张裕B:2021年半年度报告(英文版)

              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report




Yantai Changyu Pioneer Wine Co., Ltd.

       2021 Semi-annual Report




              Final 2021-03




             August 2021




                     1
                                                        Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report




                                                        Contents


I、Important Notice,Contents and Definition ............................................................................. 4

II、Brief Introduction for the Company and Main Financial Indicators .................................. 6

III、Discussion and Analysis of Management Team .................................................................. 10

IV、Corporate Governance .......................................................................................................... 28

V、Environmental and Social Responsibility ............................................................................. 29

VI、Major issues ........................................................................................................................... 31

VII、Changes in Shares and the Shareholders’ Situation ......................................................... 41

VIII、Related Situation of Preferred Shares ................................................................................ 46

IX、Related Situation of Bonds ..................................................................................................... 46

X、Financial Report ...................................................................................................................... 47




                                                                  2
                                     Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report




                              Reference Documents

(1)The original of 2021 Semi-annual Report autographed by the chairman.
(2)The Financial Statements autographed and signed by the chairman, chief accountant and
accountants in charge.
(3)The Prospectus and Public Offering Announcement for Stock B in 1997; The Prospectus
and The Shares’ Change & Public Offering Announcement for Stock A in 2000.
(4) The originals of all documents and announcements that the Company made public during
the report period in the newspapers designated by China Securities Regulatory Commission.




                                            3
                                        Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


               I. Important Notice, Contents and Definition

The board of directors,the board of supervisors,directors, supervisors and senior executives
of the Company guarantee the truthfulness, accuracy and completeness of the contents
contained in the report with no false records, misleading statements or significant omissions,
and undertake individual and joint legal liabilities.

Mr. Zhou Hongjiang (Person in charge of the Company), Mr. Jiang Jianxun (Person in charge
of accounting work) and Ms. Guo Cuimei (Person in charge of accounting organ &
Accountant in charge) assure the truthfulness, accuracy and completeness of the financial
report in the annual report.


Except following directors, other directors have personally attended the meeting for
deliberating the semi-annual report.


 Name of director not       Position of director         Reason of not
 attending the meeting       not attending the       attending the meeting         Name of entrustee
       personally           meeting personally             personally
                                                    Due to time conflict
 Dianxin CHEN             Director                                               Hongjiang ZHOU
                                                    of official matters

Regarding major risks that the Company may face during the production and management
process, please refer to “10. Risks and response measures” in “III Discussion and Analysis of
Management Team” in this report. Investors are suggested to read carefully and pay attention
to investment risks.

The Company has no plan to distribute cash dividends and bonus shares and capital reserve
will not be transferred to equity.




                                               4
                                            Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report




                                            Definition



            Definition Item             Refers to                       Definition Content
Company/The Company                     Refers to Yantai Changyu Pioneer Wine Co., Ltd.
Changyu Group/Controlling Shareholder   Refers to Yantai Changyu Group Co., Ltd.
CSRC                                    Refers to China Securities Regulatory Commission
SSE                                     Refers to Shenzhen Stock Exchange
KPMG Huazhen                            Refers to KPMG Huazhen LLP (Limited Liability Partnership)
CNY                                     Refers to Chinese Yuan




                                                    5
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


       II. Brief Introduction for the Company and Main Financial Indicators

       1. Company’s information

Stock Abbreviation                    Changyu A, Changyu B          Stock Code          000869, 200869
Stock Abbreviation after Alteration -
Place of Stock Listing                Shenzhen Stock Exchange
Legal Name in Chinese                 烟台张裕葡萄酿酒股份有限公司
Abbreviation of Chinese Name          张裕
Legal Name in English                 YANTAI CHANGYU PIONEER WINE COMPANY LIMITED
Abbreviation of English Name          CHANGYU
Legal Representative                  Hongjiang ZHOU

       2. Contact person and information


                 Secretary to the Board of Directors        Authorized Representative of Securities Affairs
Name       Jianxun JIANG                                   Tingguo LI
Address 56 Dama Road, Yantai, Shandong, China              56 Dama Road, Yantai, Shandong, China
Tel.       0086-535-6602761                                0086-535-6633656
Fax.       0086-535-6633639                                0086-535-6633639
E-mail     jiangjianxun@changyu.com.cn                     stock@changyu.com.cn


       3. Other information
       1) Contact information of the Company
       Whether there is any change in the Company’s registered address, office address,
       corresponding postcode, website address and email address during the report period
       Available      Not available
       There is no change in the Company’s registered address, office address, corresponding
       postcode, website address and email address during the report period. Please refer to 2020
       Annual Report for detailed information.
       2) Information disclosure and filing location
       Whether there is any change in Information disclosure and filing location during the report
       period
       Available Not available
       There is no change in the name of the newspaper for information disclosure, the address of

                                                       6
                                                        Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

          the website designated by the China Securities Regulatory Commission for publishing the
          semi-annual report, and the filing location of the Company’s semi-annual report selected by
          the Company during the report period. Please refer to 2020 Annual Report for detailed
          information.
          4. Key accounting data and financial indicators
          Whether the Company needs to retrospectively adjust or restate the accounting data of
          previous fiscal years.
          Yes        No
          Reason for retrospectively adjusting or restating the accounting data
          Amalgamation of enterprise under the same control
                                                                                                                More or less than
                                                                         In the same period of last year       the same period of
                                                  During the report
                                                                                                                  last year (%)
                                                       period
                                                                                               After
                                                                       Before adjustment                        After adjustment
                                                                                            adjustment
Operating revenue (CNY)                               1,874,460,437       1,401,606,792     1,418,548,547                  32.14%
Net profit attributed to shareholders of the
                                                        371,821,819         307,035,572       318,640,075                  16.69%
listed company (CNY)
Net profit attributed to shareholders of the
listed company after deducting non-recurring            353,676,042         266,766,849       266,766,849                  32.58%
profits and losses (CNY)
Net cash flows from operating activities (CNY)          455,935,149          -29,652,821      -16,518,752               2,860.11%
Basic earnings per share (CNY/share)                            0.54                0.45                0.46               17.39%
Diluted earnings per share (CNY/share)                          0.54                0.45                0.46               17.39%
Weighted average for earning rate of net assets
                                                              3.57%               2.93%                2.99%                 0.58%
(CNY)
                                                                                                                More or less than
                                                                             At the end of last year           the end of last year
                                                   At end of this
                                                                                                                      (%)
                                                   report period
                                                                                               After
                                                                       Before adjustment                        After adjustment
                                                                                            adjustment
Total assets (CNY)                                   13,369,160,872      13,286,972,498 13,102,481,541                       2.04%
Net Assets attributed to shareholders of the
                                                     10,333,217,946      10,131,114,317 10,267,832,644                       0.64%
listed company (CNY)

          5. Differences in accounting data under PRC accounting standards and international
          accounting standards

          1) Differences of net profit and net asset in the financial report disclosed according to
                                                                7
                                                     Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

       both international accounting standards and PRC accounting standards

       Available Not available
                                                                                                      Unit:CNY
                               Net profit attributed to the shareholders of   Net Assets attributed to the shareholders of
                                           the listed company                             the listed company
                                  Current period            Last period        End of period         Beginning of period
According to PRC
                                      371,821,819              318,640,075      10,333,217,946             10,257,200,222
accounting standards
Item and amount adjusted according to international accounting standards
According to international
                                      371,821,819              318,640,075      10,333,217,946             10,257,200,222
accounting standards


       2) Differences of net profit and net asset in the financial report disclosed according to
       both foreign accounting standards and PRC accounting standards

       Available Not available
       There are no differences of net profit and net asset in the financial report disclosed according
       to both foreign accounting standards and PRC accounting standards during the report period.

       3) Explanation of the differences in accounting data under domestic and overseas
       accounting standards

       Available Not available

       6. Item and amount of irregular gains and losses

       Available Not available
                                                                                                      Unit:CNY
                                         Item                                            Amount           Explanation
   Government grants credited in current profit and loss (except for government
   grants that are closely related to the entity’s business and are enjoyed with a        21,978,695
   quota or with a limited quantity in accordance with national uniform standard)
   Other non-operating income and expenditure besides above-mentioned items                 1,919,057
   Less: Amount affected by income tax                                                      5,737,342
           Amount affected by minority equity (after tax)                                      14,633
   Total                                                                                   18,145,777          -


       The reasons shall be made clear and definitely as to the irregular profit and loss that the
                                                               8
                                        Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

Company has defined by virtue of the Explanatory Notice on Public Company’s Information
Disclosure No.1 - Irregular Profit and Loss and as to regarding the irregular profit and loss as
recurrent profit and loss as specified in the Explanatory Notice on Public Company’s
Information Disclosure No.1 - Irregular Profit and Loss.
□Available Not available
There is no situation that the irregular profit and loss is defined and specified as recurrent
profit and loss in accordance with the Explanatory Notice on Public Company’s Information
Disclosure No.1 - Irregular Profit and Loss during the report period.




                                               9
                                               Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report



                      III. Discussion and Analysis of Management Team

       1. Main businesses during the report period

       1)Basic information of main business during the report period

       During the report period, the Company’s main businesses are production and operation of
       wine and brandy, thus providing domestic and foreign consumers with healthy and
       fashionable alcoholic drinks. Compared with earlier stage, there are no significant changes
       happened to the Company’s main businesses. The wine industry that the Company involved
       in is still in growth stage. Although being affected by many factors for the short-term, the
       competition in the market is fierce and the demand in wine consumption is still weak.
       However, seen from the long term, the whole domestic wine market is on the rising trend.
       The Company is at the forefront in the domestic wine market.

       2)License obtained

       As of June 30th, 2021, the Company and its subsidiaries have obtained 10 food production
       licenses (alcohol), of which the food production licenses having been obtained since the
       beginning of 2021 are as follows:

                              Food
      Producer name                      Obtaining time      Obtaining method       Food production license number
                             category

Yantai Chateau Koya                       January 11th,       Approval from
                             Alcohol                                                      SC11537063601165
Brandy Co., Ltd.                               2021        government authority

Yantai Changyu Pioneer                                        Approval from
                             Alcohol     June 1st, 2021                                   SC11537060100050
Wine Company Limited                                       government authority

Yantai Chateau                                                Approval from
                             Alcohol     June 8th, 2021                                   SC11537063600172
Changyu-Castel Co., Ltd.                                   government authority

       3) Explanation for other major events

       During the report period, there did not exist the trademark ownership dispute, food quality
       issue or food safety incident etc. that had a significant impact on the Company.

       Brand operation

       The Company’s products were divided into two series: wine and brandy. For wine, main
       brands included Changyu, Noble Dragon, AFIP, Changyu Moser XV, Longyu, Golden Ice
       Valley, Zenithwirl, Vermouth, Rena, Baron Balboa, J.LORMIN, Atrio, Kilikanoon and IWCC

                                                      10
                                                  Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

          and so on. For Brandy, main brands included Koya, Mminni, Pagese, Roullet Fransac and so
          on.

          Major sales mode

          The Company’s main sales mode was the distribution mode, and main sales channel was
          offline sales, that is, the Company’s products were distributed to sales terminals through
          approximately 4600 distributors at home and abroad and ultimately provided to consumers.

          Distribution mode

          Available      Not available

          ①The Company adopted the settlement method of cash and carry with the distributors, and
          mainly adopted buyout distribution mode. Situation of change in the number of distributors is
          shown as follows.

                                                     Number at the    Increased number during        Number on June
                         Region
                                                      end of 2020         this report period           30th, 2021

    Eastern China                                             1702                             184                1886


    South China                                                 541                            40                   581


    Central China                                               479                             -1                  478


    North China                                                 358                             6                   364


    Northwest China                                             156                             -3                  153


    Southwest China                                             411                            14                   425


    Northeast China                                             289                            -10                  279


    HongKong, Macao,Taiwan China and overseas                   511                            10                   521


    Total                                                     4447                             240                4687




          ② Sales information of the Company’s top 5 distributors during the report period


    No.                       Customer name                    Sales amount (CNY) Proportion in total sales(%)

1          Shenzhen Changyuexin Trading Company Limited               30,597,887.90                           1.63%
2          Chongqing Ruiqi Trading Company Limited                    23,947,146.43                           1.28%

                                                         11
                                                             Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

   3         Cangnan Yuxing Subsidiary Foodstuff Corporation Inc                 21,585,746.84                            1.15%
   4         Foshan Yifeng Commercial and Trading Co., Ltd.                      16,129,827.53                            0.86%
   5         Anhui Yuanshui Beverage Co., Ltd.                                   15,172,502.65                            0.81%
   Total                                  --                                    107,433,111.35                            5.73%

           The ratio of sales in self-owned exclusive shop exceeds 10%

           Available          Not available

           Sales of online direct selling

           Available Not available



                                     First half of 2021                                          First half of 2020
Sales model       Operating income       Operating cost                         Operating income       Operating cost
                                                              Gross margin                                              Gross margin
                        (CNY)                  (CNY)                                 (CNY)                 (CNY)
Distribution            1,641,730,422          666,704,868           59.39%           1,215,013,525       488,387,163        59.80%
Direct sales              232,730,015           94,808,676           59.26%             203,535,020        86,471,176        57.52%
Total                   1,874,460,437          761,513,544           59.37%           1,418,548,546       574,858,339        59.48%

           The change in sales prices of major products accounting for more than 10% of total operating
           income in current report period exceeds 30% compared with those in last report period

           Available          Not available

           Procurement mode and procurement content

                                                                                                                Unit:CNY

                                                                                                           Amount of major
                     Procurement mode                                Procurement content
                                                                                                        procurement contents

        Qualitative and price comparison                  Raw materials including grape and so on                  237,908,950


        Invitation for bids / qualitative and price       Packaging materials                                      162,388,275
        comparison

        Invitation for bids / qualitative and price       Brewing materials                                           4,570,885
        comparison

        Invitation for bids / qualitative and price       Goods and materials for vineyard                            2,711,200
        comparison


                                                                    12
                                                      Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


     Contract                                      Fuel and power                                            16,436,528


     Qualitative and price comparison              Other alcoholic products and derivatives                   8,895,203


          Amount of purchasing raw materials from cooperatives or farmers exceeds 30% of total
          procedure amount

          Available       Not available

          The year-on-year change in the price of major outsourced raw materials exceeds 30%

          Available       Not available

          Major production mode

          The production mode of the Company is self-produce.

          Manufacturing consignment

          Available       Not available

          Major components of operating costs


                                                                                                       Unit: CNY
                                        First half of 2021                     First half of 2020              Year-on-year
 Sector         Project                          Proportion in the                      Proportion in the       increase or
                               Amount                                    Amount
                                                operating cost (%)                     operating cost (%)      decrease (%)

            Blending liquor    338,779,444                      46%     256,572,855                   46%             -0.29%

 Liquor     Packing
                               220,802,800                      30%     159,594,707                   29%                 1.18%
  and       material
alcoholic   Wages               22,817,933                         3%    16,782,341                    3%                 0.07%
beverage
            Manufacturing
                               157,299,021                      21%     123,676,988                   22%             -0.95%
            expenses


                                                                                                       Unit: CNY
                                        First half of 2021                     First half of 2020              Year-on-year
 Sector         Project                          Proportion in the                     Proportion in the        increase or
                               Amount                                   Amount
                                                operating cost (%)                     operating cost (%)      decrease (%)

            Blending liquor    242,011,692                   45.36%     181,497,536                 46.15%            -0.79%
 Wine       Packing
                               155,025,713                   29.06%     103,932,682                 26.43%                2.63%
            material

                                                              13
                                                 Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

           Wages                18,985,077            3.56%          14,343,797                3.65%               -0.09%
           Manufacturing
                               117,508,189           22.02%          93,537,058                23.78%              -1.76%
           expenses
           Blending liquor      96,767,752           46.94%          75,075,318                45.97%              0.97%
           Packing
                                65,777,088           31.90%          55,662,025                34.08%              -2.18%
           material
Brandy
           Wages                 3,832,855            1.86%           2,438,544                1.49%               0.37%
           Manufacturing
                                39,790,832           19.30%          30,139,931                18.45%              0.85%
           cost

         Yield and inventory

                  Year                Category         Yield (ton)        Sales volume (ton)     Inventory (ton)

                               Wine                            23,653                 27,998               16,756
          First half of 2020
                               Brandy                           8,330                 11,170                9,181


                               Wine                            28,229                 31,428               13,697
          First half of 2021
                               Brandy                           8,449                 14,191                5,962


         2. Analysis of core competitiveness

         Compared with the participants in the arena of the Chinese wine sector, we believe that the
         Company is with the following advantages:

         Firstly, the Company has a large brand influence. Main brands used have a long history.
         “Changyu”, “Noble Dragon” and “AFIP” are all China famous brands that have strong
         influence and good reputation.


         Secondly, the Company has set up a nationwide marketing network, formed a “three-level”
         marketing network system mainly composed of the Company’s salesmen and dealers, with
         strong marketing ability and market exploitation ability.


         Thirdly, the Company has strong scientific prowess and a product R&D system. Relying on
         the country’s only “State-level Wine R&D Center”, the Company has mastered advanced
         winemaking technology and production processes as well as been powerful enough in
         product innovation and perfect quality control system.


         Fourthly, the Company is in possession of a lot of grape-growing bases that are compatible

                                                        14
                                       Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

with its development requirements. The Company has developed a great deal of vineyards in
the most suitable areas for wine grape growing such as Shandong, Ningxia, Xinjiang,
Liaoning, Hebei and Shaanxi, whose scale and structure have generally met the Company’s
needs for development.
Fifthly, products in high, medium and low-grade as well as varieties and categories are all
complete. Over 100 varieties of series products, such as wine and brandy, cover various
grades, including high, medium and low-grade, which can meet different consumer groups’
demands. The Company has taken the dominant status in the domestic wine industry after
many years’ development and has comparative advantages in the future competition.


Sixthly, the Company has a relatively perfect motivation system. Most of Company’s
employees indirectly hold the Company’s equity through controlling shareholders. There are
high consistency between employee benefits and shareholders benefits, in favor of motivating
employees to create value for shareholders.


Seventhly, the Company has set up flexible and efficient decision-making mechanism. The
Company’s core management team always maintains a working style of unity and pragmatic
and flexible and efficient decision-making mechanism, which makes the Company can deal
with market changes more calmly.


Eighthly, the global production capacity layout has been basically completed. The Company
has completed production capacity layout in China, France, Chile, Spain, Australia and other
major wine producing countries in the world, enabling making better use of global
high-quality raw material resources, capital, talents and advanced production processes and
technologies to provide consumers with diversified quality products and better serve
consumers.


Based on the above reasons, the Company has formed relatively strong core competence and
will maintain a relatively dominant position in the future predictable market competition.


3. Analysis in main business


Summarization


During the report period, affected by many factors such as COVID-19 epidemic and change
in the domestic alcohol consumption pattern, the competition in domestic market is very
fierce. The Company seized the favorable opportunity for the gradual improvement in the
situation of domestic COVID-19 epidemic, roundly resumed all aspects of work, insisted in
taking the market as the center, insisted the development strategy of “Focus on high quality,
Focus on middle-and-high level, Focus on big product” (Three-Focus Strategy) and the
marketing concept of “Increasing sales from the terminal and continuously-cultivated
                                              15
                                       Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

consumers” without wavering, and strove to promote product sales. In the first half year, the
Company realized the business income of CNY1874.46million with a year-on-year increase
of 32.14% and the net profit attributable to shareholders of the parent company realized
CNY371.82million with a year-on-year increase of 16.69%. During the report period, the
Company mainly did following work:


Firstly, the Company steadily promoted the Three-Focus strategy. During the report period,
the Company vigorously promoted the development strategy of “Focus on high quality, Focus
on middle-and-high level, Focus on big product”, focused high-end wines on “Longyu”,
focused mid-to-high-end wines on “Noble Dragon”, focused brandy on “Koya”, concentrated
advantageous resources such as human, finance and material to core brands and key markets,
and strived to make breakthroughs, increasing the sales share of mid-to-high-end products
and key markets.


Secondly, the Company improved the level of brand positioning by virtue of external
agencies. During the report period, the Company made in-depth exchanges with domestic and
foreign well-known consulting companies for corporate management and conducted repeated
discussions and communications on how to improve brand positioning, further improving the
level of brand positioning, straightening out the brand system and making the brand
positioning clearer.


Thirdly, the Company promoted product sales through marketing innovation. The Company
took advantage of its network layout covering major markets across the country, accelerated
marketing innovation and channel innovation, actively seized online and other emerging
channels, promoted the adoption of “contactless delivery” service, “introduction of famous
wine into famous enterprises” and other new channels/modes that met the needs of the new
situation. The web live broadcast platform was used to propagandize the Company’s brand
culture, product characteristics and drinking knowledge, which drove product sales, adapted
to the new marketing environment of diversified wine consumption scenes, and effectively
improving marketing efficiency. The Company also made use of advantages of supermarkets
and e-commerce platform and strengthened distribution and logistics cooperation, expanding
market sales.


Fourthly, the Company accelerated digital transformation and empowered market
development. During the report period, the Company applied QR code assignment and
blockchain technology to production lines, realized the traceability, anti-counterfeiting, and
marketing functions through scanning the QR code on the bottle body of newly-produced
products, and deeply connected the consumers. More than 13,000 distributors settled in
“Changyu Wine Official Flagship Store” Smart Retail City, which promoted the
transformation of distributors from offline to online. The “Changyu Quality Life+”
membership applet attracted more than 300,000 members. The Company took cooperation
with 2 big online-specialized enterprises respectively for JD.com and Tmall business, with 1
                                              16
                                         Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

big online-specialized enterprise for private domain operation and live commerce business,
and with 9 big online-specialized enterprises for single brand series of products,
strengthening the correlation with target consumers and online-specialized enterprises and
promoting the improvement in the Company’s performance.


Fifthly, the Company continued to strengthen quality management and continuously
improved product quality. During the report period, the Company further improved the brand
winemaker system, clarified winemakers’ responsibility for quality improvement, and
continuously tapped the professional potential of winemakers. It strengthened direct
communication and exchanges between production technicians and consumers to better meet
consumers’ needs. It also participated in major competition activities for alcoholic products,
paid attention to domestic and international benchmark products, competed with products
from other countries, and constantly promoted the upgrade of product quality. In 2021, the
Company took participation in the Mundus Vini, Berliner Wein Trophy, DWWA, San
Francisco World Spirit Competition, IWC, IWSC, CMB and IWSGC and so on, and won a
total of 61 medals, including 16 gold medals.


Sixthly, the Company strengthened financial management and auditing supervision to prevent
operational risks. During the report period, the Company intensified the capital management
and control in controlled corporation and subsidiaries and financial supervision in overseas
enterprises to avoid liquidity risks, analyzed the risk items of tax-related entities one by one
to eliminate tax risks. It also conducted auditing in key expenses and the profit authenticity of
each operating unit as well as the integrity and effectiveness of assets, conducted off-office
auditing to middle-and-high-level cadres, and conducted flight auditing on 11 marketing
management companies including Fujian, Zhejiang, Jiangxi and Beijing and so on in order to
comprehensively prevent and control operating risks.


