Yantai Changyu Pioneer Wine Co. Ltd. 2014 Annual Report Yantai Changyu Pioneer Wine Co. Ltd.
2014 Annual Report
2015Final01
April, 2015
Yantai Changyu Pioneer Wine Co. Ltd. 2014 Annual Report Contents
I、Important Notice andDefinition.................................................................................................3II、Brief Introduction forthe Company .......................................................................................6III、Summaryof Accounting Datas and Financial Indicators ....................................................9IV、BoardofDirectors’Report ...................................................................................................12V、Major Issues .............................................................................................................................36VI、Changes inShares andtheShareholders’ Situation ...........................................................44VII、Related Situation forperferred shares ...............................................................................53VIII、Situation for Directors, Supervisors, Senior Managers and staffs...................................54IX、Corporate Governance ..........................................................................................................63X、Internal Control .......................................................................................................................72XI、Financial Report .....................................................................................................................75XII、Reference Documents .........................................................................................................178
Yantai Changyu Pioneer Wine Co. Ltd. 2014 Annual Report I. Important Notice and Definition
The Board ofDirectors，the Board ofSupervisors，directors, supervisors& senior managers of the Company collectively and individually accept full responsibility for thetruthfulness， accuracy and completeness of the information contained in this report and confirm that to the best of their knowledge and belief there are no unfaithful facts, significant omissions or misleading statements.
Except the following directors, other directors all personally attended the meeting for deliberating the annual report.
|||||
|-|-|-|-|
|Absent directors|Directors’post|Absent reason|Authorized person|
|Mr.Augusto Reina|Director|Due toworking|Mr.Sun Liqiang|
|Mr.Aldino Marzorati|Director|Due toworking|Mr.Zhou Hongjiang|
|Mr.AntonioAppignani|Director|Due toworking|Mr.Leng Bin|
|Mr.XiaoWei|IndependentDirector|Due toworking|Mr.WangZhuquan|

TheCompany’s preliminary scheme of profit distribution deliberated and passed by the board of the directors is as following: “Based on685,464,000shares，we planto pay CNY 4.40 in cash as dividends for every 10 shares (including tax) to theCompany’s all shareholders, send0bonus(including tax) andcapital reserve will not be transferred to equity.”
Mr. Sun Liqiang (Chairman of the Company), Mr. Leng Bin (Chief Financial Officer) and Mr. Jiang Jianxun (Financial Director) assure the truthfulness, accuracy and completeness of the financial report in the annual report.
Yantai Changyu Pioneer Wine Co. Ltd. 2014 Annual Report Definition
||||
|-|-|-|
|Definition Item|Refers to|Definition Content|
|Company/The Company|Refers to|Yantai Changyu Pioneer Wine Co. Ltd.|
|Changyu Group/ControllingShareholder|Refers to|Yantai Changyu Group Co.Ltd.|
|CSRC|Refers to|China Securities Regulatory Commission|
|SSE|Refers to|Shenzhen StockExchange|
|Deloitte Hua Yong|Refers to|Deloitte Hua Yong Certified Public AccountantsCo., LTD (special general partnership)|
|CNY|Refers to|Chinese Yuan|

Yantai Changyu Pioneer Wine Co. Ltd. 2014 Annual Report Significant Risk Warning
1. The Company may face significant risks in production and operation, please refer to “8.expectation for theCompany’s future development” sector of “5. Risks likely to occur” part in the chapter four named “Board ofDirectors’ Report”. We advise investors to read carefully and payattention totheinvestment risks.
2. The business plan and target in the report do not represent the earnings forecast of the listed company in 2015, which depends on several factors including the changes of market conditions and the effort extent of managing team etc. with a great uncertainty, so the investors should be inaspecial attention.
Yantai Changyu Pioneer Wine Co. Ltd. 2014 Annual ReportII、Brief Introduction for the Company
1、Company’sinformation
|||||
|-|-|-|-|
|Abbreviation of theShares:|ChangyuA、Changyu B|Code number of theShares|000869、200869|
|Abbreviation of theShares after alteration(ifhave)|_|||
|Place of listing of theShares|ShenzhenStockExchange|||
|Legal Name inChinese|烟台张裕葡萄酿酒股份有限公司|||
|Abbreviation ofChinese name|张裕|||
|Legal Name inEnglish|YANTAI CHANGYU PIONEER WINE COMPANY LIMITED|||
|Abbreviation ofEnglish name|CHANGYU|||
|Legal Representative|Mr.SunLiqiang|||
|Registered Address|56Dama Road, Yantai,Shandong,China|||
|Postal Code|264000|||
|Office Address|56Dama Road, Yantai,Shandong,China|||
|Postal Code|264000|||
|Website|http://www.changyu.com.cn|||
|E-mail|webmaster@changyu.com.cn|||

2、Contact person andinformation
||||
|-|-|-|
||Secretary to the Board ofDirectors|Authorized Representative oftheSecurities Affairs|
|Name|Mr.Qu Weimin|Mr.Li Tingguo|
|Address|56Dama Road, Yantai,Shandong, China|56Dama Road, Yantai,Shandong, China|
|Tel|0086-535-6633656|0086-535-6633656|
|Fax|0086-535-6633639|0086-535-6633639|
|E-mail|quwm@changyu.com.cn|stock@changyu.com.cn|

Yantai Changyu Pioneer Wine Co. Ltd. 2014 Annual Report3、Information disclosure andfilinglocation
|||
|-|-|
|The newspapers in which theCompany’s information isdisclosed|“China Securities Newspaper” , “Securities Times” and“Hong Kong Commercial Daily”|
|Web Site assigned by CSRC to carrytheannual report|http://www.cninfo.com.cn|
|Filing location|Boardof Directors’ Office ofthe Company,56Dama Road, Yantai, Shandong|

4、Registration changes
|||||||
|-|-|-|-|-|-|
||RegistrationDate|RegistrationPlace|Business LicenseNo.|Tax No.|OrganizationCode|
|Firstregistration|September18th,1997|the BusinessAdministrationBureau ofShandongProvince|3700001806012|State TaxationBureau37060216500338-1Local TaxationBureau370601267100035|26710003－5|
|Registrationat the end ofthe reportperiod|1st August,2012|the BusinessAdministrationBureau ofShandongProvince|370000018060122|State TaxationBureau37060216500338-1Local TaxationBureau370601267100035|26710003－5|
|Changes for the mainbusiness of the Companysince itwas listed(ifhave)||On 18th September 1997 the Company’s operating scope was theproduction, processing and sales of wine, distilled liquor, healthy liquor,fruit liquor, non-alcohol beverages, fruit jam, packing materials andwinemaking machines.On 17th April 2008, after the deliberation of 2007 shareholders’ meeting,the Company’s operating scope is amended to “the Company, legallyregistered, is in business of production, processing and sales of wine,distilled liquor, medicated liquor, fruit liquor, non-alcohol beverages,fruit jam, packing materials and winemaking machines; licensed importandexport.”On 12th May 2010, after the deliberation of 2009 shareholders’ meeting,the Company revised its operating scope to “the Company, legallyregistered, is in business of production, processing and sales of wine,distilled liquor, medicated liquor, fruit liquor, non-alcohol beverages,fruit jam, packing materials and its products, winemaking machines;licensed import and export; external investments according togovernmental policies.||||
|Changes for all previouscontrolling shareholders(ifhave)||No.||||

Yantai Changyu Pioneer Wine Co. Ltd. 2014 Annual Report5、Other documents
The accountant appointed bythe Company
|||
|-|-|
|Name|Deloitte Hua Yong Certified Public Accountants Co., LTD (specialgeneral partnership)|
|Address|No. 1East Chang'an Avenue, Dongcheng District, Beijing|
|Name of signatoryaccountants|Xu Zhaohui,Li Xu|

The sponsor agency the Company appointed to perform the duty of continuous supervision during thereport period
□Available V Not available
The financial adviser the Company appointed to perform the duty of continuous supervision during thereport period
□Available V Not available
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.III、Summary of Accounting Datas and Financial Indicators
1、Key accounting data andfinancial indicators
Whether the Company makes retroactive adjustments or restates the accounting data of previous fiscalyears because of changes of accountingpolicyand/oraccounting errors.
□Yes V No
Unit：CNY
||||||
|-|-|-|-|-|
|Item|2014|2013|More orless thanLast year(%)|2012|
|Business revenue|4,156,727,525|4,320,948,572|-3.80%|5,643,530,553|
|Net profit attributed tothe shareholders of thelisted company|977,707,711|1,048,185,927|-6.72%|1,700,928,117|
|Net profit attributed tothe shareholders of thelisted company afterdeducting the irregularprofitand loss|950,191,379|1,017,348,285|-6.60%|1,675,956,428|
|Net cash flows from theoperating activities|1,070,083,296|735,074,307|45.57%|1,302,041,322|
|Basic earnings per share|1.43|1.53|-6.54%|2.48|
|Diluted earnings pershare|1.43|1.53|-6.54%|2.48|
|Weighted average forearning rate of the netassets|13.96%|16.45%|-2.49%|31.13%|
||Dec. 31st2014|Dec.31st2013|More or lessthanLast year(%)|Dec.31st2012|
|Total assets|8,912,232,640|7,997,930,542|11.43%|8,123,134,580|
|Net Assets attributed tothe shareholders of thelisted company|6,840,452,145|6,208,279,705|10.18%|5,913,104,178|

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. 2、 Differences in accounting data under PRC accounting standards and international accounting standards
(1) Differences of net profit and net asset in the financial report disclosed according to both international accountingstandards andPRC accountingstandards
□Available V Not available
There are no differences of net profit and net asset in the financial report disclosed according to bothinternational accounting standards andPRC accounting standards during the reportperiod. (2) Differences of net profit and net asset in the financial report disclosed according to both foreign accountingstandards and PRC accounting standards
□Available V Not available
There are no differences of net profit and net asset in the financial report disclosed according to bothforeignaccounting standards andPRC accounting standards duringthe report period.
3、Item andamount of irregular profit andloss
V Available□Not available
Unit：CNY
||||||
|-|-|-|-|-|
|Item|2014|2013|2012|Explanation|
|Gain on disposal of non-currentassets, including the reversal ofaccruedimpairmentprovision|-5,086,545.00|271,989.00|-1,940,260.00||
|Tax refund or exemption that is eithernon-recurring or without properapproval|13,405,520.00|-|-||
|Government grants credited in profitand loss (except for those recurringgovernment grants that are closelyrelated totheentity's operation, inlinewith related regulations and haveproperbasisofcalculation)|27,140,194.00|36,659,754.00|23,393,756.00||
|Other non-operating income andnon-operating expenses except theaforementioned items|166,987.00|3,302,760.00|10,953,355.00||
|Reversal of impairment loss forreceivables which was separatelyundertakenimpairmenttest|192,908.00||||
|Less.Incometaxeffect|8,302,732.00|9,396,861.00|7,435,162.00||
|Total|27,516,332.00|30,837,642.00|24,971,689.00|--|

The reasons shall be made clear and definitely as to the irregular profit and loss that the Company
has defined by virtue of the Explanatory Announcement on PublicCompany’s Information
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. Disclosure No.1 - Irregular Profit and Loss and as to regarding the irregular profit and loss as recurrent profit and loss as specified in the Explanatory Announcement on PublicCompany’s Information Disclosure No.1 -Irregular ProfitandLoss.
□Available V Not available
There is no situation that the irregular profit and loss is defined and specified as recurrent profit and loss in accordance with the Explanatory Announcement on PublicCompany’s Information Disclosure No.1 -Irregular ProfitandLoss duringthe report period.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.IV、Board ofDirectors’ Report
1、Summarization
In2014，continuously influenced by the multiple negative factors such as the slowdown of domestic economic growth, overwhelming flow of foreign wine into Chinese market and the relative national policies as so on, the effective demands for premium wine products in domestic wine is weakness, the medium level wine suitable for mass consumption maintains a sound momentum of growth. But the whole market competition is still fierce, which brought a strong pressure to theCompany’s operation growth. Facing quite a lot of external disadvantages, the Company insists to focus on the market, adjust the marketing tactics and product structure, strive to develop medium and low level products, optimize the market layout, perfect the marketing channels and effort to promote product sales, Preliminary control the unfavorable situation of the sharp decline in sales revenue year-on-year. In the year, the Company realized business income of CNY 4156.73 million,3.8% down on year-on-year basis; but due to the impact of decreasing the proportion of the sales in the products with high gross profit margin and increasing the proportion of the sales in the products with the low profit margin,the Company realized net profit of CNY 977.71 million,6.72% down on year-on-year basis.
2、Analysis to mainbusiness
(1)、Summarization
||||
|-|-|-|
|Description|Increase or decrease ofthe end of the periodover the end of last year|Cause ofmajor changes|
|Operating revenue|-0.38%|Mainly because of decline of sales volume in the highprice products|
|Operating cost|1.07%|Mainly because of the increase of sales volume,especially the proportion of sales in medium-lowprice products increased|
|Sales expense|-11.82%|Mainly because of reduction of advertising expense in2014|
|Management expense|4.68%|Mainly because of increase of wage & welfare,depreciation and Property tax in 2014 over the lastyear before|
|R&Dinvestment|7.47%|Mainly because of increase of expenses for thedevelopment oftechnology research in2014|
|Financial expense|7.72%|Mainly because of reduction of interest income due todecrease oftime deposit balance,and theincrease|

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
||||
|-|-|-|
|||ofloan interest expenditure.|
|Net amount of cash flowgenerated inoperatingactivities|45.57%|Mainly because of the decline of sales expenditurethat makes inflow of cash in operating activitiesdecrease|
|Net amount of cash flowgenerated ininvestmentactivities|-75.53%|Mainly because of increase of cash expenditure forthe investment projects|
|Net amount of cash flowgenerated incapital-raisingactivities|90.22%|Mainly because of the increase of cash receivedwhich gains viadebt|

Review and summary for the early disclosed development strategy and the progress of theCompany’sbusiness planduringthe report period.
During the report period, influenced by the decelerated growth on the demand for domestic wine, market competition intensifies and the great recession on the demand for the premium wines, the business income of the Company completed CNY 4.2 billion, decreased by 3.8% compared by last year, and far from the target fixed in the beginning of the year of realizing business income no less than CNY 4.6 billion. In order to deal with the unfavorable business environment, the Company carried out the operation strategy of steady development in the medium and high-end wines, and vigorous expansion for the low-level wines, brandy and imported wines with own brands. While making efforts to promote the development of medium and high-end wines, the Company made an appropriate tilt on marketing resources to the medium and low level wines, brandy and imported wines with own brands for meeting the market demand, which played an important part in reversing the decline onthe business income. The mainwork in thereport periodis as following: Firstly, to adjust and neaten sales system, optimize and perfect marketing modes. The Company established three-level human recourses management system, regulate and establish the management system of classification and decentralization of authority. To perfect the assessment methods of Province manager, city manager, and professional manager, basic formations for Dynamic management mechanism‘selected, promotion, talent pool,quit’. External assignment marketers being fully neatened and readjusted, a part of staffs being settled down via the distributaried method. To further perfect the sales organization system consisted by three channels such as medium-high channel, medium-small channel, county-level channel and some companies such as direct-supplying company, pioneer monopoly shops, VIP Group purchase Company, tourism sales company, E-commerce, medium-small restaurant sales company as so on. To strive to develop various sales modes such as direct-supplying and semi-direct supplying etc. To reinforce the terminal development and control abilities, promote terminal sales. to further clear and definite the main push area and channels of different liquor, improve the pertinence and effectiveness of marketing. To strengthen the efforts for each basic management assessment, to evaluate the
professional management work for different channel, company and province which focus on
‘terminalwork’,‘marketingprogram’ , and‘the team construction of distributors and delivery
dealers’,topromote everymarketing strategyand measure beingimplement faster and better.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. Secondly, to accelerate the informatization, standardization construction and management innovation. The Company has implemented the second phase of SAP system project, which has been completely constructed and used in the sales system, in order to reinforce the abilities of marketing prediction, response and controlling. Logistic management has achievedproducts’ palletization for warehouse, management and transport, improve and optimize warehouse materials, and achieved the target of unified storage and delivery all over the country. Open video conference system coverage of the provincial areas, improve conference efficiency, save conference cost. Continuous to around the future development purpose and current major issue to be addressed in management, production, technology and marketing, proposed and completed over 500 items of the innovative and reasonable projects, which brought the related works and management level to a newstep.
Thirdly, to reinforce the construction of the vineyard bases, regulate the vineyard bases management, the successful completion of the work on grape purchase, further improve the research and development ability on new product and new technology. the Company purchased 37 sets of machinery equipments, took construction and management for Yantai vineyard bases in accordance with the criterion of scalization, standardization and mechanization. In accordance with different vineyard bases, which implement the classified management, make the vineyard management more scientisfic and standards. Strictly follow the price forming mechanism for raw material of grape as the market-set price, better quality better price, price on quality and the linkage mechanism for grape price to integrate with the world market and domestic market, which brought more fair and reasonable price for theCompany’s purchased grapes. Not only to make sure that the Company can purchases enough raw material of grape with best quality, further improve theCompany’sproducts’ cost performance and competitiveness, but also to promote the technology upgrading of grape cultivating in the domestic vineyards which helps lower cultivated cost and achieve better economic benefit. During the report period, the Company carried out over 20 items for new technology and new processes and technologies, applied for three key Provincial Technology Innovation project, obtained one item for Scientific and Technological Progress Award issued by China National Light Industry in 2014 annual year. Newly-introduced products of‘zuishixian’serial have beengenerally welcomed byconsumers,themarket reflects well.
Fourthly, to steadily carry out the capital investment projects, increasedevelopment’s aftereffect. During the report period, the Company has overcome the various problems and difficulties, steadily carry forward the construction of 10 investment projects which were defined at the beginning of the year,the keyinvestment projects run smoothly.
The cause of difference that theCompany’s actual operating result is20% lower or higher than the already disclosed annual profitingestimates.
□Available√ Not available
thesituationchanges ofmain operation model
□Available√ Not available
(2)、Incomes
During the report period, the sales from brandy products is at a relatively stable; both sales volume and sales revenue of ordinary red wine, sweet wine and sparkling wine has a slight increase on
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. year-on-year basis. The sales volume and sales revenue of chateau wine with high selling-price continues to decrease in different degree. Comprehensively Influenced by the aforementioned factors, the operating revenue ofthe Company has a slight droponyear-on-year basis.
WhethertheCompany’s sales revenue for material object is more thanlaborincome
√Yes□No
Unit:Ton
||||||
|-|-|-|-|-|
|Sector|Description|2014|2013|Year-on-year increaseor decrease (%)|
|Wine|Sales volume|71,854|67,978|5.70%|
|Brandy|Sales volume|37,462|37,713|-0.67%|

 Explanation onthe causes of over30% year-on-year changes oftherelated comparison data.□Available√ Not available
TheCompany’sbigorders inhand
□Available√ Not available
Majorchanges or adjustments of theCompany’sproducts orservices duringthereport period.□Available√ Not available
TheCompany’simportant customers
|||
|-|-|
|The total sales amount of thetopfive customers（CNY）|142,440,887|
|Total sales of the top five customers accounting for theproportionintotal sales for the year（%）|3.43%|

InformationontheCompany’s 5biggest customers
|||||
|-|-|-|-|
|√||||
|No.|Customer Name|Sales Amount（CNY）|Proportion in Total Sales fortheyear（%）|
|1|ChangyueXin trade company in Shenzhencity|36,611,149|0.88%|
|2|Dali Qianxingrong wine shop at Nanhaidistrict ofFoshan city|35,104,002|0.84%|
|3|Quanxing wine shop in Luocheng village,Hui’an town|26,583,492|0.64%|
|4|Xiyu trade company inNanjing city|22,961,125|0.55%|
|5|Chuxin trade company inGuangzhou city|21,181,120|0.51%|

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
|||||
|-|-|-|-|
|Total|—|142,440,887|3.43%|

 Other situation explanation ofmain customers
□Available√ Not available
(3)、 Costs
Sector category
Unit: CNY
||||||||
|-|-|-|-|-|-|-|
|Sector|Description|2014||2013||Year-on-yearincrease ordecrease(%)|
|||Amount|Proportion inthe operatingcost (%)|Amount|Proportion inthe operatingcost(%)||
|Liquor andalcoholicbeverages|Liquor forbottling|749,104,077|55.29%|681,263,276|51.27%|4.02%|
||Packingmaterial|446,560,533|32.96%|500,978,025|37.70%|-4.74%|
||Wages|53,632,561|3.96%|50,892,703|3.83%|0.13%|
||Productioncost|105,480,406|7.79%|95,663,454|7.20%|0.59%|

 Productcategory
Unit: CNY
||||||||
|-|-|-|-|-|-|-|
|Product|Description|2014||2013||Year-on-yearincrease ordecrease(%)|
|||Amount|Proportionin theoperatingcost (%)|Amount|Proportion inthe operatingcost(%)||
|Wine|Liquor forbottling|537,755,135|53.20%|475,798,429|49.57%|3.63%|
||Packingmaterial|344,532,740|34.08%|365,596,609|38.09%|-4.00%|

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
||||||||
|-|-|-|-|-|-|-|
||Wages|39,214,439|3.88%|37,909,423|3.95%|-0.07%|
||Productioncost|89,361,588|8.84%|80,584,406|8.40%|0.44%|
|Brandy|Liquor forbottling|161,946,222|58.37%|168,174,140|56.48%|1.88%|
||Packingmaterial|88,601,388|31.93%|103,136,386|34.64%|-2.71%|
||Wages|13,099,354|4.72%|12,262,608|4.12%|0.60%|
||Productioncost|13,822,841|4.98%|14,181,985|4.76%|0.22%|

Note:
Comparing with the same period of last year, there is no great changes for theproducts’ cost structure.
InformationontheCompany’s important suppliers
|||
|-|-|
|The total purchase amount ofthetop5suppliers|451,075,314|
|The proportion ofthe total purchase amount ofthetop5suppliers inthe annualpurchase amount|33.28%|

InformationontheCompany’s top5biggest suppliers
|||||
|-|-|-|-|
|√||||
|No.|Supplier Name|Purchase Amount(CNY)|Proportion in Total Purchasefor the year（%）|
|1|Yantai Shenma PackagingCo., Ltd.|149,536,913|11.03%|
|2|Yantai ChangyuGlass Co.,Ltd.|126,295,616|9.32%|
|3|152 regiment of the eighthagriculture production division|67,846,664|5.01%|
|4|Liquan subsidiary of ShandongYantai Winery Co.,Ltd.|55,142,494|4.07%|
|5|Yantai Wanfutai Winery Co.,Ltd|52,253,626|3.86%|
|Total||451,075,314|33.28%|

Other situation explanation ofmain customers
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.□Available√ Not available
(4)、Expenses
During the report period, theCompany’s sales expense reduced11.82% on year-on-year basis, mainly due to the decrease of advisementpromotion，the management expenses with a year-on-year growth of4.68%,mainly due to the increase on wages and welfare, depreciation and administration; financial expense rises7.72%, mainly due to the reduction of deposit interest income and the increase ofloan interest expenditure.
(5)、R&D expenditure
In 2013 theCompany’sR&D expenditure was totally CNY 13.23 million, respectively take up0.19% of net asset and0.31% of operating revenue which are the latest financial data being audited , there arenomajor changes generated onyear-on-year basis.
(6)、 Cash flow
Unit: CNY
|||||
|-|-|-|-|
|Item|2014|2013|Year-on-yearincrease ordecrease (%)|
|Subtotal of cash inflow inoperating activities|4,830,092,384.00|4,836,656,367.00|-0.14%|
|Subtotal of cash outflow inoperating activities|3,760,009,088.00|4,101,582,060.00|-8.33%|
|Net amount of cash flowgenerated inoperating activities|1,070,083,296.00|735,074,307.00|45.57%|
|Subtotal of cash inflow ininvestment activities|333,107,299.00|1,326,601,601.00|-74.89%|
|Subtotal of cash outflow ininvestment activities|1,315,841,068.00|1,886,457,048.00|-30.25%|
|Net amount of cash flowgenerated ininvestment activities|-982,733,769.00|-559,855,447.00|-75.53%|
|Subtotal of cash inflow incapital-raising activities|644,550,372.00|259,530,444.00|148.35%|
|Subtotal of cash outflow incapital-raising activities|720,926,810.00|1,040,484,398.00|-30.71%|

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
|||||
|-|-|-|-|
|Net amount of cash flowgenerated in capital-raisingactivities|-76,376,438.00|-780,953,954.00|90.22%|
|Net increase of cash and cashequivalents|3,913,342.00|-605,735,094.00|100.65%|

Explanation onthe causes of over30% year-on-year changes oftherelated data.
√Available□Not available
Comparing with the same period of last year, subtotal of cash inflow in investment activities was reduced by74.89%, mainly due to the significant decrease in the fixed deposit whose duration is more than 3 months; subtotal of cash outflow in investment activities was reduced by30.25%, mainly due to the significant decrease in cash paid for purchasing fixed deposit whose duration is more than 3 months; net amount of cash flow generated in investment activities was reduced by75.53%, mainly due to the increase of cash paid for purchasing and constructing fixed assets, intangible assets and other long-term assets; subtotal of cash inflow in financing activities increased by148.35%, mainly due to the increase of cash received from borrowing, net amount of cash outflow generated in financing activities was reduced by30.71%， mainly due to the decrease in cash paid for dividends distribution; Net amount of cash flow generated in financing activities was increased90.22%, mainly due to the growth of cash inflow but the decrease in cash outflow in investment activities; net increased amount of cash and cash equivalents increased by100.65%, mainly due to the significant growth of net amount of cash flow generated both in operating activities and infinancingactivities.
Explanation on the causes of the major differences between the cash inflow in theCompany’s operating activities and theyears’netprofit duringthereport period.
□Available √Not available
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.3、Structure of mainbusinesses
Unit:CNY
||||||||
|-|-|-|-|-|-|-|
||Operatingrevenue|Operatingcost|Gross profit(%)|Increase ordecrease ofoperatingrevenue overthe yearbefore (%)|Increase ordecrease ofoperatingcost over theyear before(%)|Increase ordecrease ofgross profitover the yearbefore (%)|
|Sector|||||||
|Liquor andalcoholicbeverages|4,113,169,270|1,354,777,577|67.06%|-3.76%|1.36%|-1.66%|
|Product|||||||
|Wine|3,201,368,831|1,010,863,902|68.42%|-3.91%|5.31%|-2.76%|
|Brandy|813,417,868|277,469,806|65.89%|-0.64%|-6.81%|3.55%|
|Region|||||||
|Domestic|4,072,037,577|1,342,584,579|67.03%|-4.33%|1.14%|-1.78%|

In case theCompany’s statistical calibre of main business data is adjusted during the report period, themain business data adjusted at the endof the reportperiod will betaken for therecent one year.□Available√Not available
4、Analysis to assets andliabilities
(1)、Major changes ofassets
Unit: CNY
||||||||
|-|-|-|-|-|-|-|
||At theendof2014||At theendof 2013||Proportionincreaseordecrease(%)|Explanation on majorchanges|
||Amount|Proportionin the totalassets (%)|Amount|Proportionin the totalassets (%)|||
|Monetaryfunds|1,145,365,071|12.85%|1,367,818,182|17.10%|-4.25%|—|
|Receivables|145,672,411|1.63%|177,109,516|2.21%|-0.58%|—|
|Inventory|2,087,376,398|23.42%|2,121,117,437|26.52%|-3.10%|—|
|Investmentreal estate|—|—|—|—|—|—|
|Long-termequityinvestments|—|—|—|—|—|—|

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
||||||||
|-|-|-|-|-|-|-|
|Fixedassets|2,532,682,355|28.42%|1,917,641,344|23.98%|4.44%|—|
|Constructioninprogress|1,700,466,500|19.08%|1,423,654,530|17.80%|1.28%|—|

(2)、Major changes ofliabilities
Unit: CNY
||||||||
|-|-|-|-|-|-|-|
||2014||2013||Proportionincrease ordecrease(%)|Explanation on majorchanges|
||Amount|Proportionin the totalassets (%)|Amount|Proportionin the totalassets (%)|||
|Short-termborrowings|300,000,000|3.37%|243,170,674|3.04%|0.33%|--|
|Long-termborrowings|209,380,000|2.35%|0|0%|2.35%|--|

(3)、 Measuring assets andLiabilities at Fair Value
□Available√Not available
(4)、Main oversea assets situation
□Available√ Not available
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.5、Analysis to core competitiveness
Compared with the participants in the arena of the Chinese wine sector, we believe that the Companyis providedwiththe following advantages:
Firstly, the Company has been enjoying a well-known wine brand since 120-odd years, “Changyu” ,“Jiebaina” and “AFIP” are Chinese famous trademarks that have strong influence and goodreputation.
Secondly, the Company has set up a nationwide marketing network, formed a “three-level” marketing network system mainly composed of thecompany’s salesmen and distributors, possessed thestrong marketing ability andmarket exploitation ability.
Thirdly, the Company has already had strong research strength and a productR&D system, owned a one and only “State-level WineR&D Center”, made mastery of advanced winemaking technology and production processes, been powerful enough in product innovation and established a perfect qualitycontrol system.
Fourthly, the Company is in possession of a lot of grape-growing bases to meet its future development, having developed a great deal of vineyards in the most suitable areas for wine grape growing such as in Shandong, Ningxia, Xinjiang, Liaoning, Hebei andSha’anxi, whose scales and structures have generally mettheCompany’s needs fordevelopment.
Fifthly, the Company has a great variety of products composed of all grades, its wine and brandy of over 100 sorts can meet differentconsumers’ demands. The Company has taken the lead in the domestic wine sector through rapid development in the past 10-odd years and has possessed comparative superiority inthefuture competition.
All in all, the Company has built up a strong core competitive edge and obtained and maintained a relatively dominant position inthe long-term market competition.
6、 Investment situation analysis
(1)、Information onOversea equity investment situation
a) Information onOversea investment
√Available □Not available
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
||||
|-|-|-|
|Information onOversea equity investment|||
|Investment amount during thereportperiod|Investment amount comparedwith the same period of lastyear|Amount ofvariation|
|69,216,634.00|0.00|100.00%|
|Information on the invested company|||
|Company Name|Main business|The listed Company occupiedby the equity proportion of theinvested company|
|FrancsChamps Participations|Engage in investment, merger&acquisition, production &distribution of liquor such aswine and brandy, as well asimport and export trade|100%|

b)the situation of holdingfinancial company equity
□Available √Not available
There is noholdingfinancial company equity for the Company during the reportperiod.
c) Security Investment situation
□Available √Not available
There is nosecurityinvestment fortheCompany duringthe report period.
d)The explanation ofthe situation whichrelated tohold otherlistedcompany’s equity.
□Available √Not available
There is noholdingother listedcompany’sequityfor the Companyduringthe report period.(2)、The situation of Entrustfinancing,derivatives investment and entrust loans
a) Entrustfinancing situation
□Available √Not available
There is noentrust financing forthe Company duringthe report period.
b)Derivatives investment
□Available √Not available
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. There is noderivatives investment forthe Company duringthe report period.
c) Entrustloans
□Available √Not available
There is noentrust loans for theCompany duringthereport period.
(3)、The usage situation of the raised capital
□Available √Not available
There is no usage situationof theraised capital fortheCompany duringthe report period.
(4)、Analysis tothemajor subsidiaries andjoint stockcompanies
√Available □Not available
Information about themajor subsidiaries and joint stockcompanies
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. Unit: CNY
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Company name|Companytype|Industry|Main products orservices|Registeredcapital|Total assets(CNY)|Net asset(CNY)|Operatingrevenue(CNY)|Operatingprofit (CNY)|Net profit(CNY)|
|YantaiChangyu-CastleWine Chateau Co.LTD.|Subsidiary|Wineandalcoholicbeveragesindustry|Toresearch,produceand sellwineand sparklingwineas well as thetourism service|USD 5million|170,314,549|82,093,628|110,684,738|2,666,152|1,887,415|
|LangfangCastel-ChangyuWineCo.LTD.|Jointstockcompany|Wineandalcoholicbeveragesindustry|Toproduce and sellwine|USD6,108,818|54,216,381|46,463,060|50,335,802|-2,073,597|-507,895|
|Chateau ChangyuAFIP Global|Subsidiary|Wineandalcoholicbeveragesindustry|Toresearch,produceand sellbrandyandwine|CNY 110million|658,167,387|105,905,166|160,547,230|23,833,923|20,881,532|
|Chateau LiaoningChangyu Ice WineCo., Ltd.|Subsidiary|Wineandalcoholicbeveragesindustry|Toproduce icewine|CNY 26.30million|74,220,870|64,046,876|51,973,176|-1,607,474|1,599,580|
|Xinjiang TianzhuWinery Co., Ltd.|Subsidiary|Wineandalcoholicbeveragesindustry|Toplant grape,produceand sellgrapejuice, bulkwineand fruit wine|CNY 75million|176,011,481|163,510,352|86,483,652|2,223,269|1,470,239|

Explanationonthe major subsidiaries and jointstock companies
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. During the report period, the operating income and net profit of Yantai Changyu Castel Chateau Co. Ltd. respectively increased30.43% and49.53% over the same period last year; the operating income and net profit of Chateau Changyu AFIP Global respectively increased99.36% and161.99% over the same period last year; the operating income and net profit of Chateau Liaoning Changyu Ice Wine Co., Ltd. respectively increased109.55% and144.52% over the same period last year; the operating income and net profit of Xinjiang Tianzhu Winery Co., Ltd. respectively increased32.52% and88.95% over the same period last year; operating income of the aforementioned companies were increased, mainly because of the increase of internal sales volume, the growth reason of net profit is mainly due to the increase of internal sales volume and internal clearing price. The operating income and net profit of Langfang Castel-Changyu Wine Co. respectively decreased by17.05% and451.36% over the same period last year, its operating income was decreased, mainly because of the reduction of internal sales volume, the reduction reason of net profit is mainly due to the decrease of internal sales volume and internal clearing price. Because of the aforementioned companies belonging to productive organization, its products need to be firstly sold to internal sales organization in the Company, then the internal sales organization will sale those products to external customers via internal sales organization inthe Company, therefore, theirsoperating income andnet profit come from internal sales only.
Acquisition anddisposal of subsidiaries duringthe report period
□Available √Not available
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.(5)、Important projects financed withnon-raised capital
√Available □Not available
Unit:CNY’0000
|||||||||
|-|-|-|-|-|-|-|-|
|ProjectName|TotalInvestment|Investmentin the repoperiod|Actualinvestmentuntiltheendofthereportperiod|Projectprogress|Projectbenefits|Disclosuredate|Disclosureindex(ifhave)|
|ChangyuReinaChateauSha'anxi|31,074|2,655|31,655|97%|Beingcompletedandputintoproductionforthemainbuilding|2014.04.26|http://www.cninfo.com.cn/finalpage/2014-04-26/63928624.PDF|
|ChangyuMoserXVChateauNingxia|24,415|6,503|30,503|98%||2014.04.26||
|ChangyuBaronBalboaChateauXinJiang|23,343|4,097|31,097|98%||2014.04.26||
|Changyu International Wine City blending andcoolingCenter|65,331|13,863|40,863|57%|0|2014.04.26||
|Changyu International Wine City BottlingCenter|46,736|3,669|29,169|60%|0|2014.04.26||
|ChangyuInternationalWineCityLogisticsCente|12,095|5,544|11,344|85%|0|2014.04.26||
|ChangyuVineandWineResearchInstitute|20,000|882|4,082|20%|0|2014.04.26||
|TreasureWineChateau|14,545|473|3,078|20%|0|2014.04.26||
|Koyacbrandychateau|16,530|7,300|9,800|40%|0|||
|Greeninginvestment|5,000|2,597|3,690|70%|0|2014.04.26||
|PioneerMonopolyShop|10,000|1,755|1,755|50%|0|2014.04.26||
|Total|269,069|49,338|197,036|--|--|||

