张裕B:2019年半年度财务报告(英文版)

Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


                                                 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, 2019             Unit: Yuan
                                                                                                      December 31,
                                      Item                                  Note    June 30, 2019
                                                                                                         2018
Current assets:
M onetary fund                                                              7.1       1,848,632,953     1,475,700,477
Settlement reserves
Lending funds
Tradable financial assets
Financial assets measured at the fair value and the variation of which is
recorded into the current profits and losses
Derivative financial assets
Bills receivable                                                            7.2                          288,667,988
Accounts receivable                                                         7.3         186,131,192      242,153,083
Receivables financing                                                       7.4         372,281,872
Advance payment                                                             7.5           3,490,928        4,219,949
Premium receivable
Reinsurance accounts receivable
Receivable reserves for reinsurance contract
Other receivables                                                           7.6          28,618,983       22,636,086
Including: Interest receivable                                                            2,099,109        1,332,681
              Dividends receivable
Redemptory monetary capital for sale
Inventories                                                                 7.7       2,606,781,436     2,724,591,457
Contract assets
Assets held for sale
Non-current assets due within one year
Other current assets                                                        7.8         300,418,901      258,676,396
Total current assets                                                                  5,346,356,265     5,016,645,436
Non-current assets:
Offering loans and imprest
Debt investments
Available-for-sale financial assets                                                                          467,251
Other debt investments
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


                                     Item                                     Note    June 30, 2019     December 31,
                                                                                                           2018
Held-to-maturity investments
Long-term receivables
Long-term equity investments
Other investments in equity instruments
Other non-current financial assets                                            7.9             515,922
Investment real estate                                                        7. 10        30,560,470       31,572,489
Fixed assets                                                                  7.11      5,684,612,653     5,749,731,667
Construction in progress                                                      7.12        789,872,373      759,296,591
Productive biological assets                                                  7.13        207,613,439      209,266,373
Oil-and-gas assets
Right-of-use assets
Intangible assets                                                             7.14        647,158,886      655,473,459
Development expenditure
Goodwill                                                                      7.15        165,199,111      165,199,111
Long-term prepaid expenses                                                    7.16        276,557,711      244,640,416
Deferred income tax assets                                                    7.17        234,646,603      285,436,259
Other non-current assets
Total non-current assets                                                                8,036,737,168     8,101,083,616
Total assets                                                                           13,383,093,433   13,117,729,052
Current liabilities:
Short-term loans                                                              7.18        678,170,667      688,002,410
Borrowings from the Central Bank
Loans from other banks and other financial institutions
Tradable financial liabilities
Financial liabilities measured at the fair value and the variation of which
is recorded into the current profits and losses
Derivative financial liabilities
Bills payable
Accounts payable                                                              7.19        539,459,878      713,572,881
Advances from customers                                                       7.20        177,549,080      226,075,244
Financial assets sold for repurchase
Deposits from customers and interbank
Receivings from vicariously traded securities
Receivings from vicariously sold securities
Employee remunerations payable                                                7.21        177,466,368      212,304,217
Taxes and dues payable                                                        7.22        109,000,802      128,912,790
Other payables                                                                7.23        977,667,007      608,479,890
Including: Interest payable                                                                 2,669,667          712,826
            Dividends payable                                                             412,646,375
Handling charges and commissions payable
Dividend payable for reinsurance
Contract liabilities
Liabilities held for sale
Non-current liabilities due within one year                                   7.24        180,362,314      152,940,788
Other current liabilities                                                     7.25         14,545,254       15,860,254
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


                                     Item                                   Note    June 30, 2019        December 31,
                                                                                                            2018
Total current liabilities                                                             2,854,221,370        2,746,148,474
Non-current liabilities:
Reserves for insurance contracts
Long-term borrowings                                                        7.26        165,949,250          156,480,662
Bonds payable
Including: Preferred stock
            Perpetual bonds
Lease liabilities
Long-term accounts payable                                                  7.27        201,000,000          225,000,000
Long-term employee remunerations payable
Estimated liabilities
Deferred income                                                             7.28         64,050,895           70,367,039
Deferred income tax liabilities                                             7.17         18,629,612           22,010,647
Other non-current liabilities                                               7.29          7,159,222            7,234,853
Total non-current liabilities                                                           456,788,979          481,093,201
Total liabilities                                                                     3,311,010,349        3,227,241,675
Owner’s equity:
Capital stock                                                               7.30        685,464,000          685,464,000
Other equity instruments
Including: Preferred stock
            Perpetual bonds
Capital surplus                                                             7.31        565,955,441          565,955,441
M inus: Treasury stock
Other comprehensive income                                                  7.32             -95,344           2,965,377
Special reserves
Surplus reserves                                                            7.33        342,732,000          342,732,000
General risk preparation
Undistributed profit                                                        7.34      8,197,828,994        8,008,982,547
Total owner’s equities attributable to the parent company                            9,791,885,091        9,606,099,365
M inority equity                                                                        280,197,993          284,388,012
Total owner’s equities                                                              10,072,083,084        9,890,487,377
Total liabilities and owner’s equities                                              13,383,093,433       13,117,729,052


Legal Representative: Zhou Hongjiang        Accounting Supervisor: Jiang Jianxun Accounting Department M anager: Jiang
Jianxun


2.2 Balance sheet of the parent company

Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd.                                                       Unit: Yuan
                                    Item                                    Note    June 30, 2019      December 31, 2018
Current assets:
M onetary fund                                                                        1,083,333,310          624,588,809
Tradable financial assets
Financial assets measured at the fair value and the variation of which is
recorded into the current profits and losses
Derivative financial assets
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


                                      Item                                    Note   June 30, 2019     December 31, 2018
Bills receivable                                                                                              39,885,254
Accounts receivable                                                           15.1                             1,447,973
Receivables financing                                                                     56,047,969
Advance payment                                                                              427,816                227
Other receivables                                                             15.2       526,593,613       1,025,643,356
Including: Interest receivable                                                               277,785             254,088
              Dividends receivable                                                         4,103,925         500,000,000
Inventories                                                                              505,479,473         385,154,740
Contract assets
Assets held for sale
Non-current assets due within one year
Other current assets                                                                      35,992,255          24,704,844
Total current assets                                                                   2,207,874,436       2,101,425,203
Non-current assets:
Debt investments
Available-for-sale financial assets
Other debt investments
Held-to-maturity investments
Long-term receivables
Long-term equity investments                                                  15.3     7,420,803,069       7,420,803,069
Other investments in equity instruments
Other non-current financial assets
Investment real estate                                                                    30,560,470          31,572,489
Fixed assets                                                                             260,448,515         265,311,274
Construction in progress                                                                   7,319,082           6,311,701
Productive biological assets                                                             121,158,460         125,002,793
Oil and gas assets
Right-of-use assets
Intangible assets                                                                         66,054,490          67,244,066
Development expenditure
Goodwill
Long-term prepaid expenses
Deferred income tax assets                                                                20,699,273          24,194,967
Other non-current assets                                                                 985,700,000         972,700,000
Total non-current assets                                                               8,912,743,359       8,913,140,359
Total assets                                                                          11,120,617,795      11,014,565,562
Current liabilities:
Short-term loans                                                                         150,000,000         150,000,000
Tradable financial liabilities
Financial liabilities measured at the fair value and the variation of which
is recorded into the current profits and losses
Derivative financial liabilities
Bills payable
Accounts payable                                                                         106,793,658         132,704,304
Advances from customers
Contract liabilities
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


                                    Item                                  Note       June 30, 2019     December 31, 2018
Employee remunerations                                                                    59,598,048          72,345,179
Taxes and dues payable                                                                     3,749,762          13,111,431
Other payables                                                                           913,805,782         607,974,519
Including: Interest payable                                                                  163,125             181,250
            Dividends payable                                                            411,278,400
Liabilities held for sale
Non-current liabilities due within one year
Other current liabilities                                                                  3,433,054           3,433,054
Total current liabilities                                                              1,237,380,304         979,568,487
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred stock
            Perpetual bonds
Lease liabilities
Long-term accounts payable
Long-term employee remuneration payable
Estimated liabilities
Deferred income                                                                            7,459,789           8,910,918
Deferred income tax liabilities
Other non-current liabilities                                                              2,951,042           2,710,575
Total non-current liabilities                                                             10,410,831          11,621,493
Total liabilities                                                                      1,247,791,135         991,189,980
Owner’s equity:
Capital stock                                                                            685,464,000         685,464,000
Other equity instruments
Including: Preferred stock
            Perpetual bonds
Capital surplus                                                                          557,222,454         557,222,454
M inus: Treasury stock
Other comprehensive income
Special reserves
Surplus reserves                                                                         342,732,000         342,732,000
Undistributed profit                                                                   8,287,408,206       8,437,957,128
Total owner’s equities                                                                9,872,826,660      10,023,375,582
Total liabilities and owner’s equities                                               11,120,617,795      11,014,565,562


Legal Representative: Zhou Hongjiang          Accounting Supervisor: Jiang Jianxun    Accounting Department M anager:
Jiang Jianxun


2.3 Consolidated profit statement

Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd.                                                       Unit: Yuan
                                   Item                               Note   Sum of current period   Sum of prior period
1. Total operating income                                                            2,558,274,785         2,828,230,064
Including: Operating income                                           7.35           2,558,274,785         2,828,230,064
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


             Interest income
             Earned premium
             Handling fee and commission income
2. Total operating costs                                                            1,818,822,580   2,023,670,406
Including: Operating costs                                                   7.35    936,252,225     974,557,292
              Interest expenditure
              Handling fees and commission expenditure
              Premium rebate
              Net amount of indemnity expenditure
              Net amount of the withdrawn reserve fund for insurance
              contract
              Policy bonus payment
              Amortized reinsurance expenditures
              Taxes and surcharges                                           7.36    123,550,848     165,276,251
              Selling expenses                                               7.37    591,970,801     710,659,033
              Administrative expenses                                        7.38    155,552,312     157,964,882
              Research and development expenses                              7.39      2,706,811       2,127,006
              Financial expenses                                             7.40      8,789,583      13,085,942
              Including: Interest expenses                                             9,812,560      18,739,528
                            Interest income                                            4,606,417       7,245,870
       Plus: Other profit                                                    7.41     64,211,892      37,982,878
            Investment profit (loss is listed with "-")
            Including: Investment profit for joint-run business and joint
                      venture
                      Financial assets measured at amortized cost cease
                      to be recognized as income (loss is listed with
                      "-")
            Exchange income (loss is listed with "-")
            Net exposure hedge income (loss is listed with "-")
            Income from fair value changes (loss is listed with "-")
            Credit impairment loss (loss is listed with "-")                 7.42       -765,935
            Asset impairment loss (loss is listed with "-")                  7.43      6,148,729       4,730,948
            Income from asset disposal (loss is listed with "-")             7.44          1,138          93,958
3. Operating profit (loss is listed with "-")                                        809,048,029     847,367,442
       Plus: Non-operating income                                            7.45      3,575,914       2,006,392
       M inus: Non-operating expenses                                        7.46        164,050       1,392,362
4. Total profits (total loss is listed with "-")                                     812,459,893     847,981,472
       M inus: Income tax expenses                                           7.47    210,281,578     211,979,735
5. Net profit (net loss is listed with "-")                                          602,178,315     636,001,737
5.1 Classification by operation continuity
       5.1.1 Net profit from continuing operation (net loss is listed with           602,178,315     636,001,737
"-")
     5.1.2 Net profit from terminating operation (net loss is listed
with "-")
5.2 Classification by ownership
       5.2.1 Net profit attributable to owner of the parent company                  603,403,789     635,837,405
       5.2.2 M inority interest income                                                 -1,225,474        164,332
6. Net after-tax amount of other comprehensive income                        7.48      -4,657,291     -11,126,413
Net after-tax amount of other comprehensive income attributable to                     -3,060,721      -9,230,820
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


owner of the parent company
6.1 Other comprehensive income not to be reclassified into profit and
loss later
6.1.1 Changes after remeasuring and resetting the benefit plans
6.1.2 Other comprehensive income not to be reclassified into profit
and loss under equity law
6.1.3 Changes in the fair value of other investments in equity
instruments
6.1.4 Changes in the fair value of the enterprise's own credit risk
6.1.5 Other
6.2 Other comprehensive income to be reclassified into profit and                            -3,060,721            -9,230,820
loss later
6.2.1 Other comprehensive income to be reclassified into profit and
loss under equity law
6.2.2 Changes in the fair value of other debt investments
6.2.3 Profit and loss from changes in the fair value of financial assets
for sale
6.2.4 Amount of financial assets reclassified into other
comprehensive income
6.2.5 Profit and loss from reclassification of held-to-maturity
investments into financial assets for sale
6.2.6 Provision for credit impairment of other credit investments
6.2.7 Provision for cash-flow hedge
6.2.8 Difference in translation of Foreign Currency Financial                                -3,060,721            -9,230,820
Statement
6.2.9 Other
Net after-tax amount of other comprehensive income attributable to                           -1,596,570            -1,895,593
minority shareholders
7. Total comprehensive income                                                              597,521,024            624,875,324
Attributable to owner of the parent company                                                600,343,068            626,606,585
Attributable to minority shareholders                                                        -2,822,044            -1,731,261
8. Earnings per share:
8.1 Basic earnings per share                                                                       0.88                  0.93
8.2 Diluted earnings per share                                                                     0.88                  0.93


Legal Representative: Zhou Hongjiang          Accounting Supervisor: Jiang Jianxun         Accounting Department M anager:
Jiang Jianxun


2.4 Profit statement of the parent company

Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd.                                                           Unit: Yuan
                                 Item                                      Note   Sum of current period   Sum of prior period
1. Operating income                                                        15.4            352,351,002            408,845,211
M inus: Operating costs                                                    15.4            309,570,580            352,646,989
       Taxes and surcharges                                                                  13,140,156            24,463,375
       Selling expenses
       Administrative expenses                                                               39,434,246            39,827,281
       Research and development expenses                                                        405,061               360,466
       Financial expenses                                                                    -3,657,370           -15,151,608
       Including: Interest expenses                                                          -2,705,073            11,357,611
                   Interest income                                                            1,470,667            29,630,717
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


       Plus: Other profit                                                            1,716,527     1,976,527
            Investment profit (loss is listed with "-")                     15.5   264,221,755   312,409,576
            Including: Investment profit for joint-run business and joint
                      venture
                      Financial assets measured at amortized cost cease
                      to be recognized as income (loss is listed with
                      "-")
            Net exposure hedge income (loss is listed with "-")
            Income from fair value changes (loss is listed with "-")
            Credit impairment loss (loss is listed with "-")
            Asset impairment loss (loss is listed with "-")
            Income from asset disposal (loss is listed with "-")                                     75,000
2. Operating profit (loss is listed with "-")                                      259,396,611   321,159,811
       Plus: Non-operating income                                                     703,559        56,479
       M inus: Non-operating expenses                                                  97,638           528
3. Total profits (total loss is listed with "-")                                   260,002,532   321,215,762
       M inus: Income tax expenses                                                    -726,946     2,450,592
4. Net profit (net loss is listed with "-")                                        260,729,478   318,765,170
       4.1Net profit from continuing operation (net loss is listed with            260,729,478   318,765,170
"-")
       4.2 Net profit from terminating operation (net loss is listed with
"-")
5. Net after-tax amount of other comprehensive income
5.1 Other comprehensive income not to be reclassified into profit and
loss later
5.1.1 Changes after remeasuring and resetting the benefit plans
5.1.2 Other comprehensive income not to be reclassified into profit
and loss under equity law
5.1.3 Changes in the fair value of other investments in equity
instruments
5.1.4 Changes in the fair value of the enterprise's own credit risk
5.1.5 Other
5.2 Other comprehensive income to be reclassified into profit and
loss later
5.2.1 Other comprehensive income to be reclassified into profit and
loss under equity law
5.2.2 Changes in the fair value of other debt investments
5.2.3 Profit and loss from changes in the fair value of financial assets
for sale
5.2.4 Amount of financial assets reclassified into other
comprehensive income
5.2.5 Profit and loss from reclassification of held-to-maturity
investments into financial assets for sale
5.2.6 Provision for credit impairment of other credit investments
5.2.7 Provision for cash-flow hedge
5.2.8 Difference in translation of Foreign Currency Financial
Statement
5.2.9 Other
6. Total comprehensive income                                                      260,729,478   318,765,170
7. Earnings per share:
7.1 Basic earnings per share                                                             0.38          0.47
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


7.2 Diluted earnings per share                                                                0.38                 0.47

Legal Representative: Zhou Hongjiang          Accounting Supervisor: Jiang Jianxun    Accounting Department M anager:
Jiang Jianxun


2.5 Consolidated cash flow state ment

Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd.                                                      Unit: Yuan
                           Item                                  Note         Sum of current period Sum of prior period
1. Cash flows from operating activities:
Cash received from sales of goods and rending of                                     2,399,548,448        2,680,388,050
services
Net increase in customer and interbank deposits
Net increase in borrowings from central bank
Net increase in borrowings from other financial
institutions
Cash received from receiving insurance premium of
original insurance contract
Net cash received from reinsurance business
Net increase in policy holder deposits and investment
funds
Cash received from collecting interest, handling fees
and commissions
Net increase in borrowing funds
Net increase in repurchasement business funds
Net cash received for buying and selling securities
Tax refund received                                                                     20,038,271           26,089,608
Other cash received related to operating activities              7.49                   67,785,620           42,343,021
Subtotal of cash flows of operating activities                                       2,487,372,339        2,748,820,679
Cash paid for goods and services                                                       718,093,432          677,552,938
Net increase in customer loans and advances
Net increase in deposits in central bank and interbank
deposits
Cash paid to original insurance contract payments
Net increase in financial assets held for trading purposes
Net increase in lending funds
Cash paid to interest, handling fees and commissions
Cash paid to policy bonus
Cash paid to and on behalf of employees                                                278,638,333          278,814,385
Cash paid for taxes and expenses                                                       598,384,101          802,722,798
Other cash paid related to operating activities                  7.49                  392,780,467          436,977,086
Sub-total of cash outflows of operating activities                                   1,987,896,333        2,196,067,207
Net cash flow from operating activities                                                499,476,006          552,753,472
2. Cash flow from investing activities:
Cash received from disinvestment
Cash received from withdrawal of fixed deposits                                        104,597,650          305,000,000
Cash received from obtaining investment income
Cash received from obtaining interest income                                             1,004,552            2,342,015
Cash received from disposal of fixed assets, intangible
                                                                                           175,837              471,130
assets and other long-term assets
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


