YantaiChangyuPioneerWineCo.,Ltd.

2025Semi-annualReport

Final2025-03

August28,2025

I.ImportantNotice,TableofContentsandDefinition

Theboardofdirectors，theboardofsupervisors，directors,supervisorsandseniorexecutivesoftheCompanyguaranteethetruthfulness,accuracyandcompletenessofthecontentscontainedinthesemi-annualreportwithnofalserecords,misleadingstatementsorsignificantomissions,andundertakeindividualandjointlegalliabilities.Mr.HongjiangZHOU(PersoninchargeoftheCompany)andMs.CuimeiGUO(Personinchargeofaccountingwork,Personinchargeofaccountingorgan&Accountantincharge)assurethetruthfulness,accuracyandcompletenessofthefinancialreportinthesemi-annualreport.Alldirectorsattendedthisboardmeetingforreviewingthissemi-annualreportinperson.Forward-lookingstatementssuchasfutureplansanddevelopmentstrategiescoveredinthisreportdonotconstituteasubstantialcommitmentoftheCompanytoinvestors.Investorsareadvisedtopayattentiontoinvestmentrisks.RegardingsignificantrisksthattheCompanymayfaceduringthebusinessprocess,pleasereferto“10.Risksandresponsemeasures”in“IIIDiscussionandAnalysisofManagementTeam”inthisreport.Investorsaresuggestedtoreadcarefullyandpayattentiontoinvestmentrisks.TheCompanyhasnoplantodistributecashdividendsandbonussharesandcapitalreservewillnotbetransferredtoequity.

TableofContents

I、ImportantNotice,TableofContentsandDefinition ...... 2

II、BriefIntroductionfortheCompanyandMainFinancialIndicators ...... 6III、DiscussionandAnalysisofManagementTeam ...... 9

IV、CorporateGovernance,EnvironmentalandSocialResponsibility ...... 29

V、Majorissues ...... 31

VI、ChangesinSharesandtheShareholders’Situation ...... 39

VII、RelatedSituationofBonds ...... 46

VIII、FinancialReport ...... 46IX、OtherSubmittedData ...... 168

ReferenceDocuments

(1)Theoriginalof2025Semi-annualReportautographedbytheChairman.

(2)TheFinancialStatementsautographedandsealedbythechairman,chiefaccountantandaccountantsincharge.

(3)TheProspectusandPublicOfferingAnnouncementforStockBin1997;TheProspectusandTheShares’Change&PublicOfferingAnnouncementforStockAin2000.

(4)TheoriginalsofalldocumentsandannouncementsthattheCompanymadepublicduringthereportperiodinthenewspapersdesignatedbyChinaSecuritiesRegulatoryCommission.

Definition

DefinitionItem

II.BriefIntroductionfortheCompanyandMainFinancialIndicators

1.Company’sinformation

StockAbbreviation

2.Contactpersonandinformation

3.Otherinformation

1)ContactinformationoftheCompanyWhetherthereisanychangeintheCompany’sregisteredaddress,officeaddress,correspondingpostcode,websiteaddressandemailaddressduringthereportperiod

□Applicable?InapplicableThereisnochangeintheCompany’sregisteredaddress,officeaddress,correspondingpostcode,websiteaddressandemailaddressduringthereportperiod.Pleasereferto2024AnnualReportfordetailedinformation.

2)InformationdisclosureandfilinglocationWhetherthereisanychangeininformationdisclosureandfilinglocationduringthereportperiod□Applicable?InapplicableThereisnochangeinthenameofthenewspaperforinformationdisclosure,theaddressofthewebsitedesignatedbytheChinaSecuritiesRegulatoryCommissionforpublishingthesemi-annualreport,andthefilinglocationoftheCompany’ssemi-annualreportselectedbytheCompanyduringthereportperiod.Pleasereferto2024AnnualReportfordetailedinformation.

3)OtherrelevantinformationWhetherthereisanychangeinotherrelevantinformationduringthereportperiod□Applicable?Inapplicable

4.KeyaccountingdataandfinancialindicatorsWhethertheCompanyneedstoretrospectivelyadjustorrestatetheaccountingdataofpreviousfiscalyears.?Yes?No

Duringthereport

period

5.DifferencesinaccountingdataunderPRCaccountingstandardsandinternationalaccountingstandards

1)DifferencesofnetprofitandnetassetinthefinancialreportdisclosedaccordingtobothinternationalaccountingstandardsandPRCaccountingstandard□Applicable?InapplicableTherearenodifferencesfornetprofitandnetassetsinthefinancialreportdisclosedaccordingtobothinternationalaccountingstandardsandPRCaccountingstandardsduringthereportperiod.

2)DifferencesofnetprofitandnetassetinthefinancialreportdisclosedaccordingtobothforeignaccountingstandardsandPRCaccountingstandards□Applicable?InapplicableTherearenodifferencesofnetprofitandnetassetinthefinancialreportdisclosedaccordingtobothforeignaccountingstandardsandPRCaccountingstandardsduringthereportperiod.

6.Itemandamountofnon-recurringgainsandlosses

?Applicable?Inapplicable

Unit：CNY

Item

Specificsituationofothergainsandlossesprojectsconformingtothedefinitionofnon-recurringprofitandloss

□Applicable?InapplicableTheredoesnotexistspecificsituationofotherprofitandlossitemsconformingtothedefinitionofnon-recurringprofitandloss.Explanationforregardingthenon-recurringprofitandlossspecifiedintheExplanatoryAnnouncementonPublicCompany’sInformationDisclosureNo.1-Non-recurringProfitandLossasrecurrentprofitandloss□Applicable?InapplicableThereisnosituationregardingthenon-recurringprofitandlossspecifiedintheExplanatoryAnnouncementonPublicCompany’sInformationDisclosureNo.1-Non-recurringProfitandLossasrecurrentprofitandloss

III.DiscussionandAnalysisofManagementTeam

1.MainbusinessesduringthereportperiodDuringthereportperiod,theCompany’smainbusinesswasproductionandoperationofwineandbrandy.TheCompanyneedtocomplywiththedisclosurerequirementsof“FoodandLiquorManufacturingRelatedBusinesses”inShenzhenStockExchangeIndustryInformationDisclosureGuidelineNo.3-IndustryInformationDisclosure.

1)SituationoftheindustryinwhichtheCompanyoperatesDuringthereportperiod,theCompany’smainbusinesswasproductionandoperationofwineandbrandy,thusprovidingdomesticandforeignconsumerswithhealthyandfashionablealcoholicdrinks.Comparedwithearlierstage,therewerenosignificantchangeshappenedtotheCompany’smainbusiness.ThewineindustrythattheCompanyinvolvedinwasstillingrowthstage.Beingaffectedbymanyfactorsinrecentyears,thecompetitionindomesticwinemarketwasfierce.However,seenfromthelongterm,theCompanybelievesthattheexistingconsumptionconceptmightchangewiththeincreaseofpeople’sincomelevelandtheirpursuitofarelaxed,romanticandhealthylifestyle.Moredomesticwinewouldbedrunkbypeople,andwinewouldentermoreandmorehouseholdconsumption.Thesituationofcurrentlowaverageconsumptionofdomesticwinewouldgraduallyimprove.TheCompanywasattheforefrontinthedomesticwinemarketandwassignificantlyaheadofmajordomesticcompetitors.

2)Licenseobtained

Producername

XinjiangChateauChangyuBaronBalboaCo.,Ltd.

3)ExplanationforothersignificanteventsDuringthereportperiod,theredidnotexistthetrademarkownershipdispute,foodqualityissueorfoodsafetyincidentetc.thathadasignificantimpactontheCompany.BrandoperationTheCompany’sproductsweredividedintotwoseries:wineandbrandy.Forwine,mainbrandsincludedChangyu,Longyu,NobleDragon,AFIP,Kilikanoon,GoldenIcewineValley,Changge,BaronBalboa,Donelly,Long-tailedCat,Grappie,Atrio,IWCC,Vermouthandsoon.ForBrandy,mainbrandsincludedKoya,Liquan,Mminni,Pagese,RoulletFransacandsoon.MajorsalesmodeTheCompany’smainsalesmodewasthedistributionmode,andmainsaleschannelwasofflinesales,thatis,theCompany’sproductsweredistributedtosalesterminalsthroughapproximately5000distributorsathomeandabroadandultimatelyprovidedtoconsumers.Distributionmode?Applicable?Inapplicable

①Situationofchangeinthenumberofdistributorsisshownasfollows.

SouthwestChina

②SalesinformationoftheCompany’stop5distributorsduringthereportperiod

Theratioofsalesinself-ownedexclusiveshopexceeds10%□Applicable?InapplicableSalesofonlinedirectsales?Applicable?Inapplicable

Thechangeinsalespricesofmajorproductsaccountingformorethan10%oftotaloperatingincomeincurrentreportperiodexceeds30%comparedwiththoseinlastreportperiod□Applicable?InapplicableProcurementmodeandprocurementcontent

Unit:CNY

Contract

Amountofpurchasingrawmaterialsfromcooperativesorfarmersexceeds30%oftotalprocedureamount

□Applicable?InapplicableTheyear-on-yearchangeinthepriceofmajoroutsourcedrawmaterialsexceeds30%

□Applicable?InapplicableMajorproductionmodeTheproductionmodeoftheCompanyisself-produce.Commissionedprocessingandproduction

□Applicable?InapplicableMajorcomponentsofoperatingcosts

①Classificationofsector

Unit:CNY

②Classificationofproduct

Unit:CNY

performancecosts

Yieldandinventory

2.AnalysisofcorecompetitivenessComparedwiththeparticipantsinthearenaoftheChinesewinecompetitionsector,theCompanyownsfollowingadvantages:

Firstly,theCompanyhasalargebrandinfluence.Mainbrandsusedhavealonghistory.“Changyu”,“NobleDragon”and“AFIP”areall“Chinafamousbrands”thathavestronginfluenceandgoodreputation.Secondly,theCompanyhassetupanationwidemarketingnetwork.TheCompanyhasformeda“three-level”marketingnetworksystemmainlycomposedoftheCompany’ssalesmenanddistributorsandtheonlinesalesplatformhashadacertainscaleandstronginfluence,owingstrongmarketingabilityandmarketexploitationability.Thirdly,theCompanyhasstrongscientificprowessandaproductR&Dsystem.Relyingonthecountry’s“State-levelWineR&DCenter”,theCompanyhasownedpowerfulwinemakerteam,masteredadvancedwinemakingtechnologyandproductionprocessesandhadstrong

productinnovationcapacityandperfectqualitycontrolsystem.Fourthly,theCompanyisinpossessionofalotofgrape-growingbasesthatarecompatiblewithitsdevelopmentrequirements.TheCompanyhasdevelopedagreatdealofvineyardsinthemostsuitableareasforwinegrapegrowingsuchasShandong,NingxiaandXinjiang,anditssubsidiaryoverseasenterprisesalsoownmatchinggrapebasesinlocalarea,makingtheoverallscaleandstructuregenerallymeettheCompany’sneedsforfuturedevelopment.Fifthly,productsinhigh,mediumandlow-gradeaswellasvarietiesandcategoriesareallcomplete.Over100varietiesofseriesproductssuchaswine,brandyandsparklingwinecoversvariousgrades,includinghigh,mediumandlow-grade,whichcanmeetdifferentconsumergroups’demands.TheCompanyhastakenthedominantstatusinthedomesticwineindustryaftermanyyears’developmentandhascomparativeadvantagesinthefuturecompetition.Sixthly,theCompanyhasarelativelyperfectmotivationsystem.MostofCompany’semployeesindirectlyholdtheCompany’sequitythroughcontrollingshareholders.Therearehighconsistencybetweenemployeebenefitsandshareholdersbenefits,infavorofmotivatingemployeestocreatevalueforshareholders.Seventhly,theCompanyhassetupflexibleandefficientdecision-makingmechanism.TheCompany’scoremanagementteamalwaysmaintainsaworkingstyleofunityandpragmaticandflexibleandefficientdecision-makingmechanism,whichmakestheCompanycandealwithmarketchangesmorecalmly.Eighthly,theglobalproductioncapacitylayouthasbeenbasicallycompleted.TheCompanyhascompletedproductioncapacitylayoutinChina,France,Chile,Spain,Australiaandothermajorwineproducingcountriesintheworld,enablingmakingbetteruseofglobalhigh-qualityrawmaterialresources,capital,talentsandadvancedproductionprocessesandtechnologiestoprovideconsumerswithdiversifiedqualityproductsandbetterserveconsumers.Basedontheabovereasons,theCompanyhasformedrelativelystrongcorecompetenceandwillmaintainarelativelydominantpositioninthefuturepredictablemarketcompetition.

3.AnalysisinmainbusinessSummarizationDuringthereportperiod,thedomesticwinemarketstillmaintainedadownwardtrend.Marketdemandwasseriouslyinsufficient,andcompetitionwasextremelyfierce.Theprofitabilityofwineenterprisesfurtherdeclined.Themarketshareofwineinalcoholicproductsbecamesmallerandsmaller.Coupledwiththesqueezefromotheradvantageouswinetypes,thedevelopmenttrendoftheindustryremainedatalowlevelandtherewerenoobvioussignsofarebound.Facingaseveremarketenvironment,theCompanyadheredtoa

market-orientedapproach,activelyengagedinproductandmarketinginnovation,andstrovetoexplorenewsaleschannelsandemergingmarkets,achievingcertainresults.First,theCompanyadheredtoamarket-orientedapproachandstrovetoenhanceproductsalescapabilities.Duringthereportperiod,theCompanydelveddeeplyintomaturemarketsandactivelyexpandedintoemergingmarkets;furtherimprovedandadjustedthesystemofthesalesdivisions,adheredtofocusingonproducts,markets,andmarketingactions,andimplementedtargetedmarketingstrategiesaccordingtodifferentstagesofmarketdevelopment;hadbeenmeticulouslycultivatingthematuremarket,continuouslymakingbreakthroughsinkeymarkets,andfocusingonwinningthe"decisivebattle"soastostrivetoachievenewbreakthroughs,achievingcertainresults;intensifiedeffortstocombatcounterfeitingandpreventunauthorizeddistribution,maintainingagoodmarketorderandpricesystemandenhancingtheenthusiasmofourpartners;intensifiedeffortstobuildthesalesteamandreservetalents,strictlyassessedandeliminatedmarketingpersonnel,andkeptintroducinghigh-qualityexternalmarketingtalentstoenhancethecombateffectivenessofthemarketingteam.Second,inresponsetomarketdemands,theCompanybenchmarkedagainstwell-knownandbest-sellingbrandsbothathomeandabroad,andcontinuouslypromotedproductqualityimprovementandupgradingaswellasthedevelopmentofnewproducts.Duringthereportperiod,theoverallqualityoftheCompany'sproductssteadilyimproved,andconsumersatisfactionfurtherincreased.Inresponsetothenewconsumptionenvironment,thedevelopmentofnewproductssuchasalcohol-freewineandjuicewinehadbeenpromoted.TheCompany’sproductshavewonatotalof65awards,including13grandgoldawardsand22goldawards.ChangyuNobleDragonN188DryRed2022wonthetopaward"BestInShow"attheDecanterWorldWineAwards2025.The2019HuakaifuguiReserveDryRedWineofChateauCastelwonthegoldmedalattheMUNDUSVINIandwasratedas"BestShowofChina".TheChateauLongyu’sLong12CabernetSauvignonDryRedWine2022,Long8BlendedDryRedWine2022andCabernetSauvignonDryWhiteWine2024allwonthegrandgoldmedalattheFIWAFISABIOinFrance,aswellastheChateauBaronBalboa’sX7DryRedWine2021andtheChateauGoldenIcewineValley’sVidalIcewineBlackDiamondGrade2022.KoyaSnakeYearZodiacLimitedEditionXXOwonthegoldmedalattheLSCLondonSpiritsCompetition,andwasawardedtheSpiritOfTheYearChinaandBestSpiritByPackageawards.ChangyuRieslingR268DryWhiteWine2024wonthegrandgoldmedalattheFIWAFISABIOinFrance.Third,theCompanystrengthenedfinancialmanagementandauditsupervisiontopreventbusinessrisksandimprovebusinessefficiency.Duringthereportperiod,theCompanystrengthenedthecapitalcontrolofitssubsidiariesandinternalcapitaladjustment,tookmultiplemeasurestosavefinancingcosts,andincreasedfinancialincomethroughmethodssuchasstructureddeposits,agreementdeposits,andnoticedeposits;madefulluseoftaxpreferentialpoliciestoreducetaxandfeeexpenditures;persistedinconductingregularauditssuchasthedepartureauditofmanagersandtheeconomicbenefitaudit,andstrengthenedtheauditofkeyexpensessuchasadvertisingexpensesofthebusinessdivisions;exploredinnovationsinauditingmethodsandmodels,andcontinuouslystrengthenedthequality

controlofauditing,enhancingthelevelofauditingsupervisionandloweringtheoperationalrisks.Fourth,theCompanyfullyutilizeditstourismresourcessuchasthewineculturemuseumandchateaux,intensifiedthepromotionoftourismproducts,continuouslyimprovedtheservicelevelandreceptioncapacityfortourists,andenhanceditsappealtodomesticandforeigntourists.Duringthereportperiod,thenumberoftouristsattractedbytheCompanyincreasedsignificantly.Notonlydiditgeneratetourismbusinessrevenue,butitenhancedtheCompany’sbrandawarenessandreputation,providinganewimpetusforpromotingthesalesofalcoholicproducts.Fifth,theCompanycontinuedtoimplementB-sharerepurchasestoprotecttheinterestsofinvestors.AsofJuly31,2025,theCompanyhadcumulativelyrepurchased6.79milliondomesticlistedforeigncapitalshares(Bshares)throughthededicatedsecuritiesaccountforsharerepurchasebymeansofcentralizedbidding,accountingfor1.01%oftheCompany'scurrenttotalsharecapital.Basedontheimplementationofabovemeasures,theCompanyachievedcertainresultsinthefirsthalfof2025.However,bothitsoperatingincomeandnetprofitdeclinedtovaryingdegrees.Tofullymeetthefinancialbudgettargetsfor2025andtheperformanceindicatorssetbythe2025restrictedshareincentiveplan,theCompanyisundertremendouspressure.Forthesakeofachievingitsbusinessgoals,theCompanywillfocusonfollowingtasksinthesecondhalfof2025:

Thefirstistofurtherfocusonthedevelopmentofkeymarketsforannihilationbattles.Forexistingproducts,basedonproductfeaturesandthestageofmarketdevelopment,theCompanywillimplementcorrespondingmarketingstrategies,strivetoachievenewbreakthroughsinsales,andsteadilyexpandtheexistingmarket.Inaddition,itwillalsostrengthenthemarketpromotionofnewproducts,continuouslydevelopincrementalmarkets,andprovidenewimpetusforsalesgrowth.Thesecondistostrengthentheconstructionandmanagementofthemarketingteam.TheCompanywillstrictlyenforceteamdiscipline,recruitandselectoutstandingtalentstobeassignedtostrategicmarketsanddecisivecities,enhanceemployeetrainingandsalaryassessment,andimprovethemanagementinadvertisingexpenses,pricesystemsandcross-sellingsoastobuildastrongsalesteam.Thethirdistointensifyeffortsinnewproductdevelopment,strengthenproductqualitymanagement,andcontinuouslyenhanceproductcompetitiveness.TheCompanywillfurtherimprovetheflavorsofproductssuchasDonellybasedonmarketfeedback;developwineextensionproductsthatsuitthetastesofyoungpeople(fruitjuicewine,fruit-flavoredwine);developalcohol-freewines,herbalwines(suchaspolygonatumwineandteawine)andotherproductsthatmeettheneedsofspecificgroupsofpeople;strengthenqualityinspection,increasetheseverityofpenalties,andcontinuouslyimprovetheappearancequalityofproducts.Thefourthistodoagoodjobinfinancialaccountingandfundmanagement.TheCompanywilldowellintherelevantfinancialandtaxworksuchastherepurchaseofBsharesandthe

returnofequityincentivefunds.Forimportantmatters,itwillcommunicatewiththeauditinginstitutioninadvance,activelyfollowupduringtheprocess,andreviewaftertheevent,ensuringcomplianceandefficiencyinaccounting,auditinganddisclosure.Itwillalsocontinuetoimplementthefundcontrolofstructureddepositsandsubsidiariesandbranches;conducttaxplanningtoreasonablyreducetaxandfeeexpenditures;paycloseattentiontointernationaltaxpolicies,anddoagoodjobinthefinalsettlementandpaymentofoverseasincomesuchasdividends,interestsandpropertytransfersoftheparentCompanytoavoidtaxrisks.ThefifthistoimplementtheB-sharebuy-backinaccordancewiththeB-sharebuy-backplandeterminedbytheCompany.Year-on-yearchangeinkeyfinancialdata

Unit:CNY

Thisperiod

SignificantchangeintheprofitformandprofitsourceoftheCompanyduringthereportperiod

□Applicable?InapplicableThereisnosignificantchangeintheprofitformandprofitsourceoftheCompanyduringthereportperiod.Compositionofoperatingrevenue

Unit:CNY

Thisreportperiod

Thecasesofindustry,productorareaaccountingforover10%intheCompany’soperatingrevenueoroperatingprofit?Applicable?Inapplicable

Unit:CNY

Area-classified

UndertheconditionthatthestatisticalcaliberoftheCompany’smainbusinessdataisadjustedduringthereportperiod,theCompany’smainbusinessdataadjustedonthebasisofcaliberattheendofreportperiodinrecentoneperiod.?Available?NotavailableTheCompanyneedtocomplywiththedisclosurerequirementsof“FoodandLiquorManufacturingRelatedBusinesses”inShenzhenStockExchangeIndustryInformationDisclosureGuidelineNo.3-IndustryInformationDisclosure.

1)Detailedinformationonsalesexpenses

4.Analysisinnon-mainbusiness□Applicable?Inapplicable

5.Analysisinassetsandliabilities

1)Significantchangeinassetscomposition

Unit:CNY

increaseordecrease(%)

2)Mainoverseasassetssituation?Applicable?Inapplicable

Unit：

CNY

Detailsofassets

3)Assetsandliabilitiesmeasuredatfairvalue□Applicable?Inapplicable

4)LimitationsofassetsrightsuptotheendofthereportperiodNone

6.Analysisininvestmentcondition

1)Overallsituation

?Applicable?Inapplicable

Investmentamountduringthereportperiod(CNY)

2)Casesofacquiredsignificantequityinvestmentsduringthereportperiod□Applicable?Inapplicable

3)Casesofsignificantongoingnon-equityinvestmentsduringthereportperiod?Applicable?Inapplicable

Unit:CNY

thMeeting,ResolutionAnnouncementofEighthSessionBoardofDirectors11

th

Meeting,ResolutionAnnouncementofNinthSessionBoardofDirectors

th

Meeting,ResolutionAnnouncementofNinthSessionBoardofDirectors9

thMeetingandResolutionAnnouncementofNinthSessionBoardofDirectors

thMeetingdisclosedonCNINFO(http://www.cninfo.com.cn/)

4)Financialassetsinvestment①Securityinvestmentsituation

□Applicable?InapplicableTherearenosecurityinvestmentsfortheCompanyduringthereportperiod.

②Derivativesinvestment□Applicable?InapplicableTherearenoderivativesinvestmentsfortheCompanyduringthereportperiod.

5)Theusagesituationofraisedcapital

□Applicable?InapplicableTherearenousagesituationsofraisedcapitalfortheCompanyduringthereportperiod.

7.Saleofsignificantassetsandequities

1)Saleofsignificantassets

?Applicable?Inapplicable

Counterparty

2)Saleofsignificantequities?Applicable?Inapplicable

companyfromthebeginningofthecurrentperiodtothedateofsale(CNY’0000)

8.Analysisofmainholdingandjointstockcompanies?Applicable?InapplicableSituationofmainsubsidiariesandjointstockcompaniesaffectingover10%oftheCompany’snetprofit

Unit:CNY

LaizhouChangyuWineSalesCo.,Ltd.

Acquisitionanddisposalofsubsidiariesduringthereportperiod□Applicable?InapplicableExplanationonmainholdingandjointstockcompaniesNone

9.SituationofthestructuredsubjectscontrolledbytheCompany

□Applicable?Inapplicable

10.Risksandresponsemeasures

1)RiskinpricefluctuationofrawmaterialsGrapesaretheCompany’smainrawmaterials.Thegrape’syieldandqualityareaffectedtoacertainextentbythenaturalfactorssuchasdrought,wind,rain,frostandsnow.TheseforcemajeurefactorsgreatlyinfluencethequantityandpriceofthegrapesinthisCompanyordersandaddtheuncertaintytotheCompany’sproductionandoperation.Therefore,theCompanywilllowertherisksthatarelikelytoaffectgrapequalityandresultinpricefluctuationbymeansofexpandingtheself-runvineyards,strengtheningthevineyardmanagementandoptimizingthelayoutofvineyards.

2)RiskinuncertaintyofmarketinputandoutputTocopewiththecutthroatmarketcompetitionandtomeettheneedsformarketdevelopment,theCompanyhasinputmoreandmorecapitalinthemarketandthesalesexpensehastakenupahigherpercentagepointinthebusinessrevenue.Theinput-outputratiowillaffecttheCompany’soperatingresultstoagreatextentandtheriskthatsomeinvestmentsmaynotreachtheexpectationsislikelytooccur.Therefore,theCompanywillstrengthenmarketresearchandanalysis,enhancemarketforecastaccuracyandcontinuetoperfecttheinput-outputevaluationsystemtoensuretheinvestmentsinmarkettobesatisfactoryasexpected.

3)RiskinproducttransportTheCompany’sproductsarefragileandsenttodifferentplacesallovertheworld,mostlybysea,railwayandexpressway.Thepeakseasonofsalesisusuallyincoldwinterandclosetothespringfestivalwhenmarkethasagreatdemand.Atthattime,thenaturalandhumanfactorssuchasseriousshortageoftransportcapacityresultingfrombusyflowofpeopleandgoods,wind,snow,freezingaswellastrafficaccidentsmakethetransportdepartmentsdifficulttosendproductstomarketsintimeandsafely.Asaresult,itmakesthisCompanyhavetofacetherisksofmissingthepeakseasonofsales.Therefore,theCompanywilladoptallmethodspossiblelikemakingprecisesalespredictionandwelldesignedconnectionofproductionandsales,reasonablyarrangingproductionandtransportmeansandmakinguseofmoreavailablewarehousesindifferentplacestolowerthesekindsofrisks.

4)RiskininvestmentfaultsTheCompanyinvestedmanyprojectsinthepreviousperiodsandtheinvestmentamountswererelativelylarge.Forindividualproject,owingtotheinfluenceofvariousfactors,itledtohavetherisksoffacingwiththeinvestmentamountoutofbudgetorhardlytakingbacktheexpectedinvestmentearnings.TheCompanywilltakeanadequateargumentandscientificdecision-makingforinvestmentprojects,tryhardtoreduceandavoidinvestmentrisks.

5)RiskinexchangerateTheCompany’soverseassubsidiariesexportproductstomanydifferentcountriesandtheexportamountisrelativelylarge.Theremaybeexchangelossesorgainsduetoexchangeratefluctuation.

6)OtherrisksDuringtheproductionandsalesoftheCompany’sproducts,itmaybeaffectedbyforcemajeuresuchaswars,typhoons,earthquakes,etc..

11.MarketvaluemanagementsystemandvaluationenhancementplanformulationandimplementationWhetherthecompanyhasestablishedamarketvaluemanagementsystem?Yes?No

Whetherthecompanyhasdisclosedavaluationenhancementplan

□Yes?No

1)TheCompany’squalityisthefoundationofitsinvestmentvalueandanimportantfocusofmarketvaluemanagement.TheCompanyshallfocusonitsmainbusiness,improveoperationalefficiencyandprofitability,and,basedonitsspecificcircumstances,comprehensivelyusethefollowingmethodstopromotethereasonablereflectionoftheCompany’sinvestmentvalueonitsquality:Mergersandacquisitions;Equityincentivesandemployeestockownershipplans;Cashdividends;Investorrelationsmanagement;Informationdisclosure;Sharerepurchases;Otherlawfulandcompliantmethods.

2)Whenestablishingthecompensationsystemfordirectorsandseniormanagement,theBoardofDirectorsshallensurethatthecompensationlevelmatchesmarketdevelopment,individualabilityandvalue,performancecontribution,andtheCompany’ssustainabledevelopment.TheBoardofDirectorsmayestablishlong-termincentivemechanisms,fullyutilizeequityincentivesandemployeestockownershipplans,reasonablydeterminegrantprices,thescopeofincentivetargets,thenumberofshares,andperformanceevaluationconditions,strengthenthealignmentoflong-terminterestsbetweenmanagement,employeesandtheCompany,andstimulatetheinitiativeandenthusiasmofmanagementandemployeestoenhancetheCompany’svalue.

3)TheBoardofDirectorsmay,basedontheCompany’sequitystructureandbusinessoperationneeds,promotetheestablishmentofsharerepurchasemechanismsintheCompany’sArticlesofAssociationorotherinternaldocuments.

4)TheBoardofDirectorsmay,basedontheCompany’sdevelopmentstageandoperationalsituation,formulateanddisclosemedium-and-long-termdividendplans,increasethefrequencyofdividends,optimizethedividendrhythm,reasonablyincreasethedividendratio,andenhanceinvestorsatisfaction.

12.Implementationofthe“TheImprovementBothonQualityandReturn”actionplanWhetherthecompanydisclosedthe“TheImprovementBothonQualityandReturn”actionplan

□Yes?No

IV.CorporateGovernance,EnvironmentalandSocialResponsibility

1.ChangesintheCompany’sdirectors,supervisorsandseniorexecutives?Applicable?Inapplicable

Name

2.Situationofprofitdistributionandcapitalizationofcapitalreserveintosharecapitalduringthereportperiod

□Applicable?InapplicableTheCompanyplansnottodistributecashdividendsorgivebonussharesormakecapitalizationofcapitalreserveintosharecapital.

3.ImplementationoftheCompany’sequityinventiveplan,employeestockownershipplanorotheremployeeincentivemeasures?Applicable?Inapplicable

1)EquityincentiveIn2023,theCompanyimplementedtherestrictedshareincentiveplanfor203middle-levelmanagersandcorecadresandgrantedthem5.2956millionsharesofrestrictedshare.OnJuly25,2025,theCompany’sTenthSessionBoardofDirectors2

ndMeetingdeliberatedandapprovedtheProposalonFailuretoAchieveConditionsforLiftingRestrictionsintheSecondPeriodofLiftingRestrictionInvolvedintheCompany’s2023RestrictedShareIncentivePlanandProposalonBuy-backandCancellingSomeRestrictedSharesoftheCompany’s2023RestrictedShareIncentivePlanandtoAdjusttheBuy-backPrice.Theconditionsforliftingrestrictionsinthesecondrestriction-liftedperiodofrestrictedsharesgrantedundertheCompany’sIncentivePlanhavenotbeenmet,andthenumberofrestrictedsharesgrantedtotheCompany’s179incentivesubjectsthatneedstobeboughtbackandcancelledamountsto1,864,305shares;21,946restrictedsharesthatthedepartingincentiverecipienthasbeengrantedbutnotyetreleasedfromrestrictionsneedtobeboughtbackandcancelledduetodimissionofoneincentivesubject;267,521restrictedsharesthathavebeengrantedbutnotyetreleasedfromrestrictionsneedtobeboughtbackandcancelledduetojobchangesofsixteenincentivesubject.Thetotalnumberofrestrictedshares

thatneedstobeboughtbackandcancelledbytheCompanythistimeamountsto2,153,772shares.

2)Implementationofemployees’shareownershipplan?Available?Notavailable

3)Otheremployeeincentives?Available?Notavailable

4.EnvironmentalinformationdisclosuresituationWhetherthelistedcompanyanditsmajorsubsidiariesareincludedinthelistofenterprisesthatdiscloseenvironmentalinformationinaccordancewiththelaw

□Yes?No

5.Socialresponsibilityperformance

1)TheCompanyservedtheruralrevitalizationwell,adoptedthemodeof“company+farmer”or“company+cooperative+farmer”,reformedtheslopingfieldsofJiaodongPeninsularandthenorthwesternareaincludingNingxiaandXinjiangandsoon,theuncultivatedlandorthebarrenlandintograperies.Bymeansofprovidingcapitalandtechnologyofviticulturetofruitgrowers,scientificmanagementlevelofvineyardhadbeenimproved.TheCompanysparednoefforttopopularizethenon-pollutionandmechanizedplantingmethods,continuouslyimprovedproductionefficiencyofgrapebaseandqualityofgrape,andreducedproductioncostofgrapeandlaborintensity.Throughtheabovemeasures,ontheonehand,itpromotestheeffectiveuseoflandresources,promotestheorganicintegrationofruralhouseholdsandmodernagriculture,andhelpsincreaseagriculturalefficiency,farmers’incomesandruraldevelopment;ontheotherhand,itimprovesthelocalecologicalenvironmentandbringshugeecologicalbenefits.

2)TheCompanyprovidedcounterpartsupportstoHuangchengyangvillageinLongkouCity,anoldrevolutionarybaseareabypurchasinglocalagriculturalproductstohelpsolvetheproblemofslowsales.

3)TheCompanyprovidedhelpandassistancetotheCompany’sin-serviceorretiredemployeeswithpoorfamilies,aswellastheCompany’sin-serviceorretiredemployeeswithchronicorseriousillnesses.

V.Majorissues

1.CommitmentsthattheCompany’sactualcontrollers,shareholders,relatedparties,acquirersandtheCompanyandotherrelatedcommitmentpartieshaveimplementedduringthereportperiodandhavenotimplementeduptotheendofthereportperiod□Applicable?InapplicableThereisnocommitmentsthattheCompany’sactualcontrollers,shareholders,relatedparties,acquirersandtheCompanyandotherrelatedcommitmentpartieshaveimplementedduringthereportperiodandhavenotimplementeduptotheendofthereportperiod

2.Non-operationaloccupationcapitalofthelistedcompanybycontrollingshareholderanditsrelatedparties□Applicable?InapplicableThereisnonon-operationaloccupationcapitalofthelistedcompanybycontrollingshareholderanditsrelatedpartiesduringthereportperiod.

3.Illegalexternalguarantee□Applicable?InapplicableThereisnoillegalguaranteesituationduringthereportperiod.

4.AppointmentanddismissalofcertifiedpublicaccountantsWhetherthesemi-annualreporthasbeenaudited?Yes?NoThesemi-annualreporthasnotbeenaudited.

5.ExplanationfromtheBoardofDirectorsandtheBoardofSupervisorsforthe“Non-standardAuditReport”duringthisreportperiod

□Applicable?Inapplicable

6.ExplanationfromtheBoardofDirectorsforthe“Non-standardAuditReport”oflastyear□Applicable?Inapplicable

7.Issuesrelatedwithbankruptcyreorganization

□Applicable?InapplicableTherearenorelatedissuesofbankruptcyreorganizationhappenedattheendofthereportperiod.

8.LitigationIssueMateriallitigationandarbitration

□Applicable?InapplicableTherearenomateriallitigationandarbitrationduringthereportperiod.OtherLitigationIssue□Applicable?Inapplicable

9.Penaltyandrectification□Applicable?InapplicableThereisnopenaltyandrectificationduringthereportperiod.

10.CreditoftheCompany,itscontrollingshareholderandactualcontroller

□Applicable?Inapplicable

11.Majorrelatedtransactions

1)Relatedtransactionsinrelationtoroutineoperations?Applicable□Inapplicable

Related

party

2)Relatedtransactionsinrelationtoacquisitionandsalesofassetsorequity

□Applicable?InapplicableTherearenorelatedtransactionsinrelationtoacquisitionorsalesofassetsorequityduringthereportperiod.

3)Relatedtransactionsinrelationtocommonforeigninvestment

□Applicable?InapplicableTherearenorelatedtransactionsinrelationtocommonforeigninvestmentduringthereportperiod.

4)Relatedcreditanddebtdealings?Applicable□InapplicableWhetherornotexistingnon-operatingrelatedcreditanddebttransactions□Yes?NoThereisnonon-operatingrelatedcreditanddebttransactionsduringthereportperiod.

5)Dealsofrelatedfinancialcompanies

□Applicable?InapplicableThereisnodeposit,loan,creditgrantingorotherfinancialbusinessbetweentherelatedfinancialcompaniesandrelatedparties.

6)DealsbetweenfinancialcompaniescontrolledbytheCompanyandrelayedparties□Applicable?InapplicableThereisnodeposit,loan,creditgrantingorotherfinancialbusinessbetweenthefinancialcompaniescontrolledbytheCompanyandrelatedparties.