In order to achieve the Company’s business target set at the beginning of the year, in the
second half of 2021, the Company will focus on following tasks:


The first is to carry out in-depth rectification of cadres’ work style to enhance the vitality and
execution of the team. The topic of the rectification work will be “strengthening work style
construction, improving execution capabilities, building a strong team”, based on which the
Company will highlight 22 issues in five aspects, containing political discipline, innovative
development, mental state, implementation and compliance. It will insist problem-oriented,
target-oriented and result-oriented approaches and focus on rectifying major discipline
problems in cadres' work style in order for the cadre team to further enhance the ideological
level, maintain high-spirited morale and take the initiative to act.


The second is to firmly implement the “Three-Focus” strategy, accelerate the digital
transformation and jointly build marketing teams together with distributors, continue to
promote the construction of distributors, and better adapt to the new market and consumption
                                                17
                                               Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

     environment. It will further rationalize marketing system, increase the efforts to sort out and
     eliminate the Company’s marketing personnel and distributor teams, continue adding fresh
     blood, and improve the combat effectiveness of the two teams. Moreover, it will severely
     crack down on vicious cross-selling and low-price sales behaviors to maintain a good market
     order. It will also increase marketing investment, focus on creating consumption scenarios
     and actively guide product consumption.


     The third is to organize meticulously and cooperate closely to complete the procurement of
     grapes and other raw materials with regulated quality and quantity to provide reliable raw
     material guarantee for future development. It will continue promoting and implementing
     various measures for internal quality improvement, strengthen responsibilities, pay close
     attention to implementation, and strive to complete quality improvement target.


     The fourth is to, through the combination of internal training and external introduction,
     vigorously cultivate and absorb outstanding talents, strictly control the entrance of personnel,
     complete the annual recruitment of talents with high quality, and take efforts to build a good
     talent echelon.


     The fifth is to continue to strengthen financial and audit supervision, take serious measures
     for safety production and strive to eliminate major hidden dangers in order to ensure stable
     and orderly production and operation and to prevent major production and operation
     accidents and risks.


     Year-on-year change in key financial data
                                                                                                    Unit: CNY
                                            The same period      Year-on-year
                           This period                                                 Cause of significant changes
                                              of last year    increase or decrease

                                                                                     Mainly because of increase in
Operating revenue           1,874,460,437     1,418,548,547               32.14%
                                                                                     sales volume

                                                                                     Mainly because of increase in
Operating cost                761,513,544       574,858,339               32.47%
                                                                                     sales volume

                                                                                     Mainly because of increase in
Sales expense                 388,385,610       252,912,204               53.57%
                                                                                     marketing expense

                                                                                     Mainly because of increase in
Management expense            123,384,629       113,069,869                9.12% employee compensation and
                                                                                     safety production expense

                                                                                     Mainly because of decrease in
Financial expense               9,363,032        11,937,402              -21.57% service charge and exchange
                                                                                     gain or loss


                                                      18
                                                        Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

                                                                                            Mainly because of increase in
 Income tax expense                   136,579,849        113,453,948               20.38% operating income resulting from
                                                                                            increased sales volume

 Net amount of cash flow
                                                                                            Mainly because of increase in
 generated in operating               455,935,149        -16,518,752           2,860.11%
                                                                                            received cash by selling products
 activities

                                                                                            Mainly because of decrease in
 Net amount of cash flow
                                                                                            received fixed deposit and
 generated in investment             -113,095,884        -42,948,365            -163.33%
                                                                                            increase in purchasing long-term
 activities
                                                                                            assets including fixed assets

 Net amount of cash flow
                                                                                            Mainly because of decrease in
 generated in capital-raising          -2,719,043           -4,237,386             35.83%
                                                                                            cash paid for debt repayment
 activities

 Increased amount of cash                                                                   Mainly because of increase in
                                      339,719,689        -64,012,462             630.71%
 and cash equivalents                                                                       received cash by selling products

         Significant change in the profit form and profit source of the Company during the report
         period

         Available        Not available

         There is no significant change in the profit form and profit source of the Company during the
         report period.


         Composition of operating revenue
                                                                                                          Unit: CNY
                                       This report period                  The same period of last year            Year-on-year
                                                    Proportion in                            Proportion in           increase or
                                  Amount                                  Amount
                                                operating revenue                        operating revenue         decrease (%)

Total operating revenue         1,874,460,437                  100%      1,418,548,547                  100%                32.14%
Sector-classified
Sector of liquor and
                                1,874,460,437                  100%      1,418,548,547                  100%                32.14%
alcoholic beverage
Product-classified
Wine                            1,307,676,111                69.76%       991,762,953                 70.92%                31.85%
Brandy                           501,728,940                 26.77%       372,080,310                 26.61%                34.84%
Tourism                           52,119,124                  2.78%        42,197,420                   1.59%               23.51%
Others                            12,936,262                  0.69%        12,507,864                   0.89%               3.43%


                                                                19
                                                      Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

 Area-classified
 Domestic                         1,627,153,708           86.81%        1,200,564,232               84.45%              35.53%
 Overseas                          247,306,729            13.19%          217,984,315               15.55%              13.45%

          The cases of industry, product or area accounting for over 10% in the Company’s operating
          revenue or operating profit

          Available Not available
                                                                                                          Unit: CNY
                                                                      Year-on-year         Year-on-year        Year-on-year
                    Operating                        Gross         increase or decrease     increase or         increase or
                                    Operating cost
                    revenue                          margin         (%) of operating      decrease (%) of     decrease (%) of
                                                                         revenue          operating cost      gross profit rate
Sector-classified
Sector of
liquor and
                  1,874,460,437       761,513,544     59.37%                   32.14%             32.47%                -0.10%
alcoholic
beverage
Product-classified
Wine              1,307,676,111       533,530,671     59.20%                   31.85%             35.65%                -1.14%
Brandy              501,728,940       206,168,527     58.91%                   34.84%             26.24%                2.80%
Tourism              52,119,124        16,990,491     67.40%                   23.51%             41.18%                -4.08%
Others               12,936,262          4,823,854    62.71%                    3.43%            -22.16%               12.26%
Area-classified
Domestic          1,627,153,708       607,557,517     62.66%                   35.53%             37.29%                -0.48%
Abroad              247,306,729       153,956,027     37.75%                   13.45%             16.36%                -1.56%

          Under the condition that the statistical caliber of the Company’s main business data is
          adjusted during the report period, the Company’s main business data adjusted on the basis of
          caliber at the end of report period in recent one year.

          Available           Not available

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

          Available Not available

          During the report period, the Company’s operating income of alcohol and alcoholic beverage
          manufacturing, wine and brandy all increased by more than 30% compared with the same
          period of last year. The main reason was that the Company seized the favorable opportunity
          of remittence in COVID-19 epidemic, increased marketing efforts and achieved good results,
                                                              20
                                                       Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

        resulting in an increase in the sales of wine and brandy.

        4. Analysis in non-main business
        Available          Not available

        5. Analysis in assets and liabilities

        1) Significant change in assets composition
                                                                                                           Unit: CNY
                            At the end of this report period          At the end of last year          Proportion
                                                                                                                     Explanation
                                                 Proportion in                      Proportion in      increase or
                                                                                                                     on significant
                               Amount            the total assets    Amount         the total assets    decrease
                                                                                                                       changes
                                                      (%)                                (%)              (%)

Monetary funds                 1,513,731,040            11.32%      1,194,214,929            9.11%           2.21%                 -
Account receivables              169,236,257              1.27%      183,853,362             1.40%          -0.13%                 -
Contract assets                              0               0%                 0               0%              0%                 -
Inventory                      2,920,940,415            21.85%      2,945,548,651          22.48%           -0.63%                 -
Investment real estate            25,470,474              0.19%       27,057,730             0.21%          -0.02%                 -
Long-term equity                                                                                                                   -
                                  47,159,727              0.35%       48,263,507             0.37%          -0.02%
investments
Fixed assets                   5,674,883,742            42.45%      5,724,935,846          43.69%           -1.24%                 -
Construction in progress         670,705,216              5.02%      635,495,152             4.85%           0.17%                 -
Right-of-use asset               110,547,744              0.83%                 0               0%           0.83%                 -
Short-term borrowings            716,361,680              5.36%      689,090,715             5.26%           0.10%                 -
Contract liability               108,304,501              0.81%      135,073,280             1.03%          -0.22%                 -
Long-term borrowings             202,741,846              1.52%      200,352,968             1.53%          -0.01%                 -
Lease liability                  111,337,332              0.83%                 0               0%           0.83%                 -




                                                               21
                                                                                                                                  Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report



       2) Main overseas assets situation
       Available          Not available
                                                                                                                                                                                       Unit:CNY
                            Formation                                    Operation         Control measures for safeguarding of       Earning     Proportion of overseas assets   Whether there are significant
   Details of assets                         Assets scale   Location
                              reasons                                      mode                        asset security                 condition   in the Company’s net assets          impairment risks

                                                                                      The Company participates in making important
Hacienda Y Vinedos        Acquisition of                                Independent
                                             512,925,352     Spain                    decisions through board of directors and        7,027,198                         4.96%     No
Marques Del Atrio. SL         equity                                     operation
                                                                                      appoints CFO on financial management.

Indomita Wine             Establishment                                 Independent   The Company participates in making important
                                             521,523,340     Chile                                                                    2,429,411                         5.05%     No
Company Chile, S.p.A.     of joint venture                               operation    decisions through board of directors.

Kilikanoon Estate Pty.,   Acquisition of                                Independent   The Company participates in making important
                                             175,884,505    Australia                                                                    24,392                         1.70%     No
Ltd.                          equity                                     operation    decisions through board of directors.

                               Sole
Francs Champs                                                           Independent   The Company participates in making important
                          proprietorship     225,518,561     France                                                                  -1,518,307                         2.18%     No
Participations SAS                                                       operation    decisions through board of directors.
                           establishment



       3) Assets and liabilities measured at fair value

       Available           Not available


       4) Limitations of assets rights up to the end of the report period
       At the end of report period, the Company has no assets sealed up, detained or frozen. For information about assets mortgage and pledge, please refer to
       Announcement on External Guarantee and Announcement on Guarantee provided by Spanish Atrio Company for Bank Loan disclosed on China
       Securities Journal, Securities Times and CNINFO (http://www.cninfo.com.cn) in 2016, 2017, 2018, 2019 and 2020.
                                                                                                      22
                                                                                                                                           Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


          6. Analysis in investment condition

          1) Overall situation

          Available            Not available

          Investment amount during the report period (CNY)                       Investment amount of the same period of last year (CNY)                                          Variation
                                                           80,000,000                                                                            180,460,000                                        -55.67%


          2) Cases of acquired significant equity investments during the report period

          Available            Not available


          3) Cases of significant ongoing non-equity investments during the report period

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

Yantai Changyu                                                                                                                                                                                Please refer to Resolution
                                              Liquor and
International                                                                                                                                                                                 Announcement of Seventh
                 Self-constr                  alcoholic                                           Owned
Wine City                        Yes                            46,730,000       1,673,024,100                    100%                 0                 0   —                  2017.04.22   Session Board of
                 ucted                        beverage                                            fund
Blending and                                                                                                                                                                                  Directors 4th Meeting,
                                              sector
Cooling Center                                                                                                                                                                                Resolution Announcement

                                                                                                            23
                                                                                                   Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

                                                                                                                                                      of Seventh Session Board
Yantai Changyu
                                                                                                                                                      of Directors 8th Meeting,
International      Self-constr                                                 Owned
                                 Yes              12,390,000   1,086,590,000                100%   0              0   —                 2017.04.22   Resolution Announcement
Wine City          ucted                                                       fund
                                                                                                                                                      of Seventh Session Board
Bottling Center
                                                                                                                                                      of Directors 10th Meeting,
                                                                                                                                                      Resolution Announcement
Yantai Changyu
                                                                                                                                                      of Eighth Session Board
International
                   Self-constr                                                 Owned                                                                  of Directors 4th Meeting
Wine City                        Yes                      0     462,677,200                 100%   0              0   —                 2017.04.22
                   ucted                                                       fund                                                                   and Resolution
Logistics
                                                                                                                                                      Announcement of Eighth
Center
                                                                                                                                                      Session Board of
Changyu
                                                                                                                                                      Directors 7th Meeting
Vineand Wine       Self-constr                                                 Owned
                                 Yes              20,880,000    173,854,800                 97%    0              0   —                 2017.04.22   disclosed on China
Research           ucted                                                       fund
                                                                                                                                                      Securities Journal,
Institute
                                                                                                                                                      Securities Times and
Treasure Wine      Self-constr                                                 Owned                                                                  CNINFO
                                 Yes                      0     211,320,000                 90%    0              0   —                 2017.04.22
Chateau            ucted                                                       fund                                                                   (http://www.cninfo.com.c

Koya Brandy        Self-constr                                                 Owned                                                                  n)
                                 Yes                      0     207,095,500                 95%    0              0   —                 2017.04.22
Chateau            ucted                                                       fund

Oak barrel
                   Self-constr                                                 Owned
procurement                      Yes                      0               0                 0%     0              0   —                 2021.04.28
                   ucted                                                       fund
project

Total                   --             --    --   80,000,000   3,814,561,600     --          --    0              0          --              --                    --


                4) Financial assets investment

                ①Security investment situation
                                                                                       24
                                                            Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

         Available         Not available

         There are no security investments for the Company during the report period.

         ②Derivatives investment

         Available         Not available
         There are no derivatives investments for the Company during the report period.

         7. Sale of significant assets and equities

         1) Sale of significant assets

         Available         Not available

         The Company did not sell significant assets during the report period.

         2) Sale of significant equities

         Available         Not available

         8. Analysis of main holding and joint stock companies

         Available         Not available
         Situation of main subsidiaries and joint stock companies affecting over 10% of the Company’s net profit


                                                                                                                    Unit: CNY
                  Company       Main        Registered                                 Operating      Operating
 Company name                                            Total assets   Net assets                                  Net profit
                    type       business      capital                                    revenue         profit

Yantai Changyu                 Sales of
Pioneer Wine      Subsidiary   alcoholic   CNY8million   818,725,152     65,616,857   1,038,210,123   412,413,177   342,003,376
Sales Co., Ltd.                products

Yantai Changyu                 Sales of
Wine Sales Co.,   Subsidiary   alcoholic   CNY5million   205,339,586    200,880,122    339,936,543     42,500,758    31,853,178
Ltd.                           products

Changyu Trading
                               Sales of
Co., Ltd. in
                  Subsidiary   alcoholic   CNY5million    44,575,805     19,490,622     95,960,320     30,650,462    22,963,892
Development
                               products
Zone of Yantai

Laizhou Changyu                Sales of
Wine Sales Co.,   Subsidiary   alcoholic   CNY1million    54,335,934      1,000,000    148,731,180      6,837,325     5,126,917
Ltd.                           products



                                                                 25
                                         Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


Acquisition and disposal of subsidiaries during the report period
Available       Not available
Explanation on main holding and joint stock companies
No
9. Situation of the structured subjects controlled by the Company
Available       Not available
10. Risks and response measures
1) Risk in price fluctuation of raw materials
Grapes are the Company’s main raw materials. The grape’s yield and quality are affected to a
certain extent by the natural factors such as drought, wind, rain, frost and snow. These force
majeure factors greatly influence the quantity and price of the grapes in this Company orders
and add the uncertainty to the Company’s production and operation. Therefore, the Company
will lower the risks that are likely to affect grape quality and result in price fluctuation by
means of expanding the self-run vineyards, strengthening the vineyard management and
optimizing the layout of vineyards.

2) Risk in uncertainty of market input and output
To cope with the cutthroat market competition and to meet the needs for market development,
the Company has input more and more capital in the market and the sales expense has taken
up a higher percentage point in the business revenue. The input-output ratio will affect the
Company’s operating results to a great extent and the risk that some investments may not
reach the expectations is likely to occur. Therefore, the Company will strengthen market
research and analysis, enhance market forecast accuracy and continue to perfect the
input-output evaluation system to ensure the investments in market to be satisfactory as
expected.

3) Risk in product transport
The Company’s products are fragile and sent to different places all over the world, mostly by
sea, railway and expressway. The peak season of sales is usually in cold winter and close to
the spring festival when market has a great demand. At that time, the natural and human
factors such as serious shortage of transport capacity resulting from busy flow of people and
goods, wind, snow, freezing as well as traffic accidents make the transport departments
difficult to send products to markets in time and safely. As a result, it makes this Company
have to face the risks of missing the peak season of sales. Therefore, the Company will adopt
all methods possible like making precise sales prediction and well designed connection of
production and sales, reasonably arranging production and transport means and making use of
more available warehouses in different places to lower these kinds of risks.

4) Risk in investment faults
The Company invested many projects in the previous periods and the investment amounts
were relatively large. For individual project, owing to the influence of various factors, it led to
have the risks of facing with the investment amount out of budget or hardly taking back the
expected investment earnings. The Company will take an adequate argument and scientific
decision-making for investment projects, try hard to reduce and avoid investment risks.

                                                26
                                       Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


5) Risk in exchange rate
The Company’s overseas subsidiaries export products to many different countries and the
export amount is relatively large. There may be exchange losses or gains due to exchange rate
fluctuation.

6) Risk in epidemic risk
The Company’s products are currently mainly used for people’s consumption at gatherings. If
the chance of gathering declines due to the epidemic, it may have a greater negative impact on
the Company’s product sales.




                                              27
                                                    Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

                                     IV. Corporate Governance

 1. Information for the shareholders’ meeting and interim shareholders’ meeting held
 during the report period

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

                                  Participation ratio    Convening   Disclosure
   Session       Meeting type                                                                Meeting Resolution
                                     of investors           date        date
                                                                                  http://www.cninfo.com.cn
2020 Annual        Annual
                                                                                  Resolution Announcement of 2020 Annual
Shareholders’   Shareholders’        61.95%           2021.05.27   2021.05.28
                                                                                  Shareholders’ Meeting (Announcement no.:
  Meeting          Meeting
                                                                                  2021-Temporary 14)


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

 Available         Not available

 2. Changes in the Company’s directors, supervisors and senior executives

 Available Not available
 There is no change in the Company’s directors, supervisors and senior executives during the
 reporting period. Please refer to the 2020 Annual Report for details.

 3. Situation of profit distribution and capitalization of capital reserve into share capital
 during the report period

 Available Not available
 The Company plans not to distribute cash dividends or give bonus shares or make capitalization of
 capital reserve into share capital.
 4. Implementation of the Company’s equity inventive plan, employee stock ownership
 plan or other employee incentive measures

 Available Not available
 There are no implementation of the Company’s equity inventive plan, employee stock
 ownership plan and other employee incentive measures during the report period.




                                                              28
                                                                                                                                 Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                                                                 V. Environmental and Social Responsibility

    1. Major environmental situation

    Whether the listed company and its subsidiaries belong to major polluters published by the environmental protection department

    Yes         No


 Name of        Name of major                            Quantity of                                                                                           Total     Total approved   Condition of
                                          Mode of                      Distribution situation     Discharge
company or       pollutants and                          discharge                                                Implemented pollution discharge standard   volume of     volume of       excessive
                                         discharge                      of discharge outlet     concentration
 subsidiary   particular pollutants                          outlet                                                                                          discharge     discharge       discharge

                                                                                                                Emission Standard for Air Pollutants of
                                                                       Confirmed in line
                                                                                                                Boiler(GB13271-2014), Emission Standard
                                      Discharge outlet                 with national
             Organized exhaust                                                                                  for Odor Pollutants (GB14554-93), 4a in
Liaoning                              of boiler                        standard Graphical
Changyu      gas,                                                                               Meeting the     Class 2 of Emission Standard for
                                      chimney and                      Signs for
Icewine      inorganizedexhaust                          2                                      national        Environmental Noise at the Boundary of       35m3/d      120m3/d          No
Chateau Co.,                          discharge outlet                 Environmental
Ltd.         gas, waster water,                                                                 standards       Industrial Enterprises (GB12348-2008),,
                                      of factory waste                 Protection
             noise                                                                                              Comprehensive Wastewater Discharge
                                      water                            (GB15562.1-1995)
                                                                                                                Standard of Liaoning Province
                                                                       (GB15562.2-1995)
                                                                                                                (DB21/1627-2008)


    Construction and operation of pollution prevention facilities
    The exhaust gas, SO2 and NOX produced by this company's boiler are discharged through ceramic tube dust removers and bag dust removers. A
    wastewater treatment station has been constructed. The wastewater treatment process adopts the treatment process of hydrolysis- aerobiont. Production
    waste water and domestic sewage are treated by the in-plant wastewater treatment station and then discharged into the wastewater treatment plant in
    Beidianzixiang Town.



                                                                                                     29
                                                     Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

           Environmental impact assessment of construction projects and other environmental
           protection administrative permits
           It has been approved in the Huanhuanjianzi (2016) No.24 issued by the Environmental
           Protection Bureau of Huanren Manchu Autonomous County.
           Emergency plan for emergentenvironmentalincident
           The     Company      has     formulated a    comprehensive  emergency    plan   for
           emergentenvironmentalincident.

           Environmental self-monitoring program
           The Company has formulated a complete environmental self-monitoring program.

           Administrative penalties due to environmental issues during the reporting period
Name of Company or     Penalty    Violation                        Impact on the Production and     Rectification Measures of
                                               Penalty Result
       Subsidiary      Reason     Situation                       Operation of the Listed Company          the Company

None                  None       None         None               None                               None



           Other environmental information that should be made public
           No

           Other related environmental information
           No

           2. Social responsibility performance

           1) The Company has counterpart supported to Huangchengyang village in Longkou City, an
           old revolutionary base area, to purchase local agricultural products such as apples and millet,
           to help solve the problem of slow sales.

           2) The Company has donated CNY300,000 to Wushan Country, Chongqing City to
           consolidate and expand the achievements and efforts of anti-poverty in some impoverished
           areas of Wushan Country.

           3) The Company provided help and assistance to the Company’s in-service or retired
           employees with poor families, as well as the Company’s in-service or retired employees with
           chronic or serious illnesses.




