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个股公告正文

张 裕B:2015年年度报告(英文版)

日期:2016-04-29附件下载

                 Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report




Yantai Changyu Pioneer Wine Co. Ltd.

         2015 Annual Report



              2016 Final 01




             April, 2016




                                                                       1
                                             Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report


               I. Important Notice, Contents and Definition

The Board of Directors,the Board of Supervisors,directors, supervisors & senior managers
of the Company collectively and individually accept full responsibility for the truthfulness,
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 the annual report.

All directors personally attended the meeting for deliberating the annual report.

1. The Company may face significant risks in production and operation, please refer to
“8.expectation for the Company’s future development” sector of “5. Risks likely to occur”
part in the chapter four named “Board of Directors’ Report”. We advise investors to read
carefully and pay attention to the investment risks. 2. The business plan and target in the
report do not represent the earnings forecast of the listed company in 2016, which depends on
several factors including the changes of market conditions and the effort extent of managing
team etc. with a great uncertainty, so the investors should be in a special attention.

The Company’s preliminary scheme of profit distribution deliberated and passed by the board
of the directors is as following: “ Based on the Company total 685,464,000 shares on 31
December 2015,we plan to pay CNY 5 in cash as dividends for every 10 shares (including
tax) to the Company’s all shareholders, send 0 bonus(including tax) and capital reserve will
not be transferred to equity. ”




                                                                                                   2
                                                               Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report


                                                         Contents
I、Important Notice,Contents and Definition..............................................................................2

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

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

IV、Management Discussion and Analysis ................................................................................. 13

V、Major issues ............................................................................................................................. 33

VI、Changes in Shares and the Shareholders’ Situation ...........................................................50

VII、Related Situation of Preferred Shares ................................................................................59

VIII、 Situation for Directors, Supervisors, Senior Management and Staffs...........................60

IX、 Corporate Governance ........................................................................................................ 70

X、 Financial Report .................................................................................................................... 80

XI、Reference Documents............................................................................................................ 180




                                                                                                                                     3
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Definition


Definition Item             Refers to Definition Content
Company/The Company         Refers to Yantai Changyu Pioneer Wine Co. Ltd.
Changyu Group/Controlling   Refers to
                                      Yantai Changyu Group Co. Ltd.
Shareholder
CSRC                        Refers to China Securities Regulatory Commission
SSE                         Refers to Shenzhen Stock Exchange
                            Refers to Deloitte Hua Yong Certified Public Accountants
Deloitte Hua Yong
                                      Co., LTD (special general partnership)
CNY                         Refers to Chinese Yuan




                                                                                        4
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II. Brief Introduction for the Company and Main Financial Indicators

1. Company’s information

                                                             Code number of the
Abbreviation of the Shares:      Changyu A、Changyu B                           000869、200869
                                                             Shares
Abbreviation of the Shares
                                 _
after alteration (if have)
Place of listing of the Shares   Shenzhen Stock Exchange
Legal Name in Chinese            烟台张裕葡萄酿酒股份有限公司
Abbreviation of Chinese
                                 张裕
name
Legal Name in English (if
                                 YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
have)
Abbreviation of English name
                                 CHANGYU
(if have)
Legal Representative             Mr. Sun Liqiang
Registered Address               56 Dama Road, Yantai, Shandong, China
Postal Code                      264000
Office Address                   56 Dama Road, Yantai, Shandong, China
Postal Code                      264000
Website                          http://www.changyu.com.cn
E-mail                           webmaster@changyu.com.cn

2. Contact person and information

                                     Secretary to the Board of   Authorized Representative of the
                                             Directors                   Securities Affairs
Name                             Mr. Qu Weimin                   Mr. Li Tingguo
                                 56 Dama Road, Yantai, Shandong, 56 Dama Road, Yantai,
Address
                                 China                           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 disclosure and filing location

The newspapers in which the             “China Securities Newspaper” , “Securities Times” and
Company’s information is disclosed     “Hong Kong Commercial Daily”
Web Site assigned by CSRC to carry
                                        http://www.cninfo.com.cn
the annual report
Filing location                         Board of Directors’ Office of the Company,
                                                                                                          5
                                            Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
                                     56 Dama Road, Yantai, Shandong

4. Registration changes

Organization Code            26710003-5
                             On 18th September 1997 the Company’s operating scope was the
                             production, processing and sales of wine, distilled liquor, healthy
                             liquor, fruit liquor, non-alcohol beverages, fruit jam, packing
                             materials and winemaking machines.
                        On 17th April 2008, after the deliberation of 2007 shareholders’
                        meeting, the Company’s operating scope is amended to “the
                        Company, legally registered, is in business of production, processing
Changes for the main and sales of wine, distilled liquor, medicated liquor, fruit liquor,
business of the Company non-alcohol beverages, fruit jam, packing materials and winemaking
                        machines; licensed import and export.”
since it was listed
(if have)               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 sales
                        of wine, distilled liquor, medicated liquor, fruit liquor, non-alcohol
                        beverages, fruit jam, packing materials and its products, winemaking
                        machines; licensed import and export; external investments according
                        to governmental policies.

Changes for all previous
controlling shareholders No.
(if have)

5. Other documents

The accountant appointed by the Company
                                 Deloitte Hua Yong Certified Public Accountants Co., LTD
Name
                                 (special general partnership)
Address                          No. 1 East Chang'an Avenue, Dongcheng District, Beijing
Name of signatory accountants Xu Zhaohui, Li Xu
The sponsor agency the Company appointed to perform the duty of continuous supervision
during the report period
□Available       Not available
The financial adviser the Company appointed to perform the duty of continuous supervision
during the report period
□Available       Not available

6. Key accounting data and financial indicators

Whether the Company makes retroactive adjustments or restates the accounting data of
previous fiscal years because of changes of accounting policy and/or accounting errors.
□Yes      No



                                                                                                       6
                                                     Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
                                                                More or less
Item                     2015               2014                than          2013
                                                                Last year (%)
Business revenue           4,649,722,368.00    4,156,727,525.00        11.86%    4,320,948,572.00
Net profit attributed
to the shareholders
                           1,030,073,860.00           977,707,711.00               5.36%         1,048,185,927.00
of      the     listed
company
Net profit attributed
to the shareholders
of      the     listed
company          after       993,268,823.00           950,191,379.00               4.53%         1,017,348,285.00
deducting          the
irregular profit and
loss
Net cash flows
from the operating         1,143,046,367.00         1,070,083,296.00               6.82%           735,074,307.00
activities
Basic earnings per
                                          1.50                     1.43            4.90%                            1.53
share
Diluted     earnings
                                          1.50                     1.43            4.90%                            1.53
per share
Weighted average
for earning rate of                  14.40%                    13.96%              0.44%                        16.45%
the net assets
                                                                          More or less
                         Dec. 31st 2015          Dec. 31st 2014           than          Dec. 31st 2013
                                                                          Last year (%)
Total assets        10,344,211,461.00               8,912,232,640.00              16.07%         7,997,930,542.00
Net          Assets
attributed to the
                     7,564,099,003.00               6,840,452,145.00              10.58%         6,208,279,705.00
shareholders of the
listed company


7. Differences in accounting data under PRC accounting standards and international
accounting standards
(1) Differences of net profit and net asset in the financial report disclosed according to
both international accounting standards and PRC accounting standards
□Available       Not available
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.


                                                                                                                7
                                                       Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
  (2) Differences of net profit and net asset in the financial report disclosed according to
  both foreign accounting standards and PRC accounting standards
  □Available       Not available
  There are no differences of net profit and net asset in the financial report disclosed according
  to both foreign accounting standards and PRC accounting standards during the report period.


  8. Key financial indicators by quarter
                                                                               Unit:CNY
                             st                   nd                      rd                    th
                            1 Quarter        2 Quarter        3 Quarter      4 Quarter
Business revenue             1,825,212,207.00 1,000,581,043.00 860,434,812.00 963,494,306.00
Net profit attributed to
the shareholders of the 530,248,397.00 215,811,851.00 136,798,209.00 147,417,173.00
listed company
Net profit attributed to
the shareholders of the
listed company after 526,745,613.00 212,686,390.00 133,641,945.00 120,396,645.00
deducting the irregular
profit and loss
Net cash flows from the
                             697,396,327.00 229,766,733.00 292,071,264.00 -76,187,957.00
operating activities
   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
   by the Company.
  □Yes        No


  9. Item and amount of irregular profit and loss
  V Available □Not available
                                                                                                 Unit:CNY
Item                                     2015           2014                   2013            Explanation
Gain on disposal of non-current
assets, including the reversal of           136,061.00 -5,086,545.00              271,989.00
accrued impairment provision
Tax refund or exemption that is either
non-recurring or without proper                          13,405,520.00
approval
Government grants credited in profit
and loss (except for those recurring
government grants that are closely
                                           38,952,919.00 27,140,194.00 36,659,754.00
related to the entity's operation, in line
with related regulations and have
proper basis of calculation)
Reversal of impairment loss for                              192,908.00
                                                                                                                  8
                                                Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
receivables which was separately
undertaken impairment test
Other non-operating income and
non-operating expenses except the    9,071,448.00     166,987.00       3,302,760.00
aforementioned items
Less. Income tax effect             11,355,391.00 8,302,732.00 9,396,861.00
Total                               36,805,037.00 27,516,332.00 30,837,642.00 --

  The reasons shall be made clear and definitely as to the irregular profit and loss that the
  Company has defined by virtue of the Explanatory Announcement on Public Company’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 on
  Public Company’s Information Disclosure No.1 - Irregular Profit and Loss.
  □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 Public Company’s
  Information Disclosure No.1 - Irregular Profit and Loss during the report period.




                                                                                                           9
                                                                                               Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.



                                          III. Summary of the Company’s Businesses

1. Main businesses during the report period

During the report period, the Company’s main businesses 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 the
Company’s main businesses. The wine industry that the Company involve in is still in the growth stage, the whole domestic wine market is on
the rising trend. The Company takes the dominant position in the domestic wine market.

2. Significant changes of main assets

(1) Significant changes of main assets

          Main assets                           Explanation of significant changes
          Equity asset                                No significant changes
                                      A year-on-year growth of 21.98% owing that parts of
                                  construction projects have completed construction and put into
          Fixed asset
                                     production and hence related investment is turned from
                                               construction in process to fixed asset
        Intangible asset                              No significant changes
                                   An increase of 17.97% owing to the increased investment in
    Construction in process        construction in process, such as Changyu International Wine
                                                          City and so on

(2) Main overseas assets condition


                                                                                                                                                      10
                                                                                        Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
  Available □Not available
Details    Formation Assets scale   Location   Operation mode    Control measures   Earning   The proportion of              Whether there
of assets reasons                                                for                condition overseas assets in the         are significant
                                                                 safeguarding of              Company’s net                 impairment risks
                                                                 asset security               assets
Equity   Acquisition   435,177,537 Spain       Wine production                      807,079 5.84%                            No
asset    of equity                             and operation




                                                                                                                                               11
                                              Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
3. Analysis of core competitiveness
Compared with the participants in the arena of the Chinese wine sector, we believe that the
Company is provided with the following advantages:
Firstly, the Company has been enjoying a well-known wine brand since 120-odd years,
“Changyu”, “Jiebaina” and “AFIP” are Chinese famous trademarks that have strong influence
and good reputation.
Secondly, the Company has set up a nationwide marketing network, formed a “three-level”
marketing network system mainly composed of the company’s salesmen and distributors,
possessed the strong marketing ability and market exploitation ability.
Thirdly, the Company has already had strong research strength and a product R&D system,
owned a one and only “State-level Wine R&D Center”, made mastery of advanced
winemaking technology and production processes, been powerful enough in product
innovation and 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 and structures have generally met the Company’s needs for development.
Fifthly, the Company has a great variety of products composed of all grades, its wine and
brandy of over 100 sorts can meet different consumers’ demands. The Company has taken
the lead in the domestic wine sector through rapid development in the past 10-odd years and
has possessed comparative superiority in the future competition.
All in all, the Company has built up a strong core competitive edge and obtained and
maintained a relatively dominant position in the long-term market competition.




                                                                                                     12
                                                         Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.

                             IV. Management Discussion and Analysis
         1. Summarization
         In 2015, 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,
         the market competition is further intensified, which has brought 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 medium and low level products, optimize the market
         layout, perfect the marketing channels and effort to promote product sales, achieving good
         results and realizing business income of CNY 4649.72 million, an increase of 11.86%
         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 CNY 1030.07 million
         belonging to the parent company’s shareholders , an increase of 5.36% compared with last
         year.


         2. Analysis of main business

         (1) Summarization

Description                         Increase or decrease of Cause of significant changes
                                    the end of the period
                                    over the end of last year
Operating revenue                                   11.86%Mainly because of increased sales volume
Operating cost                                      10.21%Mainly because of the increase of sales volume,
                                                          especially the proportion of sales in medium-low
                                                          price products increased
Sales expense                                       20.39%Mainly because of reduction of advertising expense in
                                                          2015
Management expense                                  22.18%Mainly because of increase of wage & welfare,
                                                          depreciation and Property tax in 2015 over the last
                                                          year before
R&D investment                                      10.18%Mainly because of increase of expenses for the
                                                          development of technology research in 2015
Financial expense                                  165.41%Mainly because of reduction of interest income due to
                                                          decrease of time deposit balance, and the increase
                                                          of loan interest expenditure.
Net amount of cash flow                              6.82%Mainly because of increased sale volume that makes
generated in operating activities                         cash inflow of business activities increased
                                                                                                                13
                                                      Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
Net amount of cash flow                           4.57%Mainly because of decline of cash expenditure for the
generated in investment                                investment projects
activities
Net amount of cash flow                          -1.57%Mainly because of decline of other received cash
generated in capital-raising                           related with financing activities
activities

         Review and summary of the process of the Company’s early-disclosed development strategy
         and business plan during the report 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 4.65 billion, increased by 11.86 % compared with the last year, exceeding the target
         fixed in the beginning of the year of realizing business income no less than CNY 4.4 billion.
         In order to deal with the unfavorable business environment, the Company carried out the
         operation strategy of steady development in the medium and high-end wines, and vigorous
         expansion for the low-level wines, brandy and imported wines with own brands. While
         making efforts to promote the development of medium and high-end wines, the Company
         made an appropriate tilt on marketing resources to the medium and low level wines, brandy
         and imported wines with own brands for meeting the market demand, which played an
         important part in realizing the increase on the business income. The main work in the 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 further improved the multi-channel and multi-company marketing
         framework, making the sales system more smoothly from the top down; By increasing the
         investment in the wine market, strengthening the inspection of terminal work, and strongly
         pushing the increase in sales of medium-and-low level wines and the promotion of brandy,
         the Company accelerated the sales of terminal and acquired greater improvement in
         marketing capability.
         Secondly, the production management was strengthened and the production cost was reduced
         constantly. The control of major production costs was strengthened and the management
         methods of both equipment repairing fee and fuel-power fee were improved. The Company
         strengthened the management of quota funds, perfected the examination and evaluation
         system to occupied funds, and realized dynamic management and paid use to fund
         occupation of each unit within the company. The procurement cost of raw materials was
         further reduced by increasing the centralized procurement. Based on above measures, cost
         per ton of comparable products reduced CNY 181 over the same period of previous year.
         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. In 2015, the Company implemented 14 key technologies and conducted 57
         technological development projects; focused on ‘Quality Day’ in every month to further
         intensify the examination and supervision of quality system construction; further deepened

                                                                                                             14
                                               Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
the quality control of package materials, standardized the legality of package materials in
combination with newly-implemented ‘Food Safety Law’ and ‘Advertisement Law’. Based
on above measures, the inner quality of the company’s products got a stable improvement.
Koyac XO Porcelain Barrel Brandy won Gold medal in Conours Mondial de Bruxelles
2015-Spirits Selection and the Icewine won Gold medal in ‘Quality Wine-Producing Areas
of International Leaders Contest’.
Fourthly, the procurement of raw materials such as grapes was completed successfully and
the management of grape base was further strengthened. The Company completed the whole
year work of grapes procurement and processing according to the plan, which provides a
reliable guarantee of raw material for adapting the development of market; stregnthented the
budget management of various expense in self-supporting bases, took comprehensive
professional training for farmers and strengthened the classified management and classified
evaluation of contractual bases; imported 102 mechanized equipment, further improving the
machinery utilization rate of Yantai self-supporting bases and each chateau base. By taking
above mentioned measures, the Company’s grape base management has become more
standardized and the quality of grape has been much improved.
Fifthly, the construction of technological upgrading projects is steadily promoted to
strengthen momentum for future development. During the report period, the Company has
overcomed the various problems and difficulties, steadily carry forward the construction of 9
investment projects which were defined at the beginning of the year, the key investment
projects run smoothly with good engineering quality.

(2) Revenue and cost

  Composition of operating incomes
                                                                                       Unit: CNY
                           2015                                2014
                                  Proportion                            Proportion      Year-on-year
                                      in                                    in           increase or
                  Amount                             Amount
                                  operating                             operating       decrease (%)
                                   incomes                               incomes
    Total
  operation 4,649,722,368.00          100% 4,156,727,525.00                   100%             11.86%
   revenue
Industry-classified
Industry of
liquor and
               4,649,722,368.00    100.00% 4,156,727,525.00               100.00%              11.86%
alcoholic
beverage
Product-classified
Wine           3,659,597,234.00      78.71% 3,201,368,831.00                77.02%             14.31%
Brandy           883,276,247.00      19.00%   813,417,868.00                19.57%              8.59%
Others           106,848,887.00       2.30%   141,940,826.00                 3.41%            -24.72%
                                                                                                      15
                                                  Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
Area-classified
Domestic      4,481,598,915.00           96.38% 4,072,037,577.00               97.96%             10.06%
Abroad          168,123,453.00            3.62%    84,689,948.00                2.04%             98.52%

   The condition of sectors, products or areas accounting for over 10% in the
Company’s operating incomes or operating profits

  Available □Not available
                                                                                        Unit: CNY
                                                                                               Year-on
                                                                          Year-on- Year-on-
                                                                                                 -year
                                                                              year    year
                                                                                               increase
                                                                           increase increase
                                                               Gross                               or
                                                                               or      or
            Operating income             Operating cost        profit                          decrease
                                                                          decrease decrease
                                                                rate                            (%) of
                                                                             (%) of  (%) of
                                                                                                 gross
                                                                          operating operating
                                                                                                 profit
                                                                            income    cost
                                                                                                  rate
Industry-classified
Industry
of liquor
and           4,649,722,368.00          1,512,503,035.00      67.47%        11.86%         10.21%            0.49%
alcoholic
beverage
Product-classified
Wine          3,659,597,234.00          1,145,785,230.00      68.69%        14.31%         13.35%         0.27%
Brandy           883,276,247.00           307,213,390.00      65.22%         8.59%         10.72%        -0.67%
Area-classified
Domestic      4,481,598,915.00          1,456,071,487.00      67.51%        10.06%          8.45%            0.48%



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

  Yes □No

Sector         Project            Unit             2015                 2014          Year-on-year
                                                                                      increase     or
                                                                                      decrease (%)
Wine           Sales volume       Ton                      86,318              71,854        20.13%
Brandy         Sales volume       Ton                      40,074              37,462          6.97%

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


                                                                                                         16
                                                 Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
   □Available        Not available

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

   □Available        Not available

      Composition of operating costs
                                                                                             Unit: CNY
Sector      Project      2015                         2014                                 Year-on-yea
                         Amount           Proportio   Amount               Proportio       r increase or
                                          n in the                         n in the        decrease
                                          operating                        operating       (%)
                                          cost (%)                         cost (%)
            Blending      813,179,854.0                749,104,077.0
                                            54.76%                            55.29%              -0.53%
            liquor                    0                            0
Liquor      Packing       515,456,922.0                446,560,533.0
and                                         34.71%                            32.96%               1.75%
            material                  0                            0
alcoholic
            Wages         55,456,767.00      3.73%     53,632,561.00            3.96%             -0.22%
beverage
            Productio     100,900,541.0                105,480,406.0
                                             6.79%                              7.79%             -0.99%
            n cost                    0                            0

   Explanation
   No

      Whether there are changes of consolidation scope during the report period

     Yes □No

   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".



