Stock Code: 603609 Stock Abbreviation (English): Wellhope
Liaoning Wellhope Agri-Tech Joint Stock Co., Ltd.
2019 Semi-Annual Report
August 2019
Important StatementsI. The Board of Directors, Supervisory Board, Directors, Supervisors and SeniorManagement of Liaoning Wellhope hereby warrant that there are no false representations,misleading statements or material omissions in this semi-annual report, jointly andseverally accept full responsibility for the truthfulness, accuracy and completeness of thecontents of this report.II. All the Board Directors attended the board meeting.III. This semi-annual report is unaudited.IV. The Company's Chairman Jin Weidong and the Director of internal audit ZhangWenliang warrant the truthfulness, accuracy and completeness of the informationpresented in the financial statements in this report.V. In the reporting period, there has been no plan for profit distribution or capitalreserve converted into share capital.VI. Risk Statement of Forward-looking StatementsThe forward-looking descriptions in this report in terms of plans, development strategiesand other information cannot be deemed the Company's commitment to investors. Pleasebeware of the investment risks.VII. There has been no occurrence of the Company's non-business capital being occupiedby controlling shareholders and their related parties.VIII. There has been no occurrence of the Company violating its decision-makingprocedure while providing external guarantees.IX. Material Risk WarningThe Company describes possible risks in detail in this report. Please refer to "PossibleRisks" in Section IV "Business Operations Analysis".X. This semi-annual report has been issued in both Chinese and English versions. In casethere is any discrepancy or inconsistency between the two versions, the Chinese versionshall prevail. The disclosed Chinese version of 2019 Semi-annual Report can be obtained at:
www.sse.com.cn.
Contents
Section I Glossary ...... 4
Section II Company Profile and Key Financial Information ...... 5
Section III Business Overview ...... 8
Section IV Business Operations Analysis ...... 23
Section V Important Disclosures ...... 42
Section VI Changes in Common Shares and Shareholder Information ...... 55
Section VII Preference Share ...... 59
Section VIII Directors, Supervisors and Senior Management ...... 60
Section IX Corporate Bond ...... 61
Section X Financial Statements ...... 62
Section XI Reference ...... 78
Section I Glossary
| CSRC | refers to | China Securities Regulatory Commission |
| SSE | refers to | Shanghai Stock Exchange |
| Wellhope, Liaoning Wellhope, the Company | refers to | Liaoning Wellhope Agri-Tech Joint Stock Co., Ltd. |
| Reporting Period | refers to | January 1st, 2019-June 30th, 2019 |
| De Heus | refers to | De Heus Mauritius Ltd., established in Port Louis, Mauritius, one of the shareholders of Wellhope |
| Royal De Heus | refers to | Koninklijke De Heus B.V., the parent company of De Heus Mauritius Ltd., the biggest feed company in the Netherlands |
| Heli Investment | refers to | Shenyang Wellhope Heli Investment Ltd., one of the shareholders of Wellhope |
| Company Constitution | refers to | The Constitution of Liaoning Wellhope Agri-Tech Joint Stock Co., Ltd. |
| Shareholders' Meeting | refers to | The Shareholders' Meeting of Liaoning Wellhope Agri-Tech Joint Stock Co., Ltd. |
| Board of Directors | refers to | The Board of Directors of Liaoning Wellhope Agri-Tech Joint Stock Co., Ltd. |
| Supervisory Board | refers to | The Supervisory Board of Liaoning Wellhope Agri-Tech Joint Stock Co., Ltd. |
| Premix | refers to | Also known as additive premix, it is a well-proportioned mixture prepared by two or more than two kinds of feed additives and carrier or diluents according to appropriate proportion. It is a general name for compound premix, microelement premix and vitamin premix. |
| Concentrate Feed | refers to | It is a well-proportioned mixture consisted of protein feed, mineral feed and feed additives according to appropriate proportion, it can be made into compound feed by mixing with energy feed in a specified proportion. |
| Compound Feed | refers to | Based on the nutritional needs of animals, more feed raw materials and feed additives are industrially processed according to feed formula, it can be directly used for feeding animals. |
Section II Company Profile and Key Financial InformationI. Company Information
| Company Name(English) | Liaoning Wellhope Agri-Tech Joint Stock Co., Ltd. |
| Abbreviation(English) | Wellhope |
| Company Name(Chinese) | 辽宁禾丰牧业股份有限公司 |
| Abbreviation(Chinese) | 禾丰牧业 |
| Legal Representative | Jin Weidong |
II. Contact Person
| Secretary of the Board | Representative of Securities Affairs | |
| Name | Zhao Xin | Yang Guolai |
| Address | No. 169, Huishan Street, Shenbei New District, Shenyang, Liaoning, P. R. of China | No. 169, Huishan Street, Shenbei New District, Shenyang, Liaoning, P. R. of China |
| Tel | 024-88081409 | 024-88081409 |
| Fax | 024-88082333 | 024-88082333 |
| hfmy@wellhope.co | hfmy@wellhope.co |
III. Basic Information of the Company
| Registered Address | No. 169, Huishan Street, Shenbei New District, Shenyang, Liaoning, P. R. of China |
| Postal Code | 110164 |
| Office Address | No. 169, Huishan Street, Shenbei New District, Shenyang, Liaoning, P. R. of China |
| Postal Code | 110164 |
| Company Website | www.wellhope-ag.com |
| hfmy@wellhope.co |
IV. Place where the Semi-Annual Report is Prepared
| Media Designated by the Company for Disclosing Information | China Securities Journal, Shanghai Securities News, Securities Times |
| Website Designated by the CSRC for Publishing the Annual Report | www.sse.com.cn |
| Place where the Company Prepares its Semi-annual Report | Securities Department of the Company |
V. Stock Information
| Stock Type | Stock Exchange for Listing | Stock Abbreviation | Stock Code |
| A Share | Shanghai Stock Exchange | Wellhope(禾丰牧业) | 603609 |
VI. Other InformationNot applicable
VII. Key Accounting Data and Financial Performance Indicators
1. Key Accounting Data
Unit: yuan Currency: RMB
| Item | January-June, 2019 | January-June, 2018 | Year-on-year change % |
| Operating revenue | 7,727,400,004.75 | 6,850,215,702.49 | 12.81 |
| Net profit attributable to the shareholders of the Company | 359,008,639.18 | 164,359,110.71 | 118.43 |
| Net profit attributable to the shareholders of the Company deducting non-recurring gains and losses | 358,296,799.48 | 157,546,972.69 | 127.42 |
| Net cash flow from operating activities | 296,568,981.22 | 290,259,024.18 | 2.17 |
| June 30th, 2019 | December 31st, 2018 | Change compared with the end of prior year % | |
| Net assets attributable to the shareholders of the Company | 4,839,986,271.06 | 3,851,915,758.64 | 25.65 |
| Total assets | 8,317,280,762.53 | 6,930,694,562.43 | 20.01 |
2. Key Financial Performance Indicators
| Item | January-June, 2019 | January-June, 2018 | Year-on-year change % |
| Basic earnings per share (yuan per share) | 0.41 | 0.20 | 105.00 |
| Diluted earnings per share (yuan per share) | 0.41 | 0.20 | 105.00 |
| Basic earnings per share deducting non-recurring gains and losses (yuan per share) | 0.41 | 0.19 | 115.79 |
| Weighted average return on equity (%) | 8.37 | 4.77 | Increased 3.6 percentage points |
| Weighted average return on equity deducting non-recurring gains and losses (%) | 8.36 | 4.58 | Increased 3.78 percentage points |
VIII. Non-Recurring Gains and Losses
Unit: yuan Currency: RMB
| Item | Amount |
| Gains or losses on disposal of non-current assets | -4,131,816.55 |
| Government grants charged to current gains or losses (excl. the government grants that are closely related to the Company's ordinary course of business and gained constantly at fixed quotas or amounts as per certain standards based on the state polices) | 16,245,640.41 |
| Gains or losses on fair value changes in holding the trading financial assets and liabilities as well as derivative financial assets and liabilities, and investment income from disposal of trading financial assets and liabilities, derivative financial assets and liabilities as well as other debt investment (excl. the effective portion of hedges | -484,195.89 |
| that arise in the Company's ordinary course of business) | |
| Non-operating income and expense other than those described above | -12,473,989.60 |
| Non-controlling interests effects | 4,271,396.05 |
| Income tax effects | -2,715,194.72 |
| Total | 711,839.70 |
Section III Business OverviewI. Principal Business, Operation Model and Current Situation of the Industry in the
Reporting PeriodPrincipal business of Wellhope (hereinafter referred to as "the Company") primarilyconsists of feed production and sale, feed raw materials trade, integrated broiler business,pig raising business and related business. All the operating segments run under the overallstrategy, and carry out operation activities in their respective business areas in an orderlymanner.
1. Feed business and feed raw materials trade business
A. Snapshot of the industryAfrican swine fever is reshaping China’s feed and pig raising industries. In the first half of2019, pig inventories continuously decreased due to swine fever. The statistics showedthat the inventories of reproductive sow and pig in the end of June 2019 respectivelydeclined 26.61% and 28.79% compared with the same period of prior year, and thedeliveries of pig from January to June in 2019 fell 11.47% on a year-on-year basis. Africanswine fever has brought a huge impact on the entire industry, the consumption of pig feedhas dropped significantly, feed companies lowered feed price to seize their market share,making competitions among feed players fierce. Meanwhile, feed product portfolios havebeen significant changed. On one hand, African swine fever boosted the development ofbroiler, layer and ruminant raising industries, which stimulated the consumption of poultryfeed, ruminant and aquatic feed. On the other hand, some pig feed players increased theproduction of poultry, aquatic and ruminant feed to ensure operating rate, whichindirectly promoted the growing output of poultry, aquatic and ruminant feed.According to public statistics, China's total feed production in the first half of 2019 reached
93.06 million tonnes, dropped 0.5% compared with the same period of prior year, pig feedof which recorded 36.3 million tonnes, decreased 14%, layer feed realized 13.03 milliontonnes, increased 10.5%, broiler feed reached 32.79 million tonnes, rose 12.4%, ruminantfeed realized 4.42 million tonnes, grew 4.9%. In January 2019, pig feed and poultry feedrespectively accounted for 46% and 30.9% of total feed production, while in June,accounted for 34.9% and 35.3% respectively.
Moreover, in accordance with the newly revised regulations, starting from July 2019, feedmanufacturers should use new production license instead of original inspection certificate.In the meantime, higher requirements have been put forward in terms of processingequipment and quality inspection, etc., market access for feed players has been stricter.Furthermore, from July 1st, 2020, feed manufacturers have to stop producing commercialfeed that contains additives of growth-promoting drugs (except traditional Chinesemedicine), previously produced commercial feed can be used until December 31st, 2020.B. Business profileThe Company manufactures and sells animal feed for swine, poultry, ruminant, aquaticand fur-farmed animals, which are categorized into premix, concentrate and compoundfeed. Driven by the principle of “constantly working on new products, never following thebeaten path”, it always designs tailor-made products for animals in different growth stages.Since 2006, the Company has entered a strategic cooperation with Royal De Heus, a Dutchcompany also a global player in animal nutrition, which is active in over 75 countries.Supported by De Heus' worldwide resources, advanced know-how and centurial businesspractices, whilst relying on self-owned data-based nutrition evaluation system that derivesfrom years of researches on nutrition and raw materials, the Company is committed tosupplying feed products centered on the needs of local markets and customers, to offeringfarmers integrated services in terms of animal raising, disease prevention and control aswell as operation management, helping them to achieve the best economic benefits.The subsidiary trade companies mainly trade in feed raw materials in terms of fish meal,soybean meal and co-products of corn, also engage in feed additives including amino acid,antioxidant, mold inhibitors and vitamin. In addition, the trade companies are the salesagents of animal health products such as vaccines and veterinary medicine produced byglobal strategic suppliers.Based on tremendous strengths in technology, research and development (hereinafterreferred to as "R&D"), seasoned talents and brand influence, the Company has created anoperation model of integrating science and technology, manufacture and trade for feedand feed raw materials trade businesses, serving customers and local markets throughresources sharing, synergetic development and combined action. At present, the
Company's feed products cover the markets in 29 provinces and regions across China, ithas also built feed plants in Nepal, Indonesia and the Philippines, etc. Meanwhile, its tradebusiness distributes in Northeast China, Northern China, Eastern China, Southwest China,Guangdong Province and other regions, feed products and raw materials have also beenexported to Nepal, Mongolia and other countries.
2. Integrated broiler business
A. Snapshot of the industryIn regard of supply, supported by prosperous broiler market, the amount of newreplacement of grandparent stock increased in the first half of 2019, 15 local companiesreplaced their grandparent stock. The production of day old chick of parent stock waslower in the first quarter, but showed a rapid growth in the second quarter. In themeantime, the inventories of parent breeders and enforced molting breeders grew. Thestatistics indicated that in the first half of 2019, the production of day old chick of parentstock in China increased 16% compared with the same period of prior year, commercialday old chick grew 11%. However, the production performance of breeders was relativelylower, whilst the overall consumption needs were positive, so the situation of tight supplyof white feather broiler did not change substantially.In regard of demand, the statistics showed that in the first half of 2019, the price ofdomestic chicken products rose 7.5% compared with prior month and grew 25.1% on ayear-on-year basis. From January to May, chicken price increased in fluctuations andreached the highest in May (12,800-13,000 yuan per tonnes), which was the secondhighest price since 2011, but downstream inventories and other factors pushed chickenprice back down in June. In regard of consumption, the demand for chicken products rosesignificantly. Benefiting from the characteristics of high protein, low fat and low sterol,people's preference for chicken has been increased constantly, in addition, at presentinfluenced by severe African swine fever, as the alternative, the price of chicken productswas rising driven by the soaring price of pork.In general, in the first half of 2019, the supply and demand of white feather broilerindustry were flourishing with good expectations, and the overall profit level of theindustry realized historic high.
B. Business profileThe Company's broiler integrated chain covers more than 30 holding and associatedcompanies, which are mainly located in the provinces of Liaoning, Hebei, Henan, Jilin andShandong, etc. It has established three business units in terms of broiler raising, raw meatprocessing and further processing, which contains breeding, hatching, feed producing,commercial broiler raising, slaughtering and processing of raw meat, further processing ofprepared and cooked food. The integrated operation can effectively ensure the productionand supply of all operating segments, and facilitate the Company to control food safetyacross the entire chain. Meanwhile, through standardized management and streamlineoperation, the Company consolidates the controls of bio-safety, drug residue andin-process hygiene to achieve traceable food safety. The Company's integrated broilerbusiness has been becoming one of the main white feather broiler suppliers in China.
?Broiler raising unit: This unit covers breeder raising, day old chick hatching andcommercial broiler rearing. The Company formulates scientific and reasonable feedingprograms, light programs and disease prevention system to provide qualified eggs for thehatching farms; meanwhile, it has established thorough management system in thehatching process, introduced intelligent facilities that are available for hatching in batches,also equipped high-efficient and energy-saving hatcher and environment control system
for supplying healthy day old chicks. Entering commercial broiler sector, the Companymainly raises broiler by self-owned farms and contract(out-sourcing) farms under thepattern of unifying nine aspects, including unified site selection and planning, unifiedconstruction standards, unified day old chicks supply, unified disease prevention, unifiedfeed supply, unified medicine supply, unified technological guidance, unified testing andunified slaughtering and processing. Guided by scientific raising standards, all the farmsapply three tiers cage system, and automate all the processes from feed intake, watertemperature to moisture control, etc., meanwhile, the farms combine crop planting withanimal raising to reduce manure pollution and to promote resource recycling. The deliverybody weight of commercial broiler can reach over 2.8 kg, and the European productionindex (shortened as EPI in the following parts) can realize 380, which receive widerecognition from the cooperative farms.?Raw meat processing unit: The Company has 15 holding and associated slaughteringentities, which are equipped with state-of-the-art production lines with an annualslaughtering capacity of 550 million broilers. Driven by all-in and all-out inspection andquarantine, every single entity has established a total quality guarantee system andtraceability system to monitor all the processes. Meanwhile, the Company constantlystrengthens and improves slaughtering and processing techniques by ways of systematicpre-job training and skill promotion training as well as conducting "6S" management (i.e.,Seiri, Seiton, Seiketsu, Shitsuke, Standard, Safety), making the killing-out percentage standout among the companies with similar scale. The Company mainly supplies fresh andcold-storage broiler parts products, which are sold to meat processing companies,supermarkets and chain fast-food stores, major clients include Shineway Group, JinluoGroup, Yurun Group, RT-MART, McDonalds, KFC, Yoshinoya, Wallace, Dili Fresh Food,catering companies and other local fresh food markets, etc., as well as sold to otherregions such as Hong Kong and Macao, and countries in terms of Mongolia and Bahrain.?Further processing unit: The Company uses high-quality chicken supplied by self-ownedslaughtering entities as raw materials, at present it supplies over 100 kinds of products,which are sold to supermarkets and cooked food shops. Under the backdrop of continuousexpansion of consumer demand, the Company expands its exporting business of cookedfood to the markets of Japan and Korea.
