读取中,请稍候

00-00 00:00:00
--.--
0.00 (0.000%)
昨收盘:0.000今开盘:0.000最高价:0.000最低价:0.000
成交额:0成交量:0买入价:0.000卖出价:0.000
市盈率:0.000收益率:0.00052周最高:0.00052周最低:0.000
张裕B:2019年年度报告(英文版) 下载公告
公告日期:2020-04-24

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report

Yantai Changyu Pioneer Wine Co., Ltd.

2019Annual Report

Final 2020-01

April 2020

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report

Contents

I、Important Notice,Contents and Definition ...... 3

II、Brief Introduction for the Company and Main Financial Indicators ...... 5

III、Summary of the Company’s Businesses ...... 10

IV、ManagementDiscussionandAnalysis ...... 14

V、Major issues ...... 37

VI、Changes in Shares and the Shareholders’ Situation ...... 55

VII、Related Situation of Preferred Shares ...... 63

VIII、Related Situation of Convertible Corporate Bonds ...... 63

IX、Situation for Directors, Supervisors, Senior Executives and Staffs ...... 64

X、Corporate Governance ...... 76

XI、Related Situation of Corporation Bonds ...... 83

XII、Financial Report ...... 84

XIII、Reference Document ...... 214

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual ReportI. Important Notice, Content and DefinitionThe board of directors,the board of Supervisors,directors, supervisors and senior executivesof the Company guarantee the truthfulness, accuracy and completeness of the contentscontained in the report with no false records, misleading statements or significant omissions,and undertake individual and joint legal liabilities.Mr. Zhou Hongjiang (Person in charge of the Company), Mr. Jiang Jianxun (Person in chargeof accounting work) and Ms. Guo Cuimei (Person in charge of accounting organ &Accountant in charge) assure the truthfulness, accuracy and completeness of the financialreport in the annual report.Except following directors, all other directors have personally attended the meeting fordeliberating the annual report.

Director name withnon-present in person

Director post withnon-present in person

non-present inperson

Name ofmandatory

Reason for
Augusto ReinaDirectorDie of illness--
Aldino MarzoratiDirectorTrip blocked due

to COVID-19

epidemicZhou Hongjiang
Enrico SivieriDirectorTrip blocked due

to COVID-19

epidemicZhou Hongjiang

About significant risks that may be faced in production and operation process, please referto“(5) Risks likely to occur” part of “9. Expectation for the Company’s Future Development”in the Chapter Four “Management Discussion and Analysis” of the report.Investors areadvised to read carefully and pay attention to investment risks.Forward-looking statements such as future plans and development strategies covered in thisreport do not constitute a substantial commitment of the Company to investors. Investors areadvised to pay attention to investment risks.The Company’s preliminary scheme of profit distribution deliberated and passed by the boardof directors this time is shown as following:Based on the Company’s total 685,464,000shares, we plan to pay CNY7(including tax) in cash as dividends for every 10 shares to allshareholders and send 0 bonus share (including tax). Capital reserve will not be transferred toequity.

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual ReportDefinition

Definition ItemRefers toDefinition Content
Company/The CompanyRefers toYantai Changyu Pioneer Wine Co., Ltd.
Changyu Group/Controlling ShareholderRefers toYantai Changyu Group Co., Ltd.
CSRCRefers toChina Securities Regulatory Commission
SSERefers toShenzhen Stock Exchange
KPMG HuazhenRefers toKPMG Huazhen LLP (Limited Liability Partnership)
CNYRefers toChinese Yuan

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report

II. Brief Introduction for the Company and Main Financial Indicators

1. Company’s information

Stock AbbreviationChangyu A, Changyu BStock Code000869, 200869
Stock Abbreviation after Alteration-
Place of Stock ListingShenzhen Stock Exchange
Legal Name in Chinese

烟台张裕葡萄酿酒股份有限公司

Abbreviation of Chinese Name

张裕

Legal Name in EnglishYANTAI CHANGYU PIONEER WINE COMPANY LIMITED
Abbreviation of English NameCHANGYU
Legal RepresentativeMr. Zhou Hongjiang
Registered Address56 Dama Road, Yantai, Shandong, China
Postal Code264000
Office Address56 Dama Road, Yantai, Shandong, China
Postal Code264000
Websitehttp://www.changyu.com.cn
E-mailwebmaster@changyu.com.cn

2. Contact person and information

Secretary to the Board of Directors Authorized Representative of Securities Affairs

NameMr. Jiang JianxunMr. Li Tingguo
Address56 Dama Road, Yantai, Shandong, China56 Dama Road, Yantai, Shandong, China
Tel.0086-535-66027610086-535-6633656
Fax.0086-535-66336390086-535-6633639
E-mailjiangjianxun@changyu.com.cnstock@changyu.com.cn

3. Information disclosure and filing location

Media name for information disclosure selected by the CompanyChina Securities Newspaper , Securities Times and Hong Kong Commercial Daily
Web Site assigned by CSRC to carry the annual report

http://www.cninfo.com.cn

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report

Filing location of the Company’s annual reportBoard of Directors’ Office of the Company,56 Dama Road, Yantai, Shandong

4. Registration changes

Organization Code913700002671000358

Changes for the main businessesof the Company since it was listed

The business scope determined by the Company when it was

established on September 18

th

sales of wine, distilled liquor, healthy liquor, fruit liquor, non-

alcohol beverage, fruit jam, packing material and winemaking machine.On

April 17

th, 2008, approved by the

Company’s business scope is chang

ed to production, processing and

sales of wine, distilled liquor, medicinal liquor, fruit liqueur

non-alcohol beverage, fruit jam, packing material,

winemaking

machines and licensed import and export. On May12

th,

approved by the 2009 shareholders’ meeting, the Company changed

its business

distilled liquor, medicinal liquor, fruit liqueur, non-

alcohol beverage,

fruit jam, packing material and its products, winemaking machine

licensed import and export and

external investment according to

national policy. On September 23

rd, 2016, approved by

annual 1

stInterim shareholders’ meeting, the Company chang

ed its

operating scope to wine and fruit wine (bulk wine, processing and

liqueur) production, other liquors (other distilled liquors

) production,

production, processing and sales of packing material and wine

making machinery,grape plantation and procurement

, tourism resources development (excluding tourism), packaging design,

activity of building rental, licensed import and export

warehouse business and

external investment according to national

policy.

No.

5. Other relevant information

The accounting firm appointed by the Company

Changes for all previouscontrolling shareholdersName

NameKPMG Huazhen LLP

Address

Level 8, No.2 East Wing of Dongfang Square, No.1 East Chang’an Street, Dongcheng District, Beijing
Name of signatory accountantsMs. Wang Ting, Ms. Chai Jing

The sponsor institution appointed by the Company to perform the duty of continuoussupervision during the report period

□Available ?Not available

The financial adviser appointed by the Company to perform the duty of continuoussupervision during the report period

□Available ?Not available

6. Key accounting data and financial indicators

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report

Whether the Company needs to retrospectively adjust or restate the accounting data ofprevious fiscal years.

□Yes ?No

2019 2018

2017

More or less than Last year (%)
Operating revenue (CNY)5,031,011,4895,142,244,740-2.16%4,932,545,229
Net profit attributed to

shareholders of the listed

1,129,735,749

company (CNY)

1,042,632,929

8.35%

1,031,695,056

Net profit attributed to

shareholders of the listedcompany after deductingnon-recurring profits and

892,075,931

losses (CNY)

965,426,238

-7.60%

986,095,872

Net cash flows from operating activities (CNY)

837,838,024

975,978,746

-14.15%

973,243,027

Basic earnings per share (CNY)

1.65

1.52

8.55%

1.51

Diluted earnings per share (CNY)

1.65

1.52

8.55%

1.51

Weighted average for

earning rate of net assets

11.30%

(CNY)

11.23%

0.07%

12.14%

December 31st,

2019

December 31st,

2018

More or less than

Last year (%)

December 31st,

2017

Total assets (CNY)

Total assets (CNY)13,647,932,56813,117,729,0524.04%12,536,755,208
Net Assets attributed to

shareholders of the listed

10,308,910,198

company (CNY)

9,606,099,365

7.32%

8,906,342,299

7. Differences in accounting data under PRC accounting standards and international

accounting standards

(1) Differences between net profits and net assets in the financial report disclosed

according to both international accounting standards and PRC accounting standards

□Available ?Not available

There are no differences between net profits and net assets in the financial report disclosedaccording to both international accounting standards and PRC accounting standards duringthe report period.

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report

(2) Differences between net profits and net assets in the financial report disclosed

according to both foreign accounting standards and PRC accounting standards

□Available ?Not available

There are no differences between net profits and net assets in the financial report disclosedaccording to both foreign accounting standards and PRC accounting standards during thereport period.

8. Key financial indicators by quarter

Unit:CNY

1st Quarter2nd Quarter3rd Quarter4th Quarter
Operating revenue1,667,424,758890,850,027968,100,1751,504,636,529
Net profit attributed to

shareholders of the

456,381,471

listed company

147,022,318

125,557,834

400,774,126

Net profit attributed to

shareholders of thelisted company afterdeducting non-

450,709,661

recurring profits and losses

101,781,034

119,702,422

219,882,814

Net cash flows from operating activities

294,678,342

204,797,664

145,855,707

192,506,311

Whether there are significant differences between the above mentioned financial indicators ortheir sum and the related financial indicators in the quarterly reports and semi-annual reportsdisclosed by the Company.

□Yes ?No

9. Item and amount of non-recurring profit and loss

?Available □Not available

Unit:CNY

Item201920182017Explanation

Profits and losses on disposal ofnon-current assets, including theprovision for asset impairment write-offpart

6,272,676

11,368,355

-222,586

Including return on investment of

CNY 6,233,661through

disposing equity of Mirefleurs
Government grants included in the

current profits and losses(except forthose recurring government grants thatare closely related to the entity'soperation, in line with related regulations

84,837,581

and have proper basis of calculation)

87,281,434

47,638,384

Other non-operating revenues and7,298,4793,817,40113,999,251

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report

Other profit and loss

expenditures in addition to the aforementioned items
projects conforming

to the definition of non-recurring profitand loss

218,649,636

Offsetting the

trademark usefee in previousyearsFor detailedinformation,please refer to

(5)(a) of X in

Financial Report
Less

Income tax effect79,367,89325,157,18815,523,424
Minority shareholders' equity effect (after taxes)

30,661

103,311

292,441

Total237,659,81877,206,69145,599,184--

The reasons shall be made clear and definitely as to the non-recurring profit and loss that theCompany has defined by virtue of the Explanatory Announcement on Public Company’sInformation Disclosure No.1 - Non-recurring Profit and Loss and as to regarding thenon-recurring profit and loss as recurrent profit and loss as specified in the ExplanatoryAnnouncement on Public Company’s Information Disclosure No.1 –Non-recurring Profit andLoss.

□Available ?Not available

There are no cases that non-recurring profit and loss is defined and specified as recurrentprofit and loss in accordance with the Explanatory Announcement on Public Company’sInformation Disclosure No.1 - Non-recurring Profit and Loss during the report period.

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual ReportIII. Summary of the Company’s Businesses

1. Main businesses during the report period

During the report period, the Company’s main businesses are production and operation of wine and brandy, thus providing domestic and foreignconsumers with healthy and fashionable alcoholic drinks. Compared with earlier stage, there are no significant changes happened to theCompany’s main businesses. The wine industry that the Company involved in is still in growth stage. Although being affected by many factorsfor the short-term, the competition in the market is fierce and the wine consumption temporarily declines. However, seen from the long term,the whole domestic wine market is on the rising trend. The Company is at the forefront in the domestic wine market.

2. Significant changes of main assets

(1) Significant changes of main assets

Main assetsExplanation of significant changes

Equity asset

Agreement with SC Garri du Gai to jointly establish joint venture company L&M Holdings, in which FrancsChamps Participations SAS used 100% equity of Societe Civile Argricole Du Chateau De Mirefleurs ascontribution of capital; determined the long-term equity investment of CNY 45.10 million, the carryingamount of long-term equity investment adjusted and reduced by CNY 1.12 million in accordance to theequity method at the end of the period and the ending balance with CNY 43.98 million.Fixed asset

During the report period, this Company’s subsidiary Francs Champs Participations SAS signed Cooperation
The fixed assets increased by 2.51% compared with the initial stage, owing to part of constructions in process

have been transferred to fixed asset during the report period.

Intangible assetThere are no significant changes of intangible asset during the report period.

Construction in process

constructions in process have been transferred to fixed asset during the report period.

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report

(2) Main overseas assets situation

?Available □Not available

Unit:CNYDetails of

assets

Formation

reasons

Assets scale Location

Operation

mode

measures forsafeguarding of

asset security

Earningcondition

overseas assets inthe Company’s

net assets

Whether there are

significantimpairment risks

Hacienda Y

VinedosMarques Del

Atrio. SL

Acquisition of

equity

561,790,770 Spain

Independent

operation

participates inmakingimportantdecisionsthrough board of

directors andappoints CFO

on financial

management.

6,463,473 1.21% No

Indomita

WineCompanyChile, S.p.A.

Establishment

of jointventure

515,352,803 Chile

Independent

operation

participates inmakingimportantdecisionsthrough board of

directors andappoints CFOon financial

management.

16,279,461 3.47% No

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report

KilikanoonEstate Pty.,

Ltd.

Acquisition of

equity

156,244,219 Australia

Independentoperation

participates inmakingimportantdecisionsthrough board of

directors.

463,409 0.79% No

FrancsChampsParticipationsSAS

Sole

establishment

229,962,968 France

Independentoperation

proprietorshipThe Company

participates inmakingimportantdecisionsthrough board of

4,117,668 2.17% No

directors.
Explanation

for othersituation

No

3. Analysis of core competitiveness

Compared with the participants in the arena of the Chinese wine sector, we believe that the Company is with the following advantages:

Firstly, the Company has been enjoying a well-known wine brand since 120-odd years. “Changyu”, “Noble Dragon” and “AFIP” are all Chinafamous brand that have strong influence and good reputation.Secondly, the Company has set up a nationwide marketing network, formed a “three-level” marketing network system mainly composed of theCompany’s salesmen and dealers, with strong marketing ability and market exploitation ability.

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual ReportThirdly, the Company has strong scientific prowess and a product R&D system. Relying on the country’s only “State-level Wine R&D Center”,the Company has mastered advanced winemaking technology and production processes as well as been powerful enough in product innovationand perfect quality control system.Fourthly, the Company is in possession of a lot of grape-growing bases that are compatible with its development requirements. The Companyhas developed a great deal of vineyards in the most suitable areas for wine grape growing such as Shandong, Ningxia, Xinjiang, Liaoning, Hebeiand Shanxi, whose scale and structure have generally met the Company’s needs for development.Fifthly, products in high, medium and low-grade as well as varieties and categories are all complete. Over 100 varieties of series products suchas wine, brandy and sparkling wine covers various grades, including high, medium and low-grade, which can meet different consumer groups’demands. The Company has taken the dominant status in the domestic wine industry through rapid development in the past 10-odd yearand hascomparative advantages in the future competition.Sixthly, the Company has a relatively perfect motivation system. Most of Company’s employees indirectly hold the Company’s equity throughcontrolling shareholders. There are high consistency between employee benefits and shareholders benefits, in favor of motivating employees tocreate value for shareholders.Seventhly, the Company has set up flexible and efficient decision-making mechanism. The Company’s core management team always maintainsa working style of unity and pragmatic and flexible and efficient decision-making mechanism, which makes the Company can deal with marketchanges more calmly.Eighthly, the global production capacity layout has been basically completed. The Company has completed production capacity layout in China,France, Chile, Spain, Australia and other major wine producing countries in the world, enabling making better use of global high-quality rawmaterial resources, capital, talents and advanced production processes and technologies to provide consumers with diversified quality productsand better serve consumers.Based on the above reasons, the Company has formed relatively strong core competence and will maintain a relatively dominant position in thefuture predictable market competition.

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual ReportIV. Management Discussion and Analysis

1. Summarization

In 2019, influenced by many factors, such as the slowdown of domestic economic growth andthe increase in uncertainty resulting from Sino-US trade friction, the competition in domesticwine market was very strong. The sales volumes of both imported wine and domestic winedecreased and some wine production enterprises got into trouble.Facing quite a lot of externaldisadvantages, the Company persisted in taking the market as the center, adhered to thedevelopment strategy of “Focus on middle-and-high level, Focus on high quality, Focus onbig product” and the marketing philosophy of “obtaining growth from the terminal andnurturing consumers”, and strived to promote product sales, achieving good results andrealizing operating revenue of CNY5,031.01million with a year-on-year decrease of

2.16%and net profit of CNY1,129.74million belonging to the parent company’s shareholders

with a year-on-year increase of8.35%.

2. Analysis of main business

(1) Summarization

Description

the end of the period

over the end of last year

Cause of significant changes

-

Operating revenue2.16%Mainly because of decrease in sales volume
Operating cost-0.74%Mainly because of decline in wine sales

-

Sales expense17.37%Mainly because of return of trademark use

fee during this report period

-

Management expense9.22%Mainly because of year-on-year decrease

in wage & welfare and depreciation

expensesR&D

expense

R&D26.27%Mainly because of increase in expenses

for technology research and development

in 2019
Financial expense

-

1.82%Mainly because of decrease in loan interest expenditure

-14.15

Net amount of cash flow generated in operating activities%Mainly because of decrease in received

cash from product sales and rendering of

serviceNet amount of cashflow generated ininvestment activities

-59.0

Net amount of cash flow generated in investment activities1%

Mainly because of decrease in paid cashfor investment activities

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report

-raising

activities9.06%

Mainly because of decrease in

from capital-raising activitiesReview and summary of the process of the Company’s early-disclosed development strategyand business plan during the report periodDuring the report period, the Company realized the operating revenue ofCNY5,031.01millionwithandecrease of 2.16% compared with last year, slightly lower thanthe target fixed at the beginning of the year of realizing operating revenue no less than CNY

5.3 billion. The net profit of CNY 1,129.74 million belonging to the parent company’s

shareholders was realized with an increase of 8.35% compared with last year. The mainworks during the report period were shown as followed:

Firstly, the Company adjusted the sales structure and rationalized the marketing system,further promoting the market strategy. During the report period, the Company strengthenedthe sales structure led by alcohol product variety and streamlined the marketing system forvarious alcohol products such as wine, brandy and imported wine etc., making sales teambecome more focused and further clarifying the responsibilities, rights and benefits. Therelationship between parent brand Changyu and its subsidiary brands were rationalized. TheCompany first proposed and implemented“Brand Manager System”, highlighted the keypoints according to different brand positioning, studied different target consumer groups in atargeted manner and let dedicated people do professional things so that the branddevelopment planning became clearer. Each variety of alcohol products focused according torespective brand development trend and clarified corresponding power point. To brandy, theCompany actively changed its market positioning, strived to learn promotion experience ofhigh-end Chinese liquor in order to cut the “cake” of liquor market; to wine, the Companystudied the market strategy with the bench marking of international competitive productsbased on the characteristics of different wineries. To imported wine, the Company selectedthe best from imported wines and paid special attention to Chilean Indomita and AustralianKilikanoon. Through the “jointly building a fee pool with distributors”, an exclusive team ofChangyu under each backbone distributor system was built to ensure the properimplementation of “obtaining growth from the terminal and nurturing consumers”.Secondly, the Company insisted on product innovation, strengthened brand building andcontinuously expanded market influence. During the report period, the Company adhered tothe general principle of “not stunning, not listed” for new products and successively launcheda series of new products including new Rena Chateau, new Castel, Shartar five-star brandy,Pagese, Mminni, Long Tailed Cat, Vini Panda and limited-edition Noble Dragon and so on.These new products were well received by the market and recognized by consumers, makingthe domestic and foreign influence of “Changyu” brand increase steadily. The data from L.W.Institute of Xinhua News Agency showed that “The global brand awareness of Changyu is

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report

equivalent to Lafite”. Based on the annual global wine brand influence index issued by WineIntelligence, a British wine research agency, “Changyu” ranked first in the Chinese market.Thirdly, The Company implemented precision marketing by virtue of digital technology toimprove operating efficiency. During the report period, the Company further implementedthe order-driven approach and fully realized online coding for chateau wines, Noble Dragon,and ordinary wines, basically achieving order driving of products.The identificationmanagement work “one bottle, one code” was put in place, and the anti-counterfeiting workfor high-end products is continued being promoted.The Company gradually completed thetransformation of marketing code, deeply investigated the distributor identificationmanagement and product traceability, and preliminarily made the planning of productanti-counterfeiting trackability and marketing promotion system integrating logistics code,anti-channeling code and marketing code into one code, which further strengthened the linkcontrol. The Company implemented a “comprehensive digital transformation” strategy todrive sales orders online and offline. The Company collaborated with online Tmall, JD andSuning and other digital platforms while cooperating with offline distributors to promoteAPP ordering.The Company formed strategic partnership with Tencent, JD, Tmall andSuning etc., and utilized digital means to gradually achieve “more precise user positioning,more sophisticated marketing promotion, and more efficient customer conversion”.Fourthly, the Company enhanced quality management and improved production processes,further improving product quality. During the report period, the Company strategicallydeployed global high-quality raw material bases, and laid out medium-and-long-termpremium raw material bases in China, Australia, Chile and France respectively, which hasprovided a sufficient quantity of medium- and high-grade bulk wine resources for theimplementation of the “Three Focus” strategy.The Company strengthened technicalexchanges between domestic and foreign winemakers, vigorously carried out research onnew technologies and new processes, improved traditional processes and continuouslyimproved product quality, which achieved significant results. 3 great gold medals and 34gold medals were awarded in various international competitions. Koya XO 15 years won thechampionship at the Global Brandy Blind Tasting Fair, surpassing the world’s fivewell-known XO brands. The Company also built “Koya” to be a Chinese high-end brandybrand.Changyu Koya chateau was awarded the title of “The First Brandy Chateau in China”by China Alcohol Drinks Association, and the winemaker Ms. Zhang Baochun was awardedthe title of “Chief Brandy Master in China”. The Chinese Brandy Research Institution wasformally settled in Koya chateau. Changyu Noble Dragon became “Global TOP5” in theglobal best-selling wine brands blind tasting competition, and was rated as “Asian TOP1” bythe Singapore Lianhe Zaobao.Fifthly, the Company strengthened internal audit, intensified risk prevention and control, andreduced operating costs. During the report period, the Company strengthened tax planning,conducted comprehensive audits to off-site warehouses, accounts receivable, advertising feemanagement and distributor inventory etc., and established and improved risk prevention and

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Reportcontrol system and budget dynamic management system for overseas enterprises, whicheffectively prevented operating risks and reduced operating costs.

(2) Revenue and cost

① Composition of operating revenue

Unit: CNY

20192018

Year-on-year

increase ordecrease (%)Amount

operating

revenue

Amount

operating

revenue
Total operating revenue

5,031,011,489 100% 5,142,244,740 100% -2.16%

Sector-classified
Sector of liquor

and alcoholicbeverage

5,031,011,489 100% 5,142,244,740 100% -2.16%

Product-classified
Wine3,833,828,38476.20%4,000,233,43477.79%-4.16%
Brandy1,071,623,81721.30%999,207,29919.43%7.25%
Tourism88,716,2961.76%101,978,9381.98%-13.01%
Others36,842,9920.74%40,825,0690.79%-9.75%
Total5,031,011,489100%5,142,244,740100%-2.16%
Area-classified
Domestic4,482,413,27189.10%4,486,387,95687.25%-0.09%
Overseas548,598,21810.90%655,856,78412.75%-16.35%
Total5,031,011,489100%5,142,244,740100%-2.16%

② The cases of industry, product or area accounting for over 10% in the Company’s

operating revenue or operating profit?Available □Not available

Unit: CNY

Operatingrevenue

Operating cost

Grossmargin

increase ordecrease (%)of operating

revenueYear-on-year

increase ordecrease (%)of operating

costYear-on-year

increase ordecrease (%)

of gross

profit rate
Sector-classified
Sector of

liquor andalcoholic

5,031,011,489 1,887,495,991 62.48% -2.16% -0.74% -0.54%

beverage
Product-classified

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report

Wine3,833,828,3841,401,341,24363.45%-4.16%-4.07%-0.03%
Brandy1,071,623,817436,894,31459.23%7.25%8.22%-0.37%
Tourism88,716,29627,251,75069.28%-13.01%-12.93%-0.03%
Others36,842,99222,008,68440.26%-9.75%282.20%-45.63%
Total5,031,011,4891,887,495,99162.48%-2.16%-0.74%-0.54%
Area-classified
Domestic4,482,413,2711,523,524,72766.01%-0.09%3.11%-1.05%
Abroad548,598,218363,971,26433.65%-16.35%-14.16%-1.69%
Total5,031,011,4891,887,495,99162.48%-2.16%-0.74%-0.54%

Under the condition that the statistical caliber of the Company’s main business data isadjusted during the report period, the Company’s main business data adjusted on the basis ofcaliber at the end of report period in recent one year.

□Available ?Not available

③Whether the Company’s sales revenue for material object is more than labor service

revenue?Yes □No

Sector Project Unit 2019 2018

increase or

decrease (%)
WineSales volumeTon95,902112,600-14.83%
BrandySales volumeTon38,89539,315-1.07%

Explanation on the causes of over 30% year-on-year changes of the related comparison data

□Available ? Not available

④ The fulfillment of major sales contract signed by the Company up to the report

period

□Available ? Not available

⑤ Composition of operating costs

Classification of sector and product

Unit: CNYSector Project

2019 2018

Year-on-year

increase ordecrease (%)Amount

the operating

cost (%)

Amount

Proportion inProportion in

the operating

cost (%)Liquorandalcoholic

Blending liquor

941,841,68950.76%981,838,78952.42%-1.66%

Packingmaterial

632,114,480 34.07% 633,281,194 33.82% 0.26%

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report

beverage

Wages65,607,419 3.54% 63,385,522 3.38% 0.15%

Manufacturingexpenses

215,835,927 11.63% 194,485,534 10.38% 1.25%

Unit: CNYSector Project

20192018

Year-on-yearincrease ordecrease (%)Amount

Proportion inthe operating

cost (%)

Amount

Proportion inthe operating

cost (%)

Wine

Blending liquor711,784,892 50.79% 759,623,724 52.00% -1.21%

Packingmaterial

464,625,885 33.16% 484,791,303 33.19% -0.03%

Wages56,725,667 4.05% 54,718,770 3.75% 0.30%

Manufacturingexpenses

168,204,799 12.00% 161,721,616 11.06% 0.93%

Brandy

Blending liquor230,056,797 52.66% 217,997,239 54.00% -1.34%

Packingmaterial

167,488,596 38.34% 144,272,064 35.74% 2.60%

Wages8,881,752 2.03% 8,666,752 2.14% -0.11%

Manufacturingcost

30,467,170 6.97% 32,763,918 8.12% -1.14%ExplanationNo

⑥ Whether there are changes of consolidation scope during the report period

?Yes □NoFor detailed information about the changes in the scope of consolidated financial statementsin this year, please refer to VI“Change in consolidation scope” in Financial Report of thisreport.

⑦ Major changes or adjustments of the Company’s businesses, products or service

during the report period

□Available ?Not available

⑧Information of major sales customers and major suppliers

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual ReportThe Company’s major sales customersThe total sales amount of the top five customers(CNY)271,566,418

The proportion that total sales amount of the top five customers accounting for the annual total sales amount

5.40%

The proportion that sales amount of the related party in the total sales

amount of the top five customers accounting for the annual

%

0%

Information of the Company’s 5 biggest sales customersNo. Customer name

Sales amount

(CNY)

sales for the year(

%

Changyuexin Trading Company Limited in Shenzhen city

77,966,257.00

1.55%

2Shenzhen Ruiqi Trading Company Limited68,303,967.001.36%

45,629,821.00

Xinbaicheng Food Firm in Hanjiang district of Putian city

0.91%

Fuzhou Shengshihanggang Trading Company Limited

42,902,091.00

0.85%

36,764,282.00

Yukun Information Technology Co., Ltd. in Foshan city

0.73%

Total--271,566,418.005.40%

Other situation explanations of major customers

□Available ?Not available

Information on the Company’s main suppliers

The total purchase amount of the top 5 suppliers602,438,946.00
The proportion of the total purchase amount of the top 5 suppliers in the annual purchase amount

45.48%

10.08%

Information on the Company’s top 5 biggest suppliersNo. Supplier name

Purchase amount

(CNY)

The proportion of the related party purchase amount in the top 5 supplierpurchase amount in annual purchase amountProportion in total

purchase for the

year

139,869,748.00

Liquan Sales Department of Shandong Yantai Winery Co.,Ltd.

10.56%

2 Yantai Shenma Packaging Co., Ltd. 133,587,430.00

10.08%

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report

3 Qixia Changyu Glass Co.,Ltd. 131,011,805.00

9.89%

4 Xinjiang Yuyuan Liquor Co.,Ltd. 127,813,447.00

9.65%

Fangcaohu Branch

70,156,516.00

Xinjiang Tianyu Winery Co., Ltd.

5.30%

Total -- 602,438,946.00

45.48%

Other situation explanations of main suppliers

□Available ?Not available

(3) Expense

Unit: CNY2019 2018

Year-on-year

increase ordecrease (%)

Explanation of significant

changesSalesexpense

1,053,232,024 1,274,599,146 -17.37%

Year-on-year
Mainly because of return of

trademark use fee during this

Managementexpense

311,904,656 343,580,651 -9.22%

report period
Mainly because of

year-on-year decrease inwage & welfare and

depreciation expenses
Financial expense

35,290,702 35,945,302 -1.82%

Research andDevelopmentexpense

6,041,116 4,784,118 26.27%

Mainly because of decrease in loan interest expenditure
Mainly because of increase in

expenses for technologyresearch and development in2019

(4) Research and development investment

□Available ?Not available

(5) Cash flow

Unit: CNYItem 2019 2018

Year-on-year increase

Subtotal of cash inflow in

or decrease (%)
operating activities

4,782,456,490

5,080,363,769

-5.86%

Subtotal of cash outflow in

operating activities

3,944,618,466

4,104,385,023

-3.89%

Net amount of cash flow

837,838,024

975,978,746

-14.15%

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Reportgenerated in operating

Subtotal of cash inflow in

activities
investment activities

242,866,775

423,413,326

-42.64%

Subtotal of cash outflow in

investment activities

451,029,212

931,261,875

-51.57%

Net amount of cash flowgenerated in investment

activities

-208,162,437

-507,848,549

59.01%

Subtotal of cash inflow in

capital-raising activities

942,134,032

1,114,333,670

-15.45%

Subtotal of cash outflow in

capital-raising activities

1,413,600,451

1,546,641,222

-8.60%

Net amount of cash flowgenerated in capital-raising

activities

-471,466,419

-432,307,552

9.06%

Net increase of cash and cash

equivalents

158,912,341

25,971,060

511.88%

Explanation of main influence factors contributing to great changes in related data onyear-on-year basis?Available □Not availableCompared with the same period of last year, during the report period,the net amount of cashflow generated in operating activities decreased by 14.15%, mainly due to the year-on-yeardecrease in the cash received from commodity sales and rendering service; subtotal of cashinflow in investment activities decreased by 42.64%, mainly due to the decrease in receivedcash in recouping the capital outlay; subtotal of cash outflow in investment activitiesdecreased by 51.57%, mainly due to the decrease in the cash paid for acquiring fixed assets,intangible assets and other long-term assets and the cash paid for investment;net amount ofcash flow generated in investment activities increased by 59.01%, mainly due to the decreasein the cash outflow in investment activities; subtotal of cash inflow in capital-raising activitiesdecreased by 15.45%, mainly due to the decrease in received cash from loan; net increase ofcash and cash equivalents increased by 511.88%, mainly due to the decrease in cash outflowin investment activities.Explanation on the causes of major differences between the net cash flow generated by theCompany’s operating activities and net profit of this year during the report period.

□Available ?Not available

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report

3. Analysis to non-main business

□Available ?Not available

4. Assets and liabilities

(1) Significant changes of assets composition

Whether the Company implements new financial instruments standard, new revenue standardor new lease standard for the first time since 2019 and adjusts related items in the financialstatement at the beginning of the execution year?Available □Not available

Unit: CNY

At the end of 2019At the end of 2018

Proportionincrease ordecrease

(%)Explanation on

significant

changesAmount

the total

assets (%)

Amount

the total assets

(%)

Monetary funds 1,565,783,980

11.47%

1,475,700,477

11.25%

0.22%

No significant changes

Receivables 266,218,153

1.95%

242,153,083

1.85%

0.10%

No significant changes

Inventory 2,872,410,407

21.05%

2,724,591,457

20.77%

0.28%

No significant changes
Investment real estate

29,714,586

0.22%

31,572,489

0.24%

-0.02%

No significant changes
Long-term

equity

43,981,130

investments

0.32%

0%

0.32%

No significant

changesFixed assets 5,894,068,898

43.19%

5,749,731,667

43.83%

-0.64%

No significant changes
Construction in progress

567,478,833

4.16%

759,296,591

5.79%

-1.63%

No significant changes
Short-term borrowings

754,313,744

5.53%

688,002,410

5.24%

0.29%

No significant changes
Long-term borrowings

128,892,501

0.94%

156,480,662

1.19%

-0.25%

No significant changes

(2) Assets and liabilities measured at fair value

□Available ?Not available

(3) Limitations of assets rights up to the end of the report period

At the end of report period, the Company has no assets sealed up, detained or frozen. Forinformation about assets mortgage and pledge, please refer to Announcement on External

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual ReportGuarantee disclosed on China Securities Journal, Securities Times and CNINFO(http://www.cninfo.com.cn/) in 2016, 2017, 2018 and 2019.

5. Investment condition

(1) Overall situation

?Available □Not available

Investment amount during the report period (CNY)Investment amount of the same period of last year (CNY)

Variation

399,750,000450,762,420-11.32%

(2) Cases of acquired significant equity investments during the report period

□Available ?Not available

(3) Cases of significant ongoing non-equity investments during the report period

?Available □Not available

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual Report

Unit: CNY

Project name

Investmentmode

WhetherBelongsto fixedassetsinvestment

Involvedsectors ofinvestment projects

Investmentamountduringthe reportperiod

Accumulated

actualinvestmentamount upto the endofthe reportperiod

Capitalsource

Projectprogres

s

Estimatedearnings

Accumulated

realizedearningsupto the

end ofthereportpe

riod

Reasonsforunreachedplanningschedule andestimatede

arnings

Disclosureda

te (ifhave)

Disclosureindex (if have)

YantaiChangyuInternationalWineCityBlendingandCoolingCenter

Self-constructed

Yes

Liquorandalcoholicbeveragesector

250,180,000 1,626,294,100 Ownedfund 100% 0 0 — 2017.04.22

Please refer to ResolutionAnnouncement of SeventhSession Board of Directors

thMeeting, ResolutionAnnouncement of SeventhSession Board of Directors

th

Meetingand ResolutionAnnouncement of SeventhSession Board of Directors

thMeeting disclosed onChina Securities Journal,Securities Times andCNINFO(http://www.cninfo.com.cn/)

YantaiChangyuInternationalWineCityBottlingCenter

Self-constructed

Yes 91,000,000 1,004,200,000 Ownedfund 100% 0 0 — 2017.04.22

YantaiChangyuInternationalWineCityLogisticsCenter

Self-constructed

Yes 46,170,000 462,677,200 Ownedfund 100% 0 0 — 2017.04.22ChangyuVineand

Self-constructed

Yes 6,000,000 122,974,800 Owned fund 85% 0 0 — 2017.04.22

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual ReportWineResearchInstituteTreasureWineChateau

Self-constructed

Yes 0 128,820,000 Owned fund 75% 0 0 — 2017.04.22KoyaBrandyChateau

Self-constructed

Yes 0 147,329,000 Owned fund 85% 0 0 — 2017.04.22Oak barrelprocurementproject

Self-constructed

Yes 0 0 Owned fund 0% 0 0 — 2018.04.20SAPinformatizationfor industrialproduction

Self-constructed

Yes 2,600,000 40,450,000 Owned fund 100% 0 0 — 2018.04.20Project ofpurchase intrinityjointactionequipment byYantai chateau

Self-constructed

Yes 0 0 Owned fund 0% 0 0 — 2018.04.20

Project of“constanttemperatureand humidity”system inundergroundcellar of

Self-constructed

Yes 3,800,000 3,800,000 Owned fund 100% 0 0 — 2018.04.20

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Annual ReportResearch &DevelopmentCenterConstruction

supplierrelationshipmanagement

platform and

plantmaintenanceplatform

Self-constructed

Yes 0 0 Owned fund 0% 0 0 — 2018.04.20

Total -- -- -- 399,750,000.00 3,536,545,100.00 -- -- 0 0 -- -- --

(4) Financial assets investment

①Security investment situation

□Available ?Not available

There are no security investments for the Company during the report period.

