Guangdong Haid Group Co., Limited
2019 Annual Report
Stock Code: 002311Stock Abbreviation: Haid Group
Bond Code: 128102Bond Abbreviation: Haid Convertible Bonds
Date of Approval for Publication: 21 April 2020
Section I. Important Notice, Table of Contents and Definitions
The board of directors (the "Board"), the supervisory committee, the directors,the supervisors and the senior management of the Guangdong Haid Group Co.,Limited (the "Company") hereby warrant the truthfulness, accuracy andcompleteness of the information presented in this report, guarantee that thereare no misrepresentations, misleading statements or material omissionscontained in this annual report, and are individually and collectively responsiblefor the authenticity, accuracy and completeness of the information contained inthis report.Mr. Hua Xue, head of the Company, and Mr. Shaolin Yang, head in charge ofaccounting work and head of the accounting department (Accounting Officer),declare that they warrant the truthfulness, accuracy and completeness of thefinancial statements in the annual report.All directors were present in person at the Board meeting to consider andapprove this annual report.The Report contains forward-looking statements such as future plans, which donot constitute any specific undertakings by the Group to its investors. Investorsare advised to pay attention to investment risks.
Risk Warning:
I. Risk of Periodical Fluctuations in the Feed Industry due to Abnormal
Weather and Epidemic Diseases during Animal ProductionThe feed industry mainly serves the downstream animal feeding industry. Theabnormal changes in natural elements such as precipitation and typhoon maylead to fluctuations of the inventory of livestock or aquatic products and eventhe large-scale outbreak of animal diseases. This thus affects the demand forfeed and likely causes the risk of periodic and regional fluctuations of the latter.With the environmental changes and the expansion of animal productionindustry, human and animal epidemic diseases may also occur occasionally. Forinstance, the COVID-19 epidemic started to wreak havoc on the world inJanuary 2020; the African swine fever virus broke out across China in August2018; and PRRSV-mediated pig disease, shrimp-relevant EMS epidemic diseaseand poultry-relevant “H7N9” disease all occurred recently. The outbreak of
animal diseases will directly inhibit the scale of animal production and reducethe demand for feed in the short term; major animal and human epidemicdiseases may also lead to compulsory measures imposed by the government torestrict human and goods circulation to cut off the infection sources, which maydampen the demand from end-consumers, leading to a downturn of the animalproduction industry, and further affect the feed demand, giving rise to adverseeffects on the production and operation of feed enterprises.Risk management methods: (1) The Company is currently fully deployingfactories and developing local markets in major areas in Southern China,Central China, Eastern China and Northern China and overseas markets inSoutheast Asia, etc. and the expansion of regional distribution can effectivelycope with the risk of weather anomalies and natural disasters in local areas. (2)The Company's feed varieties cover pig feed, chicken feed, duck feed and otherlivestock feed and fish feed, shrimp feed and other aquatic feed. With a varietyof products and a well-balanced structure, it can effectively deal with the risk ofsingle breed species and has strong comprehensive anti-risk capability. (3) TheCompany has set up professional functional departments at its headquarters,and the Group has set up multiple regional / business divisions according toregions or business categories. Each professional center aims at acquiringtechnical and management leadership in its field and provides technical andmanagement standards as well as integrated and professional management andservice support for multiple regional/business divisions and various branchesand subsidiaries. The flat and professional management structure and anefficient management team enable the Company to allocate various resources ina timely manner during the epidemic, and make targeted anti-epidemicarrangements for different businesses and regions.II. Risk of Drastic Price Fluctuations of Major Raw MaterialsThe feed ingredients mainly consist of various kinds of staple agriculturalproducts such as corn and soybeans(soybean meal). In recent years, the domesticand international markets of agricultural product have been closely linked.Changes in the planting area and harvest of crops in major grain-producingcountries, purchasing and storage and subsidy policies, import and exportpolicies, fluctuations in logistics capacity and costs of shipping, exchange rates,human and animal epidemic diseases and others may cause great fluctuations ininternational trade and prices of agricultural products, which, in turn, has acertain impact on the cost of feed and farming. With the strengthening of theinternationalization in trade of agricultural products, the factors for changes inthe prices of agricultural products have become more complex and the pricefluctuations have therefore increased. If raw material prices fluctuate and theCompany fails to understand the changes in the trade of feed raw materials in a
timely manner and promptly implement strategic management and risk controlof procurement, the Company may face the risk of rising integratedprocurement costs.Risk management methods: (1) The Company divides raw material intodifferent categories and implements a combination of centralized procurementof staple category and local procurement of regional varieties, which not onlyguarantees the advantages of large-scale raw material procurement, but alsoobtains localization advantages from rapid response in respect of regionalprocurement; (2) The Company continuously invests in the construction of theraw material procurement research system. The team of the professional rawmaterial information research department is relatively mature. It conductsstrategic procurement through the real-time tracking, research and judgment ofthe domestic and foreign bulk raw material market trends, and implementsposition risk management for bulk raw materials through futures hedging, rawmaterials trade and other tools to effectively control procurement risks; (3) TheCompany has accumulated rich experience in research and development ofanimal nutrition and feed formula technologies, and has research anddevelopment team composed of over 1,000 members. Large amounts of fundsare spent on research and development each year, focusing on animal nutritionrequirements, feed formula technology, animal farming and geneticimprovement, comprehensive investigation on healthy animal farming strategies,and other research areas. The Company has a profound understanding ofanimal nutritional requirements and higher level of expertise in comprehensiveutilization of raw materials. Therefore, in case of raw material price fluctuations,it can quickly adjust the formula to control the reasonable feed nutrient leveland formula costs.III. Risk of Structural, Regional and Scale Adjustment to Farming Industryunder Environmental Protection Regulations and PoliciesIn recent years, the State has introduced a series of environmental protectionlaws and regulations including the new Environmental Protection Law (环保法),the Regulations on Prevention and Control of Pollution from Large-ScaleProduction of Livestock and Poultry (畜禽规模养殖污染防治条例), Action Planfor Prevention and Treatment of Water Pollution (水污染防治行动计划), andthe Guiding Opinions on Adjusting the Layout of Pig Production in theSouthern Water Network Region (关于促进南方水网地区生猪养殖布局调整),the "13th Five-Year Plan" on Ecological and Environmental Protection (“十三五”生态环境保护规划), which stipulate the pollution prevention and control ofanimal production industry, increase the pollution control of animal productionindustry, and especially limit the production scale in the regions of key water
sources and its surrounding areas. According to the regulations and policies ofthe central government, banned areas and restricted areas have been set upthroughout the country, and pig farms in the banned areas in the southern waternetwork area are gradually relocating. The implementation of environmentalprotection policies will speed up the withdrawal of private pig farming farmers,reduce the backward production capacity failing to meet environmentalprotection standards and with a small scale, and enable large -scale farmers tocontinuously expand their production capacity and improve the farming scaleand structure; In addition, the establishment of banned areas and restrictedareas will enforce adjustments to the pig production capacity in all places acrossthe country. The adjustments to the scale composition of pig production and therelocation of pig production area will certainly have a profound impact on theexisting capacity layout, market share, pricing power and business model of thefeed industry. The impact of enforced environmental protection policies on thepig growing and feed industries puts existing competitive companies in themarket at risk of reshuffle.Risk management methods: (1) The Company continually improves itscapability to serve farmers. In addition to feed products, the Company is alsoengaged in the industrial chain of seedlings, animal healthcare products,farming and finance and has a strong stickiness to large-scale farmers; (2) Thefeed varieties of the Company cover livestock, poultry, and aquatic animals andthe product line is abundant. The production lines for pig feed, chicken feed,duck feed and pelleted fish feed can be shared. The Company can rapidly shiftthe production layout and make adjustments to adapt to the changes in theindustry by adjusting the production capacity in all places. (3) The Companyadopts multiple models to speed up the production layout in areas with richresources and strong environmental carrying capacity, and to seize the marketshare of new animal farming areas.IV. Risk of Exchange Rate FluctuationsThe global procurement of raw materials has become the norm. The scale ofoverseas investment and overseas operations of the Company is also rapidlyexpanding. The scale of cross-border fund settlement and the stock of overseasassets have grown substantially, involving the currency types of various relatedcountries. Currency exchange rate fluctuations are subject to different influencefactors, and exchange rate fluctuations in any currency may have a certainimpact on the settlement cost and asset stock value of the region.Risk management methods: (1) Based on the business scale, business model, andsettlement characteristics in different regions and countries, the Companystrictly controls the exchange rate risks, carefully selects settlement currencies,
and strives to achieve relatively balanced regional fund inflow and outflowthrough structural arrangements of financing sources and financing types; (2)The expansion of two-way fluctuations in the RMB exchange rate has becomethe new normal. The Company further enhances its awareness of foreignexchange risk management, and arranges settlement models based on theprocurement and sales strategies and cycle characteristics of import and exportoperations. And forward foreign exchange settlement and sale, swaps, foreignexchange options and other financial instruments are flexibly used to lock theexchange rate risks, control procurement and sales costs, and control thepossible risk brought about by exchange rate fluctuations. (3) The Company setsup an overseas capital pool to achieve centralized management of foreignexchanges, increase the utilization efficiency of foreign exchanges, as well asreduce the risk of exchange rate fluctuations in the settlement and payment ofexchanges. (4) In the overseas business operations, due to the high cost ofexchange rate lock-in, the Company gives play to the advantage of the highinterest rates of the local currencies and chooses appropriate term depositschemes for high interest income to offset the depreciation risk of the localcurrencies.
The proposed profit distribution plan of the Company was considered andpassed by the Board: on the basis of the total number of shares on theregistration date when the plan is implemented in the future, the Company willdistribute cash dividend of RMB 3.5 (tax inclusive) and 0 bonus share (taxinclusive) for every 10 existing shares held by all shareholders withoutcapitalization of capital reserve.This report has been prepared in both Chinese and English. Should there be anydiscrepancies or misunderstandings between the two versions, the Chineseversion shall prevail. The complete published Chinese 2019 Annual Report isavailable athttp://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=9900009032&stockCode=002311&announcementId=1207538986&announcementTime=2020-04-21.
Table of Contents
Section I. Important Notice, Table of Contents and Definitions ................................................... 1
Section II. Company Profile and Key Financial Indicators ......................................... 8
Section III. Business Overview ................................................................................ 13
Section IV. Discussion and Analysis of Operations .................................................. 21
Section V. Material Matters ...................................................................................... 50
Section VI. Share Changes and Shareholder Information ......................................... 87
Section VII. Preferred Shares ................................................................................... 97
Section VIII. Convertible Corporate Bonds .............................................................. 98
Section IX. Directors, Supervisors, Senior Management and Staff ........................... 99
Section X. Corporate Governance .......................................................................... 113
Section XI. Corporate Bonds .................................................................................. 125
Section XII. Financial Statements .......................................................................... 126
Section XIII. Documents Available for Reference .................................................. 370
Definitions
| Item | Definition |
| Company, Group, Haid Group | Guangdong Haid Group Co., Limited |
| Board | the board of directors of Guangdong Haid Group Co., Limited |
| Supervisory Committee | the supervisory committee of Guangdong Haid Group Co., Limited |
| General Meeting | the general meeting of Guangdong Haid Group Co., Limited |
| Company Law | the Company Law of the People’s Republic of China |
| Securities Law | the Securities Law of the People’s Republic of China |
| Articles of Association | the Articles of Association of Guangdong Haid Group Co., Limited |
| RMB | Renminbi |
| reporting period, the period, the year | the period from 1 January 2019 to 31 December 2019 |
| last year, the same period of last year | the period from 1 January 2018 to 31 December 2018 |
| the end of the period | 31 December 2019 |
| the beginning of the period or the year | 1 January 2019 |
| CSRC | China Securities Regulatory Commission |
Section II. Company Profile and Key Financial IndicatorsI. Company profile
| Stock abbreviation | Haid Group | Stock code | 002311 |
| Stock exchanges on which the shares are listed | Shenzhen Stock Exchange | ||
| Chinese name of the Company | 广东海大集团股份有限公司 | ||
| Chinese abbreviation of the Company | 海大集团 | ||
| English name of the Company (if any) | Guangdong Haid Group Co., Limited | ||
| English abbreviation of the Company (If any) | HAID GROUP | ||
| Legal representative of the Company | Hua Xue | ||
| Registered address | Room 701 , Building 2，Haid Mansion，No. 42，Road 4, Wangbo, Nancun Town, Panyu Dist， Guangzhou，China. | ||
| Postal code of registered address | 511445 | ||
| Office address | Room 701 , Building 2，Haid Mansion，No. 42，Road 4, Wangbo, Nancun Town, Panyu Dist， Guangzhou，China | ||
| Postal code of office address | 511445 | ||
| Website of the Company | www.haid.com.cn | ||
| Email address | zqbgs@haid.com.cn | ||
II. Contact persons and contact methods
| Secretary to the Board | Securities Affairs Representative | |
| Name | Zhijian Huang | Jiewen Lu、Huafang Yang |
| Correspondence address | Room 701 , Building 2，Haid Mansion，No. 42，Road 4, Wangbo, Nancun Town, Panyu Dist， Guangzhou，China | Room 701 , Building 2，Haid Mansion，No. 42，Road 4, Wangbo, Nancun Town, Panyu Dist， Guangzhou，China |
| Telephone | 8620-39388960 | 8620-39388960 |
| Facsimile | 8620-39388958 | 8620-39388958 |
| Email address | zqbgs@haid.com.cn | zqbgs@haid.com.cn |
III. Information disclosure and places for inspection
| Designated media for information disclosure | Securities Times, China Securities Journal, Securities Daily, Shanghai Securities News |
| Designated websites for the publication of the Annual Report as approved by CSRC | www.cninfo.com.cn |
| Places for inspection of the Company’s Annual Report | Securities Department of the Company |
IV. Change in registration
| Organisation registration code | No change |
| Change of principal activities since its listing (if any) | No change |
| Change of the controlling shareholder (if any) | No change |
V. Other relevant informationCPAs engaged by the Company
| Name of CPAs | Grant Thornton China (Special General Partnership) |
| CPAs’ Office Address | 5th Floor, Scitech Palace 22 Jianguomen Wai Avenue, Chaoyang District, Beijing |
| Name of the Signing Certified Public Accountants | Wenyuan Guan and Shuxia Zhang |
Sponsors engaged by the Company to continuously perform its supervisory function during the reporting period
□ Applicable √ Not applicable
Financial Advisors engaged by the Company to continuously perform its supervisory function during the reporting period
□ Applicable √ Not applicable
VI. Major accounting data and financial indicators
Retrospective adjustment to or restatement of the accounting data for prior years by the Company
□ Yes √ No
| 2019 | 2018 | Increase/decrease for the year as compared to the | 2017 |
| prior year | ||||
| Total Operating Income (RMB) | 47,612,587,464.50 | 42,156,628,800.11 | 12.94% | 32,556,634,127.38 |
| Net profits for the year attributable to shareholders of the Company (RMB) | 1,648,762,579.59 | 1,437,281,732.28 | 14.71% | 1,207,225,209.35 |
| Net profits for the year attributable to shareholders of the Company after deducting the non-operating gain and loss (RMB) | 1,580,784,060.76 | 1,394,557,560.67 | 13.35% | 1,162,756,461.48 |
| Net cash flows from operating activities (RMB) | 3,246,980,705.08 | 1,035,764,006.33 | 213.49% | 494,221,455.85 |
| Basic earnings per share (RMB per share) | 1.06 | 0.90 | 17.78% | 0.78 |
| Diluted earnings per share (RMB per share) | 1.05 | 0.90 | 16.67% | 0.78 |
| Rate of return on equity on weighted average basis | 19.54% | 20.21% | -0.67% | 20.01% |
| As at the end of 2019 | As at the end of 2018 | Increase/decrease as at the end of the year compared to the end of the prior year | As at the end of 2017 | |
| Total assets (RMB) | 18,854,315,218.31 | 17,365,663,861.06 | 8.57% | 13,160,456,702.93 |
| Total equity attributable to owners of the Company (RMB) | 9,103,789,731.01 | 7,745,939,076.96 | 17.53% | 6,474,694,687.24 |
VII. Differences in accounting data under domestic and overseas accounting standards
1. Differences between the net income and net assets disclosed in accordance with international accountingstandards and China accounting standards in the financial report
□ Applicable √ Not applicable
There was no difference between the net income and net assets disclosed in accordance with international accounting standards andChina accounting standards in the financial report during the reporting period.
2. Differences between the net income and net assets disclosed in accordance with overseas accountingstandards and China accounting standards in the financial report
□ Applicable √ Not applicable
There was no difference between the net income and net assets disclosed in accordance with overseas accounting standards andChina accounting standards in the financial report during the reporting period.VIII. Key Financial Indicators by QuarterUnit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Total Operating Income | 8,874,920,365.40 | 12,189,372,705.03 | 14,448,270,108.28 | 12,100,024,285.79 |
| Net profits for the year attributable to shareholders of the Company | 122,489,585.76 | 551,430,216.83 | 738,553,472.12 | 236,289,304.88 |
| Net profits for the year attributable to shareholders of the Company after deducting the non-operating gain and loss | 120,051,433.64 | 543,171,630.64 | 708,579,905.05 | 208,981,091.43 |
| Net cash flows from operating activities | -678,764,341.96 | 1,007,122,610.85 | 1,672,826,361.80 | 1,245,796,074.39 |
Whether the above indicators or their aggregated amounts have any material difference with the respective amounts as disclosed inthe quarterly report or interim report
□ Yes √ No
IX. Items and Amounts of Non-operating Gains or Losses
√ Applicable □ Not applicable
Unit: RMB
| Item | Amount for 2019 | Amount for 2018 | Amount for 2017 | Explanation |
| Gain or loss on disposal of non-current assets | -699,384.34 | -581,071.09 | -12,825,316.16 | |
| Government subsidies charged to current profit or loss (exclusive of government subsidies given in the Company’s ordinary course of business at fixed quotas or amounts as per government’s uniform standards) | 53,217,210.55 | 66,315,959.91 | 59,725,956.70 | |
| Gain equal to the amount by which investment costs for the Company to obtain subsidiaries, associates and joint ventures are lower than the Company’s enjoyable fair value of identifiable net asset value of investees when making investments | 3,199,250.94 | 122,148.00 |
| Gain or loss on changes in fair value of held-for-trading financial assets and liabilities & financial assets and liabilities at fair value through profit or loss (exclusive of effective portion of hedges that arise in the Company’s ordinary course of business) | 4,383,792.92 | -175,206.74 | -73,004.67 | |
| Account receivables that are individually tested for impairment and reversal of contract assets impairment | 3,818,866.10 | 3,466,834.57 | 1,359,508.00 | |
| Non-operating gains and losses other than above | 19,284,324.06 | -12,961,386.26 | 2,623,429.25 | |
| Other gains and losses that meet the definition of non-operating gain/loss | 5,465,542.39 | 1,263,559.84 | 1,259,316.26 | |
| Less: Income tax effects | 17,653,550.72 | 11,931,518.80 | 8,012,841.86 | |
| Less: Non-controlling interests effects (net of tax) | 3,037,533.07 | 2,672,999.82 | -289,552.35 | |
| Total | 67,978,518.83 | 42,724,171.61 | 44,468,747.87 | -- |
Notes for the Company's non-operating gain or loss items as defined in the Explanatory Announcement on Information Disclosurefor Companies Offering Their Securities to the Public No.1 - Non-operating Gains or Losses (公开发行证券的公司信息披露解释性公告第1号——非经常性损益) and the non-operating gain or loss items as illustrated in the Explanatory Announcement onInformation Disclosure for Companies Offering Their Securities to the Public No.1 - Non-operating Gains or Losses (公开发行证券的公司信息披露解释性公告第1号——非经常性损益) defined as its recurring gain or loss items
□ Applicable √ Not applicable
No non-operating gain or loss items as defined or illustrated in the Explanatory Announcement on Information Disclosure forCompanies Offering Their Securities to the Public No.1 - Non-operating Gains or Losses (公开发行证券的公司信息披露解释性公告第1号——非经常性损益) were defined by the Company as its recurring gain or loss items during the reporting period.
Section III. Business OverviewI. Principal Operations of the Company During The Reporting Period(I) Principal businesses and products and major business models of the Company during the reporting period
1. Principal businesses and products
Centering on the products and services needed in the animal production process, the Company’s businesses coverthe research and development, design, production, sales, service and all other types of activities of variousproducts. Its main products include feeds for aquatic animals, feeds for livestock and poultry, high-quality aquaticanimal seedlings, animal healthcare products, biological products, and pig farming.The production and sale of feeds for aquatic animals, livestock and poultry are the Company's most importantbusinesses, and the Company has also accumulated a wide range of customer resources through the feed business;the Company can better help customers to achieve animal farming success by providing customers with qualityanimal seedlings that are scarce in the market; Cost-effective animal health products including vaccines,veterinary drugs and biological products, supplemented by efficient overall animal farming solutions, enablecustomers to achieve healthy animal farming while implementing better control over the cost and gainingcompetitive advantage in respect of end products.Specifically, the Company's products mainly include feeds for chickens, ducks, pigs, fish and shrimps, farmedspecies such as pig, shrimp and fish fry, as well as biological products, veterinary drugs, vaccines and otherproducts needed in the production of livestock, poultry and aquatic animals.
2. Main Business Model
The Company started up from the feed business. Its rich customer resource helps to have deep understanding ofand exploration of customer needs. This results in a continually enlarged profile of products and service to thecustomer, which gradually extends from feed to high tech areas with increased added-value such as animalseedlings, veterinary drugs and vaccine products. The scale of production and sales of high value-added productshas gradually expanded, and the proportion thereof in income structure has also been increasing year by year. Inrecent years, through the extension of the industrial chain, the Company has further attempted to enter into suchareas as pig farming and food processing. The business model has been developed and extended in an orderlymanner with various industrial segments interactively supporting and developing each other.In particular, for the feed business which has the largest scale, the business management is mainly carried out withthe business model of centralized procurement of raw materials, distributed production layout, sales of productsaccompanied with technical services. The adoption of a centralized procurement model composed of "group +regional center", combined with hedging and other methods, for agricultural products and other bulk raw materialscan achieve better procurement cost advantages and risk control; with the goal of being the closest to the market,convenient in logistics and rich in resources, the Company conduct distributed layout production and its factories
currently are mainly distributed in nearly 100 cities in China and Southeast Asia; Distribution + direct sales is theCompany's main sales model. Focusing on localized marketing, the Company has fully established distributionchannels to efficiently solve farmers' capital and transportation needs. The Company’s own professionaltechnology and service teams consisting of a large number of members directly visit farmers to provide farmingtechnical services and have achieved functional complementation and collaboration with sales organization andmanagement teams in terms of sales and service as well as channel and farmers; high-quality animal seedlings,biological Products, veterinary drugs and vaccines have become indispensable products and tools for theCompany to provide services and constitute a package of overall sales programs and solutions.The business models for seedlings and animal healthcare products reflect the distinctive features of research anddevelopment and technology as the guide, differentiated products as the carrier, and service support as the mainpromotion strategy. Seedlings and animal healthcare products involve a long period of investment in research anddevelopment. Technology accumulation needs better predictability and market insight, and strong originality ofproducts. To provide better service support, it is necessary to invest in the long term and to build service teamswith rich technology, knowledge, and experience. Therefore, a multi-tiered research and development system hasbeen chosen for the business management model, supplemented by a production base that has a relatively highstarting point for investment and a marketing strategy with a stronger aggressive power.The Company's pig farming business started at an early stage, and adopts the business model of "company +farmer", which means that the Company provides farmers with necessary products such as seedlings, feed,vaccines, etc., the farmers complete the farming process after agreeing on the main technical requirements for thefarming process and then the Company repurchases the finished products for sales. As the land resources for pigfarming are on the rise, the Company is gradually expanding its self-supporting production bases.The Company has set up professional functional departments including research institute, procurement center,financial center, operation and development center, marketing center, process and information management center,and human resource center at its headquarters. Each professional center aims at acquiring technical andmanagement leadership in its field and provides technical and management standards as well as integrated andprofessional management and service support for large regions/business divisions and various branches andsubsidiaries. The Group has set up multiple regional / business divisions according to regions or businesscategories. The regional / business divisions mainly organize and manage the production, sales and service ofbranches and subsidiaries.
(II) Development stage and periodic characteristics of and position of the Company in the industries where theCompany operated during the reporting period
1. Industry development stage
China's feed industry development started in the 1980s. After over forty years of development, China’s totalamount of feed ranks the first in the world. In recent years, the national feed production was steady in slowergrowth and has entered a stage of stable development and industrial restructuring and upgrading. Due to theaggravated competition among enterprises, the number of feed enterprises decreased from more than 10,000 in
2010 to over 5,000 in 2019. It is expected that the consolidation would continue and the number would be furtherreduced. In 2019, China’s feed production (around 1/4 of the global production) maintained a steady growth,exceeding 200 million tonnes for the fifth consecutive year and being the largest in the world for the ninthconsecutive year. The industry will gradually shift to large -scale and intensified development, but feed enterpriseswill be subject to further differentiation. Superior enterprises will make good use of the opportunity of industryconsolidation and their scale advantages to extend the industrial chain or develop diversified businesses throughmergers and acquisitions as well as construction of new production capacities; confronted with the developmentbottlenecks in terms of capital pressure, talent pressure, technical pressure and service capacity, SMEs willgradually be merged by dominant enterprises or eliminated from the market.The high-quality animal seedlings have a huge market space. However, most of the high-quality seedlings forfarmed species, especially aquatic seedlings, are currently under-supplied. There are fewer new strains withproprietary intellectual property right, and the production capacity is small. It is far from meeting the needs of theanimal farming industry to upgrade and progress. In a longer period, there will be pressure in respect of achievingresearch and development progress and improving production supply capacity.The market demand of animal healthcare industry has grown rapidly. In particular, with the upgrading ofconsumption, the upgrading of farming species has significantly increased the demand for health, safety, andgreen farming, and the concept of prevention over treatment has been increasingly accepted by a wide range offarmers. The help of reasonable animal healthcare product investment for farming is mainly reflected in the directeffects of a reduced disease risk, increased health and safety added value of products, controllable farming costs,and improved farming efficiency, as well as a number of extended effects including reduced labor intensity andimproved industrial chain extension capability. In the future, the market capacity of the animal healthcare industrywill see a greater room for continuous development on the basis of the current situation, and dominant enterpriseswill usher in major market development opportunities.The pig farming business is rapidly moving towards large -scale, intensive, and factory-oriented development. Theoutbreak of the African swine fever in 2018 has accelerated concentration in the industry. Small-scale farmers andfamily-based private farmers quickly withdraw from the market, while large companies are expected to expandtheir farming size rapidly during the epidemic by virtue of their superiority in funds, technology and the epidemicprevention and control system. In December 2019, the live pig inventory decreased by 27.5% year on year; andthe fertile sow inventory decreased by 31.32% year on year.
2. Periodic characteristics of the industry
The cycle of feed, animal healthcare products, seedlings and other industries is related to that of the animalproduction industry. The cycle of the animal production industry is mainly determined by the supply end (feedingcapacity).China is a country with a large population. Residents have a huge food consumption demand which remainsrelatively rigid and stable for a certain period of time. Therefore, the supply end of the animal production industry(animal farming capacity) determines the price of the farmed species and thus determines the cycle of the animalproduction industry. In general, the feed industry will lag behind the cycle of the animal production industry.When the animal farming capacity is smaller than the demand, the terminal price of the farmed species will
increase, the profit of the farming will be considerable, and the farming cycle will have a high degree of prosperity.However, due to the reduction of the farming capacity, feed demand will decline. When the farming amount isgreater than the consumer demand, the terminal price of the farmed species will fall, resulting in farming loss andsluggish farming cycle. However, due to the larger amount of animal farming, there is a greater demand for feed.As the prosperity of the animal farming industry directly affects the farmers' choice of high-quality or low-gradefeed products, the enthusiasm of feed feeding, the sensitivity of feed product prices, and the effective transfer offeed raw material price fluctuations, etc., the cyclical factors of the feed industry offset each other, with a limitedimpact on feed products. The feed industry features a weak cycle.The high-quality aquatic seedlings and animal healthcare industry are in a period of rapid growth, with no obviousperiodic characteristics, and they are in a period of rapid development of the industry as a whole.
3. Position of the Company in the industries in which the Company operatesThe Company is a large integrated enterprise.Firstly, China's feed industry is still relatively decentralized. The Company ranks among the top five in thenational feed industry. It sold 12.29 million tonnes of feed in 2019, representing approximately 5.37% of thecountry's total feed production. The market share of the Company has further enlarged, with ample room forfurther growth. The Company's aquatic feed ranks at the forefront of the domestic industry due to its technologicaland scale leadership; and the livestock and poultry feed ranks among the top ten in the industry and in a leadingposition in technology and industry scale in the regional market. The Company ranks among the top ten feedenterprises in the world in terms of production and sales scale.The Company has been gradually expanding feed, seedlings and animal healthcare markets in Vietnam, India,Indonesia, Ecuador, etc.The Company's high-quality fish and shrimp fry, and animal healthcare products for aquatic species are playing aleading role in the industry in respect of technology and market scale.The Company is recognized as a Key National Leading Enterprise for Industrialization of Agriculture, aState-Level Enterprise Technology Center, and among the top 500 Chinese companies in 2019, the top 500Chinese manufacturing companies, the top 500 privately-held companies in China and the 2018 Fortune China500.
II. Material Changes of Major Assets
1. Material Changes of Major Assets
| Major assets | Description |
| Equity assets | During the reporting period, the Company’s equity assets decreased by 12.13% from the beginning of the period, of which investments in minority-owned enterprises decreased by 20.99%, mainly due to the transfer of equity interests in Guangdong GF Hulian Micro-Loan Co., Ltd.. |
| Fixed assets | During the reporting period, the Company’s fixed assets increased by 38.26% from the beginning of the period, mainly because the Company’s projects under construction were transferred to fixed assets after completion and being put into production in the year, the increase in purchase and construction of production equipment. |
| Intangible assets | During the reporting period, the Company’s intangible assets increased by 20.83% from the beginning of the period, mainly due to the new land and software use rights. |
| Construction in progress | During the reporting period, the construction in progress of the Company decreased by 9.15% from the beginning of the period, mainly due to the transfer of construction in progress in last year to fixed assets upon reaching the scheduled usable status. |
2. Major Assets Overseas
□ Applicable √ Not applicable
III. Analysis of Core Competitiveness
As the Company's products and services are centered on the needs of the animal production industry, theCompany's core competitiveness is also comprehensively represented by a diversified and complete productconfiguration, outstanding single product advantage, comprehensive farming technology service capabilities,industrial layout and the ability to organize the development of the industrial chain-related links, as well as thedelicacy management capability.