3. Pig raising business
A. Snapshot of the industryIn terms of supply, affected by African swine fever, the inventories of breeding sowdeclined sharply in the first half of 2019 in China, making the supply of piglets tightened,the deliveries of pig were far below consumer demand. The statistics indicated that, theinventories of breeding sow and pig in the end of June 2019 respectively declined 26.61%and 28.79% compared with the same period of prior year. From January to June, thesupply of piglets decreased 29.27%, the deliveries of pig declined 11.47%, and the porkproduction decreased 10.31% compared with the same period of prior year, the shortsupply spurred a rapid rise in pig price. In June, pig prices in the provinces of Liaoning,Guangdong and other places broke 20 yuan per kg, pig raising industry made up deficitsand got surpluses.In terms of demand, the consumer demand of pork decreased to some extent draggeddown by African swine fever. However, at present, China still has a huge shortfall of porkand the demand of pig exceeds supply. The statistics showed that in the first half of 2019,the domestic pig price soared from 11 yuan per kg to 17 yuan. From the perspective ofmeat consumption, transporting live pigs was restricted to some extent, making circulatingwith cold-chain gradually increase, and the release of frozen meat inventories in 2018alleviated the consumption pressure of pork. Under the backdrop of a severe shortage ofpork, the consumptions of alternative chicken, beef, mutton and eggs have been graduallyincreased. Chicken, in particular, has become more and more popular among consumersdue to its good characteristics, and has gradually become the preferred alternative forpork.To conclude, in the first half of this year, the supply of pig showed the tight trend, and pigprice started to rise. The pig raising industry turned from deficit to profit. At the same time,the substitution effect of other protein foods on pork gradually increased.B. Business profileThe Company has entered pig raising business by self-built farms and co-invested farmsthat are primarily located in the provinces of Liaoning, Henan, Hebei, Heilongjiang andAnhui. In 2019, the first stage of 500,000 heads' pig project located in Fushun city of
Liaoning Province was completed and came into operation in April, the pig project locatedin Guanmen mountain of Fushun city will finish construction in the end of September, andthe construction of pig project in Gongzhuling city will be completed in the end of October.The Company raises breeder by self-owned farms, and rears finisher by self-owned farmstogether with contract(out-sourcing) family farms, following the pattern of "unifying fiveaspects" in terms of unified pig house standard, unified piglet supply, unified feed supply,unified feeding management and unified repurchase of commercial piglet. Among theCompany's pig projects, Lingyuan breeder farm is a designated trial farm of the nationalpig industry system, and the pig project located in Henan Province, raises sows by its ownfarms, also buys piglets for contract farms, which provides effective supports for pig feedbusiness of regional companies.In compliance with the principle of moderate scale for every single farm along with thesite planning of multi-point layout, the Company strictly controls bio-safety and adheres tothe concept of environmental-friendly animal husbandry to protect environment bydisposing manure in the natural method. Fushun pig project was jointly designed byfamous pig raising experts and Architectural Design and Research Institute of TsinghuaUniversity CO. LTD., setting its sights on becoming a first-rate modern pig breeding farm.This farm adopts high-level technique and first-class facilities, and has specially designedbio-safety program. By introducing high-quality Landrace and Yorkshire to ensure the geneof grandparent stock, it is committed to supplying pure parent stock with clear family treeand providing better commercial piglet and finisher. Meanwhile, the Company helpsfarmers in surrounding areas to increase their incomes by offering them contracts tofatten pig, contributing to the economy development of local rural areas, whilst basing onscientific environmental protection technology, the farms combine crop planting withanimal husbandry to achieve eco-friendly and recyclable agriculture.◇Explanation: Above statistics data come from the Ministry of Agriculture and Rural
Affairs of China and www.boyar.cn.II. Core Competitiveness Analysis within the Reporting PeriodCore competitiveness of the Company lies in a highly educated, experienced, loyal andstable management team, rationally planned and steady-development based corporate
strategy, increasingly matured and competitive integrated operation model, systematic,scientific and continuously innovative technology system, development-driven andstrongly rooted corporate culture.
1. Highly educated, experienced, loyal and stable management teamThe highly educated senior managers of the Company have professional background ofover 20-year's experiences in feed and animal husbandry industries as well as businessmanagement. They are pioneers and developers of the Company, who are committed toinsisting entrepreneurship, acquiring new knowledge and keeping pace with the era overthe years. The seven founders of the Company always hold together and fight together,they are praised as "seven noble partners” in the industry, the high solidarity of thestart-up shareholders has become the Company's most significant core competitiveness,whilst “Unity is Power” is also one part of the core culture. Almost all the middle andsenior managers are internally selected and cultivated by the Company, they have deepunderstanding and recognition of the corporate culture and operation model, they havestrong sense of ownership, full sense of mission and responsibility, devoting themselves tothe sustainable development of the Company. Within over 20 years, the managementteam has maintained high stability, almost no chief director or above level manager leavesthe Company, in regard of over 100 general managers, besides those who are adjusted dueto substandard performance, also few of them quit the job. Meanwhile, newly promotedmembers born in the 1980s and 1990s are selected from key talents' cultivation programs,such as “Seedling Plan” and “Sunflower Program”, they love the Company, highly recognizethe corporate culture, become the backbone force of the management team. As a reward,the Company offers core members equity incentive policies in different ways, moreover, italso pays high attention to continuous learning and ability improvement of thesemanagers, provides them with different training programs, including ExecutiveDevelopment Program, Leadership Training Camp, etc., which are conducted strict trainingand appraisal rules. Whilst it also organizes those managers to study from some leadingcompanies at home and abroad to broaden their horizons and make further progress. Themain reason that causes the failure of some domestic companies is attributable to“unstable and disunited management team”, in contrast, the highly educated, loyal andstable management team is one of the core competitiveness of Wellhope, making the
Company having faith in future and moving forward.
2. Rationally planned and steady-development based corporate strategyBased on comprehensive understanding of domestic and overseas political, economic andindustrial trends, the Company always pays attention to its sustainable development andrisk control, and focuses on its operation quality and the investment return of newprojects. Driven by a stable and conscientious investment attitude, the Company alwaysrationalizes its business distribution, develops step by step instead of investing andexpanding businesses recklessly, always maintains the rationality and safety of industrialstructures and avoids all kinds of risks regarding business operation.Rationally planned and steady-development-based corporate strategy reflects in thefollowing aspects:
The Company has primarily formed an industrial chain with high competitiveness andcapability of risk prevention and control in the fields of raw material trade, feedmanufacturing and selling, animal raising, slaughtering and further processing, which canimprove its competitiveness, enable all business divisions to connect closely, reduce thecost of intermediate links, improve profit margin and greatly mitigate the risks of singleoperation.Instead of rapidly covering nationwide markets supported by the success of feed businessin Northeast regions and integrated broiler business, the Company, with rich experiencesin market expanding, insists on exploring new markets basing on overall analysis andinvestigations, step by step entering the markets in Northeast, Northern China, Henan,Shandong and other areas. It moves forward steadily and purses asset-light operation,always focuses on overall operation quality and returns on investment, following theprinciple of “making existing businesses stronger, accumulating business practices, laying asolid foundation, seeking for the dominate position gradually”.The sales volume and growth rate of all feed categories in terms of pig, poultry, ruminantand aquatic products are relatively balanced and each has its advantages. While constantlypromoting integrated broiler business, the Company has entered pig raising business, andplans to take 5 to 8 years to craft an operation model driven by two complementaryengines in terms of integrated broiler and integrated pig businesses. Such business layout,
with high risk resistance, will not lead the Company to a rather high fluctuation due to abig blow or a downturn suffered by one of the business.In 2018, the Company conducted "SWOT” analysis regarding itself on a scientific andprudent basis, finally confirmed its development goals for recent three years and next tenyears, and formed a development strategy from 2019 to 2021, i.e.: "To steadily improveexisting core businesses, to vigorously develop emerging strategic businesses and activelycultivate potential businesses. In the following three years, to further echelon the talentsteam, to unremittingly innovate technology and marketing pattern, information resources,investment and financing platform, to deeply expand international business centered onSoutheast Asia, forming an operation model with "leading-edge quality and efficiency"that can create synergies and reduce costs among all business divisions and providecustomers and related parties (shareholders, employees, suppliers, society) products andservices with brand influence, to become an enterprise with leading-edge quality andefficiency across agriculture, animal husbandry and food industries as well as a supplier ofrelevant services". The Company will proactively carry out all the work under overallstrategies with unity and cohesion, so as to achieve the goals.
3. Increasingly matured and competitive integrated operation modelAnimal husbandry industry and feed industry are experiencing big transformations andchanges, feed producers gradually withdraw the leadership in the industrial chain, whilstfarms and large-scale integrated groups will take the dominated position in the future. Onone hand, following the trends of markets and changes of customers, the Company hasimplemented significant measures to improve its feed market share and overallprofitability, including constantly developing new products, adjusting marketing strategyand consolidating administrative departments. On the other hand, as early as 10 years ago,the Company had planned to move into integrated broiler business, nowadays thisbusiness has developed from small to large scale, from joint venture to individual soleproprietorship, from fragmented parts to closely connected integration, which make theCompany have explored a relatively matured and competitive integrated operation model.Relatively complete integrated chain: The Company is responsible for breeding, feed R&Das well as production, providing instructions of environment and small climate in the
house, and monitoring all the processes relating to broiler raising. Meanwhile, theCompany repurchases commercial broilers for its slaughterhouses and processes raw meat,prepared and cooked food, making all the processes of the integrated chain controllable.Modern model of self-owned farms together with large contract farms: The Companyhas changed its broiler raising model from “self-owned farms and family farms” to“self-owned farms together with large contact farms”, wining the priority by strategiclayouts and judgments of the industry. Relying on the strength of R&D, the Company'sfeed conversion ratio ranks at the first class in the industry, whilst benefiting from highstandard of farm building and application of three tiers cage system, the design ofventilation and environment control also reaches higher level, hence, the Company hasrealized efficiency and cost leadership supported by high-standard raising and finemanagement conducted in the slaughtering process.Fine management conducted in the integrated chain: Driven by the principle of savingenergy, reducing emission, protecting environment and providing healthy products, theCompany has established stringent production access standards for the integrated chain.And now, it is forging a data sharing and collaboration platform for green manufacturing ofwhite feather broiler chain, aiming at consolidating logistics, information flow and capitalflow. Meanwhile, the Company is committed to promoting the fine management in theintegrated chain, also conducting strict benchmarking management and tracing feedbackby monthly meeting, field inspection and big data sharing. Over ten years' dedicatedresearches and consecutive improvements enable the Company to achieve significantprogress in the operation efficiency and cost control regarding broiler raising, feedproduction and slaughtering, etc., thus the competitive integrated operation model hasbecome one of the core competitiveness of the Company. By summarizing and extractingthe practices related to the chain, standards can be formed and will be easy to be copiedand promoted elsewhere.Integrated operation shows a new development direction for enterprises in agricultureand animal husbandry industry, at present many of them are searching their ownexperiences in this field. Wellhope has operated broiler integration over ten years, richoperation practices and the management team composed of dedicated experts serves asthe core competitiveness of integrated broiler business.
4. Systematic, scientific and continuously innovative R&D systemAs a technology and innovation driven corporation, the Company strictly follows itsmission described as "Using advanced technology, excellent service, and outstandingproducts to promote the development of China’s animal husbandry industry, saveresources, protect the environment, provide food security and benefit the society", itsR&D team, driven by market-oriented and customer-oriented principles and the goals of“safe product, stable quality, tailor-made nutrition and powering business performance”,has always been dedicated to constantly innovating know-how and working on newproducts.The Company's R&D system applies vertical management in regard of nutritionist, productmanager, formulator, field technician, quality controller, laboratory technician and otherrelated positions. Guiding by over 100 highly educated and seasoned experts, it hascreated a management system of R&D and results' application, which starts from studyingon demands of customers, trends of industry, to research and development of products,analysis of production demands, to transformation of achievements. Regarding technology,the Company has received certain awards and recognitions from national and local level,such as National-Recognized Enterprise Technology Center, National and Local JointEngineering Research Center for Researching and Developing New Biological Feed and ItsApplication, Wellhope Feed Engineering Technology Research Center of Liaoning Province,etc. Moreover, by combining De Heus’ global resources, leading-edge technology andcenturial business practices with the Company’s more than 20 years of researches onnutrition and raw materials, it has built a precisely data-based nutrition evaluation system,and also constantly improved its product lines, innovated databases application andanimal growth model to continuously maintain and strengthen its product competence.Among the progresses, the Company has made pioneering explorations andbreakthroughs in feed technology regarding "safety and high quality", "tailor-madenutrition and high efficiency", "antibiotic-free and environmental protection”, etc.Furthermore, the Company's well-equipped testing center is one of the national keylaboratories certified by CNAS (China National Accreditation Service for ConformityAssessment). By virtue of up-to-date equipment and facilities, the testing center has beencapable of detecting melamine and other banned additives very early, and at present its
test results can be recognized by 60 countries. The Company is dedicated to guaranteeingthe quality of products from micro to macro, putting the concept of safe production intoevery step, and it has established self-owned raw material database and also shares dataresources of the Dutch partner, meanwhile, it uses raw material data that calculatesenergy dynamics by regression equation, formulates precise nutrition in accordance withproduction performance and feed intake, so as to get lowest cost price of feed formula toachieve best price quality ratio.In the first half of 2019, the Company led and participated in more than 10 projects atnational, provincial and municipal level. Among them, Wellhope, as the first organizer,coordinated the major science and technology project of Liaoning Province--"Feed Qualityand Safety Control and Low-protein Feed". The project "Creation Technology for New-typeAmino Acid and Low-Protein Pig Feed", co-operated with China Agricultural University, hasentered the second prize list of National Technology Invention Awards and passed thepublicity period. The project "Development and Promotion of Energy-saving andEnvironment-friendly Livestock and Poultry Feed" passed the preliminary selection of thesecond prize of Liaoning Province Science and Technology Progress Awards. As arepresentative of enterprises in the feed industry, the Company participated in formulatinggroup standard for fermented feed production, and participated in formulating thestandard for "Question Bank for Formulators of China's feed industry" and compilingrelevant questions. Meanwhile, in the first half of 2019, the Company successfullyscreened two sets of cost-effective antibiotic-free feed formula solutions, and developed"Wellhope immune nutrition" products, which improved animal's immune response abilityand disease resistance by enhancing daily intake of amino acids, etc., to help to realize thewithdrawal of antibiotics in feed and efficient and healthy animal raising. Furthermore, inthe first half of 2019, the Company was granted with 3 invention patents, and hadsubmitted 6 invention patents that were formally accepted.Based on continuous improvement of feed technology and raising programs, the Companyhas constantly improved its technology relating to integrated broiler business, the deliverybody weight of broiler can reach over 2.8kg with a livability of 95% and Europeanproduction index of over 380. Those indexes, which directly show slaughtering technologyand management ability, such as per capita daily slaughtering numbers and killing-out
percentage, have stepped to the first-class level in the industry.
