,149
(ii) Net profit from discontinued operations--
V. Other comprehensive income, net of tax--
VI. Total comprehensive income for the year412,140,101749,757,149

These financial statements were approved by the Board of Directors of the Company on 10April 2024. .

Zhou Hongjiang Legal RepresentativeJiang Jianxun The person in charge of accounting affairsGuo Cuimei The head of the accounting department(Company stamp)
(Signature and stamp)(Signature and stamp)(Signature and stamp)

The notes on pages 20 to 117 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedConsolidated cash flow statementfor the year ended 31 December 2023

(Expressed in Renminbi Yuan)

Note20232022
I. Cash flows from operating activities:
Proceeds from sale of goods and rendering of services4,362,027,2683,681,133,282
Refund of taxes37,827,698?186,197,815
Proceeds from other operating activitiesV.51(1)219,385,62261,825,407
Sub-total of cash inflows4,619,240,5883,929,156,504
Payment for goods and services1,368,282,2151,266,006,299
Payment to and for employees491,419,621493,589,542
Payment of various taxes910,748,260718,434,215
Payment for other operating activitiesV.51(1)675,698,749582,249,801
Sub-total of cash outflows3,446,148,8453,060,279,857
Net cash flows from operating activitiesV.52(1)1,173,091,743868,876,647
II. Cash flows from investing activities:
Proceeds from disposal of investments238,200,000?133,200,000
Investment returns received3,196,066?1,340,518
Net proceeds from disposal of fixed assets, intangible assets and other long-term assets10,529,79328,412,630
Net proceeds from disposal of subsidiaries and other business unitsV.52(2)20,308,625-
Net proceeds from acquisition of subsidiaries and other business unitsV.52(2)657,049-
Sub-total of cash inflows272,891,533162,953,148
Payment for acquisition of fixed assets, intangible assets and other long-term assets132,032,219198,791,362
Payment for acquisition of investments464,200,000108,200,000
Sub-total of cash outflows596,232,219?306,991,362
Net cash flows from investing activities(323,340,686)(144,038,214)

The notes on pages 20 to 117 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedConsolidated cash flow statementfor the year ended 31 December 2023 (continued)(Expressed in Renminbi Yuan)

Note20232022
III. Cash flows from financing activities:?
Proceeds from investors103,411,919-
Proceeds from borrowings573,859,507641,331,495
Sub-total of cash inflows677,271,426?641,331,495
Repayments of borrowings768,253,239903,179,998
Payment for dividends, profit distributions or interest341,454,132333,134,330
Payment for other financing activitiesV.51(3)67,229,12319,774,744
Sub-total of cash outflows1,176,936,4941,256,089,072
Net cash flows from financing activities(499,665,068)(614,757,577)
IV. Effect of foreign exchange rate changes on cash and cash equivalents316,163345,715
V. Net increase in cash and cash equivalentsV.52(1)350,402,152110,426,571
Add: Cash and cash equivalents at the beginning of the year1,612,753,6001,502,327,029
VI. Cash and cash equivalents at the end of the yearV.52(2)1,963,155,7521,612,753,600

These financial statements were approved by the Board of Directors of the Company on 10April 2024. .

Zhou Hongjiang Legal RepresentativeJiang Jianxun The person in charge of accounting affairsGuo Cuimei The head of the accounting department(Company stamp)
(Signature and stamp)(Signature and stamp)(Signature and stamp)

The notes on pages 20 to 117 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedCompany cash flow statementfor the year ended 31 December 2023

(Expressed in Renminbi Yuan)

Note20232022
I. Cash flows from operating activities:
Proceeds from sale of goods and rendering of services673,455,798610,597,839
Tax returns received-1,597,879
Proceeds from other operating activities12,473,24184,262,490
Sub-total of cash inflows685,929,039696,458,208
Payment for goods and services611,290,566401,136,965
Payment to and for employees60,646,44767,906,188
Payment of various taxes62,523,75450,709,754
Payment for other operating activities28,861,99023,452,120
Sub-total of cash outflows763,322,757543,205,027
Net cash flows from operating activities(77,393,718)153,253,181
II. Cash flows from investing activities:
Proceeds from disposal of investments262,833,449118,200,000
Investment returns received729,828,424489,479,719
Net proceeds from disposal of fixed assets, intangible assets and other long-term assets576,150175,978
Net proceeds from disposal of subsidiaries and other business units17,965,5191,677,331
Proceeds from borrowings to subsidiaries10,000,000312,000,000
Sub-total of cash inflows1,021,203,542921,533,028
Payment for acquisition of fixed assets, intangible assets and other long-term assets7,116,73121,831,779
Payment for acquisition of investments478,823,400218,200,000
Net payment for acquisition of subsidiaries and other business units5,537,700-
Cash paid to subsidiaries94,230,000138,700,000
Sub-total of cash outflows585,707,831378,731,779
Net cash flows from investing activities435,495,711542,801,249

The notes on pages 20 to 117 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedCompany cash flow statementfor the year ended 31 December 2023 (continued)(Expressed in Renminbi Yuan)

Note20232022
III. Cash flows from financing activities:
Proceeds from investors103,411,919-
Proceeds from borrowings100,000,000100,000,000
Sub-total of cash inflows203,411,919100,000,000
Repayments of borrowings100,000,000150,000,000
Payment for dividends or interest311,643,260311,697,035
Payment for other financing activities4,956,1054,796,838
Sub-total of cash outflows416,599,365466,493,873
Net cash flows from financing activities(213,187,446)(366,493,873)
IV. Effect of foreign exchange rate changes on cash and cash equivalents--
V. Net increase in cash and cash equivalents144,914,547329,560,557
Add: Cash and cash equivalents at the beginning of the year843,369,997513,809,440
VI. Cash and cash equivalents at the end of the year988,284,544843,369,997

These financial statements were approved by the Board of Directors of the Company on 10April 2024. .

Zhou Hongjiang Legal RepresentativeJiang Jianxun The person in charge of accounting affairsGuo Cuimei The head of the accounting department(Company stamp)
(Signature and stamp)(Signature and stamp)(Signature and stamp)

The notes on pages 20 to 117 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedConsolidated statement of changes in shareholders’ equityfor the year ended 31 December 2023

(Expressed in Renminbi Yuan)

NoteAttributable to shareholders of the CompanyNon-controlling interestsTotal shareholders’ equity
Share capitalCapital reserveLess:Treasury-StockOther comprehensive incomeSurplus reserveRetained earningsSub-total
I. Balance at the beginning of the year685,464,000524,968,760-(23,760,238)342,732,0009,049,649,21110,579,053,733246,526,56110,825,580,294
II. Changes in equity during the year????????
1. Total comprehensive income---8,975,561-532,438,907541,414,468(5,862,264)535,552,204
2. Shareholders’ contributions and decrease of capital
(1). Effects of Restricted Share Incentive PlanV.326,785,559127,362,115(103,411,919)---30,735,755-30,735,755
(2). Acquisition of non-controlling interestsVIII.2-(1,244,168)----(1,244,168)(31,502,609)(32,746,777)
3. Appropriation of profits????????
Distributions to shareholdersV.37-----(308,458,800)(308,458,800)(1,538,316)(309,997,116)
4. Others
Disposal of equities in subsidiaries-------(58,598,565)(58,598,565)
III. Balance at the end of the year692,249,559651,086,707(103,411,919)(14,784,677)342,732,0009,273,629,31810,841,500,988149,024,80710,990,525,795

These financial statements were approved by the Board of Directors of the Company on 10 April 2024. .

Zhou Hongjiang Legal RepresentativeJiang Jianxun The person in charge of accounting affairsGuo Cuimei The head of the accounting department(Company stamp)
(Signature and stamp)(Signature and stamp)(Signature and stamp)

The notes on pages 20 to 117 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedConsolidated statement of changes in shareholders’ equity (continued)for the year ended 31 December 2022(Expressed in Renminbi Yuan)

NoteAttributable to shareholders of the CompanyNon-controlling interestsTotal shareholders’ equity
Share capitalCapital reserveOther comprehensive incomeSurplus reserveRetained earningsSub-total
I. Balance at the beginning of the year685,464,000524,968,760(34,707,177)342,732,0008,929,426,60010,447,884,183244,792,42110,692,676,604
II. Changes in equity during the year????????
(1) Total comprehensive income--10,946,939-428,681,411439,628,3504,002,909443,631,259
(2) Appropriation of profits????????
Distributions to shareholdersV.37----(308,458,800)(308,458,800)(2,268,769)(310,727,569)
III. Balance at the end of the year685,464,000524,968,760(23,760,238)342,732,0009,049,649,21110,579,053,733246,526,56110,825,580,294

These financial statements were approved by the Board of Directors of the Company on 10 April 2024. .

Zhou Hongjiang Legal RepresentativeJiang Jianxun The person in charge of accounting affairsGuo Cuimei The head of the accounting department(Company stamp)
(Signature and stamp)(Signature and stamp)(Signature and stamp)

The notes on pages 20 to 117 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedCompany statement of changes in shareholders’ equityfor the year ended 31 December 2023

(Expressed in Renminbi Yuan)

NoteShare capitalCapital reserveLess:Treasury-StockSurplus reserveRetained earningsTotal shareholders’ equity
I. Balance at the beginning of the year685,464,000560,182,235-342,732,0009,582,860,01411,171,238,249
II. Changes in equity during the year?????
(1) Total comprehensive income----412,140,101412,140,101
(2) Contribution by owners
Effects of Restricted Share Incentive Plan6,785,559127,362,115(103,411,919)--30,735,755
(3) Appropriation of profits?????
Distributions to shareholders----(308,458,800)(308,458,800)
III. Balance at the end of the year692,249,559687,544,350(103,411,919)342,732,0009,686,541,31511,305,655,305

These financial statements were approved by the Board of Directors of the Company on 10April 2024. .

Zhou Hongjiang Legal RepresentativeJiang Jianxun The person in charge of accounting affairsGuo Cuimei The head of the accounting department(Company stamp)
(Signature and stamp)(Signature and stamp)(Signature and stamp)

The notes on pages 20 to 117 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedCompany statement of changes in shareholders’ equityfor the year ended 31 December 2022 (continued)

(Expressed in Renminbi Yuan)

NoteShare capitalCapital reserveSurplus reserveRetained earningsTotal shareholders’ equity
I. Balance at the beginning of the year685,464,000560,182,235342,732,0009,141,561,66510,729,939,900
II. Changes in equity during the year?????
(1) Total comprehensive income---749,757,149749,757,149
(2) Appropriation of profits?????
Distributions to shareholders---(308,458,800)(308,458,800)
III. Balance at the end of the year685,464,000560,182,235342,732,0009,582,860,01411,171,238,249

These financial statements were approved by the Board of Directors of the Company on 10April 2024. .

Zhou Hongjiang Legal RepresentativeJiang Jianxun The person in charge of accounting affairsGuo Cuimei The head of the accounting department(Company stamp)
(Signature and stamp)(Signature and stamp)(Signature and stamp)

The notes on pages 20 to 117 form part of these financial statements.

Yantai 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 wine, brandy, 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 Companyis Yantai, Shandong. Headquarter of the Company is located at No. 56 Da Ma Lu, ZhifuDistrict, Yantai, Shandong, PRC.

As at 31 December 2023 the total shares issued by the Company amounts to 692,249,559shares. Please refer to Note V. 32 in detail.

The holding company of the Group is Changyu Group Company, which is jointly controlled byYantai GuoFeng Investment Holding Ltd., ILLVA SARONNO HOLDING SPA, InternationalFinance Corporation and Yantai Yuhua Investment and Development Company Limited.

The financial statements have been authorised by the board of directors on 10 April 2024.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 VIII “Equity in other entities” indetail.

II. Basis of preparation

The financial statements have been prepared on the going concern basis.

III. Significant accounting policies and accounting estimates

1 Statement of compliance

The financial statements have been prepared in accordance with the requirements 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 December2023, 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 2023.

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 theCompany adopt Euro, Chilean Peso and Australian Dollar as their functional currencies onthe basis of the primary economic environment in which they operate. The Company adoptsRMB to prepare its financial statements.

5 Method used to determine the materiality threshold and the basis for selection

ItemMateriality threshold
Significant other payables/accounts payable with ageing of more than one yearAmount of the individual other payables/accounts payable with ageing of more than 1 year exceeds 0.5% of the Group’s total liabilities
Significant construction projects in progressCarrying amount of the individual construction in progress exceeds 0.5% of the Group’s total non-current assets
Significant non-wholly-owned subsidiariesCarrying amount of net assets attributable to non-controlling shareholders of the non-wholly-owned subsidiaries exceeds 0.5% of the Group’s net assets
Significant investing and financing activities not requiring the use of cashAmount of the individual cash flow exceeds exceeds 0.5% of the Group’s total assets

6 Accounting treatments for business combinations involving entities under common control

and not under common control

A transaction constitutes a business combination when the Group obtains control of one ormore entities (or a group of assets or net assets). Business combination is classified aseither business combinations involving enterprises under common control or businesscombinations not involving enterprises under common control.

For a transaction not involving enterprises under common control, the acquirer determineswhether acquired set of assets constitute a business. The Group may elect to apply thesimplified assessment method, the concentration test, to determine whether an acquired setof assets is not a business. If the concentration test is met and the set of assets isdetermined not to be a business, no further assessment is needed. If the concentration testis not met, the Group shall perform the assessment according to the guidance on thedetermination of a business.

When the set of assets the group acquired does not constitute a business, acquisition costsshould be allocated to each identifiable assets and liabilities at their acquisition?date fairvalues. It is not required to apply the accounting of business combination described asbelow.

(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. Anycosts directly attributable to the combination are recognised in profit or loss when incurred.The combination date is the date on which one combining entity obtains control of othercombining entities.

(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 issuedby the acquirer, in exchange for control of the acquiree, exceeds (2) the acquirer’s interest inthe acquisition-date fair value of the acquiree’s identifiable net assets, the difference isrecognised as goodwill (see Note III.19). 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, aretransferred to investment income in the period in which the acquisition occurs (see NoteIII.12(2)(b)). If equity interests of the acquiree held before acquisition-date were equityinstrument investments measured at fair value through other comprehensive income, othercomprehensive income recognised shall be moved to retained earnings on acquisition-date.

7 Criteria of control and preparation of consolidated financial statements

(1) General principles

The scope of consolidated financial statements is based on control and the 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-controllingshareholders of a subsidiary exceeds the non-controlling shareholders’ share of the openingowners’ equity of the subsidiary, the excess is still allocated against the non-controllinginterests.

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-group balances and transactions, and any unrealised profit or loss arising from intra-grouptransactions, are eliminated when preparing the consolidated financial statements.Unrealised losses resulting from intra-group transactions are eliminated in the same way asunrealised gains, unless they represent impairment losses that are recognised in thefinancial statements.

(2) Subsidiaries acquired through a business combination

Where a subsidiary was acquired during the reporting period, through a businesscombination involving entities under common control, the financial statements of thesubsidiary are included in the consolidated financial statements based on the carryingamounts of the assets and liabilities of the subsidiary in the financial statements of theultimate controlling party as if the combination had occurred at the date that the ultimatecontrolling party first obtained control. The opening balances and the comparative figures ofthe consolidated financial statements are also restated.

Where a subsidiary was acquired during the reporting period, through a businesscombination involving entities not under common control, the identifiable assets and liabilitiesof the acquired subsidiaries are included in the scope of consolidation from the date thatcontrol commences, 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 otherarrangement;- 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.7(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 foras a 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 incontrol, the difference between the proportion interests of the subsidiary’s net assets beingacquired or disposed and the amount of the consideration paid or received is adjusted to thecapital reserve (share premium) in the consolidated balance sheet, with any excess adjustedto retained earnings.

8 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.

9 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. 16). 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 to Renminbiat the spot exchange rates at the transaction dates. The resulting translation differences arerecognised in other comprehensive income. The translation differences accumulated in othercomprehensive income with respect to a foreign operation are transferred to profit or loss inthe period when the foreign operation is disposed.

10 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.12),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. A tradereceivable, without significant financing component or practical expedient applied for oneyear or less contracts, is initially measured at the transaction price in accordance with NoteIII.25.

(2) Classification and subsequent measurement of financial assets

(a) Classification of financial assets

The classification of financial assets is generally based on the business model in 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 asdescribed above are measured at FVTPL. On initial recognition, the Group mayirrevocably designate a financial asset that otherwise meets the requirements to bemeasured at amortised cost or at FVOCI as at FVTPL if doing so eliminates orsignificantly reduces an 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 forthe credit risk associated with the principal amount outstanding during a particularperiod of time and for other basic lending risks and costs, as well as a profit margin.The Group also assesses whether the financial asset contains a contractual term thatcould change the timing or amount of contractual cash flows such that it would notmeet 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, reclassified, through the amortisationprocess or in order 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 recognisedas income 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 andthe net 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

settle the 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.

The Group derecognises a financial liability (or part of it) only when its contractual obligation(or part of it) is extinguished.

(6) Impairment

The Group recognises loss allowances for expected credit loss (ECL) on:

- financial assets measured at amortised cost;- financial investments at fair value through other comprehensive income

Financial assets measured at fair value, including debt investments or equity securities 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 asthe present value of all cash shortfalls (i.e. the difference between the cash flows due to theentity in accordance with the contract and the cash flows that the Group expects to receive).

The maximum period considered when estimating ECLs is the maximum contractual period(including extension options) over which the Group is exposed to credit risk.

Lifetime ECLs are the ECLs that result from all possible default events over the expected lifeof a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possiblewithin the 12 months after the balance sheet date (or a shorter period if the expected life ofthe instrument is less than 12 months).

Loss allowances for bills receivable, accounts receivable and receivables under financingarising from oridinary business activities such as sale of goods and provision of services ,arealways measured at an amount equal to lifetime ECLs. ECLs on these financial assets areestimated using a provision matrix based on the Group’s historical credit loss experience,adjusted for factors that are specific to the debtors and an assessment of both the currentand forecast general economic conditions at the balance sheet date.

Except for bills receivable, accounts receivable, receivables under financing, the Groupmeasures loss allowances at an amount equal to 12-month ECLs for the following financialinstruments, and at an amount equal to lifetime ECLs for all other financial instruments:

- If the financial instrument is determined to have low credit risk at the balance sheet date;- If the credit risk on a financial instrument has not increased significantly since initial

recognition.

Provisions for bad and doubtful debts arising from receivables

(a) Categories of groups for collective assessment based on credit risk characteristics and

basis for determination

Bills receivableBased on the different credit risk characteristics of acceptors, the Group classifies bills receivable into two groups: bank acceptance bills and commercial acceptance bills.
Accounts receivableHistorically, there is no significant difference in terms of occurrence of losses among different customer types for the Group. Therefore, the Group makes provisions for bad and doubtful debts arising from accounts receivable on the basis of all customers being one group without further segmentation by different customer types.
Receivables under financingThe Group’s receivables under financing are bank acceptance bills held for dual purposes. As the accepting banks have high credit ratings, the Group considers all receivables under financing as a group.
Other receivablesThe Group’s other receivables mainly include deposits and guarantees receivable,ect. Based on the nature of receivables and the credit risk characteristics of different counterparties, the Group classifies other receivables into 2 groups, specifically: the group of deposits and guarantees receivable and the group of other receivables.

(b) Criteria for individual assessment

Bills receivable, accounts receivable , receivables under financing, and otherreceivables are usually assessed collectively as a group based on credit riskcharacteristics to make provisions. When a counterparty is significantly different fromother counterparties in the group in terms of credit risk characteristics, or if there hasbeen a significant change in its credit risk characteristics, the individual approach isadopted for receivables due from this counterparty. For example, when a counterpartyis in serious financial difficulties and the expected credit loss ratio of receivables duefrom this counterparty is significantly higher than the average expected credit loss ratioof the relevant ageing range, it should be individualy assessed for provisioningpurposes.

