Financial Report
1. Audit report
Whether the semiannual report has been audited
□ Yes √ No
2. Financial statement
The unit in the statements of the financial annotations is RMB Yuan.
2.1 Consolidated balance sheet
Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd. June 30, 2021 Unit: Yuan
| Item | Note | June 30, 2021 | December 31, 2020 |
| Current assets: | |||
| Monetary fund | 7.1 | 1,513,731,040 | 1,194,214,929 |
| Settlement reserves | |||
| Lending funds | |||
| Tradable financial assets | |||
| Derivative financial assets | |||
| Bills receivable | |||
| Accounts receivable | 7.2 | 169,236,257 | 183,853,362 |
| Receivables financing | 7.3 | 338,278,251 | 338,090,187 |
| Advance payment | 7.4 | 8,027,712 | 71,296,416 |
| Premium receivable | |||
| Reinsurance accounts receivable | |||
| Receivable reserves for reinsurance contract | |||
| Other receivables | 7.5 | 22,861,668 | 22,428,956 |
| Including: Interest receivable | |||
| Dividends receivable | |||
| Redemptory monetary capital for sale | |||
| Inventories | 7.6 | 2,920,940,415 | 2,945,548,651 |
| Contract assets | |||
| Assets held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 7.7 | 220,460,751 | 234,118,715 |
| Total current assets | 5,193,536,094 | 4,989,551,216 | |
| Non-current assets: | |||
| Offering loans and imprest | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term receivables | |||
| Long-term equity investments | 7.8 | 47,159,727 | 48,263,507 |
| Other investments in equity instruments | |||
| Other non-current financial assets | |||
| Investment real estate | 7.9 | 25,470,474 | 27,057,730 |
| Item | Note | June 30, 2021 | December 31, 2020 |
| Fixed assets | 7.10 | 5,674,883,742 | 5,724,935,846 |
| Construction in progress | 7.11 | 670,705,216 | 635,495,152 |
| Productive biological assets | 7.12 | 190,183,036 | 192,173,536 |
| Oil-and-gas assets | |||
| Right-of-use assets | 7.13 | 110,547,744 | |
| Intangible assets | 7.14 | 651,746,519 | 660,989,065 |
| Development expenditure | |||
| Goodwill | 7.15 | 132,938,212 | 132,938,212 |
| Long-term prepaid expenses | 7.16 | 332,133,295 | 314,465,855 |
| Deferred income tax assets | 7.17 | 181,479,059 | 206,241,275 |
| Other non-current assets | 7.18 | 158,377,754 | 170,370,147 |
| Total non-current assets | 8,175,624,778 | 8,112,930,325 | |
| Total assets | 13,369,160,872 | 13,102,481,541 | |
| Current liabilities: | |||
| Short-term loans | 7.19 | 716,361,680 | 689,090,715 |
| Borrowings from the Central Bank | |||
| Loans from other banks and other financial institutions | |||
| Tradable financial liabilities | |||
| Derivative financial liabilities | |||
| Bills payable | |||
| Accounts payable | 7.20 | 409,887,533 | 484,347,958 |
| Advances from customers | |||
| Contract liabilities | 7.21 | 108,304,501 | 135,073,280 |
| Financial assets sold for repurchase | |||
| Deposits from customers and interbank | |||
| Receivings from vicariously traded securities | |||
| Receivings from vicariously sold securities | |||
| Employee remunerations payable | 7.22 | 139,388,230 | 188,779,911 |
| Taxes and dues payable | 7.23 | 161,200,580 | 213,412,813 |
| Other payables | 7.24 | 683,062,474 | 386,105,526 |
| Including: Interest payable | 2,289,564 | 553,471 | |
| Dividends payable | 274,507,652 | 1,003,125 | |
| Handling charges and commissions payable | |||
| Dividend payable for reinsurance | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 7.25 | 125,279,691 | 133,311,890 |
| Other current liabilities | 7.26 | 14,000,154 | 14,820,653 |
| Total current liabilities | 2,357,484,843 | 2,244,942,746 | |
| Non-current liabilities: | |||
| Reserves for insurance contracts | |||
| Long-term borrowings | 7.27 | 202,741,846 | 200,352,968 |
| Bonds payable | |||
| Including: Preferred stock | |||
| Perpetual bonds | |||
| Lease liabilities | 7.28 | 111,337,332 |
| Item | Note | June 30, 2021 | December 31, 2020 |
| Long-term accounts payable | 7.29 | 64,000,000 | 86,000,000 |
| Long-term employee remunerations payable | |||
| Estimated liabilities | |||
| Deferred income | 7.30 | 45,454,375 | 52,653,609 |
| Deferred income tax liabilities | 7.17 | 11,873,395 | 12,022,613 |
| Other non-current liabilities | 7.31 | 2,078,971 | 2,078,971 |
| Total non-current liabilities | 437,485,919 | 353,108,161 | |
| Total liabilities | 2,794,970,762 | 2,598,050,907 | |
| Owner’s equity: | |||
| Capital stock | 7.32 | 685,464,000 | 685,464,000 |
| Other equity instruments | |||
| Including: Preferred stock | |||
| Perpetual bonds | |||
| Capital surplus | 7.33 | 524,968,760 | 524,968,760 |
| Minus: Treasury stock | |||
| Other comprehensive income | 7.34 | -21,042,366 | 576,129 |
| Special reserves | |||
| Surplus reserves | 7.35 | 342,732,000 | 342,732,000 |
| General risk preparation | |||
| Undistributed profit | 7.36 | 8,801,095,552 | 8,714,091,755 |
| Total owner’s equities attributable to the parent company | 10,333,217,946 | 10,267,832,644 | |
| Minority equity | 240,972,164 | 236,597,990 | |
| Total owner’s equities | 10,574,190,110 | 10,504,430,634 | |
| Total liabilities and owner’s equities | 13,369,160,872 | 13,102,481,541 |
Legal Representative: Zhou Hongjiang Accounting Supervisor: Jiang Jianxun Accounting Department Manager: Guo Cuimei
2.2 Balance sheet of the parent company
Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd. Unit: Yuan
| Item | Note | June 30, 2021 | December 31, 2020 |
| Current assets: | |||
| Monetary fund | 616,538,061 | 267,548,326 | |
| Tradable financial assets | |||
| Derivative financial assets | |||
| Bills receivable | |||
| Accounts receivable | 17.1 | 69,805 | |
| Receivables financing | 31,148,514 | 13,920,000 | |
| Advance payment | 1,475,764 | 171,709 | |
| Other receivables | 17.2 | 271,659,240 | 580,131,798 |
| Including: Interest receivable | |||
| Dividends receivable | 200,000,000 | ||
| Inventories | 458,649,317 | 482,442,935 | |
| Contract assets | |||
| Assets held for sale |
| Item | Note | June 30, 2021 | December 31, 2020 |
| Non-current assets due within one year | |||
| Other current assets | 25,156,377 | 24,842,325 | |
| Total current assets | 1,404,697,078 | 1,369,057,093 | |
| Non-current assets: | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term receivables | |||
| Long-term equity investments | 17.3 | 7,599,301,118 | 7,599,778,880 |
| Other investments in equity instruments | |||
| Other non-current financial assets | |||
| Investment real estate | 25,470,474 | 27,057,730 | |
| Fixed assets | 235,857,615 | 243,634,747 | |
| Construction in progress | 259,132 | 2,865,243 | |
| Productive biological assets | 115,113,721 | 115,103,753 | |
| Oil and gas assets | |||
| Right-of-use assets | 43,293,228 | ||
| Intangible assets | 79,416,810 | 80,789,731 | |
| Development expenditure | |||
| Goodwill | |||
| Long-term prepaid expenses | |||
| Deferred income tax assets | 15,270,673 | 18,285,685 | |
| Other non-current assets | 1,820,700,000 | 1,530,700,000 | |
| Total non-current assets | 9,934,682,771 | 9,618,215,769 | |
| Total assets | 11,339,379,849 | 10,987,272,862 | |
| Current liabilities: | |||
| Short-term loans | 150,000,000 | 150,000,000 | |
| Tradable financial liabilities | |||
| Derivative financial liabilities | |||
| Bills payable | |||
| Accounts payable | 43,145,258 | 76,470,081 | |
| Advances from customers | |||
| Contract liabilities | |||
| Employee remunerations | 57,210,645 | 67,808,910 | |
| Taxes and dues payable | 2,826,925 | 9,123,959 | |
| Other payables | 664,761,829 | 521,505,947 | |
| Including: Interest payable | 139,583 | 181,250 | |
| Dividends payable | 274,185,600 | ||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 3,688,236 | ||
| Other current liabilities | |||
| Total current liabilities | 921,632,893 | 824,908,897 | |
| Non-current liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preferred stock |
| Item | Note | June 30, 2021 | December 31, 2020 |
| Perpetual bonds | |||
| Lease liabilities | 45,412,927 | ||
| Long-term accounts payable | |||
| Long-term employee remuneration payable | |||
| Estimated liabilities | |||
| Deferred income | 3,651,213 | 5,507,708 | |
| Deferred income tax liabilities | 88,555 | ||
| Other non-current liabilities | 1,164,471 | 1,164,471 | |
| Total non-current liabilities | 50,317,166 | 6,672,179 | |
| Total liabilities | 971,950,059 | 831,581,076 | |
| Owner’s equity: | |||
| Capital stock | 685,464,000 | 685,464,000 | |
| Other equity instruments | |||
| Including: Preferred stock | |||
| Perpetual bonds | |||
| Capital surplus | 560,182,235 | 560,182,235 | |
| Minus: Treasury stock | |||
| Other comprehensive income | |||
| Special reserves | |||
| Surplus reserves | 342,732,000 | 342,732,000 | |
| Undistributed profit | 8,779,051,555 | 8,567,313,551 | |
| Total owner’s equities | 10,367,429,790 | 10,155,691,786 | |
| Total liabilities and owner’s equities | 11,339,379,849 | 10,987,272,862 |
Legal Representative: Zhou Hongjiang Accounting Supervisor: Jiang Jianxun Accounting Department Manager: Guo Cuimei
2.3 Consolidated profit statement
Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd. Unit: Yuan
| Item | Note | Sum of current period | Sum of prior period |
| 1. Total operating income | 1,874,460,437 | 1,418,548,547 | |
| Including: Operating income | 7.37 | 1,874,460,437 | 1,418,548,547 |
| Interest income | |||
| Earned premium | |||
| Handling fee and commission income | |||
| 2. Total operating costs | 1,385,344,667 | 1,043,027,624 | |
| Including: Operating costs | 7.37 | 761,513,544 | 574,858,339 |
| Interest expenditure | |||
| Handling fees and commission expenditure | |||
| Premium rebate | |||
| Net amount of indemnity expenditure | |||
| Net amount of the withdrawn reserve fund for insurance contract | |||
| Policy bonus payment | |||
| Amortized reinsurance expenditures |
| Item | Note | Sum of current period | Sum of prior period |
| Taxes and surcharges | 7.38 | 100,220,017 | 88,443,822 |
| Selling expenses | 7.39 | 388,385,610 | 252,912,204 |
| Administrative expenses | 7.40 | 123,384,629 | 113,069,869 |
| Research and development expenses | 7.41 | 2,477,835 | 1,805,988 |
| Financial expenses | 7.42 | 9,363,032 | 11,937,402 |
| Including: Interest expenses | 14,239,535 | 14,891,310 | |
| Interest income | 5,827,243 | 6,146,409 | |
| Plus: Other profit | 7.43 | 21,978,695 | 50,780,231 |
| Investment profit (loss is listed with “-") | 7.44 | -1,621,780 | -1,170,685 |
| Including: Investment profit for joint-run business and joint venture | -1,621,780 | -1,170,685 | |
| Financial assets measured at amortized cost cease to be recognized as income | |||
| Exchange income (loss is listed with “-") | |||
| Net exposure hedge income (loss is listed with “-") | |||
| Income from fair value changes (loss is listed with “-") | |||
| Credit impairment loss (loss is listed with “-") | 7.45 | -6,176,948 | -533,145 |
| Asset impairment loss (loss is listed with “-") | 7.46 | 3,680,018 | 4,242,813 |
| Income from asset disposal (loss is listed with “-") | 7.47 | 24,148 | |
| 3. Operating profit (loss is listed with “-") | 506,975,755 | 428,864,285 | |
| Plus: Non-operating income | 7.48 | 2,488,778 | 6,686,519 |
| Minus: Non-operating expenses | 7.49 | 569,721 | 1,026,474 |
| 4. Total profits (total loss is listed with “-") | 508,894,812 | 434,524,330 | |
| Minus: Income tax expenses | 7.50 | 136,579,849 | 113,453,948 |
| 5. Net profit (net loss is listed with “-") | 372,314,963 | 321,070,382 | |
| 5.1 Classification by operation continuity | |||
| 5.1.1 Net profit from continuing operation (net loss is listed with “-") | 372,314,963 | 321,070,382 | |
| 5.1.2 Net profit from terminating operation (net loss is listed with “-") | |||
| 5.2 Classification by ownership | |||
| 5.2.1 Net profit attributable to owner of the parent company | 371,821,819 | 318,640,075 | |
| 5.2.2 Minority interest income | 493,144 | 2,430,307 | |
| 6. Net after-tax amount of other comprehensive income | 7.51 | -24,776,238 | -5,765,822 |
| Net after-tax amount of other comprehensive income attributable to owner of the parent company | -21,618,495 | -5,006,653 | |
| 6.1 Other comprehensive income not to be reclassified into profit and loss later | |||
| 6.1.1 Changes after remeasuring and resetting the benefit plans | |||
| 6.1.2 Other comprehensive income not to be reclassified into profit and loss under equity law | |||
| 6.1.3 Changes in the fair value of other investments in equity instruments |
| Item | Note | Sum of current period | Sum of prior period |
| 6.1.4 Changes in the fair value of the enterprise's own credit risk | |||
| 6.1.5 Other | |||
| 6.2 Other comprehensive income to be reclassified into profit and loss later | -21,618,495 | -5,006,653 | |
| 6.2.1 Other comprehensive income to be reclassified into profit and loss under equity law | |||
| 6.2.2 Changes in the fair value of other debt investments | |||
| 6.2.3 Amount of financial assets reclassified into other comprehensive income | |||
| 6.2.4 Provision for credit impairment of other credit investments | |||
| 6.2.5 Provision for cash-flow hedge | |||
| 6.2.6 Difference in translation of Foreign Currency Financial Statement | -21,618,495 | -5,006,653 | |
| 6.2.7 Other | |||
| Net after-tax amount of other comprehensive income attributable to minority shareholders | -3,157,743 | -759,169 | |
| 7. Total comprehensive income | 347,538,725 | 315,304,560 | |
| Attributable to owner of the parent company | 350,203,324 | 313,633,422 | |
| Attributable to minority shareholders | -2,664,599 | 1,671,138 | |
| 8. Earnings per share: | |||
| 8.1 Basic earnings per share | 0.54 | 0.46 | |
| 8.2 Diluted earnings per share | 0.54 | 0.46 |
Legal Representative: Zhou Hongjiang Accounting Supervisor: Jiang Jianxun Accounting Department Manager: Guo Cuimei
2.4 Profit statement of the parent company
Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd. Unit: Yuan
| Item | Note | Sum of current period | Sum of prior period |
| 1. Operating income | 17.4 | 206,300,566 | 152,950,515 |
| Minus: Operating costs | 17.4 | 169,012,171 | 143,241,194 |
| Taxes and surcharges | 11,779,088 | 4,379,365 | |
| Selling expenses | |||
| Administrative expenses | 29,404,865 | 30,150,311 | |
| Research and development expenses | 522,997 | 318,917 | |
| Financial expenses | 1,903,108 | 934,777 | |
| Including: Interest expenses | 3,316,692 | 2,807,750 | |
| Interest income | 1,700,240 | 2,251,235 | |
| Plus: Other profit | 3,949,823 | 1,819,890 | |
| Investment profit (loss is listed with “-") | 17.5 | 494,528,070 | 87,474,604 |
| Including: Investment profit for joint-run business and joint venture | -477,762 | ||
| Financial assets measured at amortized cost cease to be recognized as income (loss is listed with “-") | |||
| Net exposure hedge income (loss is listed with “-") | |||
| Income from fair value changes (loss is listed |
| Item | Note | Sum of current period | Sum of prior period |
| with “-") | |||
| Credit impairment loss (loss is listed with “-") | -443 | -71,879 | |
| Asset impairment loss (loss is listed with “-") | 671,511 | ||
| Income from asset disposal (loss is listed with “-") | -30,921 | ||
| 2. Operating profit (loss is listed with “-") | 492,124,866 | 63,820,077 | |
| Plus: Non-operating income | 83,440 | 2,007,235 | |
| Minus: Non-operating expenses | 371,527 | 525,000 | |
| 3. Total profits (total loss is listed with “-") | 491,836,779 | 65,302,312 | |
| Minus: Income tax expenses | -376,545 | -5,644,794 | |
| 4. Net profit (net loss is listed with “-") | 492,213,324 | 70,947,106 | |
| 4.1Net profit from continuing operation (net loss is listed with “-") | 492,213,324 | 70,947,106 | |
| 4.2 Net profit from terminating operation (net loss is listed with “-") | |||
| 5. Net after-tax amount of other comprehensive income | |||
| 5.1 Other comprehensive income not to be reclassified into profit and loss later | |||
| 5.1.1 Changes after remeasuring and resetting the benefit plans | |||
| 5.1.2 Other comprehensive income not to be reclassified into profit and loss under equity law | |||
| 5.1.3 Changes in the fair value of other investments in equity instruments | |||
| 5.1.4 Changes in the fair value of the enterprise's own credit risk | |||
| 5.1.5 Other | |||
| 5.2 Other comprehensive income to be reclassified into profit and loss later | |||
| 5.2.1 Other comprehensive income to be reclassified into profit and loss under equity law | |||
| 5.2.2 Changes in the fair value of other debt investments | |||
| 5.2.3 Amount of financial assets reclassified into other comprehensive income | |||
| 5.2.4 Provision for credit impairment of other credit investments | |||
| 5.2.5 Provision for cash-flow hedge | |||
| 5.2.6 Difference in translation of Foreign Currency Financial Statement | |||
| 5.2.7 Other | |||
| 6. Total comprehensive income | 492,213,324 | 70,947,106 | |
| 7. Earnings per share: | |||
| 7.1 Basic earnings per share | 0.72 | 0.10 | |
| 7.2 Diluted earnings per share | 0.72 | 0.10 | |
| Legal Representative: Zhou Hongjiang Accounting Supervisor: Jiang Jianxun Accounting Department Manager: Guo Cuimei | |||
2.5 Consolidated cash flow statement
Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd. Unit: Yuan
| Item | Note | Sum of current period | Sum of prior period |
| Item | Note | Sum of current period | Sum of prior period |
| 1. Cash flows from operating activities: | |||
| Cash received from sales of goods and rending of services | 1,888,979,284 | 1,507,726,721 | |
| Net increase in customer and interbank deposits | |||
| Net increase in borrowings from central bank | |||
| Net increase in borrowings from other financial institutions | |||
| Cash received from receiving insurance premium of original insurance contract | |||
| Net cash received from reinsurance business | |||
| Net increase in policy holder deposits and investment funds | |||
| Cash received from collecting interest, handling fees and commissions | |||
| Net increase in borrowing funds | |||
| Net increase in repurchasement business funds | |||
| Net cash received for buying and selling securities | |||
| Tax refund received | 25,489,549 | 23,217,782 | |
| Other cash received related to operating activities | 7.52 | 26,262,022 | 47,768,202 |
| Subtotal of cash flows of operating activities | 1,940,730,855 | 1,578,712,705 | |
| Cash paid for goods and services | 528,698,794 | 632,477,833 | |
| Net increase in customer loans and advances | |||
| Net increase in deposits in central bank and interbank deposits | |||
| Cash paid to original insurance contract payments | |||
| Net increase in lending funds | |||
| Cash paid to interest, handling fees and commissions | |||
| Cash paid to policy bonus | |||
| Cash paid to and on behalf of employees | 260,016,591 | 240,815,653 | |
| Cash paid for taxes and expenses | 429,710,784 | 470,110,699 | |
| Other cash paid related to operating activities | 7.52 | 266,369,537 | 251,827,272 |
| Sub-total of cash outflows of operating activities | 1,484,795,706 | 1,595,231,457 | |
| Net cash flow from operating activities | 455,935,149 | -16,518,752 | |
| 2. Cash flow from investing activities: | |||
| Cash received from disinvestment | |||
| Cash received from withdrawal of fixed deposits | 5,200,000 | 60,128,600 | |
| Cash received from obtaining investment income | |||
| Cash received from obtaining interest income | 97,241 | 1,160,244 | |
| Cash received from disposal of fixed assets, intangible assets and other long-term assets | 11,531 | 2,760 | |
| Net cash received from disposal of branch and other business unit | |||
| Other cash received related to investing activities | |||
| Subtotal of cash flows of investment activities | 5,308,772 | 61,291,604 | |
| Cash paid to acquire fixed assets, intangible assets and other long-term assets | 112,686,656 | 68,181,643 | |
| Cash for investment | 518,000 | 858,326 | |
| Cash paid for purchasing fixed deposits | 5,200,000 | 35,200,000 | |
| Net increase in hypothecated loan |
| Item | Note | Sum of current period | Sum of prior period |
| Net cash paid for acquiring branch and other business unit | |||
| Other cash paid related to investment activities | |||
| Subtotal of cash outflows of investment activities | 118,404,656 | 104,239,969 | |
| Net cash flow from investing activities | -113,095,884 | -42,948,365 | |
| 3. Cash flow from financing activities | |||
| Cash received from acquiring investment | 7,430,000 | ||
| Including: cash received from acquiring minority shareholders investment by branch | 7,430,000 | ||
| Cash received from acquiring loans | 596,450,339 | 778,228,305 | |
| Other cash received related to financing activities | 21,654,861 | ||
| Subtotal cash flows of financing activities | 625,535,200 | 778,228,305 | |
| Cash paid for paying debts | 609,426,516 | 758,287,985 | |
| Cash paid for distributing dividend and profit or paying interest | 11,683,409 | 24,177,706 | |
| Including: dividend and profit paid to minority shareholders by branch | 1,551,687 | ||
| Other cash paid related to financing activities | 7,144,318 | ||
| Subtotal of cash outflows of financing activities | 628,254,243 | 782,465,691 | |
| Net cash flow from financing activities | -2,719,043 | -4,237,386 | |
| 4. Influences of exchange rate fluctuation on cash and cash equivalents | -400,533 | -307,959 | |
| 5. Net Increase in cash and cash equivalents | 339,719,689 | -64,012,462 | |
| Plus: balance at the beginning of the period of cash and cash equivalents | 1,052,665,105 | 1,397,399,469 | |
| 6. Balance at the end of the period of cash and cash equivalents | 1,392,384,794 | 1,333,387,007 |
Legal Representative: Zhou Hongjiang Accounting Supervisor: Jiang Jianxun Accounting Department Manager: Guo Cuimei
2.6 Cash flow statement of the parent company
Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd. Unit: Yuan
| Item | Sum of current period | Sum of prior period |
| 1. Cash flows from operating activities: | ||
| Cash received from sales of goods and rending of services | 219,352,502 | 176,514,170 |
| Tax refund received | ||
| Other cash received related to operating activities | 4,587,865 | 14,486,373 |
| Subtotal of cash flows of operating activities | 223,940,367 | 191,000,543 |
| Cash paid for goods and services | 119,811,768 | 149,176,637 |
| Cash paid to and on behalf of employees | 31,143,555 | 25,497,870 |
| Cash paid for taxes and expenses | 22,678,777 | 2,648,464 |
| Other cash paid related to operating activities | 98,483,900 | 107,931,895 |
| Sub-total of cash outflows of operating activities | 272,118,000 | 285,254,866 |
| Net cash flow from operating activities | -48,177,633 | -94,254,323 |
| 2. Cash flow from investing activities: | ||
| Cash received from disinvestment | ||
| Cash received from withdrawal of fixed deposits | 5,200,000 | 15,200,000 |
| Cash received from obtaining investment income | 695,005,832 | 287,389,704 |
| Item | Sum of current period | Sum of prior period |
| Cash received from obtaining interest income | 97,241 | |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 47,954 | |
| Net cash received from disposal of branch and other business unit | ||
| Other cash received related to investing activities | ||
| Subtotal of cash flows of investment activities | 700,351,027 | 302,589,704 |
| Cash paid to acquiring fixed assets, intangible assets and other long-term assets | 2,688,616 | 1,040,048 |
| Cash for investment | ||
| Cash paid for purchasing fixed deposits | 5,200,000 | 20,200,000 |
| Net cash paid for acquiring branch and other business unit | ||
| Other cash paid related to investment activities | 290,000,000 | 97,000,000 |
| Subtotal of cash outflows of investment activities | 297,888,616 | 118,240,048 |
| Net cash flow from investing activities | 402,462,411 | 184,349,656 |
| 3. Cash flow from financing activities | ||
| Cash received from acquiring investment | ||
| Cash received from acquiring loans | 150,000,000 | 150,000,000 |
| Other cash received related to financing activities | ||
| Subtotal cash flows of financing activities | 150,000,000 | 150,000,000 |
| Cash paid for debts | 150,000,000 | 150,000,000 |
| Cash paid to distribute dividend, profit or pay interest | 2,442,943 | 2,748,375 |
| Other cash paid related to financing activities | 2,809,688 | |
| Subtotal of cash outflows of financing activities | 155,252,631 | 152,748,375 |
| Net cash flow from financing activities | -5,252,631 | -2,748,375 |
| 4. Influences of exchange rate fluctuation on cash and cash equivalents | ||
| 5. Net Increase in cash and cash equivalents | 349,032,147 | 87,346,958 |
| Plus: balance at the beginning of the period of cash and cash equivalents | 182,123,070 | 623,116,542 |
| 6. Balance at the end of the period of cash and cash equivalents | 531,155,217 | 710,463,500 |
Legal Representative: Zhou Hongjiang Accounting Supervisor: Jiang Jianxun Accounting Department Manager: Guo Cuimei
2.7 Consolidated owner’s equity changing list
Unit: Yuan
| Item | This period | ||||||||||||||
| Owners’ equity of the parent company | Minority shareholders’ equity | Total owners’ equity | |||||||||||||
| Capital stock | Other equity instruments | Capital reserves | Minus: Treasury stock | Other comprehensive income | Special reserves | Surplus reserves | General risk preparation | Undistributed profits | Other | Subtotal | |||||
| Preferred stock | Perpetual bonds | Other | |||||||||||||
| 1. Balance at the end of last 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 | |||||||
| Plus: Accounting policies changing | -10,632,422 | -10,632,422 | -10,632,422 | ||||||||||||
| Previous error correction | |||||||||||||||
| Business combination under common control | |||||||||||||||
| Other | |||||||||||||||
| 2. Balance at the beginning of this year | 685,464,000 | 524,968,760 | 576,129 | 342,732,000 | 8,703,459,333 | 10,257,200,222 | 236,597,990 | 10,493,798,212 | |||||||
| 3. Increased or decreased amount in this period (reducing amount is listed with “-") | -21,618,495 | 97,636,219 | 76,017,724 | 4,374,174 | 80,391,898 | ||||||||||
| 3.1 Total comprehensive income | -21,618,495 | 371,821,819 | 350,203,324 | -2,664,599 | 347,538,725 | ||||||||||
| 3.2 Owners' invested and reduced capital | 7,430,000 | 7,430,000 | |||||||||||||
| 3.2.1 Owner’ invested common stock | 7,430,000 | 7,430,000 | |||||||||||||
| 3.2.2 Other equity instrument holders’ invested capital | |||||||||||||||
| 3.2.3 Amount of shares paid and reckoned in owners' equity | |||||||||||||||
| 3.2.4 Other | |||||||||||||||
| 3.3 Profit distribution | -274,185,600 | -274,185,600 | -391,227 | -274,576,827 | |||||||||||
| 3.3.1 Accrued surplus reserves | |||||||||||||||
| 3.3.2 Accrued general risk preparation | |||||||||||||||
| 3.3.3 Distribution to owners (or shareholders) | -274,185,600 | -274,185,600 | -391,227 | -274,576,827 | |||||||||||
| 3.3.4 Other | |||||||||||||||
| Item | This period | ||||||||||||||
| Owners’ equity of the parent company | Minority shareholders’ equity | Total owners’ equity | |||||||||||||
| Capital stock | Other equity instruments | Capital reserves | Minus: Treasury stock | Other comprehensive income | Special reserves | Surplus reserves | General risk preparation | Undistributed profits | Other | Subtotal | |||||
| Preferred stock | Perpetual bonds | Other | |||||||||||||
| 3.4 Internal transfer of owners' equity | |||||||||||||||
| 3.4.1 Capital reserves transferred and increased capital (or capital stock) | |||||||||||||||
| 3.4.2 Surplus reserves transferred and increased capital (or capital stock) | |||||||||||||||
| 3.4.3 Surplus reserves covering deficit | |||||||||||||||
| 3.4.4 Retained earnings carried over from the benefit plan variation | |||||||||||||||
| 3.4.5 Retained earnings carried over from other comprehensive income | |||||||||||||||
| 3.4.6 Other | |||||||||||||||
| 3.5 Special reserves | |||||||||||||||
| 3.5.1 Withdrawal in this period | |||||||||||||||
| 3.5.2 Usage in this period | |||||||||||||||
| 3.6 Other | 0 | ||||||||||||||
| 4. Balance at the end of this period | 685,464,000 | 524,968,760 | -21,042,366 | 342,732,000 | 8,801,095,552 | 10,333,217,946 | 240,972,164 | 10,574,190,110 | |||||||
Unit: Yuan
| Item | Last period | ||||||||||||||
| Owners’ equity of the parent company | Minority shareholders’ equity | Total owners’ equity | |||||||||||||
| Capital stock | Other equity instruments | Capital reserves | Minus: Treasury stock | Other comprehensive income | Special reserves | Surplus reserves | General risk preparation | Undistributed profits | Other | Subtotal | |||||
| Preferred stock | Perpetual bonds | Other | |||||||||||||
| 1. Balance at the end of last 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 | |||||||
| Plus: Accounting policies changing | |||||||||||||||
| Previous error correction | |||||||||||||||
| Business combination under common control | |||||||||||||||