5. Development-driven and strongly rooted corporate cultureAfter years of development, the Company has created corporate values featured byleading its business development and being understood and recognized by all employees.In 2018, while conducting SWOT analysis during Performance Excellence Managementproject, the Company's corporate culture was put forward as the firstly importantadvantage by all staff. The core culture, represented by Wellhope Vision, which is mainlydescribed as "Always put customers’ needs first and constantly work on new products,never follow the beaten path, always conduct business honestly, always aim to providevalue to our society and to maintain sustained growth through technology, innovation, andcreative work”, and by Wellhope Mission, which is primarily described as "Save resources,protect the environment, provide food security and benefit the society", plays the role ofdriven principles for management and the source power for ensuring the Company'ssustainable development. Whilst the subculture, originated from the core culture, is thespecific concept and strategy which guides management and business operation, includingTechnology Strategy, i.e. --No Technology, No Success, only producing reasonable andhigh-quality product, Marketing Strategy, i.e. --The best way to expand our business issupporting our customers growing business, providing customers not only products, butalso solutions to problems, Quality Principle, i.e.--Never use unqualified raw material,Never use non-standard equipment, Never allow substandard operation, Never produceunqualified products, Never ignore unsatisfied customers, Never tolerate imperfect service,HR Policy, i.e.--Providing a fair, just, and merit-based environment for rewardingemployees, continuously searching for talents and creating development space foremployees, always being dedicated to employee’s professional growth and helping thembuild a blessed life, Code of Conduct for Managers, i.e.--Exercising strict self-discipline,acting with integrity & honest; separating personal and corporate business, sharingachievement, showing kindness to everyone. These cultures have been constantlyimproved, publicized and practiced over the years, also promoted by the managers vialeading by example themselves, together they make the corporate culture root inemployees' behaviors. In 2018, along with deeper reforms and for adapting to the changesof internal and external business environments, the Company further summarized and
refined its corporate culture, confirmed the core values as “Integrity, Responsibility andWin-win” and the management culture as “Innovation, High-efficiency and Self-discipline”.In the first half of 2019, the Company continually took different ways to enhance itsculture incorporating into daily practice, for instance, holding live broadcast in whichsenior executives shared stories relating to the company culture, making employees couldunderstand the connotation of the culture and answer their questions. The first time oflive broadcast attracted over 80,000 online viewers. Meanwhile, the Company improvedpublicity materials and collected stories regarding to its corporate culture, and started towork on the code of conduct for employees to constantly guide the thoughts and to showthe desired behaviors for all staff, hence, promoting its corporate culture to play a greaterrole in pushing forward the Company's development.
Section IV Business Operations AnalysisI. OverviewIn the first half of 2019, the global economic growth slowed down. Sino-US trade frictionshave affected the imports of major agricultural products and the original structure ofagricultural supply chain, which increased uncertainties. In the meantime, African swinefever has changed pig raising industry, becoming a time-phased normalstate. Theagriculture and animal husbandry industries witnessed intensified competitions. 2019 isthe first year for the Company to conduct strategic reform and transformation, and thestarting year for its three-year's goal relating to stock incentive. According to the strategyand business plan, the Company has steadily promoted each business division, all thestaffs have been highly motivated with clear goals, and the Company has alwaysmaintained a healthy and rapid development, main operating indicators realized rapidgrowth.
1. Business highlight
During the reporting period, total operating revenue of the Company realized RMB 7.727billion yuan with a year-on-year growth rate of 12.81%, total profit reached RMB 461million yuan with a year-on-year growth rate of 104.34%, the net profit attributable to theshareholders recorded RMB 359 million yuan, increased by 118.43% compared with thesame period of prior year, and the net profit attributable to the shareholders deductingnon-recurring gains and losses reached RMB 358 million yuan, achieving a year-on-yeargrowth rate of 127.42%.From January to June in the recent three years (2017-2019), the growth of operatingrevenue, net profit attributable to the shareholders, return on equity and net profitmargin on sales are listed as follows:
2. Driving factors of performance growth
Feed business and integrated broiler business are the two largest contributors towardsthe Company's overall business performance.In the reporting period, supported by the blooming market, the Company furtheraccelerated the layout of broiler integration, improved internal operations andprofitability. In the meantime, during the reporting period, the Company's income frominvestment realized RMB 188.067 million yuan with a year-on-year growth rate of
102.79%, which mainly came from the joint-stock companies that belong to integratedbroiler business division.The Company's feed business division, another contributor, constantly stepped upresearch and development, market expanding and customer service, as well as furthertightened fine management to reduce cost and improve efficiency, its feed sales volumerealized steady progress, which increased 9.15% compared with the same period of prioryear, poultry feed, ruminant feed and aquatic feed of which rose 21.19%, 11.58% and
16.30% respectively. African swine fever hit the pig raising industry, facing difficulties andcrisis, the Company further increased its market share by developing new products,upgrading services, implementing brand marketing and other measures to effectivelycontrol the decline of pig feed. During the reporting period, the sales volume of theCompany's pig feed fell 5.87% compared with the same period of prior year, much lowerthan the industry average decline level of 14% (data from the Ministry of Agriculture andRural Affairs of China).
3. Business review
? Feed businessIn the first half of 2019, the Company continued to deepen internal reform, separate salessystem and administrative system, as well as conduct benchmarking analysis, by doing this,it further activated staff team, strengthened marketing, reduced cost and improvedoperating efficiency. Meanwhile, based on its core competitiveness, the Company gavefull play to its strengths of technology and brand, innovated its service model to attractnew customers and retain old customers, to continuously increase its market share.In the reporting period, under the unfavorable situation of African swine fever, both the
Company's feed sales volume and gross profit rate achieved growth, its feed businessrealized the sales revenue of RMB 3.381 billion yuan, increase 3.58% compared with thesame period of prior year; its holding and associated companies totally manufactured 2.23million tonnes feed with a year-on-year growth rate of 15%; the companies included inthe consolidated financial statements sold 1.16 million tonnes feed, increased 9.15%, andthe gross profit rate of feed reached 13.50%, up 0.96 percentage points.Detailed information for feed presented in categories list as follows:
| Item | January-June, 2019 Sales volume (10,000 tonnes) | January-June, 2018 Sales volume (10,000 tonnes) | Year-on-Year Change |
| Pig feed | 38.03 | 40.40 | -5.87% |
| Poultry feed | 50.04 | 41.29 | 21.19% |
| Ruminant feed | 20.82 | 18.66 | 11.58% |
| Aquatic feed | 5.78 | 4.97 | 16.30% |
| Other feed | 0.93 | 0.58 | 60.34% |
| Total | 115.59 | 105.90 | 9.15% |
? Pig feed: The Company continuously developed market-oriented pig feed products,increased the sales volume of high-value products and constantly innovated customerservice systems to mitigate the impact of African swine fever. In the reporting period, thesales volume of pig feed recorded 380,300 tonnes, decreased 5.87%, which was far lessthan the decreasing level of the inventories and deliveries of pig in China. In response toAfrican swine fever, the Company researched on preventing and controlling programs, alsoconducted on-line counseling to help customers to tide over difficulties; meanwhile, thetechnical team promptly developed Wellhope immune nutrition pig products to improveanimal's immunity and high yield.? Ruminant feed: On the basis of holding dairy cattle feed stable, the Company devotedgreat efforts to the markets of beef cattle and mutton sheep, it has launched high efficientfeeding programs and supporting products, which gained the leading position in themarket. During the reporting period, the sales volume of ruminant feed recorded 208,200tonnes, growing 11.58%, among which beef cattle feed increased 20%, mutton sheep feedrose 38%.
? Poultry feed: The Company continued to explore large-scale customers and enhancefarm service. While stabilizing layer and broiler feed markets, it vigorously expanded the
markets of duck, goose and quail feed, making poultry feed achieve a historicbreakthrough. During the reporting period, the sales volume of poultry feed recorded500,400 tonnes with a year-on-year growth rate of 21.19%.? Aquatic feed: The Company constantly optimized product portfolios, increased theproportion of shrimp and crab feed as well as expanded feed, and has gradually formedregional advantages, brand effect and market reputation. During the reporting period, thesales volume of aquatic feed reached 57,800 tonnes with a year-on-year growth rate of
16.30%, among which shrimp and crab feed increased 113%.
? Integrated broiler businessIn the first half of 2019, China's white feather broiler market ushered in a historicallystrong cycle, overall profit level of this industry realized relatively historic high. Under thisfavorable opportunity, the Company promoted its organic growth and expanded externalinvestment, achieving a substantial increase in profits.Externally, the Company accelerated the pace of business expansion and rapidly expandedits production scale. On June 16th, 2019, the Company signed a strategic cooperationagreement with Tai'qian County People's Government of Henan Province, one of thenationally designated poor counties. The two parties will build high-level manufacturingbase for white feather broiler integration chain, carry out in-depth and systematiccooperation in broiler raising, eco-agriculture, feed production, meat processing andretailing, etc. The total investment of the project will be about RMB 1.7 billion yuan,mainly including broiler raising project, slaughterhouse, feed plant with an annual capacityof 500,000 tonnes, cooked food project with an annual capacity of 20,000 tonnes andcommercial hatching project that can provide 100 million day old chicks per year. Thiscooperation will further improve the Company's layout in broiler industrial chain, furtherenhance its comprehensive strength and overall competitiveness, and promote itssustainable development.Internally, the Company has always adhered to refined management, continuouslylowered operating costs and heightened efficiency, the structure of its business units hasbeen increasingly optimized. Regarding broiler raising unit, it focused on improvingproduction safety and efficiency, and increasing the capacity of broiler raising business to
enhance the synergies. Regarding raw meat processing unit, it constantly automated itsslaughterhouses and increased slaughtering capacity, as well as continued to optimizeproduct quality and structure to make products more competitive. Regarding furtherprocessing unit, it has made great efforts to boost business scale, enhance product safetyand added value, meanwhile, it vigorously promoted raw meat processing and cookedfood businesses.In the reporting period, the Company's holding and associated companies totally raised191 million broilers with a year-on-year growth rate of 26%, slaughtered 224 millionbroilers with a year-on-year growth rate of 16%, totally produced 560,000 tonnes of meatproducts with a year-on-year growth rate of 17%. In the first half of 2019, 85% of theslaughtered broilers were raised by the Company's self-owned farms and contract farms,its internal supply of broiler has been gradually approaching the demand of slaughtering,which has further beefed up the synergies among the whole chain.? Feed raw material trade businessIn the reporting period, influenced by African swine fever and Sino-US trade frictions, theCompany's raw material trade business realized the operating revenue of RMB 1.265billion yuan, declined 7.72% compared with the same period of prior year. Most productsof the Company's trade business are raw materials and additives used in pig feed. In thefirst half of 2019, China's pig feed production decreased by 14%, which affected the salesvolume and profit of the Company's raw material trade. Meanwhile, the uncertainties ofSino-US trade frictions also affected the Company's soybean meal trade. In response tothese factors, the Company's trade companies continued to strengthen internal operationand IT application, strictly controlled non-strategic costs and actively explored overseanew products to upgrade product line, and expanded the markets in the South China.Benefiting from the blooming broiler market, the revenue of its animal health productsachieved good growth. Based on steady operation and talents team, its pet clinic businesshas been one of the fastest growing and largest pet chain institutions in the NortheastChina.
? Pig raising businessIn the first half of 2019, African swine fever continued. During the reporting period, theCompany focused on building and upgrading the bio-safety prevention and control systemfor its pig farms, implemented comprehensive measures from product R&D to farms. The“Anti-African swine fever” supervision team of the Company's head office designed andguided the preventing and controlling programs, the pig farms' bio-safety supervisiondepartment and the engineering department were responsible for monitoring, inspection,testing, prevention and control as well as other work to comprehensively guarantee safetyproduction. At the same time, the Company constantly optimized pig farms' internalmanagement systems and heightened operation through certain measures, such asbenchmarking management, it also vigorously built professional talents team for pigraising, cultivated outstanding talents through training camp to reserve specialized talentsfor pig raising business.During the reporting period, while running the existing pig raising projects well, theCompany promoted related new projects in an orderly manner. The pig project in Fushuncity with a planning of providing 500,000 heads of pig has been operated in April 2019, thepig project in Guanmen mountain of Fushun city will finish construction in September2019, and the construction of pig project in Gongzhuling city will be completed in the endof October 2019. Along with carrying forward newly built projects, the capacity of pigraising will be gradually released.Currently, the Company's pig raising projects are mainly concentrated in the threeNortheastern provinces (Liaoning, Heilongjiang, Jilin), Hebei Province, Henan Province, etc.These places, with four distinct seasons and dry climate, are suitable for pig raising.Meanwhile, the Company has rich practices in operating integrated business and hasformed coordinated development of related businesses, which can provide effectivesupporting for pig raising business. In addition, the Company has accumulated moreexperiences in pig feed technology. Its application research of high-yield sows, such asDenmark series, is at the domestic leading level, the advantages of feed and nutrition willprovide a strong guarantee for pig raising. Relying on above advantages and theexploration and practices in the previous two years, whilst basing on the opportunitiesbrought by African swine fever, Wellhope has firm confidence in entering pig raising
business, and will further speed up this business, actively seek for cooperation andacquisition opportunities regarding pig raising and slaughtering, taking 5 to 8 years to craftan operation model driven by two complementary engines in terms of integrated broilerand pig businesses, focusing on achieving the management strength of "leading-edgequality and efficiency" that creates synergies and reduces costs among all business.
4. Technology Innovation
In the first half of 2019, enterprises needed to directly deal with many market changesbrought by Sino-US trade friction, African swine fever and non-use plan of antibiotic infeed. The technical team has been actively upgrading products and conducting innovationsto help the Company achieve its business objectives.? Feed products for pig:
During the reporting period, the Company has constantly improved its customer servicesystem, for instance, providing technical services and on-site guidance for customers vialive broadcast and WeChat and other new media. Furthermore, the Companystrengthened the development of market-oriented pig feed to reduce the impact ofAfrican swine fever.a. Developing Wellhope immune nutrition products: Through enhancing the daily intakeof amino acids, etc., improve animal's immune response and resistance to disease,supplement and partially replace traditional techniques that rely on antibiotics to improveresistance to disease and production performance, help to achieve non-use of antibioticsin feed and efficient and healthy raising.b. Developing plasma-free starter feed: As African swine fever spreads, homologous rawmaterials must not be used in pig feed to ensure bio-safety of feed products, therebyensure the safety of pig farm.c. Upgrading feed for piglet and fattener: The Company has developed and updated thesecond generation of creep feed that are suitable for large-scale pig farms; the “Aifeng”series of piglet products, have been further optimized to adapt to the market demand forlow-protein feed and high price of pig. Meanwhile, it has developed feed products forextra big finishers to response to the market demands, such as increased delivery weight
of pig.d. Optimizing feed for high-production sow: Based on the needs of pig farms undercurrent special situation, the Company re-adjusted the level of crude fiber in sow feed, inthe meantime, it provided technical guidance to the farms, the application results ofrelated products have been verified in partners' pig farms and large farms, whichconsolidated the market position of the Company's hyperprolific sow feed.e. Preparing antibiotic alternatives: In the past two years, the Company has designed 41combinations of formula programs relating to antibiotic alternatives. In the first half of2019, the Company has made pleasing progress, 2 sets of cost-effective antibiotic-freefeed programs have been successfully screened, which laid a foundation for futurenon-use of antibiotics in piglet feed.? Feed products for broiler:
a. Strengthening pre-production experiment for feed products: The Company'sstandardized raising bases for white feather broiler have been operated successively, thebusiness area has been expanding from Liaoning to Hebei, Shandong and Henan provinces,etc. According to the environmental climate and raising model of different regions, theCompany has established relevant R&D bases for conducting pre-production experiment.In the first half of 2019, it has completed five verification tests. Relying on a series ofresearch and development, the growth performance and slaughter performance ofbroilers have been further improved, so as to maximize the value of per broiler.b. The technology of antibiotic-free formula becoming more and more mature: TheCompany has always been stricter with drug use management in feed than the nationalrequirements. By adjusting feed formula and veterinaries’ early monitoring and warning,the Company has been promoting antibiotic-free feed and reducing the use of antibiotic infarms step by step.? Feed products for layer:
a. The Company's subsidiaries jointly developing series of 10% premix feed products forlayer: Through improving nutritional programs, the effects of premix feed products oneggshell color and fecal formability have been improved, which avoid homogenizationcompetition with 5% premix feed products, and expand the Company's sales volume and
market share of premix feed products.b. Adjusting and upgrading feed products for laying duck, breeding geese, etc.: TheCompany has continued to seek improvement in feed product processing technology,product quality and appearance to meet market demands.c. Research on fermented feed products for layer have been carried out in an orderlymanner: Fermented feed products have improved layer's resistance to disease, reducedheat stress and lowered ammonia concentration in houses, which have great marketpotential. The Company has been promoting the products in many regions.? Feed products for ruminants:
a. Technical program for calf early raising: Combining farm data and practices of feedingmanagement, the technical program for early calf raising that accords with thecharacteristics of Wellhope has been put forward. The weaning weight of calf can exceedthe feeding standard requirement.b. Product research and comprehensive solutions for dairy cattle under heat stress: TheCompany specifically launched heat stress product, and launched solutions for productand diet under heat stress, which obviously relieved heat stress under the existing feedingconditions. Furthermore, it optimized and adjusted products for dry milk and perinatalperiods, also designed health care programs for prenatal and postnatal periods, whichsolved the problem of postpartum metabolic disease and improved milk production.c. As for beef cattle and mutton sheep products, the Company actively promoted theapplication of new products and on-site demonstration work, and specifically designedproducts for breeding period, which improved the production performance of breedingcows.? Aquatic feed products and others:
a. Developing functional compound feed products: The Company has set its sights ondeveloping functional and environment-friendly feed with precision nutrition, anddeveloping functional compound feed that can improve immunity to strengthen fishhealth and production performance. Meanwhile, it also developed and appliedenvironment-friendly feed for factory-like South American white shrimp, which effectively
reduced nitrogen and phosphorus in factory-like farming to achieve closed farming and todecline water demand and farming costs.b. Developing key stage products for special fish feed: The Company developed andapplied functional starter feed for special fish and hatchling to solve the palatability offeed at the fry stage and to effectively improve growth performance and liveability.c. Improving feed products and feeding program for fur animals: The Companycontinued to improve feed products for fur animal and launched test bases to strengthenthe advantages of fur animal feed, steadily improved fur animal feed products.