Financial 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 flowobligations in the near term and adverse changes in economic and business conditions in thelonger term may, but will not necessarily, reduce the ability of the borrower to fulfil itscontractual cash flow obligations.

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 financialinstrument assessed at the balance sheet date with that assessed at the date of initialrecognition.

When determining whether the credit risk of a financial asset has increased significantlysince initial recognition and when estimating ECL, the Group considers reasonable andsupportable information 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 and 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 significantincrease in credit risk is performed on either an individual basis or a collective basis. Whenthe assessment is performed on a collective basis, the financial instruments are groupedbased on shared credit risk characteristics, such as past due status and credit risk ratings.

The Group assumes that the credit risk on a financial asset has increased significantly if it 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, theGroup 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 ofamounts due.

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 costsis recognised in shareholders’ equity. Consideration and transaction costs paid by theCompany for repurchasing self-issued equity instruments are deducted from shareholders’equity.

When the Company repurchases its own shares, those shares are treated as treasuryshares. All expenditure relating to the repurchase is recorded in the cost of the treasuryshares, with the transaction recording in the share register. Treasury shares are excludedfrom profit distributions and are presented as a deduction under shareholders’ equity in thebalance sheet.

11 Inventories

(1) Categories

Inventories include raw materials, work in progress and finished goods. 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 andfinished goods include direct labour costs and an appropriate allocation of productionoverheads.

Agricultural products harvested are reported in accordance with the CAS No.1 - Inventories.

(2) Measurement method of cost of inventories

Cost of inventories is calculated using the weighted average method.

(3) Inventory count system

The Group maintains a perpetual inventory system.

(4) Amortisation method for low-value consumables and packaging materials

Consumables including low-value consumables and packaging materials are charged toprofit or loss upon receipt. The amortisation charge is included in the cost of the relatedassets or recognised in profit or loss for the current period.

(5) Criteria and method for provision for obsolete inventories

At the balance sheet date, inventories are carried at the lower of cost and net realisablevalue.

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 production is measuredbased on the net realisable value of the finished goods in which they will be incorporated.The net realisable value of inventory held to satisfy sales or service contracts is measuredbased on the contract price. If the quantities of inventories held by the Group exceed thequantities specified in sales contracts, the net realisable value of the excess portion ofinventories is based on general selling prices.

Any excess of the cost over the net realisable value of each item

of inventories is recognisedas a provision for obsolete inventories, and is recognised in profit or loss.

12 Long-term equity investments

(1) Investment cost of long-term equity investments

(a) Long-term equity investments acquired through a business combination

- The initial cost of a long-term equity investment acquired through a businesscombination 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 initialcost of the investment in accordance with the above policies. The differencebetween this initial cost and the sum of the carrying amount of previously-heldinvestment and the consideration paid for the shares newly acquired is adjusted tocapital premium in the capital reserve, with any excess adjusted to retainedearnings.

- For a long-term equity investment obtained through a business combination notinvolving 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 combinationis initially recognised at the amount of cash paid if the Group acquires theinvestment by cash, or at the fair value of the equity securities issued if aninvestment is acquired by issuing equity securities.

(2) Subsequent measurement of long-term equity investment

(a) Investments in subsidiaries

In the Company’s separate financial statements, long-term equity investments insubsidiaries are accounted for using the cost method unless the investment isclassified as held for sale (See Note III. 31). Except for cash dividends or profitdistributions declared but not yet distributed that have been included in the price orconsideration paid in obtaining the investments, the Company recognises its share ofthe cash dividends or profit distributions declared by the investee as investment incomefor the current 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.21.

In the Group’s consolidated financial statements, subsidiaries are accounted for inaccordance with the policies described in Note III.7.

(b) Investment in joint ventures and associates

A joint venture is an arrangement whereby the Group and other parties have jointcontrol (see Note III.12(3)) and rights to the net assets of the arrangement.

Associated enterprises refer to enterprises to which the Group can exercise significantinfluence (see Note III.12(3)).

A long-term equity investment in a joint venture or an associate is accounted for usingthe equity method for subsequent measurement, unless the investment is classified asheld for sale (see Note III.31).

The 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 lessthan the Group’s interest in the fair value of the investee’s identifiable net assets atthe date of acquisition, the investment is initially recognised at the investor’s shareof the fair value of the investee’s identifiable net assets, and the difference isrecognised in profit 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 theinvestee’s owners’ equity, other than those arising from the investee’s net profit orloss, other comprehensive income or profit distribution (referred to as “otherchanges in owners’ equity”), is recognised directly in the Group’s equity, and thecarrying amount of the investment 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 afterthe carrying amount of the long-term equity investment and any long-term interestthat in substance forms part of the Group’s net investment in the associate isreduced to zero, except to the extent that the Group has an obligation to assumeadditional losses. If the joint venture or the associate subsequently reports netprofits, the Group resumes recognising its share of those profits only after its shareof the profits equals the share of losses not recognised.

For the impairment of the investments in joint ventures and associates, refer to NoteIII.21.

(3) Criteria for determining the existence of joint control over an investee

Joint control is the contractually agreed sharing of control of an arrangement, which 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 canexercise joint control over an investee:

- Whether no single participant party is in a position to control the investee’s relatedactivities 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.

13 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.31). For the impairment of the investmentproperties, refer to Note III.21.

CategoryEstimated useful life (years)Residual value rate (%)Depreciation rate (%)
Plant and buildings20 - 40 years0 - 5%2.4% - 5.0%

14 Fixed assets

(1) Recognition of fixed assets

Fixed assets represent the tangible assets held by the Group for use in production of goods,supply of services, for rental or for administrative purposes with useful lives over 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 intendeduse. The cost of self-constructed assets is measured in accordance with the policy set out inNote III.15.

Where the parts of an item of fixed assets have different useful lives or provide benefits tothe Group in a different pattern, thus necessitating use of different depreciation rates ormethods, 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 thecosts will flow to the Group, and the carrying amount of the replaced part is derecognised.The costs of the day-to-day maintenance of fixed assets are recognised in profit or loss asincurred.

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.31).

The estimated useful lives, residual value rates and depreciation rates of each class of fixedassets are as follows:

ClassEstimated useful life (years)Residual value rate (%)Depreciation rate (%)
Plant and buildings20 - 40 years0 - 5%2.4% - 5.0%
Machinery equipment5 - 30 years0 - 5%3.2% - 20.0%
Motor vehicles4 - 12 years0 - 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.21.

(4) Disposal of fixed assets

The carrying amount of a fixed asset is derecognised:

- when the fixed asset is holding for disposal; or- when no future economic benefit is expected to be generated from its use or disposal.

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.

15 Construction in progress

The cost of self-constructed assets includes the cost of materials, direct labour, capitalisedborrowing costs (see Note III.16), and any other costs directly attributable to bringing theasset to working condition for its intended use.

A self-constructed asset is classified as construction in progress and transferred to fixedasset when it is ready for its intended use. No depreciation is provided against constructionin progress.

Criteria and timing for the transfer to fixed assets:

CategoryCriteria and timing for the transfer to fixed assets
Plant and buildings(1) The main construction projects and ancillary projects have been substantially completed; (2) the construction projects have been checked and accepted by the survey, design, construction and supervision units after meeting the pre-determined design requirements; (3) the construction projects have been checked and accepted by external departments such as the fire department, the land and resources department and the planning department; (4) if a construction project is available for its intended use but its final account has not yet been finalised, the construction project will be transferred to fixed assets at its estimated value from the date it is available for its intended use, based on the its estimated value of construction.
Machinery and equipment(1) The relevant equipment and other supporting facilities have been installed; (2) the equipment can operate normally and stably for a period after commissioning; (3) the production equipment is capable of producing qualified products stably for a period; (4) the equipment has been checked and accepted by asset management personnel and users.

Construction in progress is stated in the balance sheet at cost less accumulated impairmentlosses (see Note III.21).

When an enterprise sells products or by-products produced before a fixed asset is availablefor its intended use, the proceeds and related cost are accounted for in accordance with CAS14 – Revenue and CAS 1 – Inventories respectively, and recognised in profit or loss for thecurrent period.

16 Borrowing costs

Borrowing costs incurred directly attributable to the acquisition, and construction orproduction of a qualifying asset are capitalised as part of the cost of the asset. Otherborrowing costs are recognised as financial expenses when incurred.

During the capitalisation period, the amount of interest (including amortisation of anydiscount or premium on borrowing) to be capitalised in each accounting period is determinedas follows:

- Where funds are borrowed specifically for the acquisition and construction or production of

a qualifying asset, the amount of interest to be capitalised is the interest expensecalculated using effective interest rates during the period less any interest income earnedfrom depositing the borrowed funds or any investment income on the temporaryinvestment of those funds before being used on the asset.

- To the extent that the Group borrows funds generally and uses them for the acquisitionand construction or production of a qualifying asset, the amount of borrowing costs eligiblefor capitalisation is determined by applying a capitalisation rate to the weighted average ofthe excess amounts of cumulative expenditure on the asset over the above amounts ofspecific borrowings. The capitalisation rate is the weighted average of the interest ratesapplicable to 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 ona specific-purpose borrowing denominated in foreign currency are capitalised as part of thecost of 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 ofacquisition, construction or production that are necessary to prepare the asset for itsintended use are in progress, and ceases when the assets become ready for their intendeduse. Capitalisation of borrowing costs should cease when the qualifying asset beingconstructed or produced has reached its expected usable or saleable condition.Capitalisation of borrowing costs is suspended when the acquisition, construction orproduction activities are interrupted abnormally for a period of more than three months.

17 Biological assets

The Group’s biological assets are bearer biological assets.

Bearer biological assets are those that are held for the purposes of producing 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 estimateduseful lives, estimated net residual value rates and depreciation rates of bearer biologicalassets are as follows:

CategoryEstimated useful life (years)Estimated net residual value rateDepreciation rate (%)
Vines20 years0%5.0%

The Group evaluates the useful life and expected net salvage value by considering thenormal producing 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, anydifference between the disposal proceeds and the carrying amount of the asset should berecognised in profit or loss for the period in which it arises.

18 Intangible assets

Useful life and amortisation methods

Intangible assets are stated in the balance sheet at cost less accumulated amortization(where the estimated useful life is finite) and impairment losses (see Note III.21). For 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.

The estimated useful lives, basis for determination and amortisation methods of intangibleassets are as follows:

ItemAmortisation period (years)Basis for determinationAmortisation methods
Land use rights40 - 50 yearsTerms of land use rightsStright-line Method
Software licenses5 - 10 yearsShorter of the term of software or the estimated useful life of softwareStright-line Method
Trademarks10 yearsShorter of the term of trademark rights or the estimated useful life of trademark rightsStright-line Method

Useful lives and amortisation methods of intangible asset with finite useful life are reviewedat least at each year-end.

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. (the “Australia Kilikanoon Estate”), therefore there was no amortisation. The right to usetrademark refers to the trademark held by the Group arising from the acquisition of the ChileIndomita Wine Group and the Australia Kilikanoon Estate with infinite useful lives. Thevaluation of trademark was based on the trends in the market and competitive environment,product cycle, and managing long-term development strategy. Those basis indicated thetrademark will provide net cash flows to the Group within an uncertain period. The useful lifeis indefinite as it was hard to predict the period that the trademark would bring economicbenefits to the Group.

19 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.

Goodwill is not amortised and is stated in the balance sheet at cost less accumulatedimpairment losses (see Note III.21). On disposal of an asset group or a set of asset groups,any attributable goodwill is written off and included in the calculation of the profit or loss ondisposal.

20 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:

ItemAmortisation period
Land requisition fee50 years
Greening fee5 - 20 years
Renovation Fee3 - 20 years
Others3 years

21 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 indicationof impairment:

- fixed assets- construction in progress- right-of-use assets- intangible assets- bearer biological assets- investment properties measured using a cost model- long-term equity investments- goodwill- long-term deferred expenses, etc.

If any indication exists, the recoverable amount of the asset is estimated. In addition, 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.22) 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.

The 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 are allocatedfirst to reduce the carrying amount of any goodwill allocated to the asset group or set of assetgroups, and then to reduce the carrying amount of the other assets in the asset group or setof asset groups on a pro rata basis. However, such allocation would not reduce the carryingamount of an asset below the highest of its fair value less costs to sell (if measurable), itspresent value of expected future cash flows (if determinable) and zero.

Once an impairment loss is recognised, it is not reversed in a subsequent period.

22 Fair value measurement

Unless otherwise specified, the Group measures fair value as follows:

Fair value is the price that would be received to sell an asset or paid to transfer a liability inan orderly 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 assetor liability at the measurement date, and uses valuation techniques that are appropriate inthe circumstances and for which sufficient data and other information are available tomeasure fair value. Valuation techniques mainly include the market approach, the incomeapproach and the cost approach.

23 Provisions

A provision is recognised for an obligation related to a contingency if the Group has apresent obligation that can be estimated reliably, and it is probable that an outflow ofeconomic benefits will be required to settle the obligation.

A provision is initially measured at the best estimate of the expenditure required to settle therelated present obligation. Where the effect of the time value of money is material, provisionsare determined by discounting the expected future cash flows. Factors pertaining to acontingency such as the risks, uncertainties and time value of money are taken into accountas a whole in reaching the best estimate.

Where there is a continuous range of possibleoutcomes for the expenditure required, and each possible outcome in that range is as likelyas any other, the best estimate is the mid-point of that range. In other cases, the bestestimate is determined as follows:

- Where the contingency involves a single item, the best estimate is the most likelyoutcome.- Where the contingency involves a large population of items, the best estimate is

determined by weighting all possible outcomes by their associated probabilities.

The Group reviews the carrying amounts of provisions at the balance sheet date and adjuststheir carrying amounts to the current best estimates.

24 Share-based payments

(1) Classification of share-based payments

Share-based payment transactions in the Group are equity-settled share-based payments..

(2) Accounting treatment of share-based payments

- Equity-settled share-based payments

Where the Group uses shares or other equity instruments as consideration for servicesreceived from employees, the payment is measured at the fair value of the equityinstruments granted to employees at the grant date. If the equity instruments granted toemployees vest immediately, the fair value of the equity instruments granted is fullyrecognised as costs or expenses on the grant date, with a corresponding increase incapital reserve. If the equity instruments granted do not vest until the completion ofservices for a period, or until the achievement of a specified performance condition, theGroup recognises an amount at each balance sheet date during the vesting period basedon the best estimate of the number of equity instruments expected to vest according tonewly obtained subsequent information regarding changes in the number of employeesexpected to vest the equity instruments. The Group measures the services received at thegrant-date fair value of the equity instruments and recognises the costs or expenses asthe services are received, with a corresponding increase in capital reserve.

When the Group receives services but has no obligation to settle the transaction becausethe relevant equity instruments are issued by the Company’s ultimate parent or itssubsidiaries outside the Group, the Group also classifies the transaction as equity-settled.

25 Revenue recognition

Revenue is the gross inflow of economic benefits arising in the course of the Group’sordinary activities when the inflows result in increase in shareholders’ equity, other thanincrease relating to contributions from shareholders.

Revenue is recognised when the Group satisfies the performance obligation in the contractby transferring the control over relevant goods or services to the customers.

Where a contract has two or more performance obligations, the Group determines the stand-alone selling price at contract inception of the distinct good or service underlying eachperformance obligation in the contract and allocates the transaction price in proportion tothose stand-alone selling prices. The Group recognises as revenue the amount of thetransaction price that is allocated to each performance obligation. The stand-alone sellingprice is the price at which the Group would sell a promised good or service separately to acustomer. If a stand-alone selling price is not directly observable, the Group considers allinformation that is reasonably available to the entity, maximises the use of observable inputsto estimate the stand-alone selling price.

For the contract with a warranty, the Group analyses the nature of the warranty provided, ifthe warranty provides the customer with a distinct service in addition to the assurance thatthe product complies with agreed-upon specifications, the Group recognises for the promisedwarranty as a performance obligation. Otherwise, the Group accounts for the warranty inaccordance with the requirements of CAS No.13 – Contingencies.

The transaction price is the amount of consideration to which the Group expects to beentitled in exchange for transferring promised goods or services to a customer, excludingamounts collected on behalf of third parties. The Group recognises the transaction price onlyto the extent that it is highly probable that a significant reversal in the amount of cumulativerevenue recognised will not occur when the uncertainty associated with the variableconsideration is subsequently resolved. Where the contract contains a significant financingcomponent, the Group recognises the transaction price at an amount that reflects the pricethat a customer would have paid for the promised goods or services if the customer had paidcash for those goods or services when (or as) they transfer to the customer. The differencebetween the amount of promised consideration and the cash selling price is amortised usingan effective interest method over the contract term. The Group does not adjust theconsideration for any effects of a significant financing component if it expects, at contractinception, that the period between when the Group transfers a promised good or service to acustomer and when the customer pays for that good or service will be one year or less.

The Group satisfies a performance obligation over time if one of the following criteria is met;or otherwise, a performance obligation is satisfied at a point in time:

- the customer simultaneously receives and consumes the benefits provided by the Group’sperformance as the Group performs;- the customer can control the asset created or enhanced during the Group’s performance;or- the Group’s performance does not create an asset with an alternative use to it and theGroup has an enforceable right to payment for performance completed to date.

For performance obligation satisfied over time, the Group recognises revenue over time bymeasuring the progress towards complete satisfaction of that performance obligation. Whenthe outcome of that performance obligation cannot be measured reasonably, but the Groupexpects to recover the costs incurred in satisfying the performance obligation, the Grouprecognises revenue only to the extent of the costs incurred until such time that it canreasonably measure the outcome of the performance obligation.

For performance obligation satisfied at a point in time, the Group recognises revenue at thepoint in time at which the customer obtains control of relevant goods or services. Todetermine whether a customer has obtained control of goods or services, the Groupconsiders the following indicators:

- the Group has a present right to payment for the goods or services;- the Group has transferred physical possession of the goods to the customer;- the Group has transferred the legal title of the goods or the significant risks and rewards ofownership of the goods to the customer; and- the customer has accepted the goods or services.

For the sale of a product with a right of return, the Group recognises revenue when theGroup obtains control of that product, in the amount of consideration to which the Groupexpects to be entitled in exchange for the product transferred (i.e. excluding the amount ofwhich expected to be returned), and recognises a refund liability for the products expected tobe returned. Meanwhile, an asset is recognised in the amount of carrying amount of theproduct expected to be returned less any expected costs to recover those products (includingpotential decreases in the value of returned products), and carry forward to cost in theamount of carrying amount of the transferred products less the above costs. At the end ofeach reporting period, the Group updates its assessment of future sales return. If there isany change, it is accounted for as a change in accounting estimate.

A contract asset is the Group’s right to consideration in exchange for goods or services that ithas transferred to a customer when that right is conditional on something other than thepassage of time. The Group recognises loss allowances for expected credit loss on contractassets (see Note III.10(6)). Accounts receivable is the Group’s right to consideration that isunconditional (only the passage of time is required). A contract liability is the Group’sobligation to transfer goods or services to a customer for which the Group has receivedconsideration (or an amount of consideration is due) from the customer.

The following is the description of accounting policies regarding revenue from the Group’sprincipal activities:

The Group’s sales revenue is mainly derived from dealer sales. Revenue is recognisedwhen the Group transfers control of the related products to the customer. Based on thebusiness contract, the Group recognised the sales revenue of these transfers when theproduct is confirmed and signed for acceptance by the customers.