                                                            30
                                                                                                               Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                                                                            VI. Major issues


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


   Available          □Not available

                               Commitment                                                             Commitment          Commitment
      Commitments                              Commitment type          Commitment content                                                             Implementation
                                  party                                                                  time               period
Commitments at share
reform
Commitments made in
acquisition report or
equity changes report
Commitments at asset
restructuring
                             Yantai Changyu    Solve horizontal
                                                                Non-horizontal competition            May 18th, 1997         Forever        Has been performing
                             Group Co., Ltd.     competition
                                                                                                                                            According to Trademark License
                                                                 According to Trademark License                                             Contract, the trademark royalty
                                                                 Contract, the trademark royalty of                                         annually paid by the Company to
Commitments at the                                               Changyu and other trademarks paid                                          Changyu Group shall be mainly
initial public offering or                                       by the Company to Yantai Changyu                                           used by Changyu Group to
                             Yantai Changyu     Clear the use of Group Co., Ltd. every year is                         From May 18th, 1997 publicize trademarks including
refinancing                                                                                           May 18th, 1997
                             Group Co., Ltd.   trademark royalty mainly used for advertising                             to April 4th, 2019 Changyu and contract products.
                                                                                                                                            Except 2013 to 2017 during which
                                                                 Changyu and other trademarks and                                           the commitment was not strictly
                                                                 this contract products by Yantai                                           performed, Yantai Changyu Group
                                                                 Changyu Group Co., Ltd.                                                    Co., Ltd. has been performing its
                                                                                                                                            commitment.
Equity incentive

                                                                                       31
                                                                                                                    Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


commitments
                                                                 The CNY231,768,615 that was not
                                                                 used for publicity of trademarks
                                                                 and contract products as promised
                                                                 will be offset by the four-year
                                               Compensating      trademark royalty from 2019 to                            From April 4th, 2019
                            Yantai Changyu                                                                     th
                                                unredeemed       2022. If insufficient, the shortfall   April 4 , 2019      to December 31st, Has been performing
                            Group Co., Ltd.
                                                commitment       would be filled in one time in                                   2023
                                                                 2023. If there is any excess, the
                                                                 excess portion of the trademark
                                                                 royalty would be collected from the
                                                                 year with excess occurrence.
                                                                                                                                                 In accordance with the above
                                                                                                                                                 commitments, Changyu Group shall
                                                                                                                                                 transfer 180 eligible domestic
Commitments at middle                                            Except for some trademarks that                                                 trademarks and 33 foreign
and small shareholders of                                        cannot be stripped from “Changyu”                                             registered trademarks to the
the Company                                                      trademark, the trademarks and                                                   Company for free. Except for the
                                                                 patents which could be                                                          trademark of “Aurora”, which
                                                                 conditionally registered or applied                                             cannot be transferred due to its
                                                                 by the Company, but are still                                                   invalidity, the other 179 domestic
                                            Transferring partial
                            Yantai Changyu                       registered or applied by Changyu                                                trademarks that Changyu Group
                                             trademark to the                                           April 4th, 2019            None
                            Group Co., Ltd.                      Group that licensed to the                                                      promised to transfer have been
                                                 Company
                                                                 Company, will be transferred to the                                             transferred to the Company free of
                                                                 Company by Changyu Group free                                                   charge; Except for the four
                                                                 of charge before the end of 2019,                                               trademarks registered in Malaysia
                                                                 so as to ensure the independence                                                and Canada that are in the process
                                                                 and integrity of the Company’s                                                 of transfer, the other 29 foreign
                                                                 assets.                                                                         trademarks that Changyu Group
                                                                                                                                                 promised to transfer have been
                                                                                                                                                 transferred to the Company free of
                                                                                                                                                 charge.
Commitment under
timely implementation or Yes
not


                                                                                        32
                                                                                                                  Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                          According to the Trademark License Contract (hereafter referred to as “the Contract”), Changyu Group promises that the trademark royalty annually paid
                          by the Company to Changyu Group shall be mainly used by Changyu Group to publicize trademarks and contract products. But above-mentioned
                          ‘mainly’ is not a specific number, which is easy to cause divergence due to different understanding and leads to problem appearance during the
                          implementation process.
                          From 2013 to 2017, Changyu Group collected a total of CNY420,883,902 trademark royalty, of which 51% was used to publicize trademarks including
                          Changyu and contract products with amount of CNY214,650,790. The amount has been used to publicize trademarks including Changyu and contract
Whether or not to have    products is CNY50,025,181, with a balance of CNY164,625,609. In 2018 and 2019, the trademark royalty collected of 2017 and 2018 is
specific reasons of the   CNY155,623,907, of which 51% is used to publicize trademarks including Changyu and contract products with amount of CNY79,368,193. The amount
unimplemented             has been used to publicize trademarks including Changyu and contract products is CNY12,225,187, with a balance of CNY67,143,006. From 2013 to
commitment and next       2018, the accumulated balance of Changyu Group using to publicize trademarks including Changyu and contract products is CNY231,768,615. Changyu
steps                     Group promises that the four-year trademark royalty from 2019 to 2022 will be used for offset. If insufficient, the shortfall would be filled in one time in
                          2023. If there is any excess, the excess portion of the trademark royalty would be collected from the year with excess occurrence.
                          If Changyu Group is not able to implement the above-mentioned commitment owing to various reasons, the Company will timely supervise and urge
                          Changyu Group to fulfill its commitment and request Changyu Group to raise funds through bank loaning, assets sales and equity sales etc. in order to
                          implement the commitment.
                          For detailed information, please refer to Announcement on Commitment Issues of Yantai Changyu Group Co., Ltd. disclosed on April 4th, 2019.




                                                                                        33
                                         Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


2. Non-operational occupation capital of the listed company by controlling shareholder
and its related parties

Available Not available
There is no non-operational occupation capital of the listed company by controlling
shareholder and its related parties during the report period.

3. Illegal external guarantee

Available Not available
There is no illegal guarantee situation during the report period.

4. The appointment and dismissal of certified public accountants

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

5. Explanation from the board of directors and the board of supervisors for the
“Non-standard Audit Report” during this report period

Available       Not available

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

Available       Not available

7. Issues related with bankruptcy reorganization

Available Not available
There are no related issues of bankruptcy reorganization happened at the end of the report
period.

8. Litigation Issue

Material litigation and arbitration
Available Not available
There are no material litigation and arbitration during the report period.
Other Litigation Issue
Available Not available

9. Penalty and rectification

Available       Not available
                                                34
                                         Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

There are no penalty and rectification during the report period.

10. Credit of the Company, its controlling shareholder and actual controller

Available       Not available

11. Major related transactions

1) Related transactions in relation to routine operations

Available Not available
There are no related transactions in relation to routine operations during the reporting period.

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

Available Not available
There are no related transactions in relation to acquisition or sales of assets or equity during
the report period.

3) Related transactions in relation to common foreign investment

Available Not available
There are no related transactions in relation to common foreign investment during the report
period.

4) Related credit and debt dealings

Available       Not available

Whether or not existing non-operating related credit and debt transactions
Yes       No
There are no non-operating related credit and debt transactions during the report period.

5) Deals with related financial companies and financial companies controlled by the
Company

Available Not available
There is no deposit, loan, credit granting or other financial business between the Company,
related financial companies, financial companies controlled by the Company and related
parties.

6) Other major related transactions

Available       Not available


                                                35
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

  For other major related transactions, please refer to the Announcement on Anticipation of
  2021 Annual Routine Related Transaction and the Section XII “ Related Parties and Related
  Transaction” of the Financial Report of this report.

  Disclosure website of interim report for major related transaction

                                                     Disclosure date of        Name of disclosure website for
        Name of interim announcement
                                                   interim announcement           interim announcement
Announcement on Anticipation of 2021 Annual       April 28th, 2021           http://www.cninfo.com.cn
Routine Related Transaction


  12. Major contracts and execution conditions

  1) Trusteeship, contract and lease issues

  ① Trusteeship situation

  Available Not available
  There is no trusteeship situation during the report period.

  ② Contract situation

  Available Not available
  Explanation for contract situation
  For the Company’s contract operation situation during the report period, please refer to “23.
  Other payables” in Note 7 “Notes on consolidated financial statement” in the financial report
  of this report.

  Project whose profit and loss brought for the Company reach more than 10% of the total
  profit during the report period
  Available Not available
  There are no contract projects whose profit and loss brought for the Company reach more
  than 10% of the total profit during the report period.

  ③ Lease situation

  Available Not available
  Explanation for lease situation
  On January 1st, 2017, the Company renewed the Space Lease Agreement with the controlling
  shareholder Yantai Changyu Group Company Limited. The Company leased the space with
  15,196.94 square meters locating at No. 174 Shihuiyao Road, Zhifu District, Yantai City. The
  rent per year is CNY 1.4645 million with a rental period of 5 years from January 1st, 2017 to
  December 31st, 2021. On January 1st, 2017, the Company’s subordinate Sales & Marketing
  Co. of Yantai Changyu Pioneer Wine Company Limited Brandy Sales Division renewed the
  Space Lease Agreement with the controlling shareholder Yantai Changyu Group Company
                                                     36
                                       Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

Limited, leasing the space with 42,552.83 square meters locating at No. 1 Jichang Road,
Zhifu District, Yantai City and the space with 3,038 square meters locating at 56 Dama Road,
Zhifu District, Yantai City, which are all under the name of controlling shareholder. The rent
of above spaces per year is CNY 4.3935 million with a rental period of 5 years from January
1st, 2017 to December 31st, 2021.
On July 1st, 2017, this Company signed a house-leasing contract with Yantai Shenma
Packaging Company Limited. According to this contract, since July 1st, 2017, this Company
leased property to Yantai Shenma Packaging Company Limited for a business purpose with
the annual rent of CNY 1,626,880. This contract expires on June 30th, 2022.

Project whose profit and loss brought for the Company reach more than 10% of the total
profit during the report period

Available Not available
There are no lease projects whose profit and loss brought for the Company reach more than
10% of the total profit during the report period.




                                              37
                                                                                                                                       Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


      2) Major guarantee


      Available            Not available
                                                                                                                                                                                    Unit: CNY’0000
                                                           External guarantee of the Company and its subsidiaries(excluding guarantee to subsidiaries)
                   Disclosure date of                       Actual date of                                                                                                Whether or not Whether or not belong
Guarantee object                               Guarantee                    Actual guarantee                                                                  Guarantee
                 related announcement                      occurrence (date                  Guarantee type      Collateral          Counter Guarantee                       complete       to related-party
     name                                       quota                           amount                                                                         Period
                 about guarantee quota                      of agreement)                                                                                                 implementation       guarantee
Yantai Economic
                                                                                                                              Tendering guarantee for Yantai
and Technological                                                                             Joint and
                                                                                                                              Changyu Wine Research and
Development               2016.12.22            34,160       2016.12.21          34,160       several liability None                                          10 years    No             No
                                                                                                                              Development Company Limited’ s
Zone Management                                                                               guarantee
                                                                                                                              loans
Council.
                                                                            Total of the actual external
Total of the external guarantee quota
                                                                          0 guarantee amount during the                                                                                                      0
approved during the report period (A1)
                                                                            report period (A2)
Total of the external guarantee quota                                      Balance of the actual external
approved by the end of the report period                            34,160 guarantee by the end of the report                                                                                           34,160
(A3)                                                                       period (A4)
                                                                            Guarantee situations between the Company and subsidiaries
                      Disclosure date of                    Actual date of                                                                                                Whether or not Whether or not belong
Guarantee object                               Guarantee                    Actual guarantee                                                                  Guarantee
                    related announcement                   occurrence (date                  Guarantee type      Collateral          Counter Guarantee                       complete       to related-party
     name                                       quota                           amount                                                                         Period
                    about guarantee quota                   of agreement)                                                                                                 implementation       guarantee
Yantai Changyu                                                                                Joint and
                                                                                                                Plant and
Wine   Research                                                                               several liability
                          2016.12.22            72,176       2016.12.21          72,176                         other fixed None                              10 years    No             Yes
and Development                                                                               guarantee;
                                                                                                                assets
Company Limited                                                                               Mortgage
                                                                                              Joint and
Kilikanoon Estate
                          2018.12.05             8,528       2018.12.13           7,518       several liability None          None                            5 year      No             Yes
Pty Ltd
                                                                                              guarantee
Total of the guarantee quota approved to                                   Balance of the actual guarantee for
subsidiaries by the end of the report period                        80,704 subsidiaries by the end of the                                                                                               79,694
(B3)                                                                       report period (B4)
                                                                                     Guarantee situations between subsidiaries


                                                                                                        38
                                                                                                                                   Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                   Disclosure
                 date of related
                                                          Actual date of                                                                                            Whether or not Whether or not belong
Guarantee object announcement                                             Actual guarantee                                                              Guarantee
                                     Guarantee quota     occurrence (date                  Guarantee type       Collateral      Counter Guarantee                      complete       to related-party
     name            about                                                    amount                                                                     Period
                                                          of agreement)                                                                                             implementation       guarantee
                   guarantee
                     quota
        —               —                 —                  —                —                —             —                   —                  —           —                 —
                                                                   Total guarantee amount of the Company(Total of above three major items)
                                                                           Balance of the actual guarantee by
Total of the approved guarantee quota by
                                                                   114,864 the end of the report period                                                                                          113,854
the end of the report period(A3+B3+C3)
                                                                           (A4+B4+C4)
The proportion of actual total guarantee amount (A4+B4+C4) accounting
                                                                                                                                                                                                 11.02%
for the Company’s net asset
Among :
The amount of guarantee for shareholders, actual controllers and their
                                                                                                                                                                                                       0
related parties(D)
The amount of debt guarantee for the guaranteed objects whose
                                                                                                                                                                                                       0
asset-liability ratio is more than 70% directly or indirectly(E)
Total amount of guarantee of the part that exceeds 50% of net assets
                                                                                                                                                                                                       0
(F)
Total amount of the above-mentioned three items(D+E+F)                                                                                                                                               0
Explanation for undue guarantees that have happened warranty liability
                                                                         No
or may take joint payback liabilities during the report period (if have)
Explanation for violating due process to provide external guarantee (if
                                                                        No
have)



      Explanation on specific situations of adapting guarantee by complex methods
      No.




                                                                                                         39
                                        Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

3) Financial management entrustment

Available Not available
There is no financial management entrustment during the report period.

4) Major contracts for daily operations

Available      Not available

5) Other important contracts

Available Not available
There are no other important contracts during the report period.

13. Other Major issues

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

14. Major issues of Company’s subsidiaries

Available      Not available




                                               40
                                                             Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

                     VII. Changes in Shares and the Shareholders’ Situation

          1. Changes in shares

          1) Changes in shares

                                                                                                               Unit: share
                                 Amount before this change                    Change (+, -)                            Amount after this change
                                                                                  Transfer other
                                                Percentage Allot new Distribute                                                      Percentage
                                   Amount                                            capital to    Others   Subtotal    Amount
                                                    %        share bonus share                                                           %
                                                                                   share capital
I. Shares with trading limited
condition

  1. State-owned holdings

  2. State-owned legal person
  holdings

  3. Other domestic holdings

     Among which: domestic
  legal person
                     domestic
  natural person

  4. Foreign-owned holdings

     Among which: foreign
  legal person
                    foreign
  natural person
II. Shares without trading
                                  685,464,000       100%                                                               685,464,000        100%
limited condition

  1. A shares                     453,460,800      66.15%                                                              453,460,800      66.15%
  2. B shares                     232,003,200      33.85%                                                              232,003,200      33.85%
  3. Oversea listed foreign
shares

  4. Others

III. Total shares                 685,464,000       100%                                                               685,464,000        100%



          Cause of share change
          Available Not available
          Approval of share change
          Available Not available
          Transfer ownership of changed shares
          Available Not available
          Implementation progress of share buy-back
          Available Not available

                                                                     41
                                         Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report

Implementation progress of reducing holding buy-back share through the way of centralized
bidding
Available Not available
The influence of share change on the financial indicators such as basic earnings per share,
diluted earnings per share of the latest year and the latest period, net asset per share belonging
to the Company’s common shareholders, etc.
Available Not available
Other contents the Company thinks necessary or securities regulatory departments ask to make
public.
Available Not available

2) Changes in restricted shares

Available       Not available


2. Securities issuance and listing situation

Available       Not available




                                                42
                                                                                                                                           Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


   3. The number of shareholders of the Company and the shareholdings


                                                                                                 Total number of preferred shareholder recovering voting power by the end of
Total shareholders in the report period                                                 49,333                                                                                                           0
                                                                                                 report period (if have) (see note 8)
                                                               Shareholders holding more than 5% or the top 10 shareholders holding situation
                                                                                                   Shares held until                          Number of      Number of              Pledged or frozen
                                                                                   Percentage                           Changes during
               Name of Shareholders                   Character of shareholders                     the end of the                            restricted     unrestricted      Share
                                                                                      (%)                              the report period                                                      Amount
                                                                                                     report period                              shares         shares          status
                                                     Domestic non-state legal
YANTAI CHANGYU GROUP CO., LTD.                                                          50.40%           345,473,856                   0                        345,473,856             -                  -
                                                     person
GAOLING FUND, L.P.                                   Foreign legal person                 3.08%           21,090,219                   0                         21,090,219             -                  -
BBH BOS S/A FIDELITY FD - CHINA FOCUS FD Foreign legal person                             1.57%           10,758,326          -1,402,400                         10,758,326             -                  -
CHINA SECURITIES FINANCE CORP                        State legal person                   1.45%            9,968,557          -4,307,148                          9,968,557             -                  -
SHENWAN HONGYUAN SECURITIES
                                                     Foreign legal person                 1.07%            7,303,152            -928,581                          7,303,152             -                  -
(HONGKONG) LIMITED
FIDELITY PURITAN TRUST: FIDELITY SERIES
                                        Foreign legal person                              0.93%            6,350,762                   0                          6,350,762             -                  -
INTRINSIC OPPORTUNITIES FUND
GUOTAI JUNAN SECURITIES (HONGKONG)
                                                     Foreign legal person                 0.80%            5,475,910              -6,035                          5,475,910             -                  -
LIMITED
Haitong International Securities Company
                                                     Foreign legal person                 0.75%            5,118,902            377,115                           5,118,902             -                  -
Limited-Account Client
CHINA MERCHANTS SECURITIES (HK) CO.,
                                                     State legal person                   0.69%            4,756,347          1,547,626                           4,756,347             -                  -
LIMITED
VANGUARD EMERGING MARKETS STOCK
                                                     Foreign legal person                 0.60%            4,090,642            282,193                           4,090,642             -                  -
INDEX FUND
Strategic investors or legal result of the placement of new shares to become a top
                                                                                   No
10 shareholders
                                                                                  Among the top 10 shareholders, Yantai Changyu Group Company Limited has no associated relationship or accordant
The explanation for the associated relationship and accordant action
                                                                                  action relationship with the other 9 listed shareholders, while the relationship among the other shareholders is unknown.
Explanation of the above-mentioned shareholders’ entrustment/ fiduciary voting
                                                                                No
rights and waiver of the voting rights
Special explanation for the existence of a special repurchase account among the
                                                                                No
top 10 shareholders


                                                                                                          43
                                                                                                                                      Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                                                                    The top 10 shareholders with shares without trading limited condition
                                                                                                                                                                                  Type of share
                             Name of Shareholders                                  Number of shares without trading limited condition held until the end of the year
                                                                                                                                                                       Type of share         Amount
YANTAI CHANGYU GROUP CO., LTD.                                                                                                                          345,473,856         A                     345,473,856
GAOLING FUND, L.P.                                                                                                                                        21,090,219        B                      21,090,219
BBH BOS S/A FIDELITY FD - CHINA FOCUS FD                                                                                                                  10,758,326        B                      10,758,326
CHINA SECURITIES FINANCE CORP                                                                                                                              9,968,557        A                       9,968,557
SHENWAN HONGYUAN SECURITIES(HONGKONG) LIMITED                                                                                                              7,303,152        B                       7,303,152
FIDELITY PURITAN TRUST: FIDELITY SERIES INTRINSIC
                                                                                                                                                           6,350,762        B                       6,350,762
OPPORTUNITIES FUND
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED                                                                                                                  5,475,910        B                       5,475,910
Haitong International Securities Company Limited-Account Client                                                                                            5,118,902        B                       5,118,902
CHINA MERCHANTS SECURITIES (HK) CO., LIMITED                                                                                                               4,756,347        B                       4,756,347
VANGUARD EMERGING MARKETS STOCK INDEX FUND                                                                                                                 4,090,642        B                       4,090,642
The explanation for the associated relationship and accordant action of the top
10 shareholders with unrestricted shares, the the associated relationship and Among the top 10 shareholders, Yantai Changyu Group Company Limited has no associated relationship or accordant action
accordant action between the top 10 shareholders with unrestricted shares and relationship with the other 9 listed shareholders, and the relationship among the other shareholders is unknown.
the top 10 shareholders
Explanation for the top 10 shareholders who involved in financing activities and
                                                                                 The top 10 shareholders do not involve in financing activities and stock trade business.
stock trading business


   Whether or not the Company’s top 10 common shareholders and top 10 shareholders with unrestricted shares take agreed repurchase transaction during
   the report period

   Yes       No
   There is no agreed repurchase transaction taken by the Company’s top 10 common shareholders and top 10 shareholders with unrestricted shares
   during the report period.

   4. Changes in shareholdings of directors, supervisors and senior executives

   Available            Not available

                                                                                                       44
                                                                                                                      Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report




                                             Number of Shares   Increased number     Decreased number       Number of      Number of restricted    Number of restricted    Number of restricted
                                                held at the      of shares held in    of shares held in   shares held at   shares granted at the   shares granted in the   shares granted at the
   Name          Position           Status   beginning period   the current period   the current period   the end period     beginning period         current period            end period
                                                 (shares)             (shares)             (shares)          (shares)            (shares)                (shares)                (shares)
Hongjiang
            Chairman            Incumbent              36,500                    0                   0           36,500                       0                        0                      0
ZHOU
            Director, General
Jian SUN                        Incumbent              30,000              30,000                    0           60,000                       0                        0                      0
            manager

Total       -                   -                      66,500              30,000                    0           96,500                       0                        0                      0




  5. Changes in controlling shareholders or actual controllers

  Changes in the controlling shareholders during the report period
  Available      Not available
  There is no any change in the controlling shareholders during the report period.

  Changes in the actual controllers during the report period
  Available      Not available
  There is no any change in the actual controllers during the report period.




                                                                                         45
                                             Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report




                  VIII. Related Situation of Preferred Shares

Available Not available
There are no preferred shares during the report period.




