YANTAI CHANGYU PIONEER WINE
COMPANY LIMITED
Auditors' Report and Financial Statements
For the year ended 31 December 2013
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
FINANCIAL STATEMENTS AND AUDITOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2013
CONTENTS PAGE AUDITOR'S REPORT 1 - 2 THE COMPANY'S AND CONSOLIDATED BALANCE SHEETS 3 - 6 THE COMPANY AND CONSOLIDATED INCOME STATEMENTS 7 - 8 THE COMPANY AND CONSOLIDATED STATEMENTS
OF CHANGES IN SHAREHOLDERS' EQUITY 9 - 10 THE COMPANY AND CONSOLIDATED CASH FLOW STATEMENTS 11 - 12 NOTES TO THE FINANCIAL STATEMENTS 13 - 93 APPENDIX I SUPPLEMENTARY INFORMATION TO FINANCIAL STATEMENTS
De Shi Bao (Shen) Zi (14) No. P1493 AUDITOR'S REPORT
TO THE SHAREHOLDERS OF
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(A joint stock limited company incorporated in the People's Republic of China)
We have audited the accompanying financial statements of Yantai Changyu Pioneer Wine Company Limited (the "Company") and its subsidiaries (collectively the "Group"), which comprise the consolidated and company balance sheets as at 31 December 2013, and the consolidated and company income statements, statements of changes in equity and cash flow statement for the year then ended, and the notes to the financial statements.
1. Management' responsibility for the financial statements
Management of the Company is responsible for the preparation and fair presentation of these financial statements. This responsibility includes: (1) preparing the financial statements in accordance with Accounting Standards for Business Enterprises to achieve fair presentation of the financial statements; (2) designing, implementing and maintaining internal control which is necessary to enable that the financial statements are free from material misstatement, whether due to fraud or error.
2. Auditors' responsibility
Our responsibility is to express an audit opinion on these financial statements based on our audit. We conducted our audit in accordance with China Standards on Auditing. China Standards on Auditing require that we comply with the Code of Ethics for Chinese Certified Public Accountants and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing audit procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on theauditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, Certified Public Accountants consider the internal control relevant to the preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
AUDITOR'S REPORT
TO THE SHAREHOLDERS OF
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED - continued
(A joint stock limited company incorporated in the People's Republic of China)
Opinion
In our opinion, the financial statements of Yantai Changyu Pioneer Wine Company Limited present fairly, in all material respects, the company's and consolidated financial position as of 31 December 2013, and the company's and consolidated results of operations and cash flows for the year then ended in accordance with Accounting Standards for Business Enterprises.
Deloitte Touche Tohmatsu Chinese Certified Public Accountant Certified Public Accountants LLP Xu Zhao Hui
Shanghai, China Li Xu
24 April 2014
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED BALANCE SHEET
YEAR ENDED 31 DECEMBER 2013
ASSETS Notes 2013 2012 RMB RMB CURRENT ASSETS
Cash and bank VI-1 1,367,818,182 2,227,470,828 Notes receivables VI-2 79,702,753 92,635,701 Trade receivables VI-3 177,109,516 135,217,384 Advances to suppliers VI-4 45,997,863 44,294,482 Interest receivable VI-5 8,417,995 7,215,854 Other receivables VI-6 99,331,794 28,462,945 Inventories VI-7 2,121,117,437 2,268,621,441____________ ____________ Total current assets 3,899,495,540 4,803,918,635____________ ____________ NON-CURRENT ASSETS
Long-term equity investments VI-8 - 5,000,000 Property, plant and equipment VI-9 1,917,641,344 1,823,983,721 Construction in progress VI-10 1,423,654,530 832,828,689 Materials for construction of fixed assets 676,539 - Intangible assets VI-11 296,129,754 278,293,922 Biological assets VI-12 101,794,515 39,681,580 Goodwill VI-13 13,112,525 - Long-term prepaid expenses VI-14 165,521,803 160,871,860 Deferred tax assets VI-15 158,533,090 150,376,138 Other non-current assets VI-17 24,972,804 28,180,035____________ ____________ Total non-current assets 4,102,036,904 3,319,215,945____________ ____________ Total assets 8,001,532,444 8,123,134,580________________________ ________________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED BALANCE SHEET
YEAR ENDED 31 DECEMBER 2013 - continued
LIABILITIES AND EQUITY Notes 2013 2012 RMB RMB CURRENT LIABILITIES
Short-term borrowings VI-18 243,170,674 - Notes payable 5,765,694 - Trade payables VI-19 258,116,331 324,881,168 Advances from customers VI-20 188,651,254 450,172,253 Employee benefits VI-21 134,322,137 140,484,927 Taxes payable VI-22 194,413,430 444,084,576 Other payables VI-23 497,301,630 470,650,111 Interest payable 2,152,059 - Non-current liability due within 1 year VI-24 - 150,945,000 Other current liabilities VI-25 12,915,801 8,090,382____________ ____________ Total current liabilities 1,536,809,010 1,989,308,417____________ ____________ NON-CURRENT LIABILITIES
Deferred tax liability VI-15 5,336,115 5,336,115 Other non-current liabilities VI-26 88,366,835 69,004,861____________ ____________ Total non-current liabilities 93,702,950 74,340,976____________ ____________ Total liabilities 1,630,511,960 2,063,649,393____________ ____________ EQUITY
Share capital VI-27 685,464,000 685,464,000 Capital surplus VI-28 563,139,042 562,139,042 Surplus reserve VI-29 342,732,000 342,732,000 Retained earnings VI-30 4,616,944,663 4,322,769,136 Equity attributable to shareholders
of the Company 6,208,279,705 5,913,104,178 Non-controlling interests 162,740,779 146,381,009____________ ____________ Total equity 6,371,020,484 6,059,485,187____________ ____________ Total liabilities and equity 8,001,532,444 8,123,134,580________________________ ________________________ The accompanying notes form an integral part of these financial statements.
The financial statements on pages 3 to 93 were signed by the following:
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
BALANCE SHEET OF THE COMPANY
YEAR ENDED 31 DECEMBER 2013
ASSETS Notes 2013 2012 RMB RMB CURRENT ASSETS
Cash and bank XII-1 602,444,243 1,090,260,851 Notes receivabless XII-2 32,594,381 1,450,000 Trade receivables XII-3 1,600,968 710,080 Dividend receivable XII-4 752,595,884 993,614,383 Advances to suppliers XII-5 24,824,672 26,131,908 Interest receivable VI-5 8,417,995 7,215,854 Other receivables XII-6 3,709,583,949 2,194,219,753 Inventories XII-7 781,284,189 893,442,758____________ ____________ Total current assets 5,913,346,281 5,207,045,587____________ ____________ NON-CURRENT ASSETS
Long-term equity investments XII-8 1,048,208,923 1,006,492,893 Property, plant and equipment XII-9 425,294,116 354,789,743 Construction in progress XII-10 269,802 24,640,660 Intangible assets XII-11 79,139,831 81,512,908 Biological assets XII-12 60,851,409 16,866,437 Deferred tax assets XII-13 22,956,747 19,517,202 Other non-current assets XII-14 2,616,525 2,502,630____________ ____________ Total non-current assets 1,639,337,353 1,506,322,473____________ ____________ Total assets 7,552,683,634 6,713,368,060________________________ ________________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
BALANCE SHEET OF THE COMPANY
YEAR ENDED 31 DECEMBER 2013 - continued
LIABILITIES AND EQUITY Notes 2013 2012 RMB RMB CURRENT LIABILITIES
Short-term borrowings VI-18 243,170,674 - Trade payables XII-15 166,453,563 164,815,117 Employee benefits XII-16 69,032,912 80,144,533 Taxes payable XII-17 37,578,670 17,995,089 Other payables XII-18 1,612,596,521 1,432,464,297 Interest payable 2,152,059 - Other current liabilities 2,559,227 1,856,337____________ ____________ Total current liabilities 2,133,543,626 1,697,275,373____________ ____________ NON-CURRENT LIABILITIES
Other non-current liabilities 22,275,462 19,905,019____________ ____________ Total non-current liabilities 22,275,462 19,905,019____________ ____________ Total liability 2,155,819,088 1,717,180,392____________ ____________ EQUITY
Share capital VI-27 685,464,000 685,464,000 Capital surplus XII-19 557,222,454 557,222,454 Surplus reserve VI-29 342,732,000 342,732,000 Retained earnings 3,811,446,092 3,410,769,214____________ ____________ Total equity 5,396,864,546 4,996,187,668____________ ____________ Total liabilities and equity 7,552,683,634 6,713,368,060________________________ ________________________ The accompanying notes form an integral part of these financial statements.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED INCOME STATEMENT
YEAR ENDED 31 DECEMBER 2013
Notes 2013 2012 RMB RMB Revenue VI-32 4,320,948,572 5,643,530,553 Less: Cost of sales VI-32 1,357,897,999 1,401,088,983 Taxes and surcharges VI-33 236,394,164 318,214,304 Selling expenses VI-34 1,140,836,150 1,449,224,163 Administrative expenses VI-35 245,498,950 254,374,809 Impairment loss of assets VI-36 2,149,438 2,777,648 Add: Financial income VI-37 18,700,357 19,918,261____________ ____________ Operating profit 1,356,872,228 2,237,768,907 Add: Non-operating income VI-38 42,108,726 35,378,260 Less: Non-operating expenses VI-39 1,874,223 2,971,409 Including: losses on disposal
of non-current assets 678,016 2,581,199____________ ____________ Profit before tax 1,397,106,731 2,270,175,758 Less: Income tax VI-40 348,920,804 569,247,641____________ ____________ Profit for the year 1,048,185,927 1,700,928,117________________________ ________________________ Attributable to shareholders of the Company 1,048,185,927 1,700,928,117________________________ ________________________ Earnings per share
Basic earnings per share VI-41 1.53 2.48________________________ ________________________ Diluted earnings per share VI-41 N/A N/A________________________ ________________________ Comprehensive income 1,048,185,927 1,700,928,117________________________ ________________________ Attributable to shareholders of the Company 1,048,185,927 1,700,928,117________________________ ________________________ The accompanying notes form an integral part of these financial statements.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
INCOME STATEMENT OF THE COMPANY
YEAR ENDED 31 DECEMBER 2013
Notes 2013 2012 RMB RMB Revenue XII-20 1,730,694,774 1,776,979,032 Less: Cost of sales XII-20 1,473,772,762 1,444,948,143 Taxes and surcharges XII-21 135,046,585 175,240,595 Administrative expenses XII-22 109,664,952 126,120,749 Impairment loss of assets XII-23 4,392,429 - Add: Financial income XII-24 25,948,141 24,834,687 Investment income XII-25 1,126,019,415 1,091,018,499____________ ____________ Operating Profit 1,159,785,602 1,146,522,731 Add: Non-operating income 4,266,595 2,141,698 Less: Non-operating expenses 1,019,467 2,434,516____________ ____________ Profit before tax 1,163,032,730 1,146,229,913 Less: Income tax 8,345,452 15,334,107____________ ____________ Profit for the year 1,154,687,278 1,130,895,806________________________ ________________________ Total comprehensive income 1,154,687,278 1,130,895,806________________________ ________________________ The accompanying notes form an integral part of these financial statements.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED SATATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2013
2013
Attributable to shareholders of the Company
Issue Capital Surplus Retained Non-controlling
capital surplus reserve earnings Subtotal interests Total RMB RMB RMB RMB RMB RMB RMB 1 January 2013 _6_85_,4_6_4,_00_0 _5_62_,1_3_9,_04_2 _3_42_,7_3_2,_00_0_4_,3_22_,7_6_9,_13_6_5_,9_13_,1_0_4,_17_8_1_46_,3_8_1,_00_9_6_,0_59_,4_8_5,_18_7 Profit for the year and
total comprehensive income - - - 1,048,185,927 1,048,185,927 - 1,048,185,927 Shareholders' injection
Injection of non-controlling
interest - - - - - 16,359,770 16,359,770 Proposed final dividend
(Notes VI-30)
Withdrawal of surplus reserve - - - (754,010,400) (754,010,400) - (754,010,400) Others (Notes VI-28) ______-_ __1_,0_00_,0_0_0 ______-________-____1_,0_00_,0_0_0______-_ ___1_,0_00_,0_0_0 3 1 December 2013 __6__85__,4__6__4,__00__0 __5__63__,1__3__9,__04__2 __3__42__,7__3__2,__00__0__4__,6__16__,9__4__4,__66__3__6__,2__08__,2__7__9,__70__5__1__62__,7__4__0,__77__9__6__,3__71__,0__2__0,__48__4 2012
Attributable to shareholders of the Company
Issue Capital Surplus Retained Non-controlling
capital surplus reserve earnings Subtotal interests Total RMB RMB RMB RMB RMB RMB RMB 1 January 2012 _5_27_,2_8_0,_00_0 _5_62_,1_3_9,_04_2 _2_95_,9_4_2,_63_0_3_,6_28_,2_7_9,_98_9_5_,0_13_,6_4_1,_66_1_1_36_,3_1_8,_48_7_5_,1_49_,9_6_0,_14_8 Profit for the year and
total comprehensive income - - - 1,700,928,117 1,700,928,117 - 1,700,928,117 Shareholders' injection
Injection of non-controlling
interest - - - - - 10,062,522 10,062,522 Withdrawal of surplus reserve - - 46,789,370 (46,789,370) - - - Proposed final dividend
(Notes VI-30) - - - (801,465,600) (801,465,600) - (801,465,600) O thers (Notes VI-30) _1_58_,1_8_4,_00_0 ______-_ ______-__(_15_8_,1_84_,0_0_0)_______-_______-_ _______-_ 3 1 December 2012 __6__85__,4__6__4,__00__0 __5__62__,1__3__9,__04__2 __3__42__,7__3__2,__00__0__4__,3__22__,7__6__9,__13__6__5__,9__13__,1__0__4,__17__8__1__46__,3__8__1,__00__9__6__,0__59__,4__8__5,__18__7 The accompanying notes form an integral part of these financial statements.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
STATEMENT OF CHANGES IN EQUITY OF THE COMPANY
YEAR ENDED 31 DECEMBER 2013
2013
Issued capital Capital surplus Surplus reserve Retained earnings Total RMB RMB RMB RMB RMB 1 January 2013 _6_8_5,_46_4_,0_0_0 _5_5_7,_22_2_,4_5_4 _3_4_2,_73_2_,0_0_0 _3_,4_1_0,_76_9_,2_1_4 _4_,9_9_6,_18_7_,6_6_8 Profit for the year and
total comprehensive income - - - 1,154,687,278 1,154,687,278 Withdrawal of surplus reserve
P roposed final dividend (Notes VI-30) _______-_ _______-_ _______-_ _(_7_54_,_01_0_,4_0_0) _(_7_54_,_01_0_,4_0_0) 3 1 December 2013 __6__8__5,__46__4__,0__0__0 __5__5__7,__22__2__,4__5__4 __3__4__2,__73__2__,0__0__0 __3__,8__1__1,__44__6__,0__9__2 __5__,3__96__,__86__4__,5__4__6 2012
Issued capital Capital surplus Surplus reserve Retained earnings Total RMB RMB RMB RMB RMB 1 January 2012 _5_2_7,_28_0_,0_0_0 _5_5_7,_22_2_,4_5_4 _2_9_5,_94_2_,6_3_0 _3_,2_8_6,_31_2_,3_7_8 _4_,6_6_6,_75_7_,4_6_2 Profit for the year and
total comprehensive income - - - 1,130,895,806 1,130,895,806 Withdrawal of surplus reserve - - 46,789,370 (46,789,370) - P roposed final dividend (Notes VI-30) _______-_ _______-_ _______-_ _(_8_01_,_46_5_,6_0_0) _(_8_01_,_46_5_,6_0_0) Shareholder equity internal carry forward
O thers (Notes VI-30) _1_5_8,_18_4_,0_0_0 _______-_ _______-_ _(_1_58_,_18_4_,0_0_0) ________-_ 3 1 December 2012 __6__8__5,__46__4__,0__0__0 __5__5__7,__22__2__,4__5__4 __3__4__2,__73__2__,0__0__0 __3__,4__1__0,__76__9__,2__1__4 __4__,9__9__6,__18__7__,6__6__8 The accompanying notes form an integral part of these financial statements.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 DECEMBER 2013
Notes 2013 2012 RMB RMB CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sales of goods or rendering of service 4,766,532,032 6,775,549,780 Cash received form tax refund 22,163,624 14,636,437 Cash received relating to other operating activities VI-42 ___4_7_,9_6_0_,7_1_1 ___4_0_,0_5_1_,9_1_2 Cash inflows from operating activities _4_,8_3_6_,6_5_6_,3_6_7 _6_,8_3_0_,2_3_8_,1_2_9 Cash paid for goods and services (1,293,320,336) (1,997,334,346) Cash paid to and on behalf of employees (379,880,613) (409,261,052) Cash paid for all types of taxes (1,368,825,802) (1,768,277,184) C ash paid relating to other operating activities VI-42 (_1_,0_5_9_,5_5_5_,3_0_9) (_1_,3_5_3_,3_2_4_,2_2_5) C ash outflows from operating activities (_4_,1_0_1_,5_8_2_,0_6_0 ) (_5_,5_2_8_,1_9_6_,8_0_7) N et cash flows from operating activities VI-43 __7_3_5_,0_7_4_,3_0_7 _1_,3_0_2_,0_4_1_,3_2_2 CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in term deposits over 3 months 1,292,524,719 1,273,844,720 Proceeds from return on investments 33,050,471 46,581,313 Proceeds from disposal of property, plant and equipment ____1_,0_2_6_,4_1_1 ____2_,0_9_4_,3_3_3 Cash inflows from investing activities _1_,3_2_6_,6_0_1_,6_0_1 _1_,3_2_2_,5_2_0_,3_6_6 Cash paid for acquisition of properties, plants and equipments,
intangible assets and other long-term assets (962,180,456) (870,164,926) Cash paid for term deposits over 3 months (907,392,728) (662,524,719) O ther cash paid for the purchase of non-controlling interest __(_1_6_,8_8_3_,8_6_4) _________-_ Cash outflows from investing activities (_1_,8_8_6_,4_5_7_,0_4_8 ) (_1_,5_3_2_,6_8_9_,6_4_5) N et cash flows from investing activities ____(5__5__9__,8__5__5__,4__4__7 ) ____(2__1__0__,1__6__9__,2__7__9) CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from Non-controlling interest 16,359,770 10,062,522 Cash receipts from borrowings 243,170,674 - Cash received from other financing activities _________-_ ___9_0_,0_0_0_,0_0_0 C ash inflows from financing activities __2_5_9_,5_3_0_,4_4_4 __1_0_0_,0_6_2_,5_2_2 Dividends paid and interest paid (764,539,398) (805,660,589) C ash paid from other financing activities VI-42 __(2_7_5_,9_4_5_,0_0_0 ) __(_8_0_,4_9_7_,8_2_3) C ash outflows from financing activities (_1_,0_4_0_,4_8_4_,3_9_8 ) __(8_8_6_,1_5_8_,4_1_2) N et cash flows from financing activities __(7_8_0_,9_5_3_,9_5_4 ) __(7_8_6_,0_9_5_,8_9_0) NET INCREASE OF CASH AND CASH EQUIVALENTS (605,735,094) 305,776,153 ADD: CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR VI-43 _1_,5_6_2_,2_9_4_,0_2_6 _1_,2_5_6_,5_1_7_,8_7_3 C ASH AND CASH EQUIVALENTS AT END OF YEAR VI-43 ____9__5__6__,5__5__8__,9__3__2 __1__,5__6__2__,2__9__4__,0__2__6 The accompanying notes form an integral part of these financial statements.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CASH FLOW STATEMENT OF THE COMPANY
YEAR ENDED 31 DECEMBER 2013
Notes 2013 2012 RMB RMB CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sales of goods or rendering of service 1,993,219,656 2,190,406,491 Cash received relating to other operating activities ____9_,1_9_4_,8_9_1 ____8_,0_8_5_,0_7_1 C ash inflows from operating activities _2_,0_0_2_,4_1_4_,5_4_7 _2_,1_9_8_,4_9_1_,5_6_2 Cash paid for goods and services (1,385,474,499) (1,930,252,146) Cash paid to and on behalf of employees (162,425,829) (147,607,346) Cash paid for all types of taxes (206,446,458) (335,467,847) C ash paid relating to other operating activities (_1_,4_5_9_,4_0_7_,0_1_6) (_1_,0_2_6_,8_1_6_,5_2_3) C ash outflows from operating activities (_3_,2_1_3_,7_5_3_,8_0_2) (_3_,4_4_0_,1_4_3_,8_6_2) N et cash flows from operating activities XII-26 (_1_,2_1_1_,3_3_9_,2_5_5) (_1_,2_4_1_,6_5_2_,3_0_0) CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in term deposits over 3 months 1,292,524,719 1,268,844,720 Proceeds from return on investments 1,395,495,286 2,003,196,895 Proceeds from disposals of property, plant and equipment _______4_,0_0_0 ____6_,6_4_7_,0_2_6 C ash inflows from investing activities _2_,6_8_8_,0_2_4_,0_0_5 _3_,2_7_8_,6_8_8_,6_4_1 Cash paid for acquisition of property, plant and equipment,
intangible assets and other long-term assets (131,396,826) (36,503,683) Cash paid for term deposits over 3 months (907,392,728) (662,524,719) C ash paid for subsidiary investment __(_2_9_,9_8_8_,5_3_0) __(4_0_8_,1_9_3_,5_3_0) C ash outflows from investing activities (_1_,0_6_8_,7_7_8_,0_8_4) (_1_,1_0_7_,2_2_1_,9_3_2) N et cash flows from investing activities _1_,6_1_9_,2_4_5_,9_2_1 _2_,1_7_1_,4_6_6_,7_0_9 CASH FLOWS FROM FINANCING ACTIVITIES
Cash receipts from borrowings __2_4_3_,1_7_0_,6_7_4 _________-_ Cash inflows from financing activities __2_4_3_,1_7_0_,6_7_4 _________-_ Cash paid for distribution of dividends or profits
and for interest expenses (754,010,400) (801,465,600) Cash paid from other financing activities __(1_2_5_,0_0_0_,0_0_0) _________-_ C ash outflows from financing activities __(8_7_9_,0_1_0_,4_0_0) __(8_0_1_,4_6_5_,6_0_0) N et cash flows from financing activities __(6_3_5_,8_3_9_,7_2_6) __(8_0_1_,4_6_5_,6_0_0) INCREASE/(DECREASE) OF CASH
AND CASH EQUIVALENTS __(2_2_7_,9_3_3_,0_6_0) __1_2_8_,3_4_8_,8_0_9 ADD: CASH AND CASH EQUIVALENTS
AT BEGINNING OF THE YEAR XII-27 __4_2_5_,0_8_4_,0_4_9 __2_9_6_,7_3_5_,2_4_0 C ASH AND CASH EQUIVALENTS AT END OF THE YEAR XII-27 ____1__9__7__,1__5__0__,9__8__9 ____4__2__5__,0__8__4__,0__4__9 The accompanying notes form an integral part of these financial statements.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2013
(I) CORPORATE INFORMATION
Yantai Changyu Pioneer Wine Co., Ltd. (the "Company") was incorporated as a joint stock limited company in accordance with the Company Law of the People's Republic of China (the "PRC") in a reorganization carried out by Yantai Changyu Group Co., Ltd. ("Changyu Group Company"), in which Changyu Group Company injected certain assets and liabilities in relation to the brandy, wine, and sparkling wine production and sales businesses to the Company. The Company and its subsidiaries (the "Group") are principally engaged in the production and sales of wine, brandy, sparkling wine.