| Other | |||||||||||||||
| 2. Balance at the beginning of this 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 | |||||||
| Item | Last period | ||||||||||||||
| Owners’ equity of the parent company | Minority shareholders’ equity | Total owners’ equity | |||||||||||||
| Capital stock | Other equity instruments | Capital reserves | Minus: Treasury stock | Other comprehensive income | Special reserves | Surplus reserves | General risk preparation | Undistributed profits | Other | Subtotal | |||||
| Preferred stock | Perpetual bonds | Other | |||||||||||||
| 3. Increased or decreased amount in this period (reducing amount is listed with “-") | -117,806,600 | 4,811,712 | -21,421,289 | -134,416,177 | -35,278,074 | -169,694,251 | |||||||||
| 3.1 Total comprehensive income | 4,811,712 | 470,860,587 | 475,672,299 | 2,561,399 | 478,233,698 | ||||||||||
| 3.2 Owners' invested and reduced capital | -117,806,600 | -117,806,600 | -34,679,936 | -152,486,536 | |||||||||||
| 3.2.1 Owner’ invested common stock | |||||||||||||||
| 3.2.2 Other equity instrument holders’ invested capital | |||||||||||||||
| 3.2.3 Amount of shares paid and reckoned in owners' equity | |||||||||||||||
| 3.2.4 Other | -117,806,600 | -117,806,600 | -34,679,936 | -152,486,536 | |||||||||||
| 3.3 Profit distribution | -492,281,876 | -492,281,876 | -3,159,537 | -495,441,413 | |||||||||||
| 3.3.1 Accrued surplus reserves | |||||||||||||||
| 3.3.2 Accrued general risk preparation | |||||||||||||||
| 3.3.3 Distribution to owners (or shareholders) | -411,278,400 | -411,278,400 | -2,376,794 | -413,655,194 | |||||||||||
| 3.3.4 Other | |||||||||||||||
| 3.4 Internal transfer of owners' equity | |||||||||||||||
| 3.4.1 Capital reserves transferred and increased capital (or capital stock) | |||||||||||||||
| 3.4.2 Surplus reserves transferred and increased capital (or capital stock) | |||||||||||||||
| 3.4.3 Surplus reserves covering deficit | |||||||||||||||
| 3.4.4 Retained earnings carried over from the benefit plan amount | |||||||||||||||
| 3.4.5 Retained earnings carried over from other comprehensive income | |||||||||||||||
| 3.4.6 Other | |||||||||||||||
| Item | Last period | ||||||||||||||
| Owners’ equity of the parent company | Minority shareholders’ equity | Total owners’ equity | |||||||||||||
| Capital stock | Other equity instruments | Capital reserves | Minus: Treasury stock | Other comprehensive income | Special reserves | Surplus reserves | General risk preparation | Undistributed profits | Other | Subtotal | |||||
| Preferred stock | Perpetual bonds | Other | |||||||||||||
| 3.5 Special reserves | |||||||||||||||
| 3.5.1 Withdrawal in this period | |||||||||||||||
| 3.5.2 Usage in this period | |||||||||||||||
| 3.6 Other | |||||||||||||||
| 4. Balance at the end of this period | 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 | |||||||
2.8 Owner’s equity changing list of the parent company
Unit: Yuan
| Item | This period | |||||||||||
| Capital stock | Other equity instruments | Capital reserves | Minus: Treasury stock | Other comprehensive income | Special reserves | Surplus reserves | Undistributed profits | Other | Total owners’ equity | |||
| Preferred stock | Perpetual bonds | Other | ||||||||||
| 1. Balance at the end of last year | 685,464,000 | 560,182,235 | 342,732,000 | 8,567,313,551 | 10,155,691,786 | |||||||
| Plus: Accounting policies changing | -6,289,720 | -6,289,720 | ||||||||||
| Previous error correction | ||||||||||||
| Other | ||||||||||||
| 2. Balance at the beginning of this year | 685,464,000 | 560,182,235 | 342,732,000 | 8,561,023,831 | 10,149,402,066 | |||||||
| 3. Increased or decreased amount in this period (reducing amount is listed with “-") | 218,027,724 | 218,027,724 | ||||||||||
| 3.1 Total comprehensive income | 492,213,324 | 492,213,324 | ||||||||||
| 3.2 Owners' invested and reduced capital | ||||||||||||
| 3.2.1 Owners’ invested common stock | ||||||||||||
| 3.2.2 Other equity instrument holder’ invested capital | ||||||||||||
| 3.2.3 Amount of shares paid and reckoned in owners' equity | ||||||||||||
| 3.2.4 Other | ||||||||||||
| 3.3 Profit distribution | -274,185,600 | -274,185,600 | ||||||||||
| 3.3.1 Drew surplus reserves | ||||||||||||
| 3.3.2 Distribution to owners (or shareholders) | -274,185,600 | -274,185,600 | ||||||||||
| 3.3.3 Other | ||||||||||||
| 3.4 Internal transfer of owners' equity | ||||||||||||
| 3.4.1 Capital reserves transferred and increased capital (or capital stock) | ||||||||||||
| 3.4.2 Surplus reserves transferred and increased capital (or capital stock) | ||||||||||||
| 3.4.3 Surplus reserves covering deficit | ||||||||||||
| 3.4.4 Retained earnings carried over from the benefit plan amount | ||||||||||||
| 3.4.5 Retained earnings carried over from other comprehensive income | ||||||||||||
| 3.4.6 Other | ||||||||||||
| 3.5 Special reserves | ||||||||||||
| 3.5.1 Accrual in this period | ||||||||||||
| 3.5.2 Usage in this period | ||||||||||||
| 3.6 Other | ||||||||||||
| 4. Balance at the end of this period | 685,464,000 | 560,182,235 | 342,732,000 | 8,779,051,555 | 10,367,429,790 |
Unit: Yuan
| Item | Last period | |||||||||||
| Capital stock | Other equity instruments | Capital reserves | Minus: Treasury stock | Other comprehensive income | Special reserves | Surplus reserves | Undistributed profits | Other | Total owners’ equity | |||
| Preferred stock | Perpetual bonds | Other | ||||||||||
| 1. Balance at the end of last year | 685,464,000 | 557,222,454 | 342,732,000 | 8,619,977,577 | 10,205,396,031 | |||||||
| Plus: Accounting policies changing | ||||||||||||
| Previous error correction | ||||||||||||
| Other | ||||||||||||
| 2. Balance at the beginning of this year | 685,464,000 | 557,222,454 | 342,732,000 | 8,619,977,577 | 10,205,396,031 | |||||||
| 3. Increased or decreased amount in this period (reducing amount is listed with “-") | 2,959,781 | -52,664,026 | -49,704,245 | |||||||||
| 3.1 Total comprehensive income | 427,160,774 | 427,160,774 | ||||||||||
| 3.2 Owners' invested and reduced capital | 2,959,781 | 2,959,781 | ||||||||||
| 3.2.1 Owners’ invested common stock | ||||||||||||
| 3.2.2 Other equity instrument holder’ invested capital | ||||||||||||
| 3.2.3 Amount of shares paid and reckoned in owners' equity | ||||||||||||
| 3.2.4 Other | 2,959,781 | 2,959,781 | ||||||||||
| 3.3 Profit distribution | -479,824,800 | -479,824,800 | ||||||||||
| 3.3.1 Drew surplus reserves | ||||||||||||
| 3.3.2 Distribution to owners (or shareholders) | -479,824,800 | -479,824,800 | ||||||||||
| 3.3.3 Other | ||||||||||||
| 3.4 Internal transfer of owners' equity | ||||||||||||
| 3.4.1 Capital reserves transferred and increased capital (or capital stock) | ||||||||||||
| 3.4.2 Surplus reserves transferred and increased capital (or capital stock) | ||||||||||||
| 3.4.3 Surplus reserves covering deficit | ||||||||||||
| 3.4.4 Retained earnings carried over from the benefit plan amount | ||||||||||||
| 3.4.5 Retained earnings carried over from other comprehensive income | ||||||||||||
| 3.4.6 Other | ||||||||||||
| 3.5 Special reserves | ||||||||||||
| 3.5.1 Accrual in this period | ||||||||||||
| 3.5.2 Usage in this period | ||||||||||||
| 3.6 Other | ||||||||||||
| 4. Balance at the end of this period | 685,464,000 | 560,182,235 | 342,732,000 | 8,567,313,551 | 10,155,691,786 |
3. Company profile
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 the merger and reorganization carried out byYantai Changyu Group Co., Ltd. (“Changyu Group”) with its assets and liabilities in relationto wine business. The Company and its subsidiary companies (hereinafter collectivelyreferred to as the “Group”) are engaged in the production and sale of wine and brandy,planting and purchase of grapes, development of tourism resources, etc. The registeredaddress of the Company is Yantai City, Shandong Province, and the office address of theheadquarters is 56 Dama Road, Zhifu District, Yantai City, Shandong Province.
As at June 30, 2021, the Company issued 685,464,000 shares accumulatively. Refer to Note
7.32 for details.
The parent company of the Group is Changyu Group incorporated in China, which wasultimately and actually controlled by four parties, including Yantai Guofeng InvestmentHolding Co., Ltd., ILLVA Saronno Holding Spa, International Finance Corporation and YantaiYuhua Investment & Development Co., Ltd.
The financial statement and the consolidated financial statement of the Company wereapproved by the Board of Directors on August 24, 2021.
The details of scope of the consolidated financial statement in this period can be seen in Note9 “Equity in other entities”. The details of scope changes of the consolidated financialstatement in this period can be seen in Note 8 “Changes of the consolidated scope”.
4. Preparation basis of financial statement
4.1 Preparation basis
The Group implements the Accounting Standards for Business Enterprises (including the newand revised editions published in 2014) (“ASBE”) published by the Ministry of Finance andrelevant regulations thereof.
4.2 Continuous operation
The Group has appraised the ability of continuous operation for 12 months from June 30,2021, and no issues or situations causing major doubts to this ability are found. Therefore, thisfinancial statement is prepared on the basis of the continuous operation assumption.
5. Main accounting policies and accounting estimates
5.1 Statement on compliance with ASBE
This financial statement fulfills the requirement of ASBE issued by the Ministry of Financeand gives a true and integrated view of the consolidated financial status and the financialstatus as at June 30, 2021, as well as the consolidated operating result, the operating result, the
consolidated cash flow and the cash flow of the Company from January to June 2021.
In addition, the financial statement of the Company also complies with the related disclosurerequirements for statement and its notes stipulated by Preparation Rules for InformationDisclosure by Companies Offering Securities to the Public No. 15 – General Provisions onFinancial Reports (2014 Revision) by the China Securities Regulatory Commission(hereinafter referred to as the “CSRC”).
5.2 Accounting period
The accounting year is from January 1 to December 31 in Gregorian calendar.
5.3 Operating cycle
The operating cycle refers to the period from the enterprise purchases the assets used forprocessing to the cash or cash equivalent is realized. The operating cycle of the Company is12 months.
5.4 Recording currency
Since Renminbi (RMB) is the currency of the main economic environment in which theCompany and the domestic subsidiary companies thereof are situated, the Company and thesubsidiary companies thereof adopt RMB as the recording currency. The overseas subsidiarycompanies thereof determine EUR, CLP and AUD as the recording currency according to themain economic environment in which they are situated. The currency in this financialstatement prepared by the Group is RMB.
5.5 Accounting treatment method for business combination under common control andnon-common control
5.5.1 Business combination under common control
A business combination under common control is a business combination in which all of thecombining enterprises are ultimately controlled by the same party or same multiple partiesbefore and after the combination, and that control is not transitory. The assets and liabilitiesobtained by the combining party in the business combination shall be measured on the basisof the carrying amount in the ultimate controlling party's consolidated financial statement asat the combination date. Where there is a difference between the carrying amount of the netassets acquired and the carrying amount of the combination consideration paid (or the totalpar value of the shares issued), the stock premium in capital surplus shall be adjusted. If thestock premium in capital surplus is not sufficient to offset, the retained earnings shall beadjusted. The direct related expenses incurred for the business combination shall be includedin the current profit and loss when incurred. The combination date is the date on which thecombining party actually obtains control of the combined party.
5.5.2 Business combination under non-common control
A business combination under non-common control is a business combination in which all of
the combining parties are not ultimately controlled by the same party or same multiple partiesbefore and after the combination. The sum of fair values of the assets paid by the Group, asthe acquirer, (including the acquiree’s equity the Group held before the acquisition date),liabilities incurred or assumed, and the equity securities issued on the acquisition date inexchange for the control over the acquiree, deducts the fair value of the acquiree’s identifiablenet assets acquired in the combination on the acquisition date. If the difference is positive, itshall be recognized as goodwill; and if it is negative, it shall be included in the current profitand loss. All the identifiable assets, liabilities and contingent liabilities which are obtainedfrom the acquiree and meet the recognition conditions shall be confirmed by the Group on theacquisition date according to the fair value thereof. The acquisition date is the date on whichthe acquirer actually obtains control of the acquiree.
For a business combination involving entities not under common control and achieved instages, the Group remeasures its previously-held equity interest in the acquiree to itsacquisition-date fair value and recognises any resulting difference between the fair value andthe carrying amount as investment income or other comprehensive income for the currentperiod. In addition, any amount recognised in other comprehensive income that may bereclassified to profit or loss, in prior reporting periods relating to the previously-held equityinterest, and any other changes in the owners’ equity under equity accounting, are transferredto investment income in the period in which the acquisition occurs. If equity interests of theacquiree held before acquisition-date were equity instrument investments measured at fairvalue through other comprehensive income, other comprehensive income recognised shall bemoved to retained earnings on acquisition-date.
5.6 Compiling methods of consolidated financial statement
5.6.1 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. Totalcomprehensive income attributable to non-controlling shareholders is presented separately inthe consolidated income statement below the total comprehensive income line item.
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-groupbalances and transactions, and any unrealised profit or loss arising from intra-grouptransactions, are eliminated when preparing the consolidated financial statements. Unrealisedlosses resulting from intra-group transactions are eliminated in the same way as unrealisedgains, unless they represent impairment losses that are recognised in the financial statements.
5.6.2 Subsidiaries acquired through a business combination
Where a subsidiary was acquired during the reporting period, through a business combinationinvolving entities under common control, the financial statements of the subsidiary areincluded in the consolidated financial statements based on the carrying amounts of the assetsand liabilities of the subsidiary in the financial statements of the ultimate controlling party asif the combination had occurred at the date that the ultimate controlling party first obtainedcontrol. The opening balances and the comparative figures of the consolidated financialstatements are also restated.
Where a subsidiary was acquired during the reporting period, through a business combinationinvolving entities not under common control, the identifiable assets and liabilities of theacquired subsidiaries are included in the scope of consolidation from the date that controlcommences, based on the fair value of those identifiable assets and liabilities at theacquisition date.
5.6.3 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 iseconomically justified 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.
If each of the multiple transactions forms part of a bundled transaction which eventuallyresults in the loss of control in the subsidiary, these multiple transactions are accounted for asa single transaction. In the consolidated financial statements, the difference between theconsideration received and the corresponding proportion of the subsidiary’s net assets(calculated continuously from the acquisition date) in each transaction prior to the loss ofcontrol shall be recognised in other comprehensive income and transferred to profit or losswhen the parent eventually loses control of the subsidiary.
5.6.4 Changes in non-controlling interests
Where the Company acquires a non-controlling interest from a subsidiary’s non-controllingshareholders or disposes of a portion of an interest in a subsidiary without a change in control,the difference between the proportion interests of the subsidiary’s net assets being acquired ordisposed and the amount of the consideration paid or received is adjusted to the capitalreserve (share premium) in the consolidated balance sheet, with any excess adjusted toretained earnings.
5.7 Determination standard of cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposit, and short-term highlyliquid investments which are readily convertible into known amount of cash with aninsignificant risk of changes in value.
5.8 Foreign currency transaction and foreign currency statement translationWhen 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.Non-monetary items that are measured at historical cost in foreign currencies are translated toRenminbi 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 Renminbi atthe 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.
5.9 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, receivables, payables,loans and borrowings and share capital.
5.9.1 Recognition and initial measurement of financial assets and financial liabilities
A financial asset and financial liability is recognised in the balance sheet when the Groupbecomes a party to the contractual provisions of a financial instrument.
A financial assets (unless it is a trade receivable without a significant financing component)and financial liabilities is measured initially at fair value. For financial assets and financialliabilities at fair value through profit or loss, any related directly attributable transaction costsare charged to profit or loss; for other categories of financial assets and financial liabilities,any related directly attributable transaction costs are included in their initial costs. Accountsreceivable containing no significant financing component are measured initially at transactionprices determined by the accounting policies set out in Note 5.23.
5.9.2 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 which afinancial asset is managed and its contractual cash flow characteristics. On initial recognition,a financial asset is classified as measured at amortised cost, at fair value through othercomprehensive income (“FVOCI”), or at fair value through profit or loss (“FVTPL”).
Financial assets are not reclassified subsequent to their initial recognition unless the Groupchanges its business model for managing financial assets in which case all affected financialassets are reclassified on the first day of the first reporting period following the change in thebusiness model.
A financial asset is measured at amortised cost if it meets both of the following conditions andis not designated as at FVTPL:
- it is held within a business model whose objective is to hold assets to collect contractualcash flows; and- its contractual terms give rise on specified dates to cash flows that are solely payments ofprincipal and interest on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and isnot 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 ofprincipal 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. Theinstrument meets the definition of equity from the perspective of the issuer.
All financial assets not classified as measured at amortised cost or FVOCI as described aboveare measured at FVTPL. On initial recognition, the Group may irrevocably designate afinancial asset that otherwise meets the requirements to be measured at amortised cost or atFVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatchthat would otherwise arise.
The business model refers to how the Group manages its financial assets in order to generatecash flows. That is, the Group’s business model determines whether cash flows will resultfrom collecting contractual cash flows, selling financial assets or both. The Group determinesthe business model for managing the financial assets according to the facts and based on thespecific business objective for managing the financial assets determined by the Group’s keymanagement personnel.
In assessing whether the contractual cash flows are solely payments of principal and interest,the Group considers the contractual terms of the instrument. For the purposes of thisassessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition.‘Interest’ is defined as consideration for the time value of money and for the credit riskassociated with the principal amount outstanding during a particular period of time and forother basic lending risks and costs, as well as a profit margin. The Group also assesseswhether the financial asset contains a contractual term that could change the timing or amountof contractual cash flows such that it would not meet this condition.
(b) Subsequent measurement of financial assets
- Financial assets at FVTPL
These financial assets are subsequently measured at fair value. Net gains and losses, includingany interest or dividend income, are recognised in profit or loss unless the financial assets arepart of a hedging relationship.
- Financial assets at amortised cost
These assets are subsequently measured at amortised cost using the effective interest method.A gain or loss on a financial asset that is measured at amortised cost and is not part of ahedging relationship shall be recognised in profit or loss when the financial asset isderecognised, through the amortisation process or in order to recognise impairment gains orlosses.
- Debt investments at FVOCI
These assets are subsequently measured at fair value. Interest income calculated using the
effective interest method, impairment and foreign exchange gains and losses are recognised inprofit or loss. Other net gains and losses are recognised in other comprehensive income. Onderecognition, gains and losses accumulated in other comprehensive income are reclassifiedto profit or loss.
- Equity investments at FVOCI
These assets are subsequently measured at fair value. Dividends are recognised as income inprofit or loss. Other net gains and losses are recognised in other comprehensive income. Onderecognition, gains and losses accumulated in other comprehensive income are reclassifiedto retained earnings.
5.9.3 Classification and subsequent measurement of financial liabilitiesFinancial 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.
5.9.4 Offsetting
Financial assets and financial liabilities are generally presented separately in the balance sheet,and are not offset. However, a financial asset and a financial liability are offset and the netamount is presented in the balance sheet when both of the following conditions are satisfied:
- The Group currently has a legally enforceable right to set off the recognised amounts；- The Group intends either to settle on a net basis, or to realise the financial asset and settlethe financial liability simultaneously.
5.9.5 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 not retaincontrol 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 transferredfinancial 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 partof it) is extinguished.
5.9.6 Impairment
The Group recognises loss allowances for expected credit loss (ECL) on:
- financial assets measured at amortised cost;- financial investments at fair value through other comprehensive income
Financial assets measured at fair value, including debt investments or equity securities atFVPL, equity securities designated at FVOCI and derivative financial assets, are not subjectto the ECL assessment.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as thepresent value of all cash shortfalls (i.e. the difference between the cash flows due to the entityin accordance with the contract and the cash flows that the Group expects to receive).
The maximum period considered when estimating ECLs is the maximum contractual period(including extension options) over which the Group is exposed to credit risk.
Lifetime ECLs are the ECLs that result from all possible default events over the expected lifeof a financial instrument.
12-month ECLs are the portion of ECLs that result from default events that are possiblewithin the 12 months after the balance sheet date (or a shorter period if the expected life of theinstrument is less than 12 months).
For accounts receivable, loss allowance always measured at an amount equal to lifetime ECLs.ECLs on these financial assets are estimated using a provision matrix based on the Group’shistorical credit loss experience, adjusted for factors that are specific to the debtors and anassessment of both the current and forecast general economic conditions at the balance 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 alow risk 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 significantly sinceinitial recognition and when estimating ECL, the Group considers reasonable and supportableinformation that is relevant and available without undue cost or effort, includingforward-looking information. In particular, the following information is taken into account:
- failure to make payments of principal or interest on their contractually due dates;- an actual or expected significant deterioration in a financial instrument’s external orinternal 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 significant increasein credit risk is performed on either an individual basis or a collective basis. When theassessment is performed on a collective basis, the financial instruments are grouped based onshared 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 at amortisedcost 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 estimated future cash flows ofthe financial asset have occurred. Evidence that a financial asset is credit-impaired includesthe 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 a reversalof impairment in profit or loss in the period in which the recovery occurs.
5.9.7 Equity instrument
The consideration received from the issuance of equity instruments net of transaction costs isrecognised in shareholders’ equity. Consideration and transaction costs paid by the Companyfor repurchasing self-issued equity instruments are deducted from shareholders’ equity.
When the Company repurchases its own shares, those shares are treated as treasury shares. Allexpenditure relating to the repurchase is recorded in the cost of the treasury shares, with the
transaction recording in the share register. Treasury shares are excluded from profitdistributions and are presented as a deduction under shareholders’ equity in the balance sheet.
5.10 Inventories
5.10.1 Classification and cost
Inventories include raw materials, work in progress and reusable materials. Inventories areinitially measured at cost. Cost of inventories comprises all costs of purchase, costs ofconversion and other expenditure incurred in bringing the inventories to their present locationand condition. In addition to the purchase cost of raw materials, work in progress and finishedgoods include direct labour costs and an appropriate allocation of production overheads.
Agricultural products harvested are reported in accordance with the CAS No.1 - Inventories.
5.10.2 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.
5.10.3 Basis for determining the net realisable value and method for provision forobsolete inventoriesAt the balance sheet date, inventories are carried at the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business less theestimated costs of completion and the estimated costs necessary to make the sale and relevanttaxes. The net realisable value of materials held for use in the production is measured basedon the net realisable value of the finished goods in which they will be incorporated. The netrealisable value of the inventory held to satisfy sales or service contracts is measured based onthe contract price, to the extent of the quantities specified in sales contracts, and the excessportion of inventories is measured based on general selling prices.
