Stock Code: 000869， 200869 Stock Abbreviation: Changyu A， Changyu B Announcement No.: 2021-Final 01
Yantai Changyu Pioneer Wine Co., Ltd.2020 Annual Report Abstract
1. Important Notice
This Annual Report Abstract comes from the whole contents of annual report. If investors desire tocomprehensively understand the Company’s operating results, financial situation and futuredevelopment plan, please read the Annual Report on the media specified by the China SecuritiesRegulatory Commission.
All directors have personally attended the meeting for deliberating the annual report.
Non-standard audit opinion notice
□Available ?Not available
The preliminary scheme of the report period’s ordinary share profit distribution or increasing equitywith reserve deliberated by the board of the directors?Available □Not available
Whether to increase equity with reserve
□Yes ?No
The Company’s preliminary scheme of profit distribution deliberated and passed by the board ofdirectors this time is shown as following: Based on the Company’s total 685,464,000 shares, we planto pay CNY4 (including tax) in cash as dividends for every 10 shares to all shareholders and send 0bonus share (including tax). Capital reserve will not be transferred to equity.
The draft plan of preferred share profit distribution during the report period deliberated and passedby the board of directors
□Available ?Not available
2. Basic information of the Company
(1) Brief introduction of the Company
| Abbreviation of Shares: | Changyu A, Changyu B | Code number of the Shares | 000869, 200869 |
| Place of listing of Shares | Shenzhen Stock Exchange | ||
| Contact person and information | Secretary to the Board of Directors | Authorized Representative of the Securities Affairs |
| Name | Mr. Jiang Jianxun | Mr. Li Tingguo |
| Address | 56 Dama Road, Yantai, Shandong, China | 56 Dama Road, Yantai, Shandong, China |
| Fax | 0086-535-6633639 | 0086-535-6633639 |
| Tel | 0086-535-6602761 | 0086-535-6633656 |
| jiangjianxun@changyu.com.cn | stock@changyu.com.cn |
(2) Main businesses during the report period or brief introduction of products
During the report period, the Company’s main businesses are production and operation of wine andbrandy, thus providing domestic and foreign consumers with healthy and fashionablealcoholic drinks. Compared with earlier stage, there are no significant changes happened to theCompany’s main businesses.The wine industry that the Company involved in is still in growth stage. Although being affected bymany factors for the short-term, the competition in the market is fierce and the wine consumptiontemporarily declines. However, seen from the long term, the whole domestic wine market is on therising trend. The Company is at the forefront in the domestic wine market.The Company’s products were divided into two series: wine and brandy. For wine, main brandsincluded Changyu, Noble Dragon, AFIP, Changyu Moser XV, Golden Ice Valley, Zenithwirl,Vermouth, Rena, Baron Balboa, J.LORMIN, ATRIO, Kilikanoon and IWCC and so on. For Brandy,main brands included Koya, Mminni, Pagese, Roullet Fransac and so on.
(3) Key accounting data and financial indicators
①Key accounting data and financial indicators in recent three years
Whether the Company needs to retrospectively adjust or restate the accounting data of previous fiscalyears.?Yes □No
Reason for retrospectively adjusting or restating the accounting data
Amalgamation of enterprise under the same control
Unit: CNY
| 2020 | 2019 | More or less than Last year (%) | 2018 | |||
| Before adjustment | After adjustment | After adjustment | Before adjustment | After adjustment | ||
| Operating revenue | 3,395,402,001 | 5,031,011,489 | 5,074,025,899 | -33.08% | 5,142,244,740 | 5,142,244,740 |
| Net profit attributed to | 470,860,587 | 1,129,735,749 | 1,141,367,296 | -58.75% | 1,042,632,929 | 1,042,632,929 |
| shareholders of the listed company | ||||||
| Net profit attributed to shareholders of the listed company after deducting non-recurring profits and losses | 397,655,187 | 892,075,931 | 892,496,644 | -55.44% | 965,426,238 | 965,426,238 |
| Net cash flows from operating activities | 505,146,673 | 837,838,024 | 848,852,360 | -40.49% | 975,978,746 | 975,978,746 |
| Basic earnings per share | 0.69 | 1.65 | 1.67 | -58.68% | 1.52 | 1.52 |
| Diluted earnings per share | 0.69 | 1.65 | 1.67 | -58.68% | 1.52 | 1.52 |
| Weighted average for earning rate of net assets | 4.57% | 11.30% | 11.40% | -6.83% | 11.23% | 11.23% |
| December 31st, 2020 | December 31st, 2019 | More or less than Last year (%) | December 31st, 2018 | |||
| Before adjustment | After adjustment | After adjustment | Before adjustment | After adjustment | ||
| Total assets | 13,102,481,541 | 13,647,932,568 | 13,764,855,252 | -4.81% | 13,117,729,052 | 13,117,729,052 |
| Net Assets attributed to shareholders of the listed company | 10,267,832,644 | 10,308,910,198 | 10,402,248,821 | -1.29% | 9,606,099,365 | 9,606,099,365 |
②Key accounting data by quarter
Unit: CNY
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |
| Operating revenue | 805,715,048 | 612,833,499 | 774,191,143 | 1,202,662,311 |
| Net profit attributed to shareholders of the listed company | 234,499,910 | 84,140,165 | 85,120,851 | 67,099,661 |
| Net profit attributed to shareholders of the listed company after deducting non-recurring profits and losses | 225,980,141 | 40,786,708 | 73,406,867 | 57,481,471 |
| Net cash flows from operating activities | -118,493,699 | 101,974,947 | 268,955,826 | 252,709,599 |
Whether there are significant differences between above-mentioned financial indicators or their sumand the related financial indicators in the quarterly report and semi-annual report disclosed by theCompany.