5. Awards received in 2019
? China's Top 100 Valuable Corporations in the Main-Board Market. The Companyhas received this award for three consecutive years.? China's Top 100 Corporations in the Light Industry, ranking the 40th. The Company
has received this award for three consecutive years.? China's Top 100 Sci-tech Corporations in the Light Industry, ranking the 21st.? China's Top 50 Corporations in the Light and Food Industry, ranking the 12nd.? Entering Top 5 Corporations in Agricultural Industry by Brand Value.? Entering China's Pioneer Listed Corporations by High-quality Development.
6. Analysis of primary business
a. Analysis of related items in the financial statements
Unit: yuan Currency: RMB
| Item | January-June, 2019 | January-June, 2018 | Change % |
| Operating revenue | 7,727,400,004.75 | 6,850,215,702.49 | 12.81 |
| Operating costs | 6,985,820,614.94 | 6,297,480,308.08 | 10.93 |
| Sales expenses | 239,990,725.07 | 210,701,513.67 | 13.90 |
| Administrative expenses | 126,915,965.17 | 103,605,422.49 | 22.50 |
| Financial expenses | 39,721,751.73 | 33,085,461.73 | 20.06 |
| R&D expenses | 30,021,345.87 | 29,771,840.08 | 0.84 |
| Net cash flow from operating activities | 296,568,981.22 | 290,259,024.18 | 2.17 |
| Net cash flow from investing activities | -376,062,265.52 | -227,373,483.03 | not applicable |
| Net cash flow from financing activities | 679,776,007.24 | -53,464,658.10 | not applicable |
Explanation for the change of operating revenue: mainly due to the revenue from broilerprocessing and raising businesses increased.Explanation for the change of operating cost: mainly due to the costs of broiler processingand raising businesses increased.Explanation for the change of sales expenses: mainly due to the expenses of staffremuneration and restricted stock increased compared with the same period of prior year.Explanation for the change of administrative expenses: mainly due to the expenses of staffremuneration and restricted stock increased compared with the same period of prior year.Explanation for the change of financial expenses: mainly due to the interests on bankborrowings increased.Explanation for the change of net cash flow from operating activities: mainly due to cashreceived from selling products increased compared with the same period of prior year.Explanation for the change of net cash flow from investing activities: mainly due to cashpaid for overall assets acquisition increased.Explanation for the change of net cash flow from financing activities: mainly due to cashreceived from non-public issuing stock.
7. Assets and liabilities
Unit: yuan Currency: RMB
| Item | June 30th, 2019 | Percentage of total assets % | June 30th, 2018 | Percentage of total assets % | Year-on-year change % | Explanation |
| Monetary funds | 1,573,431,869.60 | 18.92 | 928,902,753.06 | 13.40 | 69.39 | Due to cash received from non-public issuing stock |
| Derivative financial assets | 4,765,331.00 | 0.06 | 2,042,527.60 | 0.03 | 133.31 | The position of derivative financial assets increased |
| Notes receivable | 3,086,026.50 | 0.04 | 13,611,778.44 | 0.20 | -77.33 | Honor of notes and letter of credit decreased |
| Accounts receivable | 547,067,503.01 | 6.58 | 397,891,678.23 | 5.74 | 37.49 | Newly increased accounts receivable during the settlement period |
| Other receivable | 132,822,976.91 | 1.60 | 98,997,213.04 | 1.43 | 34.17 | Dividends paid by associated companies, general operating receivables and receivables from disposal of subsidiaries' shareholding increased |
| Other equity instrument investment | 4,547,809.52 | 0.05 | 3,197,809.52 | 0.05 | 42.22 | Newly increased other equity instrument investment in the current period |
| Construction in progress | 85,569,862.73 | 1.03 | 255,719,188.30 | 3.69 | -66.54 | Completed construction that transferred to fixed assets decreased |
| Productive biological assets | 56,033,181.19 | 0.67 | 30,484,794.88 | 0.44 | 83.81 | Breeding broilers and pigs increased |
| Other non-current assets | 326,934,235.00 | 3.93 | 197,497,688.18 | 2.85 | 65.54 | Advance payment of long-term assets and fees to farms increased |
| Advance receipts | 256,304,585.35 | 3.08 | 161,173,916.67 | 2.33 | 59.02 | Advance payment of sales increased |
| Non-current liabilities due within one year | 56,374,186.31 | 0.68 | 32,999,999.96 | 0.48 | 70.83 | Long-term borrowings and long-term payables due within one year increased |
| Long-term borrowings | 42,500,000.00 | 0.51 | 118,500,000.00 | 1.71 | -64.14 | Long-term borrowings from bank decreased |
8. Investment analysis
As at June 30th, 2019, the balance of the Company's long-term equity investment reachedRMB 1.54 billion yuan, increased by 13.72% compared with the end of prior year.? Financial assets measured at fair valueDuring the reporting period, the Company has financial assets that were measured at fairvalue and its changes recorded into current profit and loss. The income from the changesin fair value reached RMB -169,200 yuan.
9. Main holding and associated companies
RMB 10,000 yuan
| Company | Core business | Registered capital | Shareholding of the Company | Total assets | Net assets | Net profit |
| Shenyang Wellhope Ruminant Feed | Feed manufacturing and selling | 550.00 | 100% | 13,063.98 | 11,323.25 | 1,120.33 |
| Beijing Sanyuan Wellhope Agri-Tech | Feed manufacturing and selling | 1,000.00 | 70% | 21,213.91 | 18,961.56 | 310.69 |
| Shenyang Wellhope Agri-Tech | Feed manufacturing and selling | 8,210.00 | 100% | 14,116.63 | 12,002.98 | 564.39 |
| Xi’an Wellhope Feed Sci-Tech | Feed manufacturing and selling | 500.00 | 85% | 13,319.70 | 11,410.18 | 1,546.39 |
| Liaoning Expert Trading | Feed raw materials selling | 2,000.00 | 100% | 38,039.66 | 21,777.77 | 602.21 |
| Anshan Jiuguhe Food | Broiler slaughtering, processing and selling | 4,100.00 | 41.55% | 53,595.97 | 27,588.23 | 4,563.28 |
The effect of the net profit of subsidiary or the investment income from associated company on the Company's net profit reaching 10% orabove:
RMB 10,000 yuan
| Company | Core business | Registered capital | Shareholding of the Company | Total assets | Net assets | Operating revenue | Operating profit | Net profit |
| Dalian Heyuan Agri-Tech | Broiler raising and selling | 10,000.00 | 51% | 86,807.10 | 43,984.26 | 92,851.09 | 13,604.20 | 13,482.90 |
| Dalian Chengsan Animal Husbandry | Broiler raising and selling | 1,008.61 | 20% | 140,797.95 | 102,659.65 | 136,979.86 | 24,053.31 | 23,950.45 |
| Beipiao Hongfa Food | Broiler raising, slaughtering, processing and selling | 3,000.00 | 35% | 122,322.28 | 96,409.99 | 160,437.64 | 23,794.02 | 23,599.18 |
II. Other DisclosuresPossible risksA. Risks of fluctuations in raw material pricesMost costs of the feed business come from raw materials. The production changes inproducing areas, import policies, storage and subsidies, exchange rate fluctuations,logistics costs and other factors may trigger fluctuations in the raw material market, whichwill affect the Company's feed business costs and gross profit margins. With deepenedinternationalization of the trade of agricultural products in recent years, thesupply-demand relationship and trading price of raw materials have been affected bymarket conditions such as spot and futures at home and abroad, and the price trend hasbecome more complex followed by increasingly fierce fluctuations, which furtherincreases the difficulties of the Company’s cost management. In addition, the changes inChina-US trade relations, international political and economic environment and otherfactors have also made the purchase price of raw materials more variable.Solutions:
(a) The Company has established strategic partnerships with many top domestic andforeign raw material suppliers, and strategically reduced purchasing costs throughthree-level purchasing mode in terms of headquarters’ centralized purchasing, regions’price compare purchasing and local departments’ purchasing of different varieties.(b) The Company combines its raw material trading business with purchasing management,i.e., the professional and practical raw materials’ purchasing team conducts targetedforward-looking researches and real-time tracking on the market, makes great efforts toreduce the purchasing price, such as uniformly managing different varieties, adopting spotpurchasing and futures together.(c) The purchasing team works closely with the R&D team to complement each other'sadvantages, further optimize the purchasing cost by way of re-formulating the feeds i.e.,changing the composition of the feed to use cheaper alternative raw materials whileachieving the same results, which can further optimize purchasing costs.(d) The Company and Royal De Heus have set up an information sharing channel, which
makes the two sides can timely share the market trends, such as raw materials, additives,etc. In addition, the two sides may carry out joint purchasing cooperation in the future,which will greatly enhance the overall bargaining power.B. Risks of fluctuations in livestock and poultry pricesAnimal husbandry industry is a typical cyclical industry, and the hysteretic nature of theadjustment of supply causes the prices fluctuating periodically. At present, China's animalhusbandry industry is still dominated by back yard farms and small-scale farms, these farmowners show the character of non-rational decision-making, especially an obvious “herdeffect”, which further aggravates the cyclical fluctuations in the market price.Solutions:
(a) The Company's integrated broiler business has established an industrial chain, whichcan make the price fluctuations of all businesses can be fully counteracted, and thenreduce the risks of price fluctuations of the whole chain.(b) Since launching the integrated broiler business, the Company has always beencommitted to improving the production standards and management of each sector,reducing overall operating costs by optimizing the production and operation indicators andimproving per capita efficiency. The advantage of its operating costs can mitigate thenegative impacts on the Company when the industry is downward, and improve theoverall profitability when the industry is booming.C. Risks of serious animal diseaseFeed and animal raising are the Company's two main businesses. Disease outbreak is oneof the main risks faced by animal raising companies. Once a disease happens, it will causepanic in the market, which will reduce the demands, then lessen the production of thecompanies, decrease incomes and increase costs. Whilst, the feed industry mainly servesdownstream animal raising industry, the downstream market will directly affect theperformance of feed business. As an unpredictable emergency, an explosive disease willundoubtedly have a strong impact on the Company's operations.Solutions:
(a) Rationally optimize the industrial distribution and structural layout, disperse possible
risks by the simplest and direct way.(b) Improve the prevention and control technology of major epidemics, complete the earlywarning system and strive to control epidemics effectively before spreading.(c) Set an emergency command system for major epidemics to minimize losses when theyoccur.(d) Strengthen analysis and research capabilities for major epidemics, enhance animal’simmunity from the perspective of animal nutrition and veterinary services.D. Risks of the industrial pattern adjustment caused by environmental protectionpoliciesChina has put forward some environmental protection regulations in recent years, such asEnvironmental Protection Tax Law, etc., which show the government's determination toincrease environmental protection supervision in animal husbandry industry, whilst thelocal governments have also issued certain new regulations. It can be seen that thecontinuously strengthening environmental protection is the trend of the industry also anunavoidable reality, which will further weed out unqualified players and make the industryfacing the situation of re-shuffling.Solutions:
During the start-up period, the Company had input "Save Resources, Committed toEnvironmental Protection" as part of its Vision. For more than 20 years, the Company hasalways taken saving resources and protecting the environment as its important missions.(a) Regarding to raising and slaughtering, in the face of increasingly strict environmentalprotection requirements, the Company have comprehensively identified environmentalrisk points, and formulated emergency plan for environmental emergencies so as tomaintain the stable operation. For the key pollutant discharge plants, the Company hasdeveloped a complete self-monitoring program, which can find problems to repair,eliminate hidden dangers in a timely manner, it also continuously increases investment inenvironmental protection, such as personnel and funds, to ensure these plants alwayscomplying with national standards.(b) Regarding to feed production, the Company has always implemented national
environmental protection standards with the most rigorous attitude, established completeprevention and control measures for waste gas, noise, wastewater, solid waste and otherpollution generated during the production process. It uses environmental-friendly rawmaterials and additives in feed formulations and also continuously develops safe andenvironment-friendly daily ration to reduce the emissions of heavy metals, nitrogen andphosphorus.E. Risks of exchange rate fluctuationsThe Company's international business started early and developed rapidly. The exchangerate fluctuations have released great influence on raw material purchasing, product exportand overseas investment, presenting as follows: First, international development has madethe global purchasing of raw materials becoming normally, therefore, the risks of exchangerate fluctuations are particularly evident in the raw materials which are based on overseasupply. Secondly, the Company’s export business of broiler products is growing rapidlywith customers from many countries and regions around the world, and the exchange ratefluctuations are inevitably caused by the settlements of multiple currencies. Finally, due tothe large overseas investment and overseas operations, the cross-border capitaltransactions and settlements will also be affected by exchange rate fluctuations.Solutions:
(a) Closely focus and study on the dynamic international foreign exchange market,enhance the awareness of preventing foreign exchange risk, and improve the research andforecasting capabilities of the foreign exchange market.(b) Improve the bargaining power in foreign trade transaction by enhancing thecompetitiveness of products, and use RMB for settlement, reduce the exchange rate risksby adding insured value clause and the exchange rate risk allocation clause in the contract.(c) Make full use of foreign exchange forwards, swaps and options (combination) andother instruments to maintain the exchange rate for foreign exchange exposure.(d) According to specific conditions of different countries, based on the principle of "usingforeign currencies in foreign trade", reasonably match the income and debts to control theexchange rate risks.
F. Risks of food safetyIn recent years, there have been some food safety incidents in China, which affectedconsumers' confidence in food safety. China has continuously improved the legislation onfood safety and food sources, conducted forceful measures on handling food violations.Once the food safety incident is triggered by poor quality supervision, it will directlydamage the interests of consumers and cause panic, which may greatly impact thedownstream demand and affect the brand and performance of the enterprises.Solutions:
(a) Regarding to feed business, the Company has established a three-level qualitymanagement mechanism and testing system which consists of headquarters, regions andlocal departments, adopted ISO 9001, ISO 22000, ISO-IEC 17025 and other internationalstandards, thoroughly implemented a series of quality standards to realize the wholeprocess control of the products and established the traceability system. The Companyworks hard to popularize near-infrared detection technology, improves detectionefficiency and shares data in time. By doing this, it can quickly realize risk warning andmonitor heavy metals, harmful microorganisms and mycotoxins, providing an importantguarantee for the feed products. In addition, by drawing on the experiences of Europeanantibiotic-free feed, and basing on current situation in China, the Company has realizedsome progresses in antibiotic alternatives, at present, the feed products for finisher, sow,layer at laying period, broiler, ruminant and aquatic can realize antibiotic-free technology.(b) Regarding to integrated broiler business, its industrial chain can fully control theforefront part of the supply of "material, medicine, day old chick" and production andsales process. Through unified operation model, standardized management andstreamline operation, it can integrate bio-safety, drug residue control and hygienemanagement during the whole production processing to achieve food safety traceability.
