Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Yantai Changyu Pioneer Wine Co. Ltd.
2017 Annual Report
Final 2018-01
April, 2018
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Contents
I、Important Notice,Contents and Definition ............................................................................. 4
II、Brief Introduction for the Company and Main Financial Indicators .................................. 5
III、Summary of the Company’s Businesses .............................................................................. 10
IV、Management Discussion and Analysis ................................................................................. 14
V、Major issues ............................................................................................................................. 34
VI、Changes in Shares and the Shareholders’ Situation .......................................................... 48
VII、Related Situation of Preferred Shares ............................................................................... 57
VIII、Situation for Directors, Supervisors, Senior Management and Staffs ............................ 58
IX、Corporate Governance .......................................................................................................... 71
X、Related Situation of Corporation Bonds ............................................................................... 81
XI、Financial Report ...................................................................................................................... 82
XII、Reference Document .......................................................................................................... 198
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Definition
Definition Item Refers to Definition Content
Company/The Company Refers to Yantai Changyu Pioneer Wine Co. Ltd.
Changyu Group/Controlling Refers to
Yantai Changyu Group Co. Ltd.
Shareholder
CSRC Refers to China Securities Regulatory Commission
SSE Refers to Shenzhen Stock Exchange
Refers to Deloitte Hua Yong Certified Public Accountants
Deloitte Hua Yong
Co., Ltd (special general partnership)
CNY Refers to Chinese Yuan
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
I. Important Notice, Content and Definition
The Board of Directors,the Board of Supervisors,directors, supervisors & senior managers
of the Company collectively and individually accept full responsibility for the truthfulness,
accuracy and completeness of the information contained in this report and confirm that to the
best of their knowledge and belief there are no unfaithful facts, significant omissions or
misleading statements.
Mr. Zhou Hongjiang (Chairman of the Company), Mr. Jiang Jianxun (Chief Financial Officer
& Financial Director) assure the truthfulness, accuracy and completeness of the financial
report in the annual report.
Except the following directors, all other directors have personally attended the meeting for
deliberating the annual report.
Reason for
Director name with Director post with Name of
non-present in
non-present in person non-present in person mandatory
person
Sun Liqiang Director Business trip Zhou Hongjiang
Antonio Appignani Director Business trip Augusto Reina
Wang Shigang Independent director Business trip Wang Zhuquan
The business plan and target in the report do not represent the earnings forecast of the
Company to 2018. Whether the Company could achieve that or not depends on several
factors including the changes of market conditions and the effort extent of managing team etc.
with a great uncertainty, so the investors should be in a special attention.
About significant risks that may be faced in production and operation process, please refer
to“5. Risks likely to occur” part of “9.Expectation for the Companys Future Development”
in the chapter four “Management Discussion and Analysis” of this report. We advise
investors to read carefully and pay attention to the investment risks.
The Companys preliminary scheme of profit distribution deliberated and passed by the
Board of Directors is shown as following: Based on the Companys total 685,464,000 shares,
we plan to pay CNY5 (including tax) in cash as dividends for every 10 shares to all
shareholders and to send 0 bonus share (including tax) and capital reserve will not be
transferred to equity.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
II. Brief Introduction for the Company and Main Financial Indicators
1. Company’s information
Code number of the
Abbreviation of the Shares: Changyu A、Changyu B 000869、200869
Shares
Abbreviation of the Shares
_
after alteration
Place of listing of the Shares Shenzhen Stock Exchange
Legal Name in Chinese 烟台张裕葡萄酿酒股份有限公司
Abbreviation of Chinese name 张裕
Legal Name in English YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
Abbreviation of English name CHANGYU
Legal Representative Mr. Zhou Hongjiang
Registered Address 56 Dama Road, Yantai, Shandong, China
Postal Code
Office Address 56 Dama Road, Yantai, Shandong, China
Postal Code
Website http://www.changyu.com.cn
E-mail webmaster@changyu.com.cn
2. Contact person and information
Secretary to the Board of Authorized Representative of the
Directors Securities Affairs
Name Mr. Qu Weimin Mr. Li Tingguo
56 Dama Road, Yantai, Shandong, 56 Dama Road, Yantai,
Address
China Shandong, China
Tel 0086-535-6633656 0086-535-6633656
Fax 0086-535-6633639 0086-535-6633639
E-mail quwm@changyu.com.cn stock@changyu.com.cn
3. Information disclosure and filing location
The newspapers in which the China Securities Newspaper , Securities Times and Hong
Companys information is disclosed Kong Commercial Daily
Web Site assigned by CSRC to carry
http://www.cninfo.com.cn
the annual report
Board of Directors Office of the Company,
Filing location
56 Dama Road, Yantai, Shandong
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
4. Registration changes
Organization Code 913700002671000358
The business scope determined by the Company when it was
established on September 18th, 1997 is production, processing and
sales of wine, distilled liquor, healthy liquor, fruit liquor, non-alcohol
beverages, fruit jam, packing materials and winemaking machines.
On April 17th, 2008, approved by the 2007 shareholders meeting, the
Companys business scope is changed to production, processing and
sales of wine, distilled liquor, medicated liquor, fruit liquor,
non-alcohol beverages, fruit jam, packing materials and winemaking
machines; licensed import and export. On May 12th, 2010, approved
Changes for the main by the 2009 shareholders meeting, the Company changed its business
scope to production, processing and sales of wine, distilled liquor,
business of the Company medicated liquor, fruit liquor, non-alcohol beverages, fruit jam,
since it was listed packing materials and its products, winemaking machines; licensed
import and export; external investments according to governmental
(if have) policies. On September 23rd, 2016, approved by the 2016 annual 1st
Interim shareholders meeting, the Company changed its operating
scope to wine and fruit wine (bulk wine, processing and filling)
production; blending liquor and other blending liquors (grape wine)
production; other liquors (other distilling liquors) production;
production, processing and sales of package materials and
winemaking machines; grape plantation and procurement; tourism
resources development (excluding tourism); package design; activity
of building rental; licensed import and export; warehouse business;
external investments according to governmental policies. ”
Changes for all previous
controlling shareholders No.
(if have)
5. Other documents
The accountant appointed by the Company
Deloitte Hua Yong Certified Public Accountants Co., Ltd
Name
(special general partnership)
Address No. 1 East Chang'an Avenue, Dongcheng District, Beijing
Name of signatory accountants Li Xu, Li Yangang
The sponsor agency the Company appointed to perform the duty of continuous supervision
during the report period
□Available Not available
The financial adviser the Company appointed to perform the duty of continuous supervision
during the report period
□Available Not available
6. Key accounting data and financial indicators
Whether the company needs to retrospectively adjust or restate the accounting data of
previous fiscal years.
□Yes No
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
More or less than
2017 2016
Last year (%)
Business revenue (CNY) 4,932,545,229 4,717,596,472 4.56% 4,649,722,368
Net profit attributed to the
shareholders of the listed 1,031,695,056 982,460,488 5.01% 1,030,073,860
company (CNY)
Net profit attributed to the
shareholders of the listed
company after deducting 986,095,872 941,730,478 4.71% 993,268,823
the irregular profit and loss
(CNY)
Net cash flows from the
973,243,027 889,911,970 9.36% 1,143,046,367
operating activities (CNY)
Basic earnings per share
1.51 1.43 5.59% 1.5
(CNY)
Diluted earnings per share
1.51 1.43 5.59% 1.5
(CNY)
Weighted average for
earning rate of net assets 12.14% 12.55% -0.41% 14.40%
(CNY)
More or less than
December 31st, 2017 December 31st, 2016 December 31st, 2015
Last year (%)
Total assets (CNY) 12,536,755,208 11,528,077,971 8.75% 10,344,211,461
Net Assets attributed to the
shareholders of the listed 8,906,342,299 8,209,010,989 8.49% 7,564,099,003
company (CNY)
7. Differences in accounting data under PRC accounting standards and international
accounting standards
(1) Differences of net profit and net asset in the financial report disclosed according to
both international accounting standards and PRC accounting standards
□Available Not available
There are no differences of net profit and net asset in the financial report disclosed according
to both international accounting standards and PRC accounting standards during the report
period.
(2) Differences of net profit and net asset in the financial report disclosed according to
both foreign accounting standards and PRC accounting standards
□Available Not available
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
There are no differences of net profit and net asset in the financial report disclosed according
to both foreign accounting standards and PRC accounting standards during the report period.
8. Key financial indicators by quarter
Unit:CNY
st nd rd
1 Quarter 2 Quarter 3 Quarter 4th Quarter
Business revenue 1,896,586,469 870,511,728 1,030,899,920 1,134,547,112
Net profit attributed to
the shareholders of the 516,634,494 153,434,560 146,115,408 215,510,594
listed company
Net profit attributed to
the shareholders of the
listed company after 512,684,945 140,221,430 138,825,432 194,364,065
deducting irregular
profits and losses
Net cash flows from 384,358,508 36,001,811 386,267,511 166,615,197
operating activities
Whether there are differences between the above mentioned financial indicators or their sum
and the related financial indicators in the quarterly reports and semi-annual reports disclosed
by the Company.
□Yes No
9. Item and amount of irregular profit and loss
Available □Not available
Unit:CNY
Item 2017 2016 2015 Explanation
Profits and losses on disposal of
non-current assets, including the provision -222,586 14,719 136,061
for asset impairment write-off part
Government grants included in the current
profits and losses (except for those
recurring government grants that are
47,638,384 49,130,643 38,952,919
closely related to the entity's operation, in
line with related regulations and have
proper basis of calculation)
Other non-operating income and
non-operating expenses except the 13,999,251 4,656,972 9,071,448
aforementioned items
Less: Income tax effect 13,072,324 13,072,324 11,355,391
Minority shareholders' equity (after
taxes)
Total 45,599,184 40,730,010 36,805,037 --
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
The reasons shall be made clear and definitely as to the irregular profit and loss that the
Company has defined by virtue of the Explanatory Announcement on Public Company’s
Information Disclosure No.1 - Irregular Profit and Loss and as to regarding the irregular
profit and loss as recurrent profit and loss as specified in the Explanatory Announcement on
Public Company’s Information Disclosure No.1 - Irregular Profit and Loss.
□Available Not available
There is no situation that the irregular profit and loss is defined and specified as recurrent
profit and loss in accordance with the Explanatory Announcement on Public Company’s
Information Disclosure No.1 - Irregular Profit and Loss during the report period.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
III. Summary of the Company’s Businesses
1. Main businesses during the report period
Whether the Company needs to follow the disclosure requirement of special business
No.
During the report period, the Companys main business is to produce and operate wine and brandy, thus providing the domestic and foreign
consumers with healthy and fashionable alcoholic drinks. Compared with earlier stage, there are no significant changes happened to the
Companys main businesses. The wine industry that the Company involved in is still in the growth stage, the whole domestic wine market is on
the rising trend. The Company takes the dominant position in the domestic wine market.
2. Significant changes of main assets
(1) Significant changes of main assets
Main assets Explanation of significant changes
Equity asset No significant changes during the report period
The fixed assets increased by13.79% compared with the initial stage, owing that parts of construction in
Fixed asset
process have been transferred to fixed asset during the report period.
The intangible assets increased by 35.48% compared with the initial stage, owing that Via Indómita, S.A.,
Intangible asset Via Dos Andes, S.A. and Bodegas Santa Alicia SpA purchased by the Companys subsidiary Indomita Wine
Company Chile, SpA have been included in the consolidation range during the report period.
The construction in process decreased by 23.78% compared with the initial stage, owing to parts of
Construction in process
construction have been transferred to fixed asset during the report period.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
(2) Main overseas assets situation
Available □Not available
Unit:CNY
Control Proportion of
Whether there are
Formation Operation measures for Earning overseas assets in
Details of assets Assets scale Location significant impairment
reasons mode safeguarding of condition the Companys net
risks
asset security assets
The Company
participates in
making
Hacienda Y important
Vinedos Acquisition of Independent decisions
515,135,463 Spain 7,701,416 5.61% No
Marques Del equity operation through board of
Atrio. SL directors and
appoints CFO
on financial
management
The Company
participates in
making
Indomita Wine important
Founding of Independent
Company Chile, 481,333,962 Chile decisions 31,458,952 5.24% No
joint venture operation
SpA through board of
directors and
appoints CFO
on financial
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
management
The Company
Francs Champs Founding of directly appoints
Independent
Participations sole 232.909,654 France senior -4,142,035 2.54% No
operation
SAS proprietorship executives on
management
Other explanation No.
3. Analysis of core competitiveness
Whether the Company needs to follow the disclosure requirement of special business
No.
Compared with the participants in the arena of the Chinese wine sector, we believe that the Company is provided with the following advantages:
Firstly, the Company has been enjoying a well-known wine brand since 120-odd years, “Changyu”, “Jiebaina” and “AFIP” are Chinese famous
trademarks that have strong influence and good reputation.
Secondly, the Company has set up a nationwide marketing network, formed a “three-level” marketing network system mainly composed of the
companys salesmen and distributors, possessed the strong marketing ability and market exploitation ability.
Thirdly, the Company has already had strong research strength and a product R&D system, owned a one and only “State-level Wine R&D
Center”, made mastery of advanced winemaking technology and production processes, been powerful enough in product innovation and
established a perfect quality control system.
Fourthly, the Company is in possession of a lot of grape-growing bases to meet its future development, having developed a great deal of
vineyards in the most suitable areas for wine grape growing such as in Shandong, Ningxia, Xinjiang, Liaoning, Hebei and Shanxi, whose scales
and structures have generally met the Companys needs for development.
Fifthly, the Company has a great variety of products composed of all grades, its wine, brandy and sparkling wine of over 100 sorts can meet
different consumers demands. The Company has taken the lead in the domestic wine sector through rapid development in the past 10-odd years
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
and has possessed comparative superiority in the future competition.
Sixthly, the Company has a relatively respect motivation system. Most of Companys
employees indirectly hold the Companys equity through controlling shareholders. There are
high consistency between employee benefits and shareholders benefits, in favor of motivating
employees to create value for shareholders.
Seventhly, the Company has set up flexible and efficient decision-making mechanism. The
Companys core management team always maintains a working style of unity and
cooperation and flexible and efficient decision-making mechanism, which makes the
Company can deal with market changes more calmly.
Eighthly, the global production capacity layout has been basically completed. The Company
has completed production capacity layout in China, France, Chile, Spain, Australia and other
major wine producing countries in the world, enabling making better use of global
high-quality raw material resources, capital, talents and advanced production processes and
technologies to provide consumers with diversified quality products and better serve
consumers.
All in all, the Company has built up a strong core competitive edge and obtained and
maintained a relatively dominant position in the future predictable market competition.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
IV. Management Discussion and Analysis
1. Summarization
In 2017, influenced by the slowdown of domestic economic growth, the overall domestic
wine industry was relatively stable and the demand in wine maintained the growth
momentum with small amplitude, but the impact from imported wine became ever more
severe and entire domestic wine brands were weak; owing to significant decrease in
production of international and domestic wine-making grapes, the price of bulk wine
increased by a large margin; based on environmental protection and governance factors, the
cost of packing materials continued increasing; with the investment projects gradually
putting into operation, the depreciation of fixed assets increased. Above-mentioned adverse
factors brought bigger challenges for the Company to achieve sustained and steady growth.
Facing quite a lot of external disadvantages, the Company insisted in taking the market as the
center, insisted the development strategy of “Focus on middle-and-high level, Focus on high
quality, Focus on big product”, comprehensively implemented the development strategy of
same importance between wine and brandy, optimized product structure and market layout,
accelerated the development of new product and did best to promote product sales, achieving
good results and realizing business income of CNY4932.55million with an increase of 4.56%
compared with last year and net profit of CNY1031.69 million belonging to the parent
companys shareholders with an increase of 5.01% compared with last year.
2. Analysis of main business
(1) summarization
Whether or not the same as the disclosed summarization in operation situation discussion and
analysis?
□Available Not available
Increase or decrease
of the end of the
Description Cause of significant changes
period over the end
of last year
Operating revenue 4.56% Mainly because of increase in sales volume
Operating cost 6.08% Mainly because of increase in sales volume
Mainly because of year-on-year increase in
Sales expense 1.54% wage & welfare, advertising promotion fee in
Mainly because of year-on-year increase in
Management expense 10.01%
depreciation cost and office expense in 2017
Mainly because of increase in expenses for
R&D investment 0.34%
technology research and development in
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Mainly because of decrease in loan interest
Financial expense -15.38%
expenditure
Net amount of cash flow
Mainly because of increase in received cash
generated in operating 9.36%
from product sales and rendering of service
activities
Net amount of cash flow Mainly because of increase in fixed term
generated in investment -19.31% deposit at least three months and cash used to
activities acquire overseas enterprise
Net amount of cash flow Mainly because of decrease in received cash
generated in capital-raising -494.03% from loan, pledge loan security deposit and
activities interest
Review and summary of the process of the Companys early-disclosed development strategy
and business plan during the report period
During the report period, the Company realizes the business income of CNY4.93255billion
with an increase of 4.56% compared with last year, exceeding the target fixed at the
beginning of the year of realizing business income no less than CNY4.9billion. Facing to the
unfavorable business environment, the Company insists the development trend of “Focus on
middle and high level, Focus on high quality, Focus on big product”, fully implement the
development strategy of same importance between wine and brandy, pushes hard on
harmonious development of multi-liquor, which played an important part in realizing the
increase in the business income.
The main work during the report period is shown as followed:
Firstly, the Company further integrated and perfected marketing system, accelerated new
products launch in market, energetically developed E-business and export business and
strengthened the management in market, achieving good results. During the report period, the
Company optimized and integrated middle-and-low channel and B-category supermarket
semi-direct supply company as well as distributors selling Castel, Noble Dragon or other
main products, pushed out new products, such as 9th-generation Noble Dragon, new
Zuishixian, Reserve five-star brandy and Cabernet Sauvignon dry white wine and so on,
strived to expand E-business and export business and intensified the punishment to fleeing
goods, effectively protecting distributors interest and realizing various degrees of increase in
brandy, imported wine and other liquor as well as online sales and export business.
Secondly, the research for new products and new technologies was continued being conducted
and the quality management was strengthened in order to improve technological level and
product quality. The Company carried out 44 technology research, obtained 3 scientific and
technological achievements at ministerial and provincial level, newly applied and obtained
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
authorization of 8 national patent. The Company undertook three projects about Yantai
scientific and technological development plan, including “Selection Research and
Development Application of New Strain about Premium and Characteristic Grape Variety
Cabernet Gernischt in Yantai Producing Region”, which passed result authentication and
acceptance of China National Light Industry Council and Yantai
Science and Technology Bureau and reached international advanced level. “Establishment
and Application of Quality Evaluation and Control System about Premium Wine-making
Grape Material and Wine” won first prize of China General Chamber of Commerce
scientific and technological progress. The Company perfected quality control system,
strengthened supervision, inspection and punishment degree, reinforced monitoring in key
quality safety indicators, making product quality steadily improve. 2015 Golden-label
Icewine of Changyu Golden Icewine Valley won special gold medal in 2017 IWSC. 2014
Merlot dry red wine of Xinjiang Changyu Balboa Family won gold medal in 2017 Decanter
Asia Wine Awards.
Thirdly, informatization construction was steadily promoted and the market service ability of
production system had a bigger improvement. The Company completed the construction of
projects, such as first-phase ERP informatization of SAP and order production system of
chateau wine and so on; fully implement the order production mode of chateau wine, shortened
production cycle, reduced fund occupation and intensified management in the logistics link of
chateau wine, effectively preventing the overstock of products; further standardized
submission procedure of production and sales plan, assuring the timely grasp in the
implementation situation of order and improving the level of market service ability of
production system.
Fourthly, the procurement of raw materials, such as grapes, was completed successfully and
the management in grape base was further strengthened. The Company comprehensively
accomplished the procurement plan of raw material, such as grapes, and further deepened
sort management and sort acquisition in grape base, making scientific and normative
management in grape base reach a higher level; perfected grape purchase policy, improving
the stable development of grape base; improved grape purchase standard and promoted raw
material quality; actively introduced new grape variety, conducted selection and improvement
work, cultivated a lot of new varieties, enriching the variety resource for future product
development; took series of technology research and promotion work on how to improve raw
material quality in self-supporting base and organized orchardist to take professional training
on grape planting technology for many times, improving their level of grape planting and
management.
Fifthly, the Company continued promoting internationalization strategy and steadily
implemented overseas acquisition. This company, together with LAMBO SpA, establishes a
joint venture enterprise Indomita Wine Company Chile, SpA (Chinese name: 智利魔狮葡萄
酒简式股份公司, for short “Indomita Wine”). After establishment, as transferee, Indomita
Wine acquires 100% equity of all three subsidiaries under Chile Bethwines. In addition, the
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Company reached the agreement in acquiring 80% equity of Kilikanoon Estate Pty Ltd in
Australia with transferor.
(2) Revenue and cost
Composition of operating incomes
Unit: CNY
2017
Proportion Proportion Year-on-year
in in increase or
Amount Amount
operating operating decrease (%)
incomes incomes
Total
operation 4,932,545,229 100% 4,717,596,472 100% 4.56%
revenue
Industry-classified
Industry of
liquor and
4,932,545,229 100% 4,717,596,472 100% 4.56%
alcoholic
beverage
Product-classified
Wine 3,829,326,556 77.63% 3,700,806,317 78.45% 3.47%
Brandy 989,889,728 20.07% 905,687,936 19.20% 9.30%
Others 113,328,945 2.30% 111,102,219 2.36% 2.00%
Area-classified
Domestic 4,497,288,066 91.18% 4,437,302,746 94.06% 1.35%
Abroad 435,257,163 8.82% 280,293,726 5.94% 55.29%
The condition of sectors, products or areas accounting for over 10% in the
Company’s operating incomes or operating profits
Available □Not available
Whether the Company follow disclosure requirement of special industry?
No.
Unit: CNY
Year-on- Year-on- Year-on
year year -year
increase increase increase
Gross
or or or
Operating income Operating cost profit
decrease decrease decrease
rate
(%) of (%) of (%) of
operating operating gross
income cost profit
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
rate
Industry-classified
Industry
of liquor
and 4,932,545,229 1,671,592,279 66.11% 4.56% 6.08% -0.49%
alcoholic
beverage
Product-classified
Wine 3,829,326,556 1,266,391,452 66.93% 3.47% 5.11% -0.52%
Brandy 989,889,728 352,328,968 64.41% 9.30% 10.85% -0.50%
Area-classified
Domestic 4,497,288,066 1,378,672,642 69.34% 1.35% 0.48% 0.26%
Under the situation that the statistical caliber of the Companys main business data was
adjusted during the report period, the Companys main business data adjusted on the basis of
caliber at the end of report period in recent one year.
□Available Not available
Whether the Company’s sales revenue for material object is more than labor income
Yes □No
Sector Project Unit 2017 2016 Year-on-year
increase or
decrease (%)
Sales volume Ton 104,016 98,958 5.11%
Wine
Production Ton 97,620 99,784 -2.17%
Sales volume Ton 39,130 40,171 -2.59%
Brandy
Production Ton 37,666 43,262 -12.93%
Explanation on the causes of over 30% year-on-year changes of the related comparison data.
□Available Not available
The fulfillment of major sales contract signed by the Company up to the report
period
□Available Not available
Composition of operating costs
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Unit: CNY
Sector Project 2017 2016 Year-on-yea
Amount Proportio Amount Proportio r increase or
n in the n in the decrease
operating operating (%)
cost (%) cost (%)
Blending
711,224,945 56.16% 692,570,791 57.49% -1.32%
liquor
Packing
395,026,889 31.19% 372,613,924 30.93% 0.27%
material
Wine
Wages 47,843,744 3.78% 44,895,195 3.73% 0.05%
manufactu
112,295,874 8.87% 94,704,442 7.86% 1.01%
ring cost
Blending
204,764,927 58.12% 187,495,081 58.99% -0.87%
liquor
Packing
117,982,142 33.49% 105,943,197 33.33% 0.15%
material
Brandy
Wages 9,678,688 2.75% 11,965,588 3.76% -1.02%
manufactu
19,903,211 5.65% 12,441,839 3.91% 1.73%
ring cost
Whether there are changes of consolidation scope during the report period
Yes □No
During the report period, this company, together with LAMBO SpA, establishes a joint
venture enterprise Indomita Wine Company Chile, SpA (for short “Indomita Wine”). This
company holds 85% equity of Indomita Wine. After establishment, as transferee, Indomita
Wine acquires 100% equity of all three subsidiaries under Chile Bethwines. Indomita Wine
and its subsidiaries all are included in the consolidate scope.
During the report period, this company newly establishes Sales & Marketing Company of
Yantai Changyu Pioneer Wine Company Limited with the registered capital of CNY5million
and the business scope of wholesale business and retail business. This newly established
company is included in the consolidate scope.
Major changes or adjustments of the Company’s products or services during the
report period
□Available Not available
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Information of major customers and major suppliers
The Companys important customers
The total sales amount of the top five
167,081,822 173,506,000
customers(CNY)
The proportion that total sales amount of
3.68%
the top five customers accounting for the 3.39%
annual total sales amount(%)
The proportion that sales amount of the
related party in the total sales amount of
0% 0%
the top five customers accounting for the
annual total sales amount(%)
Information on the Companys 5 biggest customers
Sales Amount Proportion in Total Sales for
No. Customer Name
(CNY) the year(%)
Yukoon Information Technology Company
1 39,959,376.81 0.81%
Limited in Foshan city
Huahaipengcheng Liquor Company Limited
2 35,624,317.46 0.72%
in Zhuhai city
Haikou Heshunxin Trading Company
3 32,472,435.94 0.66%
Limited
Changyuexin Trading Company Limited in
4 29,920,506 0.61%
Shenzhen city
5 Fengxiang grocery store in Huian town 29,105,185.83 0.59%
Total 167,081,822 3.39%
Other situation explanation of major customers
□Available Not available
Information on the Companys important suppliers
The total purchase amount of the top 5 suppliers 452,349,552
The proportion of the total purchase amount of the top 5 suppliers in the annual
30.02%
purchase amount
Purchase amount of the related party in total purchase amount of the top five five
10.90%
suppliers accounting for annual total purchase amount(%)
Information on the Companys top 5 biggest suppliers
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Purchase Amount Proportion in Total Purchase
No. Supplier Name
(CNY) for the year(%)
1 Yantai Shenma Packaging Co., Ltd. 145,872,001 9.68%
2 Yantai Changyu Glass Co.,Ltd. 117,731,881 7.81%
Liquan Sales Department of 93,275,802
3 6.19%
Shandong Yantai Winery Co.,Ltd.
4 Xinjiang Yuyuan Liquor Co.,Ltd. 54,619,361 3.62%
152 regiment of the eighth 40,850,506
5 2.71%
agriculture production division
Total 452,349,552 30.02%
Other situation explanation of main customers
□Available Not available
(3) Costs
Unit: CNY
Year-on-year Explanation of
2017 2016 increase or significant
decrease (%) changes
Mainly because
of year-on-year
increase in
wage &
Sales expense 1,272,522,443 1,253,260,668 1.54%
welfare,
advertising
promotion fee
in 2017
Mainly because
of year-on-year
Management increase in
340,781,958 309,783,548 10.01%
expense depreciation
cost and office
expense in 2017
Mainly because
Financial of decrease in
18,590,259 21,968,859 -15.38%
expense loan interest
expenditure
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
(4) Research and development expenditure
□Available Not available
(5) Cash flow
Unit: CNY
Year-on-year
Item 2017 2016 increase or
decrease (%)
Subtotal of cash inflow in
4,965,586,341 4,525,609,466 9.72%
operating activities
Subtotal of cash outflow in
3,992,343,314 3,635,697,496 9.81%
operating activities
Net amount of cash flow
973,243,027 889,911,970 9.36%
generated in operating activities
Subtotal of cash inflow in
216,678,355 112,952,925 91.83%
investment activities
Subtotal of cash outflow in
1,036,886,116 800,394,471 29.55%
investment activities
Net amount of cash flow
-820,207,761 -687,441,546 -19.31%
generated in investment activities
Subtotal of cash inflow in
1,064,892,130 1,191,567,445 -10.63%
capital-raising activities
Subtotal of cash outflow in
1,307,993,557 1,232,491,837 6.13%
capital-raising activities
Net amount of cash flow
generated in capital-raising -243,101,427 -40,924,392 -494.03%
activities
Net increase of cash and cash
-76,053,030 164,700,643 -146.18%
equivalents
Explanation of main influence factors contributing to great changes in related data on
year-on-year basis
□Available Not available
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Explanation on the causes of the major differences between the net cash flow generated by
the Companys operating activities and this years net profit during the report period.