②Derivatives investment

□Available ?Not available

There are no derivatives investments for the Company during the report period.

(5) The usage situation of raised capital

□Available ?Not available

There are no usage situations of raised capital for the Company during the report period.

6. Sale of significant assets and equities

(1) Sale of significant assets

?Available □Not available

Transaction party

Sold asset Sale date

Transactio

n price(CNY’0000)

Net profitcontributed by

this asset forlisted company

from the

beginning ofreport period to

sale date

Influence ofsale in listed

company(note III)

Proportion

of netprofitcontributed to listedcompanyresultingfrom asset

sale intotal net

profit

Pricingprinciplefor asset

sale

Relatedtransaction or

not

Associat

ionRelation

ship

withtransaction party

(ifapplicab

le)

Whether

thepropertyright ofinvolved

assetshas beentransferr

ed

Whetherthe creditand debthas beentransferre

d

Whetherimpleme

nted asschedule

, if not,

explain

the

reason

and

measure

s thathavebeentaken

Disclo

suredate

Disclosure

index

Yantai The April 2,411.55 0 Through this

0ContractYesParentNoNoYesAprilPlease refer

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportChangyuPioneerWineCo., Ltd.

workshopand officebuildingofpreviousbrandymanufacturingplant andcorresponding lands

th,2019

transaction,the Companycould replaceidleworkshopand lands forthe landoccupied byXishan officebuilding sothat theCompanycould notonly betterguarantee thesafety andintegrality ofXishan officebuilding inorder torealize theassetappreciationand hedge butalso eliminatepreviousrelated

ualpricing

companyandsubsidiarycompany

th

,2019

toAnnouncementOnAssetReplacementdisclosed bytheCompany

2019-

temporaty 1

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Reporttransactionincludingland rentalfee. Thistransactionwill not affectthe continuityof businessand thestability ofmanagement.

(2) Sale of significant equities

□Available ?Not available

7. Analysis of main holding and joint stock companies

?Available □Not availableSituation of main subsidiaries and joint stock companies affecting over 10% of the Company’s net profit

Unit: CNYCompany name Company type Main business Registered capital Total assets Net assets Operating revenue Operating profit Net profitYantai ChangyuPioneer WineSales Co., Ltd.

Subsidiary Sales CNY8million 1,420,161,516 191,198,133 3,821,020,948 942,128,095 793,451,810Yantai ChangyuWine Sales Co.,Ltd.

Subsidiary Sales CNY5million 396,403,239 378,470,761 1,081,596,277 186,864,347 140,221,071Changyu Trading Subsidiary Sales CNY5million 88,463,752 233,496,494 436,530,152 173,831,064 131,639,723

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportCo., Ltd. inDevelopmentZone of YantaiLaizhouChangyuWine Sales Co.,Ltd.

Subsidiary Sales CNY1million 88,463,752 1,000,000 226,162,063 157,486,950 118,115,212

Acquisition and disposal of subsidiaries during the report period?Available □Not available

Company name

Mode of acquisition and disposal of subsidiaries during the report periodEffect on overall production management and performance
Chateau De MirefleursEstablishment of joint venture company for contracted

transfer

enjoyed net asset share of this subsidiary is CNY

6,233,661.

Explanation on main holding and joint stock companiesNo

8. Situation of the structured subjects controlled by the Company

□Available ??Not available

9. Expectation for the Company’s future development

On the basis of our limited experience and professional skills, the Company makes the following judgments on the wine industry and futuredevelopment:

(1) The sector competition pattern and development trend

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportUnder uncertainty effects caused by the slowdown of national macroscopic economy growth, the Sino-American trade friction and thenovelcoronaviruspneumoniaepidemic, the overall demand of Chinese wine market in 2020 will be still comparatively weak, the total wine consumptionis more likely to maintain a downward trend, and the wine industry's operating situation will be even more severe. With the rise of Chinesee-commerce and Internet generation, the scene and habits of people's consumption in wine continue to change. The mobile terminal media on the“mobile phone screen”, including WeChat, Douyin, Toutiao and Internet celebrity IP etc., has become an important channel for wine operators tocommunicate with consumers. Owing to the serious “fragmentation” of the wine market, it is more difficult to target wine consumers. Whethercompared with the per capita consumption of domestic beer and liquor, or compared with the per capita consumption of major foreign wine consumingcountries, the consumption popularizing rate and penetration rate of Chinese wine in domestic are very low. Although there are some twists and turnsduring its development period in the short term, seen from the long term, the huge development potential has not changed.In such a case of long-termcoexistence of opportunities and challenges, those enterprises that possess strong brand influence and marketing ability, catch the opportunities,actively take adjustments, make full use of newly emerging and traditional sales channels, timely satisfy the consumers’ demands and provide productswith high cost performance will have the opportunity to be the final winner of competitions, and then form a new pattern of the future Chinese winemarket.

(2) The Company’s development strategy

The Company will adhere to the development strategy of “Focus on middle-and-high level, Focus on high quality, Focus on big product” and themarketing philosophy of “obtaining growth from the terminal and nurturing consumers”,continue improving the relatively independent systemconstruction of wine, brandy, imported wine and overseas business, enhance wine, scale up brandy, improve imported wine, stabilize overseas businessand promote the all-round development of various alcohol products.

(3) Management plan for the new year

In 2020, the Company will try its best to realize operating revenue of not less than CNY3.7 billion and control the main operating costs and three periodexpenses below CNY2.8 billion.

(4) Measures to be taken by the Company

In order to better seize the opportunities and meet the challenges, the Company will stand from the present, take a long-term perspective, forge ahead,adhere to market-oriented approach, take advantage of profit assessment, take innovation and major work as driving force and persevere in

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Reportmanagement and implementation. The Company will make every effort to do following major work in 2020 in order to strive to achieve annualbusiness target.The first is to further deepen and implement the “Three Focus” strategy. For domestic wine, the Company clearly defines the development direction of“focusing on chateau wine, strengthening Noble Dragon and scaling up ordinary wine” and will continue focusing on brands of seven chateau wines,Noble Dragon and Zenithwirl etc.. Under the premise of keeping the total investment unchanged, the Company will transfer part of offline funds toonline channels to future increase the proportion of input on online channels. For brandy, the Company will continue adhering to the strategy of“focusing on middle-and-high-end products and driving the sales of low-end products in virtue of middle-and-high-end products”, and focus on Koya,Five Star, Mminni and Pegase these four brands. The main brands will be further focused on Koya XO 15 and Fine Five-star, through which the brandycategory could be expanded, thus driving the all-round development of brandy brands. For imported wine, the Company will focus on six acquiredbrands, especially on Kilikanoon and IWCC.The second is to continue to implement business philosophy of “customer-centered, striver-based and result-oriented”. The Company will takeeffective measures to fully implement the market strategy of “let fewer people manage distributors, let more people serve terminals and consumerstogether with distributors”. Also the Company will continue increasing the salary level of sales personnel and enhancing front-line personnel’s workingenthusiasm through measures such as increasing efficiency while reducing staff and improving compensation system and so on. The Company willadvocate that“everyone is product experience officer”, “everyone is a service experience officer” and “everyone is a self-media” to comprehensivelyimprove product awareness, service awareness and marketing awareness.The third is to make efforts to expand new marketing channels. The Company will strengthen the development of online channels, new retail channels,big distributor channels and personalized-ordering group purchase channels, and establish a system of “brand team” + “outsourcing brand consultingcompany” to provide more accurate and effective marketing support. Through the innovation of marketing system, the Company will push forward 1-2chateau brands to establish an alliance company with big distributors to expand the market scale;mobilize more than 2,000 key distributors across thecountry to open their own smart retail malls;guide distributors to recruit “community partners”;promote distributors make full use of city-wideplatforms like Meituan, Eleme, 58 Tongcheng, Douyin, JingdongDaojia and Little Red Book to run their business in various new formats;promotecontactless delivery of wines among distributors through their own distribution system or courier delivery in the same city, and help them improvecontactless delivery capacity and open up sales channels;mobilize all employees to participate in short video marketing and live streaming videomarketing.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportThe fourth is to comprehensively promote the Company’s traditional business to be transferred to digitization business. The Company will strive torealize digitalization of planting, production, sales and marketing in an all-round way, thus to provide accurate service to clients and targeted marketingto consumers. In 2020, the Company will print anti-counterfeiting codes on the back and conduct the reformation of one-off marketing codes topromote distributor-driven orders in an all-round way and introduce the inbound and outbound identification management and product traceability inthe distributor link. The Company will also cooperate with Tencent and other companies to complete the digital integration of marketing to promotedigital marketing level.The fifth is to continue improving product quality. The Company will stabilize the total number of contracted bases, improve the planting level of itsown grape bases, and cultivate new wine grape varieties according to different geographical and climatic characteristics in China. Besides that, theCompany will establish long-term stabled high, medium and low raw material bases for wine and brandy to meet different product demands andcomplete wine and brandy overseas grape base layout from a global perspective. The Company will also increase the import quantity of oak barrels andformulate a three-year purchase plan of oak barrels for high-end products such as chateau wines and Koya brandy and so on, and improve the way andmethod of using oak barrels. The Company will further establish and improve the “evaluation system for brand wine-makers team”, mobilizewinemakers to go deep into the production line to improve product quality and go deep into the market line to understand consumer demand, in orderto better play the winemakers team’s technical and work capability. The Company will support and encourage the research and developmentinvestment of new technology and new process to ensure the steady improvement of product quality.The sixth is to further improve the employment mechanism. The Company will continue to implement the general policy of “strictly control theemployment and release the demission”, and strive to achieve the general goal of “control the total number and keep the income non-decreasing”. TheCompany will accelerate the reform of the selection and employment mechanism, salary distribution and incentive mechanism to open up a dualchannel for employees’ career development and salary incentive. A three-year talent development plan for management, brewing, equipment,marketing, production and other aspects will be made. The system of “management trainee” and “guidance of mentor to apprentice”will be establishedto form the talent training model of “everyone has a mentor in front and anechelon formation in back”. Meanwhile, the Company will also establish agood mechanism to reward innovation success and tolerate innovation failure and create a favorable atmosphere to encourage innovation and toleratefailure, providing reliable guarantee for the smooth development of innovation work in all aspects of the Company.The seventh is to strengthen audit supervision and internal control system construction. The Company will further strengthen the audit supervision ofeach operating unit and intensify the trinity supervision system of auditing, financing and discipline inspection commission.The Company will enhance

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Reportthe punishment level, investigate every problems discovered in auditing and not promote or appoint responsible personnel. The Company will furtherimprove the internal control system of areas prone to serious fraud, including seal, related transaction, sales advertising fee, material procurement,project construction and inventory and so on, in order to timely eliminate major hidden dangers and prevent operational risks.The eighth is to strengthen the financial management. The Company will improve the budgeting mode, timely and dynamically adjust and improve theannual budget in accordance with the major changes inside and outside of the Company, and enhance the timeliness and pertinence of budgetmanagement. The Company will improve the simulation profit assessment system for secondary enterprises to improve the overallprofitability.Meanwhile, the Company will make full use of national policy of reducing taxes and fees to rationalize tax planning and strengthenfinancial management of overseas enterprises to prevent major risks.The above business plan and business goals do not represent the listed company’s profit forecast for 2020. Whether it can be realized depends onvarious factors such as changes in market conditions and the efforts of the management team, which has great uncertainties. Please pay specialattention to this.

10. The Company’s receptions of research, communication, visit and other activities

Activity registration form for receptions of research, communication, visit and other activities during the report period?Available □Not available

Reception timeReception patternType of reception objectBasic situation index of reception

October 16

th, 2019 Other Individual

Wine Co., Ltd. InvestorRelations Activation Record

Form
Times of reception1
Number of institution reception0
Number of individual reception6
Number of other objects reception0
Whether to disclose, reveal and leak material nonpublic informationNo

V. Major issues

1. The Company’s ordinary share profit distribution and increasing equity with capital

reserveOrdinary share profit distribution policies especially promulgation, implementation oradjustment of cash dividends policies during the report period?Available □Not availableDeliberated and passed by the 2018 Shareholders’ Meeting convened on May 17

th, 2019 bythe Company, the Company’s 2018 annual profit distribution scheme is shown as follows:

based on total 685,464,000 shares (including 453,460,800 A shares and 232,003,200 B shares)up to December 31

st, 2018, the Company would pay cash dividend to all shareholdersregistered on the share registration day: CNY6 in cash per ten shares. This time the Companywould neither dispatch bonus shares nor increase equity with capital reserve.Total amount of shares has not changed since the disclosure of the distribution plan to theimplementation period.On June 28

th

, 2019, the Company published the Implementation Announcement of2018Annual Equity Distribution on China Securities Journal, Securities Times andwww.cninfo.com.cn, determining that the share registration day and the ex-dividend dayof AShare was respectively on July 5

th

, 2019 and on July 8

th

, 2019; the last trading day, the shareregistration day and the ex-dividend dayof B Share was respectively on July 5

th, 2019, onJuly 8

th

, 2019 and on July 10

th, 2019.This time the dispatching objects contain all A Shareshareholders registered at ChinaSecurities Depository and Clearing Corporation Limited Shenzhen Company after closing ofShenzhen Stock Exchange in the afternoon of July 5

th

, 2019 and all B Shareshareholdersregistered at China Securities Depository and Clearing Corporation Limited ShenzhenCompany after closing of Shenzhen Stock Exchange in the afternoon of July 10

th

, 2019 (thelast trading day is July 5

th, 2019).This dispatching has already been completed in mid-July 2019. The profit distributionscheme implemented this time is consistent with the scheme deliberated and passed by theshareholders’ meeting. The implementation of the profit distribution scheme for this time isnot more than two months after the shareholders' meeting passing it.

Special explanation for the cash dividends policy
Whether it is in accordance with the requirements of the regulation in the Articles of Association and the resolution of shareholdersYes
Whether the distribution standard and proportion is clear and definiteYes
Whether the relevant decision process and mechanism is completeYes
Whether the independent directors perform their responsibilities and play the rolesYes
Whether the small and middle shareholders have the chance to express their

addeputys and appeals, as well as their lawful right and interest is in an enough

protectionYes
Whether it is legal and transparent for the condition and process while adjusting and amending the cash dividends policyYes

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportThe Company’s scheme (preliminary scheme) of ordinary share profit distribution andincreasing equity with capital reserve in the recent three years (including the report period)The Company’s profit distribution scheme in 2017 is as following: Because the left amount oflegal earned surplus reserve reaches 50% of the registered capital, while making profitdistribution, the legal earned surplus reserve will not be drawn. Based on the Company’s685,464,000 shares at total up to December 31

st, 2017, the Company plans to pay CNY5 incash as dividends for every ten shares (including tax) to the Company’s all shareholders,totaling up to CNY342,732,000, accounting for 33.22% of the net profitCNY1,031,695,056attributable to the shareholders of the parent company in the consolidatedstatement, the retained and undistributed profit of CNY688,963,056 will be reserved for thedistribution of next year.The Company’s profit distribution scheme in 2018 is as following: Because the left amount oflegal earned surplus reserve reaches 50% of registered capital, while making profit distribution,the legal earned surplus reserve will not be drawn. Based on the Company’s 685,464,000shares at total up to December 31

st, 2018, the Company plans to pay CNY6 in cash asdividends for every ten share (including tax) to the Company’s all shareholders, totaling up toCNY411,278,400 accounted for 39.45% of net profits CNY1,042,632,929 attributable toshareholders of parent company in the consolidated statements. The retained andundistributed profit of CNY631,354,529 will be reserved for distribution in the next year.The Company’s profit distribution draft scheme in 2019 is as following: Because the leftamount of legal earned surplus reserve reaches 50% of registered capital, while making profitdistribution, the legal earned surplus reserve will not be drawn. Based on the Company’s685,464,000 shares at total up to December 31

st, 2019, the Company plans to pay CNY7 incash as dividends for every ten share (including tax) to the Company’s all shareholders,totaling up to CNY479,824,800 accounted for 42.47% of net profits CNY1,129,735,749attributable to shareholders of parent company in the consolidated statements. The retainedand undistributed profit of CNY649,910,949will be reserved for distribution in the next year.The Company’s ordinary share cash dividend record in recent three years (including thereport period)

Unit: CNYYear ofdistribution

Amount of cash

dividend(including tax)

to the listedcompany’sshareholders in the

consolidatedstatement of thedistribution year

Net profit belongingProportion in

the net profitbelonging tothe listedcompany’sshareholders

in theconsolidatedstatement (%)

Amount ofcashdividends

(eg.

sharesbuy-back) in

other ways

of cashdividendsin other

ways

Amount of cash

dividend(including other

ways)

Proportion(includingother ways)inthe net profitbelonging to

the listedcompany’sshareholders

in theconsolidatedstatement (%)

Proportion
2019479,824,800.001,129,735,749.0042.47%0.000.00%479,824,800.0042.47%
2018411,278,400.001,042,632,929.0039.45%0.000.00%411,278,400.0039.45%
2017342,732,000.001,031,695,056.0033.22%0.000.00%342,732,000.0033.22%

During the report period, the Company earned profit, the profit of the parent company thatcould be distributed to ordinary share shareholders was positive but without proposingordinary share cash dividend distribution preliminary scheme.

□Available ??Not available

2. The Company’s preliminary scheme of profit distribution and preliminary scheme of

increasing equity with capital reserve for the report period?Available □Not available

Number of sending bonus shares per ten shares (share)0
Number of dividend payout per ten shares (CNY) (including tax)7
Number of transferring per ten shares(share)0
The cardinal number of the capital stocks for the preliminary distribution scheme (share)

685,464,000

CNY

(including tax)479,824,800.00
Amount of cash dividends(eg. shares buy-back)

in other ways0.00
Total cash dividend distribution

(including other ways)479,824,800
Attributable profit

1,129,735,749.00
The proportion of cash dividend distribution in the total profit distribution(including other ways)

100%

Cash dividend distribution this time
If the Company’s development is in growth stage and major capital expenditure is arranged,

while making profit distribution, the proportion of cash

dividends should takes up no less than 20% in this profit distribution.
Detailed explanation for the preliminary scheme of profit distribution or increasing equity with capital reserve
According to the audit result from KMPG Huazhen LLP, the net profit belonging to the

parent company’s stockholders in the consolidated statement in 2019 is CNY1,129,735,749and the net profit of the parent company in financial statement in 2019is CNY593,298,849.According to PRC accounting standard, the situation for attributable profits of theconsolidation and the parent company in 2019as following:

Unit: CNY

ConsolidationParent company
Undistributed profits at the end the year8,719,899,3598,619,977,577
Including: net profits in 2019

1,129,735,749

593,298,849

Undistributed profit carried forward of the beginning of the year

8,001,442,010 8,437,957,128

411,278,400 411,278,400

Distribution of 2018 dividends
Withdrawal legal surplus reserve00

According to regulation of 157

thitem in the Articles of Association,

Company can distribute dividends either in cash or by stock, the profit to be distributed each

year is not less than 25% of the distributable profit realized in the same year and the accumulated sum of profit to be distributed in cash in the last three years is not less than 30%

considering the large amount on the capital expenditure in 2020, under the condition of notinfluencing the normal prod

uction and operation, the Company put forward preliminary

scheme on profit distribution in 2019 as following:

Because the left amount of legal earned surplus reserve reaches 50% of registered capital,while making profit distribution, the legal earned surplus reserve will not be drawn. Based onthe Company’s 685,464,000 shares at total up to December 31

st, 2019, the Company plans topay CNY7

shareholders, totaling up to CNY479,824,800 accounted for 42.47

% of net profits

CNY1,129,735,749 attributabl

statements. The retained and undistributed profit of CNY649,910,949will be reserved fordistribution in the next year.The cash dividend distributed to shareholders of domestic listed foreign shares (B share) ispaid in Hongkong dollar converted based on the middle rate between CNY and Hongkongdollar issued by the People’s Bank of China on the first working day after the resolution date

of 2019 shareholders’ meeting.

3. Implementation of commitments

(1) Commitments that the Company’s actual controllers, shareholders, related parties,

acquirers and the Company and other related commitment parties have implementedduring the report period and have not implemented up to the end of the report period?Available □Not availableCommitments

Commitment partyCommitment typeCommitment contentCommitment timeCommitment period

Implementation

share reform

Commitments at
Commitments made in acquisition report

or equity changesreport

- -

Commitments at asset restructuring
Commitments at the

initial publicoffering orrefinancing

ChangyuGroup Co.,

Ltd.

Solvehorizontalcompetition

Non-horizontalcompetition

May 18

th

, 1997 Forever Has been performing

YantaiChangyuGroup Co.,Ltd.

Clear the use

of trademark

royalty

TrademarkLicenseContract, thetrademarkroyalty ofChangyu and

other trademarks

May 18

th, 1997

From May

th

, 1997 toApril 4

th

, 2019According to

Trademark LicenseContract, thetrademark use feeannually paid by theCompany toChangyu Group shallbe mainly used

Company toYantai ChangyuGroup Co., Ltdever year ismainly used foradvertisingChangyu and

other trademarks and this contract

products byYantai Changyu

Group Co., Ltd.byChangyu Group to

publicize trademarksand contractproducts. Except2013 to 2017 duringwhich thecommitment was notstrictly performed,YantaiChangyuGroup Co.,Ltd. has beenperforming its

commitment.
Equity incentive commitments

Commitments atmiddle and smallshareholders of theCompany

YantaiChangyuGroup Co.,Ltd.

Compensating

unredeemedcommitment

The

CNY231,768,615 that was notused forpublicity oftrademarks andcontractproducts as

offset by thefour-yeartrademark use

fee from 2019 to

2022. Ifinsufficient, theshortfall wouldbe filled in onetime in 2023. Ifthere is anyexcess, the

the trademark

use fee would be

collected fromthe year withexcessoccurrence.

April 4

th

, 2019

From April 4

th

2019 toDecember 31

st

,

2023

Has been performing

timelyimplementation or

No

Whether or not tohave specificreasons of theunimplementedcommitment andnext steps

not
According to t

Trademark License Contract

promises that the trademark use fee annually paid by the Company to Changyu Group shall be mainlyused byChangyu Group to publicize trademarks and contract products. But above-mentioned ‘mainly’ isnot a specific number, which is easy to cause divergence due to different understanding and leads toproblem appearance during the implementation process.From 2013 to 2017, Changyu Group collected a total of CNY420,883,902 trademark use fee, of which51% was used to publicize trademarks including Changyu and contract products with amount ofCNY214,650,790. The amount has been used to publicize trademarks including Changyu and contractproducts is CNY50,025,181, with a balance of CNY164,625,609.In 2018 and 2019, the trademark use fee collected of 2017 and 2018 is CNY155,623,907, of which 51%is used to publicize trademarks including Changyu and contract products with amount ofCNY79,368,193. The amount has been used to publicize trademarks including Changyu and contractproducts is CNY12,225,187, with a balance of CNY67,143,006.Since 2013, the accumulated balance of Changyu Group using to publicize trademarks includingChangyu and contract products is CNY231,768,615.Changyu Group promises that the four-year trademark use fee from 2019 to 2022 will be used for offset.If insufficient, the shortfall would be filled in one time in 2023. If there is any excess, the excess portionof the trademark use fee would be collected from the year with excess occurrence. If Changyu Group isnot able to implement the above-mentioned commitment owing to various reasons, the Company willtimely supervise and urge Changyu Group to fulfill its commitment and request Changyu Group to raisefunds through bank loaning, assets sales and equity sales etc. in order to implement the commitment.For detailed information, please refer to

Announcement on Commitment Issues of Yantai Changyu Group

Co., Ltd disclosed on April 4

th

, 2019.

(2) The Company should make a statement on the achieved original profit forecast of

assets or projects and its reason if there is profit forecast of Company’s assets orprojects and the report period is still in the profit forecast period

□Available ?Not available

4. Non-business capital occupying of listed company by controlling shareholder and its

related parties

□Available ?Not available

There are no non-business capitals occupying of listed company by controlling shareholderand its related parties during the report period.

5. Explanation of Non-standard Audit Report given by accounting firm in the report

period from board of directors, board of supervisors and independent directors (ifhave)

□Available ?Not available

6. Compared with the last year’s financial report, explanation for the changes of

accounting policy, accounting estimation and accounting method

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report?Available □Not availableThe Company has implemented the new financial standard since January 1

st, 2019. Accordingto the transition requirements of the standard, the Company made retrospective adjustmentsto classification and measurement (including impairment) of financial instruments that werenot derecognized on the date (January 1

st, 2019) of the implementation of the New FinancialInstruments Standard. This company did not adjust the comparative financial statement data,and the difference between the original book value of financial instrument and the new bookvalue on the date of implementation of the New Financial Instruments Standard was recordedinto retained income or other comprehensive income in early 2019.The Company prepared financial statements according to the relevant requirements ofAccounting [2019] No. 6, which only affected the format of financial statements and thelisting of some items and did not have significant effects on the Company's net asset, netprofit and other related financial indexes.For other information about changes in accounting policy, please refer to Announcement onChanges in Accounting Policy disclosed by the Company in SecuritiesTimes,ChinaSecuritiesJournal and CNINFO.

7. The situation explanation for the correction of major accounting errors which need to

be retrospect and restated during the report period

□Available ?Not available

There is no situation for the correction of major accounting errors which need to be retrospect andrestated.

8. Compared with the last year’s financial report, explanation for the changes of the

consolidated statements scope?Available □Not availableFor detailed information about the changes in the scope of consolidated financial statementsin this year, please refer to VI“Change in consolidation scope” in Financial Report of thisreport.

9. The appointment and dismissal of certified public accountants

Currently appointed accounting firm

Domestic accounting firm nameKPMG Hua Zhen LLP
Remuneration for domestic accounting firm (CNY‘0000)
Consecutive period for the audit service of domestic accounting firm
Name of certified public accountant for the audit service of domestic accounting firm

Ms. Wang Ting, Ms. Chai Jing

accountant’s audit service of domestic

accounting firm
Overseas accounting firm name (if have)
Remuneration for overseas accounting firm (CNY‘0000) (if have)
Consecutive period for the audit service of overseas accounting firm(if have)
Name of certified public accountant for the audit service of overseas accounting firm(if have)
Consecutive period for the certified public

accountant’s audit service of overseas

accounting firm (if have)

Whether or not to employ a new accounting firm during the report period?Yes □NoWhether or not to employ a new accounting firm during the audit period

□Yes ?No

Whether the change in accounting firm fulfils approval procedure?Yes □NoDetailed explanation for employing a new accounting firm and the change in accounting firmThis Company did not continue employing Deloitte Hua Yong certified public accountantsco., Ltd. (special general partnership) to be the audit authority of 2019 annual financial reportand internal control and to employ KMPG Hua Zhen LLP to be the audit authority of 2019annual financial report and internal control. The employment period is one year and theannual audit expense (including travel expenses and total labor expenses) is CNY1.95million.To employ internal control audit accounting firms, financial adviser or sponsor.?Available □Not availableThe Company employs KMPG Hua Zhen LLP to be the audit authority of 2019 annualfinancial report and internal control. The employment period is one year and the annual auditexpense (including travel expenses and total labor expenses) is CNY1.95million.

10. Face of suspension and termination of listing after the disclosure of annual report

□Available ?Not available

11.Bankruptcy reorganization

□Available ?Not available

There is no bankruptcy reorganization during the report period.

12. Material litigation and arbitration

□Available ?Not available

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportThere are no material litigation and arbitration during the report period.

13. Penalty and rectification

?Available □Not availableName Type Reason Type of

investigationand

Decision(if have)

Disclosuredate

Disclosure index

YantaiChangyuGroup Co.,Ltd.

Shareholderholdingmore than5% ofequity

Fail toimplementcommitmentstrictly from2013 to2017

Other April 4

th

,2019

punishment
Rectification Report on Related

Questions inDecision on AdministrativeSupervision Measures fromChina Securities RegulatoryCommission ShandongRegulatory Authority byRelevantResponsiblePersonnel

YantaiChangyu Pioneer WineCo., Ltd. disclosed in ChinaSecurities Journal,Securities Timesand CNINFO(http://www.cninfo.com.cn/)

(announcement no.:

2019-temporaty 05)

YantaiChangyuPioneerWine Co.,

Ltd.

Other Issues of

trademarkand patent

Other April 4

th

,2019

ZhouHongjiang,QuWeimin

Seniorexecutive

ZhouHongjiangacting as thegeneralmanager atthat timeandQuWeiminacting as theboardsecretary atthat time failto beindustriousandresponsible

Other April 4

th

,2019

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportExplanation for rectification situation?Available □Not availableFor detailed information about rectification situation, please refer to Announcement onCommitments of Yantai Changyu Group Co., Ltd to Yantai Changyu Pioneer Wine Co., Ltd.andRectification Report on Related Questions in Decision on Administrative Supervision Measuresfrom China Securities Regulatory Commission Shandong Regulatory Authority byRelevantResponsiblePersonnel in Yantai Changyu Pioneer Wine Co., Ltd disclosed in ChinaSecurities Journal, Securities Times and CNINFO on April 4

th, 2019.

14. Credit of the Company, holding shareholders and actual controllers

□Available ?Not available

15. Implementation of the Company’s equity inventive plan, employee stock ownership plan

or other employee incentive measures

□Available ?Not available

There are no implementation of the Company’s equity inventive plan, employee stock ownershipplan and other employee incentive measures during the report period.

16. Significant related transactions

(1) Related transactions in relation to daily operations

?Available □Not available

(2) Related transactions in relation to acquisition and sales of assets or equity

Relatedparty

Relationship Type Content Pricing

principle

Price Amount

(CNY‘0000)

Proportionaccounting

of similartransaction

s

Approvedtransactionquota(CNY‘0000)

Whetherexceedapprovedtransactionquota

Clearingform

Availablemarket priceof similartransactions

Disclosuredate

Disclosureindex

YantaiShe

nmaPackagingCo., Ltd.

Controlledby the same

parentcompany

Purchase

andcommissionprocessing

Purchase

andcommissionprocessing

packingmaterials

Agreement

pricing

Determinedby agreement

13,359 15.07% 17,500No Cash No

April 20

th,2019

Announcement on 2019

AnnualRoutineRelatedTransactiondisclosed in

ChinaSecuritiesJournal,SecuritiesTimes

andCNINFO in

2019

YantaiChangyuGroup Co.

Ltd.

Parentcompany

Licensed

use ofintangible

assets

Licensed useof trademark

and patent

Agreement

pricing

Determinedby agreement

21,865 100% 21,865No Cash No

April 4

th

,2019

Total - -

35,224--39,365

- -Details of the return of large sales NoActual performance of the estimated total amount fordaily operations related transactions by category that willoccur during this period. (if have)

NoReason for the deference between transaction price andmarket reference price(if available)

Not available

□Available ?Not available

There are no related transactions in relation to acquisition or sales of assets or equity during thereport period.

(3) Related transactions in relation to common foreign investment

□Available ?Not available

There are no related transactions in relation to common foreign investment during the reportperiod.

(4) Related current credit and debt transactions

?Available □Not available

Whether or not existing non-operating related credit and debt transactions

□Yes ?No

There are no non-operating related credit and debt transactions during the report period.

(5) Other major related transactions

?Available □Not available

Disclosure website of interim report for major related transaction

Name of interim announcementDisclosure date of interim announcementName of disclosure website for interim announcement
Announcement

On AssetReplacement

April 20th, 2020http://www.cninfo.com.cn

17. Major and important contracts and execution results

(1) Trusteeship, contract and leasehold issues

? Trusteeship situation

□Available ?Not available

There is no trusteeship situation during the report period.

? Contract situation

?Available □Not availableContract situation descriptionDuring the report period, about the Company’s contract operation situation, please see “1.Thestructure of Enterprise group” in VIII “Rights and interests of other subject” in the financialreport of this report.

Project in gains and losses for the Company to achieve more than 10% of the total profit

□Available ?Not available

There are no contract projects in gains and losses for the Company to achieve more than 10%of the total profit during the report period.

? Leasehold situation

□Available ?Not available

There is no leasehold situation during the report period.

(2) Major guarantee

?Available □Not available? Guarantee situation

Unit: CNY’0000

External guarantee of the Company and its subsidiaries(excluding guarantee to subsidiaries)Guarantee objectname

Disclosure date of

relatedannouncementabout guarantee

quota

Guarantee

quota

Actual date of

of agreement)

Actualguarantee

amount

Guarantee

type

Guarantee

Period

Whether or not

completeimplementation

Whether or

occurrence (datenot belong to

related-

guaranteeYantai Economicand TechnologicalDevelopment

party
Zone Management

Council.

2016.12.22 34160 2016.12.21 34160

Mortgage;

Pledge

10years No No

Total of the external guarantee quotaapproved during the report period (A1)

Total of the actual external

guarantee amount during the

report period (A2)

Total of the external guarantee quotaapp

roved by the end of the report period

(A3)

34160

Balance of the actualexternal guarantee by theend of the report period(A4)

34160

Guarantee situations between the Company and subsidiariesGuarantee object

name

Disclosure date of

relatedannouncement a

guarantee quota

Guarantee

quota

Actual date of

boutoccurrence (date

of agreement)

Actualguarantee

amount

Guarantee

type

Guarantee

Period

Whether or notcompleteimplementation

Whether or

related-

party

guaranteeSales &MarketingCompany ofYantai ChangyuPioneer Wine

2016.10.31 10,000 2016.11.05 10,000

Joint liability

assurance

2 years No Yes

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportCompany LimitedYantai ChangyuPioneer WineCompany Limited

2016.12.22 11,984 2016.12.21 11,984

Mortgage;Pledge

10 years No YesYantai ChangyuWine Researchand DevelopmentCompany Limited

2016.12.22 72,176 2016.12.21 72,176

Jointliabilityassurance;M

ortgage

10 years No Yes

Kilikanoon EstatePty Ltd

2017.12.12 7100 2018.01.09 7100

Jointliabilityassurance

1 year No YesTotal of the guarantee quot

subsidiaries during the report period(B1)

a approved toTotal of the actual guarantee

amount for subsidiariesduring the report period(B2)

Total of the guarantee quota approved to

subsidiaries by the end of the reportperiod (B3)

89,276

Balance of the actual

guarantee for subsidiaries by

the end of the report period(B4)

89,276

Guarantee situations between subsidiariesGuarantee objectname

Disclosure date ofrelatedannouncementabout guaranteequota

Guaranteequota

Actual date ofoccurrence (date

of agreement)

Actualguaranteeamount

Guaranteetype

GuaranteePeriod

Whether or notcompleteimplementation

Whether or not belong to

related-partyguaranteeHacienda YVinedos MarquesDel Atrio. SL

2016.04.29 3,502 2015.10.08 3,502 Mortgage; Long term No NoIndomita WineCompany Chile,SpA

2018.04.23 1,986 2018.04.20 1,986 Mortgage; Long term No NoSocieteCivileArgricole Du ChateauDe Mirefleurs

854 2019.07.30 854 Mortgage; Long term No NoSCEA ChateauLiversan

5,122 2019.07.30 5,122 Mortgage; Long term No NoTotal of the guarantee quota approvedto subsidiaries during the report period(C1)

5,976

Total of the actual guarantee

amount for subsidiariesduring the report period(C2)

5,976

Total of the guarantee quota approvedto subsidiaries by the end of the report

11,464

Balance of the actual

11,464

guarantee for subsidiaries by

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Reportperiod (C3) the end of the report period

(C4)Total guarantee amount of the Company(Total of above three major items)Total of the approved guarantee quotaduring the report period(A1+B1+C1)

5,976

Total of the actual guarantee

amount during the report

period(A2+B2+C2)

5,976

Total of the approved guarantee quotaby the end of the report period(A3+B3+C3)

134,900

Balance of the actual

guarantee by the end of the

report period(A4+B4+C4

134,900

The proportion of actual total guarantee amount (A4+B4+C4)accounting for the Company’s net asset

Among :

The amount of guarantee for shareholders, actual controllers and their relatedparties(D)

The amount of debt guarantee for the guaranteed objects whose asset-

13.09%

liability

ratio is more than 70% directly or indirectly(E)

Total amount of guarantee of the part that exceeds 50% of net assets(F) 0Total amount of the above-mentioned three items(D+E+F) 0Explanation for undue guarantees that have happened warranty liability ormay take joint payback liabilities during the report period (if have)

NoExplanation for violating due process to provide external guarantee (if have) No

Specific explanation on adopting complex guarantee typeNo.

