Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report Yantai Changyu Pioneer Wine Co. Ltd.
2016 Annual Report
2016Final01
April, 2017
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report Contents
I、ImportantNotice，Contents andDefinition..............................................................................3II、Brief IntroductionfortheCompany andMain Financial Indicators ..................................5III、Summary oftheCompany’s Businesses ..............................................................................10IV、ManagementDiscussionand Analysis .................................................................................13V、Major issues .............................................................................................................................34VI、Changes in Shares andtheShareholders’Situation ...........................................................50VII、Related SituationofPreferred Shares ................................................................................59VIII、 SituationforDirectors, Supervisors, SeniorManagementandStaffs...........................60IX、 Corporate Governance ........................................................................................................73X、 Related SituationofCorporation Bonds .............................................................................83XI、FinancialReport.......................................................................................................................84XII、ReferenceDocument ..........................................................................................................185
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report I. Important Notice, Contents 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.
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 theannual report.
Alldirectors personally attended the meeting for deliberating theannual report.
About significant risks that may be faced in production and operation process, please refer to“5. Risks likely to occur” part of “9.Expectation for theCompany’s Future Development” in chapter four “Management Discussion and Analysis” of this report. We advise investors to read carefully and pay attention to theinvestment risks.
The business plan and target in the report do not represent the earnings forecast of the listed company to 2017. Whether the Company could achieve that or not depends on several factors including the changes of market conditions and the effort extent of managing team etc. with a great uncertainty, sotheinvestors shouldbein a special attention.
TheCompany’s preliminary scheme of profit distribution deliberated and passed by the Board of Directors is shown as following“: Based ontheCompanys’ total 685,464,000 shares, we plan to pay CNY5 (including tax) in cash as dividends for every 10 shares to all shareholders and to send 0 bonus share (including tax) and capital reserve will not be transferred to equity. ”
Yantai Changyu Pioneer Wine Co. Ltd. 2016 Annual Report Definition
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|DefinitionItem|Refers to|DefinitionContent|
|Company/The Company|Refers to|Yantai Changyu Pioneer WineCo.Ltd.|
|Changyu Group/ControllingShareholder|Refers to|Yantai Changyu Group Co.Ltd.|
|CSRC|Refers to|ChinaSecurities Regulatory Commission|
|SSE|Refers to|ShenzhenStock Exchange|
|DeloitteHuaYong|Refers to|Deloitte Hua Yong Certified Public AccountantsCo.,LTD(special general partnership)|
|CNY|Refers to|ChineseYuan|

II. Brief Introduction for the Company and Main Financial Indicators
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport1.Company’s information
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|Abbreviation ofthe Shares:|Changyu A、Changyu B|Code number of theShares|000869、200869|
|Abbreviation ofthe Sharesafter alteration (if have)|_|||
|Placeoflistingof theShares|Shenzhen StockExchange|||
|Legal Name in Chinese|烟台张裕葡萄酿酒股份有限公司|||
|Abbreviation ofChinesename|张裕|||
|Legal Name in English (ifhave)|YANTAI CHANGYU PIONEER WINE COMPANYLIMITED|||
|Abbreviation ofEnglish name(ifhave)|CHANGYU|||
|Legal Representative|Mr. Sun Liqiang|||
|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 personand information
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||Secretary totheBoard ofDirectors|Authorized Representative oftheSecurities Affairs|
|Name|Mr. Qu Weimin|Mr. Li Tingguo|
|Address|56Dama Road, Yantai, Shandong,China|56DamaRoad, 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|

 3.Information disclosureandfilinglocation
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|Thenewspapers in which theCompany’sinformation isdisclosed|“ChinaSecurities Newspaper” ,“Securities Times”and“Hong KongCommercial Daily”|
|WebSiteassigned byCSRCto carrytheannual report|http://www.cninfo.com.cn|
|Filinglocation|Board ofDirectors’Office oftheCompany,56DamaRoad, Yantai, Shandong|

4.Registrationchanges
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|OrganizationCode|913700002671000358|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport 18th
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|Changes for the mainbusiness of the Companysinceitwas listed(ifhave)|On 18th September 1997 the Company’s operating scope was theproduction, processing and sales of wine, distilled liquor, healthyliquor, fruit liquor, non-alcohol beverages, fruit jam, packingmaterials and winemaking machines.On 17th April 2008, after the deliberation of 2007 shareholders’meeting, the Company’s operating scope is amended to “theCompany, legally registered, is in business of production, processingand sales of wine, distilled liquor, medicated liquor, fruit liquor,non-alcohol beverages, fruit jam, packing materials and winemakingmachines; licensed importand export.”On 12th May 2010, after the deliberation of 2009 shareholders’meeting, the Company revised its operating scope to “the Company,legally registered, is in business of production, processing and salesof wine, distilled liquor, medicated liquor, fruit liquor, non-alcoholbeverages, fruit jam, packing materials and its products, winemakingmachines; licensed import and export; external investments accordingtogovernmental policies. ”On 23rd September 2016, after the deliberation of 2016annual 1stInterim shareholders’ meeting, the Company revised its operatingscope to “wine and fruit wine (bulk wine, processing and filling)production; blending liquor and other blending liquors (grape wine)production; other liquors (other distilling liquors) production;production, processing and sales of package materials andwinemaking machines; grape plantation and procurement; tourismresources development (excluding tourism); package design; activityof building rental; licensed import and export; warehouse business;external investmentsaccording to governmental policies. ”|
|Changes for all previouscontrollingshareholders(ifhave)|No.|

5.Otherdocuments
Theaccountant appointed bythe Company
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|Name|Deloitte Hua Yong Certified Public Accountants Co., LTD(special general partnership)|
|Address|No. 1East Chang'an Avenue, Dongcheng District, Beijing|
|Nameofsignatory accountants|Li Xu,Li Yangang|

The sponsor agency the Company appointed to perform the duty of continuous supervision during thereport period
□Available Not available
The financial adviser the Company appointed to perform the duty of continuous supervision during thereport period
□Available Not available
6.Key accounting dataand financialindicators
Whether the Company makes retroactive adjustments or restates the accounting data of
previous fiscal years because of changes ofaccounting policy and/or accounting errors.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport□YesNo
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|-|-|-|-|-|
|Item|2016|2015|More or lessthanLast year (%)|2014|
|Business revenue|4,717,596,472|4,649,722,368|1.46%|4,156,727,525|
|Net profit attributedto the shareholdersof the listedcompany|982,460,488|1,030,073,860|-4.62%|977,707,711|
|Net profit attributedto the shareholdersof the listedcompany afterdeducting theirregular profit andloss|941,730,478|993,268,823|-5.19%|950,191,379|
|Net cash flowsfrom the operatingactivities|889,911,970|1,143,046,367|-22.15%|1,070,083,296|
|Basic earnings pershare|1.43|1.5|-4.67%|1.43|
|Diluted earningspershare|1.43|1.5|-4.67%|1.43|
|Weighted averagefor earning rate ofthenet assets|12.55%|14.40%|-1.85%|13.96%|
|Item|Dec.31st2016|Dec.31st2015|More or lessthanLastyear(%)|Dec.31st2014|
|Totalassets|11,528,077,971|10,344,211,461|11.44%|8,912,232,640|
|Net Assetsattributed to theshareholders of thelisted company|8,209,010,989|7,564,099,003|8.53%|6,840,452,145|

7.Differences inaccounting data underPRC accounting standardsandinternational accounting standards
(1) Differences of net profit and net asset in the financial report disclosed according to bothinternational accounting standardsandPRC accountingstandards
□Available Not available
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport There are no differences of net profit and net asset in the financial report disclosed according to both international accounting standards and PRC accounting standards during the report period.
(2) Differences of net profit and net asset in the financial report disclosed according to bothforeign accounting standardsandPRCaccounting standards
□Available Not available
There are no differences of net profit and net asset in the financial report disclosed according toboth foreign accounting standards and PRCaccounting standards during the report period. 8.Key financialindicators byquarter
Unit：CNY
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|-|-|-|-|-|
||1st Quarter|2ndQuarter|3rdQuarter|4thQuarter|
|Business revenue|1,882,230,620|870,802,179|1,010,732,839|953,830,834|
|Net profit attributed tothe shareholders of thelistedcompany|542,806,719|152,215,128|129,748,790|157,689,851|
|Net profit attributed tothe shareholders of thelisted company afterdeducting the irregularprofit and loss|538,762,161|139,716,160|123,011,178|140,240,980|
|Net cash flows from theoperating activities|605,256,456|77,491,913|308,317,385|-101,153,784|

Whether there are differences between the above mentioned financial indicators or their sum and the related financial indicators in the quarterly reports and semi-annual reports disclosed bytheCompany.
□YesNo
9.Item andamountofirregular profitandloss
V Available□Not available
Unit：CNY
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|-|-|-|-|-|
|Item|2016|2015|2014|Explanation|
|Gain on disposal of non-currentassets, including the reversal ofaccruedimpairmentprovision|14,719|136,061|-5,086,545|－|
|Tax refund or exemption that is eithernon-recurring or without properapproval|||13,405,520|－|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
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|Government grants credited in profitand loss (except for those recurringgovernment grants that are closelyrelatedtotheentity's operation,inlinewith related regulations and haveproperbasisofcalculation)|49,130,643|38,952,919|27,140,194|－|
|Reversal of impairment loss forreceivables which was separatelyundertakenimpairmenttest|||192,908|－|
|Other non-operating income andnon-operating expenses except theaforementioneditems|4,656,971|9,071,448|166,987|－|
|Less.Incometaxeffect|13,072,324|11,355,391|8,302,732|－|
|Total|40,730,009|36,805,037|27,516,332|--|

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 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 onPublicCompany’s Information DisclosureNo.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 InformationDisclosure No.1- Irregular ProfitandLoss during thereport period.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport III. Summary of theCompany’s Businesses
1.Mainbusinesses during thereport period
WhethertheCompany need to followthe disclosurerequirement of special business?
No.
During the report period, theCompany’s main business is to produce and operate wine and brandy, thus providing the domestic and foreign consumers with healthy and fashionable alcoholic drinks. Compared with earlier stage, there are no significant changes happened to theCompany’s main businesses. The wine industry that the Company involved in is still in the growth stage, the whole domestic wine market is on therising trend. The Company takes thedominant positionin thedomesticwinemarket.
2.Significantchanges ofmain assets
(1)Significantchanges ofmain assets
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|Main assets|Explanation ofsignificant changes|
|Equityasset|No significant changes|
|Fixed asset|The bookvalueoffixed assets increases by51.60%comparedwith thebeginning oftheyear, owing that parts ofconstructionprojects havetransferred tofixed asset during thereport period.|
|Intangibleasset|No significant changes|
|Constructioninprocess|The bookvalueofconstruction projects decreases by32.89%compared with thebeginning ofthe year, owing toparts ofconstruction projects have transferred to fixed asset during thereport period.|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport (2)Main overseas assets condition
Available □Not available
Unit：CNY
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|Detailsofassets|Formationreasons|Assets scale|Location|Operation mode|Controlmeasuresforsafeguarding ofasset security|Earningcondition|Theproportion ofoverseas assets in theCompany’snetassets|Whether therearesignificantimpairmentrisks|
|Equityasset|Acquisitionofequity|465,376,681|Spain|Wine productionand operation||-7,484,378|5.54%|No|
|Otherexplanation||No.|||||||

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport 3.Analysisofcore competitiveness
WhethertheCompany need to followthe disclosurerequirement of special business?
No.
Compared with the participants in the arena of the Chinese wine sector, we believe that the Company isprovided with thefollowing 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 good reputation.
Secondly, the Company has set up a nationwide marketing network, formed a “three-level” marketing network system mainly composed of thecompany’s salesmen and distributors, possessed thestrong marketing abilityand market 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 innovationand established a perfect quality control 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 and Shanxi, whose scales andstructures havegenerally met theCompany’s needs for development.
Fifthly, the Company has a great variety ofproducts composed of all grades, itswine，brandy and sparkling wine 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 comparativesuperiority inthefuture competition.
Sixthly, the Company has a relatively respect motivation system. Most ofCompany’s employees indirectly hold theCompany’s equity through controlling shareholders. There are high consistency between employee benefits and shareholders benefits, in favor of motivating employees to create valuefor shareholders.
All in all, the Company has built up a strong core competitive edge and obtained and maintained arelatively dominant positionin thelong-term market competition.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport IV. Management Discussion and Analysis
1.Summarization
In 2016, influenced by the slowdown of domestic economic growth, the overall domestic wine industry is relatively stable, the effective demands for top-level products is weakness, the medium-and-low-level products suitable for mass consumption maintains a favorable growth tendency. Because of the overwhelming flow of foreign wine into Chinese market, product price range further decreases, making market competition further intensified and bringing bigger challenges for the Company to achieve sustained and steady 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 brandy and imported wine, optimize the market layout, perfect the marketing channels and effort to promote product sales, achieving good results and realizing business income of CNY 4717.59 million, an increase of1.46% compared with last year; 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 CNY982.46 million belonging to the parentcompany’s shareholders, an decrease of4.62% compared with last year.
2.Analysisofmain business
Whetherornot thesame as thedisclosed summarization inoperation situation discussionand analysis?
□Available Not available
(1)Summarization
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|Description|Increase or decrease ofthe end of the periodover theend oflast year|Causeofsignificant changes|
|Operating revenue|1.46%|Mainlybecause ofincrease insales volume|
|Operating cost|4.18%|Mainly because of increase in sales volume,especially the proportion of sales in medium-lowpriceproducts increased|
|Sales expense|3.48%|Mainly because of year-on-year increase of wage &welfare,transport cost and depreciation in 2016|
|Management expense|-1.33%|Mainly because of year-on-year reduction of propertytax, stamp tax, business travel expense and servicecost in2016|
|R&D investment|0.34%|Mainly because of increase in expenses fortechnology research and development in 2016|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
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|Financial expense|94.63%|Mainly because of reduction of interest income due todecreaseof timedepositbalance,and the increaseinloaninterest expenditureand exchange loss|
|Net amount ofcash flowgenerated in operating activities|-22.15%|Mainly because of decline of received cash fromproduction sales and rendering ofservice|
|Net amount ofcash flowgenerated in investmentactivities|26.70%|Mainly because of the decrease in received cash paidbysubsidiary and other businessunits|
|Net amount ofcash flowgenerated in capital-raisingactivities|47.24%|Mainlybecause ofincrease inreceived cash from loan|

Review and summary of the process of theCompany’s early-disclosed development strategy and business plan during thereport period
During the report period, influenced by the decelerated growth on the demand for domestic wine and intensified market competition, the Company has realized the business income of CNY 4.72 billion, increased by1.46% compared with last year, exceeding the target fixed at 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 continuously carried out the development strategy of multi-liquor, pushed hard on harmonious development of multi-liquor, which played an important part in realizing the increase in the business income. Themain work inthe report period is as following:
Firstly, the Company further strengthened the construction of marketing system, optimized product structure, increased the marketing promotion efforts and enhanced the marketing capability. the Company promoted the construction of wine distributor system, especially for chateau wine mainly pushed by the Company; quickened the national sales system construction and organized brandy-tasting meeting for 450 times. The Company further perfected the sales system of multi-channel and multi-corporation, integrated middle-and-low channel and middle-and-small hotel companies, and adjusted sales system for imported liquor. The Company built independent sales system for imported liquors, making marketing promotion more professional and more systematic. the Company conducted accurate dissemination for brands through new media platforms and took many activities, such as “G20 State Banquet”, “World Cabernet Gernischt Day” and “Grappie Launch” and so on. According to Baidu search index, the visibility of Changyu brands in the whole year ranked first in thewineindustry.
Secondly, the management of production was enhanced in order to lower the production cost and improve the production efficiency. Under the circumstance of raw material shortage, the Company fully took the advantage of centralized purchasing to ensure the full and timely supply of raw materials as well as the inhibition of increase in raw material price, resulting
that the purchasing prices of main packaging materials were lower over5% than average
price. The Company further strictly controlled various expenses, reinforced the management
of production process consumption index in order to keep major production expenses within
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport the standard scope of the Company. Owing to the improvement of production efficiency per capita in production system, the output per capita was increased through mode of production structure optimization.
Thirdly, the research for new products and new technologies was continued being conducted and the quality management was strengthened in order to improve technological level and product quality. The Company confirmed 41 technologies for improving internal quality of products, such as chateau wine, Jiebaina and brandy and so on, conducted technology research mainly in the aspects of product anti-oxidation and extension of bulk wine stability, and promoted steady improvement in internal quality of various products; combined with North West Agriculture and Forestry University to report a “Innovation and Application of Key Technology in Chinese Wine Industry Chain” project and won the second prize of 2016 National Scientific and Technological Progress Award; combined with Jiangnan University to report a “Establishment and Application of Quality Assessment and Management System for Premium Wine-making Grape Material and Wine” project and won the first prize of 2016 China General Chamber of Commerce Scientific and Technological Progress Award; its technology center was awarded as 2016 “National Agricultural Products Processing and Development Center Technological Innovation Top 10 Unit”; applied for 2 national patents for invention and published 5 academic paper; attended wine and spirit tasting contest owing international influence, which could be exemplified as Brussels, winning 3 gold awards and 8 silver awards; The Company enhanced product quality testing and mentoring, and implemented annual quality target, major work and special work, improving the quality management level.
Fourthly, the procurement of raw materials such as grapes was completed successfully and the management of grape base was further strengthened. The Company balanced domestic and international raw material resource, and optimized grape purchase pricing method, so that grape purchase pricing controlled in reasonablelevel.
Fifthly, the construction of technological upgrading projects is steadily promoted to strengthen momentum for future development. During the report period, the 7 projects run smoothly among 9 projects which planed to be constructed. Another 2 projects (named Changyu International Wine City Tourism Projects and Pioneer Monopoly Shop) Suspended implementation owing to the changes of domestic economic situation and consumer market ,engineering qualityofeach construction project is excellent.
(2)Revenue andcost
Compositionof operating incomes
Unit:CNY
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|-|-|-|-|-|-|
||2016||2015||Year-on-yearincrease ordecrease (%)|
||Amount|Proportioninoperatingincomes|Amount|Proportioninoperatingincomes||
|Total|4,717,596,472|100%|4,649,722,368|100%|1.46%|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
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|operationrevenue||||||
|Industry-classified||||||
|Industry ofliquor andalcoholicbeverage|4,717,596,472|100%|4,649,722,368|100%|1.46%|
|Product-classified||||||
|Wine|3,700,806,317|78.45%|3,659,597,234|78.71%|-0.26%|
|Brandy|905,687,936|19.20%|883,276,247|19%|0.20%|
|Others|111,102,219|2.36%|106,848,887|2.30%|0.06%|
|Area-classified||||||
|Domestic|4,437,302,746|94.06%|4,481,598,915|96.38%|-2.32%|
|Abroad|280,293,726|5.94%|168,123,453|3.62%|2.32%|

 The condition of sectors, products or areas accounting for over10% in theCompany’s operating incomes or operating profits
Available□Not available
Whether theCompany followdisclosure requirement ofspecial industry?
No.
Unit:CNY
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|-|-|-|-|-|-|-|
||Operating income|Operating cost|Grossprofitrate|Year-on-yearincreaseordecrease(%)ofoperatingincome|Year-on-yearincreaseordecrease(%) ofoperatingcost|Year-on-yearincreaseordecrease(%) ofgrossprofitrate|
|Industry-classified|||||||
|Industryof liquorandalcoholicbeverage|4,717,596,472|1,575,770,979|66.60%|1.46%|4.18%|-0.87%|
|Product-classified|||||||
|Wine|3,700,806,317|1,204,784,351|67.45%|1.13%|5.15%|-1.24%|
|Brandy|905,687,936|317,845,705|64.91%|2.54%|3.46%|-0.31%|
|Area-classified|||||||
|Domestic|4,437,302,746|1,372,112,826|69.08%|-0.99%|-5.77%|1.57%|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport Under the situation that the statistical caliber of theCompany’s main business data was adjusted during the report period, theCompany’s main business data adjusted on the basis of caliber at theend of report period in recent one year.
□AvailableNot available
WhethertheCompany’s sales revenueformaterial object is more thanlaborincomeYes□No
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|-|-|-|-|-|-|
|Sector|Project|Unit|2016|2015|Year-on-yearincrease ordecrease (%)|
|Wine|Sales volume|Ton|98,958|86,318|14.64%|
||Production|Ton|99,784|84,446|18.16%|
|Brandy|Sales volume|Ton|40,171|40,074|0.24%|
||Production|Ton|43,262|39,432|9.71%|

 Explanation onthecauses ofover30%year-on-year changes of therelated comparison data.□AvailableNot available
 The fulfillment of major sales contract signed by the Company up to the report period
□AvailableNot available
Compositionof operating costs
Unit:CNY
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|Sector|Project|2016||2015||Year-on-year increase ordecrease(%)|
|||Amount|Proportion in theoperatingcost (%)|Amount|Proportion in theoperatingcost (%)||
|Wine|Blendingliquor|692,570,791|57.49%|608,095,160|53.07%|4.41%|
||Packingmaterial|372,613,924|30.93%|408,405,997|35.64%|-4.72%|
||Wages|44,895,195|3.73%|41,930,611|3.66%|0.07%|
||manufacturingcost|94,704,442|7.86%|87,353,461|7.62%|0.24%|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
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|-|-|-|-|-|-|-|
|Brandy|Blendingliquor|187,495,081|58.99%|189,302,330|61.62%|-2.63%|
||Packingmaterial|105,943,197|33.33%|93,152,552|30.32%|3.01%|
||Wages|11,965,588|3.76%|12,551,940|4.09%|-0.32%|
||manufacturingcost|12,441,839|3.91%|12,206,568|3.97%|-0.06%|

Whether there arechanges of consolidation scopeduringthereport period
Yes□No
For the scope of consolidated financial statement in this year, please see Notes VIII "Equity in other entities" in detail. For detail of changes in the scope of consolidated financial statement in thisyear, please see Notes VII "Change in consolidation scope".
 Major changes or adjustments of theCompany’s products or services during the report period
□Available Not available
Information of majorcustomers andmajor suppliers
TheCompany’s important customers
|||
|-|-|
|Thetotal sales amount of thetopfive customers（CNY）|173,506,000|
|The proportion that total sales amount of the top five customersaccountingfor theannual total sales amount（%）|3.68%|
|The proportion that sales amount of the related party in the totalsales amount of the top five customers accounting for the annualtotalsales amount（%）|0%|

InformationontheCompany’s 5biggest customers
|||||
|-|-|-|-|
|No.|CustomerName|SalesAmount（CNY）|Proportion in Total Sales fortheyear（%）|
|1|Chuxin Trade Company Limited inGuangzhou city|49,540,846|1.05%|
|2|New Baicheng Food Trade Company in|34,594,182|0.73%|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
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|-|-|-|-|
||Hanjiang district ofPutian city|||
|3|Huahaipengcheng Liquor Company LimitedinZhuhai city|31,452,543|0.67%|
|4|Wal-Mart (China) Investment CompanyLimited|29,012,715|0.61%|
|5|Dali Qianxingrong Wine Shop in Nanhaidistrictof Foshan city|28,905,714|0.61%|
|Total|—|173,506,000|3.68%|

Available□Not available
There is no associated relationship between top 5 customers and the Company. TheCompany’s directors, supervisors, senior management, core technicians, shareholders holding over5% shares, actual controller and other related partydon’t gain benefits directly and indirectly in majorcustomers.
InformationontheCompany’s important suppliers
|||
|-|-|
|Thetotal purchase amount of thetop 5suppliers|510,981,344|
|Theproportion of thetotal purchase amount ofthetop 5suppliers intheannualpurchaseamount|38.32%|
|Purchase amount of the related party in total purchase amount of the top fivesuppliers accounting forannual totalpurchase amount（%）|five11.29%|

InformationontheCompany’s top5biggest suppliers
|||||
|-|-|-|-|
|No.|SupplierName|PurchaseAmount(CNY)|Proportion in Total Purchasefortheyear（%）|
|1|Yantai Shenma Packaging Co.,Ltd.|150,590,287|11.29%|
|2|Yantai Changyu Glass Co.,Ltd.|128,098,740|9.61%|
|3|Xinjiang Yuyuan Liquor Co.,Ltd.|85,691,150|6.43%|
|4|Liquan Sales Department ofShandong Yantai Winery Co.,Ltd.|85,477,737|6.41%|
|5|152 regiment of the eighthagriculture production division|61,123,430|4.58%|
|Total||510,981,344|38.32%|

 Othersituation explanationof main customers
□Available Not available
(3)Costs
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport Unit:CNY
||||||
|-|-|-|-|-|
||2016|2015|Year-on-yearincrease ordecrease(%)|Explanation ofsignificantchanges|
|Sales expense|1,253,260,668|1,211,127,163|3.48%|Mainly becauseofyear-on-yearincrease ofwage &welfare,transport costanddepreciation in2016|
|Managementexpense|309,783,548|313,968,409|-1.33%|Mainly becauseofyear-on-yearreduction ofproperty tax,stamp tax,business travelexpenseandservice cost in2016|
|Financialexpense|21,968,859|11,287,685|94.63%|Mainly becauseof reduction ofinterest incomedue to decreaseof time depositbalance, and theincreaseofloan interestexpenditureandexchange loss|

 (4)Research anddevelopmentexpenditure
□Available Not available
(5)Cash flow
Unit: CNY
|||||
|-|-|-|-|
|Item|2016|2015|Year-on-yearincrease ordecrease (%)|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
|||||
|-|-|-|-|
|Subtotal ofcash inflowinoperating activities|4,525,609,466|5,045,321,545|-10.30%|
|Subtotal ofcash outflowinoperating activities|3,635,697,496|3,902,275,178|-6.83%|
|Net amount ofcash flowgenerated in operating activities|889,911,970|1,143,046,367|-22.15%|
|Subtotal ofcash inflowininvestment activities|112,952,925|70,956,457|59.19%|
|Subtotal ofcash outflowininvestment activities|800,394,471|1,008,811,136|-20.66%|
|Net amount ofcash flowgenerated in investment activities|-687,441,546|-937,854,679|26.70%|
|Subtotal ofcash inflowincapital-raising activities|1,191,567,445|602,060,185|97.92%|
|Subtotal ofcash outflowincapital-raising activities|1,232,491,837|679,633,059|81.35%|
|Net amount ofcash flowgenerated in capital-raisingactivities|-40,924,392|-77,572,874|47.24%|
|Net increase of cash and cashequivalents|164,700,643|131,769,387|24.99%|

Explanation of main influence factors contributing to great changes in related data on year-on-yearbasis
Available □Not available
During the report period, comparing with the same period of last year, net amount of cash flow generated in operating activities was reduced by22.15%, mainly due to the decrease in received cash from selling commodity and providing labor service; subtotal of cash inflow in investment activities increased by59.19%, mainly due to the regain of the fixed deposit whose duration is more than 3 months; subtotal of cash outflow in investment activities was reduced by20.66%, mainly due to the decrease in received net amount of cash paid by subsidiary and other business units; net amount of cash flow generated in investment
activities increased by26.7%, mainly due to the decrease in received cash paid by subsidiary
and other business units; subtotal of cash inflow in capital-raising activities increased by
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport97.92%, mainly due to the increase in received cash from loan; subtotal of cash outflow in capital-raising activities increased by81.35%, mainly due to the increase in the cash paid for debt repayment; net amount of cash flow generated in capital-raising activities increased by47.24%, mainly due to the increase in the received cash from loan; net increased amount of cash and cash equivalents increased by24.99%, mainly due to the significant growth of net amount ofcash flowgenerated in bothoperating activities and financing activities.
Explanation on the causes of the major differences between the net cash flow generated bytheCompany’s operating activities andthisyear’s net profit during thereport period.
□Available Not available
3.Analysisto non-main business
□Available Not available
4.Assets andliabilities situation
(1)Major changes of assets
Unit: CNY
||||||||
|-|-|-|-|-|-|-|
||At theendof 2016||At theend of2015||Proportionincrease ordecrease(%)|Explanationon majorchanges|
||Amount|Proportion in thetotalassets(%)|Amount|Proportion in thetotalassets(%)|||
|Monetaryfunds|1,391,517,607|12.07%|1,285,362,414|12.43%|-0.36%|-|
|Receivables|173,062,628|1.50%|197,795,091|1.91%|-0.41%|-|
|Inventory|2,248,609,740|19.51%|2,260,852,964|21.86%|-2.35%|-|
|Investmentreal estate||0%||0%|0%|-|
|Long-termequityinvestments||0%||0%|0%|-|
|Fixedassets|4,683,187,493|40.62%|3,089,245,185|29.86%|10.76%|Significantincreaseinthebookvalueoffixed assets|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
||||||||
|-|-|-|-|-|-|-|
|||||||comparedwiththebeginningoftheyear,owing thatparts ofconstructionprojectshavetransferredtofixedasset duringthereportperiod.|
|Construction inprogress|1,346,281,737|11.68%|2,005,990,308|19.39%|-7.71%|Significantdecrease inthebookvalueofconstructionprojectscomparedwiththebeginningoftheyear,owing toparts ofconstructionprojectshavetransferredtofixedasset duringthereportperiod.|
|Short-termborrowings|662,388,882|5.75%|665,581,921|6.43%|-0.68%|Nomajorchanges|
|Long-termborrowings|49,140,555|0.43%|71,686,629|0.69%|-0.26%|Nomajorchanges|

 (2)Measuring assets andLiabilities atFairValue
□Available Not available
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport (3)Assets rights restricted situationupto theend ofreport period
① In order to ensure the Company and Yantai Economic and Technological Development Zone Management Council to fulfill debtors obligation, Yantai Changyu Wine Research and Development Company Limited plans to provide bank receipt of self-owned CNY46.1million and 365,052.7㎡ land with an estimated valuation of CNY127.7684million to China Agricultural Development Key Construction Fund Company Limited as guarantee for the debt amount of CNY119.84million including original capital of CNY107million invested byChinaAgricultural Development Key ConstructionFund Company Limited.
②In order to ensure Yantai Changyu Wine Research and Development Company Limited and Yantai Economic and Technological Development Zone Management Council to fulfill debtors obligation, the Company plans to provide two real estate used for warehouse and office to China Agricultural Development Key Construction Fund Company Limited as guarantee to provide joint liability for the payment of Yantai Changyu Wine Research and Development Company Limited and Yantai Economic and Technological Development Zone Management Council for the debt amount of guarantee is CNY221.76million, including original capital of CNY198million invested by China Agricultural Development Key Construction Fund Company Limited. The first real estate provided by the Company as guarantee locates on Shixue Road in Zhifu District, whose land area, total building area and the estimated value is respectively 34,888㎡, 10,071.04㎡ and CNY42.6514million; the second real estate locates in the western grape hill factory on Dahaiyang Road in Zhifu District Yantai, whose land area, total building area and the estimated value is respectively176,074㎡,89,571.29㎡ and CNY330.898million.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport 5.Investmentsituation
(1)Overall situation
Available □Not available
||||
|-|-|-|
|Investment amount during thereport period (CNY)|Investment amount ofthesameperiod oflast year (CNY)|Variation|
|929,180,000.00|842,060,000.00|10.35%|

(2)Situationof acquired main equity investments during thereport period
□Available Not available
Unit:CNY (3)Situationof mainongoing non-equity investments duringthereport period
Available □Not available
Unit:CNY
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Projectname|Investmentmode|Whetheritbelongstofixedassetsinvestment|Involvedsectors|InvestmentAmountduringthisreportperiod|Accumulatedacinvestmentamountuptotheendofthereportperiod|tuCaalpitalsource|Processofproject|Estimatedprofit|Accumulatedrealizedprofituptotheendofthereportperiod|Reasonsforunreachedplanningscheduleandestimatedprofit|Disclosuredate(ifhave)|Disclosureindex(ifhave)|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|YantaiChangyuInternationalWineCityBlendingandCoolingCenter|Self-constructed|Yes|Liquorandalcoholicbeveragesector|349,500,000|1,023,130,000|Ownedfunds|95%|—|—|—|2016.04.29|http://www.cninfo.com.cn/cninfo-new/disclosure/szse_main/bulletin_detail/true/1202265203?announceTime=2016-04-29|
|YantaiChangyuInternationalWineCityBottlingCenter|Self-constructed|Yes|Liquorandalcoholicbeveragesector|295,000,000|776,690,000|Ownedfunds|95%|—|—|—|2016.04.29||
|YantaiChangyuInternationalWineCityLogisticsCenter|Self-constructed|Yes|Liquorandalcoholicbeveragesector|199,452,000|398,892,000|Ownedfunds|100%|—|—|—|2016.04.29||
|ChangyuVineandWineResearchInstitute|Self-constructed|Yes|Liquorandalcoholicbeveragesector|15,000,000|105,760,000|Ownedfunds|55%|—|—|—|2016.04.29||
|TreasureWineChateau|Self-constructed|Yes|Liquorandalcoholicbeveragesector|31,000,000|78,990,000|Ownedfunds|55%|—|—|—|2016.04.29||
|KoyacBrandy|Self-|Yes|Liquorand|13,928,000|111,928,000|Owned|50%|—|—|—|2016.04.29||

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Chateau|constructed||alcoholicbeveragesector|||funds||||||
|GreeningInvestment|Self-constructed|Yes|Liquorandalcoholicbeveragesector|25,300,000|25,300,000|Ownedfunds|100%|—|—|—|2016.04.29|
|YantaiinternationalWineCityTourismproject|Self-constructed|Yes|Liquorandalcoholicbeveragesector|0|0|Ownedfunds|0%|—|—|Suspendimplementation|2016.04.29|
|PioneerMonopolyShop|Self-constructed|Yes|Liquorandalcoholicbeveragesector|0|45,140,000|Ownedfunds|60%|—|—|Suspendimplementation|2016.04.29|
|Total|—|—|—|929,180,000|2,565,830,000|—|—|—|—|--|--|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport (4)Financialassets investment
Security investment situation
□Available Not available
There is nosecurity investment for theCompanyduring thereport period.
Derivatives investment
□Available Not available
There is noentrust financing fortheCompany during thereport period.
(5)The usage situationofthe raised capital
□Available Not available
There is nousage situation oftheraised capital for theCompany during thereport period. (6)Saleofmajor assets andequities
Saleof majorassets
□Available Not available
There is nosaleofmajor assets during thereport period.
Saleof majorequities
□Available Not available
(7)Analysis to themajor holdingand jointstock companies
Available □Not available
Situation of main subsidiaries and joint stock companies affecting over10% of theCompany’s netprofit
Unit:CNY
||||||||||
|-|-|-|-|-|-|-|-|-|
|Companyname|Companytype|Mainbusiness|Registeredcapital|Totalasset|Netasset|Operationrevenue|Operationprofit|NetProfit|
|XinjiangTianzhuWinery|Subsidiary|Toplantgrape,produce|CNY 75million|157,135,133|128,532,045|118,253,496|14,648,474|11,561,969|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
||||||||||
|-|-|-|-|-|-|-|-|-|
|Co.,Ltd.||and sellgrapejuice, bulkwine andfruit wine|||||||
|YantaiChangyu-CastelWineChateauCo.LTD.|Subsidiary|Toresearch,produceand sellwine andsparklingwine aswell as thetourismservice|USD5million|290,330,975|79,426,494|102,588,593|18,037,953|13,184,637|
|LangfangCastel-ChangyuWineCo.LTD.|Jointstockcompany|Toproduceand sellwine|USD6,108,818|46,418,915|36,184,983|41,948,391|1,690,042|731,204|
|ChateauChangyuAFIPGlobal|Subsidiary|Toresearch,produceand sellbrandy andwine|CNY110million|590,662,821|158,551,404|178,662,315|40,183,818|29,417,483|
|ChateauLiaoningChangyuIceWineCo.,Ltd.|Subsidiary|Toproduceice wine|CNY26.30million|65,785,268|51,928,324|43,742,412|-5,846,120|-5,895,304|
|DicotPartners,S.L.|Subsidiary|Toproduceand operateowine andotherliquor|EUR2.385732million|465,376,681|122,961,191|281,328,100|-16,244,067|-7,484,378|

