金融界首页>行情中心>张裕A>个股公告> 正文

-

-
(-%)
当前价  
当前价  
当前价  

个股公告正文

张 裕B:2017年年度报告(英文版)

日期:2018-04-23附件下载

    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    Yantai Changyu Pioneer Wine Co. Ltd.
    
    2017 Annual Report
    
    Final 2018-01
    
    April, 2018
    
    Contents
    
    I、Important Notice,Contents and Definition ............................................................................. 4
    
    II、Brief Introduction for the Company and Main Financial Indicators .................................. 5
    
    III、Summary of the Company’s Businesses .............................................................................. 10
    
    IV、Management Discussion and Analysis ................................................................................. 14
    
    V、Major issues ............................................................................................................................. 34
    
    VI、Changes in Shares and the Shareholders’ Situation .......................................................... 48
    
    VII、Related Situation of Preferred Shares ............................................................................... 57
    
    VIII、Situation for Directors, Supervisors, Senior Management and Staffs ............................ 58
    
    IX、Corporate Governance .......................................................................................................... 71
    
    X、Related Situation of Corporation Bonds ............................................................................... 81
    
    XI、Financial Report ...................................................................................................................... 82
    
    XII、Reference Document .......................................................................................................... 198
    
    Definition
    
    Definition Item                   Refers to Definition Content
    Company/The Company           Refers to Yantai Changyu Pioneer Wine Co. Ltd.
    Changyu Group/Controlling       Refers to Yantai Changyu Group Co. Ltd.
    Shareholder
    CSRC                           Refers to China Securities Regulatory Commission
    SSE                             Refers to Shenzhen Stock Exchange
    Deloitte Hua Yong               Refers to Deloitte Hua Yong Certified Public Accountants
                                             Co., Ltd (special general partnership)
    CNY                            Refers to Chinese Yuan
    
    
    I. Important Notice, Content and Definition
    
    The Board of Directors,the Board of Supervisors,directors, supervisors & senior managers
    
    of the Company collectively and individually accept full responsibility for the truthfulness,
    
    accuracy and completeness of the information contained in this report and confirm that to the
    
    best of their knowledge and belief there are no unfaithful facts, significant omissions or
    
    misleading statements.
    
    Mr. Zhou Hongjiang (Chairman of the Company), Mr. Jiang Jianxun (Chief Financial Officer
    
    & Financial Director) assure the truthfulness, accuracy and completeness of the financial
    
    report in the annual report.
    
    Except the following directors, all other directors have personally attended the meeting for
    
    deliberating the annual report.
    
         Directorname with        Director post with        Reason for         Name of
        non-presentin person     non-present in person     non-present in       mandatory
                                                           person
     Sun Liqiang               Director               Business trip        Zhou Hongjiang
     Antonio Appignani         Director               Business trip        Augusto Reina
     WangShigang             Independent director    Business trip        Wang Zhuquan
    
    
    The business plan and target in the report do not represent the earnings forecast of the
    
    Company to 2018. 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.
    
    About significant risks that may be faced in production and operation process, please refer
    
    to“5. Risks likely to occur” part of “9.Expectation for the Company?s Future Development”
    
    in the chapter four “Management Discussion and Analysis” of this report. We advise
    
    investors to read carefully and pay attention to the investment risks.
    
    The Company?s preliminary scheme of profit distribution deliberated and passed by the
    
    Board of Directors is shown as following: Based on the Company?s total 685,464,000 shares,
    
    we plan to pay CNY5 (including tax) in cash as dividends for every 10 shares to all
    
    shareholders and to send 0 bonus share (including tax) and capital reserve will not be
    
    transferred to equity.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    II. Brief Introduction for the Company and Main Financial Indicators
    
    1. Company’s information
    
    Abbreviation of the Shares:    Changyu A、ChangyuB Code number of the 000869、200869
                                                       Shares
    Abbreviation of the Shares     _
    after alteration
    Place of listing of the Shares   Shenzhen Stock Exchange
    Legal Namein 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. Zhou Hongjiang
    Registered Address           56 Dama Road, Yantai, Shandong, China
    Postal Code                  264000
    Office Address               56 Dama Road, Yantai, Shandong, China
    Postal Code                  264000
    Website                     http://www.changyu.com.cn
    E-mail                       webmaster@changyu.com.cn
    
    
    2. Contact person and information
    
                                    Secretaryto the Board of     Authorized Representative of the
                                          Directors                   Securities Affairs
    Name                      Mr. Qu Weimin                 Mr. LiTingguo
    Address                    56 Dama Road, Yantai, Shandong, 56 Dama Road, Yantai,
                               China                          Shandong, China
    Tel                        0086-535-6633656              0086-535-6633656
    Fax                        0086-535-6633639              0086-535-6633639
    E-mail                     quwm@changyu.com.cn         stock@changyu.com.cn
    
    
    3. Information disclosure and filing location
    
    The newspapers in which the        China Securities Newspaper , Securities Times and Hong
    Company?s information is disclosed  Kong Commercial Daily
    Web Site assigned by CSRC to carry  http://www.cninfo.com.cn
    the annual report
    Filing location                     Board of Directors? Office of the Company,
                                      56 Dama Road, Yantai, Shandong
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    4. Registration changes
    
    Organization Code         913700002671000358
                              TeshtaeblbisuhseindesosnsSceoppteemdbeetrer1m8itnh,ed199b7yitsheproCdoumctpioann,yprwohceesnsinitgwanads
                              sbaelveesraogfews,infer,uditisjtailmle,dplaiqcukoinr,ghmeaalttehryiallisquaonrd,fwruiintelmiqaukoirn,gnomna-aclhcionheos.l
                              On April 17th, 2008, approved by the 2007 shareholders? meeting, the
                              Csaolemspaonfy?swbinues,inedsisstsilcloedpeliisqcuhoar,ngmededtoicpatreodduclitqiouno,r,profrcueistsinligquaonrd,
                              nmoanc-hailnceosh;ollicbeenvseerdagimesp,ofrrtuiatnjdamex,ppoarctk.iOngnMmaatyer1ia2ltsh,an2d01w0,inaepmpraokvinegd
    Changes   for   the   main sbcyotpheet2o00p9rosdhuacretihoonl,deprrso?cmeseseintignga,ntdhesCaloemspoafnwyicnhea,ndgiesdtiiltlsedbulsiqinueosrs,
    business  of  the  Company medicated liquor, fruit liquor, non-alcohol beverages, fruit jam,
    since it was listed          pimacpkoirntganmdateexripaolsrt;anedxteitrsnaplroindvuecststm,wenitnsemacackoirndginmgatcohignoevse;rlnimceennsteadl
    (if have)                  pInotleirciimes.sOhanreSheopltdeemrsb?erm2e3ertdin,g2,0t1h6e,aCpopmropvaendybcyhathnege2d01i6tsaonpneuraalti1nsgt
                              spcroopdeucttioonw;ibnleenadnindgfrliuqiutowrianned(obtuhlekrwblienned,inpgrolciqesusoirnsg(garnadpefiwlliinnge))
                              pprroodduuccttiioonn,;optrhoecressliinqguorsand(othsaelresdisotfillinpgacklaiqgueorsm)atperrioadlsuctiaonnd;
                              rweisnoeumrcaeksindgevmelaocphmineenst;(egxracpluedipnlganttoautiroisnma);ndpacpkroacgueredmeseignnt;;taocutirvisitmy
                              oexftebrunialdliinngversetnmtaeln;tsliaccecnosreddinigmtpoogrotvaenrdnmeexnptoarlt;pwolaicreiehso.u”sebusiness;
    Changes  for  all  previous
    controlling shareholders     No.
    (if have)
    
    
    5. Other documents
    
    The accountant appointed by the Company
    
    Name                         Deloitte  Hua  Yong  Certified  Public  Accountants  Co.,  Ltd
                                  (specialgeneral partnership)
    Address                       No. 1 East Chang'an Avenue, Dongcheng District, Beijing
    Name of signatory accountants   Li Xu, Li Yangang
    
    
    The sponsor agency the Company appointed to perform the duty of continuous supervision
    
    during the report period
    
    □Available ?Not available
    
    The financial adviser the Company appointed to perform the duty of continuous supervision
    
    during the report period
    
    □Available ?Not available
    
    6. Key accounting data and financial indicators
    
    Whether the company needs to retrospectively adjust or restate the accounting data of
    
    previous fiscal years.
    
    □Yes ?No
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
                                   2017              2016        More or less than        2015
                                                                   Lastyear (%)
    Business revenue (CNY)        4,932,545,229     4,717,596,472           4.56%     4,649,722,368
    Net profit attributed to the
    shareholders of the listed      1,031,695,056       982,460,488           5.01%     1,030,073,860
    company (CNY)
    Net profit attributed to the
    shareholders of the listed
    company  after  deducting       986,095,872       941,730,478           4.71%       993,268,823
    the irregular profit and loss
    (CNY)
    Net cash flows from the       973,243,027       889,911,970           9.36%     1,143,046,367
    operating activities (CNY)
    Basic  earnings per share              1.51              1.43           5.59%               1.5
    (CNY)
    Diluted earnings per share              1.51              1.43           5.59%               1.5
    (CNY)
    Weighted   average   for
    earning rate of net assets           12.14%           12.55%          -0.41%           14.40%
    (CNY)
                             December 31st, 2017 December31st, 2016  Moreorlessthan  December31st, 2015
                                                                   Last year(%)
    Total assets (CNY)            12,536,755,208    11,528,077,971           8.75%    10,344,211,461
    Net Assets attributed to the
    shareholders of the listed      8,906,342,299     8,209,010,989           8.49%     7,564,099,003
    company (CNY)
    
    
    7. Differences in accounting data under PRC accounting standards and international
    
    accounting standards
    
    (1) Differences of net profit and net asset in the financial report disclosed according to
    
    both international accounting standards and PRC accounting standards
    
    □Available ?Not available
    
    There are no differences of net profit and net asset in the financial report disclosed according
    
    to both international accounting standards and PRC accounting standards during the report
    
    period.
    
    (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
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    There are no differences of net profit and net asset in the financial report disclosed according
    
    to both foreign accounting standards and PRC accounting standards during the report period.
    
    8. Key financial indicators by quarter
    
    Unit:CNY
    
                             1st Quarter       2nd Quarter       3rd Quarter      4th Quarter
    Business revenue          1,896,586,469      870,511,728    1,030,899,920   1,134,547,112
    Net profit attributed to
    the shareholders of the       516,634,494      153,434,560     146,115,408     215,510,594
    listed company
    Net profit attributed to
    the shareholders of the
    listed company after         512,684,945      140,221,430     138,825,432     194,364,065
    deducting irregular
    profits and losses
    Net cash flows from         384,358,508       36,001,811     386,267,511     166,615,197
    operating activities
    
    
    Whether there are differences between the above mentioned financial indicators or their sum
    
    and the related financial indicators in the quarterly reports and semi-annual reports disclosed
    
    by the Company.
    
    □Yes ?No
    
    9. Item and amount of irregular profit and loss
    
    ?Available □Not available
    
    Unit:CNY
    
                     Item                      2017         2016         2015       Explanation
    Profits and losses on disposal of
    non-current assets, including the provision    -222,586         14,719      136,061
    for asset impairment write-off part
    Government grants included in the current
    profits and losses (except for those
    recurring government grants that are        47,638,384    49,130,643   38,952,919
    closely related to the entity's operation, in
    line with related regulations and have
    proper basis of calculation)
    Other non-operating income and
    non-operating expenses except the          13,999,251     4,656,972    9,071,448
    aforementioned items
    Less: Income tax effect                  13,072,324      13,072,324  11,355,391
         Minority shareholders' equity (after
         taxes)
    Total                                    45,599,184    40,730,010  36,805,037        --
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    The reasons shall be made clear and definitely as to the irregular profit and loss that the
    
    Company has defined by virtue of the Explanatory Announcement on Public Company’s
    
    Information Disclosure No.1 - Irregular Profit and Loss and as to regarding the irregular
    
    profit and loss as recurrent profit and loss as specified in the Explanatory Announcement on
    
    Public Company’s Information Disclosure No.1 - Irregular Profit and Loss.
    
    □Available ?Not available
    
    There is no situation that the irregular profit and loss is defined and specified as recurrent
    
    profit and loss in accordance with the Explanatory Announcement on Public Company’s
    
    Information Disclosure No.1 - Irregular Profit and Loss during the report period.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    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. 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.
    
    2. Significant changes of main assets
    
    (1) Significant changes of main assets
    
              Mainassets                                           Explanation of significant changes
              Equityasset          No significant changes during the report period
              Fixed asset          The fixed assets increased by13.79% compared with the initial stage, owing that parts of construction in
                                  process have been transferred to fixed asset during the report period.
                                  The intangible assets increased by 35.48% compared with the initial stage, owing that Vi?aIndómita,S.A.,
            Intangible asset        Vi?aDos Andes, S.A. and Bodegas Santa Alicia SpA purchased by the Company?s subsidiary Indomita Wine
                                  Company Chile, SpA have been included in the consolidation range during the report period.
         Constructionin process     The construction in process decreased by 23.78% compared with the initial stage, owing to parts of
                                  construction have been transferred to fixed asset during the report period.
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    (2) Main overseas assets situation
    
    ?Available □Not available
    
    Unit:CNY
    
                                                                                Control                      Proportion of       Whether there are
     Details of assets     Formation    Assets scale  Location     Operation      measures for      Earning     overseas assets in   significant impairment
                         reasons                                 mode       safeguarding of    condition    the Company?s net          risks
                                                                             asset security                       assets
                                                                             The Company
                                                                             participates in
                                                                                making
       Hacienda Y                                                             important
         Vinedos      Acquisition of  515,135,463    Spain     Independent       decisions      7,701,416               5.61%           No
       MarquesDel        equity                                operation     through board of
        Atrio. SL                                                             directors and
                                                                             appoints CFO
                                                                              on financial
                                                                              management
                                                                             The Company
                                                                             participates in
                                                                                making
      IndomitaWine    Founding of                            Independent      important
     Company Chile,   joint venture   481,333,962    Chile      operation        decisions     31,458,952              5.24%           No
          SpA                                                              through board of
                                                                              directorsand
                                                                             appoints CFO
                                                                              on financial
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
                                                                              management
                                                                             The Company
     Francs  Champs   Founding of                            Independent   directly appoints
     Participations          sole       232.909,654   France      operation         senior        -4,142,035              2.54%           No
     SAS             proprietorship                                           executives on
                                                                              management
     Other explanation                 No.
    
    
    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”, “Jiebaina” and “AFIP” are Chinese famous
    
    trademarks that have strong influence and good reputation.
    
    Secondly, the Company has set up a nationwide marketing network, formed a “three-level” marketing network system mainly composed of the
    
    company?s salesmen and distributors, possessed the strong marketing ability and market exploitation ability.
    
    Thirdly, the Company has already had strong research strength and a product R&D system, owned a one and only “State-level Wine R&D
    
    Center”, made mastery of advanced winemaking technology and production processes, been powerful enough in product innovation and
    
    established a perfect quality control system.
    
    Fourthly, the Company is in possession of a lot of grape-growing bases to meet its future development, having developed a great deal of
    
    vineyards in the most suitable areas for wine grape growing such as in Shandong, Ningxia, Xinjiang, Liaoning, Hebei and Shanxi, whose scales
    
    and structures have generally met the Company?s needs for development.
    
    Fifthly, the Company has a great variety of products composed of all grades, its wine, 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
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    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.
    
    Seventhly, the Company has set up flexible and efficient decision-making mechanism. The
    
    Company?s core management team always maintains a working style of unity and
    
    cooperation and flexible and efficient decision-making mechanism, which makes the
    
    Company can deal with market changes more calmly.
    
    Eighthly, the global production capacity layout has been basically completed. The Company
    
    has completed production capacity layout in China, France, Chile, Spain, Australia and other
    
    major wine producing countries in the world, enabling making better use of global
    
    high-quality raw material resources, capital, talents and advanced production processes and
    
    technologies to provide consumers with diversified quality products and better serve
    
    consumers.
    
    All in all, the Company has built up a strong core competitive edge and obtained and
    
    maintained a relatively dominant position in the future predictable market competition.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    IV. Management Discussion and Analysis
    
    1. Summarization
    
    In 2017, influenced by the slowdown of domestic economic growth, the overall domestic
    
    wine industry was relatively stable and the demand in wine maintained the growth
    
    momentum with small amplitude, but the impact from imported wine became ever more
    
    severe and entire domestic wine brands were weak; owing to significant decrease in
    
    production of international and domestic wine-making grapes, the price of bulk wine
    
    increased by a large margin; based on environmental protection and governance factors, the
    
    cost of packing materials continued increasing; with the investment projects? gradually
    
    putting into operation, the depreciation of fixed assets increased. Above-mentioned adverse
    
    factors brought bigger challenges for the Company to achieve sustained and steady growth.
    
    Facing quite a lot of external disadvantages, the Company insisted in taking the market as the
    
    center, insisted the development strategy of “Focus on middle-and-high level, Focus on high
    
    quality, Focus on big product”, comprehensively implemented the development strategy of
    
    same importance between wine and brandy, optimized product structure and market layout,
    
    accelerated the development of new product and did best to promote product sales, achieving
    
    good results and realizing business income of CNY4932.55million with an increase of 4.56%
    
    compared with last year and net profit of CNY1031.69 million belonging to the parent
    
    company?s shareholders with an increase of 5.01% compared with last year.
    
    2. Analysis of main business
    
    (1) summarization
    
    Whether or not the same as the disclosed summarization in operation situation discussion and
    
    analysis?
    
    □Available ?Not available
    
                            Increase or decrease
    Description              of the end of theCause of significant changes
                            period over the end
                            of last year
    Operating revenue        4.56%            Mainly because of increase in sales volume
    Operating cost           6.08%            Mainly because of increase in sales volume
                                              Mainly because of year-on-year increase in
    Sales expense            1.54%            wage & welfare, advertising promotion fee in
                                              2017
    Management expense     10.01%           Mainly because of year-on-year increase in
                                              depreciation cost and office expense in 2017
    R&D investment         0.34%            Mainly because of increase in expenses for
                                              technology  research  and  development  in
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
                                              2017
    Financial expense         -15.38%           Mainly because of decrease in loan interest
                                              expenditure
    Net amount of cash flow                  Mainly because of increase in received cash
    generated   in   operating9.36%             from product sales and rendering of service
    activities
    Net amount of cash flow                  Mainly because of increase in fixed term
    generated  in  investment-19.31%           deposit at least three months and cash used to
    activities                                  acquire overseas enterprise
    Net amount of cash flow                  Mainly because of decrease in received cash
    generated in capital-raising-494.03%          from loan, pledge loan security deposit and
    activities                                  interest
    
    
    Review and summary of the process of the Company?s early-disclosed development strategy
    
    and business plan during the report period
    
    During the report period, the Company realizes the business income of CNY4.93255billion
    
    with an increase of 4.56% compared with last year, exceeding the target fixed at the
    
    beginning of the year of realizing business income no less than CNY4.9billion. Facing to the
    
    unfavorable business environment, the Company insists the development trend of “Focus on
    
    middle and high level, Focus on high quality, Focus on big product”, fully implement the
    
    development strategy of same importance between wine and brandy, pushes hard on
    
    harmonious development of multi-liquor, which played an important part in realizing the
    
    increase in the business income.
    
    The main work during the report period is shown as followed:
    
    Firstly, the Company further integrated and perfected marketing system, accelerated new
    
    products? launch in market, energetically developed E-business and export business and
    
    strengthened the management in market, achieving good results. During the report period, the
    
    Company optimized and integrated middle-and-low channel and B-category supermarket
    
    semi-direct supply company as well as distributors selling Castel, Noble Dragon or other
    
    main products, pushed out new products, such as 9th-generation Noble Dragon, new
    
    Zuishixian, Reserve five-star brandy and Cabernet Sauvignon dry white wine and so on,
    
    strived to expand E-business and export business and intensified the punishment to fleeing
    
    goods, effectively protecting distributors? interest and realizing various degrees of increase in
    
    brandy, imported wine and other liquor as well as online sales and export business.
    
    Secondly, the research for new products and new technologies was continued being conducted
    
    and the quality management was strengthened in order to improve technological level and
    
    product quality. The Company carried out 44 technology research, obtained 3 scientific and
    
    technological achievements at ministerial and provincial level, newly applied and obtained
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    authorization of 8 national patent. The Company undertook three projects about Yantai
    
    scientific and technological development plan, including “Selection Research and
    
    Development Application of New Strain about Premium and Characteristic Grape Variety
    
    Cabernet Gernischt in Yantai Producing Region”, which passed result authentication and
    
    acceptance of China National Light Industry Council and Yantai
    
    Science and Technology Bureau and reached international advanced level. “Establishment
    
    and Application of Quality Evaluation and Control System about Premium Wine-making
    
    Grape Material and Wine” won first prize of China General Chamber of Commerce
    
    scientific and technological progress. The Company perfected quality control system,
    
    strengthened supervision, inspection and punishment degree, reinforced monitoring in key
    
    quality safety indicators, making product quality steadily improve. 2015 Golden-label
    
    Icewine of Changyu Golden Icewine Valley won special gold medal in 2017 IWSC. 2014
    
    Merlot dry red wine of Xinjiang Changyu Balboa Family won gold medal in 2017 Decanter
    
    Asia Wine Awards.
    
    Thirdly, informatization construction was steadily promoted and the market service ability of
    
    production system had a bigger improvement. The Company completed the construction of
    
    projects, such as first-phase ERP informatization of SAP and order production system of
    
    chateau wine and so on; fully implement the order production mode of chateau wine, shortened
    
    production cycle, reduced fund occupation and intensified management in the logistics link of
    
    chateau wine, effectively preventing the overstock of products; further standardized
    
    submission procedure of production and sales plan, assuring the timely grasp in the
    
    implementation situation of order and improving the level of market service ability of
    
    production system.
    
    Fourthly, the procurement of raw materials, such as grapes, was completed successfully and
    
    the management in grape base was further strengthened. The Company comprehensively
    
    accomplished the procurement plan of raw material, such as grapes, and further deepened
    
    sort management and sort acquisition in grape base, making scientific and normative
    
    management in grape base reach a higher level; perfected grape purchase policy, improving
    
    the stable development of grape base; improved grape purchase standard and promoted raw
    
    material quality; actively introduced new grape variety, conducted selection and improvement
    
    work, cultivated a lot of new varieties, enriching the variety resource for future product
    
    development; took series of technology research and promotion work on how to improve raw
    
    material quality in self-supporting base and organized orchardist to take professional training
    
    on grape planting technology for many times, improving their level of grape planting and
    
    management.
    
    Fifthly, the Company continued promoting internationalization strategy and steadily
    
    implemented overseas acquisition. This company, together with LAMBO SpA, establishes a
    
    joint venture enterprise Indomita Wine Company Chile, SpA (Chinese name: 智利魔狮葡萄
    
    酒简式股份公司, for short “Indomita Wine”). After establishment, as transferee, Indomita
    
    Wine acquires 100% equity of all three subsidiaries under Chile Bethwines. In addition, the
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    Company reached the agreement in acquiring 80% equity of Kilikanoon Estate Pty Ltd in
    
    Australia with transferor.
    
    (2) Revenue and cost
    
    ? Composition of operating incomes
    
    Unit: CNY
    
                             2017                        2016
                                   Proportion                   Proportion  Year-on-year
                     Amount          in          Amount          in       increase or
                                   operating                     operating   decrease (%)
                                    incomes                     incomes
        Total
      operation   4,932,545,229     100%      4,717,596,472     100%      4.56%
       revenue
     Industry-classified
     Industry of
     liquor  and  4,932,545,229     100%      4,717,596,472        100%  4.56%
     alcoholic
     beverage
     Product-classified
     Wine        3,829,326,556     77.63%     3,700,806,317     78.45%     3.47%
     Brandy      989,889,728      20.07%     905,687,936      19.20%     9.30%
     Others       113,328,945      2.30%      111,102,219      2.36%      2.00%
     Area-classified
     Domestic    4,497,288,066     91.18%     4,437,302,746     94.06%     1.35%
     Abroad      435,257,163      8.82%      280,293,726      5.94%      55.29%
    
    
    ? The condition of sectors, products or areas accounting for over 10% in the
    
    Company’s operating incomes or operating profits
    
    ?Available □Not available
    
    Whether the Company follow disclosure requirement of special industry?
    
    No.
    
    Unit: CNY
    
                                                               Year-on-   Year-on-  Year-on
                                                                 year       year      -year
                                                       Gross   increase   increase   increase
                Operating income    Operating cost     profit      or        or        or
                                                        rate    decrease   decrease  decrease
                                                                (%) of     (%) of    (%) of
                                                               operating  operating    gross
                                                                income     cost      profit
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
                                                                                      rate
     Industry-classified
     Industry
     of  liquor
     and        4,932,545,229      1,671,592,279       66.11%  4.56%     6.08%     -0.49%
     alcoholic
     beverage
     Product-classified
     Wine      3,829,326,556      1,266,391,452       66.93%  3.47%     5.11%     -0.52%
     Brandy     989,889,728        352,328,968        64.41%  9.30%     10.85%    -0.50%
     Area-classified
     Domestic   4,497,288,066      1,378,672,642       69.34%  1.35%     0.48%     0.26%
    
    
    Under the situation that the statistical caliber of the Company?s main business data was
    
    adjusted during the report period, the Company?s main business data adjusted on the basis of
    
    caliber at the end of report period in recent one year.
    
    □Available ?Not available
    
    ?Whether the Company’s sales revenue for material object is more than labor income
    
    ?Yes □No
    
     Sector        Project        Unit          2017         2016         Year-on-year
                                                                          increase    or
                                                                          decrease (%)
     Wine         Sales volume  Ton          104,016       98,958        5.11%
                   Production    Ton          97,620        99,784        -2.17%
     Brandy       Sales volume  Ton          39,130        40,171        -2.59%
                   Production    Ton          37,666        43,262        -12.93%
    
    
    Explanation on the causes of over 30% year-on-year changes of the related comparison data.
    
    □Available ? Not available
    
    ? The fulfillment of major sales contract signed by the Company up to the report
    
    period
    
    □Available ? Not available
    
    ? Composition of operating costs
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    Unit: CNY
    
     Sector     Project     2017                     2016                      Year-on-yea
                           Amount       Proportio   Amount        Proportio   r increase or
                                         n  in  the                 n  in  the  decrease
                                         operating                  operating   (%)
                                         cost(%)                   cost (%)
               Blending    711,224,945   56.16%    692,570,791    57.49%    -1.32%
               liquor
               Packing     395,026,889   31.19%    372,613,924    30.93%    0.27%
               material
     Wine      Wages      47,843,744    3.78%      44,895,195     3.73%      0.05%
               manufactu
                           112,295,874   8.87%      94,704,442     7.86%      1.01%
               ring cost
               Blending    204,764,927   58.12%    187,495,081    58.99%    -0.87%
               liquor
               Packing     117,982,142   33.49%    105,943,197    33.33%    0.15%
               material
     Brandy    Wages      9,678,688     2.75%      11,965,588     3.76%      -1.02%
               manufactu
                           19,903,211    5.65%      12,441,839     3.91%      1.73%
               ring cost
    
    
    ?Whether there are changes of consolidation scope during the report period
    
    ?Yes □No
    
    During the report period, this company, together with LAMBO SpA, establishes a joint
    
    venture enterprise Indomita Wine Company Chile, SpA (for short “Indomita Wine”). This
    
    company holds 85% equity of Indomita Wine. After establishment, as transferee, Indomita
    
    Wine acquires 100% equity of all three subsidiaries under Chile Bethwines. Indomita Wine
    
    and its subsidiaries all are included in the consolidate scope.
    
    During the report period, this company newly establishes Sales & Marketing Company of
    
    Yantai Changyu Pioneer Wine Company Limited with the registered capital of CNY5million
    
    and the business scope of wholesale business and retail business. This newly established
    
    company is included in the consolidate scope.
    
    ? Major changes or adjustments of the Company’s products or services during the
    
    report period
    
    □Available ?Not available
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    ? Information of major customers and major suppliers
    
    The Company?s important customers
    
    The total sales amount of the top five
                                          167,081,822           173,506,000
    customers(CNY)
    The proportion that total sales amount of                       3.68%
    the top five customers accounting for the 3.39%
    annual total sales amount(%)
    The proportion that sales amount of the
    related party in the total sales amount of 0%                    0%
    the top five customers accounting for the
    annual total sales amount(%)
    
    
    Information on the Company?s 5 biggest customers
    
    No.    Customer Name                         Sales Amount     Proportion in Total Sales for
                                                   (CNY)        the year(%)
    1       Yukoon Information Technology Company 39,959,376.81    0.81%
            Limitedin Foshan city
    2       Huahaipengcheng Liquor Company Limited 35,624,317.46    0.72%
            inZhuhai city
    3       Haikou   Heshunxin   Trading   Company 32,472,435.94    0.66%
            Limited
    4       Changyuexin Trading Company Limited in 29,920,506       0.61%
            Shenzhencity
    5       Fengxiang grocery store in Hui?an town     29,105,185.83    0.59%
    Total                                           167,081,822      3.39%
    
    
    Other situation explanation of major customers
    
    □Available ?Not available
    
    Information on the Company?s important suppliers
    
     The total purchase amount of the top 5 suppliers                               452,349,552
     The proportion of the total purchase amount of the top 5 suppliers in the annual    30.02%
     purchase amount
     Purchase amount of the related party in total purchase amount of the top five fi1v0e.90%
     suppliers accounting for annual total purchase amount(%)
    
    
    Information on the Company?s top 5 biggest suppliers
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
                                             PurchaseAmount  Proportion  in  Total  Purchase
    No.      Supplier Name
                                             (CNY)            for the year(%)
    1        Yantai Shenma Packaging Co., Ltd. 145,872,001       9.68%
    2        Yantai Changyu Glass Co.,Ltd.     117,731,881       7.81%
             Liquan   Sales   Department   of 93,275,802
    3                                                          6.19%
             ShandongYantai Winery Co.,Ltd.
    4        Xinjiang Yuyuan Liquor Co.,Ltd.   54,619,361        3.62%
             152  regiment   of   the   eighth 40,850,506
    5                                                          2.71%
             agricultureproduction division
    Total                                    452,349,552       30.02%
    
    
    Other situation explanation of main customers
    
    □Available ?Not available
    
    (3) Costs
    
    Unit: CNY
    
                                                        Year-on-year     Explanation of
                           2017             2016        increase or       significant
                                                        decrease (%)     changes
                                                                         Mainly because
                                                                         of year-on-year
                                                                         increase     in
     Sales expense    1,272,522,443     1,253,260,668     1.54%           wage        &
                                                                         welfare,
                                                                         advertising
                                                                         promotion  fee
                                                                         in2017
                                                                         Mainly because
                                                                         of year-on-year
     Management     340,781,958      309,783,548      10.01%          increase      in
     expense                                                             depreciation
                                                                         cost and office
                                                                         expensein 2017
                                                                         Mainlybecause
     Financial        18,590,259       21,968,859       -15.38%         of decrease in
     expense                                                             loan interest
                                                                         expenditure
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    (4) Research and development expenditure
    
    □Available ?Not available
    
    (5) Cash flow
    
    Unit: CNY
    
                                                                               Year-on-year
                  Item                      2017                 2016          increase or
                                                                               decrease(%)
        Subtotal of cash inflow in     4,965,586,341         4,525,609,466         9.72%
           operating activities
        Subtotalof cash outflow in    3,992,343,314         3,635,697,496         9.81%
           operating activities
         Netamount of cash flow     973,243,027          889,911,970          9.36%
      generatedin operating activities
        Subtotal of cash inflow in     216,678,355          112,952,925          91.83%
           investmentactivities
        Subtotalof cash outflow in    1,036,886,116         800,394,471          29.55%
           investmentactivities
         Netamount of cash flow     -820,207,761          -687,441,546          -19.31%
     generatedin investment activities
        Subtotal of cash inflow in     1,064,892,130         1,191,567,445         -10.63%
         capital-raising activities
        Subtotalof cash outflow in    1,307,993,557         1,232,491,837         6.13%
         capital-raising activities
         Netamount of cash flow
        generatedin capital-raising    -243,101,427          -40,924,392           -494.03%
                activities
       Netincrease of cash and cash   -76,053,030           164,700,643          -146.18%
               equivalents
    
    
    Explanation of main influence factors contributing to great changes in related data on
    
    year-on-year basis
    
    □Available ?Not available
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    Explanation on the causes of the major differences between the net cash flow generated by
    
    the Company?s operating activities and this year?s net profit during the report period.
    
    □Available ?Not available
    
    3. Analysis to non-main business
    
    □Available ?Not available
    
    4. Assets and liabilities situation
    
    (1) Major changes of assets
    
    Unit: CNY
    
                Atthe end of 2017          At the end of 2016
                                 Proportio                 Proportio Proportion Explanation
                                 n in  the                 n  in  theincrease or on    major
                Amount          total     Amount          total     decrease   changes
                                 assets                    assets    (%)
                                 (%)                      (%)
    Monetary   1,402,522,509    11.19%  1,391,517,607    12.07%  -0.88%    -
    funds
    Receivables 263,796,355      2.1%    173,062,628      1.50%   0.6%      -
    Inventory   2,473,614,046    19.73%  2,248,609,740    19.51%  0.22%     -
    Investment  18,467,989       0.15%                    0%      0.15%     -
    real estate
    Long-term
    equity      0                0%                       0%      0%       -
    investments
                                                                              Mainly
                                                                              because
                                                                              parts of
                                                                              construction
    Fixed assets 5,329,083,969    42.51%  4,683,187,493    40.62%  1.89%     projects
                                                                              havebeen
                                                                              transferred
                                                                              to fixed
                                                                              asset
                                                                              Mainly
    Constructio                                                                because
    n        in 1,026,141,569    8.19%   1,346,281,737    11.68%  -3.49%    parts of
    progress                                                                   construction
                                                                              projects
                                                                              havebeen
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
                                                                              transferred
                                                                              to fixed
                                                                              asset
    Short-term   714,434,286      5.70%   662,388,882      5.75%   -0.05%    -
    borrowings
    Long-term    156,125,854      1.25%   49,140,555       0.43%   0.82%     -
    borrowings
    
    
    (2) Measuring assets and Liabilities at Fair Value
    
    □Available ?Not available
    
    (3) Assets rights restricted situation up to the end of report period
    
    During this report period, the Company has no asset sealed up, distrained or frozen. For
    
    information about asset mortgage and pledge, please refer to     
    Guarantee> (announcement number: 2016-Temporary 021) and     
    Guarantee> (announcement number: 2017-Temporary 015) disclosed on China Securities
    
    Journal, Securities Times and CNINFO (http://www.cninfo.com.cn/) respectively on
    
    December 22nd, 2016 and December 12th, 2017.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    5. Investment situation
    
    (1) Overall situation
    
    ?Available □Not available
    
      Investmentamount during the   Investment amount of the same            Variation
          reportperiod (CNY)          period of last year (CNY)
                   634,882,100.00                929,180,000.00                      -31.67%
    
    
    (2) Situation of acquired main equity investments during the report period
    
    ?Available □Not available
    
    Unit: CNY
    
     Invested     Mainbusiness  Investment  Investment   ShareholdingCapital Partner  investment  Product Progress   Estimated  Investment   Whether  Disclosure Disclosure
     corporate                mode     amount     ratio      source         horizon    type    upto      earnings   profit       ornot    date(if   index(if
     name                                                                           balance             orloss      involvein have)    have)
                                                                                    sheetdate            duringthe    litigation
                                                                                                      reportperiod
     Indomita    Wineandother Newly     274,248,114  85%      Self-   LAMBO 50years    Wine   All       15,000,000  26,740,109   no      May26th, Pleasereferto
     Wine       alcoholicdrink  established                     owned  SpA                    acquisition                             2017         Company    productionand                                                          work                                        JointlyEstablishing
     Chile,SpA   management                                                            completed                                     IndomitaWineCompany
        Chile, SpA>disclosedon
        China SecuritiesJournal,
        Securities Timesand
        CNINFO
        (http://www.cninfo.com.cn/)
        on May26th,2017
     Total                           274,248,114                                                 15,000,000  26,740,109
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    (3) Situation of main ongoing non-equity investments during the report period
    
    ?Available □Not available
    
    Unit: CNY
    
                                                                                                Accumulated    Reasons                  Disclosure
                           Whether                        Accumulatedactual                           realized       for                     index(if
                           it                            investment                                             unreached                 have)
     Project         Investment belongs   Involved   InvestmentAmounatmountup      Capital Process                profitup       planning     Disclosure
     name          mode     tofixed   sectors    duringthis     totheend       source  of       Estimatedprofit  totheend      schedule     date(if
                           assets             reportperiod    ofthereport           project                ofthe         and         have)
                           investment                      period                                    report        estimatedprofit
                                                                                                period
     Yantai    Pleasereferto
     Changyu                         Liquorand                                                                                              International     Self-              alcoholic                            Owned                                                          ResolutionofSeventh
     WineCity       constructed Yes      beverage     135,489,100    1,158,619,100  funds  100%     —           —           —          2017.04.22     SessionBoardofDirectors
     Blendingand                      sector                                                                                            4thMeeting>disclosedon
     Cooling    ChinaSecuritiesJournal,
     Center    SecuritiesTimesand
     Yantai    CNINFO
     Changyu                         Liquorand                                                                                         (http://www.cninfo.com.cn/)
     International     Self-              alcoholic                            Owned                                                          onApril22nd,2017
     WineCity       constructed Yes      beverage     110,000,000     886,690,000  funds  100%     —           —           —          2017.04.22
     Bottling                         sector
     Center
     Yantai         Self-              Liquorand                           Owned
     Changyu        constructed Yes      alcoholic     16,315,200     415,207,200  funds  100%     —           —           —          2017.04.22
     International                      beverage
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
     WineCity                        sector
     Logistics
     Center
     ChangyuVine                     Liquorand
     andWine       Self-     Yes      alcoholic     10,000,000     115,760,000  Owned 60%      —           —           —          2017.04.22
     Research        constructed          beverage                            funds
     Institute                         sector
                                    Liquorand
     Treasure        Self-     Yes      alcoholic     31,000,000     109,990,000  Owned 60%      —           —           —          2017.04.22
     WineChateau    constructed          beverage                            funds
                                    sector
                                    Liquorand
     KoyaBrandy     Self-     Yes      alcoholic     23,770,000     135,698,000  Owned 55%      —           —           —          2017.04.22
     Chateau        constructed          beverage                            funds
                                    sector
                                    Liquorand
     Greening        Self-     Yes      alcoholic     27,805,700      53,105,700  Owned 100%     —           —           —          2017.04.22
     Investment      constructed          beverage                            funds
                                    sector
     Maintenance&                     Liquorand
     reconstruction    Self-              alcoholic                            Owned
     projectofRoullet  constructed Yes      beverage            0             0  funds  0%                                          2017.04.22
     Fransacchateauin                   sector
     Cognac,France
     Total          —       —       —         354,380,000    2,875,070,000  —    —       —           —           --          --
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    (4) Financial assets investment
    
    ? Security investment situation
    
    □Available ?Not available
    
    There is no security investment for the Company during the report period.
    
    ? Derivatives investment
    
    □Available ?Not available
    
    There is no entrust financing for the Company during the report period.
    
    (5) The usage situation of the raised capital
    
    □Available ?Not available
    
    There is no usage situation of the raised capital for the Company during the report period.
    
    (6) Sale of major assets and equities
    
    ? Sale of major assets
    
    □Available ?Not available
    
    There is no sale of major assets during the report period.
    