                           Item                                  Note          Sum of current period Sum of prior period
Net cash received from disposal of branch and other
business unit
Other cash received related to investing activities
Subtotal of cash flows of investment activities                                          105,778,039           307,813,145
Cash paid to acquire fixed assets, intangible assets and                                 135,073,897           154,464,274
other long-term assets
Cash for investment
Cash paid for purchasing fixed deposits                                                   85,238,750           340,000,000
Net increase in hypothecated loan
Net cash paid for acquiring branch and other business                                                          104,566,419
unit
Other cash paid related to investment activities
Subtotal of cash outflows of investment activities                                       220,312,647           599,030,693
Net cash flow from investing activities                                                 -114,534,608          -291,217,548
3. Cash flow from financing activities
Cash received from acquiring investment
Including: cash received from acquiring minority
shareholders investment by branch
Cash received from acquiring loans                                                       656,495,139           669,905,706
Cash received from issuing bonds
Other cash received related to financing activities              7.49                                           23,521,431
Subtotal cash flows of financing activities                                              656,495,139           693,427,137
Cash paid for paying debts                                                               658,033,492           658,512,141
Cash paid for distributing dividend and profit or paying                                  16,590,004            21,265,533
interest
Including: dividend and profit paid to minority
shareholders by branch
Other cash paid related to financing activities                  7.49                                           20,000,000
Subtotal of cash outflows of financing activities                                        674,623,496           699,777,674
Net cash flow from financing activities                                                  -18,128,357            -6,350,537
4. Influences of exchange rate fluctuation on cash
                                                                                                53,702          -7,404,199
and cash equivalents
5. Net Increase in cash and cash equivalents                                             366,866,743           247,781,188
Plus: balance at the beginning of the period of cash and                               1,206,860,334         1,180,889,274
cash equivalents
6. Balance at the end of the period of cash and cash                                   1,573,727,077         1,428,670,462
equivalents

Legal Representative: Zhou Hongjiang          Accounting Supervisor: Jiang Jianxun      Accounting Department M anager:
Jiang Jianxun


2.6 Cash flow statement of the parent company

Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd.                                                         Unit: Yuan
                                  Item                                  Sum of current period        Sum of prior period
1. Cash flows from operating activities:
Cash received from sales of goods and rending of services                            219,405,421               275,862,358
Tax refund received
Other cash received related to operating activities                                   57,674,830               100,163,394
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


                                 Item                                    Sum of current period      Sum of prior period
Subtotal of cash flows of operating activities                                       277,080,251              376,025,752
Cash paid for goods and services                                                     163,184,301              200,935,534
Cash paid to and on behalf of employees                                               45,116,586               43,647,320
Cash paid for taxes and expenses                                                      22,530,113               43,132,327
Other cash paid related to operating activities                                      321,847,893               19,942,485
Sub-total of cash outflows of operating activities                                   552,678,893              307,657,666
Net cash flow from operating activities                                              -275,598,642              68,368,086
2. Cash flow from investing activities:
Cash received from disinvestment
Cash received from withdrawal of fixed deposits                                       40,000,000              305,000,000
Cash received from obtaining investment income                                       760,152,668              717,667,435
Cash received from obtaining interest income                                             484,857                2,342,015
Net cash received from disposal of fixed assets, intangible assets and                     7,519                  538,055
other long-term assets
Net cash received from disposal of branch and other business unit
Other cash received related to investing activities
Subtotal of cash flows of investment activities                                      800,645,044            1,025,547,505
Cash paid to acquiring fixed assets, intangible assets and other                      10,164,233               11,968,401
long-term assets
Cash for investment                                                                   13,000,000              105,926,184
Cash paid for purchasing fixed deposits                                               85,238,750              340,000,000
Net cash paid for acquiring branch and other business unit
Other cash paid related to investment activities
Subtotal of cash outflows of investment activities                                   108,402,983              457,894,585
Net cash flow from investing activities                                              692,242,061              567,652,920
3. Cash flow from financing activities
Cash received from acquiring investment
Cash received from acquiring loans                                                                            200,000,000
Cash received from issuing bonds
Other cash received related to financing activities
Subtotal cash flows of financing activities                                                                   200,000,000
Cash paid for debts                                                                                           600,000,000
Cash paid to distribute dividend, profit or pay interest                                3,248,000              11,660,417
Other cash paid related to financing activities
Subtotal of cash outflows of financing activities                                       3,248,000             611,660,417
Net cash flow from financing activities                                                -3,248,000            -411,660,417
4. Influences of exchange rate fluctuation on cash and cash
equivalents
5. Net Increase in cash and cash equivalents                                         413,395,419              224,360,589
Plus: balance at the beginning of the period of cash and cash                        532,384,882              493,568,866
equivalents
6. Balance at the end of the period of cash and cash equivalents                     945,780,301              717,929,455


Legal Representative: Zhou Hongjiang          Accounting Supervisor: Jiang Jianxun       Accounting Department M anager:
Jiang Jianxun
  Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report



    2.7 Consolidated owne r’s equity changing list

                                                                                                                                                                                                        Unit: Yuan
                                                                                                                        This period
                                                                                          Owners’ equity of the parent company
          Item                                     Other equity                                                                                                                         Minority
                                                                                       Minus:      Other                                General Undistributed                                          Total owners’
                                                   instruments             Capital                                                                                                    shareholders’
                                                                                      Treasury comprehensive Special     Surplus                                                                          equity
                             Capital stock                                                                                               risk                 Other     Subtotal         equity
                                             Preferred   Perpetual        reserves                          reserves     reserves                 profits
                                                                                       stock      income                              preparation
                                              stock       bonds Other
1. Balance at the end of
                         685,464,000                                    565,955,441               2,965,377            342,732,000              8,008,982,547         9,606,099,365    284,388,012 9,890,487,377
last year
Plus:        Accounting                                                                                                                            -3,278,942            -3,278,942                       -3,278,942
policies changing
Previous            error
correction
Business combination
under common control
Other
2. Balance at the
beginning of this year 685,464,000                                      565,955,441               2,965,377            342,732,000              8,005,703,605         9,602,820,423    284,388,012 9,887,208,435

3.     Increased   or
decreased amount in
this period (reducing                                                                             -3,060,721                                      192,125,389          189,064,668       -4,190,019     184,874,649
amount is listed with
"-")
3.1              Total                                                                            -3,060,721                                      603,403,789          600,343,068       -2,822,044     597,521,024
comprehensive income
3.2 Owners' invested
and reduced capital
3.2.1 Owner’ invested
common stock
3.2.2 Other equity
instrument       holders’
invested capital
3.2.3 Amount of shares
paid and reckoned in
   Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


owners' equity
3.2.4 Other
3.3 Profit distribution                                                                             -411,278,400    -411,278,400     -1,367,975   -412,646,375
3.3.1 Accrued surplus
reserves
3.3.2 Accrued general
risk preparation
3.3.3 Distribution to
owners             (or                                                                              -411,278,400    -411,278,400     -1,367,975   -412,646,375
shareholders)
3.3.4 Other
3.4 Internal transfer of
owners' equity
3.4.1 Capital reserves
transferred        and
increased capital (or
capital stock)
3.4.2 Surplus reserves
transferred        and
increased capital (or
capital stock)
3.4.3 Surplus reserves
covering deficit
3.4.4 Retained earnings
carried over from the
benefit plan amount
3.4.5 Retained earnings
carried over from other
comprehensive income
3.4.6 Other
3.5 Special reserves
3.5.1 Withdrawal in this
period
3.5.2 Usage in this
period
3.6 Other
4. Balance at the end of 685,464,000                   565,955,441          -95,344   342,732,000   8,197,828,994   9,791,885,091   280,197,993 10,072,083,084
this period
  Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report



                                                                                                                         Last period
                                                                                          Owners’ equity of the parent company
          Item                                     Other equity                                                                                                                          Minority
                                                                                       Minus:      Other                                 General Undistributed                                          Total owners’
                                                   instruments             Capital                            Special     Surplus                                                      shareholders’
                             Capital stock                                            Treasury comprehensive                              risk                 Other     Subtotal                          equity
                                                                          reserves                           reserves     reserves                 profits                                equity
                                             Preferred   Perpetual                     stock      income                               preparation
                                              stock       bonds Other
1. Balance at the end of 685,464,000                                    565,955,441               3,109,240             342,732,000              7,309,081,618         8,906,342,299    271,636,379 9,177,978,678
last year
Plus:       Accounting
policies changing
Previous            error
correction
Business combination
under common control
Other
2. Balance at the 685,464,000                                           565,955,441               3,109,240             342,732,000              7,309,081,618         8,906,342,299    271,636,379 9,177,978,678
beginning of this year
3.     Increased   or
decreased amount in
this period (reducing                                                                              -143,863                                        699,900,929          699,757,066      12,751,633      712,508,699
amount is listed with
"-")
3.1              Total                                                                             -143,863                                      1,042,632,929         1,042,489,066      -1,381,414 1,041,107,652
comprehensive income
3.2 Owners' invested                                                                                                                                                                     17,532,823        17,532,823
and reduced capital
3.2.1 Owner’ invested
common stock
3.2.2 Other equity
instrument       holders’
invested capital
3.2.3 Amount of shares
paid and reckoned in
owners' equity
3.2.4 Other                                                                                                                                                                              17,532,823        17,532,823
  Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


3.3 Profit distribution                                                                              -342,732,000    -342,732,000     -3,399,776   -346,131,776
3.3.1 Accrued surplus
reserves
3.3.2 Accrued general
risk preparation
3.3.3 Distribution to
owners             (or                                                                               -342,732,000    -342,732,000     -3,399,776   -346,131,776
shareholders)
3.3.4 Other
3.4 Internal transfer of
owners' equity
3.4.1 Capital reserves
transferred        and
increased capital (or
capital stock)
3.4.2 Surplus reserves
transferred        and
increased capital (or
capital stock)
3.4.3 Surplus reserves
covering deficit
3.4.4 Retained earnings
carried over from the
benefit plan amount
3.4.5 Retained earnings
carried over from other
comprehensive income
3.4.6 Other
3.5 Special reserves
3.5.1 Withdrawal in this
period
3.5.2 Usage in this
period
3.6 Other
4. Balance at the end of 685,464,000                  565,955,441          2,965,377   342,732,000   8,008,982,547   9,606,099,365   284,388,012 9,890,487,377
this period
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


2.8 Owner’s equity changing list of the parent company

                                                                                                                                                                                             Unit: Yuan
                                                                                                                          This period

                   Item                                       Other equity instruments                       M inus:       Other                                                          Total owners’
                                                  Capital                                       Capital                                  Special     Surplus    Undistributed                equity
                                                              Preferred   Perpetual                         Treasury   comprehensive                                            Other
                                                  stock                               Other    reserves                                 reserves     reserves     profits
                                                                stock      bonds                             stock        income
1. Balance at the end of last year              685,464,000                                   557,222,454                                          342,732,000 8,437,957,128            10,023,375,582
Plus: Accounting policies changing
Previous error correction
Other
2. Balance at the beginning of this year        685,464,000                                   557,222,454                                          342,732,000 8,437,957,128              10,023,375,582
3. Increased or decreased amount in this
period (reducing amount is listed with                                                                                                                          -150,548,922                 -150,548,922
"-")
3.1 Total comprehensive income                                                                                                                                   260,729,478                 260,729,478
3.2 Owners' invested and reduced capital
3.2.1 Shareholders’ invested common
stock
3.2.2 Other equity instrument holder’
invested capital
3.2.3 Amount of shares paid and
reckoned in owners' equity
3.2.4 Other
3.3 Profit distribution                                                                                                                                         -411,278,400                 -411,278,400
3.3.1 Drew surplus reserves
3.3.2 Distribution        to   owners     (or                                                                                                                   -411,278,400                 -411,278,400
shareholders)
3.3.3 Other
3.4 Internal transfer of owners' equity
3.4.1 Capital reserves transferred and
increased capital (or capital stock)
3.4.2 Surplus reserves transferred and
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


increased capital (or capital stock)
3.4.3 Surplus reserves covering deficit
3.4.4 Retained earnings carried over
from the benefit plan amount
3.4.5 Retained earnings carried over
from other comprehensive income
3.4.6 Other
3.5 Special reserves
3.5.1 Accrual in this period
3.5.2 Usage in this period
3.6 Other
4. Balance at the end of this period       685,464,000                                   557,222,454                                           342,732,000 8,287,408,206            9,872,826,660


                                                                                                                                                                                     Unit: Yuan
                                                                                                                      Last period

                   Item                                  Other equity instruments                       M inus:       Other                                                         Total owners’
                                             Capital                                       Capital                                   Special     Surplus    Undistributed              equity
                                                         Preferred   Perpetual                         Treasury   comprehensive                                             Other
                                             stock                               Other    reserves                                  reserves     reserves     profits
                                                           stock      bonds                             stock        income
1. Balance at the end of last year         685,464,000                                   557,222,454                                           342,732,000 7,811,100,555            9,396,519,009
Plus: Accounting policies changing
Previous error correction
Other
2. Balance at the beginning of this year   685,464,000                                   557,222,454                                           342,732,000 7,811,100,555            9,396,519,009
3. Increased or decreased amount in this
period (reducing amount is listed with                                                                                                                       626,856,573              626,856,573
"-")
3.1 Total comprehensive income                                                                                                                               969,588,573              969,588,573
3.2 Owners' invested and reduced capital
3.2.1 Shareholders’ invested common
stock
3.2.2 Other equity instrument holder’
invested capital
3.2.3 Amount of shares paid and
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


reckoned in owners' equity
3.2.4 Other
3.3 Profit distribution                                                                            -342,732,000      -342,732,000
3.3.1 Drew surplus reserves
3.3.2 Distribution        to   owners     (or
shareholders)
3.3.3 Other
3.4 Internal transfer of owners' equity
3.4.1 Capital reserves transferred and
increased capital (or capital stock)
3.4.2 Surplus reserves transferred and
increased capital (or capital stock)
3.4.3 Surplus reserves covering deficit
3.4.4 Retained earnings carried over
from the benefit plan amount
3.4.5 Retained earnings carried over
from other comprehensive income
3.4.6 Other
3.5 Special reserves
3.5.1 Accrual in this period
3.5.2 Usage in this period
3.6 Other
4. Balance at the end of this period            685,464,000              557,222,454   342,732,000 8,437,957,128   10,023,375,582
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report




3. Company profile


Yantai Changyu Pioneer Wine Co., Ltd. (the “Company” or the “Joint-stock Company”) was
incorporated as a joint-stock limited company in accordance with the Company Law of the People’s
Republic of China (the “PRC”) in the merger and reorganization carried out by Yantai Changyu Group
Co., Ltd. (“Changyu Group Company”) with its assets and liabilities in relation to wine business. The
Company and its subsidiary companies (hereinafter collectively referred to as the “Group”) are
engaged in the production and sale of wine, brandy and champagne, planting and purchase of grapes,
development of tourism resources, etc. The registered address of the Company is Yantai City,
Shandong Province, and the office address of the headquarters is 56 Dama Road, Zhifu District, Yantai
City, Shandong Province.


As at June 30, 2019, the Company issued 685,464,000 shares accumulatively. Refer to Note 7.30 for
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 26, 2019.


The details of scope of the consolidated financial statement in this period can be seen in Note 9
“Equity in other entities”. The details of 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
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


regulations thereof.


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, the 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, 2019, and no
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


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, 2019, 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 2019.


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
EUR, CLP and AUD 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
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


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 profits
and losses 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 shall be recognized as goodwill as an asset and initially measured
at cost. 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 recognizes 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.
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report




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 profits and losses 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 Determination standard 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 held by the Group 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 state ment translation
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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 profits and losses,
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 changes of the book balance other than the amortized
cost shall be recognized as other comprehensive income and included in the current profits and losses.


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
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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 Company shall recognize a financial
asset or financial liability.


5.9.1 Classification, recognition and measurement of financial assets
According to the business model of financial assets management and the contractual cash flow
characteristics of financial assets, the Company divides financial assets into: financial assets measured
at amortized cost; financial assets measured at fair value and the variation of which is included in
other comprehensive income; and financial assets measured at fair value and the variation of which is
included in the current profits and losses.



At the time of initial recognition, financial assets shall be measured at their fair value. As for the
financial assets measured at their fair value and the variation of which is included in the current profits
and losses, the transaction expenses thereof shall be directly included in the current profits and losses;
as for other categories of financial assets, the transaction expenses thereof shall be included in initial
recognized cost. For accounts receivable or bills receivable arising from sale of products or provision
of services, which do not contain or do not take into account material financing elements, the
Company shall take the amount of consideration that the Company is entitled to receive as expected as
the initial recognized amount.


① Financial assets measured at amortized cost
The Company manages such financial assets by the following business model: collecting contractual
cash flow as the target, with the contractual cash flow characteristics of such financial assets consistent
with the basic lending arrangement, that is, the cash flow generated on a specific date is only the
payment of principal and interest based on the outstanding principal amount. The Company shall
recognize the interest income of such financial assets by the actual interest rate method, and conduct
subsequent measurement at amortized cost. The profits or losses generated from the amortization or
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impairment shall be included in the current profits and losses.


② Financial assets measured at fair value and the variation of which is included in other
comprehensive income
The Company manages such financial assets by the following business model: aiming at both
receiving contractual cash flow and selling, with the contractual cash flow characteristics of such
financial assets consistent with the basic lending arrangements. Such financial assets are measured at
fair value and the variation of which is included in other comprehensive income, but impairment
losses or gains, exchange gains and losses and interest income calculated by the effective interest rate
method shall be included in the current profits and losses.
In addition, the Company designates some non-tradable equity instrument investments as financial
assets measured at fair value and the variation of which is included in other comprehensive income.
The Company shall include relevant dividend income of such financial assets in the current profits and
losses, and the fair value changes in other comprehensive income. When the recognition of such
financial assets is terminated the accumulated gains or losses previously recorded in other
comprehensive income will be transferred into retained income from other comprehensive income,
which shall not be included in the current profits and losses.


③ Financial assets measured at fair value and the variation of which is included in the current profits
and losses
The Company divides those financial assets excluding the above financial assets measured at
amortized cost and financial assets measured at fair value and the variation of which is included in
other comprehensive income into financial assets measured at fair value and the variation of which is
included in the current profits and losses, and list as tradable financial assets. In addition, at the time of
initial recognition, in order to eliminate or significantly reduce accounting mismatches, the Company
designates some financial assets as financial assets measured at fair value and the variation of which is
included in the current profits and losses. For such financial assets, the Company adopts fair value for
subsequent measurement, and the variation in fair value shall be included in the current profits and
losses. The financial assets that have matured for more than one year since the balance sheet date and
are expected to be held for more than one year are listed as other non-current financial assets.


