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个股公告正文

张 裕B:2018年半年度报告(英文版)

日期:2018-08-30附件下载

    Yantai Changyu Pioneer Wine Co., Ltd. 2018 Semi-annual Report
    
    Yantai Changyu Pioneer Wine Co., Ltd.
    
    2018 Semi-annual Report
    
    Final 2018-03
    
    August, 2018
    
    Contents
    
    I. Important Notice, Contents and Definition ................................................................................. 3
    
    II. Brief Introduction for the Company and Main Financial Indicators .................................... 5
    
    III. Summary of the Company’s Businesses .................................................................................. 8
    
    IV. Management Discussion and Analysis ................................................................................... 11
    
    V. Major issues ................................................................................................................................ 28
    
    VI. Changes in Shares and the Shareholders’ Situation ............................................................. 39
    
    VII. Related Situation of Preferred Shares .................................................................................. 44
    
    VIII Situation for Directors, Supervisors, Senior Management Staffs ....................................... 44
    
    IX. Related Situation of Corporation Bonds ............................................................................... 45
    
    X. Financial Report.......................................................................................................................... 46
    
    XI. Reference Document................................................................................................................ 151
    
    I. Important Notice, Contents and Definition
    
    The Board of Directors, the Board of Supervisors, directors, supervisors & senior
    
    management staffs of the Company collectively and individually accept full responsibility for
    
    the truthfulness, accuracy and completeness of the information contained in this report and
    
    confirm that to the best of their knowledge and belief there are no unfaithful facts, significant
    
    omissions or misleading statements.
    
    Mr. 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 semi-annual report.
    
    Except the following directors, all other directors have personally attended the meeting for
    
    deliberating the semi-annual report.
    
      Director name with     Director post with         Reason for            Name of
     non-present in person   non-present in person   non-present in person       mandatory
     Sun Liqiang           Director               Business trip           Zhou Hongjiang
     AugustoReina         Director               Business trip           Aldino Marzorati
    
    
    About significant risks that may be faced in production and operation process, please refer
    
    to―10. Risks the Company faces and measures‖ in chapter four ―Management Discussion and
    
    Analysis‖ of this report. We advise investors to read carefully and pay attention to the
    
    investment risks.
    
    The business plan and target in the report do not represent the earnings forecast of the listed
    
    company to 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.
    
    The Company has no plan to distribute cash dividends and bonus shares, and capital reserve
    
    will not be transferred to equity.
    
    Definition
    
              Definition Item            Refers to                Definition Content
    Company/The Company/The Group   Refers to  YantaiChangyu Pioneer WineCo. Ltd.
    Changyu Group/Controlling          Refers to  YantaiChangyu Group Co. Ltd.
    Shareholder
    CSRC                              Refers to  China Securities Regulatory Commission
    SSE                               Refers to  Shenzhen Stock Exchange
    Deloitte HuaYong                  Refers to  Deloitte Hua Yong Certified Public Accountants
                                                 Co., LTD(special general partnership)
    CNY                               Refers to  ChineseYuan
    
    
    II、Brief Introduction for the Company and Main Financial Indicators
    
    1. Company’s information
    
    Abbreviation oftheShares:   ChangyuA、ChangyuB          CodenumberoftheShares  000869、200869
    Abbreviation  of the Shares -
    after alteration
    Place oflistingoftheShares  ShenzhenStockExchange
    Legal Namein Chinese       烟台张裕葡萄酿酒股份有限公司
    Abbreviation ofChinese name 张裕
    Legal NameinEnglish      YANTAICHANGYUPIONEERWINECOMPANYLIMITED
    Abbreviation ofEnglishname CHANGYU
    Legal Representative       Mr.ZhouHongjiang
    
    
    2. Contact person and information
    
                    Secretary totheBoardofDirectors           AuthorizedRepresentativeoftheSecuritiesAffairs
    Name     Mr.QuWeimin                           Mr.LiTingguo
    Address    56DamaRoad,Yantai,Shandong,China           56DamaRoad,Yantai,Shandong,China
    Tel       0086-535-6633656                         0086-535-6633656
    Fax       0086-535-6633639                         0086-535-6633639
    E-mail     quwm@changyu.com.cn                     stock@changyu.com.cn
    
    
    3. Other information
    
    1) The Company’s contact information
    
    Whether there is any change for the Company‘s registered address, office address, post code,
    
    website and e-mail address during the report period.
    
    □Available ?Not available
    
    There is no any change for the Company‘s office address, post code, website and e-mail address
    
    during the report period, please see 2017 annual report for more details.
    
    2) Information disclosure and filling location
    
    Whether there is any change for the information disclosure and filling location during the report
    
    period.
    
    □Available ?Not available
    
    There is no any change for the newspapers in which the Company‘s information is disclosed,
    
    website assigned by CSRC to carry the semi-annual report and the filling location during the report
    
    period, please see 2017 annual report for more details.
    
    4. Key accounting data and financial indicators
    
    Whether the Company makes retroactive adjustments or restates the accounting data of previous
    
    fiscal years.
    
    ?No
    
                                In thereportperiod    Inthesameperiodoflast   Moreorlessthanlast
                                                           year                year(%)
    Business revenue(CNY)                2,828,230,064          2,767,098,197               2.21%
    Net  profit  attributed  to  the
    shareholders  of  the  listed            635,837,405            670,069,054               -5.11%
    company (CNY)
    Net  profit  attributed  to  the
    shareholders  of  the  listed            606,678,719            652,906,375               -7.08%
    company after deducting the
    irregular profitandloss(CNY)
    Net  cash  flows  from  the            552,753,472            420,360,319              31.50%
    operating activities(CNY)
    Basic   earnings  per  share                  0.93                  0.98               -5.10%
    (CNY/share)
    Diluted  earnings  per  share                  0.93                  0.98               -5.10%
    (CNY/share)
    Weighted average for earning                6.89%                7.84%               -0.95%
    rate ofthenetassets
                                Theendofthereport      Theendoflastyear     Moreorlessthanlast
                                     period                                     year(%)
    Totalassets(CNY)                   13,038,507,425         12,536,755,208                  4%
    Net  Assets attributed to the
    shareholders  of  the  listed          9,532,948,884          8,906,342,299               7.04%
    company (CNY)
    
    
    5. Differences in accounting data under PRC accounting standards and international
    
    accounting standards
    
    1) Differences of net profit and net asset in the financial report disclosed according to both
    
    international accounting standards and PRC accounting standards
    
    ?Available □Not available
    
    Unit:CNY
    
                        Netprofitattributedtotheshareholdersof   NetAssetsattributedtotheshareholdersof
                                 thelistedcompany                     thelistedcompany
                          Currentperiod       Lastperiod       Endofperiod     Beginningofperiod
     According  to  PRC        635,837,405        670,069,054     9,532,948,884         8,906,342,299
     accountingstandards
     Itemandamountadjustedaccordingtointernationalaccountingstandards
     According       to
     international               635,837,405        670,069,054      9,532,948,884        8,906,342,299
     accountingstandards
    
    
    2) Differences of net profit and net asset in the financial report disclosed according to both
    
    foreign accounting standards and PRC accounting standards
    
    □Available ?Not available
    
    There are no differences of net profit and net asset in the financial report disclosed according to
    
    both foreign accounting standards and PRC accounting standards during the report period.
    
    3) Explanation of the differences in accounting data under domestic and overseas accounting
    
    standards
    
    □Available ?Not available
    
    6. Item and amount of irregular profit and loss
    
    ?Available □Not available
    
    Unit:CNY
    
                                Item                                Amount       Explanation
    Profit and loss on disposal of non-current assets, including the reversal of          93,958
    accrued impairmentprovision
    Government grants credited in profit and loss (except for those recurring
    government grants that are closely related to the entity's operation, in line       37,982,878
    with relatedregulationsandhaveproperbasisofcalculation)
    Other non-operatingexpenseandincome                                    614,030
    Less: Incometaxeffect                                                9,447,208
         Minorityshareholdersequityeffect(aftertax)                             84,972
    Total                                                             29,158,686       -
    
    
    The reasons shall be made clear and definitely as to the irregular profit and loss that the Company
    
    has defined by virtue of the Explanatory Notice on Public Company’s Information Disclosure No.1 -
    
    Irregular Profit and Loss and as to regarding the irregular profit and loss as recurrent profit and loss
    
    as specified in the Explanatory Notice on Public Company’s Information Disclosure No.1 -
    
    Irregular Profit and Loss.
    
    □Available ?Not available
    
    There is no situation that the irregular profit and loss is defined and specified as recurrent profit and
    
    loss in accordance with the Explanatory Notice on Public Company’s Information Disclosure No.1 -
    
    Irregular Profit and Loss during the report period.
    
    III. Summary of the Company’s Businesses
    
    1. Main businesses during the report period
    
    Whether the Company needs to follow the disclosure requirement of special business
    
    No.
    
    During the report period, the Company‘s main business is to produce and operate wine and brandy, thus providing the domestic and foreign
    
    consumers with healthy and fashionable alcoholic drinks. The Company integrates the planting and procurement of grape, the procurement of
    
    raw and auxiliary material, the production and sales of products. Compared with earlier stage, there are no significant changes happened to the
    
    Company‘s main businesses. The wine industry that the Company involved in is still in the growth stage, the whole domestic wine market is on
    
    the rising trend. The Company takes the dominant position in the domestic wine market. During the report period, the sales of low-price wines,
    
    low-priced brandy and chateau wines of Castel are slightly down. The sales of mid-priced wines such as Noble Dragon remain stable. The sales
    
    of mid-to-high priced brandy, imported wines and chateaus wines such as AFIP keep the favorable growth momentum. All these make the
    
    Company‘s operating revenue appear a small increase compared with the same period of last year. However, due to factors such as rising prices
    
    of raw materials and packaging materials, and increased depreciation, the Company's net profit declined slightly.
    
    2. Significant changes of main assets
    
    1) Significant changes of main assets
    
              Mainassets                        Explanation of significant changes
    Equity asset                   No significant changes
    Fixed asset                    No significant changes
    Intangible asset                No significant changes
    Construction in process         No significant changes
    
    
    2) Main overseas assets condition
    
    ?Available □Not available
    
                                                                   Control measuresfor                   Proportionof     Whetherthereare
       Details of      Formation    Assetsscale  Location    Operation       safeguardingof        Earning     overseasassetsin      significant
         assets        reasons                             mode          assetsecurity        condition    theCompany‘snet   impairmentrisks
        assets
                                                                  The         Company
       HaciendaY                                                  participates in  making
        Vinedos      Acquisition                         Independent   important     decisions
      Marques Del     ofequity    456,572,779   Spain     operation    through    board    of     1,214,012             4.79%        No
       Atrio. SL                                                   directors  and  appoints
                                                                  CFO   on   financial
                                                                  management
                                                                  The         Company
                                                                  participates in  making
     Indomita Wine   Foundingof                         Independent   important     decisions
       Company     jointventure   483,324,945    Chile     operation    through    board    of      -281,859             5.07%        No
       Chile,SpA                                                   directors  and  appoints
                                                                  CFO   on   financial
                                                                  management
     Francs Champs   Foundingof                                     The Company directly
      Participations      sole      228,843,440   France    Independent   appoints        senior     -2,717,412             2.40%        No
         SAS       proprietorship                         operation    executives         on
                                                                  management
                                                                  The         Company
       Kilikanoon    Acquisition                         Independent   participates in  making
      EstatePtyLtd     ofequity    148,472,200  Australia    operation    important     decisions      -115,317             1.56%        No
                                                                  through    board    of
                                                                  directors
    
    
    Explanation on major holding companies and joint stock companies
    
    During the report period, Indomita Wine Company Chile, SpA and Kilikanoon Estate Pty Ltd is with small losses, mainly due to the fact that the
    
    two are located in the southern hemisphere as well as the low season sales of the first half of the year.
    
    3. Analysis of core competitiveness
    
    Whether the Company needs to follow the disclosure requirement of special business?
    
    No.
    
    Compared with the participants in the arena of the Chinese wine sector, we believe that the
    
    Company is provided with the following advantages:
    
    Firstly, the Company has been enjoying a well-known wine brand since 120-odd years, ―Changyu‖,
    
    ―Noble Dragon‖ and ―AFIP‖ are Chinese famous trademarks that have strong influence and good
    
    reputation.
    
    Secondly, the Company has set up a nationwide marketing network, formed a ―three-level‖
    
    marketing network system mainly composed of the company‘s salesmen and distributors, possessed
    
    the strong marketing ability and market exploitation ability.
    
    Thirdly, the Company has already had strong research strength and a product R&D system, owned a
    
    one and only ―State-level Wine R&D Center‖, made mastery of advanced winemaking technology
    
    and production processes, been powerful enough in product innovation and established a perfect
    
    quality control system.
    
    Fourthly, the Company is in possession of a lot of grape-growing bases to meet its future
    
    development, having developed a great deal of vineyards in the most suitable areas for wine grape
    
    growing such as in Shandong, Ningxia, Xinjiang, Liaoning, Hebei and Shanxi, whose scales and
    
    structures have generally met the Company‘s needs for development.
    
    Fifthly, the Company has a great variety of products composed of all grades, its wine,brandy and
    
    sparkling wine of over 100 sorts can meet different consumers‘ demands. The Company has taken
    
    the lead in the domestic wine sector through rapid development in the past 10-odd years and has
    
    possessed comparative superiority in the future competition.
    
    Sixthly, the Company has a relatively respect motivation system. Most of Company‘s employees
    
    indirectly hold the Company‘s equity through controlling shareholders. There are high consistency
    
    between employee benefits and shareholders benefits, in favor of motivating employees to create
    
    value for shareholders.
    
    Seventhly, the company has established a flexible and efficient decision-making mechanism. The
    
    core management of the Company has always maintained a united and pragmatic work style and
    
    flexible and efficient decision-making mechanism, enabling the Company to respond more
    
    coercively to market changes.
    
    Eighthly, the company has basically completed the global production capacity layout. The Company
    
    has completed production capacity layout in the world's most important wine producing countries
    
    such as China, France, Chile, Spain, Australia, etc., and can make better use of global high-quality
    
    raw material resources, capital, talents and advanced production techniques and technologies to
    
    provide consumers with diversification quality products and services.
    
    Based on the above reasons, the Company has formed strong core competitiveness and will
    
    maintain this comparative advantage in the foreseeable market competition in the future.
    
    IV. Management Discussion and Analysis
    
    1. Summarization
    
    During the report period, influenced by the slowdown of domestic economic growth, the overall
    
    domestic wine industry is relatively stable. Influenced by the further decrease in product price
    
    resulting from the overwhelming flow of foreign wine into Chinese market, the competition in
    
    domestic wine market, especially for middle-and-low-level wines, is very fierce, plus the great
    
    impact brought by E-commerce and other new channels to traditional sales channels in the
    
    meantime this company‘s E-commerce business is still in the beginning stage, resulting in bigger
    
    challenges for the Company to achieve sustained and steady growth. Facing quite a lot of external
    
    disadvantages, the Company insists to focus on the market, timely adjust the development strategy
    
    and marketing tactics, optimize the market layout and product structure, perfect the marketing
    
    channels and assessment system, strive to promote product sales, achieving good results and
    
    realizing business income of CNY2828.23 million, an increase of 2.21% compared with last year;
    
    but due to the impact of increase in operating cost, taxes and additional, sales expense and
    
    administrative expense, the Company realized net profit of CNY635.84 million belonging to the
    
    parent company‘s shareholders, an decrease of 5.11% compared with last year.
    
    During the report period, the Company mainly did following works:
    
    Firstly, the Company adjusted and fortified its management team, increasing the management level
    
    and capacity of management team.
    
    Secondly, the Company proposed the strategy of ―Focus on big product, focus on high quality, focus
    
    on middle-to-high end‖ (in other words ―Three Focus‖ strategy), further clarifying its development
    
    direction.
    
    Thirdly, the Company basically completed the reform and reorganization work in sales systems,
    
    improving the mode of market investment and enhancing marketing ability. The Company further
    
    implemented the measure of ―personnel reduction while salary increase‖ in sales system, reduced
    
    redundant personnel, completed the personnel setting, position setting and personnel allocation
    
    work in business management department in sales system, perfected performance assessment
    
    method for marketing personnel and conducted authorized operation to partial business unit and
    
    provincial branches, improving the sales team‘s working enthusiasm, initiative and fighting
    
    capacity.
    
    Fourthly, the Company fully implemented ―Three Focus‖ strategy, accelerated the product carding
    
    as well as the backbone distributor system construction and increased the market investment,
    
    improving products‘ market competitiveness. For high-end products, the Company focused on
    
    ―MOSER‖, ―AFIP‖, ―CASTEL‖, ―Golden Icewine Valley‖, ―Baron Balboa‖, ―Rena‖, ―Tinlot‖ wine
    
    and ―Koya‖ brandy and strived to build ―MOSER‖ to a globally well-known high-end brand, to
    
    build ―AFIP‖, ―CASTEL‖, ―Golden Icewine Valley‖ and ―Koya‖ to nationally well-known
    
    high-end brands and to build ―Baron Balboa‖, ―Rena‖, ―Tinlot‖ to regionally well-known high-end
    
    brands. For middle-end products, the Company focused on ―Noble Dragon‖ and reserva five-star
    
    brandy, reinforced the market development in the ninth-edition Noble Dragon and reserva five-star
    
    brandy, continued consolidating and enlarging the position of ―Noble Dragon‖ as domestic biggest
    
    single product in wine market and continually increased the market share of middle-end brandy. For
    
    low-to-mid-end products, the Company focused on ―Zuishixian‖ and mini-brandy to digging
    
    consumption potential and to guide and cultivate new consumer group. For imported liquor, the
    
    Company mainly paid attention to acquired brands, such as Atrio, Mirefleurs, Indomita, Kilikanoon
    
    and Roullet Fransac in order to occupy important position in Chinese imported wine market. The
    
    Company also conducted comprehensive carding and reorganization to products and distributor
    
    team, reduced product items, eliminated and replaced unqualified distributors, implemented strict
    
    access system to distributors selling the ninth-edition Noble Dragon and new-edition ―Zuishixian‖,
    
    changed the market investment mode, intensified the fighting degree to fleeing goods, further
    
    standardized market order, better protected distributors‘ interest and improved distributors‘
    
    enthusiasm.
    
    Fifthly, the Company strengthened quality management and quickened the pace in product update
    
    and upgrade in order to better adapt to market change. During the report period, the Company
    
    revised internal quality management system, took unannounced inspection to eleven wineries and
    
    conducted update and upgrade work to products including partial chateau wine, Noble Dragon,
    
    reserva five-star brandy, five-star brandy and Zuishixian etc, effectively improving product quality
    
    and better satisfying the market need.
    
    Sixthly, the Company reinforced financial management and audit work in order to strive to
    
    accomplish energy-saving and cost-reducing and to further reduce operating cost. During the report
    
    period, the Company further strengthened internal fund allocation and control, reasonably arranged
    
    loan structure, strived to reduce fund cost; intensified the cost management, such as advertisement
    
    and major raw material purchase and so on, and strongly reduced freight and storage expense;
    
    enhanced the financial management in overseas acquired enterprise and reinforced audit degree to
    
    investment project in order to prevent operating risk and improve investment benefits; made great
    
    efforts to increase the ratio of order-driven products, to shorten delivery time, to reduce inventory
    
    and capital occupying and to improve enterprise profitability.
    
    Seventhly, the Company continued implementing internationalization strategy and orderly promoted
    
    overseas acquisition work. During the report period, the Company acquired 80% equity of
    
    Kilikanoon Estate Pty Ltd in Australia, optimizing the Company‘s capacity layout and product
    
    structure and further improving the market competition of imported products. Through M&A and
    
    strategic cooperation, the Company‘s production had extended to Asia, Europe, America and
    
    Oceania and the Company had completed the capacity layout in major global wine-producing
    
    countries and famous wine-producing region, such as France, Spain, Australia and Chile and so on.
    
    The Company also had deep brand cooperation with major wine enterprises in Italy, New Zealand,
    
    Argentina and other countries. Now the Company owned five overseas chateaux, eight domestic
    
    chateaux and more than twenty foreign and domestic major brands and sold its products to more
    
    than seventy countries and regions in the world.
    
    Eighthly, the Company strengthened the management in investment project and basically completed
    
    the installation and commissioning work of major production lines in Changyu industrial park,
    
    laying the foundation of putting into operation as soon as possible and further improving production
    
    efficiency.
    
    In order to achieve the operation target set by the Company at the beginning of this year, the
    
    Company would do following work in the second half of 2018:
    
    Firstly, the Company will intensify the brand construction and carding work and enlarge the
    
    cooperation breadth and depth with domestic E-commerce magnate and new media in order to
    
    improve brand awareness and reputation. The Company will intensify brand aggregation, continue
    
    teasing and reducing product quantity and optimize product line; for choice of media, bind up with
    
    high-flow platform, enhance resource exchange and share and take deep cooperation with precision
    
    media with high category permeability to form high-flow and strong-viscosity communication
    
    strategy; for publicity form, focus on output content, aim at different media attribute and make
    
    brand image output at different platforms including MicroBlog, WeChat official account, Zhihu
    
    account and TouTiao etc by adopting micro film, short video, multimedia, long image-text, live
    
    broadcast and other forms.
    
    Secondly, the Company will continue paying attention to the construction of key distributor team
    
    and professional sales personnel team, conduct the tasting and promotion work of mid-to-high-end
    
    products, such as chateau wine, Noble Dragon, ―Three Star‖ and above level brandy and Zuishixian
    
    and so on, and strive to promote the sales of mid-to-high-end products; do the preparation work for
    
    the opening of Koya chateau and the launch of new products, such as Koya brandy; continue
    
    promoting the sales work of acquired brands in domestic and foreign markets, such as Atrio,
    
    Mirefleurs, Donelli, Indomita and Kilikanoon and so on, further establish and perfect the domestic
    
    and foreign sales system, take full advantage of foreign sales network to enlarge the export scale of
    
    domestic wines; centralize marketing resources and focus on key markets to continually enlarge the
    
    quantity and coverage of dominated market.
    
    Thirdly, the Company will start the order-driven business mode for Noble Dragon distributors,
    
    make great efforts to shorten delivery time and reduce inventory level and fund occupation.
    
    Fourthly, the Company will further enlarge and implement authorized operation to improve the
    
    positivity, initiative and flexibility of front-line production and management personnel and to
    
    accelerate market reaction speed; improve the Company‘s assessment and incentive measures to
    
    production and management department, enhance staff training and reorganization, strictly carry out
    
    assessment, reward, promotion and elimination system, and motivate all staff‘s vitality and fighting
    
    capacity.
    
    Fifthly, the Company will orderly proceed the construction of investment projects and focus on the
    
    connection between production and sales. The Company will pay special attention to the ending
    
    work of main body‘s civil work in Yantai Changyu International Wine City (in other words Yantai
    
    Changyu Industry Park), accelerate the construction of intelligentization and informatization
    
    management system as well as the maintenance and transformation in Cognac Roullet Fransac
    
    chateau and the fire engineering in the research institute; conduct the coordination work between
    
    project construction and production and reasonably arrange construction and production progress to
    
    timely satisfy the market need.
    
    Sixthly, the Company will strengthen the management in supply chain and fully accomplish the
    
    purchase in grape material. The Company will enhance the construction and management in the
    
    supply chain of overseas and domestic grape material and other packing materials, strive to realize
    
    diversification of material supply and make sure that, for all raw materials, the important segment
    
    could be monitored and the whole course could be traced; based on the material requirement in
    
    future years, scientifically make raw material purchase plan, further perfect raw material pricing
    
    mechanism, reasonably determine raw material purchase price, comprehensively complete raw
    
    material purchase work, preferably control raw material cost and improve raw material quality.
    
    2. Analysis of main business
    
    See ―1. Summarization‖ in ―Management Discussion and Analysis‖.
    
    Period comparison of main financial data
    
    Unit: CNY
    
                             In thereport   Inthesameperiodof Moreorless                        Reasonforchanges
                                period          lastyear          (%)
    Operating revenue            2,828,230,064      2,767,098,197      2.21%AMuasintrlayliaattthriabtuatereditnocltuhdeedCoinmtphaenysc‘sopceonosfocliodnastoiolindaotfiocnommapkainnigesanininCchrielaeseanind
                                                                      operatingrevenue
    Operating cost                974,557,292       925,754,133      5.27%mMaatienrliyalsatotrnibyuetaerd-onto-ytehaerbinascirseasein prices of raw materials and packaging
    Sales expense                710,659,033       668,735,726      6.27%Mstaafifnclyomatpterinbsuatteiodntoonthyeeainr-corne-ayseearinbaasdivsertisingpromotion fees and marketing
    Management expense           160,091,888       130,542,386     22.64%eMxapiennlyseaottnriybeuater-donto-ytehaeribnacsriesaseof employee‘scompensation and depreciation
    Financial expense              13,085,942        11,147,949     17.38%Mainly attributed to the increase in interest expenses and handling fees on
                                                                      year-on-yearbasis
                                                                      Mainly attributed to the decrease in total profit (profit before tax) on
    Income taxexpense            211,979,735       228,752,790      -7.33%year-on-year basis which results in a decrease in current income tax expenses
                                                                      onyear-on-yearbasis
    Net  amount of cash flow
    generated   in   operating     552,753,472       420,360,319     31.50%Mseravinicleyparttorvibiduitnegdotontyheeari-nocnre-yaesearobfacsaisshreceived from goods selling and labor
    activities
    Net  amount of cash flow                                           Mainly attributed to the recovery of fixed term deposits making the cash
    generated   in   investment    -291,217,548       -797,540,941     63.49%injection in investment activities increased on year-on-year basis and the cash
    activities                                                           outflowfrominvestmentactivitiesdecreasedonyear-on-yearbasis
    Net  amount of cash flow      -6,350,537       353,878,706    -101.79%Mainly attributed to the year-on-yeardecrease in cash received from loans and
    generated   in   financing                                           theyear-on-yearincreaseincashpaidfordebtrepayment
    activities
    Net  increased  amount  of                                           Mainly attributed to the increase in net cash flow from operating activities and
    cash andcashequivalents       247,781,188        -27,454,401   1,002.52%netcashflowfrominvestingactivitiesonyear-on-yearbasis
    
    
    Whether there is any great change for the Company‘s profit structure or profit source during the report period
    
    □Available ?Not available
    
    There is no great change for the Company‘s profit structure or profit source during the report period.
    
    Structure of main businesses
    
    Unit: CNY
    
                 Operating                Grossprofit  Increaseordecreaseofoperating  Increaseordecreaseofoperating   Increaseordecreaseofgross
       Item       revenue    Operatingcost     (%)      revenueoverthesameperiodof  costoverthesameperiodoflast   profitoverthesameperiodof
                                                            last year(%)                   year(%)                    lastyear
    Sector
    Wine  and
    alcoholic     2,828,230,064  974,557,292       65.54%                      2.21%                       5.27%                      -1%
    beverages
    Product
    Wine        2,235,369,550  759,887,101       66.01%                      3.92%                       7.94%                    -1.26%
    Brandy        552,121,883   194,450,633       64.78%                     -4.03%                      -2.86%                    -0.43%
    Other          40,738,631   20,219,557       50.37%                      0.22%                      -6.23%                     3.42%
    
    
    3. Analysis to non-main business
    
    □Available ?Not available
    
    4. Assets and liabilities situation
    
    1) Major changes of assets
    
    Unit: CNY
    
                               Theendofthereportperiod       Theendofthesameperiodoflastyear   Proportionincreaseor  Explanationonsignificant
                              Amount      Proportioninthe      Amount      Proportioninthetotal      decrease              changes
                                           totalassets(%)                        assets(%)            (%)
    Monetary funds             1,683,038,453         12.91%      1,550,067,781            12.63%             0.28%Nosignificantchanges
    Receivables                  243,413,092          1.87%       167,152,509             1.36%             0.51%Nosignificantchanges
        Mainly  attributed  to  the
    Inventory                  2,338,925,432         17.94%      2,024,302,929            16.49%             1.45%increase in raw materials
        reserved at the end of the
        report period
    Investment realestate           17,877,379          0.14%                                0%             0.14%Nosignificantchanges
    Long-term         equity                                                              0%               0% Nosignificantchanges
    investments
        Mainly  attributed  to  the
    Fixed assets                5,457,575,677         41.86%      4,591,037,486            37.40%             4.46%transfer of constructions in
        progress during the report
        period
        Mainly  attributed  to  the
    Construction inprogress       1,015,914,753          7.79%      1,697,297,440            13.83%            -6.04%transfer of constructions in
        progress into fixed assets
        during thereportperiod
        Mainly  attributed  to  the
    Short-term borrowings         750,454,676          5.76%       846,881,075             6.90%            -1.14%return of short term bank
        loans
    Long-term borrowings          153,965,191          1.18%       175,270,580             1.43%            -0.25%Nosignificantchanges
    
    
    2) Measuring assets and liabilities at fair value
    
    □Available ?Not available
    
    3) Assets rights restricted situation up to the end of report period
    
    Assets rights restricted situation of the Company up to the end of report period, please refer to Announcement on External Guarantee
    
    (announcement number: 2016-Temporary 021) and Announcement on External Guarantee (announcement number: 2017-Temporary 015)
    
    disclosed on China Securities Journal, Securities and the website (www.cninfo.com.cn) respectively on December 22nd, 2016 and December 12th,
    
    2017.
    