Pursuant to the approval from the Government of Shandong Province (Luzheng[1997]119), the Company was reorganized as a joint stock limited company on 10 April 1997. On 23 September 1997, the Company was approved by China Securities Regulatory Commission (the "CSRC")([1997] No. 52) to issue 88,000,000 domestically listed foreign investment shares ("B shares") on Shenzhen Stock Exchange. On 18 September 1997, the Company obtained the business license with the registered number No. 26718011-9.
In October 2000, the Company was approved by CSRC to issue 32,000,000 domestically listed Shares ("A Shares"). The A shares were listed on Shenzhen Stock Exchange on 26 October 2000. Pursuant to the share reform notices issued by the Company in February 2006, Changyu Group Company transferred its 13,977,600 shares to the shareholders of A share of the Company. After the reform, percentage of equity attributable to Changyu Group Company decreased from53.8% to50.4%.
At June 2012, the board of directors proposed an allotment to all shareholders by 3 shares every 10 shares based on the issued shares of 527,280,000, the aggregate number of share dividend is 158,184,000 shares. The total shares issued by the Company amounts to 685,464,000 shares. Please refer to Notes V-27 in detail.
The holding company of the Group is Changyu Group Company, which is jointly controlled by Yantai SASAC, ILLVA Saronno Investment Italy, International Finance Corporation and Yantai Yuhua Investment and Development Company Limited.
The financial statements have been authorized by the board of directors on 24 April 2014. According to the Company's articles of association, the financial statements will be reviewed by shareholders on the shareholder's meeting.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
1. Preparation of financial statements
The Group has adopted the Accounting Standards for Business Enterprises ("ASBE") issued by the Ministry of Finance ("MoF") on 15 February 2006. In addition, the Group has disclosed relevant financial information in accordance with Information Disclosure and Presentation Rules for Companies Offering Securities to the Public No.15－ General Provisions on Financial Reporting (Revised in 2010).
The financial statements are prepared on a going concern basis.
The Group adopts the historical cost as the principle of measurement in the financial statements. Where assets are impaired, provisions for asset impairment are made in accordance with relevant requirements.
2. Declaration for implementing CAS
The financial statements are prepared in accordance with CAS, which showing a true and fair view of the financial position on 31 December 2013, financial performance and cash flow in 2013 of the Company and the Group.
3. Accounting year
The accounting year of the Group is from 1 January to 31 December of each calendar year. 4. Reporting currency
Renminbi (“RMB”) is the currency of the primary economic environment in which the Company and its domestic subsidiaries operate. Therefore, the Company and its domestic subsidiaries choose RMB as their functional currency. The Company's foreign subsidiary chooses Currency RMB as its functional currency on the basis of the primary economic environment in which it operates. The Group adopts RMB to prepare its financial statements.
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5. Business combination
Business combinations not involving enterprises under common control and goodwill
A business combination not involving enterprises under common control is a business combination in which all of the combining enterprises are not ultimately controlled by the same party or parties before and after the combination.
The cost of combination is the aggregate of the fair values, at the acquisition date, of the assets given, liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for control of the acquiree. The intermediary expenses incurred by the acquirer in respect of auditing, legal services, valuation and consultancy services, etc. and other associated administrative expenses attributable to the business combination are recognised in profit or loss when they are incurred. Where a business combination not involving enterprises under common control is achieved in stages that involve multiple transactions, the cost of combination is the sum of the consideration paid at the acquisition date and the fair value at the acquisition date of the acquirer's previously held interest in the acquiree. The equity interest in the acquiree held before the acquisition date is remeasured at its fair value at the acquisition date, with any difference between its fair value and its carrying amount being recognised as investment income. The other comprehensive income of the acquiree before the acquisition date relating to the previously held interest in the acquiree is transferred to investment income.
Goodwill arising on a business combination is measured at cost less accumulated impairment losses, and is presented separately in the consolidated financial statements. It is tested for impairment at least at the end of each year.
For the purpose of impairment testing, goodwill is considered together with the related assets group(s), i.e., goodwill is reasonably allocated to the related assets group(s) or each of assets group(s) expected to benefit from the synergies of the combination. An impairment loss is recognised if the recoverable amount of the assets group or sets of assets groups (including goodwill) is less than its carrying amount. The impairment loss is firstly allocated to reduce the carrying amount of any goodwill allocated to such assets group or sets of assets groups, and then to the other assets of the group pro-rata on the basis of the carrying amount of each asset (other than goodwill) in the group.
The recoverable amount of an asset is the higher of its fair value less costs of disposal and the present value of the future cash flows expected to be derived from the asset. An asset's fair value is the price in a sale agreement in an arm's length transaction. If there is no sale agreement but an asset is traded in an active market, fair value is the current bid price. If there is no sale agreement or active market for an asset, fair value is assessed based on the best information available. Costs of disposal include legal costs related to the disposal of the asset, related taxes, costs of removing the asset and direct costs to bring the asset into condition for its sale. The present value of expected future cash flows of an asset shall be determined by estimating the future cash flows to be derived from continuing use of the asset and from its ultimate disposal and applying the appropriate discount rate to those future cash flows.
The impairment of goodwill is recognised in profit or loss for the period in which it is incurred
and will not be reversed in any subsequent period.
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6. Consolidated financial statements
The consolidation scope of consolidated financial statements is determined on the basis of control. The consolidated financial statements include the financial statements of the Company and its subsidiaries for the year ended 31 December 2013. The subsidiaries are entities that are controlled by the Company.
For a subsidiary disposed of by the Group, the operating results and cash flows before the date of disposal (the date when control is lost) are included in the consolidated income statement and consolidated statement of cash flows, as appropriate.
For a subsidiary acquired through a business combination not involving enterprises under common control, the operating results and cash flows from the acquisition date (the date when control is obtained) are included in the consolidated income statement and consolidated statement of cash flows, as appropriate, and no adjustment is made to the opening balances and comparative figures in the consolidated financial statements.
For a subsidiary acquired through a business combination not involving enterprises under common control, the operating results and cash flows from the acquisition date (the date when control is obtained) are included in the consolidated income statement and consolidated statement of cash flows, as appropriate, and no adjustment is made to the opening balances and comparative figures in the consolidated financial statements.
The significant accounting policies and accounting periods adopted by the subsidiaries are determined based on the uniform accounting policies and accounting periods set out by the Company.
All significant intra-group balances and transactions are eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the Company is treated as minority interests and presented as "minority interests" in the consolidated balance sheet within shareholders' equity. The portion of net profits or losses of subsidiaries for the period attributable to minority interests is presented as "minority interests" in the consolidated income statement below the "net profit" line item.
When the amount of loss for the period attributable to the minority shareholders of a subsidiary exceeds the minority shareholders' portion of the opening balance of owners' equity of the subsidiary, the excess amount are still allocated against minority interests.
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7. Cash and cash equivalents
Cash comprises cash on hand and demand deposit. Cash equivalents refers to short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
8. Foreign currency transactions and foreign currencies reporting
8.1 Transactions denominated in foreign currencies
A foreign currency transaction is recorded, on initial recognition, by applying the spot exchange rate on the date of the transaction.
At the balance sheet date, foreign currency monetary items are translated into RMB using the spot exchange rates at the balance sheet date. Exchange differences arising from the differences between the spot exchange rates prevailing at the balance sheet date and those on initial recognition or at the previous balance sheet date are recognised in profit or loss for the period, except the exchange differences related to a specific-purpose borrowing denominated in foreign currency that qualify for capitalisation are capitalised as part of the cost of the qualifying asset during the capitalisation period.
8.2 Translation of financial statements denominated in foreign currencies
Cash flows arising from a transaction in foreign currency are translated at the spot exchange rate on the date of the cash flows. The effect of exchange rate changes on cash and cash equivalents is regarded as a reconciling item and presented separately in the cash flow statement.
For the purpose of preparing the consolidated financial statements, financial statements of a foreign operation are translated from the foreign currency into RMB using the following method: assets and liabilities on the balance sheet are translated at the spot exchange rate prevailing at the balance sheet date; shareholders' equity items except for retained earnings are translated at the spot exchange rates at the dates on which such items arose; all items in the income statement as well as items reflecting the distribution of profits are translated at the spot exchange rates on the dates of the transactions; the opening balance of retained earnings is the translated closing balance of the previous year's retained earnings; the closing balance of retained earnings is calculated and presented on the basis of each translated income statement and profit distribution item. The difference between the translated assets and the aggregate of liabilities and shareholders' equity items is separately presented as the exchange differences arising on translation of financial statements denominated in foreign currencies under the shareholders' equity in the balance sheet. Cash flows arising from a transaction in foreign currency and the cash flows of a foreign subsidiary are translated at the spot exchange rate on the date of the cash flows. The effect of exchange rate changes on cash and cash equivalents is regarded as a reconciling item and presented separately in the cash flow statement as "effect of exchange rate changes on cash and cash equivalents".
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9. Financial instruments
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. For financial assets and financial liabilities at fair value through profit or loss, transaction costs are immediately recognised in profit or loss. For other financial assets and financial liabilities, transaction costs are included in their initial recognised amounts.
9.1 Determination of fair value
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in anarm’s length transaction. For a financial instrument which has an active market, the Group uses the quoted price in the active market to establish its fair value. For a financial instrument which has no active market, the Group establishes fair value by using a valuation technique. Valuation techniques include using recentarm’s length market transactions between knowledgeable, willing parties, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models. 9.2 Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability (or a group of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period, using the effective interest rate. The effective interest rate is the rate that exactly discounts estimated future cash flows through the expected life of the financial asset or financial liability or, where appropriate, a shorter period to the net carrying amount of the financial asset or financial liability.
When calculating the effective interest rate, the Group estimates future cash flows considering all contractual terms of the financial asset or financial liability (without considering future credit losses), and also considers all fees paid or received between the parties to the contract giving rise to the financial asset and financial liability that are an integral part of the effective interest rate, transaction costs, and premiums or discounts, etc.
9.3 Classification, recognition and measurement of financial assets
On initial recognition, theGroup’s financial assets are classified into one of the four categories, including financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables, and available-for-sale financial assets. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis.
9.3.1 Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Group's management has the positive intention and ability to hold to maturity.
Held-to-maturity investments are subsequently measured at amortised cost using the effective
interest method. Gain or loss arising from derecognition, impairment or amortisation is recognised
in profit or loss.
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9. Financial instruments - continued
9.3 Classification, recognition and measurement of financial assets - continued
9.3.2. Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Financial assets classified as loans and receivables by the Group include notes receivable, accounts receivable, interest receivable, dividends receivable, and other receivables.
Loans and receivables are subsequently measured at amortised cost using the effective interest method. Gain or loss arising from derecognition, impairment or amortisation is recognised in profit or loss.
9.4 Impairment of financial assets
The Group assesses at each balance sheet date the carrying amounts of financial assets other than those at fair value through profit or loss. If there is objective evidence that a financial asset is impaired, the Group determines the amount of any impairment loss. Objective evidence that a financial asset is impaired is evidence that, arising from one or more events that occurred after the initial recognition of the asset, the estimated future cash flows of the financial asset, which can be reliably measured, have been affected.
Objective evidence that a financial asset is impaired includes the following observable events: (1) Significant financial difficulty of the issuer or obligor;
(2) A breach of contract by the borrower, such as a default or delinquency in interest or principal payments;
(3) The Group, for economic or legal reasons relating to theborrower’s financial difficulty, granting a concession to the borrower;
(4) It becoming probable that the borrower will enter bankruptcy or other financial reorganisations;
(5) The disappearance of an active market for that financial asset because of financial difficulties of the issuer;
(6) Upon an overall assessment of a group of financial assets, observable data indicates that there is a measurable decrease in the estimated future cash flows from the group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the group. Such observable data includes:
- Adverse changes in the payment status of borrower in the group of assets; - Economic conditions in the country or region of the borrower which may lead to a failure to pay the group of assets;
(7) Significant adverse changes in the technological, market, economic or legal environment in which the issuer operates, indicating that the cost of the investment in the equity instrument may not be recovered by the investor;
(8) Other objective evidence indicating there is an impairment of a financial asset.
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9. Financial instruments - continued
9.4 Impairment of financial assets - continued
- Impairment of financial assets measured at amortised cost
If financial assets carried at amortised cost are impaired, the carrying amounts of the financial assets are reduced to the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. The amount of reduction is recognised as an impairment loss in profit or loss. If, subsequent to the recognition of an impairment loss on financial assets carried at amortised cost, there is objective evidence of a recovery in value of the financial assets which can be related objectively to an event occurring after the impairment is recognised, the previously recognised impairment loss is reversed. However, the reversal is made to the extent that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
For a financial asset that is individually significant, the Group assesses the asset individually for impairment. For a financial asset that is not individually significant, the Group assesses the asset individually for impairment or includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset (whether significant or not), it includes the asset in a group of financial assets with similar credit risk characteristics and collectively reassesses them for impairment. Assets for which an impairment loss is individually recognised are not included in a collective assessment of impairment. - Impairment of financial assets measured at cost
If an impairment loss has been incurred on an investment in unquoted equity instrument (without a quoted price in an active market) whose fair value cannot be reliably measured, or on a derivative financial asset that is linked to and must be settled by delivery of such an unquoted equity instrument, the carrying amount of the financial asset is reduced to the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. The amount of reduction is recognised as an impairment loss in profit or loss. The impairment loss on such financial asset is not reversed once it is recognised.
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9. Financial instruments - continued
9.5 Transfer of financial assets
The Group derecognises a financial asset if one of the following conditions is satisfied: (1) the contractual rights to the cash flows from the financial asset expire; or (2) the financial asset has been transferred and substantially all the risks and rewards of ownership of the financial asset is transferred to the transferee; or (3) although the financial asset has been transferred, the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset but has not retained control of the financial asset.
If the Group neither transfers nor retains substantially all the risks and rewards of ownership of a financial asset, and it retains control of the financial asset, it recognises the financial asset to the extent of its continuing involvement in the transferred financial asset and recognises an associated liability. The extent of theGroup’s continuing involvement in the transferred asset is the extent to which it is exposed to changes in the value of the transferred asset.
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, the difference between (1) the carrying amount of the financial asset transferred; and (2) the sum of the consideration received from the transfer and any cumulative gain or loss that has been recognised in other comprehensive income, is recognised in profit or loss.
If a part of the transferred financial asset qualifies for derecognition, the carrying amount of the transferred financial asset is allocated between the part that continues to be recognised and the part that is derecognised, based on the respective fair values of those parts. The difference between (1) the carrying amount allocated to the part derecognised; and (2) the sum of the consideration received for the part derecognised and any cumulative gain or loss allocated to the part derecognised which has been previously recognised in other comprehensive income, is recognised in profit or loss.
10. Receivables
10.1 Receivables that are individually significant and for which bad debt provision is individually assessed
The Group assesses at each balance sheet date whether there is any objective evidence that the accounts receivable and other receivables, whose individual carrying amount is greater than RMB3,000,000 is impaired. If there is any evidence indicates that the carrying amount of the individual asset is lower than the present value of future cash flows, the impairment will be recognized.
10.2 Receivables for which bad debt provision is collectively assessed on a portfolio basis The Group classifies the receivables that are not individually significant and those that are individually significant but are not impaired individually into groups of financial assets according to the similarity and relevance of credit risk characteristics. These credit risks usually reflect the debtors' ability to pay the amounts due at maturity under contractual terms of related assets and
are related to the estimation of future cash flows of the assets subject to assessment.
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11. Inventories
11.1 Categories of inventories
The Group's inventories mainly include raw materials, work in progress and finished goods. Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of conversion and other expenditures incurred in bringing the inventories to their present location and condition.
11.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the first-in-first-out method. Agricultural products harvested are reported in accordance with the CAS 1 Inventories. 11.3 Inventory count system
The perpetual inventory system is maintained for stock system.
11.4 Basis for determining net realisable value of inventories and provision methods for decline in value of inventories
At the balance sheet date, inventories are measured at the lower of cost and net realisable value. If the net realisable value is below the cost of inventories, a provision for decline in value of inventories is made. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, the estimated costs necessary to make the sale and relevant taxes. Net realisable value is determined on the basis of clear evidence obtained, and takes into consideration the purposes of holding inventories and effect of post balance sheet events.
After the provision for decline in value of inventories is made, if the circumstances that previously caused inventories to be written down below cost no longer exist so that the net realisable value of inventories is higher than their cost, the original provision for decline in value is reversed and the reversal is included in profit or loss for the period.
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12. Long term equity investments
12.1 Determination of investment cost
For a long-term equity investment acquired not involving enterprises under common control, the investment cost of the long-term equity investment is the cost of acquisition. For a long-term equity investment acquired through business combination not involving enterprises under common control and achieved in stages, the investment cost of the long-term equity investment is the aggregate of the carrying amount of the equity interest held in the acquiree prior to the acquisition date and the cost of the additional investment at the acquisition date. The long-term equity investment acquired otherwise than through a business combination is initially measured at its cost.
12.2 Subsequent measurement and recognition of profit or loss
12.2.1. Long-term equity investment accounted for using the equity method
The Group accounts for investment in associates and joint ventures using the equity method. An associate is an entity over which the Group has significant influence and a joint venture is an entity over which the Group exercises joint control along with other investors.
Under the equity method, where the initial investment cost of a long-term equity investment exceeds theGroup’s share of the fair value of theinvestee’s identifiable net assets at the time of acquisition, no adjustment is made to the initial investment cost. Where the initial investment cost is less than theGroup’s share of the fair value of theinvestee’s identifiable net assets at the time of acquisition, the difference is recognised in profit or loss for the period, and the cost of the long- term equity investment is adjusted accordingly.
Under the equity method, the Group recognises its share of the net profit or loss of the investee for the period as investment income or loss for the period. The Group recognises its share of theinvestee’s net profit or loss based on the fair value of theinvestee’s individual separately identifiable assets, etc at the acquisition date after making appropriate adjustments to conform with the Group's accounting policies and accounting period. Unrealised profits or losses resulting from the Group's transactions with its associates and joint ventures are recognised as investment income or loss to the extent that those attributable to the Group's equity interest are eliminated. However, unrealised losses resulting from the Group's transactions with its associates and joint ventures which represent impairment losses on the transferred assets are not eliminated. Changes in owners' equity of the investee other than net profit or loss are correspondingly adjusted to the carrying amount of the long-term equity investment, and recognised as other comprehensive income which is included in the capital reserve.