Section V Important DisclosuresI. Shareholders' Meeting Convened during the Reporting Period
| Meeting | Date | Website designated for disclosing the resolution | Resolution disclosing date |
| 2018 Annual Shareholders' Meeting | May 20th, 2019 | www.sse.com.cn | May 21st, 2019 |
II. Plan of Profit Distribution or Capital Reserve Converted into Share Capital in the
First Half Year
| Whether distribute profit or convert capital reserve into share capital | No |
| Dividend per 10 shares (yuan, tax included) | 0 |
III. Execution of Commitment
| Background of making commitment | Type of commitment | Commitment party | Content | Date of making commitment and validity | Whether there is a time limit | Whether performs strictly |
| Commitment relating to IPO | Handling horizontal competition | Nature person shareholders holding more than 5% of the shares | I warrant and commit that I will not directly or indirectly develop, operate or assist in the operation or participate in or engage in any activity that is competitive with the business of Liaoning Wellhope, if Liaoning Wellhope will increase any business scope after the date of signing this commitment, I promise to give up the business. | March 2nd, 2011, long-term valid | yes | yes |
| Handling related party transaction | Legal person shareholders holding more than 5% of the shares-Heli Investment | Our company warrants and commits that our company will not directly or indirectly develop, operate or assist in the operation or participate in or engage in any activity that is competitive with the business of Liaoning Wellhope, if Liaoning Wellhope will increase any business scope after the date of signing this commitment, our company promises to give up the business. | March 2nd, 2011, long-term valid | yes | yes | |
| Restriction of selling shares | Jin Weidong, Wang Fengjiu, Shao Caimei, Wang Zhongtao, Ding Yunfeng | When selling shares within two years after the expiration of the lock-up period, the selling price shall not be lower than the offering price. After going public, if the closing price of the Company's stock of 20 consecutive trading days within 6 months is lower than the offering price, or the closing price in the end of 6 months later is lower than the offering price, the above lock-up period shall be automatically extended for 6 months. (if the Company conducts ex-right, ex-dividend for reasons of distributing cash dividend, capital reserve converted into share capital, issuing new shares, etc., the price of selling stock and closing price shall be conducted ex-right and ex-dividend in accordance with relevant provisions of China Securities Regulatory Commission and Shanghai Stock Exchange.) | April 2nd, 2014, within two years after the expiration of the lock-up period | yes | yes | |
| Restriction of selling shares | Jin Weidong, Wang Fengjiu, Shao Caimei, Wang Zhongtao, Ding Yunfeng | After IPO, if I plan to selling shares after the expiration of the lock-up period, I will announce the selling plan prior to 3 trading days before selling shares. Specific arrangement will be as follows: 1. the number of selling shares: if selling shares within 2 years after the expiration of the lock-up, the number of selling shares will be no more than 5 million shares, if the Company will conduct placing, capital reserve converted into share capital, etc., which will change the share capital, the number of selling shares shall make corresponding adjustment; 2. Way of selling | April 2nd, 2014, within two years after the expiration of the lock-up period | yes | yes |
| shares: the shares shall be sold through the centralized bidding trading system and block trading system of Shanghai Stock Exchange. If the total number of unrestricted shares planned to be sold within the next month is expected to exceed 1% of the total number of shares, the shares shall be transferred through the blocking trading system. 3. Selling price: if selling shares within 2 years after the expiration of the lock-up, the selling price shall be not lower than the IPO price (if the Company conducts ex-right, ex-dividend for reasons of distributing cash dividend, capital reserve converted into share capital, issuing new shares, etc., the price of selling stock or buying stock shall be conducted ex-right and ex-dividend in accordance with relevant provisions of China Securities Regulatory Commission and Shanghai Stock Exchange) 4. Time limit of selling shares: the time limit of selling shares shall be within six months from the date of announcing the selling plan. After the expiration of time limit, if intending to continue to sell shares, shall perform the announcement of selling shares again in accordance with the above arrangement. If above commitments cannot be fulfilled, the proceeds from selling shares shall belong to the Company and shall be paid to the designated account of the Company within 5 days of receiving such income. | ||||||
| Other | Jin Weidong, Wang Fengjiu, Shao Caimei, Wang Zhongtao, Ding Yunfeng | The controlling shareholder Jin Weidong and persons acting in concert with him undertake that there are no false records, misleading statements or material omissions in the prospectus of IPO and its summary, and shall bear individual and joint legal liabilities for its authenticity, accuracy and completeness. | long-term valid | yes | yes | |
| Other | Liaoning Wellhope | The Company undertakes that there are no false records, misleading statements or material omissions in the prospectus of IPO and its abstract, and it shall bear individual and joint legal liabilities for its authenticity, accuracy and completeness. | long-term valid | yes | yes | |
| Commitment relating to re-Financing | Dividend | Liaoning Wellhope | Liaoning Wellhope Three-Year’s Shareholder Dividend Return Plan (2017-2019) | December 15th, 2017, three years | yes | yes |
IV. Accounting Firm Engaged by the CompanyThe Company did not change the accounting firm during the reporting period.Jiangsu SuyaJincheng CPA LLP is the Company's auditing institution in 2019.V. Major Litigation and Arbitration MattersNonVI. Statement of the Integrity of the Company, its Controlling Shareholder and Actual
Controller during the Reporting PeriodDuring the reporting period, there has been no occurrence of the Company and itscontrolling shareholder and actual controller failing to perform the effective judgment ofthe court, needing to pay a large amount of unliquidated debt due.VII. Employee’s Equity Incentive Plan, Stock Ownership Plan or other Incentive
Measures and Related Impacts
| Overview | Query URLs |
| On November 21st, 2018, the Company held the 7th meeting of the 6th Session of Board of Directors, deliberating and approving 2018 Restricted Stock Incentive Plan (draft) and its Summary, and on January 9th, 2019, the Company finished the registration of restricted stock. | For details, please refer to "The Announcement of Granting Result of Liaoning Wellhope 2018 Restricted Stock Incentive Plan" issued by the Company on the website of Shanghai Stock Exchange "www.sse.com.cn" on January 11st, 2019. (Announcement No. 2019-001) |
VIII. Significant Related Party Transaction
? Related transactions in regard of day-to-day operations
RMB 10,000 yuan
| Related party | Relationship | Transaction type | Transaction content | Pricing principle | Transaction amount | Settlement mode |
| Anshan Jiuguhe Food | Associated company | Purchasing commodity | Broiler product | Comparable uncontrolled price | 451.58 | Transfer of account |
| Huludao Jiuguhe Food | Associated company | Purchasing commodity | Broiler product | Comparable uncontrolled price | 224.62 | Transfer of account |
| Guangzhou Yikun Trading | Associated company | Purchasing commodity | Feed raw materials | Comparable uncontrolled price | 71.16 | Transfer of account |
| Jinzhou Jiufeng Food | Associated company | Purchasing commodity | Feed raw materials | Comparable uncontrolled price | 78.13 | Transfer of account |
| Zhangjiakou Jiahe Agriculture and Animal Husbandry | Associated company | Purchasing commodity | Piglet | Comparable uncontrolled price | 371.45 | Transfer of account |
| Schippers(Beijing) | Associated company | Purchasing commodity | Other | Comparable uncontrolled price | 50.34 | Transfer of account |
| Tai’an Jiuguhe Agriculture | Associated company | Purchasing commodity | Feed | Comparable uncontrolled price | 975.47 | Transfer of account |
| Qingdao Shenfeng Agri-Tech | Associated company | Purchasing commodity | Feed | Comparable uncontrolled price | 9.21 | Transfer of account |
| Dalian Chengsan Animal Husbandry | Associated company | Purchasing commodity | Delivery broiler | Comparable uncontrolled price | 7,510.00 | Transfer of account |
| Linghai Jiuguhe Feed | Associated company | Selling commodity | Poultry feed, feed raw materials | Comparable uncontrolled price | 2,268.33 | Transfer of account |
| Tai’an Jiuguhe Agriculture | Associated company | Selling commodity | Poultry feed, feed raw materials | Comparable uncontrolled price | 4,009.11 | Transfer of account |
| Anshan Jiuguhe Food | Associated company | Selling commodity | Broiler product | Comparable uncontrolled price | 11,452.05 | Transfer of account |
| Qingdao Shenfeng Agri-Tech | Associated company | Selling commodity | Pig feed, feed raw materials | Comparable uncontrolled price | 879.43 | Transfer of account |
| Huludao Jiuguhe Food | Associated company | Selling commodity | Feed | Comparable uncontrolled price | 48.13 | Transfer of account |
| Dandong Wellhope Chengsan Agri-Tech | Associated company | Selling commodity | Feed, feed raw materials | Comparable uncontrolled price | 118.55 | Transfer of account |
| Guangzhou Yikun Trading | Associated company | Selling commodity | Feed raw materials | Comparable uncontrolled price | 6,706.73 | Transfer of account | |
| Beipiao Hongfa Food | Associated company | Selling commodity | Feed raw materials | Comparable uncontrolled price | 270.67 | Transfer of account | |
| Zhangjiakou Jiahe Agriculture and Animal Husbandry | Associated company | Selling commodity | Feed | Comparable uncontrolled price | 1,324.35 | Transfer of account | |
| Schippers(Beijing) | Associated company | Selling commodity | Other | Comparable uncontrolled price | 19.90 | Transfer of account | |
| Jinzhou Jiufeng Food | Associated company | Selling commodity | Delivery broiler | Comparable uncontrolled price | 300.20 | Transfer of account | |
| Anshan Fengsheng Food | Associated company | Selling commodity | Delivery broiler | Comparable uncontrolled price | 8,492.19 | Transfer of account | |
| Dalian Chengsan Animal Husbandry | Associated company | Selling commodity | Additives, lysine | Comparable uncontrolled price | 239.93 | Transfer of account | |
| Tailai Jiahe Agriculture and Animal Husbandry | Associated company | Selling commodity | Feed | Comparable uncontrolled price | 1,063.81 | Transfer of account | |
| Total | / | 46,935.34 | / | ||||
| Large amount sales return | non | ||||||
| Explanation of related party transaction | The Company and its associated companies know each other better, and have maintained long-term cooperation relationships, which can strengthen the trust of products produced by partners, reduce transaction cost, improve working efficiency and avoid trading disputes. Meanwhile, purchasing raw materials from related parties can ensure the quality. Moreover, by participating in the management and exerting influence on related companies can help them to maintain a long-term and stable supply, also help them reduce the marketing pressure. The purpose of conducting related party transactions is to satisfy the needs of the Company's production and operation, the purchasing or selling price is determined according to the market price of similar products. Such transactions do not violate relevant laws, Company Constitution, etc., and do not damage the rights and interests of shareholders. | ||||||
IX. Anti-poverty Project of the Company
1. Targeted poverty alleviation
The Company actively responds to the planning and requirements of the Party CentralCommittee and governments at all levels for targeted poverty alleviation. Driving by theprinciple of the Company’s Mission—"Providing Service to the Society", and taking"targeted poverty alleviation" as anti-poverty strategy, it has made poverty alleviationprograms and work plans regarding to reducing poverty through industrial development tofacilitate targeted poverty alleviation. At the same time, the Company also actively assiststo education and public welfare establishments to expand the scope of poverty alleviation.
2. Overview of targeted poverty alleviation
Lankao meat duck integration project was invested by the Company as the targetedpoverty alleviation project in response to the call of Lankao County Party Committee andcounty government. Since 2014, the Company has built a total of 1,053 duck houses inLankao County, including 58 duck farms and other back yard houses, which used unifiedmanagement in terms of unified supply of day old duckling, feed, medicine, technicalservice and repurchasing to ensure food safety. The farmers do not need to prepareworking capital. The Company also provides farmers with unified veterinary drug subsidyof RMB 0.5 yuan per duck.In the first half of 2019, the Company offered 1,052 contracts to 352 farmers, andrepurchased 11.14 million meat ducks, providing total subsidy of RMB 5.87 million yuan.
3. Figures of targeted poverty alleviation
RMB 10,000 yuan
| Index | Details |
| 1. Overall | |
| including: funds for poverty alleviation | 587 |
| 2. In details | |
| Type of targeted poverty alleviation | Poverty alleviation for agricultural industry |
| a. The number of targeted poverty alleviation project | 1 |
| b. Investment amount | 587 |
4. Progress of targeted poverty alleviation
In the first half of 2019, the farmers realized good benefits, the average profit of them
reached about RMB 2 yuan per duck. The Company will constantly strengthen technicalservice and the trainings for farmers to improve their technology level, so as to ensure thesuccess of farming, achieve a win-win situation.
