YANTAI CHANGYU PIONEER WINE
COMPANY LIMITED
Financial Statements and Auditor's Report
For the year ended 31 December 2016
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
FINANCIAL STATEMENTS AND AUDITOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2016
CONTENTS PAGE AUDITOR'S REPORT 1 - 2 THE CONSOLIDATED BALANCE SHEET 3 - 4 THE COMPANY'S BALANCE SHEET 5 - 6 THE CONSOLIDATED INCOME STATEMENT 7 THE COMPANY'S INCOME STATEMENT 8 THE CONSOLIDATED CASH FLOW STATEMENT 9 THE COMPANY'S CASH FLOW STATEMENT 10 THE CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY 11 THE COMPANY'S STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY 12 NOTES TO THE FINANCIAL STATEMENTS 13– 100
De Shi Bao (Shen) Zi (17) No. P01956 AUDITOR'S REPORT
TO THE SHAREHOLDERS OF
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
We have audited the accompanying financial statements of Yantai Changyu Pioneer Wine Company Limited and its subsidiaries which comprise the consolidated and company's balance sheets as at 31 December 2016, and the consolidated and company's income statements, the consolidated and company's cash flow statements and the consolidated and company's statements of changes in shareholders' equity 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. Auditor's 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 the auditor'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
3. Opinion
In our opinion, the financial statements of Yantai Changyu Pioneer Wine Company Limited present fairly, in all material respects, the consolidated and company's financial position as of 31 December 2016, and the consolidated and company's 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 Li Xu (Signature and seal) Shanghai, China Li Yan Gang (Signature and seal) 20 April 2017
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED BALANCE SHEETS
YEAR ENDED 31 DECEMBER 2016
ASSETS Notes Closing balance Opening balance RMB RMB CURRENT ASSETS
Cash and bank VI-1 1,391,517,607 1,285,362,414 Notes receivable VI-2 210,470,027 113,988,122 Accounts receivable VI-3 173,062,628 197,795,091 Prepayments VI-4 2,175,606 3,591,098 Interest receivable VI-5 24,200 8,019,338 Other receivables VI-6 18,880,800 46,146,487 Inventories VI-7 2,248,609,740 2,260,852,964 Non-current assets held for sale VI-8 2,000,197 - Other current assets VI-9 169,522,242 48,449,551____________ ____________ Total current assets 4,216,263,047 3,964,205,065____________ ____________ NON-CURRENT ASSETS
Available-for-sale financial assets VI-10 340,263 402,814 Fixed assets VI-11 4,683,187,493 3,089,245,185 Construction in progress VI-12 1,346,281,737 2,005,990,308 Bearer biological assets VI-13 201,428,980 192,198,283 Intangible assets VI-14 483,815,080 463,899,916 Goodwill VI-15 121,265,866 105,504,426 Long-term prepaid expenses VI-16 162,206,229 175,124,167 Deferred tax assets VI-17 295,937,037 302,406,656 Other non-current assets VI-18 17,352,239 45,234,641____________ ____________ Total non-current assets 7,311,814,924 6,380,006,396____________ ____________ Total assets 11,528,077,971 10,344,211,461________________________ ________________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED BALANCE SHEETS
YEAR ENDED 31 DECEMBER 2016 - continued
LIABILITIES AND EQUITY Notes Closing balance Opening balance RMB RMB CURRENT LIABILITIES
Short-term borrowings VI-19 662,388,882 665,581,921 Notes payable VI-20 38,900,000 29,000,000 Accounts payable VI-21 545,231,319 569,278,368 Receipts in advance VI-22 425,246,421 234,566,504 Employee benefits payable VI-23 206,431,734 190,239,451 Taxes payable VI-24 144,042,600 41,285,107 Interest payable 563,613 977,304 Deferred income VI-25 11,163,883 11,241,873 Other payables VI-26 546,305,310 509,226,395 Non-current liabilities due within one year VI-27 71,799,093 156,335,647____________ ____________ Total current liabilities 2,652,072,855 2,407,732,570____________ ____________ NON-CURRENT LIABILITIES
Long-term borrowings VI-28 49,140,555 71,686,629 Long-term payables VI-29 293,000,000 - Deferred income VI-25 101,775,243 69,836,411 Deferred tax liabilities VI-17 24,908,410 34,350,349 Other non-current liabilities VI-30 7,696,222 4,047,476____________ ____________ Total non-current liabilities 476,520,430 179,920,865____________ ____________ Total liabilities 3,128,593,285 2,587,653,435____________ ____________ EQUITY
Share capital VI-31 685,464,000 685,464,000 Capital reserve VI-32 565,955,441 565,955,441 Other comprehensive income VI-33 (5,259,014) (10,442,512) Surplus reserve VI-34 342,732,000 342,732,000 Retained earnings VI-35 6,620,118,562 5,980,390,074____________ ____________ Equity attributable to shareholders
of the Company 8,209,010,989 7,564,099,003 Non-controlling interests 190,473,697 192,459,023____________ ____________ Total equity 8,399,484,686 7,756,558,026____________ ____________ Total liabilities and equity 11,528,077,971 10,344,211,461________________________ ________________________ The accompanying notes form an integral part of these financial statements.
The financial statements on pages 3 to 100 were signed by the following:
Legal Representative:_________________________________
Person in Charge of the Accounting Body:_________________
Chief Accountant:____________________________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
BALANCE SHEET OF THE COMPANY
YEAR ENDED 31 DECEMBER 2016
ASSETS Notes Closing balance Opening balance RMB RMB CURRENT ASSETS
Cash and bank XIV-1 269,460,060 280,818,833 Notes receivable XIV-2 1,114,200 38,429,319 Accounts receivable XIV-3 3,326,683 2,392,870 Prepayments XIV-4 702,647 445,619 Interest receivable VI-5 24,200 8,019,338 Dividend receivable XIV-5 531,819,113 788,092,349 Other receivables XIV-6 3,582,532,862 5,734,456,129 Inventories XIV-7 792,732,418 728,173,107 Non-current assets held for sale VI-8 2,000,197 - Other current assets 20,085,058 22,700,317____________ ____________ Total current assets 5,203,797,438 7,603,527,881____________ ____________ NON-CURRENT ASSETS
Available-for-sale financial assets VI-10 - - Long-term equity investments XIV-8 1,834,341,541 1,423,725,152 Fixed assets XIV-9 347,481,417 369,506,014 Construction in progress XIV-10 500,000 7,990,777 Bearer biological assets XIV-11 123,036,693 110,961,189 Intangible assets XIV-12 72,002,372 74,381,525 Deferred tax assets XIV-13 26,985,252 37,938,692 Other non-current assets XIV-14 2,617,457,460 -____________ ____________ Total non-current assets 5,021,804,735 2,024,503,349____________ ____________ Total assets 10,225,602,173 9,628,031,230________________________ ________________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
BALANCE SHEET OF THE COMPANY
YEAR ENDED 31 DECEMBER 2016 - continued
LIABILITIES AND EQUITY Notes Closing balance Opening balance RMB RMB CURRENT LIABILITIES
Short-term borrowings XIV-15 500,000,000 601,297,447 Accounts payable XIV-16 247,568,857 273,091,182 Receipts in advance XIV-17 6,000,000 - Employee benefits payable XIV-18 70,812,761 71,058,615 Taxes payable XIV-19 33,266,225 19,331,311 Interest payable 563,613 977,304 Deferred income 1,767,054 1,767,054 Other payables XIV-20 368,310,362 994,821,281 Non-current liabilities due within one year XIV-21 29,227,200 127,345,600____________ ____________ Total current liabilities 1,257,516,072 2,089,689,794____________ ____________ NON-CURRENT LIABILITIES
Long-term borrowings VI-28 - 56,761,600 Deferred income 19,933,699 21,824,352 Other non-current liabilities 2,499,403 1,944,955____________ ____________ Total non-current liabilities 22,433,102 80,530,907____________ ____________ Total liability 1,279,949,174 2,170,220,701____________ ____________ EQUITY
Share capital VI-31 685,464,000 685,464,000 Capital reserve XIV-22 557,222,454 557,222,454 Surplus reserve VI-34 342,732,000 342,732,000 Retained earnings 7,360,234,545 5,872,392,075____________ ____________ Total equity 8,945,652,999 7,457,810,529____________ ____________ Total liabilities and equity 10,225,602,173 9,628,031,230________________________ ________________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED INCOME STATEMENT
YEAR ENDED 31 DECEMBER 2016
Notes 2016 2015 RMB RMB I. Revenue VI-36 4,717,596,472 4,649,722,368 Less: Cost of sales VI-36 1,575,770,979 1,512,503,035 Taxes and surcharges VI-37 269,716,646 258,013,524 Selling expenses VI-38 1,253,260,668 1,211,127,163 Administrative expenses VI-39 309,783,548 313,968,409 Impairment loss of assets VI-40 3,279,266 2,823,115 Financial expenses VI-41 21,968,859 11,287,685____________ ____________ II. Operating profit 1,283,816,506 1,339,999,437 Add: Non-operating income VI-42 55,172,160 50,065,317 Including: gains from disposal
of non-current assets 157,846 192,945 Less: Non-operating expenses VI-43 1,369,826 1,904,889 Including: losses from disposal
of non-current assets 143,127 56,884____________ ____________ III. Profit before tax 1,337,618,840 1,388,159,865 Less: Income tax VI-44 357,029,446 357,884,235____________ ____________ IV. Profit for the year 980,589,394 1,030,275,630____________ ____________ Attribute to shareholders of the Company 982,460,488 1,030,073,860 Minority interest income (1,871,094) 201,770________________________ ________________________ V. Other comprehensive income (post-tax)
Other comprehensive income attributable
to shareholders of the Company
Other comprehensive income
to be reclassified to profit and loss
Foreign currency statement translation difference 5,183,498 (7,639,241) Other comprehensive income attributable
to minority interest 432,191 (102,535)____________ ____________ Other comprehensive income (post-tax) 5,615,689 (7,741,776)________________________ ________________________ VI. Total comprehensive income
Attribute to shareholders of the Company 987,643,986 1,022,434,619 Attribute to minority interest of the Company (1,438,903) 99,235________________________ ________________________ Total comprehensive income 986,205,083 1,022,533,854________________________ ________________________ VII. Earnings per share
(I) Basic earnings per share VI-45 1.43 1.50________________________ ________________________ (II) Diluted earnings per share VI-45 N/A N/A________________________ ________________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
INCOME STATEMENT OF THE COMPANY
YEAR ENDED 31 DECEMBER 2016
Notes 2016 2015 RMB RMB I. Revenue XIV-23 1,415,104,946 1,383,184,483 Less: Cost of sales XIV-23 1,152,076,500 1,154,834,509 Taxes and surcharges XIV-24 106,469,217 128,127,130 Administrative expenses XIV-25 85,962,137 131,187,795 Financial expenses XIV-26 34,226,452 18,852,697 Investment income XIV-27 1,798,129,418 1,587,303,643____________ ____________ II. Operating Profit 1,834,500,058 1,537,485,995 Add: Non-operating income 7,433,751 5,229,734 Including: gains from disposal
of non-current assets 157,846 160,609 Less: Non-operating expenses 405,899 921,076 Including: losses from disposal
of non-current assets 46,484 44,269____________ ____________ III. Profit before tax 1,841,527,910 1,541,794,653 Less: Income tax 10,953,440 (11,725,445)____________ ____________ IV. Profit for the year
and total comprehensive income 1,830,574,470 1,553,520,098________________________ ________________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 DECEMBER 2016
Notes 2016 2015 RMB RMB CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from the sale of goods
and the rendering of services 4,441,041,101 5,005,115,064 Receipts of tax refunds 17,860,500 17,833,465 Other cash receipts relating to operating activities VI-46(1) ___6_6_,7_0_7_,8_6_5 ___2_2_,3_7_3_,0_1_6 S ub-total of cash inflows from operating activities _4_,5_2_5_,6_0_9_,4_6_6 _5_,0_4_5_,3_2_1_,5_4_5 Cash payments for goods purchased and services received 961,128,796 1,106,430,193 Cash payments to and on behalf of employees 435,621,220 400,245,285 Payment of various types of taxes 1,133,232,957 1,312,212,563 Other cash payments relating to operating activities VI-46(2) _1_,1_0_5_,7_1_4_,5_2_3 _1_,0_8_3_,3_8_7_,1_3_7 S ub-total of cash outflows from operating activities _3_,6_3_5_,6_9_7_,4_9_6 _3_,9_0_2_,2_7_5_,1_7_8 N et cash flows from operating activities VI-47(1) __8_8_9_,9_1_1_,9_7_0 _1_,1_4_3_,0_4_6_,3_6_7 CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in term deposits over 3 months 98,021,025 58,245,260 Proceeds from return on investments 7,723,126 9,337,943 Proceeds from disposal of fixed assets ____7_,2_0_8_,7_7_4 ____3_,3_7_3_,2_5_4 S ub-total of cash inflows from investing activities __1_1_2_,9_5_2_,9_2_5 ___7_0_,9_5_6_,4_5_7 Cash paid for acquisition of properties, plants and equipment,
intangible assets and other long-term assets 704,834,302 775,468,190 Cash paid for term deposits over 3 months 92,021,025 20,000,000 Cash paid for the purchase subsidiaries and other equity VI-46(3) 3,539,144 207,868,406 Other cash payment relating to investing activities _________-_ ____5_,4_7_4_,5_4_0 S ub-total of cash outflows from investing activities __8_0_0_,3_9_4_,4_7_1 _1_,0_0_8_,8_1_1_,1_3_6 N et cash flows from investing activities __(6_8_7_,4_4_1_,5_4_6 ) __(9_3_7_,8_5_4_,6_7_9) CASH FLOWS FROM FINANCING ACTIVITIES
Cash receipts from borrowings 1,011,089,858 598,060,185 Other cash received from financing activities VI-46(4) __1_8_0_,4_7_7_,5_8_7 ____4_,0_0_0_,0_0_0 S ub-total of cash inflows from financing activities _1_,1_9_1_,5_6_7_,4_4_5 __6_0_2_,0_6_0_,1_8_5 Cash paid for dividends, profits and interests 372,529,256 326,060,259 Cash paid for borrowings 839,962,581 325,272,800 Cash paid for acquisition minority interest - 150,000 Cash paid from other financing activities VI-46(5) ___2_0_,0_0_0_,0_0_0 ___2_8_,1_5_0_,0_0_0 S ub-total of cash outflows from financing activities _1_,2_3_2_,4_9_1_,8_3_7 __6_7_9_,6_3_3_,0_5_9 N et cash flows from financing activities __(_4_0_,9_2_4_,3_9_2) __(_7_7_,5_7_2_,8_7_4) Effect of foreign exchange rate changes
on cash and cash equivalents 3,154,611 4,150,573 NET INCREASE OF CASH AND CASH EQUIVALENTS 164,700,643 131,769,387 A dd: cash and cash equivalents at beginning of the year VI-47(3) _1_,0_9_2_,2_4_1_,6_6_1 __9_6_0_,4_7_2_,2_7_4 C ASH AND CASH EQUIVALENTS AT END OF THE YEAR VI-47(3) __1__,2__5__6__,9__4__2__,3__0__4 __1__,0__9__2__,2__4__1__,6__6__1
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CASH FLOW STATEMENT OF THE COMPANY
YEAR ENDED 31 DECEMBER 2016
Notes 2016 2015 RMB RMB CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from the sale of goods
and the rendering of services 1,260,184,309 1,407,696,475 Other cash receipts relating to operating activities __2_3_2_,3_2_8_,4_7_3 ____1_,0_5_0_,6_2_8 S ub-total of cash inflows from operating activities _1_,4_9_2_,5_1_2_,7_8_2 _1_,4_0_8_,7_4_7_,1_0_3 Cash payments for goods purchased and services received 887,413,606 944,400,045 Cash payments to and on behalf of employees 121,662,409 149,896,172 Cash payment of various types of taxes 132,372,497 191,387,102 Other cash payment relating to operating activities __8_0_5_,1_2_7_,3_6_8 _1_,1_2_8_,2_3_6_,6_0_2 S ub-total of cash outflows from operating activities _1_,9_4_6_,5_7_5_,8_8_0 _2_,4_1_3_,9_1_9_,9_2_1 N et cash flows from operating activities XIV-28 __(4_5_4_,0_6_3_,0_9_8) (_1_,0_0_5_,1_7_2_,8_1_8 ) CASH FLOWS FROM INVESTING ACTIVITIES
Cash receipts from equity investment - 350,000 Cash receipts from deposits over 3 months 18,021,025 46,245,260 Cash receipts from return on investments 1,530,872,587 1,211,082,256 Cash receipts from disposals of fixed assets ____9_,7_0_5_,0_2_6 _____1_9_0_,2_0_5 S ub-total of cash inflows from investing activities _1_,5_5_8_,5_9_8_,6_3_8 _1_,2_5_7_,8_6_7_,7_2_1 Cash payments for acquisition of fixed assets,
intangible assets and other long-term assets 28,351,843 42,104,159 Cash payments for term deposits over 3 months 12,021,025 20,000,000 Cash payments for subsidiary investment 468,882,418 325,163,585 Other cash payment relating to investing activities ________-__ ___5_,_4_74_,_54_0_ S ub-total of cash outflows from investing activities __5_0_9_,2_5_5_,2_8_6 __3_9_2_,7_4_2_,2_8_4 N et cash flows from investing activities _1_,0_4_9_,3_4_3_,3_5_2 __8_6_5_,1_2_5_,4_3_7 CASH FLOWS FROM FINANCING ACTIVITIES
Cash receipts from borrowings 500,000,000 595,268,270 Cash inflows from financing activities __1_3_5_,5_8_4_,3_4_7 _________-_ S ub-total of cash outflows from investing activities __6_3_5_,5_8_4_,3_4_7 __5_9_5_,2_6_8_,2_7_0 Cash paid for dividends, profits and interests 372,039,591 325,424,652 Cash paid for borrowings __7_6_4_,6_1_9_,8_9_2 __3_2_3_,0_5_1_,3_2_0 S ub-total of Cash outflows from financing activities _1_,1_3_6_,6_5_9_,4_8_3 __6_4_8_,4_7_5_,9_7_2 N et cash flows from financing activities __(5_0_1_,0_7_5_,1_3_6) __(_5_3_,2_0_7_,7_0_2) Effect of foreign exchange rate changes
on cash and cash equivalents - 3,807,697 NET INCREASE/(DECREASE) OF CASH
AND CASH EQUIVALENTS 94,205,118 (189,447,386) A dd: cash and cash equivalents at beginning of the year XIV-29 __1_4_3_,7_9_8_,0_8_0 __3_3_3_,2_4_5_,4_6_6 C ASH AND CASH EQUIVALENTS AT END OF THE YEAR XIV-29 ____2__3__8__,0__0__3__,1__9__8 ____1__4__3__,7__9__8__,0__8__0
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
CONSOLIDATED SATATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2016
2016
Attributable to shareholders of the Company
Issued Capital Other comprehensive Surplus Retained Non-controlling
capital surplus income reserve earnings interests Total RMB RMB RMB RMB RMB RMB RMB I. Opening balance
of the current year __68_5,_46_4,_00_0 __56_5,_95_5,_44_1 (1_0_,44_2_,51_2 ) ___34_2,_73_2,_00_0__5,_98_0,_39_0,_07_4__19_2,_45_9,_02_3__7,_75_6,_55_8,_02_6 II. Changes for the year
(I) Total comprehensive income
1. Net Profit - - - - 982,460,488 (1,871,094) 980,589,394 2. Other comprehensive income (VI-33) - - 5,183,498 - - 432,191 5,615,689 (II) Profit distribution
Distributions to
shareholders (VI-35) ______-_ ______-_ ___-__ _______-___(_34_2,_73_2,_00_0)___(_54_6,_42_3)__(_34_3,_27_8,_42_3) III. Closing balance
of the current year ____68__5,__46__4,__00__0 ____56__5,__95__5,__44__1 (__5,__25__9,__01__4) ______34__2,__73__2,__00__0____6,__62__0,__11__8,__56__2____19__0,__47__3,__69__7____8,__39__9,__48__4,__68__6 2015
Attributable to shareholders of the Company
Issued Capital Other comprehensive Surplus Retained Non-controlling
capital surplus income reserve earnings interests Total RMB RMB RMB RMB RMB RMB RMB I. Opening balance
of the current year __68_5,_46_4,_00_0 __56_3,_13_9,_04_2 __(_2,_80_3,_27_1)___34_2,_73_2,_00_0__5,_25_1,_92_0,_37_4__16_2,_74_0,_77_9__7,_00_3,_19_2,_92_4 II. Changes for the year
(I) Total comprehensive income
1. Net Profit - - - - 1,030,073,860 201,770 1,030,275,630 2. Other comprehensive income (VI-33) - - (7,639,241) - - (102,535) (7,741,776) (II) Shareholders investment and
Divestment
1.Acquisition subsidiary (VII-1) - - - - - 32,585,408 32,585,408 2. Transaction with non-controlling
interests - 2,816,399 - - - (2,966,399) (150,000) (III) Profit distribution
Distributions to
shareholders (VI-35) ______-_ ______-_ ______-________-___(_30_1,_60_4,_16_0)______-_ __(_30_1,_60_4,_16_0) III. Closing balance of
the current year ____68__5,__46__4,__00__0 ____56__5,__95__5,__44__1 ____(1__0,__44__2,__51__2)______34__2,__73__2,__00__0____5,__98__0,__39__0,__07__4____19__2,__45__9,__02__3____7,__75__6,__55__8,__02__6
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
STATEMENT OF CHANGES IN EQUITY OF THE COMPANY
YEAR ENDED 31 DECEMBER 2016
2016
Issued capital Capital reserve Surplus reserve Retained earnings Total RMB RMB RMB RMB RMB I. Opening balance
of the current year _6_85_,_46_4_,0_0_0 _5_57_,_22_2_,4_5_4 _3_42_,_73_2_,0_0_0 _5_,8_7_2,_39_2_,0_7_5 _7_,4_5_7,_81_0_,5_2_9 II. Changes for the year
(I) Total comprehensive income - - - 1,830,574,470 1,830,574,470 (II) Profit distribution
Distributions to shareholders (VI-35) _______-_ _______-_ _______-_ _(_3_42_,_73_2_,0_0_0) _(_3_42_,_73_2_,0_0_0) III.Closing balance
of the current year __6__8_5_,__46__4__,0__0__0 __5__57__,__22__2__,4__5__4 __3__42__,__73__2__,0__0__0 __7__,3__6__0,__23__4__,5__4__5 __8__,9__4__5,__65__2__,9__9__9 2015
Issued capital Capital reserve Surplus reserve Retained earnings Total RMB RMB RMB RMB RMB I. Opening balance
of the current year _6_85_,_46_4_,0_0_0 _5_57_,_22_2_,4_5_4 _3_42_,_73_2_,0_0_0 _4_,6_20_,_47_6_,1_3_7 _6_,2_0_5,_89_4_,5_9_1 II. Changes for the year
(I) Total comprehensive income - - - 1,553,520,098 1,553,520,098 (II) Profit distribution
Distributions to shareholders (VI-35) _______-_ _______-_ _______-_ _(_3_01_,_60_4_,1_6_0) _(_3_01_,_60_4_,1_6_0) III.Closing balance
of the current year __6__8_5_,__46__4__,0__0__0 __5__57__,__22__2__,4__5__4 __3__42__,__73__2__,0__0__0 __5__,8__7__2,__39__2__,0__7__5 __7__,4__5__7,__81__0__,5__2__9
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2016
I. CORPORATE INFORMATION
Yantai Changyu Pioneer Wine Co., Ltd. (the "Company") was incorporated as a joint stock limited company in accordance with the Company Law of the People's Republic of China (the "PRC") in a reorganization carried out by Yantai Changyu Group Co., Ltd. ("Changyu Group Company"), in which Changyu Group Company injected certain assets and liabilities in relation to the brandy, wine, and sparkling wine production and sales businesses to the Company. The Company and its subsidiaries (the "Group") are principally engaged in the production and sales of wine, brandy, sparkling wine, grape growing and acquisition, as well as travel resource development, etc. . Registration place of the Company is Yantai, Shandong. Headquarter of the Company is located at No. 56 Da Ma Lu, Zhifu District, Yantai, Shandong, PRC.
