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个股公告正文

张 裕B:2017年半年度报告(英文版)

日期:2017-08-29附件下载

              Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report




Yantai Changyu Pioneer Wine Co. Ltd.

       2017 Semi-annual Report



              Final 2017-03




            August, 2017




                                                                        1
                                                         Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report




                                                         Contents


I、Important Notice, Contents and Definition ............................................................................... 3

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

III、Summary of the Company’s Businesses ................................................................................ 9

IV、Management Discussion and Analysis ................................................................................. 11

V、Major issues ............................................................................................................................. 24

VI、Changes in Shares and the Shareholders’ Situation .......................................................... 34

VII、Related Situation of Preferred Shares ............................................................................... 39

VIII、 Situation for Directors, Supervisors, Senior Management Staffs .................................. 40

IX、 Related Situation of Corporation Bonds ........................................................................... 41

X、 Financial Report ...................................................................................................................... 42

XI、Reference Document ............................................................................................................. 138




                                                                                                                                     2
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               I. Important Notice, Contents and Definition

The Board of Directors , the Board of Supervisors , directors, supervisors & senior
management staffs 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.

Expect the following directors, other directors have personally attended the Board of
Directors‘ meeting for deliberating this Semi-annual report.
Director name with       Director post with      Reason for              Mandatary Name
non-present in person non-present in person non-present in person
Liu Yan                  Independent director Business trip              Luo Fei
Wei Anning               Director                Business trip           Qu Weimin

About significant risks that may be faced in production and operation process, please refer
to―10. Risks the Company faces and measures‖ in chapter four ―Management Discussion and
Analysis‖ of this report. We advise investors to read carefully and pay attention to the
investment risks.

The business plan and target in the report do not represent the earnings forecast of the listed
company to 2017. Whether the Company could achieve that or not depends on several factors
including the changes of market conditions and the effort extent of managing team etc. with a
great uncertainty, so the investors should be in a special attention.

In the first half year, the Company has no plan to distribute cash dividends and bonus shares;
capital reserve will not be transferred to equity.




                                                                                                    3
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Definition


Definition Item             Refers to Definition Content
Company/The Company/The     Refers to
                                      Yantai Changyu Pioneer Wine Co. Ltd.
Group
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

Abbreviation of the Shares:      Changyu A、Changyu B               Code number of the Shares   000869、200869
Abbreviation of the Shares
                                 -
after alteration
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 name 张裕
Legal Name in English            YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
Abbreviation of English name CHANGYU
Legal Representative             Mr. Sun Liqiang


2. Contact person and information


                                                                  Authorized Representative of the Securities
              Secretary to the Board of Directors
                                                                  Affairs

Name          Mr. Qu Weimin                                       Mr. Li Tingguo
Address       56 Dama Road, Yantai, Shandong, China               56 Dama Road, Yantai, Shandong, China
Tel           0086-535-6633656                                    0086-535-6633656
Fax           0086-535-6633639                                    0086-535-6633639
E-mail        quwm@changyu.com.cn                                 stock@changyu.com.cn


3. Other information

1)、The Company’s contact information

Whether there is any change for the Company‘s registered address, office address, post code,
website and e-mail address during the report period.
□Available Not available
There is no any change for the Company‘s office address, post code, website and e-mail address
during the report period, please see 2016 annual report for more details.


2)、Information disclosure and filling location

Whether there is any change for the information disclosure and filling location during the report
period.
□Available Not available




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    There is no any change for the newspapers in which the Company‘s information is disclosed,
    website assigned by CSRC to carry the semi-annual report and the filling location during the report
    period, please see 2016 annual report for more details.

    4. Key accounting data and financial indicators

    Whether the Company makes retroactive adjustments or restates the accounting data of previous
    fiscal years.
    □          No
                                                            In the same period of last More or less than last
                                  In the report period
                                                                      year                  year (%)
Business revenue (CNY)                    2,767,098,197                   2,753,032,799                           0.51%
Net profit attributed to the
shareholders of the listed                  670,069,054                     695,021,847                          -3.59%
company (CNY)
Net profit attributed to the
shareholders of the listed
company after deducting the                 652,906,375                     678,478,321                          -3.77%
irregular profit and loss
(CNY)
Net cash flows from the
                                            420,360,319                     682,748,369                        -38.43%
operating activities (CNY)
Basic earnings per share
                                                    0.98                              1.01                       -2.97%
(CNY/share)
Diluted earnings per share
                                                    0.98                              1.01                       -2.97%
(CNY/share)
Weighted average for earning
                                                  7.84%                            8.78%                         -0.94%
rate of the net assets

                                 The end of the report                                        More or less than last
                                                               The end of last year
                                       period                                                      year (%)

Total assets (CNY)                       12,273,978,471                 11,528,077,971                            6.47%
Net Assets attributed to the
shareholders of the listed                8,880,538,852                   8,209,010,989                           8.18%
company (CNY)

    5. 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




                                                                                                                   6
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                                                                                                         Unit: CNY
                         Net profit belonged to shareholders of        Net asset belonged to shareholders of
                                     listed company                               listed company
                         Amount in current      Amount in last       Amount at the end            Amount at the
                             period               period              of this period             beginning of this
                                                                                                      period
Based on Chinese
                               670,069,054          695,021,847            8,880,538,852             8,209,010,989
accounting standard
Items and amount adjusted based on international accounting standard

Based on
international                  670,069,054          695,021,847            8,880,538,852             8,209,010,989
accounting standard

        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.

        3)、Explanation of difference in accounting data based on Chinese and international
        accounting standards
        □Available Not available

        6. Item and amount of irregular profit and loss

        Available      □Not available
                                                                                                       Unit:CNY
                                 Item                                          Amount                  Explanation
Gain on disposal of non-current assets, including the reversal of
                                                                                      -495,071
accrued impairment provision
Tax return, deduction and exemption with unauthorized approval
                                                                                   12,737,950
or no official document of approval
Government grants credited in profit and loss (except for those
recurring government grants that are closely related to the entity's
                                                                                    6,997,254
operation, in line with related regulations and have proper basis
of calculation)
Other non-operating expense and income                                              3,225,833
Less: Income tax effect                                                             5,303,287
Total                                                                              17,162,679                 -

        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 Notice on Public Company’s Information Disclosure No.1

                                                                                                                     7
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- Irregular Profit and Loss and as to regarding the irregular profit and loss as recurrent profit and
loss as specified in the Explanatory Notice on Public Company’s Information Disclosure No.1 -
Irregular Profit and Loss.
□Available 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 Notice on Public Company’s Information Disclosure No.1 -
Irregular Profit and Loss during the report period.




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                       III. Summary of the Company’s Businesses

1. Main businesses during the report period
Whether the Company needs to follow the disclosure requirement of special business?
No.

During the report period, the Company‘s main business is to produce and operate wine and brandy,
thus providing the domestic and foreign consumers with healthy and fashionable alcoholic drinks.
The Company integrates the planting and procurement of grape, the procurement of raw and
auxiliary material, the production and sales of products. Compared with earlier stage, there are no
significant changes happened to the Company‘s main businesses. The wine industry that the
Company involved 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. During the report
period, the sales of wines with low price is slightly down; middle-and-high-level wines, such as
Noble Dragon and chateau wine, remain stable; the sales amount of brandy and imported wines
keeps the favorable growth momentum. All these make the Company‘s business performance
basically equal compared with the same period of last year.

2. Significant changes of main assets

1)、Significant changes of main assets

Main assets                        Explanation of significant changes
Equity asset                       No significant changes
Fixed asset                        No significant changes
Intangible asset                   No significant changes
                                   Increasing by 26.07% compared with the end of last year, mainly
Construction in process
                                   owing to increased investment in projects under construction
                                   Increasing by 79.98% compared with the end of last year, mainly
Notes receivable                   owing to increased amount of bank acceptance through selling
                                   products to clients
                                   Increasing by 1424.5% compared with the end of last year,
Interest receivable
                                   mainly owing to increased interest of fixed deposit
                                   Increasing by 73.01% compared with the end of last year, mainly
Other current assets
                                   owing to increased tax prepaid
                                   Increasing by 1832% compared with the end of last year, mainly
                                   owing that the settlement about the acquisition of Bethwines by
Other non-current assets
                                   the Company‘s subsidiary Indomita Wine Company Chile, SpA
                                   is not finished

2)、Main overseas assets condition

□Available        Not available


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3. Analysis of core competitiveness
Whether the Company needs to follow the disclosure requirement of special business?
No.

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‖, ―Noble Dragon‖ 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,brandy
and sparkling wine 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.
Sixthly, the Company has a relatively respect motivation system. Most of Company‘s
employees indirectly hold the Company‘s equity through controlling shareholders. There are
high consistency between employee benefits and shareholders benefits, in favor of motivating
employees to create value for shareholders.
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.




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                   IV. Management Discussion and Analysis
1. Summarization
During the report period, influenced by the slowdown of domestic economic growth, the
overall domestic wine industry is relatively stable. With the increased scale of domestic
middle class, the effective demands for top-level products begin the slow recovery and the
medium-and-low-level products suitable for mass consumption maintains a slight growth
tendency. Influenced by the further decrease in product price resulting from the overwhelming
flow of foreign wine into Chinese market, the competition in domestic wine market,
especially for middle-and-low-level wines, is very fierce, plus the great impact brought by
E-commerce and other new channels to traditional sales channels, resulting in bigger
challenges for the Company to achieve sustained and steady growth. Facing quite a lot of
external disadvantages, the Company insists to focus on the market, adjust the marketing
tactics and product structure, strive to develop brandy and imported wine, optimize the market
layout, perfect the marketing channels and assessment system, strive to promote product sales,
achieving good results and realizing business income of CNY2767.09 million, an increase of
0.51% compared with last year; but due to the impact of increase in operating cost, taxes and
additional, sales expense and administrative expense, the Company realized net profit of
CNY670.06 million belonging to the parent company‘s shareholders, an decrease of 3.59%
compared with last year.
During the report period, the Company mainly did following works:
Firstly, the Company focused on the market, strengthened the market adjustment and strived
to promote the overall development of various products. During the report period, the
Company insisted the strategy of ―focusing on wine while fully developing various products‖,
further perfected the construction of sales system and performance assessment method for
marketing personnel, integrated the sales structure of regional market, such as southwest,
northwest and some coastal cities and so on, as well as that of sub channels, implemented
―personnel reduction with salary increase, personnel reduction with efficiency increase ‖,
reorganized some exclusive shops, receiving favorable results; further perfect the team of key
distributors and the team of professional sales personnel, consolidated the market position of
middle-and-high-level products, such as chateau wine and Noble Dragon; quickened the
layout of marketing network for brandy and reinforced the marketing of middle-level brandy,
such as ―Three Star‖, ―Four Star‖ and ―Five Star‖ and so on, further increasing the
profitability of brandy products; continued doing well the marketing work of overseas
acquired enterprise‘s products which behave well in international market and retain steady
growth momentum in domestic market, providing new power for accelerating the Company‘s
development.
Secondly, the Company strengthened the financial management and made efforts to achieve
energy-saving and cost-reducing to further reduce the operating cost. During the report period,
the Company scientifically made the programme for financing structure, strengthened the
capital allocation and management and accelerated the capital flow, favorably squeezing the
capital cost; reinforced the monitoring for key expenses, such as advertising expense, freight,
big repair charge and grape planting expense, etc, and strengthened the profit assessment of
self-owned grape bases, reducing the operating cost and improving the capital use efficiency.

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Thirdly, the Company continued implementing internationalization strategy and orderly
proceeded the overseas acquisition work. During the report period, the Company decided to
establish Indomita Wine Company Chile, SpA which acted as the platform to acquire Chilean
Bethwines‘s three subsidiaries with wine business, further perfecting the Company‘s
productivity layout and product structure and improving the Company‘s market competition
in imported products.
Fourthly, the Company intensified the project management to ensure that each construction
project could be put into operation on schedule. During the report period, through reinforcing
the project management, scientifically arranging schedule, strictly conforming to the budget
requirement, making and implementing removal plan and doing well the connection between
production and sales, the Company ensured that each construction project goes smoothly. At
present, civil work of main invested projects have reached the ending phase and the
production equipments are in the installation and commissioning phase.
In order to achieve the operation target set by the Company at the beginning of this year, the
Company would do following work in the second half year of 2017:
Firstly, the Company would intensifying the brand construction and carding work, further
clear brand positioning and optimize the product line. The Company would take thorough
carding work to current brands and product lines, fully improve the packaging quality and
level of products, further clear the market positioning of each brand and industriously
compressing the quantity of categories in order for the Company to better carry out marketing
work.
Secondly, the Company would continue paying attention to the construction of key distributor
team and professional sales personnel team, conducting the tasting and promotion work of
middle-and-high-level products, such as chateau wine, Noble Dragon, ―Three Star‖ and above
level brandy products, and striving to promote the sales of middle-and-high-level products; do
the preparation work for the launch of new products, such as Koyac brandy, Chilean Indomita
wines and small volume products, further perfect the product development and design of
Grappie and put them on the market at the right time; continue promoting the sales work of
acquired brands in domestic and foreign markets, such as Atrio, Mirefleurs, Donelli and
Indomita and so on, further establish and perfect the domestic and foreign sales system, take
full advantage of foreign sales network to enlarge the export scale of domestic wines; make
the best of information technology, strengthen the ability to react to market conditions, change
the production from plan-driven to order-driven, fully implement the strategy of utilizing the
sales volume to decide the production, shorten the delivery time, strive to lower the inventory,
reduce the fund occupation and increase the enterprise revenue; reinforce the training and
reorganization work of marketing team, improve the assessment and incentive mechanism and
further enhance the marketing capacity.
Thirdly, the Company would orderly proceed the construction of invested projects and focus
on the connection between production and sales. The Company would manly focus on the
ending work of main body‘s civil work in Yantai Changyu International Wine City (in other
words Yantai Changyu Industry Park) as well as the equipment installation and
commissioning work, weed out backward production capacity, achieve the seamless
connection between old capacity and new capacity and timely satisfy the market needs.


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Fourthly, the Company would optimize the layout of grape bases and comprehensively complete the procurement of grape materials. The
Company would actively explore the new model of building overseas grape base, enlarge the area of overseas grape base, increase and improve
the raw material supply channel, make effort to reduce raw material cost and improve raw material quality; keep optimizing the grape pricing
mechanism, reasonably confirm grape procurement price and comprehensively complete the procurement work of raw material in order to
ensure the material supply.

2. Analysis of main business
Refer to ―1. Summarization‖ of ―Management Discussion and Analysis
Period comparison of main financial data
                                                                                                                                                Unit: CNY
                           In the report       In the same period
                                                                  More or less (%)                          Reason for changes
                              period               of last year
Operating revenue           2,767,098,197          2,753,032,799           0.51% -
Operating cost                 925,754,133          902,734,104            2.55% -
Sales expense                  668,735,726          650,737,234            2.77% -
Management expense                                                                   Mainly attributed to the increase of employee‘s compensation
                               130,542,386          122,695,845            6.40%
                                                                                     and depreciation expense on year-on-year basis
                                                                                     Mainly attributed to the decrease of interest income from bank
Financial expense               11,147,949            10,988,233           1.45%
                                                                                     deposits on year-on-year basis
                                                                                     Mainly attributed to the decreased of deferred income tax
Income tax expense             228,752,790          238,715,481            -4.17%
                                                                                     expenses on year-on-year basis
R&D investment                             0                   0              0% -
Net amount of cash
flow generated in                                                                    Mainly attributed to the increase of bill receivable from goods
                               420,360,319          682,748,369          -38.43%
                                                                                     selling
operating activities


                                                                                                                                                            13
                                                                                                  Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


Net amount of cash                                                               Mainly attributed to the increase of cash generated by building
flow generated in                                                                of fixed assets, intangible assets and other long-term assets as
                               -797,540,941        -397,659,283         -100.56%
                                                                                 well as cash used for more than three months fixed deposit on
investment activities                                                            year-on-year basis
Net amount of cash
flow generated in                                                                   Mainly attributed to the decrease of cash used for debt
                                353,878,706        259,718,424             36.25%
                                                                                    repayment on year-on-year basis
financing activities



                                                                                 Mainly attributed to the decrease of cash received from goods
Net increased amount of                                                          selling and labor service providing on year-on-year basis but
cash and cash                   -27,454,401        551,693,393          -104.98% the increase of cash generated by building of fixed assets,
equivalents                                                                      intangible assets and other long-term assets on year-on-year
                                                                                 basis




Whether there is any great change for the Company‘s profit structure or profit source during the report period

□Available     Not available

There is no great change for the Company‘s profit structure or profit source during the report period.




                                                                                                                                                           14
                                                                                                Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


    Structure of main businesses
                                                                                                                                       Unit: CNY
                                                          Increase or decrease of      Increase or decrease of operating Increase or decrease of gross
             Operating      Operating    Gross profit
                                                        operating revenue over the     cost over the same period of last profit over the same period of
              revenue         cost           (%)
                                                        same period of last year (%)               year (%)                               last year

Sector

Wine and
alcoholic   2,767,098,197 925,754,133          66.54%                         0.51%                                 2.55%                                -0.67%
beverages

Product

Wine        2,151,123,903 704,020,080          67.27%                        -1.21%                                 0.10%                                -0.43%
Brandy       575,324,933 200,170,322           65.21%                         6.47%                                 9.13%                                -0.85%
Other          40,649,361   21,563,731         46.95%                        15.35%                               34.88%                                 -7.68%
Region

Domestic    2,629,066,639 841,890,209          67.98%                         0.16%                                 3.88%                                -1.14%
Overseas     138,031,558    83,863,924         39.24%                         7.60%                                -9.09%                               11.16%


    3. Analysis to non-main business

    □Available   Not available



                                                                                                                                                         15
                                                                                                  Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


     4. Assets and liabilities situation

     1)、Major changes of assets
                                                                                                                                       Unit: CNY
                               The end of the report period      The end of the same period of last year Proportion increase
                                                                                                                                Explanation on major
                                             Proportion in the                       Proportion in the      or decrease
                               Amount                                Amount                                                           changes
                                               total assets (%)                       total assets (%)           (%)
Monetary funds                1,550,067,781              12.63%     1,391,517,607                 12.07%               0.56% -
Receivables                     167,152,509                1.36%      173,062,628                   1.50%             -0.14% -
                                                                                                                             Mainly attributed to the
Inventory                     2,024,302,929              16.49%     2,248,609,740                 19.51%              -3.02% decrease of amount of
                                                                                                                             inventory goods selling
Investment real estate                                        0%                                       0%                 0% -
Long-term equity
                                                           0%                                       0%                         0% -
investments
                                                                                                                                 Mainly attributed to the
Fixed assets                  4,591,037,486           37.40%        4,683,187,493               40.62%                    -3.22% increase of accumulated
                                                                                                                                 depreciation
                                                                                                                                 Mainly attributed to the
                                                                                                                                 increase of investment on
Construction in progress      1,697,297,440           13.83%        1,346,281,737               11.68%                     2.15%
                                                                                                                                 the construction in
                                                                                                                                 progress
                                                                                                                                 Mainly attributed to the
Short-term borrowings           846,881,075             6.90%         662,388,882                5.75%                     1.15% increase of short term
                                                                                                                                 loans acquired from banks
                                                                                                                                 Mainly attributed to the
Long-term borrowings            175,270,580             1.43%          49,140,555                0.43%                        1% increase of long term loans
                                                                                                                                 acquired from banks

     2)、 Measuring assets and liabilities at fair value



                                                                                                                                                           16
                                                                                                                          Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


           □Available        Not available

           3)、Assets rights restricted situation up to the end of report period

           Assets rights restricted situation of the Company up to the end of report period, please refer to Notice on External Guarantee disclosed on the
           website (www.cninfo.com.cn) on December 22nd, 2016.