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. 28
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.7、Forecast on the business achievement from January toMarch of2015 Caution and explanation for the forecast on the accumulated net profit from the beginning of the year to the end of the next report period, which could probably be in a loss or in a great change comparing withthe same period of last year.
□Available √Not available
8、Main part situation of thespecial purpose being controlled bythe Company□Available √Not available
9、Expectation for theCompany’sfuture development
On the basis of our limited experience and special skills, we make the following estimation of thewine sector andtheCompany’s futuredevelopment.
(1)The sector competition setup anddevelopment trend
Due to the continuous limitation for the domestic consumption of premium wine in the future long time, the continuing entrance of imported wines to Chinese market, and the great impact for the traditional sales channels caused by the new channels such as E-commerce, the competition in the domestic wine industry will still be awfully fierce in the current and future long time, the consumption for high-end wine maybe continue to remain weak. But in the long run, thanks to increase of their incomes,people’s pursuits to health and fashion life, the people are favoring wines which fit well with the trend of consumption, it will ceaselessly stimulate their demand for quality wine.That’s to say, the Chinese wine sector still has huge potential to tap. Especially the medium-low level wine with high performance-to-price ratio can have a faster growth. In such a case of long-term coexistence of opportunities and challenges, only those enterprises that possess strong branding influence and marketing ability, catch the opportunities, actively take adjustments and make full use of oncoming and traditional sales channels, can timely get the run of theconsumers’ demands and provide products of high performance-to-price ratio will have an opportunity to be the final winners ofcompetition and form anew structure ofthe future Chinese wine market. (2)TheCompany’s development strategy
The Company will continue to adhere to the strategy of taking wine as pillar product while developingallkindsofproducts,activelyexpandthescopeofconsumption andmarketing mode, revise the sales decreased trend of high-end wine; develop middle-level wines and brandy, strengthen the promotion of sparkling wine, make efforts to provide consumers with a rich varietyofproductsinhighcostperformance.
(3)Managementplaninanewyear
In2015,theCompany will try itsbest torealize business income of not less thanCNY4.4 billion andcontrolthemainoperatingcostsandthreeperiodchargesbelowCNY2.9billion. (4)The measures the Company will take
The Company will emphasize the following aspects in 2015, so as to better catch the opportunities and face with the challenges:
Firstly,to focus onthe market,perform everymarketing jobseffectively, strengthen marketing ability.The Company will further perfect the marketing system for chateau wine, enhance themarketing forchateau wine,the Company will cement the highground position ofbrands inthedomestic wine market. Increase the media publicity andmarketing promotion efforts ofmedium-low level brands suchas‘jiebaina’,‘zuishixian’and‘NobelWine’ as so on,improve the market share of medium-low level products. Accelerate the construction of
brandyextension system, assure to putinplacefor‘twoteams’,‘marketingplan’,‘terminal
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.construction’inbrandy’s major channels, furtherexpandbrandy’smarket-coverage and brandawareness,promote the sales ofbrandyin thenational market. Combine their own characteristics of distributors and delivery dealer,establish and improve theaccess institution ofdistributors and delivery dealer, theinstitutionofcommunication, motivation and quit, continue to push the construction of Pioneer monopoly shops forward, strengthen the training, communicationand assessment jobs ofeach level marketers, promote the overall qualityof cradres, reinforce the marketing abilityofsales system.
Secondly, to further strengthen the control for production cost and major operation expenses, further compress production cost. The Company will optimize pricing mechanism of grapes purchase price, in order that gradually make the wine-making grapes price convergence between domestic market and international market. Continue to adhere the centralized purchase for the main raw materials, control purchase cost of bulk raw material. Reinforce to monitor the production in the warehouse, reduce capital charges. Perfectproductions’ identification system, ensure the trouble-free operation in the palletization system applied to the processes of producing, transporting, and storage. Strengthen the management of fuel cost, transport cost, maintenance cost and landscaping cost, perfect wage system for every ton of wine,improve producing efficiency,reduce production cost.
Thirdly, to strengthen the construction and management for vineyards, continually increase the research& development ability and products quality. The Company will carry out the normalization construction and management for the vineyards in accordance with the criterion of scalization, standardization and mechanization, continue to practice the tracking and management of winemakers for the vineyards, build the vineyards at Xinjiang and Yantai for promotion and demonstration on mechanization management, greatly promote the machinery works. Continue to neaten contract vineyard and the training ofgrape’s growers, strictly control the area of contract vineyards, constantly generalize advanced planting technology. Perfect project management, prediction management and assessment system of the vineyards, strengthen the assessment and management of the person in charge of special area, try to reduce the cost on planting grapes and improve the grape quality. The Company will perfect the classification standards for bulk wine, the quality tracking of bulk wine whole usage process and assessment mechanization, optimize winemaking technology, reinforce the applied research on oak barrels, further improve production quality, strengthen to develop new products, constantly enrich products variety. Further distinguish and clear the products characteristic of general wine in different varieties, form the products line with distinctive andunique style.
Fourthly, to steadily carry forwards investment projects construction, scientific arrange the progress of construction, guarantee the engineering quality. The Company will continuously promote the projects of Yantai Changyu International Wine City (namely Yantai Changyu Industrial Park) and the construction for pioneer monopoly shops, reinforce the management of construction budget to investment projects, strengthenprojects’ cost review and completion audit, strictly control the investment amount on projects, make sure to finish the construction for all projects and put them into operation on the basis of scheduled progress andquality.
(5)Risks likelytooccur
A) Risks inprice fluctuationofraw materials
Grapes are theCompany’s main raw materials. Thegrape’s yield and quality are affected to a
certain extent by the natural factors such as drought, wind, rain, frost and snow. These force
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. majeure factors greatly influence the quantity and price of the grapes in this Company orders and add the uncertainty to theCompany’s production and operation. Therefore, the Company will lower the risks that are likely to affect grape quality and result in price fluctuation by means of expanding the self-run vineyards, strengthening the vineyard management and optimizing the layout ofvineyards.
B) Risks inuncertainty of market input and output
To cope with the cutthroat market competition and to meet the needs for market development, the Company has input more and more capital in the market and the sales expense has taken up a higher percentage point in the business revenue. The input-output ratio will affect theCompany’s operating results to a great extent and the risk that some investments may not reach the expectations is likely to occur. Therefore, the Company will strengthen market research and analysis, enhance market forecast accuracy and continue to perfect the input-output evaluation system to ensure the investments in market to be satisfactory as expected.
C)Risksinproducttransport
TheCompany’s products are fragile and sent to different places all over the world, mostly by sea,railway and expressway. The peak season of sales is usually incold winter and close to the spring festival when market has a great demand. At that time, the natural and human factors such as serious shortage of transport capacity resulting from busy flow of people and goods, wind, snow, freezing as well as traffic accidents make the transport departments difficult to sendproducts tomarkets intime andsafely.Asaresult,itmakes thisCompany havetofacethe risks of missing the peak season of sales. Therefore, the Company will adopt all methods possible like making precise sales prediction and well designed connection of production and sales, reasonably arranging production and transport means and making use of more available warehousesindifferentplacestolowerthesekindsofrisks.
D)Risksininvestmentfaults
According to the plan, currently the Company has finished the production layout at home, and the next step is to pay more attention to the overseas merge and acquisition in the same industry. Currently,Yantai Changyu International Wine City (namely Yantai Changyu Industrial Park) has those features such as the big investment amount, long-term construction period and many uncertainfactors;moreunforeseeable factors fortheoverseas merge andacquisitionprojects inthe progress ofM&A, it is difficult to make sure the fair and reasonable transaction price, the integration and management afterM&A is also hard. Under the influence of uncertain factors for individualprojects,Itleadstohavetherisksoffacingwiththeinvestmentamountoutofbudgetor hardlytakingbacktheexpectedinvestmentearnings.TheCompanywilltakeanadequateargument and scientific decision-making for investment projects, try hard to reduce and avoid investment risks.
10、The Board ofDirectors’ and the Board of Supervisor give the explanation for‘nostandardauditingreport’issuedbytheaccountingfirmduringthisreportperiod.□Available √Not available
11、Compared with the previousyear’s financial report, explanation for the changes of accountingpolicy ,accounting estimation andaccounting method.√Available □Not available
During the report period, the Company changes the accounting policy about Long-term
Equity Investment. About the detailed contents, please see‘‘25. Changes in significant
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. accountingpolicy’’ in‘‘3. Significant accounting policy and accountingestimate’’ of foot-notes tofinancial statements inthis report.
12.Duringthereportperiod,thesituationexplanationforthecorrectionofmajoraccounting errorswhichneedtoberetrospectandrestated.
□Available √Not available
There is no situation for the correction of major accounting errors which need to be retrospect and restated.
13、Compared with the previousyear’s financial report, explanation for the changes of the consolidated statements scope.
□Available √Not available
Thereisnosituationforthechangesoftheconsolidatedstatementscope.
14、TheCompany’sprofit anddividend distribution
Promulgation, implementation or adjustment of profit distribution policies during the report period.
V Available□Not available
According to the auditing result made by Ernst& Young Hua Ming Certified Public Accounts Co. Ltd., the net profit that the Company made in 2013 was CNY1,048.185927million. After deducting the minorityshareholders’ profit and loss, the net profit belong to theCompany’s shareholders is CNY 1,048.185927 million. After the deliberation of theCompany’s Board of Directors and theShareholders’ Meeting, the profit plan of 2013 is as following: Because the left amount of legal earned surplus reserve is less than50% of the registered capital, while making profit distribution, the legal earned surplus reserve will not be drawn. Then based on theCompany’s 685,464,000 shares at total up to December 31, 2013, we plan to pay CNY 5 in cash as dividends for every ten shares (including tax) to theCompany’s all shareholders, totaling up to CNY342.732 million, accounting for32.7% of the net profit CNY 1048.185927 million attributable to the shareholders of the parent company in the consolidated statement, the retained and undistributed profit of CNY 705.453927 million will be reserved for the distribution of next year. This plan is in line with the provisions of theCompany’s Articles of Association. On July 5, 2014, the Company released the Implementation Announcement of 2013 Annual Equity Distribution, determining that the share registration day of A Stock was on July 10, 2014 and the ex-dividend day was on July 11, 2014, the last trading day of B Stock was on July 10, 2014, the share registration day was on July 15, 2014 and the ex-dividend day was on July 11, 2014. The Company also distributed equity before July 30, 2014 to theCompany’s all A Stock holders registered after closing of Shenzhen Stock Exchange on the afternoon of July 10, 2014 at China Securities Depository and Clearing Corporation Limited Shenzhen Company and theCompany’s all B Stock holders registered after closing of Shenzhen Stock Exchange on the afternoon of July 15, 2014 at China Securities Depository andClearing Corporation Limited Shenzhen Company.
|||
|-|-|
|Special explanation||
|Whether it is in accordance with the requirements of the regulation in the ArticlesofAssociation andtheresolution of shareholders|Yes|
|Whether the distribution standard and proportionisclear and definite|Yes|
|Whether the relative decision process and mechanism is complete|Yes|

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
|||
|-|-|
|Whether the independent directors performtheir responsibilities and playtheroles.|Yes|
|Whether the small and middle shareholders have the chance to express theiradvices and appeals, as well as their lawful right and interest is in an enoughprotection.|Yes|
|Whether it is legal and transparent for the condition and process while adjustingandamending the cash dividends distributionpolicy.|Yes|

TheCompany’s preliminary scheme of profit distribution and preliminary scheme of increasing equity withcapital reserve inthe recent three years (including thereport period). The profit distribution plan of 2012 is as following: Because the left amount of legal earned surplus reserve is less than50% of registered capital, while making profit distribution, the legal earned surplus reserve of CNY46.78937 million will be drawn firstly. Based on theCompany’s 685.464 million shares at total up to December 31, 2012, we plan to pay CNY 11 in cash as dividends for every ten shares (including tax) to theCompany’s all shareholders, totaling up to CNY 754.0104 million, take up44.33% of net profits CNY1700.928117 million attributable to shareholders of parent company in the consolidated statements. The retained and undistributed profit of CNY 900.128347 million will be reserved for distribution inthenext year.
TheCompany’s profit distribution plan in 2013 is as following: Because the left amount of legal earned surplus reserve reaches50% of the registered capital, while making profit distribution, the legal earned surplus reserve will not be drawn. Then based on theCompany’s 685,464,000 shares at total up to December 31, 2013, we plan to pay CNY 5 in cash as dividends for every ten shares (including tax) to theCompany’s all stockholders, totaling up to CNY 342.732 million, accounting for32.70% of the net profit CNY 1048.185927 million attributable to the shareholders of the parent company in the consolidated statement, the retained and undistributed profit of CNY 705.453927 million will bereserved for thedistribution ofnext year.
TheCompany’s preliminary scheme of profit distribution in 2014 is as following: Because the left amount of legal earned surplus reserve reaches50% of registered capital, while making profit distribution, the legal earned surplus reserve will be not drawn. Based on theCompany’s 685.464 millionshares at total up to December 31,2014, we plan to pay CNY 4.4 in cash as dividends for every ten share (including tax) to theCompany’s all shareholders, totaling up to CNY 301.60416 million accounted for30.85% of net profits CNY977.707711 million attributable to shareholders of parent company in the consolidated statements. The retained and undistributed profit of CNY 676.103551 million will be reserved for distribution inthenext year.
TheCompany’scash dividendrecordin recent three years
Unit: CNY
|||||
|-|-|-|-|
|Year of distribution|Amount of cashdividend (includingtax)|Net profit belonging tothe listed company’sstockholders in theconsolidated statementofthe distribution year|Proportion in the netprofit belonging to thelisted company’sstockholders in theconsolidated statement|

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
|||||
|-|-|-|-|
||||(%)|
|2014|301,604,160|977,707,711|30.85%|
|2013|342,732,000|1,048,185,927|32.70%|
|2012|754,010,400|1,700,928,117|44.33%|

 During the report period the Company earned profit, the undistributed profit of the parent companywas positive but withoutproposingcash dividend distribution.□Available V Not available
15、TheCompany’s preliminary scheme of profit distribution and preliminary scheme of increasing equity withcapital reserve
V Available□Not available
|||
|-|-|
|Number ofsendingbonus shares per ten shares (share)|0|
|Number ofdividend payout per ten shares (CNY) (including tax)|4.40|
|Number oftransferring per tenshares(share)|0|
|The cardinal number of the capital stocks for the preliminary distributionscheme (shares)|685,464,000|
|Totalcash dividend distribution （CNY）(includingtax)|301,604,160|
|Distributable profit(CNY)|977,707,711|
|The proportionofcash dividend distribution inthe total profitdistribution|100%|
|Cash dividenddistributionpolicy||
|Others||
|Policy of cash dividend||
|The stage of Company development belongs to growth period, while making profitdistribution, Distribute dividends in cash takes up not less than 20% proportion in thedistributable profit.||
|Detailed explanation for the profit distributionor preliminary scheme ofincreasing equitywithcapital reserve||
|According to the audit result from Deloitte Hua Yong, The net profit belonging to the parentcompany’s stockholders in the consolidated statement is CNY977.707711million, the netprofit of the parent company infinancial statement isCNY 1151.762045millionin2014.According to PRC accounting standard, the situation for the attributable profit ofconsolidation and parent company in2014isas following:Unit: CNYConsolidation Parent companyUndistributable profitat the end the year 5,251,920,374 4,620,476,137Including:net profit in2014 977,707,711 1,151,762,045||

||||
|-|-|-|
||Consolidation|Parent company|
|Undistributable profitat the end the year|5,251,920,374|4,620,476,137|
|Including:net profit in2014|977,707,711|1,151,762,045|

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
||||
|-|-|-|
|Distributable profit carried over to thebeginningof the year|4,616,944,663|3,811,446,092|
|Distribution for 2013dividend|342,732,000|342,732,000|
|Withdrawing for the legal earned surplusreserve|0|0|

According to regulation of 157th item in the Articles of Association, which is that the Company can distribute dividends either in cash or by stock, the profit to be distributed each year is not less than25% of the distributable profit realized in the same year and the accumulated sum of profit to be distributed in cash in the next three years is not less than30% of the yearly average distributable profit to be realized in the next three years, meanwhile, considering the large amount on the capital expenditure in 2015, under the condition of not influencing the normal production and operation, the Company put forward preliminary scheme onprofitdistribution in2014as following:
Because the left amount of legal earned surplus reserve reaches50% of registered capital, while making profit distribution, the legal earned surplus reserve will be not drawn. Based on theCompany’s 685.464 million shares at total up to December 31, 2014, we plan to pay CNY 4.4 in cash as dividends for every ten share (including tax) to theCompany’s all shareholders, totaling up to CNY 301.60416 million accounted for30.85% of net profits CNY977.707711 million attributable to shareholders of parent company in the consolidated statements. The retained and undistributed profit of CNY 676.103551 million will be reserved for distribution in the next year. The cash dividend for the shareholders of B share listed overseas was paid in Hongkong dollar according to the middle rate between CNY and Hongkong dollar issued by thePeople’s Bank of China on the first working day after the resolution date of 2014shareholders’meeting.
16、Social Responsibility
V Available□Not available
During the report period, considering the fulfillment of theCompany’s social responsibility, please see 2014 Annual Social Responsibility Report disclosed on www.cninfo.com.cn on 28thApril 2015.
The listed company and its subsidiaries are whether or not to belong to the heavy pollution industrystipulated bythe state environmental protection department.
Yes No V Not available
The listed company and its subsidiaries are whether or not to exist major social security problems.
Yes No V Not available
The Company is whether ornottobe inan administrative penalty.
Yes No V Not available
17、TheCompany’sReceptions, Studies and Visits
V Available□Not available
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
|||||||
|-|-|-|-|-|-|
|ReceptionTime|Receptionplace|Receptionmethod|Receptionobjecttype|Receptionobject|Main context ofcommunicationand suppliedmaterial|
|2014.03.06|Meetingroom of theCompany|Fieldsurvey|Others|Huangwei from CITICSecurities|E-commerceadvancedexperienceintroduction andcommunication forconsumerproducts’industry|
|2014.05.20|Meetingroom of theCompany|Fieldsurvey|Institution|Shuaihu from ChinaInternational Fundmanagement Co.Ltd ChenyufromAEGON-INDUSTRIALFund Management Co.LtdCao Liyan from BOCISecuritiesLimited|currentbusinessoperationsituationandotherissues|
|2014.09.19|Meetingroom of theCompany|Fieldsurvey|Institution|Wang Jiandong fromSunshine Insurance GroupSunshine Asset ManagementCorporation Limited JiatingtingfromSprings Capital(Beijing)Co.Ltd|currentbusinessoperationsituation|
|2014.11.25|Shanghai|other|Institution|Deng Xiaofeng fromBOSERA FUNDSmanagement limited Ai jingfrom BOCOM & Schrodersfund management limited LiYan from China AssetManagement Co.,Ltd QiYing from China PacificInsuranceCompanyLtd|currentbusinessoperationsituationandotherissues|
|Number ofReception|4|||||
|Number ofinstitution|9|||||
|Number ofotherobject|1|||||
|Whetherdisclose,reveal orbetrayno-publicimportinformation|No|||||

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.V、Major Issues
1、Material litigationand arbitration
□ Available √Not Available
There are nomaterial litigation andarbitration duringthereport period.
2、Media’s doubts
□ Available √Not Available
There are nocommon doubts issued byMedia duringthereport period.
3、Non-business capital occupying oflisted company bycontrolling shareholder and its related parties
□ Available √Not Available
There are nonon-business capitals occupying oflisted company by controlling shareholder andits related parties during the reportperiod.4、Bankruptcy reorganization
□ Available √Not Available
There is nobankruptcy reorganization duringthe report period.
5、Transaction inassets
(1)、Acquisitionof assets
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.□ Available √Not Available
There is noacquisition of assets during thereport period.
(2)、Sale ofassets
□ Available √Not Available
There is nosale ofassets duringthe report period.
(3)、Combination of enterprises
□ Available √Not Available
There is nocombination ofenterprises during the reportperiod.
6、Implementation and its influence ofCompany’sshare incentive
□ Available √Not Available
There are noshare incentive plan and its implementation situationduring thereport period.
7、Significant related transactions
(1)、Related transactions inrelation toroutine operations
√ Available □ Not Available
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Related party|Interrelationship|Type ofrelatedtransaction|Content ofrelatedtransaction|Pricingprinciple ofrelatedtransaction|Price ofrelatedtransaction|Amount ofrelatedtransaction(CNY ‘0000)|Proportionin the samekind oftransaction(%)|Settlementmethod ofrelatedtransaction|Marketprice|Date ofdisclosure|Disclosureindex|
|Yantai ShenmaPacking Co.,Ltd.|Under thesame parentcompany|Relatedparty’scommodity|Procurementofcommodity|Agreementprice|－|14,954|10.76%|Check|－|||

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||and labortransaction|andacceptanceof laborfrom relatedparty|||||||||
|Total|||--|--|14,954|--|--|--|--|--|
|Details of rejection of bigsales|||No||||||||
|Necessity and continuity as well as cause to transactwith related party (but not with other dealer in themarket)|||The Company will sign a processing contract with and purchase packing materials from YantaiShenma Packing Materials Co., Ltd. under Changyu Group, which is helpful for the Company, as aprerequisite of fair price, to acquire sustainable, quality and stable supply of packing materials and tosave the Company’s procurement and transport costs of packing materials so as to strengthen itsproduct competitiveness.||||||||
|Influence of related transaction on listed company’sindependency|||The Company’s independency will not be affected by related transactions because the Company haslower requirements for production technology of packing materials and there are too many qualifiedproducers readyfor selection.||||||||
|The level of Company’s dependency on related party aswell assolutions|||No||||||||
|If a prediction is made to the total amount of routinerelated transactions to occur during this period by type,what is the actual implementation result during thereport period.|||No||||||||
|Cause of bigger differences in between transaction priceand market reference price|||The transaction priceis fixedinreference tomarket price, noobvious difference.||||||||

(2)、Related transactions inrelationtoacquisition and sales of assets
□ Available √Not Available
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. There are norelated transactions inrelation toacquisition orsales ofassets duringthe report period.
(3)、Related transactions inrelation tocommon foreign investment
□ Available √Not Available
There are norelated transactions inrelation tocommonforeign investment duringthereport period.
(4)、Related current credit and debt
√ Available □ Not Available
Whether ornottoexist non-business related current credit and debt
□ yes √no
There are nonon-business related current credit and debt.
(5)、Other related transactions
√ Available □ Not Available
Detailed information about other related routine transactions among Company,Company’s controlling shareholder Yantai Changyu Group Company Limited anditssubsidiaries, please see Part7‘‘Relation Among Related Parties andTheirTransactions’’ inthe financial statement of thisreport. 40
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. 8.Majorand important contracts and execution results
(1)、Trusteeship, contract andleasehold issues
A) Trusteeship situation
□ Available √Not Available
There is notrusteeship situation duringthe report period.
B) Contract situation
√Available □ Not Available
Contract situation description
During the report period, about theCompany’s contract operation situation, please see‘‘1.Subsidiary’’ in Annex 5‘‘The Consolidation Scope of Consolidated FinancialStatements’’ in the financial report ofthisreport.
Project ingains andlosses forthe Company toachieve morethan10% ofthe total profit
□Available√ Not Available
There are no contract projects in gains and losses for the Company to achieve more than10% of the total profit duringthe report period.
C) Leasehold situation
√Available □ Not Available
Leasehold situation description
On 1st January 2012, the Company renewed the Space Lease Agreement with the controlling shareholder Changyu Group, the Company leased the space with 57749.77 square meters located at 174 Shihuiyao Road, Zhifu District,Yantai City and the space with 3038 square meters located at 56 Dama Road, Zhifu District, Yantai City, which are all under the name of controlling shareholder. The rent of the above spaces per year is CNY 5.858 million with a period of 5 years from 1st January 2012 to31st December 2016.
Project ingains andlosses forthe Company toachieve morethan10% ofthe total profit
□Available√ Not Available
There are no leasehold projects in gains and losses for the Company to achieve more than10% of thetotal profitduring the reportperiod.
(2)、Guarantee situation
□Available√ Not Available
There is noguarantee situation duringthe report period.
(3)、Other important contracts
□Available√ Not Available
There are noother important contracts duringthe report period.
(4)、Other important deals
□Available√ Not Available
There are noother important deals duringthe report period.
9.Implementation ofcommitments
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.(1)、The commitments of the Company or its shareholders holding more than5% in the report period oruntil thereport period
√Available □ Not Available
|||||||
|-|-|-|-|-|-|
|Commitments|Commitmentparty|Commitmentcontent|Commitmenttime|Commitmentperiod|Implementation|
|Commitments at share reform|－|－|－|－|－|
|Commitments made inacquisition report or equitychanges report|－|－|－|－|－|
|Commitments at assetrestructuring|－|－|－|－|－|
|Commitments at the initialpublicoffering orrefinancing|YantaiChangyuGroup Co.Ltd.|Non-horizontalcompetition|18thMay1997|Forever|Has beenperformingstrictly|
||YantaiChangyuGroup Co.Ltd.|According toTrademarkLicenseContract, theCompany willpay trademarkroyalty for the‘‘Changyu’’products ofYantai ChangyuGroup Co., Ltdevery year,Yantai ChangyuGroup Co., Ltdwill usetrademarkroyalty toadvertise‘‘Changyu’’trademarks andContractedproducts in thiscontract.|18thMay1997|Forever|Has beenperformingstrictly|
|Commitments at middle andsmall shareholders of theCompany|－|－||－|－|
|Commitment under timely|Yes|||||

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
|||
|-|-|
|implementation or not||
|Whether or not to have specificreasons of the unimplementedcommitment and next steps(ifany)|No|

(2)、The Company should make a statement on the achieved original profit forecast of assets or projects and its reason if there is profit forecast ofCompany’s assets or projects and the report period is still intheprofitforecast period.
□Available√ Not Available
10、The appointmentand dismissal of certified public accountants
Currently appointed accountingfirm
|||
|-|-|
|Domestic accounting firm name|Deloitte Hua Yong Certified Public Accountants Co., Ltd.(special general partnership)|
|Reward for domestic accounting firm(CNY‘0000)|190|
|Consecutive period for the auditservices ofdomestic accounting Firm|2|
|Name of Certified public accountantfor the audit services of domesticaccounting Firm|Xu Zhaohui,Li Xu|

Whether or nottodismiss the accountingfirm duringthereport period
□Yes√ No
Toemploy internal control audit accounting firms, financial adviser orsponsor.
√ Available □Not Available
The Company will appoint Deloitte Hua Yong as certified public accountants of theCompany’s 2014 internal control, and continue appointing this company as certified public accountants of theCompany’s2015internal control.
11、Explanation of Non-standard Audit Report given by accounting firm in the report period fromBoard ofSupervisors and independent directors (where applicable)
□Available√ Not Available
12、Penalty andrectification
□Available√ Not Available
There are nopenaltyor rectification duringthe report period.
13、 Face ofsuspension andtermination of listingafter the disclosure ofannual report□Available√ Not Available
14、Other explanation ofmajor issues
□Available√ Not Available
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. There are noother majorissues needtobe explained duringthe report period.
15、Major issues ofCompany’ssubsidiary
□Available√ Not Available
16、Corporation bonds issued bythe Company
□Available√ Not Available
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.VI、Changes in Shares and theShareholders’ Situation
1、Changes in shares
(1)、Changes in shares
Unit: share
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Amountbeforethischange||Change (+,-)|||||Amountafterthischange||
||Amount|Percentage%|Allotnewshare|Distribute bonusshare|Transferothercapital tosharecapital|others|Subtotal|Amount|Percentage%|
|1、Unrestrictedshares|685,464,000|100%||||||685,464,000|100%|
|(1)、Ashares|453,460,800|66.15%||||||453,460,800|66.15%|
|(2)、Bshares|232,003,200|33.85%||||||232,003,200|33.85%|
|2、Totalshares|685,464,000|100%||||||685,464,000|100%|

 Cause ofshare change
□Available√ Not Available
Approval ofshare change
□Available√ Not Available
Transfer of changed shares
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.□Available√ Not Available
The influence of share change on the financial indicators such as basic earnings per share, diluted earnings per share of the latest year and the latest period,net asset per sharebelongingtotheCompany’s common shareholders, etc.
□Available√ Not Available
Other contents theCompany thinks necessary orsecurities regulatory departments ask tomake public.
□Available√ Not Available
(2)、Changes in restricted shares
□Available√ Not Available
2、Securities issuance and listingsituation
(1)、Securities issuance inthe recent three years at theendof reportperiod
□Available√ Not Available
(2)、Explanation ofchangeinCompany’s total shares and shareholding structure andchange inCompany’s assets and liabilitystructure□Available√ Not Available
(3)、Current employee shares
□Available√ Not Available
3、Situation for shareholders andtheactual controllers
(1)、The number ofshareholders of the Companyand the shareholdings
Unit：share 46
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Total shareholders in the reportperiod|43,151, including28,531A shareholdersand 14,620B shareholders|Total number of shareholdersuntilthe end of the 5th tradingdays before the disclosure dayofthe annualreport|||43,593, including29,146 A shareholders, and 14,447 BShareholders|||Total number of preferredshareholder recoveringvoting power at the end ofreport period|||0||
|Shareholders holding more than 5%orthetop10shareholders holdingsituation|||||||||||||
|Name ofShareholders|Character ofshareholders||Percentage(%)|Shares held until the endof the report period||Changesduring thereportperiod|Numberofrestrictedshares||Number ofunrestrictedshares|Pledged orfrozen|||
|||||||||||Sharestatus||Amount|
|YANTAI CHANGYU GROUPCO. LTD.|Domesticnon-state-ownedlegal person||50.4%|345,473,856||0|0||345,473,856|||0|
|GAOLING FUND,L.P.|Foreignshareholder||3.53%|24,176,997||0|0||24,176,997|||0|
|BBH BOS S/A FIDELITY FD -CHINA FOCUS FD|Foreignshareholder||2.35%|16,106,326||0|0||16,106,326|||0|
|GIC PRIVATE LIMITED|Foreignshareholder||1.45%|9,913,484||-9307489|0||9,913,484|||0|
|NORGES BANK|Foreignshareholder||0.66%|4,511,246||2823258|0||4,511,246||||
|VALUE PARTNERSHIGH-DIVIDEND STOCKSFUNDS|Foreignshareholder||0.62%|4,280,146||-1686735|0||4,280,146|||0|
|FIDELITY FUNDS|Foreignshareholder||0.58%|3,997,933||3997933|0||3,997,933||||
|BBH A/C VANGUARDEMERGING MARKETS STOCKINDEX FUND|Foreignshareholder||0.58%|3,950,987||-756079|0||3,950,987||||
|FIDELITY CHINA SPECIALSITUATIONS PLC|Foreignshareholder||0.55%|3,779,202||3779202|0||3,779,202||||

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
||||||||
|-|-|-|-|-|-|-|
|AGRICULTURAL BANK OFCHINA-HUAXIA STEADYGROWTH MIXED SECURITIESINVESTMENT FUND|Domesticnon-state-ownedlegal person|0.53%|3,624,745|2324745|0|3,624,745|

||||||
|-|-|-|-|-|
|Strategic investors or legal result of the placement of newshares tobecome a top10shareholders(if have)(see note3)|NO||||
|The explanation for the associated relationship andaccordant action|Among the top 10 shareholders, Yantai Changyu Group Company Limited has noassociated relationship or accordant action relationship with the other 9 listed shareholders,andtherelationship among the other shareholders is unknown.||||
|The top10shareholders withunrestricted shares|||||
|Name ofShareholders||Number of unrestrictedshares held until theendof theyear|Type ofshare||
||||Type ofshare|Amount|
|YANTAI CHANGYU GROUP CO. LTD.||345,473,856|A|345,473,856|
|GAOLING FUND,L.P.||24,176,997|B|24,176,997|
|BBH BOS S/A FIDELITY FD -CHINA FOCUS FD||16,106,326|B|16,106,326|
|GIC PRIVATE LIMITED||9,913,484|B|9,913,484|
|NORGES BANK||4,511,246|B|4,511,246|
|VALUE PARTNERS HIGH-DIVIDEND STOCKS FUNDS||4,280,146|B|4,280,146|
|FIDELITY FUNDS||3,997,933|B|3,997,933|
|BBH A/C VANGUARD EMERGING MARKETS STOCK INDEX FUND||3,950,987|B|3,950,987|
|FIDELITY CHINA SPECIAL SITUATIONS PLC||3,779,202|B|3,779,202|
|AGRICULTURAL BANK OF CHINA-HUAXIA STEADY GROWTH MIXEDSECURITIES INVESTMENT FUND||3,624,745|A|3,624,745|
|The explanation for the associated relationship and accordant action of the top 10shareholders with unrestricted shares, the the associated relationship and accordant||Among the top 10 shareholders, Yantai Changyu GroupCompany Limited has no associated relationship or accordant|||

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
|||
|-|-|
|action between the top 10 shareholders with unrestricted shares and the top 10shareholders|action relationship with the other 9 listed shareholders, and therelationship amongtheothershareholders isunknown.|
|Explanation for the top 10 shareholders who involved in financing activities andstocktrading business|The top 10 shareholders do not involve in financing activitiesandstock trade business.|