□Available Not available
3. Analysis to non-main business
□Available Not available
4. Assets and liabilities situation
(1) Major changes of assets
Unit: CNY
At the end of 2017 At the end of 2016
Proportio Proportio Proportion
Explanation
n in the n in the increase or
on major
Amount total Amount total decrease
changes
assets assets (%)
(%) (%)
Monetary
1,402,522,509 11.19% 1,391,517,607 12.07% -0.88% -
funds
Receivables 263,796,355 2.1% 173,062,628 1.50% 0.6% -
Inventory 2,473,614,046 19.73% 2,248,609,740 19.51% 0.22% -
Investment
18,467,989 0.15% 0% 0.15% -
real estate
Long-term
equity 0 0% 0% 0% -
investments
Mainly
because
parts of
construction
Fixed assets 5,329,083,969 42.51% 4,683,187,493 40.62% 1.89% projects
have been
transferred
to fixed
asset
Mainly
because
Constructio
parts of
n in 1,026,141,569 8.19% 1,346,281,737 11.68% -3.49%
construction
progress
projects
have been
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
transferred
to fixed
asset
Short-term
714,434,286 5.70% 662,388,882 5.75% -0.05% -
borrowings
Long-term
156,125,854 1.25% 49,140,555 0.43% 0.82% -
borrowings
(2) Measuring assets and Liabilities at Fair Value
□Available Not available
(3) Assets rights restricted situation up to the end of report period
During this report period, the Company has no asset sealed up, distrained or frozen. For
information about asset mortgage and pledge, please refer to (announcement number: 2016-Temporary 021) and (announcement number: 2017-Temporary 015) disclosed on China Securities
Journal, Securities Times and CNINFO (http://www.cninfo.com.cn/) respectively on
December 22nd, 2016 and December 12th, 2017.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
5. Investment situation
(1) Overall situation
Available □Not available
Investment amount during the Investment amount of the same
Variation
report period (CNY) period of last year (CNY)
634,882,100.00 929,180,000.00 -31.67%
(2) Situation of acquired main equity investments during the report period
Available □Not available
Unit: CNY
Invested Main business Investment Investment Shareholding Capital Partner investment Product Progress Estimated Investment Whether Disclosure Disclosure
corporate mode amount ratio source horizon type up to earnings profit or not date (if index (if
name balance or loss involve in have) have)
sheet date during the litigation
report period
Indomita Wine and other Newly 274,248,114 85% Self- LAMBO 50 years Wine All 15,000,000 26,740,109 no May 26th, Please refer to
Wine alcoholic drink established owned SpA acquisition 2017 disclosed on
China Securities Journal,
Securities Times and
CNINFO
(http://www.cninfo.com.cn/)
on May 26th, 2017
Total 274,248,114 15,000,000 26,740,109
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
(3) Situation of main ongoing non-equity investments during the report period
Available □Not available
Unit: CNY
Reasons Disclosure
Accumulated
Whether Accumulated actual for index (if
realized
it investment unreached have)
Investment Amount Process profit up Disclosure
Project Investment belongs Involved amount up Capital planning
during this of Estimated profit to the end date (if
name mode to fixed sectors to the end source schedule
report period project of the have)
assets of the report and
report
investment period estimated profit
period
Yantai Please refer to
Changyu disclosed on
sector
Cooling China Securities Journal,
Center Securities Times and
Yantai CNINFO
Changyu Liquor and (http://www.cninfo.com.cn/)
International Self- alcoholic Owned on April 22nd, 2017
Yes 110,000,000 886,690,000 100% — — — 2017.04.22
Wine City constructed beverage funds
Bottling sector
Center
Yantai Liquor and
Self- Owned
Changyu Yes alcoholic 16,315,200 415,207,200 100% — — — 2017.04.22
constructed funds
International beverage
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Wine City sector
Logistics
Center
Changyu Vine Liquor and
and Wine Self- alcoholic Owned
Yes 10,000,000 115,760,000 60% — — — 2017.04.22
Research constructed beverage funds
Institute sector
Liquor and
Treasure Self- alcoholic Owned
Yes 31,000,000 109,990,000 60% — — — 2017.04.22
Wine Chateau constructed beverage funds
sector
Liquor and
Koya Brandy Self- alcoholic Owned
Yes 23,770,000 135,698,000 55% — — — 2017.04.22
Chateau constructed beverage funds
sector
Liquor and
Greening Self- alcoholic Owned
Yes 27,805,700 53,105,700 100% — — — 2017.04.22
Investment constructed beverage funds
sector
Maintenance &
Liquor and
reconstruction
Self- alcoholic Owned
project of Roullet Yes 0 0 0% 2017.04.22
constructed beverage funds
Fransac chateau in
sector
Cognac, France
Total — — — 354,380,000 2,875,070,000 — — — — -- --
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
(4) Financial assets investment
Security investment situation
□Available Not available
There is no security investment for the Company during the report period.
Derivatives investment
□Available Not available
There is no entrust financing for the Company during the report period.
(5) The usage situation of the raised capital
□Available Not available
There is no usage situation of the raised capital for the Company during the report period.
(6) Sale of major assets and equities
Sale of major assets
□Available Not available
There is no sale of major assets during the report period.
Sale of major equities
□Available Not available
(7) Analysis to the major holding and joint stock companies
Available □Not available
Situation of main subsidiaries and joint stock companies affecting over 10% of the
Company’s net profit
Unit: CNY
Company Company Main Registered Total Net Operation Operation Net
name type business capital asset asset revenue profit Profit
Xinjiang Subsidiary To plant 15,531,5
Tianzhu grape, CNY75mil 101,588, 95,443,1 116,555,58
20,036,552
Winery produce and lion 381 87
Co., Ltd. sell
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
grape juice,
bulk wine
and fruit
wine
Yantai Subsidiary To research,
Changyu- produce and
Castel sell wine USD5milli 255,474, 80,408,4 9,859,10
68,964,230 2,038,551
Wine and sparking on 006 05
Chateau wine,tourist
Co., Ltd service
Langfang
Castel- Joint
To produce USD 40,702,2 34,568,3 -1,616,63
Changyu stock 39,165,527 -1,226,621
and sell wine 6,108,818 55 46
Wine Co. company
LTD.
Chateau Subsidiary To research,
Changyu produce and CNY642,7 695,747, 621,784, 145,103,20 17,475,6
25,301,360
AFIP sell brandy 50 324 281 0
Global and wine
Chateau Subsidiary
Liaoning
To produce CNY59.68 64,141,7 53,170,0 1,241,69
Changyu 49,643,396 2,038,551
ice wine 73million 17 22
Ice Wine
Co., Ltd.
Dicot Subsidiary To produce
Partners, and operate EUR2,385, 515,135, 126,769, 281,007,16 2,000,68
-1,816,304
S.L. wine and 732 463 123 7
other liquor
Indomita Subsidiary To produce
Wine and operate USD47.19 481,333, 354,103, 157,953,46 28,791,6
23,047,447
Company wine and million 962 792 7
Chile, SpA other liquor
Acquisition and disposal of subsidiaries during the report period
□Available Not available
Information of main holding and joint stock companies
No
(8) Main part situation of the special purpose being controlled by the Company
□ Not available
(9) Expectation for the Company’s future development
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
On the basis of our limited experience and special skills, we make the following estimation of the
wine sector and the Companys future development:
(1) The sector competition setup and development trend
Under the slowdown effect of national macroscopic economy growth, the operation situation of
the Company will become more severe, plus the change of the alcohol consumption environment,
leading to difficulties in selling high-end products; Consumers tend to be more rational, which
requires Changyu to make more efforts in improving the cost performance of products; Owing
that influx of plenty of imported wines would further compress the domestic wine market shares
and the new channels such as E-commerce cause great impact on the traditional sales channels,
the competition in the domestic wine industry will still be fierce at present and in the future long
time; Raw material cost, freight and depreciation expense and other expenses are likely to increase,
bringing big pressure to the Companys profitability. But in the long run, thanks to increase in
their income, more and more people would pursue health and fashion life mode and the people
would be in more favor of wines which fit quite well with the trend of consumption, ceaselessly
stimulating the demands for premium wine. This decides that the Chinese wine industry owns a
huge market development potential, especially that brandy and wine with high price ratio might
have a faster growth. In addition, with the increased consumption by domestic middle class,
“drink less, drink good, drink healthily” will become future tendency and wine will keep
continuous and rapid development trend in China. In such a case of long-term coexistence of
opportunities and challenges, those enterprises that possess strong brand influence and marketing
ability, catch the opportunities, actively take adjustments, make full use of newly emerging and
traditional sales channels, timely satisfy the consumers demands and provide products with high
price ratio will have the opportunity to be the final winner of competition and then form a new
structure of the future Chinese wine market.
(2) The Companys development strategy
The Company will insist the development direction of “Focus on middle-and-high level, Focus on
high quality, Focus on big product”, comprehensively implement the development strategy of
same importance between wine and brandy, endeavour to promote the harmonious development
of various liquor; actively expand the scope of consumption field and marketing mode,
industriously develop middle-and--high-end wines and brandy, strengthen the marketing level of
imported wine and strive to provide consumers with a rich variety of products in high price ratio.
(3) Management plan in new year
In 2018, the Company will try its best to realize business income of not less than CNY5.2 billion
and control the main operating costs and three period expenses below CNY3.7 billion.
(4) The measures the Company will take
In order to better catch the opportunities and face the challenges, the Company will take full
advantage of self-owned advantages, adhere to market-orientation, intensify internal adjustment
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
and reformation degree, enlarge subsidiaries autonomous right in operation, increase enterprise
vitality, implement the performance assessment mode of mainly focusing on profit, pay attention
to following aspects in 2018 in order to achieve the annual operation target:
Firstly, the Company will insist the development direction of focusing on middle-and-high-level
products, focusing on high quality and focusing on big product. Based on product Characteristics,
the Company will further clear brand positioning of wine, brandy and imported liquor and insist in
focusing on the strategy of developing middle-and-high-level products. The Company will further
perfect quality management traceability system and actively promote the construction of product
quality traceability informatization system; build raw material base in premium wine-making
grape region including France, Chile and Australia and so on in order to improve the scientific
management level of domestic base and to assure the stable supply of premium bulk wine; take
international advanced level as benchmarking, confirmedly promote high quality strategy,
improve internal quality and external appearance of products in order to achieve the
comprehensive transcendence to major competitive products. The Company will centralize
resources to make several big products at different levels, through which the Company could
promote the continuous improvement of the Companys brand awareness and influence.
Secondly, the Company will reform sales system to build new sales system that could adapt to
development requirement. The Company will further perfect the relatively-independent sales
system construction of wine, brandy and imported liquor to promote comprehensive development
of various liquor; through downsizing staff and improving efficiency, perfecting salary system and
other measures, increase the salary of sales personnel, improve their work enthusiasm and
stimulate the market vitality; strengthen system construction of backbone distributor, build unified
customer complaint system facing distributors and customers, improve their internal motivation in
selling Changyu products; focus on brand image of “Internationalization, High Quality”, actively
develop the export business and improve brand influence.
Thirdly, the Company will carry out order mode and promote informatization system construction
for production and sales plan. The Company will accelerate the informatization system
construction, roundly promote order-driven mode, build the company into a smart factory,
significantly improve the market service capacity of production system, reduce the inventory scale
and fund occupation, thoroughly sole the problem of disconnection between production and sales.
Fourthly, the Company will strengthen finance governance to perfect evaluation system whose
principal line is profit. The Company will establish the assessment system taking profit as main
line to improve profitability; strengthen profit assessment in self-supporting grape base, perfect
the budget management of various expense and control operating cost; optimize the Companys
analysis system of consolidated statement and financial assessment to improve supervision
efficiency of financial assessment; continue reinforcing the management of major expense and
consumption level; actively strive for project loan and policy-based fund loan to reduce loan cost;
reinforce tax planning and reduce tax bearing level.
Fifthly, the Company will reinforce supervision and administration function to improve
management level of overseas acquired enterprise. The Company will faithfully strengthen
operation management of overseas asset to assure the healthy operation of overseas acquired
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
enterprise; improve the positivity of overseas management team and build overseas acquired
enterprise to be “International Marketing Platform”, “Grape Resource Platform” and “Technology
Communication Platform” through series measures, such as reinforcing the third-party audit and
perfecting enthusiasm policy and so on.
Sixthly, the Company will reasonably delegate power to lower levels and reinforce monitoring
simultaneously to improve enthusiasm of subsidiaries. Meanwhile the Company delegates more
autonomy in management to subsidiaries, the C will also reinforce supervision to ensure that the
subsidiaries could maintain right development direction and operation trajectory.
Seventhly, the Company will steadily promote the construction of investment projects to assure
the project quality. The Company will accelerate to complete the commissioning work of
production lines in research and development center, improve production stability and give full
play to high efficiency of production lines; accelerate to promote putting Tinlot chateau and Koya
chateau into operation; complete the construction of second-phase SAP project in Changyu
industrial park (Yantai Changyu international wine city).
(5) Potential risks
A) Risks in price fluctuation of raw materials
Grapes are the Companys main raw materials. The grapes yield and quality are affected to a
certain extent by the natural factors such as drought, wind, rain, frost and snow. These force
majeure factors greatly influence the quantity and price of the grapes in this Company orders and
add the uncertainty to the Companys production and operation. Therefore, the Company will
lower the risks that are likely to affect grape quality and result in price fluctuation by means of
expanding the self-run vineyards, strengthening the vineyard management and optimizing the
layout of vineyards.
B) Risks in uncertainty of market input and output
To cope with the cutthroat market competition and to meet the needs for market development, the
Company has input more and more capital in the market and the sales expense has taken up a
higher percentage point in the business revenue. The input-output ratio will affect the Companys
operating results to a great extent and the risk that some investments may not reach the
expectations is likely to occur. Therefore, the Company will strengthen market research and
analysis, enhance market forecast accuracy and continue to perfect the input-output evaluation
system to ensure the investments in market to be satisfactory as expected.
C) Risks in product transport
The Companys products are fragile and sent to different places all over the world, mostly by sea,
railway and expressway. The peak season of sales is usually in cold winter and close to the spring
festival when market has a great demand. At that time, the natural and human factors such as
serious shortage of transport capacity resulting from busy flow of people and goods, wind, snow,
freezing as well as traffic accidents make the transport departments difficult to send products to
markets in time and safely. As a result, it makes this Company have to face the risks of missing
the peak season of sales. Therefore, the Company will adopt all methods possible like making
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
precise sales prediction and well designed connection of production and sales, reasonably
arranging production and transport means and making use of more available warehouses in
different places to lower these kinds of risks.
D) Risks in investment faults
According to the plan, currently the Company has finished the production layout at home, and the
next step is to pay more attention to the overseas merge and acquisition in the same industry.
Currently, Changyu industrial park (Yantai Changyu international wine city) has those features
such as the big investment amount, long-term construction period and many uncertain factors;
more unforeseeable factors for the overseas merge and acquisition projects in the progress of
M&A, it is difficult to make sure the fair and reasonable transaction price, the integration and
management after M&A is also hard. Under the influence of uncertain factors for individual
projects, it leads to have the risks of facing with the investment amount out of budget or hardly
taking back the expected investment earnings. The Company will take an adequate argument and
scientific decision-making for investment projects, try hard to reduce and avoid investment risks.
10. The Company’s receptions, studies, communications and visits
Activity registration form about receptions, studies, communications and visits during the report
period
□Available Not available
There is no receptions, studies, communications and visits activities during the report period.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
V. Major issues
1. The Company’s common stock profit distribution and increasing equity with capital
reserve
Promulgation, implementation or adjustment of common stock profit distribution policies
especially cash dividends policies during the report period
Available □Not available
Deliberated and passed by the 2016 Stockholders Meeting convened on June 15th, 2017 by
the Company, the Companys 2016 annual profit distribution scheme is shown as follows:
based on total 685,464,000 shares (including 453,460,800 A shares and 232,003,200 B shares)
up to December 31st, 2016, the Company would pay cash dividend to all shareholders
registered on the share registration day: CNY5 in cash per ten shares. This time the Company
would neither dispatch bonus shares nor increase equity with capital reserve.
Total amount of shares has not changed since the disclosure of the distribution plan to the
implementation period.
On July 4th, 2017, the Company published the Implementation Announcement of 2016 Annual
Equity Distribution on China Securities Journal, Securities Times and www.cninfo.com.cn,
determining that the share registration day and the ex-dividend day of A Share was
respectively on July 10th, 2017 and on July 11th, 2017; the last trading day, the share
registration day and the ex-dividend day of B Share was respectively on July 10th, 2017, on
July 13th, 2017 and on July 11th, 2017. Total amount of shares on the share registration day
and the ex-dividend day is 685,464,000 shares (including 453,460,800 A shares and
232,003,200 B shares). This time the dispatching objects contain all A Share shareholders
registered at China Securities Depository and Clearing Corporation Limited Shenzhen
Company after closing of Shenzhen Stock Exchange in the afternoon of July 10th, 2017 and
all B Share shareholders registered at China Securities Depository and Clearing Corporation
Limited Shenzhen Company after closing of Shenzhen Stock Exchange in the afternoon of
July 13th, 2017.
This dispatching has already been completed in mid-July 2017. The profit distribution
scheme implemented this time is consistent with the scheme deliberated and passed by the
stockholders meeting. The implementation of the profit distribution scheme for this time is
not more than two months after the shareholders' meeting passing it.
Special explanation for the cash dividends policy
Whether it is in accordance with the requirements of the regulation in the Articles Yes
of Association and the resolution of shareholders
Whether the distribution standard and proportion is clear and definite Yes
Whether the relevant decision process and mechanism is complete Yes
Whether the independent directors perform their responsibilities and play the roles Yes
Whether the small and middle shareholders have the chance to express their Yes
advices and appeals, as well as their lawful right and interest is in an enough
protection
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Whether it is legal and transparent for the condition and process while adjusting Yes
and amending the cash dividends policy
The Companys scheme (preliminary scheme) of common stock profit distribution and
increasing equity with capital reserve in the recent three years (including the report period)
The Companys profit distribution scheme in 2015 is as following: Because the left amount of
legal earned surplus reserve reaches 50% of registered capital, while making profit distribution,
the legal earned surplus reserve will not be drawn. Based on the Companys 685,464,000
shares at total up to December 31st, 2015, we plan to pay CNY5 in cash as dividends for every
ten share (including tax) to the Companys all shareholders, totaling up to CNY342,732,000
accounted for 33.27% of net profits CNY1,030,073,860 attributable to shareholders of parent
company in the consolidated statements. The retained and undistributed profit of
CNY687,341,860 will be reserved for distribution in the next year.
The Companys profit distribution scheme in 2016 is as following: Because the left amount
of legal earned surplus reserve reaches 50% of the registered capital, while making profit
distribution, the legal earned surplus reserve will be not drawn. Based on the Companys
685,464,000 shares at total up to December 31st, 2016, we plan to pay CNY5 in cash as
dividends for every ten shares (including tax) to the Companys all stockholders, totaling up
to CNY342,732,000 accounting for 34.89% of the net profit CNY982,460,488 attributable to
the shareholders of the parent company in the consolidated statement, the retained and
undistributed profit of CNY639,728,488 will be reserved for the distribution of next year.
The Companys profit distribution scheme in 2017 is as following: Because the left amount of
legal earned surplus reserve reaches 50% of the registered capital, while making profit
distribution, the legal earned surplus reserve will not be drawn. Based on the Companys
685,464,000 shares at total up to December 31st, 2017, we plan to pay CNY5 in cash as
dividends for every ten shares (including tax) to the Companys all stockholders, totaling up to
CNY342,732,000, accounting for 33.22% of the net profit CNY1,031,695,056 attributable to
the shareholders of the parent company in the consolidated statement, the retained and
undistributed profit of CNY688,963,056 will be reserved for the distribution of next year.
The Companys common stock cash dividend record in recent three years (including the
report period)
Unit: CNY
Proportion in the net
Net profit belonging to
profit belonging to
Amount of the listed companys Amount of cash Proportion of cash
Year of the listed companys
cash dividend stockholders in the dividends in other dividends in other
distribution stockholders in the
(including tax) consolidated statement ways ways
consolidated
of the distribution year
statement (%)
2017 342,732,000 1,031,695,056 33.22% 0 0%
2016 342,732,000 982,460,488 34.89% 0 0%
2015 342,732,000 1,030,073,860 33.27% 0 0%
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
During the report period, the Company earned profit, the profit of the parent company that
could be distributed to common stock shareholders was positive but without proposing
common stock cash dividend distribution preliminary scheme.
□ Not available
2. The Company’s preliminary scheme of profit distribution and preliminary scheme of
increasing equity with capital reserve for the report period
Available □Not available
Number of sending bonus shares per ten shares (share)
Number of dividend payout per ten shares (CNY) (including tax)
Number of transferring per ten shares(share)
The cardinal number of the capital stocks for the preliminary distribution
685,464,000
scheme (shares)
Total cash dividend distribution(CNY)(including tax) 342,732,000
Attributable profit(CNY) 1,031,695,056
The proportion of cash dividend distribution in the total profit distribution 100%
Cash dividend distribution this time
If the Companys development is in growth stage and major capital expenditure is arranged,
while making profit distribution, the proportion of cash dividends should takes up no less
than 20% in this profit distribution.
Detailed explanation for the preliminary scheme of profit distribution or increasing equity
with capital reserve
According to the audit result from Deloitte Hua Yong Certified Public Accountants Co., Ltd,
the net profit belonging to the parent companys stockholders in the consolidated statement in
2017 is CNY1,031,695,056 and the net profit of the parent company in financial statement in
2017 is CNY793,598,010.
According to PRC accounting standard, the situation for attributable profits of the
consolidation and the parent company in 2017 as following:
Unit: CNY
Consolidation Parent company
Undistributed profits at the end the year 7,309,081,618 7,811,100,555
Including: net profits in 2017 1,031,695,056 793,598,010
Undistributed profit carried forward of the 6,620,118,562 7,360,234,545
beginning of the year
Distribution of 2016 dividends 342,732,000 342,732,000
Withdrawal legal surplus reserve 7,309,081,618 7,811,100,555
According to regulation of 157th item in the Articles of Association, which is that “the
Company can distribute dividends either in cash or by stock, the profit to be distributed each
year is not less than 25% of the distributable profit realized in the same year and the
accumulated sum of profit to be distributed in cash in the last three years is not less than 30%
of the yearly average distributable profit to be realized in the last three years”. Meanwhile,
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
considering the large amount on the capital expenditure in 2018, under the condition of not
influencing the normal production and operation, the Company put forward preliminary
scheme on profit distribution in 2017 as following:
Because the left amount of legal earned surplus reserve reaches 50% of the registered capital,
while making profit distribution, the legal earned surplus reserve will not be drawn. Then
based on the Companys 685,464,000 shares at total up to December 31st, 2017, we plan to
pay CNY 5 in cash as dividends for every ten shares (including tax) to the Companys all
stockholders, totaling up to CNY342,732,000, accounting for 33.22% of the net profit
CNY1,031,695,056 attributable to the shareholders of the parent company in the consolidated
statement; the retained undistributed profit of CNY688,963,056 will be reserved for the
distribution of next year. The cash dividend distributed to shareholders of domestic listed
foreign shares (B share) is paid in Hongkong dollar converted based on the the middle rate
between CNY and Hongkong dollar issued by the Peoples Bank of China on the first
working day after the resolution date of 2017 shareholders meeting.
3. Implementation of commitments
(1) Commitments that the Company’s actual controllers, shareholders, related parties,
acquirers and the Company and other related commitment parties have implemented
during the report period and have not implemented up to the end of the report period
Available □Not available
Commitment Commitment Commitment Commitment Commitment
Commitments Implementation
party type content time period
Commitments at
share reform
Commitments
made in
acquisition report
or equity changes
report
Commitments at
- - - -
asset restructuring
Yantai
Solve Has been
Changyu Non-horizontal
Commitments at horizontal May 18th, 1997 Forever performing
Group Co. competition
the initial public competition strictly
Ltd.
offering or
Clear the use According to
refinancing
of trademark Trademark
Yantai royalty License
Has been
Changyu Contract, the th
May 18 , 1997 Forever performing
Group Co. trademark
strictly
Ltd. royalty of
Changyu and
other
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
trademarks
paid by the
Company to
Yantai
Changyu
Group Co., Ltd
ever year is
mainly used
for advertising
Changyu and
other
trademarks and
this contract
products by
Yantai
Changyu
Group Co.,
Ltd.
Equity incentive
commitments
Commitments at
middle and small
shareholders of
the Company
Commitment
under timely
Yes
implementation or
not
Whether or not to
have specific
reasons of the
No
unimplemented
commitment and
next steps(if any)
(2) The Company should make a statement on the achieved original profit forecast of
assets or projects and its reason if there is profit forecast of Company’s assets or
projects and the report period is still in the profit forecast period
□Available Not available
4. Non-business capital occupying of listed company by controlling shareholder and its
related parties
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
□Available Not available
There are no non-business capitals occupying of listed company by controlling shareholder
and its related parties during the report period.
5. Explanation of Non-standard Audit Report given by accounting firm in the report
period from board of directors, board of supervisors and independent directors (if
have)
□Available Not available
6. Compared with the last year’s financial report, explanation for the changes of
accounting policy, accounting estimation and accounting method
Available □Not available
In accordance with related regulation of Ministry of Finance, the Company plans to change
the accounting policy about “Government Grants”. Detailed information is shown as follows:
Before the change: The Company executes 《Accounting Standard for Business Enterprises
No. 16 - Government Grants》 involved in 《Notification of Ministry of Finance on Printing
and Distributing 38 Items of Specific Standards Including 》(Cai Kuai [2006] No.3) printed and distributed by
Ministry of Finance on February 15th, 2006. Hereby, the Company classifies received
government grants into “Non-operating Income” on the basis of benefit period.
After the change: The Company executes《Accounting Standard for Business Enterprises No.
16 - Government Grants》(Cai Kuai [2017] No.15) formulated by Ministry of Finance. For the
rest unchanged parts, the Company will still execute relevant standards and regulations
published by Ministry of Finance on February 15th, 2006. Hereby, the accounting treatment in
government grants will be divided into three classes: firstly, loan interest subsidy offsets
“Financial Expense”; secondly, it is classified into “Other Income”; thirdly, those that are not
relevant with operating activity are classified into “Non-operating Income”.
7. The situation explanation for the correction of major accounting errors which need to
be retrospect and restated during the report period
□Available Not available
There is no situation for the correction of major accounting errors which need to be retrospect and
restated.
8. Compared with the last year’s financial report, explanation for the changes of the
consolidated statements scope
Available □Not available
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
th
(1) On May 11 , 2017, this company, together with LAMBO SpA signed Agreement among
Shareholders and Price Adjustment Agreement, establishes a joint venture enterprise
Indomita Wine Company Chile, SpA (Chinese name: 智利魔狮葡萄酒简式股份公司, for
short “Indomita Wine”) with an investment of USD4,190,000. This Company offers
USD40,110,000, holding 85% equity of Indomita Wine. After establishment, as transferee,
Indomita Wine offers USD47,190,000, acquiring 100% equity of all three subsidiaries under
Chile Bethwines. On July 1st, 2017, this Company completed all the prerequisites regarding
share purchase, obtaining the control of three subsidiaries under Chile Bethwines. During the
report period, Indomita Wine and its subsidiaries all are included in the consolidate scope.
(2) On January 18th, 2017, this company newly establishes Sales & Marketing Company of
Yantai Changyu Pioneer Wine Company Limited with the registered capital of CNY5million
and the business scope of wholesale business and retail business. This newly established
company is included in the consolidate scope during the report period.
9. The appointment and dismissal of certified public accountants
Currently appointed accounting firm
Deloitte Hua Yong Certified Public Accountants
Domestic accounting firm name
Co., Ltd. (special general partnership)
Remuneration for domestic accounting firm
(CNY0000)
Consecutive period for the audit services of
domestic accounting firm
Name of certified public accountant for the audit
Li Xu, Li Yangang
services of domestic accounting firm
Consecutive period for the certified public
accountants audit services of domestic -
accounting firm
Overseas accounting firm name (if have)
Remuneration for overseas accounting firm
(CNY0000) (if have)
Consecutive period for the audit services of
-
overseas accounting firm (if have)
Name of certified public accountant for the audit
-
services of overseas accounting firm (if have)
Consecutive period for the certified public -
accountants audit services of overseas
accounting firm (if have)
Whether or not to dismiss the accounting firm during the report period
□Yes No
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
To employ internal control audit accounting firms, financial adviser or sponsor.
□Available Not available
10. Face of suspension and termination of listing after the disclosure of annual report
□Available Not available
11. Bankruptcy reorganization
□Available Not available
There is no bankruptcy reorganization during the report period.
12. Material litigation and arbitration
□Available Not available
There are no material litigation and arbitration during the report period.
13. Penalty and rectification
□Available Not available
There are no penalties or rectifications during the report period.
14. Credit of the Company, holding shareholders and actual controllers
□Available Not available
15. Implementation of the Company’s equity inventive plan, employee stock ownership plan
or other employee incentive measures
□Available Not available
There are no implementation of the Companys equity inventive plan, employee stock ownership
plan and other employee incentive measures during the report period.
16. Significant related transactions
(1) Related transactions in relation to daily operations
Available □Not available
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Related Relationship Type Content Pricing Price Amount Proportion Approved Whether Clearing Available Disclosure Disclosur
party principle (CNY0000) accounting transaction exceed form market price date e index
for amount quota approved of similar
of similar (CNY0000) transaction transactions
transactions quota
Purchase
Yantai Controlled Purchase and
Shenma by the same and commission Agreement Determined April 26th,
14,587 8.71% 18,000 No Cash No -
Packaging parent commission processing pricing by agreement
Co., Ltd. company processing packing
materials
Yantai Licensed
Licensed use
Changyu Parent use of Agreement Determined April 26th,
of trademark 7,289 100% 7,605 No Cash No -
Group Co. company intangible pricing by agreement
and patent
Ltd. assets
Total - - 21,876 -- 25,605 - - - - -
Details of the return of large sales No
Actual performance of the estimated total amount for In 2017, the estimated amount for daily operations related transactions of the Company is CNY331.3million and the actual amount incurred for
daily operations related transactions by category that will daily operations related transactions is CNY273.55million.
occur during this period.