    5. Investment situation analysis
    
    1) Overall situation
    
    ?Available □Not available
    
       Amount ofinvestmentduringthereportperiod      Amountofinvestmentinthesameperiodlastyear                 Extentofchange
                       (CNY)                                     (CNY)
                                  312,384,336.55                                 630,502,100                                     50.45%
    
    
    2) Situation of acquired main equity investments during the report period
    
    ?Available □Not available
    
    Unit: CNY
    
                                                                                   Progress          Investme  Whethe
     Name of    Main                                                  Investme         uptothe          ntprofit   rornot
       the    businesse  Investme   Investment   Shareholdi   Capital    Partners     nt     Produ   balance   Estimate  andloss     to    Disclosure Disclosure
     invested      s     ntmode     amount     ngratio    source            horizon   cttype   sheet    dprofit     for    prosecu  date     index
     company                                                                         date            current     te
                                                                                                    period
                                                           PTO7 Pty
                                                             Ltd、                                                          Announcemen
                                                             Bruce                                                           tonEquity
                                                           Warren &                                                         Acquisitionof
                                                            Lindsey                                                          Kilikanoon
              Producti                                         Anne                                                          EstatePtyLtd
     Kilikano    onand   Acquisiti   101,452,936.            Self-own   Baudinet                 Complet  6,763,52                  Decemb   (announceme
     on Estate   salesof     on        55        80%       ed     、Nathan   50years   Wines    ed       9     -115,317    No    er12th,    ntnumber:
      PtyLtd    wines                                          Waks&                                                  2017    2017-Tempor
                                                            Michelle                                                          ary017)
                                                            Williams                                                         disclosedon
                                                              、                                                            thewebsite
                                                           Woodvale                                                         (www.cninfo.
                                                            Vintners                                                           com.cn)
                                                           Pty Ltd、
                                                            NWMW
                                                            Nominee
                                                             sPty
                                                           Ltd、W.J.
                                                             Duthy
                                                            Holdings
                                                           Pty Ltd、
                                                            Warrick
                                                             James
                                                            Duthy、
                                                            SH&G
                                                            Nominee
                                                             sPty
                                                             Ltd、
                                                             David
                                                            Leonard
                                                              &
                                                            Rebecca
                                                            Louise
                                                            Adams、
                                                             12-14
                                                            Marsden
                                                           Street Pty
                                                             Ltd、
                                                            Burford
                                                            Sampson
                                                            andJane
                                                            Hamilton
                                                            Sampson
     Total        -        -     101,45552,936.    -         -        -        -       -       -     6,7693,52 -115,317     -       -         -
    
    
    3) Situation of main ongoing non-equity investments during the report period
    
    ?Available □Not available
    
    Unit: CNY
    
                                                                                                   Reasons
                                                     Accumulated                        Accumulated      for
                          Whether           Investment     actual                             realized
                                                                                                  unreached
                         it belongs            Amount     investment          Process            profitup
       Project    Investment   tofixed   Involved   duringthe    amountup   Capital    of    Estimated   totheend     planning    Disclosure      Disclosure
       name       mode              sectors                        source           profit                schedule       date         index
                           assets             report      totheend          project             ofthe
                                                                                                    and
                         investment            period     ofthereport                           report
                                                       period                             period    estimatedprofit
     Yantai    Pleasereferto
     Changyu    Announcementon
     International                     Liquor                                                                                Resolutionofthe
     WineCity                        and                                                                                  SeventhSession
     Blending       Self-       Yes    alcoholic  107,016,000  1,265,635,100  Owned   100%        -          -    Nodirect    2018.04.23      Boardof
     and        constructed           beverage                        fund                               earnings                Directors8th
     Cooling                         sector                                                                                Meetingdisclosed
     Center    onChinaSecurities
     Construction    Journal,Securities
     Project    andthewebsite
     Yantai        Self-       Yes     Liquor    50,000,000   936,690,000  Owned   100%        -          -    Nodirect    2018.04.23  (www.cninfo.com.cn)
     Changyu    constructed             and                          fund                               earnings              onApril23rd,2018.
     International                     alcoholic
     WineCity                      beverage
     Bottling                         sector
     Center
     Construction
     Project
     Yantai
     Changyu                        Liquor
     International                      and
     WineCity      Self-       Yes    alcoholic         0   415,207,200  Owned   100%        -          -    Nodirect    2018.04.23
     Logistics    constructed           beverage                        fund                                earning
     Center                          sector
     Construction
     Project
     Changyu
     Vine                           Liquor
     andWine      Self-               and                         Owned                             Notputinto
     Research    constructed    Yes    alcoholic    1,800,000   117,560,000   fund     75%        -          -    operation    2018.04.23
     Institute                        beverage
     Construction                      sector
     Project
     Treasure                        Liquor
     Wine         Self-               and                         Owned                             Notputinto
     Chateau                 Yes    alcoholic    9,840,000   119,830,000           75%        -          -              2018.04.23
     Construction  constructed           beverage                        fund                               operation
     Project                         sector
     Koya                          Liquor
     Brandy        Self-               and                         Owned                             Notputinto
     Chateau     constructed    Yes    alcoholic    4,230,000   139,928,000   fund     80%        -          -    operation    2018.04.23
     Construction                     beverage
     Project                         sector
                                   Liquor
                                    and
     Greening      Self-                                           Owned                              Nodirect
                           Yes    alcoholic    4,000,000    57,105,700          100%        -          -              2018.04.23
     Investment   constructed           beverage                        fund                                earning
                                   sector
     Cognac                         Liquor
     Fransac                          and
     Chateau       Self-       Yes    alcoholic    7,535,400     7,535,400  Owned    30%        -          -  Notcompleted  2018.04.23
     Rrepair and  constructed                                         fund
     Renovation                      beverage
     Project                         sector
     Industrial                        Liquor
     Production                        and
     SAP          Self-       Yes    alcoholic   26,510,000    37,850,000  Owned    60%        -          -    Nodirect    2018.04.23
     Information   constructed                                         fund                                earning
     Construction                     beverage
     Project                         sector
                                   Liquor
     Research                         and
     InstituteFire    Self-       Yes    alcoholic         0             Owned     0%        -          -    Nodirect    2018.04.23
     Engineering  constructed                                         fund                                earning
     Project                        beverage
                                   sector
                                   Liquor
     Oak  Barrel    Self-               and                         Owned                              Nodirect
     Procurement              Yes    alcoholic         0           0           0%        -          -              2018.04.23
     Project      constructed           beverage                        fund                                earning
                                   sector
     Non-dry                        Liquor
     Sticker                          and
     Labeling       Self-       Yes    alcoholic         0           0  Owned     0%        -          -    Nodirect    2018.04.23
     Machine     constructed                                         fund                                earning
     Procurement                     beverage
     Project                         sector
     Total          —        —       —    210,931,400  3,097,341,400    —       —        -          -       --          --           --
    
    
    4) Financial assets investment
    
    (1) Security investment
    
    □Available ?Not available
    
    There is no security investment for the Company during the report period.
    
    (2) Derivative investment
    
    □Available ?Not available
    
    There is no derivative investment for the Company during the report period.
    
    6. Sale of major assets and equities
    
    1) Sale of major assets
    
    □Available ?Not available
    
    There is no sale of major assets during the report period.
    
    2) Sale of major equities
    
    □Available ?Not available
    
    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          Mainbusiness           Registeredcapital    Totalasset    Netasset    Operation   Operation   NetProfit
          name         type                                                                            revenue      profit
     Xinjiang Tianzhu            Grape planting, grape juice, bulk
     Winery Co.,Ltd.  Subsidiary  wine and fruit wine processing,     CNY75million     100,490,996   94,660,914      18,803  -1,156,537    -184,572
                               fillingandsales
         Yantai                 Wineand sparklingwineresearch,
     Changyu-Chateau  Subsidiary  productionandsalesaswellasthe     USD5million     254,998,005   83,446,152   43,226,910   3,706,113   2,861,474
      ChangyuCastel             tourismservice
      Wine Co.Ltd.
     Langfang Castel-    Joint
      Changyu Wine     stock    Wineproductionandsales        USD6.108818million   35,673,406   31,609,890    5,038,281  -1,952,954  -1,952,954
         Co.Ltd.      company
     Chateau Changyu            Brandy  and  wines  research,
       AFIPGlobal    Subsidiary  productionandsales              CNY642.75million   690,531,538  640,211,147   78,502,666  21,121,608  15,243,700
      Wine Co.Ltd.
     Chateau Liaoning
       ChangyuIce    Subsidiary  Icewineproduction              CNY59.6873million   84,138,776   55,148,440   27,305,133   2,913,516    905,396
      Wine Co.,Ltd.
       Hacienda Y              Wineand other liquors production
     VinedosMarques  Subsidiary  andoperation                  EUR2.385732million  456,572,779  122,855,707  148,197,893    -771,033   1,214,012
       DelAtrio,SL
     Indomita  Wine            Wineand other liquors production
        Company     Subsidiary  andoperation                    USD47.19million   483,324,945  349,642,978   93,719,341  -1,582,286    -281,859
       Chile,  SpA
     KilikanoonEstate  Subsidiary  Wineand other liquors production  AUD6.529221million  148,472,200   83,884,229   25,904,401    -385,840    -115,317
         PtyLtd                andoperation
    
    
    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. Forecast for the operation achievements from January to September of 2018
    
    Caution and explanation for the prediction that the cumulative net profit from the beginning of the year to the end of next report period could be
    
    in a loss or there will be in a great change comparing with the same period of last year.
    
    ?Not available
    
    10. Risks the Company faces and measures
    
    (1) Risks in price fluctuation of raw materials
    
    Grapes are the Company‘s main raw materials. The grape‘s yield and quality are affected to a certain extent by the natural factors such as
    
    drought, wind, rain, frost and snow. These force majeure factors greatly influence the quantity and price of the grapes in Company orders and
    
    add the uncertainty to the Company‘s production and operation. Therefore, the Company will lower the risks that are likely to affect grape
    
    quality and result in price fluctuation by means of expanding the self-run vineyards, strengthening the vineyard management and optimizing the
    
    layout of vineyards.
    
    (2) Risks in uncertainty of market input and output
    
    To cope with the cutthroat market competition and to meet the needs for market development, the Company has input more and more capital in
    
    the market and the sales expense has taken up a higher percentage point in the business revenue. The input-output ratio will affect the
    
    Company‘s operating results to a great extent and the risk that some investments may not reach the expectations is likely to occur. Therefore, the
    
    Company will strengthen market research and analysis, enhance market forecast accuracy and continue to perfect the input-output evaluation
    
    system to ensure the investments in market to be satisfactory as expected.
    
    (3) Risks in product transport
    
    The Company‘s products are fragile and sent to different places all over the world, mostly by sea, railway and expressway. The peak season of
    
    sales is usually in cold winter and close to the spring festival when market has a great demand. At that time, the natural and human factors such
    
    as serious shortage of transport capacity resulting from busy flow of people and goods, wind, snow, freezing as well as traffic accidents make the
    
    transport departments difficult to send products to markets in time and safely. As a result, it makes the Company have to face the risks of missing
    
    the peak season of sales. Therefore, the Company will adopt all methods possible like making precise sales prediction and well designed
    
    connection of production and sales, reasonably arranging production and transport means and making use of more available warehouses in
    
    different places to lower these kinds of risks.
    
    (4) Risks in investment faults
    
    According to the plan, currently the Company has finished the production layout at home, and the next step is to pay more attention to the
    
    overseas merge and acquisition in the same industry. Currently, Yantai Changyu International Wine City (namely Yantai Changyu Industrial Park)
    
    has those features such as the big investment amount, long-term construction period and many uncertain factors; more unforeseeable factors for
    
    the overseas merge and acquisition projects in the progress of M&A, it is difficult to make sure the fair and reasonable transaction price, the
    
    integration and management after M&A is also hard. Under the influence of uncertain factors for individual projects, it leads to have the risks of
    
    facing with the investment amount out of budget or hardly taking back the expected investment earnings. The Company will take an adequate
    
    argument and scientific decision-making for investment projects, try hard to reduce and avoid investment risks.
    
    V. Major issues
    
    1. Information for the shareholders’ meeting and temporary shareholders’ meeting held during the report period
    
    1) Information for the shareholders’ meeting during the report period
    
                Session             Meeting type  Participation ratio    Convening date     Disclosure date          Disclosure Index
                                                    of investors
                                                                                                        http://www.cninfo.com.cn
        2017Annual Shareholders‘       Annual                                                           Announcement  on  Resolution  of
                Meeting             shareholders‘      62.42%          2018.05.24         2018.05.25    2017 Annual Shareholders’Meeting
                                      meeting                                                           ( Announcement   number:2018-
                                                                                                        Temporary15)
    
    
    2) Request for convening temporary shareholders’ meeting by priority shareholders owing recovered voting right
    
    □Available ?Not available
    
    2. The Company’s preliminary scheme of profit distribution and preliminary scheme of increasing equity with capital reserve
    
    □Available ?Not available
    
    There are no schemes of paying cash dividend, bonus share and increasing equity with capital during the semi-annual period.
    
    3. Commitments that the Company’s actual controllers, shareholders, related parties, acquirers and the Company and other related
    
    commitment parties have implemented during the report period and have not implemented up to the end of the report period
    
    ?Available □Not available
    
      Commitments    Commitmentparty    Commitmenttype    Commitmentcontent      Commitmenttime     Commitmentperiod      Implementation
    Commitments  at
    share reform
    Commitments
    made        in
    acquisition report
    or equity changes
    report
    Commitments  at
    asset
    restructuring
                  Yantai Changyu Group Solve    horizontalNon-horizontalcompetition      1997.05.18             Forever        Has been performing
                  Co. Ltd.             competition                                                                     strictly
                                                      According  to  Trademark
                                                      License   Contract,   the
                                                      Company     will    pay
    Commitments  at                                     trademark royalty for the
    the initial public                                     ??Changyu‘‘
    offering      or                                     productsofYantaiChangyuYantaiChangyu Group Clear the purpose of                                                              Has been performing
    refinancing      Co.Ltd.             brandroyalty      YGaronutapiCChoa.,nLgytdueGvreoruypyCeoar.,,1997.05.18             Forever        strictly
                                                      Ltd  will  use  trademark
                                                      royalty    to    advertise
                                                      ??Changyu‘‘ trademarks and
                                                      Contracted products in this
                                                      contract.
    Equity  incentive
    commitments
    Commitments  at
    middle and small
    shareholders   of
    the Company
    Commitment
    under     timelyYes
    implementation
    or not
    Whether or not to
    have    specific
    reasons  of  theNo
    unimplemented
    commitment and
    next steps
    
    
    4. The appointment and dismissal of certified public accountants
    
    Whether the semi-annual report has been audited
    
    □ Yes ?No
    
    The semi-annual report has not been audited.
    
    5. Explanation from the board of directors for the “Non-standard Audit Report” of last year
    
    □Available ?Not available
    
    6. Explanation from the board of directors for the “Non-standard Audit Report” of last year
    
    □Available ?Not available
    
    7. Bankruptcy reorganization
    
    □Available ?Not available
    
    There are no related issues of bankruptcy reorganization happened during the report period and until the report period.
    
    8. Litigation Issue
    
    Material litigation and arbitration
    
    □Available ?Not available
    
    There are no material litigation and arbitration during the report period.
    
    Other Litigation Issue
    
    □Available ?Not available
    
    9. Penalty and rectification
    
    □Available ?Not available
    
    There are no penalties or rectifications during the report period.
    
    10. Credit of the Company, holding shareholders and actual controllers
    
    ?Available □Not available
    
    There is no situation such as court effective judgment is failure to execute, a large amount of
    
    debt expires but it is unpaid by the company, holding shareholders and actual controllers.
    
    11. Implementation of the Company’s equity inventive plan, employee stock ownership
    
    plan or other employee incentive measures
    
    □Available ?Not available
    
    There are no implementation of the Company‘s equity inventive plan, employee stock
    
    ownership plan and other employee incentive measures.
    
    12. Significant related transactions
    
    1) Related transactions in relation to routine operations
    
    ?Available □Not available
    
    Related transactions in relation to routine operations, please refer to XII "Related party and
    
    Related Transaction" in the chapter X "Financial Report".
    
    2) Related transactions in relation to acquisition and sales of assets or equity
    
    □Available ?Not available
    
    There are no related transactions in relation to acquisition or sales of assets or equity during
    
    the report period.
    
    3) Related transactions in relation to common foreign investment
    
    □Available ?Not available
    
    There are no related transactions in relation to common foreign investment during the report
    
    period.
    
    4) Related current credit and debt
    
    ?Available □Not available
    
    Whether or not to exist non-operating related credit and debt
    
    □Yes ?No
    
    There are no non-operating related credit and debt during the report period.
    
    5) Other major related transactions
    
    □Available ?Not available
    
    There are no other major related transactions during the report period.
    
    13. Non-business capital occupying of listed company by controlling shareholder and its
    
    related parties
    
    □Available ?Not available
    
    There are no non-business capitals occupying of listed company by controlling shareholder
    
    and its related parties during the report period.
    
    14. Major and important contracts and execution results
    
    1) Trusteeship, contract and leasehold issues
    
    (1) Trusteeship situation
    
    □Available ?Not available
    
    There is no trusteeship situation during the report period.
    
    (2) Contract situation
    
    ?Available □Not available
    
    Contract situation description
    
    During the report period, about the Company‘s contract operation situation, please refer to
    
    ―41. Other payables‖ in Annex 7 ―Notes to consolidated financial statement‖ in the financial
    
    report of this report.
    
    Project in gains and losses for the Company to achieve more than 10% of the total profit
    
    □Available ?Not available
    
    There are no contract projects in gains and losses for the Company to achieve more than 10%
    
    of the total profit during the report period.
    
    (3) Leasehold situation
    
    ?Available □Not available
    
    Leasehold situation description
    
    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
    
    (1) Guarantee situation
        Unit:CNY‘0000
                                    External guaranteeoftheCompanyanditssubsidiaries(excludingguaranteetosubsidiaries)
                     Disclosure dateofrelated               Actualdateof                                           Whetherornot    Whetherornot
     Guaranteeobjectname   announcementabout   Guaranteequota  occurrence(dateof  Actualguarantee  Guaranteetype   Guarantee       complete         belongto
                                                                      amount                    Period                      related-party
                         guaranteequota                    agreement)                                           implementation      guarantee
    Yantai  Economic and
    Technological             2016.12.22         34,160       2016.12.21        34,160       Mortgage;      10years          No            No
    Development    Zone                                                              Pledge
    Management Council.
    Total of the external guarantee quota approved                          0 Totaloftheactualexternalguarantee                                        0
    during thereportperiod(A1)                                           amountduringthereportperiod(A2)
    Total of the external guarantee quota approved by                           Balance  of  the  actual  external
    the endofthereportperiod(A3)                                   34,160 guarantee by the end of the report                                    34,160
                                                                  period(A4)
                                                GuaranteesituationsbetweentheCompanyandsubsidiaries
                      Disclosuredateofrelated               Actualdateof                                           Whetherornot    Whetherornot
     Guaranteeobjectname   announcementabout   Guaranteequota  occurrence(dateof  Actualguarantee  Guaranteetype   Guarantee       complete         belongto
                                                                      amount                    Period                      related-party
                         guaranteequota                    agreement)                                           implementation      guarantee
    Sales   &  Marketing
    Company  of  Yantai      2016.10.31         10,000       2016.11.05        10,000       Jointliability      2years          No            Yes
    Changyu Pioneer Wine                                                              assurance
    Company Limited
    Yantai Changyu Pioneer      2016.12.22         11,984       2016.12.21        11,984       Mortgage;      10years          No            Yes
    Wine CompanyLimited                                                               Pledge
    Yantai Changyu Wine                                                            Jointliability
    Research        and      2016.12.22         72,176       2016.12.21        72,176       assurance;      10years          No            Yes
    Development Company                                                              Mortgage
    Limited
    Kilikanoon  Estate Pty                                                             Jointliability
    Ltd                    2017.12.12          7,100        2018.01.09         7,100        assurance       1year          No            Yes
    Totaloftheguaranteequotaapprovedtosubsidiaries                           Totalof the actual guarantee amount
    during thereportperiod(B1)                                          0 for subsidiaries during the report                                     7,100
                                                                  period (B2)
    Totaloftheguaranteequotaapprovedtosubsidiaries                           Balance of the actual guarantee for
    by theendofthereportperiod(B3)                                  89,276 subsidiaries by the end of the report                                    89,276
                                                                  period (B4)
                                                      Guaranteesituationsbetweensubsidiaries
                     Disclosure date of related            Actual   date   of                                      Whether   or   notWhether  or  not
    Guarantee objectname  announcement     about Guaranteequota occurrence (date of Actual  guarantee Guaranteetype  Guarantee     complete          belong      to
                     guaranteequota                    agreement)        amount                    Period        implementation      related-party
        guarantee
    Hacienda  Y  Vinedos
    Marques  Del  Atrio.2016.04.29           3,502        2015.10.08        3,502          Mortgage     Long-term     No             No
    SL
    Indomita       Wine
    Company      Chile,2018.04.23           1,986        2018.04.20        1,986          Mortgage     Long-term     No             No
    SpA
    Total  of  the  guarantee  quota  approved  to                          0 Totalof the actual guarantee amount                                     5,488
    subsidiaries duringthereportperiod(C1)                                   for subsidiaries during the report
                                                                  period (C2)
    Total  of  the  guarantee  quota  approved  to                           Balance of the actual guarantee for
    subsidiaries bytheendofthereportperiod(C3)                          5,488 subsidiaries by the end of the report                                     5,488
                                                                  period (C4)
                                          TotalguaranteeamountoftheCompany(Totalofabovethreemajoritems)
                                                                  Total of the actual guarantee amount
    Total of the approved guarantee quota during the                          0 during   the   report   period                                    12,588
    report period(A1+B1+C1)                                           (A2+B2+C2)
    Total of the approved guaranteequota bythe end of                           Balance of the actual guarantee by
    the reportperiod(A3+B3+C3)                                  128,924 the  end  of  the  report  period                                   128,924
                                                                  (A4+B4+C4)
    The proportion ofactualtotalguaranteeamount(A4+B4+C4)accountingfortheCompany‘s                                                            13.52%
    net asset
    Among :
    The amountofguaranteeforshareholders,actualcontrollersandtheirrelatedparties(D)       0
    The amountofdebtguaranteefortheguaranteedobjectswhoseasset-liabilityratioismorethan70% 0
    directly orindirectly(E)
    Totalamountofguaranteeofthepartthatexceeds50%ofnetassets(F)                  0
    Totalamountoftheabove-mentionedthreeitems(D+E+F)                           0
    
    
    (2) Illegal external guarantee
    
    □Available ?Not available
    
    There is no illegal guarantee situation during the report period.
    
    3) Other important contracts
    
    □Available ?Not available
    
    There are no other important contracts during the report period.
    
    15. Situation for Social Responsibility
    
    1) Major environmental situation
    
    The listed company and its subsidiaries are whether or not to belong to the heavy pollution industry stipulated by the state environmental
    
    protection department.
    
    □Yes ?No
    
    2) Situation for carrying out social responsibility of targeted poverty
    
    (1) Targeted poverty plan
    
    No
    
    (2) Summary of semi-annual targeted poverty
    
    Zhuqiao town in Yantai Laizhou locates in hilly land. The life of farmers living here depends on the weather and their income is very low. Since
    
    2013, the Company has planted 8000 mu of wine-making grapes adapting to the infertile soil in here and employed more than 600 farmers in
    
    around 16 villages to work in the vineyard, making these farmers‘ average annual income increase CNY10 thousand. This not only is beneficial
    
    for local green ecology construction but also drives local farmers to overcome poverty and achieve prosperity. At present ,there is no
    
    poverty-stricken family in these 16 villages.
    
    (3) Targeted poverty effectiveness
    
    The Company has adopted the mode of ―Company+Cooperative+Farmer‖ to achieve the layout of 200 thousands of mu of grape bases in
    
    domestic six producing regions including Xinjiang, Ningxia, Yantai, Liaoning, Shaanxi and Hebei and so on, bringing about CNY800million to
    
    nationwide fruit farmers every year and driving thousands of farmers to overcome poverty and achieve prosperity.
    
    (4) Subsequent targeted poverty plan
    
    No
    
    16. Other Major issues
    
    □Available ?Not available
    
    There are no other major issues need to be explained during the report period.
    
    17. Major issues of Company’s subsidiaries
    
    □Available ?Not available
    
                                    VI. Changes in Shares and the Shareholders’Situation
    1. Changes in shares
    1) Changes in shares
        Unit:share
                            Amountbeforethischange                               Change  (+,-)                  Amountafterthischange
                                                                              Transfer
                            Amount            Percentage  nAelwlotDistribute  bonuscoathpeitraltoothers  Subtotal         Amount       Percentage
                                              %                share                                                      %shareshare
                                                                              capital
    1、Unrestrictedshares              685,464,000     100%                                                        685,464,000     100%
    (1) Ashares                      453,460,800    66.15%                                                        453,460,800    66.15%
    (2) Bshares                      232,003,200    33.85%                                                        232,003,200    33.85%
    2、Totalshares                    685,464,000     100%                                                        685,464,000     100%
    
    
    Cause of share change
    
    □Available ?Not available
    
    Approval of share change
    
    □Available ?Not available
    
    Transfer of changed shares
    
    □Available ?Not available
    
    The influence of share change on the financial indicators such as basic earnings per share, diluted earnings per share of the latest year and the
    latest period, net asset per share belonging to the Company‘scommon 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 restrictedshares
    □Available   ?Not available
    2. Securities issuance and listing situation
    □Available   ?Not available
    3. Situation for shareholdersand the actual controllers
        Unit:share
                                                                     Totalnumberofpreferred
    Total common shareholders at the end of 40,428 (21,831 of StockAand 18,597 ofshareholderrecovering               0
    report period                      StockB)
                                                                     votingpowerattheendofreportperiod
                                      Shareholdersholdingmorethan5%orthetop10shareholdersholdingsituation
    Name ofShareholders   Characterofshareholders       Percentage   ShareshelduntiltheendofChanges     Number  Number   ofPledgedorfrozen
                                                   (%)        thereportperiod         during    theof       unrestricted
                                                                                    reportperiod  restricted shares       Sharestatus Amount
                                                                                               shares
    YANTAI   CHANGYUDomestic non-state-owned legal 50.40%     345,473,856            0           0       345,473,856             0
    GROUP CO.LTD.     person
    GAOLING FUND,L.P.  Foreignlegalperson           3.08%      21,090,219             0           0       21,090,219             0
    CHINA   SECURITIESState-ownedlegalperson       2.27%      15,531,455             -107,200     0       15,531,455             0
    FINANCE CORP
    BBH     BOS    S/A                           2.22%      15,241,826             0           0       15,241,826             0
    FIDELITY FD - CHINAForeignlegalperson
    FOCUS FD
    SHENWAN                                     1.19%      8,144,869              1,590,215    0       8,144,869              0
    HONGYUAN         Foreignlegalperson
    SECURITIES(HONG
    KONG) LIMITED
    GUOTAI      JUNAN                           0.95%      6,535,089              -293,408     0       6,535,089              0
    SECURITIES(HONGK  Foreignlegalperson
    ONG) LIMITED
    FIDELITY   PURITAN                           0.89%      6,100,762              0           0       6,100,762              0
    TRUST:     FIDELITY
    SERIES    INTRINSICForeignlegalperson
    OPPORTUNITIES
    FUND
    CENTRAL     HUIJIN                           0.69%      4,761,200              0           0       4,761,200              0
    ASSET              State-ownedlegalperson
    MANAGEMENT LTD.
    VANGUARD                                    0.55%      3,788,487              0           0       3,788,487              0
    EMERGING          Foreignlegalperson
    MARKETS    STOCK
    INDEXFUND
    FIDELITY     CHINA                           0.55%      3,779,202              0           0       3,779,202              0
    SPECIAL SITUATIONSForeignlegalperson
    PLC
    Strategic investorsor legal result of the placementof new shares toNo
    become atop10shareholders(ifhave)(seenote3)
    The explanation for the associated relationship and accordantAmong the top 10 shareholders, Yantai Changyu Group Company Limited has no associated
    action                                                relationshiporaccordantactionrelationshipwiththeother 9listedshareholders,andthe relationship
                                                         amongtheothershareholdersisunknown.
                                                   Thetop10shareholderswithunrestrictedshares
    Name ofShareholders                                                       Number of unrestricted sharesTypeofshare
                                                                             helduntiltheendoftheyear  Typeofshare           Amount
    YANTAICHANGYUGROUPCO.LTD.                                        345,473,856               A                    345,473,856
    GAOLING FUND,L.P.                                                      21,090,219                B                    21,090,219
    CHINA SECURITIESFINANCECORP                                         15,531,455                A                    15,531,455
    BBH BOSS/AFIDELITYFD-CHINAFOCUSFD                                15,241,826                B                    15,241,826
    SHENWAN HONGYUANSECURITIES(HONGKONG)LIMITED                   8,144,869                 B                    8,144,869
    GUOTAI JUNANSECURITIES(HONGKONG)LIMITED                          6,535,089                 B                    6,535,089
    FIDELITY PURITANTRUST:FIDELITYSERIESINTRINSICOPPORTUNITIESFUND  6,100,762                 B                    6,100,762
    CENTRAL HUIJINASSETMANAGEMENTLTD.                                4,761,200                 A                    4,761,200
    VANGUARDEMERGINGMARKETSSTOCKINDEXFUND                       3,788,487                 B                    3,788,487
    FIDELITY CHINASPECIALSITUATIONSPLC                                  3,779,202                 B                    3,779,202
    The  explanation for the associated relationship and accordant action of the top 10 Among the top 10 shareholders,YantaiChangyu Group Company Limited
    shareholders with unrestricted shares, the the associated relationship and accordant actionhas no associated relationship or accordant action relationship with the
    between thetop10shareholderswithunrestrictedsharesandthetop10shareholders       other 9 listed shareholders, and the relationship among the other
                                                                            shareholders isunknown.
    Explanation for the top 10 shareholders who involved in financing activities and stock The top 10 shareholders do not involve in financing activities and stock
    trading business(ifhave)(seenote4)                                            tradebusiness.
    
