张裕Ｂ：2021年年度审计报告（英文版）

YANTAI CHANGYU PIONEER WINE COMPANY LIMITED

ENGLISH TRANSLATION OF FINANCIAL STATEMENTSFOR THE YEAR 1 JANUARY 2021 TO 31 DECEMBER 2021IF THERE IS ANY CONFLICT BETWEEN THE CHINESE VERSION AND ITS ENGLISH

TRANSLATION, THE CHINESE VERSION WILL PREVAIL

Page 1 of 6

AUDITOR’S REPORT

KPMG Huazhen Shen Zi No. 2205034

All Shareholders of Yantai Changyu Pioneer Wine Company Limited:

Opinion

We have audited the accompanying financial statements of Yantai Changyu Pioneer WineCompany Limited (“Yantai Changyu”), which comprise the consolidated balance sheet andcompany balance sheet as at 31 December 2021, the consolidated income statement andcompany income statement, the consolidated cash flow statement and company cash flowstatement, the consolidated statement of changes in shareholders’ equity and companystatement of changes in shareholders’ equity for the year then ended, and notes to thefinancial statements.

In our opinion, the accompanying financial statements present fairly, in all material respects,the consolidated financial position and company financial position of Yantai Changyu as at 31December 2021, and of its consolidated financial performance and company financialperformance and its consolidated cash flows and company cash flows for the year thenended in accordance with Accounting Standards for Business Enterprises issued by theMinistry of Finance of the People’s Republic of China.

Basis for Opinion

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

Page 2 of 6

AUDITOR’S REPORT (continued)

KPMG Huazhen Shen Zi No. 2205034

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of mostsignificance in our audit of the financial statements for the year. These matters wereaddressed in the context of our audit of the financial statements as a whole, and in formingour opinion thereon, and we do not provide a separate opinion on these matters.

Recognition of Sales Revenue from Distributors
Refer to the accounting policies set out in the notes to the financial statements “III. Significant accounting policies and accounting estimates” 22 and “V. Notes to the consolidated financial statements” 37.
Key Audit Matters	How the Matter was Addressed in Our Audit
The principal activities of Yantai Changyu and its subsidiaries (hereinafter referred to as “Yantai Changyu Group”) include manufacture and sales of wine, brandy and sparkling wine. The revenue of Yantai Changyu Group is mainly derived from sales of distributors. All distributor transaction terms adopt the unified transaction terms formulated by Yantai Changyu Group. Based on the contractual agreement and the business arrangement, Yantai Changyu sells products to distributors and the transfer of product ownership is completed and the revenue is recognised when the goods are delivered to distributors and signed for acceptance. As revenue is one of the key performance indicators of Yantai Changyu Group, there is a risk that management may recognise revenue earlier or later in order to meet specific performance targets or expectations, therefore, the risk of cut-off misstatement arising from distributors’ sales revenue is identified as a key audit matter.	Our audit procedures to evaluate revenue recognition of sales revenue from distributors included the following: ? Understand and evaluate the Management’s design and operation effectiveness of key internal controls related to distributor sales revenue recognition; ? Selecting the sales contracts Yantai Changyu signed with distributors in order to examine whether Yantai Changyu has adopted the unified transaction terms, and evaluate whether the accounting policy of revenue recognition meets the requirements of the Accounting Standards for Business Enterprises; ? On a sampling basis, reconcile the revenue recorded for the year to relevant supporting files such as relevant orders and signed delivery notes, etc. to evaluate whether revenue is recognised in accordance with the accounting policy of Yantai Changyu;

Page 3 of 6

AUDITOR’S REPORT (continued)

KPMG Huazhen Shen Zi No. 2205034

Key Audit Matters (continued)

Recognition of Sales Revenue from Distributors (continued)
Refer to the accounting policies set out in the notes to the financial statements “III. Significant accounting policies and accounting estimates” 22 and “V. Notes to the consolidated financial statements” 37.
The Key Audit Matters	How the matter was addressed in our audit
	? On a sampling basis, reconcile the sales transaction before and after balance sheet date to relevant supporting files such as relevant orders, signed delivery notes, etc. to evaluate whether revenue is recognised in appropriate accounting period; ? Check the sales record after the balance sheet date to identify significant sales returns and check relevant supporting files (If applicable) in order to evaluate whether relevant revenue is recorded in the appropriate accounting period; ? Select revenue accounting entries that meet specific risk criteria and check related supporting documents.

Page 4 of 6

AUDITOR’S REPORT (continued)

KPMG Huazhen Shen Zi No. 2205034

Other Information

Management of Yantai Changyu is responsible for the other information. The otherinformation comprises all the information included in the 2021 annual report, other than thefinancial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do notexpress any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistentwith the financial statements or our knowledge obtained in the audit or otherwise appears tobe materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatementof this other information, we are required to report that fact. We have nothing to report in thisregard.

Responsibilities of Management and Those Charged with Governance for the FinancialStatements

Management is responsible for the preparation and fair presentation of the financialstatements in accordance with the Accounting Standards for Business Enterprises, and forthe design, implementation and maintenance of such internal control necessary to enablethat the financial statements are free from material misstatement, whether due to fraud orerror.

In preparing the financial statements, management is responsible for assessing YantaiChangyu’s ability to continue as a going concern, disclosing, as applicable, matters related togoing concern and using the going concern basis of accounting unless management eitherintends to liquidate Yantai Changyu or to cease operations, or has no realistic alternative butto do so.

Those charged with governance are responsible for overseeing Yantai Changyu’s financialreporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements asa whole are free from material misstatement, whether due to fraud or error, and to issue anauditor’s report that includes our opinion. Reasonable assurance is a high level ofassurance, but is not a guarantee that an audit conducted in accordance with CSAs willalways detect a material misstatement when it exists. Misstatements can arise from fraud orerror and are considered material if, individually or in the aggregate, they could reasonablybe expected to influence the economic decisions of users taken on the basis of thesefinancial statements.

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AUDITOR’S REPORT (continued)

KPMG Huazhen Shen Zi No. 2205034

Auditor’s Responsibilities for the Audit of the Financial Statement (continued)

As part of an audit in accordance with CSAs, we exercise professional judgement andmaintain professional scepticism throughout the audit. We also:

(1) Identify and assess the risks of material misstatement of the financial statements,

whether due to fraud or error, design and perform audit procedures responsive to thoserisks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error, as fraud may involve collusion, forgery,intentional omissions, misrepresentations, or the override of internal control.

(2) Obtain an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances.

(3) Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by the management.

(4) Conclude on the appropriateness of management’s use of the going concern basis of

accounting and, basis of accounting and, based on the audit evidence obtained,whether a material uncertainty exists related to events or conditions that may castsignificant doubt on Yantai Changyu’s ability to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in ourauditor’s report to the related disclosures in the financial statements or, if suchdisclosures are inadequate, to modify our opinion. Our conclusions are based on theaudit evidence obtained up to the date of our auditor’s report. However, future eventsor conditions may cause Yantai Changyu to cease to continue as a going concern.

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

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

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

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

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AUDITOR’S REPORT (continued)

KPMG Huazhen Shen Zi No. 2205034

Auditor’s Responsibilities for the Audit of the Financial Statement (continued)

We communicate with those charged with governance regarding, among other matters, theplanned scope and timing of the audit and significant audit findings, including any significantdeficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied withrelevant ethical requirements regarding independence, and communicate with them allrelationships and other matters that may reasonably be thought to bear on our independenceand, where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine thosematters that were of most significance in the audit of the financial statements of the year andare therefore the key audit matters. We describe these matters in our auditor’s report unlesslaw or regulation precludes public disclosure about the matter or when, in extremely rarecircumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweighthe public interest benefits of such communication.

KPMG Huazhen LLP Certified Public Accountants Registered(Stamp) in the People’s Republic of China

Wang Ting (Engagement Partner)(Signature and stamp)

Beijing, China Xu Weiran(Signature and stamp)

Date: 25 April 2022

Yantai Changyu Pioneer Wine Company LimitedConsolidated balance sheetas at 31 December 2021

(Expressed in Renminbi Yuan)

	Note	31 December 2021	31 December 2020
Assets
Current assets
Cash at bank and on hand	V.1	1,567,095,993	1,194,214,929
Bills receivable	V.2	42,827,666	-
Accounts receivable	V.3	291,006,410	183,853,362
Receivables under financing	V.4	364,457,497	338,090,187
Prepayments	V.5	75,235,879	71,296,416
Other receivables	V.6	30,125,270	22,428,956
Inventories	V.7	2,802,622,520	2,945,548,651
Other current assets	V.8	217,152,601	234,118,715
Total current assets		5,390,523,836	4,989,551,216
Non-current assets
Long-term equity investments	V.9	46,496,510	48,263,507
Investment properties	V.10	24,502,258	27,057,730
Fixed assets	V.11	5,687,867,314	5,724,935,846
Construction in progress	V.12	590,172,099	635,495,152
Bearer biological assets	V.13	193,712,942	192,173,536
Right-of-use assets	V.14	134,569,039	-
Intangible assets	V.15	617,866,879	660,989,065
Goodwill	V.16	112,374,541	132,938,212
Long-term deferred expenses	V.17	284,593,163	314,465,855
Deferred tax assets	V.18	245,210,731	206,241,275
Other non-current assets	V.19	144,120,442	170,370,147
Total non-current assets		8,081,485,918	8,112,930,325
Total assets		13,472,009,754	13,102,481,541

The notes on pages 20 to 111 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedConsolidated balance sheetas at 31 December 2021 (continued)

(Expressed in Renminbi Yuan)

	Note	31 December 2021	31 December 2020
Liabilities and shareholders’ equity
Current liabilities
Short-term loans	V.20	622,066,457	689,090,715
Accounts payable	V.21	493,453,816	484,347,958
Contract liabilities	V.22	147,120,716	135,073,280
Employee benefits payable	V.23	195,019,441	188,779,911
Taxes payable	V.24	342,322,300	213,412,813
Other payables	V.25	453,033,491	386,105,526
Other current liabilities	V.26	18,374,193	14,820,653
Non-current liabilities due within one year	V.27	110,865,126	133,311,890
Total current liabilities		2,382,255,540	2,244,942,746
Non-current liabilities
Long-term loans	V.28	176,047,043	200,352,968
Lease liabilities	V.14	101,811,588	-
Long-term payables	V.29	64,000,000	86,000,000
Deferred income	V.30	41,295,338	52,653,609
Deferred tax liabilities	V.18	11,803,970	12,022,613
Other non-current liabilities	V.31	2,119,671	2,078,971
Total non-current liabilities		397,077,610	353,108,161
Total liabilities		2,779,333,150	2,598,050,907

The notes on pages 20 to 111 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedConsolidated balance sheetas at 31 December 2021 (continued)(Expressed in Renminbi Yuan)

	Note	31 December 2021	31 December 2020
Liabilities and shareholders’ equity (continued)
Shareholders’ equity
Share capital	V.32	685,464,000	685,464,000
Capital reserve	V.33	524,968,760	524,968,760
Other comprehensive income	V.34	(34,707,177)	576,129
Surplus reserve	V.35	342,732,000	342,732,000
Retained earnings	V.36	8,929,426,600	8,714,091,755
Total equity attributable to shareholders of the Company		10,447,884,183	10,267,832,644
Non-controlling interests		244,792,421	236,597,990
Total owners’ equity		10,692,676,604	10,504,430,634
Total liabilities and shareholders’ equity		13,472,009,754	13,102,481,541

These financial statements were approved by the Board of Directors of the Company on 25April 2022.

Zhou Hongjiang Legal Representative		Jiang Jianxun The person in charge of accounting affairs		Guo Cuimei The head of the accounting department		(Company stamp)
(Signature and stamp)		(Signature and stamp)		(Signature and stamp)

The notes on pages 20 to 111 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedCompany balance sheetas at 31 December 2021(Expressed in Renminbi Yuan)

	Note	31 December 2021	31 December 2020
Assets
Current assets
Cash at bank and on hand		562,588,819	267,548,326
Bills receivable	XIV.1	9,800,000	-
Receivables under financing	XIV.2	62,411,636	13,920,000
Prepayments		406,500	171,709
Other receivables	XIV.3	398,072,976	580,131,798
Inventories		383,294,208	482,442,935
Other current assets		20,637,860	24,842,325
Total current assets		1,437,211,999	1,369,057,093
Non-current assets
Long-term equity investments	XIV.4	7,599,421,494	7,599,778,880
Investment properties		24,502,258	-
Fixed assets		231,284,799	270,692,477
Construction in progress		255,996	2,865,243
Bearer biological assets		114,753,306	115,103,753
Right-of-use assets		36,826,342	-
Intangible assets		78,043,888	80,789,731
Deferred tax assets		18,033,185	18,285,685
Other non-current assets		2,023,500,000	1,530,700,000
Total non-current assets		10,126,621,268	9,618,215,769
Total assets		11,563,833,267	10,987,272,862

The notes on pages 20 to 111 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedCompany balance sheetas at 31 December 2021 (continued)

(Expressed in Renminbi Yuan)

	Note	31 December 2021	31 December 2020
Liabilities and shareholders’ equity
Current liabilities
Short-term loans		150,000,000	150,000,000
Accounts payable		90,339,903	76,470,081
Employee benefits payable		66,770,838	67,808,910
Taxes payable		32,588,429	9,123,959
Other payables		445,874,937	521,505,947
Non-current liabilities due within one year		1,485,190	-
Total current liabilities		787,059,297	824,908,897
Non-current liabilities
Lease liabilities		43,312,517	-
Deferred income		2,268,527	5,507,708
Deferred tax liabilities		88,555	-
Other non-current liabilities		1,164,471	1,164,471
Total non-current liabilities		46,834,070	6,672,179
Total liabilities		833,893,367	831,581,076

The notes on pages 20 to 111 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedCompany balance sheetas at 31 December 2021 (continued)

(Expressed in Renminbi Yuan)

	Note	31 December 2021	31 December 2020
Liabilities and shareholders’ equity (continued)
Shareholders’ equity
Share capital		685,464,000	685,464,000
Capital reserve		560,182,235	560,182,235
Surplus reserve		342,732,000	342,732,000
Retained earnings		9,141,561,665	8,567,313,551
Total owners’ equity		10,729,939,900	10,155,691,786
Total liabilities and shareholders’ equity		11,563,833,267	10,987,272,862

These financial statements were approved by the Board of Directors of the Company on 25April 2022.

Zhou Hongjiang Legal Representative		Jiang Jianxun The person in charge of accounting affairs		Guo Cuimei The head of the accounting department		(Company stamp)
(Signature and stamp)		(Signature and stamp)		(Signature and stamp)

The notes on pages 20 to 111 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedConsolidated income statementfor the year ended 31 December 2021

(Expressed in Renminbi Yuan)

	Note	2021	2020
I. Operating income	V.37	3,953,067,583	3,395,402,001
Less: Operating cost	V.37	1,647,789,874	1,503,877,407
Taxes and surcharges	V.38	264,057,570	203,789,274
Selling and distribution expenses	V.39	998,954,105	788,252,485
General and administrative expenses	V.40	299,076,376	290,646,466
Research and development expenses		10,919,262	4,531,418
Financial expenses	V.41	21,178,727	20,441,713
Including: Interest expenses		28,851,606	32,890,621
Interest income		19,558,354	14,247,274
Add: Other income	V.42	48,240,741	73,063,620
Investment losses	V.43	(2,784,997)	(2,217,623)
Including: Losses from investment in joint ventures and associates		(2,784,997)	(2,217,623)
Credit (losses)/reversal	V.44	(7,937,144)	4,348,309
Impairment losses	V.45	(19,874,251)	(3,215,978)
Losses from disposal of assets	V.46	(11,939,284)	(1,180,655)

The notes on pages 20 to 111 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedConsolidated income statementfor the year ended 31 December 2021 (continued)

(Expressed in Renminbi Yuan)

	Note	2021	2020
II. Operating profit		716,796,734	654,660,911
Add: Non-operating income	V.47	5,214,304	11,908,510
Less: Non-operating expenses	V.47	6,311,844	1,702,858
III. Total profit		715,699,194	664,866,563
Less: Income tax expenses	V.48	209,020,821	191,804,500
IV. Net profit		506,678,373	473,062,063
(1) Net profit classified by continuity of operations:
1. Net profit from continuing operations		506,678,373	473,062,063
2. Net profit from discontinued operations		-	-
(2) Net profit classified by ownership:
1. Net profit attributable to owners of the Company		500,102,606	470,860,587
2. Non-controlling interests		6,575,767	2,201,476
V. Other comprehensive income, net of tax		(39,307,949)	5,171,635
(1) Other comprehensive income (net of tax) attributable to shareholders of the Company		(35,283,306)	4,811,712
Translation differences arising from translation of foreign currency financial statements		(35,283,306)	4,811,712
(2) Other comprehensive income (net of tax) attributable to non-controlling interests		(4,024,643)	359,923

The notes on pages 20 to 111 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedConsolidated income statementfor the year ended 31 December 2021 (continued)

(Expressed in Renminbi Yuan)

	Note	2021	2020
VI. Total comprehensive income for the year		467,370,424	478,233,698
(1) Attributable to shareholders of the Company		464,819,300	475,672,299
(2) Attributable to non-controlling interests		2,551,124	2,561,399
VII. Earnings per share:
(1) Basic earnings per share	V.49	0.73	0.69
(2) Diluted earnings per share	V.49	0.73	0.69

These financial statements were approved by the Board of Directors of the Company on 25April 2022.

Zhou Hongjiang Legal Representative		Jiang Jianxun The person in charge of accounting affairs		Guo Cuimei The head of the accounting department		(Company stamp)
(Signature and stamp)		(Signature and stamp)		(Signature and stamp)

The notes on pages 20 to 111 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedCompany income statementfor the year ended 31 December 2021

(Expressed in Renminbi Yuan)

	Note	2021	2020
I. Operating income	XIV.5	578,895,802	512,303,553
Less: Operating cost	XIV.5	472,158,738	452,368,512
Taxes and surcharges		38,263,612	19,841,835
General and administrative expenses		74,948,200	74,929,302
Research and development expenses		907,975	728,793
Financial expenses		2,193,348	(602,459)
Including: Interest expenses		5,870,092	4,875,912
Interest income		7,122,455	5,594,285
Add: Other income		6,108,832	5,339,898
Investment income	XIV.6	867,523,178	449,504,721
Credit reversal		-	601,610
II. Operating profit		864,055,939	420,483,799
Add: Non-operating income		997,416	3,961,267
Less: Non-operating expenses		3,295,694	1,050,415

The notes on pages 20 to 111 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedCompany income statementfor the year ended 31 December 2021 (continued)(Expressed in Renminbi Yuan)

	Note	2021	2020
III. Total profit		861,757,661	423,394,651
Less: Income tax expenses		6,703,679	(3,766,123)
IV. Net profit		855,053,982	427,160,774
(i) Net profit from continuing operations		855,053,982	427,160,774
(ii) Net profit from discontinued operations		-	-
V. Other comprehensive income, net of tax		-	-
VI. Total comprehensive income for the year		855,053,982	427,160,774

These financial statements were approved by the Board of Directors of the Company on 25April 2022.

Zhou Hongjiang Legal Representative		Jiang Jianxun The person in charge of accounting affairs		Guo Cuimei The head of the accounting department		(Company stamp)
(Signature and stamp)		(Signature and stamp)		(Signature and stamp)

The notes on pages 20 to 111 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedConsolidated cash flow statementfor the year ended 31 December 2021(Expressed in Renminbi Yuan)

	Note	2021	2020
I. Cash flows from operating activities:
Proceeds from sale of goods and rendering of services		3,674,741,084	3,259,057,195
Refund of taxes and surcharges		48,716,047	45,642,498
Proceeds from other operating activities	V.50(1)	89,142,251	81,197,248
Sub-total of cash inflows		3,812,599,382	3,385,896,941
Payment for goods and services		957,499,905	1,095,500,438
Payment to and for employees		507,532,110	529,304,037
Payment of various taxes		659,986,692	704,054,796
Payment for other operating activities	V.50(2)	562,198,017	551,890,997
Sub-total of cash outflows		2,687,216,724	2,880,750,268
Net cash flows from operating activities	V.51(1)	1,125,382,658	505,146,673
II. Cash flows from investing activities:
Proceeds from disposal of investments		93,553,062	135,647,402
Investment returns received		2,587,932	1,730,511
Net proceeds from disposal of fixed assets, intangible assets and other long-term assets		7,923,724	49,200,301
Sub-total of cash inflows		104,064,718	186,578,214
Payment for acquisition of fixed assets, intangible assets and other long-term assets		225,502,766	155,918,502
Payment for acquisition of investments		54,218,000	83,508,393
Net cash paid for the acquisition of subsidiaries and other business units	V.51(2)	-	89,519,789
Sub-total of cash outflows		279,720,766	328,946,684
Net cash flows from investing activities		(175,656,048)	(142,368,470)

The notes on pages 20 to 111 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedConsolidated cash flow statementfor the year ended 31 December 2021 (continued)(Expressed in Renminbi Yuan)

	Note	2021	2020
III. Cash flows from financing activities:
Proceeds from investors		7,840,000	-
Proceeds from borrowings		847,358,786	987,668,379
Sub-total of cash inflows		855,198,786	987,668,379
Repayments of borrowings		1,036,788,771	1,098,773,637
Payment for dividends, profit distributions or interest		302,051,763	531,697,065
Payment for other financing activities	V.50(3)	15,904,567	62,966,747
Sub-total of cash outflows		1,354,745,101	1,693,437,449
Net cash flows from financing activities		(499,546,315)	(705,769,070)
IV. Effect of foreign exchange rate changes on cash and cash equivalents		(518,371)	(1,743,498)
V. Net increase/(decrease) in cash and cash equivalents	V.51(1)	449,661,924	(344,734,365)
Add: Cash and cash equivalents at the beginning of the year		1,052,665,105	1,397,399,470
VI. Cash and cash equivalents at the end of the year	V.51(3)	1,502,327,029	1,052,665,105

These financial statements were approved by the Board of Directors of the Company on 25April 2022.

Zhou Hongjiang Legal Representative		Jiang Jianxun The person in charge of accounting affairs		Guo Cuimei The head of the accounting department		(Company stamp)
(Signature and stamp)		(Signature and stamp)		(Signature and stamp)

The notes on pages 20 to 111 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedCompany cash flow statementfor the year ended 31 December 2021(Expressed in Renminbi Yuan)

	Note	2021	2020
I. Cash flows from operating activities:
Proceeds from sale of goods and rendering of services		514,762,698	365,804,968
Proceeds from other operating activities		47,112,100	19,507,538
Sub-total of cash inflows		561,874,798	385,312,506
Payment for goods and services		313,397,323	261,854,964
Payment to and for employees		76,053,780	65,247,752
Payment of various taxes		39,248,076	6,778,231
Payment for other operating activities		71,110,685	139,442,785
Sub-total of cash outflows		499,809,864	473,323,732
Net cash flows from operating activities		62,064,934	(88,011,226)
II. Cash flows from investing activities:
Proceeds from disposal of investments		38,200,000	58,238,750
Investment returns received		1,068,448,220	450,538,570
Net proceeds from disposal of fixed assets, intangible assets and other long-term assets		408,885	131,260
Proceeds from borrowings to subsidiaries		162,200,000	9,000,000
Sub-total of cash inflows		1,269,257,105	517,908,580
Payment for acquisition of fixed assets, intangible assets and other long-term assets		22,919,289	51,762,211
Payment for acquisition of investments		38,200,000	131,408,115
Net cash paid for the acquisition of subsidiaries and other business units		-	89,519,789
Cash paid to subsidiaries		655,000,000	112,000,000
Sub-total of cash outflows		716,119,289	384,690,115
Net cash flows from investing activities		553,137,816	133,218,465

The notes on pages 20 to 111 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedCompany cash flow statementfor the year ended 31 December 2021 (continued)

(Expressed in Renminbi Yuan)

	Note	2021	2020
III. Cash flows from financing activities:
Proceeds from borrowings		150,000,000	150,000,000
Sub-total of cash inflows		150,000,000	150,000,000
Repayments of borrowings		150,000,000	150,000,000
Payment for dividends or interest		280,055,692	486,200,712
Payment for other financing activities		3,460,687	-
Sub-total of cash outflows		433,516,379	636,200,712
Net cash flows from financing activities		(283,516,379)	(486,200,712)
IV. Effect of foreign exchange rate changes on cash and cash equivalents		-	-
V. Net increase/(decrease) in cash and cash equivalents		331,686,371	(440,993,473)
Add: Cash and cash equivalents at the beginning of the year		182,123,069	623,116,542
VI. Cash and cash equivalents at the end of the year		513,809,440	182,123,069

These financial statements were approved by the Board of Directors of the Company on 25April 2022.