Acquisitionand disposal ofsubsidiaries during thereport period
□Available Not available
Informationof main holdingand jointstock companies
No
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport (8)Main partsituation ofthespecial purposebeingcontrolled by theCompany
□Available Not available
(9)ExpectationfortheCompany’s future development
On the basis of our limited experience and special skills, we make the following estimation of the winesector and theCompany’sfuture development:
(1)The sector competitionsetup and development trend
In 2017, under the slowdown effect of national macroscopic economy growth, the operation situation of the Company will become more severe, plus the change of the alcohol consumption environment, leading to difficulties in selling high-end products; Consumers tend to be more rational, which requires Changyu to make more efforts in improving the cost performance of products; Owing that influx of plenty of imported wines would further compress the domestic wine market shares and the new channels such as E-commerce cause great impact on the traditional sales channels, the competition in the domestic wine industry will still be fierce at present and in the future long time; Raw material cost, freight and depreciation expense and other expenses are likely to increase, bringing big pressure to theCompany’s profitability. But in the long run, thanks to increase in their income, more and more people would pursue health and fashion life mode and the people would be in more favor of wines which fit quite well with the trend of consumption, ceaselessly stimulating the demands for premium wine. This decides that the Chinese wine industry owns a huge market development potential, especially that brandy and wine with high price ratio might have a faster growth. In such a case of long-term coexistence of opportunities and challenges, those enterprises that possess strong brand influence and marketing ability, catch the opportunities, actively take adjustments, make full use of newly emerging and traditional sales channels, timely satisfy theconsumers’ demands and provide products with high price ratio will have the opportunity to be the final winner of competition and then form a new structure ofthefuture Chinesewinemarket.
(2)TheCompany’s development strategy
The Company will continue adhering to the strategy of focusing on wine while fully developing various products, actively expand the scope of consumption field and marketing mode, industriously develop middle-and--high-end wines and brandy, strengthen the marketing level of imported wineand striveto provideconsumers with a rich variety ofproducts inhigh price ratio. (3)Management plan innew year
In 2017, the Company will try its best to realize business income of not less than CNY4.9 billion and control the main operating costs and threeperiod expenses belowCNY3.5billion.
(4)The measures theCompany willtake
In order to better catch the opportunities and face the challenges, the Company will take full advantage of self-owned advantages, adhere to market-orientation, take profit evaluation as a means, regard innovations and key work as drives, insist in management and implementation and would pay attention to following aspects in2017:
Firstly, the Company will stick to market-orientation, further enhance the construction of marketing system, optimize the product mix and improve marketing capacity. The Company will optimize distributor structure of wines such as Changyu Castel, Changyu AFIP and Jiebaina etc, accelerate marketing system construction of three western chateaux, promote steady growth of
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport sales volume in middle-and-high-level products; will complete upgrade of Brandy products, further expand Brandy market coverage and increase marketing investment of middle-and-high-level brandy product in order to ensure the continuous and rapid grow of brandy; will strengthen marketing effort of middle-and-low-end products and acquired overseasenterprises’ product and endeavor to develop Zuishixian, Grappie and imported products to Big Product; will continue enhancing newly-emerging business including direct-supply and e-commerce etc, enlarging input of e-commerce business and accelerating the development of e-commerce business; will intensify product price management so as to improve profit ability; will standardize business of VIP custom-made product and improve service level; will positively takevarious measures toenhance market competitiveness ofPioneer MonopolyShop.
Secondly, the Company will focus on informationization of production system, comprehensively improve management level and reduce business risk. The Company will build an intelligentialized manufacturing system to realize systematic control in overall process of production and logistics as well as the seamless joint of various links including the generation of sales order, decomposition of production plan, operation on production line, storage and logistics links, build an efficient and flexible production mode, support “various varieties, small quantity” production and “order business flexibility”, improve production efficiency and meet the quickly changed market need; will continue perfecting and implementing the management control and assessment method of salary per ton, bulk wine consumption and controlled expense, make centralized purchasing in bulk raw material to reduce production cost and improve production efficiency; will further perfect capital management system, improvefinancing modeand reducecapital cost. Thirdly, the Company will further enhance the management of grape base and reinforce the guarantee capability of grape material. The Company will integrate the layout of domestic and foreign raw material resource to form the advantage complementation of domestic and foreign raw material in the aspects of quality, quantity and price and so on and to ensure the stable supply of premium raw material; will actively carry out the classification management, classification processing and pricing in bases special for brandy; will improve grape pricing mechanism and guide the grape bases to produce as the need; will further enhance the management level of self-supporting bases and improve the quality of wine grape through increasing the soil fertility and adopting advanced cultivation technology; will perfect the management system of tracing grape bases by winemakers to improve the management level and grape quality of bases; will perfect profit assessment method of bases and enhance the profitability of self-supporting bases; will further increase contractual base area per contractor, enahnce popularizing rate of mechanization plantation, improveplantation efficiency and reduceraw material cost.
Fourthly, in order to speed up the pace of internationalization, the Company will continue seeking for target enterprise in major wine regions, such as Australia and Chile, in order to realize the comprehensive layout in global major wine regions; will reinforce the management of acquired enterprise and achieve continuous and rapid development in overseas market in the mean time of enlarging Chinese market business.
Fifthly, the company will steadily push construction of investment projects forward, reinforce project management, scientifically arrange construction process and strive for putting into production on time. The Company will continue conducting construction of various project in Yantai Changyu International Wine City(Changyu Industry park),do the equipment commissioning and finishing touches well, intensify project cost audit and auditing of final
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport settlement, strictly control project investment amount and ensure that all projects could be built and put intooperation according tothescheduled process andquality.
(5)Potential risks
A)Risksin price fluctuation of raw 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 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) Risksin uncertainty ofmarket inputand 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 theinvestments in market to besatisfactory as expected.
C)Risksin product transport
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 in cold 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 send products to markets in time and safely. As a result, it makes this Company have to face the 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 warehouses in different places to lowerthese kinds ofrisks.
D)Risksin investment faults
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 uncertain factors; more unforeseeable factors for the overseas merge and acquisition projects in the 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 individual projects, It leads to have the risks of facing with the investment amount out of budget or hardly taking back the expected investment earnings. The Company will take an adequate argument and scientific decision-making for investment projects, try hard to reduce and avoid investment risks.
10.TheCompany’sreceptions, studies, communications andvisits
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReportAvailable □Not available
|||||
|-|-|-|-|
|Reception Time|Reception method|Reception object type|Basic informationindex ofstudies|
|2016.05.05|Field survey|Institution|-|
|2016.05.12|Field survey|Individual|-|
|2016.05.26|Field survey|Individual|-|
|2016.06.24|Field survey|Individual|-|
|Number ofReception|4of|||
|Numberofreceived institution|46|||
|Numberofreceivedindividual|0|||
|Numberofotherobject|0|||
|Whetherdisclose,reveal orbetrayno-publicimportinformation|No|||

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport V. Major issues
1. TheCompany’s common stock profit distribution and increasing equity with capital reserve
Promulgation, implementation oradjustment ofcommon stock profit distribution policies especially cash dividends policies during thereport period
Available □Not available
Deliberated and passed by the 2015Stockholders’ Meeting convened on 26th May, 2016 by the Company, theCompany’s 2015 annual profit distribution scheme is shown as follows: based ontotal 685,464,000 shares (including 453,460,800 A shares and 232,003,200 B shares) up to 31st December, 2015, the Company would pay cash dividend to all shareholders registered on the share registration day: CNY5 in cash per ten shares. This time the Company would neitherdispatch bonus shares norincreaseequity with capital reserve.
On 1st July, 2016, the Company published the Implementation Announcement of 2015 Annual Equity Distribution on China Securities Journal, Securities Times and www.cninfo.com.cn, determining that the share registration day and the ex-dividend day of A Share was respectively on 6th July, 2016 and on 7th July, 2016; the last trading day, the share registration day and the ex-dividend day of B Share was respectively on 6th July, 2016, on 11thJuly,2016and on7thJuly.
This time the dispatching objects contain all A Share holders registered at China Securities Depository and Clearing Corporation Limited Shenzhen Company after closing of Shenzhen Stock Exchange on the afternoon of 6th July, 2016 and all B Share holders registered at China Securities Depository and Clearing Corporation Limited Shenzhen Company after closing of Shenzhen Stock Exchange on the afternoon of 11th July, 2016. This dispatching has already been completed in July 2016.
|||
|-|-|
|Special explanation||
|Whether it is in accordance with the requirements of the regulation in the ArticlesofAssociation and theresolution ofshareholders|Yes|
|Whetherthedistributionstandard and proportion is clear anddefinite|Yes|
|Whethertherelative decision process and mechanism is complete|Yes|
|Whethertheindependent directors perform theirresponsibilitiesand play theroles.|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 adjustingand amending the cashdividends distributionpolicy.|Yes|

TheCompany’s plan (preliminary scheme) of common stock profit distribution and
increasing equity withcapital reserve inthe recent threeyears (including thereport period).
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport TheCompany’s 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 685,464,000 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.
TheCompany’s preliminary scheme of profit distribution plan in 2015 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 ontheCompany’s 685,464,000 shares at total up to December 31, 2015, 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 for33.27% of the net profit CNY 1030.07386 million attributable to the shareholders of the parent company in the consolidated statement, the retained and undistributed profit of CNY 687.34186 million will bereserved for thedistribution ofnextyear.
TheCompany’s profit distribution plan in 2016 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, 2016, 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 for34.89% of the net profit CNY 982.460488 million attributable to the shareholders of the parent company in the consolidated statement, the retained and undistributed profit of CNY 639.728488 million will be reserved forthe distribution ofnextyear.
TheCompany’s common stock cash dividend record in recent three years (including the report period)
Unit:CNY
|||||||
|-|-|-|-|-|-|
|Year ofdistribution|Amount ofcash dividend(includingtax)|Net profitbelonging to thelisted company’sstockholders in theconsolidatedstatement of thedistributionyear|Proportion in thenet profit belongingto the listedcompany’sstockholders in theconsolidatedstatement (%)|Amount of cashdividends in otherways|Proportion of cashdividends in otherways|
|2016|342,732,000|982,460,488|34.89%|0|0%|
|2015|342,732,000|1,030,073,860|33.27%|0|0%|
|2014|301,604,160|977,707,711|30.85%|0|0%|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport During the report period the Company earned profit, the profit of the parent company that could be distributed to common stock shareholders was positive but without proposing common stock cashdividend distribution.
□Available Not available
2. TheCompany’s preliminary scheme of profit distribution and preliminary scheme of increasing equitywith capital reserve
Available □Not available
|||
|-|-|
|Numberof sending bonus shares perten shares (share)|0|
|Numberof dividend payout perten shares (CNY) (including tax)|5|
|Numberof transferring per ten shares(share)|0|
|The cardinal number of the capital stocks for the preliminary distributionscheme (shares)|685,464,000|
|Total cashdividend distribution（CNY）(including tax)|342,732,000|
|Distributableprofit (CNY)|982,460,488|
|Theproportion of cashdividend distribution inthe totalprofit distribution|100%|
|Cash dividend||
|If the Company’s development is in growth stage and major capital expenditure is arranged,while making profit distribution, the proportion of cash dividends should takes up no lessthan 20%inthisprofit distribution||
|Detailed explanation for the preliminary scheme of profit distribution or increasing 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 CNY982.460488million, the netprofit oftheparent company in financial statement isCNY1830.574470million in 2016.According to PRC accounting standard, the situation for the attributable profit ofconsolidation andparent company in2016is as following:Unit:CNYConsolidation Parent companyUndistributableprofit at theend theyear6,620,118,562 7,360,234,545Including: net profit in2016982,460,488 1,830,574,470Distributable profit carried over to the5,980,390,074 5,872,392,075beginning oftheyearDistributionfor 2015dividend342,732,000 342,732,000Withdrawing for the legal earned surplus0 0reserveAccording to regulation of 157th item in the Articles of Association, which is that theCompany can distribute dividends either in cash or by stock, the profit to be distributed eachyear is not less than 25% of the distributable profit realized in the same year and the||

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport 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 2017, under the condition of not influencing the normal production and operation, the Company put forward preliminary scheme onprofit distribution in2016as 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 ontheCompany’s 685,464,000 shares at total up to December 31, 2016, 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 for34.89% of the net profit CNY 982.460488million attributable to the shareholders of the parent company in the consolidated statement, the retained and undistributed profit of CNY 639.728488 million will be reserved for the distribution of 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 dateof2016shareholders’meeting.
3.Implementation ofcommitments
(1) Commitments that theCompany’s actual controllers, shareholders, related parties, acquirers and the Company and other related commitment parties have implemented during thereport period and have not implemented upto theend ofthereport period
Available □Not available
||||||||
|-|-|-|-|-|-|-|
|Commitments|Commitmentparty|Commitmenttype|Commitmentcontent|Commitmenttime|Commitmentperiod|Implementation|
|Commitments atshare reform|－||－||－|－|
|Commitmentsmadeinacquisitionreport orequitychanges report|－||－||－|－|
|Commitments atassetrestructuring|－||－||－|－|
|Commitments attheinitialpublicoffering orrefinancing|YantaiChangyuGroup Co.Ltd.|Solvehorizontalcompetition|Non-horizontalcompetition|18thMay 1997|Forever|Has beenperformingstrictly|
||YantaiChangyuGroup Co.Ltd.|Clearthepurposeofbrand royalty|According toTrademarkLicenseContract,the|18thMay 1997|Forever|Has beenperformingstrictly|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
|||||||
|-|-|-|-|-|-|
||||Companywillpay trademarkroyaltyfor the‘‘Changyu’’products ofYantaiChangyuGroup Co., Ltdevery year,YantaiChangyuGroup Co., Ltdwillusetrademarkroyaltytoadvertise‘‘Changyu’’trademarks andContractedproducts in thiscontract.|||
|Equityincentivecommitments|－|－|－|－|－|
|Commitments atmiddleandsmallshareholders oftheCompany|－|－|－|－|－|
|Commitmentunder timelyimplementationornot|Yes|||||
|Whetheror notto havespecificreasons oftheunimplementedcommitmentandnextsteps(ifany)|No|||||

(2)TheCompany shouldmake astatementon theachieved originalprofitforecast of assets or projects andits reason ifthere is profitforecastofCompany’sassets or
projects andthe report periodis still intheprofitforecastperiod
□Available Not available
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport 4. Non-business capital occupying of listed company by controlling shareholder and its related parties
□Available Not available
There are no non-business capitals occupying of listed company by controlling shareholder and its related parties during thereport period.
5. Explanation of Non-standard Audit Report given by accounting firm in the report period from board of directors, board of supervisors and independent directors (if have)
□Available Not available
6. Compared with the previousyear’s financial report, explanation for the changes of accounting policy, accounting estimation andaccounting method
□Available Not available
There are no changes of accounting policy, accounting estimation and accounting method during thereport period.
7.Duringthe reportperiod, the situationexplanationforthecorrectionofmajor accounting errorswhichneedtoberetrospectandrestated.
□Available Not available
Thereis no situation for thecorrection of majoraccounting errors which needto beretrospect and restated.
8. Compared with the previousyear’s financial report, explanation for the changes of theconsolidated statements scope.
Available □Not available
For the scope of consolidated financial statement in this year, please see Notes VIII "Equity in other entities" in detail. For detail of changes in the scope of consolidated financial statement in thisyear, please see Notes VII "Change in consolidation scope".
9.Theappointmentanddismissal of certified publicaccountants
Currently appointed accounting firm
|||
|-|-|
|Domestic accounting firm name|Deloitte Hua Yong Certified Public Accountants Co., Ltd.(special general partnership)|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
|||
|-|-|
|Reward for domestic accounting firm(CNY‘0000)|198|
|Consecutive period for the auditservices of domesticaccounting Firm|4|
|Name of Certified public accountantfor the audit services of domesticaccounting Firm|Li Xu,Li Yangang|
|Overseas accounting firm name (ifhave)|－|
|Reward for overseas accounting firm(CNY‘0000)(if have)|0|
|Consecutive period for the auditservices of overseas accounting Firm|－|
|Name of Certified public accountantfor the audit services of overseasaccounting Firm|－|

Whetherornot todismisstheaccounting firm during thereport period
□YesNo
To employ internal control audit accounting firms, financial adviser orsponsor.
Available□Not available
The Company employs Deloitte Hua Yong Certified Public Accountants Co., Ltd. (special general partnership)as 2016internal control audit accounting firms.
10.Face ofsuspensionandtermination oflistingafter thedisclosureofannual report□Available Not available
11.Bankruptcy reorganization
□Available Not available
There is nobankruptcy reorganization during thereport period.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport 12.Material litigationandarbitration
□Available Not available
There are nomaterial litigation andarbitration during thereport period.
13.Penalty andrectification
□Available Not available
There are nopenalties or rectifications during thereport period.
14.Creditof theCompany, holdingshareholders and actualcontrollers
□Available Not available
15. Implementation of theCompany’s equity inventive plan, employee stock ownership plan orother employee incentivemeasures
□Available Not available
There are no implementation of theCompany’s equity inventive plan, employee stock ownership plan and other employee incentive measures.
16.Significantrelated transactions
(1)Related transactions in relation to routineoperations
Available □Not available
Detailed information about theCompany’s 2016 annual routine related transactions, please refer to Notes X "Related party and Related Transaction" in the Financial Statement of the report in detail, or could also look up theCompany’s related temporary announcement according to thefollowing index.
Disclosurewebsite ofmajor relatedtransactions’temporary reports forrelated query
||||
|-|-|-|
|Name ofTemporary announcement|Disclosure date oftemporary announcement|Website of disclosure oftemporary announcement|
|Announcement of2017annual routine relatedtransaction|April 22,2017|Cninf(http://www.cninfo.com.cn)|
|Announcement of2016annual routine relatedtransaction|April 29,2016|Cninf(http://www.cninfo.com.cn)|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport (2)Related transactions in relation to acquisitionandsales ofassets orequity
□Available Not available
There are norelated transactions inrelation to acquisition orsales ofassets orequity during thereport period.
(3)Related transactions in relation to common foreigninvestment
□Available Not available
There are norelated transactions inrelation to commonforeign investmentduring thereport period.
(4)Related currentcreditanddebt
Available □Not available
Whetherornot toexistnon-operatingrelated credit and debt
□Yes No
(5)Other major relatedtransactions
□Available Not available
17.Major andimportantcontracts andexecutionresults
(1)Trusteeship, contractand leaseholdissues
Trusteeship situation
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport□Available Not available
There is notrusteeship situationduring thereport period.
Contract situation
Available □Not available
Contract situation description
During the report period, about theCompany’s contract operation situation, please see‘‘1. The structure of Enterprisegroup’’ inAnnex8‘‘Rights andinterests ofothersubject’’in thefinancialreport of thisreport.
Project in gains and losses for theCompany to achieve morethan10%ofthetotal profit
□Available Not available
There are nocontract projects ingains and losses forthe Companyto achieve morethan10%of thetotal profit during thereport period.Leaseholdsituation
Available □Not available
Leasehold situationdescription
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 CNY5.858million witha period of 5years from 1stJanuary 2012to31stDecember 2016.
Project in gains and losses for theCompany to achieve morethan10%ofthetotal profit
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport□Available Not available
There are noleasehold projects in gains and losses for theCompany to achieve morethan10%ofthetotal profit during thereport period. (2)Major guarantee
Available □Not available
Guarantee situation
Unit:CNY’0000
||||||||||
|-|-|-|-|-|-|-|-|-|
|ExternalguaranteeoftheCompanyanditssubsidiaries（excludingguaranteetosubsidiaries）|||||||||
|Guaranteeobjectname|Disclosuredateofrelatedannouncementaboutguaranteequota|Guaranteequota|Actualdateofoccurrence(dateofagreement)|Actualguaranteeamount|Guaranteetype|GuaranteePeriod|Whetherornotcompleteimplement|Whether ornot belong torelated-partyguarantee|
|YantaiEconomicandTechnologicalDevelopmentZoneManagementCouncil.|2016.12.22|34160|2016.12.21|34160|Mortgage;Pledge|10years|No|No|
|Totaloftheexternalguaranteequotaapprovedduringthereportperiod(A1)||34160||Totaloftheactualexternalguaranteeamountduringthereportperiod(A2)||34160|||
|Totaloftheexternalguaranteequota||34160||Balanceoftheactual||34160|||

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
||||||||||
|-|-|-|-|-|-|-|-|-|
|approvedbytheendofthereportperiod(A3)||||externalguaranteebytheendofthereportperiod(A4)|||||
|GuaranteebetweentheCompanyandsubsidiaries|||||||||
|Guaranteeobjectname|Disclosuredateofrelatedannouncementaboutguaranteequota|Guaranteequota|Actualdateofoccurrence(dateofagreement)|Actualguaranteeamount|Guaranteetype|GuaranteePeriod|Whetherornotcompleteimplement|Whether ornot belong torelated-partyguarantee|
|YantaiChangyuPioneerWineSalesLimitedCompany|2016.10.31|10,000|2016.11.05|10,000|Jointliabilityassurance|2years|No|Yes|
|YantaiChangyuPioneerWineCompanyLimited|2016.12.22|11,984|2016.12.21|11,984|Mortgage;Pledge|10years|No|Yes|
|YantaiChangyuWineResearchandDevelopmentCompanyLimited|2016.12.22|72,176|2016.12.21|72,176|Jointliabilityassurance;Mortgage|10years|No|No|
|Totaloftheguaranteequotaapprovedtosubsidiariesduringthereportperiod(B1)||82,176||Totaloftheactualguaranteeamountforsubsidiariesduringthereportperiod(B2)||32,176|||
|Totaloftheguaranteequotaapprovedtosubsidiariesbytheendofthereport||82,176||Balanceoftheactualguaranteeforsubsidiaries||32,176|||

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
||||||||||
|-|-|-|-|-|-|-|-|-|
|period(B3)||||bytheendofthereportperiod(B4)|||||
|Guaranteebetweensubsidiaries|||||||||
|Guaranteeobjectname|Disclosuredateofrelatedannouncementaboutguaranteequota|Guaranteequota|Actualdateofoccurrence(dateofagreement)|Actualguaranteeamount|Guaranteetype|GuaranteePeriod|Whetherornotcompleteimplement|Whether ornot belong torelated-partyguarantee|
|Totaloftheguaranteequotaapprovedtosubsidiariesduringthereportperiod(C1)||0||Totaloftheactualguaranteeamountforsubsidiariesduringthereportperiod(C2)||0|||
|Totaloftheguaranteequotaapprovedtosubsidiariesbytheendofthereportperiod(C3)||0||Balanceoftheactualguaranteeforsubsidiariesbytheendofthereportperiod(C4)||0|||
|TotaloftheCompany’sguaranteeamount（Totalofabovethreemajoritems）|||||||||
|Totaloftheapprovedguaranteequotaduringthereportperiod（A1+B1+C1）||116,336||Totaloftheactualguaranteeamountduringthereportperiod（A2+B2+C2）||66,336|||
|Totaloftheapprovedguaranteequotabytheendofthereportperiod（A3+B3+C3）||116,336||Balanceoftheactualguaranteebytheendofthereportperiod（A4+B4+C4）||66,336|||
|TheproportionofActualtotalguaranteeamount(A4+B4+C4)intheCompany’snetasset||||8.08%|||||

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
|||
|-|-|
|Among:||
|Theamountofguaranteeforshareholders,actualcontrollersandtheirrelatedparties（D）|0|
|Theamountofdebtguaranteefortheguaranteedobjectswhoseasset-liabilityratioismorethan70%directlyorindirectly（E）|0|
|Totalamountofguaranteethatexceeds50%ofnetassets（F）|0|
|Totalamountoftheabove-mentionedthreeitems（D+E+F）|0|
|Explanationforundueguaranteesthathavehappenedwarrantyliabilityormaytakejointpaybackliabilitiesduringthereportperiod（ifhave）|No|
|Explanationforviolatingdueprocesstoprovideexternalguarantee（ifhave）|No|

Specificexplanation onadopting complex guarantee type
No.
Illegalexternal guarantee
□Available Not available
There is noillegal guarantee situationduring thereport period.
(3)Entrustingothers to manage cash assets
Financialmanagement entrustment
□Available Not available
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport There is nofinancial management entrustment during thereport period.
Loanentrustment
□Available Not available
There is noloan entrustment during thereport period.
(4)Other importantcontracts
□Available Not available
There are nootherimportant contracts during thereport period.
18.SocialResponsibility
(1)Precise poverty
①Summary ofannual precise poverty
No.
②Workingcondition ofListedcompany’s annual precise poverty
No.
③Subsequent precise poverty plan
No.
(2)Other social responsibility
Please see “China Securities Newspaper”,“Securities Times”and 2016Annual Social ResponsibilityReport disclosed onwww.cninfo.com.cn . The listed company and its subsidiaries are whether or not to belong to the heavy pollution industry stipulated by the state environmental protection department.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport□Yes No
Whetherornot topublicsocial responsibility
Yes □No
|||||||
|-|-|-|-|-|-|
|Enterprisesocial responsibility||||||
|Enterprise property|Whether includingenvironmentalinformation|Whether includingsocial information|Whether includinginformation ingovernance aspect|Standard of disclosure||
|||||Domesticstandard|Foreign standard|
|Private|Yes|Yes|Yes|Listed Companysocial responsibilityguidance|other|

Detail explaination
|||
|-|-|
|1.WhethertheCompany has passed Environment Management SystemCertification(ISO14001)|Yes.|
|2.Expenditureof environment protection in thefirm-year(CNY‘0000)|630|
|3.Emission reduction performance of three wastes ‘waste gas, waste water andwasteresidues’for theCompany|Alldischarges with standards|
|4.Investment of employee career development ability for improvement of employeeknowledge andtechnology|220|
|5.Social publicdonation|186|

19.OtherMajor issues
□Available Not available
There are noothermajor issuesneed to be explained during thereport period.
20.Major issues ofCompany’s subsidiaries
□Available Not available
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. Changes in Shares and theShareholders’ Situation
1.Changes inshares
(1)Changes in shares
Unit:share
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Amountbeforethischange||Change (+,-)|||||Amountafterthischange||
||Amount|Percentage%|Allotnewshare|Distributebonusshare|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%|

 Causeofshare change
□Available Not available
Approval of share change
□Available Not available
Transferof changedshares
□Available Not available
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport 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 pershare belongingtotheCompany’scommon shareholders, etc.
□Available Not available
Othercontents theCompany thinksnecessary orsecurities regulatory departments ask to makepublic.
□Available Not available
(2)Changes in restricted shares
□Available Not available
2.Securities issuance andlistingsituation
(1)Securities issuance (excludepreferred share) duringreport period
□Available Not available
(2)ExplanationofchangeinCompany’s total shares andshareholding structure andchangeinCompany’s assets and liability structure□Available Not available
(3)Current employee shares
□Available Not available
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport 3.Situationforshareholders andtheactual controllers
(1)Thenumber ofshareholders of theCompany andtheshareholdings
Unit：share
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Total shareholders inthereport period|41,984|Total number ofshareholders by the end oflast month before thedisclosure day of theannual report||42,254||Total number ofpreferredshareholder recoveringvoting power by the endofreport period (if have)(see note 8)||0||Totalnumber ofpreferredshareholder recoveringvoting power by the end oflast month before thedisclosure day of the annualreport (if have) (see note 8)|||0|
|Shareholders holding more than 5%orthe top10shareholders holdingsituation||||||||||||||
|Name ofShareholders|Character ofshareholders||Percentage(%)||Shares held until theend of thereport period||Changesduring thereportperiod||Numberofrestrictedshares||Number ofunrestrictedshares|Pledged orfrozen||
|||||||||||||Sharestatus|Amount|
|YANTAICHANGYU GROUPCO. LTD.|Domestic non-state-ownedlegal person||50.40%||345,473,856||0||||345,473,856||0|
|GAOLINGFUND,L.P.|Foreign legal person||3.11%||21,300,919||0||||21,300,919||0|
|CHINASECURITIESFINANCE CORP|State-owned legal person||2.32%||15,924,155||-73,300||||15,924,155||0|
|BBH BOS S/AFIDELITY FD -CHINAFOCUS FD|Foreign legal person||2.22%||15,241,826||-334,300||||15,241,826||0|
|TIANAN|Domestic non-state-owned||1.16%||7,939,166||7,939,166||||7,939,166||0|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
||||||||
|-|-|-|-|-|-|-|
|PROPERTYINSURANCE CO.,LTD—BAOYINGNO.1|legal person||||||
|NORGES BANK|Foreign legal person|0.96%|6,584,748|886,296|6,584,748|0|
|GUOTAI JUNANSECURITIES(HONGKONG) LIMITED|Foreign legal person|0.78%|5,321,478|651,906|5,321,478|0|
|CENTRAL HUIJINASSETMANAGEMENTLTD.|State-owned legal person|0.69%|4,761,200|0|4,761,200|0|
|BBHA/CVANGUARDEMERGINGMARKETSSTOCKINDEX FUND|Foreign legal person|0.55%|3,788,487|72,700|3,788,487|0|
|FIDELITY CHINASPECIALSITUATIONS PLC|Foreign legal person|0.55%|3,779,202|0|3,779,202|0|

|||||
|-|-|-|-|
|Strategic investors or legal result of the placement of newshares to become 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,and therelationship among the othershareholders is unknown.|||
|Thetop 10shareholders with unrestricted shares||||
|NameofShareholders||Number of unrestricted|Type ofshare|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
|||||
|-|-|-|-|
||shares held until the end oftheyear|Type ofshare|Amount|
|YANTAI CHANGYU GROUP CO.LTD.|345,473,856|A|345,473,856|
|GAOLING FUND,L.P.|21,300,919|B|21,300,919|
|CHINASECURITIES FINANCE CORP|15,924,155|A|15,924,155|
|BBHBOS S/AFIDELITY FD -CHINA FOCUS FD|15,241,826|B|15,241,826|
|TIANAN PROPERTYINSURANCE CO., LTD—BAOYINGNO.1|7,939,166|A|7,939,166|
|NORGES BANK|6,584,748|B|6,584,748|
|GUOTAI JUNANSECURITIES(HONGKONG) LIMITED|5,321,478|B|5,321,478|
|CENTRALHUIJIN ASSETMANAGEMENT LTD.|4,761,200|A|4,761,200|
|BBHA/C VANGUARDEMERGING MARKETS STOCKINDEXFUND|3,788,487|B|3,788,487|
|FIDELITYCHINA SPECIAL SITUATIONSPLC|3,779,202|B|3,779,202|
|The explanation for the associated relationship and accordant action of the top 10shareholders with unrestricted shares, the the associated relationship andaccordant action between the top 10 shareholders with unrestricted shares and thetop10shareholders|Among the top 10 shareholders, Yantai Changyu Group CompanyLimited has no associated relationship or accordant actionrelationship with the other 9 listed shareholders, and the relationshipamongtheother shareholders is unknown.|||
|Explanation for the top 10 shareholders who involved in financing activities andstocktrading business (ifhave)(see note4)|The top 10 shareholders do not involve in financing activities andstock 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)Situationforthecontrolling shareholders ofthe Company
Property ofholding shareholders
Typeof holdingshareholders: Legal representative
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
||||||
|-|-|-|-|-|
|Nameofcontrolling shareholder|Legalrepresentative|Establishmentdate|Organizationcode|Main business|
|Yantai Changyu Group Co.Ltd.|SunLiqiang|1997.04.27|913706002656458244|Production and distribution of wine,healthy liquor, distilled liquor andnon-alcohol beverages, planting ofagricultural products and exportbusiness under the scope ofpermission.|
|Equity situation for the other domestic listedcompanies controlled or shared by thecontrolling shareholders during the reportperiod|No.||||

Changes in thecontrolling shareholder duringthereport period
□Available Not available
There are nochanges in thecontrolling shareholder during thereport period.
(3)Situationfortheactual controllers of theCompany
Property ofactual controllers: domesticother institutions;foreign other institutions
Typeof actual controllers: Legal representative
||||||
|-|-|-|-|-|
|Name of actualcontrollers|Legalrepresentative|Establishmentdate|Organizationcode|Main business|
|Yantai Yuhua Investment&Development Co. Ltd|Jiang Hua|2004.10.28|76779294－7|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, grape|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
||||||
|-|-|-|-|-|
|||||plantation.|
|ILLVA Saronno HoldingSpa|AugustoReina|1984.07.25|－|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|Philippe LEHOUEROU|1956.07.25|－|International Finance Corporation is one of the members of World Bank,mainly dedicated to investment in private sectors of developing countrieswhile providing technical support and consultation service. The corporationis 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 to alleviatepoverty and improvepeople’s life.|
|Yantai GuofengInvestment Holdings Co.,Ltd|Chen Dianxin|2009.02.12|00426068-6|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 ofrelevant departments )|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
|||
|-|-|
|Equity situation for theother domestic listedcompanies controlled bythe actual controllerduringthe report period|No|

Changes ofthe actual controllers during thereport period
□Available Not available
There are nochanges in actual controllers during the report period.
Introduction for property right and control relations between the Company and itsactual controllers
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
|||
|-|-|
||YantaiGuofengInvestmentHoldingsCo.,Ltd|
|IllvaSaronnoHoldingSpa||