7)Othermajorrelatedtransactions?Applicable□InapplicableForothermajorrelatedtransactions,pleaserefertotheAnnouncementof2025AnnualExpectedRoutineRelatedTransactionandtheSectionXI“RelatedPartiesandRelatedTransaction”oftheFinancialReportofthisreport.Disclosurewebsiteofinterimreportformajorrelatedtransaction

Nameofinterimannouncement

12.Majorcontractsandexecutionconditions

1)Trusteeship,contractandleaseissues

①Trusteeshipsituation

□Applicable?InapplicableThereisnotrusteeshipsituationduringthereportperiod.

②Contractingsituation

□Applicable?InapplicableThereisnosuchcontractingsituationduringthereportperiod.

③Leasesituation?Applicable□InapplicableExplanationforleasesituationOnJanuary1,2022,theCompanyrenewedtheSpaceLeaseAgreementwiththecontrolling

shareholderYantaiChangyuGroupCompanyLimited.TheCompanyleasedthespacewith15,196.94squaremeterslocatingatNo.174ShihuiyaoRoad,ZhifuDistrict,YantaiCity.TherentperyearisCNY1.4645millionwitharentalperiodof5yearsfromJanuary1,2022toDecember31,2026.OnJanuary1,2022,theCompany’ssubordinateSales&MarketingCo.ofYantaiChangyuPioneerWineCompanyLimitedBrandySalesDivisionrenewedtheSpaceLeaseAgreementwiththecontrollingshareholderYantaiChangyuGroupCompanyLimited,leasingthespacewith42,552.83squaremeterslocatingatNo.1JichangRoad,ZhifuDistrict,YantaiCityandthespacewith3,038squaremeterslocatingat56DamaRoad,ZhifuDistrict,YantaiCity,whichareallunderthenameofcontrollingshareholder.TherentofabovespacesperyearisCNY4.3935millionwitharentalperiodof5yearsfromJanuary1,2022toDecember31,2026.In2023,thisCompanysignedahouse-leasingcontractwithYantaiShenmaPackagingCompanyLimited.Accordingtothiscontract,sinceJuly1,2023,thisCompanyleasedpropertytoYantaiShenmaPackagingCompanyLimitedforabusinesspurposewiththeannualrentofCNY1,626,880.ThiscontractexpiresonJune30,2028.ProjectwhoseprofitandlossbroughtfortheCompanyreachmorethan10%ofthetotalprofitduringthereportperiodApplicable?InapplicableTherearenoleaseprojectswhoseprofitandlossbroughtfortheCompanyreachmorethan10%ofthetotalprofitduringthereportperiod.

2)Majorguarantee?Applicable□Inapplicable

Unit:CNY’0000

ExternalguaranteeoftheCompanyanditssubsidiaries（excludingguaranteetosubsidiaries）

EastWestBank

ExplanationonspecificsituationsofadaptingguaranteebycomplexmethodsNone

3)Financialmanagemententrustment?Applicable?InapplicableThereisnofinancialmanagemententrustmentduringthereportperiod.

4)Otherimportantcontracts?Applicable?Inapplicable

Nameof

thecompanyenteringintothecontract

13.OtherMajorissues?Applicable?InapplicableTherearenoothermajorissuesneedtobeexplainedduringthereportperiod.

14.MajorissuesofCompany’ssubsidiaries?Applicable?Inapplicable

V.ChangesinSharesandShareholders’Situation

1.Changesinshares

1)Changesinshares

Unit:share

Amountbeforethischange

Causeofsharechange?Applicable?InapplicableDuringthereportingperiod,theCompanyboughtbackandcancelledsomeBsharesandrestrictedsharesgrantedtoemployeesApprovalofsharechange?Applicable?InapplicableIthasbeendeliberatedandapprovedbytheCompany’sBoardofDirectorsandShareholders’Meeting.Transferownershipofchangedshares?Applicable?InapplicableThetransferhasbeencompleted.Implementationprogressofsharebuy-back?Applicable?InapplicableTheCompanyheldtheNinthSessionBoardofDirectors11

thMeetingonApril16,2025,andthe2024AnnualShareholders’MeetingonMay23,2025.ThemeetingsdeliberatedandapprovedthePlanonBuy-BackofPartialBSharesofYantaiChangyuPioneerWineCo.,Ltd.onebyone.Accordingtotheabove-mentionedBsharebuy-backplan,theCompanywould,inlightofitsownfinancialandoperatingconditions,implementthebuy-backofBsharesthroughcentralizedcompetitivebiddingundertheconditionthatthetotalbuy-backfundsdonotexceedCNY100millionandthebuy-backpricedoesnotexceedHKD11.50pershare.Thebuy-backperiodwouldnotexceed12monthsfromthedatewhentheShareholders’Meetingapprovedthesharebuy-backplan.Theproposednumberofsharestobeboughtbackisnolessthan10millionsharesandnomorethan15millionshares.Thespecificnumberofbuy-backwillbebasedontheactualnumberofsharesboughtbackattheexpirationofthebuy-backperiod.Thebought-backshareswouldbecancelledandtheCompan’sregisteredcapitalwouldbereducedaccordingly.Atthesametime,theBoardofDirectorswouldbeauthorizedtohandlerelevantmatters.TheCompanyimplementedadividendpaymentinJune2025withacashdividendofCNY4(HKD:CNY=1:0.9169)forevery10sharestoallshareholders,andthereforeadjustedthebuy-backpriceceilingtonotexceedHKD11.06persharewitheffectfromJune24,2025.AsofJuly31,2025,theCompanyhasboughtback6,790,000BsharesoftheCompanythroughsharebuy-backspecialsecuritiesaccountinacentralizedbiddingmode,accountingfor

1.010682%ofCompany’scurrenttotalsharecapital,withthehighesttransactionpriceofHKD9.00pershareandthelowesttransactionpriceofHKD8.20pershare.ThetotaltransactionamountwasHKD58,967,861(excludingtransactionfees).Implementationprogressofreducingholdingbuy-backsharethroughthewayofcentralizedbidding?Applicable?InapplicableTheinfluenceofsharechangeonthefinancialindicatorssuchasbasicearningspershare,dilutedearningspershareofthelatestyearandthelatestperiod,netassetpersharebelongingtotheCompany’scommonshareholders,etc.?Applicable?InapplicableDuringthereportingperiod,thefluctuationrangeoftheCompany’sshareswasextremelysmall.Theinfluenceofsharechangeonthefinancialindicatorssuchasbasicearningspershare,dilutedearningspershareofthelatestyearandthelatestperiod,netassetpersharebelongingtotheCompany’scommonshareholders,etc.,isalmostnegligible.

OthercontentstheCompanythinksnecessaryorsecuritiesregulatorydepartmentsasktomakepublic.?Applicable?Inapplicable

2)Changesinrestrictedshares?Applicable?Inapplicable

Unit:share

Shareholdername

2.Securitiesissuanceandlistingsituation?Applicable?Inapplicable

3.ThenumberofshareholdersoftheCompanyandtheshareholdings

Totalshareholdersinthereportperiod

Shareholdersholdingmorethan5%,thetop10shareholdersandthetop10shareholderswithunrestrictedtradablesharesparticipateinthelendingofsharesinvolvedintherefinancingbusiness?Applicable?InapplicableThetop10shareholdersandthetop10shareholderswithunrestrictedtradableshareshavechangedfromthepreviousperiodduetorefinancinglending/restitutionreasons?Applicable?InapplicableWhetherornottheCompany’stop10commonshareholdersandtop10shareholderswithunrestrictedsharestakeagreedrepurchasetransactionduringthereportperiod?Yes?No

Thetop10shareholderswithshareswithouttradinglimitedcondition

ThereisnoagreedrepurchasetransactiontakenbytheCompany’stop10commonshareholdersandtop10shareholderswithunrestrictedsharesduringthereportperiod.

4.Changesinshareholdingsofdirectors,supervisorsandseniorexecutives?Applicable?Inapplicable

Name

5.ChangesincontrollingshareholdersoractualcontrollersChangesinthecontrollingshareholdersduringthereportperiod?Applicable?InapplicableThereisnoanychangeinthecontrollingshareholdersduringthereportperiod.Changesintheactualcontrollersduringthereportperiod?Applicable?InapplicableThereisnoanychangeintheactualcontrollersduringthereportperiod.

6.RelatedSituationofPreferredShares?Applicable?InapplicableTherearenopreferredsharesduringthereportperiod.

LIUShilu

XII.RelatedSituationofBonds

?Applicable?Inapplicable

XIII.FinancialReport

1.AuditreportWhetherthesemiannualreporthasbeenaudited?Yes?No

2.FinancialstatementTheunitinthestatementsofthefinancialnotesisRMBYuan.

1.ConsolidatedbalancesheetCompilingunit:YantaiChangyuPioneerWineCo.,Ltd.June30,2025Unit:yuan

Item

Item

Item

Item

LegalRepresentative:ZhouHongjiangAccountingSupervisor:JiangJianxunAccountingDepartmentManager:GuoCuimei

2.BalancesheetoftheparentcompanyCompilingunit:YantaiChangyuPioneerWineCo.,Ltd.Unit:yuan

Item

Item

Item

LegalRepresentative:ZhouHongjiangAccountingSupervisor:JiangJianxunAccountingDepartmentManager:GuoCuimei

3.ConsolidatedprofitstatementCompilingunit:YantaiChangyuPioneerWineCo.,Ltd.Unit:yuan

Item

Item

LegalRepresentative:ZhouHongjiangAccountingSupervisor:JiangJianxunAccountingDepartmentManager:GuoCuimei

4.ProfitstatementoftheparentcompanyCompilingunit:YantaiChangyuPioneerWineCo.,Ltd.Unit:yuan

Item

Item

LegalRepresentative:ZhouHongjiangAccountingSupervisor:JiangJianxunAccountingDepartmentManager:GuoCuimei

5.ConsolidatedcashflowstatementCompilingunit:YantaiChangyuPioneerWineCo.,Ltd.Unit:yuan

Item

Item

Item

LegalRepresentative:ZhouHongjiangAccountingSupervisor:JiangJianxunAccountingDepartmentManager:GuoCuimei

6.Cashflowstatementoftheparentcompany

Compilingunit:YantaiChangyuPioneerWineCo.,Ltd.Unit:yuan

Item

Item

LegalRepresentative:ZhouHongjiangAccountingSupervisor:JiangJianxunAccountingDepartmentManager:GuoCuimei

7.Consolidatedowner’sequitieschanginglist

Unit:yuan

Item

increasedcapital(orcapitalstock)

Unit:yuan

listedwith“-”)

2.Surplusreservestransferredandincreasedcapital(orcapitalstock)

8.Owner’sequitieschanginglistoftheparentcompany

Unit:yuan

Item

5.Retainedearningscarriedoverfromothercomprehensiveincome

Unit:yuan

4.Others

3.Companyprofile

YantaiChangyuPioneerWineCo.,Ltd.(the“Company”orthe“Joint-stockCompany”)wasincorporatedasajoint-stocklimitedcompanyinaccordancewiththeCompanyLawofthePeople’sRepublicofChina(the“PRC”)inthemergerandreorganizationcarriedoutbyYantaiChangyuGroupCo.,Ltd.(“ChangyuGroup”)withitsassetsandliabilitiesinrelationtowinebusiness.TheCompanyanditssubsidiarycompanies(hereinaftercollectivelyreferredtoasthe“Group”)areengagedintheproductionandsaleofwine,brandyandsparklingwine,plantingandpurchaseofgrapes,developmentoftourismresources,etc.TheregisteredaddressoftheCompanyisYantaiCity,ShandongProvince,andtheofficeaddressoftheheadquartersis56DamaRoad,ZhifuDistrict,YantaiCity,ShandongProvince.AsatJune30,2025,theCompanyissued671,823,900sharesaccumulatively.RefertoNote

7.32fordetails.TheparentcompanyoftheGroupisChangyuGroupincorporatedinChina,whichwasultimatelyandactuallycontrolledbyfourparties,includingYantaiGuofengInvestmentHoldingGroupCo.,Ltd.,ILLVASaronnoHoldingSpa,InternationalFinanceCorporationandYantaiYuhuaInvestment&DevelopmentCo.,Ltd.ThefinancialstatementandtheconsolidatedfinancialstatementoftheCompanywereapprovedbytheBoardofDirectorsinAugust26,2025.ThedetailsofscopeoftheconsolidatedfinancialstatementinthisperiodcanbeseeninNote10“Equityinotherentities”.

4.Preparationbasisoffinancialstatement

1.Preparationbasis

TheCompanypreparesthefinancialstatementonthebasisofcontinuousoperation.

2.ContinuousoperationTheGrouphasappraisedtheabilityofcontinuousoperationfor12monthsfromJune30,2025,andnoissuesorsituationscausingmajordoubtstothisabilityarefound.Therefore,thisfinancialstatementispreparedonthebasisofthecontinuousoperationassumption.

5.Mainaccountingpoliciesandaccountingestimates

1.StatementoncompliancewithASBE

ThisfinancialstatementfulfillstherequirementofAccountingStandardsforBusinessEnterprises(ASBE)issuedbytheMinistryofFinanceandgivesatrueandintegratedviewoftheconsolidatedfinancialstatusandthefinancialstatusasatJune30,2025,aswellastheconsolidatedoperatingresult,theoperatingresult,theconsolidatedcashflowandthecashflowoftheCompanyfromJanuarytoJune2025.

Inaddition,thefinancialstatementoftheCompanyalsocomplieswiththerelateddisclosurerequirementsforstatementanditsnotesstipulatedbyPreparationRulesforInformationDisclosurebyCompaniesOfferingSecuritiestothePublicNo.15–GeneralProvisionsonFinancialReports(2014Revision)bytheChinaSecuritiesRegulatoryCommission(hereinafterreferredtoasthe“CSRC”).

2.Accountingperiod

TheaccountingyearisfromJanuary1toDecember31inGregoriancalendar.

3.OperatingcycleTheoperatingcyclereferstotheperiodfromtheenterprisepurchasestheassetsusedforprocessingtothecashorcashequivalentisrealized.TheoperatingcycleoftheCompanyis12months.

4.Recordingcurrency

SinceRenminbi(RMB)isthecurrencyofthemaineconomicenvironmentinwhichtheCompanyandthedomesticsubsidiarycompaniesthereofaresituated,theCompanyandthesubsidiarycompaniesthereofadoptRMBastherecordingcurrency.TheoverseassubsidiarycompaniesthereofdetermineEUR,CLPandAUDastherecordingcurrencyaccordingtothemaineconomicenvironmentinwhichtheyaresituated.ThecurrencyinthisfinancialstatementpreparedbytheGroupisRMB.

5.Determinationmethodandselectioncriteriaforsignificantstandards

Item

6.Accountingtreatmentmethodforbusinesscombinationundercommoncontrolandnon-commoncontrolIftheGroupobtainscontroloveroneormoreenterprises(oragroupofassetsornetassets)andsuchtransactionoreventconstitutesabusiness,itshallbeaccountedforasabusinesscombination.Businesscombinationsareclassifiedintobusinesscombinationundercommon

controlandbusinesscombinationundernon-commoncontrol.Forabusinesscombinationnotundercommoncontrol,whenassessingwhethertheacquiredsetofassetsornetassetsconstitutesabusiness,theacquirermayconsiderapplyingthe“concentrationtest”asasimplifiedassessment.Iftheacquiredsetpassestheconcentrationtest,itshallbedeterminednottoconstituteabusiness.Ifitdoesnotpasstheconcentrationtest,itshallbeassessedagainstthebusinesscriteria.WhentheGroupacquiresasetofassetsornetassetsthatdoesnotconstituteabusiness,theacquisitioncostshallbeallocatedtotheidentifiableassetsandliabilitiesacquiredattheirrelativefairvaluesontheacquisitiondate,ratherthanapplyingtheaccountingtreatmentforabusinesscombination.

(1)Businesscombinationundercommoncontrol

Abusinesscombinationundercommoncontrolisabusinesscombinationinwhichallofthecombiningenterprisesareultimatelycontrolledbythesamepartyorsamemultiplepartiesbeforeandafterthecombination,andthatcontrolisnottransitory.Theassetsandliabilitiesobtainedbythecombiningpartyinthebusinesscombinationshallbemeasuredonthebasisofthecarryingamountintheultimatecontrollingparty’sconsolidatedfinancialstatementasatthecombinationdate.WherethereisadifferencebetweentheGroup’sshareofcarryingamountofthenetassetsacquiredandthecarryingamountofthecombinationconsiderationpaid(orthetotalparvalueofthesharesissued),thedeficitshallbeappliedinsequenceagainstthesurplusreserveandthentheundistributedprofits.Ifthestockpremiumincapitalsurplusisnotsufficienttooffset,thedeficitshallbeappliedinsequenceagainstthesurplusreserveandthentheundistributedprofits.Thedirectrelatedexpensesincurredforthebusinesscombinationshallbeincludedinthecurrentprofitandlosswhenincurred.Thecombinationdateisthedateonwhichthecombiningpartyactuallyobtainscontrolofthecombinedparty.

(2)Businesscombinationundernon-commoncontrol

Abusinesscombinationundernon-commoncontrolisabusinesscombinationinwhichallofthecombiningpartiesarenotultimatelycontrolledbythesamepartyorsamemultiplepartiesbeforeandafterthecombination.ThesumoffairvaluesoftheassetspaidbytheGroup,astheacquirer,(includingtheacquiree’sequitytheGroupheldbeforetheacquisitiondate),liabilitiesincurredorassumed,andtheequitysecuritiesissuedontheacquisitiondateinexchangeforthecontrolovertheacquiree,shalldeductthefairvalueoftheacquiree’sidentifiablenetassetsacquiredinthecombinationontheacquisitiondate.Afterconsideringtheeffectofrelateddeferredincometaxes,ifthedifferenceispositive,itshallberecognizedasgoodwill;andifitisnegative,itshallbeincludedinthecurrentprofitandloss.ThedirectexpensesincurredforthebusinesscombinationbytheGroupshallbeincludedinthecurrentprofitandloss.Alltheidentifiableassets,liabilitiesandcontingentliabilitieswhichareobtainedfromtheacquireeandmeettherecognitionconditionsshallbeconfirmedbytheGroupontheacquisitiondateaccordingtothefairvaluethereof.Theacquisitiondateisthedateonwhichtheacquireractuallyobtainscontroloftheacquiree.Forabusinesscombinationinvolvingentitiesnotundercommoncontrolandachievedin

stages,theGroupre-measuresitspreviously-heldequityinterestintheacquireetoitsacquisition-datefairvalue,andrecognizesanyresultingdifferencebetweenthefairvalueandthecarryingamountasinvestmentincomeorothercomprehensiveincomeforthecurrentperiod.Othercomprehensiveincomeandotherchangesinowner’sequitiesthatcanbereclassifiedintoprofitorlossundertheequitymethodofaccountingfortheequityinterestoftheacquireeheldbeforeacquisitiondateshallbetransferredtocurrentinvestmentincomeonthepurchasedate;andifequityinterestsoftheacquireeheldbeforeacquisitiondateareequityinstrumentinvestmentsmeasuredatfairvaluewithchangesrecognizedinothercomprehensiveincome,othercomprehensiveincomerecognizedbeforeacquisitiondateshallbetransferredtoretainedearningsonacquisitiondate.