1. Diverse and complete product configuration
Centering on the animal farming chain, after many years of technological investment, transformation of researchand development achievements, product accumulation, production layout, etc., the Company's productconfiguration has reached a relatively rich and complete state and covered the whole process of animal farmingincluding feed, functional feed, seedlings, drugs, vaccines, biological products, etc. and it is still in development.With respect to feed products, the Company is one of the few feed producers in China that can produce feed forfish, shrimps, pigs, meat poultry and egg poultry. And it is fairly competitive in all the product categories, with alarge market share in major markets. Product configuration capability requires strong insights into customerdemands, research and development organization capability, results conversion capability, investment inconstruction of production bases, processing organization capability, marketing promotion capability, andtechnical service capability.The Company has rich technical research reserves and a research and development team composed of more than1,600 members. It annually invests a considerable amount in research and development and research anddevelopment personnel includes multi-disciplinary talents in the fields of animal nutrition, veterinary medicine,animal farming and genetic improvement, animal farming strategy optimization, bioengineering, biochemistry and
machinery. The fast transformation of research and development results and clear and rapid implementation ofinvestment supporting strategies contribute to the Company's strong product configuration capability.For example, for feed formula technology, the Company, through more than 20 years of accumulation incontinuous research and development, has established a huge database of animal nutrition requirements andreserved a variety of raw material formula technologies. More than 1,000 sets of comparative experimental resultsare added to the database of core nutritional needs of animals and raw materials utilization to convert technologiesinto productivity. Therefore, the Company has a strong capacity in terms of organization and continuousoptimization of product formulas and adaptation to changes. To quickly adjust the formula when the raw materialprices fluctuate can ensure acquisition of cost competitive advantages.The Company now has a marketing team consisting of more than 6,000 members who visit farms or farming sitesto know the animal farming situation. Therefore, the Company has detailed data sources for terminal consumptionhabits, animal growth performance after feed utilization, animal farming strategy and animal farming needs, andcan accurately grasp the demands of farmers and precisely propose technical requirements on product design tosupport full concentration of the Company's technical resources on customer's core needs.
2. Clear and excellent product power is the Company's most important competitive advantageFor all series of products, the Company is dedicated to creating product power that is significantly ahead of itscompetitors and has invested heavily in the explicit expression of product power.Despite of a high price, high-end products have the obvious advantage of ultimate pursuit of animal survival rate,growth effects, and growth efficiency and have a prominent brand effect. On the basis of ensuring leadingproduction efficiency, middle-end products are close to the competitors' product pricing and are pursuingoutstanding cost performance. Therefore, in light of the industry’s overall good farming benefits, the Company’scustomers, with the support of integrated products, can obtain significantly higher returns than those of the sametype of farmers; in the event that the industry’s farming benefits decline and even the entire industry suffers losses,the Company’s customers can suffer from less or even no loss.The manifestation of product power requires the support of various internal professional capabilities of theCompany: the research and development capabilities of animal nutrition and raw material utilization, productformula technology capability, raw material value procurement capability, efficient internal operation capabilityare all indispensable. For example, in respect of support of value purchase capacity, the Company’s purchase teamhas outstanding professional capabilities. The team is young and specialized, and it performs division of laboraccording to subdivided raw material categories. The wide industry perspective and a large amount of informationacquisition and analysis ensure tracking, research, and judgment of the market trends of bulk raw materials athome and abroad in a real time way and utilization of futures instruments for hedging of bulk raw materials toeffectively control the purchase price risk and position risk. The prominent purchase capability can identifynumerous raw material purchase opportunities, making cost advantages for feed products and trade of rawmaterials possible. The Company is the first company to successfully achieve centralized purchase in the industry.It has obvious advantages in respect of large-scale purchases. Besides, it is sophisticated in the combinedapplication of purchase tools including spot goods, futures and options, as well as flexible application methods.Forward value purchase and risk position management also help the Company to gain purchasing cost advantages.
Another example is the Company's ability to support efficient operations. By promoting the application of SAP,EPS and other management software, the Company has a strong information-based system, and internaloperations are gradually becoming more streamlined, standardized, and more data-based. The role of data-basedoperation is to find out the efficient and energy-saving operation method by comparing the big data of branches;the role of process-based operation and standardization is to greatly improve the internal reproducibility. Thehighly efficient operation capability is an important support for the effective organization of professionalproduction of various products.
3. Comprehensive animal farming technical services is an important initiative for the Company to coordinateproduct chain and continuously acquire new customers and improve customer's stickinessIn 2006, the Company took the lead in the industry to provide comprehensive technical services to farmers, andpositioned the Company as a service-oriented enterprise and an enterprise that provides animal farming solutionsto farmers. The Company provides farmers with full-process product and technical service support including"seedlings - stocking mode - environmental control – animal epidemic prevention - feed - market information" toensure that farmers can use the most advanced farming technology to ensure farmers’ growing success andprofitability. The Company has a service team composed of more than 6,000 talents with the most experience andmost passion in the industry; it has also accumulated a variety of advanced animal farming models based on localcharacteristics; its hundreds of highly efficient service stations in farming concentrated areas throughout thecountry can simultaneously provide technical services for tens of thousands of farmers. The Company's relativelycomplete service system in the industry can give full play to its product force strengths and provides a full rangeof technical services for farming, which can effectively amplify the benefits for customers, thereby increasing thestickiness of customers.The comprehensive animal farming technical services have become an important brand label of the Company andan important means for the Company to obtain customers and increase the stickiness of customers.
4. The Company's existing industrial layout advantage supports the Company to quickly organize thecomprehensive development of multiple links in the industrial chain, reserve of new businesses in order, and theincreasingly prominent industrial comprehensive advantages.The Company's feed products include a full range of feed products such as livestock and poultry feed and aquaticfeed. The product line is complete and the product mix features endow the company with a strong anti-riskcapability. Different kinds of feed products have different technical contents, different gross profit margins, anddifferent market characteristics and operational risks. The Company's product mix makes it possible for theCompany to obtain higher gross profit margins than the industry's general level, and to better control the marketoperational risks caused by animal epidemic diseases and imbalance of supply and demand and ensures theCompany's stable revenue from sales of feed products and maintain a rapid growth much higher than that of theindustry.Over the years, the Company has orderly developed high-quality aquatic animal seedlings, aquatic animalhealthcare products, livestock and poultry vaccines, veterinary drugs, animal healthcare products for livestock andpoultry, pig farming and other businesses and the core technologies in industrial chain have gradually gainedadvantages in terms of technology, industrial layout and industrial collaboration, thus fostering more new business
growth points and profit growth points for the Company and laying a sound foundation for the Company to furtheramplify the multiplier effects of the industrial chain and create comparative competitive advantages.
5. Continuously building excellent operation management team and fine management capabilityThe Company has a hard-working, dedicated, professional and superb management team with a consistentphilosophy. Most of the members of the team are graduated from agricultural institutions of higher learning andhave a strong professional background. The management has a profound and comprehensive understanding of thefeed industry and has accumulated rich practical experience and formed magnificent and unified visions and goals,strong industry insight, leadership and executive force, enabling them to adapt to the rapid changes in the feedindustry and the Company's ever-increasing operational management requirements in terms of academicbackground, knowledge structure, industry experience and age.In recent years, the industry is in an era of dramatic changes with tremendous changes in industry development,scale of farmers and needs of customers. Emerging industries including rural finance and ″Internet+″ modelhave also constantly impacted the industry. To promote the transformation and innovation of the industry andcreate corporate mechanism and culture, i.e. the collective learning capacity that can quickly respond to changesenabling the Company to continuously create value for customers, is the foundation for the Company to gainsustainable competitive advantages.From producing aquafeed premixture to manufacturing compound feeds for various aquatic species includingfreshwater fish, marine fish, and shrimps, from having leading advantages in aquatic feeds at the beginning togradually having apparent advantages extended to feed for livestock and poultry, from simple feed productionoperation to provision of comprehensive services including seedlings, animal healthcare and animal farmingtechnical services for farmers, and from business operation only in Southern China to expansion to Central China,Eastern China, Northern China, Southeast Asia and South America, the Company has experienced the process ofdevelopment from scratch to become stronger and larger and to rank the forefront of the industry, relying on thecollective learning ability of the Company’s management and all employees. Affected by this culture and benefitsfrom this capacity, the Company keeps learning and growing.
Section IV. Discussion and Analysis of OperationsI. Overview
(I) Industry situationIn 2019, China experienced a decrease in feed production, fiercer competition in the feed industry, a continuousfall in the number of feed producers and increasing market concentration in the industry. Affected by the AfricanSwine Fever (ASF), pig production and livestock inventory suffered substantial decline, resulting in surging porkprices and switching some demands from pork to poultry meat. As the conversion rate of poultry meat is muchhigher than pork, feed production across the country has experienced decrease from “structured” adjustment. In2019, the total output of industrial feed reached 228,854,000 tons, a year-on-year decrease of 3.7%. The output ofpig feed was 76,632,000 tons, a year-on-year decrease of 26.6%; poultry feed was 115,814,000 tons, ayear-on-year increase of 22.0%; aquatic feed was 22,029,000 tons, a year-on-year increase of 0.3%. Thesubstantial adjustment to the feed varieties and structure posed huge challenges to the industry and many feedcompanies had no choice but to develop new feed products and new markets or directly withdraw from marketcompetition. In 2019, the number of feed manufacturers that were in actual production with basically normal ratesof operations decreased to 5,016, representing a decline of 33.05% from 7,492 registered in 2017. Large leadingfeed manufacturers continued to increase capacity, leading to faster enhancement in industrial concentration.In terms of farming, pig farming was sluggish at first and then went upturn; poultry farming continued the risingmomentum; aquaculture was in relative recession. Affected by ASF, the scale of pig farming went downsubstantially, and the end prices and farming profits were at low levels at first, followed by rises later, with a newhigh in the fourth quarter. However, due to the big epidemic risks facing farming industry, the increase in farmingwas mainly seen in large companies. Medium- and small-sized companies and individual farmers withdrew fromthe market at a faster speed. As a result, poultry farming welcomed a huge alternative development opportunity.The decrease in pig supply gave rise to robust demands for poultry meat and eggs, resulting in continuous growthin poultry farming and a boom in overall profits of the industrial chain (including breeding, farming andslaughtering) with differences in profit distribution in different stages. In terms of aquaculture, due to its relativelyweaker role in substituting pig supply, the industrial expectations were not met and the industry was sluggishthroughout the year. The scale of special aquatic products, such as crayfish, crabs, mandarin fish and channa argus,remained small, with considerable fluctuations in prices due to short-term supply-demand relations. But theconsumption trend of special aquatic products gradually replacing traditional varieties remained unchanged.(II) Production and operation of the CompanyDuring the Reporting Period, the business scale of animal feed, aquatic breeding, animal health products, animalhusbandry and trade continued to grow on all fronts. For 2019, the operating income amounted to RMB 47.613billion, up by 12.94% year-on-year; and the net profits attributable to the owners of the Company reached RMB
1.649 billion, up by 14.71% year-on-year.
1. The Company has complete product lines in the animal feed business, possesses core competitiveness for pig,
poultry and aquatic feed and witnesses continued increase in market shares.The Company possessed competitive edges in varieties, ensuring stable and continuous growth in its total feed.From the outbreaks of flood in Central China in 2016 and the bird flu in 2017 to ASF in 2018 and 2019, animalfarming and feed industries have been greatly affected by natural disasters and epidemics in recent years, leadingto big fluctuations in the farming size and price of farming varieties and shifts in feed demands. Taking theadvantage in the full spectrum of its product pipeline and core competitiveness for all products, the Company hasmade rapid adjustment to its strategic plans, production capacity and personnel deployment in response to marketchanges. These efforts effectively mitigated the impact from natural disasters, epidemics, and great fluctuationsfrom the industry and led to stable and continuous growth in its total feed output. During the Reporting Period,despite of a decline of total feed production across the country, the Company’s sales volume of feed reached 12.29million tons, up by 15% year-on-year, accounting for 5.37% of the country’s total feed output and obtaininghigher market shares.
(1) In terms of pig feed, the Company’s sales volume decreased by 28% year-on-year, but with slight increase ingross profit margin and huge progress in product technology, structure optimization, service and brand building.Affected by ASF, livestock inventory of pigs fell substantially throughout China, particularly in South China, theCompany’s core market, which saw a year-on-year decrease of 70%-80% in demands for both livestock inventoryand pig feed in the second half year. Most feed companies shut down their operation or were forced to shiftbusiness. In the difficult period, the Company focused on the development of product technology for pig feedbusiness, dealt with new nutrition, formula and technology demands triggered by ASF through technologicalinnovation, investment in technology and upgrading in production process, in a bid to build productcompetitiveness for pig feed. During the Reporting Period, with improvement to the product structure, theCompany’s pig feed products gave outstanding performance in a number of aspects, including improving physicalfitness, maintaining health and facilitating growth. The proportion of hi-tech and high gross-profit products, suchas sow feed, creep feed, concentrate and suckling pig feed, increased substantially from 18% in 2015 to 27% thisyear. At the same time, by focusing on its anti-epidemic services, the Company provided pig health products andveterinary drugs. In addition, to address customers’ pressing demands, the Company conducted specialized onlinetraining on epidemic prevention technology (A total of 15 sessions were held with 1,879,500 views) and organizeda team offline to perform technology services and training on epidemic prevention and tooth extraction forfarmers. By doing so, the Company built the image of an industrial leader in epidemic prevention, set up a servicesystem for pig feed and strengthened customer stickiness. Through the efforts of its team, the Company gainedrecognition from many customers for its pig feed brand, with key sales regions expanding from the original Southand Central China to North and Southwest China. Growth was maintained in the number of farming customersand sales channels and increase was seen in market shares; the gross profit margin from pig feed products rose by
0.5 percentage point, laying a solid foundation for subsequent recovery of pig feed.
(2) In terms of poultry feed, the Company’s sales volume went up by 35% year-on-year, with continuousexpansion in the advantages of technology, scale and market. The gross profit margin increased by nearly 2percentage points with huge enhancement in profitability, presenting a picture of simultaneous increases in bothvolume and profits. Through years of technical development and experience, the Company has built increasinglyobvious advantage in technology. It has completed the development of the nutrition system and the formulasystem for its existing advantaged breeds, including Cherry Valley ducks, white-feather broilers, laying ducks andlaying hens, enabling it to exercise precise nutrition management and leading to material improvements in cost
control capability; it has made marked progress in the technical development of new breeds, including Muscovyducks, hybrid Muscovy ducks, geese, quails and native breeds of chicken, with basic development in the nutritionsystem and the formula system and evident effect of product strength. By virtue of its technical advantage, theCompany exercised differentiated competition for newly developed breeds, resulting in substantial increase inprofits. For example, with high profit margins of goose feed and the Company’s precise production positioningand prominent product strength, the sales volume of goose feed experienced double increase during the ReportingPeriod. The substantial growth in a number of new products drove continuous optimization in poultry feedstructure and increase in gross profit margin. Furthermore, the Company duly expanded capacity and reasonablyadjusted the management model in key markets of poultry feed, leading to further improvement in operatingefficiency. Equipped with the technical capacity, product capacity, advantage in scale and operating efficiency ofabove the industrial average level, the Company has built huge market competitive edges for poultry feed andcontinuously improved the product defense line, driving quick increase in its total feed and profits.
(3) In terms of aquatic feed, the Company’s sales volume rose by 13% year-on-year, maintained growth far higherthan the industrial average and further improved the variety structure. During the Reporting Period, due to theinconspicuous effect of substituting port consumption and the absorption of the high-speed growth in farming sizefor the previous years, the Company’s special aquatic products (including weever and channa argus) that hadgrown rapidly in recent years suffered decline in inventory and shrinkage in feed demands. By virtue of itsadvantage in technology, service and industrial chain, the Company managed to achieve growth in the salesvolume by about 10% with further increase in market shares. Meanwhile, the Company made vigorous efforts todevelop special feed markets for crayfish, crabs and golden pomfret, leading to more than 70% growth in salesvolume during the Reporting Period. As a result, the Company’s sales volume of special aquatic feed sustainedgrowth by over 20% throughout the year with slight increase in gross profit margin. Holding firm confidence inconsumption upgrading, special aquaculture and increase in demands for special aquatic feed, the Company hasmade resolute efforts to spend on the development of resources and technology, develop new product market,seize and increase market shares, build capacity for special aquatic feed across the country, and preserve itsleading advantage in technology and production capacity. During the Reporting Period, the capacity for specialaquatic feed that was completed and being built by the Company exceeded 1 million tons, laying a solidfoundation for growth in sales volume in the next few years. General aquatic (including traditional aquaticproducts such as the four major Chinese carps) feed faced exceptionally fierce competition with compressedoverall industrial profits throughout the year due to increasing competition from the business shift of many pigfeed companies. In the second half year, quite many new competitors withdrew from the market with fasterindustrial reshuffle and concentration. In 2019, the Company’s sale volume of general aquatic feed basicallyleveled with the previous year and gross profit margin fell by 2.28 percentage points. In summary, the salesvolume of aquatic feed for the year grew by 13%, which was much higher than the industrial average. The productstructure continued to improve with huge potential in the growth of special aquatic feed. Despite the impact fromthe decrease in gross profit margin of general aquatic feed, which caused a drop of 0.69 percentage pointyear-on-year in the overall gross profit margin, the industrial concentration was going faster, and the Company’smarket shares continued to rise with obvious competitive edge in industrial chain.
2. Through industrial chain building, the Company developed comprehensive competitiveness in multipledimensions and ensured stable and sustained growthIn terms of industrial chain development, the Company adopts a basic strategy of increasing size based on
specialization and extending industrial chain based on core competitiveness. By centering around the feedbusiness and based on improving specialization, the Company has developed the upstream and downstream of theindustrial chain of farming, aquatic breeding, poultry slaughtering, animal health and raw materials trade togenerate synergistic effect with the feed business, improve its profitability and anti-risk capacity, and ensure stableand sustained growth.The Company’s sales business of agricultural products include farming, aquatic animal fry production and poultryslaughtering. (1) Farming mainly includes pig farming. During the Reporting Period, the Company realized a salesrevenue of RMB 1.371 billion from pig business, up by 53.36% year-on-year. In the context of ASF, the Companybuilt its own pig farms in the first half year and focused on increasing the business scale by purchasing pigletsfrom external parties according to the principle of prudence. Core attention was emphasized on the establishmentof a biological epidemic prevention system, optimization of each branch point including animal production,animal health, selective breeding, nutrition and cost-control. Meanwhile emphasis was also given to team-buildingand reserving land resources. As of now, the Company has reserved sufficient land for pig farm construction inGuangdong, Guangxi, Hunan, Hubei and Guizhou, established a farming team comprising more than 1,000members, and equipped the farming team with industrial leading capacity for ASF prevention and control. In thesecond half year, as it had set up a sound epidemic prevention system and treatment methods, the Companyexpedited the construction pace of self-owned pig farms, leading to further expansion in pig farming scale. (2) TheCompany realized a sales revenue of RMB 354 million from aquatic breeding, up by 26.43% year-on-year. Interms of shrimp breed, the Company will continued to improve the system and standardize the management model;in respect of fish breed, it will focus on the breeding and reproduction of special aquatics. The Company hasformed advantages in industrial chain for aquatic breeding and feed and animal health, allowing itself to providefarmers with integrated solutions. (3) Benefiting from the boom in poultry industrial chain, the Company realizeda sales revenue of RMB 828 million, up by 46.55% year-on-year, with slight increase in the profitability.With regard to animal health business, the Company realized a sales revenue of RMB 574 million, up by 21.28%year-on-year, with an increase of 6.72 percentage points in the gross profit margin. The Company’s animal healthproducts include microecologics, vaccines and veterinary drugs for aquatic animals, livestock and poultry. Overyears’ development, the Company has formed a comprehensive service system and sound internal distributionchannels for its aquatic animal health segment as the product and service models are being upgraded continuously.In addition, the Company enjoys prominent advantages in the cost performance of core products and sustainedincrease in market shares. It focuses on vaccines, veterinary drugs and other related products for the livestock andpoultry health segment as a response to the huge room of market demands for livestock and poultry healthproducts. In recent years, the Company has made efforts to accumulate and improve its capacity for the R&D,production and supply of livestock and poultry health products. In 2019, it started to build the livestock andpoultry health service system to integrate the products into the system through effective organization and grasp theopportunity to substitute farmers’ original animal health products.In terms of raw materials trade, due to China-U.S. trade frictions and the decrease in domestic demands for corn,the Company began to shrink its trade scale in the second half year. During the Reporting Period, the Companyrealized a sales revenue of RMB 5.199 billion, with the gross profit margin roughly equivalent to the previousyear and stable profits.
3. The Company focused on the research in animal nutrition, reproduction and breeding and farming model, built
nutrition systems and formula systems for the entire farming process of various breeds, created specialized anddifferentiated terminal products, enhanced product competence and built a technology-driven farming companyR&D provides the basis for the survival of the Company while continuous increase in R&D spending serves as thebasis for the development of the Company. During the Reporting Period, the Company spent RMB 428 million onR&D (including R&D expenses and development expenditure), up by 37.93% year-on-year. By focusing onbreeding/nutrition/health/farming and food, the Company built an industrial leading R&D system for the wholeindustrial chain. While raising the spending on application technology, the Company focused on strengthening thebuilding of technology platforms for various business modules on the industrial chain and formed a three-levelR&D system covering from the research in platform technology and the development of application technology tothe application of system solutions. The Company’s R&D team currently comprises more than 1,600 members,including over 300 holding PhD Degree and Master’s Degree (The whole Group has a total of 878 employeesholding PhD Degree and Master’s Degree), providing adequate HR foundation for the improvement of theCompany’s R&D system. During the Reporting Period, the Company made substantial achievements intechnology R&D, including breakthroughs in the breeding of holandric channa argus and holandric tilapia, globalleading formula technology for low-fishmeal and non-fishmeal, and industrial leading converted application ofantibiotic-free technology in feed.In terms of industry-education-research collaboration, the Company has conducted various forms of suchcollaboration with more than 50 domestic and foreign colleges and research institutes. The collaboration modesinclude jointly building industry-education-research collaboration bases, academicians’ workstations and keylaboratories, and jointly solving industrial key, common, prospective and emergency problems. During theReporting Period, the Company undertook and involved in 55 government projects in total, including sevenstate-level, 34 provincial, 11 municipal and three district-level projects. In addition, the Company worked withSouth China Agricultural University and Institute of Animal Health, Guangdong Academy of AgriculturalSciences, to respectively undertake one project on technology-based emergency prevention and control over ASFin Guangdong Province, being Research and Application of Comprehensive Emergency ASF Prevention andControl Technology (《非洲猪瘟应急综合防控技术研究及应用》) and Research and Application of Precise ASFTesting Technology (《非洲猪瘟精准检测技术研究与应用》). The projects have led to successful development ofnucleic test kits for ASF virus, providing emergency measures for the industry.As the “total ban on antibiotics” enters countdown, the Company is making active steps to implement green,antibiotic-free and healthy farming through technology innovation and promote the sustainable development offarming industry. During the Reporting Period, the Company undertook Research and Application of KeyTechnology in the Biosynthesis of Antibiotic-free Feed, a project under the Key Field R&D Program ofGuangdong Province, together with South China Agricultural University, Yunnan Normal University andShandong Youtell Biotech Co., Ltd.. Through “research and application of key technology in the microbialfermentation of feed” and “research and application of key technology in the substitution of antibiotics in feed”,the Company aims to make breakthroughs in key technology in the biosynthesis of antibiotic-free feed, providesystematic solutions for substitutes of feed containing antibiotics, demonstrate and promote the solutions, and thuslead industrial progress and development.
II. Analysis of Principal Operations
1. Overview
Please see "I. Overview" under "Discussion and Analysis of Operations" for relevant information.
2. Revenue and cost
(1) Components of revenue
Unit: RMB
| 2019 | 2018 | Increase/decrease | |||
| Amount | % of revenue | Amount | % of revenue | ||
| Total operating income | 47,612,587,464.50 | 100.00% | 42,156,628,800.11 | 100.00% | 12.94% |
| By industry | |||||
| Feed industry | 44,871,383,878.06 | 94.24% | 40,415,026,750.36 | 95.87% | 11.03% |
| Farming industry | 2,741,203,586.44 | 5.76% | 1,741,602,049.75 | 4.13% | 57.40% |
| By product | |||||
| Sales of feed | 38,985,186,067.96 | 81.88% | 34,965,196,221.20 | 82.94% | 11.50% |
| Sales of animal healthcare products | 574,064,192.41 | 1.21% | 473,324,165.98 | 1.12% | 21.28% |
| Sales of agricultural products | 2,741,203,586.44 | 5.76% | 1,741,602,049.75 | 4.13% | 57.40% |
| Trading business | 5,199,456,961.28 | 10.92% | 4,874,822,732.93 | 11.57% | 6.66% |
| Others | 112,676,656.41 | 0.24% | 101,683,630.25 | 0.24% | 10.81% |
| By region | |||||
| Southern China | 26,044,702,214.86 | 54.70% | 25,268,338,101.65 | 59.94% | 3.07% |
| Eastern China | 6,301,474,741.13 | 13.23% | 5,944,635,932.64 | 14.10% | 6.00% |
| Northern China | 16,583,504,018.01 | 34.83% | 13,048,253,974.37 | 30.95% | 27.09% |
| Central China | 10,075,744,770.11 | 21.16% | 9,410,967,930.35 | 22.32% | 7.06% |
| Overseas | 4,285,189,298.17 | 9.00% | 2,982,432,421.86 | 7.08% | 43.68% |
| Combined offset | -15,678,027,577.78 | -32.93% | -14,497,999,560.76 | -34.39% | 8.14% |
(2) Industries, products or regions accounting for over 10% of revenue or operating income of theCompany
√ Applicable □ Not applicable
Unit: RMB
| Revenue | Operating costs | Gross profit margin | Increase/decrease of revenue as compared to the corresponding period of the prior year | Increase/decrease of operating costs as compared to the corresponding period of the prior year | Increase/decrease of gross profit margin as compared to the corresponding period of the prior year | |
| By industry | ||||||
| Feed industry | 44,871,383,878.06 | 40,099,159,977.55 | 10.64% | 11.03% | 11.04% | -0.01% |
| Farming industry | 2,741,203,586.44 | 2,124,251,939.55 | 22.51% | 57.40% | 41.35% | 8.80% |
| By product | ||||||
| Sales of feed | 38,985,186,067.96 | 34,759,643,284.59 | 10.84% | 11.50% | 11.74% | -0.20% |
| Sales of animal healthcare products | 574,064,192.41 | 263,811,700.51 | 54.04% | 21.28% | 5.80% | 6.72% |
| Sales of agricultural products | 2,741,203,586.44 | 2,124,251,939.55 | 22.51% | 57.40% | 41.35% | 8.80% |
| Trading business | 5,199,456,961.28 | 5,043,647,623.86 | 3.00% | 6.66% | 6.80% | -0.12% |
| By region | ||||||
| Southern China | 26,044,702,214.86 | 22,810,102,142.18 | 12.42% | 3.07% | 1.61% | 1.26% |
| Eastern China | 6,301,474,741.13 | 5,830,841,389.77 | 7.47% | 6.00% | 5.56% | 0.39% |
| Northern China | 16,583,504,018.01 | 15,635,306,528.36 | 5.72% | 27.09% | 27.67% | -0.42% |
| Central China | 10,075,744,770.11 | 9,428,408,033.61 | 6.42% | 7.06% | 6.28% | 0.68% |
| Overseas | 4,285,189,298.17 | 3,802,870,898.34 | 11.26% | 43.68% | 42.92% | 0.48% |
Under the circumstances that the statistics specification for the Company’s principal operations data experienced adjustment in thereporting period, the principal operations data upon adjustment of the statistics specification at the end of the reporting period in thelatest year
□ Applicable √ Not applicable
(3) Whether revenue from sales in kind is higher than revenue from services
√ Yes □ No
| By industry | Item | Unit | 2019 | 2018 | Increase/ decrease |
| Feed industry | Sales | 10,000 tonnes | 1,228.64 | 1,070.14 | 14.81% |
| Production output | 10,000 tonnes | 1,259.01 | 1,065.37 | 18.18% | |
| Inventories | 10,000 tonnes | 15.13 | 12.59 | 20.17% |
Explanation on why the related data varied by more than 30%
□ Applicable √ Not applicable
(4) Performance of material sales contracts of the Company during the reporting period
□ Applicable √ Not applicable
(5) Composition of operating costs
By industry and productUnit: RMB
| By industry | Item | 2019 | 2018 | Increase/decrease | ||
| Amount | % of operating costs | Amount | % of operating costs | |||
| Feed industry | Material costs | 38,314,454,972.39 | 95.55% | 34,607,873,095.71 | 95.83% | 10.71% |
| Feed industry | Labour costs | 502,192,987.50 | 1.25% | 407,312,350.01 | 1.13% | 23.29% |
| Feed industry | Manufacturing expenses | 1,250,454,649.07 | 3.12% | 983,253,333.82 | 2.72% | 27.18% |
| Feed industry | Others | 32,057,368.59 | 0.08% | 114,321,062.98 | 0.32% | -71.96% |
| Total of feed industry | 40,099,159,977.55 | 100.00% | 36,112,759,842.52 | 100.00% | 11.04% | |
| Farming industry | Material costs | 1,798,900,558.11 | 84.68% | 1,239,184,793.41 | 82.46% | 45.17% |
| Farming industry | Labour costs | 211,537,541.78 | 9.96% | 174,088,889.20 | 11.58% | 21.51% |
| Farming industry | Manufacturing expenses | 113,813,839.66 | 5.36% | 89,552,659.64 | 5.96% | 27.09% |
| Total of farming | 2,124,251,939.55 | 100.00% | 1,502,826,342.25 | 100.00% | 41.35% | |
Unit: RMB
industryBy product
| By product | Item | 2019 | 2018 | Increase/decrease | ||
| Amount | % of operating costs | Amount | % of operating costs | |||
| Sales of feed | Material costs | 33,027,101,264.23 | 95.02% | 29,729,810,330.65 | 95.57% | 11.09% |
| Sales of feed | Labour costs | 493,259,024.87 | 1.42% | 400,649,491.11 | 1.29% | 23.11% |
| Sales of feed | Manufacturing expenses | 1,239,282,995.49 | 3.57% | 975,889,966.20 | 3.14% | 26.99% |
| Total sales of feed | 34,759,643,284.59 | 100.00% | 31,106,349,787.96 | 100.00% | 11.74% | |
| Sales of animal healthcare products | Material costs | 243,706,084.30 | 92.38% | 235,330,337.68 | 94.38% | 3.56% |
| Sales of animal healthcare products | Labour costs | 8,933,962.63 | 3.39% | 6,662,858.90 | 2.67% | 34.09% |
| Sales of animal healthcare products | Manufacturing expenses | 11,171,653.58 | 4.23% | 7,363,367.62 | 2.95% | 51.72% |
| Total sales of animal health products | 263,811,700.51 | 100.00% | 249,356,564.20 | 100.00% | 5.80% | |
| Sales of agricultural products | Material costs | 1,798,900,558.11 | 84.68% | 1,239,184,793.41 | 82.46% | 45.17% |
| Sales of agricultural products | Labour costs | 211,537,541.78 | 9.96% | 174,088,889.20 | 11.58% | 21.51% |
| Sales of agricultural products | Manufacturing expenses | 113,813,839.66 | 5.36% | 89,552,659.64 | 5.96% | 27.09% |
| Total sales of agricultural products | 2,124,251,939.55 | 100.00% | 1,502,826,342.25 | 100.00% | 41.35% | |
| Trading business | Sales costs | 5,043,647,623.86 | 100.00% | 4,722,496,795.03 | 100.00% | 6.80% |
| Total of trading business | 5,043,647,623.86 | 100.00% | 4,722,496,795.03 | 100.00% | 6.80% | |
| Others | Sales costs | 32,057,368.59 | 100.00% | 34,556,695.33 | 100.00% | -7.23% |
Notes:
(6) Change of scope of consolidation during the reporting period
√ Yes □ No
During the year, the scope of consolidation included 317 subsidiaries. For details, please refer to the Note 7"Interests in other entities" in XII "Financial Report". The scope of consolidation of the Company in this yearincreased by 50 and reduced by 5 as compared with the last year. For details, please refer to the Note 6 "Change inscope of consolidation" in XII "Financial Report".