The Group discontinues recognising its share of net losses of the investee after the carrying amount of the long-term equity investment together with any long-term interests that in substance form part of its net investment in the investee is reduced to zero. If the Group has incurred obligations to assume additional losses of the investee, a provision is recognized according to the expected obligation, and recorded as investment loss for the period. Where net profits are subsequently made by the investee, the Group resumes recognising its share of those profits only after its share of the profits exceeds the share of losses previously not recognised.
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12. Long term equity investments - continued
12.2 Subsequent measurement and recognition of profit or loss - continued
12.2.2. Disposal of long-term equity investments
On disposal of a long term equity investment, the difference between the proceeds actually received and receivable and the carrying amount is recognised in profit or loss for the period. For a long-term equity investment accounted for using the equity method, the amount included in the shareholders' equity attributable to the percentage interest disposed is transferred to profit or loss for the period.
12.3 Basis for determining joint control and significant influence over investee
Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating policy decisions relating to the activity require the unanimous consent of the parties sharing control. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. When determining whether an investing enterprise is able to exercise control or significant influence over an investee, the effect of potential voting rights of the investee (for example, warrants and convertible debts) held by the investing enterprises or other parties that are currently exercisable or convertible shall be considered.
12.4 Methods of impairment assessment and determining the provision for impairment loss The Group reviews the long-term equity investments at each balance sheet date to determine whether there is any indication that they have suffered an impairment loss. If an impairment indication exists, the recoverable amount is estimated. If such recoverable amount is less than its carrying amount, a provision for impairment losses in respect of the deficit is recognised in profit or loss for the period.
Once an impairment loss is recognised for a long-term equity investment, it will not be reversed in any subsequent period.
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13. Property, plant and equipment
13.1 Recognition criteria for fixed assets
Fixed assets are tangible assets that are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes, and have useful lives of more than one accounting year. A fixed asset is recognised only when it is probable that economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. Fixed assets are initially measured at cost.
Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset and if it is probable that economic benefits associated with the asset will flow to the Group and the subsequent expenditures can be measured reliably. Meanwhile the carrying amount of the replaced part is derecognised. Other subsequent expenditures are recognised in profit or loss in the period in which they are incurred.
13.2 Depreciation of each category of fixed assets
A fixed asset is depreciated over its useful life using the straight-line method since the month subsequent to the one in which it is ready for intended use. The useful life, estimated net residual value rate and annual depreciation rate of each category of fixed assets are as follows:
Estimated Estimated Annual useful life residual rate depreciation rate Buildings 20-40years 0-5% 2.4%-5.0% Machinery 10-20years 0-5% 4.8%-10.0% Motor Vehicles 4-12years 0-5% 7.9%-25.0% A variety of depreciation rate can be used for different components of an item of property, plant and equipment according to its different useful lives or nature.
13.3 Other explanations
The Group evaluates the useful life, expected net residual value, and the depreciation method of the property, plant and equipment every year, and makes adjustment where necessary.
For details of the impairment test and impairment loss recognition for property, plant and equipment, please refer to Note II-19.
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14. Construction in progress
Construction in progress is measured at its actual costs. The actual costs include various construction expenditures during the construction period, borrowing costs capitalised before it is ready for intended use and other relevant costs. Construction in progress is not depreciated. Construction in progress is transferred to a fixed asset when it is ready for intended use. The Group assesses at each balance sheet date whether there is any indication that construction in progress may be impaired. If there is any indication that such assets may be impaired, recoverable amounts are estimated for such assets. Recoverable amount is estimated on individual basis. If it is not practical to estimate the recoverable amount of an individual asset, the recoverable amount of the asset group to which the asset belongs will be estimated. If the recoverable amount of an asset or an asset group is less than its carrying amount, the deficit is accounted for as an impairment loss and is recognised in profit or loss for the period.
For details of the impairment test and impairment loss recognition for construction in progress, please refer to Note II-19.
15. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying asset are capitalised when expenditures for such asset and borrowing costs are incurred and activities relating to the acquisition, construction or production of the asset that are necessary to prepare the asset for its intended use or sale have commenced. Capitalisation of borrowing costs ceases when the qualifying asset being acquired, constructed or produced becomes ready for its intended use or sale. Capitalisation of borrowing costs is suspended during periods in which the acquisition, construction or production of a qualifying asset is suspended abnormally and when the suspension is for a continuous period of more than 3 months. Capitalisation is suspended until the acquisition, construction or production of the asset is resumed. Other borrowing costs are recognised as an expense in the period in which they are incurred.
Where funds are borrowed under a specific-purpose borrowing, the amount of interest to be capitalised is the actual interest expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds before being used on the asset or any investment income on the temporary investment of those funds. Where funds are borrowed under general-purpose borrowings, the Group determines the amount of interest to be capitalised on such borrowings by applying a capitalisation rate to the weighted average of the excess of cumulative expenditures on the asset over the amounts of specific-purpose borrowings. The capitalisation rate is the weighted average of the interest rates applicable to the general-purpose borrowings.
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16. Biological assets
The biological assets of the Group are vines.
Biological assets should be recognized when and only when:
(i) The Group controls the asset as a result of past events;
(ii) It is probable that future economic benefits associate with the asset will flow to the entity; and
(iii) The cost of the asset can be measured reliably.
Biological assets are initially measured at its cost.
The Group charge deprecation for productive biological assets which satisfy expected production, and record the deprecation in balance sheet and income statement. The Group uses straight line method to calculate the deprecation, and details as follows:
Estimated Estimated Annual Category useful life residual rate depreciation rate Vines 20 years - 5% The Group evaluates the useful life, expected net salvage value, and the depreciation method of the property, plant and equipment at the end of each year.
Agricultural produce harvested from the entity's biological assets are measured at its weighted- average book value. The book value comprises all material, labor and other indirect expense occurred in producing and gathering the agricultural assets. Agricultural produce harvested are reported in accordance with the CAS 1 Inventories.
When biological assets are sold, lost, dead, or damaged, the carrying amount is recognized in the income statement after deduction of relevant taxes.
17. Intangible assets
17.1 Intangible assets
Intangible assets include land use rights, patents, etc.
An intangible asset is measured initially at cost. When an intangible asset with a finite useful life is available for use, its original cost less net residual value and any accumulated impairment losses is amortised over its estimated useful life using the straight-line method. An intangible asset with an indefinite useful life is not amortised.
For an intangible asset with a finite useful life, the Group reviews the useful life and amortisation method at the end of the period, and makes adjustments when necessary.
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17. Intangible assets - continued
17.1 Intangible assets - continued
The useful lives of the intangible assets are as follows:
Useful life Land use rights 40-50 years Software use rights 5 years 17.2 Methods of impairment assessment and determining the provision for impairment losses of intangible assets
The Group assesses at each balance sheet date whether there is any indication that the intangible assets with a finite useful life may be impaired. If there is any indication that such assets may be impaired, recoverable amounts are estimated for such assets. Recoverable amount is estimated on individual basis. If it is not practical to estimate the recoverable amount of an individual asset, the recoverable amount of the asset group to which the asset belongs will be estimated. If the recoverable amount of an asset or an asset group is less than its carrying amount, the deficit is accounted for as an impairment loss and is recognised in profit or loss for the period.
Intangible assets with indefinite useful life and intangible assets not yet available for use are tested for impairment annually, irrespective of whether there is any indication that the assets may be impaired.
Once the impairment loss of such assets is recognised, it is not be reversed in any subsequent period.
18. Long term prepaid expenses
Long-term prepaid expenses represent expenses incurred that should be borne and amortised over the current and subsequent periods (together of more than one year). Long-term prepaid expenses are amortised using the straight-line method over the expected periods in which benefits are derived.
Long term prepaid expenses are amortized over the useful economic life on a straight line basis. Amortization period Land requisition fee 50 years Land lease prepayment 50 years Greening fee 5 years Others 50 years
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19. Revenue
19.1 Revenue from sale of goods
Revenue from sale of goods is recognised when (1) the Group has transferred to the buyer the significant risks and rewards of ownership of the goods; (2) the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (3) the amount of revenue can be measured reliably; (4) it is probable that the associated economic benefits will flow to the Group; and (5) the associated costs incurred or to be incurred can be measured reliably.
19.2 Revenue from rendering of services
When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction shall be recognized by reference the stage of completion of the transaction at the reporting date. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied:
(i) The amount of revenue can be measured reliably;
(ii) It is probable that the economic benefit associated with the transaction will flow to the entity;
(iii) The stage of completion of the transaction at the reporting date can be measured reliably; and
(iv) The costs incurred for the transaction and the costs to complete the transaction can be measured reliably.
20. Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. The Group as lessee under operating leases
Operating lease payments are recognised on a straight-line basis over the term of the relevant lease, and are either included in the cost of related asset or charged to profit or loss for the period. Initial direct costs incurred are charged to profit or loss for the period. Contingent rents are charged to profit or loss in the period in which they are actually incurred.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
21. Deferred tax assets/deferred tax liabilities
The income tax expenses include current income tax and deferred income tax.
21.1. Current income tax
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are measured at the amount expected to be paid (or recovered) according to the requirements of tax laws.
21.2. Deferred tax assets and deferred tax liabilities
For temporary differences between the carrying amounts of certain assets or liabilities and their tax base, or between the nil carrying amount of those items that are not recognised as assets or liabilities and their tax base that can be determined according to tax laws, deferred tax assets and liabilities are recognised using the balance sheet liability method.
Deferred tax is generally recognised for all temporary differences. Deferred tax assets for deductible temporary differences are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilised. However, for temporary differences associated with the initial recognition of goodwill and the initial recognition of an asset or liability arising from a transaction (not a business combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of transaction, no deferred tax asset or liability is recognised.
For deductible losses and tax credits that can be carried forward, deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the deductible losses and tax credits can be utilised.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future. At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates, according to tax laws, that are expected to apply in the period in which the asset is realised or the liability is settled.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
21. Deferred tax assets/ deferred tax liabilities - continued
21.2. Deferred tax assets and deferred tax liabilities - continued
Current and deferred tax expenses or income are recognised in profit or loss for the period, except when they arise from transactions or events that are directly recognised in other comprehensive income or in shareholders' equity, in which case they are recognised in other comprehensive income or in shareholders' equity; and when they arise from business combinations, in which case they adjust the carrying amount of goodwill.
At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if it is no longer probable that sufficient taxable profits will be available in the future to allow the benefit of deferred tax assets to be utilised. Such reduction in amount is reversed when it becomes probable that sufficient taxable profits will be available.
When the Group has a legal right to settle on a net basis and intends either to settle on a net basis or to realise the assets and settle the liabilities simultaneously, current tax assets and current tax liabilities are offset and presented on a net basis.
When the Group has a legal right to settle current tax assets and liabilities on a net basis, and deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax assets and liabilities on a net basis or to realise the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a net basis. 22. Operating leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.. 22.1 The Group as lessee under operating leases
Operating lease payments are recognised on a straight-line basis over the term of the relevant lease, and are either included in the cost of related asset or charged to profit or loss for the period. Initial direct costs incurred are charged to profit or loss for the period. Contingent rents are charged to profit or loss in the period in which they are actually incurred.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(II) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
23. Other significant accounting policies, accounting estimates andpreparation of financial statements 23.1 Employee benefits
In an accounting period in which an employee has rendered service to the Group, the Group recognises the employee benefits for that service as a liability, except for compensation for termination of employment relationship with the employees.
The Group participates in the employee social security systems, such as basic pensions, medical insurance, housing funds and other social securities established by the government in accordance with relevant requirements. The related expenditures are either included in cost of related assets or charged to profit or loss in the period when they are incurred.
When the Group terminates the employment relationship with employees before the expiry of the employment contracts or provides compensation as an offer to encourage employees to accept voluntary redundancy, if the Group has a formal plan for termination of employment relationship or has made an offer for voluntary redundancy which will be implemented immediately, and the Group cannot unilaterally withdraw from the termination plan or the redundancy offer, a provision for the compensation payable arising from the termination of employment relationship with employees is recognised with a corresponding charge to the profit or loss for the period. 23.2 Related party relationships
Related party relationships can be defined as the entity is under control, joint control or significant influence by another entity or two or more than two entities are under the control, joint control by the same entity.
(III) CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY ASSUMPTIONS AND UNCERTAINTIES IN ACCOUNTING ESTIMATES
In the application of accounting policies as set out in Note II, the Group is required to make judgment's, estimates and assumptions about the carrying amounts of items in the financial statements that cannot be measured accurately, due to the internal uncertainties of the operating activities. These judgments, estimates and assumptions are based on historical experience of the Group's management as well as other factors that are considered to be relevant. Actual results may differ from these estimates.
The Group periodically review the judgments, estimates and assumptions above on a going concern basis. For those changes in accounting policies that only affect current financial statements, the influences are recognized in current period. For those changes in accounting policies that affect both current and future financial statements, the influences are recognized in both current and prospective periods.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(III) CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY ASSUMPTIONS AND UNCERTAINTIES IN ACCOUNTING ESTIMATES - continued Significant accounting judgments and accounting estimates
The following are key assumptions for after balance sheet date event and other factors of uncertain estimation. They may cause material adjustment on balance sheet in following accounting period.
Deferred tax assets
Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable profits together with future tax planning strategies.
Depreciation
As set out in Note II-13, the depreciation is calculated on the straight line basis to write-off the cost of each item of fixed assets to its residual value over its estimated useful life. The Group's management determines the estimated useful lives for its property, plant and equipment. This estimate is based on the historical experience of the actual useful lives of property, plant and equipment of similar nature and functions. If the previous estimates have significant changes, and depreciation expenses will be adjusted in the future periods.
Useful life of intangible assets
The estimated useful lives of the intangible assets are determined based on the historical experience of the actual useful lives of intangible assets of similar nature and functions as well as considering the contractual rights and statutory rights applicable to the intangible assets. When the estimated useful lives of finite intangible assets are shortened or extended, the amortization periods should be adjusted accordingly. When there is evidence indicating the useful lives of intangible assets with indefinite useful lives becomes finite, the useful lives should be estimated and the intangible assets should be accounted for in accordance with the standards for the intangible assets with finite useful lives.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(III) CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY ASSUMPTIONS AND UNCERTAINTIES IN ACCOUNTING ESTIMATES - continued Significant accounting judgments and accounting estimates - continued
Impairment of non-current assets
The Group assesses whether the recoverable amount is lower than the book value. If there are any indicators that the book value of non-current assets cannot be fully recoverable, impairment losses should be recorded.
The recoverable amount is the higher of an asset's fair value less costs to sell and the present value of the future cash flows expected to be derived from an asset. As it is difficult for the Group to obtain the quoted market price of the assets (or assts group), the fair value of the assets cannot be reliably estimated. When the management make estimation on the expected future cash flows from the asset or cash generating unit, estimates should be made on choosing a suitable production volume, selling price and related operating costs discount rate in order to calculate the present value of those cash flows. When recoverable amounts are undertaken, management may use all available for use information, including the forecast on production volume, selling price and related operating costs in reasonable and supportable assumptions.
Estimated provision for trade receivables
A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy are considered indicators that the trade receivable is impaired. The provision is reassessed at the end of each year.
Inventory provision based on net realizable value
The inventory are measured on the lower of carrying value and net realizable value, and provision should be made for impairment on obsolete and slow moving inventories. The group will reassess whether the net realizable value is lower than the carrying cost at the end of each year. (IV) TAXES
1. The main taxes and tax rate are as follows:
Value added tax VAT is levied at17% on the invoiced amount after deduction of eligible input VAT.
Consumption tax The consumption tax of the group is levied on gross revenue at rates ranging from10% to20%.
Business tax The Group is subject to a business tax of5% on its taxable revenue. City development tax Levied at7% of total business tax payment.
Corporate income tax The Group is subject to a corporate income tax rate of25% on its taxable income.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(IV) TAXES - continued
2. Tax incentives and relative permit
A subsidiary of the Company, Xinjiang Tianzhu Co., Ltd which is a wine production enterprise incorporated in Xinjiang Weizu Autonomous. In accordance with (Caishui[2011] No.60) and (Xinzhengfa[2010] No.105), from the first profit-making year, which is from 2012 to 2015, the company enjoys a favorable corporate income tax rate of15% besides the exemption of corporate income tax which belongs to local government. The corporate income tax applicable for 2012 is9%.
A subsidiary of the Company, Xinjiang Babao Baron Chateau Co., Ltd. which is a wine production enterprise incorporated in Xinjiang Weizu Autonomous. In accordance with (Caishui[2011] No.60) and (Xinzhengfa[2010] No.105), from the first profit-making year, which is from 2011 to 2015, the company enjoys a favorable corporate income tax rate of15% besides the exemption of corporate income tax which belongs to local government. The corporate income tax applicable for 2012 is9%.
Ningxia Changyu Grape Growing Co., Ltd., a subsidiary of the Group, whose principal activity is grape growing is incorporated in Ningxia Huizu Autonomous Region. According to clause 27 of PRC Corporate Income Tax and clause 86 of PRC Corporate Income Tax Measures for Implementation, Ningxia Changyu Grape Growing Co., Ltd. enjoys an exemption of corporate income tax.
(V) SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS
1. Particulars of the subsidiaries
Place and date Legal Business Registered Principle Incorporate Name ofregistration representative nature capital activities code Subsidiary acquired from a business combination: under non-common control
Xinjiang Tianzhu Wine Co., Ltd. 11 April 2006 ZhouHongjiang Manufacturing RMB75,000,000 Production 787 604 261 ("Xinjiang Tianzhu") (a) Shihezi, Xinjiang, China and sales of wine Etablissements Roullet 18 April 1983 ZhouHongjiang Sales EUR2,896,531 Trading, brokerage and N/A Fransac) ("French Sales") (h) Cognac, France agent sales
Subsidiaries acquired by establishment
Beijing Changyu Sales and 14 July 1998 SunJian Sales RMB1,000,000 Sales of wine 634 377 029 Distribution Co., Ltd. Beijing, China
("Beijing Sales")
Yantai Kylin Packaging Co., 29 September 1999 YangMing Manufacturing RMB15,410,000 Production of 863 052 455 Ltd. ("Kylin Packaging") Yantai, Shandong, China packaging materials Yantai Changyu-Castel 3 September 2001 SunLiqiang Manufacturing USD5,000,000 Production and 730 682 613 Wine Chateau Co., Ltd. Yantai, Shandong, China sales of wine
("Changyu Chateau") (b)
Changyu (Jingyang) 5 December 2001 WeiBingsheng Manufacturing RMB1,000,000 Production and 732 663 643 Wine Co., Ltd. ("Jingyang Wine") Jingyang, Shanxi, China sales of wine
Yantai Changyu Pioneer Wine 24 December 2001 JiangHua Sales RMB8,000,000 Sales of wine 746 576 380 Sales Co., Ltd. ("Sales Company") Yantai, Shandong, China
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(V) SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS - continued
1. Particulars of the subsidiaries - continued
Place and date Legal Business Registered Principle Incorporate Name ofregistration representative nature capital activities code Langfang Development (c) 1 March 2002 AlanCastel Manufacturing USD6,108,808 Production and 735 624 56X Zone Castel-Changyu Wine Lanfang, Hebei, China sales of wine
Co., Ltd. ("Langfang Castel")
Changyu (Jingyang) Wine 8 April 2002 WeiBinsheng Sales RMB1,000,000 Sales of wine 735 379 154 Sales Co., Ltd. ("Jingyang Sales") Jingyang, Shanxi, China
Langfang Changyu Pioneer 19 April 2002 LiuWanqiang Sales RMB1,000,000 Sales of wine 737 388 150 Wine Sales Co., Ltd. Langfang, Hebei, China
("Langfang Sales").