7.Determinationstandardofcontrolandcompilingmethodsofconsolidatedfinancialstatement

(1)GeneralprinciplesTheconsolidationscopeoftheconsolidatedfinancialstatementsisdeterminedbasedoncontrol,includingtheCompanyanditscontrolledsubsidiaries.ControlreferstotheGroup’spowerovertheinvestee,enjoyingvariablereturnsthroughparticipationinrelatedactivitiesoftheinvestee,andhavingtheabilitytouseitspowerovertheinvesteetoinfluenceitsreturnamount.WhendeterminingwhethertheGrouphaspowerovertheinvestee,theGrouponlyconsiderssubstantiverightsrelatedtotheinvestee(includingsubstantiverightsenjoyedbytheGroupitselfandotherparties).Thefinancialcondition,operatingperformance,andcashflowsofthesubsidiariesshallbeincludedintheconsolidatedfinancialstatementsfromthedateofcontroltothedateofcontroltermination.Theequity,profitandloss,andtotalcomprehensiveincomeattributabletominorityshareholdersofthesubsidiariesshallbeseparatelypresentedintheshareholders’equitysectionoftheconsolidatedbalancesheetandthenetprofitandtotalcomprehensiveincomesectionoftheconsolidatedprofitstatement.Ifthecurrentlossessharedbyminorityshareholdersofthesubsidiariesexceedtheirshareofthesubsidiaries’initialowner’sequity,thebalanceshallstillbeoffsetagainsttheminorityequity.WhentheaccountingperiodoraccountingpoliciesofasubsidiaryaredifferentfromthoseoftheCompany,theCompanyhasmadenecessaryadjustmentstothefinancialstatementsofthesubsidiarybasedontheCompany’sownaccountingperiodoraccountingpolicies.Allintra-grouptransactionsandbalancesduringthecombination,includingunrealizedintra-grouptransactionsgainsandlosses,havebeenoffset.Ifthereisevidencethatunrealizedlossesincurredinintra-grouptransactionsarerelatedtoimpairmentlossesofassets,thefullamountofsuchlossesshallberecognized.

(2)Subsidiariesacquiredthroughabusinesscombination

Whereasubsidiaryisacquiredthroughabusinesscombinationinvolvingentitiesundercommoncontrol,whenpreparingtheconsolidatedfinancialstatementsforcurrentperiod,basedonthecarryingamountsoftheassetsandliabilitiesofthecombinedsubsidiaryinthefinancialstatementsoftheultimatecontrollingparty,thecombinedsubsidiaryshallbe

deemedtobeincludedintheconsolidationscopeoftheCompanywhentheultimatecontrollingpartyoftheCompanybeginstoexercisecontroloverit,andtheinitialbalanceandthecomparativefiguresoftheconsolidatedfinancialstatementsshallbecorrespondinglyadjusted.Whereasubsidiaryisacquiredthroughabusinesscombinationinvolvingentitiesnotundercommoncontrol,whenpreparingtheconsolidatedfinancialstatementsforcurrentperiod,basedonthefairvalueofidentifiableassetsandliabilitiesoftheacquiredsubsidiarydeterminedontheacquisitiondate,theacquiredsubsidiaryshallbeincludedintheconsolidationscopeoftheCompanyfromtheacquisitiondate.

(3)DisposalofsubsidiariesWhentheGrouplosescontroloverasubsidiary,anyresultingdisposalgainsorlossesarerecognizedasinvestmentincomeforthecurrentperiod.Theremainingequityinvestmentisre-measuredatitsfairvalueatthedatewhencontrolislost,anyresultinggainsorlossesarealsorecognizedasinvestmentincomeforthecurrentperiod.WhentheGrouplosescontrolofasubsidiaryinmultipletransactionsinwhichitdisposesofitslong-termequityinvestmentinthesubsidiaryinstages,thefollowingareconsideredtodeterminewhethertheGroupshouldaccountforthemultipletransactionsasabundledtransaction:

-arrangementsareenteredintoatthesametimeorincontemplationofeachother;-arrangementsworktogethertoachieveanoverallcommercialeffect;-theoccurrenceofonearrangementisdependentontheoccurrenceofatleastoneotherarrangement;-onearrangementconsideredonitsownisnoteconomicallyjustified,butitiseconomicallyjustifiedwhenconsideredtogetherwithotherarrangements.Ifeachofthemultipletransactionsdoesnotformpartofabundledtransaction,thetransactionsconductedbeforethelossofcontrolofthesubsidiaryareaccountedforinaccordancewiththeaccountingpolicyforpartialdisposalofequityinvestmentinsubsidiarieswherecontrolisretained.Ifeachofthemultipletransactionsformspartofabundledtransaction,eachtransactionshallbetreatedasatransactionfordisposingoftheexistingsubsidiaryandlosingcontrol.Thedifferencebetweenthedisposalpriceandthenetcarryingvalueofthesubsidiarythatiscontinuouslycalculatedfromtheacquisitiondatecorrespondingtothedisposalinvestmentbeforelosingcontrolshallbeincludedinothercomprehensiveincomeintheconsolidatedfinancialstatements,andbetransferredwhenlosingcontroltoprofitorlossoftheperiodlosingcontrol.

(4)ChangesinminorityequityThedifferencebetweenthecostoflong-termequityinvestmentacquiredbytheCompany

throughthepurchaseofminorityequityandthenetassetshareofthesubsidiarycalculatedbasedonthenewlyincreasedshareholdingratio,aswellasthedifferencebetweenthedisposalpriceobtainedfrompartialdisposalofequityinvestmentinthesubsidiarywithoutlosingcontrolandthenetassetshareofthesubsidiarycorrespondingtothedisposaloflong-termequityinvestment,shallbeadjustedtothecapitalreserve(sharepremium)intheconsolidatedbalancesheet.Andifthecapitalreserve(sharepremium)isinsufficienttooffset,thedeficitshallbeappliedinsequenceagainstthesurplusreserveandthentheundistributedprofits.

8.DeterminationstandardofcashandcashequivalentsCashandcashequivalentscomprisecashonhand,depositsthatcanbeusedforpaymentatanytime,andshort-termhighlyliquidinvestmentswhicharereadilyconvertibleintoknownamountofcashwithaninsignificantriskofchangesinvalue.

9.Foreigncurrencytransactionandforeigncurrencystatementtranslation

WhentheGroupreceivescapitalinforeigncurrenciesfrominvestors,thecapitalistranslatedtoRenminbiatthespotexchangerateatthedateofthereceipt.Otherforeigncurrencytransactionsare,oninitialrecognition,translatedtoRenminbiatthespotexchangerates.MonetaryitemsdenominatedinforeigncurrenciesaretranslatedtoRenminbiatthespotexchangerateatthebalancesheetdate.Theresultingexchangedifferencesaregenerallyrecognizedincurrentprofitorloss,unlesstheyarisefromthere-translationoftheprincipalandinterestofspecificborrowingsfortheacquisitionandconstructionofqualifyingassets.Non-monetaryitemsthataremeasuredathistoricalcostinforeigncurrenciesaretranslatedtoRenminbiusingtheexchangerateatthetransactiondate.Intranslatingthefinancialstatementsofaforeignoperation,assetsandliabilitiesofforeignoperationaretranslatedtoRenminbiatthespotexchangerateatthebalancesheetdate.Equityitems,excludingundistributedprofitandthetranslationdifferencesinothercomprehensiveincome,aretranslatedtoRenminbiatthespotexchangeratesatthetransactiondate.IncomeandexpensesintheincomestatementaretranslatedtoRenminbiatthespotexchangeratesatthetransactiondate.Theresultingtranslationdifferencesgeneratedbytheaboveconversionarerecognizedinothercomprehensiveincome.Thetranslationdifferencesaccumulatedinothercomprehensiveincomewithrespecttoaforeignoperationaretransferredtoprofitorlossintheperiodwhentheforeignoperationisdisposed.

10.FinancialinstrumentsFinancialinstrumentsincludecashatbankandonhand,investmentsindebtandequitysecuritiesotherthanthoseclassifiedaslong-termequityinvestments,receivables,leasereceivables,payables,loansandborrowingsandsharecapital.

(1)Recognitionandinitialmeasurementoffinancialassetsandfinancialliabilities

AfinancialassetandfinancialliabilityisrecognizedinthebalancesheetwhentheGroupbecomesapartytothecontractualprovisionsofafinancialinstrument.

Afinancialasset(unlessitisatradereceivablewithoutasignificantfinancingcomponent)andfinancialliabilityismeasuredinitiallyatfairvalue.Forfinancialassetsandfinancialliabilitiesatfairvaluethroughprofitorloss,anyrelateddirectlyattributabletransactioncostsarechargedtoprofitorloss;forothercategoriesoffinancialassetsandfinancialliabilities,anyrelatedattributabletransactioncostsareincludedintheirinitialcosts.AccountsreceivablecontainingnosignificantfinancingcomponentornotconsideringfinancingcomponentofcontractsthatdonotexceedoneyeararemeasuredinitiallyattransactionpricesdeterminedbytheaccountingpoliciessetoutinNote5.22.

(2)Classificationandsubsequentmeasurementoffinancialassets

(a)ClassificationoffinancialassetsofthisGroupTheclassificationoffinancialassetsisgenerallybasedonthebusinessmodelinwhichafinancialassetismanagedanditscontractualcashflowcharacteristics.Oninitialrecognition,afinancialassetisclassifiedasmeasuredatamortizedcost,atfairvaluethroughothercomprehensiveincome(“FVOCI”),oratfairvaluethroughprofitorloss(“FVTPL”).FinancialassetsarenotreclassifiedsubsequenttotheirinitialrecognitionunlesstheGroupchangesitsbusinessmodelformanagingfinancialassetsinwhichcaseallaffectedfinancialassetsarereclassifiedonthefirstdayofthefirstreportingperiodfollowingthechangeinthebusinessmodel.AfinancialassetismeasuredatamortizedcostifitmeetsbothofthefollowingconditionsandisnotdesignatedasatFVTPL:

-itisheldwithinabusinessmodelwhoseobjectiveistoholdassetstocollectcontractualcashflows;and-itscontractualtermsgiveriseonspecifieddatestocashflowsthataresolelypaymentsofprincipalandinterestontheprincipalamountoutstanding.AdebtinvestmentismeasuredatFVOCIifitmeetsbothofthefollowingconditionsandisnotdesignatedasatFVTPL:

-itisheldwithinabusinessmodelwhoseobjectiveisachievedbybothcollectingcontractualcashflowsandsellingfinancialassets;and-itscontractualtermsgiveriseonspecifieddatestocashflowsthataresolelypaymentsofprincipalandinterestontheprincipalamountoutstanding.Oninitialrecognitionofanequityinvestmentthatisnotheldfortrading,theGroupmayirrevocablyelecttopresentsubsequentchangesintheinvestment’sfairvalueinothercomprehensiveincome.Thiselectionismadeonaninvestment-by-investmentbasis.Theinstrumentmeetsthedefinitionofequityfromtheperspectiveoftheissuer.AllfinancialassetsnotclassifiedasmeasuredatamortizedcostorFVOCIasdescribedabovearemeasuredatFVTPL.Oninitialrecognition,theGroupmayirrevocablydesignateafinancialassetthatotherwisemeetstherequirementstobemeasuredatamortizedcostorat

FVOCIasatFVTPLifdoingsoeliminatesorsignificantlyreducesanaccountingmismatchthatwouldotherwisearise.ThebusinessmodelreferstohowtheGroupmanagesitsfinancialassetsinordertogeneratecashflows.Thatis,theGroup’sbusinessmodeldetermineswhethercashflowswillresultfromcollectingcontractualcashflows,sellingfinancialassetsorboth.TheGroupdeterminesthebusinessmodelformanagingthefinancialassetsaccordingtothefactsandbasedonthespecificbusinessobjectiveformanagingthefinancialassetsdeterminedbytheGroup’skeymanagementpersonnel.Inassessingwhetherthecontractualcashflowsaresolelypaymentsofprincipalandinterest,theGroupconsidersthecontractualtermsoftheinstrument.Forthepurposesofthisassessment,‘principal’isdefinedasthefairvalueofthefinancialassetoninitialrecognition.‘Interest’isdefinedasconsiderationforthetimevalueofmoneyandforthecreditriskassociatedwiththeprincipalamountoutstandingduringaparticularperiodoftimeandforotherbasiclendingrisksandcosts,aswellasaprofitmargin.TheGroupalsoassesseswhetherthefinancialassetcontainsacontractualtermthatcouldchangethetimingoramountofcontractualcashflowssuchthatitwouldnotmeetthiscondition.(b)Subsequentmeasurementoffinancialassets-FinancialassetsatFVTPLThesefinancialassetsaresubsequentlymeasuredatfairvalue.Netgainsandlosses,includinganyinterestordividendincome,arerecognizedinprofitorlossunlessthefinancialassetsarepartofahedgingrelationship.-FinancialassetsatamortizedcostTheseassetsaresubsequentlymeasuredatamortizedcostusingtheeffectiveinterestmethod.Againorlossonafinancialassetthatismeasuredatamortizedcostandisnotpartofahedgingrelationshipshallberecognizedinprofitorlosswhenthefinancialassetisderecognizedandreclassified,throughtheamortizationprocessorinordertorecognizeimpairmentgainsorlosses.-DebtinvestmentsatFVOCITheseassetsaresubsequentlymeasuredatfairvalue.Interestincomecalculatedusingtheeffectiveinterestmethod,impairmentandforeignexchangegainsandlossesarerecognizedinprofitorloss.Othernetgainsandlossesarerecognizedinothercomprehensiveincome.Onderecognition,gainsandlossesaccumulatedinothercomprehensiveincomearereclassifiedtoprofitorloss.-EquityinvestmentsatFVOCITheseassetsaresubsequentlymeasuredatfairvalue.Dividendsarerecognizedasincomeinprofitorloss.Othernetgainsandlossesarerecognizedinothercomprehensiveincome.On

derecognition,gainsandlossesaccumulatedinothercomprehensiveincomearereclassifiedtoretainedearnings.

(3)Classificationandsubsequentmeasurementoffinancialliabilities

FinancialliabilitiesareclassifiedasmeasuredatFVTPLoramortizedcostbytheGroup.-FinancialliabilitiesatFVTPLAfinancialliabilityisclassifiedasatFVTPLifitisclassifiedasheld-for-trading(includingderivativefinancialliability)oritisdesignatedassuchoninitialrecognition.FinancialliabilitiesatFVTPLaresubsequentlymeasuredatfairvalueandnetgainsandlosses,includinganyinterestexpense,arerecognizedinprofitorloss,unlessthefinancialliabilitiesarepartofahedgingrelationship.-FinancialliabilitiesatamortizedcostThesefinancialliabilitiesaresubsequentlymeasuredatamortizedcostusingtheeffectiveinterestmethod.

(4)Offsetting

Financialassetsandfinancialliabilitiesaregenerallypresentedseparatelyinthebalancesheet,andarenotoffset.However,afinancialassetandafinancialliabilityareoffsetandthenetamountispresentedinthebalancesheetwhenbothofthefollowingconditionsaresatisfied:

-TheGroupcurrentlyhasalegallyenforceablerighttosetofftherecognizedamounts；-TheGroupintendseithertosettleonanetbasis,ortorealizethefinancialassetandsettlethefinancialliabilitysimultaneously.

(5)DerecognitionoffinancialassetsandfinancialliabilitiesFinancialassetisderecognizedwhenoneofthefollowingconditionsismet:

-thecontractualrightstothecashflowsfromthefinancialassetexpire;-thefinancialassethasbeentransferredandtheGrouptransferssubstantiallyalloftherisksandrewardsofownershipofthefinancialasset;or-thefinancialassethasbeentransferred,althoughtheGroupneithertransfersnorretainssubstantiallyalloftherisksandrewardsofownershipofthefinancialasset,itdoesnotretaincontroloverthetransferredasset.Whereatransferofafinancialassetinitsentiretymeetsthecriteriaforderecognition,thedifferencebetweenthetwoamountsbelowisrecognizedincurrentprofitorloss:

-thecarryingamountofthefinancialassettransferredmeasuredatthedateofderecognition;-thesumoftheconsiderationreceivedfromthetransferand,whenthetransferredfinancialassetisadebtinvestmentatFVOCI,anycumulativegainorlossthathasbeenrecognizeddirectlyinothercomprehensiveincomeforthepartderecognized.TheGroupderecognizesafinancialliability(orpartofit)onlywhenitscontractualobligation(orpartofit)isextinguished.