           5. Investment situation analysis

           1)、Overall situation

           □Available        Not available

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

           Available         □Not available
                                                                                                                                                                          Unit: CNY
                                                                                                                                               Investment
Name of                                                                                                           Progress up
                                                                                                                                                profit and    Whether
  the         Main       Investment    Investment    Shareholding    Capital                Investmen   Product      to the      Estimated                                Disclosure         Disclosure
                                                                                 Partners                                                        loss for     or not to
invested    businesses     mode          amount         ratio         source                t horizon    type       balance        profit                                 date               index
                                                                                                                                                 current     prosecute
company                                                                                                            sheet date
                                                                                                                                                 period
                                                                                                                                                                                             Notice on
            Productio
                                                                                                                  Registration                                                               Establishi
Indomita      n and
                                                                                                                    already                                                                     ng
 Wine       operation                                                                                                                                                              th
                           Newly                                                 LAMBO                            completed,                                               May 26 ,          Joint-Vent
Company      of wine                   280,502,100      85%         Self-owned              50 years    Alcohol                  50,000,000.        0           No
                         established                                              SpA                             now taking                                                2017                ure
 Chile,     and other
                                                                                                                  settlement                                                                 Indomita
  SpA       alcoholic
                                                                                                                   procedure                                                                   Wine
            beverages
                                                                                                                                                                                             Company

                                                                                                                                                                                        17
                                                                                                                                                   Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


                                                                                                                                                                                                                          Chile, SpA
                                                                                                                                                                                                                          disclosed
                                                                                                                                                                                                                            on the
                                                                                                                                                                                                                           website
                                                                                                                                                                                                                            (www.
                                                                                                                                                                                                                           cninfo.
                                                                                                                                                                                                                           com. cn)
Total           -             -              280,502,100       -                 -                   -             -             -             -          50,000,000.          0              -                -                -


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

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

Yantai                                                                                                                                                                                                                Notice on
Changyu                                                                                                                                                                                                             Resolution of
                                                  Liquor and
International                                                                                                                                                                                                        the Seventh
                    Self-                          alcoholic                                             Owned                                                           Not completed or
Wine City                            Yes                           172,000,000   1,195,130,000                             98%                                       0                            2016.04.22       Session Board
                constructed                        beverage                                              funds                                                           put into operation
Blending and                                                                                                                                                                                                               of
                                                     sector
Cooling                                                                                                                                                                                                            Directors’ 4th
Center                                                                                                                                                                                                                Meeting
Yantai              Self-                         Liquor and                                             Owned                                                           Not completed or                          disclosed on the
                                     Yes                           103,000,000        879,690,000                          98%                                       0                            2016.04.22
Changyu         constructed                        alcoholic                                             funds                                                           put into operation                        website (www.

                                                                                                                                                                                                                     18
                                                                                           Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


International                       beverage                                                                                                      cninfo. com. cn)
Wine City                             sector
Bottling
Center
Yantai
Changyu                             Liquor and
International      Self-            alcoholic                               Owned
                              Yes                 4,700,000   403,592,000           100%                  0    No direct earning    2016.04.22
Wine City       constructed         beverage                                funds
Logistics                             sector
Center
Changyu Vine                        Liquor and
and Wine           Self-            alcoholic                               Owned                              Not completed or
                              Yes                 2,000,000   107,760,000           60%                   0                         2016.04.22
Research        constructed         beverage                                funds                              put into operation
Institute                             sector
                                    Liquor and
Treasure           Self-            alcoholic                               Owned                              Not completed or
                              Yes                23,860,000   102,850,000           60%                   0                         2016.04.22
Wine Chateau    constructed         beverage                                funds                              put into operation
                                      sector
                                    Liquor and
Koyac Brandy       Self-            alcoholic                               Owned                              Not completed or
                              Yes                32,240,000   144,168,000           60%                   0                         2016.04.22
Chateau         constructed         beverage                                funds                              put into operation
                                      sector
                                    Liquor and
Greening           Self-            alcoholic                               Owned
                              Yes                12,200,000    37,500,000           100%                  0    No direct earning    2016.04.22
Investment      constructed         beverage                                funds
                                      sector
Cognac                              Liquor and
                   Self-                                                                                       Not completed or
Fransac                       Yes   alcoholic            0             0     —      0%                   0                         2016.04.22
                constructed                                                                                    put into operation
chateau                             beverage



                                                                                                                                                    19
                                                                                                Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


renovation                                  sector
project
Total                —          —          —        350,000,000   2,870,690,000   —    —   0              0           --                --                --


             4)、Financial assets investment

             (1) Security investment

             □Available     Not available

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

             (2) Derivative investment

             □Available     Not available

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

             6. Sale of major assets and equities

             1)、 Sale of major assets

             □Available     Not available

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

             2)、 Sale of major equities

             □Available     Not available



                                                                                                                                                         20
                                                                                                                    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


   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 business                Industry         Registered capital   Total asset    Net asset     Operation       Operation     Net Profit
        name               type                                                                                                              revenue          profit
                                      To plant grape, produce and   Wine and alcoholic
  Xinjiang Tianzhu
                        Subsidiary    sell grape juice, bulk wine   beverages industry     CNY75million        171,307,123   123,857,826    115,904,168     26,750,711    22,453,715
   Winery Co., Ltd.
                                            and fruit wine
       Yantai                          To research, produce and     Wine and alcoholic
  Changyu-Chateau                       sell wine and sparkling     beverages industry
                        Subsidiary                                                          USD5million        246,486,329    79,644,461     20,668,538      1,138,003      -106,018
Changyu Castel Wine                   wine as well as the tourism
       Co. Ltd.                                 service
  Langfang Castel-      Joint stock                                 Wine and alcoholic
                                       To produce and sell wine                          USD6.108818million     45,760,868    36,337,841     23,732,778        207,784       161,088
Changyu Wine Co. Ltd.   company                                     beverages industry
Chateau Changyu AFIP                   To research, produce and     Wine and alcoholic
                        Subsidiary                                                         CNY110million       541,925,594   172,295,488     75,491,933     17,573,835    12,511,172
Global Wine Co. Ltd.                     sell brandy and wine       beverages industry
  Chateau Liaoning                                                  Wine and alcoholic
Changyu Ice Wine Co.,   Subsidiary       To produce ice wine        beverages industry    CNY26.30million       79,162,817    49,835,838     16,724,881     -2,046,303     -2,063,324
         Ltd.
 Hacienda Y Vinedos                    To produce and operate o     Wine and alcoholic
                        Subsidiary                                                       EUR2.385732million    435,592,862   124,144,131    131,223,890     -2,216,518      -233,187
Marques Del Atrio, SL                    wine and other liquor      beverages industry


   Acquisition and disposal of subsidiaries during the report period
   □Available    Not available
   Information of main holding and joint stock companies
   During the report period, Yantai Changyu-Castel Wine Chateau Co. Ltd. and Chateau Liaoning Changyu Ice Wine Co., Ltd. produced losses,
   which mainly attributed to the decrease of sales revenue of Yantai Changyu Pioneer Wine Sales Limited Company and other internal sales


                                                                                                                                                                             21
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organisations from the two sales companies. Hacienda Y Vinedos Marques Del Atrio, SL
produced losses, which mainly attributed to the amortization of premium from initial
acquisition.

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

□                 Not available

9. Forecast for the operation achievements from January to September of 2017

Caution and explanation for the prediction that the cumulative net profit from the beginning
of the year to the end of next report period could be in a loss or there will be in a great change
comparing with the same period of last year.

□                 Not available

10. Risks the Company faces and measures

(1) 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 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.

(2) 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.

(3) 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.

                                                                                                        22
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(4) 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.




                                                                                                       23
                                                                                              Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


                                                               V. Major issues
1. 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 ratio
           Session                Meeting type                           Convening date      Disclosure date                Disclosure Index
                                                      of investors
                                     Annual                                                                      http://www.cninfo.com.cn
  2016 Annual Shareholders‘
                                  shareholders‘        61.86%            2017.06.15           2017.06.16        Notice on Resolution of 2016
          Meeting
                                    meeting                                                                      Annual Shareholders’ Meeting

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

□Available    Not available

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

□Available     Not available
There are no schemes of paying cash dividend, bonus share and increasing equity with capital during the semi-annual period.


3. Commitments that the Company’s actual controllers, shareholders, related parties, acquirers and the Company and other related
commitment parties have implemented during the report period and have not implemented up to the end of the report period

Available      □Not available

 Commitments Commitment party Commitment type              Commitment content    Commitment time        Commitment period             Implementation
Commitments
at share reform
Commitments

                                                                                                                                                       24
                                                                                       Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


made in
acquisition
report or equity
changes report
Commitments
at asset
restructuring
                   Yantai Changyu   Solve horizontal  Non-horizontal                                                        Has been
                                                                               1997.05.18                Forever
                   Group Co. Ltd.   competition       competition                                                           performing strictly
                                                      According to
                                                      Trademark License
                                                      Contract, the Company
                                                      will pay trademark
                                                      royalty for the
Commitments                                           Changyu‘‘
at the initial                                        products of Yantai
public offering Yantai Changyu      Clear the purpose Changyu Group Co.,                                                    Has been
                                                                               1997.05.18                Forever
or refinancing Group Co. Ltd.       of brand royalty Ltd every year, Yantai                                                 performing 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

                                                                                                                                                25
                                                                                                 Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


the Company
Commitment
under timely
               Yes
implementatio
n or not
Whether or not
to have
specific
reasons of the No
unimplemented
commitment
and next steps

 4. The appointment and dismissal of certified public accountants

 Whether the semi-annual report has been audited
 □ Yes    No
 The semi-annual report has not been audited.

 5. Explanation from the board of directors for the “Non-standard Audit Report” of last year

 □Available     Not available

 6. Explanation from the board of directors for the “Non-standard Audit Report” of last year

 □Available     Not available

 7. Bankruptcy reorganization

 □Available     Not available
 There are no related issues of bankruptcy reorganization happened during the report period and until the report period.

                                                                                                                                                          26
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8. Litigation Issue

Material litigation and arbitration

□Available     Not available

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

Other Litigation Issue

□Available     Not available

9. Penalty and rectification

□Available     Not available

There are no penalties or rectifications during the report period.

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

□Available     Not available

11. 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.

12. Significant related transactions

1)、 Related transactions in relation to routine operations

□Available     Not available

There are no related transactions in relation to routine operations during the report period.

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


                                                                                                        27
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□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 to exist non-operating related credit and debt

□Yes     No

There are no non-operating related credit and debt during the report period.

5)、 Other major related transactions

Available       □Not available

Detailed information about routine related transactions, please refer to Notes XI "Related party
and Related Transaction" in the Financial Statement of the report in detail, or could also look up
the Company‘s related temporary announcement according to the following index.

Disclosure website of major related transactions‘ temporary reports for related query

Name of                             Disclosure date of     Website of disclosure of
Temporary announcement              temporary announcement temporary announcement
Notice on 2017 Annual Routine                              Cninf
                                    2017.04.22
Related Transaction                                        (http://www.cninfo.com.cn)

13. 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.

14. Major and important contracts and execution results

1)、Trusteeship, contract and leasehold issues

(1) Trusteeship situation

□Available     Not available

There is no trusteeship situation during the report period.

                                                                                                       28
                                             Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


(2) Contract situation

Available      □Not available

Contract situation description
During the report period, about the Company‘s contract operation situation, please see 1.
Equity in the subsidiaries‘‘ in Annex 9 Rights and interests of other subjects‘‘ in the
financial report of this 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.

(3) Leasehold situation

Available      □Not available

Leasehold situation description

During the report period, 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 January 1st, 2016 to December 31st, 2021.

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




                                                                                                      29
                                                                                                                                            Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


     (1) Guarantee situation

                                                                                                                                                                                 Unit: CNY‘0000
                                                      External guarantee of the Company and its subsidiaries(excluding guarantee to subsidiaries)
                         Disclosure date of                                                                                                                     Whether or not
 Guarantee object                               Guarantee Actual date of occurrence                                                               Guarantee                       Whether or not belong to
                       related announcement                                             Actual guarantee amount          Guarantee type                            complete
       name                                       quota       (date of agreement)                                                                   Period                          related-party guarantee
                       about guarantee quota                                                                                                                      implement
 Yantai Economic
 and Technological
Development Zone            2016.12.22             34,160         2016.12.21                                34,160      Mortgage; Pledge           10 years           No                     No
   Management
      Council.
Total of the external guarantee quota                                                   Total of the actual external guarantee amount
                                                                                    0                                                                                                                         0
approved during the report period (A1)                                                  during the report period (A2)
Total of the external guarantee quota                                                   Balance of the actual external guarantee by the
                                                                               34,160                                                                                                                  34,160
approved by the end of the report period (A3)                                           end of the report period (A4)
                                                                            Guarantee between the Company and subsidiaries
                         Disclosure date of                                                                                                                     Whether or not    Whether or not belong to
 Guarantee object                               Guarantee Actual date of occurrence                                                               Guarantee
                       related announcement                                             Actual guarantee amount          Guarantee type                            complete         related-party guarantee
       name                                       quota       (date of agreement)                                                                   Period
                       about guarantee quota                                                                                                                      implement
  Yantai Changyu
                                                                                                                          Joint liability
Pioneer Wine Sales          2016.10.31             10,000         2016.11.05                                10,000                                  2years            No                    Yes
                                                                                                                           assurance
 Company Limited
  Yantai Changyu
   Pioneer Wine             2016.12.22             11,984         2016.12.21                                11,984      Mortgage; Pledge            10years           No                    Yes
 Company Limited
  Yantai Changyu
Wine Research and                                                                                                         Joint liability
                            2016.12.22             72,176         2016.12.21                                72,176                                  10years           No                     No
   Development                                                                                                       assurance; Mortgage
 Company Limited

                                                                                                                                                                                                       30
                                                                                                                                           Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


Total of the guarantee quota approved to                                                 Total of the actual guarantee amount for
                                                                                     0                                                                                                                       0
subsidiaries during the report period (B1)                                               subsidiaries during the report period (B2)
Total of the guarantee quota approved to
                                                                                         Balance of the actual guarantee for subsidiaries
subsidiaries by the end of the report period                                   82,176                                                                                                                 82,176
                                                                                         by the end of the report period (B4)
(B3)
                                                                                         Guarantee between subsidiaries
                         Disclosure date of                                                                                                                    Whether or not
 Guarantee object                              Guarantee Actual date of occurrence                                                                 Guarantee                     Whether or not belong to
                       related announcement                                               Actual guarantee amount         Guarantee type                          complete
        name                                      quota        (date of agreement)                                                                  Period                         related-party guarantee
                       about guarantee quota                                                                                                                     implement
            -                     -                 -                   -                             -                         -                      -              -                      -
Total of the guarantee quota approved to                                                 Total of the actual guarantee amount for
                                                                                     0                                                                                                                       0
subsidiaries during the report period (C1)                                               subsidiaries during the report period (C2)
Total of the guarantee quota approved to
                                                                                         Balance of the actual guarantee for subsidiaries
subsidiaries by the end of the report period                                         0                                                                                                                       0
                                                                                         by the end of the report period (C4)
(C3)
                                                              Total of the Company‘s guarantee amount(Total of above three major items)
Total of the approved guarantee quota during the report period(A1+B1+C1)                                  0 Total of the actual guarantee amount during the report period(A2+B2+C2)                      0
Total of the approved guarantee quota by the end of the report period(A3+B3+C3)                    116,336 Balance of the actual guarantee by the end of the report period(A4+B4+C4)             116,336
The proportion of Actual total guarantee amount (A4+B4+C4) in the Company‘s net asset                                                                                                               13.10%
Among :
The amount of guarantee for shareholders, actual controllers and their related parties(D)                                                   0
The amount of debt guarantee for the guaranteed objects whose asset-liability ratio is more than 70% directly or indirectly(E)              0
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
Explanation for violating due process to provide external guarantee                                                                           No
       Specific explanation on adopting complex guarantee type

       No

                                                                                                                                                                                                      31
                                                                                               Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report

 (2) Illegal external guarantee

□Available     Not available

There is no illegal guarantee situation during the report period.

3)、Other important contracts

□Available     Not available

There are no other important contracts during the report peri

15. Situation for Social Responsibility

1)、Situation for carrying out social responsibility of precise poverty
There is not carried out precise poverty, no-plan for Subsequent precise poverty during the Semi-annual report period.

2)、Major environmental situation
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

16. Other Major issues

□Available Not available
There are no other major issues need to be explained during the report period.

17. Major issues of Company’s subsidiaries

Available       □Not available
                                                                                                                                                        32
                                                                                                  Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


Information of newly established subsidiaries during this report period is as follows:

Full name of invested    Incorporation    date    Corporate representative   Business Character     Registered capital            Contribution amount
unit                     and place
Yantai Changyu           2017.01.18               Wang Hongshan              Sales                  CNY 5,000,000                 CNY 5,000,000
Pioneer Wine Sales       Yantai, Shandong
Company Limited          province, China
Indomita Wine            2017.04.06               WILFRED CHARLES            Manufacturing          USD 1,000,000                 USD 40,110,000
Company Chile, SpA       Santiago, Chile          LEIGH NIELSEN              industry




                                                                                                                                                           33
                                                                                           Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-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
□Available Not available




                                                                                                                                                    34
                                                                                               Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report

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


□Available    Not available


3. Situation for shareholders and the actual controllers

                                                                                                                                            Unit:share
                                                                         Total number of preferred
Total common shareholders at the 43,009 (23,475 of Stock A and           shareholder recovering
                                                                                                               0
end of report period                  19,534 of Stock B)                 voting power at the end of report
                                                                         period
                                  Shareholders holding more than 5% or the top 10 shareholders holding situation
                                                       Percentag Shares held until the Changes         Number Number of Pledged or frozen
Name                 of
                        Character of shareholders      e
Shareholders                                                     end of the report period during the of          unrestricted Share
                                                                                                                                     Amount
                                                       (%)                                report       restricte shares       status

                                                                                                                                                        35
                                                                            Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report

                                                                        period       d
                                                                                     shares
YANTAI                                           50.40%   345,473,856   0                        345,473,856
                  Domestic       non-state-owned
CHANGYU GROUP
                  legal person
CO. LTD.
GAOLING           Foreign legal person           3.11%    21,300,919    0                        21,300,919
FUND,L.P.
CHINA             State-owned legal person       2.32%    15,924,155    0                        15,924,155
SECURITIES
FINANCE CORP
BBH    BOS    S/A                                2.22%    15,241,826    0                        15,241,826
FIDELITY FD - Foreign legal person
CHINA FOCUS FD
TIANAN                                           1.43%    9,774,689     1,835,523                9,774,689
PROPERTY
                  Domestic       non-state-owned
INSURANCE CO.,
                  legal person
LTD—BAOYING
NO.1
GUOTAI JUNAN                                     0.96%    6,582,957     1,261,479                6,582,957
SECURITIES(HONG Foreign legal person
KONG) LIMITED
FIDELITY                                         0.88%    6,000,851     3,700,858                6,000,851
PURITAN TRUST:
FIDELITY SERIES
                  Foreign legal person
INTRINSIC
OPPORTUNITIES
FUND
CENTRAL HUIJIN                                   0.69%    4,761,200     2,461,207                4,761,200
                  State-owned legal person
ASSET
                                                                                                                                     36
                                                                                                 Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report

MANAGEMENT
LTD.
BBH A/C                                                  0.55%     3,788,487                0                       3,788,487
VANGUARD
EMERGING                Foreign legal person
MARKETS STOCK
INDEX FUND
FIDELITY CHINA                                           0.55%     3,779,202                0                       3,779,202
SPECIAL                 Foreign legal person
SITUATIONS PLC
Strategic investors or legal result of the placement of new
                                                             No
shares to become a top 10 shareholders(if have)(see note 3)
                                                             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
accordant action
                                                             shareholders, 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                                                       15,924,155                   A                         15,924,155
BBH BOS S/A FIDELITY FD - CHINA FOCUS FD                                            15,241,826                   B                         15,241,826
TIANAN PROPERTY INSURANCE CO., LTD—BAOYING NO.1                                    9,774,689                    A                         9,774,689
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED                                           6,582,957                    B                         6,582,957
FIDELITY PURITAN TRUST: FIDELITY SERIES INTRINSIC                                   6,000,851                    B                         6,000,851
OPPORTUNITIES FUND
CENTRAL HUIJIN ASSET MANAGEMENT LTD.                                                4,761,200                    A                         4,761,200

                                                                                                                                                          37
                                                                                              Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report

BBH A/C VANGUARD EMERGING MARKETS STOCK INDEX FUND                                 3,788,487                   B                        3,788,487
FIDELITY CHINA SPECIAL SITUATIONS PLC                                              3,779,202                   B                        3,779,202
The explanation for the associated relationship and accordant action of the top 10 Among the top 10 shareholders, Yantai Changyu Group
shareholders with unrestricted shares, the the associated relationship and         Company Limited has no associated relationship or accordant
accordant action between the top 10 shareholders with unrestricted shares and the action relationship with the other 9 listed shareholders, and the
top 10 shareholders                                                                relationship 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 (if have)(see note 4)                                       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
There is no agreed repurchase trading taken by the Company‘s top 10 common shareholders and shareholders with unrestricted shares during the
report period.