26 Contract costs

Contract costs are either the incremental costs of obtaining a contract with a customer or thecosts to fulfil a contract with a customer.

Incremental costs of obtaining a contract are those costs that the Group incurs to obtain acontract with a customer that it would not have incurred if the contract had not been obtainede.g. an incremental sales commission. The Group recognises as an asset the incrementalcosts of obtaining a contract with a customer if it expects to recover those costs. Other costsof obtaining a contract are expensed when incurred.

If the costs to fulfil a contract with a customer are not within the scope of inventories or otheraccounting standards, the Group recognises an asset from the costs incurred to fulfil acontract only if those costs meet all of the following criteria:

- the costs relate directly to an existing contract or to a specifically identifiable anticipatedcontract, including direct labour, direct materials, allocations of overheads (or similarcosts), costs that are explicitly chargeable to the customer and other costs that areincurred only because the Group entered into the contract- the costs generate or enhance resources of the Group that will be used in satisfying (or incontinuing to satisfy) performance obligations in the future; and- the costs are expected to be recovered.

Assets recognised for the incremental costs of obtaining a contract and assets recognised forthe costs to fulfil a contract (the “assets related to contract costs”) are amortised on asystematic basis that is consistent with the transfer to the customer of the goods or servicesto which the assets relate and recognised in profit or loss for the current period. The Grouprecognises the incremental costs of obtaining a contract as an expense when incurred if theamortisation period of the asset that the entity otherwise would have recognised is one yearor less.

The Group recognises an impairment loss in profit or loss to the extent that the carryingamount of an asset related to contract costs exceeds:

- remaining amount of consideration that the Group expects to receive in exchange for the

goods or services to which the asset relates; less- the costs that relate directly to providing those goods or services that have not yet beenrecognised as expenses.

27 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 andrates stipulated by the government. Basic pension insurance contributions payable arerecognised as a liability as the employee provides services, with a corresponding charge toprofit or loss or 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 orloss at the earlier of the following dates:

- When the Group cannot unilaterally withdraw the offer of termination benefits because ofan 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 carryout the restructuring by starting to implement that plan or announcing its main features tothose affected by it.

28 Government grants

Government grants are non-reciprocal transfers of monetary or non-monetary assets fromthe government to the Group except for capital contributions from the government in thecapacity as 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 a non-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 incomeor non-operating income. A grant that compensates the Group for expenses or losses to beincurred in the future is recognised as deferred income, and included in other income or non-operating income in the periods in which the expenses or losses are recognised. Or includedin other income or non-operating income directly.

29 Income tax

Current tax and deferred tax are recognised in profit or loss except to the extent that 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 deductible lossesand tax credits carried forward to subsequent periods. Deferred tax assets are recognised tothe extent that it is probable that future taxable profits will be available against whichdeductible temporary differences can be utilised.

Deferred tax is not recognised for temporary differences arising from the initial recognition ofassets or liabilities in a single transaction that is not a business combination, affects neitheraccounting profit nor taxable profit (or deductible loss) and does not give rise to equal taxableand deductible temporary differences. Deferred tax is also not recognised for taxabletemporary 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 reductions are reversed to the extent that it becomes probable that sufficient taxableprofits will be available.

At the balance sheet date, deferred tax assets and deferred tax liabilities are offset if all ofthe following 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 currenttax assets on a net basis, or to realise the assets and settle the liabilities simultaneously,in each future period in which significant amounts of deferred tax liabilities or deferred taxassets are expected to be settled or recovered.

30 Leases

A contract is lease if the lessor conveys the right to control the use of an identified asset tolessee for a period of time in exchange for consideration.

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. Acontract is, or contains, a lease if the contract conveys the right to control the use of anidentified asset for a period of time in exchange for consideration.

To assess whether a contract conveys the right to control the use of an identified asset, theGroup assesses whether:

- the contract involves the use of an identified asset. An identified asset may be specifiedexplicitly or implicitly speicied in a contrat and should be physically distinct, or capacityportion or other portion of an asset that is not physically distinct but it representssubstantially all of the capacity of the asset and thereby provides the customer with theright to obtain substantially all of the ecomonic benefits from the use of the asset. If thesupplier has a substantive substitution right throughout the period of use, then the asset isnot identified;- the lessee has the right to obtain substantially all of the economic benefits from use of theasset throughout the period of use;- the lessee has the right to direct the use of the asset.

For a contract that contains more separate lease componets, the lessee and the lessorseparate lease components and account for each lease component as a lease separately.For a contract that contains lease and non-lease components, the lessee and the lessorseparate lease components from non-lease components. For a contract that contains leaseand non-lease components, the lessee allocates the consideration in the contract to eachlease component on the basis of the relative stand-alone price of the lease component andthe aggregate stand-alone price of the non-lease components. The lessor allocates theconsideration in the contract in accordance with the accounting policy in Note III.25.

(1) As a lessee

The Group recognises a right-of-use asset and a lease liability at the lease commencementdate. The right-of-use asset is initially measured at cost, which comprises the initial amountof the lease liability, any lease payments made at or before the commencement date (lessany lease incentives received), any initial direct costs incurred and an estimate of costs todismantle and remove the underlying asset or to restore the site on which it is located orrestore the underlying asset to the condition required by the terms and conditions of thelease.

The right-of-use asset is depreciated using the straight-line method. If the lessee isreasonably certain to exercise a purchase option by the end of the lease term, the right-of-use asset is depreciated over the remaining useful lives of the underlying asset. Otherwise,the right-of-use asset is depreciated from the commencement date to the earlier of the end ofthe useful life of the right-of-use asset or the end of the lease term. Impairment losses ofright-of-use assets are accounted for in accordance with the accounting policy described inNote III.21.

The lease liability is initially measured at the present value of the lease payments that are notpaid at the commencement date, discounted using the interest rate implicit in the lease or, ifthat rate cannot be readily determined, the Group’s incremental borrowing rate.

A constant periodic rate is used to calculate the interest on the lease liability in each periodduring the lease term with a corresponding charge to profit or loss or included in the cost ofassets where appropriate. Variable lease payments not included in the measurement of thelease liability is charged to profit or loss or included in the cost of assets where appropriateas incurred.

Under the following circumstances after the commencement date, the Group remeasureslease liabilities based on the present value of revised lease payments:

- there is a change in the amounts expected to be payable under a residual valueguarantee;- there is a change in future lease payments resulting from a change in an index or a rate

used to determine those payments;- there is a change in the assessment of whether the Group will exercise a purchase,extension or termination option, or there is a change in the exercise of the extension ortermination option.

When the lease liability is remeasured, a corresponding adjustment is made to the carryingamount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of theright-of-use asset has been reduced to zero.

The Group has elected not to recognise right-of-use assets and lease liabilities for short-termleases that have a lease term of 12 months or less and leases of low-value assets. TheGroup recognises the lease payments associated with these leases in profit or loss or as thecost of the assets where appropriate using the straight-line method over the lease term.

(2) As a lessor

The Group determines at lease inception whether each lease is a finance lease or anoperating lease. A lease is classified as a finance lease if it transfers substantially all therisks and rewards incidental to ownership of an underlying asset irrespective of whether thelegal title to the asset is eventually transferred. An operating lease is a lease other than afinance lease.

When the Group is a sub-lessor, it assesses the lease classification of a sub-lease withreference to the right-of-use asset arising from the head lease, not with reference to theunderlying asset. If a head lease is a short-term lease to which the Group applies practicalexpedient described above, then it classifies the sub-lease as an operating lease.

Under a finance lease, at the commencement date, the Group recognises the finance leasereceivable and derecognises the finance lease asset. The finance lease receivable is initiallymeasured at an amount equal to the net investment in the lease. The net investment in thelease is measured at the aggregate of the unguaranteed residual value and the presentvalue of the lease receivable that are not received at the commencement date, discountedusing the interest rate implicit in the lease.

The Group recognises finance income over the lease term, based on a pattern reflecting aconstant periodic rate of return. The derecognition and impairment of the finance leasereceivable are recognised in accordance with the accounting policy in Note III.10. Variablelease payments not included in the measurement of net investment in the lease arerecognised as income as they are earned.

Lease receipts from operating leases is recognised as income using the straight-line methodover the lease term. The initial direct costs incurred in respect of the operating lease areinitially capitalised and subsequently amortised in profit or loss over the lease term on thesame basis as the lease income. Variable lease payments not included in lease receipts arerecognised as income as they are earned.

31 Assets held for sale

The Group classified a non-current asset or disposal group as held for sale when thecarrying amount of a non-current asset or disposal group will be recovered through a saletransaction rather 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 in similartransactions, the non-current asset or disposal group must be available for immediate salein their present condition subject to terms that are usual and customary for sales of suchassets or disposal groups;- Its sale is highly probable, that is, the Group has made a resolution on a sale plan and hasobtained a firm purchase commitment. The sale is to be completed within one year.

Non-current assets or disposal groups held for sale are stated at the lower of carryingamount and fair value (see Note III.22) less costs to sell (except financial assets (see NoteIII.10), deferred tax assets (see Note III.29) and investment properties subsequent measuredat fair value (see Note III. 13) initially and subsequently. Any excess of the carrying amountover the fair value (see Note III.22) less costs to sell is recognised as an impairment loss inprofit or loss.

32 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.

33 Related parties

If a party has the power to control, jointly control or exercise significant influence overanother party, or vice versa, or where two or more parties are subject to common control orjoint control from another party, they are considered to be related parties. Related partiesmay be individuals or enterprises. Enterprises with which the Company is under commoncontrol only from the State and that have no other related party relationships are notregarded as related parties.

In addition to the related parties stated above, the Company determines related partiesbased on the disclosure requirements of Administrative Procedures on the InformationDisclosures of Listed Companies issued by the CSRC.

34 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 five parts: China, Spain, France, Chile and Australia. Themanagement periodically evaluates segment results, in order to allocate resources andevaluate performances. In 2023, over 86% of revenue, more than 96% of profit and over91% of non-current assets derived from China/are located in China. Therefore the Groupdoes not need to disclose additional segment report information.

35 Significant accounting estimates and judgements

The preparation of the financial statements requires management to make estimates andassumptions that affect the application of accounting policies and the reported amounts ofassets, liabilities, income and expenses. Actual results may differ from these estimates. Themanagement estimates as well as underlying assumptions and uncertainties involved arereviewed on an ongoing basis. Revisions to accounting estimates are recognised in theperiod in which the estimate is revised and in any future periods affected.

Significant accounting estimates see Notes V.3 7 11 and 16.

36 Changes in significant accounting policies

In 2023, the Group has adopted the following newly revised accounting standards andimplementation guidance and illustrative examples issued by the MOF:

The accounting treatment of deferred tax related to assets and liabilities arising from a singletransaction excluded from the scope of the initial recognition exemption” in CAS BulletinNo.16 (Caikuai [2022] No.31) (“CAS Bulletin No.16”)

According to the provisions, for taxable and deductible temporary differences arising from theinitial recognition of assets or liabilities in a single transaction that is not a businesscombination, affects neither accounting profits nor taxable profit (or deductible losses) andgives rise to equal taxable and deductible temporary differences, the Group recognises thecorresponding deferred tax liabilities and deferred tax assets respectively in accordance withrelevant provisions in CAS 18 - Income Tax when such transactions occur, instead ofrecognising deferred tax liabilities or deferred tax assets based on the net amount of taxableand deductible temporary differences. The adoption of the above requirements and guidancedoes not have a significant effect on the financial position and financial performance of theGroup.

IV. Taxation

1 Main types of taxes and corresponding tax rates

Type of taxTaxation basisTax rate
Value-added tax (VAT)Output VAT is calculated on product sales and taxable services revenue. The basis for VAT payable is to deduct input VAT from the output VAT for the period13%, 9%, 6% (China), 20% (France), 21% (Spain), 19% (Chile) and 10% (Australia)
Consumption taxBased on taxable revenue10% of the price, 20% of the price and RMB1,000 each ton (China)
Urban maintenance and construction taxBased on VAT paid7% (China)
Corporate income taxBased on taxable profits25% (China), 25% (France), 28% (Spain), 27% (Chile), 30% (Australia)

Other than tax incentives stated in Note IV. 2, applicable tax rates of the Group in 2023 and2022 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 thePeople’s Republic of China and clause 86 of the Implementation Rules of Enterprise IncomeTax Law of the People’s Republic of China, Grape Growing enjoys an exemption ofcorporate income tax.

Yantai Changyu Wine Research & Development Centre Co., Ltd. (“R&D Centre”), a branchof the Company, is an enterprise engaged in grape growing in the Economic andTechnological Development Zone of Yantai City, Shandong Province. Pursuant to Article 27of the Enterprise Income Tax Law of the People’s Republic of China and Article 86 of theImplementation Regulations of the Enterprise Income Tax Law of the People’s Republic ofChina, R&D Centre enjoys the preferential policy of exemption of enterprise income tax onincome from grape growing.

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 Republicof China 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.

Xinjiang Tianzhu Wine Co., Ltd. (“Xinjiang Tianzhu” , disposal in June 2023), a subsidiary ofthe Company, is an enterprise of wine production and sales incorporated in Shihezi city,Xinjiang Weizu Autonomous. In accordance with relevant provisions of the Announcementon Continuation of CIT Policies for Large-scale Development in the Western Region(Announcement [2020] No.23 of the Ministry of Finance), Ningxia Chateau Changyu Moser isentitled to preferential tax policies. Therefore, during the period from 2021 to 2030, itscorporate income tax shall be levied at a reduced tax rate of 15%.

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 relevant provisions of the Announcement onContinuation of CIT Policies for Large-scale Development in the Western Region(Announcement [2020] No.23 of the Ministry of Finance), Ningxia Chateau Changyu Moser isentitled to preferential tax policies. Therefore, during the period from 2021 to 2030, itscorporate income tax shall be levied at a reduced tax rate of 15%.

Ningxia Changyu Longyu Chateau Co., Ltd. (“Ningxia Chateau”), a subsidiary of theCompany, is an enterprise of wine production and sales incorporated in Yinchuan, NingxiaHui Autonomous Region. In accordance with the Notice on Continuing the Enterprise IncomeTax Policies for the Large-Scale Development of Western China (Notice of the Ministry ofFinance [2020] No. 23), Ningxia Chateau is qualified to enjoy preferential taxation policies,which means it can pay corporate income tax at a preferential rate of 15% for the period from2021 to 2030.

Changyu (Ningxia) Wine Co., Ltd. (“Ningxia Wine”), a subsidiary of the Company, is anenterprise engaged in wine production and sales, incorporated in Shihezi City, Xinjiang UygurAutonomous Region. In accordance with relevant provisions of the Announcement onContinuation of CIT Policies for Large-scale Development in the Western Region(Announcement [2020] No.23 of the Ministry of Finance), Changyu (Ningxia) Wine is entitledto preferential tax policies. Therefore, during the period from 2021 to 2030, its corporateincome tax shall be levied at a reduced tax rate of 15%.

In accordance with the PRC Enterprise Income Tax Law and its implementing regulations,the Notice of the Ministry of Finance and the State Administration of Taxation onImplementing the Inclusive Tax Deduction and Exemption Policies for Micro and SmallEnterprises (No.13 [2019] of the Ministry of Finance), the Announcement on Implementationof Income Tax Incentives for Micro and Small Enterprises and Individually-owned Businesses(Announcement [2023] No.6 from the Ministry of Finance and the State Administration ofTaxation) and the Announcement on Further Implementation of Income Tax Incentives forSmall Enterprises with Meagre Profits (Announcement [2022] No. 13 of the Ministry ofFinance and the State Taxation Administration), for micro and small enterprises that meet theapplication requirements that the taxable income that is not more than RMB 1 million, theamount of taxable income shall be reduced by 25%, and the applicable rate of enterpriseincome tax shall be 20%; for the annual taxable income exceeding RMB 1 million, but is notmore than RMB 3 million, the amount of taxable income shall be reduced by 25%, and theapplicable rate of enterprise income tax shall be 20%. Beijing Changyu Wine Marketing Co.,Ltd. (“Beijing Marketing”), a subsidiary of the Company, was identified as a qualified smallenterprise with meagre profits.

Pursuant to the Announcement on Clarifying VAT Relief and Other Policies for Small-scaleVAT Taxpayers (Announcement [2023] No.1 of the Ministry of Finance and the State TaxationAdministration), the taxable sales revenue of small-scale VAT taxpayers to which a levy rateof 3% is applicable shall be subject to VAT at a reduced levy rate of 1%; and the prepaid VATitems to which a pre-levy rate of 3% is applicable shall be subject to a reduced pre-levy rateof 1% from the period from 1 January 2023 to 31 December 2023. Xinjiang Changyu SalesCo., Ltd. Weimeisi Tasting Centre Branch is entitled to the above exemption.

In accordance with the Notice of the Ministry of Finance and the State Administration ofTaxation on Further Stepping up the Implementation of the Policy for the Refund of Term-EndExcess Input Value-Added Tax Credits (Notice of the Ministry of Finance and State TaxationAdministration [2022] No. 14), the government should further step up the implementation ofthe policy for the refund of term-end excess input value-added tax credits and expand thescope of industries applicable to this policy. The Company and its qualified subsidiaries haveenjoyed this policy.

In accordance with the Notice of the Ministry of Finance and the State Administration ofTaxation on the Further Implementation of Reduction and Exemption in Six Taxes and TwoFees for Small-Scale and Micro Enterprises (Notice of the Ministry of Finance and StateTaxation Administration [2022] No. 10), from 1 January 2022 to 31 December 2024, People’sGovernments of all provinces, autonomous regions and municipalities can reduce theresource tax, urban maintenance and construction tax, property tax, Urban and townshipland use tax, stamp duty (excluding stamp duty on securities transaction), farmlandoccupation tax, education surcharges, and local education surcharges within a 50% taxrange for small-scale VAT taxpayers, small-scale and low-profit enterprises, and individually-owned businesses based on the actual situation in the region. Shandong, Xinjiang, Ningxia,Shaanxi, and other provinces (regions, cities) are all subject to a 50% reduction in “six taxesand two fees”, and some subsidiaries of the Company are qualified to enjoy the taxreduction.

V. Notes to the consolidated financial statements

1 Cash at bank and on hand

Item20232022
Cash on hand74,95147,954
Bank deposits2,217,280,8011,643,577,420
Other monetary funds337,8957,828,741
Total2,217,693,6471,651,454,115
Including: Total overseas deposits24,317,46917,073,210

As at 31 December 2023, the Group’s term deposits with previous maturity of more thanthree months is RMB 254,200,000, with interest rate 1.70% - 2.25% (31 December 2022:

RMB28,200,000).

As at 31 December 2023, the Group’s other monetary assets is as follows:

Item20232022
Deposits for letters of credit-6,000,000
Alipay account balance192,9971,695,245
Deposit for ICBC platform10,00010,000
Deposits for the customs134,898123,496
Total337,8957,828,741

As at 31 December 2023, the Group did not have any special interest arrangements such asthe establishment of joint fund management accounts with related parties.

2 Bills receivable

Classification of bills receivable

Item20232022
Bank acceptance bills1,260,0002,712,460
Total1,260,0002,712,460

All of the above bills are due within one year.

3 Accounts receivable

(1) Accounts receivable by customer type are as follows:

Type31 December 202331 December 2022
Amounts due from related parties4,401,3072,827,473
Amounts due from other customers390,889,475355,711,618
Sub-total395,290,782358,539,091
Less: Provision for bad and doubtful debts(13,158,448)(14,556,106)
Total382,132,334343,982,985

As at 31 December 2023, ownership restricted accounts receivable is RMB 73,628,265 (31December 2022: RMB59,982,807), referring to Note V. 53.