? Illegal external guarantee

□Available ?Not available

There is no illegal guarantee situation during the report period.

(3) Entrusting others to manage cash assets

? Financial management entrustment

□Available ?Not available

There is no financial management entrustment during the report period.

? Loan entrustment

□Available ?Not available

There is no loan entrustment during the report period.

(4) Other important contracts

□Available ?Not available

There are no other important contracts during the report period.

18. Social Responsibility

(1) Social responsibility performance

Please refer to2019 Annual Social Responsibility Report disclosed on Securities Times, ChinaSecurities Newspaperandwww.cninfo.com.cn by the Company.

(2) Targeted poverty alleviation social responsibility performance

①Targeted poverty plan

The Company has reached the mutual agreementwithZhuqiao Town Party CommitteeGovernment and Da Langya Village Committee to establish professional grapecooperative.Itplans to help to conductthe construction of 100mu of vineyard per year from 2019 to 2021with a total area of 300 m and also to sign grape purchase contract in order to help localvillagers to get rid of poverty and become better off.

②Summary of annual targeted poverty

Related leaders of the Company visited the village, held meetings with local leaders andpersonnel receiving assistance and worked on the spot to discuss and accelerate assistancemeasures. 3 motor-pumped wells have been digged to assist the target personnel in theconstruction of grape bases.

③ Targeted poverty effectiveness

At present, the Company has completed the preliminary preparations for targeted povertyalleviation in Dalangya Village, and officially started the implementation of povertyalleviation work.

④ Subsequent targeted poverty plan

No

(3) Environmental protection related situation

Whether the listed company and its subsidiaries belong to major polluterspublished by theenvironmental protection departmentYes

of

companName of

major

pollutantsMod

e of

dischQua

ntity

ofDistributi

on

situationDischa

rge

concenImplemente

dpollution

dischargeTota

l

voluTota

l

apprCon

ditio

subsidiary

y orand

particularpollutants

argedisc

hargeoutlet

dischargeoutlet

oftrationstandardme

ofdischarge

volumeofdischarg

eexce

ssivedischarge

ChangyuIcewineChateauCo., Ltd.

Organize

d exhaustgas,inorganizedexhaustgas,wasterwater,noise

hargeoutlet ofboilerchimneyanddischargeoutlet offactorywastewater

Disc2Confirme

d in linewithnationalstandardGraphical SignsforEnvironmentalProtection(GB1556

2.1-1995)

(GB1556

2.2-1995)

g thenationalstandards

MeetinEmission

Standardfor AirPollutantsofBoiler(GB13271-2014),EmissionStandardfor OdorPollutants(GB14554-

93), 4a in

Class 2 ofEmissionStandardforEnvironmental Noise attheBoundary ofIndustrialEnterprises(GB12348-2008),,ComprehensiveWastewaterDischargeStandard ofLiaoningProvince(DB21/1627

35m3/d

m3/d

-2008)No

Construction and operation of pollution prevention facilitiesThe exhaust gas, SO

and NO

Xproduced by this company's boiler are discharged throughceramic tube dust removers and bag dust removers. A wastewater treatment station has beenconstructed. The wastewater treatment process adopts thetreatment process ofhydrolysis-aerobiont. Production wastewater and domestic sewage are treated by the in-plant

wastewater treatment station and then discharged into thewastewater treatmentplantinBeidianzixiang Town.

Environmental impact assessment of construction projects and other environmentalprotection administrative permitsIt has been approved in the Huanhuanjianzi (2016) No.24 issued by the EnvironmentalProtection Bureau of Huanren Manchu Autonomous County.

Emergency plan for emergentenvironmentalincidentThe Company has formulated a comprehensive emergency plan foremergentenvironmentalincident.

Environmental self-monitoring programThe Company has formulated a complete environmental self-monitoring program.

Other environmental information that should be made publicNo

Other related environmental informationNo

19. Other Major issues

□Available ?Not available

There are no other major issues need to be explained during the report period.

20. Major issues of Company’s subsidiaries

□Available ?Not available

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportVI. Changes in Shares and the Shareholders’ Situation

1. Changes in shares

(1) Changes in shares

Unit: share

Amount before this changeChange (+, -)

Amount

Amount after this change
Percentage %Allot new shareDistribute bonus shareTransfer other capital to share capital

others Sub total Amount

1.Shares without trading

limited condition

685,464,000

Percentage %

100.00%

685,464,000

100.00%

(1). A shares 453,460,800

66.15%

453,460,800

66.15%

(2). B shares 232,003,200

33.85%

232,003,200

33.85%

2. Total shares 685,464,000

100.00%

685,464,000

100.00%

Cause of share change

□Available ?Not available

Approval of share change

□Available ?Not available

Transfer ownership of changed shares

□Available ?Not available

Implementation progress of share buy-back

□Available ?Not available

Implementation progress of reducing holding buy-back share through the way of centralized bidding

□Available ?Not available

The influence of share change on the financial indicators such as basic earnings per share, dilutedearnings per share of the latest year and thelatest period, net asset per share belonging to the Company’s common shareholders, etc.

□Available ?Not available

Other contents the Company thinks necessary or securities regulatory departments ask to make public.

□Available ?Not available

(2) Changes in restricted shares

□Available ?Not available

2. Securities issuance and listing situation

(1) Securities issuance (exclude preferred share) during report period

□Available ?Not available

(2) Explanation of change in Company’s total shares and shareholding structure and change in Company’s assets and liability structure

□Available ?Not available

(3) Current employee shares

□Available ?Not available

3. Situation for shareholders and the actual controllers

(1) The number of shareholders of the Company and the shareholdings

Unit:share

the report period

43,856

Total shareholders inTotal number of shareholders by

the end of last mo

disclosure day of the annual report

45,626

Total number of preferred shareholder recovering voting power by the end of

report period (if have) (see note 8)

Total number of preferred shareholder recovering voting power by the end of

last m

the annual report (if have) (see note 8)

onth before the disclosure day of

Shareholders holding more than 5% or the top 10 shareholders holding situationName of Shareholders Character of shareholders

Percentage(%)

Shares held until

the end of thereport period

Changes duringthe report period

Number ofrestricted

shares

Number ofunrestrictedshares

Pledged or frozenShare status AmountYANTAI CHANGYU GROUP CO.,LTD.

Domestic non-state legalperson

50.40%

345,473,856

345,473,856

GAOLING FUND, L.P. Foreign legal person 3.08%

21,090,219

21,090,219

CHINA SECURITIES FINANCE CORP State legal person 2.25%

15,440,794

15,440,794

BBH BOS S/A FIDELITY FD - CHINAFOCUS FD

Foreign legal person

2.22%

15,241,826

15,241,826

SHENWAN HONGYUANSECURITIES(HONGKONG) LIMITED

Foreign legal person

1.20%

8,243,333

-104,330

8,243,333

FIDELITY PURITAN TRUST:

FIDELITY SERIES INTRINSICOPPORTUNITIES FUND

Foreign legal person

0.93%

6,350,762

250,000

6,350,762

GUOTAI JUNANSECURITIES(HONGKONG) LIMITED

Foreign legal person

0.70%

4,810,345

-233,162

4,810,345

CENTRAL HUIJIN ASSETMANAGEMENT LIMITED

State legal person

0.69%

4,761,200

4,761,200

VANGUARD EMERGING MARKETSSTOCK INDEX FUND

Foreign legal person

0.55%

3,788,487

3,788,487

FIDELITY CHINA SPECIAL Foreign legal person 0.55%

3,779,202

3,779,202

SITUATIONS PLC

become a top 10 shareholders(if have)(see note 3)

NoThe explanation for the associated relationship and accordant action

Strategic investors or legal result of the placement of new shares to
Among the top 10 shareholders, Yantai Changyu Group Company Limited has no associated relationship or accordant

action relationship with the other 9 listed shareholders, while the relationship among the other shareholders is unknown.The top 10 shareholders with shares without trading limited conditionName of Shareholders Number of shares without trading limited condition held until the end of the year

Type of shareType of share AmountYANTAI CHANGYU GROUP CO., LTD. 345,473,856

A 345,473,856

GAOLING FUND,L.P. 21,090,219

B 21,090,219

CHINA SECURITIES FINANCE CORP 15,440,794

A 15,440,794

BBH BOS S/A FIDELITY FD - CHINA FOCUS FD 15,241,826

B 15,241,826

SHENWAN HONGYUAN SECURITIES(HONGKONG) LIMITED 8,243,333

B 8,243,333

FIDELITY PURITAN TRUST: FIDELITY SERIES INTRINSICOPPORTUNITIES FUND

6,350,762

B 6,350,762

GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED 4,810,345

B 4,810,345

CENTRAL HUIJIN ASSET MANAGEMENT LIMITED 4,761,200

A 4,761,200

VANGUARD EMERGING MARKETS STOCK INDEX FUND 3,788,487

B 3,788,487

FIDELITY CHINA SPECIAL SITUATIONS PLC 3,779,202

B 3,779,202

The explanation for the associated relationship and accordant action of

the top 10 shareholders with unrestricted shares, the

relationship and acc

ordant action between the top 10 shareholders with

unrestricted shares and the top 10 shareholders

Among the top 10 shareholders, Yantai Changyu Group Company Limited has no associated relationship or accordantaction relationship with the other 9 listed shareholders, and the relationship among the other shareholders is unknown.

activities and stock trading business (if have)(see note 4)

The top 10 shareholders do not involve in financing activities and stock trade business.

Whether or not the Company’s top 10 common shareholders and shareholders withshares without trading limited conditiontake agreedrepurchase trading during the report period

□Yes ?No

There is no agreed repurchase trading taken by the Company’s top 10 common shareholders and shareholders withshares without trading limitedconditionduring the report period.

(2) Situation for the controlling shareholders of the Company

Property of holding shareholders: Property of holding main body undefinedType of holding shareholders: Legal representativeName of controlling shareholder Legal representative Establishment date Organization code Main businessYantai Changyu Group Co., Ltd. Zhou Hongjiang 1997.04.27 913706002656458244

Production and distribution of wine, healthy liquor, distilled liquorand non-alcohol beverages, planting of agricultural products andexport business under the scope of permission.

or shared by the controlling shareholders during the report period

No.Changes in the controlling shareholder during the report period

□Available ?Not available

There are no changes in the controlling shareholder during the report period.

(3) Situation for the actual controllers of the Company

Property of actual controllers: domestic other institutions; foreign other institutionsType of actual controllers: Legal representative

Name of actual controllers Legal representative

Equity situation for the other domestic listed companies controlled

Establishment date Organization code

Main businessYantai Yuhua Investment & Development JiangHua 2004.10.28 76779294-7 Under state permission, property

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportCo., Ltd.

products excluded), hardware and electronical products, grape plantation.ILLVA Saronno Holding S.p.a. Augusto Reina 1984.07.25 -

wholesale and retail of construction material, chemical products (chemical hazard
Directly or indirectly conduct the production and distribution of food products

(alcoholic products included) as well as industrial, commercial, financial and service

activities of any other kinds through joint-stock companies and organizations.

International Finance Corporation

Philippe LEHOUEROU

1956.07.25 -

International Finance Corporation is one of the members of World Bank, mainly dedicated to investment in private sectors of developing countries while providing

technical support and consultation service

sectors of developing countries in order to alleviate poverty and improve people’s life.

Yantai Guofeng Investment HoldingsGroup Co., Ltd.

Rong Feng 2009.02.12 00426068-6

Operating management of state-

. The corporation is a multilateral financial institution that ranks first in the world in terms of providing capital stock and loans to developing countries. Its purpose is to promote sustainable investments of private
owned property right (stock right) authorized by

State-owned Assets Supervision a

operation (including acquisition, reintegration and transfer, etc) of state-

owned

property right and state-

venture investment enterprises or individuals; Partici

pation in the establishment of venture capital investment enterprises and venture capital investment management

consultant institutions; Investment and financing service

financing consultant business; Other business authorized by State-

owned Assets Supervision and Administration Commission of Yantai Municipal Government.(Projects need to be authorized in accordance with the law could carry out

business activities only after the approval of relevant departments )Equity situation fo

controller during the report period

Yantai Yuhua Investment & Development Co., Ltd. did not control

r the other domestic listed companies controlled by the actualthe equity of other domestic and foreign listed companies except the Company

during the reporting period; It is not clear that other actual controllers control the equity of other domestic and foreign listed companies

Company during the reporting period.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportChanges of the actual controllers during the report period

□Available ?Not available

There are no changes in actual controllers during the report period.Introduction for property right and control relations between the Company and its actual controllers

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportActual controller controls the Company through a trust or other asset management ways

□Available ?Not available

(4) Other institutional shareholders holding more than 10% shares

□Available ?Not available

(5) Shares reduction situations of holding shareholders, actual controllers, restructuring side and other commitment subjects

□Available ?Not available

VII. Related Situation of Preferred Shares

□Available ?Not available

There are no preferred shares during the report period.

VIII. Related Situation of Convertible Corporate Bonds

□Available ?Not available

There are no convertible corporate bonds during the report period.

IX. Situation for Directors, Supervisors, Senior Executives and Staff

1. Changes in shareholdings of directors, supervisors and senior executives

Name Post Status Gender Age

Beginning date

of tenure

tenure

Shares held at

Ending date ofthe beginning of

the period

Increasedshares duringthe period

Decreasedshares duringthe period

Otherchanges ofshares held

Shares held atthe end of the

periodZhou Hongjiang ChairmanIncumbentM55 2002.05.20 2022.05.18 0

Sun Liqiang DirectorOutgoingM72 1997.09.18 2019.05.17 0

Leng Bin DirectorIncumbentM57 2000.08.22 2022.05.18 0

Sun Jian Director Incumbent M 53 2019.05.17 2022.05.18 0

Li Jiming DirectorIncumbentM53 2019.05.17 2022.05.18 0

Chen Dianxin DirectorIncumbentF53 2019.05.17 2022.05.18 0

Qu Weimin DirectorOutgoingM62 1997.09.18 2019.05.17 0

Zhang Ming DirectorOutgoingM46 2016.05.26 2019.05.17 0

Augusto Reina DirectorIncumbentM79 2006.12.07 2020.02.20 0

Aldino Marzorati DirectorIncumbentM67 2006.12.07 2020.05.18 0

Appignani Antonio

DirectorOutgoingM81 2006.12.07 2019.05.17 0

Enrico Sivieri DirectorIncumbentM51 2019.05.17 2022.05.18 0

Wei Anning DirectorIncumbentM56 2017.06.15 2022.05.18 0

Wang Zhuquan Independent directorIncumbentM54 2014.05.23 2022.05.18 0

Wang Shigang Independent directorOutgoingM54 2011.05.10 2019.05.17 0

Luo Fei Independent directorIncumbentM67 2016.09.23 2022.05.18 0

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportDuan Changqing Independent directorIncumbentM55 2019.05.17 2022.05.18 0

Liu Huirong Independent directorIncumbentF56 2019.05.17 2022.05.18 0

Liu Qinglin Independent directorIncumbentM56 2019.07.02 2022.05.18 0

Liu Yan Independent directorOutgoingF46 2016.09.23 2019.05.17 0

Guo Guoqing Independent directorOutgoingM57 2018.12.04 2019.07.02 0

Kong Qingkun

Chairman of the Board of Supervisors

IncumbentM47 2013.05.14. 2022.05.18 0

Zhang Lanlan SupervisorIncumbentF50 2013.05.14. 2020.05.18 0

Liu Zhijun SupervisorIncumbentM39 2016.05.26 2020.05.18 0

Sun Jian General managerIncumbentM53 2018.01.10 2022.05.18 0

Li Jiming Chief engineerOutgoingM53 2001.09.14 2019.05.28 0

Li Jiming Deputy general manager

IncumbentM53 2019.05.28 2022.05.29 0

Jiang Hua Deputy general manager

IncumbentM56 2001.09.14 2022.05.29 0

Peng Bin Deputy general manager

IncumbentM53 2018.01.10 2022.05.29 0

Qu Weimin Board secretaryOutgoingM62 1997.09.18 2019.05.28 0

Jiang Jianxun Chief financial officerOutgoingM53 2018.01.10 2019.05.27 0

Jiang Jianxun

Deputy general manager and Board secretary

IncumbentM53 2019.05.28 2022.05.29 0

Pan Jianfu

General manager assistant

IncumbentM44 2018.04.19 2022.05.29 0

Liu Shilu

General manager

assistant

IncumbentM45 2018.04.19 2022.05.29 0

Xiao Zhenbo

General manager assistant

IncumbentM43 2018.04.19 2022.05.29 0

Total -------- -- -- 0

2. Changes in the Company’s directors, supervisors and senior executives

?Available □Not available

Name Position Type Date ReasonSun Liqiang Director Outgoing due to the expiry of term 2019.05.17 The term of office has expired and will no longer be appointed as a

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportdirectorQu Weimin Director Outgoing due to the expiry of term 2019.05.17 The term of office has expired and will no longer be appointed as a

directorZhang Ming Director Outgoing due to the expiry of term 2019.05.17 The term of office has expired and will no longer be appointed as a

directorAppignani Antonio Director Outgoing due to the expiry of term 2019.05.17 The term of office has expired and will no longer be appointed as a

directorWang Shigang Independent director Outgoing due to the expiry of term 2019.05.17 The term of office has expired and will no longer be appointed as an

independent directorLiu Yan Independent director Outgoing due to the expiry of term 2019.05.17 The term of office has expired and will no longer be appointed as an

independent directorGuoGuoqing Independent director Outgoing 2019.07.02 Voluntary resignation prior to expiration of termLi Jiming Chief engineer Outgoing due to the expiry of term 2019.05.28 The term of office has expired and will no longer be appointed as a

chief engineerQu Weimin Board secretary Outgoing due to the expiry of term 2019.05.28 The term of office has expired and will no longer be appointed as a

board secretaryJiang Jianxun Chief financial officer Outgoing due to the expiry of term 2019.05.28 The term of office has expired and will no longer be appointed as a

chief financial officerSun Jian Director Appointment 2019.05.17 Be appointed as a director of the CompanyLi Jiming Director Appointment 2019.05.17 Be appointed as a director of the CompanyChen Dianxin Director Appointment 2019.05.17 Be appointed as a director of the CompanyEnrico Sivieri Director Appointment 2019.05.17 Be appointed as a director of the CompanyDuanChangqing Independent director Appointment 2019.05.17 Be appointed as an independent director of the CompanyLiu Huirong Independent director Appointment 2019.05.17 Be appointed as an independent director of the CompanyLiu Qinglin Independent director Appointment 2019.07.02 Be appointed as an independent director of the CompanyLi Jiming Deputy general manager Appointment 2019.05.28 Be appointed as a deputy general manager of the CompanyJiang Jianxun

Deputy general manager andBoard secretary

Appointment 2019.05.28

Be appointed as a deputy general manager of the Company and board

secretary

3. Situation for work experience

The professional background, main work experiences and present positions of the Company’sdirectors, supervisors and senior executives

(1) Members of Board of Directors

Mr. ZhouHongjiang, male, 55, Chinese, with doctoral degree, senior engineer, used to bethe General Manager of Yantai Changyu Pioneer Wine Sales Co., Ltd.,the DeputyGeneralManager, the General Manager and the Deputy Chairman of Yantai Changyu Pioneer WineCo., Ltd.. He is incumbent asthe representative of the 13

th

National People’s Congress, theChairman of Yantai Changyu Group Co., Ltd.,and the board director and the Chairman of theCompany.Mr. Leng Bin, male, 57, Chinese, with master degree, senior accountant,used to betheDeputy Section Chief and the Section Chief of Yantai Audit Bureau,the board director andthe Chief Accountant of Yantai Changyu Group Co., Ltd. and the board director and theDeputy General Manager of the Company. He is incumbent as the board director of theGroup Company and the Company, and with an additional post of the General Manager ofthe Group Company.Mr. Sun Jian,male, 53,Chinese, MBA, used to be the Deputy General Manager of theCompany. He is incumbent as the board director and the General Manager of the Company,and with an additional post of the board director of the Group Company.Mr. Li Jiming, male, 53,Chinese, with doctoral degree, application researcher, used to be theChief Engineer of the Company. He is incumbent as the board director and the DeputyGeneral Manager of the Company, and with an additional post of the board director of theGroup Company.Mrs. Chen Dianxin, female, 53,Chinese, with master degree of the Party School; from July1985 to September 2013, she successively served as staff of Yantai Chemical Purchasing andSupply Station, Yantai Bureau of Commerce for secondment, staff of Yantai Stated-ownedAssets Assessment Center, the Deputy Director of Yantai Stated-owned Assets AssessmentCenter, the Deputy Section Chief of Assets Assessment Management Department in YantaiState-owned Assets Bureau, the Deputy Section Chief of Assets Assessment ManagementDepartment in Yantai State-owned Assets Supervision and Administration Commission,full-time Deputy Secretary of Party branch in Yantai State-owned Assets Supervision andAdministration Commission, the Section Chief of Property Management Department inYantai State-owned Assets Supervision and Administration Commission. From September2013 to February 2014, she served as the Director of retired carders work office and theSection Chief of Property Management Department in Yantai State-owned AssetsSupervision and Administration Commission. From February 2014 to October 2018, sheserved as the Director of retired carders work office in Yantai State-owned AssetsSupervision and Administration Commission (During the period, she successively andconcurrently served as the Director of Yantai Moon Group Co., Ltd. and Yantai Moon Co.,Ltd., director of Yantai Tayho Advanced Materials Group Co.,Ltd., the Chairman of YantaiGuofeng Investment Holding Group Co., Ltd., the Chairman and the General Manager ofYantai Guosheng Investment Holding Co., Ltd., the Chairman of Yantai Guoxin InvestmentHolding Co., Ltd., the Vice Chairman and the Director of Yantai CIMC Raffles Offshore Co.,Ltd., the Vice chairman and the Director of Yantai CIMC Raffles Shipyard Co., Ltd. and the

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportDirector of Yantai Guoyu Lease Finance Co., Ltd. and so on). Since October 2018, she hasbeen served as the Deputy Secretary of Party branch and the General Manager of YantaiGuofeng Investment Holding Group Co., Ltd. and the current board director of the Company.Mr. Augusto Reina, male, 79 by the end of 2019, Italian, died on February 19

th,2020 (localtime) (Beijing time: February 20

th,2020) died as theChief Executive Officer of severalcompanies including Illva Saronno Holding S.p.A. and Illva Saronno Investment S.R.L., themember of the board of directors of Barberini S.p.a., the director of Federvini (ItalianAlcohols Production and Export Association), the director of Instituto Del Liquore (WineResearch Institute), the director of Assovini (Sicily Viniculture and Wine ProductionAssociation) and the board director of the Changyu Group Co., Ltd. and the Company.Mr. Aldino Marzorati, male, 67, Italian, with bachelor degree, servescurrently as theGeneral Manager of Illva Saronno Holding S.p.A, the member of the board of directors ofsome branches under the Group Company and the board director of Changyu Group Co., Ltd.and the Company.Mr. Enrico Sivieri, male, 51, Italian, with bachelor degree, served successively as thefinancial controller of ARNEG S.p.a., the commercial analyst of SPILLERS FOODSITALIA S.p.a., the trade controller of Nestle’ Purina Petcare Europe, European marketing &sales controller of Nestle’ Purina Petcare Europe, the European supply chain controller ofNestle’ Purina Petcare Europe, the Southern Europe regional controller of Nestle’ PurinaPetcare Europe and theDirector of group financial controlling of IllvaSaronno Holding S.p.A.,and currently serving as a member of the board of directors for Royal Oak Distillery Ltd. andtheGeneral Manager of Illva Saronno Holding S.p.A. and the board director of the Company.Mr. Wei Anning, male, Chinese, 56, with doctoral degree, ever served as AgriculturalEconomist of the World Bank, the Director of North East Asia Food & AgribusinessResearch of the Rabobank, China CEO of the Fortis Bank Belgium, the Executive DeputyPresident of the New Hope Group (Sichuan), the President of Shandong Liuhe Group, theDirector of Xinjiang Kuntai Group Co., Ltd., the Director of Hangzhou United RuralCommercial Bank Co., Ltd, theChairman of the Shandong Chinwhiz Group. He is good atcorporate governance, enterprise development strategy and equity investments. Now, he isserving as the Executive Director and the General Manager of Shanghai Gueva FundManagement Co., Ltd Co., Ltd, the Executive Director of both Ningxia Gueva FundManagement Co., Ltd and Ningbo Gueva Fund Management Co., Ltd, the independentdirector of Dachan Food (Asia) Co., Ltd, Orient Securities Co., Ltd and Fortune SG FundManagement Co., Ltd..He is serving as the board director of the Group Company and theCompany.Mr. Luo Fei, male, 67, Chinese, with doctoral degree, visiting scholar of University ofToronto, doctoral supervisors, Government Special Allowance expert, first batch oftrans-century subject (academic) leading personals of Financial Department. He successivelyserved as the Dean of Accounting Institute in Zhongnan University of Economics and theDean of Accounting Institute in Zhongnan University of Economics and Law. He focuses onthe study of Financial Accounting, Cost Accounting, Financial Management, and so on. Hehas worked in companies for many years and has practical working experience withcompanies. Now he is serving as independent director of the Company.Mr. Wang Zhuquan, male, 54, Chinese, with doctoral degree of Management(Accountancy), first batch of national accounting academic leading personals of FinancialDepartment, the entrant of accountant master cultivation project of Financial Department,

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Reportoutstanding teacher of Shandong province, Government Special Allowance expert, acted asindependent director of the Company from 13

th May, 2010 to 12

thMay, 2013. Now he is aprofessor and a doctoral supervisor of the Ocean University of China as well as the currentindependent director of the Company and the some listed companies which could beexemplified as Qingdao Double-Star Co., Ltd.Mr. DuanChangqing,male, 55,Chinese, with doctoral degree, professor, doctoral andmaster’s supervisor, and the national senior winemaker and senior wine taster.He currentlyserves as the chief scientist of national grape industry technology system andthe Director ofWine Processing Key Laboratory of Ministry of Agriculture and Rural Affairs. Meanwhile,he holds concurrent posts of the Director of China Wine Technology Committee, the Directorof China Wine and Fruit Wine Expert Committee, the Executive President and the SecretaryGeneral of Grape and Wine Branch of Chinese Horticultural Society and the Vice Presidentof China Agricultural Society Grape Branch. Hismajor research fields are the basictheoretical research and related high and new technology research and development as wellas application promotion work in the direction of suitability between ecology in producingarea and grape variety and liquor variety, evolvement mechanism and directional brewing ofwine flavor formation, grape fruit flavor metabolism regulation and product flavor qualityevaluation and so on. He is a current independent director of the Company.Mrs. Liu Huirong, female, 56, Chinese, with doctoral degree, the former Deputy Dean andDean of the Institute of Political Science and Law of Ocean University of China. She used toserve as an independent director of Sailun Group Co., Ltd., Longda Meatand Sacred Sun Co.,Ltd. and Shandong Sacred Sun Power Sources Co., Ltd.. Currently, she is a second-levelprofessor and doctoral supervisor of Ocean University of China and with additional post as aresearcher of the “Belt and Road Initiative” Judicial Research Center of the SupremePeople’s Court, an expert at the Supreme People’s Court for foreign-related commercial andmaritime action expert database, the Deputy Chairman of the sixth Shandong Law Societyand the Deputy Director of the Academic Committee, and the Chairman of the QingdaoLaw-based Government Research Institute. Her research fields are International Law andLegislative Science. She has won the title of Shandong Top Ten Outstanding Young andMiddle-aged Jurists, the third prize of Excellent Social Science Achievement of the Ministryof Education, the third prize of Shandong Excellent Social Science Achievement, the secondprize of Shandong Excellent Philosophy and Social Science Achievement, the first prize ofExcellent Achievement of Shandong Education Department and the Top Talent in QingdaoCity. She is a current independent director of the Company.Mr. Liu Qinglin, male, 56, doctoral degree of Management, Chinese, no overseas permanentresidence. He is currently a professor and doctoral supervisor of Economics Faculty ofShandong University, the Director of Institute for World Economy Studies of ShandongUniversity, the Executive Deputy President of Shandong Institute of Development ofShandong University, a member of a council of China Society of World Economics, anexecutive member of a council of The Association for Canadian Studies in ChinaandShandong Youth Scholars Association, a member of a council of Shandong Association forBusiness Economics and Shandong Price Association. He currently serves as an independentdirector of Shandong XinnengTaishan Power Generation Co., Ltd., an independent directorof WeihaiHuadong Automation Co., Ltd. and an independent director of the Company.

(2) Members of board of supervisors

Mr.Kong Qingkun, male, 47, Chinese, MBA and economist, successively served as a sectionmember of production department in the healthy liquor branch office, a clerk and theDeputyDirector and the Director of general manager office.Ms. Zhang Lanlan, female, 50, bachelor degree and economist, successively served as theDeputy Manager of the import and export branch of the Company and the Manager of importdepartment of the Company. She now is the Director of board of directors’ office.Mr. Liu Zhijun, male, 39, Chinese, bachelor degree, worked in foreign fund department ofEconomy and Trade Bureau in LongkouEconomic Development Zone, served as a newssection member of propaganda department in Longkou Municipal Committee, a member ofpropaganda and mass work section, a member of planning section, the Deputy DirectorMember of programming development and enterprise distribution section, the DeputyDirector Member and the Deputy Chief of programming development section. He now is asupervisor of the Company.

(3) Other senior executives

Mr. Jiang Hua, male, 56, Chinese, with master degree, senior engineer, has been serving asthe DeputyGeneral Manager of the Company since 14

thSeptember, 2001.Mr. Peng Bin, male, 53, MBA, senior engineer, ever successively served as the DeputyDirector of wine-blending workshop and the Director of wine-storage workshop of BrandyCompany under Yantai Changyu Group Co., Ltd., the DepartmentChief of TechnicalTransformation Department and the Minister of Investment and Development Department aswell as theDeputy General Manager of Yantai Changyu Group Co., Ltd. and the GeneralManager Assistant of Yantai ChangyuGroup Co., Ltd.. He serves as the Deputy GeneralManager of the Company.Mr. Jiang Jianxun, male, 53, Chinese, MBA and accountant, served as the Financial Managerof the Company from 20

th May, 2002 to 10

th

January,2018. He serves as the Deputy GeneralManager and Board Secretary of the Company.Mr. PanJianfu,male, Han ethnic, Chinese, 44, MBA and senior economist, used to serve asthe General Manager of the Jiangxi Branch of the Company, the General Manager of theShanghai marketing management company and the General Manager of Beijing marketingmanagement center. Currently, he is the General Manager Assistant of the Company and theGeneral Manager of Beijing marketing management center and Beijing Chateau AFIP.Mr. Liu Shilu,male, Han ethnic, Chinese, 45, master degree, used to be the Manager ofTianjin branch of the Company, the Competence Manager of North China market, theGeneral Manger of Beijing marketing management company, the General Manager ofGuangdong marketing management center and the General Manager of e-commerce branchof the Company. Currently, he serves as the General Manager Assistance of the Companyand the General Manager of Yantai Changyu Pioneer Wine Sales Co., Ltd..Mr. Xiao Zhenbo, male, Han ethnic, Chinese, 43, MBA, served as the Deputy Manager of theCompany’s market strategy development center, the General Manager of Shandongmarketing management company and Yantai Changyu liquor company. He currently servesas the General Manager Assistant of the Company and the General Manager of Zhejiangmarketing management company.Post in the shareholder’s company?Available □Not available

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportName Shareholder’s Company Post

Beginning dateof the post

Ending dateof the post

Paid by shareholder’s

company or notZhou Hongjiang Yantai Changyu Group Co., Ltd. Chairman 2018.01.10 2022.01.11 NoLeng Bin Yantai Changyu Group Co., Ltd. Director 2018.01.10 2022.01.11 YesLeng Bin Yantai Changyu Group Co., Ltd. General manager 2018.01.10 2022.01.11 YesSun Jian Yantai Changyu Group Co., Ltd. Director 2018.01.10 2022.01.11 NoLi Jiming Yantai Changyu Group Co., Ltd. Director 2018.01.10 2022.01.11 NoChen Dianxin Yantai Changyu Group Co., Ltd. Director 2018.11.15 2022.01.11 NoAugusto Reina Yantai Changyu Group Co., Ltd. Director 2018.01.10 2022.01.11 NoAldino Marzorati Yantai Changyu Group Co., Ltd. Director 2018.01.10 2022.01.11 NoEnrico Sivieri Yantai Changyu Group Co., Ltd. Director 2018.01.10 2022.01.11 NoStefano Battioni Yantai Changyu Group Co., Ltd. Director 2020.04.09 2022.01.11 NoWei Anning Yantai Changyu Group Co., Ltd. Director 2018.01.10 2022.01.11 NoExplanation for the post inthe shareholder’s company

No.

Post at other companies

□Available ?Not available

Disciplinary actions taken by securities regulators in recent 3 years to the Company’sdirectors, supervisors and senior management both on the job and left during the reportperiod?Available □Not AvailableDuring the report period, the Shandong Regulatory Bureau of China Securities RegulatoryCommission issued a “Decision on Measures to Issue Warning Letters to Mr. ZhouHongjiang and Mr. Qu Weimin”, but it did not impose administrative penalty on Mr. ZhouHongjiang and Mr. Qu Weimin.