5.9.2 Classification, recognition and measurement of financial liabilities

At the time of initial recognition, financial liabilities are divided into financial liabilities measured at
fair value and the variation of which is included in the current profits and losses and other financial
liabilities. As for the financial liabilities measured at fair value and the variation of which is included
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in the current profits and losses, the transaction expenses thereof shall be directly inc luded in the
current profits and losses; as for other financial liabilities, the transaction expenses thereof shall be
included in initial recognized cost.


①Financial liabilities measured at fair value and the variation of which is included in the current
profits and losses
Financial liabilities measured at fair value and the variation of which is included in the current profits
and losses include tradable financial liabilities (including derivatives belonging to financial liabilities)
and financial liabilities designated as those measured at fair value when initially recognized and the
variation of which is included in the current profits and losses.


Tradable financial liabilities (including derivatives belonging to financial liabilities) shall be
subsequently measured at fair value, and the variation in the fair value shall be included in the current
profits and losses except those related to hedge accounting.

For the financial liabilities designated as those measured at fair value and the variation of which is
included the current profits and losses, the variation in fair value caused by changes in the Company's
own credit risk is included into other comprehensive income, and when the recognition of this liability
is terminated, the accumulated variation in fair value caused by changes in its own credit risk which is
included into other comprehensive income shall be transferred into retained income.



The remaining variations in fair value are included in the current profits and losses. If any accounting
mismatch in profits and losses is caused or enlarged by handling the impact of changes in the own
credit risk of such financial liabilities in the above way, the Company shall include all the gains or
losses of such financial liabilities (including the impact amount of changes in the credit risk of the
enterprise) in the current profits and losses.


② Other financial liabilities
In addition to the financial assets of which the transfer doesn’t meet the conditions to terminate the
recognition or financial liabilities formed by continuous involvement in the transferred financial assets
and other financial liabilities beyond the financial guarantee contract classified as financial liabilities
measured at amortized cost, the financial liabilities shall be measured at the amortized cost for
subsequent measurement, and the profits or losses caused by termination of recognition or
amortization shall be included in the current profits and losses.


5.9.3 Recognition basis and measurement method for the transfer of financial assets
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Where a financial asset meets any of the following requirements, the recognition of it shall be
terminated: ①The contractual rights for collecting the cash flow of the said financial asset are
terminated; ②The financial asset has been transferred and almost all the risks and rewards in the
ownership of the financial asset have been transferred to the transferee; ③The financial asset has been
transferred, although the enterprise has neither transferred nor retained almost all the risks and rewa rds
in the ownership of the financial asset, it has given up its control over the financial asset. If the
enterprise has neither transferred nor retained nearly all the risks and rewards in the ownership of the
financial asset, and has not given up its control over the financial asset, relevant financial asset shall be
recognized according to the extent of its continued involvement in the transferred financial asset, and
relevant liabilities shall be recognized accordingly. The extent of continued involvement in the
transferred financial asset refers to the risk level faced by the enterprise due to the change in the value
of the financial asset.


Where the overall transfer of the financial asset meets 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 profits and losses.


Where the partly transfer of a financial asset meets the derecognition conditions of termination, the
book value of the transferred financial asset shall be distributed between the terminated part of the
recognition and the unterminated part of the recognition, and the difference between the sum of the
consideration received as a result of the transfer and the accumulated mount of the changes in the fair
value of the derecognized part that is originally included in other comprehensive income and the
aforesaid distributed book amount shall be included in the current profits and losses.


The Company shall determine whether almost all the risks and rewards in the ownership of the
financial assets sold by means of attached right of recourse or the financial assets that it holds which
are endorsed to transfer have been transferred. Where almost all the risks and rewards in the ownership
of the financial assets have been transferred to the transferee, the recognition of such financial assets
shall be terminated; Where almost all the risks and rewards in the ownership of the financial assets are
retained, the recognition of such financial assets shall not be terminated; If almost all the risks and
rewards in the ownership of the financial assets are neither transferred nor retained, the enterprise shall
continue to judge whether it retains control over the assets and then conduct accounting treatment in
accordance with the principles described in the preceding paragraphs.


5.9.4 Derecognition of financial liabilities
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Where the current obligation of a financial liability (or part thereof) has been discharged, the Company
shall terminate the recognition of such financial liability (or part thereof). If the Company (borrower)
signs an agreement with the lender to replace the original financial liability by assuming the new
financial liability, and the contract terms of the new financial liability are substantially different from
those of the original financial liability, the recognition of the original financial liability shall be
terminated and a new financial liability shall be recognized at the same time. If the Company
substantially modifies the contract terms of the original financial liability (or part thereof), it shall
terminate the recognition of the original financial liability and recognize a new financial liability in
accordance with the revised terms at the same time.


If the recognition of a financial liability (or part of it) is terminated, the Company shall record the
difference between its book value and the consideration paid (including the transferred non-cash assets
or liabilities assumed) into the current profits and losses.


5.9.5 Offsetting of financial assets and financial liabilities


Where the Company has a legal right that is currently enforceable to set off the recognized amount of
financial assets and financial liabilities, and intends either to settle on a net basis, or to realise the
financial assets and clear off the financial liabilities simultaneously, the f inancial assets and financial
liabilities 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.



5.9.6 Determination method of the fair value of financial assets and liabilities


The fair value refers to the price that market participants need to pay to receive or transfer a
liability when selling an asset in an orderly transaction that takes place on the measurement
date. Where there is an active market for a financial instrument, the Company shall determine
its fair value by the quotation in the active market. Quotations in the active market are prices
that are readily available from exchanges, brokers, trade associations, pricing services, etc., on
a regular basis, which represent the prices of actual market transactions that occur in fair trade.
Where there is no active market for financial instruments, the Company shall use valuation
techniques to determine their fair value. Valuation techniques include referring to prices used
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in recent market transactions by parties familiar with the situation and willing to trade, current
fair values of other financial instruments that are substantially the same, discounted cash flow
method, option pricing models, etc. At the time of valuation, the Company adopts valuation
techniques applicable to the current situation and supported by sufficient available data and
other information, selects input values consistent with the asset or liability characteristics
considered by market participants in the transaction of related assets or liabilities, and gives
priority to relevant observable input values as far as possible. When relevant observable input
values can’t be obtained or are not practicable to obtain, the non- inputable values shall be
used.


5.9.7 Equity instruments


An equity instrument is any contract that evidences a residual interest in the assets of the Company
after deducting all of its liabilities. The Company issues (including refinancing), repurchases, sells or
cancels equity instruments as changes in equity, and transaction costs related to equity transactions are
deducted from the equity. The Company does not recognize any variation in the fair value of equity
instruments.


Dividends paid on the Company's equity instruments during their existence (including the “interest”
generated by the instruments classified as equity instruments) shall be treated as profit distribution.



5.9.8 Impairment of financial assets


For financial assets measured at amortized cost and debt instrument investments measured at fair value
and whose changes are included in other comprehensive income, the Company shall recognize
provision for losses on the basis of expected credit losses.


The Company takes reasonable and reliable information about past events, current situation and
forecast of future economic situation into consideration, calculates the probability weighted amount of
the present value of the difference between the cash flow receivable of     the contract and the cash flow
expected to be received based on the weight of the risk of default, and recognizes the expected credit
losses.


On each balance sheet date, the Company measures the expected credit losses of financial instruments
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at different stages respectively. If the credit risk of the financial instrument does not increase
significantly after the initial recognition, in the first stage, the Company shall measure the provision
for losses according to the expected credit losses in the next 12 months; If the credit risk of a financial
instrument has increased significantly since the initial recognition, but no credit impairment has
occurred, in the second stage, the Company shall measure the provision for losses according to the
expected credit loss of the entire duration of the instrument; If the credit impairment of a financial
instrument has occurred since the initial recognition, in the third stage, the Company shall measure the
provision for losses according to the expected credit loss of the entire duration of the instrument.


For financial instruments with low credit risk on the balance sheet date, the Company assumes that the
credit risk has not increased significantly since the initial recognition, and measures the provision for
losses according to the expected credit loss in the next 12 months.


For the financial instruments in the first and second stages and with low credit risk, the Company
calculates the interest income according to the book balance without deduction of impairment
provision at the actual interest rate. For financial instruments in the third stage, interest income is
calculated according to the book balance minus the amortized cost at the actual interest rate after the
provision for impairment has been accrued.


When an individual financial asset can’t evaluate the information of the expected credit loss at a
reasonable cost, the Company divides the receivables into several combinations according to the
characteristics of credit risk, and calculates the expected credit loss on the basis of the combination.


For bills receivable and accounts receivable, no matter whether there is a significant financing
component, the Company measures the provision for losses according to the expected credit loss
throughout the duration.


For the bills receivable divided into portfolio, the Company calculates the expected credit loss by
referring to the historical credit loss experience, combining the current situation as well as the forecast
of the future economic situation, and through the default risk exposure and the expected credit loss
rate of the entire duration.


For the accounts receivable divided into portfolio, the Company calculates the expected credit loss by
referring to the historical credit loss experience, combining the current situation as well as the forecast
of the future economic situation, and formulating the comparison table of the overdue days of accounts
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receivable and the expected credit loss rate of the whole duration.


For other receivables divided into portfolio, the Company calculates the expected credit loss by
referring to the historical credit loss experience, combining the current situation as well as the forecast
of the future economic situation, and through the default risk exposure and the expected credit loss
rate within the next 12 months or the entire duration.


The Company will include the accrued or transferred-back provision for losses in the current profits
and losses. For debt instruments that are measured at fair value and the variation of which is included
in other comprehensive income, the Company shall adjust other comprehensive income while
including impairment loss or profit in the current profits and losses.



5.10 Inventories


5.10.1 Categories of inventories


The inventories of the Group mainly include raw materials, goods in process and finished goods.
Inventories are initially measured at cost. Inventory costs include purchase costs, processing costs and
other expenses incurred to bring inventory to its current location and condition.


The agricultural products harvested are treated in accordance with the Accounting Standard for
Business Enterprises No.1 – Inventories.


5.10.2 Valuation method of inventories upon delivery


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


5.10.3 Determination basis for net realisable value of inventories


On 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
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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.



5.10.4 Inventory count system


The perpetual inventory system is maintained for stock system.



5.10.5 Amortization method for low cost and short-lived consumable items and
packaging materials


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



5.11 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
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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 On 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.


5.12 Long-term equity investments


5.12.1 Judgment basis of 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.



5.12.2 Determination of initial investment cost


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


Audit fee, legal services, evaluation and 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 recognized using
original cost.
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5.12.3 Subsequent measurement and recognition of profit or loss


Long-term equity investment accounted for using the cost method


The financial statement of the Company 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
recognized in the period in accordance with the attributable share of cash dividends or profit
distributions declared by the investee.



5.12.4 Disposal of long-term equity investments


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



5.13 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 recognized in profit or loss
in the period in which they are incurred.


The Group uses the cost model for subsequent measurement of investment properties, and adopts a
depreciation or amortization 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 recognizes the
amount of any proceeds on disposal net of the carrying amount and related taxes in profit or loss for
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the period.


5.14 Fixed assets


5.14.1 Recognition condition


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 recognized 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
derecognized.     Other subsequent expenditures are recognized in profit or loss in the period in which
they are incurred.


5.14.2 Depreciation method


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:


                                                     Depreciation        Residual   value Annual depreciation
Classification            Depreciation method
                                                     life                rate             rate
                          Straight-line
Houses and buildings                                 20-40 years         0-5%            2.4%-5.0%
                          depreciation
                    Straight-line
                                                     5-30 years          0-5%            3.2%-20.0%
Machinery equipment depreciation
                          Straight-line
                                                     4-12 years          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.
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5.14.3 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 derecognized. 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 recognized 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.


5.15 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.


5.16 Borrowing costs


Borrowing costs directly attributable to the assets meeting the capitalization conditions during the
acquisition, construction or production shall be capitalized 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.
Capitalization of borrowing costs shall be terminated when the qualifying asset being acquired,
constructed or produced becomes ready for its intended use or sale. Capitalization of borrowing costs
is suspended during the period 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, until the acquisition, construction or production of the asset is resumed. Other borrowing
costs are recognized as an expense in the period in which they are incurred.


The interest expenses actually incurred in the current period of the special loan shall be capitalized
after deducting the interest income obtained by depositing the unused loan funds into the bank or the
investment income obtained from the temporary investment.
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5.17 Biological assets


The biological assets of the Group are productive biological assets.


Productive biological assets are biological assets, for example, held for the production of agricultural
produce, provision of services or leasing Productive biological assets in the Group are vines to
produce grapes. A productive biological asset is initially measured at cost. The cost of a productive
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:


Category              Useful life       Estimated net residual rate      Annual 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 productive biological assets.


The Group reviews the useful life and estimated net residual value of productive 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 recognized in profit or loss for
the current period.



5.18 Intangible assets
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Intangible assets include land use right, software, trademark, 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 amortized 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:
Category              Useful life       Estimated net residual rate      Annual amortization rate
Land use right        40-50 years                    -                        2%-2.5%
Software               5-10 years                        -                    10%-20%
Trademark                 10 years                                                10%


Except for the above intangible assets with finite useful life, the Group also has land use right and
trademark use right with infinite useful lives. Land use right with infinite useful life refers to the
permanent land property right held by the Company for purchasing by Via Indómita, S.A., Via Dos
Andes, S.A., and Bodegas Santa Alicia SpA. (collectively referred to as the "Chile Indomita Wine
Group") and Kilikanoon Estate Pty Ltd (hereinafter referred to as “Australian Kilikanoon Estate”)
according to related Chilean and Australian law, which doesn’t need to be amortized. Trademark use
right refers to the trademark held by the Group for purchasing Chile Indomita Wine Group and
Australian Kilikanoon Estate, which has no finite useful life. The valuation of trademark use right is
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 Amortization
method at the end of the period, and makes adjustments when necessary.


5.19 Impairment of long-term assets


The Group and the Company review the impairment status of long-term equity investments, fixed
assets, investment real estate, construction in progress, productive 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.
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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 recognized 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 recognized 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 recognized in profit or loss for the period in which it is incurred and will not be
reversed in any subsequent period.


5.20 Long-term unamortized expenses


The Long-term unamortized expenses are amortized evenly over the period of estimated earnings, and
the long-term unamortized expenses of the Group are amortized over the following period:


                           Amortization period
Land requisition fee            50 years
Land lease prepayment           50 years
Greening fee                     5-20 years
Leasehold improvement            3-5years
Other                            3 years


5.21 Employee remuneration
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5.21.1 Accounting treatments of short-te rm remuneration


In an accounting period in which an employee has rendered service to the Group, the Group
recognizes the actual long-term remuneration for that service as a liability, and includes in the current
profits and losses or the related asset costs. Employee welfare expenses incurred by the Group shall be
recorded into the current profits and losses or related asset costs according to the actual amount.
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 recognized 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 included in the current profits and
losses or related asset costs.



5.21.2 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 recognize 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.



5.21.3 Accounting treatments of termination benefits


When providing termination benefits to employees, the Group recognize 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 recognize relevant costs and expenses related to
the payment of termination benefits in reconstructuring.


5.22 Revenue


5.22.1 Revenue from sale of goods
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Revenue from sale of goods is recognized 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.


5.22.2 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 recognized only to the extent of the costs incurred that will be recoverable, and the costs
incurred are recognized as expenses for the period. When it is not probable that the costs incurred will
be recovered, revenue is not recognized.


5.23 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 recognized 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.


5.23.1 Judgment basis and accounting treatments of government grant related to an
asset


A government grant related to an asset is recognized as deferred income, and evenly amortized to
profit or loss over the useful life of the related asset.


5.23.2 Judgment basis and accounting treatments of government grant related to income
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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 recognized as deferred income, and recognized in
profit or loss over the periods in which the related costs are recognized. If the grant is a compensation
for related expenses or losses already incurred, the grant is recognized 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.



5.24 Deferred income tax assets/deferred income tax liabilities


The income tax expenses include current income tax and deferred income tax.


5.24.1 Current income tax


On 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.



5.24.2 Deferred income tax assets and deferred income 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 recognized as assets or liabilities
and their tax base that can be determined according to tax laws, deferred income tax assets and
liabilities are recognized using the balance sheet liability method.
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Deferred tax is generally recognized for all temporary differences. Deferred income tax assets for
deductible temporary differences are recognized 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 recognized.


For deductible losses and tax credits that can be carried forward, deferred income tax assets are
recognized 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 income tax liabilities are recognized 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 income tax assets arising
from deductible temporary differences associated with such investments and interests are only
recognized 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.


On the balance sheet date, deferred income 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 recognized in profit or loss for the period, except
when they arise from transactions or events that are directly recognized in other comprehensive
income or in shareholders' equity, in which case they are recognized 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.


On the balance sheet date, the carrying amount of deferred income 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 income tax assets to be utilised.         Such reduction in amount is reversed when it
becomes probable that sufficient taxable profits will be available.
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5.24.3 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
income tax assets and deferred income 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 income tax assets or liabilities are
expected to be reversed, deferred income tax assets and deferred income tax liabilities are offset and
presented on a net basis.



5.25 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.



5.25.1 Ope rating lease accounting treatments


The Group as lessee under operating leases


Operating lease payments are recognized 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 recognized 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 recognized 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
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actually arise.