      Major changes or adjustments of the Company’s products or services during the
   report period

   □Available         Not available

      Information of major customers and major suppliers

   The Company’s important customers

                                                                                                        17
                                                Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.

The total sales amount of the top five customers(CNY)                                            162,300,452.00
Total sales of the top five customers accounting for the
                                                                                                              3.49%
proportion in total sales for the year(%)



Information on the Company’s 5 biggest customers

                                                         Sales Amount           Proportion in Total Sales for
No.     Customer Name
                                                         (CNY)                the year(%)
        ChangyueXin Trade Company in Shenzhen
1                                                             35,452,036.00                                   0.76%
        city

        Baicheng Trade Distribution Center in

        Hanjiang district of Putian city (New

        Baicheng Food Trade Company in Hanjiang

2       district of Putian city, Zhongheng Food               33,579,353.00                                   0.72%

        Trade Company in Chengxiang district of

        Putian city, Baicheng Commerce and Trade

        Company Limited in Putian city )

        Dali Qianxingrong Wine Shop in Nanhai

3       district of Foshan city (Xiqiaolizhi Shop in          32,892,494.00                                   0.71%

        Nanhai district of Foshan city )

        Wal-Mart (China) Investment Company
4                                                             31,879,636.00                                   0.69%
        Limited

        Huhaipengcheng Liquor Industry Company
5                                                             28,496,932.00                                   0.61%
        Limited in Zhuhai city

Total   —                                                   162,300,452.00                                   3.49%

Other situation explanation of main customers
□Available       Not available

Information on the Company’s important suppliers
The total purchase amount of the top 5 suppliers                                                57,512,952.00
The proportion of the total purchase amount of the top 5 suppliers in the annual
                                                                                                           3.56%
purchase amount

                                                                                                       18
                                                    Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.


Information on the Company’s top 5 biggest suppliers


                                                    Purchase Amount          Proportion in Total Purchase
No.         Supplier Name
                                                    (CNY)                    for the year(%)

1           Yantai Shenma Packaging Co., Ltd.            153,891,013.00                                        9.52%

2           Yantai Changyu Glass Co.,Ltd.                136,649,691.00                                        8.46%

            Liquan     Sales   Department      of
3                                                        102,003,625.00                                        6.31%
            Shandong Yantai Winery Co.,Ltd.

            152   regiment     of    the   eighth
4                                                          79,434,236.00                                       4.92%
            agriculture production division

5           Yantai Wanfutai Winery Co., Ltd                57,512,952.00                                       3.56%

Total                                                    529,491,518.00                                    32.77%

Other situation explanation of main customers
□Available          Not available

(3) Costs

                                                                             Unit: CNY
                                                       Year-on-year    Explanation of
                           2015             2014       increase or     significant
                                                       decrease (%)    changes
                                                                       Mainly because
                                                                       of increased
Sales expense        1,211,127,163.00 1,006,009,364.00          20.39% advertising
                                                                       expense in
                                                                       2015
                                                                       Mainly because
                                                                       of increased
                                                                       wage, welfare
Management
                       313,968,409.00   256,980,018.00          22.18% expense,
expense
                                                                       depreciation
                                                                       and building
                                                                       tax
                                                                       Mainly because
Financial                                                              of decreased
                        11,287,685.00   -17,256,721.00         165.41%
expense                                                                interest income
                                                                       resulting from
                                                                                                           19
                                           Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
                                                                                 the decline of
                                                                                 fixed deposit
                                                                                 balance and
                                                                                 increased loan
                                                                                 interest
                                                                                 expenditure

(4) Research and development expenditure

□Available        Not available

(5) Cash flow
                                                                                      Unit: CNY
                                                                                          Year-on-year
                Item                    2015                           2014                 increase or
                                                                                          decrease (%)
    Subtotal of cash inflow in
                                      5,045,321,545.00             4,830,092,384.00                   4.46%
        operating activities
    Subtotal of cash outflow in
                                      3,902,275,178.00             3,760,009,088.00                   3.78%
        operating activities
     Net amount of cash flow
                                      1,143,046,367.00             1,070,083,296.00                   6.82%
 generated in operating activities
    Subtotal of cash inflow in
                                        70,956,457.00                333,107,299.00              -78.70%
       investment activities
    Subtotal of cash outflow in
                                      1,008,811,136.00             1,315,841,068.00              -23.33%
       investment activities
     Net amount of cash flow
                                      -937,854,679.00               -982,733,769.00               -4.57%
 generated in investment activities
    Subtotal of cash inflow in
                                       604,498,188.00                644,550,372.00               -6.21%
     capital-raising activities
    Subtotal of cash outflow in
                                       679,633,059.00                720,926,810.00               -5.73%
     capital-raising activities
     Net amount of cash flow
    generated in capital-raising        -75,134,871.00                -76,376,438.00              -1.63%
              activities
   Net increase of cash and cash
                                       134,207,390.00                   3,913,342.00          3,329.48%
            equivalents



                                                                                                  20
                                                Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.

Explanation of main influence factors contributing to great changes in related data on

year-on-year basis
  Available     □Not available


During the report period, comparing with the same period of last year, subtotal of cash inflow

in investment activities was reduced by 78.7%, mainly due to the significant decrease in the

fixed deposit whose duration is more than 3 months; subtotal of cash outflow in investment

activities was reduced by 23.33%, mainly due to the significant decrease in cash paid for

purchasing and constructing fixed assets, intangible assets and other long-term assets; net

increased amount of cash and cash equivalents increased by 3329.48%, mainly due to the

significant growth of net amount of cash flow generated both in operating activities and in

investment activities.



Explanation on the causes of the major differences between the net cash flow generated by

the Company’s operating activities and this year’s net profit during the report period.


  Available     □Not available

3. Analysis to non-main business

□Available        Not available

4. Assets and liabilities situation

(1) Major changes of assets
                                                                                           Unit: CNY
              At the end of 2015             At the end of 2014
                                   Proportio                 Proportio Proportion
                                                                                  Explanation
                                   n in the                  n in the increase or
                                                                                  on    major
              Amount               total     Amount          total     decrease
                                                                                  changes
                                   assets                    assets    (%)
                                   (%)                       (%)
Monetary                                                                          No major
               1,285,362,414.00       12.43% 1,145,365,071.00 12.85%       -0.42%
funds                                                                             changes
                                                                                  No major
Receivables     197,795,091.00         1.91% 145,672,411.00      1.63%      0.28%
                                                                                  changes
                                                                                                       21
                                            Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
                                                                                       No major
Inventory      2,260,852,964.00   21.86% 2,087,376,398.00        23.42%         -1.56%
                                                                                       changes
Investment                                                                             No major
                                   0.00%                           0.00%         0.00%
real estate                                                                            changes
Long-term
                                                                                          No major
equity                             0.00%                           0.00%         0.00%
                                                                                          changes
investments
                                                                                          No major
Fixed assets   3,089,245,185.00   29.86% 2,532,682,355.00        28.42%          1.44%
                                                                                          changes
Constructio
                                                                                          No major
n         in 2,005,990,308.00     19.39% 1,700,466,500.00        19.08%          0.31%
                                                                                          changes
progress
Short-term                                                                             No major
                665,581,921.00     6.43%   300,000,000.00          3.37%         3.06%
borrowings                                                                             changes
Long-term                                                                              No major
                 71,686,629.00     0.69%   209,380,000.00          2.35%        -1.66%
borrowings                                                                             changes

(2) Measuring assets and Liabilities at Fair Value

□Available       Not available




                                                                                                   22
                                                                                                                                              Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
5. Investment situation

(1) Overall situation

      Available         □Not available

 Investment amount during the                      Investment amount of the same
                                                                                                                 Variation
     report period (CNY)                              period of last year (CNY)
        842,060,000.00                                     562,596,634.00                                            49.67%

(2) Situation of acquired main equity investments during the report period

      Available         □Not available
                                                                                                                                                                                                 Unit: CNY
Invested    Main          Investment    Investment    Shareholding   Capital      Partner        Investment   Product   Progress     Estimated        Profit and    Whether    Disclosure    Disclosure index (if have

company     business      mode          amount        rate           source                      period       type      up to the    profit           loss     of   involved   date     if

name                                                                                                                    balance                       investment    in         have

                                                                                                                        sheet date                    during this   lawsuits

                                                                                                                                                      period

Discot      Production    Acquisition   18625.00      75%            Self-owned   Comercial      50 years     wine      completed    5,800,00.00      807,079.00    no         2015.08.28    http://www.cninfo.com.cn/finalp

Partners,   and                                                      capital      Gatar,                                                                                                     age/2015-08-28/1201509186.PD

S.L         operation                                                             S.L.     and                                                                                               F

            of     wine                                                           estion

            and other                                                             Ganuza,

            alcoholic                                                             S.L.

            products

Société   Production    Acquisition   2363.00       90%            Self-owned   Vignobles      50 years     wine      completed    1,400,000.00     0.00          no         2015.11.25    http://www.cninfo.com.cn/finalp

Civile      of                                                       capital      et                                                                                                         age/2015-11-25/1201786784.PD


                                                                                                                                                                                                                23
                                                                                                                                             Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
          Agricole       top-level                                                           Domaines                                                                                       F

          du             Bordeaux                                                            Castel

          Chteau         wine

          de

          Mirefleurs

          Total                                    20,988.00                                                                           7,200,000.00   807,079.00



          (3) Situation of main ongoing non-equity investments during the report period

               Available             □Not available
                                                                                                                                                                                                Unit: CNY
Project                Investment     Whether      Involved     Investment      Accumulated Capital       Process   Estimated profit     Accumulated          Reasons            Disclosure     Disclosure
name                   mode           it           sectors      Amount          actual           source   of                             realized             for                date (if       index (if
                                      belongs                   during this     investment                project                        profit up            unreached          have)          have)
                                      to fixed                  report period   amount up                                                to the end           planning
                                      assets                                    to the end                                               of the               schedule
                                      investment                                of the report                                            report               and
                                                                                period                                                   period               estimated profit


Yantai                 Self-          Yes          Liquor and   265,000,        673,630,000.     Owned    75.00%    0.00                 0.00                 —                 2015.04.28     http://www.cninf
Changyu                constructed                 alcoholic    000.00          00               funds                                                                                          o.com.cn/finalpa
International                                      beverage                                                                                                                                     ge/2015-04-28/
Wine City                                          sector                                                                                                                                       1200918766.PDF
Blending and
Cooling
Center
Yantai                 Self-          Yes          Liquor and   190,000,        481,690,000.     Owned    85.00%    0.00                 0.00                 —                 2015.04.28     http://www.cninf
Changyu                constructed                 alcoholic    000.00          00               funds                                                                                          o.com.cn/finalpa

                                                                                                                                                                                                        24
                                                                                                       Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
International                       beverage                                                                                                            ge/2015-04-28/
Wine City                           sector                                                                                                              1200918766. PDF
Bottling
Center
Yantai          Self-         Yes   Liquor and   86,000,      199,440,000.   Owned   95.00%   0.00   0.00             —              2015.04.28        http://www.cninf
Changyu         constructed         alcoholic    000.00       00             funds                                                                      o.com.cn/finalpa
International                       beverage                                                                                                            ge/2015-04-28/
Wine City                           sector                                                                                                              1200918766. PDF
Logistics
Center
Changyu Vine    Self-         Yes   Liquor and   49,940,      90,760,000.    Owned   40.00%   0.00   0.00             —              2015.04.28        http://www.cninf
and Wine        constructed         alcoholic    000.00       00             funds                                                                      o.com.cn/finalpa
Research                            beverage                                                                                                            ge/2015-04-28/
Institute                           sector                                                                                                              1200918766. PDF
Treasure        Self-         Yes   Liquor and   17,210,      47,990,000.    Owned   40.00%   0.00   0.00             —              2015.04.28        http://www.cninf
Wine Chateau    constructed         alcoholic    000.00       00             funds                                                                      o.com.cn/finalpa
                                    beverage                                                                                                            ge/2015-04-28/
                                    sector                                                                                                              1200918766. PDF
Koyac Brandy    Self-         Yes   Liquor and   0.00         98,000,000.    Owned   40.00%   0.00   0.00             —              2015.04.28        http://www.cninf
Chateau         constructed         alcoholic                 00             funds                                                                      o.com.cn/finalpa
                                    beverage                                                                                                            ge/2015-04-28/
                                    sector                                                                                                              1200918766. PDF
Changyu         Self-         Yes   Liquor and   4,290,00     43,700,000.    Owned   80.00%   0.00   0.00             —              2015.04.28        http://www.cninf
International   constructed         alcoholic                 00             funds                                                                      o.com.cn/finalpa
Wine City                           beverage                                                                                                            ge/2015-04-28/
Grape Base                          sector                                                                                                              1200918766. PDF
Greening        Self-         Yes   Liquor and   1,740,000.   38,640,000.    Owned   70.00%   0.00   0.00             —              2015.04.28        http://www.cninf
Investment      constructed         alcoholic    00           00             funds                                                                      o.com.cn/finalpa

                                                                                                                                                              25
                                                                                               Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
                               beverage                                                                                                         ge/2015-04-28/
                               sector                                                                                                           1200918766. PDF
Pioneer    Self-         Yes   Liquor and   18,000,    35,550,000.   Owned   60.00%   0.00   0.00             —              2015.04.28        http://www.cninf
Monopoly   constructed         alcoholic    000.00     00            funds                                                                      o.com.cn/finalpa
Shop                           beverage                                                                                                         ge/2015-04-28/
                               sector                                                                                                           1200918766. PDF
Total      --            --    --           632,180,   1,709,400,    --      --       0.00   0.00             --              --                --
                                            000.00     000.00




                                                                                                                                                      26
                                                 Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
 (4) Financial assets investment

    Security investment situation

 □Available       Not available

 There is no security investment for the Company during the report period.

    Derivatives investment

 □Available       Not available

 There is no entrust financing for the Company during the report period.

 (5) The usage situation of the raised capital

 □Available       Not available

 There is no usage situation of the raised capital for the Company during the report period.

 (6) Sale of major assets and equities

    Sale of major assets

 □Available       Not available

 There is no sale of major assets during the report period.

    Sale of major equities

 □Available       Not available

 (7) Analysis to the major holding and joint stock companies

   Available     □Not available

  Situation of main subsidiaries and joint stock companies affecting over 10% of the
  Company’s net profit
                                                                              Unit: CNY
Company Company Main            Registered Total    Net      Operation Operation Net
name       type      business   capital    asset    asset    revenue   profit      Profit
Yantai               To                      274,79
           Subsidia             USD 5                82,896, 98,894,4               7,573,6
Changyu              research,              5,419.0
           ry                   million               983.00     99.00                41.00
-Castle              produce                      0

                                                                                                        27
                                               Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
Wine                   and sell
Chateau                wine and
Co.                    sparkling
LTD.                   wine as
                       well as the
                       tourism
                       service
Langfang
            Joint
Castel-                To produce USD
            stock                                 53,339,   45,425,      51,602,8                         862,10
Changyu                and sell   6,108,81
            compan                                 634.00    677.00         97.00                           3.00
Wine Co.               wine       8
            y
LTD.
Chateau     Subsidia   To
Changyu     ry         research,
                                     CNY           739,79    149,28
AFIP                   produce                                           170,037,                     25,424,
                                     110          5,780.0   3,921.0
Global                 and sell                                            611.00                      015.00
                                     million            0         0
                       brandy and
                       wine
Chateau     Subsidia
Liaoning    ry                    CNY
                       To produce                 72,547,   59,823,      51,657,5                     -4,223,
Changyu                           26.30
                       ice wine                    094.00    627.00         43.00                     249.00
Ice Wine                          million
Co., Ltd.
Xinjiang    Subsidia   To plant
Tianzhu     ry         grape,
Winery                 produce
                                                   182,72    161,83
Co., Ltd.              and sell      CNY 75                              107,683,                     -37,548
                                                  8,427.0   8,245.0
                       grape         million                               230.00                         .00
                                                        0         0
                       juice, bulk
                       wine and
                       fruit wine

 Acquisition and disposal of subsidiaries during the report period

    Available    □Not available

Company name           Acquisition and disposal      Influence to overall production and
                       Mode of subsidiaries          Operation as well as performance
                       during the report period
Dicot Partners, S.L.   Equity Acquisition            Beneficial for enriching the Company’s
                                                     product structure and improving profitability
Société Civile       Equity Acquisition            Beneficial for enriching the Company’s
Agricole du Chteau                                   product structure and improving profitability
de Mirefleurs


                                                                                                      28
                                               Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
Information of main holding and joint stock companies
No