(7) Significant change in or adjustment of the businesses, products or services of the Company during thereporting period
□ Applicable √ Not applicable
(8) Sales to major customers and major suppliers
Sales to major customers of the Company
| Total sales to top 5 customers (RMB) | 1,155,482,902.95 |
| Total sales to top 5 customers as a percentage of the total sales for the year | 2.43% |
| Sales to top 5 customers who are related parties as a percentage of the total sales for the year | 0.00% |
Information on top 5 customers of the Company
| No. | Name of customer | Sales (RMB) | As a percentage of the total sales for the year (%) |
| 1 | No. 1 | 249,938,129.38 | 0.52% |
| 2 | No. 2 | 235,310,604.57 | 0.49% |
| 3 | No. 3 | 230,210,223.69 | 0.48% |
| 4 | No. 4 | 224,979,824.20 | 0.47% |
| 5 | No. 5 | 215,044,121.11 | 0.45% |
| Total | -- | 1,155,482,902.95 | 2.43% |
Other explanation of major customers
√ Applicable □ Not applicable
The top five customers of the Company are mainly customers of the trading business. The top five customers have no related
relationship with the Company. The Company’s directors, supervisors, senior management, core technical personnel, shareholdersholding more than 5% of shares, de facto controllers and other related parties do not have direct or indirect interest in the majorcustomers. The top five customers accounted for 2.43% of total annual sales. The Company’s sales revenue does not depend onsingle or top five customers.Major suppliers of the Company
| Total purchases from top 5 suppliers (RMB) | 3,371,497,511.40 |
| Total purchases from top 5 suppliers as a percentage of the total purchases for the year | 8.12% |
| Total purchases from top 5 suppliers who are related parties as a percentage of the total purchases for the year | 0.00% |
Information on top 5 suppliers of the Company
| No. | Name of supplier | Purchases (RMB) | As a percentage of the total purchases for the year (%) |
| 1 | No. 1 | 903,847,742.13 | 2.18% |
| 2 | No. 2 | 889,382,484.80 | 2.14% |
| 3 | No. 3 | 752,931,209.88 | 1.81% |
| 4 | No. 4 | 413,913,697.17 | 1.00% |
| 5 | No. 5 | 411,422,377.42 | 0.99% |
| Total | -- | 3,371,497,511.40 | 8.12% |
Other explanation of major suppliers
√ Applicable □ Not applicable
The top five suppliers of the Company have no related relationship with the Company. The Company’s directors, supervisors, seniormanagement, core technical personnel, shareholders holding more than 5% of shares, de facto controllers and other related parties donot have direct or indirect interest in the major suppliers. The top five suppliers accounted for 8.12% of total annual sales. TheCompany’s sales revenue does not depend on single or top five suppliers.
3. Expenses
Unit: RMB
| 2019 | 2018 | Increase/ decrease | Reasons for material changes | |
| Selling and distribution expenses | 1,562,696,499.51 | 1,377,926,458.68 | 13.41% |
| increase in market development and promotional costs caused by new markets being put into operation and new products being put into the market | ||||
| General and administrative expenses | 1,190,746,169.15 | 967,112,552.40 | 23.12% | Mainly due to the expansion of the Company's operating scale, the increase in management personnel and their salary and benefits, and the increase in expenses on employee trainings |
| Financial expenses | 211,949,889.53 | 219,052,330.92 | -3.24% | A slight year-on-year decline, basically flat with last year |
| Research and development expenditure | 416,009,959.72 | 309,167,320.66 | 34.56% | Mainly due to a higher expense on R&D materials, a higher number of R&D personnel and higher salaries for the R&D personnel in a bid to enhance the research and development |
4. Research and development expenditure
√ Applicable □ Not applicable
For further information, please refer to “I. Overview” in “Section IV. Discussion and Analysis of Operations”.Research and development expenditure of the Company
| 2019 | 2018 | Percentage change | |
| Research and development headcount | 1,623 | 1,200 | 35.25% |
| Ratio of research and development personnel | 7.81% | 6.90% | 0.91% |
| Research and development expenditure (RMB) | 428,148,011.70 | 310,403,708.96 | 37.93% |
| Research and development expenditure to revenue | 0.90% | 0.74% | 0.16% |
| Capitalized amount of research and development expenditure (RMB) | 0.00 | 5,396,408.67 | -100.00% |
| Capitalized research and development expenditure to research and development expenditure | 0.00% | 1.74% | -1.74% |
Reasons for significant change in total research and development expenditure to revenue
√ Applicable □ Not applicable
Research and development expenditure increased by 37.93% in 2019, representing a higher percentage in revenue. This is mainlybecause the Company continued to increase its expenditure on the basic elements of research and development, including personnel,equipment and materials, for long-term strategic development.Reasons for significant change in capitalization rate of research and development expenditure and explanations thereon
√ Applicable □ Not applicable
The research and development projects within the Company were still in the research and development stage in the reporting period,and have not yet reached the conditions where they can be capitalized and transferred to intangible assets. That’s why the capitalizedresearch and development expenditure decreased by 100% in the current year compared to last year.
5. Cash flows
Unit: RMB
| Item | 2019 | 2018 | Increase/ decrease |
| Sub-total of cash inflows from operating activities | 50,517,055,726.03 | 42,570,025,344.23 | 18.67% |
| Sub-total of cash outflows from operating activities | 47,270,075,020.95 | 41,534,261,337.90 | 13.81% |
| Net cash flows from operating activities | 3,246,980,705.08 | 1,035,764,006.33 | 213.49% |
| Sub-total of cash inflows from investing activities | 1,097,694,547.15 | 2,630,017,529.91 | -58.26% |
| Sub-total of cash outflows from investing activities | 3,214,662,629.47 | 4,635,569,493.87 | -30.65% |
| Net cash flows from investing activities | -2,116,968,082.32 | -2,005,551,963.96 | -5.56% |
| Sub-total of cash inflows from financing activities | 8,012,906,351.42 | 10,290,384,714.54 | -22.13% |
| Sub-total of cash outflows from financing activities | 9,500,550,393.79 | 8,550,331,518.38 | 11.11% |
| Net cash flows from financing activities | -1,487,644,042.37 | 1,740,053,196.16 | -185.49% |
| Net increase in cash and cash equivalents | -333,902,151.08 | 783,892,200.49 | -142.60% |
Explanation on main effects of material changes
√ Applicable □ Not applicable
1. Net cash flows from operating activities increased by 213.49% as compared to the corresponding period of the
prior year mainly due to higher operating income, profits, accounts receivable and inventory turnover efficiency.
2. Net cash flows from investing activities decreased by 5.56% as compared to the corresponding period of theprior year mainly due to the expansion of the Company's scale and the increase in fixed asset investments.
3. Net cash flows from financing activities decreased by 185.49% as compared to the corresponding period of theprior year mainly because the Company repaid certain medium and long-term loans in an adjustment to thefinancing structure according to its financing planning.Explanation on main reasons leading to the material difference between net cash flows from operating activitiesduring the reporting period and net income for the year
√ Applicable □ Not applicable
During the reporting period, the net cash flows from operating activities of the Company amounted to RMB3,246.9807 million, which was RMB 1,457.4736 million more than the net income of RMB1,789.5071 million.The difference was mainly due to the increase in operating efficiency associated with accounts receivables,inventory turnover rate, etc.III. Analysis of Non-Principal Operations
□ Applicable √ Not applicable
IV. Analysis of Assets and Liabilities
1. Material changes of asset items
The Company adopted the new accounting standards governing financial instruments, revenue and leases in 2019 for the first time,and adjusted the relevant financial statement items at the beginning of the year of adoption
√ Applicable □ Not applicable
Unit: RMB
| As at the end of 2019 | As at the beginning of 2019 | Percentage change | Description of major changes | |||
| Amount | As a percentage of total assets | Amount | As a percentage of total assets | |||
| Cash at bank and on hand | 1,849,735,912.84 | 9.81% | 1,735,409,838.58 | 9.99% | -0.18% | At the end of the period, the percentage in total assets decreased by 0.18 percentage point, flat with the end of the prior year; and the balance increased by 6.59% year-on-year, which was mainly due to the increase in the scale of the Company's operations. |
| Accounts | 1,021,751,432.56 | 5.42% | 964,844,422.76 | 5.56% | -0.14% | At the end of the period, the percentage |
| receivable | in total assets decreased by 0.14 percentage point, and the balance increased by 5.90% year-on-year, which was mainly due to the increase in the scale of the Company's operations. | |||||
| Inventories | 4,463,319,035.43 | 23.67% | 4,843,780,132.17 | 27.89% | -4.22% | At the end of the period, the percentage in total assets decreased by 4.22 percentage points, and the balance decreased by 7.85% year-on-year, which was mainly due to the decrease in stocking of raw materials used in production. |
| Investment properties | 30,645,502.71 | 0.16% | 46,397,156.64 | 0.27% | -0.11% | At the end of the period, the percentage in total assets decreased by 0.11 percentage point, and the balance decreased by 33.95% year-on-year, which was mainly due to the transfer of some leased-out properties to self-occupied fixed assets. |
| Long-term equity investments | 62,614,691.35 | 0.33% | 38,614,535.85 | 0.22% | 0.11% | At the end of the period, the percentage in total assets increased by 0.11 percentage point; and the balance increased by 62.15% year-on-year, which was mainly due to the increase in investments in associates. |
| Fixed assets | 6,298,328,342.41 | 33.41% | 4,555,480,833.77 | 26.23% | 7.18% | At the end of the period, the percentage in total assets increased by 7.18 percentage points, and the balance increased by 38.26% year-on-year, which was mainly due to the production capacity expansion projects under construction being completed, put into production and converted into fixed assets. |
| Construction in progress | 657,751,195.76 | 3.49% | 724,011,706.23 | 4.17% | -0.68% | At the end of the period, the percentage in total assets decreased by 0.68 percentage point, and the balance decreased by 9.15% year-on-year, which was mainly due to the projects under construction being completed, put into production and converted into fixed assets. |
| Short-term loans | 3,020,892,004.18 | 16.02% | 2,715,954,867.69 | 15.64% | 0.38% | At the end of the period, the percentage in total assets increased by 0.38 percentage point, and the balance increased by 11.23% year-on-year, which was mainly due to the increase in short-term borrowings and the repayment of certain medium and long-term borrowings in an adjustment to the financing structure. |
| Long-term loans | 821,661,042.98 | 4.36% | 1,842,910,000.00 | 10.61% | -6.25% | At the end of the period, the percentage in total assets decreased by 6.25 percentage points, and the balance decreased by 55.42% year-on-year, which was mainly due to the repayment of certain medium and long-term borrowings. |
| Goodwill | 349,068,366.52 | 1.85% | 380,610,061.82 | 2.19% | -0.34% | At the end of the period, the percentage in total assets decreased by 0.34 percentage point, and the balance decreased by 8.29% year-on-year, which was mainly due to the allowances for impairment in certain goodwill. |
Explanations on relevant data:
1. As at the end of the reporting period, the book value of inventories of the Company was RMB 4,463.3190 million, which aremainly raw materials for production, merchandise inventories and consumptive biological assets. Inventory falling price reserves ofRMB 12.1181 million have been sufficiently provided for certain inventory goods whose costs are lower than the net realizable value.The other inventory turnover is normal.
2. As at the end of the reporting period, the book value of fixed assets of the Company was RMB 6,298.3283 million. Except thatimpairment provisions of RMB 0.9823 million have been sufficiently provided for certain buildings and finance lease fixed assetswhose recoverable amounts are lower than the book value, the other fixed assets are in normal use and there has been no significantchange in profitability.
3. As at the end of the reporting period, the book value of goodwill of the Company was RMB 349.0684 million, representing 3.83%of the net assets attributable to the shareholders of the Company. At the end of the period, after the Company allocates goodwill tothe relevant asset group and uses the financial forecast data approved by the management as the benchmark to predict future cashflows, the Company discounts the goodwill at discounted rate and calculates the present value of future cash flows from the relatedasset group after the allocation of goodwill. Upon calculation, except that the present values of the future cash flows of the assetgroups of certain subsidiaries, both subsidiaries of the Company, were less than their book values and provisions of RMB 42.5903million for impairment of goodwill were made, the goodwill of other asset groups did not show signs of impairment.
2. Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB
| Item | Opening balance | Profit or loss from change in fair value during the period | Cumulative fair value change charged to equity | Impairment provided during the period | Purchases during the period | Disposal during the period | Other changes | Closing balance |
| Financial assets | ||||||||
| 2. Derivative financial assets | 49,672,592.73 | -21,089,097.38 | 28,583,495.35 | |||||
| Sub-total of financial assets | 49,672,592.73 | -21,089,097.38 | 28,583,495.35 | |||||
| Others (note) | 323,421,350.00 | 19,600,000.00 | 87,500,000.00 | 255,521,350.00 | ||||
| Total of the above | 373,093,942.73 | -21,089,097.38 | 19,600,000.00 | 87,500,000.00 | 284,104,845.35 | |||
| Financial liabilities held for trading | 46,271,790.00 | 43,638,280.00 | 2,633,510.00 | |||||
Note: Non-current financial assets measured at fair valueContents of other changesWhether there were any material changes on the measurement attributes of major assets of the Company during the reporting period
□ Yes √ No
3. Restriction on asset rights as at the end of the reporting period
As at the end of the reporting period, the Company still had restricted assets of around RMB 24.5087 million, which were mainlyland reclamation deposits, letter of credit deposits, deposits for customs duties and loan deposits.V. Analysis of Investments
1. Overview
√ Applicable □ Not applicable
| Investments during the reporting period (RMB) | Investments during the corresponding period of prior year (RMB) | Change |
| 1,336,744,184.76 | 1,232,329,580.75 | 8.47% |
2. Material equity investments during the reporting period
□ Applicable √ Not applicable
3. Material non-equity investments during the reporting period
□ Applicable √ Not applicable
4. Financial assets measured at fair value
√ Applicable □ Not applicable
Unit: RMB
| Asset class | Initial investment cost | Profit or loss from change in fair value during the period | Cumulative fair value change charged to equity | Purchases during the period | Disposal during the period | Accumulative return on investment | Closing balance | Source of fund |
| Futures | 2,942,875.00 | 7,207,904.50 | 0.00 | 0.00 | 0.00 | 0.00 | 10,150,779.50 | Owned funds |
| Derivative financial assets | 46,729,717.73 | -28,297,001.88 | 0.00 | 0.00 | 0.00 | 0.00 | 18,432,715.85 | Owned funds |
| Others (note) | 323,421,350.00 | 0.00 | 19,600,000.00 | 87,500,000.00 | 9,550,737.01 | 255,521,350.00 | Owned funds | |
| Total | 373,093,942.73 | -21,089,097.38 | 0.00 | 19,600,000.00 | 87,500,000.00 | 9,550,737.01 | 284,104,845.35 | -- |
Note: Non-current financial assets measured at fair value
5. Use of proceeds
□ Applicable √ Not applicable
The Company did not use any raised funds during the reporting period.VI. Disposal of Material Assets and Equity Interest
1. Disposal of material assets
□ Applicable √ Not applicable
The Company did not dispose of any material asset in the reporting period.
2. Disposal of material equity interest
√ Applicable □ Not applicable
| Transaction party | Equity interests disposed | Date of disposal | Selling price (RMB’0,000) | Amount contributed by the equity interests to net profit of the Company from period-beginning to date of disposal (RMB’0,000) | Effect of the disposal on the Company | Amount contributed by the sale to net profit of the Company as % of the Company’s net profit (%) | Pricing principle | Related transaction or not | Relationship between transaction party and the Company | Ownership fully transferred or not | Executed as scheduled or not, if not, state reason and actions taken | Disclosure date | Index to disclosed information |
| Infore Holding Group Co., Ltd. | A 16.50% interest in Guangdong GF Hulian Micro-Loan Co., Ltd. | 26 November 2019 | 8,688.27 | 379.5 | No adverse impact | 0.27% | According to net asset value | No | —— | Yes | Yes | 22 October 2019 | Announcement No. 2019-074 on Disposal of Interest in Minority-Owned Enterprise disclosed on the designated media for information disclosure dated 22 October |
VII. Analysis of major subsidiaries and investees
√ Applicable □ Not applicable
Major subsidiaries and investees accounting for over 10% of the net income of the CompanyUnit: RMB’0,000
2019Name ofcompany
| Name of company | Type of company | Principal activities | Registered capital | Total assets | Net assets | Revenue | Operating profit | Net income |
| Guangdong Hinter Biotechnology Group Co., Ltd. | Subsidiary | Production and sales of premixture | 8,000.00 | 74,648.85 | 65,663.47 | 126,907.89 | 60,431.00 | 51,676.84 |
| Qingyuan Haibei Bio-technology Co., Ltd. | Subsidiary | Production and sales of premixture, additives and micro-ecological products | 100.00 | 82,905.52 | 59,383.3 | 98,658.42 | 37,188.71 | 31,886.93 |
Acquisition and disposal of subsidiaries during the reporting period
√ Applicable □ Not applicable
| Name of companies | Methods to acquire and dispose of subsidiaries during the reporting period | Impact on overall production and operation and results |
| Gaotang Huayu Pig Farming Co., Ltd. | Business combination not under common control | No material effects on the results of the period |
| Alaer Ruitai Biological Protein Co., Ltd. | Business combination not under common control | No material effects on the results of the period |
| Pingnan Haid Feed Co., Ltd. | Newly established | No material effects on the results of the period |
| Linyi Hedong Haiding Agriculture and Animal Husbandry Development Co., Ltd. | Newly established | No material effects on the results of the period |
| Linyi Haiding Feed Technology Co., Ltd. | Newly established | No material effects on the results of the period |
| Jingtai Haijing Fishery Technology Co., Ltd. | Newly established | No material effects on the results of the period |
| Qinzhou Qinnan Yitun Ecological Agriculture Co., Ltd. | Newly established | No material effects on the results of the period |
| Guangzhou Shunkang Aquatic Farming Co., Ltd. | Newly established | No material effects on the results of the period |
| Vietnam Haibei Biotechnology Co., Ltd. | Newly established | No material effects on the results of the period |
| PT Hisenor Technology Indonesia | Newly established | No material effects on the results of the period |
| Tianjin Rongchuan Feed Co., Ltd. | Newly established | No material effects on the results of the period |
| Zhangzhou Haijing Marine Biotechnology Co., Ltd. | Newly established | No material effects on the results of the period |
| Zhanjiang Rongda Feed Co., Ltd. | Newly established | No material effects on the results of the period |
| Huainan Haid Bio-Feed Co., Ltd. | Newly established | No material effects on the results of the period |
| Maoming Haid Biotechnology Co., Ltd. | Newly established | No material effects on the results of the period |
| Binzhou Dingxin Farming Service Co., Ltd. | Newly established | No material effects on the results of the period |
| Guangzhou Ronghai Farming Technology Co., Ltd. | Newly established | No material effects on the results of the period |
| Hubei Haililiang Fertilizer Co., Ltd. | Newly established | No material effects on the results of the period |
| Sichuan Rongchuan Feed Co., Ltd. | Newly established | No material effects on the results of the period |
| Yulin Haid Feed Co., Ltd. | Newly established | No material effects on the results of the period |
| Zhongshan Ronghai Acquatic Farming Co., Ltd. | Newly established | No material effects on the results of the period |
| Sichuan Haile Agriculture and Animal Husbandry Co., Ltd. | Newly established | No material effects on the results of the period |
| Guangzhou Xingnong Ecological Agriculture and Animal Husbandry Development Co., Ltd. | Newly established | No material effects on the results of the period |
| Huayuan Yitun Ecological Agriculture Co., Ltd. | Newly established | No material effects on the results of the period |
| Guangzhou Haiyin Financing & Guaranty Co., Ltd. | Newly established | No material effects on the results of the period |
| Guangzhou Rongda Aquatic Technology Co., Ltd. | Newly established | No material effects on the results of the period |
| Haid Marino CIA.LTDA. | Newly established | No material effects on the results of the period |
| Qinzhou Hailong Feed Co., Ltd. | Newly established | No material effects on the results of the period |
| Linyi Bairong Aquatic Farming Co., Ltd. | Newly established | No material effects on the results of the period |
| Deyang Dachuan Biotechnology Co., Ltd. | Newly established | No material effects on the results of the period |
| Xinxing Haifeng Agriculture and Animal Husbandry Co., Ltd. | Newly established | No material effects on the results of the period |
| Huai’an Huilong Feed Co., Ltd. | Newly established | No material effects on the results of the period |
| Hainan Haid Biotechnology Co., Ltd. | Newly established | No material effects on the results of the period |
| Yiyuan Haiying Food Co., Ltd. | Newly established | No material effects on the results of the period |
| Liuzhou Haid Feed Co., Ltd. | Newly established | No material effects on the results of the period |
| Haid Egypt Co.,Ltd | Newly established | No material effects on the results of the period |
| Zhaoqing Ronghai Farming Technology Co., Ltd. | Newly established | No material effects on the results of the period |
| Sihong Haiding Feed Co., Ltd. | Newly established | No material effects on the results of the period |
| Junan Haiding Feed Co., Ltd. | Newly established | No material effects on the results of the period |
| Zouping Haiying Food Co., Ltd. | Newly established | No material effects on the results of the period |
| Yichang Zhihai Agriculture and Animal Husbandry Co., Ltd. | Newly established | No material effects on the results of the period |
| Zhanjiang Haijing Marine Biotechnology Co., Ltd. | Newly established | No material effects on the results of the period |
| Baojing Yitun Ecological Agriculture Co., Ltd. | Newly established | No material effects on the results of the period |
| Jiangmen Ronghai Farming Technology Co., Ltd. | Newly established | No material effects on the results of the period |
| Yingde Yitun Pig Farming Co., Ltd. | Newly established | No material effects on the results of the period |
| Gao’an Haid Biotechnology Co., Ltd. | Newly established | No material effects on the results of the period |
| Ruyuan Yitun Pig Farming Co., Ltd. | Newly established | No material effects on the results of the period |
| Linyi Haiding Farming Co., Ltd. | Newly established | No material effects on the results of the period |
| Hengnan Yitun Ecological Agriculture Co., Ltd. | Newly established | No material effects on the results of the period |
| Shanggao Haid Biotechnology Co., Ltd. | Newly established | No material effects on the results of the period |
| Hainan Haiwei Feed Co., Ltd. | Disposal of equity interests | No material effects on the results of the period |
| Zoucheng Mulian Zhongxing Ecological Agriculture Technology Co., Ltd. | De-registered | No material effects on the results of the period |
| Guangzhou Youju Feed Trading Co., Ltd. | De-registered | No material effects on the results of the period |
| Guangdong Mutai Biotechnology Co., Ltd. | De-registered | No material effects on the results of the period |
| Changzhou Hairong Aquatic Farming Service Specialized Cooperative Association | De-registered | No material effects on the results of the period |
Description of major subsidiaries and investees
1. Guangdong Hinter Biotechnology Group Co., Ltd. is mainly engaged in feed premixture which are mainly sold to other internalbranches and subsidiaries of the Company and other feed companies in the industry. The gross profit of the product is higher than thatof the Company's compound feed products. During the reporting period, its revenue and profit were good and recorded a net incomeof RMB 517 million (including internal and external sales).
2. Qingyuan Haibei Bio-technology Co., Ltd. is mainly engaged in animal healthcare products and feed additives, which are mainlysold to internal feed companies, farmers and distributors. Its product gross margin is higher than that of the Company's compoundfeed products. During the reporting period, it recorded a net income of RMB 319 million (including internal and external sales).VIII. Structured Entities Controlled by the Company
□ Applicable √ Not applicable
IX. Outlook on the Future Development of the Company(I) Development status of the industryAccording to the "13th Five-Year Development Plan for National Feed Industry" (2016-2020) (全国饲料工业“十三五”发展规划（2016-2020 ）) issued by the Ministry of Agriculture, during the "13th Five-Year" period, asChina’s economic development has entered into a period of new normal, the farming industry has entered a newstage of production slowdown, structural optimization, quality upgrade, layout adjustment and industrialintegration and the development of the feed industry faces many challenges in terms of market space,technological upgrading and industrial integration.
1. Feed demand is stable and the overall industry continues to grow
According to the development goals under the "13th Five -Year Development Plan for National Feed Industry"(2016-2020) (全国饲料工业“十三五”发展规划（2016-2020）), the national industrial feed production is expectedto reach 220 million tonnes in 2020. According to animal species, there are 94 million tonnes of pig feed , 60million tonnes of feed for poultry for meat, 31 million tonnes of feed for poultry for eggs, 20 million tonnes ofaquatic feed , 10 million tonnes of ruminant feed, 1.2 million tonnes of pet feed, and 3.8 million tonnes of otheranimal feeds. It is expected that the total amount of feed will increase by 20 million tonnes in the next five years,representing a growth rate of approximately 10%, and the annual average increase will be approximately 4 milliontonnes, representing a growth rate of approximately 1.9%.
2. It is more apprent for technology to drive industry progress
In the differentiation and integrated development of the feed industry, technology has played an increasinglyimportant role in the industrial competition. The global agricultural products are becoming more and more closelyrelated. Weather conditions and trade frictions in certain regions will cause large fluctuations in the prices ofagricultural products. Animal farming requirements, feed formula adjustments, and raw material substitutiontechnologies are the core fields of feed technology competition. For other technologies, vigorous development ofbiological feed technology, continuous increase in the types and the continuous expansion of functions of feedmicrobes, enzyme preparations, etc. have shown tremendous potentials in promoting the reduction of the use offeed antibiotics and efficient utilization of feed resources, and will become new threshold of competition in theindustry.
3. It is more urgent to conduct industrial integration
The growth of the total amount of feed has slowed down, and the competition among enterprises has been fierce.Leading enterprises have accelerated their investment in industries and foreign countries. The feed enterpriseswith strong overall strength have advantages in capital, management, technology, and talents. They will furtheraccelerate the pace of entering the farming industry and building the entire industry chain in order to enhancesustainable development capability. The feed industry in emerging markets such as Southeast Asia, Northeast Asia,and Africa is in a rapid growth period, and the "going global" initiative is increasingly important for China's feedcompanies to expand their development space.
4. Seedlings and animal healthcare industries will rapidly grow in longer periods due to technologicaladvancement and farming upgrades.Focusing on the development of the farming industry, the development trend of the feed business also indicates toa large extent that the high-quality animal seedlings will have a huge development demand in the long term.Strengthening animal health care is an important trend feature of future animal farming development. Productdemand will grow rapidly.(II) Prospects for the future development of the CompanyThe Company's development strategy is to become a leading high-tech farming and animal husbandry companywith sustainable development capability in China. The Company's development is based on "creating value forcustomers". The Company will closely focus on the farming sector to provide farmers with comprehensivesolutions, including feed, seedling, animal healthcare products and farming technology services, and meet otherneeds of farmers and distributors for financial services, etc. to effectively enhance the profitability of theCompany's farmers and distributors and realize the win-win development of the Company and its customers.The basic strategy for the development of the Company's industrial chain is to scale up on the basis ofspecialization and to extend the industrial chain based on core competitiveness. The Company will focus on feedproducts as its core business. At the same time, it will actively develop raw materials, animal healthcare products,seedling, farming, circulation, and food processing businesses, cultivate the Company's professional capabilities inthe entire industry chain, and build its comprehensive core competitiveness in the industry chain.(III) Possible risks
1. Risk of Periodical Fluctuations in the Feed Industry due to Abnormal Weather and Epidemic Diseases duringAnimal ProductionThe feed industry mainly serves the downstream animal feeding industry. The abnormal changes in naturalelements such as precipitation and typhoon may lead to fluctuations of the inventory of livestock or aquaticproducts and even the large-scale outbreak of animal diseases. This thus affects the demand for feed and likelycauses the risk of periodic and regional fluctuations of the latter. With the environmental changes and theexpansion of animal production industry, human and animal epidemic diseases may also occur occasionally. Forinstance, the COVID-19 epidemic started to wreak havoc on the world in January 2020; the African swine fevervirus broke out across China in August 2018; and PRRSV-mediated pig disease, shrimp-relevant EMS epidemicdisease and poultry-relevant “H7N9” disease all occurred recently. The outbreak of animal diseases will directlyinhibit the scale of animal production and reduce the demand for feed in the short term; major animal and humanepidemic diseases may also lead to compulsory measures imposed by the government to restrict human and goodscirculation to cut off the infection sources, which may dampen the demand from end-consumers, leading to adownturn of the animal production industry, and further affect the feed demand, giving rise to adverse effects onthe production and operation of feed enterprises.Risk management methods: (1) The Company is currently fully deploying factories and developing local marketsin major areas in Southern China, Central China, Eastern China and Northern China and overseas markets in
Southeast Asia, etc. and the expansion of regional distribution can effectively cope with the risk of weatheranomalies and natural disasters in local areas. (2) The Company's feed varieties cover pig feed, chicken feed, duckfeed and other livestock feed and fish feed, shrimp feed and other aquatic feed. With a variety of products and awell-balanced structure, it can effectively deal with the risk of single breed species and has strong comprehensiveanti-risk capability. (3) The Company has set up professional functional departments at its headquarters, and theGroup has set up multiple regional / business divisions according to regions or business categories. Eachprofessional center aims at acquiring technical and management leadership in its field and provides technical andmanagement standards as well as integrated and professional management and service support for largeregions/business divisions and various branches and subsidiaries. The flat and professional management structureand an efficient management team enable the Company to allocate various resources in a timely manner during aepidemic, and make targeted arrangements for different businesses and regions.