    
    Whether or not the Company‘s top 10 common shareholders and shareholders with unrestricted shares take agreed repurchase trading during the
    
    report period
    
    □Yes ?No
    
    There is no agreed repurchase trading taken by the Company‘s top 10 common shareholders and shareholders with unrestricted shares during the
    
    report period.
    
    4. Changes of controlling shareholders or the actual controllers situation
    
    Changes of the controlling shareholders during the report period
    
    □Available ?Not available
    
    There is no any change of the controlling shareholders during the report period.
    
    Changes of the actual controllers during the report period
    
    □Available ?Not available
    
    There is no any change of the actual controllers during the report period.
    
    VII. Related Situation of Preferred Shares
    
    □Available ?Not available
    
    VIII. Situation for Directors, Supervisors, Senior Management Staffs
    
    1. Changes in shareholdings of directors, supervisors and senior management staffs
    
    □Available ?Not available
    
    There are no any changes in shareholdings of directors, supervisors and senior management staffs
    
    during the report period, details see 2017 annual report
    
    2. Personnel changes in Company's directors, supervisors and senior management
    
    ?Available □Not available
    
     Name            Positionsheld    Type                 Date           Reason
     SunLiqiang       Chairman        leavingthepost         2017.12.08      Resigning from the post of
                                                                        chairman  on  his  own
                                                                        initiative and  no  longer
                                                                        serving   as   chairman;
                                                                        currently   serving   as
                                                                        directoroftheCompany
     ZhouHongjiang    Vicechairman    leavingthepost         2018.01.08      Resigning from the post of
                                                                        vicechairman on his own
                                                                        initiative,   no   longer
                                                                        serving as vice chairman,
                                                                        and is elected to serve as
                                                                        chairman;      currently
                                                                        servingas chairman of the
                                                                        Company
     ZhouHongjiang    Generalmanager  Non-reappointment      2018.01.08      Resigning from the post of
                                                                        general manager on  his
                                                                        own  initiative  and  no
                                                                        longer serving as general
                                                                        manager;currently serving
                                                                        asdirectoroftheCompany
     LengBin         Vice    general  Non-reappointment      2018.01.08      Resigning from the post of
                      manager                                           vice general manager on
                                                                        his own initiative and no
                                                                        longer  serving  as  vice
                                                                        generalmanager; currently
                                                                        serving as director of the
                                                                        Company.
     SunJian          Vice-general     Appointedandremoved  2018.01.08      Being appointedas general
                      manager                                           manager  and  removed
                                                                        from    vice    general
                                                                        manager;currently serving
                                                                        as the general manager of
                                                                        theCompany
     PengBin          Vice    general  Appointed             2018.01.08      Being appointed as vice
                      manager                                           general manager; currently
                                                                        serving as  vice  general
                                                                        manageroftheCompany
     JiangJianxun      Chief  financial  Appointed             2018.01.08      Being appointed as chief
                      officer                                             financial officer; currently
                                                                        serving as chief financial
                                                                        officer   and    finance
                                                                        manageroftheCompany
    
    
    IX. Related Situation of Corporation Bonds
    
    Whether or not the Company has the corporation bonds issued in public, listed in the stock
    
    exchange, not due on the Semi-annual report‘s authorized issue date or failed to pay in full on
    
    the due date.
    
    No
    
    X. Financial Report
    
    1. Audit report
    
    Whether the semiannual report has been audited
    
    □ Yes √ No
    
    2. Financial statement
    
    The unit in the statements of the financial annotations is RMB Yuan.
    
    2.1 Consolidated balance sheet
    
    Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd. June 30, 2018 Unit: Yuan
    
                           Item                        Note    Endingbalance   Beginningbalance
    Current assets:
    Monetary fund                                         7.1       1,683,038,453    1,402,522,509
    Settlement reserves
    Lending funds
    Financial assetsmeasuredatthefairvalueandthevariationofwhichis
    recorded intothecurrentprofitandloss
    Derivative financialassets
    Bills receivable                                         7.2        367,210,884     244,796,818
    Accounts receivable                                      7.3        243,413,092     263,796,355
    Advance payment                                       7.4          3,122,797       2,417,931
    Premium receivable
    Reinsurance accountsreceivable
    Receivable reservesforreinsurancecontract
    Interest receivable                                       7.5          1,218,373        240,968
    Dividends receivable
    Other receivables                                       7.6         16,500,022      18,737,454
    Buying backthesaleoffinancialassets
    Inventories                                            7.7       2,338,925,432    2,473,614,046
    Assets heldforsale                                      7.8          2,000,197       2,000,197
    Non-current assetsduewithinoneyear
    Other currentassets                                      7.9        362,977,990     230,822,759
    Totalcurrentassets                                              5,018,407,240    4,638,949,037
    Non-current assets:
    Offering loansandimprest
    Available-for-salefinancialassets                            7.10           463,880        467,251
    Held-to-maturity investments
    Long-term receivables
    Long-term equityinvestments
    Investment realestate                                    7.11        17,877,379      18,467,989
    Fixed assets                                           7.12      5,457,575,677    5,329,083,969
    Construction inprogress                                  7.13      1,015,914,753    1,026,141,569
                           Item                        Note    Endingbalance   Beginningbalance
    Construction materials
    Disposal offixedassets
    Productive biologicalassets                                7.14        202,661,748     201,929,888
    Oil andgasassets
    Intangible assets                                        7.15        662,694,276     655,448,897
    Development expenditure
    Goodwill                                            7.16        163,930,875     128,135,981
    Long-term prepaidexpenses                                7.17        227,993,424     230,009,231
    Deferred taxassets                                      7.18        270,988,173     308,121,396
    Other non-currentassets
    Totalnon-currentassets                                            8,020,100,185    7,897,806,171
    Totalassets                                                   13,038,507,425   12,536,755,208
    Current liabilities:
    Short-term loans                                        7.19        750,454,676     714,434,286
    Borrowings fromtheCentralBank
    Customer andinterbankdeposits
    Borrowing funds
    Financial liabilitiesmeasuredatthefairvalueandthevariationofwhich
    is recordedintothecurrentprofitandloss
    Derivative financialliabilities
    Bills payable
    Accounts payable                                       7.20        505,856,955     666,442,879
    Advances fromcustomers                                 7.21        366,355,280     350,894,156
    Financial assetssoldforrepurchase
    Handling feesandcommissionspayable
    Employee remunerations                                  7.22        177,995,138     210,824,234
    Taxespayable                                         7.23        73,859,747     145,094,156
    Interest payable                                        7.24           834,247        771,250
    Dividends payable                                      7.25           746,021
    Other payables                                         7.26        671,707,915     602,964,319
    Dividend payableforreinsurance
    Reserves forinsurancecontracts
    Acting tradingsecurities
    Acting underwritingsecurities
    Liabilities heldforsale
    Non-current liabilitiesduewithinoneyear                       7.27        140,570,388     110,954,827
    Other currentliabilities                                   7.28         16,311,727      16,878,199
    Totalcurrentliabilities                                             2,704,692,094    2,819,258,306
    Non-current liabilities:
    Long-term borrowings                                    7.29        153,965,191     156,125,854
    Bonds payable
     Including:Preferredstock
            Perpetual capitalsecurities
    Long-term accountspayable                                7.30        235,000,000     259,000,000
    Long-term employeeremunerationspayable
    Special accountspayable
                           Item                        Note    Endingbalance   Beginningbalance
    Estimated liabilities
    Deferred income                                       7.31        92,340,427      92,918,855
    Deferred taxliabilities                                    7.18        26,020,063      24,264,203
    Other non-currentliabilities                                7.32         6,848,847       7,209,312
    Totalnon-currentliabilities                                           514,174,528     539,518,224
    Totalliabilities                                                 3,218,866,622    3,358,776,530
    Owner’s equity:
    Capital stock                                          7.33        685,464,000     685,464,000
    Other equityinstruments
    Including: Preferredstock
            Perpetualcapitalsecurities
    Capital surplus                                         7.34        565,955,441     565,955,441
    Minus: Treasurystock
    Other comprehensiveincome                               7.35         -6,121,580       3,109,240
    Special reserves
    Surplus reserves                                        7.36        342,732,000     342,732,000
    General riskpreparation
    Retained earnings                                       7.37      7,944,919,023    7,309,081,618
    Totalowner‘sequitiesattributabletotheparentcompany                      9,532,948,884    8,906,342,299
    Minority equity                                                   286,691,919     271,636,379
    Totalowner‘sequities                                             9,819,640,803    9,177,978,678
    Totalliabilitiesandowner‘sequities                                   13,038,507,425   12,536,755,208
    
    
    Legal Representative: Zhou Hongjiang Accounting Supervisor: Jiang Jianxun Accounting Department Manager: Jiang
    
    Jianxun
    
    2.2 Balance sheet of the parent company
    
    Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd. Unit: Yuan
    
                           Item                        Note    Endingbalance   Beginningbalance
    Current assets:
    Monetary fund                                                   818,844,330     559,174,466
    Financial assetsmeasuredatthefairvalueandthevariationofwhichis
    recorded intothecurrentprofitandloss
    Derivative financialassets
    Bills receivable                                                   33,180,494      41,645,203
    Accounts receivable                                     15.1         12,408,787       7,805,333
    Advance payment                                                    453,842         99,673
    Interest receivable                                                     87,014         76,646
    Dividends receivable                                                 2,238,064     407,495,922
    Other receivables                                       15.2        509,269,034     592,274,075
    Inventories                                                      393,024,758     348,042,053
    Assets heldforsale                                                  2,000,197       2,000,197
    Non-current assetsduewithinoneyear
    Other currentassets                                                 34,997,149      29,706,058
    Totalcurrentassets                                              1,806,503,669    1,988,319,626
                           Item                        Note    Endingbalance   Beginningbalance
    Non-current assets:
    Available-for-salefinancialassets
    Held-to-maturity investments
    Long-term receivables
    Long-term equityinvestments                               15.3       4,617,128,388    4,511,202,204
    Investment realestate                                               17,877,379      18,467,989
    Fixed assets                                                     273,244,802     288,150,901
    Construction inprogress                                              11,388,924       6,756,349
    Construction materials
    Disposal offixedassets
    Productive biologicalassets                                           120,973,169     119,572,539
    Oil andgasassets
    Intangible assets                                                   68,433,643      69,623,219
    Development expenditure
    Goodwill
    Long-term prepaidexpenses
    Deferred taxassets                                                 22,493,100      28,787,907
    Other non-currentassets                                            3,721,606,444    3,718,674,166
    Totalnon-currentassets                                            8,853,145,849    8,761,235,274
    Totalassets                                                   10,659,649,518   10,749,554,900
    Current liabilities:
    Short-term loans                                                  200,000,000     600,000,000
    Financial liabilitiesmeasuredatthefairvalueandthevariationofwhich
    is recordedintothecurrentprofitandloss
    Derivative financialliabilities
    Bills payable
    Accounts payable                                                  82,489,858      97,833,124
    Advances fromcustomers                                             6,000,000       6,000,000
    Employee remunerations                                             59,439,264      70,108,076
    Taxespayable                                                     5,443,037      14,569,690
    Interest payable                                                     238,356        652,500
    Dividends payable
    Other payables                                                   573,572,022     544,713,172
    Liabilities heldforsale
    Non-current liabilitiesduewithinoneyear
    Other currentliabilities                                               3,693,054       3,953,054
    Totalcurrentliabilities                                              930,875,591    1,337,829,616
    Non-current liabilities:
    Long-term borrowings
    Bonds payable
    Including: Preferredstock
            Perpetualcapitalsecurities
    Long-term accountspayable
    Long-term employeeremunerationpayable
    Special accountspayable
    Estimated liabilities
                           Item                        Note    Endingbalance   Beginningbalance
    Deferred income                                                   11,253,946      12,970,473
    Deferred taxliabilities
    Other non-currentliabilities                                            2,235,802       2,235,802
    Totalnon-currentliabilities                                            13,489,748      15,206,275
    Totalliabilities                                                   944,365,339    1,353,035,891
    Owner’s equity:
    Capital stock                                                    685,464,000     685,464,000
    Other equityinstruments
    Including: Preferredstock
            Perpetualcapitalsecurities
    Capital surplus                                                   557,222,454     557,222,454
    Minus: Treasurystock
    Other comprehensiveincome
    Special reserves
    Surplus reserves                                                  342,732,000     342,732,000
    Retained earnings                                                8,129,865,725    7,811,100,555
    Totalowner‘sequities                                             9,715,284,179    9,396,519,009
    Totalliabilitiesandowner‘sequities                                   10,659,649,518   10,749,554,900
    
    
    Legal Representative: Zhou Hongjiang Accounting Supervisor: Jiang Jianxun Accounting Department Manager:
    
    Jiang Jianxun
    
    2.3 Consolidated profit statement
    
    Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd. Unit: Yuan
    
                         Item                       Note  Sumofcurrentperiod  Sumofpriorperiod
    1. Totaloperatingincome                                        2,828,230,064      2,767,098,197
    Including: Operatingincome                             7.38        2,828,230,064      2,767,098,197
            Interestincome
            Earnedpremium
            Handlingfeeandcommissionincome
    2. Totaloperatingcosts                                          2,018,939,458      1,890,800,616
    Including: Operatingcosts                              7.38         974,557,292       925,754,133
            Interest expenditure
            Handling feesandcommissionexpenditure
            Premium rebate
            Net amountofindemnityexpenditure
            Net amount of the withdrawn reserve fund forinsurance
            contract
            Policy bonuspayment
            Amortized reinsuranceexpenditures
            Taxes andsurcharges                         7.39         165,276,251       160,473,998
            Selling expenses                            7.40         710,659,033       668,735,726
            Administrative expenses                       7.41         160,091,888       130,542,386
            Financial expenses                           7.42          13,085,942        11,147,949
            Loss onimpairmentofassets                    7.43          -4,730,948        -5,853,576
       Plus: Fairvaluechangeprofit(lossislistedwith"-")
           Investmentprofit(lossislistedwith"-")
           Including:Investmentprofitforjoint-runbusinessandjoint
                 venture
           Exchangeincome(lossislistedwith"-")
           Incomefromassetdisposal(lossislistedwith"-")        7.44            93,958         -495,071
           Otherincome                                7.45          37,982,878
    3. Operatingprofit(lossislistedwith"-")                               847,367,442       875,802,510
       Plus: Non-operatingincome                          7.46          2,006,392        23,147,605
       Minus: Non-operatingexpenses                       7.47          1,392,362          186,568
    4. Totalprofits(totallossislistedwith"-")                               847,981,472       898,763,547
       Minus: Incometaxexpenses                          7.48         211,979,735       228,752,790
    5. Netprofit(netlossislistedwith"-")                                 636,001,737       670,010,757
       5.1 Net profit from continuing operation (net loss is listed with             636,001,737       670,010,757
    "-")
       5.2 Netprofit fromterminatingoperation (net lossislistedwith
    "-")
       Net profitattributabletoowneroftheparentcompany                    635,837,405       670,069,054
       Minority interestincome                                          164,332          -58,297
    6. Netafter-taxamountofothercomprehensiveincome         7.49         -11,126,413         1,767,741
    Net after-taxamountofothercomprehensiveincomeattributableto                -9,230,820         1,458,809
    owner oftheparentcompany
    6.1 Othercomprehensiveincomenottobereclassifiedintoprofitand
    loss later
    6.1.1 Netliabilitiesornetassetschangeafterremeasuringand
    resetting thebenefitplans
    6.1.2 Shareenjoyedinothercomprehensiveincomenottobe
    reclassified intoprofitandlossininvestedunitunderequitylaw
    6.2 Othercomprehensiveincometobereclassifiedintoprofitand                 -9,230,820         1,458,809
    loss later
    6.2.1 Shareenjoyedinothercomprehensiveincometobereclassified
    into profitandlossininvestedunitunderequitylaw
    6.2.2 Profitandlossfromchangesinfairvalueoffinancialassetsfor
    sale
    6.2.3 Profitandlossfromreclassificationofheld-to-maturity
    investment intofairvalueoffinancialassetsforsale
    6.2.4 Effectivepartofprofitandlossofcash-flowhedge
    6.2.5 DifferenceintranslationofForeignCurrencyFinancial                    -9,230,820         1,458,809
    Statement
    6.2.6 Other
    Net after-taxamountofothercomprehensiveincomeattributableto                -1,895,593          308,932
    minority shareholders
    7. Totalcomprehensiveincome                                      624,875,324       671,778,498
    (1) Attributabletoowneroftheparentcompany                            626,606,585       671,527,863
    (2) Attributabletominorityshareholders                                  -1,731,261          250,635
    8. Earningspershare
    8.1 Basicearningspershare                                              0.93            0.98
    8.2 Dilutedearningspershare                                             0.93            0.98
    
    
    Legal Representative: Zhou Hongjiang Accounting Supervisor: Jiang Jianxun Accounting Department Manager:
    
    Jiang Jianxun
    
    2.4 Profit statement of the parent company
    
    Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd. Unit: Yuan
    
                         Item                       Note  Sumofcurrentperiod  Sumofpriorperiod
    1. Operatingincome                                 15.4         408,845,211       831,820,503
    Minus: Operatingcosts                                15.4         352,646,989       737,950,378
         Taxesandsurcharges                                         24,463,375        48,865,790
         Selling expenses
         Administrativeexpenses                                       40,187,747        40,078,068
         Financial expenses                                          -15,151,608        9,292,969
         Lossonimpairmentofassets
    Plus: Fairvaluechangeprofit(lossislistedwith"-")
       Investment profit(lossislistedwith"-")                  15.5         312,409,576        66,127,980
       Including: Investment profit for joint-run business and joint
    venture
       Income fromassetdisposal(lossislistedwith"-")                           75,000          10,448
       Other income                                                 1,976,527
    2. Operatingprofit(lossislistedwith"-")                               321,159,811       61,771,726
    Plus: Non-operatingincome                                             56,479        1,001,523
    Minus: Non-operatingexpenses                                            528          20,257
    3. Totalprofits(totallossislistedwith"-")                               321,215,762        62,752,992
    Minus: Incometaxexpenses                                          2,450,592         -681,003
    4. Netprofit(netlossislistedwith"-")                                 318,765,170        63,433,995
    4.1 Netprofitfromcontinuingoperation(netlossislistedwith"-")               318,765,170        63,433,995
    4.2 Netprofitfromterminatingoperation(netlossislistedwith"-")
    5. Netafter-taxamountofothercomprehensiveincome
    5.1 Othercomprehensiveincomenottobereclassifiedintoprofitand
    loss later
    5.1.1 Netliabilitiesornetassetschangeafterremeasuringand
    resetting thebenefitplans
    5.1.2 Shareenjoyedinothercomprehensiveincomenottobe
    reclassified intoprofitandlossininvestedunitunderequitylaw
    5.2 Othercomprehensiveincometobereclassifiedintoprofitand
    loss later
    5.2.1 Shareenjoyedinothercomprehensiveincometobereclassified
    into profitandlossininvestedunitunderequitylaw
    5.2.2 Profitandlossfromchangesinfairvalueoffinancialassetsfor
    sale
    5.2.3 Profitandlossfromreclassificationofheld-to-maturity
    investment intofairvalueoffinancialassetsforsale
    5.2.4 Effectivepartofprofitandlossofcash-flowhedge
    5.2.5 DifferenceintranslationofForeignCurrencyFinancial
    Statement
    5.2.6 Other
    6. Totalcomprehensiveincome                                      318,765,170        63,433,995
    7. Earningspershare
    7.1 Basicearningspershare                                              0.47            0.09
    7.2 Dilutedearningspershare                                             0.47            0.09
    
    
    Legal Representative: Zhou Hongjiang Accounting Supervisor: Jiang Jianxun Accounting Department Manager:
    
    Jiang Jianxun
    
    2.5 Consolidated cash flow statement
    
    Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd. Unit: Yuan
    
                     Item                        Note       Sumofcurrentperiod Sumofpriorperiod
    1. Cashflowsfromoperatingactivities:
    Cash received from sales of goods and rending of                      2,680,388,050     2,524,565,138
    services
    Net increaseincustomerandinterbankdeposits
    Net increaseinborrowingsfromcentralbank
    Net  increase in borrowings from other financial
    institutions
    Cash received from receiving insurance premium of
    original insurancecontract
    Net cashreceivedfromreinsurancebusiness
    Net increase in policy holder deposits and investment
    funds
    Net increase after disposal of financial assets measured
    at the fair value and the variation of which is recorded
    into thecurrentprofitandloss
    Cash received from collecting interest, handling fees
    and commission
    Net increaseinborrowings
    Net increaseinrepurchasementbusinessfunds
    Taxrefundreceived                                                26,089,608       12,777,072
    Other cashreceivedrelatedtooperatingactivities           7.50              42,343,021       38,889,912
    Subtotal ofcashflowsofoperatingactivities                            2,748,820,679     2,576,232,122
    Cash paidforgoodsandservices                                      677,552,938      640,732,974
    Net increaseincustomerloansandadvances
    Net increase in deposits in central bank and interbank
    deposits
    Cash paidtooriginalinsurancecontractpayments
    Cash paidtointerest,handlingfeesandcommission
    Cash paidtopolicybonus
    Cash paidtoandonbehalfofemployees                                 278,814,385      239,805,346
    Cash paidfortaxesandexpenses                                      802,722,798      842,815,705
    Other cashpaidrelatedtooperatingactivities              7.50             436,977,086      432,517,778
    Sub-total ofcashoutflowsofoperatingactivities                         2,196,067,207     2,155,871,803
    Net cashflowfromoperatingactivities                                 552,753,472      420,360,319
    2. Cashflowfrominvestingactivities:
    Cash receivedfromdisinvestment
    Cash receivedfromwithdrawaloffixeddeposits                            305,000,000        3,000,000
    Cash receivedfromobtaininginvestmentprofit                              2,342,015          25,550
    Cash received from disposal of fixed assets, intangible                          471,130         237,161
    assets andotherlong-termassets
    Net cash received from disposal of branch and other
    business unit
    Other cashreceivedrelatedtoinvestingactivities
    Subtotal ofcashflowsofinvestmentactivities                            307,813,145        3,262,711
                     Item                        Note       Sumofcurrentperiod Sumofpriorperiod
    Cash paid to acquire fixed assets, intangible assets and                       154,464,274      282,149,010
    other long-termassets
    Cash forinvestment
    Cash paidforpurchasingfixeddeposits                                  340,000,000      201,000,000
    Net increaseinhypothecatedloan
    Net cash paid for acquiring branch and other business                       104,566,419
    unit
    Other cashpaidrelatedtoinvestmentactivities             7.50                            317,654,642
    Subtotal ofcashoutflowsofinvestmentactivities                          599,030,693      800,803,652
    Net cashflowfrominvestingactivities                                 -291,217,548      -797,540,941
    3. Cashflowfromfinancingactivities
    Cash receivedfromacquiringinvestment                                                48,396,726
    Including:  cash received from acquiring minority                                      48,396,726
    shareholders investmentbybranch
    Cash receivedfromacquiringloans                                     669,905,706      773,435,000
    Cash receivedfromissuingbonds
    Other cashreceivedrelatedtofinancingactivities           7.50              23,521,431        1,303,473
    Subtotal cashflowsoffinancingactivities                               693,427,137      823,135,199
    Cash paidforpayingdebts                                          658,512,141      451,386,980
    Cash paid fordistributing dividend andprofit or paying                       21,265,533       17,869,513
    interest
    Including:  dividend  and profit paid to minority
    shareholders bybranch
    Other cashpaidrelatedtofinancingactivities              7.50              20,000,000
    Subtotal ofcashoutflowsoffinancingactivities                           699,777,674      469,256,493
    Net cashflowfromfinancingactivities                                   -6,350,537      353,878,706
    4. Influences of exchange rate fluctuation on cash                        -7,404,199       -4,152,485
    and cashequivalents
    5. NetIncreaseincashandcashequivalents                             247,781,188       -27,454,401
    Plus: balance atthebeginningofthe periodofcashand                     1,180,889,274     1,256,942,304
    cash equivalents
    6. Balance at the end of the period of cash and cash                     1,428,670,462     1,229,487,903
    equivalents
    
    
    Legal Representative: Zhou Hongjiang Accounting Supervisor: Jiang Jianxun Accounting Department Manager:
    
    Jiang Jianxun
    
    2.6 Cash flow statement of the parent company
    
    Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd. Unit: Yuan
    
                         Item                        Sumofcurrentperiod     Sumofpriorperiod
    1. Cashflowsfromoperatingactivities:
    Cash receivedfromsalesofgoodsandrendingofservices                  275,862,358          570,587,513
    Taxrefundreceived
    Other cashreceivedrelatedtooperatingactivities                        100,163,394          385,490,644
    Subtotal ofcashflowsofoperatingactivities                          376,025,752          956,078,157
    Cash paidforgoodsandservices                                   200,935,534          269,148,068
    Cash paidtoandonbehalfofemployees                               43,647,320           52,895,854
    Cash paidfortaxesandexpenses                                    43,132,327          169,319,730
                         Item                        Sumofcurrentperiod     Sumofpriorperiod
    Other cashpaidrelatedtooperatingactivities                           19,942,485           62,494,076
    Sub-total ofcashoutflowsofoperatingactivities                       307,657,666          553,857,728
    Net cashflowfromoperatingactivities                              68,368,086          402,220,429
    2. Cashflowfrominvestingactivities:
    Cash receivedfromdisinvestment
    Cash receivedfromwithdrawaloffixeddeposits                         305,000,000           3,000,000
    Cash receivedfromobtaininginvestmentprofit                         720,009,450          198,082,845
    Net cashreceivedfromdisposaloffixedassets,intangibleassetsand            538,055.18             206,280
    other long-termassets
    Net cashreceivedfromdisposalofbranchandotherbusinessunit
    Other cashreceivedrelatedtoinvestingactivities
    Subtotal ofcashflowsofinvestmentactivities                     1,025,547,505.18          201,289,125
    Cash paid to acquiring fixed assets, intangible assets and other            11,968,401           3,295,270
    long-term assets
    Cash forinvestment                                           105,926,184        329,440,824.11
    Cash paidforpurchasingfixeddeposits                              340,000,000        104,999,999.89
    Net cashpaidforacquiringbranchandotherbusinessunit
    Other cashpaidrelatedtoinvestmentactivities
    Subtotal ofcashoutflowsofinvestmentactivities                       457,894,585          437,736,094
    Net cashflowfrominvestingactivities                            567,652,920.18         -236,446,969
    3. Cashflowfromfinancingactivities
    Cash receivedfromacquiringinvestment
    Cash receivedfromacquiringloans                                 200,000,000          700,000,000
    Cash receivedfromissuingbonds
    Other cashreceivedrelatedtofinancingactivities
    Subtotal cashflowsoffinancingactivities                            200,000,000          700,000,000
    Cash paidfordebts                                            600,000,000          514,667,600
    Cash paidtodistributedividend,profitorpayinterest                      11,660,417           9,720,581
    Other cashpaidrelatedtofinancingactivities
    Subtotal ofcashoutflowsoffinancingactivities                        611,660,417          524,388,181
    Net cashflowfromfinancingactivities                              -411,660,417          175,611,819
    4. Influences of exchange rate fluctuation on cash and cash
    equivalents
    5. NetIncreaseincashandcashequivalents                        224,360,589.18          341,385,279
    Plus: balance at the beginning of the period of cash and cash           493,568,866          238,003,198
    equivalents
    6. Balanceattheendoftheperiodofcashandcashequivalents          717,929,455.18          579,388,477
    
    
    Legal Representative: Zhou Hongjiang Accounting Supervisor: Jiang Jianxun Accounting Department Manager:
    