Actual controller controls the Companythrough a trust orotherasset management ways
□Available Not available
(4)Other institutional shareholders holdingmorethan10%shares
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport□Available Not available
(5)Shares reduction situationsof holdingshareholders, actual controllers, restructuring sideandother commitment subjects□Available Not available
VII. Related Situation of Preferred Shares
□Available Not available
There are nopreferred shares during the report period.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VIII. Situation for Directors, Supervisors, Senior Management and Staff
1.
Changes inshareholdings ofdirectors, supervisors andseniormanagement
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Name|Post|Status|Gender|Age|Beginningdateofthepost|Endingdateofthepost|Sharesheld at thebeginningoftheperiod|Increasedsharesduringtheperiod|Decreasedsharesduring theperiod|Otherchanges ofshares held|Shares held attheendoftheperiod|
|SunLiqiang|Chairman to theBoard ofDirectors|presentincumbent|M|69|1997.09.18|2019.05.27|0|0|0|0|0|
|ZhouHongjiang|Vice-chairman totheBoard ofDirectors andGeneral manager|presentincumbent|M|52|2002.05.20|2019.05.27|0|0|0|0|0|
|LengBin|DirectorandVice-generalmanager|presentincumbent|M|54|2000.08.22|2019.05.27|0|0|0|0|0|
|Qu Weimin|Director,Vice-generalmanager andSecretary to theBoard ofDirectors|presentincumbent|M|59|1997.09.18|2019.05.27|0|0|0|0|0|
|Zhang Ming|Director|presentincumbent|M|43|2016.05.26|2019.05.27|0|0|0|0|0|
|Chen Jizong|Director|leaving thepost|M|41|2013.05.14|2016.05.26|0|0|0|0|0|
|AugustoReina|Director|present|M|76|2006.12.07|2019.05.27|0|0|0|0|0|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||incumbent||||||||||
|AldinoMarzorati|Director|presentincumbent|M|64|2006.12.07|2019.05.27|0|0|0|0|0|
|AntonioAppignani|Director|presentincumbent|M|78|2006.12.07|2019.05.27|0|0|0|0|0|
|Dai Hui|Director|presentincumbent|F|51|2010.09.01|2019.05.27|0|0|0|0|0|
|Xiao Wei|Independentdirector|leaving thepost|M|56|2010.09.01|2016.05.26|0|0|0|0|0|
|WangZhuquan|Independentdirector|presentincumbent|M|51|2014.05.23|2019.05.27|0|0|0|0|0|
|Wang Shigang|Independentdirector|Presentincumbent|M|51|2011.05.10|2019.05.27|0|0|0|0|0|
|Luo Fei|Independentdirector|Presentincumbent|M|64|2016.09.23|2019.05.27|0|0|0|0|0|
|Liu Yan|Independentdirector|Presentincumbent|F|43|2016.09.23|2019.05.27|0|0|0|0|0|
|KongQingkun|Chairman to theBoard ofSupervisors|presentincumbent|M|44|2013.05.14.|2019.05.27|0|0|0|0|0|
|Zhang Lanlan|Supervisor|presentincumbent|F|47|2013.05.14.|2019.05.27|0|0|0|0|0|
|Liu Zhijun|Supervisor|presentincumbent|M|36|2016.05.26|2019.05.27|0|0|0|0|0|
|Guo Ying|Supervisor|leaving thepost|F|42|2013.05.14.|2016.05.26|0|0|0|0|0|
|Yang Ming|Vice-generalmanager|presentincumbent|M|58|1998.08.12|-|0|0|0|0|0|
|Li Jiming|Chiefengineer|present|M|50|2001.09.14|-|0|0|0|0|0|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||incumbent||||||||||
|Jiang Hua|Vice-generalmanager|presentincumbent|M|53|2001.09.14|-|0|0|0|0|0|
|SunJian|Vice-generalmanager|presentincumbent|M|50|2006.03.22|-|0|0|0|0|0|
|Jiang Jianxun|Financemanager|presentincumbent|M|50|2002.05.20|-|0|0|0|0|0|
|Total|--|--|--|--|--|--|0|0|0|0|0|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport 2.ChangesintheCompany’s directors, supervisors andsenior management
Available □Not available
||||||
|-|-|-|-|-|
|Name|Position|Type|Date|Reason|
|Chen Jizong|Director|Leaving thepost owing toexpiration oftheterm ofoffice|2016.05.26|-|
|Xiao Wei|Independentdirector|Leaving thepost owing toexpiration oftheterm ofoffice|2016.05.26|-|
|Guo Ying|Supervisor|Leaving thepost owing toexpiration oftheterm ofoffice|2016.05.26|-|

3.Situationforwork experience
The professional background, main work experiences and present positions of theCompany’s directors, supervisors and seniormanagement
(1)Members ofBoard ofDirectors
Mr. Sun Liqiang, male, 69, Chinese, with college degree, senior economist, began serving as chairman of the Company from 18th September, 1997 and has held the position ever since. Now, he concurrently is party secretary, chairman and general manager of Changyu Group. Hewas representativeof the10thand 11thNationalPeople’s Congress.
Mr. Zhou Hongjiang, male, 52, Chinese, with doctor degree, senior engineer, began serving as director, vice-chairman and general manager of the Company from 20th May, 2002 and has held the position ever since. Now, he concurrently is vice chairman of Changyu Group and the representative of the 12th NationalPeople’s Congress. He was vice general manager of the Company andgeneral manager oftheSaleCompany.
Mr. Leng Bin, male, 54, Chinese, with master degree, senior accountant, began serving as director of the Company from 15th June, 2000 and has held the position ever since. Now, he concurrently is director of Changyu Group. He was chief accountant and certified accountant of Yantai Radio Regulatory Commission and vice section chief and section chief of Yantai AuditBureau.
Mr. Qu Weimin, male, 59, Chinese, bachelor ofengineering，senior economist, began serving as director, vice general manager and concurrently as secretary to the board of directors of the Company from 18th September, 1997 and has held the position ever since. He worked at Yantai Commission for Restructuring the Economic System and Research Office of Yantai Government and has 20 years of experience in the aspect of macroeconomic study and enterpriseoperation and management.
Mr. Zhang Ming, male, 43, Chinese, with bachelor degree, senior engineer, is now chairman of Yantai Guofeng Investment Holding Co., Ltd. He was planner of Yantai Synthetic Leather
General Factory, plan specialist of business department, deputy section chief of plan and
statistic section in assets management department and section chief of plan and statistic
section in assets management department in Yantai Wanhua Synthetic Leather Group Co.,
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport Ltd, risk control section chief of Yantai Guofeng Investment Holding Co., Ltd. and concurrently director and vice general manager of Yantai Guoyu Finance Lease Co., Ltd, vice general manager and secretary to the board of directors of Wanhua Efficient Technology Group Co., Ltd. and general manager ofYantai State-owned Asset ManagementCo., Ltd. Mr. Augusto Reina, male, 76, Italian, is now 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 oftheCompany since 27thApril, 2006.
Mr. Aldino Marzorati, male, 64, Italian, with bachelor degree, is now 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 Changyu Group. He has been director of the Company since27thApril, 2006.
Mr. Antonio Appignani, male, 78, Italian, with bachelor degree, 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.
Ms. Dai Hui, female, 51, Chinese, MBA, is now consultant of IFC, director of Changyu Group Company and director of Listed Company. She was former project manager of Government Loan Enlending 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 in Beijing).
Mr. Wang Shigang, male, 51, Chinese, MBA and Certified Public Accountant, is now the board chairman of Shandong Tianhengxin Construction Cost Consultation Co. Ltd.. He previously served as independent director of the Company. He acts as the independent director again from 14thMay, 2013.
Mr. Wang Zhuquan,male, 51,Chinese, doctorof management (accountancy), first batch of national accounting academicleading personals ofFinancial Department, the entrant of
accountant master cultivationproject ofFinancial Department, outstanding teacherof
Shandong province, Government Special Allowance expert, acted as independent director from 13th May, 2010to12th May, 2013.Nowhe is theprofessor andthedoctoral supervisors oftheOcean University ofChinaas well as independent director of thesomelisted
companies which could beexemplified as Qingdao DoubleStarCo.,Ltd. Heacts as the
independent director oftheCompany again from 23rdMay, 2014.
Mr. LuoFei, male, 64,Chinese, with doctor degree, visitingscholar ofUniversity of Toronto, doctoral supervisors, Government Special Allowance expert, first batch oftrans-century
subject (academic) leading personals ofFinancial Department. Hesuccessively served as the dean ofaccounting college in Zhongnan University ofEconomics and thedean of accounting collegein Zhongnan University ofEconomics and Law. Hefocuses onthestudy offinancial accounting, cost accounting, financial management, andso on.He has worked in companies
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport formany years and has practical working experience withcompanies. Nowhe is serving as independent director oftheCompany.
Ms.Liu Yan,female, 43,Chinese, with master degree, was honored as national outstanding lawyer in 2005.Her main practice areas includeissuing andlistingof domesticand foreign stocks, merger and acquisition and foreign investment. Shenowis thepartner of Tian Yuan LawFirm and serving as independent director oftheCompany.
(2)Members ofboard ofsupervisors
Mr. Kong Qingkun, male, 44, Chinese, MBA and economist, served as the section member of production department in the healthy liquor branch office, clerk and vice director of general manager office. He nowisdirector ofgeneral manager office.
Ms. Zhang Lanlan, female, with bachelor degree and economist, served as vice-manager of theCompany’s import/export company, manager of import department. She now is director ofboardofdirectors’office.
Mr. Liu Zhijun, male, 36, Chinese, with bachelor degree, worked in foreign fund section of Economy and Trade Bureau in Longkou economic development zone, served as news section member of propaganda department in Longkou Municipal Committee, member of propaganda and mass work section, member of planning section, vice-director member of programming development and enterprise distribution section, vice-director member and deputy chief ofprogramming development section. He nowis supervisorof theCompany. (3)Other seniormanagers
Mr. Yang Ming, male, 58, Chinese, with bachelor degree, application researcher, has been serving as vice general manager of theCompany since12thAugust, 1998.
Mr. Li Jiming, male, 50, Chinese, with doctor degree, application researcher, has been serving as chief engineer oftheCompany since14th September, 2001.
Mr. Jiang Hua, male, 53, Chinese, with master degree, senior engineer, has been serving as vicegeneral manager oftheCompany since 14thSeptember, 2001.
Mr. Sun Jian, male, 50, Chinese, MBA and economist, has been serving as vice general manager ofthe Companysince 22ndMarch, 2006.
Mr. Jiang Jianxun, male, 50, Chinese, MBA and accountant, has been serving as Financial Managerofthe Company since20thMay, 2002.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport Postintheshareholder’s company
Available □Not available
|||||||
|-|-|-|-|-|-|
|Name|Shareholder’s Company|Post|Beginningdateofthepost|Endingdate ofthepost|Paidbyshareholder’scompany ornot|
|SunLiqiang|Yantai Changyu Group Co.Ltd.|Chairman andgeneral manager|2013.10.08|2017.10.07|No|
|ZhouHongjiang|Yantai Changyu Group Co.Ltd.|Vicechairman|2013.10.08|2017.10.07|No|
|Li Jiming|Yantai Changyu Group Co.Ltd.|Director|2013.10.08|2017.10.07|No|
|SunJian|Yantai Changyu Group Co.Ltd.|Director|2013.10.08|2017.10.07|No|
|ChenJizong|Yantai Changyu Group Co.Ltd.|Director|2013.10.08|2017.10.07|No|
|Augusto Reina|Yantai Changyu Group Co.Ltd.|Director|2013.10.08|2017.10.07|No|
|AldinoMarzorati|Yantai Changyu Group Co.Ltd.|Director|2013.10.08|2017.10.07|No|
|AntonioAppignani|Yantai Changyu Group Co.Ltd.|Director|2013.10.08|2017.10.07|No|
|Dai Hui|Yantai Changyu Group Co.Ltd.|Director|2014.03.06|2017.10.07|No|
|Explanation forthepost intheshareholder’s company|No.|||||

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport Postat other companies
Available □Not Available
|||||||
|-|-|-|-|-|-|
|Name|Other’s company|Postat othercompany|Beginningdate ofthepost|Endingdate ofthepost|Paid byothercompany ornot|
|LengBin|Yantai Changyu ZhongyaMedicine& Healthy Liquor Co.,Ltd|Director andlegal representative|2012.09.10||No|
|Explanation forthepost intheshareholder’s company|No.|||||

Disciplinary actions taken by securities regulators in recent 3 years to theCompany’s directors, supervisors and senior management both on the joband left during thereport period
□Available Not available
4.Salaryof directors, supervisors andseniormanagement
Decision-making process, thebasis of determination, theactual payment ofdirectors, supervisors and senior 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 Proposal on Assessment Methods of theCompany’s SeniorOfficers’ Performance from 2014 to 2017 which was passed during the Board ofDirectors’meeting.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport Salary of directors, supervisors andseniormanagement during thereport period
Unit:CNY’0000
||||||||
|-|-|-|-|-|-|-|
|Name|Post|Gender|Age|Status|Total reward fromtheCompanybefore tax|Whethergetreward fromrelated parties oftheCompany|
|SunLiqiang|Chairman to theBoard ofDirectors|M|69|present incumbent|126.89|No|
|Zhou Hongjiang|Vice-chairman to theBoard ofDirectors and general manager|M|52|present incumbent|126.77|No|
|LengBin|Director and vice-generalmanager|M|54|present incumbent|89.39|No|
|Qu Weimin|Director, Vice-general managerand Secretary tothe Board ofDirectors|M|59|present incumbent|89.11|No|
|Zhang Ming|Director|M|43|present incumbent|0|No|
|Chen Jizong|Director|M|41|leaving thepost|0|No|
|Augusto Reina|Director|M|76|present incumbent|0|No|
|AldinoMarzorati|Director|M|64|present incumbent|0|No|
|AntonioAppignani|Director|M|78|present incumbent|0|No|
|Dai Hui|Director|F|51|present incumbent|0|No|
|Xiao Wei|Independent Director|M|56|leaving thepost|5|No|
|Wang Zhuquan|Independent Director|M|52|present incumbent|5|No|
|Wang Shigang|Independent Director|M|51|present incumbent|5|No|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
||||||||
|-|-|-|-|-|-|-|
|Luo Fei|Independent Director|M|64|present incumbent|0|No|
|Liu Yan|Independent Director|F|43|present incumbent|0|No|
|Kong Qingkun|Chairman to theBoard ofsupervisors|M|44|present incumbent|60.63|No|
|Zhang Lanlan|supervisor|F|47|present incumbent|19.26|No|
|Liu Zhijun|supervisor|M|36|present incumbent|0|No|
|Guo Ying|supervisor|F|42|leaving thepost|0|No|
|Yang Ming|Vice-general manager|M|58|present incumbent|85.79|No|
|Li Jiming|ChiefEngineer|M|50|present incumbent|79.98|No|
|Jiang Hua|Vice-general manager|M|53|present incumbent|85.62|No|
|SunJian|Vice-general manager|M|50|present incumbent|77.74|No|
|Jiang Jianxun|Financemanager|M|50|present incumbent|60.49|No|
|Total|-|-|-|-|916.67|-|

 Theawarded equity incentives for thedirectors, supervisors and seniormanagement ofthe Companyduring the report period
□Available Not available
5.Staffof theCompany
(1)Staffnumber, specialty constitution andeducation degree
|||
|-|-|
|Incumbent staff numberof parent company (people)|1,625|
|Incumbent staff numberof majorsubsidiary companies (people)|3,002|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
|||
|-|-|
|Total incumbent staff (people)|4,627|
|Total staffgetting paidin current period (people)|4,627|
|Retired staff numberwhose expenses are undertaken byparentcompany or subsidiary companies (people)|0|
|Specialty constitution||
|Category|Number ofpeople (people)|
|Production staff|1,331|
|Sales staff|2,780|
|Technical staff|152|
|Financial staff|145|
|Administrativestaff|219|
|Total|4,627|
|Education degree||
|Category|Number(People)|
|Bachelor and above|1,387|
|JuniorCollege|1,953|
|Technical secondary school|550|
|Seniorhigh school and below|737|
|Total|4,627|

 (2)Remuneration policy
The Company builds and improves the remuneration and welfare system, including salary system, incentive mechanism, social security and health insurance and so on, to make sure that all staff could be insured. In accordance with the law, the Company buys social old-age insurance, medical insurance, occupational injury insurance, unemployment insurance and maternity insurance, and pay housing fund for staff. Based on the principle of “distribution according to work, equal pay for equal work”, the Company pays thestaff’s remuneration timely. With the increase of theCompany’s profitability, the Company steadily improves thestaff’s remuneration and welfare, and provides the competitive salary income
and development space ofequal opportunity for staff.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport (3) Training plan
In order to further improve theemployees’ comprehensive quality and professional skill, the 2017training planfortheCompany’s major employee is shownas follows:
① Seniorand Middle-level Managers
Firstly, it is commonality training. Training topics related with industrial development, business orientation and management philosophy would be chosen to open the senior and middle-levelmanagers’ minds, to promote operation philosophy and also to improve scientific decision-making capacity and operation capacity. The Company plans to employ professional lecturers to give lectures in the company or through remote internet videos. There will be four topics arranged for senior and middle-level managers within the year, one topicineach quarter and oneto two days for each topic.
Secondly, it is professional training. Based on individual work, senior and middle-level managers would be organized in batches to attend high-end forum and summit of entrepreneur and to visit domestic and foreign successful enterprises for studying. Middle-level managers would be encouraged to take participation in MBA and other master degree. The professional managers related with finance, equipment, safety, technology quality and other professional fields would be organized to attend vocational qualification test to get vocational qualification certificate. Senior and middle-level managers would attend special training organized by theCompany’s professional management department for safety, technology, equipment, finance and tourismand soon,noless than twicea year.
② Section Chiefand Ordinary Staff Members
Firstly, it is commonality training. Courses would be arranged in order to improve capability of management, innovation and execution. In addition, professional lecturers or college teachers would be employed to give lectures in the company, twice a year and one day for each time. They would attend commonality trainings about enterprise culture, rules and regulation and various alcohol products knowledge which shouldbeknown and grasped.
Secondly, it is professional training. Professional and responsible senior managers would choose one book for their subordinate administrative personnel to study on their own. At the end of the year these administrative personnel should propose suggestion for theCompany’s development on the basis of their own work. Eligible general administrative personnel would be encouraged to take participation in MBA and other master degree. The professional administrative personnel related with finance, equipment, safety, technology quality and other professional fields would be organized to attend vocational qualification test to get vocational qualification certificate. Based on their undertaking work, they would attend special training organized by theCompany’s professional management department no less than twice a year, which involve safety, technology, equipment, finance, tourism and comprehensive management and other special projects.
③ Marketing Personnel
Firstly, it is commonality training. They would study training materials related with theCompany’s management system, product knowledge and sales responsibilitysystem.
Secondly, it is professional training. For personnel whose level is or above manager assistant in the city marketing management company, the Company would invite professional lecturers
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport to the company or by means of remote internet video to give lectures about successful cases and economic situation research in current domestic and foreign wine industry, once a quarter and one day for each time. For city marketing manager, the Company would strengthen their training for marketing skills as well as execution ability of thecompany’s sales policy. The Company would invite its professional management cadre or employ professional lecturers to take closed training for these managers, once at the beginning of each month and one day for each time. For business directors and other personnel, every marketing management company should be based on the local business and adopt training methods of employing professional lecturers combined with going outside for visit and learning so as to make all marketing personnel within its jurisdiction attend training about successful marketing cases and marketing management philosophy. The frequency of this training is once a quarter and one day foreach time.
(4) Laboroutsourcing
□Available Not available
IX. Corporate Governance
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport 1. Current Corporate GovernanceSituation oftheCompany
(1)Aboutshareholdersandshareholders’meeting
The Company has 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 and comments from shareholders.
(2)AbouttheCompany and holding shareholder
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 damagedtheCompany’s and medium& smallshareholders’interests.
(3)Aboutthedirector andboardof directors
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 carried out the cumulative voting system. At present, the Company has four independent directors accounting for about one three 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 performed their duties according to the law and regulations. The Board of Directors convenedthemeetings in accordance withrelated rules and regulations.
(4)Aboutsupervisorandboard ofsupervisors
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 dutyperformance ofdirectors and managers of theCompany.
(5)Aboutperformance evaluationand incentivesystem
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport 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 of staff tobe linked with jobperformance.
(6)Aboutstakeholders
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)Abouttheinformation disclosureand transparency
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 havesame opportunity toacquire any information.
In order to further perfect theCompany’s governance system, during the report period, the Company formulates and improves Equipment Management Specification of Self-supporting Base, Assessment Method of Equipment Management in Self-supporting Base, Changyu Company Construction Opinions of A Level Material Base, Popularized Technology for Each Company to Improve Internal Quality of Product in2016， Daily Assessment Method of Product Quality in 2016， Monitoring Method of Quality Safety Risk for ChangyuProducts，Implementation Instruction about Management and Control of Risks at Different Levels for WineEnterprise，Implementation Scheme about Investigation and Treatment of Hidden Danger for WineEnterprise，Specification Opinions of Advancing the Accelerated Resolution of Market Feedback Problems, Management Methods of Preventing Infringements of Intellectual Property Rights and Management Methods of Litigation Warning, etc.
Whether or not there is significant variance between theCompany’s actual situation of corporate governance and the normative documents about listed company governance issued byChinaSecurities Regulatory Commission.
□Yes No
There is no significant variance between theCompany’s actual situation of corporate governance and the normative documents about listed company governance issued by China Securities Regulatory Commission.
2. Relative to the controlling shareholder, independence of the Company on business, personnel, assets, organization andfinance
(1)Personnel Arrangement
TheCompany’s general manager, vice general managers and other senior officers, all of whom were paid by the Company and did not hold any post in the controlling parties. The
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport Company was entirely independent in personnel arrangement, conclusion and adjustment of labor contracts thanks to its sound and independent system for labor, 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 owns trademarks including“黄金冰谷”,“爱斐堡”,“爱菲堡”,“爱斐” and “AFIP”, etc. 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 stillheld bythe controllingshareholders.
(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 responsiblefor theinternal audit work oftheCompany.
(4)Offices
The Company has set up a sound organizational framework, in which 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 production and business activities independently.
(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 shareholderin terms of supplyand sales byproxynor competitionwith theother.
3.SituationforHorizontalCompetition
□Available Not available
4. Information for theshareholders’ meeting and temporaryshareholders’ meeting held duringthereport period
(1)Information fortheshareholders’meeting during thereport period
|||||||
|-|-|-|-|-|-|
|Session|Meeting type|Participationratio of|Conveningdate|Disclosuredate|Disclosure Index|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
|||||||
|-|-|-|-|-|-|
|||investors||||
|2015AnnualShareholders’Meeting|Annualshareholders’meeting|62.28%|2016.05.26|2016.05.27|http://www.cninfo.com.cnNotice of2015AnnualShareholders’MeetingResolution|
|Noticeof 2016FirstExtraordinaryShareholders’MeetingResolution|ExtraordinaryShareholders’Meeting|63.08%|2016.09.23|2016.09.24|http://www.cninfo.com.cnNotice of2016FirstExtraordinaryShareholders’MeetingResolution|

(2) Request for convening temporaryshareholders’ meeting by priority shareholders owingrecovered voting right
□Available Not available
5.Performance ofindependentdirectors duringthe report period
(1) Attendance of independent directors for the board of directors and theshareholders’ meeting
||||||||
|-|-|-|-|-|-|-|
|Attendance ofindependent directors forthe board ofdirectors|||||||
|Name|Requiredattendancetime|Personalattendance|Communicationattendance|Authorizedattendance|Absence|Whether ornottoattend themeetingspersonally forsuccessivetwice|
|Xiao Wei|4|3|1|0|0|No|
|Wang Shigang|6|3|3|0|0|No|
|Wang Zhuquan|6|3|3|0|0|No.|
|Luo Fei|2|0|2|0|0|No.|
|Liu Yan|2|0|2|0|0|No.|
|Attendance timeofindependent directors fortheshareholders’ meetingwithout votingrights||2|||||

Explanation for failed to personally attend the Board ofDirectors’ meetings for successive two times
No
(2)AnyobjectionsfortheCompany’sprojects from theindependentdirectors
Whetherornot theindependent directors raised any objection fortheCompany’s projects
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport□Yes No
During the report period, the independent directors did not raise any objections for theCompany’s projects.
(3)Other explanations onindependentdirectors’ performance
Whetherornot theindependentdirectors’propositions are accepted bytheCompany
Yes □No
Explanation on acceptance or refusal of the independentdirectors’ propositions to the Company
During the report period, some independent directors propose suggestions on prudent investment in tourism project of Changyu International Wine City. They thought that it is a higher risk in the current background of slower growth of domestic economy. The Company accepted theindependentdirectors’ opinionsand decided to suspendconstruction of theproject. 6. Performance of the special committees under the Board of Directors during the report period
(1) Summary report of the Board ofDirectors’ Audit Committee regarding performance ofduties
 On March 26th , 2016, 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 2015 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 results with the accountants, the production and operation situations 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 2015 Annual Financial Statement preliminarily examined by Deloitte Hua Yong Certified Public Accounts Co., Ltd. and thepreliminary audit opinionsofthat services.”
 On 27th April 2016, the Board ofDirectors’ Audit Committee deliberated and passed 2015 Annual Audit Report, Draft Proposal on 2015 Annual Profit Distribution, Proposal on Renewal of Contract with the Present Certified Public Accountants firm, 2015 Annual Self-assessment Report on Internal Control and 2016 Internal Audit Plan issued by Deloitte HuaYong Certified PublicAccounts Co., Ltd.
All of committee members unanimously agree to submit the above proposals to theCompany’s 6th Session Board of Directors 12th Meeting for deliberation. The meeting reached thefollowing consensus:
(A) The clean-opinion auditing report on theCompany’s 2015 Annual Financial Statement issued by Deloitte Hua Yong Certified Public Accounts Co., Ltd reflects theCompany’s financial condition,operating results and cash flowtruly, objectively and correctly.
(B) 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.
(C) 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 the
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReportCompany’s 2015 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 2016 annual auditor of the Company. The employment period is one year and the audit will be taken from two aspects shown as follows.
On one hand, it is to take the audit of 2016 annual financial report and issue a Financial Audit Report. On the other hand, it is to take the audit of 2016 annual internal control and issue an Internal ControlAudit Report.
The annual auditing fee for the above parts is CNY 1.98million, including travel expense and all service charges.
(D) TheCompany’s 2015 Self-assessment Report on 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 of its strategic goals.
(E) TheCompany’s 2016 Internal Audit Plan is comparatively perfect and practicable, based onwhichtheCompany’s Audit Department will conduct the 2016annual internal audit.
 On 25th August 2016, the Board ofDirectors’ Audit Committee deliberated and passed 2016 Semiannual Report and Proposal on 2016 Semiannual Profit Distribution. The meeting reached thefollowing consensus:
TheCompany’s 2016 Semiannual Financial Statements reflected theCompany’s financial condition,operating results and cashflow truly, objectively and correctly.
As the Company just realized 2015 Annual Profit Distribution Scheme in middle July, we propose neither to distribute profits for the first half of 2016 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 Auditing Committee considers the suggestionto be reasonable.
All of Committee members unanimously agree to submit the above proposals to theCompany’s 7thSession Board of Directors 2ndMeeting for deliberation.
(2) Summary report of the Board ofDirectors’ Emolument Committee regarding performance ofduties
The Board ofDirectors’ Emolument Committee is responsible for assessment of the economy 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’s directors and seniormanagers.
 Proposal on 2015 Assessment Results of theCompany’s SeniorOfficers’ Performance was deliberated and passed by the Board ofDirectors’ Emolument Committee on 27th April 2016, who thought that this document was in compliance with Performance Assessment Methods forCompany’s Senior Executive from 2014 to 2017 approved by theCompany’s 6th Session BoardofDirectors’4thMeeting.
All committee members unanimously agree to submit the above proposals to theCompany’s 6thSession Board ofDirectors 12th Meeting fordeliberation.
During the report period, the Board ofDirectors’ Emolument Committee also examined the 2015 annual payroll records of the directors and the senior managers who receive salaries from the Company and believes that the salaries of theCompany’s directors, supervisors and senior managers received from the Company is strictly assessed and delivered based on the
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReportCompany’s economic responsibility assessment system. The salaries disclosed by the Company are inconformity with theactually paid amount.
7.Thework oftheBoard ofSupervisors
Whether or not the Board of Supervisors found any existence risk to the Company in oversight activities during thereport period
□Yes No
TheBoard ofSupervisors has noobjections tosupervision matters during thereport period. 8.Performance EvaluationandIncentivesituations ofSeniorManagement
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 business planning goals, this committee examined senior personals and also their responsible subsidiaries or departments according to their management achievement and index and took these as criterion of awards or penalties. During the report period, because of not finishing the annual business plan deliberated and passed in the Board ofDirectors’ meeting at the beginning of the year, the total salaries and rewards of theseniormanagement are basically equal to that oflast year.
9.Internal Control
(1)Specific situations forsignificantdefects of theinternal control foundduringthe
report period
□Yes No
(2)Self-assessmentreport oninternal control
|||
|-|-|
|Disclosuredateforfulltextoftheinternalcontrolself-assessmentreport|2017.04.22|
|Disclosureindexforfulltextoftheinternalcontrolself-assessmentreport|2016Self Assessment Report onInternal Control disclosed onChinaSecurities Journal,Securities Times and www.cninfo.com.cnbytheCompany on22ndApril, 2017.|
|PercentageoftotalunitassetsincludedinscopeoftheassessmentaccountingfortheCompany’stotalassetsofconsolidatedfinancialstatements|94.51%|
|PercentageofunitoperatingincomeincludedinscopeoftheassessmentaccountingfortheCompany’soperatingincomeofconsolidatedfinancial|88.61%|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
||||
|-|-|-|
|statements|||
|StandardsofDefectIdentification|||
|Category|Financialreport|Non-financialreport|
|Qualitativecriteria|Significant defects: one defect of internalcontrol, individually or together with otherdefects, has the reasonable probability to causethe significant misstatements, which can not bepromptly prevented, or found and correctedtimelyinthefinancialreport. Forexample:Company’s Directors, Supervisors and SeniorManagement have fraudulent practices;  TheCompany makes corrections for the publishedfinancial report;  The audit of externalintermediary agent finds significantmisstatement existing in the current financialreport, but the Company does not realize itduring the operation process;  Negativeinformation frequently appears in the mediaswith involving a wide scope;  TheCompany’s audit committee and internal auditdepartmentmakes an inefficientsupervision forinternal control;  Other situations maybecause significant misdirection which guides thereportuserstomaketherightjudgment.Major defects：The defect of internal control,individually or together with other defects, hasthe reasonable probability to cause thesignificant misstatements, which can not bepromptly prevented, or found and correctedtimely in the financial report, although themisstatements neither achieves nor exceeds theimportance level but still arising the attentionof Board of Directors and management team. Failure to select and apply accountingregulations in accordance with generallyaccepted accounting principles;  Failure toestablish the anti-fraud procedures and controlmeasures;  Failure to set up correspondingcontrol mechanism or to carry out and takecorresponding compensating control for theaccounting treatments with irregular andspecial deal;  Negative news appears in themediawithinfluencingawidescope; Oneormore defects exist in the control during theprocess of the ending financial report, and the|Significant defects: Any situations listedbelow appears, it can be regarded assignificant defects.  Operation: Unable toachieve all operation target or key businessindex, widely out of budget in variousaspects.  Safety accident effects: Cause noless than one person death, or more than 3person serious injuries.  Major negativeeffects: Negative information frequentlyappears in the medias with involving a widescope in the international and nationalmainstream media.  Environment effects:Create irreparable damages to environment,andcausemassivepubliccomplains.Major defects: Any situations listed belowappears, it can be regarded as major defects. Operation: Unable to achieve partlyoperationtarget,abigmarginoutofbudgetinvarious aspects.  Safety accident effects:Without reaching the person loss or thenumber of serious injury of significantdefects.  Major negative effects: Negativenews appears in the media with influencing awide scope in the provincial mainstreammedia.  Environment effects: Cause heavyenvironment damages and massive publiccomplains, ought to carry out the significantremedialmeasures.General defects: Any situations listed belowappears, it can be regarded as general defects. Operation: Other effects unable toconstitute the significant defects or majordefects.  Safety accident effects: Personalinjury less than the quantitative standards ofmajor defects.  Major negative effects:Other defects unable to constitute thesignificant defects or major defects. Environment effects: Other environmenteffects unable to constitute the significantdefectsormajordefects.|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
||||
|-|-|-|
||target of achieving truthfulness and integralitycannot be reasonably guaranteed in thefinancial report;  General defects refer to theother control defects, which do not constitutethesignificantandmajordefects.||
|Quantitativecriterion|Fortotalassets/Owner’sequity:Significantdefects:misstatements ≧1%Majordefects:0.5%≦misstatements<1%Generaldefects:misstatements<0.5%Foroperationrevenue:significantdefects:misstatements ≧1%Majordefects:0.5%≦misstatements<1%Generaldefects:misstatements<0.5%Forpretaxprofit:Significantdefects:misstatements ≧5%Majordefects:2%≦misstatements<5%Generaldefects:misstatements<2%|Fordirectpropertyloss:Significantdefects:MorethanCNY10millionMajordefects:CNY1million-CNY10million(including1million)Generaldefects:LessthanCNY1million|
|Number of significantdefect in financialreport|0||
|Number of significantdefect in non-financialreport|0||
|Number of majordefect in financialreport|0||
|Number of majordefect in non-financialreport|0||

10.Internal control auditreport
Available □Not available
|||
|-|-|
|Audit opinionsof theinternal control audit report||
|We believe that Yantai Changyu Pioneer Wine Co., Ltd. kept effective internal control to financialreport in all significant aspects in accordance with General Criteria of Company’s Internal Controland otherrelated rules on31st December, 2016.||
|Disclosureofthe internal control auditreport|Disclosure|
|Disclosuredate forthe fulltextof the|22ndApril, 2017|

YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
|||
|-|-|
|internal control audit report||
|Disclosureindex for thefull text oftheinternal control audit report|Internal ControlAudit Report disclosed onChinaSecurities Journal,Securities Times andwww.cninfo.com.cn bytheCompany on22ndApril, 2017.|
|Opiniontype of theinternal control auditreport|Standard withoutreserved opinion|
|Whetherornot exists significant defects innon-financial reports|No|

Whether or not the accounting firm issued non-standard opinions for the audit report of internal control
□Yes No
Whether the audit report of internal control issued by the accounting firm is in consistency withthe self-assessment report of theboard ofdirectors
Yes □No
X. Related Situation of Corporation Bonds
Whether or not the Company has the corporation bonds issued in public, listed in the stock exchange, not due on the annualreport’s authorized issue date or failed to pay in full on the
duedate.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport XI. Financial Report
1.AuditReport
|||
|-|-|
|Type ofauditopinion|Standard unqualified audit opinion|
|Date signed on audit report|20thApril, 2017|
|Audit agency name|Deloitte Hua Yong certified public accountants co.,Ltd.(special general partnership)|
|Document No. ofaudit report|DeShiBao(Shen)Zi(17)No.P01956|
|Certified publicaccountant's name|LiXu,LiYangang|