□Yes ?No
(4) Capital stock and shareholders’ situation
① Number of ordinary shareholder and preferred shareholder recovering voting power, and situation of shares held by top ten shareholders
Unit: share
| Total shareholders in the report period | 49,043 | Total number of shareholders by the end of last month before the disclosure day of the annual report | 53,529 | Total number of preferred shareholder recovering voting power by the end of report period | 0 | Total number of preferred shareholder recovering voting power by the end of last month before the disclosure day of the annual report | 0 | ||||||
| Shareholders holding more than 5% or the top 10 shareholders holding situation | |||||||||||||
| Name of Shareholders | Character of shareholders | Percentage (%) | Amount of holding shares | Number of restricted shares | Pledged or frozen | ||||||||
| Share status | Amount | ||||||||||||
| YANTAI CHANGYU GROUP CO., LTD. | Domestic non-state legal person | 50.40% | 345,473,856 | 0 | - | - | |||||||
| GAOLING FUND, L.P. | Foreign legal person | 3.08% | 21,090,219 | 0 | - | - | |||||||
| CHINA SECURITIES FINANCE CORP | State legal person | 2.08% | 14,275,705 | 0 | - | - | |||||||
| BBH BOS S/A FIDELITY FD - CHINA FOCUS FD | Foreign legal person | 1.77% | 12,160,726 | 0 | - | - | |||||||
| SHENWAN HONGYUAN SECURITIES (HONGKONG) LIMITED | Foreign legal person | 1.20% | 8,231,733 | 0 | - | - | |||||||
| FIDELITY PURITAN TRUST: FIDELITY SERIES INTRINSIC OPPORTUNITIES FUND | Foreign legal person | 0.93% | 6,350,762 | 0 | - | - | |||||||
| GUOTAI JUNAN SECURITIES (HONGKONG) LIMITED | Foreign legal person | 0.80% | 5,481,945 | 0 | - | - | |||||||
| Haitong International Securities Company Limited-Account Client | Foreign legal person | 0.69% | 4,741,787 | 0 | - | - | |||||||
| CENTRAL HUIJIN ASSET MANAGEMENT LIMITED | State legal person | 0.69% | 4,761,200 | 0 | - | - | |||||||
| VANGUARD EMERGING MARKETS STOCK | Foreign legal person | 0.56% | 3,808,449 | 0 | - | - | |||||||
② Number of preferred shareholder and situation of preferred shares held by top ten preferred shareholders
□Available ?Not available
There are no shares held by preferred shareholders during the report period.
③ Introduction for property right and control relations between the Company and its actual controllers
| INDEX FUND | ||
| The explanation for the associated relationship and accordant action | Among the top 10 shareholders, Yantai Changyu Group Company Limited has no associated relationship or accordant action relationship with the other 9 listed shareholders, while the relationship among the other shareholders is unknown. | |
| Explanation for the top 10 shareholders who involved in financing activities and stock trading business (if have) | The top 10 shareholders do not involve in financing activities and stock trade business. | |
(5) Company Bonds
Whether or not the Company has the corporation bonds issued in public, listed in the stock exchange,not due on the annual report’s authorized issue date or failed to pay in full on the due date.No.