                          IX. Related Situation of Bonds

Available      Not available




                                              46
                                                        Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                                               X. Financial Report

1. Audit report

Whether the semiannual report has been audited
 Yes      No
2. Financial statement

The unit in the statements of the financial annotations is RMB Yuan.
2.1 Consolidated balance sheet
Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd.                 June 30, 2021                    Unit: Yuan
                              Item                        Note         June 30, 2021          December 31, 2020
Current assets:
Monetary fund                                              7.1              1,513,731,040              1,194,214,929
Settlement reserves
Lending funds
Tradable financial assets
Derivative financial assets
Bills receivable
Accounts receivable                                        7.2               169,236,257                 183,853,362
Receivables financing                                      7.3               338,278,251                 338,090,187
Advance payment                                            7.4                  8,027,712                 71,296,416
Premium receivable
Reinsurance accounts receivable
Receivable reserves for reinsurance contract
Other receivables                                          7.5                 22,861,668                 22,428,956
Including: Interest receivable
           Dividends receivable
Redemptory monetary capital for sale
Inventories                                                7.6              2,920,940,415              2,945,548,651
Contract assets
Assets held for sale
Non-current assets due within one year
Other current assets                                       7.7               220,460,751                 234,118,715
Total current assets                                                        5,193,536,094              4,989,551,216
Non-current assets:
Offering loans and imprest
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments                               7.8                 47,159,727                 48,263,507
Other investments in equity instruments
Other non-current financial assets
Investment real estate                                     7.9                 25,470,474                 27,057,730

                                                         47
                                                          Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                              Item                          Note         June 30, 2021          December 31, 2020
Fixed assets                                                7.10              5,674,883,742              5,724,935,846
Construction in progress                                    7.11               670,705,216                 635,495,152
Productive biological assets                                7.12               190,183,036                 192,173,536
Oil-and-gas assets
Right-of-use assets                                         7.13               110,547,744
Intangible assets                                           7.14               651,746,519                 660,989,065
Development expenditure
Goodwill                                                    7.15               132,938,212                 132,938,212
Long-term prepaid expenses                                  7.16               332,133,295                 314,465,855
Deferred income tax assets                                  7.17               181,479,059                 206,241,275
Other non-current assets                                    7.18               158,377,754                 170,370,147
Total non-current assets                                                      8,175,624,778              8,112,930,325
Total assets                                                                13,369,160,872              13,102,481,541
Current liabilities:
Short-term loans                                            7.19               716,361,680                 689,090,715
Borrowings from the Central Bank
Loans from other banks and other financial institutions
Tradable financial liabilities
Derivative financial liabilities
Bills payable
Accounts payable                                            7.20               409,887,533                 484,347,958
Advances from customers
Contract liabilities                                        7.21               108,304,501                 135,073,280
Financial assets sold for repurchase
Deposits from customers and interbank
Receivings from vicariously traded securities
Receivings from vicariously sold securities
Employee remunerations payable                              7.22               139,388,230                 188,779,911
Taxes and dues payable                                      7.23               161,200,580                 213,412,813
Other payables                                              7.24               683,062,474                 386,105,526
Including: Interest payable                                                       2,289,564                    553,471
            Dividends payable                                                  274,507,652                   1,003,125
Handling charges and commissions payable
Dividend payable for reinsurance
Liabilities held for sale
Non-current liabilities due within one year                 7.25               125,279,691                 133,311,890
Other current liabilities                                   7.26                 14,000,154                 14,820,653
Total current liabilities                                                     2,357,484,843              2,244,942,746
Non-current liabilities:
Reserves for insurance contracts
Long-term borrowings                                        7.27               202,741,846                 200,352,968
Bonds payable
Including: Preferred stock
            Perpetual bonds
Lease liabilities                                           7.28                111,337,332

                                                           48
                                                             Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                              Item                             Note         June 30, 2021          December 31, 2020
Long-term accounts payable                                     7.29                 64,000,000                 86,000,000
Long-term employee remunerations payable
Estimated liabilities
Deferred income                                                7.30                 45,454,375                 52,653,609
Deferred income tax liabilities                                7.17                 11,873,395                 12,022,613
Other non-current liabilities                                  7.31                  2,078,971                  2,078,971
Total non-current liabilities                                                     437,485,919                 353,108,161
Total liabilities                                                                2,794,970,762              2,598,050,907
Owner’s equity:
Capital stock                                                  7.32               685,464,000                 685,464,000
Other equity instruments
Including: Preferred stock
            Perpetual bonds
Capital surplus                                                7.33               524,968,760                 524,968,760
Minus: Treasury stock
Other comprehensive income                                     7.34                -21,042,366                    576,129
Special reserves
Surplus reserves                                               7.35               342,732,000                 342,732,000
General risk preparation
Undistributed profit                                           7.36              8,801,095,552              8,714,091,755
Total owner’s equities attributable to the parent company                     10,333,217,946              10,267,832,644
Minority equity                                                                   240,972,164                 236,597,990
Total owner’s equities                                                         10,574,190,110             10,504,430,634
Total liabilities and owner’s equities                                        13,369,160,872              13,102,481,541
Legal Representative: Zhou Hongjiang Accounting Supervisor: Jiang Jianxun Accounting Department Manager: Guo Cuimei




2.2 Balance sheet of the parent company
Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd.                                                       Unit: Yuan
                              Item                             Note         June 30, 2021          December 31, 2020
Current assets:
Monetary fund                                                                     616,538,061                 267,548,326
Tradable financial assets
Derivative financial assets
Bills receivable
Accounts receivable                                            17.1                     69,805
Receivables financing                                                               31,148,514                 13,920,000
Advance payment                                                                      1,475,764                    171,709
Other receivables                                              17.2               271,659,240                 580,131,798
Including: Interest receivable
            Dividends receivable                                                                              200,000,000
Inventories                                                                       458,649,317                 482,442,935
Contract assets
Assets held for sale


                                                              49
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                              Item              Note         June 30, 2021          December 31, 2020
Non-current assets due within one year
Other current assets                                                 25,156,377                 24,842,325
Total current assets                                              1,404,697,078              1,369,057,093
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments                    17.3              7,599,301,118              7,599,778,880
Other investments in equity instruments
Other non-current financial assets
Investment real estate                                               25,470,474                 27,057,730
Fixed assets                                                       235,857,615                 243,634,747
Construction in progress                                               259,132                   2,865,243
Productive biological assets                                        115,113,721                115,103,753
Oil and gas assets
Right-of-use assets                                                  43,293,228
Intangible assets                                                    79,416,810                 80,789,731
Development expenditure
Goodwill
Long-term prepaid expenses
Deferred income tax assets                                           15,270,673                 18,285,685
Other non-current assets                                          1,820,700,000              1,530,700,000
Total non-current assets                                          9,934,682,771              9,618,215,769
Total assets                                                     11,339,379,849             10,987,272,862
Current liabilities:
Short-term loans                                                   150,000,000                 150,000,000
Tradable financial liabilities
Derivative financial liabilities
Bills payable
Accounts payable                                                     43,145,258                 76,470,081
Advances from customers
Contract liabilities
Employee remunerations                                               57,210,645                 67,808,910
Taxes and dues payable                                                2,826,925                  9,123,959
Other payables                                                     664,761,829                 521,505,947
Including: Interest payable                                            139,583                     181,250
            Dividends payable                                      274,185,600
Liabilities held for sale
Non-current liabilities due within one year                           3,688,236
Other current liabilities
Total current liabilities                                          921,632,893                 824,908,897
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred stock

                                               50
                                                         Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                              Item                         Note         June 30, 2021          December 31, 2020
            Perpetual bonds
Lease liabilities                                                               45,412,927
Long-term accounts payable
Long-term employee remuneration payable
Estimated liabilities
Deferred income                                                                  3,651,213                  5,507,708
Deferred income tax liabilities                                                     88,555
Other non-current liabilities                                                    1,164,471                  1,164,471
Total non-current liabilities                                                   50,317,166                  6,672,179
Total liabilities                                                             971,950,059                 831,581,076
Owner’s equity:
Capital stock                                                                 685,464,000                 685,464,000
Other equity instruments
Including: Preferred stock
            Perpetual bonds
Capital surplus                                                               560,182,235                 560,182,235
Minus: Treasury stock
Other comprehensive income
Special reserves
Surplus reserves                                                              342,732,000                 342,732,000
Undistributed profit                                                         8,779,051,555              8,567,313,551
Total owner’s equities                                                    10,367,429,790              10,155,691,786
Total liabilities and owner’s equities                                     11,339,379,849             10,987,272,862


Legal Representative: Zhou Hongjiang Accounting Supervisor: Jiang Jianxun Accounting Department Manager: Guo Cuimei



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                                                    1,874,460,437              1,418,548,547
Including: Operating income                                7.37              1,874,460,437              1,418,548,547
            Interest income
            Earned premium
            Handling fee and commission income
2. Total operating costs                                                     1,385,344,667              1,043,027,624
Including: Operating costs                                 7.37               761,513,544                 574,858,339
              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

                                                          51
                                                                 Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                                Item                               Note     Sum of current period      Sum of prior period
               Taxes and surcharges                                7.38               100,220,017                  88,443,822
               Selling expenses                                    7.39               388,385,610                 252,912,204
               Administrative expenses                             7.40               123,384,629                 113,069,869
               Research and development expenses                   7.41                  2,477,835                  1,805,988
               Financial expenses                                  7.42                  9,363,032                 11,937,402
               Including: Interest expenses                                             14,239,535                 14,891,310
                             Interest income                                             5,827,243                  6,146,409
        Plus: Other profit                                         7.43                 21,978,695                 50,780,231
             Investment profit (loss is listed with “-")          7.44                 -1,621,780                  -1,170,685
                Including: Investment profit for joint-run
                                                                                        -1,621,780                  -1,170,685
                       business and joint venture
                       Financial   assets     measured     at
                       amortized cost cease to be recognized
                       as income
             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 “-")     7.45                 -6,176,948                   -533,145
             Asset impairment loss (loss is listed with “-")      7.46                  3,680,018                  4,242,813
             Income from asset disposal (loss is listed with       7.47
                                                                                                                       24,148
“-")
3. Operating profit (loss is listed with “-")                                        506,975,755                 428,864,285
        Plus: Non-operating income                                 7.48                  2,488,778                  6,686,519
        Minus: Non-operating expenses                              7.49                   569,721                   1,026,474
4. Total profits (total loss is listed with “-")                                     508,894,812                 434,524,330
        Minus: Income tax expenses                                 7.50               136,579,849                 113,453,948
5. Net profit (net loss is listed with “-")                                          372,314,963                 321,070,382
5.1 Classification by operation continuity
      5.1.1 Net profit from continuing operation (net loss is
                                                                                      372,314,963                 321,070,382
listed with “-")
       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
                                                                                      371,821,819                 318,640,075
company
        5.2.2 Minority interest income                                                    493,144                   2,430,307
6. Net after-tax amount of other comprehensive income              7.51                -24,776,238                  -5,765,822
Net after-tax amount of other comprehensive income
                                                                                       -21,618,495                  -5,006,653
attributable to 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


                                                                  52
                                                                 Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                               Item                                Note     Sum of current period      Sum of prior period
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
                                                                                       -21,618,495                  -5,006,653
profit and 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 Amount of financial assets reclassified into other
comprehensive income
6.2.4 Provision for credit impairment of other credit
investments
6.2.5 Provision for cash-flow hedge
6.2.6 Difference in translation of Foreign Currency
                                                                                       -21,618,495                  -5,006,653
Financial Statement
6.2.7 Other
Net after-tax amount of other comprehensive income
                                                                                        -3,157,743                   -759,169
attributable to minority shareholders
7. Total comprehensive income                                                         347,538,725                 315,304,560
Attributable to owner of the parent company                                           350,203,324                 313,633,422
Attributable to minority shareholders                                                   -2,664,599                  1,671,138
8. Earnings per share:
8.1 Basic earnings per share                                                                  0.54                           0.46
8.2 Diluted earnings per share                                                                0.54                           0.46
Legal Representative: Zhou Hongjiang Accounting Supervisor: Jiang Jianxun Accounting Department Manager: Guo Cuimei


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                                                17.4               206,300,566                 152,950,515
Minus: Operating costs                                             17.4               169,012,171                 143,241,194
          Taxes and surcharges                                                          11,779,088                  4,379,365
          Selling expenses
          Administrative expenses                                                       29,404,865                 30,150,311
          Research and development expenses                                               522,997                     318,917
          Financial expenses                                                             1,903,108                    934,777
          Including: Interest expenses                                                   3,316,692                  2,807,750
                      Interest income                                                    1,700,240                  2,251,235
        Plus: Other profit                                                               3,949,823                  1,819,890
             Investment profit (loss is listed with “-")          17.5               494,528,070                  87,474,604
                Including: Investment profit for joint-run
                                                                                          -477,762
                       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
                                                                  53
                                                                 Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                               Item                                Note     Sum of current period      Sum of prior period
with “-")
             Credit impairment loss (loss is listed with “-")                                -443                     -71,879
             Asset impairment loss (loss is listed with “-")                                                         671,511
             Income from asset disposal (loss is listed with                               -30,921
“-")
2. Operating profit (loss is listed with “-")                                        492,124,866                  63,820,077
        Plus: Non-operating income                                                          83,440                  2,007,235
        Minus: Non-operating expenses                                                     371,527                     525,000
3. Total profits (total loss is listed with “-")                                     491,836,779                  65,302,312
        Minus: Income tax expenses                                                        -376,545                  -5,644,794
4. Net profit (net loss is listed with “-")                                          492,213,324                  70,947,106
      4.1Net profit from continuing operation (net loss is
                                                                                      492,213,324                  70,947,106
listed with “-")
      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 Amount of financial assets reclassified into other
comprehensive income
5.2.4 Provision for credit impairment of other credit
investments
5.2.5 Provision for cash-flow hedge
5.2.6 Difference in translation of Foreign Currency
Financial Statement
5.2.7 Other
6. Total comprehensive income                                                         492,213,324                  70,947,106
7. Earnings per share:
7.1 Basic earnings per share                                                                  0.72                           0.10
7.2 Diluted earnings per share                                                                0.72                           0.10
Legal Representative: Zhou Hongjiang Accounting Supervisor: Jiang Jianxun Accounting Department Manager: Guo Cuimei




2.5 Consolidated cash flow statement
Compiling unit: Yantai Changyu Pioneer Wine Co., Ltd.                                                           Unit: Yuan
                                                                  54
                                                            Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                            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 services                       1,888,979,284              1,507,726,721
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                                                                25,489,549                 23,217,782
Other cash received related to operating activities           7.52                 26,262,022                 47,768,202
Subtotal of cash flows of operating activities                                  1,940,730,855              1,578,712,705
Cash paid for goods and services                                                 528,698,794                 632,477,833
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 lending funds
Cash paid to interest, handling fees and commissions
Cash paid to policy bonus
Cash paid to and on behalf of employees                                          260,016,591                 240,815,653
Cash paid for taxes and expenses                                                 429,710,784                 470,110,699
Other cash paid related to operating activities               7.52               266,369,537                 251,827,272
Sub-total of cash outflows of operating activities                              1,484,795,706              1,595,231,457
Net cash flow from operating activities                                          455,935,149                 -16,518,752
2. Cash flow from investing activities:
Cash received from disinvestment
Cash received from withdrawal of fixed deposits                                     5,200,000                 60,128,600
Cash received from obtaining investment income
Cash received from obtaining interest income                                           97,241                  1,160,244
Cash received from disposal of fixed assets, intangible
                                                                                       11,531                       2,760
assets and 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                                     5,308,772                 61,291,604
Cash paid to acquire fixed assets, intangible assets and
                                                                                 112,686,656                  68,181,643
other long-term assets
Cash for investment                                                                  518,000                     858,326
Cash paid for purchasing fixed deposits                                             5,200,000                 35,200,000
Net increase in hypothecated loan
                                                             55
                                                                  Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                             Item                                   Note     Sum of current period      Sum of prior period
Net cash paid for acquiring branch and other business unit
Other cash paid related to investment activities
Subtotal of cash outflows of investment activities                                     118,404,656                 104,239,969
Net cash flow from investing activities                                                -113,095,884                -42,948,365
3. Cash flow from financing activities
Cash received from acquiring investment                                                   7,430,000
Including: cash received from acquiring                minority
                                                                                          7,430,000
shareholders investment by branch
Cash received from acquiring loans                                                     596,450,339                 778,228,305
Other cash received related to financing activities                                      21,654,861
Subtotal cash flows of financing activities                                            625,535,200                 778,228,305
Cash paid for paying debts                                                             609,426,516                 758,287,985
Cash paid for distributing dividend and profit or paying
                                                                                         11,683,409                 24,177,706
interest
Including: dividend and        profit      paid   to   minority
                                                                                                                     1,551,687
shareholders by branch
Other cash paid related to financing activities                                           7,144,318
Subtotal of cash outflows of financing activities                                      628,254,243                 782,465,691
Net cash flow from financing activities                                                  -2,719,043                  -4,237,386
4. Influences of exchange rate fluctuation on cash and
                                                                                           -400,533                   -307,959
cash equivalents
5. Net Increase in cash and cash equivalents                                           339,719,689                 -64,012,462
Plus: balance at the beginning of the period of cash and
                                                                                      1,052,665,105              1,397,399,469
cash equivalents
6. Balance at the end of the period of cash and cash
                                                                                      1,392,384,794              1,333,387,007
equivalents
Legal Representative: Zhou Hongjiang Accounting Supervisor: Jiang Jianxun Accounting Department Manager: Guo Cuimei


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                              219,352,502                 176,514,170
Tax refund received
Other cash received related to operating activities                                       4,587,865                 14,486,373
Subtotal of cash flows of operating activities                                         223,940,367                 191,000,543
Cash paid for goods and services                                                        119,811,768                149,176,637
Cash paid to and on behalf of employees                                                  31,143,555                 25,497,870
Cash paid for taxes and expenses                                                         22,678,777                  2,648,464
Other cash paid related to operating activities                                          98,483,900                107,931,895
Sub-total of cash outflows of operating activities                                     272,118,000                 285,254,866
Net cash flow from operating activities                                                 -48,177,633                -94,254,323
2. Cash flow from investing activities:
Cash received from disinvestment
Cash received from withdrawal of fixed deposits                                           5,200,000                 15,200,000
Cash received from obtaining investment income                                         695,005,832                 287,389,704

                                                                   56
                                                             Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                                  Item                                   Sum of current period     Sum of prior period
Cash received from obtaining interest income                                            97,241
Net cash received from disposal of fixed assets, intangible assets and
                                                                                        47,954
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                                    700,351,027                302,589,704
Cash paid to acquiring fixed assets, intangible assets and other
                                                                                     2,688,616                  1,040,048
long-term assets
Cash for investment
Cash paid for purchasing fixed deposits                                              5,200,000                 20,200,000
Net cash paid for acquiring branch and other business unit
Other cash paid related to investment activities                                   290,000,000                 97,000,000
Subtotal of cash outflows of investment activities                                 297,888,616                118,240,048
Net cash flow from investing activities                                            402,462,411                184,349,656
3. Cash flow from financing activities
Cash received from acquiring investment
Cash received from acquiring loans                                                 150,000,000                150,000,000
Other cash received related to financing activities
Subtotal cash flows of financing activities                                        150,000,000                150,000,000
Cash paid for debts                                                                150,000,000                150,000,000
Cash paid to distribute dividend, profit or pay interest                             2,442,943                  2,748,375
Other cash paid related to financing activities                                      2,809,688
Subtotal of cash outflows of financing activities                                  155,252,631                152,748,375
Net cash flow from financing activities                                              -5,252,631                 -2,748,375
4. Influences of exchange rate fluctuation on cash and cash
equivalents
5. Net Increase in cash and cash equivalents                                       349,032,147                 87,346,958
Plus: balance at the beginning of the period of cash and cash
                                                                                   182,123,070                623,116,542
equivalents
6. Balance at the end of the period of cash and cash equivalents                   531,155,217                710,463,500
Legal Representative: Zhou Hongjiang Accounting Supervisor: Jiang Jianxun Accounting Department Manager: Guo Cuimei




                                                              57
                                                                                                                                                             Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


        2.7 Consolidated owner’s equity changing list
                                                                                                                                                                                                                             Unit: Yuan
                                                                                                                                      This period
                                                                                                         Owners’ equity of the parent company
                                                                                                                                                                                                               Minority
                   Item                                      Other equity instruments                   Minus:      Other                                                                                                   Total owners’
                                                                                            Capital                            Special    Surplus      General risk   Undistributed                          shareholders’
                                              Capital stock Preferred Perpetual
                                                                                           reserves
                                                                                                       Treasury comprehensive
                                                                                                                              reserves    reserves     preparation      profits
                                                                                                                                                                                    Other     Subtotal                         equity
                                                              stock      bonds
                                                                                 Other
                                                                                                         stock     income                                                                                       equity

1. Balance at the end of last year            685,464,000                                524,968,760                  576,129            342,732,000                  8,714,091,755         10,267,832,644     236,597,990    10,504,430,634

Plus: Accounting policies changing                                                                                                                                      -10,632,422            -10,632,422                       -10,632,422

Previous error correction
Business combination under common
control
Other
2. Balance at the beginning of this year      685,464,000                                524,968,760                  576,129            342,732,000                  8,703,459,333         10,257,200,222     236,597,990    10,493,798,212

3. Increased or decreased amount in this
period (reducing amount is listed with                                                                            -21,618,495                                           97,636,219             76,017,724        4,374,174        80,391,898
“-")
3.1 Total comprehensive income                                                                                    -21,618,495                                          371,821,819            350,203,324       -2,664,599       347,538,725

3.2 Owners' invested and reduced
                                                                                                                                                                                                                 7,430,000         7,430,000
capital
3.2.1 Owner’ invested common stock                                                                                                                                                                              7,430,000         7,430,000

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
3.3 Profit distribution                                                                                                                                               -274,185,600            -274,185,600        -391,227      -274,576,827

3.3.1 Accrued surplus reserves
3.3.2 Accrued general risk preparation
3.3.3 Distribution        to   owners   (or
                                                                                                                                                                      -274,185,600            -274,185,600        -391,227      -274,576,827
shareholders)
3.3.4 Other

                                                                                                                       58
                                                                                                                                                          Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                                                                                                                                   This period
                                                                                                      Owners’ equity of the parent company
                                                                                                                                                                                                              Minority
                  Item                                    Other equity instruments                   Minus:      Other                                                                                                     Total owners’
                                                                                         Capital                            Special    Surplus      General risk   Undistributed                            shareholders’
                                           Capital stock Preferred Perpetual                        Treasury comprehensive                                                       Other       Subtotal                         equity
                                                                              Other     reserves                           reserves    reserves     preparation      profits                                   equity
                                                           stock      bonds                           stock     income

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 variation
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                                                                                                                                                                                                                                0

4. Balance at the end of this period       685,464,000                                524,968,760              -21,042,366            342,732,000                  8,801,095,552           10,333,217,946     240,972,164    10,574,190,110

                                                                                                                                                                                                                            Unit: Yuan
                                                                                                                                   Last period
                                                                                                      Owners’ equity of the parent company
                                                                                                                                                                                                              Minority
                  Item                                    Other equity instruments                   Minus:      Other                                                             Other     Subtotal                      Total owners’
                                                                                         Capital                            Special    Surplus      General risk   Undistributed                            shareholders’
                                           Capital stock Preferred Perpetual
                                                                                        reserves
                                                                                                    Treasury comprehensive
                                                                                                                           reserves    reserves     preparation      profits
                                                                                                                                                                                                                              equity
                                                           stock     bonds
                                                                              Other
                                                                                                     stock      income                                                                                         equity
1. Balance at the end of last year         685,464,000                                642,775,360               -4,235,583            342,732,000                  8,735,513,044           10,402,248,821     271,876,064    10,674,124,885

Plus: Accounting policies changing
Previous error correction
Business combination under common
control
Other
2. Balance at the beginning of this year   685,464,000                                642,775,360               -4,235,583            342,732,000                  8,735,513,044           10,402,248,821     271,876,064    10,674,124,885

                                                                                                                    59
                                                                                                                                                             Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                                                                                                                                         Last period
                                                                                                            Owners’ equity of the parent company
                                                                                                                                                                                                               Minority
                   Item                                        Other equity instruments                    Minus:      Other                                                          Other   Subtotal                      Total owners’
                                                                                              Capital                             Special   Surplus    General risk   Undistributed                          shareholders’
                                                Capital stock Preferred Perpetual
                                                                                             reserves
                                                                                                          Treasury comprehensive
                                                                                                                                 reserves   reserves   preparation      profits
                                                                                                                                                                                                                               equity
                                                                stock     bonds
                                                                                   Other
                                                                                                           stock      income                                                                                    equity
3. Increased or decreased amount in this
period (reducing amount is listed with                                                     -117,806,600                4,811,712                                        -21,421,289           -134,416,177     -35,278,074     -169,694,251
“-")
3.1 Total comprehensive income                                                                                         4,811,712                                       470,860,587            475,672,299        2,561,399     478,233,698

3.2 Owners' invested and reduced
                                                                                           -117,806,600                                                                                       -117,806,600     -34,679,936     -152,486,536
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                                                                                -117,806,600                                                                                       -117,806,600     -34,679,936     -152,486,536

3.3 Profit distribution                                                                                                                                               -492,281,876            -492,281,876      -3,159,537     -495,441,413