    ? Sale of major equities
    
    □Available ?Not available
    
    (7) Analysis to the major holding and joint stock companies
    
    ?Available □Not available
    
    Situation of main subsidiaries and joint stock companies affecting over 10% of the
    
    Company’s net profit
    
    Unit: CNY
    
     Company   Company   Main        Registered   Total     Net      Operation   Operation   Net
     name      type       business      capital     asset     asset     revenue     profit      Profit
     Xinjiang    Subsidiary  Toplant                                                        15,531,5
     Tianzhu              grape,        CNY75mil   101,588,   95,443,1  116,555,58  20,036,552       13
     Winery               produceand   lion            381       87         8
     Co.,Ltd.              sell
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
                         grape juice,
                         bulk wine
                         and fruit
                         wine
     Yantai     Subsidiary  Toresearch,
     Changyu-             produceand
     Castel                sell  wine    USD5milli   255,474,   80,408,4  68,964,230   2,038,551   9,859,10
     Wine                andsparking   on           006       05                            1
     Chateau              wine,tourist
     Co.,Ltd              service
     Langfang
     Castel-     Joint      Toproduce    USD       40,702,2   34,568,3                       -1,616,63
     Changyu    stock      andsellwine   6,108,818        55       46  39,165,527  -1,226,621        8
     WineCo.   company
     LTD.
     Chateau    Subsidiary  Toresearch,
     Changyu              produceand   CNY642,7   695,747,   621,784,  145,103,20  25,301,360   17,475,6
     AFIP                sellbrandy    50             324      281         0                  47
     Global               andwine
     Chateau    Subsidiary
     Liaoning              Toproduce    CNY59.68   64,141,7   53,170,0                       1,241,69
     Changyu              icewine      73million         17       22  49,643,396   2,038,551        9
     IceWine
     Co.,Ltd.
     Dicot      Subsidiary  Toproduce
     Partners,              andoperate    EUR2,385,   515,135,   126,769,  281,007,16  -1,816,304   2,000,68
     S.L.                 wineand      732            463      123         7                  2
                         other liquor
     Indomita    Subsidiary  Toproduce
     Wine                andoperate    USD47.19     481,333,   354,103,  157,953,46  23,047,447   28,791,6
     Company             wineand      million          962      792         7                  84
     Chile,SpA            otherliquor
    
    
    Acquisition and disposal of subsidiaries during the report period
    
    □Available ?Not available
    
    Information of main holding and joint stock companies
    
    No
    
    (8) Main part situation of the special purpose being controlled by the Company
    
    □ ?Not available
    
    (9) Expectation for the Company’s future development
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    On the basis of our limited experience and special skills, we make the following estimation of the
    
    wine sector and the Company?s future development:
    
    (1) The sector competition setup and development trend
    
    Under the slowdown effect of national macroscopic economy growth, the operation situation of
    
    the Company will become more severe, plus the change of the alcohol consumption environment,
    
    leading to difficulties in selling high-end products; Consumers tend to be more rational, which
    
    requires Changyu to make more efforts in improving the cost performance of products; Owing
    
    that influx of plenty of imported wines would further compress the domestic wine market shares
    
    and the new channels such as E-commerce cause great impact on the traditional sales channels,
    
    the competition in the domestic wine industry will still be fierce at present and in the future long
    
    time; Raw material cost, freight and depreciation expense and other expenses are likely to increase,
    
    bringing big pressure to the Company?s profitability. But in the long run, thanks to increase in
    
    their income, more and more people would pursue health and fashion life mode and the people
    
    would be in more favor of wines which fit quite well with the trend of consumption, ceaselessly
    
    stimulating the demands for premium wine. This decides that the Chinese wine industry owns a
    
    huge market development potential, especially that brandy and wine with high price ratio might
    
    have a faster growth. In addition, with the increased consumption by domestic middle class,
    
    “drink less, drink good, drink healthily” will become future tendency and wine will keep
    
    continuous and rapid development trend in China. In such a case of long-term coexistence of
    
    opportunities and challenges, those enterprises that possess strong brand influence and marketing
    
    ability, catch the opportunities, actively take adjustments, make full use of newly emerging and
    
    traditional sales channels, timely satisfy the consumers? demands and provide products with high
    
    price ratio will have the opportunity to be the final winner of competition and then form a new
    
    structure of the future Chinese wine market.
    
    (2) The Company?s development strategy
    
    The Company will insist the development direction of “Focus on middle-and-high level, Focus on
    
    high quality, Focus on big product”, comprehensively implement the development strategy of
    
    same importance between wine and brandy, endeavour to promote the harmonious development
    
    of various liquor; actively expand the scope of consumption field and marketing mode,
    
    industriously develop middle-and--high-end wines and brandy, strengthen the marketing level of
    
    imported wine and strive to provide consumers with a rich variety of products in high price ratio.
    
    (3) Management plan in new year
    
    In 2018, the Company will try its best to realize business income of not less than CNY5.2 billion
    
    and control the main operating costs and three period expenses below CNY3.7 billion.
    
    (4) The measures the Company will take
    
    In order to better catch the opportunities and face the challenges, the Company will take full
    
    advantage of self-owned advantages, adhere to market-orientation, intensify internal adjustment
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    and reformation degree, enlarge subsidiaries? autonomous right in operation, increase enterprise
    
    vitality, implement the performance assessment mode of mainly focusing on profit, pay attention
    
    to following aspects in 2018 in order to achieve the annual operation target:
    
    Firstly, the Company will insist the development direction of focusing on middle-and-high-level
    
    products, focusing on high quality and focusing on big product. Based on product Characteristics,
    
    the Company will further clear brand positioning of wine, brandy and imported liquor and insist in
    
    focusing on the strategy of developing middle-and-high-level products. The Company will further
    
    perfect quality management traceability system and actively promote the construction of product
    
    quality traceability informatization system; build raw material base in premium wine-making
    
    grape region including France, Chile and Australia and so on in order to improve the scientific
    
    management level of domestic base and to assure the stable supply of premium bulk wine; take
    
    international advanced level as benchmarking, confirmedly promote high quality strategy,
    
    improve internal quality and external appearance of products in order to achieve the
    
    comprehensive transcendence to major competitive products. The Company will centralize
    
    resources to make several big products at different levels, through which the Company could
    
    promote the continuous improvement of the Company?s brand awareness and influence.
    
    Secondly, the Company will reform sales system to build new sales system that could adapt to
    
    development requirement. The Company will further perfect the relatively-independent sales
    
    system construction of wine, brandy and imported liquor to promote comprehensive development
    
    of various liquor; through downsizing staff and improving efficiency, perfecting salary system and
    
    other measures, increase the salary of sales personnel, improve their work enthusiasm and
    
    stimulate the market vitality; strengthen system construction of backbone distributor, build unified
    
    customer complaint system facing distributors and customers, improve their internal motivation in
    
    selling Changyu products; focus on brand image of “Internationalization, High Quality”, actively
    
    develop the export business and improve brand influence.
    
    Thirdly, the Company will carry out order mode and promote informatization system construction
    
    for production and sales plan. The Company will accelerate the informatization system
    
    construction, roundly promote order-driven mode, build the company into a smart factory,
    
    significantly improve the market service capacity of production system, reduce the inventory scale
    
    and fund occupation, thoroughly sole the problem of disconnection between production and sales.
    
    Fourthly, the Company will strengthen finance governance to perfect evaluation system whose
    
    principal line is profit. The Company will establish the assessment system taking profit as main
    
    line to improve profitability; strengthen profit assessment in self-supporting grape base, perfect
    
    the budget management of various expense and control operating cost; optimize the Company?s
    
    analysis system of consolidated statement and financial assessment to improve supervision
    
    efficiency of financial assessment; continue reinforcing the management of major expense and
    
    consumption level; actively strive for project loan and policy-based fund loan to reduce loan cost;
    
    reinforce tax planning and reduce tax bearing level.
    
    Fifthly, the Company will reinforce supervision and administration function to improve
    
    management level of overseas acquired enterprise. The Company will faithfully strengthen
    
    operation management of overseas asset to assure the healthy operation of overseas acquired
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    enterprise; improve the positivity of overseas management team and build overseas acquired
    
    enterprise to be “International Marketing Platform”, “Grape Resource Platform” and “Technology
    
    Communication Platform” through series measures, such as reinforcing the third-party audit and
    
    perfecting enthusiasm policy and so on.
    
    Sixthly, the Company will reasonably delegate power to lower levels and reinforce monitoring
    
    simultaneously to improve enthusiasm of subsidiaries. Meanwhile the Company delegates more
    
    autonomy in management to subsidiaries, the C will also reinforce supervision to ensure that the
    
    subsidiaries could maintain right development direction and operation trajectory.
    
    Seventhly, the Company will steadily promote the construction of investment projects to assure
    
    the project quality. The Company will accelerate to complete the commissioning work of
    
    production lines in research and development center, improve production stability and give full
    
    play to high efficiency of production lines; accelerate to promote putting Tinlot chateau and Koya
    
    chateau into operation; complete the construction of second-phase SAP project in Changyu
    
    industrial park (Yantai Changyu international wine city).
    
    (5) Potential risks
    
    A) Risks in price fluctuation of raw materials
    
    Grapes are the Company?s main raw materials. The grape?s yield and quality are affected to a
    
    certain extent by the natural factors such as drought, wind, rain, frost and snow. These force
    
    majeure factors greatly influence the quantity and price of the grapes in this Company orders and
    
    add the uncertainty to the Company?s production and operation. Therefore, the Company will
    
    lower the risks that are likely to affect grape quality and result in price fluctuation by means of
    
    expanding the self-run vineyards, strengthening the vineyard management and optimizing the
    
    layout of vineyards.
    
    B) Risks in uncertainty of market input and output
    
    To cope with the cutthroat market competition and to meet the needs for market development, the
    
    Company has input more and more capital in the market and the sales expense has taken up a
    
    higher percentage point in the business revenue. The input-output ratio will affect the Company?s
    
    operating results to a great extent and the risk that some investments may not reach the
    
    expectations is likely to occur. Therefore, the Company will strengthen market research and
    
    analysis, enhance market forecast accuracy and continue to perfect the input-output evaluation
    
    system to ensure the investments in market to be satisfactory as expected.
    
    C) Risks in product transport
    
    The Company?s products are fragile and sent to different places all over the world, mostly by sea,
    
    railway and expressway. The peak season of sales is usually in cold winter and close to the spring
    
    festival when market has a great demand. At that time, the natural and human factors such as
    
    serious shortage of transport capacity resulting from busy flow of people and goods, wind, snow,
    
    freezing as well as traffic accidents make the transport departments difficult to send products to
    
    markets in time and safely. As a result, it makes this Company have to face the risks of missing
    
    the peak season of sales. Therefore, the Company will adopt all methods possible like making
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    precise sales prediction and well designed connection of production and sales, reasonably
    
    arranging production and transport means and making use of more available warehouses in
    
    different places to lower these kinds of risks.
    
    D) Risks in investment faults
    
    According to the plan, currently the Company has finished the production layout at home, and the
    
    next step is to pay more attention to the overseas merge and acquisition in the same industry.
    
    Currently, Changyu industrial park (Yantai Changyu international wine city) has those features
    
    such as the big investment amount, long-term construction period and many uncertain factors;
    
    more unforeseeable factors for the overseas merge and acquisition projects in the progress of
    
    M&A, it is difficult to make sure the fair and reasonable transaction price, the integration and
    
    management after M&A is also hard. Under the influence of uncertain factors for individual
    
    projects, it leads to have the risks of facing with the investment amount out of budget or hardly
    
    taking back the expected investment earnings. The Company will take an adequate argument and
    
    scientific decision-making for investment projects, try hard to reduce and avoid investment risks.
    
    10. The Company’s receptions, studies, communications and visits
    
    Activity registration form about receptions, studies, communications and visits during the report
    
    period
    
    □Available ?Not available
    
    There is no receptions, studies, communications and visits activities during the report period.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    V. Major issues
    
    1. The Company’s common stock profit distribution and increasing equity with capital
    
    reserve
    
    Promulgation, implementation or adjustment of common stock profit distribution policies
    
    especially cash dividends policies during the report period
    
    ?Available □Not available
    
    Deliberated and passed by the 2016 Stockholders? Meeting convened on June 15th, 2017 by
    
    the Company, the Company?s 2016 annual profit distribution scheme is shown as follows:
    
    based on total 685,464,000 shares (including 453,460,800 A shares and 232,003,200 B shares)
    
    up to December 31st, 2016, the Company would pay cash dividend to all shareholders
    
    registered on the share registration day: CNY5 in cash per ten shares. This time the Company
    
    would neither dispatch bonus shares nor increase equity with capital reserve.
    
    Total amount of shares has not changed since the disclosure of the distribution plan to the
    
    implementation period.
    
    On July 4th, 2017, the Company published the Implementation Announcement of 2016 Annual
    
    Equity Distribution on China Securities Journal, Securities Times and www.cninfo.com.cn,
    
    determining that the share registration day and the ex-dividend day of A Share was
    
    respectively on July 10th, 2017 and on July 11th, 2017; the last trading day, the share
    
    registration day and the ex-dividend day of B Share was respectively on July 10th, 2017, on
    
    July 13th, 2017 and on July 11th, 2017. Total amount of shares on the share registration day
    
    and the ex-dividend day is 685,464,000 shares (including 453,460,800 A shares and
    
    232,003,200 B shares). This time the dispatching objects contain all A Share shareholders
    
    registered at China Securities Depository and Clearing Corporation Limited Shenzhen
    
    Company after closing of Shenzhen Stock Exchange in the afternoon of July 10th, 2017 and
    
    all B Share shareholders registered at China Securities Depository and Clearing Corporation
    
    Limited Shenzhen Company after closing of Shenzhen Stock Exchange in the afternoon of
    
    July 13th, 2017.
    
    This dispatching has already been completed in mid-July 2017. The profit distribution
    
    scheme implemented this time is consistent with the scheme deliberated and passed by the
    
    stockholders? meeting. The implementation of the profit distribution scheme for this time is
    
    not more than two months after the shareholders' meeting passing it.
    
                         Specialexplanation for the cash dividends policy
     Whether it is in accordance with the requirements of the regulation in the Articles   Yes
     of Association and the resolution of shareholders
     Whether the distribution standard and proportion is clear and definite              Yes
     Whether the relevant decision process and mechanism is complete                 Yes
     Whether the independent directors perform their responsibilities and play the roles   Yes
     Whether the small and middle shareholders have the chance to express their        Yes
     advicesand appeals, as well as their lawful right and interest is in an enough
     protection
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
     Whether it is legal and transparent for the condition and process while adjusting     Yes
     and amending the cash dividends policy
    
    
    The Company?s scheme (preliminary scheme) of common stock profit distribution and
    
    increasing equity with capital reserve in the recent three years (including the report period)
    
    The Company?s profit distribution scheme in 2015 is as following: Because the left amount of
    
    legal earned surplus reserve reaches 50% of registered capital, while making profit distribution,
    
    the legal earned surplus reserve will not be drawn. Based on the Company?s 685,464,000
    
    shares at total up to December 31st, 2015, we plan to pay CNY5 in cash as dividends for every
    
    ten share (including tax) to the Company?s all shareholders, totaling up to CNY342,732,000
    
    accounted for 33.27% of net profits CNY1,030,073,860 attributable to shareholders of parent
    
    company in the consolidated statements. The retained and undistributed profit of
    
    CNY687,341,860 will be reserved for distribution in the next year.
    
    The Company?s profit distribution scheme in 2016 is as following: Because the left amount
    
    of legal earned surplus reserve reaches 50% of the registered capital, while making profit
    
    distribution, the legal earned surplus reserve will be not drawn. Based on the Company?s
    
    685,464,000 shares at total up to December 31st, 2016, we plan to pay CNY5 in cash as
    
    dividends for every ten shares (including tax) to the Company?s all stockholders, totaling up
    
    to CNY342,732,000 accounting for 34.89% of the net profit CNY982,460,488 attributable to
    
    the shareholders of the parent company in the consolidated statement, the retained and
    
    undistributed profit of CNY639,728,488 will be reserved for the distribution of next year.
    
    The Company?s profit distribution scheme in 2017 is as following: Because the left amount of
    
    legal earned surplus reserve reaches 50% of the registered capital, while making profit
    
    distribution, the legal earned surplus reserve will not be drawn. Based on the Company?s
    
    685,464,000 shares at total up to December 31st, 2017, we plan to pay CNY5 in cash as
    
    dividends for every ten shares (including tax) to the Company?s all stockholders, totaling up to
    
    CNY342,732,000, accounting for 33.22% of the net profit CNY1,031,695,056 attributable to
    
    the shareholders of the parent company in the consolidated statement, the retained and
    
    undistributed profit of CNY688,963,056 will be reserved for the distribution of next year.
    
    The Company?s common stock cash dividend record in recent three years (including the
    
    report period)
    
    Unit: CNY
    
                             Netprofit belonging to Proportion in the net
                 Amountof   the listed company?s   profit belonging to   Amount of cash  Proportion of cash
      Year of   cash dividend   stockholders in the   the listed company?s dividends in other dividends in other
    distribution (including tax) consolidated statement  stockholders in the        ways            ways
                             ofthe distribution year    consolidated
                                                     statement(%)
    2017         342,732,000        1,031,695,056             33.22%                0              0%
    2016         342,732,000          982,460,488             34.89%                0              0%
    2015         342,732,000        1,030,073,860             33.27%                0              0%
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    During the report period, the Company earned profit, the profit of the parent company that
    
    could be distributed to common stock shareholders was positive but without proposing
    
    common stock cash dividend distribution preliminary scheme.
    
    □ ?Not available
    
    2. The Company’s preliminary scheme of profit distribution and preliminary scheme of
    
    increasing equity with capital reserve for the report period
    
    ?Available □Not available
    
     Number of sending bonus shares per ten shares (share)                                 0
     Number of dividend payout per ten shares (CNY) (including tax)                        5
     Number of transferring per ten shares(share)                                          0
     The cardinal number of the capital stocks for the preliminary distribution       685,464,000
     scheme(shares)
     Total cash dividend distribution(CNY)(including tax)                     342,732,000
     Attributable profit(CNY)                                             1,031,695,056
     The proportion of cash dividend distribution in the total profit distribution            100%
                              Cash dividend distribution this time
     If the Company?s development is in growth stage and major capital expenditure is arranged,
     while making profit distribution, the proportion of cash dividends should takes up no less
     than 20% in this profit distribution.
       Detailedexplanation for the preliminary scheme of profit distribution or increasing equity
                                     with capital reserve
     According to the audit result from Deloitte Hua Yong Certified Public Accountants Co., Ltd,
     the net profit belonging to the parent company?s stockholders in the consolidated statement in
     2017 is CNY1,031,695,056 and the net profit of the parent company in financial statement in
     2017 is CNY793,598,010.
     According to  PRC  accounting standard,  the  situation  for  attributable profits  of  the
     consolidation and the parent company in 2017 as following:
                                                                             Unit: CNY
                                                  Consolidation      Parent company
        Undistributed profits at the end the year          7,309,081,618      7,811,100,555
        Including: net profits in 2017                   1,031,695,056        793,598,010
        Undistributed profit carried forward of the       6,620,118,562      7,360,234,545
        beginning of the year
        Distribution of 2016 dividends                   342,732,000        342,732,000
        Withdrawal legal surplus reserve                7,309,081,618      7,811,100,555
     According to regulation of 157th item in the Articles of Association, which is that “the
     Company can distribute dividends either in cash or by stock, the profit to be distributed each
     year is not less than 25% of the distributable profit realized in the same year and the
     accumulated sum of profit to be distributed in cash in the last three years is not less than 30%
     of the yearly average distributable profit to be realized in the last three years”. Meanwhile,
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    considering the large amount on the capital expenditure in 2018, under the condition of not
    
    influencing the normal production and operation, the Company put forward preliminary
    
    scheme on profit distribution in 2017 as following:
    
    Because the left amount of legal earned surplus reserve reaches 50% of the registered capital,
    
    while making profit distribution, the legal earned surplus reserve will not be drawn. Then
    
    based on the Company?s 685,464,000 shares at total up to December 31st, 2017, we plan to
    
    pay CNY 5 in cash as dividends for every ten shares (including tax) to the Company?s all
    
    stockholders, totaling up to CNY342,732,000, accounting for 33.22% of the net profit
    
    CNY1,031,695,056 attributable to the shareholders of the parent company in the consolidated
    
    statement; the retained undistributed profit of CNY688,963,056 will be reserved for the
    
    distribution of next year. The cash dividend distributed to shareholders of domestic listed
    
    foreign shares (B share) is paid in Hongkong dollar converted based on the the middle rate
    
    between CNY and Hongkong dollar issued by the People?s Bank of China on the first
    
    working day after the resolution date of 2017 shareholders? meeting.
    
    3. Implementation of commitments
    
    (1) 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 Commitment  Commitment   Commitment  Commitment  Implementation
                         party         type        content         time         period
    Commitments at
    share reform
    Commitments
    made in
    acquisition report
    or equity changes
    report
    Commitments at       -                        -                          -            -
    asset restructuring
                        Yantai        Solve                                                 Has been
    Commitments at     Changyu     horizontal  Non-horizontal May 18th, 1997   Forever      performing
    the initial public    Group Co.   competition competition                                   strictly
    offering or            Ltd.
    refinancing                    Clear the use According to
                                  of trademark Trademark
                        Yantai       royalty    License                                      Has been
                       Changyu                Contract, the   May 18th, 1997   Forever      performing
                       GroupCo.               trademark                                     strictly
                         Ltd.                  royalty of
                                               Changyuand
                                               other
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
                                               trademarks
                                               paidby the
                                               Companyto
                                               Yantai
                                               Changyu
                                               GroupCo., Ltd
                                               everyear is
                                               mainlyused
                                               foradvertising
                                               Changyuand
                                               other
                                               trademarksand
                                               thiscontract
                                               productsby
                                               Yantai
                                               Changyu
                                               GroupCo.,
                                               Ltd.
    Equity incentive
    commitments
    Commitments at
    middle and small
    shareholders of
    the Company
    Commitment
    under timely      Yes
    implementation or
    not
    Whether or not to
    have specific
    reasons of the     No
    unimplemented
    commitment and
    next steps(if any)
    
    
    (2) The Company should make a statement on the achieved original profit forecast of
    
    assets or projects and its reason if there is profit forecast of Company’s assets or
    
    projects and the report period is still in the profit forecast period
    
    □Available ?Not available
    
    4. Non-business capital occupying of listed company by controlling shareholder and its
    
    related parties
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    □Available ?Not available
    
    There are no non-business capitals occupying of listed company by controlling shareholder
    
    and its related parties during the report period.
    
    5. Explanation of Non-standard Audit Report given by accounting firm in the report
    
    period from board of directors, board of supervisors and independent directors (if
    
    have)
    
    □Available ?Not available
    
    6. Compared with the last year’s financial report, explanation for the changes of
    
    accounting policy, accounting estimation and accounting method
    
    ?Available □Not available
    
    In accordance with related regulation of Ministry of Finance, the Company plans to change
    
    the accounting policy about “Government Grants”. Detailed information is shown as follows:
    
    Before the change: The Company executes 《Accounting Standard for Business Enterprises
    
    No. 16 - Government Grants》 involved in 《Notification of Ministry of Finance on Printing
    
    and Distributing 38 Items of Specific Standards Including     
    Business Enterprises No. 1 - Inventory>》(Cai Kuai [2006] No.3) printed and distributed by
    
    Ministry of Finance on February 15th, 2006. Hereby, the Company classifies received
    
    government grants into “Non-operating Income” on the basis of benefit period.
    
    After the change: The Company executes《Accounting Standard for Business Enterprises No.
    
    16 - Government Grants》(Cai Kuai [2017] No.15) formulated by Ministry of Finance. For the
    
    rest unchanged parts, the Company will still execute relevant standards and regulations
    
    published by Ministry of Finance on February 15th, 2006. Hereby, the accounting treatment in
    
    government grants will be divided into three classes: firstly, loan interest subsidy offsets
    
    “Financial Expense”; secondly, it is classified into “Other Income”; thirdly, those that are not
    
    relevant with operating activity are classified into “Non-operating Income”.
    
    7. The situation explanation for the correction of major accounting errors which need to
    
    be retrospect and restated during the report period
    
    □Available ?Not available
    
    There is no situation for the correction of major accounting errors which need to be retrospect and
    
    restated.
    
    8. Compared with the last year’s financial report, explanation for the changes of the
    
    consolidated statements scope
    
    ?Available □Not available
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    (1) On May 11th, 2017, this company, together with LAMBO SpA signed Agreement among
    
    Shareholders and Price Adjustment Agreement, establishes a joint venture enterprise
    
    Indomita Wine Company Chile, SpA (Chinese name: 智利魔狮葡萄酒简式股份公司, for
    
    short “Indomita Wine”) with an investment of USD4,190,000. This Company offers
    
    USD40,110,000, holding 85% equity of Indomita Wine. After establishment, as transferee,
    
    Indomita Wine offers USD47,190,000, acquiring 100% equity of all three subsidiaries under
    
    Chile Bethwines. On July 1st, 2017, this Company completed all the prerequisites regarding
    
    share purchase, obtaining the control of three subsidiaries under Chile Bethwines. During the
    
    report period, Indomita Wine and its subsidiaries all are included in the consolidate scope.
    
    (2) On January 18th, 2017, this company newly establishes Sales & Marketing Company of
    
    Yantai Changyu Pioneer Wine Company Limited with the registered capital of CNY5million
    
    and the business scope of wholesale business and retail business. This newly established
    
    company is included in the consolidate scope during the report period.
    
    9. The appointment and dismissal of certified public accountants
    
    Currently appointed accounting firm
    
    Domestic  accounting  firm  name           Deloitte Hua Yong Certified Public Accountants
                                                Co., Ltd.(special general partnership)
    Remuneration for domestic accounting  firm                                           198
    (CNY?0000)
    Consecutive period for the audit services of                                               5
    domestic accounting firm
    Name of certified public accountant for the audit                           Li Xu, Li Yangang
    services of domestic accounting firm
    Consecutive period for the certified public
    accountant?s audit services of domestic                                                  -
    accounting firm
    Overseas accounting firm name (if have)                                                  0
    Remuneration for overseas accounting  firm                                              0
    (CNY?0000) (if have)
    Consecutive period for the audit services of                                              -
    overseas accounting firm (if have)
    Name of certified public accountant for the audit                                          -
    services of overseas accounting firm (if have)
    Consecutive period for the certified public                                               -
    accountant?s audit services of overseas
    accounting firm (if have)
    
    
    Whether or not to dismiss the accounting firm during the report period
    
    □Yes ? No
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    To employ internal control audit accounting firms, financial adviser or sponsor.
    
    □Available ?Not available
    
    10. Face of suspension and termination of listing after the disclosure of annual report
    
    □Available ?Not available
    
    11. Bankruptcy reorganization
    
    □Available ?Not available
    
    There is no bankruptcy reorganization during the report period.
    
    12. Material litigation and arbitration
    
    □Available ?Not available
    
    There are no material litigation and arbitration during the report period.
    
    13. Penalty and rectification
    
    □Available ?Not available
    
    There are no penalties or rectifications during the report period.
    
    14. Credit of the Company, holding shareholders and actual controllers
    
    □Available ?Not available
    
    15. Implementation of the Company’s equity inventive plan, employee stock ownership plan
    
    or other employee incentive measures
    
    □Available ?Not available
    
    There are no implementation of the Company?s equity inventive plan, employee stock ownership
    
    plan and other employee incentive measures during the report period.
    
    16. Significant related transactions
    
    (1) Related transactions in relation to daily operations
    
    ?Available □Not available
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
     Related    Relationship  Type       Content     Pricing     Price       Amount     Proportion   Approved    Whether     Clearing    Available    Disclosure  Disclosur
     party                                     principle              (CNY?0000)  accounting   transaction   exceed      form      marketprice  date      eindex
                                                                            for amount  quota       approved             of  similar
                                                                            of  similar  (CNY?0000)  transaction            transactions
                                                                            transactions            quota
                                    Purchase
      Yantai    Controlled    Purchase      and
      Shenma   bythesame     and     commission  Agreement   Determined    14,587      8.71%      18,000       No       Cash       No     April26th,     -
     Packaging    parent    commission   processing    pricing   byagreement                                                                 2017
      Co.,Ltd.    company    processing    packing
                                    materials
      Yantai               Licensed   Licenseduse
      Changyu    Parent      useof    oftrademark  Agreement   Determined     7,289       100%       7,605       No       Cash       No     April26th,     -
     GroupCo.   company    intangible    andpatent    pricing   byagreement                                                                 2017
       Ltd.                 assets
     Total                                     -         -          21,876      --         25,605      -          -         -          -         -
     Detailsofthereturnoflargesales                  No
     Actual performance of the estimated total amount for  In2017,theestimatedamountfordailyoperationsrelatedtransactionsoftheCompanyisCNY331.3millionandtheactualamountincurred  for
     dailyoperations related transactionsby categorythat will  dailyoperationsrelatedtransactionsisCNY273.55million.
     occurduringthisperiod.
     Reason for the deference between transaction price and  No
     marketreferenceprice
    
    
    (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.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    (3) Related transactions in relation to common foreign investment
    
    □Available ?Not available
    
    There are no related transactions in relation to common foreign investment during the report
    
    period.
    
    (4) Related current credit and debt transactions
    
    ?Available □Not available
    
    Whether or not existing non-operating related credit and debt transactions
    
    □Yes ?No
    
    There are no non-operating related credit and debt transactions during the report period.
    
    (5) Other major related transactions
    
    □Available ?Not available
    
    There are no other major related transactions during the report period.
    
    17. Major and important contracts and execution results
    
    (1) Trusteeship, contract and leasehold issues
    
    ? Trusteeship situation
    
    □Available ?Not available
    
    There is no trusteeship situation during the report period.
    
    ? Contract situation
    
    ?Available □Not available
    
    Contract situation description
    
    During the report period, about the Company?s contract operation situation, please see “1.The
    
    structure of Enterprise group” in Annex 8 “Rights and interests of other subject” 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.
    
    ? Leasehold situation
    
    ?Available □Not available
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    Leasehold situation description
    
    On January 1st, 2017, the Company renewed the Space Lease Agreement with the controlling
    
    shareholder Changyu Group. The Company leased the space with 15196.94 square meters
    
    located at 174 Shihuiyao Road, Zhifu District,Yantai City. The rent per year is CNY1.4645
    
    million with a rental period of 5 years from January 1st, 2017 to December 31st, 2021. On
    
    January 1st, 2017, the Company?s subordinate Sales&Marketing Co. of Yantai Changyu
    
    Pioneer Wine Company Limited. Brand Sales Department renewed the Space Lease
    
    Agreement with the controlling shareholder Changyu Group, leasing the space with 42552.83
    
    square meters located at 1 Jichang 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 CNY4.3935million
    
    with a rental period of 5 years from January 1st, 2017 to December 31st, 2021.
    
    On July 1st, 2017, this company signed a house-leasing contract with Yantai Shenma
    
    Packaging Company Limited. According to this contract, since July 1st, 2017, this company
    
    leased property to Yantai Shenma Packaging Company Limited for a business purpose with
    
    the annual rent of CNY1,626,880. This contract expires on June 30th, 2022.
    
    Project in gains and losses for the Company to achieve more than 10% of the total profit
    
    □Available ?Not available
    
    There are no leasehold projects in gains and losses for the Company to achieve more than
    
    10% of the total profit during the report period.
    
    (2) Major guarantee
    
    ?Available □Not available
    
    ? Guarantee situation
    
    Unit: CNY?0000
    
                      ExternalguaranteeoftheCompanyanditssubsidiaries(excludingguaranteetosubsidiaries)
                  Disclosuredateof                                                               Whetheror
     Guaranteeobject      related      Guarantee  Actualdateof    Actual    Guarantee  Guarantee  Whetherornot  notbelongto
         name      announcement     quota   occurrence(date  guarantee     type     Period     complete    related-party
                   aboutguarantee            ofagreement)    amount                     implementation   guarantee
                      quota
    YantaiEconomic
    and Technological                                               Mortgage;
    Development       2016.12.22      34160     2016.12.21     34160     Pledge    10years       No         No
    Zone Management
    Council.
    Totaloftheexternalguaranteequota                       Totaloftheactualexternal
    approved duringthereportperiod(A1)                     0 guaranteeamountduringthe                              0
                                                    reportperiod(A2)
    Totaloftheexternalguaranteequota                       Balanceoftheactual
    approved bytheendofthereportperiod                 34160 externalguaranteebythe                             34160
    (A3)                                             endofthereportperiod
                                                    (A4)
                                 Guarantee situationsbetweentheCompanyandsubsidiaries
                  Disclosuredateof           Actualdateof    Actual                      Whetherornot  Whetheror
     Guaranteeobject      related      Guarantee occurrence(date  guarantee   Guarantee  Guarantee    complete    notbelongto
         name     announcementabout   quota    ofagreement)    amount      type     Period   implementation  related-party
                   guaranteequota                                                                 guarantee
    Sales &                                                     Jointliability
    Marketing         2016.10.31      10,000    2016.11.05     10,000              2years       No         Yesassurance
    Company of
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    YantaiChangyu
    Pioneer Wine
    Company Limited
    YantaiChangyu                                                Mortgage;
    Pioneer Wine       2016.12.22      11,984    2016.12.21     11,984     Pledge    10years       No         Yes
    Company Limited
    YantaiChangyu                                                  Joint
    Wine Research      2016.12.22      72,176    2016.12.21     72,176     liability    10years       No         Yes
    and Development                                               assurance;
    Company Limited                                               Mortgage
    Kilikanoon Estate                                                 Joint
    Pty Ltd           2017.12.12      7100     2018.01.09      7100      liability    1year       No         Yes
                                                               assurance
    Totaloftheguaranteequotaapprovedto                     Totaloftheactualguarantee
    subsidiaries duringthereportperiod                    7,100 amountforsubsidiaries                                  0
    (B1)                                             duringthereportperiod
                                                    (B2)
    Totaloftheguaranteequotaapprovedto                     Balanceoftheactual
    subsidiaries bytheendofthereport                   89,276guaranteeforsubsidiariesby                           82,176
    period (B3)                                        theendofthereportperiod
                                                    (B4)
                                       Guarantee situationsbetweensubsidiaries
                 Disclosuredateof                                                               Whether   or
    Guarantee object  related          Guarantee  Actualdateof  Actual      Guarantee  Guarantee  Whetherornot   not belong to
    name         announcement     quota     occurrence(date guarantee    type      Period     complete      related-party
                 aboutguarantee             ofagreement)   amount                        implementation  guarantee
                 quota
    Totaloftheguaranteequotaapproved                       Totaloftheactualguarantee
    to subsidiariesduringthereportperiod                     0 amountforsubsidiaries                                  0
    (C1)                                             duringthereportperiod
                                                    (C2)
    Totaloftheguaranteequotaapproved                       Balanceoftheactual
    to subsidiariesbytheendofthereport                     0 guaranteeforsubsidiariesby                              0
    period (C3)                                        theendofthereportperiod
                                                    (C4)
                           Total guaranteeamount oftheCompany(Totalofabovethreemajoritems)
    Totaloftheapprovedguaranteequota                       Totaloftheactualguarantee
    during thereportperiod(A1+B1+C1)                 7,100 amountduringthereport                                 0
                                                    period(A2+B2+C2)
    Totaloftheapprovedguaranteequota                       Balanceoftheactual
    by theendofthereportperiod                      123,436 guaranteebytheendofthe                           116,336
    (A3+B3+C3)                                     reportperiod(A4+B4+C4)
    The proportionofactualtotalguaranteeamount(A4+B4+C4)                                                    13.06%
    accounting fortheCompany?snetasset
    Among :
    The amountofguaranteeforshareholders,actualcontrollersandtheirrelated 0
    parties(D)
    The amountofdebtguaranteefortheguaranteedobjectswhoseasset-liability 0
    ratio ismorethan70%directlyorindirectly(E)
    Totalamountofguaranteeofthepartthatexceeds50%ofnetassets(F)   0
    Totalamountoftheabove-mentionedthreeitems(D+E+F)           0
    Explanation forundueguaranteesthathavehappenedwarrantyliabilityor   No
    may takejointpaybackliabilitiesduringthereportperiod
    Explanation forviolatingdueprocesstoprovideexternalguarantee       No
    
    
    Specific explanation on adopting complex guarantee type
    
    No.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    ? Illegal external guarantee
    
    □Available ?Not available
    
    There is no illegal guarantee situation during the report period.
    
    (3) Entrusting others to manage cash assets
    
    ? Financial management entrustment
    
    □Available ?Not available
    
    There is no financial management entrustment during the report period.
    
    ? Loan entrustment
    
    □Available ?Not available
    
    There is no loan entrustment during the report period.
    
    (4) Other important contracts
    
    □Available ?Not available
    
    There are no other important contracts during the report period.
    
    18. Social Responsibility
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    (1) Social responsibility performance
    
    Please see 2017 Annual Social Responsibility Report disclosed on China Securities Newspaper, Securities Times and www.cninfo.com.cn by the
    
    Company.
    
    (2) Targeted poverty alleviation social responsibility performance
    
    ① Targeted poverty plan
    
    No
    
    ② Summary of annual targeted poverty
    
    No.
    
    ③ Targeted poverty effectiveness
    
    No
    
    ④ Subsequent targeted poverty plan
    
    No
    
    (3) Environmental protection related situation
    
    Whether the listed company and its subsidiaries belong to major polluters published by the environmental protection department
    
    No
    
    19. Other Major issues
    
    □Available ?Not available
    
    There are no other major issues need to be explained during the report period.
    
    20. Major issues of Company’s subsidiaries
    
    □Available ?Not available
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. Changes in Shares and the Shareholders’ Situation
    
    1. Changes in shares
    
    (1) Changes in shares
    
    Unit: share
    
                            Amountbeforethischange                                Change  (+,-)             Amountafterthischange
                                                                              Transfer
                            Amount           PercentageAnelwlotDistribute      ocathpeitraltoothers Subtotal        Amount      Percentage
                                              %               bonusshare                                                %shareshare
                                                                              capital
    1、Unrestrictedshares             685,464,000  100.00%                                                       685,464,000  100.00%
    (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  100.00%                                                       685,464,000  100.00%
    
    
    Cause of share change
    
    □Available ?Not available
    
    Approval of share change
    
    □Available ?Not available
    
    Transfer of changed shares
    
    □Available ?Not available
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 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
    
    (1) Securities issuance (exclude preferred share) during report period
    
    □Available ?Not available
    
    (2) Explanation of change in Company’s total shares and shareholding structure and change in Company’s assets and liability structure
    
    □Available ?Not available
    
    (3) Current employee shares
    
    □Available ?Not available
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    3. Situation for shareholders and the actual controllers
    
    (1) The number of shareholders of the Company and the shareholdings
    
    Unit:share
    
                                Total     number      of         Total number of preferred          Total number of preferred
                                shareholdersby the end of         shareholder recovering            shareholder recovering
    Total shareholders in 48,966  last  month  before  the 44,606   voting power by the end 0       voting power by the end of  0
    the report period             disclosure   day   of   the          ofreport period (if have)         last month before the
                                annualreport                       (see note 8)                    disclosure day of the annual
                                                                                                 report (if have) (see note 8)
                                  Shareholdersholding more than 5% or the top 10 shareholders holding situation
                                                                                    Changes    Number             Pledged or frozen
                                                   Percentage  Shares  held  until  the during   the of       Number  of
    Name of Shareholders Character of shareholders    (%)        end of the report period            restricte unrestricted  SharereportAmount
                                                                                    period      d       shares      status
                                                                                               shares
    YANTAI            Domestic   non-state-owned 50.40%    345,473,856           0          0       345,473,856 -          0
    CHANGYU GROUP legal person
    CO. LTD.
    GAOLING          Foreign legal person         3.08%      21,090,219            -210,700    0       21,090,219  -          0
    FUND,L.P.
    CHINA             State-owned legal person     2.32%      15,924,155            0          0       15,924,155  -          0
    SECURITIES
    FINANCE CORP
    BBH    BOS    S/A Foreign legal person         2.22%      15,241,826            0          0       15,241,826  -          0
    FIDELITY   FD   -
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    CHINA FOCUS FD
    GUOTAI JUNAN    Foreign legal person         1.00%      6,881,493             1,560,015   0       6,881,493   -          0
    SECURITIES(HONG
    KONG) LIMITED
    FIDELITY                                     0.89%      6,100,762             3,800,769   0       6,100,762   -          0
    PURITAN TRUST:
    FIDELITY SERIES  Foreign legal person
    INTRINSIC
    OPPORTUNITIES
    FUND
    CENTRAL HUIJIN                             0.69%      4,761,200             0          0       4,761,200   -          0
    ASSET              State-owned legal person
    MANAGEMENT
    LTD.
    VANGUARD                                  0.55%      3,788,487             0          0       3,788,487   -          0
    EMERGING         Foreign legal person
    MARKETS STOCK
    INDEX FUND
    FIDELITY CHINA                             0.55%      3,779,202             0          0       3,779,202   -          0
    SPECIAL           Foreign legal person
    SITUATIONS PLC
    NORGES BANK     Foreign legal person         0.52%      3,558,797             -3,025,951  0       3,558,797   -          0
     Strategicinvestors or legal result of the placement of newNo
     sharesto become a top 10 shareholders(if have)(see note 3)
     The explanation  for  the  associated  relationship  and Among the top 10 shareholders, Yantai Changyu Group Company Limited has no
     accordantaction                                      associated relationship or accordant action relationship with the other 9 listed shareholders,
                                                         andthe relationship among the other shareholders is unknown.
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
                                                 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.                                                                  21,090,219 B                        21,090,219
    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
    GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED                                   6,881,493 B                         6,881,493
    FIDELITY PURITAN TRUST: FIDELITY SERIES INTRINSIC                              6,100,762 B                         6,100,762
    OPPORTUNITIES FUND
    CENTRAL HUIJIN ASSET MANAGEMENT LTD.                                         4,761,200 A                         4,761,200
    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
    NORGES BANK                                                                        3,558,797 B                         3,558,797
    The explanation for the associated relationship and accordant action of the top 10 Among the top 10 shareholders, Yantai Changyu Group Company
    shareholders  with  unrestricted  shares,  the  the  associated  relationship  andLimited  has  no  associated  relationship  or  accordant  action
    accordant action between the top 10 shareholders with unrestricted shares and the relationship with the other 9 listed shareholders, and the relationship
    top 10 shareholders                                                       among the other shareholders is unknown.
    Explanation for the top 10 shareholders who involved in financing activities and The top 10 shareholders do not involve in financing activities and
    stock trading business (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.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    (2) Situation for the controlling shareholders of the Company
    
    Property of holding shareholders: Property of holding main body undefined
    
    Type of holding shareholders: Legal representative
    
    Name of controlling shareholder             Legal          Establishment Organization     Main business
                                             representative   date         code
                                                                                         Production and distribution of wine,
                                                                                         healthy  liquor, distilled liquor and
    Yantai Changyu Group Co. Ltd.             Sun Liqiang    1997.04.27   91370600265645 non-alcohol beverages, planting of
                                                                         8244            agricultural  products  and  export
                                                                                         business   under   the   scope   of
                                                                                         permission.
    Equity situation for the other domestic listed
    companies  controlled  or  shared  by  the
                                             No.
    controlling  shareholders  during  the  report
    period
    
    
    Changes in the controlling shareholder during the report period
    
    □Available ?Not available
    
    There are no changes in the controlling shareholder during the report period.
    