(2) The ageing analysis of accounts receivable is as follows:

Ageing20232022
Within 1 year (inclusive)387,161,172349,764,300
Over 1 year but within 2 years (inclusive)2,367,2838,085,677
Over 2 years but within 3 years (inclusive)5,396,673452,254
Over 3 years365,654236,860
Sub-total395,290,782358,539,091
Less: Provision for bad and doubtful debts(13,158,448)(14,556,106)
Total382,132,334343,982,985

The ageing is counted starting from the date when accounts receivable are recognised.

(3) Accounts receivable by provisioning method

At all times the Group measures the impairment loss for accounts receivable at an amountequal to lifetime ECLs, and the ECLs are based on the number of overdue days and the lossgiven default. According to the historical experience of the Group, there are no significantdifferences in the losses of different customer groups. Therefore, different customer groupsare not further distinguished when calculating impairment loss based on the overdueinformation.

2023

Loss given defaultCarrying amount at the end of the yearImpairment loss at the end of the year
Current0.2%365,010,895660,099
Overdue for 1 to 30 days2.7%14,276,606384,812
Overdue for 31 to 60 days10.8%1,939,270208,908
Overdue for 61 to 90 days20.8%443,19992,141
Overdue for 91 to 120 days37.2%880,565328,007
Overdue for 121 to 150 days55.4%874,822485,022
Overdue for 151 to 180 days55.4%499,866277,137
Overdue for 181 to 210 days72.1%497,356358,689
Overdue for 211 to 240 days77.1%693,596534,607
Overdue for 241 to 270 days82.9%980,610812,545
Overdue for 271 to 300 days88.9%1,596,4091,418,894
Overdue for 301 to 330 days100.0%9,1509,150
Overdue for 331 to 360 days100.0%82,54182,541
Overdue for 360 days100.0%7,505,8977,505,896
Total3.3%395,290,78213,158,448

2022

Loss given defaultCarrying amount at the end of the yearImpairment loss at the end of the year
Current0.3%320,680,504987,421
Overdue for 1 to 30 days4.6%14,539,415670,713
Overdue for 31 to 60 days12.1%5,412,870654,202
Overdue for 61 to 90 days22.9%1,755,591401,918
Overdue for 91 to 120 days25.5%852,924217,910
Overdue for 121 to 150 days32.3%3,243,3661,047,097
Overdue for 151 to 180 days40.0%469,054187,704
Overdue for 181 to 210 days42.0%217,21891,181
Overdue for 211 to 240 days44.4%636,479282,588
Overdue for 241 to 270 days51.7%654,567338,403
Overdue for 271 to 300 days71.0%1,058,407751,067
Overdue for 301 to 330 days87.7%753,174660,380
Overdue for 331 to 360 days100.0%15,26315,263
Overdue for 360 days100.0%8,250,2598,250,259
Total4.1%358,539,09114,556,106

The loss given default is measured based on the actual credit loss experience in the past 12months, and is adjusted taking into consideration the differences among the economicconditions during the historical data collection period, the current economic conditions andthe economic conditions during the expected lifetime.

(4) Movements of provisions for bad and doubtful debts:

20232022
Balance at the beginning of the year(14,556,106)(20,263,750)
Charge for the year(7,361,616)(15,084,381)
Recoveries or reversals during the year8,759,27419,837,178
Transfers out during the year-954,847
Balance at the end of the year(13,158,448)(14,556,106)

(5) Five largest accounts receivable by debtor at the end of the year:

NameRelationship with the GroupBalance at the end of the yearAgeingPercentage of ending balance of others (%)Ending balance of provision for bad and doubtful debts
Debtor OneThird party147,458,311Within 1 year37.3%265,765
Debtor TwoThird party14,267,454Within 1 year3.6%504,073
Debtor ThreeThird party14,054,076Within 1 year3.6%496,535
Debtor FourThird party9,396,987Within 1 year2.4%331,999
Debtor FiveThird party8,241,582Within 1 year2.1%291,178
Total193,418,41049.0%1,889,550

4 Receivables under financing

ItemNote20232022
Bills receivable(1)408,316,028309,329,918

(1) Pledged bills receivable by the Group at the end of the year:

As at 31 December 2023, there was no pledged bills receivable (31 December 2022: Nil).

(2) Outstanding endorsed or discounted bills that have not matured at the end of the year

ItemAmount derecognised at year end
Bank acceptance bills394,923,505
Total394,923,505

As at 31 December 2023, bills endorsed by the Group to other parties which are not yet dueat the end of the period is RMB 394,923,505 (31 December 2022: RMB 500,480,279). Thenotes are used for payment to suppliers and constructions. The Group believes that due togood reputation of bank, the risk of notes not accepting by bank on maturity is very low,therefore derecognise the note receivables endorsed. If the bank is unable to pay the noteson maturity, according to the relevant laws and regulations of China, the Group wouldundertake limited liability for the notes.

5 Prepayments

(1) Prepayments by category:

Item20232022
Prepayments61,497,93360,415,508
Total61,497,93360,415,508

(2) The ageing analysis of prepayments is as follows:

Ageing20232022
AmountPercentage (%)AmountPercentage (%)
Within 1 year (inclusive)61,468,64399.9%59,426,08098.4%
Over 1 year but within 2 years (inclusive)29,2900.1%989,4281.6%
Total61,497,933100.0%60,415,508100.0%

The ageing is counted starting from the date when prepayments are recognised.

(3) Five largest prepayments by debtor at the end of the year:

NameNature of the receivableBalance at the end of the yearAgeingPercentage of ending balance of others (%)Ending balance of provision for bad and doubtful debts
Debtor OnePrepayments29,452,494Within 1 year47.9%-
Debtor TwoPrepayments8,104,605Within 1 year13.2%-
Debtor ThreePrepayments4,832,462Within 1 year7.9%-
Debtor FourPrepayments1,715,378Within 1 year2.8%-
Debtor FivePrepayments1,274,822Within 1 year2.1%-
Total45,379,76173.9%-?

6 Other receivables

31 December 202331 December 2022
Others71,496,27670,542,398
Total71,496,27670,542,398

(1) Others by customer type:

Customer type31 December 202331 December 2022
Amounts due from other companies71,496,27670,542,398
Sub-total71,496,27670,542,398
Less: Provision for bad and doubtful debts--
Total71,496,27670,542,398

(2) The ageing analysis is as follows:

Ageing20232022
Within 1 year (inclusive)29,551,26667,221,713
Over 1 year but within 2 years (inclusive)39,753,2271,208,361
Over 2 years but within 3 years (inclusive)160,00057,928
Over 3 years2,031,7832,054,396
Sub-total71,496,27670,542,398
Less: Provision for bad and doubtful debts--
Total71,496,27670,542,398

The ageing is counted starting from the date when other receivables are recognised.

(3) Movements of provisions for bad and doubtful debts

As at 31 December 2023, no bad and doubtful debt provision was made for otherreceivables (31 December 2022: Nil).

As at 31 December 2023, the Group has no other receivables written off (31 December2022: Nil).

(4) Others categorised by nature

Nature of other receivables20232022
Land purchases and reserves receivable37,768,90241,268,902
Refund of consumption tax and VAT19,104,00812,509,201
Deposit5,429,2025,578,001
Petty cash receivable154,354440,759
Others9,039,81010,745,535
Sub-total71,496,27670,542,398
Less: Provision for bad and doubtful debts--
Total71,496,27670,542,398

(5) Five largest others-by debtor at the end of the year

NameNature of the receivableBalance at the end of the yearAgeingPercentage of ending balance of others (%)Ending balance of provision for bad and doubtful debts
Debtor OneLand purchases and reserves receivable37,768,9021-2 years52.8%-?
Debtor TwoRefund of VAT17,894,493Within 1 year25.0%-?
Debtor ThreeHousing maintenance funds2,670,094Within 1 year3.7%-?
Debtor FourRefund of VAT736,946Within 1 year1.0%-?
Debtor FiveDeposits572,880Within 1 year0.8%-?
Total59,643,31583.3%?-

7 Inventories

(1) Inventories by category:

Item20232022
Book valueProvision for impairment of inventoriesCarrying amountBook valueProvision for impairment of inventoriesCarrying amount
Raw materials241,961,713-241,961,713258,200,178-258,200,178
Work in progress1,915,860,327-1,915,860,3271,986,391,270-1,986,391,270
Finished goods625,076,081(17,507,534)607,568,547673,171,026(14,363,959)658,807,067
Total2,782,898,121(17,507,534)2,765,390,5872,917,762,474(14,363,959)2,903,398,515

(2) Provision for impairment of inventories:

ItemOpening balanceIncrease during the yearDecrease during the yearClosing balance
RecognisedReversal
Finished goods14,363,95917,507,534(14,363,959)17,507,534

8 Other current assets

Item20232022
Input tax to be credited65,228,18944,270,238
Right to recover returned goods16,876,869-
Prepaid income taxes4,438,00119,102,111
Deferred expenses1,825,4831,034,403
Trademarks (Note)-120,930,641
Total88,368,542185,337,393

Notes:

Pursuant to a royalty agreement dated 18 May 1997, starting from 18 September 1997, theGroup may use certain trademarks of Changyu Group Company, which have been registeredwith the PRC Trademark Office. An annual royalty fee at 2% of the Group’s annual sales ispayable to Changyu Group. The license is effective until the expiry of the registration of thetrademarks.

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 (including tax).

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. Article 6.3 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 becharged from the year when the surplus occurs.

The Group recovered the balance of Changyu Group’s trademark royalties in December 2023.

9 Long-term equity investments

(1) Long-term equity investments by category:

Item20232022
Investments in joint ventures37,018,89337,970,535
Investments in associates1,266,7273,400,850
Sub-total38,285,62041,371,385
Less: Provision for impairment--
Total38,285,62041,371,385

(2) Movements of long-term equity investments during the year are as follows:

Investee2023 Balance at the beginning of the yearMovements during the year2023 Closing balanceShareholding percentage
(Losses)/Profits from investments under equity-method lOthers
Joint ventures????
SAS L&M Holdings (“L&M Holdings”)37,970,535(951,642)-37,018,89355%
Associates?????
WEMISS (Shanghai) Enterprise Development Co., Ltd (“WEMISS Shanghai”) (Note1)2,318,35154,934(2,373,285)-100%
Shanghai Yufeng Brand Management Co., Ltd. (Note2)420,369(55,007)-365,362?
Yantai Guolong Wine Industry Co., Ltd. (Note2)662,130239,235-901,36510%
Sub-total3,400,850239,162(2,373,285)1,266,72710%?
Total41,371,385(712,480)(2,373,285)38,285,620

Note 1: According to the Equity Transfer Contract signed by the Company and Beijing Wanfeng Trading Co., Ltd. (“Beijing Wanfeng”) in 2023,

Beijing Wanfeng transferred its 70% equity in Weimeisi Shanghai to the Company at a price of RMB5,537,700, and Weimeisi Shanghaibecomes a wholly-owned subsidiary of the Company upon the completion of this transaction. The related transaction was completed inJanuary 2023, please see Note VII.1 for details.

Note 2: The Group has appointed one director to each of these investees.

10 Investment properties

Plants and buildings
Cost
31 December 202270,954,045
Transfer in10,211,574
31 December 202381,165,619
Accumulated depreciation?
31 December 2022(48,838,727)
Transfer in(5,125,009)
Charge for the year(2,719,052)
31 December 2023(56,682,788)
Carrying amount?
31 December 202324,482,831
31 December 202222,115,318

11 Fixed assets

(1) Fixed assets

ItemPlant & buildingsMachinery & equipmentMotor vehiclesTotal
Cost
31 December 20225,878,199,0552,793,728,17525,888,5528,697,815,782
Additions during the year???? ?
- Purchases30,659,69073,274,720174,932104,109,342
- Transfers from construction in progress6,273,0361,726,052-7,999,088
- Transfers to Investment properties(10,211,574)--(10,211,574)
Disposals or written-offs during the year(22,448)(35,868,072)(794,809)(36,685,329)
Disposals of Subsidiaries(22,793,000)(21,338,824)(1,000,461)(45,132,285)
31 December 20235,882,104,7592,811,522,05124,268,2148,717,895,024
Accumulated depreciation????
31 December 2022(1,167,095,365)(1,477,263,867)(22,633,029)(2,666,992,261)
Charge for the year(162,015,401)(150,533,496)(1,793,186)(314,342,083)
Transfers to Investment properties5,125,009--5,125,009
Disposals or written-offs during the year22,00031,996,269706,45932,724,728
Disposals of Subsidiaries11,697,95618,387,141950,43831,035,535
31 December 2023(1,312,265,801)(1,577,413,953)(22,769,318)(2,912,449,072)
Provision for impairment????
31 December 2022-(2,685,549)-(2,685,549)
Accrued during the year-(10,363,383)-(10,363,383)
Disposals of Subsidiaries-2,685,549-2,685,549
31 December 2023-(10,363,383)-(10,363,383)
Carrying amount????
31 December 20234,569,838,9581,223,744,7151,498,8965,795,082,569
31 December 20224,711,103,6901,313,778,7593,255,5236,028,137,972

As at 31 December 2023, ownership restricted net value of fixed assets is RMB 37,985,117(31 December 2022: RMB303,897,124), referring to Note V. 53.

(2) Temporarily idle fixed assets

ItemCostAccumulated depreciationProvision for impairmentCarrying amount
Machinery equipment29,423,698(19,060,315)(10,363,383)-
Total29,423,698(19,060,315)(10,363,383)-

(3) Fixed assets leased out under operating leases

ItemCarrying amount at the end of the year
Plant & buildings89,996,993
Machinery equipment931

Fixed assets pending certificates of ownership

ItemCarrying amountReason why the certificates are pending
Dormitories, main building and reception building of Changan Chateau260,797,650Processing
Buildings and boiler houses of KOYA Brand167,954,341Processing
European town, main building and service building of AFIP158,783,634Processing
Fermentation shop of Zhangyu (Jingyang)4,296,086Processing
Office, experiment building and workshop of Fermentation Centre4,163,331Processing
Finished goods warehouse and workshop of Kylin Packaging1,943,460Processing
Others874,037Processing

The buildings without property certificate above have no significant impact on the Group’smanagement.

12 Construction in progress

(1) Construction in progress

Project20232022
Book valueProvision for impairmentCarrying amountBook valueProvision for impairmentCarrying amount
Nnigxia Chateau museum construction project1,376,147-1,376,147---
Museum construction project---32,981,419-32,981,419
Shihezi Chateau Construction Project700,000-700,0007,065,744-7,065,744
Other Companies’ Construction Project1,247,094-1,247,094886,998-886,998
Total3,323,241-3,323,24140,934,161-40,934,161

(2) Movements of major construction projects in progress during the year

ItemBudget (RMB million)Opening balanceAdditions during the yearTransfers to fixed assetsOther transfers outClosing balancePercentage of actual cost to budget (%)Accumulated capitalised interestAttributable to: Interest capitalised for the yearInterest rate for capitalisation in 2023 (%)Sources of funding
Museum construction project5132,981,419--(32,981,419)-100%---Self-raised
Shihezi Chateau Construction Project7807,065,744700,000(7,065,744)-700,00098%---Self-raised

13 Bearer biological assets

Bearer biological assets are vines, which measured in cost method.

ItemImmature biological assetsMature biological assetsTotal
Original book value
31 December 202223,405,557252,471,374275,876,931
Additions during the year???
- Increase in cultivated10,319,864-10,319,864
- Transferred to mature(83,870)83,870-
Decrease during the year(850,105)(3,716,924)(4,567,029)
31 December 202332,791,446248,838,320281,629,766
Accumulated amortisation???
31 December 2022-(91,456,190)(91,456,190)
Charge for the year-(13,800,290)(13,800,290)
Decrease during the year-1,088,6971,088,697
31 December 2023-(104,167,783)(104,167,783)
Carrying amount???
31 December 202332,791,446144,670,537177,461,983
31 December 202223,405,557161,015,184184,420,741

As at 31 December 2023, there is no biological asset with ownership restricted (31December 2022: Nil).

As at 31 December 2023, no provision for impairment of biological asset of the Group wasrecognised as there is no any indication exists (31 December 2022: Nil).

14 Right-of-use assets

As a lessee

ItemPlant&buildingsLandsOthersTotal
Cost
Balance at the beginning of the year84,818,532137,980,4091,697,986224,496,927
Additions during the year3,966,354--3,966,354
Derecognition of right-of-use assets(8,359,502)--(8,359,502)
Balance at the end of the year80,425,384137,980,4091,697,986220,103,779
Accumulated depreciation????
Balance at the beginning of the year(33,923,955)(49,667,021)(1,018,792)(84,609,768)
Charge for the year(16,031,558)(5,736,448)(339,597)(22,107,603)
Derecognition of right-of-use assets8,359,502--8,359,502
Balance at the end of the year(41,596,011)(55,403,469)(1,358,389)(98,357,869)
Carrying amounts????
At the end of the year38,829,37382,576,940339,597121,745,910
At the beginning of the year50,894,57788,313,388679,194139,887,159

15 Intangible assets

ItemLand use rightsSoftware licensesTrademarksTotal
Original book value
31 December 2022475,770,881101,979,429189,575,068767,325,378
Additions during the year????
- Purchase76,3291,680,094151,6731,908,096
Decrease during the year????
- Disposals(31,326,363)(771,307)(11,003)(32,108,673)
31 December 2023444,520,847102,888,216189,715,738737,124,801
Accumulated amortisation????
31 December 2022(110,698,068)(62,835,583)(15,550,881)(189,084,532)
Additions during the year????
- Charge for the year(8,864,116)(7,611,775)(456,971)(16,932,862)
Decrease during the year????
- Disposal10,746,374768,8953,10011,518,369
31 December 2023(108,815,810)(69,678,463)(16,004,752)(194,499,025)
Carrying amount????
31 December 2023335,705,03733,209,753173,710,986542,625,776
31 December 2022365,072,81339,143,846174,024,187578,240,846

As at 31 December 2023, the Group has land use right with infinite useful lives of RMB32,863,731 (31 December 2022: RMB32,376,235), representing the freehold land held byChile Indomita Wine Group and Australia Kilikanoon Estate under relevant Chile andAustralia laws, on which the amortisation is not required.

As at 31 December 2023, the Group has trademark with infinite useful lives of RMB155,447,037 (31 December 2022: RMB155,345,421), which is held by Chile Indomita WineGroup 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 13.3%and 13.9%,(2022:13.0%-14.1%). The estimated long-term average growth rate of cashflows after 5 years is 0.0% - 2.5% (2022: 0.0% - 2.5%), which represents the long-termaverage growth rate for the industry or the region in which the company operates.

According to the result of impairment assessment, by the end of 31 December 2023, themanagement believes there is no impairment loss on those trademarks with infinite usefullives of the Group.

As at 31 December 2023, there is no ownership restricted net value of intangible assets. (31December 2022: RMB 169,385,254).

16 Goodwill

(1) Changes in goodwill

Name of investee or events from which goodwill aroseNote31 December 2022Additions during the yearDisposals during the year31 December 2023
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
Chile Indomita Wine Group(a)6,870,115--6,870,115
Australia Kilikanoon Estate(a)37,063,130--37,063,130
Sub-total149,437,671--149,437,671
Impairment provision???
Australia Kilikanoon Estate(37,063,130)--(37,063,130)
Dicot Partners, S.L (“Dicot”)(5,210,925)--(5,210,925)
Sub-total(42,274,055)--(42,274,055)
Carrying amount107,163,616--107,163,616

(a) The Group acquired Fransac Sales, Dicot and Mirefleurs, Chile Indomita Wine Group

and Australia Kilikanoon Estate in December 2013, September 2015, July 2017 andJanuary 2018 respectively, resulting in respective goodwill amounting toRMB13,112,525, RMB92,391,901, RMB 6,870,115 and RMB37,063,130. The goodwillhad been allocated to corresponding asset groups for impairment testing.