Shanghai Changyu Sales and 28 April 2003 ZhouHongjiang Sales RMB1,000,000 Sales of wine 749 571 075 Distribution Co., Ltd. Shanghai, China
("Shanghai Sales")
Beijing Changyu AFIP Agriculture 8 November 2011 SunHongbo Sales RMB1,000,000 Planting 585 851 395 Development Co., Ltd. Beijing, China and tourism
("Agriculture Development")
Beijing Changyu AFIP 27 October 2005 SunLiqiang Manufacturing RMB110,000,000 Production and 780 953 469 Wine Chateau Co., Ltd.(d) Beijing, China sales of wine
Yantai("Beijing Chateau") 9 January 2006 JiangHua Sales RMB5,000,000 Sales of wine 783 487 627 Changyu Wine Sales Co., Ltd. Yantai, Shandong, China
("Wines Sales")
Yantai Changyu Pioneer 29 September 2005 ZhouHongjiang Sales RMB5,000,000 Import and technology 780 766 161 International Co., Ltd. Yantai, Shandong, China export of wine and ("Pioneer International")
Hangzhou Changyu 14 June 2006 JiangHua Sales RMB500,000 Whole-sale and retail 788 283 631 Wine Sales Co., Ltd. Hangzhou, Zhejiang, China of packaged food ("Hangzhou Changyu")
Ningxia Changyu 28 April 2006 ShaoChunsheng Planting RMB1,000,000 Plant andpurchase 788 200 410 Grape-Growing Co., Ltd. Yinchuang, Ningxia, China of grape
("Ningxia Growing")
Huanren Changyu National 16 November 2006 LengBin Sales RMB2,000,000 Whole-sale 794 822 179 Wines Sales Co., Ltd. Huanren, Liaoning, China and retail of wine ("National Wines")
Liaoning Changyu Ice 3 April 2003 ZhouHongjiang Manufacturing RMB26,300,000 Production and 747 128 301 Wine Chateau Co., Ltd. Benxi, Liaoning, China sales of ice wine ("Ice Chateau") (e)
Yantai Development Zone 4 December 2006 ZhouHongjiang Sales RMB5,000,000 Whole-sale 796 183 411 Changyu Trading Co., Ltd. Yantai, Shandong, China and retail of wine ("Development Zone Trading")
Shenzhen Changyu 17 July 2007 LinPu Sales RMB500,000 Whole-sale 664 195 20X Wine Marketing Ltd. Futian, Shenzhen, China and retail of wine ("Shenzhen Marketing")
Yantai Changyu Fushan 27 March 2007 Zhou Hongjiang Sales RMB5,000,000 Whole-sale 660 176 044 Trading Company Yantai, Shandong, China and retail of wine ("Fushan Trading")
Beijing AFIP Meeting Center 4 December 2007 Sun Hongbo Services RMB500,000 Meeting service, 669 926 612 ("Meeting Center") (f) Miyun, Beijing, China foods accommodation, tourism and
sales ofsouvenir,
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(V) SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS - continued
1. Particulars of the subsidiaries - continued
Place and date Legal Business Registered Principle Incorporate Name ofregistration representative nature capital activities code Beijing AFIP Tourism 4 June 2008 Liu Shilu Tourism RMB500,000 Tourism and culture 676 627 372 and Culture Company Miyun, Beijing , China communication, ("AFIP Tourism") (g) development
of tourist resources, meeting service
Ningxia Changyu 25 April 2008 Li Jiming Manufacturing RMB1,000,000 Manufacturing 670 408 275 Pioneer Wine Co., Ltd. Yinchuan, Ningxia, China and sales of wine, ("Ningxia Wine") packing material, plant,process
and purchase of grapes Yantai Changyu 26 November 2008 Liu Quan Sales RMB80,000,000 Packaging of foods 683 222 859 DingLuoTe Chateau. Yantai, Shandong China
("Ding Luo Te Chateau")
Qing Tong Xia Changyu 17 November 2009 Liu Yuquan Sales RMB500,000 Whole-sale 694 334 151 Wine Marketing Ltd. Qing Tong Xia, Ningxia, China and retail of wine ("Qing Tong Xia Sales")
XinJiang BaBao Baron Changyu 2 April 2010 Sun Liqiang Manufacturing RMB150,000,000 Manufacturing 552 414 949 Wine Chateau Co., Ltd. Shihezi, Xinjiang, China and sales of wine ("Shi He Zi Chateau")
Ningxia Moser 15th Changyu 26 April 2010 Zhou Hongjiang Manufacturing RMB2,000,000 Wine/packaging 694 349 740 Wine Chateau Co., Ltd. Yinchuan, Ningxia, China manufacturing,tourism (" Ningxia Chateau")
Shanxi Changyu Rina 12 April 2010 Sun Liqiang Manufacturing RMB20,000,000 Tourism and 552 180 142 Castle Chateau Co., Ltd. Xianyang, Shanxi, China wine manufacturing (" Chang'an Chateau")
Yantai Changyu Wine Research 29 March 2010 Sun Liqiang Manufacturing RMB500,000,000 Wine manufacturing 555 235 76X and Development Co., Ltd. Yantai, Shandong China
("R&D Centre")
Changyu (HuanRen) 2 December 2011 Zhou Hong Jiang Manufacturing RMB5,000,000 Fermatition 587 310 365 Wine Co., Ltd Benxi LiaoNing China project preparation ("Huan Ren Wine")
Xinjiang Changyu Sales Co., Ltd 8 August 2011 Lin Pu Sales RMB10,000,000 Foods wholesales 580 208 296 ("Xinjiang Sales") Shihezi Xinjiang China
Xinjiang Changyu Winery Co., Ltd 25 August 2011 Lin Pu Sales RMB10,000,000 Red wine 280 222 610 ("Xinjiang Winery") Shihezi Xinjiang China and fruit wine
Ningxia Changyu Trading Co., Ltd 8 November 2012 ZhouHongjiang Sales RMB1,000,000 Whole sale of 054 609 428 ("Ningxia Trading") (j) Yinchuan Ningxia China pre-packed foods Shanxi Changyu Rina Wine 29 October 2012 SunLiqiang Sales RMB3,000,000 Tourism and 056 906 215 Sales Co., Ltd ("Shanxi Sales") (k) Xianyang Shanxi China wine manufacturing Penglai Changyu Wine Sales 7 September 2012 Leng Bin Sales RMB5,000,000 Sales of red wine 053 429 070 Co., Ltd ("Penglai Sales") (l) Penglai Shandong China
Laizhou Changyu Wine Sales 19 July 2013 Leng Bin Sales RMB1,000,000 Sales of red wine 074 406 41-7 Co., Ltd ("Laizhou Sales") (l) Laizhou Shandong China
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(V) SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS - continued
1. Particulars of the subsidiaries - continued
Equity interest
owned by the company
Paid in capital Consolidate financial Non-controlling Name at 31 December 2012 Direct Indirect Votingpower statements interes Subsidiary acquired in business combination: under non-common control
Xinjiang Tianzhu (a) RMB60,000,000 60% - 100% Yes RMB56,093,912 French Sales (h) EUR2,896,531 100% - 100% Yes - Subsidiaries acquired by establishment:
Beijing Sales RMB1,000,000 100% - 100% Yes - Kylin Packaging RMB23,176,063 100% - 100% Yes - Changyu Chateau (b) RMB28,968,100 70% - 100% Yes RMB12,365,016 Jingyang Wine RMB1,000,000 90% - 10% Yes - Sales Company RMB8,000,000 90% 10% 100% Yes - Langfang Castel (c) RMB12,142,200 39% 10% 100% Yes RMB22,702,522 Jingyang Sales RMB1,000,000 10% - 90% Yes - Langfang Sales RMB1,000,000 10% - 90% Yes - Shanghai Sales RMB1,000,000 30% 70% 100% Yes - Agriculture Development RMB1,000,000 - 100% 100% Yes - Beijing Chateau (d) RMB77,000,000 70% - 100% Yes RMB35,293,868 Wines Sales RMB5,000,000 90% 10% 100% Yes - Pioneer International RMB5,000,000 70% 30% 100% Yes - Hangzhou Changyu RMB500,000 - 100% 100% Yes - Ningxia Growing RMB1,000,000 100% - 100% Yes - National Wines RMB2,000,000 100% - 100% Yes - Ice Chateau (e) RMB13,413,000 51% - 100% Yes RMB33,319,062 Development Zone Trade RMB5,000,000 - 100% 100% Yes - Shenzhen Marketing RMB500,000 - 100% 100% Yes - Fushan Trading RMB5,000,000 - 100% 100% Yes - Meeting Center (f) RMB500,000 - 100% 100% Yes - AFIP Tourism (g) RMB350,000 70% - 100% Yes RMB2,966,399 Ningxia Wine RMB1,000,000 100% - 100% Yes - Ding Luo Te Chateau RMB80,000,000 100% - 100% Yes - Qing Tong Xia Sales RMB500,000 100% 100% Yes - Shi He Zi Chateau RMB150,000,000 100% - 100% Yes - Ningxia Chateau RMB2,000,000 100% - 100% Yes - Chang'an Chateau RMB20,000,000 100% - 100% Yes - Research and
Development Centre RMB500,000,000 100% - 100% Yes - Huan Ren Wine RMB5,000,000 100% - 100% Yes - Xinjiang Sales RMB10,000,000 - 100% 100% Yes - Xinjiang Winery RMB10,000,000 - 100% 100% Yes - Ningxia Trading RMB1,000,000 - 100% 100% Yes - Shanxi Sales RMB3,000,000 - 100% 100% Yes - Penglai Wine Sales RMB5,000,000 - 100% 100% Yes - Laizhou Wine Sales (i) RMB10,000,000 - 100% 100% Yes - (a) Xinjiang Tianzhu was acquired by the Company in 2009, accounting for60% of Tianzhu's equity interest. Pursuant to the operation contract signed by the Company, the Company is entrusted to manage Tianzhu and therefore has the full power to control its strategic operating, investing and financing policies by paying the non-controlling party contract fee. The operation agreement will be terminated on 31 December 2018.
(b) Changyu Chateau is a Sino-foreign joint venture established by the Company and a foreign investor. Pursuant to an operation contract signed by the Company, and the foreign investor, the Company is entrusted to manage Changyu Chateau and therefore has the full power to control its strategic operating, investing and financing policies. The operation agreement will be terminated on 31 December 2022.
(c) Langfang Castel is a sino-foreign joint venture established by the Company and a foreign investor. Pursuant to the agreement signed by the Company, Langfang Castel and the foreign investor, the Company is entrusted to manage Langfang Castel and therefore has the full power to control its strategic operating, investing and financing policies, therefore
the financial statements of Langfang Castel are consolidated in the Group's consolidated
financial statements. The operation agreement will be terminated on 31 December 2022.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(V) SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS - continued
1. Particulars of the subsidiaries - continued
(d) Beijing Chateau is a joint venture established by the Company and two investors. Pursuant to an operation contract signed by the Company and the investors, the Company is entrusted to manage Beijing Chateau and therefore has the full power to control its strategic operating, investing and financing policies. The operation agreement will be terminated on 2 September 2019.
(e) Ice Chateau is a sino-foreign joint venture established by the Company and a foreign investor. Pursuant to the agreement signed by the Company, Ice Chateau and the foreign investor, the Company is entrusted to manage Ice Chateau and therefore has the full power to control its strategic operating, investing and financing policies. The operation agreement will be terminated on 31 December 2016.
(f) Meeting Centre is a subsidiary of Beijing Chateau.
(g) AFIP Tourism is a joint venture established by the Company and two investors. Pursuant to an operation contract signed by the Company and the investors, the Company is entrusted to manage AFIP Tourism and therefore has the full power to control its strategic operating, investing and financing policies. The operation agreement will be terminated on 2 September 2019.
(h) Laizhou sales is a limited liability company solely founded by the Company in 2013. Its paid capital is RMB1, 000,000 which has been fully paid by the end of 2013.
(i) French sales is a limited liability company acquired by the Company in December 2013. The Company holds its 100 percent shares.
2 Changes in the scope of consolidated financial statement
Except for those newly established subsidiaries, the scope of consolidated financial statements was same with last year.
3 The entity newly included in the consolidation
The newly included subsidiary is as following:
Net Asset Net profit/(loss) as at 2013.12.31 up to date RMB RMB Laizhou Trading 1,000,000 30,293,187 French Sales 16,876,005 -__________________ __________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Cash and bank
2013 2012 RMB RMB Cash on hand 772,817 48,894 Cash at bank 1,235,788,080 2,227,421,934 Other monetary assets 131,257,285 -____________ ____________ 1,367,818,182 2,227,470,828________________________ ________________________ As at 31 December 2013, the balance of restricted cash of the Group is RMB2,609,237(31 December 2012: RMB2,652,083), which is theGroup’s housing fund.
As at 31 December 2013, the Group's other monetary assets include security of RMB125,000,000 pledged for a short-term borrowing from HSBC of HKD303,963,343 (translated as RMB243,170,674), refundable deposit for notes payable of Shi He Zi Chateau of RMB5,965,996, and company cards deposit guarantee of RMB291,289.
As at 31 December 2013, the Group's overseas cash and bank deposit is RMB13,104,666 (31 December 2012: Nil).
As at 31 December 2013, The Group's term deposits with original maturity of more than three months when acquired is RMB277,392,728 (31 December 2012: RMB662,524,719) with interest rates ranging from2.86%-3.58%, which will mature from 3 months to 1 year.
2. Notes receivable
2013 2012 RMB RMB Bank acceptance bills 79,702,753 92,635,701__________________ __________________ As of 31 December 2013, there was no pledged notes receivables (31 December 2012: Nil), and no notes receivables were reclassified as accounts receivable due to the default of drawer (31 December 2012: Nil).
As at 31 December 2013, the top four notes receivables endorsed to third parties but not yet matured is as follows:
Drawer Issuing date Maturity date Amount RMB Better Life Commercial Chain Share Co.,Ltd 12/11/2013 3/11/2014 1,436,400 Jincheng Jinchengyuan Trading Ltd. 11/29/2013 5/29/2014 1,000,000 Jinan Luye Trading Ltd. 9/2/2013 3/2/2014 1,000,000 Wuxi Fanghe Sugar, Cigar and Wine Ltd 9/13/2013 3/13/2014 1,000,000 Fujian Nanan Ruigang Building Materials Ltd 9/26/ 2013 3/2 6/2014 __1_,0_0_0_,0_0_0____5__,4__3__6__,4__0__0
As at 31 December 2013, there was no notes receivable discounted to obtain short-term loan .
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
3. Trade receivables
2013 2012
Balance Provision Balance Provision Amoun Amoun Amoun Amoun
RMB % RMB % RMB % RMB % Individually
significant 72,118,959 40.7 - - 73,711,433 54.5 - - Individually
insignificant _1_04_,9_9_0,_55_7 _5_9._3 __-_ __-_ _6_1_,5_0_5,9_5_1 _4_5._5 __-_ __-___1__77__,1__0__9,__51__6 1__0__0.__0 ____-__ ____-__ __1__35__,2__1__7,__38__4 1__0__0.__0 ____-__ ____-__ The normal credit term is one month, which can be extended to three months for certain major customers. The trade receivables are interest free.
The Group determines that trade receivable of more than RMB 3,000,000 is considered as individually significant trade receivable.
The aging analysis is as follows:
2013 2012 RMB RMB Within 1 year 174,141,205 135,217,384 1 to 2 years 2,968,311 -__________ __________ 177,109,516 135,217,384____________________ ____________________ As at 31 December 2013, there was no bad debt provision for trade receivables (31 December 2012: Nil). There was no bad debt provision made, reversed or written-off by management in 2013 (2012: Nil).
As at 31 December 2013, there was no trade receivable due from shareholders with voting rights of5% or above (31 December 2012: Nil).
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
3. Trade receivables - continued
As at 31 December 2013, the top 5 of trade receivables are as follows:
Relationship Percentage of with the Group Amount Aging total receivables RMB % Nonggongshang Supermarket (Group) Co., Ltd Third party 17,306,266 Within 1 year 9.8 Lianhua Supermarket Holdings Co. Ltd. Third party 10,584,587 Within 1 year 6.0 Kangcheng Investment (China) Co., Ltd. Third party 9,911,907 Within 1 year 5.6 Jiangsu Hengxing Wine Co., Ltd Third party 8,118,529 Within 1 year 4.6 Suguo Supermarket Co., Ltd Third party __7_,0_7_6_,1_1_6 Within 1 year _4_._0__5__2__,9__9__7__,4__0__5 __30__.__0 As at 31 December 2013, trade receivables due from related parties are as following:
Percentage of Relationship with the Group Amount total receivables% Yantai Zhongya
Phamaceutical
tonic wine Co., Ltd Under the control of the same parent company 2,567,129 1.5 Yantai ShenMa
Packing Co., Ltd. Under the control of the same parent company 911,197 0.5 Yantai Changyu
International Window of
the Wine City Co., Ltd. Under the control of t he same parent company___4_2_,4_7_8 _0_._0__3__,5__2__0__,8__0__4 __2__.__0 As at 31 December 2012, trade receivables due from related parties are as following:
Percentage of Relationship with the Group Amount total receivables% Yantai Zhongya
Phamaceutical
tonic wine Co., Ltd Under the control of the same parent company 1,820,376 1.3 Yantai Changyu
Tourism Co., Ltd Under the control of t he same parent company__3_1_1_,2_2_0 _0_._3__2__,1__3__1__,5__9__6 __1__.__6
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
4. Advances to suppliers
The aging analysis is as follows:
2013 2012 RMB RMB Within 1 year 45,997,863 44,294,482____________________ ____________________ As at 31 December 2013, the top 5 of advances to suppliers are as follows:
Reason Percentage of Relationship for being total advances with the Group Amount Aging outstanding to suppliers RMB % Xinjiang Yuyuan Wine
Co., Ltd. Third party 20,069,242 Within 1 year goods not received 43.6 Sun Xiaofang Third party 5,350,000 Within 1 year goods not received 11.6 Austria Lawrence
Fine Wines V Co. Ltd Third party 3,364,403 Within 1 year goods not received 7.7 Xinjiang Tianyu Wine
Co., Ltd. Third party 3,200,053 Within 1 year goods not received 7.3 Weifang Qingxin Landscape
Engineering Ltd Third party __1_,6_0_0_,0_0_0 Within 1 year project no t finished _3_._5__3__3__,5__8__3__,6__9__8 __73__.__0 As at 31 December 2013, there was no advance paid to shareholders with voting rights of5% or above (31 December 2012: Nil).
5. Interest receivable
2013
Opening balance Increase Decrease Closing balance RMB RMB RMB RMB Interests of term deposits __7__,2__1__5__,8__5__4 __2__0__,8__3__8__,1__6__1 (__1__9__,6__3__6__,0__2__0) __8__,4__1__7__,9__9__5 As at 31 December 2013, there was no overdue interest receivable (31 December 2012: Nil).
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables
(1) Disclosure of other receivables by categories
2013 2012
Balance Bad debts provision Balance Bad debts provision Amoun Amoun Amoun Amoun
RMB % RMB % RMB % RMB % Individually
significant
and provision 65,272,429 61.2 (7,392,429) 100.0 11,120,600 28.1 (11,120,600) 100.0 Individually
insignificant
and provision __41_,4_51_,7_9_4 __3_8._8 _____-_ ___-_ _2_8_,4_62_,9_4_5 __7_1._9______-_ ___-___1__06__,7__2__4,__22__3 __1__0__0.__0 __(7__,3__92__,4__2__9) ____10__0__.0 __3__9__,5__83__,5__4__5 __1__0__0.__0__(1__1__,1__20__,6__0__0)__1__0__0.__0 The aging analysis is as follows:
Closing balance Opening balance
Bad debts Carrying Bad debts Carrying Amount provision amount Amount provision amount Amount Proportion Amount Amount Proportion Amount Amount Amount RMB % RMB RMB % RMB RMB RMB Within 1 year 96,808,614 90.7 - 96,808,614 26,741,541 67.6 26,741,541 1 to 2 years 1,936,191 1.8 - 1,936,191 943,410 2.4 943,410 2 to 3 years 221,072 0.2 - 221,072 376,038 0.9 376,038 Over 3 years __7_,7_5_8,_34_6___7_.3__(7_,3_92_,4_2_9)___3_65_,9_1_7_1_1_,5_22_,5_5_6__2_9._1_(1_1_,1_20_,6_0_0)___4_01_,9_5_6__1__06__,7__2__4,__22__3___1_0__0__.0____(7__,3__92__,4__2__9)__9__9__,3__31__,7__9__4__3__9__,5__83__,5__4__5__1__0__0__.0__(1__1__,1__20__,6__0__0)__2__8__,4__62__,9__4__5 The movement of provision for other receivables is as follows:
Opeing balance Accrual Reversal Written-off Closing balance RMB RMB RMB RMB RMB 2013 __1__1__,1__2__0__,6__0__0 ________-
______
____(6__0__7__,5__7__1) __(__3__,1__2__0__,6__0__0) ____7__,3__9__2__,4__2__9 As at 31 December 2013, the bad debt provision for individually significant balance is as follows: Balance Bad debts provision Percentage Reason for provision RMB RMB %
The debtor is in the Tiantong Security Co., Ltd. ____7__,3__9__2__,4__2__9 ____7__,3__9__2__,4__2__9 100 process of liquidation As at 31 December 2012, the bad debt provision for individually significant balance is as follows: Balance Bad debts provision Percentage Reason for provision RMB RMB %
Tiantong Security Co., Ltd. 8,000,000 8,000,000 100 The debtor is in the process of liquidation 100 The aging is more than
three years and not
Finance Bureau of Jingyang County__3_,1_2_0_,6_0_0 __3_,1_2_0_,6_0_0 likely to be recovered
__1__1__,1__2__0__,6__0__0 __1__1__,1__2__0__,6__0__0
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables - continued
(2) Reversals and collections during the current period
Reasons for Basis of determining Accumulated bad debt Amount of reversal or the original bad debt provision prior to reversals or Content of other receivables collections provision reversals or collections collections RMB RMB Tiantong Security Co., Ltd. Collected Exceed credit period (8,000,000) 607,571 (3) Other receivables written off in the reporting period
Write off of other receivables in 2013
Reason of Whether are related Nature Write-off amount write-off party transaction RMB
Custom of Yantai Government borrowin gs __3__,1__2__0__,6__0__0 Unable to recover No (4) As at 31 December 2013, there was no other receivable due from shareholders with voting rights of5% or above (31 December 2012: Nil).