Whether or not theCompany’s top 10 common shareholders and shareholders with unrestricted shares take agreed repurchase trading during the report period
□Yes√ No
There is no agreed repurchase trading taken by theCompany’s top 10 common shareholders and shareholders with unrestricted shares during the report period.
(2)、Situationforthe controlling shareholders of the Company
Legal representative
|||||||
|-|-|-|-|-|-|
|Name ofcontrolling shareholder|Legalrepresentative|Establishmentdate|Organizationcode|Registered capital|Mainbusiness|
|YantaiChangyu Group Co. Ltd.|SunLiqiang|1997.04.27|26564582－4|CNY 50million|Production and distribution of wine,healthy liquor, distilled liquor andnon-alcohol beverages, planting ofagricultural products and exportbusiness under the scope ofpermission.|
|Futuredevelopment strategy|Continue centralizing superior resources, focusing on wine business, reasonably developing relevantsupportingindustries and industriously promoting harmonious development ofvarious of industries|||||
|Operating results, financial condition, cashflow and futuredevelopment strategy etc.|Through the audit, at the end of 2014, total asset of controlling shareholder Yantai Changyu Group Co.Ltd. amounts to CNY 9.5 billion, net liability amounts to CNY 2.1 billion, net asset amounts to CNY7.4 billion, 2014 operating income amounts to CNY 4.2 billion, net profit amounts to CNY 1.1 billion,net cash flows generated from operating activities amount toCNY1.2billion.|||||

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
|||
|-|-|
|Equity situation for the other domestic listedcompanies controlled or shared by thecontrolling shareholders during the reportperiod|No.|

Changes inthe controllingshareholder duringthe report period
□Available √ Not Available
There are nochanges inthe controllingshareholder duringthereport period.
(3)、Situationforthe actualcontrollers of theCompany
Legal representative
|||||||
|-|-|-|-|-|-|
|Name of actualcontrollers|Legalrepresentative|Establishmentdate|Organizationcode|Registeredcapital|Main business|
|Yantai Yuhua Investment&Development Co. Ltd|Jiang Hua|2004.10.28|76779294－7|CNY387.995million|Under state permission, property investment, tenancy of machine and facility,wholesale and retail of construction material, chemical products (chemicalhazard products excluded), hardware and electronical products, grapeplantation.|
|ILLVA SaronnoInvestment Italy|AugustoReina|1984.07.25|－|EUR50,416,000|Directly or indirectly conduct the production and distribution of foodproducts (alcoholic products included) as well as industrial, commercial,financial and service activities of any other kinds through joint-stockcompanies and organizations|
|International FinanceCorporation|Cai Jinyong|1956.07.25|－|USD 2.36billion|International Finance Corporation is one of the members of World Bank,mainly dedicated to investment in private sectors of developing countrieswhile providing technical support and consultation service. The corporation|

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
|||||||
|-|-|-|-|-|-|
||||||is a multilateral financial institution that ranks first in the world in terms ofproviding capital stock and loans to developing countries. Its purpose is topromote sustainable investments of private sectors of developing countries inorder toalleviate povertyand improve people’s life.|
|Yantai GuofengInvestment Holdings Co.,Ltd|Chen Dianxin|2009.02.12|00426068-6|CNY220million|Operating management of state-owned property right (stock right) authorizedby State-owned Assets Supervision and Administration Commission ofYantai Municipal Government; Financing, investment and operatingmanagement of government projects, such as strategic investment andindustrial investment and so on; Capital operation (including acquisition,reintegration and transfer, etc) of state-owned property right and state-ownedstock right within the scope of authorization; Venture capital investmentbusiness; Agency of venture capital investment business of other ventureinvestment enterprises or individuals; Participation in the establishment ofventure capital investment enterprises and venture capital investmentmanagement consultant institutions; Investment and financing servicebusiness; Investment and financing consultant business; Other businessauthorized by State-owned Assets Supervision and AdministrationCommission of Yantai Municipal Government.(Projects need to beauthorized in accordance with the law could carry out business activities onlyafter theapproval of relevant departments )|
|Future developmentstrategy|No|||||
|Operating results,financial condition andcash flowand so on|No|||||
|Equity situation for theother domestic listed|No|||||

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
||
|-|
|companies controlled bythe actual controllerduringthe report period|

Changes ofthe actual controllers during the reportperiod
√Available □Not Available
|||
|-|-|
|Names ofnew actual controllers|ILLVA Saronno Investment ItalyandYantai Guofeng Investment HoldingsCo., Ltd|
|Changing date|2014.04.30|
|Query indexes onthe appointed website|http://www.cninfo.com.cn/finalpage/2014-05-06/63971775.PDF|
|Disclosure date ontheappointedwebsite|2014.05.06|

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. Introductionfor property rightand controlrelations between the Company andits actual controllers Actualcontroller controls the Company througha trust or other asset management ways
□Available √ Not Available
(4)、Other institutional shareholders holdingmore than10%shares
□Available √ Not Available
4、Situation of plan to increase held shares proposed or implemented by theCompany’s shareholders andits persons acting inconcert duringthe report period
□Available √ Not Available
Within the scope known by the Company, there are noCompany’s shareholders or its persons acting in concert proposing or implementing the plan to increase held shares during the report period.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.VII、Related situation of preferred shares
□Available √ Not Available
There are nopreferred shares during thereport period.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.VIII、Situation for Directors, Supervisors, Senior Management and Staffs
1、Changes inshareholdings ofdirectors, supervisors and senior management
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Name|Post|Status|Gender|Age|Beginningdate of thepost|Ending dateofthe post|Shares heldat thebeginning ofthe period|Increasedshares duringtheperiod|Decreasedsharesduring theperiod|Shares heldat the endof theperiod|
|SunLiqiang|Chairman to the Board ofDirectors|presentincumbent|M|67|2013.05.14.|2016.05.13|0|0|0|0|
|ZhouHongjiang|Vice-chairman to theBoard of Directors andgeneral manager|presentincumbent|M|50|2013.05.14.|2016.05.13|0|0|0|0|
|LengBin|Director and vice-generalmanager|presentincumbent|M|52|2013.05.14.|2016.05.13|0|0|0|0|
|Qu Weimin|Director, Vice-generalmanager and Secretary totheBoard ofDirectors|presentincumbent|M|57|2013.05.14.|2016.05.13|0|0|0|0|
|Chen Jizong|Director|presentincumbent|M|39|2013.05.14.|2016.05.13|0|0|0|0|
|Augusto Reina|Director|presentincumbent|M|74|2013.05.14.|2016.05.13|0|0|0|0|
|AldinoMarzorati|Director|presentincumbent|M|62|2013.05.14.|2016.05.13|0|0|0|0|
|AntonioAppignani|Director|presentincumbent|M|76|2013.05.14.|2016.05.13|0|0|0|0|

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Jean Paul Pinard|Director|leave post|M|65|2013.05.14.|2014.05.23|0|0|0|0|
|Dai Hui|Director|presentincumbent|F|49|2014.05.23|2016.05.13|0|0|0|0|
|Xiao Wei|Independent director|presentincumbent|M|54|2013.05.14.|2016.05.13|0|0|0|0|
|Wang Zhuquan|Independent director|presentincumbent|M|50|2014.05.23|2016.05.13|0|0|0|0|
|Wang Shigang|Independent director|Presentincumbent|M|49|2013.05.14.|2016.05.13|0|0|0|0|
|Kong Qingkun|Chairman for the Board ofSupervisors|presentincumbent|M|42|2013.05.14.|2016.05.13|||||
|ZhangLanlan|Supervisor|presentincumbent|F|45|2013.05.14.|2016.05.13|||||
|Guo Ying|Supervisor|presentincumbent|F|40|2013.05.14.|2016.05.13|||||
|Yang Ming|Vice-general manager|presentincumbent|M|56|－|－|0|0|0|0|
|Li Jiming|Chief engineer|presentincumbent|M|48|－|－|0|0|0|0|
|JiangHua|Vice-general manager|presentincumbent|M|51|－|－|0|0|0|0|
|SunJian|Vice-general manager|presentincumbent|M|48|－|－|0|0|0|0|
|JiangJianxun|Finance manager|presentincumbent|M|48|－|－|0|0|0|0|
|Total|－|－|－|－|－|－|0|0|0|0|

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.2、Situationfor workexperience
The main work experiences of theCompany’s directors, supervisors and senior management in the recent 5years.
(1)、Members of Boardof Directors
Mr. Sun Liqiang, a college graduate and senior economist, was the representative of 10th and 11th NationalPeople’s Congress. Now he is the Party Secretary, Chairman and General Manager of Changyu Group. He began serving as chairman of the Company on September 18th , 1997 and has heldthepositionever since.
Mr. Zhou Hongjiang, a doctoral graduate and senior engineer, now is the vice chairman of Changyu Group ,and the representative of 12th NationalPeople’s Congress. He began serving as general manager of the Company on December 28th , 2001, Director, Vice Chairman and concurrently as General Manager of theCompany onMay 20th ,2002,hehas heldthe positionever since.
Mr. Leng Bin, a postgraduate and senior accountant and now is the Director of Changyu Group. He beganserving asa director of theCompany onJune 15th, 2000andheldthe position ever since. Mr. Qu Weimin, a bachelor of engineering and senior economist, has been serving as director, vice General Manager and concurrently as Secretary to the board of directors of the Company since September 18th,1997.
Mr. Chen Jizong, a university graduate, the qualifications of statistician and accountant, now is the union director of property management department of SASAC Yantai and Director of Changyu Group. He has beendirector ofthe Company since May 13th 2010.
Mr. Augusto Reina is serving as chief executive officer of several companies including Illva Saronno Holding SpA and Illva Saronno Investment SRL, member of the board of directors of Barberini Spa, director of Federvini (Italian Alcohols Production and Export Association), director of Istituto Del Liquore (Wine Research Institute), director of Assovini (Sicily Viniculture and Wine Production Association) and director of Changyu Group. He has been director of the Company since April27th,2006.
Mr. Aldino Marzorati, a university graduate, is the General Manager of Illva Saronno Holding SpA and director of the board of directors of some branches under the group company and the director of ChangyuGroup.He hasbeen director ofthe Company since April 27th,2006.
Mr. Antonio Appignani, a university graduate, is vice chairman of Italian Business Consultation Committee, chief of Professional Ethics Committee, teacher of vocational training course of Industrial and Commercial Consultation Committee, member of Economic and Commercial Committee of the public university “G. D Annunzio” and concurrently serving as member of the board of directors of different companies and member of the board of directors of several companies under Illva Group and the director of Changyu Group. He has been director of the Companysince April 27th,2006.
Mr. Dai Hui, born in 1965, MBA, former project manager of Government Transfer Loan Department in China FOTIC (staying in Beijing), former manager assistant of High Net Worth Center in First Pacific Bank (staying in Hongkong), representative of Rabobank Beijing Office (staying in Beijing) and chief representative of Rabobank Beijing Office (staying inBeijing), is now consultant ofIFC, director ofChangyu Group Company anddirector of Listed Company.
Mr. Xiao Wei, a postgraduate and a lawyer, now is the partner of Jun He Law Office. He has been servingas independent director of the Company since September 1st,2010.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. Mr. Wang Zhuquan, doctor of management (accountancy), first batch of national accounting academic leading personals of Financial Department, top-notch personal in Qingdao, consultant expert of Enterprise Internal Control Standard Committee of Financial Department, Government Special Allowance expert, acted as independent director from13th May 2010 to 12th May 2013. Now he is the vice-president of School of Management and the accounting department head in the Ocean University of China as well as independent director of some listed companies which could be exemplified as Qingdao TGOOD electric Co., Ltd. He acts as the independent director again from 23rdMay 2014.
Mr. Wang Shigang, MBA and qualification of China Certified Public Accountant, now is the board chairman of Shandong Tianhengxin Construction Cost Consultion Co. Ltd., He previously served as independent director of the Company. He acts as the independent director again from 14th May 2013.
(2)、 Members of boardofsupervisors
Mr. Kong Qingkun, MBA and economist, used to be the section member of production department in the healthy liquor branch; the clerk and vice manager of general manager office, now he is the manager of general manager office.
Ms. Zhang Lanlan, a university graduate and economist, used to be vice-manager of import/export company,manager ofimport department; sheis manager ofboardofdirectors office now.
Ms. Guo Ying, a university graduate and senior accountant, used to be the member of financial audit department of Yantai Yiqing Industry Company; senior staff of operating supervision department of SASAC Yantai, senior staff and vice director of directors& supervisor office; now she is vicedirector of directors&supervisor office ofSASAC Yantai.
(3)、Other senior managers
Mr. Yang Ming, a university graduate and applied researcher, has been serving as Vice General Manager ofthe Company since August12th,1998.
Mr. Li Jiming, a doctor and applied researcher, has been serving as Chief Engineer of the Company since September 14th,2001.
Mr. Jiang Hua, a postgraduate and senior engineer has been serving as Vice General Manager of the Companysince September 14th, 2001.
Mr. Sun Jian, an MBA and economist, has been serving as Vice General Manager of the Company since March22nd,2006.
Mr. Jiang Jianxun, an MBA and accredited accountant, has been serving as Financial Manager of theCompany since May 20th,2002.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. Post intheshareholder’scompany
√ Available □ Not Available
|||||||
|-|-|-|-|-|-|
|Name|Shareholder’s Company|Post|Beginning dateofthe post|Ending date ofthepost|Paid byshareholder’scompanyor not|
|SunLiqiang|YantaiChangyu Group Co. Ltd.|Chairman andgeneral manager|2013.10.08|2017.10.07|No|
|ZhouHongjiang|YantaiChangyu Group Co. Ltd.|Vice chairman|2013.10.08|2017.10.07|No|
|LiJiming|YantaiChangyu Group Co. Ltd.|Director|2013.10.08|2017.10.07|No|
|Sun Jian|YantaiChangyu Group Co. Ltd.|Director|2013.10.08|2017.10.07|No|
|ChenJizong|YantaiChangyu Group Co. Ltd.|Director|2013.10.08|2017.10.07|No|
|AugustoReina|YantaiChangyu Group Co. Ltd.|Director|2013.10.08|2017.10.07|No|
|AldinoMarzorati|YantaiChangyu Group Co. Ltd.|Director|2013.10.08|2017.10.07|No|
|AntonioAppignani|YantaiChangyu Group Co. Ltd.|Director|2013.10.08|2017.10.07|No|
|Dai Hui|YantaiChangyu Group Co. Ltd.|Director|2014.03.06|2017.10.07|No|
|Explanation for the post in theshareholder’scompany|No.|||||

Post at other companies
√ Available □ Not Available
|||||||
|-|-|-|-|-|-|
|Name|Other’s Company|Post atother company|Beginning|Ending date of|Paid by other|

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
|||||||
|-|-|-|-|-|-|
||||date of thepost|thepost|companyor not|
|Leng Bin|Yantai Changyu ZhongyaMedicine & Healthy Liquor Co.,Ltd|Director andlegal representative|2012.09.10||No|
|Explanation for the post in theshareholder’scompany|No.|||||

3、Salaryof directors, supervisors and senior management
Decision-making process, thebasis for determining, the actual payments ofdirectors, supervisors andsenior management
The salary for the independent directors is paid according to the resolution ofshareholders’ meeting. The salary for the chairman, directors with administration duty, supervisors, managers and other senior management should be paid on basis of the evaluation result according to the Evaluation andIncentives Scheme for Senior Management ofthe Company whichwas passed during theBoardofDirectors’ meeting.
Salary of directors, supervisors andsenior management duringthe reportperiod.
Unit:CNY’0000
|||||||||
|-|-|-|-|-|-|-|-|
|Name|Post|Gender|Age|Status|Total rewardfrom thecompany|Total rewardfrom theshareholder’scompany|Actual reward atthe end of thereport period|
|SunLiqiang|Chairman to the Board ofDirectors|M|67|presentincumbent|120.8||90|
|ZhouHongjiang|Vice-chairman to the Boardof Directors and generalmanager|M|50|presentincumbent|117.9||87.8|
|LengBin|Director and vice-generalmanager|M|52|presentincumbent|84.1||55.6|
|Qu Weimin|Director, Vice-generalmanager and Secretary to the|M|57|present|86.5||66.7|

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
||||||||
|-|-|-|-|-|-|-|
||Board ofDirectors|||incumbent|||
|Chen Jizong|Director|M|39|presentincumbent|||
|Augusto Reina|Director|M|74|presentincumbent|||
|AldinoMarzorati|Director|M|62|presentincumbent|||
|AntonioAppignani|Director|M|76|presentincumbent|||
|Jean Paul Pinard|Director|M|65|leave post|||
|Dai Hui|Director|F|49|presentincumbent|||
|Xiao Wei|Independent Director|M|54|presentincumbent|5|5|
|Wang Zhuquan|Independent Director|M|50|presentincumbent|5|5|
|Wang Shigang|Independent Director|M|49|presentincumbent|5|5|
|Kong Qingkun|Chairman for the Board ofsupervisors|M|42|presentincumbent|59.9|47.9|
|ZhangLanlan|supervisor|F|45|presentincumbent|18.5|17.3|
|Guo Ying|supervisor|F|40|presentincumbent|||
|Yang Ming|Vice-general manager|M|56|presentincumbent|75.3|56.6|

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
||||||||
|-|-|-|-|-|-|-|
|Li Jiming|Chief Engineer|M|48|presentincumbent|83.3|56.6|
|JiangHua|Vice-general manager|M|51|presentincumbent|86|56.6|
|SunJian|Vice-general manager|M|48|presentincumbent|79.6|56.6|
|JiangJianxun|Finance manager|M|48|presentincumbent|61.5|38.8|
|Total|--|--|--|--|888.4|645.5|

 The awarded equity incentives forthedirectors, supervisors andsenior management of the Company duringthe report period
□Available √ Not Available
4、ChangesinCompany’s directors, supervisors, Senior Management
||||||
|-|-|-|-|-|
|Name|Post|Type|Date|Reason|
|Jean Paul Pinard|Director|Leave post|2014.05.23|Application for resignfromdirector|
|Dai Hui|Director|Beelected|2014.05.23||
|Wang Zhuquan|Independent director|Beelected|2014.05.23||

5、Changes incore technical teamor key technical personnel during thereport period (non-directors, supervisors andsenior management) Duringthe report period, there are nochanges in coretechnical team orkey technical personnel.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.6、Staff of the Company
Up to December 31st 2014, the total registered staff number of the Company (including theCompany’s headquarter and main controlling subsidiary companies) was 4868,consisting of:
|||||
|-|-|-|-|
|Classification|Category|Number|Percentage oftotal staff|
|Specialty constitution|Productionand service staff|1,445|29.68%|
||Sales staff|2,286|46.97%|
||Technical staff|157|3.22%|
||Financial andadministrative staff|980|20.13%|
|Education degree|Bachelor orabove|1,329|27.3%|
||College graduate|2,136|43.88%|
||Vocational school|768|15.78%|
||Senior highschool diploma or below|635|13.04%|

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
IX、Corporate Governance
1. Current Corporate Governance Situation ofthe Company
The Company has, according to relevant national laws and rules including the Company Law of thePeople’s Republic of China, Securities Law of thePeople’s Republic of China, Guidelines on Corporate Governance of Listed Companies, Listing Guidelines at Shenzhen Stock Exchange and also other laws and rules issued by CSRC and Shenzhen Stock Exchange, and combining the own actual situation, established Articles of Associations and other internal governance regulations, constantly improved its legal entity structure and internal management rules, legally conducted its activities and strengthened the information disclosure. TheCompany’s governance structure is in accord with requirements of relevant regulatory documentsonlistingcompany’s governance issued byCSRC.
(1)、About shareholders andshareholders’meeting
The Company has already set up the Deliberation Rules ofShareholders’ Meeting, and convened theshareholders’ meetings in strict accordance with requirements of standard opinion ofshareholders’ meeting, made the great effort to provide convenient conditions for more shareholders to participate theshareholders’ meeting, and ensured all shareholders to enjoy same equity and well exercised their rights. The Company drew great attention to the communication and exchange with shareholders, actively responded theshareholders’ inquiry and questions, and widely listened to the suggestions andcomments from shareholders.
(2)、About the Companyand holdingshareholder
The Company has independent power on business and self-management, and also be independent of its holding shareholder on business, staff, assets, organization and finance. The Board of Directors, Board of Supervisors, management team and also internal organizations operated independently in the Company. The holding shareholder of the Company could regulate its activities, no other behavior was found that surpassed theshareholders’ meeting to directly or indirectly interfere with the decision-making and business activities of the Company, or occupied any assets of the Company which damaged theCompany’s and medium& smallshareholders’ interests.
(3)、About the director and board ofdirectors
The Company strictly appoints all directors in light of Company Law and Articles of Associations. The qualifications of all directors are in line with the requirements of laws and regulations. In accordance with the requirements of Corporate Governance Guidelines, the Company has already carried out the cumulative voting system. At present, the Company has three independent directors accounting for one fourth of all directors, and the number and composition of board of directors was basically in accord with requirements of regulations and also Articles and Associations. All directors of the Company could work in the light of regulations including Rules of Board ofDirectors’ Procedure and Working Rules for Independent Directors, punctually attended board ofdirectors’ andshareholders’ meetings, actively took part in relevant knowledge training, knew very well about the laws and regulations concerned, had a deep knowledge and long experience of practitioners, and
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
performed their duties according to the law and regulations. The Board of Directors convened themeetings inaccordance withrelated rules andregulations.
(4)、About supervisor andboardof supervisors
The Company strictly elected all supervisors in light of Company Laws and Articles of Associations. At present, board of supervisors has three people among which one supervisor is representative for staff, the number and composition of board of supervisor was in accord with requirements of regulations and rules. All supervisors of the Company could follow the requirement of Rules of Board ofSupervisors’ Procedure, insist the principle of responsibility to all shareholders, seriously perform their duties, effectively supervise and present their independent opinion on important issues, interrelated deals, financial status, the duty performance of directors and managers of theCompany.
(5)、 About performance evaluation andincentive system
The engagement of managers was open and transparent, and accorded with laws and regulations. The Company has established and gradually improved the performance evaluation standard and formed efficient incentive system, so as to ensure the salary ofstaff tobelinked with jobperformance.
(6)、 About the party withrelevant benefit
The Company could fully respect and safeguard the legal rights of the party with relevant benefit, cooperate actively with the stakeholders, jointly drive the Company to develop continually and stably, pay great attention to the issues such as local environmental protection and public utilities etc., and assume full responsibilities for the social responsibility.
(7)、 About the information disclosure andtransparency
The Company has appointed the secretary to Board of Directors to be responsible for investor relation management including information disclosure, investor relations management and reception ofshareholders’ visit and consultation. The Company has also assigned China Securities Newspaper, Securities Times, Honkong Commercial Daily and web site http://www.cninfo.com.cn/ to disclose information, punctually, accurately and truly disclosed any information in the light of requirement of relevant laws and rules, and also ensured all shareholders to have same opportunity to acquire any information.
In order to further perfect theCompany’s governance system, during the report period, the Company formulates Opinion about Strengthening Sales Human Resource Management, Opinion about Financial Management of Sales Secondary Enterprise, Opinion about Strengthening theProducts’ Internal Cost, 2014 Annual Assessment Management Methods for Bulk Wine Consumption in the Bulk Wine Warehouse, in the Oak Aging Warehouse and in the Bottle Wine Warehouse, 2014 Annual Assessment Methods for Liquor Yield of Bulk Wine Fermentation, Reasonable Suggestion for Methods of Project Approval, Implementation, Examination and Assessment and Management Methods for Acquisition of Oversea Enterprises. In addition, the Company also modify and perfect some management systems, such as Assessment Methods for Innovation Projects of More Than Middle-level Managers and Examination and Assessment Methods for Innovation Work of Every Secondary Enterprise and so on .
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
Whether theCompany’s corporate governance is not in compliance with theCompany Law and the relevant provisionsof China Securities Regulatory Commission
□Yes √ No
TheCompany’s corporate governance is in compliance with the Company Law and the relevant provisions of ChinaSecurities Regulatory Commission.
Progress of theCompany’s special activities in terms of corporate governance as well as formulation and implementation of inside information source registration and management rules
In order to strengthen management of inside information source and prevent occurrence of backstage deals, theCompany’s 5th session of Board ofDirectors’ 10th meeting deliberated and passed the Inside Information Source Registration and Management Rule on April 18, 2012. The founding of the system standardized the approval process of insid e information reporting, defined the scope of inside information source, and set up a prevention and punishment mechanism of inside information. During the report period, the Company has strictly managed staffs who contact with inside information Source against material inside information of the sensitive disclosure etc such as reporting informationinsiders’ registration, and informing timely to supervisory department. During the report period, there were no in the Company the informationinsiders’ transactions of theCompany’s shares by taking advantage of the sensitive inside information that affects theCompany’s share price before it was disclosed and no supervisorydepartments’ punishment records, either.
2、Information for theshareholders’ meeting and temporaryshareholders’ meetingheld duringthe report period
(1)、Information fortheshareholders’ meeting duringthe report period
|||||||
|-|-|-|-|-|-|
|Session|Date|Proposals name|Resolution|Disclosuredate|Disclosure Index|
|2013AnnualShareholders’Meeting|23rdMay2014|2013 Annual Board ofDirectors’ WorkingReport,2013 Annual Board ofSupervisors WorkingReport,2013AnnualReport,2013 Annual ProfitDistributionScheme,Proposal on theAppointment ofDirectors,Proposal on theAppointment ofIndependentDirectors,|Alldeliberatedandpassed|24th May2014|http://www.cninfo.com.cn/finalpage/2014-05-24/64059965.PDF|

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
||
|-|
|Proposal on Renewal ofAccountingFirm|

(2)、Information for thetemporaryshareholders’meeting duringthe report period
There is notemporaryshareholders’ meeting duringthe report period.
(3)、Request for convening temporaryshareholders’ meeting by priority shareholders owingrecovered votingright
□Available √ Not Available
3、Performance of independent directors during the report period
(1)、 Attendance of independent directors for the board of directors and theshareholders’ meeting
||||||||
|-|-|-|-|-|-|-|
|Attendance of independent directors for theboardof directors|||||||
|Name|Requiredattendancetime|Personalattendance|Communicationattendance|Authorizedattendance|Absence|Whether ornot to attendthe meetingspersonallyforsuccessivetwice|
|WangZhuquan|2|1|1|0|0|No.|
|Xiao Wei|4|3|1|0|0|No.|
|WangShigang|4|3|1|0|0|No.|
|Attendance time ofindependent directorsfor the shareholders’meeting||1|||||

Explanation for not personally attending the Board ofDirectors’ meetings for successive twice.
There are no independent directors absent of personally attending the Board of
Directors’meetings forsuccessive twice.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
(2)、Any objections fortheCompany’s projects fromtheindependent directors
Whether or not the independent directors raised any objections for theCompany’s projects.
□Yes √No.
During the report period, the independent directors did not raise any objections for theCompany’s projects.
(3)、Other explanations onindependentdirectors’ performance
The independentdirectors’propositions are accepted bytheCompany ornot
√ Yes□ No
Explanation onacceptance orrefusal ofthe independentdirectors’ propositions
Regarding the investment project involved in the industrial tourism, the independent director raised a suggestion‘Taking full advantage of existing production and management facilities and avoiding overlappinginvestment’ and the Company adopted this suggestion.
4、Performance of the special committees under the Board of Directors during thereport period
(1)、Summary report oftheBoardofDirectors’Audit Committee
(A) On March 18th , 2014, after the certified public accountants responsible for annual audits had introduced their preliminary opinions, the independent directors on behalf of the Audit Committee communicated with them and made written comments which read that “we communicated in detail with the certified public accountants responsible for auditing of theCompany’s 2013 Annual Report who expounded the main standards, main emphasis audited field, the problems and the matters necessary to adjust that were found during the auditing.We’ve noticed that the Company has adjusted the matters as the accountants suggested. On the basis of our communication with the accountants, the production and operation results that theCompany’s management reported to us as well as the progress of important events, we believe that we have no objection to theCompany’s 2013 Annual Financial Statement preliminarily examined by Deloitte Hua Yong Certified Public Accounts Co., Ltd. and the preliminary audit opinionsof that Services.”
(B) On 23rd April 2014, the Board ofDirectors’ Audit Committee deliberated and passed 2013 Annual Auditing Report issued by Deloitte Hua Yong Certified Public Accounts Co., Ltd., Proposal on 2013 Annual Profit Distribution, Proposal on
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
Appointment for Certified Public Accountants Firm, 2013 Annual Self Assessment Report onthe Company's Internal Control and2014Annual Internal Audit Plan.
All of committee members unanimously agree to submit the above proposals to theCompany’s 6th Session BoardofDirectors’4th Meeting fordeliberation.
The meetingreached thefollowing consensus:
1 The clean-opinion auditing report on theCompany’s 2013 Annual Financial Statement issued by Deloitte Hua Yong Certified Public Accounts Co., Ltd reflects theCompany’s financial condition, operating results and cash flow truly, objectively and correctly.
2 The profit distribution scheme that the Company formulated is relatively acceptable, taking theshareholders’ interest into account while paying attention to theCompany’s long-term development.
③ Considering the strict maintenance of objective and fair standpoint as well as the high audit quality and reasonable arrangement for audit progress during the process of theCompany’s 2013 annual financial audit and internal control audit taken by Deloitte Hua Yong Certified Public Accounts Co., Ltd, it is proposed that the Company will reappoint Deloitte Hua Yong Certified Public Accounts Co., Ltd as the 2014 annual auditor of the Company. The employment period is one year and the auditwill be taken from two aspects shown as follows.
On one hand, Deloitte will take the audit of 2014 annual financial report and issue a Financial Audit Report. On the other hand, Deloitte will take the audit of 2014 annual internal control audit andissue anInternal Control Audit Report.
The annual auditing fee for the above parts are CNY 1.9million, including travel expense and all service charges.
④ TheCompany’s 2013 Annual Self Assessment Report on the Company's Internal Control has truly and objectively mirrored out the present standing of theCompany’s internal control and can basically ensure the effective implementation of its policies and realization ofits strategic goals.
⑤ TheCompany’s 2014 Annual Internal Audit Plan is comparatively perfect and practicable, based on which theCompany’s Audit Department will conduct the 2014 annual internal audit.
(C) On 25th August 2014, the Board ofDirectors’ Audit Committee deliberated and passed 2014 Semiannual Report and 2014 Semiannual Profit Distribution. The meeting reached thefollowing consensus:
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
①TheCompany’s 2014 Semiannual Financial Statements reflected theCompany’s financial condition,operatingresults andcash flow truly,objectively and correctly.
②As the Company just realized 2013 Annual Profit Distribution Scheme in middle July, we propose neither to distribute profits for the first half of 2014 nor to increase theCompany’s capital stock with accumulated public fund. The net profit made in the first half of this year will be reserved and distributed at the end of the year. Our AuditingCommittee considers thesuggestion tobe reasonable.
③All of Committee members unanimously agree to submit the above proposals to theCompany’s 6th Session BoardofDirectors’6thMeeting for deliberation.
(2)、Summary report oftheBoardofDirectors’Emolument Committee
The Board ofDirectors’ Emolument Committee is responsible for assessment of the economic responsibilities of the directors and the senior managers who receive salaries from the Company and examination of the salary policy and scheme designed for theCompany’sdirectors and senior managers.
Propose onCompany’s 2013 Annual SeniorExecutive’s Performance Assessment Results and Performance Assessment Methods forCompany’s Senior Executive from 2014 to 2017 were deliberated and passed by the Board ofDirectors’ Emolument Committee on 23th April 2014, who thought that these two documents were in compliance with assessment methods stipulated in the Incentive Scheme for theCompany’s Senior Executive approved by theCompany’s 4th Session Board ofDirectors’ 20th Meeting. All committee members unanimously agree to submit the above proposals to theCompany’s 6th Session Board ofDirectors’ 4th Meeting for deliberation.
During the report period, the Board ofDirectors’ Emolument Committee also examined the 2013 annual payroll records of the directors and the senior managers who receive salaries from the Company. The committee believes that theCompany’s directors, supervisors and senior managers got paid completely in line with the processes of theCompany’s economic responsibility assessment system and the salaries the Company made public were inconformity withthe actuallypaidamount.
5、The work ofthe Boardof Supervisors
During the report period, whether the board of supervisors found any existence of risk for the Companyduringtheir oversight activities.
□Yes √No
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
During the report period, the board of supervisors has no objection during their oversight activities.
6、Relative to the controlling shareholder, independence and completeness of the Company onbusiness, personnel, assets, organization and finance
(1)、Personnel Arrangement: theCompany’s general manager, vice general managers and other senior officers, all of whom were paid by the Company did not hold any post in the controlling parties. The Company was entirely independent in personnel arrangement, conclusion and adjustment of labor contracts thanks to its sound and independent system forlabor, personal and salary management.
(2)、Assets: Tangible assets and Intangible assets including trademark, industrial property right and non-patent technologies were all clearly divided between the Company and the controlling shareholder, and all legal formalities were completed. The Company being a legal independent entity consistently conducted business activities legally and provided no guarantee in any form with its assets for its shareholders orindividuals’ liabilities or any other legal persons or natural persons. The Company has already transferred free the trademarks to the Company including‘‘黄金冰谷’’,‘‘爱斐堡’’,‘‘爱菲堡’’,‘‘爱斐’’ and‘‘AFIP’’ etc trademarks. However, due to some issues from the past, the Company permitted to use “Changyu” etc the intangible assets such as part of trademark ownership and patent still held by the controlling shareholders.
(3)、Finance: The Company has independent finance department, chief account and financial staff, and also complete, independent and standardized accounting system. The Company has also established its own bank accounts, duly and legally paying taxes, workers insurance fund. All financial individuals do not hold any concurrent posts in associated companies and are able to make financial decisions independently. The Company has its own audit department, which is especially responsible for the internal auditwork of the Company.
(4)、Offices: The Company has set up a sound organizational framework, inwhich the Board of Directors and Board of Supervisors operate independently, no superior and subordinate relationship exists between the functional departments of the controlling shareholder. The Company has its own independent production& business offices, all functional departments are independent to exercise their powers and carry out the productionandbusiness activities independently.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
(5)、Operations: the operations of the Company are independent of the controlling shareholder, the Company owns itself completely independent systems covering research and development, accounting, workforce and labor, quality control, raw materials purchase, production and sales, and is possessed of self-run capabilities, and has neither relationship with the controlling shareholder in terms of supply and sales byproxynor competition withthe other.
7、Situation for Horizontal Competition
□Available √ Not Available
8、Performance Evaluation and Incentive to Senior Management
The Company has already established a sound system for evaluation of achievement of senior management and the related incentive system which linked the reward with theCompany’s benefit and personal achievement. The Emolument Committee under Board of Directors assumed the responsibility of stipulating the policy and appraising the scheme for salaries and rewards. Based on theCompany’s annual production and business goals, this committee examined senior personals and also their responsible subsidiaries or departments according to their management achievement and index, and took these as a criteria of awards or penalties. During the report period, because of not finishing the annual business plan deliberated and passed in the Board ofDirectors’ meeting at the beginning of the year, the total salaries and rewards of the senior management willbe6.6% less thanlast year.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
X、Internal Control
1、Internal control construction
During the report period and as the requirement of General Criteria ofCompany’s Internal Control and its corresponding guidelines jointly issued by the Ministry of Finance and other four ministries, the Company confirms its strategic development target and internal control target. Based on the internal and external surroundings, through the comprehensive and systemic risk assessment in combination with characteristics of wine industry, the Company keeps perfecting and deepening internal control construction. The Company mainly formulates and perfects the rules and regulations about marketing, overseas acquisition as well as grape base construction and management. The Company also takes many measures to ensure the implementation of everyinternal control system.
Based on the relevant law and regulations, such as Corporation Law, Securities Law and Rules Governing the Listing of Stocks on Shenzhen Stock Exchange, the Company has already built an intact and effective internal control system covering the company and each critical business circulation, which is in accordance with the requirements of General Criteria ofCompany’s Internal Control and its corresponding guidelines. The built system provides essential theoretical foundation and institutional guarantee for the legal compliance of operating management, safety of assets, authenticity and integrity of Financial Report and relevant information as well as the accomplishment of strategic target.
2、The BoardofDirectors’statement onthe internal control responsibilities
It is the responsibility of the Board of Directors to establish, perfect and effectively execute the internal control, evaluate its efficiency and disclose truthfully the assessment report on internal control as requested byCompany’s internal control standard system. The board of supervisors should supervise the establishment and implementation of board of directors on the internal control. Managers should take in charge of organizing and leading the daily operation ofCompany’s internal control. The board ofdirectors，the board ofsupervisors，directors, supervisors& senior management of the Company collectively and individually accepted full responsibility for thetruthfulness，accuracy and completeness of the information contained in the report and confirm that to the best of their knowledge and belief there are no
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
unfaithful facts, significant omissions or misleading statements. The target of theCompany’s internal control is to reasonably guarantee the lawfulness and compliance on operation management, the safety of assets, the truthfulness and completeness of financial report and its related information, so as to improve business efficiency and result and promote the realization of development strategy. Due to the inherent limitations, internal control only can provide the reasonable guarantee for realizing the above mentioned targets. Besides, owing to the changed situation which could probably cause the irrelevancy of internal control or reduce the compliance for the control policy and formality, there is a certain risk to calculate the efficiency of the future internal controlaccording tothe assessment result of internal control.
3、Basis of establishing internal control forfinancial report
Basis of establishing internal control for financial report is in accordance with the rules of General Criteria ofCompany’s Internal Control with its corresponding guidelines and Internal Control Guideline of Listed Company on Shenzhen Stock Exchange.
4、Self-assessment report oninternal control
|||
|-|-|
|The specific circumstances for the significant defects of the internal control found during the reportperiodinthe internal control self assessment report.||
|Duringthe report period, thesignificant defects ofinternal control haven’t been found.||
|Disclosure date for the full text of theinternal controlself assessment report|28th April 2015|
|Disclosure index for the full text of theinternal controlself assessment report|www.cninfo.com.cn|