Zhou Hongjiang Legal Representative		Jiang Jianxun The person in charge of accounting affairs		Guo Cuimei The head of the accounting department		(Company stamp)
(Signature and stamp)		(Signature and stamp)		(Signature and stamp)

The notes on pages 20 to 111 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedConsolidated statement of changes in shareholders’ equityfor the year ended 31 December 2021(Expressed in Renminbi Yuan)

	Note	Attributable to shareholders of the Company						Non-controlling interests	Total shareholders’ equity
		Share capital	Capital reserve	Other comprehensive income	Surplus reserve	Retained earnings	Sub-total
I. Balance at the beginning of the year		685,464,000	524,968,760	576,129	342,732,000	8,714,091,755	10,267,832,644	236,597,990	10,504,430,634
Add: Changes in accounting policies		-	-	-	-	(10,582,161)	(10,582,161)	-	(10,582,161)
Adjusted balance at the beginning of the year		685,464,000	524,968,760	576,129	342,732,000	8,703,509,594	10,257,250,483	236,597,990	10,493,848,473
II. Changes in equity during the year
(1) Total comprehensive income		-	-	(35,283,306)	-	500,102,606	464,819,300	2,551,124	467,370,424
(2) Shareholders’ contributions
Establishment of subsidiaries		-	-	-	-	-	-	7,840,000	7,840,000
(3) Appropriation of profits	V.36
Distributions to shareholders		-	-	-	-	(274,185,600)	(274,185,600)	(2,196,693)	(276,382,293)
III. Balance at the end of the year		685,464,000	524,968,760	(34,707,177)	342,732,000	8,929,426,600	10,447,884,183	244,792,421	10,692,676,604

These financial statements were approved by the Board of Directors of the Company on 25 April 2022.

Zhou Hongjiang Legal Representative		Jiang Jianxun The person in charge of accounting affairs		Guo Cuimei The head of the accounting department		(Company stamp)
(Signature and stamp)		(Signature and stamp)		(Signature and stamp)

The notes on pages 20 to 111 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedConsolidated statement of changes in shareholders’ equityfor the year ended 31 December 2020(Expressed in Renminbi Yuan)

	Note	Attributable to shareholders of the Company						Non-controlling interests	Total shareholders’ equity
		Share capital	Capital reserve	Other comprehensive income	Surplus reserve	Retained earnings	Sub-total
I. Balance at the beginning of the year		685,464,000	642,775,360	(4,235,583)	342,732,000	8,735,513,044	10,402,248,821	271,876,064	10,674,124,885
II. Changes in equity during the year
(1) Total comprehensive income		-	-	4,811,712	-	470,860,587	475,672,299	2,561,399	478,233,698
(2) Shareholders’ contributions
Acquisitions of non-controlling interests		-	(28,286,811)	-	-	-	(28,286,811)	(34,679,936)	(62,966,747)
(3) Appropriation of profits	V.36
Distributions to shareholders		-	-	-	-	(492,281,876)	(492,281,876)	(3,159,537)	(495,441,413)
(4) Business combination under common control		-	(89,519,789)	-	-	-	(89,519,789)	-	(89,519,789)
III. Balance at the end of the year		685,464,000	524,968,760	576,129	342,732,000	8,714,091,755	10,267,832,644	236,597,990	10,504,430,634

These financial statements were approved by the Board of Directors of the Company on 25 April 2022.

Zhou Hongjiang Legal Representative		Jiang Jianxun The person in charge of accounting affairs		Guo Cuimei The head of the accounting department		(Company stamp)
(Signature and stamp)		(Signature and stamp)		(Signature and stamp)

The notes on pages 20 to 111 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedCompany statement of changes in shareholders’ equityfor the year ended 31 December 2021(Expressed in Renminbi Yuan)

	Note	Share capital	Capital reserve	Surplus reserve	Retained earnings	Total shareholders’ equity
I. Balance at the beginning of the year		685,464,000	560,182,235	342,732,000	8,567,313,551	10,155,691,786
Add: Changes in accounting policies	III.33				(6,620,268)	(6,620,268)
Adjusted balance at the beginning of the year		685,464,000	560,182,235	342,732,000	8,560,693,283	10,149,071,518
II. Changes in equity during the year
(1) Total comprehensive income		-	-	-	855,053,982	855,053,982
(2) Appropriation of profits
Distributions to shareholders		-	-	-	(274,185,600)	(274,185,600)
III. Balance at the end of the year		685,464,000	560,182,235	342,732,000	9,141,561,665	10,729,939,900

These financial statements were approved by the Board of Directors of the Company on 25April 2022.

Zhou Hongjiang Legal Representative		Jiang Jianxun The person in charge of accounting affairs		Guo Cuimei The head of the accounting department		(Company stamp)
(Signature and stamp)		(Signature and stamp)		(Signature and stamp)

The notes on pages 20 to 111 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedCompany statement of changes in shareholders’ equityfor the year ended 31 December 2020 (continued)(Expressed in Renminbi Yuan)

	Note	Share capital	Capital reserve	Surplus reserve	Retained earnings	Total shareholders’ equity
I. Balance at the beginning of the year		685,464,000	557,222,454	342,732,000	8,619,977,577	10,205,396,031
II. Changes in equity during the year
(1) Total comprehensive income		-	-	-	427,160,774	427,160,774
(2) Shareholders’ contributions
Purchase of share equity of Yantai Changyu Culture Development Co., Ltd (“Culture Development”)		-	2,959,781	-	-	2,959,781
(3) Appropriation of profits
Distributions to shareholders		-	-	-	(479,824,800)	(479,824,800)
III. Balance at the end of the year		685,464,000	560,182,235	342,732,000	8,567,313,551	10,155,691,786

These financial statements were approved by the Board of Directors of the Company on 25April 2022.

Zhou Hongjiang Legal Representative		Jiang Jianxun The person in charge of accounting affairs		Guo Cuimei The head of the accounting department		(Company stamp)
(Signature and stamp)		(Signature and stamp)		(Signature and stamp)

The notes on pages 20 to 111 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedNotes to the financial statements(Expressed in Renminbi Yuan unless otherwise indicated)

I. Company status

Yantai Changyu Pioneer Wine Co., Ltd. (the "Company” or the “Joint Stock Company”) wasincorporated as a joint stock limited company in accordance with the Company Law of thePeople's Republic of China (the "PRC") in a reorganisation carried out by Yantai ChangyuGroup Co., Ltd. ("Changyu Group"), in which Changyu Group Company injected certainassets and liabilities in relation to the brandy, wine, and sparkling wine production and salesbusinesses to the Company. The Company and its subsidiaries (the "Group") are principallyengaged in the production and sales of wine, brandy, sparkling wine, grape growing andacquisition, as well as travel resource development, etc. Registration place of the Companyis Yantai, Shandong. Headquarter of the Company is located at No. 56 Da Ma Lu, ZhifuDistrict, Yantai, Shandong, PRC.

As at 31 December 2021 the total shares issued by the Company amounts to 685,464,000shares. Please refer to Note V. 32 in detail.

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

The financial statements have been authorised by the board of directors on 25 April 2022.According to the Company's articles of association, the financial statements will be reviewedby shareholders on the shareholder's meeting.

For consolidation scope of the year, please refer to Note VI "Equity in other entities" in detail.

II. Basis of preparation

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

The Group has adopted the revised “Accounting Standard for Business Enterprises No. 22 –Financial Instruments: Recognition and Measurement” and related new financial instrumentsstandards and “Accounting Standard for Business Enterprises No. 14 – Revenue”, issued bythe Ministry of Finance (“MOF”) of the People’s Republic of China in 2017, since 1 January2019 and 1 January 2020 respectively. In addition, it has adopted the revised “AccountingStandard for Business Enterprises No. 21 – Leases” issued by the MOF in 2018 since 1January 2021 (see Note III.33(1)).

III. Significant accounting policies and accounting estimates

1 Statement of compliance

The financial statements have been prepared in accordance with the requirements ofAccounting Standards for Business Enterprises or referred to as China Accounting Standards(“CAS”) issued by the MOF. These financial statements present truly and completely theconsolidated financial position and financial position of the Company as at 31 December2021, and the consolidated financial performance and financial performance and theconsolidated cash flows and cash flows of the Company for the year then ended.

These financial statements also comply with the disclosure requirements of “Regulation onthe Preparation of Information Disclosures by Companies Issuing Securities, No. 15: GeneralRequirements for Financial Reports” as revised by the China Securities RegulatoryCommission (“CSRC”) in 2014.

2 Accounting period

The accounting period is from 1 January to 31 December.

3 Operating cycle

The Company takes the period from the acquisition of assets for processing to until theultimate realisation of cash or cash equivalents as a normal operating cycle. The operatingcycle of the Company is 12 months.

4 Functional currency

Renminbi ("RMB") is the currency of the primary economic environment in which theCompany and its domestic subsidiaries operate. Therefore, the Company and its domesticsubsidiaries choose RMB as their functional currency. Overseas subsidiaries of theCompany adopt Euro, Chilean Peso and Australian Dollar as their functional currencies onthe basis of the primary economic environment in which they operate. The Company adoptsRMB to prepare its financial statements.

5 Accounting treatments for business combinations involving entities under common control

and not under common control

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

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

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

(1) Business combinations involving entities under common control

A business combination involving entities under common control is a business combination inwhich all of the combining entities are ultimately controlled by the same party or parties bothbefore and after the business combination, and that control is not transitory. The assetsacquired and liabilities assumed are measured based on their carrying amounts in theconsolidated financial statements of the ultimate controlling party at the combination date.The difference between the carrying amount of the net assets acquired and the considerationpaid for the combination (or the total par value of shares issued) is adjusted against sharepremium in the capital reserve, with any excess adjusted against retained earnings. Anycosts directly attributable to the combination are recognised in profit or loss when incurred.The combination date is the date on which one combining entity obtains control of othercombining entities.

(2) Business combinations involving entities not under common control

A business combination involving entities not under common control is a businesscombination in which all of the combining entities are not ultimately controlled by the sameparty or parties both before and after the business combination. Where (1) the aggregate ofthe acquisition-date fair value of assets transferred (including the acquirer’s previously heldequity interest in the acquiree), liabilities incurred or assumed, and equity securities issuedby the acquirer, in exchange for control of the acquiree, exceeds (2) the acquirer’s interest inthe acquisition-date fair value of the acquiree’s identifiable net assets, the difference isrecognised as goodwill (see Note III.18). If (1) is less than (2), the difference is recognised inprofit or loss for the current period. Other acquisition-related costs are expensed whenincurred. The acquiree’s identifiable asset, liabilities and contingent liabilities, if therecognition criteria are met, are recognised by the Group at their acquisition-date fair value.The acquisition date is the date on which the acquirer obtains control of the acquiree.

For a business combination involving entities not under common control and achieved instages, the Group remeasures its previously-held equity interest in the acquiree to itsacquisition-date fair value and recognises any resulting difference between the fair value andthe carrying amount as investment income or other comprehensive income for the currentperiod. In addition, any amount recognised in other comprehensive income that may bereclassified to profit or loss, in prior reporting periods relating to the previously-held equityinterest, and any other changes in the owners’ equity under equity accounting, aretransferred to investment income in the period in which the acquisition occurs (see NoteIII.11(2)(b)). If equity interests of the acquiree held before acquisition-date were equityinstrument investments measured at fair value through other comprehensive income, othercomprehensive income recognised shall be moved to retained earnings on acquisition-date.

6 Consolidated financial statements

(1) General principles

The scope of consolidated financial statements is based on control and the consolidatedfinancial statements comprise the Company and its subsidiaries. Control exists when theinvestor has all of following: power over the investee; exposure, or rights, to variable returnsfrom its involvement with the investee and has the ability to affect those returns through itspower over the investee. When assessing whether the Group has power, only substantiverights (held by the Group and other parties) are considered. The financial position, financialperformance and cash flows of subsidiaries are included in the consolidated financialstatements from the date that control commences until the date that control ceases.

Non-controlling interests are presented separately in the consolidated balance sheet withinshareholders’ equity. Net profit or loss attributable to non-controlling shareholders ispresented separately in the consolidated income statement below the net profit line item.Total comprehensive income attributable to non-controlling shareholders is presentedseparately in the consolidated income statement below the total comprehensive income lineitem.

When the amount of loss for the current period attributable to the non-controllingshareholders of a subsidiary exceeds the non-controlling shareholders’ share of the openingowners’ equity of the subsidiary, the excess is still allocated against the non-controllinginterests.

When the accounting period or accounting policies of a subsidiary are different from those ofthe Company, the Company makes necessary adjustments to the financial statements of thesubsidiary based on the Company’s own accounting period or accounting policies. Intra-group balances and transactions, and any unrealised profit or loss arising from intra-grouptransactions, are eliminated when preparing the consolidated financial statements.Unrealised losses resulting from intra-group transactions are eliminated in the same way asunrealised gains, unless they represent impairment losses that are recognised in the financialstatements.

(2) Subsidiaries acquired through a business combination

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

Where a subsidiary was acquired during the reporting period, through a businesscombination involving entities not under common control, the identifiable assets and liabilitiesof the acquired subsidiaries are included in the scope of consolidation from the date thatcontrol commences, based on the fair value of those identifiable assets and liabilities at theacquisition date.

(3) Disposal of subsidiaries

When the Group loses control over a subsidiary, any resulting disposal gains or losses arerecognised as investment income for the current period. The remaining equity investment isre-measured at its fair value at the date when control is lost, any resulting gains or losses arealso recognised as investment income for the current period.

When the Group loses control of a subsidiary in multiple transactions in which it disposes ofits long-term equity investment in the subsidiary in stages, the following are considered todetermine whether the Group should account for the multiple transactions as a bundledtransaction:

- arrangements are entered into at the same time or in contemplation of each other;- arrangements work together to achieve an overall commercial effect;- the occurrence of one arrangement is dependent on the occurrence of at least one otherarrangement;- one arrangement considered on its own is not economically justified, but it is economicallyjustified when considered together with other arrangements.

If each of the multiple transactions does not form part of a bundled transaction, thetransactions conducted before the loss of control of the subsidiary are accounted for inaccordance with the accounting policy for partial disposal of equity investment in subsidiarieswhere control is retained (see Note III.6(4)).

If each of the multiple transactions forms part of a bundled transaction which eventuallyresults in the loss of control in the subsidiary, these multiple transactions are accounted foras a single transaction. In the consolidated financial statements, the difference between theconsideration received and the corresponding proportion of the subsidiary’s net assets(calculated continuously from the acquisition date) in each transaction prior to the loss ofcontrol shall be recognised in other comprehensive income and transferred to profit or losswhen the parent eventually loses control of the subsidiary.

(4) Changes in non-controlling interests

Where the Company acquires a non-controlling interest from a subsidiary’s non-controllingshareholders or disposes of a portion of an interest in a subsidiary without a change incontrol, the difference between the proportion interests of the subsidiary’s net assets beingacquired or disposed and the amount of the consideration paid or received is adjusted to thecapital reserve (share premium) in the consolidated balance sheet, with any excess adjustedto retained earnings.

7 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, deposits that can be readily withdraw ondemand, and short-term, highly liquid investments that are readily convertible into knownamounts of cash and are subject to an insignificant risk of change in value.

8 Foreign currency transactions and translation of foreign currency financial statements

When the Group receives capital in foreign currencies from investors, the capital is translatedto Renminbi at the spot exchange rate at the date of the receipt. Other foreign currencytransactions are, on initial recognition, translated to Renminbi at the spot exchange rates.

Monetary items denominated in foreign currencies are translated to Renminbi at the spotexchange rate at the balance sheet date. The resulting exchange differences are generallyrecognised in profit or loss, unless they arise from the re-translation of the principal andinterest of specific borrowings for the acquisition and construction of qualifying assets (seeNote III. 15). Non-monetary items that are measured at historical cost in foreign currenciesare translated to Renminbi using the exchange rate at the transaction date.

In translating the financial statements of a foreign operation, assets and liabilities of foreignoperation are translated to Renminbi at the spot exchange rate at the balance sheet date.Equity items, excluding retained earnings and the translation differences in othercomprehensive income, are translated to Renminbi at the spot exchange rates at thetransaction dates. Income and expenses in the income statement are translated to Renminbiat the spot exchange rates at the transaction dates. The resulting translation differences arerecognised in other comprehensive income. The translation differences accumulated in othercomprehensive income with respect to a foreign operation are transferred to profit or loss inthe period when the foreign operation is disposed.

9 Financial instruments

Financial instruments include cash at bank and on hand, investments in debt and equitysecurities other than those classified as long-term equity investments (see Note III.11),receivables, payables, loans and borrowings and share capital.

(1) Recognition and initial measurement of financial assets and financial liabilities

A financial asset or financial liability is recognised in the balance sheet when the Groupbecomes a party to the contractual provisions of a financial instrument.

A financial assets (unless it is a trade receivable without a significant financing component)and financial liabilities is measured initially at fair value. For financial assets and financialliabilities at fair value through profit or loss, any related directly attributable transaction costsare charged to profit or loss; for other categories of financial assets and financial liabilities,any related directly attributable transaction costs are included in their initial costs. A tradereceivable, without significant financing component or practical expedient applied for oneyear or less contracts, is initially measured at the transaction price in accordance with NoteIII.22.

(2) Classification and subsequent measurement of financial assets

(a) Classification of financial assets

The classification of financial assets is generally based on the business model in whicha financial asset is managed and its contractual cash flow characteristics. On initialrecognition, a financial asset is classified as measured at amortised cost, at fair valuethrough other comprehensive income (“FVOCI”), or at fair value through profit or loss(“FVTPL”).

Financial assets are not reclassified subsequent to their initial recognition unless theGroup changes its business model for managing financial assets in which case allaffected financial assets are reclassified on the first day of the first reporting periodfollowing the change in the business model.

A financial asset is measured at amortised cost if it meets both of the followingconditions and is not designated as at FVTPL:

- it is held within a business model whose objective is to hold assets to collectcontractual cash flows; and- its contractual terms give rise on specified dates to cash flows that are solelypayments of principal and interest on the principal amount outstanding.

A debt investment is measured at FVOCI if it meets both of the following conditions andis not designated as at FVTPL:

- it is held within a business model whose objective is achieved by both collectingcontractual cash flows and selling financial assets; and- its contractual terms give rise on specified dates to cash flows that are solely

payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Group mayirrevocably elect to present subsequent changes in the investment’s fair value in othercomprehensive income. This election is made on an investment-by-investment basis.The instrument meets the definition of equity from the perspective of the issuer.

All financial assets not classified as measured at amortised cost or FVOCI asdescribed above are measured at FVTPL. On initial recognition, the Group mayirrevocably designate a financial asset that otherwise meets the requirements to bemeasured at amortised cost or at FVOCI as at FVTPL if doing so eliminates orsignificantly reduces an accounting mismatch that would otherwise arise.

The business model refers to how the Group manages its financial assets in order togenerate cash flows. That is, the Group’s business model determines whether cashflows will result from collecting contractual cash flows, selling financial assets or both.The Group determines the business model for managing the financial assets accordingto the facts and based on the specific business objective for managing the financialassets determined by the Group’s key management personnel.

In assessing whether the contractual cash flows are solely payments of principal andinterest, the Group considers the contractual terms of the instrument. For the purposesof this assessment, ‘principal’ is defined as the fair value of the financial asset on initialrecognition. ‘Interest’ is defined as consideration for the time value of money and forthe credit risk associated with the principal amount outstanding during a particularperiod of time and for other basic lending risks and costs, as well as a profit margin.The Group also assesses whether the financial asset contains a contractual term thatcould change the timing or amount of contractual cash flows such that it would notmeet this condition.

(b) Subsequent measurement of financial assets

- Financial assets at FVTPL

These financial assets are subsequently measured at fair value. Net gains andlosses, including any interest or dividend income, are recognised in profit or lossunless the financial assets are part of a hedging relationship.

- Financial assets at amortised cost

These assets are subsequently measured at amortised cost using the effectiveinterest method. A gain or loss on a financial asset that is measured at amortisedcost and is not part of a hedging relationship shall be recognised in profit or losswhen the financial asset is derecognised, reclassified, through the amortisationprocess or in order to recognise impairment gains or losses.

- Debt investments at FVOCI

These assets are subsequently measured at fair value. Interest income calculatedusing the effective interest method, impairment and foreign exchange gains andlosses are recognised in profit or loss. Other net gains and losses are recognised inother comprehensive income. On derecognition, gains and losses accumulated inother comprehensive income are reclassified to profit or loss.

- Equity investments at FVOCI

These assets are subsequently measured at fair value. Dividends are recognisedas income in profit or loss. Other net gains and losses are recognised in othercomprehensive income. On derecognition, gains and losses accumulated in othercomprehensive income are reclassified to retained earnings.

(3) Classification and subsequent measurement of financial liabilities

Financial liabilities are classified as measured at FVTPL or amortised cost by the Group.

- Financial liabilities at FVTPL

A financial liability is classified as at FVTPL if it is classified as held-for-trading (includingderivative financial liability) or it is designated as such on initial recognition.

Financial liabilities at FVTPL are subsequently measured at fair value and net gains andlosses, including any interest expense, are recognised in profit or loss, unless the financialliabilities are part of a hedging relationship.

- Financial liabilities at amortised cost

These financial liabilities are subsequently measured at amortised cost using the effectiveinterest method.

(4) Offsetting

Financial assets and financial liabilities are generally presented separately in the balancesheet, and are not offset. However, a financial asset and a financial liability are offset andthe net amount is presented in the balance sheet when both of the following conditions aresatisfied:

- The Group currently has a legally enforceable right to set off the recognised amounts;- The Group intends either to settle on a net basis, or to realise the financial asset andsettle the financial liability simultaneously.

(5) Derecognition of financial assets and financial liabilities

Financial asset is derecognised when one of the following conditions is met:

- the Group’s contractual rights to the cash flows from the financial asset expire;- the financial asset has been transferred and the Group transfers substantially all of therisks and rewards of ownership of the financial asset; or;- the financial asset has been transferred, although the Group neither transfers nor retainssubstantially all of the risks and rewards of ownership of the financial asset, it does notretain control over the transferred asset.

Where a transfer of a financial asset in its entirety meets the criteria for derecognition, thedifference between the two amounts below is recognised in profit or loss:

- the carrying amount of the financial asset transferred measured at the date ofderecognition;- the sum of the consideration received from the transfer and, when the transferred financial

asset is a debt investment at FVOCI, any cumulative gain or loss that has beenrecognised directly in other comprehensive income for the part derecognised.

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

(6) Impairment

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

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

Financial assets measured at fair value, including debt investments or equity securities atFVPL, equity securities designated at FVOCI and derivative financial assets, are not subjectto the ECL assessment.

Measurement of ECLs

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured asthe present value of all cash shortfalls (i.e. the difference between the cash flows due to theentity in accordance with the contract and the cash flows that the Group expects to receive).

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

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

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

For accounts receivable, loss allowance are always measured at an amount equal to lifetimeECLs. ECLs on these financial assets are estimated using a provision matrix based on theGroup’s historical credit loss experience, adjusted for factors that are specific to the debtorsand an assessment of both the current and forecast general economic conditions at thebalance sheet date.