(8) Main part situation of the special purpose being controlled by the Company

□Available       Not available

(9) Expectation for the Company’s future development

On the basis of our limited experience and special skills, we make the following estimation of the
wine sector and the Company’s future development:
(1)The sector competition setup and development trend
Due to the continuous limitation for the domestic consumption of premium wine in the future long
time, the continuing entrance of imported wines to Chinese market, and the great impact for the
traditional sales channels caused by the new channels such as E-commerce, the competition in the
domestic wine industry will still be awfully fierce in the current and future long time, the
consumption for high-end wine maybe continue to remain weak. But in the long run, thanks to
increase of their incomes, people’s pursuits to health and fashion life, the people are favoring
wines which fit well with the trend of consumption, it will ceaselessly stimulate their demand for
quality wine. That’s to say, the Chinese wine sector still has huge potential to tap. Especially the
medium-low level wine with high performance-to-price ratio can have a faster growth. In such a
case of long-term coexistence of opportunities and challenges, only those enterprises that possess
strong branding influence and marketing ability, catch the opportunities, actively take adjustments
and make full use of oncoming and traditional sales channels, can timely get the run of the
consumers’ demands and provide products of high performance-to-price ratio will have an
opportunity to be the final winners of competition and form a new structure of the future Chinese
wine market.
(2)The Company’s development strategy
The Company will continue to adhere to the strategy of taking wine as pillar product while
developing all kinds of products, actively expand the scope of consumption and marketing mode,
revise the sales decreased trend of high-end wine; develop middle-level wines and brandy,
strengthen the promotion of sparkling wine, make efforts to provide consumers with a rich variety
of products in high cost performance.
(3) Management plan in a new year
In 2016, the Company will try its best to realize business income of not less than CNY4.6 billion
and control the main operating costs and three period charges below CNY3.0 billion.
(4) The measures the Company will take
The Company will emphasize the following aspects in 2016, so as to better catch the opportunities
and face the challenges:
Firstly, it is to stick to market-orientation and promote the integrated development of various
kinds of wine. The Company will continue adhering to wine-based development strategy firmly,
improve the construction of sales system for chateau wines, as well as the incentive measures to
dealers and the company’s staff, so as to promote the sales volume of chateau wines. The
governance of market order will be enhanced to consolidate the brand advantages of middle-end
wines (represented as Jiebaina). The market promotion of low-end wines will be strengthened to
increase the market shares. The appearance of sparkling wine with low alcohol and Tinlot Reserva
                                                                                                      29
                                               Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
products on the market will be completed and the appearance of wines in small package on the
market will be quickened. The company will strengthen the construction of Brandy sales system
and improve its market promotion. The Koyac Brandy products will be improved and their sales
system will be built. In the meantime that the company pay attention to domestic brands, the sales
of imported products by the company acting as agency in China, especially products whose brands
are acquired by the company, will be boosted to satisfy the demands of customers.
Secondly, it is to strengthen the control for major production costs and expenses, further
compressing production cost and reducing expenses. The Company will further reinforce financial
management and audit supervision, improve management methods of major expenses in
production system, improve centralized procurement rules, improve profit accounting system in
subordinate production and operation units, make a good fund plan, enhance fund occupation
management and make efforts to reduce production costs and expenses; establish and improve the
financial management and auditing system of industrial park, grape bases and overseas investment
companies; improve and perfect financial early warning analysis system to prevent operating risks;
optimize products’ pricing mechanism and strive to improve products’ gross profit margin.
Thirdly, it is to strengthen the management for vineyards, continually increase the products
quality. The Company will carry out the normalization construction and management for the
vineyards in accordance with the criterion of scalization, standardization and mechanization,
continue to practice the tracking and management of winemakers for the vineyards. For
self-supporting bases, the company will enhance the corresponding simulation profit evaluation,
build the informatization management system in self-supporting bases, and improve the
management level of bases. Besides, the company will fully push the mechanization planting
pattern to further reduce the planting cost. For contractual bases, in order to improve the
management level of bases, the classified management of grape bases will be continued being
implemented and the advanced planting technical training for contracted farmers will also be
continued being enhanced. In addition, the company will strengthen the legal education of quality
and safety to improve farmers’ consciousness of food safety. The layout of raw material bases will
be implemented worldwide to form the pattern that the quality and quantity of raw materials in
domestic bases could be complementary with that in foreign bases. The Company will perfect the
classification standards for bulk wine, the quality tracking of bulk wine whole usage process and
assessment mechanization, optimize winemaking technology, reinforce the applied research on
oak barrels, further improve production quality, strengthen to develop new products, constantly
enrich products variety. Further distinguish and clear the products characteristic of general wine in
different varieties, form the products line with distinctive and unique style.
Fourthly, it is to steadily carry forwards investment projects construction, scientific arrange the
progress of construction, guarantee the engineering quality. The Company will continuously
promote the projects of Yantai Changyu International Wine City (namely Yantai Changyu
Industrial Park) and the construction for pioneer monopoly shops, reinforce the management of
construction budget to investment projects, strengthen projects’ cost review and completion audit,
strictly control the investment amount on projects, make sure to finish the construction for all
projects and put them into operation on the basis of scheduled progress and quality.
(5) Potential risks
A) Risks in price fluctuation of raw materials
Grapes are the Company’s main raw materials. The grape’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
                                                                                                      30
                                               Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
 add the uncertainty to the Company’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 of vineyards.
 B) Risks in uncertainty of market input and output
 To cope with the cutthroat market competition and to meet the needs for market development, the
 Company has input more and more capital in the market and the sales expense has taken up a
 higher percentage point in the business revenue. The input-output ratio will affect the Company’s
 operating results to a great extent and the risk that some investments may not reach the
 expectations is likely to occur. Therefore, the Company will strengthen market research and
 analysis, enhance market forecast accuracy and continue to perfect the input-output evaluation
 system to ensure the investments in market to be satisfactory as expected.
 C) Risks in product transport
 The Company’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 lower these kinds of risks.
 D) Risks in 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 of M&A, it is difficult to make sure the fair and reasonable transaction price, the
 integration and management after M&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. The Company’s receptions, studies, communications and visits

   Available     □Not available

                     Reception method       Reception object type         Basic information
Reception Time
                                                                          index of studies
2015.05.22           Field survey           Institution                   -

2015.05.22           Field survey           Individual                    -

                                                                                                      31
                            Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
Number of
Reception
Number of
received institution
Number
of received
individual
Number of other
object
Whether disclose,      No
reveal or betray
no-public
import information




                                                                                   32
                                              Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.

                                    V. Major issues
1. The Company’s common stock profit distribution and increasing equity with capital
reserve

Promulgation, implementation or adjustment of common stock profit distribution policies
especially cash dividends policies during the report period

  Available    □Not available


According to the auditing result made by The Deloitte HuaYong certified public accountants
co., LTD, the net profit that the Company made in 2014 was CNY977.707711million. After
deducting the minority shareholders’ profit and loss, the net profit belong to the Company’s
shareholders is CNY977.707711 million. After the deliberation of the Company’s Board of
Directors and the Shareholders’ Meeting, the profit plan of 2014 is as following: Because the
left amount of legal earned surplus reserve is less than 50% of the registered capital, while
making profit distribution, the legal earned surplus reserve will not be drawn. Then based on
the Company’s 685,464,000 shares at total up to December 31, 2014, we plan to pay CNY4.4
in cash as dividends for every ten shares (including tax) to the Company’s all shareholders,
totaling up to CNY301.60416 million, accounting for 30.85% of the net profit CNY
977.707711 million attributable to the shareholders of the parent company in the consolidated
statement, the retained and undistributed profit of CNY 676.103551 million will be reserved
for the distribution of next year. This plan is in line with the provisions of the Company’s
Articles of Association. On July 5, 2015, the Company published the Implementation
Announcement of 2014 Annual Equity Distribution on China Securities Journal, Securities
Times and www.cninfo.com.cn, determining that the share registration day of A Stock was
on July 10, 2015 and the ex-dividend day was on July 13, 2015, the last trading day of B
Stock was on July 10, 2015, the share registration day was on July 15, 2015 and the
ex-dividend day was on July 13, 2015. The Company also distributed equity before July 30,
2015 to the Company’s all A Stock holders registered after closing of Shenzhen Stock
Exchange on the afternoon of July 10, 2015 at China Securities Depository and Clearing
Corporation Limited Shenzhen Company and the Company’s all B Stock holders registered
after closing of Shenzhen Stock Exchange on the afternoon of July 15, 2015 at China
Securities Depository and Clearing Corporation Limited Shenzhen Company.


Special explanation
Whether it is in accordance with the requirements of the regulation in the Articles          Yes
of Association and the resolution of shareholders
Whether the distribution standard and proportion is clear and definite                       Yes
Whether the relative decision process and mechanism is complete                              Yes
Whether the independent directors perform their responsibilities and play the roles.         Yes
Whether the small and middle shareholders have the chance to express their                   Yes
advices and appeals, as well as their lawful right and interest is in an enough
protection.
Whether it is legal and transparent for the condition and process while adjusting            Yes
                                                                                                     33
                                                     Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
       and amending the cash dividends distribution policy.



       The Company’s plan (preliminary scheme) of common stock profit distribution and
       increasing equity with capital reserve in the recent three years (including the report period).
       The Company’s profit distribution plan in 2013 is as following: Because the left amount of
       legal earned surplus reserve reaches 50% of the registered capital, while making profit
       distribution, the legal earned surplus reserve will not be drawn. Then based on the
       Company’s 685,464,000 shares at total up to December 31, 2013, we plan to pay CNY 5 in
       cash as dividends for every ten shares (including tax) to the Company’s all stockholders,
       totaling up to CNY 342.732 million, accounting for 32.70% of the net profit CNY
       1048.185927 million attributable to the shareholders of the parent company in the
       consolidated statement, the retained and undistributed profit of CNY 705.453927 million will
       be reserved for the distribution of next year.


       The Company’s profit distribution in 2014 is as following: Because the left amount of legal
       earned surplus reserve reaches 50% of registered capital, while making profit distribution, the
       legal earned surplus reserve will be not drawn. Based on the Company’s 685.464 million
       shares at total up to December 31, 2014, we plan to pay CNY 4.4 in cash as dividends for
       every ten share (including tax) to the Company’s all shareholders, totaling up to CNY
       301.60416 million accounted for 30.85% of net profits CNY977.707711 million attributable
       to shareholders of parent company in the consolidated statements. The retained and
       undistributed profit of CNY 676.103551 million will be reserved for distribution in the next
       year.

       The Company’s preliminary scheme of profit distribution plan in 2015 is as following:
       Because the left amount of legal earned surplus reserve reaches 50% of the registered capital,
       while making profit distribution, the legal earned surplus reserve will not be drawn. Then
       based on the Company’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 the Company’s all
       stockholders, totaling up to CNY 342.732 million, accounting for 33.27% 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
       be reserved for the distribution of next year.


       The Company’s common stock cash dividend record in recent three years (including the
       report period)

                                                                                     Unit: CNY
                           Net           profit Proportion in the Amount of cash Proportion of cash
             Amount     of
                           belonging to the net profit belonging dividends in other dividends in other
Year      of cash dividend
                           listed company’s to       the     listed ways           ways
distribution (including
                           stockholders in the company’s
             tax)
                           consolidated         stockholders in the
                                                                                                            34
                                                      Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
                          statement of the consolidated
                          distribution year statement (%)
           342,732,000.
2015                       1,030,073,860.00                33.27%                         0.00                    0.00%
                     00
           301,604,160.
2014                         977,707,711.00                30.85%                         0.00                    0.00%
                     00
           342,732,000.
2013                       1,048,185,927.00                32.70%                         0.00                    0.00%
                     00

       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 cash dividend distribution.

       □Available       Not available


       2. The Company’s preliminary scheme of profit distribution and preliminary scheme of
       increasing equity with capital reserve

         Available    □Not available

       Number of sending bonus shares per ten shares (share)                                          0
       Number of dividend payout per ten shares (CNY) (including tax)                                 5
       Number of transferring per ten shares(share)                                                   0
       The cardinal number of the capital stocks for the preliminary distribution
                                                                                            685,464,000
       scheme (shares)
       Total cash dividend distribution (CNY)(including tax)                           342,732,000.00
       Distributable profit (CNY)                                                      1,030,073,860.00
       The proportion of cash dividend distribution in the total profit distribution           100.00%
       Cash dividend
       If the Company’s development is in growth stage, while making profit distribution, the
       proportion of cash dividends should takes up no less than 20% in this profit distribution
       Detailed explanation for the preliminary scheme of profit distribution or increasing equity
       with capital reserve
       According to the audit result from Deloitte Hua Yong, the net profit belonging to the parent
       company’s stockholders in the consolidated statement is CNY1030.07386million, the net
       profit of the parent company in financial statement is CNY1553.520098 million in 2015.
       According to PRC accounting standard, the situation for the attributable profit of
       consolidation and parent company in 2015 is as following:
                                                                                             Unit: CNY
                                                         Consolidation            Parent company
           Undistributable profit at the end the year    5,980,390,074            5,872,392,075
           Including: net profit in 2015                 1,030,073,860            1,553,520,098
           Distributable profit carried over to the 5,251,920,374                 4,620,476,137
           beginning of the year
                                                                                                             35
                                                     Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
          Distribution for 2014 dividend           301,604,160                     301,604,160
          Withdrawing for the legal earned surplus 0                               0
          reserve

       According to regulation of 157th item in the Articles of Association, which is that the
       Company can distribute dividends either in cash or by stock, the profit to be distributed each
       year is not less than 25% of the distributable profit realized in the same year and the
       accumulated sum of profit to be distributed in cash in the next three years is not less than
       30% of the yearly average distributable profit to be realized in the next three years,
       meanwhile, considering the large amount on the capital expenditure in 2016, under the
       condition of not influencing the normal production and operation, the Company put forward
       preliminary scheme on profit distribution in 2015 as following:
       Because the left amount of legal earned surplus reserve reaches 50% of the registered capital,
       while making profit distribution, the legal earned surplus reserve will not be drawn. Then
       based on the Company’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 the Company’s all
       stockholders, totaling up to CNY 342.732 million, accounting for 33.27% 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
       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 the People’s Bank of China on the first working day after the
       resolution date of 2015 shareholders’ meeting.

       3. Implementation of commitments

       (1) Commitments that the Company, shareholders, actual controllers, acquirers, directors,
       supervisors, senior managers and other related parties have implemented during the report
       period and have not implemented up to the end of the report period

         Available    □Not available

                Commitment                 Commitment               Commitment          Commitment Implementat
Commitments                Commitment type
                party                      content                  time                period     ion
Commitments at
                    -                                  -                                     -                -
share reform
Commitments
made in
acquisition         -                                  -                                     -                -
report or equity
changes report
Commitments at
asset               -                                  -                                     -                -
restructuring
Commitments at Yantai         Solve horizontal   Non-horizontal 18thMay 1997 Forever                      Has been
                                                                                                            36
                                                   Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
the initial public Changyu     competition      competition                                             performing
offering or        Group Co.                                                                            strictly
refinancing        Ltd.
                   Yantai      Clear the purpose According to
                   Changyu     of brand royalty Trademark
                   Group Co.                     License
                   Ltd.                          Contract, the
                                                 Company will
                                                 pay trademark
                                                 royalty for the
                                                 ‘‘Changyu’’
                                                 products of
                                                 Yantai
                                                 Changyu
                                                 Group Co., Ltd                                         Has been
                                                 every year,      18thMay 1997 Forever                  performing
                                                 Yantai                                                 strictly
                                                 Changyu
                                                 Group Co., Ltd
                                                 will use
                                                 trademark
                                                 royalty to
                                                 advertise
                                                 ‘‘Changyu’’
                                                 trademarks and
                                                 Contracted
                                                 products in this
                                                 contract.
Equity incentive
                     -               -              -                                     -                -
commitments
Commitments at
middle and
small                -               -                                                     -                -
                                                      -
shareholders of
the Company
Commitment       Yes
under timely
implementation
or not
Whether or not No
to have specific
reasons of the
unimplemented
commitment and
next steps(if
                                                                                                          37
                                                           Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
any)

       (2) The Company should make a statement on the achieved original profit forecast of
       assets or projects and its reason if there is profit forecast of Company’s assets or
       projects and the report period is still in the profit forecast period

       □Available         Not available

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


       □Available         Not available


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

       5. Explanation of Non-standard Audit Report given by accounting firm in the report
       period from board of directors, board of supervisors and independent directors (if
       have)

       □Available         Not available

       6. Compared with the previous year’s financial report, explanation for the changes of
       accounting policy, accounting estimation and accounting method

       □Available         Not available


       There are no changes of accounting policy, accounting estimation and accounting method
       during the report period.

       7. During the report period, the situation explanation for the correction of major accounting
       errors which need to be retrospect and restated.

       □Available         Not available


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

       8. Compared with the previous year’s financial report, explanation for the changes of
       the consolidated statements scope.

         Available       □Not available

                                                                                                                  38
                                               Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.


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".


9. The appointment and dismissal of certified public accountants

Currently appointed accounting firm

                                          Deloitte Hua Yong Certified Public Accountants Co., Ltd.
Domestic accounting firm          name
                                          (special general partnership)
Reward for domestic accounting firm
                                     195
(CNY‘0000)
Consecutive period for the audit
                                     3
services of domestic accounting Firm
Name of Certified public accountant
for the audit services of domestic Xu Zhaohui, Li Xu
accounting Firm
Overseas accounting firm name (if
                                     -
have)
Reward for overseas accounting firm
                                     0
(CNY‘0000) (if have)
Consecutive period for the audit
                                     -
services of overseas accounting Firm
Name of Certified public accountant
for the audit services of overseas -
accounting Firm

Whether or not to dismiss the accounting firm during the report period

□Yes       No

To employ internal control audit accounting firms, financial adviser or sponsor.

□Available       Not available

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

□Available       Not available

11. Bankruptcy reorganization
□Available     Not available
There is no bankruptcy reorganization during the report period.

                                                                                                      39
                                                Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
12. Material litigation and arbitration

□Available       Not available

There are no material litigation and arbitration during the report period.


13. Penalty and rectification

□Available       Not available

There are no penalties or rectifications during the report period.

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

□Available       Not available

15. Implementation of the Company’s equity inventive plan, employee stock ownership plan
or other employee incentive measures

□Available       Not available

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

16. Significant related transactions

(1) Related transactions in relation to routine operations

  Available     □Not available




                                                                                                       40
                                                                                                                           Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.

                                                                                                      Approved        Whether or
                                                                             Amount of Proportion transaction         not
                                                   Pricing                                                                        Settlement
                           Type      of Content of              Price     of related     in the same quota            exceeds
Related   Interrelationshi                         principle of                                                                   method of Market Date       of Disclosure
                           related      related                 related      transaction kind      of                 the
party     p                                        related                                                                        related     price disclosure index
                           transaction transaction              transaction (CNY         transaction                  approved
                                                   transaction                                                                    transaction
                                                                             ‘0000)     (%)                          transaction
                                                                                                                      credit
                                   Procurement
                       Related     of
Yantai
                       party’s    commodity
Shenma Under the same                            Agreement                                                                                                           http://www.
                       commodity and                       -                     15,389        11.08%       19,000       No      Check        -      2015.04.25
Packing parent company                           price                                                                                                               cninfo.com.cn
                       and labor acceptance
Co., Ltd.
                       transaction of labor from
                                   related party
Total                                                --          --          15,389        --            19,000                   --           --      --            --
Details of rejection of big sales                    No
If a prediction is made to the total amount of routine No
related transactions to occur during this period by
type, what is the actual implementation result during
the report period (if have)
Cause of bigger differences in between transaction The transaction price is fixed in reference to market price, no obvious difference.
price and market reference price (if applicable)




                                                                                                                                                                                  41
                                                                                                      Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.




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

□Available          Not available

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

(3) Related transactions in relation to common foreign investment
□Available       Not available
There are no related transactions in relation to common foreign investment during the report period.

(4) Related current credit and debt

  Available        □Not available

Whether or not exists non-operating related current credit and debt

□Yes         No

There are no non-business related current credit and debt.

(5) Other major related transactions

  Available        □Not available




                                                                                                                                                             42
                                                                                                      Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
   Detailed information about other related routine transactions among the Company, the Company’s controlling shareholder Yantai Changyu Group
   Company Limited and its subsidiaries, please see Part 7 ‘‘Relation Among Related Parties and Their Transactions’’ in the financial statement of this
   report.

  Disclosure website of major related transactions’ temporary reports for related query
Name of                             Disclosure date of                 Disclosure website name
Temporary announcement              Temporary announcement             of temporary announcement

Announcement about 2015               2015.04.28                        Cninf (http://www.cninfo.com.cn)
annual routine related
transactions

   17. Major and important contracts and execution results

   (1) Trusteeship, contract and leasehold issues

     Trusteeship situation

   □Available       Not available

   There is no trusteeship situation during the report period.

     Contract situation

     Available     □Not available

   Contract situation description
   During the report period, about the Company’s contract operation situation, please see ‘‘1. Subsidiary’’ in Annex 5 ‘‘The Consolidation Scope
   of Consolidated Financial Statements’’ in the financial report of this report.

                                                                                                                                                             43
                                                                                                  Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.


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

□Available       Not available

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

  Leasehold situation

  Available    □Not available

Leasehold situation description

On 1st January 2012, the Company renewed the Space Lease Agreement with the controlling shareholder Changyu Group, the Company leased
the space with 57749.77 square meters located at 174 Shihuiyao Road, Zhifu District,Yantai City and the space with 3038 square meters located
at 56 Dama Road, Zhifu District, Yantai City, which are all under the name of controlling shareholder. The rent of the above spaces per year is
CNY 5.858 million with a period of 5 years from 1st January 2012 to 31st December 2016.