(5) Top five entities with the largest balances of other receivables
As at 31 December 2013, the top 5 of other receivables are as follows:
Relationship Percentage of total with the Group Amount Aging other receivable RMB % Non-taxing account of Bureau of
Finance of Yantai Economic
Development Zone Third party 52,880,000 Within 1 year 49.5 Tiantong Security Co., Ltd. Third party 7,392,429 Over 3 years 6.9 Construction Union of Yantai
Economic Development Zone Third party 5,000,000 Within 1 year 4.7 Liaoning Administration of
Foreign Experts Affairs Third party 1,894,055 Within 1 year 1.8 Yantai Electronic Company of
Shandong Electronic Power Group Third party ___9_5_3_,2_0_0 Within 1 year _0_._9__6__8__,1__1__9__,6__8__4 __63__.__8 (6) As at 31 December 2013, there was no other receivable due from related parties (31 December 2012: Nil).
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
7. Inventories
2013 2012
Net carrying Net carrying Balance Provision amount Balance Provision amount RMB RMB RMB RMB RMB RMB Raw material 85,025,169 - 85,025,169 61,041,026 - 61,041,026 Finished goods 1,119,090,234 (13,135,590) 1,105,954,644 1,051,981,303 (15,378,581) 1,036,602,722 Work in progress __9_3_0,_13_7_,6_2_4 ______-___9_3_0,_13_7_,6_2_4_1_,1_7_0,_97_7_,6_9_3______-__1_,1_7_0,_97_7_,6_9_3__2__,1__3__4,__25__3__,0__2__7 __13__,__13__5__,5__9__0__2__,1__4__2,__22__6__,1__3__8__2__,2__8__4,__00__0__,0__2__2__15__,__37__8__,5__8__1__2__,2__6__8,__62__1__,4__4__1 Movement of inventory provision is as follows:
2013 Opening balance Increase Decrease Closing balance RMB RMB RMB RMB Finished goods __1__5__,3__7__8__,5__8__1 ________-
______
__(__2__,2__4__2__,9__9__1) __1__3__,1__3__5__,5__9__0 8. Long-term equity investment
2013
Opening
and closing Equity Voting Current year Initial cost balance interest power Provision provision RMB RMB % % RMB RMB Cost method:
Yantai Dingtao
Construction and
Development Co., Ltd.
("Yantai Dingtao") __10__,0__0__0__,0__0__0 __5,__00__0__,0__0__0 ____1__8 ____1__8 __10__,0__0__0__,0__0__0 __5,__00__0__,0__0__0
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
9. Property, plant and equipment
2013 Opening balance Increase Decrease Closing balance RMB RMB RMB RMB Cost
Buildings 1,376,818,737 97,296,111 (9,468,040) 1,464,646,808 Machineries and equipment 1,110,690,952 128,413,628 (2,912,455) 1,236,192,125 Motor vehicles ___2_2_,2_7_8_,1_3_2 ___2_,7_5_3_,8_1_5 ___(7_0_6_,4_5_8) ___2_4_,3_2_5_,4_8_9__2__,5__0__9__,7__8__7__,8__2__1 __2__2__8__,4__6__3__,5__5__4 (__1__3__,0__8__6__,9__5__3) __2__,7__2__5__,1__6__4__,4__2__2 Accumulated depreciation
Buildings 184,409,573 39,161,069 (1,137,624) 222,433,018 Machineries and equipment 484,127,864 83,721,184 (2,190,053) 565,658,995 Motor vehicles ___1_7_,2_6_6_,6_6_3 ___2_,8_2_1_,3_1_1 ___(6_5_6_,9_0_9) ___1_9_,4_3_1_,0_6_5____6__8__5__,8__0__4__,1__0__0 __1__2__5__,7__0__3__,5__6__4 __(__3__,9__8__4__,5__8__6) ____8__0__7__,5__2__3__,0__7__8 Net carrying amount
Buildings 1,192,409,164 1,242,213,790 Machineries and equipment 626,563,088 670,533,130 Motor vehicles ____5_,0_1_1_,4_6_9 ____4_,8_9_4_,4_2_4__1__,8__2__3__,9__8__3__,7__2__1 __1__,9__1__7__,6__4__1__,3__4__4 The increase of accumulated depreciation for 2013 is RMB125,703,564(2012: RMB125,261,510). The amount of transfer from construction in progress to property, plant and equipment for 2013 is RMB133,150,604 (2012: RMB208,080,554). The amount of property, plant and equipment purchased is RMB 87,479,584 and the amount disposed of is RMB5,253,586.
As at 31 December 2013, there was no property, plant and equipment with ownership restricted (31 December 2012: Nil).
As at 31 December 2013, buildings without property certificate are as follows:
Reason for not Expected Amount receiving receiving date RMB
Beijing Chateau European town, main, service building 215,934,181 Processing 2014 Ning Xia Wine production factory and office buildin 91,102,463 Processing 2014 Jingyang factory Fermentation building 66,476,601 Processing 2014 Xinjiang Tianzhu fermentations and storage warehouse 20,255,624 Processing 2014 Ice Wine Chateau office building and packing workshop 10,666,305 Processing 2014 Sales Company office buildings 5,259,058 Processing 2014 Kylin Packaging finished goods warehouse and workshop 2,843,788 Processing 2014 Fermentation/Experiment centre and workshop ______2__,0__6__1__,4__6__5 Processing 2014 As at 31 December 2013, the Group has no temporary idle fixed assets, fixed assets held for sale, fixed assets leased in under finance leases and fixed assets leased out under operating leases (2012: RMB: Nil).
As at 31 December 2013, there was no property, plant and equipment
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
10. Construction in progress
2013 2012 RMB RMB The Company's reconstruction project 269,802 24,640,660 Xinjiang Tianzhu workshop reconstruction project 1,018,309 4,479,084 Kylin Packing production line project 19,800 - Yantai Chateau vineyard project 10,619,000 3,300,000 Ningxia Chateau road project 600,000 - Beijing Chateau construction project - 11,731 Sales Company construction project 66,682,027 62,842,601 Langfang Castor workshop project - 7,633,319 Jingyang Wine fermentation workshop
reconstruction project 158,569 - Ningxia united workshop 1,464,202 1,556,490 Shi He Zi Chateau construction project 152,871,244 156,451,724 Ningxia Chateau construction project 92,062,210 41,367,789 Xianyang Chateau construction project 403,657,745 261,525,502 Research, development and manufacturing center
Construction Project 558,716,989 169,912,227 Ding Luo Te Chateau Project 119,074,949 91,790,388 Huanren factory construction project 16,439,684 7,317,174____________ __________ 1,423,654,530 832,828,689________________________ ____________________ Accumulated expenditure 2013 Budget Opening balance Addition Transfer to PPE Closing balance Financed by /budget RMB RMB RMB RMB RMB % The Company's reonstruction project 201,440,000 24,640,660 32,254,029 (56,624,887) 269,802 Self-raised 90.2 Xinjiang Tianzhu Workshop
Reconstruction Project 37,570,000 4,479,084 - (4,479,084) - Self-raised 100.0 Xinjiang Tianzhu technology
innovation and reconstruction project 3,500,000 - 1,225,437 (207,128) 1,018,309 Self-raised 35.0 Kylin Packing production line project 6,200,000 - 99,250 (79,450) 19,800 Self-raised 86.9 Yantai Chateau vineyard project 30,000,000 3,300,000 7,319,000 - Self-raised 35.4 Ningxia Chateau road project 600,000 - 600,000 - 600,000 Self-raised 100.0 Beijing Chateau construction project 268,565 11,731 10,464,327 (10,476,058) - Self-raised 99.4 AFIP Wine grape trellis project 21,000,000 - 268,565 (268,565) - Self-raised 100.0 Sales Company construction project 106,350,000 62,842,601 4,309,633 (470,207) 66,682,027 Self-raised 116.9 Langfang Castor workshop project 19,727,000 7,633,319 5,809,469 (13,442,788) - Self-raised 69.0 Jingyang ferment project 26,000,000 - 158,569 - 158,569 Self-raised 72.8 Ningxia United Workshop 58,700,000 1,556,490 187,028 (279,316) 1,464,202 Self-raised 98.0 Shihezi Chateau
Construction Project 750,000,000 156,451,724 43,242,641 (46,823,121) 152,871,244 Self-raised 75.0 Ningxia Chateau
Construction Project 284,150,000 41,367,789 50,694,421 - 92,062,210 Self-raised 104.4 Xianyang Chateau
Construction Project 440,740,000 261,525,502 142,132,243 - 403,657,745 Self-raised 91.6 Research, development and
manufacturing center
Construction Project 1,693,970,000 169,912,227 384,413,763 - 554,325,990 Self-raised 37.4 Ding Luo Te Chateau project 152,400,000 91,790,388 27,284,561 - 119,074,948 Self-raised 78.1 Huanren factory construction project 15,000,000__7,_31_7,_17_4 __9,_12_2,_51_0______-___1_6,_43_9,_68_4 Self-raised 109.6__83__2,__82__8,__68__9 __72__3,__97__6,__44__5__(__13__3,__15__0,__60__4)__1,__41__9,__26__3,__53__0
There was no interest capitalized in construction in progress in 2013.
As at 31 December 2013, there was no provision was made for the construction in process.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Intangible assets
2013 Opening balance Increase Closing balance RMB RMB RMB Cost
Land use right 299,710,962 1,332,053 301,043,015 Software use right 3,780,000 23,343,447 27,123,447__________ _________ __________ 303,490,962 24,675,500 328,166,462__________ _________ __________ Accumulated amortization
Land use right 21,717,040 5,970,876 27,687,916 Software use right 3,480,000 868,792 4,348,792__________ _________ __________ 25,197,040 6,839,668 32,036,708__________ _________ __________ Net carrying amount
Land use right 277,993,922 273,355,099 Software use right 300,000 22,774,655__________ __________ 278,293,922 296,129,754____________________ ____________________ The amortisation of 2013 is RMB6,839,668.
As at 31 December 2013, there was no intangible asset with restricted ownership.
12. Biological assets
2013 RMB Opening balance 39,681,580 Addition 62,959,555 Amortization (846,620)__________ Closing balance 101,794,515____________________ As at 31 December 2013, there is no biological asset with ownership restricted. As at 31 December 2013, the Group's accumulated depreciation of biological assets is RMB8,795,165 (2012: RMB7,948,545).
As at 31 December 2013, there is no indication that biological assets may be impaired, and no provision was made.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. Goodwill
2013 Opening balance Increase Decrease Closing balance RMB RMB RMB RMB French sales ______-__
____
__1__3,__1__1__2,__5__25__ ______-__
____
__1__3,__1__1__2,__5__25__ As mentioned above in Note XI-1, in order to determine the fair value of assets and liabilities of French Sales at the acquisition date, a valuation institution is to be hired to determine the fair value of the assets and liabilities of the company. As the valuation has not been commenced till the issue of financial statements of 2013, the Group temporarily recognised the book value of assets and liabilities of French Sales as its fair value at the acquisition date. Therefore, the Group recognised a goodwill of RMB13,112,525 in regard to the acquisition. The valuation is expected to be finished in 2014 and the book value of assets, liabilities and goodwill above will also be adjusted according to the valuation result.
14. Long-term prepaid expenses
2013 Opening balance Increase Amortization Closing balance RMB RMB RMB RMB Land lease prepayments 63,541,467 2,936,860 (3,977,253) 62,501,074 Land requisition fee 50,849,948 - (2,458,948) 48,391,000 Greening fee 44,747,706 10,218,601 (11,273,043) 43,693,264 Others ___1_,7_3_2_,7_3_9 __9_,2_7_5_,4_5_5 ___(_7_1_,7_2_9) __1_0_,9_3_6_,4_6_5__1__6__0__,8__7__1__,8__6__0 __2__2__,4__3__0__,9__1__6 (__1__7__,7__8__0__,9__7__3) __1__6__5__,5__2__1__,8__0__3 15. Deferred tax assets/liabilities
Deferred tax assets and liabilities are presented separately:
Deferred tax assets and liabilities recognized are as follows:
2013 2012 RMB RMB Deferred tax assets
Unrealized profit from intra-company transactions 84,493,108 98,817,513 Unpaid bonus 19,635,738 20,873,113 Retirement benefit 4,877,490 6,178,176 Asset impairment provision 7,632,005 7,874,795 Deductable losses 24,346,814 10,064,437 Deferred income 17,547,935 6,568,104__________ __________ 158,533,090 150,376,138__________ __________
Deferred tax liabilities
Fair value adjustment in business combination under
non-common control 5,336,115 5,336,115
____________________ ____________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
15. Deferred tax assets/liabilities - continued
Deferred tax assets and liabilities not recognized:
2013 2012 RMB RMB Deductable losses 20,440,916 20,505,913__________________ __________________ Deductable losses not recognized as deferred tax assets will expire in:
2013 2012 RMB RMB 2013 - 64,997 2014 19,077,494 19,077,494 2015 1,363,422 1,363,422_________ _________ 20,440,916 20,505,913__________________ __________________ Temporary differences from assets and liabilities that resulting in such differences are as follows: 2013 2012 RMB RMB Deductible temporary difference
Unrealized profit from intra-company transactions 337,972,438 395,270,055 Unpaid bonus 78,542,951 83,492,454 Early retirement benefit 19,509,959 24,712,704 Provision for impairment 30,528,019 31,499,181 Deductible losses 97,387,257 40,257,750 Deferred income 96,526,843 40,465,889__________ __________ 660,467,467 615,698,033____________________ ____________________ 2013 2012 RMB RMB Taxable temporary difference
Fair value adjustment in business
combination under non-common control 21,344,460 21,344,460__________________ __________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
16. Provision for impairment of assets
2013
Opeing balance Accrual Reversal Written-off Closing balance RMB RMB RMB RMB RMB Bad debt provision 11,120,600 - (607,571) (3,120,600) 7,392,429 Inventory provision 15,378,581 - (2,242,991) - 13,135,590 Investment of long-term investment__5_,0_0_0_,0_0_0 _5_,0_0_0_,0_0_0 ______-
_
_______-
_
_1_0_,0_0_0_,0_0_0__3__1__,4__9__9__,1__8__1 __5__,0__0__0__,0__0__0 (__2__,8__5__0__,5__6__2) __(__3__,1__2__0__,6__0__0) __3__0__,5__2__8__,0__1__9 17. Other non-current assets
2013 2012 RMB RMB Ningxia Growing's biological assets 21,370,902 24,898,903 Unrecognised finance charge 3,601,902 3,281,132__________ __________ 24,972,804 28,180,035____________________ ____________________ 18. Short-term borrowings
2013 2012 RMB RMB Secured loans with securities under the custody of lenders 243,170,674 -____________________ ____________ As at 31 December 2013, secured loans with securities under the custody of lenders is the amount borrowed by the Company from Qingdao Branch of HSBC with the bank deposit of RMB 125,000,000 as custody. The borrowing amount is HKD303,963,343 with annual interest rate of1.8% and borrowing period from 5 July 2013 to 4 July 2014.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
19. Trade payables
The trade payables are interest free with a credit period no more than three months from its suppliers normally.
2013 2012 RMB RMB Within 1 year 258,116,331 324,881,168____________________ ____________________ As at 31 December 2013, there are no payables to the shareholders with voting rights of5%, the Group's outstanding balance payable to related parties are as following:
2013 2012 RMB RMB Accounts payables to related party
Yantai ShenMa Packing Co., Ltd. 46,370,178 43,366,087 Yantai Zhongya Pharmaceutical Tonic Wine Co., Ltd. 4,520,101 7,972,184 Yantai Changyu Wine Culture Museum Limited 177,526 -_________ _________ 51,067,805 51,338,271__________________ __________________ 20. Advances from customers
2013 2012 RMB RMB Within 1 year 182,757,182 450,172,253 1 to 2 years 5,894,072 -__________ __________ 188,651,254 450,172,253____________________ ____________________ As at 31 December 2013, the Group had no outstanding balance payable to the related parties or shareholders with voting rights of5% or above (31 December 2012: Nil).
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
21. Employee benefit
31 December 2013
Opening balance Increase Decrease Closing balance RMB RMB RMB RMB Salaries and bonus 87,598,216 308,001,166 (309,061,233) 86,538,149 Staff benefit - 8,499,785 (8,499,785) - Staff welfare 262,293 42,937,485 (43,022,516) 177,262 Includes:
Medical insurance 57,516 8,998,978 (8,902,904) 153,590 Pension 202,487 30,598,636 (30,777,674) 23,449 Unemployment insurance 2,148 1,637,364 (1,639,289) 223 Injury insurance 142 929,453 (929,595) - Maternity insurance - 773,054 (773,054) - Housing fund 294,914 7,795,836 (8,080,818) 9,932 Union fee and education fee 2,018,390 4,684,475 (4,320,864) 2,382,001 Termination benefits 27,993,831 1,799,076 (6,684,987) 23,107,920 Other allowances __2_2_,3_1_7_,2_8_3 ________-
_
____(2_1_0_,4_1_0 ) __2_2_,1_0_6_,8_7_3__1__4__0__,4__8__4__,9__2__7 __3__7__3__,7__1__7__,8__2__3 __(3__7__9__,8__8__0__,6__1__3 ) __1__3__4__,3__2__2__,1__3__7 As at 31 December 2013, the Group had no overdue employee benefit payable (31 December 2012: Nil).
22. Taxes payable
2013 2012 RMB RMB Value added tax 862,414 (21,005,478) Consumption tax 26,658,283 33,478,543 Business tax 4,348,055 1,041,384 Corporation income tax 142,079,369 405,075,954 Urban land use tax 878,982 1,180,572 Individual income tax 6,824,553 6,091,205 City construction tax 6,016,703 8,872,888 Property tax 655,545 1,904,752 Others 6,016,703 7,444,756__________ __________ 194,413,430 444,084,576____________________ ____________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
23. Other payables
2013 2012 RMB RMB Deposit from distributors 215,888,735 210,775,654 Royalty fee 78,986,198 99,943,588 Payables for equipment and construction 63,133,029 51,846,156 Advertising costs 51,854,647 20,434,958 Deposits from suppliers 2,565,206 2,370,702 Others 84,873,815 85,279,053__________ __________ 497,301,630 470,650,111____________________ ____________________ The balance due to the shareholders with voting right of5% or above is as follows:
2013 2012 RMB RMB Royalty fee 78,986,198 99,943,588 Yantai ShenMa Packing Co., Ltd. 165,230 - Yantai Zhongya Pharmaceutical Tonic Wine Co., Ltd. 52,760 -_________ _________ 79,204,188 99,943,588__________________ __________________ As at 31 December 2013, significant outstanding balance aged over than one year is as follows: Reasons for Amount payable outstanding RMB
Economical cooperative society East Baiyan Street Unpaid Juge District Miyun County 5,390,354 Land Rental________________
There was no repayment of the above balances after the balance sheet date.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
24. Non-current liabilities due within one year
2013 2012 RMB RMB Trust scheme due within one year - 142,785,000 Interest payable - 8,160,000______ __________ - 150,945,000____________ ____________________ In October 2012, the Company and Shangdong Province International Trust Co., Ltd.("Shandong Trust") entered into a profit transfer agreement ("October 2012 trust scheme"), pursuant to which the Company agreed to transfer its right to the profit generated by certain type of wine to a special trust fund established by Shandong Trust and received RMB90,000,000 with annual interest rate of8.5%. The specified profit right includes the following benefits: (1) The gains generated in the delivery of packed wine according to the delivering instruction by Shandong Trust; (2) The disposal gain of the target assets in any case; and (3) Any other gains generated by the target assets. According to the contract, the Company paid interest to Shandong Trust at an interest rate of8.5% and returned the amount of the trust option not exercised of target assets when the arrangement expires. The October 2012 trust scheme has expired on 5 November 2013. As no option is exercised by Shandong Trust, the Company liquidated the trust scheme in cash on 15 November 2013 in accordance with the agreement.
In July 2011, the Company and Zhonghai Trust Co., Ltd.("Zhonghai Trust") entered into a profit transfer agreement ("July 2011 trust scheme"), pursuant to which the Company agreed to transfer its right to the profit generated by certain type of wine to a special trust fund established by Zhonghai Trust and received RMB52,785,000 with annual interest rate of7%. The specified profit right includes the following benefits: (1) The gains generated in the delivery of packed wine according to the delivering instruction by Zhonghai Trust; (2) The disposal gain of the target assets in any case; and (3) Any other gains generated by the target assets. The July 2011 trust scheme has expired on 20 February 2013. As no option is exercised by Zhonghai Trust, the Company liquidated the trust scheme in cash on 21 February 2013 in accordance with the agreement.