5、Internal control auditreport or authentication report
Internal control audit report issued by Deloitte Hua Yong certified public accountants Co.,Ltd.
|||
|-|-|
|Audit opinions ofthe internal control audit report||
|We believe that Yantai Changyu Pioneer Wine Co., Ltd. is in accordance with the rules of GeneralCriteria of Company’s Internal Control and other related rules, all significant aspects keep effectiveinternal controlinthefinancial report.||
|Disclosure date for the full text of theinternal controlauditreport|28th April 2015|

YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
|||
|-|-|
|Disclosure index for the full text of theinternal controlauditreport|Document name: 2014 Annual Internal Control ReportonSelf Assessment.Website address: www.cninfo.com.cn|

 Whether or not the certified public accountants issued a non-standard advice for the auditreport of internal control.
□Yes √No.
Whether the audit report of internal control issued by the certified public accountants is inconsistency with theself-assessment report ofthe boardofdirectors.
√ Yes □ No.
6、The establishment and implementation of responsibility ascertainment rules forthe significant errors inthe annual report
Accountability System for Significant Errors in the Annual Report of the Company has already been deliberated and passed by the 5th session of Board ofDirectors’ 4th meeting on 7th April, 2011 and also been in strict performance. During the report period, there are no big errors in 2013 Annual Report and 2014 Semi-annual Report issued and disclosed bytheCompany.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.XI、Financial Report
1、Audit Report
|||
|-|-|
|Type of auditopinion|Standard unqualified audit opinion|
|Date signedonaudit report|25thApril, 2015|
|Auditagency name|Deloitte Hua Yong certified public accountants co.,Ltd.(special general partnership)|
|Certified publicaccountant's name|XuZhaohui LiXu|