    Jiang Jianxun
    
    2.7 Consolidated owner’s equity changing list
    
    Unit: Yuan
    
                                                                          This period
                                                        Owners‘equityoftheparentcompany
             Item                  Otherequityinstruments           Minus:     Other                                        Minority   Totalowners‘
                        Capitalstock Preferred  Perpetual       Capital   Treasury  comprehensive Special   Surplus  Generalrisk Undistributed shareholders‘    equity
                                  stock   capital  Other  reserves    stock     income    reserves  reserves  preparation    profits      equity
                                       securities
    1. Balance at the end of last685,464,000                  565,955,441          3,109,240         342,732,000         7,309,081,618 271,636,379 9,177,978,678
    year
    Plus:  Accounting  policies
    changing
    Previouserrorcorrection
    Business combination under
    commoncontrol
    Other
    2. Balanceatthebeginningof685,464,000                  565,955,441          3,109,240         342,732,000         7,309,081,618 271,636,379 9,177,978,678
    thisyear
    3.  Increased or  decreased
    amountinthisperiod(reducing                                            -9,230,820                           635,837,405   15,055,540  641,662,125
    amountislistedwith"-")
    3.1   Total  comprehensive                                            -9,230,820                           635,837,405   -1,731,261   624,875,324
    income
    3.2  Owners' invested and                                                                                         17,532,822   17,532,822
    reducedcapital
    3.2.1 Shareholders‘ invested
    commonstock
    3.2.2 Other equity instrument
    holders‘investedcapital
    3.2.3 Amount of shares paid
    and reckonedinowners'equity
    3.2.4Other    17,532,822   17,532,822
    3.3 Profitdistribution                                                                                                -746,021    -746,021
    3.3.1Accruedsurplusreserves
    3.3.2  Accrued general risk
    preparation
    3.3.3 Distribution to owners                                                                                          -746,021    -746,021
    (or shareholders)
    3.3.4Other
    3.4 Internaltransferofowners'
    equity
    3.4.1    Capital   reserves
    transferred  and  increased
    capital(orcapitalstock)
    3.4.2   Surplus   reserves
    transferred  and  increased
    capital(orcapitalstock)
    3.4.3Surplusreservescovering
    deficit
    3.4.4Other
    3.5 Specialreserves
    3.5.1Withdrawalinthisperiod
    3.5.2Usageinthisperiod
    3.6 Other
    4. Balance at the end of this685,464,000                  565,955,441          -6,121,580         342,732,000         7,944,919,023 286,691,919 9,819,640,803
    period
    
    
    Unit: Yuan
    
                                                                          Prior period
                                                        Owners‘equityoftheparentcompany
             Item                  Otherequityinstruments          Minus:     Other                                        Minority   Totalowners‘
                         CapitalstockPreferredPerpetual      Capital   Treasury  comprehensive Special   Surplus  Generalrisk Undistributed shareholders‘    equity
                                   stock  capital Other  reserves    stock     income    reserves  reserves   preparation    profits      equity
                                        securities
    1. Balance at the end of last685,464,000                 565,955,441          -5,259,014         342,732,000          6,620,118,562  190,473,697  8,399,484,686
    year
    Plus:  Accounting  policies
    changing
    Previouserrorcorrection
    Business  combination under
    commoncontrol
    Other
    2. Balanceat the beginningof685,464,000                 565,955,441          -5,259,014         342,732,000          6,620,118,562  190,473,697  8,399,484,686
    thisyear
    3.  Increased or  decreased
    amount inthisperiod(reducing                                            8,368,254                           688,963,056   81,162,682   778,493,992
    amountislistedwith"-")
    3.1   Total  comprehensive                                            8,368,254                           1,031,695,056  3,594,080  1,043,657,390
    income
    3.2  Owners'  invested  and                                                                                         78,236,726   78,236,726
    reducedcapital
    3.2.1  Shareholders‘ invested
    commonstock
    3.2.2 Other equity instrument
    holders‘investedcapital
    3.2.3 Amount of shares paid
    and reckonedinowners'equity
    3.2.4Other    78,236,726   78,236,726
    3.3 Profitdistribution                                                                                    -342,732,000   -668,124   -343,400,124
    3.3.1Drewsurplusreserves
    3.3.2  Drew  general  risk
    preparation
    3.3.3 Distributiontoowners(or                                                                             -342,732,000   -668,124   -343,400,124
    shareholders)
    3.3.4Other
    3.4 Internaltransferof owners'
    equity
    3.4.1    Capital   reserves
    transferred  and   increased
    capital(orcapitalstock)
    3.4.2    Surplus   reserves
    transferred  and   increased
    capital(orcapitalstock)
    3.4.3 Surplusreservescovering
    deficit
    3.4.4Other
    3.5 Specialreserves
    3.5.1Accrualinthisperiod
    3.5.2Usageinthisperiod
    3.6 Other
    4. Balance at the end of this685,464,000                 565,955,441          3,109,240         342,732,000          7,309,081,618  271,636,379  9,177,978,678
    period
    
    
    2.8 Owner’s equity changing list of the parent company
    
    Unit: Yuan
    
                                                                               Thisperiod
                 Item               Capital   Otherequityinstruments   Capital     Minus:        Other       Special    Surplus   Undistributed  Totalowners‘
                                    stock   Preferred PerpetualcapitalOther  reserves    Treasury    comprehensive   reserves   reserves     profits       equity
                                            stock   securities                 stock        income
    1. Balanceattheendoflastyear         685,464,000                   557,222,454                                342,732,000 7,811,100,555  9,396,519,009
    Plus:Accountingpolicieschanging
    Previouserrorcorrection
    Other
    2. Balanceatthebeginningofthisyear    685,464,000                   557,222,454                                342,732,000 7,811,100,555  9,396,519,009
    3. Increased or decreased amount in this                                                                              318,765,170   318,765,170
    period (reducingamountislistedwith"-")
    3.1 Totalcomprehensiveincome                                                                                      318,765,170   318,765,170
    3.2 Owners'investedandreducedcapital
    3.2.1 Shareholders‘investedcommonstock
    3.2.2  Other  equity  instrument  holder‘
    investedcapital
    3.2.3 Amountofsharespaidandreckonedin
    owners' equity
    3.2.4 Other
    3.3 Profitdistribution
    3.3.1 Drewsurplusreserves
    3.3.2   Distribution  to   owners  (or
    shareholders)
    3.3.3 Other
    3.4 Internaltransferofowners'equity
    3.4.1  Capital  reserves transferred and
    increasedcapital(orcapitalstock)
    3.4.2  Surplus  reserves transferred and
    increasedcapital(orcapitalstock)
    3.4.3 Surplusreservescoveringdeficit
    3.4.4 Other
    3.5 Specialreserves
    3.5.1Accrualinthisperiod
    3.5.2 Usageinthisperiod
    3.6 Other
    4. Balanceattheendofthisperiod       685,464,000                   557,222,454                                342,732,000 8,129,865,725  9,715,284,179
    
    
    Unit: Yuan
    
                                                                               Priorperiod
                 Item                Capital   Otherequityinstruments   Capital     Minus:        Other       Special    Surplus   Undistributed  Totalowners‘
                                     stock   Preferred Perpetualcapital     reserves    Treasury    comprehensive   reserves   reserves     profits       equity
                                            stock    securities  Other             stock        income
    1. Balanceattheendoflastyear         685,464,000                  557,222,454                                342,732,000 7,360,234,545  8,945,652,999
    Plus:Accountingpolicieschanging
    Previouserrorcorrection
    Other
    2. Balanceatthebeginningofthisyear     685,464,000                  557,222,454                                342,732,000 7,360,234,545  8,945,652,999
    3. Increased or decreased amount in this                                                                             450,866,010   450,866,010
    period (reducingamountislistedwith"-")
    3.1 Totalcomprehensiveincome                                                                                      793,598,010   793,598,010
    3.2 Owners'investedandreducedcapital
    3.2.1 Shareholders‘investedcommonstock
    3.2.2  Other  equity  instrument  holder‘
    investedcapital
    3.2.3 Amountofsharespaidandreckonedin
    owners' equity
    3.2.4 Other
    3.3 Profitdistribution                                                                                             -342,732,000  -342,732,000
    3.3.1 Drewsurplusreserves
    3.3.2 Distributiontoowners(orshareholders)                                                                             -342,732,000  -342,732,000
    3.3.3 Other
    3.4 Internaltransferofowners'equity
    3.4.1  Capital  reserves  transferred  and
    increasedcapital(orcapitalstock)
    3.4.2  Surplus  reserves  transferred  and
    increasedcapital(orcapitalstock)
    3.4.3 Surplusreservescoveringdeficit
    3.4.4 Other
    3.5 Specialreserves
    3.5.1Accrualinthisperiod
    3.5.2 Usageinthisperiod
    3.6 Other
    4. Balanceattheendofthisperiod        685,464,000                  557,222,454                                342,732,000 7,811,100,555  9,396,519,009
    
    
    3. Company profile
    
    Yantai Changyu Pioneer Wine Co., Ltd. (the “Company” or the “Joint-stock Company”) was
    
    incorporated as a joint-stock limited company in accordance with the Company Law of the People’s
    
    Republic of China (the “PRC”) in the merger and reorganization carried out by Yantai Changyu
    
    Group Co., Ltd. (“Changyu Group Company”) with its assets and liabilities in relation to wine
    
    business. The Company and its subsidiary companies (hereinafter collectively referred to as the
    
    “Group”) are engaged in the production and sale of wine, brandy and champagne, planting and
    
    purchase of grapes, development of tourism resources, etc. The registered address of the Company is
    
    Yantai City, Shandong Province, and the office address of the headquarters is 56 Dama Road, Zhifu
    
    District, Yantai City, Shandong Province.
    
    As at June 30, 2018, the Company issued 685,464,000 shares accumulatively. Refer to Note 7.33 for
    
    the details.
    
    The parent company of the Group is Changyu Group Company incorporated in China, which was
    
    ultimately and actually controlled by four parties, including Yantai Guofeng Investment Holding Co.,
    
    Ltd., ILLVA Saronno Holding Spa, International Finance Corporation and Yantai Yuhua Investment &
    
    Development Co., Ltd.
    
    The financial statement and the consolidated financial statement of the Company were approved by
    
    the Board of Directors on August 28, 2018.
    
    The scope of the consolidated financial statement in this period can be seen in Note 9“Equity in other
    
    entities”. The scope changes of the consolidated financial statement in this period can be seen in Note
    
    8 “Changes of the consolidated scope”.
    
    4. Preparation basis of financial statement
    
    4.1 Preparation basis
    
    The Group implements the Accounting Standards for Business Enterprises (including the new and
    
    revised editions published in 2014) (“ASBE”) published by the Ministry of Finance and relevant
    
    regulations thereof. In addition, the Group also discloses relevant financial information in accordance
    
    with Information Disclosure and Preparation Rules for Enterprises Publically Issuing Securities No.15
    
    ---- General Rules for Financial Statement (Revised in 2014).
    
    Note-accounting basis and pricing principle
    
    The note-accounting basis of financial accounting adopted by the Group is accrual system and the
    
    measurement basis adopted by the Group in preparing its financial statement is historical cost.
    
    Subsequently, if the assets are impaired, impairment provisions are made in accordance with relevant
    
    accounting standards.
    
    When the historical cost measurement is used, the assets are measured by the amount of cash or cash
    
    equivalent when the assets are purchased or the fair value of the consideration. The liabilities are
    
    measured by the actually received funds or assets for performing the current obligations, or the
    
    contract amount for performing the current obligations, or the amount of cash or cash equivalent paid
    
    for anticipated liabilities in the daily activities.
    
    Fair value refers to a price received for selling an asset or paid for transferring a liability by the market
    
    participant in orderly transactions on the measurement date. No matter the fair value is observable or
    
    estimated by the valuation technique, the fair value measured and disclosed in this financial statement
    
    is recognized on this basis.
    
    The fair value measurement is divided into three levels based on the observable degree of the input
    
    fair value and the importance of this input value on the whole fair value measurement:
    
    *The input value of the first level is the unadjusted price of the same assets or liabilities which can be
    
    acquired in an active market on the measurement date.
    
    *The input value of the second level is the directly or indirectly observable input value of relevant
    
    assets or liabilities except that of the first level.
    
    *The input value of the third level is the unobservable input value of relevant assets or liabilities.
    
    4.2 Continuous operation
    
    The Group has appraised the ability of continuous operation for 12 months from June 30, 2018, and no
    
    issues or situations causing major doubts to this ability are found. Therefore, this financial statement is
    
    prepared on the basis of the continuous operation assumption.
    
    5. Main accounting policies and accounting estimates
    
    5.1 Statement on compliance with ASBE
    
    This financial statement fulfills the requirement of ASBE and gives a true and integrated view of the
    
    financial status and the consolidated financial status as at June 30, 2018, as well as the operating result,
    
    the consolidated operating result, the cash flow and the consolidated cash flow of the Company from
    
    January to June 2018.
    
    5.2 Accounting period
    
    The accounting period of the Group is from January 1 to December 31.
    
    5.3 Operating cycle
    
    The operating cycle refers to the period from the enterprise purchases the assets used for processing to
    
    the cash or cash equivalent is realized. The operating cycle of the Company is 12 months.
    
    5.4 Recording currency
    
    Since Renminbi (RMB) is the currency of the main economic environment in which the Company and
    
    the domestic subsidiary companies thereof are situated, the Company and the subsidiary companies
    
    thereof adopt RMB as the recording currency. The overseas subsidiary companies thereof determine
    
    Euro, Chilean Peso and Australian Dollar as the recording currency according to the main economic
    
    environment in which they are situated. The currency in this financial statement prepared by the Group
    
    is RMB.
    
    5.5 Accounting treatment method for business combination under common control and
    
    non-common control
    
    5.5.1 Business combination and goodwill under non-common control
    
    A business combination under non-common control is a business combination in which all of the
    
    combining enterprises are not ultimately controlled by the same party or parties before and after the
    
    combination.
    
    The combination cost shall be the fair value of the assets paid, the liabilities incurred or assumed or
    
    the equity instruments issued by the acquirer in exchange for the control over the acquiree. The
    
    intermediary expenses such as audit, legal services and assessment consultation and other related
    
    management expenses paid by the acquirer for business combination are included in the current profit
    
    and loss when they occur.
    
    The identifiable assets, liabilities and contingent liabilities which are obtained from the acquiree in the
    
    business combination and meet the recognition conditions shall be measured on the acquisition date
    
    according to the fair value thereof.
    
    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 re-assesses 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.
    
    The goodwill formed due to business combination shall be separately listed in the consolidated
    
    financial statement and measured on the basis of the cost minus the accumulative impairment
    
    provision.
    
    5.6 Compiling methods of consolidated financial statement
    
    The consolidation scope of the consolidated financial statement is determined on the basis of control.
    
    Control means that the investor holds the power in the invested party, obtains variable returns by
    
    participating in relevant activities of the invested party and has the ability to affect the amount of the
    
    returns by using the power on the invested party. Once any change of the relevant facts and situations
    
    results in any change of relevant elements of the above definition of Control, the Group will carry out
    
    reappraisal.
    
    The merger of any subsidiary company starts from the date when the Group acquires the power to
    
    control this subsidiary company, while the termination of any subsidiary company ends in the date
    
    when the Group losses the power to control this subsidiary company.
    
    As for any subsidiary company obtained in a business combination under non-common control, the
    
    business result and the cash flow thereof since the acquisition date (date of obtaining the control power)
    
    shall have been properly included in the consolidated income statement and the consolidated cash flow
    
    statement.
    
    The principal accounting policies and accounting period adopted by the subsidiary companies shall be
    
    determined in accordance with the accounting policies and accounting period uniformly regulated by
    
    the Company.
    
    The influence of the internal transaction between the Company and the subsidiary companies as well
    
    as among subsidiary companies on the consolidated financial statement shall be neutralized at the time
    
    of combination.
    
    The shares in the owner's equity of the subsidiary companies, which do not belong to the parent
    
    company, shall be recognized as the minority equity and listed under the item of“minority equity”of
    
    the owner’s equity in the balance sheet. The shares in the current profit and loss of the subsidiary
    
    companies, which belong to the minority equity, shall be listed under the item of“minority equity”of
    
    the net profit in the consolidated income statement.
    
    If the loss of the subsidiary companies borne by minority shareholders exceeds the shares of the
    
    owner's equity entitled therein by the minority shareholders at the beginning of the period, the
    
    difference shall be still credited against the minority equity.
    
    5.7 Recognition standards of cash and cash equivalents
    
    Cash comprises cash on hand and demand deposit of the Company. Cash equivalents refer to
    
    short-term highly liquid investments which are readily convertible into known amount of cash with an
    
    insignificant risk of changes in value.
    
    5.8 Foreign currency transaction and foreign currency statement translation
    
    5.8.1 Foreign currency transaction
    
    At the time of initial recognition of a foreign currency transaction, the amount of the foreign currency
    
    shall be translated into the amount of the recording currency at the spot exchange rate on the
    
    transaction date.
    
    The monetary items of the foreign currency transaction shall be translated into RMB at the spot
    
    change rate on the balance sheet date. The currency translation difference generated by the difference
    
    between the spot change rate on the balance sheet date and the spot change rate at the initial
    
    recognition or on the previous balance sheet date shall be included in the current profit and loss,
    
    except: ① the currency translation difference of the dedicated foreign currency loan that meets the
    
    capitalization condition shall be included in the cost of assets as capitalization during the capitalization
    
    period; ② the currency translation difference of the arbitrage tool to avoid foreign exchange risk
    
    shall be treated according to the hedge accounting method; ③ the currency translation difference of
    
    the available-for-sale monetary items generated by the book value other than the amortized cost shall
    
    be recognized as other comprehensive income and included in other comprehensive income.
    
    The amount of the non-monetary items of the foreign currency transaction measured by historical cost
    
    shall be still translated into the amount in the recording currency at the spot exchange rate on the
    
    transaction date. The non-monetary items of the foreign currency transaction measured by the fair
    
    value shall be translated at the spot exchange rate on the fair value date, and the difference between the
    
    amount in the recording currency and the amount in original recording currency shall be treated as the
    
    change of the fair value (including exchange rate movement) and shall be included in the current profit
    
    and loss or recognized as other comprehensive income.
    
    5.8.2 Translation of foreign currency financial statement
    
    In order to compile a consolidated financial statement, the foreign currency financial statement of
    
    overseas business shall be translated into RMB financial statement in accordance with the following
    
    methods: all asset and liability items in the balance sheet shall be translated at the spot exchange rate
    
    on the balance sheet date; the shareholders' equity items, except for the ones as "undistributed profits",
    
    shall be translated at the spot exchange rate at the time when they occur; all items and the items
    
    reflecting the accrual profit distribution in the profit statement shall be translated at the exchange rate
    
    similar to the spot exchange rate at the time when they occur; the undistributed profits at the beginning
    
    of the year shall be the translated to the undistributed profits at the end of the previous year; the
    
    undistributed profits at the end of the year shall be calculated and listed as the translated profit
    
    distribution items; and the difference between the asset items and the sum of the liability items and the
    
    shareholders’ equity items shall be recognized as other comprehensive income and included in the
    
    shareholder's equity.
    
    The foreign currency cash flows and the cash flows of the overseas subsidiary companies shall be
    
    translated at the exchange rate similar to the spot exchange rate at the time when they occur; the
    
    amount of the cash and cash equivalents impacted by the exchange rate movement shall be, as a
    
    reconciling item, separately listed under “impact of exchange rate movement on cash and cash
    
    equivalents” in the cash flow statement.
    
    The balance at the beginning of the year and the actual amount of the previous year shall be listed as
    
    the amount translated according to the financial statement of the previous year.
    
    5.9 Financial instruments
    
    When becoming a party to a contract of financial instruments, the Group shall recognize a financial
    
    asset or financial liability. The financial assets and financial liabilities shall be measured at their fair
    
    value at the time of initial recognition. For other categories of financial assets and financial liabilities,
    
    relevant transaction expenses thereof shall be included in the initially recognized amount.
    
    5.9.1 Effective interest method
    
    The effective interest method refers to the method by which the amortized cost and the interest income
    
    or expenditure of different installments are calculated in light of the effective interest rates of the
    
    financial assets or financial liabilities (including a group of financial assets or financial liabilities). The
    
    effective interest rate refers to the interest rate adopted to cash the future cash flow of a financial asset
    
    or financial liability within the predicted term of existence or within a shorter applicable term into the
    
    current book value of the financial asset or financial liability.
    
    When the effective interest rate is calculated, the Group predicts the future cash flow (taking no
    
    account of the future credit loss) on the basis of considering all the contractual provisions concerning
    
    the financial assets or financial liabilities, as well as all kinds of charges, transaction expenses,
    
    discounts, premiums, etc. which are paid, charged, and included in the effective interest rate between
    
    the contracting parties of the financial assets or liabilities.
    
    5.9.2 Classification, recognition and measurement of financial assets
    
    Financial assets are classified into the following categories when they are initially recognized: the
    
    financial assets which are measured at the fair value and the variation of which is included in the
    
    current profit and loss, the investments which will be held to their maturity, loans, accounts receivable
    
    and available-for-sale financial assets. The financial assets purchased and sold through common
    
    modes shall be recognized and terminated from recognition according to the accounting on the
    
    transaction date. The financial assets held by the Group are loans, accounts receivable and
    
    available-for-sale financial assets.
    
    Loans and accounts receivable
    
    Loans and accounts receivable refer to the non-derivative financial assets for which there is no quoted
    
    price in an active market and of which the repo amount is fixed or determinable. The financial assets
    
    classified by the Group into loans and accounts receivable include monetary capital, bills receivable,
    
    accounts receivable, interest receivable, dividends receivable and other receivables.
    
    The loans and accounts receivable shall be subsequently measured at amortized cost by adopting the
    
    effective interest rate method. The profits or losses that occur when such loans and accounts receivable
    
    are terminated from recognition, impaired or amortized shall be included in the current profit and loss.
    
    Available-for-sale financial assets
    
    Available-for-sale financial assets are non-derivative financial assets that are designated as available
    
    for sale at the time of initial recognition and the financial assets other than those measured at their fair
    
    value and the variation of which is included in the current profit and loss, loans, accounts receivable
    
    and the investments which will be held to their maturity.
    
    The equity instrument investment without quoted market price in an active market whose fair value
    
    cannot be reliably measured shall be measured by cost.
    
    5.9.3 Impairment of financial assets
    
    On each balance sheet date, the Group checks the book value of the financial assets. If there is any
    
    objective evidence indicating that a financial asset is impaired, the impairment provision is accrued.
    
    Objective evidence indicating the impairment of financial assets refers to those occurring after the
    
    initial recognition, have effect on the estimated future cash flow of the financial assets, and can be
    
    measured reliably.
    
    The objective evidence indicating the impairment of the financial assets includes the following
    
    observable matters:
    
    A serious financial difficulty occurs to the issuer or the debtor;
    
    The debtor breaches any of the contractual stipulations, such as, failure to pay or delay of the payment
    
    of interest or principal;
    
    The Group makes any concession due to economic, legal factors or other factors to the debtor which is
    
    in financial difficulties;
    
    The debtor will probably become bankrupt or carry out other financial reorganizations;
    
    The financial assets can no longer continue to be traded in an active market due to serious financial
    
    difficulties of the issuer;
    
    It is impossible to identify whether the cash flow of a certain asset within a certain group of financial
    
    assets has decreased or not. But after making an overall appraisal according to the public data
    
    available, it is found that the estimated future cash flow of the said group of financial assets has indeed
    
    decreased since it was initially recognized and such decrease can be measured, including:
    
    The payment ability of the debtor of the said group of financial assets worsens gradually;
    
    The country or economic region where the debtor is situated has the conditions that may cause the
    
    financial assets to be unpaid.
    
    A serious unfavourable change occurs to the operating technology, market, economic environment,
    
    legal environment of the issuer of the equity instruments that causes the investor of the equity
    
    instruments can’t recover the investment costs;
    
    The fair value of the equity instrument investment has serious or permanent decline;
    
    Other objective evidence showing the depreciation of the financial assets.
    
    Impairment of financial assets measured by amortized cost
    
    Where a financial asset measured at amortized cost is impaired, the book value of the said financial
    
    asset shall be written down to the current value of the predicted future cash flow determined according
    
    to the capitalization of original effective exchange rate (excluding the loss of future credits not yet
    
    occurred), and the amount as written down shall be recognized as loss of the impairment of the asset
    
    and shall be included into the current profit and loss. If there is any objective evidence proving that the
    
    value of the said financial asset has been restored, and it is objectively related to the events that occur
    
    after such loss is recognized, the impairment losses originally recognized shall be reversed. However,
    
    the reversed book value shall not be any more than the amortized costs of the said financial asset on
    
    the day of reverse under the assumption that no provision is made for the impairment.
    
    An impairment test shall be made by the Group independently on the individually significant financial
    
    assets; with regard to not individually significant financial assets, an independent impairment test may
    
    be carried out, or they may be included in a combination of financial assets with similar credit risk
    
    characteristics so as to carry out an impairment-related test. Where, upon independent test, the
    
    financial asset (including the individually significant financial assets and not individually significant
    
    financial assets) has not been impaired, it shall be included in a combination of financial assets with
    
    similar credit risk characteristics so as to conduct another impairment test. Assets that are individually
    
    assessed for impairment and for which an impairment loss is or continues to be recognized shall not be
    
    included in the combination of the financial assets with similar credit risk characteristics for
    
    impairment test.
    
    Impairment of available-for-sale financial assets measured by cost
    
    When the equity instrument investment without quoted market price in an active market and the fair
    
    value of which cannot be reliably measured is impaired, the book value is decreased to the current
    
    value confirmed by the discounted future cash flow according to the current market return of the
    
    similar financial assets. The decreased amount is recognized as impairment loss and included in the
    
    current profit and loss. The impairment loss of this kind of financial assets can’t be transferred back
    
    upon confirmation.
    
    5.9.4 Transfer of financial assets
    
    Where a financial asset satisfies any of the following conditions, it shall be terminated from
    
    recognition: ① Where the contractual rights for collecting the cash flow of the said financial asset are
    
    terminated; ② Where the said financial asset has been transferred and all the risks and rewards of the
    
    financial asset have been substantially transferred to the receiver; ③ Where the financial asset has
    
    been transferred, although the Group does not transfer or retain almost all the risks and rewards of the
    
    financial asset, the Group still waives the control over the financial asset.
    
    Where the overall transfer of the financial asset satisfies the derecognition conditions, the difference
    
    between the book value of the transferred financial asset as well as the consideration received due to
    
    such transfer and the summation of the cumulative amount of the fair value of the asset that is
    
    originally included in other comprehensive income shall be included in the current profit and loss.
    
    5.9.5 Classification, recognition and measurement of financial liabilities
    
    The Group classifies the financial instruments or the components as financial liabilities or equity
    
    instruments at the time of initial recognition according to the contract terms of the issued financial
    
    instruments and the reflected economic essence rather than only the legal form, considering the
    
    definition of financial liabilities and equity instruments.
    
    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.
    
    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.
    
    5.9.6 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.
    
    5.9.7 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.
    
    5.9.8 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.
    
    5.10 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.
    
    5.11 Inventories
    
    5.11.1 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.
    
    5.11.2 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.
    
    5.11.3 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.
    
    5.11.4 Inventory count system
    
    The perpetual inventory system is maintained for stock system.
    
    5.11.5 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.
    
    5.12 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.
    
    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.
    
    5.13 Long term equity investments
    
    5.13.1 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.
    
    5.13.2 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.
    
    5.13.3 Subsequent measurement and recognition of profit or loss
    
    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.
    
    5.13.4 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.
    
    5.14 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.
    
    5.15 Fixed assets
    
    5.15.1 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.
    
    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.
    
    5.15.2 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:
    
    Classification        Depreciationmethod Depreciation  Residual  valueAnnual depreciation
                                         life          rate           rate
    Houses andbuildings Straight-line        20-40years   0-5%         2.4%-5.0%
                       depreciation
                       Straight-line        5-30years    0-5%         3.2%-20.0%
    Machinery equipment depreciation
                       Straight-line        4-12years    0-5%         7.9%-25.0%
    Transportation tools  depreciation
    
    
    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.
    
    5.15.3 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.
    
    5.16 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.
    
    5.17 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.
    
    5.18 Biological assets
    
    The Group's biological assets are 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 productive biological assets are not accrued depreciation until reaching the intended production
    
    and operation purposes. After reaching the intended production and operation purposes, the productive
    
    biological assets are accrued depreciation within the service life straight-line depreciation. The service
    
    life, estimated net residual value rate and annual depreciation rate of different productive biological
    
    assets are as follows:
    
    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.
    
    5.19 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
    
    ItemUseful 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
    
    acquisition of permanent ownership held by 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") according to related
    
    Chilean law and the acquisition of permanent ownership held by Kilikanoon Estate Pty Ltd (referred
    
    to as the "Australia Kilikanoon") according to related Australian law, for which there is no need to
    
    conduct 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.
    
    5.20 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.
    
    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.
    