25. Other current liabilities
2013 2012 RMB RMB Deferred income 12,915,801 8,090,382__________________ ________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
25. Other current liabilities - continued
Details of deferred income:
2013 2012 RMB RMB Government grant related with assets
Fund to support major constructing projects 4,403,000 2,404,874 Fund to support emerging and key industries 3,159,227 2,300,808 Others 5,353,574 3,384,700_________ ________ 12,915,801 8,090,382__________________ ________________ 26. Other non-current liabilities
2013 2012 RMB RMB Employee benefit (1) 4,755,794 7,856,000 Deferred income (2) 83,611,041 61,148,861_________ _________ 88,366,835 69,004,861__________________ __________________ (1) Employee benefit represents bonus accrued for management. According to the bonus payment schedule of 2013, the bonus is expected to be paid during 2015 to 2016. (2) Government grants:
Recognized in
non-operating Other Related to Liability Items Opening Addition income movements Closing Assets/Income RMB RMB RMB RMB RMB
Luxury wine culture industry
construction specific funds - 3,000,000 (480,000) - 2,520,000 Income Miyun Propaganda Department transfer 4,444,725 - - - 4,444,725 Assets Grape base project specific funds - 1,480,000 (740,000) - 740,000 Assets Ningxia industry revitalization and
technology reconstruction funds 9,400,000 5,900,000 (940,000) - 14,360,000 Assets Industry revitalization and technology
reconstruction specific funds - 21,330,000 - - 21,330,000 Assets Wine base liquor brewage project 11,913,864 - (1,434,874) - 10,478,990 Assets Innovation supporting funds 1,000,000 - - (1,000,000) - Assets WuYouYiXin industrial cluster
specific funds 240,000 - (60,000) - 180,000 Assets Changyu chateau project funds 23,677,300 - (3,858,700) - 19,818,600 Assets Wine electronic tracking system
specific funds 7,633,354 - (1,772,827) - 5,860,527 Assets Wine industry specific funds 930,000 - - - 930,000 Assets Shandong Peninsula Blue Economic
Area construction funds 10,000,000 - - - 10,000,000 Assets 863 Program subsidy funds
for scientific research - 64,000 - - 64,000 Assets Information system construction
project technology funds _____-___5,_80_0,_00_0 _____-_ _____-____5,_80_0,_00_0 Assets Total _6_9,_23_9,_24_3_3_7,_57_4,_00_0 _(_9,_28_6,_40_1) _(_1,_00_0,_00_0)__9_6,_52_6,_84_2
Less: Non-current liabilities due
within one year _(_8,_09_0,_38_2) __(1_2,_91_5,_80_1)
Other non-current liabilities __6__1,__14__8,__86__1 ____8__3,__61__1,__04__1
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
27. Share capital
Unrestricted
2013 Opening balance in 2013 Closing balance RMB RMB RMB Unrestricted shares
A Shares 453,460,800 - 453,460,800 B Shares 232,003,200 - 232,003,200__________ _______ __________ Total of unrestricted shares 685,464,000 - 685,464,000__________ _______ __________ Total shares 685,464,000 - 685,464,000____________________ ______________ ____________________ Unrestricted
2012 Opening balance in 2012 Closing balance RMB RMB RMB Unrestricted shares
A Shares 348,816,000 104,644,800 453,460,800 B Shares 178,464,000 53,539,200 232,003,200__________ __________ __________ Total of unrestricted shares 527,280,000 158,184,000 685,464,000__________ __________ __________ Total shares 527,280,000 158,184,000 685,464,000____________________ ____________________ ____________________ On 15 May 2012, the board of the directors of the Company proposed a cash dividend of RMB15.2 every 10 shares in respect of 2011 based on the issued shares of 527,280,000. The aggregate amount of cash dividend is RMB 801,465,600. Meanwhile, the board of the directors proposed an allotment to all shareholders by 3 shares every 10 shares based on the issued shares of 527,280,000. The aggregate amount of share dividend transferred to share capital is RMB158,184,000.
28. Capital surplus
2013 Opening balance Addition Closing balance RMB RMB RMB Share premium 557,222,454 - 557,222,454 Other 4,916,588 1,000,000 5,916,588__________ ________ __________ 562,139,042 1,000,000 563,139,042____________________ ________________ ____________________ According to Xing Cai (Qi) Fa[2009]1160, Ningxia Wine recognised government grant of RMB1,000,000 into capital reserve. The grant was previously recognised in deferred income and was due within 2013.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
28. Capital surplus - continued
2012 Opening balance Addition Closing balance RMB RMB RMB Share premium 557,222,454 - 557,222,454 Other 4,916,588 - 4,916,588__________ ______ __________ 562,139,042 - 562,139,042____________________ ____________ ____________________ 29. Surplus reserve
In accordance with the Company Law of the People's Republic of China and the Articles of Association of the Company, the Company is required to appropriate10% of the net profit to the statutory surplus reserve until the accumulated balance of the statutory surplus reserve reaches50% of the registered share capital. As the Company's surplus reserve has reached50% of the share capital, the Company does not appropriate net profit to the surplus reserve in 2013. The Company can appropriate discretionary surplus reserve after appropriation of the statutory surplus reserve. Discretionary surplus reserve can be utilized to offset the deficit or increase the share capital after approval.
30. Retained earnings
2013 2012 RMB RMB Retained earnings brought forward 4,322,769,136 3,628,279,989 Add: profit attributable to shareholders of the Company 1,048,185,927 1,700,928,117 Less: Dividends paid in respect prior year's profit - (801,465,600) Withdrawal of legal surplus (754,010,400) (46,789,370) Conversion of ordinary share dividends - (158,184,000)____________ ____________ Retained earnings carried forward 4,616,944,663 4,322,769,136________________________ ________________________ In accordance with the Articles of Association of the Company, the Company is required to appropriate10% of the net profit to the statutory surplus reserve until the accumulated balance of the statutory surplus reserve reaches50% of the registered share capital.
As at 31 December 2013, the balance of the Group's unappropriated profits include appropriation to surplus reserve by subsidiaries amounting to RMB37,554,671 (31 December 2012: RMB33,838,221).
According to the board of the directors resolution raised on 24 April 2014, the Company proposed a cash dividend of RMB5 (tax inclusive) for every 10 shares in respect of 2013 based on the
issued shares of 685,464,000. The aggregate amount of cash dividend is RMB342,732,000. The
resolution is to be approved by the annual general meeting.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
31. Assets with restriction of ownership
2013 Opening balance Increase Decrease Closing balance RMB RMB RMB RMB Cash at bank 2,652,083 131,257,285 (42,846) 133,866,522 Inventory _2_5_,7_2_6_,6_8_6 ________-
_
(_2_5_,7_2_6_,6_8_6) ________-___2__8__,3__7__8__,7__6__9 __1__3__1__,2__5__7__,2__8__5 (__2__5__,7__6__9__,5__3__2) __1__3__3__,8__6__6__,5__2__2 As at 31 December 2013, cash and bank balances with restriction of ownership include: the Group's housing fund of RMB2,609,237, security of RMB125,000,000 pledged for a short-term borrowing from HSBC of HKD303,963,343 (translated as RMB243,170,674), refundable deposit for notes payable of Shi He Zi Chateau of RMB5,965,996, and company cards deposit guarantee of RMB291,289.
As at 31 December 2012, the profit transfer trust scheme set on 2012 expired and the restriction on inventory removed, therefore there is no inventory with restriction of ownership.
32. Operating income and costs
Operating income is analyzed as follows:
2013 2012 RMB RMB Principal operating income 4,273,801,693 5,556,442,502 Other operating income 47,146,879 87,088,051____________ ____________ 4,320,948,572 5,643,530,553________________________ ________________________ Operating cost is analyzed as follows:
2013 2012 RMB RMB Principal operating income 1,336,631,197 1,359,873,644 Other operating income 21,266,802 41,215,339____________ ____________ 1,357,897,999 1,401,088,983________________________ ________________________ The operating income for the group is mainly from the sales of wine, brandy and sparkling wine. Over99% of the sales generated in PRC.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
32. Operating income and costs - continued
Operating income from top five customers in 2013 is as follows:
Percentage of total Amount operating incomes RMB % Foshan Nanhai Dali Qianxingrong wine house 38,543,431 0.9 Guangzhou Baiyun Huimingxin liquor store 35,388,051 0.8 Fuzhou Shengshi Hanggang Trading Co. Ltd. 26,095,961 0.6 Fugang Shijiao Liang's store 25,359,599 0.6 Hui'an Luocheng Quanxing liquor store 24,904,311 0.6__________ ___ 150,291,353 3.5____________________ ______ Operating income is analyzed as follows:
2013 2012 RMB RMB Sale of goods 4,273,801,693 5,556,442,502 Rendering of services 47,146,879 87,088,051____________ ____________ 4,320,948,572 5,643,530,553________________________ ________________________ 33. Taxes and surcharges
2013 2012 RMB RMB Consumption tax 150,438,896 198,061,661 Business Tax 2,595,076 4,490,563 City construction tax 44,937,923 61,248,671 Education fee and surcharges 31,426,897 45,595,614 Others 6,995,372 8,817,794__________ __________ 236,394,164 318,214,304____________________ ____________________ For detail standards of tax rate please refer to Notes IV Tax.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
34. Selling expenses
2013 2012 RMB RMB Advertising costs 577,727,845 832,290,075 Freight 126,085,723 136,710,184 Salary and employee benefit 196,790,695 191,099,359 Trademark fee 78,986,198 99,943,588 Warehouse leasing expenses 37,714,861 36,959,537 Travelling expenses 20,927,235 23,177,961 Commission 13,828,552 12,314,338 Expenses incurred for Wine festival 1,211,634 29,711,497 Others 87,563,407 87,017,624____________ ____________ 1,140,836,150 1,449,224,163________________________ ________________________ 35. General and administrative expense
2013 2012 RMB RMB Salary and employee benefit 39,539,807 55,908,211 Insurance fee 29,625,036 30,024,891 Leasing expenses 7,337,569 8,943,367 Depreciation 24,694,962 23,715,321 Amortization 8,396,636 5,793,090 Administrative expenses 13,706,767 14,546,769 Travelling expenses 6,604,787 6,379,358 Entertainment fee 3,964,265 5,296,737 Property tax, stamp duty and other taxes 11,118,372 13,619,934 Maintenance fee 15,723,166 14,716,086 Management fee 23,545,171 11,745,536 Others 61,242,412 63,685,509__________ __________ 245,498,950 254,374,809____________________ ____________________ 36. Loss on impairment of assets
2013 2012 RMB RMB Impairment loss (607,571) - Inventory provision (2,242,991) 2,777,648 Bad debts provision 5,000,000 -_________ ________
2,149,438 2,777,648
__________________ ________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
37. Financial income
2013 2012 RMB RMB Interest income 34,252,612 38,033,736 Less: interest expenses (12,681,058) (8,493,989) Bank charges (2,871,197) (9,621,486)__________ _________ 18,700,357 19,918,261____________________ __________________ 38. Non-operation income
2013 2012 RMB RMB Gains on disposal of non-current assets 271,989 4,379,454 Including: gain on disposal of plant property
and equipments 271,989 640,939 Government grants 36,659,754 23,393,756 Penalty income 210,757 373,987 Others 4,966,226 7,231,063_________ _________ 42,108,726 35,378,260__________________ __________________ Government grants recognized in the income statement is as follows:
2013 2012 RMB RMB Major projects support fund 1,680,000 1,483,193 Small and medium enterprises support fund 3,902,827 646,646 Tax refund 22,163,624 14,636,437 Others 8,913,303 6,627,480_________ _________ 36,659,754 23,393,756__________________ __________________ 39. Non-operation expenses
2013 2012 RMB RMB Loss on disposal of non-current assets 678,016 2,581,199 Including: loss on disposal of property,
plant and equipment 678,016 2,581,199 Donation 291,729 221,106
Others 904,478 169,104
________ ________
1,874,223 2,971,409
________________ ________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
40. Income tax
2013 2012 RMB RMB Current income tax 357,077,756 554,519,329 Deferred income tax (8,156,952) 25,152,800__________ __________ 348,920,804 569,247,641____________________ ____________________ Reconciliation between income tax expenses and profits is as follows:
2013 2012 RMB RMB Profit before tax 1,397,106,731 2,270,175,758 Income tax expense at statutory tax rate25% 349,276,683 567,543,940 Effect of different tax rates applied by certain subsidiaries (2,677,153) (2,746,040) Non-taxable income (131,500) (380,412) Non-deductible expenses 2,452,774 4,830,153____________ ____________ Income tax expenses at the Group's effective tax rate 348,920,804 569,247,641________________________ ________________________ 41. Earnings per share
The calculation of basic earnings per share is based on the consolidated profit attributable to ordinary shareholders of the Company during the year and the weighted average number of outstanding ordinary shares.
2013 2012 RMB RMB Earnings
Consolidated profit attributable to
ordinary shareholders of the Company 1,048,185,927 1,700,928,117____________ ____________ Shares
Weighted average number of outstanding
ordinary shares (i) 685,464,000 685,464,000____________ ____________ Basic earnings per share 1.53 2.48________________________ ________________________ The company does not have potential dilutive ordinary shares.
Note1: In June 2012, the Company allotted share dividend of 158,184,000 shares, after which the issued ordinary share became 685,464,000. Thus, the basic earnings per share is based on the adjusted number of shares.
From the balance sheet date to the date of approval of this report, there are no subsequent events
which would affect the numbers of the weighted average number of outstanding of ordinary
shares.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
42. Notes to consolidated cash flow statement
Cash received relating to other operating activities:
2013 2012 RMB RMB Government grants 42,783,729 30,555,824 Others 5,176,982 9,496,088_________ _________ 47,960,711 40,051,912__________________ __________________ Cash paid relating to other operating activities:
2013 2012 RMB RMB Selling expenses 944,945,796 1,233,262,732 General and administrative expenses 102,626,714 110,485,877 Others 11,982,799 9,575,616____________ ____________ 1,059,555,309 1,353,324,225________________________ ________________________ Cash paid relating to other financing activities:
2013 2012 RMB RMB Cash liquidation of trust scheme 150,945,000 80,497,823 Pledged security of short-term borrowing 125,000,000 -__________ __________ 275,945,000 80,497,823____________________ ____________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VI) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
43. Supplementary information to consolidated cash flow statement
(i) Supplementary information to consolidated cash flow statement
Cash flows from operating activities calculated by adjusting the net profit:
2013 2012 RMB RMB Net profit 1,048,185,927 1,700,928,117____________ ____________ Add: Loss for impairment of assets 2,149,438 2,777,648 Depreciation 125,540,127 125,261,510 Amortization of intangible assets 6,839,668 5,113,916 Amortization of Biological assets 846,620 795,539 Amortization of long-term prepaid expenses 17,780,973 14,130,153 Losses/(gain) on disposal of property,
plant and equipment 406,027 1,940,260 Finance income (21,571,554) (26,261,924) Decrease/(increase) in deferred tax assets (8,156,952) 25,152,800 Decrease/(increase) in inventories 149,746,995 (515,434,507) Decrease/(increase) in operating receivables (49,235,221) 32,246,207 Increase/(decrease) in operating payables (537,457,741) (64,608,397)____________ ____________ Net cash flows from operating activities 735,074,307 1,302,041,322________________________ ________________________ (ii) Cash and cash equivalent
2013 2012 RMB RMB Closing balance 1,367,818,182 2,227,470,828 Including:
restricted bank deposits 2,609,237 2,652,083 restricted other monetary funds 131,257,285 - deposit with a period of over three months 277,392,728 662,524,719____________ ____________ Closing balance of cash and cash equivalents 956,558,932 1,562,294,026________________________ ________________________ 2013 2012 RMB RMB Cash 956,558,932 1,562,294,026 Including:
Cash on hand 772,817 48,894 Bank deposits on demand 955,786,115 1,562,245,132____________ ____________ Closing balance of cash and cash equivalents 956,558,932 1,562,294,026________________________ ________________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VII) RELATED PARTY AND RELATED PARTY TRANSACTIONS
1. Parent company
Name of Type of Place of Legal Scope Registered Percentage Percentage Incorporate parent company enterprise registration representative of business capital of shares of voting rights Code RMB % %
Cotrolling Company Limited Company Yantai SunLiqiang Manufacturing 50,000,000 50.4 50.4 265645824 During the year ended 31 December 2013, there is no change in parent company's registered capital, shares holding or voting power.
2. Subsidiaries: Please refer to Note V-1.
3. Other related parties
Nature of related parties Incorporate code Yantai Changyu Travelling Co., Ltd. subs Controlled by the 258258654 same parent company
Yantai Changyu International Controlled by the 672208146 Window of the Wine City Co., Ltd. same parent company
Yantai ShenMa Packing Co., Ltd. e Co Controlled by the 553393350 same parent company
Yantai Zhongya Pharmaceutical Controlled by the 726203923 Tonic Wine Co., Ltd. same parent company
4. Significant related party transactions
(1) Purchases from and sales to related parties
Purchase from related parties
2013 2012 RMB RMB Yantai ShenMa Packing Co., Ltd 194,648,978 206,438,932 Yantai Zhongya Pharmaceutical tonic Wine Co., Ltd. 7,960,294 7,821,383 Yantai Changyu Travelling Co. Ltd. 2,618,189 118,886 Yantai Changyu International Window
of the Wine City Co., Ltd 100,246 725,996__________ __________ 205,327,707 215,105,197____________________ ____________________ All related party transactions are based on the negotiated price.
In 2013, purchases from related parties accounted for less than11.9% of the Group's total
purchase (2012:12.0%)
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VII) RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
4. Significant related party transactions - continued
(1) Purchases from and sales to related parties - continued
Sales to related parties
2013 2012 RMB RMB Yantai Changyu Wine Culture Museum Limited 5,495,959 4,382,547 Yantai Changyu International Window
of the Wine City Co., Ltd. 2,524,559 4,450,553 Yantai Zhongya Pharmaceutical tonic Wine Co., Ltd 1,890,313 512,551 Yantai ShenMa Packing Co., Ltd. 1,492,538 -_________ ________ 11,403,369 9,345,651__________________ ________________ All related party transactions are based on the negotiated price.
In 2013, sales to related parties accounted for less than1% of the Group's total sales (2012: less than1%).
(2) Property leased from a related party
2013 Note Assets leased Beginning date Ending date Rental expense Changyu Group Company (a) Warehouse and office building 2012/1/1 2016/12/31 5__,__85__8__,0__0__0 (a) Pursuant to the lease agreement entered into between the Company and Changyu Group Company on 1 January 2012, starting from 1 January 2012, the Company rented properties from Changyu Group Company for operation purposes at a basic annual rental of RMB5,858,000, and till 31 December 2016. For the year ended 31 December 2013, the rental payable to Changyu Group Company amounted to RMB5,858,000.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VII) RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
4. Significant related party transactions - continued
(3) Other significant related party transactions
Note 2013 2012 RMB RMB Royalty fee (a) 78,986,198 99,943,588 Patents fee (b) 50,000 50,000__________________ __________________ All related party transactions are based on the negotiated price.
(a) Royalty fee
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 been registered with the PRC Trademark Office. An annual royalty fee at2% of the Group's annual sales is payable to Changyu Group Company. The license is effective until the expiry of the registration of the trademarks.
During 2013, royalty fee paid to related company accounted for100% of the Group (2012:100%).
(b) Patents fee
Pursuant to a patents implementation license dated 18 May 1997, starting from 18 September 1997, the Company may use the patents of Changyu Group Company. The annual patents usage fee payable by the Company to Changyu Group Company was RMB50,000. The contract was expired on 20 December 2005. The Company renewed the contract on 20 August 2006 for 10 years. The annual patents usage fee payable by the Company to Changyu Group Company remained RMB50,000. For the year ended 31 December 2013, the patents usage fee payable to Changyu Group Company amounted to RMB50,000 (2012: RMB50,000).
During 2013, patent fee paid to related company accounted for100% of the Group (2012:100%).
(4) Remuneration of the management
2013 2012 RMB RMB Remuneration of the management 8,292,000 10,804,108__________________ __________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VII) RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
5. Balance due from/ to related parties
(1) Balance due from related parties
2013 2012
Trade receivables Balance Provision Balance Provision RMB RMB RMB RMB Yantai Zhongya Pharmaceutical
tonic Wine Co., Ltd. 2,567,129 - 1,820,376 - Yantai Shen Ma Packing Co. Ltd. 911,197 - - - Yantai Changyu International
Window of the Wine City Co., Ltd. 42,478 - - - Yantai Changyu Travelling Co. Ltd. ______-
_
___-
__
__3_1_1_,2_2_0 ___-____3__,5__2__0__,8__0__4 ______-
____
__2__,1__3__1__,5__9__6 ______-____ The above amounts due from related parties are unsecured, interest-free and have no fixed terms of repayment.
(2) Balance due to related parties
2013 2012 RMB RMB Trade payable
Yantai Shen Ma Packing Co, Ltd. 46,370,178 43,366,087 Yantai Zhongya Pharmaceutical tonic Wine Co., Ltd. 4,520,101 7,972,184 Yantai Changyu Wine Culture Museum Limited 177,526 -_________ _________ Total 51,067,805 51,338,271__________________ __________________ Other payable
Royalty fee payable to parent company 78,986,198 99,943,588 Yantai Zhongya Co., 165,230 - Yantai LtdShenMa Packing Co.,Ltd 52,760 -_________ _________ Total 79,204,188 99,943,588__________________ __________________ The above amounts due to related parties are unsecured, interest-free and have no fixed terms of repayment.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(VIII) CONTINGENT LIABILITIES
The Group and the Company did not have any significant contingent liabilities as at balance sheet date.