(6)Impairment

TheGrouprecognizeslossallowancesforexpectedcreditloss(ECL)on:

-financialassetsmeasuredatamortizedcost;-financialinvestmentsatfairvaluethroughothercomprehensiveincome.Financialassetsmeasuredatfairvalue,includingdebtinvestmentsorequitysecuritiesatFVPL,equitysecuritiesdesignatedatFVOCIandderivativefinancialassets,arenotsubjecttotheECLassessment.MeasurementofECLsECLsareaprobability-weightedestimateofcreditlosses.Creditlossesaremeasuredasthepresentvalueofallcashshortfalls(i.e.thedifferencebetweenthecashflowsduetotheentityinaccordancewiththecontractandthecashflowsthattheGroupexpectstoreceive).ThemaximumperiodconsideredwhenestimatingECLsisthemaximumcontractualperiod(includingextensionoptions)overwhichtheGroupisexposedtocreditrisk.LifetimeECLsaretheECLsthatresultfromallpossibledefaulteventsovertheexpectedlifeofafinancialinstrument.ECLswithinthenext12monthsreferstotheECLsthatmayoccurduetoafinancialinstrumentdefaulteventwithin12monthsafterthebalancesheetdate(iftheexpecteddurationofthefinancialinstrumentislessthan12months,itiswithintheexpectedduration),andisapartoftheECLsfortheentireduration.Forbillsreceivable,accountsreceivable,accountsreceivablefinancinggeneratedfromdailybusinessactivitiessuchassellinggoodsandprovidingservices,lossallowancealwaysmeasuredatanamountequaltolifetimeECLs.ECLsonthesefinancialassetsareestimatedusingaprovisionmatrixbasedontheGroup’shistoricalcreditlossexperience,adjustedforfactorsthatarespecifictothedebtorsandanassessmentofboththecurrentandforecastgeneraleconomicconditionsatthebalancesheetdate.Forassetsotherthanbillsreceivable,accountsreceivable,accountsreceivablefinancingthatmeetoneofthefollowingconditions,lossallowancearemeasuredatanamountequalto12-monthECLs.Forallotherfinancialinstruments,theGrouprecognizesalossallowance

equaltolifetimeECLs:

-Ifthefinancialinstrumentisdeterminedtohavelowcreditriskatthebalancesheetdate;or-Ifthecreditriskonafinancialinstrumenthasnotincreasedsignificantlysinceinitialrecognition.Baddebtprovisionforaccountsreceivable(a)Combinationcategoriesanddeterminationcriteriaforbaddebtprovisionbasedoncreditriskcharacteristics

Billsreceivable

(b)DeterminationcriteriaforsingleprovisionofbaddebtreservesbasedonindividualprovisionForbillsreceivable,accountsreceivable,accountsreceivablefinancing,andotheraccountsreceivable,theGroupusuallymeasuresitslossprovisionbasedonacombinationofcreditriskcharacteristics.Ifthecreditriskcharacteristicsofacounterpartyaresignificantlydifferentfromthoseofothercounterpartiesintheportfolio,orifthereisasignificantchangeinthecreditriskcharacteristicsofthatcounterparty,aseparateprovisionforlossshallbemadeforaccountsreceivablefromthatcounterparty.Forexample,whenacounterpartyexperiencesseriousfinancialdifficultiesandtheECLrateofaccountsreceivablefromthatcounterpartyissignificantlyhigherthantheECLrateofitsagingrange,aseparateprovisionforlossshallbemadeforit.FinancialinstrumentsthathavelowcreditriskThecreditriskonafinancialinstrumentisconsideredlowifthefinancialinstrumenthasalowriskofdefault,theborrowerhasastrongcapacitytomeetitscontractualcashflowobligationsintheneartermandadversechangesineconomicandbusinessconditionsinthelongertermmay,butwillnotnecessarily,reducetheabilityoftheborrowertofulfilitscontractualcashflowobligations.

SignificantincreasesincreditriskInassessingwhetherthecreditriskofafinancialinstrumenthasincreasedsignificantlysinceinitialrecognition,theGroupassesseswhetherthecreditriskofafinancialinstrumenthasincreasedsignificantlysinceinitialrecognitionbycomparingtheriskofdefaultatthebalancesheetdatewiththatatthedateofinitialrecognition.WhendeterminingwhetherthecreditriskofafinancialassethasincreasedsignificantlysinceinitialrecognitionandwhenestimatingECL,theGroupconsidersreasonableandsupportableinformationthatisrelevantandavailablewithoutunduecostoreffort,includingforward-lookinginformation.Inparticular,thefollowinginformationistakenintoaccount:

-failuretomakepaymentsofprincipalorinterestontheircontractuallyduedates;-anactualorexpectedsignificantdeteriorationinafinancialinstrument’sexternalorinternalcreditrating(ifavailable);-anactualorexpectedsignificantdeteriorationintheoperatingresultsofthedebtor;and-existingorforecastchangesinthetechnological,market,economicorlegalenvironmentthathaveasignificantadverseeffectonthedebtor’sabilitytomeetitsobligationtotheGroup.TheGroupassumesthatthecreditriskonafinancialassethasincreasedsignificantlyifitismorethan30dayspastdue.Credit-impairedfinancialassetsAteachbalancesheetdate,theGroupassesseswhetherfinancialassetscarriedatamortizedcostanddebtinvestmentsatFVOCIarecredit-impaired.Afinancialassetis‘credit-impaired’whenoneormoreeventsthathaveadetrimentalimpactontheestimatedfuturecashflowsofthefinancialassethaveoccurred.Evidencethatafinancialassetiscredit-impairedincludesthefollowingobservabledata:

-significantfinancialdifficultyoftheborrowerorissuer;-abreachofcontract,suchasadefaultordelinquencyininterestorprincipalpayments;-foreconomicorcontractualreasonsrelatingtotheborrower’sfinancialdifficulty,theGrouphavinggrantedtotheborroweraconcessionthatwouldnototherwiseconsider;-itisprobablethattheborrowerwillenterbankruptcyorotherfinancialreorganization;or-thedisappearanceofanactivemarketforthatfinancialassetbecauseoffinancialdifficulties.PresentationofallowanceforECLECLsarere-measuredateachbalancesheetdatetoreflectchangesinthefinancialinstrument’screditrisksinceinitialrecognition.AnychangeintheECLamountisrecognizedasanimpairmentgainorlossinprofitorloss.TheGrouprecognizesanimpairmentgainorlossforallfinancialinstrumentswithacorrespondingadjustmenttotheircarryingamount

throughalossallowanceaccount,exceptfordebtinvestmentsthataremeasuredatFVOCI,forwhichthelossallowanceisrecognizedinothercomprehensiveincome.Write-offThegrosscarryingamountofafinancialassetiswrittenoff(eitherpartiallyorinfull)totheextentthatthereisnorealisticprospectofrecovery.Awrite-offconstitutesaderecognitionevent.ThisisgenerallythecasewhentheGroupdeterminesthatthedebtordoesnothaveassetsorsourcesofincomethatcouldgeneratesufficientcashflowstorepaytheamountssubjecttothewrite-off.However,financialassetsthatarewrittenoffcouldstillbesubjecttoenforcementactivitiesinordertocomplywiththeGroup’sproceduresforrecoveryofamountsdue.Subsequentrecoveriesofanassetthatwaspreviouslywrittenoffarerecognizedasareversalofimpairmentinprofitorlossintheperiodinwhichtherecoveryoccurs.

(7)Equityinstrument

Theconsiderationreceivedfromtheissuanceofequityinstrumentsisrecognizedinshareholders’equityattheactualissueprice,withtherelatedtransactioncostsdeductedfromshareholders’equity(capitalreserve).Andifthecapitalreserve(sharepremium)isinsufficienttooffset,thedeficitshallbeappliedinsequenceagainstthesurplusreserveandthentheundistributedprofits.ConsiderationandtransactioncostspaidbytheCompanyforrepurchasingself-issuedequityinstrumentsaredeductedfromshareholders’equity.WhentheCompanyrepurchasesitsownshares,thosesharesaretreatedastreasuryshares.Allexpenditurerelatingtotherepurchaseisrecordedinthecostofthetreasuryshares,withthetransactionrecordingintheshareregister.Treasurysharesareexcludedfromprofitdistributionsandarepresentedasadeductionundershareholders’equityinthebalancesheet.Uponthecancellationoftreasuryshares,sharecapitalshallbereducedbythetotalparvalueofthesharescancelled.Wherethecostofthetreasurysharesexceedstheirtotalparvalue,theexcessshallbeappliedinsequenceagainstthecapitalreserve(sharepremium),thesurplusreserveandthentheundistributedprofits.Wherethecostofthetreasurysharesislowerthantheirtotalparvalue,theshortfallshallbecreditedtothecapitalreserve(sharepremium).

11.Inventories

(1)InventorycategoriesInventoriesincluderawmaterials,workinprogressandreusablematerials.Inventoriesareinitiallymeasuredatcost.Costofinventoriescomprisesallcostsofpurchase,costsofconversionandotherexpenditureincurredinbringingtheinventoriestotheirpresentlocationandcondition.Inadditiontothepurchasecostofrawmaterials,workinprogressandfinishedgoodsincludedirectlaborcostsandanappropriateallocationofproductionoverheads.AgriculturalproductsharvestedarereportedinaccordancewiththeAccountingStandardfor

BusinessEnterprisesNo.1-Inventories.

(2)Measurementmethodforissues

Costofinventoriesiscalculatedusingtheweightedaveragemethod.

(3)InventorycountsystemTheGroupmaintainsaperpetualinventorysystem.

(4)Amortizationmethodforlow-valueconsumablesandpackagingmaterialsConsumablesincludinglow-valueconsumablesandpackagingmaterialsareamortizedwhentheyareused.Theamortizationchargeisincludedinthecostoftherelatedassetsorrecognizedinprofitorlossforthecurrentperiod.

(5)BasisfordeterminingthenetrealizablevalueandmethodforprovisionforobsoleteinventoriesAtthebalancesheetdate,inventoriesarecarriedatthelowerofcostandnetrealizablevalue.Netrealizablevalueistheestimatedsellingpriceintheordinarycourseofbusinesslesstheestimatedcostsofcompletionandtheestimatedcostsnecessarytomakethesaleandrelevanttaxes.Thenetrealizablevalueofmaterialsheldforuseintheproductionismeasuredbasedonthenetrealizablevalueofthefinishedgoodsinwhichtheywillbeincorporated.Thenetrealizablevalueoftheinventoryheldtosatisfysalesorservicecontractsismeasuredbasedonthecontractprice,totheextentofthequantitiesspecifiedinsalescontracts,andtheexcessportionofinventoriesismeasuredbasedongeneralsellingprices.Anyexcessofthecostoverthenetrealizablevalueofeachitemofinventoriesisrecognizedasaprovisionforimpairment,andisrecognizedinprofitorloss.

(4)InventorycountsystemTheGroupmaintainsaperpetualinventorysystem.

12.Long-termequityinvestments

(1)Investmentcostdeterminationoflong-termequityinvestments(a)Long-termequityinvestmentsacquiredthroughabusinesscombination-Theinitialcostofalong-termequityinvestmentacquiredthroughabusinesscombinationinvolvingentitiesundercommoncontrolistheCompany’sshareofthecarryingamountofthesubsidiary’sequityintheconsolidatedfinancialstatementsoftheultimatecontrollingpartyatthecombinationdate.Thedifferencebetweentheinitialinvestmentcostandthecarryingamountoftheconsiderationgivenisadjustedtothesharepremiuminthecapital

reserve,withanydeficitappliedinsequenceagainstthesurplusreserveandthentheundistributedprofits.Foralong-termequityinvestmentinasubsidiaryacquiredthroughabusinesscombinationachievedinstageswhichdonotformabundledtransactionandinvolvingentitiesundercommoncontrol,theCompanydeterminestheinitialcostoftheinvestmentinaccordancewiththeabovepolicies.Thedifferencebetweenthisinitialcostandthesumofthecarryingamountofpreviously-heldinvestmentandtheconsiderationpaidforthesharesnewlyacquiredisadjustedtocapitalpremiuminthecapitalreserve,withanydeficitappliedinsequenceagainstthesurplusreserveandthentheundistributedprofits.-Foralong-termequityinvestmentobtainedthroughabusinesscombinationnotinvolvingenterprisesundercommoncontrol,theinitialcostcomprisestheaggregateofthefairvalueofassetstransferred,liabilitiesincurredorassumed,andequitysecuritiesissuedbytheCompany,inexchangeforcontroloftheacquiree.Foralong-termequityinvestmentobtainedthroughabusinesscombinationnotinvolvingentitiesundercommoncontrolandachievedthroughmultipletransactionsinstageswhichdonotformabundledtransaction,theinitialcostcomprisesthecarryingamountofthepreviously-heldequityinvestmentintheacquireeimmediatelybeforetheacquisitiondate,andtheadditionalinvestmentcostattheacquisitiondate.(b)Long-termequityinvestmentsacquiredotherthanthroughabusinesscombination-Along-termequityinvestmentacquiredotherthanthroughabusinesscombinationisinitiallyrecognizedattheamountofcashpaidiftheGroupacquirestheinvestmentbycash,oratthefairvalueoftheequitysecuritiesissuedifaninvestmentisacquiredbyissuingequitysecurities.

(2)Subsequentmeasurementandprofitandlossrecognitionmethodsoflong-termequityinvestment(a)InvestmentsinsubsidiariesIntheCompany’sseparatefinancialstatements,long-termequityinvestmentsinsubsidiariesareaccountedforusingthecostmethodunlesstheinvestmentisclassifiedasheldforsale.Exceptforcashdividendsorprofitdistributionsdeclaredbutnotyetdistributedthathavebeenincludedinthepriceorconsiderationpaidinobtainingtheinvestments,theCompanyrecognizesitsshareofthecashdividendsorprofitdistributionsdeclaredbytheinvesteeasinvestmentincomeforthecurrentperiod.Theinvestmentsinsubsidiariesarestatedinthebalancesheetatcostlessimpairmentlosses.Fortheimpairmenttestingmethodandimpairmentprovisionmethodoftheinvestmentsinsubsidiaries,refertoNote5.21.IntheGroup’sconsolidatedfinancialstatements,subsidiariesareaccountedforinaccordancewiththepoliciesdescribedinNote5.6.

(b)InvestmentsinjointventuresandassociatesAjointventureisanarrangementwherebytheGroupandotherpartieshavejointcontrolandrightstothenetassetsofthearrangement.AnassociateisanenterprisetheGroupcanexertsignificantinfluenceon.Along-termequityinvestmentinajointventureandassociateisaccountedforusingtheequitymethodforsubsequentmeasurement,unlesstheinvestmentisclassifiedasheldforsale.TheaccountingtreatmentsundertheequitymethodadoptedbytheGroupareasfollows:

-Wheretheinitialcostofalong-termequityinvestmentexceedstheGroup’sinterestinthefairvalueoftheinvestee’sidentifiablenetassetsatthedateofacquisition,theinvestmentisinitiallyrecognizedatcost.WheretheinitialinvestmentcostislessthantheGroup’sinterestinthefairvalueoftheinvestee’sidentifiablenetassetsatthedateofacquisition,theinvestmentisinitiallyrecognizedattheinvestor’sshareofthefairvalueoftheinvestee’sidentifiablenetassets,andthedifferenceisrecognizedincurrentprofitorloss.-Aftertheacquisitionoftheinvestmentinjointventuresandassociates,theGrouprecognizesitsshareoftheinvestee’sprofitorlossandothercomprehensiveincomeasinvestmentincomeorlossesandothercomprehensiveincomerespectively,andadjuststhecarryingamountoftheinvestmentaccordingly.Oncetheinvesteedeclaresanycashdividendsorprofitdistributions,thecarryingamountoftheinvestmentisreducedbytheamountattributabletotheGroup.ChangesintheGroup’sshareoftheinvestee’sowners’equity,otherthanthosearisingfromtheinvestee’snetprofitorloss,othercomprehensiveincomeorprofitdistribution(referredtoas“otherchangesinowners’equity”),isrecognizeddirectlyintheGroup’sequity,andthecarryingamountoftheinvestmentisadjustedaccordingly.-Incalculatingitsshareoftheinvestee’snetprofitsorlosses,othercomprehensiveincomeandotherchangesinowners’equity,theGrouprecognizesinvestmentincomeandothercomprehensiveincomeaftermakingappropriateadjustmentstoaligntheaccountingpoliciesoraccountingperiodswiththoseoftheGroupbasedonthefairvalueoftheinvestee’sidentifiablenetassetsatthedateofacquisition.UnrealizedprofitsandlossesresultingfromtransactionsbetweentheGroupanditsassociatesorjointventuresareeliminatedtotheextentoftheGroup’sinterestintheassociatesorjointventures.UnrealizedlossesresultingfromtransactionsbetweentheGroupanditsassociatesorjointventuresareeliminatedinthesamewayasunrealizedgainsbutonlytotheextentthatthereisnoimpairment.-TheGroupdiscontinuesrecognizingitsshareoffurtherlossesoftheinvesteeafterthe

carryingamountofthelong-termequityinvestmentandanylong-terminterestthatinsubstanceformspartoftheGroup’snetinvestmentintheassociateisreducedtozero,excepttotheextentthattheGrouphasanobligationtoassumeadditionallosses.Ifthejointventureortheassociatesubsequentlyreportsnetprofits,theGroupresumesrecognizingitsshareofthoseprofitsonlyafteritsshareoftheprofitsequalstheshareoflossesnotrecognized.FortheimpairmenttestingmethodandimpairmentprovisionmethodoftheinvestmentsinjointventuresandassociatesofthisGroup,refertoNote5.21.

(3)CriteriafordeterminingtheexistenceofjointcontrolandsignificantimpactoveraninvesteeJointcontrolisthecontractuallyagreedsharingofcontrolofanarrangement,whichexistsonlywhendecisionsabouttherelevantactivities(activitieswithsignificantimpactonthereturnsofthearrangement)requiretheunanimousconsentofthepartiessharingcontrol.ThefollowingfactorsareusuallyconsideredwhenassessingwhethertheGroupcanexercisejointcontroloveraninvestee:

-Whethernosingleparticipantpartyisinapositiontocontroltheinvestee’srelatedactivitiesunilaterally;-Whetherstrategicdecisionsrelatingtotheinvestee’srelatedactivitiesrequiretheunanimousconsentofallparticipantpartiesthatsharingofcontrol.Significantinfluenceisthepowertoparticipateinthefinancialandoperatingpolicydecisionsofaninvesteebutdoesnothavecontrolorjointcontroloverthosepolicies.

13.InvestmentpropertiesInvestmentpropertiesarepropertiesheldeithertoearnrentalincomeorforcapitalappreciationorforboth.Investmentpropertiesareaccountedforusingthecostmodelandstatedinthebalancesheetatcostlessaccumulateddepreciation,amortizationandimpairmentlosses,andadoptsadepreciationoramortizationpolicyfortheinvestmentpropertywhichisconsistentwiththatforbuildingsorlanduserights,unlesstheinvestmentpropertyisclassifiedasheldforsale.Fortheimpairmenttestingmethodandimpairmentprovisionmethod,refertoNote5.21.