Any excess of the cost over the net realisable value of each item of inventories is recognisedas a provision for impairment, and is recognised in profit or loss.
5.10.4 Inventory count system
The Group maintains a perpetual inventory system.
5.11 Long-term equity investments
5.11.1 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 combinationinvolving entities under common control is the Company’s share of the carrying amount ofthe subsidiary’s equity in the consolidated financial statements of the ultimate controllingparty at the combination date. The difference between the initial investment cost and thecarrying amount of the consideration given is adjusted to the share premium in the capitalreserve, with any excess adjusted to retained earnings. For a long-term equity investment in asubsidiary acquired through a business combination achieved in stages which do not form abundled transaction and involving entities under common control, the Company determinesthe initial cost of the investment in accordance with the above policies. The differencebetween this initial cost and the sum of the carrying amount of previously-held investmentand the consideration paid for the shares newly acquired is adjusted to capital premium in thecapital reserve, with any excess adjusted to retained earnings.- For a long-term equity investment obtained through a business combination not involvingenterprises under common control, the initial cost comprises the aggregate of the fair value ofassets transferred, liabilities incurred or assumed, and equity securities issued by the Company,in exchange for control of the acquiree. For a long-term equity investment obtained through abusiness combination not involving entities under common control and achieved throughmultiple transactions in stages which do not form a bundled transaction, the initial costcomprises the carrying amount of the previously-held equity investment in the acquireeimmediately before the acquisition date, and the additional investment cost at the acquisitiondate.
(b) Long-term equity investments acquired other than through a business combination
- A long-term equity investment acquired other than through a business combination isinitially recognised at the amount of cash paid if the Group acquires the investment by cash,or at the fair value of the equity securities issued if an investment is acquired by issuingequity securities.
5.11.2 Subsequent measurement of long-term equity investment
(a) Investments in subsidiaries
In the Company’s separate financial statements, long-term equity investments in subsidiariesare accounted for using the cost method unless the investment is classified as held for sale.Except for cash dividends or profit distributions declared but not yet distributed that havebeen included in the price or consideration paid in obtaining the investments, the Companyrecognises its share of the cash dividends or profit distributions declared by the investee asinvestment income for the current period.
The investments in subsidiaries are stated in the balance sheet at cost less accumulatedimpairment losses.
For the impairment of the investments in subsidiaries, refer to Note 5.21.
In the Group’s consolidated financial statements, subsidiaries are accounted for in accordancewith the policies described in Note 5.6.
(b) Investments in joint ventures and associates
A joint venture is an arrangement whereby the Group and other parties have joint control andrights to the net assets of the arrangement.
An associate is an enterprise the Group can exert significant influence on.
A long-term equity investment in a joint venture and associate is accounted for using theequity method for subsequent measurement, unless the investment is classified as held forsale.
The accounting treatments under the equity method adopted by the Group are as follows:
- Where the initial cost of a long-term equity investment exceeds the Group’s interest in thefair value of the investee’s identifiable net assets at the date of acquisition, the investment isinitially recognised at cost. Where the initial investment cost is less than the Group’s interestin the fair value of the investee’s identifiable net assets at the date of acquisition, theinvestment is initially recognised at the investor’s share of the fair value of the investee’sidentifiable net assets, and the difference is recognised in profit or loss.
- After the acquisition of the investment in joint ventures and associates, the Grouprecognises its share of the investee’s profit or loss and other comprehensive income asinvestment income or losses and other comprehensive income respectively, and adjusts thecarrying amount of the investment accordingly. Once the investee declares any cash dividendsor profit distributions, the carrying amount of the investment is reduced by the amountattributable to the Group. Changes in the Group’s share of the investee’s owners’ equity, otherthan those arising from the investee’s net profit or loss, other comprehensive income or profitdistribution (referred to as “other changes in owners’ equity”), is recognised directly in theGroup’s equity, and the carrying amount of the investment is adjusted accordingly.
- In calculating its share of the investee’s net profits or losses, other comprehensive incomeand other changes in owners’ equity, the Group recognises investment income and othercomprehensive income after making appropriate adjustments to align the accounting policiesor accounting periods with those of the Group based on the fair value of the investee’sidentifiable net assets at the date of acquisition. Unrealised profits and losses resulting fromtransactions between the Group and its associates or joint ventures are eliminated to the extentof the Group’s interest in the associates or joint ventures. Unrealised losses resulting fromtransactions between the Group and its associates or joint ventures are eliminated in the sameway as unrealised gains but only to the extent that there is no impairment.
- The Group discontinues recognising its share of further losses of the investee after thecarrying amount of the long-term equity investment and any long-term interest that insubstance forms part of the Group’s net investment in the associate is reduced to zero, exceptto the extent that the Group has an obligation to assume additional losses. If the joint venture
or the associate subsequently reports net profits, the Group resumes recognising its share ofthose profits only after its share of the profits equals the share of losses not recognised.
For the impairment of the investments in joint ventures and associates, refer to Note 5.21.
5.11.3 Criteria for determining the existence of joint control and significant impact overan investeeJoint control is the contractually agreed sharing of control of an arrangement, which existsonly when decisions about the relevant activities (activities with significant impact on thereturns of the arrangement) require the unanimous consent of the parties sharing control.
The following factors are usually considered when assessing whether the Group can exercisejoint control over an investee:
- Whether no single participant party is in a position to control the investee’s relatedactivities unilaterally;- Whether strategic decisions relating to the investee’s related activities require theunanimous consent of all participant parties that sharing of control.
Significant influence is the power to participate in the financial and operating policy decisionsof an investee but does not have control or joint control over those policies.
5.12 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 and impairmentlosses, and adopts a depreciation or amortisation policy for the investment property which isconsistent with that for buildings or land use rights, unless the investment property isclassified as held for sale. For the impairment of the investment properties, refer to Note 5.21.
| Category | Estimated useful life (years) | Residual value rate (%) | Depreciation rate (%) |
| Plant and buildings | 20-40 years | 0 - 5% | 2.4%-5.0% |
5.13 Fixed assets
5.13.1 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 in
Note 5.14.
Where the parts of an item of fixed assets have different useful lives or provide benefits to theGroup in a different pattern, thus necessitating use of different depreciation rates or methods,each part is recognised as a separate fixed asset.
Any subsequent costs including the cost of replacing part of an item of fixed assets arerecognised as assets when it is probable that the economic benefits associated with the costswill flow to the Group, and the carrying amount of the replaced part is derecognised. Thecosts of the day-to-day maintenance of fixed assets are recognised in profit or loss as incurred.
Fixed assets are stated in the balance sheet at cost less accumulated depreciation andimpairment losses.
5.13.2 Depreciation of fixed assets
The cost of a fixed asset, less its estimated residual value and accumulated impairment losses,is depreciated using the straight-line method over its estimated useful life, unless the fixedasset is classified as held for sale.
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 at eachyear-end.
5.13.3 For the impairment of the fixed assets, refer to Note 5.20.
5.13.4 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 are determinedas the difference between the net disposal proceeds and the carrying amount of the item, andare recognised in profit or loss on the date of retirement or disposal.
5.14 Construction in progress
The cost of self-constructed assets includes the cost of materials, direct labour, capitalisedborrowing costs, and any other costs directly attributable to bringing the asset to workingcondition for its intended use.A self-constructed asset is classified as construction in progress and transferred to fixed assetwhen it is ready for its intended use. No depreciation is provided against construction inprogress.
Construction in progress is stated in the balance sheet at cost less accumulated impairmentlosses (see Note 5.21).
5.15 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 productionof a qualifying asset, the amount of interest to be capitalised is the interest expense calculatedusing effective interest rates during the period less any interest income earned from depositingthe borrowed funds or any investment income on the temporary investment of those fundsbefore 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 of theexcess amounts of cumulative expenditure on the asset over the above amounts of specificborrowings. The capitalisation rate is the weighted average of the interest rates applicable tothe general-purpose borrowings.
The effective interest rate is determined as the rate that exactly discounts estimated futurecash flow through the expected life of the borrowing or, when appropriate, a shorter period tothe initially recognised amount of the borrowings.
During the capitalisation period, exchange differences related to the principal and interest on aspecific-purpose borrowing denominated in foreign currency are capitalised as part of the costof the qualifying asset. The exchange differences related to the principal and interest onforeign currency borrowings other than a specific-purpose borrowing are recognised as afinancial expense when incurred.
The capitalisation period is the period from the date of commencement of capitalisation ofborrowing costs to the date of cessation of capitalisation, excluding any period over which
capitalisation is suspended. Capitalisation of borrowing costs commences when expenditurefor the asset is being incurred, borrowing costs are being incurred and activities of acquisition,construction or production that are necessary to prepare the asset for its intended use are inprogress, and ceases when the assets become ready for their intended use. Capitalisation ofborrowing costs should cease when the qualifying asset being constructed or produced hasreached its expected usable or saleable condition. Capitalisation of borrowing costs issuspended when the acquisition, construction or production activities are interruptedabnormally for a period of more than three months.
5.16 Biological assets
The biological assets of the Group are productive biological assets.
Bearer biological assets are those that are held for the purposes of producing agriculturalproduce, rendering of services or rental. Bearer biological assets in the Group are vines.Bearer biological assets are initially measured at cost. The cost of self-grown or self-bredbearer biological assets represents the necessary directly attributable expenditure incurredbefore satisfying the expected production and operating purpose, including capitalisedborrowing costs.
Bearer biological assets, after reaching the expected production and operating purpose, aredepreciated using the straight-line method over its estimated useful life. The estimated usefullives, estimated net residual value rates and depreciation rates of bearer biological assets areas follows:
| Category | Useful life (years) | Estimated net residual rate (%) | Annual depreciation rate (%) |
| Vines | 20 years | 0% | 5.0% |
The Group evaluates the useful life and expected net salvage value by considering the normalproducing life of the bearer biological assets.
Useful lives, estimated residual values and depreciation methods of bearer biological assetsare reviewed at least at each year-end. Any changes should be treated as changes inaccounting estimates.
For a bearer biological asset that has been sold, damaged, dead or destroyed, any differencebetween the disposal proceeds and the carrying amount of the asset (after tax deduction)should be recognised in profit or loss for the period in which it arises.
5.17 Right-to-use assets
Right-to-use assets refer to the right vested in the Group as the lessee to use any leased assetsduring the lease period. Upon the commencement the lease term, the Group recognizesright-to-use assets and lease liabilities for leases as the lessee, provided that short-term leasesand leases of low-value assets subject to simplified treatment are excluded.
The right-to-use assets of the Group are initially measured at cost. The said cost includes:
– Initially measured amount of leased liability;– Amount of lease payments made on or before the commencement date of the lease term;in case of any lease incentive, the related amount of such lease incentive having been enjoyedshall be deducted;– Initial direct costs incurred by the Group as the lessee;– Costs that the Group expects to incur to disassemble and remove leased assets, restore thesite where leased assets are located or restore leased assets to the agreed condition under theterms of the lease.
The Group employs the straight-line method to depreciate right-to-use assets. Where it can bereasonably recognized that the ownership of leased assets will be obtained by the Group uponexpiration of the lease term, leased assets will be depreciated during the service life; where itcannot be reasonably recognized, leased assets will be depreciated during the lease term or theremaining service life of such leased assets by the Group, whichever is shorter.
The Group determines whether any right-to-use assets are impaired in accordance with theprovisions of Accounting Standard for Business Enterprises No. 8 - Impairment of Assets (the“Standard"), and has identified impairment losses subject to accounting treatment.
When the Group remeasures lease liabilities according to the Standard, the book value ofright-to-use assets shall be adjusted accordingly. Where the book value of right-to-use assetshas been reduced to zero, but lease liabilities still need to be subject to further reduction, theremaining amount shall be recognized in current profits and losses. Where any lease changeresults in decreased lease scope or shortened lease term, the Group shall correspondinglyreduce the book value of right-to-use assets and recognize gains or losses related to thepartially or completely terminated lease in current profits and losses. Where any other leasechange results in remeasurement of lease liabilities, the Group shall correspondingly adjustthe book value of right-to-use assets.
5.18 Intangible assets
Intangible assets are stated in the balance sheet at cost less accumulated amortization (wherethe estimated useful life is finite) and impairment losses (see Note 5.21). For an intangibleasset with finite useful life, its cost estimated less residual value and accumulated impairmentlosses is amortised on the straight-line method over its estimated useful life, unless theintangible asset is classified as held for sale.
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 |
| Trademark | 10 years |
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 bases 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.
5.19 Goodwill
The initial cost of goodwill represents the excess of cost of acquisition over the acquirer’sinterest in the fair value of the identifiable net assets of the acquiree under a businesscombination not involving entities under common control.
Goodwill is not amortised and is stated in the balance sheet at cost less accumulatedimpairment losses (see Note 5.21). On disposal of an asset group or a set of asset groups, anyattributable goodwill is written off and included in the calculation of the profit or loss ondisposal.
5.20 Long-term deferred expenses
Long-term deferred expenses are amortised using a straight-line method within the benefitperiod. The respective amortisation periods for such expenses are as follows:
| Item | Amortisation period |
| Land requisition fee | 50 years |
| Land lease fee | 50 years |
| Greening fee | 5-20 years |
| Renovation fee | 3-5 years |
| Others | 3 years |
5.21 Impairment of assets other than inventories and financial assetsThe carrying amounts of the following assets are reviewed at each balance sheet date based oninternal and external sources of information to determine whether there is any indication of
impairment:
- fixed assets- construction in progress- intangible assets- Bearer biological assets- investment properties measured using a cost model- long-term equity investments- goodwill- long-term deferred expenses, etc.- right-to-use assets
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 its fairvalue (see Note 5.22) less costs to sell and its present value of expected future cash flows.
An asset group is composed of assets directly related to cash-generation and is the smallestidentifiable group of assets that generates cash inflows that are largely independent of thecash inflows from other assets or asset groups.
The present value of expected future cash flows of an asset is determined by discounting thefuture cash flows, estimated to be derived from continuing use of the asset and from itsultimate disposal, to their present value using an appropriate pre-tax discount rate.
An impairment loss is recognised in profit or loss when the recoverable amount of an asset isless than its carrying amount. A provision for impairment of the asset is recognisedaccordingly. Impairment losses related to an asset group or a set of asset groups are allocatedfirst to reduce the carrying amount of any goodwill allocated to the asset group or set of assetgroups, and then to reduce the carrying amount of the other assets in the asset group or set ofasset groups on a pro rata basis. However, such allocation would not reduce the carryingamount of an asset below the highest of its fair value less costs to sell (if measurable), itspresent value of expected future cash flows (if determinable) and zero.
Once an impairment loss is recognised, it is not reversed in a subsequent period.
5.22 Fair value measurement
Unless otherwise specified, the Group measures fair value as follows:
Fair value is the price that would be received to sell an asset or paid to transfer a liability in anorderly transaction between market participants at the measurement date.
When measuring fair value, the Group takes into account the characteristics of the particularasset or liability (including the condition and location of the asset and restrictions, if any, onthe sale or use of the asset) that market participants would consider when pricing the asset orliability at the measurement date, and uses valuation techniques that are appropriate in thecircumstances and for which sufficient data and other information are available to measurefair value. Valuation techniques mainly include the market approach, the income approachand the cost approach.
5.23 Revenue
Revenue refers to the gross inflow of economic benefits formed during the course of theordinary activities of the Group, which may increase the shareholders’ equities and isirrelevant to the invested capital of the shareholders.
The Group recognizes the revenue upon fulfillment of its performance obligations in thecontract, that is, the client obtains control right over the relevant goods or services.
If there are two or more performance obligations under the contact, which shall be fulfilled,the Group will apportion the transaction price to various individual performance obligationsin accordance with the relative proportion of separate selling prices of various goods orservices under these performance obligations on the commencement date of the contract, andmeasure and recognize the revenue in accordance with the transaction prices apportioned tovarious individual performance obligations. The stand-alone selling price refers to the price atwhich the Group sells goods or provides services to customers separately. If the stand-aloneselling price cannot be directly observed, the Group comprehensively considers all therelevant information that can be reasonably obtained, and uses observable input values to thegreatest extent to estimate the stand-alone selling price.
For contracts with quality assurance clauses, the Group analyzes the nature of the qualityassurance provided. If quality assurance provides a separate service in addition to ensuring tothe client that the goods sold meet the established standards, the Group will treat it as anindividual performance obligation. Otherwise, the Group conducts accounting treatment inaccordance with the Accounting Standards for Business Enterprises No. 13 - Contingencies.
The transaction price refers to the amount of consideration that the Group expects to beentitled to receive due to the transfer of goods or services to the client, excluding paymentsreceived on behalf of third parties. The transaction price recognized by the Group does notexceed the amount at which the accumulated recognized revenue will most likely not undergoa significant reversal when the relevant uncertainty is eliminated. In the event that there is asignificant financing part in the contract, the Group determines the transaction price based onthe amount payable in cash when the client obtains control right over the relevant goods orservices. The difference between the transaction price and the contract consideration shall beamortized by the effective interest method during the contract period. From the day of theenforcement of the contract, the Group expects that the interval between the client'sacquisition of control right over the goods or services and the client's payment of the pricewill not exceed one year, regardless of the significant financing part in the contract.
If the Group meets one of the following conditions, the fulfillment of its performance
obligations in a certain period will be deemed, or the fulfillment of its performanceobligations at a certain time point will be deemed:
- The client obtains and consumes the economic benefits while the Group fulfills theperformance obligation;- The client manages to control the goods in process while the Group fulfills theperformance obligation.- Goods produced during the performance period have irreplaceable purposes and theGroup is entitled to charge money for the performance accumulated and has been finisheduntil the current time within the whole contract period.
For any performance obligations fulfilled in a certain period, the Group will recognizerevenue within the certain period in accordance with the performance progress. If theperformance progress cannot be determined reasonably and costs incurred are expected to becompensated of the Group, the revenue will be ascertained according to the costs incurreduntil the performance progress is determined reasonably.
In terms of performance obligations fulfilled at a certain time point, the Group will recognizerevenue when the client gains control right over the relevant goods or services. When it comesto determining whether a client has acquired the control right over goods or services, theGroup will consider the following conditions:
- The Group has the current right to receive payment for the goods or services;- The Group has transferred the goods in kind to the client;- The Group has transferred the legal ownership of the product or the main risks andrewards of ownership to the client;- The client has accepted the goods or services, etc.
For sales with sales return clauses, when the customer obtains control of the relevant goods,the Group recognizes revenue based on the amount of consideration expected to be entitled toreceive due to the transfer of goods to the customer (that is, does not include the expectedamount to be refunded due to sales return), and recognizes liabilities based on the expectedamount to be refunded due to sales returns. At the same time, based on the book value at thetime of transfer of the goods expected to be returned, the Group recognizes as an asset thebalance after deducting the estimated cost of recovering the goods (including the valueimpairment of the returned goods). Based on the book value of the transferred goods at thetime of transfer, the Group carries over as the cost the net amount after deducting the aboveasset cost. On each balance sheet date, the Group re-estimates the future sales returns. If thereis any change, it shall be treated as a change in accounting estimates.
The Group has transferred the goods or services to the client and thus has the right to receivecorresponding consideration (and the right is dependable on factors other than time lapses) ascontract asset, which is subject to provision of impairment on the basis of expected credit loss.The right enjoyed by the Group (only depends on time lapses) to receive considerationunconditionally from the client shall be presented under account receivables. The Grouppresents the obligation of transferring goods or services for the client due to the considerationreceived or receivable as contract liabilities.
The specific accounting policies related to the main activities of the Group’s revenue aredescribed as follows:
The Group’s sales revenue mainly comes from dealer sales. The revenue will be recognizedwhen the Group transfers control of the related products to the customer. According to thebusiness contract, for these transfers, the time when the product is confirmed and signed bythe customer shall be recognized as the confirming point of the sales revenue.
5.24 Contract cost
Contract cost includes incremental cost for being awarded the contract and performance costof the contract.
Incremental cost for being awarded the contract refers to the cost that the Group would notneed to pay if no such contracts are awarded (e.g. sales commissions, etc.). Where such cost isexpected to be recovered, the Group shall take it as the contract acquisition cost and recognizeit as an asset. Expenses incurred by the Group to be awarded contracts other than incrementalcost expected to be recovered shall be recognized in current profits and losses when incurred.
Any cost incurred by the Group for the performance of any contract that doesn't fall into thescope of other businesses specified in the Standard such as inventory, but meets the followingconditions simultaneously, shall be taken as contract performance cost and recognized as anasset.
– Where such cost is directly related to a current or anticipated contract, including directlabor cost, direct material cost, manufacturing expenses (or similar expenses), costs clearlyspecified to be borne by the customer and other costs incurred solely due to the contract;– Where such cost includes resources to be used by the Group to fulfill future performanceobligations;– Where such cost is expected to be recovered.
Assets recognized for contract acquisition cost and assets recognized for contract performancecost (hereinafter referred to as “assets related to contract cost") shall be amortized on the samebasis as the revenue recognition of goods or services related to such assets and recognized incurrent profits and losses. Where the amortization period of assets recognized for the contractacquisition cost does not exceed one year, they shall be recognized in current profits andlosses.
Where the book value of assets related to contract costs is higher than the difference betweenthe following two items, the Group shall withdraw the impairment reserves of the excess partand recognize it as the asset impairment loss:
– Residual consideration expected to be obtained arising from the transfer of goods orservices related to the assets by the Group;– Cost estimated to be occurred for the transfer of the relevant goods or services.
5.25 Employee benefits
5.25.1 Short-term employee benefits
Employee wages or salaries, bonuses, social security contributions such as medical insurance,work injury insurance, maternity insurance and housing fund, measured at the amountincurred or accured at the applicable benchmarks and rates, are recognised as a liability as theemployee provides services, with a corresponding charge to profit or loss or included in thecost of assets where appropriate.
5.25.2 Post-employment benefits – defined contribution plans
Pursuant to the relevant laws and regulations of the People’s Republic of China, the Groupparticipated in a defined contribution basic pension insurance plan in the social insurancesystem established and managed by government organisations. The Group makescontributions to basic pension insurance plans based on the applicable benchmarks and ratesstipulated by the government. Basic pension insurance contributions payable are recognisedas a liability as the employee provides services, with a corresponding charge to profit or lossor included in the cost of assets where appropriate.
5.25.3 Termination benefits
When the Group terminates the employment with employees before the employment contractsexpire, or provides compensation under an offer to encourage employees to accept voluntaryredundancy, a provision is recognised with a corresponding expense in profit or loss at theearlier of the following dates:
- When the Group cannot unilaterally withdraw the offer of termination benefits because ofan employee termination plan or a curtailment proposal;- When the Group has a formal detailed restructuring plan involving the payment oftermination benefits and has raised a valid expectation in those affected that it will carry outthe restructuring by starting to implement that plan or announcing its main features to thoseaffected by it.
5.26 Lease liabilities
Upon the commencement the lease term, the Group recognizes right-to-use assets and leaseliabilities for leases as the lessee, provided that short-term leases and leases of low-valueassets subject to simplified treatment are excluded. The Group's lease liabilities shall beinitially measured at the present value of the outstanding lease payments on thecommencement date of the lease term.
When calculating the present value of the lease payment, the Group shall employ the interestrate implicit in the lease as the discount rate; where the interest rate implicit in the leasecannot be determined, the incremental lending rate of the Group (i.e., the lessee) shall be usedas the discount rate.
The interest rate implicit in the lease refers to an interest rate at which the sum of the present
value of the lessor's lease receipts and the present value of the unsecured residual value equalsthe sum of the fair value of the leased asset and the lessor's initial direct costs. Theincremental lending rate of the Lessee refers to an interest rate payable by the Group as alessee in a similar economic environment in order to acquire assets with a value similar to thatof the right-to-use assets and to borrow funds under similar mortgage conditions during asimilar period.
The Group calculates the interest expense of lease liabilities in each period of the lease termaccording to a fixed periodic rate, which will be included in current profits and losses or assetcost. The variable lease payment not included in the measurement of lease liabilities shall berecognized in current profits and losses and loss or related asset cost when they actually occur.
In case of any of following circumstances after the commencement date of the lease term, theGroup will remeasure lease liabilities at the present value of the lease payment after anychange:
– Where the amount payable anticipated changes according to the guaranteed residualvalue;– Where the index or ratio used for recognizing the lease payment changes;– Where there is a change in the Group's assessment results of the option of purchase,renewal option or option of termination of lease or the actual exercising of the termination ofthe renewal option or option of termination of lease is inconsistent with the originalassessment result.
5.27 Government grants
Government grants are non-reciprocal transfers of monetary or non-monetary assets from thegovernment to the Group except for capital contributions from the government in the capacityas an investor in the Group.
A government grant is recognised when there is reasonable assurance that the grant will bereceived and that the Group will comply with the conditions attaching to the grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at theamount received or receivable. If a government grant is in the form of a transfer of anon-monetary asset, it is measured at fair value.
Government grants related to assets are grants whose primary condition is that the Groupqualifying for them should purchase, construct or otherwise acquire long-term assets.Government grants related to income are grants other than those related to assets. Agovernment grant related to an asset is recognised as deferred income and amortised over theuseful life of the related asset on a reasonable and systematic manner as other income ornon-operating income. A grant that compensates the Company for expenses or losses to beincurred in the future is recognised as deferred income, and included in other income ornon-operating income in the periods in which the expenses or losses are recognised, orincluded in other income or non-operating income directly.
5.28 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 taxable incomefor 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 that wouldfollow from the expected manner of recovery or settlement of the carrying amounts of theassets and liabilities, using tax rates enacted at the balance sheet date that are expected to beapplied in the period when the asset is recovered or the liability is settled.
The carrying amount of a deferred tax asset is reviewed at each balance sheet date, and isreduced to the extent that it is no longer probable that the related tax benefits will be utilised.Such reduction is reversed to the extent that it becomes probable that sufficient taxable profitswill be available.
At the balance sheet date, deferred tax assets and deferred tax liabilities are offset if all of thefollowing conditions are met:
- the taxable entity has a legally enforceable right to offset current tax liabilities and currenttax assets;- they relate to income taxes levied by the same tax authority on either: the same taxableentity; 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 liabilities simultaneously,in each future period in which significant amounts of deferred tax liabilities or deferred taxassets are expected to be settled or recovered.
5.29 Lease
Lease refers to a contract in which it is agreed that the lessor transfers the use right of assetsto the lessee to get corresponding consideration within a certain period.
On the contract start/change date, the Group shall evaluate whether the contract is a lease orincludes a lease. Where either party thereto assigns one or more use rights of the recognizedassets under its control in a certain period to get consideration, the contract is a lease orincludes a lease. Unless there is any change in the terms and conditions thereof, the Groupshall not evaluate again whether the contract is a lease or includes a lease.