Reason for the deference between transaction price and No
market reference price
(2) Related transactions in relation to acquisition and sales of assets or equity
□Available Not available
There are no related transactions in relation to acquisition or sales of assets or equity during the report period.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
(3) Related transactions in relation to common foreign investment
□Available Not available
There are no related transactions in relation to common foreign investment during the report
period.
(4) Related current credit and debt transactions
Available □Not available
Whether or not existing non-operating related credit and debt transactions
□Yes No
There are no non-operating related credit and debt transactions during the report period.
(5) Other major related transactions
□Available Not available
There are no other major related transactions during the report period.
17. Major and important contracts and execution results
(1) Trusteeship, contract and leasehold issues
Trusteeship situation
□Available Not available
There is no trusteeship situation during the report period.
Contract situation
Available □Not available
Contract situation description
During the report period, about the Companys contract operation situation, please see “1.The
structure of Enterprise group” in Annex 8 “Rights and interests of other subject” in the
financial report of this report.
Project in gains and losses for the Company to achieve more than 10% of the total profit
□Available Not available
There are no contract projects in gains and losses for the Company to achieve more than 10%
of the total profit during the report period.
Leasehold situation
Available □Not available
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Leasehold situation description
On January 1st, 2017, the Company renewed the Space Lease Agreement with the controlling
shareholder Changyu Group. The Company leased the space with 15196.94 square meters
located at 174 Shihuiyao Road, Zhifu District,Yantai City. The rent per year is CNY1.4645
million with a rental period of 5 years from January 1st, 2017 to December 31st, 2021. On
January 1st, 2017, the Companys subordinate Sales&Marketing Co. of Yantai Changyu
Pioneer Wine Company Limited. Brand Sales Department renewed the Space Lease
Agreement with the controlling shareholder Changyu Group, leasing the space with 42552.83
square meters located at 1 Jichang Road, Zhifu District,Yantai City and the space with 3038
square meters located at 56 Dama Road, Zhifu District, Yantai City, which are all under the
name of controlling shareholder. The rent of the above spaces per year is CNY4.3935million
with a rental period of 5 years from January 1st, 2017 to December 31st, 2021.
On July 1st, 2017, this company signed a house-leasing contract with Yantai Shenma
Packaging Company Limited. According to this contract, since July 1st, 2017, this company
leased property to Yantai Shenma Packaging Company Limited for a business purpose with
the annual rent of CNY1,626,880. This contract expires on June 30th, 2022.
Project in gains and losses for the Company to achieve more than 10% of the total profit
□Available Not available
There are no leasehold projects in gains and losses for the Company to achieve more than
10% of the total profit during the report period.
(2) Major guarantee
Available □Not available
Guarantee situation
Unit: CNY0000
External guarantee of the Company and its subsidiaries(excluding guarantee to subsidiaries)
Disclosure date of
Whether or
related Actual date of Actual Whether or not
Guarantee object Guarantee Guarantee Guarantee not belong to
announcement occurrence (date guarantee complete
name quota type Period related-party
about guarantee of agreement) amount implementation
guarantee
quota
Yantai Economic
and Technological Mortgage;
Development 2016.12.22 34160 2016.12.21 34160 10years No No
Zone Management Pledge
Council.
Total of the actual external
Total of the external guarantee quota
0 guarantee amount during the
approved during the report period (A1)
report period (A2)
Balance of the actual
Total of the external guarantee quota
external guarantee by the
approved by the end of the report period 34160
end of the report period
(A3)
(A4)
Guarantee situations between the Company and subsidiaries
Disclosure date of Whether or
Actual date of Actual Whether or not
Guarantee object related Guarantee Guarantee Guarantee not belong to
occurrence (date guarantee complete
name announcement about quota type Period related-party
of agreement) amount implementation
guarantee quota guarantee
Sales & Joint liability
Marketing 2016.10.31 10,000 2016.11.05 10,000 assurance
2 years No Yes
Company of
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Yantai Changyu
Pioneer Wine
Company Limited
Yantai Changyu Mortgage;
Pioneer Wine 2016.12.22 11,984 2016.12.21 11,984 10 years No Yes
Company Limited Pledge
Yantai Changyu Joint
Wine Research liability
2016.12.22 72,176 2016.12.21 72,176 10 years No Yes
and Development assurance;
Company Limited Mortgage
Joint
Kilikanoon Estate
2017.12.12 7100 2018.01.09 7100 liability 1 year No Yes
Pty Ltd
assurance
Total of the actual guarantee
Total of the guarantee quota approved to
amount for subsidiaries
subsidiaries during the report period 7,100
during the report period
(B1)
(B2)
Balance of the actual
Total of the guarantee quota approved to
guarantee for subsidiaries by
subsidiaries by the end of the report 89,276 82,176
the end of the report period
period (B3)
(B4)
Guarantee situations between subsidiaries
Disclosure date of
Whether or
related Actual date of Actual Whether or not
Guarantee object Guarantee Guarantee Guarantee not belong to
announcement occurrence (date guarantee complete
name quota type Period related-party
about guarantee of agreement) amount implementation
guarantee
quota
Total of the actual guarantee
Total of the guarantee quota approved
amount for subsidiaries
to subsidiaries during the report period 0
during the report period
(C1)
(C2)
Balance of the actual
Total of the guarantee quota approved
guarantee for subsidiaries by
to subsidiaries by the end of the report 0
the end of the report period
period (C3)
(C4)
Total guarantee amount of the Company(Total of above three major items)
Total of the actual guarantee
Total of the approved guarantee quota
7,100 amount during the report
during the report period(A1+B1+C1)
period(A2+B2+C2)
Total of the approved guarantee quota Balance of the actual
by the end of the report period 123,436 guarantee by the end of the 116,336
(A3+B3+C3) report period(A4+B4+C4)
The proportion of actual total guarantee amount (A4+B4+C4)
13.06%
accounting for the Companys net asset
Among :
The amount of guarantee for shareholders, actual controllers and their related
parties(D)
The amount of debt guarantee for the guaranteed objects whose asset-liability
ratio is more than 70% directly or indirectly(E)
Total amount of guarantee of the part that exceeds 50% of net assets(F) 0
Total amount of the above-mentioned three items(D+E+F)
Explanation for undue guarantees that have happened warranty liability or
No
may take joint payback liabilities during the report period
Explanation for violating due process to provide external guarantee No
Specific explanation on adopting complex guarantee type
No.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Illegal external guarantee
□Available Not available
There is no illegal guarantee situation during the report period.
(3) Entrusting others to manage cash assets
Financial management entrustment
□Available Not available
There is no financial management entrustment during the report period.
Loan entrustment
□Available Not available
There is no loan entrustment during the report period.
(4) Other important contracts
□Available Not available
There are no other important contracts during the report period.
18. Social Responsibility
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
(1) Social responsibility performance
Please see 2017 Annual Social Responsibility Report disclosed on China Securities Newspaper, Securities Times and www.cninfo.com.cn by the
Company.
(2) Targeted poverty alleviation social responsibility performance
① Targeted poverty plan
No
② Summary of annual targeted poverty
No.
③ Targeted poverty effectiveness
No
④ Subsequent targeted poverty plan
No
(3) Environmental protection related situation
Whether the listed company and its subsidiaries belong to major polluters published by the environmental protection department
No
19. Other Major issues
□Available Not available
There are no other major issues need to be explained during the report period.
20. Major issues of Company’s subsidiaries
□Available Not available
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. Changes in Shares and the Shareholders’ Situation
1. Changes in shares
(1) Changes in shares
Unit: share
Amount before this change Change (+, -) Amount after this change
Transfer
Percentage Allot Distribute other Percentage
Amount new capital to others Sub total Amount
% bonus share %
share share
capital
1、Unrestricted shares 685,464,000 100.00% 685,464,000 100.00%
(1)、A shares 453,460,800 66.15% 453,460,800 66.15%
(2)、B shares 232,003,200 33.85% 232,003,200 33.85%
2、Total shares 685,464,000 100.00% 685,464,000 100.00%
Cause of share change
□Available Not available
Approval of share change
□Available Not available
Transfer of changed shares
□Available Not available
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
The influence of share change on the financial indicators such as basic earnings per share, diluted earnings per share of the latest year and the
latest period, net asset per share belonging to the Companys common shareholders, etc.
□Available Not available
Other contents the Company thinks necessary or securities regulatory departments ask to make public.
□Available Not available
(2) Changes in restricted shares
□Available Not available
2. Securities issuance and listing situation
(1) Securities issuance (exclude preferred share) during report period
□Available Not available
(2) Explanation of change in Company’s total shares and shareholding structure and change in Company’s assets and liability structure
□Available Not available
(3) Current employee shares
□Available Not available
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
3. Situation for shareholders and the actual controllers
(1) The number of shareholders of the Company and the shareholdings
Unit:share
Total number of preferred
Total number of Total number of preferred
shareholder recovering
shareholders by the end of shareholder recovering
Total shareholders in voting power by the end of
48,966 last month before the 44,606 voting power by the end 0
the report period last month before the
disclosure day of the ofreport period (if have)
disclosure day of the annual
annual report (see note 8)
report (if have) (see note 8)
Shareholders holding more than 5% or the top 10 shareholders holding situation
Number Pledged or frozen
Changes
of Number of
Percentage Shares held until the during the
Name of Shareholders Character of shareholders (%) end of the report period report restricte unrestricted Share
Amount
d shares status
period
shares
YANTAI 50.40% 345,473,856 0 0 345,473,856 -
Domestic non-state-owned
CHANGYU GROUP
legal person
CO. LTD.
GAOLING Foreign legal person 3.08% 21,090,219 -210,700 0 21,090,219 -
FUND,L.P.
CHINA State-owned legal person 2.32% 15,924,155 0 0 15,924,155 -
SECURITIES
FINANCE CORP
BBH BOS S/A 2.22% 15,241,826 0 0 15,241,826 -
Foreign legal person
FIDELITY FD -
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
CHINA FOCUS FD
GUOTAI JUNAN Foreign legal person 1.00% 6,881,493 1,560,015 0 6,881,493 -
SECURITIES(HONG
KONG) LIMITED
FIDELITY 0.89% 6,100,762 3,800,769 0 6,100,762 -
PURITAN TRUST:
FIDELITY SERIES
Foreign legal person
INTRINSIC
OPPORTUNITIES
FUND
CENTRAL HUIJIN 0.69% 4,761,200 0 0 4,761,200 -
ASSET
State-owned legal person
MANAGEMENT
LTD.
VANGUARD 0.55% 3,788,487 0 0 3,788,487 -
EMERGING
Foreign legal person
MARKETS STOCK
INDEX FUND
FIDELITY CHINA 0.55% 3,779,202 0 0 3,779,202 -
SPECIAL Foreign legal person
SITUATIONS PLC
NORGES BANK Foreign legal person 0.52% 3,558,797 -3,025,951 0 3,558,797 -
Strategic investors or legal result of the placement of new
No
shares to become a top 10 shareholders(if have)(see note 3)
Among the top 10 shareholders, Yantai Changyu Group Company Limited has no
The explanation for the associated relationship and
associated relationship or accordant action relationship with the other 9 listed shareholders,
accordant action
and the relationship among the other shareholders is unknown.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
The top 10 shareholders with unrestricted shares
Number of unrestricted Type of share
Name of Shareholders shares held until the end of
Type of share Amount
the year
YANTAI CHANGYU GROUP CO. LTD. 345,473,856 A 345,473,856
GAOLING FUND,L.P. 21,090,219 B 21,090,219
CHINA SECURITIES FINANCE CORP 15,924,155 A 15,924,155
BBH BOS S/A FIDELITY FD - CHINA FOCUS FD 15,241,826 B 15,241,826
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED 6,881,493 B 6,881,493
FIDELITY PURITAN TRUST: FIDELITY SERIES INTRINSIC 6,100,762 B 6,100,762
OPPORTUNITIES FUND
CENTRAL HUIJIN ASSET MANAGEMENT LTD. 4,761,200 A 4,761,200
VANGUARD EMERGING MARKETS STOCK INDEX FUND 3,788,487 B 3,788,487
FIDELITY CHINA SPECIAL SITUATIONS PLC 3,779,202 B 3,779,202
NORGES BANK 3,558,797 B 3,558,797
The explanation for the associated relationship and accordant action of the top 10 Among the top 10 shareholders, Yantai Changyu Group Company
shareholders with unrestricted shares, the the associated relationship and Limited has no associated relationship or accordant action
accordant action between the top 10 shareholders with unrestricted shares and the relationship with the other 9 listed shareholders, and the relationship
top 10 shareholders among the other shareholders is unknown.
Explanation for the top 10 shareholders who involved in financing activities and The top 10 shareholders do not involve in financing activities and
stock trading business (if have)(see note 4) stock trade business.
Whether or not the Companys top 10 common shareholders and shareholders with unrestricted shares take agreed repurchase trading during the
report period
□Yes No
There is no agreed repurchase trading taken by the Companys top 10 common shareholders and shareholders with unrestricted shares during the
report period.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
(2) Situation for the controlling shareholders of the Company
Property of holding shareholders: Property of holding main body undefined
Type of holding shareholders: Legal representative
Legal Establishment Organization
Name of controlling shareholder Main business
representative date code
Production and distribution of wine,
healthy liquor, distilled liquor and
91370600265645 non-alcohol beverages, planting of
Yantai Changyu Group Co. Ltd. Sun Liqiang 1997.04.27
8244 agricultural products and export
business under the scope of
permission.
Equity situation for the other domestic listed
companies controlled or shared by the
No.
controlling shareholders during the report
period
Changes in the controlling shareholder during the report period
□Available Not available
There are no changes in the controlling shareholder during the report period.
(3) Situation for the actual controllers of the Company
Property of actual controllers: domestic other institutions; foreign other institutions
Type of actual controllers: Legal representative
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Name of actual Legal Establishment Organization
Main business
controllers representative date code
Under state permission, property investment, tenancy of machine and facility,
Yantai Yuhua Investment wholesale and retail of construction material, chemical products (chemical
Jiang Hua 2004.10.28 76779294-7
& Development Co. Ltd hazard products excluded), hardware and electronical products, grape
plantation.
Directly or indirectly conduct the production and distribution of food
ILLVA Saronno Holding Augusto products (alcoholic products included) as well as industrial, commercial,
1984.07.25 -
Spa Reina financial and service activities of any other kinds through joint-stock
companies and organizations
International Finance Corporation is one of the members of World Bank,
mainly dedicated to investment in private sectors of developing countries
International Finance Philippe LE while providing technical support and consultation service. The corporation
Corporation HOUEROU 1956.07.25 - is a multilateral financial institution that ranks first in the world in terms of
providing capital stock and loans to developing countries. Its purpose is to
promote sustainable investments of private sectors of developing countries in
order to alleviate poverty and improve peoples life.
Operating management of state-owned property right (stock right) authorized
by State-owned Assets Supervision and Administration Commission of
Yantai Municipal Government; Financing, investment and operating
management of government projects, such as strategic investment and
Yantai Guofeng industrial investment and so on; Capital operation (including acquisition,
Investment Holdings Co., Chen Dianxin 2009.02.12 00426068-6 reintegration and transfer, etc) of state-owned property right and state-owned
Ltd stock right within the scope of authorization; Venture capital investment
business; Agency of venture capital investment business of other venture
investment enterprises or individuals; Participation in the establishment of
venture capital investment enterprises and venture capital investment
management consultant institutions; Investment and financing service
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
business; Investment and financing consultant business; Other business
authorized by State-owned Assets Supervision and Administration
Commission of Yantai Municipal Government.(Projects need to be
authorized in accordance with the law could carry out business activities only
after the approval of relevant departments )
Equity situation for the
other domestic listed
companies controlled by No
the actual controller
during the report period
Changes of the actual controllers during the report period
□Available Not available
There are no changes in actual controllers during the report period.
Introduction for property right and control relations between the Company and its actual controllers
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Yantai Guofeng Investment
Illva Saronno Holding Spa Holdings Co., Ltd
Actual controller controls the Company through a trust or other asset management ways
□Available Not available
(4) Other institutional shareholders holding more than 10% shares
□Available Not available
(5) Shares reduction situations of holding shareholders, actual controllers, restructuring side and other commitment subjects
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
□Available Not available
VII. Related Situation of Preferred Shares
□Available Not available
There are no preferred shares during the report period.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VIII. Situation for Directors, Supervisors, Senior Management and Staff
1. Changes in shareholdings of directors, supervisors and senior management
Shares Increased
Decreased
Beginning Ending held at the shares Other Shares held at
shares
Name Post Status Gender Age date of the date of the beginning during changes of the end of the
during the
post post of the the shares held period
period
period period
Chairman to the present
Sun Liqiang M 70 1997.09.18 2019.05.27 0 0 0 0
Board of Directors incumbent
Vice-chairman to
Zhou the Board of present
M 53 2002.05.20 2019.05.27 0 0 0 0
Hongjiang Directors and incumbent
General manager
Director and present
Leng Bin Vice-general M 55 2000.08.22 2019.05.27 0 0 0 0
manager incumbent
Director and present
Qu Weimin Secretary to the M 60 1997.09.18 2019.05.27 0 0 0 0
Board of Directors incumbent
present
Zhang Ming Director M 44 2016.05.26 2019.05.27 0 0 0 0
incumbent
leaving the
Chen Jizong Director M 42 2013.05.14 2016.05.26 0 0 0 0
post
Augusto present
Director M 77 2006.12.07 2019.05.27 0 0 0 0
Reina incumbent
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Aldino present
Director M 65 2006.12.07 2019.05.27 0 0 0 0
Marzorati incumbent
Antonio present
Director M 79 2006.12.07 2019.05.27 0 0 0 0
Appignani incumbent
leaving the
Dai Hui Director F 52 2010.09.01 2017.06.15 0 0 0 0
post
present
Wei Anning Director M 54 2017.06.15 2019.05.27 0 0 0 0
incumbent
Wang Independent present
M 52 2014.05.23 2019.05.27 0 0 0 0
Zhuquan director incumbent
Present
Wang Shigang Independent M 52 2011.05.10 2019.05.27 0 0 0 0
director incumbent
Independent Present
Luo Fei M 65 2016.09.23 2019.05.27 0 0 0 0
director incumbent
Independent Present
Liu Yan F 44 2016.09.23 2019.05.27 0 0 0 0
director incumbent
Chairman to the present
Kong Board of M 45 2013.05.14. 2019.05.27 0 0 0 0
Qingkun incumbent
Supervisors
present
Zhang Lanlan Supervisor F 48 2013.05.14. 2019.05.27 0 0 0 0
incumbent
present
Liu Zhijun Supervisor M 37 2016.05.26 2019.05.27 0 0 0 0
incumbent
Sun Jian Vice-general present M 51 2006.03.22 - 0 0 0 0
manager incumbent
Vice-general present
Yang Ming M 59 1998.08.12 - 0 0 0 0
manager incumbent
Li Jiming Chief engineer present M 51 2001.09.14 - 0 0 0 0
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
incumbent
Vice-general present
Jiang Hua M 54 2001.09.14 - 0 0 0 0
manager incumbent
present
Jiang Jianxun Finance manager M 51 2002.05.20 - 0 0 0 0
incumbent
Total -- -- -- -- -- -- 0 0 0 0
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
2. Changes in the Company’s directors, supervisors and senior management
Available □Not available
Name Position Type Date Reason
Leaving the post owing to
Dai Hui Director expiration of the term of 2017.06.15 -
office
3. Situation for work experience
The professional background, main work experiences and present positions of the Companys
directors, supervisors and senior management
(1) Members of Board of Directors
Mr. Sun Liqiang, male, 70, Chinese, with college degree, senior economist, was the
representative of the 10th and 11th National Peoples Congress. From 18th September, 1997 to
10th January, 2018, he had served as chairman of the Company, and concurrently chairman
and general manager of Changyu Group. He has been director of the Company since then to
disclosure day of this report .
Mr. Zhou Hongjiang, male, 53, Chinese, with doctor degree, senior engineer, was the
representative of the 12th National Peoples Congress, vice general manager of the Company
and general manager of the Sale Company. From 20th May, 2002 to 10th January, 2018, he
served as director, vice-chairman and general manager of the Company and concurrently
vice-chairman of Changyu Group. He has been chairman of the Company, chairman and
party secretary of Changyu Group since then to disclosure day of this report; he is the
representative of the 13th National Peoples Congress now.
Mr. Leng Bin, male, 55, Chinese, with master degree, senior accountant, was vice section
chief and section chief of Yantai Audit Bureau, he served as director and vice general
manager of the Company from 15th June, 2000 to 10th January, 2018. He has been director of
the Company, and concurrently general manager and vice party secretary of Changyu Group
since then to disclosure day of this report.
Mr. Qu Weimin, male, 60, Chinese, bachelor of engineering,senior economist, worked at
Yantai Commission for Restructuring the Economic System and Research Office of Yantai
Government and has 20 years of experience in the aspect of macroeconomic study and
enterprise operation and management, he was vice general manager of the Company. He has
been served as director and concurrently secretary to the board of directors of the Company
since 18th September, 1997.
Mr. Zhang Ming, male, 44, Chinese, with bachelor degree, senior engineer, is now chairman
of Yantai Guofeng Investment Holding Co., Ltd. He was planner of Yantai Synthetic Leather
General Factory, plan specialist of business department, deputy section chief of plan and
statistic section in assets management department and section chief of plan and statistic
section in assets management department in Yantai Wanhua Synthetic Leather Group Co.,
Ltd, risk control section chief of Yantai Guofeng Investment Holding Co., Ltd. and
concurrently director and vice general manager of Yantai Guoyu Finance Lease Co., Ltd, vice
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
general manager and secretary to the board of directors of Wanhua Efficient Technology
Group Co., Ltd. and general manager of Yantai State-owned Asset Management Co., Ltd.
Mr. Augusto Reina, male, 77, Italian, is now serving as chief executive officer of several
companies including Illva Saronno Holding SpA and Illva Saronno Investment SRL, member
of the board of directors of Barberini Spa, director of Federvini (Italian Alcohols Production
and Export Association), director of Istituto Del Liquore (Wine Research Institute), director
of Assovini (Sicily Viniculture and Wine Production Association) and director of Changyu
Group. He has been director of the Company since 27th April, 2006.
Mr. Aldino Marzorati, male, 65, Italian, with bachelor degree, is now the general manager of
Illva Saronno Holding SpA and director of the board of directors of some branches under the
group company and the director of Changyu Group. He has been director of the Company
since 27th April, 2006.
Mr. Antonio Appignani, male, 79, Italian, with bachelor degree, is vice chairman of Italian
Business Consultation Committee, chief of Professional Ethics Committee, teacher of
vocational training course of Industrial and Commercial Consultation Committee, member of
Economic and Commercial Committee of the public university “G. D Annunzio” and
concurrently serving as member of the board of directors of different companies and member
of the board of directors of several companies under Illva Group and the director of Changyu
Group.
Mr. Wei Anning, male, Chinese, 54, with doctor degree, ever served as agricultural
economist of the World Bank, director of North East Asia Food & Agribusiness Research of
the Rabobank, China CEO of the Fortis Bank Belgium, executive deputy president of the
New Hope Group (Sichuan), president of Shandong Liuhe Group, chairman of the Shandong
Chinwhiz Group. He is good at corporate governance, enterprise development strategy and
equity investments. Now, he is serving as executive director and general manager of
Shanghai Gueva Fund Management Co., Ltd Co., Ltd, executive director of both Ningxia
Gueva Fund Management Co., Ltd and Ningbo Gueva Fund Management Co., Ltd,
independent director of Dachan Food (Asia) Co., Ltd, Orient Securities Co., Ltd and Fortune
SG Fund Management Co., Ltd. Besides, he is also serving concurrently as director of
Xinjiang Kuntai Group Co., Ltd, Jiangsu Financial leasing Co., Ltd and Hangzhou United
Rural Commercial Bank Co., Ltd,. He is serving as director of the Company.
Mr. Wang Shigang, male, 52, Chinese, MBA and Certified Public Accountant, is now the
board chairman of Shandong Tianhengxin Construction Cost Consultation Co. Ltd.. He
previously served as independent director of the Company. He acts as the independent
director again from 14th May, 2013.
Mr. Wang Zhuquan, male, 52, Chinese, doctor of management (accountancy), first batch of
national accounting academic leading personals of Financial Department, the entrant of
accountant master cultivation project of Financial Department, outstanding teacher of
Shandong province, Government Special Allowance expert, acted as independent director
from 13th May, 2010 to 12th May, 2013. Now he is the professor and the doctoral supervisors
of the Ocean University of China as well as independent director of the some listed
companies which could be exemplified as Qingdao DoubleStar Co., Ltd. He acts as the
independent director of the Company again from 23rd May, 2014.
Mr. Luo Fei, male, 65, Chinese, with doctor degree, visiting scholar of University of Toronto,
doctoral supervisors, Government Special Allowance expert, first batch of trans-century
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
subject (academic) leading personals of Financial Department. He successively served as the
dean of accounting college in Zhongnan University of Economics and the dean of accounting
college in Zhongnan University of Economics and Law. He focuses on the study of financial
accounting, cost accounting, financial management, and so on. He has worked in companies
for many years and has practical working experience with companies. Now he is serving as
independent director of the Company.
Ms. Liu Yan, female, 44, Chinese, with master degree, was honored as national outstanding
lawyer in 2005. Her main practice areas include issuing and listing of domestic and foreign
stocks, merger and acquisition and foreign investment. She now is the partner of Tian Yuan
Law Firm and serving as independent director of the Company.
(2) Members of board of supervisors
Mr. Kong Qingkun, male, 45, Chinese, MBA and economist, served as the section member of
production department in the healthy liquor branch office, clerk and vice director of general
manager office. He now is director of general manager office.
Ms. Zhang Lanlan, female, 48, with bachelor degree and economist, served as vice-manager
of the Companys import/export company, manager of import department. She now is
director of board of directors office.
Mr. Liu Zhijun, male, 37, Chinese, with bachelor degree, worked in foreign fund section of
Economy and Trade Bureau in Longkou economic development zone, served as news section
member of propaganda department in Longkou Municipal Committee, member of
propaganda and mass work section, member of planning section, vice-director member of
programming development and enterprise distribution section, vice-director member and
deputy chief of programming development section. He now is supervisor of the Company.
(3) Other senior managers
Mr. Sun Jian, male, 51, Chinese, MBA and economist, served as vice general manager of the
Company from 22nd March, 2006 to 10th January, 2018. He has been general manager of the
Company and concurrently director of Changyu Group since then to disclosure day of this
report.
Mr. Yang Ming, male, 59, Chinese, with bachelor degree, application researcher, he served as
vice general manager of the Company from 12th August, 1998 to 28th February, 2018. Since
then, he will not take any position in the company.
Mr. Li Jiming, male, 51, Chinese, with doctor degree, application researcher, has been
serving as chief engineer of the Company since 14th September, 2001 and concurrently
director of Changyu Group.
Mr. Jiang Hua, male, 54, Chinese, with master degree, senior engineer, has been serving as
vice general manager of the Company since 14th September, 2001.