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

□Available       Not available

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

(2) Major guarantee

  Available    □Not available

  Guarantee situation


                                                                                                                                                         44
                                                                                                                                              Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
                                                                                                                                                                               Unit: CNY’0000
                       External guarantee of the Company and its subsidiaries(excluding guarantee to subsidiaries)

                    Disclosure date of
                                                                                                                                       Whether      or
                    related                             Actual date of       Actual                                     Whether or
Guarantee object                         Guarantee                                          Guarantee       Guarantee                   not belong to
                    announcement                        occurrence (date guarantee                                      not complete
name                                     quota                                              type            Period                      related-party
                    about guarantee                     of agreement)        amount                                     implement
                                                                                                                                        guarantee
                    quota

HSBC Bank                                                                                                   2014.11.2
(China) Company                                                                                             7-
                    2015.04.28                   12500 2014.11.27                     11991 Pledge                      Yes            No
Limited Qingdao                                                                                             2015.11.2
Branch                                                                                                      6

Total of the external guarantee quota                                        Total of the actual external
approved during the report period                                        0 guarantee amount during                                                  0
(A1)                                                                         the report period (A2)

                                                                             Balance of the actual
Total of the external guarantee quota
                                                                             external guarantee by the
approved by the end of the report                                 12500                                                                          11991
                                                                             end of the report period
period (A3)
                                                                             (A4)

                                                 Guarantee between the Company and subsidiaries

                    Disclosure date of                                                                                    Whether
                                                                                                                                       Whether      or
                    related                             Actual date of       Actual                                       or not
Guarantee object                         Guarantee                                          Guarantee       Guarantee                   not belong to
                    announcement                        occurrence (date guarantee                                        complete
name                                     quota                                              type            Period                      related-party
                    about guarantee                     of agreement)        amount                                       implemen
                                                                                                                                        guarantee
                    quota                                                                                                 t

Total of the guarantee quota approved                                        Total of the actual
                                                                         0                                                                          0
to subsidiaries during the report                                            guarantee amount for

                                                                                                                                                                                                     45
                                                                                                                                       Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
period (B1)                                                                 subsidiaries during the
                                                                            report period (B2)

                                                                            Balance of the actual
Total of the guarantee quota approved
                                                                            guarantee for subsidiaries
to subsidiaries by the end of the report                                0                                                                    0
                                                                            by the end of the report
period (B3)
                                                                            period (B4)

                                                        Guarantee between subsidiaries

                    Disclosure date of                                                                               Whether
                                                                                                                                Whether      or
                    related                            Actual date of       Actual                                   or not
Guarantee object                           Guarantee                                       Guarantee     Guarantee               not belong to
                    announcement                       occurrence (date guarantee                                    complete
name                                       quota                                           type          Period                  related-party
                    about guarantee                    of agreement)        amount                                   implemen
                                                                                                                                 guarantee
                    quota                                                                                            t

                                                                            Total of the actual
Total of the guarantee quota approved
                                                                            guarantee amount for
to subsidiaries during the report                                       0                                                                    0
                                                                            subsidiaries during the
period (C1)
                                                                            report period (C2)

                                                                            Balance of the actual
Total of the guarantee quota approved
                                                                            guarantee for subsidiaries
to subsidiaries by the end of the report                                0                                                                    0
                                                                            by the end of the report
period (C3)
                                                                            period (C4)

                                Total of the Company’s guarantee amount(Total of above three major items)

                                                                            Total of the actual
Total of the approved guarantee quota                                       guarantee amount during
                                                                        0                                                                    0
during the report period(A1+B1+C1)                                        the report period
                                                                            (A2+B2+C2)

Total of the approved guarantee quota                             12500 Balance of the actual                                             11991

                                                                                                                                                                                              46
                                                                                                         Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
by the end of the report period                                            guarantee by the end of the
(A3+B3+C3)                                                               report period(A4+B4+C4)

The proportion of Actual total guarantee amount (A4+B4+C4) in the
                                                                                                         1.59%
Company’s net asset

Among :

The amount of guarantee for shareholders, actual controllers and their
                                                                                                              0
related parties(D)

The amount of debt guarantee for the guaranteed objects whose
                                                                                                              0
asset-liability ratio is more than 70% directly or indirectly(E)

Total amount of guarantee that exceeds 50% of net assets(F)                                                 0

Total amount of the above-mentioned three items(D+E+F)                                                      0

Explanation for undue guarantees that have happened warranty
liability or may take joint payback liabilities during the report period   No
(if have)

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

   Specific explanation on adopting complex guarantee type

       Illegal external guarantee

   □Available               Not available

   There is no illegal guarantee situation during the report period.

   (3) Entrusting others to manage cash assets

                                                                                                                                                                47
                                                                                 Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
  Financial management entrustment

□Available       Not available

There is no financial management entrustment during the report period.

  Loan entrustment

□Available       Not available

There is no loan entrustment during the report period.

(4) Other important contracts

□Available       Not available

There are no other important contracts during the report period.

18. Other explanation of major issues

□Available       Not available

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

19. Major issues of Company’s subsidiaries

□Available       Not available

20. Social Responsibility
                                                                                                                                        48
                                                                                                 Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.


  Available        □Not available

During the report period, considering the fulfillment of the Company’s social responsibility, please see 2015 Annual Social Responsibility Report
disclosed on www.cninfo.com.cn on 29th April 2016.

The listed company and its subsidiaries are whether or not to belong to the heavy pollution industry stipulated by the state environmental
protection department.

□Yes         No      □Not available

21. Related corporation bonds situations

Whether or not the Company has the corporation bonds issued in public, listed in the stock exchange, not due on the annual report’s authorized issue
date or failed to pay in full on the due date.

No




                                                                                                                                                        49
                                                                                              Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.

                                     VI. Changes in Shares and the Shareholders’ Situation

1. Changes in shares

(1) Changes in shares

                                                                                                                               Unit: share
                            Amount before this change                                 Change (+, -)                     Amount after this change
                                                                                Transfer
                                               Percentage Allot   Distribute    other                                                     Percentage
                            Amount                        new                   capital to others Sub total             Amount
                                               %                  bonus share                                                             %
                                                          share                 share
                                                                                capital
1、Unrestricted shares      685,464,000        100%                                                                     685,464,000       100%

(1)、A shares               453,460,800        66.15%                                                                   453,460,800       66.15%

(2)、B shares               232,003,200        33.85%                                                                   232,003,200       33.85%

2、Total shares             685,464,000        100%                                                                     685,464,000       100%

Cause of share change


□Available         Not available


Approval of share change


□Available         Not available
Transfer of changed shares
                                                                                                                                                     50
                                                                                                 Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.



□Available       Not available


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


□Available       Not available


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


□Available       Not available


(2) Changes in restricted shares


□Available       Not available


2. Securities issuance and listing situation


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


□Available       Not available
(2) Explanation of change in Company’s total shares and shareholding structure and change in Company’s assets and liability structure


                                                                                                                                                        51
                                                                                              Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
□Available      Not available


(3) Current employee shares


□Available      Not available


3. Situation for shareholders and the actual controllers

(1) The number of shareholders of the Company and the shareholdings
                                                                                                                                         Unit:share
                                                                                                       Total number of preferred
                             Total      number       of           Total number of preferred
                                                                                                       shareholder recovering
                             shareholders by the end of           shareholder recovering
Total shareholders in                                                                                  voting power by the end of
                      36,963 last month before the 36502          voting power by the end 0                                             0
the report period                                                                                      last month before the
                             disclosure day of the                 ofreport period (if have)
                                                                                                       disclosure day of the annual
                             annual report                         (see note 8)
                                                                                                       report (if have) (see note 8)
                                Shareholders holding more than 5% or the top 10 shareholders holding situation
                                                                                                    Number                 Pledged or frozen
                                                                                        Changes
Name               of                                Percentag Shares held until the during the of            Number of
                      Character of shareholders      e                                              restricte unrestricted
Shareholders                                                   end of the report period report                             Share status Amount
                                                     (%)                                            d         shares
                                                                                        period
                                                                                                    shares
YANTAI
              Domestic       non-state-owned                                                                     345,473,85
CHANGYU GROUP                                50.4%             345,473,856             0             0                                          0
              legal person                                                                                       6
CO. LTD.
GAOLING       Foreign legal person
                                             3.11%             21,300,919              -2,876,078 0              21,300,919                     0
FUND,L.P.
                                                                                                                                                     52
                                                                                    Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
CHINA                 State-owned legal person
SECURITIES                                            2.33%      15,997,455   15,997,455 0             15,997,455                     0
FINANCE CORP
BBH    BOS   S/A
FIDELITY FD - Foreign legal person                    2.27%      15,576,126   -530,200     0           15,576,126                     0
CHINA FOCUS FD
GREENWOODS
CHINA     ALPHA Foreign legal person                  1.26%      8,617,471    8,617,471    0           8,617,471                      0
MASTER FUND
GOLDEN CHINA
                 Foreign legal person                 1.08%      7,389,916    5,415,971    0           7,389,916                      0
MASTER FUND
NORGES BANK      Foreign legal person                 0.83%      5,698,452    1,187,206    0           5,698,452                      0
CENTRAL HUIJIN
ASSET
                 State-owned legal person             0.69%      4,761,200    4,761,200    0           4,761,200                      0
MANAGEMENT
LTD.
GUOTAI JUNAN
SECURITIES
                 Foreign legal person                 0.68%      4,669,572    1,188,656    0           4,669,572                      0
(HONGKONG)
LIMITED
FUGUO REFORM
POWER MIXED
                 Domestic non-state-owned
SECURITIES                                            0.58%      4,000,000    4,000,000    0           4,000,000                      0
                 legal person
INVESTMENT
FUNDS

Strategic investors or legal result of the placement of new
                                                            No
shares to become a top 10 shareholders(if have)(see note 3)
                                                                                                                                           53
                                                                                                  Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
                                                           Among the top 10 shareholders, Yantai Changyu Group Company Limited has no
The explanation for the associated relationship and
                                                           associated relationship or accordant action relationship with the other 9 listed shareholders,
accordant action
                                                           and the relationship among the other shareholders is unknown.
                                                   The top 10 shareholders with unrestricted shares
                                                                                   Number of unrestricted Type of share
Name of Shareholders                                                               shares held until the end of
                                                                                                                Type of share            Amount
                                                                                   the year
YANTAI CHANGYU GROUP CO. LTD.                                                      345,473,856                  A                        345,473,856
GAOLING FUND,L.P.                                                                  21,300,919                   B                        21,300,919
CHINA SECURITIES FINANCE CORP                                                      15,997,455                   A                        15,997,455
BBH BOS S/A FIDELITY FD - CHINA FOCUS FD                                           15,576,126                   B                        15,576,126
GREENWOODS CHINA ALPHA MASTER FUND                                                 8,617,471                    B                        8,617,471
GOLDEN CHINA MASTER FUND                                                           7,389,916                    B                        7,389,916
NORGES BANK                                                                        5,698,452                    B                        5,698,452
CENTRAL HUIJIN ASSET MANAGEMENT LTD.                                               4,761,200                    A                        4,761,200
GUOTAI JUNAN SECURITIES (HONGKONG) LIMITED                                         4,669,572                    B                        4,669,572
FUGUO REFORM POWER MIXED SECURITIES INVESTMENT FUNDS                               4,000,000                    A                        4,000,000
The explanation for the associated relationship and accordant action of the top 10 Among the top 10 shareholders, Yantai Changyu Group Company
shareholders with unrestricted shares, the the associated relationship and Limited has no associated relationship or accordant action
accordant action between the top 10 shareholders with unrestricted shares and the relationship with the other 9 listed shareholders, and the relationship
top 10 shareholders                                                                among the other shareholders is unknown.
Explanation for the top 10 shareholders who involved in financing activities and The top 10 shareholders do not involve in financing activities and
stock trading business                                                             stock trade business.
Whether or not the Company’s top 10 common shareholders and shareholders with unrestricted shares take agreed repurchase trading during the
report period


□Yes       No

                                                                                                                                                         54
                                                                                               Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
There is no agreed repurchase trading taken by the Company’s top 10 common shareholders and shareholders with unrestricted shares during the
report period.

(2) Situation for the controlling shareholders of the Company

Property of holding shareholders
Type of holding shareholders: Legal representative
                                              Legal               Establishment Organization
Name of controlling shareholder                                                                Main business
                                              representative      date          code
                                                                                               Production and distribution of wine,
                                                                                               healthy liquor, distilled liquor and
                                                                                               non-alcohol beverages, planting of
Yantai Changyu Group Co. Ltd.                    Sun Liqiang      1997.04.27    26564582-4
                                                                                               agricultural products and export
                                                                                               business under the scope of
                                                                                               permission.
Equity situation for the other domestic listed

companies controlled or shared by the
                                                 No.
controlling shareholders during the report

period

Changes in the controlling shareholder during the report period


□Available       Not available

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


                                                                                                                                                      55
                                                                                                    Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.

  (3) Situation for the actual controllers of the Company

  Property of actual controllers: domestic other institutions; foreign other institutions
  Type of actual controllers: Legal representative
Name        of      actual Legal          Establishment Organization
                                                                     Main business
controllers                representative date          code
                                                                     Under state permission, property investment, tenancy of machine and facility,
Yantai Yuhua Investment                                              wholesale and retail of construction material, chemical products (chemical
                           Jiang Hua      2004.10.28    76779294-7
& Development Co. Ltd                                                hazard products excluded), hardware and electronical products, grape
                                                                     plantation.
                                                                     Directly or indirectly conduct the production and distribution of food
ILLVA Saronno Holding Philippe LE                                    products (alcoholic products included) as well as industrial, commercial,
                                          1984.07.25    -
Spa                        HOUEROU                                   financial and service activities of any other kinds through joint-stock
                                                                     companies and organizations
                                                                     International Finance Corporation is one of the members of World Bank,
                                                                     mainly dedicated to investment in private sectors of developing countries
International     Finance                                            while providing technical support and consultation service. The corporation
Corporation                Cai Jinyong 1956.07.25       -           is a multilateral financial institution that ranks first in the world in terms of
                                                                     providing capital stock and loans to developing countries. Its purpose is to
                                                                     promote sustainable investments of private sectors of developing countries in
                                                                     order to alleviate poverty and improve people’s life.
                                                                     Operating management of state-owned property right (stock right) authorized
                                                                     by State-owned Assets Supervision and Administration Commission of
Yantai           Guofeng                                             Yantai Municipal Government; Financing, investment and operating
Investment Holdings Co., Chen Dianxin 2009.02.12        00426068-6 management of government projects, such as strategic investment and
Ltd                                                                  industrial investment and so on; Capital operation (including acquisition,
                                                                     reintegration and transfer, etc) of state-owned property right and state-owned
                                                                     stock right within the scope of authorization; Venture capital investment
                                                                                                                                                           56
                                                                                                     Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
                                                                         business; Agency of venture capital investment business of other venture
                                                                         investment enterprises or individuals; Participation in the establishment of
                                                                         venture capital investment enterprises and venture capital investment
                                                                         management consultant institutions; Investment and financing service
                                                                         business; Investment and financing consultant business; Other business
                                                                         authorized by State-owned Assets Supervision and Administration
                                                                         Commission of Yantai Municipal Government.(Projects need to be
                                                                         authorized in accordance with the law could carry out business activities only
                                                                         after the approval of relevant departments )
Equity situation for the
other domestic listed
companies controlled by No
the actual controller
during the report period
  Changes of the actual controllers during the report period

  □Available       Not available

  There are no changes in actual controllers during the report period.




                                                                                                                                                            57
                                            Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.

Introduction for property right and control relations between the Company and its actual
controllers




                                                                                           Yantai Guofeng Investment
                                                              Illva Saronno Holding Spa    Holdings Co., Ltd




Actual controller controls the Company through a trust or other asset management ways
□Available      Not available
(4) Other institutional shareholders holding more than 10% shares
□Available      Not available
(5) Shares reduction situations of holding shareholders, actual controllers, restructuring
side and other commitment subjects
□Available      Not available




                                                                                                   58
                                              Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.

                   VII. Related Situation of Preferred Shares
□Available       Not available
There are no preferred shares during the report period.




                                                                                                     59
                                                                                             Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.



                         VIII. Situation for Directors, Supervisors, Senior Management and Staffs


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

                                                                                  Shares Increased
                                                                                                   Decreased
                                                         Beginning Ending held at the shares                    Other     Shares held at
                                                                                                     shares
    Name             Post            Status   Gender Age date of the date of the beginning during             changes of the end of the
                                                                                                   during the
                                                            post        post       of the   the               shares held    period
                                                                                                     period
                                                                                   period  period
              Chairman to the      present
Sun Liqiang                                  M       68   2013.05.14. 2016.05.13         0            0            0              0                     0
              Board of Directors   incumbent
              Vice-chairman to
Zhou          the Board of         present
                                             M       51   2013.05.14. 2016.05.13         0            0            0              0                     0
Hongjiang     Directors and        incumbent
              general manager
              Director and         present
Leng Bin      vice-general                   M       53   2013.05.14. 2016.05.13         0            0            0              0                     0
              manager              incumbent
              Director,
              Vice-general         present
Qu Weimin     manager and                    M       58   2013.05.14. 2016.05.13         0            0            0              0                     0
              Secretary to the     incumbent
              Board of Directors
                                   present
Chen Jizong   Director                       M       40   2013.05.14. 2016.05.13         0            0            0              0                     0
                                   incumbent
Augusto                            present
              Director                       M       75   2013.05.14. 2016.05.13         0            0            0              0                     0
Reina                              incumbent
Aldino        Director             present    M      63   2013.05.14. 2016.05.13         0            0            0              0                     0
Marzorati
                                                                                                                                                    60
                                                                                   Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
                                incumbent
Antonio                         present
             Director                        M   77   2013.05.14. 2016.05.13   0            0            0              0                     0
Appignani                       incumbent
                                present
Dai Hui      Director                        F   50   2014.05.23 2016.05.13                                                                   0
                                incumbent
             Independent        present
Xiao Wei                                     M   55   2013.05.14. 2016.05.13   0            0            0              0
             director           incumbent
Wang         Independent        present
                                             M   51   2014.05.23 2016.05.13                                                                   0
Zhuquan      director           incumbent
                                Present
Wang Shigang Independent                     M   50   2013.05.14. 2016.05.13   0            0            0              0
             director           incumbent
              Chairman for the present
Kong          Board           of             M   43   2013.05.14. 2016.05.13   0            0            0              0                     0
Qingkun                          incumbent
              Supervisors
                                 present
Zhang Lanlan Supervisor                      F   46   2013.05.14. 2016.05.13   0            0            0              0                     0
                                 incumbent
                                 present
Guo Ying      Supervisor                     F   41   2013.05.14. 2016.05.13   0            0            0              0                     0
                                 incumbent
              Vice-general       present
Yang Ming                                    M   57                            0            0            0              0                     0
              manager            incumbent
                                 present
Li Jiming     Chief engineer                 M   49                            0            0            0              0                     0
                                 incumbent
              Vice-general       present
Jiang Hua                                    M   52                            0            0            0              0                     0
              manager            incumbent
              Vice-general       present
Sun Jian                                     M   49                            0            0            0              0                     0
              manager            incumbent
                                 present
Jiang Jianxun Finance manager                M   49                            0            0            0              0                     0
                                 incumbent

                                                                                                                                          61
                                             Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
2. Changes in the Company’s directors, supervisors and senior management

Name           Position        Type                      Date                         Reason
-              -               Leave post owing to                                    -
                               expiration of the term of
                               office