4. Salary of directors, supervisors and senior executives

The situation of decision-making process, the basis of determination and the actual paymentof directors, supervisors and senior executivesThe salary for the independent directors is paid according to the resolution of shareholders’meeting. The salary for the chairman, directors with administration duty, supervisors,managers and other senior management should be paid on basis of the evaluation resultaccording to the Yantai Changyu Pioneer Wine Co., Ltd. Executive Compensation andPerformance Design, which was passed during the Board of Directors’ meeting.Salary of directors, supervisors and senior executives during the report period

Unit: CNY’0000

Name Post Gender Age Status

Company before tax

Total reward from theWhether get reward

from related parties

Zhou Hongjiang Chairman M

of the Company
55

Incumbent

146.53

NoSun Liqiang Director M

Outgoing 61.06

72

NoLeng Bin Director M

Incumbent

57

YesSun Jian Director and General Manager M

53

Incumbent

132.12

NoLi Jiming Director and Deputy General Manager M

Incumbent

53

98.33

NoChen Dianxin Director F

53

Incumbent

NoQu Weimin Director and Board Secretary M

Outgoing 41.68

62

NoZhang Ming Director M

Outgoing 0

46

NoAugusto Reina Director M

Incumbent

79

NoAldino Marzorati Director M

67

Incumbent

NoAppignani Antonio Director M

Outgoing 0

81

NoEnrico Sivieri Director M

Incumbent

51

NoWei Anning Director M

56

Incumbent

NoWang Zhuquan Independent Director M

Incumbent

54

NoWang Shigang Independent Director M

54

Outgoing 4

NoLuo Fei Independent Director M

67

Incumbent

NoDuan Changqing Independent Director M

Incumbent

55

5.33

NoLiu Huirong Independent Director F

56

Incumbent

5.33

NoLiu Qinglin Independent Director M

Incumbent

56

NoLiu Yan Independent Director F

46

Outgoing 4

NoGuoGuoqing Independent Director M

57

Outgoing 8

NoKong Qingkun Chairman of the Board of Supervisors M

47

Incumbent

67.19

NoZhang Lanlan Supervisor F

Incumbent

50

21.48

NoLiu Zhijun Supervisor M

39

Incumbent

NoJiang Hua Deputy General Manager M

Incumbent

56

110.23

NoPeng Bin Deputy General Manager M

53

Incumbent

95.23

NoJiang Jianxun

Deputy General Manager and Board

M

Incumbent

Secretary

101.54

NoPan Jianfu General Manager Assistant M

44

Incumbent

65.47

NoLiu Shilu General Manager Assistant M

Incumbent

45

73.21

No

Xiao ZhenboGeneral Manager AssistantM43Incumbent97.79No
Total----1,158.52-

The awarded equity incentives for the directors, supervisors and senior executives of theCompany during the report period

□Available ?Not available

5. Staff of the Company

(1) Staff number, specialty constitution and education degree

Incumbent staff number of parent company (people)1,280
Incumbent staff number of major subsidiary companies (people)1,399
Total incumbent staff (people)2,679
Total staff getting paid in current period (people)2,679
Retired staff number whose expenses are undertaken by parent company or0
subsidiary companies (people)
Specialty constitution
CategoryNumber of people (people)
Production staff873
Sales staff1,316
Technical staff165
Financial staff131
Administrative staff194
Total2,679
Education degree
CategoryNumber (People)
Bachelor and above907
Junior College884
Technical secondary school495
Senior high school and below393
Total2,679

(2) Remuneration policy

The Company has established and improved the remuneration and welfare system, includingsalary system, incentive mechanism, social security and medical insurance and so on, toensurethe participation of all employees. In accordance with the law, the Company purchasessocial endowment insurance, medical insurance, occupational injury insurance,unemployment insurance and maternity insurance, and pays housing fund for the employees.Based on the principle of “distribution according to work and equal pay for equal work”, theCompany pays the staff’s remuneration timely. With the improvement of the Company’sprofitability, the Company steadily improves the staff’s remuneration and welfare, andprovides its employees the competitive salary and equal opportunity for development.

(3) Training plan

① Senior and Middle-level Managers

1) General training

By hiring professional lecturers to the Company or giving centralized lectures throughremote network videos, the Company could select training topics related to thecompany’s industrial development, business direction and management philosophy toexpand the strategic thinking of middle and senior managers, improve the businessphilosophy and improve the scientific decision-making ability and business ability.The Company takes meetings instead of training; during each meeting, to learn thecentral, national and governmental fundamental policies, to analyze the domestic andinternational political situation and economic situation, and research and interpret theinfluences of relevant policies and regulations on the development of the Company;meanwhile, through the research and analysis of domestic and foreign industryproduction, technology, management, marketing and other development trends, itprovides a basis for the Company to timely adjust the business strategy.

2)Professional training

Middle and senior management personnel determine self-study books by optional waysevery year, and submit their post-reading and suggestions for the Company’sdevelopment at the end of the year.According to the different personal responsibilities, the Company organizesmanagement team to attend high-end entrepreneurial forums and summits, and to visitand learn from successful enterprises at home and abroad.Middle-level managers are encouraged to participate in university correspondence andself-taught examination, or engage in advanced studies such as MBA and other masterdegrees. The Company organized professional managerial staffs from human resource,finance, equipment, safety and technical quality to participate in the qualificationexamination and obtain qualification certificates.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportThe Company organized managers to participate in specialized training of safety,human resource, law, technology, equipment, finance, WSET, tourism, etc. organizedby the professional management departments.

② Ordinary Management Personnel

1). General training

The Company sets courses aiming at improving employees’ management ability,innovation ability and executive ability, and hiring professional lecturers or universityteachers to teach at the Company.Ordinary management personnel are encouraged to attend the common-sense generaltrainings including enterprise culture, regulation framework and various liquor productsknowledge.The Company organizes employees’ outdoor quality development trainings in order toimprove team work and cohesion.

2). Professional training

During the year, the professional supervisors selected 2 books for their ordinarymanagement personnel for personal self-study; at the end of the year, the ordinarymanagement personnel submit post-reading and the development suggestions for theCompany.The Company encourages qualified ordinary management personnel to take universitycorrespondence and self-taught examination, or engage in advanced studies such asMBA and other master degrees. The Company organized professional managerial staffsfrom human resource, finance, equipment, safety and technical quality to participate inthe qualification examination and obtain qualification certificates.

③ First-line Production Personnel

1). General training

First-line production personnel participate in the general training on enterprise culture,rules and regulations and the knowledge of various alcoholic products of the Companyorganized by their units, and strengthen the knowledge training on human resourcemanagement, such as attendance management, labor discipline and comprehensiveevaluation and so on.

2). Professional training

For workers of different trades such as electricians, coolerman, forklift drivers,assemblers, tour guides, personalized product designers, etc., the Company organizesthem to participate in training to improve professional skills and operation levels, aswell as the special training on safety, technology, equipment and comprehensivemanagement of the unit, and participate in the vocational skills completion organizedby the City Municipal Bureau of Human Resources and Social Affairs.

④ Marketing Personnel

1). General training

Marketing personnel independently study mainly focuses on the marketing textbooks of“Growth”, as well as training materials including the Company’s related managementsystem, production knowledge, sales responsibility system, etc..

2). Professional training

Professional lecturers would be employed to the company or through remote internetvideos to give lectures about successful liquor cases, current economic trend researchfor domestic and foreign wine industry and other topic in order to take training forpersonnel whose levels are or above manager assistant in city marketing managementcompanies.Besides that, the Company takes training for city marketing managers on how toimprove marketing skill as well as executive force of sales policy by professionalmanagement cadres or hired professional lecturers.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportFor business directors and other personnel, each marketing management company shallbase itself on the local area to conduct trainings on successful marketing cases andmarketing management concepts with the combination training method of hiringlecturers and going out to visit and learn.

⑤ New Entry University Students

New entry university students are trained by middle and senior managers in the aspectsof corporate culture, rules and regulations, production safety, product quality,marketing strategy, salary and assessment system, etc.; meanwhile, professionallecturers will be hired to conduct training on role change, workplace etiquette,teamwork and other aspects, as well as interspersed the military training and qualitydevelopment training.

(4) Labor outsourcing

□Available ?Not available

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportX. Corporate Governance

1. Current Corporate Governance Situation of the Company

(1) About shareholders and shareholders’ meeting

The Company has set up the Deliberation Rules of Shareholders’ Meeting, and convened theshareholders’ meetings in strict accordance with requirements of standard opinions ofshareholders’ meeting, made the great effort to provide convenient conditions for moreshareholders to participate the shareholders’ meeting, and ensured all shareholders to enjoysame equity and well exercised their rights. The Company drew great attention to thecommunication and exchange with shareholders, actively responded the shareholders’inquiry and questions, and widely listened to the suggestions and comments fromshareholders.

(2) About the Company and holding shareholder

The Company has independent business and self-management capacity, which isindependent from the controlling shareholders in business, staffs, assets, institutions andfinance. The Board of Directors, Board of Supervisors, management teams and also internalinstitutions are able to operate independently in the Company. The controlling shareholdersof the Company could regulate their behaviors without directly or indirectly interfering in theCompany’s decision-making and business activities beyond the shareholder’s meeting;meanwhile, there is no case of encroaching on the Company’s assets and damaging theinterest of the Company and minority shareholders.

(3) About the director and board of directors

The Company strictly appoints all directors in light of Corporation Act and Articles ofAssociations. The qualifications of all directors are in line with the requirements of laws andregulations. In accordance with the requirements of Corporate Governance Guidelines, theCompany has carried out the cumulative voting system in the director selection. At present,the Company has five independent directors accounting for above one third of all directors,and the number and personnel composition of board of directors was basically in accord withrequirements of regulations as well as Articles of Associations. All directors of the Companywere able to carry out work in accordance with the Rules of Board of Directors’ Procedureand Working Rules for Independent Directors, punctually attended the board of directors’and shareholders’ meetings, actively took part in relevant knowledge training, were familiarwith the laws and regulations concerned, had a deep knowledge and long experience ofpractitioners, and performed their duties according to the law and regulations. The Board ofDirectors convened the meetings complies with relevant laws and regulations.

(4) About supervisor and board of supervisors

The Company strictly elected all supervisors in light of the procedures stipulated in theCorporation Act and Articles of Associations. At present, board of supervisors has threepeople among which one supervisor is representative for staff. The number and compositionof board of supervisor meet the requirements of regulations and laws. All supervisors of theCompany could follow the requirement of Rules of Board of Supervisors’ Procedure, insistthe principle of responsibility to all shareholders, seriously perform their duties, effectivelysupervise and present their independent opinions on important issues, interrelated deals,financial status, the duty performance of directors and managers of the Company.

(5) About performance evaluation and incentive system

The engagement of managers was open and transparent, and accorded with laws andregulations. The Company has established and gradually improved the performance

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Reportevaluation standard and formed efficient incentive system, so as to ensure the salary of staffto be linked with work performance.

(6) About stakeholders

The Company could fully respect and safeguard the legal rights of the party with relevantbenefit, cooperate actively with the stakeholders, jointly drive the Company to developcontinually and stably, pay great attention to the issues such as local environmental protectionand public utilities etc., and fully assume the due social responsibility.

(7) About the information disclosure and transparency

The Company has appointed the board secretary to be responsible as the head of investorrelation management including information disclosure, investor relations management andreception of shareholders’ visit and consultation. The Company has also assigned ChinaSecurities Newspaper, Securities Times, Honkong Commercial Daily and web sitehttp://www.cninfo.com.cn/ to disclose information, punctually, accurately and truly disclosedany information in the light of requirement of relevant laws and rules, and also ensured allshareholders to have same opportunity to acquire any information.In order to further perfect the Company’s governance system, during the report period, theCompany formulated and improved the management systems including Three-year Plan forWine and Brandy Raw Materials and Bulk Wines, Options on the Construction of theWinemaker Team of Changyu Company and so on.Whether or not there is significant variance between the Company’s actual situation ofcorporate governance and the normative documents about listed company governance issuedby China Securities Regulatory Commission.

□Yes ?No

There is no significant variance between the Company’s actual situation of corporategovernance and the normative documents about listed company governance issued by ChinaSecurities Regulatory Commission.

2. Relative to the controlling shareholder, independence of the Company on business,

personnel, assets, organization and finance

(1) Personnel Arrangement

The Company’s general manager, deputy general managers and other senior officers, all ofwhom were paid by the Company and did not hold any concurrent administrative ranks in thecontrolling units. The Company was entirely independent in personnel arrangement,conclusion and adjustment of labor contracts thanks to its sound and independent system forlabor, personal and salary management.

(2) Assets:

Tangible assets and Intangible assets including trademark, industrial property right andnon-patent technologies were all clearly divided between the Company and the controllingshareholders, and all legal formalities were completed. As an independent legal entity, theCompany operates independently in accordance with the law, and does not provide any formof guarantee with its assets for shareholders’ or individuals’ liabilities or other legal or naturalpersons. The Company owns trademarks including “黄金冰谷”, “爱斐堡”, “爱菲堡”,“爱斐” and “AFIP”, etc. However, due to some historical problems, the ownership of theintangible assets such as the trademark of “张裕” (Changyu) that the Company is licensed touse, patent and so on is still owned by the controlling shareholders. Except for partialtrademarks which cannot be separated from “张裕”(Changyu) trademark, the trademarks

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Reportand patents that could have been registered or applied by the Company but were registered orapplied by Changyu Group who then authorized the Company for usage, excluding a handfulof which are unable to transfer due to the reasons such as litigation, most of them have beentransferred to the Company by Changyu Group for free before the end of 2019 in order toensure the independence and completeness of the Company’s assets.

(3) Finance

The Company is equipped with independent finance department, financial administrator andfinancial and accounting staff, as well as a complete, independent and standardized financialaccounting system. The Company also opened its own bank accounts, independent andlegally paying taxes and workers insurance fund. All financial individuals do not hold anyconcurrent posts in associated companies and are able to make financial decisionsindependently. The Company has its own audit department, which is especially responsiblefor the internal audit work of the Company.

(4) Independent Institutions

The Company has set up a sound organizational framework, in which the Board of Directorsand Board of Supervisors operate independently, no superior and subordinate relationshipexists between the functional departments of the controlling shareholder. The Company hasits own independent production & business offices, and all functional departments areindependent to exercise their powers and carry out the production and business activitiesindependently.

(5) Operations

The operations of the Company are independent of the controlling shareholders. TheCompany owns itself completely independent systems covering research and development,financial accounting, labor and human resource, quality control, raw materials purchase,production and sales, has the independent management ability, and does not have the problemthat entrusts the controlling shareholders to buy and sell on commission, nor exist thehorizontal competition with controlling shareholders.

3. Situation for Horizontal Competition

□Available ?Not available

4. Information for the shareholders’ meeting and temporary shareholders’ meeting held

during the report period

(1) Information for the shareholders’ meeting during the report period

Session Meeting type

Participation ratio of investorsConvening dateDisclosure date

Disclosure Index2018 AnnualShareholders’

Meeting

Annualshareholders’

meeting

60.86% 2019.05.17 2019.05.18

http://www.cninfo.com.cn

Resolution Announcement of 2018

Annual Shareholders’ Meeting(Announcement

no.:2019-Temporary25)

2019 Annual First

InterimShareholders’

Meeting

InterimShareholders’

Meeting

62.36% 2019.07.02 2019.07.03

Resolution Announcement of 2019

Annual First Interim

Meeting (Notification

no.:2019-Temporary37)

(2) Request for convening temporary shareholders’ meeting by priority shareholders

owing recovered voting right

□Available ?Not available

5. Performance of independent directors during the report period

(1) Attendance of independent directors for the board of directors and the shareholders’

meeting

Name

Requiredattendance time

Personalattendance

Communication

attendance

Authorizedattendance

Absence

Attendance of independent directors for the board of directors
Whether or not to

attend the meetings

personally for

successive twiceAttendance

time for theshareholders’

meeting
Wang Zhuquan82600No0
Wang Shigang41300No0
Luo Fei82600No0
DuanChangqing40310No0
Liu Huirong41300No0
Liu Qinglin21100No1
Liu Yan41300No0
GuoGuoqing61500No0

Explanation for failed to personally attend the Board of Directors’ meetings for successivetwo timesDuring the report period, there were no independent directors who did not attend theshareholders’ meetings in person for two consecutive times.

(2) Any objections for the Company’s projects from the independent directors

Whether or not the independent directors raised any objection for the Company’s projects

□Yes ?No

During the report period, the independent directors did not raise any objections for theCompany’s projects.

(3) Other explanations on independent directors’ performance

Whether or not the independent directors’ propositions are accepted by the Company?Yes □NoExplanation on acceptance or refusal of the independent directors’ propositions to theCompanyDuring the report period, the independent directors suggested the Company to communicatewith all stakeholders as soon as possible to properly handle the trademark and patentregistration matters concerned by investors; as well as the charged using fee and using issues oftrademark such as “Changyu” etc.. The Company has adopted the suggestions of theindependent directors, actively coordinated with various stakeholders, and finally reached aconsensus to better solve the above issues.

6. Performance of the special committees under the Board of Directors during the

report period

①Auditing Committee: During the report period, the Company’s auditing Committee

conducted an ex-ante, in-process, and post-event review to related annual report audit workand made relevant arrangements. The auditing Committee believed that 2018 annual financialstatements issued by the Company met the requirement of Accounting Standards for BusinessEnterprises and truly and fairly reflected the balance condition up to December 31

st

, 2018 aswell as 2018 annual business performance and cash flow. There were no unsolved majordivergences in accounting and auditing or major risk issues affecting the Company'smanagement. The Company operated steadily and had the ability of continuous operations.Proposals including 2018 Annual Self-assessment Report on Internal Control,Draft proposalon 2018 Annual Profit Distribution,Appointing Certified Public Accountants Firm,Change inAccounting Policy,2018 Annual Report, 2019 Semi-annual Report and 2019 Annual AuditPlan were deliberated. Auditing committee passed above-mentioned proposals and submittedthe related proposals to board of directors for deliberation.

②Emolument Committee: Emolument Committee is responsible for assessment of the

economy responsibilities of the directors and the senior executives who receive salaries fromthe Company and examination of the salary policy and scheme designed for the Company’sdirectors and senior executives. During the report period, the Company held EmolumentCommittee meeting three times and deliberated and passed the Executive Compensation andPerformance Design, Proposal on 2018 Annual Performance Assessment Results of theCompany’s Senior Executives, and Proposal on the Election of the Convener of theCompensation Committee. The meeting considered that all the contents of the Proposal on2018 Annual Performance Assessment Results of the Company’s Senior Executives submittedto the meeting deliberation by the Company are in line with the relevant provisions of theCompany, and the Executive Compensation and Performance Designcon forms with theactual situation of the Company, in which the performance appraisal is more scientific andreasonable that could better restrain and motivate senior managers. The meeting agreed to theabove proposals and submitted them to the board of directors for deliberation. Mr. WangZhuquan was elected as the convener of the Remuneration Committee in this meeting.During the report period, the Board of Directors’ Emolument Committee also examined the2018 annual payroll records of the directors and the senior managers who receive salariesfrom the Company and believes that the salaries of the Company’s directors, supervisors andsenior managers received from the Company is strictly assessed and delivered based on theCompany’s economic responsibility assessment system. The salaries disclosed by theCompany are in conformity with the actually paid amount.

7. The work of the Board of Supervisors

Whether or not the Board of Supervisors found any existence risk to the Company inoversight activities during the report period

□Yes ?No

The Board of Supervisors has no objections to supervision matters during the report period.

8. Performance Evaluation and Incentive situations of Senior Management

The Company has already established a sound system for evaluation of achievement of seniormanagement and the related incentive system which linked the reward with the Company’sbenefit and personal achievement. The Emolument Committee under Board of Directorsassumed the responsibility of stipulating the policy and appraising the scheme for salaries andrewards. Based on the Company’s annual business planning goals, this committee examinedsenior personals and also their responsible subsidiaries or departments according to theirmanagement achievement and index and took these as criterion of awards or penalties.

During the report period, because of not finishing the annual business plan deliberated andpassed in the Board of Directors’ meeting at the beginning of the year, the total salaries andrewards of the senior management are basically equal to that of last year.

9. Internal Control

(1) Specific situations for significant defects of the internal control found during the

report period

□Yes ?No

(2) Self-assessment report on internal control

2020.04.24

Disclosure date for full text of the internal control self-assessment report
Disclosure index for full text of the internal control

self-assessment report

Report on Internal Control disclosed on Securities Times,China Securities Journal and

www.cninfo.com.cn by the Company on April 20

th

th

, 2020.
Percentage of total unit assets included in scope of

the assessment accounting for the Company’s total

89.23%

assets of consolidated financial statements
Percentage of unit operating income included in

scope of the assessment accounting for theCompany’s operating income of consolidated

91.77%

financial statements
Standards of Defect Identification
CategoryFinancial reportNon-financial report
Qualitative criteriaSignificant defects: one defect of internal control,

individually or together with

misstatements, which cannot be promptly prevented, orfound and corrected timely in the financial report. Forexample: ?

Company’s Directors, Supervisors and

Senior Management have fraudulent practices; ? TheCompany makes corrections for the published financialreport; ? The audit of external intermediary agent findssignificant misstatement existing in the current financialreport, but the Company does not realize it during theoperation process; ?

appears in the medias with involving a wide scope; ?

The Company’s audit committee and internal audit

department makes an inefficient supervision for internalcontrol; ? Other situations maybe cause significantmisdirection which guides the report users to make theright judgment.Major defects:The defect of internal control, individually

probability to cause the significant misstatements, whichcannot be promptly prevented, or found and correctedtimely in the financial report, although the misstatementsneither achieves nor exceeds the importance level but still

arising the attention of Board of Directors and

management team. ?

acc

ounting regulations in accordance with generally

accepted accounting principles; ? Failure to establish theanti-fraud procedures and control measures; ? Failure toset up corresponding control mechanism or to carry outand take corresponding compensating

accounting treatments with irregular and special deal; ?Negative news appears in the media with influencing awide scope; ? One or more defects exist in the controlduring the process of the ending financial report, and thetarget of achieving truthfulness and integrality cannot bereasonably guaranteed in the financial report; ? Generaldefects refer to the other control defects, which do not

constitute the significant and major defects.Significant defects: Any situations listed below

appears, it can be regarded as significant defects. ?Operation: Unable to achieve all operation target or keybusiness index, widely out of budget in various aspects.?

person death, or more than 3 person serious injuries. ?

Major negative effects: Negative information

frequently appears in the medias with involving a wide

media. ?

Environment effects: Create irreparable

damages to environment, and cause massive publiccomplains.Major defects: Any situations listed below appears, itcan be regarded as major defects. ?Operation: Unableto achieve partly operation target, a big margin out ofbudget in various aspects. ? Safety accident effects:

Without reaching the person loss or the number ofserious injury of significant defects. ? Major negative

influencing a wide scope in the provincial mainstreammedia. ?

Environment effects: Cause heavy

environment damages and massive public complains,ought to carry out the significant remedial measures.General defects: Any situations listed below appears, itcan be regarded as general defects. ?Operation: Othereffects unable to constitute the significant defects ormajor defects. ?

injury less than the quantitative standards of majordefects. ? Major negative effects: Other defects unableto constitute the significant defects or major defects. ?Environment effects: Other environment effects unableto constitute the significant defects or major defects.

Safety accident effects: Personal
Quantitative criterionFor total assets/Owner’s equity:For direct property loss:

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report?

1%

? Major defects: 0.5%≦misstatements<1%? General defects: misstatements<0.5%For operation revenue:

? significant defects: misstatements ≧1%? Major defects: 0.5%≦misstatements<1%? General defects: misstatements<0.5%For pretax profit:

? Significant defects: misstatements≧5%? Major defects: 2%≦misstatements<5%

? General defects: misstatements<2%? Significant defects: More than CNY10 million

? Major defects: CNY1 million-CNY10 million(including 1 million)? General defects: Less than CNY1 million

Number of significant defect in financial report0
Number of significant defect in non-financial report0
Number of major defect in financial report0
Number of major defect in non-financial report0

10. Internal control audit report

?Available □Not available

Audit opinions of the internal control audit report
We believe that Yantai Changyu Pioneer Wine Co., Ltd. kept effective internal control to financial report in all significant aspects in accordance with General Criteria of Company’s Internal Control and other related rules on December 31

st

, 2019.
Disclosure of the internal control audit reportDisclosure
Disclosure date for the full text of the internal control audit report

April 24

th, 2020Disclosure index for the full text of the internal control auditreport

Securities Times, China Securities Journal and www.cninfo.com.cn by the

Company.
Opinion type of the internal control audit reportStandard without reserved opinion
Whether or not exists significant defects in non-financial reports

NoWhether or not the accounting firm issued non-standard opinions for the audit report ofinternal control

□Yes ?No

Whether the audit report of internal control issued by the accounting firm is in consistencywith the self-assessment report of the board of directors?Yes?No

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportXI. Related Situation of Corporation BondsWhether the Company has the corporation bonds issued publicly and listed on the stockexchange, which has not matured or has matured but failed to fully redeem on the date ofapproval of the annual reportNo

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportXII. Financial Report

1. Audit Report

Type of audit opinionStandard unqualified audit opinion
Date signed on audit reportApril 22nd, 2020

Audit agency name

Audit report No. KPMG Huazhen ShenZi No. 2001809

KPMG HuazhenCertified Public AccountantsCo., Ltd. (special general partnership)Certified public accountant's name

Certified public accountant's nameMs. Wang Ting, Ms. Chai Jing

YANTAI CHANGYU PIONEER WINE COMPANY LIMITED

ENGLISH TRANSLATION OF FINANCIAL STATEMENTSFOR THE YEAR 1 JANUARY 2019 TO 31 DECEMBER 2019IF THERE IS ANY CONFLICT BETWEEN THE CHINESE VERSION AND ITS ENGLISH

TRANSLATION, THE CHINESE VERSION WILL PREVAIL

AUDITOR’S REPORT

KPMG Huazhen Shen Zi No. 2001809

All Shareholders of Yantai Changyu Pioneer Wine Company Limited:

Opinion

We have audited the accompanying financial statements of Yantai Changyu Pioneer WineCompany Limited (“Yantai Changyu”), which comprise the consolidated balance sheet andcompany balance sheet as at 31 December 2019, the consolidated income statement andcompany income statement, the consolidated cash flow statement and company cash flowstatement, the consolidated statement of changes in shareholders’ equity and companystatement of changes in shareholders’ equity for the year then ended, and notes to thefinancial statements.

In our opinion, the accompanying financial statements present fairly, in all material respects,the consolidated financial position and financial position of Yantai Changyu as at 31December 2019, and of its consolidated financial performance and company financialperformance and its consolidated cash flows and company cash flows for the year then endedin accordance with Accounting Standards for Business Enterprises issued by the Ministry ofFinance of the People’s Republic of China.

Basis for Opinion

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

AUDITOR’S REPORT (continued)

KPMG Huazhen Shen Zi No. 2001809

Key Audit Matters

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

Recognition of Sales Revenue from DistributorsRefer to the accounting policies set out in the notes to the financial statements “III.Significant accounting policies and accounting estimates” 22 and “V. Notes to theconsolidated financial statements” 35.Key Audit Matters

How the Matter was Addressed in OurAuditThe principal activities of Yantai Changyu andits subsidiaries (hereinafter referred to as“Yantai Changyu Group”) include manufactureand sales of wine, brandy and sparkling wine.The revenue of Yantai Changyu Group ismainly derived from sales of sidtributors. Alldistributor transaction terms adopt the unifiedtransaction terms formulated by YantaiChangyu Group.Sales revenue from distributors is recognisedwhen Yantai Changyu Group transfers themajor risks and rewards of product ownershipto the distributors, and these transfers arecompleted when the goods are delivered todistributors and signed for acceptance.As revenue is one of the key performanceindicators of Yantai Changyu Group, there is aninherent risk that the management willmanipulate revenue in order to achieve specificperformance objectives or expectations.Therefore, we recognise sales revenue fromdistributors as a key audit matter.

Our audit procedures to evaluate revenuerecognition of sales revenue fromdistributors included the following:

? Understand and evaluate theManagement’s design and operationeffectiveness of key internal controlsrelated to distributor sales revenuerecognition;? Selecting samples, review sales

contracts Yantai Changyu Groupsigned with distributors in order toexamine whether the Group hasadopted the unified transaction terms,and evaluate whether the accountingpolicy of revenue recognition meetsthe requirements of the AccountingStandards for Business Enterprises;

? On a sampling basis, reconcile the

revenue to relevant supporting filessuch as relevant orders and signeddelivery notes, etc. to evaluatewhether revenue is recognised inaccordance with the accounting policyof Yantai Changyu Group;

AUDITOR’S REPORT (continued)

KPMG Huazhen Shen Zi No. 2001809

Key Audit Matters (continued)

Recognition of Sales Revenue from Distributors (continued)Refer to the accounting policies set out in the notes to the financial statements “III.Significant accounting policies and accounting estimates” 22 and “V. Notes to theconsolidated financial statements” 35.The Key Audit Matters

How the matter was addressed in ouraudit

? On a sampling basis, reconcile thesales transaction before and afterbalance sheet date to relevantsupporting files such as relevantorders, signed delivery notes, etc. toevaluate whether revenue isrecognised in appropriate accountingperiod;? Selecting samples, perform

confirmation procedures to thebalances of current accounts onbalance sheet date and the amount ofsales transaction for the year;? Check whether significant sales

returns exist in sales record after thebalance sheet date and check relevantsupporting files in order to evaluatewhether relevant revenue is recordedin the appropriate accounting period;? Select revenue accounting entries that

meet specific risk criteria and checkrelated supporting documents.

AUDITOR’S REPORT (continued)

KPMG Huazhen Shen Zi No. 2001809

Other Information

Management of Yantai Changyu is responsible for the other information. The otherinformation comprises all the information included in the 2019 annual report, other than thefinancial statements and our auditor’s report thereon.

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

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

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

Responsibilities of Management and Those Charged with Governance for the FinancialStatements

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

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

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

Auditor’s Responsibilities for the Audit of the Financial Statements

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

AUDITOR’S REPORT (continued)

KPMG Huazhen Shen Zi No. 2001809

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

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

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

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

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

procedures that are appropriate in the circumstances.

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

accounting estimates and related disclosures made by the management.

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

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

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

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

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

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

AUDITOR’S REPORT (continued)

KPMG Huazhen Shen Zi No. 2001809

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

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

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

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

KPMG Huazhen LLP Certified Public Accountants Registered

in the People’s Republic of China(Stamp)

Wang Ting (Engagement Partner)(Signature and stamp)

Beijing, China Chai Jing(Signature and stamp)

Date:22/04/2020

Yantai Changyu Pioneer Wine Company LimitedConsolidated balance sheetas at 31 December 2019(Expressed in Renminbi Yuan)

Note 2019 2018

Assets

Current assets

Cash at bank and on handV. 11,565,783,9801,475,700,477
Bills receivableV. 2-288,667,988
Accounts receivableV. 3266,218,153242,153,083
Receivables under financingV. 4316,470,229-

Prepayments V. 5 67,707,537 4,219,949

Other receivablesV. 624,246,81222,636,086
InventoriesV. 72,872,410,4072,724,591,457
Other current assetsV. 8267,424,938258,676,396
Total current assets5,380,262,0565,016,645,436

Non-current assets

Available-for-sale financial assets-467,251
Long-term equity investmentsV. 943,981,130-
Investment propertiesV. 1029,714,58631,572,489
Fixed assetsV. 115,894,068,8985,749,731,667

Construction in progress V. 12 567,478,833 759,296,591

Bearer biological assetsV. 13202,425,286209,266,373
Intangible assetsV. 14651,946,355655,473,459
GoodwillV. 15141,859,193165,199,111
Long-term deferred expensesV. 16277,595,408244,640,416

Deferred tax assets V. 17 264,926,503

285,436,259

Other non-current assetsV. 18193,674,320-
Total non-current assets8,267,670,5128,101,083,616
Total assets13,647,932,56813,117,729,052

The notes on pages 111 to 213 form part of these financial statements.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedConsolidated balance sheetas at 31 December 2019 (continued)(Expressed in Renminbi Yuan)

Note 2019 2018

Liabilities and shareholders’ equity

Current liabilities

Short-term loansV. 19754,313,744688,002,410
Accounts payableV. 20570,252,612713,572,881
Advance payments receivedV. 21120,609,499226,075,244
Employee benefits payableV. 22234,459,116212,304,217

Taxes payable V. 23 375,169,971

128,912,790

Other payablesV. 24450,532,485608,479,890
Non-current liabilities due within one year

V. 25 150,826,221 152,940,788

Total current liabilities2,656,163,6482,730,288,220
Non-current liabilities

Long-term loans V. 26 128,892,501 156,480,662

Long-term payablesV. 27191,000,000225,000,000
Deferred incomeV. 2870,701,28886,227,293
Deferred tax liabilitiesV. 1714,691,42422,010,647
Other non-current liabilitiesV. 297,645,7777,234,853

Total non-current liabilities 412,930,990 496,953,455

Total liabilities3,069,094,6383,227,241,675

The notes on pages 111 to 213 form part of these financial statements.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedConsolidated balance sheetas at 31 December 2019 (continued)(Expressed in Renminbi Yuan)

Note 2019 2018

Liabilities and shareholders’ equity (continued)

Shareholders’ equity

Share capitalV. 30685,464,000685,464,000
Capital reserveV. 31565,050,422565,955,441
Other comprehensive incomeV. 32(4,235,583)2,965,377
Surplus reserveV. 33342,732,000342,732,000

Retained earnings V. 34 8,719,899,359 8,008,982,547

10,308,910,198 9,606,099,365

Total equity attributable to shareholders of the Company
Non-controlling interests269,927,732284,388,012
Total owners’ equity10,578,837,9309,890,487,377

Total liabilities and shareholders’ equity 13,647,932,568 13,117,729,052

These financial statements were approved by the Board of Directors of the Company on 22April 2020.

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

The notes on pages 111 to 213 form part of these financial statements.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedCompany balance sheetas at 31 December 2019(Expressed in Renminbi Yuan)

Note20192018
Assets
Current assets
Cash at bank and on hand710,505,269624,588,809
Bills receivable-39,885,254
Accounts receivableXV.11,988,3261,447,973
Receivables under financingXV.241,679,635-
Prepayments776,539227
Other receivablesXV.3586,424,9581,025,643,356
Inventories434,007,808385,154,740
Other current assets39,130,46624,704,844
Total current assets1,814,513,0012,101,425,203
Non-current assets
Long-term equity investmentsXV.47,432,422,6217,420,803,069
Investment properties29,714,58631,572,489
Fixed assets261,137,072265,311,274
Construction in progress-6,311,701
Bearer biological assets121,414,096125,002,793
Intangible assets64,864,91367,244,066
Deferred tax assets16,255,87024,194,967
Other non-current assets1,427,700,000972,700,000
Total non-current assets9,353,509,1588,913,140,359
Total assets11,168,022,15911,014,565,562

The notes on pages 111 to 213 form part of these financial statements.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedCompany balance sheetas at 31 December 2019 (continued)(Expressed in Renminbi Yuan)

Note20192018
Liabilities and shareholders’ equity
Current liabilities
Short-term loans150,000,000150,000,000
Accounts payable63,655,240132,704,304
Employee benefits payable70,445,84772,345,179
Taxes payable6,052,45613,111,431
Other payables660,149,563607,974,519
Total current liabilities950,303,106976,135,433
Non-current liabilities
Deferred income9,176,31512,343,972
Other non-current liabilities3,146,7072,710,575
Total non-current liabilities12,323,02215,054,547
Total liabilities962,626,128991,189,980

The notes on pages 111 to 213 form part of these financial statements.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedCompany balance sheetas at 31 December 2019 (continued)(Expressed in Renminbi Yuan)

Note20192018
Liabilities and shareholders’ equity (continued)
Shareholders’ equity
Share capital685,464,000685,464,000
Capital reserve557,222,454557,222,454
Surplus reserve342,732,000342,732,000
Retained earnings8,619,977,5778,437,957,128
Total owners’ equity10,205,396,03110,023,375,582
Total liabilities and shareholders’ equity11,168,022,15911,014,565,562

These financial statements were approved by the Board of Directors of the Company on 22April 2020.

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

The notes on pages 111 to 213 form part of these financial statements.