2. Risk of Drastic Price Fluctuations of Major Raw Materials
The feed ingredients mainly consist of various kinds of staple agricultural products such as corn andsoybeans(soybean meal). In recent years, the domestic and international markets of agricultural product have beenclosely linked. Changes in the planting area and harvest of crops in major grain-producing countries, purchasingand storage and subsidy policies, import and export policies, fluctuations in logistics capacity and costs ofshipping, exchange rates, human and animal epidemic diseases and others may cause great fluctuations ininternational trade and prices of agricultural products, which, in turn, has a certain impact on the cost of feed andfarming. With the strengthening of the internationalization in trade of agricultural products, the factors for changesin the prices of agricultural products have become more complex and the price fluctuations have thereforeincreased. If raw material prices fluctuate and the Company fails to understand the changes in the trade of feedraw materials in a timely manner and promptly implement strategic management and risk control of procurement,the Company may face the risk of rising integrated procurement costs.Risk management methods: (1) The Company divides raw material into different categories and implements acombination of centralized procurement of staple category and local procurement of regional varieties, which notonly guarantees the advantages of large-scale raw material procurement, but also obtains localization advantagesfrom rapid response in respect of regional procurement; (2) The Company continuously invests in the constructionof the raw material procurement research system. The team of the professional raw material information researchdepartment is relatively mature. It conducts strategic procurement through the real-time tracking, research andjudgment of the domestic and foreign bulk raw material market trends, and implements position risk managementfor bulk raw materials through futures hedging, raw materials trade and other tools to effectively controlprocurement risks; (3) The Company has accumulated rich experience in research and development of animalnutrition and feed formula technologies, and has research and development team composed of over 1,000members. Large amounts of funds are spent on research and development each year, focusing on animal nutritionrequirements, feed formula technology, animal farming and genetic improvement, comprehensive investigation onhealthy animal farming strategies, and other research areas. The Company has a profound understanding of animalnutritional requirements and higher level of expertise in comprehensive utilization of raw materials. Therefore, incase of raw material price fluctuations, it can quickly adjust the formula to control the reasonable feed nutrientlevel and formula costs.
3. Risk of Structural, Regional and Scale Adjustment to Farming Industry under Environmental Protection
Regulations and PoliciesIn recent years, the State has introduced a series of environmental protection laws and regulations including thenew Environmental Protection Law (环保法), the Regulations on Prevention and Control of Pollution fromLarge-Scale Production of Livestock and Poultry (畜禽规模养殖污染防治条例), Action Plan for Prevention andTreatment of Water Pollution (水污染防治行动计划), and the Guiding Opinions on Adjusting the Layout of PigProduction in the Southern Water Network Region (关于促进南方水网地区生猪养殖布局调整), the "13thFive-Year Plan" on Ecological and Environmental Protection (“十三五”生态环境保护规划), which stipulate thepollution prevention and control of animal production industry, increase the pollution control of animal productionindustry, and especially limit the production scale in the regions of key water sources and its surrounding areas.According to the regulations and policies of the central government, banned areas and restricted areas have beenset up throughout the country, and pig farms in the banned areas in the southern water network area are graduallyrelocating. The implementation of environmental protection policies will speed up the withdrawal of private pigfarming farmers, reduce the backward production capacity failing to meet environmental protection standards andwith a small scale, and enable large -scale farmers to continuously expand their production capacity and improvethe farming scale and structure; In addition, the establishment of banned areas and restricted areas will enforceadjustments to the pig production capacity in all places across the country. The adjustments to the scalecomposition of pig production and the relocation of pig production area will certainly have a profound impact onthe existing capacity layout, market share, pricing power and business model of the feed industry. The impact ofenforced environmental protection policies on the pig growing and feed industries puts existing competitivecompanies in the market at risk of reshuffle.Risk management methods: (1) The Company continually improves its capability to serve farmers. In addition tofeed products, the Company is also engaged in the industrial chain of seedlings, animal healthcare products,farming and finance and has a strong stickiness to large-scale farmers; (2) The feed varieties of the Companycover livestock, poultry, and aquatic animals and the product line is abundant. The production lines for pig feed,chicken feed, duck feed and pelleted fish feed can be shared. The Company can rapidly shift the production layoutand make adjustments to adapt to the changes in the industry by adjusting the production capacity in all places. (3)The Company adopts multiple models to speed up the production layout in areas with rich resources and strongenvironmental carrying capacity, and to seize the market share of new animal farming areas.
4. Risk of Exchange Rate Fluctuations
The global procurement of raw materials has become the norm. The scale of overseas investment and overseasoperations of the Company is also rapidly expanding. The scale of cross-border fund settlement and the stock ofoverseas assets have grown substantially, involving the currency types of various related countries. Currencyexchange rate fluctuations are subject to different influence factors, and exchange rate fluctuations in any currencymay have a certain impact on the settlement cost and asset stock value of the region.Risk management methods: (1) Based on the business scale, business model, and settlement characteristics indifferent regions and countries, the Company strictly controls the exchange rate risks, carefully selects settlementcurrencies, and strives to achieve relatively balanced regional fund inflow and outflow through structuralarrangements of financing sources and financing types; (2) The expansion of two-way fluctuations in the RMBexchange rate has become the new normal. The Company further enhances its awareness of foreign exchange risk
management, and arranges settlement models based on the procurement and sales strategies and cyclecharacteristics of import and export operations. And forward foreign exchange settlement and sale, swaps, foreignexchange options and other financial instruments are flexibly used to lock the exchange rate risks, controlprocurement and sales costs, and control the possible risk brought about by exchange rate fluctuations. (3) TheCompany sets up an overseas capital pool to achieve centralized management of foreign exchanges, increase theutilization efficiency of foreign exchanges, as well as reduce the risk of exchange rate fluctuations in thesettlement and payment of exchanges. (4) In the overseas business operations, due to the high cost of exchangerate lock-in, the Company makes use of the high interest rates of the local currencies and makes term depositsproperly for high interest income to offset the depreciation risk of the local currencies.X. Reception of Research Investigations, Communications and Interviews
1. Registration table of reception of research investigations, communications and interviews during thereporting period
√ Applicable □ Not applicable
| Reception time | Reception method | Reception object type | Index of basic information on research investigation |
| 16 April 2019 | By phone | Institution | For details, please refer to the Table of Investor Relations Activity Records of Guangdong Haid Group Co., Limited 2019-001) published on the website of www.cninfo.com.cn on 17 April 2019 |
| 6 May 2019 | Field research | Institution | For details, please refer to the Table of Investor Relations Activity Records of Guangdong Haid Group Co., Limited 2019-002) published on the website of www.cninfo.com.cn on 8 May 2019 |
| 30 July 2019 | By phone | Institution | For details, please refer to the Table of Investor Relations Activity Records of Guangdong Haid Group Co., Limited 2019-003) published on the website of www.cninfo.com.cn on 31 July 2019 |
| 21 October 2019 | By phone | Institution | For details, please refer to the Table of Investor Relations Activity Records of Guangdong Haid Group Co., Limited 2019-004) published on the website of www.cninfo.com.cn on 23 October 2019 |
| 28 November 2019 | Field research | Institution | For details, please refer to the Table of Investor Relations Activity Records of Guangdong Haid Group Co., Limited 2019-005) published on the website of www.cninfo.com.cn on 2 December |
| 2019 | |||
| 16 December 2019 | Field research | Institution | For details, please refer to the Table of Investor Relations Activity Records of Guangdong Haid Group Co., Limited 2019-006) published on the website of www.cninfo.com.cn on 18 December 2019 |
Section V. Material Matters
I. Profit Distribution for Ordinary Shares of the Company and Capitalization of CapitalReserves
Formulation, implementation or adjustment of profit distribution policy for ordinary shares, especially the cashdividend during the reporting period
√ Applicable □ Not applicable
According to the Proposal on 2018 Profit Distribution Plan (《关于2018年度利润分配预案的议案》) asconsidered and approved at the 2018 annual general meeting convened on 6 May 2019, the distribution plan is asfollows: Based on "the total number of shares on the registration date when the plan is implemented in the future",a cash dividend of RMB 3.00 (tax inclusive) was to be paid for every 10 shares. On 27 June 2019, dividenddistribution was completed.The Company’s profit distribution policy, dividend distribution policy, dividend standards, and dividend ratios arewell-defined and clear. Independent directors have duly performed their duties and functions. Minorityshareholders have the opportunity to fully express their views and concern, which is in line with the Articles ofAssociation and the requirements of the consideration procedures. The conditions and procedures for theadjustment or change of the profit distribution policy are compliant and transparent, and the legal rights andinterests of small and medium investors are fully protected.
| Particulars of Cash Dividend Policy | |
| Whether the policy is in compliance with the requirements of the Articles of Association or the resolutions passed at the general meeting; | Yes |
| Whether the basis and ratio of the distribution of dividends are well-defined and clear; | Yes |
| Whether the relevant decision making procedure and system are sound; | Yes |
| Whether the independent directors have duly performed their duties and functions; | Yes |
| Whether there are enough opportunities for minority shareholders to express their views and concerns, and whether their legal interests are sufficiently protected, etc; | Yes |
| Whether the conditions and procedures are legal and transparent in respect of cash dividend policy with adjustments and changes; | Not applicable |
The dividend distribution plans for ordinary shares (proposed) and the proposals on capitalization of capitalreserves (proposed) over the past three years (the reporting period inclusive)
1. 2017 annual dividend distribution plan of the Company
Based on the Company’s total share capital of 1,581,514,354 shares, a cash dividend of RMB 2.50 (tax inclusive)per 10 shares was distributed and total cash dividend distributed amounted to RMB 395,378,588.50. Theremaining undistributed profits were carried forward to the following year.
2. 2018 annual dividend distribution plan of the Company
Based on the Company’s total share capital of 1,580,870,934 shares, a cash dividend of RMB 3.00 (tax inclusive)per 10 shares was distributed and total cash dividend distributed amounted to RMB 474,261,280.20. Theremaining undistributed profits were carried forward to the following year.
3. 2019 annual dividend distribution plan of the Company
On 18 April 2020, the Proposal on 2019 Profit Distribution Plan (关于2019年度利润分配预案的议案) wasconsidered and approved at the ninth meeting of the fifth session of the Board. The Company proposed todistribute RMB 3.5 (tax inclusive) per 10 shares based on "the total number of shares on the registration datewhen the plan is implemented in the future". The proposed total amount of dividend shall not exceed the profit ofthe company (parent company) available for distribution to shareholders as at 31 December 2019. The remainingundistributed profits will be carried forward to the following year.
Cash dividends for ordinary shares of the Company over the past three years (the reporting period inclusive)Unit: RMB
| Year of distribution | Amount of cash dividends (tax inclusive) |
| As a percentage of net profits for the year attributable to shareholders of the Company in the consolidated financial statements | Amount of cash dividends distribution through other means (such as share repurchase) | As a percentage of net income attributable to ordinary shareholders of the Company in the consolidated financial statements | Total amount of cash dividends (including other means) | As a percentage of net profits for the year attributable to shareholders of the Company in the consolidated financial statements | |||
| 2019 [Note] | 553,125,122.90 | 1,648,762,579.59 | 33.55% | 0.00 | 0.00% | 553,125,122.90 | 33.55% |
| 2018 | 474,390,280.20 | 1,437,281,732.28 | 33.01% | 0.00 | 0.00% | 474,390,280.20 | 33.01% |
| 2017 | 395,378,588.50 | 1,207,225,209.35 | 32.75% | 0.00 | 0.00% | 395,378,588.50 | 32.75% |
Note: According to the 2019 profit distribution plan of the Company as considered and approved at the ninth meeting of the fifth
session of the Board of the Company: The Company proposed to distribute RMB 3.50 (tax inclusive) per 10 shares based on “thetotal number of shares on the registration date when the plan is implemented in the future”. The proposed total amount of dividendshall not exceed the profit of the company (parent company) available for distribution to shareholders as at 31 December 2019.According to the Company's total share capital of 1,580,357,494 shares as at 18 April 2020, the Company's 2019 annual cashdividend is expected to be RMB 553,125,122.90.
The Company made a profit and had positive retained profit available for ordinary shareholders of parent company during thereporting period without cash dividend for ordinary shares being proposed
□ Applicable √ Not applicable
II. Proposals on Profit Distribution and Capitalization of Capital Reserves During ThisReporting Period
√ Applicable □ Not applicable
| Numbers of bonus share per 10 shares (share(s)) | 0 |
| Dividend distribution per 10 shares (RMB) (tax inclusive) | 3.5 |
| Conversion per 10 shares (share(s)) | 0 |
| Share base of the distribution proposal (shares) | Total number of shares on the registration date when the plan is implemented in the future |
| Amount of cash dividend (RMB) (tax inclusive) | 553,125,122.90 |
| Amount of cash dividends distribution through other means (such as share repurchase) (RMB) | 0.00 |
| Total amount of cash dividends (including other means) (RMB) | 553,125,122.90 |
| Distributable profits (RMB ) | 3,068,374,960.79 |
| Percentage of total amount of cash dividends (including other means) to total incomes distribution | 100% |
| Cash dividend policy | |
| For profit distribution of companies which are in the growth period with significant capital expenditure arrangement, the percentage for cash dividend shall represent at least 20% of the profits distribution for the current year | |
| Particulars of profit distribution and capitalization of capital reserves | |
| According to the audit report issued by Grant Thornton China (Special General Partnership), the Company (parent company) achieved a net income of RMB 1,156,770,766.52 and made provision for statutory surplus reserves of RMB 115,677,076.65, without allocation to discretionary revenue reserve in 2019. As at 31 December 2019, the profit available for distribution to shareholders amounted to RMB 3,068,374,960.79. | |
III. Performance of Undertakings
1. Undertakings made by parties involved in undertakings including the Company’s beneficial controllers,shareholders, related parties, bidders and the Company during the reporting period or prior periods butsubsisting to the end of the reporting period
√ Applicable □ Not applicable
Based on the good operating conditions and profitability in 2019, as well as the Company's business scale and future growth, thelegitimate demands of investors and continuous return to shareholders, the Company formulated the 2019 annual profit distributionplan as follows: The Company proposed to distribute RMB 3.50 (tax inclusive) per 10 shares based on "the total number of shareson the registration date when the plan is implemented in the future". The proposed total amount of dividend shall not exceed theprofit of the company (parent company) available for distribution to shareholders as at 31 December 2019. The remainingundistributed profits will be carried forward to the following year. In order to look after the shareholders’ immediate and long-terminterests in a better way on the premise of guaranteeing the Company's normal operations and long-term development, theCompany put forward the above-mentioned profit distribution plan. The preparation of the above-mentioned profit distribution planis in line with the Company Law and the Articles of Association, and the Dividend Distribution Plan of the Company for the NextThree Years (2019-2021) (《未来三年（2019-2021年）分红回报规划》). The distribution plan is legal, compliant and reasonableand in line with the Company's distribution policy.The independent directors of the Company expressed their independent opinions that the Company's 2019 profit distribution plangives full consideration to the returns to investors and is in line with the actual situation of the company without any prejudice tothe interests of shareholders, in particular minority shareholders.This proposal will be submitted to the 2019 annual general meeting for final approval.Undertaking
| Undertaking | Party involved in undertaking | Type of undertaking | Details of undertaking | Undertaking date | Term | Particulars on the performance |
| Undertaking on shareholding structure reformation | ||||||
| Undertaking made in offering documents or shareholding alternation documents | ||||||
| Undertaking made during asset |
| reconstruction | ||||||
| Undertaking made on initial public offering or refinancing | Hua Xue | Undertaking on horizontal competition, related party transaction and capital occupation | 1. Mr. Hua Xue guarantees no prejudice to the interests of Haid Group and its other shareholders by virtue of his capacity as the de facto controller. 2. Mr. Hua Xue guarantees that, as long as he serves as the de facto controller of Haid Group, he and his wholly-owned subsidiaries, controlled subsidiaries and actually controlled companies (except Haid Group) will not engage in business activities that, directly or indirectly, compete with or constitute competitive threat to the principal businesses or major products of Haid Group in any form, including investment, acquisition or merger of companies, enterprises or other economic organizations the principal businesses or major products of which are the same with or similar to those of Haid Group. | 27 November 2009 | Long term | In strict performance |
| Hua Xue | Other undertaking | 1. I promise not to intervene in the Company’s management activities, and not to encroach on the Company's interests. 2. Before the implementation of the Company's public offerings of convertible corporate bonds, if the China Securities Regulatory Commission (CSRC) makes other measures for filling returns and new regulatory provisions on their commitments, and the above commitments cannot meet the requirements of the CSRC, I promise to issue a supplementary commitment according to the latest regulations of the CSRC. 3. Commitments include effectively fulfilling the Company's commitment to fill in return and any other measures that I made to fill in return. If I violate these commitments and cause losses to the company or investors, I am willing to bear the compensatory liability of the Company | 6 August 2019 | From 6 August 2019 to 18 March 2026 | In strict performance |
| or investors according to law. | |||||
| Guangzhou Haihao Investment Co., Ltd. | Undertaking on horizontal competition, related party transaction and capital occupation | 1. It guarantees no prejudice to the interests of Haid Group and other shareholders of Haid Group by virtue of its capacity as the controlling controller. 2. Guangzhou Haihao guarantees that, as long as it is the controlling shareholder of Haid Group, it and its wholly-owned subsidiaries, controlled subsidiaries (except Haid Group) and actually controlled companies will not engage in business activities that, directly or indirectly, compete with or constitute competitive threat to the principal businesses or major products of Haid Group in any form, including investment, acquisition or merger of companies, enterprises or other economic organizations the principal businesses or major products of which are the same with or similar to those of Haid Group. | 27 November 2009 | Long term | In strict performance |
| Guangzhou Haihao Investment Co., Ltd. | Other undertaking | 1. Haihao Investment promises not to intervene in Haid Group’s management activities, and not to encroach on its interests. 2. Before the implementation of Haid Group's public offerings of convertible corporate bonds, if the China Securities Regulatory Commission (CSRC) makes other measures for filling returns and new regulatory provisions on their commitments, and the above commitments cannot meet the requirements of the CSRC, Haihao Investment promises to issue a supplementary commitment according to the latest regulations of the CSRC. 3. Commitments include effectively fulfilling Haid Group's commitment to fill in return and any other measures that Haihao made to fill in return. If Haihao violates these commitments and causes losses to Haid Group or its | 6 August 2019 | From 6 August 2019 to 18 March 2026 | In strict performance |
| investors, it is willing to bear the compensatory liability of Haid Group or its investors according to law. | |||||
| Hua Xue, Li Tian, Yingzhuo Xu, Qi Cheng, Jianfang Gui, Jianguo He, Yunguo Liu, Guoxiang Liu, Xueqiao Qian, Shaolin Yang, Xiewu Jiang, Guocheng Mi, Zhongzhu Chen, Mingzhong Chen and Zhijian Huang | Other undertaking | 1. I promise not to transfer interests to other units or individuals for free or under unfair conditions, or in other way to damage company interests. 2. I promise to regulate personal business consumption behavior. 3. I promise not to use the Company's assets to engage in investment and consumption activities unrelated to the performance of my duties. 4. I promise that the salary system formulated by the board of directors or the remuneration and appraisal committee is linked to the implementation of the Company's return compensation measures. 5. I promise that the exercise conditions of equity incentive are linked to the implementation of the Company's return compensation measures. 6. From the date of issuance of this commitment to the date before the completion of this public issuance of convertible corporate bonds by the listed company, if China Securities Regulatory Commission makes other new regulatory provisions on return compensation measures and commitments, and the above commitments fail to meet the provisions of China Securities Regulatory Commission, I promise to issue supplementary commitments in accordance with the latest regulations of the China Securities Regulatory Commission at that time. 7. I promise to implement the Company's relevant return compensation measures and any commitments related to the return compensation measures I have made. If I violate these commitments and cause losses to the Company or investors, I shall bear the compensation | 6 August 2019 | From 6 August 2019 to 18 March 2026 | In strict performance |
| responsibility to the Company or investors in accordance with the law. | ||||||
| Equity incentive undertakings | Guangdong Haid Group Co., Limited | Other undertaking | The Company guarantees no provision loans or financial assistance in other forms to the incentive targets for acquisition of relevant interests under the Restricted Shares and Share Options Plan of Guangdong Haid Group Co., Limited (广东海大集团股份有限公司限制性股票及股票期权计划), including provision of guarantees for their loans. | 4 March 2015 | From 4 March 2015 to 3 March 2019 | Expired |
| Guangdong Haid Group Co., Limited | Other undertaking | The Company guarantees no provision of loans or financial assistance in other forms to the incentive targets for acquisition of relevant interests under the 2016 Restricted Shares Incentive Plan of Guangdong Haid Group Co., Limited (广东海大集团股份有限公司2016年限制性股票激励计划), including provision of guarantees for their loans. | 15 February 2017 | From 15 February 2017 to 23 March 2022 | In strict performance | |
| Other undertakings made to the Company’s minority shareholders | Guangdong Haid Group Co., Limited | Dividend undertaking | Specific conditions, proportions and intervals of cash dividends: The following conditions shall be satisfied when the company makes distribution of cash dividends: (1) The profits and the accumulative distributable profit (i.e., tax after the Company makes up losses and make allocation to reserves) realized by the company in the year or half year is positive in value and the cash flow is sufficient. The distribution of cash dividend will not affect the Company's subsequent operations; (2) The auditor has issued a standard unqualified audit report on the Company's annual financial report (if the Company distributes the interim dividend, the auditor shall have issued a standard unqualified audit report on the Company's financial report for the previous year; (3) The Company has no | 18 April 2016 | From 18 April 2016 to 17 April 2019 | Expired |
| plan on material external investment or major cash outlays within the next twelve months (except proceeds-financed investment projects). A major investment plan means that the accumulated expenditure of the Company to be used for external investment and purchase of assets or equipment within the next twelve months will reach or exceed 30% of the Company's latest audited net assets. (4) Other circumstances in which the Board considers it is not suitable for distribution of cash dividends. In compliance with the above conditions, the Company will, in principle, make a distribution of cash dividend once a year. The Board of the Company may propose interim cash dividends based on the profitability of the Company when the relevant regulations allow. In principle, the Company's profits accumulated in cash every three years should not be less than 30% of the annual average distributable profit realized in the three years. | |||||
| Guangdong Haid Group Co., Limited | Dividend undertaking | Specific conditions, proportions and intervals of cash dividends: The following conditions shall be satisfied when the company makes distribution of cash dividends: (1) The profits and the accumulative distributable profit (i.e., tax after the Company makes up losses and make allocation to reserves) realized by the company in the year or half year is positive in value and the cash flow is sufficient. The distribution of cash dividend will not affect the Company's subsequent operations; (2) The auditor has issued a standard unqualified audit report on the Company's annual financial report (if the Company distributes the interim | 6 May 2019 | 6 May 2019 to 5 May 2022 | In strict performance |
| dividend, the auditor shall have issued a standard unqualified audit report on the Company's financial report for the previous year; (3) The Company has no plan on material external investment or major cash outlays within the next twelve months (except proceeds-financed investment projects). A major investment plan means that the accumulated expenditure of the Company to be used for external investment and purchase of assets or equipment within the next twelve months will reach or exceed 30% of the Company's latest audited net assets. (4) Other circumstances in which the Board considers it is not suitable for distribution of cash dividends. In compliance with the above conditions, the Company will, in principle, make a distribution of cash dividend once a year. The Board of the Company may propose interim cash dividends based on the profitability of the Company when the relevant regulations allow. In principle, the Company's profits accumulated in cash every three years should not be less than 30% of the annual average distributable profit realized in the three years. | ||||||
| Hua Xue, Li Tian, Yingzhuo Xu, Xiaojun Shang, Chengping Lu, Xinchun Li, Erxuan Deng, Zhenxiong Qi, Jing Wang, Jia Chen, Mingzhong Chen, Xueqiao Qian, Shaolin Yang, Zhijian Huang | Undertaking on reduction of shareholding | In compliance with the laws and regulations governing shareholding reductions by directors, supervisors and senior management | 27 November 2009 | Long term | In strict performance | |
| Whether undertakings | Yes | |||||
| performed on time | |
| Specific reasons why undertakings were not performed on time and next steps | Not applicable |
2. Description on the Company’s assets and items in meeting original profit forecast and its explanation asthere is profit forecast for assets and items of the Company and the reporting period is still within theprofit forecast period
√ Applicable □ Not applicable
| Earnings forecast asset or project name | Forecast start time | Forecast end time | Expected results for the current period (RMB 0’000) | Actual results for the current period (RMB 0’000) | Reasons for failure to reach the forecast (if applicable) | Date of previous forecast disclosure | Index of previous forecast disclosure |
| Shandong Daxin Group Co., Ltd. | 1 January 2017 | 31 December 2019 | 16,500 | 15,123.84 | Daxin Group specializes in producing and marketing feed for pigs. The African swine fever had a material impact on Daxin Group. That’s why it failed to fulfill the 2019 earnings undertaking. | 15 September 2017 | For details, please refer to the Announcement on the Acquisition of Partial Equity Interests of Daxin Group and External Investment (《关于收购大信集团部分股权暨对外投资的公告》) (Announcement No. 2017-076) published in China Securities Journal, Securities Times, Securities Daily and on the website of |
Undertaking of the Company's shareholders and counterparties on operating results in reporting year
√ Applicable □ Not applicable
Jianbing Liu, Haibo Yu, Yuqin Wang, Xianlai Duan and Mingjun Yang (hereinafter referred to as “the undertakingparty”), former shareholders of Shandong Daxin Group Co., Ltd. (formerly known as Shandong Daxin Group Co.,Limited, hereinafter referred to as "Daxin Group"), the acquisition target of the Company, made undertakings onthe net income (i.e., net income attributable to shareholders of the company, before or after the non-operatingincome and loss, whichever is lower; the case is the same below) to be realized in four full accounting years from2017 to 2020:
(1) Daxin Group will achieve a net income of not less than RMB 50 million in 2017, the accumulated net incomeof not less than RMB 105 million in 2017 and 2018, the accumulated net income of not less than RMB 165million in 2017 to 2019, and the accumulated net income of not less than RMB 230 million in 2017 to 2020.
(2) If the accumulated net income for the current year fails to reach the committed amount, the undertaking partyshall pay the Company compensation = (accumulated net income for the current year - actual accumulated netincome of the current year) / total committed amount of RMB 230 million * total transaction amount of RMB298,776,000 – net compensation paid by the undertaking party to the Company. The accumulated compensationamount is limited to the total transaction price of the underlying assets. If the actual accumulated net income forany year during the results undertaking period is not less than the accumulated net income undertaken, theCompany shall return all the compensation that has been paid by the undertaking party to the undertaking party.
(3) The undertaking party will increase shareholding in Haid Group through purchase of shares from thesecondary market within 6 months after receipt of the second installment of payment for equity transfer with anamount of RMB 60 million. After Daxin Group’s fulfillment of the annual results goals for 2017 and 2018 orpayment of sufficient compensation in case of non-fulfillment of the goals, the undertaking party may release thelock-up for 50% of the above-mentioned shares additionally purchased; After Daxin Group’s fulfillment of theannual results goals for 2017 to 2020 or payment of sufficient compensation in case of non-fulfillment of the goals,the undertaking party may release the lock-up for the remaining 50% of the above-mentioned shares.According to the 2017 Audit Report of Shandong Daxin Group Co., Ltd. (山东大信集团有限公司2017年度审计报告) (Guang Kuai Shen Zi [2018] No. G17036521306) and the 2018 Audit Report of Shandong Daxin GroupCo., Ltd. (山东大信集团有限公司2018年度审计报告) (Guang Kuai Shen Zi [2019] No. G18031440261) issuedby GP Certified Public Accountants (Special General Partnership), as well as the 2019 Audit Report of ShandongDaxin Group Co., Ltd. (山东大信集团有限公司2019年度审计报告) (Grant Thornton Shen Zi (2020) No.440FC0812) issued by the Guangzhou branch of Grant Thornton China (Special General Partnership), DaxinGroup's 2017-2019 audited net income attributable to shareholders of the company was RMB 167.7250 millionand the net income attributable to the shareholders of the company after excluding non-operating income or losswas RMB 151.2384 million. Therefore, Daxin Group has failed to fulfill the 2017-2019 earnings undertaking.According to the aforesaid earnings undertaking, the undertaking party shall pay the Company compensation =
(accumulated net income for the current year - actual accumulated net income of the current year) / totalcommitted amount of RMB 230 million * total transaction amount of RMB 298,776,000 – net compensation paidby the undertaking party to the Company, that is, (165,000,000-151,238,400)/230,000,000*298,776,000-0=17,876,700.According to the way of payment of the earnings compensation as agreed upon by the Company and theundertaking party, the aforesaid compensation due from the undertaking party shall be deducted from the fifthinstallment of payment for equity transfer.
The completion of performance commitment and its influence on goodwill impairment testThe Company adopts the method of discounting the expected future cash flow to calculate the present value offuture cash flow of related assets and the goodwill impairment after discounting at the pre tax discount rate byconsidering the risks of related assets in their industries and environment. In view of the completion of theperformance commitments above, its future recoverable amount and budget data of Daxin Group, the Companyhas accrued RMB3.3284 million of goodwill impairment reserves for the goodwill formed by the acquisition ofDaxin Group.
IV. Appropriation of Funds of the Company by the Controlling Shareholder and Its RelatedParties for Non-Operating Purposes
□ Applicable √ Not applicable
There was no appropriation of funds of the Company by the controlling shareholder and its related parties for non-operating purposesduring the reporting period.V. Opinions of the Board, the Supervisory Committee and Independent Directors (If Any)Regarding the "Modified Audit Report" for the Reporting Period Issued by the Accountants
□ Applicable √ Not applicable
VI. Reason for Changes in Accounting Policies, Accounting Estimates and AccountingMethods as Compared to the Financial Report for the Prior Year
√ Applicable □ Not applicable
1. For the changes in accounting policies and accounting estimates as compared to the financial report for theprior year, please refer to Note III, 35 in Part XII “Financial Report”.
2. During the reporting period, the Company communicated properly with the former CPA firm GP CertifiedPublic Accountants (SGP) regarding the change of CPA firm and obtained its understanding and support.
VII. Reason for Retrospective Restatement to Correct Major Accounting Errors During theReporting Period
□ Applicable √ Not applicable
During the reporting period, there was no major accounting error which shall be subject to retrospective restatement.VIII. Reason for Changes in Scope of the Consolidated Financial Statements as Compared tothe Financial Report for the Prior Year
√ Applicable □ Not applicable
During the year, the scope of consolidation included 317 subsidiaries. For details, please refer to the Note 7"Interests in other entities" in XII "Financial Report". The scope of consolidation of the Company in this yearincreased by 50 and reduced by 5 as compared with the last year. For details, please refer to the Note 6 "Change inscope of consolidation" in XII "Financial Report".