As at 31 December 2016 the total shares issued by the Company amounts to 685,464,000 shares. Please refer to Note VI-31 in detail.
The holding company of the Group is Changyu Group Company, which is jointly controlled by Yantai GuoFeng Investment Holding Ltd, ILLVA SARONNO HOLDING SPA, International Finance Corporation and Yantai Yuhua Investment and Development Company Limited. The financial statements have been authorized by the board of directors on 20 April 2017. According to the Company's articles of association, the financial statements will be reviewed by shareholders on the shareholder's meeting.
For consolidation scope of the year, please refer to Notes VIII "Equity in other entities" in detail. For detail of changes in consolidation scope of the year, please refer to Notes VII "Change in consolidation scope".
II. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
1. Basis of preparation
The Group has adopted the Accounting Standards for Business Enterprises ("ASBE") issued by the Ministry of Finance ("MoF"). In addition, the Group has disclosed relevant financial information in accordance with Information Disclosure and Presentation Rules for Companies Offering Securities to the Public No. 15 - General Provisions on Financial Reporting (Revised in 2014).
2. Basis of accounting and principle of measurement
The Group has adopted the accrual basis of accounting. The Group adopts the historical cost as the principle of measurement in the financial statements. Where assets are impaired, provisions for asset impairment are made in accordance with relevant requirements.
Under the historical cost measurement, an asset is measured at the fair value of consideration paid in cash and cash equivalents at the date of the purchase. Liability is measured at the value of asset
received through taking current obligation, the contract value for taking current obligation, or the
cash and cash equivalents value estimated for repaying debt in daily business activity.
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II. BASIS OF PREPARATION OF FINANCIAL STATEMENTS - continued
2. Basis of accounting and principle of measurement - continued
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis.
Fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
2) Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
3) Level 3 inputs are unobservable inputs for the asset or liability.
3. Going concern
As at 31 December 2016, the Group evaluated the profitability ability in the foreseeable 12 months and did not notice any event or circumstance that would constitute significant doubt on going concern ability of the Group. Therefore, the financial statements have been prepared on a going concern basis.
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING 1. Declaration for implementing CAS
The financial statements are prepared in accordance with CAS, which showing a true and fair view of the financial position on 31 December 2016, financial performance and cash flow in 2016 of the Company and the Group.
2. Accounting year
The accounting year of the Group is from 1 January to 31 December of each calendar year. 3. Business cycle
Business cycle refers to the period from purchasing assets to be processed to receiving cash or cash equivalents by the Company. The business cycle of the Company is 12 months.
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III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING - continued
4. Reporting currency
Renminbi ("RMB") is the currency of the primary economic environment in which the Company and its domestic subsidiaries operate. Therefore, the Company and its domestic subsidiaries choose RMB as their functional currency. The Company's foreign subsidiary chooses Currency Euro as its functional currency on the basis of the primary economic environment in which it operates. The Company adopts RMB to prepare its financial statements.
5. Business combination
5.1Business combinations not involving enterprises under common control and goodwill A business combination not involving enterprises under common control is a business combination in which all of the combining enterprises are not ultimately controlled by the same party or parties before and after the combination.
The cost of combination is the aggregate of the fair values, at the acquisition date, of the assets given, liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for control of the acquiree. The intermediary expenses incurred by the acquirer in respect of auditing, legal services, valuation and consultancy services, etc. and other associated administrative expenses attributable to the business combination are recognised in profit or loss when they are incurred.
Qualified identifiable assets, liabilities and contingent liabilities obtained by acquirer in the acquisition are measured using fair value at the acquisition date.
The cost of combination exceeds the acquirer's interest in the fair value of the acquiree's identifiable net assets, the difference is treated as an asset and recognised as goodwill, which is measured at cost on initial recognition. Within the 12 month after acquisition, adjustment for the provisional recognised value will be regarded as the recognition and measurement at acquisition date.
At the end of the year for acquisition, if the fair value for qualified identifiable assets, liabilities and contingent liabilities can be determined temporarily, temporally determined fair value will be recognised as consideration for recognition and measurement of acquisition.
Goodwill arising on a business combination is measured at cost less accumulated impairment losses, and is presented separately in the consolidated financial statements. It is tested for impairment at least at the end of each year.
6. Preparation of consolidated financial statements
6.1 Preparation of consolidated financial statements
The scope of consolidation in the consolidated financial statements is determined on the basis of control. Control is the power to govern the financial and operating policies of an enterprise so as to obtain benefits from its operating activities. The Group will re-evaluate if changes in relevant
facts and circumstances results in changes in relevant factors involved in the above definition of
control.
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III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING - continued
6. Preparation of consolidated financial statements - continued
6.1 Preparation of consolidated financial statements - continued
Consolidation of subsidiary starts from the control on the subsidiary by the Group and ends at the loss of control on the subsidiary by the Group.
For 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.
The significant accounting policies and accounting periods adopted by the subsidiaries are determined based on the uniform accounting policies and accounting periods set out by the Company.
All significant intra-group balances and transactions are eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the Company is treated as non- controlling interests and presented as "non-controlling interests" in the consolidated balance sheet within shareholders' equity. The portion of net profits or losses of subsidiaries for the period attributable to non-controlling interests is presented as "non-controlling interests" in the consolidated income statement below the net profit line item.
When the amount of loss for the period attributable to the non-controlling shareholders of a subsidiary exceeds the non-controlling shareholders' portion of the opening balance of owners' equity of the subsidiary, the excess amount are still allocated against non-controlling interests. For the transaction that Purchase minority interest or disposal part of the equity does not loss the control of the subsidiaries, it should treated as equity transaction, and adjust the equity attributable to shareholders and minority interest in order to reflex the changes of equity in subsidiaries. The difference between minority interest adjustment and fair value of received/paid consideration will adjust in capital reserve, and if capital reserve is not enough for offset, will adjust surplus reserve. 7. Cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents are the Group's short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 8. Translation of transactions and financial statements denominated in foreign currencies
8.1 Transactions denominated in foreign currencies
A foreign currency transaction is recorded, on initial recognition, by applying the spot exchange rate on the date of the transaction.
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III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING - continued
8. Translation of transactions and financial statements denominated in foreign currencies - continued 8.1 Transactions denominated in foreign currencies - continued
At the balance sheet date, foreign currency monetary items are translated into RMB using the spot exchange rates at the balance sheet date. Exchange differences arising from the differences between the spot exchange rates prevailing at the balance sheet date and those on initial recognition or at the previous balance sheet date are recognised in profit or loss for the period, except that (1) exchange differences related to a specific-purpose borrowing denominated in foreign currency that qualify for capitalisation are capitalised as part of the cost of the qualifying asset during the capitalisation period; (2) exchange differences related to hedging instruments for the purpose of hedging against foreign currency risks are accounted for using hedge accounting; (3) exchange differences arising from available-for-sale non-monetary items denominated in foreign currencies and changes in the carrying amounts of available-for-sale monetary items are recognised as other comprehensive income and included in capital reserve.
Foreign currency non-monetary items measured at historical cost are translated to the amounts in functional currency at the spot exchange rates on the dates of the transactions and the amounts in functional currency remain unchanged. Foreign currency non-monetary items measured at fair value are re-translated at the spot exchange rate on the date the fair value is determined. Difference between the re-translated functional currency amount and the original functional currency amount is treated as changes in fair value (including changes of exchange rate) and is recognised in profit and loss or as other comprehensive income included in capital reserve. 8.2 Translation of financial statements denominated in foreign currencies
For the purpose of preparing the consolidated financial statements, financial statements of a foreign operation are translated from the foreign currency into RMB using the following method: assets and liabilities on the balance sheet are translated at the spot exchange rate prevailing at the balance sheet date; shareholders' equity items except for retained earnings are translated at the spot exchange rates at the dates on which such items arose; all items in the income statement as well as items reflecting the distribution of profits are translated at the spot exchange rates on the dates of the transactions; the opening balance of retained earnings is the translated closing balance of the previous year's retained earnings; the closing balance of retained earnings is calculated and presented on the basis of each translated income statement and profit distribution item. The difference between the translated assets and the aggregate of liabilities and shareholders' equity items is separately presented as the exchange differences arising on translation of financial statements denominated in foreign currencies of other comprehensive income under the shareholders' equity in the balance sheet.
Cash flows arising from a transaction in foreign currency and the cash flows of a foreign subsidiary are translated at the spot exchange rate on the date of the cash flows. The effect of exchange rate changes on cash and cash equivalents is regarded as a reconciling item and presented separately in the cash flow statement as "effect of exchange rate changes on cash and cash equivalents".
The opening balances and the comparative figures of previous year are presented at the translated amounts in the previous year's financial statements.
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III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING - continued
9. Financial instruments
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. For other financial assets and financial liabilities, transaction costs are included in their initial recognised amounts.
9.1 Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability (or a group of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period, using the effective interest rate. The effective interest rate is the rate that exactly discounts estimated future cash flows through the expected life of the financial asset or financial liability or, where appropriate, a shorter period to the net carrying amount of the financial asset or financial liability.
When calculating the effective interest rate, the Group estimates future cash flows considering all contractual terms of the financial asset or financial liability (without considering future credit losses), and also considers all fees paid or received between the parties to the contract giving rise to the financial asset and financial liability that are an integral part of the effective interest rate, transaction costs, and premiums or discounts, etc.
9.2 Classification, recognition and measurement of financial assets
On initial recognition, the Group's financial assets are classified into one of the four categories, including financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables, and available-for-sale financial assets. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Financial assets of the Group are loans and receivables and available-for-sale financial assets.
9.2.1 Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Financial assets classified as loans and receivables by the Group include cash and bank, notes receivable, accounts receivable, interest receivable and other receivables.
Loans and receivables are subsequently measured at amortised cost using the effective interest method. Gain or loss arising from derecognition, impairment or amortisation is recognised in profit or loss.
9.2.2 Available-for-sale financial assets
Available-for-sale financial assets include non-derivative financial assets that are designated on initial recognition as available for sale, and financial assets that are not classified as financial assets at fair value through profit or loss, loans and receivables or held-to-maturity investments.
For investments in equity instruments that do not have a quoted market price in an active market
and whose fair value cannot be reliably measured, they are measured at cost.
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III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING - continued
9. Financial instruments - continued
9.3 Impairment of financial assets
The Group assesses at each balance sheet date the carrying amounts of financial assets other than those at fair value through profit or loss. If there is objective evidence that a financial asset is impaired, the Group determines the amount of any impairment loss. Objective evidence that a financial asset is impaired is evidence that, arising from one or more events that occurred after the initial recognition of the asset, the estimated future cash flows of the financial asset, which can be reliably measured, have been affected.
Objective evidence that a financial asset is impaired includes the following observable events: (1) Significant financial difficulty of the issuer or obligor;
(2) A breach of contract by the borrower, such as a default or delinquency in interest or principal payments;
(3) The Group, for economic or legal reasons relating to the borrower's financial difficulty, granting a concession to the borrower;
(4) It becoming probable that the borrower will enter bankruptcy or other financial reorganisations;
(5) The disappearance of an active market for that financial asset because of financial difficulties of the issuer;
(6) Upon an overall assessment of a group of financial assets, observable data indicates that there is a measurable decrease in the estimated future cash flows from the group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the group. Such observable data includes:
- Adverse changes in the payment status of borrower in the group of assets; - Economic conditions in the country or region of the borrower which may lead to a failure to pay the group of assets;
(7) Significant adverse changes in the technological, market, economic or legal environment in which the issuer operates, indicating that the cost of the investment in the equity instrument may not be recovered by the investor;
(8) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost;
(9) Other objective evidence indicating there is an impairment of a financial asset.
- Impairment of financial assets measured at amortised cost
If financial assets carried at amortised cost are impaired, the carrying amounts of the financial assets are reduced to the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. The amount of reduction is recognised as an impairment loss in profit or loss. If, subsequent to the recognition of an impairment loss on financial assets carried at amortised cost, there is objective evidence of a recovery in value of the financial assets which can be related objectively to an event occurring after the impairment is recognised, the previously recognised impairment loss is reversed. However, the reversal is made to the extent that the carrying amount of the
financial asset at the date the impairment is reversed does not exceed what the amortised cost
would have been had the impairment not been recognised.
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III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING - continued
9. Financial instruments - continued
9.3 Impairment of financial assets - continued
- Impairment of financial assets measured at amortised cost - continued
For a financial asset that is individually 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 available for sale assets measured at cost
If an impairment loss has been incurred on an investment in unquoted equity instrument (without a quoted price in an active market) whose fair value cannot be reliably measured, or on a derivative financial asset that is linked to and must be settled by delivery of such an unquoted equity instrument, the carrying amount of the financial asset is reduced to the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. The amount of reduction is recognised as an impairment loss in profit or loss. The impairment loss on such financial asset is not reversed once it is recognised.
9.4 Transfer of financial assets
The Group derecognises a financial asset if one of the following conditions is satisfied: (1) the contractual rights to the cash flows from the financial asset expire; or (2) the financial asset has been transferred and substantially all the risks and rewards of ownership of the financial asset is transferred to the transferee; or (3) although the financial asset has been transferred, the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset but has not retained control of the financial asset.
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, the difference between (1) the carrying amount of the financial asset transferred; and (2) the sum of the consideration received from the transfer and any cumulative gain or loss that has been recognised in other comprehensive income, is recognised in profit or loss.
9.5 Classification, recognition and measurement of financial liabilities
Debt and equity instruments issued by the Group are classified into financial liabilities or equity on the basis of the substance of the contractual arrangements and definitions of financial liability and equity instrument.
On initial recognition, financial liabilities are classified into financial liabilities at fair value through profit or loss and other financial liabilities. The financial liabilities in group are other
financial liabilities, including short-term borrowings, notes payable, account payables, interest
payables, other payables, non-current liabilities due within one year and long-term payables etc.
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9. Financial instruments - continued
9.5 Classification, recognition and measurement of financial liabilities - continued
9.5.1 Other financial liabilities
Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with gain or loss arising from derecognition or amortisation recognised in profit or loss. 9.6 Derecognition of financial liabilities
The Group derecognises a financial liability (or part of it) only when the underlying present obligation (or part of it) is discharged.
When the Group derecognises a financial liability or a part of it, it recognises the difference between the carrying amount of the financial liability (or part of the financial liability) derecognised and the consideration paid (including any non-cash assets transferred or new financial liabilities assumed) in profit or loss.
9.7 Offsetting financial assets and financial liabilities
Where the Group has a legal right that is currently enforceable to set off the recognised financial assets and financial liabilities, and intends either to settle on a net basis, or to realise the financial asset and settle the financial liability simultaneously, a financial asset and a financial liability shall be offset and the net amount is presented in the balance sheet. Except for the above circumstances, financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be offset.
9.8 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The Group does not recognise any changes in the fair value of equity instruments. The equity instruments transaction expenses deducted from equity. The Group treats distribution to equity instrument holders as profit distributions. Shareholder equity is not affected by share dividend distributed.
10. Accounts Receivable
10.1 Receivables that are individually significant and for which bad debt provision is individually assessed
A receivable that exceeds RMB 3,000,000 is deemed as an individually significant receivable by the Group.
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III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING - continued
10. Accounts Receivable - continued
10.1 Receivables that are individually significant and for which bad debt provision is individually assessed - continued
For receivables that are individually significant, the Group assesses the receivables individually for impairment. For a financial asset that is not impaired individually, the Group includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Receivables for which an impairment loss is individually recognised are not included in a collective assessment of impairment.
10.2 Receivables that are not individually significant but for which bad debt provision is individually assessed
For receivables that are not individually significant but for which bad debt provision is individually assessed, when objective evidence suggests that the Group cannot collect receivables in accordance with original clauses, the Group would recognize impairment loss and provide bad debts according to the difference between carrying amount and present value of future cash flows. 11. Inventories
11.1 Categories of inventories
The Group's inventories mainly include raw materials, work in progress and finished goods. Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of conversion and other expenditures incurred in bringing the inventories to their present location and condition.
11.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the weighted average method. Agricultural products harvested are reported in accordance with the CAS 1 Inventories. 11.3 Basis for determining net realisable value of inventories and provision methods for decline in value of inventories
At the balance sheet date, inventories are measured at the lower of cost and net realisable value. If the net realisable value is below the cost of inventories, a provision for decline in value of inventories is made. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, the estimated costs necessary to make the sale and relevant taxes. Net realisable value is determined on the basis of clear evidence obtained, and takes into consideration the purposes of holding inventories and effect of post balance sheet events.
Provision for decline in value of other inventories is made based on the excess of cost of inventory over its net realisable value on an item-by-item basis.
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11. Inventories - continued
11.3 Basis for determining net realisable value of inventories and provision methods for decline in value of inventories - continued
After the provision for decline in value of inventories is made, if the circumstances that previously caused inventories to be written down below cost no longer exist so that the net realisable value of inventories is higher than their cost, the original provision for decline in value is reversed and the reversal is included in profit or loss for the period.
11.4 Inventory count system
The perpetual inventory system is maintained for stock system.
11.5 Amortisation method for low cost and short-lived consumable items and packaging materials Packaging materials and low cost and short-lived consumable items are amortised using the immediate write-off method.
12. Non-current assets held for sale
A certain non-current asset of the Group (excluding deferred tax asset) is accounted for as non- current asset held for sale if all of the following conditions are satisfied at the same time: the non- current asset can be disposed immediately at its current state solely based on the general terms for disposal of similar non-current assets; a resolution has been made for the disposal of the non- current asset; an irrevocable transfer agreement has been entered into with the transferee; and it is highly probable that the transfer will be completed within one year. Non-current assets held for sale are not depreciated or amortized, and are measured at the lower of the carrying amount and the fair value less costs to sell.
13. Long term equity investments
13.1 Basis for determining control, joint control and significant influence
Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating policy decisions relating to the activity require the unanimous consent of the parties sharing control. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. When determining whether an investing enterprise is able to exercise control or significant influence over an investee, the effect of potential voting rights of the investee (for example, warrants and convertible debts) held by the investing enterprises or other parties that are currently exercisable or convertible shall be considered.
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III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING - continued
13. Long term equity investments - continued
13.2 Determination of initial investment cost
For a long-term equity investment acquired not involving enterprises under common control, the investment cost of the long-term equity investment is the cost of acquisition. Where the acquiree's equity is obtained at stages through multiple deals and finally a business combination not involving enterprises under common control is achieved, the deals are accounted for considering whether they are respectively attributable to "a package deal": where the deals are attributable to "a package deal", the deals are treated as deals to obtain control.
Audit fee, legal services, consulting fees and other related management costs in acquisition are expensed in profits and losses when happened.
Other long-term equity investments acquired from other than acquisitions are recognised using original cost.
13.3 Subsequent measurement and recognition of profit or loss
13.3.1 Long-term equity investment accounted for using the cost method
The Group accounts for long-term equity investment using the cost method. A subsidiary is an investee that is controlled by the Group.
Under the cost method, a long-term equity investment is measured at initial investment cost. Long-term equity investment is adjusted when capital is added or recollected. Investment income is recognised in the period in accordance with the attributable share of cash dividends or profit distributions declared by the investee.
13.4 Disposal of long-term equity investments
On disposal of a long term equity investment, the difference between the proceeds actually received and receivable and the carrying amount is recognised in profit or loss for the period. 14. Fixed assets
14.1 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.
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III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING - continued
14. Fixed assets - continued
14.2 Depreciation of each category of fixed assets
A fixed asset is depreciated over its useful life using the straight-line method since the month subsequent to the one in which it is ready for intended use. The useful life, estimated net residual value rate and annual depreciation rate of each category of fixed assets are as follows:
Estimated Estimated Annual useful life residual rate depreciation rate Buildings 20-40years 0-5% 2.4%-5.0% Machinery 5-20years 0-5% 4.8%-20.0% Motor Vehicles 4-12years 0-5% 7.9%-25.0% Estimated net residual value assumes the situation where a fixed asset expire for its estimated useful life and is in its expected final status. Estimated net residual value is the amount that the Group can obtain from the disposal less expected disposal fees.
14.3 Other explanations
If a fixed asset is upon disposal or no future economic benefits are expected to be generated from its use or disposal, the fixed asset is derecognised. When a fixed asset is sold, transferred, retired or damaged, the amount of any proceeds on disposal of the asset net of the carrying amount and related taxes is recognised in profit or loss for the period.
The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciation method applied at least once at each financial year-end, and account for any change as a change in an accounting estimate.
15. Construction in progress
Construction in progress is measured at its actual costs. The actual costs include various construction expenditures during the construction period, borrowing costs capitalised before it is ready for intended use and other relevant costs. Construction in progress is not depreciated. Construction in progress is transferred to a fixed asset when it is ready for intended use.