(IX) COMMITMENT
1. Capital commitments
2013 2012 RMB'000 RMB'000 Capital commitments
Authorized, but not contracted 1,253,880 1,605,664________________________ ________________________ 2. Operating lease commitment
As lessee
Significant operating lease: the Company has total future minimal lease payments under non- cancelable contract with lessor are as follow:
2013 2012 RMB'000 RMB'000 Within one year 23,612 14,334 One year to two years 11,208 8,560 Two years to three years 9,726 6,512 Three years and above 28,390 20,279_________ _________ 72,936 49,685__________________ __________________ (X) POST BALANCE SHEET DATE EVENT
According to the board of the directors resolution raised on 24 April 2014, the Company proposed a cash dividend of RMB5 (tax inclusive) for every 10 shares in respect of 2013 based on the issued shares of 685,464,000. The aggregate amount of cash dividend is RMB342,732,000. The resolution is to be approved by the annual general meeting.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XI) OTHER SIGNIFICANT EVENTS
1. Business Consolidation
The group is the buyer in a business combination not under common control.
The basic information of the combination is as follows:
(1) Basic information of the acquiree:
French Sales is a limited company founded by Mr. Georges Roullet and Mr. Charles Tavernier in Sant, French in 31 March 1983. The Company acquired100% share of French Sales at the consideration of EUR 3,575,000 (RMB29,988,530). After the acquisition, the Company holds100% share of French Sales.
(2) Primary financial information of the acquiree:
31 December 2013 Closing Balance RMB Primary financial information of theacquiree：
Identifiable assets
Cash and bank balances 13,104,666 Accounts receivable 1,502,386 Prepayments 15,844 Other receivables 297,601 Inventories 2,671,923 Fixed assets 1,550,012 Intangible assets 61,197_________ Sub-total 19,203,629_________ Identifiable liabilities
Accounts payable 1,928,669 Other payables 157,854 Employee benefits payable 215,238 Taxes payable 25,863_________ Sub-total 2,327,624_________ Total net assets 16,876,005_________ Less: Minority interests - Equity attributable to the Company's shareholders 16,876,005 Less: Acquisition consideration 29,988,530_________ Goodwill 13,112,525__________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XI) OTHER SIGNIFICANT EVENTS - continued
1. Business Consolidation - continued
(2) Primary financial information of the acquiree: - continued
According to the agreement of<Transfer of Shares of Etablissements RoulletFransac> signed on 16 October 2013, the Group acquired French Sales in 2013 December. In order to determine the fair value of assets and liabilities of French Sales at the acquisition date, a valuation institution is to be hired to determine the fair value of the assets and liabilities of the company. As the valuation has not been commenced till the issue of financial statements of 2013, the Group temporarily recognised the book value of assets and liabilities of French Sales as its fair value at the acquisition date. Therefore, the Group recognised a goodwill of RMB13,112,525 in regard to the acquisition. The valuation is expected to be finished in 2014 and the book value of assets, liabilities and goodwill above will also be adjusted according to the valuation result.
The acquisition consideration is satisfied by cash. The cash and cash equivalent paid in the acquisition of French Sales are:
Amount RMB Cash and cash equivalent as acquisition consideration 29,988,530 Less: cash and cash equivalents of the acquiree 13,104,666_________ Net cash and cash equivalents paid in the acquisition of subsidiary 16,883,864__________________ 2. Segment report
The Group is principally engaged in the production and sales of wine, brandy, sparkling wine. In accordance with the Group's internal organisation structure, management requirements and internal reporting system, the Group's operation determines only one operation segment and reporting segment engaged in the production and sales within China. Therefore the Group does not need to disclose additional segment report information.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XI) OTHER SIGNIFICANT EVENTS - continued
3. Financial instrument and risk management
The Group's major financial instruments include cash and bank, notes receivabless, accounts receivables, interest receivables, other receivables, other non-current assets, short-term borrowings, notes payables, trade payables, payroll payables, interest payables, other payables and other non-current liabilities. Details of these financial instruments are disclosed in Note VI. The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below. Management manages and monitors these exposures to ensure the risks are monitored at a certain level.
(1) Risk management objectives and policies
Market risk
(a) Currency risk
Currency risk is the risk that losses will occur because of changes in foreign exchange rates. The Group's exposure to the currency risk is primarily associated with HKD. The balance of the Group's assets and liabilities are both denominated in RMB except the short term loan of HKD 303,963,343(RMB 243,170,674). Currency risk arising from the assets and liabilities denominated in foreign currencies may have impact on the Group's performance.
(b) Interest rate risk - risk of changes in fair value
The Group's fair value interest rate risk of financial instruments relates primarily to fixed-rate bank borrowings (see Note VI-18 for details). The Company is of the view that the Group has no significant interest rate risks, and no interest rate swaps are designated to hedge against interest rate risks.
Credit risk
Credit risk is the risk of financial loss on one party of a financial instrument due to the failure of another party to meet its obligations.
The Group trades only with recognized and creditworthy third parties. It is the Group's policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis to ensure that the Group's exposure to bad debts is not significant. For transactions that are not denominated in the functional currency of the relevant operating unit, the Group does not offer credit terms without the specific approval of the Department of Credit Control in the Group.
The credit risk of the Group's other financial assets, which comprise cash and bank, notes receivables, interests receivable and other receivables,, arises from default of the counterparty, with a maximum exposure equal to the carrying amounts of these instruments.
Since the Group trades only with recognized and creditworthy third parties, there is no requirement for collateral. Concentrations of credit risk are managed by customer/counterparty, by geographical region and by industry sector. As at 31 December 2013,30.0% of trade
receivables of the Group are due from the top 5 customers (31 December 2012:41.4%). There is
no collateral or other credit enhancement on the balance of the trade receivables of the Group.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XI) OTHER SIGNIFICANT EVENTS - continued
3. Financial instrument and risk management - continued
(1) Risk management objectives and policies - continued
Liquidity risk
Liquidity risk is the risk that an enterprise may encounter deficiency of funds in meeting obligations associated with financial liabilities.
The Group monitors its risk of deficiency of funds using a recurring liquidity planning tool. This tool considers the maturity of both its financial instruments and expected cash flows from theGroup’s operations.
TheGroup’s financial liabilities mainly consist of trade payables and other payables (except for deposits) arose from principal activities and amount received from trust scheme. The fair value of the financial liabilities is equal to their book value. The Group is of the view that the cash flow from the above financial assets is adequate to cover all financial liabilities whereby the Group has no significant liquidity risk.
The table below summarizes the maturity profile of the Group's financial assets and liabilities as at the balance sheet date, based on the undiscounted contractual cash flows:
2013
Financial assets
1 to 3 months 3 to 12 months Over 1 year Total RMB RMB RMB RMB Cash and bank 956,559,232 424,501,488 - 1,381,060,720 Notes receivabless 53,438,752 26,264,001 - 79,702,753 Trade receivable 149,110,510 27,999,006 - 177,109,516 Interest receivables 8,417,995 - - 8,417,995 Other receivables 99,331,794 - - 99,331,794 Other non-current assets _________-
_
________-
_
_2_1_,3_7_0_,9_0_2 ___2_1_,3_7_0_,9_0_2__1__,2__6__6__,8__5__7__,9__8__3 __4__7__8__,7__6__4__,4__9__5 __2__1__,3__7__0__,9__0__2 __1__,7__6__6__,9__9__3__,3__8__0 Financial liabilities
1 to 3 months 3 to 12 months Over 1 year Total RMB RMB RMB RMB Short-term borrowings - 247,547,746 - 247,547,746 Notes payables - 5,765,694 - 5,765,694 Trade payables 225,248,499 32,867,832 - 258,116,331 Other payables 99,136,105 398,165,525 - 497,301,630 Interest payables 2,152,059 - - 2,152,059 Other non-current liabilities _________-
_
________-
_
__4_,7_5_5_,7_9_4 ____4_,7_5_5_,7_9_4____3__2__6__,5__3__6__,6__6__3 __6__8__4__,3__4__6__,7__9__7 ____4__,7__5__5__,7__9__4 __1__,0__1__5__,6__3__9__,2__5__4
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XI) OTHER SIGNIFICANT EVENTS - continued
3. Financial instrument and risk management - continued
(2) Fair value
Fair values of the financial assets and financial liabilities are determined as follows:
 The fair value of financial assets and financial liabilities with standard terms and conditions and traded on active markets are determined with reference to quoted market bid prices and ask prices respectively;
 The fair value of other financial assets and financial liabilities (excluding derivative instruments) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis or using prices from observable current market transactions;
The management considers that the carrying amounts of financial assets and financial liabilities in the financial statements approximate their fair values.
(3) Sensitivity analysis
The Group adopts sensitivity analysis technique to analyse how the profit and loss for the period and shareholders' equity would have been affected by reasonably possible changes in the relevant risk variables. As it is unlikely that risk variables will change in an isolated manner, and the interdependence among risk variables will have significant effect on the amount ultimately influenced by the changes in a single risk variable, the following are based on the assumption that the change in each risk variable is on a stand-alone basis.
Currency risk
Where all other variables are held constant, the reasonably possible changes in the foreign exchange rate may have the following pre-tax effect on the profit or loss for the period and shareholders' equity:
Current year Prior year
Effect on Effect on shareholders' shareholders' Item Change in exchange rate Effect on profit equity Effect on profit equity RMB RMB RMB RMB Liability: HKD 5% increase (121,892) (121,892) - - Liability: HKD 5% decrease 121,892 121,892 - -
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XI) OTHER SIGNIFICANT EVENTS - continued
3. Financial instrument and risk management - continued
(3) Sensitivity analysis - continued
Interest rate risk
The Group has no floating-rate borrowings, and management of the Group considers the fluctuation in interest rates of bank balances and pledged deposits is insignificant. Therefore, no sensitivity analysis on interest rates for bank balances and pledged deposits is presented. (XII) NOTES TO COMPANY FINANCIAL STATEMENTS
1. Cash and bank
2013 2012 RMB RMB Cash on hand 12,479 11,916 Cash at bank 477,140,475 1,090,248,935 Other monetary assets 125,291,289 -____________ ____________ 602,444,243 1,090,260,851________________________ ________________________ As at 31 December 2013, the balance of restricted cash of the Group is RMB 2,609,237 (31 December 2012: RMB2,652,083), which is composed of theGroup’s housing fund.
As at 31 December 2013, cash and bank balances with restriction of ownership include: security of RMB125,000,000 pledged for a short-term borrowing from HSBC of HKD303,963,343 (translated as RMB243,170,674), and company cards deposit guarantee of RMB291,289. As at 31 December 2013, The Group's term deposits with original maturity of more than three months when acquired is RMB277,392,728 (31 December 2012: RMB662,524,719) with interest rates ranging from2.86%-3.58%, which will mature from 3 months to 1 year.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
2. Note receivable
2013 2012 RMB RMB Bank acceptances 32,594,381 1,450,000__________________ __________________ As of 31 December 2013, there was no pledged notes receivables (31 December 2012: Nil), and no notes receivables were reclassified as accounts receivable due to the default of drawer (31 December 2012: Nil).
On 31 December 2013, the Company's pledged notes receivable is RMB16,727,830, the top five largest amounts are:
Date of issue Date of issue Maturity date Amount RMB Suzhou Zhenwu Trading Co., Ltd. 22/9/2013 22/3/2014 1,000,000 Tai'an Mingyin Co., Ltd. 14/8/2013 13/2/2014 1,000,000 Jinan Luye Trading Co., Ltd. 2/9/2013 2/3/2014 1,000,000 Wuxi Fanghe Sugar alcohol Co., Ltd. 13/9/2013 13/3/2014 1,000,000 Fujian Nan'an Ruigang Co., Ltd. 26/9/2013 26/3/2014 _1_,0_0_0_,0_0_0__5__,0__0__0__,0__0__0 As at 31 December 2013, there was no notes receivable discounted to obtain short-term loan. 3. Trade receivables
2013 2012
Carrying Amount Provision Carrying Amount Provision Amount Amount Amount Amount
RMB % RMB % RMB % RMB % Individually significant
and provision __1__,6__00__,9__6__8 ____10__0 ____-__ ____-__ __7__10__,0__8__0 __10__0__.0 ____-__ ____-__ The normal credit term of trade receivables is one month, which can be extended to three months for certain major customers. The trade receivables are interest free.
The Group determines that trade receivable of more than RMB 3,000,000 is considered as individually significant trade receivable.
2013 2012 RMB RMB Within 1 year 1,600,968 710,080__________________ __________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
3. Trade receivables - continued
As at 31 December 2013, there was no provision provided for trade receivables (31 December 2012: Nil). The Company did not provide, reverse or write off any provision during 2013 (31 December 2012: Nil)
As at 31 December 2013, there was no account receivable due from the Company's shareholders with voting rights of5% or above (31 December 2012: Nil).
As at 31 December 2013, the particulars of top 1 account receivables amount are as follows: Ratio of total Relationship with the Company Amount receivables RMB % Under common control __1__,6__0__0,__9__6__8 __1__00__.__0 As at 31 December 2012, the particulars of top 1 account receivables amount are as follows: Ratio of total Relationship with the Company Amount receivables RMB % Under common control __7__10__,__0__80__ __1__00__.__0 4. Dividend receivables
Aging Opening balance Increase Increase Closing balance RMB RMB RMB RMB Within 1 year
Including: Sales Company 980,000,000 970,000,000 (1,211,018,499) 738,981,501 AFIP Tourism - 68,000,000 (68,000,000) - Kylin Packaging - 24,469,867 (24,469,867) - AFIP Wine Chateau - 32,000,000 (32,000,000) - Wines Sales - 11,140,442 (11,140,442) - Ice Chateau - 5,458,011 (5,458,011) - Shihezi Chateam - 5,265,269 (5,265,269) - Langfang Castel - 5,162,898 (5,162,898) - Jingyang Sales - 3,522,928 (3,522,928) - Xinjiang Tianzhu - 1,000,000 (1,000,000) - Over 1 year
Including: Pioneer International ___1_3_,6_1_4_,3_8_3 _________-
_
_________-
_
__1_3_,6_1_4_,3_8_3 Total ____9__9__3__,6__1__4__,3__8__3 __1__,1__2__6__,0__1__9__,4__1__5 (__1__,3__6__7__,0__3__7__,9__1__4)__7__5__2__,5__9__5__,8__8__4
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
5. Advances from customers
The aging analysis is as follows:
2013 2012 RMB RMB Within 1 year 24,824,672 26,131,908__________________ __________________ As at 31 December 2013, advances from customers are as follows:
Percentage of Relationship Reason for being total advances with the Group Amount Aging outstanding to suppliers RMB % Xinjiang Yuyuan Wine Co., Ltd. Third party 20,069,242 Within 1 year goods not received 80.8 Xinjiang Tianyu Wine Co., Ltd. Third party 3,200,053 Within 1 year goods not received 12.9 Shandong Electric Power Group Third party 863,325 Within 1 year electric fee 3.5 Shandong Taihe Construction
Management Co. Ltd. Third party 376,300 Within 1 year service not received 1.5 Shandong Yantai Brewery Co., Ltd.
Liquan wine branch Third party ___13_7_,2_2_9 Within 1 year goods not received __0._6__24__,__64__6__,1__4__9 __9__9.__3 As at 31 December 2013, there was no advance paid to shareholders with voting rights of5% or above (31 December 2012: Nil).
6. Other receivables
Closing balance Opening balance
Carrying amount Bad debts provision Carrying amount Bad debts provision Amount Proportion Amount Proportion Amount Proportion Amount Proportion RMB % RMB % RMB % RMB % Individually significant
and provision 3,683,374,031 99.1 (7,392,429) 100.0 11,120,600 0.5 (11,120,600) 100.0 Individually insignificant
and provision __3_3_,6_02_,3_4_7_9_9._8 _____-_ __-__2_,1_94_,2_1_9,_75_3_9_9._5______-_ ___-___3__,7__16__,9__7__6,__37__81__0__0__.0 __(7__,3__92__,4__2__9 ) __10__0__.0__2__,2__05__,3__4__0,__35__31__0__0__.0__(1__1__,1__20__,6__0__0) __1__0__0.__0 The Group determines that other receivable of more than RMB 3,000,000 is considered as individually significant other receivable.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
6. Other receivables - continued
The aging analysis is as follows:
Closing balance Opening balance
Bad debts Carrying Bad debts Carrying Amount provision amount Amount provision amount Amount Proportion Amount Amount Amount Proportion Amount Amount RMB % RMB RMB RMB % RMB RMB Within 1 year 3,709,472,668 99.8 - 3,709,472,668 2,194,000,959 99.5 - 2,194,000,959 1 to 2 years 111,281 - - 111,281 191,603 - - 191,603 2 to 3 years - - - - 27,191 - - 27,191 Over 3 years ___7_,3_9_2,4_2_9___0_.2__7_,3_92_,4_2_9_______-___1_1_,1_20_,6_0_0___0_.51_1_,1_20_,6_0_0_______-___3__,7__16__,9__7__6,__37__8____10__0__.0____7__,3__92__,4__2__9__3__,7__09__,5__8__3,__94__9__2__,2__05__,3__4__0,__35__3____10__0__.01__1__,1__20__,6__0__0__2,__19__4__,2__19__,7__5__3 The movement of provision for other receivables is as follows:
Opening Balance Accrued Reversed Write-off Closing Balance RMB RMB RMB RMB RMB 2013 __1__1__,1__2__0__,6__0__0 ______-
____
__(6__0__7__,5__7__1) __(__3__,1__2__0__,6__0__0) ____7__,3__9__2__,4__2__9 As at 31 December 2013, other receivable that are individually significant at the end of the period but for which bad debt provision has been assessed individually:
Bad debt
Balance provision Percentage Reason for provision
RMB RMB %
The debtor is in
Tiantong Security Co.,Ltd. __7__,3__9__2__,4__2__9 __7__,3__9__2__,4__2__9 100 the process of liquidation As at 31 December 2012, other receivable that are individually significant at the end of the period but for which bad debt provision has been assessed individually:
Bad debt
Balance provision Percentage Reason for provision
RMB RMB %
The debtor is in the
Tiantong Security Co.,Ltd. 8,000,000 8,000,000 100 process of liquidation Aging over 3 years and Finance Bureau of Jingyang __3_,1_2_0_,6_0_0 __3_,1_2_0_,6_0_0 100 low recovering possibilities__1__1__,1__2__0__,6__0__0 __1__1__,1__2__0__,6__0__0
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
6. Other receivables - continued
Reversals and collections during the current period:
Basis of determining Accumulated bad debt
Reasons for the original bad debt provision prior to Amount of reversal Cotent reversal or collections provison reversals or collections or collections RMB RMB Tiantong Security Co.,Ltd. Collected Exceed credit period __(8__,0__0__0,__00__0__) __6__0__7,__57__1__ Accounts receivable written off in the reporting period
Whether arising from related party Nature Amount Reason for write off transactions RMB
Finance Bureau of Jingyang Government borrowing__3__,1__2__0__,6__0__0 Unable to collect No As at 31 December 2013, there was no other receivable due from the shareholders with voting rights of5% or above. (31 December 2012: Nil)
As at 31 December 2013, the particulars of top 5 other receivables are as follows:
Relationship Percentage of total with the Group Amount Aging advances to suppliers RMB % Sales Company Subsidiary 701,689,111 Within 1 year 18.9 Shihezi Chateau Subsidiary 574,116,402 Within 1 year 15.4 Changan Chateau Subsidiary 568,947,758 Within 1 year 15.3 Beijing Chateau Subsidiary 534,672,348 Within 1 year 14.4 Ningxia Wine Subsi diary __3_0_5_,6_3_0_,0_6_1 Within 1 year _8_._2__2__,6__8__5__,0__5__5__,6__8__0 __72__.__2 At 31 December 2013, the balance of other receivables from related parties is RMB3,691,961,808, approximately99.3% of total other receivables. These were all from subsidiaries of the Company (2012: the balance of other receivable from related parties is RMB2,163,251,044, approximately98.1% of total other receivables).