(2) Provision for impairment of goodwill

The Group has allocated the above goodwill to relevant asset groups for impairment testing.

As at 31 December 2023, Australia Kilikanoon Estate has made full provision for impairmentof goodwill and Atrio has made provision for impairment amounted to RMB 5,210,925 for thecurrent period.

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 forfuture 5 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 Roullet Fransac, Dicot, andMirefleurs, Indomita Wine are 10.7%, 9.1%, and 13.3%, respectively (2022: 11.4%, 10.8%,and 13.0%). The key assumption is the growth rate of annual revenue growth rate ofrelevant subsidiaries, which is computed based on the expected growth rate of eachsubsidiary and long-term average growth rates of relevant industries. Other relevant keyassumption is budget gross profit margin, which is determined based on the historicalperformance of each subsidiary and its expectations for market development.

17 Long-term deferred expenses

Item31 December 2022Additions during the yearAmortisation for the year31 December 2023
Land requisition fee45,043,781-(1,778,943)43,264,838
Greening fee118,996,004-(8,680,919)110,315,085
Leasehold improvement103,895,36450,256,817(7,514,688)146,637,493
Others6,764,083220,500(539,892)6,444,691
Total274,699,23250,477,317(18,514,442)306,662,107

18 Deferred tax assets and deferred tax liabilities

(1) Deferred tax assets and liabilities

Item31 December 202331 December 2022
Deductible or taxable temporary differencesDeferred tax assets/ (liabilities)Deductible or taxable temporary differencesDeferred tax assets/ (liabilities)
Deferred tax assets:
Provision for impairment of assets41,029,36510,563,36631,605,6148,024,903
Unrealised profits of intra-group transactions403,653,124100,913,281431,328,252107,832,063
Unpaid bonus138,873,63734,718,409132,673,26933,168,317
Termination benefits8,475,8452,118,9619,422,1542,355,538
Deductible tax losses261,937,56361,634,797285,560,64267,483,931
Deferred income32,582,7347,021,30438,389,0588,288,411
Effects of Restricted Share Incentive Plan17,614,1804,370,992--
Effect of the lease standard708,367177,094837,972209,493
Sub-total904,874,815221,518,204929,816,961227,362,656
Deferred tax liabilities:
Revaluation due to business combinations involving entities not under common control26,659,5307,718,48043,651,10510,577,065
Effect of the lease standard3,995,6281,001,2492,759,468689,867
Sub-total30,655,1588,719,72946,410,57311,266,932

(2) Details of unrecognised deferred tax assets

Item20232022
Deductible tax losses420,651,124352,775,161

(3) Expiration of deductible tax losses for unrecognised deferred tax assets

Year20232022
2023-22,801,737
202436,171,77842,088,453
202570,528,51075,724,538
202668,479,17172,197,891
2027128,025,572139,962,542
2028117,446,093-
Total420,651,124352,775,161

19 Other non-current assets

Item20232022
Prepaid for Construction fee1,760,000-

20 Short-term loans

Short-term loans by category:

Item20232022
Unsecured loans178,605,850227,866,802
Mortgaged loans163,103,275127,908,137
Guaranteed loans23,272,32033,603,541
Total364,981,445389,378,480

As at 31 December 2023, details of short-term borrowings were as follows:

AmountExchange rateAmountNature of interest rateInterest rateInterest rate at the end of the year
RMB%%
Credit loans (RMB)100,000,0001.0000100,000,000Floating1 Year LPR - 0.95%2.70%
Credit loans (USD)1,000,0007.08717,087,130Fixed7.30%7.30%
Credit loans (EUR)9,100,0007.859271,518,720Floating3.90% ~ 6.95%3.90% ~ 6.95%
Mortgaged loans (EUR)9,368,4177.859273,628,264Floating4.35% ~ 5.40%4.35% ~ 5.40%
Mortgaged loans (USD)12,625,0007.087189,475,011Fixed6.83% ~ 7.30%6.83% ~ 7.30%
Secured loan (AUD)4,800,0004.848423,272,320Floating1.81% ~ 2.54%1.81% ~ 2.54%
Total??364,981,445???

? As at 31 December 2023, mortgaged loans (EUR) were Hacienda y Vi?edos Marques delAtrio, S.L.U (“ Atrio “) factoring of accounts receivable from banks including BancoANTANDER、BBVA、CAIXABANK of EUR 9,368,417 (equivalent of RMB 73,628,264)(31 December 2022: EUR8,080,778 (equivalent of RMB59,982,807).

? On 31 December 2023, Chile Indomita Wine Group pledged its fixed assets to BancoScotiabank and Banco de Chile to borrow USD 12,625,000 (equivalent to RMB89,475,011 ) (31 December 2022: USD9,750,000 (equivalent to RMB67,925,330).

? On 31 December 2023, the secured loan represented the secured loan of AustraliaKilikanoon Estate of AUD4,800,000 (equivalent to RMB23,272,320) (31 December 2022:

AUD7,128,758, equivalent to RMB33,603,541).

21 Accounts payable

(1) Details of advance payments received are as follows:

Ageing20232022
Within 1 year (inclusive)459,106,370466,035,065
Over 1 year but within 2 years (inclusive)10,654,98334,588,275
Over 2 years but within 3 years (inclusive)990,3161,637,390
Over 3 years2,600,8561,063,016
Total473,352,525503,323,746

(2) There is no significant advance payments received with ageing of more than one year.

22 Contract liabilities

ItemAs at 31 December 2023As at 1 January 2023
Receipt in advance174,757,233164,437,033
Withholding sales rebates521,6161,290,958
Total175,278,849165,727,991

Contract liabilities primarily relate to the Group’s advances from sales contracts of specificcustomers and the withholding sales rebates. Relevant contract liabilities are recognised asrevenue when the control of the goods is transferred to the customer.

23 Employee benefits payable

(1) Employee benefits payable:

Note31 December 2022Additions during the yearDecrease during the year31 December 2023
Short-term employee benefits(2)173,197,491453,422,444(450,084,972)176,534,963
Post-employment benefits - defined contribution plans(3)331,89336,838,982(36,850,391)320,484
Termination benefits9,422,1543,537,949(4,484,258)8,475,845
Total182,951,538493,799,375(491,419,621)185,331,292

(2) Short-term employee benefits

31 December 2022Additions during the yearDecrease during the year31 December 2023
Salaries, bonuses, allowances169,643,402395,188,658(391,481,809)173,350,251
Staff welfare1,460,17023,794,432(24,007,235)1,247,367
Social insurance307,24417,496,294(17,508,522)295,016
Medical insurance307,24415,679,097(15,691,325)295,016
Work-related injury insurance-1,347,906(1,347,906)-
Maternity insurance-469,291(469,291)-
Housing fund38,58211,384,809(11,384,809)38,582
Labour union fee, staff and workers’ education fee1,748,0935,558,251(5,702,597)1,603,747
Total173,197,491453,422,444(450,084,972)176,534,963

(3) Post-employment benefits - defined contribution plans

31 December 2022Additions during the yearDecrease during the year31 December 2023
Basic pension insurance330,66035,627,108(35,638,517)319,251
Unemployment insurance1,2331,211,874(1,211,874)1,233
Total331,89336,838,982(36,850,391)320,484

24 Taxes payable

Item20232022
Value-added tax65,545,85442,260,465
Consumption tax50,879,21045,524,174
Corporate income tax134,574,175131,264,991
Individual income tax1,414,3091,199,990
Tax on the use of urban land1,730,9861,899,840
Education surcharges5,072,4362,731,857
Urban maintenance and construction tax6,787,0186,168,990
Others8,719,4438,645,595
Total274,723,431239,695,902

25 Other payables

Note31 December 202331 December 2022
Interest payable-88,889
Dividends payable-70,317
Others(1)555,634,336372,449,483
Total555,634,336372,608,689

(1) Others

(a) Details of others by nature are as follows:

Item20232022
Deposit payable to dealer194,060,993207,492,570
Advertising fee payable104,815,51740,244,601
Payables for repurchase of treasury shares103,411,919-
Trademarks27,515,798-
Freight charges payable22,301,36825,894,816
Deposits due to suppliers18,284,97113,549,010
Equipment and construction fee payable14,832,43915,976,573
Payables for equities14,623,377-
Contracting fee payable3,360,3557,407,093
Staff deposit462,672508,175
Others51,964,92761,376,645
Total555,634,336372,449,483

(b) There are no significant others aged over one year accured this year.

26 Other current liabilities

Item20232022
Refund liabilities arising from rights of return24,869,246-
Tax to be transferred out as sales20,089,05118,945,706
Total44,958,29718,945,706

27 Non-current liabilities due within one year

Non-current liabilities due within one year by category are as follows:

Item20232022
Long-term loans due within one year58,510,868103,011,894
Long-term payables due within one year-22,000,000
Lease liabilities due within one year20,013,12519,008,940
Total78,523,993144,020,834

28 Long-term loans

Long-term loans by category

Item20232022
Credit loans125,127,311186,342,909
Guaranteed loans-44,781,100
Less: Long-term loans due within one year58,510,868103,011,894
Total66,616,443128,112,115

As at 31 December 2023, details of long-term borrowings were as follows:

AmountExchange rateAmountNature of interest rateInterest rateInterest rate at the end of the yearLong-term loans due within one yearLong-term loans due after one year
RMB%%
Credit loans (EUR)745,6877.85925,860,499Fixed1.50% - 3.28%1.50% - 3.28%5,737,711122,788
Credit loans (EUR)15,175,4397.8592119,266,812Floating2.00% ~ 7.59%2.00% ~ 7.59%52,773,15766,493,655
Total125,127,31158,510,86866,616,443

As at 31 December 2023, Credit loans (EUR) were EUR 15,921,126 borrowed by BancoSabadell, Bankia, Banco Santander, BBVA, Caja Rural de Navarr etc. (equivalent of RMB125,127,311 (31 December 2022: EUR25,103,788, equivalent of RMB186,342,909).

29 Lease liabilities

ItemNote20232022
Long-term lease liabilities?105,051,460128,514,033
Less: Lease liabilities due within one yearV.2720,013,12519,008,940
Total?85,038,335109,505,093

30 Long-term payables

Item20232022
Agricultural Development Fund of China-64,000,000
Less: Long-term payables due within one year-22,000,000
Balance of long-term payables-42,000,000

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 recoveryinvestment 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 inR&D Centre, nominally equity investment, is actually a debt investment (financial discountloan). The Group take this investment as long-term payables, which measured in amortizedcost. As at 31 December 2023, the Group has repaid the amount in full.

31 Deferred income

Item31 December 2022Additions during the yearDecrease during the year31 December 2023
Government grants38,389,0584,000,000(9,806,324)32,582,734

Government grants:

Liability31 December 2022Additions of government grants during the yearAmounts recognised in other income during the year31 December 2023Related to assets/income
Industrial development support project16,400,000-(4,100,000)12,300,000Government grants related to assets
Retaining wall subsidies5,973,3333,500,000(638,000)8,835,333Government grants related to assets
Xinjiang industrial revitalisation and technological transformation project9,954,000-(1,422,000)8,532,000Government grants related to assets
Wine fermentation capacity construction project1,600,000-(400,000)1,200,000Government grants related to assets
Special fund for efficient water-saving irrigation project991,000-(162,000)829,000Government grants related to assets
Subsidy for economic and energy-saving technological transformation projects513,200-(128,300)384,900Government grants related to assets
Subsidies for construction of scenic spots-250,000(4,216)245,784Government grants related to assets
Subsidy for mechanic development of Penglai Daliuhang Base90,408-(34,691)55,717Government grants related to assets
Special funds for cellar maintenance2,079,711-(2,079,711)-Government grants related to assets
Engineering technology transformation of information system project580,000-(580,000)-Government grants related to assets
Leisure agriculture subsidies from Jugezhuang government-250,000(50,000)200,000Related to income
Special Funds for Innovation-Driven Development of Yantai City172,406-(172,406)-Related to income
Prize from Industrial Design Competition of Yantai Mayor’s Cup35,000-(35,000)-Related to income
Total38,389,0584,000,000(9,806,324)32,582,734

32 Share capital

Balance at the beginning of the yearChanges during the yearBalance at the end of the year
Issuance of new shares
Unrestricted RMB ordinary shares453,460,800-453,460,800
Restricted RMB ordinary shares (Note)-6,785,5596,785,559
Foreign shares listed domestically232,003,200-232,003,200
Total shares685,464,0006,785,559692,249,559

Note: The Proposal on the Company’s 2023 Restricted Share Incentive Plan (Draft) and

Relevant Summary and the Proposal on the Request for the Authorisation to theBoard of Directors by the General Meetings of Shareholders to Handle Mattersrelated to the Company’s 2023 Restricted Share Incentive Plan were passed byresolutions in the Group’s 2022 General Meetings of Shareholders held on 26 May2023. In addition, the Proposal on the Adjustments to Matters related to 2023Restricted Share Incentive Plan and the Proposal on the Granting of RestrictedShares to Incentive Objects under the 2023 Restricted Share Incentive Plan werereviewed and passed in the 2023 first extraordinary Board meeting held on 26 June2023 (hereinafter referred to as the “Restricted Share Incentive Plan”, see Note XIIIfor details). The Group determined to grant 6,850,000 restricted shares to 204incentive objects at a grant price of RMB15.24 per share on 26 June 2023 (the grantdate). A total of 203 incentive objects of the Group actually subscribed for 6,785,559restricted shares at a grant price of RMB15.24 per share. The transaction increasedthe Company’s registered capital by RMB6,785,559, increased the capital reserve byRMB96,626,360 and recognised the repurchase obligation on restricted shares ofRMB103,411,919.

33 Capital reserve

ItemsNote31 December 2022Additions during the yearDecrease during the year31 December 2023
Share premium(1)519,052,17296,626,360-615,678,532
Others(2)5,916,58830,735,755(1,244,168)35,408,175
Total?524,968,760127,362,115(1,244,168)651,086,707

(1) During the reporting period, the Group’s issuance of restricted shares in connection

with the implementation of the Restricted Share Plan resulted in an increase in sharepremium of RMB96,626,360, see Note V.32 for details.

(2) During the reporting period, the Group’s recognition of amortisation expenses in

connection with the implementation of the Restricted Share Plan resulted in anincrease in capital reserve of RMB30,735,755.

As a result of the Company’s acquisition of non-controlling interests in LiaoningChangyu Ice Wine Chateau Co., Ltd., the difference between the long-term equityinvestment acquired and the share of net assets continuously calculated since theacquisition date by the subsidiary based on the proportion of newly increasedshareholding was recognised in capital reserve, resulting in a decrease in capitalreserve by RMB1,244,168, see Note VIII.2 for details.

34 Treasury shares

ItemBalance at the beginning of the yearAdditions during the yearDecrease during the yearBalance at the end of the year
Treasury shares-103,411,919-103,411,919
Total-103,411,919-103,411,919

The increase in treasury shares during the reporting period was due to the repurchaseobligation of RMB103,411,919 arising from the granting of restricted shares to incentiveobjects in connection with the implementation of the Restricted Share Plan, see Note V.32for details.

35 Other comprehensive income

ItemBalance at the beginning of the year attributable to shareholders of the CompanyAccrued during the yearBalance at the end of the year attributable to shareholders of the Company
Before-tax amountLess: Previously recognised amount transferred to profit or lossLess: Income tax expensesNet-of-tax amount attributable to shareholders of the CompanyNet-of-tax amount attributable to non-controlling interests
Items that may be reclassified to profit or loss
Translation differences arising from translation of foreign currency financial statements(23,760,238)9,519,495--8,975,561543,934(14,784,677)

36 Surplus reserve

Item31 December 202331 December 2022
Statutory surplus reserve342,732,000342,732,000

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 profitto the surplus reserve in 2023 as surplus reserve of the Company is above 50% of theregistered capital.

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.

37 Retained earnings

ItemNote20232022
Retained earnings at the beginning of the year9,049,649,2118,929,426,600
Add: Net profits for the year attributable to shareholders of the Company532,438,907428,681,411
Less: Dividends to ordinary shares(1)(308,458,800)(308,458,800)
Retained earnings at the end of the year(2)9,273,629,3189,049,649,211

(1) Dividends in respect of ordinary shares declared during the year

Pursuant to the shareholders’ approval at the shareholders’ general meeting on 26 May2023, the Company paid cash dividends to shareholders on June 16, 2023 and June 21,2023 ,a cash dividend of RMB 0.45 per share (2022: RMB0.45 per share), totalling RMB308,458,800 (2022:RMB308,458,800).

(2) Retained earnings at the end of the year

As at 31 December 2023, the consolidated retained earnings attributable to the Companyincluded an appropriation of RMB 55,900,659 (2022: RMB58,180,889) to surplus reservemade by the subsidiaries.

38 Operating income and operating costs

Item20232022
IncomeCostIncomeCost
Principal activities4,309,556,6311,754,792,9563,860,311,3181,651,154,424
Other operating activities75,207,70432,190,70158,629,84229,640,308
Total4,384,764,3351,786,983,6573,918,941,1601,680,794,732
Including: Revenue from contracts with customers4,380,255,8401,783,149,4983,916,599,9341,679,459,968
Rent income4,508,4953,834,1592,341,2261,334,764

(1) Disaggregation of revenue from contracts with customers:

Type of contract20232022
By type of goods or services
- Liquor4,309,556,6313,860,311,318
- Others70,699,20956,288,616
By timing of transferring goods or services?
- Revenue recognised at a point in time4,380,255,8403,916,599,934

(2) Geographical regions of operating income and operating costs:

Type of contract20232022
IncomeCostIncomeCost
By geographical regions
- China3,761,534,7931,378,286,4843,320,757,5551,283,478,621
- Other countries and regions623,229,542408,697,173598,183,605397,316,111
Total4,384,764,3351,786,983,6573,918,941,1601,680,794,732

39 Taxes and surcharges

Item20232022
Consumption tax239,887,676198,284,289
Urban maintenance and construction tax35,197,17228,067,931
Education surcharges23,177,13719,554,864
Property tax34,003,21928,150,521
Tax on the use of urban land10,331,17511,403,394
Stamp duty5,289,2573,230,856
Others1,849,935964,772
Total349,735,571289,656,627

40 Selling and distribution expenses

Item20232022
Marketing fee490,535,793322,593,973
Salaries and benefits290,154,434282,395,182
Labour service fee93,243,814108,784,934
Advertising fee75,527,63775,862,425
Depreciation expense48,882,91547,509,217
Design and production fee32,182,65630,594,519
Travelling expenses29,318,91323,759,493
Trademarks expenses27,515,79821,877,171
Storage rental27,290,48825,572,282
Restricted share incentive plan fee22,929,489-
Conference fee19,309,5578,735,659
Water, electricity and gas fee16,830,07316,438,410
Others66,061,20964,842,873
Total1,239,782,7761,028,966,138

41 General and administrative expenses

Item20232022
Salaries and benefits80,051,08973,824,670
Depreciation expenses89,486,53885,366,361
Repair costs11,978,85511,853,538
Administrative expenses19,929,52323,586,680
Amortisation of greening fee17,409,39817,846,265
Amortisation expenses16,202,52318,057,909
Safety production costs10,743,06311,539,602
Security and cleaning fee8,326,3018,530,050
Restricted share incentive plan fee7,806,266-
Contracting fee4,337,7384,309,290
Others37,719,56432,691,166
Total303,990,858287,605,531

42 Financial expenses

Item20232022
Interest expenses from loans and payables31,297,81022,174,501
Interest expenses from lease liabilities4,502,2874,682,389
Interest income from deposits(30,571,465)(24,186,351)
Exchange losses5,002,1173,301,716
Other financial expenses852,7101,283,952
Total11,083,4597,256,207

43 Other income

Item20232022Related to assets/income
Industrial development support project4,100,0004,100,000Government grants related to assets
Special funds for the maintenance of wine cellars2,079,711-Government grants related to assets
Xinjiang Industrial Revitalization and Technological Transformation Project1,422,0001,422,000Government grants related to assets
Subsidies for retaining wall638,000-Government grants related to assets
Engineering technology transformation of information system project580,000-Government grants related to assets
Wine production capacity construction project400,000400,000Government grants related to assets
Special subsidies for infrastructure support-1,060,000Government grants related to asse
Others - Government grants related to assets329,2072,152,842Government grants related to assets
Tax rebates19,533,1967,592,342Related to income
Special funds for the development of enterprises9,237,7168,380,737Related to income
Wine Industry Development Project2,684,2812,773,000Related to income
Talent development funds from Shihezi government1,500,000-Related to income
Funds for rural revitalisation, technological innovation and enhancement action plan1,170,000-Related to income
Funds for the integration development project of agricultural industry1,000,000-Related to income
Others - Government grants related to income6,849,6885,264,519Related to income
Total51,523,79933,145,440

Other income during reporting period has been included in non-recurring gains and losses.