4. Changes of controlling shareholders or the actual controllers situation

Changes of the controlling shareholders during the report period
□Available Not available
There is no any change of the controlling shareholders during the report period.
Changes of the actual controllers during the report period
□Available Not available
There is no any change of the actual controllers during the report period.




                                                                                                                                                       38
                                                   Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report



                      VII. Related Situation of Preferred Shares
□Available     Not available

There are no preferred shares during the report period.




                                                                                                            39
                                                  Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report




    VIII. Situation for Directors, Supervisors, Senior Management Staffs

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

□Available Not available
There are no any changes in shareholdings of directors, supervisors and senior management staffs
during the report period, details see 2016 annual report

2. Personnel changes in Company's directors, supervisors and senior management

Available       □Not available
Name               Positions held                        Type                  Date              Reason
Dai Hui            Director                              Leave after           2017.06.15        -
                                                         tenure
Wei Anning          Director                             Elected               2017.06.15
Zhou Hongjiang      General manager                      Appointed             2017.04.20        -
Leng Bin            Vice-general manager                 Appointed             2017.04.20
Qu Weimin           Vice-general manager                 Leave after           2017.04.20        -
                                                         tenure
Yang Ming           Vice-general manager                 Appointed             2017.04.20
Li Jiming           Chief engineer                       Appointed             2017.04.20
Jiang Hua           Vice-general manager                 Appointed             2017.04.20
Sun Jian            Vice-general manager                 Appointed             2017.04.20
Jiang Jianxun       Finance manager                      Appointed             2017.04.20        -




                                                                                                           40
                                             Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report

                  IX. Related Situation of Corporation Bonds

Whether or not the Company has the corporation bonds issued in public, listed in the stock
exchange, not due on the Semi-annual report‘s authorized issue date or failed to pay in full on
the due date.
No.




                                                                                                      41
                                                             Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


                                               X. Financial Report
1. Audit report

Whether the semiannual report has been audited
     □ Yes √ No

2. Financial statement

The unit in the statements of the financial annotations is RMB Yuan.

2.1 Consolidated balance sheet

Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd.                                                        Unit: Yuan
                                      Item                                  Note     Ending balance      Beginning balance
Current assets:
Monetary fund                                                               7.1          1,550,067,781       1,391,517,607
Settlement reserves
Lending funds
Financial assets measured at the fair value and the variation of which is
recorded into the current profit and loss
Derivative financial assets
Bills receivable                                                            7.2            378,804,230         210,470,027
Accounts receivable                                                         7.3            167,152,509         173,062,628
Advance payment                                                             7.4              2,114,086           2,175,606
Premium receivable
Reinsurance accounts receivable
Receivable reserves for reinsurance contract
Interest receivable                                                         7.5                368,928              24,200
Dividends receivable
Other receivables                                                           7.6             16,311,182          18,880,800
Buying back the sale of financial assets
Inventories                                                                 7.7          2,024,302,929       2,248,609,740
Assets classified as holding and available for sale                         7.8              2,000,197           2,000,197
Non-current assets due within one year
Other current assets                                                        7.9            293,294,297         169,522,242
Total current assets                                                                     4,434,416,139       4,216,263,047
Non-current assets:
Offering loans and imprest
Available-for-sale financial assets                                         7.10               463,800            340,263
Held-to-maturity investments
Long-term receivables
Long-term equity investments
Investment real estate
Fixed assets                                                                7.11         4,591,037,486       4,683,187,493
Construction in progress                                                    7.12         1,697,297,440       1,346,281,737
Construction materials

                                                                                                                        42
                                                              Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


                                      Item                                    Note    Ending balance      Beginning balance
Disposal of fixed assets
Productive biological assets                                                  7.13          198,024,312         201,428,980
Oil and gas assets
Intangible assets                                                             7.14          479,362,173         483,815,080
Development expenditure
Goodwill                                                                      7.15          121,265,866         121,265,866
Long-term prepaid expenses                                                    7.16          157,020,911         162,206,229
Deferred tax assets                                                           7.17          259,844,790         295,937,037
Other non-current assets                                                      7.18          335,245,554          17,352,239
Total non-current assets                                                                  7,839,562,332       7,311,814,924
Total assets                                                                             12,273,978,471      11,528,077,971
Current liabilities:
Short-term loans                                                              7.19          846,881,075         662,388,882
Borrowings from the Central Bank
Customer and interbank deposits
Borrowing funds
Financial liabilities measured at the fair value and the variation of which
is recorded into the current profit and loss
Derivative financial liabilities
Bills payable                                                                 7.20            8,000,000          38,900,000
Accounts payable                                                              7.21          399,318,487         545,231,319
Advances from customers                                                       7.22          321,530,693         425,246,421
Financial assets sold for repurchase
Handling fees and commissions payable
Employee remunerations                                                        7.23          158,977,820         206,431,734
Taxes payable                                                                 7.24           77,113,119         144,042,600
Interest payable                                                                                                   563,613
Dividends payable                                                             7.25              703,430
Other payables                                                                7.26          653,190,411         546,305,310
Dividend payable for reinsurance
Reserves for insurance contracts
Acting trading securities
Acting underwriting securities
Liabilities classified as holding and available for sale
Non-current liabilities due within one year                                   7.27          106,975,215          71,799,093
Other current liabilities                                                     7.28           11,163,882          11,163,883
Total current liabilities                                                                 2,583,854,132       2,652,072,855
Non-current liabilities:
Long-term borrowings                                                          7.29          175,270,580          49,140,555
Bonds payable
 Including: Preferred stock
               Perpetual capital securities
Long-term accounts payable                                                    7.30          269,000,000         293,000,000
Long-term employee remunerations payable
Special accounts payable
Estimated liabilities
                                                                                                                         43
                                                              Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


                                      Item                                   Note     Ending balance      Beginning balance
Deferred income                                                              7.31            97,348,319         101,775,243
Deferred tax liabilities                                                     7.17            21,852,738          24,908,410
Other non-current liabilities                                                7.32             7,696,222           7,696,222
Total non-current liabilities                                                               571,167,859         476,520,430
Total liabilities                                                                         3,155,021,991       3,128,593,285
Owner’s equity:
Capital stock                                                                7.33           685,464,000         685,464,000
Other equity instruments
Including: Preferred stock
            Perpetual capital securities
Capital surplus                                                              7.34           565,955,441         565,955,441
Minus: Treasury stock
Other comprehensive income                                                   7.35            -3,800,205          -5,259,014
Special reserves
Surplus reserves                                                             7.36           342,732,000         342,732,000
General risk preparation
Retained earnings                                                            7.37         7,290,187,616       6,620,118,562
Total owner‘s equities attributable to the parent company                                8,880,538,852       8,209,010,989
Minority equity                                                                             238,417,628         190,473,697
Total owner‘s equities                                                                   9,118,956,480       8,399,484,686
Total liabilities and owner‘s equities                                                  12,273,978,471      11,528,077,971


Legal Representative: Sun Liqiang          Accounting Supervisor: Leng Bin   Accounting Department Manager: Jiang Jianxun


2.2 Balance sheet of the parent company

Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd.                                                         Unit: Yuan
                                      Item                                   Note     Ending balance      Beginning balance
Current assets:
Monetary fund                                                                              747,876,320          269,460,060
Financial assets measured at the fair value and the variation of which is
recorded into the current profit and loss
Derivative financial assets
Bills receivable                                                                           107,090,401            1,114,200
Accounts receivable                                                          15.1             1,838,244           3,326,683
Advance payment                                                                               1,172,079             702,647
Interest receivable                                                                              34,313              24,200
Dividends receivable                                                                       324,673,936          531,819,113
Other receivables                                                            15.2         3,539,710,433       3,582,532,862
Inventories                                                                                506,836,398          792,732,418
Assets classified as holding and available for sale                                           2,000,197           2,000,197
Non-current assets due within one year
Other current assets                                                                         58,168,826          20,085,058
Total current assets                                                                      5,289,401,147       5,203,797,438
Non-current assets:
Available-for-sale financial assets

                                                                                                                         44
                                                              Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


                                    Item                                      Note    Ending balance       Beginning balance
Held-to-maturity investments
Long-term receivables
Long-term equity investments                                                  15.3        2,108,589,655        1,834,341,541
Investment real estate
Fixed assets                                                                               335,000,273           347,481,417
Construction in progress                                                                       268,929               500,000
Construction materials
Disposal of fixed assets
Productive biological assets                                                               121,231,009           123,036,693
Oil and gas assets
Intangible assets                                                                            70,812,796           72,002,372
Development expenditure
Goodwill
Long-term prepaid expenses
Deferred tax assets                                                                          25,477,622           26,985,252
Other non-current assets                                                                  2,747,906,376        2,617,457,460
Total non-current assets                                                                  5,409,286,660        5,021,804,735
Total assets                                                                             10,698,687,807       10,225,602,173
Current liabilities:
Short-term loans                                                                           700,000,000           500,000,000
Financial liabilities measured at the fair value and the variation of which
is recorded into the current profit and loss
Derivative financial liabilities
Bills payable
Accounts payable                                                                             61,360,245          247,568,857
Advances from customers                                                                       6,000,000            6,000,000
Employee remunerations                                                                       55,455,887           70,812,761
Taxes payable                                                                                14,378,705           33,266,225
Interest payable                                                                                       0             563,613
Dividends payable                                                                                      0                   0
Other payables                                                                             813,653,329           368,310,362
Liabilities classified as holding and available for sale                                               0                   0
Non-current liabilities due within one year                                                  15,499,200           29,227,200
Other current liabilities                                                                     1,767,054            1,767,054
Total current liabilities                                                                 1,668,114,420        1,257,516,072
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred stock
            Perpetual capital securities
Long-term accounts payable
Long-term employee remuneration payable
Special accounts payable
Estimated liabilities
Deferred income                                                                              18,986,990           19,933,699
Deferred tax liabilities

                                                                                                                          45
                                                                Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


                                     Item                                       Note         Ending balance     Beginning balance
Other non-current liabilities                                                                       2,499,403           2,499,403
Total non-current liabilities                                                                      21,486,393          22,433,102
Total liabilities                                                                               1,689,600,813       1,279,949,174
Owner’s equity:
Capital stock                                                                                     685,464,000         685,464,000
Other equity instruments
Including: Preferred stock
            Perpetual capital securities
Capital surplus                                                                                   557,222,454         557,222,454
Minus: Treasury stock
Other comprehensive income
Special reserves
Surplus reserves                                                                                  342,732,000         342,732,000
Retained earnings                                                                               7,423,668,540       7,360,234,545
Total owner‘s equities                                                                         9,009,086,994       8,945,652,999
Total liabilities and owner‘s equities                                                        10,698,687,807      10,225,602,173


Legal Representative: Sun Liqiang          Accounting Supervisor: Leng Bin          Accounting Department Manager: Jiang Jianxun


2.3 Consolidated profit statement

Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd.                                                                Unit: Yuan
                                    Item                                     Note     Sum of current period   Sum of prior period
1. Total operating income                                                                     2,767,098,197         2,753,032,799
Including: Operating income                                                  7.38             2,767,098,197         2,753,032,799
            Interest income
            Earned premium
            Handling fee and commission income
2. Total operating costs                                                                      1,890,800,616         1,840,237,208
Including: Operating costs                                                   7.38              925,754,133            902,734,104
             Interest expenditure
             Handling fees and commission expenditure
             Premium rebate
             Net amount of indemnity expenditure
                    Net amount of the withdrawn reserve fund for
                    insurance contract
             Policy bonus payment
             Amortized reinsurance expenditures
             Taxes and surcharges                                            7.39              160,473,998            153,081,792
             Selling expenses                                                7.40              668,735,726            650,737,234
             Administrative expenses                                         7.41              130,542,386            122,695,845
             Financial expenses                                              7.42               11,147,949             10,988,233
             Loss on impairment of assets                                    7.43                -5,853,576                         0
     Plus: Fair value change profit (loss is listed with "-")
          Investment profit (loss is listed with "-")
         Including: Investment profit for joint-run business and joint

                                                                                                                               46
                                                              Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


                     venture
           Exchange income (loss is listed with "-")
           Other income
3. Operating profit (loss is listed with "-")                                                 876,297,581            912,795,591
     Plus: Non-operating income                                             7.44               23,304,205             21,933,526
Including: Gains on disposal of non-current assets                                                156,600                 94,567
     Minus: Non-operating expenses                                          7.45                  838,239                343,776
              Including: Losses on disposal of non-current assets                                 651,671                110,052
4. Total profits (total loss is listed with "-")                                              898,763,547            934,385,341
     Minus: Income tax expenses                                             7.46              228,752,790            238,715,481
5. Net profit (net loss is listed with "-")                                                   670,010,757            695,669,860
     Net profit attributable to owner of the parent company                                   670,069,054            695,021,847
     Minority interest income                                                                      -58,297               648,013
6. Net after-tax amount of other comprehensive income                       7.47                 1,767,741             6,701,754
Net after-tax amount of other comprehensive income attributable to
                                                                                                 1,458,809             6,249,919
owner of the parent company
6.1 Other comprehensive income not to be reclassified into profit and
loss later
6.1.1 Net liabilities or net assets change after remeasuring and
resetting the benefit plans
6.1.2 Share enjoyed in other comprehensive income not to be
reclassified into profit and loss in invested unit under equity law
6.2 Other comprehensive income to be reclassified into profit and
                                                                                                 1,458,809             6,249,919
loss later
6.2.1 Share enjoyed in other comprehensive income to be reclassified
into profit and loss in invested unit under equity law
6.2.2 Profit and loss from changes in fair value of financial assets for
sale
6.2.3 Profit and loss from reclassification of held-to-maturity
investment into fair value of financial assets for sale
6.2.4 Effective part of profit and loss of cash-flow hedge
6.2.5 Difference in translation of Foreign Currency Financial
                                                                                                 1,458,809             6,249,919
Statement
6.2.6 Other
Net after-tax amount of other comprehensive income attributable to
                                                                                                  308,932                451,835
minority shareholders
7. Total comprehensive income                                                                 671,778,498            702,371,614
(1) Attributable to owner of the parent company                                               671,527,863            701,271,766
(2) Attributable to minority shareholders                                                         250,635              1,099,848
8. Earnings per share
(1) Basic earnings per share                                                                          0.98                  1.01
(2) Diluted earnings per share                                                                        0.98                  1.01


Legal Representative: Sun Liqiang         Accounting Supervisor: Leng Bin          Accounting Department Manager: Jiang Jianxun


2.4 Profit statement of the parent company

Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd.                                                              Unit: Yuan
                                   Item                                     Note     Sum of current period   Sum of prior period
1. Operating income                                                         15.4               831,820,503           655,299,000
Minus: Operating costs                                                      15.4               737,950,378           501,312,599
                                                                                                                              47
                                                              Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


        Taxes and surcharges                                                                    48,865,790             73,401,856
        Selling expenses
        Administrative expenses                                                                 40,078,068             55,027,172
        Financial expenses                                                                       9,292,969             18,250,416
        Loss on impairment of assets
Plus: Fair value change profit (loss is listed with "-")
     Investment profit (loss is listed with "-")                            15.5                66,127,980            683,891,453
     Including: Investment profit for joint-run business and joint
venture
     Other income
2. Operating profit (loss is listed with "-")                                                   61,761,278            691,198,410
Plus: Non-operating income                                                                       1,134,756              1,141,128
     Including: Gains on disposal of non-current assets                                            133,233                 94,567
Minus: Non-operating expenses                                                                      143,042                 36,839
        Including: losses on disposal of non-current assets                                        122,785                 21,839
3. Total profits (total loss is listed with "-")                                                62,752,992            692,302,699
Minus: Income tax expenses                                                                        -681,003              2,102,811
4. Net profit (net loss is listed with "-")                                                     63,433,995            690,199,888
5. Net after-tax amount of other comprehensive income
5.1 Other comprehensive income not to be reclassified into profit and
loss later
5.1.1 Net liabilities or net assets change after remeasuring and
resetting the benefit plans
5.1.2 Share enjoyed in other comprehensive income not to be
reclassified into profit and loss in invested unit under equity law
5.2 Other comprehensive income to be reclassified into profit and
loss later
5.2.1 Share enjoyed in other comprehensive income to be reclassified
into profit and loss in invested unit under equity law
5.2.2 Profit and loss from changes in fair value of financial assets for
sale
5.2.3 Profit and loss from reclassification of held-to-maturity
investment into fair value of financial assets for sale
5.2.4 Effective part of profit and loss of cash-flow hedge
5.2.5 Difference in translation of Foreign Currency Financial
Statement
5.2.6 Other
6. Total comprehensive income                                                                   63,433,995            690,199,888
7. Earnings per share
(1) Basic earnings per share                                                                             0.09                 1.01
(2) Diluted earnings per share                                                                           0.09                 1.01


Legal Representative: Sun Liqiang         Accounting Supervisor: Leng Bin          Accounting Department Manager: Jiang Jianxun


2.5 Consolidated cash flow statement

Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd.                                                               Unit: Yuan
                                   Item                                     Sum of current period           Sum of prior period
1. Cash flows from operating activities:
Cash received from sales of goods and rending of services                                2,524,565,138              2,706,821,883

                                                                                                                                  48
                                                               Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


                                 Item                                      Sum of current period     Sum of prior period
Net increase in customer and interbank deposits
Net increase in borrowings from central bank
Net increase in borrowings from other financial institutions
Cash received from receiving insurance premium of original
insurance contract
Net cash received from reinsurance business
Net increase in policy holder deposits and investment funds
Net increase after disposal of financial assets measured at the fair
value and the variation of which is recorded into the current profit
and loss
Cash received from collecting interest, handling fees and commission
Net increase in borrowings
Net increase in repurchasement business funds
Tax refund received                                                                     12,777,072              13,866,472
Other cash received related to operating activities                                     38,889,912              27,834,008
Subtotal of cash flows of operating activities                                       2,576,232,122           2,748,522,363
Cash paid for goods and services                                                       640,732,974             635,982,569
Net increase in customer loans and advances
Net increase in deposits in central bank and interbank deposits
Cash paid to original insurance contract payments
Cash paid to interest, handling fees and commission
Cash paid to policy bonus
Cash paid to and on behalf of employees                                                239,805,346             230,296,149
Cash paid for taxes and expenses                                                       842,815,705             756,992,525
Other cash paid related to operating activities                                        432,517,778             442,502,751
Sub-total of cash outflows of operating activities                                   2,155,871,803           2,065,773,994
Net cash flow from operating activities                                                420,360,319             682,748,369
2. Cash flow from investing activities:
Cash received from return of investment
Fixed deposit with the term of over 3 months                                             3,000,000               8,000,000
Cash received from obtaining investment profit                                              25,550                  28,483
Cash received from disposal of fixed assets, intangible assets and
                                                                                                                   233,355
other long-term assets                                                                     237,161
Net cash received from disposal of branch and other business unit
Other cash received related to investing activities
Subtotal of cash flows of investment activities                                          3,262,711               8,261,838
Cash paid to acquire fixed assets, intangible assets and other
                                                                                                               398,151,685
long-term assets                                                                       282,149,010
Cash for investment
Cash paid to buy fixed deposit with the term of over 3 months                          201,000,000               7,007,000
Net increase in hypothecated loan
Net cash paid to acquire branch and other business unit                                                            762,436
Other cash paid related to investment activities                                       317,654,642
Subtotal of cash outflows of investment activities                                     800,803,652             405,921,121
Net cash flow from investing activities                                               -797,540,941            -397,659,283
3. Cash flow from financing activities
Cash received from acquiring investment                                                 48,396,726