For assets other than accounts receivable that meet one of the following conditions, lossallowance are measured at an amount equal to 12-month ECLs. For all other financialinstruments, the Group recognises a loss allowance equal to lifetime ECLs:

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

Financial instruments that have low credit risk

The credit risk on a financial instrument is considered low if the financial instrument has a lowrisk of default, the borrower has a strong capacity to meet its contractual cash flowobligations in the near term and adverse changes in economic and business conditions in thelonger term may, but will not necessarily, reduce the ability of the borrower to fulfil itscontractual cash flow obligations.

Significant increases in credit risk

In assessing whether the credit risk of a financial instrument has increased significantly sinceinitial recognition, the Group compares the risk of default occurring on the financialinstrument assessed at the balance sheet date with that assessed at the date of initialrecognition.

When determining whether the credit risk of a financial asset has increased significantlysince initial recognition and when estimating ECL, the Group considers reasonable andsupportable information that is relevant and available without undue cost or effort, includingforward-looking information. In particular, the following information is taken into account:

- failure to make payments of principal or interest on their contractually due dates;- an actual or expected significant deterioration in a financial instrument’s external or

internal credit rating (if available);- an actual or expected significant deterioration in the operating results of the debtor; and- existing or forecast changes in the technological, market, economic or legal environmentthat have a significant adverse effect on the debtor’s ability to meet its obligation to theGroup.

Depending on the nature of the financial instruments, the assessment of a significantincrease in credit risk is performed on either an individual basis or a collective basis. Whenthe assessment is performed on a collective basis, the financial instruments are groupedbased on shared credit risk characteristics, such as past due status and credit risk ratings.

The Group assumes that the credit risk on a financial asset has increased significantly if it ismore than 30 days past due.

Credit-impaired financial assets

At each balance sheet date, the Group assesses whether financial assets carried atamortised cost and debt investments at FVOCI are credit-impaired. A financial asset is‘credit-impaired’ when one or more events that have a detrimental impact on the estimatedfuture cash flows of the financial asset have occurred. Evidence that a financial asset iscredit-impaired includes the following observable data:

- significant financial difficulty of the borrower or issuer;- a breach of contract, such as a default or delinquency in interest or principal payments;- for economic or contractual reasons relating to the borrower’s financial difficulty, theGroup having granted to the borrower a concession that would not otherwise consider;- it is probable that the borrower will enter bankruptcy or other financial reorganisation; or- the disappearance of an active market for that financial asset because of financialdifficulties.

Presentation of allowance for ECL

ECLs are remeasured at each balance sheet date to reflect changes in the financialinstrument’s credit risk since initial recognition. Any change in the ECL amount is recognisedas an impairment gain or loss in profit or loss. The Group recognises an impairment gain orloss for all financial instruments with a corresponding adjustment to their carrying amountthrough a loss allowance account, except for debt investments that are measured at FVOCI,for which the loss allowance is recognised in other comprehensive income.

Write-off

The gross carrying amount of a financial asset is written off (either partially or in full) to theextent that there is no realistic prospect of recovery. A write-off constitutes a derecognitionevent. This is generally the case when the Group determines that the debtor does not haveassets or sources of income that could generate sufficient cash flows to repay the amountssubject to the write-off. However, financial assets that are written off could still be subject toenforcement activities in order to comply with the Group’s procedures for recovery ofamounts due.

Subsequent recoveries of an asset that was previously written off are recognised as areversal of impairment in profit or loss in the period in which the recovery occurs.

(7) Equity instrument

The consideration received from the issuance of equity instruments net of transaction costs isrecognised in shareholders’ equity. Consideration and transaction costs paid by theCompany for repurchasing self-issued equity instruments are deducted from shareholders’equity.

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

10 Inventories

(1) Classification and cost

Inventories include raw materials, work in progress and reusable materials. Inventories areinitially measured at cost. Cost of inventories comprises all costs of purchase, costs ofconversion and other expenditure incurred in bringing the inventories to their present locationand condition. In addition to the purchase cost of raw materials, work in progress andfinished goods include direct labour costs and an appropriate allocation of productionoverheads.

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

(2) Measurement method of cost of inventories

Cost of inventories is calculated using the weighted average method.

Consumables including low-value consumables and packaging materials are amortised whenthey are used. The amortisation charge is included in the cost of the related assets orrecognised in profit or loss for the current period.

(3) Basis for determining the net realisable value and method for provision for obsolete

inventories

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

Net realisable value is the estimated selling price in the ordinary course of business less theestimated costs of completion and the estimated costs necessary to make the sale andrelevant taxes. The net realisable value of materials held for use in the production ismeasured based on the net realisable value of the finished goods in which they will beincorporated. The net realisable value of the inventory held to satisfy sales or servicecontracts is measured based on the contract price, to the extent of the quantities specified insales contracts, and the excess portion of inventories is measured based on general sellingprices.

Any excess of the cost over the net realisable value of each item of inventories is recognisedas a provision for impairment, and is recognised in profit or loss.

(4) Inventory count system

The Group maintains a perpetual inventory system.

11 Long-term equity investments

(1) Investment cost of long-term equity investments

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

- The initial cost of a long-term equity investment acquired through a business

combination involving entities under common control is the Company’s share of thecarrying amount of the subsidiary’s equity in the consolidated financial statements ofthe ultimate controlling party at the combination date. The difference between theinitial investment cost and the carrying amount of the consideration given is adjustedto the share premium in the capital reserve, with any excess adjusted to retainedearnings. For a long-term equity investment in a subsidiary acquired through abusiness combination achieved in stages which do not form a bundled transactionand involving entities under common control, the Company determines the initialcost of the investment in accordance with the above policies. The differencebetween this initial cost and the sum of the carrying amount of previously-heldinvestment and the consideration paid for the shares newly acquired is adjusted tocapital premium in the capital reserve, with any excess adjusted to retainedearnings.

- For a long-term equity investment obtained through a business combination notinvolving enterprises under common control, the initial cost comprises the aggregateof the fair value of assets transferred, liabilities incurred or assumed, and equitysecurities issued by the Company, in exchange for control of the acquiree. For along-term equity investment obtained through a business combination not involvingentities under common control and achieved through multiple transactions in stageswhich do not form a bundled transaction, the initial cost comprises the carryingamount of the previously-held equity investment in the acquiree immediately beforethe acquisition date, and the additional investment cost at the acquisition date.

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

- A long-term equity investment acquired other than through a business combination

is initially recognised at the amount of cash paid if the Group acquires theinvestment by cash, or at the fair value of the equity securities issued if aninvestment is acquired by issuing equity securities.

(2) Subsequent measurement of long-term equity investment

(a) Investments in subsidiaries

In the Company’s separate financial statements, long-term equity investments insubsidiaries are accounted for using the cost method unless the investment isclassified as held for sale (See Note III. 28). Except for cash dividends or profitdistributions declared but not yet distributed that have been included in the price orconsideration paid in obtaining the investments, the Company recognises its share ofthe cash dividends or profit distributions declared by the investee as investment incomefor the current period.

The investments in subsidiaries are stated in the balance sheet at cost lessaccumulated impairment losses.

For the impairment of the investments in subsidiaries, refer to Note III.20.

In the Group’s consolidated financial statements, subsidiaries are accounted for inaccordance with the policies described in Note III.6.

(b) Investment in joint ventures and associates

A joint venture is an arrangement whereby the Group and other parties have jointcontrol (see Note III.11(3)) and rights to the net assets of the arrangement.

Associated enterprises refer to enterprises to which the Group can exercise significantinfluence (see Note III.11(3)).

A long-term equity investment in a joint venture is accounted for using the equitymethod for subsequent measurement, unless the investment is classified as held forsale (see Note III.28).

The accounting treatments under the equity method adopted by the Group are asfollows:

- Where the initial cost of a long-term equity investment exceeds the Group’s interestin the fair value of the investee’s identifiable net assets at the date of acquisition, theinvestment is initially recognised at cost. Where the initial investment cost is lessthan the Group’s interest in the fair value of the investee’s identifiable net assets atthe date of acquisition, the investment is initially recognised at the investor’s shareof the fair value of the investee’s identifiable net assets, and the difference isrecognised in profit or loss.

- After the acquisition of the investment, the Group recognises its share of theinvestee’s profit or loss and other comprehensive income as investment income orlosses and other comprehensive income respectively, and adjusts the carryingamount of the investment accordingly. Once the investee declares any cashdividends or profit distributions, the carrying amount of the investment is reduced bythe amount attributable to the Group. Changes in the Group’s share of theinvestee’s owners’ equity, other than those arising from the investee’s net profit orloss, other comprehensive income or profit distribution (referred to as “otherchanges in owners’ equity”), is recognised directly in the Group’s equity, and thecarrying amount of the investment is adjusted accordingly.

- In calculating its share of the investee’s net profits or losses, other comprehensive

income and other changes in owners’ equity, the Group recognises investmentincome and other comprehensive income after making appropriate adjustments toalign the accounting policies or accounting periods with those of the Group based onthe fair value of the investee’s identifiable net assets at the date of acquisition.Unrealised profits and losses resulting from transactions between the Group and itsassociates or joint ventures are eliminated to the extent of the Group’s interest in theassociates or joint ventures. Unrealised losses resulting from transactions betweenthe Group and its associates or joint ventures are eliminated in the same way asunrealised gains but only to the extent that there is no impairment.

- The Group discontinues recognising its share of further losses of the investee after

the carrying amount of the long-term equity investment and any long-term interestthat in substance forms part of the Group’s net investment in the associate isreduced to zero, except to the extent that the Group has an obligation to assumeadditional losses. If the joint venture subsequently reports net profits, the Groupresumes recognising its share of those profits only after its share of the profitsequals the share of losses not recognised.

For the impairment of the investments in joint ventures and associates, refer to NoteIII.20.

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

Joint control is the contractually agreed sharing of control of an arrangement, which existsonly when decisions about the relevant activities (activities with significant impact on thereturns of the arrangement) require the unanimous consent of the parties sharing control.

The following factors are usually considered when assessing whether the Group canexercise joint control over an investee:

- Whether no single participant party is in a position to control the investee’s relatedactivities unilaterally;- Whether strategic decisions relating to the investee’s related activities require the

unanimous consent of all participant parties that sharing of control.

Significant influence is the power to participate in the financial and operating policy decisionsof an investee but does not have control or joint control over those policies.

12 Investment properties

Investment properties are properties held either to earn rental income or for capitalappreciation or for both. Investment properties are accounted for using the cost model andstated in the balance sheet at cost less accumulated depreciation, amortisation andimpairment losses, and adopts a depreciation or amortisation policy for the investmentproperty which is consistent with that for buildings or land use rights, unless the investmentproperty is classified as held for sale (see Note III.28). For the impairment of the investmentproperties, refer to Note III.20.

Category	Estimated useful life (years)	Residual value rate (%)	Depreciation rate (%)
Plant and buildings	20 - 40 years	0 - 5%	2.4% - 5.0%

13 Fixed assets

(1) Recognition of fixed assets

Fixed assets represent the tangible assets held by the Group for use in production of goods,supply of services, for rental or for administrative purposes with useful lives over oneaccounting year.

The cost of a purchased fixed asset comprises the purchase price, related taxes, and anydirectly attributable expenditure for bringing the asset to working condition for its intendeduse. The cost of self-constructed assets is measured in accordance with the policy set out inNote III.14.

Where the parts of an item of fixed assets have different useful lives or provide benefits tothe Group in a different pattern, thus necessitating use of different depreciation rates ormethods, each part is recognised as a separate fixed asset.

Any subsequent costs including the cost of replacing part of an item of fixed assets arerecognised as assets when it is probable that the economic benefits associated with thecosts will flow to the Group, and the carrying amount of the replaced part is derecognised.The costs of the day-to-day maintenance of fixed assets are recognised in profit or loss asincurred.

Fixed assets are stated in the balance sheet at cost less accumulated depreciation andimpairment losses.

(2) Depreciation of fixed assets

The cost of a fixed asset, less its estimated residual value and accumulated impairmentlosses, is depreciated using the straight-line method over its estimated useful life, unless thefixed asset is classified as held for sale (see Note III.28).

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

Class	Estimated useful life (years)	Residual value rate (%)	Depreciation rate (%)
Plant and buildings	20 - 40 years	0 - 5%	2.4% - 5.0%
Machinery equipment	5 - 30 years	0 - 5%	3.2% - 20.0%
Motor vehicles	4 - 12 years	0 - 5%	7.9% - 25.0%

Useful lives, estimated residual values and depreciation methods are reviewed at least ateach year-end.

(3) For the impairment of the fixed assets, refer to Note III.20.

(4) Disposal of fixed assets

The carrying amount of a fixed asset is derecognised:

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

Gains or losses arising from the retirement or disposal of an item of fixed asset aredetermined as the difference between the net disposal proceeds and the carrying amount ofthe item, and are recognised in profit or loss on the date of retirement or disposal.

14 Construction in progress

The cost of self-constructed assets includes the cost of materials, direct labour, capitalisedborrowing costs (see Note III.15), and any other costs directly attributable to bringing theasset to working condition for its intended use.

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

Construction in progress is stated in the balance sheet at cost less accumulated impairmentlosses (see Note III.20).

15 Borrowing costs

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

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

- Where funds are borrowed specifically for the acquisition and construction or production ofa qualifying asset, the amount of interest to be capitalised is the interest expensecalculated using effective interest rates during the period less any interest income earnedfrom depositing the borrowed funds or any investment income on the temporaryinvestment of those funds before being used on the asset.

- To the extent that the Group borrows funds generally and uses them for the acquisitionand construction or production of a qualifying asset, the amount of borrowing costs eligiblefor capitalisation is determined by applying a capitalisation rate to the weighted average ofthe excess amounts of cumulative expenditure on the asset over the above amounts ofspecific borrowings. The capitalisation rate is the weighted average of the interest ratesapplicable to the general-purpose borrowings.

The effective interest rate is determined as the rate that exactly discounts estimated futurecash flow through the expected life of the borrowing or, when appropriate, a shorter period tothe initially recognised amount of the borrowings.

During the capitalisation period, exchange differences related to the principal and interest ona specific-purpose borrowing denominated in foreign currency are capitalised as part of thecost of the qualifying asset. The exchange differences related to the principal and interest onforeign currency borrowings other than a specific-purpose borrowing are recognised as afinancial expense when incurred.

The capitalisation period is the period from the date of commencement of capitalisation ofborrowing costs to the date of cessation of capitalisation, excluding any period over whichcapitalisation is suspended. Capitalisation of borrowing costs commences when expenditurefor the asset is being incurred, borrowing costs are being incurred and activities ofacquisition, construction or production that are necessary to prepare the asset for itsintended use are in progress, and ceases when the assets become ready for their intendeduse. Capitalisation of borrowing costs should cease when the qualifying asset beingconstructed or produced has reached its expected usable or saleable condition.Capitalisation of borrowing costs is suspended when the acquisition, construction orproduction activities are interrupted abnormally for a period of more than three months.

16. Biological assets

The Group's biological assets are bearer biological assets.

Bearer biological assets are those that are held for the purposes of producing agriculturalproduce, rendering of services or rental. Bearer biological assets in the Group are vines.Bearer biological assets are initially measured at cost. The cost of self-grown or self-bredbearer biological assets represents the necessary directly attributable expenditure incurredbefore satisfying the expected production and operating purpose, including capitalisedborrowing costs.

Bearer biological assets, after reaching the expected production and operating purpose, aredepreciated using the straight-line method over its estimated useful life. The estimateduseful lives, estimated net residual value rates and depreciation rates of bearer biologicalassets are as follows:

Category	Estimated useful life (years)	Estimated net residual value rate	Depreciation rate (%)
Vines	20 years	0%	5.0%

The Group evaluates the useful life and expected net salvage value by considering thenormal producing life of the bearer biological assets.

Useful lives, estimated residual values and depreciation methods of bearer biological assetsare reviewed at least at each year-end. Any changes should be treated as changes inaccounting estimates.

For a bearer biological asset that has been sold, damaged, dead or destroyed, anydifference between the disposal proceeds and the carrying amount of the asset should berecognised in profit or loss for the period in which it arises.

17 Intangible assets

Intangible assets are stated in the balance sheet at cost less accumulated amortization(where the estimated useful life is finite) and impairment losses (see Note III.20). For anintangible asset with finite useful life, its cost estimated less residual value and accumulatedimpairment losses is amortised on the straight-line method over its estimated useful life,unless the intangible asset is classified as held for sale (see Note III.28).

The respective amortisation periods for intangible assets are as follows:

Item	Amortisation period (years)
Land use rights	40 - 50 years
Software licenses	5 - 10 years
Trademarks	10 years

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

An intangible asset is regarded as having an indefinite useful life and is not amortised whenthere is no foreseeable limit to the period over which the asset is expected to generateeconomic benefits for the Group. At the balance sheet date, the Group had intangible assetswith infinite useful lives including the land use rights and trademarks. Land use rights withinfinite useful lives are permanent land use rights with permanent ownership held by theGroup under the relevant Chile and Australian laws arising from the Group’s acquisition ofVi?a Indómita, S.A., Vi?a Dos Andes, S.A., and Bodegas Santa Alicia SPA. (collectivelyreferred to as the "Chile Indomita Wine Group"), and the acquisition of Kilikanoon Estate PtyLtd. (hereinafter referred to as the "Australia Kilikanoon Estate"), therefore there was noamortisation. The right to use trademark refers to the trademark held by the Group arisingfrom the acquisition of the Chile Indomita Wine Group and the Australia Kilikanoon Estatewith infinite useful lives. The valuation of trademark was based on the trends in the marketand competitive environment, product cycle, and managing long-term development strategy.Those basis indicated the trademark will provide net cash flows to the Group within anuncertain period. The useful life is indefinite as it was hard to predict the period that thetrademark would bring economic benefits to the Group.

18 Goodwill

The initial cost of goodwill represents the excess of cost of acquisition over the acquirer’sinterest in the fair value of the identifiable net assets of the acquiree under a businesscombination not involving entities under common control.

Goodwill is not amortised and is stated in the balance sheet at cost less accumulatedimpairment losses (see Note III.20). On disposal of an asset group or a set of asset groups,any attributable goodwill is written off and included in the calculation of the profit or loss ondisposal.

19 Long-term deferred expenses

Long-term deferred expenses are amortised using a straight-line method within the benefitperiod. The respective amortisation periods for such expenses are as follows:

Item	Amortisation period
Land requisition fee	50 years
Land lease prepayment	50 years
Greening fee	5 - 20 years
Leasehold improvement	3 - 5 years
Others	3 years

20 Impairment of assets other than inventories and financial assets

The carrying amounts of the following assets are reviewed at each balance sheet date basedon internal and external sources of information to determine whether there is any indicationof impairment:

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

If any indication exists, the recoverable amount of the asset is estimated. In addition, theGroup estimates the recoverable amounts of goodwill and intangible assets with infiniteuseful lives at each year-end, irrespective of whether there is any indication of impairment.Goodwill is allocated to each asset group, or set of asset groups, that is expected to benefitfrom the synergies of the combination for the purpose of impairment testing.

The recoverable amount of an asset (or asset group, set of asset groups) is the higher of itsfair value (see Note III.21) less costs to sell and its present value of expected future cashflows.

An asset group is composed of assets directly related to cash-generation and is the smallestidentifiable group of assets that generates cash inflows that are largely independent of thecash inflows from other assets or asset groups.

The present value of expected future cash flows of an asset is determined by discounting thefuture cash flows, estimated to be derived from continuing use of the asset and from itsultimate disposal, to their present value using an appropriate pre-tax discount rate.

An impairment loss is recognised in profit or loss when the recoverable amount of an asset isless than its carrying amount. A provision for impairment of the asset is recognisedaccordingly. Impairment losses related to an asset group or a set of asset groups areallocated first to reduce the carrying amount of any goodwill allocated to the asset group orset of asset groups, and then to reduce the carrying amount of the other assets in the assetgroup or set of asset groups on a pro rata basis. However, such allocation would not reducethe carrying amount of an asset below the highest of its fair value less costs to sell (ifmeasurable), its present value of expected future cash flows (if determinable) and zero.

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

21 Fair value measurement

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

Fair value is the price that would be received to sell an asset or paid to transfer a liability inan orderly transaction between market participants at the measurement date.

When measuring fair value, the Group takes into account the characteristics of the particularasset or liability (including the condition and location of the asset and restrictions, if any, onthe sale or use of the asset) that market participants would consider when pricing the assetor liability at the measurement date, and uses valuation techniques that are appropriate inthe circumstances and for which sufficient data and other information are available tomeasure fair value. Valuation techniques mainly include the market approach, the incomeapproach and the cost approach.

22 Revenue recognition

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

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

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

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

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

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

- the customer simultaneously receives and consumes the benefits provided by the Group’s

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

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

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

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

ownership of the goods to the customer; and- the customer has accepted the goods or services.

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

A contract asset is the Group’s right to consideration in exchange for goods or services that ithas transferred to a customer when that right is conditional on something other than thepassage of time. The Group recognises loss allowances for expected credit loss on contractassets (see Note III.9(6)). Accounts receivable is the Group’s right to consideration that isunconditional (only the passage of time is required). A contract liability is the Group’sobligation to transfer goods or services to a customer for which the Group has receivedconsideration (or an amount of consideration is due) from the customer.

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

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

23 Contract costs

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

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

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

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

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

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

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

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

24 Employee benefits

(1) Short-term employee benefits

Employee wages or salaries, bonuses, social security contributions such as medicalinsurance, work injury insurance, maternity insurance and housing fund, measured at theamount incurred or accured at the applicable benchmarks and rates, are recognised as aliability as the employee provides services, with a corresponding charge to profit or loss orincluded in the cost of assets where appropriate.

(2) Post-employment benefits – defined contribution plans

Pursuant to the relevant laws and regulations of the People’s Republic of China, the Groupparticipated in a defined contribution basic pension insurance plan in the social insurancesystem established and managed by government organisations. The Group makescontributions to basic pension insurance plans based on the applicable benchmarks andrates stipulated by the government. Basic pension insurance contributions payable arerecognised as a liability as the employee provides services, with a corresponding charge toprofit or loss or included in the cost of assets where appropriate.

(3) Termination benefits

When the Group terminates the employment with employees before the employmentcontracts expire, or provides compensation under an offer to encourage employees to acceptvoluntary redundancy, a provision is recognised with a corresponding expense in profit orloss at the earlier of the following dates:

- When the Group cannot unilaterally withdraw the offer of termination benefits because ofan employee termination plan or a curtailment proposal;- When the Group has a formal detailed restructuring plan involving the payment of

termination benefits and has raised a valid expectation in those affected that it will carryout the restructuring by starting to implement that plan or announcing its main features tothose affected by it.

25 Government grants

Government grants are non-reciprocal transfers of monetary or non-monetary assets fromthe government to the Group except for capital contributions from the government in thecapacity as an investor in the Group.

A government grant is recognised when there is reasonable assurance that the grant will bereceived and that the Group will comply with the conditions attaching to the grant.

If a government grant is in the form of a transfer of a monetary asset, it is measured at theamount received or receivable. If a government grant is in the form of a transfer of a non-monetary asset, it is measured at fair value.

Government grants related to assets are grants whose primary condition is that the Groupqualifying for them should purchase, construct or otherwise acquire long-term assets.Government grants related to income are grants other than those related to assets. Agovernment grant related to an asset is recognised as deferred income and amortised overthe useful life of the related asset on a reasonable and systematic manner as other incomeor non-operating income. A grant that compensates the Company for expenses or losses tobe incurred in the future is recognised as deferred income, and included in other income ornon-operating income in the periods in which the expenses or losses are recognised. Orincluded in other income or non-operating income directly.

26 Income tax

Current tax and deferred tax are recognised in profit or loss except to the extent that theyrelate to a business combination or items recognised directly in equity (including othercomprehensive income).

Current tax is the expected tax payable calculated at the applicable tax rate on taxableincome for the year, plus any adjustment to tax payable in respect of previous years.

At the balance sheet date, current tax assets and liabilities are offset only if the Group has alegally enforceable right to set them off and also intends either to settle on a net basis or torealise the asset and settle the liability simultaneously.