If the contract contains multiple separate leases at the same time, the lessee and lessor willsplit the contract and have each separate lease separately subject to accounting treatment. Ifthe contract includes lease and non-lease parts at the same time, the lessee and the lessor willsplit them separately.
5.29.1 Where the Group is the lessee
(a) See Notes III, 17 for the general accounting treatment of right-to-use assets;(b) See Notes III, 26 for the general accounting treatment of leased liabilities;(c) Short-term lease and lease of low-value assetsThe Group does not recognize right-to-use assets and leased liabilities for short-term leaseand lease of low-value assets. Short-term lease refers to any lease with a lease term within 12months from the beginning date of the lease term, excluding option of purchase. Lease oflow-value assets refers to low-value lease when a single lease asset is regarded as a new asset.The Group shall include the lease payment of short-term lease and lease of low-value assetsinto the current profits and losses or relevant asset costs according to the straight-line methodin each period of the lease term.
(d) Lease changeIf there is any lease change and the following conditions are met at the same time, the Groupwill have such a lease change subject to accounting treatment as a separate lease:
– Where such a lease change expands the scope of the lease by adding one or more userights to leased assets;
– Where the increased consideration is equivalent to the separate price of the expandedportion of the scope of the lease adjusted according to the contract.
Where such a lease change is not regarded as a separate lease for accounting treatment, theGroup shall re-apportion the consideration of the contract after such a change, re-determinethe lease term, and re-measure the leased liabilities according to the present value of the leasepayment after the change and the revised discount rate on the effective date of such a leasechange.
Where any lease change results in decreased lease scope or shortened lease term, the Groupshall correspondingly reduce the book value of right-to-use assets and recognize gains orlosses related to the partially or completely terminated lease in current profits and losses.
Where any other lease change results in remeasurement of leased liabilities, the Group shallcorrespondingly adjust the book value of right-to-use assets.
5.29.2 The Group as the lessor
(a) Lease classificationFrom the inception of lease, the Group will divide leases into finance lease and operatinglease as the lessor. Finance lease refers to a lease in which almost all the risks and returnsrelated to the ownership of the leased asset are essentially transferred, regardless of whetherthe ownership is finally transferred or not. Operating lease refers to other leases except for thefinance lease. When the Group is the sublease lessor, the sublease shall be classified based onthe right-to-use assets arising from the original lease.
(b) The Group will record operating lease business as the lessor.During each period of the lease term, the Group recognizes lease receipts from operatingleases as rental revenue by using the straight-line method. The Group capitalizes initial directcosts pertaining to operating leases upon their occurrence, and apportions them as per thesame basis used for recognizing the rental income within the lease term and includes them incurrent profits and losses by period. The Group's variable lease receipts related to operatingleases that are not included in the lease receipts shall be recognized in current profits andlosses when they actually occur.
(c) Accounting treatment method of finance leasesFrom the commencement date of the lease term, the Group recognizes finance leasereceivables for finance leases and derecognizes the related assets. The Group regards the netinvestment in a lease as the entry value of finance lease receivables at the time of initialmeasurement of finance lease receivables. The net investment in a lease is the sum of thepresent value of unguaranteed residual value and rental receipts not received yet on thecommencement date of the lease term which is subject to discounting at the interest rateimplicit in the lease term.
The Group calculates and recognizes the interest income in each period within the lease termaccording to a fixed periodic rate. Derecognition and impairment of finance lease receivablesshall be subject to accounting treatment in accordance with Note V.9 hereto. The variablelease payment which is not included in the net investment in a lease, shall be recognized incurrent profits and losses when it actually occurs.
(d) Lease changeWhere any finance lease of which the Group is the lessor changes and the followingconditions are met at the same time, the Group will have such a change subject to accountingtreatment as a separate lease:
- Where such a change expands the scope of the lease by adding one or more use rights to
leased assets;
- Where the increased consideration is equivalent to the separate price of the expandedportion of the scope of the lease adjusted according to the contract.
Where such a change of finance lease is not subject to accounting treatment as a separatelease, the Group, as the lessor, will treat the changed lease in any of the followingcircumstances.
- Where such a change becomes effective on the inception of lease and the lease will beclassified as an operating lease, the Group, as the lessor, will have it subject to accountingtreatment as a new lease from the effective date of such a lease change and take the netinvestment in a lease prior to the effective date of such a lease change as the carryingvalue of the leased asset.
- Where such a change becomes effective on the inception of lease and the lease will beclassified as a finance lease, the Group, as the lessor, will have it subject to accountingtreatment in accordance with the provisions regarding the modification or renegotiation ofcontracts specified in the Accounting Standard for Business Enterprises No. 22 -Recognition and Measurement Instruments. In other words, where a modification orrenegotiation of a lease contract does not result in the derecognition of finance leasereceivables, but a change in future cash flows, the carrying amount of such finance leasereceivables will be recalculated and the related gain or loss recognized in current profitsand losses. The carrying amount of finance lease receivables will be determined on thebasis of cash flows from the renegotiated or modified lease contract discounted at theoriginal discount rate of finance lease receivables or at the present value of the discountrate recalculated in accordance with Article 23 of Accounting Standard for BusinessEnterprises No. 24 - Hedge Accounting (2017), where applicable. For all costs andexpenses incurred by modifying or renegotiating the lease contract, the Group will adjustthe carrying amount of the modified finance lease receivables and amortize them over theremaining term of such modified finance lease receivables.
In the event of any change in an operating lease of which the Group is the lessor, the Groupwill have it subject to accounting treatment as a new lease from the effective date of thechange, and the amount of lease receipts received in advance or receivable relating to thelease prior to such change will be taken as an amount received under the new lease.
5.29.3 Leaseback transaction
The Group assesses whether the transfer of assets in sale-and-leaseback transactions is a salein accordance with the principles described in Note V.23 hereto.
(a) The Group as the seller and lessee:
Where any asset transfer in sale and leaseback transactions falls into the range of sales, theCompany, as a lessee, will measure the right-to-use assets formed by sale and leaseback andrecognize profit or loss only related to the right transferred to the lessor according to the partin the original asset book value relating to right-to-use assets gained by leaseback. Where anyasset transfer in sale and leaseback transactions does not fall into the range of sales, theCompany, as a lessee, will continue to recognize the transferred asset and a financial liabilityequivalent to the transfer income. Please refer to Note V.9 hereto for details of accountingtreatment of financial liability.
(b) The Group as the buyer and lessorWhere any asset transfer in sale and leaseback transactions falls into the range of sales, theCompany, as the lessor, will have the purchase of assets subject to accounting treatment andalso have the lease of assets subject to the same in accordance with the aforementioned “(2)The Group as the lessor". Where any asset transfer in sale and leaseback transactions does notfall into the range of sales, the Company, as a lessor, will not recognize the transferred asset,but recognize a financial asset equivalent to the transfer income. Please refer to Note V.9hereto for details of accounting treatment of financial asset.
5.30 Assets held for sale
The Group classified a non-current asset or disposal group as held for sale when the carryingamount of a non-current asset or disposal group will be recovered through a sale transactionrather than through continuing use.
A disposal group refers to a group of assets to be disposed of, by sale or otherwise, together asa whole in a single transaction and liabilities directly associated with those assets that will betransferred in the transaction.
A non-current asset or disposal group is classified as held for sale when all the followingcriteria are met:
- According to the customary practices of selling such asset or disposal group in similartransactions, the non-current asset or disposal group must be available for immediate sale intheir present condition subject to terms that are usual and customary for sales of such assets ordisposal 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 carrying amountand fair value less costs to sell (except financial assets, deferred tax assets and investmentproperties subsequent measured at fair value initially and subsequently. Any excess of thecarrying amount over the fair value less costs to sell is recognised as an impairment loss inprofit or loss.
5.31 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 sheet datebut are disclosed in the notes separately.
5.32 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 parties maybe individuals or enterprises. Enterprises with which the Company is under common control
only from the State and that have no other related party relationships are not regarded asrelated parties.
In addition to the related parties stated above, the Group determines related parties based onthe disclosure requirements of Administrative Procedures on the Information Disclosures ofListed Companies issued by the CSRC.
5.33 Segment reporting
The Group is principally engaged in the production and sales of wine, brandy, and sparklingwine in China, France, Spain, Chile and Australia. In accordance with the Group's internalorganisation structure, management requirements and internal reporting system, the Group'soperation is divided into four parts: China, Spain, France, Chile and Australia. Themanagement periodically evaluates segment results, in order to allocate resources andevaluate performances. In 2021, over 86% of revenue, more than 98% of profit and over 97%of non-current assets derived from China / are located in China. Therefore the Group does notneed to disclose additional segment report information.
5.34 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.
5.34.1 Significant accounting estimates
Except for accounting estimates relating to depreciation and amortisation of assets such asinvestment properties, fixed assets, bearer biological assets and intangible assets (see Notes
5.12, 13, 16 and 18) and provision for impairment of various types of assets (see Notes 7.2, 5,6, 10, 11, 12, 13, 14 and Notes 17.1 and 2). Other significant accounting estimates are asfollows:
(i) Note 7.17 – Recognition of deferred tax asset;(ii) Note 11. – Fair value measurements of financial instruments.
5.35 Changes in significant accounting policies and accounting estimates
5.35.1 Changes in significant accounting policies
The Ministry of Finance issued the Accounting Standard for Business Enterprises No. 21 -Lease (Revised in 2018) (Cai Kuai [2018] No. 35) (hereinafter referred to as “AccountingStandard No.21”) on December 7, 2018. After deliberation and approval at the seventhmeeting of the Eighth Board of Directors of the Company, the Group has implemented theaforesaid Accounting Standard No.21 from January 1, 2021, and changed relevant accountingpolicies as provided therein.
According to the Accounting Standard No.21, the Group has elected not to reassess whether acontract existing prior to the date of initial execution is a lease or contains a lease.
The Group has elected to adjust only the cumulative impact number for lease contractsoutstanding as of January 1, 2020. For the cumulative impact amount of the first execution,the amount of retained earnings and other relevant items in the financial statements at thebeginning of the first execution period (i.e. January 1, 2021) is adjusted, while the informationin the comparable period not adjusted.
On the date of initial execution of the Accounting Standard No.21 (i.e. January 1, 2021), theGroup's specific linking-up treatment and its impact are as follows:
The Group as the lesseeFor operating leases on the date of initial execution, leased liabilities are measured as thepresent value of the lessee's liability based on the present value of remaining lease paymentsdiscounted at the incremental lending rate on the date of initial execution. The unpaid rentalspayable under the original lease standard, which were accrued on an accrual basis, areincluded in the remaining lease payments.
For operating leases falling into the category of houses, buildings and structures prior to thedate of initial execution, the Group measures right-to-use assets in accordance with theassumption that the Accounting Standard No.21 has been adopted from the commencementdate of the lease term and that the incremental lending rate on the date of initial execution istaken as the discount rate. The Group conducts impairment tests on the right-to-use assets onthe date of initial execution without adjusting the book value of such assets.
The Group does not recognize right-to-use assets and leased liabilities for operating leaseswhere leased assets are low-value ones prior to the date of initial execution. For operatingleases other than low-value leases on the date of initial execution, the Group applies one ormore of the following simplified treatments depending on each lease:
- Any lease to be completed within 12 months after the date of initial execution, is regarded
as a short-term lease for treatment;- When leased liabilities are measured, the same discount rate is used for leases with similarcharacteristics;- Right-to-use assets are measured with initial direct costs excluded;- When there is any option to renew or option to terminate the lease, the lease term will be
recognized by the Group in accordance with actual exercising of the option and other
up-to-date states before the date of initial execution;- As an alternative to the impairment test of right-to-use assets, whether a contract including
is an onerous contract is evaluated before the date of initial execution pursuant to the
Accounting Standard for Business Enterprises No.13 - Contingencies and the right-to-use
assets adjusted by the Group according to the loss reserves included in the balance sheet
before the date of initial execution;- If a lease change occurs before the date of initial execution, the Group will have it subject
to accounting treatment according to the final arrangement of such a lease change.
The Group as the lessorThe Group does not need to adjust the amount of retained earnings and other related items inthe financial statements for leases in which the Group is the lessor at the beginning of the yearwhen the Accounting Standard No.21 is initially executed. The Group will conductaccounting treatment in accordance with the Accounting Standard No.21 from the date ofinitial execution.
The execution of the Accounting Standard No.21 on January 1, 2021 has no material impacton financial statements of both the Group and the Company.
5.35.2 Changes in significant accounting estimates
Nil
5.35.3 Particulars of first implementation of new lease standards to adjust the firstimplementation of related items in the financial statements at the beginning of the year
Consolidated Balance Sheet
Unit: Yuan
| Item | December 31, 2020 | January 1, 2021 | Adjustments |
| Current assets: | |||
| Monetary fund | 1,194,214,929 | 1,194,214,929 | |
| Settlement reserves | |||
| Lending funds | |||
| Tradable financial assets | |||
| Derivative financial assets | |||
| Bills receivable | |||
| Accounts receivable | 183,853,362 | 183,853,362 | |
| Receivables financing | 338,090,187 | 338,090,187 | |
| Advance payment | 71,296,416 | 71,296,416 | |
| Premium receivable | |||
| Reinsurance accounts receivable | |||
| Receivable reserves for reinsurance contract | |||
| Other receivables | 22,428,956 | 22,428,956 | |
| Including: Interest receivable | |||
| Dividends receivable | |||
| Redemptory monetary capital for sale | |||
| Inventories | 2,945,548,651 | 2,945,548,651 | |
| Contract assets | |||
| Assets held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 234,118,715 | 234,118,715 | |
| Total current assets | 4,989,551,216 | 4,989,551,216 | |
| Non-current assets: |
| Item | December 31, 2020 | January 1, 2021 | Adjustments |
| Offering loans and imprest | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term receivables | |||
| Long-term equity investments | 48,263,507 | 48,263,507 | |
| Other investments in equity instruments | |||
| Other non-current financial assets | |||
| Investment real estate | 27,057,730 | 27,057,730 | |
| Fixed assets | 5,724,935,846 | 5,724,935,846 | |
| Construction in progress | 635,495,152 | 635,495,152 | |
| Productive biological assets | 192,173,536 | 192,173,536 | |
| Oil-and-gas assets | |||
| Right-of-use assets | 104,654,936 | 104,654,936 | |
| Intangible assets | 660,989,065 | 660,989,065 | |
| Development expenditure | |||
| Goodwill | 132,938,212 | 132,938,212 | |
| Long-term prepaid expenses | 314,465,855 | 306,090,617 | -8,375,238 |
| Deferred income tax assets | 206,241,275 | 207,199,400 | 958,125 |
| Other non-current assets | 170,370,147 | 170,370,147 | |
| Total non-current assets | 8,112,930,325 | 8,210,168,148 | 97,237,823 |
| Total assets | 13,102,481,541 | 13,199,719,364 | 97,237,823 |
| Current liabilities: | |||
| Short-term loans | 689,090,715 | 689,090,715 | |
| Borrowings from the Central Bank | |||
| Loans from other banks and other financial institutions | |||
| Tradable financial liabilities | |||
| Derivative financial liabilities | |||
| Bills payable | |||
| Accounts payable | 484,347,958 | 479,305,382 | -5,042,576 |
| Advances from customers | |||
| Contract liabilities | 135,073,280 | 135,073,280 | |
| Financial assets sold for repurchase | |||
| Deposits from customers and interbank | |||
| Receivings from vicariously traded securities | |||
| Receivings from vicariously sold securities | |||
| Employee remunerations payable | 188,779,911 | 188,779,911 | |
| Taxes and dues payable | 213,412,813 | 213,412,813 | |
| Other payables | 386,105,526 | 386,105,526 | |
| Including: Interest payable | 553,471 | 553,471 | |
| Dividends payable | 1,003,125 | 1,003,125 | |
| Handling charges and commissions payable | |||
| Dividend payable for reinsurance | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 133,311,890 | 141,497,136 | 8,185,246 |
| Other current liabilities | 14,820,653 | 14,820,653 |
| Item | December 31, 2020 | January 1, 2021 | Adjustments |
| Total current liabilities | 2,244,942,746 | 2,248,085,416 | 3,142,670 |
| Non-current liabilities: | |||
| Reserves for insurance contracts | |||
| Long-term borrowings | 200,352,968 | 200,352,968 | |
| Bonds payable | |||
| Including: Preferred stock | |||
| Perpetual bonds | |||
| Lease liabilities | 104,489,294 | 104,489,294 | |
| Long-term accounts payable | 86,000,000 | 86,000,000 | |
| Long-term employee remunerations payable | |||
| Estimated liabilities | |||
| Deferred income | 52,653,609 | 52,653,609 | |
| Deferred income tax liabilities | 12,022,613 | 12,260,894 | 238,281 |
| Other non-current liabilities | 2,078,971 | 2,078,971 | |
| Total non-current liabilities | 353,108,161 | 457,835,736 | 104,727,575 |
| Total liabilities | 2,598,050,907 | 2,705,921,152 | 107,870,245 |
| Owner’s equity: | |||
| Capital stock | 685,464,000 | 685,464,000 | |
| Other equity instruments | |||
| Including: Preferred stock | |||
| Perpetual bonds | |||
| Capital surplus | 524,968,760 | 524,968,760 | |
| Minus: Treasury stock | |||
| Other comprehensive income | 576,129 | 576,129 | |
| Special reserves | |||
| Surplus reserves | 342,732,000 | 342,732,000 | |
| General risk preparation | |||
| Undistributed profit | 8,714,091,755 | 8,703,459,333 | -10,632,422 |
| Total owner’s equities attributable to the parent company | 10,267,832,644 | 10,257,200,222 | -10,632,422 |
| Minority equity | 236,597,990 | 236,597,990 | |
| Total owner’s equities | 10,504,430,634 | 10,493,798,212 | -10,632,422 |
| Total liabilities and owner’s equities | 13,102,481,541 | 13,199,719,364 | 97,237,823 |
Balance Sheet of the Parent Company
Unit: Yuan
| Item | December 31, 2020 | January 1, 2020 | Adjustments |
| Current assets: | |||
| Monetary fund | 267,548,326 | 267,548,326 | |
| Tradable financial assets | |||
| Derivative financial assets | |||
| Bills receivable | |||
| Accounts receivable | |||
| Receivables financing | 13,920,000 | 13,920,000 | |
| Advance payment | 171,709 | 171,709 | |
| Other receivables | 580,131,798 | 580,131,798 |
| Item | December 31, 2020 | January 1, 2020 | Adjustments |
| Including: Interest receivable | |||
| Dividends receivable | 200,000,000 | 200,000,000 | |
| Inventories | 482,442,935 | 482,442,935 | |
| Contract assets | |||
| Assets held for sale | |||
| Non-current assets due within one year | |||
| Other current assets | 24,842,325 | 24,842,325 | |
| Total current assets | 1,369,057,093 | 1,369,057,093 | |
| Non-current assets: | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term receivables | |||
| Long-term equity investments | 7,599,778,880 | 7,599,778,880 | |
| Other investments in equity instruments | |||
| Other non-current financial assets | |||
| Investment real estate | 27,057,730 | 27,057,730 | |
| Fixed assets | 243,634,747 | 243,634,747 | |
| Construction in progress | 2,865,243 | 2,865,243 | |
| Productive biological assets | 115,103,753 | 115,103,753 | |
| Oil and gas assets | |||
| Right-of-use assets | 44,816,966 | 44,816,966 | |
| Intangible assets | 80,789,731 | 80,789,731 | |
| Development expenditure | |||
| Goodwill | |||
| Long-term prepaid expenses | |||
| Deferred income tax assets | 18,285,685 | 18,285,685 | |
| Other non-current assets | 1,530,700,000 | 1,530,700,000 | |
| Total non-current assets | 9,618,215,769 | 9,663,032,735 | 44,816,966 |
| Total assets | 10,987,272,862 | 11,032,089,828 | 44,816,966 |
| Current liabilities: | |||
| Short-term loans | 150,000,000 | 150,000,000 | |
| Tradable financial liabilities | |||
| Derivative financial liabilities | |||
| Bills payable | |||
| Accounts payable | 76,470,081 | 76,470,081 | |
| Advances from customers | |||
| Contract liabilities | |||
| Employee remunerations | 67,808,910 | 67,808,910 | |
| Taxes and dues payable | 9,123,959 | 9,123,959 | |
| Other payables | 521,505,947 | 521,505,947 | |
| Including: Interest payable | 181,250 | 181,250 | |
| Dividends payable | |||
| Liabilities held for sale | |||
| Non-current liabilities due within one year | 3,624,896 | 3,624,896 | |
| Other current liabilities |
| Item | December 31, 2020 | January 1, 2020 | Adjustments |
| Total current liabilities | 824,908,897 | 828,533,793 | 3,624,896 |
| Non-current liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preferred stock | |||
| Perpetual bonds | |||
| Lease liabilities | 47,393,235 | 47,393,235 | |
| Long-term accounts payable | |||
| Long-term employee remuneration payable | |||
| Estimated liabilities | |||
| Deferred income | 5,507,708 | 5,507,708 | |
| Deferred income tax liabilities | 88,555 | 88,555 | |
| Other non-current liabilities | 1,164,471 | 1,164,471 | |
| Total non-current liabilities | 6,672,179 | 54,153,969 | 47,481,790 |
| Total liabilities | 831,581,076 | 882,687,762 | 51,106,686 |
| Owner’s equity: | |||
| Capital stock | 685,464,000 | 685,464,000 | |
| Other equity instruments | |||
| Including: Preferred stock | |||
| Perpetual bonds | |||
| Capital surplus | 560,182,235 | 560,182,235 | |
| Minus: Treasury stock | |||
| Other comprehensive income | |||
| Special reserves | |||
| Surplus reserves | 342,732,000 | 342,732,000 | |
| Undistributed profit | 8,567,313,551 | 8,561,023,831 | -6,289,720 |
| Total owner’s equities | 10,155,691,786 | 10,149,402,066 | -6,289,720 |
| Total liabilities and owner’s equities | 10,987,272,862 | 11,032,089,828 | 44,816,966 |
Adjustment Explanation
The Company has implemented the new lease standard from January 1, 2021. According tothe stipulation of new lease standard, the Company has elected not to reassess whether acontract existing prior to the date of initial execution is a lease or contains a lease. TheCompany has elected to adjust only the cumulative impact number for lease contractsoutstanding as of January 1, 2021. For the cumulative impact amount of the first execution,the amount of relevant items in the financial statements at the beginning of the first executionperiod (i.e. January 1, 2021) is adjusted, while the information in the comparable period notadjusted.
6. Taxes
6.1 The main taxes and tax rates are as follows:
| Tax category | Taxation basis | Tax rates |
| Value added tax | Levied on the balance between the | 13%, 9%, 6% (China), 20% (France), |
6.2 Tax incentives
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 PRC Corporate Income Tax and clause 86 of PRCCorporate Income Tax Measures for Implementation, Ningxia Growing enjoys an exemptionof corporate income tax.
Yantai Changyu Grape Growing Co., Ltd. (“Grape Growing”), a branch of the Company,whose principal activity is grape growing, is incorporated in Zhifu District, Yantai City,Shandong Province. According to clause 27 of PRC Corporate Income Tax and clause 86 ofPRC Corporate Income Tax Measures for Implementation, Grape Growing enjoys anexemption of corporate income tax.
Grape Planting Branch of Yantai Changyu Wine R&D and Manufacturing Co., Ltd. (“R&Dand Growing”), a branch of the Company, whose principal activity is grape growing, isincorporated in YEDA, Shandong Province. According to Clause 27 of PRC CorporateIncome Tax and Clause 86 of PRC Corporate Income Tax Measures for Implementation, R&Dand Growing enjoys an exemption of corporate income tax.
Beijing Changyu AFIP Agriculture Development Co., Ltd (“Agriculture Development”), asubsidiary of the Group, whose principal activity is grape growing, is incorporated in MiyunCounty, Beijing. According to clause 27 of the Corporate Income Tax Law of the People’sRepublic of China and clause 86 of the Implementation Rules of Enterprise Income Tax Lawof the People’s Republic of China, Agriculture Development enjoys an exemption of corporateincome tax.
Xinjiang Tianzhu Co., Ltd (“Xinjiang Tianzhu”), a subsidiary of the Company, is an enterpriseof wine production and sales incorporated in Shihezi City, Xinjiang Uygur AutonomousRegion. In accordance with the Announcement on Continuing the Enterprise Income TaxPolicies for the Large-Scale Development of Western China of the Ministry of Finance, theState Taxation Administration and the National Development and Reform Commission(Announcement No. 23 [2020] of the Ministry of Finance), Xinjiang Tianzhu is qualified toenjoy preferential taxation policies, which means it can pay corporate income tax at apreferential rate of 15% for the period from 2021 to 2030.
Xinjiang Babao Baron Chateau Co., Ltd. (“Shihezi Chateau”), a subsidiary of the Company, isan enterprise of wine production and sales incorporated in Shihezi City, Xinjiang UygurAutonomous Region. In accordance with Announcement on Continuing the Enterprise IncomeTax Policies for the Large-Scale Development of Western China of the Ministry of Finance,
| output tax calculated based on taxable income and the input tax allowed to be deducted in current period | 21% (Spain), 19% (Chile), 10% (Australia) | |
| Consumption tax | Levied on taxable income | 10% of the price, 20% of the price and 1,000 Yuan each ton (China) |
| City development tax | Levied on circulation tax actually paid | 7% (China) |
| Corporate income tax | Levied on taxable income | 25% (China), 28% (France), 28% (Spain), 27% (Chile), 30% (Australia) |
the State Taxation Administration and the National Development and Reform Commission(Announcement No. 23 [2020] of the Ministry of Finance), Shihezi Chateau is qualified toenjoy preferential taxation policies, which means it can pay corporate income tax at apreferential rate of 15% for the period from 2021 to 2030.
Chateau Changyu Moser XV Co., Ltd., Ningxia (“Ningxia Chateau”), a subsidiary of theCompany, is an enterprise of wine production and sales incorporated in Yinchuan City,Ningxia Huizu Autonomous Region. In accordance with Announcement on Continuing theEnterprise Income Tax Policies for the Large-Scale Development of Western China of theMinistry of Finance, the State Taxation Administration and the National Development andReform Commission (Announcement No. 23 [2020] of the Ministry of Finance), NingxiaChateau is qualified to enjoy preferential taxation policies, which means it can pay corporateincome tax at a preferential rate of 15% for the period from 2021 to 2030.