De Shi Bao (Shen) Zi(15) No. P1560 AUDITOR'S REPORT
TOTHE SHAREHOLDERS OF
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
We have auditedthe accompanying financial statements ofYantai Changyu Pioneer Wine Company Limited anditssubsidiaries which comprise the consolidated andcompany's balance sheets as at31December 2014,and theconsolidated andcompany's income statements, the consolidated andcompany's cash flowstatements and the consolidated andcompany's statements ofchanges in shareholders' equity for theyearthenended, and thenotes tothe financial statements.
1.Management' responsibility forthefinancial statements
Management of theCompany is responsible for thepreparation andfair presentation of these financial statements. This responsibility includes: (1)preparing the financial statements in accordance withAccounting Standards forBusiness Enterprises toachieve fairpresentation ofthe financial statements; (2) designing, implementing and maintaining internal control which is necessary toenable that thefinancial statements are free from material misstatement, whether due tofraud orerror.
2.Auditor's responsibility
Our responsibility is toexpress an audit opiniononthese financial statements based onour audit. We conducted our audit inaccordance with ChinaStandards onAuditing. China Standards on Auditingrequire that we comply with theCode ofEthics for Chinese Certified Public
Accountants andplanand perform the auditto obtain reasonable assurance about whether the financial statements are free from material misstatement.
Anaudit involves performing audit procedures toobtain audit evidence abouttheamounts and
disclosures inthefinancial statements. The procedures selected depend onthe auditor's
judgment,including theassessment of therisks ofmaterial misstatement of the financial
statements, whether due tofraud or error. In making thoseriskassessments, Certified Public
Accountants consider the internal controlrelevant tothe preparation and fairpresentation ofthe
financial statements inorder todesignauditprocedures that are appropriate inthe circumstances,
butnot forthepurpose ofexpressing an opiniononthe effectiveness ofthe internal control. An
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. auditalso includes evaluating the appropriateness ofaccounting policies usedand the
reasonableness of accountingestimates made bymanagement, as well as evaluating the overall presentation ofthe financial statements.
We believe that the auditevidence we have obtained is sufficient and appropriate toprovidea basis forouraudit opinion.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. AUDITOR'S REPORT
TOTHE 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 2014, and the consolidated and company's results of operations and cash flows for the yearthenended inaccordance with Accounting Standards for Business Enterprises.
Deloitte Touche Tohmatsu Chinese Certified Public Accountant Certified Public Accountants LLP Xu ZhaoHui (Signature and seal) Shanghai,China Li Xu (Signature andseal) 25April 2015
YantaiChangyuPioneerWineCo.Ltd.2013AnnualReport. CONSOLIDATED BALANCE SHEETS
YEAR ENDED 31DECEMBER 2014
ASSETS Notes 2014 2013 RMB RMB CURRENT ASSETS
Cash andbank balances VI-1 1,145,365,071 1,367,818,182 Notes receivable VI-2 138,315,319 79,702,753 Accounts receivable VI-3 145,672,411 177,109,516 Prepayments VI-4 8,073,786 45,997,863 Interest receivable VI-5 3,619,429 8,417,995 Other receivables VI-6 31,362,302 99,331,794 Inventories VI-7 2,087,376,398 2,121,117,437 Other current assets 29,662,076 -____________ ____________ Total current assets 3,589,446,792 3,899,495,540____________ ____________ NON-CURRENT ASSETS
Available-for-sale financial assets VI-8 - - Fixedassets VI-9 2,532,682,355 1,917,641,344 Constructioninprogress VI-10 1,700,466,500 1,423,654,530 Materials forconstruction offixed assets - 676,539 Bearer biological assets VI-11 151,723,241 101,794,515 Intangible assets VI-12 452,951,194 296,129,754 Goodwill VI-13 13,112,525 13,112,525 Long-term prepaidexpenses VI-14 201,911,605 165,521,803 Deferred taxassets VI-15 254,186,823 158,533,090 Other non-current assets VI-16 15,751,605 21,370,902____________ ____________ Total non-current assets 5,322,785,848 4,098,435,002____________ ____________ Total assets 8,912,232,640 7,997,930,542____________ ____________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. CONSOLIDATED BALANCE SHEETS
YEAR ENDED 31DECEMBER 2014-continued
LIABILITIES AND EQUITY Notes 2014 2013 RMB RMB CURRENT LIABILITIES
Short-term borrowings VI-17 300,000,000 243,170,674 Notes payable VI-18 10,000,000 5,765,694 Accounts payable VI-19 357,811,822 258,116,331 Receipts inadvance VI-20 215,127,598 188,651,254 Employee benefitspayable VI-21 158,948,592 130,720,235 Taxes payable VI-22 87,504,048 194,413,430 Interest payable 3,475,641 2,152,059 Deferred income VI-23 12,398,718 12,915,801 Other payables VI-24 469,804,317 497,301,630____________ ____________ Total current liabilities 1,615,070,736 1,533,207,108____________ ____________ NON-CURRENT LIABILITIES
Long-term borrowings VI-25 209,380,000 - Deferred income VI-23 76,024,992 83,611,041 Deferred taxliabilities VI-15 4,565,636 5,336,115 Other non-current liabilities VI-26 3,998,352 4,755,794____________ ____________ Total non-current liabilities 293,968,980 93,702,950____________ ____________ Total liabilities 1,909,039,716 1,626,910,058____________ ____________ EQUITY
Share capital VI-27 685,464,000 685,464,000 Capital reserve VI-28 563,139,042 563,139,042 Other comprehensive income VI-29 (2,803,271) - Surplus reserve VI-30 342,732,000 342,732,000 Retained earnings VI-31 5,251,920,374 4,616,944,663____________ ____________ Equityattributable to shareholders
ofthe Company 6,840,452,145 6,208,279,705 Non-controllinginterests 162,740,779 162,740,779____________ ____________ Total equity 7,003,192,924 6,371,020,484____________ ____________ Total liabilities and equity 8,912,232,640 7,997,930,542____________ ____________ The accompanying notes form an integral partof these financial statements.
The financial statements onpages 3to95were signed bythefollowing:
Legal Representative:_________________________________
Personin Charge ofthe Accounting Body:_________________
ChiefAccountant:____________________________________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. BALANCE SHEET OF THE COMPANY
YEAR ENDED 31DECEMBER 2014
ASSETS Notes 2014 2013 RMB RMB CURRENT ASSETS
Cash andbank XIV-1 496,138,263 602,444,243 Notes receivable XIV-2 98,158,251 32,594,381 Accounts receivable XIV-3 1,516,518 1,600,968 Prepayments XIV-4 1,710,787 24,824,672 Interest receivable XIV-5 3,580,811 8,417,995 Dividendreceivable XIV-6 402,596,884 752,595,884 Other receivables XIV-7 4,708,836,276 3,709,583,949 Inventories XIV-8 681,696,774 781,284,189 Other current assets 14,996,807 -____________ ____________ Total current assets 6,409,231,371 5,913,346,281____________ ____________ NON-CURRENT ASSETS
Available-for-sale financial assets VI-8 - - Long-term equity investments XIV-9 1,093,437,027 1,048,208,923 Fixedassets XIV-10 403,210,655 425,294,116 Constructioninprogress XIV-11 182,765 269,802 Bearer biological assets XIV-12 83,631,722 60,851,409 Intangible assets XIV-13 76,760,678 79,139,831 Deferred taxassets XIV-14 27,053,571 22,956,747____________ ____________ Total non-current assets 1,684,276,418 1,636,720,828____________ ____________ Total assets 8,093,507,789 7,550,067,109____________ ____________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. BALANCE SHEET OF THE COMPANY
YEAR ENDED 31DECEMBER 2014-continued
LIABILITIES AND EQUITY Notes 2014 2013 RMB RMB CURRENT LIABILITIES
Short-term borrowings VI-17 300,000,000 243,170,674 Accounts payable XIV-15 228,052,722 166,453,563 Employee benefitspayable XIV-16 70,233,251 66,416,387 Taxes payable XIV-17 18,205,124 37,578,670 Interest payable 3,475,641 2,152,059 Deferred income 3,017,898 2,559,227 Other payables XIV-18 1,030,604,819 1,612,596,521____________ ____________ Total current liabilities 1,653,589,455 2,130,927,101____________ ____________ NON-CURRENT LIABILITIES
Long-term borrowings VI-25 209,380,000 - Deferred income 22,747,915 20,095,300 Other non-current liabilities 1,895,828 2,180,162____________ ____________ Total non-current liabilities 234,023,743 22,275,462____________ ____________ Total liability 1,887,613,198 2,153,202,563____________ ____________ EQUITY
Share capital VI-27 685,464,000 685,464,000 Capital reserve XIV -19 557,222,454 557,222,454 Surplus reserve VI-30 342,732,000 342,732,000 Retained earnings 4,620,476,137 3,811,446,092____________ ____________ Total equity 6,205,894,591 5,396,864,546____________ ____________ Total liabilities and equity 8,093,507,789 7,550,067,109____________ ____________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. CONSOLIDATED INCOME STATEMENT
YEAR ENDED 31DECEMBER 2014
Notes 2014 2013 RMB RMB I.Revenue VI-32 4,156,727,525 4,320,948,572 Less: Costof sales VI-32 1,372,444,612 1,357,897,999 Taxes andsurcharges VI-33 269,446,774 236,394,164 Selling expenses VI-34 1,006,009,364 1,140,836,150 Administrative expenses VI-35 256,980,018 245,498,950 Impairment loss ofassets VI-36 1,995,877 2,149,438 Financial expenses VI-37 (17,256,721) (18,700,357)____________ ____________ II.Operating profit 1,267,107,601 1,356,872,228 Add: Non-operating income VI-38 43,996,405 42,108,726 Including: gains from disposal
ofnon-current assets 121,113 271,989
Less: Non-operating expenses VI-39 8,370,249 1,874,223 Including: losses from disposal
ofnon-current assets 5,207,658 678,016
____________ ____________ III.Profit before tax 1,302,733,757 1,397,106,731 Less: Income tax VI-40 325,026,046 348,920,804____________ ____________ IV. Profit fortheyear and attributable
toshareholders ofthe Company 977,707,711 1,048,185,927____________ ____________ V.Other comprehensive income (post-tax)
Other comprehensive income
tobereclassified to profitandloss
Foreigncurrency statement
translation difference (2,803,271) -____________ ____________ Other comprehensive income (post-tax) (2,803,271) -____________ ____________ VI. Totalcomprehensive income
attributable toowners of theCompany 974,904,440 1,048,185,927____________ ____________ VII.Earnings pershare
(I)Basic earnings per share VI-41 1.43 1.53____________ ____________ (II) Diluted earnings per share VI-41 N/A N/A____________ ____________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. INCOME STATEMENT OF THE COMPANY
YEAR ENDED 31DECEMBER 2014
Notes 2014 2013 RMB RMB I.Revenue XIV -20 1,647,825,652 1,730,694,774 Less: Costof sales XIV -20 1,406,987,744 1,473,772,762 Taxes andsurcharges XIV -21 157,026,901 135,046,585 Administrative expenses XIV -22 112,051,545 109,664,952 Impairment loss/(reverse) ofassets XIV -23 (192,908) 4,392,429 Financial expenses XIV -24 (11,053,553) (25,948,141) Investment income XIV -25 1,164,089,666 1,126,019,415____________ ____________ II.Operating Profit 1,147,095,589 1,159,785,602 Add: Non-operating income 6,371,028 4,266,595 Including: gains from disposal
ofnon-current assets 105,236 1,374
Less: Non-operating expenses 5,801,396 1,019,467 Including: losses from disposal
ofnon-current assets 5,181,727 663,565
____________ ____________ III.Profit before tax 1,147,665,221 1,163,032,730 Less: Income tax (4,096,824) 8,345,452____________ ____________ IV. Profit fortheyear
andtotal comprehensive income 1,151,762,045 1,154,687,278____________ ____________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31DECEMBER 2014
Notes 2014 2013 RMB RMB CASHFLOWSFROMOPERATINGACTIVITIES
Cashreceiptsfromthesaleofgoods
andtherenderingofservices 4,787,289,147 4,766,532,032 Receiptsoftaxrefunds 18,259,690 22,163,624 Othercashreceiptsrelatingtooperatingactivities VI-42(1) ___2_4_,5_4_3_,5_4_7 ___4_7_,9_6_0_,7_1_1 Sub-totalofcashinflowsfromoperatingactivities _4_,8_3_0_,0_9_2_,3_8_4 _4_,8_3_6_,6_5_6_,3_6_7 Cashpaymentsforgoodspurchasedandservicesreceived (1,255,567,298) (1,293,320,336) Cashpaymentstoandonbehalfofemployees (358,415,330) (379,880,613) Paymentofvarioustypesoftaxes (1,301,077,872) (1,368,825,802) Othercashpaymentsrelatingtooperatingactivities VI-42(2) _(_84_4_,_94_8_,5_8_8_) (1_,_05_9_,_55_5_,3_0_9_) Sub-totalofcashoutflowsfromoperatingactivities (3_,_76_0_,_00_9_,0_8_8_) (4_,_10_1_,_58_2_,0_6_0_) Netcashflowsfromoperatingactivities VI-43(1) _1_,0_7_0_,0_8_3_,2_9_6 __7_3_5_,0_7_4_,3_0_7 CASHFLOWSFROMINVESTINGACTIVITIES
Decreaseintermdepositsover3months 307,694,951 1,292,524,719 Proceedsfromreturnoninvestments 24,230,453 33,050,471 Proceedsfromdisposaloffixedassets ____1_,1_8_1_,8_9_5 ____1_,0_2_6_,4_1_1 Sub-totalofcashinflowsfrominvestingactivities __3_3_3_,1_0_7_,2_9_9 _1_,3_2_6_,6_0_1_,6_0_1 Cashpaidforacquisitionofproperties,plantsandequipment,
intangibleassetsandotherlong-termassets (1,238,293,585) (962,180,456) Cashpaidfortermdepositsover3months (77,547,483) (907,392,728) Othercashpaidforthepurchaseofnon-controllinginterest _______-___ __(1_6_,_88_3_,8_6_4_) Sub-totalofcashoutflowsfrominvestingactivities (1_,_31_5_,_84_1_,0_6_8_) (1_,_88_6_,_45_7_,0_4_8_) Netcashflowsfrominvestingactivities _(_98_2_,_73_3_,7_6_9_) _(_55_9_,_85_5_,4_4_7_) CASHFLOWSFROMFINANCINGACTIVITIES
CashreceivedfromNon-controllinginterest - 16,359,770 Cashreceiptsfromborrowings 515,368,080 243,170,674 Othercashreceivedfromfinancingactivities __1_2_9_,1_8_2_,2_9_2 _______-___ Sub-totalofcashinflowsfromfinancingactivities __6_4_4_,5_5_0_,3_7_2 __2_5_9_,5_3_0_,4_4_4 Cashpaidfordividends,profitsandinterests (353,707,371) (764,539,398) Cashpaidforborrowings (242,219,439)
Cashpaidfromotherfinancingactivities VI-42(3) _(_12_5_,_00_0_,0_0_0_) _(_27_5_,_94_5_,0_0_0_) Sub-totalofcashoutflowsfromfinancingactivities _(_72_0_,_92_6_,8_1_0_) (1_,_04_0_,_48_4_,3_9_8_) Netcashflowsfromfinancingactivities __(7_6_,_37_6_,4_3_8_) _(_78_0_,_95_3_,9_5_4_) Effectofforeignexchangeratechanges
oncashandcashEquivalents (7,059,747) - NETINCREASEOFCASHANDCASHEQUIVALENTS 3,913,342 (605,735,094) ADD:CASHANDCASHEQUIVALENTS
ATBEGINNINGOFTHEYEAR VI-43(2) __9_5_6_,5_5_8_,9_3_2 _1_,5_6_2_,2_9_4_,0_2_6 CASHANDCASHEQUIVALENTSATENDOFTHEYEAR VI-43(2) 960,472,274 956,558,932__________ __________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. CASH FLOW STATEMENT OF THE COMPANY
YEAR ENDED 31DECEMBER 2014
Notes 2014 2013 RMB RMB CASHFLOWSFROMOPERATINGACTIVITIES
Cashreceiptsfromthesaleofgoods
andtherenderingofservices 1,827,219,301 1,993,219,656 Othercashreceiptsrelatingtooperatingactivities ___1_2_,1_6_8_,2_0_5 ____9_,1_9_4_,8_9_1 Sub-totalofcashinflowsfromoperatingactivities _1_,8_3_9_,3_8_7_,5_0_6 _2_,0_0_2_,4_1_4_,5_4_7 Cashpaymentsforgoodspurchasedandservicesreceived (1,302,377,275) (1,385,474,499) Cashpaymentstoandonbehalfofemployees (151,732,255) (162,425,829) Cashpaymentofvarioustypesoftaxes (257,237,660) (206,446,458) Othercashpaymentrelatingtooperatingactivities (1_,_59_4_,_02_6_,3_4_1_) (1_,_45_9_,_40_7_,0_1_6_) Sub-totalofcashoutflowsfromoperatingactivities (3_,_30_5_,_37_3_,5_3_1_) (3_,_21_3_,_75_3_,8_0_2_) Netcashflowsfromoperatingactivities XIV-26 (1_,_46_5_,_98_6_,0_2_5_) (1_,_21_1_,_33_9_,2_5_5_) CASHFLOWSFROMINVESTINGACTIVITIES
Cashreceiptsfromdepositsover3months 295,694,951 1,292,524,719 Cashreceiptsfromreturnoninvestments 1,530,610,338 1,395,495,286 Cashreceiptsfromdisposalsoffixedassets _____5_5_0_,8_2_4 _______4_,0_0_0 Sub-totalofcashinflowsfrominvestingactivities _1_,8_2_6_,8_5_6_,1_1_3 _2_,6_8_8_,0_2_4_,0_0_5 Cashpaymentsforacquisitionoffixedassets,
intangibleassetsandotherlong-termassets (52,003,088) (131,396,826) Cashpaymentsfortermdepositsover3months (53,547,483) (907,392,728) Cashpaymentsforsubsidiaryinvestment __(3_7_,_98_0_,5_0_0_) __(2_9_,_98_8_,5_3_0_) Sub-totalofcashoutflowsfrominvestingactivities _(_14_3_,_53_1_,0_7_1_) (1_,_06_8_,_77_8_,0_8_4_) Netcashflowsfrominvestingactivities _1_,6_8_3_,3_2_5_,0_4_2 _1_,6_1_9_,2_4_5_,9_2_1 CASHFLOWSFROMFINANCINGACTIVITIES
Cashreceiptsfromborrowings 515,368,080 243,170,674 Othercashreceivedfromfinancingactivities __1_2_9_,1_8_2_,2_9_2 _______-___ Cashinflowsfromfinancingactivities __6_4_4_,5_5_0_,3_7_2 __2_4_3_,1_7_0_,6_7_4 Cashpaidfordividends,profitsandinterests (351,636,158) (754,010,400) Cashpaidforborrowings (242,219,439) - Cashpaidfromotherfinancingactivities _(_12_5_,_00_0_,0_0_0_) _(_12_5_,_00_0_,0_0_0_) Cashoutflowsfromfinancingactivities _(_71_8_,_85_5_,5_9_7_) _(_87_9_,_01_0_,4_0_0_) Netcashflowsfromfinancingactivities __(7_4_,_30_5_,2_2_5_) _(_63_5_,_83_9_,7_2_6_) Effectofforeignexchangeratechanges
oncashandcashEquivalents (6,939,315) (635,839,726) INCREASE/(DECREASE)OFCASH
ANDCASHEQUIVALENTS 136,094,477 (227,933,060) ADD:CASHANDCASHEQUIVALENTS
ATBEGINNINGOFTHEYEAR XIV-27 __1_9_7_,1_5_0_,9_8_9 __4_2_5_,0_8_4_,0_4_9 CASHANDCASHEQUIVALENTSATENDOFTHEYEAR XIV-27 333,245,466 197,150,989__________ __________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. CONSOLIDATED SATATEMENT OF CHANGES INEQUITY
YEAR ENDED 31DECEMBER 2014
2014
AttributabletoshareholdersoftheCompany
Issued Capital Othercomprehensive Surplus Retained Non-controlling
capital surplus income reserve earnings interests Total RMB RMB RMB RMB RMB RMB RMB I.Openingbalance
ofthecurrentyear __68_5,_46_4,_00_0 __56_3,_13_9,_04_2 _____-_____34_2,_73_2,_00_0__4,_61_6,_94_4,_66_3__16_2,_74_0,_77_9 __6,_37_1,_02_0,_48_4 II.Changesfortheyear
(I)Totalcomprehensiveincome - - (2,803,271) - 977,707,711 - 974,904,440 (II)Profitdistribution
Distributionsto
shareholders(VI-31)_____-__ _____-__ _____-________-____(3_42_,7_32_,0_00_)_____-__ __(3_42_,7_32_,0_00_) III.Closingbalanceof
thecurrentyear __68_5,_46_4,_00_0 __56_3,_13_9,_04_2 __(2_,8_03_,2_71_)___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 2013
AttributabletoshareholdersoftheCompany
Issued Capital Othercomprehensive Surplus Retained Non-controlling
capital surplus income reserve earnings interests Total RMB RMB RMB RMB RMB RMB RMB I.Openingbalance
ofthecurrentyear __68_5,_46_4,_00_0 __56_2,_13_9,_04_2 ___-__ ___34_2,_73_2,_00_0__4,_32_2,_76_9,_13_6__14_6,_38_1,_00_9 __6,_05_9,_48_5,_18_7 II.Changesfortheyear
(I)Totalcomprehensiveincome - - - - 1,048,185,927 - 1,048,185,927 (II)Shareholders'injection
Injectionofnon-controlling
interest - - - - - 16,359,770 16,359,770 (III)Profitdistribution
Distributionsto
shareholders(VI-31) - - - - (754,010,400) - (754,010,400) (IV)Others(NotesVI-28) _____-__ ___1,_00_0,_00_0 ___-__ ______-________-_______-__ ____1,_00_0,_00_0 III.Closingbalance
ofthecurrentyear __68_5,_46_4,_00_0 __56_3,_13_9,_04_2 ___-__ ___34_2,_73_2,_00_0__4,_61_6,_94_4,_66_3__16_2,_74_0,_77_9 __6,_37_1,_02_0,_48_4
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. STATEMENT OF CHANGES IN EQUITY OFTHE COMPANY
YEAR ENDED 31DECEMBER 2014
2014
Issuedcapital Capitalreserve Surplusreserve Retainedearnings Total RMB RMB RMB RMB RMB I.Openingbalance
ofthecurrentyear _6_85_,_46_4_,0_0_0 _5_57_,_22_2_,4_5_4 _3_4_2,_73_2_,0_0_0 _3_,8_11_,_44_6_,0_9_2 _5_,3_96_,_86_4_,5_4_6 II.Changesfortheyear
(I)Totalcomprehensiveincome - - - 1,151,762,045 1,151,762,045 (II)Profitdistribution
Distributionstoshareholders(VI-31)______-__ ______-__ ______-__ _(3_4_2_,7_3_2,_00_0_) _(_34_2_,7_3_2,_0_00_) III. Closingbalance
ofthecurrentyear _6_85_,_46_4_,0_0_0 _5_57_,_22_2_,4_5_4 _3_4_2,_73_2_,0_0_0 4_,6_2_0,_4_76_,1_3_7
_
_6_,2_05_,_89_4_,5_9_1 2013
Issuedcapital Capitalreserve Surplusreserve Retainedearnings Total RMB RMB RMB RMB RMB I.Openingbalance
ofthecurrentyear _6_85_,_46_4_,0_0_0 _5_57_,_22_2_,4_5_4 _3_4_2,_73_2_,0_0_0 _3_,4_10_,_76_9_,2_1_4 _4_,9_96_,_18_7_,6_6_8 II.Changesfortheyear
(I)Totalcomprehensiveincome - - - 1,154,687,278 1,154,687,278 (II)Profitdistribution
Distributionstoshareholders(VI-31)______-__ ______-__ ______-__ _(7_5_4_,0_1_0,_40_0_) _(_75_4_,0_1_0,_4_00_) III. Closingbalance
ofthecurrentyear _6_85_,_46_4_,0_0_0 _5_57_,_22_2_,4_5_4 _3_4_2,_73_2_,0_0_0 _3_,8_11_,_44_6_,0_9_2 _5_,3_96_,_86_4_,5_4_6
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31DECEMBER 2014
I. CORPORATE INFORMATION
Yantai Changyu Pioneer Wine Co., Ltd. (the "Company") was incorporated as a jointstock limited company in accordance with theCompany Law ofthe People's Republic of China (the "PRC") ina reorganization carried outbyYantai ChangyuGroup Co., Ltd. ("Changyu Group Company"), inwhich Changyu GroupCompany injectedcertain assets andliabilities inrelation to thebrandy,wine, and sparkling wine production andsales businesses totheCompany. The Company and its subsidiaries (the "Group") are principally engaged inthe productionandsales of wine,brandy,sparkling wine. Registration place ofthe Company isYantai, Shandong. Headquarter ofthe Company is located at No. 56Da Ma Lu,Zhifu District, Yantai, Shandong, PRC.
As at 31December 2014,the total shares issued bythe Company amounts to685,464,000shares. Please refer toNotes VI-27indetail.
The holdingcompany of the Group is Changyu GroupCompany, which isjointly controlled by Yantai SASAC, ILLVA Saronno Investment Italy, International Finance Corporation andYantai Yuhua Investment andDevelopment Company Limited.
The financial statements have beenauthorized bythe boardof directors on25April 2015. According totheCompany's articles ofassociation, the financial statements will be reviewed by shareholders onthe shareholder's meeting.
Forconsolidation scope ofthe year, please refer toNotes VIII"Equity inother entities" indetail. Fordetail ofchanges inconsolidation scope ofthe year, please refer toNotes VII "Change in consolidation scope".
II. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
1. Basis of preparation
The Group hasadopted the AccountingStandards for Business Enterprises ("ASBE") issued by theMinistry ofFinance ("MoF") (also includingthe 2014new issued andrevised accounting standards). Inaddition,the Group has disclosed relevant financial information inaccordance withInformation Disclosure andPresentation Rules for Companies Offering Securities to the Public No. 15- General ProvisionsonFinancial Reporting (Revised in 2014).
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. II. BASIS OF PREPARATION OF FINANCIAL STATEMENTS - continued
2. Basis of accounting and principle ofmeasurement
The Group hasadopted the accrual basis ofaccounting. The Group adopts thehistorical cost as theprinciple of measurement inthe financial statements. Where assets are impaired, provisions forasset impairment are made inaccordance withrelevant requirements.
Underthehistorical cost measurement, anasset is measured at the fair valueofconsideration paid incash andcash equivalents at thedate ofthepurchase. Liability is measured at the valueof asset received throughtaking current obligation, the contract valuefor taking current obligation,or the cash andcash equivalents valueestimated for repaying debt in daily business activity.
Fair value isthe price that would be received tosell anasset or paidtotransfer aliabilityinan orderlytransaction between market participants atthe measurement date, regardless ofwhether thatprice is directly observable or estimated using another valuation technique. Fair valuefor measurement and/or disclosure purposes inthese consolidated financial statements isdetermined onsucha basis.
Fair value measurements are categorised intoLevel 1,2or 3based onthe degree to whichthe inputstothefair valuemeasurements are observable and the significance ofthe inputstothe fair valuemeasurement initsentirety, which are described as follows:
1) Level 1inputsare quotedprices (unadjusted)in active markets foridentical assets or liabilities that theentitycan access at the measurement date;
2) Level 2inputsare inputs, other than quoted prices included within Level 1,that are observable fortheasset orliability, either directly orindirectly; and
3) Level 3inputsare unobservable inputsfor the asset or liability.
3. Going concern
As at 31December 2014,the Groupevaluated the profitability ability intheforeseeable 12 monthsand did notnotice any event or circumstance that would constitute significant doubton goingconcern abilityof theGroup. Therefore, thefinancial statements have beenprepared ona goingconcern basis.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. III. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
1. Declaration for implementing CAS
The financial statements are prepared inaccordance withCAS, which showing a trueand fair viewof thefinancial positionon31December 2014, financial performance andcash flow in2014 ofthe Companyand the Group.
2. Accountingyear
The accountingyear ofthe Group is from 1January to31December ofeach calendar year. 3. Business cycle
Business cycle refers tothe periodfrom purchasing assets tobe processed to receiving cash or cash equivalents bytheCompany. The business cycle of theCompany is 12months.
4. Reportingcurrency
Renminbi("RMB") is the currency ofthe primary economic environment in whichthe Company andits domestic subsidiaries operate. Therefore, theCompany and its domestic subsidiaries choose RMB as their functional currency. The Company's foreignsubsidiary chooses Currency Euroas itsfunctional currency onthebasis of theprimary economic environment inwhich it operates. The Groupadopts RMB toprepare itsfinancial statements.
5. Business combination
5.1Business combinations notinvolving enterprises under common controlandgoodwill Abusiness combination notinvolvingenterprises under common control is abusiness
combinationin whichallof thecombining enterprises are notultimately controlled bythe same party orparties before and after thecombination.
The costofcombination is the aggregate of thefair values, at the acquisition date,ofthe assets given,liabilities incurred or assumed, andequitysecurities issued bytheacquirer inexchange for control ofthe acquiree. The intermediary expenses incurred bythe acquirer inrespect of auditing,legalservices, valuation and consultancy services, etc.and otherassociated
administrative expenses attributable tothe business combination are recognised in profitor loss whenthey are incurred.
Qualified identifiable assets, liabilities andcontingentliabilities obtained byacquirer inthe acquisition are measured using fairvalue at theacquisition date.
The costofcombination exceeds the acquirer's interest inthe fair valueof the acquiree's identifiable net assets, the difference istreated as anasset and recognised as goodwill, whichis measured at cost oninitial recognition.
Goodwill arising on abusiness combination is measured at costless accumulated impairment losses, and is presented separately inthe consolidated financial statements. Itis testedfor impairment at least at the end of each year.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. III. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -continued
6. Preparation ofconsolidated financial statements
6.1Preparation ofconsolidated financial statements
The scope ofconsolidation intheconsolidated financial statements isdetermined onthe basis of control.Control is thepower togovern thefinancial andoperatingpolicies ofan enterprise soas toobtain benefits from its operating activities. The Group will reevaluate if changes in relevant facts and circumstances results inchanges inrelevant factors involved in theabove definitionof control.
Consolidation ofsubsidiary starts from the control onthe subsidiary bytheGroup andends atthe loss ofcontrol onthesubsidiary bytheGroup.
Fora subsidiary disposed of bytheGroup, the operating results and cash flows before the dateof disposal (the datewhen control is lost) are included inthe consolidated income statement and consolidated statement ofcash flows, as appropriate.
Fora subsidiary acquired througha business combination not involvingenterprises under commoncontrol, theoperating results and cash flows from theacquisition date (the datewhen control isobtained) areincluded inthe consolidated income statement and consolidated statement ofcash flows, as appropriate, and noadjustment ismade tothe openingbalances andcomparative figures intheconsolidated financial statements.
The significant accounting policies andaccounting periodsadopted bythe subsidiaries are determined based onthe uniformaccounting policies and accounting periods set out bythe Company.
All significant intra-group balances and transactions are eliminated onconsolidation.
The portionof subsidiaries' equity that isnot attributable tothe Company is treated as
non-controllinginterests andpresented as "non-controlling interests" inthe consolidated balance sheet within shareholders' equity. The portion ofnet profits or losses of subsidiaries forthe period attributable tonon-controlling interests is presented as "non-controlling interests" inthe consolidated income statement belowthenet profit line item.
When the amount oflossfor the periodattributable tothenon-controlling shareholders of a subsidiary exceeds thenon-controllingshareholders' portionoftheopeningbalance of owners' equityof the subsidiary, the excess amount are stillallocated against non-controlling interests. 7. Cash andcashequivalents
Cash comprises cash on hand anddeposits that can bereadily withdrawn ondemand. Cash equivalents arethe Group's short-term, highlyliquid investments that arereadily convertible to known amounts ofcash and which are subject to an insignificant risk ofchanges invalue.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. III. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -continued
8. Translation oftransactions and financial statements denominated inforeign currencies
8.1Transactions denominated in foreigncurrencies
Aforeign currency transaction is recorded, oninitialrecognition, byapplying thespot exchange rateonthedate ofthe transaction.
At thebalance sheet date,foreign currency monetary items are translated intoRMB using thespot exchange rates at the balance sheet date. Exchange differences arising from thedifferences between thespotexchange rates prevailing at the balance sheet date andthose oninitial recognition orat the previousbalance sheet dateare recognised inprofitor loss for theperiod, except that (1)exchange differences related toa specific-purpose borrowing denominated in foreigncurrency that qualifyfor capitalisation are capitalised aspart of thecost ofthequalifying assetduring thecapitalisation period; (2) exchange differences related tohedginginstruments for thepurpose ofhedgingagainst foreign currency risksare accounted for using hedgeaccounting; (3)exchange differences arising fromavailable-for-sale non-monetary items denominated in foreigncurrencies andchanges inthe carrying amounts ofavailable-for-sale monetary items are recognised as othercomprehensive income and included incapital reserve.
Foreigncurrency non-monetary items measured at historical costare translated totheamounts in functional currency atthespot exchange rates onthedates of the transactions and theamounts in functional currency remain unchanged. Foreigncurrency non-monetary items measured atfair valueare re-translated at thespotexchange rate onthe date thefair value isdetermined. Difference between there-translated functional currency amount andthe original functional currency amount is treated aschanges infair value(including changes ofexchange rate) and is recognised inprofit andloss oras other comprehensive income included incapital reserve. 8.2Translation offinancial statements denominated inforeign currencies
Forthe purpose of preparing the consolidated financial statements, financial statements ofa foreignoperation are translated from the foreign currency intoRMB usingthe following method: assets and liabilities onthebalance sheet aretranslated at the spotexchangerate prevailing at the balance sheet date; shareholders' equity items except for retained earnings are translated at the spotexchange rates at thedates onwhich such items arose; all items intheincome statement as well as items reflecting thedistribution ofprofits aretranslated at the spotexchange rates onthe dates ofthe transactions; the opening balance ofretained earnings isthe translated closingbalance ofthe previousyear's retained earnings; the closing balance ofretained earnings iscalculated and presented onthebasis of each translated income statement andprofit distribution item. The difference between the translated assets andthe aggregate of liabilities and shareholders' equity items is separately presented as theexchange differences arising ontranslation offinancial statements denominated inforeign currencies ofothercomprehensive income under the shareholders' equity inthe balance sheet.
Cash flows arisingfrom a transaction inforeign currency and thecash flows of aforeign subsidiary are translated at thespot exchange rate onthedate ofthecash flows. The effect of exchange ratechanges oncash andcash equivalents is regarded asa reconciling item and presented separately inthe cash flowstatement as "effect of exchange ratechanges oncash and cash equivalents".
The openingbalances and the comparative figuresof previous year arepresented atthe translated
amounts inthe previous year's financial statements.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. III. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -continued
9. Financial instruments
Financial assets andfinancial liabilities are recognised when the Group becomes a party tothe contractual provisions ofthe instrument. Financial assets and financial liabilities are initially measured at fair value. Forother financial assets and financial liabilities, transaction costs are includedintheir initial recognised amounts.
9.1Effective interest method
The effective interestmethodis a method ofcalculating the amortised cost of afinancial assetor a financial liability (ora group offinancial assets orfinancial liabilities) andof allocating the interestincome orinterest expense over the relevant period, usingthe effective interest rate. The effective interest rate is therate that exactly discounts estimated future cash flows throughthe expected life ofthe financial asset orfinancial liabilityor, where appropriate, ashorter period to thenetcarrying amount of thefinancial asset or financial liability.
When calculating the effective interest rate, the Group estimates futurecash flows considering all contractual terms ofthefinancial asset orfinancial liability (withoutconsidering futurecredit losses), andalso considers all fees paid orreceived between the parties to thecontract givingrise tothefinancial asset and financial liabilitythatare an integral part of theeffective interest rate, transaction costs, and premiums ordiscounts, etc.
9.2Classification, recognition andmeasurement of financial assets
Oninitial recognition, the Group's financial assets are classified intoone ofthe four categories, includingfinancial assets at fairvalue throughprofit orloss, held-to-maturity investments, loans andreceivables, and available-for-sale financial assets. All regular way purchases orsales of financial assets are recognised and derecognised onatrade date basis. Financial assets ofthe Group are loans and receivables andavailable-for-sale financial assets.
9.2.1Loansandreceivables
Loansand receivables are non-derivative financial assets withfixed ordeterminable payments thatare not quotedinanactive market. Financial assets classified asloans andreceivables by theGroup includecash andbank, notesreceivable, accounts receivable, interest receivable, dividends receivable, andotherreceivables.
Loansand receivables are subsequently measured at amortised cost using theeffective interest method. Gain or loss arising fromderecognition, impairment oramortisation is recognised in profitor loss.
9.2.2Available-for-sale financial assets
Available-for-sale financial assets include non-derivative financial assets that are designated on initial recognition asavailable forsale, andfinancial assets that are not classified as financial assets at fairvalue through profit orloss, loansand receivables orheld-to-maturity investments. For investments in equity instruments that do not have a quoted market price in an active market and whosefairvaluecannotbereliablymeasured,theyaremeasuredatcost.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. III. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -continued
9. Financial instruments -continued
9.3Impairment offinancial assets
The Group assesses at each balance sheet date the carrying amounts offinancial assets otherthan those at fairvalue throughprofitor loss. Ifthere is objective evidence that a financial asset is impaired, theGroup determines the amount ofanyimpairment loss. Objective evidence that a financial asset is impaired is evidence that, arising fromone or more events that occurred after the initial recognition ofthe asset, the estimated future cash flows of the financial asset, which can be reliably measured, havebeen affected.
Objective evidence that a financial asset isimpaired includes thefollowingobservable events: (1) Significant financial difficulty ofthe issuer or obligor;
(2) Abreach ofcontract bythe borrower, such asa default ordelinquency ininterest or principal payments;
(3) The Group, for economic orlegal reasons relating totheborrower's financial difficulty, grantinga concession tothe borrower;
(4) Itbecoming probable that theborrower willenter bankruptcy orother financial
reorganisations;
(5) The disappearance of anactive market forthat financial asset because offinancial difficulties ofthe issuer;
(6) Uponanoverall assessment ofa groupof financial assets, observable data indicates that thereis a measurable decrease intheestimated futurecash flows from the groupof financial assets since the initial recognition of those assets, although thedecrease cannot yetbe identified with theindividual financial assets inthe group. Such observable data includes:
- Adverse changes inthepaymentstatus of borrower inthe groupof assets;
- Economic conditionsinthecountry or region oftheborrower which maylead toa failure topay thegroupofassets;
(7) Significant adverse changes inthe technological, market, economic orlegal environment in whichthe issuer operates, indicating that the cost ofthe investment intheequity instrument maynot berecovered bythe investor;
(8) Asignificant or prolonged decline inthefair valueof an investment inan equity instrument below its cost;
(9) Other objective evidence indicating there is animpairment ofa financial asset.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. III. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -continued
9. Financial instruments -continued
9.3Impairment offinancial assets - continued
-Impairment of financial assets measured atamortised cost
Iffinancial assets carried atamortised cost are impaired, thecarrying amounts ofthefinancial assets are reduced tothepresent valueof estimated futurecash flows (excluding future credit losses that have not beenincurred) discounted at the financial asset's original effective interest rate. The amount of reduction is recognised asan impairment loss inprofit or loss. If, subsequenttotherecognition of animpairment lossonfinancial assets carried atamortised cost, thereis objective evidence ofa recovery invalue of the financial assets which canbe related objectivelytoan event occurring after the impairment is recognised, thepreviously recognised impairment loss is reversed. However, the reversal is made totheextent that thecarrying amountof the financial asset atthe date theimpairment is reversed does not exceed whatthe amortisedcost would havebeen hadtheimpairment notbeenrecognised.
Fora financial asset that is individually significant, the Group assesses the asset individually for impairment. Fora financial asset that is notindividually significant, the Group assesses the asset individuallyforimpairment orincludes the asset ina groupof financial assets withsimilar credit risk characteristics and collectively assesses themforimpairment. IftheGroup determines that noobjective evidence of impairment exists for anindividually assessed financial asset (whether significant or not),itincludes theasset ina groupof financial assets withsimilar credit risk characteristics and collectively reassesses them forimpairment. Assets for which animpairment loss isindividually recognised are notincluded ina collective assessment ofimpairment. -Impairment of available for sale assets measured atcost
Ifan impairment loss has beenincurred onaninvestment inunquoted equity instrument (without aquotedprice inan active market) whose fair valuecannot be reliably measured, orona derivative financial asset that is linked toandmust be settled bydelivery of suchan unquoted equityinstrument, thecarrying amount ofthe financial asset isreduced tothe present value of estimated futurecash flows discounted atthecurrent market rate of returnfor a similar financial asset. The amount of reduction isrecognised as an impairment lossin profitor loss. The impairment loss onsuch financial asset is not reversed once itis recognised.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. III. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -continued
9. Financial instruments -continued
9.4Transfer offinancial assets
The Group derecognises a financial asset ifone ofthefollowing conditionsis satisfied: (1)the contractual rightstothecash flows from the financial asset expire; or (2) thefinancial asset has beentransferred and substantially allthe risks andrewards ofownership ofthe financial asset is transferred tothe transferee; or (3)although thefinancial asset hasbeen transferred, the Group neither transfers nor retains substantially all therisks and rewards of ownershipofthe financial assetbut has notretained control ofthe financial asset.
Fora transfer ofa financial asset inits entirety that satisfies the derecognition criteria, the difference between (1)the carrying amount of the financial asset transferred; and (2)the sum of theconsideration received from the transfer and any cumulative gainorloss that has been recognised inother comprehensive income, is recognised inprofit orloss.
9.5Classification, recognition andmeasurement of financial liabilities
Debtand equity instruments issued bythe Group are classified intofinancial liabilities or equity onthebasis of thesubstance ofthecontractual arrangements anddefinitions of financial liability andequityinstrument.