Yantai Changyu Pioneer Wine Company LimitedConsolidated Income statementfor the year ended 31 December 2019(Expressed in Renminbi Yuan)

Note20192018
I. Operating incomeV. 355,031,011,4895,142,244,740
Less: Operating costV. 351,887,495,9911,901,611,507
Taxes and surchargesV. 36268,462,378276,491,674
Selling and distribution expenses

V. 37 1,053,232,024 1,274,599,146

V. 38 311,904,656 343,580,651

General and administrative expenses
Research and development expenses

6,041,116 4,784,118

Financial expensesV. 3935,290,70235,945,302
Including: Interest expenses41,570,79446,354,902
Interest income12,327,44112,086,007
Add: Other incomeV. 4077,337,58187,281,434

Investment income V. 41 5,112,733 -

investment in

joint ventures

(1,120,928)

-

Credit lossesV. 42(7,304,777)-
Impairment (losses) / reversal

V. 43

912,166

(20,552,916)
Gains from disposal of assets

V. 44 39,015 11,368,355

The notes on pages 111 to 213 form part of these financial statements.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedConsolidated Income statementfor the year ended 31 December 2019 (continued)(Expressed in Renminbi Yuan)

Note20192018
II. Operating profit1,523,216,2581,404,794,297
Add: Non-operating incomeV. 4510,921,7487,353,309
Less: Non-operating expensesV. 453,623,2693,535,908
III. Total profit1,530,514,7371,408,611,698
Less: Income tax expensesV. 46400,806,109367,127,522
IV. Net profit1,129,708,6281,041,484,176
(1) Net profit classified by continuity of operations:
1. Net profit from continuing operations

1,129,708,628 1,041,484,176

- -

2. Net profit from discontinued operations
(2) Net profit classified by ownership (“-” for net loss):

1,129,735,749 1,042,632,929

1. Net profit attributable to owners of the company
2. Non-controlling losses(27,121)(1,148,753)
V. Other comprehensive income, net of tax

(376,524)

(8,542,792)
(1) Other comprehensive income

(net of tax) attributable toshareholders of the

Company
Translation differences arising

from translation of fo

currency financial

statements

(143,863)

(7,200,960)
(2) Other comprehensive income

(net of tax) attributable to

(1,341,832)

non-controlling interests

(232,661)

The notes on pages 111 to 213 form part of these financial statements.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedConsolidated Income statementfor the year ended 31 December 2019 (continued)(Expressed in Renminbi Yuan)

Note20192018
VI. Total comprehensive income for the year

1,121,165,836 1,041,107,652

1,122,534,789 1,042,489,066

(1) Attributable to shareholders of the company
(2) Attributable to non-controlling interests

(1,368,953)

(1,381,414)

VII. Earnings per share:
(1) Basic earnings per shareV. 471.651.52
(2) Diluted earnings per shareV. 471.651.52

These financial statements were approved by the Board of Directors of the Company on 22April 2020.

Zhou Hongjiang Legal Representative
Jiang Jianxun The person in charge
of accounting affairsGuo Cuimei The head of the accountin

g

department(Company stamp)
(Signature and stamp)(Signature and stamp)(Signature and stamp)

The notes on pages 111 to 213 form part of these financial statements.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedCompany income statementfor the year ended 31 December 2019(Expressed in Renminbi Yuan)

Note20192018
I. Operating incomeXV.5740,856,362876,447,070
Less: Operating costXV.5655,504,063774,487,031
Taxes and surcharges25,045,04138,346,761
General and administrative expenses

86,481,192 90,505,208

815,233 887,355

Research and development expenses
Net financial income(4,798,485)(20,292,737)
Including: Interest expenses497,27716,075,353
Interest income5,843,69841,821,372
Add: Other income3,953,0024,237,655
Investment incomeXV.6621,620,723964,128,659
Credit impairment losses(601,610)-
Gains from disposal of assets

22,297 12,411,962

II. Operating profit602,803,730973,291,728
Add: Non-operating income1,840,0621,483,478
Less: Non-operating expenses1,118,124593,694

The notes on pages 111 to 213 form part of these financial statements.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedIncome statement of the companyfor the year ended 31 December 2019 (continued)(Expressed in Renminbi Yuan)

Note20192018
III. Total profit603,525,668974,181,512
Less: Income tax expenses10,226,8194,592,939
IV. Net profit593,298,849969,588,573
(i) Net profit from continuing operations

593,298,849

969,588,573

(ii) Net profit from discontinued operations

- -

- -

V. Other comprehensive income, net of tax
VI. Total comprehensive income for the year

593,298,849

969,588,573

These financial statements were approved by the Board of Directors of the Company on 22April 2020.

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

The notes on pages 111 to 213 form part of these financial statements.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedConsolidated cash flow statementfor the year ended 31 December 2019(Expressed in Renminbi Yuan)

Note20192018
I. Cash flows from operating activities:
Proceeds from sale of goods and rendering of services

4,647,970,683 4,950,603,207

Refund of taxes and surcharges40,741,28657,056,690
Proceeds from other operating activities

V. 48(1) 93,744,521 72,703,872

Sub-total of cash inflows4,782,456,4905,080,363,769
Payment for goods and services1,338,542,6011,383,945,233
Payment to and for employees576,928,850544,742,974
Payment of various taxes1,115,582,6791,111,980,499
Payment for other operating activities

V. 48(2) 913,564,336 1,063,716,317

Sub-total of cash outflows3,944,618,4664,104,385,023
Net cash flows from operating activities

V. 49(1) 837,838,024 975,978,746

II. Cash flows from investing activities:
Proceeds from disposal of investments

234,722,614 400,000,000

Investment returns received1,809,7863,445,895
Net proceeds from disposal of fixed

assets, intangible assets and

6,334,375 19,967,431

other long-term assets
Sub-total of cash inflows242,866,775423,413,326
Payment for acquisition of fixed

assets, intangible assets and

281,005,768 347,384,820

other long-term assets
Payment for acquisition of investments

169,618,600 478,042,400

404,844 105,834,655

Net cash paid for the acquisition of subsidiaries and other business units
Sub-total of cash outflows451,029,212931,261,875
Net cash flows from investing activities

(208,162,437)

(507,848,549)

The notes on pages 111 to 213 form part of these financial statements.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedConsolidated cash flow statementfor the year ended 31 December 2019 (continued)(Expressed in Renminbi Yuan)

Note20192018
III. Cash flows from financing activities:
Proceeds from investors-2,050,000
Including: Cash received from

minority shareholders

- 2,050,000

of subsidiaries
Proceeds from borrowings942,134,0321,049,815,411
Proceeds from other financing activities

V. 48(3) - 62,468,259

Sub-total of cash inflows942,134,0321,114,333,670
Repayments of borrowings939,525,4261,103,189,409
Payment for dividends, profit distributions or interest

462,455,473 397,351,813

V. 48(4) 11,619,552 46,100,000

Payment for other financing activities
Sub-total of cash outflows1,413,600,4511,546,641,222
Net cash flows from financing activities

(471,466,419)

(432,307,552)

IV. Effect of foreign exchange rate

changes on cash and cash

703,173 (9,851,585)

equivalents
V. Net increase in cash and cash equivalents

V. 49(1) 158,912,341 25,971,060

1,206,860,334 1,180,889,274

Add: Cash and cash equivalents at the beginning of the year
VI. Cash and cash equivalents at the end of the year

V. 49(2) 1,365,772,675 1,206,860,334

These financial statements were approved by the Board of Directors of the Company on 22April 2020.

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

The notes on pages 111 to 213 form part of these financial statements.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedCompany cash flow statementfor the year ended 31 December 2019(Expressed in Renminbi Yuan)

Note20192018
I. Cash flows from operating activities:

737,920,018 817,341,175

Proceeds from sale of goods and rendering of services
Proceeds from other operating activities

211,049,689 177,786,322

Sub-total of cash inflows948,969,707995,127,497
Payment for goods and services710,601,952608,241,452
Payment to and for employees91,738,062107,256,441
Payment of various taxes48,817,36362,066,449
Payment for other operating activities

28,434,079 74,357,324

Sub-total of cash outflows879,591,456851,921,666
Net cash flows from operating activities

69,378,251 143,205,831

II. Cash flows from investing activities:
Proceeds from disposal of investments

131,133,236 370,000,000

Investment returns received922,250,025874,520,633
Net proceeds from disposal of fixed

assets, intangible assets and

1,354,733 11,212,195

other long-term assets
Proceeds from borrowings to subsidiaries

8,000,000 -

Sub-total of cash inflows1,062,737,9941,255,732,828
Payment for acquisition of fixed

assets, intangible assets and

21,417,387 28,842,911

other long-term assets
Payment for acquisition of investments

138,566,890 410,000,000

- 107,194,420

Net cash paid for the acquisition of subsidiaries and other business units
Cash paid to subsidiaries463,000,000-
Sub-total of cash outflows622,984,277546,037,331
Net cash flows from investing activities

439,753,717

709,695,497

The notes on pages 111 to 213 form part of these financial statements.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedCompany cash flow statementfor the year ended 31 December 2019 (continued)(Expressed in Renminbi Yuan)

Note20192018
III. Cash flows from financing activities:
Proceeds from borrowings150,000,000200,000,000
Sub-total of cash inflows150,000,000200,000,000
Repayments of borrowings150,000,000650,000,000
Payment for dividends or interest418,400,308364,085,312
Sub-total of cash outflows568,400,3081,014,085,312
Net cash flows from financing activities

(418,400,308)

(814,085,312)

IV. Effect of foreign exchange rate

changes on cash and cash

- -

equivalents
V. Net increase in cash and cash equivalents

90,731,660 38,816,016

532,384,882 493,568,866

Add: Cash and cash equivalents at the beginning of the year
VI. Cash and cash equivalents at the end of the year

623,116,542 532,384,882

These financial statements were approved by the Board of Directors of the Company on 22April 2020.

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

The notes on pages 111 to 213 form part of these financial statements.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedConsolidated statement of changes in shareholders’ equityfor the year ended 31 December 2019(Expressed in Renminbi Yuan)

Note

Non-controlling

interests

Total owners’

equityShare capital Capital reserve

Attributable to shareholders of the Company
Other

comprehensive

Surplus reserve

Retainedearnings

Sub-total

income
I. Balance at the beginning of the year

685,464,000 565,955,441 2,965,377 342,732,000 8,008,982,547 9,606,099,365 284,388,012 9,890,487,377

III. 32 - - - -

Add: Changes in accounting policies(7,540,537)

(7,540

-

,537)(7,540,537)
Adjusted balance at the beginning of the year

685,464,000 565,955,441 2,965,377 342,732,000 8,001,442,010

9,598,558,828

284,388,012 9,882,946,840

II. Changes in equity during the year
(1) Total

comprehensive

- - (

income7,200,960)

- 1,129,735,749 1,122,534,789 (1,368,953)

1,121,165,836

(2) Contribution by owners

non-controlling

interests

- (905,019)

- - -

(905,019)

(10,714,533)

(11,619,552)

(3) Appropriation of profits

V. 34

- - - - (411,278,400)

Distributions to shareholders

(411,278,400)

(2,376,794)

(413,655,194)

III. Balance at the end of the year

685,464,000 565,050,422 (4,235,583)

342,732,000 8,719,899,359 10,308,910,198 269,927,732 10,578,837,930

These financial statements were approved by the Board of Directors of the Company on 22 April 2020.

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

The notes on pages 111 to 213 form part of these financial statements.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedConsolidated statement of changes in shareholders’ equityfor the year ended 31 December 2018(Expressed in Renminbi Yuan)

Note

Non-controlling

interests

Totalshareholders’

equityShare capital Capital reserve

Attributable to shareholders of the Company
Other

comprehensive

Surplus reserve

Retainedearnings

Sub-total

income
I. Balance at the beginning of the year
685,464,000565,955,4413,109,240342,732,0007,309,081,6188,906,342,299

271,636,379 9,177,978,678

II. Changes in equity during the year
(1) Total comprehensive income--

(143,863)

-1,042,632,9291,042,489,066

(1,381,414)

1,041,107,652

(2) Shareholders’

contributions and

decrease of capital
Acquired as subsidiaries------17,532,82317,532,823
(3) Appropriation of profitsV. 34
Distributions to shareholders
----

(342,732,000)

(342,732,000)

(3,399,776)

(346,131,776)

III. Balance at the end of the year685,464,000565,955,4412,965,377342,732,0008,008,982,5479,606,099,365284,388,0129,890,487,377

These financial statements were approved by the Board of Directors of the Company on 22 April 2020.

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

The notes on pages 111 to 213 form part of these financial statements.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedCompany statement of changes in shareholders’ equityfor the year ended 31 December 2019(Expressed in Renminbi Yuan)

Note Share capital Capital reserve Surplus reserve

Retainedearnings

shareholders’

equity

I、 Balance at the

685,464,000 557,222,454 342,732,000 8,437,957,128 10,023,375,582

beginning of the year
Add: Changes in accounting policies

III. 32 - - - - -

685,464,000 557,222,454 342,732,000 8,437,957,128 10,023,375,582II、 Changes in equity for

Adjusted balance at the beginning of the year
the year

comprehensive

income

- - - 593,298,849 593,298,849

2. Appropriation of profits
Distributions to shareholders

- - - (411,278,400)

(411,278,400)

III、 Balance at the end of

685,464,000 557,222,454 342,732,000 8,619,977,577 10,205,396,031

These financial statements were approved by the Board of Directors of the Company on 22April 2020.

the year

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

The notes on pages 111 to 213 form part of these financial statements.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedCompany statement of changes in shareholders’ equityfor the year ended 31 December 2018 (continued)(Expressed in Renminbi Yuan)

Note Share capital Capital reserve Surplus reserve

Retainedearnings

shareholders’

equity

IV、 Balance at the

685,464,000 557,222,454 342,732,000 7,811,100,555 9,396,519,009V、 Changes in equity for

beginning of the year
the year

comprehensive

income

- - - 969,588,573

969,588,573

2. Appropriation of profits

- - - (342,732,000)

Distributions to shareholders

(342,732,000)

VI、 Balance at the end of

the year

685,464,000

557,222,454

342,732,000

8,437,957,128

10,023,375,582

These financial statements were approved by the Board of Directors of the Company on 22April 2020.

Zhou Hongjiang Legal Representative
Jiang Jianxun The person in charge
of accounting affairsGuo Cuimei The head of the account

ing

department(Company stamp)
(Signature and stamp)(Signature and stamp)(Signature and stamp)

The notes on pages 111 to 213 form part of these financial statements.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportYantai Changyu Pioneer Wine Company LimitedNotes to the financial statements(Expressed in Renminbi Yuan unless otherwise indicated)

I. Company status

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

As at 31 December 2019 the total shares issued by the Company amounts to 685,464,000shares. Please refer to Note VI. 30 in detail.

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

The financial statements have been authorised by the board of directors on 22 April 2020.According to the Company's articles of association, the financial statements will be reviewedby shareholders on the shareholder's meeting.

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

II. Basis of preparation

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

Since 1 January 2019, the Company has adopted new financial instrument standards revisedby MOF in 2017, including CAS 22 — Recognition and Measurement of Financial Instruments(See Note III. 32(1)).

The Group has not adopted CAS No.14 — Revenue and CAS No. 22 — Lease revised in2017 and 2018 respectively.

III. Significant accounting policies and accounting estimates

1 Statement of compliance

The financial statements have been prepared in accordance with the requirements ofAccounting Standards for Business Enterprises or referred to as China Accounting Standards(“CAS”) issued by the MOF. These financial statements present truly and completely theconsolidated financial position and financial position of the Company as at 31 December2019, and the consolidated financial performance and financial performance and theconsolidated cash flows and cash flows of the Company for the year then ended.

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

2 Accounting period

The accounting period is from 1 January to 31 December.

3 Operating cycle

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

4 Functional currency

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

5 Accounting treatments for business combinations involving entities under common control and

not under common control

(1) Business combinations involving entities under common control

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

(2) Business combinations involving entities not under common control

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

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

6 Consolidated financial statements

(1) General principles

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

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

When the amount of loss for the current period attributable to the non-controlling shareholdersof a subsidiary exceeds the non-controlling shareholders’ share of the opening owners’ equityof the subsidiary, the excess is still allocated against the non-controlling interests.

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 financialstatements.

(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 as ifthe 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.

(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 other

arrangement;- one arrangement considered on its own is not economically justified, but it is economicallyjustified when considered together with other arrangements.

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

If each of the multiple transactions forms part of a bundled transaction which eventuallyresults in the loss of control in the subsidiary, these multiple transactions are accounted 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.

(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 acquiredor disposed 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.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report7 Cash and cash equivalents

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

8 Foreign currency transactions and translation of foreign currency financial statements

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

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

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

9 Financial instruments

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

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

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

A financial assets (unless it is a trade receivable without a significant financing component)and financial liabilities is measured initially at fair value. For financial assets and financialliabilities at fair value through profit or loss, any related directly attributable transaction costsare charged to profit or loss; for other categories of financial assets and financial liabilities,any related directly attributable transaction costs are included in their initial costs. Accountsreceivable containing no significant financing component are measured initially at transactionprices determined by the accounting policies set out in Note III.22.

(2) Classification and subsequent measurement of financial assets

(a) Classification of financial assets

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

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

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

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

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

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

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

All financial assets not classified as measured at amortised cost or FVOCI as describedabove are measured at FVTPL. On initial recognition, the Group may irrevocablydesignate a financial asset that otherwise meets the requirements to be measured atamortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reducesan accounting mismatch that would otherwise arise.

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

In assessing whether the contractual cash flows are solely payments of principal andinterest, the Group considers the contractual terms of the instrument. For the purposesof this assessment, ‘principal’ is defined as the fair value of the financial asset on initialrecognition. ‘Interest’ is defined as consideration for the time value of money and for thecredit risk associated with the principal amount outstanding during a particular period oftime and for other basic lending risks and costs, as well as a profit margin. The Groupalso assesses whether the financial asset contains a contractual term that could changethe timing or amount of 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 andlosses, including any interest or dividend income, are recognised in profit or lossunless the financial assets are part of a hedging relationship.

- Financial assets at amortised cost

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

- Debt investments at FVOCI

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

- Equity investments at FVOCI

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

(3) Classification and subsequent measurement of financial liabilities

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

- Financial liabilities at FVTPL

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

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

- Financial liabilities at amortised cost

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

(4) Offsetting

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

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

(5) Derecognition of financial assets and financial liabilities

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

- the Group’s contractual rights to the cash flows from the financial asset expire;- the financial asset has been transferred and the Group transfers substantially all of the

risks and rewards of ownership of the financial asset; or;- the financial asset has been transferred, although the Group neither transfers nor retains

substantially all of the risks and rewards of ownership of the financial asset, it does not

retain control over the transferred asset.

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

- the carrying amount of the financial asset transferred measured at the date of

derecognition;- the sum of the consideration received from the transfer and, when the transferred financial

asset is a debt investment at FVOCI, any cumulative gain or loss that has been recognised

directly in other comprehensive income for the part derecognised.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportThe Group derecognises a financial liability (or part of it) only when its contractual obligation(or part of it) is extinguished.

(6) Impairment

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

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

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

Measurement of ECLs

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured 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 possible withinthe 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 lifetimeECLs. ECLs on these financial assets are estimated using a provision matrix based on theGroup’s historical credit loss experience, adjusted for factors that are specific to the debtorsand an assessment of both the current and forecast general economic conditions at thebalance sheet date.

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

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

recognition.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportFinancial instruments that have low credit risk

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

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 financial instrumentassessed at the balance sheet date with that assessed at the date of initial recognition.

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 or internal

credit rating (if available);- an actual or expected significant deterioration in the operating results of the debtor; and- existing or forecast changes in the technological, market, economic or legal environment

that have a significant adverse effect on the debtor’s ability to meet its obligation to the

Group.

Depending on the nature of the financial instruments, the assessment of a 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 basedon shared credit risk characteristics, such as past due status and credit risk ratings.

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

Credit-impaired financial assets

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

- significant financial difficulty of the borrower or issuer;- a breach of contract, such as a default or delinquency in interest or principal payments;- for economic or contractual reasons relating to the borrower’s financial difficulty, the Group

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 of amountsdue.

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

(7) Equity instrument

The consideration received from the issuance of equity instruments net of transaction costs isrecognised in shareholders’ equity. Consideration and transaction costs paid by 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.All expenditure relating to the repurchase is recorded in the cost of the treasury shares, withthe transaction recording in the share register. Treasury shares are excluded from profitdistributions and are presented as a deduction under shareholders’ equity in the balancesheet.

10 Inventories

(1) Classification and cost

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

(2) Measurement method of cost of inventories

Cost of inventories is calculated using the weighted average method.

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

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

inventories

At the balance sheet date, inventories are carried at the lower of cost and net 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 andrelevant taxes. The net realisable value of materials held for use in the production ismeasured based on the net realisable value of the finished goods in which they will beincorporated. The net realisable value of the inventory held to satisfy sales or servicecontracts is measured based on the contract price, to the extent of the quantities specified insales contracts, and the excess portion of inventories is measured based on general sellingprices.

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

(4) Inventory count system

The Group maintains a perpetual inventory system.

11 Long-term equity investments

(1) Investment cost of long-term equity investments

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

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

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

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report- For a long-term equity investment obtained through a business combination not

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

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

- A long-term equity investment acquired other than through a business combination isinitially recognised at the amount of cash paid if the Group acquires the investmentby cash, or at the fair value of the equity securities issued if an investment is acquiredby issuing equity securities.

(2) Subsequent measurement of long-term equity investment

(a) Investments in subsidiaries

In the Company’s separate financial statements, long-term equity investments insubsidiaries are accounted for using the cost method unless the investment is classifiedas held for sale (See Note III. 27). Except for cash dividends or profit distributionsdeclared but not yet distributed that have been included in the price or considerationpaid in obtaining the investments, the Company recognises its share of the cashdividends or profit distributions declared by the investee as investment income for thecurrent period.

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

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

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

(b) Investments in joint ventures

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

A long-term equity investment in a joint venture is accounted for using the equity methodfor subsequent measurement, unless the investment is classified as held for sale (seeNote III.27).

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportThe accounting treatments under the equity method adopted by the Group are asfollows:

- Where the initial cost of a long-term equity investment exceeds the Group’s interestin the fair value of the investee’s identifiable net assets at the date of acquisition, theinvestment is initially recognised at cost. Where the initial investment cost is less thanthe Group’s interest in the fair value of the investee’s identifiable net assets at thedate of acquisition, the investment is initially recognised at the investor’s share of thefair value of the investee’s identifiable net assets, and the difference is recognised inprofit or loss.

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

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

- The Group discontinues recognising its share of further losses of the investee 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 tozero, except to the extent that the Group has an obligation to assume additionallosses. If the joint venture subsequently reports net profits, the Group resumesrecognising its share of those profits only after its share of the profits equals theshare of losses not recognised.

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

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

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

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

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

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.

12 Investment properties

Investment properties are properties held either to earn rental income or for capitalappreciation or for both. Investment properties are accounted for using the cost model andstated in the balance sheet at cost less accumulated depreciation, amortisation andimpairment losses, and adopts a depreciation or amortisation policy for the investmentproperty which is consistent with that for buildings or land use rights, unless the investmentproperty is classified as held for sale (see Note III.27). For the impairment of the investmentproperties, refer to Note III.20.

Category

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

13 Fixed assets

(1) Recognition of fixed assets

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

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

(2) Depreciation of fixed assets

The cost of a fixed asset, less its estimated residual value and accumulated impairmentlosses, is depreciated using the straight-line method over its estimated useful life, unless thefixed asset is classified as held for sale (see Note III.27).

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 buildings20-40 years0 - 5%2.4%-5.0%
Machinery equipment5-30 years0 - 5%3.2%-20.0%
Motor vehicles4-12 years0 - 5%7.9%-25.0%

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

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

(4) Disposal of fixed assets

The carrying amount of a fixed asset is derecognised:

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

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

14 Construction in progress

The cost of self-constructed assets includes the cost of materials, direct labour, capitalisedborrowing costs (see Note III.15), and any other costs directly attributable to bringing the assetto working condition 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 III.20).

15 Borrowing costs

Borrowing costs incurred directly attributable to the acquisition, and construction or productionof a qualifying asset are capitalised as part of the cost of the asset. Other borrowing costs arerecognised as financial expenses when incurred.

During the capitalisation period, the amount of interest (including amortisation of any discountor premium on borrowing) to be capitalised in each accounting period is determined asfollows:

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

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

- To the extent that the Group borrows funds generally and uses them for the acquisition andconstruction or production of a qualifying asset, the amount of borrowing costs eligible forcapitalisation 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 applicableto the general-purpose borrowings.

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

During the capitalisation period, exchange differences related to the principal and interest 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 whichcapitalisation 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.

16. Biological assets

The Group's biological assets are bearer biological assets.

Bearer biological assets are those that are held for the purposes of producing agriculturalproduce, rendering of services or rental. Bearer biological assets in the Group are vines.Bearer biological assets are initially measured at cost. The cost of self-grown or self-bredbearer biological assets represents the necessary directly attributable expenditure incurredbefore satisfying the expected production and operating purpose, including capitalisedborrowing costs.Bearer biological assets, after reaching the expected production and operating purpose, aredepreciated using the straight-line method over its estimated useful life. The estimated usefullives, estimated net residual value rates and depreciation rates of bearer biological assets areas follows:

Category

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

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportThe 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.

17 Intangible assets

Intangible assets are stated in the balance sheet at cost less accumulated amortization(where the estimated useful life is finite) and impairment losses (see Note III.20). For anintangible asset with finite useful life, its cost estimated less residual value and accumulatedimpairment losses is amortised on the straight-line method over its estimated useful life,unless the intangible asset is classified as held for sale (see Note III.27).

The respective amortisation periods for intangible assets are as follows:

ItemAmortisation period (years)
Land use rights40-50 years
Software licenses5-10 years
Trademarks10

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 Estate withinfinite useful lives. The valuation of trademark was based on the trends in the market andcompetitive environment, product cycle, and managing long-term development strategy.Those basis indicated the trademark will provide net cash flows to the Group within anuncertain period. The useful life is indefinite as it was hard to predict the period that thetrademark would bring economic benefits to the Group.

18 Goodwill

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

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportGoodwill is not amortised and is stated in the balance sheet at cost less accumulatedimpairment losses (see Note III.20). On disposal of an asset group or a set of asset groups,any attributable goodwill is written off and included in the calculation of the profit or loss ondisposal.

19 Long-term deferred expenses

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

ItemAmortisation period
Land requisition fee50 years
Land lease prepayment50 years
Greening fee5-20 years
Leasehold improvement3-5 years
Others3 years

20 Impairment of assets other than inventories and financial assets

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

- 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.

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

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

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

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportThe present value of expected future cash flows of an asset is determined by discounting thefuture cash flows, estimated to be derived from continuing use of the asset and from itsultimate disposal, to their present value using an appropriate pre-tax discount rate.

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

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

21 Fair value measurement

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

Fair value is the price that would be received to sell an asset or paid to transfer a liability 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.

22 Revenue recognition

Revenue is the gross inflow of economic benefits arising in the course of the Group’s ordinaryactivities when the inflows result in increase in shareholders’ equity, other than increaserelating to contributions from shareholders. Revenue is recognised in profit or loss when it isprobable that the economic benefits will flow to the Group, the revenue and costs can bemeasured reliably and the following conditions are met:

(1) Sale of goods

Revenue is recognised when the general conditions stated above and the following conditionsare satisfied:

- Significant risks and rewards of ownership of goods have been transferred to the buyer;- The Group retains neither continuing managerial involvement to the degree usuallyassociated with ownership nor effective control over the goods sold.

Revenue from the sale of goods is measured at the fair value of the consideration received orreceivable under the sales contract or agreement.

Sales of the Group are mainly conducted by distributors. The sales are generally completedwhen the goods are delivered to distributors and are signed for acceptance.

(2) Rendering of services

Revenue is measured at the fair value of the consideration received or receivable under thecontract or agreement.

Where the outcome of a transaction involving the rendering of services can be estimatedreliably at the balance sheet date, revenue is recognised by reference to the stage ofcompletion based on the proportion of services performed to date to the total services to beperformed.

Where the outcome cannot be estimated reliably, revenues are recognised to the extent of thecosts incurred that are expected to be recoverable, and an equivalent amount is charged toprofit or loss as service cost; otherwise, the costs incurred are recognised in profit or loss andno service revenue is recognised.

(3) Interest income

Interest income is recognised on a time proportion basis with reference to the principaloutstanding and the applicable effective interest rate.

23 Employee benefits

(1) Short-term employee benefits

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

(2) Post-employment benefits – defined contribution plans

Pursuant to the relevant laws and regulations of the People’s Republic of China, the Groupparticipated in a defined contribution basic pension insurance plan in the social insurancesystem established and managed by government organisations. The Group makescontributions to basic pension insurance plans based on the applicable benchmarks 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.

(3) Termination benefits

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

- When the Group cannot unilaterally withdraw the offer of termination benefits because of

an 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.

24 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 overthe useful 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.

25 Income tax

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

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

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

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

Deferred tax is not recognised for the temporary differences arising from the initial recognitionof assets or liabilities in a transaction that is not a business combination and that affectsneither accounting profit nor taxable profit (or deductible loss). Deferred tax is not recognisedfor taxable temporary differences arising from the initial recognition of goodwill.

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

The carrying amount of a deferred tax asset is reviewed at each balance sheet date, and isreduced to the extent that it is no longer probable that the related tax benefits will be utilised.Such reduction is reversed to the extent that it becomes probable that sufficient 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 taxable entity; or- different taxable entities which intend either to settle the current tax liabilities and current

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 deferredtax assets are expected to be settled or recovered.

26 Operating leases and finance leases

A lease is classified as either a finance lease or an operating lease. A finance lease is a leasethat transfers substantially all the risks and rewards incidental to ownership of a leased assetto the lessee, irrespective of whether the legal title to the asset is eventually transferred. Anoperating lease is a lease other than a finance lease.

(1) Operating lease charges

Rental payments under operating leases are recognised as part of the cost of another relatedasset or as expenses on a straight-line basis over the lease term. Contingent rental paymentsare expensed as incurred.

(2) Assets leased out under operating leases

Fixed assets leased out under operating leases, except for investment properties (see NoteIII.12), are depreciated in accordance with the Group’s depreciation policies described in NoteIII.13(2). Impairment losses are recognised in accordance with the accounting policydescribed in Note III.20. Income derived from operating leases is recognised in profit or lossusing the straight-line method over the lease term. If initial direct costs incurred in respect ofthe assets leased out are material, the costs are initially capitalised and subsequentlyamortised in profit or loss over the lease term on the same basis as the lease income.Otherwise, the costs are charged to profit or loss immediately.

27 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, togetheras a whole in a single transaction and liabilities directly associated with those assets that willbe transferred in the transaction.

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

- According to the customary practices of selling such asset or disposal group insimilar transactions, the non-current asset or disposal group must be available forimmediate sale in their present condition subject to terms that are usual and customary forsales of such assets or disposal groups;

- Its sale is highly probable, that is, the Group has made a resolution on a sale planand has obtained a firm purchase commitment. The sale is to be completed within oneyear.

Non-current assets or disposal groups held for sale are stated at the lower of carrying amountand fair value (see Note III.21) less costs to sell (except financial assets (see Note III.9),deferred tax assets (see Note III.25) and investment properties subsequent measured at fairvalue (see Note III. 12) initially and subsequently. Any excess of the carrying amount over thefair value (see Note III.21) less costs to sell is recognised as an impairment loss in profit orloss.

28 Profit distributions

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

29 Related parties

If a party has the power to control, jointly control or exercise significant influence over anotherparty, or vice versa, or where two or more parties are subject to common control or jointcontrol from another party, they are considered to be related parties. Related parties may beindividuals or enterprises. Enterprises with which the Company is under common control onlyfrom the State and that have no other related party relationships are not regarded as relatedparties.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportIn addition to the related parties stated above, the Company determines related parties basedon the disclosure requirements of Administrative Procedures on the Information Disclosures ofListed Companies issued by the CSRC.

30 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 2019, over 89% of revenue, more than 98% of profit and over 92%of non-current assets derived from China / are located in China. Therefore the Group does notneed to disclose additional segment report information.

31 Significant accounting estimates and judgements

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

(1) Significant accounting estimates

Except for accounting estimates relating to depreciation and amortisation of assets such asinvestment properties, fixed assets, bearer biological assets and intangible assets (see NotesIII. 12, 13, 16 and 17) and provision for impairment of various types of assets (see Notes V.3,6, 7, 11, 12, 13, 14, 15 and Note XV.1 and 3). Other significant accounting estimates are asfollows:

(i) Note V. 17 – Recognition of deferred tax asset;(ii) Note IX. – Fair value measurements of financial instruments.

32 Changes in significant accounting policies and accounting estimates

(1) Description and reasons of changes in accounting policies

In 2019, the Group has adopted the following revised accounting standards issued by theMOF recently:

- Accounting Standard for Business Enterprises No. 22 — Recognition and Measurement ofFinancial Instruments (revised), Accounting Standard for Business Enterprises No. 23 —Transfer of Financial Instruments (revised), Accounting Standard for Business EnterprisesNo. 22 — Hedging Accounting (revised) and Accounting Standard for Business EnterprisesNo. 37 — Presentation of Financial Instruments (revised) (hereinafter referred to as “newfinancial instrument standard”)- Notice on Revision of the 2019 Illustrative Financial Statements (Caikuai [2019] No.6)- Notice on Revision of Illustrative Consolidated Financial Statements (2019 version) (Cai

Kuai [2019] No. 16).

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report- CAS No.7 – Exchange of Non-monetary Assets (Revised) (“CAS 7 (2019)”)- CAS No.12 – Debt Restructuring (Revised) (“CAS 12 (2019)”)

(a) Presentation of financial statements

The Group has prepared financial statements for the year ended 31 December 2019 inaccordance with the financial statement format specified in Caikuai [2019] No.6 andCaikuai [2019] No.16. The Group has applied the new presentation requirementsretrospectively.

Affected assets and liabilities items in the consolidated and company balance sheets asat 31 December 2018:

The GroupBeforeadjustments

Adjustments

Before adjustmentsAfter adjustments

Bills and accounts receivable 530,821,071 (530,821,071)

-

Bills receivable-288,667,988288,667,988

Accounts receivable - 242,153,083 242,153,083

Bills and accounts payable 713,572,881 (713,572,881)

-

Accounts payable - 713,572,881 713,572,881

Deferred income due within one year 15,860,254 (15,860,254)

-

Deferred income70,367,03915,860,25486,227,293

Total 1,330,621,245 - 1,330,621,245

The Company
Before adjustments

Adjustments

Bills and accounts receivable 41,333,227 (41,333,227)

After adjustments

-

Bills receivable - 39,885,254 39,885,254

Accounts receivable - 1,447,973 1,447,973

Bills and accounts payable 132,704,304 (132,704,304)

-

Accounts payable - 132,704,304 132,704,304

Deferred income due within one year

Deferred income due within one year3,433,054(3,433,054)-

Deferred income 8,910,918 3,433,054 12,343,972

Total 186,381,503 - 186,381,503

(b) New financial instrument standards

The new financial instrument standards revise the Accounting Standard for BusinessEnterprises No. 22 — Recognition and Measurement of Financial Instruments ,Accounting Standard for Business Enterprises No. 23 — Transfer of FinancialInstruments, Accounting Standard for Business Enterprises No. 24 — Hedging andAccounting Standard for Business Enterprises No. 37 — Presentation of FinancialInstruments issued by the MOF in 2006 (hereinafter referred to as “previous financialinstrument standards”).

The new financial instrument standards classify financial assets into three basiccategories: (1) financial assets measured at amortised cost; (2) financial assetsmeasured at FVOCI;(3) financial assets at FVTPL. The classification of financial assetsunder new financial instruments standards is generally based on the business model inwhich a financial asset is managed and its contractual cash flow characteristics. Newfinancial instruments standards cancel the previous categories of held to maturityinvestments, loans and receivables and available for sale financial assets underprevious financial instruments standards. Under new financial instruments standards,derivatives embedded in contracts where the host is a financial asset are neverseparated. Instead, the hybrid financial instrument as a whole is assessed forclassification.

New financial instruments standards replace the “incurred loss” model in previousfinancial instruments standards with the ECL model. The ECL model requires anongoing measurement of credit risk associated with a financial asset and thereforerecognises ECLs earlier than under the “incurred loss” accounting model in previousfinancial instruments standards.