Mr. Jiang Jianxun, male, 51, Chinese, MBA and accountant, served as Financial Manager of
the Company from 20th May, 2002 to 10th January,2018. He has been chief financial officer
of the Company since then to disclosure day of this report.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Post in the shareholders company
Available □Not available
Paid by
Beginning date Ending date of
Name Shareholders Company Post shareholders
of the post the post
company or not
Chairman and
Sun Liqiang Yantai Changyu Group Co. Ltd. general manager 2013.10.08 2018.01.10 No
Zhou Hongjiang Yantai Changyu Group Co. Ltd. Vice chairman 2013.10.08 2018.01.10 No
Li Jiming Yantai Changyu Group Co. Ltd. Director 2013.10.08 2022.01.10 No
Sun Jian Yantai Changyu Group Co. Ltd. Director 2013.10.08 2022.01.10 No
Zhang Ming Yantai Changyu Group Co. Ltd. Director 2013.10.08 2022.01.10 No
Augusto Reina Yantai Changyu Group Co. Ltd. Director 2013.10.08 2022.01.10 No
Aldino Marzorati Yantai Changyu Group Co. Ltd. Director 2013.10.08 2022.01.10 No
Antonio Appignani Yantai Changyu Group Co. Ltd. Director 2013.10.08 2022.01.10 No
Wei Anning Yantai Changyu Group Co. Ltd. Director 2017.04.18 2022.01.10 No
Mr. Zhou Hongjiang serves as the position of chairman in the shareholders company from 10 th January,
Explanation for the post in the
2018 to 10th January, 2022. Mr. Leng Bin serves as the position of general manager in the shareholders
shareholders company
company from 10th January, 2018 to 10th January, 2022.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Post at other companies
Available □Not Available
Beginning
Ending date of Paid by other
Name Others company Post at other company date of the
the post company or not
post
Yantai Changyu Zhongya
Director and
Leng Bin Medicine & Healthy Liquor Co., 2012.09.10 No
legal representative
Ltd
Explanation for the post in the
No.
shareholders company
Disciplinary actions taken by securities regulators in recent 3 years to the Companys directors, supervisors and senior management both on the
job and left during the report period
□Available Not available
4. Salary of directors, supervisors and senior management
Decision-making process, the basis of determination, the actual payment of directors, supervisors and senior management
The salary for the independent directors is paid according to the resolution of shareholders meeting. The salary for the chairman, directors with
administration duty, supervisors, managers and other senior management should be paid on basis of the evaluation result according to the
Proposal on Assessment Methods of the Company’s Senior Officers’ Performance from 2014 to 2017 which was passed during the Board of
Directors meeting.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Salary of directors, supervisors and senior management during the report period
Unit: CNY0000
Whether get
Total reward from
reward from
Name Post Gender Age Status the Company
related parties of
before tax
the Company
Chairman to the Board of
Sun Liqiang M 70 present incumbent 143.00 No
Directors
Vice-chairman to the Board of
Zhou Hongjiang M 53 present incumbent 143.30 No
Directors and general manager
Director and vice-general
Leng Bin M 55 present incumbent 97.16 No
manager
Director and Secretary to the
Qu Weimin M 60 present incumbent 97.70 No
Board of Directors
Zhang Ming Director M 44 present incumbent 0 No
Chen Jizong Director M 42 leaving the post 0 No
Augusto Reina Director M 77 present incumbent 0 No
Aldino Marzorati Director M 65 present incumbent 0 No
Antonio Appignani Director M 79 present incumbent 0 No
Dai Hui Director F 52 leaving the post 0 No
Wei Anning Director M 54 present incumbent 0 No
Wang Zhuquan Independent Director M 52 present incumbent 8 No
Wang Shigang Independent Director M 52 present incumbent 8 No
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Luo Fei Independent Director M 65 present incumbent 8 No
Liu Yan Independent Director F 44 present incumbent 8 No
Chairman to the Board of
Kong Qingkun M 45 present incumbent 69.91 No
supervisors
Zhang Lanlan supervisor F 48 present incumbent 20.02 No
Liu Zhijun supervisor M 37 present incumbent 0 No
Sun Jian Vice-general manager M 51 present incumbent 94.79 No
Yang Ming Vice-general manager M 59 present incumbent 91.33 No
Li Jiming Chief Engineer M 51 present incumbent 87.17 No
Jiang Hua Vice-general manager M 54 present incumbent 89.44 No
Jiang Jianxun Finance manager M 51 present incumbent 65.11 No
Total - - - - 1,030.93 -
The awarded equity incentives for the directors, supervisors and senior management of the Company during the report period
□Available Not available
5. Staff of the Company
(1) Staff number, specialty constitution and education degree
Incumbent staff number of parent company (people) 1,536
Incumbent staff number of major subsidiary companies (people) 2,504
Total incumbent staff (people) 4,040
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Total staff getting paid in current period (people) 4,040
Retired staff number whose expenses are undertaken by parent
company or subsidiary companies (people)
Specialty constitution
Category Number of people (people)
Production staff 1,140
Sales staff 2,325
Technical staff
Financial staff
Administrative staff
Total 4,040
Education degree
Category Number (People)
Bachelor and above 1,243
Junior College 1,670
Technical secondary school
Senior high school and below
Total 4,040
(2) Remuneration policy
The Company builds and improves the remuneration and welfare system, including salary system, incentive mechanism, social security and
health insurance and so on, to make sure that all staff could be insured. In accordance with the law, the Company buys social old-age insurance,
medical insurance, occupational injury insurance, unemployment insurance and maternity insurance, and pay housing fund for staff. Based on
the principle of “distribution according to work, equal pay for equal work”, the Company pays the staffs remuneration timely. With the increase
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
of the Companys profitability, the Company steadily improves the staffs remuneration
and welfare, and provides the competitive salary income and development space of
equal opportunity for staff.
(3) Training plan
In order to further improve the employees comprehensive quality and professional skill,
the 2018 training plan for the Companys major employee is shown as follows:
① Senior and Middle-level Managers
1) Commonality training
Professional lecturers would be employed to take intensive class in the company or
through remote internet videos in order to give training for senior administrative staff.
This training would be held once a quarter, 1-2 days for each time.
2) Professional training
Based on their respective work, organize them to attend Entrepreneur High-end Forum
and Summit Meeting and go to domestic and foreign successful enterprise for visit and
study. Attend special training at least twice a year, such as safety, technology, facility,
finance, WSET, tourism etc which are organized by special management department.
Encourage middle-level administrative staff to attend university correspondence,
self-study examination, MBA or other further education for master degree; organize
professional management cadres, involved in human resources, finance, facility, safety
and technology quality etc, to attend vocational qualification examination for
professional certificate.
② Section Chief and Ordinary Staff Members
1) Commonality training
This training would be held twice a year, one day course for each time. Professional
lecturers or university teachers would be employed to give lectures in the company.
Attend training including company culture, regulatory framework and various liquor
products knowledge; reinforce training in the aspect of human resources management.
Organize employee to attend outdoor quality expansion training once a year, one or two
days for each time.
2) Professional training
Based on personnel work, attend special training at least twice a year, such as safety,
technology, facility, finance, tourism, integrated management etc, which are organized
by special management department. Encourage eligible general administrative staff to
attend university correspondence, self-study examination, MBA or other further
education for master degree; organize professional administrative staff, involved in
human resources, finance, facility, safety and technology quality etc, to attend
vocational qualification examination for professional certificate.
③ Marketing Personnel
1) Commonality training
Independently study company internal marketing materials, and training material
including related management system, production knowledge, sales responsibility
system etc.
2) Professional training
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Professional lecturers would be employed to the company or through remote internet
videos to give lectures about successful liquor cases, current economic trend research
for domestic and foreign wine industry and other topic in order to take training for
personnel whose level is or above manager assistant in city marketing management
company. This training is once a quarter, one day for each time. Take closed training
for city marketing manager on how to improve marketing skill as well as executive
force of sales policy by inviting the company’s professional management cadre or
employing professional lecturers to give lectures. This training is once a month, one
day for each time. Take training for business controller and other personnel on
successful marketing cases and marketing management philosophy by employing
lecturers in combination with going out to visit and study. This training is once a
quarter and one day for each time.
(4) Labor outsourcing
□Available Not available
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
IX. Corporate Governance
1. Current Corporate Governance Situation of the Company
(1) About shareholders and shareholders’ meeting
The Company has set up the Deliberation Rules of Shareholders’ Meeting, and convened the
shareholders meetings in strict accordance with requirements of standard opinion of
shareholders meeting, made the great effort to provide convenient conditions for more
shareholders to participate the shareholders meeting, and ensured all shareholders to enjoy
same equity and well exercised their rights. The Company drew great attention to the
communication and exchange with shareholders, actively responded the shareholders
inquiry and questions, and widely listened to the suggestions and comments from
shareholders.
(2) About the Company and holding shareholder
The Company has independent power on business and self-management, and also be
independent of its holding shareholder on business, staff, assets, organization and finance.
The Board of Directors, Board of Supervisors, management team and also internal
organizations operated independently in the Company. The holding shareholder of the
Company could regulate its activities, no other behavior was found that surpassed the
shareholders meeting to directly or indirectly interfere with the decision-making and
business activities of the Company, or occupied any assets of the Company which damaged
the Companys and medium & small shareholders interests.
(3) About the director and board of directors
The Company strictly appoints all directors in light of Company Law and Articles of
Associations. The qualifications of all directors are in line with the requirements of laws and
regulations. In accordance with the requirements of Corporate Governance Guidelines, the
Company has carried out the cumulative voting system. At present, the Company has four
independent directors accounting for about one three of all directors, and the number and
composition of board of directors was basically in accord with requirements of regulations
and also Articles and Associations. All directors of the Company could work in the light of
regulations including Rules of Board of Directors’ Procedure and Working Rules for
Independent Directors, punctually attended board of directors and shareholders meetings,
actively took part in relevant knowledge training, knew very well about the laws and
regulations concerned, had a deep knowledge and long experience of practitioners, and
performed their duties according to the law and regulations. The Board of Directors
convened the meetings in accordance with related rules and regulations.
(4) About supervisor and board of supervisors
The Company strictly elected all supervisors in light of Company Laws and Articles of
Associations. At present, board of supervisors has three people among which one supervisor
is representative for staff, the number and composition of board of supervisor was in accord
with requirements of regulations and rules. All supervisors of the Company could follow the
requirement of Rules of Board of Supervisors’ Procedure, insist the principle of
responsibility to all shareholders, seriously perform their duties, effectively supervise and
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
present their independent opinion on important issues, interrelated deals, financial status, the
duty performance of directors and managers of the Company.
(5) About performance evaluation and incentive system
The engagement of managers was open and transparent, and accorded with laws and
regulations. The Company has established and gradually improved the performance
evaluation standard and formed efficient incentive system, so as to ensure the salary of staff
to be linked with job performance.
(6) About stakeholders
The Company could fully respect and safeguard the legal rights of the party with relevant
benefit, cooperate actively with the stakeholders, jointly drive the Company to develop
continually and stably, pay great attention to the issues such as local environmental
protection and public utilities etc., and assume full responsibilities for the social
responsibility.
(7) About the information disclosure and transparency
The Company has appointed the secretary to Board of Directors to be responsible for
investor relation management including information disclosure, investor relations
management and reception of shareholders visit and consultation. The Company has also
assigned China Securities Newspaper, Securities Times, Honkong Commercial Daily and
web site http://www.cninfo.com.cn/ to disclose information, punctually, accurately and truly
disclosed any information in the light of requirement of relevant laws and rules, and also
ensured all shareholders to have same opportunity to acquire any information.
In order to further perfect the Companys governance system, during the report period, the
Company formulates and improves Quality Management Method for Changyu Products,
Assessment Method of Safety Management, Risk Hierarchical Control Handbook, Daily
‘Zero Hidden Danger’ Report System for Larger and Above Risk Point and Work Safety
Contingency Plan;the Company formulates Opinion of Further Reinforcing Internal Control
Management in Production Process, Finance Accounting and Management Method of
Changyu Self-supporting Grape Base, Opinion about Improving Cork Allocation of Changyu
Products,Opinion about Improvement in Equipment and Facilities Affecting Products’
Internal Quality, Establishment and Implement of Traceability System of Changyu Products’
Quality Safety and so on.
Whether or not there is significant variance between the Companys actual situation of
corporate governance and the normative documents about listed company governance issued
by China Securities Regulatory Commission.
□Yes No
There is no significant variance between the Companys actual situation of corporate
governance and the normative documents about listed company governance issued by China
Securities Regulatory Commission.
2. Relative to the controlling shareholder, independence of the Company on business,
personnel, assets, organization and finance
(1) Personnel Arrangement
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
The Companys general manager, vice general managers and other senior officers, all of
whom were paid by the Company and did not hold any post in the controlling parties. The
Company was entirely independent in personnel arrangement, conclusion and adjustment of
labor contracts thanks to its sound and independent system for labor, personal and salary
management.
(2) Assets:
Tangible assets and Intangible assets including trademark, industrial property right and
non-patent technologies were all clearly divided between the Company and the controlling
shareholder, and all legal formalities were completed. The Company being a legal
independent entity consistently conducted business activities legally and provided no
guarantee in any form with its assets for its shareholders or individuals liabilities or any
other legal persons or natural persons. The Company owns trademarks including “黄金冰谷”,
“爱斐堡”, “爱菲堡”, “爱斐” and “AFIP”, etc. However, due to some issues from the past,
the Company permitted to use “Changyu” etc the intangible assets such as part of trademark
ownership and patent still held by the controlling shareholders.
(3) Finance
The Company has independent finance department, chief account and financial staff, and also
complete, independent and standardized accounting system. The Company has also
established its own bank accounts, duly and legally paying taxes, workers insurance fund. All
financial individuals do not hold any concurrent posts in associated companies and are able to
make financial decisions independently. The Company has its own audit department, which is
especially responsible for the internal audit work of the Company.
(4) Offices
The Company has set up a sound organizational framework, in which the Board of Directors
and Board of Supervisors operate independently, no superior and subordinate relationship
exists between the functional departments of the controlling shareholder. The Company has
its own independent production & business offices, all functional departments are
independent to exercise their powers and carry out the production and business activities
independently.
(5) Operations
The operations of the Company are independent of the controlling shareholder. The Company
owns itself completely independent systems covering research and development, accounting,
workforce and labor, quality control, raw materials purchase, production and sales, and is
possessed of self-run capabilities, and has neither relationship with the controlling
shareholder in terms of supply and sales by proxy nor competition with the other.
3. Situation for Horizontal Competition
□Available Not available
4. Information for the shareholders’ meeting and temporary shareholders’ meeting held
during the report period
(1) Information for the shareholders’ meeting during the report period
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Participation
Convening Disclosure
Session Meeting type ratio of Disclosure Index
date date
investors
http://www.cninfo.com.cn
2016 Annual Annual
Notice of 2016 Annual
Shareholders shareholders 61.86% 2017.06.15 2017.06.16
Shareholders Meeting
Meeting meeting
Resolution
(2) Request for convening temporary shareholders’ meeting by priority shareholders
owing recovered voting right
□Available Not available
5. Performance of independent directors during the report period
(1) Attendance of independent directors for the board of directors and the shareholders’
meeting
Attendance of independent directors for the board of directors
Whether Attendance
or not to time for the
attend the shareholders
Required
Personal Communication Authorized meetings meeting
Name attendance Absence
attendance attendance attendance personally
time
for
successive
twice
Wang 6 2 4 0
0 No
Shigang
Wang 6 2 4 0
0 No.
Zhuquan
Luo Fei 6 2 4 0 0 No. 1
Liu Yan 6 1 4 1 0 No. 1
Explanation for failed to personally attend the Board of Directors meetings for successive
two times
No
(2) Any objections for the Company’s projects from the independent directors
Whether or not the independent directors raised any objection for the Companys projects
□Yes No
During the report period, the independent directors did not raise any objections for the
Companys projects.
(3) Other explanations on independent directors’ performance
Whether or not the independent directors propositions are accepted by the Company
Yes □No
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Explanation on acceptance or refusal of the independent directors propositions to the
Company
During the report period, some independent directors propose suggestions on prudent
investment in tourism project of Changyu International Wine City. They thought that it is a
higher risk in the current background of slower growth of domestic economy. The Company
accepted the independent directors opinions and decided to suspend construction of the project.
6. Performance of the special committees under the Board of Directors during the
report period
On 23rd March, 2017, after the certified public accountants responsible for annual audits
had introduced their preliminary opinions, the independent directors on behalf of the Audit
Committee communicated with them and made written comments which read that “we
communicated in detail with the certified public accountants responsible for auditing of the
Companys 2016 Annual Report who expounded the main standards, main emphasis audited
field, the problems and the matters necessary to adjust that were found during the auditing.
Weve noticed that the Company has adjusted the matters as the accountants suggested. On
the basis of our communication results with the accountants, the production and operation
situations that the Companys management reported to us as well as the progress of important
events, we believe that we have no objection to the Companys 2016 Annual Financial
Statement preliminarily examined by Deloitte Hua Yong Certified Public Accounts Co., Ltd.
and the preliminary audit opinions of that services.”
On 20th April 2017, the Board of Directors Audit Committee deliberated and passed 2016
Annual Audit Report, Draft Proposal on 2016 Annual Profit Distribution, Proposal on
Renewal of Contract with the Present Certified Public Accountants firm, 2016 Annual
Self-assessment Report on Internal Control and 2017 Internal Audit Plan issued by Deloitte
Hua Yong Certified Public Accounts Co., Ltd.
All of committee members unanimously agree to submit the above proposals to the
Companys 7th Session Board of Directors 4th Meeting for deliberation. The meeting reached
the following consensus:
(A) The clean-opinion auditing report on the Companys 2016 Annual Financial Statement
issued by Deloitte Hua Yong Certified Public Accounts Co., Ltd reflects the Companys
financial condition, operating results and cash flow truly, objectively and correctly.
(B) The profit distribution scheme that the Company formulated is relatively acceptable, taking
the shareholders interest into account while paying attention to the Companys long-term
development.
(C) Considering the strict maintenance of objective and fair standpoint as well as the high
audit quality and reasonable arrangement for audit progress during the process of the
Companys 2016 annual financial audit and internal control audit taken by Deloitte Hua
Yong Certified Public Accounts Co., Ltd, it is proposed that the Company will reappoint
Deloitte Hua Yong Certified Public Accounts Co., Ltd as the 2017 annual auditor of the
Company. The employment period is one year and the audit will be taken from two aspects
shown as follows.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
On one hand, it is to take the audit of 2017 annual financial report and issue a Financial Audit
Report. On the other hand, it is to take the audit of 2017 annual internal control and issue an
Internal Control Audit Report.
The annual auditing fee for the above parts is CNY 1.98million, including travel expense and
all service charges.
(D) The Companys 2016 Self-assessment Report on Internal Control has truly and
objectively mirrored out the present standing of the Companys internal control and can
basically ensure the effective implementation of its policies and realization of its strategic
goals.
(E) The Companys 2017 Internal Audit Plan is comparatively perfect and practicable, based
on which the Companys Audit Department will conduct the 2017 annual internal audit.
On 25th August 2017, the Board of Directors Audit Committee deliberated and passed
2017 Semiannual Report and Proposal on 2017 Semiannual Profit Distribution. The meeting
reached the following consensus:
The Companys 2017 Semiannual Financial Statements reflected the Companys financial
condition, operating results and cash flow truly, objectively and correctly.
As the Company just realized 2016 Annual Profit Distribution Scheme in middle July, we
propose neither to distribute profits for the first half of 2017 nor to increase the Companys
capital stock with accumulated public fund. The net profit made in the first half of this year will
be reserved and distributed at the end of the year. Our Auditing Committee considers the
suggestion to be reasonable.
All of Committee members unanimously agree to submit the above proposals to the
Companys 7th Session Board of Directors 5th Meeting for deliberation.
(2) Summary report of the Board of Directors’ Emolument Committee regarding
performance of duties
The Board of Directors Emolument Committee is responsible for assessment of the economy
responsibilities of the directors and the senior managers who receive salaries from the
Company and examination of the salary policy and scheme designed for the Companys
directors and senior managers.
Proposal on 2016 Assessment Results of the Company’s Senior Officers’ Performance was
deliberated and passed by the Board of Directors Emolument Committee on 20th April 2017,
who thought that this document was in compliance with Performance Assessment Methods
for Company’s Senior Executive from 2014 to 2017 approved by the Companys 6th Session
Board of Directors 4th Meeting.
All committee members unanimously agree to submit the above proposals to the Companys
7th Session Board of Directors 4th Meeting for deliberation.
During the report period, the Board of Directors Emolument Committee also examined the
2016 annual payroll records of the directors and the senior managers who receive salaries
from the Company and believes that the salaries of the Companys directors, supervisors and
senior managers received from the Company is strictly assessed and delivered based on the
Companys economic responsibility assessment system. The salaries disclosed by the
Company are in conformity with the actually paid amount.
7. The work of the Board of Supervisors
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Whether or not the Board of Supervisors found any existence risk to the Company in
oversight activities during the report period
□Yes No
The Board of Supervisors has no objections to supervision matters during the report period.
8. Performance Evaluation and Incentive situations of Senior Management
The Company has already established a sound system for evaluation of achievement of senior
management and the related incentive system which linked the reward with the Companys
benefit and personal achievement. The Emolument Committee under Board of Directors
assumed the responsibility of stipulating the policy and appraising the scheme for salaries and
rewards. Based on the Companys annual business planning goals, this committee examined
senior personals and also their responsible subsidiaries or departments according to their
management achievement and index and took these as criterion of awards or penalties.
During the report period, because of not finishing the annual business plan deliberated and
passed in the Board of Directors meeting at the beginning of the year, the total salaries and
rewards of the senior management are basically equal to that of last year.
9. Internal Control
(1) Specific situations for significant defects of the internal control found during the
report period
□Yes No
(2) Self-assessment report on internal control
Disclosure date for full text of the
2018.04.23
internal control self-assessment report
Disclosure index for full text of the 2016 Self Assessment Report on Internal Control disclosed on
internal control self-assessment report China Securities Journal, Securities Times and www.cninfo.com.cn
by the Company on 22nd April, 2017.
Percentage of total unit assets included
in scope of the assessment accounting
86.03%
for the Companys total assets of
consolidated financial statements
Percentage of unit operating income
included in scope of the assessment
accounting for the Companys operating 89.82%
income of consolidated financial
statements
Standards of Defect Identification
Category Financial report Non-financial report
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Qualitative criteria Significant defects: one defect of internal Significant defects: Any situations listed
control, individually or together with other below appears, it can be regarded as
defects, has the reasonable probability to cause significant defects. Operation: Unable to
the significant misstatements, which can not be achieve all operation target or key business
promptly prevented, or found and corrected index, widely out of budget in various
timely in the financial report. For example: aspects. Safety accident effects: Cause no
Companys Directors, Supervisors and Senior less than one person death, or more than 3
Management have fraudulent practices; The person serious injuries. Major negative
Company makes corrections for the published effects: Negative information frequently
financial report; The audit of external appears in the medias with involving a wide
intermediary agent finds significant scope in the international and national
misstatement existing in the current financial mainstream media. Environment effects:
report, but the Company does not realize it Create irreparable damages to environment,
during the operation process; Negative and cause massive public complains.
information frequently appears in the medias Major defects: Any situations listed below
with involving a wide scope; The appears, it can be regarded as major defects.
Companys audit committee and internal audit Operation: Unable to achieve partly
department makes an inefficient supervision for operation target, a big margin out of budget in
internal control; Other situations maybe various aspects. Safety accident effects:
cause significant misdirection which guides the Without reaching the person loss or the
report users to make the right judgment. number of serious injury of significant
Major defects:The defect of internal control, defects. Major negative effects: Negative
individually or together with other defects, has news appears in the media with influencing a
the reasonable probability to cause the wide scope in the provincial mainstream
significant misstatements, which can not be media. Environment effects: Cause heavy
promptly prevented, or found and corrected environment damages and massive public
timely in the financial report, although the complains, ought to carry out the significant
misstatements neither achieves nor exceeds the remedial measures.
importance level but still arising the attention General defects: Any situations listed below
of Board of Directors and management team. appears, it can be regarded as general defects.
Failure to select and apply accounting Operation: Other effects unable to
regulations in accordance with generally constitute the significant defects or major
accepted accounting principles; Failure to defects. Safety accident effects: Personal
establish the anti-fraud procedures and control injury less than the quantitative standards of
measures; Failure to set up corresponding major defects. Major negative effects:
control mechanism or to carry out and take Other defects unable to constitute the
corresponding compensating control for the significant defects or major defects.
accounting treatments with irregular and Environment effects: Other environment
special deal; Negative news appears in the effects unable to constitute the significant
media with influencing a wide scope; One or defects or major defects.
more defects exist in the control during the
process of the ending financial report, and the
target of achieving truthfulness and integrality
cannot be reasonably guaranteed in the
financial report; General defects refer to the
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
other control defects, which do not constitute
the significant and major defects.
Quantitative criterion For total assets/Owners equity: For direct property loss:
Significant defects: misstatements ≧1% Significant defects: More than CNY10
Major defects: 0.5%≦misstatements<1% million
General defects: misstatements<0.5% Major defects: CNY1 million-CNY10
For operation revenue: million (including 1 million)
significant defects: misstatements ≧1% General defects: Less than CNY1 million
Major defects: 0.5%≦misstatements<1%
General defects: misstatements<0.5%
For pretax profit:
Significant defects: misstatements ≧5%
Major defects: 2%≦misstatements<5%
General defects: misstatements<2%
Number of significant
defect in financial
report
Number of significant
defect in non-financial
report
Number of major
defect in financial
report
Number of major
defect in non-financial
report
10. Internal control audit report
Available □Not available
Audit opinions of the internal control audit report
We believe that Yantai Changyu Pioneer Wine Co., Ltd. kept effective internal control to financial
report in all significant aspects in accordance with General Criteria of Company’s Internal Control
and other related rules on 31st December, 2017.
Disclosure of the internal control audit
Disclosure
report
Disclosure date for the full text of the
23rd April, 2018
internal control audit report
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
Internal Control Audit Report disclosed on China
Disclosure index for the full text of the
Securities Journal, Securities Times and
internal control audit report
www.cninfo.com.cn by the Company on 23rd April, 2018.
Opinion type of the internal control audit
Standard without reserved opinion
report
Whether or not exists significant defects in
No
non-financial reports
Whether or not the accounting firm issued non-standard opinions for the audit report of
internal control
□Yes No
Whether the audit report of internal control issued by the accounting firm is in consistency
with the self-assessment report of the board of directors
□Yes No
Explanations on the audit report of internal control issued by the accounting firm is not in
consistency with the self-assessment report of the board of directors
None.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
X. Related Situation of Corporation Bonds
Whether or not the Company has the corporation bonds issued in public, listed in the stock
exchange, not due on the annual reports authorized issue date or failed to pay in full on the
due date.
No.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
XI. Financial Report
1. Audit Report
Type of audit opinion Standard unqualified audit opinion
Date signed on audit report 19th April, 2018
Deloitte Hua Yong certified public accountants co.,
Audit agency name
Ltd. (special general partnership)
Certified public accountant's name Li Xu, Li Yangang
AUDITOR'S REPORT
De Shi Bao (Shen) Zi (18) No. P02977
(Page 1 of 6 pages)
TO THE SHAREHOLDERS OF
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
1. Opinion
We have audited the financial statements of Yantai Changyu Pioneer Wine Company Limited
(\"Yantai Changyu Company\"), which comprise the consolidated and Company's balance sheets as at
31 December 2017, and the consolidated and Company's income statements, the consolidated and
Company's cash flow statements and the consolidated and Company's statements of changes in
owners' equity for the year then ended, and the notes to the financial statements.
In our opinion, the accompanying financial statements of Yantai Changyu Pioneer Wine Company
Limited is prepared and present fairly, in all material respects, the consolidated and Company's
financial position as of 31 December 2017, and the consolidated and the Company's results of
operations and cash flows for the year then ended in accordance with Accounting Standards for
Business Enterprises.
2. Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing. Our responsibilities
under those standards are further described in the Auditor's Responsibilities for the Audit of the
Financial Statements section of our report. We are independent of Yantai Changyu Company in
accordance with the code of ethics for Chinese Certified Public Accountants, and we have fulfilled
our other ethical responsibilities in accordance with the Code. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
3. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters. We determine the followings are key audit
matters in need of communication in our report.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
AUDITORS REPORT - continued
De Shi Bao (Shen) Zi (18) No. P02977
(Page 2 of 6 pages)
3. Key Audit Matters - continued
The determination of the fair value of identifiable assets and liabilities associated with
business combination
1、Item description
As disclosed in Notes VII, during the year, the Company through its acquired 100% shares of
Chile Indomita Wine Group. As disclosed in Notes III-5, the Company need to recognize the
acquiree's identifiable assets and liabilities which were met the recognition criteria generated
during the acquisition at their fair value on the acquisition day. As disclosed in Notes IV \"The
determination of the fair value of identifiable assets and liabilities associated with business
combination\", during the recognition of the above identifiable assets and liabilities' fair value
based on the present value of future cash flow, the management of the Company need to
forecast the cash flow according the growth rate of sales based on future market's supply and
demand, and considered selecting the appropriate discount rate for discounting, which involved
the management to exercise significant estimations and judgments. Therefore, we identified the
determination of the fair value of identifiable assets and liabilities associated with business
combination as a key audit matter.
2、How our audit addressed the key audit matter
Our procedures in relation to the key audit matter mainly included:
(1) Understanding and assessing the appropriateness of the method used by the management
to Identify and recognize the various identifiable assets and liabilities on the acquisition
day;
(2) Understanding and assessing the competence and independence of the valuation
specialists appointed by the management;
(3) Using our internal valuation specialists, and reviewing the rationality of the significant
estimations, (including the growth rate of sales, the discount rate and etc.), used by the
management and their valuation specialists in the value of various identifiable assets and
liabilities' fair value.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
AUDITORS REPORT - continued
De Shi Bao (Shen) Zi (18) No. P02977
(Page 3 of 6 pages)
3. Key Audit Matters - continued
Valuation of long-term assets' impairment
1、Item description
As disclosed in Notes VI-12 and 13, some subsidiaries of the Company were sustained loss and
the cash flow from operating activities were net out and the related assets existed an indication
of impairment. As at 31 December 2017, the book values of fixed assets and construction in
progress (\"CIP\") were RMB 928,058,429 and RMB 89,001,307, respectively, and were
significant in financial statement level. As disclosed in Notes IV \"Impairment of long-term
assets \", a highly uncertainty existed related to the Company's management to determine the
recoverable amount based on expected future cash flows, which involved the use of significant
accounting estimation and judgment on the growth rate of sales, average gross rate, other
operating expenses of those subsidiaries of the relevant assets (group of assets) and the
discount rate used in calculation the present value. For the above reasons, we identified the
valuation of long-term assets' impairment as a key audit matter.
2、How our audit addressed the key audit matter
Our procedures in relation to the key audit matter mainly included:
(1) Understanding, assessing and testing the relatively designing, implementing and
effectiveness of key internal controls over the valuation of book values of the fixed assets
and CIP;
(2) Based on our understanding of the business and industry of those subsidiaries, assessing
the rationality of significant accounting estimation and judgment used by the management
to forecast the future cash flows during the impairment test, including the growth rate of
sales, the average gross rate, other operating expenses and the discount rate used in
calculation the present value;
(3) Using our internal valuation specialists, reviewing the appropriateness of the future cash
flows discount model prepared by the management and the rationality of the discount rate
used;
(4) Performing the recalculation procedure, checking the accuracy of calculations in the
discount future cash flows model.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
AUDITORS REPORT - continued
De Shi Bao (Shen) Zi (18) No. P02977
(Page 4 of 6 pages)
4. Other Information
The management of Yantai Changyu Pioneer Wine Company Limited is responsible for other
information. The other information comprises the information included in the Yantai Changyu 2017
annual report, but does not include the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
5. Responsibilities of the Management and Those Charged with Governance for the Financial
Statements
The management of Yantai Changyu Pioneer Wine Company Limited is responsible for the
preparation and fair presentation of the financial statements in accordance with Accounting Standards
for Business Enterprises, and designing, implementing and maintaining internal control that is
necessary to enable the financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the management is responsible for assessing Yantai Changyu
Companys ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the management either intends to
liquidate Yantai Changyu Company or to cease operations, or have no realistic alternative but to do
so.