Changyu (Ningxia) Wine Co., Ltd. (“Ningxia Wine”), a subsidiary of the Company, is anenterprise of wine production and sales incorporated in Yinchuan City, Ningxia HuizuAutonomous Region. In accordance with Announcement on Continuing the Enterprise IncomeTax Policies for the Large-Scale Development of Western China of the Ministry of Finance,the State Taxation Administration and the National Development and Reform Commission(Announcement No. 23 [2020] of the Ministry of Finance), Ningxia Wine is qualified to enjoypreferential taxation policies, which means it can pay corporate income tax at a preferentialrate of 15% for the period from 2021 to 2030.
According to the provisions of the Announcement of the Ministry of Finance and the StateTaxation Administration on Continuing the Implementation of Certain Tax PreferentialPolicies Responding to the COVID-19 Outbreak (Announcement No. 7 of [2021] of theMinistry of Finance and the State Taxation Administration), the implementation period for thepreferential tax policies specified in the Announcement of the Ministry of Finance and theState Administration of Taxation on Relavant Donation Tax Policies Supporting thePrevention and Control of the Outbreak of Novel Coronavirus Pneumonia Caused byCOVID-19 (Annoucement No. 9 [2020] of the Ministry of Finance and the State TaxationAdministration) shall be extended until March 31, 2021. The Company’s Yantai ChangyuWine Culture Museum Co., Ltd. (“Museum”) and other subsidiaries provide catering,accommodation, tourism and other life services. Income from the provision of life services isexempt from VAT from January 1, 2021 to March 31, 2021.
The Company’s subsidiary Xinjiang Changyu Wine Sales Co., Ltd. Weimeisi Tasting CenterBranch (“Xinjiang Tasting”) is a large-scale restaurant service company located in ShiheziCity, Xinjiang. According to the Announcement of the Ministry of Finance and the StateTaxation Administration on the Value-Added Tax Policies on Supporting the Resumption ofWork and Business of Individual Industrial and Commercial Households (No. 13 [2020]) andthe Announcement of the Ministry of Finance and the State Taxation Administration onContinuing the Implementation of Certain Tax Preferential Policies Responding to theCOVID-19 Outbreak (Announcement No. 7 of [2021] of the Ministry of Finance and the StateTaxation Administration), it enjoys a preferential policy of 1% VAT collection rate forsmall-scale taxpayers in 2021.
7. Notes to items in the consolidated financial statement
7.1 Monetary capital
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Cash on hand | 32,865 | 19,637 |
| Bank deposit | 1,468,546,985 | 1,128,882,937 |
| Other monetary capital | 45,151,190 | 65,312,355 |
| Total | 1,513,731,040 | 1,194,214,929 |
| Including: Total overseas deposits | 42,814,048 | 47,674,019 |
As at June 30, 2021, the restricted bank deposit details are listed as follows:
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Housing fund of the unit | 2,641,994 | 2,684,407 |
| Total | 2,641,994 | 2,684,407 |
As at June 30, 2020, the details of other monetary funds are listed as follows:
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Pledge of fixed deposits by Yantai Changyu Wine Research, Development and Manufacture Co., Ltd. (“R&D Company”) | 20,000,000 | |
| Guaranteed deposits paid for the letter of credit | 44,540,850 | 44,540,850 |
| Account balance of Alipay | 600,340 | 761,505 |
| Guaranty money for ICBC platform | 10,000 | 10,000 |
| Total | 45,151,190 | 65,312,355 |
As at June 30, 2021, the bank deposits of the Group including short-term fixed depositsranging from 3 months to 12 months amounted to RMB 73,553,062 Yuan (December 31,2020: RMB 73,553,062), with the interest rates ranging from 1.5% to 2.25%.
7.2 Bills receivable
7.2.1 Classification of bills receivable
Unit: Yuan
| Type | Ending balance | Beginning balance | ||||||||
| Book balance | Provision for bad debts | Book value | Book balance | Provision for bad debts | Book value | |||||
| Amount | Proportion | Amount | Accrued proportion | Amount | Proportion | Amount | Accrued proportion | |||
| Accounts receivable for which provision for bad debts is accrued on a single item basis | ||||||||||
| Accounts receivable for which provision for bad debts is accrued on a combined basis | 187,739,811 | 100% | 18,503,554 | 9.86% | 169,236,257 | 196,179,968 | 100% | 12,326,606 | 6.30% | 183,853,362 |
| Total | 187,739,811 | 100% | 18,503,554 | 9.86% | 169,236,257 | 196,179,968 | 100% | 12,326,606 | 6.30% | 183,853,362 |
Provision for bad debts accrued on a combined basis:
Unit: Yuan
| Name | Ending balance | ||
| Book balance | Provision for bad debts | Accrued proportion | |
| Amounts due from related parties | 399,844 | 2,526.23 | 0.63% |
| Amounts due from other customers | 187,339,967 | 18,501,027.77 | 9.88% |
| Total | 187,739,811 | 18,503,554 | -- |
Disclosed by age:
Unit: Yuan
| Age | Ending balance |
| Within 1 year (including 1 year) | 178,544,958 |
| 1-2 years | 6,193,356 |
| 2-3 years | 3,001,497 |
| Over 3 years | |
| Total | 187,739,811 |
As at June 30, 2021, the accounts receivable with ownership restrictions were RMB44,245,910 Yuan (December 31, 2020: 28,557,991 Yuan). Please refer to Note 7.19 for details.
7.2.2 Provision for bad debts accrued, withdrawn or transferred back in this periodProvision for bad debts accrued in this period:
Unit: Yuan
| Type | Beginning balance of the year | Changes in this period | Ending balance | ||
| Accrued | Withdrawn or transferred back | Cancelled | |||
| Accounts receivable for which provision for bad debts is accrued | 12,326,606 | 6,176,948 | 18,503,554 | ||
| Total | 12,326,606 | 6,176,948 | 18,503,554 | ||
7.2.3 Accounts receivable actually cancelled after verification in this periodNil
7.2.4 Accounts receivable collected by the borrowers of top 5 units ranked by the endingbalance
Unit: Yuan
| Unit | Relationship with the Group | Amount | Period | Percentage in total accounts receivable | Ending balance of provision for bad and doubtful debts |
| Lianhua Supermarket Holdings Co., Ltd. | Third party | 9,751,234 | Within 1 year | 5.20% | 1,782,383 |
| Inland Trading Co | Third party | 8,342,885 | Within 1 year | 4.40% | 114,255 |
| Nonggongshang Supermarket (Group) Co., Ltd. | Third party | 6,978,820 | Within 2 years | 3.70% | 5,844,945 |
| Sainsburys Supermarkets Ltd | Third party | 4,851,068 | Within 1 year | 2.60% | 62,591 |
| COOP DENMARK A/S | Third party | 3,760,513 | Within 1 year | 2.00% | 48,520 |
| Total | -- | 33,684,520 | -- | 17.90% | 7,852,694 |
7.2.5 Accounts receivable terminating recognition due to transfer of financial assetsNil
7.2.6 Accounts receivable transferred and included in assets and liabilitiesNil
7.3 Receivables financing
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Bills receivable | 338,278,251 | 338,090,187 |
| Total | 338,278,251 | 338,090,187 |
7.3.1 The pledged bills receivable of the Group at the end of the yearNil
7.3.2 Outstanding endorsed bills that have not matured at the end of the year
| Item | Amount derecognised at year end |
| Bank acceptance bills | 79,930,626 |
| Total | 79,930,626 |
As at June 30, 2021, bills endorsed by the Group to other parties which are not yet due at theend of the period is RMB 79,930,626 Yuan (December 31, 2020: RMB 260,721,441 Yuan).The notes are used for payment to suppliers and constructions. The Group believes that due togood reputation of bank, the risk of notes not accepting by bank on maturity is very low,therefore derecognise the note receivables endorsed. If the bank is unable to pay the notes onmaturity, according to the relevant laws and regulations of China, the Group would undertakelimited liability for the notes.
7.4 Advance payment
7.4.1 Advance payment listed by age
Unit: Yuan
| Age | Ending balance | Beginning sum | ||
| Amount | Proportion | Amount | Proportion | |
| Within 1 year | 7,957,433 | 99.12% | 70,977,636 | 99.60% |
| 1-2 years | 70,279 | 0.88% | 318,780 | 0.40% |
| 2-3 years | ||||
| More than 3 years | ||||
| Total | 8,027,712 | -- | 71,296,416 | -- |
7.4.2 Advance payment collected by the prepaid parties of top 5 units ranked by theending balance
Unit: Yuan
| Category of client | Relationship with the Group | Amount | Age | Reason for unsettlement | Percentage in the total advance payment% |
| Chile SOCIEDAD AGRICOLA REQUINGUA LTDA. | Third party | 1,039,773 | Within 1 year | Prepayments | 13.0% |
| State Grid Shandong Electronic Power Yantai Company | Third party | 673,128 | Within 1 year | Prepaid electricity fees | 8.4% |
| Yantai Yanghang Intelligent Technology Co., Ltd. | Third party | 150,008 | Within 1 year | Prepayments | 1.9% |
| Sinopec Sales Co., Ltd. Shandong Yantai Petroleum Branch | Third party | 130,000 | Within 1 year | Prepaid fuel cost | 1.6% |
| Chongqing Yirong Glass Products Co., Ltd. | Third party | 79,000 | Within 1 year | Prepayments | 1.0% |
| Total | -- | 2,071,909 | -- | 25.90% |
7.5 Other receivables
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Interest receivable | ||
| Dividends receivable | ||
| Other receivables | 22,861,668 | 22,428,956 |
| Total | 22,861,668 | 22,428,956 |
Other receivables
7.5.1 Other receivables classified by nature
Unit: Yuan
| Nature | Ending book balance | Beginning book balance |
| Deposit and guaranty money receivable | 6,225,930 | 10,287,959 |
| Consumption tax and added-value tax export rebate | 7,453,412 | 8,254,195 |
| Imprest receivable | 519,647 | 124,878 |
| Other | 8,662,679 | 3,761,924 |
| Total | 22,861,668 | 22,428,956 |
7.5.2 Disclosed by age
Unit: Yuan
| Age | Ending balance |
| Within 1 year (including 1 year) | 16,935,627 |
| 1-2 years | 1,027,718 |
| 2-3 years | 986,592 |
| More than 3 years | 3,911,731 |
| Total | 22,861,668 |
7.5.3 Provision for bad debts accrued, withdrawn or transferred back in this periodThe provision for bad debts accrued in this period was RMB 0 Yuan; and that withdrawn ortransferred back in this period was RMB 0 Yuan.
7.5.4 Other receivables actually cancelled after verification in this periodNil
7.5.5 Other receivables collected by the borrowers of top 5 units ranked by the endingbalance
Unit: Yuan
| Unit | Nature | Ending balance | Age | Percentage in total ending balance of other accounts receivable | Ending balance of provision for bad debts |
| Sercicio de Impuestos Internos | Value-added tax export rebate | 6,243,897 | Within 1 years | 27.30% | |
| Changyu Group | Lease payment in advance | 2,929,000 | Within 1 years | 12.80% | |
| YEDA Construction Industry Association | Construction guaranty money | 1,143,500 | Over 3 years | 5.00% | |
| Municipalidad de Casablanca | Guaranty money | 880,000 | Within 1 year | 3.80% | |
| YEDA Finance Bureau | Guaranty money | 719,880 | Over 3 years | 3.10% | |
| Total | -- | 11,916,277 | -- | 52.00% |
7.5.6 Accounts receivable involving government subsidies
Nil
7.5.7 Other receivables that are terminated for recognition due to transfer of financialassetsNil
7.5.8 Other receivables transferred and then included in assets and liabilitiesNil
7.6 Inventories
7.6.1 Inventory classification
Unit: Yuan
| Item | Ending balance | Beginning balance | ||||
| Book balance | Depreciation provision | Book value | Book balance | Depreciation provision | Book value | |
| Raw materials | 91,871,066 | 91,871,066 | 70,165,666 | 70,165,666 | ||
| Goods in process | 2,247,156,663 | 2,247,156,663 | 2,236,815,423 | 2,236,815,423 | ||
| Commodity stocks | 592,707,302 | 10,794,616 | 581,912,686 | 653,042,196 | 14,474,634 | 638,567,562 |
| Total | 2,931,735,031 | 10,794,616 | 2,920,940,415 | 2,960,023,285 | 14,474,634 | 2,945,548,651 |
7.6.2 Inventory depreciation provision
Unit: Yuan
| Item | Beginning balance | Increase in this period | Decrease in this period | Ending balance | ||
| Accrual | Other | Transfer back or write-off | Other | |||
| Raw materials | ||||||
| Goods in process | ||||||
| Commodity stocks | 14,474,634 | 3,680,018 | 10,794,616 | |||
| Total | 14,474,634 | 3,680,018 | 10,794,616 | |||
7.7 Other current assets
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Prepaid corporate income tax | 27,948,958 | 16,087,815 |
| Deductible input tax | 190,766,318 | 215,812,506 |
| Rent to be amortized | 1,745,475 | 2,218,394 |
| Total | 220,460,751 | 234,118,715 |
7.8 Long-term equity investments
Unit: Yuan
| Investee | Beginning balance (book value) | Movements during the period | Ending balance (book value) | Ending balance of provision for impairment | ||||||||
| Increase in capital | Decrease in capita | Losses from investments under equity-method | Other omprehensive income adjustment | Other equity changing | Declare cash dividend or profit | Accrual provision for impairment | Others | |||||
| 1. Joint ventures | ||||||||||||
| SAS L&M Holdings (“L&M Holdings”) | 42,019,654 | -1,125,662 | 40,893,992 | |||||||||
| Subtotal | 42,019,654 | -1,125,662 | 40,893,992 | |||||||||
| Weimeisi (Shanghai) Enterprise Development Co., Ltd. (“Weimeisi Shanghai”) | 2,743,890 | -479,955 | 2,263,935 | |||||||||
| Yantai Santai Real Estate | 3,499,963 | 2,193 | 3,502,156 | |||||||||
| Development Co., Ltd. | |||||||||||
| Chengdu Yufeng Brand Management Co., Ltd. (“Chengdu Yufeng”) | 518,000 | -18,356 | 499,644 | ||||||||
| Subtotal | 6,243,853 | 518,000 | -496,118 | 6,265,735 | |||||||
| Total | 48,263,507 | 518,000 | -1,621,780 | 47,159,727 |
In October 2020, Yantai Changyu Pioneer International Limited (“Pioneer International”), asubsidiary of the Group, signed an agreement with six institutional shareholders includingChengdu Yukun Wine Partnership (Limited Partnership), Sichuan Xiangshanxing TechnologyCo., Ltd. and Banniere BM (Shanghai) Co., Ltd. to jointly invest in the establishment ofChengdu Yufeng Brand Management Co., Ltd. (“Chengdu Yufeng”). Pioneer Internationalcontributes in currency RMB 518,000 Yuan, accounting for 10% of the shares of ChengduYufeng. As per the Agreement and the Articles of Association, shareholders exercise theirvoting rights in proportion to their capital contributions.
7.9 Investment real estate
7.9.1 Investment real estate by cost measurement method
Unit: Yuan
| Item | Houses and buildings | Land use right | Construction in progress | Total |
| Ⅰ Original book value | ||||
| 1. Beginning balance | 70,954,045 | 70,954,045 | ||
| 2. Increase in this period | ||||
| 2.1 Outsourcing | ||||
| 2.2 Transfer in from inventories\fixed assets\ construction in progress | ||||
| 2.3 Business merger increase | ||||
| 3. Decrease in this period | ||||
| 3.1 Disposal | ||||
| 3.2 Other transfer out | ||||
| 4. Ending balance | 70,954,045 | 70,954,045 | ||
| Ⅱ Accumulated depreciation & accumulated amortization | ||||
| 1. Beginning balance | 43,896,315 | 43,896,315 | ||
| 2. Increase in this period | 1,587,256 | 1,587,256 | ||
| 2.1 Accrual or amortization | 1,587,256 | 1,587,256 | ||
| 3. Decrease in this period | ||||
| 3.1 Disposal | ||||
| 3.2 Other transfer out | ||||
| 4. Ending balance | 45,483,571 | 45,483,571 | ||
| Ⅲ Impairment provision |
| Item | Houses and buildings | Land use right | Construction in progress | Total |
| 1. Beginning balance | ||||
| 2. Increase in this period | ||||
| 2.1 Accrual | ||||
| 3. Decrease in this period | ||||
| 3.1 Disposal | ||||
| 3.2 Other transfer out | ||||
| 4. Ending balance | ||||
| Ⅳ Book value | ||||
| 1. Ending book value | 25,470,474 | 25,470,474 | ||
| 2. Beginning book value | 27,057,730 | 27,057,730 |
7.10 Fixed assets
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Fixed assets | 5,674,883,742 | 5,724,935,846 |
| Disposal of fixed assets | ||
| Total | 5,674,883,742 | 5,724,935,846 |
7.10.1 Particulars of fixed assets
Unit: Yuan
| Item | Houses and buildings | Machinery equipment | Transportation tools | Total |
| Ⅰ Original book value: | ||||
| 1. Beginning balance | 5,136,758,695 | 2,787,309,487 | 27,566,592 | 7,951,634,774 |
| 2. Increase in this period | 35,695,914 | 63,007,012 | 125,621 | 98,828,547 |
| 2.1 Acquisition | 22,526,967 | 60,753,925 | 125,621 | 83,406,513 |
| 2.2 Transfer in from construction in progress | 13,168,947 | 2,253,087 | 15,422,034 | |
| 2.3 Business merger increase | ||||
| 3. Decrease in this period | 7,416,859 | 19,041,989 | 270,707 | 26,729,555 |
| 3.1 Disposal or retirement | 7,416,859 | 19,041,989 | 270,707 | 26,729,555 |
| 4. Ending balance | 5,165,037,750 | 2,831,274,510 | 27,421,506 | 8,023,733,766 |
| Ⅱ Accumulated depreciation | ||||
| 1. Beginning balance | 892,581,856 | 1,294,646,448 | 21,992,597 | 2,209,220,901 |
| 2. Increase in this period | 66,332,617 | 74,456,405 | 947,047 | 141,736,069 |
| 2.1 Accrual | 66,332,617 | 74,456,405 | 947,047 | 141,736,069 |
| 3. Decrease in this period | 3,069,846 | 16,265,290 | 249,837 | 19,584,973 |
| 3.1 Disposal or retirement | 3,069,846 | 16,265,290 | 249,837 | 19,584,973 |
| 4. Ending balance | 955,844,627 | 1,352,837,563 | 22,689,807 | 2,331,371,997 |
| Ⅲ Impairment provision | ||||
| 1. Beginning balance | 17,478,027 | 17,478,027 |
| Item | Houses and buildings | Machinery equipment | Transportation tools | Total |
| 2. Increase in this period | ||||
| 2.1 Accrual | ||||
| 3. Decrease in this period | ||||
| 3.1 Disposal or retirement | ||||
| 4. Ending balance | 17,478,027 | 17,478,027 | ||
| Ⅳ Book value | ||||
| 1. Ending book value | 4,209,193,123 | 1,460,958,920 | 4,731,699 | 5,674,883,742 |
| 2. Beginning book value | 4,244,176,839 | 1,475,185,012 | 5,573,995 | 5,724,935,846 |
As at June 30, 2021, the net value of the fixed assets with ownership restrictions was RMB323,761,779 Yuan (December 31, 2020: RMB 333,748,819 Yuan). Please refer to Note 7.54for details.
7.10.2 Particulars of temporarily idle fixed assets
Unit: Yuan
| Item | Original book value | Accumulated depreciation | Depreciation reserves | Book value | Remarks |
| Buildings | 47,821,026 | 16,830,920 | 30,990,106 | ||
| Machinery equipment | 73,592,531 | 52,434,878 | 17,478,027 | 3,679,626 | |
| Other equipment | 3,344,518 | 3,182,456 | 162,062 | ||
| Total | 124,758,075 | 72,448,254 | 17,478,027 | 34,831,794 |
7.10.3 Particulars of fixed assets under finance leases
Nil
7.10.4 Fixed assets under operating lease
Unit: Yuan
| Item | Ending book value |
| Machinery equipment | 9,461 |
7.10.5 Particulars of fixed assets without property certificates
Unit: Yuan
| Item | Book value | Reason for not receiving the property certificate |
| Industrial Production Center of the R&D Company | 1,595,735,176 | Under transaction |
| Dormitory Building, Main Building and Reception Building of Chang’an Chateau | 280,517,963 | Under transaction |
| European Town, Main Building and Service Building of Chateau AFIP | 173,174,563 | Under transaction |
| Fermentation Workshop and Wine Storage Workshop of Xinjiang Tianzhu | 16,157,943 | Under transaction |
| Office Building and Packaging Workshop of Icewine Valley | 9,231,659 | Under transaction |
| Wine-making Workshop of Changyu (Jingyang) | 5,303,366 | Under transaction |
| Office Building, Laboratory Building and Workshop of | 3,231,861 | Under transaction |
| Fermentation Center | ||
| Finished Goods Warehouse and Workshop of Kylin Packaging | 2,170,155 | Under transaction |
| Others | 288,417 | Under transaction |
| Total | 2,085,811,103 | Under transaction |
7.11 Construction in progress
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Construction in progress | 670,705,216 | 635,495,152 |
| Engineering materials | ||
| Total | 670,705,216 | 635,495,152 |
7.11.1 Particulars of construction in progress
Unit: Yuan
| Item | Ending balance | Beginning balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Research, Development & Manufacture Center (“Changyu Wine City Complex”) | 662,298,797 | 662,298,797 | 589,010,299 | 589,010,299 | ||
| Construction Project of Ningxia Chateau | 438,090 | 438,090 | 420,440 | 420,440 | ||
| Construction Project of Chang’an Chateau | 738,462 | 738,462 | ||||
| Construction Project of Shihezi Chateau | 2,420,681 | 2,420,681 | 7,626,393 | 7,626,393 | ||
| Construction Project of Sales Company | 738,462 | 738,462 | 5,000 | 5,000 | ||
| Construction Projects of Other Companies | 4,809,186 | 4,809,186 | 37,694,558 | 37,694,558 | ||
| Total | 670,705,216 | 670,705,216 | 635,495,152 | 635,495,152 | ||
7.11.2 Changes of major construction in progress in this period
Unit: Yuan
| Item | Budget | Beginning balance | Increase in this period | Transferred to fixed assets in this period | Other decrease in this period | Ending balance | Proportion of accumulative project input in budget | Accumulative capitalized amount of interest | Including: capitalized amount of interest in this period | Capitalization ratio of interest in this period | Capital source |
| Changyu Wine City Complex | 4,505,780,000 | 589,010,299 | 73,288,498 | 662,298,797 | 81.60% | 16,481,461 | 271,338 | 1.2% and 4.3% | Loans form financial institutions and self-raised funds | ||
| Construction Project of Ningxia Chateau | 428,256,552 | 420,440 | 17,650 | 438,090 | 100% | Self-raised funds | |||||
| Construction Project of Chang’an Chateau | 698,120,331 | 7,626,393 | 4,930,395 | 12,556,788 | 0 | 100.40% | Self-raised funds | ||||
| Construction Project of Shihezi Chateau | 780,000,000 | 5,000 | 2,415,681 | 2,420,681 | 96.70% | Self-raised funds | |||||
| Construction Project of Sales Company | 164,513,550 | 738,462 | 738,462 | 99.60% | Self-raised funds | ||||||
| Total | 6,576,670,433 | 597,800,594 | 80,652,224 | 12,556,788 | 665,896,030 | -- | 16,481,461 | 271,338 | -- |
As at June 30, 2021, there was no indication for impairment of construction in progress of the Group, so no provision for impairment was made.
7.12 Productive biological assets
7.12.1 Productive biological assets by cost measurement method
Unit: Yuan
| Item | Plantation | Total | |
| Immature | Mature | ||
| Ⅰ Original book value | |||
| Beginning balance | 7,607,557 | 248,758,101 | 256,365,658 |
| Increase in this period | 859,391 | 4,001,890 | 4,861,281 |
| 2.1 Outsourcing | |||
| 2.2 Self cultivation | 4,861,281 | 4,861,281 | |
| The immature turn to the mature | -4,001,890 | 4,001,890 | |
| Decrease in this period | |||
| 3.1 Disposal | |||
| 3.2 Other | |||
| 4. Ending balance | 8,466,948 | 252,759,991 | 261,226,939 |
| Ⅱ Accumulated depreciation | |||
| Beginning balance | 64,192,122 | 64,192,122 | |
| Increase in this period | 6,851,781 | 6,851,781 | |
| 2.1 Accrual | 6,851,781 | 6,851,781 | |
| Decrease in this period | |||
| 3.1 Disposal | |||
| 3.2 Other | |||
| 4. Ending balance | 71,043,903 | 71,043,903 | |
| Ⅲ Impairment provision | |||
| Beginning balance | |||
| Increase in this period | |||
| 2.1 Accrual | |||
| Decrease in this period | |||
| 3.1 Disposal | |||
| 3.2 Other | |||
| 4. Ending balance | |||
| Ⅳ Book value | |||
| Ending book value | 8,466,948 | 181,716,088 | 190,183,036 |
| Beginning book value | 7,607,557 | 184,565,979 | 192,173,536 |
As at June 30, 2021, no ownership of the biological assets was restricted.
As at June 30, 2021, there was no indication for impairment of biological assets of the Group,so no provision was made.
7.13 Right-to-use assets
Unit: Yuan
| Item | Building | Land | Total |
| Ⅰ Original book value | |||
| Beginning balance | 43,079,204 | 101,398,128 | 144,477,332 |
| Increase in this period | 13,042,435 | 13,042,435 | |
| Decrease in this period | |||
| Ending balance | 56,121,639 | 101,398,128 | 157,519,767 |
| Ⅱ Accumulated amortization | |||
| Beginning balance | 7,353,773 | 32,468,623 | 39,822,396 |
| Increase in this period | 5,137,935 | 2,011,692 | 7,149,627 |
| 2.1 Accrual | 5,137,935 | 2,011,692 | 7,149,627 |
| Decrease in this period | |||
| 3.1 Disposal | |||
| Ending balance | 12,491,708 | 34,480,315 | 46,972,023 |
| Ⅲ Impairment provision | |||
| Beginning balance | |||
| Increase in this period | |||
| 2.1 Accrual | |||
| Decrease in this period | |||
| 3.1 Disposal | |||
| Ending balance | |||
| Ⅳ Book value | |||
| 1. Ending book value | 43,629,931 | 66,917,813 | 110,547,744 |
| 2. Beginning book value | 35,725,431 | 68,929,505 | 104,654,936 |
7.14 Intangible assets
7.14.1 Particulars of intangible assets
Unit: Yuan
| Item | Land use right | Software use right | Trademark | Total |
| Ⅰ Original book value | ||||
| Beginning balance | 532,069,913 | 98,975,807 | 189,269,287 | 820,315,007 |
| Increase in this period | 1,355,331 | 1,355,331 | ||
| 2.1 Acquisition | 1,355,331 | 1,355,331 | ||
| 2.2 Internal R&D | ||||
| 2.3 Business merger increase | ||||
| Decrease in this period | ||||
| 3.1 Disposal | ||||
| Ending balance | 532,069,913 | 100,331,138 | 189,269,287 | 821,670,338 |
| Ⅱ Accumulated amortization | ||||
| Beginning balance | 100,498,469 | 44,325,044 | 14,502,429 | 159,325,942 |
| Increase in this period | 5,409,332 | 4,846,843 | 341,702 | 10,597,877 |
| 2.1 Accrual | 5,409,332 | 4,846,843 | 341,702 | 10,597,877 |
| Decrease in this period |
| Item | Land use right | Software use right | Trademark | Total |
| 3.1 Disposal | ||||
| Ending balance | 105,907,801 | 49,171,887 | 14,844,131 | 169,923,819 |
| Ⅲ Impairment provision | ||||
| Beginning balance | ||||
| Increase in this period | ||||
| 2.1 Accrual | ||||
| Decrease in this period | ||||
| 3.1 Disposal | ||||
| Ending balance | ||||
| Ⅳ Book value | ||||
| 1. Ending book value | 426,162,112 | 51,159,251 | 174,425,156 | 651,746,519 |
| 2. Beginning book value | 431,571,444 | 54,650,763 | 174,766,858 | 660,989,065 |
As at June 30, 2021, the net value of the intangible assets with ownership restrictions wasRMB 204,132,966 Yuan (December 31, 2020: RMB 206,920,456). Please refer to Note 7.54for details.