Retrospective adjustments were made to classification and measurement (includingimpairment) of financial instruments not derecognised on the date of effectiveness of thestandards (i.e. 1 January 2019) according to transition requirements of the new financialinstrument standards. The Group has not yet adjusted the financial statement andrecognises the difference between the previous carrying amount of financial instrumentsand the new carrying amount on the date of effectiveness of the standards as retainedearnings or other comprehensive income at the beginning 2019.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report(i) The impact of adoption new financial instrument standards on the consolidated

and company balance sheets as at 31 December 2018 after retrospectiveadjustments in accordance with Caikuai [2019] No.6 and Caikuai [2019] No.16 aresummarised as follows:

The Group
31 December 20181 January 2019Adjustments
Assets
Current assets
Bills receivable288,667,988-(288,667,988)
Accounts receivable242,153,083232,099,034(10,054,049)
Receivables under financing-288,667,988288,667,988
Available-for-sale financial assets467,251-(467,251)
Other non-current financial assets-467,251467,251
Deferred tax assets285,436,259287,949,7712,513,512
The Company
31 December 20181 January 2019Adjustments
Assets
Bills receivable39,885,254-(39,885,254)
Receivables under financing-39,885,25439,885,254

(ii) Impact of classification of financial instruments

? The Group endorses some bank acceptance bills according to its daily capitalmanagement needs. Bank acceptance bills of the Group are managed within abusiness model whose objective is to collect contractual cash flows and sell thefinancial asset.As at 1 January 2019, the Group reclassified bank acceptancebills of its subsidiaries of RMB288,667,988 to financial assets at fair valuethrough other comprehensive income and presented as receivables underfinancing.

? As at 31 December 2018, the carrying amount of unlisted equity investment

measured at cost held by the Group was RMB467,251. As at 1 January 2019,the Group designated the equity investment as financial assets at fair valuethrough profit or loss and presented as other non-current financial assets.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportBased on balance sheets as at 31 December 2018 after retrospective adjustments in accordance with Caikuai [2019] No.6 andCaikuai [2019] No.16, results of the classification and measurement of financial assets in accordance with the previous financialinstrument standards and the new financial instrument standards are summarised as follows:

The Group

Previous financial instrument standards (31 December 2018)New financial instrument standards (1 January 2019)
ItemType of measurementCarrying amountItemType of measurementCarrying amount
Cash at bank and on handAmortised cost (loans and receivables)

1,475,700,477

Amortised cost 1,475,700,477Bills receivable

Amortised cost (loans and

receivables)

288,667,988

Receivables under

financing

Cash at bank and on hand
Measured at fair value

through other

288,667,988Accounts receivable

comprehensive income
Amortised cost (loans and receivables)

242,153,083 Accounts receivable Amortised cost 232,099,034Other receivables

22,636,086 Other receivables Amortised cost 22,636,086Available-for-sale

financial assets

Measured at cost (equity

instrument)

467,251

Other non-current

financial assets

Amortised cost (loans and receivables)
Measured at fair value

through profit or loss

467,251Other current assets

(standard requirements)
Amortised cost (loans and receivables)

258,676,396 Other current assets Amortised cost 258,676,396

The Company

Previous financial instrument standards (31 December 2018)New financial instrument standards (1 January 2019)
ItemType of measurementCarrying amountItemType of measurementCarrying amount
Cash at bank and on handAmortised cost (loans and receivables)

624,588,809

Amortised cost 624,588,809Bills receivable

Amortised cost (loans and

receivables)

39,885,254

Receivables under

financing

Cash at bank and on hand
Measured at fair value

through other

39,885,254Accounts receivable

comprehensive income
Amortised cost (loans and receivables)

1,447,973 Accounts receivable Amortised cost 1,447,973Other receivables

1,025,643,356 Other receivables Amortised cost 1,025,643,356Other current assets

Amortised cost (loans and receivables)
Amortised cost (loans and receivables)

24,704,844 Other current assets Amortised cost 24,704,844

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportBased on balance sheets as at 31 December 2018 after retrospectiveadjustments in accordance with Caikuai [2019] No.6 and Caikuai [2019] No.16,adjustment of the carrying amount of the Previous financial assets to the carryingamount of the new financial assets classified and measured in accordance withthe new financial instruments standards is as follows:

The Group

under original

financial instruments

standards (31

Reclassification Remeasurement

December 2018)Carrying amount under new financial

instrumentsstandards (31

December 2019)
Amortised cost
Receivables
Balance under previous

financial instruments

242,153,083 - - -

standards
Re-measurement: ECL allowance

- - (10,054,049)

-

Balance under new financial instruments standards

- - - 232,099,034

Bills receivable
Balance under previous

financial instruments

288,667,988 - - -

standards
Less: transferred to FVOCI

(new financial

- (288,667,988)

instrument standards)

- -

- - - -

Balance under new financial instruments standards
Available-for-sale financial assets

financial instruments

standards

467,251 - - -

(new financial

instrument standards)

- (467,251)

- -

Balance under new financial instruments standards

- - - -

FVOCI
Receivables under financing
Balance under previous

financial instruments

- - - -

standards
Add: Transferred from bills

receivable (underprevious financial

- 288,667,988 - -

instrument standards)
Balance under new financial instruments standards

- - - 288,667,988

FVTPL
Financial assets held for

trading (including othernon-current financial

assets)
Balance under previous

financial instruments

- - - -

standards
Add: transferred from

available-for-salefinancial assets (underprevious financial

- 467,251 - -

instrument standards)
Balance under new financial instruments standards

- - - 467,251

The Company

Balance underprevious financial

(31 December 2018)

Reclassification Remeasurement

instrumentsstandards (31

December 2019)
Amortised cost
Bills receivable
Balance under previous

financial instruments

39,885,254 - - -

standards
Less: transferred to FVOCI

(new financial

- (39,885,254)

instrument standards)

- -

- - - -

Balance under new financial instruments standards
FVOCI
Receivables under financing
Balance under previous

financial instruments

- - - -

standards
Add: Transferred from bills

receivable (underprevious financial

- 39,885,254 - -按新金融工具准则列示的余额- - - 39,885,254

(iii) Impacts of adoption of ECL measurement

The Group applies the new ECL model to the following items:

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

The new ECL model do not apply to investments in equity instruments.

Based on balance sheets as at 31 December 2018 after retrospective adjustmentsin accordance with Caikuai [2019] No.6 and Caikuai [2019] No.16, adjustment ofthe closing amount of the previous financial instrument provision for impairmentsto the new provision for impairments classified and measured in accordance withthe new financial instrument standards is as follows:

The Group

Type of measurement

instrument standards)

Provision for losses

under

previous financial

instrument standards /

Estimated liabilities

recognised inaccordance withcontingency standard

Reclassification Remeasurement

(31 December 2018)

Loss allowance

instrumentsstandards(1 January 2019)

under new financial
Loans and receivables

(previous financialinstrument standards) /financial assetsmeasured at amortisedcost(new financial instrument

standards)
Accounts receivable--10,054,04910,054,049
Total--10,054,04910,054,049

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report(c) CAS 7 (2019)

The CAS 7 (2019) specifies the applicability of standard for exchange of non-monetaryassets and clarifies the accounting treatment for the situation in which the recognisingtiming of assets received is inconsistent with the derecognising timing of assets givenup. The standard also revises the measurement principle for several assets to bereceived or given up at the same time during exchange of non-monetary assets at fairvalue. Additionally, the standard includes disclosure requirements on whether theexchange of non-monetary assets has commercial substance and the reasons behindthis determination.

The effective date of CAS 7 (2019) is 10 June 2019. Exchanges of non-monetary assetsthat occurred between 1 January 2019 and the effective date shall be adjustedaccording to CAS 7 (2019). Retrospective adjustment is not required for exchanges ofnon-monetary assets prior to 1 January 2019. The adoption of the Standard did nothave any material impact on the financial position and financial performance of theGroup.

(d) CAS 12 (2019)

CAS 12 (2019) modifies the definition of debt restructuring to specify the scope of thisstandard, as well as the application of relevant financial instruments standards withrespect to the recognition, measurement and presentation of financial instrumentsinvolved in debt restructuring. For debt restructuring in which a debt is settled by thetransfer of assets, CAS 12 (2019) modifies the principle of measurement for initialrecognition of non-financial assets received by the creditor, and gains or losses of thedebtor from debt restructuring are recognised without distinguishing whether they aregains or losses from asset transfer or debt restructuring. For debt restructuring in whicha debt is settled by the issuance of equity instruments to the creditor, CAS 12 (2019)revises the principle of measurement for initial recognition of its share of equity by thecreditor, and provides more guidance on the principle of measurement for initialrecognition of equity instruments by the debtor.

The effective date of CAS 12 (2019) is 17 June 2019. Debt restructuring that occurredbetween 1 January 2019 and the effective date shall be adjusted according to CAS 12(2019). Retrospective adjustment is not required for debt restructuring prior to 1 January2019. The adoption of the Standard did not have any material impact on the financialposition and financial performance of the Group.

IV. Taxation

1 Main types of taxes and corresponding tax rates

Tax typeTax basisTax rate

Value-added tax(VAT)

product sales and taxableservices revenue. The basis forVAT payable is to deduct inputVAT from the output VAT for

the period13%, 9%, 6% (China, after 1 April

2019), 16%, 10%, 6% (China, 1 May2018 to 31 March 2019), 17%, 13%,6% (China, before 1 May 2018), 20%(France), 21% (Spain), 19% (Chile)

Consumption tax

and 10% (Australia)

Based on taxable revenue

10% of the price, 20% of the price and RMB1,000 each ton (China)
Urban maintenance and construction tax

Based on VAT paid 7% (China)

Based on taxable profits

Corporate income tax25% (China), 28% (France), 28% (Spain), 27% (Chile), 30% (Australia)

Other than tax incentives stated in Note IV. 2, applicable tax rates of the Group in 2019 and2018 are all stated as above.

2 Tax preferential treatments

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

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

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

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportXinjiang Tianzhu Wine Co., Ltd. ("Xinjiang Tianzhu"), a subsidiary of the Company, is anenterprise of wine production and sales incorporated in Shihezi city, Xinjiang WeizuAutonomous. In accordance with the Notice on Tax Policy Issues concerning FurtherImplementation of the Western China Development Strategy (Cai Shui [2011] No.58), XinjiangTianzhu is qualified to enjoy preferential taxation policies, which means it can pay corporateincome tax at a preferential rate of 15% for the period from 2015 to 2020.

Xinjiang Chateau Changyu Baron Balboa Co., Ltd. ("Chateau Shihezi"), a subsidiary of theCompany, is an enterprise of wine production and sales incorporated in Shihezi city, XinjiangWeizu Autonomous. In accordance with the Notice on Tax Policy Issues concerning FurtherImplementation of the Western China Development Strategy (Cai Shui [2011] No.58), ShiheziChateau is qualified to enjoy preferential taxation policies, which means it can pay corporateincome tax at a preferential rate of 15% for the period from 2015 to 2020.

V. Notes to the consolidated financial statements

1 Cash at bank and on hand

Item20192018
Cash on hand59,975114,335
Bank deposits1,474,489,1771,382,399,749
Other monetary funds91,234,82893,186,393
Total1,565,783,9801,475,700,477
Including: Total overseas deposits42,752,63022,664,704

As at 31 December 2019, the balance of restricted cash of the Group is as follows:

Item20192018
House maintenance funds2,647,8772,611,350

As at 31 December 2019, the Group's other monetary assets is as follows:

Item20192018
Yantai Changyu Pioneer Wine Company Limited

Research and Development Co., Ltd. ("R&D

46,100,000 46,100,000

Centre") pledged deposit for long-term payables
Deposits for letters of credit44,540,85044,540,850
Alipay account balance583,9782,483,816
Deposit for Company cards-51,727
Deposit for ICBC platform10,00010,000
Total91,234,82893,186,393

As at 31 December 2019, the Group's term deposits with previous maturity of more than threemonths is RMB106,128,600 with interest rate 1.10%-2.75% (31 December 2018:

RMB173,042,400).

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report2 Bills receivable

Classification of bills receivable

Item31 December 2019

31 December 2018

Bank acceptance bills - 288,667,988Total - 288,667,988

3 Accounts receivable

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

Type31 December 20191 January 201931 December 2018
Amounts due from related parties5,902,8714,696,6854,696,685
Amounts due from other customers

277,619,657

237,456,398 237,456,398

Sub-total283,522,528242,153,083242,153,083
Less: Provision for bad and doubtful debts

(17,304,375)

(10,054,049)

-

Total266,218,153232,099,034242,153,083

As at 31 December 2019, ownership restricted accounts receivable is RMB54,663,422 (31December 2018: RMB52,015,032), referring to Note V. 50.

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

Ageing20192018
Within 1 year (inclusive)275,693,658240,312,773
Over 1 year but within 2 years (inclusive)7,354,2621,566,622
Over 2 years but within 3 years (inclusive)308,950273,688
Over 3 years165,658-
Sub-total283,522,528242,153,083
Less: Provision for bad and doubtful debts(17,304,375)-
Total266,218,153242,153,083

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

(3) Accounts receivable by provisioning method

(a) Assessment of ECLs on accounts receivable in 2019:

At all times the Group measures the impairment loss for accounts receivable at anamount equal to lifetime ECLs, and the ECLs are based on the number of overdue daysand the loss given default. According to the historical experience of the Group, there areno significant differences in the losses of different customer groups. Therefore, differentcustomer groups are not further distinguished when calculating impairment loss basedon the overdue information.

Loss given default

Carrying amount at the end of the yearImpairment loss at the end of the year
Current0.5%212,429,9201,039,698
Overdue for 1 to 30 days3.4%30,728,7751,047,549
Overdue for 31 to 60 days7.1%11,523,509814,636
Overdue for 61 to 90 days12.1%5,764,703700,190
Overdue for 91 to 120 days17.4%1,590,671276,279
Overdue for 121 to 150 days

22.4% 2,311,625 517,066

28.5% 661,492 188,571

Overdue for 151 to 180 days
Overdue for 181 to 210 days

33.3% 2,583,362 861,027

39.4% 6,296,727 2,478,756

Overdue for 211 to 240 days
Overdue for 241 to 270 days

72.9% 588,355 428,627

87.8% 583,701 512,581

Overdue for 271 to 300 days
Overdue for 331 to 330 days

97.3% 753,239 732,946

100.0% 1,491,202 1,491,202

Overdue for 330 to 360 days
Overdue for 360 days100.0%6,215,2476,215,247
Total6.1%283,522,52817,304,375

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

(b) Impairment of account receivables in 2018

Under previous financial instruments standards, provision for impairments is mde whenthere is objective evidence of impairment.

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

2019 2018

- -

Balance under the previous financial instruments standards
Adjustment on initial application of the new financial instruments standards

(10,054,049)

-

Balance at the beginning of the year after adjustment

(10,054,049)

-Charge for the year (7,304,777)

-Written-off during the year 54,451 -Balance at the end of the year (17,304,375)

-

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

Name

Relationshipwith the Group

Balance at theend of the year

Ageing

Percentage ofending balance

of others (%)

Ending

balance ofprovision for

bad and

doubtful debts

THE CO-OP FOOD GROUP Third party 14,953,492

5.6% 817,989

Within 1 year
Lianhua Supermarket Holdings Co., Ltd.

Third party 13,988,131

5.3% 636,038

Within 1 year
NGS Supermarket (Group) Co., Ltd.

Third party 9,278,350

3.3% 1,916,366

Jiajiayue Group Co., Ltd. Third party 8,437,439

Within 1 year
Within 1 year

3.0% 45,468

MARKS AND SPENCER Third party 7,427,424

2.6% 406,296

Total 54,084,836 19.2% 3,822,157

4 Receivables under financing

Item

Within1 yearNote

2019 2018Bills receivable (1) 316,470,229 -

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

As at 31 December 2018, there was no pledged bills receivable (31 December 2018: Nil).

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

Item

NoteAmount derecognised at

year end

Amount derecognised at year end
Bank acceptance bills265,759,455
Total265,759,455

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportAs at 31 December 2019, bills endorsed by the Group to other parties which are not yet due atthe end of the period is RMB265,759,455 (31 December 2018: RMB182,829,674). The notesare used for payment to suppliers and constructions. The Group believes that due to goodreputation of bank, the risk of notes not accepting by bank on maturity is very low, thereforederecognise the note receivables endorsed. If the bank is unable to pay the notes on maturity,according to the relevant laws and regulations of China, the Group would undertake limitedliability for the notes.

5 Prepayments

(1) Prepayments by category:

Item20192018
Prepayments66,807,5374,219,949
Other prepayments900,000-
Total67,707,5374,219,949

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

Ageing

20192018

Amount

Amount

Percentage (%)Percentage (%)
Within 1 year (inclusive)67,441,713100%4,219,949100%
Over 1 year but within 2 years (inclusive)

265,824 - - -

Total67,707,537100%4,219,949100%

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

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

Name

receivable

Balance at theend of the year

Ageing

Percentage ofending balance of

others (%)

Nature of theEnding

balance ofprovision for

bad and

doubtful debts
Beijing Aod Investment Group Co., Ltd.Prepayments

49,396,000

73.0% -

Xinjiang Yuyuan Wine Co., Ltd.

Within 1 year
Prepayments

11,749,019

17.3% -

State Grid Shandong ElectronicPower Yantai Company

Within 1 year
Prepaid

electricity

1,229,571

Within 1

year

1.8% -

fees
Yantai Mingyuan Refrigeration and

Air-conditioning Equipment Co.,

Ltd.Prepayment

s for the

600,000

Within 1year

0.9% -

Yantai Huibao Artware

Manufacturing Co., Ltd.

equipment
Prepayment

s for the

533,855

Within 1

year

0.8% -

equipment
Total63,508,44593.8%-

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report6 Other receivables

Note31 December 201931 December 2018
Interest receivable(1)148,9271,332,681

Others (2) 24,097,885 21,303,405

Total24,246,81222,636,086

(1) Interest receivable

(a) Interest receivable by category:

Item31 December 2019

31 December 2018

Interest receivable on bank deposits 148,927 1,332,681

(b) Significant overdue interest:

As at 31 December 2019, there was no overdue interest receivable (31 December2018: Nil).

(2) Others

(a) Others by customer type:

Customer type31 December 2019

31 December 2018

Amounts due from related parties813,440813,440

Amounts due from other companies 23,284,445 20,489,965Sub-total 24,097,885 21,303,405Less: Provision for bad and doubtful debts - -Total 24,097,885 21,303,405

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report(b) The ageing analysis is as follows:

Ageing20192018
Within 1 year (inclusive)16,052,91611,293,908
Over 1 year but within 2 years (inclusive)940,6686,693,702
Over 2 years but within 3 years (inclusive)6,547,1781,922,998
Over 3 years557,1231,392,797
Sub-total24,097,88521,303,405
Less: Provision for bad and doubtful debts--
Total24,097,88521,303,405

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

[(c) Movements of provisions for bad and doubtful debts

As at 31 December 2019, no bad and doubtful debt provision was made for otherreceivables (31 December 2018: Nil).

As at 31 December 2019, the Group has no other receivables written off (31 December2018: Nil).

(d) Others categorised by nature

Nature of other receivablesNote20192018
Deposit9,812,02710,453,624
Refund of consumption tax and VAT

8,937,164 6,273,882

Petty cash receivable1,741,1472,274,038
Others3,607,5472,301,861
Sub-total24,097,88521,303,405
Less: Provision for bad and doubtful debts

- -

Total24,097,88521,303,405

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

Name

Nature of the

receivable

Balance at theend of the year

Ageing

Percentage of ending balance of others (%)Ending balance of

provision for bad

Sercicio de Impuestos Internos Refund of VAT 7,710,362

and doubtful debts
Within 1 year

32.0% -

Deposits 5,262,324

Over 2

years

21.8% -

Finance Bureau of Yantai Economic and Technological Development Area
Yantai Economic and Technological Development Zone Construction Industry Federation

Construction

deposit

1,143,500

Over 2

years

4.7% -

Yantai Shenma Packaging Co., Ltd.Lease receivables

813,440

3.4% -

Within 1 year
Yantai Municipal Tax Service, State Taxation Administration

Refund of VAT 736,946

3.1% -

Within 1 year
Total15,666,57265.0%-

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report7 Inventories

(1) Inventories by category:

Item

20192018

Book value

impairment of

inventories

Carrying amount

Book value

Provision for

impairment of

Carrying amount

inventories
Raw materials71,681,418-71,681,41867,267,035-67,267,035
Work in progress2,102,781,536-2,102,781,5361,787,819,923-1,787,819,923
Finished goods718,127,090(20,179,637)697,947,453894,187,725(24,683,226)869,504,499
Total2,892,590,044(20,179,637)2,872,410,4072,749,274,683(24,683,226)2,724,591,457

(2) Provision for impairment of inventories:

Item Opening balance

Increase during the yearDecrease during the year

Closing balance

RecognisedReversal
Finished goods24,683,22620,179,637(24,683,226)20,179,637

8 Other current assets

Item20192018
Prepaid income taxes16,854,09124,077,323
Input tax to be credited248,975,183233,087,707
Prepaid rent1,595,6641,511,366
Total267,424,938258,676,396

9 Long-term equity investments

(1) Long-term equity investments by category:

Item20192018
Investments in joint ventures43,981,130-
Less: Provision for impairment--
Total43,981,130-

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

Investee

2018Balance at thebeginning of the

yearMovements during the year

2019Closing balance

Shareholding

percentageIncrease in capital

investments under

equity-method
Joint ventures

SAS L&M Holdings (“L&M Holdings”) - 45,102,058 (1,120,928)

43,981,130 55%

Total-45,102,058(1,120,928)43,981,130

On 22 February 2019, Francs Champs Participations SAS (“Francs Champs”), a subsidiary of the Group, signed the Cooperation Agreement withSC Garri du Gai to establish L&M Holdings, a joint venture. Francs Champs contributed 100% of the equity of its subsidiary, Societe CivileArgricole Du Chateau De Mirefleurs (“Mirefleurs”), with a fair value of RMB45,102,058, accounting for 55% of the shares of L&M Holdings. As perthe Agreement and the Articles of Association, L&M Holdings is jointly controlled by shareholders of both parties.

10 Investment properties

Buildings and plants
Cost
Balance as at 31 December 2018 and 31 December 201970,954,045
Accumulated depreciation
31 December 2018(39,381,556)
Charge for the year(1,857,903)
31 December 2019(41,239,459)
Carrying amount
Carrying amount at 31 December 201929,714,586
Carrying amount at 31 December 201831,572,489

11 Fixed assets

(1) Fixed assets

Item Plant & buildings

Motor vehicles Total

Machinery & equipment
Cost
31 December 20184,761,426,4252,665,798,81426,580,6397,453,805,878
Additions during the year
- Purchases14,592,625114,964,1232,963,537132,520,285
- Transfers from construction in progress

335,319,537 8,856,929 - 344,176,466

(6,035,224) (59,313,825)

Disposals or written-offs during the year

(2,874,020)

(68,223,069)

Disposal of subsidiaries(11,674,567)--(11,674,567)
31 December 20195,093,628,7962,730,306,04126,670,1567,850,604,993
Accumulated depreciation
31 December 2018(621,266,769)(1,062,064,237)(20,743,205)(1,704,074,211)
Charge for the year(143,711,571)(156,813,823)(2,260,577)(302,785,971)
Disposals or written-offs during the year

5,930,965 55,080,117 2,859,001 63,870,083

Disposal of subsidiaries3,932,031--3,932,031
31 December 2019(755,115,344)(1,163,797,943)(20,144,781)(1,939,058,068)
Provision for impairment
31 December 2018----
Charge for the year-(17,478,027)-(17,478,027)
31 December 2019-(17,478,027)-(17,478,027)
Carrying amount
31 December 20194,338,513,4521,549,030,0716,525,3755,894,068,898
31 December 20184,140,159,6561,603,734,5775,837,4345,749,731,667

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportAs at 31 December 2019, ownership restricted net value of fixed assets is RMB344,670,852(31 December 2018: RMB412,006,421), referring to Note V. 50.

(2) Temporarily idle fixed assets

Item Cost

Accumulated depreciationProvision for impairment

Carrying amount

Buildings47,821,026(14,796,008)-33,025,018
Machinery equipment73,592,531(52,434,878)(17,478,027)3,679,626
Other equipment3,344,518(3,173,906)-170,612
Total124,758,075(70,404,792)(17,478,027)36,875,256

(3) Fixed assets leased out under operating leases

Item

Carrying amount at the end of the year
RMB
Machinery equipment102,608
Total102,608

(4) Fixed assets pending certificates of ownership

Item Carrying amount

Reason why the certificates are pending
Industry Production Centre of R&D Centre1,761,265,190Processing
Dormitories, main building and reception building of Changan Chateau

287,560,490 Processing

181,809,121 Processing

European town, main building and service building of Chateau Beijing
Main building of Chateau Tinlot of Yantai Changyu

79,992,032 Processing

17,124,481 Processing

Fermentation shop and warehouse of Xinjiang Tianzhu
Office and packaging shop of Golden Icewine Valley

8,890,557 Processing

Fermentation shop of Zhangyu (Jingyang)3,862,118Processing
Office, experiment building and workshop of Fermentation Centre

3,484,107 Processing

2,306,172 Processing

Finished goods warehouse and workshop of Kylin Packaging
Office of Sales Company981,632Processing

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

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report12 Construction in progress

(1) Construction in progress

Project

20192018

Book value

Provision for impairmentCarrying amount

Book value

Provision for impairmentCarrying amount
R&D Centre ("Changyu

Wine Complex")

485,017,326 - 485,017,326 608,553,618 - 608,553,618

Project
Ningxia Chateau Construction Project

46,448,561 - 46,448,561 47,163,862 - 47,163,862

6,313,962 - 6,313,962 17,985,881 - 17,985,881

Sales Company Construction Project
Changan Chateau Construction Project

4,052,839 - 4,052,839 39,793,898 - 39,793,898

877,348 - 877,348 23,664,126 - 23,664,126

Shihezi Chateau Construction Project
Other Companies’ Construction Project

24,768,797 - 24,768,797 22,135,206 - 22,135,206

Total567,478,833-567,478,833759,296,591-759,296,591

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

Item Budget Opening balance

Additions duringthe year

Transfers to fixed

assets

long-termdeferred

expenses

Closing balance

Percentage ofactual cost to

budget (%)

Accumulated

capitalised

interest

Interest

capitalised for the yearInterest rate for capitalisation in

2019 (%)

Sources of funding

Changyu WineComplex

4,505,780,000 608,553,618 150,740,457 (268,583,246) (5,693,503) 485,017,326 77.6% 15,413,102 1,141,265

1.2% and

4.3%

Loans from

financialinstitutions and

self-raised
Ningxia Chateau

Construction

414,150,000 47,163,862 306,115 (1,021,416) - 46,448,561 102.2% - - - Self-raised

Project
Changan Chateau

Construction

620,740,000 39,793,898 10,349,914 (44,440,973) (1,650,000) 4,052,839 110.4% - - - Self-raised

Project
Shihezi Chateau

Construction

780,000,000 23,664,126 905,888 (276,666) (23,416,000) 877,348 96.4% - - - Self-raised

Project
Sales Company

Construction

161,350,000 17,985,881 4,236,485 (15,908,404) - 6,313,962 100.3% - - - Self-raised

13. Bearer biological assets

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

Item

Immature biological assetsMature biological assets

TotalOriginal book value

31 December 201813,837,608235,246,042249,083,650
Additions during the year

- Increase in cultivated 7,824,116 - 7,824,116- Transferred to mature (8,832,902) 8,832,902 -

Disposals during the year-(3,560,972)(3,560,972)
31 December 201912,828,822240,517,972253,346,794
Accumulated amortisation
31 December 2018-(39,817,277)(39,817,277)
Charge for the year-(12,722,828)(12,722,828)
Disposals during the year-1,618,5971,618,597
31 December 2019-(50,921,508)(50,921,508)
Carrying amount
31 December 201912,828,822189,596,464202,425,286

31 December 2018 13,837,608 195,428,765 209,266,373

As at 31 December 2019, there is no biological asset with ownership restricted (31 December2018: Nil).

As at 31 December 2019, no provision for impairment of biological asset of the Group wasrecognised as there is no any indication exists (31 December 2018: Nil).

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report14 Intangible assets

Intangible assets

ItemLand use rightsSoftware licensesTrademarksTotal

Original book value31 December 2018 528,252,911 75,822,057 170,068,735 774,143,703Additions during the year

- Purchase

3,502,791

12,436,424 704,531

16,643,746

31 December 2019 531,755,702

88,258,481 170,773,266

790,787,449

Accumulated amortisation

31 December 2018 (78,070,910) (26,722,815) (13,876,519) (118,670,244)Additions during the year

- Charge for the year (11,262,596)

(8,442,975) (465,279) (20,170,850)

Decrease during the year

- - - -31 December 2019 (89,333,506)

(35,165,790)

(14,341,798)

(138,841,094)

Carrying amount

31 December 2019 442,422,196

53,092,691 156,431,468

651,946,35531 December 2018 450,182,001 49,099,242 156,192,216 655,473,459

As at 31 December 2019, the Group has land use right with infinite useful lives ofRMB30,589,474 ( 31 December 2018: RMB30,881,409), representing the freehold land heldby Chile Indomita Wine Group and Australia Kilikanoon Estate under relevant Chile andAustralia laws, on which the amortisation is not required.

As at 31 December 2019, the Group has trademark with infinite useful lives ofRMB154,674,985 (31 December 2018: RMB154,150,933), which is held by Chile IndomitaWine Group and Australia Kilikanoon Estate. The recoverable amount of the trademark isdetermined according to the present value of the expected future cash flows generated fromthe asset group to which the single assets of trademark right belongs. The managementprepares the cash flow projection for future 5 years (the "projecting period") based on thelatest financial budget assumption, and estimates the cash flows after the future 5 years (the"subsequent period"). The pretax discount rates used in the cash flow projections are 11.6%and 12.8%, respectively. A key assumption in the estimate of future cash flows is the revenuegrowth rate in the projecting period. Such revenue growth rate is determined based on theindustry and the expected growth rate of Chile Indomita Wine Group and Australia KilikanoonEstate.

The Group recognises the trademark with infinite useful lives as intangible assets, theimpairment assessment of which is made at the end of each reporting year. The managementbelieves that any reasonable change of the above assumptions will not result in the total bookvalue of the asset group to which the single assets of trademark right belongs exceeding itsrecoverable amount.

According to the result of impairment assessment, by the end of 31 December 2019, themanagement believes there is no impairment loss on those trademarks with infinite usefullives of the Group.

As at 31 December 2019, ownership restricted net value of intangible assets isRMB212,495,435 (31 December 2018: RMB218,070,414), referring to Note V. 50.

15 Goodwill

(1) Changes in goodwill

Note 31 December 2018

Name of investee or events from which goodwill aroseAdditions during the yearDisposals during the year

31 December 2019

Original book value
Etablissements Roullet Fransac (“Roullet Fransac”)

(a) 13,112,525 - - 13,112,525

Dicot Partners, S.L (“Dicot”)(a)92,391,901--92,391,901
Societe Civile Argricole Du Chateau De Mirefleurs (“Mirefleurs”)

(b) 15,761,440 - (15,761,440) -

Chile Indomita Wine Group(a)6,870,115--6,870,115
Australia Kilikanoon Estate(a)37,063,130--37,063,130
Sub-total165,199,111-(15,761,440)149,437,671
Impairment provision-(7,578,478)-(7,578,478)
Carrying amount165,199,111(7,578,478)(15,761,440)141,859,193

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

in December 2013, September 2015 January 2016 and July 2017 respectively, resultingin respective goodwill amounting to RMB 13,112,525, RMB 92,391,901, RMB15,761,440 and RMB 6,870,115. The Group acquired Australia Kilikanoon Estate inJanuary 2018, resulting goodwill amounting to RMB 37,063,130, which have beenallocated to corresponding asset groups for impairment testing.

(b) On 22 February 2019, Francs Champs, a subsidiary of the Group, signed the

Cooperation Agreement with SC Garri du Gai to contribute 100% of the equity ofMirefleurs to establish L&M Holdings, a joint venture. The Group lost control ofMirefleurs this year, and the goodwill decreased by RMB15,761,440 accordingly.

(2) Provision for impairment of goodwill

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

The recoverable amount of the asset group is determined according to the present value ofthe expected future cash flows. The management prepares the cash flow projection for future5 years (the "projecting period") based on the latest financial budget assumption, andestimates the cash flows after the future 5 years (the "subsequent period"). The pretaxdiscount rate used in calculating the recoverable amounts of Fransac Sales, Dicot, Mirefleurs,Indomita Wine and Australia Kilikanoon Estate are 14.2%, 11.4%, 11.6% and 12.8%,respectively (2018: 16.6%, 12.4%, 16.6 %, 12.3% and 13.1%). The key assumption is thegrowth rate of annual revenue growth rate of relevant subsidiaries, which is computed basedon the expected growth rate of each subsidiary and long-term average growth rates ofrelevant industries. Other relevant key assumption is budget gross profit margin, which isdetermined based on the historical performance of each subsidiary and its expectations formarket development. According to the results of the impairment test, the Group found that therecoverable amount of the asset group including goodwill of Australia Kilikanoon Estate islower than its book value. Therefore, on 31 December 2019, the provision for impairment ofgoodwill was RMB7,578,478. The impairment loss was recognised in asset impairment loss.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report16 Long-term deferred expenses

Item 31 December 2018

Additions during the yearAmortisation for the year

Other decreases 31 December 2019

54,217,763 753,161 (1,472,473) (1,369,037) 52,129,414

Land lease prepayment
Land requisition fee43,427,739-(1,967,479)-41,460,260
Greening fee141,224,47213,983,448(9,255,420)-145,952,500
Leasehold improvement

775,647 33,568,156 (1,354,917) - 32,988,886

Others4,994,7951,075,628(1,006,075)-5,064,348
Total244,640,41649,380,393(15,056,364)(1,369,037)277,595,408

17 Deferred tax assets and deferred tax liabilities

(1) Deferred tax assets and liabilities

Item

31 December 20191 January 201931 December 2018
Deductible or

taxabletemporary

Deferred tax

assets /(liabilities)

differencesDeductible or

taxabletemporary

Deferred tax

assets /(liabilities)

differencesDeductible or

taxabletemporary

Deferred tax

assets /(liabilities)

differences
Deferred tax assets:
Provision for

impairment of

54,771,519 13,692,880 34,737,276 8,684,319 24,683,226 6,170,807

assets
Unrealised profits

of intra-group

479,898,175 119,974,545 602,476,583 150,619,145 602,476,583 150,619,145Unpaid bonus 184,674,946 46,168,736 141,808,257 35,485,814 141,808,257 35,485,814

transactionsTermination

benefits

24,833,512 6,208,378 26,186,243 6,546,561 26,186,243 6,546,561

Termination benefits
Deductible tax losses

247,147,752 63,459,305 262,937,999 67,566,387 262,937,999 67,566,387

Deferred income70,643,43715,422,65986,227,29318,868,96386,227,29318,868,963
Assets

assessment

- - 661,415 178,582 661,415 178,582

impairment
Sub-total1,061,969,341264,926,5031,155,035,066287,949,7711,144,981,016285,436,259
Deferred tax liabilities:

businesscombinations

involving entities

not under

(51,829,561)

common control

(14,691,424) (81,338,130) (22,010,647) (81,338,130) (22,010,647)

(2) Details of unrecognised deferred tax assets

Item20192018
Deductible tax losses132,081,819171,430,831

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

Year 2019 20182019 - 7,311,2732020 5,718,454 45,960,7662021 36,741,465 82,685,2132022 26,609,674 14,362,7872023 31,350,376 21,110,7922024 31,661,850 -

Total132,081,819171,430,831

18 Other non-current assets

Item20192018
Royalty193,674,320-

Pursuant to a royalty agreement dated 18 May 1997, starting from 18 September 1997, the

Company may use certain trademarks of Changyu Group Company, which have beenregistered with the PRC Trademark Office. An annual royalty fee at 2% of the Group's annualsales is payable to Changyu Group. The license is effective until the expiry of the registrationof the trademarks.