Oninitial recognition, financial liabilities areclassified intofinancial liabilities atfair value throughprofit orloss andotherfinancial liabilities. The financial liabilities ingroup areother financial liabilities, includingshort-term borrowings,notes payables, account payables, interest payables, other payables andlong-term borrowings etc.
9.5.1Other financial liabilities
Other financial liabilities are subsequently measured at amortised cost usingthe effective interest method,with gainor loss arising from derecognition or amortisation recognised inprofit orloss. 9.6Derecognition of financial liabilities
The Group derecognises a financial liability (orpart of it)onlywhen the underlyingpresent obligation (orpart of it)is discharged. Anagreement between the Group(anexisting borrower) andan existing lender toreplace the original financial liability with a newfinancial liability with substantially different terms is accounted for as an extinguishment of theoriginal financial liabilityand therecognition ofa newfinancial liability.
When the Groupderecognises afinancial liability ora part ofit,itrecognises the difference between thecarrying amount ofthe financial liability (or partof thefinancial liability) derecognised andthe consideration paid(including anynon-cash assets transferred or new financial liabilities assumed) inprofit or loss.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. III. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -continued
9. Financial instruments -continued
9.7Offsetting 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 notbeoffset.
9.8Equityinstruments
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 equityinstruments. The equityinstruments transaction expenses deductedfrom equity. The Group treats distribution to equity instrument holders as profit distributions. Shareholder equityisnot affected byshare dividend distributed.
10. Account Receivables
10.1Receivables that are individually significant andfor which baddebtprovision isindividually assessed
A receivable that exceeds RMB 3,000,000 is deemed as an individually significant receivable by theGroup.
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 includedina collective assessment of impairment.
10.2 Receivables that are notindividually significant but for which baddebt provisionis individuallyassessed
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 tothedifference between carrying amount and present value offuture cash flows.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. III. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -continued
11. Inventories
11.1Categories 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 locationandcondition.
11.2Valuationmethodof inventories upondelivery
The actual cost of inventories upondelivery iscalculated usingthe weighted average method. Agricultural products harvested are reported inaccordance withthe CAS 1Inventories. 11.3 Basis for determining net realisable value of inventories and provision methods for decline in valueofinventories
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 inventoryover its net realisable valueonanitem-by-item basis.
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 isreversed andthereversal is includedinprofitor loss fortheperiod.
11.4Inventorycount system
The perpetual inventory system is maintainedfor stock system.
11.5Amortisation method forlowcost andshort-lived consumable items andpackaging materials Packaging materials and low cost and short-lived consumable items are amortised using the immediatewrite-off method.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. III. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -continued
12. Longtermequityinvestments
12.1Basis 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.
12.2Determination of initialinvestment cost
For a long-term equity investment acquired not involving enterprises under common control, the investment cost of thelong-term equity investment is thecost ofacquisition.
Audit fee, legal services, consulting fees and other related management costs in acquisition are expensedinprofits andlosses when happened.
Other long-term equity investments acquired from other than acquisitions are recognised using original cost.
12.3Subsequent measurement and recognition ofprofitor loss
12.3.1Long-term equity investment accounted forusing the costmethod
The Group accounts for long-term equity investment using the cost method. A subsidiary is an investee that iscontrolled bytheGroup.
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 bythe investee.
12.4Disposal oflong-term equity investments
On disposal of a long term equity investment, the difference between the proceeds actually received and receivable and thecarrying amount is recognised inprofit orloss for the period.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. III. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -continued
13. Fixedassets
13.1 Recognition criteria for fixedassets
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. Fixedassets are initiallymeasured atcost.
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 theperiod inwhichtheyare incurred.
13.2Depreciation ofeach 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 andannual depreciation rate ofeach category offixed assets are as follows: Estimated Estimated Annual useful life residual rate depreciation rate Buildings 20-40years 0-5% 2.4%-5.0% Machinery 10-20years 0-5% 4.8%-10.0% Motor Vehicles 4-12years 0-5% 7.9%-25.0% 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 canobtainfrom the disposal less expected disposal fees.
13.3Other 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 relatedtaxes is recognised in profitor loss for theperiod.
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 inan accountingestimate.
14. Constructioninprogress
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.
Constructioninprogress istransferred toa fixed asset whenit is ready for intendeduse.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. III. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -continued
15. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying asset are capitalised when expenditures for such asset and borrowing costs are incurred and activities relating to the acquisition, construction or production of the asset that are necessary to prepare the asset for its intended use or sale have commenced. Capitalisation of borrowing costs ceases when the qualifying asset being acquired, constructed or produced becomes ready for its intended use or sale. Capitalisation of borrowing costs is suspended during periods in which the acquisition, construction or production of a qualifying asset is suspended abnormally and when the suspension is for a continuous period of more than 3 months. Capitalisation is suspended until the acquisition, construction or production of the asset is resumed. Other borrowing costs arerecognised as an expense in theperiod inwhich theyare incurred.
16. Biological assets
The biological assets ofthe Group are bearer biological assets.
16.1Bearer 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 borrowingcost meetingthecapitalisation 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 methodto calculate thedeprecation, and details as follows:
Estimated Estimated Annual Category useful life residual rate depreciation rate Vines 20years - 5% The Group evaluates the useful life and expected net salvage value by considering the normal producing life ofthe bearer biologialassets.
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 inan 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 profitor loss for thecurrent period.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. III. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -continued
17. Intangible assets
17.1Intangible assets
Intangible assets include landuse rights,software, etc.
An intangible asset is measured initially at cost. When an intangible asset with a finite useful life is available for use, its original cost less net residual value and any accumulated impairment losses is amortised over its estimated useful life using the straight-line method. An intangible asset with an indefinite useful life is not amortised. The useful lives of the intangible assets are as follows:
Annual Item Useful life Net residual value amortization rate Land use rights 40-50years - 2-2.5% Software 5-10 years - 10-20% For an intangible asset with a finite useful life, the Group reviews the useful life and amortisation methodat theend ofthe period, andmakes adjustments when necessary.
18. Impairment oflong-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. An intangible asset with an indefinite useful life and intangible assets not yet available for use are tested for impairment annually, irrespective of whether there is any indicationthat theassets maybe impaired.
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 theasset.
If recoverable amount of assets is less than book value, the difference is recognised as impairment provisionandexpensed incurrent 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 onthe basis ofthe carrying amount of each asset (otherthangoodwill) inthegroup. The impairment is recognised in profit or loss for the period in which it is incurred and will not be reversed inany subsequent period.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. III. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -continued
19. Longtermprepaid expenses
Long-term prepaid expenses represent expenses incurred that should be borne and amortised over the current and subsequent periods (together of more than one year). Long-term prepaid expenses are amortised using the straight-line method over the expected periods in which benefits arederived.
Longtermprepaid expenses of the Group are amortized over thefollowingperiod:
Amortization period Land requisition fee 50years Land lease prepayment 50years Greeningfee 5years Leasehold improvement 3-5years Others 3years 20. Employee benefits
20.1Short-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 whenthey are incurred. Non-monetary employee benefits are measured atfair 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 relatedassets or charged toprofit orloss inthe periodwhen they are incurred.
20.2Accountingtreatments ofretired benefits
Retiredbenefits ofthe Groupare all predetermined provisionplan.
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 whentheyare incurred.
20.3Accountingtreatments oftermination 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 andexpenses related to thepayment oftermination benefits inreconstructuring.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. III. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -continued
21. Revenue
21.1Revenue 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 canbe measured reliably.
21.2Revenue 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 ofthe transaction at the reporting date. The outcome ofa transaction canbe 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.
22. 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 toanasset ora government grant related toincome based onits 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 theamount received orreceivable.
22.1Government grant related to anasset
A government grant related to an asset is recognised as deferred income, and evenly amortised to profitor loss over the useful life ofthe related asset.
22.2Government 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 profitor loss for theperiod.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. III. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -continued
23. Deferred taxassets/deferred tax liabilities
The income taxexpenses includecurrent income taxand deferred income tax.
23.1Current 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 taxlaws.
23.2Deferred taxassets and deferred taxliabilities
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 usingthe 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, nodeferred taxasset orliability isrecognised.
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 whichthe deductible losses and tax credits canbe 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 liabilityis settled.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. III. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -continued
23. Deferred taxassets/ deferred tax liabilities -continued
23.2Deferred taxassets 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 theyadjust the carrying amount ofgoodwill.
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 beavailable.
23.3 Netoff ofincome 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 ona 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, ineachfutureperiod inwhich significant amounts of deferredtaxassetsor liabilities areexpected to bereversed,deferredtaxassetsanddeferredtaxliabilities areoffsetandpresentedonanetbasis. 24. Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership tothe lessee. All other leases are classified as operating leases. 24.1Operating leases
24.1.1The Group as lessee under operating leases
Operating lease payments are recognised on a straight-line basis over the term of the relevant lease, and are either included in the cost of related asset or charged to profit or loss for the period. Initial direct costs incurred are charged to profit or loss for the period. Contingent rents are charged toprofit orloss intheperiod inwhich they areactually incurred.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. III. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -continued
25. Other significant accounting policies,accounting estimates andpreparation of financial statements From 1 July 2014, the Group has adopted a series of new accounting standards issued by The Ministry of Finance, including Accounting Standard for Business Enterprises No.39-Fair value measurement, Accounting Standard for Business Enterprises No.40-Joint Arrangements, Accounting Standard for Business Enterprises No.41-Disclosure of interests in other entities, Accounting Standard for Business Enterprises No.2-Long-term equity investment, Accounting Standard for Business Enterprises No.9-Employee benefit, Accounting Standard for Business Enterprises No.30- Presentation of financial statement, Accounting Standard for Business Enterprises No.33-Consolidated Financial Statements Accounting Standard for Business Enterprises No.37-Financial instrument disclosures.These changes in accounting policies were approvedintheNo.8meeting bythe No.6board ofdirectors oftheCompany.
Long-term equity investment
Before adopting Accounting Standard for Business Enterprises No.2-Long-term equity investment (Revised), the Group treated as long-term investment for investment with neither control nor significant influence to investee, no quoted market price in an active market and whose fair value cannotbe reliably measured at cost.
After adopting Accounting Standard for Business Enterprises No.2-Long-term equity investment (Revised), the Group treated as available-for-sale financial assets for the investment with neither control nor significant influence to investee, no quoted market price in an active market and whose fair value cannot be reliably. The Group undertakes retrospective adjustments for the changes in accounting policy, resulting the change from long-term equity investment to as available-for-sale financial assets for investment with neither control nor significant influence to investee, no quoted market price in an active market and whose fair value cannot be reliably. As full bad debts provision has been made for the asset on 31 December 2013, the amount in blance sheet isnotaffected.
Employee benefit
Before adopting Accounting Standard for Business Enterprises No.9-Employee benefit (Revised), for retired benefits, when the Group terminates employment relationship with employees before the expiry of the employment contracts or provides compensation as an offer to encourage employees to accept voluntary redundancy, if the Group has a formal plan for termination of employment relationship or has made an offer for voluntary redundancy which will be implemented immediately, and the Group cannot unilaterally withdraw from the termination plan or the redundancy offer, a provision for the compensation payable arising from the termination of employment relationship with employees is recognised with a corresponding charge to the profit orloss for theperiod.
After adopting Accounting Standard for Business Enterprises No.9-Employee benefit (Revised), please see Notes III 20(3)-Accounting treatments for retired benefits for its accounting policies. Management of the Group believes that adopting the accounting standard does not have a material impact onthefinancial statements.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. III. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -continued
25. Other significant accounting policies, accounting estimates and preparation offinancial statements -continued
JointArrangements
Accounting Standard for Business Enterprises No.40-Joint Arrangement classifies joint arrangements as joint operations and joint ventures. An entity determines the type of joint arrangement in which it is involved by considering its rights and obligations. An entity assesses its rights and obligations by considering the structure and legal form of the arrangement, the contractual terms agreed to by the parties to the arrangement. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Management of the Group believes that adopting the accounting standard does not haveamaterialimpactonthefinancialstatements.
Consolidated Financial Statements
Accounting Standard for Business Enterprises No.33-Consolidated Financial Statements (Revised) has revised the definition of control, the "control" is defined as "investor owns the power to investee, earns changeable return through participating relevant activities of the investee, has the power to affect the changeable return through utilizing the power to the investee and makes explicit accounting rules about the special transaction. Management of the Group believes that adoptingthe accounting standard does not havea material impact onthe financial statements. Financial instrument disclosures
Accounting Standard for Business Enterprises No.37-Financial instrument disclosures (Revised) adds rules relating to offset and disclosure requirements, adds disclosure requirements about financial asset transfer and modifies disclosure requirements about the maturity of financial assets and liabilities. This financial statement has been prepared in accordance with the standard, and withcomparable annual financial statements disclosure adjustedaccordingly.
Presentation of financial statement
Accounting Standard for Business Enterprises No.30- Presentation offinancial statement (Revised) separates other comprehensive income into following two categories: (1) Other comprehensive income items which will not be reclassified subsequently to profit or loss; (2) Other comprehensive income items which will be reclassified subsequently to profit or loss when specific conditions are met. This financial statement has been prepared in accordance with the standard,and withcomparable annualfinancial statements disclosure adjusted accordingly.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. III. SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -continued
25. Other significant accounting policies, accounting estimates and preparation offinancial statements -continued
Fairvalue measurement
Accounting Standard for Business Enterprises No.39-Fair value measurement regulates measurement and disclosure of fair value. Adopting the standard does not have a significant impact on measurement of financial statement items, but will lead to more extensive disclosures on fair valuebytheGroup. Thisfinancialstatementhasbeenpreparedinaccordancewiththestandard. Disclosure ofinterests inother entities
Accounting Standard for Business Enterprises No.41-Disclosure of interests in other entities applies to the disclosure of an enterprise's interest in subsidiaries, joint arrangements, associates and unconsolidated structured entities. Adopting the standard will lead to more extensive disclosures on financial statements by the Group. This financial statement has been prepared in accordance with the standard, and with comparable annual financial statements disclosure adjusted accordingly.
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 maydiffer 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 bothcurrent andprospective periods.
Significant accounting judgments andaccounting 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 taxassets
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.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. IV. CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY ASSUMPTIONS AND UNCERTAINTIES IN ACCOUNTING ESTIMATES - continued Significant accounting judgments andaccounting estimates - continued
Depreciation
As set out in Note III-13, the depreciation is calculated on the straight line basis to write-off the cost of each item of fixed assets to its residual value over its estimated useful life. The Group's management determines the estimated useful lives for its 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 thefuture 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 consideringthe contractual rights and statutory rights applicable tothe intangible assets. When the estimated useful lives of finite intangible assets are shortened or extended, the amortization periods should be adjusted accordingly. When there is evidence indicating the useful lives of intangible assets with indefinite useful lives becomes finite, the useful lives should be estimated and the intangible assets should be accounted for in accordance with the standards forthe intangible assets with finite useful lives.
Impairment ofnon-current assets
The Group assesses whether the recoverable amount is lower than the book value. If there are any indicators that the book value of non-current assets cannot be fully recoverable, impairment losses should be recorded.
The recoverable amount is the higher of an asset's fair value less costs to sell and the present value of the future cash flows expected to be derived from an asset. As it is difficult for the Group to obtain the quoted market price of the assets (or assts group), the fair value of the assets cannot be reliably estimated. When the management make estimation on the expected future cash flows from the asset or cash generating unit, estimates should be made on choosing a suitable production volume, selling price and related operating costs discount rate in order to calculate the present value of those cash flows. When recoverable amounts are undertaken, management may use all available for use information, including the forecast on production volume, selling price andrelated operating costs inreasonable and supportable assumptions.
Estimated provision foraccounts 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 endof each year.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. IV. CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY ASSUMPTIONS AND UNCERTAINTIES IN ACCOUNTING ESTIMATES - continued Significant accounting judgments andaccounting estimates - continued
Inventoryprovisionbased onnet 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 thanthecarrying costat the endof each year. V. TAXES
1. Themaintaxesandtaxrateareasfollows:
Value added tax VAT islevied at17%onthe invoiced amount after deduction ofeligible inputVAT.
Consumptiontax The consumption taxof thegroup islevied ongross revenue atrates rangingfrom10%to20%.
Business tax The Group is subject toa businesstaxof5% onits taxable revenue. Citydevelopment tax Leviedat7% oftotal business taxpayment.
Corporate income tax The Group is subject toa corporate income tax rate of25%or33% onitstaxable income.
Other than tax incentives stated in Notes-V (2), applicable tax rates of the Group in 2014 and 2013areallstated as above.
2. Taxincentivesandrelativepermit
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 exemptionof corporate income tax.
A subsidiary of the Company, Xinjiang Tianzhu Co., Ltd ("Xinjiang Tianzhu") which is a wine production enterprise incorporated in Xinjiang Weizu Autonomous. In accordance with (Caishui[2011] No.60) and (Xinzhengfa[2010] No.105), which is from 2012 to 2016, the company enjoys a favorable corporate income tax rate of15% besides the exemption of corporate income tax whichbelongs tolocal government. The corporate income taxapplicable forcurrent yearis9%. A subsidiary of the Company, Xinjiang Babao Baron Chateau Co., Ltd. ("Shihezi Chateau") which is a wine production enterprise incorporated in Xinjiang Weizu Autonomous. In accordance with (Caishui[2011] No.60) and (Xinzhengfa[2010] No.105), which is from 2011 to 2015, the company enjoys a favorable corporate income tax rate of15% besides the exemption of corporate income tax which belongs to local government. The corporate income tax applicable forcurrent year is9%.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Cash andbank
Closing balance Opening balance RMB RMB Cash 101,660 772,817 Bankbalance 1,010,259,393 1,235,788,080 Other currency fund 135,004,018 131,257,285____________ ____________ Total 1,145,365,071 1,367,818,182____________ ____________ As at 31 December 2014, the balance of restricted cash of the Group is RMB 2,643,519 (31 December 2013:RMB 2,609,237),which is theGroup's housingfund.
As at 31 December 2014, the Group's other monetary assets include security of RMB125,000,000 018 (31 December 2013: RMB125,000,000)s pledged for a short-term borrowing from HSBC of HKD152,000,000 (translated as RMB119,912,800), refundable deposit for notes payable of Shi He Zi Chateau of RMB10,000,000 (31 December 2013: RMB 5,965,996)and company cards depositguarantee of RMB4,018 (31December 2013: RMB291,289).
As at 31 December 2014, the Group's overseas cash and bank deposit is RMB 43,746,008 (31 December 2013:RMB 13,104,666).
As at 31 December 2014, The Group's term deposits with original maturity of more than three months when acquired is RMB 47,245,260 (31 December 2013: RMB 277,392,728) with interest rates rangingfrom3.25%-4.13%, which will mature from 3monthsto 1year.
2. Notes receivable
(1) Categories of notesreceivable
Closing balance Opening balance RMB RMB Bank acceptances 138,315,319 79,702,753__________ _________ (2) Notes receivable which havebeen pledged as security at theend ofthe period:
As of31December 2014,there was nopledged notes receivable (31December 2013: Nil).
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
2. Notes receivable -continued
(3) Notes endorsed bythe Grouptoother parties which are not yet due attheend oftheperiod Closing balance Opening balance RMB RMB Bank acceptances 47,805,224 19,167,830__________ _________ As at 31 December 2014, notes endorsed by the Group to other parties which are not yet due at the end of the period is RMB47,805,224 (31 December 2013: RMB19,167,830). 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 relevantlaws andregulations ofChina, the Groupwould undertake limitedliability forthe notes. (4) Notes receivable reclassified to accounts receivable due to the drawers' inability to settle the note on maturity
No notes receivable were reclassified as accounts receivable due to the default of drawer (31 December 2013:Nil).
3. Accounts receivable
(1) Disclosure of accounts receivable bycategories:
Closingbalance Openingbalance
Baddebts Carrying Baddebts Carrying Amount provision amount Amount provision amount Amount Proportion Amount Ratio Amount Amount Proportion Amount Ratio Amount RMB % RMB % RMB RMB % RMB % RMB Accountsreceivablethatare
individuallysignificantand
forwhichbaddebtprovision
hasbeenassessedindividually 67,557,319 46.4 - - 67,557,319 72,118,959 40.7 - - 72,118,959 Accountsreceivablethatare
notindividuallysignificantbut
forwhichbaddebtprovision
hasbeenassessedindividually_7_8,_11_5,_09_2_5_3_.6__-____-___7_8,_11_5,_09_2_10_4,_99_0,_55_7_5_9_.3 __-____-___10_4,_99_0,_55_7 Total _14_5,_67_2,_41_1_10_0_.0__-____-___14_5,_67_2,_41_1_17_7,_10_9,_51_6_10_0_.0 __-____-___17_7,_10_9,_51_6
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
3. Accounts receivable -continued
(1) Disclosure of accounts receivable bycategories: - continued
The Group determines that accounts receivable of more than RMB3,000,000 is considered as individuallysignificant trade receivable.
The normal credit term is one month, which can be extended to one year for certain major customers. The accounts receivable are interest-free.
The aginganalysis is as follows:
Closing balance Opening balance RMB RMB Within1year 145,672,411 174,141,205 1to2years - 2,968,311__________ __________ 145,672,411 177,109,516__________ __________ (2) Recognitions, collections andreversals duringthe current period:
As at 31 December 2014, there was no bad debt provision for accounts receivable (31 December 2013: Nil). There was no bad debt provision made, reversed or written-off by management in 2014(2013:Nil).
(3) Top five entities with thelargest balances ofaccounts receivable:
Relationship Percentageof withtheGroup Amount Aging totalreceivables RMB % NonggongshangSupermarket
(Group)Co.,Ltd Thirdparty 13,983,913 Within1year 9.6 Wal-Mart(China)InvestmentCo.,Ltd. Thirdparty 9,764,215 Within1year 6.7 SuguoSupermarketCo.,Ltd Thirdparty 8,979,267 Within1year 6.2 KunshanRunhuaBusinessCo.Ltd
Huangpubranch Thirdparty 8,363,514 Within1year 5.7 WumartStores,Inc. Thirdparty __7_,8_6_4_,0_7_7 Within1year _5_._4 48,954,986 33.6________ ___
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
4. Prepayments
(1) The aging analysis isas follows:
Closing balance Openingbalance Amount Ratio Amount Ratio RMB % RMB % Within1year 8,073,786 100.0 45,997,863 100.0_________ _____ _________ _____ (2) As at 31December 2014,the top5of prepayments are as follows:
Reason Percentageof Relationship forbeing totaladvances withtheGroup Amount Aging outstanding tosuppliers RMB % AustriaLawrence
FineWinesVCo.Ltd Thirdparty 2,828,300 Within1year goodsnotreceived 35.0 ShandongElectricityCompany
Yantaibranch Thirdparty 677,389 Within1year electricitypurchase 8.4 BeijingDiaoyutaiWineCo. Thirdparty 400,800 Within1year prepaiddeposits 5.0 Liu,Yuling Thirdparty 348,124 Within1year goodsnotreceived 4.3 Yu,Zhihai Thirdparty ____32_8_,1_9_4 Within1year goodsnotreceived __4._1 4,582,807 56.8________ ___ 5. Interest receivable
(1) Categories of interest receivable
Closing balance Opening balance RMB RMB Interestsoftermdeposits 3,619,429 8,417,995________ ________ (2) Overdue interest
As at 31December 2014,there was nooverdue interest receivable (31 December 2013:Nil).
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
6. Other receivables
(1) Disclosure of other receivables bycategories
Closingbalance Openingbalance
Baddebts Carrying Baddebts Carrying Amount provision amount Amount provision amount Amount Proportion Amount Ratio Amount Amount Proportion Amount Ratio Amount RMB % RMB % RMB RMB % RMB % RMB Otherreceivablesthatare
individuallysignificantand
forwhichbaddebtprovision
hasbeenassessedindividually 16,540,213 42.9 (7,199,521) 43.5 9,340,692 65,272,429 61.2 (7,392,429) 11.3 57,880,000 Otherreceivablesthatare
notindividuallysignificantbut
forwhichbaddebtprovision
hasbeenassessedindividually_2_2,_02_1,_61_0_5_7_.1___-____-__2_2,_02_1,_61_0_4_1,_45_1,_79_4_3_8_.8___-____-__4_1,_45_1,_79_4合计 _3_8,_56_1,_82_3_10_0_.0(7_,1_99_,5_21_)_1_8_.7_3_1,_36_2,_30_2_10_6,_72_4,_22_3_10_0_.0(7_,3_92_,4_29_)__6_.9_9_9,_33_1,_79_4 The Group determines that other receivables of more than RMB 3,000,000 are considered as individuallysignificant other receivables.
Other receivables that are individually significant and for which bad debt provision has been assessed individually:
As at 31December 2014,the bad debt provision forindividually significant balance isas follows: Balance Baddebtsprovision Percentage Reasonforprovision RMB RMB %
Thedebtorisinthe processof liquidation
TiantongSecurityCo.,Ltd. 7,199,521 7,199,521 100 Unabletorepay_______ _______
As at 31December 2013,the bad debt provision forindividually significant balance isas follows: Balance Baddebtsprovision Percentage Reasonforprovision RMB RMB %
Thedebtorisinthe processof liquidation
TiantongSecurityCo.,Ltd. 7,392,429 7,392,429 100 Unabletorepay_______ _______
The aginganalysis is as follows:
Closingbalance Openingbalance
Baddebts Carrying Baddebts Carrying Amount provision amount Amount provision amount Amount Proportion Amount Amount Amount Proportion Amount Amount RMB % RMB RMB RMB % RMB RMB Within1year 22,513,054 58.4 - 22,513,054 96,808,614 90.7 - 96,808,614 1to2years 7,422,977 19.3 - 7,422,977 1,936,191 1.8 - 1,936,191 2to3years 976,083 2.5 - 976,083 221,072 0.2 - 221,072 Over3years __7_,6_49_,7_0_9__1_9._8_(_7,_19_9_,5_21_)___4_50_,1_8_8__7_,7_58_,3_4_6___7._3_(_7,_39_2_,4_29_)___3_65_,9_1_7_3_8_,5_61_,8_2_3__10_0._0_(_7,_19_9_,5_21_)_3_1_,3_62_,3_0_2_10_6_,7_24_,2_2_3__10_0._0_(_7,_39_2_,4_29_)__99_,3_31_,7_9_4
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
6. Other receivables - continued
(2) Accrual, reversal andwritten-off duringthe current period
Opeingbalance Accrual Reversal Written-off Closingbalance RMB RMB RMB RMB RMB 2014 7,392,429 (192,908) 7,199,521_______ _______ _______ ________ ________ No baddebt accrued in2014,andbaddebt reversed in 2014isRMB 192,908.
Reasonsfor Basisofdetermining Accumulatedbaddebt Amountof reversalor theoriginal provisionpriorto reversalsor Contentofotherreceivables collections baddebtprovision reversalsorcollections collections RMB RMB TiantongSecurityCo.,Ltd. Collected Exceedcreditperiod (7,392,429) 192,908________ ______ (3) Other receivables written offin thereporting period
No other receivable written off in2014.
(4) Disclosure of other receivables bycategories
Closing balance Opening balance RMB RMB Deposit 8,651,139 8,794,120 Petty cash receivable 3,138,780 3,657,944 Refund of consumption tax,real estate tax 8,772,123 6,927,183 Land purchase deposit - 52,880,000 Others 10,800,260 27,072,547__________ _________ 31,362,302 99,331,794__________ _________ (5) Topfive entities with thelargest balances ofotherreceivables
As at 31December 2014,the top5ofother receivables areas follows:
Percentageoftotal Baddebt Nature Amount Aging otherreceivable Amount RMB % RMB TiantongSecurityCo.,Ltd. Investmentfund 7,199,521 Over3years 18.7 7,199,521 YantaiEconomicandTechnological
DevelopmentZoneConstruction
IndustryAssociation Deposit 5,000,000 1-2years 13.0 - ShiheziNationalTaxBureau Refundtax 4,340,692 Within1year 11.2 - YantaiNationalTaxBureau Refundtax 2,407,934 Within1year 6.2 - LiaoningAdministrationof
ForeignExpertsAffairs Reimbursedexpenses ___1_,8_94_,0_5_5 1-2years __4._9 _____-____20_,8_4_2,_20_2_ _5_4._0 __7_,1_99_,5_2_1
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
7. Inventories
(1) Disclosure of inventories bycategories
Closingbalance Openingbalance
Netcarrying Netcarrying Balance Provision amount Balance Provision amount RMB RMB RMB RMB RMB RMB Rawmaterial 74,820,215 - 74,820,215 85,025,169 - 85,025,169 Workinprogress 919,070,983 - 919,070,983 930,137,624 - 930,137,624 Finishedgoods _1_,1_08_,_80_9_,5_7_5 (1_5_,3_2_4,_37_5_)_1_,0_93_,_48_5_,2_0_0_1_,1_19_,_09_0_,2_3_4(1_3_,1_3_5,_5_90_)_1_,1_05_,_95_4_,6_4_4 2,102,700,773 (15,324,375) 2,087,376,398 2,134,253,027 (13,135,590) 2,121,117,437_________ _________________________________________ (2) Inventory provision
2014 Opening balance Increase Decrease Closingbalance RMB RMB RMB RMB Finishedgoods 13,135,590 2,188,785 - 15,324,375________ _______ ________ ________ 8. Available-for-sale financial assets
(1) Available-for-sale financial assets
Closingbalance Openingbalance
Amount Impairment Carryingamount Amount Impairment Carryingamount RMB RMB RMB RMB RMB RMB Available-for-sale
equityinstruments
measuredatcost 10,000,000 (10,000,000) - 10,000,000 (10,000,000) -_________ _______ ______ _________ _______ ______ (2) Available-for-sale financial assets measured at cost
Carryingamount Provisionforimpairmentlosses Proportionof votingpowerin Cashdividend Investee Opening Increase Decrease Closing Opening Increase Decrease Closing theinvestee(%) fortheperiod RMB RMB RMB RMB RMB RMB RMB RMB RMB YantaiDingtao
Constructionand
DevelopmentCo.,Ltd.
10,000,000 - - 10,000,000 10,000,000 - - 10,000,000 18 -
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
9. Fixedassets
(1) Details offixedassets
Buildings Machinery MotorVehicles Total RMB RMB RMB RMB I.Totaloriginalcarryingamount
1.Openingbalance 1,464,646,808 1,236,192,126 24,325,489 2,725,164,423 2.Increase
Purchase 4,823,315 47,752,763 2,129,517 54,705,595 TransferfromCIP 590,228,245 98,432,128 - 688,660,373 3.Decrease
Disposal ________-__ ___(_8_,4_0_2,_91_7_) ___(6_8_0,_30_3_) ____(9_,0_8_3,_22_0_) 4.Closingbalance 2,059,698,368 1,373,974,100 25,774,703 3,459,447,171__________ __________ ________ __________ II.Totalaccumulateddepreciation
1.Openingbalance 222,433,019 565,658,995 19,431,065 807,523,079 2.Increase
Additions 47,202,827 78,071,524 1,875,434 127,149,785 3.Decrease
Disposal ________-__ ___(7_,5_6_0_,1_46_)_ ___(3_4_7,_90_2_) ___(7_,9_0_8_,0_48_)_ 4.Closingbalance 269,635,846 636,170,373 20,958,597 926,764,816__________ __________ ________ __________ III.Totalcarryingamountof
fixedassets
1.Closingcarryingamount 1,790,062,522 737,803,727 4,816,106 2,532,682,355__________ __________ ________ __________ 2.Openingcarryingamount 1,242,213,789 670,533,131 4,894,424 1,917,641,344__________ __________ ________ __________ As at 31 December 2014, there was no fixed assets with ownership restricted (31 December 2013: Nil).
As at 31 December 2014, there was no temporary idle fixed assets, no fixed assets leased under finance leases ,noleased out under operating leases andnoheld for sale at theendof the period. (2) Fixedassets ofwhich certificates of title havenot beenobtained
As at 31December 2014,buildings withoutproperty certificate areas follows:
Reasonswhycertificates Items Amount oftitlehavenotbeenobtained RMB
XinjiangShiheziChateaufactorybuilding 256,981,006 Processing BeijingChateauEuropeantown,main,servicebuilding 233,407,559 Processing NingxiaWineproductionfactoryandofficebuilding 77,789,345 Processing SalesCompanyofficebuildings 44,351,379 Processing XinjiangTianzhufermentationsandstoragewarehouse 28,325,121 Processing IceWineChateauofficebuildingandpackingworkshop 10,429,634 Processing Fermentationcenteroffice,experimentbuildingandworkshop 6,556,657 Processing Jingyangfactoryfermentationbuilding 4,969,078 Processing KylinPackagingfinishedgoodswarehouseandworkshop 2,759,562 Processing__________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
10. Constructioninprogress
(1) Constructioninprogress
Closing balance Opening balance RMB RMB The Company's reconstruction project 182,767 269,802 XinjiangTianzhu workshopreconstruction project 317,758 1,018,309 KylinPackingproduction line project - 19,800 Yantai Chateau vineyard project - 10,619,000 AFIPplaza reconstruction project 28,000 - NingxiaChateau roadproject 4,083,378 600,000 IceWine Chateau project 69,840 - Sales Company construction project 39,316,089 66,682,027 Langfang Castel reconstruction project 271,057 - JingyangWine fermentation workshop
reconstruction project 794,385 158,569 Ningxiaunited workshop - 1,464,202 Shi He ZiChateau construction project 69,298,865 152,871,244 XinjiangSales Co. constructionproject 6,513,350 - NingxiaChateau construction project 127,432,353 92,062,210 Xianyang Chateau construction project 222,927,964 403,657,745 Research, development andmanufacturing center
Construction Project 1,127,641,913 558,716,989 Ding LuoTe Chateau Project 73,517,357 119,074,949 Huanrenfactory construction project 26,261,424 16,439,684 Chang'an Chateau tourismproject 1,810,000 -____________ ____________ 1,700,466,500 1,423,654,530____________ ____________ (2) Changes insignificant construction inprogress
Accumulated
Opening Transferto Opening expenditure/b
Budget balance Addition PPE balance udget Status Financedby RMB RMB RMB RMB RMB %
XinjiangTianzhutechnology
innovationandreconstructionproject 3,500,000 1,018,309 2,018,462 (2,719,013) 317,758 92.7 92.7 Self-raised YantaiChateauvineyardproject 30,000,000 10,619,000 9,916,359 (20,535,359) - 68.5 68.5 Self-raised SalesCompanyconstructionproject 161,350,000 66,682,027 18,011,481 (45,377,419) 39,316,089 88.2 88.2 Self-raised ShiheziChateauConstructionProject
(includeXinjiangSales) 780,000,000 152,871,244 80,212,788 (157,271,817) 75,812,215 82.4 82.4 Self-raised NingxiaChateauConstructionProject
(includeNingxiaGrowing) 414,150,000 92,662,210 79,015,348 (40,161,827) 131,515,731 90.7 90.7 Self-raised XianyangChateauConstructionProject
(includeShanxiTourism) 620,740,000 403,657,745 150,024,525 (328,944,306) 224,737,964 89.2 89.2 Self-raised Research,developmentand
manufacturingcenter 1,693,970,000 558,716,989 568,924,924 - 1,127,641,913 66.6 66.6 Self-raised DingLuoTeChateauproject 192,400,000 119,074,949 47,238,806 (92,796,398) 73,517,357 86.4 86.4 Self-raised Huanrenfactoryconstructionproject
31,000,000 16,439,684 9,821,740 - 26,261,424 84.7 84.7 Self-raised 1,421,742,157 965,184,433 (687,806,139) 1,699,120,451
There was nointerest capitalized inconstruction inprogress in 2014.
As at 31December 2014,there was noindication of impairment, therefore noprovision was made.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
11. Bearer biological assets
Measured at cost
Planting RMB I.Totaloriginal carrying amount
1.Opening balance 110,589,680 2.Increase
Self cultivated 55,887,849 3.Decrease
Disposal (5,093,268)__________ 4.Closingbalance 161,384,261__________ II.Total accumulated depreciation
1.Openingbalance 8,795,165 2.Increase
Accrual 865,855__________ 3.Closingbalance 9,661,020__________ III.Total net carrying amount
1.Closingnet carrying amount 151,723,241__________ 2.Opening net carrying amount 101,794,515__________ As at 31December 2014,there is nobiological asset with ownershiprestricted.
As at 31 December 2014, biological assets of the Group include mature bearer biological assets of RMB 23,758,058 (2013: RMB 13,994,402) and immature bearer biological assets of RMB 127,965,183.(2013:RMB 87,800,113)