Category

14.Fixedassets

(1)RecognitionoffixedassetsFixedassetsrepresentthetangibleassetsheldbytheGroupforuseinproductionofgoods,supplyofservices,forrentalorforadministrativepurposeswithusefullivesoveroneaccountingyear.Theinitialcostofapurchasedfixedassetcomprisesthepurchaseprice,relatedtaxes,andanyattributableexpenditureforbringingtheassettoworkingconditionforitsintendeduse.Theinitialcostofself-constructedfixedassetsismeasuredinaccordancewiththepolicysetoutinNote5.15.WherethepartsofanitemoffixedassetshavedifferentusefullivesorprovidebenefitstotheGroupinadifferentpattern,thusnecessitatinguseofdifferentdepreciationratesormethods,eachpartisrecognizedasaseparatefixedasset.Foranysubsequentcostoffixedassets,includingthecostofreplacingpartofanitemoffixedassets,whenitisprobablethattheeconomicbenefitsassociatedwiththecostswillflowtotheGroup,itshallbecapitalizedandincludedinthecostoffixedassets,andthecarryingamountofthereplacedpartisderecognizedmeanwhile;andthecostsrelatedtotheday-to-daymaintenanceoffixedassetsshallberecognizedincurrentprofitorlossasincurred.Fixedassetsarestatedinthebalancesheetatcostlessaccumulateddepreciationandimpairmentlosses.

(2)Depreciationoffixedassets

Thecostofafixedasset,lessitsestimatedresidualvalueandaccumulatedimpairmentlosses,isdepreciatedusingthestraight-linemethodoveritsestimatedusefullife,unlessthefixedassetisclassifiedasheldforsale.Theusefullives,residualvalueratesandannualdepreciationratesofeachclassoffixedassetsareasfollows:

Class

Usefullives,estimatedresidualvaluesanddepreciationmethodsarereviewedatleastateach

year-end.

(3)Forimpairmenttestingmethodandimpairmentprovisionmethod,refertoNote5.21.

(4)DisposaloffixedassetsTheGroupwillderecognizeofafixedassetwhenmeetingoneofthefollowingconditions:

-whenthefixedassetisholdingfordisposal;or-whennofutureeconomicbenefitisexpectedtobegeneratedfromitsuseordisposal.Gainsorlossesarisingfromtheretirementordisposalofanitemoffixedassetaredeterminedasthedifferencebetweenthenetdisposalproceedsandthecarryingamountoftheitem,andarerecognizedinprofitorlossonthedateofretirementordisposal.

15.Constructioninprogress

Thecostofself-constructedfixedassetsincludesthecostofmaterials,directlabor,capitalizedborrowingcosts,andnecessarycostsattributabletobringingtheassettoworkingconditionforitsintendeduse.Aself-constructedfixedassetisclassifiedasconstructioninprogressandtransferredtofixedassetwhenitisreadyforitsintendeduse.Nodepreciationisprovidedagainstconstructioninprogress.Criteriaandtimingfortransferofconstructioninprogresstofixedassets

Category

Theproductionequipmentcanproducequalifiedproductsconsistentlyoveraperiodoftime;(4)Theequipmenthasbeenacceptedbyassetmanagementpersonnelandusers.

Constructioninprogressisstatedinthebalancesheetatcostlessimpairmentlosses(seeNote5.21).Ifanenterprisesellsproductsorby-productsproducedbyfixedassetsbeforetheyreachtheirintendedusablestatetotheoutsideparties,inaccordancewiththeprovisionsofAccountingStandardsforBusinessEnterprisesNo.14–RevenueandAccountingStandardsforBusinessEnterprisesNo.1–Inventories,relevantincomeandcostsshallbeaccountedforseparatelyandincludedinprofitorlossforthecurrentperiod.

16.BorrowingcostsBorrowingcostsincurreddirectlyattributabletotheacquisition,andconstructionorproductionofaqualifyingassetarecapitalizedaspartofthecostoftheasset.Otherborrowingcostsarerecognizedasfinancialexpenseswhenincurred.Duringthecapitalizationperiod,theamountofinterest(includingamortizationofanydiscountorpremiumonborrowing)tobecapitalizedineachaccountingperiodisdeterminedasfollows:

-Wherefundsareborrowedspecificallyfortheacquisitionandconstructionorproductionofaqualifyingasset,theamountofinteresttobecapitalizedistheinterestexpensecalculatedusingeffectiveinterestratesduringtheperiodlessanyinterestincomeearnedfromdepositingtheborrowedfundsoranyinvestmentincomeonthetemporaryinvestmentofthosefundsbeforebeingusedontheasset.-TotheextentthattheGroupborrowsfundsgenerallyandusesthemfortheacquisitionandconstructionorproductionofaqualifyingasset,theamountofborrowingcostseligibleforcapitalizationisdeterminedbyapplyingacapitalizationratetotheweightedaverageoftheexcessamountsofcumulativeexpenditureontheassetovertheaboveamountsofspecificborrowings.Thecapitalizationrateistheweightedaverageoftheinterestratesapplicabletothegeneral-purposeborrowings.Theeffectiveinterestrateisdeterminedastheratethatexactlydiscountsestimatedfuturecashflowthroughtheexpectedlifeoftheborrowingor,whenappropriate,ashorterperiodtotheinitiallyrecognizedamountoftheborrowings.Duringthecapitalizationperiod,exchangedifferencesrelatedtotheprincipalandinterestonaspecific-purposeborrowingdenominatedinforeigncurrencyarecapitalizedaspartofthe

costofthequalifyingasset.Theexchangedifferencesrelatedtotheprincipalandinterestonforeigncurrencyborrowingsotherthanaspecific-purposeborrowingarerecognizedasafinancialexpensewhenincurred.Thecapitalizationperiodistheperiodfromthedateofcommencementofcapitalizationofborrowingcoststothedateofcessationofcapitalization,excludinganyperiodoverwhichcapitalizationissuspended.Capitalizationofborrowingcostscommenceswhenexpenditurefortheassetisbeingincurred,borrowingcostsarebeingincurredandactivitiesofacquisition,constructionorproductionthatarenecessarytopreparetheassetforitsintendeduseareinprogress,andceaseswhentheassetsbecomereadyfortheirintendeduse.Capitalizationofborrowingcostsshouldceasewhenthequalifyingassetbeingconstructedorproducedhasreacheditsexpectedusableorsaleablecondition.Capitalizationofborrowingcostsissuspendedwhentheacquisition,constructionorproductionactivitiesareinterruptedabnormallyforaperiodofmorethanthreemonths.

17.Biologicalassets

ThebiologicalassetsoftheGroupareproductivebiologicalassets.Productivebiologicalassetsarebiologicalassetsheldforthepurposesofproducingagriculturalproduce,renderingofservicesorrental.ProductivebiologicalassetsintheGrouparevines.Productivebiologicalassetsareinitiallymeasuredatcost.Thecostofself-grownorself-bredproductivebiologicalassetsrepresentsthenecessaryattributableexpenditureincurredbeforesatisfyingtheexpectedproductionandoperatingpurpose,includingcapitalizedborrowingcosts.Productivebiologicalassets,afterreachingtheexpectedproductionandoperatingpurpose,aredepreciatedusingthestraight-linemethodoveritsusefullife.Theusefullives,estimatednetresidualvalueratesandannualdepreciationratesofproductivebiologicalassetsareasfollows:

Category

TheGroupevaluatestheusefullifeandexpectednetresidentialvaluebyconsideringthenormalproducinglifeoftheproductivebiologicalassets.Usefullives,estimatedresidualvaluesanddepreciationmethodsofproductivebiologicalassetsarereviewedatleastateachyear-end.Anychangesshouldbetreatedaschangesinaccountingestimates.Foraproductivebiologicalassetthathasbeensold,damaged,deadordestroyed,anydifferencebetweenthedisposalproceedsandthecarryingamountoftheasset(aftertax

deduction)shouldberecognizedinprofitorlossfortheperiodinwhichitarises.

18.IntangibleassetsServicelifeandamortizationmethodIntangibleassetsarestatedinthebalancesheetatcostlessaccumulatedamortization(wheretheestimatedusefullifeisfinite)andimpairmentlosses(seeNote5.21).Foranintangibleassetwithfiniteusefullife,itscostestimatedlessresidualvalueandaccumulatedimpairmentlossesisamortizedonthestraight-linemethodoveritsestimatedusefullife,unlesstheintangibleassetisclassifiedasheldforsale.Therespectiveservicelife,determinationbasis,andamortizationmethodforintangibleassetsareasfollows:

Item

Theusefullifeandamortizationmethodofintangibleassetswithlimitedusefullifearereviewedatleastateachyear-end.AnintangibleassetisregardedashavinganindefiniteusefullifeandisnotamortizedwhenthereisnoforeseeablelimittotheperiodoverwhichtheassetisexpectedtogenerateeconomicbenefitsfortheGroup.Atthebalancesheetdate,theGrouphadintangibleassetswithinfiniteusefullivesincludingthelanduserightsandtrademarks.LanduserightswithinfiniteusefullivesarepermanentlanduserightswithpermanentownershipheldbytheGroupundertherelevantChileandAustralianlawsarisingfromtheGroup’sacquisitionofVi?aIndómita,S.A.,Vi?aDosAndes,S.A.,andBodegasSantaAliciaSpA.(collectivelyreferredtoasthe“ChileIndomitaWineGroup”),andtheacquisitionofKilikanoonEstatePtyLtd(hereinafterreferredtoasthe“AustraliaKilikanoonEstate”),thereforetherewasnoamortization.TherighttousetrademarkreferstothetrademarkheldbytheGrouparisingfromtheacquisitionoftheChileIndomitaWineGroupandtheAustraliaKilikanoonEstatewithinfiniteusefullives.Thevaluationoftrademarkwasbasedonthetrendsinthemarketandcompetitiveenvironment,productcycle,andmanaginglong-termdevelopmentstrategy.ThosebasesindicatedthetrademarkwillprovidenetcashflowstotheGroupwithinanuncertainperiod.TheusefullifeisindefiniteasitwashardtopredicttheperiodthatthetrademarkwouldbringeconomicbenefitstotheGroup.

19.Goodwill

Theinitialcostofgoodwillrepresentstheexcessofcostofacquisitionovertheacquirer’s

interestinthefairvalueoftheidentifiablenetassetsoftheacquireeunderabusinesscombinationnotinvolvingentitiesundercommoncontrol.Goodwillisnotamortizedandisstatedinthebalancesheetatcostlessaccumulatedimpairmentlosses(seeNote5.21).Ondisposalofanassetgrouporasetofassetgroups,anyattributablegoodwilliswrittenoffandincludedinthecalculationoftheprofitorlossondisposal.

20.Long-termdeferredexpenses

TheGrouprecognizesexpensesthathavebeenincurredandwhosebenefitperiodexceedsoneyearaslong-termdeferredexpenses.Long-termdeferredexpensesareamortizedusingastraight-linemethodwithinthebenefitperiod.Therespectiveamortizationperiodsforsuchexpensesareasfollows:

Item

21.Impairmentofassetsotherthaninventoriesandfinancialassets

Thecarryingamountsofthefollowingassetsarereviewedateachbalancesheetdatebasedoninternalandexternalsourcesofinformationtodeterminewhetherthereisanyindicationofimpairment:

-fixedassets-constructioninprogress-right-of-useassets-intangibleassets-productivebiologicalasset-investmentpropertiesmeasuredusingacostmodel-long-termequityinvestments-goodwill-long-termdeferredexpenses,etc.Ifanyindicationexists,therecoverableamountoftheassetisestimated.Inaddition,theGroupestimatestherecoverableamountsofgoodwillandintangibleassetswithinfiniteusefullivesateachyear-end,irrespectiveofwhetherthereisanyindicationofimpairment.

Goodwillisallocatedtoeachassetgroup,orsetofassetgroups,thatisexpectedtobenefitfromthesynergiesofthecombinationforthepurposeofimpairmenttesting.Therecoverableamountofanasset(orassetgroup,setofassetgroups)isthehigherofitsfairvalue(seeNote5.21)lesscoststosellanditspresentvalueofexpectedfuturecashflows.Anassetgroupiscomposedofassetsdirectlyrelatedtocash-generationandisthesmallestidentifiablegroupofassetsthatgeneratescashinflowsthatarelargelyindependentofthecashinflowsfromotherassetsorassetgroups.Thepresentvalueofexpectedfuturecashflowsofanassetisdeterminedbydiscountingthefuturecashflows,estimatedtobederivedfromcontinuinguseoftheassetandfromitsultimatedisposal,totheirpresentvalueusinganappropriatepre-taxdiscountrate.Animpairmentlossisrecognizedinprofitorlosswhentherecoverableamountofanassetislessthanitscarryingamount.Aprovisionforimpairmentoftheassetisrecognizedaccordingly.Impairmentlossesrelatedtoanassetgrouporasetofassetgroupsareallocatedfirsttoreducethecarryingamountofanygoodwillallocatedtotheassetgrouporsetofassetgroups,andthentoreducethecarryingamountoftheotherassetsintheassetgrouporsetofassetgroupsonaproratabasis.However,suchallocationwouldnotreducethecarryingamountofanassetbelowthehighestofitsfairvaluelesscoststosell(ifmeasurable),itspresentvalueofexpectedfuturecashflows(ifdeterminable)andzero.Onceanimpairmentlossisrecognized,itisnotreversedinasubsequentperiod.

22.FairvaluemeasurementUnlessotherwisespecified,theGroupmeasuresfairvalueasfollows:

Fairvalueisthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsatthemeasurementdate.Whenmeasuringfairvalue,theGrouptakesintoaccountthecharacteristicsoftheparticularassetorliability(includingtheconditionandlocationoftheassetandrestrictions,ifany,onthesaleoruseoftheasset)thatmarketparticipantswouldconsiderwhenpricingtheassetorliabilityatthemeasurementdate,andusesvaluationtechniquesthatareappropriateinthecircumstancesandforwhichsufficientdataandotherinformationareavailabletomeasurefairvalue.Valuationtechniquesmainlyincludethemarketapproach,theincomeapproachandthecostapproach.

23.EstimatedliabilitiesIftheobligationrelatedtocontingenciesisacurrentobligationundertakenbytheGroup,andtheperformanceofsuchobligationislikelytoresultintheoutflowofeconomicbenefits

fromtheGroup,andtherelevantamountcanbereliablymeasured,theGroupwillrecognizetheestimatedliability.Theestimatedliabilitiesareinitiallymeasuredbasedonthebestestimateoftheexpensesrequiredtofulfilltherelevantcurrentobligations.Forassetsthathaveasignificantimpactonthetimevalueofmoney,theestimatedliabilityisdeterminedbydiscountingtheestimatedfuturecashflows.Whendeterminingthebestestimate,theGrouptakesintoaccountfactorssuchasrisks,uncertainties,andtimevalueofmoneyrelatedtocontingencies.Iftherequiredexpenditureexistsacontinuousrange,andthelikelihoodofvariousoutcomesoccurringwithinthisrangeisthesame,thebestestimateisdeterminedbasedonthemedianvaluewithinthisrange;andinothercases,thebestestimateishandledasfollows:

-Ifthecontingencyinvolvesasingleitem,itshallbedeterminedbasedonthemostlikelyamounttooccur.-Ifthecontingencyinvolvesmultipleitems,itshallbedeterminedbasedonvariouspossibleoutcomesandrelatedprobabilities.TheGroupreviewsthecarryingamountofestimatedliabilitiesonthebalancesheetdateandadjuststhecarryingamountbasedonthecurrentbestestimate.

24.Share-basedpayment

(1)Typeofshare-basedpayment

Theshare-basedpaymentofthisGroupisequity-settledshare-basedpayment.

(2)Accountingtreatmentrelatedtoimplementingshare-basedpaymentplan-Equity-settledshare-basedpaymentWhentheGroupexchangessharesorotherequityinstrumentsforemployeeservices,theequityinstrumentsgrantedtoemployeesshallbemeasuredatfairvalueonthegrantdate.Forshare-basedpaymenttransactionsthatareimmediatelyexercisableupongrant,theGrouprecognizesthefairvalueofequityinstrumentsasrelevantcostsorexpensesonthegrantdate,andincreasescapitalreservesaccordingly.Forshare-basedpaymenttransactionsthatcanonlybeexercisedaftercompletingthevestingperiodforservicesormeetingtheprescribedperformanceconditionsafterthegrant,theGroupwillmakethebestestimateofthenumberoffeasibleequityinstrumentsoneachbalancesheetdateduringthevestingperiodbasedonsubsequentinformationsuchaschangesinthenumberoffeasibleemployees.Basedonthis,theservicesobtainedinthecurrentperiodwillbeincludedinrelevantcostsorexpensesaccordingtothefairvalueoftheequityinstrumentsonthegrantdate,andcorrespondinglyincludedincapitalreserves.WhentheGroupacceptsservicesbutdoesnothavesettlementobligations,andtheequityinstrumentsgrantedtoemployeesarethoseoftheultimatecontrollingpartyoftheCompanyoritscontrolledsubsidiariesotherthantheGroup,theGroupwilltreatthisshare-basedpaymentplanasashare-basedpaymentforequitysettlement.