    5.21 Long term prepaid expenses
    
    Long term prepaid expenses of the Group are amortized over the following period:
    
    Amortization periodLand requisition fee 50 yearsLand lease prepayment 50 yearsGreening fee 5-20 years
    
    Leasehold improvement 3-5years
    
    Others 3 years
    
    5.22 Employee benefits
    
    5.22.1 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.
    
    5.22.2 Accounting treatments of retired benefits
    
    Retired benefits of the Group are all predetermined provision plan.
    
    In the period in which the employees provide service, the Group recognise liability in accordance with
    
    the amounts to be paid calculated according to the predetermined provision plan, and the related
    
    expenditures are either included in cost of related assets or charged to profit or loss in the period when
    
    they are incurred.
    
    5.22.3 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.
    
    5.23 Revenue
    
    5.23.1 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.
    
    5.23.2 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.
    
    5.24 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.
    
    5.24.1 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.
    
    5.24.2Government 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.
    
    5.25 Deferred tax assets/deferred tax liabilities
    
    The income tax expenses include current income tax and deferred income tax.
    
    5.25.1 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.
    
    5.25.2 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.
    
    5.25.3 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.
    
    5.26 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.
    
    5.26.1 Operating lease accounting methods
    
    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.
    
    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.
    
    5.27 Changes in major accounting policies and accounting estimates
    
    5.27.1 Changes in major accounting policies
    
    No
    
    5.27.2 Changes in major accounting estimates
    
    No
    
    5.28 Others
    
    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 4, 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.
    
    Depreciation
    
    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.
    
    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.
    
    6. TAXES
    
    6.1 The main taxes and tax rate are as follows:
    
     Taxcategory         Taxationbasis                      Taxrate
     Valueaddedtax      Levied on the balance between the  16%,  10%,  6%  (Chinese),  20%
                        output tax calculated based on taxable  (France), 21% (Spain), 19% (Chile),
                        income and the input tax allowed to be  10%(Australia)
                        deducted in currentperiod
     Consumptiontax      Leviedon taxableincome             10%, 20%(Chinese)
     Citydevelopmenttax  Leviedon circulationtax actuallypaid   7% (Chinese)
     Corporateincometax  Leviedon taxableincome             25%(Chinese), 33.3%(France), 28%
                                                          (Spain),   27%   (Chile),   30%
                                                          (Australia)
    
    
    6.2 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.
    
    7. Notes to consolidated financial statement
    
    7.1 Monetary capital
    
    Unit: Yuan
    
                 Item                     Endingbalance                 Beginningbalance
     Cashonhand                                         151,228                       136,973
     Bankdeposit                                     1,561,166,484                   1,278,397,711
     Othermonetarycapital                                121,720,741                    123,987,825
     Total                                          1,683,038,453                   1,402,522,509
    
    
    As at June 30, 2018, the restricted bank deposit details are listed as follows:
    
                Item                      Endingbalance                 Beginningbalance
     Housingfundoftheunit                                2,647,250                     2,645,410
     Total                                             2,647,250                     2,645,410
    
    
    As at June 30, 2018, the details of other monetary funds are listed as follows:
    
                Item                      Endingbalance                 Beginningbalance
     PledgeoffixeddepositsbyYantai
     ChangyuWineResearch,                               61,700,000                    61,700,000
     DevelopmentandManufactureCo.,
     Ltd.(―R&DCompany‖)
     Guaranteeddepositspaidfortheletter                      57,946,190                    57,946,190
     ofcredit
     AccountbalanceofAlipay                               1,743,116                     4,317,635
     Guarantymoneyfortheunitcard                            321,435                       14,000
     GuarantymoneyforICBCplatform                           10,000                       10,000
     Total                                           121,720,741                    123,987,825
    
    
    As at June 30, 2018, the bank deposits of the Group including short-term fixed deposits ranging from
    
    3 months to 12 months amounted to RMB 130,000,000 Yuan (December 31, 2017: RMB 95,000,000
    
    Yuan), with the interest rates ranging from 1.40% to 2.03%.
    
    7.2 Bills receivable
    
    7.2.1 Classification of bills receivable
    
    Unit: Yuan
    
                    Type                      Endingbalance             Beginningbalance
    Bank acceptance                                      367,210,884                 244,796,818
    Trade acceptance
    Total                                              367,210,884                 244,796,818
    
    
    7.2.2 Bills receivable pledged by the Company at the end of period
    
    Nil7.2.3 Bills receivable endorsed or discounted by the Company at the end of period butnot yet matured as of the balance sheet date
    
    Unit: Yuan
    
                 Item             Amountterminatingrecognitionattheend Amountnotterminatingrecognition
                                            ofperiod                  attheendofperiod
    Bank acceptance                                      225,833,211
    Trade acceptance
    Total                                              225,833,211
    
    
    7.2.4 Bills receivable reclassified as accounts receivable by the Company due to the
    
    default of drawer at the end of period
    
    Nil7.3 Accounts receivable7.3.1 Accounts receivable disclosed by type
    
    Unit: Yuan
    
                            Endingbalance                           Beginningbalance
       Type       Bookbalance    Baddebtprovision             Bookbalance    Baddebtprovision
                Amount  ProportioAmount Accrued  Bookvalue   Amount  ProportionAmount Accrued  Bookvalue
                          n         proportion                               proportion
    Accounts    243,413,092 100.0%              243,413,092 263,796,355  100.0%              263,796,355
    receivable of
    significant
    single amount
    and single
    accrued bad
    debt
    provision
    Accounts
    receivable
    accrued bad
    debt
    provision by
    credit risk
    features
    Accounts
    receivable of
    insignificant
    single amount
    and single
    accrued bad
    debt
    provision
    Total       243,413,092 100.0%              243,413,092 263,796,355  100.0%              263,796,355
    
    
    The credit term of accounts receivable is normally one month. Major customers can be granted a credit
    
    term up to one year. The accounts receivable are free from interest.
    
    As at June 30, 2018, the accounts receivable with ownership restrictions were RMB 35,016,424 Yuan
    
    (December 31, 2017: RMB 46,337,062 Yuan). Please refer to Note 7.19 for details.
    
    7.3.2 Bad debt provision accrued, transferred back or received in this period
    
    The bad debt provision accrued in this period was RMB 0 Yuan; and that transferred back or
    
    received in this period was RMB 0 Yuan.
    
    7.3.3 Accounts receivable actually cancelled after verification in this period
    
    Nil7.3.4 Accounts receivable collected by the borrowers of top 5 units ranked by the endingbalance
    
    Unit: Yuan
    
            Unit          Relationshipwiththe      Amount           Period        Percentageintotal
                            Company                                      accountsreceivable
        Nonggongshang
     Supermarket (Group)Co.,     Thirdparty            11,250,509    Within1year                4.6%
            Ltd.
      YantaiZhongyaMedical     Affiliatedparty            8,912,812    Within1year                3.7%
       HealthWineCo.,Ltd.
       LianhuaSupermarket       Thirdparty             8,263,237    Within1year                3.4%
        HoldingsCo.,Ltd.
    Suguo SupermarketCo.,Ltd.    Thirdparty             5,812,309    Within1year                2.4%
    Shanghai LotusSupermarket     Thirdparty             5,694,902    Within1year                2.3%
       ChainStoreCo.,Ltd.
            Total                --                39,933,769        --                   16.4%
    
    
    7.3.5 Accounts receivable terminating recognition due to transfer of financial assets
    
    Nil
    
    7.3.6 Accounts receivable transferred and included in assets and liabilities
    
    Nil
    
    7.4 Advance payment
    
    7.4.1 Advance payment listed by age
    
    Unit: Yuan
    
                                     Ending balance                    Beginningsum
              Age
                                Amount         Proportion           Amount        Proportion
    Within 1year                      3,122,797          100.0%            2,417,931      100.0%
    1-2 years
    2-3 years
    More than3years
    Total                            3,122,797              --            2,417,931          --
    
    
    7.4.2 Advance payment collected by the prepaid parties of top 5 units ranked by the
    
    ending balance
    
    Unit: Yuan
    
                                                                               Percentage
                Unit             Relationshipwith  Amount    Age    Reasonforunsettlement  inthetotal
                                   theGroup                                       advance
                                                                                payment%
    YantaiPowerSupplyCompanyofState                       Within1    Prepaidelectricity
    Grid ShandongElectricPower          Thirdparty     500,000   year       purchasingfund       16.0%
    Company
    Beijing PutianshouTradeCo.,Ltd.       Thirdparty     192,000 Within1 Failuretoreceivethegoods    6.1%
                                                       year
    Qingdao VinoproTradingCo.,Ltd.       Thirdparty     105,200 Within1 Failuretoreceivethegoods    3.4%
                                                       year
    Xinjiang XinyanmushenTechnology      Thirdparty      116,980 Within1 Failuretoreceivethegoods    3.7%
    Co., Ltd.                                             year
    YantaiBohongIndustry&TradeCo.,     Thirdparty      95,137 Within1 Failuretoreceivethegoods    3.0%
    Ltd.                                                year
                Total                  --       1,009,317    --            --            32.2%
    
    
    7.5 Interest receivable
    
    7.5.1 Classification of interest receivable
    
    Unit: Yuan
    
                Item                     Endingbalance                 Beginningbalance
    Fixed deposit                                        1,218,373                     240,968
    Entrusted loan
    Bond investment
    Total                                              1,218,373                     240,968
    
    
    7.6 Other accounts receivable
    
    7.6.1 Other accounts receivable disclosed by type
    
    Unit: Yuan
    
                          Ending balance                          Beginningbalance
       Type      Bookbalance    Baddebtprovision             Bookbalance    Baddebtprovision
              Amount  Proportion Amount Accrued Bookvalue  Amount  ProportionAmount Accrued Bookvalue
                                   proportion                              proportion
    Other
    accounts
    receivable of
    significant
    single     16,500,022  100.0%               16,500,022 18,737,454  100.0%              18,737,454
    amount and
    single
    accrued bad
    debt
    provision
    Other
    accounts
    receivable
    accrued bad
    debt
    provision by
    credit risk
    features
    Other
    accounts
    receivable of
    insignificant
    single
    amount and
    single
    accrued bad
    debt
    provision
    Total      16,500,022  100.0%               16,500,022 18,737,454  100.0%              18,737,454
    
    
    7.6.2 Bad debt provision accrued, transferred back or received in this period
    
    The bad debt provision accrued in this period was RMB 0 Yuan; and that transferred back or
    
    received in this period was RMB 0 Yuan.
    
    7.6.3 Other accounts receivable actually cancelled after verification in this period
    
    Nil7.6.4 Other accounts listed by nature
    
    Unit: Yuan
    
                       Nature                     Endingbookbalance     Beginningbookbalance
    Deposit andguarantymoneyreceivable                            11,240,442              10,075,901
                       Nature                      Endingbookbalance     Beginningbookbalance
    Imprest receivable                                          2,134,326               2,215,146
    Investment receivable                                                              2,050,000
    Consumption taxandadded-valuetaxexportrebate                      472,569               2,451,188
    Other                                                   2,652,685               1,945,219
    Total                                                  16,500,022              18,737,454
    
    
    7.6.5 Other accounts receivable collected by the borrowers of top 5 units ranked by the
    
    ending balance
    
    Unit: Yuan
    
                                      Ending                Percentageintotal   Endingbalanceof
              Unit            Nature     balance       Age     endingbalanceofother  baddebtprovision
                                                           accountsreceivable
    YEDA  Construction  IndustryConstruction
    Association               guaranty       7,702,477  2-3years               46.7%
                          money
                          Advance
    Beijing  Shanshui  Decorationelectric         465,460  1-2years                2.8%
    Engineering Co.,Ltd.        charge
                          receivable
                          Advance
    Shaanxi Fangyuan Construction electric         449,337  1-2years                2.7%
    Engineering Co.,Ltd.        charge
                          receivable
    TRANSBANK            Deposit         324,029 Within1year              2.0%
    YEDAFinanceBureau       Guaranty        198,056  1-2years                1.2%
                          money
    Total                       --        9,139,359     --                  55.4%
    
    
    7.6.6 Other accounts receivable terminating recognition due to transfer of financial
    
    assets
    
    Nil
    
    7.6.7 Other accounts receivable transferred and included in assets and liabilities
    
    Nil
    
    7.7 Inventories
    
    7.7.1 Inventory classification
    
    Unit: Yuan
    
                              Endingbalance                       Beginningbalance
         Item                   Depreciation                          Depreciation
                    Bookbalance    provision    Bookvalue   Bookbalance    provision     Bookvalue
    Raw materials        195,466,096              195,466,096    66,881,090                66,881,090
    Goods inprocess     1,529,164,344            1,529,164,344  1,568,230,851              1,568,230,851
    Commodity stocks     627,705,074   13,410,082   614,294,992   864,097,497    25,595,392   838,502,105
    Total             2,352,335,514   13,410,082  2,338,925,432  2,499,209,438    25,595,392  2,473,614,046
    
    
    7.7.2 Inventory depreciation provision
    
    Unit: Yuan
    
                     Beginning      Increaseinthisperiod        Decreaseinthisperiod
          Item         balance      Accrual       Other    Transferbackor    Other    Endingbalance
                                                        write-off
    Raw materials
    Goods inprocess
    Commodity stocks      25,595,392      683,753               12,869,063               13,410,082
    Total               25,595,392      683,753               12,869,063               13,410,082
    
    
    7.8 Assets held for sale
    
    Unit: Yuan
    
           Item         Endingbookvalue       Fairvalue       Estimateddisposal   Estimateddisposaltime
                                                           expenses
    Zhenshantun collective           2,000,197         16,282,224          3,878,560             2018
    apartment
    Total                       2,000,197         16,282,224          3,878,560        --
    
    
    The Company has signed an irrevocable agreement for disposing the fixed assets, and the
    
    contract amount is RMB 16,282,224 Yuan. The disposal is predicted to be completed in 2018.
    
    7.9 Other current assets
    
    Unit: Yuan
    
                Item                     Endingbalance                Beginningbalance
    Prepaid corporateincometax                           101,768,819                    22,911,298
    Deductible inputtax                                 259,484,264                   206,529,504
    Rent tobeamortized                                   1,724,907                     1,381,957
    Total                                           362,977,990                   230,822,759
    
    
    7.10 Available-for-sale financial assets
    
    7.10.1 Particulars of available-for-sale financial assets
    
    Unit: Yuan
    
                                      Endingbalance                  Beginningbalance
              Item              Book      Impairment     Book     Book      Impairment     Book
                              balance     provision     value    balance      provision     value
    Available-for-salefinancial
    instruments:
    Available-for-saleequity           463,880               463,880    467,251               467,251
    instruments:
          Fairvaluemeasurement
          Costmeasurement         463,880               463,880    467,251               467,251
    Total                        463,880               463,880    467,251               467,251
    
    
    7.10.2 Available-for-sale financial assets by cost measurement at the end of period
    
    Unit: Yuan
    
                        Bookbalance                  Impairmentprovision        Shareholding Cash
     Investedunit Beginning InincrtehaisseDiencrtheaisseEnding   Beginning InincrtehaisseDiencrtheaisseEnding  inravteiosteindtuhneitdiivnidtheinsd
                       period  period                   period  period                    period
    Other (Note)    467,251   5053   8424   463,880                               Lessthan
                                                                           1%
    Total         467,251   5053   8424   463,880                                  --
    
    
    Note: The Group holds less than 1% of the shares in such invested entities. These invested
    
    entities are all unlisted companies and their fair value can‘t be measured reliably, so the
    
    Group shall measure such available-for-sale financial assets by cost method.
    
    7.11 Investment real estate
    
    7.11.1 Investment real estate by cost measurement method
    
    √ Applicable □ Inapplicable
    
    Unit: Yuan
    
            Item            Housesand      Landuseright       Constructionin          Total
                           buildings                          progress
    Ⅰ Originalbookvalue
      1.Beginningbalance          38,347,283                                          38,347,283
      2.Increaseinthisperiod
       2.1 Outsourcing
       2.2 Transferinfrom
    inventories\fixed assets\
    construction inprogress
       2.3 Businessmerger
    increase
      3.Decreaseinthisperiod
       3.1 Disposal
       3.2 Othertransferout
      4.Endingbalance            38,347,283                                          38,347,283
    Ⅱ Accumulated
    depreciation &accumulated
    amortization
      1.Beginningbalance          19,879,294                                          19,879,294
      2.Increaseinthisperiod          590,610                                            590,610
       2.1 Accrualor               590,610                                            590,610
            Item            Housesand      Landuseright       Constructionin          Total
                           buildings                          progress
    amortization
      3.Decreaseinthisperiod
       3.1 Disposal
       3.2 Othertransferout
      4.Endingbalance            20,469,904                                          20,469,904
    Ⅲ Impairmentprovision
      1.Beginningbalance
      2.Increaseinthisperiod
       2.1 Accrual
      3.Decreaseinthisperiod
       3.1 Disposal
       3.2 Othertransferout
      4.Endingbalance
    Ⅳ Bookvalue
      1.Endingbookvalue          17,877,379                                          17,877,379
      2.Beginningbookvalue        18,467,989                                          18,467,989
    
    
    7.12 Fixed assets
    
    7.12.1 Particulars of fixed assets
    
    Unit: Yuan
    
            Item            Housesand    Machineryequipment   Transportationtools        Total
                           buildings
    Ⅰ Originalbookvalue:
      1.Beginningbalance        4,508,868,684       2,247,350,293         28,689,415       6,784,908,392
      2.Increaseinthisperiod        28,099,550        276,616,965          2,714,616        307,431,131
       2.1 Acquisition             4,386,524        117,719,992          1,772,906        123,879,422
       2.2 Transferinfrom                         98,234,615                          98,234,615
    construction inprogress
       2.3 Businessmerger         23,713,026         60,662,358           941,710         85,317,094
    increase
       2.4 Other
      3.Decreaseinthisperiod                        7,556,503          3,521,487         11,077,990
       3.1 Disposalor                              7,556,503          3,521,487         11,077,990
    retirement
       3.2 Other
      4.Endingbalance          4,536,968,234       2,516,410,755         27,882,544       7,081,261,533
    Ⅱ Accumulated
    depreciation
      1.Beginningbalance         512,643,486        922,944,520         20,236,417       1,455,824,423
      2.Increaseinthisperiod        67,468,028        106,700,526          1,231,461        175,400,015
       2.1 Accrual               65,844,058         72,709,493           559,369        139,112,920
       2.2 Businessmerger          1,623,970         33,991,033           672,092         36,287,095
    increase
       2.3 Other
      3.Decreaseinthisperiod                        6,591,830           946,752          7,538,582
            Item            Housesand    Machineryequipment   Transportationtools        Total
                           buildings
       3.1 Disposalor                              6,591,830           946,752          7,538,582
    retirement
       3.2 Other
      4.Endingbalance           580,111,514       1,023,053,216         20,521,126       1,623,685,856
    Ⅲ Impairmentprovision
      1.Beginningbalance
      2.Increase
       2.1 Accrual
       2.2 Other
      3.Decrease
       3.1 Disposalor
    retirement
       3.2 Other
      4.Endingbalance
    Ⅳ Bookvalue
      1.Endingbookvalue        3,956,856,720       1,493,357,539          7,361,418       5,457,575,677
      2.Beginningbookvalue      3,996,225,198       1,324,405,773          8,452,998       5,329,083,969
    
    
    As at June 30, 2018, the net value of the fixed assets with ownership restrictions was RMB
    
    142,338,624 Yuan (December 31, 2017: RMB 145,009,923 Yuan). Please refer to Note 7.52
    
    for details.
    
    As at June 30, 2018, the net value of the fixed assets divided into those held for sale was
    
    RMB 2,000,197 Yuan (December 31, 2017: RMB 2,000,197 Yuan).
    
    7.12.2 Temporarily idle fixed assets
    
    Nil7.12.3 Fixed assets under finance leases
    
    Nil7.12.4 Fixed assets under operating lease
    
    Unit: Yuan
    
                        Item                                  Endingbookvalue
    Machinery equipment                                                              199,791
    
    
    7.12.5 Fixed assets without property certificates
    
    Unit: Yuan
    
                         Item                       Bookvalue   Reasonfornotreceivingtheproperty
                                                                      certificate
    Industrial ProductionCenteroftheR&DCompany             1,623,153,949        Undertransaction
    Dormitory Building,MainBuildingandReceptionBuildingof      353,370,544        Undertransaction
    Chang‘an Chateau
    European Town,MainBuildingandServiceBuildingofBeijing      190,443,678        Undertransaction
    Chateau
    Main BuildingofYantaiChateauChangyuTinlot                84,912,291        Undertransaction
    Fermentation WorkshopandWineStorageWorkshopofXinjiang      18,143,780        Undertransaction
    Tianzhu
    Office BuildingandPackagingWorkshopofIcewineValley          9,352,280        Undertransaction
    Wine-making WorkshopofChangyu(Jingyang)                  4,326,818        Undertransaction
    Office Building,LaboratoryBuildingandWorkshopof             3,750,132        Undertransaction
    Fermentation Center
    Finished GoodsWarehouseandWorkshopofKylinPackaging        2,442,189        Undertransaction
    Office ofSalesCompany                                 2,021,311        Undertransaction
    Total                                           2,291,916,972        Undertransaction
    
    
    7.13 Construction in progress
    
    7.13.1 Particulars of construction in progress
    
                                        Endingbalance                 Beginningbalance
                Item                      Impairment                     Impairment
                               Bookbalance  provision  Bookvalue  Bookbalance  provision  Bookvalue
    Research, Development&Manufacture
    Center (―ChangyuWineCity         835,624,055          835,624,055  883,731,540          883,731,540
    Complex‖)
    Construction ProjectofChang‘an       48,016,036           48,016,036   53,290,036           53,290,036
    Chateau
    Construction ProjectofNingxia        47,902,668           47,902,668   35,711,269           35,711,269
    Chateau
    Construction ProjectofShihezi        29,221,272           29,221,272   25,463,724           25,463,724
    Chateau
    Construction ProjectofSalesCompany   14,205,640           14,205,640   11,355,685           11,355,685
    Construction ProjectofChateauTinlot   17,689,488           17,689,488   5,819,246            5,819,246
    Construction ProjectsofOther         23,255,594           23,255,594   10,770,069           10,770,069
    Companies
    Total                       1,015,914,753         1,015,914,753 1,026,141,569         1,026,141,569
    
    
    7.13.2 Changes of major construction in progress in this period
    
    Unit: Yuan
    
                                                       Proportion        Including
                                    Transferred Other           of   Accumulati   :   Capitalizati
                      Beginning  Increasein  tofixed  decrea  Ending  accumulati   ve   capitalize onratioof Capital
       Item     Budget    balance   thisperiod  assetsin  sein   balance  veproject capitalized damount interestin  source
                                            this                amountof ofinterest
                                    thisperiod period         inputin   interest   inthis  thisperiod
                                                        budget          period
    Constructi
    on Project                                                                        Loans
    of                                                                             form
    Research,
    Developm                                                                       financial
    ent &     4,505,780,0 883,731,54 39,381,9 87,489,3     835,624,0  72.5% 11,092,50 2,664,5  1.20%  institutio
    Manufactu       00        0     14     99          55             6    41 and4.3% nsand
    re Center                                                                       self-raise
    (―Changyu                                                                       dfunds
    WineCity
    Complex‖)
    Constructi
    on Project  620,740,00          5,437,37 10,711,3     48,016,03                            Self-rais
    of              0 53,290,036      2     72           6  107.7%                     edfunds
    Chang‘an
    Chateau
    Constructi
    on Project  780,000,00 25,463,724 3,757,54            29,221,27  92.0%                     Self-rais
    of Shihezi        0              8                  2                            edfunds
    Chateau
    Constructi
    on Project  161,350,00 11,355,685 2,849,95            14,205,64  95.2%                     Self-rais
    of Sales          0              5                  0                            edfunds
    Company
    Constructi
    on Project  41,415,000 35,711,269 12,191,3            47,902,66  128.0%                     Self-rais
    of Ningxia                       99                  8                            edfunds
    Chateau
    Constructi
    on Project  192,400,00  5,819,246 11,870,2            17,689,48  102.5%                     Self-rais
    of Chateau        0              42                  8                            edfunds
    Tinlot
    Total     6,301,685,0 1,015,371,5 75,488,4 98,200,7     992,659,1      -- 11,092,50 2,664,5          --
                   00      00     30     71          59             6    41
    
    
    As at June 30, 2018, there was no indication for impairment of construction in progress of the
    
    Group, so no provision for impairment was made.
    
    7.14 Productive biological assets
    
    7.14.1 Productive biological assets by cost measurement method
    
    Unit: Yuan
    
                   Item                            Plantation                    Total
                                         Immature            Mature
    Ⅰ Originalbookvalue
      1. Beginningbalance                         12,175,000          217,537,353       229,712,353
      2. Increaseinthisperiod                        1,548,693            8,462,877        10,011,570
       2.1 Outsourcing
       2.2 Selfcultivation                          5,131,006            4,880,564        10,011,570
       2.3 Theimmatureturntothemature              -3,582,313            3,582,313
      3. Decreaseinthisperiod
       3.1 Disposal
       3.2 Other
      4.Endingbalance                            13,723,693          226,000,230       239,723,923
    Ⅱ Accumulateddepreciation
      1. Beginningbalance                                           27,782,465        27,782,465
      2. Increaseinthisperiod                                          9,279,710         9,279,710
       2.1 Accrual                                                 9,279,710         9,279,710
       2.2 Other
      3. Decreaseinthisperiod
       3.1 Disposal
       3.2 Other
      4.Endingbalance                                              37,062,175        37,062,175
    Ⅲ Impairmentprovision
      1. Beginningbalance
      2. Increaseinthisperiod
       2.1 Accrual
       2.2 Other
      3. Decreaseinthisperiod
       3.1 Disposal
       3.2 Other
      4.Endingbalance
    Ⅳ Bookvalue
      1. Endingbookvalue                         13,723,693          188,938,055       202,661,748
      2. Beginningbookvalue                       12,175,000          189,754,888       201,929,888
    
    
    As at June 30, 2018, no ownership of the biological assets was restricted.
    
    As at June 30, 2018, there was no indication for impairment of biological assets of the Group, so no
    
    provision was made.
    
    7.15 Intangible assets
    
    7.15.1 Particulars of intangible assets
    
    Unit: Yuan
    
             Item            Landuseright     Softwareuseright      Trademark          Total
    Ⅰ Originalbookvalue
       1.Beginningbalance           521,731,139         73,666,754       159,702,508        755,100,401
       2. Increaseinthisperiod          7,089,292         3,228,127        9,167,907         19,485,326
         2.1Acquisition               999,745         1,183,404          211,645          2,394,794
         2.2 InternalR&D
         2.3 Businessmerger           6,089,547         2,044,723        8,956,262         17,090,532
    increase
         2.4 Other
       3. Decreaseinthisperiod
         3.1 Disposal
         3.2 Other
       4.Endingbalance             528,820,431         76,894,881       168,870,415        774,585,727
    Ⅱ Accumulatedamortization
       1.Beginningbalance            67,547,772         21,516,741       10,586,991         99,651,504
       2.Increaseinthisperiod           5,316,763         4,729,142        2,194,042         12,239,947
         2.1Accrual                5,316,763         4,056,496        2,194,042         11,567,301
         2.2 Businessmerger                            672,646                          672,646
    increase
       3.Decreaseinthisperiod
         3.1 Disposal
         3.2 Other
       4.Endingbalance              72,864,535         26,245,883       12,781,033        111,891,451
    Ⅲ Impairmentprovision
       1.Beginningbalance
       2.Increaseinthisperiod
         2.1Accrual
         2.2 Other
       3.Decreaseinthisperiod
         3.1 Disposal
         3.2 Other
       4.Endingbalance
    Ⅳ Bookvalue
      1.Endingbookvalue            455,955,896         50,648,998       156,089,382        662,694,276
      2.Beginningbookvalue          454,183,367         52,150,013       149,115,517        655,448,897
    
    
    As at June 30, 2018, the net value of the intangible assets with ownership restrictions was
    
    RMB 161,934,242 Yuan (December 31, 2017: RMB 164,051,996 Yuan). Please refer to
    
    Note 7.52 for details.
    