7.14.2 Particulars of land use right of that not receiving the property certificate
Nil
7.15 Goodwill
7.15.1 Original book value of goodwill
Unit: Yuan
| Name of the invested unit or matter forming goodwill | Beginning balance | Increase in this period | Decrease in this period | Ending balance | ||
| Formed by business merger | Other | Disposal | Other | |||
| Etablissements Roullet Fransac (“Roullet Fransac”) | 13,112,525 | 13,112,525 | ||||
| Dicot Partners, S.L (“Atrio Group”) | 92,391,901 | 92,391,901 | ||||
| Indomita Wine Company Chile, SpA | 6,870,115 | 6,870,115 | ||||
| Kilikanoon Estate, Australia | 37,063,130 | 37,063,130 | ||||
| Total | 149,437,671 | 149,437,671 | ||||
7.15.2 Provision for impairment of goodwill
Unit: Yuan
| Name of the invested unit or matter forming goodwill | Beginning balance | Increase in this period | Decrease in this period | Ending balance | ||
| Formed by business merger | Other | Disposal | Other | |||
| Etablissements Roullet Fransac (“Roullet Fransac”) | ||||||
| Dicot Partners, S.L (“Atrio Group”) | ||||||
| Indomita Wine Company Chile, SpA | ||||||
| Kilikanoon Estate, Australia | 16,499,459 | 16,499,459 | ||||
| Total | 16,499,459 | 16,499,459 |
7.16 Long-term unamortized expenses
Unit: Yuan
| Item | Beginning balance | Increase in this period | Amortization in this period | Other decrease | Ending balance |
| Land lease fees | 42,965,977 | 712,443 | 42,253,534 | ||
| Land acquisition fees | 39,579,921 | 548,304 | 39,031,617 | ||
| Afforestation fees | 138,185,253 | 4,388,818 | 133,796,435 | ||
| Renovation costs | 80,446,179 | 32,052,432 | 3,227,870 | 109,270,741 | |
| Other | 4,913,287 | 4,246,622 | 1,378,941 | 7,780,968 | |
| Total | 306,090,617 | 36,299,054 | 10,256,376 | 332,133,295 |
7.17 Deferred income tax assets/liabilities
7.17.1 Un-offset deferred income tax assets
Unit: Yuan
| Item | Ending Balance | Beginning Balance | ||
| Deductible temporary difference | Deferred income tax assets | Deductible temporary difference | Deferred income tax assets | |
| Asset impairment provision | 46,776,197 | 10,356,331 | 44,279,268 | 9,732,098 |
| Unrealized profits from inter-company transactions | 212,321,254 | 53,080,313 | 313,043,226 | 78,260,807 |
| Deductible loss | 305,592,163 | 75,332,385 | 268,074,301 | 65,844,999 |
| Unpaid bonus | 114,040,653 | 28,510,163 | 147,824,610 | 36,956,152 |
| Dismission welfare | 13,397,290 | 3,349,323 | 16,274,352 | 4,068,588 |
| Deferred income | 45,454,376 | 9,826,084 | 52,653,609 | 11,378,631 |
| Others | 4,097,837 | 1,024,460 | 4,097,837 | 958,125 |
| Total | 741,679,770 | 181,479,059 | 846,247,203 | 207,199,400 |
7.17.2 Un-offset deferred income tax liabilities
Unit: Yuan
| Item | Ending Balance | Beginning Balance | ||
| Taxable temporary difference | Deferred income tax liabilities | Taxable temporary difference | Deferred income tax liabilities | |
| Assets appraisal appreciation in business merger under non-common control | 37,134,158 | 11,635,114 | 49,156,771 | 12,022,613 |
| Others | 953,124 | 238,281 | 953,124 | 238,281 |
| Total | 38,087,282 | 11,873,395 | 50,109,895 | 12,260,894 |
7.17.3 Details of unconfirmed deferred income tax assets
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Deductable temporary difference | ||
| Deductible loss | 221,743,602 | 187,130,828 |
| Total | 221,743,602 | 187,130,828 |
7.17.4 Deductible losses of unconfirmed deferred income tax assets will expire in:
Unit: Yuan
| Year | Ending sum | Beginning sum | Remark |
| 2021 | 25,008,263 | 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 | 75,864,506 | 75,864,506 | |
| 2026 | 34,612,774 | ||
| Total | 221,743,602 | 187,130,828 | -- |
7.18 Other non-current assets
Unit: Yuan
| Item | Ending balance | Beginning balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Royalty | 158,377,754 | 158,377,754 | 170,370,147 | 170,370,147 | ||
| Total | 158,377,754 | 158,377,754 | 170,370,147 | 170,370,147 | ||
7.19 Short-term loans
7.19.1 Classification of short-term loans
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Pledge loan | ||
| Mortgage loan | 115,493,615 | 55,724,891 |
| Guaranteed loan | 22,112,812 | 14,215,916 |
| Fiduciary loan | 578,755,253 | 619,149,908 |
| Total | 716,361,680 | 689,090,715 |
As at June 30, 2021, EUR mortgaged loan was Hacienday Vi?edos Marques del Atrio, S.L.U(“Atrio”) factoring of accounts receivable from banks including Banco de Sabadell, S.A. ofEUR 5,756,539 (equivalent of RMB 44,245,910 Yuan) (December 31, 2020: RMB28,557,993 Yuan).As at June 30, 2021, USD mortgaged loan was Chile Indomita Wine Group mortgaged USD11,125,000 (equivalent of RMB 71,247,705 Yuan) of its fixed assets to Banco Scotiabank(December 31, 2020: RMB 26,162,960 Yuan).On June 30, 2021, AUD guaranteed loan was Australia Kilikanoon Estate has borrowed fromANZ Bank AUD 4,556,712 (equivalent of RMB 22,112,812 Yuan) (December 31, 2020:
RMB 14,215,916 Yuan), and it is guaranteed by this Company.
7.20 Accounts payable
7.20.1 List of accounts payable
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Accounts payable for materials, etc. | 409,887,533 | 479,305,382 |
| Total | 409,887,533 | 479,305,382 |
7.20.2 Explanation of significant accounts payable aged more than one yearAs at June 30, 2
21, there were no significant accounts payable aged more than one year.
7.21 Contract liabilities
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Advances from customers | 108,304,501 | 118,210,799 |
| Withholding of goods with sales rebate | 16,862,481 | |
| Total | 108,304,501 | 135,073,280 |
7.22 Employee remunerations payable
7.22.1 List of employee remunerations payable
Unit: Yuan
| Item | Beginning balance | Increase in this period | Decrease in this period | Ending balance |
| 1. Short-term remuneration | 172,176,085 | 184,482,600 | 230,765,275 | 125,893,410 |
| 2. Post-employment welfare – defined contribution plan | 329,474 | 22,026,390 | 22,258,334 | 97,530 |
| 3. Dismission welfare | 16,274,352 | 3,831,246 | 6,708,308 | 13,397,290 |
| 4.Other welfare due within one year | ||||
| Total | 188,779,911 | 210,340,236 | 259,731,917 | 139,388,230 |
7.22.2 List of short-term remunerations
Unit: Yuan
| Item | Beginning balance | Increase in this period | Decrease in this period | Ending balance |
| 1. Salaries, bonuses, allowances and subsidies | 170,277,311 | 159,884,889 | 206,177,612 | 123,984,588 |
| 2. Staff welfare | 1,734,723 | 9,520,020 | 9,179,045 | 2,075,698 |
| 3. Social insurance charges | 340,733 | 6,938,923 | 7,271,571 | 8,085 |
| Including: Medical insurance | 340,733 | 6,159,617 | 6,492,265 | 8,085 |
| Injury insurance | 772,799 | 772,799 | ||
| Maternity insurance | 6,507 | 6,507 | ||
| 4. Housing fund | 27,497 | 6,547,794 | 6,541,143 | 34,148 |
| 5. Union fee and staff education fee | 1,874,792 | 1,590,974 | 1,595,904 | 1,869,862 |
| 6. Short-term compensated absences |
| Item | Beginning balance | Increase in this period | Decrease in this period | Ending balance |
| 7. Short-term profit-sharing plan | ||||
| Minus: Those divided into non-current liabilities | 2,078,971 | 2,078,971 | ||
| Total | 172,176,085 | 184,482,600 | 230,765,275 | 125,893,410 |
7.22.3 List of defined contribution plan
Unit: Yuan
| Item | Beginning balance | Increase | Decrease | Ending balance |
| 1. Basic endowment insurance | 329,464 | 21,461,355 | 21,693,299 | 97,520 |
| 2. Unemployment insurance | 10 | 565,035 | 565,035 | 10 |
| 3. Enterprise annuity payment | ||||
| Total | 329,474 | 22,026,390 | 22,258,334 | 97,530 |
7.22.4 Dismission welfare
Unit: Yuan
| Item | Beginning balance | Increase | Decrease | Ending balance |
| 1. Compensation for server of labor relation | ||||
| 2. Compensation for early retirement | 16,274,352 | 3,831,246 | 6,708,308 | 13,397,290 |
| Total | 16,274,352 | 3,831,246 | 6,708,308 | 13,397,290 |
7.23 Taxes and dues payable
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Value added tax | 13,683,762 | 25,853,102 |
| Consumption tax | 7,730,930 | 42,076,231 |
| Corporate income tax | 129,991,906 | 130,621,524 |
| Individual income tax | 329,670 | 614,344 |
| Urban maintenance and construction tax | 1,407,055 | 3,429,038 |
| Education surcharges | 1,043,473 | 2,498,374 |
| Urban land use tax | 2,271,394 | 2,327,666 |
| Other | 4,742,390 | 5,992,534 |
| Total | 161,200,580 | 213,412,813 |
7.24 Other payables
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Interest payable | 2,289,564 | 553,471 |
| Dividends payable | 274,507,652 | 1,003,125 |
| Other payables | 406,265,258 | 384,548,930 |
| Total | 683,062,474 | 386,105,526 |
7.24.1 Interest payable
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Interest of long-term loans with interest paid by installment and principal paid on maturity | ||
| Interest of corporate bonds | ||
| Interest payable of short-term loans | 2,289,564 | 553,471 |
| Interest of preferred shares\ perpetual bonds divided into financial liabilities | ||
| Other | ||
| Total | 2,289,564 | 553,471 |
7.24.2 Dividends payable
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Ordinary stock dividends | 274,185,600 | |
| Preferred stock dividends/sustainable debt dividends divided into equity instruments | ||
| Other | 322,052 | 1,003,125 |
| Total | 274,507,652 | 1,003,125 |
7.24.3 Other payables
7.24.3.1 Other payables listed by nature
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Dealer’s deposit payable | 228,020,107 | 177,129,582 |
| Equipment purchase and construction costs payable | 41,353,043 | 51,381,563 |
| Transportation charges payable | 2,385,516 | 26,061,359 |
| Advertisement expenses payable | 54,224,614 | 50,444,091 |
| Employee cash deposit | 359,282 | 359,282 |
| Supplier’s deposit payable | 13,526,594 | 14,836,302 |
| Contracting fees payable | 4,280,818 | 9,656,066 |
| Other | 62,115,284 | 54,680,685 |
| Total | 406,265,258 | 384,548,930 |
7.25 Non-current liabilities due within one year
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Long-term loans due within one year | 94,001,441 | 111,311,890 |
| Bonds payable due within one year | ||
| Long-term accounts payable due within one year | 22,000,000 | 22,000,000 |
| Lease liabilities due within one year | 9,278,250 | 8,185,246 |
| Total | 125,279,691 | 141,497,136 |
7.26 Other current liabilities
| Item | Ending balance | Beginning balance |
| Unamortized VAT amount | 14,000,154 | 14,820,653 |
| Total | 14,000,154 | 14,820,653 |
7.27 Long-term loans
7.27.1 Classification of long-term loans
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Pledged loan | ||
| Mortgage loan | ||
| Guaranteed loan | 76,983,600 | 91,445,600 |
| Fiduciary loan | 219,759,687 | 220,219,258 |
| Less: Long-term loans due within one year | 94,001,441 | 111,311,890 |
| Total | 202,741,846 | 200,352,968 |
As at June 30, 2021, fiduciary loans (EUR) were EUR 28,591,461 borrowed by Atrio fromBanco Sabadell, Bankia, Banco Santander, BBVA and Caja Rural de Navarr etc. (equivalentof RMB 219,759,687 Yuan) (December 31, 2020: RMB 220,219,258 Yuan). Guaranteedloans (RMB) were long-term borrowings of RMB 18,750,000 Yuan of the R&D andManafacturing Company, a subsidiary of the Company (December 31, 2020: RMB31,250,000 Yuan). Guaranteed loans (AUD) were Australia Kilikanoon Estate has borrowedAUD 12,000,000 (equivalent of RMB 58,233,600 Yuan) (December 31, 2020: RMB60,195,600 Yuan) from ANZ Bank and it is guaranteed by this Company.
7.28 Lease Liabilities
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Building | 45,722,898 | 36,248,053 |
| Land | 74,892,684 | 76,426,487 |
| Less: Lease liabilities due within one year | 9,278,250 | 8,185,246 |
| Total | 111,337,332 | 104,489,294 |
7.29 Long-term accounts payable
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Long-term accounts payable | 64,000,000 | 86,000,000 |
| Special accounts payable | ||
| Total | 64,000,000 | 86,000,000 |
7.29.1 Long-term accounts payable listed by nature
Unit: Yuan
| Item | Ending balance | Beginning balance |
| 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, Agricultural Development Fund invested RMB 305,000,000 Yuan in the Research,Development & Manufacture Company, accounting for 37.9% of the registered capital.According to the investment agreement, it is agreed that Agricultural Development Fund willtake back the investment fund in ten years and obtain fixed income according to year, whichis 1.2% of the remaining principal. Except for the above fixed income, the AgriculturalDevelopment Fund shall not enjoy other profits of the Research, Development & ManufactureCompany or bear the losses of the Research, Development & Manufacture Company.Accordingly, the investment of the Agricultural Development Fund in the Research,Development & Manufacture Company is equity investment nominally, which is debtinvestment (finance discount interest loan) in deed. The Group included the investment of theAgricultural Development Fund in long-term accounts payable measured by amortized cost.From January to June 2021, the Group gave back the principal of RMB 24,000,000 Yuan.Refer to Note 7.54 for details of mortgaged and pledged assets.
7.30 Deferred income
Unit: Yuan
| Item | Beginning balance | Increase in this period | Decrease in this period | Ending balance | Forming reason |
| Governmental subsidy | 52,653,609 | 7,199,234 | 45,454,375 | ||
| Total | 52,653,609 | 7,199,234 | 45,454,375 | -- |
Projects related to governmental subsidy
Unit: Yuan
| Item of liabilities | Beginning balance | Amount of subsidy newly increased in this period | Amount included in non-operating revenue in this period | Amount included in other income in this period | Amount offset the cost expenses | Other changes | Ending balance | Related to assets/income |
| Industrial development support project | 24,600,000 | 2,050,000 | 22,550,000 | Related to assets | ||||
| Xinjiang industrial revitalisation and technological transformation project | 12,798,000 | 711,000 | 12,087,000 | Related to assets | ||||
| Fixed asset investment reward of Shihezi Chateau project | 2,436,600 | 1,140,000 | 1,296,600 | Related to assets | ||||
| Shandong Peninsula Blue Economic Area construction funds | 2,000,000 | 1,000,000 | 1,000,000 | Related to assets | ||||
| Special government grant for infrastructure | 2,120,000 | 530,000 | 1,590,000 | Related to assets | ||||
| Raw wine fermentation | 434,700 | 434,700 | Related to assets |
| Item of liabilities | Beginning balance | Amount of subsidy newly increased in this period | Amount included in non-operating revenue in this period | Amount included in other income in this period | Amount offset the cost expenses | Other changes | Ending balance | Related to assets/income |
| project | ||||||||
| Wine fermentation capacity construction (Huanren) project | 2,400,000 | 200,000 | 2,200,000 | Related to assets | ||||
| Engineering technology transformation of information system project | 1,740,000 | 290,000 | 1,450,000 | Related to assets | ||||
| Liquor electronic tracking project | 1,191,150 | 333,527 | 857,623 | Related to assets | ||||
| Special fund for efficient water-saving irrigation project | 1,315,000 | 81,000 | 1,234,000 | Related to assets | ||||
| Subsidy for economic and energy-saving technological transformation projects | 769,800 | 64,150 | 705,650 | Related to assets | ||||
| Wine industry development project | 186,000 | 93,000 | 93,000 | Related to assets | ||||
| Subsidy for mechanic development of Penglai Daliuhang Base | 238,858 | 13,270 | 225,588 | Related to assets | ||||
| Cross-border e-commerce project | 201,801 | 126,887 | 74,914 | Related to income | ||||
| Subsidy for boiler reconstruction and demolition | 70,000 | 5,000 | 65,000 | Related to income | ||||
| Prize for Yantai Mayor’s Cup Industrial Design Competition | 50,000 | 25,000 | 25,000 | Related to income | ||||
| Special fund for 2020 Yantai City Innovation Driven Development | 101,700 | 101,700 | Related to income | |||||
| Total | 52,653,609 | 7,199,234 | 45,454,375 |
7.31 Other non-current liabilities
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Employee remunerations payable | 2,078,971 | 2,078,971 |
| Total | 2,078,971 | 2,078,971 |
As at June 30, 2021, the employee remunerations payable referred to the job security depositdeducted from the year-end bonus of the employees higher than sales manager of the Groupin proportion, which will be paid from 2021 to 2023 as predicted.
7.32 Share capital
Unit: Yuan
| Beginning balance | Increase or decrease (+,-) in this period | Ending balance | |||||
| Newly issued shares | Allocated shares | Share transferred from accumulation fund | Other | Subtotal | |||
| Total shares | 685,464,000 | 685,464,000 | |||||
7.33 Capital reserves
Unit: Yuan
| Item | Beginning balance | Increase in this period | Decrease in this period | Ending balance |
| Capital premium (Share capital premium) | 519,052,172 | 519,052,172 | ||
| Other capital reserves | 5,916,588 | 5,916,588 | ||
| Total | 524,968,760 | 524,968,760 |
7.34 Other comprehensive income
Unit: Yuan
| Item | Beginning balance | Amount incurred in this period | Ending balance | |||||
| Amount incurred before income tax in this period | Minus: amount included in other comprehensive income before and transferred to profit or loss in this period | Minus: amount included in other comprehensive income before and transferred to retained earnings in this period | Minus: income tax expenses | Attributable to parent company after tax | Attributable to minority shareholders after tax | |||
| 1. Other comprehensive income not to be reclassified into profit and loss later | ||||||||
| Including: Changes after remeasuring and resetting the benefit plans | ||||||||
| Other comprehensive income not to be reclassified into profit and loss under equity law | ||||||||
| Changes in the fair value of other investments in equity instruments | ||||||||
| Changes in the fair value of the enterprise's own credit risk | ||||||||
| 2. Other comprehensive income to be reclassified into profit and loss later | 576,129 | -24,776,238 | -21,618,495 | -3,157,743 | -21,042,366 | |||
| Including: Other | ||||||||
| Item | Beginning balance | Amount incurred in this period | Ending balance | |||||
| Amount incurred before income tax in this period | Minus: amount included in other comprehensive income before and transferred to profit or loss in this period | Minus: amount included in other comprehensive income before and transferred to retained earnings in this period | Minus: income tax expenses | Attributable to parent company after tax | Attributable to minority shareholders after tax | |||
| comprehensive income to be reclassified into profit and loss under equity law | ||||||||
| Changes in the fair value of other debt investments | ||||||||
| Amount of financial assets reclassified into other comprehensive income | ||||||||
| Provision for credit impairment of other credit investments | ||||||||
| Provision for cash-flow hedge | ||||||||
| Difference in translation of Foreign Currency Financial Statement | 576,129 | -24,776,238 | -21,618,495 | -3,157,743 | -21,042,366 | |||
| Total other comprehensive income | 576,129 | -24,776,238 | -21,618,495 | -3,157,743 | -21,042,366 | |||
7.35 Surplus reserves
Unit: Yuan
| Item | Beginning balance | Increase in this period | Decrease in this period | Ending balance |
| Legal surplus reserves | 342,732,000 | 342,732,000 | ||
| Free surplus reserves | ||||
| Reserve fund | ||||
| Enterprise expansion fund | ||||
| Other | ||||
| Total | 342,732,000 | 342,732,000 |
7.36 Undistributed profit
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Undistributed profit at the end of prior period before adjustment | 8,714,091,755 | 8,735,513,044 |
| Total Undistributed profit at the beginning of the period before adjustment | -10,632,422 |
| (increase listed with+ , and decrease listed with -) | ||
| Undistributed profit at the beginning of the period after adjustment | 8,703,459,333 | 8,735,513,044 |
| Plus: Net profit for owner of the parent company | 371,821,819 | 470,860,587 |
| Minus: Drawn legal surplus | ||
| Drawn free surplus | ||
| Drawn common risk provision | ||
| Common dividend payable | 274,185,600 | 492,281,876 |
| Common dividend transferred to share capital | ||
| Undistributed profit at the end of period | 8,801,095,552 | 8,714,091,755 |
As a result of the implementation of the new lease standard by the Group in 2021, theundistributed profit at the beginning of 2021 was reduced by RMB 10,632,422 Yuan.