5. Follow-up targeted poverty alleviation
On June 16th, 2019, the Company signed a strategic cooperation agreement with Tai'qianCounty People's Government of Henan Province, one of the nationally designated poorcounties. The two parties will build high-level manufacturing base for white feather broilerintegrated chain, the Company will also help farmers to relieve financial pressure andincrease income according to local targeted poverty alleviation policies.The Company will continue to focus on agriculture-related poverty alleviation projects,assist in cultivating talents, providing job opportunities and increasing income of farmers.Meanwhile, it will give full play to its advantages in the industry, integrate resources,continuously deepen the effect of poverty alleviation, and contribute to the goal ofbuilding a moderately prosperous society in all respects.X. Environmental Protection Policy
1. Information of pollution discharge
Puyang Wellhope Food Co., Ltd. (hereinafter referred to as "Puyang Wellhope"), a holdingsubsidiary of the Company, has been listed as key sewage & gas waste emission companyof Puyang City. Dalian Zhongjia Wellhope Food Co., Ltd. (hereinafter referred to as"Zhongjia Food"), and Dalian Huakang Xinxin Food Co., Ltd. (hereinafter referred to as"Huakang Food"), holding subsidiaries of the Company, have been listed as key sewage &gas waste emission company of Dalian City. Kaifeng Wellhope Meat Food Co., Ltd.(hereinafter referred to as "Kaifeng Wellhope"), a holding subsidiary of the Company, hasbeen listed as key sewage waste emission company of Kaifeng City. Shenyang HuakangBroiler Co., Ltd. (hereinafter referred to as "Shenyang Huakang"), a holding subsidiary ofthe Company, has been listed as key sewage waste emission company of Shenyang City.Details are presented as follows:
Puyang Wellhope: the main pollutants include gas waste and water waste, among whichwater waste mainly contains COD, ammonia nitrogen, total phosphorus, pH, suspended
solids, biochemical oxygen requirement, animal and vegetable oil, total coliform group andtotal nitrogen. The gas waste mainly contains SO2, nitric oxide and particulate matter.Emission method: 1 waste water emission outlet for sewage treatment, distributed in thesoutheast corner of the building of the sewage monitoring base station; 1 exhaustemission outlet, distributed in the boiler room in the northeast corner of the plant site.Puyang Wellhope strictly implements emission standards for industrial "three wastes". Theemission of waste water is subject to the three-level standards in the Discharge Standardof Water Pollutants for Meat Packing Industry (GB 13457-1992), emission permit(9141092367412881xt001p), and the indirect emission limit value in the water inflowagreement of Nanle County sewage treatment Co., Ltd. (COD≤400mg/L, NH3-N≤35mg/L,total phosphorus≤2.5mg/L, BOD≤180mg/L, suspended solids≤220mg/L, totalnitrogen≤40mg/L, pH value of 6-9). The gas waste emission is subject to the concentrationlimit of Emission Standard of Air Pollutants for Coal-Burning Oil-Burning Gas-Fired Boiler(GB 13271-2014) and emission permit (9141092367412881xt001p) requirements, that is,the emission concentration of SO
shall be ≤50mg/Nm
, the emission concentration ofparticulate shall be ≤20mg/Nm
and emission concentration of NOX shall be ≤150mg /Nm?. Total emission of main pollutants under the pollutant emission permit is as follows:
COD 15.58 tons per year and ammonia nitrogen 2.95 tons per year. During the reportingperiod, the total emission of Puyang Wellhope was controlled within the permitted scope,and the "three wastes" treatment met the requirements, did not exceed the standard.Kaifeng Wellhope: the main pollutant is water waste, which mainly contains COD,ammonia nitrogen, total phosphorus, pH, suspended solids, biochemical oxygenrequirements, animal and vegetable oil, total coliform group and total nitrogen. Emissionmethod: 1 waste water emission outlet for sewage treatment, distributed in the southeastof the factory. Kaifeng Wellhope strictly implements emission standards for industrial"three wastes". The emission of waste water is subject to the second-level standard in theDischarge Standard of Water Pollutants for Meat Processing Industry (GB 13457-1992),emission permit (91410212MA4057G88A001R) and the sewage emission limit in the GHPYZI No. 2501 Environmental evaluation criteria (COD≤100mg/L, NH3-N≤20mg/L, BOD≤40/L,suspended solids≤100mg/L, pH value of 6-8.5, coliform numbers≤10000). Total emission ofmain pollutants under the pollutant emission permit: COD 3.60 tons per year, ammonia
nitrogen 0.79 tons per year. During the reporting period, the total emission of KaifengWellhope was controlled within the permitted scope, and the "three wastes" treatmentmet the requirements, did not exceed the standard.Zhongjia Food: the main pollutants include gas waste and water waste, among whichwater waste mainly contains COD, ammonia nitrogen, total phosphorus, pH, suspendedsolids and total nitrogen. The gas waste mainly contains SO2, nitric oxide and particulatematter. Emission method: 1 waste water emission outlet for sewage treatment, distributedin the west of the southern end of the new sewage treatment workshop; 1 exhaustemission outlet, distributed on the roof of the boiler room. Zhongjia Food strictlyimplements emission standards for industrial "three wastes", DB 21/1627-2008 LiaoningProvincial Standard-Comprehensive Sewage Emission Standard (COD≤50mg/L,NH3-N≤8mg/L, total phosphorus≤0.5mg/L, suspended solids≤20mg/L, totalnitrogen≤15mg/L, pH value of 6-9). The gas waste emission is subject to gas boileremission concentration limit of Emission Standard of Air Pollutants for Coal-BurningOil-Burning Gas-Fired Boiler (GB 13271-2014). During the reporting period, the totalemission of Zhongjia Food was controlled within the permitted scope, and the "threewastes" treatment met the requirements, did not exceed the standard.Huakang Food: the main pollutants include gas waste and water waste, among whichwater waste mainly contains COD, ammonia nitrogen, total phosphorus, pH, suspendedsolids and total nitrogen. Emission method: 1 waste water emission outlet for sewagetreatment, distributed in the west of the southern end of the new sewage treatmentworkshop; 1 gas waste exhaust outlet, distributed in the southeast corner of the sewagetreatment workshop; 1 exhaust emission outlet, distributed on the roof of the boiler room.Huakang Food strictly implements emission standards for "three wastes", DB
21.1627-2008 Liaoning Provincial Standard-Comprehensive Sewage Emission Standard(COD≤50mg/L, NH3-N≤8mg/L, total phosphorus≤0.5mg/L, suspended solids≤20mg/L, totalnitrogen≤15mg/L, pH value of 6-9). The gas waste emission is subject to gas boileremission concentration limit (GB 13271-2014). During the reporting period, the totalemission of Huakang Food was controlled within the permitted scope, and the "threewastes" treatment met the requirements, did not exceed the standard.Shenyang Huakang: the main pollutant is water waste, which mainly contains COD,
ammonia nitrogen, pH and suspended solids. Emission method: 1 waste water emissionoutlet for sewage treatment, distributed in then northeast of the sewage treatmentstation. Shenyang Huakang strictly implements the emission standards for industrial "threewastes". The emission of waste water is subject to the first-level standard in the DischargeStandard of Water Pollutants for Meat Processing Industry (GB 13457-1992), emissionpermit DB 21/1627-2008 Liaoning Provincial Standard-Comprehensive Sewage EmissionStandard (COD≤50mg/L, NH3-N≤8mg/L, total phosphorus≤0.5mg/L, suspendedsolids≤20mg/L, pH value of 6-9). The gas waste emission is subject to gas boiler emissionconcentration limit of Emission Standard of Air Pollutants for Coal-Burning Oil-BurningGas-Fired Boiler (GB 13271-2014) (SO
emission concentration ≤200mg/Nm3, particulatematter concentration ≤20mg/Nm3, NOX emission concentration ≤200mg/Nm3). Duringthe reporting period, the total emission of Shenyang Huakang was controlled within thepermitted scope, and the "three wastes" treatment met the requirements, did not exceedthe standard.
2. Circumstance of building and operating pollution control facilitiesPuyang Wellhope:
a. Sewage treatment: Puyang Wellhope has 2000T/D sewage treatment station, whichadopts the treatment process of "pretreatment plus oil separation plus A2O plusdisinfection" to treat the wastewater. Its environmental protection facilities are runningnormally, and the pollutant emission indexes all meet the third-level standards in theDischarge Standard of Water Pollutants for Meat Processing Industry (GB 13457-1992), theemission permit (YHXKNo. 2015-001 of Puyang City) and the indirect emission limit valuein the water inflow agreement of Nanle County sewage treatment Co., Ltd.b. Waste gas treatment: the gas generated by the waste water pool of the sewagetreatment station is collected and purified by activated carbon adsorption and thendischarged through the 15m-high chimney in accordance with related standard; thetraditional coal-fired boilers are replaced by gas-fired boilers, and all kinds of pollutantsmeet the gas boiler emission concentration limit of the Emission Standard of Air Pollutantsfor Coal-Burning Oil-Burning Gas-Fired Boiler(GB 13271-2014)and emission permit(YHXKNo. 2015-001 of Puyang City) requirements with the 8-meter high chimney for reaching
the emission standard, which has been fundamentally effectively treated.Kaifeng Wellhope:
Sewage treatment: Kaifeng Wellhope has 1700T/D sewage treatment station, whichadopts the treatment process of "air floatation plus A2O" to treat the wastewater. Itsenvironmental protection facilities are running normally, and the pollutant emissionindexes all meet the second-level standards in the Discharge Standard of Water Pollutantsfor Meat Packing Industry (GB 13457-1992), the emission permit (CertificateNo.:91410212MA4057G88A001R) and the sewage emission limit in the GHPY ZI No. 2501Environmental evaluation criteria.Zhongjia Food:
a. Sewage treatment: Zhongjia Food has a 1200T/D sewage treatment station, whichadopts the treatment process of "mechanical barrier - oil separator - regulation pool -hydrolysis pool - contact oxidation pool - sedimentation pool - sand filter" to treat thewastewater and achieve DB 21/1627-2008 Liaoning Provincial Standard - ComprehensiveSewage Emission Standard.b. Waste gas treatment: the smoke and dust generated by 4T coal-fired boilers used forproduction is de-dusted by wet method and de-sulphurized by magnesium oxide. All kindsof pollutants meet the gas boiler emission concentration limit of the Emission Standard ofAir Pollutants for Coal-Burning Oil-Burning Gas-Fired Boiler (GB 13271-2014).Huakang Food:
a. Sewage treatment: Huakang Food has a 900T/D and 300T/D sewage treatment stationthat adopt the treatment process of "mechanical barrier - oil separator - regulation pool -air flotation - hydrolysis pool - A2O - sedimentation pool - advanced treatment - sand filter- clean water pool", which can achieve DB 21/1627-2008 Liaoning Provincial Standard -Comprehensive Sewage Emission Standard.b. Waste gas treatment: the smoke and dust generated by 4T coal-fired boilers used forproduction is de-dusted by wet method and de-sulphurized by magnesium oxide. All kindsof pollutants meet the gas boiler emission concentration limit GB 13271-2014. It also has a16m-high chimney, realize fundamentally effective control.
Shenyang Huakang:
Sewage treatment: Shenyang Huakang has a 720T/D sewage treatment station, whichadopts the treatment process of "pretreatment plus oil separation plus A2O plusdisinfection" to treat the wastewater. Its environmental protection facilities are runningnormally, and the pollutant emission indexes have reached the first-level standard in theDischarge Standard of Water Pollutants for Meat Packing Industry (GB 13457-1992).
3. Environmental impact assessment of construction projects and other administrativepermits for environmental protectionDuring the reporting period, all the construction projects of the Company met therequirements of environmental impact assessment and other environmental protectionadministrative licenses. The Company has strictly implemented the "three simultaneous"environmental protection system.
4. Emergency plan for environmental accidents
According to the requirements of environmental protection authorities and relevant lawsand regulations, each production unit of the Company has identified the site withpotential environmental risk and formulated the emergent plans of environmentalpollution accident; meanwhile, related companies conducted emergency exercises toimprove self-help capability, and continued to identify the hidden danger to ensure normaloperations.
Section VI Changes in Common Shares and Shareholder InformationI. Changes in Common SharesA. Changes in shares
Unit: share
| Before changing | Increase/decrease in the reporting period | After changing | ||||
| Shares | Percentage % | Issuing new shares | Subtotal | Shares | Percentage % | |
| 1. Restricted shares | 91,127,927 | 91,127,927 | 91,127,927 | 9.88 | ||
| A. Shares held by the state | ||||||
| B. Shares held by state-owned corporations | 54,133,857 | 54,133,857 | 54,133,857 | 5.87 | ||
| C. Shares held by other domestic investors | 34,697,483 | 34,697,483 | 34,697,483 | 3.76 | ||
| including: Shares held by domestic corporations | ||||||
| Shares held by domestic natural persons | 34,697,483 | 34,697,483 | 34,697,483 | 3.76 | ||
| D. Shares held by foreign investors | 2,296,587 | 2,296,587 | 2,296,587 | 0.25 | ||
| including: shares held by foreign corporations | 2,296,587 | 2,296,587 | 2,296,587 | 0.25 | ||
| Shares held by foreign natural persons | ||||||
| 2. Non-restricted shares | 831,176,469 | 100.00 | 831,176,469 | 90.12 | ||
| A. RMB common shares | 831,176,469 | 100.00 | 831,176,469 | 90.12 | ||
| 3. Total shares | 831,176,469 | 100.00 | 91,127,927 | 91,127,927 | 922,304,396 | 100.00 |
B. Explanation of changes in shares? On November 21st and December 7th, 2018, the Company respectively held a BoardMeeting and Shareholder's Meeting to approve the resolution--Liaoning Wellhope 2018Restricted Stock Incentive Plan and Its Summary (draft). On January 9th, 2019, theCompany completed the registration of restricted stock, and issued 14.575 millionrestricted shares to 372 employees, the total number of shares of the Company increasedfrom 831,176,469 shares to 845,751,469 shares.? On November 9th, 2018, in accordance with the approval of the CSRC, the Companynon-public issued 76,552,927 A-shares to 8 investors, and completed the registration of
new shares on April 24th, 2019. The total number of shares of the Company increasedfrom 845,751,469 shares to 922,304,396 shares.C. Changes in restricted shares
Unit:share
| Name of shareholder | Opening restricted shares | Number of unrestricted shares in the reporting period | Increase of restricted shares in the reporting period | Restricted shares in the end of the reporting period | Reason for restriction | Date of removing restriction |
| Sinosafe Assets Management- Industrial and Commercial Bank of China-Sinosafe Assets Management Stably Increasing Profit No. 12 Collection Asset Management Product | 29,527,559 | 29,527,559 | non-public issuing stock | April, 24th, 2020 | ||
| Shenzhen Galaxy Investment Co., Ltd. | 4,921,259 | 4,921,259 | non-public issuing stock | April, 24th, 2020 | ||
| Generali China Asset Management- China Minsheng Banking Corp- Generali China Asset-Non-public Offering Selection No. 103 Asset Management Product | 19,685,039 | 19,685,039 | non-public issuing stock | April, 24th, 2020 | ||
| Wu Ying | 14,763,779 | 14,763,779 | non-public issuing stock | April, 24th, 2020 | ||
| Employees who were granted restricted shares(totalling) | 14,575,000 | 14,575,000 | equity incentive | Within 12, 24, 36 months after completing restricted stock registration | ||
| Jin Weidong | 3,062,117 | 3,062,117 | non-public issuing stock | April, 24th, 2022 | ||
| DE HEUS MAURITIUS | 2,296,587 | 2,296,587 | non-public issuing stock | April, 24th, 2022 | ||
| Ding Yunfeng | 1,531,058 | 1,531,058 | non-public issuing stock | April, 24th, 2022 | ||
| Wang Zhongtao | 765,529 | 765,529 | non-public issuing stock | April, 24th, 2022 | ||
| Total | 91,127,927 | 91,127,927 | / | / |
II. ShareholdersA. The number of shareholders
| Total number of common shareholder as at June 30th, 2019 | 29,432 |
B. Top ten shareholders and top ten shareholders holding unrestricted shares as at
the end of the reporting period
Unit: share
| Shareholding of top ten shareholders | |||||||
| Name of shareholder | Changes | Total shares held at the period-end | % | Restricted shares held | Pledged or Frozen | Nature of shareholder | |
| Status | Status | ||||||
| Jin Weidong | 3,062,117 | 149,549,498 | 16.21 | 3,062,117 | Pledged | 77,430,000 | Domestic natural person |
| DE HEUS MAURITIUS | 2,296,587 | 82,303,939 | 8.92 | 2,296,587 | Foreign corporation | ||
| Ding Yunfeng | 1,531,058 | 81,929,558 | 8.88 | 1,531,058 | Pledged | 50,560,000 | Domestic natural person |
| Shao Caimei | 54,559,878 | 5.92 | Pledged | 16,900,000 | Domestic natural person | ||
| Wang Fengjiu | 50,084,602 | 5.43 | Pledged | 10,945,000 | Domestic natural person | ||
| Zhang Tiesheng | 48,360,000 | 5.24 | Pledged | 6,600,000 | Domestic natural person | ||
| Shenyang Wellhope Heli Investment Co., Ltd. | 48,360,000 | 5.24 | Domestic corporation | ||||
| Wang Zhongtao | 765,529 | 47,916,529 | 5.20 | 765,529 | Pledged | 8,140,000 | Domestic natural person |
| Sinosafe Assets Management- Industrial and Commercial Bank of China-Sinosafe Assets Management Stably Increasing Profit No. 12 Collection Asset Management Product | 29,527,559 | 29,527,559 | 3.20 | 29,527,559 | Unknown | Other | |
| Generali China Asset Management- China Minsheng Banking Corp- Generali China Asset-Non-public Offering Selection No. 103 Asset Management Product | 19,685,039 | 19,685,039 | 2.13 | 19,685,039 | Unknown | Other | |
| Top ten shareholders holding unrestricted shares | |||
| Name of shareholder | Unrestricted shares held | Shares by type | |
| Type | Shares | ||
| Jin Weidong | 146,487,381 | RMB common stock | 146,487,381 |
| Ding Yunfeng | 80,398,500 | RMB common stock | 80,398,500 |
| DE HEUS MAURITIUS | 80,007,352 | RMB common stock | 80,007,352 |
| Shao Caimei | 54,559,878 | RMB common stock | 54,559,878 |
| Wang Fengjiu | 50,084,602 | RMB common stock | 50,084,602 |
| Zhang Tiesheng | 48,360,000 | RMB common stock | 48,360,000 |
| Shenyang Wellhope Heli Investment Co., Ltd. | 48,360,000 | RMB common stock | 48,360,000 |
| Wang Zhongtao | 47,151,000 | RMB common stock | 47,151,000 |
| National Council for Social Security Fund China 503 Portfolio | 13,500,000 | RMB common stock | 13,500,000 |
| Gao Junsong | 12,499,772 | RMB common stock | 12,499,772 |
| Relationship of above shareholders or statement made by the parties acting in concert | 1. Jin Weidong, Ding Yunfeng, Wang Fengjiu, Shao Caimei and Wang Zhongtao act in concert; 2. Jin Weidong is the actual controller of Shenyang Heli Investment Co., Ltd. 3. No relation or concerted action is found among other shareholders. | ||
Top ten shareholders holding restricted shares
Unit: share
| No. | Name of shareholder | Restricted shares held | Public trading of restricted shares | Restriction condition | |
| Date available for public trading | Newly increased number of share available for public trading | ||||
| 1 | Sinosafe Assets Management- Industrial and Commercial Bank of China-Sinosafe Assets Management Stably Increasing Profit No. 12 Collection Asset Management Product | 29,527,559 | April, 24th, 2020 | Restricted period- 12 months | |
| 2 | Generali China Asset Management- China Minsheng Banking Corp- Generali China Asset-Non-public Offering Selection No. 103 Asset Management Product | 19,685,039 | April, 24th, 2020 | Restricted period- 12 months | |
| 3 | Wu Ying | 14,763,779 | April, 24th, 2020 | Restricted period- 12 months | |
| 4 | Shenzhen Galaxy Investment Co., Ltd. | 4,921,259 | April, 24th, 2020 | Restricted period- 12 months | |
| 5 | Jin Weidong | 3,062,117 | April, 24th, 2022 | Restricted period- 36 months | |
| 6 | DE HEUS MAURITIUS | 2,296,587 | April, 24th, 2022 | Restricted period- 36 months | |
| 7 | Ding Yunfeng | 1,531,058 | April, 24th, 2022 | Restricted period- 36 months | |
| 8 | Wang Zhongtao | 765,529 | April, 24th, 2022 | Restricted period- 36 months | |
| Relationship of above shareholders or statement made by the parties acting in concert | 1. Jin Weidong, Ding Yunfeng and Wang Zhongtao act in concert; 2. No relation or concerted action is found among other shareholders. | ||||
Section VII Preference ShareNot Applicable
Section VIII Directors, Supervisors and Senior ManagementI. Changes in ShareholdingsA. Changes in shareholdings of incumbent and outgoing directors, supervisors andsenior management during the reporting period
Unit: share
| Name | Office title | Opening shareholding (shares) | Closing shareholding (shares) | Changes in shareholding (shares) | Reason of Changing |
| Jin Weidong | Director | 146,487,381 | 149,549,498 | 3,062,117 | Non-public issuing stock |
| Ding Yunfeng | Director | 80,398,500 | 81,929,558 | 1,531,058 | Non-public issuing stock |
| Wang Zhongtao | Supervisor | 47,151,000 | 47,916,529 | 765,529 | Non-public issuing stock |
| Wang Fengjiu | Senior management | 50,084,602 | 50,084,602 | ||
| Shao Caimei | Director | 54,559,878 | 54,559,878 | ||
| Wang Zhenyong | Senior management | 9,800,000 | 9,800,000 | ||
| Zhang Wenliang | Director | 8,565,100 | 8,565,100 | ||
| Zhao Xin | Director | 4,470,160 | 4,470,160 | ||
| Qiu Jiahui | Senior management | ||||
| Hu Jianmin | Independent director | ||||
| Liu Huan | Independent director | ||||
| Wang Zhe | Independent director | ||||
| Jacobus Johannes de Heus | Director | ||||
| Marcus Leonardus van der Kwaak | Supervisor | ||||
| Yuan Minger | Supervisor | ||||
| Li Jun | Supervisor | ||||
| Wei Yanjin | Supervisor | ||||
| Ren Bingxin | Supervisor | 5,429,500 | 5,429,500 |
II. Changes of Directors, Supervisors and Senior Management
| Name | Office title | Change |
| Wei Yanjin | Supervisor | Outgoing |
| Ren Bingxin | Supervisor | New electing |
Explanation:
On March 26th, 2019, Mr. Wei Yanjin resigned as the supervisor due to personal reasons.The employees of the Company unanimously elected Mr. Ren Bingxin as the supervisor.