                                                                                                                           49
                                                            Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


                                  Item                                     Sum of current period     Sum of prior period
Including: cash received from acquiring minority shareholders
investment by branch                                                                    48,396,726
Cash received from acquiring loans                                                     773,435,000             809,175,350
Cash received from issuing bonds
Other cash received related to financing activities                                      1,303,473
Subtotal cash flows of financing activities                                            823,135,199             809,175,350
Cash paid to pay debts                                                                 451,386,980             512,516,014
Cash paid to distribute dividend, profit or pay interest                                17,869,513              16,940,912
Including: dividend and profit paid to minority shareholders by
branch
Other cash paid related to financing activities                                                                 20,000,000
Subtotal of cash outflows of financing activities                                      469,256,493             549,456,926
Net cash flow from financing activities                                                353,878,706             259,718,424
4. Influences of exchange rate fluctuation on cash and cash
                                                                                                                 6,885,883
equivalents                                                                             -4,152,485
5. Net Increase in cash and cash equivalents                                           -27,454,401             551,693,393
Plus: balance at the beginning of the period of cash and cash
equivalents                                                                          1,256,942,304           1,092,241,661
6. Balance at the end of the period of cash and cash equivalents                     1,229,487,903           1,643,935,054


Legal Representative: Sun Liqiang        Accounting Supervisor: Leng Bin      Accounting Department Manager: Jiang Jianxun


2.6 Cash flow statement of the parent company

Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd.                                                         Unit: Yuan
                                 Item                                      Sum of current period     Sum of prior period
1. Cash flows from operating activities:
Cash received from sales of goods and rending of services                              570,587,513             595,186,103
Tax refund received
Other cash received related to operating activities                                    385,490,644                 239,938
Subtotal of cash flows of operating activities                                         956,078,157             595,426,041
Cash paid for goods and services                                                       269,148,068             324,226,720
Cash paid to and on behalf of employees                                                 52,895,854              79,790,054
Cash paid for taxes and expenses                                                       169,319,730              88,941,454
Other cash paid related to operating activities                                         62,494,076             846,691,535
Sub-total of cash outflows of operating activities                                     553,857,728           1,339,649,763
Net cash flow from operating activities                                                402,220,429            -744,223,722
2. Cash flow from investing activities:
Cash received from return of investment
Fixed deposit with the term of over 3 months                                             3,000,000               8,000,000
Cash received from obtaining investment profit                                         198,082,845           1,164,454,077
Net cash received from disposal of fixed assets, intangible assets and
                                                                                           206,280                 231,240
other long-term assets
Net cash received from disposal of branch and other business unit
Other cash received related to investing activities
Subtotal of cash flows of investment activities                                        201,289,125           1,172,685,317
Cash paid to acquire fixed assets, intangible assets and other
                                                                                         3,295,270              15,892,483
long-term assets

                                                                                                                           50
                                                           Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


                                 Item                                     Sum of current period     Sum of prior period
Cash for investment                                                                   329,440,824
Cash paid to buy fixed deposit with the term of over 3 months                         105,000,000               7,007,000
Net cash paid to acquire branch and other business unit
Other cash paid related to investment activities
Subtotal of cash outflows of investment activities                                    437,736,094              22,899,483
Net cash flow from investing activities                                              -236,446,969           1,149,785,834
3. Cash flow from financing activities
Cash received from acquiring investment
Cash received from acquiring loans                                                    700,000,000             400,000,000
Cash received from issuing bonds
Other cash received related to financing activities
Subtotal cash flows of financing activities                                           700,000,000             400,000,000
Cash paid to pay debts                                                                514,667,600             420,114,492
Cash paid to distribute dividend, profit or pay interest                                9,720,581              13,936,049
Other cash paid related to financing activities
Subtotal of cash outflows of financing activities                                     524,388,181             434,050,541
Net cash flow from financing activities                                               175,611,819             -34,050,541
4. Influences of exchange rate fluctuation on cash and cash
equivalents
5. Net Increase in cash and cash equivalents                                          341,385,279             371,511,571
Plus: balance at the beginning of the period of cash and cash
                                                                                      238,003,198             143,798,080
equivalents
6. Balance at the end of the period of cash and cash equivalents                      579,388,477             515,309,651


Legal Representative: Sun Liqiang       Accounting Supervisor: Leng Bin      Accounting Department Manager: Jiang Jianxun




                                                                                                                          51
                                                                                                                                         Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report




 2.7 Consolidated owner’s equity changing list

                                                                                                                                                                                                Unit: Yuan
                                                                                                                    This period
                                                                                        Owners‘ equity of the parent company

              Item                                Other equity instruments                                                                                                      Minority
                                                                                                Minus:        Other                                                                            Total owners‘
                                                                                   Capital                               Special     Surplus     General risk Undistributed   shareholders‘
                                  Capital stock               Perpetual                        Treasury   comprehensive                                                                           equity
                                                  Preferred
                                                               capital            reserves                              reserves    reserves     preparation    profits          equity
                                                   stock                 Other                  stock        income
                                                              securities
1. Balance at the end of last
                              685,464,000                                        565,955,441                  -5,259,014           342,732,000               6,620,118,562     190,473,697 8,399,484,686
year
Plus: Accounting       policies
changing
Previous error correction
Business combination under
common control
Other
2. Balance at the beginning of
                               685,464,000                                       565,955,441                  -5,259,014           342,732,000               6,620,118,562     190,473,697 8,399,484,686
this year
3. Increased or decreased
amount in this period (reducing                                                                                1,458,809                                       670,069,054       47,943,931     719,471,794
amount is listed with "-")
3.1   Total     comprehensive
                                                                                                               1,458,809                                       670,069,054          250,635     671,778,498
income
3.2 Owners' invested        and
                                                                                                                                                                                 48,396,726      48,396,726
reduced capital
3.2.1 Shareholders‘ invested
                                                                                                                                                                                 48,396,726      48,396,726
common stock
3.2.2 Other equity instrument
holders‘ invested capital
3.2.3 Amount of shares paid
and reckoned in owners' equity
                                                                                                                                                                                                          52
                                                                             Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


3.2.4 Other
3.3 Profit distribution                                                                                            -703,430     -703,430
3.3.1 Accrued surplus reserves
3.3.2 Accrued general risk
preparation
3.3.3 Distribution to owners
                                                                                                                   -703,430     -703,430
(or shareholders)
3.3.4 Other
3.4 Internal transfer of owners'
equity
3.4.1       Capital      reserves
transferred and increased
capital (or capital stock)
3.4.2      Surplus       reserves
transferred and increased
capital (or capital stock)
3.4.3 Surplus reserves covering
deficit
3.4.4 Other
3.5 Special reserves
3.5.1 Withdrawal in this period
3.5.2 Usage in this period
3.6 Other
4. Balance at the end of this
                              685,464,000   565,955,441   -3,800,205   342,732,000             7,290,187,616   238,417,628 9,118,956,480
period




                                                                                                                                      53
                                                                                                                                        Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


                                                                                                                                                                                               Unit: Yuan
                                                                                                                   Prior period
                                                                                      Owners‘ equity of the parent company

               Item                              Other equity instruments                                                                                                      Minority
                                                                                             Minus:        Other                                                                              Total owners‘
                                                                                 Capital                              Special       Surplus     General risk Undistributed   shareholders‘
                                   Capital stock Preferred Perpetual                        Treasury   comprehensive                                                            equity
                                                                                                                                                                                                 equity
                                                            capital             reserves                             reserves       reserves    preparation    profits
                                                   stock              Other                  stock        income
                                                           securities
1. Balance at the end of last
                              685,464,000                                     565,955,441                 -10,442,512             342,732,000               5,980,390,074     192,459,023 7,756,558,026
year
Plus: Accounting        policies
changing
Previous error correction
Business combination under
common control
Other
2. Balance at the beginning of
                               685,464,000                                    565,955,441                 -10,442,512             342,732,000               5,980,390,074     192,459,023 7,756,558,026
this year
3. Increased or decreased
amount in this period (reducing                                                                             5,183,498                                         639,728,488       -1,985,326     642,926,660
amount is listed with "-")
3.1    Total     comprehensive
                                                                                                            5,183,498                                         982,460,488       -1,438,903     986,205,083
income
3.2 Owners' invested        and
reduced capital
3.2.1 Shareholders‘ invested
common stock
3.2.2 Other equity instrument
holders‘ invested capital
3.2.3 Amount of shares paid
and reckoned in owners' equity
3.2.4 Other
                                                                                                                                                                                                         54
                                                                             Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


3.3 Profit distribution                                                                         -342,732,000       -546,423 -343,278,423
3.3.1 Drew surplus reserves
3.3.2 Drew        general      risk
preparation
3.3.3 Distribution to owners (or
                                                                                                -342,732,000       -546,423 -343,278,423
shareholders)
3.3.4 Other
3.4 Internal transfer of owners'
equity
3.4.1       Capital     reserves
transferred and increased capital
(or capital stock)
3.4.2       Surplus     reserves
transferred and increased capital
(or capital stock)
3.4.3 Surplus reserves covering
deficit
3.4.4 Other
3.5 Special reserves
3.5.1 Accrual in this period
3.5.2 Usage in this period
3.6 Other
4. Balance at the end of this
                              685,464,000   565,955,441   -5,259,014   342,732,000             6,620,118,562   190,473,697 8,399,484,686
period




                                                                                                                                      55
                                                                                                                                                   Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


2.8 Owner’s equity changing list of the parent company

                                                                                                                                                                                                     Unit: Yuan
                                                                                                                                   This period
                                                                    Other equity instruments                             Minus:            Other
                     Item                               Capital                                             Capital                                        Special    Surplus      Undistributed   Total owners‘
                                                                    Preferred Perpetual capital                         Treasury      comprehensive
                                                         stock                                    Other    reserves                                       reserves    reserves       profits          equity
                                                                     stock       securities                              stock           income

1. Balance at the end of last year                    685,464,000                                         557,222,454                                                342,732,000   7,360,234,545 8,945,652,999
Plus: Accounting policies changing
Previous error correction
Other
2. Balance at the beginning of this year              685,464,000                                         557,222,454                                                342,732,000   7,360,234,545 8,945,652,999
3. Increased or decreased amount in this
                                                                                                                                                                                      63,433,995      63,433,995
period (reducing amount is listed with "-")
3.1 Total comprehensive income                                                                                                                                                        63,433,995      63,433,995
3.2 Owners' invested and reduced capital
3.2.1 Shareholders‘ invested common stock
3.2.2 Other equity        instrument       holder‘
invested capital
3.2.3 Amount of shares paid and reckoned in
owners' equity
3.2.4 Other
3.3 Profit distribution
3.3.1 Drew surplus reserves
3.3.2   Distribution        to     owners      (or
shareholders)
3.3.3 Other
3.4 Internal transfer of owners' equity
3.4.1   Capital   reserves       transferred   and
                                                                                                                                                                                                               56
                                                                                                                                                  Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


increased capital (or capital stock)
3.4.2 Surplus reserves transferred and
increased capital (or capital stock)
3.4.3 Surplus reserves covering deficit
3.4.4 Other
3.5 Special reserves
3.5.1 Accrual in this period
3.5.2 Usage in this period
3.6 Other
4. Balance at the end of this period              685,464,000                                             557,222,454                                               342,732,000   7,423,668,540 9,009,086,994


                                                                                                                                                                                                    Unit: Yuan
                                                                                                                                   Prior period
                                                                    Other equity instruments                             Minus:           Other
                       Item                             Capital                                             Capital                                       Special    Surplus      Undistributed   Total owners‘
                                                                    Preferred Perpetual capital                         Treasury     comprehensive
                                                         stock                                             reserves                                      reserves    reserves       profits          equity
                                                                     stock        securities      Other                  stock          income

1. Balance at the end of last year                    685,464,000                                         557,222,454                                               342,732,000   5,872,392,075 7,457,810,529
Plus: Accounting policies changing
Previous error correction
Other
2. Balance at the beginning of this year              685,464,000                                         557,222,454                                               342,732,000   5,872,392,075 7,457,810,529
3. Increased or decreased amount in this
                                                                                                                                                                                  1,487,842,470 1,487,842,470
period (reducing amount is listed with "-")
3.1 Total comprehensive income                                                                                                                                                    1,830,574,470 1,830,574,470
3.2 Owners' invested and reduced capital
3.2.1 Shareholders‘ invested common stock
3.2.2 Other equity            instrument   holder‘
invested capital

                                                                                                                                                                                                              57
                                                                             Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


3.2.3 Amount of shares paid and reckoned in
owners' equity
3.2.4 Other
3.3 Profit distribution                                                                                      -342,732,000   -342,732,000
3.3.1 Drew surplus reserves
3.3.2 Distribution to owners (or shareholders)                                                               -342,732,000   -342,732,000
3.3.3 Other
3.4 Internal transfer of owners' equity
3.4.1 Capital reserves transferred        and
increased capital (or capital stock)
3.4.2 Surplus reserves transferred        and
increased capital (or capital stock)
3.4.3 Surplus reserves covering deficit
3.4.4 Other
3.5 Special reserves
3.5.1 Accrual in this period
3.5.2 Usage in this period
3.6 Other
4. Balance at the end of this period             685,464,000   557,222,454                    342,732,000   7,360,234,545 8,945,652,999




                                                                                                                                      58
                                                 Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report




3. Company profile

  Yantai Changyu Pioneer Wine Co., Ltd. (the ―Company‖ or the ―Joint-stock 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 the merger and reorganization carried out by Yantai Changyu
  Group Co., Ltd. (―Changyu Group Company‖) with its assets and liabilities in relation to wine
  business. The Company and its subsidiary companies (hereinafter collectively referred to as the
  ―Group‖) are engaged in the production and sale of wine, brandy and champagne, planting and
  purchase of grapes, development of tourism resources, etc. The registered address of the Company
  is Yantai City, Shandong Province, and the office address of the headquarters is 56 Dama Road,
  Zhifu District, Yantai City, Shandong Province.

  As at June 30, 2017, the Company issued 685,464,000 shares accumulatively. Refer to Note 7.33
  for the details.

  The parent company of the Group is Changyu Group Company incorporated in China, which was
  ultimately and actually controlled by four parties, including Yantai Guofeng Investment Holding
  Co., Ltd., ILLVA Saronno Holding Spa, International Finance Corporation and Yantai Yuhua
  Investment & Development Co., Ltd.

  The financial statement and the consolidated financial statement of the Company were approved by
  the Board of Directors on August 25, 2017.

  The scope of the consolidated financial statement in this period can be seen in Note 9 ―Equity in
  other entities‖. The scope changes of the consolidated financial statement in this period can be seen
  in Note 8 ―Changes of the consolidated scope‖.



4. Preparation basis of financial statement

4.1 Preparation basis
   The Group implements the Accounting Standards for Business Enterprises (including the new and
   revised editions published in 2014) (―ASBE‖) published by the Ministry of Finance and relevant
   regulations thereof. In addition, the Group also discloses relevant financial information in
   accordance with Information Disclosure and Preparation Rules for Enterprises Publically Issuing
   Securities No.15 ---- General Rules for Financial Statement (Revised in 2014).
   Note-accounting basis and pricing principle
   The note-accounting basis of financial accounting adopted by the Group is accrual system and the
   measurement basis adopted by the Group in preparing its financial statement is historical cost.
   Subsequently, if the assets are impaired, impairment provisions are made in accordance with
   relevant accounting standards.
   When the historical cost measurement is used, the assets are measured by the amount of cash or
   cash equivalent when the assets are purchased or the fair value of the consideration. The liabilities
   are measured by the actually received funds or assets for performing the current obligations, or the
   contract amount for performing the current obligations, or the amount of cash or cash equivalent
   paid for anticipated liabilities in the daily activities.
   Fair value refers to a price received for selling an asset or paid for transferring a liability by the
   market participant in orderly transactions on the measurement date. No matter the fair value is
   observable or estimated by the valuation technique, the fair value measured and disclosed in this
   financial statement is recognized on this basis.
                                                                                                          59
                                                  Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


   The fair value measurement is divided into three levels based on the observable degree of the input
   fair value and the importance of this input value on the whole fair value measurement:
   *The input value of the first level is the unadjusted price of the same assets or liabilities which can
    be acquired in an active market on the measurement date.
   *The input value of the second level is the directly or indirectly observable input value of relevant
    assets or liabilities except that of the first level.
   *The input value of the third level is the unobservable input value of relevant assets or liabilities.
4.2 Continuous operation
   The Group has appraised the ability of continuous operation for 12 months from June 30, 2017,
   and no issues or situations causing major doubts to this ability are found. Therefore, this financial
   statement is prepared on the basis of the continuous operation assumption.