3. Management Discussion and Analysis
(1) Brief introduction of operation situation during the report period
In 2020, influenced by many factors, such as the slowdown of domestic economic growth and theCOVID-19 epidemic, the competition in domestic wine market was very strong. The sales volumesof both imported wine and domestic wine continued the decreasing trend. Most wine productionenterprises got into trouble and the Profitability had a significant decrease. The domestic wineindustry was generally on the verge of loss. Facing quite a lot of external disadvantages, theCompany persisted in taking the market as the center, adhered to the development strategy of “Focuson middle-and-high level, Focus on high quality, Focus on big product” and the marketingphilosophy of “obtaining growth from the terminal and nurturing consumers”, and made the most ofadvantages including long history, strong capital strength, high brand awareness, widespreadmarketing network and abundant products and o on to strive to promote product sales, bearing thesevere market test, maintaining the industry leadership, further widening the gap with majordomestic competitors and realizing operating revenue of CNY3,395.4million with a year-on-yeardecrease of 33.08% and net profit of CNY470.86million belonging to the parent company’sshareholders with a year-on-year decrease of 58.75%.
① Production and inventory
| Sector | Project | Unit | 2020 | 2019 | Year-on-year increase or decrease (%) |
| Alcohol and alcoholic beverage industry | Sales volume | Ton | 93,501 | 127,129 | -26.45% |
| Yield | Ton | 93,990 | 129,104 | -27.20% | |
| Inventory | Ton | 24,925 | 21,007 | 18.65% |
② Composition of operating revenue
Unit: CNY
| 2020 | 2019 | Year-on-year increase or decrease (%) | |||
| Amount | Proportion in operating revenue | Amount | Proportion in operating revenue | ||
| Total operating revenue | 3,395,402,001 | 100% | 5,074,025,899 | 100% | -33.08% |
| Sector-classified | |||||
| Sector of liquor and | 3,395,402,001 | 100% | 5,074,025,899 | 100% | -33.08% |
| alcoholic beverage | |||||
| Product-classified | |||||
| Wine | 2,424,359,348 | 71.40% | 3,855,645,607 | 75.99% | -37.12% |
| Brandy | 877,428,035 | 25.84% | 1,073,184,805 | 21.15% | -18.24% |
| Tourism | 69,589,233 | 2.05% | 109,037,225 | 2.15% | -36.18% |
| Others | 24,025,385 | 0.71% | 36,158,262 | 0.71% | -33.55% |
③ Composition of operating costs
Classification of sector and product
Unit: CNY
| Sector | Project | 2020 | 2019 | Year-on-year increase or decrease (%) | ||
| Amount | Proportion in the operating cost (%) | Amount | Proportion in the operating cost (%) | |||
| Liquor and alcoholic beverage | Blending liquor | 731,348,214 | 49.42% | 933,730,318 | 50.75% | -1.33% |
| Packing material | 457,572,889 | 30.92% | 626,670,556 | 34.06% | -3.14% | |
| Wages | 56,969,384 | 3.85% | 65,607,418 | 3.57% | 0.28% | |
| Manufacturing expenses | 234,032,840 | 15.81% | 213,977,095 | 11.62% | 4.19% | |
Unit: CNY
| Sector | Project | 2020 | 2019 | Year-on-year increase or decrease (%) | ||
| Amount | Proportion in the operating cost (%) | Amount | Proportion in the operating cost (%) | |||
| Wine | Blending liquor | 540,591,702 | 49.07% | 703,625,279 | 50.77% | -1.70% |
| Packing material | 326,909,741 | 29.67% | 459,299,602 | 33.14% | -3.47% | |
| Wages | 48,585,743 | 4.41% | 56,725,667 | 4.09% | 0.32% | |
| Manufacturing expenses | 185,657,867 | 16.85% | 166,276,568 | 12.00% | 4.85% | |
| Brandy | Blending liquor | 190,756,512 | 52.20% | 230,056,797 | 52.66% | -0.46% |
| Packing material | 130,663,148 | 35.76% | 167,488,596 | 38.34% | -2.58% | |
| Wages | 8,383,641 | 2.29% | 8,881,752 | 2.03% | 0.26% | |
| Manufacturing cost | 35,597,765 | 9.75% | 30,467,170 | 6.97% | 2.78% | |
④ Review and summary of the process of the Company’s early-disclosed development strategy andbusiness plan during the report period
During the report period, the domestic wine industry was hit hard, the wine consumption market wassmall and disorderly, offline channel suffered serious setbacks, and online channel was not optimistic.The Company realized the operating revenue of CNY3,395.4million with an decrease of 33.08%compared with last year, lower than the target fixed at the beginning of the year of realizingoperating revenue no less than CNY3.7billion, and realized the net profit of CNY470.86millionbelonging to the parent company’s shareholders with an decrease of 58.75% compared with last year.The main works during the report period were shown as followed:
Firstly, the Company coordinated epidemic prevention work and operation work. After the outbreakof COVID-19 epidemic in China, the Company took the prevention and control of the epidemic as avery important task, quickly established a team for epidemic prevention and control, linked up anddown and organized multiple meetings to improve and implement the prevention and control workplan. After the domestic epidemic got relieved, in accordance with the requirements of relevantgovernment departments, the Company actively organized the production resumption, insisted thenormalized epidemic management work, successfully achieved “zero infection” and “zero accidents”and better balanced epidemic prevention and control work and operation work.Secondly, the Company actively adjusted market strategies. The Company vigorously consolidatedthe sales system divided based on different alcoholic products varieties and continued promoting thesystem construction for domestic wine, brandy and imported wine. For domestic wine, at thebeginning of the year, the Company actively coped the challenge of the epidemic, successivelylaunched many activities, including carrying out non-contact distribution, recruiting communitypartners, holding “Cloud Drinking” tasting activity and encouraging all employees to conduct shortvideo marketing activity and so on. The Company especially adopted a quota system to NobleDragon in order to further regulate the market. For Brandy, the Company fully implemented the“Three Focuses” strategy, steadily improving the product structure and further increasing theproportion of mid-to-high-end products, focused on the marketing and promotion work, such astasting activities and chateau experience etc, and constantly improved the format of tasting activities.For imported wine, the Company adhered to the positioning of Yantai Changyu Pioneer InternationalWine Co., Ltd. as a “brand operating company”, which further increased the proportion of overseasacquired brands. Besides these, the Company improved the brand manager system to further clarifythe rights and responsibilities of brand managers, improved the assessment method to salespersonnel to strive to eliminate system defects and increase the enthusiasm of sales personnel,promoted the integration of regional logistics transshipment centers and reformed the distributionsystem to improve distribution efficiency and reduce logistics costs. The Company also acceleratedthe pace of digital transformation, completed the code for each bottle of new product, launched“Changyu Member Applet”, “Changyu Smart Retail Mall” and blockchain digital certification andso on, intensified online sales and strengthened cooperation with big online enterprises to achieve anew breakthrough in online sales.Thirdly, The Company insisted improving product quality. The Company further intensified thebrand winemaker system, strengthened the responsibility of brand winemakers for internal quality ofcorresponding brand products, and enhanced product competitiveness. Great progress was made inthe development of new products. Xinjiang Chateau passed the organic chateau certification.Ningxia Chateau, Beijing Chateau, Xinjiang Chateau and Yantai Chateau completed product
upgrades. J.LORMIN and Vermouth launched new products. Regionally customized products ofCastel, Noble Dragon, low-end wines and brandy and so on were launched. The quality of theCompany’s domestic chateau wines were recognized by international authorities. This year, it won99 medals in influential international competitions, including 5 grand gold medals and 35 goldmedals. The new red and white Vermouth won the gold medal in 2020 ISGC. Noble Dragon won thechampion in the “The World’s Best Selling Wine Brands Blind Tasting”. Golden Ice Valley icewinescored 93 points in the “Blind Tasting The World’s Best Icewines”. AFIP chateau wine ranked Top 3in Blind-tasting The Stars of The Wine World. Moser chateau wine got 93 scores inwww.erobertparker.com. In addition, overseas acquired chateau products also received many awards.For example, Kilikanoon wine won 13 gold medals in Mundus Vini, was awarded the “AustralianWinery of the Year” seven times, and was awarded the “Australian Best Producer” for the fourthconsecutive year; IWCC obtained China’s organic certification and achieved the “Grand Slam” oforganic certification in six major countries containing United States, European Union, Japan,Switzerland, UK and China, whose customized wine was selected as the celebration gift at theCelebrations on the 50
th
anniversary of the establishment of diplomatic ties between China and Chileheld on December 11
th.Fourthly, the Company strengthened financial management and audit supervision. The Companymade full use of the centralized capital management and control mechanism, which improved theefficiency of capital use and reduced capital occupation and financing costs. Utilizing the favorablefactors of exchange rate changes, relevant departments collaborated as a whole and reasonably graspthe timing of import and foreign exchange purchasing, which saved the expenditure of foreignexchange purchasing. The Company also strengthened the audit in the authenticity of financialrevenues and expenditures, and conducted a comprehensive audit in the profit authenticity of mainoperating subsidiaries, in the economic responsibilities of outgoing middle-and-high-level personneland in the major technological transformation projects.