44 Investment income/(losses)

Investment losses by items

ItemNOTE20232022
Long-term equity investment losses under equity method(712,480)(1,605,469)
Investment profit/(loss) arising from disposal of subsidiaries and long-term equity investmentsVII.224,559,930(1,842,325)
Total23,847,450(3,447,794)

45 Credit reversal

Item20232022
Accounts receivable1,397,6584,752,797
Total1,397,6584,752,797

46 Impairment losses

Item20232022
Fixed assets10,363,383-
Inventories3,143,575578,745
Goodwill-5,210,925
Total13,506,9585,789,670

47 Loss from asset disposals

Item20232022
Loss from disposal of fixed assets134,13316,191,903

Loss from disposal of assets during reporting period has been included in non-recurringgains and losses.

48 Non-operating income and non-operating expenses

(1) Non-operating income by item is as follows:

Item20232022
Net income from fine9,325,229566,334
Insurance compensation452,2423,038,560
Others2,214,7993,227,915
Total11,992,2706,832,809

Non-operating income during reporting period has been included in non-recurring gains andlosses.

(2) Non-operating expenses

Item20232022
Donations provided1,212,015693,625
Losses from scrapping of packaging materials1,137,256-
Losses from disposal of non-current assets573,560867,796
Compensation, penalty and fine expenses80,403723,161
Others425,176665,409
Total3,428,4102,949,991

Non-operating expenses during reporting period has been included in non-recurring gainsand losses.

49 Income tax expenses

ItemNote20232022
Current tax expense for the year based on tax law and regulations216,588,992176,922,552
Changes in deferred tax assets/liabilities(1)4,844,45517,311,037
Total221,433,447194,233,589

(1) The analysis of changes in deferred tax is set out below:

Item20232022
Origination of temporary differences4,844,45517,311,037
Total4,844,45517,311,037

(2) Reconciliation between income tax expenses and accounting profit:

Item20232022
Profit before taxation747,466,156625,582,303
Estimated income tax at 25%186,866,539156,395,576
Effect of different tax rates applied by subsidiaries2,070,8283,875,636
Effect of non-deductible costs, expense and losses4,978,0356,207,982
Effect of deductible losses of deferred tax assets not recognised for the year25,756,99626,681,652
Deferred tax assets written-off1,761,0491,072,743
Income tax expenses221,433,447194,233,589

50 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:

20232022
Consolidated net profit attributable to ordinary shareholders of the Company532,438,907428,681,411
Weighted average number of ordinary shares outstanding685,464,000685,464,000
Basic earnings per share (RMB/share)0.780.63

Weighted average number of ordinary shares is calculated as follows:

20232022
Issued ordinary shares at the beginning of the year685,464,000685,464,000
Weighted average number of ordinary shares at the end of the year685,464,000685,464,000

(2) Diluted earnings per share

Diluted earnings per share is calculated by dividing consolidated net profit attributable toordinary shareholders of the Company by the weighted average number of ordinary sharesoutstanding (diluted):

?Note20232022
Consolidated net profit attributable to ordinary shareholders of the Company (Dilute)(a)532,438,907428,681,411
Weighted average number of ordinary shares outstanding (Dilute)(b)685,670,893685,464,000
Diluted earnings per share (RMB/share)0.780.63

(a) Consolidated net profit attributable to ordinary shareholders of the Company (diluted) is

calculated as follows:

20232022
Consolidated net profit attributable to ordinary shareholders of the Company532,438,907428,681,411
Consolidated net profit attributable to ordinary shareholders of the Company (diluted)532,438,907428,681,411

(b) The weighted average number of the Company’s ordinary shares (diluted) is calculated

as follows:

?20232022
Weighted average number of ordinary shares at 31 December685,464,000685,464,000
Diluted adjustments:
Effects of restricted shares206,893-
Weighted average number of ordinary shares (diluted) at the end of the year685,670,893685,464,000

51 Cash flow statement

(1) Cash relating to operating activities

a. Proceeds relating to other operating activities:

Item20232022
Recovery of prior years’ trademarks right receivables (Note V.8)120,930,641-
Government grants45,677,242?30,239,160
Penalty income9,325,229?566,334
Interest income from bank27,375,399?22,845,833
Others16,077,111?8,174,080
Total219,385,622?61,825,407

b. Payments relating to other operating activities:

Item20232022
Selling and distribution expenses539,874,320?443,486,326
General and administrative expenses99,254,521?92,510,326
Others36,569,90846,253,149
Total675,698,749?582,249,801

(2) Cash relating to investing activities

a. Proceeds relating to significant investing activities:

Item20232022
Recovery of fixed deposits238,200,000133,200,000

b. Payments relating to significant investing activities:

Item20232022
Investments in fixed deposits464,200,000108,200,000
Acquisition of fixed assets and construction in progress110,067,855182,207,269

(3) Cash relating to financing activities

a. Proceeds relating to other financing activities:

Item20232022
Payment of capital reduction20,674,509-
Acquisition of non-controlling interests14,623,400-
Cash paid for lease31,931,214?19,774,744
Total67,229,123?19,774,744

b. Changes in liabilities arising from financing activities

Balance at the beginning of the yearAdditions during the yearDecreases during the yearBalance at the end of the year
CashNon-cashCashNon-cash
Short-term loan389,378,480557,308,654-(581,705,689)-364,981,445
Long-term loan128,112,11516,550,853-(75,199,936)(2,846,589)66,616,443
Lease liabilities109,505,093-3,966,353(8,182,353)(20,250,758)85,038,335
Long-term accounts payable42,000,000--(42,000,000)--
Non-current liabilities due within one year144,020,834-23,097,347(88,594,188)-78,523,993
Other accounts payable - dividends payable70,317-309,997,116(310,067,433)--
Other accounts payable - interest payable88,889-35,800,097(35,888,986)--
Other accounts payable - payables for equities--29,246,777(14,623,400)-14,623,377
Other accounts payable - payables for repurchase of treasury shares-103,411,919---103,411,919
Other accounts payable - Investments returned to minority shareholders--20,674,509(20,674,509)--
Total813,175,728677,271,426422,782,199(1,176,936,494)(23,097,347)713,195,512

52 Supplementary information on cash flow statement

(1) Supplement to cash flow statement

a. Reconciliation of net profit to cash flows from operating activities:

Item20232022
Net profit526,032,709431,348,714
Add: Credit/asset impairment losses12,109,3001,036,873
Depreciation of fixed assets and investment property317,061,135314,038,019
Amortisation of intangible assets16,932,86225,766,271
Amortisation of long-term deferred expenses18,514,44219,340,746
Amortisation of biological assets13,800,29014,911,694
Depreciation of ROU assets22,107,60322,131,592
Losses from disposal of fixed assets, intangible assets, and other long-term assets707,69317,059,699
Financial expenses32,287,86825,170,658
Equity incentive expenses30,735,755-
Investment (profits)/losses(23,847,450)3,447,794
Decrease in deferred tax assets5,174,68317,848,075
Decrease in deferred tax liabilities(330,228)(537,038)
Decrease/(increase) in gross inventories131,877,015(101,354,740)
(Increase)/decrease in operating receivables(54,231,481)187,564,569
Increase/(decrease) iecrease in operating payables124,159,547(108,896,279)
Net cash flows from operating activities1,173,091,743868,876,647

b. Significant investing and financing activities not requiring the use of cash:

Item20232022
Payment of construction in progress and other long-term assets by bank acceptances13,226,59240,584,152

c. Change in cash and cash equivalents:

Item20232022
Cash equivalents at the end of the year1,963,155,7521,612,753,600
Less: Cash equivalents at the beginning of the year1,612,753,6001,502,327,029
Net increase in cash and cash equivalents350,402,152110,426,571

(2) Information on acquisition or disposal of subsidiaries and other business units during the

current year:

Information on acquisition of WEIMISS SHANGHAI:

2023
Consideration for acquisitions5,537,700
Cash or cash equivalents paid during the year for acquiring subsidiaries and other business units during the year5,537,700
Less: Cash and cash equivalents held by acquired subsidiaries and other business units6,194,749
Net cash received for the acquisition657,049

For non-cash assets and liabilities held by the acquired subsidiaries and other businessunits, refer to Note VII.1.

Information on disposal of subsidiaries and other business units:

Xinjing TianzhuLangfang Castel
Consideration for disposals12,090,00010,921,494
Cash or cash equivalents received during the year for disposing of subsidiaries and other business units during the year12,090,00010,921,494
Less: Cash and cash equivalents held by disposed subsidiaries and other business units2,451,415251,454
Net cash received for disposing of subsidiaries and other business units9,638,58510,670,040
Non-cash assets and liabilities held by disposed subsidiaries and other business units
- Current assets603,7813,977,024
- Non-current assets22,865,4119,507,310
- Current liabilities23,8191,039,979
- Non-current liabilities2,216,975-

(3) Details of cash and cash equivalents

Item20232022
Cash at bank and on hand
Including: Cash on hand74,95147,954
Bank deposits available on demand1,963,080,8011,612,705,646
Closing balance of cash and cash equivalents1,963,155,7521,612,753,600

53 Assets with restrictive ownership title or right of use

ItemOpening balanceBalance at the end of the yearReason for restriction
Cash at bank and on hand10,500,515337,895The Company deposits for letters of credit etc.
Account receivable (i)59,982,80773,628,265Short-term borrowings mortgage from Atrio
Fixed assets303,897,12437,985,117Short-term borrowings from Dicot
Intangible assets169,385,254-R&D Centre mortgage for long-term payables
Total543,765,700111,951,277

(i) As at 31 December 2023, the amount of accounts receivable with restricted ownership

is EUR 9,368,417 , equivalent of RMB 73,628,265 hich refers to accounts receivableAtrio conducted for factoring from Banco de Sabadell, S.A. Etc. (31 December 2022:

EUR8,080,778, equivalent of RMB 59,982,807).

54 Leases

(1) As a lessee

Item20232022
Short-term lease expenses for which the practical expedient has been applied527,463122,097
Total cash outflow for leases32,458,677?19,896,841

The Group leases buildings and motor vehicles with the lease terms of 1 year or less, and allof these leases are short-term leases. The Group has elected not to recognise right-of-useassets and lease liabilities for these leases.

(2) As a lessor

Item20232022
Lease income4,508,4952,341,226

The Group leased out some machineries in 2022 and 2023 with a lease term within 1year. The Group has classified these leases as operating leases, because they do nottransfer substantially all of the risks and rewards incidental to the ownership of theassets.

VI. Research and development expenses

Presentation by nature

Item20232022
Salaries6,564,8847,171,522
Diagnostic test fees3,448,0001,819,699
Consultancy fee3,039,5191,476,996
Material consumption2,212,169995,281
Others2,148,9623,967,812
Total17,413,53415,431,310
Including: research and development expenditures that are expensed17,413,53415,431,310

VII. Change of consolidation scope

1 Business combinations involving entities not under common control

(1) Business combinations involving entities not under common control occurred during the year

Acquisition date of equity investmentCost of equity investmentShareholding acquired (%)Acquisition methodAcquisition dateBasis of acquisition date determinationAcquiree from acquisition date to 31 December 2023
IncomeNet profitNet cash outflow
Weimiss Shanghai01/31/20235,537,70070%Equity transfer01/31/2023Transfer of controls1,673,699225,84290,627

Weimiss Shanghai is a company registered in Shanghai on 20 August 2020 and is engaged in Beijing Wanfeng. The Company held 30% of theequity and Beijing Wanfeng Trading Co., Ltd. held 70% of the equity at the time of incorporation. This entity is mainly engaged in the wine andfood operations. According to the Equity Transfer Contract signed by the Company and Beijing Wanfeng in 2023, Beijing Wanfeng transferredits 70% equity in Weimiss Shanghai to the Company at a price of RMB5,537,700, and Weimiss Shanghai becomes a wholly-owned subsidiaryof the Company upon the completion of this transaction. The related transaction was completed in January 2023.

(2) Acquisition cost and goodwill

Acquisition costWeimiss Shanghai
Carrying amountFair value
Cash5,537,7005,537,700
Equity interests held before acquisition date2,373,2852,373,285
Total acquisition cost7,910,9857,910,985
Less: Share of the fair value of the identifiable net assets acquired7,910,9857,910,985
Goodwill--

(3) Identifiable assets and liabilities of the acquiree at the acquisition date

Weimeisi Shnghai
Fair valueCarrying amount
Assets
Cash at bank and on hand6,194,7496,194,749
Receivables1,3941,394
Prepayments22,46322,463
Other receivables216,388216,388
Inventories1,356,5771,356,577
Other current assets124,024124,024
Liabilities
Accounts Received in Advance3535
Payroll3,0003,000
Other payables1,5751,575
Net assets7,910,9857,910,985
Less: Non-controlling interests--
Net assets acquired7,910,9857,910,985

2 Disposal of subsidiaries

(1) Transactions or events resulting in loss of control over subsidiaries

Entity nameDate of losing controlConsideration on the date of losing controlShareholding being disposed on the date of losing control (%)Disposal method on the date of losing controlBasis for determining date of losing controlDifference between consideration received and the related share of net assets in consolidated financial statementsProportion of remaining shareholding on the date of losing controlInvestment income or loss/retained earnings transferred from other comprehensive income related to previous equity investments in subsidiaries
Xinjiang Tianzhu Wine Co., Ltd.30/06/202312,090,00060%Equity transferTransfer of controls17,003,530--
Langfang Development Zone Castel-Changyu Wine Co., Ltd.20/12/202310,921,49449%Equity transferTransfer of controls7,556,400--

(2) Other reasons for change of consolidation scope

The Group’s subsidiaries - Changyu (Jingyang) Wine Sales Co., Ltd. and Langfang Changyu Pioneer Wine Sales Co., Ltd. were cancelled in2023.