5. Main accounting policies and accounting estimates

5.1 Statement on compliance with ASBE
   This financial statement fulfills the requirement of ASBE and gives a true and integrated view of
   the financial status and the consolidated financial status as at June 30, 2017, as well as the
   operating result, the consolidated operating result, the cash flow and the consolidated cash flow of
   the Company from January to June 2017.
5.2 Accounting period
  The accounting period of the Group is from January 1 to December 31.
5.3 Operating cycle
   The operating cycle refers to the period from the enterprise purchases the assets used for
   processing to the cash or cash equivalent is realized. The operating cycle of the Company is 12
   months.
5.4 Recording currency
   Since Renminbi (RMB) is the currency of the main economic environment in which the Company
   and the domestic subsidiary companies thereof are situated, the Company and the subsidiary
   companies thereof adopt RMB as the recording currency. The overseas subsidiary companies
   thereof determine Euro and Peso as the recording currency according to the main economic
   environment in which they are situated. The currency in this financial statement prepared by the
   Group is RMB.
5.5 Accounting treatment method for business combination under common control and
   non-common control
5.5.1 Business combination and goodwill under non-common control
  A business combination under non-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 combination cost shall be the fair value of the assets paid, the liabilities incurred or assumed or
  the equity instruments issued by the acquirer in exchange for the control over the acquiree. The
  intermediary expenses such as audit, legal services and assessment consultation and other related
  management expenses paid by the acquirer for business combination are included in the current
  profit and loss when they occur.
  The identifiable assets, liabilities and contingent liabilities which are obtained from the acquiree in
  the business combination and meet the recognition conditions shall be measured on the acquisition
                                                                                                            60
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  date according to the fair value thereof.
  If the combination cost is larger than the fair value of the identifiable net assets obtained from the
  acquiree during the combination, the difference shall be recognized as business goodwill and
  initially measured according to the cost thereof.
  The goodwill formed due to business combination shall be separately listed in the consolidated
  financial statement and measured on the basis of the cost minus the accumulative impairment
  provision.
5.6 Compiling methods of consolidated financial statement
  The consolidation scope of the consolidated financial statement is determined on the basis of
  control. Control means that the investor holds the power in the invested party, obtains variable
  returns by participating in relevant activities of the invested party and has the ability to affect the
  amount of the returns by using the power on the invested party. Once any change of the relevant
  facts and situations results in any change of relevant elements of the above definition of Control,
  the Group will carry out reappraisal.
  The merger of any subsidiary company starts from the date when the Group acquires the power to
  control this subsidiary company, while the termination of any subsidiary company ends in the date
  when the Group losses the power to control this subsidiary company.
  As for any subsidiary company obtained in a business combination under non-common control, the
  business result and the cash flow thereof since the acquisition date (date of obtaining the control
  power) shall have been properly included in the consolidated income statement and the
  consolidated cash flow statement.
  The principal accounting policies and accounting period adopted by the subsidiary companies shall
  be determined in accordance with the accounting policies and accounting period uniformly
  regulated by the Company.
  The influence of the internal transaction between the Company and the subsidiary companies as
  well as among subsidiary companies on the consolidated financial statement shall be neutralized at
  the time of combination.
  The shares in the owner's equity of the subsidiary companies, which do not belong to the parent
  company, shall be recognized as the minority equity and listed under the item of ―minority equity‖
  of the owner‘s equity in the balance sheet. The shares in the current profit and loss of the subsidiary
  companies, which belong to the minority equity, shall be listed under the item of ―minority equity‖
  of the net profit in the consolidated income statement.
  If the loss of the subsidiary companies borne by minority shareholders exceeds the shares of the
  owner's equity entitled therein by the minority shareholders at the beginning of the period, the
  difference shall be still credited against the minority equity.
  The transaction of purchasing the minority interest of any subsidiary company or that doesn‘t lose
  the control power of this subsidiary company due to disposal of partial equity investment shall be
  recognized as equity transaction for business accounting, and the book value of the equity
  attributable to the owner of the parent company and the minority equity shall be adjusted to reflect
  the changes in the related rights and interests in the subsidiary company. The difference between
  the adjusted amount of the minority interest and the fair value of the paid/received consideration
  shall be adjusted as capital reserves. If the capital reserves are insufficient for offset, the retained
  income shall be adjusted accordingly.
5.7 Recognition standards of cash and cash equivalents
  Cash comprises cash on hand and demand deposit of the Company. Cash equivalents refer to
  short-term highly liquid investments which are readily convertible into known amount of cash with
  an insignificant risk of changes in value.


                                                                                                          61
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5.8 Foreign currency transaction and foreign currency statement translation


5.8.1 Foreign currency transaction

  At the time of initial recognition of a foreign currency transaction, the amount of the foreign
  currency shall be translated into the amount of the recording currency at the spot exchange rate on
  the transaction date.
  The monetary items of the foreign currency transaction shall be translated into RMB at the spot
  change rate on the balance sheet date. The currency translation difference generated by the
  difference between the spot change rate on the balance sheet date and the spot change rate at the
  initial recognition or on the previous balance sheet date shall be included in the current profit and
  loss, except: ① the currency translation difference of the dedicated foreign currency loan that
  meets the capitalization condition shall be included in the cost of assets as capitalization during the
  capitalization period; ② the currency translation difference of the arbitrage tool to avoid foreign
  exchange risk shall be treated according to the hedge accounting method; ③ the currency
  translation difference of the available-for-sale monetary items generated by the book value other
  than the amortized cost shall be recognized as other comprehensive income and included in other
  comprehensive income.
  The amount of the non-monetary items of the foreign currency transaction measured by historical
  cost shall be still translated into the amount in the recording currency at the spot exchange rate on
  the transaction date. The non-monetary items of the foreign currency transaction measured by the
  fair value shall be translated at the spot exchange rate on the fair value date, and the difference
  between the amount in the recording currency and the amount in original recording currency shall
  be treated as the change of the fair value (including exchange rate movement) and shall be included
  in the current profit and loss or recognized as other comprehensive income.
5.8.2 Translation of foreign currency financial statement
  In order to compile a consolidated financial statement, the foreign currency financial statement of
  overseas business shall be translated into RMB financial statement in accordance with the
  following methods: all asset and liability items in the balance sheet shall be translated at the spot
  exchange rate on the balance sheet date; the shareholders' equity items, except for the ones as
  "undistributed profits", shall be translated at the spot exchange rate at the time when they occur; all
  items and the items reflecting the accrual profit distribution in the profit statement shall be
  translated at the exchange rate similar to the spot exchange rate at the time when they occur; the
  undistributed profits at the beginning of the year shall be the translated to the undistributed profits
  at the end of the previous year; the undistributed profits at the end of the year shall be calculated
  and listed as the translated profit distribution items; and the difference between the asset items and
  the sum of the liability items and the shareholders‘ equity items shall be recognized as other
  comprehensive income and included in the shareholder's equity.
  The foreign currency cash flows and the cash flows of the overseas subsidiary companies shall be
  translated at the exchange rate similar to the spot exchange rate at the time when they occur; the
  amount of the cash and cash equivalents impacted by the exchange rate movement shall be, as a
  reconciling item, separately listed under ―impact of exchange rate movement on cash and cash
  equivalents‖ in the cash flow statement.
  The balance at the beginning of the year and the actual amount of the previous year shall be listed
  as the amount translated according to the financial statement of the previous year.
5.9 Financial instruments
  When becoming a party to a contract of financial instruments, the Group shall recognize a financial
  asset or financial liability. The financial assets and financial liabilities shall be measured at their

                                                                                                          62
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  fair value at the time of initial recognition. For other categories of financial assets and financial
  liabilities, relevant transaction expenses thereof shall be included in the initially recognized
  amount.
5.9.1 Effective interest method
   The effective interest method refers to the method by which the amortized cost and the interest
  income or expenditure of different installments are calculated in light of the effective interest rates
  of the financial assets or financial liabilities (including a group of financial assets or financial
  liabilities). The effective interest rate refers to the interest rate adopted to cash the future cash flow
  of a financial asset or financial liability within the predicted term of existence or within a shorter
  applicable term into the current book value of the financial asset or financial liability.
  When the effective interest rate is calculated, the Group predicts the future cash flow (taking no
  account of the future credit loss) on the basis of considering all the contractual provisions
  concerning the financial assets or financial liabilities, as well as all kinds of charges, transaction
  expenses, discounts, premiums, etc. which are paid, charged, and included in the effective interest
  rate between the contracting parties of the financial assets or liabilities.

5.9.2 Classification, recognition and measurement of financial assets

  Financial assets are classified into the following categories when they are initially recognized: the
  financial assets which are measured at the fair value and the variation of which is included in the
  current profit and loss, the investments which will be held to their maturity, loans, accounts
  receivable and available-for-sale financial assets. The financial assets purchased and sold through
  common modes shall be recognized and terminated from recognition according to the accounting
  on the transaction date. The financial assets held by the Group are loans, accounts receivable and
  available-for-sale financial assets.
  Loans and accounts receivable
  Loans and accounts receivable refer to the non-derivative financial assets for which there is no
  quoted price in an active market and of which the repo amount is fixed or determinable. The
  financial assets classified by the Group into loans and accounts receivable include monetary capital,
  bills receivable, accounts receivable, interest receivable, dividends receivable and other
  receivables.
  The loans and accounts receivable shall be subsequently measured at amortized cost by adopting
  the effective interest rate method. The profits or losses that occur when such loans and accounts
  receivable are terminated from recognition, impaired or amortized shall be included in the current
  profit and loss.
  Available-for-sale financial assets
  Available-for-sale financial assets are non-derivative financial assets that are designated as
  available for sale at the time of initial recognition and the financial assets other than those
  measured at their fair value and the variation of which is included in the current profit and loss,
  loans, accounts receivable and the investments which will be held to their maturity.
  The equity instrument investment without quoted market price in an active market whose fair value
  cannot be reliably measured shall be measured by cost.

5.9.3 Impairment of financial assets

  On each balance sheet date, the Group checks the book value of the financial assets. If there is any
  objective evidence indicating that a financial asset is impaired, the impairment provision is accrued.
  Objective evidence indicating the impairment of financial assets refers to those occurring after the
  initial recognition, have effect on the estimated future cash flow of the financial assets, and can be
                                                                                                           63
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measured reliably.
The objective evidence indicating the impairment of the financial assets includes the following
observable matters:
         ① A serious financial difficulty occurs to the issuer or the debtor;
         ② The debtor breaches any of the contractual stipulations, such as, failure to pay or delay of
            the payment of interest or principal;
         ③ The Group makes any concession due to economic, legal factors or other factors to the
            debtor which is in financial difficulties;
         ④ The debtor will probably become bankrupt or carry out other financial reorganizations;
         ⑤ The financial assets can no longer continue to be traded in an active market due to serious
            financial difficulties of the issuer;
         ⑥ It is impossible to identify whether the cash flow of a certain asset within a certain group
            of financial assets has decreased or not. But after making an overall appraisal according to
            the public data available, it is found that the estimated future cash flow of the said group of
            financial assets has indeed decreased since it was initially recognized and such decrease
            can be measured, including:
 *         The payment ability of the debtor of the said group of financial assets worsens gradually;
     *       The country or economic region where the debtor is situated has the conditions that may
             cause the financial assets to be unpaid.
         ⑦ A serious unfavourable change occurs to the operating technology, market, economic
            environment, legal environment of the issuer of the equity instruments that causes the
            investor of the equity instruments can‘t recover the investment costs;
         ⑧ The fair value of the equity instrument investment has serious or permanent decline; and
         ⑨ Other objective evidence showing the depreciation of the financial assets.
* Impairment of financial assets measured by amortized cost
Where a financial asset measured at amortized cost is impaired, the book value of the said financial
asset shall be written down to the current value of the predicted future cash flow determined
according to the capitalization of original effective exchange rate (excluding the loss of future
credits not yet occurred), and the amount as written down shall be recognized as loss of the
impairment of the asset and shall be included into the current profit and loss. If there is any
objective evidence proving that the value of the said financial asset has been restored, and it is
objectively related to the events that occur after such loss is recognized, the impairment losses
originally recognized shall be reversed. However, the reversed book value shall not be any more
than the amortized costs of the said financial asset on the day of reverse under the assumption that
no provision is made for the impairment.
An impairment test shall be made by the Group independently on the individually significant
financial assets; with regard to not individually significant financial assets, an independent
impairment test may be carried out, or they may be included in a combination of financial assets
with similar credit risk characteristics so as to carry out an impairment-related test. Where, upon
independent test, the financial asset (including the individually significant financial assets and not
individually significant financial assets) has not been impaired, it shall be included in a
combination of financial assets with similar credit risk characteristics so as to conduct another
impairment test. Assets that are individually assessed for impairment and for which an impairment
loss is or continues to be recognized shall not be included in the combination of the financial assets
with similar credit risk characteristics for impairment test.
* Impairment of available-for-sale financial assets measured by cost

                                                                                                            64
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    When the equity instrument investment without quoted market price in an active market and the
    fair value of which cannot be reliably measured is impaired, the book value is decreased to the
    current value confirmed by the discounted future cash flow according to the current market return
    of the similar financial assets. The decreased amount is recognized as impairment loss and
    included in the current profit and loss. The impairment loss of this kind of financial assets can‘t be
    transferred back upon confirmation.

5.9.4 Transfer of financial assets

   Where a financial asset satisfies any of the following conditions, it shall be terminated from
   recognition: ① Where the contractual rights for collecting the cash flow of the said financial asset
   are terminated; ② Where the said financial asset has been transferred and all the risks and rewards
   of the financial asset have been substantially transferred to the receiver; ③ Where the financial
   asset has been transferred, although the Group does not transfer or retain almost all the risks and
   rewards of the financial asset, the Group still waives the control over the financial asset.
   Where the overall transfer of the financial asset satisfies the derecognition conditions, the
   difference between the book value of the transferred financial asset as well as the consideration
   received due to such transfer and the summation of the cumulative amount of the fair value of the
   asset that is originally included in other comprehensive income shall be included in the current
   profit and loss.

5.9.5 Classification, recognition and measurement of financial liabilities

   The Group classifies the financial instruments or the components as financial liabilities or equity
   instruments at the time of initial recognition according to the contract terms of the issued financial
   instruments and the reflected economic essence rather than only the legal form, considering the
   definition of financial liabilities and equity instruments.
   The financial liabilities are classified as the financial liabilities and other financial liabilities
   measured by fair value and the variation of which is included in the current profit and loss at the
   time of initial recognition. The financial liabilities of the Group are other financial liabilities,
   including short-term loans, bills payable, accounts payable, interest payable, other payables,
   non-current liabilities due within one year, long-term loans and long-term payables.
  Other financial liabilities
   Other financial liabilities are subsequently measured at amortized cost by adopting effective
   interest rate method, wherein the profits or losses that arise when such financial liabilities are
   terminated from recognition or amortized shall be included in the current profit and loss.
5.9.6 Terminated recognition of financial liabilities
   When the prevailing obligations of a financial liability are relieved in all or in part, the recognition
   of the financial liability shall be terminated in all or in part.
   Where the recognition of a financial liability is totally or partially terminated, the difference
   between the book value of the part which has been terminated from recognition and the
   consideration which has been paid (including the transferred non-cash assets and the assumed new
   financial liabilities) shall be included into the current profit and loss.
5.9.7 Offset of financial assets and financial liabilities
   When the Group has the legal right to offset the recognized financial assets and financial liabilities
   and this right can be implemented at present, and when the Group plans to use net settlement or
   liquidate the financial assets and pay off the financial liabilities, the amount after the financial
   assets offset the financial liabilities is listed in the balance sheet. Besides, the financial assets and
                                                                                                            65
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   the financial liabilities are respectively listed in the balance sheet without offset.
5.9.8 Equity instruments
   The equity instruments mean the contracts by which to hold the residual equity in the assets of the
   Group after deducting all the liabilities. The issuing (including refinancing), counter purchase, sale
   or cancellation of the equity instruments by the Group shall be handled as changes of the equity.
   The Group doesn‘t recognize any change to the fair value of the equity instruments. The transaction
   expenses related to the equity transaction shall be deducted from the equity.
   The distribution related to the equity instrument holder by the Group shall be considered as profit
   distribution, and the issued share dividends don‘t affect the total amount of the shareholders‘
   equity.
5.10 Accounts receivable
5.10.1 Bad account provision of individually significant accounts receivable
                                                       The accounts receivable with the amount above RMB
Judgment reference or amount standard for individually
                                                       3,000,000 Yuan shall be recognized by the Group as the
significant accounts
                                                       individually significant accounts receivable.
                                                                  An impairment test shall be made independently by the
                                                                  Group on the individually significant financial assets.
                                                                  Where, upon independent test, the financial asset has not
                                                                  been impaired, it shall be included in a combination of
                                                                  financial assets with similar risk characteristics so as to
Accruing method for individually significant accounts accrued for
                                                                  conduct another impairment test. The accounts receivable
bad account provision individually
                                                                  that are independently assessed for impairment and for
                                                                  which an impairment loss is or continues to be recognized
                                                                  shall not be included in the combination of accounts
                                                                  receivable with similar credit risk characteristics for
                                                                  impairment test.

5.10.2 Individually insignificant accounts receivable accrued for bad account provision
individually
                                     If there is objective evidence that the Group can‘t call back the accounts
Reasons for accruing for bad account
                                     according to original articles, the individually insignificant accounts receivable
provision individually
                                     can be accrued for bad account provision individually.
                                             The impairment losses are recognized according to the difference between the
Methods for      accruing    bad   account
                                             present value of future cash flow and the book value, and impairment provision
provision
                                             is accrued.

5.11 Inventories
5.11.1 Classification of inventories
   Inventories of the Group comprise raw materials, goods in process and commodity stocks. The
   inventories are initially measured by cost. The inventory cost consists of purchase cost, processing
   cost and other expenditures to make inventories reach the current site and state.
5.11.2 Pricing methods for sending out inventories
   Weighted average method is used to determine the actual cost for sending out inventories when
   sending them out.
   The agricultural products after the harvest are handled in accordance with the ASBE 1- Inventories.
5.11.3 Recognition reference of the net realizable value of inventories
   Inventories are stated at the lower of cost and net realizable value on the balance sheet date. If the
   net realizable value is lower than the cost of inventories, the provision for the loss on decline in
   value of inventories are made. The net realizable value refers to the amount: the estimated sale
   price of inventories deducting the estimated cost to happen till completion, the estimated selling

                                                                                                                          66
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  expense and relevant taxes, in daily activities. Based on the acquired concrete evidence, the
  purpose for holding inventories and the impact of matters after balance sheet date shall be also
  considered during recognition of the net realizable value of inventories.
  The inventories are accrued inventory depreciation provision according to the difference of single
  inventory item and its net realizable value.
  After accruing inventory depreciation provision, if the previous influence factors writing down
  inventories value disappear resulting in the net realizable value of the inventories being higher than
  their book value, it shall be reversed from the originally accrued inventory depreciation provision
  amount and the reversed amount shall be included in the current profit and loss.
5.11.4 Inventory system for the inventories
  Inventory system: Perpetual inventory system
5.11.5 Amortization method of low-priced and easily-worn articles and packages
  Amortization method of packages and low-priced and easily-worn articles: One-off amortization
  method
5.12 Those divided into assets held for sale
   When a non-current asset of the Group (excluding deferred income tax asset) meets the following
   conditions simultaneously, the Group shall recognize it as holding for sale: This non-current asset
   can be sold immediately at the current state only according to the usual terms for selling such
   non-current assets; a resolution has been passed related to the disposal of this non-current asset; an
   irrevocable transfer agreement has been signed with the transferee; and this transfer will be
   completed within one year. As for non-current assets held for sale, the Group shall not withdraw
   the depreciation or carry out amortization, and the book value or the net amount deducting the
   disposal expenses from the fair value, whichever is less, shall be used for calculation.
5.13 Long-term equity investments
5.13.1 Judgment standard of control, common control and significant impact
   Control means that the investor holds the power in the invested party, obtains variable returns by
   participating in relevant activities of the invested party and has the ability to affect the amount of
   the returns by using the power on the invested party. Common control means a joint control over a
   certain arrangement according to relevant agreements and relevant activities of this arrangement
   must be decided upon unanimous consent of the participants sharing the control power.
   Significant impact refers to the right to participate in decision-making of the investor‘s financial
   and operating policies but not controlling or commonly controlling the formulation of these
   policies with other parties. When determining whether to control or exert significant influence on
   the invested unit, the potential voting power factors such as the current convertible company
   bonds and the current executable equity warrants held by the investor and other parties in the
   invested unit have been considered.
5.13.2 Recognition of initial investment cost
  For long-term equity investments acquired from business combination under non-common control,
  the combination cost shall be regarded as the initial investment cost of the long-term equity
  investments on the acquisition date. For the business merger ultimately formed under non-common
  control with the stock rights of the purchased party step by step through several transactions, it
  shall be handled depending on whether it is a ―package deal‖: If it belongs to a ―package deal‖,
  each transaction shall be regarded as a transaction with the control power acquired for the
  accounting treatment.
  The intermediary expenses such as audit, legal services and assessment consultation and other
  related management expenses paid by the acquirer for business combination are included in the
  current profit and loss when they occur.