(2) Whether there are significant changes in the main business during the reporting period
□Yes ?No
(3) The cases of industry, product or area accounting for over 10% in the Company’soperating revenue or operating profit?Available □Not available
Unit: CNY
| Operating revenue | Operating cost | Gross margin | Year-on-year increase or decrease (%) of operating revenue | Year-on-year increase or decrease (%) of operating cost | Year-on-year increase or decrease (%) of gross profit rate | |
| Sector-classified | ||||||
| Sector of liquor and alcoholic beverage | 3,395,402,001 | 1,503,877,407 | 55.71% | -33.08% | -19.91% | -7.29% |
| Product-classified | ||||||
| Wine | 2,424,359,348 | 1,101,745,053 | 54.56% | -37.12% | -20.50% | -9.50% |
| Brandy | 877,428,035 | 365,401,066 | 58.36% | -18.24% | -16.36% | -0.93% |
| Tourism | 69,589,233 | 23,954,081 | 65.58% | -36.18% | -36.42% | 0.13% |
| Others | 24,025,385 | 12,777,207 | 46.82% | -33.55% | -25.56% | -5.71% |
| Area-classified | ||||||
| Domestic | 2,889,121,152 | 1,223,020,007 | 57.67% | -36.16% | -19.20% | -8.88% |
| Abroad | 506,280,849 | 280,857,400 | 44.53% | -7.71% | -22.84% | 10.87% |
(4) Whether there is seasonality or periodicity operating features required special attention
□Yes ?No
(5) Explanation for significant changes in operation revenue, operating cost, total net profit orconstitution attributable to the ordinary shareholders of the listed company compared withlast report period?Available ?Not availableCompared with 2019, the operating income, operating costs and net profit attributable toshareholders of listed company decreased by 33.08%, 19.91% and 58.75% respectively, mainly dueto the decline in sales affected by the epidemic.
(6) Condition of facing delisting situation
□Available ?Not available
(7) Items related to financial report
①Compared with the last year’s financial report, explanation for the changes of accountingpolicy, accounting estimation and accounting method?Available □Not availableOn July 5
th, 2017, the Ministry of Finance issued the Notice on Amendment and Issuance ofAccounting Standard for Business Enterprises No.14-Revenue (Caikuai [2017] No.22), whichrequired enterprises simultaneously listing both in domestic and overseas and enterprises that listedat abroad and adopted International Financial Reporting Standards or Enterprise AccountingStandards to prepare financial statements shall implement this new accounting policy from January
st
, 2018; other enterprises listing in domestic shall implement this new accounting policy fromJanuary 1
st, 2020; non-listed enterprises implementing enterprise accounting standards shallimplement this new accounting policy from January 1
st, 2021. Due to the revision of aboveaccounting standards, the company needs to adjust the relevant accounting policies originallyadopted accordingly.According to above-mentioned regulation of relevant standards and notice of Ministry of Finance,this company will implement the new revenue standard from January 1
st, 2020.
This change of accounting policy is carried out by the Company in accordance with the relevantregulations and requirements issued by the Ministry of Finance. The accounting policy after changecould objectively and fairly reflect the Company’s financial situation and operating results, incompliance with relevant laws and regulations and the Company’s actual situation. This change ofaccounting policy will not have a significant impact on the Company’s financial status, operatingresults and cash flow, nor will there be any damage to the Company and shareholders’ interests.
②The situation explanation for the correction of major accounting errors which need to beretrospect and restated during the report period
□Available ?Not available
There is no situation for the correction of major accounting errors which need to be retrospect andrestated.
③Compared with the last year’s financial report, explanation for the changes of theconsolidated statements scope?Available □Not availableFor detailed information about the changes in the scope of consolidated financial statements in thisyear, please refer to Note 6: “Change in consolidation scope” in 2020 Annual Report of thisCompany.
Yantai Changyu Pioneer Wine Co., Ltd.
Board of Directors April 28
th, 2021