Deferred tax assets and deferred tax liabilities arise from deductible and taxable temporarydifferences respectively, being the differences between the carrying amounts of assets andliabilities for financial reporting purposes and their tax bases, which include the deductiblelosses and tax credits carried forward to subsequent periods. Deferred tax assets arerecognised to the extent that it is probable that future taxable profits will be available againstwhich deductible temporary differences can be utilised.

Deferred tax is not recognised for the temporary differences arising from the initialrecognition of assets or liabilities in a transaction that is not a business combination and thataffects neither accounting profit nor taxable profit (or deductible loss). Deferred tax is notrecognised for taxable temporary differences arising from the initial recognition of goodwill.

At the balance sheet date, deferred tax is measured based on the tax consequences thatwould follow from the expected manner of recovery or settlement of the carrying amounts ofthe assets and liabilities, using tax rates enacted at the balance sheet date that are expectedto be applied in the period when the asset is recovered or the liability is settled.

The carrying amount of a deferred tax asset is reviewed at each balance sheet date, and isreduced to the extent that it is no longer probable that the related tax benefits will be utilised.Such reduction is reversed to the extent that it becomes probable that sufficient taxableprofits will be available.

At the balance sheet date, deferred tax assets and deferred tax liabilities are offset if all ofthe following conditions are met:

- the taxable entity has a legally enforceable right to offset current tax liabilities and currenttax assets;- they relate to income taxes levied by the same tax authority on either:

- the same taxable entity; or- different taxable entities which intend either to settle the current tax liabilities andcurrent tax assets on a net basis, or to realise the assets and settle the liabilitiessimultaneously, in each future period in which significant amounts of deferred taxliabilities or deferred tax assets are expected to be settled or recovered.

27 Leases

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

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

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

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

For a contract that contains more separate lease componets, the lessee and the lessorseparate lease components and account for each lease component as a lease separately.For a contract that contains lease and non-lease components, the lessee and the lessorseparate lease components from non-lease components. For a contract that contains leaseand non-lease components, the lessee allocates the consideration in the contract to eachlease component on the basis of the relative stand-alone price of the lease component andthe aggregate stand-alone price of the non-lease components. The lessor allocates theconsideration in the contract in accordance with the accounting policy in Note III.22.

(1) As a lessee

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

The right-of-use asset is depreciated using the straight-line method. If the lessee isreasonably certain to exercise a purchase option by the end of the lease term, the right-of-use asset is depreciated over the remaining useful lives of the underlying asset. Otherwise,the right-of-use asset is depreciated from the commencement date to the earlier of the end ofthe useful life of the right-of-use asset or the end of the lease term. Impairment losses ofright-of-use assets are accounted for in accordance with the accounting policy described inNote III.20.

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

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

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

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

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

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

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

(2) As a lessor

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

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

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

The Group recognises finance income over the lease term, based on a pattern reflecting aconstant periodic rate of return. The derecognition and impairment of the finance leasereceivable are recognised in accordance with the accounting policy in Note III.9. Variablelease payments not included in the measurement of net investment in the lease arerecognised as income as they are earned.

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

28 Assets held for sale

The Group classified a non-current asset or disposal group as held for sale when thecarrying amount of a non-current asset or disposal group will be recovered through a saletransaction rather than through continuing use.

A disposal group refers to a group of assets to be disposed of, by sale or otherwise, togetheras a whole in a single transaction and liabilities directly associated with those assets that willbe transferred in the transaction.

A non-current asset or disposal group is classified as held for sale when all the followingcriteria are met:

- According to the customary practices of selling such asset or disposal group in similar

transactions, the non-current asset or disposal group must be available for immediate salein their present condition subject to terms that are usual and customary for sales of suchassets or disposal groups;- Its sale is highly probable, that is, the Group has made a resolution on a sale plan and hasobtained a firm purchase commitment. The sale is to be completed within one year.

Non-current assets or disposal groups held for sale are stated at the lower of carryingamount and fair value (see Note III.21) less costs to sell (except financial assets (see NoteIII.9), deferred tax assets (see Note III.26) and investment properties subsequent measuredat fair value (see Note III. 12) initially and subsequently. Any excess of the carrying amountover the fair value (see Note III.21) less costs to sell is recognised as an impairment loss inprofit or loss.

29 Profit distributions

Dividends or profit distributions proposed in the profit appropriation plan, which will beapproved after the balance sheet date, are not recognised as a liability at the balance sheetdate but are disclosed in the notes separately.

30 Related parties

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

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

31 Segment reporting

The Group is principally engaged in the production and sales of wine, brandy, and sparklingwine in China, France, Spain, Chile and Australia. In accordance with the Group's internalorganisation structure, management requirements and internal reporting system, the Group'soperation is divided into five parts: China, Spain, France, Chile and Australia. Themanagement periodically evaluates segment results, in order to allocate resources andevaluate performances. In 2021, over 87% of revenue, more than 94% of profit and over92% of non-current assets derived from China/are located in China. Therefore the Groupdoes not need to disclose additional segment report information.

32 Significant accounting estimates and judgements

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

(1) Significant accounting estimates

Except for accounting estimates relating to depreciation and amortisation of assets such asinvestment properties, fixed assets, bearer biological assets and intangible assets (seeNotes III. 13 and 16) and provision for impairment of various types of assets (see Notes V.3,7, 11, 15 and 16). Other significant accounting estimates are as follows:

(i) Note V. 18 - Recognition of deferred tax asset;(ii) Note VIII. - Fair value measurements of financial instruments.

33 Changes in significant accounting policies and accounting estimates

(1) Description and reasons of changes in accounting policies

In 2021, the Group has adopted the following newly revised accounting standards andimplementation guidance and illustrative examples issued by the MOF:

- CAS No.21 - Lease (Revised) (Caikuai [2018] No.35) (“the new leases standard”)- The Accounting Treatment of COVID-19-Related Rent Concessions (Caikuai [2020]

No.10) and Notice of Extending the Applicable Period of ‘Accounting Treatment of COVID-19 Related Rent Concessions’ (Caikuai [2021] No.9)- CAS Bulletin No.14 (Caikuai [2021] No.1) (“Bulletin No. 14”)

(a) New leases standard

New leases standard has revised CAS No.21 - Leases issued by the MOF in 2006(“previous leases standard”). The Group has applied new leases standard since 1January 2021 and has adjusted the related accounting policies.

New leases standard refines the definition of a lease. The Group assesses whether acontract is or contains a lease in accordance with the definition in new leases standard.For contracts which existed before the date of initial application, the Group has electednot to reassess whether a contract is or contains a lease at the date of initialapplication.

? As a lessee

Under previous leases standard, the Group classifies leases as operating or financeleases based on its assessment of whether the lease transfers significantly all of therisks and rewards incidental to ownership of the underlying asset to the Group.

Under new leases standard, the Group no longer distinguishes between operatingleases and finance leases. The Group recognises right-of-use assets and leaseliabilities for all leases (except for short-term leases and leases of low-value assetswhich are accounted for using the practical expedient).

For a contract that contains lease and non-lease components, the Group allocatesthe consideration in the contract to each lease component on the basis of therelative stand-alone price of the lease component and the aggregate stand-aloneprice of the non-lease components.

The Group has elected to recognise the cumulative effect of adopting new leasesstandard as an adjustment to the opening balances of retained earnings and otherrelated items in the financial statements in the initial year of application.Comparative information has not been restated.

For leases classified as operating leases before the date of initial application, leaseliabilities were measured at the present value of the remaining lease payments,discounted using the Group’s incremental borrowing rate at the date of initialapplication. Right-of-use assets are measured at either:

- their carrying amount as if new leases standard had been applied since thecommencement date, discounted using the Group’s incremental borrowing rate atthe date of initial application; or

The Group uses the following practical expedients to account for leases classified asoperating leases before the date of initial application:

- accounted for the leases for which the lease term ends within 12 months of thedate of initial application as short-term leases;- applied a single discount rate to leases with similar characteristics when

measuring lease liabilities;- excluded initial direct costs from measuring the right-of-use assets;- determined the lease term according to the actual implementation or other

updates of options before the date of initial application if the contract contains

options to extend or terminate the lease;- As an alternative to the impairment test of the right-of-use assets, the right-of-use

assets shall be adjusted according to the amount of loss provision from onerous

contracts included in the balance sheet in accordance with Accounting Standards

for Business Enterprises No. 13 - Contingencies before the date of initial

application;- No retrospective adjustment shall be made to the lease changes that occurred

before the beginning of the year when the new leases standard is initially applied,

and instead, the new leases standard shall be applicable for the accounting

treatment based on the final arrangement of the lease changes.

For leases classified as finance leases before the date of initial application, the right-of-use asset and the lease liability are measured at the original carrying amount ofthe assets under finance lease and obligations under finance leases at the date ofinitial application.

? As a lessor

The Group is not required to make any adjustments to the opening balances ofretained earnings and other related items in the financial statements in the initialyear of application and surplus for leases for which it acts as a lessor. The Grouphas applied new leases standard since the date of initial application.

? Effect of the application of new leases standard since 1 January 2021 on financialstatements

When measuring lease liabilities, the Group discounted lease payments using itsincremental borrowing rate at 1 January 2021. The weighted-average rate appliedby the Group and the Company is 4.65%.

The impact of the adoption of the new leases standard on the consolidated andcompany balance sheets as at 1 January 2021 are summarised as follows:

	The Group
	31 December 2020	1 January 2021	The amounts of adjustments
Assets
Non-current assets:
Right-of-use assets	-	130,293,427	130,293,427
Long-term deferred expenses	314,465,855	273,547,599	(40,918,256)
Deferred tax assets	206,241,275	207,199,400	958,125
Total non-current assets	520,707,130	611,040,426	90,333,296
Total assets	520,707,130	611,040,426	90,333,296

	The Group
	31 December 2020	1 January 2021	The amounts of adjustments
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	484,347,958	479,305,382	(5,042,576)
Non-current liabilities due within one year	133,311,890	140,629,742	7,317,852
Total current liabilities	617,659,848	619,935,124	2,275,276
Non-current liabilities:
Lease liabilities	-	98,401,900	98,401,900
Deferred tax liabilities	12,022,613	12,260,894	238,281
Total non-current liabilities	12,022,613	110,662,794	98,640,181
Total liabilities	629,682,461	730,597,918	100,915,457
Shareholders’ equity:
Retained earnings	8,714,091,755	8,703,509,594	(10,582,161)
Total equity attributable to shareholders of the Company	8,714,091,755	8,703,509,594	(10,582,161)
Total owners’ equity	8,714,091,755	8,703,509,594	(10,582,161)
Total liabilities and shareholders’ equity	9,343,774,216	9,434,107,512	90,333,296

	The Company
	31 December 2020	1 January 2021	The amounts of adjustments
Assets
Non-current assets:
Right-of-use assets	-	39,589,486	39,589,486
Total non-current assets	-	39,589,486	39,589,486
Total assets	-	39,589,486	39,589,486
Liabilities and shareholders’ equity
Current liabilities:
Non-current liabilities due within one year	-	2,048,380	2,048,380
Total current liabilities	-	2,048,380	2,048,380
Non-current liabilities:
Lease liabilities	-	44,072,819	44,072,819
Deferred tax liabilities	-	88,555	88,555
Total non-current liabilities	-	44,161,374	44,161,374
Total liabilities	-	46,209,754	46,209,754
Shareholders’ equity:
Retained earnings	8,567,313,551	8,560,693,283	(6,620,268)
Total equity attributable to shareholders of the Company	8,567,313,551	8,560,693,283	(6,620,268)
Total owners’ equity	8,567,313,551	8,560,693,283	(6,620,268)
Total liabilities and shareholders’ equity	8,567,313,551	8,606,903,037	39,589,486

(b) Caikuai [2020] No.10 and Caikuai [2021] No.9

The Accounting Treatment of COVID-19 Related Rent Concessions (Caikuai [2020]No.10) provides practical expedient under certain conditions for rent concessionsoccurring as a direct consequence of the COVID-19 pandemic. If the company choosesto adopt the practical expedient, then there is no need to assess whether there is alease change or reassess the lease classification. In combination of the requirementsof Caikuai [2021] No.9, such practical expedient is only applicable to any reduction inlease payments due before 30 June 2022. Cumulative effects of adopting the aboveregulations are adjusted to the opening retained earnings or other comprehensiveincome for the year 2021. Comparative information is not restated.

The adoption of the above regulations does not have significant effect on the financialposition and financial performance of the Group.

(c) Bulletin No.14

Bulletin No.14 takes effect on 26 January 2021 (implementation date).

(i) “Public-private partnership” (PPP) arrangements

Bulletin No.14 and the Q&A and practical examples for accounting treatment ofPPP project contract social capital clarifies the features and conditions of PPParrangements, sets out the accounting and disclosure requirements of a privateentity in PPP arrangements. Item 5 of CAS Bulletin No.2 (Caikuai [2008] No.11)on “How to account for entities participating in public infrastructure constructionbusinesses under build-operate-transfer arrangement” is repealed accordingly.

PPP arrangements which are commenced before 31 December 2020 and notcompleted on the implementation date and new PPP arrangements occurredduring 1 January 2021 to the implementation date are subject to retrospectiveadjustments. Cumulative effects are adjusted to the opening retained earningsand other relevant line items in the financial statements for the year 2021.Comparative information is not restated.

The adoption of Bulletin No.14 does not have significant effect on the financialposition and financial performance of the Group.

(ii) Benchmark interest rate reform

Bulletin No.14 introduces the accounting and disclosure requirements for themodification of financial instruments and lease liabilities resulting from thebenchmark interest rate reform. Transactions related to the benchmark interestrate reform that occurred before 31 December 2020 and during 1 January 2021to the implementation date are subject to retrospective adjustments. Cumulativeeffects are adjusted to the opening retained earnings or other comprehensiveincome for the year 2021. Comparative information is not restated.

The adoption of Bulletin No.14 does not have significant effect on the financial positionand financial performance of the Group.

IV. Taxation

1 Main types of taxes and corresponding tax rates

Value-added tax (VAT)	Output VAT is calculated on product sales and taxable services revenue. The basis for VAT payable is to deduct input VAT from the output VAT for the period	13%, 9%, 6% (China), 20% (France), 21% (Spain), 19% (Chile) and 10% (Australia)
Consumption tax	Based on taxable revenue	10% of the price, 20% of the price and RMB1,000 each ton (China)
Urban maintenance and construction tax	Based on VAT paid	7% (China)
Corporate income tax	Based on taxable profits	25% (China), 26.5% (France, 2021), 28% (France, 2020), 28% (Spain), 27% (Chile), 30% (Australia)

Other than tax incentives stated in Note IV. 2, applicable tax rates of the Group in 2021 and2020 are all stated as above.

2 Tax preferential treatments

Ningxia Changyu Grape Growing Co., Ltd. (“Ningxia Growing”), a subsidiary of the Group,whose principal activity is grape growing is incorporated in Ningxia Huizu AutonomousRegion. According to clause 27 of the Corporate Income Tax Law of the People’s Republic ofChina and clause 86 of the Implementation Rules of Enterprise Income Tax Law of thePeople’s Republic of China, Ningxia Growing enjoys an exemption of corporate income tax.

Yantai Changyu Grape Growing Co., Ltd. (“Grape Growing”), a branch of the Company,whose principal activity is grape growing is incorporated in Zhifu District, Yantai City,Shandong Province. According to clause 27 of the Corporate Income Tax Law of thePeople’s Republic of China and clause 86 of the Implementation Rules of Enterprise IncomeTax Law of the People’s Republic of China, Grape Growing enjoys an exemption ofcorporate income tax.

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

Beijing Changyu AFIP Agriculture Development Co., Ltd (“Agriculture Development”), asubsidiary of the Group, whose principal activity is grape growing is incorporated in Miyun,Beijing. According to clause 27 of the Corporate Income Tax Law of the People’s Republicof China and clause 86 of the Implementation Rules of Enterprise Income Tax Law of thePeople’s Republic of China, Agriculture Development enjoys an exemption of corporateincome tax.

Xinjiang Tianzhu Wine Co., Ltd. (“Xinjiang Tianzhu”), a subsidiary of the Company, is anenterprise of wine production and sales incorporated in Shihezi city, Xinjiang WeizuAutonomous. In accordance with relevant provisions of the Announcement on Continuationof CIT Policies for Large-scale Development in the Western Region (Announcement [2020]No.23 of the Ministry of Finance), Ningxia Chateau Changyu Moser is entitled to preferentialtax policies. Therefore, during the period from 1 January 2021 to 31 December 2030, itscorporate income tax shall be levied at a reduced tax rate of 15%.

Xinjiang Chateau Changyu Baron Balboa Co., Ltd. (“Chateau Shihezi”), a subsidiary of theCompany, is an enterprise of wine production and sales incorporated in Shihezi city, XinjiangWeizu Autonomous. In accordance with relevant provisions of the Announcement onContinuation of CIT Policies for Large-scale Development in the Western Region(Announcement [2020] No.23 of the Ministry of Finance), Ningxia Chateau Changyu Moser isentitled to preferential tax policies. Therefore, during the period from 1 January 2021 to 31December 2030, its corporate income tax shall be levied at a reduced tax rate of 15%.

Ningxia Chateau Changyu Moser XV Co., Ltd. (“Chateau Ningxia”), a subsidiary of theCompany, is an enterprise engaged in wine production and sales, incorporated in ShiheziCity, Xinjiang Uygur Autonomous Region. In accordance with relevant provisions of theAnnouncement on Continuation of CIT Policies for Large-scale Development in the WesternRegion (Announcement [2020] No.23 of the Ministry of Finance), Ningxia Chateau ChangyuMoser is entitled to preferential tax policies. Therefore, during the period from 1 January2021 to 31 December 2030, its corporate income tax shall be levied at a reduced tax rate of15%.

Changyu (Ningxia) Wine Co., Ltd. (“Ningxia Wine”), a subsidiary of the Company, is anenterprise engaged in wine production and sales, incorporated in Shihezi City, Xinjiang UygurAutonomous Region. In accordance with relevant provisions of the Announcement onContinuation of CIT Policies for Large-scale Development in the Western Region(Announcement [2020] No.23 of the Ministry of Finance), Changyu (Ningxia) Wine is entitledto preferential tax policies. Therefore, during the period from 1 January 2021 to 31 December2030, its corporate income tax shall be levied at a reduced tax rate of 15%.

Pursuant to the Announcement on Tax Policies to Support Prevention and Control of Covid-19 Pandemic (Announcement [2020] No.8 of the Ministry of Finance and the StateAdministration of Taxation), from 1 January 2020, income derived by taxpayers fromprovision of public transportation services and living services, as well as express deliveryservices involving residents' necessities, shall be exempted from VAT. Furthermore,according to the Announcement on Continued Implementation of Some Preferential Tax/FeePolicies for Responding to the COVID-19 Pandemic (Announcement [2021] No. 7 of theMinistry of Finance and the State Administration of Taxation), the above tax preferential taxpolicy is extended to 31 March 2021. The Company has certain subsidiaries, such as YantaiZhangyu Wine Culture Museum Co., Ltd. ("the Museum"), which provides catering,accommodation, tourism and other living services, so, the income obtained from theprovision of such living services shall be exempted from VAT, from 1 January 2020 to 31March 2021.

Xinjiang Changyu Sales Co., Ltd. Vermouth Tasting Centre Branch (“Xinjiang VermouthTasting Centre”), a subsidiary of the Company, is an enterprise engaged in large-scalerestaurant services, located in Shihezi City, Xinjiang Uygur Autonomous Region. According tothe Announcement on Value-added Tax Policies for Supporting Individual Businesses inResumption of Business (Announcement [2020] No.13 of the Ministry of Finance and theState Taxation Administration) and the Announcement on Continued Implementation of SomePreferential Tax/Fee Policies for Responding to the COVID-19 Pandemic (Announcement[2021] No. 7 of the Ministry of Finance State Taxation Administration), Xinjiang VermouthTasting Centre, qualified as a small-scale VAT taxpayer, is entitled to pay VAT at the reducedlevy rate of 1% for the year ended 31 December 2021.

Based on the Notice of the Department of Finance of Shaanxi Province and the ShaanxiProvincial Taxation Bureau under the State Taxation Administration on Matters Concerningthe Relief and Exemption of Urban Land Use Tax and Real Estate Tax in Fighting theEpidemic (Shaan Cai Shui [2020] No.4), the Department of Finance and the Taxation Bureaushall approve the application for tax relief and exemption submitted by taxpayers who havedifficulties to pay urban land use tax and real estate tax owing to the suspension ofproduction and business for more than 30 days (inclusive) arising from the epidemic.Shaanxi Chateau Changyu Rena Co., Ltd. and Changyu (Jingyang) Wine Co., Ltd., twosubsidiaries of the Company, meet the application requirements and will be exempted fromreal estate tax and urban land use tax in the first quarter of 2020.

Pursuant to the Notice of the Taxation Bureau in Ningxia Hui Autonomous Region under theState Taxation Administration and the Department of Finance in Ningxia Hui AutonomousRegion on Implementing the Policies of Real Estate Tax and Urban Land Use Tax by thePeople’s Government in Autonomous Region in response to the impact from Covid-19Epidemic (Ning Shui Han [2020] No.19), the Taxation Bureau shall approve the applicationfor tax relief submitted by enterprises that have difficulties to pay real estate tax and urbanland use tax owing to the epidemic. Shaanxi Chateau Changyu Rena Co., Ltd. and Changyu(Ningxia) Wine Co., Ltd., two subsidiaries of the Company, meet the application requirementsand will be exempted from real estate tax and urban land use tax for five months in 2020.

V. Notes to the consolidated financial statements

1 Cash at bank and on hand

Item	2021	2020
Cash on hand	71,486	19,637
Bank deposits	1,558,134,072	1,128,882,937
Other monetary funds	8,890,435	65,312,355
Total	1,567,095,993	1,194,214,929
Including: Total overseas deposits	28,691,521	47,674,019

As at 31 December 2021, the balance of restricted cash of the Group is as follows:

Item	2021	2020
House maintenance funds	2,678,529	2,684,407

As at 31 December 2021, the Group’s term deposits with previous maturity of more thanthree months is RMB53,200,000 with interest rate 1.75% - 2.25% (31 December 2020:

RMB73,553,062).

As at 31 December 2021, the Group’s other monetary assets is as follows:

Item	2021	2020
Yantai Changyu Pioneer Wine Company Limited Research and Development Co., Ltd. (“R&D Centre”) pledged deposit for long-term payables	-	20,000,000
Deposits for letters of credit	7,900,850	44,540,850
Alipay account balance	859,558	761,505
Deposit for ICBC platform	10,000	10,000
Deposits for the customs	120,027	-
Total	8,890,435	65,312,355

As at 31 December 2021, the Group did not have any special interest arrangements such asthe establishment of joint fund management accounts with related parties.

2 Bills receivable

Classification of bills receivable

Item	2021	2020
Bank acceptance bills	42,827,666	-
Total	42,827,666	-

All of the above bills are due within one year.

3 Accounts receivable

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

Type	31 December 2021	31 December 2020
Amounts due from related parties	287,788	2,268,311
Amounts due from other customers	310,982,372	193,911,657
Sub-total	311,270,160	196,179,968
Less: Provision for bad and doubtful debts	(20,263,750)	(12,326,606)
Total	291,006,410	183,853,362

As at 31 December 2021, ownership restricted accounts receivable is RMB49,061,015 (31December 2020: RMB28,557,991), referring to Note V. 52.