AUDITOR'S REPORT
TOTHE SHAREHOLDERS OF
YANTAI CHANGYU PIONEER WINE COMPANYLIMITED
Wehaveaudited theaccompanying financial statements ofYantai Changyu PioneerWineCompany Limited which comprisethe consolidated and company's balance sheets as at 31stDecember 2016,and theconsolidated and company's income statements, theconsolidated and company's cash flow statements and theconsolidated andcompany's statements ofchanges in shareholders' equity for the year then ended, and thenotes tothefinancial statements.
1).Management' responsibilityforthe financialstatements
Management of the Company is responsible for the preparation and fair presentation of these financial statements. This responsibility includes: (1) preparing the financial statements in accordance with Accounting Standards for Business Enterprises to achieve fair presentation of the financial statements; (2) designing, implementing and maintaining internal control which is necessary to enable that the financial statements are free from material misstatement, whether duetofraud orerror.
2).Auditor's responsibility
Our responsibility is to express an audit opinion on these financial statements based on our audit. We conducted our audit in accordance with China Standards on Auditing. China Standards on Auditing require that we comply with the Code of Ethics for Chinese Certified Public Accountants and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing audit procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due
to fraud or error. In making those risk assessments, Certified Public Accountants consider the internal
control relevant to the preparation and fair presentation of the financial statements in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the internal control. An audit also includes evaluating the
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating theoverall presentation ofthefinancial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouraudit opinion.
3).Opinion
In ouropinion, thefinancial statements ofYantai Changyu PioneerWineCompany Limited present fairly, in all material respects, theconsolidated and company's financial positionas of31stDecember 2016,and theconsolidated and company's results ofoperationsand cash flows for theyear thenended inaccordance with Accounting Standards forBusiness Enterprises.
DeloitteHuaYong Certified PublicAccountants Co.,Ltd ChineseCertified PublicAccountant (Special General Partnership) Li Xu
Shanghai, China Li Yangang
20thApril, 2017 2. Financial report
Unit:CNY
CONSOLIDATED BALANCE SHEETS
YEAR ENDED 31DECEMBER 2016
ASSETS Notes Closingbalance Opening balance RMB RMB CURRENT ASSETS
Cash and bank VI-1 1,391,517,607 1,285,362,414 Notes receivable VI-2 210,470,027 113,988,122 Accounts receivable VI-3 173,062,628 197,795,091 Prepayments VI-4 2,175,606 3,591,098 Interest receivable VI-5 24,200 8,019,338 Otherreceivables VI-6 18,880,800 46,146,487 Inventories VI-7 2,248,609,740 2,260,852,964 Non-current assets held forsale VI-8 2,000,197 - Othercurrent assets VI-9 169,522,242 48,449,551
____________ ____________
Total current assets 4,216,263,047 3,964,205,065
____________ ____________
NON-CURRENT ASSETS
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport Available-for-salefinancial assets VI-10 340,263 402,814 Fixedassets VI-11 4,683,187,493 3,089,245,185 Constructionin progress VI-12 1,346,281,737 2,005,990,308 Bearerbiological assets VI-13 201,428,980 192,198,283 Intangibleassets VI-14 483,815,080 463,899,916 Goodwill VI-15 121,265,866 105,504,426 Long-term prepaid expenses VI-16 162,206,229 175,124,167 Deferred tax assets VI-17 295,937,037 302,406,656 Othernon-current assets VI-18 17,352,239 45,234,641____________ ____________ Total non-current assets 7,311,814,924 6,380,006,396____________ ____________ Total assets 11,528,077,971 10,344,211,461________________________ ________________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport CONSOLIDATED BALANCE SHEETS
YEAR ENDED 31DECEMBER 2016- continued
LIABILITIES ANDEQUITY Notes Closingbalance Opening balance RMB RMB CURRENT LIABILITIES
Short-term borrowings VI-19 662,388,882 665,581,921 Notes payable VI-20 38,900,000 29,000,000 Accounts payable VI-21 545,231,319 569,278,368 Receipts in advance VI-22 425,246,421 234,566,504 Employee benefits payable VI-23 206,431,734 190,239,451 Taxes payable VI-24 144,042,600 41,285,107 Interest payable 563,613 977,304 Deferred income VI-25 11,163,883 11,241,873 Otherpayables VI-26 546,305,310 509,226,395 Non-current liabilities duewithinone year VI-27 71,799,093 156,335,647____________ ____________ Total current liabilities 2,652,072,855 2,407,732,570____________ ____________ NON-CURRENT LIABILITIES
Long-term borrowings VI-28 49,140,555 71,686,629 Long-term payables VI-29 293,000,000 - Deferred income VI-25 101,775,243 69,836,411 Deferred tax liabilities VI-17 24,908,410 34,350,349 Othernon-current liabilities VI-30 7,696,222 4,047,476____________ ____________ Total non-current liabilities 476,520,430 179,920,865____________ ____________ Total liabilities 3,128,593,285 2,587,653,435____________ ____________ EQUITY
Sharecapital VI-31 685,464,000 685,464,000 Capital reserve VI-32 565,955,441 565,955,441 Othercomprehensive income VI-33 (5,259,014) (10,442,512) Surplusreserve VI-34 342,732,000 342,732,000 Retained earnings VI-35 6,620,118,562 5,980,390,074____________ ____________ Equityattributable to shareholders
oftheCompany 8,209,010,989 7,564,099,003 Non-controlling interests 190,473,697 192,459,023____________ ____________ Total equity 8,399,484,686 7,756,558,026____________ ____________ Total liabilities and equity 11,528,077,971 10,344,211,461________________________ ________________________ Theaccompanying notes form anintegral part ofthese financial statements.
Thefinancial statements onpages 3to100were signed bythefollowing:
Legal Representative:_________________________________
Person in Charge oftheAccounting Body:_________________
ChiefAccountant:____________________________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport BALANCE SHEET OF THE COMPANY
YEAR ENDED 31DECEMBER 2016
ASSETS Notes Closingbalance Opening balance RMB RMB CURRENT ASSETS
Cash and bank XIV-1 269,460,060 280,818,833 Notes receivable XIV-2 1,114,200 38,429,319 Accounts receivable XIV-3 3,326,683 2,392,870 Prepayments XIV-4 702,647 445,619 Interest receivable VI-5 24,200 8,019,338 Dividend receivable XIV-5 531,819,113 788,092,349 Otherreceivables XIV-6 3,582,532,862 5,734,456,129 Inventories XIV-7 792,732,418 728,173,107 Non-current assets held forsale VI-8 2,000,197 - Othercurrent assets 20,085,058 22,700,317____________ ____________ Total current assets 5,203,797,438 7,603,527,881____________ ____________ NON-CURRENT ASSETS
Available-for-salefinancial assets VI-10 - - Long-term equity investments XIV-8 1,834,341,541 1,423,725,152 Fixedassets XIV-9 347,481,417 369,506,014 Constructionin progress XIV-10 500,000 7,990,777 Bearerbiological assets XIV-11 123,036,693 110,961,189 Intangibleassets XIV-12 72,002,372 74,381,525 Deferred tax assets XIV-13 26,985,252 37,938,692 Othernon-current assets XIV-14 2,617,457,460 -____________ ____________ Total non-current assets 5,021,804,735 2,024,503,349____________ ____________ Total assets 10,225,602,173 9,628,031,230________________________ ________________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport BALANCE SHEET OF THE COMPANY
YEAR ENDED 31DECEMBER 2016- continued
LIABILITIES ANDEQUITY Notes Closingbalance Opening balance RMB RMB CURRENT LIABILITIES
Short-term borrowings XIV-15 500,000,000 601,297,447 Accounts payable XIV-16 247,568,857 273,091,182 Receipts in advance XIV-17 6,000,000 - Employee benefits payable XIV-18 70,812,761 71,058,615 Taxes payable XIV-19 33,266,225 19,331,311 Interest payable 563,613 977,304 Deferred income 1,767,054 1,767,054 Otherpayables XIV-20 368,310,362 994,821,281 Non-current liabilities duewithinone year XIV-21 29,227,200 127,345,600____________ ____________ Total current liabilities 1,257,516,072 2,089,689,794____________ ____________ NON-CURRENT LIABILITIES
Long-term borrowings VI-28 - 56,761,600 Deferred income 19,933,699 21,824,352 Othernon-current liabilities 2,499,403 1,944,955____________ ____________ Total non-current liabilities 22,433,102 80,530,907____________ ____________ Total liability 1,279,949,174 2,170,220,701____________ ____________ EQUITY
Sharecapital VI-31 685,464,000 685,464,000 Capital reserve XIV-22 557,222,454 557,222,454 Surplusreserve VI-34 342,732,000 342,732,000 Retained earnings 7,360,234,545 5,872,392,075____________ ____________ Total equity 8,945,652,999 7,457,810,529____________ ____________ Total liabilities and equity 10,225,602,173 9,628,031,230________________________ ________________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport CONSOLIDATED INCOME STATEMENT
YEAR ENDED 31DECEMBER 2016
Notes 2016 2015 RMB RMB I. Revenue VI-36 4,717,596,472 4,649,722,368 Less: Costofsales VI-36 1,575,770,979 1,512,503,035 Taxesand surcharges VI-37 269,716,646 258,013,524 Sellingexpenses VI-38 1,253,260,668 1,211,127,163 Administrativeexpenses VI-39 309,783,548 313,968,409 Impairment loss ofassets VI-40 3,279,266 2,823,115 Financial expenses VI-41 21,968,859 11,287,685____________ ____________ II. Operating profit 1,283,816,506 1,339,999,437 Add: Non-operating income VI-42 55,172,160 50,065,317 Including: gains from disposal
ofnon-current assets 157,846 192,945
Less: Non-operating expenses VI-43 1,369,826 1,904,889 Including: lossesfrom disposal
ofnon-current assets 143,127 56,884
____________ ____________ III. Profitbefore tax 1,337,618,840 1,388,159,865 Less: Income tax VI-44 357,029,446 357,884,235____________ ____________ IV. Profit for theyear 980,589,394 1,030,275,630____________ ____________ Attributeto shareholders ofthe Company 982,460,488 1,030,073,860 Minorityinterest income (1,871,094) 201,770________________________ ________________________ V. Other comprehensive income(post-tax)
Othercomprehensive incomeattributable
toshareholders oftheCompany
Othercomprehensive income
tobe reclassified to profit and loss
Foreign currency statement translation difference 5,183,498 (7,639,241)
Othercomprehensive incomeattributable
tominority interest 432,191 (102,535)____________ ____________ Othercomprehensive income(post-tax) 5,615,689 (7,741,776)________________________ ________________________ VI. Total comprehensive income
Attributeto shareholders ofthe Company 987,643,986 1,022,434,619 Attributeto minorityinterest of theCompany (1,438,903) 99,235
________________________ ________________________ Total comprehensiveincome 986,205,083 1,022,533,854________________________ ________________________ VII. Earnings per share
(I) Basic earnings pershare VI-45 1.43 1.50________________________ ________________________ (II) Diluted earnings per share VI-45 N/A N/A
________________________ ________________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport INCOME STATEMENT OFTHE COMPANY
YEAR ENDED 31DECEMBER 2016
Notes 2016 2015 RMB RMB I. Revenue XIV-23 1,415,104,946 1,383,184,483 Less: Costofsales XIV-23 1,152,076,500 1,154,834,509 Taxes and surcharges XIV-24 106,469,217 128,127,130 Administrativeexpenses XIV-25 85,962,137 131,187,795 Financial expenses XIV-26 34,226,452 18,852,697 Investment income XIV-27 1,798,129,418 1,587,303,643____________ ____________ II. Operating Profit 1,834,500,058 1,537,485,995 Add: Non-operating income 7,433,751 5,229,734 Including: gains from disposal
ofnon-current assets 157,846 160,609
Less: Non-operating expenses 405,899 921,076 Including: losses from disposal
ofnon-current assets 46,484 44,269
____________ ____________ III. Profitbefore tax 1,841,527,910 1,541,794,653 Less: Income tax 10,953,440 (11,725,445)____________ ____________ IV. Profit for theyear
and total comprehensiveincome 1,830,574,470 1,553,520,098________________________ ________________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport CONSOLIDATED CASHFLOW STATEMENT
YEAR ENDED 31DECEMBER 2016
Notes 2016 2015 RMB RMB CASHFLOWSFROMOPERATINGACTIVITIES
Cashreceiptsfromthesaleofgoods
andtherenderingofservices 4,441,041,101 5,005,115,064 Receiptsoftaxrefunds 17,860,500 17,833,465 Othercashreceiptsrelatingtooperatingactivities VI-46(1) ___6_6_,7_0_7_,8_6_5 ___2_2_,3_7_3_,0_1_6 Sub-totalofcashinflowsfromoperatingactivities _4_,5_2_5_,6_0_9_,4_6_6 _5_,0_4_5_,3_2_1_,5_4_5 Cashpaymentsforgoodspurchasedandservicesreceived 961,128,796 1,106,430,193 Cashpaymentstoandonbehalfofemployees 435,621,220 400,245,285 Paymentofvarioustypesoftaxes 1,133,232,957 1,312,212,563 Othercashpaymentsrelatingtooperatingactivities VI-46(2) _1_,1_0_5_,7_1_4_,5_2_3 _1_,0_8_3_,3_8_7_,1_3_7 Sub-totalofcashoutflowsfromoperatingactivities _3_,6_3_5_,6_9_7_,4_9_6 _3_,9_0_2_,2_7_5_,1_7_8 Netcashflowsfromoperatingactivities VI-47(1) __8_8_9_,9_1_1_,9_7_0 _1_,1_4_3_,0_4_6_,3_6_7 CASHFLOWSFROMINVESTINGACTIVITIES
Decreaseintermdepositsover3months 98,021,025 58,245,260 Proceedsfromreturnoninvestments 7,723,126 9,337,943 Proceedsfromdisposaloffixedassets ____7_,2_0_8_,7_7_4 ____3_,3_7_3_,2_5_4 Sub-totalofcashinflowsfrominvestingactivities __1_1_2_,9_5_2_,9_2_5 ___7_0_,9_5_6_,4_5_7 Cashpaidforacquisitionofproperties,plantsandequipment,
intangibleassetsandotherlong-termassets 704,834,302 775,468,190 Cashpaidfortermdepositsover3months 92,021,025 20,000,000 Cashpaidforthepurchasesubsidiariesandotherequity VI-46(3) 3,539,144 207,868,406 Othercashpaymentrelatingtoinvestingactivities _______-___ ____5_,4_7_4_,5_4_0 Sub-totalofcashoutflowsfrominvestingactivities __8_0_0_,3_9_4_,4_7_1 _1_,0_0_8_,8_1_1_,1_3_6 Netcashflowsfrominvestingactivities _(_68_7_,_44_1_,5_4_6_) _(_93_7_,_85_4_,6_7_9_) CASHFLOWSFROMFINANCINGACTIVITIES
Cashreceiptsfromborrowings 1,011,089,858 598,060,185 Othercashreceivedfromfinancingactivities VI-46(4) __1_8_0_,4_7_7_,5_8_7 ____4_,0_0_0_,0_0_0 Sub-totalofcashinflowsfromfinancingactivities _1_,1_9_1_,5_6_7_,4_4_5 __6_0_2_,0_6_0_,1_8_5 Cashpaidfordividends,profitsandinterests 372,529,256 326,060,259 Cashpaidforborrowings 839,962,581 325,272,800 Cashpaidforacquisitionminorityinterest - 150,000 Cashpaidfromotherfinancingactivities VI-46(5) ___2_0_,0_0_0_,0_0_0 ___2_8_,1_5_0_,0_0_0 Sub-totalofcashoutflowsfromfinancingactivities _1_,2_3_2_,4_9_1_,8_3_7 __6_7_9_,6_3_3_,0_5_9 Netcashflowsfromfinancingactivities __(4_0_,_92_4_,3_9_2_) _(_77_,_5_72_,_87_4_)_ Effectofforeignexchangeratechanges
oncashandcashequivalents 3,154,611 4,150,573 NETINCREASEOFCASHANDCASHEQUIVALENTS 164,700,643 131,769,387 Add:cashandcashequivalentsatbeginningoftheyear VI-47(3) _1_,0_9_2_,2_4_1_,6_6_1 __9_6_0_,4_7_2_,2_7_4 CASHANDCASHEQUIVALENTSATENDOFTHEYEAR VI-47(3) 1,256,942,304 1,092,241,661____________________ ____________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport CASHFLOW STATEMENT OF THE COMPANY
YEAR ENDED 31DECEMBER 2016
Notes 2016 2015 RMB RMB CASHFLOWSFROMOPERATINGACTIVITIES
Cashreceiptsfromthesaleofgoods
andtherenderingofservices 1,260,184,309 1,407,696,475 Othercashreceiptsrelatingtooperatingactivities __2_3_2_,3_2_8_,4_7_3 ____1_,0_5_0_,6_2_8 Sub-totalofcashinflowsfromoperatingactivities _1_,4_9_2_,5_1_2_,7_8_2 _1_,4_0_8_,7_4_7_,1_0_3 Cashpaymentsforgoodspurchasedandservicesreceived 887,413,606 944,400,045 Cashpaymentstoandonbehalfofemployees 121,662,409 149,896,172 Cashpaymentofvarioustypesoftaxes 132,372,497 191,387,102 Othercashpaymentrelatingtooperatingactivities __8_0_5_,1_2_7_,3_6_8 _1_,1_2_8_,2_3_6_,6_0_2 Sub-totalofcashoutflowsfromoperatingactivities _1_,9_4_6_,5_7_5_,8_8_0 _2_,4_1_3_,9_1_9_,9_2_1 Netcashflowsfromoperatingactivities XIV-28 _(_45_4_,_06_3_,0_9_8_) (1_,_00_5_,_17_2_,8_1_8_) CASHFLOWSFROMINVESTINGACTIVITIES
Cashreceiptsfromequityinvestment - 350,000 Cashreceiptsfromdepositsover3months 18,021,025 46,245,260 Cashreceiptsfromreturnoninvestments 1,530,872,587 1,211,082,256 Cashreceiptsfromdisposalsoffixedassets ____9_,7_0_5_,0_2_6 _____1_9_0_,2_0_5 Sub-totalofcashinflowsfrominvestingactivities _1_,5_5_8_,5_9_8_,6_3_8 _1_,2_5_7_,8_6_7_,7_2_1 Cashpaymentsforacquisitionoffixedassets,
intangibleassetsandotherlong-termassets 28,351,843 42,104,159 Cashpaymentsfortermdepositsover3months 12,021,025 20,000,000 Cashpaymentsforsubsidiaryinvestment 468,882,418 325,163,585 Othercashpaymentrelatingtoinvestingactivities _______-___ ___5_,_4_74_,_54_0_ Sub-totalofcashoutflowsfrominvestingactivities __5_0_9_,2_5_5_,2_8_6 __3_9_2_,7_4_2_,2_8_4 Netcashflowsfrominvestingactivities _1_,0_4_9_,3_4_3_,3_5_2 __8_6_5_,1_2_5_,4_3_7 CASHFLOWSFROMFINANCINGACTIVITIES
Cashreceiptsfromborrowings 500,000,000 595,268,270 Cashinflowsfromfinancingactivities __1_3_5_,5_8_4_,3_4_7 _______-___ Sub-totalofcashinflowsfromfinancingactivities __6_3_5_,5_8_4_,3_4_7 __5_9_5_,2_6_8_,2_7_0 Cashpaidfordividends,profitsandinterests 372,039,591 325,424,652 Cashpaidforborrowings __7_6_4_,6_1_9_,8_9_2 __3_2_3_,0_5_1_,3_2_0 Sub-totalofCashoutflowsfromfinancingactivities _1_,1_3_6_,6_5_9_,4_8_3 __6_4_8_,4_7_5_,9_7_2 Netcashflowsfromfinancingactivities _(_50_1_,_07_5_,1_3_6_) __(5_3_,_20_7_,7_0_2_) Effectofforeignexchangeratechanges
oncashandcashequivalents - 3,807,697 NETINCREASE/(DECREASE)OFCASH
ANDCASHEQUIVALENTS 94,205,118 (189,447,386) Add:cashandcashequivalentsatbeginningoftheyear XIV-29 __1_4_3_,7_9_8_,0_8_0 __3_3_3_,2_4_5_,4_6_6 CASHANDCASHEQUIVALENTSATENDOFTHEYEAR XIV-29 238,003,198 143,798,080____________________ ____________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport CONSOLIDATED SATATEMENT OFCHANGES IN EQUITY
YEAR ENDED 31DECEMBER 2016
2016
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_5,_95_5,_44_1 (1_0_,44_2_,51_2) ___34_2,_73_2,_00_0__5,_98_0,_39_0,_07_4__19_2,_45_9,_02_3 __7,_75_6,_55_8,_02_6 II.Changesfortheyear
(I)Totalcomprehensiveincome
1.NetProfit - - - - 982,460,488 (1,871,094) 980,589,394 2.Othercomprehensiveincome(VI-33) - - 5,183,498 - - 432,191 5,615,689 (II)Profitdistribution
Distributionsto
shareholders(VI-35) _____-__ _____-__ ___-__ ______-____(3_42_,7_32_,0_0_0)_(_54_6,_42_3)__ __(3_43_,2_78_,4_2_3) III.Closingbalance
ofthecurrentyear ____68__5,__46__4,__00__0 ____56__5,__95__5,__44__1 (__5,__25__9,__01__4) ______34__2,__73__2,__00__0____6,__62__0,__11__8,__56__2____19__0,__47__3,__69__7 ____8,__39__9,__48__4,__68__6 2015
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 __(2_,8_03_,2_7_1)___34_2,_73_2,_00_0__5,_25_1,_92_0,_37_4__16_2,_74_0,_77_9 __7,_00_3,_19_2,_92_4 II.Changesfortheyear
(I)Totalcomprehensiveincome
1.NetProfit - - - - 1,030,073,860 201,770 1,030,275,630 2.Othercomprehensiveincome(VI-33) - - (7,639,241) - - (102,535) (7,741,776) (II)Shareholdersinvestmentand
Divestment
1. Acquisitionsubsidiary(VII-1) - - - - - 32,585,408 32,585,408 2.Transactionwithnon-controlling
interests - 2,816,399 - - - (2,966,399) (150,000) (III)Profitdistribution
Distributionsto
shareholders(VI-35)_____-__ _____-__ _____-________-____(3_01_,6_04_,1_6_0)_____-__ __(3_01_,6_04_,1_6_0) III.Closingbalanceof
thecurrentyear ____68__5,__46__4,__00__0 ____56__5,__95__5,__44__1 __(__10__,4__42__,5__1__2)______34__2,__73__2,__00__0____5,__98__0,__39__0,__07__4____19__2,__45__9,__02__3 ____7,__75__6,__55__8,__02__6
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport STATEMENT OF CHANGES IN EQUITY OF THE COMPANY
YEAR ENDED 31DECEMBER 2016
2016
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_42_,_73_2_,0_0_0 _5_,8_7_2,_39_2_,0_7_5 _7_,4_5_7,_81_0_,5_2_9 II.Changesfortheyear
(I)Totalcomprehensiveincome - - - 1,830,574,470 1,830,574,470 (II)Profitdistribution
Distributionstoshareholders(VI-35)______-__ ______-__ ______-__ _(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__42__,__73__2__,0__0__0 __7__,3__6__0,__23__4__,5__4__5 __8__,9__4__5,__65__2__,9__9__9 2015
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_42_,_73_2_,0_0_0 4_,6_2_0_,4_76_,_13_7_ _6_,2_0_5,_89_4_,5_9_1 II.Changesfortheyear
(I)Totalcomprehensiveincome - - - 1,553,520,098 1,553,520,098 (II)Profitdistribution
Distributionstoshareholders(VI-35)______-__ ______-__ ______-__ _(3_0_1_,6_0_4,_16_0_) _(_30_1_,6_0_4,_1_60_) III. Closingbalance
ofthecurrentyear __6__85__,__46__4__,0__0__0 __5__57__,__22__2__,4__5__4 __3__42__,__73__2__,0__0__0 __5__,8__7__2,__39__2__,0__7__5 __7__,4__5__7,__81__0__,5__2__9
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport NOTES TOFINANCIAL STATEMENTS
YEAR ENDED 31DECEMBER 2016
I. CORPORATE INFORMATION
Yantai Changyu Pioneer Wine Co., Ltd. (the "Company") was incorporated as a joint stock limited company in accordance with the Company Law of the People's Republic of China (the "PRC") in a reorganization carried out by Yantai Changyu Group Co., Ltd. ("Changyu Group Company"), in which Changyu Group Company injected certain assets and liabilities in relation to the brandy, wine, and sparkling wine production and sales businesses to the Company. The Company and its subsidiaries (the "Group") are principally engaged in the production and sales of wine, brandy, sparkling wine, grape growing and acquisition, as well as travel resource development, etc. . Registration place of the Company is Yantai, Shandong. Headquarter of the Company islocated at No.56Da MaLu, Zhifu District, Yantai, Shandong, PRC.
As at 31 December 2016 the total shares issued by the Company amounts to 685,464,000 shares. Pleaserefer to NoteVI-31 indetail.
The holding company of the Group is Changyu Group Company, which is jointly controlled by Yantai GuoFeng Investment Holding Ltd, ILLVA SARONNO HOLDING SPA, International FinanceCorporation and Yantai Yuhua Investment and Development CompanyLimited. The financial statements have been authorized by the board of directors on 20 April 2017. According to the Company's articles of association, the financial statements will be reviewed by shareholders ontheshareholder's meeting.
For consolidation scope of the year, please refer to Notes VIII "Equity in other entities" in detail. For detail of changes in consolidation scope of the year, please refer to Notes VII "Change in consolidation scope".
II. BASISOFPREPARATIONOF FINANCIAL STATEMENTS
1. Basis ofpreparation
The Group has adopted the Accounting Standards for Business Enterprises ("ASBE") issued by the Ministry of Finance (“MoF”). In addition, the Group has disclosed relevant financial information in accordance with Information Disclosure and Presentation Rules for Companies Offering Securities to the Public No. 15 - General Provisions on Financial Reporting (Revised in 2014).
2. Basis ofaccountingand principleof measurement
The Group has adopted the accrual basis of accounting. The Group adopts the historical cost as the principle of measurement in the financial statements. Where assets are impaired, provisions forasset impairment are madeinaccordance withrelevant requirements.
Under the historical cost measurement, an asset is measured at the fair value of consideration paid in cash and cash equivalents at the date of the purchase. Liability is measured at the value of asset received through taking current obligation, the contract value for taking current obligation, or the cash and cash equivalents value estimated forrepaying debt in daily business activity.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport II. BASISOFPREPARATIONOF FINANCIAL STATEMENTS-continued
2. Basis ofaccountingand principleof measurement -continued
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined onsuchabasis.
Fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair valuemeasurement inits entirety, which are described as follows:
1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that theentity can access at themeasurement date;
2) Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for theasset or liability, either directly orindirectly; and
3) Level 3inputs are unobservable inputs fortheasset orliability.
3. Going concern
As at 31 December 2016, the Group evaluated the profitability ability in the foreseeable 12 months and did not notice any event or circumstance that would constitute significant doubt on going concern ability of the Group. Therefore, the financial statements have been prepared on a going concern basis.
III. SUMMARYOF SIGNIFICANT ACCOUNTING POLICIESAND ACCOUNTING
1. Declaration for implementingCAS
The financial statements are prepared in accordance with CAS, which showing a true and fair view of the financial position on 31 December 2016, financial performance and cash flow in 2016 oftheCompany andthe Group.
2. Accounting year
Theaccounting year ofthe Group is from 1January to 31December ofeach calendar year. 3. Business cycle
Business cycle refers to the period from purchasing assets to be processed to receiving cash or cash equivalents bytheCompany. The businesscycle ofthe Company is12months.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport III. SUMMARYOF SIGNIFICANT ACCOUNTING POLICIESAND ACCOUNTING - continued
4. Reporting currency
Renminbi ("RMB") is the currency of the primary economic environment in which the Company and its domestic subsidiaries operate. Therefore, the Company and its domestic subsidiaries choose RMB as their functional currency. The Company's foreign subsidiary chooses Currency Euro as its functional currency on the basis of the primary economic environment in which it operates. TheCompany adopts RMB toprepare itsfinancial statements.
5. Business combination
5.1Business combinations notinvolving enterprises under common control andgoodwill A business combination not involving enterprises under common control is a business combination in which all of the combining enterprises are not ultimately controlled by the same party or parties before and after thecombination.
The cost of combination is the aggregate of the fair values, at the acquisition date, of the assets given, liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for control of the acquiree. The intermediary expenses incurred by the acquirer in respect of auditing, legal services, valuation and consultancy services, etc. and other associated administrative expenses attributable to the business combination are recognised in profit or loss when they are incurred.
Qualified identifiable assets, liabilities and contingent liabilities obtained by acquirer in the acquisition are measured usingfair value at theacquisition date.
The cost of combination exceeds the acquirer's interest in the fair value of the acquiree's identifiable net assets, the difference is treated as an asset and recognised as goodwill, which is measured at cost on initial recognition. Within the 12 month after acquisition, adjustment for the provisional recognised value will be regarded as the recognition and measurement at acquisition date.
At the end of the year for acquisition, if the fair value for qualified identifiable assets, liabilities and contingent liabilities can be determined temporarily, temporally determined fair value will be recognised as consideration for recognition and measurement ofacquisition.
Goodwill arising on a business combination is measured at cost less accumulated impairment losses, and is presented separately in the consolidated financial statements. It is tested for impairment at least at theend ofeach year.
6. Preparation ofconsolidated financial statements
6.1Preparation ofconsolidated financial statements
The scope of consolidation in the consolidated financial statements is determined on the basis of control. Control is the power to govern the financial and operating policies of an enterprise so as to obtain benefits from its operating activities. The Group will re-evaluate if changes in relevant facts and circumstances results in changes in relevant factors involved in the above definition of
control.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport III. SUMMARYOF SIGNIFICANT ACCOUNTING POLICIESAND ACCOUNTING - continued
6. Preparation ofconsolidated financial statements - continued
6.1Preparation ofconsolidated financial statements - continued
Consolidation of subsidiary starts from the control on the subsidiary by the Group and ends at the lossof control onthesubsidiary bytheGroup.
For a subsidiary disposed of by the Group, the operating results and cash flows before the date of disposal (the date when control is lost) are included in the consolidated income statement and consolidated statement of cash flows, as appropriate.
The significant accounting policies and accounting periods adopted by the subsidiaries are determined based on the uniform accounting policies and accounting periods set out by the Company.
Allsignificant intra-group balances andtransactions are eliminated onconsolidation.
The portion of subsidiaries' equity that is not attributable to the Company is treated as non-controlling interests and presented as "non-controlling interests" in the consolidated balance sheet within shareholders' equity. The portion of net profits or losses of subsidiaries for the period attributable to non-controlling interests is presented as "non-controlling interests" in the consolidated income statement belowthenet profit lineitem.
When the amount of loss for the period attributable to the non-controlling shareholders of a subsidiary exceeds the non-controlling shareholders' portion of the opening balance of owners' equity ofthesubsidiary, theexcess amount are still allocated against non-controlling interests. For the transaction that Purchase minority interest or disposal part of the equity does not loss the control of the subsidiaries, it should treated as equity transaction, and adjust the equity attributable to shareholders and minority interest in order to reflex the changes of equity in subsidiaries. The difference between minority interest adjustment and fair value of received/paid consideration will adjust incapital reserve, and ifcapital reserveis not enoughfor offset, will adjust surplus reserve. 7. Cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents are the Group's short-term, highly liquid investments that are readily convertible to known amounts ofcash and which aresubject to aninsignificant risk ofchanges in value. 8. Translation oftransactions and financial statements denominated in foreign currencies
8.1Transactions denominated in foreign currencies
A foreign currency transaction is recorded, on initial recognition, by applying the spot exchange rate onthedateof thetransaction.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport III. SUMMARYOF SIGNIFICANT ACCOUNTING POLICIESAND ACCOUNTING - continued
8. Translation oftransactions and financial statements denominated in foreign currencies - continued 8.1Transactions denominated in foreign currencies -continued
At the balance sheet date, foreign currency monetary items are translated into RMB using the spot exchange rates at the balance sheet date. Exchange differences arising from the differences between the spot exchange rates prevailing at the balance sheet date and those on initial recognition or at the previous balance sheet date are recognised in profit or loss for the period, except that (1) exchange differences related to a specific-purpose borrowing denominated in foreign currency that qualify for capitalisation are capitalised as part of the cost of the qualifying asset during the capitalisation period; (2) exchange differences related to hedging instruments for the purpose of hedging against foreign currency risks are accounted for using hedge accounting; (3) exchange differences arising from available-for-sale non-monetary items denominated in foreign currencies and changes in the carrying amounts of available-for-sale monetary items are recognised as other comprehensive incomeand included incapital reserve.
Foreign currency non-monetary items measured at historical cost are translated to the amounts in functional currency at the spot exchange rates on the dates of the transactions and the amounts in functional currency remain unchanged. Foreign currency non-monetary items measured at fair value are re-translated at the spot exchange rate on the date the fair value is determined. Difference between the re-translated functional currency amount and the original functional currency amount is treated as changes in fair value (including changes of exchange rate) and is recognised in profit and loss oras othercomprehensiveincome included in capital reserve. 8.2Translation offinancial statements denominated in foreign currencies
For the purpose of preparing the consolidated financial statements, financial statements of a foreign operation are translated from the foreign currency into RMB using the following method: assets and liabilities on the balance sheet are translated at the spot exchange rate prevailing at the balance sheet date; shareholders' equity items except for retained earnings are translated at the spot exchange rates at the dates on which such items arose; all items in the income statement as well as items reflecting the distribution of profits are translated at the spot exchange rates on the dates of the transactions; the opening balance of retained earnings is the translated closing balance of the previous year's retained earnings; the closing balance of retained earnings is calculated and presented on the basis of each translated income statement and profit distribution item. The difference between the translated assets and the aggregate of liabilities and shareholders' equity items is separately presented as the exchange differences arising on translation of financial statements denominated in foreign currencies of other comprehensive income under the shareholders' equity in thebalance sheet.
Cash flows arising from a transaction in foreign currency and the cash flows of a foreign subsidiary are translated at the spot exchange rate on the date of the cash flows. The effect of exchange rate changes on cash and cash equivalents is regarded as a reconciling item and presented separately in the cash flow statement as "effect of exchange rate changes on cash and cash equivalents".
The opening balances and the comparative figures of previous year are presented at the translated amounts inthe previous year's financial statements.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport III. SUMMARYOF SIGNIFICANT ACCOUNTING POLICIESAND ACCOUNTING - continued
9. Financial instruments
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. For other financial assets and financial liabilities, transaction costs are included in theirinitialrecognised amounts.
9.1Effectiveinterest method
The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability (or a group of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period, using the effective interest rate. The effective interest rate is the rate that exactly discounts estimated future cash flows through the expected life of the financial asset or financial liability or, where appropriate, a shorter period to thenet carrying amount ofthefinancial asset orfinancial liability.
When calculating the effective interest rate, the Group estimates future cash flows considering all contractual terms of the financial asset or financial liability (without considering future credit losses), and also considers all fees paid or received between the parties to the contract giving rise to the financial asset and financial liability that are an integral part of the effective interest rate, transactioncosts, and premiums ordiscounts, etc.
9.2Classification, recognition and measurement of financial assets
On initial recognition, the Group's financial assets are classified into one of the four categories, including financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables, and available-for-sale financial assets. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Financial assets of the Group are loans and receivables and available-for-sale financial assets.
9.2.1Loansandreceivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Financial assets classified as loans and receivables by the Group include cash and bank, notes receivable, accounts receivable, interest receivable and otherreceivables.
Loans and receivables are subsequently measured at amortised cost using the effective interest method. Gain or loss arising from derecognition, impairment or amortisation is recognised in profit orloss.
9.2.2Available-for-salefinancial assets
Available-for-sale financial assets include non-derivative financial assets that are designated on initial recognition as available for sale, and financial assets that are not classified as financial assets at fair valuethrough profit orloss, loans andreceivables orheld-to-maturity investments. For investments in equity instruments that do not have a quoted market price in an active market
and whosefair valuecannot bereliably measured, they are measured at cost.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport III. SUMMARYOF SIGNIFICANT ACCOUNTING POLICIESAND ACCOUNTING - continued
9. Financial instruments -continued
9.3Impairment of financial assets