IX. Engagement or Dismissal of Accounting Firms
Current accounting firm engaged
| Name of the domestic accounting firm | Grant Thornton China (Special General Partnership) |
| Remuneration of the domestic accounting firm (RMB ’0,000) | 360 |
| Continued term of service of the domestic accounting firm | 1 |
| Name of certified public accountants of the domestic accounting firm | Wenyuan Guan, Shuxia Zhang |
| Continued term of service of certified public accountants of the domestic accounting firm | Wenyuan Guan: 1 year Shuxia Zhang: 2 years |
| Name of the overseas accounting firm (if any) | Not applicable |
| Remuneration of the overseas accounting firm (RMB ’0,000) (if any) | 0 |
| Continued term of service of the overseas accounting firm (if any) | Not applicable |
| Name of certified public accountants of the overseas accounting firm (if any) | Not applicable |
| Continued term of service of certified public accountants of the overseas accounting firm (if any) | Not applicable |
Whether to appoint another accounting firm during the current period
√ Yes □ No
Whether to change the accounting firm during the audit
□ Yes √ No
Whether the approval procedure was executed regarding the change of accounting firm
√ Yes □ No
Detailed description of the reappointment and change of accounting firmThrough deliberation and approval of the 5
th
meeting of the 5
th board of directors and the 4
thextraordinary general meeting ofshareholders in 2019, Grant Thornton China (Special General Partnership) was appointed as the audit institution of the Company in2019. The board of directors audit committee of the Company has reviewed the qualification of Grant Thornton China (SpecialGeneral Partnership) and found that it meets the relevant requirements for providing annual audit services for the Company, andagreed to appoint Grant Thornton China (Special General Partnership) as the Company’s 2019 financial report audit institution. GrantThornton China (Special General Partnership) is qualified to audit securities and futures related businesses with decades ofexperience and ability to provide audit services for listed companies, and it can meet the requirements of the Company’s financialaudit and related special audit work.
Particulars on recruitment of accounting firms, financial consultants or sponsors for internal control and auditing purposes
□ Applicable √ Not applicable
X. Suspension in Trading or Delisting Upon Publication of Annual Report
□ Applicable √ Not applicable
XI. Matters Related to Bankruptcy and Reorganisation
□ Applicable √ Not applicable
There was no matter related to bankruptcy and reorganisation during the reporting period.XII. Material Litigation and Arbitration
□ Applicable √ Not applicable
During the reporting period, the Company was not involved in any material litigation and arbitration.
XIII. Punishment and Rectification
□ Applicable √ Not applicable
There was no punishment and rectification of the Company during the reporting period.
XIV. Credibility of the Company, Its Controlling Shareholders and Beneficial Controllers
□ Applicable √ Not applicable
XV. Implementation of the Equity Incentive Plan, Employee Shareholding Plan or OtherEmployee Incentive Measures of the Company
√ Applicable □ Not applicable
(I) Restricted Shares and Share Option Incentive Plan
1. Decision-making procedures and approval
(1) On 3 March 2015, the Company convened the 2015 first non-operating general meeting to consider andapprove, by way of special resolutions, the Restricted Shares and Share Option Incentive Plan of Guangdong HaidGroup Co., Limited (广东海大集团股份有限公司限制性股票与股票期权激励计划) and its summary(hereinafter referred to as "Restricted Shares and Share Option Incentive Plan"), the Proposal Regarding theMeasures for Implementation and Assessment of the Restricted Shares and Share Option Incentive Plan ofGuangdong Haid Group Co., Limited (《关于<广东海大集团股份有限公司限制性股票与股票期权激励计划实施考核管理办法>的议案》), the Proposal Regarding Authorisation of the Board of Directors at the GeneralMeeting to Handle Matters Related to the Restricted Shares and Share Option Incentive Plan (《关于股东大会授权董事会办理公司限制性股票与股票期权激励计划相关事宜的议案》) and other proposals.
(2) On 4 March 4 2015, the Company convened the thirteenth meeting of third session of the Board to considerand approve the Proposal Regarding Grant of Restricted Shares and Share Options to the Targets of the RestrictedShares and Share Option Incentive Plan of Guangdong Haid Group Co., Limited (《关于向<广东海大集团股份有限公司限制性股票与股票期权激励计划>激励对象授予限制性股票与股票期权的议案》), pursuant to whichthe Company granted 14,395,000 restricted shares to 168 targets of restricted shares incentives at the price ofRMB 5.64 per share; 10,425,000 share options to 291 targets of share option incentives at the exercise price ofRMB 11.41 per share with the grant date of 4 March 2015. The source of the underlying shares of the restrictedshares and share options under the plan were the RMB denominated ordinary shares issued by the Company to theincentive targets by way of private placement. On 20 March 2015, the Company completed registration for grantof the above-mentioned restricted shares and share options.
2. Implementation during the reporting period
During the reporting period, the option incentive targets chose to exercise 76,950 options in the third exerciseperiod of the Restricted Shares and Share Option Incentive Plan (《限制性股票与股票期权激励计划》). Togetherwith the 12,900 options that were exercised at the end of last year but not yet registered, the share capital of theCompany increased by 89,850 shares in total during the reporting period.
3. Incentive targets' exercise of interests during the reporting period and interests accumulatively granted but notyet exercised as at the end of the reporting periodDuring the reporting period, the number of options exercised in the third exercise period of restricted shares andshare option incentive plan was 76,950; as at the end of the reporting period, the unexercised share options underthe Restricted Shares and Share Option Incentive Plan were 0.(II) 2016 Restricted Share Incentive Plan
1. Decision-making procedures and approval
(1) On 15 February 2017, the Company convened the 2017 first non-operating general meeting to consider andapprove the 2016 Restricted Share Incentive Plan of Guangdong Haid Group Co., Limited (Revision) (广东海大集团股份有限公司2016年限制性股票激励计划(修订稿)) and its summary (hereinafter referred to as "2016
Restricted Share Incentive Plan") and the Proposal Regarding Authorisation of the Board of Directors at theGeneral Meeting to Handle Matters Related to the 2016 Restricted Share Incentive Plan (《关于提请股东大会授权董事会办理公司2016年限制性股票激励计划相关事宜的议案》) and related resolutions, pursuant to whichthe Company was approved to issue no more than 46 million restricted shares to incentive targets by way ofprivate placement of which 41,601,300 shares would be first granted to 1,484 incentive targets at the grant price ofRMB 7.48 per share, and 4,398,700 restricted shares would be reserved.
(2) On 13 March 2017, the Company convened the sixth meeting of the fourth session of the Board to considerand approve the Proposal on Adjustment to the Number of Interests under the 2016 Restricted Share IncentivePlan of the Company (《关于调整公司2016年限制性股票激励计划权益数量的议案》), pursuant to which thenumber of incentive targets of first grant was changed from 1,484 into 1,373 and the restricted shares not grantedyet were adjusted from 41,601,300 shares to 40,283,200 shares.
(3) On 13 March 2017, the Company convened the sixth meeting of the fourth session of the Board to considerand approve the Proposal on Grant of Restricted Shares to Incentive Targets under the 2016 Restricted ShareIncentive Plan of the Company (《关于向公司2016年限制性股票激励计划激励对象授予限制性股票的议案》),pursuant to which the Company was approved to grant 40,283,200 shares to 1,373 incentive targets for the firsttime with 13 March 2017 as the first grant date and the grant price of RMB 7.48 per share. On 20 March 2017, theCompany completed the registration of grant of all the above-mentioned restricted shares.
(4) On 27 October 2017, the Company convened the tenth meeting of the four session of the Board to considerand approve the Proposal Regarding Adjustments to the Matters Related to the Equity Incentive Plan andCancellation of Certain Restricted Shares (《关于调整公司股权激励计划相关事项及注销部分股票期权的议案》) and the Proposal Regarding Repurchase of Certain Restricted Shares for Cancellation (《关于回购注销部分限制性股票的议案》), pursuant to which the Company was approved to repurchase the 618,800 unlockedrestricted shares which had been granted to the certain incentive targets who have resigned or terminated the laborcontract for cancellation, the number of incentive targets of the first grant was adjusted to 1,336 and therepurchase price of restricted shares was adjusted to RMB 7.18 per share. On 28 December 2017, the Companycompletes the repurchase for cancellation for all the above-mentioned restricted shares and the cancellation for allthe above-mentioned share options.
(5) On 8 December 2017, the Company convened the eleventh meeting of the fourth session of the Board toconsider and approve the Proposal Regarding the Grant of Reserved Restricted Shares to Incentive Targets underthe 2016 Restricted Share Incentive Plan of the Company (《关于向公司2016年限制性股票激励计划激励对象授予预留限制性股票的议案》), pursuant to which the Company was approved to grant 4,398,700 reservedrestricted shares to 399 incentive targets with the grant price of RMB 10.44 per share and 8 December 2017 as thegrant date. Upon audit and confirmation by the Shenzhen Stock Exchange and Shenzhen Branch of ChinaSecurities Depository and Clearing Corporation Limited, the Company completed the registration for grant ofreserved restricted shares to 360 incentive targets. 4,308,000 reserved restricted shares were granted and thelisting date of the restricted shares would be 24 January 2018.
2. Implementation during the reporting period
(1) The second unlocking period of the first grant and the first unlocking period of the reserve grant of the 2016
Restricted Share Incentive PlanOn 13 April 2019, the Company convened the seventeenth meeting of the fourth session of the Board to considerand approve the Proposal on the Satisfaction of the Unlocking Conditions of the Restricted Share Incentive Plan(《关于股权激励计划符合解锁条件的议案》). The Board was of the view that the unlocking conditions had beensatisfied for the second unlocking period of the first grant and for the first unlocking period of the reserve grantunder the 2016 Restricted Share Incentive Plan (Revised) (《2016年限制性股票激励计划（修订稿）》) and thusapproved the incentive targets to unlock the relevant shares as prescribed. In the second unlocking period of thefirst grant of the 2016 Restricted Share Incentive Plan (《2016年限制性股票激励计划》), the number of restrictedshares available for listing and trading was 7,471,740; and in the first unlocking period of the reserve grant, thenumber of restricted shares available for listing and trading was 1,188,360.
(2) Repurchase for cancellation for the 2016 Restricted Share Incentive Plan
On 13 April 2019, the Company convened the seventeenth meeting of the fourth session of the Board to considerand approve the Proposal Regarding Repurchase of Certain Restricted Shares for Cancellation (《关于回购注销部分限制性股票的议案》). Due to demission, termination of employment or failure to pass the 2018 annualpersonal performance appraisal of 28 incentive targets in the first grant of restricted shares and 18 incentivetargets in the reserve grant, the Company was agreed to repurchase and cancel 309,400 restricted shares in the firstgrant and 120,600 restricted shares in the reserve grant that had been granted to the aforesaid incentive targets buthad not yet reached the unlocking conditions. On 19 June 2019, the Company completed the repurchase forcancellation of the above-mentioned restricted shares.On 18 October 2019, the Company convened the fifth meeting of the fifth session of the Board to consider andapprove the Proposal on the Adjustment to the Repurchase Price of the Stock Incentive Plan (《关于调整股权激励计划回购价格的议案》). Due to the implementation of the Company’s 2018 annual equity distribution, theCompany was approved to adjust the repurchase price of the first granted restricted shares under the 2016Restricted Share Incentive Plan (Revised) (《2016年限制性股票激励计划（修订稿）》) to RMB 6.63 per share,and adjust the repurchase price of the reserved restricted shares to RMB 9.89 per share.On 18 October 2019, the Company convened the fifth meeting of the fifth session of the Board to consider andapprove the Proposal Regarding Repurchase of Certain Restricted Shares for Cancellation (《关于回购注销部分限制性股票的议案》). Due to the dismission or termination of employment of 29 restricted share incentive targetsin the first grant and 14 restricted share incentive targets in the reserve grant, the Company was approved torepurchase for cancellation the 431,400 restricted shares in the first grant and the 82,040 restricted shares in thereserve grant of the above-mentioned incentive targets which had been granted but failed to satisfy the unlockingconditions. On 30 December 2019, the Company completed the repurchase for cancellation of theabove-mentioned restricted shares.
3. Incentive targets' exercise of interests during the reporting period and interests accumulatively granted but notyet exercised as at the end of the reporting periodAs at the end of the reporting period, the number of restricted shares which had been granted but not unlockedunder the 2016 Restricted Share Incentive Plan was 24,701,140 shares.
In summary, during the reporting period, due to implementation of the 2016 Restricted Share Incentive Plan (2016年限制性股票激励计划), incentive targets chose to exercise 76,950 options; and the Company repurchased atotal of 943,440 restricted shares for cancellation. As at the end of the reporting period, the Company had granteda total of 24,701,140 restricted shares which had not been unlocked.(III) Explanations for other circumstances due to the implementation of the 2016 Restricted Share Incentive Plan(2016年限制性股票激励计划) during the reporting period
1. For information on grant of interests to and exercise of interests by directors and senior management, pleaserefer to I. "Changes in restricted shares" under section VI in this report.
2. Explanation on changes in share capital caused by implementation of the 2016 Restricted Share Incentive Plan(2016年限制性股票激励计划).During the reporting period, the total shares of the Company increased by 89,850 shares due to incentive targets’independent exercise of options; and decreased by 943,440 shares due to repurchase of restricted shares forcancellation. After the above-mentioned changes, the total number of shares of the Company as at the end of theperiod changed from 1,581,211,084 shares to 1,580,357,494 shares. For details of the changes, please refer to the Iand II under section VI of this report.
3. Accounting treatment method for option incentive and effects of equity incentive cost on the results of theCompanyAccording to relevant provisions under the Accounting Standards for Business Enterprises No. 11 - Share-basedPayment (企业会计准则第11号–股份支付), the Company will, on each balance sheet date in the waiting period,amend the number of restricted shares / share options that are expected to be unlockable / exercisable according tothe latest available information of changes in the number of incentive targets allowed to unlock restrictedshares/exercise options, completion of performance indicators and other follow-up information and include theservices obtained in the current period in the relevant costs or expenses and capital reserves at fair value of therestricted shares/exercise options on the grant date.The implementation of the above equity incentive plan will not have a significant impact on the Company'sfinancial position and operating results during the reporting period and in the future.(IV) Employee Stock Ownership Plan for Core Team
1. On 15 February 2017, the Proposal Regarding the Employee Stock Ownership Plan for Core Team ofGuangdong Haid Group Co., Limited (Revised) and Its Summary (《关于<广东海大集团股份有限公司核心团队员工持股计划（修订稿）>及其摘要的议案》) was approved at the first extraordinary general meeting of 2017,pursuant to which the Company was approved to prepare the Employee Stock Ownership Plan for Core Team ofGuangdong Haid Group Co., Limited (Revised) (广东海大集团股份有限公司核心团队员工持股计划（修订稿）)(hereinafter referred to as the “Employee Stock Ownership Plan”) in accordance with relevant laws andregulations. As such, the Employee Stock Ownership Plan would permanently exist and be launched each yearunless determination as determined by the Stock Ownership Plan Management Committee and consideration and
approval by the Board and general meeting; and the Company would formulate specific plans under the EmployeeStock Ownership Plan. It was agreed to set special funds of RMB12 million as the capital source for the First Planof the Employee Stock Ownership Plan (hereinafter referred to as the “First Plan of the Stock Ownership Plan”).As at 21 March 2017, under the First Plan of the Stock Ownership Plan, "GF Yuanchi ? Haid Core No. 1Targeted Asset Management Program (广发原驰?海大核心1号定向资产管理计划)" purchased 720,187 sharesfrom the secondary market. On 29 December 2017, the vesting of the first vesting period of the above-mentionedpurchased shares was completed, with 40% of these shares, i.e. 288,075 shares, being vested. On 29 December2018, the vesting of the second vesting period of the above-mentioned purchased shares was completed, with 30%of these shares, i.e. 216,056 shares, being vested. On 31 December 2019, the vesting of the third vesting period ofthe above-mentioned purchased shares was completed, with 30% of these shares, i.e. 216,056 shares, being vested.As of 31 December 2019, the total 720,187 shares under the First Plan of the Stock Ownership Plan had beenvested, with the vesting particulars in line with the First Plan of the Stock Ownership Plan. On 31 December 2019,the lockup period for the First Plan of the Stock Ownership Plan expired and the unlocking conditions had beensatisfied. Therefore, starting from 31 December 2019, all the 720,187 shares under the First Plan of the StockOwnership Plan have been allowed for trading.As of the end of the reporting period, 720,187 shares were held under the First Plan of the Stock Ownership Plan,accounting for 0.05% of the then total share capital. During the reporting period, no change occurred to theholders of the First Plan of the Stock Ownership Plan and their holdings.
2. On 14 May 2018, the Proposal Regarding the Second Plan of the Employee Stock Ownership Plan for CoreTeam of Guangdong Haid Group Co., Limited and Its Summary (《关于<广东海大集团股份有限公司核心团队员工持股计划之二期计划>及其摘要的议案》) (hereinafter referred to as the “Second Plan of the StockOwnership Plan”) was approved at the 2017 annual general meeting. As such, the Company was approved toimplement the Second Plan of the Employee Stock Ownership Plan. A special fund of RMB38,511,460.57 wouldbe established and the related employees would raise no more than RMB50,000,000. The total number ofemployees to participate in the Second Plan of the Stock Ownership Plan would be no more than 30, including 4directors, supervisors and senior management, as well as no more than 26 other core personnel. As of 11 July2018, the "GF Yuanchi ? Haid Core No. 2 Targeted Asset Management Program” (广发原驰?海大核心2号定向资产管理计划) purchased 4,386,186 shares of the Company’s stock from the secondary market for the SecondPlan of the Stock Ownership Plan, of which 1,908,436 shares were purchased with the special fund. On 28December 2018, the first vesting of the said shares purchased with the special fund was completed, with 40% ofthese shares, i.e. 763,374 shares, being vested; and on 31 December 2019, the second vesting of the said sharespurchased with the special fund was completed, with 30% of these shares, i.e. 572,531 shares, being vested. Andthe shares purchased with the employees’ self-raised capital would be vested on the third vesting day of the sharespurchased with the special fund according to their payment percentage.As of the end of the reporting period, 1,908,436 shares were held under the Second Plan of the Stock OwnershipPlan, accounting for 0.12% of the then total share capital. During the reporting period, no change occurred to theholders of the Second Plan of the Stock Ownership Plan and their holdings.
3. On 6 May 2019, the Proposal Regarding the Third Plan of the Employee Stock Ownership Plan for Core Teamof Guangdong Haid Group Co., Limited and Its Summary (《广东海大集团股份有限公司核心团队员工持股计划之三期计划》及其摘要的议案》) (hereinafter referred to as the “Third Plan of the Stock Ownership Plan”) was
approved at the 2018 annual general meeting. As such, the Company was approved to implement the Third Plan ofthe Employee Stock Ownership Plan. A special fund of RMB30,180,630.23 would be established as the capitalsource. The total number of employees to participate in the Third Plan of the Stock Ownership Plan would be nomore than 30, including 4 directors, supervisors and senior management, as well as no more than 26 other corepersonnel. As of 4 November 2019, the "GF Yuanchi ? Haid Core Employee Stock Ownership Plan No. 3 SingleAsset Management Program” (广发原驰?海大核心员工持股计划3号单一资产管理计划) purchased 888,500shares of the Company’s stock from the secondary market for the Third Plan of the Stock Ownership Plan. On 31December 2019, the first vesting of the said shares purchased with the special fund was completed, with 40% ofthese shares, i.e. 355,400 shares, being vested.As of the end of the reporting period, 888,500 shares were held under the Third Plan of the Stock Ownership Plan,accounting for 0.06% of the then total share capital. During the reporting period, no change occurred to theholders of the Third Plan of the Stock Ownership Plan and their holdings.XVI. Significant Related Party Transactions
1. Related party transactions associated with day-to-day operation
√ Applicable □ Not applicable
| Related party | Related party relationship | Types of the related party transactions | Subject matter of the related party transactions | Pricing basis of the related party transactions | Price of related party transactions | Amount of related party transactions (RMB ’0,000) | Percentage as the amount of similar transactions | Amount of transactions approved (RMB ’0,000) | Whether exceeding approved cap | Settlement of related party transactions | Market price of available similar transaction | Disclosure date | Disclosure index |
| Foshan Haihang Xingfa Agriculture and Animal Husbandry Development Co., Ltd. | Associate | Sales of products and commodities | Sales of feed and other products | Market price | The price of each transaction shall be determined by both parties through negotiation based on the uniform | 6,622.91 | 0.15% | 6,210 | Yes | On normal commercial terms or in accordance with relevant agreements | Not applicable | 16 April 2019 | Announcement on Day-to-day Related Party Transaction in 2019 (Announcement No. 2019-007) publish |
| market price as quoted externally by the seller at the time of transaction. | ed on 16 April 2019 in the media designated for information disclosure | ||||||||||||
| Guizhou Fuhai Chemical Co., Ltd. | Associate | Purchase of raw materials | Purchase of raw materials | Market price | The price of each transaction shall be determined by both parties through negotiation based on the uniform market price as quoted externally by the seller at the time of transaction. | 11,653.47 | 0.28% | 10,585 | Yes | On normal commercial terms or in accordance with relevant agreements | Not applicable | 16 April 2019 | Announcement on Day-to-day Related Party Transaction in 2019 (Announcement No. 2019-007) published on 16 April 2019 in the media designated for information disclosure |
| Total | -- | -- | 18,276.38 | -- | 16,795 | -- | -- | -- | -- | -- | |||
| Particulars on refund of bulk sale | Not applicable | ||||||||||||
| Actual performance of day-to-day transactions to be conducted in the period for which the total transaction amount is estimated by categories during the reporting period (if any) | Not applicable |
| Reasons for large differences between transaction prices and market reference prices (if applicable) | Not applicable |
2. Related party transaction in connection with purchase or sale of assets or equity interest
□ Applicable √ Not applicable
There was no related party transaction of the Company in connection with purchase or sale of assets or equity interest during thereporting period.
3. Related party transaction connected to joint external investment
□ Applicable √ Not applicable
There was no related party transaction of the Company connected to joint external investment during the reporting period.
4. Related creditors’ rights and debts transactions
√ Applicable □Not applicable
Whether there were related creditors’ rights and debts for non-operating purposes
□ Yes √ No
There were no related creditors’ rights and debts for non-operating purposes of the Company during the reporting period.
5. Other significant related party transactions
□ Applicable √ Not applicable
There was no other significant related party transaction of the Company during the reporting period.XVII. Material Contracts and Implementation
1. Custody, contracting and leasing
(1) Custody
□ Applicable √ Not applicable
There was no custody of the Company during the reporting period.
(2) Contracting
□ Applicable √ Not applicable
There was no contracting of the Company during the reporting period.
(3) Leasing
□ Applicable √ Not applicable
There was no leasing of the Company during the reporting period.
2. Significant guarantees
√ Applicable □ Not applicable
(1) Guarantees
Unit: RMB 0’000
| External guarantees of the Company and its subsidiaries (excluding guarantees to subsidiaries) | ||||||||
| Name of obligee | Date of the related announcement disclosing the guarantee amount | Amount of guarantee | Guarantee date | Guarantee provided | Type of guarantee | Term | Fulfilled or not | Guarantee to related parties or not |
| Customers (such as farmers and dealers) of Jiangsu Haihe Agriculture and Animal Husbandry Co., Ltd. | 27 April 2018 | 402.00 | 26 April 2018 | - | Joint liability guarantee | 1 year | Yes | No |
| Customers (such as farmers and dealers) of seven controlled subsidiaries including Hunan Haid Bio-Feed Co., Ltd. | 28 June 2018 | 1,556.90 | 4 July 2018 | 544.11 | Joint liability guarantee | 1 year | No | No |
| Customers (such as farmers and dealers) for whom Shandong Haiding Agriculture and Animal Husbandry Co., Ltd. | 26 October 2018 | 1,100.00 | 25 October 2018 | 232.54 | Joint liability guarantee | 1 year | No | No |
| provided guarantees | ||||||||
| Customers (such as farmers and dealers) of eleven controlled subsidiaries including Guangxi Haid Feed Co., Ltd. | 16 April 2019 | 1,500.00 | 6 May 2019 | 822.70 | Joint liability guarantee | 1-3 years | No | No |
| Customers (such as farmers and dealers) of Nanchang Haid Biotechnology Co., Ltd. | 22 October 2019 | 600.00 | 22 October 2019 | 161.00 | Joint liability guarantee | 1 year | No | No |
| Customers (such as farmers and dealers) of subsidiary | 22 October 2019 | 1,500.00 | 18 October 2019 | - | Joint liability guarantee | 3 years | No | No |
| Customers (such as farmers and dealers) of subsidiary | 26 November 2019 | 800.00 | 23 November 2019 | - | Joint liability guarantee | 1 year | Yes | No |
| Total external guarantees approved during the reporting period (A1) | 4,400.00 | Total actual external guarantees during the reporting period (A2) | 1,760.35 | |||||
| Total external guarantees approved at the end of the reporting period (A3) | 7,458.90 | Total balance of actual external guarantees at the end of the reporting period (A4) | 1,505.55 | |||||
| Guarantees between the Company and its subsidiaries | ||||||||
| Name of obligee | Date of the related announcement disclosing the guarantee amount | Amount of guarantee | Guarantee date | Guarantee provided | Type of guarantee | Term | Fulfilled or not | Guarantee to related parties or not |
| Sheng Long Bio-Tech International Co.,Ltd | 27 April 2017 | 75,750 | 29 November 2017 | 2,792.58 | Joint liability guarantee | 2 years | Yes | No |
| Sheng Long Bio-Tech International Co.,Ltd | 20 April 2018 | 99,389 | 7 May 2018 | 11,239.69 | Joint liability guarantee | 2 years | Yes | No |
| 2 July 2018 | 1,943.06 | Joint liability guarantee | 1 year | Yes | No | |||
| 23 July 2018 | 6,450.67 | Joint liability guarantee | 2 years | No | No | |||
| 21 December 2018 | 10,303.07 | Joint liability guarantee | 2 years | No | No | |||
| 25 April 2019 | 8,291.32 | Joint liability guarantee | 1 year | No | No | |||
| Sheng Long Bio-Tech International Co.,Ltd | 16 April 2019 | 88,019 | 24 May 2019 | 3,633.9 | Joint liability guarantee | 2 years | No | No |
| 8 May 2019 | 16,290.39 | Joint liability guarantee | 1 year | No | No | |||
| Haid International Group Limited | 27 October 2017 | 34,881 | 28 March 2018 | 34,881 | Joint liability guarantee | 7 years | No | No |
| Haid International Group Limited | 20 April 2018 | 120,042 | 17 July 2018 | 6,278.58 | Joint liability guarantee | 2 years | No | No |
| 9 July 2018 | 12,093.03 | Joint liability guarantee | 1 year | Yes | No | |||
| 9 July 2018 | 6,976.2 | Joint liability guarantee | 1 year | Yes | No | |||
| 17 July 2018 | 13,952.4 | Joint liability guarantee | 2 years | Yes | No | |||
| Haid International Group Limited | 29 August 2018 | 55,235.20 | 28 December 2018 | 15,347.64 | Joint liability guarantee | 2 years | Yes | No |
| 31 January 2019 | 15,228.26 | Joint liability guarantee | 1 year | No | No | |||
| 3 April 2019 | 6,976.2 | Joint liability guarantee | 3 months | Yes | No | |||
| 18 April 2019 | 2,092.86 | Joint liability guarantee | 3 months | Yes | No | |||
| Haid International Group Limited | 16 April 2019 | 142,450 | 14 May 2019 | 10,464.3 | Joint liability guarantee | 2 months | Yes | No |
| 5 August 2019 | 2,790.48 | Joint liability guarantee | 3 months | Yes | No | |||
| 19 August 2019 | 3,488.1 | Joint liability guarantee | 1 month | Yes | No | |||
| 10 September 2019 | 10,464.3 | Joint liability guarantee | 6 months | No | No | |||
| 17 September 2019 | 4,185.72 | Joint liability guarantee | 6 months | No | No | |||
| 7 November 2019 | 2,790.48 | Joint liability guarantee | 3 months | No | No |
| Sheng Long Bio Tech(M)SDN. BHD | 20 April 2018 | 700 | 25 September 2018 | 279.05 | Joint liability guarantee | 1 year | Yes | No |
| Sheng Long Bio Tech(M)SDN. BHD | 16 April 2019 | 770 | 25 September 2019 | 279.05 | Joint liability guarantee | 1 year | No | No |
| Haid Feed Co.,Limited | 27 April 2017 | 12,000 | 12 November 2017 | 1,795.2 | Joint liability guarantee | 2 years | Yes | No |
| 8 February 2018 | 256.38 | Joint liability guarantee | 2 years | Yes | No | |||
| 16 April 2019 | 16,184 | 22 November 2019 | 1,294.13 | Joint liability guarantee | 3 years | No | No | |
| 27 December 2019 | 1,248.43 | Joint liability guarantee | 2 years | No | No | |||
| ShengLong Bio-Tech(India)Private Limited | 20 April 2018 | 4,254 | 12 December 2018 | 1,271.6 | Joint liability guarantee | 2 years | Yes | No |
| 29 August 2018 | 7,700 | 19 April 2019 | 814.1 | Joint liability guarantee | 6 months | Yes | No | |
| 16 April 2019 | 12,135 | 21 June 2019 | 1,760.68 | Joint liability guarantee | 1 year | No | No | |
| 18 October 2019 | 1,535.48 | Joint liability guarantee | 6 months | No | No | |||
| 2 December 2019 | 684.71 | Joint liability guarantee | 3 years | No | No | |||
| Hai Duong Haid Company Limited | 27 April 2017 | 8,250 | 30 November 2017 | 1,191.84 | Joint liability guarantee | 2 years | Yes | No |
| 17 April 2018 | 2,040.85 | Joint liability guarantee | 2 years | No | No | |||
| 20 April 2018 | 10,584 | 19 March 2019 | 490.98 | Joint liability guarantee | 2 years | No | No | |
| 16 April 2019 | 10,250 | 15 August 2019 | 490.96 | Joint liability guarantee | 2 years | No | No | |
| China Haida Feed Group（HK）Limited | 16 April 2019 | 196,680 | 20 May 2019 | 1,466.9 | Joint liability guarantee | 2 years | No | No |
| PT.HAIDA AGRICULTURE INDONESIA | 16 April 2019 | 3,850 | ||||||
| PT.HAIDA SURABAYA TRADING | 16 April 2019 | 3,850 | ||||||
| Guangzhou Yitun Pig | 29 June 2019 | 100,000 | 25 November | 24,813.89 | Joint liability | 10 years | No | No |
| Industry Investment Co., Ltd. | 2019 | guarantee | ||||||
| 82 wholly-owned or controlled subsidiaries | 16 April 2019 | 132,750 | 1 January 2019 | 127,832.31 | Joint liability guarantee | 1 year | No | No |
| Alaer Ruiliheng Biological Protein Co., Ltd. | 26 November 2019 | 2,737.19 | 26 November 2019 | 2,737.19 | Joint liability guarantee | 2 years | No | No |
| Total amount of guarantee provided for subsidiaries approved during the reporting period (B1) | 709,675.19 | Total amount of guarantee provided for subsidiaries during the reporting period (B2) | 381,237.96 | |||||
| Total amount of guarantee provided for subsidiaries approved as at the end of the reporting period (B3) | 1,138,460.39 | Total balance of guarantee provided for subsidiaries as at the end of the reporting period (B4) | 178,304.35 | |||||
| Guarantees between subsidiaries | ||||||||
| Name of obligee | Date of the related announcement disclosing the guarantee amount | Amount of guarantee | Guarantee date | Guarantee provided | Type of guarantee | Term | Fulfilled or not | Guarantee to related parties or not |
| China Haida Feed Group（HK）Limited | 16 April 2019 | 40,000 | 7 May 2019 | 1,008.35 | Joint liability guarantee | 1 year | No | No |
| China Haida Feed Group（HK）Limited | 29 June 2019 | 10,000 | ||||||
| Sheng Long Bio-Tech International Co.,Ltd | 29 June 2019 | 14,700 | ||||||
| Alaer Ruiliheng Biological Protein Co., Ltd. | 26 November 2019 | 3,273.34 | 26 November 2019 | 0 | Pledge | 2 years | No | No |
| Total amount of guarantee between subsidiaries approved during the reporting period (C1) | 67,973.34 | Total amount of guarantee between subsidiaries during the reporting period (C2) | 1,008.35 | |||||
| Total amount of guarantee between subsidiaries approved as at the end of the reporting period (C3) | 67,973.34 | Total balance of guarantee between subsidiaries as at the end of the reporting period (C4) | 0 | |||||
| Total amount of guarantee provided (i.e. sum of the above three guarantee amounts) | ||||||||
| Total amount of guarantee approved during the reporting period (A1+B1+C1) | 782,048.53 | Total amount of guarantee during the reporting period (A2+B2+C2) | 384,006.66 |
| Total amount of guarantee approved as at the end of the reporting period (A3+B3+C3) | 1,213,892.63 | Total balance of guarantee as at the end of the reporting period (A4+B4+C4) | 179,809.90 |
| The percentage of total amount of guarantee provided (i.e. A4+B4+C4) to the net assets of the Company | 19.75% | ||
| Of which: | |||
| Balance of guarantee provided for shareholders, beneficial controllers and its related parties (D) | 0 | ||
| Balance of guarantee directly or indirectly provided for obligors with gearing ratio over 70% (E) | 34,627.69 | ||
| Total amount of guarantee provided in excess of 50% of net assets (F) | 0 | ||
| Sum of the above three amount of guarantee (D+E+F) | 34,627.69 | ||
| Explanations on liability to guarantee occurred during the reporting period or possible joint liability for satisfaction for undue guarantee (if any) | Not applicable | ||
| Explanations on provision of guarantee in violation of established procedures | Not applicable | ||
Notes:
1. The guarantee amounts provided by subsidiaries for external parties are calculated according to the equity-holding percentages ofthe Company in those subsidiaries.