Those charged with governance are responsible for overseeing Yantai Changyu Companys financial
reporting process.
6. Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that
includes our opinion solely to you. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with China Standards on Auditing will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
AUDITORS REPORT - continued
De Shi Bao (Shen) Zi (18) No. P02977
(Page 5 of 6 pages)
6. Auditor's Responsibilities for the Audit of the Financial Statements - continued
As part of an audit in accordance with China Standards on Auditing, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the internal control.
(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 the management's use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on Yantai Changyu Companys
ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor's report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor's report. However, future
events or conditions may cause the Yantai Changyu Company to cease to continue as a going
concern.
(5) Evaluate the overall presentation, structure and content of the financial statements (including the
disclosures), and whether the financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Yantai Changyu Company to express an opinion on the financial
statements. We are responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
AUDITORS REPORT - continued
De Shi Bao (Shen) Zi (18) No. P02977
(Page 6 of 6 pages)
6. Auditor's Responsibilities for the Audit of the Financial Statements - continued
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor's report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Deloitte Touche Tohmatsu CPA LLP Chinese Certified Public Accountant: Li Xu
Shanghai, China (Engagement partner)
Chinese Certified Public Accountant: Li Yangang
19, April , 2018
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
CONSOLIDATED BALANCE SHEETS
YEAR ENDED 31 DECEMBER 2017
ASSETS Notes Closing balance Opening balance
RMB RMB
CURRENT ASSETS
Cash and bank VI-1 1,402,522,509 1,391,517,607
Notes receivable VI-2 244,796,818 210,470,027
Accounts receivable VI-3 263,796,355 173,062,628
Prepayments VI-4 2,417,931 2,175,606
Interest receivable VI-5 240,968 24,200
Other receivables VI-6 18,737,454 18,880,800
Inventories VI-7 2,473,614,046 2,248,609,740
Non-current assets held for sale VI-8 2,000,197 2,000,197
Other current assets VI-9 230,822,759
_____________ 169,522,242
_____________
Total current assets 4,638,949,037
_____________ 4,216,263,047
_____________
NON-CURRENT ASSETS
Available-for-sale financial assets VI-10 467,251 340,263
Investment properties VI-11 18,467,989 -
Fixed assets VI-12 5,329,083,969 4,683,187,493
Construction in progress VI-13 1,026,141,569 1,346,281,737
Bearer biological assets VI-14 201,929,888 201,428,980
Intangible assets VI-15 655,448,897 483,815,080
Goodwill VI-16 128,135,981 121,265,866
Long-term prepaid expenses VI-17 230,009,231 162,206,229
Deferred tax assets VI-18 308,121,396 295,937,037
Other non-current assets VI-19 -
_____________ 17,352,239
_____________
Total non-current assets 7,897,806,171
_____________ 7,311,814,924
_____________
Total assets 12,536,755,208
_____________ 11,528,077,971
_____________
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
CONSOLIDATED BALANCE SHEETS
YEAR ENDED 31 DECEMBER 2017 - continued
LIABILITIES AND EQUITY Notes Closing balance Opening balance
RMB RMB
CURRENT LIABILITIES
Short-term borrowings VI-20 714,434,286 662,388,882
Notes payable VI-21 - 38,900,000
Accounts payable VI-22 666,442,879 545,231,319
Receipts in advance VI-23 350,894,156 425,246,421
Advances from customers VI-24 210,824,234 206,431,734
Taxes payable VI-25 145,094,156 144,042,600
Interest payable 771,250 563,613
Deferred income VI-26 16,878,199 11,163,883
Other payables VI-27 602,964,319 546,305,310
Non-current liabilities due within one year VI-28 110,954,827
_____________ 71,799,093
_____________
Total current liabilities 2,819,258,306
_____________ 2,652,072,855
_____________
NON-CURRENT LIABILITIES
Long-term borrowings VI-29 156,125,854 49,140,555
Long-term payables VI-30 259,000,000 293,000,000
Deferred income VI-26 92,918,855 101,775,243
Deferred tax liabilities VI-18 24,264,203 24,908,410
Other non-current liabilities VI-31 7,209,312
_____________ 7,696,222
_____________
Total non-current liabilities 539,518,224
_____________ 476,520,430
_____________
Total liabilities 3,358,776,530
_____________ 3,128,593,285
_____________
EQUITY
Share capital VI-32 685,464,000 685,464,000
Capital reserve VI-33 565,955,441 565,955,441
Other comprehensive income VI-34 3,109,240 (5,259,014)
Surplus reserve VI-35 342,732,000 342,732,000
Retained earnings VI-36 7,309,081,618
_____________ 6,620,118,562
_____________
Equity attributable to shareholders
of the Company 8,906,342,299 8,209,010,989
Non-controlling interests 271,636,379
_____________ 190,473,697
_____________
Total equity 9,177,978,678
_____________ 8,399,484,686
_____________
Total liabilities and equity 12,536,755,208
_____________ 11,528,077,971
_____________
The accompanying notes form an integral part of these financial statements.
The financial statements on pages 7 to 110 were signed by the following:
Zhou Hongjiang Jiang Jianxun Jiang Jianxun
Legal Representative Person in Charge of the Chief Accountant
Accounting Body
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
BALANCE SHEET OF THE COMPANY
YEAR ENDED 31 DECEMBER 2017
ASSETS Notes Closing balance Opening balance
RMB RMB
CURRENT ASSETS
Cash and bank XIV- 1 559,174,466 269,460,060
Notes receivable XIV- 2 41,645,203 1,114,200
Accounts receivable XIV- 3 7,805,333 3,326,683
Prepayments XIV- 4 99,673 702,647
Interest receivable 76,646 24,200
Dividend receivables XIV- 5 407,495,922 531,819,113
Other receivables XIV- 6 592,274,075 3,582,532,862
Inventories XIV- 7 348,042,053 792,732,418
Non-current assets held for sale VI-8 2,000,197 2,000,197
Other current assets 29,706,058
_____________ 20,085,058
_____________
Total current assets 1,988,319,626
_____________ 5,203,797,438
_____________
NON-CURRENT ASSETS
Long-term equity investments XIV- 8 4,511,202,204 1,834,341,541
Investment properties VI-11 18,467,989 -
Fixed assets XIV- 9 288,150,901 347,481,417
Construction in progress XIV- 10 6,756,349 500,000
Bearer biological assets XIV- 11 119,572,539 123,036,693
Intangible assets XIV- 12 69,623,219 72,002,372
Deferred tax assets XIV- 13 28,787,907 26,985,252
Other non-current assets XIV- 14 3,718,674,166
_____________ 2,617,457,460
_____________
Total non-current assets 8,761,235,274
_____________ 5,021,804,735
_____________
Total assets 10,749,554,900
_____________ 10,225,602,173
_____________
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
BALANCE SHEET OF THE COMPANY
YEAR ENDED 31 DECEMBER 2017 - continued
LIABILITIES AND EQUITY Notes Closing balance Opening balance
RMB RMB
CURRENT LIABILITIES
Short-term borrowings XIV- 15 600,000,000 500,000,000
Accounts payable XIV- 16 97,833,124 247,568,857
Advances from customers XIV- 17 6,000,000 6,000,000
Employee benefits payable XIV- 18 70,108,076 70,812,761
Taxes payable XIV- 19 14,569,690 33,266,225
Interest payable 652,500 563,613
Deferred income 3,953,054 1,767,054
Other payables XIV- 20 544,713,172 368,310,362
Non-current liabilities due within one year XIV- 21 -
_____________ 29,227,200
_____________
Total current liabilities 1,337,829,616
_____________ 1,257,516,072
_____________
NON-CURRENT LIABILITIES
Deferred income 12,628,573 19,933,699
Other non-current liabilities 2,577,702
_____________ 2,499,403
_____________
Total non-current liabilities 15,206,275
_____________ 22,433,102
_____________
Total liability 1,353,035,891
_____________ 1,279,949,174
_____________
EQUITY
Share capital VI-32 685,464,000 685,464,000
Capital reserve XIV- 22 557,222,454 557,222,454
Surplus reserve VI-35 342,732,000 342,732,000
Retained earnings 7,811,100,555
_____________ 7,360,234,545
_____________
Total equity 9,396,519,009
_____________ 8,945,652,999
_____________
Total liabilities and equity 10,749,554,900
_____________ 10,225,602,173
_____________
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
CONSOLIDATED INCOME STATEMENT
YEAR ENDED 31 DECEMBER 2017
Notes 2017
RMB RMB
I. Revenue VI-37 4,932,545,229 4,717,596,472
Less: Cost of sales VI-37 1,671,592,279 1,575,770,979
Taxes and surcharges VI-38 310,252,023 269,716,646
Selling expenses VI-39 1,272,522,443 1,253,260,668
Administrative expenses VI-40 340,781,958 309,783,548
Financial expenses VI-41 18,590,259 21,968,859
Impairment loss of assets VI-42 8,293,553 3,279,266
Add: Loss (income) from disposal of assets (222,586) 14,719
Other income VI-43 46,038,384
____________ -
____________
II. Operating profit 1,356,328,512 1,283,831,225
Add: Non-operating income VI-44 17,230,727 55,014,314
Less: Non-operating expenses VI-45 1,631,476
____________ 1,226,699
____________
III. Profit before tax 1,371,927,763 1,337,618,840
Less: Income tax VI-46 338,134,245
____________ 357,029,446
____________
IV. Profit for the year 1,033,793,518
____________ 980,589,394
____________
(I) Categorized by the nature of continuing operation
1. Net profit(loss) from continuing operations 1,033,793,518
____________ 980,589,394
____________
(II) Categorized by ownership:
1. Profit or loss attributable to non-controlling interests 2,098,462 (1,871,094)
2. Net profit attributable to owners of the Company 1,031,695,056
____________ 982,460,488
____________
V. Other comprehensive income (post-tax) 9,863,872
____________ 5,615,689
____________
Other comprehensive income attributable
to shareholders of the Company
Other comprehensive income
to be reclassified to profit and loss
Foreign currency statement translation difference 8,368,254 5,183,498
Other comprehensive income attributable
to non-controlling interest 1,495,618
____________ 432,191
____________
VI. Total comprehensive income 1,043,657,390
____________ 986,205,083
____________
Attribute to shareholders of the Company 1,040,063,310 987,643,986
Attribute to non-controlling interest of the Company 3,594,080
____________ (1,438,903)
____________
____________ ____________
VII. Earnings per share
(I) Basic earnings per share VI-47 1.51
____________ 1.43
____________
(II) Diluted earnings per share VI-47 N/A N/A
____________ ____________
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
INCOME STATEMENT OF THE COMPANY
YEAR ENDED 31 DECEMBER 2017
Notes 2017
RMB RMB
I. Revenue XIV- 23 1,311,256,854 1,415,104,946
Less: Cost of sales XIV- 23 1,165,953,408 1,152,076,500
Taxes and surcharges XIV- 24 76,570,225 106,469,217
Administrative expenses XIV- 25 80,693,044 85,962,137
Financial expenses XIV- 26 637,568 34,226,452
Add:Investment income XIV- 27 798,877,905 1,798,129,418
Loss (income) from disposal of assets (29,625) 111,362
Other income 5,219,126
____________ -
____________
II. Operating Profit 791,470,015 1,834,611,420
Add: Non-operating income 686,646 7,275,905
Less: Non-operating expenses 335,237
____________ 359,415
____________
III. Profit before tax 791,821,424 1,841,527,910
Less: Income tax (1,776,586)
____________ 10,953,440
____________
IV. Profit for the year 793,598,010
____________ 1,830,574,470
____________
Net profitfrom continuing operations 793,598,010
____________ 1,830,574,470
____________
V. Total comprehensive income 793,598,010 1,830,574,470
____________ ____________
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 DECEMBER 2017
Notes 2017
RMB RMB
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from the sale of goods
and the rendering of services 4,827,152,526 4,441,041,101
Receipts of tax refunds 53,196,910 17,860,500
Other cash receipts relating to operating activities VI-48(1) 85,236,905
____________ 66,707,865
____________
Sub-total of cash inflows from operating activities 4,965,586,341
____________ 4,525,609,466
____________
Cash payments for goods purchased and services received 1,143,840,915 961,128,796
Cash payments to and on behalf of employees 512,777,815 435,621,220
Payment of various types of taxes 1,260,813,596 1,133,232,957
Other cash payments relating to operating activities VI-48(2) 1,074,910,988
____________ 1,105,714,523
____________
Sub-total of cash outflows from operating activities 3,992,343,314
____________ 3,635,697,496
____________
Net cash flows from operating activities VI-49(1) 973,243,027
____________ 889,911,970
____________
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in term deposits over 3 months 205,000,000 98,021,025
Proceeds from return on investments 4,084,350 7,723,126
Net cash receipts from disposals of fixed assets,
intangible assets and other long-term assets 7,594,005
____________ 7,208,774
____________
Sub-total of cash inflows from investing activities 216,678,355
____________ 112,952,925
____________
Cash paid for acquisition of properties, plants and equipment,
intangible assets and other long-term assets 435,960,357 704,834,302
Cash paid for term deposits over 3 months 297,000,000 92,021,025
Cash paid for purchase of available-for-sale financial assets 129,216 -
Cash paid for the purchase subsidiaries and other equity VI-48(3) 303,796,543
____________ 3,539,144
____________
Sub-total of cash outflows from investing activities 1,036,886,116
____________ 800,394,471
____________
Net cash flows from investing activities (820,207,761)
____________ (687,441,546)
____________
CASH FLOWS FROM FINANCING ACTIVITIES
Cash receipts from capital contributions 48,396,726 -
Including: cash receipts from capital contributions
from minority owners of subsidiaries 48,396,726 -
Cash receipts from borrowings 963,564,600 1,011,089,858
Other cash received from financing activities VI-48(4) 52,930,804
____________ 180,477,587
____________
Sub-total of cash inflows from financing activities 1,064,892,130
____________ 1,191,567,445
____________
Cash paid for borrowings 876,502,273 839,962,581
Cash paid for dividends, profits and interests 369,791,284 372,529,256
Cash paid from other financing activities VI-48(5) 61,700,000
____________ 20,000,000
____________
Sub-total of cash outflows from financing activities 1,307,993,557
____________ 1,232,491,837
____________
Net cash flows from financing activities (243,101,427)
____________ (40,924,392)
____________
Effect of foreign exchange rate changes
on cash and cash equivalents 14,013,131 3,154,611
NET DECREASE/( INCREASE ) OF CASH AND CASH EQUIVALENTS (76,053,030) 164,700,643
Add: cash and cash equivalents at beginning of the year VI-49(3) 1,256,942,304
____________ 1,092,241,661
____________
CASH AND CASH EQUIVALENTS AT END OF THE YEARVI-49(3) 1,180,889,274
____________ 1,256,942,304
____________
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
CASH FLOW STATEMENT OF THE COMPANY
YEAR ENDED 31 DECEMBER 2017
Notes 2017
RMB RMB
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from the sale of goods
and the rendering of services 984,103,489 1,260,184,309
Other cash receipts relating to operating activities 431,983,092
____________ 232,328,473
____________
Sub-total of cash inflows from operating activities 1,416,086,581
____________ 1,492,512,782
____________
Cash payments for goods purchased and services received 398,827,772 887,413,606
Cash payments to and on behalf of employees 89,894,049 121,662,409
Cash payment of various types of taxes 207,917,864 132,372,497
Other cash payment relating to operating activities 121,377,127
____________ 805,127,368
____________
Sub-total of cash outflows from operating activities 818,016,812
____________ 1,946,575,880
____________
Net cash flows from operating activities XIV- 28 598,069,769
____________ (454,063,098)
____________
CASH FLOWS FROM INVESTING ACTIVITIES
Cash receipts from deposits over 3 months 103,000,000 18,021,025
Cash receipts from return on investments 827,218,467 1,530,872,587
Net cash receipts from disposals of fixed assets,
intangible assets and other long-term assets 26,760,929
____________ 9,705,026
____________
Sub-total of cash outflows from investing activities 956,979,396
____________ 1,558,598,638
____________
Cash payments to acquire or construct fixed assets, intangible
assets and other long-term assets 22,527,073 28,351,843
Cash payments for term deposits over 3 months 105,000,000 12,021,025
Cash payments for subsidiary investment 881,056,220
____________ 468,882,418
____________
Sub-total of cash outflows from investing activities 1,008,583,293
____________ 509,255,286
____________
Net cash flows from investing activities (51,603,897)
____________ 1,049,343,352
____________
CASH FLOWS FROM FINANCING ACTIVITIES
Cash receipts from borrowings 600,000,000 500,000,000
Cash inflows from financing activities -
____________ 135,584,347
____________
Sub-total of cash outflows from investing activities 600,000,000
____________ 635,584,347
____________
Cash paid for borrowings 530,339,600 764,619,892
Cash paid for dividends, profits and interests 360,560,604
____________ 372,039,591
____________
Sub-total of Cash outflows from financing activities 890,900,204
____________ 1,136,659,483
____________
Net cash flows from financing activities (290,900,204)
____________ (501,075,136)
____________
NET INCREASE/(DECREASE) OF CASH
AND CASH EQUIVALENTS 255,565,668 94,205,118
Add: cash and cash equivalents at beginning of the year XIV- 29 238,003,198
____________ 143,798,080
____________
CASH AND CASH EQUIVALENTS AT END
OF THE YEAR XIV- 29 493,568,866
____________ 238,003,198
____________
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
CONSOLIDATED SATATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2017
Attributable to shareholders of the Company
Issued Capital Other comprehensive Surplus Retained Non-controlling
capital surplus income reserve earnings interests Total
RMB RMB RMB RMB RMB RMB RMB
I. Opening balance
of the current year 685,464,000
_______ 565,955,441
_______ (5,259,014)
_______ 342,732,000
_______ 6,620,118,562
________ 190,473,697
_______ 8,399,484,686
________
II. Changes for the year
(I) Total comprehensive income - - 8,368,254 - 1,031,695,056 3,594,080 1,043,657,390
(II) Owners contributions and reduction in capital
Non-controlling interests' capital
contribution (VIII-2) - - - - - 78,236,726 78,236,726
(II) Profit distribution
Distributions to
shareholders (VI-36) _______ - -
_______ -
_______ -
_______ (342,732,000) (668,124)
________ _______ ________(343,400,124)
III. Closing balance
of the current year 685,464,000
_______ 565,955,441
_______ 3,109,240
_______ 342,732,000
_______ 7,309,081,618
________ 271,636,379
_______ 9,177,978,678
________
Attributable to shareholders of the Company
Issued Capital Other comprehensive Surplus Retained Non-controlling
capital surplus income reserve earnings interests Total
RMB RMB RMB RMB RMB RMB RMB
I. Opening balance
of the current year 685,464,000
_______ 565,955,441
_______ (10,442,512)
_______ 342,732,000
_______ 5,980,390,074
________ 192,459,023
_______ 7,756,558,026
________
II. Changes for the year
(I) Total comprehensive income - - 5,183,498 - 982,460,488 (1,438,903) 986,205,083
(II) Profit distribution
Distributions to
shareholders (VI-36) -
_______ -
_______ _______- -
_______ (342,732,000) (546,423)
________ _______ ________(343,278,423)
III. Closing balance
of the current year 685,464,000
_______ 565,955,441
_______ (5,259,014)
_______ 342,732,000
_______ 6,620,118,562
________ 190,473,697
_______ 8,399,484,686
________
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
STATEMENT OF CHANGES IN EQUITY OF THE COMPANY
YEAR ENDED 31 DECEMBER 2017
Issued capital Capital reserve Surplus reserve Retained earnings Total
RMB RMB RMB RMB RMB
I. Opening balance
of the current year 685,464,000
________ 557,222,454
________ 342,732,000
________ 7,360,234,545
_________ 8,945,652,999
_________
II. Changes for the year
(I) Total comprehensive income - - - 793,598,010 793,598,010
(II) Profit distribution
Distributions to shareholders (VI-36) -
________ -
________ -
________ (342,732,000)
_________ (342,732,000)
_________
III. Closing balance
of the current year 685,464,000
________ 557,222,454
________ 342,732,000
________ 7,811,100,555
_________ 9,396,519,009
_________
Issued capital Capital reserve Surplus reserve Retained earnings Total
RMB RMB RMB RMB RMB
I. Opening balance
of the current year 685,464,000
________ 557,222,454
________ 342,732,000
________ 5,872,392,075
_________ 7,457,810,529
_________
II. Changes for the year
(I) Total comprehensive income - - - 1,830,574,470 1,830,574,470
(II) Profit distribution
Distributions to shareholders (VI-36) -
________ -
________ -
________ (342,732,000)
_________ (342,732,000)
_________
III. Closing balance
of the current year 685,464,000
________ 557,222,454
________ 342,732,000
________ 7,360,234,545
_________ 8,945,652,999
_________
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2017
I. CORPORATE INFORMATION
Yantai Changyu Pioneer Wine Co., Ltd. (the \"Company\") was incorporated as a joint stock
limited company in accordance with the Company Law of the People's Republic of China (the
\"PRC\") in a reorganization carried out by Yantai Changyu Group Co., Ltd. (\"Changyu Group
Company\"), in which Changyu Group Company injected certain assets and liabilities in relation to
the brandy, wine, and sparkling wine production and sales businesses to the Company. The
Company and its subsidiaries (the \"Group\") are principally engaged in the production and sales of
wine, brandy, sparkling wine, grape growing and acquisition, as well as travel resource
development, etc. . Registration place of the Company is Yantai, Shandong. Headquarter of the
Company is located at No. 56 Da Ma Lu, Zhifu District, Yantai, Shandong, PRC.
As at 31 December 2017 the total shares issued by the Company amounts to 685,464,000 shares.
Please refer to Note VI-32 in detail.
The holding company of the Group is Changyu Group Company, which is jointly controlled by
Yantai GuoFeng Investment Holding Ltd, ILLVA SARONNO HOLDING SPA, International
Finance Corporation and Yantai Yuhua Investment and Development Company Limited.
The financial statements have been authorized by the board of directors on 19 April 2018.
According to the Company's articles of association, the financial statements will be reviewed by
shareholders on the shareholder's meeting.
For consolidation scope of the year, please refer to Notes VIII \"Equity in other entities\" in detail.
For detail of changes in consolidation scope of the year, please refer to Notes VII \"Change in
consolidation scope\".
II. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
1. Basis of preparation
The Group has adopted the Accounting Standards for Business Enterprises (\"ASBE\") issued by
the Ministry of Finance (\"MoF\"). In addition, the Group has disclosed relevant financial
information in accordance with Information Disclosure and Presentation Rules for Companies
Offering Securities to the Public No. 15 - General Provisions on Financial Reporting (Revised in
2014).
2. Basis of accounting and principle of measurement
The Group has adopted the accrual basis of accounting. The Group adopts the historical cost as
the principle of measurement in the financial statements. Where assets are impaired, provisions
for asset impairment are made in accordance with relevant requirements.
Under the historical cost measurement, an asset is measured at the fair value of consideration paid
in cash and cash equivalents at the date of the purchase. Liability is measured at the value of asset
received through taking current obligation, the contract value for taking current obligation, or the
cash and cash equivalents value estimated for repaying debt in daily business activity.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
II. BASIS OF PREPARATION OF FINANCIAL STATEMENTS - continued
2. Basis of accounting and principle of measurement - continued
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date, regardless of whether
that price is directly observable or estimated using another valuation technique. Fair value for
measurement and/or disclosure purposes in these consolidated financial statements is determined
on such a basis.
Fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the
inputs to the fair value measurements are observable and the significance of the inputs to the fair
value measurement in its entirety, which are described as follows:
1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date;
2) Level 2 inputs are inputs, other than quoted prices included within Level 1, that are
observable for the asset or liability, either directly or indirectly; and
3) Level 3 inputs are unobservable inputs for the asset or liability.
3. Going concern
As at 31 December 2017, the Group evaluated the profitability ability in the foreseeable 12
months and did not notice any event or circumstance that would constitute significant doubt on
going concern ability of the Group. Therefore, the financial statements have been prepared on a
going concern basis.
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
1. Declaration for implementing CAS
The financial statements are prepared in accordance with CAS, which showing a true and fair
view of the financial position on 31 December 2017, financial performance and cash flow in 2017
of the Company and the Group.
2. Accounting year
The accounting year of the Group is from 1 January to 31 December of each calendar year.
3. Business cycle
Business cycle refers to the period from purchasing assets to be processed to receiving cash or
cash equivalents by the Company. The business cycle of the Company is 12 months.
4. Reporting currency
Renminbi (\"RMB\") is the currency of the primary economic environment in which the Company
and its domestic subsidiaries operate. Therefore, the Company and its domestic subsidiaries
choose RMB as their functional currency. The Company's foreign subsidiary chooses Currency
Euro and Chilean Peso as its functional currency on the basis of the primary economic
environment in which it operates. The Company adopts RMB to prepare its financial statements.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
continued
5. Business combination
5.1Business combinations not involving enterprises under common control and goodwill
A business combination not involving enterprises under common control is a business
combination in which all of the combining enterprises are not ultimately controlled by the same
party or parties before and after the combination.
The cost of combination is the aggregate of the fair values, at the acquisition date, of the assets
given, liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for
control of the acquiree. The intermediary expenses incurred by the acquirer in respect of
auditing, legal services, valuation and consultancy services, etc. and other associated
administrative expenses attributable to the business combination are recognised in profit or loss
when they are incurred.
Qualified identifiable assets, liabilities and contingent liabilities obtained by acquirer in the
acquisition are measured using fair value at the acquisition date.
Where the cost of combination exceeds the acquirers interest in the fair value of the acquirees
identifiable net assets, the difference is treated as an asset and recognised as goodwill, which is
measured at cost on initial recognition. Where the cost of combination is less than the acquirers
interest in the fair value of the acquirees identifiable net assets, the acquirer firstly reassesses the
measurement of the fair values of the acquirees identifiable assets, liabilities and contingent
liabilities and measurement of the cost of combination. If after that reassessment, the cost of
combination is still less than the acquirers interest in the fair value of the acquirees identifiable
net assets, the acquirer recognises the remaining difference immediately in profit or loss for the
current period.
Goodwill arising on a business combination is measured at cost less accumulated impairment
losses, and is presented separately in the consolidated financial statements. It is tested for
impairment at least at the end of each year.
6. Preparation of consolidated financial statements
6.1 Preparation of consolidated financial statements
The scope of consolidation in the consolidated financial statements is determined on the basis of
control. Control is the power to govern the financial and operating policies of an enterprise so as
to obtain benefits from its operating activities. The Group will re-evaluate if changes in relevant
facts and circumstances results in changes in relevant factors involved in the above definition of
control.
Consolidation of subsidiary starts from the control on the subsidiary by the Group and ends at the
loss of control on the subsidiary by the Group.
For the subsidiaries through business combination not involving enterprises under common
control, the results of operations and cash flows from the acquisition day were properly included
in the consolidated income statements and consolidated cash flow statements.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
continued
6. Preparation of consolidated financial statements - continued
6.1 Preparation of consolidated financial statements
The significant accounting policies and accounting periods adopted by the subsidiaries are
determined based on the uniform accounting policies and accounting periods set out by the
Company.
All significant intra-group balances and transactions are eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the Company is treated as
non-controlling interests and presented as \"non-controlling interests\" in the consolidated balance
sheet within shareholders' equity. The portion of net profits or losses of subsidiaries for the period
attributable to non-controlling interests is presented as \"non-controlling interests\" in the
consolidated income statement below the net profit line item.
When the amount of loss for the period attributable to the non-controlling shareholders of a
subsidiary exceeds the non-controlling shareholders' portion of the opening balance of owners'
equity of the subsidiary, the excess amount are still allocated against non-controlling interests.
7. Cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash
equivalents are the Group's short-term, highly liquid investments that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value.
8. Translation of transactions and financial statements denominated in foreign currencies
8.1 Transactions denominated in foreign currencies
A foreign currency transaction is recorded, on initial recognition, by applying the spot exchange
rate on the date of the transaction.
At the balance sheet date, foreign currency monetary items are translated into RMB using the spot
exchange rates at the balance sheet date. Exchange differences arising from the differences
between the spot exchange rates prevailing at the balance sheet date and those on initial
recognition or at the previous balance sheet date are recognised in profit or loss for the period,
except that (1) exchange differences related to a specific-purpose borrowing denominated in
foreign currency that qualify for capitalisation are capitalised as part of the cost of the qualifying
asset during the capitalisation period; (2) exchange differences related to hedging instruments for
the purpose of hedging against foreign currency risks are accounted for using hedge accounting;
(3) exchange differences arising from available-for-sale non-monetary items denominated in
foreign currencies and changes in the carrying amounts of available-for-sale monetary items are
recognised as other comprehensive income and included in capital reserve.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
continued
8. Translation of transactions and financial statements denominated in foreign currencies - continued
8.1 Transactions denominated in foreign currencies - continued
Foreign currency non-monetary items measured at historical cost are translated to the amounts in
functional currency at the spot exchange rates on the dates of the transactions and the amounts in
functional currency remain unchanged. Foreign currency non-monetary items measured at fair
value are re-translated at the spot exchange rate on the date the fair value is determined.