VIII. Interests in other entities

1 Interests in subsidiaries

(1) Composition of the Group

Name of the SubsidiaryPrincipal place of businessRegistered placeBusiness natureRegistered capitalShareholding ratio (%)Acquisition method
(or similar equity interest)
Etablissements Roullet Fransac (“Roullet Fransac”)Cognac, FranceCognac, FranceTradingEUR2,900,000-100Business combinations involving entities not under common control
Dicot Partners, S.L (“Dicot”)Navarre, SpainNavarre, SpainMarketing and salesEUR2,000,00090-Business combinations involving entities not under common control
Vi?a Indómita, S.A., Vi?a Dos Andes, S.A., and BodegasSantaAlicia SpA.. (“Chile Indomita Wine Group”)Santiago, ChileSantiago, ChileMarketing and salesCLP31,100,000,00085-Acquired through establishment or investment
Kilikanoon Estate Pty Ltd. (“Australia Kilikanoon Estate”)Adelaide, AustraliaAdelaide, AustraliaMarketing and salesAUD6,420,00097.5-Business combinations involving entities not under common control
Beijing Changyu Sales and Distribution Co., Ltd. (“Beijing Sales”)Beijing, ChinaBeijing, ChinaMarketing and salesRMB1,000,000100-Acquired through establishment or investment
Yantai Kylin Packaging Co., Ltd. (“Kylin Packaging”)Yantai, Shandong, ChinaYantai, Shandong, ChinaManufacturingRMB15,410,000100-Acquired through establishment or investment
Yantai Chateau Changyu-Castel Co., Ltd.(“Chateau Changyu”) (a)Yantai, Shandong, ChinaYantai, Shandong, ChinaManufacturingUSD5,000,00070-Acquired through establishment or investment
Changyu (Jingyang) Wine Co., Ltd. (“Jingyang Wine”)Xianyang, Shaanxi, ChinaXianyang, Shaanxi, ChinaManufacturingRMB1,000,0009010Acquired through establishment or investment
Yantai Changyu Pioneer Wine Sales Co., Ltd. (“Sales Company”)Yantai, Shandong, ChinaYantai, Shandong, ChinaMarketing and salesRMB8,000,000100-Acquired through establishment or investment
Shanghai Changyu Sales and Distribution Co., Ltd. (“Shanghai Sales”)Shanghai, ChinaShanghai, ChinaMarketing and salesRMB1,000,000100-Acquired through establishment or investment
Beijing Changyu AFIP Agriculture development Co., Ltd. (“Agriculture Development”)Miyun, Beijing, ChinaMiyun, Beijing, ChinaMarketing and salesRMB1,000,000-100Acquired through establishment or investment
Beijing Chateau Changyu AFIP Global Co., Ltd. (“AFIP”) (b)Beijing, ChinaBeijing, ChinaManufacturingRMB642,750,00091.53-Acquired through establishment or investment
Yantai Changyu Wine Sales Co., Ltd. (“Wines Sales”)Yantai, Shandong, ChinaYantai, Shandong, ChinaMarketing and salesRMB5,000,0009010Acquired through establishment or investment
Name of the SubsidiaryPrincipal place of businessRegistered placeBusiness natureRegistered capitalShareholding ratio (%)Acquisition method
(or similar equity interest)
Yantai Changyu Pioneer International Co., Ltd. (“Pioneer International”)Yantai, Shandong, ChinaYantai, Shandong, ChinaMarketing and salesRMB5,000,0007030Acquired through establishment or investment
Hangzhou Changyu Wine Sales Co., Ltd. (“Hangzhou Changyu”)Hangzhou, Zhejiang, ChinaHangzhou, Zhejiang, ChinaMarketing and salesRMB500,000-100Acquired through establishment or investment
Ningxia Changyu Grape Growing Co., Ltd. (“Ningxia Growing”)Yinchuan, Ningxia, ChinaNingxia, ChinaPlatingRMB1,000,000100-Acquired through establishment or investment
Huanren Changyu National Wines Sales Co., Ltd. (“National Wines”)Benxi, Liaoning, ChinaBenxi, Liaoning, ChinaMarketing and salesRMB2,000,000100-Acquired through establishment or investment
Liaoning Changyu Golden Icewine Valley Co., Ltd. (“Golden Icewine Valley”)Benxi, Liaoning, ChinaBenxi, Liaoning, ChinaManufacturingRMB59,687,300100-Acquired through establishment or investment
Yantai Development Zone Changyu Trading Co., Ltd. (“Development Zone Trading”)Yantai, Shandong, ChinaYantai, Shandong, ChinaMarketing and salesRMB5,000,000-100Acquired through establishment or investment
Beijing AFIP Meeting Center (“Meeting Center”)Miyun, Beijing, ChinaMiyun, Beijing, ChinaServicesRMB500,000-100Acquired through establishment or investment
Beijing AFIP Tourism and Culture (“AFIP Tourism”)Miyun, Beijing, ChinaMiyun, Beijing, ChinaTourismRMB500,000-100Acquired through establishment or investment
Changyu (Ningxia) Wine Co., Ltd. (“Ningxia Wine”)Ningxia, ChinaNingxia, ChinaManufacturingRMB1,000,000100-Acquired through establishment or investment
Yantai Changyu Chateau Tinlot Co., Ltd. (“Chateau Tinlot”)Yantai, Shandong, ChinaYantai, Shandong, ChinaWholesale and retailRMB400,000,0006535Acquired through establishment or investment
Xinjiang Chateau Changyu Baron Balboa Co., Ltd. (“Chateau Shihezi”)Shihezi, Xinjiang, ChinaShihezi, Xinjiang, ChinaManufacturingRMB550,000,000100-Acquired through establishment or investment
Ningxia Chateau Changyu Moser XV Co., Ltd. (“Chateau Ningxia”)Yinchuan, Ningxia, ChinaYinchuan, Ningxia, ChinaManufacturingRMB2,000,000100-Acquired through establishment or investment
Shaanxi Chateau Changyu Rena Co., Ltd. (“Chateau Changan”)Xianyang, Shaanxi, ChinaXianyang, Shaanxi, ChinaManufacturingRMB20,000,000100-Acquired through establishment or investment
Yantai Changyu Wine Research & Development Centre Co., Ltd. (“R&D Centre”) (c)Yantai, Shandong, ChinaYantai, Shandong, ChinaManufacturingRMB500,000,000100-Acquired through establishment or investment
Changyu (HuanRen) Wine Co., Ltd. (“Huan Ren Wine”)Benxi, Liaoning, ChinaBenxi, Liaoning, ChinaWine production projectingRMB5,000,000100-Acquired through establishment or investment
Xinjiang Changyu Sales Co., Ltd. (“Xinjiang Sales”)Shihezi, Xinjiang, ChinaShihezi, Xinjiang, ChinaMarketing and salesRMB10,000,000-100Acquired through establishment or investment
Ningxia Changyu Trading Co., Ltd. (“Ningxia Trading”)Yinchuan, Ningxia, ChinaYinchuan, Ningxia, ChinaMarketing and salesRMB1,000,000-100Acquired through establishment or investment
Shaanxi Changyu Rena Wine Sales Co., Ltd. (“Shaanxi Sales”)Xianyang, Shaanxi, ChinaXianyang, Shaanxi, ChinaMarketing and salesRMB3,000,000-100Acquired through establishment or investment
Name of the SubsidiaryPrincipal place of businessRegistered placeBusiness natureRegistered capitalShareholding ratio (%)Acquisition method
(or similar equity interest)
Penglai Changyu Wine Sales Co., Ltd.(“Penglai Sales”)Penglai, Shandong, ChinaPenglai, Shandong, ChinaMarketing and salesRMB5,000,000-100Acquired through establishment or investment
Laizhou Changyu Wine Sales Co., Ltd. (“Laizhou Sales”)Laizhou, Shandong, ChinaLaizhou, Shandong, ChinaMarketing and salesRMB1,000,000-100Acquired through establishment or investment
Francs Champs Participations SAS (“Francs Champs”)Cognac, FranceCognac, FranceInvestment and tradingEUR32,000,000100-Acquired through establishment or investment
Yantai Roullet Fransac Wine Sales Co., Ltd. (“Yantai Roullet Fransac”)Yantai, Shandong, ChinaYantai, Shandong, ChinaMarketing and salesRMB1,000,000-100Acquired through establishment or investment
Yantai Changyu Wine Sales Co., Ltd. (“Wine Sales Company”)Yantai, Shandong, ChinaYantai, Shandong, ChinaMarketing and salesRMB5,000,000100-Acquired through establishment or investment
Shaanxi Chateau Changyu Rena Tourism Co., Ltd. (“Chateau Tourism”)Xianxin, Shaanxi, ChinaXianxin, Shaanxi, ChinaTourismRMB1,000,000-100Acquired through establishment or investment
Longkou Changyu Wine Sales Co., Ltd. (“Longkou Sales”)Yantai, Shandong, ChinaYantai, Shandong, ChinaMarketing and salesRMB1,000,000-100Acquired through establishment or investment
Yantai Changyu Cultural Tourism Development Co., Ltd. (“Culture Development “)Yantai, Shandong, ChinaYantai, Shandong, ChinaTourismRMB10,000,000100-Acquired through establishment or investment
Yantai Changyu Wine Culture Museum Co., Ltd. (“Museum”)Yantai, Shandong, ChinaYantai, Shandong, ChinaTourismRMB500,000-100Acquired through establishment or investment
Yantai Changyu Culture Tourism Production Sales Co., Ltd. (“Culture Sales”)Yantai, Shandong, ChinaYantai, Shandong, ChinaTourismRMB5,000,000-100Acquired through establishment or investment
Yantai Changyu International Window of the Wine City Co., Ltd. (“Window of the Wine City”)Yantai, Shandong, ChinaYantai, Shandong, ChinaTourismRMB60,000,000-100Acquired through establishment or investment
Yantai KOYA Brandy Chateau Co., Ltd. (“Chateau KOYA”)Yantai, Shandong, ChinaYantai, Shandong, ChinaManufacturingRMB10,000,000100-Acquired through establishment or investment
Changyu (Shanghai) International Digital Marketing Center Limited (“Digital Marketing”)Shanghai, ChinaShanghai, ChinaMarketing and salesRMB50,000,000100-Acquired through establishment or investment
Shanghai Changyu Guoqu Digital Technology Co., Ltd. (“Shanghai Guoqu”)Shanghai, ChinaShanghai, ChinaMarketing and salesRMB6,000,000-51Acquired through establishment or investment
Tianjin Changyu Yixin Digital Technology Co., Ltd. (“Tianjin Yixin”)Tianjin, ChinaTianjin, ChinaMarketing and salesRMB10,000,000-51Acquired through establishment or investment
Shanghai Changyu Yixin Digital Technology Co., Ltd. (“Shanghai Yixin”)Shanghai, ChinaShanghai, ChinaMarketing and salesRMB10,000,000-51Acquired through establishment or investment
Yantai Creighton Catering Company Limited (“Creighton Catering”)Yantai, Shandong, ChinaYantai, Shandong, ChinaServicesRMB1,000,000-100Acquired through establishment or investment
Name of the SubsidiaryPrincipal place of businessRegistered placeBusiness natureRegistered capitalShareholding ratio (%)Acquisition method
(or similar equity interest)
Weimeisi ShanghaiShanghai, ChinaShanghai, ChinaMarketing and salesRMB10,000,000100-Acquired through establishment or investment

Reasons for the inconsistency between the proportion of shareholdings in a subsidiary and the proportion of voting rights:

(a) Chateau Changyu is a Sino-foreign joint venture established by the Company and a foreign investor, accounting for 70% of Changyu

Chateau’s equity interest. Through agreement arrangement, the Company has the full power to control Changyu Chateau’s strategicoperating, investing and financing policies. The agreement arrangement is terminated on 31 December 2027.

(b) AFIP is a limited liability company established by Yantai Dean and Beijing Qinglang. After the equity change, the Company holds 91.53%

of its equity. Through agreement arrangement, the Company has the full power to control AFIP’s strategic operating, investing andfinancing policies. The agreement arrangement will be terminated on 2 September 2024.

(c) R&D Centre was a joint venture established by the Company and CADF, at December 31, 2023 the Company held 100% of its

equity.Through agreement arrangement in Note V. 30, the Company has the full power to control R&D Centre’s strategic operating,investing and financing policies. The agreement arrangement will be terminated on 28 February 2025. The R&D Centre settled all CADFborrowings early and completed the change of business license on 28 December 2023.

(2) Material non-wholly owned subsidiaries

Name of the SubsidiaryProportion of ownership interest held by non-controlling interestsComprehensive income attributable to non-controlling interests for the yearDividend declared to non-controlling shareholders during the yearBalance of non-controlling interests at the end of the year
AFIP8.47%--56,409,393
IWCC15%1,248,4151,151,48357,361,438

(3) Key financial information about material non-wholly owned subsidiaries

The following table sets out the key financial information of the above subsidiaries withoutoffsetting internal transactions, but with adjustments made for the fair value adjustment at theacquisition date and any differences in accounting policies:

AFIPChile Indomita Wine Group
2023202220232022
Current assets268,602,777251,902,602252,718,459221,192,234
Non-current assets384,948,572399,165,555314,112,626320,233,623
Total assets653,551,349651,068,157566,831,085541,425,857
Current liabilities26,013,75722,424,425167,265,413140,793,252
Non-current liabilities3,603,8863,020,5829,598,44511,311,586
Total liabilities29,617,64325,445,007176,863,858152,104,838
Operating income198,426,991175,992,960232,778,304238,351,323
Net profit/(loss)2,636,577(3,366,711)11,018,54123,561,992
Total comprehensive income2,636,577(3,366,711)8,322,76529,720,066
Cash flows from operating activities10,320,2198,265,56822,541,31718,971,851

2 Transactions that cause changes in the Group’s interests in subsidiaries that do not result in

loss of control

(1) Changes in the Group’s interests in subsidiaries:

Fiscal yearName of SubsidiaryPercentage of minority shareholdings acquiredPurchase date
2023Golden Ice Wine Vally49%30/01/2023

(2) Impact of transactions on non-controlling interests and equity attributable to the shareholders

of the Company:

Golden Ice Wine Vally
Acquisition cost consideration
- Cash29,246,777
- Non-cash assets3,500,000
Total32,746,777
Less: Share of net assets in subsidiaries based on the shares acquired31,502,609
Difference1,244,168
Including: Adjustment to capital reserve1,244,168

IX. Risk related to financial instruments

The Group has exposure to the following main risks from its use of financial instruments inthe normal course of the Group’s operations:

- Credit risk- Liquidity risk- Interest rate risk- Foreign currency risk

The following mainly presents information about the Group’s exposure to each of the 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.

1 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 primarilyattributable to cash at bank, receivables, debt investments and derivative financialinstruments entered into for hedging purposes. Exposure to these credit risks are monitoredby management on an ongoing basis.

The cash at bank of the Group is mainly held with well-known financial institutions.Management does not foresee any significant credit risks from these deposits and does notexpect that these financial institutions may default and cause losses to the Group.

As at 31 December 2023, 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 therelevant operating unit, the Group does not offer credit terms without the specific approval ofthe Department of Credit Control in the Group. In addition, the Group reviews therecoverable amount of each individual trade debt at each balance sheet date to ensure thatadequate impairment losses are made for irrecoverable amounts. In this regard, themanagement of the Group considers that the Group’s credit risk is significantly reduced.

Since the Group trades only with recognised and creditworthy third parties, there is norequirement for collateral. Concentrations of credit risk are managed bycustomer/counterparty, by geographical region and by industry sector. As at 31 December2023, 49.0% of the Group trade receivables are due from top five customers (31 December2022: 48.8%). 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 predeterminedlevels). The Group’s policy is to regularly monitor its liquidity requirements and itscompliance with lending covenants, to ensure that it maintains sufficient reserves of cash,readily realisable marketable securities and adequate committed lines of funding from majorfinancial institutions to meet its liquidity requirements in the short and longer term.

The following tables set out the remaining contractual maturities at the balance sheet date 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:

Item2023 Contractual undiscounted cash flowCarrying amount at balance sheet date
Within 1 year or on demand1 to 2 yearsMore than 2 years but less than 5 yearsMore than 5 yearsTotal
Short-term loans378,707,190---378,707,190364,981,445
Accounts payable473,352,525---473,352,525473,352,525
Other payables555,634,336---555,634,336555,634,336
Long-term payables (including the portion due within one year)62,702,8579,455,18361,890,894-134,048,934125,127,311
Lease liability (including the portion due within one year)24,050,88823,215,48421,007,14362,047,723130,321,238105,051,460
Total1,494,447,79632,670,66782,898,03762,047,7231,672,064,2231,624,147,077
Item2022 Contractual undiscounted cash flowCarrying amount at balance sheet date
Within 1 year or on demand1 to 2 yearsMore than 2 years but less than 5 yearsMore than 5 yearsTotal
Short-term loans396,981,235---396,981,235389,378,480
Accounts payable503,323,746---503,323,746503,323,746
Other payables372,608,689---372,608,689372,608,689
Long-term loans (including the portion due within one year)75,108,08370,927,517115,864,799-261,900,399231,124,009
Long-term payables (including the portion due within one year)22,546,67422,282,67420,039,452-64,868,80064,000,000
Lease liability (including the portion due within one year)22,767,66622,126,51733,652,99068,864,863147,412,036128,514,033
Total1,393,336,093115,336,708169,557,24168,864,8631,747,094,9051,688,948,957

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 determinesthe appropriate weightings of the fixed and floating rate interest-bearing instruments basedon the current 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:

Item20232022
Effective interest rateAmountsEffective interest rateAmounts
Financial assets
- Cash at bank1.45% - 2.25%579,200,0002.00% - 2.25%53,200,000
Financial liabilities??
- Short-term loans6.83% ~ 7.30%(96,562,141)0.65% - 6.76%(155,774,939)
- Long-term loans (including the portion due within one year)1.50% - 3.28%(5,860,499)1.50% - 3.65%(183,331,680)
- Long-term payables (including the portion due within one year)?--1.20%(64,000,000)
- Lease liability (including the portion due within one year)4.65%(105,051,460)4.65%(128,514,033)
Total?371,725,900(478,420,652)

Variable rate instruments:

Item20232022
Effective interest rateAmountsEffective interest rateAmounts
Financial assets
- Cash at bank0.20% - 1.61%1,638,418,6960.25% - 1.61%1,598,206,161
Financial liabilities??
- Short-term loans1Year LPR - 0.95%(100,000,000)1 year LPR 0.5%(200,000,000)
- Short-term loans1.81% ~ 2.54%(23,272,320)1.81% - 2.54%(33,603,542)
- Short-term loans3.90% ~ 6.95%(145,146,984)--
- Long-term loans (including the portion due within one year)-?-BBSY+1.10%(44,781,100)
- Long-term loans (including the portion due within one year)2.00% ~ 7.59%(119,266,812)2.85% - 3.35%(3,011,228)
Total?1,250,732,5801,316,810,291

(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 2023, based on assumptions above, it is estimated that a generalincrease of 50 basis points in interest rates, with all other variables held constant, woulddecrease the Group’s equity by RMB 1,453,823 (2022: RMB1,055,235), and net profit byRMB 1,453,823 (2022: RMB1,055,235).

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 balancesheet date and had been applied to re-measure those financial instruments held by theGroup which expose the Group to fair value interest rate risk at the balance sheet date. Inrespect of the exposure to cash flow interest rate risk arising from floating rate non-derivativeinstruments held by the Group at the balance sheet date, the impact on the net profit andequity is estimated as an annualised impact on interest expense or income of such a changein interest rates.

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 main currency risk arising from recognised

assets or liabilities denominated in foreign currencies is presented in the following tables.For presentation purposes, the amounts of the exposure are shown in Renminbi, translatedusing the spot rate at the balance sheet date. Differences resulting from the translation ofthe financial statements denominated in foreign currency are excluded.

20232022
Balance at foreign currencyBalance at RMB equivalentBalance at foreign currencyBalance at RMB equivalent
Cash at bank and on hand
- USD308,2292,184,23210,92276,068
- EUR6752367494
- HKD217196208186
Short-term loans??
- USD13,625,00096,562,14113,750,00095,792,132

(2) The following are the exchange rates for Renminbi against foreign currencies applied by the

Group:

Average rateBalance sheet date mid-spot rate
2023202220232022
USD7.05586.75737.08716.9646
EUR7.66897.09857.85927.4229
HKD0.90110.85830.90620.8933

(3) Sensitivity analysis

Assuming all other risk variables remained constant, a 5% strengthening of the Renminbiagainst the US dollar and Euro dollar at 31 December would have impact on the Group’sequity and net profit by the amount shown below. whose effect is in Renminbi and translatedusing the spot rate at the year-end date:

EquityNet profit
31 December 2023
USD3,539,1723,539,172
EUR(20)(20)
HKD(7)(7)
Total3,539,1453,539,145
31 December 2022
USD3,589,3523,589,352
EUR(19)(19)
HKD(7)(7)
Total3,589,3263,589,326

A 5% weakening of the Renminbi against the US dollar and Euro dollar at 31 Decemberwould have had the equal but opposite effect to the amounts shown above, on the basis thatall other variables remained constant.

X. Fair value disclosure

All financial assets and financial liabilities held by the Group are carried at amounts notmaterially different from their fair value at 31 December 2023 and 31 December 2022.

XI. Related parties and related party transactions

1 Information about the parent of the Company

Company nameRegistered placeBusiness natureRegistered capitalShareholding percentage (%)Percentage of voting rights (%)Ultimate controlling party of the Company
Changyu GroupYantaiManufacturing50,000,00049.9%49.9%Jointly controlled by Yantai GuoFeng Investment Holding Ltd, ILLVA SARONNO HOLDING SPA, International Finance Corporation and Yantai Yuhua Investment and Development Company Limited.

The registered capital of the parent company did not change in 2023, while the parent company’s shareholding percentage and proportion ofvoting rights changed from 50.4% to 49.9%.

2 Information about the subsidiaries of the Company

For information about the subsidiaries of the Company, refer to Note VIII.1.

3 Information on other related parties

Name of other related partiesRelated party relationship
Yantai Shenma Packaging Co., Ltd. (“Shenma Packaging”)Controlled by the same parent company
Yantai Zhongya Zhibao Pharmaceutical Co., Ltd. (“Zhongya Zhibao”)Information on the Group’s directors, supervisors and the senior management
WEMISS (Shanghai) Enterprise Development Co., Ltd (“WEMISS Shanghai”)Associate of the Group from January 1 to January 30, 2023 Subsidiaries of the joint venture after January 31, 2023
Shanghai Yufeng Brand Management Co., Ltd.("Shanghai Yufeng”)Associate of the Group
Yantai Guolong Wine Industry Co., Ltd (“Yantai Guolong”)Associate of the Group
Societe Civile Argricole Du Chateau De Mirefleurs (“Mirefleurs”)Subsidiaries of the joint venture
CHATEAU DE LIVERSAN (“LIVERSAN”)Subsidiaries of the joint venture

4 Transactions with related parties

(1) Product procurement

Related partiesNature of transaction20232022
Shenma PackagingProduct procurement83,991,23282,187,388
Zhongya ZhibaoProduct procurement152,932253,410
MirefleursProduct procurement7,844,1087,054,664
LIVERSANProduct procurement2,602,9672,870,515
Total94,591,23992,365,977

(2) Sales of goods

Related partiesNature of transaction20232022
Zhongya ZhibaoSales of goods4,306,8275,384,362
Shanghai YufengSales of goods5,691,2392,017,066
Wemiss ShanghaiSales of goods-614,302
Shenma PackagingSales of goods121,548110,048
Yantai GuolongSales of goods9,152,26526,816,648
Total19,271,87934,942,426

(3) Purchase of fixed assets

Related parties of the CompanyNature of transaction20232022
Shenma PackagingPurchase of fixed assets1,592,6984,245,929
Total1,592,6984,245,929

(4) Leases

(a) As the lessor

Name of lesseeType of assets leasedLease income recognised in 2023Lease income recognised in 2022
Shenma PackagingOffices and plants1,549,4101,549,410
Zhongya ZhibaoOffices and plants963,810590,476
Total2,513,2202,139,886

(b) As the lessee

Name of lessorType of assets leasedLease expense recognised in 2023Lease expense recognised in 2022
Changyu GroupOffice buildings1,612,1181,425,735
Changyu GroupOffices and plants1,394,7621,275,144
Changyu GroupOffices and plants4,184,2863,825,433
Changyu GroupOffices and commercial building7,057,1436,145,488
Total14,248,30912,671,800

(5) Remuneration of key management personnel

Item20232022
Remuneration of key management personnel12,846,00710,265,674

(6) Other related party transactions

Related partiesNature of transaction20232022
Changyu GroupTrademarks27,515,79821,877,171

Pursuant to a royalty agreement dated 18 May 1997, starting from 18 September 1997, theCompany 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’sannual sales is payable to Changyu Group. The license is effective until the expiry of theregistration of the trademarks.