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      -2,376,794     -413,655,194
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

                                                                                                                          60
                                                                                                                                                          Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                                                                                                                                   Last period
                                                                                                      Owners’ equity of the parent company
                                                                                                                                                                                                              Minority
                  Item                                    Other equity instruments                   Minus:      Other                                                             Other     Subtotal                      Total owners’
                                                                                         Capital                            Special    Surplus      General risk   Undistributed                            shareholders’
                                           Capital stock Preferred Perpetual
                                                                                        reserves
                                                                                                    Treasury comprehensive
                                                                                                                           reserves    reserves     preparation      profits
                                                                                                                                                                                                                              equity
                                                           stock     bonds
                                                                              Other
                                                                                                     stock      income                                                                                         equity
3.5 Special reserves
3.5.1 Withdrawal in this period
3.5.2 Usage in this period
3.6 Other
4. Balance at the end of this period       685,464,000                                524,968,760                  576,129            342,732,000                  8,714,091,755           10,267,832,644     236,597,990    10,504,430,634

      2.8 Owner’s equity changing list of the parent company
                                                                                                                                                                                                                            Unit: Yuan
                                                                                                                                       This period
                                                                Other equity instruments                                   Minus:          Other
                       Item                                                                                  Capital                                 Special                Surplus         Undistributed                   Total owners’
                                               Capital stock Preferred Perpetual                                          Treasury     comprehensive                                                             Other
                                                                                     Other                  reserves                                 reserves               reserves          profits                          equity
                                                               stock      bonds                                            stock          income
1. Balance at the end of last year               685,464,000                                              560,182,235                                                     342,732,000        8,567,313,551                  10,155,691,786
Plus: Accounting policies changing                                                                                                                                                               -6,289,720                     -6,289,720
Previous error correction
Other
2. Balance at the beginning of this year         685,464,000                                              560,182,235                                                     342,732,000        8,561,023,831                  10,149,402,066
3. Increased or decreased amount in this
period (reducing amount is listed with                                                                                                                                                         218,027,724                     218,027,724
“-")
3.1 Total comprehensive income                                                                                                                                                                 492,213,324                     492,213,324
3.2 Owners' invested and reduced capital
3.2.1 Owners’ invested common stock
3.2.2 Other equity instrument holder’
invested capital
3.2.3 Amount of shares            paid   and
reckoned in owners' equity


                                                                                                                    61
                                                                                                                                       Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


3.2.4 Other
3.3 Profit distribution                                                                                                                                            -274,185,600             -274,185,600
3.3.1 Drew surplus reserves
3.3.2 Distribution         to   owners    (or
                                                                                                                                                                   -274,185,600             -274,185,600
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                                     560,182,235                                        342,732,000    8,779,051,555           10,367,429,790


                                                                                                                                                                                          Unit: Yuan
                                                                                                                         Last period

                    Item                                          Other equity instruments                     Minus:        Other
                                                                                                  Capital                              Special      Surplus       Undistributed            Total owners’
                                                Capital stock   Preferred   Perpetual                         Treasury   comprehensive                                            Other
                                                                                        Other    reserves                              reserves     reserves        profits                   equity
                                                                  stock      bonds                             stock        income
1. Balance at the end of last year               685,464,000                                    557,222,454                                         342,732,000   8,619,977,577            10,205,396,031
Plus: Accounting policies changing
Previous error correction
Other
                                                                                                       62
                                                                           Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


2. Balance at the beginning of this year       685,464,000   557,222,454                342,732,000   8,619,977,577            10,205,396,031
3. Increased or decreased amount in this
                                                               2,959,781                                -52,664,026               -49,704,245
period (reducing amount is listed with “-")
3.1 Total comprehensive income                                                                          427,160,774              427,160,774
3.2 Owners' invested and reduced capital                       2,959,781                                                            2,959,781
3.2.1 Owners’ 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                                                    2,959,781                                                            2,959,781
3.3 Profit distribution                                                                                -479,824,800              -479,824,800
3.3.1 Drew surplus reserves
3.3.2 Distribution to owners (or
                                                                                                       -479,824,800              -479,824,800
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   560,182,235                342,732,000   8,567,313,551            10,155,691,786

                                                                    63
                                               Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


3. Company profile

Yantai Changyu Pioneer Wine Co., Ltd. (the “Company” or the “Joint-stock Company”) was
incorporated as a joint-stock limited company in accordance with the Company Law of the
People’s Republic of China (the “PRC”) in the merger and reorganization carried out by
Yantai Changyu Group Co., Ltd. (“Changyu Group”) 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 and brandy,
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, 2021, the Company issued 685,464,000 shares accumulatively. Refer to Note
7.32 for details.

The parent company of the Group is Changyu Group 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 24, 2021.

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 regulations thereof.

4.2 Continuous operation

The Group has appraised the ability of continuous operation for 12 months from June 30,
2021, and no issues or situations causing major doubts to this ability are found. Therefore, this
financial statement is prepared on the basis of the continuous operation assumption.

5. Main accounting policies and accounting estimates

5.1 Statement on compliance with ASBE

This financial statement fulfills the requirement of ASBE issued by the Ministry of Finance
and gives a true and integrated view of the consolidated financial status and the financial
status as at June 30, 2021, as well as the consolidated operating result, the operating result, the
                                                64
                                             Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


consolidated cash flow and the cash flow of the Company from January to June 2021.

In addition, the financial statement of the Company also complies with the related disclosure
requirements for statement and its notes stipulated by Preparation Rules for Information
Disclosure by Companies Offering Securities to the Public No. 15 – General Provisions on
Financial Reports (2014 Revision) by the China Securities Regulatory Commission
(hereinafter referred to as the “CSRC”).

5.2 Accounting period

The accounting year is from January 1 to December 31 in Gregorian calendar.
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 under common control


A business combination under common control is a business combination in which all of the
combining enterprises are ultimately controlled by the same party or same multiple parties
before and after the combination, and that control is not transitory. The assets and liabilities
obtained by the combining party in the business combination shall be measured on the basis
of the carrying amount in the ultimate controlling party's consolidated financial statement as
at the combination date. Where there is a difference between the carrying amount of the net
assets acquired and the carrying amount of the combination consideration paid (or the total
par value of the shares issued), the stock premium in capital surplus shall be adjusted. If the
stock premium in capital surplus is not sufficient to offset, the retained earnings shall be
adjusted. The direct related expenses incurred for the business combination shall be included
in the current profit and loss when incurred. The combination date is the date on which the
combining party actually obtains control of the combined party.

5.5.2 Business combination under non-common control


A business combination under non-common control is a business combination in which all of
                                               65
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


the combining parties are not ultimately controlled by the same party or same multiple parties
before and after the combination. The sum of fair values of the assets paid by the Group, as
the acquirer, (including the acquiree’s equity the Group held before the acquisition date),
liabilities incurred or assumed, and the equity securities issued on the acquisition date in
exchange for the control over the acquiree, deducts the fair value of the acquiree’s identifiable
net assets acquired in the combination on the acquisition date. If the difference is positive, it
shall be recognized as goodwill; and if it is negative, it shall be included in the current profit
and loss. All the identifiable assets, liabilities and contingent liabilities which are obtained
from the acquiree and meet the recognition conditions shall be confirmed by the Group on the
acquisition date according to the fair value thereof. The acquisition date is the date on which
the acquirer actually obtains control of the acquiree.

For a business combination involving entities not under common control and achieved in
stages, the Group remeasures its previously-held equity interest in the acquiree to its
acquisition-date fair value and recognises any resulting difference between the fair value and
the carrying amount as investment income or other comprehensive income for the current
period. In addition, any amount recognised in other comprehensive income that may be
reclassified to profit or loss, in prior reporting periods relating to the previously-held equity
interest, and any other changes in the owners’ equity under equity accounting, are transferred
to investment income in the period in which the acquisition occurs. If equity interests of the
acquiree held before acquisition-date were equity instrument investments measured at fair
value through other comprehensive income, other comprehensive income recognised shall be
moved to retained earnings on acquisition-date.

5.6 Compiling methods of consolidated financial statement

5.6.1 General principles

The scope of consolidated financial statements is based on control and the consolidated
financial statements comprise the Company and its subsidiaries. Control exists when the
investor has all of following: power over the investee; exposure, or rights, to variable returns
from its involvement with the investee and has the ability to affect those returns through its
power over the investee. When assessing whether the Group has power, only substantive
rights (held by the Group and other parties) are considered. The financial position, financial
performance and cash flows of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that control ceases.

Non-controlling interests are presented separately in the consolidated balance sheet within
shareholders’ equity. Net profit or loss attributable to non-controlling shareholders is
presented separately in the consolidated income statement below the net profit line item. Total
comprehensive income attributable to non-controlling shareholders is presented separately in
the consolidated income statement below the total comprehensive income line item.

When the amount of loss for the current period attributable to the non-controlling
shareholders of a subsidiary exceeds the non-controlling shareholders’ share of the opening
owners’ equity of the subsidiary, the excess is still allocated against the non-controlling
interests.


                                                66
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


When the accounting period or accounting policies of a subsidiary are different from those of
the Company, the Company makes necessary adjustments to the financial statements of the
subsidiary based on the Company’s own accounting period or accounting policies. Intra-group
balances and transactions, and any unrealised profit or loss arising from intra-group
transactions, are eliminated when preparing the consolidated financial statements. Unrealised
losses resulting from intra-group transactions are eliminated in the same way as unrealised
gains, unless they represent impairment losses that are recognised in the financial statements.

5.6.2 Subsidiaries acquired through a business combination

Where a subsidiary was acquired during the reporting period, through a business combination
involving entities under common control, the financial statements of the subsidiary are
included in the consolidated financial statements based on the carrying amounts of the assets
and liabilities of the subsidiary in the financial statements of the ultimate controlling party as
if the combination had occurred at the date that the ultimate controlling party first obtained
control. The opening balances and the comparative figures of the consolidated financial
statements are also restated.

Where a subsidiary was acquired during the reporting period, through a business combination
involving entities not under common control, the identifiable assets and liabilities of the
acquired subsidiaries are included in the scope of consolidation from the date that control
commences, based on the fair value of those identifiable assets and liabilities at the
acquisition date.

5.6.3 Disposal of subsidiaries

When the Group loses control over a subsidiary, any resulting disposal gains or losses are
recognised as investment income for the current period. The remaining equity investment is
re-measured at its fair value at the date when control is lost, any resulting gains or losses are
also recognised as investment income for the current period.

When the Group loses control of a subsidiary in multiple transactions in which it disposes of
its long-term equity investment in the subsidiary in stages, the following are considered to
determine whether the Group should account for the multiple transactions as a bundled
transaction:

- arrangements are entered into at the same time or in contemplation of each other;
- arrangements work together to achieve an overall commercial effect;
- the occurrence of one arrangement is dependent on the occurrence of at least one other
arrangement;
- one arrangement considered on its own is not economically justified, but it is
economically justified when considered together with other arrangements.

If each of the multiple transactions does not form part of a bundled transaction, the
transactions conducted before the loss of control of the subsidiary are accounted for in
accordance with the accounting policy for partial disposal of equity investment in subsidiaries
where control is retained.

                                                67
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


If each of the multiple transactions forms part of a bundled transaction which eventually
results in the loss of control in the subsidiary, these multiple transactions are accounted for as
a single transaction. In the consolidated financial statements, the difference between the
consideration received and the corresponding proportion of the subsidiary’s net assets
(calculated continuously from the acquisition date) in each transaction prior to the loss of
control shall be recognised in other comprehensive income and transferred to profit or loss
when the parent eventually loses control of the subsidiary.

5.6.4 Changes in non-controlling interests

Where the Company acquires a non-controlling interest from a subsidiary’s non-controlling
shareholders or disposes of a portion of an interest in a subsidiary without a change in control,
the difference between the proportion interests of the subsidiary’s net assets being acquired or
disposed and the amount of the consideration paid or received is adjusted to the capital
reserve (share premium) in the consolidated balance sheet, with any excess adjusted to
retained earnings.


5.7 Determination standard of cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposit, and short-term highly
liquid investments which are readily convertible into known amount of cash with an
insignificant risk of changes in value.

5.8 Foreign currency transaction and foreign currency statement translation

When the Group receives capital in foreign currencies from investors, the capital is translated
to Renminbi at the spot exchange rate at the date of the receipt. Other foreign currency
transactions are, on initial recognition, translated to Renminbi at the spot exchange rates.

Monetary items denominated in foreign currencies are translated to Renminbi at the spot
exchange rate at the balance sheet date. The resulting exchange differences are generally
recognised in profit or loss, unless they arise from the re-translation of the principal and
interest of specific borrowings for the acquisition and construction of qualifying assets.
Non-monetary items that are measured at historical cost in foreign currencies are translated to
Renminbi using the exchange rate at the transaction date.

In translating the financial statements of a foreign operation, assets and liabilities of foreign
operation are translated to Renminbi at the spot exchange rate at the balance sheet date.
Equity items, excluding retained earnings and the translation differences in other
comprehensive income, are translated to Renminbi at the spot exchange rates at the
transaction dates. Income and expenses in the income statement are translated to Renminbi at
the spot exchange rates at the transaction dates. The resulting translation differences are
recognised in other comprehensive income. The translation differences accumulated in other
comprehensive income with respect to a foreign operation are transferred to profit or loss in
the period when the foreign operation is disposed.

5.9 Financial instruments

                                                68
                                                Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


Financial instruments include cash at bank and on hand, investments in debt and equity
securities other than those classified as long-term equity investments, receivables, payables,
loans and borrowings and share capital.

5.9.1 Recognition and initial measurement of financial assets and financial liabilities


A financial asset and financial liability is recognised in the balance sheet when the Group
becomes a party to the contractual provisions of a financial instrument.

A financial assets (unless it is a trade receivable without a significant financing component)
and financial liabilities is measured initially at fair value. For financial assets and financial
liabilities at fair value through profit or loss, any related directly attributable transaction costs
are charged to profit or loss; for other categories of financial assets and financial liabilities,
any related directly attributable transaction costs are included in their initial costs. Accounts
receivable containing no significant financing component are measured initially at transaction
prices determined by the accounting policies set out in Note 5.23.

5.9.2 Classification and subsequent measurement of financial assets

(a) Classification of financial assets

The classification of financial assets is generally based on the business model in which a
financial asset is managed and its contractual cash flow characteristics. On initial recognition,
a financial asset is classified as measured at amortised cost, at fair value through other
comprehensive income (“FVOCI”), or at fair value through profit or loss (“FVTPL”).

Financial assets are not reclassified subsequent to their initial recognition unless the Group
changes its business model for managing financial assets in which case all affected financial
assets are reclassified on the first day of the first reporting period following the change in the
business model.

A financial asset is measured at amortised cost if it meets both of the following conditions and
is not designated as at FVTPL:

- it is held within a business model whose objective is to hold assets to collect contractual
cash flows; and
- its contractual terms give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.

A debt investment is measured at FVOCI if it meets both of the following conditions and is
not designated as at FVTPL:

- it is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets; and
- its contractual terms give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
                                                 69
                                                Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report




On initial recognition of an equity investment that is not held for trading, the Group may
irrevocably elect to present subsequent changes in the investment’s fair value in other
comprehensive income. This election is made on an investment-by-investment basis. The
instrument meets the definition of equity from the perspective of the issuer.

All financial assets not classified as measured at amortised cost or FVOCI as described above
are measured at FVTPL. On initial recognition, the Group may irrevocably designate a
financial asset that otherwise meets the requirements to be measured at amortised cost or at
FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch
that would otherwise arise.

The business model refers to how the Group manages its financial assets in order to generate
cash flows. That is, the Group’s business model determines whether cash flows will result
from collecting contractual cash flows, selling financial assets or both. The Group determines
the business model for managing the financial assets according to the facts and based on the
specific business objective for managing the financial assets determined by the Group’s key
management personnel.

In assessing whether the contractual cash flows are solely payments of principal and interest,
the Group considers the contractual terms of the instrument. For the purposes of this
assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition.
‘Interest’ is defined as consideration for the time value of money and for the credit risk
associated with the principal amount outstanding during a particular period of time and for
other basic lending risks and costs, as well as a profit margin. The Group also assesses
whether the financial asset contains a contractual term that could change the timing or amount
of contractual cash flows such that it would not meet this condition.

(b) Subsequent measurement of financial assets

-   Financial assets at FVTPL

These financial assets are subsequently measured at fair value. Net gains and losses, including
any interest or dividend income, are recognised in profit or loss unless the financial assets are
part of a hedging relationship.

-   Financial assets at amortised cost

These assets are subsequently measured at amortised cost using the effective interest method.
A gain or loss on a financial asset that is measured at amortised cost and is not part of a
hedging relationship shall be recognised in profit or loss when the financial asset is
derecognised, through the amortisation process or in order to recognise impairment gains or
losses.

-   Debt investments at FVOCI

These assets are subsequently measured at fair value. Interest income calculated using the
                                                 70
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


effective interest method, impairment and foreign exchange gains and losses are recognised in
profit or loss. Other net gains and losses are recognised in other comprehensive income. On
derecognition, gains and losses accumulated in other comprehensive income are reclassified
to profit or loss.

-   Equity investments at FVOCI

These assets are subsequently measured at fair value. Dividends are recognised as income in
profit or loss. Other net gains and losses are recognised in other comprehensive income. On
derecognition, gains and losses accumulated in other comprehensive income are reclassified
to retained earnings.

5.9.3 Classification and subsequent measurement of financial liabilities

Financial liabilities are classified as measured at FVTPL or amortised cost by the Group.

-   Financial liabilities at FVTPL

A financial liability is classified as at FVTPL if it is classified as held-for-trading (including
derivative financial liability) or it is designated as such on initial recognition.

Financial liabilities at FVTPL are subsequently measured at fair value and net gains and
losses, including any interest expense, are recognised in profit or loss, unless the financial
liabilities are part of a hedging relationship.

-   Financial liabilities at amortised cost

These financial liabilities are subsequently measured at amortised cost using the effective
interest method.

5.9.4 Offsetting

Financial assets and financial liabilities are generally presented separately in the balance sheet,
and are not offset. However, a financial asset and a financial liability are offset and the net
amount is presented in the balance sheet when both of the following conditions are satisfied:

- The Group currently has a legally enforceable right to set off the recognised amounts;
- The Group intends either to settle on a net basis, or to realise the financial asset and settle
the financial liability simultaneously.

5.9.5 Derecognition of financial assets and financial liabilities

Financial asset is derecognised when one of the following conditions is met:
- the Group’s contractual rights to the cash flows from the financial asset expire;
- the financial asset has been transferred and the Group transfers substantially all of the
risks and rewards of ownership of the financial asset; or;
                                                71
                                                  Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


- the financial asset has been transferred, although the Group neither transfers nor retains
substantially all of the risks and rewards of ownership of the financial asset, it does not retain
control over the transferred asset.

Where a transfer of a financial asset in its entirety meets the criteria for derecognition, the
difference between the two amounts below is recognised in profit or loss:

- the carrying amount of the financial asset transferred measured at the date of
derecognition;
- the sum of the consideration received from the transfer and, when the transferred
financial asset is a debt investment at FVOCI, any cumulative gain or loss that has been
recognised directly in other comprehensive income for the part derecognised.

The Group derecognises a financial liability (or part of it) only when its contractual obligation (or part
of it) is extinguished.


5.9.6 Impairment

The Group recognises loss allowances for expected credit loss (ECL) on:

-   financial assets measured at amortised cost;
-   financial investments at fair value through other comprehensive income

Financial assets measured at fair value, including debt investments or equity securities at
FVPL, equity securities designated at FVOCI and derivative financial assets, are not subject
to the ECL assessment.

Measurement of ECLs

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the
present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity
in accordance with the contract and the cash flows that the Group expects to receive).

The maximum period considered when estimating ECLs is the maximum contractual period
(including extension options) over which the Group is exposed to credit risk.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life
of a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible
within the 12 months after the balance sheet date (or a shorter period if the expected life of the
instrument is less than 12 months).

For accounts receivable, loss allowance always measured at an amount equal to lifetime ECLs.
ECLs on these financial assets are estimated using a provision matrix based on the Group’s
historical credit loss experience, adjusted for factors that are specific to the debtors and an
assessment of both the current and forecast general economic conditions at the balance sheet
                                                   72
                                             Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


date.

For assets other than accounts receivable that meet one of the following conditions, loss
allowance are measured at an amount equal to 12-month ECLs. For all other financial
instruments, the Group recognises a loss allowance equal to lifetime ECLs:

- If the financial instrument is determined to have low credit risk at the balance sheet date;
- If the credit risk on a financial instrument has not increased significantly since initial
recognition.

Financial instruments that have low credit risk

The credit risk on a financial instrument is considered low if the financial instrument has a
low risk of default, the borrower has a strong capacity to meet its contractual cash flow
obligations in the near term and adverse changes in economic and business conditions in the
longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its
contractual cash flow obligations.

Significant increases in credit risk

In assessing whether the credit risk of a financial instrument has increased significantly since
initial recognition, the Group compares the risk of default occurring on the financial
instrument assessed at the balance sheet date with that assessed at the date of initial
recognition.

When determining whether the credit risk of a financial asset has increased significantly since
initial recognition and when estimating ECL, the Group considers reasonable and supportable
information that is relevant and available without undue cost or effort, including
forward-looking information. In particular, the following information is taken into account:

- failure to make payments of principal or interest on their contractually due dates;
- an actual or expected significant deterioration in a financial instrument’s external or
internal credit rating (if available);
- an actual or expected significant deterioration in the operating results of the debtor; and
- existing or forecast changes in the technological, market, economic or legal environment
that have a significant adverse effect on the debtor’s ability to meet its obligation to the
Group.

Depending on the nature of the financial instruments, the assessment of a significant increase
in credit risk is performed on either an individual basis or a collective basis. When the
assessment is performed on a collective basis, the financial instruments are grouped based on
shared credit risk characteristics, such as past due status and credit risk ratings.

The Group assumes that the credit risk on a financial asset has increased significantly if it is
more than 30 days past due.


                                               73
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


Credit-impaired financial assets

At each balance sheet date, the Group assesses whether financial assets carried at amortised
cost and debt investments at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’
when one or more events that have a detrimental impact on the estimated future cash flows of
the financial asset have occurred. Evidence that a financial asset is credit-impaired includes
the following observable data:

- significant financial difficulty of the borrower or issuer;
- a breach of contract, such as a default or delinquency in interest or principal payments;
- for economic or contractual reasons relating to the borrower’s financial difficulty, the
Group having granted to the borrower a concession that would not otherwise consider;
- it is probable that the borrower will enter bankruptcy or other financial reorganisation; or
- the disappearance of an active market for that financial asset because of financial
difficulties.

Presentation of allowance for ECL

ECLs are remeasured at each balance sheet date to reflect changes in the financial
instrument’s credit risk since initial recognition. Any change in the ECL amount is recognised
as an impairment gain or loss in profit or loss. The Group recognises an impairment gain or
loss for all financial instruments with a corresponding adjustment to their carrying amount
through a loss allowance account, except for debt investments that are measured at FVOCI,
for which the loss allowance is recognised in other comprehensive income.