3. Situation for work experience
The professional background, main work experiences and present positions of the Company’s
directors, supervisors and senior management
The main work experiences of the Company’s directors, supervisors and senior management
in the recent 5 years
(1) Members of Board of Directors
Mr. Sun Liqiang, a college graduate and senior economist, was the representative of 10th and
11th National People’s Congress. Now he is the Party Secretary, Chairman and General
Manager of Changyu Group. He began serving as chairman of the Company on September
18th , 1997 and has held the position ever since.
Mr. Zhou Hongjiang, a doctoral graduate and senior engineer, now is the vice chairman of
Changyu Group ,and the representative of 12th National People’s Congress. He began serving
as general manager of the Company on December 28th , 2001, Director, Vice Chairman and
concurrently as General Manager of the Company on May 20th , 2002, he has held the
position ever since.
Mr. Leng Bin, a postgraduate and senior accountant and now is the Director of Changyu
Group. He began serving as a director of the Company on June 15th, 2000 and held the
position ever since.
Mr. Qu Weimin, a bachelor of engineering and senior economist, has been serving as director,
vice General Manager and concurrently as Secretary to the board of directors of the Company
since September 18th , 1997.
Mr. Chen Jizong, a university graduate, the qualifications of statistician and accountant, now
is the union director of property management department of SASAC Yantai and Director of
Changyu Group. He has been director of the Company since May 13th 2010.
Mr. Augusto Reina is serving as chief executive officer of several companies including Illva
Saronno Holding SpA and Illva Saronno Investment SRL, member of the board of directors
of Barberini Spa, director of Federvini (Italian Alcohols Production and Export Association),
director of Istituto Del Liquore (Wine Research Institute), director of Assovini (Sicily
Viniculture and Wine Production Association) and director of Changyu Group. He has been
director of the Company since April 27th, 2006.
Mr. Aldino Marzorati, a university graduate, is the General Manager of Illva Saronno
Holding SpA and director of the board of directors of some branches under the group
company and the director of Changyu Group. He has been director of the Company since
April 27th, 2006.
Mr. Antonio Appignani, a university graduate, is vice chairman of Italian Business
Consultation Committee, chief of Professional Ethics Committee, teacher of vocational
training course of Industrial and Commercial Consultation Committee, member of Economic
and Commercial Committee of the public university “G. D Annunzio” and concurrently
                                                                                                    62
                                             Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
serving as member of the board of directors of different companies and member of the board
of directors of several companies under Illva Group and the director of Changyu Group. He
has been director of the Company since April 27th, 2006.
Mr. Dai Hui, born in 1965, MBA, former project manager of Government Transfer Loan
Department in China FOTIC (staying in Beijing), former manager assistant of High Net
Worth Center in First Pacific Bank (staying in Hongkong), representative of Rabobank
Beijing Office (staying in Beijing) and chief representative of Rabobank Beijing Office
(staying in Beijing), is now consultant of IFC, director of Changyu Group Company and
director of Listed Company.
Mr. Xiao Wei, a postgraduate and a lawyer, now is the partner of Jun He Law Office. He has
been serving as independent director of the Company since September 1st, 2010.
Mr. Wang Zhuquan, doctor of management (accountancy), first batch of national accounting
academic leading personals of Financial Department, the entrant of accountant master
cultivation project of Financial Department, Government Special Allowance expert, acted as
independent director from 13th May 2010 to 12th May 2013. Now he is the professor and the
doctoral supervisors of the Ocean University of China as well as independent director of
some listed companies which could be exemplified as Qingdao DoubleStar Co., Ltd. He acts
as the independent director of the Company again from 23rd May 2014.
Mr. Wang Shigang, MBA and qualification of China Certified Public Accountant, now is the
board chairman of Shandong Tianhengxin Construction Cost Consultion Co. Ltd., He
previously served as independent director of the Company. He acts as the independent
director again from 14th May 2013.
(2) Members of board of supervisors
Mr. Kong Qingkun, MBA and economist, used to be the section member of production
department in the healthy liquor branch; the clerk and vice manager of general manager
office, now he is the manager of general manager office.
Ms. Zhang Lanlan, a university graduate and economist, used to be vice-manager of
import/export company, manager of import department; she is manager of board of directors
office now.
Ms. Guo Ying, a university graduate and senior accountant, used to be the member of
financial audit department of Yantai Yiqing Industry Company; senior staff of operating
supervision department of SASAC Yantai, senior staff and vice director of directors &
supervisor office; now she is vice director of directors & supervisor office of SASAC Yantai.
(3) Other senior managers
Mr. Yang Ming, a university graduate and applied researcher, has been serving as Vice
General Manager of the Company since August 12th, 1998.
Mr. Li Jiming, a doctor and applied researcher, has been serving as Chief Engineer of the
Company since September 14th, 2001.
Mr. Jiang Hua, a postgraduate and senior engineer has been serving as Vice General Manager
of the Company since September 14th, 2001.
Mr. Sun Jian, an MBA and economist, has been serving as Vice General Manager of the
Company since March 22nd, 2006.
Mr. Jiang Jianxun, an MBA and accredited accountant, has been serving as Financial
Manager of the Company since May 20th, 2002.


                                                                                                    63
                                                                                               Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.

Post in the shareholder’s company

    Available      □Not available
                                                                                                                                  Paid by
                                                                                     Beginning date Ending date of
                Name                       Shareholder’s Company         Post                                                 shareholder’s
                                                                                       of the post     the post
                                                                                                                              company or not
                                                                   Chairman     and
Sun Liqiang                          Yantai Changyu Group Co. Ltd. general manager 2013.10.08           2017.10.07          No

Zhou Hongjiang                       Yantai Changyu Group Co. Ltd. Vice chairman    2013.10.08          2017.10.07          No

Li Jiming                            Yantai Changyu Group Co. Ltd. Director         2013.10.08          2017.10.07          No

Sun Jian                             Yantai Changyu Group Co. Ltd. Director         2013.10.08          2017.10.07          No

Chen Jizong                          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

Aldino Marzorati                     Yantai Changyu Group Co. Ltd. Director         2013.10.08          2017.10.07          No

Antonio Appignani                    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 for the post in the
                                     No.
shareholder’s company

Post at other companies

 √ Available    □ Not Available
                                                                                            Beginning Ending date of           Paid by other
                Name                         Other’s Company       Post at other company
                                                                                            date of the  the post             company or not

                                                                                                                                                      64
                                                                                                  Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
                                                                                                 post
                                    Yantai   Changyu     Zhongya
                                                                   Director and
Leng Bin                            Medicine & Healthy Liquor Co.,                           2012.09.10                        No
                                                                   legal representative
                                    Ltd
Explanation for the post in the
                                    No.
shareholder’s company
Disciplinary actions taken by securities regulators in recent 3 years to the Company’s directors, supervisors and senior management both on the
job and left during the report period

□Available       Not available

4. Salary of directors, supervisors and senior management

Decision-making process, the basis for determining, the actual payments of directors, supervisors and senior management
The salary for the independent directors is paid according to the resolution of shareholders’ meeting. The salary for the chairman, directors with
administration duty, supervisors, managers and other senior management should be paid on basis of the evaluation result according to the
Proposal on Assessment Methods of the Company’s Senior Officers’ Performance from 2014 to 2017 which was passed during the Board of
Directors’ meeting.

Salary of directors, supervisors and senior management during the report period
                                                                                                                                Unit: CNY’0000
                                                                                                                                 Whether get
                                                                                                             Total reward from
                                                                                                                                 reward from
           Name                             Post                   Gender         Age         Status           the company
                                                                                                                               related parties of
                                                                                                                 before tax
                                                                                                                                 the company
                             Chairman to the Board of M
Sun Liqiang                                                                          68 present incumbent                       135 No
                             Directors
                             Vice-chairman to the Board of M
Zhou Hongjiang                                                                       51 present incumbent                       135 No
                             Directors and general manager
                                                                                                                                                         65
                                                                     Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
                    Director    and     vice-general M
Leng Bin                                                 53 present incumbent                       95 No
                    manager
                    Director, Vice-general manager
Qu Weimin           and Secretary to the Board of M      58 present incumbent                       94 No
                    Directors
Chen Jizong         Director                       M     40 present incumbent                         0 No

Augusto Reina       Director                       M     75 present incumbent                         0 No

Aldino Marzorati    Director                       M     63 present incumbent                         0 No

Antonio Appignani   Director                       M     77 present incumbent                         0 No

Dai Hui             Director                       F     50 present incumbent                         0 No

Xiao Wei            Independent Director           M     55 present incumbent                         5 No

Wang Zhuquan        Independent Director           M     51 present incumbent                         5 No

Wang Shigang        Independent Director           M     50 present incumbent                         5 No
                    Chairman for the Board of M
Kong Qingkun                                             43 present incumbent                       66 No
                    supervisors
Zhang Lanlan        supervisor                     F     46 present incumbent                       19 No

Guo Ying            supervisor                     F     41 present incumbent                         0 No

Yang Ming           Vice-general manager           M     57 present incumbent                       88 No

Li Jiming           Chief Engineer                 M     49 present incumbent                       85 No

Jiang Hua           Vice-general manager           M     52 present incumbent                       95 No

Sun Jian            Vice-general manager           M     49 present incumbent                       83 No

Jiang Jianxun       Finance manager                M     49 present incumbent                       66 No

                                                                                                                            66
                                                                                                  Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.

Total                                       -                      -           -              -                                 976             -

The awarded equity incentives for the directors, supervisors and senior management of the Company during the report period

□Available       Not available


5. Staff of the Company
(1) Staff number, specialty constitution and education degree

Incumbent staff number of parent company (people)                                                                                                    1,845
Incumbent staff number of major subsidiary companies (people)                                                                                        3,155
Total incumbent staff (people)                                                                                                                       5,000
Total staff getting paid in current period (people)                                                                                                  5,000
Retired staff number whose expenses are undertaken by parent                                                                                             0
company or subsidiary companies (people)
                                                          Specialty constitution
                                 Category                                                    Number of people (people)
Production staff                                                                                                                                     1,434
Sales staff                                                                                                                                          2,563
Technical staff                                                                                                                                        194
Financial staff                                                                                                                                        190
Administrative staff                                                                                                                                   619
Total                                                                                                                                                5,000
                                                             Education degree
                                 Category                                                            Number (People)
Bachelor and above                                                                                                                                   1,324
Junior College                                                                                                                                       2,299
        Technical secondary school                                                                                                                     791

                                                                                                                                                         67
                                                                                                 Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.


Senior high school and below                                                                                                                          586
Total                                                                                                                                               5,000

(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 pay the staff’s remuneration timely. With the increase
of the Company’s profitability, the Company steadily improves the staff’s remuneration and welfare, and provides the competitive salary income
and development space of equal opportunity for staff.

(3) Training plan

In order to further improve the employees’ comprehensive quality and professional skill, the 2016 training plan for the Company’s major
employee is shown as follows:
① Senior and 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-level managers’ 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 topic in each quarter and one to two days
for each topic.
Secondly, it is professional training. Based on personnel 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 the Company’s professional management department
for safety, technology, equipment, finance and tourism and so on, no less than twice a year.
② Section Chief and Ordinary Staff Members
                                                                                                                                                        68
                                                                                                  Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
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 product knowledge which should be
known 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 the company’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 the Company’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 the Company’s management system, product knowledge and
sales responsibility system.
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 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 the company’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 for each time.


(4) Labor outsourcing

□Available       Not available


                                                                                                                                                         69
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                             IX. Corporate Governance

1. Current Corporate Governance Situation of the Company

The Company has, according to relevant national laws and rules including the Company Law
of the People’s Republic of China, Securities Law of the People’s Republic of China,
Guidelines on Corporate Governance of Listed Companies, Listing Guidelines at Shenzhen
Stock Exchange and also other laws and rules issued by CSRC and Shenzhen Stock
Exchange, and combining the own actual situation, established Articles of Associations and
other internal governance regulations, constantly improved its legal entity structure and
internal management rules, legally conducted its activities and strengthened the information
disclosure. The Company’s governance structure is in accord with requirements of relevant
regulatory documents on listing company’s governance issued by CSRC.
(1)、About shareholders and shareholders’ meeting
The Company has already set up the Deliberation Rules of Shareholders’ Meeting, and
convened the shareholders’ meetings in strict accordance with requirements of standard
opinion of shareholders’ meeting, made the great effort to provide convenient conditions for
more shareholders to participate the shareholders’ 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 the shareholders’
inquiry and questions, and widely listened to the suggestions and comments from
shareholders.
(2)、About the Company 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 the
shareholders’ meeting to directly or indirectly interfere with the decision-making and
business activities of the Company, or occupied any assets of the Company which damaged
the Company’s and medium & small shareholders’ interests.
(3)、About the director and board of 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 already carried out the cumulative voting system. At present, the Company has
three independent directors accounting for one fourth of all directors, and the number and
composition of board of directors was basically in accord with requirements of regulations
and also Articles and Associations. All directors of the Company could work in the light of
regulations including Rules of Board of Directors’ Procedure and Working Rules for
Independent Directors, punctually attended board of directors’ and shareholders’ 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

                                                                                                     70
                                               Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
performed their duties according to the law and regulations. The Board of Directors
convened the meetings in accordance with related rules and regulations.
(4)、About supervisor and board of supervisors
The Company strictly elected all supervisors in light of Company Laws and Articles of
Associations. At present, board of supervisors has three people among which one supervisor
is representative for staff, the number and composition of board of supervisor was in accord
with requirements of regulations and rules. All supervisors of the Company could follow the
requirement of Rules of Board of Supervisors’ Procedure, insist the principle of
responsibility to all shareholders, seriously perform their duties, effectively supervise and
present their independent opinion on important issues, interrelated deals, financial status, the
duty performance of directors and managers of the Company.
(5)、 About performance evaluation and incentive system
The engagement of managers was open and transparent, and accorded with laws and
regulations. The Company has established and gradually improved the performance
evaluation standard and formed efficient incentive system, so as to ensure the salary of staff
to be linked with job performance.
(6)、 About the party with relevant benefit
The Company could fully respect and safeguard the legal rights of the party with relevant
benefit, cooperate actively with the stakeholders, jointly drive the Company to develop
continually and stably, pay great attention to the issues such as local environmental
protection and public utilities etc., and assume full responsibilities for the social
responsibility.
(7)、 About the information disclosure and 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 of shareholders’ visit and consultation. The Company has also
assigned China Securities Newspaper, Securities Times, Honkong Commercial Daily and
web site http://www.cninfo.com.cn/ to disclose information, punctually, accurately and truly
disclosed any information in the light of requirement of relevant laws and rules, and also
ensured all shareholders to have same opportunity to acquire any information.
In order to further perfect the Company’s governance system, during the report period, the
Company formulates Evaluation and Management Methods of Self-supporting Vineyards in
2015, Management Methods of Self-supporting Bases in Yantai, Changyu Company
Examination and Evaluation Methods of Contractual Base in 2015, Management Methods of
Overseas Enterprises, Evaluation Methods of SAP operating maintenance staff in
information management department, Opinions of Strengthening the construction of
Provincial and City-level Manager Team, and Opinions of Currently Strengthening Human
Resource Management, etc. In addition, the Company also modify and improve some
management systems, such as Management Methods of Labor Contract and Opinions of Staff
Training at All Levels in Both Production And Organ Systems, etc.

Whether or not there is significant variance between the Company’s actual situation of
corporate governance and the normative documents about listed company governance issued
by China Securities Regulatory Commission.
□Yes       No

                                                                                                      71
                                              Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
There is no significant variance between the Company’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 and finance

(1) 、 Personnel Arrangement: the Company’s general manager, vice general managers and
other senior officers, all of whom were paid by the Company did not hold any post in the
controlling parties. The Company was entirely independent in personnel arrangement,
conclusion and adjustment of labor contracts thanks to its sound and independent system 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 or individuals’ liabilities or any
other legal persons or natural persons. The Company has already transferred free the
trademarks to the Company including “黄金冰谷”, “爱斐堡”, “爱菲堡”, “爱斐” and “AFIP”,
etc. However, due to some issues from the past, the Company permitted to use “Changyu” etc
the intangible assets such as part of trademark ownership and patent still held by the
controlling shareholders.
(3)、Finance: The Company has independent finance department, chief account and financial
staff, and also complete, independent and standardized accounting system. The Company has
also established its own bank accounts, duly and legally paying taxes, workers insurance fund.
All financial individuals do not hold any concurrent posts in associated companies and are
able to make financial decisions independently. The Company has its own audit department,
which is especially responsible for the internal audit work of the Company.
(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 shareholder in terms of supply and sales by proxy nor competition with
the other.

Progress of the Company’s special activities in terms of corporate governance as well as
formulation and implementation of inside information source registration and management
rules
In order to strengthen management of inside information source and prevent occurrence of
backstage deals, the Company’s 5th session of Board of Directors’ 10th meeting deliberated
                                                                                                     72
                                                   Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
    and passed the Inside Information Source Registration and Management Rule on April 18,
    2012. The founding of the system standardized the approval process of insid e information
    reporting, defined the scope of inside information source, and set up a prevention and
    punishment mechanism of inside information. During the report period, the Company has
    strictly managed staffs who contact with inside information Source against material inside
    information of the sensitive disclosure etc such as reporting information insiders’ registration,
    and informing timely to supervisory department. During the report period, there were no in
    the Company the information insiders’ transactions of the Company’s shares by taking
    advantage of the sensitive inside information that affects the Company’s share price before it
    was disclosed and no supervisory departments’ punishment records, either.

    3. Situation for Horizontal Competition

    □Available       Not available

    4. Information for the shareholders’ meeting and temporary shareholders’ meeting held
    during the report period

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

                              Participation      Convening        Disclosure
Session        Meeting type                                                         Disclosure Index
                              ratio of investors date             date
Notice of 2014
 Annual        Annual                                                               http://www.cninfo.com.
Shareholders’ shareholders’ 62.32%            2015.05.22        2015.05.23        cn/finalpage/2015-05-23
Meeting        meeting                                                              /1201050607.PDF
Resolution

     (2) Request for convening temporary shareholders’ meeting by priority shareholders
    owing recovered voting right

    □Available       Not available

    5. Performance of independent directors during the report period

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

    Attendance of independent directors for the board of directors
                                                                       Whether     or
                                                                       not to attend
                  Required
                             Personal Communication Authorized         the meetings
    Name          attendance                                   Absence
                             attendance attendance  attendance         personally for
                  time
                                                                       successive
                                                                       twice

                                                                                                          73
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Wang
                        4          3                   1               0           0 No.
Zhuquan
Xiao Wei                4          1                   1               2           0 No.
Wang
                        4          3                   1               0           0 No.
Shigang
Attendance    time     of
independent directors for
                                                                                                        1
the        shareholders’
meeting
Explanation for not personally attending the Board     of Directors’ meetings for successive
twice

No

(2) Any objections for the Company’s projects from the independent directors
Whether or not the independent directors raised any objections for the Company’s projects.
□Yes       No
During the report period, the independent directors did not raise any objections for the
Company’s projects.
(3) Other explanations on independent directors’ performance
The independent directors’ propositions are accepted by the Company or not
  Yes □No
Explanation on acceptance or refusal of the independent directors’ propositions
Independent directors propose suggestions on enhancing the feasibility study of investment
projects. The Company has organized many times both domestic and foreign experts to make
study to major investment projects repeatedly and to demonstrate many times, laying
foundation for board of directors’ scientific decision.