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

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

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

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

As at 31 December 2019, the Group's royalty in 2019 was RMB38,094,295. When thedifference is deducted by the above-mentioned amount, the balance of royalty due fromChangyu Group was RMB193,674,320.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report19 Short-term loans

Short-term loans by category:

Item20192018
Unsecured loans661,067,617605,202,708
Mortgaged loans82,568,22279,467,832
Guaranteed loans10,677,9053,331,870
Total754,313,744688,002,410

As at 31 December 2019, details of short-term borrowings were as follows:

Amount

Exchange

rate

Amount

Nature ofinterest rate

Interest rate

Interest rate at

the

end of the year
RMB%%
Credit loans (RMB)

150,000,000 1.0000 150,000,000 Floating

4.35%

1-year LPR+0.04%
Credit loans (RMB)

400,000,000 1.0000 400,000,000 Floating

benchmark

interest rate (%)

4.35%

Credit loans (EUR)6,632,9327.815551,839,679Fixed0.85%-2.0%0.85%-2.0%
Credit loans (USD)8,490,0006.976259,227,938Fixed2.81%-4.90%2.81%-4.90%
Mortgaged loans (EUR)

6,994,232 7.8155 54,663,422 Fixed 0.35%-2.86% 0.35%-2.86%

4,000,000 6.9762 27,904,800 Fixed 2.86% 2.86%

Mortgaged loans (USD)
Guaranteed loans (AUD)

2,186,169 4.8843 10,677,905 Fixed 3% 3%

754,313,744

As at 31 December 2019, mortgaged loans were Hacienda y Vi?edos Marques del Atrio,S.L.U (" Atrio ") factoring of accounts receivable from banks including Banco de Sabadell,S.A. of EUR6,994,232 (equivalent of RMB54,663,422) (31 December 2018: RMB52,015,032).Mortgaged loans were Indomita Wine mortgaged USD4,000,000 (equivalent ofRMB27,904,800) of its fixed assets to BBVA (31 December 2018: RMB27,452,800). AustraliaKilikanoon Estate has guaranteed loans of AUD2,186,169 (equivalent of RMB10,677,905) (31December 2018: RMB3,331,870).

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report20 Accounts payable

Ageing20192018
Within 1 year (inclusive)564,803,430710,208,269
Over 1 year but within 2 years (inclusive)2,255,0833,091,659
Over 2 years but within 3 years (inclusive)3,007,686121,598
Over 3 years186,413151,355
Total570,252,612713,572,881

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

21 Advance payments received

Details of advances from customers are as follows:

Item20192018
Advances from customers120,609,499226,075,244

There is no significant advances from customers with ageing of more than one year:

22 Employee benefits payable

(1) Employee benefits payable:

Note 31 December 2018

Additions during the yearDecrease during the year

31 December 2019

(2) 185,893,109 530,648,082 (507,651,734) 208,889,457

Short-term employee benefits
Post-employment benefits -

defined contribution

(3) 224,865 56,303,607 (55,792,325) 736,147

plans
Termination benefits26,186,24312,542,984(13,895,715)24,833,512
Total212,304,217599,494,673(577,339,774)234,459,116

(2) Short-term employee benefits

31 December 2018

Additions during the yearDecrease during the year

31 December 2019

187,685,990 481,363,315 (457,031,510) 212,017,795Staff welfare 3,014,288 13,807,921 (14,820,620) 2,001,589Social insurance 461,095 20,088,329 (19,981,978) 567,446Medical insurance 460,440 17,829,589 (17,722,583) 567,446

Salaries, bonuses,

allowancesWork-related injury

insurance

655 1,131,235 (1,131,890) -Maternity insurance - 1,127,505 (1,127,505) -

Work-related injury

insuranceHousing fund

Housing fund52,51011,993,406(12,031,721)14,195
Labour union fee, staff and workers’ education fee

1,914,079 3,806,035 (3,785,905) 1,934,209Sub-total 193,127,962 531,059,006 (507,651,734) 216,535,234Less: Non-current liabilities 7,234,853 410,924 - 7,645,777Total 185,893,109 530,648,082 (507,651,734)

208,889,457

(3) Post-employment benefits - defined contribution plans

31 December 2018

Additions during the

year

Additions during the yearDecrease during the year

31 December 2019

Basic pension insurance224,53355,054,748(54,543,144)736,137
Unemployment insurance3321,248,859(1,249,181)10
Total224,86556,303,607(55,792,325)736,147

23 Taxes payable

Item20192018
Value-added tax88,590,03536,442,868
Consumption tax48,497,55028,636,646
Corporate income tax216,958,30940,869,507
Individual income tax840,9972,476,527
Tax on the use of urban land2,216,3905,669,099
Education surcharges4,858,9044,337,712
Urban maintenance and construction tax6,731,7725,165,128
Others6,476,0145,315,303
Total375,169,971128,912,790

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report24 Other payables

Note31 December 201931 December 2018
Interest payable758,047712,826
Dividends payable1,366,559-
Others(1)448,407,879607,767,064
Total450,532,485608,479,890

(1) Others

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

Item20192018
Deposit payable to dealer164,649,995159,191,138
Advertising fee payable90,741,40480,715,461
Equipment and construction fee payable72,004,009152,825,734
Freight charges payable31,842,44338,867,725
Contracting fee payable16,997,68527,070,584
Deposits due to suppliers13,990,90015,901,210
Staff deposit1,866,7652,806,766
Royalty due to Changyu Group-78,414,978
Others56,314,67851,973,468
Total448,407,879607,767,064

(b) Significant others aged over one year:

Item

Balance at the end of the yearReasons why not settled
VASF Company

4,877,876

Payables for contracting fee
Total4,877,876

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report25 Non-current liabilities due within one year

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

Item20192018
Long-term loans due within one year116,826,221118,940,788
Long-term payables due within one year34,000,00034,000,000
Total150,826,221152,940,788

26 Long-term loans

(1) Long-term loans by category

Item20192018
Credit loans136,749,730139,171,506
Guaranteed loans105,093,000129,500,000
Mortgaged loans3,875,9926,749,944
Less: Long-term loans due within one year116,826,221118,940,788
Total128,892,501156,480,662

As at 31 December 2019, details of long-term borrowings were as follows:

Amount

Exchan

ge rate

Amount

interest

rate

Interest rate

the end of the

yearLong-term loans

due within one

yearLong-term loans

due after one

year
RMB%%
Credit loans (EUR)17,497,2467.8155136,749,730Fixed1.0%-1.7%1.0%-1.7%88,740,09148,009,639
Guaranteed loans (RMB)

56,250,000 1 56,250,000 Floating

4.275% 25,000,000 31,250,000

90% of 5-year LPR
Guaranteed loans (AUD)

10,000,000 4.8843 48,843,000 Fixed 2.5% 2.5% - 48,843,000

495,937 7.8155 3,875,992 Fixed 1.8% 1.8% 3,086,130 789,862

Mortgaged loans (EUR)
Total245,718,722116,826,221128,892,501

As at 31 December 2019, Credit loans were EUR17,497,246 borrowed by Atrio from Bankia,Banco Santander, BBVA and Caja Rural de Navarr etc. (equivalent of RMB136,749,730) (31December 2018: RMB139,171,506). Mortgaged loans (RMB) were long-term borrowings ofRMB56,250,000 of the R&D Centre, a subsidiary of the Company (31 December 2018:

RMB81,250,000). Australia Kilikanoon Estate has borrowed AUD10,000,000(equivalent ofRMB48,843,000) (31 December 2018: RMB48,250,000) from ANZ Bank and its guaranteedby the Company. Mortgaged loans were borrowings of EUR495,937 (equivalent ofRMB3,875,992) form Popular Espa?ol, pledged with its land which valued EUR2,931,722(equivalent of RMB22,912,873) (31 December 2018: RMB6,749,944).

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report27 Long-term payables

Item 2019 2018Agricultural Development Fund of China ("CADF") 225,000,000 259,000,000Less: Long-term payables due within one year 34,000,000 34,000,000Balance of long-term payables 191,000,000 225,000,000

In 2016, RMB 305,000,000 from CADF was invested in R&D Centre, CADF accounted for

37.9% of the registered capital. According to the investment agreement, CADF will recovery

investment funds over 10 years, the investment income received equal to 1.2% of theremaining unpaid principal per annum. In addition to the fixed income, CADF will no longerenjoy other profits or bear the loss of R&D Centre. Therefore, although the investment in R&DCentre, nominally equity investment, is actually a debt investment (financial discount loan).The Group take this investment as long-term payables, which measured in amortized cost.The Group repays the principal of RMB 34,000,000 in 2019. Refer to Note V. 50 for details ofmortgaged and pledged assets.

Balance oflong-termpayables

oninvestm

ent

Investmentdate

Termination

date ofrepayment

Due within one

year

Due after one year

Mortgaged andpledged assets

RMBRMBRMB

57,000,000 1.2%

12 January

2016

24 December

2025

10,000,000 47,000,000

hand and intangible

assets

154,000,000 1.2%

29 February 201628 February 2026

22,000,000 132,000,000

14,000,000 1.2% 16 June 2016 22 May 2026 2,000,000 12,000,000

Fixed assets and intangible assets
Cash at bank and on hand
225,000,00034,000,000191,000,000

28 Deferred income

Item 31 December 2018

Additions during the yearDecrease during the year

31 December 2019Government grants 86,227,293 7,833,097 (23,359,102)

70,701,288

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportGovernment grants:

Liability 31 December 2018

government grants

during the yearAmounts recognised

in other income

31 December 2019

Related toassets/income

during the year
Industrial development support

project 32,800,000 - (4,100,000) 28,700,000

grants related

to assets
Xinjiang industrial revitalisation

and technological

15,642,000 - (1,422,000) 14,220,000

transformation projectGovernment

grants related

to assets
Fixed asset investment reward

of Shihezi Chateau project 6,996,600 - (2,280,000) 4,716,600

grants related

to assets
Shandong Peninsula Blue

Economic Area construction

6,000,000 - (2,000,000) 4,000,000

fundsGovernment

grants related

to assets
Special government grant for

infrastructure 4,240,000 - (1,060,000) 3,180,000

grants related

to assets
Raw wine fermentation project

3,304,500 - (1,434,900) 1,869,600

grants related

to assets
Wine fermentation capacity

construction (Huanren)

3,200,000 - (400,000) 2,800,000

projectGovernment

grants related

to assets
Engineering technology transformation of information system project

2,900,000 - (580,000) 2,320,000

grants related

to assets
Liquor electronic tracking

project 2,525,257 - (667,054) 1,858,203

grants related

to assets
Infrastructure construction

project 1,718,750 - (1,368,750) 350,000

grants related

to assets
Special fund for efficient

water-saving irrigation

1,639,000 500,000 (262,000) 1,877,000

projectGovernment

grants related

to assets
Subsidy for economic and

energy-saving technological

1,026,400 - (128,300) 898,100

transformation projectsGovernment

grants related

to assets
Wine industry development

project 558,000 - (186,000) 372,000

grants related

to assets
Subsidy for mechanic

development of Penglai

- 265,397 - 265,397

Daliuhang BaseGovernment

grants related

to assets
Coal subsidy

- 260,000 (58,500) 201,500

grants related

to assets
Introduction fund for service industry development

2,000,000 400,000 (2,400,000) -

Related to income
Cross-border e-commerce project

880,256 29,000 (69,298) 839,958

Related to income
Travelling development fund subsidy project

500,000 60,000 - 560,000

Related to income
Water pollution control project fund

206,530 - (113,600) 92,930

Related to income
Subsidy for boiler

reconstruction and

90,000 - (10,000) 80,000

Related toincome

demolition
Special funds for the development of enterprises

- 6,318,700 (4,818,700) 1,500,000

Total 86,227,293 7,833,097 (23,359,102) 70,701,288

29 Other non-current liabilities

Related to

incomeItem

Item31 December 201931 December 2018
Employee benefits payable7,645,7777,234,853

As at 31 December 2019, employee benefit represents deposit from bonus accrued formanagers and above. The bonus is expected to be paid during 2021 to 2023.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report30 Share capital

At 31 December 2018 and 31 December 2019
Unrestricted A shares453,460,800
B shares232,003,200
Total of unrestricted shares685,464,000

31 Capital reserve

Item 31 December 2018

Additions during the yearDecrease during the year

31 December 2019

Share premium560,038,853-(905,019)559,133,834
Others5,916,588--5,916,588
Total565,955,441-(905,019)565,050,422

The balance between the long-term equity investment acquired due to the purchase ofminority shareholding and the share of net assets continuously calculated since the date ofacquisition by the subsidiary based on the proportion of newly increased shareholding shallbe offset against the capital reserve. Details of non-controlling interests acquired during theyear, see Note- VII. 2.

32 Other comprehensive income

Item

Balance at thebeginning of the yearattributable toshareholders of the

Company

Accrued during the yearBalance at the end of the year

attributable to

the CompanyBefore-taxamount

shareholders of

Less:

Previouslyrecognised

amounttransferred to

profit or loss

Less:

Income taxexpenses

Net-of-tax

amountattributable to

the Company

Net-of-taxamountattributable tonon-

shareholders ofcontrolling

interests

Items that may be reclassified to profit or loss
Translation

differences arisingfrom translation offoreign currencyfinancial

2,965,377 (8,542,792) - - (7,200,960) (1,341,832) (4,235,583)

33 Surplus reserve

statementsItem

Item31 December 201931 December 2018
Statutory surplus reserve342,732,000342,732,000

In accordance with the Company Law and the Articles of Association Company, the Companyappropriated 10% of its net profit to statutory surplus reserve. The appropriation to thestatutory surplus reserve may be ceased when the accumulated appropriation reaches over50% of the registered capital of the Company. The Company does not appropriate net profit tothe surplus reserve in 2019 as surplus reserve of the Company is above 50% of the registeredcapital.

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

34 Retained earnings

ItemNote20192018
Retained earnings at the beginning of the year (before adjustment)

8,008,982,547 7,309,081,618

(1) (7,540,537)

Total adjustments for opening retained earnings

-

8,001,442,010 7,309,081,618

Retained earnings at the beginning of the year (after adjustment)
Add: Net profits for the year attributable to shareholders of the Company

1,129,735,749 1,042,632,929

Less: Dividends to ordinary shares(2)411,278,400342,732,000
Retained earnings at the end of the year(3)8,719,889,3598,008,982,547

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

Retrospective adjustments of RMB7,540,537 made on beginning retained earnings inaccordance with CAS and related new regulations (See Note III. 32).

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

Pursuant to the shareholders’ approval at the shareholders’ general meeting on 17 May 2019,a cash dividend of RMB0.6 per share (2018: RMB0.5 per share), totalling RMB411,278,40(2018: RMB342,732,000), was declared and paid to the Company’s ordinary shareholders on8 July 2019 and 10 July 2019.

(3) Retained earnings at the end of the year

As at 31 December 2019, the consolidated retained earnings attributable to the Companyincluded an appropriation of RMB56,059,538 (2018: RMB54,336,543) to surplus reservemade by the subsidiaries.

35 Operating income and operating costs

Item

2019 2018Income Cost Income CostPrincipal activities 4,944,119,295 1,855,399,515 5,066,265,044 1,872,991,039Other operating activities 86,892,194 32,096,476 75,979,696 28,620,468

Total5,031,011,4891,887,495,9915,142,244,7401,901,611,507

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportDetails of operating income:

20192018
Operating income from principal activities
- Sale of goods4,944,119,2955,066,265,044
Sub-total4,944,119,2955,066,265,044
Income from other business86,892,19475,979,696
Total5,031,011,4895,142,244,740

36 Taxes and surcharges

Item20192018
Consumption tax159,206,181157,037,382
Urban maintenance and construction tax36,159,52639,655,738
Education surcharges26,463,12928,762,507
Property tax29,984,23731,461,708
Tax on the use of urban land11,033,25212,098,790
Stamp duty3,088,7474,507,785
Others2,527,3062,967,764
Total268,462,378276,491,674

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report37 Selling and distribution expenses

Item20192018
Marketing fee376,428,191386,519,123
Salaries and benefits353,390,023297,489,665
Transport charges121,007,566141,756,007
Labour service fee72,788,24572,036,252
Advertising fee45,359,13535,857,276
Conference fee42,272,18932,731,215
Depreciation expense40,227,48241,410,740
Storage rental37,586,63845,668,613
Design and production fee26,471,70329,437,757
Travelling expenses26,010,81327,176,277
Water, electricity and gas fee14,136,77911,297,244
Royalty(182,711,622)73,976,395
Others80,264,88279,242,582
Total1,053,232,0241,274,599,146

38 General and administrative expenses

Item20192018
Salaries and benefits90,477,287114,473,209
Depreciation expenses61,831,91571,978,485
Repair costs28,555,03225,189,384
Administrative expenses23,101,63623,766,176
Amortisation expenses18,373,49518,187,049
Amortisation of greening fee18,409,03114,730,804
Contracting fee13,377,25513,364,835
Rental charge12,938,86413,012,167
Safety production costs9,510,8289,692,574
Security and cleaning fee8,124,1358,659,405
Others27,205,17830,526,563
Total311,904,656343,580,651

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report39 Financial expenses

Item 2019 2018Interest expenses from loans and payables 50,212,059 52,198,774Less: Borrowing costs capitalised 1,141,265 5,843,872

7,500,000 -Interest income from deposits and receivables (12,327,441)

Less: Financial expenses offset by fiscal interest subsidy

(12,086,007)

Net exchange (gains) / losses 3,611,536 (666,323)

Other financial expenses 2,435,813 2,342,730Total 35,290,702 35,945,302

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

40 Other income

Item20192018Related to assets/income
Reward on the fixed asset investment

2,280,000 2,280,000

Government grants related to assets
Shandong Peninsula Blue

Economic Area construction

2,000,000 2,000,000

Government grants

related to assets

funds
Industrial development support project

4,100,000 4,100,000

Government grants related to assets
Others - Government grants related to assets

7,567,504 8,579,199

Government grants related to assets
Special funds for the development of enterprises

37,449,390 42,953,900 Related to income

Tax refunds8,724,7756,587,773Related to income
Strong industrial city special funds2,518,7004,750,000Related to income
Others - Government grants related to income

12,697,212 16,030,562 Related to income

Total77,337,58187,281,434

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

41 Investment income

Investment income by item

ItemNote20192018
Long-term equity investment losses under equity method

(1,120,928)

-

Investment income from disposal of long-term equity investments(1)

6,233,661 -

Total5,112,733-

(1) On 22 February 2019, Francs Champs, a subsidiary of the Group, signed the Cooperation

Agreement with SC Garri du Gai to establish L&M Holdings, a joint venture. Francs Champscontributed 100% of the equity of its subsidiary, Mirefleurs, with a fair value ofRMB45,102,058. The deference of RMB6,233,661 between the book value of fair value of netasset of Mirefleurs and the goodwill of Mirefleurswas when it was acquired by the Group wasincluded in investment income.

42 Credit losses

Item2019
Accounts receivable7,304,777
Total7,304,777

43 Impairment losses / (reversal)

Item20192018
Inventories(4,503,589)(912,166)
Fixed assets17,478,027-
Goodwill7,578,478-
Total20,552,916(912,166)

44 Gains from asset disposals

Item20192018
Gains from disposal of fixed assets39,01511,368,355

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

45 Non-operating income and non-operating expenses

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

Item 2019 2018Net penalty income 2,593,116 1,901,530Others 8,328,632 5,451,779Total 10,921,748 7,353,309

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

(2) Non-operating expenses

Item20192018
Compensation, penalty and fine expenses403,9751,445,721
Donations provided699,296593,819
Others2,519,9981,496,368
Total3,623,2693,535,908

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

46 Income tax expenses

ItemNote20192018
Current tax expense for the year based on tax law and regulations

385,102,064

352,598,370

Changes in deferred tax assets/liabilities(1)15,704,04514,529,152
Total400,806,109367,127,522

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

Item20192018
Origination of temporary differences15,704,04514,529,152
Total15,704,04514,529,152

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

Item20192018
Profit before taxation1,530,514,7371,408,611,698
Estimated income tax at 25%382,628,684352,152,925
Effect of different tax rates applied by subsidiaries(707,938)(949,634)
Effect of non-deductible costs, expense and losses6,705,5695,496,292
Effect of deductible losses of deferred tax assets not recognised for the year

7,397,810 4,642,727Deferred tax assets written-off 4,781,984 5,785,212

Income tax expenses400,806,109367,127,522

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report47 Basic earnings per share and diluted earnings per share

(1) Basic earnings per share

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

20192018
Consolidated net profit attributable to ordinary shareholders of the Company

1,129,735,749 1,042,632,929

685,464,000 685,464,000

Weighted average number of ordinary shares outstanding
Basic earnings per share (RMB/share)1.651.52

Weighted average number of ordinary shares is calculated as follows:

20192018
Issued ordinary shares at the beginning of the year685,464,000685,464,000
Weighted average number of ordinary shares at the end of the year

685,464,000 685,464,000

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

48 Cash flow statement

(1) Proceeds relating to other operating activities:

Item20192018
Government grants69,311,57657,123,900
Penalty income2,593,1161,901,530
Interest income from bank12,327,4417,871,853
Others9,512,3885,806,589
Total93,744,52172,703,872

(2) Payments relating to other operating activities:

Item20192018
Selling and distribution expenses761,969,906918,966,855
General and administrative expenses138,738,416140,112,380
Others12,856,0144,637,082
Total913,564,3361,063,716,317

(3) Proceeds relating to other financing activities:

Item20192018
R&D Centre pledged deposit for long-term payables-61,700,000
Interest income from R&D Centre pledged deposit for long-term payables

- 768,259

Total-62,468,259

(4) Payments relating to other financing activities:

Item20192018
Proceed from acquisitions of non-controlling interests’ distributions or interest

11,619,552 -

R&D Centre pledged deposit for long-term payables-46,100,000
Total11,619,55246,100,000

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report49 Supplementary information on cash flow statement

(1) Supplement to cash flow statement

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

Item20192018
Net profit1,129,708,6281,041,484,176
Add: Provisions for impairment of assets / (reversal)

20,552,916 (912,166)

Credit losses7,304,777-
Depreciation of fixed assets and investment property

304,643,874 299,696,260

Amortisation of intangible assets20,170,85019,018,740
Amortisation of long-term deferred expenses

15,056,364 12,082,117

Amortisation of biological assets12,722,82812,034,812
Gains from disposal of fixed assets,

intangible assets, and other long-term

(39,015)

assets

(11,368,355)

Financial expenses49,508,88645,855,744
Royalty(182,711,622)-
Investment income(5,112,733)-
Decrease in deferred tax assets23,023,26822,685,137
Decrease in deferred tax liabilities(7,319,223)(8,155,985)
Decrease in gross inventories(158,274,938)(180,452,933)
Increase in operating receivables(290,520,189)(137,899,294)
Decrease in operating payables(100,876,647)(138,089,507)
Net cash flows from operating activities837,838,024975,978,746

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

Item20192018
Payment of intangible assets and other long-term assets by bank acceptances

165,716,961 109,378,598

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Reportc. Change in cash and cash equivalents:

Item20192018
Cash equivalents at the end of the year1,365,772,6751,206,860,334
Less: Cash equivalents at the beginning of the year

1,206,860,334

1,180,889,274

Net increase in cash and cash equivalents158,912,34125,971,060

(2) Details of cash and cash equivalents

Item20192018
Cash at bank and on hand
Including: Cash on hand59,975114,335
Bank deposits available on demand1,365,712,7001,206,745,999
Closing balance of cash and cash equivalents1,365,772,6751,206,860,334

50 Assets with restrictive ownership title or right of use

Item Opening balance

Additions during the yearDecrease during the yearBalance at the end of the yearReason for restriction

Cash at

bank andon hand

95,797,743 - (1,915,038) 93,882,705

mortgage forlong-term payables

etc.

Account

receivable(i)

52,015,032 183,997,103 (181,348,713) 54,663,422

borrowingsmortgage from

Atrio

Fixed assets 412,006,421 - (67,335,569) 344,670,852

mortgage forlong-term payablesand long-term and

short-term

borrowings

Intangibleassets

218,070,414 - (5,574,979) 212,495,435

mortgage for

long-term payables
Total777,889,610183,997,103(256,174,299)705,712,414

(i) As at 31 December 2019, the amount of accounts receivable with restricted ownership

is EUR 6,994,232 (equivalent of RMB54,663,422), which refers to accounts receivableAtrio conducted for factoring from Banco de Sabadell, S.A. Etc. (31 December 2018:

EUR6,628,399, equivalent of RMB52,015,032)

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportVI. Change of consolidation scope

Disposal of subsidiaries

Disposal of investments in subsidiaries through a single transaction resulting in loss of

control

Name Consideration

beingdisposed(%)

Disposalmethod

Date of losingcontrol

Basis for

Shareholdingdetermining date

of losing control

of net assets in

consolidated financial statements

Mirefleurs 45,102,058 100

30/03/2019

Transfer by agreementAsset delivery date

6,233,661

The Group recognised a gain of RMB6,233,661 on disposal of Mirefleurs resulting in lossof control, which has been included in investment income of consolidated financialstatements.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportVII. Interests in other entities

1 Interests in subsidiaries

(1) Composition of the Group

Name of the Subsidiary

Principal place ofbusiness

Registered place

Business

nature

Registered capital

Shareholding ratio(%)

Acquisition method(or similar equity

interest)Xinjiang Tianzhu Wine Co., Ltd. (“Xinajing

Tianzhu”)

Shihezi, Xinjiang,

China

Shihezi, Xinjiang,

China

Manufacturing RMB75,000,000 60 -

Business combinationsinvolving entities not under

common controlEtablissements Roullet Fransac

(“Roullet Fransac”)

Cognac, France Cognac, France Trading EUR2,900,000 - 100

Business combinationsinvolving entities not under

common controlDicot Partners, S.L (“Dicot”) Navarre, Spain Navarre, Spain

Marketing and

sales

EUR2,000,000 75 -

Business combinationsinvolving entities not under

common controlVi?a Indómita, S.A.,Vi?a Dos Andes,S.A.,

and Bodegas Santa Alicia SpA. (“ChileIndomita Wine Group”)

Santiago, Chile Santiago, Chile

Marketing and

sales

CLP31,100,000,000 85 -

Acquired throughestablishment or investmentKilikanoon Estate Pty Ltd

(“Australia Kilikanoon Estate”)

Adelaide, Australia Adelaide, Australia

Marketing and

sales

AUD6,420,000 82.5 -

Business combinationsinvolving entities not under

common controlBeijing Changyu Sales and Distribution Co.,

Ltd ("Beijing Sales")

Beijing, China Beijing, China

Marketing and

sales

RMB1,000,000 100 -

Acquired throughestablishment or investmentYantai Kylin Packaging Co., Ltd. ("Kylin

Packaging")

Yantai, Shandong,

China

Yantai, Shandong,

China

Manufacturing RMB15,410,000 100 -

Acquired throughestablishment or investmentYantai Chateau Changyu-Castel Co., Ltd

("Chateau Changyu") (c)

Yantai, Shandong,

China

Yantai, Shandong,

China

Manufacturing RMB5,000,000 70 -

Acquired throughestablishment or investmentChangyu (Jingyang) Wine Co., Ltd.("Jingyang Wine")

Xianyang, Shaanxi,

China

Xianyang, Shaanxi,

China

Manufacturing RMB1,000,000 90 10

Acquired throughestablishment or investmentYantai Changyu Pioneer Wine Sales Co., Yantai, Shandong, Yantai, Shandong, Marketing and

RMB8,000,000 100 -

Acquired through

Name of the Subsidiary

Principal place ofbusiness

Registered place

Business

nature

Registered capital

Shareholding ratio

(%)

Acquisition method(or similar equityinterest)

Ltd. ("Sales Company")ChinaChinasalesestablishment or investment

Langfang Development Zone

Castel-Changyu Wine Co., Ltd ("LangfangCastel")

Langfang, Hebei,

China

Langfang, Hebei,

China

Manufacturing RMB6,108,818 39 10

Acquired throughestablishment or investmentChangyu (Jingyang) Wine Sales Co., Ltd.("Jingyang Sales")

Xianyang, Shaanxi,

China

Xianyang, Shaanxi,

China

Marketing and

sales

RMB1,000,000 10 90

Acquired throughestablishment or investmentLangfang Changyu Pioneer Wine Sales Co.,Ltd ("Langfang Sales")

Langfang, Hebei,

China

Langfang, Hebei,

China

Marketing and

sales

RMB1,000,000 10 90

Acquired throughestablishment or investmentShanghai Changyu Sales and DistributionCo., Ltd. ("Shanghai Sales")

Shanghai, China Shanghai, China

Marketing and

sales

RMB1,000,000 30 70

Acquired throughestablishment or investmentBeijing Changyu AFIP Agriculture

development Co., Ltd ("AgricultureDevelopment")

Miyun, Beijing, China

Miyun, Beijing,

China

Marketing and

sales

RMB1,000,000 - 100

Acquired throughestablishment or investmentBeijing Chateau Changyu AFIP Global Co.,Ltd. (“AFIP”) (d)

Beijing, China Beijing, China Manufacturing RMB 64,2750,000 91.53 -

Acquired throughestablishment or investmentYantai Changyu Wine Sales Co., Ltd.

("Wines Sales")

Yantai, Shandong,

China

Yantai, Shandong,

China

Marketing and

sales

RMB5,000,000 90 10

Acquired throughestablishment or investmentYantai Changyu Pioneer International Co.,

Ltd. ("Pioneer International")

Yantai, Shandong,

China

Yantai, Shandong,

China

Marketing and

sales

RMB5,000,000 70 30

Acquired throughestablishment or investmentHangzhou Changyu Wine Sales Co., Ltd.("Hangzhou Changyu")

Hangzhou, Zhejiang,

China

Hangzhou, Zhejiang,

China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentNingxia Changyu Grape Growing Co., Ltd.

(“Ningxia Growing”)

Yinchuan, Ningxia,

China

Ningxia, China Plating RMB1,000,000 100 -

Acquired throughestablishment or investmentHuanren Changyu National Wines SalesCo., Ltd. ("National Wines")

Benxi, Liaoning, China

Benxi, Liaoning,

China

Marketing and

sales

RMB2,000,000 100 -

Acquired throughestablishment or investmentLiaoning Changyu Golden Icewine Valley

Co., Ltd. ("Golden Icewine Valley") (e)

Benxi, Liaoning, China
Benxi, Liaoning, China

Benxi, Liaoning,

China

Manufacturing RMB59,687,300 51 -

Acquired throughestablishment or investmentYantai Development Zone Changyu Trading

Co., Ltd ("Development Zone Trading")

Yantai, Shandong,

China

Yantai, Shandong,

China

Marketing and

sales

RMB5,000,000 - 100

Acquired throughestablishment or investment

Name of the Subsidiary

Principal place of

business

Registered place

Business

nature

Registered capital

Shareholding ratio(%)

Acquisition method(or similar equityinterest)Shenzhen Changyu Wine Marketing Ltd.("Shenzhen Marketing") (a)

Shenzhen,Guangdong, China

Shenzhen,Guangdong, China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentYantai Changyu Fushan Trading Company("Fushan Trading")

Yantai, Shandong,

China

Yantai, Shandong,

China

Marketing and

sales

RMB5,000,000 - 100

Acquired throughestablishment or investmentBeijing AFIP Meeting Center ("MeetingCenter")

Miyun, Beijing, China

Miyun, Beijing,

China

Services RMB500,000 - 100

Acquired throughestablishment or investmentBeijing AFIP Tourism and Culture ("AFIP

Tourism")

Miyun, Beijing, China

Miyun, Beijing,

China

Tourism RMB500,000 - 100

Acquired throughestablishment or investmentChangyu (Ningxia) Wine Co., Ltd. (“Ningxia

Wine”)

Ningxia, China Ningxia, China Manufacturing RMB1,000,000 100 -

Acquired throughestablishment or investmentYantai Changyu Chateau Tinlot Co., Ltd.("Chateau Tinlot")

Yantai, Shandong,

China

Yantai, Shandong,

China

retail

RMB400,000,000 65 35

Acquired throughestablishment or investmentQing Tong Xia Changyu Wine Marketing Ltd.