2. The foreign-currency guarantees in the table above are converted at the middle rate of exchange at the end of the reporting period.Details about composite guarantees
(2) External guarantees against the rules and regulations
□ Applicable √ Not applicable
There was no external guarantee provided by the Company which was against the rules and regulations during the reporting period.
3. Entrusted cash and asset management
(1) Entrusted wealth management
√ Applicable □ Not applicable
Entrusted wealth management during the reporting periodUnit: RMB 0’000
| Type | Fund source for entrusted wealth management | Amount of entrusted wealth management | Undue balance | Overdue outstanding amount |
| Wealth management products of banks | Owned funds | 43,000 | 0 | 0 |
| Total | 43,000 | 0 | 0 | |
Particulars of high risk wealth management products with individual significant amount or low security, poor liquidity, andnon-principal guaranteed
□ Applicable √ Not applicable
Unable to recover the principal of entrusted wealth management or other circumstances that may result in impairment
□ Applicable √ Not applicable
(2) Entrusted loans
□ Applicable √ Not applicable
The Company did not have any entrusted loan during the reporting period.
4. Other material contracts
□ Applicable √ Not applicable
The Company did not have any other material contract during the reporting period.
XVIII. Fulfillment of Social Responsibility
1. Fulfillment of social responsibility
Please refer to the “Haid Group: Social Responsibility Report 2019” (《海大集团：2019年度社会责任报告》)disclosed by the Company on the media designated for information disclosure.
2. Performance of Social Responsibility for Targeted poverty alleviation
(1) Targeted poverty alleviation plan
The Company proactively responds to the spirit under the Decision of the Central Committee of the ChineseCommunist Party and the State Council on Tackling Key Problems in Poverty Alleviation (《中共中央、国务院关于打赢脱贫攻坚战的决定》) and Opinions of China Securities Regulatory Commission on Giving Play to theRole of Capital Market in Serving the Poverty Alleviation Strategy of the State (《中国证监会关于发挥资本市场作用服务国家脱贫攻坚战略的意见》), and has formulated industrial poverty alleviation programs and workplans to assist accrete poverty alleviation. By leveraging on the advantages of the Company in terms of industry,talents, and resources and direct investment in education assistance and industrial development, the Companydevoted to education, poverty alleviation through transfer employment, and other social welfare undertakings andproactively performs social responsibilities.
(2) Summary of targeted poverty alleviation in the year
During the reporting period, the Company actively promoted the implementation of poverty alleviation projects.
1) Proactively carrying out poverty alleviation projects through industrial developmentThe Company always regards poverty alleviation as an important issue for the Company to fulfill its socialresponsibilities. In implementing the strategic layout, the Company gives priority to establishment of productionbases in poor counties / districts / villages (hereinafter referred to as "Poverty-stricken Areas"). During thereporting period, the Company conducted investment in establishment of quite a number of subsidiaries andproactively pushed forward the construction and operation and the projects in several Poverty-stricken Areasincluding Huayuan County and Baojing County in the Tujia and Miao Autonomous Prefecture of Xiangxi ofHunan Province, and Shou County in Huainan City of Anhui Province. During the reporting period, the totalassets of the business projects set up for poverty alleviation amounted to approximately RMB5.60 million.During the reporting period, the Company, as always, proactively responded to the call of the Committee of theCommunist Party of the Guangzhou Municipality and the Guangdong Province and the government of theGuangzhou Municipality for the counterpart support program. In order to carry out the “100 Enterprises Support100 Villages” program of Qingyuan City, the leaders of subsidiary Qingyuan Haibei personally visited WoshuiVillage in Woshui Town of Liannan County on 3 December 2019 to explore effective approaches of povertyalleviation through industrial development. This was an effective move to help the poor village and the peoplethere to develop their specialty industry and create jobs and to help them fight their own way out of poverty. TheCompany has fully fulfilled its social responsibility.
2) Proactively carrying out poverty alleviation through education
Since 2016, the Company has persisted in carrying out public benefit activities themed by "prospering farmers andsupporting education" and paid continuous attention to underprivileged children in rural areas. During thereporting period, the Company carried out a “2019 Autumn Scholarships” event at Guihou Village in Yanxi Townof Changtai County of Zhangzhou of Fujian, providing scholarships of more than RMB50,000 for 25 poorstudents in the village (about RMB2,000 for each).
3) Proactively participating in social poverty alleviation activities
During the reporting period, the Company continued to implement the poverty alleviation planning of the national,provincial and municipal governments, and keep an eye on those in need. During the reporting period, theCompany donated to poverty alleviation funds, helped targeted poor families, and donated to the government’spoverty alleviation programs. It donated money and supplies of RMB416,500 to poverty-stricken areas inGuangxi Province, Fujian Province, etc., which were used to help alleviate poverty, improve education, improvethe living environment, purchase social insurance, etc.
(3) Targeted poverty alleviation achievements
| Indicators | Unit of measurement | Quantity/ development situation |
| I. General information | —— | —— |
| Including: 1. Funds | RMB 0'000 | 41.65 |
| II. Sub-item investment | —— | —— |
| 1. Poverty elimination through industrial development | —— | —— |
| Including: 1.1Types of industrial development poverty elimination projects | —— | Agriculture and forestry industry poverty alleviation |
| 2. Poverty elimination through shift of occupation | —— | —— |
| 3. Poverty elimination through relocation | —— | —— |
| 4. Poverty elimination through education | —— | —— |
| Including: 4.1 Input of funding poor students | RMB 0'000 | 5 |
| 4.2 Number of poor students funded | Number of people | 25 |
| 5. Poverty alleviation through improvement in health | —— | —— |
| 6. Poverty alleviation through ecological protection | —— | —— |
| 7. Minimum guarantee | —— | —— |
| 8. Social poverty alleviation | —— | —— |
| 8.3 Input to poverty alleviation funds | RMB 0'000 | 0.5 |
| 9.Other projects | —— | —— |
| 9.2 Input | RMB 0'000 | 36.15 |
| III. Awards granted (description, level) | —— | —— |
| Top 10 Chinese Listed Companies in Social Responsibility 2017 (Special Award for Contributions in Poverty Alleviation) | ||
| Guangdong-Hong Kong-Macau Greater Bay Area Corporate Social Responsibility Award 2017—For Contributions in Targeted Poverty Alleviation | ||
| Advanced Entity in the Poverty Alleviation Work of the Feed Industry in 2018 |
(4) Subsequent targeted poverty alleviation plan
The Company will continue to proactively respond to the call of the country to give full play to the Company'sadvantages in terms of industries, talents and resources, engage in targeted poverty alleviation with a relentlesseffort, and promote organic integration between economic value creation and social responsibility fulfillment.
3. Information on environmental protection
Whether the Company and its subsidiaries are key pollutant discharging units as published by the environmental protection authorityYes
| Name of the company or subsidiary | Names of major pollutants and characteristic pollutants | Discharge method | Outlet quantity | Outlet distribution | Emission concentration | Pollutant discharge standards | Total discharge | Total discharge approved | Excessive discharge |
| Zhuhai Rongchuan Feed Co., Ltd.(Zhuhai Rongchuan) | Exhaust gas: sulfur dioxide, nitrogen oxides, particles(others), dust, odor | Exhaust gas: organized discharge | 3 | Boiler exhaust gas outlet; dust outlet; soot exhaust gas outlet; exhaust gas outlet | Exhaust gas: Sulfur dioxide <50mg/m3; nitrogen oxides <150mg/m3; particles (others) <20 mg/m3; dust <120.12 mg/m3 ; odor (dimensionless) : 977 | Emission Standard of Air Pollutants for Boiler (GB 13271-2014); Emission Limits of Air Pollutants (DB-44/27-2001) ; Emission Standards for Odor Pollutants(GB-14554-93) | Exhaust gas <4,285.43 million m3year | Exhaust gas: 4,285.43 million m3/year | No |
| Guangzhou Haiwei Feed Co., Ltd. (Guangzhou Haiwei) | Sewage: COD , BOD5, ammonia nitrogen, PH value, phosphate, animal and vegetable oils | Municipal pipe network | 1 | Total outlet | COD: 75.1 mg/l; PH value: 6.98; BOD5: 21.4 mg/L; suspended matter: 41 mg/L; ammonia nitrogen: 0.089 mg/L; phosphate: 0.04 mg/L; animal and vegetable oils < 0.04 mg/L | The discharge limits of water pollutants in Guangdong (DB-44/26-2001) the second time period second-level | Sewage: 4,800 tons/year | Sewage: 5,300 tons /year | No |
| Sewage: | Munic | 1 | Total | COD: 75.1 mg/l; | The discharge limits of water pollutants in | Sewag | Sewa | No |
| COD , BOD5, ammonia nitrogen, PH value, phosphate, animal and vegetable oils | ipal pipe network | outlet | PH value: 6.98; BOD5: 21.4 mg/L; suspended matter: 41 mg/L; ammonia nitrogen: 0.089 mg/L; phosphate: 0.04 mg/L; animal and vegetable oils < 0.04 mg/L | Guangdong (DB-44/26-2001) the second time period second-level | e: 4,800 tons/year | ge: 5,300 tons /year | |||
| Exhaust gas: particles, sulfur dioxide, nitrogen oxides, carbon monoxide, lampblack, odor, soot | Discharge after sewage treatment | 4 | Boiler chimney, canteen chimney, workshop exhaust gas outlet | Particles: 20mg/m?; sulfur dioxide: 6mg/m3; nitrogen oxide: 90mg/m3; soot: 0.14mg/m3; ozone (dimensionless): 17; soot: 11mg/m3 | Emission Standard of Air Pollutants for Boilers(DB-44/765-2010）gas standard; Emission Limits of Air Pollutants (DB-44/27-2001) the second time period second-level; Emission Standard of Cooking Fume(GB18483-2001); Emission Standards for Odor Pollutants | Exhaust gas: 50.82 million m3/year | Exhaust gas: 64.27 million m3/year | No | |
| Guangzhou Dachuan Feed Co., Ltd.(Guangzhou Dachuan) | Sewage: COD , BOD5, ammonia nitrogen, PH value, suspended matter, animal and vegetable oils | Municipal pipe network | 1 | Sewage outlet | COD: 70-100mg/L; ammonia nitrogen: 24-25mg/L; PH value : 6-9; TP: <1mg/L; TA: 160-170mg/L | The Discharge Limits of Water Pollutants in Guangdong (DB-44/26-2001) the second time period first-level | Sewage : 3,800 tons /year | Sewage : 4,860 tons /year | No |
| Exhaust gas: particles, sulfur dioxide, nitrogen oxides, carbon monoxide, odor | Discharge after sewage treatment | 4 | Boiler exhaust gas outlet; dust outlet; soot exhaust gas outlet; | COD: 10mg/L, BOD5: 3.7m /L, ammonia nitride: 0.05mg/L, PH value:7.86(dimensionless): suspended matter: 11mg/L0.12mg/L | Emission Standard of Air Pollutants for Boilers(DB-44/765-2010）gas standard; Emission Limits of Air Pollutants (DB-44/27-2001) the second time period second-level and concentration limits of unorganized emission monitoring point for the second time period; Emission Standard of Cooking Fume(GB18483-2001); Emission Standards for Odor Pollutants (GB14554-93) boundary second-level | Exhaust gas: 105 million m3; odor: 6 tons/year | Exhaust gas: 1,586.205 million m3/year | No |
| exhaust gas outlet | |||||||||
| Gaozhou Sanhe Animal Husbandry Co., Ltd. (“Gaozhou Sanhe”) | Sewage: COD, ammonia nitrogen, BOD, TP, suspended matter | Discharge after sewage treatment | 1 | Sewage outlet | COD: 80-100mg/L; ammonia nitride: 0.5-0.9mg/L; TP: 2.9mg/L; PH value: 6-7; TA:50-70mg/L | Pollutant Discharge Standards for Livestock and Poultry Farming Industry (DB44/613-2009) | 127,700 tons | 128,000 tons | No |
| Linxi County Haiying Food Co., Ltd.(Linxi Haiying) | Sewage: COD, ammonia nitride, BOD, TP, TN, PH, suspended matter, animal and vegetable oils, fecal coliform, anionic surfactant Exhaust gas: sulfur dioxide, nitrogen oxides, smoke blackness, particulate matter, odor concentration, hydrogen sulfide, ammonia | Sewage: discharged into the municipal pipe network after reaching the standard Exhaust gas: organized discharge | 6 | 1 sewage, 2 boilers, 3 exhaust gases | COD: 100mg/L; BOD: 40mg/L; SS: 100mg/L; ammonia nitride: 20mg/L; TN: 40mg/L; TP: 3mg/L; PH value: 6-9; animal and vegetable oils: 20mg/L; sulfur dioxide: 10mg/m3 nitrogen oxide: 30mg/m3; particulate matter: 5mg/m3; ammonia: 4.9kg/h; hydrogen sulfide: 0.33kg/h; odor concentration (dimensionless): 2000 | Sewage: Secondary standard of Discharge standard of Water Pollutants for Meat Packing Industry (GB13457-1992); Exhaust gas: Emission standard of Air Pollutants for Boiler(GB13271-2014) (XQLB [2018] No. 91) Emission Standard for Odor Pollutants (GB14554-1993) | 10.129 tons/year | 10.129 tons/year | No |
Construction and operation of pollution prevention and control facilities
1. During the reporting period, the Company’s key pollutant discharging subsidiaries were all equipped withpollution prevention and control facilities as required and all environmental protection facilities were operatingnormally.
2. Gaozhou Sanhe’s farms were equipped with pollution prevention and control facilities as required and allenvironmental protection facilities were operating normally.
3. In factories of Guangzhou Dachuan and Guangzhou Haiwei, the dust of waste gas is removed through cycloneseparator and pulse dust collector, and its stench is removed by spray equipment. After the wastewater is treatedby A2/o process, it is recycled to the spray tower. The waste residue is handed over to the unit with treatmentqualification for unified recovery and treatment.
4. Zhuhai Rongchuan adopts other environmental-protection process according to its own production situation: thedust of waste gas is removed through cyclone separator and pulse dust collector, and its stench is removed bychemical dosing spray equipment. After the wastewater is treated by air flotation and biochemical treatment, it isrecycled to the spray tower, which can save water resources.
5. Linxi Haiying adopts the spray tower, activated carbon and hotocatalysis to handle the waste gas effectively,which reduces the content of ammonia and hydrogen sulfide in the waste gas.
Environmental Impact Assessment and Other Environmental Protection Administrative Licensing of ConstructionProjectsAll the aforementioned feed factories prepared environmental impact reports before project implementation andsubmitted to the environmental authority for review and approval in accordance with the requirements ofenvironmental laws and regulations. They commenced project construction after obtaining the approval andcarried out construction works strictly in accordance with the requirements of environmental impact assessment.Furthermore, they went through the procedures for the acceptance of project completion for environmental impactassessment in accordance with laws and obtained the pollutant discharge permit.
Emergency plan for emergent environmental incidentsThe Company has formulated the Measures for Management of Safety and Environmental Protection Incidents(安全环保事故事件管理办法) in 2018 to standardize the Company's safety and environmental accident reportingand investigation procedures and enhance the level of accident management. Meanwhile, as per the rules for theprevention of pollution and other public hazards in the Environmental Protection Law of the People’s Republic ofChina, an emergency plan system for urgent environmental incidents has also be formulated and filed with theenvironmental protection and other related administrations.
Self-monitoring program for environmentIn accordance with national or local standards for pollutant discharge (control), environmental impact assessmentreports and official replies, and technical specification requirements of environment monitoring, the Companyformulates self-monitoring plans and designates special personnel to carry out routine monitoring, including themonitoring of the discharge of water pollutants and atmospheric pollutants.Some subsidiaries appoint external professional institutions to carry out phased environment monitoring andintensify their supervision over environmental protection through the combination of self-monitoring andprofessional monitoring by third parties.
1. During the Reporting Period, Guangzhou Dachuan appointed Guangzhou Delong Environmental TestingTechnology Co., Ltd., a third-party independent institution to carry out monitoring on the Particulate matter,gaseous pollutants and odor. The monitoring report with the No. DL201905-A0603 was produced, proving thatthe results met the standards.
2. During the Reporting Period, Guangzhou Haiwei appointed Guangdong Anna Testing Technology Co., Ltd., athird-party independent institution to test the ammonia, hydrogen sulfide, methylmercaptan, methylsulfide,dimethyl disulfide and odor. The test report with the Ana Test (2019) No. 121608 was produced, proving that theresults met the standards.
3. During the Reporting Period, Zhuhai Rongchuan appointed Guangdong Sigor Testing Technology Co., Ltd., athird-party independent institution to test the particles, hydrogen sulfide, ammonia, trimethylamine. The test reportwith the No. SGT-HJ19070401a was produced, proving that the results met the standards.
4. During the Reporting Period, Linxi Haiying appointed Hebei Jingding Environmental Monitoring Co., Ltd. athird-party independent institution to test the concentrations of sulfur dioxide, nitrogen oxide, particulate matter,smoke blackness and the PH value of wastewater, COD, ammonia nitrogen, TP, TN, SS, animal and vegetable oils,BODS, fecal coliform number, anionic surfactant. The test report with the 2019(environment) No. 0245 wasproduced, proving that results met the standards.
Other environmental information that should be disclosedNone
Others information on environmental protectionNone
XIX. Other Matters of Significance
□ Applicable √ Not applicable
The Company did not have any other matters of significance to be explained during the reporting period.XX. Matters of Significance of Subsidiaries of the Company
□ Applicable √ Not applicable
Section VI. Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
| Before | Increase/decrease in Reporting Period (+/-) | After | |||||||
| Shares | Percentage (%) | New issue | Shares as dividend converted from retained earnings | Shares as dividend converted from capital reserves | Other | Subtotal | Shares | Percentage (%) | |
| 1. Restricted shares | 36,447,514 | 2.31% | -9,582,525 | -9,582,525 | 26,864,989 | 1.70% | |||
| 1.3 Shares held by other domestic investors | 36,447,514 | 2.31% | -9,582,525 | -9,582,525 | 26,864,989 | 1.70% | |||
| 2. Non-restricted shares | 1,544,763,570 | 97.69% | 89,850 | 8,639,085 | 8,728,935 | 1,553,492,505 | 98.30% | ||
| 2.1 RMB common shares | 1,544,763,570 | 97.69% | 89,850 | 8,639,085 | 8,728,935 | 1,553,492,505 | 98.30% | ||
| 3. Total shares | 1,581,211,084 | 100.00% | 89,850 | -943,440 | -853,590 | 1,580,357,494 | 100.00% | ||
Reasons for share changes:
√ Applicable □ Not applicable
1. Based on the shareholdings of the Company’s directors, supervisors and senior management in the Company atthe end of last year, their tradable shares were recalculated at the beginning of the current year, resulting inchanges in their shares in lockup.
2. Share options were exercised under the Restricted Share and Share Option Incentive Plan（《限制性股票与股票期权激励计划》）.During the reporting period, the awardees of the Restricted Share and Share Option Incentive Plan (《限制性股票与股票期权激励计划》) chose to exercise 76,950 share options in the third exercise period. The number of theshare options that awardees chose to exercise but were unregistered was 12,900 as at the end of last year. As such,the Company’s total shares increased by 89,850 shares.
3. Certain restricted shares were repurchased and cancelled under the 2016 Restricted Share Incentive Plan(Revised) (《2016年限制性股票激励计划（修订稿）》).
(1) As certain awardees of the 2016 Restricted Share Incentive Plan (Revised) (《2016年限制性股票激励计划（修订稿）》) had resigned, been dismissed or failed in their individual performance appraisals of 2018, amongothers, the Company repurchased and cancelled a total of 430,000 restricted shares that had been granted to thesaid awardees but failed to meet the unlocking conditions. On 16 April 2019, the Company disclosed theAnnouncement on Decrease in Capital due to Repurchase and Cancellation of Certain Restricted Shares (《关于回购注销部分限制性股票的减资公告》) (announcement No. 2019-012) and publicized the capital decrease matterfor 45 days. As of 5 June 2018, the Company had returned a total of RMB 3,373,056.00 to the relevant awardeesin cash, thus reducing the share capital by RMB 430,000.00 and the capital reserves by RMB 2,943,056.00. Thisdecrease in capital was verified by GP Certified Public Accountants (LLP), which issued the Capital VerificationReport GHYZ [2019] No. G18031441713 (广会验字[2019]G18031441713号《验资报告》). On 19 June 2019, asconfirmed by the Shenzhen branch of China Securities Depository and Clearing Co., Ltd., the Companycompleted the repurchase and cancellation of the said restricted shares with the said authority. As such, theCompany’s total shares decreased by 430,000 shares.
(2) As certain awardees of the 2016 Restricted Share Incentive Plan (Revised) (《2016年限制性股票激励计划（修订稿）》) had resigned or been dismissed, among others, the Company repurchased and cancelled a total of513,440 restricted shares that had been granted to the said awardees but failed to meet the unlocking conditions.On 22 October 2019, the Company disclosed the Announcement on Decrease in Capital due to Repurchase andCancellation of Certain Restricted Shares (《关于回购注销部分限制性股票的减资公告》) (announcement No.2019-070) and publicized the capital decrease matter for 45 days. As of 16 December 2019, the Company hadreturned a total of RMB 3,671,557.60 to the relevant awardees in cash, thus reducing the share capital by RMB513,440.00 and the capital reserves by RMB 3,158,117.60. This decrease in capital was verified by GrantThornton China (Special General Partnership), which issued the Capital Verification Report ZTYZ [2019] No.440ZC0270 (致同验字(2019)第440ZC0270号《验资报告》). On 30 December 2019, as confirmed by theShenzhen branch of China Securities Depository and Clearing Co., Ltd., the Company completed the repurchaseand cancellation of the said restricted shares with the said authority. As such, the Company’s total sharesdecreased by 513,440 shares.After all the changes above, the Company’s total shares have changed from 1,581,211,084 shares to1,580,357,494 shares.
Approval of share changes:
√ Applicable □ Not applicable
1. On 13 April 2019, the Proposal on Repurchase and Cancellation of Certain Restricted Shares (《关于回购注销部分限制性股票的议案》) was reviewed and approved at the Seventeenth Meeting of the Company’s FourthBoard. As 18 awardees of restricted shares and 18 awardees of reserved restricted shares in the first grant hadresigned, been dismissed or failed to pass the personal performance appraisals of 2018, among others, theCompany was agreed to repurchase and cancel 309,400 restricted shares in the first grant and 120,600 reservedrestricted shares that had been granted to these awardees but failed to meet the unlocking conditions. And the
Proposal on Repurchase and Cancellation of Certain Restricted Shares (《关于回购注销部分限制性股票的议案》)has been reviewed and approved at the 2018 Annual General Meeting.
2. On 18 October 2019, the Proposal on Repurchase and Cancellation of Certain Restricted Shares (《关于回购注销部分限制性股票的议案》) was reviewed and approved at the Fifth Meeting of the Company’s Fifth Board. As29 awardees of restricted shares and 14 awardees of reserved restricted shares in the first grant had resigned orbeen dismissed, among others, the Company was agreed to repurchase and cancel 431,400 restricted shares in thefirst grant and 82,040 reserved restricted shares that had been granted to these awardees but failed to meet theunlocking conditions. And the Proposal on Repurchase and Cancellation of Certain Restricted Shares (《关于回购注销部分限制性股票的议案》) has been reviewed and approved at the Fourth Extraordinary General Meeting of2019.
Transfer of share ownership:
□ Applicable √ Not applicable
Implementation progress of any share repurchase:
□ Applicable √ Not applicable
Implementation progress of any reduction of the repurchased shares through centralized bidding:
□ Applicable √ Not applicable
Effects of share changes on the basic earnings per share, diluted earnings per share, equity per share attributable tothe common shareholders of the Company and other financial indicators of the prior year and the prior period,respectively:
□ Applicable √ Not applicable
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable
2. Change in Restricted Shares
√ Applicable □ Not applicable
Unit: share
| Shareholder | Opening restricted shares | Increased in Reporting Period | Unlocked in Reporting Period | Closing restricted shares | Reason for lockup | Date of unlocking |
| Li Tian | 1,347,905 | 31,480 | 1,379,385 | Shares in lockup due to her senior management position: 31,480 restricted shares were transferred to her shares in lockup due to her senior management position upon being unlocked during the reporting period. | Not applicable | |
| Li Tian | 125,920 | 31,480 | 94,440 | Restricted shares: 31,480 restricted shares were unlocked | 30 April 2019 |
| during the reporting period. | ||||||
| Xueqiao Qian | 251,675 | 22,300 | 273,975 | Shares in lockup due to his senior management position: 22,300 restricted shares were transferred to his shares in lockup due to his senior management position upon being unlocked during the reporting period. | Not applicable | |
| Xueqiao Qian | 89,200 | 22,300 | 66,900 | Restricted shares: 22,300 restricted shares were unlocked during the reporting period. | 30 April 2019 | |
| Shaolin Yang | 241,140 | 22,440 | 82,725 | 180,855 | Shares in lockup due to his senior management position: 1. The shares in lockup due to his senior management position decreased by 82,725 shares upon the recalculation of his transferable shares in the year according to his shareholdings on 1 January 2019; 2. 22,440 restricted shares were transferred to his shares in lockup due to his senior management position upon being unlocked during the reporting period. | Not applicable |
| Shaolin Yang | 89,760 | 22,440 | 67,320 | Restricted shares: 22,440 restricted shares were unlocked during the reporting period. | 30 April 2019 | |
| Zhijian Huang | 302,114 | 27,520 | 329,634 | Shares in lockup due to his senior management position: 27,520 restricted shares were transferred to his shares in lockup due to his senior management position upon being unlocked during the reporting period. | Not applicable | |
| Zhijian Huang | 110,080 | 27,520 | 82,560 | Restricted shares: 27,520 restricted shares were unlocked during the reporting period. | 30 April 2019 | |
| Zhongzhu Chen | 465,700 | 130,530 | 335,170 | Restricted shares: 130,530 restricted shares were unlocked during the reporting period. | Not applicable | |
| Qi Cheng | 100,000 | 30,000 | 70,000 | Restricted shares: 70,000 restricted shares were unlocked | Not applicable |
| during the reporting period. | ||||||
| Xiewu Jiang | 89,040 | 22,260 | 66,780 | Restricted shares: 22,260 restricted shares were unlocked during the reporting period. | Not applicable | |
| Guoxiang Liu | 500,700 | 140,530 | 360,170 | Restricted shares: 140,530 restricted shares were unlocked during the reporting period. | Not applicable | |
| Guocheng Mi | 492,680 | 138,920 | 353,760 | Restricted shares: 138,920 restricted shares were unlocked during the reporting period. | Not applicable | |
| Other restricted share awardees than senior management | 32,241,600 | 9,037,560 | 23,204,040 | Restricted shares: 1. A total of 8,094,120 restricted shares were unlocked during the reporting period; 2. A total of 943,440 restricted shares were repurchased and cancelled during the reporting period. | 30 April 2019 | |
| Total | 36,447,514 | 103,740 | 9,686,265 | 26,864,989 | -- | -- |
II Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in Reporting Period
□ Applicable √ Not applicable
2. Change in Total Shares, Shareholder Structure and Asset and Liability Structures
√ Applicable □ Not applicable
1. As certain awardees of the 2016 Restricted Share Incentive Plan (Revised) (《2016年限制性股票激励计划（修订稿）》) had resigned, been dismissed or failed in their individual performance appraisals of 2018, among others,the Company repurchased and cancelled a total of 430,000 restricted shares that had been granted to the saidawardees but failed to meet the unlocking conditions. On 16 April 2019, the Company disclosed theAnnouncement on Decrease in Capital due to Repurchase and Cancellation of Certain Restricted Shares (《关于回购注销部分限制性股票的减资公告》) (announcement No. 2019-012) and publicized the capital decrease matterfor 45 days. As of 5 June 2019, the Company had returned a total of RMB 3,373,056.00 to the relevant awardeesin cash, thus reducing the share capital by RMB 430,000.00 and the capital reserves by RMB 2,943,056.00. Thisdecrease in capital was verified by GP Certified Public Accountants (LLP), which issued the Capital VerificationReport GHYZ [2019] No. G18031441713 (广会验字[2019]G18031441713号《验资报告》). On 19 June 2019, asconfirmed by the Shenzhen branch of China Securities Depository and Clearing Co., Ltd., the Companycompleted the repurchase and cancellation of the said restricted shares with the said authority. As such, theCompany’s total shares decreased by 430,000 shares.