6. Performance of the special committees under the Board of Directors during the
report period
(1) Summary report of the Board of Directors’ Audit Committee
1 On March 23th , 2015, 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 the
Company’s 2014 Annual Report who expounded the main standards, main emphasis audited
field, the problems and the matters necessary to adjust that were found during the auditing.
We’ve noticed that the Company has adjusted the matters as the accountants suggested. On
the basis of our communication with the accountants, the production and operation results
that the Company’s management reported to us as well as the progress of important events,
we believe that we have no objection to the Company’s 2014 Annual Financial Statement
preliminarily examined by Deloitte Hua Yong Certified Public Accounts Co., Ltd. and the
preliminary audit opinions of that Services.”
2 On 26rd April 2015, the Board of Directors’ Audit Committee deliberated and passed 2014
Annual Auditing Report, Proposal on 2014 Annual Profit Distribution, Proposal on

                                                                                                    74
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Appointment for Certified Public Accountants Firm, 2014 Annual Self Assessment Report on
the Company's Internal Control and 2015 Annual Internal Audit Plan issued by Deloitte Hua
Yong Certified Public Accounts Co., Ltd.
All of committee members unanimously agree to submit the above proposals to the
Company’s 6th Session Board of Directors’ 4th Meeting for deliberation.
The meeting reached the following consensus:
(A) The clean-opinion auditing report on the Company’s 2014 Annual Financial Statement
issued by Deloitte Hua Yong Certified Public Accounts Co., Ltd reflects the Company’s
financial condition, operating results and cash flow truly, objectively and correctly.
(B) The profit distribution scheme that the Company formulated is relatively acceptable,
taking the shareholders’ interest into account while paying attention to the Company’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
Company’s 2014 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 2015 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, Deloitte will take the audit of 2015 annual financial report and issue a Financial
Audit Report. On the other hand, Deloitte will take the audit of 2015 annual internal control
audit and issue an Internal Control Audit Report.
The annual auditing fee for the above parts are CNY 1.95million, including travel expense
and all service charges.
(D) The Company’s 2014Annual Self Assessment Report on the Company's Internal Control
has truly and objectively mirrored out the present standing of the Company’s internal control
and can basically ensure the effective implementation of its policies and realization of its
strategic goals.
(E) The Company’s 2015 Annual Internal Audit Plan is comparatively perfect and practicable,
based on which the Company’s Audit Department will conduct the 2015 annual internal
audit.
3 On 26th August 2015, the Board of Directors’ Audit Committee deliberated and passed
2015 Semiannual Report and 2015 Semiannual Profit Distribution. The meeting reached the
following consensus:
The Company’s 2015 Semiannual Financial Statements reflected the Company’s financial
condition, operating results and cash flow truly, objectively and correctly.
As the Company just realized 2014 Annual Profit Distribution Scheme in middle July, we
propose neither to distribute profits for the first half of 2015 nor to increase the Company’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
suggestion to be reasonable.
All of Committee members unanimously agree to submit the above proposals to the
Company’s 6th Session Board of Directors’ 10th Meeting for deliberation.
(2) Summary report of the Board of Directors’ Emolument Committee
The Board of Directors’ Emolument Committee is responsible for assessment of the
economic responsibilities of the directors and the senior managers who receive salaries from
                                                                                                     75
                                              Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
the Company and examination of the salary policy and scheme designed for the Company’s
directors and senior managers.
1 Propose on Company’s 2014 Annual Senior Executive’s Performance Assessment Results
was deliberated and passed by the Board of Directors’ Emolument Committee on 26th April
2015, who thought that this document was in compliance with Performance Assessment
Methods for Company’s Senior Executive from 2014 to 2017 approved by the Company’s 6th
Session Board of Directors’ 4th Meeting.
All committee members unanimously agree to submit the above proposals to the Company’s
6th Session Board of Directors’ 8th Meeting for deliberation.
2During the report period, the Board of Directors’ Emolument Committee also examined the
2014 annual payroll records of the directors and the senior managers who receive salaries
from the Company. The committee believes that the Company’s directors, supervisors and
senior managers got paid completely in line with the processes of the Company’s economic
responsibility assessment system and the salaries the Company made public were in
conformity with the actually paid amount.

7. The work of the Board of Supervisors
During the report period, whether the board of supervisors found any existence of risk for the
Company during their oversight activities.
□Yes       No
During the report period, the board of supervisors has no objection during their oversight
activities.

8. Performance Evaluation and Incentive to Senior Management

The Company has already established a sound system for evaluation of achievement of senior
management and the related incentive system which linked the reward with the Company’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 the Company’s annual production and business goals, this committee
examined senior personals and also their responsible subsidiaries or departments according to
their management achievement and index, and took these as a criteria of awards or penalties.
During the report period, because of not finishing the annual business plan deliberated and
passed in the Board of Directors’ meeting at the beginning of the year, the total salaries and
rewards of the senior management are basically equal to that of last year.


9. Internal Control


(1) Specific circumstances for the significant defects of the internal control found during
the report period

□Yes       No


(2) Self-assessment report on internal control

                                                                                                     76
                                                               Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.


Disclosure date for the full text of the
                                              2016.04.29
internal control self-assessment report
Disclosure index for the full text of the
                                              www.cninfo.com.cn
internal control self-assessment report
                                              Standards of Defect Identification
       Category                             Financial report                                 Non-financial report
Qualitative criteria      Significant defects: one defect of internal          Significant defects: Any situations listed
                          control, individually or together with other         below appears, it can be regarded as
                          defects, has the reasonable probability to cause     significant defects.     Operation: Unable to
                          the significant misstatements, which can not be      achieve all operation target or key business
                          promptly prevented, or found and corrected           index, widely out of budget in various
                          timely in the financial report. For example:         aspects.     Safety accident effects: Cause no
                          Company’s Directors, Supervisors and Senior         less than one person death, or more than 3
                          Management have fraudulent practices;                person serious injuries.       Major negative
                          Company makes corrections for the published          effects: Negative information frequently
                          financial report;        The audit of external       appears in the medias with involving a wide
                          intermediary      agent      finds    significant    scope in the international and national
                          misstatement existing in the current financial       mainstream media.         Environment effects:
                          report, but Company does not realize it during       Create irreparable damages to environment,
                          the operation process;     Negative information      and cause massive public complains.
                          frequently appears in the medias with involving      Major defects: Any situations listed below
                          a wide scope;       Company’s audit committee       appears, it can be regarded as major defects.
                          and internal audit department makes an                   Operation: Unable to achieve partly
                          inefficient supervision for internal control;        operation target, a big margin out of budget in
                          Other situations maybe cause significant             various aspects.       Safety accident effects:
                          misdirection which guides the report users to        Without reaching the person loss or the
                          make the right judgment.                             number of serious injury of significant
                          Major defects : The defect of internal control,     defects.     Major negative effects: Negative
                          individually or together with other defects, has     news appears in the media with influencing a
                          the reasonable probability to cause the              wide scope in the provincial mainstream
                          significant misstatements, which can not be          media.      Environment effects: Cause heavy
                          promptly prevented, or found and corrected           environment damages and massive public
                          timely in the financial report, although the         complains, ought to carry out the significant
                          misstatements neither achieves nor exceeds the       remedial measures.
                          importance level but still arising the attention     General defects: Any situations listed below
                          of Board of Directors and management team.           appears, it can be regarded as general defects.
                               Failure to select and apply accounting              Operation: Other effects unable to
                          regulations in accordance with generally             constitute the significant defects or major
                          accepted accounting principles;       Failure to     defects.     Safety accident effects: Personal
                          establish the anti-fraud procedures and control      injury less than the quantitative standards of
                          measures;       Failure to set up corresponding      major defects.        Major negative effects:
                          control mechanism or to carry out and take           Other defects unable to constitute the
                          corresponding compensating control for the           significant defects or major defects.
                          accounting treatments with irregular and             Environment effects: Other environment

                                                                                                                      77
                                                         Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
                         special deal;     Negative news appears in the effects unable to constitute the significant
                         media with influencing a wide scope; One or defects or major defects.
                         more defects exist in the control during the
                         process of the ending financial report, and the
                         target of achieving truthfulness and integrality
                         cannot be reasonably guaranteed in the
                         financial report;    General defects refer to the
                         other control defects, which do not constitute
                         the significant and major defects.
Quantitative criterion   For total assets/Owner’s equity:               For direct property loss:
                           Significant defects: misstatements ≧1%            Significant defects: More than CNY10
                           Major defects: 0.5%≦misstatements<1%         million
                           General defects: misstatements<0.5%               Major defects: CNY 1 million-10 million
                         For operation revenue:                          (including 1 million)
                           significant defects: misstatements ≧1%          General defects: Less than CNY 1 million
                           Major defects: 0.5%≦misstatements<1%
                           General defects: misstatements<0.5%
                         For pretax profit:
                           Significant defects: misstatements ≧5%
                           Major defects: 2%≦misstatements<5%
                           General defects: misstatements<2%
Number of significant 0
defect in financial
report
Number of significant 0
defect in non-financial
report
Number of major 0
defect in financial
report
Number of major 0
defect in non-financial
report



       10. Internal control audit report

         Available       □Not available

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

                                                                                                                78
                                                 Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.

report
Disclosure date for the full text of the
                                               29th April 2016
internal control audit report
Disclosure index for the full text of the Document name: 2015 Annual Internal Control Report
internal control audit report                  on Self Assessment. Website address: www.cninfo.com.cn
Opinion type of the internal control audit
                                               Standard without reserved opinion
report
Whether or not exists significant defects in
                                               No
non-financial reports

Whether or not the certified public accountants issued a non-standard advice for the audit
report of internal control.
□Yes        No
Whether the audit report of internal control issued by the certified public accountants is in
consistency with the self-assessment report of the board of directors.
  Yes □No




                                                                                                        79
                                                         Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.


                                        X. Financial Report


1. Audit Report

   Type of audit opinion                            Standard unqualified audit opinion
   Date signed on audit report                      25th April, 2015
                                                    Deloitte Hua Yong certified public accountants co.,
   Audit agency name
                                                    Ltd. (special general partnership)
   Certified public accountant's name               Xu Zhaohui         Li Xu


                                                                     De Shi Bao (Shen) Zi (15) No. P1560

      AUDITOR'S REPORT

      TO THE SHAREHOLDERS OF
      YANTAI CHANGYU PIONEER WINE COMPANY LIMITED

      We have audited the accompanying financial statements of Yantai Changyu Pioneer Wine
      Company Limited and its subsidiaries which comprise the consolidated and company's balance
      sheets as at 31 December 2015, and the consolidated and company's income statements, the
      consolidated and company's cash flow statements and the consolidated and company's statements
      of changes in shareholders' equity for the year then ended, and the notes to the financial
      statements.

      1. Management' responsibility for the financial statements

      Management of the Company is responsible for the preparation and fair presentation of these
      financial statements. This responsibility includes: (1) preparing the financial statements in
      accordance with Accounting Standards for Business Enterprises to achieve fair presentation of the
      financial statements; (2) designing, implementing and maintaining internal control which is
      necessary to enable that the financial statements are free from material misstatement, whether due
      to fraud or error.

      2. Auditor's responsibility

      Our responsibility is to express an audit opinion on these financial statements based on our audit.
      We conducted our audit in accordance with China Standards on Auditing. China Standards on
      Auditing require that we comply with the Code of Ethics for Chinese Certified Public
      Accountants and plan and perform the audit to obtain reasonable assurance about whether the
      financial statements are free from material misstatement.

      An audit involves performing audit procedures to obtain audit evidence about the amounts and
      disclosures in the financial statements. The procedures selected depend on the auditor's
      judgment, including the assessment of the risks of material misstatement of the financial
      statements, whether due to fraud or error. In making those risk assessments, Certified Public
      Accountants consider the internal control relevant to the preparation and fair presentation of the
      financial statements in order to design audit procedures that are appropriate in the circumstances,
      but not for the purpose of expressing an opinion on the effectiveness of the internal control. An
                                                                                                             - 80 -
                                                   Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.




                                                                                                       - 81 -
                                                    Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
AUDITOR'S REPORT

TO THE SHAREHOLDERS OF
YANTAI CHANGYU PIONEER WINE COMPANY LIMITED - continued


3. Opinion

In our opinion, the financial statements of Yantai Changyu Pioneer Wine Company Limited
present fairly, in all material respects, the consolidated and company's financial position as of 31
December 2015, and the consolidated and company's results of operations and cash flows for the
year then ended in accordance with Accounting Standards for Business Enterprises.


Deloitte Touche Tohmatsu                                       Chinese Certified Public Accountant
Certified Public Accountants LLP                                Xu Zhao Hui (Signature and seal)
Shanghai, China                                                    Li Xu (Signature and seal)
                                                                         27 April 2016




                                                                                                        - 82 -
                                               Yantai Changyu Pioneer Wine Co. Ltd. 2013 Annual Report.


CONSOLIDATED BALANCE SHEETS
YEAR ENDED 31 DECEMBER 2015

ASSETS                                 Notes             Closing balance          Opening balance
                                                              RMB                     RMB
CURRENT ASSETS
 Cash and bank                         VI-1              1,285,362,414             1,145,365,071
 Notes receivable                      VI-2                 113,988,122               138,315,319
 Accounts receivables                  VI-3                 197,795,091               145,672,411
 Prepayments                           VI-4                   3,591,098                 8,073,786
 Interest receivable                   VI-5                   8,019,338                 3,619,429
 Other receivables                     VI-6                  46,146,487                31,362,302
 Inventories                           VI-7               2,260,852,964             2,087,376,398
 Other current assets                  VI-8                  48,449,551
                                                         ____________                 29,662,076
                                                                                   ____________
Total current assets                                      3,964,205,065
                                                         ____________              3,589,446,792
                                                                                   ____________
NON-CURRENT ASSETS
 Available-for-sale financial assets   VI-9                     402,814                      -
 Fixed assets                          VI-10             3,089,245,185             2,532,682,355
 Construction in progress              VI-11              2,005,990,308             1,700,466,500
 Bearer biological assets              VI-12                192,198,283               151,723,241
 Intangible assets                     VI-13                463,899,916               452,951,194
 Goodwill                              VI-14                105,504,426                13,112,525
 Long-term prepaid expenses            VI-15                175,124,167               201,911,605
 Deferred tax assets                   VI-16                302,406,656               254,186,823
 Other non-current assets              VI-17                 45,234,641
                                                         ____________                  15,751,605
                                                                                   ____________
Total non-current assets                                  6,380,006,396
                                                         ____________               5,322,785,848
                                                                                   ____________
Total assets                                             10,344,211,461            8,912,232,640
                                                         ____________              ____________




                                                                                                      83
                                                         Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
CONSOLIDATED BALANCE SHEETS
YEAR ENDED 31 DECEMBER 2015 - continued

LIABILITIES AND EQUITY                           Notes             Closing balance          Opening balance
                                                                        RMB                     RMB
CURRENT LIABILITIES
 Short-term borrowings                          VI-18                665,581,921               300,000,000
 Notes payable                                  VI-19                 29,000,000                10,000,000
 Accounts payable                               VI-20                569,278,368               357,811,822
 Receipts in advance                            VI-21                234,566,504               215,127,598
 Employee benefits payable                      VI-22                190,239,451               158,948,592
 Taxes payable                                  VI-23                 41,285,107                87,504,048
 Interest payable                                                        977,304                 3,475,641
 Deferred income                                VI-24                 11,241,873                12,398,718
 Other payables                                 VI-25                509,226,395               469,804,317
 Non-current liabilities due within one year    VI-26                156,335,647
                                                                   ____________                       -
                                                                                             ____________
Total current liabilities                                           2,407,732,570
                                                                   ____________               1,615,070,736
                                                                                             ____________
NON-CURRENT LIABILITIES
 Long-term borrowings                           VI-27                 71,686,629              209,380,000
 Deferred income                                VI-24                 69,836,411                76,024,992
 Deferred tax liabilities                       VI-16                 34,350,349                 4,565,636
 Other non-current liabilities                  VI-28                  4,047,476
                                                                   ____________                  3,998,352
                                                                                             ____________
Total non-current liabilities                                        179,920,865
                                                                   ____________                293,968,980
                                                                                             ____________
Total liabilities                                                   2,587,653,435
                                                                   ____________               1,909,039,716
                                                                                             ____________
EQUITY
  Share capital                                 VI-29                685,464,000                685,464,000
  Capital reserve                               VI-30                 565,955,441               563,139,042
  Other comprehensive income                    VI-31                (10,442,512)                (2,803,271)
  Surplus reserve                               VI-32                342,732,000                342,732,000
  Retained earnings                             VI-33              5,980,390,074
                                                                   ____________               5,251,920,374
                                                                                             ____________
  Equity attributable to shareholders
    of the Company                                                  7,564,099,003             6,840,452,145
  Non-controlling interests                                           192,459,023
                                                                   ____________                 162,740,779
                                                                                             ____________
Total equity                                                        7,756,558,026
                                                                   ____________               7,003,192,924
                                                                                             ____________
Total liabilities and equity                                       10,344,211,461             8,912,232,640
                                                                   ____________              ____________


The accompanying notes form an integral part of these financial statements.

The financial statements on pages 3 to 98 were signed by the following:


Legal Representative: _________________________________

Person in Charge of the Accounting Body: _________________

Chief Accountant: ____________________________________


                                                                                                             - 84 -
                                                Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
BALANCE SHEET OF THE COMPANY
YEAR ENDED 31 DECEMBER 2015

ASSETS                                 Notes              Closing balance          Opening balance
                                                               RMB                     RMB
CURRENT ASSETS
  Cash and bank                        XIV-1                280,818,833                496,138,263
  Notes receivable                     XIV-2                 38,429,319                 98,158,251
 Accounts receivable                   XIV-3                  2,392,870                  1,516,518
 Prepayments                           XIV-4                    445,619                  1,710,787
  Interest receivable                  XIV-5                  8,019,338                  3,580,811
  Dividend receivable                  XIV-6                788,092,349                402,596,884
  Other receivables                    XIV-7              5,734,456,129              4,708,836,276
  Inventories                          XIV-8                728,173,107                681,696,774
  Other current assets                                       22,700,317
                                                          ____________                  14,996,807
                                                                                    ____________
Total current assets                                       7,603,527,881
                                                          ____________              6,409,231,371
                                                                                    ____________
NON-CURRENT ASSETS
 Available-for-sale financial assets    VI-8                       -                         -
 Long-term equity investments          XIV-9              1,423,725,152             1,093,437,027
 Fixed assets                          XIV-10               369,506,014               403,210,655
 Construction in progress              XIV-11                 7,990,777                   182,765
 Bearer biological assets              XIV-12               110,961,189                83,631,722
 Intangible assets                     XIV-13                74,381,525                76,760,678
 Deferred tax assets                   XIV-14                37,938,692
                                                          ____________                 27,053,571
                                                                                    ____________
Total non-current assets                                   2,024,503,349
                                                          ____________               1,684,276,418
                                                                                    ____________
Total assets                                               9,628,031,230            8,093,507,789
                                                          ____________              ____________




                                                                                                    - 85 -
                                                        Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
BALANCE SHEET OF THE COMPANY
YEAR ENDED 31 DECEMBER 2015 - continued

LIABILITIES AND EQUITY                         Notes              Closing balance          Opening balance
                                                                       RMB                     RMB
CURRENT LIABILITIES
 Short-term borrowings                          VI-18               601,297,447               300,000,000
 Accounts payable                              XIV-15               273,091,182               228,052,722
 Employee benefits payable                     XIV-16                71,058,615                70,233,251
 Taxes payable                                 XIV-17                19,331,311                18,205,124
 Interest payable                                                       977,304                 3,475,641
 Deferred income                                                      1,767,054                 3,017,898
 Other payables                                XIV-18               994,821,281             1,030,604,819
 Non-current liabilities due within one year    VI-26               127,345,600
                                                                  ____________                       -
                                                                                            ____________
Total current liabilities                                          2,089,689,794
                                                                  ____________               1,653,589,455
                                                                                            ____________
NON-CURRENT LIABILITIES
 Long-term borrowings                          VI-27                 56,761,600              209,380,000
 Deferred income                                                     21,824,352                22,747,915
 Other non-current liabilities                                        1,944,955
                                                                  ____________                  1,895,828
                                                                                            ____________
Total non-current liabilities                                        80,530,907
                                                                  ____________                234,023,743
                                                                                            ____________
Total liability                                                    2,170,220,701
                                                                  ____________               1,887,613,198
                                                                                            ____________
EQUITY
  Share capital                                 VI-29                685,464,000               685,464,000
  Capital reserve                              XIV-19                557,222,454               557,222,454
  Surplus reserve                               VI-32                342,732,000               342,732,000
  Retained earnings                                                5,872,392,075
                                                                  ____________               4,620,476,137
                                                                                            ____________
Total equity                                                       7,457,810,529
                                                                  ____________               6,205,894,591
                                                                                            ____________
Total liabilities and equity                                       9,628,031,230             8,093,507,789
                                                                  ____________              ____________




                                                                                                            - 86 -
                                                            Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
CONSOLIDATED INCOME STATEMENT
YEAR ENDED 31 DECEMBER 2015

                                                 Notes                      2015                     2014
                                                                            RMB                      RMB