    7.15.2 Land use right of that not receiving the property certificate
    
    Nil
    
    7.16 Goodwill
    
    7.16.1 Original book value of goodwill
    
    Unit: Yuan
    
     Nameoftheinvested   Beginning     Increaseinthisperiod       Decreaseinthisperiod
     unitormatterforming   balance   Formedbybusiness                                Endingbalance
         goodwill                               Other     Disposal      Othermerger
    Etablissements Roullet
    Fransac (―Roullet      13,112,525                                                  13,112,525
    Fransac‖)
    Dicot Partners,S.L     92,391,901                                                  92,391,901
    (―Atrio Group‖)
    Societe Civile
    Argricole DuChateau    15,761,440                                                  15,761,440
    De Mirefleurs
    (―Mirefleurs‖)
    Indomita Wine         6,870,115                                                   6,870,115
    Company Chile,SpA
    Kilikanoon Estate,                    35,794,894                                    35,794,894
    Australia
          Total        128,135,981      35,794,894                                   163,930,875
    
    
    7.17 Long-term unamortized expenses
    
    Unit: Yuan
    
         Item       Beginningbalance   Increaseinthis  Amortizationinthis  Otherdecrease    Endingbalance
                                    period          period
    Land leasefees          56,365,385                      719,454                    55,645,931
    Land acquisition         43,976,036                      569,650                    43,406,386
    fees
    Afforestation fees       125,628,334       6,101,637       6,526,355                   125,203,616
    Renovation costs           873,263                      109,158                      764,105
    Other                 3,166,213                      192,827                     2,973,386
    Total                230,009,231       6,101,637       8,117,444                   227,993,424
    
    
    7.18 Deferred income tax assets/liabilities
    
    7.18.1 Un-offset deferred income tax assets
    
    Unit: Yuan
    
                                            EndingBalance              BeginningBalance
                   Item                 DteemdpuoctriabrlyeDeferredincome    DteemdpuoctriabrlyeDeferredincome
                                       difference       taxassets      difference      taxassets
    Asset impairmentprovision                   13,410,082      3,352,521     25,595,392      6,398,848
    Unrealized profitsfrominter-company           585,312,988    146,328,247    618,591,681    154,647,920
    transactions
    Deductible loss                          300,198,853     77,339,305     345,639,059     88,584,337
    Unpaid bonus                            59,305,392     14,853,004     94,462,722     23,671,611
    Dismission welfare                        20,405,213      5,101,303     27,980,857      6,995,214
    Deferred income                         108,652,154     23,832,078     109,797,054     24,285,203
    Asset valuationimpairment                     673,019       181,715       684,622       184,848
    Accrued promotionalexpenses                                          13,413,655      3,353,415
    Total                                1,087,957,701    270,988,173   1,236,165,042    308,121,396
    
    
    7.18.2 Un-offset deferred income tax liabilities
    
    Unit: Yuan
    
                                            EndingBalance              BeginningBalance
                   Item                 teTmaxpaobraleryDeferredincome    teTmaxpaobraleryDeferredincome
                                       difference     taxliabilities     difference     taxliabilities
    Assets appraisalappreciationinbusinessmerger     105,651,986     26,020,063     89,316,823     24,264,203
    under non-commoncontrol
    Changes infairvalueofavailable-for-sale
    financial assets
    Total                                 105,651,986     26,020,063     89,316,823     24,264,203
    
    
    7.18.3 Details of unconfirmed deferred income tax assets
    
    Unit: Yuan
    
                   Item                      Endingbalance              Beginningbalance
    Deductible loss                                       157,307,221                 150,320,039
    Total                                              157,307,221                 150,320,039
    
    
    7.18.4 Deductible losses of unconfirmed deferred income tax assets will expire in:
    
    Unit: Yuan
    
           Year             Endingsum         Beginningsum               Remark
    2019                           7,311,273           7,311,273
    2020                          45,960,766          45,960,766
    2021                          82,685,213          82,685,213
    2022                          14,362,787          14,362,787
    2023                           6,987,182
    Total                         157,307,221         150,320,039              --
    
    
    7.19 Short-term loans
    
    7.19.1 Classification of short-term loans
    
    Unit: Yuan
    
                  Item                      Endingbalance               Beginningbalance
    Pledge loan
    Mortgage loan                                       54,882,050                   65,939,662
    Guaranteed loan                                      43,544,169
    Fiduciary loan                                      652,028,457                  648,494,624
    Total                                             750,454,676                  714,434,286
    
    
    As at June 30, 2018, the mortgage loan referred to the factoring business for accounts
    
    receivable of EUR 4,576,413 (equivalent to RMB 35,016,424 Yuan) that Hacienda y Vinedos
    
    Marques del Atrio, S.L.U. (―Marques del Atrio‖) transacted in such banks as Banco de
    
    Sabadell, S.A. (December 31, 2017: RMB 46,337,062 Yuan), and a loan of USD 3,000,000
    
    (equivalent to RMB 19,865,626 Yuan) that Indomita Wine Company Chile, SpA from BBVA
    
    bank by mortgage of fixed assets of CLP 3,139,045,000 (equivalent to RMB 31,704,355 Yuan)
    
    (December 31, 2017: RMB 19,602,600 Yuan).
    
    By means of overseas loan under domestic guarantee, the Company opened a financing
    
    guarantee with the credit line of domestic bank to provide a guarantee for the loan of AUD
    
    8,953,626 (equivalent to RMB 43,544,169 Yuan) of Kilikanoon Estate, Australia. The letter
    
    of guarantee came into effect from January 17, 2018 and will expire on January 15, 2019.
    
    7.20 Accounts payable
    
    7.20.1 List of accounts payable
    
    Unit: Yuan
    
                  Item                      Endingbalance               Beginningbalance
    Within oneyear                                     502,094,548                  664,020,176
    From oneyeartotwoyears                               2,408,743                    2,051,592
    From twoyearstothreeyears                              1,097,233                     371,111
    Over threeyears                                        256,431
    Total                                             505,856,955                  666,442,879
    
    
    7.20.2 Explanation of significant accounts payable aged more than one year
    
    As at June 30, 2018, there were no significant accounts payable aged more than one year.
    
    7.21 Advances from customers
    
    7.21.1 List of advances from customers
    
    Unit: Yuan
    
                   Item                        Endingsum                Beginningsum
    Within oneyear                                      356,522,984                 340,025,690
    From oneyeartotwoyears                                 2,894,155                   7,072,254
    From twoyearstothreeyears                               3,285,740                    381,463
    Over threeyears                                        3,652,401                   3,414,749
    Total                                              366,355,280                 350,894,156
    
    
    7.21.2 Advances from customers of significant amount aged more than one year
    
    As at June 30, 2018, the Company had no advances from customers of significant amount
    
    aged more than one year.
    
    7.22 Employee remunerations payable
    
    7.22.1 List of employee remunerations payable
    
    Unit: Yuan
    
               Item             Beginningbalance  Increaseinthis   Decreaseinthis     Endingbalance
                                                period         period
    1. Short-termremuneration              182,545,284    218,523,367      244,584,113        156,484,538
    2. Post-employmentwelfare–defined         298,093     26,186,535       25,379,241         1,105,387
    contribution plan
    3. Dismissionwelfare                  27,980,857      1,275,387        8,851,031         20,405,213
    4.Other welfareduewithinoneyear
    Total                            210,824,234    245,985,289      278,814,385        177,995,138
    
    
    7.22.2 List of short-term remunerations
    
    Unit: Yuan
    
              Item              Beginningbalance     Increaseinthis    Decreaseinthis    Endingbalance
                                                  period          period
    1. Salaries,bonuses,allowances            185,014,318      194,859,167      220,953,405     158,920,080
    and subsidies
    2. Staffwelfare                        2,116,475       4,592,350        5,304,548       1,404,277
    3. Socialinsurancecharges                  524,316       11,468,383       10,938,536       1,054,163
    Including: Medicalinsurance                524,316       9,928,407        9,411,157       1,041,566
            Injuryinsurance                               819,706         807,109         12,597
            Maternityinsurance                             720,270         720,270
    4. Housingfund                          39,256       5,680,880        5,709,726         10,410
    5. Unionfeeandstaffeducationfee           2,060,231       1,922,587        2,038,363       1,944,455
              Item              Beginningbalance     Increaseinthis    Decreaseinthis    Endingbalance
                                                  period          period
    6.    Short-term   compensated
    absences
    7. Short-termprofit-sharingplan
    Minus:   Those  divided  into           7,209,312                       360,465       6,848,847
    non-current liabilities
    Total                              182,545,284      218,523,367      244,584,113     156,484,538
    
    
    7.22.3 List of defined contribution plan
    
    Unit: Yuan
    
              Item              Beginningbalance       Increase        Decrease      Endingbalance
    1. Basicendowmentinsurance                297,591       25,034,196       24,821,104        510,683
    2. Unemploymentinsurance                    502       1,152,339         558,137        594,704
    3. Enterpriseannuitypayment                                                              -
    Total                                298,093       26,186,535       25,379,241       1,105,387
    
    
    7.22.4 Dismission welfare
    
    Unit: Yuan
    
                Item             Beginningbalance     Increase         Decrease      Endingbalance
    1. Compensationforserveroflabor                         1,275,387          1,275,387
    relation
    2. Compensationforearlyretirement         27,980,857                        7,575,644    20,405,213
    Total                              27,980,857       1,275,387          8,851,031    20,405,213
    
    
    7.23 Taxes payable
    
    Unit: Yuan
    
                    Item                        Endingbalance            Beginningbalance
    Valueaddedtax                                          15,404,619                35,681,696
    Consumption tax                                         12,373,243                44,961,022
    Corporate incometax                                      35,771,016                38,834,293
    Individual incometax                                        804,004                7,805,917
    Urban maintenanceandconstructiontax                          1,542,643                5,669,280
    Property tax                                             3,976,184                4,647,644
    Urban landusetax                                         2,493,549                2,645,687
    Other                                                 1,494,489                4,848,617
    Total                                                 73,859,747               145,094,156
    
    
    7.24 Interest payable
    
    Unit: Yuan
    
                    Item                        Endingbalance             Beginningbalance
    Interest oflong-termloanswithinterestpaidby
                    Item                        Endingbalance             Beginningbalance
    installment andprincipalpaidonmaturity
    Interest ofcorporatebonds
    Interest payableofshort-termloans                                834,247                  771,250
    Interest ofpreferredshares\perpetualbondsdivided
    into financialliabilities
    Other
    Total                                                    834,247                  771,250
    
    
    7.25 Dividends payable
    
    Unit: Yuan
    
                    Item                        Endingbalance            Beginningbalance
    Ordinary stockdividends
    Preferred stockdividends/sustainabledebtdividends
    divided intoequityinstruments
    Other                                                   746,021
    Total                                                   746,021
    
    
    7.26 Other payables
    
    7.26.1 Other payables listed by nature
    
    Unit: Yuan
    
                   Item                      Endingbalance              Beginningbalance
    Dealer‘s depositpayable                                  153,278,830                139,710,963
    Equipment purchaseandconstructioncosts                      112,120,286                130,706,777
    payable
    Transportation chargespayable                              13,329,596                 27,847,092
    TrademarkusefeespayableforChangyuGroup                   45,965,699                 77,208,929
    Company
    Advertising expensespayable                               243,506,777                132,248,615
    Employee cashdeposit                                     7,199,282                 13,327,132
    Supplier‘s depositpayable                                  11,909,254                  3,082,595
    Contracting feespayable                                   26,669,423                 38,070,571
    Other                                               57,728,768                 40,761,645
    Total                                               671,707,915                602,964,319
    
    
    7.26.2 Other significant accounts payable aged more than one year
    
    Unit: Yuan
    
                   Item                     Endingbalance         Causeofunpaymentorcarry-over
    Beijing QinglangEcologicalAgriculture                      7,033,763 Thecontractingfeeshaven‘tbeensettled
    TechnologyDevelopment
    YantaiDe‘anInvestmentCo.,Ltd.                          3,218,174 Thecontractingfeeshaven‘tbeensettled
    Total                                            10,251,937              --
    
    
    7.27 Non-current liabilities due within one year
    
    Unit: Yuan
    
                Item                    Endingbalance               Beginningbalance
    Long-term loansduewithinone                      106,570,388                    76,954,827
    year
    Long-term accountspayabledue                      34,000,000                    34,000,000
    within oneyear
    Total                                           140,570,388                    110,954,827
    
    
    7.28 Other current liabilities
    
    Unit: Yuan
    
                  Item                      Endingbalance               Beginningbalance
    Deferred income                                      16,311,727                   16,878,199
    Total                                             16,311,727                   16,878,199
    
    
    7.29 Long-term loans
    
    7.29.1 Classification of long-term loans
    
    Unit: Yuan
    
                  Item                      Endingbalance               Beginningbalance
    Pledge loan
    Mortgage loan                                        7,528,121                    6,693,544
    Guaranteed loan                                      75,000,000                   81,250,000
    Fiduciary loan                                       71,437,070                   68,182,310
    Total                                            153,965,191                  156,125,854
    
    
    Description of the classification of long-term loans:
    
    Unit: Yuan
    
             Item              Endingbalance     Long-termloanduewithinone Long-termloandueoverone
                                                      year                  year
    Pledge loan
    Mortgage loan                         7,528,121                                   7,528,121
    Guaranteed loan                      100,000,000             25,000,000             75,000,000
    Fiduciary loan                       153,007,458             81,570,388             71,437,070
    Total                              260,535,579            106,570,388            153,965,191
    
    
    As at June 30, 2018, the guaranteed loan referred to the long-term loan of RMB 100,000,000
    
    Yuan borrowed by the Company for the R&D Company by means of credit guarantee
    
    (December 31, 2017: RMB 100,000,000 Yuan), and the mortgage loan referred to the loan of
    
    EUR 679,560 (equivalent to RMB 5,199,656 Yuan) borrowed from Popular Espa?ol by
    
    Marques del Atrio by mortgage of its fixed assets of EUR 4,264,170 (equivalent to RMB
    
    32,627,300 Yuan) (December 31, 2017: RMB 9,502,372 Yuan). Kilikanoon Estate, Australia
    
    borrowed a loan of AUD 478,783 (equivalent to RMB 2,328,465 Yuan) by pledge of its fixed
    
    assets of AUD 503,163 (equivalent to RMB 2,447,034 Yuan) from NAB bank (December 31,
    
    2017: Nil).
    
    7.30 Long-term accounts payable
    
    7.30.1 Long-term accounts payable listed by nature
    
    Unit: Yuan
    
    Item                                                Endingbalance    Beginningbalance
    China AgriculturalDevelopmentKeyConstructionFund                    235,000,000         259,000,000
    Total                                                      235,000,000         259,000,000
    
    
    In 2016, Agricultural Development Fund invested RMB 305,000,000 Yuan in the R&D
    
    Company, accounting for 37.9% of the registered capital. According to the investment
    
    agreement, it is agreed that Agricultural Development Fund will take back the investment
    
    fund in ten years and obtain fixed income according to year, which is 1.2% of the remaining
    
    principal. Except for the above fixed income, the Agricultural Development Fund shall not
    
    enjoy other profits of the R&D Company or bear the losses of the R&D Company.
    
    Accordingly, the investment of the Agricultural Development Fund in the R&D Company is
    
    equity investment nominally, which is debt investment in deed. The Group included the
    
    investment of the Agricultural Development Fund in long-term accounts payable measured by
    
    amortized cost. In 2017, the Group gave back the principal of RMB 12,000,000 Yuan. From
    
    January to June 2018, the Group gave back the principal of RMB 24,000,000 Yuan, and the
    
    mortgaged and pledged assets included monetary capital of RMB 61,700,000 Yuan, fixed
    
    assets of RMB 75,559,935 Yuan, and intangible assets of RMB 161,934,242.
    
    Unit: Yuan
    
       Balanceoflong-termaccounts   Long-termaccountspayable Long-termaccountspayabledueinone
                payable               duewithinoneyear                yearlater
                         269,000,000               34,000,000                        235,000,000
    
    
    7.31 Deferred income
    
    Unit: Yuan
    
         Item       Beginningbalance   Increaseinthis    Decreaseinthis    Endingbalance    Formingreason
                                    period          period
    Governmental          109,797,054       8,200,000       9,344,900      108,652,154
    subsidy
    Minus: Those
    included incurrent       16,878,199                                  16,311,727       --
    liabilities
    Non-current            92,918,855                                  92,340,427       --
    liabilities
    
    
    Projects related to governmental subsidy
    
    Unit: Yuan
    
                             Amount            Amount
                               of     Amount   included Amount
                     Beginning  subsidy  includedin  inother  offset   Other   Ending     Relatedto
      Item ofliabilities    balance   newly  non-operating incomein thecost changes   balance    assets/income
                             increased  revenuein    this   expenses
                              in this   thisperiod   period
                              period
    Grape bulkwine       4,739,400                   717,450               4,021,950 Relatedtoassets
    brewing project
    Reward forinvestment
    in fixedassetsof       9,276,600                 1,140,000               8,136,600 Relatedtoassets
    Chateau Shihezi
    project
    Industrial revitalization
    and technical        17,064,000                   711,000              16,353,000 Relatedtoassets
    transformation project
    in Xinjiang
    Special subsidyfor
    supporting           5,300,000                   530,000               4,770,000 Relatedtoassets
    infrastructure
    Industrial revitalization
    and technical         1,086,000                 1,086,000                      Relatedtoassets
    transformation project
    in Ningxia
    Tourismdevelopment     500,000                                        500,000 Relatedtoincome
    fund subsidyproject
    Supporting fundfor    10,200,000                                      10,200,000 Relatedtoincome
    corporate development
    Construction projectof
    grape brewing        3,600,000                   200,000               3,400,000 Relatedtoassets
    production capacity
    (Huanren)
    Electronic traceability   3,192,311                  333,527               2,858,784 Relatedtoassets
    system projectofwine
    Transferred fundof
    Propaganda           888,945                   444,472                 444,473 Relatedtoassets
    Department, Miyun
    County Committee
    Wineindustry          744,000                   93,000                 651,000 Relatedtoassets
    development project
    Peninsula blue
    economic zone        8,000,000                 1,000,000               7,000,000 Relatedtoassets
    construction project
    Technical
    transformation project
    of information-based    3,480,000                   290,000               3,190,000 Relatedtoassets
    system construction
    engineering
    Cross-border          702,615  300,000                                1,002,615 Relatedtoincome
    e-commerce project
    Research projectofred
    wine phenolic          284,601                                        284,601 Relatedtoincome
    substances
    Grape base            520,000                   260,000                 260,000 Relatedtoassets
    construction project
    Fund forwater
    pollution treatment      320,132                   56,801                 263,331 Relatedtoincome
    project
    Infrastructure         1,843,750                   62,500               1,781,250 Relatedtoassets
                              Amount           Amount
                                of     Amount   included Amount
                     Beginning  subsidy  includedin  inother  offset   Other   Ending     Relatedto
      Item ofliabilities    balance   newly  non-operating incomein thecost changes   balance    assets/income
                             increased  revenuein    this   expenses
                              in this   thisperiod   period
                              period
    construction fund
    Supporting fundfor    36,900,000                 2,050,000               34,850,000 Relatedtoassets
    industrial development
    Subsidy foreconomic
    and energy-saving      1,154,700                   64,150               1,090,550 Relatedtoassets
    technical
    transformation project
    Special fundfor
    building Yantaiasa            4,750,000                                4,750,000 Relatedtoincome
    strong manufacturing
    city
    Efficient water-saving          3,150,000           306,000               2,844,000 Relatedtoassets
    irrigation project
    Total             109,797,054 8,200,000          9,344,900              108,652,154      --
    
    
    7.32 Other non-current liabilities
    
    Unit: Yuan
    
                   Item                     Endingbalance              Beginningbalance
    Employee remunerationspayable                            6,848,847                    7,209,312
    Total                                              6,848,847                    7,209,312
    
    
    As at June 30, 2018, the employee remunerations payable referred to the job security deposit
    
    deducted from the year-end bonus of the employees higher than sales manager of the
    
    Company in proportion, which will be paid from 2019 to 2021 as predicted.
    
    7.33 Share capital
    
    Unit: Yuan
    
                                      Increaseordecrease(+,-)inthisperiod
                Beginning                        traSnshfaerrered                     Ending
                 balance   NewshlyariesssuedAsllhoacraetsed  from       Other      Subtotal     balance
                                              accumulation
                                                 fund
    Totalshares    685,464,000                                                      685,464,000
    
    
    7.34 Capital reserves
    
    Unit: Yuan
    
             Item           Beginningbalance   Increaseinthisperiod    Decreaseinthis    Endingbalance
                                                                period
    Capital premium(Share            560,038,853                                      560,038,853
    capital premium)
    Other capitalreserves                5,916,588                                        5,916,588
    Total                         565,955,441                                      565,955,441
    
    
    7.35 Other comprehensive income
    
    Unit: Yuan
    
                                               Amount incurredinthisperiod
                                      Amount  Minus:profit
                            Beginning   incurred   orlossinthis  Minus: Attributable Attributable  Ending
              Item            balance    before    trapnesrfieordredincome  toparent  tominority  balance
                                     incometax   fromother    tax   company  shareholders
                                      in this   comprehensive expenses  aftertax   aftertax
                                      period   incomebefore
    1. Othercomprehensiveincome
    not tobereclassifiedintoprofit
    and losslater
    Including: changeinnetliabilities
    and netassetsfromrecalculated
    defined benefitplan
        Share enjoyedinother
    comprehensive incomenottobe
    reclassified intoprofitandlossin
    invested unitunderequitylaw
    2. Othercomprehensiveincometo
    be reclassifiedintoprofitandloss   3,109,240 -11,126,413                  -9,230,820  -1,895,593 -6,121,580
    later
    Including: shareenjoyedinother
    comprehensive incometobe
    reclassified intoprofitandlossin
    invested unitunderequitylaw
         Profitandlossfrom
    changes infairvalueoffinancial
    assets forsale
         Profitandlossfrom
    reclassification ofheld-to-maturity
    investment intofairvalueof
    financial assetsforsale
         Effectivepartofprofitand
    loss ofcash-flowhedge
         Differenceintranslationof
    Foreign CurrencyFinancial       3,109,240 -11,126,413                  -9,230,820  -1,895,593 -6,121,580
    Statement
    Totalothercomprehensiveincome  3,109,240 -11,126,413                  -9,230,820  -1,895,593 -6,121,580
    
    
    7.36 Surplus reserves
    
    Unit: Yuan
    
             Item           Beginningbalance   Increaseinthisperiod    Decreaseinthis    Endingbalance
                                                               period
    Legal surplusreserves              342,732,000                                      342,732,000
    Free surplusreserves
    Reserve fund
    Enterprise expansionfund
    Other
    Total                         342,732,000                                      342,732,000
    
    
    7.37 Undistributed profit
    
    Unit: Yuan
    
                              Item                           Endingbalance   Beginningbalance
    Undistributed profitattheendofpriorperiodbeforeadjustment               7,309,081,618       6,620,118,562
    TotalUndistributedprofitatthebeginningoftheperiodbeforeadjustment
    (increase listedwith+,anddecreaselistedwith-)
    Undistributed profitatthebeginningoftheperiodafteradjustment             7,309,081,618       6,620,118,562
    Plus: Netprofitforowneroftheparentcompany                          635,837,405       1,031,695,056
    Minus: Drawnlegalsurplus
    Drawn freesurplus
    Drawn commonriskprovision
    Common dividendpayable                                                         342,732,000
    Common dividendtransferredtosharecapital
    Undistributed profitattheendofperiod                               7,944,919,023       7,309,081,618
    
    
    7.38 Operating income and operating cost
    
    Unit: Yuan
    
                 Item                Amountincurredinthisperiod      Amountincurredinpriorperiod
                                     Income         Cost          Income          Cost
    Main business                       2,818,814,912     969,407,949    2,761,797,479      921,629,225
    Other business                         9,415,152       5,149,343       5,300,718       4,124,908
    Total                             2,828,230,064     974,557,292    2,767,098,197      925,754,133
    
    
    7.39 Taxes and surcharges
    
    Unit: Yuan
    
                    Item                   Amountincurredinthisperiod   Amountincurredinpriorperiod
    Consumption tax                                         97,343,463                87,580,364
    Urban maintenanceandconstructiontax                          23,778,056                30,288,028
    Education surcharges                                      17,417,976                21,968,359
    Building tax                                            16,878,556                 9,993,265
    Land usetax                                             6,013,248                 5,092,473
    Stamp duty                                             2,247,814                 1,970,707
    Other                                                 1,597,138                 3,580,802
    Total                                                165,276,251               160,473,998
    
    
    7.40 Selling expenses
    
    Unit: Yuan
    
                Item                Amountincurredinthisperiod       Amountincurredinpriorperiod
    Advertising promotionexpenses                         362,293,691                   353,792,438
    Employee remunerations                              139,247,494                    115,463,193
    Transportation expenses                                67,177,736                    64,053,872
    Trademark usefees                                   43,363,867                    44,428,033
    Storage andleaseexpenses                              19,857,616                    27,357,293
    Depreciation expenses                                 21,735,895                    19,740,726
    Service charges                                     12,459,237                     6,734,393
    Travel expenses                                     10,886,711                    10,036,717
    Water,electricityandgascharges                          7,166,936                     3,572,499
    Office &postagecosts                                 2,349,806                     2,479,541
    Packing expenses                                     3,873,287                     3,140,528
    Public   security  &  clean-keeping                     2,336,546                     2,532,418
    expenses
    Business entertainmentexpenses                           1,995,516                     1,190,071
    Afforestation fees                                     1,177,756                     1,342,117
    Property managementexpenses                            1,291,390                     1,348,857
    Other                                            13,445,549                    11,523,030
    Total                                           710,659,033                   668,735,726
    
    
    7.41 Management expenses
    
    Unit: Yuan
    
                Item                Amountincurredinthisperiod       Amountincurredinpriorperiod
    Employee remunerations                               60,660,238                    45,732,792
    Depreciation expenses                                 35,410,914                    28,996,760
    Contracting expenses                                  7,178,106                    10,086,436
    Repair expenses                                      7,076,148                     5,768,634
    Office expenses                                     10,977,189                     8,693,956
    Amortization expenses                                 9,520,182                     9,569,693
    Afforestation fees                                     6,493,556                     3,893,103
    Rental expenses                                      5,061,778                     5,095,023
    Business entertainmentexpenses                           2,815,060                     2,562,180
    Public   security  &  clean-keeping                     3,953,646                     2,787,735
    expenses
    Travel expenses                                      2,139,939                     2,650,716
    Other                                             8,805,132                     4,705,358
    Total                                           160,091,888                   130,542,386
    
    
    7.42 Financial expenses
    
    Unit: Yuan
    
                Item                Amountincurredinthisperiod       Amountincurredinpriorperiod
    Interest expenditure                                  18,739,528                    15,042,038
    Minus: Interestincome                                 7,245,870                     4,849,166
    Plus: Commissioncharges                               3,005,483                      754,300
    Exchangegainorloss                                 -1,413,199                      200,777
    Total                                            13,085,942                    11,147,949
    
    
    7.43 Loss on impairment of assets
    
                   Item                  Amountincurredinthisperiod    Amountincurredinpriorperiod
    1. Lossonbaddebts
    2. Inventoryfallingpriceloss                               -4,730,948                 -5,853,576
    3. Lossonimpairmentofavailable-for-sale
    financial assets
    4. Lossonimpairmentofheld-tomaturity
    investment
    5. Lossonimpairmentoflong-termequity
    investment
    6.  Lossonimpairmentofinvestmentrealestate
    7. Lossonimpairmentoffixedassets
    8. Lossonimpairmentofengineeringmaterials
    9. Lossonimpairmentofconstructioninprogress
    10. Lossonimpairmentofproductivebiological
    assets
    11. Lossonimpairmentofoilandgasassets
    12. Lossonimpairmentofintangibleassets
    13. Lossonimpairmentofgoodwill
    14. Other
    Total                                               -4,730,948                 -5,853,576
    
    
    7.44 Income from asset disposal
    
    Unit: Yuan
    
    Source ofincomefromassetdisposal         Amountincurredinthisperiod       Amountincurredinpriorperiod
    Income fromdisposaloffixedassets                             93,958                    -495,071
    Total                                                  93,958                    -495,071
    
    
    7.45 Other income
    
    Unit: Yuan
    
            Source ofotherincome          Amountincurredinthis   Amountincurredin       Nature
                                           period            priorperiod
    Supporting fundforindustrialdevelopment               2,050,000                   Relatedtoassets
    Industrial revitalizationandtechnical                    1,086,000                   Relatedtoassets
    transformationprojectinNingxia
    Rewardforinvestmentinfixedassets                   1,140,000                   Relatedtoassets
    Special fundforconstructionofpeninsulablue             1,000,000                   Relatedtoassets
    economiczone
    Other                                        4,012,100                   Relatedtoassets
    Taxreturns                                    15,011,673                  Relatedtoincome
    Other                                       13,683,105                   Relatedtoincome
            Source ofotherincome          Amountincurredinthis   Amountincurredin       Nature
                                           period            priorperiod
    Total                                        37,982,878
    
    
    7.46 Non-operating income
    
    Unit: Yuan
    
                Item              Amountincurredin Amountincurredin    Amountincludedinthecurrent
                                    thisperiod       priorperiod       non-recurringprofits/losses
    Gains ondebtrecombination
    Gains onexchangeofnon-monetary
    assets
    Grains ondonations
    Governmental subsidy                                  19,735,204
    Other                                2,006,392        3,412,401                    2,006,392
    Total                                2,006,392       23,147,605                    2,006,392
    
    
    Governmental subsidies included in the current profit/loss:
    
    Unit: Yuan
    
             Itemofsubsidy          Amountincurredin   Amountincurredin     Relatedtoassets/income
                                     thisperiod        priorperiod
    Supporting fundofmajorprojects                              3,520,914 Relatedtoassets
    Supporting fundforthedevelopmentof                           2,086,027 Relatedtoassets
    small andmedium-sizedenterprises
    Taxreturns                                            12,737,950 Relatedtoincome
    Other                                                 1,390,313 Relatedtoincome
    Total                                                 19,735,204           --
    
    
    7.47 Non-operating expenses
    
    Unit: Yuan
    
              Item          Amountincurredin  Amountincurredin      Amountincludedinthecurrent
                              this period        priorperiod          non-recurringprofits/losses
    Loss ondebtrecombination
    Loss onexchangeof
    non-monetary assets
    Donation
    Fine, penaltyandoverduefine
    paid duetoviolationoflawsand         1,187,713          170,997                       1,187,713
    administrative regulations
    Other                            204,649           15,571                         204,649
    Total                           1,392,362          186,568                       1,392,362
    
    
    7.48 Income tax expenses
    
    7.48.1 List of income tax expenses
    
    Unit: Yuan
    
                       Item                   Amountincurredinthisperiod   Amountincurredinprior
                                                                          period
    Current incometaxexpenses                                   178,993,081             195,716,215
    Deferred incometaxexpenses                                   32,986,654             33,036,575
    Total                                                  211,979,735            228,752,790
    
    
    7.48.2 Adjustment process of accounting profit and income tax expenses
    
    Unit: Yuan
    
                                  Item                             Amountincurredinthisperiod
    Totalprofit                                                                   847,981,472
    Income taxexpensescalculatedaccordingtothelegal/applicabletaxrate                           211,995,368
    Influence ofdifferenttaxratesapplicabletosubsidiary                                        -3,617,656
    Influence ofincometaxinthetermbeforeadjustment                                          200,814
    Influence ofnontaxableincome
    Influence ofnon-deductiblecosts,expensesandlosses                                        1,654,413
    Influence ofdeductiblelossfromuseofunconfirmeddeferredincometaxassetsinprior
    period
    Influence ofdeductibletemporarydifferenceordeductiblelossofunconfirmeddeferred                  1,746,796
    income taxassetsinthisperiod
    Income taxexpense                                                             211,979,735
    
    
    7.49 Other comprehensive income
    
    See details in Note 7.35.
    