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16. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying asset are capitalised when expenditures for such asset and borrowing costs are incurred and activities relating to the acquisition, construction or production of the asset that are necessary to prepare the asset for its intended use or sale have commenced. Capitalisation of borrowing costs ceases when the qualifying asset being acquired, constructed or produced becomes ready for its intended use or sale. Capitalisation of borrowing costs is suspended during periods in which the acquisition, construction or production of a qualifying asset is suspended abnormally and when the suspension is for a continuous period of more than 3 months. Capitalisation is suspended until the acquisition, construction or production of the asset is resumed. Other borrowing costs are recognised as an expense in the period in which they are incurred. Where funds are borrowed under a specific-purpose borrowing, the amount of interest to be capitalized is the actual interest expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds before being used on the asset or any investment income on the temporary investment of those funds.
17. Biological assets
17.1 Bearer biological assets
Bearer biological assets are biological assets, for example, held for the production of agricultural produce, provision of services or rental, Bearer biological assets in the Group are vines. A bearer biological asset is initially measured at cost. The cost of a bearer biological asset self-grown or self-bred comprises those costs necessarily incurred and directly attributable to the asset before the asset becomes available for its intended production and operating purposes, and any borrowing cost meeting the capitalisation criteria.
The Group charge deprecation for productive biological assets which satisfy expected production, and record the deprecation in balance sheet and income statement. The Group uses straight line method to calculate the deprecation, and details as follows:
Estimated Estimated Annual Category useful life residual rate depreciation rate Vines 20 years - 5.0% The Group evaluates the useful life and expected net salvage value by considering the normal producing life of the bearer biological assets.
The Group reviews the useful life and estimated net residual value of bearer biological assets and the depreciation method applied at least once at each financial year-end, and account for any change as a change in an accounting estimate.
On the sale, identification of any shortages during stocktaking, death or damage of biological asset, the proceeds on disposal net of the carrying amount and relevant taxes is recognised in profit or loss for the current period.
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III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING - continued
18. Intangible assets
Intangible assets include land use rights, software, etc.
An intangible asset is measured initially at cost method. When an intangible asset with a finite useful life is available for use, its original cost less net residual value and any accumulated impairment losses is amortised over its estimated useful life using the straight-line method. The useful lives of the intangible assets are as follows:
Annual Item Useful life Net residual value amortization rate Land use rights 40-50 years - 2.0%-2.5% Software 5-10 years - 10.0%-20.0% Trademark 10 years - 10.0% 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.
19. Impairment of long-term assets
The Group and the Company review the impairment status of long-term equity investments, fixed assets, construction in progress, bearer biological asset and intangible assets with finite useful life at the end of each year. If the assets exist impairment, the Group estimates the recoverable amount of the assets.
Recoverable amount is estimated on individual basis. If it is not practical to estimate the recoverable amount of an individual asset, the recoverable amount of the asset group to which the asset belongs will be estimated. The recoverable amount of an asset is the higher of its fair value less costs of disposal and the present value of the future cash flows expected to be derived from the asset.
If recoverable amount of assets is less than book value, the difference is recognised as impairment provision and expensed in current period.
Goodwill is tested for impairment at least at the end of each year. For the purpose of impairment testing, goodwill is considered together with the related assets group (s), i.e., goodwill is reasonably allocated to the related assets group (s) or each of assets group (s) expected to benefit from the synergies of the combination. An impairment loss is recognised if the recoverable amount of the assets group or sets of assets groups (including goodwill) is less than its carrying amount. The impairment loss is firstly allocated to reduce the carrying amount of any goodwill allocated to such assets group or sets of assets groups, and then to the other assets of the group pro-rata on the basis of the carrying amount of each asset (other than goodwill) in the group. The impairment is recognised in profit or loss for the period in which it is incurred and will not be reversed in any subsequent period.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING - continued
20. Long term prepaid expenses
Long term prepaid expenses of the Group are amortized over the following period:
Amortization period Land requisition fee 50 years Land lease prepayment 50 years Greening fee 5-20 years Leasehold improvement 3-5years Others 3 years 21. Employee benefits
21.1 Short-term employee benefits
In an accounting period in which an employee has rendered service to the Group, the Group recognises the actual employee benefits for that service as a liability. The employee benefits of the Group are either included in cost of related assets or charged to profit or loss in the period when they are incurred. Non-monetary employee benefits are measured at fair value.
Social insurances such as medical insurance, injury insurance and pregnancy insurance, housing funds, labor union and employee education fees paid by the Group for employees, are recognised as relevant liability in the period in which the employees provide service, in accordance with the regulated recognition basis and percentage. The related expenditures are either included in cost of related assets or charged to profit or loss in the period when they are incurred.
21.2 Accounting treatments of retired benefits
Retired benefits of the Group are all predetermined provision plan.
In the period in which the employees provide service, the Group recognise liability in accordance with the amounts to be paid calculated according to the predetermined provision plan, and the related expenditures are either included in cost of related assets or charged to profit or loss in the period when they are incurred.
21.3 Accounting treatments of termination benefits
When providing termination benefits to employees, the Group recognise employee benefits payroll resulting from termination benefits at the earlier of: the Group cannot unilaterally withdraw from the termination plan or the redundancy offer; the Group recognise relevant costs and expenses related to the payment of termination benefits in reconstructuring.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING - continued
22. Revenue
22.1 Revenue from sale of goods
Revenue from sale of goods is recognised when the Group has transferred to the buyer the significant risks and rewards of ownership of the goods. The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold. The amount of revenue can be measured reliably and it is probable that the associated economic benefits will flow to the Group. The associated costs incurred or to be incurred can be measured reliably.
22.2 Revenue from rendering of services
When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction shall be recognized by reference the stage of completion of the transaction at the reporting date. The outcome of a transaction can be estimated reliably. When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue is recognised only to the extent of the costs incurred that will be recoverable, and the costs incurred are recognised as expenses for the period. When it is not probable that the costs incurred will be recovered, revenue is not recognised.
23. Government grants
Government grants are transfer of monetary assets and non-monetary assets from the government to the Group at no consideration. The income is accounted for as either a government grant related to an asset or a government grant related to income based on its nature.
A government grant is recognised only when the Group can comply with the conditions attaching to the grant and the Group will receive the grant. Monetary government grants are measured by the amount received or receivable.
23.1 Government grant related to an asset
A government grant related to an asset is recognised as deferred income, and evenly amortised to profit or loss over the useful life of the related asset.
23.2 Government grant related to income
For a government grant related to income, if the grant is a compensation for related expenses or losses to be incurred in subsequent periods, the grant is recognised as deferred income, and recognised in profit or loss over the periods in which the related costs are recognised. If the grant is a compensation for related expenses or losses already incurred, the grant is recognised immediately in profit or loss for the period.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING - continued
24. Deferred tax assets/deferred tax liabilities
The income tax expenses include current income tax and deferred income tax.
24.1 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.
24.2 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
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING - continued
24. Deferred tax assets/deferred tax liabilities - continued
24.2 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.
24.3 Net off of income taxes
When the Group has a legal right to settle on a net basis and intends either to settle on a net basis or to realise the assets and settle the liabilities simultaneously, current tax assets and current tax liabilities are offset and presented on a net basis.
When the Group has a legal right to settle current tax assets and liabilities on a net basis, and deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax assets and liabilities on a net basis or to realise the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a net basis. 25. 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. Operating lease accounting methods
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.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
IV. CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY ASSUMPTIONS AND UNCERTAINTIES IN ACCOUNTING ESTIMATES
In the application of accounting policies as set out in Note III, the Group is required to make judgments, estimates and assumptions about the carrying amounts of items in the financial statements that cannot be measured accurately, due to the internal uncertainties of the operating activities. These judgments, estimates and assumptions are based on historical experience of the Group's management as well as other factors that are considered to be relevant. Actual results may differ from these estimates.
The Group periodically review the judgments, estimates and assumptions above on a going concern basis. For those changes in accounting policies that only affect current financial statements, the influences are recognized in current period. For those changes in accounting policies that affect both current and future financial statements, the influences are recognized in both current and prospective periods.
Significant accounting judgments and accounting estimates
The following are key assumptions for after balance sheet date event and other factors of uncertain estimation. They may cause material adjustment on balance sheet in following accounting period.
Deferred tax assets
Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable profits together with future tax planning strategies.
Depreciation
As set out in Note III-14, the depreciation is calculated on the straight line basis to write-off the cost of each item of fixed assets to its residual value over its estimated useful life. The Group's management determines the estimated useful lives for its fixed assets. This estimate is based on the historical experience of the actual useful lives of fixed assets of similar nature and functions. If the previous estimates have significant changes, and depreciation expenses will be adjusted in the future periods.
Useful life of intangible assets
The estimated useful lives of the intangible assets are determined based on the historical experience of the actual useful lives of intangible assets of similar nature and functions as well as considering the contractual rights and statutory rights applicable to the intangible assets. When the estimated useful lives of finite intangible assets are shortened or extended, the amortization periods should be adjusted accordingly.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
IV. 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 assets group), the fair value of the assets cannot be reliably estimated. When the management make estimation on the expected future cash flows from the asset or cash generating unit, estimates should be made on choosing a suitable 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 accounts receivable
A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy are considered indicators that the trade receivable is impaired. The provision is reassessed at the end of each year.
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. V. TAXES
1. The main taxes and tax rate are as follows:
(1) China
Value added tax VAT is levied at6% and17% 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
V. TAXES - continued
(1) China - continued
As approved by the State Council, according to "Circular on Nationwide Implementation of Pilot for Change from Business Tax to VAT" (Cai Shui[2016] No.36), since 1 May 2016, all the business tax payers engaged in construction, real estate, finance and living services etc. are included in the scope of pilot and pay VAT instead of business tax (the "change from business tax to VAT"). Thereinto, the VAT rate for living services industry is6%. The Group has been paying VAT instead of business tax for its revenue from tour, accommodation, catering etc. since the "change from business tax to VAT".
(2) France
Value added tax VAT is levied at19.6% on the invoiced amount after deduction of eligible input VAT.
Corporate income tax The Group is subject to a corporate income tax rate of33% on its taxable income.
(3) Spain
Value added tax VAT is levied at21% on the invoiced amount after deduction of eligible input VAT.
Corporate income tax The Group is subject to a corporate income tax rate of28% on its taxableincome.(2015:30%)
Other than tax incentives stated in Note V-2, applicable tax rates of the Group in 2016 and 2015 are all stated as above.
2. Tax incentives and relative permit
Ningxia Changyu Grape Growing Co., Ltd.("Ningxia Growing"), a subsidiary of the Group, whose principal activity is grape growing is incorporated in Ningxia Huizu Autonomous Region. According to clause 27 of PRC Corporate Income Tax and clause 86 of PRC Corporate Income Tax Measures for Implementation, Ningxia Changyu Grape Growing Co., Ltd. enjoys an exemption of corporate income tax.
Xinjiang Tianzhu Co., Ltd ("Xinjiang Tianzhu"), a subsidiary of the Company, is an enterprise of wine production and sales incorporated in Shihezi city, Xinjiang Weizu Autonomous. In accordance with the Notice on Tax Policy Issues concerning Further Implementation of the Western China Development Strategy (Cai Shui[2011] No.58), Xinjiang Tianzhu is qualified to enjoy preferential taxation policies, which means it can pay corporate income tax at a preferential rate of15% for the period from 2015 to 2020.
Xinjiang Babao Baron Chateau Co., Ltd. ("Shihezi Chateau"), a subsidiary of the Company, is an enterprise of wine production and sales incorporated in Shihezi city, Xinjiang Weizu Autonomous. In accordance with the Notice on Tax Policy Issues concerning Further Implementation of the Western China Development Strategy (Cai Shui[2011] No.58), Shihezi Chateau is qualified to enjoy preferential taxation policies, which means it can pay corporate income tax at a preferential rate of15% for the period from 2015 to 2020.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Cash and bank
Closing balance Opening balance RMB RMB Cash 117,507 179,488 Bank balance 1,240,607,797 1,103,705,354 Other currency fund 150,792,303 181,477,572____________ ____________ Total 1,391,517,607 1,285,362,414________________________ ________________________ At 31 December 2016, the balance of restricted cash of the Group is as follows:
Closing balance Opening balance RMB RMB The Company's housing fund 2,711,926 2,643,181____________ ____________ 2,711,926 2,643,181________________________ ________________________ As at 31 December 2016, the Group's other monetary assets is as follows:
Closing balance Opening balance RMB RMB Research and Development Co., Ltd
("R&D Centre") pledged deposit 46,100,000 151,100,000 Refundable deposit for notes payable 38,900,000 30,000,000 Deposit for letter of credit 25,694,735 370,000 Alipay account balance 40,047,367 - Company cards deposit guarantee 50,201 7,572____________ ____________ 150,792,303 181,477,572________________________ ________________________ As at 31 December 2016, the balance of restricted of the alipay account is RMB 18,118,441 (31 December 2015: Nil).
As at 31 December 2016, the Group's overseas cash and bank deposit is RMB 16,080,618 (31 December 2015: RMB 6,019,640).
As at 31 December 2016, The Group's term deposits with original maturity of more than three months when acquired is RMB 3,000,000 (31 December 2015: RMB 9,000,000) with interest rate1.65%.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Notes receivable
(1) Categories of notes receivable
Closing balance Opening balance RMB RMB Bank acceptances 210,470,027 113,988,122____________________ __________________ (2) Notes receivable which have been pledged as security at the end of the period
As at 31 December 2016, there was no pledged notes receivable (31 December 2015: Nil). (3) Notes endorsed by the Group to other parties which are not yet due at the end of the period Closing balance Opening balance RMB RMB Bank acceptances 198,302,531 84,677,596____________________ __________________ As at 31 December 2016, notes endorsed by the Group to other parties which are not yet due at the end of the period is RMB 198,302,531 (31 December 2015: RMB 84,677,596). The notes are used for payment to suppliers. The Group believes that due to good reputation of bank, the risk of notes not accepting by bank on maturity is very low, and almost all the risks and rewards on ownership of the notes receivable have been transferred to the supplier, therefore derecognise the note receivables endorsed. If the bank is unable to pay the notes on maturity, according to the relevant laws and regulations of China, the Group would undertake limited liability for the notes. (4) Notes receivable reclassified to accounts receivable due to the drawers' inability to settle the note on maturity
As at 31 December 2016, no notes receivable were reclassified as accounts receivable due to the default of drawer (31 December 2015: Nil).
3. Accounts receivable
(1) Disclosure of accounts receivable by categories:
Closing balance Opening balance
Bad debts Carrying Bad debts Carrying Amount provision amount Amount provision amount Amount Proportion Amount Ratio Amount Amount Proportion Amount Ratio Amount RMB % RMB % RMB RMB % RMB % RMB Accounts receivable that are
individually significant and
for which bad debt provision
has been assessed individually 75,230,493 43.5 - - 75,230,493 74,538,738 37.7 - - 74,538,738 Accounts receivable that are
not individually significant but
for which bad debt provision
has been assessed individually_9_7,_83_2,_13_5_5_6_.5__-____-___9_7,_83_2,_13_5_12_3,_25_6,_35_3_6_2_.3 __-____-___12_3,_25_6,_35_3
Total __17__3,__06__2,__62__8__10__0__.0____-________-______17__3,__06__2,__62__8__19__7,__79__5,__09__1__10__0__.0 ____-________-______19__7,__79__5,__09__1
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
3. Accounts receivable - continued
(1) Disclosure of accounts receivable by categories: - continued
The normal credit term is one month, which can be extended to one year for certain major customers. The accounts receivable are interest-free.
As at 31 December 2016, ownership restricted accounts receivable is RMB 30,732,944 (31 December 2015: RMB 23,880,775), referring to Note VI-48.
The aging analysis is as follows:
Closing balance Opening balance RMB RMB Within 1 year 172,610,351 197,653,190 1 to 2 years 452,277 141,901__________ __________ 173,062,628 197,795,091____________________ ____________________ (2) Recognitions, collections and reversals during the current period:
As at 31 December 2016, there was no bad debt provision for accounts receivable (31 December 2015: Nil). There was no bad debt provision made, reversed or written-off by management in 2016 (2015: Nil).
(3) Top five entities with the largest balances of accounts receivable:
Relationship Percentage of Name with the Group Amount Aging total receivables RMB % DIA Market Third party 13,687,807 Within 1 year 7.9 Nongongshang Supermarket
(Group) Co., Ltd Third party 13,625,761 Within 1 year 7.9 Wal-Mart (China) Investment Co., Ltd. Third party 6,416,066 Within 1 year 3.7 Fujian Minhou glorison Co., Ltd Third party 6,025,970 Within 1 year 3.5 Suguo Supermarket Co., Ltd Third party __5_,7_3_1_,5_9_8 Within 1 year _3_._3__4__5__,4__8__7__,2__0__2 __26__.__3
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
4. Prepayments
(1) The aging analysis is as follows:
Closing balance Opening balance Amount Ratio Amount Ratio RMB % RMB % Within 1 year 2,175,606 100.0 3,096,223 86.2 1 to 2 years - - 494,875 13.8________ _____ ________ _____ 2,175,606 100.0 3,591,098 100.0________________ __________ ________________ __________ (2) As at 31 December 2016, the top 5 of prepayments were as follows:
Reason Percentage of Relationship for being total advances with the Group Amount Aging outstanding to suppliers RMB % Shandong Electricity Company
Yantai branch Third party 502,670 Within 1 year electricity purchase 23.1 DONELLIVINI S.P.A Third party 367,148 Within 1 year goods not received 16.9 Xinjiang Hua Xing Glass Co., Ltd Third party 116,267 Within 1 year goods not received 5.3 Shanghai Zi Ri Packing Co., Ltd Third party 104,832 Within 1 year goods not received 4.8 Chongqing Hao Sheng glass
incorporated company Th ird party ____9_3_,4_5_6 Within 1 year goods not received __4._3____1__,__18__4__,3__7__3 __5__4.__4 5. Interest receivable
(1) Categories of interest receivable
Closing balance Opening balance RMB RMB Interests of term deposits 24,200 8,019,338________________ ________________ (2) Overdue interest
As at 31 December 2016, there was no overdue interest receivable (31 December 2015: Nil).
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables
(1) Disclosure of other receivables by categories
Closing balance Opening balance
Bad debts Carrying Bad debts Carrying Amount provision amount Amount provision amount Amount Proportion Amount Ratio Amount Amount Proportion Amount Ratio Amount RMB % RMB % RMB RMB % RMB % RMB Other receivables that are
individually significant and
for which bad debt provision
has been assessed individually 7,417,220 39.3 - - 7,417,220 32,390,931 60.7 (7,199,521) 22.2 25,191,410 Other receivables that are
not individually significant but
for which bad debt provision
has been assessed individually_1_1,_46_3,_58_0_6_0_.7____-___-__1_1,_46_3,_58_0_2_0,_95_5,_07_7_3_9_.3____-___-__2_0,_95_5,_07_7 Total __1__8,__88__0,__80__0__10__0__.0________-______-____1__8,__88__0,__80__0__5__3,__34__6,__00__8__10__0__.0(__7,__19__9,__52__1)__1__4__.0__4__6,__14__6,__48__7 The aging analysis is asfollows：
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 8,204,303 43.5 - 8,204,303 36,271,669 68.0 - 36,271,669 1 to 2 years 7,715,992 40.8 - 7,715,992 2,725,644 5.1 - 2,725,644 2 to 3 years 1,929,613 10.2 - 1,929,613 6,840,476 12.8 - 6,840,476 Over 3 years __1_,0_3_0,_89_2___5_.5______-___1_,0_3_0,_89_2__7_,5_0_8,_21_9__1_4_.1__(7_,1_9_9,_52_1 )___3_0_8,_69_8 Total ___1_8__,8__8__0,__80__0____10__0__.0____________-______18__,8__8__0,__80__0__5__3__,3__4__6,__00__8__1__0__0__.0____(7__,1__99__,5__2__1)__4__6__,1__4__6,__48__7 (2) Accrual, reversal and written-off during the current period
No bad debt accrued or reversed in 2016 (2015: bad debt was reversed RMB: Nil).
(3) Other receivables written off in the reporting period
Other receivables were written off RMB 7,199,521 in 2016. (2015: Nil).