    (3) Situation for the actual controllers of the Company
    
    Property of actual controllers: domestic other institutions; foreign other institutions
    
    Type of actual controllers: Legal representative
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    Name     of     actual Legal        Establishment Organization  Main business
    controllers              representative date         code
                                                                   Understate permission, property investment, tenancy of machine and facility,
    Yantai Yuhua Investment Jiang Hua    2004.10.28   76779294-7 wholesale and retail of construction material, chemical products (chemical
    & Development Co. Ltd                                         hazard  products  excluded),  hardware  and  electronical  products,  grape
                                                                   plantation.
                                                                   Directly or indirectly conduct the production and distribution of food
    ILLVA Saronno Holding Augusto      1984.07.25   -           products (alcoholic products included) as well as industrial, commercial,
    Spa                    Reina                                  financial and service activities of any other kinds through joint-stock
                                                                   companiesand organizations
                                                                   International Finance Corporation is one of the members of World Bank,
                                                                   mainly dedicated to investment in private sectors of developing countries
    International     Finance Philippe   LE                           while providing technical support and consultation service. The corporation
    Corporation             HOUEROU  1956.07.25   -           is a multilateral financial institution that ranks first in the world in terms of
                                                                   providingcapital stock and loans to developing countries. Its purpose is to
                                                                   promotesustainable investments of private sectors of developing countries in
                                                                   orderto alleviate poverty and improve people?s life.
                                                                   Operatingmanagement of state-owned property right (stock right) authorized
                                                                   by State-owned Assets Supervision and Administration Commission of
                                                                   Yantai  Municipal  Government;  Financing,  investment  and  operating
                                                                   management of government projects, such as strategic investment and
    Yantai         Guofeng                                        industrial investment and so on; Capital operation (including acquisition,
    Investment Holdings Co., Chen Dianxin 2009.02.12   00426068-6   reintegration and transfer, etc) of state-owned property right and state-owned
    Ltd                                                            stock right within the scope of authorization; Venture capital investment
                                                                   business; Agency of venture capital investment business of other venture
                                                                   investment enterprises or individuals; Participation in the establishment of
                                                                   venture capital  investment  enterprises  and  venture  capital  investment
                                                                   management consultant  institutions;  Investment  and  financing  service
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
                                                                   business; Investment and financing consultant business; Other business
                                                                   authorized  by  State-owned  Assets  Supervision  and  Administration
                                                                   Commission  of  Yantai  Municipal  Government.(Projects  need  to  be
                                                                   authorizedin accordance with the law could carry out business activities only
                                                                   afterthe approval of relevant departments )
    Equity  situation for the
    other   domestic   listed
    companies controlled by No
    the   actual   controller
    during the report period
    
    
    Changes of the actual controllers during the report period
    
    □Available ?Not available
    
    There are no changes in actual controllers during the report period.
    
    Introduction for property right and control relations between the Company and its actual controllers
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    Yantai Guofeng Investment
    
    Illva Saronno Holding Spa Holdings Co., Ltd
    
    Actual controller controls the Company through a trust or other asset management ways
    
    □Available ?Not available
    
    (4) Other institutional shareholders holding more than 10% shares
    
    □Available ?Not available
    
    (5) Shares reduction situations of holding shareholders, actual controllers, restructuring side and other commitment subjects
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    □Available ?Not available
    
    VII. Related Situation of Preferred Shares
    
    □Available ?Not available
    
    There are no preferred shares during the report period.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VIII. Situation for Directors, Supervisors, Senior Management and Staff
    
    1. Changes in shareholdings of directors, supervisors and senior management
    
                                                                                Shares   Increased Decreased
                                                          Beginning   Ending   held at the  shares    shares     Other   Shares held at
        Name           Post          Status   Gender Age date of the date of the beginning   during  during the changes of the end of the
                                                             post       post      of the      the     period  shares held    period
                                                                                 period    period
    Sun Liqiang   Chairman to the    present    M
                  Boardof Directors                   70  1997.09.18 2019.05.27         0        0         0         0             0incumbent
                  Vice-chairmanto
    Zhou         the Board of       present    M
    Hongjiang    Directors and                       53  2002.05.20 2019.05.27         0        0         0         0             0incumbent
                  Generalmanager
                  Directorand       present
    Leng Bin     Vice-general                 M     55  2000.08.22 2019.05.27         0        0         0         0             0
                  manager          incumbent
                  Directorand       present
    Qu Weimin   Secretary to the              M     60  1997.09.18 2019.05.27         0        0         0         0             0
                  Boardof Directors incumbent
    Zhang Ming   Director           present    M     44  2016.05.26 2019.05.27         0        0         0         0             0
                                   incumbent
    Chen Jizong   Director           leaving the M     42  2013.05.14 2016.05.26         0        0         0         0             0
                                   post
    Augusto      Director           present    M
    Reina                                            77  2006.12.07 2019.05.27         0        0         0         0             0incumbent
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    Aldino        Director           present    M
    Marzorati                                        65  2006.12.07 2019.05.27         0        0         0         0             0incumbent
    Antonio      Director           present    M
    Appignani                                       79  2006.12.07 2019.05.27         0        0         0         0             0incumbent
    Dai Hui      Director           leaving the F      52  2010.09.01 2017.06.15         0        0         0         0             0
                                   post
    Wei Anning   Director           present    M     54  2017.06.15 2019.05.27         0        0         0         0             0
                                   incumbent
    Wang        Independent       present    M
    Zhuquan      director                            52  2014.05.23 2019.05.27         0        0         0         0             0incumbent
    Wang Shigang Independent       Present    M
                  director                            52  2011.05.10 2019.05.27         0        0         0         0             0incumbent
    Luo Fei       Independent       Present    M
                  director                            65  2016.09.23 2019.05.27         0        0         0         0             0incumbent
    Liu Yan      Independent       Present    F
                  director                            44  2016.09.23 2019.05.27         0        0         0         0             0incumbent
    Kong         Chairman to the    present
    Qingkun      Board of                    M     45  2013.05.14. 2019.05.27         0        0         0         0             0
                  Supervisors       incumbent
    Zhang Lanlan Supervisor        present    F      48  2013.05.14. 2019.05.27         0        0         0         0             0
                                   incumbent
    Liu Zhijun    Supervisor        present    M     37  2016.05.26 2019.05.27         0        0         0         0             0
                                   incumbent
    Sun Jian      Vice-general       present    M     51  2006.03.22 -          0         0        0         0         0
                  manager          incumbent
    Yang Ming   Vice-general       present    M
                  manager                           59  1998.08.12      -              0        0         0         0             0incumbent
    Li Jiming     Chief engineer     present    M     51  2001.09.14      -              0        0         0         0             0
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
                                   incumbent
    Jiang Hua     Vice-general       present    M
                  manager                           54  2001.09.14      -              0        0         0         0             0incumbent
    Jiang Jianxun Finance manager   present    M     51  2002.05.20      -              0        0         0         0             0
                                   incumbent
    Total                 --             --       --    --      --         --             0        0         0         0             0
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    2. Changes in the Company’s directors, supervisors and senior management
    
    ?Available □Not available
    
        Name       Position             Type                 Date         Reason
                               Leavingthe post owing to
     Dai Hui       Director    expiration of the term of      2017.06.15           -
                               office
    
    
    3. Situation for work experience
    
    The professional background, main work experiences and present positions of the Company?s
    
    directors, supervisors and senior management
    
    (1) Members of Board of Directors
    
    Mr. Sun Liqiang, male, 70, Chinese, with college degree, senior economist, was the
    
    representative of the 10th and 11th National People?s Congress. From 18th September, 1997 to
    
    10th January, 2018, he had served as chairman of the Company, and concurrently chairman
    
    and general manager of Changyu Group. He has been director of the Company since then to
    
    disclosure day of this report .
    
    Mr. Zhou Hongjiang, male, 53, Chinese, with doctor degree, senior engineer, was the
    
    representative of the 12th National People?s Congress, vice general manager of the Company
    
    and general manager of the Sale Company. From 20th May, 2002 to 10th January, 2018, he
    
    served as director, vice-chairman and general manager of the Company and concurrently
    
    vice-chairman of Changyu Group. He has been chairman of the Company, chairman and
    
    party secretary of Changyu Group since then to disclosure day of this report; he is the
    
    representative of the 13th National People?s Congress now.
    
    Mr. Leng Bin, male, 55, Chinese, with master degree, senior accountant, was vice section
    
    chief and section chief of Yantai Audit Bureau, he served as director and vice general
    
    manager of the Company from 15th June, 2000 to 10th January, 2018. He has been director of
    
    the Company, and concurrently general manager and vice party secretary of Changyu Group
    
    since then to disclosure day of this report.
    
    Mr. Qu Weimin, male, 60, Chinese, bachelor of engineering,senior economist, worked at
    
    Yantai Commission for Restructuring the Economic System and Research Office of Yantai
    
    Government and has 20 years of experience in the aspect of macroeconomic study and
    
    enterprise operation and management, he was vice general manager of the Company. He has
    
    been served as director and concurrently secretary to the board of directors of the Company
    
    since 18th September, 1997.
    
    Mr. Zhang Ming, male, 44, Chinese, with bachelor degree, senior engineer, is now chairman
    
    of Yantai Guofeng Investment Holding Co., Ltd. He was planner of Yantai Synthetic Leather
    
    General Factory, plan specialist of business department, deputy section chief of plan and
    
    statistic section in assets management department and section chief of plan and statistic
    
    section in assets management department in Yantai Wanhua Synthetic Leather Group Co.,
    
    Ltd, risk control section chief of Yantai Guofeng Investment Holding Co., Ltd. and
    
    concurrently director and vice general manager of Yantai Guoyu Finance Lease Co., Ltd, vice
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    general manager and secretary to the board of directors of Wanhua Efficient Technology
    
    Group Co., Ltd. and general manager of Yantai State-owned Asset Management Co., Ltd.
    
    Mr. Augusto Reina, male, 77, Italian, is now serving as chief executive officer of several
    
    companies including Illva Saronno Holding SpA and Illva Saronno Investment SRL, member
    
    of the board of directors of Barberini Spa, director of Federvini (Italian Alcohols Production
    
    and Export Association), director of Istituto Del Liquore (Wine Research Institute), director
    
    of Assovini (Sicily Viniculture and Wine Production Association) and director of Changyu
    
    Group. He has been director of the Company since 27th April, 2006.
    
    Mr. Aldino Marzorati, male, 65, Italian, with bachelor degree, is now the general manager of
    
    Illva Saronno Holding SpA and director of the board of directors of some branches under the
    
    group company and the director of Changyu Group. He has been director of the Company
    
    since 27th April, 2006.
    
    Mr. Antonio Appignani, male, 79, Italian, with bachelor degree, is vice chairman of Italian
    
    Business Consultation Committee, chief of Professional Ethics Committee, teacher of
    
    vocational training course of Industrial and Commercial Consultation Committee, member of
    
    Economic and Commercial Committee of the public university “G. D Annunzio” and
    
    concurrently serving as member of the board of directors of different companies and member
    
    of the board of directors of several companies under Illva Group and the director of Changyu
    
    Group.
    
    Mr. Wei Anning, male, Chinese, 54, with doctor degree, ever served as agricultural
    
    economist of the World Bank, director of North East Asia Food & Agribusiness Research of
    
    the Rabobank, China CEO of the Fortis Bank Belgium, executive deputy president of the
    
    New Hope Group (Sichuan), president of Shandong Liuhe Group, chairman of the Shandong
    
    Chinwhiz Group. He is good at corporate governance, enterprise development strategy and
    
    equity investments. Now, he is serving as executive director and general manager of
    
    Shanghai Gueva Fund Management Co., Ltd Co., Ltd, executive director of both Ningxia
    
    Gueva Fund Management Co., Ltd and Ningbo Gueva Fund Management Co., Ltd,
    
    independent director of Dachan Food (Asia) Co., Ltd, Orient Securities Co., Ltd and Fortune
    
    SG Fund Management Co., Ltd. Besides, he is also serving concurrently as director of
    
    Xinjiang Kuntai Group Co., Ltd, Jiangsu Financial leasing Co., Ltd and Hangzhou United
    
    Rural Commercial Bank Co., Ltd,. He is serving as director of the Company.
    
    Mr. Wang Shigang, male, 52, Chinese, MBA and Certified Public Accountant, is now the
    
    board chairman of Shandong Tianhengxin Construction Cost Consultation Co. Ltd.. He
    
    previously served as independent director of the Company. He acts as the independent
    
    director again from 14th May, 2013.
    
    Mr. Wang Zhuquan, male, 52, Chinese, doctor of management (accountancy), first batch of
    
    national accounting academic leading personals of Financial Department, the entrant of
    
    accountant master cultivation project of Financial Department, outstanding teacher of
    
    Shandong province, Government Special Allowance expert, acted as independent director
    
    from 13th May, 2010 to 12th May, 2013. Now he is the professor and the doctoral supervisors
    
    of the Ocean University of China as well as independent director of the some listed
    
    companies which could be exemplified as Qingdao DoubleStar Co., Ltd. He acts as the
    
    independent director of the Company again from 23rd May, 2014.
    
    Mr. Luo Fei, male, 65, Chinese, with doctor degree, visiting scholar of University of Toronto,
    
    doctoral supervisors, Government Special Allowance expert, first batch of trans-century
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    subject (academic) leading personals of Financial Department. He successively served as the
    
    dean of accounting college in Zhongnan University of Economics and the dean of accounting
    
    college in Zhongnan University of Economics and Law. He focuses on the study of financial
    
    accounting, cost accounting, financial management, and so on. He has worked in companies
    
    for many years and has practical working experience with companies. Now he is serving as
    
    independent director of the Company.
    
    Ms. Liu Yan, female, 44, Chinese, with master degree, was honored as national outstanding
    
    lawyer in 2005. Her main practice areas include issuing and listing of domestic and foreign
    
    stocks, merger and acquisition and foreign investment. She now is the partner of Tian Yuan
    
    Law Firm and serving as independent director of the Company.
    
    (2) Members of board of supervisors
    
    Mr. Kong Qingkun, male, 45, Chinese, MBA and economist, served as the section member of
    
    production department in the healthy liquor branch office, clerk and vice director of general
    
    manager office. He now is director of general manager office.
    
    Ms. Zhang Lanlan, female, 48, with bachelor degree and economist, served as vice-manager
    
    of the Company?s import/export company, manager of import department. She now is
    
    director of board of directors? office.
    
    Mr. Liu Zhijun, male, 37, Chinese, with bachelor degree, worked in foreign fund section of
    
    Economy and Trade Bureau in Longkou economic development zone, served as news section
    
    member of propaganda department in Longkou Municipal Committee, member of
    
    propaganda and mass work section, member of planning section, vice-director member of
    
    programming development and enterprise distribution section, vice-director member and
    
    deputy chief of programming development section. He now is supervisor of the Company.
    
    (3) Other senior managers
    
    Mr. Sun Jian, male, 51, Chinese, MBA and economist, served as vice general manager of the
    
    Company from 22nd March, 2006 to 10th January, 2018. He has been general manager of the
    
    Company and concurrently director of Changyu Group since then to disclosure day of this
    
    report.
    
    Mr. Yang Ming, male, 59, Chinese, with bachelor degree, application researcher, he served as
    
    vice general manager of the Company from 12th August, 1998 to 28th February, 2018. Since
    
    then, he will not take any position in the company.
    
    Mr. Li Jiming, male, 51, Chinese, with doctor degree, application researcher, has been
    
    serving as chief engineer of the Company since 14th September, 2001 and concurrently
    
    director of Changyu Group.
    
    Mr. Jiang Hua, male, 54, Chinese, with master degree, senior engineer, has been serving as
    
    vice general manager of the Company since 14th September, 2001.
    
    Mr. Jiang Jianxun, male, 51, Chinese, MBA and accountant, served as Financial Manager of
    
    the Company from 20th May, 2002 to 10th January,2018. He has been chief financial officer
    
    of the Company since then to disclosure day of this report.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    Post in the shareholder?s company
    
    ?Available □Not available
    
                                                                                  Beginningdate  Ending date of      Paid by
                 Name                 Shareholder?s Company           Post         of the post       the post      shareholder?s
        companyor not
    Sun Liqiang                    Yantai Changyu Group Co. Ltd. Cgehnaeirramlamnaannadger2013.10.08     2018.01.10     No
    Zhou Hongjiang                 Yantai Changyu Group Co. Ltd. Vice chairman    2013.10.08     2018.01.10     No
    Li Jiming                       Yantai Changyu Group Co. Ltd. Director         2013.10.08     2022.01.10     No
    Sun Jian                        Yantai Changyu Group Co. Ltd. Director         2013.10.08     2022.01.10     No
    Zhang Ming                    Yantai Changyu Group Co. Ltd. Director         2013.10.08     2022.01.10     No
    Augusto Reina                  Yantai Changyu Group Co. Ltd. Director         2013.10.08     2022.01.10     No
    Aldino Marzorati                Yantai Changyu Group Co. Ltd. Director         2013.10.08     2022.01.10     No
    Antonio Appignani              Yantai Changyu Group Co. Ltd. Director         2013.10.08     2022.01.10     No
    Wei Anning                    Yantai Changyu Group Co. Ltd. Director         2017.04.18     2022.01.10     No
                                   Mr. Zhou Hongjiang serves as the position of chairman in the shareholders company from 10th January,
    Explanation for the post in the              th
                                   2018 to 10  January, 2022. Mr. Leng Bin serves as the position of general manager in the shareholders
    shareholder?s company                          th                  th
                                   company from 10  January, 2018 to 10  January, 2022.
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    Post at other companies
    
    ?Available □Not Available
    
                                                                                      Beginning  Ending date of   Paid by other
                 Name                    Other?s company        Post at other company date of the     the post     company or not
                                                                                         post
                                   Yantai Changyu Zhongya       Director and
    Leng Bin                       Medicine & Healthy Liquor Co., legal representative    2012.09.10               No
                                   Ltd
    Explanation for the post in the
                                   No.
    shareholder?s company
    
    
    Disciplinary actions taken by securities regulators in recent 3 years to the Company?s directors, supervisors and senior management both on the
    
    job and left during the report period
    
    □Available ?Not available
    
    4. Salary of directors, supervisors and senior management
    
    Decision-making process, the basis of determination, the actual payment of directors, supervisors and senior management
    
    The salary for the independent directors is paid according to the resolution of shareholders? meeting. The salary for the chairman, directors with
    
    administration duty, supervisors, managers and other senior management should be paid on basis of the evaluation result according to the
    
    Proposal on Assessment Methods of the Company’s Senior Officers’ Performance from 2014 to 2017 which was passed during the Board of
    
    Directors? meeting.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    Salary of directors, supervisors and senior management during the report period
    
    Unit: CNY?0000
    
                                                                                                  Total reward from    Whether get
              Name                       Post               Gender    Age          Status          the Company      reward from
                                                                                                      beforetax     related parties of
        the Company
    Sun Liqiang               Chairman to the Board of       M
                              Directors                                     70 present incumbent              143.00 No
    Zhou Hongjiang           Vice-chairman to the Board of   M
                              Directorsand general manager                   53 present incumbent              143.30 No
    Leng Bin                 Director and vice-general       M
                              manager                                      55 present incumbent               97.16 No
    Qu Weimin               Director and Secretary to the     M
                              Boardof Directors                             60 present incumbent               97.70 No
    Zhang Ming               Director                      M              44 present incumbent                   0 No
    Chen Jizong               Director                      M              42 leaving the post                      0 No
    Augusto Reina            Director                      M              77 present incumbent                   0 No
    Aldino Marzorati          Director                      M              65 present incumbent                   0 No
    Antonio Appignani         Director                      M              79 present incumbent                   0 No
    Dai Hui                   Director                      F               52 leaving the post                      0 No
    Wei Anning               Director                      M              54 present incumbent                   0 No
    Wang Zhuquan            Independent Director           M              52 present incumbent                   8 No
    Wang Shigang             Independent Director           M              52 present incumbent                   8 No
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    Luo Fei                   Independent Director           M              65 present incumbent                   8 No
    Liu Yan                  Independent Director           F               44 present incumbent                   8 No
    Kong Qingkun            Chairman to the Board of       M
                              supervisors                                   45 present incumbent               69.91 No
    Zhang Lanlan             supervisor                     F               48 present incumbent               20.02 No
    Liu Zhijun                supervisor                     M              37 present incumbent                   0 No
    Sun Jian                  Vice-general manager          M              51 present incumbent               94.79 No
    Yang Ming                Vice-general manager          M              59 present incumbent               91.33 No
    Li Jiming                 Chief Engineer                M              51 present incumbent               87.17 No
    Jiang Hua                 Vice-general manager          M              54 present incumbent               89.44 No
    Jiang Jianxun              Finance manager               M              51 present incumbent               65.11 No
    Total                                   -                   -         -              -                   1,030.93        -
    
    
    The awarded equity incentives for the directors, supervisors and senior management of the Company during the report period
    
    □Available ?Not available
    
    5. Staff of the Company
    
    (1) Staff number, specialty constitution and education degree
    
     Incumbentstaff number of parent company (people)                                                                            1,536
     Incumbentstaff number of major subsidiary companies (people)                                                                  2,504
     Total incumbent staff (people)                                                                                               4,040
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
     Total staff getting paid in current period (people)                                                                               4,040
     Retired staff number whose expenses are undertaken by parent                                                                       0
     companyor subsidiary companies (people)
                                                           Specialtyconstitution
                                Category                                                 Number of people (people)
     Production staff    1,140
     Sales staff    2,325
     Technicalstaff    158
     Financialstaff    184
     Administrative staff    233
     Total    4,040
                                                             Educationdegree
                                Category                                                     Number (People)
     Bachelorand above    1,243
     Junior College    1,670
     Technicalsecondary school                                                                                                   669
     Senior high school and below                                                                                                  458
     Total    4,040
    
    
    (2) Remuneration policy
    
    The Company builds and improves the remuneration and welfare system, including salary system, incentive mechanism, social security and
    
    health insurance and so on, to make sure that all staff could be insured. In accordance with the law, the Company buys social old-age insurance,
    
    medical insurance, occupational injury insurance, unemployment insurance and maternity insurance, and pay housing fund for staff. Based on
    
    the principle of “distribution according to work, equal pay for equal work”, the Company pays the staff?s remuneration timely. With the increase
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    of the Company?s profitability, the Company steadily improves the staff?s remuneration
    
    and welfare, and provides the competitive salary income and development space of
    
    equal opportunity for staff.
    
    (3) Training plan
    
    In order to further improve the employees? comprehensive quality and professional skill,
    
    the 2018 training plan for the Company?s major employee is shown as follows:
    
    ① Senior and Middle-level Managers
    
    1) Commonality training
    
    Professional lecturers would be employed to take intensive class in the company or
    
    through remote internet videos in order to give training for senior administrative staff.
    
    This training would be held once a quarter, 1-2 days for each time.
    
    2) Professional training
    
    Based on their respective work, organize them to attend Entrepreneur High-end Forum
    
    and Summit Meeting and go to domestic and foreign successful enterprise for visit and
    
    study. Attend special training at least twice a year, such as safety, technology, facility,
    
    finance, WSET, tourism etc which are organized by special management department.
    
    Encourage middle-level administrative staff to attend university correspondence,
    
    self-study examination, MBA or other further education for master degree; organize
    
    professional management cadres, involved in human resources, finance, facility, safety
    
    and technology quality etc, to attend vocational qualification examination for
    
    professional certificate.
    
    ② Section Chief and Ordinary Staff Members
    
    1) Commonality training
    
    This training would be held twice a year, one day course for each time. Professional
    
    lecturers or university teachers would be employed to give lectures in the company.
    
    Attend training including company culture, regulatory framework and various liquor
    
    products knowledge; reinforce training in the aspect of human resources management.
    
    Organize employee to attend outdoor quality expansion training once a year, one or two
    
    days for each time.
    
    2) Professional training
    
    Based on personnel work, attend special training at least twice a year, such as safety,
    
    technology, facility, finance, tourism, integrated management etc, which are organized
    
    by special management department. Encourage eligible general administrative staff to
    
    attend university correspondence, self-study examination, MBA or other further
    
    education for master degree; organize professional administrative staff, involved in
    
    human resources, finance, facility, safety and technology quality etc, to attend
    
    vocational qualification examination for professional certificate.
    
    ③ Marketing Personnel
    
    1) Commonality training
    
    Independently study company internal marketing materials, and training material
    
    including related management system, production knowledge, sales responsibility
    
    system etc.
    
    2) Professional training
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    Professional lecturers would be employed to the company or through remote internet
    
    videos to give lectures about successful liquor cases, current economic trend research
    
    for domestic and foreign wine industry and other topic in order to take training for
    
    personnel whose level is or above manager assistant in city marketing management
    
    company. This training is once a quarter, one day for each time. Take closed training
    
    for city marketing manager on how to improve marketing skill as well as executive
    
    force of sales policy by inviting the company’s professional management cadre or
    
    employing professional lecturers to give lectures. This training is once a month, one
    
    day for each time. Take training for business controller and other personnel on
    
    successful marketing cases and marketing management philosophy by employing
    
    lecturers in combination with going out to visit and study. This training is once a
    
    quarter and one day for each time.
    
    (4) Labor outsourcing
    
    □Available ?Not available
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    IX. Corporate Governance
    
    1. Current Corporate Governance Situation of the Company
    
    (1) About shareholders and shareholders’ meeting
    
    The Company has set up the Deliberation Rules of Shareholders’ Meeting, and convened the
    
    shareholders? meetings in strict accordance with requirements of standard opinion of
    
    shareholders? meeting, made the great effort to provide convenient conditions for more
    
    shareholders to participate the shareholders? meeting, and ensured all shareholders to enjoy
    
    same equity and well exercised their rights. The Company drew great attention to the
    
    communication and exchange with shareholders, actively responded the shareholders?
    
    inquiry and questions, and widely listened to the suggestions and comments from
    
    shareholders.
    
    (2) About the Company and holding shareholder
    
    The Company has independent power on business and self-management, and also be
    
    independent of its holding shareholder on business, staff, assets, organization and finance.
    
    The Board of Directors, Board of Supervisors, management team and also internal
    
    organizations operated independently in the Company. The holding shareholder of the
    
    Company could regulate its activities, no other behavior was found that surpassed the
    
    shareholders? meeting to directly or indirectly interfere with the decision-making and
    
    business activities of the Company, or occupied any assets of the Company which damaged
    
    the Company?s and medium & small shareholders? interests.
    
    (3) About the director and board of directors
    
    The Company strictly appoints all directors in light of Company Law and Articles of
    
    Associations. The qualifications of all directors are in line with the requirements of laws and
    
    regulations. In accordance with the requirements of Corporate Governance Guidelines, the
    
    Company has carried out the cumulative voting system. At present, the Company has four
    
    independent directors accounting for about one three of all directors, and the number and
    
    composition of board of directors was basically in accord with requirements of regulations
    
    and also Articles and Associations. All directors of the Company could work in the light of
    
    regulations including Rules of Board of Directors’ Procedure and Working Rules for
    
    Independent Directors, punctually attended board of directors? and shareholders? meetings,
    
    actively took part in relevant knowledge training, knew very well about the laws and
    
    regulations concerned, had a deep knowledge and long experience of practitioners, and
    
    performed their duties according to the law and regulations. The Board of Directors
    
    convened the meetings in accordance with related rules and regulations.
    
    (4) About supervisor and board of supervisors
    
    The Company strictly elected all supervisors in light of Company Laws and Articles of
    
    Associations. At present, board of supervisors has three people among which one supervisor
    
    is representative for staff, the number and composition of board of supervisor was in accord
    
    with requirements of regulations and rules. All supervisors of the Company could follow the
    
    requirement of Rules of Board of Supervisors’ Procedure, insist the principle of
    
    responsibility to all shareholders, seriously perform their duties, effectively supervise and
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    present their independent opinion on important issues, interrelated deals, financial status, the
    
    duty performance of directors and managers of the Company.
    
    (5) About performance evaluation and incentive system
    
    The engagement of managers was open and transparent, and accorded with laws and
    
    regulations. The Company has established and gradually improved the performance
    
    evaluation standard and formed efficient incentive system, so as to ensure the salary of staff
    
    to be linked with job performance.
    
    (6) About stakeholders
    
    The Company could fully respect and safeguard the legal rights of the party with relevant
    
    benefit, cooperate actively with the stakeholders, jointly drive the Company to develop
    
    continually and stably, pay great attention to the issues such as local environmental
    
    protection and public utilities etc., and assume full responsibilities for the social
    
    responsibility.
    
    (7) About the information disclosure and transparency
    
    The Company has appointed the secretary to Board of Directors to be responsible for
    
    investor relation management including information disclosure, investor relations
    
    management and reception of shareholders? visit and consultation. The Company has also
    
    assigned China Securities Newspaper, Securities Times, Honkong Commercial Daily and
    
    web site http://www.cninfo.com.cn/ to disclose information, punctually, accurately and truly
    
    disclosed any information in the light of requirement of relevant laws and rules, and also
    
    ensured all shareholders to have same opportunity to acquire any information.
    
    In order to further perfect the Company?s governance system, during the report period, the
    
    Company formulates and improves Quality Management Method for Changyu Products,
    
    Assessment Method of Safety Management, Risk Hierarchical Control Handbook, Daily
    
    ‘Zero Hidden Danger’ Report System for Larger and Above Risk Point and Work Safety
    
    Contingency Plan;the Company formulates Opinion of Further Reinforcing Internal Control
    
    Management in Production Process, Finance Accounting and Management Method of
    
    Changyu Self-supporting Grape Base, Opinion about Improving Cork Allocation of Changyu
    
    Products,Opinion about Improvement in Equipment and Facilities Affecting Products’
    
    Internal Quality, Establishment and Implement of Traceability System of Changyu Products’
    
    Quality Safety and so on.
    
    Whether or not there is significant variance between the Company?s actual situation of
    
    corporate governance and the normative documents about listed company governance issued
    
    by China Securities Regulatory Commission.
    
    □Yes ?No
    
    There is no significant variance between the Company?s actual situation of corporate
    
    governance and the normative documents about listed company governance issued by China
    
    Securities Regulatory Commission.
    
    2. Relative to the controlling shareholder, independence of the Company on business,
    
    personnel, assets, organization and finance
    
    (1) Personnel Arrangement
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    The Company?s general manager, vice general managers and other senior officers, all of
    
    whom were paid by the Company and did not hold any post in the controlling parties. The
    
    Company was entirely independent in personnel arrangement, conclusion and adjustment of
    
    labor contracts thanks to its sound and independent system for labor, personal and salary
    
    management.
    
    (2) Assets:
    
    Tangible assets and Intangible assets including trademark, industrial property right and
    
    non-patent technologies were all clearly divided between the Company and the controlling
    
    shareholder, and all legal formalities were completed. The Company being a legal
    
    independent entity consistently conducted business activities legally and provided no
    
    guarantee in any form with its assets for its shareholders or individuals? liabilities or any
    
    other legal persons or natural persons. The Company owns trademarks including “黄金冰谷”,
    
    “爱斐堡”, “爱菲堡”, “爱斐” and “AFIP”, etc. However, due to some issues from the past,
    
    the Company permitted to use “Changyu” etc the intangible assets such as part of trademark
    
    ownership and patent still held by the controlling shareholders.
    
    (3) Finance
    
    The Company has independent finance department, chief account and financial staff, and also
    
    complete, independent and standardized accounting system. The Company has also
    
    established its own bank accounts, duly and legally paying taxes, workers insurance fund. All
    
    financial individuals do not hold any concurrent posts in associated companies and are able to
    
    make financial decisions independently. The Company has its own audit department, which is
    
    especially responsible for the internal audit work of the Company.
    
    (4) Offices
    
    The Company has set up a sound organizational framework, in which the Board of Directors
    
    and Board of Supervisors operate independently, no superior and subordinate relationship
    
    exists between the functional departments of the controlling shareholder. The Company has
    
    its own independent production & business offices, all functional departments are
    
    independent to exercise their powers and carry out the production and business activities
    
    independently.
    
    (5) Operations
    
    The operations of the Company are independent of the controlling shareholder. The Company
    
    owns itself completely independent systems covering research and development, accounting,
    
    workforce and labor, quality control, raw materials purchase, production and sales, and is
    
    possessed of self-run capabilities, and has neither relationship with the controlling
    
    shareholder in terms of supply and sales by proxy nor competition with the other.
    
    3. Situation for Horizontal Competition
    
    □Available ?Not available
    
    4. Information for the shareholders’ meeting and temporary shareholders’ meeting held
    
    during the report period
    
    (1) Information for the shareholders’ meeting during the report period
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
                             Participation  Convening  Disclosure
       Session   Meeting type   ratio of       date        date        Disclosure Index
                               investors
     2016Annual    Annual                                     http://www.cninfo.com.cn
    Shareholders? shareholders? 61.86%     2017.06.15  2017.06.16 Notice of 2016 Annual
       Meeting     meeting                                     Shareholders? Meeting
                                                               Resolution
    
    
    (2) Request for convening temporary shareholders’ meeting by priority shareholders
    
    owing recovered voting right
    
    □Available ?Not available
    
    5. Performance of independent directors during the report period
    
    (1) Attendance of independent directors for the board of directors and the shareholders’
    
    meeting
    
                  Attendance of independent directors for the board of directors
                                                                  Whether  Attendance
                                                                  ornot to  time for the
             Required                                            attend the shareholders?
     Name  attendance Personal Communication Authorized Absence meetings    meeting
               time   attendance   attendance   attendance         personally
                                                                    for
                                                                 successive
                                                                   twice
    Wang   6         2         4             0                0 No       1
    Shigang
    Wang   6         2         4             0                0 No.       1
    Zhuquan
    Luo Fei 6         2         4             0                0 No.       1
    Liu Yan 6         1         4             1                0 No.       1
    
    
    Explanation for failed to personally attend the Board of Directors? meetings for successive
    
    two times
    
    No
    
    (2) Any objections for the Company’s projects from the independent directors
    
    Whether or not the independent directors raised any objection for the Company?s projects
    
    □Yes ?No
    
    During the report period, the independent directors did not raise any objections for the
    
    Company?s projects.
    
    (3) Other explanations on independent directors’ performance
    
    Whether or not the independent directors? propositions are accepted by the Company
    
    ?Yes □No
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    Explanation on acceptance or refusal of the independent directors? propositions to the
    
    Company
    
    During the report period, some independent directors propose suggestions on prudent
    
    investment in tourism project of Changyu International Wine City. They thought that it is a
    
    higher risk in the current background of slower growth of domestic economy. The Company
    
    accepted the independent directors? opinions and decided to suspend construction of the project.
    
    6. Performance of the special committees under the Board of Directors during the
    
    report period
    
    ? On 23rd March, 2017, after the certified public accountants responsible for annual audits
    
    had introduced their preliminary opinions, the independent directors on behalf of the Audit
    
    Committee communicated with them and made written comments which read that “we
    
    communicated in detail with the certified public accountants responsible for auditing of the
    
    Company?s 2016 Annual Report who expounded the main standards, main emphasis audited
    
    field, the problems and the matters necessary to adjust that were found during the auditing.
    
    We?ve noticed that the Company has adjusted the matters as the accountants suggested. On
    
    the basis of our communication results with the accountants, the production and operation
    
    situations that the Company?s management reported to us as well as the progress of important
    
    events, we believe that we have no objection to the Company?s 2016 Annual Financial
    
    Statement preliminarily examined by Deloitte Hua Yong Certified Public Accounts Co., Ltd.
    
    and the preliminary audit opinions of that services.”
    
    ? On 20th April 2017, the Board of Directors? Audit Committee deliberated and passed 2016
    
    Annual Audit Report, Draft Proposal on 2016 Annual Profit Distribution, Proposal on
    
    Renewal of Contract with the Present Certified Public Accountants firm, 2016 Annual
    
    Self-assessment Report on Internal Control and 2017 Internal Audit Plan issued by Deloitte
    
    Hua Yong Certified Public Accounts Co., Ltd.
    
    All of committee members unanimously agree to submit the above proposals to the
    
    Company?s 7th Session Board of Directors 4th Meeting for deliberation. The meeting reached
    
    the following consensus:
    
    (A) The clean-opinion auditing report on the Company?s 2016 Annual Financial Statement
    
    issued by Deloitte Hua Yong Certified Public Accounts Co., Ltd reflects the Company?s
    
    financial condition, operating results and cash flow truly, objectively and correctly.
    
    (B) The profit distribution scheme that the Company formulated is relatively acceptable, taking
    
    the shareholders? interest into account while paying attention to the Company?s long-term
    
    development.
    
    (C) Considering the strict maintenance of objective and fair standpoint as well as the high
    
    audit quality and reasonable arrangement for audit progress during the process of the
    
    Company?s 2016 annual financial audit and internal control audit taken by Deloitte Hua
    
    Yong Certified Public Accounts Co., Ltd, it is proposed that the Company will reappoint
    
    Deloitte Hua Yong Certified Public Accounts Co., Ltd as the 2017 annual auditor of the
    
    Company. The employment period is one year and the audit will be taken from two aspects
    
    shown as follows.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    On one hand, it is to take the audit of 2017 annual financial report and issue a Financial Audit
    
    Report. On the other hand, it is to take the audit of 2017 annual internal control and issue an
    
    Internal Control Audit Report.
    
    The annual auditing fee for the above parts is CNY 1.98million, including travel expense and
    
    all service charges.
    
    (D) The Company?s 2016 Self-assessment Report on Internal Control has truly and
    
    objectively mirrored out the present standing of the Company?s internal control and can
    
    basically ensure the effective implementation of its policies and realization of its strategic
    
    goals.
    
    (E) The Company?s 2017 Internal Audit Plan is comparatively perfect and practicable, based
    
    on which the Company?s Audit Department will conduct the 2017 annual internal audit.
    
    ? On 25th August 2017, the Board of Directors? Audit Committee deliberated and passed
    
    2017 Semiannual Report and Proposal on 2017 Semiannual Profit Distribution. The meeting
    
    reached the following consensus:
    
    The Company?s 2017 Semiannual Financial Statements reflected the Company?s financial
    
    condition, operating results and cash flow truly, objectively and correctly.
    
    As the Company just realized 2016 Annual Profit Distribution Scheme in middle July, we
    
    propose neither to distribute profits for the first half of 2017 nor to increase the Company?s
    
    capital stock with accumulated public fund. The net profit made in the first half of this year will
    
    be reserved and distributed at the end of the year. Our Auditing Committee considers the
    
    suggestion to be reasonable.
    