5.26 Changes in major accounting policies and accounting estimates


5.26.1 Changes in major accounting policies
Content and reason of accounting policy
                                           Examination and approval procedure                      Remarks
                change
In 2017, the M inistry of Finance issued
the revised Accounting Standards for
Enterprises No.22–Recognition and
Measurement of Financial Instruments,
Accounting Standards for Enterprises
No.23–Transfer of Financial Assets,
Accounting Standards for Enterprises
No.24 –Hedging and Accounting
                                                                                  In the consolidated balance sheet on
Standards for Enterprises No.37-
                                                                                  January 1, 2019, the accounts receivable
Presentation of Financial Instruments
                                                                                  changed from RM B 242,153,083 to RM B
(hereinafter referred to as “New
                                                                                  237,781,161; the deferred income tax
Financial Instruments Standards”). From Approved by the second meeting of the
                                                                                  assets were changed from RM B
January 1, 2019, the Group conducted        eighth Board of Directors.
                                                                                  285,436,259 to RM B 286,529,239; and
accounting treatment in accordance with
                                                                                  the undistributed profit was changed from
the above newly revised standards.
                                                                                  RM B 8,008,982,547 to RM B
According to the linkage provisions, no
                                                                                  8,005,703,605.
adjustment will be made to the
information during the comparable
period. The undistributed profits at the
beginning of this reporting period will be
retroactively adjusted based on the
difference between the new standards
and the existing standards on the first day
of implementation.
According to the requirements in the
Notice on Revising, Printing &
Distributing Financial Report Format for
General Enterprises in 2019 (Cai Kuai
[2019]No. 6), in the balance sheet, the
item of “bills receivable and accounts
receivable” shall be divided into “bills
receivable” and “accounts receivable”;
                                                                                  The change of accounting policy has no
and the item of “bills payable and         Approved by the second meeting of the
                                                                                  impact on the merger and the net profit of
accounts payable” shall be divided into eighth Board of Directors.
                                                                                  the Company and the owner's equity.
“bills payable” and “accounts payable”;
in the income statement, the item of
“R&D expenses” not only reflects the
expensed expenditure incurred in the
research and development process, but
also includes the amortization of
self-developed intangible assets listed in
the item of “management expenses”.



5.26.2 Changes in major accounting estimates
      Nil

5.26.3 Particulars of first imple mentation of New Financial Instruments Standards, ne w
income standards, and ne w lease standards to adjust the first imple mentation of related
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items in the financial statements at the beginning of the year
                                             Consolidated Balance Sheet
                                                                                                                        Unit: Yuan
                Item                     December 31, 2018                     January 1, 2019                Adjusted amount
Bills receivable                                      288,667,988                                                      -288,667,988
Accounts receivable                                   242,153,083                         237,781,161                    -4,371,922
Receivables financing                                                                     288,667,988                   288,667,988
Available-for-sale       financial                         467,251                                                         -467,251
assets
Other    non-current     financial                                                            467,251                      467,251
assets
Deferred income tax assets                            285,436,259                         286,529,239                     1,092,980
Undistributed profit                                 8,008,982,547                      8,005,703,605                    -3,278,942
Total owner’s equity                                9,606,099,365                      9,602,820,423                    -3,278,942


Explanation for adjustment:
                                                                                                                        Unit: Yuan
                                                           Impact of the
                                  Book value listed                                                            Book value listed
                                                               New               Impact of changes in
                               according to the original                                                     according to the new
          Item                                               Financial           presentation of other
                             standards on December 31,                                                     standards on January 1,
                                                            Instrument           financial statements
                                        2018                                                                         2019
                                                             Standards
Bills receivable and                         530,821,071                                   -530,821,071
accounts receivable
Bills receivable                                             -288,667,988                   288,667,988
Accounts receivable                                             -4,371,922                  242,153,083                 237,781,161
Receivables financing                                         288,667,988                                               288,667,988
Available-for-sale                               467,251         -467,251
financial assets
Other        non-current                                             467,251                                               467,251
financial assets
Deferred income tax                          285,436,259        1,092,980                                               286,529,239
assets
Total                                        816,724,581        -3,278,942                                              813,445,639


                                       Balance Sheet of the Parent Company
                                                                                                                        Unit: Yuan
         Item                  December 31, 2018                      January 1, 2019                      Adjusted amount
Bills receivable                              39,885,254                                                                -39,885,254

Accounts                                       1,447,973                              1,447,973
receivable
Receivables
                                                                                     39,885,254                          39,885,254
financing
Total         owner’s                    10,023,375,582                         10,023,375,582
equity


Explanation for adjustment:
                                                                                                                         Unit: Yuan
                                  Book value listed        Impact of the        Impact of changes             Book value listed
                               according to the original       New              in presentation of          according to the new
          Item
                             standards on December 31,       Financial            other financial         standards on January 1,
                                        2018                Instrument              statements                      2019
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


                                                         Standards

Bills receivable and                     41,333,227                          -41,333,227
accounts receivable
Bills receivable                                          -39,885,254         39,885,254
Accounts receivable                                                            1,447,973                   1,447,973

Receivables financing                                      39,885,254                                    39,885,254
Other receivables                      1,025,643,356                                                   1,025,643,356
Total                                  1,066,976,583                                                   1,066,976,583



5.27 Other


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 reviews 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.


Key assumption and uncertainties in 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 income tax assets recognized by deductible loss


Deferred income 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 income tax assets that can be recognized,
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


based upon the likely timing and level of future taxable profits together with future tax planning
strategies.


Depreciation of fixed assets


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, depreciation expenses will be adjusted in the future period.


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 estimating the present value of future cash flows, it is necessary to make important
judgments about the output, selling price, related operating costs, discount rate used in calculating the
present value of the asset (or asset group), etc. In estimating the recoverable amount, the Group uses
all readily available information, including projections of production volumes, selling prices and
associated operating costs based on reasonable and supportable assumptions.


Inventory depreciation provision accrued 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.


Preparation for the measurement of the fair value of identifiable assets and liabilities of the
acquiree from a business combination
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


For the cost of business combination, the Group allocates the purchase price based on the fair value of
the identifiable assets and liabilities of the acquiree on the date of acquisition. When measuring the fair
value of the above identifiable assets and liabilities in accordance with the present value of future cash
flow, the management of the Group needs to estimate the sales growth rate based on the supply and
demand situation of the future market to forecast the cash flow, and consider to choose the appropriate
discount rate for the discount. The management may use significant accounting estimates and
judgments in the progress.



6. Taxes
6.1 The main taxes and tax rates are as follows:


Tax category               Taxation basis                                Tax rates

Value added tax            Levied on the balance between the
                                                                         13%, 9%        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 current period

Consumption tax            Levied on taxable income                      10%, 20% (Chinese)

City development tax Levied on circulation tax actually paid             7% (Chinese)

Corporate income tax Levied on taxable income                            25%(Chinese), 33.3%(France), 28%
                                                                         (Spain),      27%   (Chile),   30%
                                                                         (Australia)


6.2 Tax incentives and relative pe rmit


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.
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


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 items in the consolidated financial statement

7.1 Monetary capital

                                                                                                  Unit: Yuan
                  Item                            Ending balance                  Beginning balance
Cash on hand                                                             70,198                         114,335
Bank deposit                                                   1,756,744,006                     1,382,399,749
Other monetary capital                                             91,818,749                         93,186,393
Total                                                          1,848,632,953                     1,475,700,477


As at June 30, 2019, the restricted bank deposit details are listed as follows:
                                                                                                  Unit: Yuan
                 Item                             Ending balance                  Beginning balance
Housing fund of the unit                                            2,647,877                         2,611,350
Total                                                               2,647,877                         2,611,350


As at June 30, 2019, the details of other monetary funds are listed as follows:
                                                                                                  Unit: Yuan
                 Item                             Ending balance                  Beginning balance
Pledge of fixed deposits by Yantai
Changyu Wine Research,
                                                                   46,100,000                     46,100,000
Development and M anufacture Co.,
Ltd. (“R&D Company”)
Guaranteed deposits paid for the letter
                                                                   44,540,850                     44,540,850
of credit
Account balance of Alipay                                           1,042,367                         2,483,816
Guaranty money for the unit card                                     125,532                            51,727
Guaranty money for ICBC platform                                         10,000                         10,000
Total                                                              91,818,749                     93,186,393
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


As at June 30, 2019, the bank deposits of the Group including short-term fixed deposits ranging from
3 months to 12 months amounted to RMB 180,439,250 Yuan (December 31, 2018: RMB 173,042,400
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                               Ending balance                   Beginning balance
Bank acceptance                                                                                          288,667,988
Trade acceptance
Total                                                                                                    288,667,988



7.2.2 Provision for bad debts accrued, withdrawn or transferred back in this period

        Nil

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

        Nil

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

                                                                                                         Unit: Yuan
                                        Amount terminating recognition at the end Amount not terminating recognition
                   Item
                                                      of period                         at the end of period
Bank acceptance                                                     275,760,494
Trade acceptance
Total                                                               275,760,494


7.2.5 Bills receivable reclassified as accounts receivable by the Company due to the
default of drawe r at the end of period

        Nil

7.2.6 Bills receivable actually cancelled after verification in this period

        Nil

7.3 Accounts receivable

7.3.1 Accounts receivable disclosed by type

                                                                                                           Unit: Yuan
  Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


                                       Ending balance                                             Beginning balance
                                           Provision for bad                                            Provision for bad
                     Book balance                                                 Book balance
    Type                                         debts                                                        debts
                                                                  Book value                                                  Book value
                   Amount      Proportion Amount      Accrued                   Amount       Proportion Amount Accrued
                                                     proportion                                               proportion
Accounts
receivable for
which
provision for
                                                                               242,153,083       100%                         242,153,083
bad debts is
accrued on a
single item
basis
Including:
Accounts
receivable for
which
provision for
               191,269,049          100% 5,137,857        2.78% 186,131,192
bad debts is
accrued on a
combined
basis
Including:
Accounts
receivable for
which
provision for
               191,269,049          100% 5,137,857        2.78% 186,131,192
bad debts is
accrued by
credit risk
features
Total            191,269,049        100% 5,137,857        2.78% 186,131,192 242,153,083          100%                         242,153,083


  Provision for bad debts accrued on a combined basis:
                                                                                                                            Unit: Yuan
                                                                           Ending balance
                 Name
                                           Book balance                Provision for bad debts            Accrued proportion
  Accounts receivable for which
  provision for bad debts is                         191,269,049                         5,137,857                             2.78%
  accrued by credit risk features
  Total                                              191,269,049                         5,137,857 --


  Disclosed by age:
                                                                                                                            Unit: Yuan
                                 Age                                                          Ending balance
  Within 1 year (including)                                                                                            180,854,504
  1-2 years                                                                                                                 8,978,048
  2-3 years                                                                                                                 1,199,269
  Over 3 years                                                                                                                237,228
  Total                                                                                                                191,269,049


  As at June 30, 2019, the accounts receivable with ownership restrictions were RMB 31,134,017 Yuan
  (December 31, 2018: RMB 52,015,032 Yuan). Please refer to Note 7.18 for details.
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


7.3.2 Provision for bad debts accrued, withdrawn or transferred back in this period

Provision for bad debts accrued in this period:
                                                                                                                  Unit: Yuan
                                         Adjusted                                Changes in t his period
                       Beginning      amount in the
                       balance of           first        Beginning
                      the original   implementation    balance of the                   Withdrawn                  Ending
        Type                                                                                or
                        financial       of the New       year after      Accrued                      Cancelled    balance
                      instruments        Financial      adjustment                      transferred
                        standards      Instruments                                         back
                                         Standards
Accounts
receivable for
which provision
                                           4,371,922        4,371,922        765,935                              5,137,857
for bad debts is
accrued by credit
risk features
Total                                      4,371,922        4,371,922        765,935                              5,137,857




There were no provision for bad debts withdrawn or transferred back in this period.

7.3.3 Accounts receivable actually cancelled after verification in this period

         Nil

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

                                                                                                                  Unit: Yuan
                               Relationship with the                                                   Percentage in total
               Unit                                        Amount                      Period
                                     Company                                                           accounts receivable
Nonggongshang
Supermarket (Group) Co.,             Third party                10,077,717       Within 1 year                         5.3%
Ltd.
Suguo Supermarket Co., Ltd.          Third party                 7,168,620       Within 1 year                         3.7%
Viedos y Bodegas Las
                                     Third party                 6,917,840       Within 1 year                         3.6%
Pircas
Lianhua Supermarket                  Third party                 5,408,819       Within 1 year                         2.8%
Holdings Co., Ltd.
MARKS AND SPENCER                    Third party                 5,365,322       Within 1 year                         2.8%
Total                                    --                     34,938,318               --                          18.3%


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
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


7.4 Receivables financing

                                                                                                                 Unit: Yuan
                     Item                          Ending balance                          Beginning balance
Bank acceptance                                                     372,281,872
                   Total                                            372,281,872


7.5 Advance payment

7.5.1 Advance payment listed by age

                                                                                                             Unit: Yuan

                                              Ending balance                                Beginning sum
                Age
                                       Amount              Proportion                  Amount                Proportion

Within 1 year                               3,490,928                   100%                   4,219,949                100%

1-2 years

2-3 years

M ore than 3 years

Total                                       3,490,928          --                              4,219,949           --



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

                                                                                                                 Unit: Yuan

                                                                                                                 Percentage
                                       Relationship with                                                         in the total
            Category of client                             Amount        Age       Reason for unsettlement
                                          the Group                                                               advance
                                                                                                                 payment%

                                                                       Within 1
Ningxia Vangarie Wine Co., Ltd.           Third party       600,000               Failure to receive the goods          17.2%
                                                                         year

Yantai Power Supply Company of State
                                                                       Within 1       Prepaid electricity
Grid Shandong Electric Power              Third party       500,000                                                     14.3%
                                                                         year          purchasing fund
Company

                                                                       Within 1
DONELLI VINI S.P.A.                       Third party       463,523               Failure to receive the goods          13.3%
                                                                         year

YEDA Thermal Power Construction &                                      Within 1
                                          Third party       250,545               Failure to receive the goods          7.2%
Installation Engineering Co., Ltd.                                       year

Yantai Deyi Hardware M echanical &                                     Within 1
                                          Third party       192,045               Failure to receive the goods          5.5%
Electrical Co., Ltd.                                                     year
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


                    Total                      --          2,006,113       --                   --                   57.4%



7.6 Other receivables

                                                                                                                 Unit: Yuan

                      Item                          Ending balance                           Beginning balance
Interest receivable                                                    2,099,109                                  1,332,681
Dividends receivable
Other receivables                                                    26,519,874                                  21,303,405
Total                                                                28,618,983                                  22,636,086


7.6.1 Inte rest receivable

                                                                                                                 Unit: Yuan
                    Item                            Ending balance                           Beginning balance
Fixed deposit                                                           2,099,109                                 1,332,681
Entrusted loan
Bond investment
Total                                                                   2,099,109                                 1,332,681


7.6.2 Other receivables

7.6.2.1 Other receivables classified by nature

                                                                                                                 Unit: Yuan
                             Nature                             Ending book balance           Beginning book balance
Deposit and guaranty money receivable                                            9,991,516                       10,453,624
Imprest receivable                                                               2,776,485                        2,274,038
Accounts receivable from related parties                                         1,911,880                         813,440
Consumption tax and added-value tax export rebate                                9,651,893                        6,273,882
Other                                                                            2,188,100                        1,488,421
Total                                                                           26,519,874                       21,303,405


7.6.2.2 Disclosed by age

                                                                                                             Unit: Yuan
                             Age                                                    Ending balance

Within 1 year (including)                                                                                        15,284,516

1-2 years                                                                                                         1,162,933

2-3 years                                                                                                         8,302,579

M ore than 3 years                                                                                                1,769,846

Total                                                                                                            26,519,874
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


7.6.2.3 Provision for bad debts accrued, withdrawn or transferred back in this period

The provision for bad debts accrued in this period was RMB 0 Yuan; and that withdrawn or
transferred back in this period was RMB 0 Yuan.

7.6.2.4 Other receivables actually cancelled after verification in this period

        Nil
7.6.2.5 Othe r receivables collected by the borrowe rs of top 5 units ranked by the ending
balance
                                                                                                              Unit: Yuan
                                                                                Percentage in total    Ending balance of
                                               Ending
               Unit               Nature                         Age         ending balance of other   provision for bad
                                               balance
                                                                               accounts receivable           debts
                           Construction
YEDA Construction Industry guaranty
                                                7,709,477 Within 3 years                     29.10%
Association
                           money
                              Lease
Yantai God Horse Packing Co.,
                              payment           1,626,880 Within 1 year                       6.10%
Ltd. Printing Branch          receivable

Yantai Zhongya M edical Health Lease
                               payment               285,000 Within 1 year                    1.10%
Wine Co., Ltd.
                               receivable
                               Guaranty
YEDA Finance Bureau                                  198,056 Within 1 year                    0.70%
                               money
Yantai Power Supply Company
of State Grid Shandong Electric Deposit               80,000 Within 1 year                    0.30%
Power Company
Total                                --         9,899,413          --                        37.30%


7.6.2.6 Accounts receivable involving government s ubsidies

         Nil

7.6.2.7 Othe r receivables that are terminated for recognition due to transfer of financial
assets

         Nil

7.6.2.8 Other receivables transferred and then included in assets and liabilities

         Nil

7.7 Inventories

7.7.1 Inventory classification

                                                                                                              Unit: Yuan
        Item                        Ending balance                                    Beginning balance
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


                                             Depreciation                                          Depreciation
                          Book balance                         Book value       Book balance                         Book value
                                              provision                                             provision
Raw materials                   88,705,179                        88,705,179        67,267,035                           67,267,035
Goods in process           1,837,958,108                       1,837,958,108     1,787,819,923                       1,787,819,923
Commodity stocks               698,652,646     18,534,497        680,118,149       894,187,725         24,683,226      869,504,499
Total                      2,625,315,933       18,534,497      2,606,781,436     2,749,274,683         24,683,226    2,724,591,457


7.7.2 Inventory depreciation provision

                                                                                                                         Unit: Yuan
                                                 Increase in this period             Decrease in this period
                            Beginning
        Item                                                                    Transfer back or                    Ending balance
                             balance           Accrual             Other                               Other
                                                                                   write-off
Raw materials
Goods in process
Commodity stocks               24,683,226                                             6,148,729                          18,534,497
Total                          24,683,226                                             6,148,729                          18,534,497


7.8 Other current assets

                                                                                                                         Unit: Yuan

                   Item                                     Ending balance                           Beginning balance
Prepaid corporate income tax                                                  70,523,939                                 24,077,323
Deductible input tax                                                         229,478,097                               233,087,707
Rent to be amortized                                                            416,865                                   1,511,366
Total                                                                        300,418,901                               258,676,396


7.9 Other non-current financial assets

                                                                                                                         Unit: Yuan

                   Item                                     Ending balance                           Beginning balance
Other                                                                           515,922
Total                                                                           515,922




7.10 Investment real estate

7.10.1 Investment real estate by cost measurement method

                                                                                                                         Unit: Yuan
                                     Houses and                                      Construction in
            Item                                            Land use right                                           Total
                                      buildings                                         progress
Ⅰ Original book value
  1. Beginning balance                   70,954,045                                                                      70,954,045
  2. Increase in this period
    2.1 Outsourcing
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