(4) Disclosure of other receivables by categories
Closing balance Opening balance RMB RMB Deposit 13,191,851 27,424,926 Investment fund - 7,199,521 Petty cash receivable 2,934,424 6,679,122 Refund of consumption tax, real estate tax 573,586 635,482 Others 2,180,939 11,406,957__________ _________ 18,880,800 53,346,008____________________ __________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables - continued
(5) Top five entities with the largest balances of other receivables
As at 31 December 2016, the top 5 of other receivables are as follows:
Percentage of total Bad debt Nature Amount Aging other receivables Amount RMB % RMB Yantai Development Zone
Finance Bureau Construction deposit 7,417,220 Within 2 years 39.3 - Yantai Development Zone Construction
Industry Association Construction deposit 2,151,300 Within 3 years 11.4 - Canada Oros Ice-wine Co., Ltd Foreign investment fund 2,050,000 1-2 years 10.9 - Shandong Electricity Company
Yantai branch Electricity deposit 1,385,200 2-3years 7.3 - Yantai Economic and Technological
Development Zone Thermal Co., Ltd Deposit ____5_0_0,_00_0 Within 1 year __2._6 ______-_______13__,5__0__3,__72__0 __7__1__.5 ____________-__ 7. Inventories
(1) Disclosure of inventories by categories
Closing balance Opening balance
Net carrying Net carrying Balance Provision amount Balance Provision amount RMB RMB RMB RMB RMB RMB Raw material 72,011,633 - 72,011,633 89,256,433 - 89,256,433 Work in progress 1,253,218,347 - 1,253,218,347 1,247,023,301 - 1,247,023,301 Finished goods __9_44_,_80_6_,5_1_6 (_21_,_42_6_,7_5_6)__9_23_,_37_9_,7_6_0__9_42_,_72_0_,7_2_0(_18_,_14_7_,4_9_0)__9_24_,_57_3_,2_3_0__2__,2__7__0,__03__6__,4__9__6 (__21__,__42__6__,7__5__6)__2__,2__4__8,__60__9__,7__4__0__2__,2__7__9,__00__0__,4__5__4(__18__,__14__7__,4__9__0)__2__,2__6__0,__85__2__,9__6__4 (2) Inventory provision
Opening balance Increase Decrease Closing balance RMB RMB RMB RMB Finished goods __1__8__,1__4__7__,4__9__0 __3__,2__7__9__,2__6__6 ________-__
______
__2__1__,4__2__6__,7__5__6
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
8. Non-current assets held for sale
Expected Expected Closing balance Fair value disposal fees disposal time RMB RMB RMB
Zhen Shan Tun Department ____2__,0__0__0__,1__9__7 1__6__,2__8__2__,2__2__4 3__,8__7__8__,5__6__0 Within 1 year Note: The Company has signed an irrevocable agreement for disposal of fixed assets, with the amount of RMB 16,282,224, according to which the disposal is expected to be completed in 2017. 9. Other current assets
Closing balance Opening balance RMB RMB Prepaid taxes 26,238,092 28,201,991 Pending deduct VAT on purchase 135,316,274 3,580,354 Prepaid rent 7,967,876 16,667,206__________ __________ 169,522,242 48,449,551____________________ ____________________ 10. Available-for-sale financial assets
(1) Available-for-sale financial assets
Closing balance Opening balance
Amount Impairment Carrying amount Amount Impairment Carrying amount RMB RMB RMB RMB RMB RMB Available-for-sale
equity instruments
measured at cost ______10__,__34__0__,2__6__3(__10__,__00__0__,0__0__0) __3__4__0,__26__3__ ______10__,__40__2__,8__1__4(__10__,__00__0__,0__0__0) __4__0__2,__81__4__ (2) Available-for-sale financial assets measured at cost
Carrying amount Provision for impairment losses Proportion of
voting power in Cash dividend Investee Opening Increase Decrease Closing Opening Increase Decrease Closing the investee(%) for the period RMB RMB RMB RMB RMB RMB RMB RMB RMB Yantai Ding Tao
Construction and
Development Co., Ltd
(Note 1). 10,000,000 - - 10,000,000 10,000,000 - - 10,000,000 18.0 - Other(Note 2) 402,814 - (62,551) 340,263 - - - - Less than1% - 10,402,814 - (62,551) 10,340,263 10,000,000 - - 10,000,000
Note 1: An impairment provision amounting to RMB 10,000,000 has been made by the Company for the balance of the carrying amount of the equity investment in Yantai Dingtao Construction and Development Co., Ltd. As the fair value of the investee which is an unlisted company cannot be measured reliably, the Company measured such available-for-sale financial asset at cost. Note 2: The Group holding equity ratios of investment companies are less than1%. Investment
companies are all unlisted companies, and their fair value cannot be measured reliably, therefore,
the Group uses cost method to measure these available-for-sale financial assets.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Fixed assets
(1) Details of fixed assets
Buildings Machinery Motor Vehicles Total RMB RMB RMB RMB I. Total original carrying amount
1. Opening balance 2,647,418,685 1,498,619,150 28,457,393 4,174,495,228 2. Increase
(1)Purchase 6,350,850 33,119,747 4,341,981 43,812,578 (2)Transfer from CIP 1,300,071,628 442,163,898 817,566 1,743,053,092 (3)Acquisition increase 5,935,266 2,114,634 - 8,049,900 3. Decrease
Disposal - (6,881,854) (4,287,799) (11,169,653) Classified as Non-current
assets held for sale (VI-8) ____(3_,_59_9_,2_2_1) _________-_ _______-_ ____(3_,_59_9_,2_2_1) 4. Closing balance __3_,9_5_6,_17_7_,2_0_8 __1_,9_6_9,_13_5_,5_7_5 __29_,_32_9_,1_4_1 __5_,9_5_4,_64_1_,9_2_4 II. Total accumulated depreciation
1. Opening balance 336,439,433 725,768,456 23,042,154 1,085,250,043 2. Increase
Additions 75,321,191 120,291,861 2,165,958 197,779,010 3. Decrease
Disposal - (5,902,188) (4,073,410) (9,975,598) Classified as Non-current
assets held for sale (VI-8) ____(1_,_59_9_,0_2_4) _________-_ _______-_ ____(1_,_59_9_,0_2_4) 4. Closing balance ___4_10_,_16_1_,6_0_0 ___8_4_0,_15_8_,1_2_9 __21_,_13_4_,7_0_2 __1_,2_7_1,_45_4_,4_3_1 III. Total carrying amount
1. Closing carrying amount ____3__,5__4__6,__01__5__,6__0__8 ____1__,1__2__8,__97__7__,4__4__6 ____8__,__19__4__,4__3__9 ____4__,6__8__3,__18__7__,4__9__3 2. Opening carrying amount ____2__,3__1__0,__97__9__,2__5__2 ______7__7__2,__85__0__,6__9__4 ______5,__41__5__,2__3__9 ____3__,0__8__9,__24__5__,1__8__5 As at 31 December 2016, fixed assets with ownership restricted are RMB 68,658,094 (31 December 2015: RMB 18,405,000). Please refer to Notes VI-48 in detail.
As at 31 December 2016, Classified as available for sale assets are RMB 2,000,197 (31 December 2015:Nil), there was no temporary idle fixed assets, no fixed assets leased under finance leases , no leased out under operating leases and no held for sale at the end of the period.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Fixed assets - continued
(2) Fixed assets of which certificates of title have not been obtained
As at 31 December 2016, buildings without property certificate are as follows:
Reasons why certificates Amount of title have not been obtained RMB
Research and Development Co, Ltd Industry Production Centre 1,210,828,009 Processing Changan Chateau Dormitory building, main building 265,374,545 Processing Xinjiang Shihezi Chateau factory building 256,782,251 Processing Beijing Chateau European town, main, service building 220,650,663 Processing Ding Luo Te Chateau main building 90,847,654 Processing Sales Company office buildings 21,896,020 Processing Xinjiang Tianzhu fermentations and storage warehouse 19,057,557 Processing Ice Wine Chateau office building and packing workshop 9,814,003 Processing Jingyang factory fermentation building 4,389,119 Processing Fermentation centre office, experiment building and workshop 3,994,837 Processing Kylin Packaging finished goods warehouse and workshop ____2_,5_7_8_,2_0_6 Processing__2__,1__0__6__,2__1__2__,8__6__4
12. Construction in progress
(1) Construction in progress:
Closing balance Opening balance RMB RMBR&D Centre ("Changyu Wine integrational
Construction") Project 1,227,968,480 1,799,097,086 Ningxia Chateau Construction Project 36,717,169 13,709,767 Shihezi Chateau Construction Project 30,600,684 28,105,618 Sales Company construction project 26,011,600 55,645,386 Xianyang Chateau Construction Project 10,346,598 61,308,522 Ding Luo Te Chateau Project 4,871,422 5,000,221 AFIP plaza reconstruction project 3,713,945 3,659,245 Jingyang Wine fermentation workshop
reconstruction project 2,331,559 997,645 Other companies construction project 2,299,684 973,216 Huanren factory construction project 920,596 29,502,825 The Company's reconstruction project 500,000 7,990,777____________ ____________ 1,346,281,737 2,005,990,308________________________ ________________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
12. Construction in progress - continued
(2) Changes in significant construction inprogress：
Transfer to Total accumulated Capitalizing Interest
Opening
Transfer to
intangible Closing Capitalizing interest capitalization
Budget balance Addition PPE assets balance Status interest for this period rate Financed by RMB RMB RMB RMB RMB RMB % RMB RMB %
Loans from financialR&D Centre ("Changyu Wine
institutions integrational Construction") Project 4,505,780,000 1,799,097,086 1,003,719,738 (1,574,848,344) - 1,227,968,480 62.2 2,289,723 2,289,723 1.2 and Self-raised Changan Chateau Construction
Project 620,740,000 61,308,522 17,783,086 (68,745,010) - 10,346,598 95.0 - - - Self-raised Sales Company construction project 161,350,000 55,645,386 11,407,602 (27,335,730) (13,705,658) 26,011,600 90.0 - - - Self-raised Shihezi Chateau Construction
Project 780,000,000 28,105,618 14,565,801 (12,070,735) - 30,600,684 87.9 - - - Self-raised Ningxia Chateau Construction
Project 414,150,000 13,709,767 31,819,787 (8,812,385) - 36,717,169 95.0 - - - Self-raised Ding Luo Te Chateau project 192,400,000 5,000,221 4,468,303 (4,597,102) - 4,871,422 95.7 - - - Self-raised Huanren factory construction project 31,000,000 29,502,825 4,319,991 (32,902,220) - 920,596 95.0 - - - Self-raised 1,992,369,425 1,088,084,308 (1,729,311,526) (13,705,658) 1,337,436,549 2,289,723 2,289,723
The interest capitalized in construction in progress is RMB 2,289,723 in 2016(2015: Nil).
(3) As at 31 December 2016, there was no indication of impairment, therefore no provision was made.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. Bearer biological assets
Bearer biological assets are Vines, which measured in cost method
Immature Mature
biological assets biological assets Total RMB RMB RMB I. Total original carrying amount
1. Opening balance 132,806,510 70,761,347 203,567,857 2. Increase
(1) Purchase 751,300 - 751,300 (2) Cultivated increase 18,737,361 - 18,737,361 (3) Acquisition increase 1,519,808 250,080 1,769,888 (4) Transfer to mature assets
from immature assets (70,197,077) 70,197,077 -__________ _________ __________ 3. Decrease
(1) Disposal (5,775,942) - (5,775,942)__________ _________ __________ 4. Closing balance 77,841,960 141,208,504 219,050,464__________ _________ __________ II. Total accumulated depreciation
1. Opening balance - 11,369,574 11,369,574 2. Increase
Additions - 6,251,910 6,251,910__________ _________ __________ 3. Closing balance - 17,621,484 17,621,484__________ _________ __________ III. Total net carrying amount
1. Closing net carrying amount 77,841,960 123,587,020 201,428,980____________________ __________________ ____________________ 2. Opening net carrying amount 132,806,510 59,391,773 192,198,283____________________ __________________ ____________________ As at 31 December 2016, there was no biological asset with ownership restricted.
As at 31 December 2016, there was 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
14. Intangible assets
(1) Intangible asset
Land use rights Software use rights Trademark Total RMB RMB RMB RMB I. Total original carrying amount
1. Opening balance 467,605,436 37,653,788 15,237,653 520,496,877 2. Increase
(1)Purchase 23,884,633 1,076,223 201,924 25,162,780 (2)Transfer from CIP - 13,705,658 - 13,705,658 (3)Acquisition increase _________-_ _________-_ _____2_,4_8_8 _______2_,4_8_8 3. Closing balance ___4_91_,_49_0_,0_6_9 ____5_2,_43_5_,6_6_9 __15_,_44_2_,0_6_5 ___5_59_,_36_7_,8_0_3 II. Total accumulated depreciation
1. Opening balance 46,649,712 9,826,191 121,058 56,596,961 2. Increase
Additions ____10_,_15_3_,7_1_8 _____2,_72_2_,0_9_2 __6_,_07_9_,9_5_2 ____18_,_95_5_,7_6_2 3. Closing balance ____56_,_80_3_,4_3_0 ____1_2,_54_8_,2_8_3 __6_,_20_1_,0_1_0 ____75_,_55_2_,7_2_3 III. Total carrying amount
1. Closing carrying amount ______4__34__,__68__6__,6__3__9 ________3__9,__88__7__,3__8__6 ____9__,__24__1__,0__5__5 ______4__83__,__81__5__,0__8__0 2. Opening carrying amount ______4__20__,__95__5__,7__2__4 ________2__7,__82__7__,5__9__7 ____15__,__11__6__,5__9__5 ______4__63__,__89__9__,9__1__6 As at 31 December 2016, the intangible asset with restricted ownership was RMB 145,937,719, Please refer to Note VI-48 in detail.
(2) Land use right without ownership certificate
As at 31 December 2016, details of land use right without ownership certificates are listed as below:
Carrying amount Reasons RMB
A-49 Residential Community of
Yantai Development Zone 23,690,000 In progress____________________
15. Goodwill
Investee Opening balance Increase Decrease Closing balance RMB RMB RMB RMB Etablissements Roullet
Fransac ("Fransac Sales") 13,112,525 - - 13,112,525 Dicot Partners, S.L (" Dicot ") 92,391,901 - - 92,391,901 Societe Civile Argricole Du Chateau
De Mirefleurs ("Mirefleurs") _______-__ _15_,_7_61_,_44_0_ ___-___ __1_5_,7_6_1_,4_4_0 Total __1__0__5__,5__0__4__,4__2__6 _1_5__,__7_6_1__,_4_4__0
__
______-__
____
__1__2__1__,2__6__5__,8__6__6
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
15. Goodwill - continued
The Group acquired Fransac Sales, Dicot and Mirefleurs in December 2013, September 2015 and January 2016 respectively, resulting in respective goodwill amounting to RMB 13,112,525,RMB 92,391,901 and RMB 15,761,440, which have been allocated to corresponding asset groups for impairment testing.
The recoverable amount of an asset group is determined based on the present value of expected future cash flows. Future cash flow projections are made based on financial budgets approved by management covering a 5-year period (projecting period) and presume that cash flows after the projecting period (subsequent period) remain unchanged. According to the corporate financial structure and local corporate income tax rate, discount rate used in calculating the recoverable amounts of Fransac Sales, Dicot and Mirefleurs are10.3%,8.5% and10.3% (2015:8.8%,7.5%, N/A) respectively. One key assumption in projecting future cash flows is the growth rate in projecting period, which is computed based on the expected growth rate of the industry. Growth rate of sales in subsequent period is2%. Management of the Group believes that any reasonable changes in the above assumptions will not cause book values of these subsidiaries exceeds their recoverable amounts.
According to the assessment, the Group confirms that no impairment provision need to be made for goodwill in the reporting period.
16. Long-term prepaid expenses
Opening balance Increase Amortization Closing balance RMB RMB RMB RMB Land lease prepayments 59,328,587 - (1,481,601) 57,846,986 Land requisition fee 46,409,764 - (1,216,864) 45,192,900 Greening fee 34,229,777 25,363,472 (5,132,278) 54,460,971 Leasehold improvement 23,957,390 1,871,939 (24,737,750) 1,091,579 Others __1_1_,1_9_8_,6_4_9 __1_,5_3_2_,5_8_8 _(_9_,1_1_7_,4_4_4) ___3_,6_1_3_,7_9_3__1__7__5__,1__2__4__,1__6__7 __2__8__,7__6__7__,9__9__9 (__4__1__,6__8__5__,9__3__7) __1__6__2__,2__0__6__,2__2__9
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
17. Deferred tax assets/liabilities
Deferred tax assets and deferred tax liabilities are not related to income tax of the same tax authorities of the same tax subjects, thus not presented with the net amount after netting. (1) Recognised deferred tax assets not presented at the net amount afteroffset：
Closing balance Opening balance
Temporary Deferred tax Temporary Deferred tax differences assets differences assets RMB RMB RMB RMB Unrealized profit from intra
676,375,006 169,093,751 691,741,084 172,935,271 - company transactions
Unpaid bonus 154,895,784 38,723,946 133,017,447 33,254,362 Retirement benefit 13,115,948 3,278,987 16,147,369 4,036,842 Asset impairment provision 31,426,756 7,856,689 35,347,011 8,836,753 Deductable losses 176,273,380 44,068,345 265,793,269 66,448,318 Deferred income 112,939,126 25,230,521 81,078,284 16,895,110 Accrued Rebate 30,739,192 7,684,798 -- --- 1,195,765,192 295,937,037 1,223,124,464 302,406,656 (2) Recognised deferred tax liabilities not presented at the net amount afteroffset：
Closing balance Opening balance
Taxable temporary Deferred Taxable temporary Deferred Item difference tax liability difference tax liability RMB RMB RMB RMB Revaluation surplus in
business combination
Not under common
90,877,162 24,908,410 117,475,753 34,350,349 control
(3) Deferred tax assets and liabilities not recognized
Closing balance Opening balance RMB RMB Deductable losses 135,957,252 41,690,051____________________ __________________ (4) Deductable losses not recognized as deferred tax assets will expire in:
Closing balance Opening balance RMB RMB 2019 7,311,273 - 2020 45,960,766 41,690,051 2021 82,685,213 -__________ _________ 135,957,252 41,690,051__________________ __________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
18. Other non-current assets
Closing balance Opening balance RMB RMB Receivable from transfer of biological assets 17,352,239 17,137,746 Prepaid investment fund for Mirefleurs - 22,622,355 Others - 5,474,540__________ _________ 17,352,239 45,234,641____________________ __________________ 19. Short-term borrowings
Closing balance Opening balance RMB RMB Credit loans 631,655,938 640,290,788 Mortgaged loans 30,732,944 25,291,133__________ __________ 662,388,882 665,581,921____________________ ____________________ As at 31 December 2016, short-term borrowings detail were as follows:
Loans amount Exchange rate RMB Nature of Interest rate interest % Credit loans (RMB) 600,000,000 1.0000 600,000,000 Floating 3.48%~3.92% Credit loans (EUR) 4,332,394 7.3068 31,655,938 Fixed 0.89%~1.65% Mortgaged loans (EUR) 4,2 06,074 7.3068 _3_0_,7_3_2_,9_4_4 Fixed 0.90%~1.80%6__6__2__,3__8__8__,8__8__2
As at 31 December 2016, mortgaged loans were Dicot Partners, S.L.U (" Dicot ") factoring of accounts receivable from Banco de Sabadell, S.A. etc. EUR 4,206,074 (translated as RMB 30,732,944)(31 December 2015:RMB 23,880,775). There was no mortgage loans with fixed assets in 31 December 2016 (31 December 2015:RMB 1,410,358).
20. Notes payable
Closing balance Opening balance RMB RMB Bank acceptances 38,900,000 29,000,000__________________ __________________ As at 31 December 2016, there was no due notes payable unpaid (31 December 2015: Nil). Notes payable are all due within one year.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
21. Accounts payable
The aging analysis of accounts payable are as follows
Closing balance Opening balance RMB RMB Within 1 year 544,128,280 567,791,049 1 to 2 years 1,103,039 1,487,319__________ __________ 545,231,319 569,278,368____________________ ____________________ 22. Advances from customers
The aging analysis of advances from customers are as follows
Closing balance Opening balance RMB RMB Within 1 year 419,382,071 229,993,684 1 to 2 years 2,046,166 286,001 2 to 3 years 108,748 530,799 Over 3 years 3,709,436 3,756,020__________ __________ 425,246,421 234,566,504____________________ ____________________ 23. Employee benefit payable
(1) Employee benefit payable as follows:
Opening balance Increase Decrease Closing balance RMB RMB RMB RMB Short-term payroll 174,061,906 410,151,564 (390,912,851) 193,300,619 Post-demission benefits
- predetermined provision plan 30,176 40,067,340 (40,082,349) 15,167 Termination benefits __1_6_,1_4_7_,3_6_9 ___1_,5_9_4_,5_9_9 __(_4_,6_2_6_,0_2_0) __1_3_,1_1_5_,9_4_8__1__9__0__,2__3__9__,4__5__1 __4__5__1__,8__1__3__,5__0__3 __(4__3__5__,6__2__1__,2__2__0) __2__0__6__,4__3__1__,7__3__4
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
23. Employee benefit payable - continued
(2) Employee benefit payable:
Opening balance Increase Decrease Closing balance RMB RMB RMB RMB Salaries and bonus 174,767,931 375,367,681 (352,486,022) 197,649,590 Staff benefit 179,078 11,865,885 (11,422,228) 622,735 Staff welfare 268,019 15,065,068 (15,075,838) 257,249 Includes:
Medical insurance 268,019 12,691,920 (12,702,690) 257,249 Injury insurance - 1,342,010 (1,342,010) - Maternity insurance - 1,031,138 (1,031,138) - Housing fund 47,318 10,313,104 (10,322,750) 37,672 Union fee and education fee ___2_,8_4_7_,0_3_6 ___3_,2_6_3_,8_5_6 __(_3_,5_1_7_,8_8_3) ___2_,5_9_3_,0_0_9 Total __1__7__8__,1__0__9__,3__8__2 __4__1__5__,8__7__5__,5__9__4 __(3__9__2__,8__2__4__,7__2__1) __2__0__1__,1__6__0__,2__5__5 Less: Non-current liabilities ___4_,0_4_7_,4_7_6 ___7_,6_9_6_,2_2_2 Short-term payroll __1__7__4__,0__6__1__,9__0__6 __1__9__3__,3__0__0__,6__1__9 (3) Predetermined provision plan
Opening balance Increase Decrease Closing balance RMB RMB RMB RMB Pension 29,995 38,404,278 (38,419,295) 14,978 Unemployment insurance ___1_8_1 __1_,6_6_3_,0_6_2 _(_1_,6_6_3_,0_5_4) ___1_8_9__3__0__,1__7__6 __4__0__,0__6__7__,3__4__0 (__4__0__,0__8__2__,3__4__9) __1__5__,1__6__7 The Group participates in pension insurance and unemployment insurance plans established by government institution. According to those plans, the Group pays pension and unemployment insurance each month on the basis of14%-21% and1%-2% last period salary respectively. Apart from these monthly expenses, the Group does not bear any further payment obligation. This year the Group should pay RMB 38,404,278 and RMB 1,663,062 (2015: RMB 29,499,285 and RMB 1,648,525) respectively into pension insurance and unemployment insurance. As at 31 December 2016, the Group has unpaid pension and unemployment insurance of RMB 14,978 and RMB 189 respectively (31 December 2015: RMB 29,995 and RMB 181), which is due to the pension insurance and unemployment insurance plan at the end of the reporting period. These payments have been paid after the end of the reporting period.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
24. Taxes payable
Closing balance Opening balance RMB RMB Value added tax 23,496,328 (45,821,559) Consumption tax 30,361,471 18,638,837 Business tax - 509,491 Corporation income tax 69,388,730 49,020,665 Urban land use tax 2,651,262 2,812,536 Individual income tax 7,811,301 6,587,254 City construction tax 4,248,115 4,197,401 Property tax 1,071,223 855,668 Others 5,014,170 4,484,814__________ __________ 144,042,600 41,285,107____________________ ____________________ 25. Deferred income
Closing balance Opening balance RMB RMB Government grants
Current liabilities 11,163,883 11,241,873 Non-current liabilities 101,775,243 69,836,411__________ _________ 112,939,126 81,078,284____________________ __________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
25. Deferred income - continued
Government grants:
Recognized in Related to Opening Addition non-operating income Closing Assets/Income RMB RMB RMB RMB
Wine base liquor brewage project 7,609,243 - (1,434,943) 6,174,300 Assets Shihezi chateau project funds 13,836,600 - (2,280,000) 11,556,600 Assets reconstruction specific funds 19,908,000 - (1,422,000) 18,486,000 Assets Ningxia industry revitalization and
technology reconstruction funds 7,676,000 - (3,295,000) 4,381,000 Assets Wine grape subsidies 470,000 - (94,000) 376,000 Income Modern agriculture grape production
development subsidies 324,000 - (64,800) 259,200 Income WuYouYiXin industrial cluster specific funds 60,000 - (60,000) - 000 Assets Agricultural technology subsidies 822,000 - (822,000) - Income Industry revitalization and technology
(Huanren) wine production construction funds 4,000,000 - - 4,000,000 Assets Wine electronic tracking system
specific funds 4,526,419 - (667,054) 3,859,365 Assets Miyun Propaganda Department transfer 2,666,835 - (888,945) 1,777,890 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 59,890 283,200 - 343,090 Income Information system construction
project technology funds 4,640,000 - (580,000) 4,060,000 Assets Integration projects subsidies 28,800 - - 28,800 Income Cross-border e-Business projects subsidies 1,660,497 125,100 (299,800) 1,485,797 Income Red wine phenolics research projects funds 300,000 - (4,399) 295,601 Income Grape base construction project 1,560,000 - (520,000) 1,040,000 Assets Water pollution abatement project - 200,000 (66,267) 133,733 Income Infrastructure construction project - 1,500,000 (31,250) 1,468,750 Assets Industrial development support project - 41,000,000 - 41,000,000 Assets Subsidy for updating of economic and energy-saving
technology ______-_ __1,_28_3,_00_0 ______-_ ___1,_28_3,_00_0 Assets Total ____8__1,__07__8,__28__4 __4__4,__39__1,__30__0 ____(1__2,__53__0,__45__8) ____11__2,__93__9,__12__6
Less: Non-current liabilities due within one year __1_1,_24_1,_87_3 __1_1,_16_3,_88_3
Other non-current liabilities ____6__9,__83__6,__41__1 ____10__1,__77__5,__24__3
As at 31 December 2016, the Group recognise current liability for deferred income to be accounted in profit or loss within one year, and recognise non-current liability for deferred income to be accounted in profit or loss over one year.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
26. Other payables
(1) Natures of other payables are as follows
Closing balance Opening balance RMB RMB Deposit from distributors 128,539,352 114,475,163 Payables for equipment and construction 77,261,072 92,580,929 Payables for transportation 36,690,764 29,713,956 Royalty fee 78,572,540 86,001,287 Advertising costs 79,414,075 76,818,144 Accrued rebate 30,739,192 - Capital increment from minority interest (Note) 29,847,320 22,522,636 Employee deposit 16,296,186 16,078,904 Deposits from suppliers 2,206,379 5,644,909 Payables for contracting fee 31,011,929 32,936,900 Others 35,726,501 32,453,567__________ __________ 546,305,310 509,226,395____________________ ____________________ (2) Description of significant other payables aged more than one year
Company Amount Reasons RMB
Beijing Qinglang agriculture science and technology
development limited company 23,983,072 unfinished capital increment(Note) Beijing Qinglang agriculture science and technology
development limited company 11,074,240 Payables for contracting fee Yantai De'an Investment Company Limited 5,864,248 unfinished capital increment (Note) Yantai De'an Investment Company Limited ___4_,_72_9_,1_2_2 Payables for contracting fee______45__,__65__0__,6__8__2
Note: Unfinished capital increment is the investment fund from minority shareholders for the subsidiary of the Company. As at 31 December 2016, capital increment procedures have not finished.