I. Revenue                                       VI-34                4,649,722,368              4,156,727,525
    Less: Cost of sales                          VI-34                1,512,503,035             1,372,444,612
          Taxes and surcharges                   VI-35                  258,013,524                269,446,774
          Selling expenses                       VI-36                1,211,127,163             1,006,009,364
          Administrative expenses                VI-37                  313,968,409                256,980,018
          Impairment loss of assets              VI-38                    2,823,115                  1,995,877
                Financial expenses               VI-39                   11,287,685
                                                                      ____________                (17,256,721)
                                                                                                ____________
II. Operating profit                                                   1,339,999,437             1,267,107,601
      Add: Non-operating income                  VI-40                    50,065,317                43,996,405
            Including: gains from disposal
                                          of non-current assets                                         192,945
                                                121,113
      Less: Non-operating expenses               VI-41                       1,904,889                8,370,249
            Including: losses from disposal
                                    of non-current assets                                             56,884
                                               5,207,658              ____________              ____________
III. Profit before tax                                                1,388,159,865              1,302,733,757
        Less: Income tax                         VI-42                  357,884,235
                                                                      ____________                 325,026,046
                                                                                                ____________
IV. Profit for the year                                                1,030,275,630
                                                                      ____________                977,707,711
                                                                                                ____________
          Attribute to shareholders of the Company                     1,030,073,860              977,707,711
          Minority interest income                                           201,770                     -
                                                                      ____________              ____________
V. Other comprehensive income (post-tax)
      Other comprehensive income attributable
        to shareholders of the Company
      Other comprehensive income
        to be reclassified to profit and loss
      Foreign currency statement translation difference                                             (7,639,241)
                                              (2,803,271)
      Other comprehensive income attributable
        to minority interest                                              (102,535)
                                                                      ____________                      -
                                                                                                ____________
      Other comprehensive income (post-tax)                              (7,741,776)
                                                                      ____________                 (2,803,271)
                                                                                                ____________
VI. Total comprehensive income
        Attribute to shareholders of the Company                       1,022,434,619              974,904,440
        Attribute to minority interest of the Company                                                  99,235 -
                                                                      ____________              ____________
       Total comprehensive income                                      1,022,533,854
                                                                      ____________                974,904,440
                                                                                                ____________
VII. Earnings per share
          (I) Basic earnings per share           VI-43                         1.50                      1.43
                                                                      ____________              ____________
         (II) Diluted earnings per share         VI-43                         N/A                       N/A
                                                                      ____________              ____________



                                                                                                                - 87 -
                                                           Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
INCOME STATEMENT OF THE COMPANY
YEAR ENDED 31 DECEMBER 2015

                                                  Notes                    2015                     2014
                                                                           RMB                      RMB

I. Revenue                                       XIV -20             1,383,184,483              1,647,825,652
     Less: Cost of sales                         XIV -20             1,154,834,509             1,406,987,744
           Taxes and surcharges                  XIV -21               128,127,130                157,026,901
           Administrative expenses               XIV -22               131,187,795                112,051,545
           Impairment loss/(reverse) of assets   XIV -23                      -                     (192,908)
                 Financial expenses              XIV -24                18,852,697               (11,053,553)
            Investment income                    XIV -25             1,587,303,643
                                                                     ____________              1,164,089,666
                                                                                               ____________
II. Operating Profit                                                 1,537,485,995              1,147,095,589
      Add: Non-operating income                                          5,229,734                  6,371,028
            Including: gains from disposal
                                          of non-current assets                                        160,609
                                                 105,236
             Less: Non-operating expenses                                  921,076                   5,801,396
                       Including: losses from disposal
                                                     of non-current assets                            44,269
                                                5,181,727           ____________               ____________
III. Profit before tax                                               1,541,794,653              1,147,665,221
        Less: Income tax                                               (11,725,445)
                                                                     ____________                  (4,096,824)
                                                                                               ____________
IV. Profit for the year
           and total comprehensive income                             1,553,520,098            1,151,762,045
                                                                     ____________              ____________




                                                                                                               - 88 -
                                                                   Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 DECEMBER 2015

                                                                  Notes             2015                     2014
                                                                                    RMB                      RMB
CASH FLOWS FROM OPERATING ACTIVITIES
 Cash receipts from the sale of goods
   and the rendering of services                                               5,005,115,064            4,787,289,147
 Receipts of tax refunds                                                          17,833,465               18,259,690
 Other cash receipts relating to operating activities            VI-44(1)         22,373,016
                                                                               __________                  24,543,547
                                                                                                        __________
Sub-total of cash inflows from operating activities                            5,045,321,545
                                                                               __________               4,830,092,384
                                                                                                        __________
Cash payments for goods purchased and services received                        1,106,430,193            1,255,567,298
Cash payments to and on behalf of employees                                      400,245,285             (358,415,330)
Payment of various types of taxes                                              1,312,212,563            1,301,077,872
Other cash payments relating to operating activities             VI-44(2)      1,083,387,137
                                                                               __________                  844,948,588
                                                                                                        __________
Sub-total of cash outflows from operating activities                           3,902,275,178
                                                                               __________               3,760,009,088
                                                                                                        __________
Net cash flows from operating activities                         VI-45(1)      1,143,046,367
                                                                               __________               1,070,083,296
                                                                                                        __________
CASH FLOWS FROM INVESTING ACTIVITIES
 Decrease in term deposits over 3 months                                          58,245,260              307,694,951
 Proceeds from return on investments                                               9,337,943               24,230,453
 Proceeds from disposal of fixed assets                                            3,373,254
                                                                               __________                   1,181,895
                                                                                                        __________
Sub-total of cash inflows from investing activities                               70,956,457
                                                                               __________                 333,107,299
                                                                                                        __________
Cash paid for acquisition of properties, plants and equipment,
  intangible assets and other long-term assets                                   775,468,190            1,238,293,585
Cash paid for term deposits over 3 months                                         20,000,000               77,547,483
Cash paid for the purchase subsidiaries and other equity                         213,342,946
                                                                               __________                        -
                                                                                                        __________
Sub-total of cash outflows from investing activities                           1,008,811,136
                                                                               __________               1,315,841,068
                                                                                                        __________
Net cash flows from investing activities                         VI-44(3)       (937,854,679)
                                                                               __________                (982,733,769)
                                                                                                        __________
CASH FLOWS FROM FINANCING ACTIVITIES
 Cash receipts from borrowings                                                   598,060,185              515,368,080
 Other cash received from financing activities                                     4,000,000
                                                                               __________                 129,182,292
                                                                                                        __________
Sub-total of cash inflows from financing activities                              602,060,185
                                                                               __________                 644,550,372
                                                                                                        __________
Cash paid for dividends, profits and interests                                   326,060,259              353,707,371
Cash paid for borrowings                                                         325,272,800              242,219,439
Cash paid for acquisition minority interest                                          150,000                      -
Cash paid from other financing activities                        VI-44(4)         28,150,000
                                                                               __________                 125,000,000
                                                                                                        __________
Sub-total of cash outflows from financing activities                             679,633,059
                                                                               __________                 720,926,810
                                                                                                        __________
Net cash flows from financing activities                                        (77,572,874)
                                                                               __________                (76,376,438)
                                                                                                        __________
Effect of foreign exchange rate changes
  on cash and cash Equivalents                                                     4,150,573                (7,059,747)
NET INCREASE OF CASH AND CASH EQUIVALENTS                                        131,769,387                  3,913,342
ADD: CASH AND CASH EQUIVALENTS
          AT BEGINNING OF THE YEAR                               VI-45(2)        960,472,274
                                                                               __________                 956,558,932
                                                                                                        __________
CASH AND CASH EQUIVALENTS AT END OF THE YEAR                     VI-45(2)      1,092,241,661               960,472,274
                                                                               __________               __________




                                                                                                                       - 89 -
                                                           Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
CASH FLOW STATEMENT OF THE COMPANY
YEAR ENDED 31 DECEMBER 2015

                                                          Notes             2015                     2014
                                                                            RMB                      RMB
CASH FLOWS FROM OPERATING ACTIVITIES
 Cash receipts from the sale of goods
   and the rendering of services                                       1,407,696,475             1,827,219,301
 Other cash receipts relating to operating activities                      1,050,628
                                                                       __________                   12,168,205
                                                                                                 __________
Sub-total of cash inflows from operating activities                    1,408,747,103
                                                                       __________                1,839,387,506
                                                                                                 __________
Cash payments for goods purchased and services received                  944,400,045             1,302,377,275
Cash payments to and on behalf of employees                              149,896,172               151,732,255
Cash payment of various types of taxes                                   191,387,102               257,237,660
Other cash payment relating to operating activities                    1,128,236,602
                                                                       __________                1,594,026,341
                                                                                                 __________
Sub-total of cash outflows from operating activities                   2,413,919,921
                                                                       __________                3,305,373,531
                                                                                                 __________
Net cash flows from operating activities                  XIV-26      (1,005,172,818)
                                                                       __________               (1,465,986,025)
                                                                                                 __________
CASH FLOWS FROM INVESTING ACTIVITIES
 Cash receipts from equity investment                                        350,000                      -
 Cash receipts from deposits over 3 months                                46,245,260               295,694,951
 Cash receipts from return on investments                              1,211,082,256             1,530,610,338
 Cash receipts from disposals of fixed assets                                190,205
                                                                       __________                      550,824
                                                                                                 __________
Sub-total of cash inflows from investing activities                    1,257,867,721
                                                                       __________                1,826,856,113
                                                                                                 __________
Cash payments for acquisition of fixed assets,
  intangible assets and other long-term assets                            42,104,159                52,003,088
Cash payments for term deposits over 3 months                             20,000,000                53,547,483
Cash payments for subsidiary investment                                  330,638,125
                                                                       __________                   37,980,500
                                                                                                 __________
Sub-total of cash outflows from investing activities                     392,742,284
                                                                       __________                  143,531,071
                                                                                                 __________
Net cash flows from investing activities                                 865,125,437
                                                                       __________                1,683,325,042
                                                                                                 __________
CASH FLOWS FROM FINANCING ACTIVITIES
 Cash receipts from borrowings                                           595,268,270               515,368,080
 Other cash received from financing activities                                  -
                                                                       __________                  129,182,292
                                                                                                 __________
Cash inflows from financing activities                                   595,268,270
                                                                       __________                  644,550,372
                                                                                                 __________
Cash paid for dividends, profits and interests                           325,424,652               351,636,158
Cash paid for borrowings                                                 323,051,320               242,219,439
Cash paid from other financing activities                                       -
                                                                       __________                  125,000,000
                                                                                                 __________
Cash outflows from financing activities                                  648,475,972
                                                                       __________                  718,855,597
                                                                                                 __________
Net cash flows from financing activities                                (53,207,702)
                                                                       __________                 (74,305,225)
                                                                                                 __________
Effect of foreign exchange rate changes
  on cash and cash Equivalents                                               3,807,697              (6,939,315)
INCREASE/(DECREASE) OF CASH
  AND CASH EQUIVALENTS                                                  (189,447,386)              136,094,477
ADD: CASH AND CASH EQUIVALENTS
          AT BEGINNING OF THE YEAR                        XIV-27         333,245,466
                                                                       __________                  197,150,989
                                                                                                 __________
CASH AND CASH EQUIVALENTS AT END OF THE YEAR              XIV-27          143,798,080              333,245,466
                                                                       __________                __________




                                                                                                               - 90 -
                                                                                             Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
CONSOLIDATED SATATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2015
                                                                                                   2015
                                                           Attributable to shareholders of the Company
                                          Issued         Capital       Other comprehensive        Surplus        Retained       Non-controlling
                                          capital        surplus              income              reserve        earnings          interests          Total
                                          RMB             RMB                  RMB                 RMB            RMB                RMB              RMB

I. Opening balance
       of the current year             _______
                                        685,464,000   _______
                                                       563,139,042        _______ ________ ________
                                                                            (2,803,271) 342,732,000 5,251,920,374               _______
                                                                                                                                 162,740,779      ________
                                                                                                                                                   7,003,192,924

II. Changes for the year
(I) Total comprehensive income                  -              -             (7,639,241)                    -   1,030,073,860          99,235       1,022,533,854
(II) Shareholders investment and
          Divestment
 1. Acquisition subsidiary (VII-1)              -              -                    -                       -           -          32,585,408         32,585,408
 2. Transaction with non-controlling
        interests                               -     2,816,399                     -                       -           -          (2,966,399)          (150,000)
(III) Profit distribution
        Distributions to
             shareholders (VI-33)      _______
                                            -         _______
                                                           -              _______ ________ ________
                                                                               -        -   (301,604,160)                       _______
                                                                                                                                     -            ________
                                                                                                                                                   (301,604,160)

III. Closing balance of
            the current year            685,464,000    565,955,441         (10,442,512) 342,732,000 5,980,390,074                192,459,023       7,756,558,026
                                       _______        _______             _______ ________ ________                             _______           ________

                                                                                                   2014
                                                           Attributable to shareholders of the Company
                                          Issued         Capital       Other comprehensive        Surplus        Retained       Non-controlling
                                          capital        surplus              income              reserve        earnings          interests          Total
                                          RMB             RMB                  RMB                 RMB            RMB                RMB              RMB

I. Opening balance
       of the current year             _______
                                        685,464,000   _______
                                                       563,139,042         _____
                                                                             -              ________ ________
                                                                                              342,732,000 4,616,944,663         _______
                                                                                                                                 162,740,779      ________
                                                                                                                                                   6,371,020,484

II. Changes for the year
(I) Total comprehensive income                  -              -           (2,803,271)                      -    977,707,711              -          974,904,440
(II) Profit distribution
       Distributions to
          shareholders (VI-33)         _______
                                            -         _______
                                                           -               _____
                                                                             -              ________ ________
                                                                                                  -   (342,732,000)             _______
                                                                                                                                     -            ________
                                                                                                                                                   (342,732,000)

III. Closing balance
            of the current year         685,464,000    563,139,042         (2,803,271)        342,732,000 5,251,920,374          162,740,779       7,003,192,924
                                       _______        _______              _____            ________ ________                   _______           ________




                                                                                                                                                              - 91 -
                                                                                   Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
STATEMENT OF CHANGES IN EQUITY OF THE COMPANY
YEAR ENDED 31 DECEMBER 2015

                                                                                           2015
                                                Issued capital   Capital reserve      Surplus reserve   Retained earnings       Total
                                                    RMB              RMB                  RMB                 RMB               RMB

I. Opening balance
     of the current year                         685,464,000
                                                ________          557,222,454
                                                                 ________               342,732,000
                                                                                       ________         4,620,476,137
                                                                                                         _________          6,205,894,591
                                                                                                                            _________
II. Changes for the year
(I) Total comprehensive income                          -                 -                    -         1,553,520,098      1,553,520,098
(II) Profit distribution
        Distributions to shareholders (VI-33)        -
                                                ________              -
                                                                 ________                   -
                                                                                       ________           (301,604,160)
                                                                                                         _________           (301,604,160)
                                                                                                                            _________
III. Closing balance
           of the current year                   685,464,000      557,222,454           342,732,000      5,872,392,075      7,457,810,529
                                                ________         ________              ________          _________          _________

                                                                                           2014
                                                Issued capital   Capital reserve      Surplus reserve   Retained earnings       Total
                                                    RMB              RMB                  RMB                 RMB               RMB

I. Opening balance
     of the current year                         685,464,000
                                                ________          557,222,454
                                                                 ________               342,732,000
                                                                                       ________          3,811,446,092
                                                                                                         _________          5,396,864,546
                                                                                                                            _________
II. Changes for the year
(I) Total comprehensive income                          -                 -                    -         1,151,762,045      1,151,762,045
(II) Profit distribution
        Distributions to shareholders (VI-33)        -
                                                ________              -
                                                                 ________                   -
                                                                                       ________           (342,732,000)
                                                                                                         _________           (342,732,000)
                                                                                                                            _________
III. Closing balance
           of the current year                   685,464,000      557,222,454           342,732,000     4,620,476,137       6,205,894,591
                                                ________         ________              ________          _________          _________




                                                                                                                                        - 92 -
                                                           Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015


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. Registration place of the Company is Yantai, Shandong.
        Headquarter of the Company is located at No. 56 Da Ma Lu, Zhifu District, Yantai, Shandong,
        PRC.

        As at 31 December 2015 the total shares issued by the Company amounts to 685,464,000 shares.
        Please refer to Notes VI-29 in detail.

        The holding company of the Group is Changyu Group Company, which is jointly controlled by
        Yantai SASAC, ILLVA Saronno Investment Italy, International Finance Corporation and Yantai
        Yuhua Investment and Development Company Limited.

        The financial statements have been authorized by the board of directors on 27 April 2015.
        According to the Company's articles of association, the financial statements will be reviewed by
        shareholders on the shareholder's meeting.

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


II. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

1.   Basis of preparation

        The Group has adopted the Accounting Standards for Business Enterprises ("ASBE") issued by
        the Ministry of Finance (“MoF”). In addition, the Group has disclosed relevant financial
        information in accordance with Information Disclosure and Presentation Rules for Companies
        Offering Securities to the Public No. 15 - General Provisions on Financial Reporting (Revised in
        2014).




                                                                                                               - 93 -
                                                             Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
II.     BASIS OF PREPARATION OF FINANCIAL STATEMENTS - continued

2.    Basis of accounting and principle of measurement

        The Group has adopted the accrual basis of accounting. The Group adopts the historical cost as
        the principle of measurement in the financial statements. Where assets are impaired, provisions
        for asset impairment are made in accordance with relevant requirements.

        Under the historical cost measurement, an asset is measured at the fair value of consideration paid
        in cash and cash equivalents at the date of the purchase. Liability is measured at the value of asset
        received through taking current obligation, the contract value for taking current obligation, or the
        cash and cash equivalents value estimated for repaying debt in daily business activity.

        Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
        orderly transaction between market participants at the measurement date, regardless of whether
        that price is directly observable or estimated using another valuation technique. Fair value for
        measurement and/or disclosure purposes in these consolidated financial statements is determined
        on such a basis.

        Fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the
        inputs to the fair value measurements are observable and the significance of the inputs to the fair
        value measurement in its entirety, which are described as follows:

        1)    Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
               liabilities that the entity can access at the measurement date;

        2)    Level 2 inputs are inputs, other than quoted prices included within Level 1, that are
               observable for the asset or liability, either directly or indirectly; and

        3)    Level 3 inputs are unobservable inputs for the asset or liability.

3.    Going concern

        As at 31 December 2015, 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.




                                                                                                                 - 94 -
                                                            Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING

1.   Declaration for implementing CAS

       The financial statements are prepared in accordance with CAS, which showing a true and fair
       view of the financial position on 31 December 2015, financial performance and cash flow in 2015
       of the Company and the Group.

2.   Accounting year

       The accounting year of the Group is from 1 January to 31 December of each calendar year.

3.   Business cycle

       Business cycle refers to the period from purchasing assets to be processed to receiving cash or
       cash equivalents by the Company. The business cycle of the Company is 12 months.

4.   Reporting currency

       Renminbi ("RMB") is the currency of the primary economic environment in which the Company
       and its domestic subsidiaries operate. Therefore, the Company and its domestic subsidiaries
       choose RMB as their functional currency. The Company's foreign subsidiary chooses Currency
       Euro as its functional currency on the basis of the primary economic environment in which it
       operates. The Company adopts RMB to prepare its financial statements.

5.   Business combination

       5.1Business combinations not involving enterprises under common control and goodwill

       A business combination not involving enterprises under common control is a business
       combination in which all of the combining enterprises are not ultimately controlled by the same
       party or parties before and after the combination.

       The cost of combination is the aggregate of the fair values, at the acquisition date, of the assets
       given, liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for
       control of the acquiree. The intermediary expenses incurred by the acquirer in respect of
       auditing, legal services, valuation and consultancy services, etc. and other associated
       administrative expenses attributable to the business combination are recognised in profit or loss
       when they are incurred.