Difference between the re-translated functional currency amount and the original functional
currency amount is treated as changes in fair value (including changes of exchange rate) and is
recognised in profit and loss or as other comprehensive income included in capital reserve.
8.2 Translation of financial statements denominated in foreign currencies
For the purpose of preparing the consolidated financial statements, financial statements of a
foreign operation are translated from the foreign currency into RMB using the following method:
assets and liabilities on the balance sheet are translated at the spot exchange rate prevailing at the
balance sheet date; shareholders' equity items except for retained earnings are translated at the
spot exchange rates at the dates on which such items arose; all items in the income statement as
well as items reflecting the distribution of profits are translated at the spot exchange rates on the
dates of the transactions; the opening balance of retained earnings is the translated closing balance
of the previous year's retained earnings; the closing balance of retained earnings is calculated and
presented on the basis of each translated income statement and profit distribution item. The
difference between the translated assets and the aggregate of liabilities and shareholders' equity
items is separately presented as the exchange differences arising on translation of financial
statements denominated in foreign currencies of other comprehensive income under the
shareholders' equity in the balance sheet.
Cash flows arising from a transaction in foreign currency and the cash flows of a foreign
subsidiary are translated at the spot exchange rate on the date of the cash flows. The effect of
exchange rate changes on cash and cash equivalents is regarded as a reconciling item and
presented separately in the cash flow statement as \"effect of exchange rate changes on cash and
cash equivalents\".
The opening balances and the comparative figures of previous year are presented at the translated
amounts in the previous year's financial statements.
9 Financial instruments
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions of the instrument. Financial assets and financial liabilities are initially
measured at fair value. For other financial assets and financial liabilities, transaction costs are
included in their initial recognised amounts.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING - continued
9 Financial instruments - continued
9.1 Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset or a
financial liability (or a group of financial assets or financial liabilities) and of allocating the
interest income or interest expense over the relevant period, using the effective interest rate. The
effective interest rate is the rate that exactly discounts estimated future cash flows through the
expected life of the financial asset or financial liability or, where appropriate, a shorter period to
the net carrying amount of the financial asset or financial liability.
When calculating the effective interest rate, the Group estimates future cash flows considering all
contractual terms of the financial asset or financial liability (without considering future credit
losses), and also considers all fees paid or received between the parties to the contract giving rise
to the financial asset and financial liability that are an integral part of the effective interest rate,
transaction costs, and premiums or discounts, etc.
9.2 Classification, recognition and measurement of financial assets
On initial recognition, the Group's financial assets are classified into one of the four categories,
including financial assets at fair value through profit or loss, held-to-maturity investments, loans
and receivables, and available-for-sale financial assets. All regular way purchases or sales of
financial assets are recognised and derecognised on a trade date basis. Financial assets of the
Group are loans and receivables and available-for-sale financial assets.
9.2.1 Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. Financial assets classified as loans and receivables by
the Group include notes receivable, accounts receivable, interest receivable and other receivables.
Loans and receivables are subsequently measured at amortised cost using the effective interest
method. Gain or loss arising from derecognition, impairment or amortisation is recognised in
profit or loss.
9.2.2 Available-for-sale financial assets
Available-for-sale financial assets include non-derivative financial assets that are designated on
initial recognition as available for sale, and financial assets that are not classified as financial
assets at fair value through profit or loss, loans and receivables or held-to-maturity investments.
For investments in equity instruments that do not have a quoted market price in an active market
and whose fair value cannot be reliably measured, they are measured at cost.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
continued
9. Financial instruments - continued
9.3 Impairment of financial assets
The Group assesses at each balance sheet date the carrying amounts of financial assets other than
those at fair value through profit or loss. If there is objective evidence that a financial asset is
impaired, the Group determines the amount of any impairment loss. Objective evidence that a
financial asset is impaired is evidence that, arising from one or more events that occurred after the
initial recognition of the asset, the estimated future cash flows of the financial asset, which can be
reliably measured, have been affected.
Objective evidence that a financial asset is impaired includes the following observable events:
(1) Significant financial difficulty of the
issuer or obligor;
(2) A breach of contract by the borrower, such
as a default or delinquency in interest or principal payments;
(3) The Group, for economic or legal reasons
relating to the borrower's financial difficulty, granting a concession to the borrower;
(4) It becoming probable that the borrower
will enter bankruptcy or other financial reorganisations;
(5) The disappearance of an active market for
that financial asset because of financial difficulties of the issuer;
(6) Upon an overall assessment of a group of
financial assets, observable data indicates that there is a measurable decrease in the
estimated future cash flows from the group of financial assets since the initial recognition
of those assets, although the decrease cannot yet be identified with the individual financial
assets in the group. Such observable data includes:
- Adverse changes in the payment status of
borrower in the group of assets;
- Economic conditions in the country or
region of the borrower which may lead to a failure to pay the group of assets;
(7) Significant adverse changes in the
technological, market, economic or legal environment in which the issuer operates,
indicating that the cost of the investment in the equity instrument may not be recovered by
the investor;
(8) A significant or prolonged decline in the
fair value of an investment in an equity instrument below its cost;
(9) Other objective evidence indicating there
is an impairment of a financial asset.
- Impairment of financial assets measured at amortised cost
If financial assets carried at amortised cost are impaired, the carrying amounts of the financial
assets are reduced to the present value of estimated future cash flows (excluding future credit
losses that have not been incurred) discounted at the financial asset's original effective interest
rate. The amount of reduction is recognised as an impairment loss in profit or loss. If,
subsequent to the recognition of an impairment loss on financial assets carried at amortised cost,
there is objective evidence of a recovery in value of the financial assets which can be related
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
objectively to an event occurring after the impairment is recognised, the previously recognised
impairment loss is reversed. However, the reversal is made to the extent that the carrying
amount of the financial asset at the date the impairment is reversed does not exceed what the
amortised cost would have been had the impairment not been recognised.
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9. Financial instruments - continued
9.3 Impairment of financial assets - continued
- Impairment of financial assets measured at amortised cost - continued
For a financial asset that is individually, the Group assesses the asset individually for impairment.
- Impairment of available for sale assets measured at cost
If an impairment loss has been incurred on an investment in unquoted equity instrument (without
a quoted price in an active market) whose fair value cannot be reliably measured, or on a
derivative financial asset that is linked to and must be settled by delivery of such an unquoted
equity instrument, the carrying amount of the financial asset is reduced to the present value of
estimated future cash flows discounted at the current market rate of return for a similar financial
asset. The amount of reduction is recognised as an impairment loss in profit or loss. The
impairment loss on such financial asset is not reversed once it is recognised.
9.4 Transfer of financial assets
The Group derecognises a financial asset if one of the following conditions is satisfied: (1) the
contractual rights to the cash flows from the financial asset expire; or (2) the financial asset has
been transferred and substantially all the risks and rewards of ownership of the financial asset is
transferred to the transferee; or (3) although the financial asset has been transferred, the Group
neither transfers nor retains substantially all the risks and rewards of ownership of the financial
asset but has not retained control of the financial asset.
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, the
difference between (1) the carrying amount of the financial asset transferred; and (2) the sum of
the consideration received from the transfer and any cumulative gain or loss that has been
recognised in other comprehensive income, is recognised in profit or loss.
9.5 Classification, recognition and measurement of financial liabilities
Debt and equity instruments issued by the Group are classified into financial liabilities or equity
on the basis of the substance of the contractual arrangements and definitions of financial liability
and equity instrument.
On initial recognition, financial liabilities are classified into financial liabilities at fair value
through profit or loss and other financial liabilities. The financial liabilities in group are other
financial liabilities, including short-term borrowings, notes payable, account payables, interest
payables, other payables, non-current liabilities due within one year and long-term payables etc.
9.5.1 Other financial liabilities
Other financial liabilities are subsequently measured at amortised cost using the effective interest
method, with gain or loss arising from derecognition or amortisation recognised in profit or loss.
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9. Financial instruments - continued
9.6 Derecognition of financial liabilities
The Group derecognises a financial liability (or part of it) only when the underlying present
obligation (or part of it) is discharged.
When the Group derecognises a financial liability or a part of it, it recognises the difference
between the carrying amount of the financial liability (or part of the financial liability)
derecognised and the consideration paid (including any non-cash assets transferred or new
financial liabilities assumed) in profit or loss.
9.7 Offsetting financial assets and financial liabilities
Where the Group has a legal right that is currently enforceable to set off the recognised financial
assets and financial liabilities, and intends either to settle on a net basis, or to realise the financial
asset and settle the financial liability simultaneously, a financial asset and a financial liability shall
be offset and the net amount is presented in the balance sheet. Except for the above circumstances,
financial assets and financial liabilities shall be presented separately in the balance sheet and shall
not be offset.
9.8 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group
after deducting all of its liabilities. The Group does not recognise any changes in the fair value of
equity instruments. The equity instruments transaction expenses deducted from equity.
The Group treats distribution to equity instrument holders as profit distributions. Shareholder
equity is not affected by share dividend distributed.
10 Accounts Receivable
The Group believes that the individual receivables are all significant, and the corresponding
receivables are individually tested for impairment, and individual recognition method is used to
confirm bad debt provision.
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11 Inventories
11.1 Categories of inventories
The Group's inventories mainly include raw materials, work in progress and finished goods.
Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase,
costs of conversion and other expenditures incurred in bringing the inventories to their present
location and condition.
11.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the weighted average method.
Agricultural products harvested are reported in accordance with the CAS 1 Inventories.
11.3 Basis for determining net realisable value of inventories and provision methods for decline in
value of inventories
At the balance sheet date, inventories are measured at the lower of cost and net realisable value.
If the net realisable value is below the cost of inventories, a provision for decline in value of
inventories is made. Net realisable value is the estimated selling price in the ordinary course of
business less the estimated costs of completion, the estimated costs necessary to make the sale and
relevant taxes. Net realisable value is determined on the basis of clear evidence obtained, and
takes into consideration the purposes of holding inventories and effect of post balance sheet
events.
Provision for decline in value of other inventories is made based on the excess of cost of
inventory over its net realisable value on an item-by-item basis.
After the provision for decline in value of inventories is made, if the circumstances that
previously caused inventories to be written down below cost no longer exist so that the net
realisable value of inventories is higher than their cost, the original provision for decline in value
is reversed and the reversal is included in profit or loss for the period.
11.4 Inventory count system
The perpetual inventory system is maintained for stock system.
11.5 Amortisation method for low cost and short-lived consumable items and packaging materials
Packaging materials and low cost and short-lived consumable items are amortised using the
immediate write-off method.
12 Non-current assets held for sale
Non-current assets and disposal groups are classified as held for sale category when the Group
recovers the book value through a sale (including an exchange of nonmonetary assets that has
commercial substance) rather than continuing use.
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12. Non-current assets held for sale - continued
Non-current assets or disposal groups classified as held for sale are required to satisfy the
following conditions: (1) the asset or disposal group is available for immediate sale in its present
condition subject only to terms that are usual and customary for sales of such asset or disposal
group; (2) the sale is highly probable, i.e. the Group has made a resolution about selling plan and
obtained a confirmed purchase commitment and the sale is expected to be completed within one
year.
The Group measures the no-current assets or disposal groups classified as held for sale at the
lower of their carrying amount and fair value less costs to sell. Where the carrying amount is
higher than the net amount of fair value less costs to sell, carrying amount should be reduced to
the net amount of fair value less costs to sell, and such reduction is recognized in impairment loss
of assets and included in profit or loss for the period. Meanwhile, provision for impairment of
held-for-sale assets are made. When there is increase in the net amount of fair value of
non-current assets held for sale less costs to sell at the balance sheet date, the original deduction
should be reversed in impairment loss of assets recognized after the classification of held-for-sale
category, and the reverse amount is include in profit or loss for the period.
Non-current assets held for sale in non-current assets are not subject to depreciation or
amortization.
13. Long term equity investments
13.1 Basis for determining control, joint control and significant influence
Control is the power to govern the financial and operating policies of an entity so as to obtain
benefits from its activities. Joint control is the contractually agreed sharing of control over an
economic activity, and exists only when the strategic financial and operating policy decisions
relating to the activity require the unanimous consent of the parties sharing control. Significant
influence is the power to participate in the financial and operating policy decisions of the investee
but is not control or joint control over those policies. When determining whether an investing
enterprise is able to exercise control or significant influence over an investee, the effect of
potential voting rights of the investee (for example, warrants and convertible debts) held by the
investing enterprises or other parties that are currently exercisable or convertible shall be
considered.
13.2 Determination of initial investment cost
For a long-term equity investment acquired not involving enterprises under common control, the
investment cost of the long-term equity investment is the cost of acquisition.
Audit fee, legal services, consulting fees and other related management costs in acquisition are
expensed in profits and losses when happened.
Other long-term equity investments acquired from other than acquisitions are recognised using
original cost.
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13. Long term equity investments - continued
13.3 Subsequent measurement and recognition of profit or loss
13.3.1 Long-term equity investment accounted for using the cost method
The Group accounts for long-term equity investment using the cost method. A subsidiary is an
investee that is controlled by the Group.
Under the cost method, a long-term equity investment is measured at initial investment cost.
Long-term equity investment is adjusted when capital is added or recollected. Investment income
is recognised in the period in accordance with the attributable share of cash dividends or profit
distributions declared by the investee.
13.4 Disposal of long-term equity investments
On disposal of a long term equity investment, the difference between the proceeds actually
received and receivable and the carrying amount is recognised in profit or loss for the period.
14. Investment properties
Investment property is property held to earn rentals or for capital appreciation or both.
An investment property is measured initially at cost. Subsequent expenditures incurred for such
investment property are included in the cost of the investment property if it is probable that
economic benefits associated with an investment property will flow to the Group and the
subsequent expenditures can be measured reliably. Other subsequent expenditures are recognised
in profit or loss in the period in which they are incurred.
The Group uses the cost model for subsequent measurement of investment property, and adopts a
depreciationor amortisation policy for the investment property which is consistent with that for
buildings or land use rights.
When an investment property is sold, transferred, retired or damaged, the Group recognises the
amount of any proceeds on disposal net of the carrying amount and related taxes in profit or loss
for the period.
15. Fixed assets
15.1 Recognition criteria for fixed assets
Fixed assets are tangible assets that are held for use in the production or supply of goods or
services, for rental to others, or for administrative purposes, and have useful lives of more than
one accounting year. A fixed asset is recognised only when it is probable that economic benefits
associated with the asset will flow to the Group and the cost of the asset can be measured reliably.
Fixed assets are initially measured at cost.
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15. Fixed assets - continued
15.1 Recognition criteria for fixed assets - continued
Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset and
if it is probable that economic benefits associated with the asset will flow to the Group and the
subsequent expenditures can be measured reliably. Meanwhile the carrying amount of the
replaced part is derecognised. Other subsequent expenditures are recognised in profit or loss in
the period in which they are incurred.
15.2 Depreciation of each category of fixed assets
A fixed asset is depreciated over its useful life using the straight-line method since the month
subsequent to the one in which it is ready for intended use. The useful life, estimated net
residual value rate and annual depreciation rate of each category of fixed assets are as follows:
Estimated Estimated Annual
useful life residual rate depreciation rate
Buildings 20-40years 0-5% 2.4%-5.0%
Machinery 5-30years 0-5% 3.2%-20.0%
Motor Vehicles 4-12years 0-5% 7.9%-25.0%
Estimated net residual value assumes the situation where a fixed asset expire for its estimated
useful life and is in its expected final status. Estimated net residual value is the amount that the
Group can obtain from the disposal less expected disposal fees.
15.3 Other explanations
If a fixed asset is upon disposal or no future economic benefits are expected to be generated from
its use or disposal, the fixed asset is derecognised. When a fixed asset is sold, transferred, retired
or damaged, the amount of any proceeds on disposal of the asset net of the carrying amount and
related taxes is recognised in profit or loss for the period.
The Group reviews the useful life and estimated net residual value of a fixed asset and the
depreciation method applied at least once at each financial year-end, and account for any change
as a change in an accounting estimate.
16. Construction in progress
Construction in progress is measured at its actual costs. The actual costs include various
construction expenditures during the construction period, borrowing costs capitalised before it is
ready for intended use and other relevant costs. Construction in progress is not depreciated.
Construction in progress is transferred to a fixed asset when it is ready for intended use.
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17. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying
asset are capitalised when expenditures for such asset and borrowing costs are incurred and
activities relating to the acquisition, construction or production of the asset that are necessary to
prepare the asset for its intended use or sale have commenced. Capitalisation of borrowing costs
ceases when the qualifying asset being acquired, constructed or produced becomes ready for its
intended use or sale. Capitalisation of borrowing costs is suspended during periods in which the
acquisition, construction or production of a qualifying asset is suspended abnormally and when
the suspension is for a continuous period of more than 3 months. Capitalisation is suspended until
the acquisition, construction or production of the asset is resumed. Other borrowing costs are
recognised as an expense in the period in which they are incurred. Where funds are borrowed
under a specific-purpose borrowing, the amount of interest to be capitalized is the actual interest
expense incurred on that borrowing for the period less any bank interest earned from depositing
the borrowed funds before being used on the asset or any investment income on the temporary
investment of those funds.
18. Biological assets
The Group's biological assets are bearer biological assets.
18.1 Bearer biological assets
Bearer biological assets are biological assets, for example, held for the production of agricultural
produce, provision of services or rental, Bearer biological assets in the Group are vines. A bearer
biological asset is initially measured at cost. The cost of a bearer biological asset self-grown or
self-bred comprises those costs necessarily incurred and directly attributable to the asset before
the asset becomes available for its intended production and operating purposes, and any
borrowing cost meeting the capitalisation criteria.
The Group charge deprecation for productive biological assets which satisfy expected production,
and record the deprecation in balance sheet and income statement. The Group uses straight line
method to calculate the deprecation, and details as follows:
Estimated Estimated Annual
Category useful life residual rate depreciation rate
Vines 20 years - 5.0%
The Group evaluates the useful life and expected net salvage value by considering the normal
producing life of the bearer biological assets.
The Group reviews the useful life and estimated net residual value of bearer biological assets and
the depreciation method applied at least once at each financial year-end, and account for any
change as a change in an accounting estimate.
On the sale, identification of any shortages during stocktaking, death or damage of biological
asset, the proceeds on disposal net of the carrying amount and relevant taxes is recognised in
profit or loss for the current period.
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19. Intangible assets
Intangible assets include land use rights, software, etc.
An intangible asset is measured initially at cost method. When an intangible asset with a finite
useful life is available for use, its original cost less net residual value and any accumulated
impairment losses is amortised over its estimated useful life using the straight-line method.
Intangible assets with indefinite useful lives are not amortized. The useful lives of the intangible
assets are as follows:
Annual
Item Useful life Net residual value amortization rate
Land use rights 40-50 years - 2.0%-2.5%
Software 5-10 years - 10.0%-20.0%
Trademark 10 years - 10.0%
Except for the above intangible assets with finite useful lives, the Group had also land use right
and trademark with infinite useful lives. Land use right with infinite useful lives was related to the
Group acquired Via Indómita, S.A., Via Dos Andes, S.A., and Bodegas Santa Alicia SpA.
(collectively referred to as the \"Chile Indomita Wine Group\"), which was a permanent ownership
and held by the Chile Indomita Wine Group according to the relatively Chilean law, therefore
there was no amortization. Trademark was related to the Group acquired the Chile Indomita Wine
Group, which had no finite useful lives. The valuation of trademark was based on the trends in the
market and competitive environment, product cycle, and managing long-term development
strategy. Those basis indicated the trademark will provide net cash flows to the Group within a
given period. Because it was hard to predict the period that it would bring economic benefits to
the Group, the useful lives were uncertain.
For an intangible asset with a finite useful life, the Group reviews the useful life and amortisation
method at the end of the period, and makes adjustments when necessary.
20. Impairment of long-term assets
The Group and the Company review the impairment status of long-term equity investments, fixed
assets, construction in progress, bearer biological asset and intangible assets with finite useful life
at the end of each year. If the assets exist impairment, the Group estimates the recoverable amount
of the assets.Intangible assets with indefinite useful life and intangible assets not yet available for
use are tested for impairment annually, irrespective of whether there is any indication that the
assets may be impaired.
Recoverable amount is estimated on individual basis. If it is not practical to estimate the
recoverable amount of an individual asset, the recoverable amount of the asset group to which the
asset belongs will be estimated. The recoverable amount of an asset is the higher of its fair value
less costs of disposal and the present value of the future cash flows expected to be derived from
the asset.
If recoverable amount of assets is less than book value, the difference is recognised as impairment
provision and expensed in current period.
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20. Impairment of long-term assets - continued
Goodwill is tested for impairment at least at the end of each year. For the purpose of impairment
testing, goodwill is considered together with the related assets group (s), i.e., goodwill is
reasonably allocated to the related assets group (s) or each of assets group (s) expected to benefit
from the synergies of the combination. An impairment loss is recognised if the recoverable
amount of the assets group or sets of assets groups (including goodwill) is less than its carrying
amount. The impairment loss is firstly allocated to reduce the carrying amount of any goodwill
allocated to such assets group or sets of assets groups, and then to the other assets of the group
pro-rata on the basis of the carrying amount of each asset (other than goodwill) in the group.
The impairment is recognised in profit or loss for the period in which it is incurred and will not be
reversed in any subsequent period.
21. Long term prepaid expenses
Long term prepaid expenses of the Group are amortized over the following period:
Amortization period
Land requisition fee 50 years
Land lease prepayment 50 years
Greening fee 5-20 years
Leasehold improvement 3-5years
Others 3 years
22. Employee benefits
22.1 Short-term employee benefits
In an accounting period in which an employee has rendered service to the Group, the Group
recognises the actual employee benefits for that service as a liability. The employee benefits of
the Group are either included in cost of related assets or charged to profit or loss in the period
when they are incurred. Non-monetary employee benefits are measured at fair value.
Social insurances such as medical insurance, injury insurance and pregnancy insurance, housing
funds, labor union and employee education fees paid by the Group for employees, are recognised
as relevant liability in the period in which the employees provide service, in accordance with the
regulated recognition basis and percentage. The related expenditures are either included in cost of
related assets or charged to profit or loss in the period when they are incurred.
22.2 Accounting treatments of retired benefits
Retired benefits of the Group are all predetermined provision plan.
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22. Employee benefits- continued
22.2 Accounting treatments of retired benefits- continued
In the period in which the employees provide service, the Group recognise liability in accordance
with the amounts to be paid calculated according to the predetermined provision plan, and the
related expenditures are either included in cost of related assets or charged to profit or loss in the
period when they are incurred.
22.3 Accounting treatments of termination benefits
When providing termination benefits to employees, the Group recognise employee benefits
payroll resulting from termination benefits at the earlier of: the Group cannot unilaterally
withdraw from the termination plan or the redundancy offer; the Group recognise relevant costs
and expenses related to the payment of termination benefits in reconstructuring.
23. Revenue
23.1 Revenue from sale of goods
Revenue from sale of goods is recognised when the Group has transferred to the buyer the
significant risks and rewards of ownership of the goods. The Group retains neither continuing
managerial involvement to the degree usually associated with ownership nor effective control
over the goods sold. The amount of revenue can be measured reliably and it is probable that the
associated economic benefits will flow to the Group. The associated costs incurred or to be
incurred can be measured reliably.
23.2 Revenue from rendering of services
When the outcome of a transaction involving the rendering of services can be estimated reliably,
revenue associated with the transaction shall be recognized by reference the stage of completion
of the transaction at the reporting date. The outcome of a transaction can be estimated reliably.
When the outcome of the transaction involving the rendering of services cannot be estimated
reliably, revenue is recognised only to the extent of the costs incurred that will be recoverable,
and the costs incurred are recognised as expenses for the period. When it is not probable that the
costs incurred will be recovered, revenue is not recognised.
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24. Government grants
Government grants are transfer of monetary assets and non-monetary assets from the government
to the Group at no consideration. A government grant is recognised only when the Group can
comply with the conditions attaching to the grant and the Group will receive the grant.
Monetary government grants are measured by the amount received or receivable.
24.1 Government grant related to an asset
A government grant related to an asset is recognised as deferred income, and evenly amortised to
profit or loss over the useful life of the related asset.
24.2Government grant related to income
For a government grant related to income, if the grant is a compensation for related expenses or
losses to be incurred in subsequent periods, the grant is recognised as deferred income, and
recognised in profit or loss over the periods in which the related costs are recognised. If the grant
is a compensation for related expenses or losses already incurred, the grant is recognised
immediately in profit or loss for the period.
A government grant related to the Group's daily activities is recognized in other income based on
the nature of economic activities; a government grant is not related to the Group's daily activities
is recognized in non-operating income and expenses.
The Company's government loans with below-market rate of interest are directly paid to the
Company, and the related low rate interest will write off related borrowing costs . The
government loans with below-market rate of interest obtained by other subsidiaries of the Group
are government loans, which is provided by local bureau of finance through bank with
below-market rate of interest. The actual amount of the loan received by the Group recognized as
borrowings, and the related borrowing costs are calculated according to the principal of the loan
and the below-market rate.
25. Deferred tax assets/deferred tax liabilities
The income tax expenses include current income tax and deferred income tax.
25.1 Current income tax
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods
are measured at the amount expected to be paid (or recovered) according to the requirements of
tax laws.
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25. Deferred tax assets/deferred tax liabilities - continued
25.2 Deferred tax assets and deferred tax liabilities
For temporary differences between the carrying amounts of certain assets or liabilities and their
tax base, or between the nil carrying amount of those items that are not recognised as assets or
liabilities and their tax base that can be determined according to tax laws, deferred tax assets and
liabilities are recognised using the balance sheet liability method.
Deferred tax is generally recognised for all temporary differences. Deferred tax assets for
deductible temporary differences are recognised to the extent that it is probable that taxable
profits will be available against which the deductible temporary differences can be utilised.
However, for temporary differences associated with the initial recognition of goodwill and the
initial recognition of an asset or liability arising from a transaction (not a business combination)
that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of
transaction, no deferred tax asset or liability is recognised.
For deductible losses and tax credits that can be carried forward, deferred tax assets are
recognised to the extent that it is probable that future taxable profits will be available against
which the deductible losses and tax credits can be utilised.
Deferred tax liabilities are recognised for taxable temporary differences associated with
investments in subsidiaries and associates, and interests in joint ventures, except where the Group
is able to control the timing of the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from
deductible temporary differences associated with such investments and interests are only
recognised to the extent that it is probable that there will be taxable profits against which to utilise
the benefits of the temporary differences and they are expected to reverse in the foreseeable
future.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates,
according to tax laws, that are expected to apply in the period in which the asset is realised or the
liability is settled.
Current and deferred tax expenses or income are recognised in profit or loss for the period, except
when they arise from transactions or events that are directly recognised in other comprehensive
income or in shareholders' equity, in which case they are recognised in other comprehensive
income or in shareholders' equity; and when they arise from business combinations, in which case
they adjust the carrying amount of goodwill.
At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if it
is no longer probable that sufficient taxable profits will be available in the future to allow the
benefit of deferred tax assets to be utilised. Such reduction in amount is reversed when it
becomes probable that sufficient taxable profits will be available.
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25. Deferred tax assets/deferred tax liabilities - continued
25.3 Net off of income taxes
When the Group has a legal right to settle on a net basis and intends either to settle on a net basis
or to realise the assets and settle the liabilities simultaneously, current tax assets and current tax
liabilities are offset and presented on a net basis.
When the Group has a legal right to settle current tax assets and liabilities on a net basis, and
deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable entities which intend either to settle
current tax assets and liabilities on a net basis or to realise the assets and liabilities simultaneously,
in each future period in which significant amounts of deferred tax assets or liabilities are expected to
be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a net basis.
26. Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the
risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
26.1. Operating lease accounting methods
26.1.1 The Group as lessee under operating leases
Operating lease payments are recognised on a straight-line basis over the term of the relevant
lease, and are either included in the cost of related asset or charged to profit or loss for the period.
Initial direct costs incurred are charged to profit or loss for the period.
26.1.2 The Group as lessor under operating leases
Rental income from operating leases is recognised in profit or loss on a straight-line basis over the
term of the relevant lease. Initial direct costs with more than an insignificant amount are
capitalised when incurred, and are recognised in profit or loss on the same basis as rental income
over the lease term. Other initial direct costs with an insignificant amount are charged to profit or
loss in the period in which they are incurred. Contingent rents are charged to profit or loss in the
period in which they actually arise.
27. Changes in accounting policies
The Group started adopting the Accounting Standard for Business Enterprise No.16 - Government
Grants revised by MoF in 2017 respectively since 28 May 2017 and 12 June 2017 respectively.
Besides, the financial statements have been prepared under the Notice of the Revised Format of
Financial Statements for General Business Enterprise (Cai Kuai (2017) No. 30, hereinafter
referred to as the \"Cai Kuai No.30 Document\") released by the MoF on 25 December 2017.
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27. Changes in accounting policies - continued
Government grants
Prior to the implementation of the Accounting Standard for Business Enterprise No.16 -
Government Grants (revised), the Group did not distinguish whether government grants were
related to daily activities and were included in non-operating income.After the implementation of
the Accounting Standard for Business Enterprise No.16 - Government Grants (revised), a
government grant related to the Group's daily activities is recognized in other income based on the
nature of economic activities; a government grant is not related to the Group's daily activities is
recognized in non-operating income.
The Group has accounted for the above change in accounting policy retrospectively. Such
changes in accounting policy has no impact on the financial statements for the comparable years.