    7.50 Items of cash flow statement
    
    7.50.1 Other cash received related to operating activities
    
    Unit: Yuan
    
                    Item                 Amountincurredinthisperiod    Amountincurredinpriorperiod
    Governmental subsidyincome                               33,687,978                  1,570,329
    Interest income                                         3,555,019                  3,007,182
    Net amercementincome                                    1,609,829                  1,173,364
    Withdrawal ofcashdepositforbillspayable                                              30,900,000
    Other                                                3,490,195                  2,239,037
    Total                                               42,343,021                 38,889,912
    
    
    7.50.2 Other cash paid related to operating activities
    
    Unit: Yuan
    
                    Item                 Amountincurredinthisperiod    Amountincurredinpriorperiod
    Selling expenses                                       387,846,396                352,845,674
    Administrative expenses                                   45,235,101                 43,700,254
    Refundable deposits                                                              35,030,980
    Other                                                3,895,589                   940,870
    Total                                               436,977,086                432,517,778
    
    
    7.50.3 Other cash paid related to investment activities
    
    Unit: Yuan
    
                Item                Amountincurredinthisperiod       Amountincurredinpriorperiod
    Prepaid investmentfund                                                          317,654,642
    Total                                                                       317,654,642
    
    
    7.50.4 Other cash received related to financial activities
    
    Unit: Yuan
    
                Item                Amountincurredinthisperiod       Amountincurredinpriorperiod
    Government subsidiesreceivedrelatedto                     3,150,000                     1,000,000
    assets
    Interest income from pledge of fixed                      371,431                      303,473
    deposits bytheR&DCompany
    Long-term loans from pledge of fixed                    20,000,000
    deposits byR&DCompany
    Total                                            23,521,431                     1,303,473
    
    
    7.50.5 Other cash paid related to financial activities
    
    Unit: Yuan
    
                    Item                 Amountincurredinthisperiod    Amountincurredinpriorperiod
    R&D Company‘long-termloanspledgedby                      20,000,000
    fixed-term deposits
    Total                                               20,000,000
    
    
    7.51 Supplementary information to cash flow statement
    
    7.51.1 Supplementary information to cash flow statement
    
    Unit: Yuan
    
               Supplementarymaterials            Amountincurredinthisperiod  Amountincurredinpriorperiod
    1. Cashflowsfromoperatingactivitiescalculatedby              --                     --
    adjusting thenetprofit:
    Net profit                                             636,001,737               670,010,757
    Plus: Provisionforimpairmentofassets                          -4,730,948                -5,853,576
    Depreciation offixedassets,oil-and-gasassetsand                  148,983,240               132,923,630
    productive biologicalassets
               Supplementarymaterials            Amountincurredinthisperiod  Amountincurredinpriorperiod
    Intangible assetsamortization                                 11,567,301                9,588,347
    Amortization oflongtermprepaidexpenses                        8,117,444                5,221,889
    Losses ondisposaloffixedassets,intangibleassetsand                  -93,958                  495,071
    other long-termassets(profitlistedwith―-‖)
    Losses onretirementoffixedassets(profitlistedwith
    ―-‖)
    Losses onfairvaluechange(profitlistedwith―-‖)
    Financial costs(profitlistedwith―-‖)                          15,048,678                15,086,410
    Investment losses(profitlistedwith―-‖)
    Decrease indeferredincometaxassets(increaselisted                37,133,223                36,092,247
    with ―-‖)
    Increase ofdeferredincometaxliabilities(decrease                   -4,146,569                -3,055,672
    listed with―-‖)
    Decrease ininventories(increaselistedwith―-‖)                   216,486,236               230,160,387
    Decrease inoperatingreceivables(increaselistedwith               -305,623,146              -345,259,383
    ―-‖)
    Increase inoperatingpayable(decreaselistedwith―-‖)               -205,989,766              -325,049,788
    Other
    Net cashflowsfromoperatingactivities                         552,753,472               420,360,319
    2. Significantinvestmentandfinancingactivitiesnot              --                     --
    involving cashdepositandwithdrawal:
    Debt transferredintoassets
    Convertible corporatebondduewithin1year
    Fixed assetsunderfinancinglease
    3. Netchangesofcashandcashequivalent:                    --                     --
    Ending balanceofcash                                   1,428,670,462              1,229,487,903
    Minus: Beginningbalanceofcash                            1,180,889,274              1,256,942,304
    Plus: Endingbalanceofcashequivalent
    Minus: Beginningbalanceofcashequivalent
    Net increaseamountofcashandcashequivalent                   247,781,188               -27,454,401
    
    
    7.51.2 Composition of cash and cash equivalents
    
    Unit: Yuan
    
                     Item                        Endingbalance           Beginningbalance
    1. Cash                                             1,428,670,462              1,229,487,903
    Including: Cashonhand                                      151,228                  112,832
       Bank depositsondemand                              1,428,519,234              1,229,375,071
       Other monetarycapitalondemand
       Due fromcentralbankavailableforpayment
       Due fromtheindustry
       Inter-bank lending
    2. Cashequivalents
    Including: Bondinvestmentduewithinthreemonths
    3. Balance of cash and cash equivalents at the end of            1,428,670,462              1,229,487,903
    period
    Including:  Restricted  use  of  parent  company  or
    subsidiaries inthegroup
    
    
    7.52 Assets with ownership or use right restrictions
    
    Unit: Yuan
    
                 Item               Endingbookvalue              Reasonforrestriction
                                                   Loandeposit,L/Cdeposit,frozenbalanceofAlipay,
    Monetary capital                           124,367,991 housingfundandguarantymoneyfordepositinunit
                                                   card
    Accounts receivable                          35,016,424 Pledgeofshort-termloans
    Fixed assets                              142,338,624 Pledgeofshort-termloans,long-termloansand
                                                   long-termaccountspayable
    Intangible assets                           161,934,242 Pledgeoflong-termaccountspayable
    Total                                   463,657,281                  --
    
    
    7.53 Foreign currency monetary items
    
    7.53.1 Foreign currency monetary items
    
    The foreign currency monetary items of the Group in domestic entities of China are listed as
    
    follows:
    
    Unit: Yuan
    
          Item        Endingforeigncurrencybalance   Translationexchangerate   EndingconvertedRMBbalance
    Monetary capital                --                     --                         39,366,401
    Including: USD                      5,949,495                6.6166                39,365,429
            EUR                         127                7.6515                     972
            HKD
    
    
    7.53.2 Overseas operational entities
    
    The currency adopted by the overseas subsidiaries of the Company according to the main
    
    economic environment where the operation is located shall be chosen as the recording
    
    currency. Marques del Atrio and Francs Champs Participations SAS (―Francs Champs‖) both
    
    use euro as the recording currency, Indomita Wine Company Chile, SpA uses Chilean peso as
    
    the recording currency, and Kilikanoon Estate, Australia uses Australian dollar as the
    
    recording currency. The foreign currency assets or liabilities of overseas subsidiaries are listed
    
    as follows:
    
    Unit: Yuan
    
          Item        Endingforeigncurrencybalance   Translationexchangerate   EndingconvertedRMBbalance
    Monetary capital                --                     --                         41,202,833
    Including: USD                      6,169,166                6.6166                40,818,904
            EUR                       50,177                7.6515                  383,929
            HKD
    Short-term loans                --                     --                         59,549,400
    Including: USD                      9,000,000                6.6166                59,549,400
            EUR
            HKD
    
    
    8. Changes in scope of consolidation
    
    8.1 Business merger under non-common control incurred in this period
    
    Unit: Yuan
    
                                                                       Incomeof  Netprofitof
                                                                         the       the
               Time of    Costof                               Determination  purchased  purchased
     Nameofthe   equity     equity   Shareholding Wayofequity Purchasing  basisofthe   fromthe   fromthe
     purchased   acquisition  acquisition     ratio     acquisition    date    purchasing  purchasing  purchasing
                                                               date     datetothe  datetothe
                                                                       endofthis  endofthis
                                                                        period     period
    Kilikanoon                                                TheCompany
    Estate Pty                                                 acquiredthe
    Ltd        January18,                              January18, controlright
    ("Kilikanoon 2018      105,926,184    80%     Purchase  2018     overthe      25,904,401   -115,317
    Estate,                                                   mergedparty
    Australia")                                                 onthedateof
                                                            purchase.
    
    
    According to the Equity Transfer Contract signed between the Company and the shareholders
    
    of Kilikanoon Estate, Australia, the Company purchased 80% of the shares held by
    
    Kilikanoon Estate, Australia with AUD 20,605,000 (equivalent to RMB 105,926,184 Yuan).
    
    On January 18, 2018, the preconditions for full equity transfer were fulfilled, and the
    
    Company acquired the control right over the finance and business policy of Kilikanoon Estate,
    
    Australia.
    
    8.1.2 Combined cost and goodwill
    
    Unit: Yuan
    
                         Combinedcost                            KilikanoonEstate,Australia
    --Cash                                                                       105,926,184
    -- Fairvalueofthenon-cashassets
    -- Fairvalueoftheissuedorassumeddebts
    -- Fairvalueoftheissuedequitysecurities
    -- Fairvalueofthecontingentconsideration
    -- Fairvalueofthestockequityheldbeforethepurchasingdateonthe
    purchasing date
    --Other
    Total combinedcost                                                              105,926,184
    Minus: Fairvalueshareoftheacquirednetidentifiableassets                                    70,131,290
    Amount ofthesharethatthegoodwill/combinedcostislessthanthefair                            35,794,894
    value ofthenetidentifiableassets
    
    
    8.1.3 Identifiable assets and liabilities of the purchased on the purchasing date
    
    Unit: Yuan
    
                 Item                               KilikanoonEstate,Australia
                                    Fairvalueonthepurchasingdate     Bookvalueonthepurchasingdate
    Assets:
    Monetary capital                                       1,359,765                     1,359,765
                 Item                               KilikanoonEstate,Australia
                                    Fair valueonthepurchasingdate     Bookvalueonthepurchasingdate
    Accounts receivable                                    10,366,281                    10,366,281
    Advance payment                                       237,174                      237,174
    Other receivables                                       182,667                      182,667
    Inventory                                           69,612,312                    57,946,312
    Financial assetsavailableforsale                               5,053                       5,053
    Fixed assets                                         49,029,999                    38,696,709
    Intangible assets                                      16,417,886                     7,461,624
    Total assets                                         147,211,137                   116,255,585
    Liabilities:
    Long-term loans                                       1,282,550                     1,282,550
    Accounts payable                                      6,198,846                     6,198,846
    Employee remunerationpayable                              876,987                      876,987
    Taxes andduespayable                                  1,789,093                     1,789,093
    Long-term loans                                      43,497,119                    43,497,119
    Deferred incometaxliabilities                              5,902,429
    Total liabilities                                       59,547,024                    53,644,595
    Net assets                                          87,664,113                    62,610,990
    Minus: Minorityequity                                 17,532,823                    12,522,198
    Net assetsacquired                                    70,131,290                    50,088,792
    
    
    9. Equity in other entities
    
    9.1 Equity in the subsidiaries
    
    9.1.1 Constitution of enterprise group
    
                                                        Business   Proportionof
       Nameofsubsidiary   Principalbusinesslocation     Registrationplace       nature    shareholding    Acquisitionmode
                                                               Direct Indirect
                    ShiheziCity,Xinjiang    ShiheziCity,XinjiangUygur  Manufacturing          Acquiredfromabusiness
    XinjiangTianzhu(a)     UygurAutonomousRegion, AutonomousRegion,China   industry     60%      combinationunder
                    China                                                 non-commoncontrol
                                                                         Acquiredfromabusiness
    RoulletFransac       Cognac,France        Cognac,France         Trading          100% combinationunder
                                                                         non-commoncontrol
                                                                         Acquiredfromabusiness
    Mirefleurs          Bordeaux,France       Bordeaux,France        Trading          100% combinationunder
                                                                         non-commoncontrol
                                                                         Acquiredfromabusiness
    MarquesdelAtrio(b)    Navarra,Spain        Navarra,Spain          Sales       75%      combinationunder
                                                                         non-commoncontrol
                    Adelaide,SouthAustralia,  Adelaide,SouthAustralia,                      Acquiredfromabusiness
    KilikanoonEstate,AustraliaAustralia           Australia             Sales       80%      combinationunder
                                                                         non-commoncontrol
                                                                         Acquiredby
    IndomitaWine(c)      Santiago,Chile        Santiago,Chile         Sales       85%      establishmentor
                                                                         investment
    BeijingChangyuWine                                                        Acquiredby
    MarketingCo.,Ltd.     BeijingCity,China      BeijingCity,China       Sales      100%      establishmentor
    (―BeijingMarketing‖)                                                        investment
    YantaiKylinPackaging   YantaiCity,Shandong    YantaiCity,Shandong      Manufacturing          Acquiredby
    Co.,Ltd.(―Kylin       Province,China        Province,China         industry     100%      establishmentor
    Packaging‖)                                                              investment
                                                        Business   Proportionof
       Nameofsubsidiary   Principalbusinesslocation     Registrationplace       nature    shareholding    Acquisitionmode
                                                               Direct Indirect
    YantaiChateau        YantaiCity,Shandong    YantaiCity,Shandong      Manufacturing          Acquiredby
    Changyu-CastelCo.,Ltd.  Province,China        Province,China         industry     70%      establishmentor
    (―ChateauChangyu‖)(d)                                                       investment
    Changyu(Jingyang)     XianyangCity,Shaanxi   XianyangCity,Shaanxi     Manufacturing          Acquiredby
    PioneerWineCo.,Ltd.   Province,China        Province,China         industry     90%  10% establishmentor
    (―JingyangWine‖)                                                          investment
    YantaiChangyuPioneer   YantaiCity,Shandong    YantaiCity,Shandong                        Acquiredby
    WineSalesCo.,Ltd.     Province,China        Province,China         Sales      100%      establishmentor
    (―SalesCompany‖)                                                          investment
    LangfangDevelopment                                                       Acquiredby
    ZoneCastel-ChangyuWine LangfangCity,Hebei     LangfangCity,HebeiProvince, Manufacturing 39%  10% establishmentor
    Co., Ltd.(―Langfang    Province,China        China               industry              investment
    Castel‖)(e)
    Changyu(Jingyang)     XianyangCity,Shaanxi   XianyangCity,Shaanxi                       Acquiredby
    PioneerWineSalesCo.,   Province,China        Province,China         Sales       10%  90% establishmentor
    Ltd.(―JingyangSales‖)                                                        investment
    LangfangChangyuPioneer LangfangCity,Hebei     LangfangCity,HebeiProvince,                   Acquiredby
    WineSalesCo.,Ltd.     Province,China        China               Sales       10%  90% establishmentor
    (―LangfangSales‖)                                                          investment
    ShanghaiChangyuWine                                                       Acquiredby
    MarketingCo.,Ltd.     ShanghaiCity,China     ShanghaiCity,China      Sales       30%  70% establishmentor
    (―ShanghaiMarketing‖)                                                       investment
    BeijingChangyuAFIP
    Eco-agriculture        MiyunCounty,BeijingCity, MiyunCounty,BeijingCity,                    Acquiredby
    DevelopmentCo.,Ltd.   China             China               Sales           100% establishmentor
    (―Eco-agriculture                                                           investment
    Development‖)
    BeijingChangyuAFIP                                      Manufacturing          Acquiredby
    WineChateauCo.,Ltd.   BeijingCity,China      BeijingCity,China       industry     90%      establishmentor
    (―BeijingChateau‖)(f)                                                        investment
    YantaiChangyuWineSales YantaiCity,Shandong    YantaiCity,Shandong                        Acquiredby
    Co., Ltd.(―WineSales‖)  Province,China        Province,China         Sales       90%  10% establishmentor
                                                                         investment
    YantaiChangyuPioneer   YantaiCity,Shandong    YantaiCity,Shandong                        Acquiredby
    InternationalWineCo.,Ltd. Province,China        Province,China         Sales       70%  30% establishmentor
    (―PioneerInternational‖)                                                       investment
    HangzhouChangyuWine  HangzhouCity,Zhejiang   HangzhouCity,Zhejiang                      Acquiredby
    SalesCo.,Ltd.(―Hangzhou Province,China        Province,China         Sales           100% establishmentor
    Changyu‖)                                                               investment
                    YinchuanCity,NingxiaHui YinchuanCity,NingxiaHui   Planting              Acquiredby
    NingxiaGrowing      AutonomousRegion,China AutonomousRegion,China   industry     100%      establishmentor
                                                                         investment
    HuanrenChangyuNational BenxiCity,Liaoning     BenxiCity,LiaoningProvince,                   Acquiredby
    WineSalesCo.,Ltd.     Province,China        China               Sales      100%      establishmentor
    (―NationalWine‖)                                                          investment
    LiaoningChangyuIcewine BenxiCity,Liaoning     BenxiCity,LiaoningProvince, Manufacturing          Acquiredby
    ValleyCo.,Ltd.(―Icewine Province,China        China               industry     51%      establishmentor
    Valley‖)(g)                                                              investment
    YantaiDevelopmentZone                                                      Acquiredby
    ChangyuTradingCo.,Ltd. YantaiCity,Shandong    YantaiCity,Shandong      Sales           100% establishmentor
    (―DevelopmentZone    Province,China        Province,China                           investment
    Trading‖)
    ShenzhenChangyuWine  ShenzhenCity,Guangdong ShenzhenCity,Guangdong                     Acquiredby
    MarketingCo.,Ltd.     Province,China        Province,China         Sales           100% establishmentor
    (―ShenzhenMarketing‖)                                                       investment
    YantaiFushanDistrict    YantaiCity,Shandong    YantaiCity,Shandong                        Acquiredby
    ChangyuTradingCo.,Ltd. Province,China        Province,China         Sales           100% establishmentor
    (―FushanTrading‖)                                                          investment
    BeijingChangyuAFIP                                                        Acquiredby
    InternationalConference  MiyunCounty,BeijingCity, MiyunCounty,BeijingCity,  Service          100% establishmentor
    CenterCo.,Ltd.       China             China               industry              investment
    (―ConferenceCenter‖)
    BeijingChangyuAFIP   MiyunCounty,BeijingCity, MiyunCounty,BeijingCity,  Tourist              Acquiredby
    TourismandCultureCo.,  China             China               industry         100% establishmentor
    Ltd.(―AFIPTourism‖)                                                        investment
                                                        Business   Proportionof
       Nameofsubsidiary   Principalbusinesslocation     Registrationplace       nature    shareholding    Acquisitionmode
                                                               Direct Indirect
    Changyu(Ningxia)Pioneer YinchuanCity,NingxiaHui YinchuanCity,NingxiaHui   Manufacturing          Acquiredby
    WineCo.,Ltd.(―Ningxia  AutonomousRegion,China AutonomousRegion,China   industry     100%      establishmentor
    Wine‖)                                                                 investment
    YantaiChangyuChateau  YantaiCity,Shandong    YantaiCity,Shandong      Wholesaleand          Acquiredby
    TinlotCo.,Ltd.(―Chateau  Province,China        Province,China         retail       65%  35% establishmentor
    Tinlot‖)                                                                investment
    Changyu(Qingtongxia)   QingtongxiaCity,Ningxia  QingtongxiaCity,NingxiaHui                   Acquiredby
    WineSalesCo.,Ltd.     HuiAutonomousRegion,  AutonomousRegion,China   Sales           100% establishmentor
    (―QingtongxiaSales‖)    China                                                 investment
                    ShiheziCity,Xinjiang    ShiheziCity,XinjiangUygur  Manufacturing          Acquiredby
    ShiheziChateau       UygurAutonomousRegion, AutonomousRegion,China   industry     100%      establishmentor
                    China                                                 investment
    ChateauChangyuMoser  YinchuanCity,NingxiaHui YinchuanCity,NingxiaHui   Manufacturing          Acquiredby
    XVNingxiaCo.,Ltd.    AutonomousRegion,China AutonomousRegion,China   industry     100%      establishmentor
    (―NingxiaChateau‖)                                                         investment
    ChateauChangyuRena   XianyangCity,Shaanxi   XianyangCity,Shaanxi     Manufacturing          Acquiredby
    ShaanxiCo.,Ltd.      Province,China        Province,China         industry     100%      establishmentor
    (―Chang‘anChateau‖)                                                        investment
                    YantaiCity,Shandong    YantaiCity,Shandong      Manufacturing          Acquiredby
    R&D Company(g)     Province,China        Province,China         industry     65%      establishmentor
                                                                         investment
    Changyu(Huanren)Pioneer BenxiCity,Liaoning     BenxiCity,LiaoningProvince, Wine-making           Acquiredby
    WineCo.,Ltd.(―Huanren  Province,China        China               project     100%      establishmentor
    Wine‖)                                              preparation            investment
    XinjiangChangyuWine   ShiheziCity,Xinjiang    ShiheziCity,XinjiangUygur                    Acquiredby
    SalesCo.,Ltd.(―Xinjiang  UygurAutonomousRegion, AutonomousRegion,China   Sales           100% establishmentor
    Sales‖)            China                                                 investment
    XinjiangChangyuPioneer ShiheziCity,Xinjiang    ShiheziCity,XinjiangUygur  Manufacturing          Acquiredby
    WineCo.,Ltd.(―Xinjiang  UygurAutonomousRegion, AutonomousRegion,China   industry         100% establishmentor
    Wine‖)            China                                                 investment
    NingxiaChangyuTrading  YinchuanCity,NingxiaHui YinchuanCity,NingxiaHui                     Acquiredby
    Co., Ltd.(―Ningxia     AutonomousRegion,China AutonomousRegion,China   Sales           100% establishmentor
    Trading‖)                                                               investment
    ShaanxiChangyuRena   XianyangCity,Shaanxi   XianyangCity,Shaanxi                       Acquiredby
    WineSalesCo.,Ltd.     Province,China        Province,China         Sales           100% establishmentor
    (―ShaanxiSales‖)                                                           investment
    PenglaiChangyuWine   PenglaiCity,Shandong    PenglaiCity,Shandong                       Acquiredby
    SalesCo.,Ltd.(―Penglai  Province,China        Province,China         Sales           100% establishmentor
    Wine‖)                                                                 investment
    LaizhouChangyuWine   LaizhouCity,Shandong   LaizhouCity,Shandong                       Acquiredby
    SalesCo.,Ltd.(―Laizhou  Province,China        Province,China         Sales           100% establishmentor
    Sales‖)                                                                 investment
    FrancsChamps                                          Investment            Acquiredby
    ParticipationsSAS      Cognac,France        Cognac,France         trade      100%      establishmentor
                                                                         investment
    LanzhouChangyuWine   LanzhouCity,Gansu     LanzhouCity,GansuProvince,                   Acquiredby
    MarketingCo.,Ltd.     Province,China        China               Sales           100% establishmentor
    (―LanzhouMarketing‖)                                                       investment
    BeijingChangyuTrading                                                      Acquiredby
    Co., Ltd.(―Beijing      BeijingCity,China      BeijingCity,China       Sales           100% establishmentor
    Trading‖)                                                               investment
    TianjinChangyuPioneer                                                       Acquiredby
    WineSalesCo.,Ltd.     TianjinCity,China      TianjinCity,China       Sales           100% establishmentor
    (―TianjinPioneer‖)                                                          investment
    FuzhouChangyuPioneer  FuzhouCity,Fujian     FuzhouCity,FujianProvince,                    Acquiredby
    WineCo.,Ltd.(―Fuzhou  Province,China        China               Sales           100% establishmentor
    Pioneer‖)                                                               investment
    NanjingChangyuPioneer  NanjingCity,Jiangsu     NanjingCity,JiangsuProvince,                   Acquiredby
    WineCo.,Ltd.(―Nanjing  Province,China        China               Sales           100% establishmentor
    Pioneer‖)                                                               investment
    XianyangChangyuPioneer XianyangCity,Shaanxi   XianyangCity,Shaanxi                       Acquiredby
    WineSalesCo.,Ltd.     Province,China        Province,China         Sales           100% establishmentor
    (―XianyangPioneer‖)                                                        investment
    ShenyangChangyuPioneer ShenyangCity,Liaoning   ShenyangCity,Liaoning    Sales           100% Acquiredby
    WineCo.,Ltd.(―Shenyang Province,China        Province,China                           establishmentor
                                                        Business   Proportionof
       Nameofsubsidiary   Principalbusinesslocation     Registrationplace       nature    shareholding    Acquisitionmode
                                                               Direct Indirect
    Pioneer‖)                                                               investment
    JinanChangyuPioneer   JinanCity,Shandong     JinanCity,ShandongProvince,                   Acquiredby
    WineCo.,Ltd.(―Jinan    Province,China        China               Sales           100% establishmentor
    Pioneer‖)                                                               investment
    ShanghaiChangyuPioneer                                                      Acquiredby
    WineCo.,Ltd.(―Shanghai ShanghaiCity,China     ShanghaiCity,China      Sales           100% establishmentor
    Pioneer‖)                                                               investment
    FuzhouChangyuPioneer  FuzhouCity,Jiangxi     FuzhouCity,JiangxiProvince,                   Acquiredby
    WineCo.,Ltd.(―Fuzhou  Province,China        China               Sales           100% establishmentor
    Pioneer‖)                                                               investment
    ShijiazhuangChangyu                                                        Acquiredby
    PioneerWineSalesCo.,   ShijiazhuangCity,Hebei   ShijiazhuangCity,Hebei    Sales           100% establishmentor
    Ltd.(―Shijiazhuang     Province,China        Province,China                           investment
    Pioneer‖)
    HangzhouYuzefeng     HangzhouCity,Zhejiang   HangzhouCity,Zhejiang                      Acquiredby
    TradingCo.,Ltd.      Province,China        Province,China         Sales           100% establishmentor
    (―HangzhouYuzefeng‖)                                                       investment
    JilinChangyuPioneerWine ChangchunCity,Jilin     ChangchunCity,Jilin                        Acquiredby
    Co., Ltd.(―JilinPioneer‖)  Province,China        Province,China         Sales           100% establishmentor
                                                                         investment
    BeijingChangyuPioneer                                                       Acquiredby
    WineSalesCo.,Ltd.     BeijingCity,China      BeijingCity,China       Sales           100% establishmentor
    (―BeijingPioneer‖)                                                          investment
    HarbinChangyuPioneer  HarbinCity,Heilongjiang  HarbinCity,Heilongjiang                      Acquiredby
    WineSalesCo.,Ltd.     Province,China        Province,China         Sales           100% establishmentor
    (―HarbinPioneer‖)                                                          investment
    HunanChangyuPioneer   ChangshaCity,Hunan    ChangshaCity,Hunan                        Acquiredby
    WineCo.,Ltd.(―Hunan   Province,China        Province,China         Sales           100% establishmentor
    Pioneer‖)                                                               investment
    YinchuanChangyuPioneer YinchuanCity,NingxiaHui YinchuanCity,NingxiaHui                     Acquiredby
    WineCo.,Ltd.(―Yinchuan AutonomousRegion,China AutonomousRegion,China   Sales           100% establishmentor
    Pioneer‖)                                                               investment
    KunmingChangyuPioneer KunmingCity,Yunnan    KunmingCity,Yunnan                       Acquiredby
    WineCo.,Ltd.(―Kunming Province,China        Province,China         Sales           100% establishmentor
    Pioneer‖)                                                               investment
    ChongqingChangyu                                                         Acquiredby
    PioneerWineSalesCo.,   ChongqingCity,China    ChongqingCity,China     Sales           100% establishmentor
    Ltd.(―ChongqingPioneer‖)                                                     investment
    ZhengzhouChangyu     ZhengzhouCity,Henan   ZhengzhouCity,Henan                       Acquiredby
    PioneerWineCo.,Ltd.   Province,China        Province,China         Sales           100% establishmentor
    (―ZhengzhouPioneer‖)                                                        investment
    WuhanChangyuPioneer  WuhanCity,Hubei      WuhanCity,HubeiProvince,                    Acquiredby
    WineCo.,Ltd.(―Wuhan  Province,China        China               Sales           100% establishmentor
    Pioneer‖)                                                               investment
    TaiyuanChangyuPioneer  TaiyuanCity,Shanxi     TaiyuanCity,ShanxiProvince,                   Acquiredby
    WineCo.,Ltd.(―Taiyuan  Province,China        China               Sales           100% establishmentor
    Pioneer‖)                                                               investment
    HohhotChangyuPioneer  HohhotCity,Inner      HohhotCity,InnerMongolia                    Acquiredby
    WineCo.,Ltd.(―Hohhot  MongoliaAutonomous    AutonomousRegion,China  Sales           100% establishmentor
    Pioneer‖)           Region,China                                            investment
    ChengduChangyuPioneer ChengduCity,Sichuan    ChengduCity,Sichuan                       Acquiredby
    WineCo.,Ltd.(―Chengdu Province,China        Province,China         Sales           100% establishmentor
    Pioneer‖)                                                               investment
    NanningChangyuPioneer NanningCity,Guangxi    NanningCity,GuangxiZhuang                   Acquiredby
    WineCo.,Ltd.(―Nanning  ZhuangAutonomous     AutonomousRegion,China   Sales           100% establishmentor
    Pioneer‖)           Region,China                                             investment
    LanzhouChangyuPioneer LanzhouCity,Gansu     LanzhouCity,GansuProvince,                   Acquiredby
    WineCo.,Ltd.(―Lanzhou  Province,China        China               Sales           100% establishmentor
    Pioneer‖)                                                               investment
    YantaiRoullet-Fransac                                                        Acquiredby
    ImportedWineSalesCo.,  YantaiCity,Shandong    YantaiCity,Shandong      Sales           100% establishmentor
    Ltd.(―Yantai         Province,China        Province,China                           investment
    Roullet-Fransac‖)
    HefeiChangyuPioneer   HefeiCity,AnhuiProvince, HefeiCity,AnhuiProvince,   Sales           100% Acquiredby
    WineCo.,Ltd.(―Hefei   China             China                                 establishmentor
                                                        Business   Proportionof
       Nameofsubsidiary   Principalbusinesslocation     Registrationplace       nature    shareholding    Acquisitionmode
                                                               Direct Indirect
    Pioneer‖)                                                               investment
    Urumchi ChangyuPioneer UrumchiCity,Xinjiang   UrumchiCity,XinjiangUygur                   Acquiredby
    WineCo.,Ltd.(―Urumchi  UygurAutonomousRegion, AutonomousRegion,China   Sales           100% establishmentor
    Pioneer‖)           China                                                 investment
    Guizhou ChangyuPioneer GuiyangCity,Guizhou    GuiyangCity,Guizhou                       Acquiredby
    WineCo.,Ltd.(―Guizhou  Province,China        Province,China         Sales           100% establishmentor
    Pioneer‖)                                                               investment
    GuangzhouChangyu    GuangzhouCity,       GuangzhouCity,Guangdong                    Acquiredby
    PioneerWineCo.,Ltd.   GuangdongProvince,China Province,China         Sales           100% establishmentor
    (―GuangzhouPioneer‖)                                                       investment
                    YantaiCity,Shandong    YantaiCity,Shandong                        Acquiredby
    WineSalesCo.,Ltd.     Province,China        Province,China         Sales      100%      establishmentor
                                                                         investment
    