                                                                                                          67
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  For long-term equity investments other than those formed by business combination, initial
  measurement shall be carried out according to the cost.
5.13.3 Subsequent measurement and recognition of loss and profit
  Long-term equity investments by cost method
  Long-term equity investments in the subsidiary companies are measured on cost method basis in
  the corporate financial statement. Subsidiary companies refer to the invested entities by which the
  Group has control.
  When cost method is adopted, the long-term equity investments are measured at the initial
  investment cost. In case of additional or recovered investment, the cost of the long-term equity
  investments shall be adjusted accordingly. The current investment income shall be recognized
  according to the cash dividends or profits declared to issue by the invested unit.
5.13.4 Disposal of long-term equity investments
  When the long-term equity investments are disposed, the difference between the book value and
  the actually acquired price is included in the current profit and loss.
5.14 Fixed assets
5.14.1 Recognition conditions
  Fixed assets refer to the tangible assets held for producing goods, rendering services, leasing or
  operation management, with service life exceeding one accounting year. Fixed assets can only be
  confirmed that the economic benefits related to the fixed assets are likely to flow into the Group,
  and the cost of the fixed assets can be measured reliably. Initial measurement for fixed assets shall
  be carried out according to the cost. For the subsequent expenses related to the fixed asset, if the
  economic benefits related to the fixed asset are likely to flow into the Group and the cost thereby
  can be reliably measured, the subsequent expenses are included in fixed asset cost and the book
  value of the substituted part shall be terminated. Other subsequent expenses shall be included in the
  current profit and loss.
5.14.2 Depreciation methods
  Depreciation is calculated by the straight-line depreciation within the service life from the month
  following having been put into operation. The estimated service life, residual value and annual
  depreciation rate are as follows:
        Classification      Depreciation method   Depreciation life Residual value rate Annual depreciation rate
                                Straight-line
    Houses and buildings                            20-40 years       0-5%                2.4%-5.0%
                               depreciation
                                Straight-line
    Machinery equipment                             5-20 years        0-5%                4.8%-20.0%
                               depreciation
                                Straight-line
    Transportation tools                            4-12 years        0-5%                7.9%-25.0%
                               depreciation

  The estimated residual value refers to the amount that the Group obtains from disposal of the assets
  at present after deducting the predicted disposition expenses at an estimated state on the assumption
  that the predicted service life of the fixed assets has expired.
5.14.3 Other description
  When the fixed assets are under disposal state or cannot generate any economic benefits through
  use or disposal as expected, the fixed assets shall be derecognized. The selling, transfer, scrapping
  or damage disposal income shall be included in the current profit and loss after deducting the book
  value and relevant taxes.
  The Group reviews the service life, expected net residual value, and the depreciation method of the
  fixed assets at least at the end of each year, and in case of any change, the change will be disposed

                                                                                                             68
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  as accounting estimate change.
5.15 Construction in progress
  Construction in progress is measured by actual costs, and the actual costs include all costs of the
  engineering during the period of construction, capitalized borrowing costs before the engineering
  reaches the planned serviceable condition and other related costs. The construction in progress is
  not depreciated. The construction in progress is transferred to fixed assets after reaching the
  planned serviceable condition.
5.16 Borrowing costs
  Borrowing costs that are directly attributable to the acquisition, construction or production of a
  qualifying asset shall be capitalized after expenditure to acquire happens, borrowing costs happen,
  acquisition, construction or production essential for making the assets ready for their intended use
  or sales. Capitalization of borrowing costs shall cease when all the activities necessary to prepare
  the qualifying asset for its intended use of sale are substantially complete. If the acquisition,
  construction or production of a qualifying asset is abnormally interrupted, and the interruption
  period exceeds three months, the capitalization of borrowing costs shall be temporarily ceased,
  until the construction or production resumes. Other borrowing costs are recognized as expenses
  when occur. The amount after deducting the interest income of the borrowing funds that have not
  yet been used which are deposited in bank or the investment income from temporary investment
  from the interest expenses actually incurred in the current period of special borrowings shall be
  capitalized.
5.17 Biological assets
  The biological assets of the Group are productive biological assets.
  Productive biological assets refer to the biological assets held for the purposes of producing
  agricultural products, rendering services or leasing, etc. The productive biological assets of the
  Group are vines that produce grapes. Initial measurement for the productive biological assets is
  carried out according to the cost. For the occurred cost of the self-breeding productive biological
  asset before achieving the intended production and operation purposes can be directly attributable
  to the necessary expenses of the asset, including the borrowing cost conforming to capitalization.
  The productive biological assets are not accrued depreciation until reaching the intended
  production and operation purposes. After reaching the intended production and operation purposes,
  the productive biological assets are accrued depreciation within the service life straight-line
  depreciation. The service life, estimated net residual value rate and annual depreciation rate of
  different productive biological assets are as follows:
    Category of assets    Service life   Estimated residual value rate (%)         Annual depreciation rate
    Vines                 20 years                                                 5%

  The service life of the productive biological assets of the Group and the estimated residual value
  are confirmed by the normal service life cycle of the biological assets.
  The Group reviews the service life, expected net residual value, and the depreciation method of the
  productive biological assets at least at the end of each year. In case of any change, the change will
  be disposed as accounting estimate change.
  At the time of sale, loss, death, damage or destroy of a productive biological asset, the difference
  after deducting the book value and relevant taxes from the disposal income are included in the
  current profit and loss.
5.18 Intangible assets
5.18.1 Pricing method, service life and impairment test
  Intangible assets include land use right, software, etc.

                                                                                                              69
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  Initial measurement for intangible assets is carried out according to the cost. For the intangible
  assets with finite lives, since they are available, the amount after the original value deducts
  expected net residual value and the accrued accumulative amount of provision for impairment is
  amortized evenly based on straight line method. The intangible assets with indefinite service life
  are not amortized. The amortization method, service life and estimated residual value of all kinds
  of intangible assets are shown as follows:
  Category of assets      Service life   Estimated net residual value rate          Annual amortization rate

  Land use right          40-50 years    -                                          2-2.5%
  Software                5-10 years     -                                          10-20%
  Trademark               10 years       -                                          10%

  At the end of the period, the service life and amortization method of the intangible assets with finite
  service life shall be reviewed and adjusted if necessary.
5.19 Impairment of long-term assets
  On each balance sheet date, the Group and the Company check the long-term equity investments,
  fixed assets, construction in progress, productive biological assets and intangible assets with finite
  service life to determine whether there is a sign indicating any impairment. If there is such a sign,
  the recoverable amount shall be estimated.
  The estimated recoverable amount of the asset is based on the single asset. If it is difficult to
  estimate the recoverable amount of a single asset, the recoverable amount is determined based on
  the asset group which the asset is in. The recoverable amount is the higher one between the net
  amount after the disposition expenses are deducted from the fair value of the asset or the asset
  group and the current value of the estimated future cash flow.
  If the recoverable amount of the asset is lower than its book value, the impairment provision of the
  asset is accrued based on the difference and included in the current profit and loss.
  Impairment test is carried out for goodwill at least at the end of each year. The impairment test of
  goodwill shall be carried out in combination with the related asset group or asset combination. That
  is to say, the book value of the goodwill is amortized to the asset group or asset combination
  benefiting from the synergistic effect of the business combination according to the reasonable
  methods from the acquisition date. If the recoverable amount of the asset group or asset
  combination which includes the amortized goodwill is lower than the book value, the
  corresponding impairment loss is recognized. The amount of impairment loss shall firstly offset the
  book value of the goodwill amortized to the asset group or asset combination and then offset the
  book value of other assets in proportion according to the proportion in the book value of other
  assets in the asset group or asset combination except for the goodwill.
  After the impairment loss of assets has been recognized, it is not be reversed in the future
  accounting periods.
5.20 Long-term unamortized expenses

   Amortization period of different long-term unamortized expenses of the Group are listed as follows:
                                                                   Amortization period
   Land requisition fee                                            50 years
   Land leasing fee                                                50 years
   Afforestation fee                                               5-20 years
   Decoration fee                                                  3-5 years
   Other                                                           3 years




                                                                                                               70
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5.21 Employee remunerations
5.21.1 Accounting treatment method of short-term remunerations
  During the accounting period that the employees provide services for the Group, the actual
  short-term remunerations are recognized as liabilities and included in the current profit and loss or
  relevant asset costs. The welfare expenses of the employees in the Group are included in the
  current profit and loss or relevant asset costs when occur based on the actual amount. The
  non-monetary welfare expenses of the employees are measured by the fair value.
  During the accounting period that the employees provide services for the Group, the corresponding
  employee remunerations and the corresponding liabilities are recognized and included in the
  current profit and loss or relevant asset costs after the social insurance premiums including medical
  insurance premium, industrial injury insurance premium and birth insurance premium as well as
  housing provident funds are paid by the Group for the employees, and labor union dues and
  employee education funds are withdrawn by the Group according to the regulated withdrawing
  base and proportion.
5.21.2 Accounting treatment method of welfare after resignation
  The Group makes the contribution plan for the welfare after resignation.
  During the accounting period that the employees provide services for the Group, the amount to be
  deposited which is calculated in accordance with the contribution plan is recognized as liabilities
  and included in the current profit and loss or relevant asset costs.
5.21.3 Accounting treatment method of welfare after dismission
  If the Group provides dismission welfare to the employees, the employee remuneration liabilities
  caused by the dismission welfare shall be recognized and included in the current profit and loss on
  the following date which is earlier: The Group can‘t unilaterally withdraw the dismission welfare
  due to termination of labor relation plan or redundancy suggestion; or the Group confirms the costs
  or expenses related to the reorganization involving the payment of the dismission welfare.
5.22 Revenue
5.22.1 Revenues from sale of goods
  When the significant risks and rewards of ownership of goods have been transferred to the buyer,
  provided that the Group maintains neither continuous management right involvement to the degree
  usually associated with ownership, nor effective control over the goods sold, and cost of sales can
  be measured reliably. When the relevant economic benefits are likely to flow into the enterprise
  and the relevant incurred cost or cost to be incurred can be measured reliably, the realization of the
  revenue from sale of goods can be recognized.
5.22.2 Rendering of services
  When income amount of rendering of services can be measured reliably, the relevant economic
  benefits are likely to flow into the Group, the stage of completion of the transaction can be
  measured reliably, and the incurred cost or cost to be incurred in the transaction can be measured
  reliably, then the income realization of rendering of services can be recognized. The Group
  confirmed the income of the rendered services according to percentage-of-completion method on
  the balance sheet date. The percentage-of-completion of the service transaction is determined
  according to the proportion of the rendered service accounting for the total services that shall be
  rendered.
  If the outcome of rendering of service transaction cannot be reliably estimated, the income of the
  rendered services are determined according to the render cost amount that is incurred and is
  expected to be compensated, and the incurred service cost shall be the period charge. If the incurred
  service cost is expected to be unable to be compensated, the income will not be determined.


                                                                                                          71
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5.23 Governmental subsidies
5.23.1 Judgment standard and accounting treatment method of governmental subsidies
related to assets
  Governmental subsidies refer to monetary or non-monetary assets received by the Group from the
  government. According to the nature of the granted object clearly stipulated in relevant government
  documents, governmental subsidies include those related to assets and those related to income.
  Governmental subsidies are recognized where there is a reasonable assurance that the allowances
  will be received and all attaching conditions will be complied with. Monetary allowances are
  measured on the basis of the amount received or the amount receivable.
  Governmental subsidies related to assets are recognized as deferred income and are distributed
  equally in the current profit and loss within the useful lives of the relevant assets.
5.23.2 Judgment standard and accounting treatment method of governmental subsidies
related to revenues
  The governmental subsidies related to revenues to be used as compensation for future expenses or
  losses are recognized as deferred income and are included in the profit and loss statement for the
  period where the relevant expenses are recognized; or those to be used as compensation for
  relevant expenses or losses already occurred are recorded directly in the current profit and loss.
5.24 Deferred income tax assets/deferred income tax liabilities
  The income tax expenses include the current income tax and deferred income tax.
5.24.1 Current income tax
  On the balance sheet date, the current income tax liabilities (or assets) formed in the current period
  and the prior periods are measured according to the predicted payable (refundable) income tax
  amount as stipulated by tax law.
5.24.2 Deferred income tax assets and deferred income tax liabilities
  The balance sheet liability method is used for recognizing deferred income tax assets and deferred
  income tax liabilities for the difference between certain assets, book value of liability items and
  their tax base, and the temporary differences arising from the book value of items (that are not
  recognized as assets and liabilities but can be recognized the tax bases as stipulated by tax law) and
  tax bases.
  Normally all temporary differences are recognized the relevant deferred income taxes. However,
  for the deductible temporary differences, the Group recognized the relevant deferred income tax
  assets taking the taxable income that is likely to be obtained for deducting deductible temporary
  differences as the limit. In addition, the temporary differences relevant to initial recognition of
  goodwill and relevant to the initial recognition of assets or liabilities arising from transaction not of
  business combination, and not influencing accounting profit and taxable income (or deductible loss)
  are not recognized for the relevant deferred income tax assets or liabilities.
  For the deductible losses and tax credits that can be transferred during subsequent years, the
  corresponding deferred income tax assets shall be recognized by taking the future taxable income
  that is likely to be used to deduct deductible losses and tax credits as the limit.
  The Group recognized the deferred income tax liabilities arising from the taxable temporary
  differences relevant to the subsidiary companies, except for that the Group can control the time of
  the reverse of the temporary differences which are unlikely to be reversed in the foreseeable future.
  For the deductible temporary differences relevant to the subsidiary companies, the Group will
  recognize the deferred income tax assets only when the temporary differences are likely to be
  reversed in the foreseeable future and the taxable income for deducting deductible temporary
  differences is likely to be achieved in the future.

                                                                                                           72
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  On the balance sheet date, the deferred income tax assets and deferred income tax liabilities are
  measured according to the applicable tax rate during the period of expecting to repossess the
  relevant assets or pay off relevant liabilities as stipulated by tax law.
  Except for the current income taxes and deferred income taxes (relevant to transaction and matter
  that are directly included in other comprehensive income or stockholder's equity) that are included
  in other comprehensive income or stockholder's equity and the deferred income taxes arising from
  business combination that adjusts the book value of the goodwill, the expenses or revenues of other
  current income taxes and deferred income taxes are included in the current profit and loss.
  On the balance sheet date, the Group shall review the book value of deferred income tax assets and
  shall write down the book value of deferred income tax assets if sufficient taxable income is
  unlikely to be obtained in the future to deduct the benefits of deferred income tax assets. The
  amount written down shall be reversed when it is likely to obtain sufficient taxable income.
5.24.3 Offset of income tax
  When there is the legal right of netting or intention of netting or carrying out obtaining assets and
  paying off liabilities at the same time, the current income tax asset and current income tax liability
  of the Group are reported according to the net amount after offset.
  When there is the legal right of netting the current income tax asset and current income tax liability
  and the deferred income tax assets and deferred income tax liabilities are relevant to the income tax
  collected by same tax collection and management department on the same taxpayer or different
  taxpayers, however, the involved tax payers intend to net the current income tax assets and
  liabilities or obtain assets and pay off liabilities at the same time during every period of reverse of
  each significant deferred income tax assets and liabilities in the future, deferred income tax assets
  and deferred income tax liabilities of the Group are reported according to the net amount after
  offset.
5.25 Lease
  The term ―financing lease‖ refers to a lease that has transferred in substance all the risks and
  rewards related to the ownership of an asset. Other leases except for financing lease are the
  operating lease.
5.25.1 Accounting treatment method of operating lease
  The Group records the operating lease business as a lessee.
  Rental expenses under the operating lease are credited to related costs of the assets or the current
  profit and loss on the straight line basis over the lease terms. The initial direct expenses are
  included in the current profit and loss.
5.26 Changes in main accounting policies and accounting estimates
5.26.1 Changes in main accounting policies
  Nil
5.26.2 Changes in main accounting estimates
  Nil
5.27 Other
  Critical assumptions and uncertain factors adopted for important judgements and accounting
  estimates during the application of the accounting policies
  During the application of the accounting policies of this Financial Report IV, the Group needs to
  judge, estimate and assume the book value of the report items that are unable to be accurately
  measured due to the inherent uncertainties of business activities, in which the judgment, estimation
  and assumption are made based on the previous historical experience of the management level of
  the Group and considering other relevant factors. The actual results may have differences from the
                                                                                                          73
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estimation of the Group.
The Group regularly reviews the above-mentioned judgment, estimation and assumption based on
the continuous operation, and the change of accounting estimate only affects the current period of
change, of which the influence number will be recognized at the current period of change; in case
of influencing both current period and future period of change, the influence number will be
recognized at the current period and future period of change.
Critical assumptions and uncertain factors adopted for accounting estimates
On the balance sheet date, the main critical assumptions and uncertainties in accounting estimates
that are likely to result in significant adjustments in assets and book value of liabilities in the future
period include:
Deferred income tax assets
Within the limit of the likeliness that there is sufficient taxable income to deduct deductible losses,
the deferred income tax assets shall be recognized according to all deductible losses that have not
been utilized, which requires the management level to use a lot of judgments to estimate the
occurred time and amount of taxable income to be obtained in the future, and combine with tax
planning strategy to decide the amount of deferred income tax assets that shall be recognized.
Depreciation
The Group uses straight line method for provision for depreciation within the expected service life
after considering the residual value of the fixed assets. The Group regularly reviewed the expected
service life to decide the amount of depreciation expense that will be included in every report
period. The expected service life is recognized by the Group according to the previous experience
on similar assets and in combination with the expected technical changes. The depreciation expense
shall be adjusted if there are significant changes in the previous estimate.
Service life of intangible assets
The expected service life of intangible assets are estimated based on actual service life of the
previous intangible assets of similar natures and functions and according to historical experience
and in consideration of the duration of the contractual rights or other legal rights applicable to the
intangible assets.
In case that the service life of the intangible assets shortens or extends, the amortization period will
be adjusted in the future period for intangible assets with finite life.
Impairment of long-term assets
The Group carries out impairment assessment on long-term assets to determine if the recoverable
amount of assets drops to the amount lower than their book value. If the situation shows that the
book value of the long-term assets may not be fully recovered, the relevant assets will be deemed
as having been impaired and the impairment loss shall be correspondingly recognized.
The recoverable amount is the higher in: the net amount of fair value of an asset (or asset group)
minus disposal expense, and the present value of the estimated future cash flow of the asset (or
asset group). It is difficult for the Group to accurately estimate the fair value of an asset because of
difficulty in obtaining the open market price of the asset (or asset group). It needs to make
significant judgments on the output, selling price, relevant operating cost of the asset (or asset
group) and the discount rate used for calculating present value when estimating the present value of
future cash flow. The Group will use all easily available materials in estimating the recoverable
amount, including the forecast relevant to output, selling price and relevant operating cost
according to the reasonable and supportable assumption.
Bad account provision for accounts receivable
Bad account provision for accounts receivable shall be recognized by the management level
according to the objective evidences (e.g. the possibility of bankruptcy or severe financial difficulty

                                                                                                         74
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   of the debtor) that can affect the recovery of the accounts receivable. The management level will
   reevaluate bad account provision in the end of every year.
   Inventory depreciation provision accrued based on net realizable value
   According to the inventory accounting policy, the Group carries out price decrease provision for
   obsolete and unsalable inventories with higher cost than the net realizable value measurement
   according to the lower of the cost and net realizable value. The Group will reevaluate if the
   inventories are obsolete and unsalable, and if the net realizable value is lower than inventory cost in
   the end of every year.

6. Taxes

6.1 Main taxes and tax rate

         Taxes                                         Tax basis                                        Tax rate
                         VAT is levied by the output tax calculated by the taxable revenue as 17%, 6% (China), 19.6%
Value added tax
                         the tax base after deduction of eligible input VAT in this period.   (France) and 21% (Spain)
                         The consumption tax is levied by the taxable revenue as the tax
Consumption tax                                                                          10%-20% (China)
                         base.
Business tax             The business tax is levied by the taxable revenue as the tax base.   5% (China)
Urban maintenance and The urban maintenance and construction tax is levied by the actually
                                                                                           7% (China)
construction tax      paid turnover tax as the tax base.
                         The corporate income tax is levied by the taxable income as the tax 25% (China), 33% (France)
Corporate income tax
                         base.                                                               and 28% (Spain)



6.2 Tax incentives

Ningxia Changyu Grape Growing Co., Ltd. (―Ningxia Growing‖), a subsidiary of the Company, whose
principal activity is grape growing, is incorporated in Yongning County, Ningxia Hui Autonomous
Region. According to Article 27 of PRC Corporate Income Tax and Article 86 of PRC Corporate
Income Tax Measures for Implementation, it enjoys an exemption of corporate income tax related to
grape growing.