7.37 Operating income and operating cost
Unit: Yuan
| Item | Amount incurred in this period | Amount incurred in prior period | ||
| Income | Cost | Income | Cost | |
| Main business | 1,841,427,492 | 753,630,446 | 1,395,214,715 | 567,783,470 |
| Other business | 33,032,945 | 7,883,098 | 23,333,832 | 7,074,869 |
| Total | 1,874,460,437 | 761,513,544 | 1,418,548,547 | 574,858,339 |
7.37.1 Details of operating income
Unit: Yuan
| Item | Amount incurred in this period | |
| Income | Cost | |
| Main business | 1,841,427,492 | 753,630,446 |
| Other business | 33,032,945 | 7,883,098 |
| Total | 1,874,460,437 | 761,513,544 |
| Including: Income from contracts | 1,873,414,304 | 760,879,897 |
| Income from house rents | 1,046,133 | 633,647 |
7.37.2 Situation of income from contracts
Unit: Yuan
| Contract classification | Amount incurred in this period |
| Type of merchandise | |
| Alcoholic beverage | 1,841,427,492 |
| Others | 31,986,812 |
| Classified by the time of merchandise transfer | |
| Revenue recognized at a point in time | 1,873,414,304 |
7.38 Taxes and surcharges
Unit: Yuan
| Item | Amount incurred in this period | Amount incurred in prior period |
| Consumption tax | 58,366,205 | 49,392,779 |
| Urban maintenance and construction tax | 11,929,833 | 9,447,918 |
| Education surcharges | 8,695,431 | 6,850,290 |
| Building tax | 13,513,343 | 14,066,376 |
| Land use tax | 5,585,762 | 5,870,612 |
| Stamp duty | 1,806,604 | 2,293,353 |
| Other | 322,839 | 522,494 |
| Total | 100,220,017 | 88,443,822 |
7.39 Selling expenses
Unit: Yuan
| Item | Amount incurred in this period | Amount incurred in prior period |
| Salary and welfare expenses | 129,002,823 | 99,508,170 |
| Marketing expenses | 108,808,265 | 56,163,925 |
| Labor expenses | 16,356,442 | 5,717,581 |
| Depreciation expenses | 29,724,959 | 26,350,204 |
| Storage and lease expenses | 13,455,458 | 18,435,218 |
| Advertisement expenses | 19,485,798 | 9,212,729 |
| Trademark use fees | 11,313,578 | 8,953,500 |
| Travel expenses | 9,275,034 | 8,368,347 |
| Design & production expenses | 9,396,703 | 1,595,262 |
| Conference expenses | 6,652,432 | 2,447,005 |
| Water, electricity and gas charges | 4,969,919 | 4,491,631 |
| Other | 29,944,199 | 11,668,632 |
| Total | 388,385,610 | 252,912,204 |
7.40 Management expenses
Unit: Yuan
| Item | Amount incurred in this period | Amount incurred in prior period |
| Employee remunerations | 32,695,621 | 27,711,146 |
| Depreciation expenses | 38,197,467 | 36,815,081 |
| Contracting expenses | 3,852,345 | 6,687,337 |
| Repair expenses | 6,025,536 | 4,750,072 |
| Office expenses | 6,964,669 | 5,617,017 |
| Amortization expenses | 9,827,020 | 10,475,529 |
| Afforestation fees | 6,759,616 | 6,910,323 |
| Safe production costs | 5,159,685 | 2,506,681 |
| Rental expenses | 2,789,523 | 4,659,247 |
| Business entertainment expenses | 1,938,253 | 1,480,213 |
| Public security & clean-keeping expenses | 3,339,145 | 2,957,475 |
| Travel expenses | 675,373 | 424,412 |
| Other | 5,160,376 | 2,075,336 |
| Total | 123,384,629 | 113,069,869 |
7.41 R&D expenses
Unit: Yuan
| Item | Amount incurred in this period | Amount incurred in prior period |
| R&D expenses | 2,477,835 | 1,805,988 |
| Total | 2,477,835 | 1,805,988 |
7.42 Financial expenses
Unit: Yuan
| Item | Amount incurred in this period | Amount incurred in prior period |
| Interest expenditure | 14,239,535 | 14,891,310 |
| Minus: Interest income | 5,827,243 | 6,146,409 |
| Plus: Commission charges | 1,020,633 | 2,216,930 |
| Exchange gain or loss | -69,893 | 975,571 |
| Total | 9,363,032 | 11,937,402 |
7.43 Other income
Unit: Yuan
| Source of other income | Amount incurred in this period | Amount incurred in prior period |
| Supporting fund for industrial development | 2,050,000 | 2,050,000 |
| Reward for investment in fixed assets | 1,140,000 | 1,140,000 |
| Special fund for construction of peninsula blue economic zone | 1,000,000 | 1,000,000 |
| Other – related to assets | 2,750,646 | 3,497,505 |
| Special fund for supporting corporate development | 14,283,100 | 38,279,579 |
| Other – related to income | 754,949 | 4,813,147 |
| Total | 21,978,695 | 50,780,231 |
7.44 Investment income
Unit: Yuan
| Item | Amount incurred in this period | Amount incurred in prior period |
| Investment income from long-term equity by equity method | -1,621,780 | -1,170,685 |
| Investment income from disposal of long-term equity | ||
| Investment income gained from trading financial assets during the holding period | ||
| Investment income gained from disposal of trading financial assets | ||
| Dividend income gained from other equity instruments during the holding period | ||
| Gains generated from the remaining equity remeasured as per fair value after the loss of control | ||
| Interest income gained from equity inverstment during the holding period | ||
| Interest income gained from other equity inverstments during the holding period | ||
| Investment income gained from disposal of other equity inverstments | ||
| Total | -1,621,780 | -1,170,685 |
7.45 Loss on impairment of credit
Unit: Yuan
| Item | Amount incurred in this period | Amount incurred in prior period |
| Loss on bad debts of accounts receivable | -6,176,948 | -533,145 |
| Total | -6,176,948 | -533,145 |
7.46 Loss on impairment of assets
Unit: Yuan
| Item | Amount incurred in this period | Amount incurred in prior period |
| 1. Loss on bad debts | ||
| 2. Inventory falling price loss and loss on impairment of contrct execution cost | 3,680,018 | 4,242,813 |
| 3. Loss on impairment of long-term equity investment | ||
| 4. Loss on impairment of investment real estate | ||
| 5. Loss on impairment of fixed assets | ||
| 6. Loss on impairment of engineering materials | ||
| 7. Loss on impairment of construction in progress | ||
| 8. Loss on impairment of productive biological assets | ||
| 9. Loss on impairment of oil and gas assets | ||
| 10. Loss on impairment of intangible assets | ||
| 11. Loss on impairment of goodwill | ||
| 12. Loss on impairment of contract assets | ||
| 13. Other | ||
| Total | 3,680,018 | 4,242,813 |
7.47 Income from asset disposal
Unit: Yuan
| Source of income from asset disposal | Amount incurred in this period | Amount incurred in prior period |
| Income from disposal of fixed assets | 24,148 | |
| Total | 24,148 |
7.48 Non-operating income
Unit: Yuan
| Item | Amount incurred in this period | Amount incurred in prior period | Amount included in the current non-recurring profits/losses |
| Gains on debt recombination | |||
| Gains on exchange of non-monetary assets | |||
| Grains on donations | |||
| Governmental subsidy | |||
| Gains on breakage and scrap of non-current assets | 364 | 364 | |
| Others | 2,488,414 | 6,686,519 | 2,488,414 |
| Total | 2,488,778 | 6,686,519 | 2,488,778 |
7.49 Non-operating expenses
Unit: Yuan
| Item | Amount incurred in this period | Amount incurred in prior period | Amount included in the current non-recurring profits/losses |
| Loss on debt recombination | |||
| Loss on exchange of non-monetary assets | |||
| Donation | 500,000 | ||
| Loss on breakage and scrap of non-current assets | 45,482 | 45,482 | |
| Fine, penalty and overdue fine paid due to violation of laws and administrative regulations | 152,960 | 31,123 | 152,960 |
| Others | 371,279 | 495,351 | 371,279 |
| Total | 569,721 | 1,026,474 | 569,721 |
7.50 Income tax expenses
7.50.1 List of income tax expenses
Unit: Yuan
| Item | Amount incurred in this period | Amount incurred in prior period |
| Current income tax expenses | 111,247,007 | 63,239,625 |
| Deferred income tax expenses | 25,332,842 | 50,214,323 |
| Total | 136,579,849 | 113,453,948 |
7.50.2 Adjustment process of accounting profit and income tax expenses
Unit: Yuan
| Item | Amount incurred in this period |
| Total profit | 508,894,812 |
| Income tax expenses calculated according to the legal/applicable tax rate | 127,223,703 |
| Influence of different tax rates applicable to subsidiary | -1,400,313 |
| Influence of income tax in the term before adjustment | 647,740 |
| Influence of nontaxable income | |
| Influence of non-deductible costs, expenses and losses | 1,662,644 |
| Influence of deductible loss from use of unconfirmed deferred income tax assets in prior period | -207,119 |
| Influence of deductible temporary difference or deductible loss of unconfirmed deferred income tax assets in this period | 8,653,194 |
| Income tax expense | 136,579,849 |
7.51 Other comprehensive income
Refer to Note 7.34 for details.
7.52 Items of cash flow statement
7.52.1 Other cash received related to operating activities
Unit: Yuan
| Item | Amount incurred in this period | Amount incurred in prior period |
| Governmental subsidy income | 14,779,461 | 40,851,851 |
| Item | Amount incurred in this period | Amount incurred in prior period |
| Interest income | 4,075,142 | 3,923,939 |
| Net amercement income | 71,929 | 269,694 |
| Other | 7,335,490 | 2,722,718 |
| Total | 26,262,022 | 47,768,202 |
7.52.2 Other cash paid related to operating activities
Unit: Yuan
| Item | Amount incurred in this period | Amount incurred in prior period |
| Selling expenses | 218,063,727 | 210,590,989 |
| Administrative expenses | 41,685,752 | 37,212,155 |
| Other | 6,620,058 | 4,024,128 |
| Total | 266,369,537 | 251,827,272 |
7.52.3 Other cash received related to financing activities
Unit: Yuan
| Item | Amount incurred in this period | Amount incurred in prior period |
| Interest income from pledged time deposits by R&D Company | 1,654,861 | |
| Time deposits pledged by R&D Company for long-term loans | 20,000,000 | |
| Total | 21,654,861 |
7.52.4 Other cash paid related to financing activities
Unit: Yuan
| Item | Amount incurred in this period | Amount incurred in prior period |
| Cash paid to repay the principal and interest of the lease liability | 7,144,318 | |
| Total | 7,144,318 |
7.53 Supplementary information to cash flow statement
7.53.1 Supplementary information to cash flow statement
Unit: Yuan
| Supplementary materials | Amount incurred in this period | Amount incurred in prior period |
| 1. Cash flows from operating activities calculated by adjusting the net profit: | -- | -- |
| Net profit | 372,314,963 | 321,070,382 |
| Plus: Provision for impairment of assets | 2,496,930 | -3,709,668 |
| Depreciation of fixed assets, oil-and-gas assets and productive biological assets | 150,175,106 | 143,934,894 |
| Depreciation of right-of-use assets | 7,149,627 | |
| Amortization of intangible assets | 10,597,877 | 11,171,783 |
| Amortization of long-term deferred expenses | 10,256,376 | 7,822,994 |
| Losses on disposal of fixed assets, intangible assets and other long-term assets (profit listed with “－”) | -39,641 |
| Supplementary materials | Amount incurred in this period | Amount incurred in prior period |
| Losses on retirement of fixed assets (profit listed with “－”) | 45,118 | 157,985 |
| Losses on fair value change (profit listed with “－”) | ||
| Financial costs (profit listed with “－”) | 12,767,220 | 13,316,860 |
| Investment losses (profit listed with “－”) | 1,621,780 | 1,170,685 |
| Decrease in deferred income tax assets (increase listed with “-”) | 25,720,341 | 50,602,610 |
| Increase of deferred income tax liabilities (decrease listed with “－”) | -387,499 | -388,287 |
| Decrease in inventories (increase listed with “-”) | 28,288,254 | -41,362,368 |
| Decrease in operating receivables (increase listed with “-”) | 9,205,099 | 196,861,272 |
| Increase in operating payable (decrease listed with “-”) | -174,316,043 | -717,128,253 |
| Other | ||
| Net cash flows from operating activities | 455,935,149 | -16,518,752 |
| 2. Significant investment and financing activities not involving cash deposit and withdrawal: | -- | -- |
| Debt transferred into assets | ||
| Convertible corporate bond due within 1 year | ||
| Fixed assets under financing lease | ||
| 3. Net changes of cash and cash equivalent: | -- | -- |
| Ending balance of cash | 1,392,384,794 | 1,333,387,007 |
| Minus: Beginning balance of cash | 1,052,665,105 | 1,397,399,469 |
| Plus: Ending balance of cash equivalent | ||
| Minus: Beginning balance of cash equivalent | ||
| Net increase amount of cash and cash equivalent | 339,719,689 | -64,012,462 |
7.53.2 Composition of cash and cash equivalents
Unit: Yuan
| Item | Ending balance | Beginning balance |
| 1. Cash | 1,392,384,794 | 1,052,665,105 |
| Including: Cash on hand | 32,865 | 19,637 |
| Bank deposits on demand | 1,392,351,929 | 1,052,645,468 |
| Other monetary capital on demand | ||
| Due from central bank available for payment | ||
| Due from the industry | ||
| Inter-bank lending | ||
| 2. Cash equivalents | ||
| Including: Bond investment due within three months | ||
| 3. Balance of cash and cash equivalents at the end of period | 1,392,384,794 | 1,052,665,105 |
| Including: Restricted use of parent company or subsidiaries in the group |
7.54 Assets with ownership or use right restrictions
Unit: Yuan
| Item | Ending book value | Reason for restriction |
| Monetary capital | 47,793,184 | L/C deposit, frozen balance of Alipay, housing fund and guaranty money for deposit in unit card |
| Accounts receivable | 44,245,910 | Pledge of short-term loans |
| Fixed assets | 323,761,779 | Pledge of short-term loans, long-term loans and long-term accounts payable |
| Intangible assets | 204,132,966 | Pledge of long-term accounts payable |
| Total | 619,933,839 | -- |
7.55 Monetary items of foreign currency
7.55.1 Monetary items of foreign currency
| Item | Ending balance at foreign currency | Converted exchange rate | Ending balance at RMB equivalent |
| Monetary capital | -- | -- | 22,907,583 |
| Including: USD | 2,782,429 | 6.4601 | 17,974,767 |
| EUR | 641,776 | 7.6862 | 4,932,816 |
| HKD | |||
| Accounts receivable | -- | -- | 42,053,884 |
| Including: USD | 4,881,079 | 6.4601 | 31,532,258 |
| EUR | 854,020 | 7.6862 | 6,564,169 |
| CAD | 42,789 | 5.2097 | 222,918 |
| GBP | 417,687 | 8.9410 | 3,734,539 |
| Short-term borrowing | -- | -- | 100,874,462 |
| Including: USD | 15,615,000 | 6.4601 | 100,874,462 |
| EUR | |||
| HKD | |||
7.55.2 The Company’s overseas subsidiaries determine their functional currency based on thecurrency in the main economic environment in which they operate. The functional currency ofAtrio and Francs Champs Participations SAS ("Farshang Holdings") is Euro, the functionalcurrency of Chile Indomita Wine Group is Chilean Peso, and the functional currency ofAustralia Kilikanoon Estate is Australian Dollar.
8. Changes in scope of consolidation
| Full name of investing unit | Equity acquisition mode | Foundation date | Nature of business | Registered capital | Actual contribution amount |
| Tianjin Changyu Yixin Digital Technology Co., Ltd. | Acquired by establishment or investment | January 22, 2021 | Sales | RMB 10 Million Yuan | 5,100,000 |
| Shanghai Changyu Guoqu Digital Technology Co., Ltd. | Acquired by establishment or investment | March 30, 2021 | Sales | RMB 6 Million Yuan | 3,060,000 |
| Yantai Christon Catering Co., Ltd. | Acquired by establishment or investment | March 23, 2021 | Catering industry | RMB 1 Million Yuan |
9. Equity in other entities
9.1 Equity in the subsidiaries
9.1.1 Constitution of enterprise group
| Name of subsidiary | Principal business location | Registration place | Business nature | Proportion of shareholding | Acquisition mode | |
| Direct | Indirect | |||||
| Xinjiang Tianzhu Wine Co., Ltd. (“Xinajing Tianzhu”) | Shihezi, Xinjiang, China | Shihezi, Xinjiang, China | Manufacturing | 60% | Acquired from a business combination under non-common control | |
| Etablissements Roullet Fransac (“Roullet Fransac”) | Cognac, France | Cognac, France | Trading | 100% | Acquired from a business combination under non-common control | |
| Dicot Partners, S.L (“Dicot”) | Navarre, Spain | Navarre, Spain | Sales | 90% | Acquired from a business combination under non-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 | Sales | 85% | Acquired by establishment or investment | |
| Kilikanoon Estate Pty Ltd (“Australia Kilikanoon Estate”) | Adelaide, Australia | Adelaide, Australia | Sales | 97.50% | Acquired from a business combination under non-common control | |
| Beijing Changyu Sales and Distribution Co., Ltd. (“Beijing Sales”) | Beijing, China | Beijing, China | Sales | 100% | Acquired by establishment or investment | |
| Yantai Kylin Packaging Co., Ltd. (“Kylin Packaging”) | Yantai, Shandong, China | Yantai, Shandong, China | Manufacturing | 100% | Acquired by establishment or investment | |
| Yantai Chateau Changyu-Castel Co., Ltd. (“Chateau Changyu”) (b) | Yantai, Shandong, China | Yantai, Shandong, China | Manufacturing | 70% | Acquired by establishment or investment | |
| Changyu (Jingyang) Wine Co., Ltd. (“Jingyang Wine”) | Xianyang, Shaanxi, China | Xianyang, Shaanxi, China | Manufacturing | 90% | 10% | Acquired by establishment or investment |
| Yantai Changyu Pioneer Wine Sales Co., Ltd. (“Sales Company”) | Yantai, Shandong, China | Yantai, Shandong, China | Sales | 100% | Acquired by establishment or investment | |
| Langfang Development Zone Castel-Changyu Wine Co., Ltd. (“Langfang Castel”) | Langfang, Hebei, China | Langfang, Hebei, China | Manufacturing | 39% | 10% | Acquired by establishment or investment |
| Changyu (Jingyang) Wine Sales Co., Ltd. (“Jingyang Sales”) | Xianyang, Shaanxi, China | Xianyang, Shaanxi, China | Sales | 10% | 90% | Acquired by establishment or investment |
| Langfang Changyu Pioneer Wine Sales Co., Ltd. (“Langfang Sales”) | Langfang, Hebei, China | Langfang, Hebei, China | Sales | 10% | 90% | Acquired by establishment or investment |
| Shanghai Changyu Sales and Distribution Co., Ltd. | Shanghai, China | Shanghai, China | Sales | 100% | Acquired by establishment or | |
| Name of subsidiary | Principal business location | Registration place | Business nature | Proportion of shareholding | Acquisition mode | |
| Direct | Indirect | |||||
| (“Shanghai Sales”) | investment | |||||
| Beijing Changyu AFIP Agriculture development Co., Ltd. (“Agriculture Development”) | Miyun, Beijing, China | Miyun, Beijing, China | Sales | 100% | Acquired by establishment or investment | |
| Beijing Chateau Changyu AFIP Global Co., Ltd. (“AFIP”) (c) | Beijing, China | Beijing, China | Manufacturing | 91.53% | Acquired by establishment or investment | |
| Yantai Changyu Wine Sales Co., Ltd. (“Wines Sales”) | Yantai, Shandong, China | Yantai, Shandong, China | Sales | 90% | 10% | Acquired by establishment or investment |
| Yantai Changyu Pioneer International Co., Ltd. (“Pioneer International”) | Yantai, Shandong, China | Yantai, Shandong, China | Sales | 70% | 30% | Acquired by establishment or investment |
| Hangzhou Changyu Wine Sales Co., Ltd. (“Hangzhou Changyu”) | Hangzhou, Zhejiang, China | Hangzhou, Zhejiang, China | Sales | 100% | Acquired by establishment or investment | |
| Ningxia Changyu Grape Growing Co., Ltd. (“Ningxia Growing”) | Yinchuan, Ningxia, China | Ningxia, China | Planting | 100% | Acquired by establishment or investment | |
| Huanren Changyu National Wines Sales Co., Ltd. (“National Wines”) | Benxi, Liaoning, China | Benxi, Liaoning, China | Sales | 100% | Acquired by establishment or investment | |
| Liaoning Changyu Golden Icewine Valley Co., Ltd. (“Golden Icewine Valley”) (d) | Benxi, Liaoning, China | Benxi, Liaoning, China | Manufacturing | 51% | Acquired by establishment or investment | |
| Yantai Development Zone Changyu Trading Co., Ltd. (“Development Zone Trading”) | Yantai, Shandong, China | Yantai, Shandong, China | Sales | 100% | Acquired by establishment or investment | |
| Yantai Changyu Fushan Trading Company (“Fushan Trading”) | Yantai, Shandong, China | Yantai, Shandong, China | Sales | 100% | Acquired by establishment or investment | |
| Beijing AFIP Meeting Center (“Meeting Center”) | Miyun, Beijing, China | Miyun, Beijing, China | Services | 100% | Acquired by establishment or investment | |
| Beijing AFIP Tourism and Culture (“AFIP Tourism”) | Miyun, Beijing, China | Miyun, Beijing, China | Tourism | 100% | Acquired by establishment or investment | |
| Changyu (Ningxia) Wine Co., Ltd. (“Ningxia Wine”) | Ningxia, China | Ningxia, China | Manufacturing | 100% | Acquired by establishment or investment | |
| Yantai Changyu Chateau Tinlot Co., Ltd. (“Chateau Tinlot”) | Yantai, Shandong, China | Yantai, Shandong, China | Wholesale and retail | 65% | 35% | Acquired by establishment or investment |
| Xinjiang Chateau Changyu Baron Balboa Co., Ltd. (“Chateau Shihezi”) | Shihezi, Xinjiang, China | Shihezi, Xinjiang, China | Manufacturing | 100% | Acquired by establishment or investment | |
| Ningxia Chateau Changyu Moser XV Co., Ltd. (“Chateau Ningxia”) | Yinchuan, Ningxia, China | Yinchuan, Ningxia, China | Manufacturing | 100% | Acquired by establishment or investment | |
| Shaanxi Chateau Changyu Rena Co., Ltd. (“Chateau | Xianyang, Shaanxi, China | Xianyang, Shaanxi, China | Manufacturing | 100% | Acquired by establishment or | |
| Name of subsidiary | Principal business location | Registration place | Business nature | Proportion of shareholding | Acquisition mode | |
| Direct | Indirect | |||||
| Chang’an”) | investment | |||||
| Yantai Changyu Wine Research & Development Centre Co., Ltd. (“R&D Centre”) (e) | Yantai, Shandong, China | Yantai, Shandong, China | Manufacturing | 85.32% | Acquired by establishment or investment | |
| Changyu (HuanRen) Wine Co., Ltd. (“Huan Ren Wine”) | Benxi, Liaoning, China | Benxi, Liaoning, China | Wine-making project | 100% | Acquired by establishment or investment | |
| Xinjiang Changyu Sales Co., Ltd. (“Xinjiang Sales”) | Shihezi, Xinjiang, China | Shihezi, Xinjiang, China | Sales | 100% | Acquired by establishment or investment | |
| Ningxia Changyu Trading Co., Ltd. (“Ningxia Trading”) | Yinchuan, Ningxia, China | Yinchuan, Ningxia, China | Sales | 100% | Acquired by establishment or investment | |
| Shaanxi Changyu Rena Wine Sales Co., Ltd. (“Shaanxi Sales”) | Xianyang, Shaanxi, China | Xianyang, Shaanxi, China | Sales | 100% | Acquired by establishment or investment | |
| Penglai Changyu Wine Sales Co., Ltd. (“Penglai Wine”) | Penglai, Shandong, China | Penglai, Shandong, China | Sales | 100% | Acquired by establishment or investment | |
| Laizhou Changyu Wine Sales Co., Ltd. (“Laizhou Sales”) | Laizhou, Shandong, China | Laizhou, Shandong, China | Sales | 100% | Acquired by establishment or investment | |
| Francs Champs Participations SAS (“Francs Champs”) | Cognac, France | Cognac, France | Investment and trading | 100% | Acquired by establishment or investment | |
| Yantai Roullet Fransac Wine Sales Co., Ltd. (“Yantai Roullet Fransac”) | Yantai, Shandong, China | Yantai, Shandong, China | Sales | 100% | Acquired by establishment or investment | |
| Yantai Changyu Wine Sales Co., Ltd. (“Wine Sales Company”) | Yantai, Shandong, China | Yantai, Shandong, China | Sales | 100% | Acquired by establishment or investment | |
| Shaanxi Chateau Changyu Rena Tourism Co., Ltd. (“Chateau Tourism”) | Xianxin, Shaanxi, China | Xianxin, Shaanxi, China | Tourism | 100% | Acquired by establishment or investment | |
| Longkou Changyu Wine Sales Co., Ltd. (“Longkou Sales”) | Yantai, Shandong, China | Yantai, Shandong, China | Sales | 100% | Acquired by establishment or investment | |
| Changyu Cultural Tourism Company | Yantai, Shandong, China | Yantai, Shandong, China | Tourism | 100% | Acquired by establishment or investment | |
| Museum | Yantai, Shandong, China | Yantai, Shandong, China | Tourism | 100% | Acquired by establishment or investment | |
| Yantai Changyu Cultural Tourism Product Sales Co., Ltd. (“Cultural Sales”) | Yantai, Shandong, China | Yantai, Shandong, China | Tourism | 100% | Acquired by establishment or investment | |
| Yantai Changyu Window of International Wine City Co. Ltd. (“Window of Wine City”) | Yantai, Shandong, China | Yantai, Shandong, China | Tourism | 100% | Acquired by establishment or investment | |
| Yantai Chateau Koya Brandy Co., Ltd. ("Chateau Koya") | Yantai, Shandong, China | Yantai, Shandong, China | Manufacturing | 100% | Acquired by establishment or investment | |
| Name of subsidiary | Principal business location | Registration place | Business nature | Proportion of shareholding | Acquisition mode | |
| Direct | Indirect | |||||
| Changyu (Shanghai) International Digital Marketing Center Co., Ltd. ("Digital Marketing") | Shanghai, China | Shanghai, China | Sales | 100% | Acquired by establishment or investment | |
| Tianjin Changyu Yixin Digital Technology Co., Ltd. (“Tianjin Yixin”) (a) | Tianjin, China | Tianjin, China | Sales | 51% | Acquired by establishment or investment | |
| Shanghai Changyu Guoqu Digital Technology Co., Ltd. (“Shanghai Guoqu”) (a) | Shanghai, China | Shanghai, China | Sales | 51% | Acquired by establishment or investment | |
| Yantai Christon Catering Co., Ltd. (“Christon Catering”) (a) | Yantai, Shandong, China | Yantai, Shandong, China | Catering | 100% | Acquired by establishment or investment | |
(a) Companies above were newly established in 2021.Explanation for difference between the proportion of shareholding and proportion of votingpower in the subsidiaries:
(b) Chateau Changyu is a Sino-foreign joint venture established by the Group and a foreigninvestor, accounting for 70% of Changyu Chateau’s equity interest. Through agreementarrangement, the Group has the full power to control Changyu Chateau’s strategic operating,investing and financing policies. The agreement arrangement will be terminated on December31, 2022.
(c) AFIP is a limited liability company jointly established by the Group and Yantai De’an andBeijing Qinglang. In June 2019, Yantai Dean transferred 1.31% of its equity to YantaiChangyu.After the equity change, the Group holds 91.53% of its equity. Through agreementarrangement, the Group has the full power to control AFIP’s strategic operating, investing andfinancing policies. The agreement arrangement will be terminated on September 2, 2024.
(d) Icewine Valley is a Sino-foreign joint venture established by the Group and a foreigninvestor, whose 51% of the shares are held by the Group. The Group exercises full controlover the operation, investment and financing policies of Icewine Valley by contractarrangement. The contract arrangement will expire on December 31, 2021.
(e) The Research, Development & Manufacture Company is a joint venture established by theGroup and Agricultural Development Fund, whose 85.32% of the shares were held by theGroup on June 30, 2021. As stated in Note 7.29, the Group exercises full control over theoperation, investment and financing policies of the Research, Development & ManufactureCompany by contract arrangement. The contract arrangement will expire on May 22, 2026.Up to June 30, 2021, the remaining investment of the Agricultural Development Fundaccounted for 14.68% of the registered capital.
9.1.2 Important non-wholly-owned subsidiaries
Unit: Yuan
| Name of subsidiary | Shareholding proportion of minority shareholders | Profit/loss attributable to minority shareholders in this period | Other comprehensive income attributable to minority shareholders in this period | Dividend declared to be distributed to minority shareholders in this period | Balance of minority shareholder’s interest at the end of period |
| Xinjiang Tianzhu | 40% | -638,269 | 45,479,831 | ||
| AFIP | 8.47% | 56,409,393 | |||
| Icewine Valley | 49% | 33,319,062 | |||
| Indomita Wine | 15% | 364,412 | -2,566,658 | 53,807,100 |
Explanation for difference between the proportion of shareholding and proportion of votingpower of the minority shareholders in the subsidiaries: See details in Note 9.1.1.