25.RevenueRevenuereferstothegrossinflowofeconomicbenefitsformedduringthecourseoftheordinaryactivitiesoftheGroup,whichmayincreasetheshareholders’equitiesandisirrelevanttotheinvestedcapitaloftheshareholders.TheGrouprecognizestherevenueuponfulfillmentofitsperformanceobligationsinthecontract,thatis,theclientobtainscontrolrightovertherelevantgoodsorservices.Iftherearetwoormoreperformanceobligationsunderthecontact,whichshallbefulfilled,theGroupwillapportionthetransactionpricetovariousindividualperformanceobligationsinaccordancewiththerelativeproportionofseparatesellingpricesofvariousgoodsorservicesundertheseperformanceobligationsonthecommencementdateofthecontract,andmeasureandrecognizetherevenueinaccordancewiththetransactionpricesapportionedtovariousindividualperformanceobligations.Thestand-alonesellingpricereferstothepriceatwhichtheGroupsellsgoodsorprovidesservicestocustomersseparately.Ifthestand-alonesellingpricecannotbedirectlyobserved,theGroupcomprehensivelyconsidersalltherelevantinformationthatcanbereasonablyobtained,andusesobservableinputvaluestothegreatestextenttoestimatethestand-alonesellingprice.Forcontractswithqualityassuranceclauses,theGroupanalyzesthenatureofthequalityassuranceprovided.Ifqualityassuranceprovidesaseparateserviceinadditiontoensuringtotheclientthatthegoodssoldmeettheestablishedstandards,theGroupwilltreatitasanindividualperformanceobligation.Otherwise,theGroupconductsaccountingtreatmentinaccordancewiththeAccountingStandardsforBusinessEnterprisesNo.13-Contingencies.ThetransactionpricereferstotheamountofconsiderationthattheGroupexpectstobeentitledtoreceiveduetothetransferofgoodsorservicestotheclient,excludingpaymentsreceivedonbehalfofthirdparties.ThetransactionpricerecognizedbytheGroupdoesnotexceedtheamountatwhichtheaccumulatedrecognizedrevenuewillmostlikelynotundergoasignificantreversalwhentherelevantuncertaintyiseliminated.Intheeventthatthereisasignificantfinancingpartinthecontract,theGroupdeterminesthetransactionpricebasedontheamountpayableincashwhentheclientobtainscontrolrightovertherelevantgoodsorservices.Thedifferencebetweenthetransactionpriceandthecontractconsiderationshallbeamortizedbytheeffectiveinterestmethodduringthecontractperiod.Fromthedayoftheenforcementofthecontract,theGroupexpectsthattheintervalbetweentheclient'sacquisitionofcontrolrightoverthegoodsorservicesandtheclient’spaymentofthepricewillnotexceedoneyear,regardlessofthesignificantfinancingpartinthecontract.IftheGroupmeetsoneofthefollowingconditions,thefulfillmentofitsperformanceobligationsinacertainperiodwillbedeemed,orthefulfillmentofitsperformanceobligationsatacertaintimepointwillbedeemed:

-TheclientobtainsandconsumestheeconomicbenefitswhiletheGroupfulfillstheperformanceobligation;-TheclientmanagestocontrolthegoodsinprocesswhiletheGroupfulfillstheperformanceobligation.-Goodsproducedduringtheperformanceperiodhaveirreplaceablepurposesandthe

Groupisentitledtochargemoneyfortheperformanceaccumulatedandhasbeenfinisheduntilthecurrenttimewithinthewholecontractperiod.Foranyperformanceobligationsfulfilledinacertainperiod,theGroupwillrecognizerevenuewithinthecertainperiodinaccordancewiththeperformanceprogress.IftheperformanceprogresscannotbedeterminedreasonablyandcostsincurredareexpectedtobecompensatedoftheGroup,therevenuewillbeascertainedaccordingtothecostsincurreduntiltheperformanceprogressisdeterminedreasonably.Intermsofperformanceobligationsfulfilledatacertaintimepoint,theGroupwillrecognizerevenuewhentheclientgainscontrolrightovertherelevantgoodsorservices.Whenitcomestodeterminingwhetheraclienthasacquiredthecontrolrightovergoodsorservices,theGroupwillconsiderthefollowingconditions:

-TheGrouphasthecurrentrighttoreceivepaymentforthegoodsorservices;-TheGrouphastransferredthegoodsinkindtotheclient;-TheGrouphastransferredthelegalownershipoftheproductorthemainrisksandrewardsofownershiptotheclient;-Theclienthasacceptedthegoodsorservices,etc.Forsaleswithsalesreturnclauses,whenthecustomerobtainscontroloftherelevantgoods,theGrouprecognizesrevenuebasedontheamountofconsiderationexpectedtobeentitledtoreceiveduetothetransferofgoodstothecustomer(thatis,doesnotincludetheexpectedamounttoberefundedduetosalesreturn),andrecognizesliabilitiesbasedontheexpectedamounttoberefundedduetosalesreturns.Atthesametime,basedonthebookvalueatthetimeoftransferofthegoodsexpectedtobereturned,theGrouprecognizesasanassetthebalanceafterdeductingtheestimatedcostofrecoveringthegoods(includingthevalueimpairmentofthereturnedgoods).Basedonthebookvalueofthetransferredgoodsatthetimeoftransfer,theGroupcarriesoverasthecostthenetamountafterdeductingtheaboveassetcost.Oneachbalancesheetdate,theGroupre-estimatesthefuturesalesreturns.Ifthereisanychange,itshallbetreatedasachangeinaccountingestimates.TheGrouphastransferredthegoodsorservicestotheclientandthushastherighttoreceivecorrespondingconsideration(andtherightisdependableonfactorsotherthantimelapses)ascontractasset,whichissubjecttoprovisionofimpairmentonthebasisofexpectedcreditloss.TherightenjoyedbytheGroup(onlydependsontimelapses)toreceiveconsiderationunconditionallyfromtheclientshallbepresentedunderaccountreceivables.TheGrouppresentstheobligationoftransferringgoodsorservicesfortheclientduetotheconsiderationreceivedorreceivableascontractliabilities.ThespecificaccountingpoliciesrelatedtothemainactivitiesoftheGroup’srevenuearedescribedasfollows:

TheGroup’ssalesrevenuemainlycomesfromdealersales.TherevenuewillberecognizedwhentheGrouptransferscontroloftherelatedproductstothecustomer.Accordingtothebusinesscontract,forthesetransfers,thetimewhentheproductisconfirmedandsignedbythecustomershallberecognizedastheconfirmingpointofthesalesrevenue.

26.ContractcostContractcostincludesincrementalcostforbeingawardedthecontractandperformancecostofthecontract.IncrementalcostforbeingawardedthecontractreferstothecostthattheGroupwouldnotneedtopayifnosuchcontractsareawarded(e.g.salescommissions,etc.)Wheresuchcostisexpectedtoberecovered,theGroupshalltakeitasthecontractacquisitioncostandrecognizeitasanasset.ExpensesincurredbytheGrouptobeawardedcontractotherthanincrementalcostexpectedtoberecoveredshallberecognizedincurrentprofitsandlosseswhenincurred.AnycostincurredbytheGroupfortheperformanceofanycontractthatdoesn’tfallintothescopeofotherbusinessesspecifiedintheStandardsuchasinventory,butmeetsthefollowingconditionssimultaneously,shallbetakenascontractperformancecostandrecognizedasanasset.-Wheresuchcostisdirectlyrelatedtoacurrentoranticipatedcontract,includingdirectlaborcost,directmaterialcost,manufacturingexpenses(orsimilarexpenses),costsclearlyspecifiedtobebornebythecustomerandothercostsincurredsolelyduetothecontract;-WheresuchcostincludesresourcestobeusedbytheGrouptofulfillfutureperformanceobligations;-Wheresuchcostisexpectedtoberecovered.Assetsrecognizedforcontractacquisitioncostandassetsrecognizedforcontractperformancecost(hereinafterreferredtoas“assetsrelatedtocontractcost”)shallbeamortizedonthesamebasisastherevenuerecognitionofgoodsorservicesrelatedtosuchassetsandrecognizedincurrentprofitsandlosses.Wheretheamortizationperiodofassetsrecognizedforthecontractacquisitioncostdoesnotexceedoneyear,theyshallberecognizedincurrentprofitsandlosses.Wherethebookvalueofassetsrelatedtocontractcostsishigherthanthedifferencebetweenthefollowingtwoitems,theGroupshallwithdrawtheimpairmentreservesoftheexcesspartandrecognizeitastheassetimpairmentloss:

-ResidualconsiderationexpectedtobeobtainedarisingfromthetransferofgoodsorservicesrelatedtotheassetsbytheGroup;-Costestimatedtobeoccurredforthetransferoftherelevantgoodsorservices.

27.Employeebenefits

(1)Short-termemployeebenefits

Employeewagesorsalaries,bonuses,socialsecuritycontributionssuchasmedicalinsurance,workinjuryinsurance,maternityinsuranceandhousingfund,measuredattheamountincurredoraccruedattheapplicablebenchmarksandrates,arerecognizedasaliabilityastheemployeeprovidesservices,withacorrespondingchargetoprofitorlossorincludedinthecostofassetswhereappropriate.

(2)Post-employmentbenefits–definedcontributionplansPursuanttotherelevantlawsandregulationsofthePeople’sRepublicofChina,theGroupparticipatedinadefinedcontributionbasicpensioninsuranceplaninthesocialinsurancesystemestablishedandmanagedbygovernmentorganizations.TheGroupmakescontributionstobasicpensioninsuranceplansbasedontheapplicablebenchmarksandratesstipulatedbythegovernment.Basicpensioninsurancecontributionspayablearerecognizedasaliabilityastheemployeeprovidesservices,withacorrespondingchargetoprofitorlossorincludedinthecostofassetswhereappropriate.

(3)Terminationbenefits

WhentheGroupterminatestheemploymentwithemployeesbeforetheemploymentcontractsexpire,orprovidescompensationunderanoffertoencourageemployeestoacceptvoluntaryredundancy,aprovisionisrecognizedwithacorrespondingexpenseinprofitorlossattheearlierofthefollowingdates:

-WhentheGroupcannotunilaterallywithdrawtheofferofterminationbenefitsbecauseofanemployeeterminationplanoracurtailmentproposal;-WhentheGrouphasaformaldetailedrestructuringplaninvolvingthepaymentofterminationbenefitsandhasraisedavalidexpectationinthoseaffectedthatitwillcarryouttherestructuringbystartingtoimplementthatplanorannouncingitsmainfeaturestothoseaffectedbyit.

28.Governmentgrants

Governmentgrantsarenon-reciprocaltransfersofmonetaryornon-monetaryassetsfromthegovernmenttotheGroupexceptforcapitalcontributionsfromthegovernmentinthecapacityasaninvestorintheGroup.AgovernmentgrantisrecognizedwhenthereisreasonableassurancethatthegrantwillbereceivedandthattheGroupwillcomplywiththeconditionsattachingtothegrant.Ifagovernmentgrantisintheformofatransferofamonetaryasset,itismeasuredattheamountreceivedorreceivable.Ifagovernmentgrantisintheformofatransferofanon-monetaryasset,itismeasuredatfairvalue.GovernmentgrantsrelatedtoassetsaregrantswhoseprimaryconditionisthattheGroupqualifyingforthemshouldpurchase,constructorotherwiseacquirelong-termassets.Governmentgrantsrelatedtoincomearegrantsotherthanthoserelatedtoassets.Agovernmentgrantrelatedtoanassetisrecognizedasdeferredincomeandamortizedovertheusefullifeoftherelatedassetonareasonableandsystematicmannerasotherincomeornon-operatingincome.AgrantthatcompensatestheCompanyforexpensesorlossestobeincurredinthefutureisrecognizedasdeferredincome,andincludedinotherincomeornon-operatingincomeintheperiodsinwhichtheexpensesorlossesarerecognized,orincludedinotherincomeornon-operatingincomedirectly.

29.Incometax

Currenttaxanddeferredtaxarerecognizedinprofitorlossexcepttotheextentthattheyrelatetoabusinesscombinationoritemsrecognizeddirectlyinequity(includingothercomprehensiveincome).Currenttaxistheexpectedtaxpayablecalculatedattheapplicabletaxrateontaxableincomefortheyear,plusanyadjustmenttotaxpayableinrespectofpreviousyears.Atthebalancesheetdate,currenttaxassetsandliabilitiesareoffsetonlyiftheGrouphasalegallyenforceablerighttosetthemoffandalsointendseithertosettleonanetbasisortorealizetheassetandsettletheliabilitysimultaneously.Deferredtaxassetsanddeferredtaxliabilitiesarisefromdeductibleandtaxabletemporarydifferencesrespectively,beingthedifferencesbetweenthecarryingamountsofassetsandliabilitiesforfinancialreportingpurposesandtheirtaxbases,whichincludethedeductiblelossesandtaxcreditscarriedforwardtosubsequentperiods.Deferredtaxassetsarerecognizedtotheextentthatitisprobablethatfuturetaxableprofitswillbeavailableagainstwhichdeductibletemporarydifferencescanbeutilized.Deferredtaxisnotrecognizedforthetemporarydifferencesarisinginasingletransactionthatisnotabusinesscombination,andaffectsneitheraccountingprofitnortaxableprofit(ordeductibleloss)atthetimeofthetransaction,andtheinitiallyrecognizedassetsandliabilitiesdonotresultinequaltaxabletemporarydifferencesordeductibletemporarydifferences.Deferredtaxisnotrecognizedfortaxabletemporarydifferencesarisingfromtheinitialrecognitionofgoodwill.Atthebalancesheetdate,deferredtaxismeasuredbasedonthetaxconsequencesthatwouldfollowfromtheexpectedmannerofrecoveryorsettlementofthecarryingamountsoftheassetsandliabilities,usingtaxratesenactedatthebalancesheetdatethatareexpectedtobeappliedintheperiodwhentheassetisrecoveredortheliabilityissettled.Thecarryingamountofadeferredtaxassetisreviewedateachbalancesheetdate,andisreducedtotheextentthatitisnolongerprobablethattherelatedtaxbenefitswillbeutilized.Suchreductionisreversedtotheextentthatitbecomesprobablethatsufficienttaxableprofitswillbeavailable.Atthebalancesheetdate,deferredtaxassetsanddeferredtaxliabilitiesareoffsetifallofthefollowingconditionsaremet:

-thetaxableentityhasalegallyenforceablerighttooffsetcurrenttaxliabilitiesandcurrenttaxassets;-theyrelatetoincometaxesleviedbythesametaxauthorityoneither:thesametaxableentity;ordifferenttaxableentitieswhichintendeithertosettlethecurrenttaxliabilitiesandcurrenttaxassetsonanetbasis,ortorealizetheassetsandsettletheliabilities

simultaneously,ineachfutureperiodinwhichsignificantamountsofdeferredtaxliabilitiesordeferredtaxassetsareexpectedtobesettledorrecovered.30Lease

Leasereferstoacontractinwhichitisagreedthatthelessorconveystheuserightofanyassettothelesseeforaperiodoftimeinexchangeforconsideration.Onthecontractstartdate,theGroupshallevaluatewhetherthecontractis,orcontains,alease.Whereeitherpartytheretoconveystherighttocontroltheuseofoneormoreidentifiedassetsforaperiodoftimeinexchangeforconsideration,thecontractis,orcontainsalease.Todeterminewhetherthecontractconveystherighttocontroltheuseofidentifiedassetsforaperiodoftime,theGroupconductsthefollowingassessments:

-Whetherthecontractinvolvestheuseofanidentifiedasset.Anidentifiedassetcanbeeitherexplicitlyspecifiedinacontract,orimplicitlywhentheassetisavailabletothecustomerandcanbeaphysicallydistinctportion,orifsomecapacityorotherportionoftheassetisnotphysicallydistinctbutsubstantiallyrepresentsthefullcapacityoftheasset,sothatthecustomerobtainssubstantiallyalloftheeconomicbenefitsfromtheuseoftheasset.Ifthesupplieroftheassethasthepracticalabilitytosubstitutetheassetthroughouttheperiodofuse,theassetisnotanidentifiedasset;-Whetherthelesseehastherighttoobtainsubstantiallyalloftheeconomicbenefitsfromtheuseoftheidentifiedassetthroughouttheperiodofuse;and-Whetherthelesseehastherighttodirecttheuseofanidentifiedassetthroughoutthisperiodofuse.Ifthecontractcontainsmultipleseparateleasesatthesametime,thelesseeandlessorwillsplitthecontractandhaveeachseparateleaseseparatelysubjecttoaccountingtreatment.Ifthecontractincludesleaseandnon-leasepartsatthesametime,thelesseeandthelessorwillsplitthemseparately.Whensplittingtheleaseandnon-leasepartsincludedinthecontract,thelesseeshallallocatethecontractconsiderationaccordingtotherelativeproportionofthesumofthestand-alonepriceofeachleasepartandthestand-alonepriceofeachnon-leasepart.ThelessorshallallocatethecontractconsiderationinaccordancewiththeprovisionsontransactionpriceallocationintheaccountingpolicystatedinNote5.22.

(1)WheretheGroupisthelessee

Uponthecommencementoftheleaseterm,theGrouprecognizesright-of-useassetsandleaseliabilitiesforleases.Theright-of-useassetsareinitiallymeasuredatcost,includinginitiallymeasuredamountofleasedliability;amountofleasepaymentsmadeonorbeforethecommencementdateoftheleaseterm(therelatedamountofleaseincentivehavingbeenenjoyedshallbededucted);initialdirectcostsincurredandcoststhattheGroupexpectstoincurtodisassembleandremoveleasedassets,restorethesitewhereleasedassetsarelocatedorrestoreleasedassetstotheagreedconditionunderthetermsofthelease.TheGroupemploysthestraight-linemethodtodepreciateright-of-useassets.WhereitcanbereasonablyrecognizedthattheownershipofleasedassetswillbeobtainedbytheGroupupon

expirationoftheleaseterm,leasedassetswillbedepreciatedduringtheservicelife;otherwise,leasedassetswillbedepreciatedduringtheleasetermortheremainingservicelifeofsuchleasedassetsbytheGroup,whicheverisshorter.Right-of-useassetsshallbeprovidedforimpairmentinaccordancewiththeaccountingpoliciesstatedinNote5.21.Wheninitiallycalculatingthepresentvalueoftheunpaidleasepaymentatthecommencementdateoftheleaseterm,theGroupshallemploytheinterestrateimplicitintheleaseasthediscountrate;wheretheinterestrateimplicitintheleasecannotbedetermined,theincrementallendingrateoftheGroupshallbeusedasthediscountrate.TheGroupcalculatestheinterestexpenseofleaseliabilitiesineachperiodoftheleasetermaccordingtoafixedperiodicrate,whichwillbeincludedincurrentprofitsandlossesorassetcost.Thevariableleasepaymentnotincludedinthemeasurementofleaseliabilitiesshallberecognizedincurrentprofitsandlossesandlossorrelatedassetcostwhentheyactuallyoccur.Incaseofanyoffollowingcircumstancesafterthecommencementdateoftheleaseterm,theGroupwillre-measureleaseliabilitiesatthepresentvalueoftheleasepaymentafteranychange:

-Wheretheamountpayableanticipatedchangesaccordingtotheguaranteedresidualvalue;-Wheretheindexorratiousedforrecognizingtheleasepaymentchanges;-WherethereisachangeintheGroup'sassessmentresultsoftheoptionofpurchase,renewaloptionoroptionofterminationofleaseortheactualexercisingoftheterminationoftherenewaloptionoroptionofterminationofleaseisinconsistentwiththeoriginalassessmentresult.WhentheGroupre-measuresleaseliabilities,thebookvalueofright-of-useassetsshallbeadjustedaccordingly.Wherethebookvalueofright-of-useassetshasbeenreducedtozero,butleaseliabilitiesstillneedtobesubjecttofurtherreduction,theremainingamountshallberecognizedincurrentprofitsandlosses.TheGroupdoesnotrecognizeright-of-useassetsandleasedliabilitiesforshort-termlease(leasewithaleasetermwithin12months)andleaseoflow-valueassets.TheGroupshallincluderelatedleasepaymentintothecurrentprofitsandlossesorrelevantassetcostsaccordingtothestraight-linemethodineachperiodoftheleaseterm.