The Group assesses at each balance sheet date the carrying amounts of financial assets other than those at fair value through profit or loss. If there is objective evidence that a financial asset is impaired, the Group determines the amount of any impairment loss. Objective evidence that a financial asset is impaired is evidence that, arising from one or more events that occurred after the initial recognition of the asset, the estimated future cash flows of the financial asset, which can be reliably measured, have been affected.
Objectiveevidence that afinancial asset is impaired includes thefollowing observable events: (1) Significant financial difficulty of theissuerorobligor;
(2) A breach of contract by the borrower, such as a default or delinquency in interest or principal payments;
(3) The Group, for economic or legal reasons relating to the borrower's financial difficulty, granting aconcession to theborrower;
(4) It becoming probable that the borrower will enter bankruptcy or other financial reorganisations;
(5) The disappearance of an active market for that financial asset because of financial difficulties oftheissuer;
(6) Upon an overall assessment of a group of financial assets, observable data indicates that there is a measurable decrease in the estimated future cash flows from the group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the group. Such observable data includes:
- Adverse changes inthepayment status ofborrower in thegroup ofassets;
- Economic conditions in the country or region of the borrower which may lead to a failure topay thegroupof assets;
(7) Significant adverse changes in the technological, market, economic or legal environment in which the issuer operates, indicating that the cost of the investment in the equity instrumentmay notbe recovered bytheinvestor;
(8) A significant or prolonged decline in the fair value of an investment in an equity instrument belowits cost;
(9) Otherobjective evidence indicating there is an impairment of afinancial asset.
-Impairment offinancial assets measured at amortised cost
If financial assets carried at amortised cost are impaired, the carrying amounts of the financial assets are reduced to the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. The amount of reduction is recognised as an impairment loss in profit or loss. If, subsequent to the recognition of an impairment loss on financial assets carried at amortised cost, there is objective evidence of a recovery in value of the financial assets which can be related objectively to an event occurring after the impairment is recognised, the previously recognised impairment loss is reversed. However, the reversal is made to the extent that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the
amortised cost would have been had theimpairment not been recognised.
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9. Financial instruments -continued
9.3Impairment of financial assets- continued
-Impairment offinancial assets measured at amortised cost -continued
For a financial asset that is individually significant, the Group assesses the asset individually for impairment. For a financial asset that is not individually significant, the Group assesses the asset individually for impairment or includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset (whether significant or not), it includes the asset in a group of financial assets with similar credit risk characteristics and collectively reassesses them for impairment. Assets for which an impairment lossis individuallyrecognised are notincluded ina collective assessment ofimpairment. -Impairment ofavailable forsale assets measured at cost
If an impairment loss has been incurred on an investment in unquoted equity instrument (without a quoted price in an active market) whose fair value cannot be reliably measured, or on a derivative financial asset that is linked to and must be settled by delivery of such an unquoted equity instrument, the carrying amount of the financial asset is reduced to the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. The amount of reduction is recognised as an impairment loss in profit or loss. The impairment lossonsuch financial asset isnot reversed once itis recognised.
9.4Transferof financial assets
The Group derecognises a financial asset if one of the following conditions is satisfied: (1) the contractual rights to the cash flows from the financial asset expire; or (2) the financial asset has been transferred and substantially all the risks and rewards of ownership of the financial asset is transferred to the transferee; or (3) although the financial asset has been transferred, the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset but has not retained control of thefinancial asset.
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, the difference between (1) the carrying amount of the financial asset transferred; and (2) the sum of the consideration received from the transfer and any cumulative gain or loss that has been recognised in othercomprehensive income, isrecognised inprofit orloss.
9.5Classification, recognition and measurement of financial liabilities
Debt and equity instruments issued by the Group are classified into financial liabilities or equity on the basis of the substance of the contractual arrangements and definitions of financial liability and equity instrument.
On initial recognition, financial liabilities are classified into financial liabilities at fair value through profit or loss and other financial liabilities. The financial liabilities in group are other financial liabilities, including short-term borrowings, notes payable, account payables, interest
payables, otherpayables, non-current liabilities duewithin oneyear and long-term payables etc.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport III. SUMMARYOF SIGNIFICANT ACCOUNTING POLICIESAND ACCOUNTING - continued
9. Financial instruments -continued
9.5Classification, recognition and measurement of financial liabilities -continued
9.5.1Other financial liabilities
Other financial liabilities are subsequently measured at amortised cost using the effective interest method, withgain orloss arising from derecognition oramortisation recognised in profit or loss. 9.6Derecognition offinancial liabilities
The Group derecognises a financial liability (or part of it) only when the underlying present obligation (or part of it)isdischarged.
When the Group derecognises a financial liability or a part of it, it recognises the difference between the carrying amount of the financial liability (or part of the financial liability) derecognised and the consideration paid (including any non-cash assets transferred or new financial liabilities assumed) inprofit orloss.
9.7Offsettingfinancial 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 notbe offset.
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 equity instruments.The equity instrumentstransaction expenses deducted from equity. The Group treats distribution to equity instrument holders as profit distributions. Shareholder equity is not affected bysharedividend distributed.
10. Accounts Receivable
10.1 Receivables that are individually significant and for which bad debt provision is individually assessed
A receivable that exceeds RMB 3,000,000 is deemed as an individually significant receivable by theGroup.
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10. Accounts Receivable -continued
10.1 Receivables that are individually significant and for which bad debt provision is individually assessed -continued
For receivables that are individually significant, the Group assesses the receivables individually for impairment. For a financial asset that is not impaired individually, the Group includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Receivables for which an impairment loss is individually recognised are not included in acollective assessment ofimpairment.
10.2 Receivables that are not individually significant but for which bad debt provision is 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 andpresent valueof futurecash flows. 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 location and condition.
11.2Valuation method ofinventories upondelivery
Theactual cost ofinventories upondelivery is calculated using theweighted average method. Agricultural products harvested are reported in accordance withthe CAS1Inventories. 11.3 Basis for determining net realisable value of inventories and provision methods for decline in valueof inventories
At the balance sheet date, inventories are measured at the lower of cost and net realisable value. If the net realisable value is below the cost of inventories, a provision for decline in value of inventories is made. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, the estimated costs necessary to make the sale and relevant taxes. Net realisable value is determined on the basis of clear evidence obtained, and takes into consideration the purposes of holding inventories and effect of post balance sheet events.
Provision for decline in value of other inventories is made based on the excess of cost of inventory over itsnet realisablevalue onan item-by-item basis.
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11. Inventories -continued
11.3 Basis for determining net realisable value of inventories and provision methods for decline in valueof inventories -continued
After the provision for decline in value of inventories is made, if the circumstances that previously caused inventories to be written down below cost no longer exist so that the net realisable value of inventories is higher than their cost, the original provision for decline in value is reversed and thereversal is included in profit orloss for theperiod.
11.4Inventory count system
Theperpetual inventory system is maintained for stock system.
11.5Amortisationmethod for lowcost and short-lived consumableitems and packaging materials Packaging materials and low cost and short-lived consumable items are amortised using the immediatewrite-off method.
12. Non-current assets held forsale
Acertain non-current asset oftheGroup (excludingdeferred tax asset)is accounted for as non-current asset heldfor saleifall ofthefollowing conditions are satisfied at thesametime:the non-current asset can bedisposed immediately at itscurrent state solelybased onthegeneral terms for disposalof similarnon-current assets; aresolution has been made for thedisposal ofthe non-current asset; an irrevocabletransfer agreement has been entered into with thetransferee; and itis highly probable that the transfer willbe completed within oneyear. Non-current assets held forsale are not depreciated or amortized,and are measured at the lowerofthe carrying amount and thefair value less costs to sell.
13. Long term equity investments
13.1Basis fordetermining control, jointcontrol 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.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport III. SUMMARYOF SIGNIFICANT ACCOUNTING POLICIESAND ACCOUNTING - continued
13. Long term equity investments -continued
13.2Determinationof initial investment cost
For a long-term equity investment acquired not involving enterprises under common control, the investment cost of the long-term equity investment is the cost of acquisition. Where the acquiree's equity is obtained at stages through multiple deals and finally a business combination not involving enterprises under common control is achieved, the deals are accounted for considering whether they are respectively attributable to "a package deal": where the deals are attributable to "a packagedeal", thedeals are treated as deals toobtain control.
Audit fee, legal services, consulting fees and other related management costs in acquisition are expensed in profits and losses when happened.
Other long-term equity investments acquired from other than acquisitions are recognised using original cost.
13.3Subsequent measurement andrecognition ofprofit orloss
13.3.1Long-termequityinvestment accounted for usingthecost method
The Group accounts for long-term equity investment using the cost method. A subsidiary is an investeethat is controlled 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 distributionsdeclared bythe investee.
13.4Disposal oflong-term equity investments
On disposal of a long term equity investment, the difference between the proceeds actually received and receivable andthecarrying amount is recognised in profit orloss for theperiod. 14. Fixedassets
14.1Recognition criteria forfixed assets
Fixed assets are tangible assets that are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes, and have useful lives of more than one accounting year. A fixed asset is recognised only when it is probable that economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. Fixedassets are initiallymeasured at cost.
Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset and if it is probable that economic benefits associated with the asset will flow to the Group and the subsequent expenditures can be measured reliably. Meanwhile the carrying amount of the replaced part is derecognised. Other subsequent expenditures are recognised in profit or loss in
theperiod in which they are incurred.
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14. Fixedassets -continued
14.2Depreciation of each category offixed assets
A fixed asset is depreciated over its useful life using the straight-line method since the month subsequent to the one in which it is ready for intended use. The useful life, estimated net residual value rate and annual depreciation rate ofeach category of fixed assets are as follows: Estimated Estimated Annual useful life residual rate depreciation rate Buildings 20-40years 0-5% 2.4%-5.0% Machinery 5-20years 0-5% 4.8%-20.0% MotorVehicles 4-12years 0-5% 7.9%-25.0% Estimated net residual value assumes the situation where a fixed asset expire for its estimated useful life and is in its expected final status. Estimated net residual value is the amount that the Group can obtain from thedisposal less expected disposal fees.
14.3Otherexplanations
If a fixed asset is upon disposal or no future economic benefits are expected to be generated from its use or disposal, the fixed asset is derecognised. When a fixed asset is sold, transferred, retired or damaged, the amount of any proceeds on disposal of the asset net of the carrying amount and related taxes is recognised in profit orloss forthe period.
The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciation method applied at least once at each financial year-end, and account for any change as achange inan accounting estimate.
15. Constructionin progress
Construction in progress is measured at its actual costs. The actual costs include various construction expenditures during the construction period, borrowing costs capitalised before it is ready for intended use and other relevant costs. Construction in progress is not depreciated. Constructionin progress is transferred toa fixedasset whenit is ready forintended use.
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16. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying asset are capitalised when expenditures for such asset and borrowing costs are incurred and activities relating to the acquisition, construction or production of the asset that are necessary to prepare the asset for its intended use or sale have commenced. Capitalisation of borrowing costs ceases when the qualifying asset being acquired, constructed or produced becomes ready for its intended use or sale. Capitalisation of borrowing costs is suspended during periods in which the acquisition, construction or production of a qualifying asset is suspended abnormally and when the suspension is for a continuous period of more than 3 months. Capitalisation is suspended until the acquisition, construction or production of the asset is resumed. Other borrowing costs are recognised as an expense in the period in which they are incurred. Where funds are borrowed under a specific-purpose borrowing, the amount of interest to be capitalized is the actual interest expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds before being used on the asset or any investment income on the temporary investment ofthosefunds.
17. Biological assets
17.1Bearerbiological assets
Bearer biological assets are biological assets, for example, held for the production of agricultural produce, provision of services or rental, Bearer biological assets in the Group are vines. A bearer biological asset is initially measured at cost. The cost of a bearer biological asset self-grown or self-bred comprises those costs necessarily incurred and directly attributable to the asset before the asset becomes available for its intended production and operating purposes, and any borrowing cost meeting thecapitalisation criteria.
The Group charge deprecation for productive biological assets which satisfy expected production, and record the deprecation in balance sheet and income statement. The Group uses straight line method tocalculate 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 lifeof thebearer biological assets.
The Group reviews the useful life and estimated net residual value of bearer biological assets and the depreciation method applied at least once at each financial year-end, and account for any change as a change in an accounting estimate.
On the sale, identification of any shortages during stocktaking, death or damage of biological asset, the proceeds on disposal net of the carrying amount and relevant taxes is recognised in profit orloss forthe current period.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport III. SUMMARYOF SIGNIFICANT ACCOUNTING POLICIESAND ACCOUNTING - continued
18. Intangibleassets
Intangibleassets include land userights, software, etc.
An intangible asset is measured initially at cost method. When an intangible asset with a finite useful life is available for use, its original cost less net residual value and any accumulated impairment losses is amortised over its estimated useful life using the straight-line method. The useful lives oftheintangible assets are as follows:
Annual Item Useful life Net residual value amortizationrate Landuse rights 40-50 years - 2.0%-2.5% Software 5-10 years - 10.0%-20.0% Trademark 10years - 10.0% For an intangible asset with a finite useful life, the Group reviews the useful life and amortisation method at theendof theperiod, and makes adjustments when necessary.
19. Impairment of long-term assets
The Group and the Company review the impairment status of long-term equity investments, fixed assets, construction in progress, bearer biological asset and intangible assets with finite useful life at the end of each year. If the assets exist impairment, the Group estimates the recoverable amount oftheassets.
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 provisionand expensed in current period.
Goodwill is tested for impairment at least at the end of each year. For the purpose of impairment testing, goodwill is considered together with the related assets group (s), i.e., goodwill is reasonably allocated to the related assets group (s) or each of assets group (s) expected to benefit from the synergies of the combination. An impairment loss is recognised if the recoverable amount of the assets group or sets of assets groups (including goodwill) is less than its carrying amount. The impairment loss is firstly allocated to reduce the carrying amount of any goodwill allocated to such assets group or sets of assets groups, and then to the other assets of the group pro-rataonthebasis of thecarrying amount ofeachasset (other than goodwill)in thegroup. The impairment is recognised in profit or loss for the period in which it is incurred and will not be reversed in any subsequent period.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport III. SUMMARYOF SIGNIFICANT ACCOUNTING POLICIESAND ACCOUNTING - continued
20. Long term prepaid expenses
Long term prepaid expenses oftheGroup are amortized overthefollowing period:
Amortization period Landrequisition fee 50years Landlease prepayment 50years Greening fee 5-20 years Leasehold improvement 3-5years Others 3years 21. Employee benefits
21.1Short-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 when they are incurred. Non-monetary employee benefits are measured at fairvalue.
Social insurances such as medical insurance, injury insurance and pregnancy insurance, housing funds, labor union and employee education fees paid by the Group for employees, are recognised as relevant liability in the period in which the employees provide service, in accordance with the regulated recognition basis and percentage. The related expenditures are either included in cost of related assets orcharged toprofit orloss in theperiod when theyare incurred.
21.2Accounting treatments ofretired benefits
Retired benefits oftheGroup are all predetermined provision plan.
In the period in which the employees provide service, the Group recognise liability in accordance with the amounts to be paid calculated according to the predetermined provision plan, and the related expenditures are either included in cost of related assets or charged to profit or loss in the period when they are incurred.
21.3Accounting treatments 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 and expenses related to thepayment oftermination benefits in reconstructuring.
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22. Revenue
22.1Revenue from sale ofgoods
Revenue from sale of goods is recognised when the Group has transferred to the buyer the significant risks and rewards of ownership of the goods. The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold. The amount of revenue can be measured reliably and it is probable that the associated economic benefits will flow to the Group. The associated costs incurred or to be incurred can bemeasured reliably.
22.2Revenue from rendering ofservices
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 ofthetransaction at thereporting date. The outcomeof atransaction can be estimated reliably. When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue is recognised only to the extent of the costs incurred that will be recoverable, and the costs incurred are recognised as expenses for the period. When it is not probable that the costs incurred willbe recovered, revenueis not recognised.
23. Government grants
Government grants are transfer of monetary assets and non-monetary assets from the government tothe Group at no consideration. The income is accounted for as either a government grant related toan asset or agovernment grant related to incomebased onitsnature.
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 or receivable.
23.1Government grant related to an asset
A government grant related to an asset is recognised as deferred income, and evenly amortised to profit orloss over theuseful lifeof therelated asset.
23.2Government 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 inprofit orlossfor theperiod.
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24. Deferred tax assets/deferred tax liabilities
Theincome tax expenses includecurrent income tax anddeferred incometax.
24.1Current 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 tax laws.
24.2Deferred tax assets and deferred tax liabilities
For temporary differences between the carrying amounts of certain assets or liabilities and their tax base, or between the nil carrying amount of those items that are not recognised as assets or liabilities and their tax base that can be determined according to tax laws, deferred tax assets and liabilities are recognised using thebalance 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 tax asset orliabilityis recognised.
For deductible losses and tax credits that can be carried forward, deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which thedeductible losses and taxcredits can beutilised.
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 liabilityissettled.
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24. Deferred tax assets/deferred tax liabilities -continued
24.2Deferred tax assets and deferred tax liabilities -continued
Current and deferred tax expenses or income are recognised in profit or loss for the period, except when they arise from transactions or events that are directly recognised in other comprehensive income or in shareholders' equity, in which case they are recognised in other comprehensive income or in shareholders' equity; and when they arise from business combinations, in which case they adjust thecarrying amount of goodwill.
At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if it is no longer probable that sufficient taxable profits will be available in the future to allow the benefit of deferred tax assets to be utilised. Such reduction in amount is reversed when it becomes probable that sufficient taxableprofits willbe available.
24.3Net off ofincometaxes
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, in eachfutureperiodin whichsignificantamountsofdeferredtaxassetsorliabilitiesareexpected to bereversed,deferredtaxassetsanddeferredtaxliabilitiesareoffsetandpresentedonanetbasis. 25. Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks andrewards ofownership tothe lessee. All other leases are classified as operating leases. Operating lease accounting methods
Operating lease payments are recognised on a straight-line basis over the term of the relevant lease, and are either included in the cost of related asset or charged to profit or loss for the period. Initial direct costs incurred are charged to profit orloss fortheperiod.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport IV. CRITICAL JUDGMENTS INAPPLYING ACCOUNTING POLICIESAND KEY
ASSUMPTIONSAND UNCERTAINTIESINACCOUNTING ESTIMATES
In the application of accounting policies as set out in Note III, the Group is required to make judgments, estimates and assumptions about the carrying amounts of items in the financial statements that cannot be measured accurately, due to the internal uncertainties of the operating activities. These judgments, estimates and assumptions are based on historical experience of the Group's management as well as other factors that are considered to be relevant. Actual results may differ from these estimates.
The Group periodically review the judgments, estimates and assumptions above on a going concern basis. For those changes in accounting policies that only affect current financial statements, the influences are recognized in current period. For those changes in accounting policies that affect both current and future financial statements, the influences are recognized in bothcurrent and prospective periods.
Significantaccountingjudgments 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 accountingperiod.
Deferred tax assets
Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable profits together with future tax planning strategies.
Depreciation
As set out in Note III-14, the depreciation is calculated on the straight line basis to write-off the cost of each item of fixed assets to its residual value over its estimated useful life. The Group's management determines the estimated useful lives for its fixed assets. This estimate is based on the historical experience of the actual useful lives of fixed assets of similar nature and functions. If the previous estimates have significant changes, and depreciation expenses will be adjusted in thefuture periods.
Useful life ofintangible assets
The estimated useful lives of the intangible assets are determined based on the historical experience of the actual useful lives of intangible assets of similar nature and functions as well as considering thecontractual rights and statutory rightsapplicable to theintangible assets. When the estimated useful lives of finite intangible assets are shortened or extended, the amortizationperiods shouldbe adjusted accordingly.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport IV. CRITICAL JUDGMENTS INAPPLYING ACCOUNTING POLICIESAND KEY ASSUMPTIONSAND UNCERTAINTIESINACCOUNTING ESTIMATES -continued Significantaccountingjudgments andaccounting estimates -continued
Impairment of non-current assets
The Group assesses whether the recoverable amount is lower than the book value. If there are any indicators that the book value of non-current assets cannot be fully recoverable, impairment losses shouldbe recorded.
The recoverable amount is the higher of an asset's fair value less costs to sell and the present value of the future cash flows expected to be derived from an asset. As it is difficult for the Group to obtain the quoted market price of the assets (or assets group), the fair value of the assets cannot be reliably estimated. When the management make estimation on the expected future cash flows from the asset or cash generating unit, estimates should be made on choosing a suitable production volume, selling price and related operating costs discount rate in order to calculate the present value of those cash flows. When recoverable amounts are undertaken, management may use all available for use information, including the forecast on production volume, selling price and related operating costs in reasonableand supportableassumptions.
Estimated provisionfor accounts receivable
A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy are considered indicators that the trade receivable is impaired. The provision is reassessed at the end ofeach year.
Inventory provisionbased onnet realizablevalue
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 thenet realizablevalueis lower than thecarrying cost at theend ofeach year. V. TAXES
1. Themain taxes and tax rate are as follows:
(1) China
Value added tax VAT is levied at6%and17%ontheinvoiced amount after deduction ofeligible input VAT.
Consumption tax Theconsumption tax ofthe group is levied ongross revenue at rates ranging from10% to20%.
Business tax TheGroup issubject toa business taxof5%onits taxablerevenue. Citydevelopment tax Levied at7%oftotal business tax payment.
Corporate incometax TheGroup issubject toa corporateincome tax rateof25% onitstaxableincome.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport V. TAXES- continued
(2) China-continued
As approved by the State Council, according to "Circular on Nationwide Implementation of Pilot for Change from Business Tax to VAT" (Cai Shui[2016] No.36), since 1 May 2016, all the business tax payers engaged in construction, real estate, finance and living services etc. are included in the scope of pilot and pay VAT instead of business tax (the "change from business tax to VAT"). Thereinto, the VAT rate for living services industry is6%. The Group has been paying VAT instead of business tax for its revenue from tour, accommodation, catering etc. since the "change from businesstax toVAT".
(3) France
Value added tax VAT is levied at19.6% ontheinvoiced amount after deduction ofeligible input VAT.
Corporate incometax TheGroup issubject toa corporateincome tax rateof33% onitstaxableincome.
(4) Spain
Value added tax VAT is levied at21% ontheinvoiced amount after deduction ofeligible input VAT.
Corporate incometax TheGroup issubject toa corporateincome tax rateof28%onitstaxableincome.(2015:30%)
Otherthan tax incentives stated inNoteV-2, applicable taxrates oftheGroup in 2016and2015 are all stated 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 exemptionofcorporate incometax.
Xinjiang Tianzhu Co., Ltd ("Xinjiang Tianzhu"), a subsidiary of the Company, is an enterprise of wine production and sales incorporated in Shihezi city, Xinjiang Weizu Autonomous. In accordance with the Notice on Tax Policy Issues concerning Further Implementation of the Western China Development Strategy (Cai Shui[2011] No.58), Xinjiang Tianzhu is qualified to enjoy preferential taxation policies, which means it can pay corporate income tax at a preferential rateof15%for theperiod from 2015to2020.
Xinjiang Babao Baron Chateau Co., Ltd. ("Shihezi Chateau"), a subsidiary of the Company, is an enterprise of wine production and sales incorporated in Shihezi city, Xinjiang Weizu Autonomous. In accordance with the Notice on Tax Policy Issues concerning Further Implementation of the Western China Development Strategy (Cai Shui[2011] No.58), Shihezi Chateau is qualified to enjoy preferential taxation policies, which means it can pay corporate income tax at a preferential rateof15%for theperiod from 2015to2020.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS
1. Cash and bank
Closingbalance Opening balance RMB RMB Cash 117,507 179,488 Bank balance 1,240,607,797 1,103,705,354 Other currency fund 150,792,303 181,477,572____________ ____________ Total 1,391,517,607 1,285,362,414________________________ ________________________ At 31December 2016,thebalance ofrestricted cash of theGroup is as follows:
Closingbalance Opening balance RMB RMB The Company's housingfund 2,711,926 2,643,181____________ ____________ 2,711,926 2,643,181________________________ ________________________ As at 31 December 2016,theGroup's othermonetary assets is as follows:
Closingbalance Opening balance RMB RMB Research and Development Co., Ltd
(“R&D Centre”) pledged deposit 46,100,000 151,100,000 Refundable deposit for notespayable 38,900,000 30,000,000 Deposit for letterof credit 25,694,735 370,000 Alipay account balance 40,047,367 - Company cards deposit guarantee 50,201 7,572____________ ____________ 150,792,303 181,477,572________________________ ________________________ As at 31 December 2016, the balance of restricted of the alipay account is RMB 18,118,441 (31 December 2015:RMB: Nil).
As at 31 December 2016, the Group's overseas cash and bank deposit is RMB 16,080,618 (31 December 2015:RMB 6,019,640).
As at 31 December 2016, The Group's term deposits with original maturity of more than three months when acquired is RMB 3,000,000 (31 December 2015: RMB 9,000,000) with interest rate1.65%.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport 2.
VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS
2. Notes receivable
(1) Categories of notes receivable
Closingbalance Opening balance RMB RMB Bank acceptances 210,470,027 113,988,122____________________ __________________ (2) Notes receivable which have been pledged as security at theendoftheperiod:
As at 31 December 2016,there was nopledged notes receivable (31 December 2015: Nil). (3) Notes endorsed bytheGroup to otherparties which are not yet dueat theendof theperiod Closingbalance Opening balance RMB RMB Bank acceptances 198,302,531 84,677,596____________________ __________________ As at 31 December 2016, notes endorsed by the Group to other parties which are not yet due at the end of the period is RMB 198,302,531 (31 December 2015: RMB 84,677,596). The notes are used for payment to suppliers. The Group believes that due to good reputation of bank, the risk of notes not accepting by bank on maturity is very low, and almost all the risks and rewards on ownership of the notes receivable have been transferred to the supplier, therefore derecognise the note receivables endorsed. If the bank is unable to pay the notes on maturity, according to the relevant laws and regulations ofChina, theGroup would undertake limited liabilityfor thenotes. (4) Notes receivable reclassified to accounts receivable due to the drawers' inability to settle the note on maturity
As at 31 December 2016, no notes receivable were reclassified as accounts receivable due to the defaultof drawer(31 December2015: Nil).
3. Accounts receivable
(1) Disclosureof accounts receivablebycategories:
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 75,230,493 43.5 - - 75,230,493 74,538,738 37.7 - - 74,538,738 Accountsreceivablethatare
notindividuallysignificantbut
forwhichbaddebtprovision
hasbeenassessedindividually_9_7,_83_2,_13_5_5_6_.5__-____-___9_7,_83_2,_13_5_12_3,_25_6,_35_3_6_2_.3 __-____-___12_3,_25_6,_35_3
Total __17__3,__06__2,__62__8__10__0__.0____-________-______17__3,__06__2,__62__8__19__7,__79__5,__09__1__10__0__.0 ____-________-______19__7,__79__5,__09__1
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
3. Accounts receivable - continued
(1) Disclosureof accounts receivableby categories: -continued
Thenormal credit term isonemonth, which can be extended toone year forcertain major customers. The accounts receivable are interest-free.
As at 31 December 2016,ownership restricted accounts receivable is RMB30,732,944(31 December 2015:23,880,775), referring toNote VI-48.
Theaging analysis isas follows:
Closingbalance Opening balance RMB RMB Within1year 172,610,351 197,653,190 1to2years 452,277 141,901__________ __________ 173,062,628 197,795,091____________________ ____________________ (2) Recognitions,collections and reversals during thecurrent period:
As at 31 December 2016, there was no bad debt provision for accounts receivable (31 December 2015: Nil). There was no bad debt provision made, reversed or written-off by management in 2016(2015: Nil).
(3) Top fiveentities with thelargest balances ofaccounts receivable:
Relationship Percentageof Name withtheGroup Amount Aging totalreceivables RMB % DIAMarket Thirdparty 13,687,807 Within1year 7.9 NongongshangSupermarket
