PDF《GRACE WINE HOLDINGS LIMITED》

1 Tim Mei Avenue Central Hong Kong HONG KONG LEGAL ADVISER H.M. Chan &

Co in association with Taylor Wessing 21/F, No.

8 Queen'

s Road Central Hong Kong REGISTERED OFFICE Cricket Square Hutchins Drive P.O. Box

2681 Grand Cayman KY1C1111 Cayman Islands PRINCIPAL PLACE OF BUSINESS IN HONG KONG Unit 1-3, 11/F Westlands Centre No.

20 Westlands Road Hong Kong

3 GRACE WINE HOLDINGS LIMITED Annual Report

2018 Corporate Information CAYMAN ISLANDS PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE Conyers Trust Company (Cayman) Limited Cricket Square Hutchins Drive P.O. Box

2681 Grand Cayman KY1-1111 Cayman Islands HONG KONG BRANCH SHARE REGISTRAR Tricor Investor Services Limited Level 22, Hopewell Centre

183 Queen'

s Road East Hong Kong PRINCIPAL BANKERS China Construction Bank Corporation, Taigu Branch No.

119 Xihuan Road Taigu County Jinzhong City PRC China Merchants Bank, Shanghai Branch, Taixing Sub-branch No.

847 Xinzha Road Jing'

an District Shanghai PRC STOCK CODE

8146 4 GRACE WINE HOLDINGS LIMITED Annual Report

2018 Chairlady'

s Statement Dear Shareholders, On behalf of the board of directors (the Directors or the Board ) of Grace Wine Holdings Limited ( Grace Wine or the Company , and together with its subsidiaries, the Group , we , us or our ), I am pleased to present the Company'

s

2018 annual report. In this statement, I highlight some of our achievements this year, which I hope will help you to gain a better understanding of our business beyond what can be learned from looking at the financial results. For the whole year of 2018, our revenue grew to RMB72.6 million, representing an increase of 3.1% from RMB70.4 million for the same period in 2017. Our cost of goods sold ( COGS ), however, was negatively affected by past decisions made by us following 2013'

s significant market downturn. More specifically, in order to balance our sales and inventory, we decided to lower our production for the vintages 2013-2016, which raised our per-unit production costs. We expect that the COGS will return to historical norms in the second half of

2019 as we continue to reduce our inventories of wine made in the 2013-2016 period. Our listing costs, sale of subsidiaries and the change in our subsidiaries'

dividend policy are the three other principal factors that affected our

2018 results. You can find further details in the section headed Management Discussion and Analysis section in this annual report. The wine market in the People'

s Republic of China (the PRC , China or Mainland China ) is dynamic and ever- changing. We compete not only with an increasing number of local producers, but also with producers from all over the world. We believe that continuing innovation and embracing technology is our key to moving forwards in the industry. We are particularly excited about the growth we have achieved on our online platforms. Compared to 2017, our online revenue in

2018 grew by 34.1%. Online platforms not only offer us an exciting way to grow;

we are also able to use this channel to gather useful data about our consumers, helping us to understand how to service them better. In my previous interim statement, I wrote about our collaboration with key opinion leaders (KOLs) in other industries. We continue to believe that this channel will enable us to tap into the non-drinking millennial market. Collaborations with KOLs can be difficult, however, as they can be costly to employ and are often selective when selecting their business partners. We have been able to overcome these challenges by leveraging the reputation that we have established in the industry and our brand recognition. In 2018, our revenue through this channel increased by 1.3 time........