                               Houses and                                 Construction in
               Item                                Land use right                                      Total
                                buildings                                    progress
     2.2 Transfer in from
inventories\fixed assets\
construction in progress
     2.3 Business merger
increase
  3. Decrease in this period
     3.1 Disposal
     3.2 Other transfer out
  4. Ending balance                70,954,045                                                                70,954,045
Ⅱ Accumulated depreciation
& accumulated amortization
  1. Beginning balance             39,381,556                                                                39,381,556
  2. Increase in this period        1,012,019                                                                 1,012,019
    2.1 Accrual or
                                    1,012,019                                                                 1,012,019
amortization
  3. Decrease in this period
     3.1 Disposal
     3.2 Other transfer out
  4. Ending balance                40,393,575                                                                40,393,575
Ⅲ Impairment provision
  1. Beginning balance
  2. Increase in this period
     2.1 Accrual
  3. Decrease in this period
     3.1 Disposal
     3.2 Other transfer out
  4. Ending balance
Ⅳ Book value
  1. Ending book value             30,560,470                                                                30,560,470
  2. Beginning book value          31,572,489                                                                31,572,489


7.11 Fixed assets
                                                                                                             Unit: Yuan
                      Item                        Ending balance                         Beginning balance
Fixed assets                                                    5,684,612,653                          5,749,731,667
Disposal of fixed assets
Total                                                           5,684,612,653                          5,749,731,667


7.11.1 Particulars of fixed assets

                                                                                                             Unit: Yuan
                               Houses and
               Item                             M achinery equipment     Construction tools            Total
                                buildings
Ⅰ Original book value:
  1. Beginning balance          4,761,426,425           2,665,798,814             26,580,639           7,453,805,878
  2. Increase in this period       33,949,084              48,642,164               1,281,845                83,873,093
     2.1 Acquisition                4,174,052              13,254,325               1,281,845                18,710,222
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


                                     Houses and
             Item                                      M achinery equipment      Construction tools         Total
                                      buildings
     2.2 Transfer in from
                                         29,775,032                35,387,839                                  65,162,871
construction in progress
     2.3 Business merger
increase
  3. Decrease in this period               5,422,920                 2,867,114                456,453           8,746,487
      3.1 Disposal or
                                           5,422,920                 2,867,114                456,453           8,746,487
retirement
  4. Ending balance                   4,789,952,589              2,711,573,864            27,406,031        7,528,932,484
Ⅱ Accumulated depreciation
  1. Beginning balance                  621,266,769              1,062,064,237            20,743,205        1,704,074,211
  2. Increase in this period             67,239,979                79,376,506               1,071,000         147,687,485
     2.1 Accrual                         67,239,979                79,376,506               1,071,000         147,687,485
  3. Decrease in this period               4,489,447                 2,518,788                433,630           7,441,865
      3.1 Disposal or
                                           4,489,447                 2,518,788                433,630           7,441,865
retirement
  4. Ending balance                     684,017,301              1,138,921,955            21,380,575        1,844,319,831
Ⅲ Impairment provision
  1. Beginning balance
  2. Increase in this period
     2.1 Accrual
  3. Decrease in this period
      3.1 Disposal or
retirement
  4. Ending balance
Ⅳ Book value
  1. Ending book value                4,105,935,288              1,572,651,909              6,025,456       5,684,612,653
  2. Beginning book value             4,140,159,656              1,603,734,577              5,837,434       5,749,731,667


As at June 30, 2019, the net value of the fixed assets with ownership restrictions was RMB
353,013,613 Yuan (December 31, 2018: RMB 412,006,421 Yuan). Please refer to Note 7.51
for details.

7.11.2 Particulars of te mporarily idle fixed assets

                                                                                                               Unit: Yuan
                               Original book      Accumulated          Depreciation
          Item                                                                            Book value        Remarks
                                   value          depreciation          reserves
Temporarily idle fixed
                                 124,758,075            67,762,891                             56,995,184
assets




7.11.3 Particulars of fixed assets under finance leases

      Nil

7.11.4 Fixed assets under operating lease

                                                                                                               Unit: Yuan
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report


                              Item                                                    Ending book value
M achinery equipment                                                                                                 115,720


7.11.5 Particulars of fixed assets without property certificates

                                                                                                                   Unit: Yuan
                                                                                      Reason for not receiving the property
                                 Item                                Book value
                                                                                                   certificate
Industrial Production Center of the R&D Company                      1,733,732,977             Under transaction
Dormitory Building, M ain Building and Reception Building of
                                                                       280,709,011             Under transaction
Chang’an Chateau
European Town, M ain Building and Service Building of Beijing
                                                                       184,687,307             Under transaction
Chateau
M ain Building of Yantai Chateau Changyu Tinlot                         81,685,892             Under transaction
Fermentation Workshop and Wine Storage Workshop of Xinjiang
                                                                        17,499,421             Under transaction
Tianzhu
Office Building and Packaging Workshop of Icewine Valley                 9,044,465             Under transaction
Wine-making Workshop of Changyu (Jingyang)                               4,017,018             Under transaction
Office Building, Laboratory Building and Workshop of
                                                                         3,572,175             Under transaction
Fermentation Center
Finished Goods Warehouse and Workshop of Kylin Packaging                 2,351,511             Under transaction
Office Building of Guangxi Guilin Office and Office Building of
                                                                         1,110,076             Under transaction
Shanxi Datong Office
Total                                                                2,318,409,853             Under transaction


7.12 Construction in progress

7.12.1 Particulars of construction in progress

                                                    Ending balance                            Beginning balance
                 Item                                  Impairment                                  Impairment
                                        Book balance                 Book value    Book balance               Book value
                                                        provision                                   provision
Research, Development & M anufacture
Center (“Changyu Wine City          672,975,492                     672,975,492     608,553,617               608,553,617
Complex”)
Construction Project of Chang’an
                                          17,537,828                  17,537,828      39,793,893                  39,793,893
Chateau
Construction Project of Ningxia
                                          47,371,353                  47,371,353      47,163,863                  47,163,863
Chateau
Construction Project of Shihezi
                                             379,517                     379,517      23,664,124                  23,664,124
Chateau
Construction Project of Sales Company     19,145,181                  19,145,181      17,985,882                  17,985,882
Construction Projects of Other
                                          32,463,002                  32,463,002      22,135,212                  22,135,212
Companies
Total                                    789,872,373                 789,872,373     759,296,591               759,296,591
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annualFinancial Report




7.12.2 Changes of major construction in progress in this pe riod

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

                                                                                                                                                                                                Loans form financial
Changyu Wine City                                                                                                                                                            1.20% and            institutions and
                          4,505,780,000   608,553,617 105,008,609 30,903,286 9,683,448 672,975,492                        76.60%                           16,954,039
Complex                                                                                                                                                                         4.3%             self-raised funds

Construction Project of                                                                                                                                                                          Self-raised funds
                           620,740,000     39,793,893    7,523,270 29,779,335                        17,537,828          109.90%
Chang’an Chateau
Construction Project of                                                                                                                                                                          Self-raised funds
                           780,000,000     23,664,124    4,615,627        138,172 27,762,062            379,517           96.90%
Shihezi Chateau
Construction Project of                                                                                                                                                                          Self-raised funds
                           161,350,000     17,985,882    1,262,622        103,323                    19,145,181           98.50%
Sales Company
Construction Project of                                                                                                                                                                          Self-raised funds
                            41,415,000     47,163,863      207,490                                   47,371,353          102.60%
Ningxia Chateau
                          6,109,285,000   737,161,379 118,617,618 60,924,116 37,445,510 757,409,371                       --                --             16,954,039                                    --
Total
As at June 30, 2019, there was no indication for impairment of construction in progress of the Group, so no provision for impairment was made.
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report




7.13 Productive biological assets

7.13.1 Productive biological assets by cost measurement method

                                                                                                 Unit: Yuan
                      Item                                      Plantation                     Total
                                                    Immature                 M ature
Ⅰ Original book value
  1. Beginning balance                                   13,837,608              235,246,042    249,083,650
  2. Increase in this period                              -4,798,454               9,593,745      4,795,291
    2.1 Outsourcing
    2.2 Self cultivation                                   2,388,310               2,406,981      4,795,291
    The immature turn to the mature                       -7,186,764               7,186,764
  3. Decrease in this period
    3.1 Disposal
    3.2 Other
  4. Ending balance                                        9,039,154             244,839,787    253,878,941
Ⅱ Accumulated depreciation
  1. Beginning balance                                                            39,817,277     39,817,277
  2. Increase in this period                                                       6,448,225      6,448,225
    2.1 Accrual                                                                    6,448,225      6,448,225
  3. Decrease in this period
    3.1 Disposal
    3.2 Other
  4. Ending balance                                                               46,265,502     46,265,502
Ⅲ Impairment provision
  1. Beginning balance
  2. Increase in this period
    2.1 Accrual
  3. Decrease in this period
    3.1 Disposal
    3.2 Other
  4. Ending balance
Ⅳ Book value
  1. Ending book value                                     9,039,154             198,574,285    207,613,439
  2. Beginning book value                                13,837,608              195,428,765    209,266,373


As at June 30, 2019, no ownership of the biological assets was restricted.


As at June 30, 2019, there was no indication for impairment of biological assets of the Group, so no
provision was made.
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


7.14 Intangible assets

7.14.1 Particulars of intangible assets

                                                                                                 Unit: Yuan

             Item                Land use right      Software use right      Trademark        Total


Ⅰ Original book value


   1. Beginning balance               528,252,911               75,822,057      170,068,735    774,143,703

   2. Increase in this period               16,176                107,993                             124,169
       2.1 Acquisition                      16,176                107,993                             124,169
       2.2 Internal R&D

        2.3 Business merger
increase

   3. Decrease in this period
       3.1 Disposal
   4. Ending balance                  528,269,087               75,930,050      170,068,735    774,267,872
Ⅱ Accumulated amortization

   1. Beginning balance                78,070,910               26,722,815       13,876,519    118,670,244

   2. Increase in this period            5,231,260               3,185,493          21,989        8,438,742
       2.1 Accrual                       5,231,260               3,185,493          21,989        8,438,742
   3. Decrease in this period
       3.1 Disposal
   4. Ending balance                   83,302,170               29,908,308       13,898,508    127,108,986
Ⅲ Impairment provision

   1. Beginning balance

   2. Increase in this period
       2.1 Accrual
   3. Decrease in this period
       3.1 Disposal
   4. Ending balance
Ⅳ Book value

  1. Ending book value                444,966,917               46,021,742      156,170,227    647,158,886

  2. Beginning book value             450,182,001               49,099,242      156,192,216    655,473,459



As at June 30, 2019, the net value of the intangible assets with ownership restrictions was
RMB 215,282,924 Yuan (December 31, 2018: RMB 218,070,414 Yuan). Please refer to
Note 7.51 for details.
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


7.14.2 Particulars of land use right of that not receiving the property ce rtificate

        Nil

7.15 Goodwill

                                                                                                                         Unit: Yuan
Name of the invested                           Increase in this period              Decrease in this period
                          Beginning
unit or matter forming                     Formed by business                                                      Ending balance
                           balance                                   Other          Disposal         Other
       goodwill                                 merger
Etablissements Roullet
Fransac (“Roullet            13,112,525                                                                                 13,112,525
Fransac”)
Dicot Partners, S.L
                              92,391,901                                                                                 92,391,901
(“Atrio Group”)
Societe Civile
Argricole Du Chateau
                              15,761,440                                                                                 15,761,440
De M irefleurs
(“M irefleurs”)
Indomita Wine
                               6,870,115                                                                                  6,870,115
Company Chile, SpA
Kilikanoon Estate,
                              37,063,130                                                                                 37,063,130
Australia
         Total            165,199,111                                                                                   165,199,111


7.16 Long-term unamortized expenses

                                                                                                                         Unit: Yuan
                                                Increase in this     Amortization in this
        Item           Beginning balance                                                       Other decrease      Ending balance
                                                    period                period
Land lease fees                 54,217,763                                      1,073,811                                53,143,952
Land acquisition
                                43,427,739                                        215,293                                43,212,446
fees
Afforestation fees             141,224,472              9,683,449               4,615,467                               146,292,454
Renovation costs                   775,647            27,762,062                  476,300                                28,061,409
Other                            4,994,795              1,134,446                 281,791                                 5,847,450
Total                          244,640,416            38,579,957                6,662,662                               276,557,711


Remarks: The amount transferred to long-term unamortized expenses from construction in
progress was RMB 38,234,356 Yuan.

7.17 Deferred income tax assets/liabilities

7.17.1 Un-offset deferred income tax assets

                                                                                                                         Unit: Yuan
                                                                   Ending Balance                       Beginning Balance

                       Item                             Deductible                                 Deductible
                                                                             Deferred income                       Deferred income
                                                        temporary                                  temporary
                                                                                tax assets                            tax assets
                                                        difference                                 difference
Unrealized profits from inter-company
                                                           383,079,453            95,769,863         602,476,583        150,619,145
transactions
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                                                             Ending Balance                     Beginning Balance
                     Item                          Deductible                              Deductible
                                                                       Deferred income                       Deferred income
                                                   temporary                               temporary
                                                                          tax assets                            tax assets
                                                   difference                              difference
Unpaid bonus                                             107,118,804          26,808,863     141,808,257           35,485,814
Dismission welfare                                        21,108,526           5,277,132      26,186,243            6,546,561
Asset impairment provision                                23,672,354           5,918,088      24,683,226            6,170,807
Deductible loss                                          326,241,084          83,564,280     262,937,999           67,566,387
Deferred income                                           78,596,149          17,132,928      86,227,293           18,868,963
Asset valuation impairment                                  649,811             175,449          661,415              178,582
Total                                                    940,466,181       234,646,603     1,144,981,016         285,436,259


7.17.2 Un-offset deferred income tax liabilities

                                                                                                                   Unit: Yuan
                                                             Ending Balance                     Beginning Balance

                     Item                             Taxable                                Taxable
                                                                       Deferred income                       Deferred income
                                                    temporary                              temporary
                                                                        tax liabilities                       tax liabilities
                                                    difference                             difference
Assets appraisal appreciation in business merger
                                                          69,392,888          18,629,612      81,338,130           22,010,647
under non-common control
Total                                                     69,392,888          18,629,612      81,338,130           22,010,647


7.17.3 Details of unconfirme d deferred income tax assets

                                                                                                                   Unit: Yuan

                     Item                                    Ending balance                     Beginning balance

Deductable temporary difference

Deductible loss                                                            157,722,738                           171,430,831

Total                                                                      157,722,738                           171,430,831



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

                                                                                                                   Unit: Yuan

          Year                    Ending sum                  Beginning sum                       Remark

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                  21,110,792

2024                                         7,726,790

Total                                     157,722,738                  164,119,558                      --
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7.18 Short-term loans

7.18.1 Classification of short-term loans
                                                                                                       Unit: Yuan
                   Item                               Ending balance                 Beginning balance
Pledge loan
M ortgage loan                                                         65,507,517                      79,467,832
Guaranteed loan                                                         7,145,835                        3,331,870
Fiduciary loan                                                     605,517,315                      605,202,708
Total                                                              678,170,667                      688,002,410


As at June 30, 2019, the mortgage loans referred to a loan of factoring business for accounts
receivable of EUR 3,982,860 (equivalent to RMB 31,134,017 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, 2018: RMB 52,015,032 Yuan), a loan of USD 5,000,000
(equivalent to RMB 34,373,500 Yuan) that Indomita Wine Company Chile, SpA borrowed
from BBVA bank by mortgage of its fixed assets of CLP 2,931,854,000 (equivalent to RMB
29,904,911 Yuan) (December 31, 2018: RMB 27,452,800 Yuan). The guaranteed loan
referred to a loan borrowed by the Company from Australia & New Zealand Banking with a
guarantee for Kilikanoon Estate, Australia of AUD 1,483,893 (equivalent to RMB 7,145,835
Yuan) (December 31, 2018: RMB 3,331,870 Yuan).

7.19 Accounts payable

7.19.1 List of accounts payable

                                                                                                       Unit: Yuan
                   Item                               Ending balance                 Beginning balance
Trade accounts payable                                           539,459,878                       713,572,881
Total                                                            539,459,878                       713,572,881


7.19.2 Explanation of significant accounts payable aged more than one year

As at June 30, 2019, there were no significant accounts payable aged more than one year.


7.20 Advances from customers

7.20.1 List of advances from customers

                                                                                                       Unit: Yuan
                     Item                                 Ending sum                   Beginning sum
Advances from customers                                                177,549,080                  226,075,244
Total                                                                  177,549,080                  226,075,244


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


As at June 30, 2019, the Company had no advances from customers of significant amount
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


aged more than one year.


7.21 Employee remunerations payable

7.21.1 List of employee remune rations payable

                                                                                                                          Unit: Yuan
                                                                     Increase in this      Decrease in this
                    Item                   Beginning balance                                                       Ending balance
                                                                         period                period
1. Short-term remuneration                        185,893,109            214,884,524             245,100,514             155,677,119
2. Post-employment welfare – defined
                                                      224,865             27,605,713              27,149,855                 680,723
contribution plan
3. Dismission welfare                              26,186,243              1,310,247               6,387,964              21,108,526
4.Other welfare due within one year
Total                                             212,304,217            243,800,484             278,638,333             177,466,368


7.21.2 List of short-term remunerations

                                                                                                                           Unit: Yuan
                                                                        Increase in this       Decrease in this
                   Item                    Beginning balance                                                        Ending balance
                                                                            period                 period
1. Salaries, bonuses, allowances
                                                    187,685,990               188,388,623           215,640,569          160,434,044
and subsidies
2. Staff welfare                                      3,014,288                 4,969,229              7,875,107             108,410
3. Social insurance charges                             461,095                14,314,931             14,435,562             340,464
Including: M edical insurance                           460,440                12,510,735             12,656,526             314,649
           Injury insurance                                    655                914,251                889,091              25,815
           M aternity insurance                                                   889,945                889,945
4. Housing fund                                          52,510                 6,147,006              6,191,272                8,244
5. Union fee and staff education fee                  1,914,079                 1,064,735              1,033,635           1,945,179
6.    Short-term           compensated
absences

7. Short-term profit-sharing plan

M inus: Those             divided   into
                                                      7,234,853                                           75,631           7,159,222
non-current assets
Total                                               185,893,109               214,884,524           245,100,514          155,677,119


7.21.3 List of defined contribution plan

                                                                                                                           Unit: Yuan
                   Item                    Beginning balance                Increase              Decrease          Ending balance
1. Basic endowment insurance                            224,533                26,914,033             26,457,843             680,723
2. Unemployment insurance                                      332                691,680                692,012
3. Enterprise annuity payment
Total                                                   224,865                27,605,713             27,149,855             680,723
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


7.21.4 Dismission welfare

                                                                                                                      Unit: Yuan
                   Item                    Beginning balance         Increase                  Decrease          Ending balance
1. Compensation for server of labor                                       1,275,387                  1,275,387                 -
relation
2. Compensation for early retirement                26,186,243               34,860                  5,112,577        21,108,526
Total                                               26,186,243            1,310,247                  6,387,964        21,108,526


7.22 Taxes and dues payable

                                                                                                                      Unit: Yuan
                          Item                                   Ending balance                      Beginning balance
Value added tax                                                                   28,114,274                          36,442,868
Consumption tax                                                                    9,089,447                          28,636,646
Corporate income tax                                                              59,137,357                          40,869,507
Individual income tax                                                               276,031                            5,669,099
Urban maintenance and construction tax                                             2,407,009                           4,337,712
Property tax                                                                       5,406,700                           5,165,128
Urban land use tax                                                                 2,255,344                           2,476,527
Other                                                                              2,314,640                           5,315,303
Total                                                                           109,000,802                         128,912,790


7.23 Other payables

                                                                                                                      Unit: Yuan
                   Item                                Ending balance                             Beginning balance
Interest payable                                                          2,669,667                                     712,826
Dividends payable                                                       412,646,375
Other payables                                                          562,350,965                                 607,767,064
Total                                                                   977,667,007                                 608,479,890


Remarks: Other payables in the above list refer to the payables after deducting interest
payable and dividends payable.