27. Non-current liabilities due within one year
Closing balance Opening balance RMB RMB Long-term borrowings due within one year 59,799,093 156,335,647 Long-term payables due within one year 12,000,000 -__________ _________ 71,799,093 156,335,647____________________ ____________________
As at 31 December 2016, Long-term borrowings due within one year refers to Note VI-28, Long-
term payables due within one year refers to Note VI-29.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
28. Long-term borrowings
Closing balance Opening balance RMB RMB Credit loan 40,304,811 66,868,836 Mortgaged loan 8,835,744 4,817,793___________ ___________ 49,140,555 71,686,629______________________ ______________________ As at 31 December 2016, loans detail is as follows:
Loans amount Exchange rate RMB Nature Interest rate Due within Due over of interest % one year one year Credit loans (EUR) 4,000,000 7.3068 29,227,200 Floating 3.70% 29,227,200 - Credit loans (EUR) 1,200,724 7.3068 8,773,451 Floating 1.75%-2.10% 7,261,465 1,511,987 Credit loans (EUR) 8,139,378 7.3068 59,472,805 Fixed 1.00%-4.42% 20,679,980 38,792,824 Mortgaged loans (EUR) (note)1,569,24 9 7.3068 _1_1,_46_6,_19_2 Fixed 2.10% ___2,_63_0_,44_8___8,_83_5,_74_4__10__8,__93__9,__64__8 ____5__9__,7_9_9__,0_9_3____4__9,__14__0,__55__5 Note: As at 31 December 2016, mortgaged loans were Atrio using fixed assets EUR 3,765,967 (translated as RMB 27,517,168) as collateral for loans from PopularEspañol, EUR 1,569,249 (translated as RMB 11,466,192), (31 December 2015: RMB 6,068,519).
29. Long-term payables
Closing balance Opening balance RMB RMB Agricultural Development
Fund of China("CADF") 293,000,000 -____________________ __________________ In 2016, RMB 305,000,000 from CADF was invested inR&D Centre, CADF accounted for37.9% of the registered capital. According to the investment agreement, CADF will recovery investment funds over 10 years, the investment income received equal to1.2% of the remaining unpaid principal per annum. In addition to the fixed income, CADF will no longer enjoy other profits or bear the loss ofR&D Centre .Therefore although the investment inR&D Centre, nominally equity investment, is actually a debt investment. The group take this investment as long-term payables, which measured in amortized cost. Refer to Note VI-48 for details of mortgaged and pledged assets.
Long-term payables Termination date Due within 1 year Due after 1 year Mortgaged and pledged assets RMB Yield rate Investment date of repayment RMB RMB
87,000,000 1.2% 12 January 2016 24 December 2025 10,000,000 77,000,000 Cash and bank and intangible assets 198,000,000 1.2% 29 February 2016 28 February 2026 - 198,000,000 Fixed assets and intangible assets__20_,00_0,_00_0
1.2% 16 June 20 16 22 May 2026
___2_,0_00_,00_0 ___18_,0_00_,00_0
Cash and bank__3__05__,00__0,__00__0 ______12__,00__0,__00__0 ____2__93__,0__00__,00__0
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
30. Other non-current liabilities
Closing balance Opening balance RMB RMB Employee benefit 7,696,222 4,047,476__________________ __________________ As at 31 December 2016, employee benefit represents deposit from bonus accrued for managers and above. According to the bonus payment schedule of 2016, the bonus is expected to be paid during 2018 to 2020.
31. Share capital
Opening balance Increase Decrease Closing balance RMB RMB RMB RMB Unrestricted shares
A shares 453,460,800 - - 453,460,800 B shares _2_3_2_,0_0_3_,2_0_0 ___-___ ___-___ _2_3_2_,0_0_3_,2_0_0 Total of unrestricted shares
and total shares __6__8__5__,4__6__4__,0__0__0 ______-__
____
______-__
____
__6__8__5__,4__6__4__,0__0__0 32. Capital reserve
Opening balance Increase Decrease Closing balance RMB RMB RMB RMB Share premium 560,038,853 - - 560,038,853 Other ___5_,9_1_6_,5_8_8 ___-___ ___-___ ___5_,9_1_6_,5_8_8 Total __5__6__5__,9__5__5__,4__4__1 ______-__
____
______-__
____
__5__6__5__,9__5__5__,4__4__1 33. Other comprehensive income
2016
2016 Less: last year other Post-tax Post-tax
Before-tax comprehensive income Less: attributable attributable
Opening balance amount in P/L current year tax expense to parent to NCI Closing balance Other comprehensive
income to be reclassified
to profit and loss (10,442,512) 5,615,689 - - 5,183,498 432,191 (5,259,014) Foreign currency statement
translation difference (__10__,4__4__2,5__1__2) __5,__61__5,__68__9 ____-____ ____-____ __5,__18__3,__49__8 __43__2,__19__1 (__5,__25__9,__01__4) 34. Surplus reserve
Opening balance Increase Decrease Closing balance RMB RMB RMB RMB
Statutory surplus reserve __3__4__2__,7__3__2__,0__0__0 ______-__
____
______-__
____
__3__4__2__,7__3__2__,0__0__0
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
34. Surplus reserve - continued
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. The Company does not appropriate net profit to the surplus reserve in 2016.
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.
35. Retained earnings
Closing balance Opening balance RMB RMB Retained earnings brought forward 5,980,390,074 5,251,920,374 Profit attributable to shareholders of the Company 982,460,488 1,030,073,860 Less: Dividends paid in respect prior year's profit (342,732,000) (301,604,160)____________ ____________ Retained earnings carried forward 6,620,118,562 5,980,390,074________________________ ________________________ (1) Appropriation to surplus reserve by subsidiaries
As at 31 December 2016, the balance of the Group's unappropriated profits include appropriation to surplus reserve by subsidiaries amounting to RMB 71,360,640 (31 December 2015: RMB 54,946,701).
(2) Cash dividends approved by general meeting
According to the annual general meeting on 26 May 2016, dividends distribution plan has been made. On the basis of 685,464,000 issued share capital, RMB 5.0 (including taxes) for every 10 shares was distributed to shareholders, in total RMB 342,732,000 cash dividends.
(3) Profit distribution decided after the balance sheet date
According to a proposal of the board of directors approved on 20 April 2017, on the basis of 685,464,000 issued shares in 2016, cash dividends of RMB 5.0 (including taxes) for every 10 share will be distributed to all the shareholders. The aggregate amount of cash dividend is RMB 342,732,000. The above proposal regarding dividends distribution is yet to be approved in a shareholders' meeting.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
36. Operating income and costs
Operating income is analysed as follows:
2016 2015 RMB RMB Principal operating income 4,646,909,704 4,589,025,348 Other operating income 70,686,768 60,697,020____________ ____________ 4,717,596,472 4,649,722,368________________________ ________________________ Operating cost is analysed as follows:
2016 2015 RMB RMB Principal operating cost 1,552,022,043 1,484,994,084 Other operating cost 23,748,936 27,508,951____________ ____________ 1,575,770,979 1,512,503,035________________________ ________________________ The operating income for the Group is mainly from the sales of wine, brandy and sparkling wine. In 2016, Over94% (2015: over98%) of the sales generated in PRC.
37. Taxes and surcharges
2016 2015 RMB RMB Consumption tax 161,411,393 160,472,712 Business Tax 1,358,414 3,613,680 City construction tax 46,375,109 50,491,173 Education fee and surcharges 33,975,886 36,625,254 Property tax 8,221,152 - Land use tax 9,146,595 - stamp tax 2,659,421 - Others 6,568,676 6,810,705__________ __________ 269,716,646 258,013,524____________________ ____________________ For detail standards of tax rate please refer to Notes V.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
38. Selling expenses
2016 2015 RMB RMB Advertising costs 536,552,061 547,276,390 Salary and employee benefit 258,845,366 237,132,890 Freight 135,375,515 124,662,391 Trademark fee 74,125,038 83,734,976 Warehouse leasing expenses 73,141,275 70,352,917 Depreciation cost 29,477,270 18,866,370 Labor fee 29,411,296 25,367,133 Travelling expenses 27,589,397 25,946,093 Renovation costs 25,292,999 19,140,522 Water and electricity fee 8,160,610 5,344,561 Office allowance 6,166,163 6,794,673 Packing cost 5,651,814 5,090,563 Security and sanitation fee 4,244,698 3,617,320 Business entertainment 3,871,778 2,227,544 Greening fee 3,651,567 2,993,204 Property management fee 3,320,577 4,487,152 Others 28,383,244 28,092,464____________ ____________ 1,253,260,668 1,211,127,163________________________ ________________________ 39. General and administrative expense
2016 2014 RMB RMB Salary and employee benefit 98,464,931 90,478,250 Depreciation 45,605,723 38,123,017 Contracting fee 20,635,049 19,144,698 Maintenance fee 18,625,443 15,686,214 Administrative expenses 15,829,574 16,772,528 Amortization 14,795,181 12,129,490 Greening fee 11,509,618 15,154,393 Fire charge 10,923,600 - Leasing expenses 10,702,734 9,190,948 Property tax, stamp duty and other taxes 10,169,607 28,441,366 Entertainment fee 7,253,858 5,660,174 Security and sanitation fee 5,889,095 6,573,075 Service fee 5,194,426 14,878,018 Travelling expenses 4,961,661 5,018,296 Others 29,223,048 36,717,942__________ __________ 309,783,548 313,968,409____________________ ____________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
40. Loss on impairment of assets
2016 2015 RMB RMB Inventory impairment 3,279,266 2,823,115________________ __________________ 41. Financial income
2016 2015 RMB RMB Interest income (15,397,901) (16,778,280) Exchange loss 7,632,532 4,349,534 Less: Interest expenses 27,831,179 21,957,762 Bank charges 1,903,049 1,758,669__________ __________ 21,968,859 11,287,685____________________ ____________________ 42. Non-operation income
Recognized in extraordinary 2016 2015 profit and loss RMB RMB RMB Gains on disposal of non-current assets 157,846 192,945 157,846 Including: gain on disposal of plant
property and equipment 157,846 192,945 157,846 Government grants 49,130,643 38,952,919 49,130,643 Penalty income 2,617,684 7,246,157 2,617,684 Others 3,265,987 3,673,296 3,265,987_________ _________ _________ 55,172,160 50,065,317 55,172,160__________________ __________________ __________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
42. Non-operation income - continued
Government grants recognized in the income statement is as follows:
Assets/income 2016 2015 related RMB RMB
Major projects support fund 7,040,888 7,134,819 Assets related Small and medium enterprises
support fund 4,138,304 4,107,054 Assets related Tax refund 17,860,500 17,833,465 Income related Others 20,090,951 9,877,581 Income related_________ _________
49,130,643 38,952,919
__________________ __________________
43. Non-operation expenses
Recognized in extraordinary 2016 2015 profit and loss RMB RMB RMB Loss on disposal of non-current assets 143,127 56,884 143,127 Including: losses from disposal
of fixed assets 143,127 56,884 143,127 Compensation and penalty loss 618,190 1,102,893 618,190 Donation 305,080 288,009 305,080 Others 303,429 457,103 303,429_________ _________ _________ 1,369,826 1,904,889 1,369,826__________________ __________________ __________________ 44. Income tax
2016 2015 RMB RMB Current income tax 360,001,766 407,380,757 Deferred income tax (2,972,320) (49,496,522)__________ __________ 357,029,446 357,884,235____________________ ____________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
44. Income tax - continued
Reconciliation between income tax expenses and profits is as follows:
2016 2015 RMB RMB Profit before tax 1,337,618,840 1,388,159,865 Income tax expense at statutory tax rate25%(2015:25%) 334,404,710 347,039,966 Effect of different tax rates applied by certain subsidiaries (4,829,468) (3,509,042) Special tax incentives for oversea subsidiaries (2,520,771) - Changes in opening balances of deferred tax
liabilities due to tax rate adjustment (1,992,564) - Unrecognised deductable loss 20,671,303 10,422,513 Reversal of recognized deductible losses 2,895,497 - Non-deductible expenses 6,892,488 3,930,798 Others 1,508,251 -____________ ____________ Income tax expenses at the Group's effective tax rate 357,029,446 357,884,235________________________ ________________________ 45. Basic and dilutive earnings per share
The calculation of basic earnings per share is based on the consolidated profit attributable to ordinary shareholders of the Company during the year and the weighted average number of outstanding ordinary shares.
2016 2015 RMB RMB Earnings
Consolidated profit attributable to ordinary
shareholders of the Company 982,460,488 1,030,073,860____________ ____________ Shares
Weighted average number of outstanding
ordinary shares 685,464,000 685,464,000____________ ____________ Basic earnings per share 1.43 1.50________________________ ________________________ The Company does not have potential dilutive ordinary shares.
From the balance sheet date to the date of approval of this report, there are no subsequent events which would affect the numbers of the weighted average number of outstanding of ordinary shares.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
46. Notes to consolidated cash flow statement
(1) Cash received relating to other operating activities:
2016 2015 RMB RMB Government grants 19,347,985 9,774,028 Interest income 2,808,735 1,679,535 Penalty income 2,617,684 7,246,157 Refundable deposits of notes payable 38,130,000 - Others 3,803,461 3,673,296_________ _________ 66,707,865 22,373,016__________________ __________________ (2) Cash paid relating to other operating activities:
2016 2015 RMB RMB Selling expenses 942,936,949 949,202,920 General and administrative expenses 113,297,901 110,003,182 Refundable deposits of notes payable 47,030,000 20,000,000 Others 2,449,673 4,181,035____________ ____________ 1,105,714,523 1,083,387,137________________________ ________________________ (3) Cash paid for the purchase subsidiaries and other equity:
2016 2015 RMB RMB Cash paid for acquisition of Dicot - 190,148,125 Less: cash and cash equivalents for Dicot
at acquisition date - 4,902,074 Prepaid investment fund for Mirefleurs 3,540,923 22,622,355 Less: cash and cash equivalents for Mirefleurs
at acquisition date 1,779 -__________ __________ 3,539,144 207,868,406____________________ ____________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
46. Notes to consolidated cash flow statement - continued
(4) Cash received relating to other financing activities:
2016 2015 RMB RMB Pledged borrowing deposits and interest 135,584,347 - Received government grants related to assets 43,783,000 4,000,000 Interest income from restricted deposits of
R&D Centre 1,110,240 -__________ __________ 180,477,587 4,000,000____________________ ____________________ (5) Cash paid relating to other financing activities:
2016 2015 RMB RMB Time deposits pledged of long-term borrowings of
R&D Centre 20,000,000 26,100,000 Canada Oros investment fund return - 2,050,000__________ __________ 20,000,000 28,150,000____________________ ____________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
47. Supplementary information to consolidated cash flow statement
(1) Supplementary information to consolidated cash flow statement
2016 2015 RMB RMB Cash flows from operating activities
calculated by adjusting the net profit:
Net profit 980,589,394 1,030,275,630 Add: Loss for impairment of assets 3,279,266 2,823,115 Depreciation of fixed assets 197,779,010 163,322,504 Amortization of intangible assets 18,955,762 13,163,757 Amortization of Biological assets 6,251,910 1,708,554 Amortization of long-term prepaid expenses 41,685,937 32,050,283 Gains on disposal of property
plant and equipment (14,719) (136,061) Finance expense 25,919,561 6,516,142 Decrease/ (increase) in deferred tax assets 6,469,619 (48,219,833) Decrease in deferred tax liabilities (9,441,939) (1,276,689) Decrease in inventories 18,897,985 3,921,192 Increase in operating receivables (737,321,198) (175,316,875) Increase in operating payables 336,861,382 114,214,648____________ ____________ Net cash flows from operating activities 889,911,970 1,143,046,367________________________ ________________________ (2) Significant investing and financing activities not involving cash receipts and payments. Closing balance Opening balance RMB RMB Payment of intangible assets and other
long-term assets by bank acceptances 503,817,808 158,702,666________________________ ________________________ (3) Cash and cash equivalent
Closing balance Opening balance RMB RMB Closing balance of cash and bank 1,391,517,607 1,285,362,414 Less:
Restricted bank deposits 2,711,926 2,643,181 Restricted other monetary funds 128,863,377 181,477,572 Deposit with a period of over three months 3,000,000 9,000,000____________ ____________ Closing balance of cash and cash equivalents 1,256,942,304 1,092,241,661________________________ ________________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
47. Supplementary information to consolidated cash flow statement - continued
(3) Cash and cash equivalent - continued
Closing balance Opening balance RMB RMB Cash 1,256,942,304 1,092,241,661 Including: Cash on hand 117,507 179,488 Bank deposits on demand 1,256,824,797 1,092,062,173___________ __________ Closing balance of cash and cash equivalents 1,256,942,304 1,092,241,661______________________ ____________________ 48. Assets with restriction of ownership
Closing balance Opening balance RMB RMB Cash and bank 131,575,303 184,120,753 Account receivable 30,732,944 23,880,775 Fixed assets 68,658,094 18,405,000 Intangible assets 145,937,719 -____________________ ____________________ As at 31 December 2016, cash and bank balances with restriction of ownership as follows: Closing balance Opening balance RMB RMB Pledged time deposits forR&D Centre 46,100,000 151,100,000 Refundable deposits of notes payable 38,900,000 30,000,000 Refundable deposits of letter of credit 25,694,735 370,000 Balance in Alipay account 18,118,441 - TheCompany’s housing fund 2,711,926 2,643,181 Margin for entity card 50,201 7,572___________ __________ Total 131,575,303 184,120,753______________________ ____________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
48. Assets with restriction of ownership - continued
Among the aforementioned items, the amount of RMB 18,118,441 which is the blocked balances of goods payment in Alipay account can be unlocked after 15 days.
As at 31 December 2016, the amount of accounts receivable with restricted ownership is EUR 4,206,074 (translated as RMB 30,732,944) , which refers to accounts receivable Atrio conducted for factoring from Banco de Sabadell, S.A. etc.
As at 31 December 2016, the net carrying amount of fixed assets that the Company has pledged for long-term borrowings and long-term accounts payables is RMB 68,658,094.
As at 31 December 2016, the net carrying amount of intangible assets with restricted ownership is RMB 145,937,719, which mainly refers to the land use rights that Company has pledged for long- term borrowings.