(Group)Co.,Ltd Thirdparty 13,625,761 Within1year 7.9 Wal-Mart(China)InvestmentCo.,Ltd. Thirdparty 6,416,066 Within1year 3.7 FujianMinhouglorisonCo.,Ltd Thirdparty 6,025,970 Within1year 3.5 SuguoSupermarketCo.,Ltd Thirdparty __5_,7_3_1_,5_9_8 Within1year _3_._3 45,487,202 26.3________________ ______
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
4. Prepayments
(1) The aginganalysis is as follows:
Closingbalance Opening balance Amount Ratio Amount Ratio RMB % RMB % Within 1year 2,175,606 100.0 3,096,223 86.2 1to2years - - 494,875 13.8________ _____ ________ _____ 2,175,606 100.0 3,591,098 100.0________________ __________ ________________ __________ (2) As at 31December 2016,the top5ofprepayments were as follows:
Reason Percentageof Relationship forbeing totaladvances withtheGroup Amount Aging outstanding tosuppliers RMB % ShandongElectricityCompany
Yantaibranch Thirdparty 502,670 Within1year electricitypurchase 23.1 DONELLIVINIS.P.A Thirdparty 367,148 Within1year goodsnotreceived 16.9 XinjiangHuaXingGlassCo.,Ltd Thirdparty 116,267 Within1year goodsnotreceived 5.3 ShanghaiZiRiPackingCo.,Ltd Thirdparty 104,832 Within1year goodsnotreceived 4.8 ChongqingHaoShengglass
incorporatedcompany Thirdparty ____9_3_,4_5_6 Within1year goodsnotreceived __4._3____1__,__18__4__,3__7__3 __5__4.__4 5. Interest receivable
(1) Categories of interest receivable
Closingbalance Opening balance RMB RMB Interests ofterm deposits 24,200 8,019,338________________ ________________ (2) Overdue interest
As at 31 December 2016,there was nooverdue interest receivable (31 December 2015:Nil).
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
6. Otherreceivables
(1) Disclosureof otherreceivables 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 7,417,220 39.3 - - 7,417,220 32,390,931 60.7 (7,199,521) 22.2 25,191,410 Otherreceivablesthatare
notindividuallysignificantbut
forwhichbaddebtprovision
hasbeenassessedindividually_1_1,_46_3,_58_0_6_0_.7___-____-__1_1,_46_3,_58_0_2_0,_95_5,_07_7_3_9_.3___-____-__2_0,_95_5,_07_7 Total __1__8,__88__0,__80__0__10__0__.0______-________-____1__8,__88__0,__80__0__5__3,__34__6,__00__8__10__0__.0(7__,1__99__,5__2__1)__1__4__.0__4__6,__14__6,__48__7 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 8,204,303 43.5 - 8,204,303 36,271,669 68.0 - 36,271,669 1to2years 7,715,992 40.8 - 7,715,992 2,725,644 5.1 - 2,725,644 2to3years 1,929,613 10.2 - 1,929,613 6,840,476 12.8 - 6,840,476 Over3years __1_,0_3_0,_89_2___5_.5_____-____1_,0_3_0,_89_2__7_,5_0_8,_21_9__1_4_.1_(_7_,1_99_,5_2_1)___3_08_,6_9_8 Total __1__8__,8__80__,8__0__0__1__0__0.__0__________-______1__8__,8__80__,8__0__0__5__3__,3__46__,0__0__8__1__0__0.__0__(__7,__19__9__,5__21__)__4__6__,1__46__,4__8__7 (2) Accrual, reversal and written-off during thecurrent period
No bad debt accrued orreversed in 2016(2015: bad debt was reversed RMB: Nil).
(3) Otherreceivables written off in thereporting period
Other receivables were written off RMB7,199,521in 2016.(2015: Nil).
(4) Disclosureof otherreceivables bycategories
Closingbalance Opening balance RMB RMB Deposit 13,191,851 27,424,926 Investment fund - 7,199,521 Petty cashreceivable 2,934,424 6,679,122 Refund ofconsumption tax, real estatetax 573,586 635,482 Others 2,180,939 11,406,957__________ _________ 18,880,800 53,346,008____________________ __________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
6. Other receivables - continued
(5) Top fiveentities with thelargest balances ofother receivables
As at 31 December 2016,thetop 5ofotherreceivables are as follows:
Percentageoftotal Baddebt Nature Amount Aging otherreceivables Amount RMB % RMB YantaiDevelopmentZone
FinanceBureau Constructiondeposit 7,417,220 Within2years 39.3 - YantaiDevelopmentZoneConstruction
IndustryAssociation Constructiondeposit 2,151,300 Within3years 11.4 - CanadaOrosIce-wineCo.,Ltd Foreigninvestmentfund 2,050,000 1-2years 10.9 - ShandongElectricityCompany
Yantaibranch Electricitydeposit 1,385,200 2-3years 7.3 - YantaiEconomicandTechnological
DevelopmentZoneThermalCo.,Ltd Deposit ____5_0_0,_00_0 Over1years __2._6 _____-______1__3__,5__03__,7__2__0 __7__1.__5 __________-____ 7. Inventories
(1) Disclosureof inventories bycategories
Closingbalance Openingbalance
Netcarrying Netcarrying Balance Provision amount Balance Provision amount RMB RMB RMB RMB RMB RMB Rawmaterial 72,011,633 - 72,011,633 89,256,433 - 89,256,433 Workinprogress 1,253,218,347 - 1,253,218,347 1,247,023,301 - 1,247,023,301 Finishedgoods __9_44_,_80_6_,5_1_6 (2_1_,4_2_6,_7_56_)__9_23_,_37_9_,7_6_0__9_42_,_72_0_,7_2_0(1_8_,1_4_7,_4_90_)__9_24_,_57_3_,2_3_0__2__,2__7__0,__03__6__,4__9__6 (2__1__,4__2__6,__7__56__)__2__,2__4__8,__60__9__,7__4__0__2__,2__7__9,__00__0__,4__5__4(1__8__,1__4__7,__4__90__)__2__,2__60__,__85__2__,9__6__4 (2) Inventory provision
Opening balance Increase Decrease Closingbalance RMB RMB RMB RMB Finishedgoods 18,147,490 3,279,266 - 21,426,756________________ ______________ ________________ ________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
8. Non-current assets held forsale
Expected Expected Closingbalance Fairvalue disposalfees disposaltime RMB RMB RMB
ZhenShanTunDepartment 2,000,197 16,282,224 3,878,560 Within1year________________ ______________ ____________
Note: TheCompany has signed an irrevocable agreement for disposalof fixed assets, with the amount ofRMB16,282,224,according towhich thedisposal isexpected to becompleted in 2017. 9. Othercurrent assets
Closingbalance Opening balance RMB RMB Prepaid taxes 26,238,092 28,201,991 Pendingdeduct VAT onpurchase 135,316,274 3,580,354 Prepaid rent 7,967,876 16,667,206__________ __________ 169,522,242 48,449,551____________________ ____________________ 10. Available-for-salefinancial assets
(1) Available-for-salefinancial assets
Closingbalance Openingbalance
Amount Impairment Carryingamount Amount Impairment Carryingamount RMB RMB RMB RMB RMB RMB Available-for-sale
equityinstruments
measuredatcost______10__,__34__0__,2__6__3(1__0__,0__0__0,__0__00__) __3__4__0,__26__3__ ______10__,__40__2__,8__1__4(1__0__,0__0__0,__0__00__) __4__0__2,__81__4__ (2) Available-for-salefinancial 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
(Note1). 10,000,000 - - 10,000,000 10,000,000 - - 10,000,000 18.0 - Other(Note2) 402,814 - (62,551) 340,263 - - - - Lessthan1% - 10,402,814 - (62,551) 10,340,263 10,000,000 - - 10,000,000
Note1: An impairment provision amounting toRMB 10,000,000has been made bytheCompany forthe balance ofthecarrying amount of theequity investment in Yantai Dingtao Construction and Development Co., Ltd.As thefairvalue oftheinvestee which isan unlistedcompany cannot bemeasured reliably, theCompany measured such available-for-sale financial asset at cost. Note 2: the Group holding equity ratios of investment companies are less than1%. Investment companies are all unlisted companies, and their fair value cannot be measured reliably, therefore, theGroup uses cost method tomeasure theseavailable-for-sale financial assets.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
11. Fixedassets
(1) Details offixed assets
Buildings Machinery MotorVehicles Total RMB RMB RMB RMB I.Totaloriginalcarryingamount
1.Openingbalance 2,647,418,685 1,498,619,150 28,457,393 4,174,495,228 2.Increase
(1)Purchase 6,350,850 33,119,747 4,341,981 43,812,578 (2)TransferfromCIP 1,300,071,628 442,163,898 817,566 1,743,053,092 (3)Acquisitionincrease 5,935,266 2,114,634 - 8,049,900 3.Decrease
Disposal - (6,881,854) (4,287,799) (11,169,653) ClassifiedasNon-current
assetsheldforsale(VI-8) ___(_3_,5_9_9,_22_1_) ________-__ ______-__ ____(3_,5_9_9,_2_21_) 4.Closingbalance __3_,9_5_6,_17_7_,2_0_8 __1_,9_6_9,_13_5_,5_7_5 __2_9,_32_9_,1_4_1 __5_,9_5_4,_64_1_,9_2_4 II.Totalaccumulateddepreciation
1.Openingbalance 336,439,433 725,768,456 23,042,154 1,085,250,043 2.Increase
Additions 75,321,191 120,291,861 2,165,958 197,779,010 3.Decrease
Disposal - (5,902,188) (4,073,410) (9,975,598) ClassifiedasNon-current
assetsheldforsale(VI-8) ___(_1_,5_9_9,_02_4_) ________-__ ______-__ ____(1_,5_9_9,_0_24_) 4.Closingbalance ___4_10_,_16_1_,6_0_0 ___8_40_,_15_8_,1_2_9 __2_1,_13_4_,7_0_2 __1_,2_7_1,_45_4_,4_3_1 III.Totalcarryingamount
1.Closingcarryingamount ____3__,5__4__6,__01__5__,6__0__8 ____1__,1__2__8,__97__7__,4__4__6 ____8__,__19__4__,4__3__9 ____4__,6__8__3,__18__7__,4__9__3 2.Openingcarryingamount ____2__,3__1__0,__97__9__,2__5__2 ______7__72__,__85__0__,6__9__4 ____5__,__41__5__,2__3__9 ____3__,0__8__9,__24__5__,1__8__5 As at 31 December 2016, fixed assets with ownership restricted are RMB 68,658,094 (31 December 2015:18,405,000). Pleaserefer to Notes VI-48 in detail.
As at 31 December 2016, Classified as available for sale assets are RMB 2,000,197 (31 December 2015:Nil), there was no temporary idle fixed assets, no fixed assets leased under finance leases , no leased outunder operating leases and noheldfor saleat the end oftheperiod.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
11. Fixedassets -continued
(2) Fixedassets ofwhich certificates oftitlehave notbeen obtained
As at 31 December 2016,buildings without property certificate are as follows:
Reasonswhycertificates Amount oftitlehavenotbeenobtained RMB
ResearchandDevelopmentCo,LtdIndustryProductionCentre 1,210,828,009 Processing ChanganChateauDormitorybuilding,mainbuilding 265,374,545 Processing XinjiangShiheziChateaufactorybuilding 256,782,251 Processing BeijingChateauEuropeantown,main,servicebuilding 220,650,663 Processing DingLuoTeChateaumainbuilding 90,847,654 Processing SalesCompanyofficebuildings 21,896,020 Processing XinjiangTianzhufermentationsandstoragewarehouse 19,057,557 Processing IceWineChateauofficebuildingandpackingworkshop 9,814,003 Processing Jingyangfactoryfermentationbuilding 4,389,119 Processing Fermentationcentreoffice,experimentbuildingandworkshop 3,994,837 Processing KylinPackagingfinishedgoodswarehouseandworkshop 2,578,206 Processing__________
2,106,212,864
____________________
12. Constructionin progress
(1) Constructionin progress
Closingbalance Opening balance RMB RMBR&D Centre(“Changyu Wineintegrational
Construction”)Project 1,227,968,480 1,799,097,086 NingxiaChateau Construction Project 36,717,169 13,709,767 ShiheziChateau Construction Project 30,600,684 28,105,618 Sales Company construction project 26,011,600 55,645,386 Xianyang Chateau Construction Project 10,346,598 61,308,522 Ding Luo TeChateau Project 4,871,422 5,000,221 AFIP plazareconstruction project 3,713,945 3,659,245 Jingyang Winefermentation workshop
reconstruction project 2,331,559 997,645 Othercompanies construction project 2,299,684 973,216 Huanren factory construction project 920,596 29,502,825 TheCompany's reconstruction project 500,000 7,990,777____________ ____________ 1,346,281,737 2,005,990,308________________________ ________________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
12. Constructionin progress -continued
(2) Changes in significant construction inprogress：
Transferto Totalaccumulated Capitalizing Interest
Opening
Transferto
intangible Closing Capitalizing interest capitalization
Budget balance Addition PPE assets balance Status interest forthisperiod rate Financedby RMB RMB RMB RMB RMB RMB % RMB RMB %
LoansfromR&DCentre(“ChangyuWine financial integrationalConstruction”)Project institutions 4,505,780,000 1,799,097,086 1,003,719,738 (1,574,848,344) - 1,227,968,480 62.2 2,289,723 2,289,723 1.2 andSelf-raised ChanganChateauConstruction
Project 620,740,000 61,308,522 17,783,086 (68,745,010) - 10,346,598 95.0 - - - Self-raised SalesCompanyconstructionproject 161,350,000 55,645,386 11,407,602 (27,335,730) (13,705,658) 26,011,600 90.0 - - - Self-raised ShiheziChateauConstructionProject 780,000,000 28,105,618 14,565,801 (12,070,735) - 30,600,684 87.9 - - - Self-raised NingxiaChateauConstruction
Project 414,150,000 13,709,767 31,819,787 (8,812,385) - 36,717,169 95.0 - - - Self-raised DingLuoTeChateauproject 192,400,000 5,000,221 4,468,303 (4,597,102) - 4,871,422 95.7 - - - Self-raised Huanrenfactoryconstructionproject 31,000,000 29,502,825 4,319,991 (32,902,220) - 920,596 95.0 - - - Self-raised 1,992,369,425 1,088,084,308 (1,729,311,526) (13,705,658) 1,337,436,549 2,289,723 2,289,723
The interest capitalized in construction inprogress is2,289,723in 2016(2015: Nil).
(3) As at 31December 2016,there was noindication ofimpairment, therefore noprovision was made.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
13. Bearerbiological assets
Bearerbiological assets are Vines,which measured in cost method.
Immature Mature
biological assets biological assets Total RMB RMB RMB I. Total original carrying amount
1.Opening balance 132,806,510 70,761,347 203,567,857 2.Increase
(1)Purchase 751,300 - 751,300 (2)Cultivated increase 18,737,361 - 18,737,361 (3)Acquisition increase 1,519,808 250,080 1,769,888 (4)Transfer tomatureassets
from immatureassets (70,197,077) 70,197,077 -__________ _________ __________ 3.Decrease
(1)Disposal (5,775,942) - (5,775,942)__________ _________ __________ 4.Closingbalance 77,841,960 141,208,504 219,050,464__________ _________ __________ II. Total accumulated depreciation
1.Opening balance - 11,369,574 11,369,574 2.Increase
Additions - 6,251,910 6,251,910__________ _________ __________ 3.Closingbalance - 17,621,484 17,621,484__________ _________ __________ III. Total net carrying amount
1.Closingnet carrying amount 77,841,960 123,587,020 201,428,980____________________ __________________ ____________________ 2.Opening net carrying amount 132,806,510 59,391,773 192,198,283____________________ __________________ ____________________ As at 31December 2016,there was nobiological asset with ownership restricted.
As at 31 December 2016, there was no indication that biological assets may be impaired, and no provisionwas made.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
14. Intangibleassets
(1) Intangibleasset
Landuserights Softwareuserights Trademark Total RMB RMB RMB RMB I.Totaloriginalcarryingamount
1.Openingbalance 467,605,436 37,653,788 15,237,653 520,496,877 2.Increase
(1)Purchase 23,884,633 1,076,223 201,924 25,162,780 (2)TransferfromCIP - 13,705,658 - 13,705,658 (3)Acquisitionincrease ________-__ ________-__ _____2_,4_8_8 _______2_,4_8_8 3.Closingbalance ___4_91_,_49_0_,0_6_9 ____5_2,_43_5_,6_6_9 __1_5,_44_2_,0_6_5 ___5_59_,_36_7_,8_0_3 II.Totalaccumulateddepreciation
1.Openingbalance 46,649,712 9,826,191 121,058 56,596,961 2.Increase
Additions ____1_0,_15_3_,7_1_8 ____2_,_72_2_,0_9_2 __6_,_07_9_,9_5_2 ____1_8,_95_5_,7_6_2 3.Closingbalance ____5_6,_80_3_,4_3_0 ____1_2,_54_8_,2_8_3 __6_,_20_1_,0_1_0 ____7_5,_55_2_,7_2_3 III.Totalcarryingamount
1.Closingcarryingamount ______4__34__,__68__6__,6__3__9 ________3__9,__88__7__,3__8__6 ____9__,__24__1__,0__5__5 ______4__83__,__81__5__,0__8__0 2.Openingcarryingamount ______4__20__,__95__5__,7__2__4 ________2__7,__82__7__,5__9__7 ____1__5,__11__6__,5__9__5 ______4__63__,__89__9__,9__1__6 As at 31 December 2016,theintangible asset with restricted ownership was RMB 145,937,719, Pleaserefer to NoteVI-48 indetail.
(2) Landuse right without ownership certificate
As at 31 December 2016,details ofland use right without ownership certificates are listed as below:
Carrying amount Reasons RMB
A-49 Residential Community of
Yantai Development Zone 23,690,000 Inprogress____________________
15. Goodwill
Investee Openingbalance Increase Decrease Closingbalance RMB RMB RMB RMB EtablissementsRoullet
Fransac(“FransacSales”) 13,112,525 - - 13,112,525 DicotPartners,S.L(“Dicot”) 92,391,901 - - 92,391,901 SocieteCivileArgricoleDuChateau
DeMirefleurs(“Mirefleurs”) ______-___ _15_,_7_61_,_44_0_ ___-___ __1_5_,7_6_1_,4_4_0 Total 105,504,426 15,761,440 - 121,265,866__________________ ________________ ____________ __________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS–continued
15. Goodwill- continued
The Group acquired Fransac Sales, Dicot and Mirefleurs in December 2013, September 2015 and January 2016 respectively, resulting in respective goodwill amounting to RMB 13,112,525,RMB 92,391,901 and RMB 15,761,440, which have been allocated to corresponding asset groups for impairment testing.
The recoverable amount of an asset group is determined based on the present value of expected future cash flows. Future cash flow projections are made based on financial budgets approved by management covering a 5-year period (projecting period) and presume that cash flows after the projecting period (subsequent period) remain unchanged. According to the corporate financial structure and local corporate income tax rate, discount rate used in calculating the recoverable amounts of Fransac Sales, Dicot and Mirefleurs are10.3%.8.5% and10.3% (2015:8.8%,7.5%, N/A). respectively. One key assumption in projecting future cash flows is the growth rate in projecting period, which is computed based on the expected growth rate of the industry. Growth rate of sales in subsequent period is2%. Management of the Group believes that any reasonable changes in the above assumptions will not cause book values of these subsidiaries exceeds their recoverableamounts.
According to the assessment, the Group confirms that no impairment provision need to be made forgoodwill in thereporting period.
16. Long-term prepaid expenses
Opening balance Increase Amortization Closingbalance RMB RMB RMB RMB Landleaseprepayments 59,328,587 - (1,481,601) 57,846,986 Landrequisitionfee 46,409,764 - (1,216,864) 45,192,900 Greeningfee 34,229,777 25,363,472 (5,132,278) 54,460,971 Leaseholdimprovement 23,957,390 1,871,939 (24,737,750) 1,091,579 Others __1_1_,1_9_8_,6_4_9 __1_,5_3_2_,5_8_8 _(9_,_11_7_,4_4_4_) ___3_,6_1_3_,7_9_3 175,124,167 28,767,999 (41,685,937) 162,206,229__________________ ________________ ________________ __________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS–continued
17. Deferred tax assets/liabilities
Deferred tax assets and deferred tax liabilities are notrelated to incometaxof thesame tax authorities ofthesame tax subjects, thus not presented withthe net amount after netting. (1) Recognised deferred tax assets notpresented at thenet amount afteroffset：
Closingbalance Openingbalance
Temporary Deferredtax Temporary Deferredtax differences assets differences assets RMB RMB RMB RMB Unrealizedprofitfromintra
676,375,006 169,093,751 691,741,084 172,935,271 -companytransactions
Unpaidbonus 154,895,784 38,723,946 133,017,447 33,254,362 Retirementbenefit 13,115,948 3,278,987 16,147,369 4,036,842 Assetimpairmentprovision 31,426,756 7,856,689 35,347,011 8,836,753 Deductablelosses 176,273,380 44,068,345 265,793,269 66,448,318 Deferredincome 112,939,126 25,230,521 81,078,284 16,895,110 AccruedRebate 30,739,192 7,684,798 -- --- 1,195,765,192 295,937,037 1,223,124,464 302,406,656 (2) Recognised deferred tax liabilities not presented at thenet amount afteroffset：
Closingbalance Openingbalance
Taxabletemporary Deferred Taxabletemporary Deferred Item difference taxliability difference taxliability RMB RMB RMB RMB Revaluationsurplusin
businesscombination
Notundercommon
90,877,162 24,908,410 117,475,753 34,350,349 control
(3) Deferred tax assets and liabilities not recognized:
Closingbalance Opening balance RMB RMB Deductablelosses 135,957,252 41,690,051____________________ __________________ (4) Deductablelosses not recognized as deferred tax assets will expirein:
Closingbalance Opening balance RMB RMB 2019 7,311,273 - 2020 45,960,766 41,690,051 2021 82,685,213 -__________ _________ 135,957,252 41,690,051__________________ __________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS–continued
18. Othernon-current assets
Closingbalance Opening balance RMB RMB Receivablefrom transfer ofbiological assets 17,352,239 17,137,746 Prepaid investment fundfor Mirefleurs - 22,622,355 Others - 5,474,540__________ _________ 17,352,239 45,234,641____________________ __________________ 19. Short-term borrowings
Closingbalance Opening balance RMB RMB Credit loans 631,655,938 640,290,788 Mortgaged loans 30,732,944 25,291,133__________ __________ 662,388,882 665,581,921____________________ ____________________ As at 31 December 2016,short-term borrowings detail were as follows:
Loansamount Exchangerate RMB Natureof Interestrate interest % Creditloans(RMB) 600,000,000 1.0000 600,000,000 Floating 3.48%~3.92% Creditloans(EUR) 4,332,394 7.3068 31,655,938 Fixed 0.89%~1.65% mortgagedloans(EUR) 4,206,074 7.3068 _3_0_,7_3_2_,9_4_4 Fixed 0.90%~1.80% 662,388,882
________________
As at 31 December 2016, mortgaged loans were Dicot Partners, S.L (“ Dicot ”) factoring of accounts receivable from Banco de Sabadell, S.A. etc. EUR 4,206,074 (translated as RMB 30,732,944)(31 December 2015:RMB 23,880,775). There was no mortgage loans with fixed assets in 31December 2016(31 December 2015:RMB1,410,358).
20. Notes payable
Closingbalance Opening balance RMB RMB Bank acceptances 38,900,000 29,000,000__________________ __________________ As at 31 December 2016,there was nodue notes payable unpaid(31December 2015: Nil). Notes payable are all duewithinone year.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
21. Accounts payable
The aginganalysis ofaccounts payable are as follows
Closingbalance Opening balance RMB RMB Within1year 544,128,280 567,791,049 1to2years 1,103,039 1,487,319__________ __________ 545,231,319 569,278,368____________________ ____________________ 22. Advances from customers
The aginganalysis ofadvances from customers are as follows
Closingbalance Opening balance RMB RMB Within1year 419,382,071 229,993,684 1to2years 2,046,166 286,001 2to3years 108,748 530,799 Over 3years 3,709,436 3,756,020__________ __________ 425,246,421 234,566,504____________________ ____________________ 23. Employee benefit payable
(1) Employee benefit payable as follows:
Opening balance Increase Decrease Closingbalance RMB RMB RMB RMB Short-termpayroll 174,061,906 410,151,564 (390,912,851) 193,300,619 Post-demissionbenefits
-predeterminedprovisionplan 30,176 40,067,340 (40,082,349) 15,167 Terminationbenefits __1_6_,1_4_7_,3_6_9 ___1_,5_9_4_,5_9_9 __(4_,_62_6_,0_2_0_) __1_3_,1_1_5_,9_4_8 190,239,451 451,813,503 (435,621,220) 206,431,734__________________ __________________ __________________ __________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
23.Employee benefit payable -continued
(2) Employee benefit payable:
Opening balance Increase Decrease Closingbalance RMB RMB RMB RMB Salariesandbonus 174,767,931 375,367,681 (352,486,022) 197,649,590 Staffbenefit 179,078 11,865,885 (11,422,228) 622,735 Staffwelfare 268,019 15,065,068 (15,075,838) 257,249 Includes:
Medicalinsurance 268,019 12,691,920 (12,702,690) 257,249 Injuryinsurance - 1,342,010 (1,342,010) - Maternityinsurance - 1,031,138 (1,031,138) - Housingfund 47,318 10,313,104 (10,322,750) 37,672 Unionfeeandeducationfee ___2_,8_4_7_,0_3_6 ___3_,2_6_3_,8_5_6 __(3_,_51_7_,8_8_3_) ___2_,5_9_3_,0_0_9 Total 178,109,382 415,875,594 (392,824,721) 201,160,255__________________ __________________ __________________ __________________ Less:Non-currentliabilities ___4_,0_4_7_,4_7_6 ___7_,6_9_6_,2_2_2 Short-termpayroll __1__7__4__,0__6__1__,9__0__6 __1__9__3__,3__0__0__,6__1__9 (3) Predetermined provision plan
Opening balance Increase Decrease Closingbalance RMB RMB RMB RMB Pension 29,995 38,404,278 (38,419,295) 14,978 Unemploymentinsurance ___1_8_1 __1_,6_6_3_,0_6_2 _(1_,_66_3_,0_5_4_) ___1_8_9 30,176 40,067,340 (40,082,349) 15,167__________ ________________ ________________ __________ The Group participates in pension insurance and unemployment insurance plans established by government institution. According to those plans, the Group pays pension and unemployment insurance each month on the basis of14%-21% and1%-2% last period salary respectively. Apart from these monthly expenses, the Group does not bear any further payment obligation. This year the Group should pay RMB 38,404,278 and RMB 1,663,062 (2015: RMB 29,499,285 and RMB 1,648,525) respectively into pension insurance and unemployment insurance. As at 31 December 2016, the Group has unpaid pension and unemployment insurance of RMB 14,978 and RMB 189 respectively (31 December 2015: RMB 29,995 and RMB 181), which is due to the pension insurance and unemployment insurance plan at the end of the reporting period. These payments have been paid afterthe end ofthe reporting period.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
24. Taxes payable
Closingbalance Opening balance RMB RMB Value added tax 23,496,328 (45,821,559) Consumption tax 30,361,471 18,638,837 Business tax - 509,491 Corporation incometax 69,388,730 49,020,665 Urban land usetax 2,651,262 2,812,536 Individual incometax 7,811,301 6,587,254 Cityconstruction tax 4,248,115 4,197,401 Property tax 1,071,223 855,668 Others 5,014,170 4,484,814__________ __________ 144,042,600 41,285,107____________________ ____________________ 25. Deferred income
Closingbalance Opening balance RMB RMB Government grants
Current liabilities 11,163,883 11,241,873 Non-current liabilities 101,775,243 69,836,411__________ _________ 112,939,126 81,078,284____________________ __________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
25.Deferred income -continued
Government grants
Recognizedin Relatedto Opening Addition non-operatingincome Closing Assets/Income RMB RMB RMB RMB
Winebaseliquorbrewageproject 7,609,243 - (1,434,943) 6,174,300 Assets Shihezichateauprojectfunds 13,836,600 - (2,280,000) 11,556,600 Assets reconstructionspecificfunds 19,908,000 - (1,422,000) 18,486,000 Assets Ningxiaindustryrevitalizationand
technologyreconstructionfunds 7,676,000 - (3,295,000) 4,381,000 Assets Winegrapesubsidies 470,000 - (94,000) 376,000 Income Modernagriculturegrapeproduction
developmentsubsidies 324,000 - (64,800) 259,200 Income WuYouYiXinindustrialclusterspecificfunds 60,000 - (60,000) - 000 Assets Agriculturaltechnologysubsidies 822,000 - (822,000) - Income Industryrevitalizationandtechnology
(Huanren)wineproductionconstructionfunds 4,000,000 - - 4,000,000 Assets Wineelectronictrackingsystem
specificfunds 4,526,419 - (667,054) 3,859,365 Assets MiyunPropagandaDepartmenttransfer 2,666,835 - (888,945) 1,777,890 Assets Wineindustryspecificfunds 930,000 - - 930,000 Assets ShandongPeninsulaBlueEconomic
Areaconstructionfunds 10,000,000 - - 10,000,000 Assets 863Programsubsidyfundsforscientificresearch 59,890 283,200 - 343,090 Income Informationsystemconstruction
projecttechnologyfunds 4,640,000 - (580,000) 4,060,000 Assets Integrationprojectssubsidies 28,800 - - 28,800 Income Cross-bordere-Businessprojectssubsidies 1,660,497 125,100 (299,800) 1,485,797 Income Redwinephenolicsresearchprojectsfunds 300,000 - (4,399) 295,601 Income Grapebaseconstructionproject 1,560,000 - (520,000) 1,040,000 Assets Waterpollutionabatementproject - 200,000 (66,267) 133,733 Income Infrastructureconstructionproject - 1,500,000 (31,250) 1,468,750 Assets Industrialdevelopmentsupportproject - 41,000,000 - 41,000,000 Assets Subsidyforupdatingofeconomicandenergy-saving
technology _____-__ __1,_28_3,_00_0 _____-__ ___1,_28_3,_00_0 Assets Total ____8__1,__07__8,__28__4 __4__4,__39__1,__30__0 __(__12__,5__30__,4__5__8) ____11__2,__93__9,__12__6
Less:Non-currentliabilitiesduewithinoneyear __1_1,_24_1,_87_3 __1_1,_16_3,_88_3
Othernon-currentliabilities ____6__9,__83__6,__41__1 ____10__1,__77__5,__24__3
As at 31 December 2016, the Group recognise current liability for deferred income to be accounted in profit or loss within one year, and recognise non-current liability for deferred income tobe accounted in profit orloss over oneyear.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
26. Otherpayables
(1) Natures ofother payables are as follows
Closingbalance Opening balance RMB RMB Deposit from distributors 128,539,352 114,475,163 Payables forequipment and construction 77,261,072 92,580,929 Payables fortransportation 36,690,764 29,713,956 Royalty fee 78,572,540 86,001,287 Advertising costs 79,414,075 76,818,144 Accrued rebate 30,739,192 - Capital increment from minorityinterest (Note) 29,847,320 22,522,636 Employee deposit 16,296,186 16,078,904 Deposits from suppliers 2,206,379 5,644,909 Payables forcontracting fee 31,011,929 32,936,900 Others 35,726,501 32,453,567__________ __________ 546,305,310 509,226,395____________________ ____________________ (2) Description ofsignificant otherpayables aged more than oneyear
Company Amount Reasons RMB
BeijingQinglangagriculturescienceandtechnology
developmentlimitedcompany 23,983,072 unfinishedcapitalincrement(Note) BeijingQinglangagriculturescienceandtechnology 11,074,240 Payablesforcontractingfee developmentlimitedcompany
YantaiDe'anInvestmentCompanyLimited 5,864,248 unfinishedcapitalincrement(Note) YantaiDe'anInvestmentCompanyLimited ___4_,_72_9_,1_2_2 Payablesforcontractingfee______4__5,__65__0__,6__8__2
Note: Unfinished capital increment is the investment fund from minority shareholders for the subsidiary of the Company. As at 31 December 2016, capital increment procedures have not finished.
27. Non-current liabilities duewithinone year
Closingbalance Opening balance RMB RMB Long-term borrowings duewithin oneyear 59,799,093 156,335,647 Long-term payables due withinone year 12,000,000 -__________ _________ 71,799,093 156,335,647____________________ ____________________ As at 31December 2016,Long-term borrowings due withinone year refers toNote VI-28, Long-term payables due withinone year refers to NoteVI-29.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
28. Long-term borrowings
Closingbalance Opening balance RMB RMB Credit loan 40,304,811 66,868,836 Mortgaged loan 8,835,744 4,817,793___________ ___________ 49,140,555 71,686,629______________________ ______________________ As at 31 December 2016,loans detail is as follows:
Loansamount Exchangerate RMB Nature Interestrate Duewithin Dueover ofinterest % oneyear oneyear Creditloans(EUR) 4,000,000 7.3068 29,227,200 Floating 3.70% 29,227,200 - Creditloans(EUR) 1,200,724 7.3068 8,773,451 Floating 1.75%-2.10% 7,261,465 1,511,987 Creditloans(EUR) 8,139,378 7.3068 59,472,805 Fixed 1.00%-4.42% 20,679,980 38,792,824 Mortgagedloans(EUR) 1,569,249 7.3068 _1_1,_46_6,_19_2 Fixed 2.10% __2_,6_30_,4_48____8,_83_5,_74_4__10__8,__93__9,__64__8 ____5__9__,7_9_9__,0_9_3____4__9,__14__0,__55__5 Note: As at 31 December 2016, mortgaged loans were Atrio using fixed assets EUR 3,765,967 (translated as RMB 27,517,168) as collateral for loans from PopularEspañol, EUR 1,569,249 (translatedasRMB11,466,192),(31December 2015:RMB 6,068,519).
29. Long-term payables
Closingbalance Opening balance RMB RMB Agricultural Development
Fund ofChina("CADF") 293,000,000 -____________________ __________________ In 2016, RMB 305,000,000 from CADF was invested inR&D Centre, CADF accounted for37.9% of the registered capital. According to the investment agreement, CADF will recovery investment funds over 10 years, the investment income received equal to1.2% of the remaining unpaid principal per annum. In addition to the fixed income, CADF will no longer enjoy other profits or bear the loss ofR&D Centre .Therefore although the investment inR&D Centre, nominally equity investment, is actually a debt investment. The group take this investment as long-term payables, which measured in amortized cost. Refer to Note VI-48 for details of mortgaged and pledged assets.
Long-termpayables Terminationdate Duewithin1year Dueafter1year Mortgagedandpledgedassets RMB Yieldrate Investmentdate ofrepayment RMB RMB
87,000,000 1.2% 12January2016 24December2025 10,000,000 77,000,000Cashandbankandintangibleassets 198,000,000 1.2% 29February2016 28February2026 - 198,000,000Fixedassetsandintangibleassets__20_,00_0,_00_0 1.2% 16June2016 22May2026 ___2_,0_00_,00_0 ___18_,0_00_,00_0 Cashandbank__3__05__,00__0,__00__0 ______12__,00__0,__00__0 ____2__93__,0__00__,00__0
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
30. Othernon-current liabilities
Closingbalance Opening balance RMB RMB Employee benefit 7,696,222 4,047,476__________________ __________________ As at 31December 2016,employee benefit represents deposit from bonus accrued formanagers and above.According tothebonus payment schedule of2016,thebonus is expected tobepaid during2018 to2020.
31. Sharecapital
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__________________ ____________ ____________ __________________ 32. Capital reserve
Openingbalance Increase Decrease Closingbalance RMB RMB RMB RMB Sharepremium 560,038,853 - - 560,038,853 Other ___5_,9_1_6_,5_8_8 ___-___ ___-___ ___5_,9_1_6_,5_8_8 Total 565,955,441 - - 565,955,441__________________ ____________ ____________ __________________ 33. Othercomprehensive income
2016
2016 Less:lastyearother Post-tax Post-tax
Before-tax comprehensiveincome Less: attributable attributable
Openingbalance amount inP/Lcurrentyear taxexpense toparent toNCI Closingbalance Othercomprehensive
incometobereclassified
toprofitandloss (10,442,512) 5,615,689 - - 5,183,498 432,191 (5,259,014) Foreigncurrencystatement
translationdifference (10__,4__42__,5__12) __5,__61__5,__68__9 ____-____ ____-____ __5,__18__3,__49__8 __43__2,__19__1 (5__,2__59__,0__1__4) 34. Surplusreserve
Openingbalance Increase Decrease Closingbalance RMB RMB RMB RMB Statutorysurplusreserve 342,732,000 - - 342,732,000__________________ ____________ ____________ __________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS–continued
34.Surplusreserve -continued
In accordance with the Company Law of the People's Republic of China and the Articles of Association of the Company, the Company is required to appropriate10% of the net profit to the statutory surplus reserve until the accumulated balance of the statutory surplus reserve reaches50% of the registered share capital. The Company does not appropriate net profit to the surplus reservein 2016.
The Company can appropriate discretionary surplus reserve after appropriation of the statutory surplus reserve. Discretionary surplus reserve can be utilized to offset the deficit or increase the share capital after approval.
35. Retained earnings
Closingbalance Opening balance RMB RMB Retained earnings brought forward 5,980,390,074 5,251,920,374 Profitattributable to shareholders of theCompany 982,460,488 1,030,073,860 Less: Dividends paid in respect prior year's profit (342,732,000) (301,604,160)____________ ____________ Retained earnings carried forward 6,620,118,562 5,980,390,074________________________ ________________________ (1) Appropriation to surplus reserve bysubsidiaries
As at 31 December 2016, the balance of the Group's unappropriated profits include appropriation to surplus reserve by subsidiaries amounting to RMB 71,360,640 (31 December 2015: RMB 54,946,701).
(2) Cash dividends approved bygeneral meeting
According to the annual general meeting on 26 May 2016, dividends distribution plan has been made. On the basis of 685,464,000 issued share capital, RMB 5.0 (including taxes) for every 10 shares was distributedto shareholders, intotal RMB342,732,000cash dividends.
(3) Profitdistribution decided after thebalance sheet date
According to a proposal of the board of directors approved on 20 April 2017, on the basis of 685,464,000 issued shares in 2016, cash dividends of RMB 5.0 (including taxes) for every 10 share will be distributed to all the shareholders. The aggregate amount of cash dividend is RMB 342,732,000. The above proposal regarding dividends distribution is yet to be approved in a shareholders'meeting.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
36. Operating incomeandcosts
Operating incomeis analysed as follows:
2016 2015 RMB RMB Principal operating income 4,646,909,704 4,589,025,348 Otheroperating income 70,686,768 60,697,020____________ ____________ 4,717,596,472 4,649,722,368________________________ ________________________ Operating cost isanalysed as follows:
2016 2015 RMB RMB Principal operating cost 1,552,022,043 1,484,994,084 Otheroperating cost 23,748,936 27,508,951____________ ____________ 1,575,770,979 1,512,503,035________________________ ________________________ Theoperating incomefor theGroup ismainly from thesales ofwine, brandy and sparkling wine. In 2016, Over94%(2015: over98%) ofthesales generated inPRC.
37. Taxes andsurcharges
2016 2015 RMB RMB Consumption tax 161,411,393 160,472,712 Business Tax 1,358,414 3,613,680 Cityconstruction tax 46,375,109 50,491,173 Education fee and surcharges 33,975,886 36,625,254 Property tax 8,221,152 - Landuse tax 9,146,595 - stamp tax 2,659,421 - Others 6,568,676 6,810,705__________ __________ 269,716,646 258,013,524____________________ ____________________ For detail standards of tax rate please referto Notes V.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
38. Sellingexpenses
2016 2015 RMB RMB Advertising costs 536,552,061 547,276,390 Salary and employee benefit 258,845,366 237,132,890 Freight 135,375,515 124,662,391 Trademark fee 74,125,038 83,734,976 Warehouse leasing expenses 73,141,275 70,352,917 Depreciation cost 29,477,270 18,866,370 Labor fee 29,411,296 25,367,133 Travellingexpenses 27,589,397 25,946,093 Renovation costs 25,292,999 19,140,522 Waterandelectricity fee 8,160,610 5,344,561 Office allowance 6,166,163 6,794,673 Packing cost 5,651,814 5,090,563 Security and sanitation fee 4,244,698 3,617,320 Business entertainment 3,871,778 2,227,544 Greening fee 3,651,567 2,993,204 Property management fee 3,320,577 4,487,152 Others 28,383,244 28,092,464____________ ____________ 1,253,260,668 1,211,127,163________________________ ________________________ 39. General and administrativeexpense