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 6.3 is amendedto: The royalty paid to the Changyu Group by the Group shall not be used to promote thistrademark and the contract products.

The Group incurred a trademark usage fee of RMB27,515,798 this year.

5 Receivables from and payables to related parties

Receivables from related parties

ItemRelated party20232022
Book valueProvision for bad and doubtful debtsBook valueProvision for bad and doubtful debts
Accounts receivableZhongya Zhibao1,476,2622,6702,627,4738,091
Accounts receivableShanghai Yufeng2,925,0455,290--
Accounts receivableYantai Guolong--200,000616
PrepaymentsMirefleurs6,642,165---
Other current assetsChangyu Group--120,930,641-

Payables to related parties

ItemRelated party20232022
Accounts payableShenma Packaging27,358,72336,600,233
Accounts payableZhongya Zhibao2,0665,365,862
Accounts payableShanghai Yufeng-143,659
Accounts payableChangyu Group-19,434,600
Contract liabilitiesZhongya Zhibao-240
Contract liabilitiesYantai Guolong14,840,000-
Other payablesChangyu Group27,515,798-
Other payablesShenma Packaging400,000471,869

XII. 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: itsfuture funding requirements, capital efficiency, actual and expected profitability, expectedcash flows, and expected capital expenditure. Adjustments are made to the capital structurein light of changes in economic conditions affecting the Group.

Neither the Company nor any of its subsidiaries are subject to externally imposed capitalrequirements.

XIII. Share-based payments

1 Equity instruments

(1) Share options or other equity instruments outstanding at the end of the year

Type of granteesGranted during the yearExercised during the yearUnlocked during the yearForfeited during the year
QuantityAmountQuantityAmountQuantityAmountQuantityAmount
Some directors, the senior management, the middle management and core technical (operational) cadre6,785,559103,411,919------
Total6,785,559103,411,919------

(2) Equity-settled share-based payments

Pursuant to the Proposal on the Company’s 2023 Restricted Share Incentive Plan (Draft) andRelevant Summary and the Proposal on the Request for the Authorisation to the Board ofDirectors by the General Meetings of Shareholders to Handle Matters related to theCompany’s 2023 Restricted Share Incentive Plan passed by resolutions in the Group’s 2022General Meetings of Shareholders held on 26 May 2023 as well as the Proposal on theAdjustments to Matters related to 2023 Restricted Share Incentive Plan and the Proposal onthe Granting of Restricted Shares to Incentive Objects under the 2023 Restricted ShareIncentive Plan reviewed and passed in the 2023 first extraordinary Board meeting held on 26June 2023, the Group determined to grant 6,850,000 restricted shares to 204 incentiveobjects at a grant price of RMB15.24 per share on 26 June 2023 (the grant date). A total of203 incentive objects of the Group actually subscribed for 6,785,559 restricted shares at agrant price of RMB15.24 per share. The transaction increased the Company’s registeredcapital by RMB6,785,559, increased the capital reserve by RMB96,626,360.

All restricted shares granted to incentive objects are subject to different restricted salesperiods, which are respectively 12 months, 24 months and 36 months from the date ofcompletion of the grant registration of the restricted shares granted to the incentive objects.The restricted shares granted to the incentive objects under the Restricted Share IncentivePlan shall not be transferred, pledged as collateral or to repay debts during the restrictedsales periods. All restricted shares granted to incentive objects will be unlocked in threephases after 12 months from the grant date, with the proportion of unlocking in each phasebeing 30%, 30% and 40%, respectively, corresponding to unlocking dates of one year, twoyears and three years from the grant date. The actual unlocked shares shall be linked to theperformance appraisal for each year.

When the Company’s performance meets the corresponding criteria, the unlocking proportionof the above-mentioned restricted shares is determined based on the business performanceof the incentive object’s operation and the contribution value of the incentive object. TheCompany will repurchase the locked restricted shares at the granted price of the incentiveobjects if the unlocked criteria stipulated in this plan are not met, and the incentive objectshall not unlock the restricted shares for the current period.

As at 31 December 2023, the total costs of equity-settled share-based payments recognisedin the consolidate financial statements for the year were RMB30,735,755, and theaccumulated amount of equity-settled share-based payments recognised in the capitalreserve for the year amounted to RMB30,735,755.

XIV. Commitments and contingencies

1 Significant commitment

(1) Capital commitments

Item20232022
Long-term assets acquisition commitment50,057,14045,698,000
Total50,057,14045,698,000

(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:

Item20232022
Within 1 year (inclusive)50,000-
Total50,000-

2 Contingencies

The Group do not have any significant contingencies as at balance sheet date.

XV. Subsequent events

1 Distribution of dividends on ordinary shares approved after the balance sheet date

According to the proposal of the Board of Directors on 10 April 2024, the Company intendsto distribute cash dividend totaling RMB346,124,780 to all shareholders of 692,249,559capital shares for the year ended 31 December 2023 on the basis of RMB 5 (including tax)for every 10 shares. The proposal is subject to the approval by the Shareholders’ meeting.This distribution of profit in cash has not been recognised as a liability at the balance sheetdate.

XVI. 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 five parts: China, Spain, France, Chile and Australia. Themanagement periodically evaluates segment results, in order to allocate resources andevaluate performances. In 2023, over 86% of revenue, more than 96% of profit and over91% of non-current assets derived from China/are located in China. Therefore, the Groupdoes not need to disclose additional segment report information.

XVII. Notes to the Company’s financial statements

1 Receivables under financing

ItemNote20232022
Bills receivable(1)36,322,01941,061,417
Total36,322,01941,061,417

(1) The pledged bills receivable of the Company at the end of the year

As at 31 December 2023, there was no pledged bills receivable (31 December 2022: Nil).

(2) Outstanding derecognised endorsed bills that have not matured at the end of the year

ItemAmount recognised at year end
Bank acceptance bills53,825,102
Total53,825,102

As at 31 December 2023, derecognised bills endorsed by the Company to other partieswhich are not yet due at the end of the period is RMB 53,825,102 (31 December 2022:

RMB105,149,583). The notes are used for payment to suppliers. The Company believesthat due to good reputation of bank, the risk of notes not accepting by bank on maturity isvery low, therefore derecognise the note receivables endorsed. If the bank is unable to paythe notes on maturity, according to the relevant laws and regulations of China, the Companywould undertake limited liability for the notes.

2 Other receivables

Note31 December 202331 December 2022
Dividends receivable(1)-250,000,000
Others(2)576,949,997470,176,320
Total576,949,997720,176,320

(1) Dividends receivable

Item31 December 202331 December 2022
Dividends to subsidiaries-250,000,000
Total-250,000,000

(2) Others

(a) Others by customer type:

Customer type31 December 202331 December 2022
Amounts due from subsidiaries574,127,885470,128,362
Amounts due from related parties2,822,11247,958
Sub-total576,949,997470,176,320
Less: Provision for bad and doubtful debts--
Total576,949,997470,176,320

(b) The ageing analysis is as follows:

Ageing20232022
Within 1 year (inclusive)576,845,525470,071,848
Over 1 year but within 2 years (inclusive)--
Over 2 years but within 3 years (inclusive)-104,472
Over 3 years104,472-
Sub-total576,949,997470,176,320
Less: Provision for bad and doubtful debts--
Total576,949,997470,176,320

The ageing is counted starting from the date.

(c) Movements of provisions for bad and doubtful debts

As at 31 December 2023, no bad and doubtful debt provision was made for otherreceivables (31 December 2022: Nil).

As at 31 December 2023, the Company has no other receivables written off (31December 2022: Nil).

(d) Others categorised by nature

Nature of other receivables20232022
Amounts due from subsidiaries574,127,885470,128,362
Others2,822,11247,958
Sub-total576,949,997470,176,320
Less: Provision for bad and doubtful debts--
Total576,949,997470,176,320

(e) Five largest others-by debtor at the end of the year

DebtorNature of the receivableBalance at the end of the yearAgeingPercentage of ending balance of others (%)Ending balance of provision for bad and doubtful debts
Sales CompanyAmounts due from subsidiaries213,386,151Within 1 year37.0%-
Kilikanoon AustraliaAmounts due from subsidiaries53,338,503Within 1 year9.2%-
R&D CentreAmounts due from subsidiaries32,533,000Within 1 year5.6%-
Chateau ChangyuAmounts due from subsidiaries14,130,944Within 1 year2.4%-
Chile Indomita Wine GroupAmounts due from subsidiaries13,100,592Within 1 year2.3%-
Total326,489,19056.5%-

3 Long-term equity investments

(1) Long-term equity investments by category:

Item20232022
Book valueProvision for impairmentCarrying amountBook valueProvision for impairmentCarrying amount
Investments in subsidiaries7,690,772,693(42,274,055)7,648,498,6387,703,535,027-7,703,535,027
Investments in associates---2,318,351-2,318,351
Total7,690,772,693(42,274,055)7,648,498,6387,705,853,378-7,705,853,378

(2) Investments in subsidiaries:

SubsidiaryBalance at the beginning of the yearAdditions during the yearAdditions during the year - Equity IncentivesDecrease during the yearBalance at the end of the yearBalance of provision for impairment at the end of the year
Xinjiang Tianzhu60,000,000--(60,000,000)--
Kylin Packaging23,176,063-367,372-23,543,435-
Chateau Changyu28,968,100-304,959-29,273,059-
Pioneer International3,500,000-2,434,696-5,934,696-
Ningxia Growing36,573,247---36,573,247-
National Wines2,000,000---2,000,000-
Golden Icewine Valley30,440,50032,746,777244,217-63,431,494-
Chateau Beijing588,389,444-244,217-588,633,661-
Sales Company7,200,000-14,059,694-21,259,694-
Langfang Sales100,000--(100,000)--
Langfang Castel19,835,730--(19,835,730)--
Wine Sales4,500,000-833,190-5,333,190-
Shanghai Marketing1,000,000---1,000,000-
Beijing Sales850,000---850,000-
Jingyang Sales100,000--(100,000)--
Jingyang Wine900,000---900,000-
Ningxia Wine222,309,388---222,309,388-
Chateau Ningxia453,463,500-284,014-453,747,514-
Chateau Tinlot212,039,586---212,039,586-
Chateau Shihezi812,019,770-284,014-812,303,784-
Chateau Changan803,892,258-304,959-804,197,217-
R&D Centre3,288,906,445-1,324,269-3,290,230,714-
Huanren Wine22,200,000---22,200,000-
Wine Sales Company5,000,000-102,210-5,102,210-
Francs Champs236,025,404---236,025,404-
Dicot233,142,269---233,142,2695,210,925
Chile Indomita Wine Group274,248,114---274,248,114-
Australia Kilikanoon Estate129,275,639---129,275,63937,063,130
Digital Marketing1,000,000-186,121-1,186,121-
Chateau Koya110,000,000-328,128-110,328,128-
Wemiss Shanghai-7,910,985--7,910,985-
Culture Development92,479,570-142,004-92,621,574-
Development Zone Trading--861,192-861,192-
Penglai sales--1,104,339-1,104,339-
Longkou sales--1,611,286-1,611,286-
Laizhou sales--84,916-84,916-
Yantai Roullet Fransac--244,217-244,217-
Museum--265,162-265,162-
Window of the Wine City--470,134-470,134-
AFIP Tourism--162,952-162,952-
Meeting Center--102,210-102,210-
Ningxia Trading--162,952-162,952-
Creighton Catering--102,210-102,210-
Total7,703,535,02740,657,76226,615,634(80,035,730)7,690,772,69342,274,055

For information about the subsidiaries of the Company, refer to Note VIII.

(3) Investments in associates:

SubsidiaryBalance at the beginning of the yearInvestment losses recognized under the equity methodOthers (Notes.V.9)Balance at the end of the year
WEMISS Shanghai2,318,35154,934(2,373,285)-
Total2,318,35154,934(2,373,285)-

4 Operating income and operating costs

Item20232022
IncomeCostIncomeCost
Principal activities723,412,525615,998,040672,635,481575,896,372
Other operating activities7,746,4295,638,5242,426,9401,420,479
Total731,158,954621,636,564675,062,421577,316,851
Including: Revenue from contracts with customers723,412,525615,998,040672,635,481575,896,372
Rent income7,746,4295,638,5242,426,9401,420,479

Disaggregation of revenue from contracts with customers:

Type of contract20232022
By type of goods or services
- Liquor723,412,525672,635,481
By timing of transferring goods or services?
- Revenue recognised at a point in time723,412,525672,635,481

5 Investment income

Item20232022
Income from long-term equity investments accounted for using cost method476,632,356738,407,264
Income / (Loss) from long-term equity investments accounted for using equity method54,935(48,460)
Loss from long-term equity investments accounted for disposal of long-term equity investment(37,436,762)(1,842,325)
Total439,250,529736,516,479

6 Transactions with related parties

(1) Product procurement

Related partiesNature of transaction20232022
Subsidiary of the parent companyProduct procurement292,073,183154,806,785
Other related parties of the CompanyProduct procurement43,934,84742,578,235
Total336,008,030197,385,020

(2) Sales of goods

Related partiesNature of transaction20232022
Subsidiary of the parent companySales of goods787,731,546504,080,073
Other related parties of the CompanySales of goods3,184,1452,952,493
Total790,915,691507,032,566

(3) Guarantee

The Company as the guarantor

Guarantee holderCurrencyAmount of guaranteeInception date of guaranteeMaturity date of guaranteeGuarantee expired (Y/N)
Australia Kilikanoon EstateAUD17,550,00013 December 201813 December 2023Y
Australia Kilikanoon EstateAUD4,800,0001 March 202529 Feburary 2028N

(4) Leases

(a) As the lessor

Name of lesseeType of assets leasedLease income recognised in 2023Lease income recognised in 2022
Other related parties of the CompanyOffices and plants2,513,2202,139,886
Subsidiary of the parent companyOffices buildings85,71485,714
Total2,598,9342,225,600

(b) As the lessee

Name of lessorType of assets leasedLease expense recognised in 2023Lease expense recognised in 2022
Other related parties of the CompanyOffice buildings1,394,7621,275,144
TotalOffice buildings1,394,7621,275,144

7 Receivables from and payables to related parties

Receivables from related parties

ItemRelated party20232022
Book valueProvision for bad and doubtful debtsBook valueProvision for bad and doubtful debts
Accounts receivablesOther related parties of the Company727,1231,2982,309,3097,805
PrepaymentsOther related parties of the Company4,472,159---
Other receivablesSubsidiary of the parent company574,127,885-720,128,362-
Other non-current assetsSubsidiary of the parent company1,934,430,000-1,850,200,000-

Payables to related parties

ItemRelated party20232022
Accounts payableOther related parties of the Company13,895,97035,944,149
Other payablesSubsidiary of the parent company441,681,129421,781,524
Other payablesOther related parties of the Company400,000471,869

XVIII. Extraordinary gains and losses in 2023

ItemAmount
(1)Profit and loss from disposal of non-current assets23,852,237
(2)Government grants recognised through profit or loss (except for those which are closely related to the company’s normal operations, which the company is entitled to under established standards in accordance with government policies and which have a continuing impact on the profits and losses of the company)51,523,799
(3)Other non-operating income and expenses besides items above9,137,420
Sub-total84,513,456
(4)Tax effect(13,643,745)
(5)Effect on non-controlling interests after taxation(2,504,497)
Total68,365,214

Note: Extraordinary gain and loss items (1) to (3) listed above are presented in the amount

before taxation.

XIX. Return on net assets and earnings per share

1 Calculation of earnings per share

(1) Basic earnings per share

For calculation of the basic earnings per share, please refer to Note V.50.

(2) Basic earnings per share excluding extraordinary gain and loss

Basic earnings per share excluding extraordinary gain and loss is calculated as dividingconsolidated net profit excluding extraordinary gain and loss attributable to ordinaryshareholders of the Company by the weighted average number of ordinary sharesoutstanding:

20232022
Consolidated net profit attributable to ordinary shareholders of the Company532,438,907428,681,411
Extraordinary gains and losses attributable to ordinary shareholders of the Company68,365,21414,850,052
Consolidated net profit excluding extraordinary gain and loss attributable to the Company’s ordinary equity shareholders464,073,693413,831,359
Weighted average number of ordinary shares outstanding685,464,000685,464,000
Basic earnings per share excluding extraordinary gain and loss (RMB/share)0.680.60

(3) Diluted earnings per share

For calculation of the diluted earnings per share, please refer to Note V.50.

(4) Diluted earnings per share excluding extraordinary gains and losses

Diluted earnings per share excluding extraordinary gains and losses is calculated by dividingconsolidated net profit excluding extraordinary gains and losses attributable to ordinaryshareholders of the Company (diluted) by the weighted average number of ordinary sharesoutstanding (diluted):

20232022
Consolidated net profit attributable to ordinary shareholders of the Company (diluted)532,438,907428,681,411
Extraordinary gains and losses attributable to ordinary shareholders of the Company68,365,21414,850,052
Consolidated net profit excluding extraordinary gains and losses attributable to the Company’s ordinary equity shareholders (diluted)464,073,693413,831,359
Weighted average number of ordinary shares outstanding (diluted)685,670,893685,464,000
Diluted earnings per share excluding extraordinary gains and losses (RMB/share)0.680.60

2 Calculation of weighted average return on net assets

(1) Weighted average return on net assets

Weighted average return on net assets is calculated as dividing consolidated net profitattributable to ordinary shareholders of the Company by the weighted average amount ofconsolidated net assets:

20232022
Consolidated net profit attributable to ordinary shareholders of the Company532,438,907428,681,411
Weighted average amount of consolidated net assets10,684,054,05710,487,764,058
Weighted average return on net assets4.98%4.09%

Calculation of weighted average amount of consolidated net assets is as follows:

20232022
Consolidated net assets at the beginning of the year10,579,053,73310,447,884,183
Effect of consolidated net profit attributable to ordinary shareholders of the Company270,707,233219,814,175
Effects of Restricted Share Incentive Plan15,367,878-
Acquisition of non-controlling interests(1,140,487)-
Effect of shares repurchased (Note V.37)(179,934,300)(179,934,300)
Weighted average amount of consolidated net assets10,684,054,05710,487,764,058

(2) Weighted average return on net assets excluding extraordinary gain and loss

Weighted average return on net assets excluding extraordinary gain and loss is calculated asdividing consolidated net profit excluding extraordinary gain and loss attributable to ordinaryshareholders of the Company by the weighted average amount of consolidated net assets:

20232022
Consolidated net profit excluding extraordinary gain and loss attributable to the Company’s ordinary equity shareholders464,073,693413,831,359
Weighted average amount of consolidated net assets10,684,054,05710,487,764,058
Weighted average return on net assets excluding extraordinary gain and loss4.34%3.95%

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