    All of Committee members unanimously agree to submit the above proposals to the
    
    Company?s 7th Session Board of Directors 5th Meeting for deliberation.
    
    (2) Summary report of the Board of Directors’ Emolument Committee regarding
    
    performance of duties
    
    The Board of Directors? Emolument Committee is responsible for assessment of the economy
    
    responsibilities of the directors and the senior managers who receive salaries from the
    
    Company and examination of the salary policy and scheme designed for the Company?s
    
    directors and senior managers.
    
    ? Proposal on 2016 Assessment Results of the Company’s Senior Officers’ Performance was
    
    deliberated and passed by the Board of Directors? Emolument Committee on 20th April 2017,
    
    who thought that this document was in compliance with Performance Assessment Methods
    
    for Company’s Senior Executive from 2014 to 2017 approved by the Company?s 6th Session
    
    Board of Directors? 4th Meeting.
    
    All committee members unanimously agree to submit the above proposals to the Company?s
    
    7th Session Board of Directors 4th Meeting for deliberation.
    
    ?During the report period, the Board of Directors? Emolument Committee also examined the
    
    2016 annual payroll records of the directors and the senior managers who receive salaries
    
    from the Company and believes that the salaries of the Company?s directors, supervisors and
    
    senior managers received from the Company is strictly assessed and delivered based on the
    
    Company?s economic responsibility assessment system. The salaries disclosed by the
    
    Company are in conformity with the actually paid amount.
    
    7. The work of the Board of Supervisors
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    Whether or not the Board of Supervisors found any existence risk to the Company in
    
    oversight activities during the report period
    
    □Yes ?No
    
    The Board of Supervisors has no objections to supervision matters during the report period.
    
    8. Performance Evaluation and Incentive situations of Senior Management
    
    The Company has already established a sound system for evaluation of achievement of senior
    
    management and the related incentive system which linked the reward with the Company?s
    
    benefit and personal achievement. The Emolument Committee under Board of Directors
    
    assumed the responsibility of stipulating the policy and appraising the scheme for salaries and
    
    rewards. Based on the Company?s annual business planning goals, this committee examined
    
    senior personals and also their responsible subsidiaries or departments according to their
    
    management achievement and index and took these as criterion of awards or penalties.
    
    During the report period, because of not finishing the annual business plan deliberated and
    
    passed in the Board of Directors? meeting at the beginning of the year, the total salaries and
    
    rewards of the senior management are basically equal to that of last year.
    
    9. Internal Control
    
    (1) Specific situations for significant defects of the internal control found during the
    
    report period
    
    □Yes ?No
    
    (2) Self-assessment report on internal controlDisclosure date for full text of the 2018.04.23
    
     internalcontrolself-assessmentreport
     Disclosureindexforfulltextofthe       2016 Self Assessment Report on Internal Control disclosed on
     internalcontrolself-assessmentreport    China Securities Journal, Securities Times and www.cninfo.com.cn
                                      by the Company on 22nd April, 2017.
     Percentageoftotalunitassetsincluded
     inscopeoftheassessmentaccounting                                                          86.03%
     fortheCompany?stotalassetsof
     consolidatedfinancialstatements
     Percentageofunitoperatingincome
     includedinscopeoftheassessment
     accountingfortheCompany?soperating                                                        89.82%
     incomeofconsolidatedfinancial
     statements
                                       StandardsofDefectIdentification
          Category                    Financialreport                        Non-financialreport
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
     Qualitativecriteria     Significant defects: one defect of internal  Significant  defects:  Any  situations  listed
                        control,  individually or together with other  below  appears,  it  can  be  regarded  as
                        defects, has the reasonable probability to cause  significant defects. ? Operation: Unable to
                        the significant misstatements, which can not be  achieve all operation target or key business
                        promptly prevented, or found and corrected  index,  widely out  of  budget  in  various
                        timely inthefinancialreport.  Forexample:?  aspects. ? Safety accident effects: Cause no
                        Company?s Directors, Supervisors and Senior  less than one person death, or more than 3
                        Management have fraudulent practices; ? The  person serious injuries. ? Major negative
                        Company makes corrections for the published  effects:  Negative  information  frequently
                        financial  report; ? The audit of external  appears in the medias with involving a wide
                        intermediary    agent    finds    significant  scope  in  the  international  and  national
                        misstatement existing in the current financial  mainstream media. ? Environment effects:
                        report, but the Company does not realize it  Create irreparable damages to environment,
                        during  the operation process; ? Negative  andcausemassivepubliccomplains.
                        information frequently appears in the medias  Major defects: Any situations listed below
                        with  involving  a  wide  scope;  ?  The  appears, it can be regarded as major defects.
                        Company?s audit committee and internal audit  ?Operation:  Unable  to  achieve  partly
                        department makesaninefficientsupervisionfor  operationtarget,abigmarginoutofbudgetin
                        internal  control; ? Other situations maybe  various aspects. ? Safety accident effects:
                        cause significant misdirection which guides the  Without reaching the person loss or the
                        report userstomaketherightjudgment.        number  of  serious  injury  of  significant
                        Major defects:The defect of internal control,  defects. ? Major negative effects: Negative
                        individually or together with other defects, has  news appears in the media with influencing a
                        the  reasonable  probability  to  cause  the  wide scope in the provincial mainstream
                        significant misstatements, which can not be  media. ? Environment effects: Cause heavy
                        promptly prevented, or found and corrected  environment damages and massive public
                        timely in the financial report, although the  complains, ought to carry out the significant
                        misstatements neither achieves nor exceeds the  remedialmeasures.
                        importance level but still arising the attention  General defects: Any situations listed below
                        of Board of Directors and management team.  appears, it can be regarded as general defects.
                        ?  Failure to select and apply accounting  ?Operation:  Other  effects  unable  to
                        regulations  in  accordance  with  generally  constitute the significant defects or major
                        accepted accounting principles; ? Failure to  defects. ? Safety accident effects: Personal
                        establish the anti-fraud procedures and control  injury less than the quantitative standards of
                        measures; ? Failure to set up corresponding  major defects. ? Major negative effects:
                        control mechanism or to carry out and take  Other  defects  unable  to  constitute  the
                        corresponding  compensating control for the  significant  defects  or  major  defects.  ?
                        accounting  treatments  with  irregular  and  Environment  effects:  Other  environment
                        special deal; ? Negative news appears in the  effects unable to constitute the significant
                        media withinfluencingawidescope;? One or  defectsormajordefects.
                        more defects exist in the control during the
                        process of the ending financial report, and the
                        target of achieving truthfulness and integrality
                        cannot  be  reasonably  guaranteed  in  the
                        financial report; ? General defects refer to the
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
                        other control defects, which do not constitute
                        the significantandmajordefects.
     Quantitativecriterion   Fortotalassets/Owner?sequity:              Fordirectpropertyloss:
                        ? Significantdefects:misstatements ≧1%     ?Significantdefects:MorethanCNY10
                        ?Major defects:0.5%≦misstatements<1%    million
                        ? Generaldefects:misstatements<0.5%        ?Major defects:CNY1million-CNY10
                        For operationrevenue:                     million(including1million)
                        ? significantdefects:misstatements ≧1%     ?Generaldefects:LessthanCNY1million
                        ?Major defects:0.5%≦misstatements<1%
                        ? Generaldefects:misstatements<0.5%
                        For pretaxprofit:
                        ? Significantdefects:misstatements ≧5%
                        ?Major defects:2%≦misstatements<5%
                        ? Generaldefects:misstatements<2%
     Number of significant                                                                           0
     defect  in  financial
     report
     Number of significant                                                                           0
     defectin non-financial
     report
     Number  of   major                                                                           0
     defect  in  financial
     report
     Number  of   major                                                                           0
     defectin non-financial
     report
    
    
    10. Internal control audit report
    
    ?Available □Not available
    
                           Audit opinions of the internal control audit report
    We believe that Yantai Changyu Pioneer Wine Co., Ltd. kept effective internal control to financial
    report in all significant aspects in accordance with General Criteria of Company’s Internal Control
    and other related rules on 31st December, 2017.
    Disclosure of the internal control audit
                                          Disclosure
    report
    Disclosure date for the full text of the        rd
                                          23  April, 2018
    internal control audit report
    
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
                                          Internal Control Audit Report disclosed on China
    Disclosure index for the full text of the
                                          Securities Journal, Securities Times and
    internal control audit report                                                    rd
                                          www.cninfo.com.cn by the Company on 23  April, 2018.
    Opinion type of the internal control audit
                                          Standard without reserved opinion
    report
    Whether or not exists significant defects in
                                          No
    non-financial reports
    
    
    Whether or not the accounting firm issued non-standard opinions for the audit report of
    
    internal control
    
    □Yes ?No
    
    Whether the audit report of internal control issued by the accounting firm is in consistency
    
    with the self-assessment report of the board of directors
    
    □Yes ?No
    
    Explanations on the audit report of internal control issued by the accounting firm is not in
    
    consistency with the self-assessment report of the board of directors
    
    None.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    X. Related Situation of Corporation Bonds
    
    Whether or not the Company has the corporation bonds issued in public, listed in the stock
    
    exchange, not due on the annual report?s authorized issue date or failed to pay in full on the
    
    due date.
    
    No.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    XI. Financial Report
    
    1. Audit Report
    
    Type of audit opinion                         Standard unqualified audit opinion
    Date signed on audit report                    19th April, 2018
    Audit agency name                           Deloitte Hua Yong certified public accountants co.,
                                                Ltd.(special general partnership)
    Certified public accountant's name             Li Xu, LiYangang
    
    
    AUDITOR'S REPORT
    
    De Shi Bao (Shen) Zi (18) No. P02977
    
    (Page 1 of 6 pages)
    
    TO THE SHAREHOLDERS OF
    
    YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
    
    1. Opinion
    
    We have audited the financial statements of Yantai Changyu Pioneer Wine Company Limited
    
    ("Yantai Changyu Company"), which comprise the consolidated and Company's balance sheets as at
    
    31 December 2017, and the consolidated and Company's income statements, the consolidated and
    
    Company's cash flow statements and the consolidated and Company's statements of changes in
    
    owners' equity for the year then ended, and the notes to the financial statements.
    
    In our opinion, the accompanying financial statements of Yantai Changyu Pioneer Wine Company
    
    Limited is prepared and present fairly, in all material respects, the consolidated and Company's
    
    financial position as of 31 December 2017, and the consolidated and the Company's results of
    
    operations and cash flows for the year then ended in accordance with Accounting Standards for
    
    Business Enterprises.
    
    2. Basis for Opinion
    
    We conducted our audit in accordance with China Standards on Auditing. Our responsibilities
    
    under those standards are further described in the Auditor's Responsibilities for the Audit of the
    
    Financial Statements section of our report. We are independent of Yantai Changyu Company in
    
    accordance with the code of ethics for Chinese Certified Public Accountants, and we have fulfilled
    
    our other ethical responsibilities in accordance with the Code. We believe that the audit evidence
    
    we have obtained is sufficient and appropriate to provide a basis for our opinion.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    3. Key Audit Matters
    
    Key audit matters are those matters that, in our professional judgment, were of most significance in
    
    our audit of the financial statements of the current period. These matters were addressed in the
    
    context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
    
    we do not provide a separate opinion on these matters. We determine the followings are key audit
    
    matters in need of communication in our report.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    AUDITORS? REPORT - continued
    
    De Shi Bao (Shen) Zi (18) No. P02977
    
    (Page 2 of 6 pages)
    
    3. Key Audit Matters - continued
    
    The determination of the fair value of identifiable assets and liabilities associated with
    
    business combination
    
    1、Item description
    
    As disclosed in Notes VII, during the year, the Company through its acquired 100% shares of
    
    Chile Indomita Wine Group. As disclosed in Notes III-5, the Company need to recognize the
    
    acquiree's identifiable assets and liabilities which were met the recognition criteria generated
    
    during the acquisition at their fair value on the acquisition day. As disclosed in Notes IV "The
    
    determination of the fair value of identifiable assets and liabilities associated with business
    
    combination", during the recognition of the above identifiable assets and liabilities' fair value
    
    based on the present value of future cash flow, the management of the Company need to
    
    forecast the cash flow according the growth rate of sales based on future market's supply and
    
    demand, and considered selecting the appropriate discount rate for discounting, which involved
    
    the management to exercise significant estimations and judgments. Therefore, we identified the
    
    determination of the fair value of identifiable assets and liabilities associated with business
    
    combination as a key audit matter.2、How our audit addressed the key audit matter
    
    Our procedures in relation to the key audit matter mainly included:
    
    (1) Understanding and assessing the appropriateness of the method used by the management
    
    to Identify and recognize the various identifiable assets and liabilities on the acquisition
    
    day;(2) Understanding and assessing the competence and independence of the valuation
    
    specialists appointed by the management;(3) Using our internal valuation specialists, and reviewing the rationality of the significant
    
    estimations, (including the growth rate of sales, the discount rate and etc.), used by the
    
    management and their valuation specialists in the value of various identifiable assets and
    
    liabilities' fair value.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    AUDITORS? REPORT - continued
    
    De Shi Bao (Shen) Zi (18) No. P02977
    
    (Page 3 of 6 pages)
    
    3. Key Audit Matters - continued
    
    Valuation of long-term assets' impairment
    
    1、Item description
    
    As disclosed in Notes VI-12 and 13, some subsidiaries of the Company were sustained loss and
    
    the cash flow from operating activities were net out and the related assets existed an indication
    
    of impairment. As at 31 December 2017, the book values of fixed assets and construction in
    
    progress ("CIP") were RMB 928,058,429 and RMB 89,001,307, respectively, and were
    
    significant in financial statement level. As disclosed in Notes IV "Impairment of long-term
    
    assets ", a highly uncertainty existed related to the Company's management to determine the
    
    recoverable amount based on expected future cash flows, which involved the use of significant
    
    accounting estimation and judgment on the growth rate of sales, average gross rate, other
    
    operating expenses of those subsidiaries of the relevant assets (group of assets) and the
    
    discount rate used in calculation the present value. For the above reasons, we identified the
    
    valuation of long-term assets' impairment as a key audit matter.2、How our audit addressed the key audit matter
    
    Our procedures in relation to the key audit matter mainly included:
    
    (1) Understanding, assessing and testing the relatively designing, implementing and
    
    effectiveness of key internal controls over the valuation of book values of the fixed assets
    
    and CIP;(2) Based on our understanding of the business and industry of those subsidiaries, assessing
    
    the rationality of significant accounting estimation and judgment used by the management
    
    to forecast the future cash flows during the impairment test, including the growth rate of
    
    sales, the average gross rate, other operating expenses and the discount rate used in
    
    calculation the present value;(3) Using our internal valuation specialists, reviewing the appropriateness of the future cash
    
    flows discount model prepared by the management and the rationality of the discount rate
    
    used;(4) Performing the recalculation procedure, checking the accuracy of calculations in the
    
    discount future cash flows model.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    AUDITORS? REPORT - continued
    
    De Shi Bao (Shen) Zi (18) No. P02977
    
    (Page 4 of 6 pages)
    
    4. Other Information
    
    The management of Yantai Changyu Pioneer Wine Company Limited is responsible for other
    
    information. The other information comprises the information included in the Yantai Changyu 2017
    
    annual report, but does not include the financial statements and our auditor's report thereon.
    
    Our opinion on the financial statements does not cover the other information and we do not express
    
    any form of assurance conclusion thereon.
    
    In connection with our audit of the financial statements, our responsibility is to read the other
    
    information and, in doing so, consider whether the other information is materially inconsistent with
    
    the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
    
    misstated.
    
    If, based on the work we have performed, we conclude that there is a material misstatement of this
    
    other information, we are required to report that fact. We have nothing to report in this regard.
    
    5. Responsibilities of the Management and Those Charged with Governance for the Financial
    
    StatementsThe management of Yantai Changyu Pioneer Wine Company Limited is responsible for thepreparation and fair presentation of the financial statements in accordance with Accounting Standardsfor Business Enterprises, and designing, implementing and maintaining internal control that is
    
    necessary to enable the financial statements that are free from material misstatement, whether due to
    
    fraud or error.
    
    In preparing the financial statements, the management is responsible for assessing Yantai Changyu
    
    Company?s ability to continue as a going concern, disclosing, as applicable, matters related to going
    
    concern and using the going concern basis of accounting unless the management either intends to
    
    liquidate Yantai Changyu Company or to cease operations, or have no realistic alternative but to do
    
    so.
    
    Those charged with governance are responsible for overseeing Yantai Changyu Company?s financial
    
    reporting process.
    
    6. Auditor's Responsibilities for the Audit of the Financial Statements
    
    Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
    
    are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that
    
    includes our opinion solely to you. Reasonable assurance is a high level of assurance, but is not a
    
    guarantee that an audit conducted in accordance with China Standards on Auditing will always detect
    
    a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
    
    material if, individually or in the aggregate, they could reasonably be expected to influence the
    
    economic decisions of users taken on the basis of these financial statements.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    AUDITORS? REPORT - continued
    
    De Shi Bao (Shen) Zi (18) No. P02977
    
    (Page 5 of 6 pages)
    
    6. Auditor's Responsibilities for the Audit of the Financial Statements - continued
    
    As part of an audit in accordance with China Standards on Auditing, we exercise professional
    
    judgment and maintain professional skepticism throughout the audit. We also:
    
    (1) Identify and assess the risks of material misstatement of the financial statements, whether due to
    
    fraud or error, design and perform audit procedures responsive to those risks, and obtain
    
    audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
    
    detecting a material misstatement resulting from fraud is higher than for one resulting from error,
    
    as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
    
    of internal control.(2) Obtain an understanding of internal control relevant to the audit in order to design audit
    
    procedures that are appropriate in the circumstances, but not for the purpose of expressing an
    
    opinion on the effectiveness of the internal control.(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
    
    estimates and related disclosures made by the management.(4) Conclude on the appropriateness of the management's use of the going concern basis of
    
    accounting and, based on the audit evidence obtained, whether a material uncertainty exists
    
    related to events or conditions that may cast significant doubt on Yantai Changyu Company?s
    
    ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
    
    required to draw attention in our auditor's report to the related disclosures in the financial
    
    statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
    
    based on the audit evidence obtained up to the date of our auditor's report. However, future
    
    events or conditions may cause the Yantai Changyu Company to cease to continue as a going
    
    concern.(5) Evaluate the overall presentation, structure and content of the financial statements (including the
    
    disclosures), and whether the financial statements represent the underlying transactions and events
    
    in a manner that achieves fair presentation.(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
    
    business activities within the Yantai Changyu Company to express an opinion on the financial
    
    statements. We are responsible for the direction, supervision and performance of the group audit.
    
    We remain solely responsible for our audit opinion.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    AUDITORS? REPORT - continued
    
    De Shi Bao (Shen) Zi (18) No. P02977
    
    (Page 6 of 6 pages)
    
    6. Auditor's Responsibilities for the Audit of the Financial Statements - continued
    
    We communicate with those charged with governance regarding, among other matters, the planned
    
    scope and timing of the audit and significant audit findings, including any significant deficiencies in
    
    internal control that we identify during our audit.
    
    We also provide those charged with governance with a statement that we have complied with relevant
    
    ethical requirements regarding independence, and to communicate with them all relationships and
    
    other matters that may reasonably be thought to bear on our independence, and where applicable,
    
    related safeguards.
    
    From the matters communicated with those charged with governance, we determine those matters that
    
    were of most significance in the audit of the financial statements of the current period and are
    
    therefore the key audit matters. We describe these matters in our auditor's report unless law or
    
    regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
    
    determine that a matter should not be communicated in our report because the adverse consequences
    
    of doing so would reasonably be expected to outweigh the public interest benefits of such
    
    communication.
    
    Deloitte Touche Tohmatsu CPA LLP Chinese Certified Public Accountant: Li Xu
    
    Shanghai, China (Engagement partner)
    
    Chinese Certified Public Accountant: Li Yangang
    
    19, April , 2018
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    CONSOLIDATED BALANCE SHEETS
    
    YEAR ENDED 31 DECEMBER 2017
    
    ASSETS Notes Closing balance Opening balance
    
    RMB RMB
    
    CURRENT ASSETS
    
    Cash and bank VI-1 1,402,522,509 1,391,517,607
    
    Notes receivable VI-2 244,796,818 210,470,027
    
    Accounts receivable VI-3 263,796,355 173,062,628
    
    Prepayments VI-4 2,417,931 2,175,606
    
    Interest receivable VI-5 240,968 24,200
    
    Other receivables VI-6 18,737,454 18,880,800
    
    Inventories VI-7 2,473,614,046 2,248,609,740
    
    Non-current assets held for sale VI-8 2,000,197 2,000,197
    
    Other current assets VI-9 ____2_3_0_,8_2_2_,_7_5_9 ___1_6_9_,_5_2_2_,2_4_2_
    
    Total current assets __4_,_6_3_8_,9_4_9_,_0_3_7 __4_,2_1_6_,_2_6_3_,0_4_7_
    
    NON-CURRENT ASSETS
    
    Available-for-sale financial assets VI-10 467,251 340,263
    
    Investment properties VI-11 18,467,989 -
    
    Fixed assets VI-12 5,329,083,969 4,683,187,493
    
    Construction in progress VI-13 1,026,141,569 1,346,281,737
    
    Bearer biological assets VI-14 201,929,888 201,428,980
    
    Intangible assets VI-15 655,448,897 483,815,080
    
    Goodwill VI-16 128,135,981 121,265,866
    
    Long-term prepaid expenses VI-17 230,009,231 162,206,229
    
    Deferred tax assets VI-18 308,121,396 295,937,037
    
    Other non-current assets VI-19 __________-___ ____1_7_,_3_5_2_,2_3_9_
    
    Total non-current assets __7_,_8_9_7_,8_0_6_,_1_7_1 __7_,3_1_1_,_8_1_4_,9_2_4_
    
    Total assets _1_2_,_5_3_6_,7_5_5_,_2_0_8 _1_1_,5_2_8_,_0_7_7_,9_7_1_
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    CONSOLIDATED BALANCE SHEETS
    
    YEAR ENDED 31 DECEMBER 2017 - continued
    
    LIABILITIES AND EQUITY Notes Closing balance Opening balance
    
    RMB RMB
    
    CURRENT LIABILITIES
    
    Short-term borrowings VI-20 714,434,286 662,388,882
    
    Notes payable VI-21 - 38,900,000
    
    Accounts payable VI-22 666,442,879 545,231,319
    
    Receipts in advance VI-23 350,894,156 425,246,421
    
    Advances from customers VI-24 210,824,234 206,431,734
    
    Taxes payable VI-25 145,094,156 144,042,600
    
    Interest payable 771,250 563,613
    
    Deferred income VI-26 16,878,199 11,163,883
    
    Other payables VI-27 602,964,319 546,305,310
    
    Non-current liabilities due within one year VI-28 ____1_1_0_,9_5_4_,_8_2_7 ____7_1_,_7_9_9_,0_9_3_
    
    Total current liabilities __2_,_8_1_9_,2_5_8_,_3_0_6 __2_,6_5_2_,_0_7_2_,8_5_5_
    
    NON-CURRENT LIABILITIES
    
    Long-term borrowings VI-29 156,125,854 49,140,555
    
    Long-term payables VI-30 259,000,000 293,000,000
    
    Deferred income VI-26 92,918,855 101,775,243
    
    Deferred tax liabilities VI-18 24,264,203 24,908,410
    
    Other non-current liabilities VI-31 ______7_,2_0_9_,_3_1_2 _____7_,_6_9_6_,2_2_2_
    
    Total non-current liabilities ____5_3_9_,5_1_8_,_2_2_4 ___4_7_6_,_5_2_0_,4_3_0_
    
    Total liabilities __3_,_3_5_8_,7_7_6_,_5_3_0 __3_,1_2_8_,_5_9_3_,2_8_5_
    
    EQUITY
    
    Share capital VI-32 685,464,000 685,464,000
    
    Capital reserve VI-33 565,955,441 565,955,441
    
    Other comprehensive income VI-34 3,109,240 (5,259,014)
    
    Surplus reserve VI-35 342,732,000 342,732,000
    
    Retained earnings VI-36 __7_,_3_0_9_,0_8_1_,_6_1_8 __6_,6_2_0_,_1_1_8_,5_6_2_
    
    Equity attributable to shareholders
    
    of the Company 8,906,342,299 8,209,010,989Non-controlling interests ____2_7_1_,6_3_6_,_3_7_9 ___1_9_0_,_4_7_3_,6_9_7_Total equity __9_,_1_7_7_,9_7_8_,_6_7_8 __8_,3_9_9_,_4_8_4_,6_8_6_Total liabilities and equity _1_2_,_5_3_6_,7_5_5_,_2_0_8 _1_1_,5_28,077,971_________The accompanying notes form an integral part of these financial statements.
    
    The financial statements on pages 7 to 110 were signed by the following:
    
    Zhou Hongjiang Jiang Jianxun Jiang Jianxun
    
    Legal Representative Person in Charge of the Chief Accountant
    
    Accounting Body
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    BALANCE SHEET OF THE COMPANY
    
    YEAR ENDED 31 DECEMBER 2017
    
    ASSETS Notes Closing balance Opening balance
    
    RMB RMB
    
    CURRENT ASSETS
    
    Cash and bank XIV- 1 559,174,466 269,460,060
    
    Notes receivable XIV- 2 41,645,203 1,114,200
    
    Accounts receivable XIV- 3 7,805,333 3,326,683
    
    Prepayments XIV- 4 99,673 702,647
    
    Interest receivable 76,646 24,200
    
    Dividend receivables XIV- 5 407,495,922 531,819,113
    
    Other receivables XIV- 6 592,274,075 3,582,532,862
    
    Inventories XIV- 7 348,042,053 792,732,418
    
    Non-current assets held for sale VI-8 2,000,197 2,000,197
    
    Other current assets _____2_9_,7_0_6_,_0_5_8 ____2_0_,_0_8_5_,0_5_8_
    
    Total current assets __1_,_9_8_8_,3_1_9_,_6_2_6 __5_,2_0_3_,_7_9_7_,4_3_8_
    
    NON-CURRENT ASSETS
    
    Long-term equity investments XIV- 8 4,511,202,204 1,834,341,541
    
    Investment properties VI-11 18,467,989 -
    
    Fixed assets XIV- 9 288,150,901 347,481,417
    
    Construction in progress XIV- 10 6,756,349 500,000
    
    Bearer biological assets XIV- 11 119,572,539 123,036,693
    
    Intangible assets XIV- 12 69,623,219 72,002,372
    
    Deferred tax assets XIV- 13 28,787,907 26,985,252
    
    Other non-current assets XIV- 14 __3_,_7_1_8_,6_7_4_,_1_6_6 __2_,6_1_7_,_4_5_7_,4_6_0_
    
    Total non-current assets __8_,_7_6_1_,2_3_5_,_2_7_4 __5_,0_2_1_,_8_0_4_,7_3_5_
    
    Total assets _1_0_,_7_4_9_,5_5_4_,_9_0_0 _1_0_,2_2_5_,_6_0_2_,1_7_3_
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    BALANCE SHEET OF THE COMPANY
    
    YEAR ENDED 31 DECEMBER 2017 - continued
    
    LIABILITIES AND EQUITY Notes Closing balance Opening balance
    
    RMB RMB
    
    CURRENT LIABILITIES
    
    Short-term borrowings XIV- 15 600,000,000 500,000,000
    
    Accounts payable XIV- 16 97,833,124 247,568,857
    
    Advances from customers XIV- 17 6,000,000 6,000,000
    
    Employee benefits payable XIV- 18 70,108,076 70,812,761
    
    Taxes payable XIV- 19 14,569,690 33,266,225
    
    Interest payable 652,500 563,613
    
    Deferred income 3,953,054 1,767,054
    
    Other payables XIV- 20 544,713,172 368,310,362
    
    Non-current liabilities due within one year XIV- 21 __________-___ ____2_9_,_2_2_7_,2_0_0_
    
    Total current liabilities __1_,_3_3_7_,8_2_9_,_6_1_6 __1_,2_5_7_,_5_1_6_,0_7_2_
    
    NON-CURRENT LIABILITIES
    
    Deferred income 12,628,573 19,933,699
    
    Other non-current liabilities ______2_,5_7_7_,_7_0_2 _____2_,_4_9_9_,4_0_3_
    
    Total non-current liabilities _____1_5_,2_0_6_,_2_7_5 ____2_2_,_4_3_3_,1_0_2_
    
    Total liability __1_,_3_5_3_,0_3_5_,_8_9_1 __1_,2_7_9_,_9_4_9_,1_7_4_
    
    EQUITY
    
    Share capital VI-32 685,464,000 685,464,000
    
    Capital reserve XIV- 22 557,222,454 557,222,454
    
    Surplus reserve VI-35 342,732,000 342,732,000
    
    Retained earnings __7_,_8_1_1_,1_0_0_,_5_5_5 __7_,3_6_0_,_2_3_4_,5_4_5_
    
    Total equity __9_,_3_9_6_,5_1_9_,_0_0_9 __8_,9_4_5_,_6_5_2_,9_9_9_
    
    Total liabilities and equity _1_0_,_7_4_9_,5_5_4_,_9_0_0 10,225,_______6_0_2_,1_7_3_
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    CONSOLIDATED INCOME STATEMENT
    
    YEAR ENDED 31 DECEMBER 2017
    
    Notes 2017 2016
    
    RMB RMB
    
    I. Revenue VI-37 4,932,545,229 4,717,596,472
    
    Less: Cost of sales VI-37 1,671,592,279 1,575,770,979
    
    Taxes and surcharges VI-38 310,252,023 269,716,646
    
    Selling expenses VI-39 1,272,522,443 1,253,260,668
    
    Administrative expenses VI-40 340,781,958 309,783,548
    
    Financial expenses VI-41 18,590,259 21,968,859
    
    Impairment loss of assets VI-42 8,293,553 3,279,266
    
    Add: Loss (income) from disposal of assets (222,586) 14,719
    
    Other income VI-43 ____4_6_,_03_8_,_3_8_4 _________-___
    
    II. Operating profit 1,356,328,512 1,283,831,225
    
    Add: Non-operating income VI-44 17,230,727 55,014,314
    
    Less: Non-operating expenses VI-45 _____1_,_63_1_,_4_7_6 _____1_,_22_6_,_6_9_9III. Profit before tax 1,371,927,763 1,337,618,840
    
    Less: Income tax VI-46 ___3_3_8_,_13_4_,_2_4_5 ___3_5_7_,_02_9_,_4_4_6IV. Profit for the year __1_,0_3_3_,_79_3_,_5_1_8 ___9_8_0_,_58_9_,_3_9_4
    
    (I) Categorized by the nature of continuing operation
    
    1. Net profit(loss) from continuing operations __1_,0_3_3_,_79_3_,_5_1_8 ___9_8_0_,_58_9_,_3_9_4
    
    (II) Categorized by ownership:
    
    1. Profit or loss attributable to non-controlling interests 2,098,462 (1,871,094)
    
    2. Net profit attributable to owners of the Company __1_,0_3_1_,_69_5_,_0_5_6 ___9_8_2_,_46_0_,_4_8_8V. Other comprehensive income (post-tax) _____9_,8_6_3_,_8_7_2 _____5_,_61_5_,_6_8_9
    
    Other comprehensive income attributable
    
    to shareholders of the Company
    
    Other comprehensive income
    
    to be reclassified to profit and loss
    
    Foreign currency statement translation difference 8,368,254 5,183,498
    
    Other comprehensive income attributable
    
    to non-controlling interest _____1_,_49_5_,_6_1_8 _______43_2_,_1_9_1VI. Total comprehensive income __1_,0_4_3_,_65_7_,_3_9_0 ___9_8_6_,_20_5_,_0_8_3
    
    Attribute to shareholders of the Company 1,040,063,310 987,643,986
    
    Attribute to non-controlling interest of the Company _____3_,_59_4_,_0_8_0 _____(1_,_43_8_,_9_0_3)VII. Earnings per share
    
    (I) Basic earnings per share VI-47 _________1_.5_1_ _________1_.4_3_
    
    (II) Diluted earnings per share VI-47 _________N__/A_ _________N__/A_
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    INCOME STATEMENT OF THE COMPANY
    
    YEAR ENDED 31 DECEMBER 2017
    
    Notes 2017 2016
    
    RMB RMB
    
    I. Revenue XIV- 23 1,311,256,854 1,415,104,946
    
    Less: Cost of sales XIV- 23 1,165,953,408 1,152,076,500
    
    Taxes and surcharges XIV- 24 76,570,225 106,469,217
    
    Administrative expenses XIV- 25 80,693,044 85,962,137
    
    Financial expenses XIV- 26 637,568 34,226,452Add:Investment income XIV- 27 798,877,905 1,798,129,418
    
    Loss (income) from disposal of assets (29,625) 111,362
    
    Other income _____5,_2_1_9_,1__2_6 _________-___
    
    II. Operating Profit 791,470,015 1,834,611,420
    
    Add: Non-operating income 686,646 7,275,905Less: Non-operating expenses ______3_3_5_,_2_3_7 ______3_5_9_,4_1__5III. Profit before tax 791,821,424 1,841,527,910
    
    Less: Income tax ____(_1_,7_7_6_,_5_86_) ___1__0_,9_5_3_,4_4_0_IV. Profit for the year ___7_9_3_,5_9_8,0__1_0_ _1_,_8_30__,5_7_4_,_4_70_
    
    Net profitfrom continuing operations __7_9_3__,5_9_8_,_0_1_0 _1_,_83__0_,5_7_4_,_47__0V. Total comprehensive income __7__9_3,_5_9_8_,0_1_0_ _1_,8__3_0,_5_7_4_,_4_7_0
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    CONSOLIDATED CASH FLOW STATEMENT
    
    YEAR ENDED 31 DECEMBER 2017
    
    Notes 2017 2016
    
    RMB RMB
    
    CASH FLOWS FROM OPERATING ACTIVITIES
    
    Cash receipts from the sale of goods
    
    and the rendering of services 4,827,152,526 4,441,041,101
    
    Receipts of tax refunds 53,196,910 17,860,500
    
    Other cash receipts relating to operating activities VI-48(1) ___8__5_,2_3_6_,9_0_5_ ___6__6_,7_0_7_,8_6_5_
    
    Sub-total of cash inflows from operating activities _4_,9_6__5,_5_8_6_,3__41_ _4_,5_2__5,_6_0_9_,4__66_
    
    Cash payments for goods purchased and services received 1,143,840,915 961,128,796
    
    Cash payments to and on behalf of employees 512,777,815 435,621,220
    
    Payment of various types of taxes 1,260,813,596 1,133,232,957
    
    Other cash payments relating to operating activities VI-48(2) _1_,0_7__4,_9_1_0_,9__88_ _1_,1_0__5,_7_1_4_,5__23_
    
    Sub-total of cash outflows from operating activities _3_,9_9__2,_3_4_3_,3__14_ _3_,6_3__5,_6_9_7_,4__96_
    
    Net cash flows from operating activities VI-49(1) __9_7_3_,_2_4_3_,0_2_7_ __8_8_9_,_9_1_1_,9_7_0_
    
    CASH FLOWS FROM INVESTING ACTIVITIES
    
    Decrease in term deposits over 3 months 205,000,000 98,021,025
    
    Proceeds from return on investments 4,084,350 7,723,126
    
    Net cash receipts from disposals of fixed assets,
    
    intangible assets and other long-term assets _____7_,5_9_4_,_0_0_5 _____7_,2_0_8_,_7_7_4
    
    Sub-total of cash inflows from investing activities __2_1_6_,_6_7_8_,3_5_5_ __1_1_2_,_9_5_2_,9_2_5_
    
    Cash paid for acquisition of properties, plants and equipment,
    
    intangible assets and other long-term assets 435,960,357 704,834,302
    
    Cash paid for term deposits over 3 months 297,000,000 92,021,025
    
    Cash paid for purchase of available-for-sale financial assets 129,216 -
    
    Cash paid for the purchase subsidiaries and other equity VI-48(3) __3_0_3_,_7_9_6_,5_4_3_ _____3_,5_3_9_,_1_4_4
    
    Sub-total of cash outflows from investing activities _1_,0_3__6,_8_8_6_,1__16_ __8_0_0_,_3_9_4_,4_7_1_
    
    Net cash flows from investing activities __(8_2_0_,_2_0_7_,7_6_1_) __(6_8_7_,_4_4_1_,5_4_6_)
    
    CASH FLOWS FROM FINANCING ACTIVITIES
    
    Cash receipts from capital contributions 48,396,726 -
    
    Including: cash receipts from capital contributions
    
    from minority owners of subsidiaries 48,396,726 -
    
    Cash receipts from borrowings 963,564,600 1,011,089,858
    
    Other cash received from financing activities VI-48(4) ___5__2_,9_3_0_,8_0_4_ __1_8_0_,_4_7_7_,5_8_7_
    
    Sub-total of cash inflows from financing activities _1_,0_6__4,_8_9_2_,1__30_ _1_,1_9__1,_5_6_7_,4__45_
    
    Cash paid for borrowings 876,502,273 839,962,581
    
    Cash paid for dividends, profits and interests 369,791,284 372,529,256
    
    Cash paid from other financing activities VI-48(5) ___6__1_,7_0_0_,0_0_0_ ___2__0_,0_0_0_,0_0_0_
    
    Sub-total of cash outflows from financing activities _1_,3_0__7,_9_9_3_,5__57_ _1_,2_3__2,_4_9_1_,8__37_
    
    Net cash flows from financing activities __(2_4_3_,_1_0_1_,4_2_7_) ___(4_0_,_9_2_4_,3_9_2_)
    
    Effect of foreign exchange rate changes
    
    on cash and cash equivalents 14,013,131 3,154,611
    
    NET DECREASE/( INCREASE ) OF CASH AND CASH EQUIVALENTS (76,053,030) 164,700,643
    
    Add: cash and cash equivalents at beginning of the year VI-49(3) _1_,2_5__6,_9_4_2_,3__04_ _1_,0_9__2_,2_4_1_,_6_6_1
    
    CASH AND CASH EQUIVALENTS AT END OF THE YEARVI-49(3) _1_,1_8__0,_8_8_9_,2__74_ _1_,2_5__6,_9_4_2_,3__04_
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    CASH FLOW STATEMENT OF THE COMPANY
    
    YEAR ENDED 31 DECEMBER 2017
    
    Notes 2017 2016
    
    RMB RMB
    
    CASH FLOWS FROM OPERATING ACTIVITIES
    
    Cash receipts from the sale of goods
    
    and the rendering of services 984,103,489 1,260,184,309
    
    Other cash receipts relating to operating activities __4_3_1_,_9_8_3_,0_9_2_ __2_3_2_,_3_2_8_,4_7_3_
    
    Sub-total of cash inflows from operating activities _1_,4_1__6,_0_8_6_,5__81_ _1_,4_9__2,_5_1_2_,7__82_
    
    Cash payments for goods purchased and services received 398,827,772 887,413,606
    
    Cash payments to and on behalf of employees 89,894,049 121,662,409
    
    Cash payment of various types of taxes 207,917,864 132,372,497
    
    Other cash payment relating to operating activities __1_2_1_,_3_7_7_,1_2_7_ __8_0_5_,_1_2_7_,3_6_8_
    
    Sub-total of cash outflows from operating activities __8_1_8_,_0_1_6_,8_1_2_ _1_,9_4__6,_5_7_5_,_8_8_0
    
    Net cash flows from operating activities XIV- 28 __5_9_8_,_0_6_9_,7_6_9_ __(4_5_4_,_0_6_3_,0_9_8_)
    
    CASH FLOWS FROM INVESTING ACTIVITIES
    
    Cash receipts from deposits over 3 months 103,000,000 18,021,025
    
    Cash receipts from return on investments 827,218,467 1,530,872,587
    
    Net cash receipts from disposals of fixed assets,
    
    intangible assets and other long-term assets ___2__6_,7_6_0_,9_2_9_ _____9_,7_0_5_,_0_2_6
    
    Sub-total of cash outflows from investing activities __9_5_6_,_9_7_9_,3_9_6_ _1_,5_5__8,_5_9_8_,6__38_
    
    Cash payments to acquire or construct fixed assets, intangible
    
    assets and other long-term assets 22,527,073 28,351,843
    
    Cash payments for term deposits over 3 months 105,000,000 12,021,025
    
    Cash payments for subsidiary investment __8_8_1_,_0_5_6_,2_2_0_ __4_6_8_,_8_8_2_,4_1_8_
    
    Sub-total of cash outflows from investing activities _1_,0_0__8,_5_8_3_,2__93_ __5_0_9_,_2_5_5_,2_8_6_
    