IV. CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY
ASSUMPTIONS AND UNCERTAINTIES IN ACCOUNTING ESTIMATES
In the application of accounting policies as set out in Note III, the Group is required to make
judgments, estimates and assumptions about the carrying amounts of items in the financial
statements that cannot be measured accurately, due to the internal uncertainties of the operating
activities. These judgments, estimates and assumptions are based on historical experience of the
Group's management as well as other factors that are considered to be relevant. Actual results
may differ from these estimates.
The Group periodically review the judgments, estimates and assumptions above on a going
concern basis. For those changes in accounting policies that only affect current financial
statements, the influences are recognized in current period. For those changes in accounting
policies that affect both current and future financial statements, the influences are recognized in
both current and prospective periods.
Significant accounting judgments and accounting estimates
The following are key assumptions for after balance sheet date event and other factors of
uncertain estimation. They may cause material adjustment on balance sheet in following
accounting period.
Deferred tax assets
Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that
taxable profit will be available against which the losses can be utilized. Significant management
judgment is required to determine the amount of deferred tax assets that can be recognized, based
upon the likely timing and level of future taxable profits together with future tax planning
strategies.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
IV. CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY
ASSUMPTIONS AND UNCERTAINTIES IN ACCOUNTING ESTIMATES - continued
Significant accounting judgments and accounting estimates - continued
Depreciation
As set out in Note III-15, the depreciation is calculated on the straight line basis to write-off the
cost of each item of fixed assets to its residual value over its estimated useful life. The Group's
management determines the estimated useful lives for its fixed assets. This estimate is based on
the historical experience of the actual useful lives of fixed assets of similar nature and functions.
If the previous estimates have significant changes, and depreciation expenses will be adjusted in
the future periods.
Useful life of intangible assets
The estimated useful lives of the intangible assets are determined based on the historical
experience of the actual useful lives of intangible assets of similar nature and functions as well as
considering the contractual rights and statutory rights applicable to the intangible assets.
When the estimated useful lives of finite intangible assets are shortened or extended, the
amortization periods should be adjusted accordingly.
Impairment of long-term assets
The Group assesses whether the recoverable amount is lower than the book value. If there are
any indicators that the book value of non-current assets cannot be fully recoverable, impairment
losses should be recorded.
The recoverable amount is the higher of an asset's fair value less costs to sell and the present value
of the future cash flows expected to be derived from an asset. As it is difficult for the Group to
obtain the quoted market price of the assets (or assets group), the fair value of the assets cannot be
reliably estimated. When the management make estimation on the expected future cash flows
from the asset or cash generating unit, estimates should be made on choosing a suitable growth
rate of sales , average gross profit , related operating costs and discount rate in order to calculate
the present value of those cash flows, which has a high uncertainty.
Estimated provision for accounts receivable
A provision for impairment of trade receivables is established when there is objective evidence
that the Group will not be able to collect all amounts due according to the original terms of
receivables. Significant financial difficulties of the debtor, probability that the debtor will enter
bankruptcy are considered indicators that the trade receivable is impaired. The provision is
reassessed at the end of each year.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
IV. CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY
ASSUMPTIONS AND UNCERTAINTIES IN ACCOUNTING ESTIMATES - continued
Significant accounting judgments and accounting estimates - continued
Inventory provision based on net realizable value
The inventories are measured on the lower of carrying value and net realizable value, and
provision should be made for impairment on obsolete and slow moving inventories. The group
will reassess whether the net realizable value is lower than the carrying cost at the end of each
year.
The determination of the fair value of identifiable assets and liabilities associated with business
combination.
For the cost of business combination, the Group allocates the purchase price based on fair value of
relatively identifiable assets and liabilities. When the fair value of relatively identifiable assets
and liabilities are evaluated by the present value of its future cash flows, The management need
estimate the growth rate of sales based on future market supply and demand to predict cash flows,
and considered the proper discount rate for calculating, management need use major accounting
estimates and judgments in the progress.
V. TAXES
1. The main taxes and tax rate are as follows:
(1) China
Value added tax VAT is levied at 6% and 17% on the invoiced amount after
deduction of eligible input VAT.
Consumption tax The consumption tax of the group is levied on gross revenue
at rates ranging from 10% to 20%.
City development tax Levied at 7% of total business tax payment.
Corporate income tax The Group is subject to a corporate income tax rate of 25%
on its taxable income.
(2) France
Value added tax VAT is levied at 19.6% on the invoiced amount after deduction
of eligible input VAT.
Corporate income tax The Group is subject to a corporate income tax rate of 33%
on its taxable income.
(3) Spain
Value added tax VAT is levied at 21% on the invoiced amount after deduction
of eligible input VAT.
Corporate income tax The Group is subject to a corporate income tax rate of 28%
on its taxable income.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
V. TAXES
1. The main taxes and tax rate are as follows - continued:
(4) Chile
Value added tax VAT is levied at 19% on the invoiced amount after deduction
of eligible input VAT.
Corporate income tax The Group is subject to a corporate income tax rate of 25.5%
on its taxable income.
Other than tax incentives stated in Note V-2, applicable tax rates of the Group in 2017 and 2016
are all stated as above.
2. Tax incentives and relative permit
Ningxia Changyu Grape Growing Co., Ltd.(\"Ningxia Growing\"), a subsidiary of the Group,
whose principal activity is grape growing is incorporated in Ningxia Huizu Autonomous Region.
According to clause 27 of PRC Corporate Income Tax and clause 86 of PRC Corporate Income
Tax Measures for Implementation, 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 PRC Corporate Income Tax and clause 86 of PRC Corporate
Income Tax Measures for Implementation, Grape Growing enjoys an exemption of corporate
income tax.
Xinjiang Tianzhu Co., Ltd (\"Xinjiang Tianzhu\"), a subsidiary of the Company, is an enterprise of
wine production and sales incorporated in Shihezi city, Xinjiang Weizu Autonomous. In
accordance with the Notice on Tax Policy Issues concerning Further Implementation of the
Western China Development Strategy (Cai Shui [2011] No.58), Xinjiang Tianzhu is qualified to
enjoy preferential taxation policies, which means it can pay corporate income tax at a preferential
rate of 15% for the period from 2015 to 2020.
Xinjiang Babao Baron Chateau Co., Ltd. (\"Shihezi Chateau\"), a subsidiary of the Company, is an
enterprise of wine production and sales incorporated in Shihezi city, Xinjiang Weizu Autonomous.
In accordance with the Notice on Tax Policy Issues concerning Further Implementation of the
Western China Development Strategy (Cai Shui [2011] No.58), Shihezi Chateau is qualified to
enjoy preferential taxation policies, which means it can pay corporate income tax at a preferential
rate of 15% for the period from 2015 to 2020.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Cash and bank
Closing balance Opening balance
RMB RMB
Cash 136,973 117,507
Bank balance 1,278,397,711 1,240,607,797
Other currency fund 123,987,825
____________ 150,792,303
____________
Total 1,402,522,509
____________ 1,391,517,607
____________
At 31 December 2017, the balance of restricted cash of the Group is as follows:
Closing balance Opening balance
RMB RMB
The Company's housing fund 2,645,410
___________ 2,711,926
___________
As at 31 December 2017, the Group's other monetary assets is as follows:
Closing balance Opening balance
RMB RMB
Research and Development Co., Ltd
(\"R&D Centre\") pledged deposit 61,700,000 46,100,000
Refundable deposit for notes payable - 38,900,000
Deposit for letter of credit 57,946,190 25,694,735
Alipay account balance 4,317,635 40,047,367
Deposit for Company cards 14,000 50,201
Deposit for ICBC platform 10,000
___________ -
___________
123,987,825
___________ 150,792,303
___________
As at 31 December 2017, the Group's term deposits with original maturity of more than three
months when acquired is RMB 95,000,000 with interest rate 1.40%-1.95% (31 December
2016:RMB3,000,000).
2. Notes receivable
(1) Categories of notes receivable
Closing balance Opening balance
RMB RMB
Bank acceptances 244,796,818
__________ 210,470,027
__________
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
2. Notes receivable - continued
(2) Notes receivable which have been pledged as security at the end of the period
As at 31 December 2017, there was no pledged notes receivable (31 December 2016: Nil).
(3) Notes endorsed by the Group to other parties which are not yet due at the end of the period
Closing balance Opening balance
RMB RMB
Bank acceptances 188,855,843
__________ 198,302,531
__________
As at 31 December 2017, notes endorsed by the Group to other parties which are not yet due at
the end of the period is RMB 188,855,843 (31 December 2016: RMB 198,302,531). The notes are
used for payment to suppliers and constructions. The Group believes that due to good reputation
of bank, the risk of notes not accepting by bank on maturity is very low, and almost all the risks
and rewards on ownership of the notes receivable have been transferred to the supplier, therefore
derecognise the note receivables endorsed. If the bank is unable to pay the notes on maturity,
according to the relevant laws and regulations of China, the Group would undertake limited
liability for the notes.
(4) Notes receivable reclassified to accounts receivable due to the drawers' inability to settle the note on
maturity
As at 31 December 2017, no notes receivable were reclassified as accounts receivable due to the
default of drawer (31 December 2016: Nil).
3. Accounts receivable
(1) Disclosure of accounts receivable by categories:
Closing balance Opening balance
Bad debts Carrying Bad debts Carrying
Amount provision amount Amount provision amount
Amount Proportion Amount Ratio Amount Amount Proportion Amount Ratio Amount
RMB % RMB % RMB RMB % RMB % RMB
Accounts receivable for which
bad debt provision has been
assessed individually 263,796,355 100.0 - - 263,796,355 173,062,628 100.0 - - 173,062,628
______ ___ ____ ____ ______ ______ ___ ____ ____ ______
The normal credit term is one month, which can be extended to one year for certain major
customers. The accounts receivable are interest-free.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
3. Accounts receivable - continued
(1) Disclosure of accounts receivable by categories - continued
As at 31 December 2017, ownership restricted accounts receivable is RMB 46,337,062 (31
December 2016: RMB 30,732,944), referring to Note VI-50.
The aging analysis is as follows:
Closing balance Opening balance
RMB RMB
Within 1 year 263,112,714 172,610,351
1 to 2 years 683,641
__________ 452,277
__________
263,796,355
__________ 173,062,628
__________
(2) Recognitions, collections and reversals during the current period:
As at 31 December 2017, there was no bad debt provision for accounts receivable (31 December
2016: Nil). There was no bad debt provision made, reversed or written-off by management in
2017 (2016: Nil).
(3) Top five entities with the largest balances of accounts receivable:
Relationship Percentage of
Name with the Group Amount Aging total receivables
RMB %
VIA SAN PEDRO TARAPACA S.A. Third party 18,700,096 Within 1 year 7.1
Nongongshang Supermarket
(Group) Co., Ltd Third party 10,810,966 Within 1 year 4.1
DISTRIBUIDORA INTERNACIONAL Third party 9,999,760 Within 1 year 3.8
SLIGRO B.V. Third party 8,487,591 Within 1 year 3.2
SAINSBURY'S SUPERMARKETS LTD Third party 6,511,762
________ Within 1 year 2.5
___
54,510,175
________ 20.7
___
4. Prepayments
(1) The aging analysis is as follows:
Closing balance Opening balance
Amount Ratio Amount Ratio
RMB % RMB %
Within 1 year 2,417,931
________ 100.0
_____ 2,175,606
________ 100.0
_____
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
4. Prepayments
(2) As at 31 December 2017, the top 5 of prepayments were as follows:
Reason Percentage of
Relationship for being total advances
with the Group Amount Aging outstanding to suppliers
RMB %
DONELLI VINI S.P.A. Third party 370,673 Within 1 year goods not received 15.3
Shenzhen Yijia Packaging
Product Co., Ltd. Third party 313,200 Within 1 year goods not received 13.0
Shandong Electricity Company
Yantai branch Third party 200,000 Within 1 year electricity purchase 8.3
Beijing Aidixi Time International
Trade Co., Ltd. Third party 168,000 Within 1 year goods not received 6.9
Yantai Cihang International Freight
Agent Co., Ltd. Third party 121,907
_______ Within 1 year prepaid agency fees 5.0
___
1,173,780
_______ 48.5
___
5. Interest receivable
(1) Categories of interest receivable
Closing balance Opening balance
RMB RMB
Interests of term deposits 240,968
________ 24,200
________
(2) Overdue interest
As at 31 December 2017, there was no overdue interest receivable (31 December 2016: Nil).
6. Other receivables
(1) Disclosure of other receivables by categories
Closing balance Opening balance
Bad debts Carrying Bad debts Carrying
Amount provision amount Amount provision amount
Amount Proportion Amount Ratio Amount Amount Proportion Amount Ratio Amount
RMB % RMB % RMB RMB % RMB % RMB
Other receivable for which
bad debt provision has been
assessed individually 18,737,454 100.0 -
______ ___ _____ 18,737,454 18,880,800
___- ______ ______ ___ _____100.0 - 18,880,800
___- ______
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables- continued
(1) Disclosure of other receivables by categories- continued
The aging analysis is as follows:
Closing balance Opening balance
Bad debts Carrying Bad debts Carrying
Amount provision amount Amount provision amount
Amount Proportion Amount Amount Amount Proportion Amount Amount
RMB % RMB RMB RMB % RMB RMB
Within 1 year 13,214,301 70.5 - 13,214,301 8,204,303 43.5 - 8,204,303
1 to 2 years 1,937,961 10.3 - 1,937,961 7,715,992 40.8 - 7,715,992
2 to 3 years 2,273,591 12.2 - 2,273,591 1,929,613 10.2 - 1,929,613
Over 3 years 1,311,601
_______ ____7.0 -
______ 1,311,601
_______ 1,030,892
_______ ____5.5 -
______ 1,030,892
_______
Total 18,737,454
_______ ____100.0 -
______ 18,737,454 18,880,800
_______ _______ ____ 100.0 - 18,880,800
______ _______
(2) Accrual, reversal and written-off during the current period
The Group accrued bed provisions RMB 354,805 for 2017 (2016: bad debt was reversed RMB:
Nil).
(3) Other receivables written off in the reporting period
Other receivables were written off RMB 354,805 in 2017. (2016:RMB 7,199,521)。
(4) Disclosure of other receivables by categories
Closing balance Opening balance
RMB RMB
Deposit 10,075,901 13,191,851
Petty cash receivable 2,215,146 2,934,424
Investment fund 2,050,000 2,050,000
Refund of consumption tax, real estate tax 2,451,188 573,586
Others 1,945,219
__________ 130,939
_________
18,737,454
__________ 18,880,800
_________
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables - continued
(5) Five entities with the largest balances of other receivables
As at 31 December 2017, the top 5 of other receivables are as follows:
Percentage of total Bad debt
Nature Amount Aging other receivables Amount
RMB % RMB
Yantai Development Zone Construction
Industry Association Construction deposit 7,709,477 Within 2 years 41.1 -
Canada Oros Ice-wine Co., Ltd Foreign investment fund 2,050,000 2-3years 10.9 -
Yantai Economic and Technological
Development Zone Thermal Co., Ltd Deposit 630,000 Within 1 year 3.4 -
Beijing Shanshui Decoration
Engineering Co.,Ltd. Receivables on behalf 465,460 Within 1 year 2.5 -
of others' electricity fee
Shanxi Fangyuan Jiangong Receivables on behalf
Group Limited 449,337
of others' electricity fee_________ Within 1 year 2.4
____ -
_________
11,304,274
_________ 60.3
____ -
_________
7. Inventories
(1) Disclosure of inventories by categories
Closing balance Opening balance
Net carrying Net carrying
Balance Provision amount Balance Provision amount
RMB RMB RMB RMB RMB RMB
Raw material 66,881,090 - 66,881,090 72,011,633 - 72,011,633
Work in progress 1,568,230,851 - 1,568,230,851 1,253,218,347 - 1,253,218,347
Finished goods 864,097,497
_________ (25,595,392)
_______ 838,502,105
_________ 944,806,516
_________ (21,426,756)
_______ 923,379,760
_________
2,499,209,438
_________ (25,595,392)
_______ 2,473,614,046
_________ 2,270,036,496
_________ (21,426,756)
_______ 2,248,609,740
_________
_______ _______
(2) Inventory provision
Opening balance Recognized Reversal Written off Closing balance
RMB RMB RMB RMB RMB
Provision for decline in
value of inventories 21,426,756
_______ 8,215,578
_______ (276,830)
______ (3,770,112)
_______ 25,595,392
_______
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
8. Non-current assets held for sale
Expected Expected
Closing balance Fair value disposal fees disposal time
RMB RMB RMB
Zhen Shan Tun Department 2,000,197
________ 16,282,224
________ 3,878,560
_______ 2018 年
Note: The Company has signed an irrevocable agreement for disposal of fixed assets, with the
amount of RMB 16,282,224. Because the property rights hadn't been changed, the disposal didn't
finish by the end of 2017, and the disposal is expected to be completed by 2018.
9. Other current assets
Closing balance Opening balance
RMB RMB
Prepaid taxes 22,911,298 26,238,092
Pending deduct VAT on purchase 206,529,504 135,316,274
Prepaid rent 1,381,957
__________ 7,967,876
__________
230,822,759
__________ 169,522,242
___________
10. Available-for-sale financial assets
(1) Available-for-sale financial assets
Closing balance Opening balance
Amount Impairment Carrying amount Amount Impairment Carrying amount
RMB RMB RMB RMB RMB RMB
Available-for-sale
equity instruments
measured at cost 467,251
_______ -
_______ 467,251
______ 10,340,263
_______ (10,000,000)
_______ 340,263
______
_______
(2) Available-for-sale financial assets measured at cost
Carrying amount Provision for impairment losses Proportion of Cash
voting power dividend
Decrease Closing in the for the
Investee Opening Increase Opening Increase Decrease Closing investee (%) period
RMB RMB RMB RMB RMB RMB RMB % RMB
Yantai Ding Tao
Construction and
Development Co., Ltd
(Note 1).
Other(Note 2) 10,000,000 - (10,000,000) - 10,000,000 - (10,000,000) - 18.0 -
Less than
Investee 340,263 129,216 (2,228) 467,251 - - - - 1% -
10,340,263 129,216 (10,002,228) 467,251 10,000,000 - (10,000,000) -
Note 1: An impairment provision amounting to RMB 10,000,000 has been made by the Company
for the balance of the carrying amount of the equity investment in Yantai Dingtao
Construction and Development Co., Ltd, the fair value of the investee which is an unlisted
company cannot be measured reliably, the Company measured such available-for-sale
financial asset at cost. The Company has accrued the impairment of RMB 10,000,000 in
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
the previous year, and the Company write off the equity investment this year.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
10. Available-for-sale financial assets - continued
(2) Available-for-sale financial assets measured at cost - continued
Note 2:The Group holding equity ratios of investment companies are less than 1%. Investment
companies are all unlisted companies, and their fair value cannot be measured reliably,
therefore, the Group uses cost method to measure these available-for-sale financial assets.
11. Investment properties
Investment properties measured by cost method
Buildings
RMB
I. Total original carrying amount
1. Opening balance -
2. Increase
Transfer from fixed assets 38,347,283
__________
3.Closing balance 38,347,283
__________
II. Total accumulated depreciation
1. Opening balance -
2. Increase
(1) Transfer from fixed assets 19,288,684
(2) Additions 590,610
__________
3. Closing balance 19,879,294
__________
III. Total carrying amount
1. Closing carrying amount 18,467,989
__________
2. Opening carrying amount -
__________
As at 1 July 2017, the Group changed the own used properties to rent, from then the fixed assets
recognized as investment properties measured by cost method.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
12. Fixed assets
(1) Details of fixed assets
Buildings Machinery Motor Vehicles Total
RMB RMB RMB RMB
I. Total original carrying amount
1. Opening balance 3,956,177,208 1,969,135,575 29,329,141 5,954,641,924
2. Increase
(1)Purchase 8,762,218 36,809,492 2,867,768 48,439,478
(2)Transfer from CIP 545,584,623 239,819,904 105,602 785,510,129
(3)Acquisition increase (VII-1) 37,209,412 51,877,050 - 89,086,462
3. Decrease
(1) Disposal (517,494) (50,291,728) (3,613,096) (54,422,318)
(2) Transfer to Investment
properties (VI-11) (38,347,283)
____________ -
____________ -
__________ (38,347,283)
____________
4. Closing balance 4,508,868,684
____________ 2,247,350,293
____________ 28,689,415
__________ 6,784,908,392
____________
II. Total accumulated depreciation
1. Opening balance 410,161,600 840,158,129 21,134,702 1,271,454,431
2. Increase
(1)Additions 122,262,189 125,609,728 2,392,486 250,264,403
3. Decrease
(1) Disposal (491,619) (42,823,337) (3,290,771) (46,605,727)
(2)Transfer to Investment
properties (VI-11) (19,288,684)
____________ -
____________ -
__________ (19,288,684)
____________
4. Closing balance 512,643,486
____________ 922,944,520
____________ 20,236,417
__________ 1,455,824,423
____________
III. Total carrying amount
1. Closing carrying amount 3,996,225,198
____________ 1,324,405,773
____________ 8,452,998
__________ 5,329,083,969
____________
2. Opening carrying amount 3,546,015,608
____________ 1,128,977,446
____________ 8,194,439
__________ 4,683,187,493
____________
As at 31 December 2017, fixed assets with ownership restricted are RMB 145,009,923 (31
December 2016: RMB 68,658,094). Please refer to Notes VI-50 in detail.
As at 31 December 2017, Classified as available for sale assets are RMB 2,000,197 (31 December
2016: RMB 2,000,197), there was no temporary idle fixed assets, no fixed assets acquired under
finance leases, at the end of the period.
(2) Fixed assets through operating lease
Amount
RMB
Machinery 265,471
________
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
12. Fixed assets - continued
(3) Fixed assets of which certificates of title have not been obtained
As at 31 December 2016, buildings without property certificate are as follows:
Reasons why certificates
Amount of title have not been obtained
RMB
Research and Development Co, Ltd
Industry Production Centre 1,643,057,463 Processing
Changan Chateau Dormitory building, main building 357,956,446 Processing
Beijing Chateau European town, main, service building 193,321,864 Processing
Ding Luo Te Chateau main building 86,444,831 Processing
Xinjiang Tianzhu fermentations and storage warehouse 18,413,198 Processing
Ice Wine Chateau office building and packing workshop 9,506,188 Processing
Jingyang factory fermentation building 4,481,717 Processing
Fermentation centre office, experiment building and workshop 3,824,105 Processing
Kylin Packaging finished goods warehouse and workshop 2,487,528 Processing
Sales Company office buildings 2,045,603
____________ Processing
2,321,538,943
____________
(4) By the end of 31 December 2017, some subsidiaries of the Company are sustained loss and the cash
flow from operating activities are net out and the related assets existed an indication of
impairment. As at 31 December 2017, the book values of fixed assets, which exists an indication
of impairment, are RMB 928,058,429. The management performs impairment testing for fixed
assets, which exists an indication of impairment, of the above subsidiaries based on the assets
belonged group of assets. The recoverable amount of the group of assets is determined by the
present value of its future cash flows. Future cash flow projections are made based on the recently
financial budgets for the future 5 years period (projecting period) and the projecting period
(subsequent period) of 15 years, which are prepared by the management. Discount rate used in
calculating the use value of the group of assets in future is 12.6%. Other key assumptions include
the result of operations' forecast of the projecting period, which was estimated according to such
subsidiaries' growth rate of sales, average gross rate, other operating expenses based on historical
experience and future trends. The management believes that any reasonable change of the above
assumptions will not result in the total book value of fixed assets of those subsidiaries exceeding
its recoverable amount. By the end of 31 December 2017, the management believes there is no
impairment loss on those fixed assets of the Group.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. Construction in progress
(1) Construction in progress:
Closing balance Opening balance
RMB RMB
R&D Centre (\"Changyu Wine integrational
Construction\") Project 883,731,540 1,227,968,480
Xianyang Chateau Construction Project 53,290,036 10,346,598
Ningxia Chateau Construction Project 35,711,269 36,717,169
Shihezi Chateau Construction Project 25,463,724 30,600,684
Sales Company construction project 11,355,685 26,011,600
Ding Luo Te Chateau Project 5,819,246 4,871,422
Other companies construction Project 10,770,069
____________ 9,765,784
____________
1,026,141,569
____________ 1,346,281,737
____________
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. Construction in progress- continued
(2) Changes in significant construction in progress:
Transfer to Interest
Transfer to Lone-term Total accumulated Capitalizing capitalizat
Transfer to intangible prepaid Closing Capitalizing interest ion
Budge Opening balance Addition PPE assets expense balance Status interest for this period rate Financed by
RMB RMB RMB RMB RMB RMB RMB Status RMB RMB %
Loans from financial
Changyu Wine integrational institutions
Construction\" 4,505,780,000 1,227,968,480 425,697,814 (689,475,320) - (80,459,434) 883,731,540 71.6 8,427,965 6,138,242 1.2&&4.3 and Self-raised
Changan Chateau Construction -
Project 620,740,000 10,346,598 73,012,018 (30,068,580) - 53,290,036 106.8 - - - Self-raised
Shihezi Chateau Construction -
Project 780,000,000 30,600,684 27,980,421 (33,117,381) - 25,463,724 91.5 - - - Self-raised
Sales Company construction project 161,350,000 26,011,600 5,486,264 - (20,142,179) - 11,355,685 93.4 - - - Self-raised
Ningxia Chateau Construction -
Project 414,150,000 36,717,169 15,097,212 (16,103,112) - 35,711,269 98.6 - - - Self-raised
Ding Luo Te Chateau project 192,400,000 4,871,422 1,212,824 (265,000) - - 5,819,246 96.3 - - - Self-raised
1,336,515,953 548,486,553 (769,029,393) (20,142,179) (80,459,434) 1,015,371,500 8,427,965 6,138,242
The interest capitalized in construction in progress is RMB 6,138,242 in 2017(2016: RMB 2,289,723).
(3) By the end of 31 December 2017, some subsidiaries of the Company are sustained loss and the cash flow from operating activities are net out and the related
assets existed an indication of impairment. As at 31 December 2017, the book values of construction in progress (\"CIP\"), which exists an indication of
impairment, are RMB 89,001,307. The management performs impairment testing for CIP, which exists an indication of impairment, of the above
subsidiaries based on the assets belonged group of assets. The key assumptions used by the management during the assessment refer to Note VI-12. By
the end of 31 December 2017, the management believes there is no impairment loss on those CIP of the Group.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
14. Bearer biological assets
Bearer biological assets are Vines, which measured in cost method
Immature Mature
biological assets biological assets Total
RMB RMB RMB
I. Total original carrying amount
1. Opening balance 77,841,960 141,208,504 219,050,464
2. Increase
(1)Cultivated increase 9,248,294 - 9,248,294
(2) Acquisition increase (VII-1) - 1,413,595 1,413,595
(3) Transfer to mature assets
from immature assets (74,915,254)
__________ 74,915,254
__________ -
__________
3. Closing balance 12,175,000
__________ 217,537,353
__________ 229,712,353
__________
II. Total accumulated depreciation
1. Opening balance - 17,621,484 17,621,484
2. Increase
(1)Additions -
__________ 10,160,981
__________ 10,160,981
__________
3. losing balance -
__________ 27,782,465
__________ 27,782,465
__________
III. Total net carrying amount
1. Closing net carrying amount 12,175,000
__________ 189,754,888
__________ 201,929,888
__________
2. Opening net carrying amount 77,841,960 123,587,020 201,428,980
__________ __________ __________
As at 31 December 2017, there is no biological asset with ownership restricted. (31 December
2016:Nil)
As at 31 December 2017, there is no indication that biological assets may be impaired, and no
provision is made. (31 December 2016:Nil)
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOIDATED FINANCIAL STATEMENTS - continued
15. Intangible assets
(1) Intangible assets
Land use rights Software use rights Trademark Total
RMB RMB RMB RMB
I. Total original carrying amount
1. Opening balance 491,490,069 52,435,669 15,442,065 559,367,803
2. Increase
(1)Purchase 4,284,653 330,511 369,910 4,985,074
(2) Transfer from CIP - 20,142,179 - 20,142,179
25,956,417
(3)Acquisition increase(VII-1) __________ 758,395
__________ 143,890,533
________ 170,605,345
__________
3. Closing balance 521,731,139
__________ 73,666,754
__________ 159,702,508
________ 755,100,401
__________
II. Total accumulated depreciation
1. Opening balance 56,803,430 12,548,283 6,201,010 75,552,723
2. Increase
(1) Additions 10,744,342
__________ 8,968,458
__________ 4,385,981
________ 24,098,781
__________
3. Closing balance 67,547,772
__________ 21,516,741
__________ 10,586,991
________ 99,651,504
__________
III. Total carrying amount
1. Closing carrying amount 454,183,367
__________ 52,150,013
__________ 149,115,517
________ 655,448,897
__________
________
2. Opening carrying amount 434,686,639
__________ 39,887,386
__________ 9,241,055
________ 483,815,080
__________
(2) Land use right's location and years are as follows:
Item Closing balance Opening balance
RMB RMB
In the PRC( within 50 years) 428,226,950 434,686,639
Out of the PRC (more than 50 years) 25,956,417
__________ -
__________
454,183,367
__________ 434,686,639
__________
As at 31 December 2017, land use right with infinite useful lives of the Group, which is a
permanent ownership and holds by the Indomita Wine according to the relatively Chilean law is
RMB 25,956,417 (31 December 2016: Nil), therefore there is no amortization.