49. Foreign monetary items
(1) Foreign monetary items
The foreign monetary items located within China are as follows:
Closing foreign Exchange Closing translated currency balance rate RMB balance Cash and bank
EUR 77,487 7.3068 566,182 HKD 215 0.8945 192____________________ ____________ ____________________ Long-term borrowings due within one year
EUR 4,000,000 7.3068 29,227,200____________________ ____________ ____________________ (2) Overseas business entities
TheCompany’s overseas subsidiaries determine bookkeeping currency based on the primary economic environment. The bookkeeping base currency of Atrio and Francs Champs
Participations SAS ("Francs Champs") are all in Euro, and Atrio and Francs Champs have no foreign monetary items at the year end.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VII. CHANGE IN CONSOLIDATION SCOPE
1. Business combination under different control
(1) Business combination under different control in current period
Name of Equity Equity Equity Revenue from Net profit from Equity Acquisition Basis of
acquisition acquisition acquisition ratio acquisition acquisition date acquisition date acquisition cost date acquisition date
company date (%) method to year end to year end Finish payment
Mirefleurs 1 Jan 2016 EUR 3,816,000 100 Purchase 1 Jan 2016 RMB 8,016,542 RMB 807,079 and acquire equity
Other detail information:
Pursuant to the Equity Transfer Agreement entered into between the Group and Vignobles et Domaines Castel S.L ("VDC S.L.") on 12 May 2015, the Group acquired100% shares held by VDC S.L in Mirefleurs by cash consideration of EUR 3,816,000 (equivalent to RMB 26,163,278). As at 31 December 2015, the Company satisfied the prerequisite for the entire equity transfer. As at 1 January 2016, the Company obtained the control over the financial and operating policies of Mirefleurs through allocation of directors based on the Articles of Association of the Company. The Company invested EUR 3,330,000 (equivalent to RMB22,622,355) for the advanced payment on 24 November 2015 and EUR 486,000 (equivalent to RMB3,540,923) for the remaining payment in December 2016.
(2) Consideration and Goodwill
Consideration
Mirefleurs RMB Cash 26,163,278 Total consideration 26,163,278 Less: acquired provisional value of net assets 10,401,838__________ Goodwill 15,761,440____________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VII. CHANGE IN CONSOLIDATION SCOPE - continued
1. Business combination under different control - continued
(3) Recognised assets and liabilities of mergee at acquisition date
Mirefleurs
Fair value Book value at acquisition date at acquisition date RMB RMB Assets
Cash and bank 1,779 1,779 Accounts receivable 3,555 3,555 Other receivables 62,151 62,151 Inventories 9,934,027 9,934,027 Other current assets 1,191,401 1,191,401 Fixed assets 8,049,900 8,049,900 Biological assets 1,769,888 1,769,888 Intangible assets 2,488 2,488____________ ____________ Total assets 21,015,189 21,015,189________________________ ________________________ Liabilities
Accounts payable 911,071 911,071 Other payables 9,378,334 9,378,334 Employee compensation payable 323,946 323,946____________ ____________ Total liabilities 10,613,351 10,613,351________________________ ________________________ Net assets 10,401,838 10,401,838Less：Non-controlling interests - -____________ ____________ Acquired net assets 10,401,838 10,401,838________________________ ________________________ 2. Change in consolidation scope due to other reasons (new established subsidiaries)
Name Place and date of registration Legal representative Business nature Registered capital Principal activities Incorporate code Guangzhou Changyu Pioneer 22 July 2015 Wang, Hongshan Sales RMB 10,000,000 Wholesale trade 91440105347476120M Sales Co. Ltd ("Guangzhou Pioneer")* Guangzhou Guangdong, China
* As at 31 December 2015, these subsidiaries had completed registration but paid share capital in 2016, therefore they are included in the consolidation scope of the Group in 2016.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VIII. INTERESTS IN OTHER ENTITIES
1. Structure of the Group
Equity interest owned
by the company
Name Address Place of registration Nature Direct Indirect Acquisition method Xinjiang Tianzhu (a) Shihezi, Xinjiang, China Shihezi, Xinjiang, China Manufacturing 60% - Subsidiary acquired in business combination under non-common control Fransac Sales Cognac, France Cognac, France Trading - 100% Subsidiary acquired in business combination under non-common control Mirefleurs Bordeaux, France Bordeaux, France Trading 100% Subsidiary acquired in business combination under non-common control Atrio (b) Navarra, Spain Navarra, Spain Sales 75% Subsidiary acquired in business combination under non-common control Beijing Changyu Sales and distribution Co., Ltd Beijing, China Beijing, China Sales 100% - Subsidiaries acquired by establishment ("Beijing Sales")
Yantai Kylin Packaging Co., Ltd. Yantai, Shandong, China Yantai, Shandong, China Manufacturing100% - Subsidiaries acquired by establishment ("Kylin Packaging")
Yantai Changyu-Castel Wine Chateau Co., Ltd Yantai, Shandong, China Yantai, Shandong, China Manufacturing 70% - Subsidiaries acquired by establishment ("Changyu Chateau") (c)
Changyu (Jingyang) Wine Co., Ltd. Xianyang, Shanxi, China Xianyang, Shanxi, China Manufacturing 90% 10% Subsidiaries acquired by establishment ("Jingyang Wine")
Yantai Changyu Pioneer Wine Sales Co., Ltd. Yantai, Shandong, China Yantai, Shandong, China Sales 100% - Subsidiaries acquired by establishment ("Sales Company")
Langfang Development Zone Castel-Changyu Wine Lanfang, Hebei, China Lanfang, Hebei, China Manufacturing 39% 10% Subsidiaries acquired by establishment Co., Ltd ("Langfang Castel") (d)
Changyu (Jingyang) Wine Sales Co., Ltd. Xianyang, Shanxi, China Xianyang, Shanxi, China Sales 10% 90% Subsidiaries acquired by establishment ("Jingyang Sales")
Langfang Changyu Pioneer Wine Sales Co., Ltd Lanfang, Hebei, China Lanfang, Hebei, China Sales 10% 90% Subsidiaries acquired by establishment ("Langfang Sales")
Shanghai Changyu Sales and distribution Co., Shanghai, China Shanghai, China Sales 30% 70% Subsidiaries acquired by establishment Ltd. ("Shanghai Sales")
Beijing Changyu AFIP Agriculture development Miyun, Beijing, China Miyun, Beijing, China Sales - 100% Subsidiaries acquired by establishment Co., Ltd ("Agriculture Development")
Beijing Chateau (e) Beijing, China Beijing, China Manufacturing 70% - Subsidiaries acquired by establishment Yantai ("Beijing Chateau") Changyu Wine Sales Yantai, Shandong, China Yantai, Shandong, China Sales 90% 10% Subsidiaries acquired by establishment Co., Ltd. ("Wines Sales")
Yantai Changyu Pioneer International Co., Ltd. Yantai, Shandong, China Yantai, Shandong, China Sales 70% 30% Subsidiaries acquired by establishment ("Pioneer International")
Hangzhou Changyu Wine Sales Co., Ltd. Hangzhou, Zhejiang, China Hangzhou, Zhejiang, China Sales - 100% Subsidiaries acquired by establishment ("Hangzhou Changyu")
Ningxia Growing Yinchuang, Ningxia, China Yinchuang, Ningxia, China Planting 100% - Subsidiaries acquired by establishment Huanren Changyu National Wines Sales Co., Benxi, Liaoning, China Benxi, Liaoning, China Sales 100% - Subsidiaries acquired by establishment Ltd. ("National Wines")
Liaoning Changyu Ice Wine Chateau Co., Ltd. Benxi, Liaoning, China Benxi, Liaoning, China Manufacturing 51% - Subsidiaries acquired by establishment ("Ice Chateau") (f)
Yantai Development Zone Changyu Trading Yantai, Shandong, China Yantai, Shandong, China Sales - 100% Subsidiaries acquired by establishment Co., Ltd ("Development Zone Trading")
Shenzhen Changyu Wine Marketing Ltd. Shenzhen, Guangdong, China Shenzhen, Guangdong, China Sales - 100% Subsidiaries acquired by establishment ("Shenzhen Marketing")
Yantai Changyu Fushan Trading Yantai, Shandong, China Yantai, Shandong, China Sales - 100% Subsidiaries acquired by establishment Company("Fushan Trading")
Beijing AFIP Meeting Center ("Meeting Miyun, Beijing, China Miyun, Beijing, China Service - 100% Subsidiaries acquired by establishment Center")
Beijing AFIP Tourism and Culture ("AFIP Miyun, Beijing, China Miyun, Beijing, China Tourism - 100% Subsidiaries acquired by establishment Tourism")
Ningxia Wine Co.Ltd. ("Ningxia Wine"). Yinchuan, Ningxia, China Yinchuan, Ningxia, China Manufacturing100% - Subsidiaries acquired by establishment Yantai Changyu DingLuoTe Chateau. Yantai, Shandong China Yantai, Shandong China Retail and 65% 35% Subsidiaries acquired by establishment ("Ding Luo Te Chateau") Sales
Qing Tong Xia Changyu Wine Marketing Qing Tong Xia, Ningxia, China Qing Tong Xia, Ningxia, China Sales - 100% Subsidiaries acquired by establishment Ltd("Qing Tong Xia Sales")
Shihezi Chateau Shihezi, Xinjiang, China Shihezi, Xinjiang, China Manufacturing100% - Subsidiaries acquired by establishment Ningxia Moser 15th Changyu Wine Chateau Co., Yinchuan, Ningxia, China Yinchuan, Ningxia, China Manufacturing100% - Subsidiaries acquired by establishment Ltd. (" Ningxia Chateau")
Shanxi Changyu Rina Castle Chateau Co., Ltd. Xianyang, Shanxi, China Xianyang, Shanxi, China Manufacturing100% - Subsidiaries acquired by establishment (" Chang'an Chateau")
R&D Centre (g) Yantai, Shandong China Yantai, Shandong China Manufacturing 62% - Subsidiaries acquired by establishment Changyu (HuanRen) Wine Co., Ltd Benxi LiaoNing China Benxi LiaoNing China Wine 100% - Subsidiaries acquired by establishment ("Huan Ren Wine") production
Projecting
Xinjiang Sales Shihezi Xinjiang China Shihezi Xinjiang China Sales - 100% Subsidiaries acquired by establishment Xinjiang Changyu Winery Co., Ltd Shihezi Xinjiang China Shihezi Xinjiang China Manufacturing - 100% Subsidiaries acquired by establishment ("Xinjiang Winery")
Ningxia Changyu Trading Co., Ltd Yinchuan Ningxia China Yinchuan Ningxia China Sales - 100% Subsidiaries acquired by establishment ("Ningxia Trading")
Shanxi Changyu Rina Wine Sales Co., Ltd Xianyang Shanxi China Xianyang Shanxi China Sales - 100% Subsidiaries acquired by establishment ("Shanxi Sales")
Penglai Changyu Wine Sales Co., Ltd Penglai Shandong China Penglai Shandong China Sales - 100% Subsidiaries acquired by establishment ("Penglai Sales")
Laizhou Changyu Wine Sales Co., Ltd Laizhou Shandong China Laizhou Shandong China Sales - 100% Subsidiaries acquired by establishment ("Laizhou Sales")
Francs Champs Cognac, France Cognac, France Investment and100% - Subsidiaries acquired by establishment trading
Lanzhou Changyu Wine Sales Co., Ltd Lanzhou Gansu, China Lanzhou Gansu, China Sales - 100% Subsidiaries acquired by establishment ("Lanzhou Sales")
Beijing Retailing Co. Ltd("Beijing Retailing") Beijing, China Beijing, China Sales - 100% Subsidiaries acquired by establishment Tianjin Changyu Pioneer Sales Co., Ltd Tianjin, China Tianjin, China Sales - 100% Subsidiaries acquired by establishment ("Tianjin Pioneer")
Fuzhou Changyu Pioneer Sales Co., Ltd Fuzhou Fujian, China Fuzhou Fujian, China Sales - 100% Subsidiaries acquired by establishment ("Fuzhou Pioneer")
Nanjing Changyu Pioneer Sales Co., Ltd Nanjing, Jiangsu, China Nanjing, Jiangsu, China Sales - 100% Subsidiaries acquired by establishment ("Nanjing Pioneer")
Xianyang Changyu Pioneer Sales Co., Ltd Xianyang, Shanxi, China Xianyang, Shanxi, China Sales - 100% Subsidiaries acquired by establishment ("Xianyang Pioneer")
Shenyang Changyu Pioneer Sales Co., Ltd Shenyang, Liaoning, China Shenyang, Liaoning, China Sales - 100% Subsidiaries acquired by establishment ("Shenyang Pioneer")
Jinan Changyu Pioneer Sales Co., Ltd ("Jinan Jinan, Shandong, China Jinan, Shandong, China Sales - 100% Subsidiaries acquired by establishment Pioneer")
Shanghai Changyu Pioneer Sales Co., Ltd Shanghai, China Shanghai, China Sales - 100% Subsidiaries acquired by establishment ("Shanghai Pioneer")
Fuzhou Changyu Pioneer Sales Co., Ltd Fuzhou, Jiangxi, China Fuzhou, Jiangxi, China Sales - 100% Subsidiaries acquired by establishment ("Fuzhou Pioneer")
Shijiazhuang Changyu Pioneer Sales Co., Ltd Shijiazhuang, Hebei, China Shijiazhuang, Hebei, China Sales - 100% Subsidiaries acquired by establishment ("Shijiazhuang Pioneer")
Hangzhou Yuzefeng Sales Co., Ltd ("Hangzhou Hangzhou, Zhejiang, China Hangzhou, Zhejiang, China Sales - 100% Subsidiaries acquired by establishment Yuzefeng")
Jilin Changyu Pioneer Sales Co., Ltd ("Jilin Changchun, Jilin, China Changchun, Jilin, China Sales - 100% Subsidiaries acquired by establishment Pioneer")
Beijing Changyu Pioneer Sales Co., Ltd Beijing, China Beijing, China Sales - 100% Subsidiaries acquired by establishment ("Beijing Pioneer")
Haerbin Changyu Pioneer Sales Co., Ltd Haerbin, Heilongjiang, China Haerbin, Heilongjiang, China Sales - 100% Subsidiaries acquired by establishment
("Haerbin Pioneer")
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VIII. INTERESTS IN OTHER ENTITIES - continued
1. Structure of the Group - continued
Equity interest owned
by the company
Name Address Place of registration Nature Direct Indirect Acquisition method Hunan Changyu Pioneer Sales Co., Ltd ("Hunan Changsha, Hunan, China Changsha, Hunan, China Sales - 100% Subsidiaries acquired by establishment Pioneer")
Yinchuan Changyu Pioneer Sales Co., Ltd Yinchuan, Ningxia, China Yinchuan, Ningxia, China Sales - 100% Subsidiaries acquired by establishment ("Yinchuan Pioneer")
Kunming Changyu Pioneer Sales Co., Ltd Kunming, Yunnan, China Kunming, Yunnan, China Sales - 100% Subsidiaries acquired by establishment ("Kunming Pioneer")
Chongqing Changyu Pioneer Sales Co., Ltd Chongqing, China Chongqing, China Sales - 100% Subsidiaries acquired by establishment ("Chongqing Pioneer")
Zhengzhou Changyu Pioneer Sales Co., Ltd Zhengzhou, Henan, China Zhengzhou, Henan, China Sales - 100% Subsidiaries acquired by establishment ("Zhengzhou Pioneer")
Wuhan Changyu Pioneer Sales Co., Ltd Wuhan, Hubei, China Wuhan, Hubei, China Sales - 100% Subsidiaries acquired by establishment ("Wuhan Pioneer")
Taiyuan Changyu Pioneer Sales Co., Ltd Taiyuan, Shanxi, China Taiyuan, Shanxi, China Sales - 100% Subsidiaries acquired by establishment ("Taiyuan Pioneer")
Huhehaote Changyu Pioneer Sales Co., Ltd Huhehaote Inner Mongolia, China Huhehaote Inner Mongolia, Sales - 100% Subsidiaries acquired by establishment ("Huhehaote Pioneer") China
Chengdu Changyu Pioneer Sales Co., Ltd Chengdu, Sichuan, China Chengdu, Sichuan, China Sales - 100% Subsidiaries acquired by establishment ("Chengdu Pioneer")
Nanning Changyu Pioneer Sales Co., Ltd Nanning, Guangxi, China Nanning, Guangxi, China Sales - 100% Subsidiaries acquired by establishment ("Nanning Pioneer")
Lanzhou Pioneer Lanzhou Gansu, China Lanzhou Gansu, China Sales - 100% Subsidiaries acquired by establishment Yantai Fulangduo Yantai Shandong, China Yantai Shandong, China Sales - 100% Subsidiaries acquired by establishment Hefei Pioneer Hefei, Anhui, China Hefei, Anhui, China Sales - 100% Subsidiaries acquired by establishment Urumchi Pioneer Urumchi Xinjiang, China Urumchi Xinjiang, China Sales - 100% Subsidiaries acquired by establishment Guizhou Pioneer Guiyang Guizhou, China Guiyang Guizhou, China Sales - 100% Subsidiaries acquired by establishment Guangzhou Pioneer Guangzhou Guangdong China Guangzhou Guangdong China Sales - 100% Subsidiaries acquired by establishment Explanation in difference between holding interests and voting rights in subsidiaries:
(a) Xinjiang Tianzhu was acquired by the Company, accounting for60% of Xinjiang Tianzhu's equity interest. Through agreement arrangement, the Company has the full power to control Xinjiang Tianzhu's strategic operating, investing and financing policies. The agreement arrangement will be terminated on 31 December 2018.
(b) As at 12 September 2016, Dicot has completed an internal reorganization. Hacienda y Vinedos Marques del Atrio, S.L.U. consolidated Enotec S.L, Hostaler I S.L., Faustino Rivero Ulecia S.L.by Absorption merger. After the completion of the reorganization, Atrio became the only surviving company.
(c) Changyu Chateau is a Sino-foreign joint venture established by the Company and a foreign investor, accounting for70% of Changyu Chateau's equity interest. Through agreement arrangement, the Company has the full power to control Changyu Chateau's strategic operating, investing and financing policies. The agreement arrangement will be terminated on 31 December 2022.
(d) Langfang Chateau is a Sino-foreign joint venture established by the Company and a foreign investor, accounting for49% of Langfang Chateau's equity interest by the Company and subsidiaries. Through agreement arrangement, the Company has the full power to control Langfang Chateau's strategic operating, investing and financing policies. The agreement arrangement will be terminated on 31 December 2022.
(e) Beijing Chateau is a limited liability company established by the Company and domestic investors, accounting for70% of Beijing Chateau's equity interest. Through agreement arrangement, the Company has the full power to control Beijing Chateau's strategic operating, investing and financing policies. The agreement arrangement will be terminated on 2 September 2019.
(f) Ice Chateau is a Sino-foreign joint venture established by the Company and a foreign investor, accounting for51% of Ice Chateau's equity interest. Through agreement arrangement, the Company has the full power to control Ice Chateau's strategic operating, investing and financing policies. The agreement arrangement will be terminated on 31 December 2021.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
VIII. INTERESTS IN OTHER ENTITIES - continued
1. Structure of the Group - continued
(g) R&D Centre is a joint venture established by the Company and CADF, accounting for62% ofR&D Centre's equity interest at 31 December 2016. As mentioned in Note VI-29 , in 2016, RMB 305,000,000 from CADF was invested inR&D Centre's, CADF accounted for37.9% of the registered capital. According to the investment agreement, CADF will recovery investment funds over 10 years, the investment income received equal to1.2% of the remaining unpaid principal per annum. In addition to the fixed income, CADF will no longer enjoy other profits or bear the loss ofR&D Centre. Therefore although the investment inR&D Centre, nominally equity investment, is actually a debt investment. The group take this investment as long-term payables, which measured in amortized cost. The company is fully responsible for the operation, investment and financial policies of theR&D Centre in the form of such agreements. The agreement will expire on 22 May 2026.
2. Non-wholly owned subsidiaries
Name Minority Profit and loss belongs Distributions to Closing balance of shareholder ratio to minority interest shareholders minority interest Xinjiang Tianzhu 40% - - 56,093,912 Atrio 25% (1,438,903) (546,423) 30,699,317 Changyu Chateau 30% - - 12,365,016 Langfang Castel 51% - - 22,702,522 Beijing Chateau 30% - - 35,293,868 Ice Chateau 49% ____-_
____
____-
___
__3_3_,3_1_9_,_0_6_2 Total __(1__,__4__3__8__,9__0__3__) (__5__4__6__,4__2__3__) __1__90____,4__7__3__,__6__9__7 Explanation in difference between share percentage and voting power of non-controlling interests: Please see Note VIII-1.
3. Key financial information of important non-wholly owned subsidiaries
Closing balance Opening balance
Name C au sr sr ee tn st No n a- sc su er tr se nt aT so seta tsl liC abur ilr ie tn iet
s
lic
aN
u
bro
ir
len itn-
it
e s
liaT bo ilt ia til
e s
C au sr sr ee tn
s
t No n a- sc su er tr se nt
Total assets
liC abur ilr ie tn iet
s
N lo in ab-c ilu ir tir ee sn t liaT bo ilt ia tl i es Xinjiang
Tianzhu 80,126,247 77,008,886 157,135,133 23,266,974 5,336,114 28,603,088 101,018,712 81,709,715 182,728,427 15,554,068 5,336,114 20,890,182 Changyu
Chateau 173,934,285 116,396,690 290,330,975 210,904,481 - 210,904,481 156,538,810 118,256,609 274,795,419 191,898,436 - 191,898,436 Langfang Castel 26,528,622 19,890,293 46,418,915 10,233,932 - 10,233,932 30,867,940 22,471,694 53,339,634 7,913,957 - 7,913,957 Beijing
Chateau 88,294,417 502,368,404 590,662,821 431,222,472 888,945 432,111,417 216,643,935 523,151,845 739,795,780 588,733,969 1,777,890 590,511,859 Ice Chateau 38,239,653 27,545,615 65,785,268 13,756,944 100,000 13,856,944 43,224,419 29,322,675 72,547,094 12,623,467 100,000 12,723,467 Atrio 333,455,551 131,921,130 465,376,681 272,843,155 69,572,335 342,415,490 277,879,914 157,297,623 435,177,537 259,625,473 44,813,493 304,438,966 2016 2015
Name
Total
Operating activities
Total
Operating activities Revenue Net profit (loss) comprehensive Revenue Net profit (loss) comprehensive
cash flows cash flows income income
Xinjiang Tianzhu 118,253,496 11,561,969 11,561,969 5,647,080 107,683,230 (37,548) (37,548) 44,250,338 Changyu Chateau 102,588,593 13,184,637 13,184,637 16,751,337 98,894,499 7,573,641 7,573,641 22,609,230 Langfang Castel 41,948,391 731,204 731,204 8,681,926 51,602,897 862,103 862,103 1,995,967 Beijing Chateau 178,662,315 29,417,483 29,417,483 55,561,102 170,037,611 25,424,015 25,424,015 72,629,545 Ice Chateau 43,742,412 (5,895,304) (5,895,304) 4,922,305 51,657,543 (4,223,249) (4,223,249) 3,294,895 Atrio 281,328,100 (7,484,378) (8,473,348) (28,411,777) 76,202,513* 807,079* 396,939* (3,682,122)** This is amount incurred in the period between acquisition date and 31 December 2015.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT
The Group's major financial instruments include cash and bank, notes receivable, accounts receivable, interest receivables, other receivables, available-for-sale financial assets, other non- current assets, short-term borrowings, notes payable, accounts payable, other payables, interest payables, and long-term borrowings. 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.