    Net cash flows from investing activities ___(5_1_,_6_0_3_,8_9_7_) _1_,_0_4_9_,3_4_3_,3__52_
    
    CASH FLOWS FROM FINANCING ACTIVITIES
    
    Cash receipts from borrowings 600,000,000 500,000,000
    
    Cash inflows from financing activities _________-___ __1_3_5_,_5_8_4_,3_4_7_
    
    Sub-total of cash outflows from investing activities __6_0_0_,_0_0_0_,0_0_0_ __6_3_5_,_5_8_4_,3_4_7_
    
    Cash paid for borrowings 530,339,600 764,619,892
    
    Cash paid for dividends, profits and interests __3_6_0_,_5_6_0_,6_0_4_ __3_7_2_,_0_3_9_,5_9_1_
    
    Sub-total of Cash outflows from financing activities __8_9_0_,_9_0_0_,2_0_4_ _1_,1_3__6,_6_5_9_,4__83_
    
    Net cash flows from financing activities __(2_9_0_,_9_0_0_,2_0_4_) __(5_0_1_,_0_7_5_,1_3_6_)
    
    NET INCREASE/(DECREASE) OF CASH
    
    AND CASH EQUIVALENTS 255,565,668 94,205,118
    
    Add: cash and cash equivalents at beginning of the year XIV- 29 __2_3_8_,_0_0_3_,1_9_8_ __1_4_3_,_7_9_8_,0_8_0_
    
    CASH AND CASH EQUIVALENTS AT END
    
    OF THE YEAR XIV- 29 __4_9_3_,_5_6_8_,8_6_6_ __2_3_8_,_0_0_3_,1_9_8_
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    CONSOLIDATED SATATEMENT OF CHANGES IN EQUITY
    
    YEAR ENDED 31 DECEMBER 2017
    
    2017
    
    Attributable to shareholders of the Company
    
    Issued Capital Other comprehensive Surplus Retained Non-controlling
    
    capital surplus income reserve earnings interests Total
    
    RMB RMB RMB RMB RMB RMB RMB
    
    I. Opening balance
    
    of the current year _6_85_,4_6_4,_00_0 _5_65_,9_5_5,_44_1 __(5_,2_59_,0_1_4) _3_42_,7_3_2,_00_0 _6_,6_20_,1_1_8,_56_2 _1_90_,4_7_3,_69_7 _8_,3_99_,4_8_4,_68_6II. Changes for the year
    
    (I) Total comprehensive income - - 8,368,254 - 1,031,695,056 3,594,080 1,043,657,390
    
    (II) Owners? contributions and reduction in capital
    
    Non-controlling interests' capital
    
    contribution (VIII-2) - - - - - 78,236,726 78,236,726
    
    (II) Profit distribution
    
    Distributions to
    
    shareholders (VI-36) _____-__ _____-__ _____-__ _____-__ _(_34_2_,7_32_,0_0_0) ___(6_68_,1_2_4) _(_34_3_,4_00_,1_2_4)III. Closing balance
    
    of the current year _6_85_,4_6_4,_00_0 _5_65_,9_5_5,_44_1 __3_,1_09_,2_4_0 _3_42_,7_3_2,_00_0 _7,_30_9_,0_81_,6_1_8 27__1_,6_36_,3_7_9 _9,_17_7_,9_78_,6_7_8
    
    2016
    
    Attributable to shareholders of the Company
    
    Issued Capital Other comprehensive Surplus Retained Non-controlling
    
    capital surplus income reserve earnings interests Total
    
    RMB RMB RMB RMB RMB RMB RMB
    
    I. Opening balance
    
    of the current year _6_85_,4_6_4,_00_0 _5_65_,9_5_5,_44_1 _(1_0_,4_42_,5_1_2) _3_42_,7_3_2,_00_0 _5_,9_80_,3_9_0,_07_4 _1_92_,4_5_9,_02_3 _7_,7_56_,5_5_8,_02_6II. Changes for the year
    
    (I) Total comprehensive income - - 5,183,498 - 982,460,488 (1,438,903) 986,205,083
    
    (II) Profit distribution
    
    Distributions to
    
    shareholders (VI-36) _____-__ _____-__ ______- _ _____-__ _(_34_2_,7_32_,0_0_0) ___(5_46_,4_2_3) _(_34_3_,2_78_,4_2_3)III. Closing balance
    
    of the current year _6_85_,4_6_4,_00_0 _5_65_,9_5_5,_44_1 __(5_,2_59_,0_1_4) _3_42_,7_3_2,_00_0 _6_,6_20_,1_1_8,_56_2 _1_90_,4_7_3,_69_7 _8_,3_99_,4_8_4,_68_6
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    STATEMENT OF CHANGES IN EQUITY OF THE COMPANY
    
    YEAR ENDED 31 DECEMBER 2017
    
    2017
    
    Issued capital Capital reserve Surplus reserve Retained earnings Total
    
    RMB RMB RMB RMB RMB
    
    I. Opening balance
    
    of the current year _6_8_5,_46_4_,0_0_0 _5_5_7,_22_2_,4_5_4 _3_4_2,_73_2_,0_0_0 _7_,3_6_0,_23_4_,5_4_5 _8_,9_4_5,_65_2_,9_9_9
    
    II. Changes for the year
    
    (I) Total comprehensive income - - - 793,598,010 793,598,010
    
    (II) Profit distribution
    
    Distributions to shareholders (VI-36) ______- __ ______- __ ______- __ _(_3_42_,_73_2_,0_0_0) _(_3_42_,_73_2_,0_0_0)III. Closing balance
    
    of the current year _6_8_5,_46_4_,0_0_0 _5_5_7,_22_2_,4_5_4 _3_4_2,_73_2_,0_0_0 _7_,8_11_,_10_0_,5_5_5 9,396,519,009_________
    
    2016
    
    Issued capital Capital reserve Surplus reserve Retained earnings Total
    
    RMB RMB RMB RMB RMB
    
    I. Opening balance
    
    of the current year _6_8_5,_46_4_,0_0_0 _5_5_7,_22_2_,4_5_4 _3_4_2,_73_2_,0_0_0 _5_,8_7_2,_39_2_,0_7_5 _7_,4_5_7,_81_0_,5_2_9
    
    II. Changes for the year
    
    (I) Total comprehensive income - - - 1,830,574,470 1,830,574,470
    
    (II) Profit distribution
    
    Distributions to shareholders (VI-36) ______- __ ______- __ ______- __ _(_3_42_,_73_2_,0_0_0) _(_3_42_,_73_2_,0_0_0)
    
    III. Closing balance
    
    of the current year _6_8_5,_46_4_,0_0_0 _5_5_7,_22_2_,4_5_4 _3_4_2,_73_2_,0_0_0 7,360,234,545 8,945,652,999_________ _________
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    NOTES TO FINANCIAL STATEMENTS
    
    YEAR ENDED 31 DECEMBER 2017
    
    I. CORPORATE INFORMATION
    
    Yantai Changyu Pioneer Wine Co., Ltd. (the "Company") was incorporated as a joint stock
    
    limited company in accordance with the Company Law of the People's Republic of China (the
    
    "PRC") in a reorganization carried out by Yantai Changyu Group Co., Ltd. ("Changyu Group
    
    Company"), in which Changyu Group Company injected certain assets and liabilities in relation to
    
    the brandy, wine, and sparkling wine production and sales businesses to the Company. The
    
    Company and its subsidiaries (the "Group") are principally engaged in the production and sales of
    
    wine, brandy, sparkling wine, grape growing and acquisition, as well as travel resource
    
    development, etc. . Registration place of the Company is Yantai, Shandong. Headquarter of the
    
    Company is located at No. 56 Da Ma Lu, Zhifu District, Yantai, Shandong, PRC.
    
    As at 31 December 2017 the total shares issued by the Company amounts to 685,464,000 shares.
    
    Please refer to Note VI-32 in detail.
    
    The holding company of the Group is Changyu Group Company, which is jointly controlled by
    
    Yantai GuoFeng Investment Holding Ltd, ILLVA SARONNO HOLDING SPA, International
    
    Finance Corporation and Yantai Yuhua Investment and Development Company Limited.
    
    The financial statements have been authorized by the board of directors on 19 April 2018.
    
    According to the Company's articles of association, the financial statements will be reviewed by
    
    shareholders on the shareholder's meeting.
    
    For consolidation scope of the year, please refer to Notes VIII "Equity in other entities" in detail.
    
    For detail of changes in consolidation scope of the year, please refer to Notes VII "Change in
    
    consolidation scope".
    
    II. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
    
    1. Basis of preparation
    
    The Group has adopted the Accounting Standards for Business Enterprises ("ASBE") issued by
    
    the Ministry of Finance ("MoF"). In addition, the Group has disclosed relevant financial
    
    information in accordance with Information Disclosure and Presentation Rules for Companies
    
    Offering Securities to the Public No. 15 - General Provisions on Financial Reporting (Revised in
    
    2014).
    
    2. Basis of accounting and principle of measurement
    
    The Group has adopted the accrual basis of accounting. The Group adopts the historical cost as
    
    the principle of measurement in the financial statements. Where assets are impaired, provisions
    
    for asset impairment are made in accordance with relevant requirements.
    
    Under the historical cost measurement, an asset is measured at the fair value of consideration paid
    
    in cash and cash equivalents at the date of the purchase. Liability is measured at the value of asset
    
    received through taking current obligation, the contract value for taking current obligation, or the
    
    cash and cash equivalents value estimated for repaying debt in daily business activity.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    II. BASIS OF PREPARATION OF FINANCIAL STATEMENTS - continued
    
    2. Basis of accounting and principle of measurement - continued
    
    Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
    
    orderly transaction between market participants at the measurement date, regardless of whether
    
    that price is directly observable or estimated using another valuation technique. Fair value for
    
    measurement and/or disclosure purposes in these consolidated financial statements is determined
    
    on such a basis.
    
    Fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the
    
    inputs to the fair value measurements are observable and the significance of the inputs to the fair
    
    value measurement in its entirety, which are described as follows:
    
    1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
    
    liabilities that the entity can access at the measurement date;
    
    2) Level 2 inputs are inputs, other than quoted prices included within Level 1, that are
    
    observable for the asset or liability, either directly or indirectly; and
    
    3) Level 3 inputs are unobservable inputs for the asset or liability.
    
    3. Going concern
    
    As at 31 December 2017, the Group evaluated the profitability ability in the foreseeable 12
    
    months and did not notice any event or circumstance that would constitute significant doubt on
    
    going concern ability of the Group. Therefore, the financial statements have been prepared on a
    
    going concern basis.
    
    III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING
    
    1. Declaration for implementing CAS
    
    The financial statements are prepared in accordance with CAS, which showing a true and fair
    
    view of the financial position on 31 December 2017, financial performance and cash flow in 2017
    
    of the Company and the Group.
    
    2. Accounting year
    
    The accounting year of the Group is from 1 January to 31 December of each calendar year.
    
    3. Business cycle
    
    Business cycle refers to the period from purchasing assets to be processed to receiving cash or
    
    cash equivalents by the Company. The business cycle of the Company is 12 months.
    
    4. Reporting currency
    
    Renminbi ("RMB") is the currency of the primary economic environment in which the Company
    
    and its domestic subsidiaries operate. Therefore, the Company and its domestic subsidiaries
    
    choose RMB as their functional currency. The Company's foreign subsidiary chooses Currency
    
    Euro and Chilean Peso as its functional currency on the basis of the primary economic
    
    environment in which it operates. The Company adopts RMB to prepare its financial statements.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
    
    continued
    
    5. Business combination
    
    5.1Business combinations not involving enterprises under common control and goodwill
    
    A business combination not involving enterprises under common control is a business
    
    combination in which all of the combining enterprises are not ultimately controlled by the same
    
    party or parties before and after the combination.
    
    The cost of combination is the aggregate of the fair values, at the acquisition date, of the assets
    
    given, liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for
    
    control of the acquiree. The intermediary expenses incurred by the acquirer in respect of
    
    auditing, legal services, valuation and consultancy services, etc. and other associated
    
    administrative expenses attributable to the business combination are recognised in profit or loss
    
    when they are incurred.
    
    Qualified identifiable assets, liabilities and contingent liabilities obtained by acquirer in the
    
    acquisition are measured using fair value at the acquisition date.
    
    Where the cost of combination exceeds the acquirer?s interest in the fair value of the acquiree?s
    
    identifiable net assets, the difference is treated as an asset and recognised as goodwill, which is
    
    measured at cost on initial recognition. Where the cost of combination is less than the acquirer?s
    
    interest in the fair value of the acquiree?s identifiable net assets, the acquirer firstly reassesses the
    
    measurement of the fair values of the acquiree?s identifiable assets, liabilities and contingent
    
    liabilities and measurement of the cost of combination. If after that reassessment, the cost of
    
    combination is still less than the acquirer?s interest in the fair value of the acquiree?s identifiable
    
    net assets, the acquirer recognises the remaining difference immediately in profit or loss for the
    
    current period.
    
    Goodwill arising on a business combination is measured at cost less accumulated impairment
    
    losses, and is presented separately in the consolidated financial statements. It is tested for
    
    impairment at least at the end of each year.
    
    6. Preparation of consolidated financial statements
    
    6.1 Preparation of consolidated financial statements
    
    The scope of consolidation in the consolidated financial statements is determined on the basis of
    
    control. Control is the power to govern the financial and operating policies of an enterprise so as
    
    to obtain benefits from its operating activities. The Group will re-evaluate if changes in relevant
    
    facts and circumstances results in changes in relevant factors involved in the above definition of
    
    control.
    
    Consolidation of subsidiary starts from the control on the subsidiary by the Group and ends at the
    
    loss of control on the subsidiary by the Group.
    
    For the subsidiaries through business combination not involving enterprises under common
    
    control, the results of operations and cash flows from the acquisition day were properly included
    
    in the consolidated income statements and consolidated cash flow statements.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
    
    continued
    
    6. Preparation of consolidated financial statements - continued
    
    6.1 Preparation of consolidated financial statements
    
    The significant accounting policies and accounting periods adopted by the subsidiaries are
    
    determined based on the uniform accounting policies and accounting periods set out by the
    
    Company.
    
    All significant intra-group balances and transactions are eliminated on consolidation.
    
    The portion of subsidiaries' equity that is not attributable to the Company is treated as
    
    non-controlling interests and presented as "non-controlling interests" in the consolidated balance
    
    sheet within shareholders' equity. The portion of net profits or losses of subsidiaries for the period
    
    attributable to non-controlling interests is presented as "non-controlling interests" in the
    
    consolidated income statement below the net profit line item.
    
    When the amount of loss for the period attributable to the non-controlling shareholders of a
    
    subsidiary exceeds the non-controlling shareholders' portion of the opening balance of owners'
    
    equity of the subsidiary, the excess amount are still allocated against non-controlling interests.
    
    7. Cash and cash equivalents
    
    Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash
    
    equivalents are the Group's short-term, highly liquid investments that are readily convertible to
    
    known amounts of cash and which are subject to an insignificant risk of changes in value.
    
    8. Translation of transactions and financial statements denominated in foreign currencies
    
    8.1 Transactions denominated in foreign currencies
    
    A foreign currency transaction is recorded, on initial recognition, by applying the spot exchange
    
    rate on the date of the transaction.
    
    At the balance sheet date, foreign currency monetary items are translated into RMB using the spot
    
    exchange rates at the balance sheet date. Exchange differences arising from the differences
    
    between the spot exchange rates prevailing at the balance sheet date and those on initial
    
    recognition or at the previous balance sheet date are recognised in profit or loss for the period,
    
    except that (1) exchange differences related to a specific-purpose borrowing denominated in
    
    foreign currency that qualify for capitalisation are capitalised as part of the cost of the qualifying
    
    asset during the capitalisation period; (2) exchange differences related to hedging instruments for
    
    the purpose of hedging against foreign currency risks are accounted for using hedge accounting;
    
    (3) exchange differences arising from available-for-sale non-monetary items denominated in
    
    foreign currencies and changes in the carrying amounts of available-for-sale monetary items are
    
    recognised as other comprehensive income and included in capital reserve.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
    
    continued
    
    8. Translation of transactions and financial statements denominated in foreign currencies - continued
    
    8.1 Transactions denominated in foreign currencies - continued
    
    Foreign currency non-monetary items measured at historical cost are translated to the amounts in
    
    functional currency at the spot exchange rates on the dates of the transactions and the amounts in
    
    functional currency remain unchanged. Foreign currency non-monetary items measured at fair
    
    value are re-translated at the spot exchange rate on the date the fair value is determined.
    
    Difference between the re-translated functional currency amount and the original functional
    
    currency amount is treated as changes in fair value (including changes of exchange rate) and is
    
    recognised in profit and loss or as other comprehensive income included in capital reserve.
    
    8.2 Translation of financial statements denominated in foreign currencies
    
    For the purpose of preparing the consolidated financial statements, financial statements of a
    
    foreign operation are translated from the foreign currency into RMB using the following method:
    
    assets and liabilities on the balance sheet are translated at the spot exchange rate prevailing at the
    
    balance sheet date; shareholders' equity items except for retained earnings are translated at the
    
    spot exchange rates at the dates on which such items arose; all items in the income statement as
    
    well as items reflecting the distribution of profits are translated at the spot exchange rates on the
    
    dates of the transactions; the opening balance of retained earnings is the translated closing balance
    
    of the previous year's retained earnings; the closing balance of retained earnings is calculated and
    
    presented on the basis of each translated income statement and profit distribution item. The
    
    difference between the translated assets and the aggregate of liabilities and shareholders' equity
    
    items is separately presented as the exchange differences arising on translation of financial
    
    statements denominated in foreign currencies of other comprehensive income under the
    
    shareholders' equity in the balance sheet.
    
    Cash flows arising from a transaction in foreign currency and the cash flows of a foreign
    
    subsidiary are translated at the spot exchange rate on the date of the cash flows. The effect of
    
    exchange rate changes on cash and cash equivalents is regarded as a reconciling item and
    
    presented separately in the cash flow statement as "effect of exchange rate changes on cash and
    
    cash equivalents".
    
    The opening balances and the comparative figures of previous year are presented at the translated
    
    amounts in the previous year's financial statements.
    
    9 Financial instruments
    
    Financial assets and financial liabilities are recognised when the Group becomes a party to the
    
    contractual provisions of the instrument. Financial assets and financial liabilities are initially
    
    measured at fair value. For other financial assets and financial liabilities, transaction costs are
    
    included in their initial recognised amounts.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING - continued
    
    9 Financial instruments - continued
    
    9.1 Effective interest method
    
    The effective interest method is a method of calculating the amortised cost of a financial asset or a
    
    financial liability (or a group of financial assets or financial liabilities) and of allocating the
    
    interest income or interest expense over the relevant period, using the effective interest rate. The
    
    effective interest rate is the rate that exactly discounts estimated future cash flows through the
    
    expected life of the financial asset or financial liability or, where appropriate, a shorter period to
    
    the net carrying amount of the financial asset or financial liability.
    
    When calculating the effective interest rate, the Group estimates future cash flows considering all
    
    contractual terms of the financial asset or financial liability (without considering future credit
    
    losses), and also considers all fees paid or received between the parties to the contract giving rise
    
    to the financial asset and financial liability that are an integral part of the effective interest rate,
    
    transaction costs, and premiums or discounts, etc.
    
    9.2 Classification, recognition and measurement of financial assets
    
    On initial recognition, the Group's financial assets are classified into one of the four categories,
    
    including financial assets at fair value through profit or loss, held-to-maturity investments, loans
    
    and receivables, and available-for-sale financial assets. All regular way purchases or sales of
    
    financial assets are recognised and derecognised on a trade date basis. Financial assets of the
    
    Group are loans and receivables and available-for-sale financial assets.
    
    9.2.1 Loans and receivables
    
    Loans and receivables are non-derivative financial assets with fixed or determinable payments
    
    that are not quoted in an active market. Financial assets classified as loans and receivables by
    
    the Group include notes receivable, accounts receivable, interest receivable and other receivables.
    
    Loans and receivables are subsequently measured at amortised cost using the effective interest
    
    method. Gain or loss arising from derecognition, impairment or amortisation is recognised in
    
    profit or loss.
    
    9.2.2 Available-for-sale financial assets
    
    Available-for-sale financial assets include non-derivative financial assets that are designated on
    
    initial recognition as available for sale, and financial assets that are not classified as financial
    
    assets at fair value through profit or loss, loans and receivables or held-to-maturity investments.
    
    For investments in equity instruments that do not have a quoted market price in an active market
    
    and whose fair value cannot be reliably measured, they are measured at cost.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
    
    continued
    
    9. Financial instruments - continued
    
    9.3 Impairment of financial assets
    
    The Group assesses at each balance sheet date the carrying amounts of financial assets other than
    
    those at fair value through profit or loss. If there is objective evidence that a financial asset is
    
    impaired, the Group determines the amount of any impairment loss. Objective evidence that a
    
    financial asset is impaired is evidence that, arising from one or more events that occurred after the
    
    initial recognition of the asset, the estimated future cash flows of the financial asset, which can be
    
    reliably measured, have been affected.
    
    Objective evidence that a financial asset is impaired includes the following observable events:
    
    (1) Significant financial difficulty of the
    
    issuer or obligor;
    
    (2) A breach of contract by the borrower, such
    
    as a default or delinquency in interest or principal payments;
    
    (3) The Group, for economic or legal reasons
    
    relating to the borrower's financial difficulty, granting a concession to the borrower;
    
    (4) It becoming probable that the borrower
    
    will enter bankruptcy or other financial reorganisations;
    
    (5) The disappearance of an active market for
    
    that financial asset because of financial difficulties of the issuer;
    
    (6) Upon an overall assessment of a group of
    
    financial assets, observable data indicates that there is a measurable decrease in the
    
    estimated future cash flows from the group of financial assets since the initial recognition
    
    of those assets, although the decrease cannot yet be identified with the individual financial
    
    assets in the group. Such observable data includes:
    
    - Adverse changes in the payment status of
    
    borrower in the group of assets;
    
    - Economic conditions in the country or
    
    region of the borrower which may lead to a failure to pay the group of assets;
    
    (7) Significant adverse changes in the
    
    technological, market, economic or legal environment in which the issuer operates,
    
    indicating that the cost of the investment in the equity instrument may not be recovered by
    
    the investor;
    
    (8) A significant or prolonged decline in the
    
    fair value of an investment in an equity instrument below its cost;
    
    (9) Other objective evidence indicating there
    
    is an impairment of a financial asset.
    
    - Impairment of financial assets measured at amortised costIf financial assets carried at amortised cost are impaired, the carrying amounts of the financialassets are reduced to the present value of estimated future cash flows (excluding future creditlosses that have not been incurred) discounted at the financial asset's original effective interestrate. The amount of reduction is recognised as an impairment loss in profit or loss. If,subsequent to the recognition of an impairment loss on financial assets carried at amortised cost,there is objective evidence of a recovery in value of the financial assets which can be related
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    objectively to an event occurring after the impairment is recognised, the previously recognised
    
    impairment loss is reversed. However, the reversal is made to the extent that the carrying
    
    amount of the financial asset at the date the impairment is reversed does not exceed what the
    
    amortised cost would have been had the impairment not been recognised.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
    
    continued
    
    9. Financial instruments - continued
    
    9.3 Impairment of financial assets - continued
    
    - Impairment of financial assets measured at amortised cost - continuedFor a financial asset that is individually, the Group assesses the asset individually for impairment.- Impairment of available for sale assets measured at cost
    
    If an impairment loss has been incurred on an investment in unquoted equity instrument (without
    
    a quoted price in an active market) whose fair value cannot be reliably measured, or on a
    
    derivative financial asset that is linked to and must be settled by delivery of such an unquoted
    
    equity instrument, the carrying amount of the financial asset is reduced to the present value of
    
    estimated future cash flows discounted at the current market rate of return for a similar financial
    
    asset. The amount of reduction is recognised as an impairment loss in profit or loss. The
    
    impairment loss on such financial asset is not reversed once it is recognised.
    
    9.4 Transfer of financial assets
    
    The Group derecognises a financial asset if one of the following conditions is satisfied: (1) the
    
    contractual rights to the cash flows from the financial asset expire; or (2) the financial asset has
    
    been transferred and substantially all the risks and rewards of ownership of the financial asset is
    
    transferred to the transferee; or (3) although the financial asset has been transferred, the Group
    
    neither transfers nor retains substantially all the risks and rewards of ownership of the financial
    
    asset but has not retained control of the financial asset.
    
    For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, the
    
    difference between (1) the carrying amount of the financial asset transferred; and (2) the sum of
    
    the consideration received from the transfer and any cumulative gain or loss that has been
    
    recognised in other comprehensive income, is recognised in profit or loss.
    
    9.5 Classification, recognition and measurement of financial liabilities
    
    Debt and equity instruments issued by the Group are classified into financial liabilities or equity
    
    on the basis of the substance of the contractual arrangements and definitions of financial liability
    
    and equity instrument.
    
    On initial recognition, financial liabilities are classified into financial liabilities at fair value
    
    through profit or loss and other financial liabilities. The financial liabilities in group are other
    
    financial liabilities, including short-term borrowings, notes payable, account payables, interest
    
    payables, other payables, non-current liabilities due within one year and long-term payables etc.
    
    9.5.1 Other financial liabilities
    
    Other financial liabilities are subsequently measured at amortised cost using the effective interest
    
    method, with gain or loss arising from derecognition or amortisation recognised in profit or loss.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
    
    continued
    
    9. Financial instruments - continued
    
    9.6 Derecognition of financial liabilities
    
    The Group derecognises a financial liability (or part of it) only when the underlying present
    
    obligation (or part of it) is discharged.
    
    When the Group derecognises a financial liability or a part of it, it recognises the difference
    
    between the carrying amount of the financial liability (or part of the financial liability)
    
    derecognised and the consideration paid (including any non-cash assets transferred or new
    
    financial liabilities assumed) in profit or loss.
    
    9.7 Offsetting financial assets and financial liabilities
    
    Where the Group has a legal right that is currently enforceable to set off the recognised financial
    
    assets and financial liabilities, and intends either to settle on a net basis, or to realise the financial
    
    asset and settle the financial liability simultaneously, a financial asset and a financial liability shall
    
    be offset and the net amount is presented in the balance sheet. Except for the above circumstances,
    
    financial assets and financial liabilities shall be presented separately in the balance sheet and shall
    
    not be offset.
    
    9.8 Equity instruments
    
    An equity instrument is any contract that evidences a residual interest in the assets of the Group
    
    after deducting all of its liabilities. The Group does not recognise any changes in the fair value of
    
    equity instruments. The equity instruments transaction expenses deducted from equity.
    
    The Group treats distribution to equity instrument holders as profit distributions. Shareholder
    
    equity is not affected by share dividend distributed.
    
    10 Accounts Receivable
    
    The Group believes that the individual receivables are all significant, and the corresponding
    
    receivables are individually tested for impairment, and individual recognition method is used to
    
    confirm bad debt provision.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
    
    continued
    
    11 Inventories
    
    11.1 Categories of inventories
    
    The Group's inventories mainly include raw materials, work in progress and finished goods.
    
    Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase,
    
    costs of conversion and other expenditures incurred in bringing the inventories to their present
    
    location and condition.
    
    11.2 Valuation method of inventories upon delivery
    
    The actual cost of inventories upon delivery is calculated using the weighted average method.
    
    Agricultural products harvested are reported in accordance with the CAS 1 Inventories.
    
    11.3 Basis for determining net realisable value of inventories and provision methods for decline in
    
    value of inventories
    
    At the balance sheet date, inventories are measured at the lower of cost and net realisable value.
    
    If the net realisable value is below the cost of inventories, a provision for decline in value of
    
    inventories is made. Net realisable value is the estimated selling price in the ordinary course of
    
    business less the estimated costs of completion, the estimated costs necessary to make the sale and
    
    relevant taxes. Net realisable value is determined on the basis of clear evidence obtained, and
    
    takes into consideration the purposes of holding inventories and effect of post balance sheet
    
    events.
    
    Provision for decline in value of other inventories is made based on the excess of cost of
    
    inventory over its net realisable value on an item-by-item basis.
    
    After the provision for decline in value of inventories is made, if the circumstances that
    
    previously caused inventories to be written down below cost no longer exist so that the net
    
    realisable value of inventories is higher than their cost, the original provision for decline in value
    
    is reversed and the reversal is included in profit or loss for the period.
    
    11.4 Inventory count system
    
    The perpetual inventory system is maintained for stock system.
    
    11.5 Amortisation method for low cost and short-lived consumable items and packaging materials
    
    Packaging materials and low cost and short-lived consumable items are amortised using the
    
    immediate write-off method.
    
    12 Non-current assets held for sale
    
    Non-current assets and disposal groups are classified as held for sale category when the Group
    
    recovers the book value through a sale (including an exchange of nonmonetary assets that has
    
    commercial substance) rather than continuing use.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
    
    continued
    
    12. Non-current assets held for sale - continued
    
    Non-current assets or disposal groups classified as held for sale are required to satisfy the
    
    following conditions: (1) the asset or disposal group is available for immediate sale in its present
    
    condition subject only to terms that are usual and customary for sales of such asset or disposal
    
    group; (2) the sale is highly probable, i.e. the Group has made a resolution about selling plan and
    
    obtained a confirmed purchase commitment and the sale is expected to be completed within one
    
    year.
    
    The Group measures the no-current assets or disposal groups classified as held for sale at the
    
    lower of their carrying amount and fair value less costs to sell. Where the carrying amount is
    
    higher than the net amount of fair value less costs to sell, carrying amount should be reduced to
    
    the net amount of fair value less costs to sell, and such reduction is recognized in impairment loss
    
    of assets and included in profit or loss for the period. Meanwhile, provision for impairment of
    
    held-for-sale assets are made. When there is increase in the net amount of fair value of
    
    non-current assets held for sale less costs to sell at the balance sheet date, the original deduction
    
    should be reversed in impairment loss of assets recognized after the classification of held-for-sale
    
    category, and the reverse amount is include in profit or loss for the period.
    
    Non-current assets held for sale in non-current assets are not subject to depreciation or
    
    amortization.
    
    13. Long term equity investments
    
    13.1 Basis for determining control, joint control and significant influence
    
    Control is the power to govern the financial and operating policies of an entity so as to obtain
    
    benefits from its activities. Joint control is the contractually agreed sharing of control over an
    
    economic activity, and exists only when the strategic financial and operating policy decisions
    
    relating to the activity require the unanimous consent of the parties sharing control. Significant
    
    influence is the power to participate in the financial and operating policy decisions of the investee
    
    but is not control or joint control over those policies. When determining whether an investing
    
    enterprise is able to exercise control or significant influence over an investee, the effect of
    
    potential voting rights of the investee (for example, warrants and convertible debts) held by the
    
    investing enterprises or other parties that are currently exercisable or convertible shall be
    
    considered.
    
    13.2 Determination of initial investment cost
    
    For a long-term equity investment acquired not involving enterprises under common control, the
    
    investment cost of the long-term equity investment is the cost of acquisition.
    
    Audit fee, legal services, consulting fees and other related management costs in acquisition are
    
    expensed in profits and losses when happened.
    
    Other long-term equity investments acquired from other than acquisitions are recognised using
    
    original cost.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
    
    continued
    
    13. Long term equity investments - continued
    
    13.3 Subsequent measurement and recognition of profit or loss
    
    13.3.1 Long-term equity investment accounted for using the cost method
    
    The Group accounts for long-term equity investment using the cost method. A subsidiary is an
    
    investee that is controlled by the Group.
    
    Under the cost method, a long-term equity investment is measured at initial investment cost.
    
    Long-term equity investment is adjusted when capital is added or recollected. Investment income
    
    is recognised in the period in accordance with the attributable share of cash dividends or profit
    
    distributions declared by the investee.
    
    13.4 Disposal of long-term equity investments
    
    On disposal of a long term equity investment, the difference between the proceeds actually
    
    received and receivable and the carrying amount is recognised in profit or loss for the period.
    
    14. Investment properties
    
    Investment property is property held to earn rentals or for capital appreciation or both.
    
    An investment property is measured initially at cost. Subsequent expenditures incurred for such
    
    investment property are included in the cost of the investment property if it is probable that
    
    economic benefits associated with an investment property will flow to the Group and the
    
    subsequent expenditures can be measured reliably. Other subsequent expenditures are recognised
    
    in profit or loss in the period in which they are incurred.
    
    The Group uses the cost model for subsequent measurement of investment property, and adopts a
    
    depreciationor amortisation policy for the investment property which is consistent with that for
    
    buildings or land use rights.
    
    When an investment property is sold, transferred, retired or damaged, the Group recognises the
    
    amount of any proceeds on disposal net of the carrying amount and related taxes in profit or loss
    
    for the period.
    
    15. Fixed assets
    
    15.1 Recognition criteria for fixed assets
    
    Fixed assets are tangible assets that are held for use in the production or supply of goods or
    
    services, for rental to others, or for administrative purposes, and have useful lives of more than
    
    one accounting year. A fixed asset is recognised only when it is probable that economic benefits
    
    associated with the asset will flow to the Group and the cost of the asset can be measured reliably.
    
    Fixed assets are initially measured at cost.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING-
    
    continued
    
    15. Fixed assets - continued
    
    15.1 Recognition criteria for fixed assets - continued
    
    Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset and
    
    if it is probable that economic benefits associated with the asset will flow to the Group and the
    
    subsequent expenditures can be measured reliably. Meanwhile the carrying amount of the
    
    replaced part is derecognised. Other subsequent expenditures are recognised in profit or loss in
    
    the period in which they are incurred.
    
    15.2 Depreciation of each category of fixed assets
    
    A fixed asset is depreciated over its useful life using the straight-line method since the month
    
    subsequent to the one in which it is ready for intended use. The useful life, estimated net
    
    residual value rate and annual depreciation rate of each category of fixed assets are as follows:
    
    Estimated Estimated Annual
    
    useful life residual rate depreciation rate
    
    Buildings 20-40years 0-5% 2.4%-5.0%
    
    Machinery 5-30years 0-5% 3.2%-20.0%
    
    Motor Vehicles 4-12years 0-5% 7.9%-25.0%
    
    Estimated net residual value assumes the situation where a fixed asset expire for its estimated
    
    useful life and is in its expected final status. Estimated net residual value is the amount that the
    
    Group can obtain from the disposal less expected disposal fees.
    
    15.3 Other explanations
    
    If a fixed asset is upon disposal or no future economic benefits are expected to be generated from
    
    its use or disposal, the fixed asset is derecognised. When a fixed asset is sold, transferred, retired
    
    or damaged, the amount of any proceeds on disposal of the asset net of the carrying amount and
    
    related taxes is recognised in profit or loss for the period.
    
    The Group reviews the useful life and estimated net residual value of a fixed asset and the
    
    depreciation method applied at least once at each financial year-end, and account for any change
    
    as a change in an accounting estimate.
    
    16. Construction in progress
    
    Construction in progress is measured at its actual costs. The actual costs include various
    
    construction expenditures during the construction period, borrowing costs capitalised before it is
    
    ready for intended use and other relevant costs. Construction in progress is not depreciated.
    
    Construction in progress is transferred to a fixed asset when it is ready for intended use.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
    
    continued
    
    17. Borrowing costs
    
    Borrowing costs directly attributable to the acquisition, construction or production of qualifying
    
    asset are capitalised when expenditures for such asset and borrowing costs are incurred and
    
    activities relating to the acquisition, construction or production of the asset that are necessary to
    
    prepare the asset for its intended use or sale have commenced. Capitalisation of borrowing costs
    
    ceases when the qualifying asset being acquired, constructed or produced becomes ready for its
    
    intended use or sale. Capitalisation of borrowing costs is suspended during periods in which the
    
    acquisition, construction or production of a qualifying asset is suspended abnormally and when
    
    the suspension is for a continuous period of more than 3 months. Capitalisation is suspended until
    
    the acquisition, construction or production of the asset is resumed. Other borrowing costs are
    
    recognised as an expense in the period in which they are incurred. Where funds are borrowed
    
    under a specific-purpose borrowing, the amount of interest to be capitalized is the actual interest
    
    expense incurred on that borrowing for the period less any bank interest earned from depositing
    
    the borrowed funds before being used on the asset or any investment income on the temporary
    
    investment of those funds.
    
    18. Biological assets
    
    The Group's biological assets are bearer biological assets.
    
    18.1 Bearer biological assets
    
    Bearer biological assets are biological assets, for example, held for the production of agricultural
    
    produce, provision of services or rental, Bearer biological assets in the Group are vines. A bearer
    
    biological asset is initially measured at cost. The cost of a bearer biological asset self-grown or
    
    self-bred comprises those costs necessarily incurred and directly attributable to the asset before
    
    the asset becomes available for its intended production and operating purposes, and any
    
    borrowing cost meeting the capitalisation criteria.
    
    The Group charge deprecation for productive biological assets which satisfy expected production,
    
    and record the deprecation in balance sheet and income statement. The Group uses straight line
    
    method to calculate the deprecation, and details as follows:
    
    Estimated Estimated Annual
    
    Category useful life residual rate depreciation rate
    
    Vines 20 years - 5.0%
    
    The Group evaluates the useful life and expected net salvage value by considering the normal
    
    producing life of the bearer biological assets.
    
    The Group reviews the useful life and estimated net residual value of bearer biological assets and
    
    the depreciation method applied at least once at each financial year-end, and account for any
    
    change as a change in an accounting estimate.
    
    On the sale, identification of any shortages during stocktaking, death or damage of biological
    
    asset, the proceeds on disposal net of the carrying amount and relevant taxes is recognised in
    
    profit or loss for the current period.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
    
    continued
    
    19. Intangible assets
    
    Intangible assets include land use rights, software, etc.
    
    An intangible asset is measured initially at cost method. When an intangible asset with a finite
    
    useful life is available for use, its original cost less net residual value and any accumulated
    
    impairment losses is amortised over its estimated useful life using the straight-line method.
    
    Intangible assets with indefinite useful lives are not amortized. The useful lives of the intangible
    
    assets are as follows:
    
    Annual
    
    Item Useful life Net residual value amortization rate
    
    Land use rights 40-50 years - 2.0%-2.5%
    
    Software 5-10 years - 10.0%-20.0%
    
    Trademark 10 years - 10.0%
    
    Except for the above intangible assets with finite useful lives, the Group had also land use right
    
    and trademark with infinite useful lives. Land use right with infinite useful lives was related to the
    
    Group acquired Vi?a Indómita, S.A., Vi?a Dos Andes, S.A., and Bodegas Santa Alicia SpA.
    
    (collectively referred to as the "Chile Indomita Wine Group"), which was a permanent ownership
    
    and held by the Chile Indomita Wine Group according to the relatively Chilean law, therefore
    
    there was no amortization. Trademark was related to the Group acquired the Chile Indomita Wine
    
    Group, which had no finite useful lives. The valuation of trademark was based on the trends in the
    
    market and competitive environment, product cycle, and managing long-term development
    
    strategy. Those basis indicated the trademark will provide net cash flows to the Group within a
    
    given period. Because it was hard to predict the period that it would bring economic benefits to
    
    the Group, the useful lives were uncertain.
    
    For an intangible asset with a finite useful life, the Group reviews the useful life and amortisation
    
    method at the end of the period, and makes adjustments when necessary.
    
    20. Impairment of long-term assets
    
    The Group and the Company review the impairment status of long-term equity investments, fixed
    
    assets, construction in progress, bearer biological asset and intangible assets with finite useful life
    
    at the end of each year. If the assets exist impairment, the Group estimates the recoverable amount
    
    of the assets.Intangible assets with indefinite useful life and intangible assets not yet available for
    
    use are tested for impairment annually, irrespective of whether there is any indication that the
    
    assets may be impaired.
    
    Recoverable amount is estimated on individual basis. If it is not practical to estimate the
    
    recoverable amount of an individual asset, the recoverable amount of the asset group to which the
    
    asset belongs will be estimated. The recoverable amount of an asset is the higher of its fair value
    
    less costs of disposal and the present value of the future cash flows expected to be derived from
    
    the asset.
    
    If recoverable amount of assets is less than book value, the difference is recognised as impairment
    
    provision and expensed in current period.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
    
    continued
    
    20. Impairment of long-term assets - continued
    
    Goodwill is tested for impairment at least at the end of each year. For the purpose of impairment
    
    testing, goodwill is considered together with the related assets group (s), i.e., goodwill is
    
    reasonably allocated to the related assets group (s) or each of assets group (s) expected to benefit
    
    from the synergies of the combination. An impairment loss is recognised if the recoverable
    
    amount of the assets group or sets of assets groups (including goodwill) is less than its carrying
    
    amount. The impairment loss is firstly allocated to reduce the carrying amount of any goodwill
    
    allocated to such assets group or sets of assets groups, and then to the other assets of the group
    
    pro-rata on the basis of the carrying amount of each asset (other than goodwill) in the group.
    