By the end of 31 December 2017, trademark with infinite useful lives of the Group is RMB
143,890,533 (31 December 2016: Nil), which is held by the Indomita Wine. The recoverable
amount of trademark is determinated based on the present value of the expected future cash flows
generated by group of assets owns by individual trademark. Future cash flow projections are made
based on the recently financial budgets for the future 5 years period (projecting period) and
presume that cash flows after the projecting period (subsequent period). Discount rate used in
calculating the recoverable amounts is 9.6%. One key assumption in projecting future cash flows
is the growth rate in projecting period, which is computed based on the expected growth rate of
the industry and Indomita Wine. Growth rate of sales in subsequent period are 3%. The Group
recognizes the trademark with infinite useful lives as intangible assets, the impairment assessment
of which is made at the end of each reporting year.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
15. Intangible assets - continued
The management believes that any reasonable change of the above assumptions will not result in
the total book value of fixed assets of those subsidiaries exceeding its recoverable amount.
According to the result of impairment assessment, by the end of 31 December 2017, the
management believes there is no impairment loss on those trademark with infinite useful lives of
the Group.
As at 31 December 2017, the intangible asset with restricted ownership is RMB
164,051,996(December 31, 2016:RMB 145,937,719), Please refer to Note VI-50 in detail.
16. Goodwill
Investee Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Etablissements Roullet Fransac
(“Fransac Sales”) 13,112,525 - - 13,112,525
Dicot Partners, S.L
(“Dicot”) 92,391,901 - - 92,391,901
Societe Civile Argricole Du Chateau
De Mirefleurs (“Mirefleurs”) 15,761,440 - - 15,761,440
Indomita Wine -
_________ 6,870,115
________ -
______ 6,870,115
_________
Total 121,265,866
_________ 6,870,115
________ -
______ 128,135,981
_________
The Group acquired Fransac Sales, Dicot and Mirefleurs and Chile Indomita Wine Group in
December 2013, September 2015 January 2016 and January 2017respectively, resulting in
respective goodwill amounting to RMB 13,112,525,RMB 92,391,901, RMB 15,761,440 and
RMB 6,870,115, which have been allocated to corresponding asset groups for impairment testing.
The recoverable amount of the group of assets is determined by the present value of its future cash
flows. Future cash flow projections are made based on the recently financial budgets for the future
5 years period (projecting period) and presume that cash flows after the projecting period
(subsequent period). Discount rate used in calculating the recoverable amounts of Fransac Sales,
Dicot Mirefleurs and Indomita Wine are 10.3%, 8.5% ,10.3% and9.6%
(2016:10.3%,8.5%,10.3%,N/A) respectively. One key assumption in projecting future cash flows
is the growth rate of sales in projecting period, which is computed based on the expected growth
rate of the industry and each group of assets. Growth rate of sales in subsequent period of Fransac
Sales, Dicot, Mirefleurs and Indomita Wine is 2%, 2%, 2% and 3% (2016: 2%, 2%, 2% and N/A)
respectively. Management of the Group believes that any reasonable changes in the above
assumptions will not cause book values of these subsidiaries exceeds their recoverable amounts.
According to the assessment, the Group believes that no impairment provision need to be made
for goodwill in the reporting period.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
17. Long-term prepaid expenses
Opening balance Increase Amortization Closing balance
RMB RMB RMB RMB
Land lease prepayments 57,846,986 - (1,481,601) 56,365,385
Land requisition fee 45,192,900 - (1,216,864) 43,976,036
Greening fee 54,460,971 80,459,434 (9,292,071) 125,628,334
Leasehold improvement 1,091,579 244,847 (463,163) 873,263
Others 3,613,793
_________ 1,010,302
________ (1,457,882)
________ 3,166,213
_________
162,206,229
_________ 81,714,583
________ (13,911,581)
________ 230,009,231
_________
________
Note: Greening fee for the period increased due to RMB 80,459,434 transfer from CIP. Please
refer to Notes VI-13 in detail.
18. Deferred tax assets/liabilities
Deferred tax assets and deferred tax liabilities are not related to income tax of the same tax
authorities of the same tax subjects, thus not presented with the net amount after netting.
(1) Deferred tax assets:
Closing balance Opening balance
Temporary Deferred tax Temporary
differences assets differences Deferred tax assets
RMB RMB RMB RMB
Unrealized profit from intra
618,591,681 154,647,920 676,375,006 169,093,751
- company transactions
Unpaid bonus 94,462,722 23,671,611 154,895,784 38,723,946
Retirement benefit 27,980,857 6,995,214 13,115,948 3,278,987
Asset impairment provision 25,595,392 6,398,848 31,426,756 7,856,689
Deductable losses 345,639,059 88,584,337 176,273,380 44,068,345
Deferred income 109,797,054 24,285,203 112,939,126 25,230,521
Assets impairment loss 684,622 184,848 - -
Accrued rebate 13,413,655 3,353,415 30,739,192 7,684,798
1,236,165,042 308,121,396 1,195,765,192 295,937,037
(2) Deferred tax liabilities
Closing balance Opening balance
Item Taxable temporary Deferred Taxable temporary Deferred
difference tax liability difference tax liability
RMB RMB RMB RMB
Revaluation surplus in
business combination
not under common
control 89,316,823 24,264,203 90,877,162 24,908,410
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
18. Deferred tax assets/liabilities - continued
(3) Deferred tax assets and liabilities not recognized
Closing balance Opening balance
RMB RMB
Deductable losses 150,320,039
__________ 135,957,252
__________
(4) Deductable losses not recognized as deferred tax assets will expire in:
Closing balance Opening balance
RMB RMB
2019 7,311,273 7,311,273
2020 45,960,766 45,960,766
2021 82,685,213 82,685,213
2022 14,362,787
__________ -
__________
150,320,039
__________ 135,957,252
__________
19. Other non-current assets
Closing balance Opening balance
RMB RMB
Receivable from transfer of biological assets -
_________ 17,352,239
_________
20. Short-term borrowings
Closing balance Opening balance
RMB RMB
Credit loans 648,494,624 631,655,938
Mortgaged loans 65,939,662
__________ 30,732,944
__________
714,434,286
__________ 662,388,882
__________
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
20. Short-term borrowings - continued
As at 31 December 2017, short-term borrowings detail were as follows:
Nature of Interest rate Year ended
Loans amount Exchange rate RMB interest in contract Interest rate
% %
Credit loans (RMB) 600,000,000 1.0000 600,000,000 Floating 1 year LPR- 0.39(Note 1) 3.92
Credit loans (EUR)) 991,759 7.8023 7,738,003 Fixed 1.00~4.42 1.00~4.42
Credit loans (EUR) 198,841 7.8023 1,551,421 Floating 2.10 + Euribor(Note 2) 1.77
Credit loans (USD) 6,000,000 6.5342 39,205,200 Fixed 3.00 3.00
Mortgaged loans (EUR) 5,938,898 7.8023 46,337,062 Fixed 0.50~0.95 0.50~0.95
Mortgaged loans (USD) 3,000,000 6.5342 19,602,600
_________ Fixed 3.50~3.64 3.50~3.64
714,434,286
_________
Note 1: LPR is the basic interest rate of the People's Bank of China.
Note 2: Euribor is Euro Interbank Offered Rate
As at 31 December 2017, mortgaged loans were Hacienda y Vinedos Marques del Atrio, S.L.U (\"
Atrio \") factoring of accounts receivable from Banco de Sabadell, S.A. etc. EUR 5,938,898
(translated as RMB 46,337,062)(31 December 2016:RMB 30,732,944). Mortgaged loans were
Indomita Wine mortaged Peso 3,242,627,000 (translated as RMB 34,390,191) fixed assets from
BBVA bank USD 3,000,000(translated as RMB 19,602,600)( December 31, 2016:Nil)
21. Notes payable
Closing balance Opening balance
RMB RMB
Bank acceptances -
_________ 38,900,000
_________
As at 31 December 2017, there is no due notes payable unpaid (31 December 2016: Nil).
22. Accounts payable
The aging analysis of accounts payable are as follows
Closing balance Opening balance
RMB RMB
Within 1 year 664,020,176 544,128,280
1 to 2 years 2,051,592 1,103,039
2 to 3 years 371,111
__________ -
__________
666,442,879
__________ 545,231,319
__________
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
23. Advances from customers
The aging analysis of advances from customers are as follows
Closing balance Opening balance
RMB RMB
Within 1 year 340,025,690 419,382,071
1 to 2 years 7,072,254 2,046,166
2 to 3 years 381,463 108,748
Over 3 years 3,414,749
__________ 3,709,436
__________
350,894,156
__________ 425,246,421
__________
24. Employee benefits payable
(1) Employee benefits payable as follows:
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Short-term payroll 193,300,619 439,517,529 (450,272,864) 182,545,284
Post-demission benefits
- predetermined provision plan 15,167 49,975,671 (49,692,745) 298,093
Termination benefits 13,115,948
_________ 27,677,115
_________ (12,812,206)
_________ 27,980,857
_________
206,431,734
_________ 517,170,315
_________ (512,777,815)
_________ 210,824,234
_________
(2) Employee benefits payable:
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Salaries and bonus 197,486,176 390,256,786 (402,728,644) 185,014,318
Staff benefit 622,735 14,139,321 (12,645,581) 2,116,475
Staff welfare 257,249 20,336,922 (20,069,855) 524,316
Includes:
Medical insurance 257,249 18,018,716 (17,751,649) 524,316
Injury insurance - 1,499,042 (1,499,042) -
Maternity insurance - 819,164 (819,164) -
Housing fund 37,672 10,993,230 (10,991,646) 39,256
Union fee and education fee 2,593,009
_________ 3,304,360
_________ (3,837,138)
_________ 2,060,231
_________
Total 200,996,841
_________ 439,030,619
_________ (450,272,864)
_________ 189,754,596
_________
Less: Non-current liabilities 7,696,222
_________ 7,209,312
_________
Short-term payroll 193,300,619
_________ 182,545,284
_________
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
24. Employee benefits payable - continued
(3) Predetermined provision plan
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Pension 14,978 48,834,066 (48,551,453) 297,591
Unemployment insurance
_____ 1,141,605
________ (1,141,292)
________
______
15,167
_____ 49,975,671
________ (49,692,745)
________ 298,093
______
________
The Group participates in pension insurance and unemployment insurance plans established by
government institution. According to those plans, the Group pays pension and unemployment
insurance each month on the basis of 12%-32% and 0.5%-3% last period salary respectively.
Apart from these monthly expenses, the Group does not bear any further payment obligation. This
year the Group should pay RMB 48,834,066 and RMB 1,141,605 (2016: RMB 38,404,278 and
RMB 1,663,062) respectively into pension insurance and unemployment insurance. As at 31
December 2017, the Group has unpaid pension and unemployment insurance of RMB 297,591
and RMB 502 respectively (31 December 2016: RMB 14,978 and RMB 189), which is due to the
pension insurance and unemployment insurance plan at the end of the reporting period. These
payments have been paid after the end of the reporting period.
25. Taxes payable
Closing balance Opening balance
RMB RMB
Value added tax 35,681,696 23,496,328
Consumption tax 44,961,022 30,361,471
Corporation income tax 38,834,293 69,388,730
Urban land use tax 2,645,687 2,651,262
Individual income tax 7,805,917 7,811,301
City construction tax 5,669,280 4,248,115
Property tax 4,647,644 1,071,223
Others 4,848,617
__________ 5,014,170
__________
145,094,156
__________ 144,042,600
__________
26. Deferred income
Closing balance Opening balance
RMB RMB
Government grants
Current liabilities 16,878,199 11,163,883
Non-current liabilities 92,918,855
__________ 101,775,243
__________
109,797,054
__________ 112,939,126
__________
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
26. Deferred income - continued
Government grants:
Recognized in Related to
Opening Addition non-operating income Closing Assets/Income
/other income
RMB RMB RMB RMB RMB
Wine base liquor brewage project 6,174,300 - (1,434,900) 4,739,400 Assets
Shihezi chateau project funds 11,556,600 - (2,280,000) 9,276,600 Assets
Xinjiang Industrial Rejuvenation and
Technological Reconstruction Project 18,486,000 - (1,422,000) 17,064,000 Assets
Special support for infrastructure facilities - 5,300,000 - 5,300,000 Assets
Ningxia industry revitalization and
technology reconstruction funds 4,381,000 - (3,295,000) 1,086,000 Assets
Wine grape subsidies 376,000 - (376,000) - Income
Modern agriculture grape production
development subsidies 259,200 - (259,200) - Income
Tourism Promotion Project - 600,000 (600,000) - Income
Modern service industry special - 500,000 (500,000) - Income
Tourism Development Fund Subsidy Project - 500,000 - 500,000 Income
Marketing reward - 500,000 (500,000) - Income
Support enterprise development special funds - 10,200,000 - 10,200,000 Income
(Huanren) wine production construction funds 4,000,000 - (400,000) 3,600,000 Assets
Wine electronic tracking system
specific funds 3,859,365 - (667,054) 3,192,311 Assets
Miyun Propaganda Department transfer 1,777,890 - (888,945) 888,945 Assets
Wine industry specific funds 930,000 - (186,000) 744,000 Assets
Shandong Peninsula Blue Economic
Area construction funds 10,000,000 - (2,000,000) 8,000,000 Assets
863 Program subsidy funds for scientific research 343,090 - (343,090) - Income
Information system construction
project technology funds 4,060,000 - (580,000) 3,480,000 Assets
Integration projects subsidies 28,800 - (28,800) - Income
Cross-border e-Business projects subsidies 1,485,797 - (783,182) 702,615 Income
Red wine phenolics research projects funds 295,601 - (11,000) 284,601 Income
Grape base construction project 1,040,000 - (520,000) 520,000 Assets
Water pollution abatement project 133,733 300,000 (113,601) 320,132 Income
Infrastructure construction project 1,468,750 500,000 (125,000) 1,843,750 Assets
Industrial development support project 41,000,000 - (4,100,000) 36,900,000 Assets
Subsidy for updating of economic and energy-saving
technology 1,283,000
_______ -
_______ (128,300)
_______ 1,154,700
_______ Assets
Total 112,939,126 18,400,000 (21,542,072) 109,797,054
_______ _______ _______ _______
Less: Non-current liabilities due within one year 11,163,883
_______ 16,878,199
_______
Other non-current liabilities 101,775,243 92,918,855
_______ _______
As at 31 December 2017, the Group recognise current liability for deferred income to be
accounted in profit or loss within one year, and recognise non-current liability for deferred income
to be accounted in profit or loss over one year.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
27. Other payables
(1) Natures of other payables are as follows
Closing balance Opening balance
RMB RMB
Payable to dealer deposit 139,710,963 128,539,352
Payables for equipment and construction 130,706,777 77,261,072
Payables for transportation 27,847,092 36,690,764
Royalty fee 77,208,929 78,572,540
Advertising costs 118,834,960 79,414,075
Withholding promotion costs 13,413,655 30,739,192
Capital increment from minority intere - 29,847,320
Employee deposit 13,327,132 16,296,186
Deposits from suppliers 3,082,595 2,206,379
Payables for contracting fee 38,070,571 31,011,929
Others 40,761,645
__________ 35,726,501
__________
602,964,319
__________ 546,305,310
__________
(2) Description of significant other payables aged more than one year
Company Amount Reasons
RMB
Beijing Qinglang agriculture science and technology
development limited company (\"Beijing Qinglang\") 16,461,930 Payables for contracting fee
Yantai De'an Investment Company Limited (\"Yantai De'an\") 6,708,174
_________ Payables for contracting fee
23,170,104
_________
28. Non-current liabilities due within one year
Closing balance Opening balance
RMB RMB
Long-term borrowings due within one year 76,954,827 59,799,093
Long-term payables due within one year 34,000,000
__________ 12,000,000
__________
110,954,827
__________ 71,799,093
__________
As at 31 December 2017, Long-term borrowings due within one year refers to Note VI-29,
Long-term payables due within one year refers to Note VI-30.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
29. Long-term borrowings
Closing balance Opening balance
RMB RMB
Credit loan 68,182,310 40,304,811
Mortgaged loan 6,693,544 8,835,744
Guaranteed loan 81,250,000
__________ -
__________
156,125,854
__________ 49,140,555
__________
As at 31 December 2017, loans detail is as follows:
Nature Year-end Due within Due over
Loans amount Exchange rate Amount of interest Interest rate borrowing rate one year one year
RMB % %
Guaranteed loan (RMB) (Note) 100,000,000 1.0000 100,000,000 Floating 5 year LPR- 0.9 4.28 18,750,000 81,250,000
Credit loan (EUR) 15,838,703 7.8023 123,578,309 Fixed 1.00-2.53 1.00-2.53 55,395,999 68,182,310
Mortgaged loan (EUR)(Note) 1,217,894 7.8023 9,502,372
_______ Fixed 1.80 1.80 2,808,828 6,693,544
______ _______
233,080,681 156,125,854
76,954,827
_______ ______ _______
Note: As at 31 December 2017, The secured loan is the long-term loan borrowed by the company
for R&D Centre credit guarantee, RMB 100,000,000 (31 December 2016:Nil), mortgaged
loans were Atrio using fixed assets EUR 4,264,170 (translated as RMB 33,270,334) as
collateral for loans from Popular Espaol, EUR 1,217,894 (translated as RMB 9,502,372),
(31 December 2016: RMB 27,517,168).
30. Long-term payables
Closing balance Opening balance
RMB RMB
Agricultural Development
Fund of China(\"CADF\") 259,000,000
__________ 293,000,000
__________
In 2016, RMB 305,000,000 from CADF was invested in R&D Centre, CADF accounted for
37.9% of the registered capital. According to the investment agreement, CADF will recovery
investment funds over 10 years, the investment income received equal to 1.2% of the remaining
unpaid principal per annum. In addition to the fixed income, CADF will no longer enjoy other
profits or bear the loss of R&D Centre .Therefore although the investment in R&D Centre,
nominally equity investment, is actually a debt investment(Financial discount loan). The group
take this investment as long-term payables, which measured in amortized cost. The Group
repays the principal of RMB12,000,000 in 2017. Refer to Note VI-50 for details of mortgaged
and pledged assets.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
30. Long-term payables - continued
Termination date
Long-term payables Yield rate Investment date of repayment Due within 1 year Due after 1 year Mortgaged and pledged assets
RMB RMB RMB
77,000,000 1.2% 12 January 2016 24 December 2025 10,000,000 67,000,000 Cash and bank and intangible assets
198,000,000 1.2% 29 February 2016 28 February 2026 22,000,000 176,000,000 Cash and bank fixed assets
and intangible assets
______
18,000,000 1.2% 16 June 2016 22 May 2026 ______
2,000,000 ______
16,000,000 Cash and bank
293,000,000 34,000,000 259,000,000
______ ______ ______
31. Other non-current liabilities
Closing balance Opening balance
RMB RMB
Employee benefit 7,209,312
_________ 7,696,222
_________
As at 31 December 2017, employee benefit represents deposit from bonus accrued for managers
and above. According to the bonus payment schedule of 2017, the bonus is expected to be paid
during 2019 to 2021.
32. Share capital
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Unrestricted shares
A shares 453,460,800 - - 453,460,800
B shares 232,003,200
_________ -
______ -
______ 232,003,200
_________
Total of unrestricted shares
and total shares 685,464,000
_________ -
______ -
______ 685,464,000
_________
33. Capital reserve
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Share premium 560,038,853 - - 560,038,853
Other 5,916,588
_________ -
_______ -
______ 5,916,588
_________
Total 565,955,441
_________ -
_______ -
______ 565,955,441
_________
34. Other comprehensive income
2017 Less: last year other Post-tax Post-tax
Before-tax comprehensive income Less: attributable attributable
Opening balance amount in P/L current year tax expense to parent to NCI Closing balance
Other comprehensive
income to be reclassified
to profit and loss (5,259,014) 9,863,872 - - 8,368,254 1,495,618 3,109,240
Foreign currency statement
translation difference (5,259,014) 9,863,872 - - 8,368,254 1,495,618 3,109,240
______ _____ ____ ____ _____ _____ ______
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
35. Surplus reserve
Opening balance Increase Decrease Closing balance
RMB RMB RMB RMB
Statutory surplus reserve 342,732,000
_________ -
______ -
______ 342,732,000
_________
In accordance with the Company Law of the People's Republic of China and the Articles of
Association of the Company, the Company is required to appropriate 10% of the net profit to the
statutory surplus reserve until the accumulated balance of the statutory surplus reserve reaches
50% of the registered share capital. The Company does not appropriate net profit to the surplus
reserve in 2017.
The Company can appropriate discretionary surplus reserve after appropriation of the statutory
surplus reserve. Discretionary surplus reserve can be utilized to offset the deficit or increase the
share capital after approval.
36. Retained earnings
Closing balance Opening balance
RMB RMB
Retained earnings brought forward 6,620,118,562 5,980,390,074
Profit attributable to shareholders of the Company 1,031,695,056 982,460,488
Less: Dividends paid in respect prior year's profit (342,732,000)
____________ (342,732,000)
____________
Retained earnings carried forward 7,309,081,618
____________ 6,620,118,562
____________
(1) Appropriation to surplus reserve by subsidiaries
As at 31 December 2017, the balance of the Group's unappropriated profits include appropriation
to surplus reserve by subsidiaries amounting to RMB 51,994,942 (31 December 2016: RMB
71,360,640).
(2) Cash dividends approved by general meeting
According to the annual general meeting on 15 June 2017, dividends distribution plan has been
made. On the basis of 685,464,000 issued share capital, RMB 5.0 (including taxes) for every 10
shares was distributed to shareholders, in total RMB 342,732,000 cash dividends.
(3) Profit distribution decided after the balance sheet date
According to a proposal of the board of directors approved on 19 April 2018, on the basis of
685,464,000 issued shares in 2017, cash dividends of RMB 5.0 (including taxes) for every 10 share
will be distributed to all the shareholders. The aggregate amount of cash dividend is RMB
342,732,000. The above proposal regarding dividends distribution is yet to be approved in a
shareholders' meeting.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
37. Operating income and costs
Operating income is analysed as follows:
2017
RMB RMB
Principal operating income 4,856,168,699 4,646,909,704
Other operating income 76,376,530
____________ 70,686,768
____________
4,932,545,229
____________ 4,717,596,472
____________
Operating cost is analysed as follows:
2017
RMB RMB
Principal operating cost 1,645,690,616 1,552,022,043
Other operating cost 25,901,663
____________ 23,748,936
____________
1,671,592,279
____________ 1,575,770,979
____________
The operating income for the Group is mainly from the sales of wine, brandy and sparkling wine.
In 2017, Over 91% (2016: over 94%) of the sales generated in PRC.
38. Taxes and surcharges
2017
RMB RMB
Consumption tax 177,879,324 161,411,393
Business Tax - 1,358,414
City construction tax 52,247,915 46,375,109
Education fee and surcharges 35,831,575 33,975,886
Property tax 23,113,211 8,221,152
Land use tax 11,874,984 9,146,595
Stamp tax 3,945,731 2,659,421
Others 5,359,283
__________ 6,568,676
__________
310,252,023
__________ 269,716,646
__________
For detail standards of tax rate please refer to Notes V.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
39. Selling expenses
2017
RMB RMB
Advertising costs 560,533,714 536,552,061
Salary and employee benefit 272,148,620 258,845,366
Freight 139,218,637 135,375,515
Trademark fee 72,838,612 74,125,038
Warehouse leasing expenses 53,075,132 73,141,275
Depreciation cost 34,963,089 29,477,270
Labor fee 29,744,563 29,411,296
Travelling expenses 27,709,534 27,589,397
Water and electricity fee 11,247,163 8,160,610
Security and sanitation fee 9,020,885 4,244,698
Packing cost 7,163,930 5,651,814
Taxes 6,771,337 4,418,811
Office allowance 6,165,561 6,166,163
Business entertainment 4,403,750 3,871,778
Amortization of low-value consumables 4,028,573 2,039,574
Renovation costs 463,163 25,292,999
Others 33,026,180
____________ 28,897,003
____________
1,272,522,443 1,253,260,668
____________ ____________
40. Administrative expense
2017
RMB RMB
Salary and employee benefit 106,342,126 98,464,931
Depreciation 71,558,307 45,605,723
Contracting fee 21,162,623 20,635,049
Maintenance fee 21,665,024 18,625,443
Administrative expenses 22,173,925 15,829,574
Amortization 22,438,364 14,795,181
Rental fees 12,414,249 10,702,734
Service fee 12,118,257 5,194,426
Greening fee 10,667,941 11,509,618
Security and sanitation fee 6,317,723 5,889,095
Entertainment fee 5,470,001 7,253,858
Travelling expenses 4,747,256 4,961,661
Other taxes 288,907 10,169,607
Fire charge - 10,923,600
Others 23,417,255
__________ 29,223,048
__________
340,781,958
__________ 309,783,548
__________
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
41. Financial income
2017
RMB RMB
Interest income (9,168,772) (15,397,901)
Exchange loss (income) (182,610) 7,632,532
Interest expenses 32,233,729 30,120,902
Less: Capitalization of interests 6,138,242 2,289,723
Bank charges 1,846,154
__________ 1,903,049
__________
18,590,259
__________ 21,968,859
__________
42. Impairment loss of assets
2017
RMB RMB
Inventory impairment 7,938,748 3,279,266
Impairment losses from other receivables 354,805
__________ -
__________
8,293,553
__________ 3,279,266
__________
43. Other income
2017 2016 Assets/income related
RMB RMB
Industrial development support project 4,100,000 - Assets
Ningxia industry revitalization and
technology reconstruction funds 3,295,000 - Assets
Project funds 2,280,000 - Assets
Shandong Peninsula Blue Economic
Area construction funds 2,000,000 - Assets
Others 6,352,199 - Assets
Tax refund 17,765,560 - Income
Others 10,245,625
_________ -
_________ Income
46,038,384
_________ -
_________
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
44. Non-operation income
Recognized in
extraordinary
2017 2016 profit and loss
RMB RMB RMB
Government grants 1,600,000 49,130,643 1,600,000
Penalty income 7,993,571 2,617,684 7,993,571
Others 7,637,156
_________ 3,265,987
_________ 7,637,156
_________
17,230,727
_________ 55,014,314
_________ 17,230,727
_________
Government grants recognized in the income statement is as follows:
Assets/income
2017 2016 related
RMB RMB
Major projects support fund - 7,040,888 Assets
Small and medium enterprises
support fund - 4,138,304 Assets
Tax refund - 17,860,500 Income
Others 1,600,000
_________ 20,090,951
_________ Income
1,600,000
_________ 49,130,643
_________
45. Non-operation expenses
Recognized in
extraordinary
2017 2016 profit and loss
RMB RMB RMB
Compensation and penalty loss 347,528 618,190 347,528
Donation 294,899 305,080 294,899
Others 989,049
_________ 303,429
_________ 989,049
_________
1,631,476
_________ 1,226,699
_________ 1,631,476
_________
46. Income tax
2017
RMB RMB
Current income tax 330,784,002 360,001,766
Deferred income tax 7,350,243
__________ (2,972,320)
__________
338,134,245
__________ 357,029,446
__________
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
46. Income tax - continued
Reconciliation between income tax expenses and profits is as follows:
2017
RMB RMB
Profit before tax 1,371,927,763 1,337,618,840
Income tax expense at statutory tax rate 25% (2016:25%) 342,981,941 334,404,710
Effect of different tax rates applied by certain subsidiaries (9,459,223) (7,350,239)
Impact of tax exemptions (141,598) -
Changes in opening balances of deferred tax
liabilities due to tax rate adjustment (1,342,916) (1,992,564)
Unrecognised deductable loss 3,590,697 20,671,303
Utilisation of deductable losses which were not
recognised previously (6,157,735) -
Reversal of recognized deductible losses - 2,895,497
Non-deductible expenses 7,550,095 6,892,488
Others 1,112,984
____________ 1,508,251
____________
Income tax expenses at the Group's effective tax rate 338,134,245
____________ 357,029,446
____________
47. Basic and dilutive earnings per share
The calculation of basic earnings per share is based on the consolidated profit attributable to
ordinary shareholders of the Company during the year and the weighted average number of
outstanding ordinary shares.
2017
RMB RMB
Earnings
Consolidated profit attributable to ordinary
shareholders of the Company 1,031,695,056
____________ 982,460,488
____________
Shares
Weighted average number of outstanding
ordinary shares 685,464,000
____________ 685,464,000
____________
Basic earnings per share 1.51 1.43
____________ ____________
The Company does not have potential dilutive ordinary shares.
From the balance sheet date to the date of approval of this report, there are no subsequent events
which would affect the numbers of the weighted average number of outstanding of ordinary
shares.
Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
48. Notes to consolidated cash flow statement
(1) Cash received relating to other operating activities:
2017
RMB RMB
Government grants 20,930,752 19,347,985
Interest income 3,839,079 2,808,735
Penalty income 7,993,571 2,617,684
Refundable deposits of notes payable 46,900,000 38,130,000
Others 5,573,503
_________ 3,803,461
_________
85,236,905
_________ 66,707,865
_________
(2) Cash paid relating to other operating activities:
2017
RMB RMB
Selling expenses 956,902,163 942,936,949
General and administrative expenses 107,905,766 113,297,901
Refundable deposits of notes payable 8,000,000 47,030,000
Others 2,103,059
____________ 2,449,673
____________
1,074,910,988
____________ 1,105,714,523
____________
(3) Cash paid for the purchase subsidiaries and other equity:
2017
RMB RMB
Cash paid for acquisition of Indomita Wine 318,867,650 -
Less: cash and cash equivalents for Indomita
Wine at acquisition date 15,071,107 -
Cash paid investment f