Write-off

The gross carrying amount of a financial asset is written off (either partially or in full) to the
extent that there is no realistic prospect of recovery. A write-off constitutes a derecognition
event. This is generally the case when the Group determines that the debtor does not have
assets or sources of income that could generate sufficient cash flows to repay the amounts
subject to the write-off. However, financial assets that are written off could still be subject to
enforcement activities in order to comply with the Group’s procedures for recovery of
amounts due.

Subsequent recoveries of an asset that was previously written off are recognised as a reversal
of impairment in profit or loss in the period in which the recovery occurs.

5.9.7 Equity instrument

The consideration received from the issuance of equity instruments net of transaction costs is
recognised in shareholders’ equity. Consideration and transaction costs paid by the Company
for repurchasing self-issued equity instruments are deducted from shareholders’ equity.

When the Company repurchases its own shares, those shares are treated as treasury shares. All
expenditure relating to the repurchase is recorded in the cost of the treasury shares, with the

                                                74
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


transaction recording in the share register. Treasury shares are excluded from profit
distributions and are presented as a deduction under shareholders’ equity in the balance sheet.
5.10 Inventories

5.10.1 Classification and cost

Inventories include raw materials, work in progress and reusable materials. Inventories are
initially measured at cost. Cost of inventories comprises all costs of purchase, costs of
conversion and other expenditure incurred in bringing the inventories to their present location
and condition. In addition to the purchase cost of raw materials, work in progress and finished
goods include direct labour costs and an appropriate allocation of production overheads.

Agricultural products harvested are reported in accordance with the CAS No.1 - Inventories.

5.10.2 Measurement method of cost of inventories

Cost of inventories is calculated using the weighted average method.

Consumables including low-value consumables and packaging materials are amortised when
they are used. The amortisation charge is included in the cost of the related assets or
recognised in profit or loss for the current period.

5.10.3 Basis for determining the net realisable value and method for provision for
obsolete inventories

At the balance sheet date, inventories are carried at the lower of cost and net realisable value.

Net realisable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale and relevant
taxes. The net realisable value of materials held for use in the production is measured based
on the net realisable value of the finished goods in which they will be incorporated. The net
realisable value of the inventory held to satisfy sales or service contracts is measured based on
the contract price, to the extent of the quantities specified in sales contracts, and the excess
portion of inventories is measured based on general selling prices.

Any excess of the cost over the net realisable value of each item of inventories is recognised
as a provision for impairment, and is recognised in profit or loss.


5.10.4 Inventory count system

The Group maintains a perpetual inventory system.


5.11 Long-term equity investments

5.11.1 Investment cost of long-term equity investments

                                                75
                                             Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


(a) Long-term equity investments acquired through a business combination

- The initial cost of a long-term equity investment acquired through a business combination
involving entities under common control is the Company’s share of the carrying amount of
the subsidiary’s equity in the consolidated financial statements of the ultimate controlling
party at the combination date. The difference between the initial investment cost and the
carrying amount of the consideration given is adjusted to the share premium in the capital
reserve, with any excess adjusted to retained earnings. For a long-term equity investment in a
subsidiary acquired through a business combination achieved in stages which do not form a
bundled transaction and involving entities under common control, the Company determines
the initial cost of the investment in accordance with the above policies. The difference
between this initial cost and the sum of the carrying amount of previously-held investment
and the consideration paid for the shares newly acquired is adjusted to capital premium in the
capital reserve, with any excess adjusted to retained earnings.
- For a long-term equity investment obtained through a business combination not involving
enterprises under common control, the initial cost comprises the aggregate of the fair value of
assets transferred, liabilities incurred or assumed, and equity securities issued by the Company,
in exchange for control of the acquiree. For a long-term equity investment obtained through a
business combination not involving entities under common control and achieved through
multiple transactions in stages which do not form a bundled transaction, the initial cost
comprises the carrying amount of the previously-held equity investment in the acquiree
immediately before the acquisition date, and the additional investment cost at the acquisition
date.

(b) Long-term equity investments acquired other than through a business combination

- A long-term equity investment acquired other than through a business combination is
initially recognised at the amount of cash paid if the Group acquires the investment by cash,
or at the fair value of the equity securities issued if an investment is acquired by issuing
equity securities.

5.11.2 Subsequent measurement of long-term equity investment

(a) Investments in subsidiaries

In the Company’s separate financial statements, long-term equity investments in subsidiaries
are accounted for using the cost method unless the investment is classified as held for sale.
Except for cash dividends or profit distributions declared but not yet distributed that have
been included in the price or consideration paid in obtaining the investments, the Company
recognises its share of the cash dividends or profit distributions declared by the investee as
investment income for the current period.

The investments in subsidiaries are stated in the balance sheet at cost less accumulated
impairment losses.

For the impairment of the investments in subsidiaries, refer to Note 5.21.


                                               76
                                               Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


In the Group’s consolidated financial statements, subsidiaries are accounted for in accordance
with the policies described in Note 5.6.

(b) Investments in joint ventures and associates

A joint venture is an arrangement whereby the Group and other parties have joint control and
rights to the net assets of the arrangement.

An associate is an enterprise the Group can exert significant influence on.

A long-term equity investment in a joint venture and associate is accounted for using the
equity method for subsequent measurement, unless the investment is classified as held for
sale.

The accounting treatments under the equity method adopted by the Group are as follows:

- Where the initial cost of a long-term equity investment exceeds the Group’s interest in the
fair value of the investee’s identifiable net assets at the date of acquisition, the investment is
initially recognised at cost. Where the initial investment cost is less than the Group’s interest
in the fair value of the investee’s identifiable net assets at the date of acquisition, the
investment is initially recognised at the investor’s share of the fair value of the investee’s
identifiable net assets, and the difference is recognised in profit or loss.

- After the acquisition of the investment in joint ventures and associates, the Group
recognises its share of the investee’s profit or loss and other comprehensive income as
investment income or losses and other comprehensive income respectively, and adjusts the
carrying amount of the investment accordingly. Once the investee declares any cash dividends
or profit distributions, the carrying amount of the investment is reduced by the amount
attributable to the Group. Changes in the Group’s share of the investee’s owners’ equity, other
than those arising from the investee’s net profit or loss, other comprehensive income or profit
distribution (referred to as “other changes in owners’ equity”), is recognised directly in the
Group’s equity, and the carrying amount of the investment is adjusted accordingly.

- In calculating its share of the investee’s net profits or losses, other comprehensive income
and other changes in owners’ equity, the Group recognises investment income and other
comprehensive income after making appropriate adjustments to align the accounting policies
or accounting periods with those of the Group based on the fair value of the investee’s
identifiable net assets at the date of acquisition. Unrealised profits and losses resulting from
transactions between the Group and its associates or joint ventures are eliminated to the extent
of the Group’s interest in the associates or joint ventures. Unrealised losses resulting from
transactions between the Group and its associates or joint ventures are eliminated in the same
way as unrealised gains but only to the extent that there is no impairment.

- The Group discontinues recognising its share of further losses of the investee after the
carrying amount of the long-term equity investment and any long-term interest that in
substance forms part of the Group’s net investment in the associate is reduced to zero, except
to the extent that the Group has an obligation to assume additional losses. If the joint venture

                                                77
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


or the associate subsequently reports net profits, the Group resumes recognising its share of
those profits only after its share of the profits equals the share of losses not recognised.

For the impairment of the investments in joint ventures and associates, refer to Note 5.21.
5.11.3 Criteria for determining the existence of joint control and significant impact over
an investee

Joint control is the contractually agreed sharing of control of an arrangement, which exists
only when decisions about the relevant activities (activities with significant impact on the
returns of the arrangement) require the unanimous consent of the parties sharing control.

The following factors are usually considered when assessing whether the Group can exercise
joint control over an investee:

- Whether no single participant party is in a position to control the investee’s related
activities unilaterally;
- Whether strategic decisions relating to the investee’s related activities require the
unanimous consent of all participant parties that sharing of control.

Significant influence is the power to participate in the financial and operating policy decisions
of an investee but does not have control or joint control over those policies.


5.12 Investment properties

Investment properties are properties held either to earn rental income or for capital
appreciation or for both. Investment properties are accounted for using the cost model and
stated in the balance sheet at cost less accumulated depreciation, amortisation and impairment
losses, and adopts a depreciation or amortisation policy for the investment property which is
consistent with that for buildings or land use rights, unless the investment property is
classified as held for sale. For the impairment of the investment properties, refer to Note 5.21.

                          Estimated useful life       Residual value rate          Depreciation rate
      Category
                                (years)                      (%)                         (%)
 Plant and buildings           20-40 years                    0 - 5%                   2.4%-5.0%


5.13 Fixed assets

5.13.1 Recognition of fixed assets

Fixed assets represent the tangible assets held by the Group for use in production of goods,
supply of services, for rental or for administrative purposes with useful lives over one
accounting year.

The cost of a purchased fixed asset comprises the purchase price, related taxes, and any
directly attributable expenditure for bringing the asset to working condition for its intended
use. The cost of self-constructed assets is measured in accordance with the policy set out in
                                               78
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


Note 5.14.

Where the parts of an item of fixed assets have different useful lives or provide benefits to the
Group in a different pattern, thus necessitating use of different depreciation rates or methods,
each part is recognised as a separate fixed asset.

Any subsequent costs including the cost of replacing part of an item of fixed assets are
recognised as assets when it is probable that the economic benefits associated with the costs
will flow to the Group, and the carrying amount of the replaced part is derecognised. The
costs of the day-to-day maintenance of fixed assets are recognised in profit or loss as incurred.

Fixed assets are stated in the balance sheet at cost less accumulated depreciation and
impairment losses.

5.13.2 Depreciation of fixed assets

The cost of a fixed asset, less its estimated residual value and accumulated impairment losses,
is depreciated using the straight-line method over its estimated useful life, unless the fixed
asset is classified as held for sale.

The estimated useful lives, residual value rates and depreciation rates of each class of fixed
assets are as follows:

                                   Estimated useful      Residual value rate        Depreciation rate
             Class
                                      life (years)              (%)                       (%)
      Plant and buildings             20-40 years               0 - 5%                 2.4%-5.0%
    Machinery equipment               5-30 years                0 - 5%                 3.2%-20.0%
        Motor vehicles                4-12 years                0 - 5%                 7.9%-25.0%

Useful lives, estimated residual values and depreciation methods are reviewed at least at each
year-end.


5.13.3 For the impairment of the fixed assets, refer to Note 5.20.

5.13.4 Disposal of fixed assets

The carrying amount of a fixed asset is derecognised:

-   when the fixed asset is holding for disposal; or
-   when no future economic benefit is expected to be generated from its use or disposal.

Gains or losses arising from the retirement or disposal of an item of fixed asset are determined
as the difference between the net disposal proceeds and the carrying amount of the item, and
are recognised in profit or loss on the date of retirement or disposal.


                                               79
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


5.14 Construction in progress

The cost of self-constructed assets includes the cost of materials, direct labour, capitalised
borrowing costs, and any other costs directly attributable to bringing the asset to working
condition for its intended use.
A self-constructed asset is classified as construction in progress and transferred to fixed asset
when it is ready for its intended use. No depreciation is provided against construction in
progress.

Construction in progress is stated in the balance sheet at cost less accumulated impairment
losses (see Note 5.21).

5.15 Borrowing costs

Borrowing costs incurred directly attributable to the acquisition, and construction or
production of a qualifying asset are capitalised as part of the cost of the asset. Other
borrowing costs are recognised as financial expenses when incurred.

During the capitalisation period, the amount of interest (including amortisation of any
discount or premium on borrowing) to be capitalised in each accounting period is determined
as follows:

- Where funds are borrowed specifically for the acquisition and construction or production
of a qualifying asset, the amount of interest to be capitalised is the interest expense calculated
using effective interest rates during the period less any interest income earned from depositing
the borrowed funds or any investment income on the temporary investment of those funds
before being used on the asset.

- To the extent that the Group borrows funds generally and uses them for the acquisition
and construction or production of a qualifying asset, the amount of borrowing costs eligible
for capitalisation is determined by applying a capitalisation rate to the weighted average of the
excess amounts of cumulative expenditure on the asset over the above amounts of specific
borrowings. The capitalisation rate is the weighted average of the interest rates applicable to
the general-purpose borrowings.

The effective interest rate is determined as the rate that exactly discounts estimated future
cash flow through the expected life of the borrowing or, when appropriate, a shorter period to
the initially recognised amount of the borrowings.

During the capitalisation period, exchange differences related to the principal and interest on a
specific-purpose borrowing denominated in foreign currency are capitalised as part of the cost
of the qualifying asset. The exchange differences related to the principal and interest on
foreign currency borrowings other than a specific-purpose borrowing are recognised as a
financial expense when incurred.

The capitalisation period is the period from the date of commencement of capitalisation of
borrowing costs to the date of cessation of capitalisation, excluding any period over which
                                                80
                                               Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


capitalisation is suspended. Capitalisation of borrowing costs commences when expenditure
for the asset is being incurred, borrowing costs are being incurred and activities of acquisition,
construction or production that are necessary to prepare the asset for its intended use are in
progress, and ceases when the assets become ready for their intended use. Capitalisation of
borrowing costs should cease when the qualifying asset being constructed or produced has
reached its expected usable or saleable condition. Capitalisation of borrowing costs is
suspended when the acquisition, construction or production activities are interrupted
abnormally for a period of more than three months.

5.16 Biological assets

The biological assets of the Group are productive biological assets.

Bearer biological assets are those that are held for the purposes of producing agricultural
produce, rendering of services or rental. Bearer biological assets in the Group are vines.
Bearer biological assets are initially measured at cost. The cost of self-grown or self-bred
bearer biological assets represents the necessary directly attributable expenditure incurred
before satisfying the expected production and operating purpose, including capitalised
borrowing costs.

Bearer biological assets, after reaching the expected production and operating purpose, are
depreciated using the straight-line method over its estimated useful life. The estimated useful
lives, estimated net residual value rates and depreciation rates of bearer biological assets are
as follows:


                                         Estimated net residual            Annual depreciation rate
   Category       Useful life (years)
                                               rate (%)                             (%)
    Vines                20 years                    0%                                5.0%

The Group evaluates the useful life and expected net salvage value by considering the normal
producing life of the bearer biological assets.

Useful lives, estimated residual values and depreciation methods of bearer biological assets
are reviewed at least at each year-end. Any changes should be treated as changes in
accounting estimates.

For a bearer biological asset that has been sold, damaged, dead or destroyed, any difference
between the disposal proceeds and the carrying amount of the asset (after tax deduction)
should be recognised in profit or loss for the period in which it arises.

5.17 Right-to-use assets

Right-to-use assets refer to the right vested in the Group as the lessee to use any leased assets
during the lease period. Upon the commencement the lease term, the Group recognizes
right-to-use assets and lease liabilities for leases as the lessee, provided that short-term leases
and leases of low-value assets subject to simplified treatment are excluded.
                                                81
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report




The right-to-use assets of the Group are initially measured at cost. The said cost includes:
– Initially measured amount of leased liability;
– Amount of lease payments made on or before the commencement date of the lease term;
in case of any lease incentive, the related amount of such lease incentive having been enjoyed
shall be deducted;
– Initial direct costs incurred by the Group as the lessee;
– Costs that the Group expects to incur to disassemble and remove leased assets, restore the
site where leased assets are located or restore leased assets to the agreed condition under the
terms of the lease.

The Group employs the straight-line method to depreciate right-to-use assets. Where it can be
reasonably recognized that the ownership of leased assets will be obtained by the Group upon
expiration of the lease term, leased assets will be depreciated during the service life; where it
cannot be reasonably recognized, leased assets will be depreciated during the lease term or the
remaining service life of such leased assets by the Group, whichever is shorter.

The Group determines whether any right-to-use assets are impaired in accordance with the
provisions of Accounting Standard for Business Enterprises No. 8 - Impairment of Assets (the
“Standard"), and has identified impairment losses subject to accounting treatment.

When the Group remeasures lease liabilities according to the Standard, the book value of
right-to-use assets shall be adjusted accordingly. Where the book value of right-to-use assets
has been reduced to zero, but lease liabilities still need to be subject to further reduction, the
remaining amount shall be recognized in current profits and losses. Where any lease change
results in decreased lease scope or shortened lease term, the Group shall correspondingly
reduce the book value of right-to-use assets and recognize gains or losses related to the
partially or completely terminated lease in current profits and losses. Where any other lease
change results in remeasurement of lease liabilities, the Group shall correspondingly adjust
the book value of right-to-use assets.

5.18 Intangible assets

Intangible assets are stated in the balance sheet at cost less accumulated amortization (where
the estimated useful life is finite) and impairment losses (see Note 5.21). For an intangible
asset with finite useful life, its cost estimated less residual value and accumulated impairment
losses is amortised on the straight-line method over its estimated useful life, unless the
intangible asset is classified as held for sale.

The respective amortisation periods for intangible assets are as follows:


                     Item                                    Amortisation period (years)
Land use rights                                                                            40-50 years
Software licenses                                                                             5-10 years
Trademark                                                                                       10 years
                                                82
                                             Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report



An intangible asset is regarded as having an indefinite useful life and is not amortised when
there is no foreseeable limit to the period over which the asset is expected to generate
economic benefits for the Group. At the balance sheet date, the Group had intangible assets
with infinite useful lives including the land use rights and trademarks. Land use rights with
infinite useful lives are permanent land use rights with permanent ownership held by the
Group under the relevant Chile and Australian laws arising from the Group’s acquisition of
Via Indómita, S.A., Via Dos Andes, S.A., and Bodegas Santa Alicia SpA. (collectively
referred to as the “Chile Indomita Wine Group”), and the acquisition of Kilikanoon Estate Pty
Ltd.( hereinafter referred to as the “Australia Kilikanoon Estate”), therefore there was no
amortisation. The right to use trademark refers to the trademark held by the Group arising
from the acquisition of the Chile Indomita Wine Group and the Australia Kilikanoon Estate
with infinite useful lives. The valuation of trademark was based on the trends in the market
and competitive environment, product cycle, and managing long-term development strategy.
Those bases indicated the trademark will provide net cash flows to the Group within an
uncertain period. The useful life is indefinite as it was hard to predict the period that the
trademark would bring economic benefits to the Group.

5.19 Goodwill

The initial cost of goodwill represents the excess of cost of acquisition over the acquirer’s
interest in the fair value of the identifiable net assets of the acquiree under a business
combination not involving entities under common control.

Goodwill is not amortised and is stated in the balance sheet at cost less accumulated
impairment losses (see Note 5.21). On disposal of an asset group or a set of asset groups, any
attributable goodwill is written off and included in the calculation of the profit or loss on
disposal.

5.20 Long-term deferred expenses

Long-term deferred expenses are amortised using a straight-line method within the benefit
period. The respective amortisation periods for such expenses are as follows:

                         Item                                        Amortisation period
 Land requisition fee                                                                         50 years
 Land lease fee                                                                               50 years
 Greening fee                                                                               5-20 years
 Renovation fee                                                                              3-5 years
 Others                                                                                         3 years

5.21 Impairment of assets other than inventories and financial assets

The carrying amounts of the following assets are reviewed at each balance sheet date based on
internal and external sources of information to determine whether there is any indication of
                                              83
                                                Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


impairment:

-   fixed assets
-   construction in progress
-   intangible assets
-   Bearer biological assets
-   investment properties measured using a cost model
-   long-term equity investments
-   goodwill
-   long-term deferred expenses, etc.
-   right-to-use assets

If any indication exists, the recoverable amount of the asset is estimated. In addition, the
Group estimates the recoverable amounts of goodwill and intangible assets with infinite
useful lives at each year-end, irrespective of whether there is any indication of impairment.
Goodwill is allocated to each asset group, or set of asset groups, that is expected to benefit
from the synergies of the combination for the purpose of impairment testing.

The recoverable amount of an asset (or asset group, set of asset groups) is the higher of its fair
value (see Note 5.22) less costs to sell and its present value of expected future cash flows.

An asset group is composed of assets directly related to cash-generation and is the smallest
identifiable group of assets that generates cash inflows that are largely independent of the
cash inflows from other assets or asset groups.

The present value of expected future cash flows of an asset is determined by discounting the
future cash flows, estimated to be derived from continuing use of the asset and from its
ultimate disposal, to their present value using an appropriate pre-tax discount rate.

An impairment loss is recognised in profit or loss when the recoverable amount of an asset is
less than its carrying amount. A provision for impairment of the asset is recognised
accordingly. Impairment losses related to an asset group or a set of asset groups are allocated
first to reduce the carrying amount of any goodwill allocated to the asset group or set of asset
groups, and then to reduce the carrying amount of the other assets in the asset group or set of
asset groups on a pro rata basis. However, such allocation would not reduce the carrying
amount of an asset below the highest of its fair value less costs to sell (if measurable), its
present value of expected future cash flows (if determinable) and zero.

Once an impairment loss is recognised, it is not reversed in a subsequent period.

5.22 Fair value measurement

Unless otherwise specified, the Group measures fair value as follows:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date.
                                                 84
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report




When measuring fair value, the Group takes into account the characteristics of the particular
asset or liability (including the condition and location of the asset and restrictions, if any, on
the sale or use of the asset) that market participants would consider when pricing the asset or
liability at the measurement date, and uses valuation techniques that are appropriate in the
circumstances and for which sufficient data and other information are available to measure
fair value. Valuation techniques mainly include the market approach, the income approach
and the cost approach.
5.23 Revenue

Revenue refers to the gross inflow of economic benefits formed during the course of the
ordinary activities of the Group, which may increase the shareholders’ equities and is
irrelevant to the invested capital of the shareholders.

The Group recognizes the revenue upon fulfillment of its performance obligations in the
contract, that is, the client obtains control right over the relevant goods or services.

If there are two or more performance obligations under the contact, which shall be fulfilled,
the Group will apportion the transaction price to various individual performance obligations
in accordance with the relative proportion of separate selling prices of various goods or
services under these performance obligations on the commencement date of the contract, and
measure and recognize the revenue in accordance with the transaction prices apportioned to
various individual performance obligations. The stand-alone selling price refers to the price at
which the Group sells goods or provides services to customers separately. If the stand-alone
selling price cannot be directly observed, the Group comprehensively considers all the
relevant information that can be reasonably obtained, and uses observable input values to the
greatest extent to estimate the stand-alone selling price.

For contracts with quality assurance clauses, the Group analyzes the nature of the quality
assurance provided. If quality assurance provides a separate service in addition to ensuring to
the client that the goods sold meet the established standards, the Group will treat it as an
individual performance obligation. Otherwise, the Group conducts accounting treatment in
accordance with the Accounting Standards for Business Enterprises No. 13 - Contingencies.

The transaction price refers to the amount of consideration that the Group expects to be
entitled to receive due to the transfer of goods or services to the client, excluding payments
received on behalf of third parties. The transaction price recognized by the Group does not
exceed the amount at which the accumulated recognized revenue will most likely not undergo
a significant reversal when the relevant uncertainty is eliminated. In the event that there is a
significant financing part in the contract, the Group determines the transaction price based on
the amount payable in cash when the client obtains control right over the relevant goods or
services. The difference between the transaction price and the contract consideration shall be
amortized by the effective interest method during the contract period. From the day of the
enforcement of the contract, the Group expects that the interval between the client's
acquisition of control right over the goods or services and the client's payment of the price
will not exceed one year, regardless of the significant financing part in the contract.