7.23.1 Inte rest payable
                                                                                                                      Unit: Yuan
                          Item                                   Ending balance                      Beginning balance
Interest of long-term loans with interest paid by
installment and principal paid on maturity
Interest of corporate bonds
Interest payable of short-term loans                                               2,669,667                             712,826
Interest of preferred shares\ perpetual bonds
divided into financial liabilities
Other
Total                                                                              2,669,667                             712,826
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


7.23.2 Dividends payable

                                                                                                                  Unit: Yuan
                         Item                                   Ending balance                    Beginning balance
Ordinary stock dividends                                                      411,278,400
Preferred stock dividends/sustainable debt dividends
divided into equity instruments
Other                                                                         1,367,975.00
Total                                                                       412,646,375.00


7.23.3 Other payables

7.23.3.1 Other payables listed by nature

                                                                                                                  Unit: Yuan
                      Item                                   Ending balance                      Beginning balance
Dealer’s deposit payable                                                    166,741,693                         159,191,138
Equipment purchase and construction costs
                                                                              93,902,789                         152,825,734
payable
Transportation charges payable                                                15,579,562                          38,867,725
Trademark use fees payable for Changyu Group
                                                                                                                  78,414,978
Company
Advertisement marketing expenses payable                                     209,606,196                          96,429,861
Employee cash deposit                                                            869,282                           2,806,766
Supplier’s deposit payable                                                   18,732,029                          15,901,210
Contracting fees payable                                                      19,130,850                          27,070,584
Other                                                                         37,788,564                          36,259,068
Total                                                                        562,350,965                         607,767,064


7.23.3.2 Other significant accounts payable aged more than one year

                                                                                                                  Unit: Yuan
                       Item                                Ending balance              Cause of unpayment or carry -over
Beijing Qinglang Ecological Agriculture
Technology Development Co., Ltd. (“Beijing                              3,513,506 The contracting fees haven’t been settled
Qinglang”)
VASF Company                                                             4,878,866 The contracting fees haven’t been settled
Total                                                                    8,392,372                     --


7.24 Non-current liabilities due within one year

                                                                                                                  Unit: Yuan
                  Item                                 Ending balance                        Beginning balance
Long-term loans due within one                                       146,362,314                                118,940,788
year
Bonds payable due within one year
Long-term accounts payable due                                          34,000,000                                34,000,000
within one year
Lease liabilities due within one
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


year
Total                                                             180,362,314                            152,940,788


7.25 Other current liabilities

                                                                                                          Unit: Yuan
                     Item                             Ending balance                      Beginning balance
Short-term bonds payable
Refunds payable
Deferred income                                                        14,545,254                         15,860,254
Total                                                                  14,545,254                         15,860,254


7.26 Long-term loans

7.26.1 Classification of long-term loans

                                                                                                          Unit: Yuan
                     Item                             Ending balance                      Beginning balance
Pledge loan
M ortgage loan                                                          3,529,655                             3,924,916
Guaranteed loan                                                        98,156,000                        110,750,000
Fiduciary loan                                                         64,263,595                         41,805,746
Total                                                               165,949,250                          156,480,662


Description of the classification of long-term loans:
                                                                                                           Unit: Yuan
              Item                  Ending balance         Long-term loan due within one Long-term loan due over one
                                                                       year                         year
Pledge loan
M ortgage loan                                 6,616,377                      3,086,722                   3,529,655
Guaranteed loan                              116,906,000                     18,750,000                  98,156,000
Fiduciary loan                               188,789,187                    124,525,592                  64,263,595
Total                                        312,311,564                    146,362,314                 165,949,250

As at June 30, 2019, the guaranteed loan referred to the long-term loan of RMB 68,750,000
Yuan borrowed by the Company for the R&D Company by means of credit guarantee
(December 31, 2018: 81,250,000 Yuan), which was borrowed from Australia & New Zealand
Banking by the Company for Kilikanoon Estate, Australia of AUD 10,000,000 (equivalent to
RMB 48,156,000 Yuan) (December 31, 2018: 48,250,000 Yuan). The mortgage loan referred
to the loan of EUR 678,868 (equivalent to RMB 5,306,710 Yuan) borrowed from Popular
Espaol by Marques del Atrio by mortgaging its fixed assets of EUR 2,900,925 (equivalent to
RMB 22,676,531 Yuan) (December 31, 2018: RMB 6,749,944 Yuan). Kilikanoon Estate,
Australia borrowed a loan of AUD 271,963 (equivalent to RMB 1,309,667 Yuan) by pledging
its fixed assets of AUD 503,163 (equivalent to RMB 2,423,032 Yuan) from NAB bank
(December 31, 2018: RMB 48,250,000 Yuan).
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


7.27 Long-term accounts payable

7.27.1 Long-term accounts payable listed by nature

                                                                                                              Unit: Yuan
Item                                                                       Ending balance        Beginning balance
China Agricultural Development Key Construction Fund                               201,000,000             225,000,000
Total                                                                              201,000,000             225,000,000


In 2016, Agricultural Development Fund invested RMB 305,000,000 Yuan in the Research,
Development & Manufacture 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 Research, Development & Manufacture
Company or bear the losses of the Research, Development & Manufacture Company.
Accordingly, the investment of the Agricultural Development Fund in the Research,
Development & Manufacture Company is equity investment nominally, which is debt
investment (finance discount interest loan) in deed. The Group included the investment of the
Agricultural Development Fund in long-term accounts payable measured by amortized cost.
From January to June 2019, the Group gave back the principal of RMB 24,000,000 Yuan.
Refer to Note 7.51 for details of mortgaged and pledged assets.
                                                                                                              Unit: Yuan
   Balance of long-term accounts          Long-term accounts payable Long-term accounts payable due in one
              payable                        due within one year                  year later
                            235,000,000                       34,000,000                                   201,000,000



7.28 Deferred income

                                                                                                              Unit: Yuan
                                          Increase in this     Decrease in this
        Item          Beginning balance                                            Ending balance       Forming reason
                                              period               period
Governmental
                             86,227,293           4,465,398          12,096,542          78,596,149
subsidy
M inus: Those
included in current          15,860,254                                1,315,000         14,545,254
liabilities
Non-current
                             70,367,039           4,465,398          10,781,542          64,050,895           --
liabilities



Projects related to gove rnme ntal subsidy

                                                                                                              Unit: Yuan
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


                                     Amount
                                        of     Amount      Amount
                                                                         Amount
                                     subsidy included in included in
                          Beginning                                       offset   Other     Ending          Related to
   Item of liabilities                newly non-operating other
                           balance                                       the cost changes    balance       assets/income
                                    increased revenue in income in       expenses
                                      in this this period this period
                                      period
Grape bulk wine
                           3,304,500                          717,450                        2,587,050 Related to assets
brewing project
Reward for investment
in fixed assets of
                           6,996,600                        1,140,000                        5,856,600 Related to assets
Chateau Shihezi
project
Industrial revitalization
and technical
transformation project 15,642,000                             711,000                       14,931,000 Related to assets
in Xinjiang
Special subsidy for
supporting                 4,240,000                          530,000                        3,710,000 Related to assets
infrastructure
Tourism development                                                                                    Related             to
                            500,000                                                            500,000 income
fund subsidy project
Construction project of
grape brewing
                           3,200,000                          200,000                        3,000,000 Related to assets
production capacity
(Huanren)
Electronic traceability
                           2,525,257                          333,527                        2,191,730 Related to assets
system project of wine
Wine industry
                            558,000                             93,000                         465,000 Related to assets
development project
Peninsula blue
economic zone              6,000,000                        1,000,000                        5,000,000 Related to assets
construction project
Technical
transformation project
of information-based       2,900,000                          290,000                        2,610,000 Related to assets
system construction
engineering
Cross-border                                                                                           Related to
                            880,256                             67,114                         813,142 income
e-commerce project
Fund for water
                                                                                                         Related to
pollution treatment         206,530                             56,801                         149,729
                                                                                                         income
project
Infrastructure
                           1,718,750                            62,500                       1,656,250 Related to assets
construction project
Supporting fund for
industrial development 32,800,000                           2,050,000                       30,750,000 Related to assets

Subsidy for economic
and energy-saving
                           1,026,400                            64,150                         962,250 Related to assets
technical
transformation project
Special fund for
efficient water-saving     1,639,000                            81,000                       1,558,000 Related to assets
irrigation project
Guiding fund for the
                                                                                                       Related to
development of service     2,000,000 4,200,000              4,700,000                        1,500,000 income
industry
                                                                                                         Related to
Subsidy for boiler           90,000                                                             90,000
                                                                                                         income
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


                                       Amount
                                          of     Amount      Amount
                                                                            Amount
                                       subsidy included in included in
                            Beginning                                        offset   Other        Ending         Related to
   Item of liabilities                  newly non-operating other
                             balance                                        the cost changes       balance      assets/income
                                      increased revenue in income in        expenses
                                        in this this period this period
                                        period

renovation and
demolition
Subsidy for
mechanical                              265,398                                                      265,398 Related to assets
development
Total                       86,227,293 4,465,398               12,096,542                        78,596,149
M inus: Those included
                       15,860,254                               1,315,000                        14,545,254
in current liabilities
Non-current liabilities     70,367,039 4,465,398               10,781,542                        64,050,895


7.29 Other non-current liabilities

                                                                                                                    Unit: Yuan
                         Item                              Ending balance                          Beginning balance
Employee remunerations p ayable                                             7,159,222                                  7,234,853
Total                                                                       7,159,222                                  7,234,853


As at June 30, 2019, 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 2020 to 2022 as predicted.

7.30 Share capital

                                                                                                                    Unit: Yuan
                                                   Increase or decrease (+,-) in this period
                                                                    Share
                      Beginning                                  transferred                                        Ending
                       balance    Newly issued     Allocated                                                        balance
                                                                    from             Other          Subtotal
                                    shares          shares
                                                                accumulation
                                                                    fund
Total shares     685,464,000                                                                                     685,464,000

7.31 Capital reserves

                                                                                                                    Unit: Yuan
                                                                                        Decrease in this
               Item                 Beginning balance     Increase in this period                              Ending balance
                                                                                            period
Capital premium (Share
                                            560,038,853                                                            560,038,853
capital premium)
Other capital reserves                        5,916,588                                                                5,916,588
Total                                       565,955,441                                                            565,955,441


7.32 Other comprehensive income

                                                                                                                     Unit: Yuan
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


                                                                      Amount incurred in this period
                                                                   M inus: amount
                                                       Amount         included in
                                         Beginning      incurred          other      M inus: Attributable Attributable     Ending
                Item                                     before    comprehensive income to parent to minority
                                          balance                                                                          balance
                                                      income tax    income before     tax     company shareholders
                                                         in this   and transferred expenses after tax      after tax
                                                         period    to profit or loss
                                                                     in this period
1. Other comprehensive income
not to be reclassified into profit
and loss later
Including: change in net liabilities
and net assets from recalculated
defined benefit plan
       Share enjoyed in other
comprehensive income not to be
reclassified into profit and loss in
invested unit under equity law
2. Other comprehensive income to
be reclassified into profit and loss      2,965,377   -4,657,291                             -3,060,721      -1,596,570      -95,344
later
Including: share enjoyed in other
comprehensive income to be
reclassified into profit and loss in
invested unit under equity law
        Profit and loss from
changes in fair value of financial
assets for sale
        Profit and loss from
reclassification of held-to-maturity
investment into fair value of
financial assets for sale
        Effective part of profit and
loss of cash-flow hedge
       Difference in translation of
Foreign Currency Financial                2,965,377   -4,657,291                             -3,060,721      -1,596,570      -95,344
Statement
Total other comprehensive income          2,965,377   -4,657,291                             -3,060,721      -1,596,570      -95,344


7.33 Surplus reserves

                                                                                                                          Unit: Yuan
                                                                                          Decrease in this
               Item                    Beginning balance     Increase in this period                             Ending balance
                                                                                              period
Legal surplus reserves                         342,732,000                                                            342,732,000
Free surplus reserves
Reserve fund
Enterprise expansion fund
Other
Total                                          342,732,000                                                            342,732,000


7.34 Undistributed profit

                                                                                                                          Unit: Yuan
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report




                                            Item                                          Ending balance         Beginning balance


Undistributed profit at the end of prior period before adjustment                          8,008,982,547               7,309,081,618
Total Undistributed profit at the beginning of the period before adjustment
                                                                                                  -3,278,942
(increase listed with+ , and decrease listed with -)

Undistributed profit at the beginning of the period after adjustment                       8,005,703,605               7,309,081,618

Plus: Net profit for owner of the parent company                                             603,403,789               1,042,632,929

M inus: Drawn legal surplus

Drawn free surplus

Drawn common risk provision

Common dividend payable                                                                      411,278,400                 342,732,000

Common dividend transferred to share capital

Undistributed profit at the end of period                                                  8,197,828,994               8,008,982,547


7.35 Ope rating income and operating cost

                                                                                                                         Unit: Yuan
                                                    Amount incurred in this period           Amount incurred in prior period
                     Item
                                                     Income               Cost                    Income                Cost
M ain business                                      2,541,459,605        927,958,197          2,818,814,912             969,407,949
Other business                                         16,815,180           8,294,028                9,415,152             5,149,343
Total                                               2,558,274,785        936,252,225          2,828,230,064             974,557,292


7.36 Taxes and surcharges

                                                                                                                         Unit: Yuan
                            Item                            Amount incurred in this period         Amount incurred in prior period
Consumption tax                                                                      68,699,658                          97,343,463
Urban maintenance and construction tax                                               18,763,626                          23,778,056

Education surcharges                                                                 13,670,717                          17,417,976
Building tax                                                                         14,184,915                          16,878,556
Land use tax                                                                          5,478,045                            6,013,248

Stamp duty                                                                            1,504,356                            2,247,814
Other                                                                                 1,249,531                            1,597,138
Total                                                                            123,550,848                            165,276,251


7.37 Selling expenses

                                                                                                                         Unit: Yuan
                  Item                             Amount incurred in this period            Amount incurred in prior period
M arketing expenses                                                      268,185,487                                    326,942,076
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Employee remunerations                                             130,725,779                           139,247,494
Transportation expenses                                              53,735,626                           67,177,736
Trademark use fees                                                                                        43,363,867
Storage and lease expenses                                           24,274,917                           19,857,616
Depreciation expenses                                                20,476,637                           21,735,895
Advertisement expenses                                               26,920,257                           23,574,432
Conference expenses                                                   8,945,999                            9,319,883
Design & production expenses                                          2,365,761                            2,457,300
Service charges                                                      11,484,614                           12,459,237
Travel expenses                                                      11,822,548                           10,886,711
Water, electricity and gas charges                                    7,697,325                            7,166,936
Office & postage costs                                                2,801,706                            2,349,806
Packing expenses                                                      3,971,486                            3,873,287
Public security         &    clean-keeping
                                                                      2,214,479                            2,336,546
expenses
Business entertainment exp enses                                      1,763,307                            1,995,516
Other                                                                14,584,873                           15,914,695
Total                                                              591,970,801                           710,659,033


7.38 Management expenses

                                                                                                          Unit: Yuan
                     Item                    Amount incurred in this period       Amount incurred in prior period
Employee remunerations                                               62,572,295                           60,660,238
Depreciation expenses                                                31,887,697                           35,410,914
Contracting expenses                                                  7,178,106                            7,178,106
Repair expenses                                                       8,253,897                            7,076,148
Office expenses                                                      10,177,651                           10,977,189
Amortization expenses                                                 7,677,849                            9,520,182
Afforestation fees                                                    7,682,946                            6,493,556
Safe production costs                                                 2,357,016                            2,422,526
Rental expenses                                                       4,766,202                            5,061,778
Business entertainment expenses                                       2,631,383                            2,815,060
Public security         &    clean-keeping
                                                                      3,356,435                            3,953,646
expenses
Travel expenses                                                       2,971,468                            2,139,939
Other                                                                 4,039,367                            4,255,600
Total                                                              155,552,312                           157,964,882


7.39 R&D expenses

                                                                                                          Unit: Yuan
                     Item                    Amount incurred in this period       Amount incurred in prior period
R&D expenses                                                          2,706,811                            2,127,006
Total                                                                 2,706,811                            2,127,006
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7.40 Financial expenses

                                                                                                                    Unit: Yuan
                   Item                         Amount incurred in this period              Amount incurred in prior period
Interest expenditure                                                       9,812,560                                18,739,528
M inus: Interest income                                                    4,606,417                                 7,245,870
Plus: Commission charges                                                   1,271,831                                 3,005,483
Exchange gain or loss                                                      2,311,609                                 -1,413,199
Total                                                                      8,789,583                                13,085,942