2. As certain awardees of the 2016 Restricted Share Incentive Plan (Revised) (《2016年限制性股票激励计划（修订稿）》) had resigned or been dismissed, among others, the Company repurchased and cancelled a total of513,440 restricted shares that had been granted to the said awardees but failed to meet the unlocking conditions.On 22 October 2019, the Company disclosed the Announcement on Decrease in Capital due to Repurchase andCancellation of Certain Restricted Shares (《关于回购注销部分限制性股票的减资公告》) (announcement No.2019-070) and publicized the capital decrease matter for 45 days. As of 16 December 2019, the Company hadreturned a total of RMB 3,671,557.60 to the relevant awardees in cash, thus reducing the share capital by RMB513,440.00 and the capital reserves by RMB 3,158,117.60. This decrease in capital was verified by GrantThornton China (Special General Partnership), which issued the Capital Verification Report ZTYZ [2019] No.440ZC0270 (致同验字(2019)第440ZC0270号《验资报告》). On 30 December 2019, as confirmed by theShenzhen branch of China Securities Depository and Clearing Co., Ltd., the Company completed the repurchaseand cancellation of the said restricted shares with the said authority. As such, the Company’s total sharesdecreased by 513,440 shares.After all the changes above, the Company’s total shares have changed from 1,581,211,084 shares to1,580,357,494 shares.
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at Period-End
Unit: share
| Common shareholders at period-end | 12,026 | Common shareholders at month-end prior to disclosure of this Report | 13,077 | Preferred shareholders with resumed voting rights at period-end (if any) (see note 8) | 0 | Preferred shareholders with resumed voting rights at month-end prior to disclosure of this Report (if any) (see note 8) | 0 | |||||||
| 5% or greater shareholders or top 10 shareholders | ||||||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage at period-end (%) | Shares | Change during Reporting Period | Restricted shares | Non-restricted shares | Pledged or frozen shares | |||||||
| Status | Shares | |||||||||||||
| Guangzhou Haihao Investment Co., Ltd. | Domestic non-state-owned juridical person | 57.62% | 910,589,359 | - | 910,589,359 | Pledged | 39,609,000 | |
| Hong Kong Securities Clearing Company Ltd. | Foreign juridical person | 4.55% | 71,913,313 | 31,712,097 | 71,913,313 | |||
| Norges Bank – Proprietary Fund | Foreign juridical person | 1.43% | 22,648,217 | -8,965,574 | 22,648,217 | |||
| Industrial and Commercial Bank of China－Invesco Great Wall Newly Growth Mixed Securities Investment Fund | Other | 1.27% | 19,999,922 | 5,766,719 | 19,999,922 | |||
| Central Huijin Asset Management Ltd. | State-owned juridical person | 1.09% | 17,187,600 | - | 17,187,600 | |||
| Abu Dhabi Investment Authority | Foreign juridical person | 0.72% | 11,329,254 | 1,906,105 | 11,329,254 | |||
| Bank of China－Invesco Great Wall Dingyi Mixed Securities Investment Fund (LOF) | Other | 0.70% | 11,110,000 | -720,000 | 11,110,000 | |||
| National Social Security Fund Portfolio 118 | Other | 0.52% | 8,176,608 | 2,965,218 | 8,176,608 | |||
| National Social Security Fund Portfolio 104 | Other | 0.49% | 7,741,475 | 7,741,475 | 7,741,475 | |||
| Basic Endowment Insurance Fund Portfolio 1001 | Other | 0.46% | 7,270,479 | 4,449,624 | 7,270,479 | |||
| Strategic investor or general juridical person becoming top-10 shareholder due to placing of new shares (if any) (see note 3) | N/A | |||||||
| Related or acting-in-concert parties among shareholders above | Among the top 10 shareholders above, the first shareholder is the controlling shareholder of the Company, which is neither a related party nor an acting-in-concert party to the other shareholders. It is unknown whether there is, among the other shareholders, any acting-in-concert party as defined in the Administrative Measures On Acquisition Of Listed Companies (《上市公司收购管理办法》) or any related party. | ||
| Top 10 non-restricted shareholders | |||
| Name of shareholder | Non-restricted shares held at period-end | Type of shares | |
| Type | Shares | ||
| Guangzhou Haihao Investment Co., Ltd. | 910,589,359 | RMB common stock | 910,589,359 |
| Hong Kong Securities Clearing Company Ltd. | 71,913,313 | RMB common stock | 71,913,313 |
| Norges Bank – Proprietary Fund | 22,648,217 | RMB common stock | 22,648,217 |
| Industrial and Commercial Bank of China－Invesco Great Wall Newly Growth Mixed Securities Investment Fund | 19,999,922 | RMB common stock | 1,999,992 |
| Central Huijin Asset Management Ltd. | 17,187,600 | RMB common stock | 17,187,600 |
| Abu Dhabi Investment Authority | 11,329,254 | RMB common stock | 11,329,254 |
| Bank of China－Invesco Great Wall Dingyi Mixed Securities Investment Fund (LOF) | 11,110,000 | RMB common stock | 11,110,000 |
| National Social Security Fund Portfolio 118 | 8,176,608 | RMB common stock | 8,176,608 |
| National Social Security Fund Portfolio 104 | 7,741,475 | RMB common stock | 7,741,475 |
| Basic Endowment Insurance Fund Portfolio 1001 | 7,270,479 | RMB common stock | 7,270,479 |
| Related or acting-in-concert parties among top 10 non-restricted common shareholders, as well as between top 10 non-restricted common shareholders and top 10 common shareholders | Among the top 10 shareholders above, the first shareholder is the controlling shareholder of the Company, which is neither a related party nor an acting-in-concert party to the other shareholders. It is unknown whether there is, among the other shareholders, any acting-in-concert party as defined in the Measures for Administration of Takeover of Listed Companies (《上市公司收购管理办法》) or any related party. | ||
| Top 10 common shareholders conducting securities margin trading (if any) (see note 4) | As at the end of the reporting period, the Company’s controlling shareholder Guangzhou Haihao Investment Co., Ltd. held 6,000,000 shares in the Company in its client account of collateral securities for margin trading. Except for that, other shareholders of the top 10 | ||
Indicate by tick mark whether any of the top 10 common shareholders or the top 10 non-restricted common shareholders of theCompany conducted any promissory repo during the Reporting Period.
□ Yea √ No
No such cases in the Reporting Period.
2. Controlling Shareholder
Nature of controlling shareholder: Controlled by a natural personType of controlling shareholder: Juridical person
common shareholders were not engaged in margin trading.Name of controllingshareholder
| Name of controlling shareholder | Legal representative/person in charge | Date of establishment | Unified social credit code | Main business scope |
| Guangzhou Haihao Investment Co., Ltd. | Hua Xue | September 27, 2006 | 91440113793877530G | Investment with self-owned capital; wholesale of commodities (excluding commodities that require a permit or approval document to trade); retail sales of commodities (excluding commodities that require a permit or approval document to trade); import and export of commodities (excluding commodities restricted to specific parties); and import and export of technologies |
| Controlling shareholder’s holdings in other listed companies at home or abroad in Reporting Period | N/A | |||
Change of the controlling shareholder during the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Actual Controller
Nature of actual controller: Domestic natural person
Type of actual controller: Natural person
| Name of actual controller | Relationship with actual controller | Nationality | Right of residence in other countries or regions |
| Hua Xue | Himself | Chinese | None |
| Main office titles | Chairman of the Board, General Manager | ||
| Used-to-be-holding listed companies at home and abroad in past 10 years | N/A | ||
Change of the actual controller during the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.Ownership and control relations between the actual controller and the Company:
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset management.
□ Applicable √ Not applicable
4. Other 10% or Greater Juridical-Person Shareholders
□ Applicable √ Not applicable
5. Holdings of the Company’s Controlling Shareholder, Actual Controller, Reorganizer and OtherCommitment Makers under Restricted Sales Condition
□ Applicable √ Not applicable
Hua Xue
39.75%
39.75%
Guangzhou Haihao Investment Co., Ltd.
Guangzhou Haihao Investment Co., Ltd.Guangdong Haid Group Co., Limited
Guangdong Haid Group Co., Limited
57.62%
Section VII. Preferred Shares
□ Applicable √ Not applicable
No preferred shares in the Reporting Period.
Section VIII. Convertible Corporate Bonds
□ Applicable √ Not applicable
No convertible corporate bonds in the Reporting Period.
Section IX. Directors, Supervisors, Senior Management and StaffI Change in Shareholdings of Directors, Supervisors and Senior Management
| Name | Office title | Incumbent/Former | Gender | Age | Starting date of tenure | Ending date of tenure | Opening shareholding (share) | Increase in Reporting Period (share) | Decrease in Reporting Period (share) | Other increase/decrease (share) | Closing shareholding (share) |
| Hua Xue | Chairman of the Board | Incumbent | Male | 50 | June 6, 2007 | July 16, 2022 | |||||
| Hua Xue | President (General Manager) | Incumbent | Male | 50 | May 25, 2010 | July 16, 2022 | |||||
| Yingzhuo Xu | Vice Chairman of the Board | Incumbent | Male | 52 | June 6, 2007 | July 16, 2022 | |||||
| Yingzhuo Xu | Vice General Manager | Former | Male | 52 | June 6, 2007 | July 16, 2019 | |||||
| Li Tian | Director | Incumbent | Female | 48 | June 7, 2016 | July 16, 2022 | 1,965,100 | 1,965,100 | |||
| Li Tian | Vice General Manager | Former | Female | 48 | June 6, 2007 | July 16, 2019 | |||||
| Qi Cheng | Director | Incumbent | Male | 40 | July 16, 2019 | July 16, 2022 | 70,000 | 70,000 | |||
| Qi Cheng | Executive Vice President (Vice General Manager) | Incumbent | Male | 40 | July 16, 2019 | July 16, 2022 | |||||
| Jianfang Gui | Independent Director | Incumbent | Male | 64 | July 16, 2019 | July 16, 2022 | |||||
| Jianguo | Independent | Incumben | Male | 58 | July 16, 2019 | July 16, |
| He | Director | t | 2022 | ||||||||
| Yunguo Liu | Independent Director | Incumbent | Male | 54 | July 16, 2019 | July 16, 2022 | |||||
| Xiaojun Shang | Director | Former | Female | 47 | May 25, 2010 | July 16, 2019 | |||||
| Chengping Lu | Independent Director | Former | Male | 75 | November 13, 2015 | July 16, 2019 | |||||
| Xinchun Li | Independent Director | Former | Male | 58 | August 21, 2013 | July 16, 2019 | |||||
| Erkang Deng | Independent Director | Former | Female | 52 | August 21, 2013 | July 16, 2019 | |||||
| Zhenxiong Qi | Supervisor | Incumbent | Male | 50 | June 6, 2007 | July 16, 2022 | |||||
| Jing Wang | Supervisor | Incumbent | Female | 41 | May 12, 2014 | July 16, 2022 | |||||
| Jia Chen | Supervisor | Incumbent | Female | 38 | August 21, 2013 | July 16, 2022 | |||||
| Guoxiang Liu | Vice President (Vice General Manager) | Incumbent | Male | 52 | July 16, 2019 | July 16, 2022 | 360,170 | 360,170 | |||
| Xueqiao Qian | Vice President (Vice General Manager) | Incumbent | Male | 53 | July 16, 2019 | July 16, 2022 | 454,500 | 454,500 | |||
| Xueqiao Qian | Chief Engineer | Incumbent | Male | 53 | June 6, 2007 | July 16, 2022 | |||||
| Shaolin Yang | Vice President (Vice General Manager) | Incumbent | Male | 46 | July 16, 2019 | July 16, 2022 | 330,900 | 330,900 | |||
| Shaolin Yang | Chief Financial | Incumbent | Male | 46 | October 22, 2012 | July 16, 2022 |
| Officer | |||||||||||
| Xiewu Jiang | Vice President (Vice General Manager) | Incumbent | Male | 52 | July 16, 2019 | July 16, 2022 | 66,780 | 66,780 | |||
| Guocheng Mi | Vice President (Vice General Manager) | Incumbent | Male | 48 | July 16, 2019 | July 16, 2022 | 431,600 | 431,600 | |||
| Zhongzhu Chen | Vice President (Vice General Manager) | Incumbent | Male | 50 | July 16, 2019 | July 16, 2022 | 335,170 | 335,170 | |||
| Mingzhong Chen | Vice President (Vice General Manager) | Incumbent | Male | 55 | June 6, 2007 | July 16, 2022 | |||||
| Zhijian Huang | Vice President (Vice General Manager) and Board Secretary | Incumbent | Male | 42 | July 26, 2012 | July 16, 2022 | 549,592 | 137,348 | 412,244 | ||
| Total | -- | -- | -- | -- | -- | -- | 4,563,812 | 0 | 137,348 | 0 | 4,426,464 |
Notes:
1. Based on the shareholdings of the Company’s directors, supervisors and senior management in the Company at the end of last year,their tradable shares were recalculated at the beginning of the current year, resulting in changes in their shares in lockup.
2. The opening shareholdings of Mr. Qi Cheng, Mr. Guoxiang Liu, Mr. Xiewu Jiang, Mr. Guocheng Mi and Mr. Zhongzhu Chen referto their shareholdings at the date when they were elected/appointed as directors of the fifth Board or senior management of theCompany (July 26, 2019). Accordingly, the increases/decreases in their shareholdings in the reporting period refer to suchincreases/decreases during the period from July 26, 2019 to December 31, 2019.II Change in Directors, Supervisors and Senior Management
√ Applicable □ Not applicable
| Name | Office title | Type of change | Date | Reason |
| Li Tian | Vice General Manager | Expiration of office term | July 16, 2019 | Continued to be the Company’s director upon the expiration of her office term as a Vice General Manager. |
| Yingzhuo Xu | Vice General Manager | Expiration of office term | July 16, 2019 | Continued to be the Company’s director upon the expiration of his office term as a Vice General Manager. |
| Shaojun Shang | Director | Expiration of office term | July 16, 2019 | Expiration of office term |
| Chengping Lu | Independent Director | Expiration of office term | July 16, 2019 | Expiration of office term |
| Xinchun Li | Independent Director | Expiration of office term | July 16, 2019 | Expiration of office term |
| Erkang Deng | Independent Director | Expiration of office term | July 16, 2019 | Expiration of office term |
| Qi Cheng | Director and Executive Vice President (Vice General Manager) | Appointed | July 16, 2019 | Elected by the general meeting and appointed by the Board |
| Guifang Jian | Independent Director | Appointed | July 16, 2019 | Re-elected by the general meeting |
| Jianguo He | Independent Director | Appointed | July 16, 2019 | Re-elected by the general meeting |
| Yunguo Liu | Independent Director | Appointed | July 16, 2019 | Re-elected by the general meeting |
| Guoxiang Liu | Vice President (Vice General Manager) | Appointed | July 16, 2019 | Appointed by the Board |
| Xueqiao Qian | Vice President (Vice General Manager) and Chief Engineer | Appointed | July 16, 2019 | Appointed by the Board |
| Shaolin Yang | Vice President (Vice General Manager) and Chief Financial Officer | Appointed | July 16, 2019 | Appointed by the Board |
| Xiewu Jiang | Vice President (Vice General Manager) | Appointed | July 16, 2019 | Appointed by the Board |
| Guocheng Mi | Vice President (Vice General | Appointed | July 16, 2019 | Appointed by the Board |
| Manager) | ||||
| Zhongzhu Chen | Vice President (Vice General Manager) | Appointed | July 16, 2019 | Appointed by the Board |
III Brief BiographiesProfessional backgrounds, main working experience and current responsibilities in the Company of the incumbentdirectors, supervisors and senior management:
1. Directors
(1) Hua Xue
Mr. Hua Xue is an engineer. He graduated from College of Fisheries of Huazhong Agricultural University in 1992with a major in special aquaculture; in 1995, he obtained the master’s degree in zoology from School of LifeSciences of Sun Yat-Sen University. As one of the founders of the Company, he now serves as the Chairman ofthe Board and President (General Manager) of the Company, as well as an Executive Director of the Company’scontrolling shareholder Guangzhou Haihao Investment Co., Ltd. He was/is the Executive Vice President of ChinaFeed Industry Association (CFIA), Chairman of China Vocational Education Group of Modern Fishery, ViceChairman of China Association of Young Rural Entrepreneurial Leaders (CAYREL), Chairman of GuangdongHi-tech Enterprise Association (GDHTEA), Vice Chairman of Guangdong Agricultural Science and TechnologyInnovation Alliance, Vice President of Guangdong Feed Industry Association, Vice President of GuangdongFisheries Association, Vice Chairman of Guangdong Association of Young Scientists (GDAYS), Executive ViceChairman of Guangdong Shaanxi Chamber of Commerce, the NPC Member of the 14th National Congress of theCommunist Party of Guangzhou, a member of the 11th Chinese People’s Political Consultation ConferenceGuangzhou Committee, Vice Chairman of the 15th Executive Committee of Guangzhou Federation of Industryand Commerce, President of Guangzhou Association of Agricultural Leading Enterprises, and HonoraryChairman of Guangzhou Feed Profession Association (GZFPA). Meanwhile, he is recognized as “LeadingEntrepreneur in China’s Feed Industry” by the Ministry of Agriculture, and “Top 30 Excellent Entrepreneurs inChina” by China Feed Industry Association (CFIA). Mr. Hua Xue holds 39.75% equity interests in the Company'scontrolling shareholder Guangzhou Haihao Investment Co., Ltd. and is the actual controller of the Company.
(2) Li Tian
Ms. Li Tian is a Chinese Certified Public Accountant and Certified Tax Accountant. She graduated from BeijingWuzi University in 1993 with a major in accounting. From 2002 to 2004, she studied and obtained EMBA fromSun Yat-sen Business School. From 1993 to 1996, she was engaged in financial work at Guangdong ReclamationYanling Building Co., Ltd.. From 1996 to 2001, she worked for Guangzhou Lingnan Certified Public Accountantsand Guangdong Kangyuan Certified Public Accountants in succession. In January 2004, she joined the Companyand successively served as Chief Financial Officer, Board Secretary, Vice General Manager and Director.Currently, she is the Company’s director and Vice Chairman of Guangzhou Institute of Internal Audit.
(3) Yingzhuo Xu
Mr. Yingzhuo Xu is a livestock specialist. He graduated from South China Agricultural University with abachelor’s degree in Animal Husbandry in 1991 and later obtained a master’s degree in business administrationfrom HEC Paris. As one of the founders of the Company, he now serves as the Company’s Vice Chairman of theBoard. Mr. Yingzhuo Xu holds 27% equity interests in Guangzhou Haihao Investment Co., Ltd., the Company'scontrolling shareholder.
(4) Qi Cheng
Mr. Qi Cheng graduated from the major of Automation of Huazhong University of Science and Technology in2002; studied the major of World Economy in Sun Yat-sen University from 2005 to 2008 and obtained theMaster’s degree; studied EMBA in CEIBS from 2013 to 2015 and obtained MBA. From 2002 to 2010, he servedas Process Engineer, Operation Manager, Supply Chain Manager and Director of Technology in GuangzhouProcter & Gamble Co., Ltd.; from 2010 to 2017, he served as Operation Director of East Asia-Pacific Region andGlobal Supply Chain Director in Essel Propack Co., Ltd.. Currently he serves as a Director, an Executive VicePresident (Vice General Manager) and the General Manager of the South China Region of the Company.
(5) Jianfang Gui
Dr. Jianfang Gui has obtained PhD and is a doctoral supervisor, academician of the Chinese Academy of Sciencesand of The World Academy of Sciences. He graduated from the major of Cytobiology of Wuhan University andobtained the Bachelor’s degree in January 1982; obtained the Master’s degree in Genetics from Wuhan Universityin December 1984 and joined in Institute of Hydrobiology, Chinese Academy of Sciences in the same year andhas since worked there. In 1995, he obtained the Doctor’s degree of science from Institute of Hydrobiology,Chinese Academy of Sciences. From 1991 to 1994, he paid work visits and conducted postdoctoral research inMedical College of Ohio and US San Diego. From 1995, he served as Researcher and Doctoral Supervisor inInstitute of Hydrobiology, Chinese Academy of Sciences. He served as Executive Deputy Director and Director ofHydrobiology from 1999 to 2007, Director of State Key Laboratory of Freshwater Ecology and Biotechnologyfrom 2001 to 2011, and Independent Director of the 1st and 2nd sessions of the Board of the Company from 2007to 2013. Currently he serves as an Independent Director of the Company and a Vice President of China Society ofFisheries.
(6) Jianguo He
Dr. Jianguo He has obtained PhD and is a professor, winner of “The National Science Fund for DistinguishedYoung Scholars” and Chief Scientist of the State Shrimp and Crab Industry Technology System. He graduatedfrom the major of Zoology of Sun Yat-sen University and obtained the Doctor’s degree of science in 1990. He hasbeen working in Sun Yat-sen University since 1991. He served as Deputy Director of College of Life Sciences,Sun Yat-sen University from 2000 to 2008, and Director of College of Marine Science, Sun Yat-sen Universityfrom 2008 to 2018. His current positions include Professor of Sun Yat-sen University, Deputy Director of StateKey Laboratory of Pest Control and Resource Utilization (Sun Yat-sen University), Member of FisheriesAdvisory Committee of MARA, Deputy Director of Aquacultural Disease Control Expert Commission of MARA,President of Guangdong Zoological Society, Vice President of Chinese Crustacean Society, Head ofChina-ASEAN Center for Joint Research and Promotion of Marine Aquaculture Technology and IndependentDirector of the Company.
(7) Yunguo Liu
Dr. Yunguo Liu has obtained the Doctor’s degree in management (accounting) from Xiamen University. Hiscurrent positions and titles include Professor of Accounting and Doctoral Supervisor in Sun Yat-sen BusinessSchool (SYSBS), Director of Sun Yat-sen University Cost and Management Accounting Research Center,Director of School of Accountancy in Xinhua College of Sun Yat-sen University (a private college), Member ofManagement Accounting Professional Committee of Chinese Accounting Society, Executive Director of CostResearch Society of China, Leading Talent in Accountancy (Phase I) under the Ministry of Finance, Third Batchof Shortlisted Candidates for Special Support Program of the Development of State Leading Talents inAccountancy under the Ministry of Finance, Shortlisted Candidate for the Development of Accounting Celebritiesunder the Ministry of Finance (2019), Member of CGMA North Asian 100 Think Tank Leaders, and Member ofIMA China Academic Consultation Commission. His other positions include Independent Director of ShenzhenHeungkong Holding Co., Ltd. (600162.SH), Guangdong Daya Smart Kitchen Appliances Co., Ltd. (837009.OC)and Changwei Information Technology Development Co., Ltd..
2. Supervisors
(1) Zhenxiong Qi
Dr. Zhenxiong Qi is a doctoral degree holder and senior engineer. He successively participated in a key programof National Natural Science Foundation of China, theNational Key Technologies R & D Program of China during the 8th Five-Year Plan Period, National Climb—BPlan, and programs of the Shandong and Guangdong Provincial Natural Science Funds. Meanwhile, he has alsopublished many research papers, applied for multiple invention patents and been granted a State TechnologicalInvention Award (Second Prize). Since he joined the Company, he has been mainly engaged in researches onanimal nutrition and feed, aquatic farming and disease control. He has years of experience in product development,grass-root farming and technology promotion. He is now the Chairman of the Company’s Supervisory Committee.Mr. Zhenxiong Qi holds 0.1% equity interests in the Company’s controlling shareholder Guangzhou HaihaoInvestment Co., Ltd..
(2) Jing Wang
Ms. Jing Wang graduated from China University of Science and Technology (USTC) with a major inmanagement science in 2001. From 2006 to 2008, she studied and obtained the MBA degree at Cheung KongGraduate School of Business. From 2001 to 2006, she respectively worked for iFLYTEK Co., Ltd., Shenzhen BWconsulting Co., Ltd., and Tencent Technology Co., Ltd.. From early 2008 to 2010, she worked as a consultant atIBM China. From February 2012 on, she joined the Company and is currently a Supervisor and the Director of theOperation and Development Center of the Company.
(3) Jia Chen
Ms. Jia Chen graduated from Hunan University of Technology and Business (formerly known as “HunanBusiness School”) in 2005, majoring in financial management; in 2008, she obtained the master’s degree inmanagement from Sun Yat-sen Business School. From July 2008 to June 2010, she worked for Hytera
Communications Co., Ltd. and was engaged in financial work. In July 2010, she joined the Company and is nowthe Assistant to the Chief Financial Officer of the Company’s Business Department.
3. Senior Executives
(1) Guoxiang Liu
Mr. Guoxiang Liu is an assistant research fellow. He graduated from the Acquaculture Department of HuazhongAgricultural University in 1992, majoring in special acquaculture professionalism. He is now a Vice President(Vice General Manager) and the Central China General Manager of the Company, in addition to being the ViceChairman of Hubei Province Feed Industry Association. Mr. Guoxiang Liu holds 1.5% equity interests in theCompany’s controlling shareholder Guangzhou Haihao Investment Co., Ltd..
(2) Xueqiao Qian
Dr. Xueqiao Qian is an Associate Professor and has obtained the doctorate degree from the Institute ofHydrobiology, Chinese Academy of Science. He successively presided over or participated in the HubeiProvincial Natural Science Fund Project -- Development and Utilization of Feather Proteins in Fishery Feeds, thedevelopment projects of the State Key Laboratory of Freshwater Ecology and Biotechnology -- Effects ofNutrition Levels and Nutritional History on Fish’s Growth and Activities, Research on the Feeding Behavior andChemical Sensation of Allogynogenetic Crucian Carp, and Studies on the Utilization of Plant Protein by MainCultured Freshwater Fish, the NSFC Project -- Studies on the Comparative Nutritional Energetics of Feed ProteinRequirements of Carnivorous Fish and Omnivorous Fish, and the MOA’s 948 project -- Artificial Propagation andLarge-scale Aquaculture of Paddlefish etc.. Further, he has published more than 20 papers, of which, three paperswere published in international publications and included in SCI. He joined the Company in 2004 and is mainlyengaged in the aquatic animal nutrition and feed research and the development of new feed additives. Now, he is aVice President (Vice General Manager) and the Chief Engineer of the Company. Meanwhile, Mr. Xueqiao Qianholds 3% equity interests in the Company’s controlling shareholder Guangzhou Haihao Investment Co., Ltd..
(3) Shaolin Yang
Mr. Shaolin Yang has obtained the master’s degree. Graduated from Sun Yat-sen University with a major inBusiness Administration, he is also a senior accountant, certified public accountant, and certified tax accountant,and has been selected and listed into the expert database of the high-tech enterprises of Department of Science andTechnology of Guangdong Province. From December 2008 to April 2012, he served as Executive Director, CFOand Joint Secretary of KEE HOLDINGS COMPANY LIMITED (HK.02011). From May/June 2016 till now, hehas served as a supervisor of Guangdong Association of Management Accountants (GAMA) and an off-campustutor for master candidates in accounting of Sun Yat-sen Business School. In April 2012, he joined the Companyand is currently the Company’s Vice President (Vice General Manager) and CFO.
(4) Xiewu Jiang
Mr. Xiewu Jiang is an aquacultural engineer. He graduated from the major of Special Aquaculture of College ofFisheries, Huazhong Agricultural University in 1992. Subsequently, he studied in the postgraduate program of
Aquatic Animal Nutrition of Sun Yat-sen University and EMBA of South China University of Technology.Currently, he serves as Vice President (Deputy General Manager) of the Company and General Manager ofAquacultural Breeding/Premix BU. His other positions include Director of Guangzhou Municipal AgriculturalLeading Enterprises Association and Vice President of Zhanjiang Shrimp Breed Society. Mr. Xiewu Jiang holds
4.5% equity interests in the Company’s controlling shareholder Guangzhou Haihao Investment Co., Ltd..
(5) Guocheng Mi
Mr. Guocheng Mi graduated from the major of Freshwater Fishery of Southwest Agricultural University. Hejoined in the Company in 2010 and currently serves as a Vice President (Vice General Manager) and the GeneralManager of the Pig Farming BU of the Company.
(6) Zhongzhu Chen
Mr. Zhongzhu Chen graduated from Xiamen University and obtained MBA for senior management personnel in2019. He joined in the Company in 2004 and currently serves as a Vice President (Vice General Manager) and theGeneral Manager of the Shrimp Feed BU of the Company.
(7) Mingzhong Chen
Mr. Mingzhong Chen graduated from MBA of Hong Kong Baptist University. His past titles include Deputy toZhuhai Municipal People’s Congress and Member of Shaowu Municipal CPPCC and current social titles includeVice President of Guangzhou Municipal Agricultural Leading Enterprises Association, Vice President of theStanding Committee of Panyu District Federation of Industry and Commerce of Guangzhou, Vice President of thethree federations of Guangzhou (including Guangzhou Industrial Economy Federation) and Executive VicePresident of Nancun General Chamber of Commerce of Panyu District, Guangzhou. He has won a number ofhonors and titles, such as “Excellent Entrepreneur for Caring for Employees in Panyu District, Guangzhou”. Hejoined in the Company in 2004 and served as the head for project investment and preparations and Director ofPurchase. He currently serves as a Vice President (Vice General Manager) of the Company and is responsible forpublic relations, brand image and promotion of the Company.
(4) Zhijian Huang
Mr. Zhijian Huang is an accountant and a bachelor’s degree holder. He joined the Company in 2004 and is now aVice President (Vice General Manager) and the Board Secretary of the Company.