("Qing Tong Xia Sales")

Ningxia, China Ningxia, China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentXinjiang Chateau Changyu Baron BalboaCo., Ltd. (“Chateau Shihezi”)

Shihezi, Xinjiang,

China

Shihezi, Xinjiang,

China

Manufacturing RMB550,000,000 100 -

Acquired throughestablishment or investmentNingxia Chateau Changyu Moser XV Co.,

Ltd. (“Chateau Ningxia”)

Yinchuan, Ningxia,

China

Yinchuan, Ningxia,

China

Manufacturing RMB2,000,000 100 -

Acquired throughestablishment or investmentShaanxi Chateau Changyu Rena Co., Ltd.(“Chateau Changan”)

Xianyang, Shaanxi,

China

Xianyang, Shaanxi,

China

Manufacturing RMB20,000,000 100 -

Acquired throughestablishment or investmentYantai Changyu Wine Research &Development Centre Co., Ltd. (“R&DCentre”) (f)

Yantai, Shandong,

China

Yantai, Shandong,

China

Manufacturing RMB805,000,000 68.97 -

Acquired throughestablishment or investmentChangyu (HuanRen) Wine Co., Ltd ("Huan

Ren Wine")

Wholesale andBenxi, Liaoning, China

Benxi, Liaoning,

China

Wineproductionprojecting

RMB5,000,000 100 -

Acquired throughestablishment or investmentXinjiang Changyu Sales Co., Ltd ("Xinjiang

Sales")

Shihezi, Xinjiang,

China

Shihezi, Xinjiang,

China

Marketing and

sales

RMB10,000,000 - 100

Acquired throughestablishment or investmentNingxia Changyu Trading Co., Ltd ("NingxiaTrading")

Yinchuan, Ningxia,

China

Yinchuan, Ningxia,

China

Marketing and

sales

RMB1,000,000 - 100

Acquired throughestablishment or investment

Name of the Subsidiary

Principal place of

business

Registered place

Business

nature

Registered capital

Shareholding ratio(%)

Acquisition method(or similar equityinterest)Shaanxi Changyu Rena Wine Sales Co., Ltd("Shaanxi Sales")

Xianyang, Shaanxi,

China

Xianyang, Shaanxi,

China

Marketing and

sales

RMB3,000,000 - 100

Acquired throughestablishment or investmentPenglai Changyu Wine Sales Co., Ltd("Penglai Sales")

Penglai, Shandong,

China

Penglai, Shandong,

China

Marketing and

sales

RMB5,000,000 - 100

Acquired throughestablishment or investmentLaizhou Changyu Wine Sales Co., Ltd

("Laizhou Sales")

Laizhou, Shandong,

China

Laizhou, Shandong,

China

Marketing and

sales

RMB1,000,000 - 100

Acquired throughestablishment or investmentFrancs Champs Participations SAS (“Francs

Champs”)

Cognac, France Cognac, France

Investmentand trading

EUR32,000,000 100 -

Acquired throughestablishment or investmentLanzhou Changyu Wine Sales Co., Ltd

("Lanzhou Sales") (a)

Lanzhou Gansu,

China

Lanzhou Gansu,

China

Marketing and

sales

RMB100,000 - 100

Acquired throughestablishment or investmentBeijing Retailing Co. Ltd ("Beijing Retailing") Beijing, China Beijing, China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentTianjin Changyu Pioneer Sales Co., Ltd

("Tianjin Pioneer")

Tianjin, China Tianjin, China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentFuzhou Changyu Pioneer Sales Co., Ltd("Fuzhou Pioneer") (a)

Fuzhou, Fujian, China

Fuzhou, Fujian,

China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentNanjing Changyu Pioneer Sales Co., Ltd

("Nanjing Pioneer") (a)

Nanjing, Jiangsu,

China

Nanjing, Jiangsu,

China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentXianyang Changyu Pioneer Sales Co., Ltd("Xianyang Pioneer") (a)

Xianyang, Shaanxi,

China

Xianyang, Shaanxi,

China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentShenyang Changyu Pioneer Sales Co., Ltd("Shenyang Pioneer") (a)

Shenyang, Liaoning,

China

Shenyang, Liaoning,

China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentJinan Changyu Pioneer Sales Co., Ltd("Jinan Pioneer") (a)

Jinan, Shandong,

China

Jinan, Shandong,

China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentShanghai Changyu Pioneer Sales Co., Ltd("Shanghai Pioneer") (a)

Shanghai, China Shanghai, China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentFuzhou Changyu Pioneer Sales Co., Ltd

("Fuzhou Pioneer") (a)

Fuzhou, Jiangxi,

China

Fuzhou, Jiangxi,

China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentShijiazhuang Changyu Pioneer Sales Co., Shijiazhuang, Hebei, Shijiazhuang, Hebei, Marketing andRMB500,000 - 100Acquired through

Name of the Subsidiary

Principal place of

business

Registered place

Businessnature

Registered capital

Shareholding ratio

(%)

Acquisition method(or similar equityinterest)

Ltd ("Shijiazhuang Pioneer") (a)ChinaChinasalesestablishment or investment

Hangzhou Yuzefeng Sales Co., Ltd("Hangzhou Yuzefeng") (a)

Hangzhou, Zhejiang,

China

Hangzhou, Zhejiang,

China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentJilin Changyu Pioneer Sales Co., Ltd ("JilinPioneer") (a)

Changchun, Jilin,

China

Changchun, Jilin,

China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentBeijing Changyu Pioneer Sales Co., Ltd

("Beijing Pioneer")

Beijing, China Beijing, China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentHarbin Changyu Pioneer Sales Co., Ltd

("Harbin Pioneer") (a)

Heilongjiang, China Heilongjiang, China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentHunan Changyu Pioneer Sales Co., Ltd

("Hunan Pioneer") (a)

Changsha, Hunan,

China

Changsha, Hunan,

China

Marketing and

sales

RMB2,000,000 - 100

Acquired throughestablishment or investmentYinchuan Changyu Pioneer Sales Co., Ltd

("Yinchuan Pioneer") (a)

Ningxia, China Ningxia, China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentKunming Changyu Pioneer Sales Co., Ltd

("Kunming Pioneer") (a)

Kunming, Yunnan,

China

Kunming, Yunnan,

China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentChongqing Changyu Pioneer Sales Co., Ltd("Chongqing Pioneer") (a)

Chongqing, China Chongqing, China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentWuhan Changyu Pioneer Sales Co., Ltd("Wuhan Pioneer") (a)

Wuhan, Hubei, China

Wuhan, Hubei,

China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentHohhot Changyu Pioneer Sales Co., Ltd

("Hohhot Pioneer") (a)

Hohhot, InnerMongolia, China

Hohhot, InnerMongolia, China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentChengdu Changyu Pioneer Sales Co., Ltd("Chengdu Pioneer") (a)

Chengdu, Sichuan,

China

Chengdu, Sichuan,

China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentNanning Changyu Pioneer Sales Co., Ltd("Nanning Pioneer") (a)

Nanning, Guangxi,

China

Nanning, Guangxi,

China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentLanzhou Changyu Pioneer Sales Co., Ltd("Lanzhou Pioneer") (a)

Lanzhou, Gansu,

China

Lanzhou, Gansu,

China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investment

Name of the Subsidiary

Principal place of

business

Registered place

Businessnature

Registered capital

Shareholding ratio

(%)

Acquisition method(or similar equityinterest)Yantai Roullet Fransac Wine Sales Co., Ltd.(“Yantai Roullet Fransac”)

Yantai, Shandong,

China

Yantai, Shandong,

China

Marketing and

sales

RMB1,000,000 - 100

Acquired throughestablishment or investmentHefei Changyu Pioneer Sales Co., Ltd("Hefei Pioneer") (a)

Hefei, Anhui, China Hefei, Anhui, China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentUrumchi Changyu Pioneer Sales Co., Ltd("Urumchi Pioneer") (a)

Xinjiang, China Xinjiang, China

Marketing and

sales

RMB500,000 - 100

Acquired throughestablishment or investmentGuangzhou Changyu Pioneer Sales Co., Ltd

("Guangzhou Pioneer") (a)

Guanghzou,Guangdong, China

Guanghzou,Guangdong, China

Marketing and

sales

RMB11,000,000 - 100

Acquired throughestablishment or investmentYantai Changyu Wine Sales Co., Ltd. ("Wine

Sales Company")

Yantai, Shandong,

China

Yantai, Shandong,

China

Marketing and

sales

RMB5,000,000 100 -

Acquired throughestablishment or investmentShaanxi Chateau Changyu Rena Tourism

Co., Ltd ("Chateau Tourism")

Xianxin, Shaanxi,

China

Xianxin, Shaanxi,

China

Tourism RMB1,000,000 - 100

Acquired throughestablishment or investmentLongkou Changyu Wine Sales Co., Ltd("Longkou Sales")

Yantai, Shandong,

China

Yantai, Shandong,

China

Marketing and

sales

RMB1,000,000 - 100

Acquired throughestablishment or investmentSociete Civile Argricole Du Chateau DeMirefleurs (“Mirefleurs”) (b)

Bordeaux, France Bordeaux, France Trading EUR30,000 - 100

Business combinationsinvolving entities not under

common control

(a) Companies above were deregistered in 2019.(b) Mirefleurs was disposed as the contribution of L&M Holdings for the year.

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

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

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

(d) AFIP is a limited liability company established by [ ] (“Yantai Dean”) and [ ] (“Beijing Qinglang”). In June 2019, Yantai Dean

transferred 1.31% of its equity to Yantai Changyu.After the equity change, the Company holds 91.53% of its equity. Through agreementarrangement, the Company has the full power to control AFIP's strategic operating, investing and financing policies. The agreementarrangement will be terminated on 2 September 2024.

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

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

(f) R&D Centre is a joint venture established by the Company and CADF, accounting for 68.97% of R&D Centre's equity interest. Through

agreement arrangement in Note V. 27, the Company has the full power to control R&D Centre's strategic operating, investing and financingpolicies. The agreement arrangement will be terminated on 22 May 2026. As at 31 December 2019, remaining investment of CADFaccounts for 31.03% of the registered capital.

(2) Material non-wholly owned subsidiaries

Name of the Subsidiary

ownershipinterest held bynon-controlling

interestsComprehensive income attributable

to non-controllinginterests for the

Dividend declaredto non-controlling

yearshareholders during

the year

Balance ofnon-controlling

of the year

interests at the end
Xinjiang Tianzhu40%3,028,510-(47,584,138)
Dicot25%(1,509,224)1,366,691(31,869,464)
Chateau Changyu30%--(12,365,016)
Langfang Castel51%1,288,873-(19,639,108)
AFIP8%--(56,409,393)
Golden Icewine Valley49%--(33,319,062)
IWCC15%(1,697,700)846,398(53,931,129)
Australia Kilikanoon Estate17%258,494163,705(14,810,422)
Total1,368,9532,376,794(269,927,732)

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

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

Xinjiang TianzhuDicotChateau ChangyuLangfang Castel
20192018201920182019201820192018
Current assets24,829,43527,390,495470,219,326464,421,130142,525,011141,298,02319,021,76617,659,511
Non-current assets61,886,75166,486,79591,571,44499,080,668113,168,202114,694,16814,958,22316,001,682
Total assets86,716,18693,877,290561,790,770563,501,798255,693,213255,992,19133,979,98933,661,193
Current liabilities36,185-380,788,880381,659,315174,843,671171,869,6624,023,1013,358,322
Non-current liabilities5,336,1145,336,11453,110,21354,520,937400,000---
Total liabilities5,372,2995,336,114433,899,093436,180,252175,243,671171,869,6624,023,1013,358,322
Operating income-18,803289,273,434327,550,54587,051,981121,235,278-5,038,281
Net profit(7,571,274)(6,902,010)6,463,4733,811,465611,6223,710,124(123,706)(3,479,492)
Total comprehensive inco(7,571,274)(6,902,010)6,036,8963,376,761611,6223,710,124(123,706)(3,479,492)
Cash flows from operating activities

20,457 43,112 (8,744,451) 6,129,923 6,919,481 16,096,447 7,875 673,422

AFIPGolden Icewine ValleyChile Indomita Wine GroupAustralia Kilikanoon Estate
20192018201920182019201820192018
Current assets251,829,164219,973,58238,234,72045,194,591223,722,688214,784,49094,473,62087,634,707
Non-current assets452,444,880461,115,08923,291,37523,920,890291,630,115300,969,34261,770,59963,759,866
Total assets704,274,044681,088,67161,526,09569,115,481515,352,803515,753,832156,244,219151,394,573
Current liabilities45,607,61162,598,54512,077,20614,974,458142,365,749148,359,32821,801,34713,387,942
Non-current liabilities201,500-100,000100,0005,152,9744,976,16150,741,98151,893,171
Total liabilities45,809,11162,598,54512,177,20615,074,458147,518,723153,335,48972,543,32865,281,113
Operating income266,347,444159,369,78332,223,73457,290,490253,543,171262,104,56356,399,11557,648,905
Net profit30,398,74416,555,846(5,764,649)870,99416,279,46115,934,347463,409217,869
Total comprehensive inco30,398,74416,555,846(5,764,649)870,99410,322,81017,465,900(1,477,115)(1,550,720)
Cash flows from operating activities

27,503,336 19,627,933 1,655,465 289,782 5,073,408 3,584,648 479,624 (1,522,151)

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report2 Transactions that cause changes in interests in subsidiaries that do not result in loss of control

(1) Changes in interests in subsidiaries:

Year Name of the Subsidiary

interest held by

non-

controlling interests acquired

Acquisition date

2019AFIP1.31%21 June 2019

2019

2.5% 08 October 2019

(2) Impact from transactions with non-controlling interests and equity attributable to the

shareholders of the Company:

AFIP

Australia Kilikanoon

EstateAustralia Kilikanoon

Estate

Australia Kilikanoon Estate
Purchase cost
- Cash8,479,4443,140,108
Total8,479,4443,140,108
Less: share of net assets in subsidiaries based on the shares acquired

8,724,476 1,990,057

Difference
Including: Adjustment on capital reserve(245,032)1,150,051

VIII. Risk related to financial instruments

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

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

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

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

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report1 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 primarily attributableto cash at bank, receivables, debt investments and derivative financial instruments enteredinto for hedging purposes. Exposure to these credit risks are monitored by management onan ongoing basis.

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

As at 31 December 2019, 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 31 December2019, 20.3% of the Group trade receivables are due from top five customers (31 December2018: 19.8%). There is no collateral or other credit enhancement on the balance of the tradereceivables of the Group.

2 Liquidity risk

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

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportThe following tables set out the remaining contractual maturities at the balance sheet date ofthe Group’s financial liabilities, which are based on contractual undiscounted cash flows(including interest payments computed using contractual rates or, if floating, based on ratescurrent at the balance sheet date) and the earliest date the Group can be required to pay:

Item

2019 Contractual undiscounted cash flow

date

demand

1 to 2 years

but less than 5

yearsMore than 5 years

TotalShort-term loans 768,403,432 - - - 768,403,432 754,313,744Accounts payable 570,252,612 - - - 570,252,612 570,252,612Other payables 450,532,485 - - - 450,532,485 450,532,485

121,077,261 51,214,719 77,814,096 5,577,899 255,683,975 245,718,722

Long-term loans (including the portion due within one year)
Long-term payables (including

the portion due within one

36,462,109 36,054,170 106,374,904 55,473,753 234,364,936 225,000,000Total 1,946,727,899 87,268,889 184,189,000 61,051,652 2,279,237,440 2,245,817,563

Item

2018 Contractual undiscounted cash flow

year)Carrying amountat balance sheet

date

demand

1 to 2 years

but less than 5

years

More than 5 year

TotalShort-term loans 701,861,292 - - - 701,861,292 688,002,410Accounts payable 713,572,881 - - - 713,572,881 713,572,881Other payables 608,479,890 - - - 608,479,890 608,479,890

sLong-term loans (including theportion due within one year)

126,176,001 121,080,909 47,493,128 - 294,750,038 275,421,450

Long-term loans (including the portion due within one year)
Long-term payables (including

the portion due within one

36,921,367 36,462,109 107,093,324 90,356,300 270,833,100 259,000,000Total 2,187,011,431 157,543,018 154,586,452 90,356,300 2,589,497,201 2,544,476,631

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 31 December, the Group held the following interest-bearing financial instruments:

Fixed rate instruments:

Item

year)2019

20192018
Effective interest rate

Amounts

Amounts

Effective interest rate
Financial assets
- Cash at bank1.1%-2.75%106,128,6001.5%-3.8%173,042,400
Financial liabilities
- Short-term loans0.35%-4.9%(204,313,744)0.35%-4.9%(138,002,410)
- Long-term loans (including the portion due within one year)

1%-2.5% (189,468,722)

1%-3% (194,171,450)

- Long-term payables (including

the portion due within one

1.20% (225,000,000)

year)

1.20% (259,000,000)

Total(512,653,866)(418,131,460)

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportVariable rate instruments:

Item

20192018
Effective interest rate

Amounts

Amounts

Effective interest rate
Financial assets
- Cash at bank0.3%-1.75%1,459,595,4050.3%-1.75%1,302,543,742
Financial liabilities
- Short-term loansLPR(550,000,000)LPR(550,000,000)
- Long-term loans (including the portion due within one year)90% of 5-year LPR

(56,250,000)

90% of 5-year LPR

(81,250,000)

Total853,345,405671,293,742

(2) Sensitivity analysis

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

As at 31 December 2019, based on assumptions above, it is estimated that a general increaseof 50 basis points in interest rates, with all other variables held constant, would decrease theGroup’s equity by RMB2,273,438 (2018: RMB2,016,667), and net profit by RMB2,273,438(2018: RMB2,016,667).

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.

4 Foreign currency risk

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

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

liabilities denominated in foreign currencies is presented in the following tables. Forpresentation purposes, the amounts of the exposure are shown in Renminbi, translated usingthe spot rate at the balance sheet date. Differences resulting from the translation of thefinancial statements denominated in foreign currency are excluded.

20192018
Balance at foreign currencyBalance at RMB equivalentBalance at foreign currencyBalance at RMB equivalent
Cash at bank and on hand6,662,52546,592,4147,497,97151,483,850
- USD6,525,67345,524,3997,472,30351,283,910
- EUR136,6281,067,81425,455199,753
- HKD224201213187
Short-term loans12,490,00087,132,73811,000,00075,495,200
- USD12,490,00087,132,73811,000,00075,495,200

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

Group:

Average rate

Balance sheet date mid-spot rate
2019201820192018
USD6.89486.71586.97626.8632
EUR7.71617.81137.81557.8473
HKD0.88010.84640.89580.8762

(3) Sensitivity analysis

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

EquityNet profit
31 December 2019
USD2,080,4172,080,417
EUR(53,391)(53,391)
HKD(10)(10)
Total2,027,0162,027,016
31 December 2018
USD1,210,5651,210,565
EUR(53,391)(53,391)
HKD--
Total1,157,1741,157,174

A 5% weakening of the Renminbi against the US dollar, Euro and Hong Kong dollar at 31December would have had the equal but opposite effect to the amounts shown above, on thebasis that all other variables remained constant.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportIX. Fair value disclosure

All financial assets and financial liabilities held by the Group are carried at amounts not materially different from their fair value at 31 December2019 and 31 December 2018.

X. Related parties and related party transactions

1 Information about the parent of the Company

Company name

Business nature Registered capital

Registered placeShareholding percentage (%)Percentage of voting rights (%)

Ultimate controlling party of the Company

Changyu Group Yantai Manufacturing 50,000,000 50.4% 50.4%

Jointly controlled by Yantai GuoFeng

Investment Holding Group Co., Ltd.,ILLVA SARONNO HOLDING SPA,International Finance Corporation andYantai Yuhua Investment and

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

2 Information about the subsidiaries of the Company

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

3 Information about joint ventures and associates of the Company

For information about the joint ventures and associates of the Company, refer to Note VII.3.

Joint ventures and associates that have related party transactions with the Group during thisyear or the previous year are as follows:

Name of entityRelationship with the Company
L&M HoldingsJoint venture of the Group

4 Information on other related parties

Name of other related partiesRelated party relationship
Yantai Changyu Wine Culture Museum Co., Ltd.("Wine Culture Museum")Controlled by the same parent company
Yantai Changyu International Window of the Wine City Co., Ltd.("Window of the Wine City”)Controlled by the same parent company
Yantai Shenma Packaging Co., Ltd. (“Shenma Packaging”)Controlled by the same parent company
Yantai Zhongya Pharmaceutical Tonic Wine Co., Ltd.("Zhongya Pharmaceutical")Controlled by the same parent company
Yantai Changyu Culture Tourism Production Sales Co., Ltd.(" Culture Sales")Controlled by the same parent company
Yantai Changyu Culture Tourism Development Co., Ltd.(" Culture Development ")Controlled by the same parent company
L&M HoldingsJoint ventures
MirefleursSubsidiaries of the joint venture
CHATEAU DE LIVERSAN (“LIVERSAN”

Subsidiaries of the joint venture

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report5 Transactions with related parties

(1) Product procurement

Related partiesNature of transaction20192018
Shenma PackagingProduct procurement133,587,430173,238,289
Zhongya PharmaceuticalProduct procurement1,244,99115,690,930
Wine Culture MuseumProduct procurement10,832,75116,784,711
Window of the Wine CityProduct procurement8,556,6987,913,342
Culture salesProduct procurement573,84935,857
Culture developmentProduct procurement2,820,545-
MirefleursProduct procurement6,429,542-
L&M HoldingsProduct procurement1,632,941-
Total165,678,747213,663,129

(2) Sales of goods

Related partiesNature of transaction20192018
Culture developmentSales of goods9,592,510-
Wine Culture MuseumSales of goods8,305,22823,515,379
Window of the Wine CitySales of goods7,723,60213,821,555
Zhongya PharmaceuticalSales of goods4,474,0044,552,269
Culture salesSales of goods3,840,8042,914,686
Shenma PackagingSales of goods347,453348,247
Total34,283,60145,152,136

(3) Leases

(a) As the lessor

Name of lessee

Type of assets leasedLease income recognised in 2019Lease income recognised in 2018
Shenma PackagingOffices and plants1,492,5501,478,982
Zhongya PharmaceuticalOffices and plants522,936518,182
Total2,015,4861,997,164

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report(b) As the lessee

Name of lessor

Type of assets leasedLease expense recognised in 2019Lease expense recognised in 2018
Changyu GroupOffice buildings1,612,1181,538,840
Changyu GroupOffices and plants1,394,7621,331,364
Changyu GroupOffices and plants4,184,2863,994,091
Total7,191,1666,864,295

(4) Remuneration of key management personnel

Item20192018
Remuneration of key management personnel12,297,68913,102,005

(5) Other related party transactions

Related parties Nature of transaction

2019 2018

Note
Changyu GroupRoyalty(a)35,938,01473,976,395

Changyu Group

(a) (218,649,636)

Royalty deducted in the previous years

-Changyu Group Patent fee - 50,000Total

(182,711,622)

74,026,395

(a) Contract of trademarks usage

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

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

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportOn 18 May 2019, the general meeting of shareholders approved the proposal of theamendment to the royalty agreement. Article 6.1 of the royalty agreement with ChangyuGroup was amended to: During the validity period of this contract, the Group paysChangyu Group royalty on an annual basis. The royalty is calculated based on 0.98% ofthe sales volume of the Group ’s contract products using this trademark. The article isamended to: The royalty paid to the Changyu Group by the Group shall not be used topromote this trademark and the contract products.

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

As at 31 December 2019, the Group offset the royalty for the year of RMB182,711,622,including the royalty of RMB35,938,014 occurred in 2019 and the deduction of theprevious year's sales expenses of RMB218,649,636 (exclusive of tax).

6 Receivables from and payables to related parties

Receivables from related parties

Item Related party

20192018

Book value

Book value

Provision for bad and doubtful debtsProvision for bad and doubtful debts

Accounts receivable

Pharmaceutica

l

4,292,386 909,935 2,768,391 -Accounts receivable

- - 17,137 -Accounts receivable

Shenma Packaging
Window of the Wine City

1,610,485 633,980 1,911,157 -Other non-current assets

193,674,320 - - -Other receivables

Changyu Group
Shenma Packaging

813,400 - 813,400 -

Payables to related parties

ItemRelated party20192018
Accounts payableShenma Packaging39,893,53855,366,785
Accounts payableZhongya Pharmaceutical

1,024,310 6,722,667

Accounts payableWine Culture Museum4,874,9634,646,731
Accounts payableWindow of the Wine City

3,758,054 4,789,600

Accounts payableCulture sales297,956-
Accounts payableCulture development142,610-
Other payablesShenma Packaging450,000450,000
Other payablesChangyu Group-78,414,978

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportXI. Capital management

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

The Group’s capital structure is regularly reviewed and managed to achieve an optimalstructure and return for shareholders. Factors for the Group’s consideration include: its futurefunding requirements, capital efficiency, actual and expected profitability, expected cashflows, and expected capital expenditure. Adjustments are made to the capital structure in lightof changes in economic conditions affecting the Group.

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

XII. Commitments and contingencies

1 Significant commitment

(1) Capital commitments

Item20192018
Long-term assets acquisition commitment679,980,000996,675,000
Total679,980,000996,675,000

(2) Operating lease commitments

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

Item20192018
Within 1 year (inclusive)17,756,00020,576,000
Over 1 year but within 2 years (inclusive)16,189,00011,757,000
Over 2 years but within 3 years (inclusive)9,757,00010,064,000
Over 3 years89,550,94084,095,000
Total133,252,940126,492,000

2 Contingencies

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

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportXIII. Subsequent events

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

According to the proposal of the Board of Directors on 22 April 2020, the Company intends todistribute cash dividend totaling RMB479,824,800 to all shareholders of 685,464,000 capitalshares for the year ended 31 December 2019 on the basis of RMB7.0 (including tax) for every10 shares. The proposal is subject to the approval by the Shareholders’ meeting. Thisdistribution of profit in cash has not been recognised as a liability at the balance sheet date.

2 Impact of COVID-19

Since the outbreak of COVID-19in January 2020, the Company has been proactivelyperforming prevention and control measures internally. The Company has also fulfilled itssocial responsibility while conducting prevention and control measures and operation. Afterthe outbreak, the Company has analysed the possible impact, and sorted out all businessobjectives and adjusted operation contingency plans to make sure the normal businessoperations.

The Company will closely follow the development of COVID-19, assess and proactively reactto the possible impacts on the financial position and financial performance etc.

XIV. Other significant items

1 Segment reporting

The Group is principally engaged in the production and sales of wine, brandy, and sparklingwine in China, France, Spain, Chile and Australia. In accordance with the Group's internalorganisation structure, management requirements and internal reporting system, the Group'soperation is divided into four parts: China, Spain, France, Chile and Australia. Themanagement periodically evaluates segment results, in order to allocate resources andevaluate performances. In 2019, over 89% of revenue, more than 98% of profit and over 92%of non-current assets derived from China / are located in China. Therefore, the Group doesnot need to disclose additional segment report information.

XV. Notes to the Company’s financial statements

1 Accounts receivable

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

Type31 December 201931 December 2018
Amounts due from related parties2,589,9361,447,973
Sub-total2,589,9361,447,973
Less: Provision for bad and doubtful debts601,610-
Total1,988,3261,447,973

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

Ageing20192018
Within 1 year (inclusive)2,019,9361,447,973
Over 1 year but within 2 years (inclusive)570,000-
Sub-total2,589,9361,447,973
Less: Provision for bad and doubtful debts601,610-
Total1,988,3261,447,973

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

(3) Accounts receivable by provisioning method

(a) Assessment of ECLs on accounts receivable in 2019:

At all times the Company measures the impairment loss for accounts receivable at anamount equal to lifetime ECLs, and the ECLs are based on the number of overdue daysand the loss given default. According to the historical experience of the Company, thereare no significant differences in the losses of different customer groups. Therefore,different customer groups are not further distinguished when calculating impairmentloss based on the overdue information.

Loss given default

Carrying amount at the end of the yearImpairment loss at the end of the year
Current0.8%1,449,93612,179
Overdue for 1 to 30 days3.4%570,00019,431
Overdue for 330 to 360 days

100.0%

570,000 570,000

Total23.2%2,589,936601,610

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportThe loss given default is measured based on the actual credit loss experience in thepast 12 months, and is adjusted taking into consideration the differences among theeconomic conditions during the historical data collection period, the current economicconditions and the economic conditions during the expected lifetime.

(b) Impairment of account receivables in 2018

Under previous financial instruments standards, provision for impairments is mde whenthere is objective evidence of impairment.

(4) Accounts receivable by debtor at the end of the year:

Name

Relationship with the

Group

Balance of account

receivable

Ageing

Percentage of

totalreceivables

n for bad

anddoubtful

debts
Zhongya

Pharmaceutica

Other related parties of

lthe Company2,589,936

Within 1

year100%601,610

2 Receivables under financing

ItemNote20192018
Bills receivable(1)41,679,635-
Total41,679,635-

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

As at 31 December 2019, there was no pledged bills receivable (31 December 2018: Nil).

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

Item

Amount derecognised at year end
Bank acceptance bills65,303,181
Total65,303,181

As at 31 December 2019, bills endorsed by the Company to other parties which are not yetdue at the end of the period is RMB65,303,181 (31 December 2018: RMB94,755,124). Thenotes are used for payment to suppliers. The Company believes that due to good reputationof bank, the risk of notes not accepting by bank on maturity is very low, therefore derecognisethe note receivables endorsed. If the bank is unable to pay the notes on maturity, according tothe relevant laws and regulations of China, the Company would undertake limited liability forthe notes.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report3 Other receivables

Note31 December 201931 December 2018
Interest receivable(1)90,355254,088
Dividends receivable(2)200,000,000500,000,000
Others(3)386,334,603525,389,268
Total586,424,9581,025,643,356

(1) Interest receivable

(a) Interest receivable by category:

Item31 December 201931 December 2018
Interest receivable on bank deposits90,355254,088
Total90,355254,088

(b) Significant overdue interest: N/A

(2) Dividends receivable

Item31 December 201931 December 2018
Dividends to subsidiaries200,000,000500,000,000
Total200,000,000500,000,000

(3) Others

(a) Others by customer type:

Customer type31 December 201931 December 2018
Amounts due from subsidiaries385,328,319523,579,831
Amounts due from related parties813,440813,440
Others192,844995,997
Sub-total386,334,603525,389,268
Less: Provision for bad and doubtful debts--
Total386,334,603525,389,268

(b) The ageing analysis is as follows:

Ageing20192018
Within 1 year (inclusive)386,314,603525,362,872
Over 1 year but within 2 years (inclusive)-26,396
Over 2 years but within 3 years (inclusive)20,000-
Sub-total386,334,603525,389,268
Less: Provision for bad and doubtful debts--
Total386,334,603525,389,268

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

(c) Others by method of provisioning

Category

2019 2018Book value

Carrying amount

Book value

Provision for bad and doubtful debtsProvision for bad and doubtful debtsCarrying amount

Amount

Percentage

(%)

Amount

Percentag

e (%)

Amount

Percentage

(%)

Amount

Percentage

(%)

Individual assessment

- - -

- Total other receivables

- - 525,389,268 100 - -

525,389,268
Collective assessment
- Amounts due

from

385,328,319 99.7 - - 385,328,319 523,579,831 99.7 - -

subsidiaries523,579,831
- Amounts due

from related

813,440 0.2 - - 813,440 813,440 0.1 - -

parties813,440
- Amounts due

from third

192,844 0.1 - - 192,844 995,997 0.2 - -

parties995,997

Total 386,334,603 100.0 - - 386,334,603 525,389,268 100 - -

(d) Movements of provisions for bad and doubtful debts

As at 31 December 2019, no bad and doubtful debt provision was made for otherreceivables (31 December 2018: Nil).

As at 31 December 2019, the Company has no other receivables written off (31December 2018: Nil).

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report(e) Others categorised by nature

Nature of other receivables20192018
Amounts due from subsidiaries385,328,319523,579,831
Amounts due from related parties813,440813,440
Others192,844995,997
Sub-total386,334,603525,389,268
Less: Provision for bad and doubtful debts--
Total386,334,603525,389,268

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

Debtor

Nature of the

receivable

of the year

Ageing

Balance at the endPercentage of ending balance of others (%)Ending balance of

provision for bad

Sales Company

and doubtful debts
Amounts due from subsidiaries

292,380,248

75.7% -

R&D Centre

Within 1 year
Amounts due from subsidiaries

65,016,104

16.8% -

Laizhou Sales

Within 1 year
Amounts due from subsidiaries

12,469,834

3.2% -

Dicot

Within 1 year
Amounts due from subsidiaries

3,692,043

1.0% -

AFIP

Within 1 year
Amounts due from subsidiaries

1,680,926

0.4% -

Within 1 year
Total375,239,15597.1%

4 Long-term equity investments

(1) Long-term equity investments by category:

Item

20192018

Book value

Carrying amount

Provision for impairment

Book value

Carrying amount

Provision for impairment
Investments in subsidiaries

7,432,422,621 - 7,432,422,621 7,420,803,069 - 7,420,803,069

Total7,432,422,621-7,432,422,6217,420,803,069-7,420,803,069

(2) Investments in subsidiaries:

Subsidiary

beginning of the

year

Additions during

the year

Decrease duringthe year

of the year

Balance at the end
Xinjiang Tianzhu60,000,000--60,000,000
Kylin Packaging23,176,063--23,176,063
Chateau Changyu28,968,100--28,968,100
Pioneer International3,500,000--3,500,000
Ningxia Growing36,573,247--36,573,247
National Wines2,000,000--2,000,000
Golden Icewine Valley30,440,500--30,440,500
Chateau Beijing579,910,0008,479,444-588,389,444
Sales Company7,200,000--7,200,000
Langfang Sales100,000--100,000
Langfang Castel19,835,730--19,835,730
Wine Sales4,500,000--4,500,000
Shanghai Marketing300,000--300,000
Beijing Sales850,000--850,000
Jingyang Sales100,000--100,000
Jingyang Wine900,000--900,000
Ningxia Wine222,309,388--222,309,388
Chateau Ningxia453,463,500--453,463,500
Chateau Tinlot212,039,586--212,039,586
Chateau Shihezi812,019,770--812,019,770
Chateau Changan803,892,258--803,892,258
R&D Centre3,288,906,445--3,288,906,445
Huanren Wine22,200,000--22,200,000
Wine Sales Company----
Francs Champs236,025,404--236,025,404
Dicot190,150,544--190,150,544
Chile Indomita Wine Group

274,248,114 - - 274,248,114

107,194,420 3,140,108 - 110,334,528

Australia Kilikanoon Estate
Total7,420,803,06911,619,552-7,432,422,621

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

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual Report5 Operating income and operating costs

Item

2019 2018Income Cost Income CostPrincipal activities 738,011,458 653,860,504 874,292,088 772,497,769Other operating activities 2,844,904 1,643,559 2,154,982 1,989,262Total 740,856,362 655,504,063 876,447,070 774,487,031

Details of operating income:

20192018
Operating income from principal activities
- Sale of goods738,011,458874,292,088
Sub-total738,011,458874,292,088
Income from other business
- Rental income2,844,9042,154,982
Total740,856,362876,447,070

6 Investment income

Item20192018
Income from long-term equity investments accounted for using cost method

621,620,723 964,128,659

7 Transactions with related parties

(1) Product procurement

Related partiesNature of transaction20192018
Subsidiary of the parent company

Product procurement 161,271,826 209,808,816

Product procurement 60,154,605 88,897,126

Other related parties of the Company
Total221,426,431298,705,942

(2) Sales of goods

Related partiesNature of transaction20192018
Subsidiary of the parent company

Sales of goods 731,092,089 867,995,960

Sales of goods 9,764,273 8,451,110

Other related parties of the Company
Total740,856,362876,447,070

(3) Guarantee

The Company as the guarantor

Guarantee holder

Amount of guaranteeInception date of guaranteeMaturity date of guaranteeGuarantee expired (Y/N)
R&D Centre500,000,00008 March 201708 March 2022No
Australia Kilikanoon Estate

17,000,000 13 December 2018 13 December 2023 No

Total517,000,000

(4) Sale of fixed assets

Nature of transaction

Related parties of the Company

2019 2018

Sale of fixed assets - 134,445

Subsidiary of the parent company
Total-134,445

(5) Interest income occupied by capital

Related partiesNature of transaction20192018
Subsidiary of the parent companyInterest income occupied by capital

- 35,823,556

Total-35,823,556

(6) Leases

(a) As the lessor

Name of lesseeType of assets leased

Lease income recognised in 2019Lease income recognised in 2018
Other related parties of the Company

Offices and plants 2,015,486 1,997,164

Total2,015,4861,997,164

(b) As the lessee

Name of lessorType of assets leased

Lease expense recognised in 2019Lease expense recognised in 2018
Other related parties of the Company

Office buildings 1,394,762 1,331,364

TotalOffice buildings1,394,7621,331,364

(8) Other related party transactions

Related partiesNature of transaction20192018
Changyu GroupPatent fee-50,000
Total-50,000

8 Receivables from and payables to related parties

Receivables from related parties

Item Related party

20192018

Book value

Book value

Provision for bad and doubtful debtsProvision for bad and doubtful debts

Accounts receivable

2,589,936 601,610 1,447,973 -Other receivables

Other related parties of the Company
Subsidiary of the parent company

385,328,319 - 523,579,831 -Other receivables

813,440 - 813,440 -Other non-current assets

Other related parties of the Company
Subsidiary of the parent company

1,427,700,000 - 972,700,000 -

Payables to related parties

ItemRelated party20192018
Accounts payableOther related parties of the Company

11,630,361 28,892,583

Other payablesSubsidiary of the parent company

381,487,360 585,044,038Other payables

450,000 450,000

XVI. Non-recurring profit and loss statement in 2019

Other related parties of

the CompanyItem

ItemAmountNote

(1) Profit and loss from disposal of non-current assets 6,272,676

Gain from disposal of equity

investment of Mirefleurs is

(2)

RMB 6,233,661.
Government grants recognised through profit or loss

(excluding those having close relationships with theGroup’s operation and enjoyed in fixed amount or

84,837,581

quantity according to uniform national standard)

(3) Other items qualified as extraordinary gain and loss 218,649,636

the previous years, see Note

X. 5 (5) (a)

(4)

7,298,479

Other non-operating income and expenses besides items above
Sub-total317,058,372
(5)Tax effect(79,367,893)
(6)Effect on non-controlling interests after taxation(30,661)
Total237,659,818

Note: Extraordinary gain and loss items (1) to (4) listed above are presented in the amount

before taxation.

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportXVII. Return on net assets and earnings per share

In accordance with “Regulation on the Preparation of Information Disclosures by CompaniesIssuing Securities No.9 – Calculation and Disclosure of the Return on Net Assets andEarnings Per Share” (2010 revised) issued by the CSRC and relevant accounting standards,the Group’s return on net assets and earnings per share are calculated as follows:

2019

Profit for the reporting period

return on net assets

(%)

Basic earnings per

share

Diluted earnings per

share

Company’s ordinary equity

shareholders

11.30 1.65 1.65

and loss attributable to theCompany’s ordinary equity

shareholders

8.92 1.30 1.30

2018

Profit for the reporting period

return on net assets

(%)

Basic earnings per

share

Diluted earnings per

share

Company’s ordinary equity

shareholders

11.23 1.52 1.52

and loss attributable to theCompany’s ordinary equity

shareholders

10.40 1.41 1.41

Yantai Changyu Pioneer Wine Co., Ltd., 2019 Annual ReportXIII. Reference Documents

(1)The original of Annual Report autographed by the chairman.

(2)The Financial Statements autographed and signed by the chairman, chief accountant and

accountants in charge.

(3)The Prospectus and Public Offering Announcement for Stock B in 1997; The Prospectus

and The Shares’ Change & Public Offering Announcement for Stock A in 2000.

(4) The originals of all documents and announcements that the Company made public during

the report period in the newspapers designated by China Securities Regulatory Commission.

Yantai Changyu Pioneer Wine Co., Ltd.

Board of Directors April 22

nd

, 2019


  附件:公告原文
返回页顶