2016 2014 RMB RMB Salary and employee benefit 98,464,931 90,478,250 Depreciation 45,605,723 38,123,017 Contracting fee 20,635,049 19,144,698 Maintenancefee 18,625,443 15,686,214 Administrativeexpenses 15,829,574 16,772,528 Amortization 14,795,181 12,129,490 Greening fee 11,509,618 15,154,393 Fire charge 10,923,600 - Leasing expenses 10,702,734 9,190,948 Property tax,stamp dutyand other taxes 10,169,607 28,441,366 Entertainment fee 7,253,858 5,660,174 Security and sanitation fee 5,889,095 6,573,075 Service fee 5,194,426 14,878,018 Travellingexpenses 4,961,661 5,018,296 Others 29,223,048 36,717,942__________ __________ 309,783,548 313,968,409____________________ ____________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
40. Loss onimpairment ofassets
2016 2015 RMB RMB Inventory impairment 3,279,266 2,823,115________________ __________________ 41. Financial income
2016 2015 RMB RMB Interest income (15,397,901) (16,778,280) Exchange loss 7,632,532 4,349,534 Less: Interest expenses 27,831,179 21,957,762 Bank charges 1,903,049 1,758,669__________ __________ 21,968,859 11,287,685____________________ ____________________ 42. Non-operation income
Recognized in extraordinary 2016 2015 profit and loss RMB RMB RMB Gains on disposal ofnon-current assets 157,846 192,945 157,846 Including: gainondisposal ofplant
property and equipment 157,846 192,945 157,846 Government grants 49,130,643 38,952,919 49,130,643 Penalty income 2,617,684 7,246,157 2,617,684 Others 3,265,987 3,673,296 3,265,987_________ _________ _________ 55,172,160 50,065,317 55,172,160__________________ __________________ __________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
42. Non-operation income-continued
Government grants recognizedin theincome statement is as follows:
Assets/income 2016 2015 related RMB RMB
Majorprojects support fund 7,040,888 7,134,819 Assets related Smalland medium enterprises
support fund 4,138,304 4,107,054 Assets related Tax refund 17,860,500 17,833,465 Income related Others 20,090,951 9,877,581 Income related_________ _________
49,130,643 38,952,919
__________________ __________________
43. Non-operation expenses
Recognized in extraordinary 2016 2015 profit and loss RMB RMB RMB Loss ondisposal ofnon-current assets 143,127 56,884 143,127 Including: losses from disposal
offixed assets 143,127 56,884 143,127 Compensationandpenalty loss 618,190 1,102,893 618,190 Donation 305,080 288,009 305,080 Others 303,429 457,103 303,429_________ _________ _________ 1,369,826 1,904,889 1,369,826__________________ __________________ __________________ 44. Income tax
2016 2015 RMB RMB Current income tax 360,001,766 407,380,757 Deferred income tax (2,972,320) (49,496,522)__________ __________ 357,029,446 357,884,235____________________ ____________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS–continued
44. Income tax -continued
Reconciliation between incometax expenses andprofits is as follows:
2016 2015 RMB RMB Profitbefore tax 1,337,618,840 1,388,159,865 Income tax expenseat statutory taxrate25%(2015:25%) 334,404,710 347,039,966 Effect ofdifferent tax rates applied bycertain subsidiaries (4,829,468) (3,509,042) Special tax incentives foroversea subsidiaries (2,520,771) - Changes in opening balances of deferred tax
liabilities dueto tax rate adjustment (1,992,564) - Unrecognised deductable loss 20,671,303 10,422,513 Reversal ofrecognized deductiblelosses 2,895,497 - Non-deductibleexpenses 6,892,488 3,930,798 Others 1,508,251 -____________ ____________ Income tax expenses at theGroup's effectivetax rate 357,029,446 357,884,235________________________ ________________________ 45. Basicand dilutiveearnings pershare
The calculation of basic earnings per share is based on the consolidated profit attributable to ordinary shareholders of the Company during the year and the weighted average number of outstandingordinary shares.
2016 2015 RMB RMB Earnings
Consolidatedprofit attributabletoordinary
shareholders ofthe Company 982,460,488 1,030,073,860____________ ____________ Shares
Weighted average number ofoutstanding
ordinary shares 685,464,000 685,464,000____________ ____________ Basicearnings pershare 1.43 1.50________________________ ________________________ TheCompany does not have potential dilutive ordinary shares.
From thebalance sheet dateto thedateof approval ofthisreport, there are nosubsequent events which would affect thenumbers of theweighted average number ofoutstanding ofordinary shares.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
46. Notes to consolidated cash flowstatement
(1) Cash received relating to otheroperating activities:
2016 2015 RMB RMB Government grants 19,347,985 9,774,028 Interest income 2,808,735 1,679,535 Penalty income 2,617,684 7,246,157 Refundable depositsof notes payable 38,130,000 - Others 3,803,461 3,673,296_________ _________ 66,707,865 22,373,016__________________ __________________ (2) Cash paid relating to other operating activities:
2016 2015 RMB RMB Sellingexpenses 942,936,949 949,202,920 General and administrativeexpenses 113,297,901 110,003,182 Refundable depositsof notes payable 47,030,000 20,000,000 Others 2,449,673 4,181,035____________ ____________ 1,105,714,523 1,083,387,137________________________ ________________________ (3) Cash paid for thepurchase subsidiaries and other equity:
2016 2015 RMB RMB Cash paid for acquisitionof Dicot - 190,148,125 Less: cash andcash equivalents forDicot
at acquisition date - 4,902,074 Prepaid investment fund for Mirefleurs 3,540,923 22,622,355 Less: cash andcash equivalents forMirefleurs
at acquisition date 1,779 -__________ __________ 3,539,144 207,868,406____________________ ____________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
46. Notes to consolidated cash flowstatement–continued
(4) Cash received relating to otherfinancing activities:
2016 2015 RMB RMB Pledged borrowing depositsand interest 135,584,347 - Received government grants related to assets 43,783,000 4,000,000 Interest incomefrom restricted deposits of
R&D Centre 1,110,240 -__________ __________ 180,477,587 4,000,000____________________ ____________________ (5) Cash paid relating to other financing activities:
2016 2015 RMB RMB Timedeposits pledged oflong-term borrowings of
R&D Centre 20,000,000 26,100,000 Canada Oros investment fund return - 2,050,000__________ __________ 20,000,000 28,150,000____________________ ____________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
47. Supplementary information to consolidated cash flow statement
(1) Supplementary information to consolidated cash flow statement
2016 2015 RMB RMB Cash flows from operating activities
calculated byadjusting thenet profit:
Net profit 980,589,394 1,030,275,630 Add: Loss forimpairment of assets 3,279,266 2,823,115 Depreciation of fixed assets 197,779,010 163,322,504 Amortizationofintangible assets 18,955,762 13,163,757 AmortizationofBiological assets 6,251,910 1,708,554 Amortizationoflong-term prepaid expenses 41,685,937 32,050,283 Gains ondisposal ofproperty
plant and equipment (14,719) (136,061) Financeexpense 25,919,561 6,516,142 Decrease/ (increase) in deferred tax assets 6,469,619 (48,219,833) Decreasein deferred tax liabilities (9,441,939) (1,276,689) Decreasein inventories 18,897,985 3,921,192 Increase in operating receivables (737,321,198) (175,316,875) Increase in operating payables 336,861,382 114,214,648____________ ____________ Net cash flows from operating activities 889,911,970 1,143,046,367________________________ ________________________ (2) Significant investingand financing activities not involving cash receipts and payments.
Closingbalance Opening balance RMB RMB Payment ofintangible assets andother
long-term assets bybank acceptances 503,817,808 158,702,666________________________ ________________________ (3) Cash and cash equivalent
Closingbalance Opening balance RMB RMB Closingbalance of cash and bank 1,391,517,607 1,285,362,414 Less:
Restricted bank deposits 2,711,926 2,643,181 Restricted other monetary funds 128,863,377 181,477,572 Deposit with aperiod of over threemonths 3,000,000 9,000,000____________ ____________ Closingbalance of cash and cash equivalents 1,256,942,304 1,092,241,661________________________ ________________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
47. Supplementary information to consolidated cash flow statement -continued
(3) Cash and cash equivalent - continued
Closingbalance Opening balance RMB RMB Cash 1,256,942,304 1,092,241,661 Including: Cash onhand 117,507 179,488 Bank deposits ondemand 1,256,824,797 1,092,062,173___________ __________ Closingbalance of cash and cash equivalents 1,256,942,304 1,092,241,661______________________ ____________________ 48. Assets with restriction ofownership
Closingbalance Opening balance RMB RMB Cash and bank 131,575,303 184,120,753 Account receivable 30,732,944 23,880,775 Fixedassets 68,658,094 18,405,000 Intangibleassets 145,937,719 -____________________ ____________________ As at 31 December 2016,cash and bank balances withrestriction ofownership as follows: Closingbalance Opening balance RMB RMB Pledged timedeposits forR&DCentre 46,100,000 151,100,000 Refundable deposits ofnotes payable 38,900,000 30,000,000 Refundable deposits ofletterof credit 25,694,735 370,000 Balance in Alipay account 18,118,441 -TheCompany’s housingfund 2,711,926 2,643,181 Margin forentity card 50,201 7,572___________ __________ Total 131,575,303 184,120,753______________________ ____________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VI. NOTESTOCONSOLIDATEDFINANCIAL STATEMENTS -continued
48. Assets with restriction ofownership -continued
Among the aforementioned items, the amount of RMB 18,118,441 which is the blocked balances ofgoods payment in Alipay account can beunlocked after 15days.
As at 31 December 2016, the amount of accounts receivable with restricted ownership is EUR 4,206,074 (translated as RMB 30,732,944) , which refers to accounts receivable Atrio conducted forfactoring from Banco deSabadell, S.A. etc.
As at 31 December 2016, the net carrying amount of fixed assets that the Company has pledged forlong-term borrowings and long-term accounts payables isRMB 68,658,094.
As at 31 December 2016, the net carrying amount of intangible assets with restricted ownership is RMB 145,937,719, which mainly refers to the land use rights that Company has pledged for long-term borrowings.
45. Foreign monetary items
(1) Foreign monetary items
Theforeign monetary itemslocated withinChina are as follows:
Closingforeign Exchange Closingtranslated currency balance rate RMBbalance Cash and bank
EUR 77,487 7.3068 566,182 HKD 215 0.8945 192____________________ ____________ ____________________ Long-term borrowings duewithin oneyear
EUR 4,000,000 7.3068 29,227,200____________________ ____________ ____________________ (2) Overseas business entities
TheCompany’s overseas subsidiaries determinebookkeeping currency based ontheprimary economicenvironment. The bookkeeping base currency of Atrio and Francs Champs
Participations SAS(“Francs Champs”)are all inEuro, and Atrioand Francs Champshave no foreign monetary items at theyear end.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VII. CHANGE INCONSOLIDATIONSCOPE
1. Businesscombination under different control
(1) Business combination underdifferent control in current period
Nameof Equity Equity Equity Revenuefrom Netprofitfrom Equity Acquisition Basisof
acquisition acquisition acquisitionratio acquisition acquisitiondate acquisitiondate acquisitioncost date acquisitiondate
company date (%) method toyearend toyearend Finishpayment
Mirefleurs 1Jan2016 EUR3,816,000 100 Purchase 1Jan2016 RMB8,016,542 RMB807,079 andacquireequity
Otherdetail information:
Pursuant to the Equity Transfer Agreement entered into between the Group and Vignobles et Domaines Castel S.L ("VDC S.L.") on 12 May 2015, the Group acquired100% shares held by VDC S.L in Mirefleurs by cash consideration of EUR 3,816,000 (equivalent to RMB 26,163,278). As at 31 December 2015, the Company satisfied the prerequisite for the entire equity transfer. As at 1 January 2016, the Company obtained the control over the financial and operating policies of Mirefleurs through allocation of directors based on the Articles of Association of the Company. The Company invested EUR 3,330,000 (equivalent to RMB22,622,355) for the advanced payment on 24 November 2015 and EUR 486,000 (equivalent to RMB3,540,923) for the remaining payment inDecember 2016.
(2) Consideration and Goodwill
Consideration
Mirefleurs RMB Cash 26,163,278 Total consideration 26,163,278 Less: acquired provisional value ofnet assets 10,401,838__________ Goodwill 15,761,440____________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VII. CHANGE INCONSOLIDATIONSCOPE -continued
1. Business combination under different control - continued
(3) Recognised assets and liabilities of mergee at acquisition date
Mirefleurs Fair value Book value at acquisition date at acquisition date
RMB RMB Assets
Cash and bank 1,779 1,779 Accounts receivable 3,555 3,555 Otherreceivables 62,151 62,151 Inventories 9,934,027 9,934,027 Othercurrent assets 1,191,401 1,191,401 Fixedassets 8,049,900 8,049,900 Biological assets 1,769,888 1,769,888 Intangibleassets 2,488 2,488____________ ____________ Total assets 21,015,189 21,015,189________________________ ________________________ Liabilities
Accounts payable 911,071 911,071 Otherpayables 9,378,334 9,378,334 Employee compensation payable 323,946 323,946____________ ____________ Total liabilities 10,613,351 10,613,351________________________ ________________________ Net assets 10,401,838 10,401,838Less：Non-controlling interests - -____________ ____________ Acquired net assets 10,401,838 10,401,838________________________ ________________________ 2. Changeinconsolidation scope dueto otherreasons (new established subsidiaries)
Name Placeanddateofregistration Legalrepresentative Businessnature Registeredcapital Principalactivities Incorporatecode GuangzhouChangyuPioneer 22July2015 Wang,Hongshan Sales RMB10,000,000 Wholesaletrade 91440105347476120MSalesCo.Ltd(“LanzhouPioneer”)* GuangzhouGuangdong,China
* As at 31December 2015,these subsidiaries had completed registration but paid share capital in 2016,therefore they are included in theconsolidation scope oftheGroup in 2016.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VIII. INTERESTS INOTHERENTITIES
1. Structure oftheGroup
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 Mirefleurs Bordeaux,France Bordeaux,France Trading 100% Subsidiaryacquiredinbusinesscombination undernon-commoncontrol Atrio(b) Navarra,Spain Navarra,Spain Sales 75% 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")(c)
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")(d)
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")
BeijingChateau(e) 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")(f)
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(“AFIP Miyun,Beijing,China Miyun,Beijing,China Tourism - 100% Subsidiariesacquiredbyestablishment Tourism")
NingxiaWineCo.Ltd.("NingxiaWine"). Yinchuan,Ningxia,China Yinchuan,Ningxia,China Manufacturing100% - Subsidiariesacquiredbyestablishment YantaiChangyuDingLuoTeChateau. Yantai,ShandongChina Yantai,ShandongChina Retailand 65% 35% 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")
R&DCentre(g) Yantai,ShandongChina Yantai,ShandongChina Manufacturing 62% - Subsidiariesacquiredbyestablishment Changyu(HuanRen)WineCo.,Ltd BenxiLiaoNingChina BenxiLiaoNingChina Wineproduction100% - Subsidiariesacquiredbyestablishment ("HuanRenWine") Projecting
XinjiangSales ShiheziXinjiangChina ShiheziXinjiangChina Sales - 100% Subsidiariesacquiredbyestablishment 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
LanzhouChangyuWineSalesCo.,Ltd("Lanzhou LanzhouGansu,China LanzhouGansu,China Sales - 100% Subsidiariesacquiredbyestablishment Sales")
BeijingRetailingCo.Ltd("BeijingRetailing") Beijing,China Beijing,China Sales - 100% Subsidiariesacquiredbyestablishment TianjinChangyuPioneerSalesCo.,Ltd(“Tianjin Tianjin,China Tianjin,China Sales - 100% Subsidiariesacquiredbyestablishment Pioneer”)
FuzhouChangyuPioneerSalesCo.,Ltd(“Fuzhou FuzhouFujian,China FuzhouFujian,China Sales - 100% Subsidiariesacquiredbyestablishment Pioneer”)
NanjingChangyuPioneerSalesCo.,Ltd Nanjing,Jiangsu,China Nanjing,Jiangsu,China Sales - 100% Subsidiariesacquiredbyestablishment (“NanjingPioneer”)
XianyangChangyuPioneerSalesCo.,Ltd Xianyang,Shanxi,China Xianyang,Shanxi,China Sales - 100% Subsidiariesacquiredbyestablishment (“XianyangPioneer”)
ShenyangChangyuPioneerSalesCo.,Ltd Shenyang,Liaoning,China Shenyang,Liaoning,China Sales - 100% Subsidiariesacquiredbyestablishment (“ShenyangPioneer”)
JinanChangyuPioneerSalesCo.,Ltd(“Jinan Jinan,Shandong,China Jinan,Shandong,China Sales - 100% Subsidiariesacquiredbyestablishment Pioneer”)
ShanghaiChangyuPioneerSalesCo.,Ltd Shanghai,China Shanghai,China Sales - 100% Subsidiariesacquiredbyestablishment (“ShanghaiPioneer”)
FuzhouChangyuPioneerSalesCo.,Ltd(“Fuzhou Fuzhou,Jiangxi,China Fuzhou,Jiangxi,China Sales - 100% Subsidiariesacquiredbyestablishment Pioneer”)
ShijiazhuangChangyuPioneerSalesCo.,Ltd Shijiazhuang,Hebei,China Shijiazhuang,Hebei,China Sales - 100% Subsidiariesacquiredbyestablishment (“ShijiazhuangPioneer”)
HangzhouYuzefengSalesCo.,Ltd(“Hangzhou Hangzhou,Zhejiang,China Hangzhou,Zhejiang,China Sales - 100% Subsidiariesacquiredbyestablishment Yuzefeng”)
JilinChangyuPioneerSalesCo.,Ltd("Jilin Changchun,Jilin,China Changchun,Jilin,China Sales - 100% Subsidiariesacquiredbyestablishment Pioneer”)
BeijingChangyuPioneerSales Co.,Ltd Beijing,China Beijing,China Sales - 100% Subsidiariesacquiredbyestablishment (“BeijingPioneer”)
HaerbinChangyuPioneerSalesCo.,Ltd Haerbin,Heilongjiang,China Haerbin,Heilongjiang,China Sales - 100% Subsidiariesacquiredbyestablishment (“HaerbinPioneer”)
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VIII. INTERESTS INOTHERENTITIES- continued
1. Structure oftheGroup -continued
Equityinterestowned
bythecompany
Name Address Placeofregistration Nature Direct Indirect Acquisitionmethod HunanChangyuPioneerSalesCo.,Ltd(“Hunan Changsha,Hunan,China Changsha,Hunan,China Sales - 100% Subsidiariesacquiredbyestablishment Pioneer”)
YinchuanChangyuPioneerSalesCo.,Ltd Yinchuan,Ningxia,China Yinchuan,Ningxia,China Sales - 100% Subsidiariesacquiredbyestablishment (“YinchuanPioneer”)
KunmingChangyuPioneerSalesCo.,Ltd Kunming,Yunnan,China Kunming,Yunnan,China Sales - 100% Subsidiariesacquiredbyestablishment (“KunmingPioneer”)
ChongqingChangyuPioneerSalesCo.,Ltd Chongqing,China Chongqing,China Sales - 100% Subsidiariesacquiredbyestablishment (“ChongqingPioneer”)
ZhengzhouChangyuPioneerSalesCo.,Ltd Zhengzhou,Henan,China Zhengzhou,Henan,China Sales - 100% Subsidiariesacquiredbyestablishment (“ZhengzhouPioneer”)
WuhanChangyuPioneerSalesCo.,Ltd("Wuhan Wuhan,Hubei,China Wuhan,Hubei,China Sales - 100% Subsidiariesacquiredbyestablishment Pioneer")
TaiyuanChangyuPioneerSalesCo.,Ltd Taiyuan,Shanxi,China Taiyuan,Shanxi,China Sales - 100% Subsidiariesacquiredbyestablishment (“TaiyuanPioneer”)
HuhehaoteChangyuPioneerSalesCo.,Ltd HuhehaoteInnerMongolia,China HuhehaoteInnerMongolia, Sales - 100% Subsidiariesacquiredbyestablishment (“HuhehaotePioneer”) China
ChengduChangyuPioneerSalesCo.,Ltd Chengdu,Sichuan,China Chengdu,Sichuan,China Sales - 100% Subsidiariesacquiredbyestablishment (“ChengduPioneer”)
NanningChangyuPioneerSalesCo.,Ltd Nanning,Guangxi,China Nanning,Guangxi,China Sales - 100% Subsidiariesacquiredbyestablishment (“NanningPioneer”)
LanzhouPioneer LanzhouGansu,China LanzhouGansu,China Sales - 100% Subsidiariesacquiredbyestablishment YantaiFulangduo YantaiShandong,China YantaiShandong,China Sales - 100% Subsidiariesacquiredbyestablishment HefeiPioneer Hefei,Anhui,China Hefei,Anhui,China Sales - 100% Subsidiariesacquiredbyestablishment UrumchiPioneer UrumchiXinjiang,China UrumchiXinjiang,China Sales - 100% Subsidiariesacquiredbyestablishment GuizhouPioneer GuiyangGuizhou,China GuiyangGuizhou,China Sales - 100% Subsidiariesacquiredbyestablishment GuangzhouPioneer GuangzhouGuangdongChina GuangzhouGuangdongChina Sales - 100% Subsidiariesacquiredbyestablishment Explanation in difference between holding interests and voting rights 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 will beterminated on31December 2018.
(b) As at 12 September 2016, Dicot has completed an internal reorganization. Hacienda y Vinedos Marques del Atrio, S.L.U. consolidated Enotec S.L, Hostaler I S.L., Faustino Rivero Ulecia S.L.byAbsorption merger. After thecompletion ofthereorganization, Atrio becametheonly surviving company.
(c) Changyu Chateau is a Sino-foreign joint venture established by the Company and a foreign investor, accounting for70% of Changyu Chateau's equity interest. Through agreement arrangement, the Company has the full power to control Changyu Chateau's strategic operating, investing and financing policies. The agreement arrangement will be terminated on31December 2022.
(d) Langfang Chateau is a Sino-foreign joint venture established by the Company and a foreign investor, accounting for49% of Langfang Chateau's equity interest by the Company and subsidiaries. Through agreement arrangement, the Company has the full power to control Langfang Chateau's strategic operating, investing and financing policies. The agreement arrangement willbe terminated on31December 2022.
(e) Beijing Chateau is a limited liability company established by the Company and domestic investors, accounting for70% of Beijing Chateau's equity interest. Through agreement arrangement, the Company has the full power to control Beijing Chateau's strategic operating, investing and financing policies. The agreement arrangement will be terminated on2September2019.
(f) Ice Chateau is a Sino-foreign joint venture established by the Company and a foreign investor, accounting for51% of Ice Chateau's equity interest. Through agreement arrangement, the Company has the full power to control Ice Chateau's strategic operating, investing and financing policies. The agreement arrangement will be terminated on 31 December 2021.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport VIII. INTERESTSINOTHERENTITIES -continued
1. Structure oftheGroup -continued
(g)R&D Centre is a joint venture established by the Company and CADF, accounting for62%ofR&D Centre's equity interest at 31December 2016.As mentioned inNote VI-29 , in 2016, RMB 305,000,000 from CADF was invested inR&D Centre's, CADF accounted for37.9% of the registered capital. According to the investment agreement, CADF will recovery investment funds over 10 years, the investment income received equal to1.2% of the remaining unpaid principal per annum. In addition to the fixed income, CADF will no longer enjoy other profits or bear the loss ofR&D Centre. Therefore although the investment inR&D Centre, nominally equity investment, is actually a debt investment. The group take this investment as long-term payables, which measured in amortized cost. The company is fully responsible for the operation, investment and financial policies of theR&D Centre in the form of such agreements. The agreement willexpireon22May 2026.
2. Non-wholly owned subsidiaries
Name Minority Profitandlossbelongs Distributionsto Closingbalanceof shareholderratio tominorityinterest shareholders minorityinterest XinjiangTianzhu 40% - - 56,093,912 Atrio 25% (1,438,903) (546,423) 30,699,317 ChangyuChateau 30% - - 12,365,016 LangfangCastel 51% - - 22,702,522 BeijingChateau 30% - - 35,293,868 IceChateau 49% ____-_____ ____-___ __3_3_,3_1_9_,_0_6_2 Total (__1__,4__3__8__,__9__0__3__) (__5__4__6__,4__2__3__) 1__9__0__,__4__7__3__,6__9__7__ Explanation in difference between share percentage and voting power ofnon-controlling interests: Pleasesee NoteVIII-1.
3. Key financial information of importantnon-wholly ownedsubsidiaries
Closingbalance Openingbalance
Name C au sr sr ee tn st Non a- sc su er tr sent aT so st ea tsl liC au br ilr ie tn iet
s
No lin a- bc iu lir tr ie en st liaT bo ilt ia til
es
C au sr sr ee tn st Non a- sc su er tr sent
Totalassets
liC au br ilr ie tn iet
s
No lin a- bc iu lir tr ie en st liT abo it la itl ies Xinjiang
Tianzhu 80,126,247 77,008,886 157,135,133 23,266,974 5,336,114 28,603,088 101,018,712 81,709,715 182,728,427 15,554,068 5,336,114 20,890,182 Changyu
Chateau 173,934,285 116,396,690 290,330,975 210,904,481 - 210,904,481 156,538,810 118,256,609 274,795,419 191,898,436 - 191,898,436 LangfangCastel 26,528,622 19,890,293 46,418,915 10,233,932 - 10,233,932 30,867,940 22,471,694 53,339,634 7,913,957 - 7,913,957 Beijing
Chateau 88,294,417 502,368,404 590,662,821 431,222,472 888,945 432,111,417 216,643,935 523,151,845 739,795,780 588,733,969 1,777,890 590,511,859 IceChateau 38,239,653 27,545,615 65,785,268 13,756,944 100,000 13,856,944 43,224,419 29,322,675 72,547,094 12,623,467 100,000 12,723,467 Atrio 333,455,551 131,921,130 465,376,681 272,843,155 69,572,335 342,415,490 277,879,914 157,297,623 435,177,537 259,625,473 44,813,493 304,438,966 2016 2015
Name
Total
Operatingactivities
Total
Operatingactivities Revenue Netprofit(loss) comprehensive Revenue Netprofit(loss) comprehensive
cashflows cashflows income income
XinjiangTianzhu 118,253,496 11,561,969 11,561,969 5,647,080 107,683,230 (37,548) (37,548) 44,250,338 ChangyuChateau 102,588,593 13,184,637 13,184,637 16,751,337 98,894,499 7,573,641 7,573,641 22,609,230 LangfangCastel 41,948,391 731,204 731,204 8,681,926 51,602,897 862,103 862,103 1,995,967 BeijingChateau 178,662,315 29,417,483 29,417,483 55,561,102 170,037,611 25,424,015 25,424,015 72,629,545 IceChateau 43,742,412 (5,895,304) (5,895,304) 4,922,305 51,657,543 (4,223,249) (4,223,249) 3,294,895 Atrio 281,328,100 (7,484,378) (8,473,348) (28,411,777) 76,202,513* 807,079* 396,939* (3,682,122)** Thisis amount incurred in theperiod between acquisition dateand 31December 2015.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport IX. FINANCIAL INSTRUMENTAND RISKMANAGEMENT
The Group's major financial instruments include cash and bank, notes receivable, accounts receivable, interest receivables, other receivables, available-for-sale financial assets, other non-current assets, short-term borrowings, notes payable, accounts payable, other payables, interest payables, and long-term borrowings. Details of these financial instruments are disclosed in Note VI. The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below. Management manages and monitors these exposures to ensure therisks 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 risk variableis ona stand-alonebasis.
1. Risk management objectives and policies
The Group's risk management objectives are to achieve a proper balance between risks and yield, minimise the adverse impacts of risks on the Group's operation performance, and maximise the benefits of the shareholders and other stakeholders. Based on these risk management objectives, the Group's basic risk management strategy is to identify and analyse the Group's exposure to various risks, establish an appropriate maximum tolerance to risk, implement risk management, and monitors regularly and effectively these exposures to ensure the risks are monitored at a certain level.
1.1 Market risk
1.1.1 Currency risk
Currency risk is the risk that losses will occur because of changes in foreign exchange rates. The Group's exposure to the currency risk is primarily associated with EUR and HKD. Several of the Group's subsidiaries have purchases and sales denominated in EUR and HKD while the Group's other principal activities are denominated and settled in RMB. As at 31 December 2016, the balance of the Group's assets and liabilities are both denominated in RMB except that the assets and liabilities set out below are denominated in EUR and HKD. Currency risk arising from the assets and liabilities denominated in foreign currencies may have impact on the Group's performance.
Closingbalance Opening balance RMB RMB Bank and cash(EUR) 566,182 151,746,825 Bank and cash(HKD) 192 96,777 Short-term borrowings (HKD) - 103,297,447 Non-current liabilities duewithin oneyear (HKD) - 127,345,600 Non-current liabilities duewithin oneyear (EUR) 29,227,200 - Long-term borrowings (EUR) - 56,761,600______________________ ______________________
The Group closely monitors the effects of changes in the foreign exchange rates on the
Group's currency risk exposures. The Group currently does not take any measures to hedge
currency risk exposures.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport IX.FINANCIAL INSTRUMENTAND RISKMANAGEMENT -continued
1. Riskmanagement objectives and policies -continued
1.1 Market risk -continued
1.1.1Currency risk -continued
Sensitivityanalysis 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 10 10 (11,527,314) (11,527,314) HKD 5%decreaseagainstRMB (10) (10) 11,527,314 11,527,314 EUR 5%increaseagainstRMB (1,433,051) (1,433,051) 4,749,261 4,749,261 EUR 5%decreaseagainstRMB 1,433,051 1,433,051 (4,749,261) (4,749,261)________________ ________________ ________________ ________________ Note: As at 31 December 2015, the Group's management anticipated a change of5% in exchange rate forUSDto RMB.
1.1.2Interest rate risk -risk ofchanges in cash flows
The Group's cash flow interest rate risk of financial instruments relates primarily to variable-rate bank borrowings (Refer to Note VI-1, Note VI-19, Note VI-27 and Note VI-28 for details). It is the Group's policy to keep its borrowings at floating rate of interests so as to eliminate the fair valueinterest raterisk.
Thesensitivityanalysis oninterest rate risk
The sensitivity analysis oninterest rate risk is based on the changes in the market interest rate may influence theinterest incomeor expenseofthevariable rate financial instruments.
Management of the Group believes interest rate risk on bank deposit is not significant, therefore does not disclosesensitivityanalysis for interest rate risk.
Where all other variables are held constant, the reasonably possible changes in the interest rate may have thefollowing pre-tax effect ontheprofit orloss fortheperiod and shareholders' equity
Currentyear Prioryear
Effecton Effecton Changeininterestrate Effectonprofit owners'equity Effectonprofit owners'equity Bankborrowings 50%increase (1,774,725) (1,774,725) (2,528,430) (2,528,430) Bankborrowings 50%decrease 1,774,725 1,774,725 2,528,430 2,528,430 Note: Asat 13December 2015,theGroup's management anticipated achange of 50basis points
inthebank's variableinterest rate.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport IX.FINANCIAL INSTRUMENTAND RISKMANAGEMENT -continued
1. Riskmanagement objectives and policies -continued
1.2 Credit risk
As at 31 December 2016, the Group's maximum exposure to credit risk which will cause a financial losstotheGroup duetofailure to discharge an obligation bythecounterparties.
In order to minimise the credit risk, the Group has adopted a policy to ensure that all sales customers have good credit records. The Group has delegated a team responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. For transactions that are not denominated in the functional currency of the relevant operating unit, the Group does not offer credit terms without the specific approval of the Department of Credit Control in the Group. In addition, the Group reviews the recoverable amount of each individual trade debt at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the management of the Group considers that the Group's credit risk is significantly reduced.
Since the Group trades only with recognized and creditworthy third parties, there is no requirement for collateral. Concentrations of credit risk are managed by customer/counterparty, by geographical region and by industry sector. As at 31 December 2016,26.3% of the Group trade receivables are due from top 5 customers (31 December 2015:28.4%). There is no collateral or other credit enhancement on thebalance ofthe tradereceivables ofthe Group.
1.3 Liquidity risk
In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Group's operations and mitigate the effects of fluctuations in cash flows. The management monitors the utilisation of bank borrowings and ensures compliance withloan covenants.
The following is the maturity analysis for financial assets and financial liabilities held by the Group which is based on undiscounted remaining contractual obligations:
Non-derivativefinancial liabilities
Lessthanonemonth 1-3months 3-12months 1-5years Morethanfiveyears Total RMB RMB RMB RMB RMB RMB Short-termborrowings 3,777,392 145,518,875 533,769,281 - - 683,065,548 Notespayable - 34,900,000 4,000,000 - - 38,900,000 Accountpayables 128,480,966 256,961,933 159,788,420 - - 545,231,319 Otherpayables 182,570,536 85,110,213 278,624,561 - - 546,305,310 Interestpayables 563,613 - - - - 563,613 Long-termborrowings 980,746 1,783,374 58,881,143 50,793,667 - 112,438,930 Long-termpayables _______-__ ___91_5_,0_00_ ___14_,7_8_5,_83_3_ __1_36_,_86_4,_76_7_ _17_1_,3_03_,3_6_7 ___32_3_,8_68_,9_6_7____3__16__,__37__3,__25__3__ 5__25__,1__8__9,__39__5__ __1__,0__49__,__84__9,__23__8__ ____1__87__,__65__8,__43__4__ 1__71__,3__0__3,__36__7__ ____2__,2__50__,3__7__3,__68__7
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport IX.FINANCIAL INSTRUMENTAND RISKMANAGEMENT -continued
1. Riskmanagement objectives and policies -continued
1.4 Fair valuedisclosure -Financial assets and liabilities not measured using fairvalue As at 31 December 2016, management of the Group believes that book value of financial assets measured under amortised cost method isapproximately equal to theirfair value.
X. RELATEDPARTYAND RELATEDPARTYTRANSACTIONS
1. Parent company
Nameof Typeof Placeof Legal Scope Registered Percentage Percentage Incorporate parentcompany Relation enterprise registration representative ofbusiness capital ofshares ofvotingrights Code RMB % %
Controlling Parent Limited
Company Company Company Yantai SunLiqiang Manufacturing 50,000,000 50.4 50.4 265645824 During the year ended 31 December 2016, there is no change in parent company's registered capital, shares holding orvoting power.
2. Subsidiaries:Please refertoNotes VIII.
3. Otherrelated parties
Name ofrelated parities Nature ofrelated parties Incorporate code Yantai Changyu WineCultureMuseum Company controlled 913706007582586548 Co., Ltd.("WineCultureMuseum") bythesame parent
Yantai Changyu International Windowof the Company controlled 91370600672208146X WineCity Co.,Ltd.("Windowof theWineCity) bythesameparent
Yantai ShenMa Packing Co.,Ltd. Company controlled 91370600553393350J ("ShenMaPacking") bythesame parent
Yantai Zhongya Pharmaceutical Tonic Company controlled 91370600726203923M WineCo.,Ltd.("Zhongya Pharmaceutical") bythesameparent
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport X. RELATEDPARTYAND RELATEDPARTYTRANSACTIONS -continued
4. Significant related party transactions
(1) Purchases from andsales to related parties
Purchase from related parties
Thecontent ofrelated 2016 2015 party transactions RMB RMB ShenMaPacking product purchase 150,590,287 153,891,013 Zhongya Pharmaceutical product purchase 12,567,066 9,856,685 WineCultureMuseum product purchase 10,210,089 6,047,453 Windowofthe WineCity product purchase 2,032,847 730,488__________ __________ 175,400,289 170,525,639____________________ ____________________ Allrelated party transactionsare based onthe negotiated price.
In 2016, purchases from related parties accountedfor13.2%of theGroup's total purchase (2015:10.5%)
Sales to related parties
Thecontent ofrelated 2016 2015 party transactions RMB RMB WineCultureMuseum goods sales 15,670,982 7,371,180 Windowofthe WineCity goods sales 10,945,578 7,578,711 Zhongya Pharmaceutical goods sales 3,387,900 2,723,976 ShenMaPacking goods sales 1,496,669 1,820,232__________ __________ 31,501,129 19,494,099____________________ ____________________ In 2016, sales to related parties accounted for lessthan1%of theGroup's total sales (2015: less than1%).
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport X. RELATEDPARTYAND RELATEDPARTYTRANSACTIONS -continued
4. Significant related party transactions -continued
(2) Property leased from a related party
TheGroup as Lessee
2016 Assetsleased Beginningdate Endingdate Rentalexpense ChangyuGroupCompany Warehouseandofficebuilding 1January2012 31December2016 5,858,000 ChangyuGroupCompany officebuilding 31January2016 31December2020 1_,_69_2_,7_2_47__,__55__0__,7__2__4 Pursuant tothe lease agreement entered into between theCompany and Changyu Group Company on1January 2012,starting from 1January 2012,theCompany rented properties from Changyu Group Company for operation purposes at abasic annual rental ofRMB 5,858,000,and till31 December 2016.For theyear ended 31December 2016,therental payable to Changyu Group Company amounted to RMB5,858,000(2015: RMB 5,858,000).