If the Group meets one of the following conditions, the fulfillment of its performance
                                                85
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


obligations in a certain period will be deemed, or the fulfillment of its performance
obligations at a certain time point will be deemed:

- The client obtains and consumes the economic benefits while the Group fulfills the
performance obligation;
- The client manages to control the goods in process while the Group fulfills the
performance obligation.
- Goods produced during the performance period have irreplaceable purposes and the
Group is entitled to charge money for the performance accumulated and has been finished
until the current time within the whole contract period.

For any performance obligations fulfilled in a certain period, the Group will recognize
revenue within the certain period in accordance with the performance progress. If the
performance progress cannot be determined reasonably and costs incurred are expected to be
compensated of the Group, the revenue will be ascertained according to the costs incurred
until the performance progress is determined reasonably.

In terms of performance obligations fulfilled at a certain time point, the Group will recognize
revenue when the client gains control right over the relevant goods or services. When it comes
to determining whether a client has acquired the control right over goods or services, the
Group will consider the following conditions:

- The Group has the current right to receive payment for the goods or services;
- The Group has transferred the goods in kind to the client;
- The Group has transferred the legal ownership of the product or the main risks and
rewards of ownership to the client;
- The client has accepted the goods or services, etc.

For sales with sales return clauses, when the customer obtains control of the relevant goods,
the Group recognizes revenue based on the amount of consideration expected to be entitled to
receive due to the transfer of goods to the customer (that is, does not include the expected
amount to be refunded due to sales return), and recognizes liabilities based on the expected
amount to be refunded due to sales returns. At the same time, based on the book value at the
time of transfer of the goods expected to be returned, the Group recognizes as an asset the
balance after deducting the estimated cost of recovering the goods (including the value
impairment of the returned goods). Based on the book value of the transferred goods at the
time of transfer, the Group carries over as the cost the net amount after deducting the above
asset cost. On each balance sheet date, the Group re-estimates the future sales returns. If there
is any change, it shall be treated as a change in accounting estimates.

The Group has transferred the goods or services to the client and thus has the right to receive
corresponding consideration (and the right is dependable on factors other than time lapses) as
contract asset, which is subject to provision of impairment on the basis of expected credit loss.
The right enjoyed by the Group (only depends on time lapses) to receive consideration
unconditionally from the client shall be presented under account receivables. The Group
presents the obligation of transferring goods or services for the client due to the consideration
received or receivable as contract liabilities.

                                               86
                                               Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report




The specific accounting policies related to the main activities of the Group’s revenue are
described as follows:

The Group’s sales revenue mainly comes from dealer sales. The revenue will be recognized
when the Group transfers control of the related products to the customer. According to the
business contract, for these transfers, the time when the product is confirmed and signed by
the customer shall be recognized as the confirming point of the sales revenue.

5.24 Contract cost

Contract cost includes incremental cost for being awarded the contract and performance cost
of the contract.

Incremental cost for being awarded the contract refers to the cost that the Group would not
need to pay if no such contracts are awarded (e.g. sales commissions, etc.). Where such cost is
expected to be recovered, the Group shall take it as the contract acquisition cost and recognize
it as an asset. Expenses incurred by the Group to be awarded contracts other than incremental
cost expected to be recovered shall be recognized in current profits and losses when incurred.

Any cost incurred by the Group for the performance of any contract that doesn't fall into the
scope of other businesses specified in the Standard such as inventory, but meets the following
conditions simultaneously, shall be taken as contract performance cost and recognized as an
asset.

– Where such cost is directly related to a current or anticipated contract, including direct
labor cost, direct material cost, manufacturing expenses (or similar expenses), costs clearly
specified to be borne by the customer and other costs incurred solely due to the contract;
– Where such cost includes resources to be used by the Group to fulfill future performance
obligations;
– Where such cost is expected to be recovered.

Assets recognized for contract acquisition cost and assets recognized for contract performance
cost (hereinafter referred to as “assets related to contract cost") shall be amortized on the same
basis as the revenue recognition of goods or services related to such assets and recognized in
current profits and losses. Where the amortization period of assets recognized for the contract
acquisition cost does not exceed one year, they shall be recognized in current profits and
losses.

Where the book value of assets related to contract costs is higher than the difference between
the following two items, the Group shall withdraw the impairment reserves of the excess part
and recognize it as the asset impairment loss:

– Residual consideration expected to be obtained arising from the transfer of goods or
services related to the assets by the Group;
– Cost estimated to be occurred for the transfer of the relevant goods or services.
                                                87
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


5.25 Employee benefits

5.25.1 Short-term employee benefits

Employee wages or salaries, bonuses, social security contributions such as medical insurance,
work injury insurance, maternity insurance and housing fund, measured at the amount
incurred or accured at the applicable benchmarks and rates, are recognised as a liability as the
employee provides services, with a corresponding charge to profit or loss or included in the
cost of assets where appropriate.

5.25.2 Post-employment benefits – defined contribution plans

Pursuant to the relevant laws and regulations of the People’s Republic of China, the Group
participated in a defined contribution basic pension insurance plan in the social insurance
system established and managed by government organisations. The Group makes
contributions to basic pension insurance plans based on the applicable benchmarks and rates
stipulated by the government. Basic pension insurance contributions payable are recognised
as a liability as the employee provides services, with a corresponding charge to profit or loss
or included in the cost of assets where appropriate.

5.25.3 Termination benefits

When the Group terminates the employment with employees before the employment contracts
expire, or provides compensation under an offer to encourage employees to accept voluntary
redundancy, a provision is recognised with a corresponding expense in profit or loss at the
earlier of the following dates:

- When the Group cannot unilaterally withdraw the offer of termination benefits because of
an employee termination plan or a curtailment proposal;
- When the Group has a formal detailed restructuring plan involving the payment of
termination benefits and has raised a valid expectation in those affected that it will carry out
the restructuring by starting to implement that plan or announcing its main features to those
affected by it.

5.26 Lease liabilities

Upon the commencement the lease term, the Group recognizes right-to-use assets and lease
liabilities for leases as the lessee, provided that short-term leases and leases of low-value
assets subject to simplified treatment are excluded. The Group's lease liabilities shall be
initially measured at the present value of the outstanding lease payments on the
commencement date of the lease term.

When calculating the present value of the lease payment, the Group shall employ the interest
rate implicit in the lease as the discount rate; where the interest rate implicit in the lease
cannot be determined, the incremental lending rate of the Group (i.e., the lessee) shall be used
as the discount rate.

The interest rate implicit in the lease refers to an interest rate at which the sum of the present
                                                88
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


value of the lessor's lease receipts and the present value of the unsecured residual value equals
the sum of the fair value of the leased asset and the lessor's initial direct costs. The
incremental lending rate of the Lessee refers to an interest rate payable by the Group as a
lessee in a similar economic environment in order to acquire assets with a value similar to that
of the right-to-use assets and to borrow funds under similar mortgage conditions during a
similar period.

The Group calculates the interest expense of lease liabilities in each period of the lease term
according to a fixed periodic rate, which will be included in current profits and losses or asset
cost. The variable lease payment not included in the measurement of lease liabilities shall be
recognized in current profits and losses and loss or related asset cost when they actually occur.

In case of any of following circumstances after the commencement date of the lease term, the
Group will remeasure lease liabilities at the present value of the lease payment after any
change:
– Where the amount payable anticipated changes according to the guaranteed residual
value;
– Where the index or ratio used for recognizing the lease payment changes;
– Where there is a change in the Group's assessment results of the option of purchase,
renewal option or option of termination of lease or the actual exercising of the termination of
the renewal option or option of termination of lease is inconsistent with the original
assessment result.

5.27 Government grants

Government grants are non-reciprocal transfers of monetary or non-monetary assets from the
government to the Group except for capital contributions from the government in the capacity
as an investor in the Group.

A government grant is recognised when there is reasonable assurance that the grant will be
received and that the Group will comply with the conditions attaching to the grant.

If a government grant is in the form of a transfer of a monetary asset, it is measured at the
amount received or receivable. If a government grant is in the form of a transfer of a
non-monetary asset, it is measured at fair value.

Government grants related to assets are grants whose primary condition is that the Group
qualifying for them should purchase, construct or otherwise acquire long-term assets.
Government grants related to income are grants other than those related to assets. A
government grant related to an asset is recognised as deferred income and amortised over the
useful life of the related asset on a reasonable and systematic manner as other income or
non-operating income. A grant that compensates the Company for expenses or losses to be
incurred in the future is recognised as deferred income, and included in other income or
non-operating income in the periods in which the expenses or losses are recognised, or
included in other income or non-operating income directly.


                                               89
                                                Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


5.28 Income tax

Current tax and deferred tax are recognised in profit or loss except to the extent that they
relate to a business combination or items recognised directly in equity (including other
comprehensive income).

Current tax is the expected tax payable calculated at the applicable tax rate on taxable income
for the year, plus any adjustment to tax payable in respect of previous years.

At the balance sheet date, current tax assets and liabilities are offset only if the Group has a
legally enforceable right to set them off and also intends either to settle on a net basis or to
realise the asset and settle the liability simultaneously.

Deferred tax assets and deferred tax liabilities arise from deductible and taxable temporary
differences respectively, being the differences between the carrying amounts of assets and
liabilities for financial reporting purposes and their tax bases, which include the deductible
losses and tax credits carried forward to subsequent periods. Deferred tax assets are
recognised to the extent that it is probable that future taxable profits will be available against
which deductible temporary differences can be utilised.

Deferred tax is not recognised for the temporary differences arising from the initial
recognition of assets or liabilities in a transaction that is not a business combination and that
affects neither accounting profit nor taxable profit (or deductible loss). Deferred tax is not
recognised for taxable temporary differences arising from the initial recognition of goodwill.

At the balance sheet date, deferred tax is measured based on the tax consequences that would
follow from the expected manner of recovery or settlement of the carrying amounts of the
assets and liabilities, using tax rates enacted at the balance sheet date that are expected to be
applied in the period when the asset is recovered or the liability is settled.

The carrying amount of a deferred tax asset is reviewed at each balance sheet date, and is
reduced to the extent that it is no longer probable that the related tax benefits will be utilised.
Such reduction is reversed to the extent that it becomes probable that sufficient taxable profits
will be available.

At the balance sheet date, deferred tax assets and deferred tax liabilities are offset if all of the
following conditions are met:

- the taxable entity has a legally enforceable right to offset current tax liabilities and current
tax assets;
- they relate to income taxes levied by the same tax authority on either: the same taxable
entity; or different taxable entities which intend either to settle the current tax liabilities and
current tax assets on a net basis, or to realise the assets and settle the liabilities simultaneously,
in each future period in which significant amounts of deferred tax liabilities or deferred tax
assets are expected to be settled or recovered.

5.29 Lease
                                                 90
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


Lease refers to a contract in which it is agreed that the lessor transfers the use right of assets
to the lessee to get corresponding consideration within a certain period.

On the contract start/change date, the Group shall evaluate whether the contract is a lease or
includes a lease. Where either party thereto assigns one or more use rights of the recognized
assets under its control in a certain period to get consideration, the contract is a lease or
includes a lease. Unless there is any change in the terms and conditions thereof, the Group
shall not evaluate again whether the contract is a lease or includes a lease.

If the contract contains multiple separate leases at the same time, the lessee and lessor will
split the contract and have each separate lease separately subject to accounting treatment. If
the contract includes lease and non-lease parts at the same time, the lessee and the lessor will
split them separately.

5.29.1 Where the Group is the lessee

(a) See Notes III, 17 for the general accounting treatment of right-to-use assets;
(b) See Notes III, 26 for the general accounting treatment of leased liabilities;
(c) Short-term lease and lease of low-value assets
The Group does not recognize right-to-use assets and leased liabilities for short-term lease
and lease of low-value assets. Short-term lease refers to any lease with a lease term within 12
months from the beginning date of the lease term, excluding option of purchase. Lease of
low-value assets refers to low-value lease when a single lease asset is regarded as a new asset.
The Group shall include the lease payment of short-term lease and lease of low-value assets
into the current profits and losses or relevant asset costs according to the straight-line method
in each period of the lease term.

(d) Lease change
If there is any lease change and the following conditions are met at the same time, the Group
will have such a lease change subject to accounting treatment as a separate lease:

– Where such a lease change expands the scope of the lease by adding one or more use
rights to leased assets;

– Where the increased consideration is equivalent to the separate price of the expanded
portion of the scope of the lease adjusted according to the contract.

Where such a lease change is not regarded as a separate lease for accounting treatment, the
Group shall re-apportion the consideration of the contract after such a change, re-determine
the lease term, and re-measure the leased liabilities according to the present value of the lease
payment after the change and the revised discount rate on the effective date of such a lease
change.

Where any lease change results in decreased lease scope or shortened lease term, the Group
shall correspondingly reduce the book value of right-to-use assets and recognize gains or
losses related to the partially or completely terminated lease in current profits and losses.

                                                91
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


Where any other lease change results in remeasurement of leased liabilities, the Group shall
correspondingly adjust the book value of right-to-use assets.

5.29.2 The Group as the lessor

(a) Lease classification
From the inception of lease, the Group will divide leases into finance lease and operating
lease as the lessor. Finance lease refers to a lease in which almost all the risks and returns
related to the ownership of the leased asset are essentially transferred, regardless of whether
the ownership is finally transferred or not. Operating lease refers to other leases except for the
finance lease. When the Group is the sublease lessor, the sublease shall be classified based on
the right-to-use assets arising from the original lease.

(b) The Group will record operating lease business as the lessor.
During each period of the lease term, the Group recognizes lease receipts from operating
leases as rental revenue by using the straight-line method. The Group capitalizes initial direct
costs pertaining to operating leases upon their occurrence, and apportions them as per the
same basis used for recognizing the rental income within the lease term and includes them in
current profits and losses by period. The Group's variable lease receipts related to operating
leases that are not included in the lease receipts shall be recognized in current profits and
losses when they actually occur.

(c) Accounting treatment method of finance leases
From the commencement date of the lease term, the Group recognizes finance lease
receivables for finance leases and derecognizes the related assets. The Group regards the net
investment in a lease as the entry value of finance lease receivables at the time of initial
measurement of finance lease receivables. The net investment in a lease is the sum of the
present value of unguaranteed residual value and rental receipts not received yet on the
commencement date of the lease term which is subject to discounting at the interest rate
implicit in the lease term.

The Group calculates and recognizes the interest income in each period within the lease term
according to a fixed periodic rate. Derecognition and impairment of finance lease receivables
shall be subject to accounting treatment in accordance with Note V.9 hereto. The variable
lease payment which is not included in the net investment in a lease, shall be recognized in
current profits and losses when it actually occurs.

(d) Lease change
Where any finance lease of which the Group is the lessor changes and the following
conditions are met at the same time, the Group will have such a change subject to accounting
treatment as a separate lease:

-   Where such a change expands the scope of the lease by adding one or more use rights to
    leased assets;

-   Where the increased consideration is equivalent to the separate price of the expanded
    portion of the scope of the lease adjusted according to the contract.
                                                92
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report




Where such a change of finance lease is not subject to accounting treatment as a separate
lease, the Group, as the lessor, will treat the changed lease in any of the following
circumstances.

-   Where such a change becomes effective on the inception of lease and the lease will be
    classified as an operating lease, the Group, as the lessor, will have it subject to accounting
    treatment as a new lease from the effective date of such a lease change and take the net
    investment in a lease prior to the effective date of such a lease change as the carrying
    value of the leased asset.

-   Where such a change becomes effective on the inception of lease and the lease will be
    classified as a finance lease, the Group, as the lessor, will have it subject to accounting
    treatment in accordance with the provisions regarding the modification or renegotiation of
    contracts specified in the Accounting Standard for Business Enterprises No. 22 -
    Recognition and Measurement Instruments. In other words, where a modification or
    renegotiation of a lease contract does not result in the derecognition of finance lease
    receivables, but a change in future cash flows, the carrying amount of such finance lease
    receivables will be recalculated and the related gain or loss recognized in current profits
    and losses. The carrying amount of finance lease receivables will be determined on the
    basis of cash flows from the renegotiated or modified lease contract discounted at the
    original discount rate of finance lease receivables or at the present value of the discount
    rate recalculated in accordance with Article 23 of Accounting Standard for Business
    Enterprises No. 24 - Hedge Accounting (2017), where applicable. For all costs and
    expenses incurred by modifying or renegotiating the lease contract, the Group will adjust
    the carrying amount of the modified finance lease receivables and amortize them over the
    remaining term of such modified finance lease receivables.

In the event of any change in an operating lease of which the Group is the lessor, the Group
will have it subject to accounting treatment as a new lease from the effective date of the
change, and the amount of lease receipts received in advance or receivable relating to the
lease prior to such change will be taken as an amount received under the new lease.


5.29.3 Leaseback transaction

The Group assesses whether the transfer of assets in sale-and-leaseback transactions is a sale
in accordance with the principles described in Note V.23 hereto.

(a) The Group as the seller and lessee:
Where any asset transfer in sale and leaseback transactions falls into the range of sales, the
Company, as a lessee, will measure the right-to-use assets formed by sale and leaseback and
recognize profit or loss only related to the right transferred to the lessor according to the part
in the original asset book value relating to right-to-use assets gained by leaseback. Where any
asset transfer in sale and leaseback transactions does not fall into the range of sales, the
Company, as a lessee, will continue to recognize the transferred asset and a financial liability
equivalent to the transfer income. Please refer to Note V.9 hereto for details of accounting
treatment of financial liability.

                                                93
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


(b) The Group as the buyer and lessor
Where any asset transfer in sale and leaseback transactions falls into the range of sales, the
Company, as the lessor, will have the purchase of assets subject to accounting treatment and
also have the lease of assets subject to the same in accordance with the aforementioned “(2)
The Group as the lessor". Where any asset transfer in sale and leaseback transactions does not
fall into the range of sales, the Company, as a lessor, will not recognize the transferred asset,
but recognize a financial asset equivalent to the transfer income. Please refer to Note V.9
hereto for details of accounting treatment of financial asset.

5.30 Assets held for sale

The Group classified a non-current asset or disposal group as held for sale when the carrying
amount of a non-current asset or disposal group will be recovered through a sale transaction
rather than through continuing use.

A disposal group refers to a group of assets to be disposed of, by sale or otherwise, together as
a whole in a single transaction and liabilities directly associated with those assets that will be
transferred in the transaction.

A non-current asset or disposal group is classified as held for sale when all the following
criteria are met:

- According to the customary practices of selling such asset or disposal group in similar
transactions, the non-current asset or disposal group must be available for immediate sale in
their present condition subject to terms that are usual and customary for sales of such assets or
disposal groups;
- Its sale is highly probable, that is, the Group has made a resolution on a sale plan and has
obtained a firm purchase commitment. The sale is to be completed within one year.

Non-current assets or disposal groups held for sale are stated at the lower of carrying amount
and fair value less costs to sell (except financial assets, deferred tax assets and investment
properties subsequent measured at fair value initially and subsequently. Any excess of the
carrying amount over the fair value less costs to sell is recognised as an impairment loss in
profit or loss.

5.31 Profit distributions

Dividends or profit distributions proposed in the profit appropriation plan, which will be
approved after the balance sheet date, are not recognised as a liability at the balance sheet date
but are disclosed in the notes separately.


5.32 Related parties

If a party has the power to control, jointly control or exercise significant influence over
another party, or vice versa, or where two or more parties are subject to common control or
joint control from another party, they are considered to be related parties. Related parties may
be individuals or enterprises. Enterprises with which the Company is under common control
                                                94
                                             Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


only from the State and that have no other related party relationships are not regarded as
related parties.

In addition to the related parties stated above, the Group determines related parties based on
the disclosure requirements of Administrative Procedures on the Information Disclosures of
Listed Companies issued by the CSRC.

5.33 Segment reporting

The Group is principally engaged in the production and sales of wine, brandy, and sparkling
wine in China, France, Spain, Chile and Australia. In accordance with the Group's internal
organisation structure, management requirements and internal reporting system, the Group's
operation is divided into four parts: China, Spain, France, Chile and Australia. The
management periodically evaluates segment results, in order to allocate resources and
evaluate performances. In 2021, over 86% of revenue, more than 98% of profit and over 97%
of non-current assets derived from China / are located in China. Therefore the Group does not
need to disclose additional segment report information.

5.34 Significant accounting estimates and judgements

The preparation of the financial statements requires management to make estimates and
assumptions that affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates as well as underlying assumptions and uncertainties involved are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in any future periods affected.

5.34.1 Significant accounting estimates

Except for accounting estimates relating to depreciation and amortisation of assets such as
investment properties, fixed assets, bearer biological assets and intangible assets (see Notes
5.12, 13, 16 and 18) and provision for impairment of various types of assets (see Notes 7.2, 5,
6, 10, 11, 12, 13, 14 and Notes 17.1 and 2). Other significant accounting estimates are as
follows:
(i) Note 7.17 – Recognition of deferred tax asset;
(ii) Note 11. – Fair value measurements of financial instruments.

5.35 Changes in significant accounting policies and accounting estimates

5.35.1 Changes in significant accounting policies

The Ministry of Finance issued the Accounting Standard for Business Enterprises No. 21 -
Lease (Revised in 2018) (Cai Kuai [2018] No. 35) (hereinafter referred to as “Accounting
Standard No.21”) on December 7, 2018. After deliberation and approval at the seventh
meeting of the Eighth Board of Directors of the Company, the Group has implemented the
aforesaid Accounting Standard No.21 from January 1, 2021, and changed relevant accounting
policies as provided therein.

                                              95
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report




According to the Accounting Standard No.21, the Group has elected not to reassess whether a
contract existing prior to the date of initial execution is a lease or contains a lease.

The Group has elected to adjust only the cumulative impact number for lease contracts
outstanding as of January 1, 2020. For the cumulative impact amount of the first execution,
the amount of retained earnings and other relevant items in the financial statements at the
beginning of the first execution period (i.e. January 1, 2021) is adjusted, while the information
in the comparable period not adjusted.

On the date of initial execution of the Accounting Standard No.21 (i.e. January 1, 2021), the
Group's specific linking-up treatment and its impact are as follows:
The Group as the lessee

For operating leases on the date of initial execution, leased liabilities are measured as the
present value of the lessee's liability based on the present value of remaining lease payments
discounted at the incremental lending rate on the date of initial execution. The unpaid rentals
payable under the original lease standard, which were accrued on an accrual basis, are
included in the remaining lease payments.

For operating leases falling into the category of houses, buildings and structures prior to the
date of initial execution, the Group measures right-to-use assets in accordance with the
assumption that the Accounting Standard No.21 has been adopted from the commencement
date of the lease term and that the incremental lending rate on the date of initial execution is
taken as the discount rate. The Group conducts impairment tests on the right-to-use assets on
the date of initial execution without adjusting the book value of such assets.