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

Ageing	2021	2020
Within 1 year (inclusive)	302,602,474	190,047,491
Over 1 year but within 2 years (inclusive)	6,450,290	5,581,750
Over 2 years but within 3 years (inclusive)	1,830,913	366,053
Over 3 years	386,483	184,674
Sub-total	311,270,160	196,179,968
Less: Provision for bad and doubtful debts	(20,263,750)	(12,326,606)
Total	291,006,410	183,853,362

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

(3) Accounts receivable by provisioning method

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

2021

	Loss given default	Carrying amount at the end of the year	Impairment loss at the end of the year
Current	0.4%	266,055,047	951,403
Overdue for 1 to 30 days	3.3%	13,013,133	434,869
Overdue for 31 to 60 days	10.9%	8,115,584	886,023
Overdue for 61 to 90 days	23.9%	2,554,438	610,844
Overdue for 91 to 120 days	28.9%	531,696	153,780
Overdue for 121 to 150 days	40.0%	627,641	251,314
Overdue for 151 to 180 days	41.8%	1,670,068	698,131
Overdue for 181 to 210 days	50.0%	1,129,949	565,460
Overdue for 211 to 240 days	65.6%	1,415,345	928,263
Overdue for 241 to 270 days	65.7%	3,439,721	2,261,159
Overdue for 271 to 300 days	85.4%	1,340,055	1,145,021
Overdue for 301 to 330 days	100.0%	638,848	638,848
Overdue for 331 to 360 days	100.0%	244,178	244,178
Overdue for 360 days	100.0%	10,494,457	10,494,457
Total	6.5%	311,270,160	20,263,750

2020

	Loss given default	Carrying amount at the end of the year	Impairment loss at the end of the year
Current	0.4%	146,425,314	650,298
Overdue for 1 to 30 days	3.4%	14,631,174	495,839
Overdue for 31 to 60 days	6.4%	6,678,504	424,266
Overdue for 61 to 90 days	10.3%	5,582,357	574,675
Overdue for 91 to 120 days	12.9%	2,054,400	265,530
Overdue for 121 to 150 days	15.6%	2,769,171	431,319
Overdue for 151 to 180 days	21.7%	3,970,361	859,903
Overdue for 181 to 210 days	30.3%	1,417,385	429,287
Overdue for 211 to 240 days	32.0%	5,413,890	1,731,246
Overdue for 241 to 270 days	35.7%	993,299	354,988
Overdue for 271 to 300 days	54.6%	111,636	60,963
Overdue for 301 to 330 days	88.7%	748,270	664,085
Overdue for 331 to 360 days	100.0%	323,563	323,563
Overdue for 360 days	100.0%	5,060,644	5,060,644
Total	6.3%	196,179,968	12,326,606

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

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

	2021	2020
Balance at the beginning of the year after adjustment	(12,326,606)	(16,674,915)
Charge for the year	(17,855,222)	(11,591,483)
Recoveries or reversals during the year	9,918,078	15,939,792
Balance at the end of the year	(20,263,750)	(12,326,606)

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

Name	Relationship with the Group	Balance at the end of the year	Ageing	Percentage of ending balance of others (%)	Ending balance of provision for bad and doubtful debts
Debtor One	Third party	101,943,773	Within 1 year	32.8%	364,547
Debtor Two	Third party	8,935,591	Within 1 year	2.9%	162,166
Debtor Three	Third party	8,589,195	Within 1 year	2.8%	2,381,463
Debtor Four	Third party	7,028,678	Within 1 year	2.3%	148,535
Debtor Five	Third party	6,161,123	Over 1 year but within 2 years	2.0%	6,082,785
Total		132,658,360		42.8%	9,139,496

4 Receivables under financing

Item	Note	2021	2020
Bills receivable	(1)	364,457,497	338,090,187

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

As at 31 December 2021, there was no pledged bills receivable (31 December 2020: Nil).

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

Item	Amount derecognised at year end
Bank acceptance bills	449,373,119
Total	449,373,119

As at 31 December 2021, derecognised bills endorsed by the Group to other parties whichare not yet due at the end of the period is RMB449,373,119 (31 December 2020:

RMB260,721,441). The notes are used for payment to suppliers and constructions. TheGroup believes that due to good reputation of bank, the risk of notes not accepting by bankon maturity is very low, therefore derecognise the note receivables endorsed. If the bank isunable to pay the notes on maturity, according to the relevant laws and regulations of China,the Group would undertake limited liability for the notes.

5 Prepayments

(1) Prepayments by category:

Item	2021	2020
Prepayments	75,235,879	71,296,416
Total	75,235,879	71,296,416

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

Ageing	2021		2020
	Amount	Percentage (%)	Amount	Percentage (%)
Within 1 year (inclusive)	75,207,094	99.9%	70,977,636	99.6%
Over 1 year but within 2 years (inclusive)	28,785	0.1%	318,780	0.4%
Total	75,235,879	100.0%	71,296,416	100.0%

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

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

Name	Nature of the receivable	Balance at the end of the year	Ageing	Percentage of ending balance of others (%)	Ending balance of provision for bad and doubtful debts
Debtor One	Prepayments	27,057,504	Within 1 year	36.0%	-
Debtor Two	Prepayments	23,934,593	Within 1 year	31.8%	-
Debtor Three	Prepayments	5,813,616	Within 1 year	7.7%	-
Debtor Four	Prepayments	2,311,027	Within 1 year	3.1%	-
Debtor Five	Prepayments	1,743,620	Within 1 year	2.3%	-
Total		60,860,360		80.9%	-

6 Other receivables

	31 December 2021	31 December 2020
Others	30,125,270	22,428,956
Total	30,125,270	22,428,956

(1) Interest receivable

(a) Others by customer type:

Customer type	31 December 2021	31 December 2020
Amounts due from related parties	341,880	522,936
Amounts due from other companies	29,783,390	21,906,020
Sub-total	30,125,270	22,428,956
Less: Provision for bad and doubtful debts	-	-
Total	30,125,270	22,428,956

(b) The ageing analysis is as follows:

Ageing	2021	2020
Within 1 year (inclusive)	27,191,986	10,738,225
Over 1 year but within 2 years (inclusive)	70,480	3,927,625
Over 2 years but within 3 years (inclusive)	190,857	787,908
Over 3 years	2,671,947	6,975,198
Sub-total	30,125,270	22,428,956
Less: Provision for bad and doubtful debts	-	-
Total	30,125,270	22,428,956

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

(c) Movements of provisions for bad and doubtful debts

As at 31 December 2021, no bad and doubtful debt provision was made for otherreceivables (31 December 2020: Nil).

As at 31 December 2021, the Group has no other receivables written off (31 December2020: Nil).

(d) Others categorised by nature

Nature of other receivables	2021	2020
Deposit	4,568,157	10,287,959
Refund of consumption tax and VAT	7,204,557	8,254,195
Petty cash receivable	252,481	124,878
Land purchases and reserves receivable	11,550,000
Others	6,550,075	3,761,924
Sub-total	30,125,270	22,428,956
Less: Provision for bad and doubtful debts	-	-
Total	30,125,270	22,428,956

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

Name	Nature of the receivable	Balance at the end of the year	Ageing	Percentage of ending balance of others (%)	Ending balance of provision for bad and doubtful debts
Debtor One	Land purchases and reserves receivable	11,550,000	Within 1 year	38.3%	-
Debtor Two	Refund of VAT	5,995,042	Within 1 year	19.9%	-
Debtor Three	Refund of VAT	1,209,515	Within 1 year	4.0%	-
Debtor Four	Deposits	675,000	Over 1 year but within 2 years	2.2%	-
Debtor Five	Insurance	602,705	Within 1 year	2.0%	-
Total		20,032,262		66.4%	-

7 Inventories

(1) Inventories by category:

Item	2021			2020
	Book value	Provision for impairment of inventories	Carrying amount	Book value	Provision for impairment of inventories	Carrying amount
Raw materials	245,114,403	-	245,114,403	70,165,666	-	70,165,666
Work in progress	1,937,081,109	-	1,937,081,109	2,236,815,423	-	2,236,815,423
Finished goods	634,212,222	(13,785,214)	620,427,008	653,042,196	(14,474,634)	638,567,562
Total	2,816,407,734	(13,785,214)	2,802,622,520	2,960,023,285	(14,474,634)	2,945,548,651

(2) Provision for impairment of inventories:

Item	Opening balance	Increase during the year	Decrease during the year	Closing balance
		Recognised	Reversal
Finished goods	14,474,634	13,785,214	(14,474,634)	13,785,214

8 Other current assets

Item	2021	2020
Prepaid income taxes	16,697,663	16,087,815
Input tax to be credited	198,516,812	215,812,506
Deferred expenses	1,938,126	2,218,394
Total	217,152,601	234,118,715

9 Long-term equity investments

(1) Long-term equity investments by category:

Item	2021	2020
Investments in joint ventures	39,652,834	42,019,654
Investments in associates	6,843,676	6,243,853
Sub-total	46,496,510	48,263,507
Less: Provision for impairment	-	-
Total	46,496,510	48,263,507

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

Investee	2021 Balance at the beginning of the year	Movements during the year		2021 Closing balance	Shareholding percentage
		Increase in capital	Losses from investments under equity-method
Joint ventures
SAS L&M Holdings (“L&M Holdings”)	42,019,654	-	(2,366,820)	39,652,834	55%
Associates
WEMISS (Shanghai) Enterprise Development Co., Ltd (“WEMISS Shanghai”)	2,743,890	-	(377,079)	2,366,811	30%
Yantai Santai Real Estate Development Co., Ltd	3,499,963	-	19,693	3,519,656	35%
Chengdu Yufeng Brand Management Co., Ltd. (Note)		518,000	(36,528)	481,472	10%
Yantai Guolong Wine Industry Co., Ltd. (Note)		500,000	(24,263)	475,737	10%
Sub-total	6,243,853	1,018,000	(418,177)	6,843,676
Total	48,263,507	1,018,000	(2,784,997)	46,496,510

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

10 Investment properties

	Buildings and plants
Cost
Balance as at 31 December 2020 and 31 December 2021	70,954,045
Accumulated depreciation
31 December 2020	(43,896,315)
Charge for the year	(2,555,472)
31 December 2021	(46,451,787)
Carrying amount
31 December 2021	24,502,258
31 December 2020	27,057,730

11 Fixed assets

(1) Fixed assets

Item	Plant & buildings	Machinery & equipment	Motor vehicles	Total
Cost
31 December 2020	5,136,758,695	2,787,309,487	27,566,592	7,951,634,774
Additions during the year
- Purchases	42,575,416	73,522,777	1,308,231	117,406,424
- Transfers from construction in progress	115,583,725	6,463,487	-	122,047,212
Decrease during the year	-	-	-	-
Disposals or written-offs during the year	-	(46,386,188)	(1,692,947)	(48,079,135)
31 December 2021	5,294,917,836	2,820,909,563	27,181,876	8,143,009,275
Accumulated depreciation
31 December 2020	(892,581,856)	(1,294,646,448)	(21,992,597)	(2,209,220,901)
Charge for the year	(125,310,315)	(141,287,142)	(2,001,135)	(268,598,592)
Disposals or written-offs during the year	-	38,769,695	1,385,864	40,155,559
31 December 2021	(1,017,892,171)	(1,397,163,895)	(22,607,868)	(2,437,663,934)
Provision for impairment
31 December 2020	-	(17,478,027)	-	(17,478,027)
Charge for the year	-	-	-	-
31 December 2021	-	(17,478,027)	-	(17,478,027)
Carrying amount
31 December 2021	4,277,025,665	1,406,267,641	4,574,008	5,687,867,314
31 December 2020	4,244,176,839	1,475,185,012	5,573,995	5,724,935,846

As at 31 December 2021, ownership restricted net value of fixed assets is RMB313,012,605(31 December 2020: RMB333,748,819), referring to Note V. 52.

(2) Fixed assets leased out under operating leases

Item	Cost	Accumulated depreciation	Provision for impairment	Carrying amount
Buildings	47,821,026	(17,759,826)	-	30,061,200
Machinery equipment	73,592,531	(55,620,641)	(17,478,027)	493,863
Motor vehicles	3,344,518	(3,185,307)	-	159,211
Total	124,758,075	(76,565,774)	(17,478,027)	30,714,274

(3) Fixed assets leased out under operating leases

Item	Carrying amount at the end of the year
Machinery equipment	8,627

(4) Fixed assets pending certificates of ownership

Item	Carrying amount	Reason why the certificates are pending
Dormitories, main building and reception building of Changan Chateau	276,574,493	Processing
European town, main building and service building of Chateau Beijing	170,296,377	Processing
Fermentation shop and warehouse of Xinjiang Tianzhu	15,835,763	Processing
Office and packaging shop of Golden Icewine Valley	9,073,335	Processing
Fermentation shop of Zhangyu (Jingyang)	5,101,910	Processing
Office, experiment building and workshop of Fermentation Centre	3,147,779	Processing
Finished goods warehouse and workshop of Kylin Packaging	2,124,816	Processing
Others	284,591	Processing

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

12 Construction in progress

(1) Construction in progress

Project	2021			2020
	Book value	Provision for impairment	Carrying amount	Book value	Provision for impairment	Carrying amount
R&D Centre (“Changyu Wine Complex”) Project	577,328,351	-	577,328,351	589,010,299	-	589,010,299
Ningxia Chateau Construction Project	2,835,598	-	2,835,598	420,440	-	420,440
Sales Company Construction Project	-	-	-	738,462	-	738,462
Changan Chateau Construction Project	1,245,742	-	1,245,742	7,626,393	-	7,626,393
Shihezi Chateau Construction Project	1,028,512	-	1,028,512	5,000	-	5,000
Other Companies’ Construction Project	7,733,896	-	7,733,896	37,694,558	-	37,694,558
Total	590,172,099	-	590,172,099	635,495,152	-	635,495,152

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

Item	Budget (RMB million)	Opening balance	Additions during the year	Transfers to fixed assets	Other transfers out	Closing balance	Percentage of actual cost to budget (%)	Accumulated capitalised interest	Attributable to: Interest capitalised for the year	Interest rate for capitalisation in 2020 (%)	Sources of funding
Changyu Wine Complex	4,506	589,010,299	102,663,881	(114,345,829)	-	577,328,351	82.2%	17,155,308	945,185	1.2%and4.3%	Loans from financial institutions and self-raised
Ningxia Chateau Construction Project	428	420,440	2,415,158	-	-	2,835,598	100.0%				Self-raised
Changan Chateau Construction Project	698	7,626,393	6,419,524	(3,197,455)	(9,602,720)	1,245,742	100.0%				Self-raised
Shihezi Chateau Construction Project	780	5,000	2,662,193	(1,638,681)	-	1,028,512	96.7%				Self-raised

13 Bearer biological assets

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

Item	Immature biological assets	Mature biological assets	Total
Original book value
31 December 2020	7,607,557	248,758,101	256,365,658
Additions during the year
- Increase in cultivated	17,215,775	-	17,215,775
- Transferred to mature	(6,913,350)	6,913,350	-
Decrease during the year	-	(3,317,500)	(3,317,500)
31 December 2021	17,909,982	252,353,951	270,263,933
Accumulated amortisation
31 December 2020	-	(64,192,122)	(64,192,122)
Charge for the year	-	(13,721,424)	(13,721,424)
Decrease during the year	-	1,362,555	1,362,555
31 December 2021	-	(76,550,991)	(76,550,991)
Carrying amount
31 December 2021	17,909,982	175,802,960	193,712,942
31 December 2020	7,607,557	184,565,979	192,173,536

As at 31 December 2021, there is no biological asset with ownership restricted (31December 2020: Nil).

As at 31 December 2021, no provision for impairment of biological asset of the Group wasrecognised as there is no any indication exists (31 December 20120: Nil).

14 Leases

(1) As a lessee

Right-of-use assets

Item	Plant&buildings	Lands	Others	Total
Cost
Balance at the beginning of the year	42,159,688	132,140,502	1,697,986	175,998,176
Additions during the year	15,209,132	5,839,907	-	21,049,039
Balance at the end of the year	57,368,820	137,980,409	1,697,986	197,047,215
Accumulated depreciation
Balance at the beginning of the year	(7,201,147)	(38,164,005)	(339,597)	(45,704,749)
Charge for the year	(10,697,382)	(5,736,448)	(339,597)	(16,773,427)
Balance at the end of the year	(17,898,529)	(43,900,453)	(679,194)	(62,478,176)
Carrying amounts
At the end of the year	39,470,291	94,079,956	1,018,792	134,569,039
At the beginning of the year	34,958,541	93,976,497	1,358,389	130,293,427

Lease liabilities

Item	Note	31 December 2021	1 January 2021
Long-term lease liabilities		116,156,677	105,719,752
Less: lease liabilities due within one year	V,27	14,345,089	7,317,852
Total		101,811,588	98,401,900

(2) As a lessor

Operating lease

Item	2021
Lease income	2,015,486

15 Intangible assets

Item	Land use rights	Software licenses	Trademarks	Total
Original book value
31 December 2020	532,069,913	98,975,807	189,269,287	820,315,007
Additions during the year
- Purchase	1,796,701	1,688,892	222,331	3,707,924
- Transfers from construction in progress	(33,299,900)	-	-	(33,299,900)
31 December 2021	500,566,714	100,664,699	189,491,618	790,723,031
Accumulated amortisation
31 December 2020	(100,498,469)	(44,325,044)	(14,502,429)	(159,325,942)
Additions during the year
- Charge for the year	(10,508,435)	(9,200,894)	(205,640)	(19,914,969)
Decrease during the year	6,384,759	-	-	6,384,759
31 December 2021	(104,622,145)	(53,525,938)	(14,708,069)	(172,856,152)
Carrying amount
31 December 2021	395,944,569	47,138,761	174,783,549	617,866,879
31 December 2020	431,571,444	54,650,763	174,766,858	660,989,065

As at 31 December 2021, the Group has land use right with infinite useful lives ofRMB32,640,119 (31 December 2020: RMB30,746,186), representing the freehold land heldby Chile Indomita Wine Group and Australia Kilikanoon Estate under relevant Chile andAustralia laws, on which the amortisation is not required.

As at 31 December 2021, the Group has trademark with infinite useful lives ofRMB155,355,846 (31 December 2020: RMB154,901,004), which is held by Chile IndomitaWine Group and Australia Kilikanoon Estate. The recoverable amount of the trademark isdetermined according to the present value of the expected future cash flows generated fromthe asset group to which the single assets of trademark right belongs. The managementprepares the cash flow projection for future 5 years (the “projecting period”) based on thelatest financial budget assumption, and estimates the cash flows after the future 5 years (the“subsequent period”). The pretax discount rates used in the cash flow projections are 11.0%and 12.8%, respectively. A key assumption in the estimate of future cash flows is therevenue growth rate in the projecting period. Such revenue growth rate is determined basedon the industry and the expected growth rate of Chile Indomita Wine Group and AustraliaKilikanoon Estate.

The Group recognises the trademark with infinite useful lives as intangible assets, theimpairment assessment of which is made at the end of each reporting year. Themanagement believes that any reasonable change of the above assumptions will not result inthe total book value of the asset group to which the single assets of trademark right belongsexceeding its recoverable amount.

According to the result of impairment assessment, by the end of 31 December 2021, themanagement believes there is no impairment loss on those trademarks with infinite usefullives of the Group.

As at 31 December 2021, ownership restricted net value of intangible assets isRMB201,345,477 (31 December 2020: RMB206,920,456), referring to Note V. 52.

16 Goodwill

(1) Changes in goodwill

Name of investee or events from which goodwill arose	Note	31 December 2020	Additions during the year	Disposals during the year	31 December 2021
Original book value
Etablissements Roullet Fransac (“Roullet Fransac”)	(a)	13,112,525	-	-	13,112,525
Dicot Partners, S.L (“Dicot”)	(a)	92,391,901	-	-	92,391,901
Chile Indomita Wine Group	(a)	6,870,115	-	-	6,870,115
Australia Kilikanoon Estate	(a)	37,063,130	-	-	37,063,130
Sub-total		149,437,671	-	-	149,437,671
Impairment provision		(16,499,459)	(20,563,671)	-	(37,063,130)
Carrying amount		132,938,212	(20,563,671)	-	112,374,541

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

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

(2) Provision for impairment of goodwill

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

The recoverable amount of the asset group is determined according to the present value ofthe expected future cash flows. The management prepares the cash flow projection forfuture 5 years (the “projecting period”) based on the latest financial budget assumption, andestimates the cash flows after the future 5 years (the “subsequent period”). The pretaxdiscount rate used in calculating the recoverable amounts of Fransac Sales, Dicot,Mirefleurs, Indomita Wine and Australia Kilikanoon Estate are 12.1%, 11.2%, 11.0% and

12.8%, respectively (2020: 12.6%, 11.2%, 11.5% and 12.8%). The key assumption is thegrowth rate of annual revenue growth rate of relevant subsidiaries, which is computed basedon the expected growth rate of each subsidiary and long-term average growth rates ofrelevant industries. Other relevant key assumption is budget gross profit margin, which isdetermined based on the historical performance of each subsidiary and its expectations formarket development. According to the results of the impairment test, the Group found thatthe recoverable amount of the asset group including goodwill of Australia Kilikanoon Estate islower than its book value. Therefore, on 31 December 2021, the provision for impairment ofgoodwill was RMB37,063,130. The impairment loss amounting to RMB20,563,671 wasrecognised in asset impairment loss in 2021.

17 Long-term deferred expenses

Item	31 December 2020	Adjustments at the beginning of the period	1 January 2021	Additions during the year	Amortisation for the year	Written back during the year	31 December 2021
Land lease prepayment	40,918,256	(40,918,256)	-	-	-	-	-
Land requisition fee	48,601,667	-	48,601,667	-	(1,778,943)	-	46,822,724
Greening fee	138,185,253	-	138,185,253	211,223	(8,748,458)	(1,961,912)	127,686,106
Leasehold improvement	80,446,179	-	80,446,179	32,052,432	(8,218,980)	-	104,279,631
Others	6,314,500	-	6,314,500	-	(509,798)	-	5,804,702
Total	314,465,855	(40,918,256)	273,547,599	32,263,655	(19,256,179)	(1,961,912)	284,593,163

18 Deferred tax assets and deferred tax liabilities

(1) Deferred tax assets and liabilities

Item	31 December 2021		31 December 2020
	Deductible or taxable temporary differences	Deferred tax assets/ (liabilities)	Deductible or taxable temporary differences	Deferred tax assets/ (liabilities)
Deferred tax assets:
Provision for impairment of assets	51,526,991	11,522,575	44,279,268	9,732,098
Unrealised profits of intra-group transactions	481,484,528	120,371,131	313,043,226	78,260,807
Unpaid bonus	150,325,085	37,581,271	147,824,610	36,956,152
Termination benefits	14,132,191	3,533,048	16,274,352	4,068,588
Deductible tax losses	266,833,106	63,160,456	268,074,301	65,844,999
Deferred income	41,295,338	8,642,716	52,653,609	11,378,631
Others	1,598,132	399,534	-	-
Sub-total	1,007,195,371	245,210,731	842,149,366	206,241,275
Deferred tax liabilities:
Revaluation due to business combinations involving entities not under common control	46,411,478	11,300,970	49,156,771	12,022,613
Others	2,012,000	503,000	-	-
Sub-total	48,423,478	11,803,970	49,156,771	12,022,613

(2) Details of unrecognised deferred tax assets

Item	2021	2020
Deductible tax losses	234,250,359	187,130,828

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

Year	2021	2020
2021	-	25,008,263
2022	21,367,869	21,367,869
2023	22,801,737	22,801,737
2024	42,088,453	42,088,453
2025	75,794,409	75,864,506
2026	72,197,891	-
Total	234,250,359	187,130,828

19 Other non-current assets

Item	2021	2020
Royalty	144,120,442	170,370,147

Pursuant to a royalty agreement dated 18 May 1997, starting from 18 September 1997, theCompany may use certain trademarks of Changyu Group Company, which have beenregistered with the PRC Trademark Office. An annual royalty fee at 2% of the Group’sannual sales is payable to Changyu Group. The license is effective until the expiry of theregistration of the trademarks.

According to the above royalty agreement, Changyu Group collected a total ofRMB576,507,809 for royalty from 2013 to 2019, of which 51% was used to promotetrademarks such as Changyu and the product of this contract, totalling RMB294,018,093.The amount is used for promotion of Changyu and other trademarks and the products of thiscontract, totalling RMB62,250,368, the difference is RMB231,768,615 (including tax).