    The impairment is recognised in profit or loss for the period in which it is incurred and will not be
    
    reversed in any subsequent period.
    
    21. Long term prepaid expenses
    
    Long term prepaid expenses of the Group are amortized over the following period:
    
    Amortization period
    
    Land requisition fee 50 years
    
    Land lease prepayment 50 years
    
    Greening fee 5-20 years
    
    Leasehold improvement 3-5years
    
    Others 3 years
    
    22. Employee benefits
    
    22.1 Short-term employee benefits
    
    In an accounting period in which an employee has rendered service to the Group, the Group
    
    recognises the actual employee benefits for that service as a liability. The employee benefits of
    
    the Group are either included in cost of related assets or charged to profit or loss in the period
    
    when they are incurred. Non-monetary employee benefits are measured at fair value.
    
    Social insurances such as medical insurance, injury insurance and pregnancy insurance, housing
    
    funds, labor union and employee education fees paid by the Group for employees, are recognised
    
    as relevant liability in the period in which the employees provide service, in accordance with the
    
    regulated recognition basis and percentage. The related expenditures are either included in cost of
    
    related assets or charged to profit or loss in the period when they are incurred.
    
    22.2 Accounting treatments of retired benefits
    
    Retired benefits of the Group are all predetermined provision plan.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
    
    continued
    
    22. Employee benefits- continued
    
    22.2 Accounting treatments of retired benefits- continued
    
    In the period in which the employees provide service, the Group recognise liability in accordance
    
    with the amounts to be paid calculated according to the predetermined provision plan, and the
    
    related expenditures are either included in cost of related assets or charged to profit or loss in the
    
    period when they are incurred.
    
    22.3 Accounting treatments of termination benefits
    
    When providing termination benefits to employees, the Group recognise employee benefits
    
    payroll resulting from termination benefits at the earlier of: the Group cannot unilaterally
    
    withdraw from the termination plan or the redundancy offer; the Group recognise relevant costs
    
    and expenses related to the payment of termination benefits in reconstructuring.
    
    23. Revenue
    
    23.1 Revenue from sale of goods
    
    Revenue from sale of goods is recognised when the Group has transferred to the buyer the
    
    significant risks and rewards of ownership of the goods. The Group retains neither continuing
    
    managerial involvement to the degree usually associated with ownership nor effective control
    
    over the goods sold. The amount of revenue can be measured reliably and it is probable that the
    
    associated economic benefits will flow to the Group. The associated costs incurred or to be
    
    incurred can be measured reliably.
    
    23.2 Revenue from rendering of services
    
    When the outcome of a transaction involving the rendering of services can be estimated reliably,
    
    revenue associated with the transaction shall be recognized by reference the stage of completion
    
    of the transaction at the reporting date. The outcome of a transaction can be estimated reliably.
    
    When the outcome of the transaction involving the rendering of services cannot be estimated
    
    reliably, revenue is recognised only to the extent of the costs incurred that will be recoverable,
    
    and the costs incurred are recognised as expenses for the period. When it is not probable that the
    
    costs incurred will be recovered, revenue is not recognised.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
    
    continued
    
    24. Government grants
    
    Government grants are transfer of monetary assets and non-monetary assets from the government
    
    to the Group at no consideration. A government grant is recognised only when the Group can
    
    comply with the conditions attaching to the grant and the Group will receive the grant.
    
    Monetary government grants are measured by the amount received or receivable.
    
    24.1 Government grant related to an asset
    
    A government grant related to an asset is recognised as deferred income, and evenly amortised to
    
    profit or loss over the useful life of the related asset.
    
    24.2Government grant related to income
    
    For a government grant related to income, if the grant is a compensation for related expenses or
    
    losses to be incurred in subsequent periods, the grant is recognised as deferred income, and
    
    recognised in profit or loss over the periods in which the related costs are recognised. If the grant
    
    is a compensation for related expenses or losses already incurred, the grant is recognised
    
    immediately in profit or loss for the period.
    
    A government grant related to the Group's daily activities is recognized in other income based on
    
    the nature of economic activities; a government grant is not related to the Group's daily activities
    
    is recognized in non-operating income and expenses.
    
    The Company's government loans with below-market rate of interest are directly paid to the
    
    Company, and the related low rate interest will write off related borrowing costs . The
    
    government loans with below-market rate of interest obtained by other subsidiaries of the Group
    
    are government loans, which is provided by local bureau of finance through bank with
    
    below-market rate of interest. The actual amount of the loan received by the Group recognized as
    
    borrowings, and the related borrowing costs are calculated according to the principal of the loan
    
    and the below-market rate.
    
    25. Deferred tax assets/deferred tax liabilities
    
    The income tax expenses include current income tax and deferred income tax.
    
    25.1 Current income tax
    
    At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods
    
    are measured at the amount expected to be paid (or recovered) according to the requirements of
    
    tax laws.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
    
    continued
    
    25. Deferred tax assets/deferred tax liabilities - continued
    
    25.2 Deferred tax assets and deferred tax liabilities
    
    For temporary differences between the carrying amounts of certain assets or liabilities and their
    
    tax base, or between the nil carrying amount of those items that are not recognised as assets or
    
    liabilities and their tax base that can be determined according to tax laws, deferred tax assets and
    
    liabilities are recognised using the balance sheet liability method.
    
    Deferred tax is generally recognised for all temporary differences. Deferred tax assets for
    
    deductible temporary differences are recognised to the extent that it is probable that taxable
    
    profits will be available against which the deductible temporary differences can be utilised.
    
    However, for temporary differences associated with the initial recognition of goodwill and the
    
    initial recognition of an asset or liability arising from a transaction (not a business combination)
    
    that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of
    
    transaction, no deferred tax asset or liability is recognised.
    
    For deductible losses and tax credits that can be carried forward, deferred tax assets are
    
    recognised to the extent that it is probable that future taxable profits will be available against
    
    which the deductible losses and tax credits can be utilised.
    
    Deferred tax liabilities are recognised for taxable temporary differences associated with
    
    investments in subsidiaries and associates, and interests in joint ventures, except where the Group
    
    is able to control the timing of the reversal of the temporary difference and it is probable that the
    
    temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from
    
    deductible temporary differences associated with such investments and interests are only
    
    recognised to the extent that it is probable that there will be taxable profits against which to utilise
    
    the benefits of the temporary differences and they are expected to reverse in the foreseeable
    
    future.
    
    At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates,
    
    according to tax laws, that are expected to apply in the period in which the asset is realised or the
    
    liability is settled.
    
    Current and deferred tax expenses or income are recognised in profit or loss for the period, except
    
    when they arise from transactions or events that are directly recognised in other comprehensive
    
    income or in shareholders' equity, in which case they are recognised in other comprehensive
    
    income or in shareholders' equity; and when they arise from business combinations, in which case
    
    they adjust the carrying amount of goodwill.
    
    At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if it
    
    is no longer probable that sufficient taxable profits will be available in the future to allow the
    
    benefit of deferred tax assets to be utilised. Such reduction in amount is reversed when it
    
    becomes probable that sufficient taxable profits will be available.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
    
    continued
    
    25. Deferred tax assets/deferred tax liabilities - continued
    
    25.3 Net off of income taxes
    
    When the Group has a legal right to settle on a net basis and intends either to settle on a net basis
    
    or to realise the assets and settle the liabilities simultaneously, current tax assets and current tax
    
    liabilities are offset and presented on a net basis.
    
    When the Group has a legal right to settle current tax assets and liabilities on a net basis, and
    
    deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation
    
    authority on either the same taxable entity or different taxable entities which intend either to settle
    
    current tax assets and liabilities on a net basis or to realise the assets and liabilities simultaneously,
    
    in each future period in which significant amounts of deferred tax assets or liabilities are expected to
    
    be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a net basis.
    
    26. Leases
    
    Leases are classified as finance leases whenever the terms of the lease transfer substantially all the
    
    risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
    
    26.1. Operating lease accounting methods
    
    26.1.1 The Group as lessee under operating leases
    
    Operating lease payments are recognised on a straight-line basis over the term of the relevant
    
    lease, and are either included in the cost of related asset or charged to profit or loss for the period.
    
    Initial direct costs incurred are charged to profit or loss for the period.
    
    26.1.2 The Group as lessor under operating leases
    
    Rental income from operating leases is recognised in profit or loss on a straight-line basis over the
    
    term of the relevant lease. Initial direct costs with more than an insignificant amount are
    
    capitalised when incurred, and are recognised in profit or loss on the same basis as rental income
    
    over the lease term. Other initial direct costs with an insignificant amount are charged to profit or
    
    loss in the period in which they are incurred. Contingent rents are charged to profit or loss in the
    
    period in which they actually arise.
    
    27. Changes in accounting policies
    
    The Group started adopting the Accounting Standard for Business Enterprise No.16 - Government
    
    Grants revised by MoF in 2017 respectively since 28 May 2017 and 12 June 2017 respectively.
    
    Besides, the financial statements have been prepared under the Notice of the Revised Format of
    
    Financial Statements for General Business Enterprise (Cai Kuai (2017) No. 30, hereinafter
    
    referred to as the "Cai Kuai No.30 Document") released by the MoF on 25 December 2017.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    III. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING -
    
    continued
    
    27. Changes in accounting policies - continued
    
    Government grants
    
    Prior to the implementation of the Accounting Standard for Business Enterprise No.16 -
    
    Government Grants (revised), the Group did not distinguish whether government grants were
    
    related to daily activities and were included in non-operating income.After the implementation of
    
    the Accounting Standard for Business Enterprise No.16 - Government Grants (revised), a
    
    government grant related to the Group's daily activities is recognized in other income based on the
    
    nature of economic activities; a government grant is not related to the Group's daily activities is
    
    recognized in non-operating income.
    
    The Group has accounted for the above change in accounting policy retrospectively. Such
    
    changes in accounting policy has no impact on the financial statements for the comparable years.
    
    IV. CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY
    
    ASSUMPTIONS AND UNCERTAINTIES IN ACCOUNTING ESTIMATES
    
    In the application of accounting policies as set out in Note III, the Group is required to make
    
    judgments, estimates and assumptions about the carrying amounts of items in the financial
    
    statements that cannot be measured accurately, due to the internal uncertainties of the operating
    
    activities. These judgments, estimates and assumptions are based on historical experience of the
    
    Group's management as well as other factors that are considered to be relevant. Actual results
    
    may differ from these estimates.
    
    The Group periodically review the judgments, estimates and assumptions above on a going
    
    concern basis. For those changes in accounting policies that only affect current financial
    
    statements, the influences are recognized in current period. For those changes in accounting
    
    policies that affect both current and future financial statements, the influences are recognized in
    
    both current and prospective periods.
    
    Significant accounting judgments and accounting estimates
    
    The following are key assumptions for after balance sheet date event and other factors of
    
    uncertain estimation. They may cause material adjustment on balance sheet in following
    
    accounting period.
    
    Deferred tax assets
    
    Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that
    
    taxable profit will be available against which the losses can be utilized. Significant management
    
    judgment is required to determine the amount of deferred tax assets that can be recognized, based
    
    upon the likely timing and level of future taxable profits together with future tax planning
    
    strategies.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    IV. CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY
    
    ASSUMPTIONS AND UNCERTAINTIES IN ACCOUNTING ESTIMATES - continued
    
    Significant accounting judgments and accounting estimates - continued
    
    Depreciation
    
    As set out in Note III-15, the depreciation is calculated on the straight line basis to write-off the
    
    cost of each item of fixed assets to its residual value over its estimated useful life. The Group's
    
    management determines the estimated useful lives for its fixed assets. This estimate is based on
    
    the historical experience of the actual useful lives of fixed assets of similar nature and functions.
    
    If the previous estimates have significant changes, and depreciation expenses will be adjusted in
    
    the future periods.
    
    Useful life of intangible assets
    
    The estimated useful lives of the intangible assets are determined based on the historical
    
    experience of the actual useful lives of intangible assets of similar nature and functions as well as
    
    considering the contractual rights and statutory rights applicable to the intangible assets.
    
    When the estimated useful lives of finite intangible assets are shortened or extended, the
    
    amortization periods should be adjusted accordingly.
    
    Impairment of long-term assets
    
    The Group assesses whether the recoverable amount is lower than the book value. If there are
    
    any indicators that the book value of non-current assets cannot be fully recoverable, impairment
    
    losses should be recorded.
    
    The recoverable amount is the higher of an asset's fair value less costs to sell and the present value
    
    of the future cash flows expected to be derived from an asset. As it is difficult for the Group to
    
    obtain the quoted market price of the assets (or assets group), the fair value of the assets cannot be
    
    reliably estimated. When the management make estimation on the expected future cash flows
    
    from the asset or cash generating unit, estimates should be made on choosing a suitable growth
    
    rate of sales , average gross profit , related operating costs and discount rate in order to calculate
    
    the present value of those cash flows, which has a high uncertainty.
    
    Estimated provision for accounts receivable
    
    A provision for impairment of trade receivables is established when there is objective evidence
    
    that the Group will not be able to collect all amounts due according to the original terms of
    
    receivables. Significant financial difficulties of the debtor, probability that the debtor will enter
    
    bankruptcy are considered indicators that the trade receivable is impaired. The provision is
    
    reassessed at the end of each year.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    IV. CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY
    
    ASSUMPTIONS AND UNCERTAINTIES IN ACCOUNTING ESTIMATES - continued
    
    Significant accounting judgments and accounting estimates - continued
    
    Inventory provision based on net realizable value
    
    The inventories are measured on the lower of carrying value and net realizable value, and
    
    provision should be made for impairment on obsolete and slow moving inventories. The group
    
    will reassess whether the net realizable value is lower than the carrying cost at the end of each
    
    year.
    
    The determination of the fair value of identifiable assets and liabilities associated with business
    
    combination.
    
    For the cost of business combination, the Group allocates the purchase price based on fair value of
    
    relatively identifiable assets and liabilities. When the fair value of relatively identifiable assets
    
    and liabilities are evaluated by the present value of its future cash flows, The management need
    
    estimate the growth rate of sales based on future market supply and demand to predict cash flows,
    
    and considered the proper discount rate for calculating, management need use major accounting
    
    estimates and judgments in the progress.
    
    V. TAXES
    
    1. The main taxes and tax rate are as follows:
    
    (1) China
    
    Value added tax VAT is levied at 6% and 17% on the invoiced amount after
    
    deduction of eligible input VAT.
    
    Consumption tax The consumption tax of the group is levied on gross revenue
    
    at rates ranging from 10% to 20%.
    
    City development tax Levied at 7% of total business tax payment.
    
    Corporate income tax The Group is subject to a corporate income tax rate of 25%
    
    on its taxable income.
    
    (2) France
    
    Value added tax VAT is levied at 19.6% on the invoiced amount after deduction
    
    of eligible input VAT.
    
    Corporate income tax The Group is subject to a corporate income tax rate of 33%
    
    on its taxable income.
    
    (3) Spain
    
    Value added tax VAT is levied at 21% on the invoiced amount after deduction
    
    of eligible input VAT.
    
    Corporate income tax The Group is subject to a corporate income tax rate of 28%
    
    on its taxable income.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    V. TAXES
    
    1. The main taxes and tax rate are as follows - continued:
    
    (4) Chile
    
    Value added tax VAT is levied at 19% on the invoiced amount after deduction
    
    of eligible input VAT.
    
    Corporate income tax The Group is subject to a corporate income tax rate of 25.5%
    
    on its taxable income.
    
    Other than tax incentives stated in Note V-2, applicable tax rates of the Group in 2017 and 2016
    
    are all stated as above.
    
    2. Tax incentives and relative permit
    
    Ningxia Changyu Grape Growing Co., Ltd.("Ningxia Growing"), a subsidiary of the Group,
    
    whose principal activity is grape growing is incorporated in Ningxia Huizu Autonomous Region.
    
    According to clause 27 of PRC Corporate Income Tax and clause 86 of PRC Corporate Income
    
    Tax Measures for Implementation, Ningxia Growing enjoys an exemption of corporate income
    
    tax.
    
    Yantai Changyu Grape Growing Co., Ltd.(" Grape Growing "), a branch of the Company, whose
    
    principal activity is grape growing is incorporated in Zhifu District, Yantai City, Shandong
    
    Province. According to clause 27 of PRC Corporate Income Tax and clause 86 of PRC Corporate
    
    Income Tax Measures for Implementation, Grape Growing enjoys an exemption of corporate
    
    income tax.
    
    Xinjiang Tianzhu Co., Ltd ("Xinjiang Tianzhu"), a subsidiary of the Company, is an enterprise of
    
    wine production and sales incorporated in Shihezi city, Xinjiang Weizu Autonomous. In
    
    accordance with the Notice on Tax Policy Issues concerning Further Implementation of the
    
    Western China Development Strategy (Cai Shui [2011] No.58), Xinjiang Tianzhu is qualified to
    
    enjoy preferential taxation policies, which means it can pay corporate income tax at a preferential
    
    rate of 15% for the period from 2015 to 2020.
    
    Xinjiang Babao Baron Chateau Co., Ltd. ("Shihezi Chateau"), a subsidiary of the Company, is an
    
    enterprise of wine production and sales incorporated in Shihezi city, Xinjiang Weizu Autonomous.
    
    In accordance with the Notice on Tax Policy Issues concerning Further Implementation of the
    
    Western China Development Strategy (Cai Shui [2011] No.58), Shihezi Chateau is qualified to
    
    enjoy preferential taxation policies, which means it can pay corporate income tax at a preferential
    
    rate of 15% for the period from 2015 to 2020.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    
    1. Cash and bank
    
    Closing balance Opening balance
    
    RMB RMB
    
    Cash 136,973 117,507
    
    Bank balance 1,278,397,711 1,240,607,797
    
    Other currency fund ___12_3_,_9_8_7_,_82_5_ __1_5__0,_7_9_2_,3_0_3_
    
    Total _1_,_40_2__,5_2_2_,5__0_9 _1_,3__91_,_5_1_7_,6_0_7_
    
    At 31 December 2017, the balance of restricted cash of the Group is as follows:
    
    Closing balance Opening balance
    
    RMB RMB
    
    The Company's housing fund ___2__,6_4_5_,_4_1_0 ___2__,7_1_1_,_92__6
    
    As at 31 December 2017, the Group's other monetary assets is as follows:
    
    Closing balance Opening balance
    
    RMB RMB
    
    Research and Development Co., Ltd
    
    ("R&D Centre") pledged deposit 61,700,000 46,100,000
    
    Refundable deposit for notes payable - 38,900,000
    
    Deposit for letter of credit 57,946,190 25,694,735
    
    Alipay account balance 4,317,635 40,047,367
    
    Deposit for Company cards 14,000 50,201
    
    Deposit for ICBC platform ______1_0_,_0_0_0 ________-___
    
    _1__23__,9_8_7_,_8_25_ __15__0_,7_9_2_,_30__3
    
    As at 31 December 2017, the Group's term deposits with original maturity of more than three
    
    months when acquired is RMB 95,000,000 with interest rate 1.40%-1.95% (31 December
    
    2016:RMB3,000,000).
    
    2. Notes receivable
    
    (1) Categories of notes receivable
    
    Closing balance Opening balance
    
    RMB RMB
    
    Bank acceptances 2_4__4,_7_9_6_,8__1_8 _2_10_,_4_7_0_,_0_2_7
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    2. Notes receivable - continued
    
    (2) Notes receivable which have been pledged as security at the end of the period
    
    As at 31 December 2017, there was no pledged notes receivable (31 December 2016: Nil).
    
    (3) Notes endorsed by the Group to other parties which are not yet due at the end of the period
    
    Closing balance Opening balance
    
    RMB RMB
    
    Bank acceptances 1_8__8,_8_5_5_,_84_3_ _1_98_,_3_0_2_,531___
    
    As at 31 December 2017, notes endorsed by the Group to other parties which are not yet due at
    
    the end of the period is RMB 188,855,843 (31 December 2016: RMB 198,302,531). The notes are
    
    used for payment to suppliers and constructions. The Group believes that due to good reputation
    
    of bank, the risk of notes not accepting by bank on maturity is very low, and almost all the risks
    
    and rewards on ownership of the notes receivable have been transferred to the supplier, therefore
    
    derecognise the note receivables endorsed. If the bank is unable to pay the notes on maturity,
    
    according to the relevant laws and regulations of China, the Group would undertake limited
    
    liability for the notes.
    
    (4) Notes receivable reclassified to accounts receivable due to the drawers' inability to settle the note on
    
    maturity
    
    As at 31 December 2017, no notes receivable were reclassified as accounts receivable due to the
    
    default of drawer (31 December 2016: Nil).
    
    3. Accounts receivable
    
    (1) Disclosure of accounts receivable by categories:
    
    Closing balance Opening balance
    
    Bad debts Carrying Bad debts Carrying
    
    Amount provision amount Amount provision amountAmount Proportion Amount Ratio Amount Amount Proportion Amount Ratio AmountRMB % RMB % RMB RMB % RMB % RMBAccounts receivable for which
    
    bad debt provision has been
    
    assessed individually _26_3,_79_6,_35_5 _10_0_.0 __-__ __-__ _26_3,_79_6,_35_5 173,062,628 100.0 - - 173,062,628______ ___ ____ ____ ______
    
    The normal credit term is one month, which can be extended to one year for certain major
    
    customers. The accounts receivable are interest-free.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    3. Accounts receivable - continued
    
    (1) Disclosure of accounts receivable by categories - continued
    
    As at 31 December 2017, ownership restricted accounts receivable is RMB 46,337,062 (31
    
    December 2016: RMB 30,732,944), referring to Note VI-50.
    
    The aging analysis is as follows:
    
    Closing balance Opening balance
    
    RMB RMB
    
    Within 1 year 263,112,714 172,610,351
    
    1 to 2 years ____6_8_3_,_6_4_1 ____4_5_2_,2_7__7
    
    2__6_3,_7_9_6_,3_5_5_ 173____,0_6_2_,_6_28_
    
    (2) Recognitions, collections and reversals during the current period:
    
    As at 31 December 2017, there was no bad debt provision for accounts receivable (31 December
    
    2016: Nil). There was no bad debt provision made, reversed or written-off by management in
    
    2017 (2016: Nil).
    
    (3) Top five entities with the largest balances of accounts receivable:
    
    Relationship Percentage of
    
    Name with the Group Amount Aging total receivables
    
    RMB %
    
    VI?A SAN PEDRO TARAPACA S.A. Third party 18,700,096 Within 1 year 7.1
    
    Nongongshang Supermarket
    
    (Group) Co., Ltd Third party 10,810,966 Within 1 year 4.1
    
    DISTRIBUIDORA INTERNACIONAL Third party 9,999,760 Within 1 year 3.8
    
    SLIGRO B.V. Third party 8,487,591 Within 1 year 3.2
    
    SAINSBURY'S SUPERMARKETS LTD Third party __6_,5_1_1_,7_6_2 Within 1 year _2_._5
    
    _5_4_,5_1_0_,1_7_5 _20.7__
    
    4. Prepayments
    
    (1) The aging analysis is as follows:
    
    Closing balance Opening balanceAmount Ratio Amount RatioRMB % RMB %
    
    Within 1 year 2__,4_1_7_,9__3_1 _1_0_0.0 2,175,606 100.0__ ________ _____
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    4. Prepayments
    
    (2) As at 31 December 2017, the top 5 of prepayments were as follows:
    
    Reason Percentage of
    
    Relationship for being total advances
    
    with the Group Amount Aging outstanding to suppliers
    
    RMB %
    
    DONELLI VINI S.P.A. Third party 370,673 Within 1 year goods not received 15.3
    
    Shenzhen Yijia Packaging
    
    Product Co., Ltd. Third party 313,200 Within 1 year goods not received 13.0
    
    Shandong Electricity Company
    
    Yantai branch Third party 200,000 Within 1 year electricity purchase 8.3
    
    Beijing Aidixi Time International
    
    Trade Co., Ltd. Third party 168,000 Within 1 year goods not received 6.9
    
    Yantai Cihang International Freight
    
    Agent Co., Ltd. Third party ___12_1_,9_0_7 Within 1 year prepaid agency fees __5._0
    
    _1_,_17_3_,7_8_0 _4_8._5
    
    5. Interest receivable
    
    (1) Categories of interest receivable
    
    Closing balance Opening balance
    
    RMB RMB
    
    Interests of term deposits __2_4_0_,_9_6_8 ___2_4_,2_0__0
    
    (2) Overdue interest
    
    As at 31 December 2017, there was no overdue interest receivable (31 December 2016: Nil).
    
    6. Other receivables
    
    (1) Disclosure of other receivables by categories
    
    Closing balance Opening balance
    
    Bad debts Carrying Bad debts Carrying
    
    Amount provision amount Amount provision amountAmount Proportion Amount Ratio Amount Amount Proportion Amount Ratio AmountRMB % RMB % RMB RMB % RMB % RMBOther receivable for which
    
    bad debt provision has been
    
    assessed individually _1_8,_73_7,_45_4 _10_0_.0 ___-__ __-_ _1_8,_73_7,_45_4 _1_8,_88_0,_80_0 _10_0_.0 - - 18,880,800_____ ___ ______
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    6. Other receivables- continued
    
    (1) Disclosure of other receivables by categories- continued
    
    The aging analysis is as follows:
    
    Closing balance Opening balance
    
    Bad debts Carrying Bad debts Carrying
    
    Amount provision amount Amount provision amountAmount Proportion Amount Amount Amount Proportion Amount AmountRMB % RMB RMB RMB % RMB RMBWithin 1 year 13,214,301 70.5 - 13,214,301 8,204,303 43.5 - 8,204,3031 to 2 years 1,937,961 10.3 - 1,937,961 7,715,992 40.8 - 7,715,9922 to 3 years 2,273,591 12.2 - 2,273,591 1,929,613 10.2 - 1,929,613Over 3 years __1_,3_11_,6_0_1 ___7_.0 ____-__ __1_,3_11_,6_0_1 __1_,0_30_,8_9_2 ___5_.5 ____-__ __1_,0_3_0,8_9_2Total _1_8_,7_37_,4_5_4 _1_0_0_.0 ____-__ __18_,7_37_,4_5_4 _1_8_,8_80_,8_0_0 __10_0_.0 ____- 18,880,80__ _______0(2) Accrual, reversal and written-off during the current period
    
    The Group accrued bed provisions RMB 354,805 for 2017 (2016: bad debt was reversed RMB:
    
    Nil).
    
    (3) Other receivables written off in the reporting period
    
    Other receivables were written off RMB 354,805 in 2017. (2016:RMB 7,199,521)。
    
    (4) Disclosure of other receivables by categories
    
    Closing balance Opening balance
    
    RMB RMB
    
    Deposit 10,075,901 13,191,851
    
    Petty cash receivable 2,215,146 2,934,424
    
    Investment fund 2,050,000 2,050,000
    
    Refund of consumption tax, real estate tax 2,451,188 573,586
    
    Others ___1_,9_4_5_,2_1__9 ___1_3_0_,9_3__9
    
    _1__8,_7_3_7_,_4_5_4 _18,880,800________
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    6. Other receivables - continued
    
    (5) Five entities with the largest balances of other receivables
    
    As at 31 December 2017, the top 5 of other receivables are as follows:
    
    Percentage of total Bad debt
    
    Nature Amount Aging other receivables Amount
    
    RMB % RMB
    
    Yantai Development Zone Construction
    
    Industry Association Construction deposit 7,709,477 Within 2 years 41.1 -
    
    Canada Oros Ice-wine Co., Ltd Foreign investment fund 2,050,000 2-3years 10.9 -
    
    Yantai Economic and Technological
    
    Development Zone Thermal Co., Ltd Deposit 630,000 Within 1 year 3.4 -
    
    Beijing Shanshui Decoration
    
    Engineering Co.,Ltd. Receivables on behalf 465,460 Within 1 year 2.5 -
    
    of others' electricity fee
    
    Shanxi Fangyuan Jiangong Receivables on behalf
    
    Group Limited of others' electricity fee____4_49_,_3_3_7 Within 1 year __2_.4_ ______-___
    
    _1_1_,_3_04_,_2_7_4 6__0_._3 ______-___
    
    7. Inventories
    
    (1) Disclosure of inventories by categories
    
    Closing balance Opening balance
    
    Net carrying Net carrying
    
    Balance Provision amount Balance Provision amount
    
    RMB RMB RMB RMB RMB RMB
    
    Raw material 66,881,090 - 66,881,090 72,011,633 - 72,011,633
    
    Work in progress 1,568,230,851 - 1,568,230,851 1,253,218,347 - 1,253,218,347
    
    Finished goods __8_6_4,_09_7_,4_9_7 (_25_,_59_5_,3_9_2) __8_38_,_50_2_,1_0_5 __9_4_4,_80_6_,5_1_6 (_21_,_42_6_,7_5_6) __9_2_3,_37_9_,7_6_0
    
    _2_,4_9_9,_20_9_,4_3_8 (_25_,_59_5_,3_9_2) _2_,4_7_3,_61_4_,0_4_6 _2_,2_7_0,_03_6_,4_9_6 (_21_,_42_6_,7_5_6) _2_,2_4_8,_60_9_,7_4_0
    
    (2) Inventory provision
    
    Opening balance Recognized Reversal Written off Closing balance
    
    RMB RMB RMB RMB RMB
    
    Provision for decline in
    
    value of inventories _21_,_42_6_,7_5_6 _8_,_21_5_,5_7_8 _(_27_6_,8_3_0) _(3_,_77_0_,1_1_2) _25,595,392______
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    8. Non-current assets held for sale
    
    Expected Expected
    
    Closing balance Fair value disposal fees disposal time
    
    RMB RMB RMB
    
    Zhen Shan Tun Department __2_,0_0_0_,1_9_7 _1_6_,2_8_2_,2_2_4 _3_,8_7_8_,5_6_0 2018年
    
    Note: The Company has signed an irrevocable agreement for disposal of fixed assets, with the
    
    amount of RMB 16,282,224. Because the property rights hadn't been changed, the disposal didn't
    
    finish by the end of 2017, and the disposal is expected to be completed by 2018.
    
    9. Other current assets
    
    Closing balance Opening balance
    
    RMB RMB
    
    Prepaid taxes 22,911,298 26,238,092
    
    Pending deduct VAT on purchase 206,529,504 135,316,274
    
    Prepaid rent ___1_,3_8_1_,_95_7_ __7__,9_6_7_,8_7_6_
    
    2_3__0,_8_2_2_,7__5_9 _1_6_9_,_5_2_2_,2__42_
    
    10. Available-for-sale financial assets
    
    (1) Available-for-sale financial assets
    
    Closing balance Opening balance
    
    Amount Impairment Carrying amount Amount Impairment Carrying amount
    
    RMB RMB RMB RMB RMB RMB
    
    Available-for-sale
    
    equity instruments
    
    measured at cost ___46_7_,251 - 467__ _______ ____,2_5_1 _10_,_34_0_,2_6_3 (_10_,_00_0_,0_0_0) __34_0_,2_6_3
    
    (2) Available-for-sale financial assets measured at cost
    
    Carrying amount Provision for impairment losses Proportion of Cash
    
    voting power dividend
    
    Decrease Closing in the for the
    
    Investee Opening Increase Opening Increase Decrease Closing investee (%) period
    
    RMB RMB RMB RMB RMB RMB RMB % RMB
    
    Yantai Ding Tao
    
    Construction and
    
    Development Co., Ltd
    
    (Note 1).Other(Note 2) 10,000,000 - (10,000,000) - 10,000,000 - (10,000,000) - 18.0 -
    
    Less than
    
    Investee 340,263 129,216 (2,228) 467,251 - - - - 1% -
    
    10,340,263 129,216 (10,002,228) 467,251 10,000,000 - (10,000,000) -
    
    Note 1:An impairment provision amounting to RMB 10,000,000 has been made by the Company
    
    for the balance of the carrying amount of the equity investment in Yantai Dingtao
    
    Construction and Development Co., Ltd, the fair value of the investee which is an unlisted
    
    company cannot be measured reliably, the Company measured such available-for-sale
    
    financial asset at cost. The Company has accrued the impairment of RMB 10,000,000 in
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    the previous year, and the Company write off the equity investment this year.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    10. Available-for-sale financial assets - continued
    
    (2) Available-for-sale financial assets measured at cost - continued
    
    Note 2:The Group holding equity ratios of investment companies are less than 1%. Investment
    
    companies are all unlisted companies, and their fair value cannot be measured reliably,
    
    therefore, the Group uses cost method to measure these available-for-sale financial assets.
    
    11. Investment properties
    
    Investment properties measured by cost method
    
    Buildings
    
    RMB
    
    I. Total original carrying amount
    
    1. Opening balance -
    
    2. Increase
    
    Transfer from fixed assets _3__8,_3_4_7_,_2_83_
    
    3.Closing balance __38_,_3_4_7_,_2_8_3
    
    II. Total accumulated depreciation
    
    1. Opening balance -
    
    2. Increase
    
    (1) Transfer from fixed assets 19,288,684
    
    (2) Additions ____5_9_0_,_6_10_
    
    3. Closing balance __19__,8_7_9_,2_9_4_
    
    III. Total carrying amount
    
    1. Closing carrying amount _1_8__,4_6_7_,9_8_9_
    
    2. Opening carrying amount -__________
    
    As at 1 July 2017, the Group changed the own used properties to rent, from then the fixed assets
    
    recognized as investment properties measured by cost method.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    12. Fixed assets
    
    (1) Details of fixed assets
    
    Buildings Machinery Motor Vehicles Total
    
    RMB RMB RMB RMB
    
    I. Total original carrying amount
    
    1. Opening balance 3,956,177,208 1,969,135,575 29,329,141 5,954,641,924
    
    2. Increase
    
    (1)Purchase 8,762,218 36,809,492 2,867,768 48,439,478
    
    (2)Transfer from CIP 545,584,623 239,819,904 105,602 785,510,129
    
    (3)Acquisition increase (VII-1) 37,209,412 51,877,050 - 89,086,462
    
    3. Decrease
    
    (1) Disposal (517,494) (50,291,728) (3,613,096) (54,422,318)
    
    (2) Transfer to Investment
    
    properties (VI-11) ___(3_8_,_3_4_7_,2_8_3_) _________-___ _______-___ ___(3_8_,_3_4_7_,2_8_3_)
    
    4. Closing balance _4_,5_0__8,_8_6_8_,6__84_ _2_,2_4_7_,_3_5_0_,2_9_3_ _2_8_,_6_8_9_,_41_5_ _6_,7_8__4,_9_0_8_,3__92_
    
    II. Total accumulated depreciation
    
    1. Opening balance 410,161,600 840,158,129 21,134,702 1,271,454,431
    
    2. Increase
    
    (1)Additions 122,262,189 125,609,728 2,392,486 250,264,403
    
    3. Decrease
    
    (1) Disposal (491,619) (42,823,337) (3,290,771) (46,605,727)
    
    (2)Transfer to Investment
    
    properties (VI-11) ___(1_9_,_2_8_8_,6_8_4_) _________-___ _______-___ ___(1_9_,_2_8_8_,6_8_4_)
    
    4. Closing balance __5_1_2_,_6_4_3_,4_8_6_ __9_2_2_,_9_4_4_,5_2_0_ _2_0_,_2_3_6_,_41_7_ _1_,4_5__5,_8_2_4_,4__23_
    
    III. Total carrying amount
    
    1. Closing carrying amount _3_,9_9_6_,_2_2_5_,1_9_8_ _1_,3_2_4_,_4_0_5_,7_7_3_ 8,452,998 5,329,083,969__________ ____________
    
    2. Opening carrying amount _3_,5_4__6,_0_1_5_,6__08_ _1_,1_2__8,_9_7_7_,4__46_ ___8_,1_9_4_,_4_39_ _4_,6_8__3,187,493_______
    
    As at 31 December 2017, fixed assets with ownership restricted are RMB 145,009,923 (31
    
    December 2016: RMB 68,658,094). Please refer to Notes VI-50 in detail.
    
    As at 31 December 2017, Classified as available for sale assets are RMB 2,000,197 (31 December
    
    2016: RMB 2,000,197), there was no temporary idle fixed assets, no fixed assets acquired under
    
    finance leases, at the end of the period.
    
    (2) Fixed assets through operating lease
    
    Amount
    
    RMB
    
    Machinery __2_6_5,471____
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    12. Fixed assets - continued
    
    (3) Fixed assets of which certificates of title have not been obtained
    
    As at 31 December 2016, buildings without property certificate are as follows:
    
    Reasons why certificates
    
    Amount of title have not been obtained
    
    RMB
    
    Research and Development Co, Ltd
    
    Industry Production Centre 1,643,057,463 Processing
    
    Changan Chateau Dormitory building, main building 357,956,446 Processing
    
    Beijing Chateau European town, main, service building 193,321,864 Processing
    
    Ding Luo Te Chateau main building 86,444,831 Processing
    
    Xinjiang Tianzhu fermentations and storage warehouse 18,413,198 Processing
    
    Ice Wine Chateau office building and packing workshop 9,506,188 Processing
    
    Jingyang factory fermentation building 4,481,717 Processing
    
    Fermentation centre office, experiment building and workshop 3,824,105 Processing
    
    Kylin Packaging finished goods warehouse and workshop 2,487,528 Processing
    
    Sales Company office buildings ____2_,_0_4_5_,6_0_3_ Processing
    
    _2_,3_2_1_,_5_3_8_,9_4_3_
    
    (4) By the end of 31 December 2017, some subsidiaries of the Company are sustained loss and the cash
    
    flow from operating activities are net out and the related assets existed an indication of
    
    impairment. As at 31 December 2017, the book values of fixed assets, which exists an indication
    
    of impairment, are RMB 928,058,429. The management performs impairment testing for fixed
    
    assets, which exists an indication of impairment, of the above subsidiaries based on the assets
    
    belonged group of assets. The recoverable amount of the group of assets is determined by the
    
    present value of its future cash flows. Future cash flow projections are made based on the recently
    
    financial budgets for the future 5 years period (projecting period) and the projecting period
    
    (subsequent period) of 15 years, which are prepared by the management. Discount rate used in
    
    calculating the use value of the group of assets in future is 12.6%. Other key assumptions include
    
    the result of operations' forecast of the projecting period, which was estimated according to such
    
    subsidiaries' growth rate of sales, average gross rate, other operating expenses based on historical
    
    experience and future trends. The management believes that any reasonable change of the above
    
    assumptions will not result in the total book value of fixed assets of those subsidiaries exceeding
    
    its recoverable amount. By the end of 31 December 2017, the management believes there is no
    
    impairment loss on those fixed assets of the Group.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    13. Construction in progress
    
    (1) Construction in progress:
    
    Closing balance Opening balance
    
    RMB RMB
    
    R&D Centre ("Changyu Wine integrational
    
    Construction") Project 883,731,540 1,227,968,480
    
    Xianyang Chateau Construction Project 53,290,036 10,346,598
    
    Ningxia Chateau Construction Project 35,711,269 36,717,169
    
    Shihezi Chateau Construction Project 25,463,724 30,600,684
    
    Sales Company construction project 11,355,685 26,011,600
    
    Ding Luo Te Chateau Project 5,819,246 4,871,422
    
    Other companies construction Project ____1_0,_7_7_0_,0__69_ ____9__,7_6_5_,7__84_
    
    _1_,_02_6_,_1_4_1_,_5_69_ _1_,_3_46_,_2_8_1_,7_37__
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    13. Construction in progress- continued
    
    (2) Changes in significant construction in progress:
    
    Transfer to Interest
    
    Transfer to Lone-term Total accumulated Capitalizing capitalizat
    
    Transfer to intangible prepaid Closing Capitalizing interest ion
    
    Budge Opening balance Addition PPE assets expense balance Status interest for this period rate Financed by
    
    RMB RMB RMB RMB RMB RMB RMB Status RMB RMB %
    
    Loans from financial
    
    Changyu Wine integrational institutions
    
    Construction" 4,505,780,000 1,227,968,480 425,697,814 (689,475,320) - (80,459,434) 883,731,540 71.6 8,427,965 6,138,242 1.2&&4.3 and Self-raised
    
    Changan Chateau Construction -
    
    Project 620,740,000 10,346,598 73,012,018 (30,068,580) - 53,290,036 106.8 - - - Self-raised
    
    Shihezi Chateau Construction -
    
    Project 780,000,000 30,600,684 27,980,421 (33,117,381) - 25,463,724 91.5 - - - Self-raised
    
    Sales Company construction project 161,350,000 26,011,600 5,486,264 - (20,142,179) - 11,355,685 93.4 - - - Self-raised
    
    Ningxia Chateau Construction -
    
    Project 414,150,000 36,717,169 15,097,212 (16,103,112) - 35,711,269 98.6 - - - Self-raised
    
    Ding Luo Te Chateau project 192,400,000 4,871,422 1,212,824 (265,000) - - 5,819,246 96.3 - - - Self-raised
    
    1,336,515,953 548,486,553 (769,029,393) (20,142,179) (80,459,434) 1,015,371,500 8,427,965 6,138,242
    
    The interest capitalized in construction in progress is RMB 6,138,242 in 2017(2016: RMB 2,289,723).
    