(2)TheGroupasthelessor

Fromtheinceptionoflease,theGroupwilldivideleasesintofinanceleaseandoperatinglease.Financeleasereferstoaleaseinwhichalmostalltherisksandreturnsrelatedtotheownershipoftheleasedassetareessentiallytransferred,regardlessofwhethertheownershipisfinallytransferredornot.Operatingleasereferstootherleasesexceptforthefinancelease.WhentheGroupisthesubleaselessor,thesubleaseshallbeclassifiedbasedontheright-of-useassetsarisingfromtheoriginalleaseratherthantheunderlyingassetsoftheoriginallease.Iftheoriginalleaseisashort-termleaseandtheGroupelectstoapplythe

above-mentionedsimplifiedtreatmentofshort-termleasetotheoriginallease,theGroupshallclassifythesubleaseasanoperatinglease.Forfinanceleases,fromthecommencementdateoftheleaseterm,theGrouprecognizesfinanceleasereceivablesforfinanceleasesandderecognizesthefinanceleaseassets.TheGroupregardsthenetinvestmentinaleaseastheentryvalueoffinanceleasereceivablesatthetimeofinitialmeasurementoffinanceleasereceivables.Thenetinvestmentinaleaseisthesumofthepresentvalueofunguaranteedresidualvalueandrentalreceiptsnotreceivedyetonthecommencementdateoftheleasetermwhichissubjecttodiscountingattheinterestrateimplicitintheleaseterm.TheGroupcalculatesandrecognizestheinterestincomeineachperiodwithintheleasetermaccordingtoafixedperiodicrate.DerecognitionandimpairmentoffinanceleasereceivablesshallbesubjecttoaccountingtreatmentinaccordancewiththeaccountingpoliciesstatedinNote5.10.Thevariableleasepaymentwhichisnotincludedinthenetinvestmentinaleaseshallberecognizedincurrentprofitsandlosseswhenitactuallyoccurs.Duringeachperiodoftheleaseterm,theGrouprecognizesleasereceiptsfromoperatingleasesasrentalrevenuebyusingthestraight-linemethod.TheGroupcapitalizesinitialdirectcostspertainingtooperatingleasesupontheiroccurrence,andapportionsthemasperthesamebasisusedforrecognizingtherentalincomewithintheleasetermandincludesthemincurrentprofitsandlossesbyperiod.Thevariableleasereceiptsrelatedtooperatingleasesthatarenotincludedintheleasereceiptsshallberecognizedincurrentprofitsandlosseswhentheyactuallyoccur.Thevariableleasepaymentwhichisnotincludedintheleasereceiptsshallberecognizedincurrentprofitsandlosseswhenitactuallyoccurs.

31.Assetsheldforsale

TheGroupclassifiedanon-currentassetordisposalgroupasheldforsalewhenthecarryingamountofanon-currentassetordisposalgroupwillberecoveredthroughasaletransactionratherthanthroughcontinuinguse.Adisposalgroupreferstoagroupofassetstobedisposedof,bysaleorotherwise,togetherasawholeinasingletransactionandliabilitiesdirectlyassociatedwiththoseassetsthatwillbetransferredinthetransaction.Anon-currentassetordisposalgroupisclassifiedasheldforsalewhenallthefollowingcriteriaaremet:

-Accordingtothecustomarypracticesofsellingsuchassetordisposalgroupinsimilartransactions,thenon-currentassetordisposalgroupmustbeavailableforimmediatesaleintheirpresentconditionsubjecttotermsthatareusualandcustomaryforsalesofsuchassetsordisposalgroups;-Itssaleishighlyprobable,thatis,theGrouphasmadearesolutiononasaleplanandhasobtainedafirmpurchasecommitment.Thesaleistobecompletedwithinoneyear.Non-currentassetsordisposalgroupsheldforsalearestatedatthelowerofcarryingamountandfairvaluelesscoststosell(exceptfinancialassets,deferredtaxassetsandinvestmentpropertiessubsequentmeasuredatfairvalueinitiallyandsubsequently.Anyexcessofthe

carryingamountoverthefairvaluelesscoststosellisrecognizedasanimpairmentlossinprofitorloss.

32.Profitdistributions

Dividendsorprofitdistributionsproposedintheprofitappropriationplan,whichwillbeapprovedafterthebalancesheetdate,arenotrecognizedasaliabilityatthebalancesheetdatebutaredisclosedinthenotesseparately.

33.Relatedparties

Ifapartyhasthepowertocontrol,jointlycontrolorexercisesignificantinfluenceoveranotherparty,orviceversa,orwheretwoormorepartiesaresubjecttocommoncontrolorjointcontrolfromanotherparty,theyareconsideredtoberelatedparties.Relatedpartiesmaybeindividualsorenterprises.EnterpriseswithwhichtheCompanyisundercommoncontrolonlyfromtheStateandthathavenootherrelatedpartyrelationshipsarenotregardedasrelatedparties.Inadditiontotherelatedpartiesstatedabove,theGroupdeterminesrelatedpartiesbasedonthedisclosurerequirementsofAdministrativeProceduresontheInformationDisclosuresofListedCompaniesissuedbytheCSRC.

34.Segmentreporting

TheGroupisprincipallyengagedintheproductionandsalesofwine,brandy,andsparklingwineinChina,France,Spain,ChileandAustralia.InaccordancewiththeGroup’sinternalorganizationstructure,managementrequirementsandinternalreportingsystem,theGroup’soperationisdividedintofourparts:China,Spain,France,ChileandAustralia.Themanagementperiodicallyevaluatessegmentresults,inordertoallocateresourcesandevaluateperformances.In2025,over82%ofrevenue,morethan94%ofprofitandover90%ofnon-currentassetsderivedfromChina/arelocatedinChina.ThereforetheGroupdoesnotneedtodiscloseadditionalsegmentreportinformation.

35.Significantaccountingestimatesandjudgments

Thepreparationofthefinancialstatementsrequiresmanagementtomakeestimatesandassumptionsthataffecttheapplicationofaccountingpoliciesandthereportedamountsofassets,liabilities,incomeandexpenses.Actualresultsmaydifferfromtheseestimates.Estimatesaswellasunderlyingassumptionsanduncertaintiesinvolvedarereviewedonanongoingbasis.Revisionstoaccountingestimatesarerecognizedintheperiodinwhichtheestimateisrevisedandinanyfutureperiodsaffected.ForsignificantaccountingestimatesofthisCompany,seeNotes5.3,7,11and16.

36.Changesinsignificantaccountingpoliciesandaccountingestimates

(1)Changesinsignificantaccountingpolicies

Nil

(2)Changesinsignificantaccountingestimates

Nil

6.Taxes

1.Maintaxesandtaxrates

Taxcategory

2.Taxincentives

NingxiaChangyuGrapeGrowingCo.,Ltd.(“NingxiaGrowing”),asubsidiaryoftheGroup,engagedingrapegrowing,isincorporatedinYongningCounty,NingxiaHuizuAutonomousRegion.Accordingtoclause27ofPRCCorporateIncomeTaxandclause86ofPRCCorporateIncomeTaxMeasuresforImplementation,NingxiaGrowingenjoysthepreferentialpolicyofanexemptionofcorporateincometaxfromgrapecultivationincome.YantaiChangyuGrapeGrowingCo.,Ltd.(“GrapeGrowing”),abranchoftheCompany,engagedingrapegrowing,isincorporatedinZhifuDistrict,YantaiCity,ShandongProvince.Accordingtoclause27ofPRCCorporateIncomeTaxandclause86ofPRCCorporateIncomeTaxMeasuresforImplementation,GrapeGrowingenjoysthepreferentialpolicyofanexemptionofcorporateincometaxfromgrapecultivationincome.GrapePlantingBranchofYantaiChangyuWineR&DandManufacturingCo.,Ltd.(“R&DandGrowing”),abranchoftheCompany,engagedingrapegrowing,isincorporatedinYEDA,ShandongProvince.AccordingtoClause27ofPRCCorporateIncomeTaxandClause86ofPRCCorporateIncomeTaxMeasuresforImplementation,R&DandGrowingenjoysthepreferentialpolicyofanexemptionofcorporateincometaxfromgrapecultivationincome.BeijingChangyuAFIPAgricultureDevelopmentCo.,Ltd.(“AgricultureDevelopment”),a

subsidiaryoftheGroup,engagedingrapegrowing,isincorporatedinMiyunCounty,Beijing.Accordingtoclause27oftheCorporateIncomeTaxLawofthePeople’sRepublicofChinaandclause86oftheImplementationRulesofEnterpriseIncomeTaxLawofthePeople’sRepublicofChina,AgricultureDevelopmentenjoysthepreferentialpolicyofanexemptionofcorporateincometaxfromgrapecultivationincome.XinjiangBabaoBaronChateauCo.,Ltd.(“ShiheziChateau”),asubsidiaryoftheCompany,engagedinthesaleofrawwineandfinishedgrapewine,isincorporatedinShiheziCity,XinjiangUygurAutonomousRegion.InaccordancewithAnnouncementonContinuingtheEnterpriseIncomeTaxPoliciesfortheLarge-ScaleDevelopmentofWesternChinaoftheMinistryofFinance,theStateTaxationAdministrationandtheNationalDevelopmentandReformCommission(AnnouncementNo.23[2020]oftheMinistryofFinance),ShiheziChateauisqualifiedtoenjoypreferentialtaxationpolicies,whichmeansitcanpaycorporateincometaxatapreferentialrateof15%fortheperiodfrom2021to2030.NingxiaChateauChangyuLongyuCo.,Ltd.(referredtoas“NingxiaChateau”),asubsidiaryoftheCompany,engagedinthesaleoffinishedgrapewine,isincorporatedinYinchuanCity,NingxiaHuizuAutonomousRegion.InaccordancewithAnnouncementonContinuingtheEnterpriseIncomeTaxPoliciesfortheLarge-ScaleDevelopmentofWesternChinaoftheMinistryofFinance,theStateTaxationAdministrationandtheNationalDevelopmentandReformCommission(AnnouncementNo.23[2020]oftheMinistryofFinance),NingxiaChateauisqualifiedtoenjoypreferentialtaxationpolicies,whichmeansitcanpaycorporateincometaxatapreferentialrateof15%fortheperiodfrom2021to2030.Changyu(Ningxia)WineCo.,Ltd.(“NingxiaWine”),asubsidiaryoftheCompany,engagedintheproductionandsaleofrawwine,isincorporatedinYinchuanCity,NingxiaHuizuAutonomousRegion.InaccordancewithAnnouncementonContinuingtheEnterpriseIncomeTaxPoliciesfortheLarge-ScaleDevelopmentofWesternChinaoftheMinistryofFinance,theStateTaxationAdministrationandtheNationalDevelopmentandReformCommission(AnnouncementNo.23[2020]oftheMinistryofFinance),NingxiaWineisqualifiedtoenjoypreferentialtaxationpolicies,whichmeansitcanpaycorporateincometaxatapreferentialrateof15%fortheperiodfrom2021to2030.

AccordingtotheLawofthePeople'sRepublicofChinaonEnterpriseIncomeTaxanditsimplementationregulations,theAnnouncementonFurtherImplementingthePreferentialIncomeTaxPoliciesforMicroandSmallEnterprises(AnnouncementNo.13of[2022]oftheMinistryofFinanceandtheStateTaxationAdministration),andtheAnnouncementoftheMinistryofFinanceandtheStateTaxationAdministrationonTaxandFeePoliciesRelatedtoFurtherSupportingtheDevelopmentofSmallandMicroEnterprisesandIndividualIndustrialandCommercialHouseholds(AnnouncementNo.12of[2023]oftheMinistryofFinanceandtheStateTaxationAdministration),theannualtaxableincomeofasmalllow-profitenterprisemeetingtheeligibilitycriteriashallbeincludedintaxableincomeat25%oftheamount,withtheapplicableenterpriseincometaxrateof20%.BeijingChangyuWineIndustryMarketingCo.,Ltd.(“BeijingAllotting”),asubsidiaryoftheCompany,hasbeenidentifiedaseligiblesmalllow-profitenterprise.AccordingtotheprovisionsoftheAnnouncementoftheMinistryofFinanceandtheStateTaxationAdministrationonClarifyingPoliciesontheReductionandExemptionofValue-AddedTaxforSmall-ScaleVATTaxpayers(AnnouncementNo.19of[2023]ofthe

MinistryofFinanceandtheStateTaxationAdministration),fromJanuary1,2024toDecember31,2027,small-scaleVATtaxpayerssubjecttoalevyrateof3%ontaxablesalesincomewillenjoyareducedVATrateof1%;andprepaidVATitemsthataresubjecttoa3%pre-levyratewillenjoyareducedVATprepaymentrateof1%.andXinjiangChangyuSalesCo.,Ltd.WeimeisiTastingCenterBranchenjoysthistaxpreferentialpolicy.AccordingtotheprovisionsoftheAnnouncementoftheMinistryofFinanceandtheStateTaxationAdministrationonFurtherStrengtheningtheImplementationofthePoliciesRegardingtheRefundofTerm-EndExcessInputValue-AddedTaxCredits(AnnouncementNo.14of[2022]oftheMinistryofFinanceandtheStateTaxationAdministration),itwillfurtherstrengthentheimplementationoftherefundofterm-endexcessinputvalue-addedtaxcreditsandexpandtheindustryscopeofthepolicyoffullyrefundingtheexcessinputvalue-addedtaxcredits.ThisCompanyandeligiblesubsidiarieshaveenjoyedtherefundofterm-endexcessinputvalue-addedtaxcredits.AccordingtotheAnnouncementoftheMinistryofFinanceandtheStateTaxationAdministrationonTaxandFeePoliciesRelatedtoFurtherSupportingtheDevelopmentofSmallandMicroEnterprisesandIndividualIndustrialandCommercialHouseholds(AnnouncementNo.12of[2023]oftheMinistryofFinanceandtheStateTaxationAdministration),fromJanuary1,2023toDecember31,2027,asmall-scaleVATtaxpayer,asmalllow-profitenterpriseoranindividualindustrialandcommercialhouseholdmaybepayresourcetax(excludingwaterresourcetax),urbanmaintenanceandconstructiontax,propertytax,urbanlandusetax,stamptax(excludingsecuritiestradingstamptax),farmlandoccupationtax,educationalsurtax,orlocaleducationsurchargesathalfthenormalrate.SomeoftheCompany’ssubsidiariesareeligibleforthereductionof“sixtaxesandtwofees”.

7.Notestoitemsintheconsolidatedfinancialstatement

1.Monetarycapital

Unit:yuan

Item

AsatJune30,2025,thedetailsofrestrictedbankdepositsareasfollows:

AsatJune30,2025,thebankdepositsoftheGroupincludingshort-termfixeddepositsrangingfrom3monthsto12monthsamountedtoRMB57,650,000yuan,withtheinterestratesrangingfrom1.30%to2.25%(December31,2024:RMB78,650,000yuan).

AsatJune30,2025,thedetailsofothermonetaryfundsarelistedasfollows:

Unit:yuan

Item

AsofJune30,2025,theGroupdoesnothaveanyspecialinterestarrangementssuchasestablishingjointfundmanagementaccountswithrelatedparties.

2.BillsreceivableClassificationofbillsreceivable

Theabovebillsreceivableareallduewithinoneyear.

3.Accountsreceivable

(1)Disclosedbyage:

Unit:yuan

AsatJune30,2025,theaccountsreceivablewithownershiprestrictionswereRMB55,173,340yuan(December31,2024:35,917,860yuan).PleaserefertoNote7.20fordetails.

(2)Accountsreceivableareanalyzedbycustomercategoryasfollows:

Unit:yuan

Total

(3)Disclosedbyprovisionforbaddebts:

Unit:yuan

(4)Provisionforbaddebtsaccrued,withdrawnortransferredbackinthisperiodProvisionforbaddebtsaccruedinthisperiod:

Unit:yuan

(5)AccountsreceivableactuallycancelledafterverificationinthisperiodNil

(6)Accountsreceivableandcontractassetssituationcollectedbyborrowersoftop5unitsrankedbyendingbalance

Unit:yuan

Customer4

(7)AccountsreceivableterminatingrecognitionduetotransferoffinancialassetsNil

(8)AccountsreceivabletransferredandincludedinassetsandliabilitiesNil

4.Receivablesfinancing

Unit:yuan

(1)PledgedbillsreceivableoftheGroupattheendoftheyearNil

(2)Outstandingendorsedbillsthathavenotmaturedattheendoftheyear

AsatJune30,2025,billsendorsedbytheGrouptootherpartieswhicharenotyetdueisRMB80,494,726yuan(December31,2024:RMB261,965,866yuan).Thenotesareusedforpaymenttosuppliersandconstructions.TheGroupbelievesthatduetogoodreputationofbank,theriskofnotesnotacceptingbybankonmaturityisverylow,thereforederecognizethenotereceivablesendorsed.Ifthebankisunabletopaythenotesonmaturity,accordingtotherelevantlawsandregulationsofChina,theGroupwouldundertakelimitedliabilityforthenotes.

5.Advancepayment

(1)Advancepaymentlistedbyage

Unit:yuan

Age

(2)Advancepaymentcollectedbyprepaidpartiesoftop5unitsrankedbyendingbalance

Unit:yuan

6.Otherreceivables

Unit:yuan

Otherreceivables

(1)Otherreceivablesclassifiedbynature

Unit:yuan

Total

(2)Otherreceivablesclassifiedbynature

Unit:yuan

(3)Provisionforbaddebtsaccrued,withdrawnortransferredbackinthisperiod

TheprovisionforbaddebtsaccruedinthisperiodwasRMB0yuan;andthatwithdrawnortransferredbackinthisperiodwasRMB0yuan.

(4)OtherreceivablesactuallycancelledafterverificationinthisperiodNil

(5)Otherreceivablescollectedbyborrowersoftop5unitsrankedbyendingbalance

Unit:yuan

(6)Accountsreceivableinvolvinggovernmentsubsidies

Nil

(7)OtherreceivablesthatareterminatedforrecognitionduetotransferoffinancialassetsNil

(8)OtherreceivablestransferredandthenincludedinassetsandliabilitiesNil

7.Inventories

(1)Inventoryclassification

Unit:yuan

Item

(2)Inventorydepreciationprovision

Unit:yuan

8.Othercurrentassets

Unit:yuan

9.Long-termequityinvestments

Unit:yuan

Investee

Note1:TheGrouphasappointedonedirectortoeachoftheseinvestees.Note2:TheGrouphasappointedtwoDirectorstotheseinvestees.

10.Investmentrealestate

(1)Investmentrealestatebycostmeasurementmethod

Unit:yuan

Item

11.Fixedassets

Unit:yuan