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.
1. Risk management objectives and policies
The Group's risk management objectives are to achieve a proper balance between risks and yield, minimise the adverse impacts of risks on the Group's operation performance, and maximise the benefits of the shareholders and other stakeholders. Based on these risk management objectives, the Group's basic risk management strategy is to identify and analyse the Group's exposure to various risks, establish an appropriate maximum tolerance to risk, implement risk management, and monitors regularly and effectively these exposures to ensure the risks are monitored at a certain level.
1.1 Market risk
1.1.1 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 EUR and HKD. Several of the Group's subsidiaries have purchases and sales denominated in EUR and HKD while the Group's other principal activities are denominated and settled in RMB. As at 31 December 2016, the balance of the Group's assets and liabilities are both denominated in RMB except that the assets and liabilities set out below are denominated in EUR and HKD. Currency risk arising from the assets and liabilities denominated in foreign currencies may have impact on the Group's performance.
Closing balance Opening balance RMB RMB Bank and cash (EUR) 566,182 151,746,825 Bank and cash (HKD) 192 96,777 Short-term borrowings (HKD) - 103,297,447 Non-current liabilities due within one year (HKD) - 127,345,600 Non-current liabilities due within one year (EUR) 29,227,200 - Long-term borrowings (EUR) - 56,761,600______________________ ______________________ The Group closely monitors the effects of changes in the foreign exchange rates on the Group's
currency risk exposures. The Group currently does not take any measures to hedge currency risk
exposures.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT - continued
1. Risk management objectives and policies - continued
1.1 Market risk - continued
1.1.1 Currency risk - continued
Sensitivity analysis on 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' Change in exchange rate Effect on profit equity Effect on profit equity RMB RMB RMB RMB HKD 5% increase against RMB 10 10 (11,527,314) (11,527,314) HKD 5% decrease against RMB (10) (10) 11,527,314 11,527,314 EUR 5% increase against RMB (1,433,051) (1,433,051) 4,749,261 4,749,261 EUR 5% decrease against RMB ____1__,4__3__3__,0__5__1 ____1__,4__3__3__,0__5__1 __(__4__,7__4__9__,2__6__1) __(__4__,7__4__9__,2__6__1) Note: As at 31 December 2015, the Group's management anticipated a change of5% in exchange rate for USD to RMB.
1.1.2 Interest rate risk - risk of changes in cash flows
The Group's cash flow interest rate risk of financial instruments relates primarily to variable-rate bank borrowings (Refer to Note VI-1, Note VI-19, Note VI-27 and Note VI-28 for details). It is the Group's policy to keep its borrowings at floating rate of interests so as to eliminate the fair value interest rate risk.
The sensitivity analysis on interest rate risk
The sensitivity analysis on interest rate risk is based on the changes in the market interest rate may influence the interest income or expense of the variable rate financial instruments.
Management of the Group believes interest rate risk on bank deposit is not significant, therefore does not disclose sensitivity analysis for interest rate risk.
Where all other variables are held constant, the reasonably possible changes in the interest 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 Change in interest rate Effect on profit owners' equity Effect on profit owners' equity Bank borrowings 50% increase (1,774,725) (1,774,725) (2,528,430) (2,528,430) Bank borrowings 50% decrease 1,774,725 1,774,725 2,528,430 2,528,430
Note: As at 13 December 2015, the Group's management anticipated a change of 50 basis points
in the bank's variable interest rate.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT - continued
1. Risk management objectives and policies - continued
1.2 Credit risk
As at 31 December 2016, the Group's maximum exposure to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties. In order to minimise the credit risk, the Group has adopted a policy to ensure that all sales customers have good credit records. The Group has delegated a team responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. 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. In addition, the Group reviews the recoverable amount of each individual trade debt at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the management of the Group considers that the Group's credit risk is significantly reduced. 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 2016,26.3% of the Group trade receivables are due from top 5 customers (31 December 2015:28.4%). There is no collateral or other credit enhancement on the balance of the trade receivables of the Group.
1.3 Liquidity risk
In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Group's operations and mitigate the effects of fluctuations in cash flows. The management monitors the utilisation of bank borrowings and ensures compliance with loan covenants.
The following is the maturity analysis for financial assets and financial liabilities held by the Group which is based on undiscounted remaining contractual obligations:
Non-derivative financial liabilities
Less than one month 1-3 months 3-12 months 1-5 years More than five years Total RMB RMB RMB RMB RMB RMB Short-term borrowings 3,777,392 145,518,875 533,769,281 - - 683,065,548 Notes payable - 34,900,000 4,000,000 - - 38,900,000 Account payables 128,480,966 256,961,933 159,788,420 - - 545,231,319 Other payables 182,570,536 85,110,213 278,624,561 - - 546,305,310 Interest payables 563,613 - - - - 563,613 Long-term borrowings 980,746 1,783,374 58,881,143 50,793,667 - 112,438,930 Long-term payables ________-_ ___9_15_,0_0_0 ___1_4_,7_85_,8_3_3 ___13_6_,8_64_,7_6_7 _1_71_,3_0_3,_36_7 ___3_23_,8_68_,_96_7______31__6__,3__73__,2__5__3 __52__5__,1__89__,3__9__5 ____1,__04__9__,8__49__,2__3__8 ______18__7__,6__58__,4__3__4 __17__1__,3__03__,3__6__7 ____2__,25__0__,3__73__,6__8__7
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT - continued
1. Risk management objectives and policies - continued
1.4 Fair value disclosure - Financial assets and liabilities not measured using fair value As at 31 December 2016, management of the Group believes that book value of financial assets measured under amortised cost method is approximately equal to their fair value.
X. RELATED PARTY AND RELATED PARTY TRANSACTIONS
1. Parent company
Name of Type of Place of Legal Scope Registered Percentage Percentage Incorporate parent company Relation enterprise registration representative of business capital of shares of voting rights Code RMB % %
Controlling Parent Limited
Company Company Company Yantai SunLiqiang Manufacturing 50,000,000 50.4 50.4 265645824 During the year ended 31 December 2016, there is no change in parent company's registered capital, shares holding or voting power.
2. Subsidiaries: Please refer to Notes VIII.
3. Other related parties
Name of related parities Nature of related parties Incorporate code Yantai Changyu Wine Culture Museum Company controlled 913706007582586548 Co., Ltd.("Wine Culture Museum") by the same parent
Yantai Changyu International Window of the Company controlled 91370600672208146X Wine City Co., Ltd.("Window of the Wine City) by the same parent
Yantai ShenMa Packing Co., Ltd. Company controlled 91370600553393350J ("ShenMa Packing") by the same parent
Yantai Zhongya Pharmaceutical Tonic Company controlled 91370600726203923M Wine Co., Ltd.("Zhongya Pharmaceutical") by the same parent
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
X. RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
4. Significant related party transactions
(1) Purchases from and sales to related parties
Purchase from related parties
The content of related 2016 2015 party transactions RMB RMB ShenMa Packing product purchase 150,590,287 153,891,013 Zhongya Pharmaceutical product purchase 12,567,066 9,856,685 Wine Culture Museum product purchase 10,210,089 6,047,453 Window of the Wine City product purchase 2,032,847 730,488__________ __________ 175,400,289 170,525,639____________________ ____________________ All related party transactions are based on the negotiated price.
In 2016, purchases from related parties accounted for13.2% of the Group's total purchase (2015:10.5%)
Sales to related parties
The content of related 2016 2015 party transactions RMB RMB Wine Culture Museum goods sales 15,670,982 7,371,180 Window of the Wine City goods sales 10,945,578 7,578,711 Zhongya Pharmaceutical goods sales 3,387,900 2,723,976 ShenMa Packing goods sales 1,496,669 1,820,232__________ __________ 31,501,129 19,494,099____________________ ____________________ In 2016, sales to related parties accounted for less than1% of the Group's total sales (2015: less than1%).
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
X. RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
4. Significant related party transactions - continued
(2) Property leased from a related party
The Group as Lessee
2016 Assets leased Beginning date Ending date Rental expense Changyu Group Company Warehouse and office building 1 January 2012 31 December 2016 5,858,000 Changyu Group Company office building 31 January 2016 31 December 2020 1_,_69_2_,7_2_47__,__55__0__,7__2__4 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 RMB 5,858,000, and till 31 December 2016. For the year ended 31 December 2016, the rental payable to Changyu Group Company amounted to RMB 5,858,000 (2015: RMB 5,858,000).
Pursuant to the lease agreement entered into between the Group and Changyu Group Company on 1 January 2016, starting from 1 January 2016, the Group rented properties from Changyu Group Company for operation purposes at a basic annual rental of RMB 1,692,724, and till 31 December 2020. For the year ended 31 December 2016, the rental payable to Changyu Group Company amounted to RMB 1,692,724 (2015: Nil).
(3) Other significant related party transactions
The content of related Note 2016 2015 party transactions RMB RMB Changyu Group Company Royalty fee (a) 74,125,038 83,734,976 Changyu Group Company Patents fee (b) 50,000 50,000 Zhongya Pharmaceutical Sales of fixed assets (c )
____
4__1__1__,4__0__7__ ______________-__ 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 2016, royalty fee paid to related company accounted for100% of the Group (2015:100%).
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
X. RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
4. Significant related party transactions - continued
(3) Other significant related party transactions - continued
(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 RMB 50,000. 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 RMB 50,000. For the year ended 31 December 2016, the patents usage fee payable to Changyu Group Company is amounted to RMB 50,000 (2015: RMB 50,000).
During 2016, patent fee paid to related company accounted for100% of the Group (2015:100%).
(c) Sales of fixed assets
As at 28 December 2016, fixed assets sold by the Group to Zhongya Pharmaceutical amounted to RMB 411,407 (31 December 2015: nil), accounting for34.0% (31 December 2015: nil).
(4) Remuneration of the management
2016 2015 RMB RMB Remuneration of the management 9,166,918 9,744,790__________________ ________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
X. RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
5. Balance due from/to related parties
(1) Balance due from related parties
Closing balance Opening balance Accounts receivable Balance Provision Balance Provision RMB RMB RMB RMB Zhongya Pharmaceutical 3,913,997 - 2,240,282 - Shen Ma Packing. 50,700 - 169,300 - Window of the Wine City 1,833,273 - 7,812 - Wine Culture Museum __8_7_6_,7_2_4 ___-__ _______- ___-____6__,6__7__4__,6__9__4 ______-
____
__2__,4__1__7__,3__9__4 ______-____ The above amounts due from related parties are unsecured, interest-free and have no fixed terms of repayment.
(2) Balance due to related parties
Accounts payable Closing balance Opening balance RMB RMB Shen Ma Packing 59,058,023 53,735,915 Zhongya Pharmaceutical 4,328,184 7,272,656 Wine Culture Museum 3,038,520 1,928,504 Window of the Wine City ___6_1_9_,5_7_8
_
___1_4_5_,8_6_1_ Total 67,044,305 63,082,936__________________ __________________ Other payable Closing balance Opening balance RMB RMB Royalty fee payable to parent company 78,572,540 86,001,287__________________ __________________ The above amounts due to related parties are unsecured, interest-free and have no fixed terms of repayment.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XI. COMMITMENT
1. Important commitments
(1) Capital commitments
Closing balance Opening balance RMB'000 RMB'000 Capital commitment for
purchasing non-current assets 1,508,310 1,580,280________________ ________________ (2) Operating lease commitment
As lessee
Significant operating lease: Total future minimal lease payments under non-cancelable contract with lessor are as follow:
Closing balance Opening balance RMB'000 RMB'000 Within 1 year 44,631 50,369 1 to 2 years 20,262 35,100 2 to 3 years 12,836 24,265 3 years and above 36,533 44,466__________ __________ 114,262 154,200____________________ ____________________ 2. Contingent liability
The Group do not have any significant contingent liabilities as at balance sheet date.
XII. POST BALANCE SHEET DATE EVENT
According to the board of the director resolution raised on 20 April 2017, the Company proposed a cash dividend of RMB 5.0 (including taxes) for every 10 shares in respect of 2016 based on the issued shares of 685,464,000. The aggregate amount of cash dividend is RMB 342,732,000. The resolution is to be approved by the annual general meeting.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIII. OTHER SIGNIFICANT EVENTS
Segment report
The Group is principally engaged in the production and sales of wine, brandy, and champagne in China, France and Spain. In accordance with the Group's internal organization structure, management requirements and internal reporting system, the Group's operation is divided into three parts: China, France and Spain. The management periodically evaluates segment results, in order to allocate resources and evaluate performances. In 2016, more than94.4% revenue and more than99.9% profit derived from China, and more than93.9% assets are located in China. Therefore the Group does not need to disclose additional segment report information.
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS
1. Cash and bank
Closing balance Opening balance RMB RMB Cash 6,631 10,804 Bank balance 243,708,493 155,430,457 Other currency fund 25,744,936 125,377,572____________ __________ Total 269,460,060 280,818,833________________________ ____________________ As at 31 December 2016, the balance of restricted cash of the Company is RMB 2,711,926 (31 December 2015: RMB 2,643,181), which is the Group's housing fund.
As at 31 December 2016, other currency fund of the Company include: deposit of RMB 25,694,735 for letter of credit and deposit of RMB 50,201 for entity card (31 December 2015: RMB 7,572).
As at 31 December 2016, the Company's term deposits with original maturity from three months to six months when acquired is RMB 3,000,000 (31 December 2015: RMB 9,000,000 ) with interest rate1.65%.
2. Notes receivable
(1) Categories of notes receivable
Closing balance Opening balance RMB RMB Bank acceptances 1,114,200 38,429,319__________________ __________________ (2) Pledged notes receivable
As of 31 December 2016, there was no pledged notes receivable (31 December 2015: Nil).
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
2. Notes receivable - continued
(3) Notes endorsed by the Group to other parties which are not yet due at the end of the period Closing balance Opening balance RMB RMB Bank acceptances 29,199,486 59,952,558____________________ __________________ As at 31 December 2016, notes endorsed by the Company to other parties which are not yet due at the end of the period is RMB 29,199,486 (31 December 2015: RMB 59,952,558). It is for the payment to suppliers. The Company believes that due to bank good reputation, the risk of maturity cannot be cashed is very low, these notes receivable ownership of the risks and rewards have been transferred to the supplier, therefore confirm the termination of the endorsement notes receivable. If bank is unable to settle the notes on maturity, according to the relevant laws and regulations of China, the Group would undertake limited liability for the notes.
(4) Notes receivable were reclassified as accounts receivable due to the default of drawer
As at 31 December 2016, there was no notes receivable were reclassified as accounts receivable due to the default of drawer (31 December 2015: Nil).
3. Accounts receivable
(1) Disclosure of accounts receivable by categories:
Closing balance Opening balance
Balance Bad debts provisions Carrying Amount Balance Bad debts provisions Carrying Amount Amount Proportion Amount Proportion Amount Amount Proportion Amount Proportion Amount RMB (%) RMB (%) RMB RMB (%) RMB (%) RMB Accounts receivable
that are individually
not significant and
for which bad debt
provision has been
assessed individually_____3_,3__26__,6_8_3__10__0.__0 ____-________-__________3,3__26__,6__83____2__,3__92__,87__0__10__0.__00 ____-________-________2__,3__92__,87__0 The normal credit term of trade receivables is one month, which can be extended to one year for certain major customers. The trade receivables are interest free.
There was no individually significant and for which bad debt provision has been assessed individually accounts receivable.
(2) The aging analysis is as follows:
Closing balance Opening balance RMB RMB Within 1 year 3,326,683 2,392,870__________________ ________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
3. Accounts receivable - continued
(3) Provision, reversals and collections during the current period:
As at 31 December 2016, there was no provision provided for trade receivables (31 December 2015: Nil). The Company did not provide, reverse or write off any provision during 2016 (31 December 2015: Nil).
(4) The balance of accounts receivable at the end of the year
Relationship Proportion of with the Group Amount Aging total receivables RMB % Zhongya Pharmaceutical Other related parties __3__,3__2__6__,6__8__3 Within 1 year __1__00__.__0 4. Prepayments
(1) The aging analysis is as follows:
Closing balance Opening balance Amount Proportion Amount Proportion RMB % RMB % Within 1 year 702,647 100.0 445,619 100.0____________ ________ ____________ ________ (2) Top four entities with the largest balances of prepayments:
Percentage of Reason for total advances Relationship Amount being to suppliers with the Group RMB Aging outstanding % Shandong Electricity Company
Yantai branch Third party 502,671 Within 1 year Electric fee 71.6 Shanghai ziri Packing Co. Ltd. Third party 104,832 Within 1 year Goods not received 14.9 Chongqing Hao Sheng glass
Limited by Share Ltd Third party 93,456 Within 1 year Goods not received 13.3 China Petroleum Chemical Co prepayment
Shandong Yantai Petroleum Branch Third party ____1_,6_8_8 Within 1 year Gasoline fee ___0._2______70__2__,6__4__7 __1__0__0.__0
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
5. Dividend receivables
(1) Dividend receivables
Opening balance Increase Decrease Closing balance RMB RMB RMB RMB Within 1 year
Including: Sales Company 724,259,189 1,515,829,419 (1,837,422,530) 402,666,078 Wines Sales 20,465,163 82,388,043 (42,502,188) 60,351,018 Xinjiang Tianzhu - 46,502,728 (46,502,728) - Langfang Castel - 9,971,897 (9,971,897) - Changyu Chateau - 16,655,125 (5,284,518) 11,370,607 Ice Chateau - 2,000,000 (2,000,000) - Beijing Chateau - 20,000,000 (20,000,000) - Shihezi Chateau - 62,844,089 (57,002,086) 5,842,003 Kylin Packaging - 16,000,000 (16,000,000) - Jingyang Sales - 2,000,000 (2,000,000) - National Wines - 10,000,000 (10,000,000) - Atrio - 1,475,343 - 1,475,343 More than 1 year
Including: Pioneer International __4_3_,3_6_7_,9_9_7 ___1_2_,4_6_2_,7_7_4 ___(_5_,7_1_6_,7_0_7) __5_0_,1_1_4_,0_6_4 Total __7__8__8__,0__9__2__,3__4__9 __1__,7__9__8__,1__2__9__,4__1__8 (__2__,0__5__4__,4__0__2__,6__5__4 ) __5__3__1__,8__1__9__,1__1__3 (2) Significant Dividend Receivable more than 1 year
Closing balance Aging Reason for being Whether RMB outstanding impairment Pioneer International __5__0,__1__14__,__0__64__ More than 1 ye ar Not paid No 6. Other receivables
(1) Disclosure of other receivables by categories:
Closing balance Opening balance
Balance Bad debts provisions Carrying Amount Balance Bad debts provisions Carrying Amount Amount Proportion Amount Proportion Amount Amount Proportion Amount Proportion Amount RMB (%) RMB (%) RMB RMB (%) RMB (%) RMB Other receivables that are
individually significant
and for which bad debt
provision has been
assessed individually 3,572,802,092 99.7 - - 3,572,802,092 5,727,534,401 99.8 (7,199,521) 0.1 5,720,334,880 Other receivables that are
not individually significant
and for which bad debt
provision has been
assessed individually
__9_,7_30_,77_0__0._3 ____-___-____9,7_30_,7_70__14_,1_21_,24_9__0._2 ____-_ __-___14_,1_21_,24_9 Total __3,5__82__,5__32__,86__2__10__0.__0 __________ -____-____3,__58__2,5__32__,8__62__5,7__41__,6__55__,65__0__10__0.__0 __(__7,1__99__,5__21 ) ____0.__1__5,7__34__,4__56__,12__9
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
6. Other receivables - continued
(1) Disclosure of other receivables by categories: - continued
The aging analysis is as follows:
Closing balance Opening balance
Bad debts Carrying Bad debts Carrying Balance provision amount Balance provision amount Amount Proportion Amount Amount Amount Proportion Amount Amount RMB % RMB RMB RMB % RMB RMB Within 1 year 2,138,473,742 59.7 - 2,138,473,742 4,849,743,585 84.5 - 4,849,743,585 1 to 2 years 1,443,856,430 40.3 - 1,443,856,430 884,540,581 15.4 - 884,540,581 2 to 3 years 37,123 0.0 - 37,123 171,963 0.0 - 171,963 Over 3 years ____1_6_5,_56_7___0_.0_______-____1_6_5,_56_7___7_,1_9_9,_52_1___0_.1_(7_,1_99_,5_2_1)_______-___3,__58__2__,5__32__,8__6__2____10__0__.0____________-____3,__58__2__,5__32__,8__6__2__5,__74__1__,6__55__,6__5__0____10__0__.0__(7__,1__99__,5__2__1)__5,__73__4__,4__56__,1__2__9 (2) Accrual, reversal and written-off during the current period
No bad debt accrued or reversed in 2016 (2015:Nil.).
(3) Other receivables written off current year
Other receivables is written off RMB 7,199,521 (2015: Nil ).