    (3) By the end of 31 December 2017, some subsidiaries of the Company are sustained loss and the cash flow from operating activities are net out and the related
    
    assets existed an indication of impairment. As at 31 December 2017, the book values of construction in progress ("CIP"), which exists an indication of
    
    impairment, are RMB 89,001,307. The management performs impairment testing for CIP, which exists an indication of impairment, of the above
    
    subsidiaries based on the assets belonged group of assets. The key assumptions used by the management during the assessment refer to Note VI-12. By
    
    the end of 31 December 2017, the management believes there is no impairment loss on those CIP of the Group.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    14. Bearer biological assets
    
    Bearer biological assets are Vines, which measured in cost method
    
    Immature Mature
    
    biological assets biological assets Total
    
    RMB RMB RMB
    
    I. Total original carrying amount
    
    1. Opening balance 77,841,960 141,208,504 219,050,464
    
    2. Increase
    
    (1)Cultivated increase 9,248,294 - 9,248,294
    
    (2) Acquisition increase (VII-1) - 1,413,595 1,413,595
    
    (3) Transfer to mature assets
    
    from immature assets _(_7_4_,9_1_5_,2_5_4_) __7_4,_9_1_5_,2_5_4_ _______-___
    
    3. Closing balance __12_,_1_7_5_,_0_0_0 _2_17__,5_3_7_,_3_5_3 _22_9_,_7_1_2_,3__53_
    
    II. Total accumulated depreciation
    
    1. Opening balance - 17,621,484 17,621,484
    
    2. Increase
    
    (1)Additions _______-___ _1_0__,1_6_0_,_9_8_1 _1__0,_1_6_0_,9_8_1_
    
    3. losing balance _______-___ __2_7_,7_8_2_,4__65_ __27__,7_8_2_,_46__5
    
    III. Total net carrying amount
    
    1. Closing net carrying amount _1__2_,1_7_5_,0__0_0 1_8__9_,7_5_4_,8__88_ 201,929,888__________
    
    2. Opening net carrying amount __77_,_8_4_1_,_96_0_ 1_2_3_,_5_8_7_,0_2__0 _2_01__,4_28,980_____
    
    As at 31 December 2017, there is no biological asset with ownership restricted. (31 December
    
    2016:Nil)
    
    As at 31 December 2017, there is no indication that biological assets may be impaired, and no
    
    provision is made. (31 December 2016:Nil)
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOIDATED FINANCIAL STATEMENTS - continued
    
    15. Intangible assets
    
    (1) Intangible assets
    
    Land use rights Software use rights Trademark Total
    
    RMB RMB RMB RMB
    
    I. Total original carrying amount
    
    1. Opening balance 491,490,069 52,435,669 15,442,065 559,367,803
    
    2. Increase
    
    (1)Purchase 4,284,653 330,511 369,910 4,985,074
    
    (2) Transfer from CIP - 20,142,179 - 20,142,179
    
    (3)Acquisition increase(VII-1) ___2_5_,9_5_6_,4_1_7 _____7_5_8_,3_9_5 1_4_3_,8_9_0_,5_3_3 __1_7_0_,6_0_5_,3_4_5
    
    3. Closing balance __5_2_1_,7_3_1_,1_3_9 ___7_3_,6_6_6_,7_5_4 1_5_9_,7_0_2_,5_0_8 __7_5_5_,1_0_0_,4_0_1
    
    II. Total accumulated depreciation
    
    1. Opening balance 56,803,430 12,548,283 6,201,010 75,552,723
    
    2. Increase
    
    (1) Additions ___1_0_,7_4_4_,3_4_2 ____8_,9_6_8_,4_5_8 __4_,3_8_5_,9_8_1 ___2_4_,0_9_8_,7_8_1
    
    3. Closing balance ___6_7_,5_4_7_,7_7_2 ___2_1_,5_1_6_,7_4_1 _1_0_,5_8_6_,9_9_1 ___9_9_,6_5_1_,5_0_4
    
    III. Total carrying amount
    
    1. Closing carrying amount __4_5_4_,1_8_3_,3_6_7 ___52__,1_5_0_,0_1_3 1_4_9_,1_1_5_,5_1_7 __6_5_5_,4_4_8_,8_9_7
    
    2. Opening carrying amount __4_3_4_,6_8_6_,6_3_9 ___3_9_,8_8_7_,3_8_6 __9_,2_4_1_,0_5_5 __4_8_3_,81__5_,0_8_0
    
    (2) Land use right's location and years are as follows:
    
    Item Closing balance Opening balance
    
    RMB RMB
    
    In the PRC( within 50 years) 428,226,950 434,686,639
    
    Out of the PRC (more than 50 years) __25__,9_5_6_,4_1_7_ _______-___
    
    4__5_4,_1_8_3_,3_6_7_ 4_3_4_,_6_8_6_,6_3__9
    
    As at 31 December 2017, land use right with infinite useful lives of the Group, which is a
    
    permanent ownership and holds by the Indomita Wine according to the relatively Chilean law is
    
    RMB 25,956,417 (31 December 2016: Nil), therefore there is no amortization.
    
    By the end of 31 December 2017, trademark with infinite useful lives of the Group is RMB
    
    143,890,533 (31 December 2016: Nil), which is held by the Indomita Wine. The recoverable
    
    amount of trademark is determinated based on the present value of the expected future cash flows
    
    generated by group of assets owns by individual trademark. Future cash flow projections are made
    
    based on the recently financial budgets for the future 5 years period (projecting period) and
    
    presume that cash flows after the projecting period (subsequent period). Discount rate used in
    
    calculating the recoverable amounts is 9.6%. One key assumption in projecting future cash flows
    
    is the growth rate in projecting period, which is computed based on the expected growth rate of
    
    the industry and Indomita Wine. Growth rate of sales in subsequent period are 3%. The Group
    
    recognizes the trademark with infinite useful lives as intangible assets, the impairment assessment
    
    of which is made at the end of each reporting year.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    15. Intangible assets - continued
    
    The management believes that any reasonable change of the above assumptions will not result in
    
    the total book value of fixed assets of those subsidiaries exceeding its recoverable amount.
    
    According to the result of impairment assessment, by the end of 31 December 2017, the
    
    management believes there is no impairment loss on those trademark with infinite useful lives of
    
    the Group.
    
    As at 31 December 2017, the intangible asset with restricted ownership is RMB
    
    164,051,996(December 31, 2016:RMB 145,937,719), Please refer to Note VI-50 in detail.
    
    16. Goodwill
    
    Investee Opening balance Increase Decrease Closing balance
    
    RMB RMB RMB RMB
    
    Etablissements Roullet Fransac
    
    (“Fransac Sales”) 13,112,525 - - 13,112,525
    
    Dicot Partners, S.L
    
    (“Dicot”) 92,391,901 - - 92,391,901
    
    Societe Civile Argricole Du Chateau
    
    De Mirefleurs (“Mirefleurs”) 15,761,440 - - 15,761,440
    
    Indomita Wine ______-___ __6_,8_7_0_,1_1_5 ___-___ ___6_,8_7_0_,1_1_5
    
    Total _1_2_1_,2_6_5_,8_6_6 __6_,8_7_0_,1_1_5 ___-___ _1_2_8_,1_3_5_,9_8_1
    
    The Group acquired Fransac Sales, Dicot and Mirefleurs and Chile Indomita Wine Group in
    
    December 2013, September 2015 January 2016 and January 2017respectively, resulting in
    
    respective goodwill amounting to RMB 13,112,525,RMB 92,391,901, RMB 15,761,440 and
    
    RMB 6,870,115, which have been allocated to corresponding asset groups for impairment testing.
    
    The recoverable amount of the group of assets is determined by the present value of its future cash
    
    flows. Future cash flow projections are made based on the recently financial budgets for the future
    
    5 years period (projecting period) and presume that cash flows after the projecting period
    
    (subsequent period). Discount rate used in calculating the recoverable amounts of Fransac Sales,
    
    Dicot Mirefleurs and Indomita Wine are 10.3%, 8.5% ,10.3% and9.6%
    
    (2016:10.3%,8.5%,10.3%,N/A) respectively. One key assumption in projecting future cash flows
    
    is the growth rate of sales in projecting period, which is computed based on the expected growth
    
    rate of the industry and each group of assets. Growth rate of sales in subsequent period of Fransac
    
    Sales, Dicot, Mirefleurs and Indomita Wine is 2%, 2%, 2% and 3% (2016: 2%, 2%, 2% and N/A)
    
    respectively. Management of the Group believes that any reasonable changes in the above
    
    assumptions will not cause book values of these subsidiaries exceeds their recoverable amounts.
    
    According to the assessment, the Group believes that no impairment provision need to be made
    
    for goodwill in the reporting period.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    17. Long-term prepaid expenses
    
    Opening balance Increase Amortization Closing balance
    
    RMB RMB RMB RMB
    
    Land lease prepayments 57,846,986 - (1,481,601) 56,365,385
    
    Land requisition fee 45,192,900 - (1,216,864) 43,976,036
    
    Greening fee 54,460,971 80,459,434 (9,292,071) 125,628,334
    
    Leasehold improvement 1,091,579 244,847 (463,163) 873,263
    
    Others ___3_,6_1_3_,7_9_3 __1_,0_1_0_,3_0_2 _(_1_,4_5_7_,8_8_2) ___3_,1_6_6_,2_1_3
    
    _1_6_2_,2_0_6_,2_2_9 _8_1_,7_1_4_,5_8_3 (_1_3_,9_1_1_,5_8_1) _2_3_0,0__0_9_,2_3_1
    
    Note: Greening fee for the period increased due to RMB 80,459,434 transfer from CIP. Please
    
    refer to Notes VI-13 in detail.
    
    18. Deferred tax assets/liabilities
    
    Deferred tax assets and deferred tax liabilities are not related to income tax of the same tax
    
    authorities of the same tax subjects, thus not presented with the net amount after netting.
    
    (1) Deferred tax assets:
    
    Closing balance Opening balance
    
    Temporary Deferred tax Temporary
    
    differences assets differences Deferred tax assets
    
    RMB RMB RMB RMB
    
    Unrealized profit from intra 618,591,681 154,647,920 676,375,006 169,093,751
    
    - company transactions
    
    Unpaid bonus 94,462,722 23,671,611 154,895,784 38,723,946
    
    Retirement benefit 27,980,857 6,995,214 13,115,948 3,278,987
    
    Asset impairment provision 25,595,392 6,398,848 31,426,756 7,856,689
    
    Deductable losses 345,639,059 88,584,337 176,273,380 44,068,345
    
    Deferred income 109,797,054 24,285,203 112,939,126 25,230,521
    
    Assets impairment loss 684,622 184,848 - -
    
    Accrued rebate 13,413,655 3,353,415 30,739,192 7,684,798
    
    1,236,165,042 308,121,396 1,195,765,192 295,937,037
    
    (2) Deferred tax liabilities
    
    Closing balance Opening balance
    
    Item Taxable temporary Deferred Taxable temporary Deferred
    
    difference tax liability difference tax liability
    
    RMB RMB RMB RMB
    
    Revaluation surplus in
    
    business combination
    
    not under common
    
    control 89,316,823 24,264,203 90,877,162 24,908,410
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    18. Deferred tax assets/liabilities - continued
    
    (3) Deferred tax assets and liabilities not recognized
    
    Closing balance Opening balance
    
    RMB RMB
    
    Deductable losses _15__0_,3_2_0_,0__39_ _1_3_5_,9_5_7_,252___
    
    (4) Deductable losses not recognized as deferred tax assets will expire in:
    
    Closing balance Opening balance
    
    RMB RMB
    
    2019 7,311,273 7,311,273
    
    2020 45,960,766 45,960,766
    
    2021 82,685,213 82,685,213
    
    2022 _1__4,_3_6_2_,7_8__7 _______-___
    
    1__50_,_3_2_0_,0__3_9 135,957,252__________
    
    19. Other non-current assets
    
    Closing balance Opening balance
    
    RMB RMB
    
    Receivable from transfer of biological assets ______-___ 17,352,239_________
    
    20. Short-term borrowings
    
    Closing balance Opening balance
    
    RMB RMB
    
    Credit loans 648,494,624 631,655,938
    
    Mortgaged loans __65__,9_3_9_,_66_2_ __30__,7_3_2_,9_4__4
    
    7_1_4_,_4_3_4_,2__86_ _66__2,_3_8_8_,_8_82_
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    20. Short-term borrowings - continued
    
    As at 31 December 2017, short-term borrowings detail were as follows:
    
    Nature of Interest rate Year ended
    
    Loans amount Exchange rate RMB interest in contract Interest rate
    
    % %
    
    Credit loans (RMB) 600,000,000 1.0000 600,000,000 Floating 1 year LPR- 0.39(Note 1) 3.92
    
    Credit loans (EUR)) 991,759 7.8023 7,738,003 Fixed 1.00~4.42 1.00~4.42
    
    Credit loans (EUR) 198,841 7.8023 1,551,421 Floating 2.10 + Euribor(Note 2) 1.77
    
    Credit loans (USD) 6,000,000 6.5342 39,205,200 Fixed 3.00 3.00
    
    Mortgaged loans (EUR) 5,938,898 7.8023 46,337,062 Fixed 0.50~0.95 0.50~0.95
    
    Mortgaged loans (USD) 3,000,000 6.5342 ___1_9,_60_2_,6_0_0 Fixed 3.50~3.64 3.50~3.64
    
    __7_1_4,_43_4_,28__6
    
    Note 1:LPR is the basic interest rate of the People's Bank of China.
    
    Note 2: Euribor is Euro Interbank Offered Rate
    
    As at 31 December 2017, mortgaged loans were Hacienda y Vinedos Marques del Atrio, S.L.U ("
    
    Atrio ") factoring of accounts receivable from Banco de Sabadell, S.A. etc. EUR 5,938,898
    
    (translated as RMB 46,337,062)(31 December 2016:RMB 30,732,944). Mortgaged loans were
    
    Indomita Wine mortaged Peso 3,242,627,000 (translated as RMB 34,390,191) fixed assets from
    
    BBVA bank USD 3,000,000(translated as RMB 19,602,600)( December 31, 2016:Nil)
    
    21. Notes payable
    
    Closing balance Opening balance
    
    RMB RMB
    
    Bank acceptances ______-___ 3_8__,9_0_0_,_00_0_
    
    As at 31 December 2017, there is no due notes payable unpaid (31 December 2016: Nil).
    
    22. Accounts payable
    
    The aging analysis of accounts payable are as follows
    
    Closing balance Opening balance
    
    RMB RMB
    
    Within 1 year 664,020,176 544,128,280
    
    1 to 2 years 2,051,592 1,103,039
    
    2 to 3 years ____3_7_1_,_1_1_1 _______-___
    
    6_6__6_,4_4_2_,8__7_9 _54_5_,_2_3_1_,3__19_
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    23. Advances from customers
    
    The aging analysis of advances from customers are as follows
    
    Closing balance Opening balance
    
    RMB RMB
    
    Within 1 year 340,025,690 419,382,071
    
    1 to 2 years 7,072,254 2,046,166
    
    2 to 3 years 381,463 108,748
    
    Over 3 years ___3,_4_1_4_,_7_49_ __3_,_7_0_9_,4_3_6_
    
    3__5_0,_8_9_4_,_1_56_ 4_2_5__,2_4_6_,42___1
    
    24. Employee benefits payable
    
    (1) Employee benefits payable as follows:
    
    Opening balance Increase Decrease Closing balance
    
    RMB RMB RMB RMB
    
    Short-term payroll 193,300,619 439,517,529 (450,272,864) 182,545,284
    
    Post-demission benefits
    
    - predetermined provision plan 15,167 49,975,671 (49,692,745) 298,093
    
    Termination benefits __1_3_,1_1_5_,9_4_8 __2_7_,6_7_7_,1_1_5 _(_1_2_,8_1_2_,2_0_6) __2_7_,9_8_0_,8_5_7
    
    _2_0_6_,4_3_1_,7_3_4 _5_1_7_,1_7_0_,3_1_5 _(5_1_2_,7_7_7_,8_1_5) _2_10,82____4_,2_3_4
    
    (2) Employee benefits payable:
    
    Opening balance Increase Decrease Closing balance
    
    RMB RMB RMB RMB
    
    Salaries and bonus 197,486,176 390,256,786 (402,728,644) 185,014,318
    
    Staff benefit 622,735 14,139,321 (12,645,581) 2,116,475
    
    Staff welfare 257,249 20,336,922 (20,069,855) 524,316
    
    Includes:
    
    Medical insurance 257,249 18,018,716 (17,751,649) 524,316
    
    Injury insurance - 1,499,042 (1,499,042) -
    
    Maternity insurance - 819,164 (819,164) -Housing fund 37,672 10,993,230 (10,991,646) 39,256Union fee and education fee ___2_,5_9_3_,0_0_9 ___3_,3_0_4_,3_6_0 __(_3_,8_3_7_,1_3_8) ___2_,0_6_0_,2_3_1Total _2_0_0_,9_9_6_,8_4_1 _4_3_9_,0_3_0_,6_1_9 _(4_5_0_,2_7_2_,8_6_4) _1_8_9_,7_5_4_,5_9_6Less: Non-current liabilities ___7_,6_9_6_,2_2_2 ___7_,2_0_9_,3_1_2Short-term payroll _1_9_3_,3_0_0_,6_1_9 182,545,284_________
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    24. Employee benefits payable - continued
    
    (3) Predetermined provision plan
    
    Opening balance Increase Decrease Closing balance
    
    RMB RMB RMB RMB
    
    Pension 14,978 48,834,066 (48,551,453) 297,591
    
    Unemployment insurance ___1_8_9 __1_,1_4_1_,6_0_5 _(_1_,1_4_1_,2_9_2) ____5_0_2
    
    _1_5_,1_6_7 _4_9_,9_7_5_,6_7_1 (_4_9_,6_9_2,745) 298,093___ ______
    
    The Group participates in pension insurance and unemployment insurance plans established by
    
    government institution. According to those plans, the Group pays pension and unemployment
    
    insurance each month on the basis of 12%-32% and 0.5%-3% last period salary respectively.
    
    Apart from these monthly expenses, the Group does not bear any further payment obligation. This
    
    year the Group should pay RMB 48,834,066 and RMB 1,141,605 (2016: RMB 38,404,278 and
    
    RMB 1,663,062) respectively into pension insurance and unemployment insurance. As at 31
    
    December 2017, the Group has unpaid pension and unemployment insurance of RMB 297,591
    
    and RMB 502 respectively (31 December 2016: RMB 14,978 and RMB 189), which is due to the
    
    pension insurance and unemployment insurance plan at the end of the reporting period. These
    
    payments have been paid after the end of the reporting period.
    
    25. Taxes payable
    
    Closing balance Opening balance
    
    RMB RMB
    
    Value added tax 35,681,696 23,496,328
    
    Consumption tax 44,961,022 30,361,471
    
    Corporation income tax 38,834,293 69,388,730
    
    Urban land use tax 2,645,687 2,651,262
    
    Individual income tax 7,805,917 7,811,301
    
    City construction tax 5,669,280 4,248,115
    
    Property tax 4,647,644 1,071,223
    
    Others ___4,_8_4_8_,6__1_7 __5__,0_1_4_,_1_7_0
    
    _1_45_,_0_9_4_,_1_56_ 1__4_4_,0_4_2_,_60__0
    
    26. Deferred income
    
    Closing balance Opening balance
    
    RMB RMB
    
    Government grants
    
    Current liabilities 16,878,199 11,163,883
    
    Non-current liabilities _9_2__,9_1_8_,_85_5_ 1__01__,7_7_5_,2__4_3
    
    _10_9__,7_9_7_,_0_54_ _1_1_2_,9_3_9_,_1_26_
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    26. Deferred income - continued
    
    Government grants:
    
    Recognized in Related to
    
    Opening Addition non-operating income Closing Assets/Income
    
    /other income
    
    RMB RMB RMB RMB RMB
    
    Wine base liquor brewage project 6,174,300 - (1,434,900) 4,739,400 Assets
    
    Shihezi chateau project funds 11,556,600 - (2,280,000) 9,276,600 Assets
    
    Xinjiang Industrial Rejuvenation and
    
    Technological Reconstruction Project 18,486,000 - (1,422,000) 17,064,000 Assets
    
    Special support for infrastructure facilities - 5,300,000 - 5,300,000 Assets
    
    Ningxia industry revitalization and
    
    technology reconstruction funds 4,381,000 - (3,295,000) 1,086,000 Assets
    
    Wine grape subsidies 376,000 - (376,000) - Income
    
    Modern agriculture grape production
    
    development subsidies 259,200 - (259,200) - Income
    
    Tourism Promotion Project - 600,000 (600,000) - Income
    
    Modern service industry special - 500,000 (500,000) - Income
    
    Tourism Development Fund Subsidy Project - 500,000 - 500,000 Income
    
    Marketing reward - 500,000 (500,000) - Income
    
    Support enterprise development special funds - 10,200,000 - 10,200,000 Income
    
    (Huanren) wine production construction funds 4,000,000 - (400,000) 3,600,000 Assets
    
    Wine electronic tracking system
    
    specific funds 3,859,365 - (667,054) 3,192,311 Assets
    
    Miyun Propaganda Department transfer 1,777,890 - (888,945) 888,945 Assets
    
    Wine industry specific funds 930,000 - (186,000) 744,000 Assets
    
    Shandong Peninsula Blue Economic
    
    Area construction funds 10,000,000 - (2,000,000) 8,000,000 Assets
    
    863 Program subsidy funds for scientific research 343,090 - (343,090) - Income
    
    Information system construction
    
    project technology funds 4,060,000 - (580,000) 3,480,000 Assets
    
    Integration projects subsidies 28,800 - (28,800) - Income
    
    Cross-border e-Business projects subsidies 1,485,797 - (783,182) 702,615 Income
    
    Red wine phenolics research projects funds 295,601 - (11,000) 284,601 Income
    
    Grape base construction project 1,040,000 - (520,000) 520,000 Assets
    
    Water pollution abatement project 133,733 300,000 (113,601) 320,132 Income
    
    Infrastructure construction project 1,468,750 500,000 (125,000) 1,843,750 Assets
    
    Industrial development support project 41,000,000 - (4,100,000) 36,900,000 Assets
    
    Subsidy for updating of economic and energy-saving
    
    technology __1_,2_83_,0_0_0 _____-__ ___(1_28_,3_0_0) __1_,1_54_,7_0_0 Assets
    
    Total _1_12_,9_3_9,_12_6 _1_8_,400,0___0_0 (2__1_,5_42_,0_7_2) _1_09_,7_9_7,_05_4
    
    Less: Non-current liabilities due within one year _1_1_,1_63_,8_8_3 __16_,8_78_,1_9_9
    
    Other non-current liabilities _1_01_,7_7_5,_24_3 __92_,9_18_,8_5_5
    
    As at 31 December 2017, the Group recognise current liability for deferred income to be
    
    accounted in profit or loss within one year, and recognise non-current liability for deferred income
    
    to be accounted in profit or loss over one year.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    27. Other payables
    
    (1) Natures of other payables are as follows
    
    Closing balance Opening balance
    
    RMB RMB
    
    Payable to dealer deposit 139,710,963 128,539,352
    
    Payables for equipment and construction 130,706,777 77,261,072
    
    Payables for transportation 27,847,092 36,690,764
    
    Royalty fee 77,208,929 78,572,540
    
    Advertising costs 118,834,960 79,414,075
    
    Withholding promotion costs 13,413,655 30,739,192
    
    Capital increment from minority intere - 29,847,320
    
    Employee deposit 13,327,132 16,296,186
    
    Deposits from suppliers 3,082,595 2,206,379
    
    Payables for contracting fee 38,070,571 31,011,929
    
    Others __40__,7_6_1_,_6_45_ _3_5__,7_2_6_,5_0_1_
    
    _6_02_,_9_6_4_,3__19_ 5__46_,_3_0_5_,_31_0_
    
    (2) Description of significant other payables aged more than one year
    
    Company Amount Reasons
    
    RMB
    
    Beijing Qinglang agriculture science and technology
    
    development limited company ("Beijing Qinglang") 16,461,930 Payables for contracting fee
    
    Yantai De'an Investment Company Limited ("Yantai De'an") ____6,_7_08_,1_7_4 Payables for contracting fee
    
    ___2_3,_1_70_,1_04_
    
    28. Non-current liabilities due within one year
    
    Closing balance Opening balance
    
    RMB RMB
    
    Long-term borrowings due within one year 76,954,827 59,799,093
    
    Long-term payables due within one year __34__,0_0_0_,_00__0 __1_2,_0_0_0_,0__00_
    
    1_1_0_,_9_5_4_,_8_2_7 __7_1_,7_9_9_,_09_3_
    
    As at 31 December 2017, Long-term borrowings due within one year refers to Note VI-29,
    
    Long-term payables due within one year refers to Note VI-30.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    29. Long-term borrowings
    
    Closing balance Opening balance
    
    RMB RMB
    
    Credit loan 68,182,310 40,304,811
    
    Mortgaged loan 6,693,544 8,835,744
    
    Guaranteed loan __81_,_2_5_0_,0_0_0_ _______-___
    
    _1_56__,1_2_5_,8_5_4_ 4__9_,_1_4_0_,5_5_5_
    
    As at 31 December 2017, loans detail is as follows:
    
    Nature Year-end Due within Due over
    
    Loans amount Exchange rate Amount of interest Interest rate borrowing rate one year one year
    
    RMB % %
    
    Guaranteed loan (RMB) (Note) 100,000,000 1.0000 100,000,000 Floating 5 year LPR- 0.9 4.28 18,750,000 81,250,000
    
    Credit loan (EUR) 15,838,703 7.8023 123,578,309 Fixed 1.00-2.53 1.00-2.53 55,395,999 68,182,310
    
    Mortgaged loan (EUR)(Note) 1,217,894 7.8023 __9_,5_02_,3_7_2 Fixed 1.80 1.80 _2_,8_08_,8_2_8 __6_,6_9_3,_54_4
    
    _2_33_,0_8_0,_68_1 7_6_,9_54_,8_2_7 156,12_____5,_85_4
    
    Note: As at 31 December 2017, The secured loan is the long-term loan borrowed by the company
    
    for R&D Centre credit guarantee, RMB 100,000,000 (31 December 2016:Nil), mortgaged
    
    loans were Atrio using fixed assets EUR 4,264,170 (translated as RMB 33,270,334) as
    
    collateral for loans from Popular Espa?ol, EUR 1,217,894 (translated as RMB 9,502,372),
    
    (31 December 2016: RMB 27,517,168).
    
    30. Long-term payables
    
    Closing balance Opening balance
    
    RMB RMB
    
    Agricultural Development
    
    Fund of China("CADF") 2_5_9_,_000,000 293,______ ____0_0_0_,0_0_0_
    
    In 2016, RMB 305,000,000 from CADF was invested in R&D Centre, CADF accounted for
    
    37.9% of the registered capital. According to the investment agreement, CADF will recovery
    
    investment funds over 10 years, the investment income received equal to 1.2% of the remaining
    
    unpaid principal per annum. In addition to the fixed income, CADF will no longer enjoy other
    
    profits or bear the loss of R&D Centre .Therefore although the investment in R&D Centre,
    
    nominally equity investment, is actually a debt investment(Financial discount loan). The group
    
    take this investment as long-term payables, which measured in amortized cost. The Group
    
    repays the principal of RMB12,000,000 in 2017. Refer to Note VI-50 for details of mortgaged
    
    and pledged assets.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    30. Long-term payables - continued
    
    Termination date
    
    Long-term payables Yield rate Investment date of repayment Due within 1 year Due after 1 year Mortgaged and pledged assets
    
    RMB RMB RMB
    
    77,000,000 1.2% 12 January 2016 24 December 2025 10,000,000 67,000,000 Cash and bank and intangible assets
    
    198,000,000 1.2% 29 February 2016 28 February 2026 22,000,000 176,000,000 Cash and bank fixed assets
    
    _1_8_,00_0_,00_0 1.2% 16 June 2016 22 May 2026 __2,_00_0,_00_0 _1_6,_00_0,_00_0 Caasnhdanindtabnagnikble assets
    
    _29_3_,00_0_,00_0 _3_4,_00_0,_00_0 _25_9,_00_0,000__
    
    31. Other non-current liabilities
    
    Closing balance Opening balance
    
    RMB RMB
    
    Employee benefit _7__,2_0_9_,312 7,696,222___ _________
    
    As at 31 December 2017, employee benefit represents deposit from bonus accrued for managers
    
    and above. According to the bonus payment schedule of 2017, the bonus is expected to be paid
    
    during 2019 to 2021.
    
    32. Share capital
    
    Opening balance Increase Decrease Closing balance
    
    RMB RMB RMB RMB
    
    Unrestricted shares
    
    A shares 453,460,800 - - 453,460,800
    
    B shares _2_3_2_,0_0_3_,2_0_0 ___-___ ___-___ _2_3_2_,0_0_3_,2_0_0
    
    Total of unrestricted shares
    
    and total shares _6_8_5_,4_6_4_,0_0_0 ___-___ ___-___ _6_8_5_,4_6_4_,0_0_0
    
    33. Capital reserve
    
    Opening balance Increase Decrease Closing balance
    
    RMB RMB RMB RMB
    
    Share premium 560,038,853 - - 560,038,853
    
    Other ___5_,9_1_6_,5_8_8 ____-___ ___-___ ___5_,9_1_6_,5_8_8
    
    Total _5_6_5_,9_5_5_,4_4_1 ____-___ ___-___ 565,955,441_________
    
    34. Other comprehensive income
    
    2017
    
    2017 Less: last year other Post-tax Post-tax
    
    Before-tax comprehensive income Less: attributable attributable
    
    Opening balance amount in P/L current year tax expense to parent to NCI Closing balance
    
    Other comprehensive
    
    income to be reclassified
    
    to profit and loss (5,259,014) 9,863,872 - - 8,368,254 1,495,618 3,109,240
    
    Foreign currency statement
    
    translation difference _(_5,_25_9,_01_4) _9,_86_3,_87_2 __-__ __-__ _8,_36_8,_25_4 _1,495,618 3,109,240____ ______
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    35. Surplus reserve
    
    Opening balance Increase Decrease Closing balance
    
    RMB RMB RMB RMB
    
    Statutory surplus reserve _3_4_2_,7_3_2_,0_0_0 -______ -______ 3__4_2_,7_3_2_,0_0_0
    
    In accordance with the Company Law of the People's Republic of China and the Articles of
    
    Association of the Company, the Company is required to appropriate 10% of the net profit to the
    
    statutory surplus reserve until the accumulated balance of the statutory surplus reserve reaches
    
    50% of the registered share capital. The Company does not appropriate net profit to the surplus
    
    reserve in 2017.
    
    The Company can appropriate discretionary surplus reserve after appropriation of the statutory
    
    surplus reserve. Discretionary surplus reserve can be utilized to offset the deficit or increase the
    
    share capital after approval.
    
    36. Retained earnings
    
    Closing balance Opening balance
    
    RMB RMB
    
    Retained earnings brought forward 6,620,118,562 5,980,390,074
    
    Profit attributable to shareholders of the Company 1,031,695,056 982,460,488
    
    Less: Dividends paid in respect prior year's profit __(_3_4_2_,7_3_2_,0_0_0_) __(_3_4_2_,7_3_2_,_0_0_0)
    
    Retained earnings carried forward _7_,_30__9,_0_8_1_,_61_8_ _6_,6__2_0,_1_1_8_,5__62_
    
    (1) Appropriation to surplus reserve by subsidiaries
    
    As at 31 December 2017, the balance of the Group's unappropriated profits include appropriation
    
    to surplus reserve by subsidiaries amounting to RMB 51,994,942 (31 December 2016: RMB
    
    71,360,640).
    
    (2) Cash dividends approved by general meeting
    
    According to the annual general meeting on 15 June 2017, dividends distribution plan has been
    
    made. On the basis of 685,464,000 issued share capital, RMB 5.0 (including taxes) for every 10
    
    shares was distributed to shareholders, in total RMB 342,732,000 cash dividends.
    
    (3) Profit distribution decided after the balance sheet date
    
    According to a proposal of the board of directors approved on 19 April 2018, on the basis of
    
    685,464,000 issued shares in 2017, cash dividends of RMB 5.0 (including taxes) for every 10 share
    
    will be distributed to all the shareholders. The aggregate amount of cash dividend is RMB
    
    342,732,000. The above proposal regarding dividends distribution is yet to be approved in a
    
    shareholders' meeting.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    37. Operating income and costs
    
    Operating income is analysed as follows:
    
    2017 2016
    
    RMB RMB
    
    Principal operating income 4,856,168,699 4,646,909,704
    
    Other operating income ____7_6_,3_7_6_,_5_3_0 ___7__0,_6_8_6_,_76__8
    
    _4_,9_3_2__,5_4_5_,2__2_9 _4_,_71__7_,5_9_6_,_4_7_2
    
    Operating cost is analysed as follows:
    
    2017 2016
    
    RMB RMB
    
    Principal operating cost 1,645,690,616 1,552,022,043
    
    Other operating cost ____2_5,_9_0_1_,6_6_3_ ____2_3,_7_4_8_,9_3_6_
    
    _1_,6_7__1_,5_9_2_,_2_7_9 _1_,_5_7_5_,7_7_0_,9_7_9_
    
    The operating income for the Group is mainly from the sales of wine, brandy and sparkling wine.
    
    In 2017, Over 91% (2016: over 94%) of the sales generated in PRC.
    
    38. Taxes and surcharges
    
    2017 2016
    
    RMB RMB
    
    Consumption tax 177,879,324 161,411,393
    
    Business Tax - 1,358,414
    
    City construction tax 52,247,915 46,375,109
    
    Education fee and surcharges 35,831,575 33,975,886
    
    Property tax 23,113,211 8,221,152
    
    Land use tax 11,874,984 9,146,595
    
    Stamp tax 3,945,731 2,659,421
    
    Others ___5_,3_5_9_,_2_83_ ___6,_5_6_8_,_67__6
    
    _3_10__,2_5_2_,_0_2_3 _2_6_9_,7_1_6_,6__4_6
    
    For detail standards of tax rate please refer to Notes V.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    39. Selling expenses
    
    2017 2016
    
    RMB RMB
    
    Advertising costs 560,533,714 536,552,061
    
    Salary and employee benefit 272,148,620 258,845,366
    
    Freight 139,218,637 135,375,515
    
    Trademark fee 72,838,612 74,125,038
    
    Warehouse leasing expenses 53,075,132 73,141,275
    
    Depreciation cost 34,963,089 29,477,270
    
    Labor fee 29,744,563 29,411,296
    
    Travelling expenses 27,709,534 27,589,397
    
    Water and electricity fee 11,247,163 8,160,610
    
    Security and sanitation fee 9,020,885 4,244,698
    
    Packing cost 7,163,930 5,651,814
    
    Taxes 6,771,337 4,418,811
    
    Office allowance 6,165,561 6,166,163
    
    Business entertainment 4,403,750 3,871,778
    
    Amortization of low-value consumables 4,028,573 2,039,574
    
    Renovation costs 463,163 25,292,999
    
    Others ____33__,0_2_6_,1__8_0 ____28__,8_9_7_,0_0__3
    
    _1_,2_7__2,_5_2_2_,_44__3 _1_,2__5_3,_2_6_0_,6_6_8_
    
    40. Administrative expense
    
    2017 2016
    
    RMB RMB
    
    Salary and employee benefit 106,342,126 98,464,931
    
    Depreciation 71,558,307 45,605,723
    
    Contracting fee 21,162,623 20,635,049
    
    Maintenance fee 21,665,024 18,625,443
    
    Administrative expenses 22,173,925 15,829,574
    
    Amortization 22,438,364 14,795,181
    
    Rental fees 12,414,249 10,702,734
    
    Service fee 12,118,257 5,194,426
    
    Greening fee 10,667,941 11,509,618
    
    Security and sanitation fee 6,317,723 5,889,095
    
    Entertainment fee 5,470,001 7,253,858
    
    Travelling expenses 4,747,256 4,961,661
    
    Other taxes 288,907 10,169,607
    
    Fire charge - 10,923,600
    
    Others _2_3_,_4_1_7_,_25_5_ _2_9_,_2_2_3_,0__4_8
    
    3_4__0,_7_8_1_,9_5_8_ 3_0_9_,_7_8_3_,_5_48_
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    41. Financial income
    
    2017 2016
    
    RMB RMB
    
    Interest income (9,168,772) (15,397,901)
    
    Exchange loss (income) (182,610) 7,632,532
    
    Interest expenses 32,233,729 30,120,902
    
    Less: Capitalization of interests 6,138,242 2,289,723
    
    Bank charges ___1,_8_4_6_,1_5_4_ __1__,9_0_3_,0__49_
    
    __18_,_5_9_0_,2__5_9 21,968,859__________
    
    42. Impairment loss of assets
    
    2017 2016
    
    RMB RMB
    
    Inventory impairment 7,938,748 3,279,266
    
    Impairment losses from other receivables ____3_5_4_,_8_0_5 _______-___
    
    __8_,_2_9_3_,_5_5_3 __3__,2_7_9_,2__6_6
    
    43. Other income
    
    2017 2016 Assets/income related
    
    RMB RMB
    
    Industrial development support project 4,100,000 - Assets
    
    Ningxia industry revitalization and
    
    technology reconstruction funds 3,295,000 - Assets
    
    Project funds 2,280,000 - Assets
    
    Shandong Peninsula Blue Economic
    
    Area construction funds 2,000,000 - Assets
    
    Others 6,352,199 - Assets
    
    Tax refund 17,765,560 - Income
    
    Others _10__,2_4_5_,_6_2_5 ______-___ Income
    
    4__6,_0_3_8_,3_8__4 ______-___
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    44. Non-operation income
    
    Recognized in
    
    extraordinary
    
    2017 2016 profit and loss
    
    RMB RMB RMB
    
    Government grants 1,600,000 49,130,643 1,600,000
    
    Penalty income 7,993,571 2,617,684 7,993,571
    
    Others __7_,6_3_7_,_1_5_6 __3_,2_6_5_,_9_8_7 __7_,6_3_7_,_15__6
    
    _1_7_,2_3_0_,7_2_7_ 5__5,_0_1_4_,3_1_4_ 1_7__,2_3_0_,_7_2_7
    
    Government grants recognized in the income statement is as follows:
    
    Assets/income
    
    2017 2016 related
    
    RMB RMB
    
    Major projects support fund - 7,040,888 Assets
    
    Small and medium enterprises
    
    support fund - 4,138,304 Assets
    
    Tax refund - 17,860,500 Income
    
    Others __1_,6_0_0_,_0_0_0 _2_0,_0_9_0_,9_5__1 Income
    
    __1_,6_0_0_,_0_0_0 _49__,1_3_0_,64___3
    
    45. Non-operation expenses
    
    Recognized in
    
    extraordinary
    
    2017 2016 profit and loss
    
    RMB RMB RMB
    
    Compensation and penalty loss 347,528 618,190 347,528
    
    Donation 294,899 305,080 294,899
    
    Others ___9_8_9_,_0_4_9 ___3_0_3_,4_2_9_ ___9_8_9_,0_4_9_
    
    __1_,6_3_1_,_4_7_6 _1_,_2_2_6_,6__9_9 _1__,6_3_1_,4_7_6_
    
    46. Income tax
    
    2017 2016
    
    RMB RMB
    
    Current income tax 330,784,002 360,001,766
    
    Deferred income tax ___7_,3_5_0_,2_4__3 __(_2_,9_7_2_,3__2_0)
    
    3__3_8_,1_3_4_,2_4_5_ _35__7,_0_2_9_,_4_46_
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    46. Income tax - continued
    
    Reconciliation between income tax expenses and profits is as follows:
    
    2017 2016
    
    RMB RMB
    
    Profit before tax 1,371,927,763 1,337,618,840
    
    Income tax expense at statutory tax rate 25% (2016:25%) 342,981,941 334,404,710
    
    Effect of different tax rates applied by certain subsidiaries (9,459,223) (7,350,239)
    
    Impact of tax exemptions (141,598) -
    
    Changes in opening balances of deferred tax
    
    liabilities due to tax rate adjustment (1,342,916) (1,992,564)
    
    Unrecognised deductable loss 3,590,697 20,671,303
    
    Utilisation of deductable losses which were not
    
    recognised previously (6,157,735) -
    
    Reversal of recognized deductible losses - 2,895,497
    
    Non-deductible expenses 7,550,095 6,892,488
    
    Others ____1_,_1_1_2_,9__8_4 _____1_,5_0_8_,2_5__1
    
    Income tax expenses at the Group's effective tax rate ___3_38__,1_3_4_,2_4__5 __3_5__7_,0_2_9_,4_4__6
    
    47. Basic and dilutive earnings per share
    
    The calculation of basic earnings per share is based on the consolidated profit attributable to
    
    ordinary shareholders of the Company during the year and the weighted average number of
    
    outstanding ordinary shares.
    