7.41 Other income

                                                                                                                    Unit: Yuan
                                                                                                    Amount incurred in prior
                  Source of other income                        Amount incurred in this period              period
Supporting fund for industrial development                                              2,050,000                    2,050,000
Industrial revitalization and technical transformation
                                                                                                                     1,086,000
project in Ningxia
Reward for investment in fixed assets                                                   1,140,000                    1,140,000
Special fund for construction of peninsula blue economic
                                                                                        1,000,000                    1,000,000
zone
Other                                                                                   3,082,627                    4,012,100
Special fund for supporting corporate development                                      51,633,350                   15,011,673
Other                                                                                   5,305,915                   13,683,105
Total                                                                                  64,211,892                   37,982,878


7.42 Loss on impairme nt of cre dit

                                                                                                                    Unit: Yuan
                   Item                         Amount incurred in this period              Amount incurred in prior period
Loss on bad debts of accounts receivable                                    -765,935
Total                                                                       -765,935


7.43 Loss on impairme nt of assets

                                                                                                                    Unit: Yuan
                          Item                           Amount incurred in this period       Amount incurred in prior period
1. Loss on bad debts
2. Inventory falling price loss                                                 6,148,729                            4,730,948
3. Loss on impairment of available-for-sale
financial assets
4. Loss on impairment of held-to maturity
investment
5. Loss on impairment of long-term equity
investment
6. Loss on impairment of investment real estate
7. Loss on impairment of fixed assets
8. Loss on impairment of engineering materials
9. Loss on impairment of construction in progress
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


                       Item                            Amount incurred in this period          Amount incurred in prior period
10. Loss on impairment of productive biological
assets
11. Loss on impairment of oil and gas assets
12. Loss on impairment of intangible assets
13. Loss on impairment of goodwill
14. Other
Total                                                                         6,148,729                               4,730,948


7.44 Income from asset disposal

                                                                                                                     Unit: Yuan
Source of income from asset disposal               Amount incurred in this period             Amount incurred in prior period
Income from disposal of fixed assets                                                1,138                                    93,958
Total                                                                               1,138                                    93,958



7.45 Non-operating income

                                                                                                                     Unit: Yuan
                                           Amount incurred in Amount incurred in              Amount included in the current
                  Item
                                              this period       prior period                   non-recurring profits/losses
Gains on debt recombination
Gains on exchange of non-monetary
assets
Grains on donations
Governmental subsidy
Other                                                 3,575,914            2,006,392                                   3,575,914
Total                                                 3,575,914            2,006,392                                   3,575,914


7.46 Non-operating expenses

                                                                                                                     Unit: Yuan
                                    Amount incurred in      Amount incurred in              Amount included in the current
              Item                                                                           non-recurring profits/losses
                                       this period            prior period

Loss on debt recombination
Loss on exchange of
non-monetary assets
Donation

Fine, penalty and overdue fine
paid due to violation of laws and                  10,811             1,187,713                                              10,811
administrative regulations

Other                                             153,239               204,649                                         153,239
Total                                             164,050             1,392,362                                         164,050
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


7.47 Income tax expenses

7.47.1 List of income tax expenses

                                                                                                                       Unit: Yuan
                               Item                                Amount incurred in this period     Amount incurred in prior
                                                                                                              period
Current income tax expenses                                                           161,779,976                   178,993,081

Deferred income tax expenses                                                           48,501,602                      32,986,654

Total                                                                                 210,281,578                    211,979,735


7.47.2 Adjustme nt process of accounting profit and income tax expenses

                                                                                                                       Unit: Yuan
                                              Item                                                  Amount incurred in this period

Total profit                                                                                                        812,459,893

Income tax expenses calculated according to the legal/applicable tax rate                                           203,114,973

Influence of different tax rates applicable to subsidiary                                                                -66,516

Influence of income tax in the term before adjustment                                                                  3,082,397

Influence of nontaxable income

Influence of non-deductible costs, expenses and losses                                                                 2,219,026

Influence of deductible loss from use of unconfirmed deferred income tax assets in prior
period

Influence of deductible temporary difference or deductible loss of unconfirmed deferred
income tax assets in this period                                                                                       1,931,698

Income tax expense                                                                                                  210,281,578


7.48 Other comprehensive income

Refer to Note 7.32 for details.

7.49 Items of cash flow state ment

7.49.1 Other cash received related to operating activities

                                                                                                                       Unit: Yuan
                        Item                                Amount incurred in this period     Amount incurred in prior period
Governmental subsidy income                                                      62,580,748                            33,687,978
Interest income                                                                   2,835,438                             3,302,294
Net amercement income                                                             1,225,511                             1,609,829
Other                                                                             1,143,923                             3,742,920
Total                                                                            67,785,620                            42,343,021
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


7.49.2 Other cash paid related to operating activities

                                                                                                                        Unit: Yuan
                          Item                             Amount incurred in this period         Amount incurred in prior period
Selling expenses                                                                  348,849,996                          387,846,396
Administrative expenses                                                            41,017,612                           45,235,101
Other                                                                               2,912,859                            3,895,589
Total                                                                             392,780,467                          436,977,086


7.49.3 Other cash received related to financial activities

                                                                                                                        Unit: Yuan
                   Item                         Amount incurred in this period                  Amount incurred in prior period
Government subsidies received related to
                                                                                                                         3,150,000
assets
Interest income from pledge of fixed
                                                                                                                           371,431
deposits by the R&D Company
Long-term loans from pledge of fixed
                                                                                                                        20,000,000
deposits by R&D Company
Total                                                                                                                   23,521,431


7.49.4 Other cash paid related to financial activities

                                                                                                                        Unit: Yuan
                          Item                             Amount incurred in this period         Amount incurred in prior period
R&D Company’ long-term loans pledged by
                                                                                                                        20,000,000
fixed-term deposits
Total                                                                                                                   20,000,000


7.50 Supple mentary information to cash flow statement

7.50.1 Supple mentary information to cash flow statement

                                                                                                                        Unit: Yuan
                Supplementary materials                        Amount incurred in this period      Amount incurred in prior period
1. Cash flows from operating activities calculated by
                                                                             --                                   --
adjusting the net profit:
Net profit                                                                          602,178,315                        636,001,737
Plus: Provision for impairment of assets                                             -5,382,794                          -4,730,948
Depreciation of fixed assets, oil-and-gas assets and
                                                                                    155,147,729                        148,983,240
productive biological assets
Depreciation of right-of-use assets
Amortization of intangible assets                                                     8,438,742                         11,567,301
Amortization of long-term deferred expenses                                           6,662,662                          8,117,444

Losses on disposal of fixed assets, intangible assets and
                                                                                         -1,138                             -93,958
other long-term assets (profit listed with “-”)

Losses on retirement of fixed assets (profit listed with
“-”)
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


                 Supplementary materials                     Amount incurred in this period      Amount incurred in prior period
Losses on fair value change (profit listed with “-”)
Financial costs (profit listed with “-”)                                        13,987,879                         15,048,678
Investment losses (profit listed with “-”)
Decrease in deferred income tax assets (increase listed
                                                                                   50,789,656                         37,133,223
with “-”)
Increase of deferred income tax liabilities (decrease
                                                                                    -3,381,035                         -4,146,569
listed with “-”)
Decrease in inventories (increase listed with “-”)                              123,958,750                        216,486,236
Decrease in operating receivables (increase listed with
                                                                                                                    -305,623,146
“-”)                                                                           -172,662,167
Increase in operating payable (decrease listed with “-”)                       -280,260,593                       -205,989,766
Other
Net cash flows from operating activities                                          499,476,006                        552,753,472
2. Significant investment and financing activities not
                                                                            --                                 --
involving cash deposit and withdrawal:
Debt transferred into assets
Convertible corporate bond due within 1 year
Fixed assets under financing lease
3. Net changes of cash and cash equivalent:                                 --                                 --
Ending balance of cash                                                           1,573,727,077                      1,428,670,462
M inus: Beginning balance of cash                                                1,206,860,334                      1,180,889,274
Plus: Ending balance of cash equivalent
M inus: Beginning balance of cash equivalent
Net increase amount of cash and cash equivalent                                   366,866,743                        247,781,188


7.50.2 Composition of cash and cash equivalents

                                                                                                                      Unit: Yuan
                            Item                                      Ending balance                   Beginning balance
1. Cash                                                                          1,573,727,077                      1,428,670,462
Including: Cash on hand                                                                70,198                            151,228
     Bank deposits on demand                                                     1,573,656,879                      1,428,519,234
     Other monetary capital on demand
     Due from central bank available for payment
     Due from the industry
     Inter-bank lending
2. Cash equivalents
Including: Bond investment due within three months
3. Balance of cash and cash equivalents at the end of
                                                                                 1,573,727,077                      1,428,670,462
period
Including: Restricted use of parent company or
subsidiaries in the group


7.51 Assets with owne rship or use right restrictions

                                                                                                                      Unit: Yuan
                    Item                          Ending book value                        Reason for restriction
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


                                                                     Loan deposit, L/C deposit, frozen balance of Alipay,
M onetary capital                                         94,466,626 housing fund and guaranty money for deposit in unit
                                                                     card
Accounts receivable                                       31,134,017 Pledge of short-term loans
                                                                     Pledge of short-term loans, long-term loans and
Fixed assets                                             353,013,613 long-term accounts payable

Intangible assets                                        215,282,924 Pledge of long-term accounts payable
Total                                                    693,897,180                              --


7.52 Foreign curre ncy monetary ite ms

7.52.1 Foreign curre ncy monetary ite ms

The foreign currency monetary items of the Group in domestic entities of China are listed as
follows:
                                                                                                               Unit: Yuan
           Item        Ending foreign currency balance       Translation exchange rate     Ending converted RM B balance
M onetary capital                    --                                 --                                     46,815,034
Including: U SD                              6,805,498                           6.8747                        46,785,757
            EUR                                  2,901                             7.817                               22,677
            HKD                                  7,503                           0.8797                                 6,600


7.52.2 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        Ending foreign currency balance       Translation exchange rate     Ending converted RM B balance
M onetary capital                    --                                 --                                       3,553,711
Including: U SD                                516,926                           6.8747                          3,553,711
            EUR
            HKD
Short-term loans                     --                                 --                                     75,621,700
Including: U SD                             11,000,000                           6.8747                         75,621,700
            EUR
            HKD


8. Changes in scope of consolidation

     Nil
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


9. Equity in other entities

9.1 Equity in the subsidiaries

9.1.1 Constitution of enterprise group

                                                                                                           Proportion of
                                                                                             Business      shareholding
    Name of subsidiary        Principal business location         Registration place                                            Acquisition mode
                                                                                              nature
                                                                                                           Direct Indirect
                             Shihezi City, Xinjiang                                                                          Acquired from a business
Xinjiang Tianzhu (a)                                  Shihezi City, Xinjiang Uygur         Manufacturing     60%
                             Uygur Autonomous Region,                                                                        combination under
                                                      Autonomous Region, China             industry
                             China                                                                                           non-common control
                                                                                                                         Acquired from a business
Roullet Fransac              Cognac, France                 Cognac, France                 Trading                  100% combination under
                                                                                                                         non-common control
                                                                                                                         Acquired from a business
Mirefleurs                   Bordeaux, France               Bordeaux, France               Trading                  100% combination under
                                                                                                                         non-common control
                                                                                                                             Acquired from a business
Marques del Atrio            Navarra, Spain                 Navarra, Spain                 Sales             75%             combination under
                                                                                                                             non-common control
                                                                                                                             Acquired by
Indomita Wine                Santiago, Chile                Santiago, Chile                Sales             85%             establishment or
                                                                                                                             investment
                                                                                                                             Acquired from a business
Kilikanoon Estate, Australia Adelaide, Australia            Adelaide, Australia            Sales             80%             combination under
                                                                                                                             non-common control
Beijing Changyu Wine                                                                                                      Acquired by
Marketing Co., Ltd.          Beijing City, China            Beijing City, China            Sales             50%      50% establishment or
(“Beijing Marketing”)                                                                                                   investment
Yantai Kylin Packaging                                                                                                       Acquired by
                             Yantai City, Shandong          Yantai City, Shandong          Manufacturing
Co., Ltd. (“ Kylin                                                                                         100%             establishment or
                             Province, China                Province, China                industry
Packaging”)                                                                                                                 investment
Yantai Chateau                                                                                                               Acquired by
                             Yantai City, Shandong          Yantai City, Shandong          Manufacturing
Changyu-Castel Co., Ltd.                                                                                     70%             establishment or
                             Province, China                Province, China                industry
(“Chateau Changyu”) (b)                                                                                                    investment
Changyu (Jingyang)                                                                                                           Acquired by
                             Xianyang City, Shaanxi         Xianyang City, Shaanxi         Manufacturing
Pioneer Wine Co., Ltd.                                                                                      100%             establishment or
                             Province, China                Province, China                industry
(“ Jingyang Wine”)                                                                                                         investment
Yantai Changyu Pioneer                                                                                                       Acquired by
                             Yantai City, Shandong          Yantai City, Shandong
Wine Sales Co., Ltd.                                                                       Sales            100%             establishment or
                             Province, China                Province, China
(“Sales Company”)                                                                                                          investment
Langfang Development
                                                                                                                          Acquired by
Zone Castel-Changyu Wine Langfang City, Hebei               Langfang City, Hebei Province, Manufacturing     39%      10% establishment or
Co., Ltd. (“ Langfang   Province, China                    China                          industry
                                                                                                                          investment
Castel”) (c)
Changyu (Jingyang)                                                                                                           Acquired by
                             Xianyang City, Shaanxi         Xianyang City, Shaanxi
Pioneer Wine Sales Co.,                                                                    Sales            100%             establishment or
                             Province, China                Province, China
Ltd. (“ Jingyang Sales”)                                                                                                   investment
Langfang Changyu Pioneer Langfang City, Hebei                                                                                Acquired by
                                                            Langfang City, Hebei Province,
Wine Sales Co., Ltd.                                                                       Sales            100%             establishment or
                         Province, China                    China
(“ Langfang Sales”)                                                                                                        investment
Shanghai Changyu Wine                                                                                                     Acquired by
Marketing Co., Ltd.          Shanghai City, China           Shanghai City, China           Sales             30%      70% establishment or
(“Shanghai Marketing”)                                                                                                  investment
Beijing Changyu AFIP
Eco-agriculture                                                                                                          Acquired by
                             Miyun County, Beijing City, Miyun County, Beijing City,
Development Co., Ltd.                                                                      Sales                    100% establishment or
                             China                       China
(“ Eco-agriculture                                                                                                      investment
Development”)
Beijing Changyu AFIP                                                                                                         Acquired by
                                                                                           Manufacturing
Wine Chateau Co., Ltd.       Beijing City, China            Beijing City, China                              90%             establishment or
                                                                                           industry
(“Beijing Chateau”) (d)                                                                                                    investment
                                                                                                                          Acquired by
Yantai Changyu Wine Sales Yantai City, Shandong             Yantai City, Shandong          Sales             90%      10% establishment or
Co., Ltd. ( “Wine Sales”) Province, China                 Province, China                                               investment
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


                                                                                                            Proportion of
    Name of subsidiary         Principal business location         Registration place         Business      shareholding         Acquisition mode
                                                                                               nature
                                                                                                            Direct Indirect
Yantai Changyu Pioneer                                                                                                     Acquired by
International Wine Co., Ltd. Yantai City, Shandong           Yantai City, Shandong          Sales             70%      30% establishment or
                             Province, China                 Province, China
(“Pioneer International”)                                                                                                investment
Hangzhou Changyu Wine Hangzhou City, Zhejiang                                                                             Acquired by
                                                             Hangzhou City, Zhejiang
Sales Co., Ltd. (“ Hangzhou                                                                Sales                    100% establishment or
Changyu”)                   Province, China                 Province, China                                              investment
                                                                                                                              Acquired by
                               Yinchuan City, Ningxia Hui Yinchuan City, Ningxia Hui        Planting
Ningxia Growing                                                                                              100%             establishment or
                               Autonomous Region, China Autonomous Region, China            industry
                                                                                                                              investment
Huanren Changyu National Benxi City, Liaoning                Benxi City, Liaoning Province,                                   Acquired by
Wine Sales Co., Ltd.                                                                        Sales            100%             establishment or
                         Province, China                     China
(“ National Wine”)                                                                                                          investment
Liaoning Changyu Icewine                                                                                                      Acquired by
                             Benxi City, Liaoning            Benxi City, Liaoning Province, Manufacturing
Valley Co., Ltd. (“ Icewine                                                                                  51%             establishment or
                             Province, China                 China                          industry
Valley”) (e)                                                                                                                 investment
Yantai Development Zone
                                                                                                                          Acquired by
Changyu Trading Co., Ltd. Yantai City, Shandong              Yantai City, Shandong          Sales                    100% establishment or
(“ Development Zone      Province, China                    Province, China
                                                                                                                          investment
Trading”)
Shenzhen Changyu Wine                                                                                                     Acquired by
                               Shenzhen City, Guangdong      Shenzhen City, Guangdong
Marketing Co., Ltd.                                                                         Sales                    100% establishment or
                               Province, China               Province, China
(“Shenzhen Marketing”)                                                                                                  investment
Yantai Fushan District                                                                                                    Acquired by
Changyu Trading Co., Ltd. Yantai City, Shandong              Yantai City, Shandong          Sales                    100% establishment or
                          Province, China                    Province, China
(“Fushan Trading”)                                                                                                      investment
Beijing Changyu AFIP
                                                                                                                          Acquired by
International Conference       Miyun County, Beijing City, Miyun County, Beijing City,      Service                  100% establishment or
Center Co., Ltd.               China                       China                            industry
                                                                                                                          investment
(“Conference Center”)
Beijing Changyu AFIP                                                                                                      Acquired by
                               Miyun County, Beijing City, Miyun County, Beijing City,      Tourist
Tourism and Culture Co.,                                                                                             100% establishment or
                               China                       China                            industry
Ltd. (“ AFIP Tourism”)                                                                                                  investment
                                                                                                                              Acquired by
                               Yinchuan City, Ningxia Hui Yinchuan City, Ningxia Hui        Manufacturing
Ningxia Wine                                                                                                 100%             establishment or
                               Autonomous Region, China Autonomous Region, China            industry
                                                                                                                              investment
Yantai Changyu Chateau                                                                                                     Acquired by
                               Yantai City, Shandong         Yantai City, Shandong          Wholesale and
Tinlot Co., Ltd. (“Chateau                                                                                   65%      35% establishment or
                               Province, China               Province, China                retail
Tinlot”)                                                                                                                  investment
Changyu (Qingtongxia)          Qingtongxia City, Ningxia                                                                  Acquired by
                                                             Qingtongxia City, Ningxia Hui Sales
Wine Sales Co., Ltd.           Hui Autonomous Region,                                                                100% establishment or
                                                             Autonomous Region, China
(“ Qingtongxia Sales”)       China                                                                                      investment
                               Shihezi City, Xinjiang                                                                         Acquired by
                                                        Shihezi City, Xinjiang Uygur        Manufacturing
Shihezi Chateau                Uygur Autonomous Region,                                                      100%             establishment or
                                                        Autonomous Region, China            industry
                               China                                                                                          investment
                                                                                                                              Acquired by
                               Yinchuan City, Ningxia Hui Yinchuan City, Ningxia Hui        Manufacturing
Ningxia Chateau                                                                                              100%             establishment or
                               Autonomous Region, China Autonomous Region, China            industry
                                                                                                                              investment
Chateau Changyu Rena                                                                                                          Acquired by
                               Xianyang City, Shaanxi        Xianyang City, Shaanxi         Manufacturing
Shaanxi Co., Ltd.                                                                                            100%             establishment or
                               Province, China               Province, China                industry
(“Chang’an Chateau”)                                                                                                       investment
                                                                                                                              Acquired by
Research, Development &        Yantai City, Shandong         Yantai City, Shandong          Manufacturing     68%             establishment or
Manufacture Company (f)        Province, China               Province, China                industry
                                                                                                                              investment
Changyu (Huanren) Pioneer                                                                   Wine-making                       Acquired by
                           Benxi City, Liaoning              Benxi City, Liaoning Province,
Wine Co., Ltd. (“ Huanren                                                                  project          100%             establishment or
Wine”)                    Province, China                   China                          preparation                       investment
Xinjiang Changyu Wine                                                                                                     Acquired by
                               Xinjiang Uygur           Xinjiang Uygur Autonomous
Sales Co., Ltd. (“ Xinjiang                                                                Sales                    100% establishment or
                               Autonomous Region, China Region, China
Sales”)                                                                                                                  investment
Ningxia Changyu Trading                                                                                                   Acquired by
                               Yinchuan City, Ningxia Hui Yinchuan City, Ningxia Hui
Co., Ltd. (“ Ningxia                                                                       Sales                    100% establishment or
                               Autonomous Region, China Autonomous Region, China
Trading”)                                                                                                                investment
Shaanxi Changyu Rena                                                                                                      Acquired by
                               Xianyang City, Shaanxi        Xianyang City, Shaanxi
Wine Sales Co., Ltd.                                                                        Sales                    100% establishment or
                               Province, China               Province, China
(“Shaanxi Sales”)                                                                                                       investment
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