       Qualified identifiable assets, liabilities and contingent liabilities obtained by acquirer in the
       acquisition are measured using fair value at the acquisition date.

       The cost of combination exceeds the acquirer's interest in the fair value of the acquiree's
       identifiable net assets, the difference is treated as an asset and recognised as goodwill, which is
       measured at cost on initial recognition. Within the 12 month after acquisition, adjustment for the
       provisional recognised value will be regarded as the recognition and measurement at acquisition
       date.

       At the end of the year for acquisition, if the fair value for qualified identifiable assets, liabilities
       and contingent liabilities can be determined temporarily, temporally determined fair value will be
       recognised as consideration for recognition and measurement of acquisition.


                                                                                                                - 95 -
                                                              Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
III.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
           - continued

5. Business combination - continued

          5.1Business combinations        not   involving    enterprises      under      common        control     and
          goodwill-continued

          Goodwill arising on a business combination is measured at cost less accumulated impairment
          losses, and is presented separately in the consolidated financial statements. It is tested for
          impairment at least at the end of each year.

6.     Preparation of consolidated financial statements

          6.1 Preparation of consolidated financial statements

          The scope of consolidation in the consolidated financial statements is determined on the basis of
          control. Control is the power to govern the financial and operating policies of an enterprise so as
          to obtain benefits from its operating activities. The Group will re-evaluate if changes in relevant
          facts and circumstances results in changes in relevant factors involved in the above definition of
          control.

          Consolidation of subsidiary starts from the control on the subsidiary by the Group and ends at the
          loss of control on the subsidiary by the Group.

          For a subsidiary disposed of by the Group, the operating results and cash flows before the date of
          disposal (the date when control is lost) are included in the consolidated income statement and
          consolidated statement of cash flows, as appropriate.

          For a subsidiary acquired through a business combination not involving enterprises under
          common control, the operating results and cash flows from the acquisition date (the date when
          control is obtained) are included in the consolidated income statement and consolidated statement
          of cash flows, as appropriate, and no adjustment is made to the opening balances and comparative
          figures in the consolidated financial statements.

          The significant accounting policies and accounting periods adopted by the subsidiaries are
          determined based on the uniform accounting policies and accounting periods set out by the
          Company.

          All significant intra-group balances and transactions are eliminated on consolidation.

          The portion of subsidiaries' equity that is not attributable to the Company is treated as
          non-controlling interests and presented as "non-controlling interests" in the consolidated balance
          sheet within shareholders' equity. The portion of net profits or losses of subsidiaries for the period
          attributable to non-controlling interests is presented as "non-controlling interests" in the
          consolidated income statement below the net profit line item.

          When the amount of loss for the period attributable to the non-controlling shareholders of a
          subsidiary exceeds the non-controlling shareholders' portion of the opening balance of owners'
          equity of the subsidiary, the excess amount are still allocated against non-controlling interests.




                                                                                                                  - 96 -
                                                               Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
III.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
           - continued

6.     Preparation of consolidated financial statements - continued

          6.1 Preparation of consolidated financial statements - continued

          For the transaction that Purchase minority interest or disposal part of the equity does not loss the
          control of the subsidiaries, it should treated as equity transaction, and adjust the equity attributable
          to shareholders and minority interest in order to reflex the changes of equity in subsidiaries. The
          difference between minority interest adjustment and fair value of received/paid consideration will
          adjust in capital reserve, and if capital reserve is not enough for offset, will adjust surplus reserve.

7.     Cash and cash equivalents

          Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash
          equivalents are the Group's short-term, highly liquid investments that are readily convertible to
          known amounts of cash and which are subject to an insignificant risk of changes in value.

8.     Translation of transactions and financial statements denominated in foreign currencies

          8.1 Transactions denominated in foreign currencies

          A foreign currency transaction is recorded, on initial recognition, by applying the spot exchange
          rate on the date of the transaction.

          At the balance sheet date, foreign currency monetary items are translated into RMB using the spot
          exchange rates at the balance sheet date. Exchange differences arising from the differences
          between the spot exchange rates prevailing at the balance sheet date and those on initial
          recognition or at the previous balance sheet date are recognised in profit or loss for the period,
          except that (1) exchange differences related to a specific-purpose borrowing denominated in
          foreign currency that qualify for capitalisation are capitalised as part of the cost of the qualifying
          asset during the capitalisation period; (2) exchange differences related to hedging instruments for
          the purpose of hedging against foreign currency risks are accounted for using hedge accounting;
          (3) exchange differences arising from available-for-sale non-monetary items denominated in
          foreign currencies and changes in the carrying amounts of available-for-sale monetary items are
          recognised as other comprehensive income and included in capital reserve.

          Foreign currency non-monetary items measured at historical cost are translated to the amounts in
          functional currency at the spot exchange rates on the dates of the transactions and the amounts in
          functional currency remain unchanged. Foreign currency non-monetary items measured at fair
          value are re-translated at the spot exchange rate on the date the fair value is determined.
          Difference between the re-translated functional currency amount and the original functional
          currency amount is treated as changes in fair value (including changes of exchange rate) and is
          recognised in profit and loss or as other comprehensive income included in capital reserve.




                                                                                                                   - 97 -
                                                               Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
III.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
           - continued

8.     Translation of transactions and financial statements denominated in foreign currencies - continued

          8.2 Translation of financial statements denominated in foreign currencies

          For the purpose of preparing the consolidated financial statements, financial statements of a
          foreign operation are translated from the foreign currency into RMB using the following method:
          assets and liabilities on the balance sheet are translated at the spot exchange rate prevailing at the
          balance sheet date; shareholders' equity items except for retained earnings are translated at the
          spot exchange rates at the dates on which such items arose; all items in the income statement as
          well as items reflecting the distribution of profits are translated at the spot exchange rates on the
          dates of the transactions; the opening balance of retained earnings is the translated closing balance
          of the previous year's retained earnings; the closing balance of retained earnings is calculated and
          presented on the basis of each translated income statement and profit distribution item. The
          difference between the translated assets and the aggregate of liabilities and shareholders' equity
          items is separately presented as the exchange differences arising on translation of financial
          statements denominated in foreign currencies of other comprehensive income under the
          shareholders' equity in the balance sheet.

          Cash flows arising from a transaction in foreign currency and the cash flows of a foreign
          subsidiary are translated at the spot exchange rate on the date of the cash flows. The effect of
          exchange rate changes on cash and cash equivalents is regarded as a reconciling item and
          presented separately in the cash flow statement as "effect of exchange rate changes on cash and
          cash equivalents".

          The opening balances and the comparative figures of previous year are presented at the translated
          amounts in the previous year's financial statements.

9.     Financial instruments

          Financial assets and financial liabilities are recognised when the Group becomes a party to the
          contractual provisions of the instrument. Financial assets and financial liabilities are initially
          measured at fair value. For other financial assets and financial liabilities, transaction costs are
          included in their initial recognised amounts.


          9.1 Effective interest method

          The effective interest method is a method of calculating the amortised cost of a financial asset or a
          financial liability (or a group of financial assets or financial liabilities) and of allocating the
          interest income or interest expense over the relevant period, using the effective interest rate. The
          effective interest rate is the rate that exactly discounts estimated future cash flows through the
          expected life of the financial asset or financial liability or, where appropriate, a shorter period to
          the net carrying amount of the financial asset or financial liability.

          When calculating the effective interest rate, the Group estimates future cash flows considering all
          contractual terms of the financial asset or financial liability (without considering future credit
          losses), and also considers all fees paid or received between the parties to the contract giving rise
          to the financial asset and financial liability that are an integral part of the effective interest rate,
          transaction costs, and premiums or discounts, etc.




                                                                                                                   - 98 -
                                                           Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
III.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
        - continued

9.     Financial instruments - continued

       9.2 Classification, recognition and measurement of financial assets

       On initial recognition, the Group's financial assets are classified into one of the four categories,
       including financial assets at fair value through profit or loss, held-to-maturity investments, loans
       and receivables, and available-for-sale financial assets. All regular way purchases or sales of
       financial assets are recognised and derecognised on a trade date basis. Financial assets of the
       Group are loans and receivables and available-for-sale financial assets.

       9.2.1 Loans and receivables

       Loans and receivables are non-derivative financial assets with fixed or determinable payments
       that are not quoted in an active market. Financial assets classified as loans and receivables by
       the Group include cash and bank, notes receivable, accounts receivable, interest receivable,
       dividends receivable, and other receivables.

       Loans and receivables are subsequently measured at amortised cost using the effective interest
       method. Gain or loss arising from derecognition, impairment or amortisation is recognised in
       profit or loss.

       9.2.2 Available-for-sale financial assets

       Available-for-sale financial assets include non-derivative financial assets that are designated on
       initial recognition as available for sale, and financial assets that are not classified as financial
       assets at fair value through profit or loss, loans and receivables or held-to-maturity investments.

       For investments in equity instruments that do not have a quoted market price in an active market
       and whose fair value cannot be reliably measured, they are measured at cost.

       9.3 Impairment of financial assets

       The Group assesses at each balance sheet date the carrying amounts of financial assets other than
       those at fair value through profit or loss. If there is objective evidence that a financial asset is
       impaired, the Group determines the amount of any impairment loss. Objective evidence that a
       financial asset is impaired is evidence that, arising from one or more events that occurred after the
       initial recognition of the asset, the estimated future cash flows of the financial asset, which can be
       reliably measured, have been affected.

       Objective evidence that a financial asset is impaired includes the following observable events:

       (1)   Significant financial difficulty of the issuer or obligor;
       (2)   A breach of contract by the borrower, such as a default or delinquency in interest or
               principal payments;
       (3)   The Group, for economic or legal reasons relating to the borrower's financial difficulty,
               granting a concession to the borrower;
       (4)   It becoming probable that the borrower will enter bankruptcy or other financial
               reorganisations;
       (5)   The disappearance of an active market for that financial asset because of financial
               difficulties of the issuer;

                                                                                                               - 99 -
                                                          Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
III.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
        - continued

9.     Financial instruments - continued

       9.3 Impairment of financial assets - continued

       (6)   Upon an overall assessment of a group of financial assets, observable data indicates that
               there is a measurable decrease in the estimated future cash flows from the group of
               financial assets since the initial recognition of those assets, although the decrease cannot
               yet be identified with the individual financial assets in the group. Such observable data
               includes:
               - Adverse changes in the payment status of borrower in the group of assets;
               - Economic conditions in the country or region of the borrower which may lead to a
                       failure to pay the group of assets;
       (7)   Significant adverse changes in the technological, market, economic or legal environment in
               which the issuer operates, indicating that the cost of the investment in the equity
               instrument may not be recovered by the investor;
       (8)   A significant or prolonged decline in the fair value of an investment in an equity instrument
              below its cost;
       (9)   Other objective evidence indicating there is an impairment of a financial asset.

       - Impairment of financial assets measured at amortised cost

       If financial assets carried at amortised cost are impaired, the carrying amounts of the financial
       assets are reduced to the present value of estimated future cash flows (excluding future credit
       losses that have not been incurred) discounted at the financial asset's original effective interest
       rate. The amount of reduction is recognised as an impairment loss in profit or loss. If,
       subsequent to the recognition of an impairment loss on financial assets carried at amortised cost,
       there is objective evidence of a recovery in value of the financial assets which can be related
       objectively to an event occurring after the impairment is recognised, the previously recognised
       impairment loss is reversed. However, the reversal is made to the extent that the carrying
       amount of the financial asset at the date the impairment is reversed does not exceed what the
       amortised cost would have been had the impairment not been recognised.

       For a financial asset that is individually significant, the Group assesses the asset individually for
       impairment. For a financial asset that is not individually significant, the Group assesses the asset
       individually for impairment or includes the asset in a group of financial assets with similar credit
       risk characteristics and collectively assesses them for impairment. If the Group determines that
       no objective evidence of impairment exists for an individually assessed financial asset (whether
       significant or not), it includes the asset in a group of financial assets with similar credit risk
       characteristics and collectively reassesses them for impairment. Assets for which an impairment
       loss is individually recognised are not included in a collective assessment of impairment.

       - Impairment of available for sale assets measured at cost

       If an impairment loss has been incurred on an investment in unquoted equity instrument (without
       a quoted price in an active market) whose fair value cannot be reliably measured, or on a
       derivative financial asset that is linked to and must be settled by delivery of such an unquoted
       equity instrument, the carrying amount of the financial asset is reduced to the present value of
       estimated future cash flows discounted at the current market rate of return for a similar financial
       asset. The amount of reduction is recognised as an impairment loss in profit or loss. The
       impairment loss on such financial asset is not reversed once it is recognised.

                                                                                                             - 100 -
                                                           Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
III.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
        - continued

9.     Financial instruments - continued

       9.4 Transfer of financial assets

       The Group derecognises a financial asset if one of the following conditions is satisfied: (1) the
       contractual rights to the cash flows from the financial asset expire; or (2) the financial asset has
       been transferred and substantially all the risks and rewards of ownership of the financial asset is
       transferred to the transferee; or (3) although the financial asset has been transferred, the Group
       neither transfers nor retains substantially all the risks and rewards of ownership of the financial
       asset but has not retained control of the financial asset.

       For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, the
       difference between (1) the carrying amount of the financial asset transferred; and (2) the sum of
       the consideration received from the transfer and any cumulative gain or loss that has been
       recognised in other comprehensive income, is recognised in profit or loss.

       9.5 Classification, recognition and measurement of financial liabilities

       Debt and equity instruments issued by the Group are classified into financial liabilities or equity
       on the basis of the substance of the contractual arrangements and definitions of financial liability
       and equity instrument.

       On initial recognition, financial liabilities are classified into financial liabilities at fair value
       through profit or loss and other financial liabilities. The financial liabilities in group are other
       financial liabilities, including short-term borrowings, notes payables, account payables, interest
       payables, other payables and long-term borrowings etc.

       9.5.1 Other financial liabilities

       Other financial liabilities are subsequently measured at amortised cost using the effective interest
       method, with gain or loss arising from derecognition or amortisation recognised in profit or loss.

       9.6 Derecognition of financial liabilities

       The Group derecognises a financial liability (or part of it) only when the underlying present
       obligation (or part of it) is discharged.

       When the Group derecognises a financial liability or a part of it, it recognises the difference
       between the carrying amount of the financial liability (or part of the financial liability)
       derecognised and the consideration paid (including any non-cash assets transferred or new
       financial liabilities assumed) in profit or loss.




                                                                                                              - 101 -
                                                             Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
III.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
        - continued

9.     Financial instruments - continued

       9.7 Offsetting financial assets and financial liabilities

       Where the Group has a legal right that is currently enforceable to set off the recognised financial
       assets and financial liabilities, and intends either to settle on a net basis, or to realise the financial
       asset and settle the financial liability simultaneously, a financial asset and a financial liability shall
       be offset and the net amount is presented in the balance sheet. Except for the above circumstances,
       financial assets and financial liabilities shall be presented separately in the balance sheet and shall
       not be offset.

       9.8 Equity instruments

       An equity instrument is any contract that evidences a residual interest in the assets of the Group
       after deducting all of its liabilities. The Group does not recognise any changes in the fair value of
       equity instruments. The equity instruments transaction expenses deducted from equity.

       The Group treats distribution to equity instrument holders as profit distributions. Shareholder
       equity is not affected by share dividend distributed.

10. Account Receivables

       10.1 Receivables that are individually significant and for which bad debt provision is individually
       assessed

       A receivable that exceeds RMB 3,000,000 is deemed as an individually significant receivable by
       the Group.

       For receivables that are individually significant, the Group assesses the receivables individually
       for impairment. For a financial asset that is not impaired individually, the Group includes the asset
       in a group of financial assets with similar credit risk characteristics and collectively assesses them
       for impairment. Receivables for which an impairment loss is individually recognised are not
       included in a collective assessment of impairment.

       10.2 Receivables that are not individually significant but for which bad debt provision is
       individually assessed

       For receivables that are not individually significant but for which bad debt provision is
       individually assessed, when objective evidence suggests that the Group cannot collect receivables
       in accordance with original clauses, the Group would recognize impairment loss and provide bad
       debts according to the difference between carrying amount and present value of future cash flows.




                                                                                                                - 102 -
                                                           Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
III.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
        - continued

11. Inventories

       11.1 Categories of inventories

       The Group's inventories mainly include raw materials, work in progress and finished goods.
       Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase,
       costs of conversion and other expenditures incurred in bringing the inventories to their present
       location and condition.

       11.2 Valuation method of inventories upon delivery

       The actual cost of inventories upon delivery is calculated using the weighted average method.

       Agricultural products harvested are reported in accordance with the CAS 1 Inventories.

       11.3 Basis for determining net realisable value of inventories and provision methods for decline in
       value of inventories

       At the balance sheet date, inventories are measured at the lower of cost and net realisable value.
       If the net realisable value is below the cost of inventories, a provision for decline in value of
       inventories is made. Net realisable value is the estimated selling price in the ordinary course of
       business less the estimated costs of completion, the estimated costs necessary to make the sale and
       relevant taxes. Net realisable value is determined on the basis of clear evidence obtained, and
       takes into consideration the purposes of holding inventories and effect of post balance sheet
       events.

       Provision for decline in value of other inventories is made based on the excess of cost of
       inventory over its net realisable value on an item-by-item basis.

       After the provision for decline in value of inventories is made, if the circumstances that
       previously caused inventories to be written down below cost no longer exist so that the net
       realisable value of inventories is higher than their cost, the original provision for decline in value
       is reversed and the reversal is included in profit or loss for the period.

       11.4 Inventory count system

       The perpetual inventory system is maintained for stock system.

       11.5 Amortisation method for low cost and short-lived consumable items and packaging materials

       Packaging materials and low cost and short-lived consumable items are amortised using the
       immediate write-off method.




                                                                                                              - 103 -
                                                           Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
III.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
        - continued

12. Long term equity investments

       12.1 Basis for determining control, joint control and significant influence

       Control is the power to govern the financial and operating policies of an entity so as to obtain
       benefits from its activities. Joint control is the contractually agreed sharing of control over an
       economic activity, and exists only when the strategic financial and operating policy decisions
       relating to the activity require the unanimous consent of the parties sharing control. Significant
       influence is the power to participate in the financial and operating policy decisions of the investee
       but is not control or joint control over those policies. When determining whether an investing
       enterprise is able to exercise control or significant influence over an investee, the effect of
       potential voting rights of the investee (for example, warrants and convertible debts) held by the
       investing enterprises or other parties that are currently exercisable or convertible shall be
       considered.

       12.2 Determination of initial investment cost

       For a long-term equity investment acquired not involving enterprises under common control, the
       investment cost of the long-term equity investment is the cost of acquisition.

       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.

       12.3 Subsequent measurement and recognition of profit or loss

       12.3.1 Long-term equity investment accounted for using the cost method

       The Group accounts for long-term equity investment using the cost method.              A subsidiary is an
       investee that is controlled by the Group.

       Under the cost method, a long-term equity investment is measured at initial investment cost.
       Long-term equity investment is adjusted when capital is added or recollected. Investment income
       is recognised in the period in accordance with the attributable share of cash dividends or profit
       distributions declared by the investee.

       12.4 Disposal of long-term equity investments

       On disposal of a long term equity investment, the difference between the proceeds actually
       received and receivable and the carrying amount is recognised in profit or loss for the period.




                                                                                                              - 104 -
                                                              Yantai Changyu Pioneer Wine Co. Ltd. 2015 Annual Report.
III.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
        - continued

13. Fixed assets

       13.1 Recognition criteria for fixed assets

       Fixed assets are tangible assets that are held for use in the production or supply of goods or
       services, for rental to others, or for administrative purposes, and have useful lives of more than
       one accounting year. A fixed asset is recognised only when it is probable that economic benefits
       associated with the asset will flow to the Group and the cost of the asset can be measured reliably.
   &e