    
    Explanation for difference between the proportion of shareholding and proportion of voting power
    
    in the subsidiaries:
    
    (a) Xinjiang Tianzhu is a subsidiary of the Company obtained by merger and acquisition,
    
    whose 60% of the shares are held by the Company. The Company exercises full control over
    
    the operation, investment and financing policies of Xinjiang Tianzhu by contract arrangement.
    
    This contract arrangement was expired on August 6, 2017. After the expiration, the minority
    
    shareholders of Xinjiang Tianzhu shall enjoy/bear all rights/duties of shareholders specified in
    
    the Articles of Association.
    
    (b) On September 12, 2016, Atrio Group completed the internal reorganization, and Marques
    
    del Atrio absorbed and merged Atrio Group and its subsidiaries Enotec S.L., Hostaler I S.L.,
    
    and Faustino Rivero Ulecia S.L. After the reorganization was completed, Marques del Atrio
    
    becomes the only existing company.
    
    (c) Indomita Wine is a Sino-foreign joint venture jointly established by the Company and
    
    Inversiones Beth-Wines Limitada, in which the Company invested USD 40,110,000
    
    (equivalent to RMB 274,248,114 Yuan), holding 85% of the stock rights, and Inversiones
    
    Beth-Wines Limitada invested USD 7,080,000 (equivalent to RMB 48,396,726 Yuan),
    
    holding 15% of the stock rights.
    
    (d) Changyu Chateau is a Sino-foreign joint venture established by the Company and a
    
    foreign investor, whose 70% of the shares are held by the Company. The Company exercises
    
    full control over the operation, investment and financing policies of Changyu Chateau by
    
    contract arrangement. The contract arrangement will expire on December 31, 2022.
    
    (e) Langfang Castel is a Sino-foreign joint venture established by the Company and a foreign
    
    investor, whose 49% of the shares are held by the Company and its subsidiaries. The
    
    Company exercises full control over the operation, investment and financing policies of
    
    Langfang Castel by contract arrangement. The contract arrangement will expire on December
    
    31, 2022.
    
    (f) Beijing Chateau is a limited liability company jointly established by the Company and
    
    Yantai De‘an and Beijing Qinglang. In 2017, the Company made capital increase of RMB
    
    502,910,000 Yuan in Beijing Chateau, and Yantai De‘an and Beijing Qinglang jointly made
    
    capital increase of RMB 29,840,000 Yuan. On December 22, 2017, Beijing Chateau
    
    completed business registration alteration. After the capital increase, the Company holds 90%
    
    of the stock rights. The Company exercises full control over the operation, investment and
    
    financing policies of Beijing Chateau by contract arrangement. The contract arrangement will
    
    expire on September 2, 2019.
    
    (g) Icewine Valley is a Sino-foreign joint venture established by the Company and a foreign
    
    investor, whose 51% of the shares are held by the Company. The Company exercises full
    
    control over the operation, investment and financing policies of Icewine Valley by contract
    
    arrangement. The contract arrangement will expire on December 31, 2021.
    
    (h) The R&D Company is a joint venture established by the Company and Agricultural
    
    Development Fund, whose 65% of the shares were held by the Company on June 30, 2018.
    
    As stated in Note 7.30, Agricultural Development Fund invested RMB 305,000,000 Yuan in
    
    the R&D Company in 2016, accounting for 37.9% of the registered capital. According to the
    
    investment agreement, it is agreed that Agricultural Development Fund will take back the
    
    investment fund in ten years and obtain fixed income according to year, which is 1.2% of the
    
    remaining principal. Except for the above fixed income, the Agricultural Development Fund
    
    shall not enjoy other profits of the R&D Company or bear the losses of the R&D Company.
    
    Accordingly, the investment of the Agricultural Development Fund in the R&D Company is
    
    equity investment nominally, which is debt investment in deed. This Company shall include
    
    the investment of the Agricultural Development Fund in long-term accounts payable
    
    measured by amortized cost. The Company exercises full control over the operation,
    
    investment and financing policies of the R&D Company by contract arrangement. The
    
    contract arrangement will expire on May 22, 2026.
    
    9.1.2 Important non-wholly-owned subsidiaries
    
    Unit: Yuan
    
                     Shareholdingproportion Profit/lossattributable Dividenddeclaredtobe  Balanceofminority
      Nameofsubsidiary       ofminority     tominorityshareholders distributedtominority shareholder‘sinterestat
                         shareholders        inthisperiod      shareholdersinthis     theendofperiod
                                                            period
    Xinjiang Tianzhu                  40%            -73,829                          53,299,623
    Marques delAtrio                  25%           303,503           746,021         30,648,536
    Changyu Chateau                  30%                                          12,365,016
    Langfang Castel                   51%                                          22,702,522
    Beijing Chateau                   10%                                          65,133,868
    Icewine Valley                    49%                                          33,319,062
    Indomita Wine                    15%            -42,279                          52,446,446
    Kilikanoon Estate,                  20%            -23,063                          16,776,846
    Australia
    
    
    Explanation for difference between the proportion of shareholding and proportion of voting
    
    power of the minority shareholders in the subsidiaries: See details in Note 9.1.1.
    
    9.1.3 Main financial information of important non-wholly-owned subsidiaries
    
    Unit: Yuan
    
      Nameof                                  Endingbalance
     subsidiary   Currentassets   Nonas-cseutrsrent Totalassets     Currentliabilities   Nloianb-ciluitrireesntTotalliabilities
    Xinjiang        31,621,493    68,869,503      100,490,996         493,969     5,336,114    5,830,082
    Tianzhu
    Changyu       140,023,527    114,974,477      254,998,005      171,551,853              171,551,853
    Chateau
    Langfang       18,220,999    17,452,408       35,673,406        4,063,516               4,063,516
    Castel
    Beijing        215,371,778   475,159,760      690,531,538       50,320,391               50,320,391
    Chateau
    Icewine        59,047,298    25,091,478       84,138,776       28,890,336      100,000   28,990,336
    Valley
    Marques del    348,900,749   107,672,031      456,572,779      246,746,293    86,970,780  333,717,072
    Atrio
    Indomita       183,652,569   299,672,376      483,324,945      127,449,902     6,232,065  133,681,967
    Wine
    Kilikanoon
    Estate,         85,037,994    63,434,206      148,472,200       57,335,399     7,252,572   64,587,971
    Australia
    
    
    Unit: Yuan
    
      Nameof                                 Beginningbalance
     subsidiary   Currentassets   Nonas-cseutrsrent Totalassets     Currentliabilities   Nloianb-ciluitrireesntTotalliabilities
    Xinjiang        30,264,441    71,323,940      101,588,381         809,080     5,336,114    6,145,194
    Tianzhu
    Changyu       140,038,021    115,435,985      255,474,006      175,061,601              175,061,601
    Chateau
    Langfang       22,728,536    17,973,719       40,702,255        6,133,909               6,133,909
    Castel
    Beijing        214,079,274   481,668,050      695,747,324       73,963,043               73,963,043
    Chateau
    Icewine        38,657,358    25,484,359       64,141,717       10,871,695      100,000   10,971,695
    Valley
    Marques del    398,835,959    116,299,504      515,135,463      299,030,002    89,336,338  388,366,340
    Atrio
    Indomita       175,669,256   305,664,706      481,333,962      122,023,764     5,206,406  127,230,170
    Wine
    
    
    Unit: Yuan
    
                     Amountincurredinthisperiod                 Amountincurredinpriorperiod
     Name of                       Total                                 Total
     subsidiary  OipnecroamtinegNetprofit comprehensive OcapsehrafltoinwgOipnecroamtinegNetprofit comprehensive  Ocapsehrafltoinwg
                                 income                                income
    Xinjiang        18,803  -184,572     -184,572 10,284,801 115,904,168 22,453,715   22,453,715   -7,275,404
    Tianzhu
    Changyu     43,226,910  2,861,474    2,861,474  2,419,427 20,668,538   -106,018     -106,018  12,978,276
    Chateau
    Langfang     5,038,281 -1,952,954   -1,952,954  -4,435,022 23,732,778   161,088     161,088    -137,422
    Castel
    Beijing      78,502,666 15,243,700   15,243,700 12,282,145 75,491,933 12,511,172   12,511,172  -37,040,335
    Chateau
    Icewine     27,305,133   905,396     905,396  2,018,740 16,724,881  -2,063,324   -2,063,324   -1,416,775
    Valley
    Marques    148,197,893  1,214,012     -929,332 -21,783,821 131,223,890   -233,187    3,996,659  -31,616,566
    del Atrio
    Indomita     93,719,341  -281,859   -4,460,814  -7,723,684
    Wine
    Kilikanoon
    Estate,      25,904,401  -115,317   -3,779,883  -1,469,903
    Australia
    
    
    10. Risks related to financial instruments
    
    The main financial instruments of the Group include monetary capital, bills receivable, accounts
    
    receivable, interest receivable, other receivables, available-for-sale financial assets, short-term loans,
    
    accounts payable, other payables, interest payable, long-term accounts payable and long-term loans.
    
    Please refer to Note 7 of each financial instrument for the details. The risks related to these financial
    
    instruments and risk management policies adopted by the Group to reduce these risks are shown as
    
    follows. The management of the Group manages and monitors these risk exposures to ensure that the
    
    above-mentioned risks are controlled within a defined scope.
    
    The Group adopts sensitivity analysis techniques to analyze the possible influence of possible
    
    reasonable changes of risk variables on the current profit and loss and shareholders‘ equity. Since any
    
    risk variable merely changes independently and the final influence of relevance between variables on
    
    the change of certain risk variable will exert a great effect, the following content is carried out under
    
    the hypothesis that each variable changes independently.
    
    The risk management objective of the Group is to achieve proper balance between risks and benefits,
    
    to minimize the negative influence of the risks on the business performance of the Group and to
    
    maximize the shareholders‘ benefit. Based on this risk management objective, the basic risk
    
    management strategy of the Group is to determine and analyze various risks faced by the Group, to set
    
    up proper risk tolerance bottom line and to carry out risk management, and to supervise various risks
    
    timely and reliably to control the risks within a defined scope.
    
    10.1 Risk management objective and policy
    
    10.1.1 Market risk
    
    ① Foreign exchange risk
    
    Foreign exchange risk refers to the risk that causes loss due to exchange rate fluctuation. The foreign
    
    exchange risk borne by the Group is mainly relevant to EUR and USD. Except that the overseas
    
    subsidiaries of the Group purchase and sell in EUR, Chilean peso and Australian dollar, which borrow
    
    in USD, and domestic subsidiaries deposit in EUR and USD, other main business activities of the
    
    Group are priced and settled in RMB. As at June 30, 2018, except that the assets and liabilities
    
    mentioned in the table below were the balance of deposits or loans shown in foreign currencies, other
    
    assets and liabilities of the entities of the Group were settled in their respective functional currencies.
    
    Unit: Yuan
    
                       Item                         Endingbalance           Beginningbalance
     Monetarycapital(EUR)                                       383,929               1,190,459
     Monetarycapital(USD)                                     40,818,904              34,843,968
     Short-termloans(USD)                                      59,549,400              58,807,800
    
    
    The foreign exchange risk caused by the assets and liabilities of such foreign currency balance may
    
    exert an influence on the business performance of the Group. The Group pays close attention to the
    
    influence of exchange rate fluctuation on the foreign exchange risk of the Group. The Group has not
    
    taken any measures to avoid the foreign exchange risk at present.
    
    Sensitivity analysis of foreign exchange risk
    
    With the other variables unchanged, the pre-tax influence of possible reasonable exchange rate
    
    fluctuation on current profit and loss and shareholders‘ equity is shown as follows:
    
    Domestic entities:
    
    Unit: Yuan
    
       Item       Exchangeratefluctuation                          Thisperiod
                                        Influenceonprofitinthisperiod   Influenceonshareholders‘equity
     EUR     5%appreciationagainstRMB                          49                         49
     EUR     5%depreciationagainstRMB                          -49                        -49
     USD     5%appreciationagainstRMB                      1,968,271                    1,968,271
     USD     5%depreciationagainstRMB                     -1,968,271                   -1,968,271
    
    
    Overseas entities:
    
    Unit: Yuan
    
       Item       Exchangeratefluctuation                          Thisperiod
                                        Influenceonprofitinthisperiod   Influenceonshareholders‘equity
     USD     5%appreciationagainstEUR                        22,027                      22,027
     USD     5%depreciationagainstEUR                       -22,027                     -22,027
     USD     10%appreciationagainstCLP                     -5,830,116                   -5,830,116
     USD     10%depreciationagainstCLP                     5,830,116                    5,830,116
     EUR     5%appreciationagainstCLP                        19,205                      19,205
     EUR     5%depreciationagainstCLP                        -19,205                     -19,205
    
    
    Note: As at June 30, 2018, the management of the Group predicted that the EUR and USD exchange
    
    rate against RMB, EUR exchange rate against USD, and EUR exchange rate against CLP changed by
    
    5%; and USD exchange rate against CLP changed by 10%.
    
    ② Interest rate risk – risk of change in cash flow
    
    The risk of change in cash flow of financial instruments caused by interest rate change of the Group is
    
    mainly relevant to the monetary capital and bank loan at floating interest rate. The policy of the Group
    
    is to maintain the floating interest rate of these loans to eliminate the risk of change in fair value of the
    
    interest rate.
    
    Sensitivity analysis of interest rate risk
    
    Sensitivity analysis of interest rate risk is based on the hypothesis that the change in market interest
    
    rate influences the interest income or expense of financial instruments at variable rate.
    
    The management of the Group thinks that the interest rate risk of deposit in bank borne by the Group
    
    is not significant, and therefore the sensitivity analysis of interest rate of deposit in bank is not
    
    disclosed here.
    
    On the basis of the above-mentioned hypothesis, with the other variables unchanged, the pre-tax
    
    influence of possible reasonable exchange rate fluctuation on current profit and loss and shareholders‘
    
    equity is as follows:
    
    Unit: Yuan
    
       Item     Interestratechange                           Thisperiod
                                 Influenceonprofitofthisperiod       Influenceonshareholders‘equity
     Bankloan   Increaseby50BP                       -1,751,529                        -1,751,529
     Bankloan   Decreaseby50BP                       1,751,529                         1,751,529
    
    
    Note: As at June 30, 2018, the management of the Group predicted that the bank floating rate changed
    
    by 50 basis points
    
    10.1.2 Credit risk
    
    As at June 30, 2018, the largest credit risk exposure possibly causing the financial loss of the
    
    Group was mainly caused by the loss generated by the financial assets of the Group due to
    
    failure of another party of the contract in fulfilling obligations.
    
    To lower the credit risk, the Group only trades with the recognized and reputable third party.
    
    In accordance with the policy of the Group, credit check shall be carried out for all customers
    
    who transact by means of credit. In addition, the Group conducts continuous monitoring on
    
    the balance of accounts receivable to ensure that the Group will not face major risk of bad
    
    debts. For transactions not settled with recording currency of relevant business units, unless
    
    the credit control department of the Group specially approves, the Group will not provide
    
    credit trade terms. In addition, the Group audits the collection of each single significant
    
    account receivable on each date of balance sheet to ensure that sufficient bad-debt provision is
    
    accrued for accounts unable to be collected. Therefore, the management of the Group thinks
    
    the credit risk borne by the Group is greatly reduced.
    
    Since the Group only trades with the recognized and reputable third party, no collateral is
    
    required. The credit risk is managed centrally according to the customer/counter-party,
    
    geographic area and industry. As at June 30, 2018, 16.4% of accounts receivable of the Group
    
    came from top five borrowers in accounts receivable of the Group (December 31, 2017:
    
    20.7%). The Group holds no collateral or other credit enhancement for the balance of
    
    accounts receivable.
    
    10.1.3 Liquidity risk
    
    When managing the liquidity risk, the Group reserves and monitors the cash and cash
    
    equivalents the management considers sufficient to satisfy the operation need of the Group
    
    and reduce the influence of fluctuation in cash flow. The management of the Group monitors
    
    the use of bank loans and ensures to abide by the loan agreement.
    
    10.1.4 Disclosure of fair value – fair value of financial assets and liabilities not measured
    
    by fair value
    
                                                             Fairvalue
                Item           Bookvalue    First-level   Second-levelfair    Third-level      Total
                                          fairvalue       value        fairvalue
     Long-termaccountspayable       269,000,000         -  229,053,269        -           229,053,269
     measuredbyamortizedcost
    
    
    The management of the Group thinks that, as at June 30, 2018, except for the long-term
    
    accounts payable stated above, the book value of other financial assets and liabilities
    
    measured by amortized cost was close to the fair value thereof.
    
    11. Related parties and related transactions
    
    11.1 Particulars of the parent company of the Company
    
                                                              Proportionof     Proportionof
      Nameofparent                                            shareholdingofthe  votingpowersof
                   Registrationplace   Businessnature   Registeredcapital
        company                                              parentcompanyin theparentcompany
                                                              theCompany    intheCompany
    Changyu Group                 Manufacturing
                  YantaiCity                          50,000,000         50.40%         50.40%
    Company                      industry
    
    
    From January to June 2018, there was no fluctuation in the registered capital of the parent
    
    company and its share in equity interest and voting right.
    
    11.2 Particulars of the subsidiaries of the Company
    
    See particulars of the subsidiaries of the Company in Note 9.
    
    11.3 Particulars of other related parties
    
                Nameofotherrelatedparties            RelationshipbetweenotherrelatedpartiesandtheCompany
    YantaiChangyuWineCultureMuseumCo.,Ltd.(―Wine
                                               Acompanycontrolledbythesameparentcompany
    Culture Museum‖)
    YantaiChangyuWindowofInternationalWineCityCo.Ltd.
                                               Acompanycontrolledbythesameparentcompany
    (―Window ofWineCity‖)
    YantaiGodHorsePackingCo.,Ltd.(―GodHorsePacking‖)   Acompanycontrolledbythesameparentcompany
    YantaiZhongyaMedicalHealthWineCo.,Ltd.(―Zhongya
                                               Acompanycontrolledbythesameparentcompany
    Medical‖)
    YantaiChangyuCulturalTourismDevelopmentCo.,Ltd.
                                               Acompanycontrolledbythesameparentcompany
    (―Changyu CulturalTourism‖)
    
    
    11.4 Related transactions
    
    11.4.1 Related transactions of purchasing and selling goods and providing and receiving
    
    services
    
    List of purchasing goods/receiving services
    
    Unit: Yuan
    
                                              Amount incurredinthis
          Related parties         Relatedtransactions                       Amountincurredinpriorperiod
                                                    period
                                              Amount incurredinthis
          Relatedparties         Relatedtransactions                       Amountincurredinpriorperiod
                                                    period
    God HorsePacking         Purchasinggoods                  95,990,354                64,896,342
    Zhongya Medical           Purchasinggoods                   6,037,893                10,700,788
    WineCultureMuseum       Purchasinggoods                   9,475,159                 6,319,776
    WindowofWineCity        Purchasinggoods                   2,857,130                  231,879
    
    
    List of selling goods/providing services
    
    Unit: Yuan
    
                                              Amount incurredinthis
         Related parties         Relatedtransactions                        Amountincurredinpriorperiod
                                                    period
    WineCultureMuseum      Sellinggoods                      13,889,017                4,252,962
    WindowofWineCity      Sellinggoods                       8,773,612                5,642,914
    Zhongya Medical         Sellinggoods                       2,203,629                1,956,658
    God HorsePacking        Sellinggoods                         15,742                  829,977
    Changyu CulturalTourism   Sellinggoods                        220,759
    
    
    The price of transactions between the Group and the related parties are based on the
    
    negotiated price.
    
    11.4.2 Related trusteeship/contracting and mandatory administration/outsourcing
    
    Nil11.4.3 Leasing with related partiesThe Company as a lessor:
    
    Unit: Yuan
    
                                              Rental incomerecognizedin   Rentalincomerecognizedin
         Nameofthelessee        Typeofleasedassets
                                                    this period              priorperiod
    God HorsePacking         Officebuildingand                   813,440
                          plant
    Window ofWineCity       Officebuilding                       535,000
    Zhongya Medical          Officebuilding                       285,000
    
    
    Pursuant to a lease contract dated July 1, 2017 signed between the Company and God Horse
    
    Packing, starting from July 1, 2017, the Company rents properties to God Horse Packing for
    
    operation purposes with annual rental income of RMB 1,626,880 Yuan, and the expired date
    
    of the contract is June 30, 2022. From January to June 2018, the rental income recognized by
    
    the Company amounted to RMB 813,440 Yuan.
    
    Pursuant to a lease contract dated January 1, 2018 signed between the Company and Window
    
    of Wine City, starting from January 1, 2018, the Company rents houses to Window of Wine
    
    City for operation purposes with annual rental income of RMB 1,070,000 Yuan, and the
    
    expired date of the contract is December 31, 2018. From January to June 2018, the rental
    
    income recognized by the Company amounted to RMB 535,000 Yuan.
    
    Pursuant to a lease contract dated January 1, 2018 signed between the Company and Zhongya
    
    Medical, starting from January 1, 2018, the Company rents houses to Zhongya Medical for
    
    operation purposes with annual rental income of RMB 570,000 Yuan, and the expired date of
    
    the contract is December 31, 2018. From January to June 2018, the rental income recognized
    
    by the Company amounted to RMB 285,000 Yuan.
    
    The Company as a lessee:
    
    Unit: Yuan
    
                                                                     Rentrecognizedinprior
        Name ofthelessor        Typeofleasedassets    Rentrecognizedinthisperiod
                                                                          period
    Changyu GroupCompany     Officebuildingandplant                3,775,362              3,775,362
    
    
    Pursuant to a lease contract dated January 1, 2016 signed between the Company and Changyu
    
    Group Company, starting from January 1, 2016, the Company rents properties from Changyu
    
    Group Company for operation purposes at a basic annual rent of RMB 1,692,724 Yuan, and
    
    the expired date of the contract is December 31, 2020. From January to June 2018, the rental
    
    expenses recognized by the Company to Changyu Group Company amounted to RMB
    
    846,362 Yuan.
    
    Pursuant to a lease contract dated January 1, 2017 signed between the Company and Changyu
    
    Group Company, starting from January 1, 2017, the Company rents properties from Changyu
    
    Group Company for operation purposes at a basic annual rent of RMB 1,464,500 Yuan, and
    
    the expired date of the contract is December 31, 2021. From January to June 2018, the rental
    
    expenses recognized by the Company to Changyu Group Company amounted to RMB
    
    732,250 Yuan.
    
    Pursuant to a lease contract dated January 1, 2017 signed between the Company and Changyu
    
    Group Company, starting from January 1, 2017, the Company rents properties from Changyu
    
    Group Company for operation purposes at a basic annual rent of RMB 4,393,500 Yuan, and
    
    the expired date of the contract is December 31, 2021. From January to June 2017, the rental
    
    expenses recognized by the Company to Changyu Group Company amounted to RMB
    
    2,196,750 Yuan.
    
    11.4.4 Guarantee with related parties
    
    Nil11.4.5 Inter-bank borrowing and lending of related parties
    
    Nil11.4.6 Asset transfer and debt recombination of related parties
    
    Nil11.4.7 Other related transactions
    
    Unit: Yuan
    
          Item           Note         Amountincurredinthisperiod       Amountincurredinpriorperiod
     Trademarkusefee       (a)                          43,363,867                   44,428,033
        Patentfee          (b)                             25,000                      25,000
    
    
    The price of transactions between the Group and the related parties is based on the negotiated
    
    price.
    
    (a) Trademark royalty contract
    
    Pursuant to a trademark royalty contract dated May 18, 1997 signed between the Company
    
    and Changyu Group Company, starting from September 18, 1997, the Company may use
    
    certain trademark of Changyu Group Company, which has been registered with the PRC
    
    Trademark Office. An annual royalty at 2% of the Company‘s annual specific sales is payable
    
    to Changyu Group Company by the Company. The contract is effective until the expiry of the
    
    registration of the trademark. From January to June 2018, the trademark royalty paid to
    
    related parties by the Company accounted for 100% of the trademark royalty in the Group.
    
    (b) Patent implementation license contract
    
    Pursuant to a patent implementation license contract dated May 18, 1997 signed between the
    
    Company and Changyu Group Company, starting from September 18, 1997, the Company
    
    may use the patented technologies of Changyu Group Company. The annual patent royalty
    
    payable by the Company to Changyu Group Company was RMB 50,000 Yuan. The contract
    
    was expired on December 20, 2005. On August 20, 2016, the Company renewed the patent
    
    implementation license contract for 10 year, which should pay the patent royalty of RMB
    
    50,000 Yuan to Changyu Group Company annually as before. From January to June 2018, the
    
    patent royalty payable by the Company to Changyu Group Company amounted to RMB
    
    25,000 Yuan.
    
    From January to June 2018, the patent fees paid to related parties by the Group accounted for
    
    100% of the patent fees in the Group.
    
    11.5 Accounts receivable and payable of the related parties
    
    11.5.1 Accounts receivable
    
    Unit: Yuan
    
                                                   Ending balance        Beginningbalance
           Item               Relatedparties            Book    Baddebt