On 18 May 2019, the general meeting of shareholders approved the proposal of theamendment to the royalty agreement. Article 6.1 of the royalty agreement with ChangyuGroup was amended to: During the validity period of this contract, the Group pays ChangyuGroup royalty on an annual basis. The royalty is calculated based on 0.98% of the salesvolume of the Group ‘s contract products using this trademark. The article is amended to:

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

Changyu Group promised to offset the difference of RMB231,768,615 above with the royaltyfor four years, i.e. from 2019 to 2022.If it is not sufficient for deduction, the rest will be repaidin a one-off manner in 2023. If there is surplus, the surplus part of the royalty will becharged from the year when the surplus occurs. As the amount is a long-term prerpayment,the Company recognises the amount as other non-current assets and meanwhile offset thesales fee, i.e. royalty.

As at 31 December 2021, the Group’s royalty in 2021 was RMB26,249,705 (VAT included).When the difference is deducted by the above-mentioned amount, the balance of royaltydue from Changyu Group was RMB144,120,442.

20 Short-term loans

Short-term loans by category:

Item	2021	2020
Unsecured loans	478,331,156	619,149,908
Mortgaged loans	118,469,193	55,724,891
Guaranteed loans	25,266,108	14,215,916
Total	622,066,457	689,090,715

As at 31 December 2021, details of short-term borrowings were as follows:

	Amount	Exchange rate	Amount	Nature of interest rate	Interest rate	Interest rate at the end of the year
			RMB		%	%
Credit loans (RMB)	150,000,000	1.0000	150,000,000	Floating	1 year LPR-0.005	3.35%
Credit loans (RMB)	300,000,000	1.0000	300,000,000	Floating	Annual benchmark interest rate	3.35%
Credit loans (USD)	4,490,000	6.3098	28,331,156	Fixed	1.48%	1.48%
Mortgaged loans (EUR)	6,795,437	7.2197	49,061,015	Fixed	0.35% - 0.9%	0.35% - 0.9%
Mortgaged loans (USD)	11,000,000	6.3098	69,408,178	Fixed	1.12% - 1.55%	1.12% - 1.55%
Guaranteed loans (AUD)	5,466,488	4.6220	25,266,108	Fixed	2.50%	2.50%
Total			622,066,457

? As at 31 December 2021, mortgaged loans (EUR) were Hacienda y Vi?edos Marques delAtrio, S.L.U (“ Atrio “) factoring of accounts receivable from banks including Banco deSabadell, S.A. of EUR6,795,437 (equivalent of RMB49,061,015) (31 December 2020:

EUR3,558,629, equivalent of RMB28,557,993.

? On 31 December 2021, Chile Indomita Wine Group pledged its fixed assets to BancoScotiabank to borrow USD11,000,000 (equivalent to RMB69,408,178) (31 December2020: USD4,000,000, equivalent to RMB26,162,960).

? On 31 December 2021, the secured loan represented the secured loan of AustraliaKilikanoon Estate of AUD5,466,488 (equivalent to RMB25,266,108) (31 December 2020:

AUD2,833,945, equivalent to RMB14,215,916).

21 Accounts payable

Ageing	2021	2020
Within 1 year (inclusive)	486,006,974	477,926,275
Over 1 year but within 2 years (inclusive)	4,435,786	2,173,356
Over 2 years but within 3 years (inclusive)	1,405,133	1,277,767
Over 3 years	1,605,923	2,970,560
Total	493,453,816	484,347,958

There is no significant accounts payable with ageing of more than one year.

22 Contract liabilities

Item	As at 31 December 2021	As at 1 January 2021
Receipt in advance	144,013,594	118,210,799
Withholding sales rebates	3,107,122	16,862,481
Total	147,120,716	135,073,280

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

23 Employee benefits payable

(1) Employee benefits payable:

	Note	31 December 2020	Additions during the year	Decrease during the year	31 December 2021
Short-term employee benefits	(2)	172,176,085	463,134,665	(454,752,853)	180,557,897
Post-employment benefits - defined contribution plans	(3)	329,474	45,027,626	(45,027,747)	329,353
Termination benefits		16,274,352	5,609,349	(7,751,510)	14,132,191
Total		188,779,911	513,771,640	(507,532,110)	195,019,441

(2) Short-term employee benefits

	31 December 2020	Additions during the year	Decrease during the year	31 December 2021
Salaries, bonuses, allowances	170,277,311	414,204,352	(405,639,128)	178,842,535
Staff welfare	1,734,723	17,963,364	(18,057,122)	1,640,965
Social insurance	340,733	15,251,455	(15,288,352)	303,836
Medical insurance	340,733	13,693,635	(13,730,532)	303,836
Work-related injury insurance	-	1,534,970	(1,534,970)	-
Maternity insurance	-	22,850	(22,850)	-
Housing fund	27,497	12,722,935	(12,711,850)	38,582
Labour union fee, staff and workers’ education fee	1,874,792	3,033,259	(3,056,401)	1,851,650
Sub-total	174,255,056	463,175,365	(454,752,853)	182,677,568
Less: Non-current liabilities	2,078,971	40,700	-	2,119,671
Total	172,176,085	463,134,665	(454,752,853)	180,557,897

(3) Post-employment benefits - defined contribution plans

	31 December 2020	Additions during the year	Decrease during the year	31 December 2021
Basic pension insurance	329,464	43,803,058	(43,804,402)	328,120
Unemployment insurance	10	1,224,568	(1,223,345)	1,233
Total	329,474	45,027,626	(45,027,747)	329,353

24 Taxes payable

Item	2021	2020
Value-added tax	54,103,944	25,853,102
Consumption tax	70,563,701	42,076,231
Corporate income tax	194,566,746	130,621,524
Individual income tax	872,252	614,344
Tax on the use of urban land	2,441,121	2,327,666
Education surcharges	5,199,891	2,498,374
Urban maintenance and construction tax	7,128,647	3,429,038
Others	7,445,998	5,992,534
Total	342,322,300	213,412,813

25 Other payables

	Note	31 December 2021	31 December 2020
Interest payable		323,074	553,471
Dividends payable		68,392	1,003,125
Others	(1)	452,642,025	384,548,930
Total		453,033,491	386,105,526

(1) Others

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

Item	2021	2020
Deposit payable to dealer	241,414,134	177,129,582
Advertising fee payable	41,264,460	50,444,091
Equipment and construction fee payable	44,345,312	51,381,563
Freight charges payable	29,192,798	26,061,359
Deposits due to suppliers	12,966,789	14,836,302
Contracting fee payable	8,668,872	9,656,066
Staff deposit	5,037,925	359,282
Others	69,751,735	54,680,685
Total	452,642,025	384,548,930

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

26 Other current liabilities

Item	As at 31 December 2021	As at 31 December 2020
Tax to be transferred out as sales	18,374,193	14,820,653

27 Non-current liabilities due within one year

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

Item	2021	2020
Long-term loans due within one year	74,520,037	111,311,890
Long-term payables due within one year	22,000,000	22,000,000
Long-term lease liabilities due within one year	14,345,089	-
Total	110,865,126	133,311,890

28 Long-term loans

(1) Long-term loans by category

Item	2021	2020
Credit loans	193,475,080	220,219,258
Guaranteed loans	57,092,000	91,445,600
Less: Long-term loans due within one year	74,520,037	111,311,890
Total	176,047,043	200,352,968

As at 31 December 2021, details of long-term borrowings were as follows:

	Amount	Exchange rate	Amount	Nature of interest rate	Interest rate	Interest rate at the end of the year	Long-term loans due within one year	Long-term loans due after one year
			RMB		%	%
Credit loans (EUR)	26,798,216	7.2197	193,475,080	Fixed	0.95% - 3.28%	0.95% - 3.28%	68,270,037	125,205,043
Guaranteed loans (RMB)	6,250,000	1.0000	6,250,000	Floating	90% of 5-year LPR	4.275%	6,250,000	-
Guaranteed loans (AUD)	11,000,000	4.6220	50,842,000	Floating	BBSY+1.10%	1.40%	-	50,842,000
Total			250,567,080				74,520,037	176,047,043

As at 31 December 2021, Credit loans (EUR) were EUR26,798,216 borrowed by BancoSabadell, Bankia, Banco Santander, BBVA, Caja Rural de Navarr etc. (equivalent ofRMB193,475,080) (31 December 2020: EUR27,441,652, equivalent of RMB220,219,258).Guaranteed loans (RMB) were long-term borrowings of RMB6,250,000 of the R&D Centre, asubsidiary of the Company (31 December 2020: RMB31,250,000). Australia KilikanoonEstate has borrowed AUD11,000,000 (equivalent of RMB50,842,000) (31 December 2020:

AUD12,000,000, equivalent of RMB60,195,600) from ANZ Bank and it was guaranteed bythe Company.

29 Long-term payables

Item	2021	2020
Agricultural Development Fund of China (“CADF”)	86,000,000	108,000,000
Less: Long-term payables due within one year	22,000,000	22,000,000
Balance of long-term payables	64,000,000	86,000,000

In 2016, RMB305,000,000 from CADF was invested in R&D Centre, CADF accounted for

37.9% of the registered capital. According to the investment agreement, CADF will recoveryinvestment funds over 10 years, the investment income received equal to 1.2% of theremaining unpaid principal per annum. In addition to the fixed income, CADF will no longerenjoy other profits or bear the loss of R&D Centre. Therefore, although the investment inR&D Centre, nominally equity investment, is actually a debt investment (financial discountloan). The Group take this investment as long-term payables, which measured in amortizedcost. The Group repays the principal of RMB22,000,000in 2021. Refer to Note V. 52 fordetails of mortgaged and pledged assets.

Balance of long-term payables	Return on investment	Investment date	Termination date of repayment	Due within one year	Due after one year	Mortgaged and pledged assets
RMB				RMB	RMB
86,000,000	1.2%	29 February 2016	28 February 2025	22,000,000	64,000,000	Fixed assets and intangible assets

30 Deferred income

Item	31 December 2020	Additions during the year	Decrease during the year	31 December 2021
Government grants	52,653,609	2,452,011	(13,810,282)	41,295,338

Government grants:

Liability	31 December 2020	Additions of government grants during the year	Amounts recognised in other income during the year	31 December 2021	Related to assets/income
Industrial development support project	24,600,000	-	(4,100,000)	20,500,000	Government grants related to assets
Fixed asset investment reward of Shihezi Chateau project	2,436,600	-	(2,280,000)	156,600	Government grants related to assets
Shandong Peninsula Blue Economic Area construction funds	2,000,000	-	(2,000,000)	-	Government grants related to assets
Xinjiang industrial revitalisation and technological transformation project	12,798,000	-	(1,422,000)	11,376,000	Government grants related to assets
Special government grant for infrastructure	2,120,000	-	(1,060,000)	1,060,000	Government grants related to assets
Raw wine fermentation project	434,700	-	(434,700)	-	Government grants related to assets
Wine fermentation capacity construction (Huanren) project	2,400,000	-	(400,000)	2,000,000	Government grants related to assets
Engineering technology transformation of information system project	1,740,000	-	(580,000)	1,160,000	Government grants related to assets
Liquor electronic tracking project	1,191,150	-	(667,055)	524,095	Government grants related to assets
Special fund for efficient water-saving irrigation project	1,315,000	-	(162,000)	1,153,000	Government grants related to assets
Subsidy for economic and energy-saving technological transformation projects	769,800	-	(128,300)	641,500	Government grants related to assets
Wine industry development project	186,000	-	(186,000)	-	Government grants related to assets
Subsidy for mechanic development of Penglai Daliuhang Base	238,858	-	(13,270)	225,588	Government grants related to assets
Coal subsidy	-	2,079,711	-	2,079,711	Government grants related to assets
Cross-border e-commerce project	201,801	-	(201,801)	-	Related to income
Subsidy for boiler reconstruction and demolition	70,000	-	(10,000)	60,000	Related to income
Prize from Industrial Design Competition of Yantai Mayor’s Cup	50,000	50,000	(50,000)	50,000	Related to income
Special Funds for Innovation-Driven Development of Yantai City	101,700	322,300	(115,156)	308,844	Related to income
Total	52,653,609	2,452,011	(13,810,282)	41,295,338

31 Other non-current liabilities

Item	31 December 2021	31 December 2020
Employee benefits payable	2,119,671	2,078,971

As at 31 December 2021, employee benefit represents deposit from bonus accrued formanagers and above. The bonus is expected to be paid in 2023.

32 Share capital

	At 31 December 2020 and 31 December 2021
Unrestricted A shares	453,460,800
B shares	232,003,200
Total of unrestricted shares	685,464,000

33 Capital reserve

Item	31 December 2020	Additions during the year	Decrease during the year	31 December 2021
Share premium	519,052,172	-	-	519,052,172
Others	5,916,588	-	-	5,916,588
Total	524,968,760	-	-	524,968,760

34 Other comprehensive income

Item	Balance at the beginning of the year attributable to shareholders of the Company	Accrued during the year					Balance at the end of the year attributable to shareholders of the Company
		Before-tax amount	Less: Previously recognised amount transferred to profit or loss	Less: Income tax expenses	Net-of-tax amount attributable to shareholders of the Company	Net-of-tax amount attributable to non-controlling interests
Items that may be reclassified to profit or loss
Translation differences arising from translation of foreign currency financial statements	576,129	(39,307,949)	-	-	(35,283,306)	(4,024,643)	(34,707,177)

35 Surplus reserve

Item	31 December 2021	31 December 2020
Statutory surplus reserve	342,732,000	342,732,000

In accordance with the Company Law and the Articles of Association Company, the Companyappropriated 10% of its net profit to statutory surplus reserve. The appropriation to thestatutory surplus reserve may be ceased when the accumulated appropriation reaches over50% of the registered capital of the Company. The Company does not appropriate net profitto the surplus reserve in 2021 as surplus reserve of the Company is above 50% of theregistered capital.

The Company can appropriate discretionary surplus reserve after appropriation of thestatutory surplus reserve. Discretionary surplus reserve can be utilised to offset the deficit orincrease the share capital after approval.

36 Retained earnings

Item	Note	2021	2020
Retained earnings at the beginning of the year (before adjustment)		8,714,091,755	8,735,513,044
Impact of retrospective adjustment of accounting standards	(1)	(10,582,161)	-
Retained earnings at the beginning of the year (after adjustment)		8,703,509,594	8,735,513,044
Add: Net profits for the year attributable to shareholders of the Company		500,102,606	470,860,587
Less: Dividends to ordinary shares	(2)	(274,185,600)	(479,824,800)
Distribution of dividends to existing shareholders from Culture Development		-	(12,457,076)
Retained earnings at the end of the year	(3)	8,929,426,600	8,714,091,755

(1) Adjustments on beginning retained earnings are as follows:

As a result of the implementation of the new financial instrument standards by the Group in2021, the undistributed profit at the beginning of 2021 was reduced by RMB10,582,161.

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

Pursuant to the shareholders’ approval at the shareholders’ general meeting on 27 May2021, a cash dividend of RMB0.4 per share (2020: RMB0.7 per share), totallingRMB274,185,600 (2020: RMB479,824,800).

(3) Retained earnings at the end of the year

As at 31 December 2021, the consolidated retained earnings attributable to the Companyincluded an appropriation of RMB58,041,628 (2020: RMB58,021,644) to surplus reservemade by the subsidiaries.

37 Operating income and operating costs

Item	2021		2020
	Income	Cost	Income	Cost
Principal activities	3,879,875,396	1,604,954,772	3,325,812,768	1,479,923,326
Other operating activities	73,192,187	42,835,102	69,589,233	23,954,081
Total	3,953,067,583	1,647,789,874	3,395,402,001	1,503,877,407
Including:Revenue from contracts with customers	3,951,052,097	1,646,424,782	3,393,386,515	1,502,467,908
Rent income	2,015,486	1,365,092	2,015,486	1,409,499

(1) Disaggregation of revenue from contracts with customers:

Type of contract	2021	2020
By type of goods or services
- Liquor	3,879,875,396	3,325,812,768
- Others	71,176,701	67,573,747
By timing of transferring goods or services
- Revenue recognised at a point in time	3,951,052,097	3,393,386,515

38 Taxes and surcharges

Item	2021	2020
Consumption tax	164,791,894	120,563,955
Urban maintenance and construction tax	30,604,422	23,169,608
Education surcharges	22,147,840	16,756,851
Property tax	28,005,705	26,843,414
Tax on the use of urban land	11,654,759	11,332,778
Stamp duty	6,488,829	3,650,250
Others	364,121	1,472,418
Total	264,057,570	203,789,274

39 Selling and distribution expenses

Item	2021	2020
Salaries and benefits	308,876,899	289,527,114
Marketing fee	251,443,176	200,259,537
Labour service fee	96,864,855	58,723,298
Depreciation expense	48,014,605	41,224,340
Storage rental	28,110,876	35,744,058
Advertising fee	91,168,885	22,724,095
Royalty	24,763,872	21,985,068
Travelling expenses	21,624,100	20,065,075
Design and production fee	30,247,672	15,427,023
Conference fee	20,088,371	15,387,699
Water, electricity and gas fee	14,988,125	13,427,340
Others	62,762,669	53,757,838
Total	998,954,105	788,252,485

40 General and administrative expenses

Item	2021	2020
Salaries and benefits	73,920,103	73,329,053
Depreciation expenses	79,928,195	72,637,754
Repair costs	16,467,478	23,714,008
Administrative expenses	26,124,859	20,927,794
Amortisation expenses	19,354,205	19,568,760
Amortisation of greening fee	19,186,231	18,187,244
Rental charge	5,735,121	9,969,494
Safety production costs	11,190,158	7,831,443
Security and cleaning fee	7,455,965	7,650,813
Contracting fee	9,192,907	7,603,536
Others	30,521,154	29,226,567
Total	299,076,376	290,646,466

41 Financial expenses

Item	2021	2020
Interest expenses from loans and payables	24,504,339	35,187,642
Interest expenses from lease liabilities	5,292,452	-
Less: Borrowing costs capitalised	945,185	797,021
Less: Financial expenses offset by fiscal interest subsidy	-	1,500,000
Interest income from deposits and receivables	(19,558,354)	(14,247,274)
Net exchange losses/(gains)	8,296,888	(274,140)
Other financial expenses	3,588,587	2,072,506
Total	21,178,727	20,441,713

Fiscal interest subsidy during reporting period has been included in non-recurring gains andlosses.

42 Other income

Item	2021	2020	Related to assets/income
Reward on the fixed asset investment	-	2,280,000	Government grants related to assets
Shandong Peninsula Blue Economic Area construction funds	2,000,000	2,000,000	Government grants related to assets
Industrial development support project	4,100,000	4,100,000	Government grants related to assets
Others - Government grants related to assets	7,333,325	7,018,292	Government grants related to assets
Special funds for the development of enterprises	6,815,339	23,068,826	Related to income
Tax refunds	13,747,870	12,324,440	Related to income
Strong industrial city special funds	-	792,600	Related to income
Others - Government grants related to income	14,244,207	21,479,462	Related to income
Total	48,240,741	73,063,620

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

43 Investment losses

Investment losses by item

Item	2021	2020
Long-term equity investment losses under equity method	(2,784,997)	(2,217,623)
Total	(2,784,997)	(2,217,623)

44 Credit (losses)/reversal

Item	2021	2020
Accounts receivable	(7,937,144)	4,348,309
Total	(7,937,144)	4,348,309

45 Impairment losses

Item	2021	2020
Inventories	689,420	5,705,003
Goodwill	(20,563,671)	(8,920,981)
Total	(19,874,251)	(3,215,978)

46 Loss from asset disposals

Item	2021	2020
Loss from disposal of fixed assets	11,939,284	1,180,655

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

47 Non-operating income and non-operating expenses

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

Item	2021	2020
Inventory stocktake surplus	1,019,314	3,823,905
Insurance compensation	1,069,670	3,067,670
Net income from fine	1,068,169	3,098,877
Others	2,057,151	1,918,058
Total	5,214,304	11,908,510

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

(2) Non-operating expenses

Item	2021	2020
Compensation, penalty and fine expenses	1,761,266	347,635
Donations provided	900,000	1,048,300
Losses from damage or scrapping of non current assets	3,425,709	-
Others	224,869	306,923
Total	6,311,844	1,702,858

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

48 Income tax expenses

Item	Note	2021	2020
Current tax expense for the year based on tax law and regulations		248,208,920	135,163,243
Changes in deferred tax assets/liabilities	(1)	(39,188,099)	56,641,257
Total		209,020,821	191,804,500

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

Item	2021	2020
Origination of temporary differences	(39,188,099)	56,641,257
Total	(39,188,099)	56,641,257

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

Item	2021	2020
Profit before taxation	715,699,194	664,866,563
Estimated income tax at 25%	178,924,799	166,216,641
Effect of different tax rates applied by subsidiaries	7,223,819	1,310,363
Effect of non-deductible costs, expense and losses	9,480,180	7,185,074
Effect of deductible losses of deferred tax assets not recognised for the year	12,159,985	16,417,337
Deferred tax assets written-off	1,232,038	675,085
Income tax expenses	209,020,821	191,804,500

49 Basic earnings per share and diluted earnings per share

(1) Basic earnings per share

Basic earnings per share is calculated as dividing consolidated net profit attributable toordinary shareholders of the Company by the weighted average number of ordinary sharesoutstanding:

	2021	2020
Consolidated net profit attributable to ordinary shareholders of the Company	500,102,606	470,860,587
Weighted average number of ordinary shares outstanding	685,464,000	685,464,000
Basic earnings per share (RMB/share)	0.73	0.69

Weighted average number of ordinary shares is calculated as follows:

	2021	2020
Issued ordinary shares at the beginning of the year	685,464,000	685,464,000
Weighted average number of ordinary shares at the end of the year	685,464,000	685,464,000

(2) The Group does not have any potential dilutive ordinary shares for the listed years.