Xinjiang Tianzhu Wine Co., Ltd. (―Xinjiang Tianzhu‖) and Xinjiang Chateau Changyu Baron Balboa
Co., Ltd. (―Shihezi Chateau‖), the subsidiaries of the Company, are enterprises engaged in the
production and sales of bulk wine incorporated in Shihezi City, Xinjiang Uygur Autonomous Region.
In accordance with relevant regulations of the Notice on Relevant Issues of Taxes Policies for Deeply
Implementing the Western Development Strategy (Cai Shui [2011] No. 58), such enterprises enjoy the
preferential policy for the corporate income tax, and the preferential tax rate of the corporate income
tax is 15% from 2015 to 2020.

7. Notes to consolidated financial statement

7.1 Monetary capital

                                                                                                               Unit: Yuan
                  Item                               Ending balance                           Beginning balance
Cash on hand                                                              112,832                                  117,507
Bank deposit                                                        1,433,123,482                           1,240,607,797
Other monetary capital                                                116,831,467                             150,792,303

                                                                                                                       75
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Total                                                      1,550,067,781                         1,391,517,607
Including: Total amount of funds
                                                                 17,223,253                         16,080,618
deposited abroad


As at June 30, 2017, the restricted bank deposit details are listed as follows:
                   Item                        Ending balance                       Beginning balance
Housing fund of the unit                                          2,748,410                             2,711,926
Total                                                             2,748,410                             2,711,926


As at June 30, 2017, the details of other monetary funds are listed as follows:
                 Item                          Ending balance                       Beginning balance
Pledge of fixed deposits by Yantai
Changyu Wine Research,
                                                                 46,100,000                         46,100,000
Development and Manufacture Co.,
Ltd. (―R&D Company‖)
Refundable deposits of bills payable                              8,000,000                         38,900,000
Refundable deposits of the letter of
                                                                 60,580,850                         25,694,735
credit
Account balance of Alipay                                         1,992,035                         40,047,367
Guaranty money for the unit card                                   158,582                                50,201
Total                                                           116,831,467                        150,792,303
As at June 30, 2017, the frozen amount in the account balance of Alipay was RMB 1,992,035 Yuan
(December 31, 2016: RMB 18,118,441 Yuan).

As at June 30, 2017, the monetary capital deposited abroad by the Group was RMB 17,223,253 Yuan
(December 31, 2016: RMB 16,080,618 Yuan).


As at June 30, 2017, the bank deposits of the Group including short-term fixed deposits ranging from
3 months to 1 year amounted to RMB 201,000,000 Yuan (December 31, 2016: RMB 3,000,000 Yuan),
with the interest rates ranging from 1.3%-1.95%.


7.2 Bills receivable

7.2.1 Classification of bills receivable

                                                                                                     Unit: Yuan
                          Type                       Ending balance                  Beginning balance
Bank acceptance                                                    378,804,230                     210,470,027
Trade acceptance
Total                                                              378,804,230                     210,470,027



7.2.2 Bills receivable pledged by the Company at the end of period

        Nil




                                                                                                              76
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  7.2.3 Bills receivable endorsed or discounted by the Company at the end of period but
  not yet matured as of the balance sheet date

                                                                                                                    Unit: Yuan
                                               Amount terminating recognition at the end Amount not terminating recognition
                      Item
                                                              of period                        at the end of period
  Bank acceptance                                                             138,552,83
  Trade acceptance
  Total                                                                       138,552,83


  7.2.4 Bills receivable reclassified as accounts receivable by the Company due to the
  default of drawer at the end of period

           Nil

  7.3 Accounts receivable

  7.3.1 Accounts receivable disclosed by type

                                                                                                                        Unit: Yuan
                                     Ending balance                                         Beginning balance
                                             Bad debt
                     Book balance                                            Book balance          Bad debt provision
    Type                                     provision
                                                             Book value                                                 Book value
                  Amount       Proportion Amount Accrued                  Amount       Proportion Amount Accrued
                                                proportion                                              proportion
Accounts
receivable of
significant
single amount
              70,335,893          42.1%                      70,335,893 75,230,493         43.5%                         75,230,493
and single
accrued bad
debt
provision
Accounts
receivable
accrued bad
debt
provision by
credit risk
features
Accounts
receivable of
insignificant
single amount
              96,816,616          57.9%                      96,816,616 97,832,135         56.5%                         97,832,135
and single
accrued bad
debt
provision
Total            167,152,509      100%                       167,152,509 173,062,628       100%                         173,062,628



  The credit term of accounts receivable is normally one month. Major customers can be granted a credit
  term up to three months. The accounts receivable are free from interest.
  As at June 30, 2017, the accounts receivable with ownership restrictions were RMB 29,248,895 Yuan
                                                                                                                               77
                                                            Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


(December 31, 2016: RMB 30,732,944 Yuan). Please refer to Note 7.19 for the details.


7.3.2 Bad debt provision accrued, transferred back or received in this period

The bad debt provision accrued in this period was RMB 0 Yuan; and that transferred back or
received in this period was RMB 0 Yuan.

7.3.3 Accounts receivable actually cancelled after verification in this period

       Nil

7.3.4 Accounts receivable collected by the borrowers of top 5 units ranked by the ending
balance

                              Relationship with the                                                        Percentage in total
           Unit                                              Amount                    Period
                                    Company                                                                accounts receivable
     Nonggongshang
 Supermarket (Group) Co.,         Third party                      11,144,490       Within 1 year                6.7%
          Ltd.
       Distribuidora
                                  Third party                       9,926,131       Within 1 year                5.9%
   Internacional ( DIA)
      Wal-mart (China)
    Investment Co., Ltd.
                                  Third party                       8,649,179       Within 1 year                5.2%
   Lianhua Supermarket
    Holdings Co., Ltd.
                                  Third party                       8,599,554       Within 1 year                5.1%

Suguo Supermarket Co., Ltd.       Third party                       8,406,322       Within 1 year                5.0%
                                                                   46,725,676                                    28.0%
           Total                       --                                                --



7.3.5 Accounts receivable terminating recognition due to transfer of financial assets

         Nil

7.3.6 Accounts receivable transferred and included in assets and liabilities

         Nil

7.4 Advance payment

7.4.1 Advance payment listed by age

                                                                                              Unit: Yuan

                                                  Ending balance                                  Beginning sum
                Age
                                         Amount                 Proportion                    Amount              Proportion

Within 1 year                                   2,114,086                    100%                    2,175,606            100%

                                                                                                                               78
                                                        Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report



1-2 years

2-3 years

More than 3 years

Total                                      2,114,086            --                             2,175,606           --



7.4.2 Advance payment collected by the prepaid parties of top 5 units ranked by the
ending balance

                                                                                                                 Percentage
                                       Relationship with                                                         in the total
                    Unit                                   Amount        Age       Reason for unsettlement
                                          the Group                                                               advance
                                                                                                                 payment%

                                                                       Within 1
Chongqing Hoson Glass Co., Ltd.           Third party       508,873               Failure to receive the goods          24.1%
                                                                         year

Shandong Electric Power Group
                                                                       Within 1       Prepaid electricity
Company Yantai Power Supply               Third party       484,514                                                     22.9%
                                                                         year          purchasing fund
Company

Jiangsu Dibang Construction                                            Within 1
                                          Third party       421,357                 Prepaid repair charges              19.9%
Engineering Co., Ltd.                                                    year

Yantai Yanlai Electromechanical
                                                                       Within 1
Equipment Production, Maintenance         Third party       100,000                 Prepaid repair charges               4.7%
                                                                         year
and Supply Center

                                                                       Within 1
Yantai Refrigeration Equipment Plant      Third party        54,544                 Prepaid repair charges               2.6%
                                                                         year
                                                           1,569,288                                                    74.2%
                  Total                       --                          --                   --



7.5 Interest receivable

7.5.1 Classification of interest receivable

                                                                                                                 Unit: Yuan
                  Item                             Ending balance                           Beginning balance
Fixed deposit                                                           368,928                                         24,200
Entrusted loan
Bond investment
Total                                                                   368,928                                         24,200




                                                                                                                           79
                                                           Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


7.6 Other accounts receivable

7.6.1 Other accounts receivable disclosed by type

                                                                                                                    Unit: Yuan
                                 Ending balance                                         Beginning balance
                  Book balance       Bad debt provision                  Book balance          Bad debt provision
   Type
                Amount Proportion Amount       Accrued Book value     Amount Proportion Amount           Accrued Book value
                                              proportion                                                proportion
Other
accounts
receivable of
significant
single
              5,460,380     33.5%                          5,460,380 7,417,220       39.3%                            7,417,220
amount and
single
accrued bad
debt
provision
Other
accounts
receivable
accrued bad
debt
provision by
credit risk
features
Other
accounts
receivable of
insignificant
single
              10,850,802    66.5%                         10,850,802 11,463,580      60.7%                           11,463,580
amount and
single
accrued bad
debt
provision
Total          16,311,182    100%                         16,311,182 18,880,800       100%                           18,880,800



7.6.2 Bad debt provision accrued, transferred back or received in this period

The bad debt provision accrued in this period was RMB 0 Yuan; and that transferred back or
received in this period was RMB 0 Yuan.

7.6.3 Other accounts receivable actually cancelled after verification in this period

        Nil

7.6.4 Other accounts listed by nature

                                                                                                                    Unit: Yuan
                            Nature                                 Ending book balance           Beginning book balance
Deposit and guaranty money receivable                                             11,867,142                        13,191,851

                                                                                                                           80
                                                                 Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


                            Nature                                       Ending book balance            Beginning book balance
Imprest receivable                                                                       1,787,865                      2,934,424
Consumption tax rebate                                                                     483,021                        573,586
Other                                                                                    2,173,154                      2,180,939
Total                                                                                   16,311,182                     18,880,800


7.6.5 Other accounts receivable collected by the borrowers of top 5 units ranked by the
ending balance

                                                                                                                       Unit: Yuan
                                                                                          Percentage in total
                                                       Ending                                                   Ending balance of
               Unit                  Nature                               Age           ending balance of other
                                                       balance                                                  bad debt provision
                                                                                          accounts receivable
                                 Construction
YEDA Finance Bureau                                        5,460,380 Within 2 years                       33.4%
                                 guarantee
YEDA Construction        Industry Construction                         More than 3
                                                           2,151,300                                      13.2%
Association                       guarantee                              years
                                 Foreign
Canada Oros Icewine Co., Ltd.    investment                2,050,000    1-2 years                         12.6%
                                 receivable
Shandong Electric Power Group
                              Power supply                             More than 3
Company Yantai Power Supply                                1,206,853                                       7.4%
                              guarantee                                  years
Company
YEDA Thermochemistry Co.,
                          Deposit                            500,000 Within 1 year                         3.1%
Ltd.
Total                                    --            11,368,533            --                           69.7%


7.6.6 Other accounts receivable terminating recognition due to transfer of financial
assets

         Nil

7.6.7 Other accounts receivable transferred and included in assets and liabilities

         Nil

7.7 Inventories

7.7.1 Inventory classification

                                                                                                                        Unit: Yuan

                                      Ending balance                                             Beginning balance

        Item                                  Depreciation                                           Depreciation
                      Book balance                              Book value        Book balance                       Book value
                                               provision                                              provision

Raw materials               40,739,604                             40,739,604         72,011,633                       72,011,633

Goods in process         1,453,452,930                          1,453,452,930       1,253,218,347                    1,253,218,347

Commodity stocks           545,683,575          15,573,180        530,110,395        944,806,516        21,426,756    923,379,760

                                                                                                                                  81
                                                                Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report



Total                       2,039,876,109      15,573,180      2,024,302,929     2,270,036,496         21,426,756      2,248,609,740


7.7.2 Inventory depreciation provision

                                                                                                                             Unit: Yuan
                                                 Increase in this period              Decrease in this period
                            Beginning
        Item                                                                    Transfer back or                     Ending balance
                             balance            Accrual           Other                                Other
                                                                                   write-off

Raw materials

Goods in process

Commodity stocks               21,426,756                                          5,853,575.63                              15,573,180

Total                          21,426,756                                          5,853,575.63                              15,573,180


7.8 Those divided into assets held for sale

                                                                                                                             Unit: Yuan
                                                                                     Estimated disposal
          Item                 Ending book value              Fair value                                    Estimated disposal time
                                                                                          expenses
Zhenshantun collective
                                            2,000,197               16,282,224                  3,878,560
apartment
Total                                       2,000,197               16,282,224                  3,878,560               --


The Company has signed an irrevocable agreement for disposing the fixed assets, and the
contract amount is RMB 16,282,224 Yuan. The disposal is predicted to be completed in 2017.

7.9 Other current assets


                                                                                                                         Unit: Yuan
                   Item                                    Ending balance                             Beginning balance
Prepaid corporate income tax                                                 68,535,748                                      26,238,092
Deductible input tax                                                        218,239,811                                  135,316,274
Rent to be amortized                                                           6,518,738                                      7,967,876
Total                                                                       293,294,297                                  169,522,242


7.10 Available-for-sale financial assets

7.10.1 Particulars of available-for-sale financial assets

                                                                                                                             Unit: Yuan
                                                        Ending balance                               Beginning balance
                 Item                    Book             Impairment         Book           Book          Impairment            Book
                                        balance            provision         value         balance         provision            value
Available-for-sale financial
instruments:
Available-for-sale equity               10,463,800            10,000,000     463,800 10,340,263                 10,000,000     340,263
                                                                                                                                    82
                                                                Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


instruments:
        Fair value measurement
        Cost measurement                10,463,800             10,000,000     463,800 10,340,263                10,000,000      340,263
Total                                   10,463,800             10,000,000     463,800 10,340,263                10,000,000      340,263


7.10.2 Available-for-sale financial assets by cost measurement at the end of period

                                                                                                                           Unit: Yuan
                              Book balance                                  Impairment provision                                Cash
                                                                                                                Shareholding
                        Increase Decrease                                 Increase Decrease                                   dividend
Invested unit                                                                                                    ratio in the
              Beginning in this in this           Ending        Beginning in this in this           Ending                     in this
                                                                                                                invested unit
                         period period                                     period period                                       period
Yantai
Dingtao
Construction
and          10,000,000                         10,000,000 10,000,000                              10,000,000             18%
Development
Co., Ltd.
(Note 1)
Other (Note                                                                                                      Less than
                  340,263 123,537                    463,800
2)                                                                                                                  1%
Total          10,340,263 123,537               10,463,800 10,000,000                              10,000,000        --
Note 1: The book balance of the equity investment made by the Company in Yantai Dingtao
Construction and Development Co., Ltd. was RMB 10,000,000 Yuan, and the provision for
impairment of RMB 10,000,000 Yuan has been withdrawn. The invested entity is an unlisted
company and its fair value can‘t be measured reliably, so the Company shall measure such
available-for-sale financial assets by cost method.
Note 2: The Group holds less than 1% of the shares in such invested entities. These invested
entities are all unlisted companies and their fair value can‘t be measured reliably, so the
Group shall measure such available-for-sale financial assets by cost method.

7.10.3 Changes of impairment of available-for-sale financial assets in the report period

                                                                                                                     Unit: Yuan
 Classification of available-for-sale    Available-for-sale equity          Available-for-sale debt
                                                                                                                     Total
           financial assets                    instruments                       instruments
Accrued impairment balance at the
                                                        10,000,000                                                         10,000,000
beginning of period
Accrued amount of this period
Including: Transferred in from other
comprehensive income
Decrease in this period
Including: Fair value recovered and
 transferred back after date
Accrued impairment balance at the
                                                        10,000,000                                                         10,000,000
end of period


7.11 Fixed assets




                                                                                                                                    83
                                                       Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


7.11.1 Particulars of fixed assets

                                                                                                         Unit: Yuan
                               Houses and
             Item                               Machinery equipment    Transportation tools          Total
                                buildings
Ⅰ Original book value:
  1. Beginning balance          3,956,177,208          1,969,135,575              29,329,141         5,954,641,924
  2. Increase in this period      13,905,309              20,067,704                 540,959            34,513,972
     2.1 Acquisition               4,259,361              19,480,245                 540,959            24,280,565
     2.2 Transfer in from
                                   9,645,948                 587,459                                    10,233,407
construction in progress
     2.3 Business merger
increase
     2.4 Other
  3. Decrease in this period         517,494              10,793,669               2,193,612            13,504,775
      3.1 Disposal or
                                     517,494              10,793,669               2,193,612            13,504,775
retirement
     3.2 Other
  4. Ending balance             3,969,565,023          1,978,409,610              27,676,488         5,975,651,121
Ⅱ Accumulated depreciation
  1. Beginning balance           410,161,600             840,158,129              21,134,702         1,271,454,431
  2. Increase in this period      58,767,044              65,753,010               1,248,414           125,768,468
     2.1 Accrual                  58,767,044              65,753,010               1,248,414           125,768,468
     2.2 Business merger
increase
     2.3 Other
  3. Decrease in this period         502,888              10,039,409               2,066,967            12,609,264
      3.1 Disposal or
                                     502,888              10,039,409               2,066,967            12,609,264
retirement
     3.2 Other
  4. Ending balance              468,425,756             895,871,730              20,316,149         1,384,613,635
Ⅲ Impairment provision
  1. Beginning balance
  2. Increase
     2.1 Accrual
     2.2 Other
  3. Decrease
      3.1 Disposal or
retirement
     3.2 Other
  4. Ending balance
Ⅳ Book value
  1. Ending book value          3,501,139,267          1,082,537,880               7,360,339         4,591,037,486
  2. Beginning book value       3,546,015,608          1,128,977,446               8,194,439         4,683,187,493


As at June 30, 2017, the net value of the fixed assets with ownership restrictions was RMB
69,535,906 Yuan. Please refer to Note 7.50 for the details.