Section IX Corporate BondNot applicable
Section X Financial StatementsConsolidated Balance Sheet
June 30th, 2019
| Liaoning Wellhope | Unit: yuan | |
| Item | June 30th, 2019 | December 31st, 2018 |
| Current assets: | ||
| Monetary capital | 1,573,431,869.60 | 928,902,753.06 |
| Derivative financial assets | 4,765,331.00 | 2,042,527.60 |
| Notes receivable | 3,086,026.50 | 13,611,778.44 |
| Accounts receivable | 547,067,503.01 | 397,891,678.23 |
| Prepayments | 229,990,149.66 | 185,899,348.53 |
| Other receivables | 132,822,976.91 | 98,997,213.04 |
| including: dividends receivable | 23,341,783.34 | 5,481,783.34 |
| Inventory | 1,434,517,398.92 | 1,410,869,192.26 |
| Other current assets | 125,981,956.68 | 118,636,045.77 |
| Total current assets | 4,051,663,212.28 | 3,156,850,536.93 |
| Non-current assets: | ||
| Available-for-sale financial assets | 3,680,000.00 | |
| Long-term equity investment | 1,540,743,547.03 | 1,354,820,455.99 |
| Other equity instrument investment | 4,547,809.52 | |
| Fixed assets | 1,844,448,325.69 | 1,516,702,438.29 |
| Construction in progress | 85,569,862.73 | 255,719,188.30 |
| Productive biological assets | 56,033,181.19 | 30,484,794.88 |
| Intangible assets | 214,591,851.10 | 206,387,940.29 |
| Goodwill | 290,425.67 | 290,425.67 |
| Long-term deferred & prepaid expenses | 158,343,630.01 | 177,903,367.82 |
| Deferred income tax assets | 34,114,682.31 | 30,357,726.08 |
| Other non-current assets | 326,934,235.00 | 197,497,688.18 |
| Total non-current assets | 4,265,617,550.25 | 3,773,844,025.50 |
| Total assets | 8,317,280,762.53 | 6,930,694,562.43 |
| Consolidated Balance Sheet(continue) | ||
| June 30th, 2019 Unit: yuan | ||
| Item | June 30th, 2019 | December 31st, 2018 |
| Current liabilities: | ||
| Short-term borrowing | 1,449,522,585.98 | 1,347,690,168.49 |
| Accounts payable | 671,815,155.23 | 572,729,779.31 |
| Advance receipt | 256,304,585.35 | 161,173,916.67 |
| Payroll | 39,828,932.27 | 49,731,930.35 |
| Tax payable | 30,041,321.29 | 28,744,792.72 |
| Other payables | 370,038,640.51 | 309,537,195.12 |
| including: interest payable | 1,405,712.50 | 1,784,257.05 |
| dividends payable | 19,489,069.55 | 526,000.00 |
| Non-current liabilities due within one year | 56,374,186.31 | 32,999,999.96 |
| Total current liabilities | 2,873,925,406.94 | 2,502,607,782.62 |
| Non-current liabilities: | ||
| Long-term borrowings | 42,500,000.00 | 118,500,000.00 |
| Long-term payables | 16,845,833.40 | 23,345,833.38 |
| Deferred income | 18,915,195.31 | 20,252,967.41 |
| Deferred income tax liabilities | 115,017.00 | |
| Total non-current liabilities | 78,376,045.71 | 162,098,800.79 |
| Total liabilities | 2,952,301,452.65 | 2,664,706,583.41 |
| Owners' equity(or shareholders' equity): | ||
| Paid-up capital (or share capital) | 922,304,396.00 | 845,751,469.00 |
| Capital reserve | 868,884,734.07 | 153,824,536.37 |
| deduct: treasury stock | 70,688,750.00 | 70,688,750.00 |
| Other comprehensive income | 2,146,597.82 | -1,316,942.00 |
| Surplus reserves | 272,882,920.19 | 272,882,920.19 |
| Undistributed profits | 2,844,456,372.98 | 2,651,462,525.08 |
| Total equity attributable to the owners of parent company | 4,839,986,271.06 | 3,851,915,758.64 |
| Non-controlling interests | 524,993,038.82 | 414,072,220.38 |
| Total owners' equity | 5,364,979,309.88 | 4,265,987,979.02 |
| Total liabilities and owners' equity | 8,317,280,762.53 | 6,930,694,562.43 |
Consolidated Balance Sheet of Parent Company
June 30th, 2019
Unit: yuan
| Item | June 30th, 2019 | December 31st, 2018 |
| Current assets: | ||
| Monetary capital | 1,210,527,716.67 | 750,589,871.09 |
| Derivative financial assets | 2,373,461.00 | 2,042,527.60 |
| Accounts receivable | 17,433,942.31 | 16,033,809.05 |
| Prepayments | 1,509,033.09 | 2,278,798.85 |
| Other receivables | 1,377,643,449.55 | 869,671,230.01 |
| including: dividends receivable | 31,965,270.58 | 15,225,270.58 |
| Inventory | 45,899,234.06 | 41,986,504.36 |
| Total current assets | 2,655,386,836.68 | 1,682,602,740.96 |
| Non-current assets: | ||
| Available-for-sale financial assets | 3,000,000.00 | |
| Long-term equity investment | 3,531,839,774.87 | 3,285,783,087.96 |
| Other equity instrument investment | 4,039,369.92 | |
| Fixed assets | 137,381,680.74 | 73,509,615.43 |
| Construction in progress | 25,000.00 | 56,425,656.79 |
| Intangible assets | 15,859,646.29 | 16,169,866.87 |
| Long-term prepaid expenses | 806,599.83 | 854,845.30 |
| Deferred income tax assets | 9,740,249.28 | 9,060,127.91 |
| Total non-current assets | 3,699,692,320.93 | 3,444,803,200.26 |
| Total assets | 6,355,079,157.61 | 5,127,405,941.22 |
| Current liabilities: | ||
| Short-term borrowings | 1,140,000,000.00 | 1,075,000,000.00 |
| Accounts payable | 27,661,444.90 | 7,636,692.77 |
| Advance receipt | 1,627,159.69 | 2,690,153.80 |
| Payroll payable | 1,720,064.09 | 2,749,116.65 |
| Tax payable | 1,966,877.56 | 4,166,334.74 |
| Other payables | 1,375,174,162.60 | 1,026,382,418.43 |
| including: Interest payable | 1,405,712.50 | 1,601,798.61 |
| Dividends payable | 13,333,238.12 | |
| Non-current liabilities due within one year | 34,000,000.00 | 20,000,000.00 |
| Total current liabilities | 2,582,149,708.84 | 2,138,624,716.39 |
| Non-current liabilities: | ||
| Long-term borrowings | 42,000,000.00 | 118,000,000.00 |
| Deferred income | 7,301,250.00 | 7,425,000.00 |
| Deferred income tax liabilities | 115,017.00 | |
| Total non-current liabilities | 49,416,267.00 | 125,425,000.00 |
| Total liabilities | 2,631,565,975.84 | 2,264,049,716.39 |
| Owners' equity(or shareholders' equity): |
| Paid-up capital (or share capital) | 922,304,396.00 | 845,751,469.00 |
| Capital reserves | 864,552,493.69 | 160,705,065.92 |
| deduct: treasury stock | 70,688,750.00 | 70,688,750.00 |
| Other Comprehensive income | 1,452,339.23 | -1,305,935.62 |
| Surplus reserves | 272,882,920.19 | 272,882,920.19 |
| Undistributed profits | 1,733,009,782.66 | 1,656,011,455.34 |
| Total owners' equity | 3,723,513,181.77 | 2,863,356,224.83 |
| Total liabilities and owners' equity (or shareholders' equity) | 6,355,079,157.61 | 5,127,405,941.22 |
Consolidated Income Statement
January-June, 2019
| Liaoning Wellhope | Unit: yuan | |
| Item | June 30th, 2019 | June 30th, 2018 |
| 1. Total operating revenue | 7,727,400,004.75 | 6,850,215,702.49 |
| including: Operating revenue | 7,727,400,004.75 | 6,850,215,702.49 |
| 2. Total operating costs | 7,435,169,130.12 | 6,686,403,737.09 |
| including: Operating costs | 6,985,820,614.94 | 6,297,480,308.08 |
| Taxes and surtaxes | 12,698,727.34 | 11,759,191.04 |
| Selling expenses | 239,990,725.07 | 210,701,513.67 |
| Administrative expenses | 126,915,965.17 | 103,605,422.49 |
| R&D expenses | 30,021,345.87 | 29,771,840.08 |
| Financial expenses | 39,721,751.73 | 33,085,461.73 |
| including: Interest expenses | 40,211,708.70 | 36,549,414.58 |
| Interest income | -2,641,228.16 | -2,901,860.10 |
| add: Other income | 2,192,950.10 | 485,300.00 |
| Income from investment | 188,067,031.15 | 92,740,166.39 |
| including: Income from investments in associated companies and joint ventures | 186,195,941.85 | 89,150,595.32 |
| Gain from changes in fair value | -169,200.00 | 835,460.00 |
| Credit impairment loss | -18,534,402.05 | -25,031,735.81 |
| Assets impairment loss | -269,072.43 | -10,691,401.07 |
| Gain or loss from assets disposal | -45,359.23 | -838,995.13 |
| 3. Operating profit | 463,472,822.17 | 221,310,759.78 |
| add: Non-operating income | 15,814,929.98 | 8,565,564.83 |
| deduct: Non-operating expenditure | 18,322,686.59 | 4,294,410.09 |
| 4. Pretax profit | 460,965,065.56 | 225,581,914.52 |
| deduct: Income tax expense | 31,218,522.69 | 33,149,593.38 |
| 5. Net profit | 429,746,542.87 | 192,432,321.14 |
| Net profit from continuing operations | 429,746,542.87 | 192,432,321.14 |
| Net profit attributable to the shareholders of parent company | 359,008,639.18 | 164,359,110.71 |
| Non-controlling interests income | 70,737,903.69 | 28,073,210.43 |
| 6. Other comprehensive income, net of tax | 4,661,958.82 | -4,245,572.81 |
| Attributable to owners of parent company | 3,945,084.57 | -4,245,572.81 |
| a. Other comprehensive income that cannot be reclassified into gains or losses | ||
| b. Other comprehensive income that will be reclassified into the gains or losses | 3,945,084.57 | -4,245,572.81 |
| (a) Other comprehensive income that can be transferred in gains or losses under the equity method | 3,068,904.93 | -4,245,572.81 |
| (b) Exchange differences on translation of foreign currency financial statements | 876,179.64 | |
| Attributable to non-controlling interests | 716,874.25 | |
| 7. Total comprehensive income | 434,408,501.69 | 188,186,748.33 |
| Attributable to the owners of parent company | 362,953,723.75 | 160,113,537.90 |
| Attributable to non-controlling interests | 71,454,777.94 | 28,073,210.43 |
| 8. EPS | ||
| a. Basic earnings per share (yuan per share) | 0.41 | 0.20 |
| b. Diluted earnings per share (yuan per share) | 0.41 | 0.20 |
Consolidated Income Statement of Parent Company
January-June, 2019
Unit: yuan
| Item | June 30th, 2019 | June 30th, 2018 |
| 1. Total operating revenue | 261,739,621.75 | 307,735,900.71 |
| Deduct: Operating costs | 174,051,955.80 | 207,808,456.33 |
| Taxes and surtaxes | 812,810.61 | 765,497.03 |
| Selling expenses | 7,251,239.85 | 6,605,164.41 |
| Administrative expenses | 16,505,456.93 | 12,413,403.82 |
| R&D expenses | 10,304,335.79 | 10,992,419.66 |
| Financial expenses | 14,964,973.60 | 13,492,061.43 |
| including: Interest expenses | 29,112,564.27 | 27,818,889.08 |
| Interest income | -14,292,833.82 | -14,418,091.31 |
| add: Other income | 123,750.00 | |
| Income from investment | 202,720,334.91 | 91,680,421.66 |
| including: Income from investments in associated companies and joint ventures | 185,679,010.80 | 88,724,498.50 |
| Gain from changes in fair value | 766,780.00 | 835,460.00 |
| Credit impairment loss | -3,382,369.90 | -20,923,705.77 |
| Assets impairment loss | -6,150,602.09 | |
| Gain or loss from assets disposal | -30,999.44 | |
| 2. Operating profit | 238,046,344.74 | 121,100,471.83 |
| add: Non-operating income | 10,628,520.00 | 2,772,106.50 |
| deduct: Non-operating expenditure | 1,326,100.00 | 58.28 |
| 3. Pretax profit | 247,348,764.74 | 123,872,520.05 |
| deduct: Income tax expense | 4,335,646.14 | 4,238,890.05 |
| 4. Net profit | 243,013,118.60 | 119,633,630.00 |
| Net profit from continuing operations | 243,013,118.60 | 119,633,630.00 |
| 5. Other comprehensive income, net of tax | 3,068,904.93 | -4,245,572.81 |
| a. Other comprehensive income that cannot be reclassified into gains or losses | ||
| b. Other comprehensive income that will be reclassified into gains or losses | 3,068,904.93 | -4,245,572.81 |
| (a) Other comprehensive income that can be transferred in gains or losses under the equity method | 3,068,904.93 | -4,245,572.81 |
| 6. Total comprehensive income | 246,082,023.53 | 115,388,057.19 |
Consolidated Statement of Cash Flow
January-June, 2019Liaoning Wellhope Unit: yuan
| Item | June 30th, 2019 | June 30th, 2018 |
| 1. Cash flow from operating activities | ||
| Cash received by selling commodities, providing labor services | 7,948,606,132.70 | 7,049,632,638.50 |
| Tax refunds | 13,871,955.08 | 11,866,354.09 |
| Cash received from other activities related to operating | 38,922,770.34 | 43,313,298.58 |
| Sub-total of cash inflow of operating activities | 8,001,400,858.12 | 7,104,812,291.17 |
| Cash paid for purchasing commodities and receiving labor services | 6,996,689,336.06 | 6,187,546,380.34 |
| Net increase in financial assets held for trading purposes | 2,722,803.40 | |
| Cash paid to and for employee | 307,874,894.10 | 262,865,195.89 |
| Tax payments | 60,790,924.96 | 76,359,662.02 |
| Cash paid to other activities related to operating | 336,753,918.38 | 287,782,028.74 |
| Sub-total of cash outflow of operating activities | 7,704,831,876.90 | 6,814,553,266.99 |
| Net cash flow from operating activities | 296,568,981.22 | 290,259,024.18 |
| 2. Cash flow from investing activities | ||
| Cash received from disinvestment | 1,050,000.00 | 187,516.32 |
| Cash received from return on investment | 20,246,504.29 | 6,074,468.26 |
| Net cash received from disposal of fixed assets, intangible assets and other long-lived assets | 1,235,466.00 | 1,066,892.92 |
| Net cash received from disposal of subsidiaries and other business units | 510,233.92 | |
| Cash received from other activities related to investment | 2,377,932.15 | 1,360,556.14 |
| Sub-total of cash inflow of investing activities | 24,909,902.44 | 9,199,667.56 |