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
7. Inventories
2013 2012
Net carrying Net carrying Balance Provision amount Balance Provision amount RMB RMB RMB RMB RMB RMB Raw material 5,328,866 - 5,328,866 17,696,041 - 17,696,041 Finished goods 90,565,059 - 90,565,059 194,847,237 - 194,847,237 Work in progress_6_8_5_,3_9_0_,2_6_4 ____-
___
_6_8_5_,3_9_0_,2_6_4 _6_8_0_,8_9_9_,4_8_0____-
___
_6_8_0_,8_9_9_,4_8_0__7__8__1__,2__8__4__,1__8__9 ________-
______
__7__8__1__,2__8__4__,1__8__9 __8__9__3__,4__4__2__,7__5__8________-
______
__8__9__3__,4__4__2__,7__5__8 8. Long-term equity investments
Movement Cash Dividends 2013 Cost Opening balance for the year Closing balance Share holding Voting power for the year RMB RMB RMB RMB % % RMB Cost Method:
Xinjiang Tianzhu (a) 60,000,000 60,000,000 - 60,000,000 60 100 1,000,000 Vehicular Transportation 300,000 300,000 (300,000) - 100 100 - Kylin Packaging 23,176,063 23,176,063 - 23,176,063 100 100 24,469,867 Changyu Chateau (a) 28,968,100 28,968,100 - 28,968,100 70 100 - AFIP Tourism (a) 350,000 350,000 - 350,000 70 100 68,000,000 Pioneer International 3,500,000 3,500,000 - 3,500,000 70 100 - Ningxia Growing 1,000,000 1,000,000 - 1,000,000 100 100 - National Wines 2,000,000 2,000,000 - 2,000,000 100 100 - Ice Chateau (a) 30,440,500 13,413,000 17,027,500 30,440,500 51 100 5,458,011 Beijing Chateau (a) 77,000,000 77,000,000 - 77,000,000 70 100 32,000,000 Sales Company 7,200,000 7,200,000 - 7,200,000 90 100 970,000,000 Langfang Sales (b) 100,000 100,000 - 100,000 10 100 - Langfang Castel (a) 19,835,730 19,835,730 - 19,835,730 39 100 5,162,898 Wines Sales 4,500,000 4,500,000 - 4,500,000 90 100 11,140,442 Shanghai Sales (b) 300,000 300,000 - 300,000 30 100 - Beijing Sales 850,000 8500,000 - 850,000 100 100 - Jingyang Sales (b) 100,000 100,000 - 100,000 10 100 3,522,928 Jingyang Wine 900,000 900,000 - 900,000 90 100 - Ningxia Wine 1,000,000 1,000,000 - 1,000,000 100 100 - Ningxia Chateau 2,000,000 2,000,000 - 2,000,000 100 100 - Dingluote Chateau 80,000,000 80,000,000 - 80,000,000 100 100 - Shihezi Chateau 150,000,000 150,000,000 - 150,000,000 100 100 5,265,269 Xianyang Chateau 20,000,000 20,000,000 - 20,000,000 100 100 - Development Centre 500,000,000 500,000,000 - 500,000,000 100 100 - Huanren Wine 5,000,000 5,000,000 - 5,000,000 100 100 - Yaitan Dingtao 10,000,000 5,000,000 (5,000,000) - 18 18 - French Sales __2_9,_98_8,_53_0______-__2_9,_98_8,_53_0 __2_9,_98_8,_53_0 100 100 ______-___1,__05__8,__50__8,__92__3__1,__00__6,__49__2,__89__3__4__1,__71__6,__03__0 __1,__04__8,__20__8,__92__3 __1,__12__6,__01__9,__41__5 (a) The Group is entrusted to manage these non-wholly owned subsidiaries whereby the Group owned the entire operating results of these subsidiaries deducting fixed fees paid to the non-controlling interests' holders. Please refer to Note V-1 for details.
(b) The Group has100% voting power of those subsidiaries by the way of indirect controlling. During 2013, there was no significant restriction on the remittance of fund from the investees to the Company.
As at 31 December 2013, the impairment provision of RMB10, 000,000 was provided for Yantai Dingtao (31 December 2012: RMB5,000,000).
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
9. Property, plant and equipment
2013 Opening balance Increase Decrease Closing balance RMB RMB RMB RMB Cost
Buildings 234,177,475 67,758,962 (1,634,674) 300,301,763 Machineries and equipment 545,496,056 37,536,827 (199,534) 582,833,349 Motor vehicles ___1_2_,1_1_1_,5_2_2 ____4_8_9_,8_1_4 _______-
_
___1_2_,6_0_1_,3_3_6____7__9__1__,7__8__5__,0__5__3 __1__0__5__,7__8__5__,6__0__3 __(__1__,8__3__4__,2__0__8) ____8__9__5__,7__3__6__,4__4__8 Accumulated depreciation
Buildings 91,881,381 2,453,339 (974,185) 93,360,535 Machineries and equipment 336,171,488 31,532,761 (193,831) 367,510,418 Motor vehicles ____8_,9_4_2_,4_4_1 ____6_2_8_,9_3_8 _______-_ ____9_,5_7_1_,3_7_9____4__3__6__,9__9__5__,3__1__0 ____3__4__,6__1__5__,0__3__8 __(__1__,1__6__8__,0__1__6) ____4__7__0__,4__4__2__,3__3__2 Net carrying amount
Buildings 142,296,094 206,941,228 Machineries and equipment 209,324,568 215,322,931 Motor vehicles ____3_,1_6_9_,0_8_1 ____3_,0_2_9_,9_5_7____3__5__4__,7__8__9__,7__4__3 ____4__2__5__,2__9__4__,1__1__6 The increase of accumulated depreciation for 2013 is RMB34,615,038.
The amount of transfer from construction in progress to property, plant and equipment for 2013 is RMB56,624,887. The amount of property, plant and equipment purchased is RMB49,160,716 and the amount disposed of is RMB1,834,208.
As at 31 December 2013, the Group has no temporary idle fixed assets, fixed assets held for sale, fixed assets leased in under finance leases and fixed assets leased out under operating leases (2012: RMB: Nil).
10. Construction in progress
2013 2012 RMB RMB The Company's reconstruction project 269,802 24,640,660____________________ ____________________ Accumulated expenditure 2013 Budget Opening balance Addition Transfer to PPE Closing balance Financed by /budget RMB RMB RMB RMB RMB % The Company's reconstruction project 201,440,000 24,640,660 32,254,029 (56,624,887) 269,802 Self-raised 90.2 There was no interest capitalized in construction in progress in 2013.
As at 31 December 2013, there was no provision was made for the construction in process.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
11. Intangible assets
2013 Opening balance Increase Closing balance RMB RMB RMB Cost
Land use right 96,594,766 - 96,594,766 Software use right 3,480,000 - 3,480,000__________ _________ __________ 100,074,766 - 100,074,766__________ _________ __________ Accumulated amortization
Land use right 15,081,858 2,373,077 17,454,935 Software use right 3,480,000 - 3,480,000__________ _________ __________ 18,561,858 2,373,077 20,934,935__________ _________ __________ Net carrying amount
Land use right 81,512,908 79,139,831 Software use right - -__________ __________ 81,512,908 79,139,831____________________ ____________________ The amortisation of 2013 is RMB2,373,077.
As at 31 December 2013, there was no intangible asset with restricted ownership.
12. Biological asset
2013 RMB Opening balance 16,866,437 Addition 44,571,877 Amortization (586,905)__________ Closing balance 60,851,409____________________ As at 31 December 2013, there is no biological asset with ownership restricted.
As at 31 December 2013, the Company's accumulated depreciation of biological assets is RMB6,450,905 (2012: RMB5,864,000).
As at 31 December 2013, there is no indication that biological assets may be impaired, and no provision was made.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
13. Deferred tax assets and liabilities
Deferred tax assets and liabilities are presented separately:
(1) Deferred tax assets and liabilities recognized are as follows:
2013 2012 RMB RMB Deferred tax assets
Unrealized profit from intra-company transactions 1,948,776 1,948,776 Unpaid bonus 7,392,095 8,629,470 Retirement benefit 3,604,137 4,676,306 Asset impairment provision 4,348,107 4,030,150 Deferred income 5,663,632 232,500__________ __________ 22,956,747 19,517,202____________________ ____________________ (2) Taxable and deductible temporary differences are as follows:
2013 2012 RMB RMB Deductible temporary difference
Unrealized profit from intra-company transactions 7,795,104 7,795,104 Unpaid bonus 29,568,378 34,517,881 Early retirement benefit 14,416,547 18,705,224 Provision for impairment 17,392,429 16,120,600 Deferred income 22,654,527 930,000__________ __________ 91,826,985 78,068,809____________________ ____________________ 14. Other non-current assets
2013 2012 RMB RMB Unacknowledged financial changes 2,616,525 2,502,630____________________ ____________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
15. Trade payables
The trade payables are interest free with a credit period no more than three months from its suppliers normally.
2013 2012 RMB RMB Within 1 year 166,453,563 164,815,117____________________ ____________________ As at 31 December 2013, the Group had no significant outstanding balance aged more than one year.
As at 31 December 2013, there was no trade payable due to the shareholders with voting rights of5% or above.
The Company's outstanding balance payable to related parties are as following:
Proportion of Relationship with the Company Amount account receivable RMB % Subsidiaries 9,497,134 6.0 Other related parties 33,518,567 20.0_________ ____ Other related parties 43,015,701 26.0__________________ ________ 16. Employee benefit
31 December 2013
Opening balance Increase Decrease Closing balance RMB RMB RMB RMB Salaries and bonus 34,558,166 125,619,021 (132,720,851) 27,456,336 Staff benefit - 5,915,306 (5,915,306) - Staff welfare - 14,025,829 (14,025,829) - Includes:
Medical insurance - 3,154,579 (3,154,579) - Pension - 9,217,726 (9,217,726) - Unemployment insurance - 682,538 (682,538) - Injury insurance - 540,746 (540,746) - Maternity insurance - 430,240 (430,240) - Housing fund - 3,588,257 (3,588,257 ) - Union fee and education fee 1,925,482 1,287,267 (932,352) 2,380,397 Termination benefits 21,343,603 878,528 (5,053,311) 17,168,820 Other allowances __2_2_,3_1_7_,2_8_2 ________-_ ____(1_8_9_,9_2_3 ) __2_2_,1_2_7_,3_5_9____8__0__,1__4__4__,5__3__3 __1__5__1__,3__1__4__,2__0__8 __(1__6__2__,4__2__5__,8__2__9 ) ____6__9__,0__3__2__,9__1__2
As at 31 December 2013, the Company had no overdue employee benefit payable.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
17. Taxes payable
2013 2012 RMB RMB Value added tax 3,289,792 (26,594,363) Consumption tax 19,900,332 24,372,563 Corporation income tax 3,348,032 6,152,331 Urban land use tax 421,924 421,924 Individual income tax 6,275,760 6,267,584 City construction tax 2,319,867 3,383,809 Property tax 127,674 1,693,654 Others 1,895,289 2,297,587__________ __________ 37,578,670 17,995,089____________________ ____________________ 18. Other payables
2013 2012 RMB RMB Payable to subsidiaries 1,585,656,605 1,419,678,135 Payables for equipment, construction and transportation 15,029,366 6,267,120 Deposits from suppliers 277,430 75,193 Others 11,633,120 6,443,849____________ ____________ 1,612,596,521 1,432,464,297________________________ ________________________ As at 31 December 2013, there were no significant outstanding balance aged over than one year. The Company's outstanding balance payable to related parties are as following:
Proportion of Relationship with the Company Amount account receivable RMB % Subsidiaries 1,558,942,200 97.0 Other related parties 3,906 0.0____________ ____ Other related parties 1,558,946,106 97.0________________________ ________ 19. Capital reserve
As at 31 December 2013 and 31 December 2012, the balance of capital reserve represented
capital premium.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
20. Revenue and cost of sales
Revenue is as follows:
2013 2012 RMB RMB Income from principal activities 1,730,694,774 1,776,979,032________________________ ________________________ Cost of sales is as follows:
2013 2012 RMB RMB Cost from principal activities 1,473,772,762 1,444,948,143________________________ ________________________ In 2013, revenue derived from top 5 customers is as follows:
Percentage of Amount total revenue RMB % Sales Company 1,257,744,394 72.7 Penglai Wine Sales 55,541,941 3.2 Changyu Chateau 33,074,752 1.9 Wines Sales 26,171,524 1.5 Pioneer International 15,834,736 0.9____________ ____ 1,388,367,347 80.2________________________ ________ In 2013, top 5 customers of the Company are all subsidiaries.
Revenue is as follows:
2013 2012 RMB RMB Sales of good 1,730,694,774 1,776,979,032________________________ ________________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
21. Tax and surcharges
2013 2012 RMB RMB Consumption tax 112,191,992 149,442,375 City construction tax 12,054,335 13,521,752 Education fee and surcharges 8,897,690 10,001,707 Others 1,902,568 2,274,761__________ __________ 135,046,585 175,240,595____________________ ____________________ 22. General and administrative expense
2013 2012 RMB RMB Salary and employee benefit 26,777,563 43,527,397 Insurance fee 21,246,591 20,951,998 Leasing expenses 6,048,896 6,480,996 Depreciation 3,718,349 4,384,313 Amortization 2,373,076 2,939,080 Administrative expenses 8,489,998 9,644,535 Travelling expenses 4,127,300 3,867,717 Entertainment fee 288,524 329,739 Property tax, stamp duty and other taxes 3,942,998 4,166,506 Maintenance fee 10,416,751 7,130,541 Others 22,234,906 22,697,927__________ __________ 109,664,952 126,120,749____________________ ____________________ 23. Loss on impairment of assets
2013 2012 RMB RMB Long-term investment provision 5,000,000 - Bad debts provision (607,571) -________ ______ 4,392,429 -________________ ____________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
24. Financial income
2013 2012 RMB RMB Interest income 29,773,409 30,599,023 Less: Interest expenses 2,174,286 3,953,834 Bank charges 1,650,982 1,810,502_________ _________ 25,948,141 24,834,687__________________ __________________ 25. Investment income
2013 2012 RMB RMB Long-term equity investment income accounted
for by using the cost method 1,126,019,415 1,091,018,499________________________ ________________________ Among the long-term equity investment income accounted for by using cost method, the investees with investment income accounting for more than5% of the Company's total profit before tax are as follows:
Investees 2013 2012 RMB RMB Sales Company 970,000,000 980,000,000 AFIP Tourism 68,000,000 -____________________ ____________________ As at 31 December 2013 and at 31 December 2012, there was no significant restriction on the remittance of investment income to the Company.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
26. Supplement to cash flow statement
Cash flows from operating activities calculated by adjusting the net profit:
2013 2012 RMB RMB Net profit 1,154,687,278 1,130,895,806 Add: Impairment provision 4,392,429 - Depreciation 34,615,038 47,318,392 Amortization of intangible assets 2,373,077 4,291,247 Amortization of Biological assets 586,905 586,905 Losses/(gains) on disposal of property,
plant and equipments 662,192 2,354,433 Finance costs (29,773,409) (30,599,023) Investment income (1,126,019,415) (1,091,018,499) Increase/(decrease) in deferred tax assets (3,439,545) 11,820,627 Increase in inventories 112,158,569 (313,990,373) Increase in trade receivables (1,562,373,091) (475,386,959) Increase/(decrease) in trade payables 200,790,717 (527,924,856)____________ ____________ Net cash flows from operating activities (1,211,339,255) (1,241,652,300)________________________ ________________________ 27. Cash and cash equivalents
2013 2012 RMB RMB Closing balance 602,444,243 1,090,260,851 Including:
restricted bank deposits 2,609,237 2,652,083 restricted other monetary assets 125,291,289
deposit with a period of over three months 277,392,728 662,524,719__________ ____________ Closing balance of cash and cash equivalents 197,150,989 425,084,049____________________ ________________________ 2013 2012 RMB RMB Cash and bank 197,150,989 425,084,049 Including: Cash on hand 12,479 11,916 Bank deposits on demand 197,138,510 425,072,133__________ __________ 197,150,989 425,084,049____________________ ____________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
(XII) NOTES TO COMPANY FINANCIAL STATEMENTS - continued
28. Related party transactions
(1) Purchase of materials
2013 2012 RMB RMB Subsidiaries 230,279,590 362,864,737 Other related parties 135,903,876 110,901,395__________ __________ 366,183,466 473,766,132____________________ ____________________ (2) Sales of goods
2013 2012 RMB RMB Subsidiaries 1,723,774,566 1,770,544,843 Other related parties 6,920,208 6,434,189____________ ____________ 1,730,694,774 1,776,979,032________________________ ________________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
APPENDIX I SUPPLEMENTARY INFORMATION TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2013
I. DETAILS OF EXTRAORDINARY PROFIT AND LOSS
2013 RMB Loss on disposal of non-current assets, including
reversal of accrued impairment provision (271,989) Government grants credited in profit and loss
(except for those recurring government grants
that are closely related to the Group's operation,
in line with related regulations and have proper basis of calculation) (36,659,754) Other non-operating income and expense (3,302,760) Reversal of bad debt provision of receivables tested individually 607,571 Corporate income tax effect 9,396,861__________ (30,837,642)____________________ The Group's extraordinary profit and loss items are recognized in accordance with the regulations of the "public offering of securities of the Company Disclosure Explanatory Notice No. 1 - non- recurring profit and losses" (SFC[2008] No. 43).
All non-operation income and non-operation expenses are non-operating profit in 2013.Please refer to Note VI-38 and VI-39.
II. RETRUN ON EQUITY ("ROE") AND EARNINGS PRE SHARE ("EPS")
Weighted average
2013 ROE Basic EPS% RMB Net profit attributable to shareholders of the Company 17.30 1.53 Net profit attributable to shareholders
of the Company deducting extraordinary profit and loss 16.78 1.48__________ ________ The Company did not have any potential dilutive shares.
Weighted average
2012 ROE Basic EPS% RMB Net profit attributable to shareholders of the Company 31.13 2.48 Net profit attributable to shareholders
of the Company deducting extraordinary profit and loss 30.68 2.44__________ ________
The Company did not have any potential dilutive shares.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. VARIANCE ANALYSIS
Analysis on items with fluctuation more than30% (inclusive) in consolidated financial statements or balance greater than5% (inclusive) of the total assets at the balance sheet date or amount greater than10% (inclusive ) of gross profit of the reporting period.
1. The balance of cash and bank as at 31 December 2013 was RMB1,367,818,182, decreasing by39% compared with 2012. The decrease is mainly due to the cash outflow of the financing and investing activities.
2. The balance of trade receivables at 31 December 2013 is RMB177,109,516, increasing by31% compared with 2012, which was mainly due to the increase of direct supply of stores and supermarkets in 2013.
3. The balance of other receivables at 31 December 2013 is RMB99,331,794, increasing by249% compared with 2012, which was due to the significant increase of deposits made for bid of land. 4. The balance of inventory as at 31 December 2013 was RMB2,121,117,437, decreasing by7% compared with 2012, which is mainly because the Company bases its production on sales prospects. Since the sales revenue of 2013 decreased by23% compared with 2012, the balance of inventory also decreased.
5. The balance of long-term equity investments as at 31 December 2013 was zero, decreasing by100% compared with 2012, which was due to the provision of RMB5,000,000 for the investments of Yantai Dingtao.
6. The balance of property, plant and equipment as at 31 December 2013 was RMB1,917,641,344, increasing by5% compared with 2012, which was mainly due to the transfers from construction in process to property, plant and equipment and the purchase of new equipment and company. 7. The balance of construction in progress as at 31 December 2013 was RMB1,423,654,530, increasing by71% compared with 2012, which was mainly due to the construction of newly established chateau. Meanwhile improvement project on the production lines also contributed to the increase of construction in progress.
8. The balance of advance from customer was RMB188,651,254 as at 31 December 2013, decreasing by58% compared with 2012. The decrease was mainly due to the significant decrease of sales revenue under the poor market condition.
9. The balance of other payables as at 31 December 2013 was RMB 497,301,630, decreasing by6% compared with 2012 which was mainly due to the increase of unpaid advertisement expense. 10. The balance of tax payables as at 31 December 2013 was RMB194,413,430, decreasing by56% compared with 2012 due to the settlement of the unpayable advertising fee and related income tax. 11. The balance of non-current liability due within 1 year as at 31 December 2013 was zero, decreasing by100% compared with 2012, which is due to the expiration and settlement of prior trust schemes.
12. The balance of capital surplus was RMB563,139,042 as at 31 December 2013, increasing by
RMB1,000,000 compared to 2012 mainly due to the recognize of government grant of RMB
10,000,000, which was recorded in deferred income in prior year, according to the local
government article<Ning Cai (Qi) Fa[2009]1160>.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. VARIANCE ANALYSIS - continued
13. The balance of retained earnings was RMB4,616,944,663 as at 31 December 2013, increasing by7% compared with 2012, which was due to the Group's profit in 2013 and the distribution of profit for the year 2012.
14. The revenue of 2013 was RMB4,320,948,572, decreasing by23% compared with 2012. The cost of 2013 was RMB1,357,897,999, decreasing by3% compared with 2012. The decrease was mainly due to the decrease of sales volume under current poor market condition.
15. The selling expense for 2013 was RMB1,140,836,150, decreasing by21% compared with 2012.The decrease was mainly due to the decrease of promotion and advertisement expenses. 16. The other revenue was RMB42,108,726 in 2013, increasing by19% compared with 2012. The increase was mainly due to government grant received in 2013. The other expense was RMB1,874,223 in 2013, decreasing by37% compared with 2012 which was mainly due to the loss of disposal of non-current asset.