The Group does not recognize right-to-use assets and leased liabilities for operating leases
where leased assets are low-value ones prior to the date of initial execution. For operating
leases other than low-value leases on the date of initial execution, the Group applies one or
more of the following simplified treatments depending on each lease:

-   Any lease to be completed within 12 months after the date of initial execution, is regarded
    as a short-term lease for treatment;
-   When leased liabilities are measured, the same discount rate is used for leases with similar
    characteristics;
-   Right-to-use assets are measured with initial direct costs excluded;
-   When there is any option to renew or option to terminate the lease, the lease term will be
    recognized by the Group in accordance with actual exercising of the option and other
    up-to-date states before the date of initial execution;
-   As an alternative to the impairment test of right-to-use assets, whether a contract including
    is an onerous contract is evaluated before the date of initial execution pursuant to the
    Accounting Standard for Business Enterprises No.13 - Contingencies and the right-to-use
    assets adjusted by the Group according to the loss reserves included in the balance sheet
    before the date of initial execution;
-   If a lease change occurs before the date of initial execution, the Group will have it subject
    to accounting treatment according to the final arrangement of such a lease change.
                                               96
                                                         Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report




The Group as the lessor

The Group does not need to adjust the amount of retained earnings and other related items in
the financial statements for leases in which the Group is the lessor at the beginning of the year
when the Accounting Standard No.21 is initially executed. The Group will conduct
accounting treatment in accordance with the Accounting Standard No.21 from the date of
initial execution.

The execution of the Accounting Standard No.21 on January 1, 2021 has no material impact
on financial statements of both the Group and the Company.


5.35.2 Changes in significant accounting estimates

Nil

5.35.3 Particulars of first implementation of new lease standards to adjust the first
implementation of related items in the financial statements at the beginning of the year

                                               Consolidated Balance Sheet
                                                                                                            Unit: Yuan
                                 Item                            December 31, 2020     January 1, 2021   Adjustments
Current assets:
Monetary fund                                                          1,194,214,929     1,194,214,929
Settlement reserves
Lending funds
Tradable financial assets
Derivative financial assets
Bills receivable
Accounts receivable                                                      183,853,362       183,853,362
Receivables financing                                                    338,090,187       338,090,187
Advance payment                                                           71,296,416        71,296,416
Premium receivable
Reinsurance accounts receivable
Receivable reserves for reinsurance contract
Other receivables                                                         22,428,956        22,428,956
Including: Interest receivable
Dividends receivable
Redemptory monetary capital for sale
Inventories                                                            2,945,548,651     2,945,548,651
Contract assets
Assets held for sale
Non-current assets due within one year
Other current assets                                                     234,118,715       234,118,715
Total current assets                                                   4,989,551,216     4,989,551,216
Non-current assets:
                                                           97
                                                          Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                                   Item                           December 31, 2020     January 1, 2021   Adjustments
Offering loans and imprest
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments                                               48,263,507        48,263,507
Other investments in equity instruments
Other non-current financial assets
Investment real estate                                                     27,057,730        27,057,730
Fixed assets                                                            5,724,935,846     5,724,935,846
Construction in progress                                                  635,495,152       635,495,152
Productive biological assets                                              192,173,536       192,173,536
Oil-and-gas assets
Right-of-use assets                                                                         104,654,936    104,654,936
Intangible assets                                                         660,989,065       660,989,065
Development expenditure
Goodwill                                                                  132,938,212       132,938,212
Long-term prepaid expenses                                                314,465,855       306,090,617     -8,375,238
Deferred income tax assets                                                206,241,275       207,199,400        958,125
Other non-current assets                                                  170,370,147       170,370,147
Total non-current assets                                                8,112,930,325     8,210,168,148     97,237,823
Total assets                                                           13,102,481,541    13,199,719,364     97,237,823
Current liabilities:
Short-term loans                                                          689,090,715       689,090,715
Borrowings from the Central Bank
Loans from other banks and other financial institutions
Tradable financial liabilities
Derivative financial liabilities
Bills payable
Accounts payable                                                          484,347,958       479,305,382     -5,042,576
Advances from customers
Contract liabilities                                                      135,073,280       135,073,280
Financial assets sold for repurchase
Deposits from customers and interbank
Receivings from vicariously traded securities
Receivings from vicariously sold securities
Employee remunerations payable                                            188,779,911       188,779,911
Taxes and dues payable                                                    213,412,813       213,412,813
Other payables                                                            386,105,526       386,105,526
Including: Interest payable                                                   553,471           553,471
Dividends payable                                                           1,003,125         1,003,125
Handling charges and commissions payable
Dividend payable for reinsurance
Liabilities held for sale
Non-current liabilities due within one year                               133,311,890       141,497,136      8,185,246
Other current liabilities                                                  14,820,653        14,820,653

                                                           98
                                                             Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                                  Item                               December 31, 2020     January 1, 2021    Adjustments
Total current liabilities                                                  2,244,942,746     2,248,085,416        3,142,670
Non-current liabilities:
Reserves for insurance contracts
Long-term borrowings                                                         200,352,968       200,352,968
Bonds payable
Including: Preferred stock
            Perpetual bonds
Lease liabilities                                                                              104,489,294      104,489,294
Long-term accounts payable                                                    86,000,000        86,000,000
Long-term employee remunerations payable
Estimated liabilities
Deferred income                                                               52,653,609        52,653,609
Deferred income tax liabilities                                               12,022,613        12,260,894         238,281
Other non-current liabilities                                                  2,078,971         2,078,971
Total non-current liabilities                                                353,108,161       457,835,736      104,727,575
Total liabilities                                                          2,598,050,907     2,705,921,152      107,870,245
Owner’s equity:
Capital stock                                                                685,464,000       685,464,000
Other equity instruments
Including: Preferred stock
            Perpetual bonds
Capital surplus                                                              524,968,760       524,968,760
Minus: Treasury stock
Other comprehensive income                                                       576,129           576,129
Special reserves
Surplus reserves                                                             342,732,000       342,732,000
General risk preparation
Undistributed profit                                                       8,714,091,755     8,703,459,333      -10,632,422
Total owner’s equities attributable to the parent company                10,267,832,644    10,257,200,222      -10,632,422
Minority equity                                                              236,597,990       236,597,990
Total owner’s equities                                                   10,504,430,634    10,493,798,212      -10,632,422
Total liabilities and owner’s equities                                   13,102,481,541    13,199,719,364       97,237,823


                                         Balance Sheet of the Parent Company
                                                                                                                 Unit: Yuan
                                Item                           December 31, 2020      January 1, 2020        Adjustments
Current assets:
Monetary fund                                                          267,548,326         267,548,326
Tradable financial assets
Derivative financial assets
Bills receivable
Accounts receivable
Receivables financing                                                   13,920,000          13,920,000
Advance payment                                                            171,709             171,709
Other receivables                                                      580,131,798         580,131,798
                                                              99
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                               Item             December 31, 2020      January 1, 2020      Adjustments
Including: Interest receivable
Dividends receivable                                    200,000,000         200,000,000
Inventories                                             482,442,935         482,442,935
Contract assets
Assets held for sale
Non-current assets due within one year
Other current assets                                     24,842,325          24,842,325
Total current assets                                  1,369,057,093       1,369,057,093
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments                          7,599,778,880       7,599,778,880
Other investments in equity instruments
Other non-current financial assets
Investment real estate                                   27,057,730          27,057,730
Fixed assets                                            243,634,747         243,634,747
Construction in progress                                   2,865,243          2,865,243
Productive biological assets                            115,103,753         115,103,753
Oil and gas assets
Right-of-use assets                                                          44,816,966         44,816,966
Intangible assets                                        80,789,731          80,789,731
Development expenditure
Goodwill
Long-term prepaid expenses
Deferred income tax assets                               18,285,685          18,285,685
Other non-current assets                              1,530,700,000       1,530,700,000
Total non-current assets                              9,618,215,769       9,663,032,735         44,816,966
Total assets                                         10,987,272,862      11,032,089,828         44,816,966
Current liabilities:
Short-term loans                                        150,000,000         150,000,000
Tradable financial liabilities
Derivative financial liabilities
Bills payable
Accounts payable                                         76,470,081          76,470,081
Advances from customers
Contract liabilities
Employee remunerations                                   67,808,910          67,808,910
Taxes and dues payable                                     9,123,959          9,123,959
Other payables                                          521,505,947         521,505,947
Including: Interest payable                                 181,250             181,250
Dividends payable
Liabilities held for sale
Non-current liabilities due within one year                                   3,624,896          3,624,896
Other current liabilities

                                               100
                                                         Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                                Item                          December 31, 2020     January 1, 2020     Adjustments
Total current liabilities                                            824,908,897         828,533,793         3,624,896
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred stock
            Perpetual bonds
Lease liabilities                                                                         47,393,235        47,393,235
Long-term accounts payable
Long-term employee remuneration payable
Estimated liabilities
Deferred income                                                         5,507,708          5,507,708
Deferred income tax liabilities                                                               88,555            88,555
Other non-current liabilities                                           1,164,471          1,164,471
Total non-current liabilities                                           6,672,179         54,153,969        47,481,790
Total liabilities                                                    831,581,076         882,687,762        51,106,686
Owner’s equity:
Capital stock                                                        685,464,000         685,464,000
Other equity instruments
Including: Preferred stock
            Perpetual bonds
Capital surplus                                                      560,182,235         560,182,235
Minus: Treasury stock
Other comprehensive income
Special reserves
Surplus reserves                                                     342,732,000         342,732,000
Undistributed profit                                                8,567,313,551      8,561,023,831        -6,289,720
Total owner’s equities                                            10,155,691,786     10,149,402,066        -6,289,720
Total liabilities and owner’s equities                            10,987,272,862     11,032,089,828        44,816,966


Adjustment Explanation

The Company has implemented the new lease standard from January 1, 2021. According to
the stipulation of new lease standard, the Company has elected not to reassess whether a
contract existing prior to the date of initial execution is a lease or contains a lease. The
Company has elected to adjust only the cumulative impact number for lease contracts
outstanding as of January 1, 2021. For the cumulative impact amount of the first execution,
the amount of relevant items in the financial statements at the beginning of the first execution
period (i.e. January 1, 2021) is adjusted, while the information in the comparable period not
adjusted.
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% (China), 20% (France),
                                                             101
                                                  Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                       output tax calculated based on taxable       21% (Spain), 19% (Chile), 10%
                       income and the input tax allowed to be       (Australia)
                       deducted in current period
                                                                    10% of the price, 20% of the price and
Consumption tax        Levied on taxable income
                                                                    1,000 Yuan each ton (China)
City development tax   Levied on circulation tax actually paid      7% (China)
                                                                    25% (China), 28% (France), 28%
Corporate income tax   Levied on taxable income
                                                                    (Spain), 27% (Chile), 30% (Australia)

6.2 Tax incentives

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.

Grape Planting Branch of Yantai Changyu Wine R&D and Manufacturing Co., Ltd. (“R&D
and Growing”), a branch of the Company, whose principal activity is grape growing, is
incorporated in YEDA, Shandong Province. According to Clause 27 of PRC Corporate
Income Tax and Clause 86 of PRC Corporate Income Tax Measures for Implementation, R&D
and Growing enjoys an exemption of corporate income tax.

Beijing Changyu AFIP Agriculture Development Co., Ltd (“Agriculture Development”), a
subsidiary of the Group, whose principal activity is grape growing, is incorporated in Miyun
County, Beijing. According to clause 27 of the Corporate Income Tax Law of the People’s
Republic of China and clause 86 of the Implementation Rules of Enterprise Income Tax Law
of the People’s Republic of China, Agriculture Development enjoys an exemption of corporate
income tax.

Xinjiang Tianzhu Co., Ltd (“Xinjiang Tianzhu”), a subsidiary of the Company, is an enterprise
of wine production and sales incorporated in Shihezi City, Xinjiang Uygur Autonomous
Region. In accordance with the Announcement on Continuing the Enterprise Income Tax
Policies for the Large-Scale Development of Western China of the Ministry of Finance, the
State Taxation Administration and the National Development and Reform Commission
(Announcement No. 23 [2020] of the Ministry of Finance), 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 2021 to 2030.

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 Uygur
Autonomous Region. In accordance with Announcement on Continuing the Enterprise Income
Tax Policies for the Large-Scale Development of Western China of the Ministry of Finance,
                                                   102
                                            Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


the State Taxation Administration and the National Development and Reform Commission
(Announcement No. 23 [2020] of the Ministry of Finance), 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 2021 to 2030.

Chateau Changyu Moser XV Co., Ltd., Ningxia (“Ningxia Chateau”), a subsidiary of the
Company, is an enterprise of wine production and sales incorporated in Yinchuan City,
Ningxia Huizu Autonomous Region. In accordance with Announcement on Continuing the
Enterprise Income Tax Policies for the Large-Scale Development of Western China of the
Ministry of Finance, the State Taxation Administration and the National Development and
Reform Commission (Announcement No. 23 [2020] of the Ministry of Finance), Ningxia
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 2021 to 2030.

Changyu (Ningxia) Wine Co., Ltd. (“Ningxia Wine”), a subsidiary of the Company, is an
enterprise of wine production and sales incorporated in Yinchuan City, Ningxia Huizu
Autonomous Region. In accordance with Announcement on Continuing the Enterprise Income
Tax Policies for the Large-Scale Development of Western China of the Ministry of Finance,
the State Taxation Administration and the National Development and Reform Commission
(Announcement No. 23 [2020] of the Ministry of Finance), Ningxia Wine 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 2021 to 2030.

According to the provisions of the Announcement of the Ministry of Finance and the State
Taxation Administration on Continuing the Implementation of Certain Tax Preferential
Policies Responding to the COVID-19 Outbreak (Announcement No. 7 of [2021] of the
Ministry of Finance and the State Taxation Administration), the implementation period for the
preferential tax policies specified in the Announcement of the Ministry of Finance and the
State Administration of Taxation on Relavant Donation Tax Policies Supporting the
Prevention and Control of the Outbreak of Novel Coronavirus Pneumonia Caused by
COVID-19 (Annoucement No. 9 [2020] of the Ministry of Finance and the State Taxation
Administration) shall be extended until March 31, 2021. The Company’s Yantai Changyu
Wine Culture Museum Co., Ltd. (“Museum”) and other subsidiaries provide catering,
accommodation, tourism and other life services. Income from the provision of life services is
exempt from VAT from January 1, 2021 to March 31, 2021.

The Company’s subsidiary Xinjiang Changyu Wine Sales Co., Ltd. Weimeisi Tasting Center
Branch (“Xinjiang Tasting”) is a large-scale restaurant service company located in Shihezi
City, Xinjiang. According to the Announcement of the Ministry of Finance and the State
Taxation Administration on the Value-Added Tax Policies on Supporting the Resumption of
Work and Business of Individual Industrial and Commercial Households (No. 13 [2020]) and
the Announcement of the Ministry of Finance and the State Taxation Administration on
Continuing the Implementation of Certain Tax Preferential Policies Responding to the
COVID-19 Outbreak (Announcement No. 7 of [2021] of the Ministry of Finance and the State
Taxation Administration), it enjoys a preferential policy of 1% VAT collection rate for
small-scale taxpayers in 2021.



                                             103
                                                                    Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


  7. Notes to items in the consolidated financial statement

  7.1 Monetary capital
                                                                                                                             Unit: Yuan
                     Item                                      Ending balance                             Beginning balance
 Cash on hand                                                                      32,865                                           19,637
 Bank deposit                                                               1,468,546,985                                  1,128,882,937
 Other monetary capital                                                         45,151,190                                     65,312,355
 Total                                                                      1,513,731,040                                  1,194,214,929
 Including: Total overseas deposits                                             42,814,048                                     47,674,019


  As at June 30, 2021, the restricted bank deposit details are listed as follows:
                                                                                                                             Unit: Yuan
                    Item                                       Ending balance                             Beginning balance
  Housing fund of the unit                                                       2,641,994                                     2,684,407
  Total                                                                          2,641,994                                     2,684,407


  As at June 30, 2020, 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,
                                                                                                                              20,000,000
  Development and Manufacture Co., Ltd. (“R&D Company”)
  Guaranteed deposits paid for the letter of credit                                             44,540,850                    44,540,850
  Account balance of Alipay                                                                        600,340                        761,505
  Guaranty money for ICBC platform                                                                   10,000                        10,000
  Total                                                                                       45,151,190                   65,312,355


  As at June 30, 2021, the bank deposits of the Group including short-term fixed deposits
  ranging from 3 months to 12 months amounted to RMB 73,553,062 Yuan (December 31,
  2020: RMB 73,553,062), with the interest rates ranging from 1.5% to 2.25%.
  7.2 Bills receivable

  7.2.1 Classification of bills receivable
                                                                                                                              Unit: Yuan
                                       Ending balance                                               Beginning balance
                                           Provision for bad                                              Provision for bad
    Type           Book balance                                                    Book balance
                                                 debts                                                          debts
                                                                   Book value                                                     Book value
                  Amount      Proportion   Amount      Accrued                   Amount      Proportion   Amount      Accrued
                                                      proportion                                                     proportion
Accounts
receivable
for which
provision for
bad debts is
accrued on a
single item
basis
Accounts        187,739,811      100% 18,503,554         9.86% 169,236,257 196,179,968          100% 12,326,606         6.30% 183,853,362

                                                                     104
                                                            Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


receivable
for which
provision for
bad debts is
accrued on a
combined
basis
Total           187,739,811   100% 18,503,554       9.86% 169,236,257 196,179,968        100% 12,326,606      6.30% 183,853,362


  Provision for bad debts accrued on a combined basis:
                                                                                                                  Unit: Yuan
                                                                       Ending balance
                Name
                                         Book balance               Provision for bad debts          Accrued proportion
  Amounts due from related
                                                        399,844                       2,526.23                         0.63%
  parties
  Amounts due from other
                                                    187,339,967                  18,501,027.77                         9.88%
  customers
  Total                                             187,739,811                    18,503,554                                 --
  Disclosed by age:
                                                                                                                  Unit: Yuan
                               Age                                                      Ending balance
  Within 1 year (including 1 year)                                                                               178,544,958
  1-2 years                                                                                                        6,193,356
  2-3 years                                                                                                        3,001,497
  Over 3 years
  Total                                                                                                          187,739,811


  As at June 30, 2021, the accounts receivable with ownership restrictions were RMB
  44,245,910 Yuan (December 31, 2020: 28,557,991 Yuan). Please refer to Note 7.19 for details.
  7.2.2 Provision for bad debts accrued, withdrawn or transferred back in this period

  Provision for bad debts accrued in this period:
                                                                                                                  Unit: Yuan
                                           Beginning                        Changes in this period
                                                                                                                    Ending
  Type                                    balance of the                          Withdrawn or
                                                                  Accrued                            Cancelled      balance
                                               year                              transferred back
  Accounts receivable for which
                                               12,326,606          6,176,948                                      18,503,554
  provision for bad debts is accrued
  Total                                        12,326,606          6,176,948                                      18,503,554

  7.2.3 Accounts receivable actually cancelled after verification in this period

  Nil
  7.2.4 Accounts receivable collected by the borrowers of top 5 units ranked by the ending
  balance
                                                                                                                  Unit: Yuan
                                                                                      Percentage in total Ending balance of
                                Relationship with
                Unit                                  Amount            Period             accounts        provision for bad
                                   the Group
                                                                                          receivable      and doubtful debts


                                                             105
                                              Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


Lianhua Supermarket
                           Third party    9,751,234 Within 1 year               5.20%              1,782,383
Holdings Co., Ltd.
Inland Trading Co          Third party    8,342,885 Within 1 year               4.40%               114,255
Nonggongshang
Supermarket (Group) Co.,   Third party    6,978,820 Within 2 years              3.70%              5,844,945
Ltd.
Sainsburys Supermarkets
                           Third party    4,851,068 Within 1 year               2.60%                62,591
Ltd
COOP DENMARK A/S           Third party    3,760,513 Within 1 year               2.00%                48,520
Total                              --    33,684,520         --                 17.90%              7,852,694




7.2.5 Accounts receivable terminating recognition due to transfer of financial assets

Nil
7.2.6 Accounts receivable transferred and included in assets and liabilities

Nil
7.3 Receivables financing
                                                                                                  Unit: Yuan
                    Item                  Ending balance                      Beginning balance
Bills receivable                                        338,278,251                            338,090,187
Total                                                   338,278,251                            338,090,187

7.3.1 The pledged bills receivable of the Group at the end of the year

Nil


7.3.2 Outstanding endorsed bills that have not matured at the end of the year

                                  Item                                 Amount derecognised at year end
Bank acceptance bills                                                                             79,930,626
Total                                                                                             79,930,626


As at June 30, 2021, bills endorsed by the Group to other parties which are not yet due at the
end of the period is RMB 79,930,626 Yuan (December 31, 2020: RMB 260,721,441 Yuan).
The notes are used for payment to suppliers and constructions. The Group believes that due to
good reputation of bank, the risk of notes not accepting by bank on maturity is very low,
therefore derecognise the note receivables endorsed. If the bank is unable to pay the notes on
maturity, according to the relevant laws and regulations of China, the Group would undertake
limited liability for the notes.


7.4 Advance payment

7.4.1 Advance payment listed by age

                                                                                              Unit: Yuan
                                                106
                                                               Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                                                      Ending balance                                    Beginning sum
                 Age
                                             Amount                Proportion                   Amount                  Proportion
Within 1 year                                      7,957,433                 99.12%                      70,977,636           99.60%
1-2 years                                             70,279                  0.88%                         318,780            0.40%
2-3 years
More than 3 years
Total                                              8,027,712                       --                    71,296,416                  --

7.4.2 Advance payment collected by the prepaid parties of top 5 units ranked by the
ending balance
                                                                                                                           Unit: Yuan
                                                                                                                    Percentage in the
                                          Relationship with                                           Reason for
            Category of client                                  Amount             Age                               total advance
                                             the Group                                               unsettlement
                                                                                                                       payment%
Chile SOCIEDAD AGRICOLA
                                             Third party         1,039,773 Within 1 year        Prepayments                    13.0%
REQUINGUA LTDA.
State Grid Shandong Electronic                                                                  Prepaid
                                             Third party           673,128 Within 1 year                                        8.4%
Power Yantai Company                                                                            electricity fees
Yantai Yanghang Intelligent
                                             Third party           150,008 Within 1 year        Prepayments                     1.9%
Technology Co., Ltd.
Sinopec Sales Co., Ltd. Shandong
                                             Third party           130,000 Within 1 year        Prepaid fuel cost               1.6%
Yantai Petroleum Branch
Chongqing Yirong Glass Products
                                             Third party              79,000 Within 1 year      Prepayments                     1.0%
Co., Ltd.
Total                                            --              2,071,909 --                                       25.90%

7.5 Other receivables
                                                                                                                           Unit: Yuan
                      Item                                 Ending balance                              Beginning balance
Interest receivable
Dividends receivable
Other receivables                                                           22,861,668                                     22,428,956
Total                                                                       22,861,668                                     22,428,956

Other receivables

7.5.1 Other receivables classified by nature
                                                                                                                         Unit: Yuan
                                 Nature                                 Ending book balance              Beginning book balance
Deposit and guaranty money receivable                                                    6,225,930                         10,287,959
Consumption tax and added-value tax export rebate                                        7,453,412                          8,254,195
Imprest receivable                                                                        519,647                            124,878
Other                                                                                    8,662,679                          3,761,924
Total                                                                                   22,861,668                         22,428,956

7.5.2 Disclosed by age

                                                                                                                        Unit: Yuan


                                                                107
                                                               Yantai Changyu Pioneer Wine Co., Ltd. 2021 Semi-annual Report


                                Age                                                    Ending balance
Within 1 year (including 1 year)                                                                                 16,935,627
1-2 years                                                                           &e