| Cash paid for acquiring and building fixed assets, intangible assets and other long-lived assets | 211,754,778.24 | 197,883,903.65 |
| Cash paid for investments | 39,435,378.79 | 38,689,246.94 |
| Net cash paid for acquiring subsidiaries and other business units | 113,573,868.96 | |
| Cash paid to other activities related to investment | 36,208,141.97 | |
| Sub-total of cash outflow of investing activities | 400,972,167.96 | 236,573,150.59 |
| Net cash flow from investing activities | -376,062,265.52 | -227,373,483.03 |
| 3. Cash flow from financing activities | ||
| Cash received by absorbing investments | 836,980,430.50 | 4,820,000.00 |
| including: Capital contributed by non-controlling interests to subsidiaries | 67,202,692.00 | 4,820,000.00 |
| Cash received from borrowings | 857,207,911.79 | 940,990,000.00 |
| Cash received from other activities related to financing | 640,000.00 | |
| Sub-total of cash inflow of financing activities | 1,694,828,342.29 | 945,810,000.00 |
| Repayments of borrowings | 814,501,307.93 | 880,300,000.00 |
| Cash paid for distributing dividends, profits, or paid for interests | 194,694,461.11 | 118,974,658.10 |
| including: Dividends or profits paid by subsidiaries to non-controlling interests | 4,420,306.88 | |
| Cash paid to other activities related to financing activities | 5,856,566.01 | |
| Sub-total of cash outflow of financing activities | 1,015,052,335.05 | 999,274,658.10 |
| Net cash flow from financing activities | 679,776,007.24 | -53,464,658.10 |
| 4. Effect of foreign exchange rate fluctuations on cash and cash equivalents | -556,725.86 | -506,962.19 |
| 5. Net increase in cash and cash equivalents | 599,725,997.08 | 8,913,920.86 |
| add: Opening balance of cash and cash equivalents | 889,204,873.97 | 740,680,891.81 |
| 6. Closing balance of cash and cash equivalents | 1,488,930,871.05 | 749,594,812.67 |
Consolidated Statement of Cash Flow of Parent Company
January-June, 2019Liaoning Wellhope Unit: yuan
| Item | June 30th, 2019 | June 30th, 2018 |
| 1. Cash flow from operating activities | ||
| Cash received by selling commodities, providing labor services | 254,250,757.39 | 301,338,646.53 |
| Cash received from other activities related to operating | 201,186,908.54 | 279,378,312.84 |
| Sub-total of cash inflow of operating activities | 455,437,665.93 | 580,716,959.37 |
| Cash paid for purchasing commodities and receiving labor services | 155,902,826.52 | 185,194,550.69 |
| Net increase in financial assets held for trading purposes | 330,933.40 | |
| Cash paid to and for employee | 14,666,109.28 | 12,080,061.08 |
| Tax payments | 10,249,972.23 | 12,988,277.37 |
| Cash paid to other activities related to operating | 359,094,296.54 | 216,289,255.03 |
| Sub-total of cash outflow of operating activities | 540,244,137.97 | 426,552,144.17 |
| Net cash flow from operating activities | -84,806,472.04 | 154,164,815.20 |
| 2. Cash flow from investing activities | ||
| Cash received from disinvestment | 1,050,000.00 | 800,000.00 |
| Cash received from return on investment | 38,866,504.29 | 13,119,072.37 |
| Net cash received from disposal of fixed assets, intangible assets and other long-lived assets | 34,000.00 | |
| Net cash received from disposal of subsidiaries and other business units | 4,000,000.00 | |
| Cash received from other activities related to investment | 1,360,556.14 | |
| Sub-total of cash inflow of investing activities | 43,950,504.29 | 15,279,628.51 |
| Cash paid for acquiring and building fixed assets, intangible assets and other long-lived assets | 7,169,414.68 | 7,885,402.10 |
| Cash paid for investments | 84,338,378.79 | 119,469,158.49 |
| Cash paid to other activities related to investment | 2,787,170.71 | |
| Sub-total of cash outflow of investing activities | 94,294,964.18 | 127,354,560.59 |
| Net cash flow from investing activities | -50,344,459.89 | -112,074,932.08 |
| 3. Cash flow from financing activities | ||
| Cash received by absorbing investments | 769,777,738.50 | |
| Cash received from borrowings | 695,000,000.00 | 920,000,000.00 |
| Sub-total of cash inflow of financing | 1,464,777,738.50 | 920,000,000.00 |
| activities | ||
| Repayments of borrowings | 692,000,000.00 | 860,000,000.00 |
| Cash paid for distributing dividends, profits, or paid for interests | 180,476,138.26 | 112,145,959.59 |
| Sub-total of cash outflow of financing activities | 872,476,138.26 | 972,145,959.59 |
| Net cash flow from financing activities | 592,301,600.24 | -52,145,959.59 |
| 4. Effect of foreign exchange rate fluctuations on cash and cash equivalents | 6.56 | 52.39 |
| 5. Net increase in cash and cash equivalents | 457,150,674.87 | -10,056,024.08 |
| add: Opening balance of cash and cash equivalents | 740,891,873.25 | 525,941,409.05 |
| 6. Closing balance of cash and cash equivalents | 1,198,042,548.12 | 515,885,384.97 |
Change Statement of Owner's Equity
January-June, 2019
Unit: yuan
| Item | January-June, 2019 | ||||||||
| Equity attributable to the owners of parent company | Non-controlling interests | Total owners' equity | |||||||
| Share capital | Capital reserve | Deduct: Treasury stock | Other comprehensive income | Surplus reserve | Undistributed profits | Subtotal | |||
| 1. Closing balance of prior period | 845,751,469.00 | 153,824,536.37 | 70,688,750.00 | -1,316,942.00 | 272,882,920.19 | 2,651,462,525.08 | 3,851,915,758.64 | 414,072,220.38 | 4,265,987,979.02 |
| add: changes in accounting policies | -481,544.75 | -481,544.75 | -645.73 | -482,190.48 | |||||
| 2. Opening balance of current period | 845,751,469.00 | 153,824,536.37 | 70,688,750.00 | -1,798,486.75 | 272,882,920.19 | 2,651,462,525.08 | 3,851,434,213.89 | 414,071,574.65 | 4,265,505,788.54 |
| 3. Changes of current period | 76,552,927.00 | 715,060,197.70 | 3,945,084.57 | 192,993,847.90 | 988,552,057.17 | 110,921,464.17 | 1,099,473,521.34 | ||
| A. Total comprehensive income | 3,945,084.57 | 359,008,639.18 | 362,953,723.75 | 70,737,903.69 | 433,691,627.44 | ||||
| B. Capital contributed and reduced by owners | 76,552,927.00 | 715,060,197.70 | 791,613,124.70 | 791,613,124.70 | |||||
| a. Common stock invested by owners | 76,552,927.00 | 708,730,862.57 | 785,283,789.57 | 785,283,789.57 | |||||
| b. Capital contributed by other equity instrument holders | |||||||||
| c. Amount of share-based payment included in the owner's equity | 10,013,022.10 | 10,013,022.10 | 10,013,022.10 | ||||||
| d. Other | -3,683,686.97 | -3,683,686.97 | -3,683,686.97 | ||||||
| C. Profit distribution | -166,014,791.28 | -166,014,791.28 | -7,655,875.72 | -173,670,667.00 | |||||
| a. Appropriation of surplus reserves | |||||||||
| b. Extraction of general risk provisions | |||||||||
| c. Profit distributed to owners (or shareholders) | -166,014,791.28 | -166,014,791.28 | -7,655,875.72 | -173,670,667.00 | |||||
| D. Internal carry forward of owners' equity | 47,839,436.20 | 47,839,436.20 | |||||||
| a. Other | 47,839,436.20 | 47,839,436.20 | |||||||
| 4. Closing balance of current period | 922,304,396.00 | 868,884,734.07 | 70,688,750.00 | 2,146,597.82 | 272,882,920.19 | 2,844,456,372.98 | 4,839,986,271.06 | 524,993,038.82 | 5,364,979,309.88 |
| Item | January-June, 2018 | ||||||||
| Equity attributable to the owners of parent company | Non-controlling interests | Total owners' equity | |||||||
| Share capital | Capital reserve | Deduct: Treasury Stock | Other comprehensive income | Surplus reserve | Undistributed profits | Subtotal | |||
| 1. Closing balance of prior period | 831,176,469.00 | 103,593,300.06 | 232,486,459.89 | 2,223,048,013.93 | 3,390,304,242.88 | 355,960,084.62 | 3,746,264,327.50 | ||
| add: changes in accounting policies | |||||||||
| 2. Opening balance of current period | 831,176,469.00 | 103,593,300.06 | 232,486,459.89 | 2,223,048,013.93 | 3,390,304,242.88 | 355,960,084.62 | 3,746,264,327.50 | ||
| 3. Changes of current period | -3,364,732.80 | -4,245,572.81 | 81,241,463.81 | 73,631,158.20 | 32,994,189.42 | 106,625,347.62 | |||
| A. Total comprehensive income | -4,245,572.81 | 164,359,110.71 | 160,113,537.90 | 28,073,210.43 | 188,186,748.33 | ||||
| B. Capital contributed and reduced by owners | -3,364,732.80 | -3,364,732.80 | -3,364,732.80 | ||||||
| a. Common stock invested by owners | |||||||||
| b. Capital contributed by other equity instrument holders | |||||||||
| c. Amount of share-based payment included in the owner's equity | |||||||||
| d. Other | -3,364,732.80 | -3,364,732.80 | -3,364,732.80 | ||||||
| C. Profit distribution | -83,117,646.90 | -83,117,646.90 | -83,117,646.90 | ||||||
| a. Appropriation of surplus reserves | |||||||||
| b. Extraction of general risk provisions | |||||||||
| c. Profit distributed to owners (or shareholders) | -83,117,646.90 | -83,117,646.90 | -83,117,646.90 | ||||||
| d．Other | |||||||||
| D. Internal carry forward of owners' equity | 4,920,978.99 | 4,920,978.99 | |||||||
| a. Other | 4,920,978.99 | 4,920,978.99 | |||||||
| 4. Closing balance of current period | 831,176,469.00 | 100,228,567.26 | -4,245,572.81 | 232,486,459.89 | 2,304,289,477.74 | 3,463,935,401.08 | 388,954,274.04 | 3,852,889,675.12 |
Change Statement of Owner's Equity of Parent Company
January-June, 2019
Unit: yuan
| Item | January-June, 2019 | ||||||
| Share capital | Capital reserve | Deduct: Treasury stock | Other comprehensive income | Surplus reserve | Undistributed profits | Total owners' equity | |
| 1. Closing balance of prior period | 845,751,469.00 | 160,705,065.92 | 70,688,750.00 | -1,305,935.62 | 272,882,920.19 | 1,656,011,455.34 | 2,863,356,224.83 |
| add: changes in accounting policies | -310,630.08 | -310,630.08 | |||||
| 2. Opening balance of current period | 845,751,469.00 | 160,705,065.92 | 70,688,750.00 | -1,616,565.70 | 272,882,920.19 | 1,656,011,455.34 | 2,863,045,594.75 |
| 3. Changes of current period | 76,552,927.00 | 703,847,427.77 | 3,068,904.93 | 76,998,327.32 | 860,467,587.02 | ||
| A. Total comprehensive income | 3,068,904.93 | 243,013,118.60 | 246,082,023.53 | ||||
| B. Capital contributed and reduced by owners | 76,552,927.00 | 703,847,427.77 | 780,400,354.77 | ||||
| a. Common stock invested by owners | 76,552,927.00 | 692,373,258.57 | 768,926,185.57 | ||||
| b. Capital contributed by other equity instrument holders | |||||||
| c. Amount of share-based payment included in the owner's equity | 11,474,169.20 | 11,474,169.20 | |||||
| d. Other | |||||||
| C. Profit distribution | -166,014,791.28 | -166,014,791.28 | |||||
| a. Appropriation of surplus reserves | |||||||
| b. Profit distributed to owners (or shareholders) | |||||||
| c. Other | -166,014,791.28 | -166,014,791.28 | |||||
| D. Internal carry forward of owners' equity | |||||||
| 4. Closing balance of current period | 922,304,396.00 | 864,552,493.69 | 70,688,750.00 | 1,452,339.23 | 272,882,920.19 | 1,733,009,782.66 | 3,723,513,181.77 |
| Item | January-June, 2018 | ||||||
| Share capital | Capital reserve | Deduct: Treasury stock | Other comprehensive income | Surplus reserve | Undistributed profits | Total owners' equity | |
| 1. Closing balance of prior period | 831,176,469.00 | 102,593,326.35 | 232,486,459.89 | 1,375,560,959.50 | 2,541,817,214.74 | ||
| add: changes in accounting policies | |||||||
| 2. Opening balance of current period | 831,176,469.00 | 102,593,326.35 | 232,486,459.89 | 1,375,560,959.50 | 2,541,817,214.74 | ||
| 3. Changes of current period | -4,245,572.81 | 0.00 | 36,515,983.10 | 32,270,410.29 | |||
| A. Total comprehensive income | -4,245,572.81 | 119,633,630.00 | 115,388,057.19 | ||||
| B. Capital contributed and reduced by owners | |||||||
| a. Common stock invested by owners | |||||||
| b. Capital contributed by other equity instrument holders | |||||||
| c. Amount of share-based payment included in the owner's equity | |||||||
| d. Other | |||||||
| C. Profit distribution | -83,117,646.90 | -83,117,646.90 | |||||
| a. Appropriation of surplus reserves | |||||||
| b. Profit distributed to owners (or shareholders) | -83,117,646.90 | -83,117,646.90 | |||||
| c. Other | |||||||
| D. Internal carry forward of owners' equity | |||||||
| 4. Closing balance of current period | 831,176,469.00 | 102,593,326.35 | -4,245,572.81 | 232,486,459.89 | 1,412,076,942.60 | 2,574,087,625.03 | |
Section XI Reference
| Reference file directory | Financial statements that contain the signature and seal of the legal representative, the person in charge of the accounting work and the person in charge of the accounting department. |
| During the reporting period, all the original documents and original announcements of the Company that have been publicly disclosed in the newspapers designated by the CSRC. |
Chairman of the Board of Directors: Jin WeidongThe submission date approved by the Board of Directors: August 15th, 2019