9.1.3 Main financial information of important non-wholly-owned subsidiaries
Unit: Yuan
| Name of subsidiary | Ending balance | Beginning balance | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Xinjiang Tianzhu | 23,275,992 | 44,658,909 | 67,934,901 | -175,687 | 5,336,115 | 5,160,428 | 24,223,370 | 45,465,308 | 69,688,678 | -17,583 | 5,336,115 | 5,318,532 |
| AFIP | 253,132,832 | 423,282,099 | 676,414,931 | 36,226,455 | 3,518,784 | 39,745,239 | 248,357,550 | 434,045,076 | 682,402,626 | 41,910,462 | 41,910,462 | |
| Icewine Valley | 42,114,240 | 23,277,409 | 65,391,649 | 28,328,190 | 28,328,190 | 27,638,263 | 24,246,983 | 51,885,246 | 9,967,686 | 9,967,686 | ||
| Indomita Wine | 205,193,993 | 316,329,347 | 521,523,340 | 145,456,750 | 9,794,949 | 155,251,699 | 231,503,343 | 291,345,642 | 522,848,985 | 132,100,755 | 9,794,949 | 141,895,704 |
Unit: Yuan
| Name of subsidiary | Amount incurred in this period | Amount incurred in prior period | ||||||
| Operating income | Net profit | Total comprehensive income | Operating cash flow | Operating income | Net profit | Total comprehensive income | Operating cash flow | |
| Xinjiang Tianzhu | 18,349 | -1,595,672 | -1,595,672 | -347,811 | -3,171,133 | -3,171,133 | -756,855 | |
| AFIP | 102,787,989 | 2,945,093 | 2,945,093 | 13,822,216 | 50,688,043 | -2,919,024 | -2,919,024 | -1,954,062 |
| Icewine Valley | 9,007,185 | -4,854,101 | -4,854,101 | 2,755,011 | 7,365,586 | -4,410,928 | -4,410,928 | 733,935 |
| Indomita Wine | 91,401,584 | 2,429,411 | -14,681,641 | 13,380,180 | 78,507,227 | 3,664,211 | -3,634,807 | 29,108,449 |
9.2 Equity in joint ventures or associates
Summary financial information of unimportant joint ventures and associates
Unit: Yuan
| Ending balance/ amount incurred in this period | Beginning balance / amount incurred in prior period | |
| Joint ventures | -- | -- |
| Total book value of investment | 40,893,992 | 42,019,654 |
| Total of the following items calculated according to the shareholding ratio | -- | -- |
| -- Net profit | -1,125,662 | -1,961,476 |
| -- Other comprehensive income | ||
| -- Total comprehensive income | -1,125,662 | -1,961,476 |
| Associates: | -- | -- |
| Total book value of investment | 6,265,735 | 6,243,853 |
| Total of the following items calculated according to the shareholding ratio | -- | -- |
| -- Net profit | -496,118 | -256,147 |
| -- Other comprehensive income | ||
| -- Total comprehensive income | -496,118 | -256,147 |
10. Risks 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, policies andprocesses 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 risk
management 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.
10.1 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 financial instrumentsentered into for hedging purposes. Exposure to these credit risks are monitored bymanagement 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 June 30, 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 the relevantoperating unit, the Group does not offer credit terms without the specific approval of theDepartment of Credit Control in the Group. In addition, the Group reviews the recoverableamount of each individual trade debt at each balance sheet date to ensure that adequateimpairment losses are made for irrecoverable amounts. In this regard, the management of theGroup considers that the Group's credit risk is significantly reduced.
Since the Group trades only with recognised and creditworthy third parties, there is norequirement for collateral. Concentrations of credit risk are managed bycustomer/counterparty, by geographical region and by industry sector. As at June 30, 2021,
17.9% of the Group trade receivables are due from top five customers (December 31, 2020:
20.3%). There is no collateral or other credit enhancement on the balance of the tradereceivables of the Group.
10.2 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 Group 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 to approvalby the Group’s board when the borrowings exceed certain predetermined levels). The Group’spolicy is to regularly monitor its liquidity requirements and its compliance with lendingcovenants, to ensure that it maintains sufficient reserves of cash, readily realisable marketablesecurities and adequate committed lines of funding from major financial institutions to meetits liquidity requirements in the short and longer term.
10.3 Interest rate risk
Interest-bearing financial instruments at variable rates and at fixed rates expose the Group tocash flow interest rate risk and fair value interest risk, respectively. The Group determines theappropriate weightings of the fixed and floating rate interest-bearing instruments based on thecurrent market conditions and performs regular reviews and monitoring to achieve anappropriate mix of fixed and floating rate exposure.
(1) As at June 30, 2021, the Group held the following interest-bearing financial instruments:
Fixed rate instruments:
Unit: Yuan
| Item | June 30, 2021 | December 31, 2020 | ||
| Effective interest rate | Amounts | Effective interest rate | Amounts | |
| Financial assets | ||||
| - Cash at bank | 1.5%-2.25% | 73,553,062 | 1.5% - 2.75% | 93,553,062 |
| Financial liabilities | ||||
| - Short-term loans | 0.35%-1.38% | -166,361,680 | 0.35% - 3.28% | -139,090,715 |
| - Long-term loans (including the portion due within one year) | 0.95%-3.28% | -219,759,687 | 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 |
| Total | -398,568,305 | -433,952,511 | ||
Variable rate instruments:
Unit: Yuan
| Item | June 30, 2021 | December 31, 2020 | ||
| Effective interest rate | Amounts | Effective interest rate | Amounts | |
| Financial assets | ||||
| - Cash at bank | 0.3%-1.75% | 1,440,145,113 | 0.3% - 1.0% | 1,100,642,230 |
| Financial liabilities | ||||
| Item | June 30, 2021 | December 31, 2020 | ||
| Effective interest rate | Amounts | Effective interest rate | Amounts | |
| - Short-term loans | 1-year LPR | -550,000,000 | 1-year LPR | -550,000,000 |
| - Long-term loans (including the portion due within one year) | 90% of 5-year LPR | -76,983,600 | 90% of 5-year LPR | -31,250,000 |
| Total | 813,161,513 | 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 June 30, 2021, based on assumptions above, it is estimated that a general increase of 50basis points in interest rates, with all other variables held constant, would decrease theGroup’s equity by RMB 2,351,189 Yuan (2020: RMB 2,179,688 Yuan), and net profit byRMB 2,351,189 Yuan (2020: RMB 2,179,688 Yuan).
The sensitivity analysis above indicates the instantaneous change in the net profit and equitythat would arise assuming that the change in interest rates had occurred at the balance sheetdate and had been applied to re-measure those financial instruments held by the Group whichexpose the Group to fair value interest rate risk at the balance sheet date. In respect of theexposure to cash flow interest rate risk arising from floating rate non-derivative instrumentsheld by the Group at the balance sheet date, the impact on the net profit and equity isestimated as an annualised impact on interest expense or income of such a change in interestrates.
10.4 Foreign currency risk
In respect of cash at bank and on hand, accounts receivable and payable, short-term loans denominatedin foreign currencies other than the functional currency, the Group ensures that its net exposure is keptto an acceptable level by buying or selling foreign currencies at spot rates when necessary to addressshort-term imbalances.
(1) As at June 30, 2021, the Group’s exposure to currency risk arising from recognised assets orliabilities denominated in foreign currencies is presented in the following tables. For presentationpurposes, the amounts of the exposure are shown in Renminbi, translated using the spot rate at thebalance sheet date. Differences resulting from the translation of the financial statementsdenominated in foreign currency are excluded.
Unit: Yuan
| Item | June 30, 2020 | December 31, 2019 | ||
| Balance at foreign currency | Balance at RMB equivalent | Balance at foreign currency | Balance at RMB equivalent | |
| Monetary capital | 22,907,583 | 14,053,435 | ||
| - USD | 2,782,429 | 17,974,767 | 1,492,923 | 9,744,604 |
| - EUR | 641,776 | 4,932,816 | 536,926 | 4,308,831 |
| Accounts receivable | 42,053,884 | |||
| - USD | 4,881,079 | 31,532,258 | ||
| - EUR | 854,020 | 6,564,169 | ||
| - CAD | 42,789 | 222,918 | ||
| - GBP | 417,687 | 3,734,539 | ||
| Short-term borrowings | 100,874,462 | 81,524,728 | ||
| - USD | 15,615,000 | 100,874,462 | 12,490,000 | 81,524,728 |
(2) Sensitivity analysis
Assuming all other risk variables remained constant, a 5% strengthening of the Renminbiagainst the US dollar and Euro at June 30, 2021 would have impact on the Group’s equity andnet profit by the amount shown below, whose effect is in Renminbi and translated using thespot rate at the year-end date:
Unit: Yuan
| Item | Equity | Net profit |
| June 30, 2021 | ||
| USD | 4,144,985 | 4,144,985 |
| EUR | -246,641 | -246,641 |
| CAD | -11,146 | -11,146 |
| GBP | -186,727 | -186,727 |
| Total | 1,795,650 | 1,795,650 |
| December 31, 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 June 30, 2021would have had the equal but opposite effect to the amounts shown above, on the basis that allother variables remained constant.
11. Fair value disclosure
All financial assets and financial liabilities held by the Group are carried at amounts notmaterially different from their fair value at June 30, 2021.
12. Related parties and related transactions
12.1 Particulars of the parent company of the Company
| Name of parent company | Registration place | Business nature | Registered capital | Proportion of shareholding of the parent company in the Company | Proportion of voting powers of the parent company in the Company |
| Changyu Group | Yantai City | Manufacturing industry | 50,000,000 | 50.40% | 50.40% |
From January to June 2021, there was no fluctuation in the registered capital of the parentcompany and its share in equity interest and voting right.
12.2 Particulars of the subsidiaries of the Company
See particulars of the subsidiaries of the Company in Note 9.
12.3 Information about joint ventures and associates of the CompanyOther joint ventures and associates that have related party transactions with the Group duringthis period or that formed balance when having related party transactions with the Groupduring the prior period are as follows:
| Name of entity | Relationship with the Company |
| L&M Holdings | Joint venture of the Group |
| Weimeisi Shanghai | Joint venture of the Group |
| Chengdu Yufeng | Joint venture of the Group |
12.4 Particulars of other related parties
| Name of other related parties | Relationship between other related parties and the Company |
| Yantai God Horse Packing Co., Ltd. (“God Horse Packing”) | A company controlled by the same parent company |
| Yantai Zhongya Medical Health Wine Co., Ltd. (“Zhongya Medical”) | A company controlled by the same parent company |
| Mirefleurs | Subsidiaries of the joint venture |
| CHATEAU DE LIVERSAN (“LIVERSAN”） | Subsidiaries of the joint venture |
12.5 Related transactions
12.5.1 Related transactions of purchasing and selling goods and providing and receivingservices
List of purchasing goods/receiving services
Unit: Yuan
| Related parties | Related transactions | Amount incurred in this period | Amount incurred in prior period |
| God Horse Packing | Purchasing goods | 35,161,524 | 35,624,517 |
| Zhongya Medical | Purchasing goods | 164,039 | 574,791 |
| Weimeisi Shanghai | Purchasing goods | 90,265 |
List of selling goods/providing services
Unit: Yuan
| Related parties | Related transactions | Amount incurred in this period | Amount incurred in prior period |
| Zhongya Medical | Selling goods | 1,456,492 | 1,349,021 |
| God Horse Packing | Selling goods | 6,538 | 1,915 |
| Chengdu Yufeng | Selling goods | 1,639,925 |
The price of transactions between the Group and the related parties are based on thenegotiated price.
12.5.2 Related trusteeship/contracting and mandatory administration/outsourcingNil
12.5.3 Leasing with related parties
The Group as a lessor:
Unit: Yuan
| Name of the lessee | Type of leased assets | Rental income recognized in this period | Rental income recognized in prior period |
| God Horse Packing | Office building and plant | 774,705 | 746,275 |
| Zhongya Medical | Office building | 271,428 |
The Group as a lessee:
Unit: Yuan
| Name of the lessor | Type of leased assets | Rent recognized in this period | Rent recognized in prior period |
| Changyu Group | Office building and plant | 7,254,692 | 3,595,583 |
12.5.4 Related guarantee
Nil
12.5.5 Inter-bank borrowing and lending of related parties
Nil
12.5.6 Asset transfer and debt recombination of related parties
Nil
12.5.7 Other related transactions
Unit: Yuan
| Related party | Item | Amount incurred in this period | Amount incurred in prior period |
| Changyu Group | Trademark use fee | 11,313,578 | 8,977,248 |
The price of transactions between the Group and the related parties are based on thenegotiated price.
12.6 Accounts receivable and payable of the related parties
12.6.1 Accounts receivable
Unit: Yuan
| Item | Related parties | Ending balance | Beginning balance | ||
| Book balance | Provision for bad debts | Book balance | Provision for bad debts | ||
| Accounts receivable | Zhongya Medical | 399,844 | 2,526 | 714,995 | 3,175 |
| Accounts receivable | Wei Meisi Shanghai | 1,553,316 | 6,898 | ||
| Advance payment | God Horse Packing | 126,818 | |||
| Other receivables | Changyu Group | 2,929,000 | |||
| Other receivables | Zhongya Medical | 285,000 | 522,936 | ||
| Other non-current assets | Changyu Group | 158,377,754 | 170,370,147 | ||
12.6.2 Accounts payable
Unit: Yuan
| Item | Related parties | Ending book balance | Beginning book balance |
| Accounts payable | God Horse Packing | 18,870,829 | 33,421,165 |
| Accounts payable | Zhongya Medical | 15,684 | 455,176 |
| Accounts payable | Changyu Group | 19,434,600 | 19,434,600 |
| Accounts payable | Weimeisi Shanghai | 101,800 | |
| Liabilities of contracts | Chengdu Yufeng | 611,004 | |
| Other accounts payable | God Horse Packing | 450,000 | |
| Liabilities of lease | Changyu Group | 36,360,128 |
13. Share-based payment
Nil
14. Commitment and contingency
14.1 Significant commitment
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Making long-term asset commitments | 169,379,500 | 249,379,500 |
14.2 Contingency
As of the balance sheet date, the Group didn’t have any contingency to be disclosed.
15. Matters after balance sheet
15.1 Important non-adjusting events
Nil
15.2 Profit distribution
Unit: Yuan
| Profits or dividends to be distributed | 274,185,600 |
| Allocated profits or dividends approved to declare upon discussion | 274,185,600 |
15.3 Other statement of events after the balance sheet date
According to the decision of the Shareholders’ Meeting dated May 27, 2021, based on theissued capital stock of 685,464,000 shares in 2020, the Group allocated RMB 4 Yuan in cash(including tax) for every 10 shares to all shareholders with the total cash dividends of RMB274,185,600 Yuan. Such cash dividends were distributed on July 13, 2021 and July 15, 2021respectively.
16. Other important matters
Nil
17. Notes on major items in financial statements of the parent company
17.1 Accounts receivable
17.1.1 Accounts receivable disclosed by type
Unit: Yuan
| Type | Ending balance | Beginning balance | ||||||||
| Book balance | Provision for bad debts | Book value | Book balance | Provision for bad debts | Book value | |||||
| Amount | Proportion | Amount | Accrued proportion | Amount | Proportion | Amount | Accrued proportion | |||
| Accounts receivable for which provision for bad debts is accrued on a single item basis | ||||||||||
| Accounts receivable for bad debts is accrued on a combined basis | 70,248 | 100% | 443 | 0.63% | 69,805 | |||||
| Total | 70,248 | 100% | 443 | 0.63% | 69,805 | |||||
Provision for bad debts accrued on a combined basis:
Unit: Yuan
| Name | Ending balance | ||
| Book balance | Provision for bad debts | Accrued proportion | |
| Amounts due from related parties | 70,248 | 443 | 0.63% |
| Total | 70,248 | 443 | -- |
Disclosed by age:
Unit: Yuan
| Age | Ending balance |
| Within 1 year (including 1 year) | 70,248 |
| 1-2 years | |
| 2-3 years | |
| Over 3 years | |
| Total | 70,248 |
17.1.2 Provision for bad debts accrued, withdrawn or transferred back in this period
Unit: Yuan
| Type | Beginning balance | Changes in this period | Ending balance | ||
| Accrued | Withdrawn or transferred back | Cancelled | |||
| Accounts receivable for which provision for bad debts is accrued by credit risk features | 443 | 443 | |||
| Total | 443 | 443 | |||
17.1.3 Accounts receivable actually cancelled after verification in this periodNil
17.1.4 Accounts receivable collected by the borrower of top 5 units ranked by the endingbalance
Unit: Yuan
| Unit name | Ending balance of accounts receivable | Proportion in total ending balance of accounts receivable | Ending balance of bad debt reserves |
| Zhongya Medicine and Health Care Wine Company | 70,248 | 100% | 443 |
| Total | 70,248 | 100% |
17.1.5 Accounts receivable derecognized due to transfer of financial assetsNil
17.1.6 Accounts receivable transferred and included in assets and liabilitiesNil
17.2 Other receivables
Unit: Yuan
| Item | Ending balance | Beginning balance |
| Interest receivable | ||
| Dividends receivable | 200,000,000 | |
| Other receivables | 271,659,240 | 380,131,798 |
| Total | 271,659,240 | 580,131,798 |
17.2.1 Dividends receivable
Unit: Yuan
| Item (or the invested unit) | Ending balance | Beginning balance |
| Dividends receivable from subsidiaries | 200,000,000 | |
| Total | 200,000,000 |
17.2.2 Other receivables
17.2.2.1 Particulars of other receivables classified by nature
Unit: Yuan
| Nature | Ending book balance | Beginning book balance |
| Accounts receivable from subsidiaries | 270,047,970 | 379,375,427 |
| Accounts receivable from related parties | 1,017,250 | 522,936 |
| Other | 594,020 | 233,435 |
| Total | 271,659,240 | 380,131,798 |
17.2.2.2 Disclosed by age
Unit: Yuan
| Age | Ending balance |
| Within 1 year (including 1 year) | 271,639,240 |
| 1-2 years | |
| 2-3 years | |
| More than 3 years | 20,000 |
| Total | 271,659,240 |
17.2.2.3 Provision for bad debts accrued, withdrawn or transferred back in this periodThe provision for bad debts accrued in this period was RMB 0 Yuan.
17.2.2.4Accounts receivable actually cancelled after verification in this periodNil
17.2.2.5 Other accounts receivable collected by the borrower of top 5 units ranked by theending balance
Unit: Yuan
| Unit | Nature of fund | Ending balance | Age | Percentage in the total ending balance of other accounts receivable | Ending balance of provision for bad debts |
| Sales combination | Internal incomings and outgoings | 229,035,379 | Within 1 year | 84.30% | |
| R&D combination | Internal incomings and outgoings | 17,933,959 | Within 1 year | 6.60% | |
| Wine Sales | Internal incomings and outgoings | 9,954,634 | Within 1 year | 3.70% | |
| Digital Marketing | Internal incomings and outgoings | 6,649,870 | Within 1 year | 2.40% | |
| Laizhou Sales | Internal incomings and outgoings | 895,993 | Within 1 year | 0.30% | |
| Total | -- | 264,469,835 | -- | 97.3% |
17.2.2.6 Accounts receivable related to governmental subsidy
Nil
17.2.2.7 Other accounts receivable derecognized due to transfer of financial assetsNil
17.2.2.8 Other accounts receivable transferred and included in assets and liabilitiesNil
17.3 Long-term equity investment
Unit: Yuan
| Item | Ending balance | Beginning balance | ||||
| Book balance | Impairment reserve | Book value | Book balance | Impairment reserve | Book value | |
| Investment in subsidiaries | 7,593,535,027 | 7,593,535,027 | 7,593,535,027 | 7,593,535,027 | ||
| Investment in associated enterprises and joint ventures | 5,766,091 | 5,766,091 | 6,243,853 | 6,243,853 | ||
| Total | 7,599,301,118 | 7,599,301,118 | 7,599,778,880 | 7,599,778,880 | ||
17.3.1 Investment in subsidiaries
Unit: Yuan
| Invested unit | Beginning balance (book value) | Increase and decrease in this period | Ending balance (book value) | Ending balance of provision for impairment | |||
| Increase in investment | Decrease in investment | Provision for impairment accrued | Others | ||||
| Xinjiang Tianzhu | 60,000,000 | 60,000,000 | |||||
| Kylin Packaging | 23,176,063 | 23,176,063 | |||||
| Changyu Chateau | 28,968,100 | 28,968,100 | |||||
| Pioneer International | 3,500,000 | 3,500,000 | |||||
| Ningxia Growing | 36,573,247 | 36,573,247 | |||||
| National Wine | 2,000,000 | 2,000,000 | |||||
| Icewine Valley | 30,440,500 | 30,440,500 | |||||
| AFIP | 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 Marketing | 850,000 | 850,000 | |||||
| Invested unit | Beginning balance (book value) | Increase and decrease in this period | Ending balance (book value) | Ending balance of provision for impairment | |||
| Increase in investment | Decrease in investment | Provision for impairment accrued | Others | ||||
| Jingyang Sales | 100,000 | 100,000 | |||||
| Jingyang Wine | 900,000 | 900,000 | |||||
| Ningxia Wine | 222,309,388 | 222,309,388 | |||||
| Ningxia Chateau | 453,463,500 | 453,463,500 | |||||
| Chateau Tinlot | 212,039,586 | 212,039,586 | |||||
| Shihezi Chateau | 812,019,770 | 812,019,770 | |||||
| Chang’an Chateau | 803,892,258 | 803,892,258 | |||||
| R&D Company | 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 | |||||
| Marques del Atrio | 233,142,269 | 233,142,269 | |||||
| Indomita Wine | 274,248,114 | 274,248,114 | |||||
| Kilikanoon Estate, Australia | 129,275,639 | 129,275,639 | |||||
| Digital Marketing | 1,000,000 | 1,000,000 | |||||
| Changyu Cultural Tourism Company | 92,479,570 | 92,479,570 | |||||
| Total | 7,593,535,027 | 7,593,535,027 | |||||
17.3.2 Investment in associates
Unit: Yuan
| Invested unit | Beginning balance (book value) | Increase and decrease in this period | Ending balance (book value) | Ending balance of provision for impairment | |||||||
| Increase in investment | Decrease in investment | Investment gains and losses recognized under the equity method | Other comprehensive income adjustment | Other changes in equity | Declared cash dividend or profit | Provision for impairment accrued | Others | ||||
| Weimeisi Shanghai | 2,743,890 | 2,193 | 2,746,083 | ||||||||
| Yantai Santai Real Estate Development Co., Ltd. | 3,499,963 | -479,955 | 3,020,008 | ||||||||
| Total | 6,243,853 | -477,762 | 5,766,091 | ||||||||
17.4 Operating income and operating cost
Unit: Yuan
| Item | Amount incurred in this period | Amount incurred in prior period | ||
| Income | Cost | Income | Cost | |
| Main business | 189,490,544 | 153,868,830 | 132,995,774 | 125,288,367 |
| Other business | 16,810,022 | 15,143,341 | 19,954,741 | 17,952,827 |
| Total | 206,300,566 | 169,012,171 | 152,950,515 | 143,241,194 |
17.4.1 Details of operating income
Unit: Yuan
| Item | Amount incurred in this period | |
| Income | Cost | |
| Main business | 189,490,544 | 153,868,830 |
| Other business | 16,810,022 | 15,143,341 |
| Total | 206,300,566 | 169,012,171 |
| Including: Income from contracts | 205,254,433 | 168,378,524 |
| Income from house rents | 1,046,133 | 633,647 |
17.4.2 Situation of income from contracts
Unit: Yuan
| Contract classification | Amount incurred in this period |
| Type of merchandise | |
| - Alcoholic beverage | 189,490,544 |
| - Others | 15,763,889 |
| Classified by the time of merchandise transfer | |
| - Revenue recognized at a point in time | 205,254,433 |
17.5 Investment income
Unit: Yuan
| Item | Amount incurred in this period | Amount incurred in prior period |
| Income from long-term equity investment by cost method | 495,005,832 | 87,474,604 |
| Income from long-term equity investment by equity method | -477,762 | |
| Investment income from disposal of long-term equity investment | ||
| Investment income of the financial assets measured at their fair values and the variation of which is recorded into the current profits and losses during the holding period |
| Item | Amount incurred in this period | Amount incurred in prior period |
| Investment income gained from disposal of the financial assets measured at their fair values and the variation of which is recorded into the current profits and losses | ||
| Investment income of held-to-maturity investment during the holding period | ||
| Investment income of financial assets held for sale during the holding period | ||
| Investment income gained from disposal of financial assets held for sale | ||
| Gains generated from the remaining equity remeasured as per fair value after the loss of control | ||
| Total | 494,528,070 | 87,474,604 |
18. Supplementary materials
18.1 List of non-current profits/losses in this period
Unit: Yuan
| Item | Amount | Remark |
| Profits/losses on disposal of non-current assets | ||
| Tax return, deduction and exemption approved beyond the authority or without formal approval document |
| 21,978,695 | ||
| Payment for use of funds by non-financial enterprises included in the current profits/losses | ||
| Income obtained when the investment cost obtained by the enterprise from subsidiaries, joint-run business and joint venture is less than the fair value of the net identifiable assets obtained from the invested units when the investment is made | ||
| Profits/losses on exchange of non-monetary assets | ||
| Profits/losses on entrusting other people to make investment or manage assets | ||
| Asset impairment provision accrued due to force majeure such as natural disaster | ||
| Profits/losses on debt restructuring | ||
| Enterprise reorganization expenses such as staffing expenditure and integration expenses, etc. | ||
| Profits/losses on those beyond the fair value generated from transactions with unfair transaction price | ||
| Current net profits/losses on subsidiaries acquired from a business combination under common control from the beginning to the consolidation date | ||
| Profits/losses on contingencies irrelated to the normal business of the Company | ||
| Profits/losses on changes of fair value of tradable financial assets, derivative financial assets, tradable financial liabilities and derivative financial liabilities, and investment income from disposal of tradable financial assets, |
| Item | Amount | Remark |
| derivative financial assets, tradable financial liabilities, derivative financial liabilities and other investment in creditor's rights, excluding effective hedging operations relevant to the normal business of the Company | ||
| Transfer-back of accounts receivable with single impairment test and provision for impairment of contract assets | ||
| Profits/losses on external entrusted loans | ||
| Profits/losses on fair value changes of investment real estate with fair value mode for follow-up measurement | ||
| Influence of the one-time adjustment of the current profits/losses in accordance with tax and accounting laws and regulations on the current profits/losses | ||
| Trustee fee income from entrusted operation | ||
| Other non-operating income and expenditure besides the above items | 1,919,057 | |
| Other profits/losses conforming to the definition of non-current profits/losses | ||
| Minus: Influenced amount of income tax | 5,737,342 | |
| Influenced amount of minority shareholders’ equity | 14,633 | |
| Total | 18,145,777 | -- |
18.2 Return on net assets and earnings per share
| Profit incurred in this period | Weighted average return on net assets | Earnings per share | |
| Basic EPS (Yuan/Share) | Diluted EPS (Yuan/Share) | ||
| Net profit attributable to common shareholders of the Company | 3.57% | 0.54 | 0.54 |
| Net profit attributable to common shareholders of the Company deducting non-incidental profits/losses | 3.40% | 0.52 | 0.52 |
18.3 Accounting data difference under domestic and foreign accounting standard
18.3.1 Net profits & net assets difference disclosed in the financial report according tothe international accounting standard and Chinese accounting standard
Unit: Yuan
| Net profits | Net assets | |||
| Amount incurred in this period | Amount incurred in prior period | Ending balance | Beginning balance | |
| In accordance with the Chinese accounting standard | 371,821,819 | 318,640,075 | 10,333,217,946 | 10,257,200,222 |
| Item & amount adjusted in accordance with the international accounting standard: | ||||
| In accordance with the international accounting standard | 371,821,819 | 318,640,075 | 10,333,217,946 | 10,257,200,222 |