                                                                                                                84
                                                            Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


7.11.2 Temporarily idle fixed assets

      Nil

7.11.3 Fixed assets under finance leases

      Nil

7.11.4 Fixed assets under operating lease

      Nil

7.11.5 Fixed assets without property certificates

                                                                                                                  Unit: Yuan
                                                                                      Reason for not receiving the property
                                  Item                                 Book value
                                                                                                   certificate
Industrial Production Center of the R&D Company                       1,196,449,426 Under transaction
Dormitory Building, Main Building and Reception Building of
                                                                       262,115,218 Under transaction
Chang‘an Chateau
Workshop and Plant of Xinjiang Shihezi Chateau                         253,470,055 Under transaction
European Town, Main Building and Service Building of Beijing
                                                                       217,419,173 Under transaction
Chateau
Main Building of Yantai Changyu Tinlot Chateau                          89,315,962 Under transaction
Provincial Office of Sales Company                                      21,537,995 Under transaction
Fermentation Workshop and Storage Workshop of Xinjiang Tianzhu          18,788,139 Under transaction
Office Building and Packaging Workshop of Icewine Chateau                 9,660,096 Under transaction
Wine-making Workshop of Changyu (Jingyang)                                4,244,130 Under transaction
Office Building, Laboratory Building and Workshop of
                                                                          3,913,797 Under transaction
Fermentation Center
Finished Goods Warehouse and Workshop of Kylin Packaging                  2,532,867 Under transaction


7.12 Construction in progress

7.12.1 Particulars of construction in progress

                                                                                                                  Unit: Yuan
                                                     Ending balance                           Beginning balance
                 Item                                    Impairment                                Impairment
                                         Book balance               Book value      Book balance              Book value
                                                          provision                                 provision
Construction Project of Research,
Development & Manufacture Center         1,480,406,758             1,480,406,758 1,227,968,480                1,227,968,480
(―Changyu Wine City Complex‖)
Construction Project of Ningxia
                                           57,067,866                  57,067,866     36,717,169                  36,717,169
Chateau
Construction Project of Shihezi
                                           29,704,077                  29,704,077     30,600,684                  30,600,684
Chateau

                                                                                                                          85
                                                         Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


Construction Project of Sales Company      39,933,379              39,933,379    26,011,600               26,011,600
Construction Project of Chang‘an
                                           42,579,064              42,579,064    10,346,598               10,346,598
Chateau
Construction Project of Tinlot Chateau     33,752,441              33,752,441     4,871,422                4,871,422
Reconstruction Project of AFIP
                                            5,273,600               5,273,600     3,713,945                3,713,945
Tourism Plaza
Reconstruction Project of Jingyang
                                            2,931,559               2,931,559     2,331,559                2,331,559
Fermentation Workshop
Plant Construction Project of Huanren
                                            1,707,004               1,707,004       920,596                  920,596
Winery
Construction and Reconstruction
                                              268,929                 268,929       500,000                  500,000
Project of Joint-stock Company
Construction Projects of Other
                                            3,672,763               3,672,763     2,299,684                2,299,684
Companies
Total                                    1,697,297,440          1,697,297,440 1,346,281,737            1,346,281,737




                                                                                                                  86
                                                                                                                                                      Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report




7.12.2 Changes of major construction in progress in this period

                                                                                                                                                                                                                        Unit: Yuan
                                                                                                                       Proportion of                 Accumulative        Including:
                                                                             Transferred                                                                                                   Capitalization
                                                 Beginning                                  Other        Ending        accumulative Construction     capitalization     capitalization
             Item                  Budget                       Increase      to fixed                                                                                                     ratio of interest      Capital source
                                                  balance                                  decrease      balance      project input in    progress    amount of       amount of interest
                                                                               assets                                                                                                       in this period
                                                                                                                          budget                        interest        in this period

Construction Project of
Research, Development &                                                                                                                                                                                        Loans form financial
Manufacture Center               4,505,780,000   1,227,968,480 252,438,278                            1,480,406,758               67.8%                   4,107,701            1,817,978               1.2%      institutions and
―Changyu Wine City                                                                                                                                                                                              self-raised funds
Complex‖)

Construction Project of
                                  620,740,000      10,346,598   46,721,268                              57,067,866            102.5%                                                                            Self-raised funds
Chang‘an Chateau

Construction Project of Sales
                                  161,350,000      26,011,600    4,808,231    1,115,754                 29,704,077                93.0%                                                                         Self-raised funds
Company

Construction Project of
                                  780,000,000      30,600,684   14,724,227    5,391,532                 39,933,379                89.8%                                                                         Self-raised funds
Shihezi Chateau

Construction Project of
                                  414,150,000      36,717,169   10,018,016    4,156,121                 42,579,064                97.4%                                                                         Self-raised funds
Ningxia Chateau

Construction Project of Tinlot
                                  192,400,000       4,871,422   28,881,019                              33,752,441            110.7%                                                                            Self-raised funds
Chateau

Plant Construction Project of
                                   31,000,000         920,596     786,408                                1,707,004                97.5%                                                                         Self-raised funds
Huanren Winery

Total                            6,705,420,000   1,337,436,549 358,377,447 10,663,407                 1,685,150,589          --              --           4,107,701            1,817,978                                --

As at June 30, 2017, there was no indication for impairment of construction in process of the Group, so no provision was made.




                                                                                                                                                                                                                                     87
                                               Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report


7.13 Productive biological assets

7.13.1 Productive biological assets by cost measurement

                                                                                                Unit: Yuan

                         Item                           Plantation                            Total

                                             Immature                Mature

Ⅰ Original book value

  1.     Beginning balance                       77,841,960              141,208,504           219,050,464

  2.     Increase in this period                 -65,331,472               69,081,966            3,750,494

       2.1 Outsourcing                                                                                   0

       2.2 Self cultivation                        2,987,011                  763,483            3,750,494

       2.3 The immature turn to the mature       -68,318,483               68,318,483

  3.     Decrease in this period

       3.1 Disposal

       3.2 Other

  4. Ending balance                              12,510,488              210,290,470           222,800,958

Ⅱ Accumulated depreciation                      12,510,488              210,290,470

  1.     Beginning balance                                                 17,621,484           17,621,484

  2.     Increase in this period                                            7,155,162            7,155,162

       2.1 Accrual                                                          7,155,162            7,155,162

       2.2 Other

  3.     Decrease in this period

       3.1 Disposal

       3.2 Other

  4. Ending balance                                                        24,776,646           24,776,646

Ⅲ Impairment provision

  1.     Beginning balance

  2.     Increase in this period

       2.1 Accrual

  3.     Decrease in this period

       3.1 Disposal

       3.2 Other

  4. Ending balance

Ⅳ Book value

  1.     Ending book value                       12,510,488              185,513,824           198,024,312
                                                                                                        88
                                                           Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report

  2.    Beginning book value                                  77,841,960             123,587,020           201,428,980



As at June 30, 2017, no ownership of the biological assets was restricted.


As at June 30, 2017, there was no indication that biological assets may be impaired, so no provision
was made.

7.14 Intangible assets

7.14.1 Particulars of intangible assets

                                                                                                             Unit: Yuan


                Item                  Land use right     Software use right      Trademark               Total


Ⅰ Original book value


   1.      Beginning balance               491,490,069            52,435,669          15,442,065           559,367,803

   2.       Increase     in    this          4,140,000               895,888              99,552             5,135,440
        period                               4,140,000               895,888                                 5,035,888
        2.2 Internal R&D
        2.3 Business merger
increase
        2.4 Other                                                                         99,552                 99,552
   3.       Decrease     in    this
        3.1period                                                                               -                     -
   4.      Ending balance                  495,630,069            53,331,557          -                    564,503,243
Ⅱ Accumulated amortization

   1.      Beginning balance                56,803,430            12,548,283           6,201,010            75,552,723

   2.      Increase in this period           5,292,764             2,057,478           2,238,105             9,588,347
        2.1 Accrual                          5,292,764             2,057,478           2,238,105             9,588,347
        2.2 Business merger
increase
   3.      Decrease     in     this
        3.1period                                                                                                     -
   4.      Ending balance                   62,096,194            14,605,761           8,439,115-           85,141,070-
Ⅲ Impairment provision

   1.      Beginning balance                                                                    -                     -

   2.      Increase in this period
        2.1 Accrual                                                                                                   -
   3.      Decrease     in     this                                                                                   -
           period                                                                               -                   89-
                                                               Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report

        3.1 Disposal
   4.     Ending balance
Ⅳ Book value                                                                                                                        -
  3.    Ending book value                     433,533,875                 38,725,796               7,102,502-          479,362,173-

  4.    Beginning book value                  434,686,639                 39,887,386               9,241,055           483,815,080

As at June 30, 2017, the net value of the intangible assets with ownership restrictions was
RMB 143,892,516 Yuan. Please refer to Note 7.50 for the details.

7.14.2 Land use right of that not receiving the property certificate

                                                                                                                         Unit: Yuan

                           Item                                Book value        Reason for not receiving the property certificate

A-49 Residential Area, YEDA                                        23,216,200 Under transaction


7.15 Goodwill

7.15.1 Original book value of goodwill

                                                                                                                         Unit: Yuan

 Name of the invested                           Increase in this period              Decrease in this period
                           Beginning
unit or matter forming                   Formed by business                                                      Ending balance
                            balance                                 Other         Disposal            Other
        goodwill                                 merger

Etablissements Roullet
                            13,112,525                                                                                  13,112,525
Fransac

Dicot Partners, S.L         92,391,901                                                                                  92,391,901

Societe Civile
Argricole Du Chateau        15,761,440                                                                                  15,761,440
De Mirefleurs

           Total           121,265,866                                                                                 121,265,866


7.16 Long-term unamortized expenses

                                                                                                                        Unit: Yuan

                                                Increase in this    Amortization in this
          Item         Beginning balance                                                       Other decrease     Ending balance
                                                    period                  period

Land lease fees                57,846,986                                        719,453                                57,127,533

Land acquisition
                               45,192,900                                        569,651                                44,623,249
fees

Afforestation fees             54,460,971                                      2,564,214                                51,896,757

Renovation costs                  1,091,579                                      109,158                                   982,421


                                                                                                                                  90
                                                    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report

Other                           3,613,793       36,571           1,259,413                              2,390,951

Total                        162,206,229        36,571           5,221,889                           157,020,911


7.17 Deferred income tax assets/liabilities

7.17.1 Un-offset deferred income tax assets

                                                                                                      Unit: Yuan

                                                    Ending Balance                    Beginning Balance

                                              Deductible                         Deductible
                      Item                                    Deferred income                    Deferred income
                                              temporary                          temporary
                                                                 tax assets                         tax assets
                                              difference                         difference

Asset impairment provision                       25,573,180          6,393,295      31,426,756          7,856,689

Unrealized profits from inter-company
                                                581,720,137       145,430,034      676,375,006       169,093,751
transactions

Deductible loss                                 201,373,978         50,343,495     176,273,380         44,068,345

Unpaid bonus                                    121,373,855         30,343,464     154,895,784         38,723,946

Dismission welfare                               12,102,449          3,025,612      13,115,948          3,278,987

Deferred income                                 108,512,201         24,308,890     112,939,126         25,230,521

Dealer‘s rebate withdrawn in advance                                               30,739,192          7,684,798

Total                                         1,050,655,800       259,844,790    1,195,765,192       295,937,037


7.17.2 Un-offset deferred income tax liabilities

                                                                                                       Unit: Yuan

                                                    Ending Balance                    Beginning Balance

                                               Taxable                            Taxable
                      Item                                    Deferred income                    Deferred income
                                              temporary                          temporary
                                                               tax liabilities                    tax liabilities
                                              difference                         difference

Assets appraisal appreciation in business
                                                 79,944,206         21,852,738      90,877,162         24,908,410
merger under non-common control

Changes in fair value of available-for-sale
financial assets

Total                                            79,944,206         21,852,738      90,877,162         24,908,410


7.17.3 Details of unconfirmed deferred income tax assets

                                                                                                      Unit: Yuan

                      Item                          Ending balance                    Beginning balance


                                                                                                                    91
                                                       Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report

Deductible loss                                                         163,790,074                    135,957,252

Total                                                                   163,790,074                    135,957,252



7.17.4 Deductible losses of unconfirmed deferred income tax assets will expire in:

                                                                                                        Unit: Yuan

          Year                    Ending sum             Beginning sum                     Remark

2019                                       7,311,273              7,311,273

2020                                      45,960,766             45,960,766

2021                                      82,685,213             82,685,213

2022                                      27,832,822

Total                                    163,790,074            135,957,252                   --




7.18 Other non-current assets

                                                                                                        Unit: Yuan

                      Item                             Ending balance                   Beginning balance

Accounts receivable due to transfer of
                                                                    17,590,912                          17,352,239
biological assets

Prepaid investments                                                317,654,642

Total                                                              335,245,554                          17,352,239


7.19 Short-term loans

7.19.1 Classification of short-term loans
                                                                                                        Unit: Yuan

                      Item                             Ending balance                   Beginning balance

Pledge loan

Mortgage loan                                                       29,248,895                          30,732,944

Guaranteed loan

Fiduciary loan                                                     817,632,180                         631,655,938

Total                                                              846,881,075                         662,388,882

As at June 30, 2017, the pledge loan referred to the factoring business for accounts receivable
of EUR 3,783,558 (equivalent to RMB 29,248,895 Yuan) that Hacienda y Vinedos Marques
del Atrio, S.L.U. (―Marques del Atrio‖) transacted in such banks as Banco de Sabadell, S.A.
(December 31, 2016: RMB 30,732,944 Yuan). There was no loan borrowed by pledge of
fixed assets (December 31, 2016: RMB 0 Yuan).
                                                                                                                92
                                            Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report

7.20 Bills payable

                                                                                             Unit: Yuan

                    Type                   Ending balance                    Beginning balance

Trade acceptance

Bank acceptance                                             8,000,000                        38,900,000

Total                                                       8,000,000                        38,900,000


7.21 Accounts payable

7.21.1 List of accounts payable

                                                                                             Unit: Yuan

                    Item                   Ending balance                    Beginning balance

Within one year                                        396,891,500                          544,128,280

From one year to two years                                  2,426,987                            1,103,039

From two years to three years

Over three years

Total                                                  399,318,487                          545,231,319


7.21.2 Significant accounts payable aged more than one year

As at June 30, 2017, there were no significant accounts payable aged more than one year.


7.22 Advances from customers

7.22.1 List of advances from customers

                                                                                             Unit: Yuan

                      Item                    Ending sum                       Beginning sum

Within one year                                             312,184,976                     419,382,071

From one year to two years                                    3,496,490                          2,046,166

From two years to three years                                 2,031,043                           108,748

Over three years                                              3,818,184                          3,709,436

Total                                                       321,530,693                     425,246,421



7.22.2 Advances from customers of significant amount aged more than one year


As at June 30, 2017, the Company had no advances from customers of significant amount

                                                                                                       93
                                                            Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report

aged more than one year.

7.23 Employee remunerations payable

7.23.1 List of employee remunerations payable

                                                                                                                     Unit: Yuan

                                                               Increase in this      Decrease in this
                    Item                Beginning balance                                                     Ending balance
                                                                   period                period

1. Short-term remuneration                     193,300,619         168,650,584             215,863,664              146,087,539

2. Post-employment welfare – defined
                                                    15,167          23,191,201              22,418,536                  787,832
contribution plan

3. Dismission welfare                           13,115,948             509,648               1,523,147               12,102,449

4.Other welfare due within one year

Total                                          206,431,734         192,351,433             239,805,347              158,977,820


7.23.2 List of short-term remunerations

                                                                                                                     Unit: Yuan

                                                                  Increase in this       Decrease in this
                   Item                 Beginning balance                                                      Ending balance
                                                                      period                 period

1. Salaries, bonuses, allowances
                                                197,486,176            145,975,433            192,297,973           151,163,636
and subsidies

2. Staff welfare                                    622,735                 8,323,393             8,728,238             217,890

3. Social insurance charges                         257,249                 7,150,754             7,349,717              58,286

Including: Medical insurance                        257,249                 6,051,156             6,250,119              58,286
              Injury insurance                                               731,205               731,205
              Maternity insurance                                            368,393               368,393
4. Housing fund                                       37,672                5,527,361             5,551,521              13,512
5. Union fee and staff education
                                                   2,593,009                1,673,643             1,936,215           2,330,437
fee

6. Short-term compensated
absences
7. Short-term profit-sharing plan

8. Those divided into non-current
                                                  -7,696,222                                                         -7,696,222
liabilities

Total                                           193,300,619            168,650,584            215,863,664           146,087,539




                                                                                                                               94
                                                           Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report

7.23.3 List of defined contribution plan

                                                                                                                  Unit: Yuan

               Item                    Beginning balance            Increase             Decrease          Ending balance

1. Basic endowment insurance                           14,978         22,637,707              21,865,042            787,643

2. Unemployment insurance                                189             553,494                 553,494                189

3. Enterprise annuity payment

Total                                                  15,167         23,191,201              22,418,536            787,832



7.23.4 Dismission welfare

                                                                                                                  Unit: Yuan

                  Item                   Beginning balance         Increase                  Decrease         Ending balance

1. Compensation for server of labor
relation

2. Compensation for early retirement              13,115,948             509,648                  1,523,147       12,102,449

Total                                             13,115,948             509,648                  1,523,147       12,102,449


7.24 Taxes payable

                                                                                                                 Unit: Yuan

                         Item                                   Ending balance                     Beginning balance

Value added tax                                                                22,378,198                         23,496,328

Consumption tax                                                                14,378,343                         30,361,471

Corporate income tax                                                           26,129,549                         69,388,730

Individual income tax                                                            6,598,508                         7,811,301

Urban maintenance and construction tax                                           2,503,846                         4,248,115

Property tax                                                                      435,805                          1,071,223

Urban land use tax                                                               2,488,965                         2,651,262

Other                                                                            2,199,905                         5,014,170

Total                                                                          77,113,119                        144,042,600


7.25 Dividends payable

                                                                                                                 Unit: Yuan

                         Item                                   Ending balance                     Beginning balance

Ordinary stock dividends

Preferred stock dividends/sustainable debt dividends
                                                                                                                          95
                                               Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report
divided into equity instruments

Other                                                                703,430

Total                                                                703,430


7.26 Other payables

7.26.1 Other payables listed by nature

                                                                                                    Unit: Yuan

                      Item                      Ending balance                      Beginning balance

Distributor‘s deposit payable                                  157,985,200                        128,539,352

Equipment purchase and construction costs
                                                                101,721,932                         77,261,072
payable

Transportation charges payable                                   12,110,825                         36,690,764

Trademark use fees payable for Changyu Group
                                                                 44,428,033                         78,572,540
Company

Advertising expenses payable                                    221,724,475                         79,414,075

Dealer‘s rebate withdrawn in advance                                                               30,739,192

Increased capital of minority shareholders
                                                                 29,847,320                         29,847,320
(Note)

Employee cash deposit                                            19,226,564                         16,296,186

Supplier‘s deposit payable                                      11,517,176                           2,206,379

Contracting fees payable                                         37,079,817                          31,011,929

Other                                                            17,549,069                         35,726,501

Total                                                           653,190,411                        546,305,310


7.26.2 Other significant accounts payable aged more than one year

                                                                                                    Unit: Yuan

                       Item                    Ending balance             Cause of unpayment or carry-over

Beijing Qinglang Ecological Agriculture                                The procedures for capital increase
                                                          23,983,072
Technology Development Co., Ltd.                                       haven‘t been completed

Beijing Qinglang Ecological Agriculture
                                                          13,766,549 The contracting fess haven‘t been settled
Technology Development Co., Ltd.

                                                                       The procedures for capital increase
Yantai De‘an Investment Co., Ltd.                         5,864,248
                                                                       haven‘t been completed

Yantai De‘an Investment Co., Ltd.                         5,716,524 The contracting fess haven‘t been settled

Total                                                     49,330,393                      --



                                                                                                             96
                                                  Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report

7.27 Non-current liabilities due within one year

                                                                                                          Unit: Yuan

                     Item                     Ending balance                         Beginning balance
Long-term loans due within one
                                                                70,975,215                                 59,799,093
year
Long-term accounts payable due
                                                                36,000,000                                 12,000,000
within one year
Total                                                          106,975,215                                 71,799,093


7.28 Other current liabilities

                                                                                                          Unit: Yuan

                       Item                       Ending balance                         Beginning balance
Deferred income                                                   11,163,882                               11,163,883
Total                                                             11,163,882                               11,163,883


7.29 Long-term loans

7.29.1 Classification of long-term loans

                                                                                                          Unit: Yuan

                       Item                       Ending balance                         Beginning balance
Pledge loan
Mortgage loan                                                      7,995,615                                 8,835,744
Guaranteed loan
Fiduciary loan                                                   167,274,965                               40,304,811
Total                                                            175,270,580                               49,140,555


Description of the classification of long-term loans:

              Item               Ending balance         Long-term loan due within one Long-term loan due over one
                                                                    year                           year

Pledge loan

Mortgage loan                              10,778,415                        2,782,800                       7,995,615

Guaranteed loan

Fiduciary loan                            235,467,380                      68,192,415                     167,274,965

Total                                     246,245,795                      70,975,215                     175,270,580


As at June 30, 2017, the mortgage loan referred to the loan of EUR 1,394,361.55 (equivalent
to RMB 10,778,415 Yuan) borrowed from Popular Espaol by Marques del Atrio which
                                                                                                                   97
                                                         Yantai Changyu Pioneer Wine Co. Ltd. 2017 Semi-annual Report
mortgaged its fixed assets of EUR 3,812,130.38 (equivalent to RMB 29,467,767 Yuan)
(December 31, 2016: RMB 11,466,192 Yuan).

7.30 Long-term accounts payable

7.30.1 Long-term accounts payable listed by nature

                                                                                                           &en