                                                                                                         Proportion of
    Name of subsidiary        Principal business location         Registration place          Business   shareholding         Acquisition mode
                                                                                               nature
                                                                                                         Direct Indirect
Penglai Changyu Wine                                                                                                   Acquired by
                              Penglai City, Shandong        Penglai City, Shandong
Sales Co., Ltd. (“Penglai                                                                  Sales                 100% establishment or
                              Province, China               Province, China
Wine”)                                                                                                                investment
Laizhou Changyu Wine                                                                                                   Acquired by
                              Laizhou City, Shandong        Laizhou City, Shandong
Sales Co., Ltd. (“ Laizhou                                                                 Sales                 100% establishment or
Sales”)                      Province, China               Province, China                                            investment
                                                                                                                           Acquired by
Francs Champs                                                                               Investment
                              Cognac, France                Cognac, France                                100%             establishment or
Participations SAS                                                                          trade
                                                                                                                           investment
Lanzhou Changyu Wine          Lanzhou City, Gansu           Lanzhou City, Gansu Province,                              Acquired by
Marketing Co., Ltd.                                                                       Sales                   100% establishment or
                              Province, China               China
(“ Lanzhou Marketing”)                                                                                               investment
Beijing Changyu Trading                                                                                                Acquired by
Co., Ltd. (“ Beijing         Beijing City, China           Beijing City, China             Sales                 100% establishment or
Trading”)                                                                                                             investment
Tianjin Changyu Pioneer                                                                                                Acquired by
Wine Sales Co., Ltd.          Tianjin City, China           Tianjin City, China             Sales                 100% establishment or
(“Tianjin Pioneer”)                                                                                                  investment
Fuzhou Changyu Pioneer                                                                                                 Acquired by
                              Fuzhou City, Fujian           Fuzhou City, Fujian Province,
Wine Co., Ltd. (“Fuzhou                                                                    Sales                 100% establishment or
                              Province, China               China
Pioneer”)                                                                                                             investment
Nanjing Changyu Pioneer                                                                                                Acquired by
                              Nanjing City, Jiangsu         Nanjing City, Jiangsu Province, Sales
Wine Co., Ltd. (“ Nanjing                                                                                        100% establishment or
                              Province, China               China
Pioneer”)                                                                                                             investment
Xianyang Changyu Pioneer                                                                                               Acquired by
                         Xianyang City, Shaanxi             Xianyang City, Shaanxi
Wine Sales Co., Ltd.                                                                        Sales                 100% establishment or
                         Province, China                    Province, China
(“ Xianyang Pioneer”)                                                                                                investment
Shenyang Changyu Pioneer Shenyang City, Liaoning            Shenyang City, Liaoning                                    Acquired by
Wine Co., Ltd. (“Shenyang                                                                  Sales                 100% establishment or
                           Province, China                  Province, China
Pioneer”)                                                                                                             investment
Jinan Changyu Pioneer                                                                                                  Acquired by
                              Jinan City, Shandong          Jinan City, Shandong Province, Sales
Wine Co., Ltd. (“ Jinan                                                                                          100% establishment or
                              Province, China               China
Pioneer”)                                                                                                             investment
Shanghai Changyu Pioneer                                                                                               Acquired by
Wine Co., Ltd. (“Shanghai Shanghai City, China             Shanghai City, China            Sales                 100% establishment or
Pioneer”)                                                                                                             investment
Fuzhou Changyu Pioneer                                                                                                 Acquired by
                              Fuzhou City, Jiangxi          Fuzhou City, Jiangxi Province, Sales
Wine Co., Ltd. (“Fuzhou                                                                                          100% establishment or
                              Province, China               China
Pioneer”)                                                                                                             investment
Shijiazhuang Changyu
                                                                                                                       Acquired by
Pioneer Wine Sales Co.,       Shijiazhuang City, Hebei      Shijiazhuang City, Hebei        Sales                 100% establishment or
Ltd. (“Shijiazhuang          Province, China               Province, China
                                                                                                                       investment
Pioneer”)
Hangzhou Yuzefeng                                                                                                      Acquired by
                              Hangzhou City, Zhejiang       Hangzhou City, Zhejiang
Trading Co., Ltd.                                                                           Sales                 100% establishment or
                              Province, China               Province, China
(“ Hangzhou Yuzefeng”)                                                                                               investment
                                                                                                                       Acquired by
Jilin Changyu Pioneer Wine Changchun City, Jilin            Changchun City, Jilin           Sales                 100% establishment or
Co., Ltd. (“ Jilin Pioneer”) Province, China              Province, China
                                                                                                                       investment
Beijing Changyu Pioneer                                                                                                Acquired by
Wine Sales Co., Ltd.          Beijing City, China           Beijing City, China             Sales                 100% establishment or
(“Beijing Pioneer”)                                                                                                  investment
Harbin Changyu Pioneer                                                                                                 Acquired by
                              Harbin City, Heilongjiang     Harbin City, Heilongjiang
Wine Sales Co., Ltd.                                                                        Sales                 100% establishment or
                              Province, China               Province, China
(“ Harbin Pioneer”)                                                                                                  investment
Hunan Changyu Pioneer                                                                                                  Acquired by
                              Changsha City, Hunan          Changsha City, Hunan
Wine Co., Ltd. (“ Hunan                                                                    Sales                 100% establishment or
                              Province, China               Province, China
Pioneer”)                                                                                                             investment
Yinchuan Changyu Pioneer                                                                                               Acquired by
Wine Co., Ltd. (“ Yinchuan Yinchuan City, Ningxia Hui Yinchuan City, Ningxia Hui           Sales                 100% establishment or
                            Autonomous Region, China Autonomous Region, China
Pioneer”)                                                                                                             investment
Kunming Changyu Pioneer Kunming City, Yunnan                                                                           Acquired by
                                                            Kunming City, Yunnan
Wine Co., Ltd. (“ Kunming                                                                  Sales                 100% establishment or
                           Province, China                  Province, China
Pioneer”)                                                                                                             investment
Chongqing Changyu             Chongqing City, China         Chongqing City, China           Sales                 100% Acquired by
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


                                                                                                        Proportion of
    Name of subsidiary         Principal business location         Registration place        Business   shareholding         Acquisition mode
                                                                                              nature
                                                                                                        Direct Indirect
Pioneer Wine Sales Co.,                                                                                                   establishment or
Ltd. (“Chongqing Pioneer”)                                                                                              investment
Wuhan Changyu Pioneer                                                                                                 Acquired by
                               Wuhan City, Hubei             Wuhan City, Hubei Province,
Wine Co., Ltd. (“Wuhan                                                                    Sales                 100% establishment or
                               Province, China               China
Pioneer”)                                                                                                            investment
Hohhot Changyu Pioneer         Hohhot City, Inner                                                                     Acquired by
                                                             Hohhot City, Inner Mongolia
Wine Co., Ltd. (“ Hohhot      Mongolia Autonomous                                         Sales                 100% establishment or
                                                             Autonomous Region , China
Pioneer”)                     Region , China                                                                         investment
Chengdu Changyu Pioneer                                                                                               Acquired by
                          Chengdu City, Sichuan              Chengdu City, Sichuan
Wine Co., Ltd. (“Chengdu                                                                  Sales                 100% establishment or
                          Province, China                    Province, China
Pioneer”)                                                                                                            investment
Nanning Changyu Pioneer        Nanning City, Guangxi                                                                  Acquired by
                                                             Nanning City, Guangxi Zhuang Sales
Wine Co., Ltd. (“ Nanning     Zhuang Autonomous                                                                 100% establishment or
                                                             Autonomous Region, China
Pioneer”)                     Region, China                                                                          investment
Lanzhou Changyu Pioneer                                                                                               Acquired by
                               Lanzhou City, Gansu           Lanzhou City, Gansu Province,
Wine Co., Ltd. (“ Lanzhou                                                                 Sales                 100% establishment or
                               Province, China               China
Pioneer”)                                                                                                            investment
Yantai Roullet-Fransac
                                                                                                                      Acquired by
Imported Wine Sales Co.,       Yantai City, Shandong         Yantai City, Shandong
                                                                                           Sales                 100% establishment or
Ltd. (“ Yantai                Province, China               Province, China                                          investment
Roullet-Fransac”)
Hefei Changyu Pioneer                                                                                                 Acquired by
                               Hefei City, Anhui Province, Hefei City, Anhui Province,
Wine Co., Ltd. (“ Hefei                                                                   Sales                 100% establishment or
                               China                       China
Pioneer”)                                                                                                            investment
Urumchi Changyu Pioneer Urumchi City, Xinjiang                                                                        Acquired by
                                                    Urumchi City, Xinjiang Uygur Sales
Wine Co., Ltd. (“ Urumchi Uygur Autonomous Region, Autonomous Region, China                                     100% establishment or
Pioneer”)                 China                                                                                      investment
Guangzhou Changyu                                                                                                     Acquired by
                               Guangzhou City,           Guangzhou City, Guangdong         Sales                 100% establishment or
Pioneer Wine Co., Ltd.
                               Guangdong Province, China Province, China
(“ Guangzhou Pioneer”)                                                                                              investment
                                                                                                                          Acquired by
                               Yantai City, Shandong         Yantai City, Shandong
Wine Sales Co., Ltd.                                                                       Sales         100%             establishment or
                               Province, China               Province, China
                                                                                                                          investment


Explanation for difference between the proportion of shareholding and proportion of voti ng 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) 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 Cha ngyu Chateau by
contract arrangement. The contract arrangement will expire on December 31, 2022.

(c) 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 expired on December 31,
2017. After the expiration of the contract arrangement, the minority shareholders of Langfang
Castel normally enjoy/undertake all rights/duties of the shareholders agreed in the Articles of
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


Association of the Company.

(d) Beijing Chateau is a limited liability company jointly established by the Company and
Yantai De’an and Beijing Qinglang, in which the Company holds 90% of the shares. 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.

(e) 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 I cewine Valley by contract
arrangement. The contract arrangement will expire on December 31, 2021.

(f) The Research, Development & Manufacture Company is a joint venture established by the
Company and Agricultural Development Fund, whose 68% of the shares were held by the
Company on June 30, 2019. As stated in Note 7.27, the Company exercises full control over
the operation, investment and financing policies of the Research, Development &
Manufacture Company by contract arrangement. The contract arrangement will expire on
May 22, 2026. Up to June 30, 2019, the remaining investment of the Agricultural
Development Fund accounted for 32% of the registered capital.

9.1.2 Important non-wholly-owned s ubsidiaries

                                                                                                                Unit: Yuan

                       Shareholding proportion Profit/loss attributable Dividend declared to be Balance of minority
                                                                        distributed to minority
  Name of subsidiary         of minority      to minority shareholders                          shareholder’s interest at
                                                                          shareholders in this
                            shareholders           in this period                                  the end of period
                                                                                 period
Xinjiang Tianzhu                          40%                -1,200,628                                        49,412,020

M arques del Atrio                        25%                   464,844                1,367,975               29,878,944

Changyu Chateau                           30%                                                                  12,365,016

Langfang Castel                           51%                   -752,237                                       20,175,744

Beijing Chateau                           10%                                                                  65,133,868

Icewine Valley                            49%                                                                  33,319,062

Indomita Wine                             15%                   564,376                                        53,709,304

Kilikanoon Estate,                        20%                   -301,829                                       16,204,035
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-owne d subsidiaries


                                                                                                                Unit: Yuan
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                                              Ending balance                                                               Beginning balance
  Name of
 subsidiary    Current      Non-current                   Current Non-current      Total         Current     Non-current    Total      Current Non-current Total
                                        Total assets
                assets        assets                     liabilities liabilities liabilities      assets       assets       assets    liabilities liabilities liabilities
Xinjiang       26,891,774    64,187,998     91,079,771     -169,932    5,336,114      5,166,181 27,390,495    66,486,795 93,877,290                 5,336,114     5,336,114
Tianzhu
Changyu       126,947,614 113,877,340 240,824,954 163,176,906                       163,176,906 141,298,023 114,694,168 255,992,191 171,869,662                 171,869,662
Chateau
Langfang       16,966,616    15,672,549     32,639,165    4,033,546                   4,033,546 17,659,511    16,001,682 33,661,193    3,358,322                  3,358,322
Castel
Beijing
              228,256,490 458,433,952 686,690,442        45,912,267                  45,912,267 219,973,582 461,115,089 681,088,671 62,598,545                   62,598,545
Chateau
Icewine        61,748,346    23,105,860     84,854,207   31,627,378      100,000     31,727,378 45,194,591    23,920,890 69,115,481 14,974,458        100,000 15,074,458
Valley
Marques       407,617,465    92,937,395 500,554,860 304,115,810       72,890,389 377,006,198 464,421,130      99,080,668 563,501,798 381,659,315   54,520,937 436,180,252
del Atrio
Indomita
              210,503,095 295,300,215 505,803,310 138,985,158          4,861,038 143,846,196 214,784,490 300,969,342 515,753,832 148,359,328        4,976,161 153,335,489
Wine
Kilikanoon
Estate,    82,656,715        64,415,130 147,071,845      12,813,137   52,227,853     65,040,990 87,634,707    63,759,866 151,394,573 13,387,942    51,893,171 65,281,113
Australia


                                                                                                                                                           Unit: Yuan
                                   Amount incurred in this period                                               Amount incurred in prior period
  Name of                                                Total                                                                    Total
 subsidiary         Operating                                      Operating                     Operating                                                Operating
                                          Net profit comprehensive                                                 Net profit comprehensive
                     income                                        cash flow                      income                                                  cash flow
                                                        income                                                                   income
Xinjiang
                                          -3,001,571         -1,297,212            -417,462            18,803        -184,572             -184,572         10,284,801
Tianzhu
Changyu
                     24,470,842 -2,189,871                      -686,874           6,946,282 43,226,910             2,861,474            2,861,474          2,419,427
Chateau
Langfang
                                          -1,474,975            -821,013              25,801       5,038,281 -1,952,954                -1,952,954          -4,435,022
Castel
Beijing
                                       12,711,985            22,752,823            9,667,568 78,502,666 15,243,700                     15,243,700          12,282,145
Chateau          90,339,526.00
Icewine
                                          -1,986,710            -754,056           1,903,734 27,305,133               905,396              905,396          2,018,740
Valley           19,763,387.00
M arques
                   129,064,457            1,859,381          -4,084,674 -23,846,960 148,197,893                     1,214,012             -929,332        -21,783,821
del Atrio
Indomita
                     86,818,838           3,762,504           1,880,687        -1,725,571 93,719,341                 -281,859          -4,460,814          -7,723,684
Wine
Kilikanoon
Estate,              22,852,809 -1,509,147                   -4,011,458            1,024,962 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, receivables financing, other receivables, other non-current financial assets, short-term
loans, non-current liabilities due within one year, accounts payable, other payables, long-term
accounts payable and long-term loans, etc. Please refer to Note 7 for details of each financial
instruments. 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
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


scope.
The Group adopts sensitivity analysis techniques to analyze the possible influence of possible
reasonable changes of risk variables on the current profits and losses 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 manage ment 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 AUD, 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, 2019, 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                                  Ending balance            Beginning balance
M onetary capital (EUR)                                                          22,677                  199,753
M onetary capital (USD)                                                   50,339,468                  51,283,910
Short-term loans (USD)                                                    75,621,700                  75,495,200



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
Yantai Changyu Pioneer Wine Co., Ltd. 2019 Semi-annual Report


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

                                                                                This period
  Item           Exchange rate fluctuation
                                                Influence on profit in this period     Influence on shareholders’ equity
EUR        5% appreciation against RM B                                     1,134                                    1,134
EUR        5% depreciation against RM B                                    -1,134                                   -1,134
USD        5% appreciation against RM B                                2,339,288                                2,339,288
USD        5% depreciation against RM B                               -2,339,288                               -2,339,288


Overseas entities:
                                                                                                                Unit: Yuan

                   &