    2017 2016
    
    RMB RMB
    
    Earnings
    
    Consolidated profit attributable to ordinary
    
    shareholders of the Company _1_,_03_1__,6_9_5_,_0_5_6 __9__82__,4_6_0_,_4_8_8Shares
    
    Weighted average number of outstanding
    
    ordinary shares __6_8_5__,4_6_4_,0__0_0 ___6_85_,_4_6_4_,0_0_0_Basic earnings per share _________1_._5_1 _________1_._4_3The Company does not have potential dilutive ordinary shares.
    
    From the balance sheet date to the date of approval of this report, there are no subsequent events
    
    which would affect the numbers of the weighted average number of outstanding of ordinary
    
    shares.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    48. Notes to consolidated cash flow statement
    
    (1) Cash received relating to other operating activities:
    
    2017 2016
    
    RMB RMB
    
    Government grants 20,930,752 19,347,985
    
    Interest income 3,839,079 2,808,735
    
    Penalty income 7,993,571 2,617,684
    
    Refundable deposits of notes payable 46,900,000 38,130,000
    
    Others _5__,5_7_3_,5_0_3_ _3_,_8_0_3_,_46_1_
    
    8__5,_2_3_6_,_9_0_5 _6_6_,7_0_7_,_8_6_5
    
    (2) Cash paid relating to other operating activities:
    
    2017 2016
    
    RMB RMB
    
    Selling expenses 956,902,163 942,936,949
    
    General and administrative expenses 107,905,766 113,297,901
    
    Refundable deposits of notes payable 8,000,000 47,030,000
    
    Others ____2__,1_0_3_,_0_5_9 ____2__,4_4_9_,6_7_3_
    
    _1_,_07__4,_9_1_0_,_9_88_ _1_,_10_5_,_7_1_4_,_5_23_
    
    (3) Cash paid for the purchase subsidiaries and other equity:
    
    2017 2016
    
    RMB RMB
    
    Cash paid for acquisition of Indomita Wine 318,867,650 -
    
    Less: cash and cash equivalents for Indomita
    
    Wine at acquisition date 15,071,107 -
    
    Cash paid investment fund for Mirefleurs - 3,540,923
    
    Less: cash and cash equivalents for Mirefleurs
    
    at acquisition date _______-___ _______1_,_77__9
    
    3__0_3_,7_9_6_,_5_4_3 ____3,_5_3_9_,1_4_4_
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    48. Notes to consolidated cash flow statement - continued
    
    (4) Cash received relating to other financing activities:
    
    2017 2016
    
    RMB RMB
    
    Pledged borrowing deposits and interest - 135,584,347
    
    Received government grants related to assets 5,800,000 43,783,000
    
    R&D Centre long-term loan pledged time deposit 46,100,000 -
    
    Interest income from restricted deposits of
    
    R&D Centre __1__,0_3_0_,_8_0_4 ___1,_1_1_0_,_2_4_0
    
    __52_,_9_3_0_,_80_4_ 18__0_,_4_7_7_,5__87_
    
    (5) Cash paid relating to other financing activities:
    
    2017 2016
    
    RMB RMB
    
    R&D Centre long-term loan pledged time deposit __61_,_7_0_0_,_0_00_ _2__0,_0_0_0_,000___
    
    49. Supplementary information to consolidated cash flow statement
    
    (1) Supplementary information to consolidated cash flow statement
    
    2017 2016
    
    RMB RMB
    
    Cash flows from operating activities
    
    calculated by adjusting the net profit:
    
    Net profit 1,033,793,518 980,589,394
    
    Add: Loss for impairment of assets 8,293,553 3,279,266
    
    Depreciation of investment properties 590,610 -
    
    Depreciation of fixed assets 250,264,403 197,779,010
    
    Amortization of intangible assets 24,098,781 18,955,762
    
    Amortization of biological assets 10,160,981 6,251,910
    
    Amortization of long-term prepaid expenses 13,911,581 41,685,937
    
    Loss(gains) on disposal of property
    
    plant and equipment 222,586 (14,719)
    
    Finance expense 22,381,504 25,919,561
    
    Decrease in deferred tax assets 13,315,979 6,469,619
    
    Decrease in deferred tax liabilities (5,965,736) (9,441,939)
    
    Decrease(increase) in inventories (138,995,031) 18,897,985
    
    Increase in operating receivables (180,593,570) (737,321,198)
    
    Decrease(increase) in operating payables ___(_7_8_,2_3_6_,1_3_2_) ___33__6_,8_6_1_,3__82_Net cash flows from operating activities ___9_7_3_,2_4_3_,_0_2_7 ___88__9,_9_1_1_,9_7__0
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    49. Supplementary information to consolidated cash flow statement- continued
    
    (2) Significant investing and financing activities not involving cash receipts and payments.
    
    Closing balance Opening balance
    
    RMB RMB
    
    Payment of intangible assets and other
    
    long-term assets by bank acceptances ___140,___4_9_3_,_50_7_ __5_0__3,_8_1_7_,8_0_8_
    
    (3) Cash and cash equivalent
    
    Closing balance Opening balance
    
    RMB RMB
    
    Closing balance of cash and bank 1,402,522,509 1,391,517,607
    
    Less:
    
    Restricted bank deposits 2,645,410 2,711,926
    
    Restricted other monetary funds 123,987,825 128,863,377
    
    Deposit with a period of over three months ____9_5_,0_0_0_,_0_0_0 ____3__,0_0_0_,_0_0_0
    
    Closing balance of cash and cash equivalents _1_,1__80__,8_8_9_,274 1,256,942,304___ ____________
    
    Closing balance Opening balance
    
    RMB RMB
    
    Cash 1,180,889,274 1,256,942,304
    
    Including: Cash on hand 136,973 117,507
    
    Bank deposits on demand _1_,_1_8_0,_7_5_2_,3__01_ _1_,_25_6__,8_2_4_,7__97_
    
    Closing balance of cash and cash equivalents _1_,_18_0_,_8_8_9_,_2_74_ _1_,2__56_,_9_4_2_,_3_04_
    
    50. Assets with restriction of ownership
    
    Closing balance Opening balance
    
    RMB RMB
    
    Cash and bank 126,633,235 131,575,303
    
    Account receivable 46,337,062 30,732,944
    
    Fixed assets 145,009,923 68,658,094
    
    Intangible assets _16__4,_0_5_1_,_99__6 _14_5__,9_3_7_,7_1_9_
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    50. Assets with restriction of ownership - continued
    
    As at 31 December 2017, cash and bank balances with restriction of ownership as follows:
    
    Closing balance Opening balance
    
    RMB RMB
    
    Pledged time deposits for R&D Centre 61,700,000 46,100,000
    
    Refundable deposits of notes payable - 38,900,000
    
    Refundable deposits of letter of credit 57,946,190 25,694,735
    
    Balance in Alipay account 4,317,635 18,118,441
    
    The Company?s housing fund 2,645,410 2,711,926
    
    Margin for entity card 14,000 50,201
    
    Deposit for ICBC platform ______1_0_,_0_0_0 ________-___
    
    Total _1_2_6_,_6_3_3_,2_3_5_ __1_31_,5__7_5_,_3_03_
    
    Among the aforementioned items, the amount of RMB 4,317,635 which is the blocked balances
    
    of goods payment in Alipay account can be unlocked after 15 days.
    
    As at 31 December 2017, the amount of accounts receivable with restricted ownership is EUR
    
    5,938,898 (translated as RMB 46,337,062) , which refers to accounts receivable Atrio
    
    conducted for factoring from Banco de Sabadell, S.A. etc.
    
    As at 31 December 2017, fixed assets with restriction of ownership as follows:
    
    Restricted reasons Closing balance
    
    Company RMB
    
    The Company Long-term payable collateral 36,349,289
    
    Sales Company Long-term payable collateral 41,000,106
    
    Atrio Long-term borrowings collateral 33,270,337
    
    Indomita Wine Short-term borrowings collateral ___34__,3_9_0_,1__9_1
    
    Total _1__45__,0_0_9_,_9_23_
    
    As at 31 December 2017, Intangible assets with restriction of ownership as follows:
    
    Restricted reasons Closing balance
    
    Company RMB
    
    The Company Long-term payable collateral 52,720,912
    
    R&D Centre Long-term payable collateral _1_1__1,_3_3_1_,0__8_4
    
    Total __1_64,051,996________
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VI. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
    
    51. Foreign monetary items
    
    (1) Foreign monetary items
    
    The foreign monetary items located within China are as follows:
    
    Closing foreign Exchange Closing translated
    
    currency balance rate RMB balance
    
    Cash and bank
    
    EUR 127 7.8023 991
    
    HKD 219 0.8359 183
    
    USD ___4_,4_5_8_,_1_5_9 _6_.5__34_2 29,130,503_ __________
    
    (2) Overseas business entities
    
    The Company?s overseas subsidiaries determine bookkeeping currency based on the primary
    
    economic environment. The bookkeeping base currency of Atrio and Francs Champs
    
    Participations SAS ("Francs Champs") are all in Euro, and the bookkeeping base currency of
    
    Indomita Wine is Chilean peso. The foreign monetary assets and liabilities of the overseas
    
    subsidiaries are as follows:
    
    Closing foreign Exchange Closing translated
    
    currency balance rate RMB balance
    
    Cash and bank
    
    EUR 152,451 7.8023 1,189,468
    
    USD 874,394 6.5342 5,713,465
    
    Short-term borrowings
    
    USD ___9_,0_0_0_,_0_0_0 _6_._5_34__2 _5__8,_8_0_7_,8__0_0
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VII. CHANGE IN CONSOLIDATION SCOPE
    
    1. Business combination under different control
    
    (1) Business combination under different control in current period
    
                                      Equity
                      Equity     Equity    acquisiti   Equity             Basisof     Revenuefrom   Netprofitfrom
     Nameofacquisition      acquisition   acquisition   onratio   acquisitio  Acquisition   acquisition   acquisitiondate   acquisitiondate
     company             date       cost      (%)    nmethod    date       date      toyearend     toyearend
     Vi?aIndómita,S.A.                USD     100%                     Finish       RMB        RMB
     Vi?aDosAndes,S.A.    1July2017   40,110,000   100%   Purchase   1July2017   paymentand    157,953,467     28,791,684
     BodegasSantaAliciaSpA                    100%                   acquireequity
    
    
    Other detail information:
    
    According to  and  signed between the
    
    Company and LAMBO SpA ("Chile Bethwines") on 11 May 2017, both will join contribute USD
    
    47,190,000 (translated as RMB 322,644,840) to set up Indomita Wine Company Chile, SpA
    
    (Chinese name:智利魔狮葡萄酒简式股份公司, “IWCC”). USD 40,110,000 (translated as RMB
    
    274,248,114) was paid by the Company and hold for 85% of the IWCC?s share. IWCC as the
    
    transferee, contributed USD 47,190,000 (translated as RMB 318,867,650) to acquire Indomita
    
    Wine, 100% shares hold by Chile Bethwines. The Group had completed the prerequisite for the
    
    transfer of all shares, and get the control over financial and operating decisions of Indomita Wine.
    
    (2) Consideration and Goodwill
    
    Consideration
    
    Indomita Wine
    
    RMB
    
    Cash 318,867,650
    
    Total consideration 318,867,650
    
    Less: acquired provisional value of net assets _31__1,_9_9_7_,5__35_
    
    Goodwill __6_,_8_7_0_,1_1_5_
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VII. CHANGE IN CONSOLIDATION SCOPE - continued
    
    1. Business combination under different control - continued
    
    (3) Recognised assets and liabilities of mergee at acquisition date
    
    Chile Indomita Wine Group
    
    Fair value Book valueat acquisition date at acquisition date
    
    RMB RMB
    
    Assets
    
    Cash and bank 15,071,107 15,071,107
    
    Accounts receivable 77,173,885 77,173,885
    
    Other receivables 12,149,546 12,149,546
    
    Inventories 93,948,023 93,948,023
    
    Fixed assets 89,086,462 69,377,096
    
    Intangible assets 170,605,345 27,264,647
    
    Bearer biological assets 1,413,595 2,109,821
    
    Deferred tax assets ____25__,5_0_0_,_33__8 ____2_5,_3_1_2_,_3_57_
    
    Total assets ___48__4,_9_4_8_,_30__1 322_____,_4_0_6_,4_8_2_
    
    Liabilities
    
    Short-term borrowings 61,998,579 61,998,579
    
    Accounts payable 89,556,186 89,556,186
    
    Other payables 8,750,612 8,750,612
    
    Taxes payable 1,969,430 1,969,430
    
    Employee benefits payable 5,354,430 5,354,430
    
    Deferred tax liabilities _____5_,3_2_1_,5__2_9 _________-___
    
    Total liabilities ___17__2,_9_5_0_,_76__6 ___1_6_7_,6_2_9_,2_3_7_
    
    Net assets 311,997,535 154,777,245
    
    Less:Non-controlling interests _________-___ _________-___
    
    Acquired net assets __3__1_1,_9_9_7_,_53__5 ___15_4__,7_7_7_,2_4_5_
    
    2. Change in consolidation scope due to other reasons (new established subsidiaries)
    
    Name Place and date of registration Legal representative Business nature Registered capital Principal activities Incorporate code
    
    Yantai Changyu Pioneer Grape
    
    Wine Marketing Ltd 18 January 2017 Zhou Hongjiang Sales RMB 5,000,000 Retail and Sales 91370600MA3D591TXW
    
    (“Grape Wine Marketing Ltd.”)* Yantai Shandong, China
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VIII. INTERESTS IN OTHER ENTITIES
    
    1. Structure of the Group
    
    Equity interest owned
    
    by the company Acquisition method
    
    Name Address Place of registration Nature Direct Indirect
    
    Xinjiang Tianzhu (a) Shihezi, Xinjiang, China Shihezi, Xinjiang, China Manufacturi 60% - Subsidiary acquired in
    
    ng business combination under
    
    non-common control
    
    Fransac Sales Cognac, France Cognac, France Trading - 100% Subsidiary acquired in
    
    business combination under
    
    non-common control
    
    Mirefleurs Bordeaux, France Bordeaux, France Trading 100% Subsidiary acquired in
    
    business combination under
    
    non-common control
    
    Atrio (b) Navarra, Spain Navarra, Spain Sales 75% Subsidiary acquired in
    
    business combination under
    
    non-common control
    
    IWCC (c) Santiago, Chile Santiago, Chile Sales 85% - Subsidiaries acquired by
    
    establishment
    
    Beijing Changyu Sales and distribution Co., Ltd ("Beijing Beijing, China Beijing, China Sales 100% - Subsidiaries acquired by
    
    Sales") establishment
    
    Yantai Kylin Packaging Co., Ltd. Yantai, Shandong, China Yantai, Shandong, China Manufacturi 100% - Subsidiaries acquired by
    
    ("Kylin Packaging") ng establishment
    
    Yantai Changyu-Castel Wine Chateau Co., Ltd ("Changyu Yantai, Shandong, China Yantai, Shandong, China Manufacturi 70% - Subsidiaries acquired by
    
    Chateau") (d) ng establishment
    
    Changyu (Jingyang) Wine Co., Ltd. Xianyang, Shanxi, China Xianyang, Shanxi, China Manufacturi 90% 10% Subsidiaries acquired by
    
    ("Jingyang Wine") ng establishment
    
    Yantai Changyu Pioneer Wine Sales Co., Ltd. ("Sales Yantai, Shandong, China Yantai, Shandong, China Sales 100% - Subsidiaries acquired by
    
    Company") establishment
    
    Langfang Development Zone Castel-Changyu Wine Co., Ltd Lanfang, Hebei, China Lanfang, Hebei, China Manufacturi 39% 10% Subsidiaries acquired by
    
    ("Langfang Castel") (e) ng establishment
    
    Changyu (Jingyang) Wine Sales Co., Ltd. ("Jingyang Sales") Xianyang, Shanxi, China Xianyang, Shanxi, China Sales 10% 90% Subsidiaries acquired by
    
    establishment
    
    Langfang Changyu Pioneer Wine Sales Co., Ltd ("Langfang Lanfang, Hebei, China Lanfang, Hebei, China Sales 10% 90% Subsidiaries acquired by
    
    Sales") establishment
    
    Shanghai Changyu Sales and distribution Co., Ltd. ("Shanghai Shanghai, China Shanghai, China Sales 30% 70% Subsidiaries acquired by
    
    Sales") establishment
    
    Beijing Changyu AFIP Agriculture development Co., Ltd Miyun, Beijing, China Miyun, Beijing, China Sales - 100% Subsidiaries acquired by
    
    ("Agriculture Development") establishment
    
    Beijing Chateau (f) Beijing, China Beijing, China Manufacturi 90% - Subsidiaries acquired by
    
    ng establishment
    
    Yantai ("Beijing Chateau") Changyu Wine Sales Co., Ltd. Yantai, Shandong, China Yantai, Shandong, China Sales 90% 10% Subsidiaries acquired by
    
    ("Wines Sales") establishment
    
    Yantai Changyu Pioneer International Co., Ltd. ("Pioneer Yantai, Shandong, China Yantai, Shandong, China Sales 70% 30% Subsidiaries acquired by
    
    International") establishment
    
    Hangzhou Changyu Wine Sales Co., Ltd. ("Hangzhou Hangzhou, Zhejiang, China Hangzhou, Zhejiang, China Sales - 100% Subsidiaries acquired by
    
    Changyu") establishment
    
    Ningxia Growing Yinchuang, Ningxia, China Yinchuang, Ningxia, China Planting 100% - Subsidiaries acquired by
    
    establishment
    
    Huanren Changyu National Wines Sales Co., Ltd. ("National Benxi, Liaoning, China Benxi, Liaoning, China Sales 100% - Subsidiaries acquired by
    
    Wines") establishment
    
    Liaoning Changyu Ice Wine Chateau Co., Ltd. ("Ice Benxi, Liaoning, China Benxi, Liaoning, China Manufacturi 51% - Subsidiaries acquired by
    
    Chateau") (g) ng establishment
    
    Yantai Development Zone Changyu Trading Co., Ltd Yantai, Shandong, China Yantai, Shandong, China Sales - 100% Subsidiaries acquired by
    
    ("Development Zone Trading") establishment
    
    Shenzhen Changyu Wine Marketing Ltd. ("Shenzhen Shenzhen, Guangdong, China Shenzhen, Guangdong, China Sales - 100% Subsidiaries acquired by
    
    Marketing") establishment
    
    Yantai Changyu Fushan Trading Company("Fushan Trading") Yantai, Shandong, China Yantai, Shandong, China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Beijing AFIP Meeting Center ("Meeting Center") Miyun, Beijing, China Miyun, Beijing, China Service - 100% Subsidiaries acquired by
    
    establishment
    
    Beijing AFIP Tourism and Culture ("AFIP Tourism") Miyun, Beijing, China Miyun, Beijing, China Tourism - 100% Subsidiaries acquired by
    
    establishment
    
    Ningxia Wine Co.Ltd. ("Ningxia Wine"). Yinchuan, Ningxia, China Yinchuan, Ningxia, China Manufacturi 100% - Subsidiaries acquired by
    
    ng establishment
    
    Yantai Changyu DingLuoTe Chateau. Yantai, Shandong China Yantai, Shandong China Retail and 65% 35% Subsidiaries acquired by
    
    ("Ding Luo Te Chateau") Sales establishment
    
    Qing Tong Xia Changyu Wine Marketing Ltd("Qing Tong Qing Tong Xia, Ningxia, China Qing Tong Xia, Ningxia, China Sales - 100% Subsidiaries acquired by
    
    Xia Sales") establishment
    
    Shihezi Chateau Shihezi, Xinjiang, China Shihezi, Xinjiang, China Manufacturi 100% - Subsidiaries acquired by
    
    ng establishment
    
    Ningxia Moser 15th Changyu Wine Chateau Co., Ltd. (" Yinchuan, Ningxia, China Yinchuan, Ningxia, China Manufacturi 100% - Subsidiaries acquired by
    
    Ningxia Chateau") ng establishment
    
    Shanxi Changyu Rina Castle Chateau Co., Ltd. Xianyang, Shanxi, China Xianyang, Shanxi, China Manufacturi 100% - Subsidiaries acquired by
    
    (" Chang'an Chateau") ng establishment
    
    R&D Centre (g) Yantai, Shandong China Yantai, Shandong China Manufacturin 63% - Subsidiaries acquired by
    
    g establishment
    
    Changyu (HuanRen) Wine Co., Ltd Benxi LiaoNing China Benxi LiaoNing China Wine 100% - Subsidiaries acquired by
    
    ("Huan Ren Wine") production establishment
    
    Projecting
    
    Xinjiang Sales Shihezi Xinjiang China Shihezi Xinjiang China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Xinjiang Changyu Winery Co., Ltd Shihezi Xinjiang China Shihezi Xinjiang China Manufacturi - 100% Subsidiaries acquired by
    
    ("Xinjiang Winery") ng establishment
    
    Ningxia Changyu Trading Co., Ltd Yinchuan Ningxia China Yinchuan Ningxia China Sales - 100% Subsidiaries acquired by
    
    ("Ningxia Trading") establishment
    
    Shanxi Changyu Rina Wine Sales Co., Ltd ("Shanxi Sales") Xianyang Shanxi China Xianyang Shanxi China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Penglai Changyu Wine Sales Co., Ltd Penglai Shandong China Penglai Shandong China Sales - 100% Subsidiaries acquired by
    
    ("Penglai Sales") establishment
    
    Laizhou Changyu Wine Sales Co., Ltd Laizhou Shandong China Laizhou Shandong China Sales - 100% Subsidiaries acquired by
    
    ("Laizhou Sales") establishment
    
    Francs Champs Cognac, France Cognac, France Investment 100% - Subsidiaries acquired by
    
    and trading establishment
    
    Lanzhou Changyu Wine Sales Co., Ltd ("Lanzhou Sales") Lanzhou Gansu, China Lanzhou Gansu, China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Beijing Retailing Co. Ltd("Beijing Retailing") Beijing, China Beijing, China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Tianjin Changyu Pioneer Sales Co., Ltd ("Tianjin Pioneer") Tianjin, China Tianjin, China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Fuzhou Changyu Pioneer Sales Co., Ltd ("Fuzhou Pioneer") Fuzhou Fujian, China Fuzhou Fujian, China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Nanjing Changyu Pioneer Sales Co., Ltd ("Nanjing Pioneer") Nanjing, Jiangsu, China Nanjing, Jiangsu, China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Xianyang Changyu Pioneer Sales Co., Ltd ("Xianyang Xianyang, Shanxi, China Xianyang, Shanxi, China Sales - 100% Subsidiaries acquired by
    
    Pioneer") establishment
    
    Shenyang Changyu Pioneer Sales Co., Ltd ("Shenyang Shenyang, Liaoning, China Shenyang, Liaoning, China Sales - 100% Subsidiaries acquired by
    
    Pioneer") establishment
    
    Jinan Changyu Pioneer Sales Co., Ltd ("Jinan Pioneer") Jinan, Shandong, China Jinan, Shandong, China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Shanghai Changyu Pioneer Sales Co., Ltd ("Shanghai Shanghai, China Shanghai, China Sales - 100% Subsidiaries acquired by
    
    Pioneer") establishment
    
    Fuzhou Changyu Pioneer Sales Co., Ltd ("Fuzhou Pioneer") Fuzhou, Jiangxi, China Fuzhou, Jiangxi, China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Shijiazhuang Changyu Pioneer Sales Co., Ltd ("Shijiazhuang Shijiazhuang, Hebei, China Shijiazhuang, Hebei, China Sales - 100% Subsidiaries acquired by
    
    Pioneer") establishment
    
    Hangzhou Yuzefeng Sales Co., Ltd ("Hangzhou Yuzefeng") Hangzhou, Zhejiang, China Hangzhou, Zhejiang, China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VIII. INTERESTS IN OTHER ENTITIES - continued
    
    1. Structure of the Group - continued
    
    Equity interest owned
    
    by the company Acquisition method
    
    Name Address Place of registration Nature Direct Indirect
    
    Jilin Changyu Pioneer Sales Co., Ltd ("Jilin Pioneer") Changchun, Jilin, China Changchun, Jilin, China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Beijing Changyu Pioneer Sales Co., Ltd ("Beijing Pioneer") Beijing, China Beijing, China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Haerbin Changyu Pioneer Sales Co., Ltd ("Haerbin Pioneer") Haerbin, Heilongjiang, China Haerbin, Heilongjiang, China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Hunan Changyu Pioneer Sales Co., Ltd ("Hunan Pioneer") Changsha, Hunan, China Changsha, Hunan, China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Yinchuan Changyu Pioneer Sales Co., Ltd ("Yinchuan Yinchuan, Ningxia, China Yinchuan, Ningxia, China Sales - 100% Subsidiaries acquired by
    
    Pioneer") establishment
    
    Kunming Changyu Pioneer Sales Co., Ltd ("Kunming Kunming, Yunnan, China Kunming, Yunnan, China Sales - 100% Subsidiaries acquired by
    
    Pioneer") establishment
    
    Chongqing Changyu Pioneer Sales Co., Ltd ("Chongqing Chongqing, China Chongqing, China Sales - 100% Subsidiaries acquired by
    
    Pioneer") establishment
    
    Zhengzhou Changyu Pioneer Sales Co., Ltd ("Zhengzhou Zhengzhou, Henan, China Zhengzhou, Henan, China Sales - 100% Subsidiaries acquired by
    
    Pioneer") establishment
    
    Wuhan Changyu Pioneer Sales Co., Ltd ("Wuhan Pioneer") Wuhan, Hubei, China Wuhan, Hubei, China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Taiyuan Changyu Pioneer Sales Co., Ltd ("Taiyuan Pioneer") Taiyuan, Shanxi, China Taiyuan, Shanxi, China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Huhehaote Changyu Pioneer Sales Co., Ltd ("Huhehaote Huhehaote Inner Mongolia, China Huhehaote Inner Mongolia, China Sales - 100% Subsidiaries acquired by
    
    Pioneer") establishment
    
    Chengdu Changyu Pioneer Sales Co., Ltd ("Chengdu Chengdu, Sichuan, China Chengdu, Sichuan, China Sales - 100% Subsidiaries acquired by
    
    Pioneer") establishment
    
    Nanning Changyu Pioneer Sales Co., Ltd ("Nanning Pioneer") Nanning, Guangxi, China Nanning, Guangxi, China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Lanzhou Pioneer Lanzhou Gansu, China Lanzhou Gansu, China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Yantai Fulangduo Yantai Shandong, China Yantai Shandong, China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Hefei Pioneer Hefei, Anhui, China Hefei, Anhui, China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Urumchi Pioneer Urumchi Xinjiang, China Urumchi Xinjiang, China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Guizhou Pioneer Guiyang Guizhou, China Guiyang Guizhou, China Sales - 100% Subsidiaries acquired by
    
    establishment
    
    Guangzhou Changyu Pioneer Sales Co. Ltd Guangzhou Guangdong China Guangzhou Guangdong China Sales - 100% Subsidiaries acquired by
    
    ("Guangzhou Pioneer") establishment
    
    Grape Wine Marketing Ltd. Yantai Shandong China Yantai Shandong China Sales 100 - Subsidiaries acquired by
    
    establishment
    
    Explanation in difference between holding interests and voting rights in subsidiaries:
    
    (a) Xinjiang Tianzhu was acquired by the Company, accounting for 60% of Xinjiang Tianzhu's
    
    equity interest. Through agreement arrangement, the Company has the full power to control
    
    Xinjiang Tianzhu's strategic operating, investing and financing policies. The agreement
    
    arrangement will be terminated on 6 August 2017. Upon the expiry of the agreement
    
    arrangement, the non-controlling interests of Xinjiang Tianzhu will normally enjoy/commit all
    
    the rights and obligations of the shareholders as stipulated in the Articles of Association.(b) As at 12 September 2016, Dicot has completed an internal reorganization. Atrio, consolidated
    
    Enotec S.L, Hostaler I S.L., Faustino Rivero Ulecia S.L.by absorption merger. After the
    
    completion of the reorganization, Atrio became the only surviving company.(c) IWCC is a Sino-foreign joint venture estabilished by the Company and Chile Bethwines,
    
    accounting for 85% of Indomita Wine's equity interest, and the capital contribution of USD
    
    40,110,000 (translated as RMB 274,248,114) was paid by the Company, and USD7,080,000
    
    (translated as RMB 48,396,726) was paid by the Chile Bethwines and accounting for 15% of
    
    Indomita Wine's equity interest.(d) Changyu Chateau is a Sino-foreign joint venture established by the Company and a foreign
    
    investor, accounting for 70% of Changyu Chateau's equity interest. Through agreement
    
    arrangement, the Company has the full power to control Changyu Chateau's strategic
    
    operating, investing and financing policies. The agreement arrangement will be terminated
    
    on 31 December 2022.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VIII. INTERESTS IN OTHER ENTITIES - continued
    
    1. Structure of the Group - continued
    
    (e) Langfang Chateau is a Sino-foreign joint venture established by the Company and a foreign
    
    investor, accounting for 49% of Langfang Chateau's equity interest by the Company and
    
    subsidiaries. Through agreement arrangement, the Company has the full power to control
    
    Langfang Chateau's strategic operating, investing and financing policies. The agreement
    
    arrangement will be terminated on 31 December 2022.(f) Beijing Chateau is a joint venture established by the Company, Yantai De'an and Beijing
    
    Qinglang, and the Company increases the capital contribution RMB502,910,000 in this period,
    
    Yantai De'an and Beijing Qinglang together increase the capital contribution RMB29,840,000.
    
    Beijing Chateau has compeled the business registion on 22 December 2017. After capital
    
    contribution increased, the Company is accounting for 90% of Beijing Chateau's equity
    
    interest. The Company gets the control over operation, investment, and financial decision of
    
    Beijing Chateau through agreement arrangement, which will terminate on 2 September 2019.(g) Ice Chateau is a Sino-foreign joint venture established by the Company and a foreign investor,
    
    accounting for 51% of Ice Chateau's equity interest. Through agreement arrangement, the
    
    Company has the full power to control Ice Chateau's strategic operating, investing and
    
    financing policies. The agreement arrangement will be terminated on 31 December 2021.(h) R&D Centre is a joint venture established by the Company and CADF, accounting for 63.1%
    
    of R&D Centre's equity interest at 31 December 2017. As mentioned in Note VI-30 ,in 2016,
    
    RMB 305,000,000 from CADF was invested in R&D Centre's, CADF accounted for 37.9% of
    
    the registered capital. According to the investment agreement, CADF will recovery
    
    investment funds over 10 years, the investment income received equal to 1.2% of the
    
    remaining unpaid principal per annum. In addition to the fixed income, CADF will no longer
    
    enjoy other profits or bear the loss of R&D Centre. Therefore although the investment in R&D
    
    Centre, nominally equity investment, is actually a debt investment. The group take this
    
    investment as long-term payables, which measured in amortized cost. The company is fully
    
    responsible for the operation, investment and financial policies of the R&D Centre in the form
    
    of such agreements. The agreement will expire on 22 May 2026.
    
    2. Non-wholly owned subsidiaries
    
    Profit and loss belongs
    
    Minority to non-controlling Distributions to Assimilate Closing balance of
    
    Name interest shareholder ratio interest shareholders non-controlling interest non-controlling
    
    Xinjiang Tianzhu 40% (2,720,460) - - 53,373,452
    
    Atrio 25% 1,595,697 (668,124) - 31,626,890
    
    Changyu Chateau 30% - - - 12,365,016
    
    Langfang Castel 51% - - - 22,702,522
    
    Beijing Chateau 10% - - 29,840,000 65,133,868
    
    Ice Chateau 49% - - - 33,319,062
    
    IWCC 15% ____4,_71_8_,8_4_3 _______- __ ___4_8,_39_6_,7_2_6 ___53_,_11_5_,5_6_9
    
    ____3,_59_4_,08__0 ____(_66_8_,1_2_4) ___7_8,23__6_,7_2_6 __2_71_,_636__,3_7_9
    
    Explanation in difference between share percentage and voting power of non-controlling interests:
    
    Please see Note VIII-1.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    VIII. INTERESTS IN OTHER ENTITIES - continued
    
    3. Key financial information of important non-wholly owned subsidiaries
    
    Closing balance Opening balance
    
    Current Non-current Total Current Non-current Total Current Non-current Total assets Current Non-current Total
    
    Name assets assets assets liabilities liabilities liabilities assets assets liabilities liabilities liabilities
    
    Xinjiang
    
    Tianzhu 30,264,441 71,323,940 101,588,381 809,080 5,336,114 6,145,194 80,126,247 77,008,886 157,135,133 23,266,974 5,336,114 28,603,088
    
    Changyu
    
    Chateau 140,038,021 115,435,985 255,474,006 175,061,601 - 175,061,601 173,934,285 116,396,690 290,330,975 210,904,481 - 210,904,481
    
    Langfang
    
    Castel 22,728,536 17,973,719 40,702,255 6,133,909 - 6,133,909 26,528,622 19,890,293 46,418,915 10,233,932 - 10,233,932
    
    Beijing
    
    Chateau 214,079,274 481,668,050 695,747,324 73,963,043 - 73,963,043 88,294,417 502,368,404 590,662,821 431,222,472 888,945 432,111,417
    
    Ice Chateau 38,657,358 25,484,359 64,141,717 10,871,695 100,000 10,971,695 38,239,653 27,545,615 65,785,268 13,756,944 100,000 13,856,944
    
    Atrio 398,835,959 116,299,504 515,135,463 299,030,002 89,336,338 388,366,340 333,455,551 131,921,130 465,376,681 272,843,155 69,572,335 342,415,490
    
    IWCC 175,669,256 305,664,706 481,333,962 122,023,764 5,206,406 127,230,170 N/A N/A N/A N/A N/A N/A
    
    2017 2016
    
    Total Operating Total Operating
    
    Revenue Net profit (loss) comprehensive activities cash Revenue Net profit (loss) comprehensive activities cash
    
    Name income flows income flows
    
    Xinjiang Tianzhu 116,555,588 15,531,513 15,531,513 32,224,800 118,253,496 11,561,969 11,561,969 5,647,080
    
    Changyu Chateau 68,964,230 985,910 985,910 19,629,212 102,588,593 13,184,637 13,184,637 16,751,337
    
    Langfang Castel 39,165,527 (1,616,638) (1,616,638) (1,554,380) 41,948,391 731,204 731,204 8,681,926
    
    Beijing Chateau 145,103,200 17,475,647 17,475,647 49,964,881 178,662,315 29,417,483 29,417,483 55,561,102
    
    Ice Chateau 49,643,396 1,241,699 1,241,699 (1,748,535) 43,742,412 (5,895,304) (5,895,304) 4,922,305
    
    Atrio 281,007,167 2,000,682 7,701,416 (32,148,326) 281,328,100 (7,484,378) (8,473,348) (28,411,777)
    
    IWCC* 157,953,467 28,791,684 31,458,952 16,482,765 N/A N/A N/A N/A
    
    * This is amount incurred in the period between acquisition date and 31 December 2017.
    
    IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT
    
    The Group's major financial instruments include cash and bank, notes receivable, accounts
    
    receivable, interest receivables, other receivables, available-for-sale financial assets, other
    
    non-current assets, short-term borrowings, accounts payable, other payables, interest payables,
    
    and long-term borrowings. Details of these financial instruments are disclosed in Note VI. The
    
    risks associated with these financial instruments and the policies on how to mitigate these risks
    
    are set out below. Management manages and monitors these exposures to ensure the risks are
    
    monitored at a certain level.
    
    The Group adopts sensitivity analysis technique to analyse how the profit and loss for the period
    
    and shareholders' equity would have been affected by reasonably possible changes in the relevant
    
    risk variables. As it is unlikely that risk variables will change in an isolated manner, and the
    
    interdependence among risk variables will have significant effect on the amount ultimately
    
    influenced by the changes in a single risk variable, the following are based on the assumption that
    
    the change in each risk variable is on a stand-alone basis.
    
    The Group's risk management objectives are to achieve a proper balance between risks and yield,
    
    minimise the adverse impacts of risks on the Group's operation performance, and maximise the
    
    benefits of the shareholders and other stakeholders. Based on these risk management objectives,
    
    the Group's basic risk management strategy is to identify and analyse the Group's exposure to
    
    various risks, establish an appropriate maximum tolerance to risk, implement risk management,
    
    and monitors regularly and effectively these exposures to ensure the risks are monitored at a
    
    certain level.
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT - continued
    
    1. Risk management objectives and policies
    
    1.1 Market risk
    
    1.1.1 Currency risk
    
    Currency risk is the risk that losses will occur because of changes in foreign exchange rates. . The
    
    Group's exposure to the currency risk is primarily associated with EUR and USD.Several of the
    
    Group's subsidiaries have purchases and sales denominated in EUR and Chilean peso, borrowing
    
    denominated in USD, while the Group's other principal activities are denominated and settled in
    
    RMB.As at 31 December 2017, except that the assets and liabilities stated in the table below are
    
    foreign currency deposits or excess of borrowings, the assets and liabilities of each entity of the
    
    Group are settled in their respective functional currencies.
    
    Closing balance Opening balance
    
    RMB RMB
    
    Bank and cash (EUR) 1,190,459 566,182
    
    Bank and cash (USD) 34,843,968 -
    
    Non-current liabilities due within one year (EUR) - 29,227,200
    
    Short-term borrowings (USD) ___58__,8_0_7_,_80_0_ ________-___
    
    Currency risk arising from the assets and liabilities denominated in foreign currencies may have
    
    impact on the Group's performance.The Group closely monitors the effects of changes in the
    
    foreign exchange rates on the Group's currency risk exposures. The Group currently does not take
    
    any measures to hedge currency risk exposures.
    
    Sensitivity analysis on currency risk
    
    Where all other variables are held constant, the reasonably possible changes in the foreign
    
    exchange rate may have the following pre-tax effect on the profit or loss for the period and
    
    shareholders' equity:
    
    Domestic entities:
    
    Current year Prior year
    
    Effect on Effect on
    
    shareholders' shareholders'
    
    Change in exchange rate Effect on profit equity Effect on profit equity
    
    RMB RMB RMB RMB
    
    EUR 5% increase against RMB 50 50 (1,433,051) (1,433,051)
    
    EUR 5% decrease against RMB (50) (50) 1,433,051 1,433,051
    
    USD 5% increase against RMB 1,456,525 1,456,525 - -
    
    USD 5% decrease against RMB __(_1_,4_5_6_,5_2_5) _(_1_,4_5_6_,5_2_5) _____-___ _____-___
    
    Yantai Changyu Pioneer Wine Co. Ltd. 2017 Annual Report
    
    IX. FINANCIAL INSTRUMENT AND RISK MANAGEMENT - continued
    
    1. Risk management objectives and policies - continued
    
    1.1 Market ris k- continued
    
    1.1.1 Currency risk - continued
    
    Sensitivity analysis on currency risk - continued
    
    Overseas entities:
    
    Current year Prior year
    
    Effect on Effect on
    
    shareholders' shareholders'
    
    Change in exchange rate Effect on profit equity Effect on profit equity
    
    RMB RMB RMB RMB
    
    USD 5% increase against EUR 52,695 52,695 - -
    
    USD 5% decrease against EUR (52,695) (52,695) - -
    
    USD 10% increase against Chile Peso (5,275,651) (5,275,651) - -
    
    USD 10% decrease against Chile Peso 5,275,651 5,275,651 - -
    
    EUR 5% increase against Chile Peso 58,350 58,350 - -
    
    EUR 5% decrease again