As at 31 December 2014, there is no indication that biological assets may be impaired, and no provisionwas made.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
12. Intangible assets
(1) Intangible asset
Land use rights Microsoft use rights Total RMB RMB RMB I.Totaloriginal carrying amount
1.Openingbalance 301,043,015 27,123,447 328,166,462 2.Increase
Purchase 158,324,359 9,893,577 168,217,936__________ _________ __________ 3.Closingbalance 459,367,374 37,017,024 496,384,398__________ _________ __________ II.Total accumulated depreciation
1.Openingbalance 27,687,916 4,348,792 32,036,708 2.Increase
Accrual 8,595,240 2,801,256 11,396,496__________ _________ __________ 3.Closingbalance 36,283,156 7,150,048 43,433,204__________ _________ __________ III.Total net carrying amount
1.Closingnet carrying amount 423,084,218 29,866,976 452,951,194__________ _________ __________ 2.Openingnet carrying amount 273,355,099 22,774,655 296,129,754__________ _________ __________ As at 31December 2014,there was nointangible asset withrestricted ownership.
(2) Intangible asset with restricted ownership
Amount Reasons RMB
Yantai Development District A
-48、49、51、52 151,895,607 Processing__________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
13. Goodwill
Investee Openingbalance Increase Decrease Closingbalance RMB RMB RMB RMB EtablissementsRoullet
Fransac(FransacSales) 13,112,525 - - 13,112,525________ ________ ______ ________ The Group recognised agoodwill of RMB13,112,525 inregard to the acquisition of Fransac Sales, andthe Goodwill has beenallocated to relevant asset groups toundertake impairment test. 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. Discount rate used in calculating recoverable amount is9.9%. 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 value of the subsidiary exceeds itsrecoverable amount.
According to the assessment, the Group confirms that no impairment provision need to be made forgoodwill inthe reporting period.
14. Long-term prepaidexpenses
2014 Opening balance Increase Amortization Closingbalance RMB RMB RMB RMB Landleaseprepayments 62,501,074 - (1,690,886) 60,810,188 Landrequisitionfee 48,391,000 - (884,630) 47,506,370 Greeningfee 43,693,264 8,133,342 (11,230,548) 40,596,058 Leaseholdimprovement - 38,022,896 (1,289,211) 36,733,685 Others __1_0_,9_3_6_,4_6_5 __6_,0_3_3_,4_4_2 __(_70_4_,6_0_3_) __1_6_,2_6_5_,3_0_4 165,521,803 52,189,680 (15,799,878) 201,911,605_________ ________ ________ _________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
15. Deferred taxassets/liabilities
Deferred taxassets and deferred taxliabilities arenotrelated toincome tax ofthe same tax authorities of thesame taxsubjects, thus notpresented withthenet amount after netting. (1) Recognised deferred taxassets notpresented at thenet amountafteroffset：
Closingbalance Openingbalance Temporary Temporary
Items differences Deferredtaxassets differences Deferredtaxassets RMB RMB RMB RMB Unrealizedprofitfromintra
-companytransactions 632,127,732 158,031,933 337,972,433 84,493,108 Unpaidbonus 95,326,160 23,831,540 78,542,951 19,635,738 Retirementbenefit 15,936,065 3,984,016 19,509,959 4,877,490 Assetimpairmentprovision 32,523,896 8,130,974 30,528,019 7,632,005 Deductablelosses 160,950,941 44,093,889 97,387,257 24,346,814 Deferredincome 88,423,710 16,114,471 96,526,843 17,547,935 1,025,288,504 254,186,823 660,467,462 158,533,090 (2) Recognised deferred taxliabilities notpresented atthe net amount afteroffset：
Closingbalance Openingbalance Taxabletemporary Deferred Taxabletemporary Deferred Item difference taxliability difference taxliability RMB RMB RMB RMB Revaluationsurplusin
businesscombination
Notundercommoncontrol 18,262,543 4,565,636 21,344,460 5,336,115 (3) Deferred taxassets and liabilities not recognized:
Closing balance Opening balance RMB RMB Deductable losses 1,363,422 20,440,916_________ _________ (4) Deductable losses notrecognized as deferred taxassets will expire in:
Closing balance Opening balance RMB RMB 2014 - 19,077,494 2015 1,363,422 1,363,422_________ _________ 1,363,422 20,440,916_________ _________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
16. Other non-current assets
Closing balance Opening balance RMB RMB Receivable from transfer of
Ningxia Growing's biologicalassets 15,751,605 21,370,902__________ _________ 17. Short-term borrowings
Categories of short-term borrowings
Closing balance Opening balance RMB RMB Secured loans withsecurities under the custodyof lenders - 243,170,674 Unsecured andnon-guaranteed loans 300,000,000 -__________ __________ 300,000,000 243,170,674__________ __________ As at 31December 2014,unsecured loans detail isas follows:
Bank Amount Repaymentdate Interestrate RMB % HSBCChinaQingdaobranch 100,000,000 18July2014-19January2015 5.4 HSBCChinaQingdaobranch 100,000,000 27November2014-26November2015 5.0 ICBCYantaibranch 100,000,000 10July2014-9July2015 5.4_________ ____ As at 31December 2014,short-term borrowing of theGroup are all fixed interest rateborrowings. 18. Notes payables
Closing balance Opening balance RMB RMB Bank acceptances 10,000,000 5,765,694_________ _________ As at 31December 2014,there was nodue notespayable unpaid (31December 2013: Nil).
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
19. Accounts payable
The aging analysis of accounts payable are as follows
Closing balance Opening balance RMB RMB Within1year 357,811,822 258,116,331__________ __________ 20. Advances from customers
The aging analysis of advances from customers are as follows
Closing balance Opening balance RMB RMB Within1year 208,769,108 182,757,182 1to2years 1,898,868 5,894,072 2 to3 years 4,459,622 -__________ __________ 215,127,598 188,651,254__________ __________ 21. Employee benefit payable
(1) Employee benefit payable
Opening balance Increase Decrease Closingbalance RMB RMB RMB RMB Short-termpayroll 111,190,545 353,791,940 (322,027,521) 142,954,964 Post-demissionbenefits
-predeterminedprovisionplan 23,672 30,609,765 (30,575,874) 57,563 Terminationbenefits __1_9_,5_0_6_,0_1_8 ___2_,2_4_1_,9_8_2 __(5_,_81_1_,9_3_5_) __1_5_,9_3_6_,0_6_5 130,720,235 386,643,687 (358,415,330) 158,948,592_________ _________ _________ _________ (2) Short-term payroll
Opening balance Increase Decrease Closingbalance RMB RMB RMB RMB Salariesandbonus 108,645,022 320,261,874 (288,988,942) 139,917,954 Staffbenefit - 10,809,302 (10,803,334) 5,968 Staffwelfare 153,590 10,665,428 (10,657,529) 161,489 Includes:
Medicalinsurance 153,590 9,123,499 (9,118,602) 158,487 Injuryinsurance - 816,511 (814,939) 1,572 Maternityinsurance - 725,418 (723,988) 1,430 Housingfund 9,932 8,150,367 (8,090,063) 70,236 Unionfeeandeducationfee ___2_,3_8_2_,0_0_1 ___3_,9_0_4_,9_6_9 __(3_,_48_7_,6_5_3_) ___2_,7_9_9_,3_1_7 111,190,545 353,791,940 (322,027,521) 142,954,964_________ _________ _________ _________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
21. Employee benefit payable -continued
(3) Predetermined provision plan
Opening balance Increase Decrease Closingbalance RMB RMB RMB RMB Pension 23,449 29,060,721 (29,028,207) 55,963 Unemploymentinsurance ___2_2_3 __1_,5_4_9_,0_4_4 _(1_,_54_7_,6_6_7_) __1_,6_0_0 23,672 30,609,765 (30,575,874) 57,563_____ ________ ________ _____ 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 of18% and1% 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 29,060,721 and RMB 1,549,044 (In 2013: RMB 30,598,636 and RMB 1,637,364) respectively into pension insurance and unemployment insurance. At 31 December 2014, the Group has unpaid pension and unemployment insurance of RMB 55,963 and RMB 1,600 respectively (At 31 December 2013: RMB 23,499 and RMB 223), which is due to the pension insurance and unemployment insurance plan at the end of the reporting period. These payments havebeen paid after the end of the reporting period.
22. Taxes payable
Closing balance Opening balance RMB RMB Value added tax (62,755,555) 862,414 Consumptiontax 18,849,955 26,658,283 Business tax 1,005,135 4,348,055 Corporation income tax 109,836,980 142,079,369 Urbanlanduse tax 1,519,318 878,982 Individual income tax 6,644,281 6,824,553 Cityconstruction tax 4,831,936 6,016,703 Propertytax 898,914 655,545 Others 6,673,084 6,089,526__________ __________ 87,504,048 194,413,430__________ __________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
23. Deferred income
Closing balance Opening balance RMB RMB Government grants
Current liabilities 12,398,718 12,915,801 Non-current liabilities 76,024,992 83,611,041_________ _________ 88,423,710 96,526,842_________ _________ Government grants
Recognizedin Relatedto Opening Addition non-operatingincome Closing Assets/Income RMB RMB RMB RMB
Luxurywinecultureindustry
constructionspecificfunds 2,520,000 - (2,520,000) - Income MiyunPropagandaDepartmenttransfer 4,444,725 - (888,945) 3,555,780 Assets Grapebaseprojectspecificfunds 740,000 - (740,000) - Assets Ningxiaindustryrevitalizationand
technologyreconstructionfunds 14,360,000 - (3,295,000) 11,065,000 Assets Industryrevitalizationandtechnology
reconstructionspecificfunds 21,330,000 - - 21,330,000 Assets Winebaseliquorbrewageproject 10,478,990 - (1,434,874) 9,044,116 Assets WuYouYiXinindustrialclusterspecificfunds 180,000 - (60,000) 120,000 Assets Changyuchateauprojectfunds 19,818,600 - (3,702,000) 16,116,600 Assets Wineelectronictrackingsystem
specificfunds 5,860,527 - (667,053) 5,193,474 Assets Wineindustryspecificfunds 930,000 - - 930,000 Assets ShandongPeninsulaBlueEconomic
Areaconstructionfunds 10,000,000 - - 10,000,000 Assets 863Programsubsidyfundsforscientificresearch 64,000 - (1,100) 62,900 Assets Informationsystemconstruction
projecttechnologyfunds 5,800,000 - (580,000) 5,220,000 Assets Integrationprojectssubsidies - 100,000 - 100,000 Income Cross-bordere-Businessprojectssubsidies - 2,200,000 (20,560) 2,179,440 Income Winegrapesubsidies - 470,000 - 470,000 Income Modernagriculturegrapeproduction
developmentsubsidies - 324,000 - 324,000 Income Agriculturaltechnologysubsidies - 750,000 (117,600) 632,400 Income Grapebaseconstructionproject _____-__ __2,_60_0,_00_0 ___(5_20_,0_00_) ___2,_08_0,_00_0 Assets Total __9_6,_52_6,_84_2 __6,_44_4,_00_0 _(_14_,5_47_,1_32_) __8_8,_42_3,_71_0
Less:Non-currentliabilitiesduewithinoneyear __1_2,_91_5,_80_1 __1_2,_39_8,_71_8
Othernon-currentliabilities __8_3,_61_1,_04_1 __7_6,_02_4,_99_2
As at 31 December 2014, 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 tobeaccounted in profitor loss over one year.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
24. Other payables
(1) Natures ofotherpayables are asfollows
Closing balance Opening balance RMB RMB Deposit from distributors 134,470,408 215,888,735 Payables forequipment andconstruction 90,857,839 49,195,300 Payables fortransportation 24,388,114 13,937,729 Royaltyfee 77,809,993 78,986,198 Advertising costs 43,488,770 51,854,647 Other loans 22,522,636 22,522,636 Employee deposit 10,005,000 2,012,959 Deposits fromsuppliers 2,263,984 2,565,206 Payables forcontracting fee 27,132,371 22,159,875 Others 36,865,202 38,178,345__________ __________ 469,804,317 497,301,630__________ __________ (2) Description of significant other payables agedmore thanone year
Company Amount Reasons RMB
BeijingQinglangagriculturescienceandtechnology
developmentlimitedcompany 18,630,431 Otherloans BeijingQinglangagriculturescienceandtechnology 9,516,214 Payablesforcontractingfee developmentlimitedcompany
YantaiDe'anInvestmentCompanyLimited 3,892,205 Otherloans YantaiDe'anInvestmentCompanyLimited ____3,_24_5_,8_3_2 Payablesforcontractingfee 35,284,682
_________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
25. Long-term borrowings
Categories of long-term borrowings
Closing balance Opening balance RMB RMB Secured loans withsecurities under the custodyof lenders 119,912,800 - Unsecured andnon-guaranteed loans 89,467,200 -__________ ______ 209,380,000 -__________ ______ As at 31 December 2014, secured loan with securities under the custody of lenders is the amount borrowed by the Company from Qingdao Branch of HSBC with the bank deposit of RMB 125,000,000 as custody. The borrowing amount is HKD 152,000,000(equivalent to RMB 119,912,800) with quarterly paid interest rate of the 3 months Hong Kong interbank offered rates plus 195 basis points and borrowing period from 4 July 2014 to 3 July 2016. As at 31 December 2014,theinterest rate ofsecured loanis2.4%.
As at 31 December 2014, credit loan of EUR 12,000,000 (equivalent to RMB 89,467,200) is borrowed by the Company from Yantai Branch of ICBC. Monthly paid interest rate is 6 months benchmark London interbank offered rate plus 355 basis points and borrowing period is from 1 October 2014 to 29 September 2017. As at 31 December 2014, the interest rate of credit loan is3.7%.
As at 31December 2014,the group's long-term borrowings are all floatingrate loans.
26. Other non-current liabilities
Closing balance Opening balance RMB RMB Employee benefit 3,998,352 4,755,794_________ _________ As at 31 December 2014, employee benefit represents deposit from bonus accrued for managers and above. According to the bonus payment schedule of 2014, the bonus is expected to be paid during2016to2017.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
27. Share capital
2014
Openingbalance Increase Decrease Closingbalance RMB RMB RMB RMB Unrestrictedshares
Ashares 453,460,800 - - 453,460,800 Bshares _2_3_2_,0_0_3_,2_0_0 ___-___ ___-___ _2_3_2_,0_0_3_,2_0_0 Totalofunrestrictedshares
andtotalshares 685,464,000 - - 685,464,000_________ ______ ______ _________ 2013
Openingbalance Increase Decrease Closingbalance RMB RMB RMB RMB Unrestrictedshares
Ashares 453,460,800 - - 453,460,800 Bshares _2_3_2_,0_0_3_,2_0_0 ___-___ ___-___ _2_3_2_,0_0_3_,2_0_0 Totalofunrestrictedshares
andtotalshares 685,464,000 - - 685,464,000_________ ______ ______ _________ 28. Capital reserve
2014
Openingbalance Increase Decrease Closingbalance RMB RMB RMB RMB Sharepremium 557,222,454 - - 557,222,454 Other ___5_,9_1_6_,5_8_8 ___-___ ___-___ ___5_,9_1_6_,5_8_8 Total 563,139,042 - - 563,139,042_________ ______ ______ _________ 2013
Openingbalance Increase Decrease Closingbalance RMB RMB RMB RMB Sharepremium 557,222,454 - - 557,222,454 Other ___4_,9_1_6_,5_8_8 _1_,0_0_0_,0_0_0 ___-___ ___5_,9_1_6_,5_8_8 Total 562,139,042 1,000,000 - 563,139,042_________ _______ ______ _________ According to Xing Cai (Qi) Fa[2009]1160, Ningxia Wine Co.Ltd. ("Ningxia Wine") recognised government grant of RMB1,000,000 into capital reserve. The government grant is obtained for 3 years in2013and was previously recognised indeferred income.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
29. Other comprehensive income
2014
2014
Less:lastyearother Post-tax Post-tax
Before-tax comprehensiveincome Less: attributable attributable
Items Openingbalance amount inP/Lcurrentyear taxexpense toparent toNCI Closingbalance Othercomprehensive
incometobereclassified
toprofitandloss (2,803,271) - - (2,803,271) - (2,803,271) Foreigncurrencystatement
translationdifference __-__ (2_,8_03_,2_71_) __-__ __-__ (2_,8_03_,2_71_) __-__ (2_,8_03_,2_71_) 30. Surplus reserve
In accordance with the Company Law of the People's Republic of China and the Articles of Association of the Company, the Company is required to appropriate10% of the net profit to the statutory surplus reserve until the accumulated balance of the statutory surplus reserve reaches50% of the registered share capital. As the Company's surplus reserve has reached50% of the share capital, the Company doesnot appropriate net profittothe surplus reserve in2014. 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.
31. Retained earnings
Closing balance Opening balance RMB RMB Retained earnings brought forward 4,616,944,663 4,322,769,136 Add: profitattributable toshareholders ofthe Company 977,707,711 1,048,185,927 Less: Dividends paidinrespect prioryear's profit - Withdrawal oflegal surplus (342,732,000) (754,010,400) Conversion of ordinaryshare dividends -____________ ____________ Retained earnings carried forward 5,251,920,374 4,616,944,663____________ ____________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
31. Retained earnings -continued
(1) Appropriationtostatutory surplus reserve
In accordance with the Articles of Association of the Company, the Company is required to appropriate10% of the net profit to the statutory surplus reserve until the accumulated balance of thestatutory surplus reserve reaches50% of the registered share capital.
(2) Appropriationtosurplus reserve bysubsidiaries
As at 31 December 2014, the balance of the Group's unappropriated profits include appropriation to surplus reserve by subsidiaries amounting to RMB 49,484,644 (31 December 2013: RMB 37,554,671).
(3) Profit distributiondecided after thebalance sheet date
According to a proposal of the board of directors approved on 25 April 2015, on the basis of 685,464,000 issued shares in 2014, cash dividends of RMB 4.4 for every 10 share will be distributed toallthe shareholders. The aggregate amount of cash dividend isRMB301,604,160. The aboveproposalregardingdividends distribution isyettobeapprovedinashareholders' meeting. 32. Operating income and costs
Operating income is analyzed asfollows:
2014 2013 RMB RMB Principal operating income 4,113,169,270 4,273,801,693 Other operating income 43,558,255 47,146,879____________ ____________ 4,156,727,525 4,320,948,572____________ ____________ Operating cost is analyzed as follows:
2014 2013 RMB RMB Principal operating cost 1,354,777,577 1,336,631,197 Other operating cost 17,667,035 21,266,802____________ ____________ 1,372,444,612 1,357,897,999____________ ____________ The operating income for the Groupis mainlyfromthesales of wine, brandyandsparkling wine.Over99% ofthe sales generated inPRC.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
33. Taxes and surcharges
2014 2013 RMB RMB Consumptiontax 171,424,114 150,438,896 Business Tax 2,853,114 2,595,076 Cityconstruction tax 51,051,930 44,937,923 Education feeandsurcharges 36,830,754 31,426,897 Others 7,286,862 6,995,372__________ __________ 269,446,774 236,394,164__________ __________ Fordetail standards oftaxrate please refer toNotes V Tax.
34. Selling expenses
2014 2013 RMB RMB Advertising costs 466,868,778 592,734,876 Freight 120,998,488 126,085,723 Salary andemployee benefit 183,841,797 181,783,664 Trademark fee 77,809,993 78,986,198 Warehouse leasing expenses 50,816,255 37,714,861 Travelling expenses 20,986,441 20,927,235 Commission 2,926,165 13,828,552 Others 81,761,447 88,775,041____________ ____________ 1,006,009,364 1,140,836,150____________ ____________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
35. General and administrative expense
2014 2013 RMB RMB Salary andemployee benefit 42,752,029 39,539,807 Insurance fee 28,953,319 29,625,036 Leasingexpenses 11,063,572 7,337,569 Depreciation 33,086,559 24,694,962 Amortization 10,961,304 8,396,636 Administrative expenses 14,472,830 13,706,767 Travelling expenses 5,290,745 6,604,787 Entertainment fee 3,786,968 3,964,265 Propertytax,stamp dutyand other taxes 13,585,138 11,118,372 Maintenance fee 16,559,436 15,723,166 Greenfee 16,207,197 21,275,912 Contracting fee 16,539,989 18,415,497 Technology development fee 3,057,225 4,149,451 Service fee 4,158,814 5,890,437 Cleaning fee 6,860,665 4,875,096 Others 29,644,228 30,181,190__________ __________ 256,980,018 245,498,950__________ __________ 36. Loss onimpairment of assets
2014 2013 RMB RMB Reversal of impairment loss (192,908) (607,571) Inventoryimpairment (reversal) 2,188,785 (2,242,991) Impairment ofavailable forsale assets - 5,000,000_________ _________ 1,995,877 2,149,438_________ _________ 37. Financial income
2014 2013 RMB RMB Interest income (23,614,179) (27,620,072) Exchange difference (7,031,076) (6,632,540) Less: Interest expenses 12,298,953 12,681,058 Bank charges 1,089,581 2,871,197__________ __________ (17,256,721) (18,700,357)__________ __________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
38. Non-operation income
Recognized in extraordinary 2014 2013 profit and loss RMB RMB RMB Gains ondisposal ofnon-current assets 121,113 271,989 121,113 Including: gain on disposal ofplant
propertyand equipment 121,113 271,989 121,113 Government grants 40,545,714 36,659,754 40,545,714 Penaltyincome 637,531 210,757 637,531 Others 2,692,047 4,966,226 2,692,047_________ _________ _________ 43,996,405 42,108,726 43,996,405_________ _________ _________ Government grants recognized intheincome statement isas follows:
Assets/income 2014 2013 related RMB RMB
Majorprojects support fund 6,878,819 1,680,000 Assets related Small andmedium enterprises
support fund 5,010,153 3,902,827 Assets related Tax refund 18,259,690 22,163,624 Income related Others 10,397,052 8,913,303 Income related_________ _________
40,545,714 36,659,754
_________ _________
39. Non-operation expenses
Recognized in extraordinary 2014 2013 profit and loss RMB RMB RMB Loss ondisposal of non-current assets 5,207,658 678,016 5,207,658 Including: losses from disposal
offixed assets 114,390 678,016 114,390 losses fromdisposal
ofbiological assets 5,093,268 - 5,093,268 Donation 434,352 291,729 434,352 Others 2,728,239 904,478 2,728,239_________ _________ _________ 8,370,249 1,874,223 8,370,249_________ _________ _________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
40. Income tax
2014 2013 RMB RMB Current income tax 421,450,258 357,077,756 Deferred income tax (96,424,212) (8,156,952)__________ __________ 325,026,046 348,920,804__________ __________ Reconciliation between income taxexpenses and profitsis asfollows:
2014 2013 RMB RMB Profit before tax 1,302,733,757 1,397,106,731 Income tax expense at statutory tax rate25% 325,683,439 349,276,683 Effect of different taxrates appliedbycertain subsidiaries (1,356,542) (2,677,153) Non-taxable income - (131,500) Non-deductible expenses 699,149 2,452,774____________ ____________ Income tax expenses at theGroup's effective taxrate 325,026,046 348,920,804____________ ____________ 41. Basic anddilutiveearnings per share
The calculation ofbasic earnings pershare isbased ontheconsolidated profitattributable to ordinaryshareholders ofthe Company duringthe year and theweightedaverage number of outstandingordinary shares.
2014 2013 RMB RMB Earnings
Consolidated profitattributable toordinary
shareholders of the Company 977,707,711 1,048,185,927____________ ____________ Shares
Weighted average number ofoutstanding
ordinaryshares 685,464,000 685,464,000____________ ____________ Basic earnings per share 1.43 1.53____________ ____________ The Companydoes not havepotential 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.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
42. Notes toconsolidated cash flowstatement
(1) Cash received relating tootheroperating activities:
2014 2013 RMB RMB Government grants 22,286,024 42,783,729 Others 2,257,523 5,176,982_________ _________ 24,543,547 47,960,711_________ _________ (2) Cash paidrelating toother operating activities:
2014 2013 RMB RMB Selling expenses 726,232,000 944,945,796 General and administrative expenses 107,585,895 102,626,714 Others 11,130,693 11,982,799____________ ____________ 844,948,588 1,059,555,309____________ ____________ (3) Cash paidrelating toother financing activities:
2014 2013 RMB RMB Cash liquidationoftrust scheme - 150,945,000 Pledgedsecurity ofshort-term borrowing 125,000,000 125,000,000__________ __________ 125,000,000 275,945,000__________ __________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
43. Supplementary information toconsolidated cash flowstatement
(i) Supplementary information toconsolidated cash flowstatement
2014 2013 RMB RMB Cash flows from operating activities
calculated byadjustingthe net profit:
Netprofit 977,707,711 1,048,185,927 Add: Loss for impairment ofassets 1,995,877 2,149,438 Depreciation of fixedassets 127,149,785 125,540,127 Amortization of intangible assets 11,396,496 6,839,668 Amortization of Biological assets 865,855 846,620 Amortization of long-term prepaidexpenses 15,799,878 17,780,973 Loss/(gain) ondisposal of property
plant and equipment 5,086,545 406,027 Finance income (7,012,502) (21,571,554) Increase/(decrease) indeferred tax assets (95,653,733) (8,156,952) Decrease/(increase) indeferred tax liabilities (770,479) - Decrease/(increase) ininventories 31,552,254 149,746,995 Decrease/(increase) inoperating receivables 48,497,684 (49,235,221) Increase/(decrease) inoperating payables (46,532,075) (537,457,741)____________ ____________ Netcashflows from operating activities 1,070,083,296 735,074,307____________ ____________ (ii) Cash andcashequivalent
Closing balance Opening balance RMB RMB Closingbalance ofcash andbank 1,145,365,071 1,367,818,182 Less:
restricted bank deposits 2,643,519 2,609,237 restricted othermonetary funds 135,004,018 131,257,285 depositwitha periodofoverthree months 47,245,260 277,392,728____________ ____________ Closingbalance ofcash andcashequivalents 960,472,274 956,558,932____________ ____________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -continued
43. Supplementary information toconsolidated cash flowstatement - continued
(ii) Cash andcashequivalent -continued
Closing balance Opening balance RMB RMB Cash 960,472,274 956,558,932 Including:
Cash onhand 101,660 772,817 Bank deposits ondemand 960,370,614 955,786,115__________ __________ Closingbalance ofcash andcashequivalents 960,472,274 956,558,932__________ __________ 44. Assets withrestriction of ownership
Closing balance Opening balance RMB RMB Cash andbank 137,647,537 133,866,522__________ __________ As at 31 December 2014, cash and bank balances with restriction of ownership include: the Group's housing fund of RMB2,643,519, security of RMB125,000,000 pledged for a short-term borrowing from HSBC of HKD 152,000,000 (translated as RMB 119,912,800), refundable deposit for notes payable of Shi He Zi Chateau of RMB 10,000,000, and company cards deposit guarantee ofRMB4,018.
45. Foreignmonetary items
Closingforeign Exchange Closingtranslated Items currency balance rate RMB balance Cash andbank
EUR 46,148 7.4556 344,061__________ ______ __________ Long-term borrowing
EUR 12,000,000 7.4556 89,467,200 HKD 152,000,000 0.7889 119,912,800__________ ______ __________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VII. CHANGE IN CONSOLIDATION SCOPE
Change inconsolidationscope due tootherreasons (new established subsidiaries)
Name Placeanddateofregistration Legalrepresentative Businessnature Registeredcapital Principalactivities IncorporatecodeSubsidiariesacquiredbyestablishment：
FrancsChamps 17December2014 Zhou,Hongjiang Investment EUR8,575,000Investment、production N/A ParticipationsSAS("FrancsChamps") Cognac,France Sales salesandexport
LanzhouChangyuWineSales 10October2014 Yang,Ming Sales RMB100,000 Salesofwine 31607272-1 Co.Ltd("LanzhouSales") LanzhouGansu,China
BeijingRetailingCo.Ltd 28April2014 Pan,Jianfu Sales RMB500,000 Wholesaleofpre-packedfoods 09890880-9 ("BeijingRetailing") Beijing,China
TianjinChangyuPioneer 8November2013
SalesCo.Ltd("TianjinPioneer")* Tianjin,China Li,Haiping Sales RMB500,000 Wholesaleofpre-packedfoods 08301099-1 FuzhouChangyuPioneer 27May2014
SalesCo.Ltd("FuzhouPioneer") FuzhouFujian,China Sun,Guiyang Sales RMB500,000 Wholesaleofpre-packedfoods 07976834-5 NanjingChangyuPioneer 12November2013
SalesCo.Ltd("NanjingPioneer")* NanjingJiangsu,China Zhang,Fuqian Sales RMB500,000 Wholesaleofpre-packedfoods 08416861-9 XianyangChangyuPioneer 6March2014
SalesCo.Ltd("XianyangPioneer") XianyangShanxi,China Wei,Binsheng Sales RMB500,000 Wholesaleofpre-packedfoods 08818837-7 ShenyangChangyuPioneer 16April2014
SalesCo.Ltd("ShenyangPioneer") ShenyangLiaoning,China Xiao,Yongjie Sales RMB500,000 Wholesaleofpre-packedfoods 09789141-9 JinanChangyuPioneer 16October2013
SalesCo.Ltd("JinanPioneer")* JinanShandong,China Li,Yingjun Sales RMB500,000 Wholesaleofpre-packedfoods 07617957-x ShanghaiChangyuPioneer 15November2013
SalesCo.Ltd("ShanghaiPioneer")* Shanghai,China Zhai,Deqiang Sales RMB500,000 Wholesaleofpre-packedfoods 08209497-8 FuzhouChangyuPioneer 16October2013
SalesCo.Ltd("FuzhouPioneer")* FushunJiangxi,China Li,Shoukun Sales RMB500,000 Wholesaleofpre-packedfoods 07903537-9 ShijiazhuangChangyuPioneerSales 16October2013
Co.Ltd("ShijiazhuangPioneer")* ShijiazhuangHebei,China Yi,Longhai Sales RMB500,000 Wholesaleofpre-packedfoods 08131179-0 HangzhouYuzefengSales 11April2014
Co.Ltd("HangzhouYuzefeng") HangzhouZhejiang,China Xiao,Zhenbo Sales RMB500,000 Wholesaleofpre-packedfoods 09760041-5 JilinChangyuPioneerSales 21October2013
Co.Ltd("JilinPioneer")* ChangchunJilin,China Wang,Bo Sales RMB500,000 Wholesaleofpre-packedfoods 07364313-8 BeijingChangyuPioneerSales 12March2014
Co.Ltd("BeijingPioneer") Beijing,China Pan,Jianfu Sales RMB500,000 Wholesaleofpre-packedfoods 06125269-0 HaerbinChangyuPioneerSales 17June2014
Co.Ltd("HaerbinPioneer") HaerbinHeilongjiang,China Tan,Jun Sales RMB500,000 Wholesaleofpre-packedfoods 30082468-5 HunanChangyuPioneerSales 10March2014
Co.Ltd("HunanPioneer") ChangshaHunan,China Sun,Junming Sales RMB2,000,000 Wholesaleofpre-packedfoods 09446465-7 YinchuanChangyuPioneerSales 21November2013
Co.Ltd("YinchuanPioneer")* YinchuanNingxia,China Ruan,Shili Sales RMB500,000 Wholesaleofpre-packedfoods 07384874-X KunmingChangyuPioneerSales 31October2013
Co.Ltd("KunmingPioneer")* KunmingYunnan,China Ma,Long Sales RMB500,000 Wholesaleofpre-packedfoods 08042997-3 ChongqingChangyuPioneerSales 20August2014
Co.Ltd("ChongqingPioneer") Chongqing,China Wang,Wenkai Sales RMB500,000 Wholesaleofpre-packedfoods 30506782-0 ZhengzhouChangyuPioneerSales 14October2014
Co.Ltd("ZhengzhouPioneer") ZhengzhouHenan,China Bi,Jianhui Sales RMB500,000 Wholesaleofpre-packedfoods 31730946-0 WuhanChangyuPioneerSales 12September2014
Co.Ltd("WuhanPioneer") WuhanHubei,China Yu,Jun Sales RMB500,000 Wholesaleofpre-packedfoods 09200921-2 TaiyuanChangyuPioneerSales 3September2014
Co.Ltd("TaiyuanPioneer") TaiyuanShanxi,China Zhang,Shuzheng Sales RMB500,000 Wholesaleofpre-packedfoods 39792586-0 HuhehaoteChangyuPioneerSales 18July2014
Co.Ltd("HuhehaotePioneer") HuhehaoteInnerMongolia,China Han,Yong Sales RMB500,000 Wholesaleofpre-packedfoods 39776001-5 ChengduChangyuPioneerSales 10September2014
Co.Ltd("ChengduPioneer") ChengduSichuan,China Sun,Xiaopu Sales RMB500,000 Wholesaleofpre-packedfoods 39562291-1 NanningChangyuPioneerSales 10December2014
Co.Ltd("NanningPioneer") NanningGuangxi,China Dong,Houxin Sales RMB500,000 Wholesaleofpre-packedfoods 32266009-5* At 31 December 2013, these subsidiaries had completed registration but paid share capital in2014,therefore they are included intheconsolidation scope ofthe Group in2014.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VIII. INTERESTS IN OTHER ENTITIES
1. Structureof theGroup
Equityinterestowned
bythecompany
Name Address Placeofregistration Nature Direct Indirect Acquisitionmethod XinjiangTianzhu(a) Shihezi,Xinjiang,China Shihezi,Xinjiang,China Manufacturing 60% - Subsidiaryacquiredinbusinesscombination undernon-commoncontrol FransacSales Cognac,France Cognac,France Trading 100% - Subsidiaryacquiredinbusinesscombination undernon-commoncontrol BeijingChangyuSalesanddistributionCo.,Ltd Beijing,China Beijing,China Sales 100% - Subsidiariesacquiredbyestablishment ("BeijingSales")
YantaiKylinPackagingCo.,Ltd. Yantai,Shandong,China Yantai,Shandong,China Manufacturing100% - Subsidiariesacquiredbyestablishment ("KylinPackaging")
YantaiChangyu-CastelWineChateauCo.,Ltd Yantai,Shandong,China Yantai,Shandong,China Manufacturing 70% - Subsidiariesacquiredbyestablishment ("ChangyuChateau")(b)
Changyu(Jingyang)WineCo.,Ltd. Xianyang,Shanxi,China Xianyang,Shanxi,China Manufacturing 90% 10% Subsidiariesacquiredbyestablishment ("JingyangWine")
YantaiChangyuPioneerWineSalesCo.,Ltd. Yantai,Shandong,China Yantai,Shandong,China Sales 100% - Subsidiariesacquiredbyestablishment ("SalesCompany")
LangfangDevelopmentZoneCastel-ChangyuWine Lanfang,Hebei,China Lanfang,Hebei,China Manufacturing 39% 10% Subsidiariesacquiredbyestablishment Co.,Ltd("LangfangCastel")(c)
Changyu(Jingyang)WineSalesCo.,Ltd. Xianyang,Shanxi,China Xianyang,Shanxi,China Sales 10% 90% Subsidiariesacquiredbyestablishment ("JingyangSales")
LangfangChangyuPioneerWineSalesCo.,Ltd Lanfang,Hebei,China Lanfang,Hebei,China Sales 10% 90% Subsidiariesacquiredbyestablishment ("LangfangSales")
ShanghaiChangyuSalesanddistributionCo., Shanghai,China Shanghai,China Sales 30% 70% Subsidiariesacquiredbyestablishment Ltd.("ShanghaiSales")
BeijingChangyuAFIPAgriculturedevelopment Miyun,Beijing,China Miyun,Beijing,China Sales - 100% Subsidiariesacquiredbyestablishment Co.,Ltd("AgricultureDevelopment")
BeijingChangyuAFIPWineChateauCo.,Ltd.(d) Beijing,China Beijing,China Manufacturing 70% - Subsidiariesacquiredbyestablishment Yantai("BeijingChateau")ChangyuWineSales Yantai,Shandong,China Yantai,Shandong,China Sales 90% 10% Subsidiariesacquiredbyestablishment Co.,Ltd.("WinesSales")
YantaiChangyuPioneerInternationalCo.,Ltd. Yantai,Shandong,China Yantai,Shandong,China Sales 70% 30% Subsidiariesacquiredbyestablishment ("PioneerInternational")
HangzhouChangyuWineSalesCo.,Ltd. Hangzhou,Zhejiang,China Hangzhou,Zhejiang,China Sales - 100% Subsidiariesacquiredbyestablishment ("HangzhouChangyu")
NingxiaGrowing Yinchuang,Ningxia,China Yinchuang,Ningxia,China Planting 100% - Subsidiariesacquiredbyestablishment HuanrenChangyuNationalWinesSalesCo.,Ltd. Benxi,Liaoning,China Benxi,Liaoning,China Sales 100% - Subsidiariesacquiredbyestablishment ("NationalWines")
LiaoningChangyuIceWineChateauCo.,Ltd. Benxi,Liaoning,China Benxi,Liaoning,China Manufacturing 51% - Subsidiariesacquiredbyestablishment ("IceChateau") (e)
YantaiDevelopmentZoneChangyuTradingCo., Yantai,Shandong,China Yantai,Shandong,China Sales - 100% Subsidiariesacquiredbyestablishment Ltd("DevelopmentZoneTrading")
ShenzhenChangyuWineMarketingLtd. Shenzhen,Guangdong,China Shenzhen,Guangdong,China Sales - 100% Subsidiariesacquiredbyestablishment ("ShenzhenMarketing")
YantaiChangyuFushanTrading Yantai,Shandong,China Yantai,Shandong,China Sales - 100% Subsidiariesacquiredbyestablishment Company("FushanTrading")
BeijingAFIPMeetingCenter("MeetingCenter") Miyun,Beijing,China Miyun,Beijing,China Service - 100% Subsidiariesacquiredbyestablishment BeijingAFIPTourismandCulture Miyun,Beijing,China Miyun,Beijing,China Tourism 70% - Subsidiariesacquiredbyestablishment Company("AFIPTourism")(f)
NingxiaWine Yinchuan,Ningxia,China Yinchuan,Ningxia,China Manufacturing100% - Subsidiariesacquiredbyestablishment YantaiChangyuDingLuoTeChateau. Yantai,ShandongChina Yantai,ShandongChina Retailand 100% - Subsidiariesacquiredbyestablishment ("DingLuoTeChateau") Sales
QingTongXiaChangyuWineMarketing QingTongXia,Ningxia,China QingTongXia,Ningxia,China Sales - 100% Subsidiariesacquiredbyestablishment Ltd("QingTongXiaSales")
ShiHeZiChateau Shihezi,Xinjiang,China Shihezi,Xinjiang,China Manufacturing100% - Subsidiariesacquiredbyestablishment NingxiaMoser15thChangyuWineChateauCo., Yinchuan,Ningxia,China Yinchuan,Ningxia,China Manufacturing100% - Subsidiariesacquiredbyestablishment Ltd.("NingxiaChateau")
ShanxiChangyuRinaCastleChateauCo.,Ltd. Xianyang,Shanxi,China Xianyang,Shanxi,China Manufacturing100% - Subsidiariesacquiredbyestablishment ("Chang'anChateau")
YantaiChangyuWineResearchandDevelopment Yantai,ShandongChina Yantai,ShandongChina Manufacturing100% - SubsidiariesacquiredbyestablishmentCo.,Ltd.("R&DCentre")
Changyu(HuanRen)WineCo.,Ltd BenxiLiaoNingChina BenxiLiaoNingChina Wineproduction100% - Subsidiariesacquiredbyestablishment ("HuanRenWine") Projecting
XinjiangChangyuSalesCo.,Ltd ShiheziXinjiangChina ShiheziXinjiangChina Sales - 100% Subsidiariesacquiredbyestablishment ("XinjiangSales")
XinjiangChangyuWineryCo.,Ltd ShiheziXinjiangChina ShiheziXinjiangChina Manufacturing - 100% Subsidiariesacquiredbyestablishment ("XinjiangWinery")
NingxiaChangyuTradingCo.,Ltd YinchuanNingxiaChina YinchuanNingxiaChina Sales - 100% Subsidiariesacquiredbyestablishment ("NingxiaTrading")
ShanxiChangyuRinaWineSalesCo.,Ltd XianyangShanxiChina XianyangShanxiChina Sales - 100% Subsidiariesacquiredbyestablishment ("ShanxiSales")
PenglaiChangyuWineSalesCo.,Ltd PenglaiShandongChina PenglaiShandongChina Sales - 100% Subsidiariesacquiredbyestablishment ("PenglaiSales")
LaizhouChangyuWineSalesCo.,Ltd LaizhouShandongChina LaizhouShandongChina Sales - 100% Subsidiariesacquiredbyestablishment ("LaizhouSales")
FrancsChamps Cognac,France Cognac,France Investmentand100% - Subsidiariesacquiredbyestablishment trading
LanzhouSales LanzhouGansu,China LanzhouGansu,China Sales 100% - Subsidiariesacquiredbyestablishment BeijingRetailing Beijing,China Beijing,China Sales - 100% Subsidiariesacquiredbyestablishment TianjinPioneer Tianjin,China Tianjin,China Sales - 100% Subsidiariesacquiredbyestablishment FuzhouPioneer FuzhouFujian,China FuzhouFujian,China Sales - 100% Subsidiariesacquiredbyestablishment NanjingPioneer Nanjing,Jiangsu,China Nanjing,Jiangsu,China Sales - 100% Subsidiariesacquiredbyestablishment Xianyang Pioneer Xianyang,Shanxi,China Xianyang,Shanxi,China Sales - 100% Subsidiariesacquiredbyestablishment ShenyangPioneer Shenyang,Liaoning,China Shenyang,Liaoning,China Sales - 100% Subsidiariesacquiredbyestablishment JinanPioneer Jinan,Shandong,China Jinan,Shandong,China Sales - 100% Subsidiariesacquiredbyestablishment ShanghaiPioneer Shanghai,China Shanghai,China Sales - 100% Subsidiariesacquiredbyestablishment FuzhouPioneer Fuzhou,Jiangxi,China Fuzhou,Jiangxi,China Sales - 100% Subsidiariesacquiredbyestablishment ShijiazhuangPioneer Shijiazhuang,Hebei,China Shijiazhuang,Hebei,China Sales - 100% Subsidiariesacquiredbyestablishment HangzhouYuzefeng Hangzhou,Zhejiang,China Hangzhou,Zhejiang,China Sales - 100% Subsidiariesacquiredbyestablishment JilinPioneer Changchun,Jilin,China Changchun,Jilin,China Sales - 100% Subsidiariesacquiredbyestablishment BeijingPioneer Beijing,China Beijing,China Sales - 100% Subsidiariesacquiredbyestablishment HaerbinPioneer Haerbin,Heilongjiang,China Haerbin,Heilongjiang,China Sales - 100% Subsidiariesacquiredbyestablishment HunanPioneer Changsha,Hunan,China Changsha,Hunan,China Sales - 100% Subsidiariesacquiredbyestablishment YinchuanPioneer Yinchuan,Ningxia,China Yinchuan,Ningxia,China Sales - 100% Subsidiariesacquiredbyestablishment KunmingPioneer Kunming,Yunnan,China Kunming,Yunnan,China Sales - 100% Subsidiariesacquiredbyestablishment ChongqingPioneer Chongqing,China Chongqing,China Sales - 100% Subsidiariesacquiredbyestablishment ZhengzhouPioneer Zhengzhou,Henan,China Zhengzhou,Henan,China Sales - 100% Subsidiariesacquiredbyestablishment WuhanPioneer Wuhan,Hubei,China Wuhan,Hubei,China Sales - 100% Subsidiariesacquiredbyestablishment TaiyuanPioneer Taiyuan,Shanxi,China Taiyuan,Shanxi,China Sales - 100% Subsidiariesacquiredbyestablishment HuhehaotePioneer HuhehaoteInnerMongolia,China HuhehaoteInnerMongolia, Sales - 100% Subsidiariesacquiredbyestablishment China
ChengduPioneer Chengdu,Sichuan,China Chengdu,Sichuan,China Sales - 100% Subsidiariesacquiredbyestablishment NanningPioneer Nanning,Guangxi,China Nanning,Guangxi,China Sales - 100% Subsidiariesacquiredbyestablishment
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VIII. INTERESTS IN OTHER ENTITIES -continued
1. Structureof theGroup -continued
Explanation indifference between holdinginterests and votingrights insubsidiaries:
(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 willbe terminated on31December 2018.
(b) 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 on31December 2022.
(c) 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 willbe terminated on31December 2022.
(d) 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 on2September 2019.
(e) 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 2016.
(f) AFIP Tourism is a limited liability company established by the Company and domestic investors, accounting for70% of AFIP Tourism's equity interest. Through agreement arrangement, the Company has the full power to control AFIP Tourism's strategic operating, investing and financing policies. The agreement arrangement will be terminated on2September 2019.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. VIII. INTERESTS IN OTHER ENTITIES -continued
2. Non-wholly owned subsidiaries
Balance of theinterests The non-controlling ofminority Name shareholder ratio shareholders XinjiangTianzhu 40% 56,093,912 Changyu Chateau 30% 12,365,016 Langfang Castel 51% 22,702,522 BeijingChateau 30% 35,293,868 IceChateau 49% 33,319,062 AFIPTourism 30% 2,966,399 Explanation indifference between share percentage andvotingpower ofnon-controlling interests: Please see Note VIII-1.
3. Keyfinancial information ofimportant non-whollyowned subsidiaries
Closingbalance Openingbalance
Current Non-current Current Non-current Total Current Non-current Current Non-current Total Name assets assets Totalassets liabilities liabilities liabilities assets assets Totalassets liabilities liabilities liabilities XinjiangTianzhu 86,541,666 89,469,815 176,011,481 7,165,015 5,336,114 12,501,129 81,239,590 92,905,274 174,144,864 6,768,637 5,336,114 12,104,751 ChangyuChateau 56,430,830 113,883,719 170,314,549 88,220,921 - 88,220,921 96,487,353 103,678,442 200,165,795 119,959,582 - 119,959,582 LangfangCastel 29,986,460 24,229,921 54,216,381 7,753,321 - 7,753,321 33,029,246 25,777,415 58,806,661 11,835,706 - 11,835,706 BeijingChateau 113,589,773 544,577,614 658,167,387 549,595,386 2,666,835 552,262,221 117,277,848 571,558,225 688,836,073 603,812,439 - 603,812,439 IceChateau 43,424,068 30,796,802 74,220,870 10,073,994 100,000 10,173,994 42,713,007 29,436,139 72,149,146 9,601,850 100,000 9,701,850 AFIPTourism 22,013,654 1,138,756 23,152,410 4,847,671 - 4,847,671 25,794,776 690,766 26,485,542 9,644,326 - 9,644,326 2014 2013
Total Operating Total Operating Operating comprehensive activitiescash comprehensive activitiescash Name income Netprofit(loss) income flows Operatingincome Netprofit(loss) income flows XinjiangTianzhu 86,483,652 1,470,239 1,470,239 (5,590,904) 65,260,973 778,119 778,119 (10,112,402) ChangyuChateau 110,684,738 1,887,415 1,887,415 30,351,075 84,862,080 1,262,260 1,262,260 (9,076,400) LangfangCastel 50,335,802 (507,895) (507,895) (2,788,417) 60,678,547 144,551 144,551 (6,676,277) BeijingChateau 160,547,230 20,881,532 20,881,532 29,246,144 80,532,065 (33,684,992) (33,684,992) (41,475,520) IceChateau 51,973,176 1,599,580 1,599,580 (9,712,584) 24,802,111 (3,592,759) (3,592,759) 3,251,612 AFIPTourism 55,171,595 1,463,523 1,463,523 16,993,824 97,928,987 12,535,965 12,535,965 (30,901,914) IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT
The Group's major financial instruments include cash and bank, notes receivable, accounts receivable, interest receivables, other receivables, other non-current assets, short-term borrowings, notes payables, 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 thechange ineach riskvariable is onastand-alone basis.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT -continued
1. Riskmanagement objectives andpolicies
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 Currencyrisk
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 2014, 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 Bankand cash 344,061 - Long-term borrowings 209,380,000 - Short-term borrowings - 243,170,674___________ ___________ 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.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT -continued
1. Risk management objectives andpolicies - continued
1.1 Market risk -continued
1.1.1Currencyrisk- continued
Sensitivity analysis oncurrency 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:
Currentyear Prioryear
Effecton Effecton shareholders' shareholders' Changeinexchangerate Effectonprofit equity Effectonprofit equity RMB RMB RMB RMB RMB HKD 5%increaseagainstRMB (5,995,640) (5,995,640) (12,158,534) (12,158,534) HKD 5%decreaseagainstRMB 5,995,640 5,995,640 12,158,534 12,158,534 EUR 5%increaseagainstRMB (4,456,157) (4,456,157) - - EUR 5%decreaseagainstRMB 4,456,157 4,456,157 - -________ ________ ________ ________ 1.1.2Interest rate risk - risk ofchanges incash flows
The Group's cash flow interest rate risk of financial instruments relates primarily to variable-rate bank borrowings (see NoteVI (1) and NoteVI (25) for details). It is the Group's policy to keep its borrowings at floating rate ofinterests soas to eliminate thefair valueinterest rate risk. The sensitivityanalysis oninterest rate risk
The sensitivity analysis on interest rate risk is based on the changes in the market interest rate may influencethe interest income or expense ofthe variable rate financial instruments.
Management of the Group believes interest rate risk on bank deposit is not significant, therefore does not disclose sensitivityanalysis for interest rate risk.
Where all other variables are held constant, the reasonably possible changes in the interest rate mayhave the followingpre-tax effect on theprofitor loss for theperiod andshareholders' equity Currentyear Prioryear
Effecton Effecton Items Changeininterestrate Effectonprofit owners'equity Effectonprofit owners'equity Bankborrowings 50%increase (1,044,435) (1,044,435) N/A N/A Bankborrowings 50%decrease 1,044,435 1,044,435 N/A N/A The Group has no floating-rate borrowings in 2013, and management of the Group considers the fluctuation in interest rates of bank balances and pledged deposits is insignificant. Therefore, no sensitivity analysis oninterest rates for bankbalances and pledged deposits ispresented.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT -continued
1. Risk management objectives andpolicies - continued
1.2 Creditrisk
As at 31 December 2014, the Group's maximum exposure to credit risk which will cause a financial loss totheGroup duetofailure todischarge an obligation by thecounterparties 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 ofthe 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 2014,33.6% of the Group trade receivables are due from top 5 customers (31 December 2013:30.0%). There is no collateral orother credit enhancement onthe balance ofthetrade receivables oftheGroup.
Analysis ofindividuallyimpaired financial assets
As at 31 December 2014, the Group has provided full bad debts provision for the individually impaired account receivable due from TiantongSecurity Co.,Ltd., which has beenin insolvency. 1.3 Liquidityrisk
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 bankborrowings andensures compliance withloan covenants.
The following is the maturity analysis for financial assets and financial liabilities held by the Group whichis based onundiscounted remaining contractual obligations:
Non-derivative financial liabilities
Lessthanonemonth 1-3months 3-12months 1-5years RMB RMB RMB RMB Short-termborrowings 101,046,667 1,704,444 204,802,222 - Notespayables - - 10,000,000 - Accountpayables 357,811,822 - - - Otherpayables 323,064,925 - 146,739,392 - Interestpayables 3,026,660 - 448,981 - Long-termborrowings _____5_0_9_,8_1_4 ___1_,0_0_2_,6_3_4 ___4_,6_7_3_,2_9_5 __2_1_6_,6_9_1_,4_7_9 785,459,888 2,707,078 366,663,890 216,691,479__________ _________ _________ __________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT -continued
1. Risk management objectives andpolicies - continued
1.4 Fairvalue disclosure -Financial assets andliabilities notmeasured usingfair value As at 31 December 2014, management of the Group believes that book value of financial assets measured under amortised cost method is approximately equaltotheir fairvalue.
X. RELATED PARTY AND RELATED PARTY TRANSACTIONS
1. Parent company
Nameof Typeof Placeof Legal Scope Registered Percentage Percentage Incorporate parentcompany Relation enterprise registration representative ofbusiness capital ofshares ofvotingrights Code RMB % %
Cotrolling Limited
Company Company Yantai SunLiqiang Manufacturing 50,000,000 50.4 50.4 265645824 During the year ended 31 December 2014, there is no change in parent company's registered capital, shares holdingor votingpower.
2. Subsidiaries: Please refer toNote VIII.
3. Other related parties
Name ofrelated parities Nature ofrelated parties Incorporate code Yantai Changyu Wine Culture Museum Company controlled 258258654 Co.,Ltd.("Wine Culture Museum") bythe same parent
Yantai Changyu International Window of the Companycontrolled 672208146 Wine City Co., Ltd.("Window of the WineCity) bythe same parent
Yantai ShenMa PackingCo., Ltd. Companycontrolled 553393350 ("ShenMa Packing") bythe same parent
Yantai Zhongya Pharmaceutical Tonic Company controlled 726203923 Wine Co., Ltd.("Zhongya Pharmaceutical") bythe same parent
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. X. RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
4. Significant related partytransactions
(1) Purchases from and sales torelated parties
Purchase from related parties
The content of related 2014 2013 partytransactions RMB RMB ShenMa Packing product purchase 149,536,913 194,648,978 Zhongya Pharmaceutical product purchase 5,205,207 7,960,294 Wine Culture Museum product purchase 934,085 2,618,189 Windowof theWine City product purchase 4,161,708 100,246__________ __________ 159,837,913 205,327,707__________ __________ All related party transactions arebased onthenegotiated price.
In 2014, purchases from related parties accounted for less than11.8% of the Group's total purchase(2013:11.9%)
Sales torelated parties
The content of related 2014 2013 partytransactions RMB RMB Wine Culture Museum goods sales 10,111,288 5,495,959 Windowof theWine City goods sales 7,083,716 2,524,559 Zhongya Pharmaceutical goodssales 2,596,070 1,890,313 ShenMa Packing goodssales 1,684,486 1,492,538__________ __________ 21,475,560 11,403,369__________ __________ All related party transactions arebased onthenegotiated price.
In2014,sales torelated parties accounted for less than1%oftheGroup's total sales (2013: lessthan1%).
(2) Propertyleased from a related party
The Group asLessee
2014 Assetsleased Beginningdate Endingdate Rentalexpense ChangyuGroupCompany Warehouseandofficebuilding 2012/1/1 2016/12/31 5,858,000______ Pursuant to the lease agreement entered into between the Company and Changyu Group Company on 1 January 2012, starting from 1 January 2012, the Company rented properties from Changyu Group Company for operation purposes at a basic annual rental of RMB5,858,000, and till 31 December 2016. For the year ended 31 December 2014, the rental payable to Changyu Group
Companyamounted toRMB5,858,000 (2013:RMB5,858,000).
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. X. RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
4. Significant related partytransactions -continued
(3) Other significant related party transactions
Note 2014 2013 RMB RMB Royaltyfee (a) 77,809,993 78,986,198 Patents fee (b) 50,000 50,000_________ _________ All related party transactions arebased onthenegotiated price.
(a) Royaltyfee
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 ofthe registration ofthetrademarks.
During 2014, royalty fee paid to related company accounted for100% of the Group (2013:100%).
(b) Patents fee
Pursuant to a patents implementation license dated 18 May 1997, starting from 18 September 1997, the Company may use the patents of Changyu Group Company. The annual patents usage fee payable by the Company to Changyu Group Company was RMB50,000. The contract was expired on 20 December 2005. The Company renewed the contract on 20 August 2006 for 10 years. The annual patents usage fee payable by the Company toChangyu Group Company remained RMB50,000. For the year ended 31 December 2014, the patents usage fee payable to Changyu Group Company amounted to RMB50,000 (2013: RMB50,000).
During 2014, patent fee paid to related company accounted for100% of the Group (2013:100%).
(4) Remuneration ofthemanagement
2014 2013 RMB RMB Remuneration ofthemanagement 8,884,459 8,292,000_________ ________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. X. RELATED PARTY AND RELATED PARTY TRANSACTIONS - continued
5. Balance due from/ torelated parties
(1) Balance due from related parties
Closingbalance Openingbalance Accountsreceivable Balance Provision Balance Provision RMB RMB RMB RMB ZhongyaPharmaceutical 1,378,843 2,567,129 - ShenMaPacking. 15,820 911,197 - WindowoftheWineCity ____-___ _____ ___4_2_,4_7_8 ___-__ 1,394,663 3,520,804 -_______ _____ _______ _____ The above amounts due from related parties are unsecured, interest-free and have no fixed terms ofrepayment.
(2) Balance due torelated parties
Closing balance Opening balance RMB RMB Accounts payable
Shen Ma Packing 53,027,076 46,370,178 Zhongya Pharmaceutical 6,550,051 4,520,101 Wine Culture Museum 1,043,208 177,526 Windowof theWine City 59,668 -_________ _________ Total 60,680,003 51,067,805_________ _________ Other payable
Royaltyfee payable toparent company 77,809,993 78,986,198 Shen Ma Packing 200,000 165,230 Zhongya Pharmaceutical - 52,760_________ _________ Total 78,009,993 79,204,188_________ _________ The aboveamounts dueto related parties are unsecured, interest-free and havenofixed terms of repayment.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. XI. COMMITMENT
1. Importantcommitments
(1) Capital commitments
Closing balance Opening balance RMB'000 RMB'000 Capital commitments 687,460 1,253,880________ ________ (2) Operating lease commitment
As lessee
Significant operating lease: Total future minimal lease payments under non-cancelable contract withlessor are as follow:
Closing balance Opening balance RMB'000 RMB'000 Within1year 25,505 23,612 1to2years 10,271 11,208 2to3years 7,252 9,726 3years andabove 21,262 28,390_________ ______ 64,290 72,936_________ ______ 2. Contingentliability
The Group and the Company do not have any significant contingent liabilities as at balance sheet date.
XII. POST BALANCE SHEET DATE EVENT
According to the board of the directors resolution raised on 25 April 2015, the Company proposed a cash dividend of RMB 4.4 (tax inclusive) for every 10 shares in respect of 2014 based on the issued shares of 685,464,000. The aggregate amount of cash dividend is RMB 301,604,160. The resolutionis tobe approved bythe annual general meeting.
XIII. OTHER SIGNIFICANT EVENTS
Segment report
The Group is principally engaged in the production and sales of wine, brandy, and champagne. In accordance with the Group's internal organization structure, management requirements and internal reporting system, the Group's operation determines only one operation segment and reporting segment engaged in the production and sales within China. Therefore the Group does notneed to disclose additional segment report information.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. XIV. NOTES TO COMPANY FINANCIAL STATEMENTS
1. Cash andbank
Closing balance Opening balance RMB RMB Cash 5,847 12,479 Bank Blance 371,128,398 477,140,475 Other currency fund 125,004,018 125,291,289____________ __________ Total 496,138,263 602,444,243____________ __________ As at 31 December 2014, the balance of restricted cash of the Group is RMB2,643,519 (31 December 2013:RMB2,609,237), which is composed ofthe Group's housing fund.
As at 31 December 2014, other currency fund of the Company include: security of RMB 125,000,000 (at 31 December 2013: RMB 125,000,000) pledged for a long-term borrowing from HSBC of HKD 152,000,000(equivalent to RMB 119,912,800), and company cards deposit guarantee ofRMB 4,018(at 31December 2013:RMB 291,289).
As at 31 December 2014, The Group's term deposits with original maturity from three months to one year when acquired is RMB35,245,260 (31 December 2013: RMB277,392,728 ) with interest rates rangingfrom3.25%-4.13% .
2. Notes receivable
(1) Categories ofnotesreceivable
Closing balance Opening balance RMB RMB Bank acceptances 98,158,251 32,594,381_________ _________ (2) Pledgednotes receivable
As of31 December 2014, there was no pledged notes receivable (31 December 2013: Nil).
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. XIV. NOTES TO COMPANY FINANCIAL STATEMENTS -continued
2. Notereceivable - continued
(3) Notes endorsed bythe Grouptoother parties which are not yet due attheend oftheperiod Closing balance Opening balance RMB RMB Bank acceptances 52,895,804 16,727,830__________ _________ As at 31 December2014，notes endorsed by the Group to other parties which are not yet due at the end of the period is RMB 52,895,804 (31 December 2013: RMB 16,727,830). It is for the payment to suppliers. The Group believes that due to bank good reputation, the risk of maturity can not 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 note receivables. If bank is unable to settle the notes on maturity, according to the relevant laws and regulations of China,the Groupwouldundertake limitedliability forthe notes.
(4) Notes receivable were reclassified as accounts receivable dueto thedefault of drawer
As of 31 December 2014, there was no notes receivable were reclassified as accounts receivable duetothedefault of drawer (31December 2013: Nil).
3. Accounts receivable
(1) The aging analysis isas follows:
Closingbalance Openingbalance
Balance Baddebtsprovisions CarryingAmount Balance Baddebtsprovisions CarryingAmount Amount Proportion Amount Proportion Amount Amount Proportion Amount Proportion Amount RMB (%) RMB (%) RMB RMB (%) RMB (%) RMB Accountsreceivable
thatareindividually
notsignificantand
forwhichbaddebt
provisionhasbeen
assessedindividually__1_,5_16_,51_8_10_0._0 __-____-_____1,5_16_,5_18__1_,6_00_,96_8_10_0._0 __-____-____1_,6_00_,96_8 The Company determines that trade receivable of more than RMB3,000,000 is considered as individuallysignificant trade receivable.
The normal credit term of trade receivables is one month, which can be extended to one year for certainmajor customers. The trade receivables are interest free.
There was no individually significant and for which bad debt provision has been assessed individuallyaccount receivable.
The aginganalysis is as follows:
Closing balance Opening balance RMB RMB
Within1year 1,516,518 1,600,968
_________ ________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. XIV. NOTES TO COMPANY FINANCIAL STATEMENTS -continued
3. Accounts receivable -continued
(2) Provision, reversals and collections duringthe current period:
As at 31 December 2014, there was no provision provided for trade receivables (31 December 2013: Nil). The Company did not provide, reverse or write off any provision during 2014 (31 December 2013:Nil)
(3) Topthree entities with thelargest balances ofaccounts receivable
Relationship Proportionof withtheGroup Amount Aging totalreceivables RMB % YantaiHuibaoartsand
craftsManufacturingCo.,Ltd. Thirdparty 1,052,828 Within1year 69.5 ZhongyaPharmaceutical Otherrelatedparties 447,870 Within1year 29.5 ShenMaPacking Otherrelatedparties ____1_5_,8_2_0 Within1year __1_._0 1,516,518 100.0________ ____ 4. Prepayments
(1) The aginganalysis is as follows:
Closingbalance Openingbalance Amount Proportion Amount Proportion RMB % RMB % Within1year 1,710,787 100.0 24,824,672 100.0_______ ____ ________ ____ (2) Topfive entities with thelargest balances ofprepayments
Reasonfor Percentageof Relationship being totaladvances withtheGroup Amount Aging outstanding tosuppliers RMB % ShandongElectricPowerGroup Thirdparty 677,389 Within1year electricfee 39.6 Liu,Yuling Thirdparty 348,124 Within1year goodsnotreceived 20.4 Yu,Zhihai Thirdparty 328,194 Within1year goodsnotreceived 19.2 RizhaoLingfeiPackagingCo.Ltd. Thirdparty 94,484 Within1year goodsnotreceived 5.5 Lin,Changxue Thirdparty ___8_0_,4_2_8 Within1year goodsnotreceived __4._7 1,528,619 89.4_______ ___
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. XIV. NOTES TO COMPANY FINANCIAL STATEMENTS -continued
5. Interest receivable
(1) Categories of interest receivable
Closing balance Opening balance RMB RMB Interests ofterm deposits 3,580,811 8,417,995________ ________ (2) Overdue interest
As at 31 December 2014, there was no overdue interest receivable (31 December 2013:Nil). 6. Dividendreceivables
Openingbalance Increase Decrease Closingbalance RMB RMB RMB RMB Within1year
Including:SalesCompany 738,981,500 1,013,615,384 (1,350,000,000) 402,596,884 WinesSales - 90,000,000 (90,000,000) - HuanrenWine - 25,000,000 (25,000,000) - LangfangSales - 474,282 (474,282) - JingyangSales - 35,000,000 (35,000,000) - Over1year
Including:PioneerInternational __1_3_,6_1_4_,3_8_4 _______-___ __(1_3_,_61_4_,3_8_4_) ______-___ Total 752,595,884 1,164,089,666 (1,514,088,666) 402,596,884_________ __________ __________ _________ 7. Other receivables
(1) Disclosure ofotherreceivables bycategories:
Closingbalance Openingbalance
Balance Baddebtsprovisions CarryingAmount Balance Baddebtsprovisions CarryingAmount Amount Proportion Amount Proportion Amount Amount Proportion Amount Proportion Amount RMB (%) RMB (%) RMB RMB (%) RMB (%) RMB Otherreceivablesthatare
individuallysignificant
andforwhichbaddebt
provisionhasbeen
assessedindividually 4,701,016,368 99.7 (7,199,521) 0.2 4,693,816,847 3,683,374,031 99.1 (7,392,429) 0.2 3,675,981,602 Otherreceivablesthatare
notindividuallysignificant
andforwhichbaddebt
provisionhasbeen
assessedindividually
__15_,0_19_,42_9__0._3 ____-___-___1_5,0_19_,4_29__33_,6_02_,3_47__0._9 ____-_ __-___33_,60_2,_34_7 Total _4,_71_6,0_35_,7_97_10_0._0 _(7_,19_9,_52_1)__0._2_4,_70_8,8_36_,2_76_3,_716_,9_76_,37_8_10_0._0 _(7_,39_2,_42_9) __0._2_3,_70_9,5_83_,94_9 The Company determines that other receivable of more than RMB3,000,000 is considered as individuallysignificant other receivable.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. XIV. NOTES TO COMPANY FINANCIAL STATEMENTS -continued
7. Other receivables - continued
(1) Disclosure of other receivables bycategories: - continued
Other receivables that are individually significant and for which bad debt provision has been assessed individually:
As at 31 December 2014, other receivable that are individually significant at the end of the period butforwhich bad debt provision hasbeen assessed individually:
Baddebt
Balance provision Percentage Reasonforprovision RMB RMB %
Thedebtorisin
theprocessofliquidation TiantongSecurityCo.,Ltd. 7,199,521 7,199,521 100 Unabletorepay
_______ _______
As at 31 December 2013, other receivable that are individually significant at the end of the period butforwhich bad debt provision hasbeen assessed individually:
Baddebt
Balance provision Percentage Reasonforprovision RMB RMB %
Thedebtorisin
theprocessofliquidation TiantongSecurityCo.,Ltd 7,392,429 7,392,429 100 Unabletorepay
_______ _______
The aginganalysis is as follows:
Closingbalance Openingbalance
Baddebts Carrying Baddebts Carrying Balance provision amount Balance provision amount Amount Proportion Amount Amount Amount Proportion Amount Amount RMB % RMB RMB RMB % RMB RMB Within1year 4,708,620,670 99.8 - 4,708,620,670 3,709,472,668 99.8 - 3,709,472,668 1to2years 215,606 0.0 - 215,606 111,281 - - 111,281 2to3years - - - - - Over3years ___7_,1_99_,5_2_1___0_.2_(_7,_19_9_,5_21_)______-_____7_,3_92_,4_2_9___0_.2_7_,3_92_,4_2_9______-___4,_71_6_,0_35_,7_9_7__10_0_.0_(_7,_19_9_,5_21_)_4,_70_8_,8_36_,2_7_6_3,_71_6_,9_76_,3_7_8__10_0_.0_7_,3_92_,4_2_9_3,_70_9_,5_83_,9_4_9
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. XIV. NOTES TO COMPANY FINANCIAL STATEMENTS -continued
7. Other receivables - continued
(2) Accrual, reversal and written-off duringthe current period:
Openingbalance Accrued Reversed Writen-off Closingbalance RMB RMB RMB RMB RMB 2014 7,392,429 - (192,908) - 7,199,521_______ _____ ______ _____ _______ No baddebt accrued in2014,andbaddebt reversed in 2014isRMB 192,908.
Basisofdetermining Accumulatedbaddebt
Reasonsfor theoriginalbaddebt provisionpriorto Amountofreversal Cotent reversalorcollections provison reversalsorcollections orcollections RMB RMB TiantongSecurityCo.,Ltd. Collected Exceedcreditperiod (7,392,429) 192,908_______ _______ (3) Other receivable written off current year
No other receivable written off in2014.
(4) Disclosure of other receivables bynature
Closing balance Opening balance RMB RMB Receivable from subsidiary 4,699,819,825 3,691,961,808 Consumptiontaxrefund 1,924,913 1,880,028 Receivable deposit - 1,661,969 Others 7,091,538 14,080,144____________ ____________ 4,708,836,276 3,709,583,949____________ ____________ (5) Topfive entities with the largest balances ofother receivables
As at 31December 2014,the particulars oftop5otherreceivables are as follows:
Proportionoftotal Nature Amount Aging prepayments RMB % DevelopmentCentre Internalbalance 884,290,206 Within1year 18.7 ChanganChateau Internalbalance 712,804,638 Within1year 15.1 ShiheziChateau Internalbalance 611,720,867 Within1year 13.0 BeijingChateau Internalbalance 533,229,933 Within1year 11.3 NingxiaWine Internalbalance __4_1_8_,1_2_8_,5_0_0 Within1year _8_._9 3,160,174,144 67.0__________ ___
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. XIV. NOTES TO COMPANY FINANCIAL STATEMENTS -continued
8. Inventories
Closingbalance Openingbalance
Netcarrying Netcarrying Balance Provision amount Balance Provision amount RMB RMB RMB RMB RMB RMB Rawmaterial 8,061,194 - 8,061,194 5,328,866 - 5,328,866 Workinprogress 605,911,810 - 605,911,810 685,390,264 - 685,390,264 Finishedgoods __6_7_,7_2_3_,7_7_0 ___-__ __6_7_,7_2_3_,7_7_0 __9_0_,5_6_5_,0_5_9 ___-__ __9_0_,5_6_5_,0_5_9 681,696,774 - 681,696,774 781,284,189 - 781,284,189_________ _____ _________ _________ _____ _________ 9. Long-term equity investments
Movement CashDividends 2014 Cost Openingbalance fortheyear Closingbalance Shareholding Votingpower fortheyear RMB RMB RMB RMB % % RMB CostMethod
XinjiangTianzhu(a) 60,000,000 60,000,000 - 60,000,000 60 100 - KylinPackaging 23,176,063 23,176,063 - 23,176,063 100 100 - ChangyuChateau(a) 28,968,100 28,968,100 - 28,968,100 70 100 - AFIPTourism(a) 350,000 350,000 - 350,000 70 100 - PioneerInternational(b) 3,500,000 3,500,000 - 3,500,000 70 100 - NingxiaGrowing 1,000,000 1,000,000 - 1,000,000 100 100 - NationalWines 2,000,000 2,000,000 - 2,000,000 100 100 - IceChateau(a) 30,440,500 30,440,500 - 30,440,500 51 100 - BeijingChateau(a) 77,000,000 77,000,000 - 77,000,000 70 100 - SalesCompany 7,200,000 7,200,000 - 7,200,000 100 100 1,013,615,384 LangfangSales(b) 100,000 100,000 - 100,000 10 100 474,282 LangfangCastel(a) 19,835,730 19,835,730 - 19,835,730 39 100 - WineSales 4,500,000 4,500,000 - 4,500,000 90 100 90,000,000 ShanghaiSales(b) 300,000 300,000 - 300,000 30 100 - BeijingSales 850,000 850,000 - 850,000 100 100 - JingyangSales(b) 100,000 100,000 - 100,000 10 100 35,000,000 JingyangWine(b) 900,000 900,000 - 900,000 90 100 - NingxiaWine 1,000,000 1,000,000 - 1,000,000 100 100 - NingxiaChateau 2,000,000 2,000,000 - 2,000,000 100 100 - DingluoteChateau 80,000,000 80,000,000 - 80,000,000 100 100 - ShiheziChateau 150,000,000 150,000,000 - 150,000,000 100 100 - ChanganChateau 20,000,000 20,000,000 - 20,000,000 100 100 - DevelopmentCentre 500,000,000 500,000,000 - 500,000,000 100 100 - HuanrenWine 5,000,000 5,000,000 6,000,000 11,000,000 100 100 25,000,000 FrenchSales 29,988,530 29,988,530 (29,988,530) - - - - FrancsChamps
ParticipationsSAS__6_9,_21_6,_63_4 _____-__ _6_9,_21_6,_63_4 __6_9,_21_6,_63_4 100 100 _____-___1,_11_7,_42_5,_55_7 _1,_04_8,_20_8,_92_3 _4_5,_22_8,_10_4 _1,_09_3,_43_7,_02_7 _1,_16_4,_08_9,_66_6 (a) The Company is entrusted to manage these non-wholly owned subsidiaries whereby the Group owned the entire operating results of these subsidiaries deducting fixed fees paid to thenon-controllinginterests' holders. Please refer toNote VIII (1)for details. (b) The Company has100% voting power of those subsidiaries by the way of indirect controlling.
During 2014, there was no significant restriction on the remittance of fund from the investees to theCompany.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. XIV. NOTES TO COMPANY FINANCIAL STATEMENTS -continued
10. Fixedassets
(1) Fixedassets
Buildings Machinery Motorvehicles Total RMB RMB RMB RMB I.Totaloriginalcarryingamount
1.Openingbalance 300,301,763 582,833,349 12,601,336 895,736,448 2.Increase
Purchase 3,313,956 11,917,141 781,111 16,012,208 CIPtransfer 275,102 56,214 - 331,316 3.Decrease
Disposal ______-___ __(2_,_33_2_,4_2_3_) ___(_27_9_,8_5_0_) __(2_,_61_2_,2_7_3_) 4.Closingbalance _3_0_3_,8_9_0_,8_2_1 _5_9_2_,4_7_4_,2_8_1 __1_3_,1_0_2_,5_9_7 _9_0_9_,4_6_7_,6_9_9 II.Totalaccumulateddepreciation
1.Openingbalance 93,360,535 367,510,418 9,571,379 470,442,332 2.Increase
Accrual 9,662,598 27,611,496 618,844 37,892,938 3.Decrease
Disposal ______-___ __(1_,_81_5_,1_3_8_) ___(_26_3_,0_8_8_) __(2_,_07_8_,2_2_6_) 4.Closingbalance _1_0_3_,0_2_3_,1_3_3 _3_9_3_,3_0_6_,7_7_6 ___9_,9_2_7_,1_3_5 _5_0_6_,2_5_7_,0_4_4 III.Totalnetcarryingamount
1.Closingnetcarryingamount 200,867,688 199,167,505 3,175,462 403,210,655_________ _________ _________ _________ 2.Openingnetcarryingamount 206,941,228 215,322,931 3,029,957 425,294,116_________ _________ _________ _________ As at 31 December 2014, there was no fixed assets with ownership restricted (31 December 2013: Nil).
As at 31 December 2014, the Group has no temporary idle fixed assets, fixed assets held for sale, fixed assets leased in under finance leases and fixed assets leased outunder operating leases (2013: RMB: Nil).
(2) Fixedassets ofwhich certificates of title havenot beenobtained:
As at 31December 2014,buildings withoutproperty certificate areasfollows：
Reasons why certificates oftitlehave Items Amount not beenobtained RMB
Fermentation center office,
experiment building and workshop 6,556,657 Processing__________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. XIV. NOTES TO COMPANY FINANCIAL STATEMENTS -continued
11. Constructionin progress
(1) Constructioninprogress
Closing balance Opening balance RMB RMB The Company's reconstruction project 182,765 269,802__________ _______ (2) Current year movement onimportant construction
Accumulated
Opening Transferto Closing expenditure/b Theprogressof
Budget balance Addition PPE balance udget construction Financedby RMB RMB RMB RMB RMB %
TheCompany's
reconstructionproject
201,440,000 269,802 244,279 (331,316) 182,765
91.0 91.0 Self-raised There was nointerest capitalized inconstruction inprogress in 2014.
(3) As at 31December 2014,there was noprovision was made for the construction in process. 12. Bearer biological asset
Biologicalasset measured at cost
Planting RMB I.Totaloriginal carrying amount
1.Openingbalance 67,302,314 2.Increase
Self cultivated 28,460,486 3.Decrease
Disposal (5,093,268)__________ 4.Closingbalance 90,669,532__________ II.Total accumulated depreciation
1.Openingbalance 6,450,905 2.Increase
Accrual 586,905__________ 3.Closingbalance 7,037,810__________ III.Total net carrying amount
1.Closingnet carrying amount 83,631,722__________ 2.Opening net carrying amount 60,851,409__________ As at 31December 2014,there is nobiological asset with ownershiprestricted.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. XIV. NOTES TO COMPANY FINANCIAL STATEMENTS -continued
12. Bearer biological asset -continued
As at 31 December 2014, the Company's accumulated depreciation of biological assets is RMB 7,037,810(2013:RMB 6,450,905).
As at 31 December 2014, biological assets of the Company include mature bearer biological assets of RMB 7,923,216 (2013: RMB 8,510,121) and immature bearer biological assets of RMB 75,708,506.(2013:RMB 52,341,288)
As at 31 December 2014, there is no indication that biological assets may be impaired, and no provisionwas made.
13. Intangible assets
Intangible assets
Landuse right Software use right Total RMB RMB RMB I.Totaloriginal carrying amount
1.Openingand closing balance 96,594,766 3,480,000 100,074,766_________ _________ __________ II.Total accumulated depreciation
1.Openingbalance 17,454,935 3,480,000 20,934,935 2.Increase
Accrual 2,379,153 - 2,379,153_________ _________ __________ 3.Closingbalance 19,834,088 3,480,000 23,314,088_________ _________ __________ III.Total net carrying amount
1.Closingnet carrying amount 76,760,678 - 76,760,678_________ _________ __________ 2.Openingnet carrying amount 79,139,831 - 79,139,831_________ _________ __________ As at 31December 2014,there was nointangible asset withrestricted ownership.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. XIV. NOTES TO COMPANY FINANCIAL STATEMENTS -continued
14. Deferred taxassets and liabilities
Deferred taxassets and deferred taxliabilities thatare not presented at thenetamount after offset Recognised deferred taxassets notpresented at thenet amountafter offset
Closingbalance Openingbalance
Deductible Deferred Deductible Deferred Item
temporarydifference taxassets temporarydifference taxassets RMB RMB RMB RMB Unrealizedprofitfromintra
companytransactions 9,000,404 2,250,101 7,795,104 1,948,776 Unpaidbonus 28,548,564 7,137,141 29,568,378 7,392,095 Retirementbenefit 11,514,647 2,878,662 14,416,547 3,604,137 Assetimpairmentprovision 17,199,521 4,299,880 17,392,429 4,348,107 Deductablelosses 16,185,336 4,046,334 - - Deferredincome 25,765,813 6,441,453 22,654,527 5,663,632 108,214,285 27,053,571 91,826,985 22,956,747 15. Trade payables
The aginganalysis is as follows:
Closing balance Opening balance RMB RMB Within1year 228,052,722 166,453,563__________ __________ 16. Employee benefit
(1) Employee benefit
Opening balance Increase Decrease Closingbalance RMB RMB RMB RMB Short-termsalariesandwelfare 51,864,092 143,836,063 (136,981,551) 58,718,604 Post-demissionbenefits
-predeterminedprovisionplan - 10,060,441 (10,060,441) - Terminationbenefit __1_4_,5_5_2_,2_9_5 ___1_,6_5_2_,6_1_5 __(4_,_69_0_,2_6_3_) __1_1_,5_1_4_,6_4_7 66,416,387 155,549,119 (151,732,255) 70,233,251_________ _________ _________ _________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. XIV. NOTES TO COMPANY FINANCIAL STATEMENTS -continued
16. Employee benefit -continued
(2) Short-term salaries andwelfare
Opening balance Increase Decrease Closingbalance RMB RMB RMB RMB Salariesandbonus 49,583,695 127,184,205 (120,593,968) 56,173,932 Staffbenefit - 7,430,814 (7,427,314) 3,500 Staffwelfare - 4,318,828 (4,318,828) - Includes:
Medicalinsurance - 3,382,675 (3,382,675) - Injuryinsurance - 490,366 (490,366) - Maternityinsurance - 445,787 (445,787) - Housingfund - 3,584,493 (3,584,493) - Unionfeeandeducationfee ___2_,2_8_0_,3_9_7 ___1_,3_1_7_,7_2_3 __(1_,_05_6_,9_4_8_) ___2_,5_4_1_,1_7_2 51,864,092 143,836,063 (136,981,551) 58,718,604_________ _________ _________ _________ (3) Predetermined provision plan
Opening balance Increase Decrease Closingbalance RMB RMB RMB RMB Pension - 9,325,372 (9,325,372) - Unemploymentinsurance ___-__ ____7_3_5_,0_6_9 ___(_73_5_,0_6_9_) ___-__ - 10,060,441 (10,060,441) -_____ _________ _________ _____ 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 9,325,372 and RMB 735,069 (In 2013: RMB 9,217,726 and RMB 682,538) respectively into pension insurance and unemployment insurance. At 31 December 2014, the Company does not have unpaid pension and unemployment insurance (At 31 December 2013: Nil) which is due to the pension insurance and unemployment insurance plan and not paid at the endof thereporting period.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. XIV. NOTES TO COMPANY FINANCIAL STATEMENTS -continued
17. Taxes payable
Closing balance Opening balance RMB RMB Value added tax (7,183,464) 3,289,792 Consumptiontax 12,157,986 19,900,332 Corporation income tax 3,034,692 3,348,032 Urban landuse tax 837,367 421,924 Individualincome tax 6,213,385 6,275,760 Cityconstructiontax 1,510,366 2,319,867 Propertytax 355,417 127,674 Others 1,279,375 1,895,289__________ _________ 18,205,124 37,578,670__________ _________ 18. Other payables
(1) Natures ofotherpayables are asfollows
Closing balance Opening balance RMB RMB Payable tosubsidiaries 1,013,237,829 1,585,656,605 Payables forequipment and construction 7,437,012 14,058,146 Payables fortransportation 306,238 971,220 Deposits fromsuppliers 436,271 277,430 Others 9,187,469 11,633,120____________ ____________ 1,030,604,819 1,612,596,521____________ ____________ (2) As at 31December 2014,there were nosignificant outstandingbalance aged over than oneyear. 19. Capital reserve
2014 Opening balance Increase Decrease Closingbalance RMB RMB RMB RMB Sharepremium 557,222,454 - - 557,222,454_________ ______ ______ _________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. XIV. NOTES TO COMPANY FINANCIAL STATEMENTS -continued
20. Revenue andcost of sales
Revenue is as follows:
2014 2013 RMB RMB Principal operating income 1,647,825,652 1,730,694,774____________ ____________ Cost ofsales is as follows:
2014 2013 RMB RMB Principal operating cost 1,406,987,744 1,473,772,762____________ ____________ 21. Tax andsurcharges
2014 2013 RMB RMB Consumptiontax 129,159,521 112,191,992 Cityconstruction tax 14,952,818 12,054,335 Education feeandsurcharges 10,672,202 8,897,690 Others 2,242,360 1,902,568__________ __________ 157,026,901 135,046,585__________ __________ 22. General and administrative expense
2014 2013 RMB RMB Salary andemployee benefit 31,119,420 26,777,563 Insurance fee 21,720,066 21,246,591 Leasingexpenses 7,569,488 6,048,896 Depreciation 3,860,257 3,718,349 Amortization 2,917,149 2,373,076 Administrative expenses 8,748,731 8,489,998 Travelling expenses 2,704,509 4,127,300 Entertainment fee 278,344 288,524 Propertytax,stamp dutyand other taxes 5,331,881 3,942,998 Maintenance fee 9,685,094 10,416,751 Others 18,116,606 22,234,906__________ __________ 112,051,545 109,664,952__________ __________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. XIV. NOTES TO COMPANY FINANCIAL STATEMENTS -continued
23. Loss onimpairment of assets
2014 2013 RMB RMB Impairment loss of available for sale assets - 5,000,000 Reversal of impairment loss (192,908) (607,571)________ ________ (192,908) 4,392,429________ ________ 24. Financial Expense
2014 2013 RMB RMB Interest income (15,866,780) (25,717,422) Exchange earning (6,093,361) (4,055,987) Less: Interest expenses 10,227,740 2,174,286 Bank charges 678,848 1,650,982_________ _________ (11,053,553) (25,948,141)_________ _________ 25. Investment income
2014 2013 RMB RMB Long-term equity investment income accounted
forbyusing the costmethod 1,164,089,666 1,126,019,415____________ ____________ 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 2014 2013 RMB RMB Sales Company 1,013,615,384 970,000,000 Wine Sales 90,000,000 11,140,442 AFIPTourism - 68,000,000____________ ____________ As at 31 December 2014 and at 31 December 2013, there was no significant restriction on the remittance of investment income tothe Company.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. XIV. NOTES TO COMPANY FINANCIAL STATEMENTS -continued
26. Supplement tocash flow statement
2014 2013 RMB RMB Cash flows from operating activities
calculated byadjustingthe net profit:
Netprofit 1,151,762,045 1,154,687,278 Add: Impairment/(reverse) provision (192,908) 4,392,429 Depreciation of fixed assets 37,892,938 34,615,038 Amortization of intangible assets 2,379,153 2,373,077 Amortization of biological assets 586,905 586,905 Losses/(gains) ondisposal of property,
plant and equipment 5,076,491 662,192 Finance expenses (11,684,489) (29,773,409) Investment income (1,164,089,666) (1,126,019,415) Increase indeferred taxassets (4,096,824) (3,439,545) Decrease/(increase) ininventories 99,587,415 112,158,569 Increase intrade receivables (1,057,576,001) (1,562,373,091) Increase/(decrease) intrade payables (525,631,084) 200,790,717____________ ____________ Netcashflows from operating activities (1,465,986,025) (1,211,339,255)____________ ____________ 27. Cash andcashequivalents
2014 2013 RMB RMB Closingbalance ofcash andbank 496,138,263 602,444,243 Less:
Restricted bankdeposits 2,643,519 2,609,237 Restricted other monetary assets 125,004,018 125,291,289 Depositwitha periodofover threemonths 35,245,260 277,392,728__________ __________ Closingbalance ofcash andcashequivalents 333,245,466 197,150,989__________ __________ 2014 2013 RMB RMB Cash andbank 333,245,466 197,150,989 Including: Cash onhand 5,847 12,479 Bank deposits ondemand 333,239,619 197,138,510__________ __________ Closingbalance ofcash andcashequivalents 333,245,466 197,150,989__________ __________
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. XIV. NOTES TO COMPANY FINANCIAL STATEMENTS -continued
28. Related party transactions
(1) Purchase ofmaterials
2014 2013 RMB RMB Subsidiaries 275,537,285 230,279,590 Other related parties 105,807,546 135,903,876__________ __________ 381,344,831 366,183,466__________ __________ (2) Sales ofgoods
2014 2013 RMB RMB Subsidiaries 1,640,615,167 1,723,774,566 Other related parties 7,210,485 6,920,208____________ ____________ 1,647,825,652 1,730,694,774____________ ____________ 29. Receivables andpayables to related parties
(1) Trade receivables
Trade receivables Closingbalance Openingbalance Balance Baddebtsprovision Balance Baddebtsprovision RMB RMB RMB RMB Other related parties 463,690 - 1,600,968 -_______ _______ _______ _______ Other receivables Closingbalance Openingbalance Balance Baddebtsprovision Balance Baddebtsprovision RMB RMB RMB RMB Subsidiaries 4,699,819,825 - 3,691,961,808 -__________ _______ __________ _______ The abovereceivables due from related parties are unsecured, have nointerestor fixed dateof repayment.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport. XIV. NOTES TO COMPANY FINANCIAL STATEMENTS -continued
29. Receivables andpayables to related parties -continued
(2) Trade payables
Trade Payables Closing balance Openingbalance RMB RMB Subsidiaries - 9,497,134 Other related parties 29,592,060 33,518,567_________ _________ 29,592,060 43,015,701_________ _________ Other payables Closing balance Opening balance RMB RMB Subsidiaries 1,013,237,829 1,585,656,605 Other related parties 200,000 3,906____________ ____________ 1,013,437,829 1,585,660,511____________ ____________ The above payables due to related parties are unsecured, have no interest or fixed date of repayment.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
APPENDIX ISUPPLEMENTARY INFORMATION TO FINANCIAL
STATEMENTS
YEAR ENDED 31 DECEMBER 2014
I. DETAILS OFEXTRAORDINARY PROFIT AND LOSS
2014 RMB Loss ondisposal ofnon-current assets, including
reversal ofaccrued impairment provision (5,086,545) Tax rebate and reduction withoutformal approval documents 13,405,520 Government grants credited inprofit andloss
(except for those recurring government grants
thatare closelyrelated tothe Group's operation,
inlinewith related regulations and haveproper basis of calculation) 27,140,194 Other non-operating income and expense 166,987 Reversal ofbaddebt provisionofreceivables tested individually 192,908 Corporate income tax effect (8,302,732)__________ 27,516,332____________________ The Company's extraordinary profit and loss items arerecognized in
accordance withthe regulations ofthe "publicoffering ofsecurities of the
Company Disclosure ExplanatoryNotice No. 1-non-recurring profit and
losses" (SFC[2008]No. 43).
Allnon-operation income andnon-operation expenses are non-operating profit in2014.Please refer toNote VI-38and VI-39.
II. RETRUN ON EQUITY ("ROE") AND EARNINGS PRE SHARE ("EPS")
The Company's ROE andEPS are calculated inaccordance with theCSRC
regulations ofthe "Information Preparing and Disclosure Rules ofPublic
Company No. 9- calculation anddisclosure of ROE andEPS" (Revised 2010). Weighted average
2014 ROE Basic EPS% RMB Net profit attributable toshareholders of theCompany 15.11 1.43 Net profit attributable toshareholders
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
ofthe Company deducting extraordinary profit and loss 14.69 1.39_____ _________ ____ The Company didnothave anypotential dilutive shares.
Weighted average
2013 ROE Basic EPS% RMB Net profit attributable toshareholders of theCompany 16.45 1.53 Net profit attributable toshareholders
ofthe Company deducting extraordinary profit and loss 16.78 1.48_____ _________ ____ The Company didnothave anypotential dilutive shares.
YantaiChangyuPioneerWineCo.Ltd.2014AnnualReport.
XII、Reference Documents
(1)The original of AnnualReport autographed by the chairman.
(2)The Financial Statements autographed and signed by the chairman, chief accountant andaccountants incharge.
(3)The Prospectus and Public Offering Announcement for Stock B in 1997, the Prospectus and TheShares’ Change& Public Offering Announcement for Stock A in 2000.
(4) The originals of all documents and announcements that the Company made public during the report period in the newspapers designated by China Securities Regulatory Commission.
Yantai Changyu Pioneer Wine Co. Ltd.
Boardof Directors
28th April 2015