50 Cash flow statement

(1) Proceeds relating to other operating activities:

Item	2021	2020
Government grants	36,882,470	56,515,941
Penalty income	1,068,169	3,098,877
Interest income from bank	19,558,354	14,396,201
Others	31,633,258	7,186,229
Total	89,142,251	81,197,248

(2) Payments relating to other operating activities:

Item	2021	2020
Selling and distribution expenses	430,962,311	399,973,695
General and administrative expenses	128,747,237	127,666,411
Others	2,488,469	24,250,891
Total	562,198,017	551,890,997

(3) Proceeds relating to other financing activities:

Item	2021	2020
Cash paid for acquisition of minority interests	-	62,966,747
Cash paid for lease	15,904,567	-
Total	15,904,567	62,966,747

51 Supplementary information on cash flow statement

(1) Supplement to cash flow statement

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

Item	2021	2020
Net profit	506,678,373	473,062,063
Add: Provisions for impairment of assets	19,874,251	3,215,978
Credit losses/(reversal)	7,937,144	(4,348,309)
Depreciation of fixed assets and investment property	271,154,064	298,224,327
Amortisation of intangible assets	19,914,969	20,413,627
Amortisation of long-term deferred expenses	19,256,179	16,578,465
Amortisation of biological assets	13,721,424	13,270,614
Depreciation of ROU assets	16,773,427	-
Losses from disposal of fixed assets, intangible assets, and other long-term assets	15,364,993	1,338,570
Financial expenses	26,782,042	36,134,118
Royalty	24,763,872	21,985,068
Investment losses	2,784,997	2,217,623
(Increase)/Decrease in deferred tax assets	(38,969,456)	59,310,068
Decrease in deferred tax liabilities	(218,643)	(2,668,811)
Decrease/(Increase) in gross inventories	143,615,551	(38,192,093)
Increase in operating receivables	(187,412,623)	(41,443,296)
Increase/(Decrease) in operating payables	263,362,094	(353,951,339)
Net cash flows from operating activities	1,125,382,658	505,146,673

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

Item	2021	2020
Payment of construction in progress and other long-term assets by bank acceptances	60,224,230	141,440,165

c. Change in cash and cash equivalents:

Item	2021	2020
Cash equivalents at the end of the year	1,502,327,029	1,052,665,105
Less: Cash equivalents at the beginning of the year	1,052,665,105	1,397,399,470
Net increase/(dercrease) in cash and cash equivalents	449,661,924	(344,734,365)

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

year:

Information on acquisition of subsidiaries and other business units:

	2021	2020
Consideration for acquiring subsidiaries and other business units	-	89,519,789
Cash or cash equivalents paid during the year for acquiring subsidiaries and other business units during the year	-	89,519,789
Including: Culture Development	-	89,519,789
Less: Cash and cash equivalents held by disposed subsidiaries and other business units	-	-
Net cash paid for the acquisition	-	89,519,789

(3) Details of cash and cash equivalents

Item	2021	2020
Cash at bank and on hand
Including: Cash on hand	71,486	19,637
Bank deposits available on demand	1,502,255,543	1,052,645,468
Closing balance of cash and cash equivalents	1,502,327,029	1,052,665,105

52 Assets with restrictive ownership title or right of use

Item	Opening balance	Balance at the end of the year	Reason for restriction
Cash at bank and on hand	67,996,762	11,568,964	The Company deposits for letters of credit etc.
Account receivable (i)	28,557,991	49,061,015	Short-term borrowings mortgage from Atrio
Fixed assets	333,748,819	313,012,605	R&D Centre mortgage for long-term payables and long-term and short-term borrowings
Intangible assets	206,920,456	201,345,477	R&D Centre mortgage for long-term payables
Total	637,224,028	574,988,061

(i) As at 31 December 2021, the amount of accounts receivable with restricted ownership

is EUR6,795,436, which refers to accounts receivable Atrio conducted for factoringfrom Banco de Sabadell, S.A. Etc. (31 December 2020: EUR3,558,628, equivalent ofRMB28,557,991)

VI. Interests in other entities

1 Interests in subsidiaries

(1) Composition of the Group

Name of the Subsidiary	Principal place of business	Registered place	Business nature	Registered capital	Shareholding ratio (%)		Acquisition method
					(or similar equity interest)
Xinjiang Tianzhu Wine Co., Ltd. (“Xinajing Tianzhu”)	Shihezi, Xinjiang, China	Shihezi, Xinjiang, China	Manufacturing	RMB75,000,000	60	-	Business combinations involving entities not under common control
Etablissements Roullet Fransac (“Roullet Fransac”)	Cognac, France	Cognac, France	Trading	EUR2,900,000	-	100	Business combinations involving entities not under common control
Dicot Partners, S.L (“Dicot”)	Navarre, Spain	Navarre, Spain	Marketing and sales	EUR2,000,000	90	-	Business combinations involving entities not under common control
Vi?a Indómita, S.A., Vi?a Dos Andes, S.A., and Bodegas Santa Alicia SpA. (“Chile Indomita Wine Group”)	Santiago, Chile	Santiago, Chile	Marketing and sales	CLP31,100,000,000	85	-	Acquired through establishment or investment
Kilikanoon Estate Pty Ltd. (“Australia Kilikanoon Estate”)	Adelaide, Australia	Adelaide, Australia	Marketing and sales	AUD6,420,000	97.5	-	Business combinations involving entities not under common control
Beijing Changyu Sales and Distribution Co., Ltd (“Beijing Sales”)	Beijing, China	Beijing, China	Marketing and sales	RMB1,000,000	100	-	Acquired through establishment or investment
Yantai Kylin Packaging Co., Ltd. (“Kylin Packaging”)	Yantai, Shandong, China	Yantai, Shandong, China	Manufacturing	RMB15,410,000	100	-	Acquired through establishment or investment
Yantai Chateau Changyu-Castel Co., Ltd (“Chateau Changyu”) (c)	Yantai, Shandong, China	Yantai, Shandong, China	Manufacturing	USD5,000,000	70	-	Acquired through establishment or investment
Changyu (Jingyang) Wine Co., Ltd. (“Jingyang Wine”)	Xianyang, Shaanxi, China	Xianyang, Shaanxi, China	Manufacturing	RMB1,000,000	90	10	Acquired through establishment or investment
Yantai Changyu Pioneer Wine Sales Co., Ltd. (“Sales Company”)	Yantai, Shandong, China	Yantai, Shandong, China	Marketing and sales	RMB8,000,000	100	-	Acquired through establishment or investment
Langfang Development Zone Castel-Changyu Wine Co., Ltd (“Langfang Castel”)	Langfang, Hebei, China	Langfang, Hebei, China	Manufacturing	USD6,108,818	39	10	Acquired through establishment or investment
Changyu (Jingyang) Wine Sales Co., Ltd. (“Jingyang Sales”)	Xianyang, Shaanxi, China	Xianyang, Shaanxi, China	Marketing and sales	RMB1,000,000	10	90	Acquired through establishment or investment
Langfang Changyu Pioneer Wine Sales Co., Ltd (“Langfang Sales”)	Langfang, Hebei, China	Langfang, Hebei, China	Marketing and sales	RMB1,000,000	10	90	Acquired through establishment or investment

Name of the Subsidiary	Principal place of business	Registered place	Business nature	Registered capital	Shareholding ratio (%)		Acquisition method
					(or similar equity interest)
Shanghai Changyu Sales and Distribution Co., Ltd. (“Shanghai Sales”)	Shanghai, China	Shanghai, China	Marketing and sales	RMB1,000,000	100	-	Acquired through establishment or investment
Beijing Changyu AFIP Agriculture development Co., Ltd (“Agriculture Development”)	Miyun, Beijing, China	Miyun, Beijing, China	Marketing and sales	RMB1,000,000	-	100	Acquired through establishment or investment
Beijing Chateau Changyu AFIP Global Co., Ltd. (“AFIP”) (d)	Beijing, China	Beijing, China	Manufacturing	RMB642,750,000	91.53	-	Acquired through establishment or investment
Yantai Changyu Wine Sales Co., Ltd. (“Wines Sales”)	Yantai, Shandong, China	Yantai, Shandong, China	Marketing and sales	RMB5,000,000	90	10	Acquired through establishment or investment
Yantai Changyu Pioneer International Co., Ltd. (“Pioneer International”)	Yantai, Shandong, China	Yantai, Shandong, China	Marketing and sales	RMB5,000,000	70	30	Acquired through establishment or investment
Hangzhou Changyu Wine Sales Co., Ltd. (“Hangzhou Changyu”)	Hangzhou, Zhejiang, China	Hangzhou, Zhejiang, China	Marketing and sales	RMB500,000	-	100	Acquired through establishment or investment
Ningxia Changyu Grape Growing Co., Ltd. (“Ningxia Growing”)	Yinchuan, Ningxia, China	Ningxia, China	Plating	RMB1,000,000	100	-	Acquired through establishment or investment
Huanren Changyu National Wines Sales Co., Ltd. (“National Wines”)	Benxi, Liaoning, China	Benxi, Liaoning, China	Marketing and sales	RMB2,000,000	100	-	Acquired through establishment or investment
Liaoning Changyu Golden Icewine Valley Co., Ltd. (“Golden Icewine Valley”) (e)	Benxi, Liaoning, China	Benxi, Liaoning, China	Manufacturing	RMB59,687,300	51	-	Acquired through establishment or investment
Yantai Development Zone Changyu Trading Co., Ltd (“Development Zone Trading”)	Yantai, Shandong, China	Yantai, Shandong, China	Marketing and sales	RMB5,000,000	-	100	Acquired through establishment or investment
Yantai Changyu Fushan Trading Company (“Fushan Trading”)(a)	Yantai, Shandong, China	Yantai, Shandong, China	Marketing and sales	RMB5,000,000	-	100	Acquired through establishment or investment
Beijing AFIP Meeting Center (“Meeting Center”)	Miyun, Beijing, China	Miyun, Beijing, China	Services	RMB500,000	-	100	Acquired through establishment or investment
Beijing AFIP Tourism and Culture (“AFIP Tourism”)	Miyun, Beijing, China	Miyun, Beijing, China	Tourism	RMB500,000	-	100	Acquired through establishment or investment
Changyu (Ningxia) Wine Co., Ltd. (“Ningxia Wine”)	Ningxia, China	Ningxia, China	Manufacturing	RMB1,000,000	100	-	Acquired through establishment or investment
Yantai Changyu Chateau Tinlot Co., Ltd. (“Chateau Tinlot”)	Yantai, Shandong, China	Yantai, Shandong, China	Wholesale and retail	RMB400,000,000	65	35	Acquired through establishment or investment
Xinjiang Chateau Changyu Baron Balboa Co., Ltd. (“Chateau Shihezi”)	Shihezi, Xinjiang, China	Shihezi, Xinjiang, China	Manufacturing	RMB550,000,000	100	-	Acquired through establishment or investment
Ningxia Chateau Changyu Moser XV Co., Ltd. (“Chateau Ningxia”)	Yinchuan, Ningxia, China	Yinchuan, Ningxia, China	Manufacturing	RMB2,000,000	100	-	Acquired through establishment or investment
Shaanxi Chateau Changyu Rena Co., Ltd. (“Chateau Changan”)	Xianyang, Shaanxi, China	Xianyang, Shaanxi, China	Manufacturing	RMB20,000,000	100	-	Acquired through establishment or investment

Name of the Subsidiary	Principal place of business	Registered place	Business nature	Registered capital	Shareholding ratio (%)		Acquisition method
					(or similar equity interest)
Yantai Changyu Wine Research & Development Centre Co., Ltd. (“R&D Centre”) (f)	Yantai, Shandong, China	Yantai, Shandong, China	Manufacturing	RMB805,000,000	85.32	-	Acquired through establishment or investment
Changyu (HuanRen) Wine Co., Ltd (“Huan Ren Wine”)	Benxi, Liaoning, China	Benxi, Liaoning, China	Wine production projecting	RMB5,000,000	100	-	Acquired through establishment or investment
Xinjiang Changyu Sales Co., Ltd (“Xinjiang Sales”)	Shihezi, Xinjiang, China	Shihezi, Xinjiang, China	Marketing and sales	RMB10,000,000	-	100	Acquired through establishment or investment
Ningxia Changyu Trading Co., Ltd (“Ningxia Trading”)	Yinchuan, Ningxia, China	Yinchuan, Ningxia, China	Marketing and sales	RMB1,000,000	-	100	Acquired through establishment or investment
Shaanxi Changyu Rena Wine Sales Co., Ltd (“Shaanxi Sales”)	Xianyang, Shaanxi, China	Xianyang, Shaanxi, China	Marketing and sales	RMB3,000,000	-	100	Acquired through establishment or investment
Penglai Changyu Wine Sales Co., Ltd (“Penglai Sales”)	Penglai, Shandong, China	Penglai, Shandong, China	Marketing and sales	RMB5,000,000	-	100	Acquired through establishment or investment
Laizhou Changyu Wine Sales Co., Ltd (“Laizhou Sales”)	Laizhou, Shandong, China	Laizhou, Shandong, China	Marketing and sales	RMB1,000,000	-	100	Acquired through establishment or investment
Francs Champs Participations SAS (“Francs Champs”)	Cognac, France	Cognac, France	Investment and trading	EUR32,000,000	100	-	Acquired through establishment or investment
Yantai Roullet Fransac Wine Sales Co., Ltd. (“Yantai Roullet Fransac”)	Yantai, Shandong, China	Yantai, Shandong, China	Marketing and sales	RMB1,000,000	-	100	Acquired through establishment or investment
Yantai Changyu Wine Sales Co., Ltd. (“Wine Sales Company”)	Yantai, Shandong, China	Yantai, Shandong, China	Marketing and sales	RMB5,000,000	100	-	Acquired through establishment or investment
Shaanxi Chateau Changyu Rena Tourism Co., Ltd (“Chateau Tourism”)	Xianxin, Shaanxi, China	Xianxin, Shaanxi, China	Tourism	RMB1,000,000	-	100	Acquired through establishment or investment
Longkou Changyu Wine Sales Co., Ltd (“Longkou Sales”)	Yantai, Shandong, China	Yantai, Shandong, China	Marketing and sales	RMB1,000,000	-	100	Acquired through establishment or investment
Culture Development	Yantai, Shandong, China	Yantai, Shandong, China	Tourism	RMB10,000,000	100	-	Acquired through establishment or investment
Museum	Yantai, Shandong, China	Yantai, Shandong, China	Tourism	RMB500,000	-	100	Acquired through establishment or investment
Yantai Changyu Culture Tourism Production Sales Co., Ltd. (“Culture Sales”)	Yantai, Shandong, China	Yantai, Shandong, China	Tourism	RMB5,000,000	-	100	Acquired through establishment or investment
Yantai Changyu International Window of the Wine City Co., Ltd. (“Window of the Wine City”)	Yantai, Shandong, China	Yantai, Shandong, China	Tourism	RMB60,000,000	-	100	Acquired through establishment or investment
Yantai KOYA Brandy Chateau Co., Ltd (“Chateau KOYA”)	Yantai, Shandong, China	Yantai, Shandong, China	Manufacturing	RMB10,000,000	100	-	Acquired through establishment or investment

Name of the Subsidiary	Principal place of business	Registered place	Business nature	Registered capital	Shareholding ratio (%)		Acquisition method
					(or similar equity interest)
Changyu (Shanghai) International Digital Marketing Center Limited (“Digital Marketing”)	Shanghai, China	Shanghai, China	Marketing and sales	RMB50,000,000	100	-	Acquired through establishment or investment
Shanghai Changyu Guoqu Digital Technology Co., Ltd. (“Shanghai Guoqu”)(b)	Shanghai, China	Shanghai, China	Marketing and sales	RMB6,000,000	-	51	Acquired through establishment or investment
Tianjin Changyu Yixin Digital Technology Co., Ltd. (“Tianjin Yixin”)(b)	Tianjin, China	Tianjin, China	Marketing and sales	RMB10,000,000	-	51	Acquired through establishment or investment
Shanghai Changyu Yixin Digital Technology Co., Ltd. (“Shanghai Yixin”)(b)	Shanghai, China	Shanghai, China	Marketing and sales	RMB10,000,000	-	51	Acquired through establishment or investment

(a) Companies above were deregistered in 2021.

(b) The companies above are newly established companies in 2021.

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

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

Chateau’s equity interest. Through agreement arrangement, the Company has the full power to control Changyu Chateau’s strategicoperating, investing and financing policies. The agreement arrangement will be terminated on 31 December 2022.

(d) AFIP is a limited liability company established by Yantai Dean and Beijing Qinglang. In June 2019, Yantai Dean transferred 1.31% of its

equity to Yantai Changyu.After the equity change, the Company holds 91.53% of its equity. Through agreement arrangement, theCompany has the full power to control AFIP’s strategic operating, investing and financing policies. The agreement arrangement will beterminated on 2 September 2024.

(e) Golden Icewine Valley is a Sino-foreign joint venture established by the Company and a foreign investor, accounting for 51% of Golden

Icewine Valley’s equity interest. Through agreement arrangement, the Company has the full power to control Golden Icewine Valley’sstrategic operating, investing and financing policies. The agreement arrangement will be terminated on 31 December 2021.

(f) R&D Centre is a joint venture established by the Company and CADF, accounting for 85.32% of R&D Centre’s equity interest. Through

agreement arrangement in Note V. 28, the Company has the full power to control R&D Centre’s strategic operating, investing andfinancing policies. The agreement arrangement will be terminated on 28 February 2025. As at 31 December 2021, remaining investmentof CADF accounts for 14.68% of the registered capital.

(2) Material non-wholly owned subsidiaries

Name of the Subsidiary	Proportion of ownership interest held by non-controlling interests	Comprehensive income attributable to non-controlling interests for the year	Dividend declared to non-controlling shareholders during the year	Balance of non-controlling interests at the end of the year
Xinjiang Tianzhu	40%	1,392,110	-	(44,725,990)
AFIP	8.47%	-	-	(56,409,393)
Golden Icewine Valley	49%	-	-	(33,319,062)
IWCC	15%	(492,609)	1,788,975	(54,712,980)

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

The following table sets out the key financial information of the above subsidiaries without offsetting internal transactions, but withadjustments made for the fair value adjustment at the acquisition date and any differences in accounting policies:

	Xinjiang Tianzhu		AFIP		Golden Icewine Valley		Chile Indomita Wine Group
	2021	2020	2021	2020	2021	2020	2021	2020
Current assets	22,333,906	24,223,370	249,865,391	248,357,550	24,018,451	27,638,263	196,488,084	231,503,343
Non-current assets	43,852,510	45,465,308	414,851,163	434,045,076	24,450,344	24,246,983	314,756,823	291,345,642
Total assets	66,186,416	69,688,678	664,716,554	682,402,626	48,468,795	51,885,246	511,244,907	522,848,985
Current liabilities	(39,567)	(17,583)	27,459,352	41,910,462	12,976,418	9,967,686	130,027,677	132,100,755
Non-current liabilities	5,336,114	5,336,115	-	-	-	-	8,906,387	9,794,949
Total liabilities	5,296,547	5,318,532	27,459,352	41,910,462	12,976,418	9,967,686	138,934,064	141,895,704
Operating income	-	-	191,463,783	168,184,273	24,236,758	20,488,946	226,856,381	225,121,450
Net (loss)/ profit	(3,480,276)	(3,665,095)	2,326,063	2,092,230	(6,425,183)	(7,431,328)	19,716,978	18,196,663
Total comprehensive income	(3,480,276)	(3,665,095)	2,326,063	2,092,230	(6,425,183)	(7,431,328)	3,284,057	18,420,833
Cash flows from operating activities	(1,292,713)	(105,873)	(4,754,748)	3,821,964	4,744,413	4,654,744	99,234,532	37,132,027

VII. Risk related to financial instruments

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

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

The following mainly presents information about the Group’s exposure to each of the aboverisks and their sources, their changes during the year, and the Group’s objectives, policiesand processes for measuring and managing risks, and their changes during the year.

The Group aims to seek appropriate balance between the risks and benefits from its use offinancial instruments and to mitigate the adverse effects that the risks of financial instrumentshave on the Group’s financial performance. Based on such objectives, the Group’s riskmanagement policies are established to identify and analyse the risks faced by the Group, toset appropriate risk limits and controls, and to monitor risks and adherence to limits. Riskmanagement policies and systems are reviewed regularly to reflect changes in marketconditions and the Group’s activities.

1 Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for theother party by failing to discharge an obligation. The Group’s credit risk is primarilyattributable to cash at bank, receivables, debt investments and derivative financialinstruments entered into for hedging purposes. Exposure to these credit risks are monitoredby management on an ongoing basis.

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

As at 31 December 2021, the Group’s maximum exposure to credit risk which will cause afinancial loss to the Group due to failure to discharge an obligation by the counterparties.

In order to minimise the credit risk, the Group has adopted a policy to ensure that all salescustomers have good credit records. According to the policy of the Group, credit review isrequired for clients who require credit transactions. In addition, the Group continuouslymonitors the balance of account receivable to ensure there’s no exposure to significant baddebt risks. For transactions that are not denominated in the functional currency of therelevant operating unit, the Group does not offer credit terms without the specific approval ofthe Department of Credit Control in the Group. In addition, the Group reviews therecoverable amount of each individual trade debt at each balance sheet date to ensure thatadequate impairment losses are made for irrecoverable amounts. In this regard, themanagement of the Group considers that the Group’s credit risk is significantly reduced.

Since the Group trades only with recognised and creditworthy third parties, there is norequirement for collateral. Concentrations of credit risk are managed bycustomer/counterparty, by geographical region and by industry sector. As at 31 December2021, 42.8% of the Group trade receivables are due from top five customers (31 December2020: 20.3%). There is no collateral or other credit enhancement on the balance of the tradereceivables of the Group.

2 Liquidity risk

Liquidity risk is the risk that an enterprise will encounter difficulty in meeting obligations thatare settled by delivering cash or another financial asset. The Company and its individualsubsidiaries are responsible for their own cash management, including short-term investmentof cash surpluses and the raising of loans to cover expected cash demands (subject toapproval by the Company’s board when the borrowings exceed certain predeterminedlevels). The Group’s policy is to regularly monitor its liquidity requirements and itscompliance with lending covenants, to ensure that it maintains sufficient reserves of cash,readily realisable marketable securities and adequate committed lines of funding from majorfinancial institutions to meet its liquidity requirements in the short and longer term.

The following tables set out the remaining contractual maturities at the balance sheet date ofthe Group’s financial liabilities, which are based on contractual undiscounted cash flows(including interest payments computed using contractual rates or, if floating, based on ratescurrent at the balance sheet date) and the earliest date the Group can be required to pay:

Item	2021 Contractual undiscounted cash flow					Carrying amount at balance sheet date
	Within 1 year or on demand	1 to 2 years	More than 2 years but less than 5 years	More than 5 years	Total
Short-term loans	630,717,486	-	-	-	630,717,486	622,066,457
Accounts payable	493,453,816	-	-	-	493,453,816	493,453,816
Other payables	452,642,025	-	-	-	452,642,025	452,642,025
Long-term loans (including the portion due within one year)	20,586,762	125,114,353	112,380,675	15,506,135	273,587,925	250,567,080
Long-term payables (including the portion due within one year)	22,810,674	22,546,674	42,322,126	-	87,679,474	86,000,000
Lease liability (including the portion due within one year)	19,753,555	17,690,615	39,763,489	75,510,332	152,717,991	116,156,677
Total	1,639,964,318	165,351,642	194,466,290	91,016,467	2,090,798,717	2,020,886,055

Item	2020 Contractual undiscounted cash flow					Carrying amount at balance sheet date
	Within 1 year or on demand	1 to 2 years	More than 2 years but less than 5 years	More than 5 years	Total
Short-term loans	698,571,997	-	-	-	698,571,997	689,090,715
Accounts payable	484,347,958	-	-	-	484,347,958	484,347,958
Other payables	386,105,526	-	-	-	386,105,526	386,105,526
Long-term loans (including the portion due within one year)	33,175,345	24,182,478	149,719,792	135,013,150	342,090,765	311,664,858
Long-term payables (including the portion due within one year)	23,074,674	22,810,674	64,868,800	-	110,754,148	108,000,000
Total	1,625,275,500	46,993,152	214,588,592	135,013,150	2,021,870,394	1,979,209,057

3 Interest rate risk

Interest-bearing financial instruments at variable rates and at fixed rates expose the Group tocash flow interest rate risk and fair value interest risk, respectively. The Group determinesthe appropriate weightings of the fixed and floating rate interest-bearing instruments basedon the current market conditions and performs regular reviews and monitoring to achieve anappropriate mix of fixed and floating rate exposure.

(1) As at 31 December, the Group held the following interest-bearing financial instruments:

Fixed rate instruments:

Item	2021		2020
	Effective interest rate	Amounts	Effective interest rate	Amounts
Financial assets
- Cash at bank	1.75% - 2.25%	53,200,000	1.5% - 2.75%	93,553,062
Financial liabilities
- Short-term loans	0.35% - 3.35%	(172,066,457)	0.35% - 3.28%	(139,090,715)
- Long-term loans (including the portion due within one year)	0.95% - 3.28%	(193,475,080)	1% - 3.28%	(280,414,858)
- Long-term payables (including the portion due within one year)	1.20%	(86,000,000)	1.20%	(108,000,000)
- Lease liability (including the portion due within one year)	4.65%	(116,156,677)	-	-
Total		(514,498,214)		(433,952,511)

Variable rate instruments:

Item	2021		2020
	Effective interest rate	Amounts	Effective interest rate	Amounts
Financial assets
- Cash at bank	0.3% - 1.82%	1,513,824,507	0.3% - 1.0%	1,100,642,230
Financial liabilities
- Short-term loans	1 year LPR 0.005	(450,000,000)	1 year LPR 0.005	(550,000,000)
- Long-term loans (including the portion due within one year)	90% of 5 year LPR	(6,250,000)	90% of 5 year LPR	(31,250,000)
- Long-term loans (including the portion due within one year)	BBSY+1.10%	(50,842,000)	-	-
Total		1,006,732,507		519,392,230

(2) Sensitivity analysis

Management of the Group believes interest rate risk on bank deposit is not significant,therefore does not disclose sensitivity analysis for interest rate risk.

As at 31 December 2021, based on assumptions above, it is estimated that a generalincrease of 50 basis points in interest rates, with all other variables held constant, woulddecrease the Group’s equity by RMB1,901,595 (2020: RMB2,179,688), and net profit byRMB1,901,595 (2020: RMB2,179,688).