(4) Disclosure of other receivables by nature
Closing balance Opening balance RMB RMB Receivable from subsidiary 3,580,805,532 5,732,654,756 Investment fund - 7,199,521 Receivable deposit 8,000 103,834 Others 1,719,330 1,697,539____________ ____________ 3,582,532,862 5,741,655,650________________________ ________________________ (5) Top five entities with the largest balances of other receivables
As at 31 December 2016, the particulars of top five other receivables are as follows:
Proportion of total Nature Amount Aging prepayments RMB % Sales Company Internal balance 1,000,076,488 Within 2 year 27.9 Changan Chateau Internal balance 753,079,312 Within 2 year 21.0 Ningxia Chateau Internal balance 435,507,892 Within 2 year 12.2 Beijing Chateau Internal balance 382,245,667 Within 2 year 10.7 Pioneer International Internal balance __2_2_3_,5_3_9_,6_7_9 Within 2 year _6_._2
__2__,7__9__4__,4__4__9__,0__3__8 __78__.__0
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
7. Inventories
Closing balance Opening balance
Net carrying Net carrying Balance Provision amount Balance Provision amount RMB RMB RMB RMB RMB RMB Raw material 4,190,928 - 4,190,928 5,200,748 - 5,200,748 Work in progress 747,521,822 - 747,521,822 680,061,444 - 680,061,444 Finished goods __4_1_,0_1_9_,6_6_8 ___-__ __4_1_,0_1_9_,6_6_8 __4_2_,9_1_0_,9_1_5 ___-__ __4_2_,9_1_0_,9_1_5__7__9__2__,7__3__2__,4__1__8 ______-
____
__7__9__2__,7__3__2__,4__1__8 __7__2__8__,1__7__3__,1__0__7 ______-
____
__7__2__8__,1__7__3__,1__0__7 8. Long-term equity investments
Movement Cash Dividends 2016 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 46,502,728 Kylin Packaging 23,176,063 23,176,063 - 23,176,063 100 100 16,000,000 Changyu Chateau (a) 28,968,100 28,968,100 - 28,968,100 70 100 16,655,125 Pioneer International (b) 3,500,000 3,500,000 - 3,500,000 70 100 12,462,774 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 10,000,000 Ice Chateau (b) 30,440,500 30,440,500 - 30,440,500 51 100 2,000,000 Beijing Chateau (b) 77,000,000 77,000,000 - 77,000,000 70 100 20,000,000 Sales Company 7,200,000 7,200,000 - 7,200,000 100 100 1,515,829,419 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 9,971,897 Wine Sales 4,500,000 4,500,000 - 4,500,000 100 100 82,388,043 Shanghai Sales(b) 300,000 300,000 - 300,000 30 100 - Beijing Sales 850,000 850,000 - 850,000 100 100 - Jingyang Sales (b) 100,000 100,000 - 100,000 10 100 2,000,000 Jingyang Wine (b) 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 (b) 80,000,000 80,000,000 - 80,000,000 65 100 - Shihezi Chateau 550,000,000 150,000,000 400,000,000 550,000,000 100 100 62,844,089 Changan Chateau 20,000,000 20,000,000 - 20,000,000 100 100 -R&D Centre (a) 805,000,000 500,000,000 - 500,000,000 62 100 - Huanren Wine 11,000,000 11,000,000 - 11,000,000 100 100 - Francs Champs 220,320,604 209,706,634 10,613,970 220,320,604 100 100 - Atrio __19_0,_15_0,_54_4 __19_0,_14_8,_12_5 ____2,_41_9 __19_0,_15_0,_54_4 75 100 ___1,_47_5,_34_3__2,__13__9,__34__1,__54__1 __1,__42__3,__72__5,__15__2 __41__0,__61__6,__38__9 __1,__83__4,__34__1,__54__1 __1,__79__8,__12__9,__41__8 (a) The Company has100% voting power of those subsidiaries by the way of indirect controlling, referring to Note VIII-1.
(b) The Company has100% voting power of these subsidiaries by the way of indirect controlling through wholly owned subsidiaries.
During 2016, there was no significant restriction on the remittance of fund from the investees to the Company.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
9. Fixed assets
(1) Fixed assets
Buildings Machinery Motor vehicles Total RMB RMB RMB RMB I. Total original carrying amount
1. Opening balance 305,649,899 592,702,673 13,179,007 911,531,579 2. Increase
Purchase 320,033 7,195,257 3,675,768 11,191,058 CIP transfer - 7,490,777 - 7,490,777 3. Decrease
Disposal - (30,301,520) (4,092,433) (34,393,953) Classified as Non-current
assets held for sale (VI-8) __(_3_,5_9_9_,2_2_1) ________-_ ________-_ __(_3_,5_9_9_,2_2_1) 4. Closing balance _3_0_2_,3_7_0_,7_1_1 _5_7_7_,0_8_7_,1_8_7 __1_2_,7_6_2_,3_4_2 _8_9_2_,2_2_0_,2_4_0 II. Total accumulated depreciation
1. Opening balance 113,220,552 418,201,108 10,603,905 542,025,565 2. Increase
Additions 9,967,875 24,455,088 689,608 35,112,571 3. Decrease
Disposal - (26,912,479) (3,887,810) (30,800,289) Classified as Non-current
assets held for sale (VI-8) __(_1_,5_9_9_,0_2_4) ________-_ ________-_ __(_1_,5_9_9_,0_2_4) 4. Closing balance _1_2_1_,5_8_9_,4_0_3 _4_1_5_,7_4_3_,7_1_7 ___7_,4_0_5_,7_0_3 _5_4_4_,7_3_8_,8_2_3 III. Total net carrying amount
1. Closing net carrying amount __1__8__0__,7__8__1__,3__0__8 __1__6__1__,3__4__3__,4__7__0 ______5__,3__5__6__,6__3__9 __3__4__7__,4__8__1__,4__1__7 2. Opening net carrying amount __1__9__2__,4__2__9__,3__4__7 __1__7__4__,5__0__1__,5__6__5 ______2__,5__7__5__,1__0__2 __3__6__9__,5__0__6__,0__1__4 As at 31 December 2016, fixed assets with restricted ownership is RMB 27,145,520, referring to Note VI-48 for details.
As at 31 December 2016, net amount of fixed assets classified as Non-current assets held for sale was RMB 2,000,197, and the Company has no temporary idle fixed assets, fixed assets leased in under finance leases and fixed assets leased out under operating leases.
(2) Fixed assets of which certificates of title have not been obtained
As at 31 December 2016, buildings without property certificate are asfollows：
Reasons why certificates of title have Amount not been obtained RMB
Fermentation centre office,
experiment building and workshop 3,994,837 Processing
____________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
10. Construction in progress
(1) Construction in progress
Closing balance Opening balance RMB RMB Reconstruction of boiler heating systems 500,000 7,990,777________________ ________________ (2) Current year movement on important construction
Opening Transfer to Closing Accumulated The progress of Financed Budget balance Addition PPE balance expenditure/budget construction by RMB RMB RMB RMB RMB %
Reconstruction of
13,000,000 7,990,777 - (7,490,777) 500,000 61.5 90.0 Self-raised boiler heating systems
There was no interest capitalized in construction in progress in 2016.
(3) As at 31 December 2016, there was no provision was made for the construction in process. 11. Bearer biological asset
Bearer biological assets are grapetrees，which measured in cost method.
Immature Mature
biological assets biological assets Total RMB RMB RMB I. Total original carrying amount
1. Opening balance 103,624,879 14,961,025 118,585,904 2. Increase
(1) Purchase 601,300 - 601,300 (2) Cultivated increase 14,731,590 - 14,731,590 (3) Transfer to mature assets
from immature assets (64,091,555) 64,091,555 -__________ _________ __________ 3. Closing balance 54,866,214 79,052,580 133,918,794__________ _________ __________ II. Total accumulated depreciation
1. Opening balance - 7,624,715 7,624,715 2. Increase
Additions - 3,257,386 3,257,386__________ _________ __________ 3. Closing balance - 10,882,101 10,882,101__________ _________ __________ III. Total net carrying amount
1. Closing net carrying amount 54,866,214 68,170,479 123,036,693____________________ __________________ ____________________
2. Opening net carrying amount 103,624,879 7,336,310 110,961,189
____________________ __________________ ____________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV NOTES TO COMPANY FINANCIAL STATEMENTS - continued
11. Bearer biological asset - continued
As at 31 December 2016, there is no biological asset with ownership restricted.
As at 31 December 2016, there is no indication that biological assets may be impaired, and no provision was made.
12. Intangible assets
Intangible assets
Land use right RMB I. Total original carrying amount
Opening and closing balance 96,594,766__________ II. Total accumulated depreciation
1. Opening balance 22,213,241 2. Increase
Additions 2,379,153__________ 3. Closing balance 24,592,394__________ III. Total net carrying amount
1. Closing net carrying amount 72,002,372____________________ 2. Opening net carrying amount 74,381,525____________________ As at 31 December 2016, Intangible assets with restricted ownership are RMB 11,220,838, Please refer to Note VI-48 in detail.
13. Deferred tax assets
Recognised deferred tax assets not presented at the net amount after offset
Closing balance Opening balance
Deductible Deferred Deductible Deferred Item
temporary difference tax assets temporary difference tax assets RMB RMB RMB RMB Unrealized profit from intra
- company transactions 5,333,339 1,333,335 9,159,340 2,289,835 Unpaid bonus 35,607,406 8,901,851 26,378,467 6,594,617 Retirement benefit 10,754,547 2,688,637 12,914,345 3,228,586 Asset impairment provision 10,000,000 2,500,000 17,199,521 4,299,880 Deductable losses 24,544,964 6,136,241 62,511,688 15,627,922 Deferred income 21,700,753 5,425,188 23,591,406 5,897,852 107,941,009 26,985,252 151,754,767 37,938,692
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV NOTES TO COMPANY FINANCIAL STATEMENTS - continued
14. Other non-current assets
Closing balance Opening balance RMB RMB Receivables from subsidiaries 2,617,457,460 -________________________ __________________ 15. Short-term borrowings
Closing balance Opening balance RMB RMB Credit loans 500,000,000 601,297,447____________________ ____________________ As at 31 December 2016, short-term borrowings detail is as follows:
Loan bank Loans amount Loan term Interest rate RMB % HSBC (China) Co., Ltd.
Qingdao branch 100,000,000 25.Nov.2016 - 24. Feb.2017 3.48 ICBC Yantai branch 100,000,000 7.July 2016 - 4.July 2017 3.92 ICBC Yantai branch 100,000,000 24.June 2016 - 20 June 2017 3.92 ICBC Yantai branch __2__0__0__,0__0__0__,0__0__0 30 May 2016– 24.May 2017 ____3.__9__2 16. Accounts payable
The aging analysis of accounts payable are as follows
Closing balance Opening balance RMB RMB Within 1 year 246,743,228 271,603,863 1 to 2 years 825,629 1,487,319__________ __________ 247,568,857 273,091,182____________________ ____________________ 17. Advances from customers
The aging analysis of advances from customers are as follows
Closing balance Opening balance RMB RMB Within 1 year 6,000,000 -____________________ ____________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV NOTES TO COMPANY FINANCIAL STATEMENTS - continued
18. Employee benefit payable
(1) Employee benefit payable
Opening balance Increase Decrease Closing balance RMB RMB RMB RMB Short-term salaries and welfare 58,144,270 109,527,458 (107,613,514) 60,058,214 Post-demission benefits
- predetermined provision plan - 10,227,042 (10,227,042) - Termination benefit __1_2_,9_1_4_,3_4_5 ___1_,6_6_2_,0_5_5 __(_3_,8_2_1_,8_5_3) __1_0_,7_5_4_,5_4_7____7__1__,0__5__8__,6__1__5 __1__2__1__,4__1__6__,5__5__5 __(1__2__1__,6__6__2__,4__0__9) ____7__0__,8__1__2__,7__6__1 (2) Short-term salaries and welfare
Opening balance Increase Decrease Closing balance RMB RMB RMB RMB Salaries and bonus 57,454,172 95,025,808 (92,441,612) 60,038,368 Staff benefit 2,520 7,235,084 (7,044,204) 193,400 Staff welfare - 4,940,763 (4,940,763) - Includes:
Medical insurance - 3,878,517 (3,878,517) - Injury insurance - 661,206 (661,206) - Maternity insurance - 401,040 (401,040) - Housing fund - 3,189,445 (3,189,445) - Union fee and education fee ___2_,6_3_2_,5_3_3 ____5_5_0_,7_9_4 ____(8_0_9_,6_7_7) ___2_,3_7_3_,6_5_0 Total ____6__0__,0__8__9__,2__2__5 __1__1__0__,9__4__1__,8__9__4 __(1__0__8__,4__2__5__,7__0__1) ____6__2__,6__0__5__,4__1__8 Less: Non-current liabilities ___1_,9_4_4_,9_5_5 ___2_,4_9_9_,4_0_3 Short-term salaries and welfare ____5__8__,1__4__4__,2__7__0 ____6__0__,0__5__8__,2__1__4 (3) Predetermined provision plan
Opening balance Increase Decrease Closing balance RMB RMB RMB RMB Pension - 9,488,517 (9,488,517) - Unemployment insurance ___-__ ____7_3_8_,5_2_5 ____(7_3_8_,5_2_5) ___-________-
____
____1__0__,2__2__7__,0__4__2 __(__1__0__,2__2__7__,0__4__2) ______-____ The Company participates in pension insurance and unemployment insurance plans established by government institution. According to those plans, the Company pays pension and unemployment insurance each month on the basis of18% and1% last period salary respectively. Apart from these monthly expenses, the Company does not bear any further payment obligation. This year the Company should pay RMB 9,488,517 and RMB 738,525 (2015: RMB 10,505,200 and RMB 853,498) respectively into pension insurance and unemployment insurance. As at 31 December 2016, the Company does not have unpaid pension and unemployment insurance (31 December
2015: Nil) which is due to the pension insurance and unemployment insurance plan and not paid
at the end of the reporting period.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
19. Taxes payable
Closing balance Opening balance RMB RMB Value added tax 2,199,892 (2,238,737) Consumption tax 18,887,846 11,536,745 Corporation income tax 211,105 651,459 Urban land use tax 802,207 837,367 Individual income tax 7,289,253 6,136,634 City construction tax 1,941,063 1,084,656 Property tax 270,492 270,408 Others 1,664,367 1,052,779__________ _________ 33,266,225 19,331,311____________________ __________________ 20. Other payables
(1) Natures of other payables are as follows
Closing balance Opening balance RMB RMB Payable to subsidiaries 359,161,772 983,151,732 Payables for equipment and construction 2,772,304 4,600,199 Payables for transportation - 495,093 Deposits from suppliers 589,300 537,800 Others 5,786,986 6,036,457____________ ____________ 368,310,362 994,821,281________________________ ________________________ (2) As at 31 December 2016, there were no significant outstanding balance aged over than one year. 21. Non-current liabilities due within one year
Closing balance Opening balance RMB RMB Long-term borrowings due within one year 29,227,200 127,345,600____________________ ____________________ As at 31 December 2016, long-term borrowings due within one year refer to the borrowings to the Company from Yantai Branch of ICBC amounting to EUR 4,000,000 (equivalent to RMB 29,227,200), with a validity period from 1 October 2014 to 29 September 2017 at the interest rate of six-month LIBOR plus 355 basis points. The relevant interest is paid monthly. As at 31 December 2016, the interest rate of such borrowings is3.7%.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
22. Capital reserve
2016 Opening balance Increase Decrease Closing balance RMB RMB RMB RMB Share premium __5__5__7__,2__2__2__,4__5__4 ______-__
____
______-__
____
__5__5__7__,2__2__2__,4__5__4 23. Operating income and costs
Operating income is analysed as follows:
2016 2015 RMB RMB Principal operating income 1,415,104,946 1,383,184,483________________________ ________________________ Operating cost is analysed as follows:
2016 2015 RMB RMB Principal operating cost 1,152,076,500 1,154,834,509________________________ ________________________ 24. Taxes and surcharges
2016 2015 RMB RMB Consumption tax 86,244,674 106,640,172 City construction tax 8,665,672 11,533,643 Education fee and surcharges 6,189,856 8,306,059 Property tax 1,229,545 - Land use tax 2,534,985 - stamp tax 315,520 - Others 1,288,965 1,647,256__________ __________ 106,469,217 128,127,130____________________ ____________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
25. General and administrative expense
2016 2015 RMB RMB Salary and employee benefit 34,475,802 59,518,458 Maintenance fee 8,755,646 9,276,965 Leasing expenses 6,525,996 6,575,996 Administrative expenses 5,041,108 7,413,606 Depreciation 4,266,502 4,423,980 Property insurance fees 3,594,451 1,025,924 Greening fee 2,779,497 2,290,397 Amortization 2,333,153 3,012,058 Service fee 2,008,619 12,329,601 Property tax, stamp duty and other taxes 1,952,995 6,105,794 Shuttle bus 1,914,130 2,287,960 Security and sanitation fee 1,727,077 2,049,508 Postal charges 1,689,281 2,305,846 Travelling expenses 1,657,767 3,441,134 Others 7,240,113 9,130,568__________ __________ 85,962,137 131,187,795____________________ ____________________ 26. Financial Expense
2016 2015 RMB RMB Interest income (3,704,355) (11,868,515) Exchange loss(gain) 10,474,409 8,543,586 Less: Interest expenses 26,658,795 21,322,155 Bank charges 797,603 855,471_________ _________ 34,226,452 18,852,697__________________ __________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
27. Investment income
2016 2015 RMB RMB Long-term equity investment income accounted
for by using the cost method 1,798,129,418 1,587,303,643________________________ ________________________ 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 2016 2015 RMB RMB Sales Company 1,515,829,419 1,404,700,197 Wine Sales 82,388,043 65,465,162____________ ____________ 1,598,217,462 1,470,165,359________________________ ________________________ As at 31 December 2016 and at 31 December 2015, there was no significant restriction on the remittance of investment income to the Company.
28. Supplement to cash flow statement
2016 2015 RMB RMB (1) Cash flows from operating activities
calculated by adjusting the net profit:
Net profit 1,830,574,470 1,553,520,098 Add: Depreciation of fixed assets 35,112,571 37,173,740 Amortization of intangible assets 2,379,153 2,379,153 Amortization of biological assets 3,257,386 586,905 Gains on disposal of property,
plant and equipment (111,362) (116,340) Finance expenses 34,300,141 7,609,550 Investment income (1,798,129,418) (1,587,303,643) Decrease/(increase) in deferred tax assets 10,953,440 (10,885,121) Increase in inventories (64,559,311) (46,476,333) Increase/(decrease) in trade receivables 130,012,325 (973,578,831) Decrease/(increase) in trade payables (637,852,493) 11,918,004____________ ____________ Net cash flows from operating activities (454,063,098) (1,005,172,818)________________________ ________________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
28. Supplement to cash flow statement - continued
(2) Significant investing and financing activities not involving cash receipts and payaments 2016 2015 RMB RMB Change the claim on Shihezi Chateau into Long-term
equity investments 400,000,000 - Increase the investment in subsidiaries
with bank acceptances 523,977,060 - Recover the investment in subsidiaries
with bank acceptances (523,977,060) -____________ ____________ 400,000,000 -________________________ ________________________ 29. Cash and cash equivalents
2016 2015 RMB RMB Closing balance of cash and bank 269,460,060 280,818,833 Less:
Restricted bank deposits 2,711,926 2,643,181 Restricted other monetary assets 25,744,936 125,377,572 Deposit with a period of over three months 3,000,000 9,000,000__________ __________ Closing balance of cash and cash equivalents 238,003,198 143,798,080____________________ ____________________ 2016 2015 RMB RMB Cash and bank 238,003,198 143,798,080 Including: Cash on hand 6,631 10,804 Bank deposits on demand 237,996,567 143,787,276__________ __________ Closing balance of cash and cash equivalents 238,003,198 143,798,080____________________ ____________________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
30. Related party transactions
(1) Purchase of materials
2016 2015 RMB RMB Subsidiaries 397,141,028 319,040,340 Other related parties 109,448,605 111,273,050__________ __________ 506,589,633 430,313,390____________________ ____________________ (2) Sales of goods
2016 2015 RMB RMB Subsidiaries 1,399,002,536 1,374,745,130 Other related parties 16,102,410 8,439,353____________ ____________ 1,415,104,946 1,383,184,483________________________ ________________________ (3) Sales of Fixed assets
2016 2015 RMB RMB Subsidiaries 2,971,880 - Other related parties 411,407 -____________ ____________ 3,383,287 -________________________ ________________________ (4) Guarantee for related parties
The company acting as theguarantor：
Guaranteed party Amount of guarantee Inception date Maturity date If the guarantee completed Sales company __1__00__,__00__0__,0__0__0 2 November 2017 2 November 2019 No 31. Receivables and payables to related parties
(1) Trade receivables
Trade receivables Closing balance Opening balance Balance Bad debts provision Balance Bad debts provision RMB RMB RMB RMB Other related parties 3,326,683 - 1,341,924 -______________ ______________ ______________ ______________
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
XIV. NOTES TO COMPANY FINANCIAL STATEMENTS - continued
31. Receivables and payables to related parties - continued
(1) Trade receivables - continued
Other receivables Closing balance Opening balance Balance Bad debts provision Balance Bad debts provision RMB RMB RMB RMB Subsidiaries 3,580,805,532 - 5,732,654,756 -____________________ ______________ ____________________ ______________ Other non-current assets Closing balance Opening balance Balance Bad debts provision Balance Bad debts provision RMB RMB RMB RMB Subsidiaries 2,617,457,460 - - -____________________ ______________ ____________________ ______________ The above receivables due from related parties are unsecured, have no interest or fixed date of repayment.
(2) Trade payables
Trade Payables Closing balance Opening balance RMB RMB Other related parties 46,834,283 36,377,928__________________ __________________ Other payables Closing balance Opening balance RMB RMB Subsidiaries 452,689,614 983,151,732________________________ ________________________ The above payables due to related parties are unsecured, have no interest or fixed date of repayment.
32. Contingent liability
As stated in Note XIV-30(4), the Company has no other contingent liability.
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
APPENDIX I SUPPLEMENTARY INFORMATION TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2016
I. DETAILS OF EXTRAORDINARY PROFIT AND LOSS
2016 RMB Loss on disposal of non-current assets, including
reversal of accrued impairment provision 14,719 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) 49,130,643 Other non-operating income and expense 4,656,972 Corporate income tax effect (13,072,324)__________ 40,730,010____________________ The Company'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 2016. Please refer to Note VI-42 and VI-43.
II. RETRUN ON EQUITY ("ROE") AND EARNINGS PRE SHARE ("EPS")
The Company's ROE and EPS are calculated in accordance with the CSRC regulations of the "Information Preparing and Disclosure Rules of Public Company No. 9 - calculation and disclosure of ROE and EPS" (Revised 2010).
Weighted average
2016 ROE Basic EPS% RMB Net profit attributable to shareholders of the Company 12.55 1.43 Net profit attributable to shareholders
of the Company deducting extraordinary profit and loss 12.03 1.37__________ ________ The Company did not have any potential dilutive shares.
Weighted average
2016 ROE Basic EPS% RMB Net profit attributable to shareholders of the Company 14.40 1.50 Net profit attributable to shareholders
of the Company deducting extraordinary profit and loss 13.89 1.45__________ ________
The Company did not have any potential dilutive shares.