Pursuant to the lease agreement entered into between the Group and Changyu Group Company on 1 January 2016, starting from 1 January 2016, the Group rented properties from Changyu Group Company for operation purposes at a basic annual rental of RMB 1,692,724, and till 31 December 2020. For the year ended 31 December 2016, the rental payable to Changyu Group Company amounted to RMB1,692,724(2015: Nil).
(3) Othersignificant related party transactions
Thecontentofrelated Note 2016 2015 partytransactions RMB RMB ChangyuGroupCompany Royaltyfee (a) 74,125,038 83,734,976 ChangyuGroupCompany Patentsfee (b) 50,000 50,000 ZhongyaPharmaceutical Salesoffixedassets (c) 411,407 -________________ ________________ Allrelated party transactionsare based onthe negotiated price.
(a) Royalty fee
Pursuant to a royalty agreement dated 18 May 1997, starting from 18 September 1997, the Company may use certain trademarks of Changyu Group Company, which have been registered with the PRC Trademark Office. An annual royalty fee at2% of the Group's annual sales is payable to Changyu Group Company. The license is effective until the expiryof theregistration of thetrademarks.
During 2016, royalty fee paid to related company accounted for100% of the Group (2015:100%).
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport X. RELATEDPARTYAND RELATEDPARTYTRANSACTIONS -continued
4. Significant related party transactions -continued
(3) Othersignificant related party transactions -continued
(b) Patents fee
Pursuant to a patents implementation license dated 18 May 1997, starting from 18 September 1997, the Company may use the patents of Changyu Group Company. The annual patents usage fee payable by the Company to Changyu Group Company was RMB 50,000. The contract was expired on 20 December 2005. The Company renewed the contract on 20 August 2006 for 10 years. The annual patents usage fee payable by the Company to Changyu Group Company remained RMB 50,000. For the year ended 31 December 2016, the patents usage fee payable to Changyu Group Company is amounted toRMB 50,000(2015: RMB50,000).
During 2016, patent fee paid to related company accounted for100% of the Group (2015:100%).
(c) Sales offixed assets
As at 28December 2016,fixed assets sold bytheGroup to Zhongya Pharmaceutical amounted toRMB411,407(31December 2015: nil), accountingfor34.0% (31December 2015:nil).
(4) Remuneration of themanagement
2016 2015 RMB RMB Remuneration of themanagement 9,166,918 9,744,790__________________ ________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport X. RELATEDPARTYAND RELATEDPARTYTRANSACTIONS -continued
5. Balance duefrom/ to related parties
(1) Balance duefrom related parties
Closingbalance Openingbalance Accountsreceivable Balance Provision Balance Provision RMB RMB RMB RMB ZhongyaPharmaceutical 3,913,997 - 2,240,282 - ShenMaPacking. 50,700 - 169,300 - WindowoftheWineCity 1,833,273 - 7,812 - WineCultureMuseum __8_7_6_,7_2_4 ___-__ _______- ___-__ 6,674,694 - 2,417,394 -______________ __________ ______________ __________ Theabove amounts duefrom related parties are unsecured, interest-free and have nofixed terms ofrepayment.
(2) Balance dueto related parties
Accounts payable Closingbalance Opening balance RMB RMB Shen MaPacking 59,058,023 53,735,915 Zhongya Pharmaceutical 4,328,184 7,272,656 WineCultureMuseum 3,038,520 1,928,504 Windowofthe WineCity 619,578 145,861_________ _________ Total 67,044,305 63,082,936__________________ __________________ Otherpayable Closingbalance Opening balance RMB RMB Royalty fee payable toparent company 78,572,540 86,001,287__________________ __________________ Theabove amounts dueto related parties are unsecured, interest-free andhave nofixed terms of repayment.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport XI. COMMITMENT
1. Important commitments
(1) Capital commitments
Closingbalance Opening balance RMB'000 RMB'000 Capital commitmentfor
purchasing non-current assets 1,508,310 1,580,280________________ ________________ (2) Operating lease commitment
As lessee
Significant operating lease: Total future minimal lease payments under non-cancelable contract withlessor are as follow:
Closingbalance Opening balance RMB'000 RMB'000 Within1year 44,631 50,369 1to2years 20,262 35,100 2to3years 12,836 24,265 3years and above 36,533 44,466__________ __________ 114,262 154,200____________________ ____________________ 2. Contingent liability
TheGroup donot haveany significant contingent liabilities as at balance sheet date.
XII. POSTBALANCE SHEET DATE EVENT
According to the board of the director resolution raised on 20 April 2017, the Company proposed a cash dividend of RMB 5.0 (including taxes) for every 10 shares in respect of 2016 based on the issued shares of 685,464,000. The aggregate amount of cash dividend is RMB 342,732,000. The resolution isto be approved bytheannual general meeting.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport XIII. OTHERSIGNIFICANT EVENTS
Segment report
The Group is principally engaged in the production and sales of wine, brandy, and champagne in China, France and Spain. In accordance with the Group's internal organization structure, management requirements and internal reporting system, the Group's operation is divided into three parts: China, France and Spain. The management periodically evaluates segment results, in order to allocate resources and evaluate performances. In 2016, more than94.4% revenue and more than99.9% profit derived from China, and more than93.9% assets are located in China. Therefore theGroup does notneed todiscloseadditional segment report information.
XIV. NOTESTOCOMPANY FINANCIAL STATEMENTS
1. Cash and bank
Closingbalance Opening balance RMB RMB Cash 6,631 10,804 Bank balance 243,708,493 155,430,457 Othercurrency fund 25,744,936 125,377,572____________ __________ Total 269,460,060 280,818,833________________________ ____________________ As at 31 December 2016, the balance of restricted cash of the Company is RMB 2,711,926 (31 December 2015:RMB 2,643,181), which is theGroup's housingfund.
As at 31 December 2016, other currency fund of the Company include: deposit of RMB 25,694,735 for letter of credit and deposit of RMB 50,201 for entity card (31 December 2015: RMB7,572).
As at 31 December 2016, the Company's term deposits with original maturity from three months to six months when acquired is RMB 3,000,000 (31 December 2015: RMB 9,000,000 ) with interest rate1.65%.
2. Notes receivable
(1) Categories ofnotes receivable
Closingbalance Opening balance RMB RMB Bank acceptances 1,114,200 38,429,319__________________ __________________ (2) Pledged notes receivable
As of31December 2016,there was nopledged notes receivable (31 December 2015: Nil).
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport XIV. NOTESTOCOMPANY FINANCIAL STATEMENTS -continued
2. Notes receivable -continued
(3) Notes endorsed bytheGroup to otherparties which are not yet dueat theendof theperiod Closingbalance Opening balance RMB RMB Bank acceptances 29,199,486 59,952,558____________________ __________________ As at 31 December 2016, notes endorsed by the Company to other parties which are not yet due at the end of the period is RMB 29,199,486 (31 December 2015: RMB 59,952,558). It is for the payment to suppliers. The Company believes that due to bank good reputation, the risk of maturity cannot be cashed is very low, these notes receivable ownership of the risks and rewards have been transferred to the supplier, therefore confirm the termination of the endorsement notes receivable. If bank is unable to settle the notes on maturity, according to the relevant laws and regulations ofChina, theGroup would undertake limited liabilityfor thenotes.
(4) Notes receivable were reclassified as accounts receivable dueto thedefault ofdrawer
As at 31 December 2016, there was no notes receivable were reclassified as accounts receivable dueto thedefault ofdrawer(31 December 2015: Nil).
3. Accounts receivable
(1) Disclosure ofaccounts receivable 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 Accountsreceivable
thatareindividually
notsignificantand
forwhichbaddebt
provisionhasbeen
assessedindividually____3__,3__26__,68__3__10__0.__0 ____-________-__________3,3__26__,6__83____2__,3__92__,87__0__10__0.__00 ____-________-________2__,3__92__,87__0 The normal credit term of trade receivables is one month, which can be extended to one year for certain majorcustomers. The trade receivables are interest free.
There was no individually significant and for which bad debt provision has been assessed individuallyaccounts receivable.
(2) Theaging analysis isas follows:
Closingbalance Opening balance RMB RMB Within1year 3,326,683 2,392,870__________________ ________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport XIV. NOTESTOCOMPANY FINANCIAL STATEMENTS -continued
3. Accounts receivable - continued
(3) Provision,reversals andcollections during the current period:
As at 31 December 2016,there was noprovision provided for trade receivables (31 December 2015:Nil). TheCompany did not provide, reverseor write offany provision during 2016(31 December 2015:Nil).
(4) The balance ofaccounts receivable at theend oftheyear
Relationship Proportionof withtheGroup Amount Aging totalreceivables RMB % ZhongyaPharmaceutical Otherrelatedparties __3__,3__2__6__,6__8__3 Within1year __1__00__.__0 4. Prepayments
(1) Theaging analysis isas follows:
Closingbalance Openingbalance Amount Proportion Amount Proportion RMB % RMB % Within1year 702,647 100.0 445,619 100.0____________ ________ ____________ ________ (2) Top fourentities with thelargest balances ofprepayments
Percentageof Reasonfor totaladvances Relationship Amount being tosuppliers withtheGroup RMB Aging outstanding % ShandongElectricityCompany
Yantaibranch Thirdparty 502,671 Within1year electricfee 71.6 ShanghaiziriPackingCo.Ltd. Thirdparty 104,832 Within1year Goodsnotreceived 14.9 ChongqingHaoShengglass
LimitedbyShareLtd Thirdparty 93,456 Within1year Goodsnotreceived 13.3 ChinaPetroleumChemicalCo prepayment
ShandongYantaiPetroleumBranch Thirdparty ____1_,6_8_8 Within1year Gasolinefee ___0._2______70__2__,6__4__7 __1__0__0.__0
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport XIV. NOTESTOCOMPANY FINANCIAL STATEMENTS -continued
5. Dividend receivables
(1) Dividend receivables
Openingbalance Increase Decrease Closingbalance RMB RMB RMB RMB Within1year
Including:SalesCompany 724,259,189 1,515,829,419 (1,837,422,530) 402,666,078 WinesSales 20,465,163 82,388,043 (42,502,188) 60,351,018 XinjiangTianzhu - 46,502,728 (46,502,728) - LangfangCastel - 9,971,897 (9,971,897) - ChangyuChateau - 16,655,125 (5,284,518) 11,370,607 IceChateau - 2,000,000 (2,000,000) - BeijingChateau - 20,000,000 (20,000,000) - ShiheziChateau - 62,844,089 (57,002,086) 5,842,003 KylinPackaging - 16,000,000 (16,000,000) - JingyangSales - 2,000,000 (2,000,000) - NationalWines - 10,000,000 (10,000,000) - Atrio - 1,475,343 - 1,475,343 Morethan1year
Including:PioneerInternational __4_3_,3_6_7_,9_9_7 ___1_2_,4_6_2_,7_7_4 ___(5_,_71_6_,7_0_7_) __5_0_,1_1_4_,0_6_4 Total 788,092,349 1,798,129,418 (2,054,402,654) 531,819,113__________________ ____________________ ____________________ __________________ (2) Significant Dividend Receivable morethan 1year
Closingbalance Aging Reasonforbeing Whether RMB outstanding impairment
PioneerInternational __50__,__1__14__,__06__4__ Morethan1year Notpaid No 6. Otherreceivables
(1) Disclosure ofother receivables 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 3,572,802,092 99.7 - - 3,572,802,092 5,727,534,401 99.8 (7,199,521) 0.1 5,720,334,880 Otherreceivablesthatare
notindividuallysignificant
andforwhichbaddebt
provisionhasbeen
assessedindividually__9_,7_30_,77_0__0._3 ____-___-____9,7_30_,7_70__14_,1_21_,24_9__0._2 ____-_ __-___14_,1_21_,24_9 Total __3,__58__2,5__32__,8__62__10__0.__0 __________-____-____3,__58__2,5__32__,8__62__5,7__41__,6__55__,65__0__10__0.__0 __(7__,19__9,__52__1) ____0.__1__5,7__34__,4__56__,12__9
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport XIV. NOTESTOCOMPANY FINANCIAL STATEMENTS -continued
6. Otherreceivables -continued
(1) Disclosureof otherreceivables bycategories: -continued
Theaging analysis isas 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 2,138,473,742 59.7 - 2,138,473,742 4,849,743,585 84.5 - 4,849,743,585 1to2years 1,443,856,430 40.3 - 1,443,856,430884,540,581 15.4 - 884,540,581 2to3years 37,123 0.0 - 37,123 171,963 0.0 - 171,963 Over3years ____1_6_5,_56_7___0_.0_______-____1_6_5,_56_7___7_,1_99_,5_2_1___0_.1(_7,_19_9_,5_21_)______-____3__,5__82__,5__3__2,__86__2____10__0__.0__________-______3__,5__82__,5__3__2,__86__2__5,__74__1__,6__55__,6__5__0____10__0__.0(__7,__19__9__,5__21__)__5,__73__4__,4__56__,1__2__9 (2) Accrual, reversal and written-off during thecurrent period
No bad debt accrued orreversed in 2016(2015:Nil.).
(3) Other receivables written offcurrent year
Other receivables is written off RMB 7,199,521(2015:Nil )
(4) Disclosureof otherreceivables bynature
Closingbalance Opening balance RMB RMB Receivable from subsidiary 3,580,805,532 5,732,654,756 Investment fund - 7,199,521 Receivable deposit 8,000 103,834 Others 1,719,330 1,697,539____________ ____________ 3,582,532,862 5,741,655,650________________________ ________________________ (5) Top five entitieswith thelargest balances of otherreceivables
As at 31 December 2016,theparticulars oftop five otherreceivables are as follows:
Proportionoftotal Nature Amount Aging prepayments RMB % SalesCompany Internalbalance 1,000,076,488 Within2year 27.9 ChanganChateau Internalbalance 753,079,312 Within2year 21.0 NingxiaChateau Internalbalance 435,507,892 Within2year 12.2 BeijingChateau Internalbalance 382,245,667 Within2year 10.7 PioneerInternational Internalbalance __2_2_3_,5_3_9_,6_7_9 Within2year _6_._2 2,794,449,038 78.0____________________ ______
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport XIV. NOTESTOCOMPANY FINANCIAL STATEMENTS -continued
7. Inventories
Closingbalance Openingbalance
Netcarrying Netcarrying Balance Provision amount Balance Provision amount RMB RMB RMB RMB RMB RMB Rawmaterial 4,190,928 - 4,190,928 5,200,748 - 5,200,748 Workinprogress 747,521,822 - 747,521,822 680,061,444 - 680,061,444 Finishedgoods __4_1_,0_1_9_,6_6_8 ___-__ __4_1_,0_1_9_,6_6_8 __4_2_,9_1_0_,9_1_5 ___-__ __4_2_,9_1_0_,9_1_5 792,732,418 - 792,732,418 728,173,107 - 728,173,107__________________ __________ __________________ __________________ __________ __________________ 8. Long-term equity investments
Movement CashDividends 2016 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 46,502,728 KylinPackaging 23,176,063 23,176,063 - 23,176,063 100 100 16,000,000 ChangyuChateau(a) 28,968,100 28,968,100 - 28,968,100 70 100 16,655,125 PioneerInternational(b) 3,500,000 3,500,000 - 3,500,000 70 100 12,462,774 NingxiaGrowing 1,000,000 1,000,000 - 1,000,000 100 100 - NationalWines 2,000,000 2,000,000 - 2,000,000 100 100 10,000,000 IceChateau(b) 30,440,500 30,440,500 - 30,440,500 51 100 2,000,000 BeijingChateau(b) 77,000,000 77,000,000 - 77,000,000 70 100 20,000,000 SalesCompany 7,200,000 7,200,000 - 7,200,000 100 100 1,515,829,419 LangfangSales(b) 100,000 100,000 - 100,000 10 100 - LangfangCastel(a) 19,835,730 19,835,730 - 19,835,730 39 100 9,971,897 WineSales 4,500,000 4,500,000 - 4,500,000 100 100 82,388,043 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 2,000,000 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(b) 80,000,000 80,000,000 - 80,000,000 65 100 - ShiheziChateau 550,000,000 150,000,000 400,000,000 550,000,000 100 100 62,844,089 ChanganChateau 20,000,000 20,000,000 - 20,000,000 100 100 -R&DCentre(a) 805,000,000 500,000,000 - 500,000,000 62 100 - HuanrenWine 11,000,000 11,000,000 - 11,000,000 100 100 - FrancsChamps 220,320,604 209,706,634 10,613,970 220,320,604 100 100 - Atrio __19_0,_15_0,_54_4 __19_0,_14_8,_12_5 ____2,_41_9 __19_0,_15_0,_54_4 75 100 ___1,_47_5,_34_3__2,__13__9,__34__1,__54__1 __1,__42__3,__72__5,__15__2 __41__0,__61__6,__38__9 __1,__83__4,__34__1,__54__1 __1,__79__8,__12__9,__41__8 (a) The Company has100% voting power of those subsidiaries by the way of indirect controlling, referring to NoteVIII-1.
(b) The Company has100% voting power of these subsidiaries by the way of indirect controlling through whollyowned subsidiaries.
During 2016, there was no significant restriction on the remittance of fund from the investees to theCompany.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport XIV. NOTESTOCOMPANY FINANCIAL STATEMENTS -continued
9. Fixedassets
(1) Fixedassets
Buildings Machinery Motorvehicles Total RMB RMB RMB RMB I.Totaloriginalcarryingamount
1.Openingbalance 305,649,899 592,702,673 13,179,007 911,531,579 2.Increase
Purchase 320,033 7,195,257 3,675,768 11,191,058 CIPtransfer - 7,490,777 - 7,490,777 3.Decrease
Disposal - (30,301,520) (4,092,433) (34,393,953) ClassifiedasNon-current
assetsheldforsale(VI-8) __(3_,_59_9_,2_2_1_) ______-___ ______-___ __(3_,_59_9_,2_2_1_) 4.Closingbalance _3_0_2_,3_7_0_,7_1_1 _5_7_7_,0_8_7_,1_8_7 __1_2_,7_6_2_,3_4_2 _8_9_2_,2_2_0_,2_4_0 II.Totalaccumulateddepreciation
1.Openingbalance 113,220,552 418,201,108 10,603,905 542,025,565 2.Increase
Additions 9,967,875 24,455,088 689,608 35,112,571 3.Decrease
Disposal - (26,912,479) (3,887,810) (30,800,289) ClassifiedasNon-current
assetsheldforsale(VI-8) __(1_,_59_9_,0_2_4_) ______-___ ______-___ __(1_,_59_9_,0_2_4_) 4.Closingbalance _1_2_1_,5_8_9_,4_0_3 _4_1_5_,7_4_3_,7_1_7 ___7_,4_0_5_,7_0_3 _5_4_4_,7_3_8_,8_2_3 III.Totalnetcarryingamount
1.Closingnetcarryingamount 180,781,308 161,343,470 5,356,639 347,481,417__________________ __________________ __________________ __________________ 2.Openingnetcarryingamount 192,429,347 174,501,565 2,575,102 369,506,014__________________ __________________ __________________ __________________ As at 31 December 2016,fixed assetswith restricted ownership is RMB27,145,520,referring to NoteVI-48 for details.
As at 31 December 2016, net amount of fixed assets classified as Non-current assets held for sale was RMB 2,000,197, and the Company has no temporary idle fixed assets, fixed assets leased in underfinance leases and fixedassets leased out under operating leases.
(2) Fixedassets ofwhich certificates oftitlehave notbeen obtained:
As at 31 December 2016,buildings without property certificate are asfollows：
Reasons why certificates oftitlehave Amount notbeen obtained RMB
Fermentation centre office,
experiment building and workshop 3,994,837 Processing____________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport XIV. NOTESTOCOMPANY FINANCIAL STATEMENTS -continued
10. Constructionin progress
(1) Construction in progress
Closingbalance Opening balance RMB RMB Reconstruction ofboiler heating systems 500,000 7,990,777________________ ________________ (2) Current year movement onimportant construction
Opening Transferto Closing Accumulated Theprogressof Financed Budget balance Addition PPE balance expenditure/budget construction by RMB RMB RMB RMB RMB %
Reconstructionof
13,000,000 7,990,777 - (7,490,777) 500,000 61.5 90.0 Self-raised boilerheatingsystems
There was nointerest capitalized in construction in progress in2016.
(3) As at 31December 2016,there was noprovision was made for theconstruction in process. 11. Bearerbiological asset
Bearerbiological assets are grapetrees，which measured incost method.
Immature Mature
biological assets biological assets Total RMB RMB RMB I. Total original carrying amount
1.Opening balance 103,624,879 14,961,025 118,585,904 2.Increase
(1)Purchase 601,300 - 601,300 (2)Cultivated increase 14,731,590 - 14,731,590 (3)Transfer tomatureassets
from immatureassets (64,091,555) 64,091,555 -__________ _________ __________ 3.Closingbalance 54,866,214 79,052,580 133,918,794__________ _________ __________ II. Total accumulated depreciation
1.Opening balance - 7,624,715 7,624,715 2.Increase
Additions - 3,257,386 3,257,386__________ _________ __________ 3.Closingbalance - 10,882,101 10,882,101__________ _________ __________ III. Total net carrying amount
1.Closingnet carrying amount 54,866,214 68,170,479 123,036,693____________________ __________________ ____________________ 2.Opening net carrying amount 103,624,879 7,336,310 110,961,189____________________ __________________ ____________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport XIV NOTESTO COMPANY FINANCIAL STATEMENTS -continued
11. Bearerbiological asset - continued
As at 31 December 2016,there isnobiological asset withownership restricted.
As at 31 December 2016, there is no indication that biological assets may be impaired, and no provisionwas made.
12. Intangibleassets
Intangible assets
Land useright RMB I. Total original carrying amount
Opening and closingbalance 96,594,766__________ II. Total accumulated depreciation
1.Opening balance 22,213,241 2.Increase
Additions 2,379,153__________ 3.Closingbalance 24,592,394__________ III. Total net carrying amount
1.Closingnet carrying amount 72,002,372____________________ 2.Opening net carrying amount 74,381,525____________________ As at 31 December 2016,Intangibleassets with restricted ownership are RMB11,220,838,Please referto Note VI-48 indetail.
13. Deferred tax assets
Recognised deferred tax assets notpresented at thenet amount after offset
Closingbalance Openingbalance
Deductible Deferred Deductible Deferred Item
temporarydifference taxassets temporarydifference taxassets RMB RMB RMB RMB Unrealizedprofitfromintra
-companytransactions 5,333,339 1,333,335 9,159,340 2,289,835 Unpaidbonus 35,607,406 8,901,851 26,378,467 6,594,617 Retirementbenefit 10,754,547 2,688,637 12,914,345 3,228,586 Assetimpairmentprovision 10,000,000 2,500,000 17,199,521 4,299,880 Deductablelosses 24,544,964 6,136,241 62,511,688 15,627,922 Deferredincome 21,700,753 5,425,188 23,591,406 5,897,852 107,941,009 26,985,252 151,754,767 37,938,692
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport XIV NOTESTO COMPANY FINANCIAL STATEMENTS–continued
14. Othernon-current assets
Closingbalance Opening balance RMB RMB Receivables from subsidiaries 2,617,457,460 -________________________ __________________ 15. Short-term borrowings
Closingbalance Opening balance RMB RMB Credit loans 500,000,000 601,297,447____________________ ____________________ As at 31 December 2016,short-term borrowings detail is as follows:
Loanbank Loansamount Loanterm Interestrate RMB % HSBC(China)Co.,Ltd.
Qingdaobranch 100,000,000 25.Nov.2016-24.Feb.2017 3.48 ICBCYantaibranch 100,000,000 7.July2016-4.July2017 3.92 ICBCYantaibranch 100,000,000 24.June2016-20June2017 3.92 ICBCYantaibranch 200,000,000 30May2016–24.May2017 3.92__________________ ________ 16. Accounts payable
The aginganalysis ofaccounts payable are as follows
Closingbalance Opening balance RMB RMB Within1year 246,743,228 271,603,863 1to2years 825,629 1,487,319__________ __________ 247,568,857 273,091,182____________________ ____________________ 17. Advances from customers
The aginganalysis ofadvances from customers are as follows
Closingbalance Opening balance RMB RMB Within1year 6,000,000 -____________________ ____________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport XIV NOTESTO COMPANY FINANCIAL STATEMENTS–continued
18. Employee benefit payable
(1) Employee benefit payable
Opening balance Increase Decrease Closingbalance RMB RMB RMB RMB Short-termsalariesandwelfare 58,144,270 109,527,458 (107,613,514) 60,058,214 Post-demissionbenefits
-predeterminedprovisionplan - 10,227,042 (10,227,042) - Terminationbenefit __1_2_,9_1_4_,3_4_5 ___1_,6_6_2_,0_5_5 __(3_,_82_1_,8_5_3_) __1_0_,7_5_4_,5_4_7 71,058,615 121,416,555 (121,662,409) 70,812,761__________________ __________________ __________________ __________________ (2) Short-term salaries and welfare
Opening balance Increase Decrease Closingbalance RMB RMB RMB RMB Salariesandbonus 57,454,172 95,025,808 (92,441,612) 60,038,368 Staffbenefit 2,520 7,235,084 (7,044,204) 193,400 Staffwelfare - 4,940,763 (4,940,763) - Includes:
Medicalinsurance - 3,878,517 (3,878,517) - Injuryinsurance - 661,206 (661,206) - Maternityinsurance - 401,040 (401,040) - Housingfund - 3,189,445 (3,189,445) - Unionfeeandeducationfee ___2_,6_3_2_,5_3_3 ____5_5_0_,7_9_4 ___(_80_9_,6_7_7_) ___2_,3_7_3_,6_5_0 Total ____6__0__,0__8__9__,2__2__5 __1__1__0__,9__4__1__,8__9__4 (__10__8__,__42__5__,7__0__1__) ____6__2__,6__0__5__,4__1__8 Less:Non-currentliabilities ___1_,9_4_4_,9_5_5 ___2_,4_9_9_,4_0_3 Short-termsalariesandwelfare ____5__8__,1__4__4__,2__7__0 ____6__0__,0__5__8__,2__1__4 (3) Predetermined provision plan
Opening balance Increase Decrease Closingbalance RMB RMB RMB RMB Pension - 9,488,517 (9,488,517) - Unemploymentinsurance ___-__ ____7_3_8_,5_2_5 ___(_73_8_,5_2_5_) ___-__ - 10,227,042 (10,227,042) -__________ __________________ __________________ __________ The Company participates in pension insurance and unemployment insurance plans established by government institution. According to those plans, the Company pays pension and unemployment insurance each month on the basis of18% and1% last period salary respectively. Apart from these monthly expenses, the Company does not bear any further payment obligation. This year the Company should pay RMB 9,488,517 and RMB 738,525 (2015: RMB 10,505,200 and RMB 853,498) respectively into pension insurance and unemployment insurance. As at 31 December 2016, the Company does not have unpaid pension and unemployment insurance (31 December 2015: Nil) which is due to the pension insurance and unemployment insurance plan and not paid
at theendof thereporting period.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport XIV. NOTESTOCOMPANY FINANCIAL STATEMENTS -continued
19. Taxes payable
Closingbalance Opening balance RMB RMB Value added tax 2,199,892 (2,238,737) Consumption tax 18,887,846 11,536,745 Corporation income tax 211,105 651,459 Urban land usetax 802,207 837,367 Individual incometax 7,289,253 6,136,634 Cityconstruction tax 1,941,063 1,084,656 Property tax 270,492 270,408 Others 1,664,367 1,052,779__________ _________ 33,266,225 19,331,311____________________ __________________ 20. Otherpayables
(1) Natures ofother payables are as follows
Closingbalance Opening balance RMB RMB Payableto subsidiaries 359,161,772 983,151,732 Payables for equipment andconstruction 2,772,304 4,600,199 Payables for transportation - 495,093 Deposits from suppliers 589,300 537,800 Others 5,786,986 6,036,457____________ ____________ 368,310,362 994,821,281________________________ ________________________ (2) As at 31December 2016,there were nosignificant outstanding balance aged over thanoneyear. 21. Non-current liabilities duewithinone year
Closingbalance Opening balance RMB RMB Long-term borrowings duewithin oneyear 29,227,200 127,345,600____________________ ____________________ As at 31 December 2016,long-term borrowings duewithin oneyear refer to theborrowings to the Company from Yantai Branch of ICBC amounting toEUR 4,000,000(equivalent toRMB 29,227,200),with avalidity period from 1October2014to 29September 2017at theinterest rate ofsix-month LIBOR plus355basis points. Therelevant interest ispaid monthly. As at 31 December 2016,theinterest rate ofsuch borrowings is3.7%.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport XIV. NOTESTOCOMPANY FINANCIAL STATEMENTS -continued
22. Capital reserve
2016 Opening balance Increase Decrease Closingbalance RMB RMB RMB RMB Sharepremium 557,222,454 - - 557,222,454__________________ ____________ ____________ __________________ 23. Operating incomeandcosts
Operating incomeis analysed as follows:
2016 2015 RMB RMB Principal operating income 1,415,104,946 1,383,184,483________________________ ________________________ Operating cost isanalysed as follows:
2016 2015 RMB RMB Principal operating cos1,152,076,500 1,154,834,509
________________________ ________________________ 24. Taxes andsurcharges
2016 2015 RMB RMB Consumption tax 86,244,674 106,640,172 Cityconstruction tax 8,665,672 11,533,643 Education fee and surcharges 6,189,856 8,306,059 Property tax 1,229,545 - Landuse tax 2,534,985 - stamp tax 315,520 - Others 1,288,965 1,647,256__________ __________ 106,469,217 128,127,130____________________ ____________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport XIV. NOTESTOCOMPANY FINANCIAL STATEMENTS -continued
25. General and administrativeexpense
2016 2015 RMB RMB Salary and employee benefit 34,475,802 59,518,458 Maintenancefee 8,755,646 9,276,965 Leasing expenses 6,525,996 6,575,996 Administrativeexpenses 5,041,108 7,413,606 Depreciation 4,266,502 4,423,980 Property insurance fees 3,594,451 1,025,924 Greening fee 2,779,497 2,290,397 Amortization 2,333,153 3,012,058 Service fee 2,008,619 12,329,601 Property tax,stamp dutyand other taxes 1,952,995 6,105,794 Shuttlebus 1,914,130 2,287,960 Security and sanitation fee 1,727,077 2,049,508 Postalcharges 1,689,281 2,305,846 Travellingexpenses 1,657,767 3,441,134 Others 7,240,113 9,130,568__________ __________ 85,962,137 131,187,795____________________ ____________________ 26. Financial Expense
2016 2015 RMB RMB Interest income (3,704,355) (11,868,515) Exchange loss(gain) 10,474,409 8,543,586 Less: Interest expenses 26,658,795 21,322,155 Bank charges 797,603 855,471_________ _________ 34,226,452 18,852,697__________________ __________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport XIV. NOTESTO COMPANY FINANCIAL STATEMENTS–continued
27. Investment income
2016 2015 RMB RMB Long-term equity investment incomeaccounted
forbyusingthecost method 1,798,129,418 1,587,303,643________________________ ________________________ Among the long-term equity investment income accounted for by using cost method, the investees with investment income accounting for more than5% of the Company's total profit before tax are as follows:
Investees 2016 2015 RMB RMB Sales Company 1,515,829,419 1,404,700,197 WineSales 82,388,043 65,465,162____________ ____________ 1,598,217,462 1,470,165,359________________________ ________________________ As at 31 December 2016andat 31December 2015,there was nosignificant restriction onthe remittance ofinvestment incometo theCompany.
28. Supplementto cash flowstatement
2016 2015 RMB RMB (1) Cash flows from operating activities
calculated byadjusting thenet profit:
Net profit 1,830,574,470 1,553,520,098 Add: Depreciation offixedassets 35,112,571 37,173,740 Amortization ofintangible assets 2,379,153 2,379,153 Amortization ofbiological assets 3,257,386 586,905 Gains ondisposal ofproperty,
plantand equipment (111,362) (116,340) Finance expenses 34,300,141 7,609,550 Investment income (1,798,129,418) (1,587,303,643) Decrease/(increase) in deferred tax assets 10,953,440 (10,885,121) Increase in inventories (64,559,311) (46,476,333) Increase/(decrease)intrade receivables 130,012,325 (973,578,831) Decrease/(increase) in trade payables (637,852,493) 11,918,004____________ ____________ Net cash flows from operating activities (454,063,098) (1,005,172,818)________________________ ________________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport XIV. NOTESTO COMPANY FINANCIAL STATEMENTS–continued
28. Supplementto cash flowstatement -continued
(2) Significant investingand financing activities not involving cash receipts and payaments
2016 2015 RMB RMB Changetheclaim onShihezi Chateau intoLong-term
equity investments 400,000,000 - Increase theinvestment in subsidiaries
with bank acceptances 523,977,060 - Recover theinvestment in subsidiaries
with bank acceptances (523,977,060) -____________ ____________ 400,000,000 -________________________ ________________________ 29. Cash and cash equivalents
2016 2015 RMB RMB Closingbalance of cash and bank 269,460,060 280,818,833 Less:
Restricted bank deposits 2,711,926 2,643,181 Restricted other monetary assets 25,744,936 125,377,572 Deposit with aperiod ofover three months 3,000,000 9,000,000__________ __________ Closingbalance of cash and cash equivalents 238,003,198 143,798,080____________________ ____________________ 2016 2015 RMB RMB Cash and bank 238,003,198 143,798,080 Including: Cash onhand 6,631 10,804 Bank deposits ondemand 237,996,567 143,787,276__________ __________ Closingbalance of cash and cash equivalents 238,003,198 143,798,080____________________ ____________________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport XIV. NOTESTOCOMPANY FINANCIAL STATEMENTS -continued
30. Related party transactions
(1) Purchase of materials
2016 2015 RMB RMB Subsidiaries 397,141,028 319,040,340 Otherrelated parties 109,448,605 111,273,050__________ __________ 506,589,633 430,313,390____________________ ____________________ (2) Sales of goods
2016 2015 RMB RMB Subsidiaries 1,399,002,536 1,374,745,130 Otherrelated parties 16,102,410 8,439,353____________ ____________ 1,415,104,946 1,383,184,483________________________ ________________________ (3) Sales of Fixed assets
2016 2015 RMB RMB Subsidiaries 2,971,880 - Otherrelated parties 411,407 -____________ ____________ 3,383,287 -________________________ ________________________ (4) Guarantee forrelated parties
The company acting astheguarantor：
Guaranteedparty Amountofguarantee Inceptiondate Maturitydate Iftheguaranteecompleted Salescompany __1__00__,__00__0__,0__0__0 2November2017 2November2019 No 31. Receivables and payables to related parties
(1) Trade receivables
Trade receivables Closingbalance Openingbalance Balance Baddebtsprovision Balance Baddebtsprovision RMB RMB RMB RMB Otherrelated parties 3,326,683 - 1,341,924 -______________ ______________ ______________ ______________
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport XIV. NOTESTOCOMPANY FINANCIAL STATEMENTS -continued
31. Receivables and payables to related parties - continued
(1) Trade receivables–continued
Otherreceivables Closingbalance Openingbalance Balance Baddebtsprovision Balance Baddebtsprovision RMB RMB RMB RMB Subsidiaries 3,580,805,532 - 5,732,654,756 -____________________ ______________ ____________________ ______________ Othernon-current assets Closingbalance Openingbalance Balance Baddebtsprovision Balance Baddebtsprovision RMB RMB RMB RMB Subsidiaries 2,617,457,460 - - -____________________ ______________ ____________________ ______________ Theabove receivables duefrom related parties are unsecured, have nointerest orfixeddate of repayment.
(2) Trade payables
Trade Payables Closingbalance Opening balance RMB RMB Otherrelated parties 46,834,283 36,377,928__________________ __________________ Otherpayables Closingbalance Opening balance RMB RMB Subsidiaries 452,689,614 983,151,732________________________ ________________________ Theabove payables dueto related parties are unsecured, have nointerest orfixed dateof repayment.
32. Contingent liability
As stated in NoteXIV-30(4), theCompany has noother contingent liability.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport APPENDIX ISUPPLEMENTARY INFORMATION TO FINANCIAL STATEMENTS
YEAR ENDED 31DECEMBER 2016
I. DETAILSOFEXTRAORDINARY PROFITAND LOSS
2016 RMB Loss ondisposal ofnon-current assets, including
reversal of accrued impairment provision 14,719 Government grants credited in profit and loss
(except for thoserecurring government grants
that are closely related to theGroup's operation,
inlinewith related regulations and have proper basis ofcalculation) 49,130,643 Othernon-operating income and expense 4,656,972 Corporate incometax effect (13,072,324)__________ 40,730,010____________________ The Company's extraordinary profit and loss items are recognized in accordance with the regulations of the "public offering of securities of the Company Disclosure Explanatory Notice No. 1-non-recurring profit and losses" (SFC[2008]No. 43).
All non-operation income and non-operation expenses are non-operating profit in 2016.Pleaserefer to NoteVI-42 and VI-43.
II. RETRUNONEQUITY("ROE")ANDEARNINGS PRE SHARE ("EPS")
The Company's ROE and EPS are calculated in accordance with the CSRC regulations of the "Information Preparing and Disclosure Rules of Public Company No. 9-calculation anddisclosure ofROE and EPS" (Revised 2010).
Weighted average
2016 ROE BasicEPS% RMB Net profit attributable to shareholders oftheCompany 12.55 1.43 Net profit attributable to shareholders
oftheCompany deducting extraordinary profit and loss 12.03 1.37_____ _________ ____
TheCompany did not haveany potential dilutiveshares.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport Weighted average
2016 ROE BasicEPS% RMB Net profit attributable to shareholders oftheCompany 14.40 1.50 Net profit attributable to shareholders
oftheCompany deducting extraordinary profit and loss 13.89 1.45_____ _________ ____ TheCompany did not haveany potential dilutiveshares.
YantaiChangyuPioneerWineCo.Ltd.2016AnnualReport XII. Reference Documents
(1)The original ofAnnual Report autographed bythechairman.
(2)The Financial Statements autographed and signed by the chairman, chief accountant and accountants in charge.
(3)The Prospectus and Public Offering Announcement for Stock B in 1997; The Prospectus andTheShares’Change& PublicOfferingAnnouncement for Stock Ain 2000.
(4) The originals of all documents and announcements that the Company made public during thereport period in thenewspapers designated byChinaSecurities Regulatory Commission. Yantai ChangyuPioneerWineCo. Ltd.
Board ofDirectors
22ndApril,2017