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

4 Foreign currency risk

In respect of cash at bank and on hand, accounts receivable and payable, short-term loansdenominated in foreign currencies other than the functional currency, the Group ensures thatits net exposure is kept to an acceptable level by buying or selling foreign currencies at spotrates when necessary to address short-term imbalances.

(1) As at 31 December, the Group’s exposure to main currency risk arising from recognised

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

	2021		2020
	Balance at foreign currency	Balance at RMB equivalent	Balance at foreign currency	Balance at RMB equivalent
Cash at bank and on hand	2,090,539	13,406,984	2,029,849	14,053,435
- USD	1,984,323	12,640,136	1,492,923	9,744,604
- EUR	106,216	766,848	536,926	4,308,831
Short-term loans	15,490,000	98,759,593	12,490,000	81,524,728
- USD	15,490,000	98,759,593	12,490,000	81,524,728

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

Group:

	Average rate		Balance sheet date mid-spot rate
	2021	2020	2021	2020
USD	6.4512	6.8884	6.3757	6.5272
EUR	7.6186	7.9065	7.2197	8.0250

(3) Sensitivity analysis

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

	Equity	Net profit
31 December 2021
USD	4,305,973	4,305,973
EUR	(38,342)	(38,342)
Total	4,267,631	4,267,631
31 December 2020
USD	3,589,006	3,589,006
EUR	(215,442)	(215,442)
Total	3,373,564	3,373,564

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

VIII. Fair value disclosure

All financial assets and financial liabilities held by the Group are carried at amounts notmaterially different from their fair value at 31 December 2021 and 31 December 2020.

Page 97

IX. Related parties and related party transactions

1 Information about the parent of the Company

Company name	Registered place	Business nature	Registered capital	Shareholding percentage (%)	Percentage of voting rights (%)	Ultimate controlling party of the Company
Changyu Group	Yantai	Manufacturing	50,000,000	50.4%	50.4%	Jointly controlled by Yantai GuoFeng Investment Holding Ltd, ILLVA SARONNO HOLDING SPA, International Finance Corporation and Yantai Yuhua Investment and Development Company Limited.

There are no changes on the registered capital and shareholding percentage/percentage of voting rights of the parent company.

Page 98

2 Information about the subsidiaries of the Company

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

3 Information on other related parties

Name of other related parties	Related party relationship
Yantai Shenma Packaging Co., Ltd. (“Shenma Packaging”)	Controlled by the same parent company
Yantai Zhongya Pharmaceutical Tonic Wine Co., Ltd. (“Zhongya Pharmaceutical”)	Controlled by the same parent company
WEMISS Shanghai	Associate of the Group
Chengdu Yufeng	Associate of the Group
Mirefleurs	Subsidiaries of the joint venture
CHATEAU DE LIVERSAN (“LIVERSAN”)	Subsidiaries of the joint venture

4 Transactions with related parties

(1) Product procurement

Related parties	Nature of transaction	2021	2020
Shenma Packaging	Product procurement	80,754,599	78,520,694
Zhongya Pharmaceutical	Product procurement	591,522	850,478
Mirefleurs	Product procurement	6,822,330	9,261,722
LIVERSAN	Product procurement	3,269,146	3,746,069
Total		91,437,597	92,378,963

(2) Sales of goods

Related parties	Nature of transaction	2021	2020
Zhongya Pharmaceutical	Sales of goods	3,872,660	3,920,047
WEMISS Shanghai	Sales of goods	2,677,707	1,374,616
Chengdu Yufeng	Sales of goods	5,365,061	-
Shenma Packaging	Sales of goods	287,930	293,488
Total		12,203,358	5,588,151

(3) Services

Related parties	Nature of transaction	2021	2020
Shenma Packaging	Services	-	106,195
Total		-	106,195

Page 99

(4) Purchase of fixed assets

Related parties of the Company	Nature of transaction	2021	2020
Shenma Packaging	Purchase of fixed assets	4,101,232	-
Total		4,101,232	-

(5) Sale of fixed assets

Related parties of the Company	Nature of transaction	2021	2020
Changyu Group	Sale of fixed assets	-	44,845,989
Total		-	44,845,989

(6) Leases

(a) As the lessor

Name of lessee	Type of assets leased	Lease income recognised in 2021	Lease income recognised in 2020
Shenma Packaging	Offices and plants	1,492,550	1,492,550
Zhongya Pharmaceutical	Offices and plants	522,936	522,936
Total		2,015,486	2,015,486

(b) As the lessee

Name of lessor	Type of assets leased	Lease expense recognised in 2021	Lease expense recognised in 2020
Changyu Group	Office buildings	1,612,118	1,612,118
Changyu Group	Offices and plants	1,394,762	1,394,762
Changyu Group	Offices and plants	4,184,286	4,184,286
Changyu Group	Offices and commercial building	7,057,143	1,050,000
Changyu Group	Office buildings	-	714,286
Total		14,248,309	8,955,452

(7) Remuneration of key management personnel

Item	2021	2020
Remuneration of key management personnel	12,495,933	6,975,110

(8) Other related party transactions

Related parties	Nature of transaction	Note	2021	2020
Changyu Group	Royalty	(a)	24,763,872	21,985,068
Changyu Group	Transfer of trademark use rights	(b)	-	18,334,528
Changyu Group	Transfer of Culture Development		-	89,519,789
Zhongya Pharmaceutical	Equity transfer of Changyu Museum		-	1,033,912

Page 100

(a) Contract of trademarks usage

Pursuant to a royalty agreement dated 18 May 1997, starting from 18 September 1997,the Company may use certain trademarks of Changyu Group Company, which havebeen registered with the PRC Trademark Office. An annual royalty fee at 2% of theGroup’s annual sales is payable to Changyu Group. The license is effective until theexpiry of the registration of the trademarks.

According to the above royalty agreement, Changyu Group collected a total ofRMB576,507,809 for royalty from 2013 to 2019, of which 51% was used to promotetrademarks such as Changyu and the product of this contract, totallingRMB294,018,093. The amount is used for promotion of Changyu and othertrademarks and the products of this contract, totalling RMB62,250,368, the difference isRMB231,768,615(tax inclusive).

On 18 May 2019, the general meeting of shareholders approved the proposal of theamendment to the royalty agreement. Article 6.1 of the royalty agreement withChangyu Group was amended to: During the validity period of this contract, the Grouppays Changyu Group royalty on an annual basis. The royalty is calculated based on

0.98% of the sales volume of the Group ‘s contract products using this trademark. Thearticle 6.3 is amended to: The royalty paid to the Changyu Group by the Group shallnot be used to promote this trademark and the contract products.

In addition, in accordance with agreement the Group signed with Changyu Group inNovember 2019, Changyu Group promised to offset the difference of RMB231,768,615above with the royalty for four years, i.e. from 2019 to 2022.If it is not sufficient fordeduction, the rest will be repaid in a one-off manner in 2023. If there is surplus, thesurplus part of the royalty will be charged from the year when the surplus occurs.

The Group incurred a trademark usage fee of RMB24,763,872 this year.

(b) Transfer of trademark use rights

On 22 April 2020, the Fourth Meeting of the Eighth Board of Directors of the Groupreviewed and approved the Proposal on Transferring the “KOYA” and OtherTrademarks of Yantai Changyu Group Co., Ltd.. On 16 June 2020, the Group andChangyu Group signed the Trademark Transfer Agreement to transfer the ownership of43 trademarks owned by Changyu Group, including KOYA, ZENITHWIRL, FRANLLET,WEMISS and PIONEER at an estimated price of RMB19,434,600 (tax inclusive).

Page 101

5 Receivables from and payables to related parties

Receivables from related parties

Item	Related party	2021		2020
		Book value	Provision for bad and doubtful debts	Book value	Provision for bad and doubtful debts
Accounts receivable	Zhongya Pharmaceutical	287,788	956	714,995	3,175
Accounts receivable	WEMISS Shanghai	-	-	1,553,316	6,898
Prepayments	Shenma Packaging	-	-	126,818	-
Other non-current assets	Changyu Group	144,120,442	-	170,370,147	-
Other receivables	Shenma Packaging	341,880	-	-	-
Other receivables	Zhongya Pharmaceutical	-	-	522,936	-

Payables to related parties

Item	Related party	2021	2020
Accounts payable	Shenma Packaging	30,184,072	33,421,165
Accounts payable	Zhongya Pharmaceutical	-	455,176
Accounts payable	Chengdu Yufeng	344,464	-
Accounts payable	Changyu Group	19,434,600	19,434,600
Contract liability	Zhongya Pharmaceutical	653	-
Other payables	Shenma Packaging	-	450,000

X. Capital management

The Group’s primary objectives when managing capital are to safeguard its ability to continueas a going concern, so that it can continue to provide returns for shareholders, by pricingproducts and services commensurately with the level of risk and by securing access tofinance at a reasonable cost.

The Group’s capital structure is regularly reviewed and managed to achieve an optimalstructure and return for shareholders. Factors for the Group’s consideration include: itsfuture funding requirements, capital efficiency, actual and expected profitability, expectedcash flows, and expected capital expenditure. Adjustments are made to the capital structurein light of changes in economic conditions affecting the Group.

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

Page 102

XI. Commitments and contingencies

1 Significant commitment

(1) Capital commitments

Item	2021	2020
Long-term assets acquisition commitment	84,963,700	249,379,500
Total	84,963,700	249,379,500

(2) Operating lease commitments

As at 31 December, the total future minimum lease payments under non-cancellableoperating leases of the Group’s properties were payable as follows:

Item	2021	2020
Within 1 year (inclusive)	651,000	24,076,000
Over 1 year but within 2 years (inclusive)	-	17,735,000
Over 2 years but within 3 years (inclusive)	-	15,564,000
Over 3 years	-	106,278,000
Total	651,000	163,653,000

2 Contingencies

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

XII. Subsequent events

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

According to the proposal of the Board of Directors on 25 April 2022, the Company intends todistribute cash dividend totaling RMB308,458,800 to all shareholders of 685,464,000 capitalshares for the year ended 31 December 2021 on the basis of RMB4.5 (including tax) forevery 10 shares. The proposal is subject to the approval by the Shareholders’ meeting. Thisdistribution of profit in cash has not been recognised as a liability at the balance sheet date.

XIII. Other significant items

1 Segment reporting

The Group is principally engaged in the production and sales of wine, brandy, and sparklingwine in China, France, Spain, Chile and Australia. In accordance with the Group’s internalorganisation structure, management requirements and internal reporting system, the Group’soperation is divided into five parts: China, Spain, France, Chile and Australia. Themanagement periodically evaluates segment results, in order to allocate resources andevaluate performances. In 2021, over 87% of revenue, more than 94% of profit and over92% of non-current assets derived from China/are located in China. Therefore, the Groupdoes not need to disclose additional segment report information.

Page 103

XIV. Notes to the Company’s financial statements

1 Bills receivable

Classification of bills receivable

Item	2021	2020
Bank acceptance bills	9,800,000	-
Total	9,800,000	-

All of the above bills are due within one year.

2 Receivables under financing

Item	Note	2021	2020
Bills receivable	(1)	62,411,636	13,920,000
Total		62,411,636	13,920,000

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

As at 31 December 2021, there was no pledged bills receivable (31 December 2020: Nil).

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

Item	Amount derecognised at year end
Bank acceptance bills	65,893,889
Total	65,893,889

As at 31 December 2021, derecognised bills endorsed by the Company to other partieswhich are not yet due at the end of the period is RMB65,893,889 (31 December 2020:

RMB49,849,895). The notes are used for payment to suppliers. The Company believes thatdue to good reputation of bank, the risk of notes not accepting by bank on maturity is verylow, therefore derecognise the note receivables endorsed. If the bank is unable to pay thenotes on maturity, according to the relevant laws and regulations of China, the Companywould undertake limited liability for the notes.

3 Other receivables

	Note	31 December 2021	31 December 2020
Dividends receivable	(1)	-	200,000,000
Others	(2)	398,072,976	380,131,798
Total		398,072,976	580,131,798

(1) Dividends receivable

Item	31 December 2021	31 December 2020
Dividends to subsidiaries	-	200,000,000
Total	-	200,000,000

Page 104

(2) Others

(a) Others by customer type:

Customer type	31 December 2021	31 December 2020
Amounts due from subsidiaries	397,998,281	379,375,427
Amounts due from related parties	-	522,936
Others	74,695	233,435
Sub-total	398,072,976	380,131,798
Less: Provision for bad and doubtful debts	-	-
Total	398,072,976	380,131,798

(b) The ageing analysis is as follows:

Ageing	2021	2020
Within 1 year (inclusive)	397,936,651	378,307,160
Over 1 year but within 2 years (inclusive)	11,853	1,804,638
Over 2 years but within 3 years (inclusive)	104,472	-
Over 3 years	20,000	20,000
Sub-total	398,072,976	380,131,798
Less: Provision for bad and doubtful debts	-	-
Total	398,072,976	380,131,798

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

(c) Others by method of provisioning

	2021					2020
Category	Book value		Provision for bad and doubtful debts		Carrying amount	Book value		Provision for bad and doubtful debts		Carrying amount
	Amount	Percentage (%)	Amount	Percentage (%)		Amount	Percentage (%)	Amount	Percentage (%)
Individual assessment
- Total other receivables	-	-	-	-	-	-	-	-	-	-
Collective assessment
- Amounts due from subsidiaries	397,998,281	99.98	-	-	397,998,281	379,375,427	99.80	-	-	379,375,427
- Amounts due from related parties	-	-	-	-	-	522,936	0.14	-	-	522,936
- Amounts due from third parties	74,695	0.02	-	-	74,695	233,435	0.06	-	-	233,435
Total	398,072,976	100.00	-	-	398,072,976	380,131,798	100.00	-	-	380,131,798

(d) Movements of provisions for bad and doubtful debts

As at 31 December 2021, no bad and doubtful debt provision was made for otherreceivables (31 December 2020: Nil).

As at 31 December 2021, the Company has no other receivables written off (31December 2020: Nil).

Page 105

(e) Others categorised by nature

Nature of other receivables	2021	2020
Amounts due from subsidiaries	397,998,281	379,375,427
Amounts due from related parties	-	522,936
Others	74,695	233,435
Sub-total	398,072,976	380,131,798
Less: Provision for bad and doubtful debts	-	-
Total	398,072,976	380,131,798

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

Debtor	Nature of the receivable	Balance at the end of the year	Ageing	Percentage of ending balance of others (%)	Ending balance of provision for bad and doubtful debts
Sales Company	Amounts due from subsidiaries	113,621,178	Within 1 year	28.5	-
R&D Centre	Amounts due from subsidiaries	36,611,978	Within 1 year	9.2	-
Digital Marketing	Amounts due from subsidiaries	14,925,497	Within 1 year	3.7	-
Chateau KOYA	Amounts due from subsidiaries	1,458,255	Within 1 year	0.4	-
Chateau Changyu	Amounts due from subsidiaries	419,481	Within 1 year	0.1	-
Total		167,036,389		41.9	-

4 Long-term equity investments

(1) Long-term equity investments by category:

Item	2021			2020
	Book value	Provision for impairment	Carrying amount	Book value	Provision for impairment	Carrying amount
Investments in subsidiaries	7,593,535,027	-	7,593,535,027	7,593,535,027	-	7,593,535,027
Investments in associates	5,886,467	-	5,886,467	6,243,853	-	6,243,853
Total	7,599,421,494	-	7,599,421,494	7,599,778,880	-	7,599,778,880

Page 106

(2) Investments in subsidiaries:

Subsidiary	Balance at the beginning of the year	Additions during the year	Decrease during the year	Balance at the end of the year
Xinjiang Tianzhu	60,000,000	-	-	60,000,000
Kylin Packaging	23,176,063	-	-	23,176,063
Chateau Changyu	28,968,100	-	-	28,968,100
Pioneer International	3,500,000	-	-	3,500,000
Ningxia Growing	36,573,247	-	-	36,573,247
National Wines	2,000,000	-	-	2,000,000
Golden Icewine Valley	30,440,500	-	-	30,440,500
Chateau Beijing	588,389,444	-	-	588,389,444
Sales Company	7,200,000	-	-	7,200,000
Langfang Sales	100,000	-	-	100,000
Langfang Castel	19,835,730	-	-	19,835,730
Wine Sales	4,500,000	-	-	4,500,000
Shanghai Marketing	1,000,000	-	-	1,000,000
Beijing Sales	850,000	-	-	850,000
Jingyang Sales	100,000	-	-	100,000
Jingyang Wine	900,000	-	-	900,000
Ningxia Wine	222,309,388	-	-	222,309,388
Chateau Ningxia	453,463,500	-	-	453,463,500
Chateau Tinlot	212,039,586	-	-	212,039,586
Chateau Shihezi	812,019,770	-	-	812,019,770
Chateau Changan	803,892,258	-	-	803,892,258
R&D Centre	3,288,906,445	-	-	3,288,906,445
Huanren Wine	22,200,000	-	-	22,200,000
Wine Sales Company	5,000,000	-	-	5,000,000
Francs Champs	236,025,404	-	-	236,025,404
Dicot	233,142,269	-	-	233,142,269
Chile Indomita Wine Group	274,248,114	-	-	274,248,114
Australia Kilikanoon Estate	129,275,639	-	-	129,275,639
Digital Marketing	1,000,000	-	-	1,000,000
Culture Development	92,479,570	-	-	92,479,570
Total	7,593,535,027	-	-	7,593,535,027

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

(3) Investments in associates:

Subsidiary	Balance at the beginning of the year	Additions during the year	Decrease during the year	Balance at the end of the year
WEMISS Shanghai	2,743,890	-	(377,079)	2,366,811
Yantai Santai Real Estate Development Co., Ltd	3,499,963	19,693	-	3,519,656
Total	6,243,853	19,693	(377,079)	5,886,467

Page 107

5 Operating income and operating costs

Item	2021		2020
	Income	Cost	Income	Cost
Principal activities	576,706,055	470,719,232	510,205,498	450,876,445
Other operating activities	2,189,747	1,439,506	2,098,055	1,492,067
Total	578,895,802	472,158,738	512,303,553	452,368,512
Including:Revenue from contracts with customers	576,706,055	470,719,232	510,205,498	450,876,445
Rent income	2,189,747	1,439,506	2,098,055	1,492,067

(1) Disaggregation of revenue from contracts with customers:

Type of contract	2021	2020
By type of goods or services
- Liquor	576,706,055	510,205,498
By timing of transferring goods or services
- Revenue recognised at a point in time	576,706,055	510,205,498

6 Investment income

Item	2021	2020
Income from long-term equity investments accounted for using cost method	867,880,564	449,760,868
Loss from long-term equity investments accounted for using equity method	(357,386)	(256,147)
Total	867,523,178	449,504,721

Page 108

7 Transactions with related parties

(1) Product procurement

Related parties	Nature of transaction	2021	2020
Subsidiary of the parent company	Product procurement	117,808,977	107,663,061
Other related parties of the Company	Product procurement	30,002,566	36,249,251
Total		147,811,543	143,912,312

(2) Sales of goods

Related parties	Nature of transaction	2021	2020
Subsidiary of the parent company	Sales of goods	576,708,399	504,080,073
Other related parties of the Company	Sales of goods	3,017,548	2,952,493
Total		579,725,947	507,032,566

(3) Guarantee

The Company as the guarantor

Guarantee holder	Currency	Amount of guarantee	Inception date of guarantee	Maturity date of guarantee	Guarantee expired (Y/N)
R&D Centre	RMB	500,000,000	08 March 2017	08 March 2022	N
Australia Kilikanoon Estate	AUD	25,000,000	13 December 2018	13 December 2023	N

(4) Leases

(a) As the lessor

Name of lessee	Type of assets leased	Lease income recognised in 2021	Lease income recognised in 2020
Other related parties of the Company	Offices and plants	2,015,486	2,015,486
Subsidiary of the parent company	Offices buildings	85,714	82,569
Total		2,101,200	2,098,055

(b) As the lessee

Name of lessor	Type of assets leased	Lease expense recognised in 2021	Lease expense recognised in 2020
Other related parties of the Company	Office buildings	1,394,762	1,394,762
Total	Office buildings	1,394,762	1,394,762

Page 109

(5) Other related party transactions

Related parties	Nature of transaction	2021	2020
Changyu Group	Transfer of trademark use rights	-	18,334,528
Changyu Group	Transfer of Culture Development	-	89,519,789

8 Receivables from and payables to related parties

Receivables from related parties

Item	Related party	2021		2020
		Book value	Provision for bad and doubtful debts	Book value	Provision for bad and doubtful debts
Prepayments	Other related parties of the Company	-	-	126,818	-
Other receivables	Subsidiary of the parent company	397,998,281	-	379,375,427	-
Other receivables	Other related parties of the Company	-	-	522,936	-
Other non-current assets	Subsidiary of the parent company	2,023,500,000	-	1,530,700,000	-

Payables to related parties

Item	Related party	2021	2020
Accounts payable	Other related parties of the Company	28,014,000	29,634,723
Other payables	Subsidiary of the parent company	362,651,747	319,936,973
Other payables	Other related parties of the Company	-	450,000

XV. Non-recurring profit and loss statement in 2021

Item		Amount
(1)	Profit and loss from disposal of non-current assets	(15,364,993)
(2)	Government grants recognised through profit or loss (excluding those having close relationships with the Group’s operation and enjoyed in fixed amount or quantity according to uniform national standard)	48,240,741
(3)	Other non-operating income and expenses besides items above	2,328,169
	Sub-total	35,203,917
(4)	Tax effect	(7,306,787)
(5)	Effect on non-controlling interests after taxation	(30,486)
	Total	27,866,644

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

before taxation.

Page 110

XVI. Return on net assets and earnings per share

1 Calculation of earnings per share

(1) Basic earnings per share

For calculation of the basic earnings per share, please refer to Note V.49.

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

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

	2021	2020
Consolidated net profit attributable to ordinary shareholders of the Company	500,102,606	470,860,587
Extraordinary gains and losses attributable to ordinary shareholders of the Company	27,866,644	73,205,400
Consolidated net profit excluding extraordinary gain and loss attributable to the Company’s ordinary equity shareholders	472,235,962	397,655,187
Weighted average number of ordinary shares outstanding	685,464,000	685,464,000
Basic earnings per share excluding extraordinary gain and loss (RMB/share)	0.69	0.58

(3) Diluted earnings per share

During the reporting period, the Company did not have dilutive potential ordinary shares.

2 Calculation of weighted average return on net assets

(1) Weighted average return on net assets

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

	2021	2020
Consolidated net profit attributable to ordinary shareholders of the Company	500,102,606	470,860,587
Weighted average amount of consolidated net assets	10,329,718,533	10,304,733,743
Weighted average return on net assets	4.84%	4.57%

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

	2021	2020
Consolidated net assets at the beginning of the year	10,267,832,644	10,402,248,821
Impact of changes in accounting policies	(10,582,161)	-
Business combination involving entities under common control	-	(37,299,912)
Effect of consolidated net profit attributable to ordinary shareholders of the Company	232,409,650	237,836,150
The impact of the purchase of minority shareholders’ equity	-	(8,046,940)
Effect of shares repurchased (Note V.36)	(159,941,600)	(290,004,376)
Weighted average amount of consolidated net assets	10,329,718,533	10,304,733,743

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

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

	2021	2020
Consolidated net profit excluding extraordinary gain and loss attributable to the Company’s ordinary equity shareholders	472,235,962	397,655,187
Weighted average amount of consolidated net assets (Note)	10,329,718,533	10,243,190,738
Weighted average return on net assets excluding extraordinary gain and loss	4.57%	3.88%

Note: When a business combination under common control occurs during the reporting

period, the net assets of the combining party shall be weighted from the monthfollowing the acquisition date when calculating the weighted average return on netassets after deducting non-recurring gains and losses. When calculating theweighted average return on net assets after deducting non-recurring gains and lossesduring the comparative period, the net assets of the combining party shall not beweighted.