Posts concurrently held in shareholding entities:
√ Applicable □ Not applicable
| Name | Shareholding entity | Post held in shareholding entity | Starting date of tenure | Ending date of tenure | Remuneration or allowance from shareholding entity |
| Hua Xue | Guangzhou Haihao Investment Co., Ltd. | Executive director | September 27, 2006 | None | |
| Yingzhuo Xu | Guangzhou Haihao Investment Co., Ltd. | Supervisor | September 27, | None |
| 2006 | |||
| Note | None | ||
Posts held concurrently in other entities:
√ Applicable □ Not applicable
| Name | Other entity | Post held in other entity | Starting date of tenure | Ending date of tenure | Remuneration or allowance from the entity |
| Hua Xue | Guangzhou Juchang Investment Co., Ltd. | Executive Director | March 9, 2011 | June 13, 2019 | None |
| Hua Xue | Guangdong Aerocity Holding Co., Ltd. | Director | January 21, 2015 | None | |
| Jianfang Gui | Institute of Hydrobiology, Chinese Acadamy of Sciences | Research fellow | August 1, 1995 | Yes | |
| Jianguo He | Sun Yat-Sen University | Professor | December 1, 1994 | Yes | |
| Yunguo Liu | Sun Yat-Sen University | Professor | December 1, 1992 | Yes | |
| Yunguo Liu | Guangdong Daya Smart Kitchen Appliances Co., Ltd. | Independent Director | June 22, 2017 | October 12, 2022 | Yes |
| Yunguo Liu | Shenzhen Heungkong Holding Co., Ltd. | Independent Director | May 6, 2016 | May 17, 2022 | Yes |
| Yunguo Liu | Changwei Information Technology Development Co., Ltd. | Independent Director | September 1, 2016 | September 1, 2022 | Yes |
| Xiewu Jiang | Bangpu Breeding Technology Co., Ltd. | Director | May 1, 2019 | No | |
| Mingzhong Chen | Guangzhou Guanglan Investment Co., Ltd. | Executive Director | July 26, 2013 | September 25, 2019 | No |
| Shaolin Yang | Guangdong Association of Management Accountants | Supervisor | May 18, 2016 | May 18, 2021 | None |
| Shaolin Yang | Sun Yat-Sen University | Extramural Tutor for master’s degree students | June 5, 2016 | June 5, 2022 | Yes |
| Note | None | ||||
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and seniormanagement as well as those who left in the Reporting Period:
□ Applicable √ Not applicable
IV Remuneration of Directors, Supervisors and Senior ManagementDecision-making procedure, determination basis and actual payments of remuneration for directors, supervisorsand senior management:
The remuneration of the Company’s directors, supervisors and senior management is in strict compliance with the
Company’s Rules of Procedure for Meetings of Shareholders (《股东大会议事规则》) and Rules of Procedure forBoard (《董事会议事规则》), as well as with the Company Law and the Company’s Articles of Association. Theremuneration is determined according to the Company’s operating performance and these personnel’sperformance appraisal indicators.Remuneration of directors, supervisors and senior management in the Reporting Period:
Unit: RMB 0,000
| Name | Office title | Gender | Age | Incumbent/Former | Total before-tax remuneration from the Company | Remuneration from related party |
| Hua Xue | Chairman of the Board and President (General Manager) | Male | 50 | Incumbent | 309.69 | No |
| Yingzhuo Xu | Vice Chairman of the Board | Male | 52 | Incumbent | 119.67 | No |
| Li Tian | Director | Female | 48 | Incumbent | 264.48 | No |
| Qi Cheng | Director and Executive Vice President (Vice General Manager) | Male | 40 | Incumbent | 98.41 | No |
| Jianfang Gui | Independent Director | Male | 64 | Incumbent | 5.52 | No |
| Jianguo He | Independent Director | Male | 58 | Incumbent | 5.52 | No |
| Yunguo Liu | Independent Director | Male | 54 | Incumbent | 5.52 | No |
| Zhenxiong Qi | Supervisor | Male | 50 | Incumbent | 125.22 | No |
| Jing Wang | Supervisor | Female | 41 | Incumbent | 85.16 | No |
| Jia Chen | Supervisor | Female | 38 | Incumbent | 33.54 | No |
| Guoxiang Liu | Vice President (Vice General Manager) | Male | 52 | Incumbent | 74.23 | No |
| Xueqiao Qian | Vice President (Vice General Manager) and Chief Engineer | Male | 53 | Incumbent | 134.13 | No |
| Shaolin Yang | Vice President (Vice General Manager) and Chief Financial Officer | Male | 46 | Incumbent | 166.98 | No |
| Xiewu Jiang | Vice President (Vice General Manager) | Male | 52 | Incumbent | 104.51 | No |
| Guocheng Mi | Vice President (Vice General Manager) | Male | 48 | Incumbent | 84.93 | No |
| Zhongzhu | Vice President (Vice | Male | 50 | Incumbent | 189.31 | No |
| Chen | General Manager) | |||||
| Mingzhong Chen | Vice President (Vice General Manager) | Male | 55 | Incumbent | 95.45 | No |
| Zhijian Huang | Vice President (Vice General Manager) and Board Secretary | Male | 42 | Incumbent | 103.69 | No |
| Xiaojun Shang | Former Director | Female | 47 | Former | No | |
| Xinchun Li | Former Independent Director | Male | 58 | Former | 6.57 | No |
| Erkang Deng | Former Independent Director | Female | 52 | Former | 6.57 | No |
| Chengping Lu | Former Independent Director | Male | 75 | Former | 6.57 | No |
| Total | -- | -- | -- | -- | 2,025.67 | -- |
Notes:
1. As Qi Cheng, Jianfang Gui, Jianguo He, Yunguo Liu, Guoxiang Liu, Xiewu Jiang, Guocheng Mi and Zhongzhu Chen were electedas directors of the fifth Board and senior management at the First Extraordinary General Meeting of 2019 and the First Meeting ofthe Fifth Board, the remuneration data of theirs in the table above are for the period from July 2019 to December 2019. Theremuneration data of others are for the whole year of 2019.
2. Xiaojun Shang, Xinchun Li, Erkang Deng and Chengping Lu quit as members of the fourth Board of the Company upon theexpiration of their office terms in July 2019. Therefore, the remuneration data of theirs are for the period from January 2019 to July2019.Equity incentives for directors, supervisors and senior management in the Reporting Period:
□ Applicable √ Not applicable
V Employees
1. Numbers, Functions and Educational Backgrounds of Employees
| Number of in-service employees of Parent Company (Haid Group exclusive of subsidiaries) | 1,244 |
| Number of in-service employees of major subsidiaries | 19,530 |
| Total number of in-service employees | 20,774 |
| Total number of paid employees in Reporting Period | 20,774 |
| Number of retirees to whom Parent Company or its major subsidiaries need to pay retirement pension | 0 |
| Functions | |
| Function | Employees |
| Production | 9,240 |
| Sales | 6,186 |
| Technical | 1,623 |
| Financial | 1,302 |
| Administrative | 1,963 |
| Procurement | 460 |
| Total | 20,774 |
| Educational backgrounds | |
| Educational background | Employees |
| Doctoral degree | 71 |
| Master’s degree | 807 |
| Bachelor’s degree | 4,290 |
| Junior college | 4,064 |
| Senior high school, technical secondary school and below | 11,542 |
| Total | 20,774 |
2. Employee Remuneration Policy
While strictly abiding by Labor Contract Law (《劳动合同法》) and other related laws, regulations, departmentrules and regulatory documents, the Company implements the following principles according to the characteristicsof the industry and the Company’s operations: persist in the principle of labor-based distribution combining duties,power and interests; implement the principle of linking income levels with the Company’s performance and workgoals; implement the principle of integrating individual remuneration with the Company’s long-term interests toensure sustained growth in main business, prevent short-term behaviors and promote the Company’s sustainedoperations and development; stick to the principle of linking remuneration with performance appraisal with equalemphasis on incentive and restraint; give comprehensive consideration to market changes and marketremuneration levels. The Company has established a reasonable post and remuneration system to provideemployees with competitive salaries in the industry, link performance with remuneration, enhance staff awarenessfor team work and give full play to every employee’s enthusiasm and creativity.
3. Employee Training Plans
The Company always emphasizes the development of human resources and talents with a firm belief that staffdevelopment is an important power and resource for the Company’s continuous development. The Company hasestablished an extensive talent cultivation system covering new employees, key personnel, managers, assistantgeneral managers/vice general managers and the general manager, possesses an excellent course developmentsystem and a systematic internal trainer development system and carries out broad-based and precise talentdevelopment through famous trainer courses, outdoor training, behavior learning, coach tutoring, onlinebroadcasting, online learning and other channels. The Company has also established a self-inspection mechanismcovering “talent development mechanism, talent development platform operation and plan implementation, talentassessment and talent management self-inspection reports”.
Haid College, the Company’s functional department for talent development, pays attention to the development offarmers while making active steps to improve staff abilities and competence based on the Group’s strategies andbusiness practice. Facing the severe ASF, Haid College worked with all employees related to pig feed to makelive online videos and practical training at bases. The 15 sessions of Haid Lectures on Anti-ASF Services openedto the public covered 17 subjects in total broadcast hours of 1,800 minutes, gaining 1,879,500 views andenhancing the Group staff’s knowledge and handling skills of ASF. The 12 sessions of practical training at basesdeveloped nearly 200 professional anti-ASF engineers who helped farmers to successfully resume farming.As it continues to speed up the expansion of international business, the Company is facing increasingly strongerdemands for international technical and management professionals. In 2019, the Group’s first global talenttraining was successfully opened in a bid to proactively respond to international development, build aninternational talent resource pool, complete the reserve of overseas expatriates, and prepare for the building andimprovement of the Group’s international mechanism of talent reserve as a pilot model. The Group’s global talentdevelopment program drew close attention from the management in a number of aspects, including the traineescreening model, development mode, teaching contents and design of assessment methods. The plan went througha number of reviews and revisions, with overseas front line management personnel returning to China toparticipate in the formulation of the program. The development plan was a result of collaboration across countries,departments and teams. Based on the Group’s culture, and supported by the science-based teaching design, theprogram integrated organizational behaviors, psychology, cross-culture management, service marketing and otherrelevant theories with clear training objectives and featured a talent development path through full combinationwith strategies. From the first day of opening, the trainees actively engaged themselves in language study,theoretical study and practice. After the first stage of domestic intensive training, all trainees have been equippedwith the required knowledge and skills, laying a solid foundation for their work overseas.Haid College continues to explore new models of talent development. To make its training more targeted anddiverse, the College has made full use of network, video and other forms and developed its own online learningplatform Haiwei (《海味》). The objectives of the platform include enhancing organizational learning abilities,improving the overall work competence of employees, and effectively communicating organizational experience.As of the end of 2019, the platform had covered all major specialty lines, including QC, finance, HR, plant andpurchase, with administrators of functional centers, regions/business units, branches and subsidiaries organizingtheir employees to study online, and administrators of specialty lines organizing their employees to enhance theirspecialty skills. Haiwei has 6,003 online registered users, with a monthly total online duration of 67,702.62 hours,monthly per capita online duration of 16.21 hours, monthly online learning duration of 17.98 hours and monthlyper capita learning duration of 7.3 hours. It has introduced 1,594 well-designed courses and 702 internallydeveloped specialty courses and opened online classes for aquatic service engineers. By combining theintroduction of select external courses and the continuous development of internal courses and integrating on-siteand online training, the College makes learning more efficiently, enables staff to improve their work skills andcomprehensive competence, and achieves win-win results including both improvement to individual professionalabilities and sustainable development of the Company.
4. Labor Outsourcing
□ Applicable √ Not applicable
Section X. Corporate GovernanceI Overview
1. The Establishment of the Company System
From the Company’s listing to the end of the Reporting Period, the Company has formulated and strictlyimplemented various systems, including Articles of Association, Rules of Procedure of the Shareholders’ GeneralMeeting, Rules of Procedure of the Board, Working System of the Special Committee of the Board, Rules ofProcedure of the Supervisory Committee, Independent Director System, Working Rules of General Manager,Code of Conduct of Directors, Supervisors and Senior Executives, Board Secretarial Work System, Related Partyand Related Transaction Management System, Special Reserve and Use Management System of Raised Funds,Management Policy for Shares held by Directors, Supervisors and Senior Executives in the Company and RelatedChanges, Administrative Measures for the External Provision of Financial Assistance, Management Systems forHolding Subsidiaries, Registration Management System for Insider Information, Accountability System for MajorErrors in Information Disclosure in Annual Reports, Futures Management System, Working Rules for AnnualReports by the Audit Committee, Investment Decision Management System, Investor Relations ManagementSystem, External Information User Management System, Information Disclosure System, Internal ReportingSystem for Major Information, Dividend Management System, Information Disclosure Management System forDebt Financing Instruments in the Inter-bank Bond Market, Investor Complaints Management System, 2016Annual Implementation and Assessment Management Policies for the Restricted Stock Option Assessment Plans,Foreign Exchange Hedging Management System and the Complaint and Complainant Protection System, etc., andthe established sound internal control system in order to continuously improve the Company’s governancestructure and enhance the Company’s governance level.
2. Shareholders and General Meeting
During the Reporting Period, the Company strictly adhered to applicable laws and regulations such as CorporationLaw, Rules of the General Meeting of Listed Companies, Articles of Association, and Rules of Procedure of theGeneral Meeting, as well as the Company’s internal control rules, and standardized the convening, holding andvoting procedures of the General Meeting to ensure that all Shareholders could be equal, and fully exercise theirrights. In addition, as witnessed by the hired lawyers, the legitimacy of the meeting’s convening, holding andvoting procedures could be guaranteed, and relevant legitimate rights and interests of the Company and itsshareholders could be secured as well. In 2019, five general meetings were convened and held by the Board intotal; the convening, holding and voting procedures of such meetings were witnessed by the lawyers and all werelegal and valid.
3. The Company and Its Controlling Shareholder
The Company has independent and complete businesses and independent management capabilities. It iscompletely independent from the controlling shareholder in terms of business, personnel, assets, organization, andfinance. The controlling shareholder exercises its rights and assumes corresponding obligations in accordance
with the law, and there is no direct or indirect interference with the Company’s decision-making and businessoperation beyond the authority of the shareholders’ general meeting. Meanwhile, the Company’s Board,Supervisory Committee, and various internal functional departments are capable of independent operations. As ofthe Reporting Period, no controlling shareholder of the Company ever occupied the capital of the listed Company,and no listed Company illegally provided any controlling shareholder with any guarantee.
4. Directors and the Board
Strictly in accordance with Corporation Law, Articles of Association, Rules of Procedure of the Board andIndependent Director System, the Company has elected and appointed various directors, and such election andappointment procedures are open, fair and just. Besides, the composition and number of directors meet relevantlegal and regulatory requirements. The members for the Company’s 5th session of Board are all nominated,approved and elected by the Board by means of the cumulative voting system. Currently, there are 7 directors,including 3 independent directors. Independent directors occupy more than one third of all directors and theirqualifications are in accordance with Guidance Opinions on the Establishment of Independent Director System inListed Companies.All directors of the Company have performed their duties in strict compliance with relevant laws, regulations, andregulatory documents, attended all board meetings and carried out related works in a serious and responsiblemanner, and firmly conformed to any statement and commitment made by directors. However, independentdirectors have full right to know about the Company’s major issues and can issue independent opinions on majorissues without being influenced.The Board has established the audit committee, the remuneration and appraisal committee, the strategy committeeand the nomination committee. Each committee can exercise its functions in accordance with its work rules andmake due contributions to the standardization of corporate governance. In the meantime, the Board is able to carryout its work in strict accordance with relevant laws and regulations. All directors of the Company are honest andtrustworthy, diligent and responsible, attend corresponding board meetings and shareholders’ meetings with aserious attitude, actively participate in relevant training, and are familiar with relevant laws and regulations.
5. Supervisors and the Supervisory Committee
The Company has strictly observed Corporation Law, Articles of Association and other relevant regulations toappoint supervisors. The 5th session of the Supervisory Committee consists of three supervisors, including twoshareholder supervisors and one employee supervisor. The number and composition of the SupervisoryCommittee meet relevant requirements stipulated in applicable laws and regulations. However, the shareholderrepresentative supervisors are elected by adopting the cumulative voting system, and the employee supervisors areelected and appointed by means of the employees’ assembly in the form of secret ballot. The number ofsupervisors that served as directors or senior management personnel of the Company in recent two years does notexceed one half of the total number of supervisors of the Company, and the number of supervisors nominated by asingle shareholder does not exceed one half of the total number of supervisors of the Company.The Company’s supervisors can earnestly fulfill their responsibilities in accordance with Rules of Procedure ofthe Supervisory Committee, effectively supervise and inspect the Company’s major issues, related transactions,
the legality and compliance of duties performed by the Company’s directors and senior management, andmaintain legitimate rights and interests of the Company and its shareholders.
6. Stakeholders
The Company fully respects and safeguards legitimate rights and interests of relevant stakeholders, realizes thecoordinated balance of interests of the society, shareholders, the Company, and employees etc., sincerely treatssuppliers and customers, earnestly cultivates every employee, develops the mutual benefit and win-wincooperation with relevant stakeholders, and jointly promotes the Company’s sustained, healthy and rapiddevelopment.
7. Information Disclosure and Transparency
Pursuant to relevant laws and regulations, as well as the Company’s Information Disclosure System and InvestorRelations Management System, the Company has disclosed corresponding information in a true, accurate,complete and timely manner to ensure that all shareholders have equal access to such information.The Company has designated the board secretary in charge of the Company’s information disclosure and investorrelations management, and the securities department serves as the executive department for information disclosureand investor relations management. The Company pays special attention to communicate with investors and willstrengthen communication with investors by various means such as telephone, e-mail, and investor relationsinteractive platform etc.
8. Internal Audit System
The Company has established the complete internal audit system and set up the internal audit department incharge of the effective internal supervision of the Company’s daily operations.
9. Investor Relations Management
The Company has always attached great importance to the management of investor relations, carried out relatedworks in accordance with Investor Relations Management System and other systems, implemented the investorrelations management by various means such as Shenzhen Stock Exchange investor relations interactive platform,investor hot-lines, and reception of investors etc., strengthened the communication with investors, and fullyguaranteed the investors’ right to know.The corporate governance is a systematic and long-term project that requires continuous improvement. After theCompany is successfully listed, it is willing to accept supervisions from all parties, adhere to the scientific outlookon development, constantly improve the corporate governance system, and strengthen the implementation ofvarious laws and regulations to promote the healthy development of the Company and enhance the overallcompetitiveness.
The implementation of the Company’s special activities of corporate governance and that of the insiderinformation registration management system are described as follows:
1. The implementation of the Company’s special activities of corporate governanceIn accordance with the Notice on Diligently Studying and Implementing the Guidelines in the Speech of Mr. YiHuiman at the 2019 Annual Meeting of China Association for Public Companies (《关于认真学习贯彻易会满主席在中国上市公司协会2019年年会讲话精神的通知》) (GDZJF [2019] No. 63), the Company veritablyresponded to the requirements of the Notice, organized its directors, supervisors, senior managers, controllingshareholder and actual shareholder to diligently study the speech of Mr. Yi, and performed self-inspection andself-correction based on its actual situation.In accordance with the Notice on Carrying Out the Themed Promotional Activity of “Constitution PromotionWeek” of 2019 (《关于开展2019年“宪法宣传周”主题宣传活动的通知》) (GDZJF [2019] No. 137), theCompany established a special group to organize its directors, supervisors, senior managers, other employees andinvestors to further study and promote the Constitution, carry forward its essence and safeguard its authority.
2. Formulation and Implementation of Confidential Information Insiders Registration and Management SystemAccording to Corporation Law, Securities Law, Management Policies for Information Disclosure of ListedCompanies, Stock Listing Rules of Shenzhen Stock Exchange, Guidelines for the Operation of Listed Companieson SME Boards of Shenzhen Stock Exchange, Regulations on the Establishment of Insiders Registration andManagement System by Listed Companies and other relevant laws, regulations, and Articles of Association,Proposal of Deliberating Insider Information Registration and Management System was approved at the 18thmeeting of the 2nd session of Board on December 29, 2011. The proposal was disclosed on the website(http://www.cninfo.com.cn) on December 31, 2011. The Company properly carried out corresponding informationinsider registration and reporting works strictly according to relevant requirements and systems, and recorded andrevealed the list of all information insiders and relevant reports, communications, formulation, resolutions anddisclosures before any information was disclosed. If any special event is involved and the list of the informationinsider’s close relatives (spouse, parents and offspring) was required, the Company also finished correspondingregistration and reporting work. During the Reporting Period, the Company notified all directors, supervisors,senior management personnel and relevant information insiders that they were not allowed to buy and sell theCompany’s stocks within the window period by means of SMS and e-mail 30 days before the disclosure of regularreports and 10 days before the disclosure of earnings forecasts and Preliminary Earnings Estimate, and conductedan internal audit on the buying and selling of the Company’s stocks by directors, supervisors, senior managementpersonnel and relevant information insiders. During the Reporting Period, no information insider was everinvolved in the illegal buying and selling of the Company’s stocks, and no relevant personnel was suspected ofbeing involved in insider trading and was imposed some supervision measures and administrative penalties bycompetent regulatory departments.
Indicate by tick market whether there is any material incompliance with the regulatory documents issued by theCSRC governing the governance of listed companies.
□ Yes √ No
No such incompliance.
II The Company’s Independence from Controlling Shareholder in Business, Personnel, Asset,Organizational Structure and Financial AffairsWith independent and complete business and self-dependent operating ability, the Company is completelyindependent from its controlling shareholder in business, personnel, asset, organizational structure and financialaffairs. The controlling shareholder exercises its rights and shoulders its corresponding obligations according tolaw, with no direct or indirect intervention in the Company’s decision-making and operating activities by goingbeyond the General Meeting.
1. Independence in Business
The Company has an independent and complete business operation system, with all the necessary conditions andabilities to carry out production and operational activities and extend its business in an independent manner.Therefore, the Company is independent from its controlling shareholder in doing business with its controllingshareholder or any of the controlling shareholder’s related parties.
2. Independence in Personnel
The Company’s senior management and key technical staff all work full time for and get paid by the Company.None of them hold any post other than director or supervisor in or get paid by the controlling shareholder, theactual controller or any other company under their control.
3. Independence in Asset
The Company owns its own production and operation venues, as well as is able to control all of its assets withcomplete, clear ownership. The Company has never provided guarantees for any shareholder’s liability with itsassets or credit, nor has it lent any loan or credit line under its name to any shareholder. None of the Company’sassets, capital or other resources is occupied to harm the interests of the Company.
4. Independence in Organizational Structure
The Company has a sound, clear organizational structure. Its Board, Supervisory Committee and all otherfunctional departments are able to operate in an independent manner. The Company’s organizational structure iscomplete independent from its controlling shareholder, with no interventions from the controlling shareholder ofany of its related parties in this respect. All the Company’s departments perform their duties independently, withno overlap between the Company’s organizational structure and its controlling shareholder’s.
5. Independence in Financial Affairs
As per the applicable laws and regulations, the Company has put in place a sound, well-established financialmanagement system. It has an independent accounting system and an independent financial department withprofessional financial staff, who hold no posts in the controlling shareholder or any of its related parties. The
Company has its own bank account, not sharing the same account with its controlling shareholder. And it pays itsown taxes by law. And the Company is able to use its self-owned capital at its sole discretion, with none of itscapital being occupied by the controlling shareholder or it having to provide any guarantee for the controllingshareholder against laws and regulations.
III Horizontal Competition
□ Applicable √ Not applicable
IV Annual and Non-Operating General Meetings Convened during Reporting Period
1. General Meetings Convened during Reporting Period
| Meeting | Type | Investor participation ratio | Date | Disclosure date | Index to disclosed information |
| 2018 Annual General Meeting | Annual | 62.76% | 6 May 2019 | 7 May 2019 | Announcement on Resolutions of 2018 Annual General Meeting (No. 2019-021) disclosed on Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily and www.cninfo.com.cn |
| First Non-Operating General Meeting of 2019 | Non-operating | 61.75% | 16 July 2019 | 17 July 2019 | Announcement on Resolutions of First Non-Operating General Meeting of 2019 (No. 2019-041) disclosed on Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily and www.cninfo.com.cn |
| Second Non-Operating General Meeting of 2019 | Non-operating | 65.19% | 6 August 2019 | 7 August 2019 | Announcement on Resolutions of Second Non-Operating General Meeting of 2019 (No. 2019-049) |
| disclosed on Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily and www.cninfo.com.cn | |||||
| Third Non-Operating General Meeting of 2019 | Non-operating | 65.42% | 23 August 2019 | 24 August 2019 | Announcement on Resolutions of Third Non-Operating General Meeting of 2019 (No. 2019-058) disclosed on Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily and www.cninfo.com.cn |
| Fourth Non-Operating General Meeting of 2019 | Non-operating | 63.75% | 16 December 2019 | 17 December 2019 | Announcement on Resolutions of Fourth Non-Operating General Meeting of 2019 (No. 2019-095) disclosed on Securities Times, China Securities Journal, Shanghai Securities News, Securities Daily and www.cninfo.com.cn |
2. Non-operating General Meetings Convened at Request of Preferred Shareholders with Resumed VotingRights
□ Applicable √ Not applicable
V Performance of Duties by Independent Directors in Reporting Period
1. Attendances of Independent Directors at Board Meetings and General Meetings
| Attendances of independent directors at board meetings and general meetings | |||||||
| Independent director | Due attendances at | Attendances at board meetings | Attendances at board meetings | Attendances at board meetings | Absences at board meetings | Not attending board meetings | Attendances at general |
| board meetings in Reporting Period | on site | by telecommunication | through a proxy | in person for twice in a row | meetings | ||
| Guifang Jian | 7 | 4 | 3 | 0 | 0 | N/A | 3 |
| Jianguo He | 7 | 6 | 1 | 0 | 0 | N/A | 3 |
| Yunguo Liu | 7 | 7 | 0 | 0 | 0 | N/A | 3 |
| Chengping Lu | 3 | 0 | 3 | 0 | 0 | N/A | 0 |
| Xinchun Li | 3 | 3 | 0 | 0 | 0 | N/A | 2 |
| Erkang Deng | 3 | 3 | 0 | 0 | 0 | N/A | 2 |
Explanation for any independent director not attending board meetings in person for twice in a row:
2. Objections Raised by Independent Directors on Matters of the CompanyIndicate by tick mark whether any independent director raised any objection on any matter of the Company.
□ Yes √ No
No such cases in the Reporting Period.
3. Other Information about Performance of Duties by Independent DirectorsIndicate by tick mark whether any suggestions from independent directors were adopted by the Company.
√ Yes □ No
Suggestions of independent directors adopted or non-adopted by the Company:
During the Reporting Period, the Company’s independent directors performed their duties in strict accordancewith the Company Law, the Code of Corporate Governance for Listed Companies in China, the Guidelines of theShenzhen Stock Exchange for the Standard Operation of Listed Companies on the Small and Medium-SizedEnterprise Board, the Directive on Establishment of Independent Director System in Listed Companies, the Rulesfor Independent Directors and other applicable laws and regulations, as well as the Company’s Articles ofAssociation. Upon an in-depth knowledge about the Company’s production and operation status obtained throughattending the Company’s board meetings and general meetings, as well as through on-site investigations, theindependent directors carefully exercised their voting rights and effectively performed their duties. Theindependent directors issued independent, just opinions on the Company’s continuing related-party transactions,profit distribution, 2018 Annual Internal Control Self-Assessment Report (《公司2018年度内部控制自我评价报告》), provision of guarantees for external parties, adjustments to the repurchase prices of its restricted shareincentive plan, changes to the accounting policies, appointment of the CPA firm, the re-election of the Board, theissuance of convertible corporate bonds and other matters arising during the Reporting Period. All the independentdirectors’ suggestions and opinion were accepted by the Company during the Reporting Period, which protectedthe interests of the Company as a whole, as well as the legal interests of the shareholders, especially the minorityshareholders.
VI Performance of Duties by Specialized Committees under Board in Reporting Period
1. Performance of Duties by Audit Committee under Board
The Audit Committee under the fourth Board convened a total of four meetings and the Audit Committee underthe fifth Board convened a total of three meetings during the Reporting Period, at which the Company’s periodicreports, the quarterly related-party transactions, the matter concerning the occupation of the Company’s funds byits controlling shareholder or other related parties, changes to the accounting policies, the work report of theinternal audit department, etc. were reviewed, the person-in-charge of internal audit was nominated, as well as theindependent auditor for the convertible corporate bonds project and for the annual financial statements wasappointed. The Audit Committee also communicated with the external auditors on the audit of the 2018 annualfinancial statements and the 2019 annual financial statements and urged the audit progress. As such, the AuditCommittee has faithfully fulfilled its supervision and examination duties.
2. Performance of Duties by Remuneration and Appraisal Committee under BoardThe Remuneration and Appraisal Committee under the fourth Board convened one meeting and the Remunerationand Appraisal Committee under the fifth Board convened two meetings during the Reporting Period to improvethe post and remuneration systems, as well as to push forward the implementation of the core team stockownership plan and the repurchase and cancellation of restricted shares.
3. Performance of Duties by Nomination Committee under Board
The Nomination Committee under the fourth Board convened one meeting and the Nomination Committee underthe fifth Board convened one meeting during the Reporting Period to review the core management candidates andoffer advice.
4. Performance of Duties by Strategy Committee under Board
The Strategy Committee under the fourth Board convened one meeting and the Strategy Committee under the fifthBoard convened one meeting during the Reporting Period to discuss and offer advice on the hedging business, theproduction capacity plan, the establishment of a financing guaranty company, investments in new projects, etc.
VII Performance of Duties by Supervisory BoardIndicate by tick mark whether the Supervisory Board found any risk to the Company during its supervision in theReporting Period.
□ Yes √ No
The Supervisory Board raised no objections in the Reporting Period.
VIII Appraisal of and Incentive for Senior Management
1. Appraisal of Senior Management
The Company has put in place a senior management selection, appraisal, incentive and restrictive system. Allappointed by and being responsible to the Board, senior management shoulders the operating indicators set by theBoard. The Remuneration and Appraisal Committee under the Board is responsible for a year-end appraisal ofsenior management’s service ability, performance of duties and fulfillment of objectives, among others. And then
the committee formulates a remuneration plan for the Board’s review. During the Reporting Period, the Companyduly restricted its senior management as per the applicable laws and regulations by strengthening the connectionbetween performance appraisal and remuneration and incentives, aligning remuneration with appraisal results, andachieving differentiation in remuneration.
2. Incentive for Senior Management
For details, see “Part V Significant Events”, “XV Implementation of Equity Incentive Plans, Employee StockOwnership Plans or Other Employee Incentive Measures” herein.
IX Internal Control Assessment Report
1. Material Internal Control Deficiencies Identified for Reporting Period
□ Yes √ No
2. Internal Control Self-Assessment Report
| Disclosure date of internal control self-assessment report | 21 April 2020 | |
| Index to disclosed internal control self- assessment report | www.cninfo.com.cn | |
| Assessed entities’ combined assets as a percentage of consolidated total assets | 100.00% | |
| Assessed entities’ combined sales revenue as a percentage of consolidated sales revenue | 100.00% | |
| Internal control deficiency identification standards | ||
| Type | Financial-reporting related | Non-financial-reporting related |
| Nature standard | A material deficiency refers to a deficiency or a deficiency group that consists of multiple deficiencies that may cause a great deviation from the control objective. It is considered a material financial-reporting internal control deficiency if any of the following cases occurs: (1) Any of the Company’s directors, supervisors or senior management is involved in a serious fraud; (2) The Company corrects its disclosed financial statements for multiple times; (3) certified public accountants identifies a material misstatement in the current financial | Material deficiencies: (1) The internal control environment is invalid; (2) Any leak of insider information about any investment in external parties, asset restructuring, etc. against regulations causes any severe fluctuations in the Company’s stock price or any materially adverse impact on the Company’s image; (3) The violation of the Company’s decision-making procedure in any significant event causes a significant economic loss to the Company; or (4) The independent auditor identifies any |
| statements which the Company has failed to identify during its internal control process; or (4) The Company’s Audit Committee and internal audit organ maintain invalid supervision over internal control. A serious deficiency refers to a single deficiency or a deficiency group including other deficiencies that is less serious than a material deficiency but may still cause a deviation from the control objective. It is considered a serious financial-reporting internal control deficiency if any of the following cases occurs: (1) The Company does not select and adopt its accounting policies as per the generally accepted accounting standards; (2) The Company does not formulate anti-fraud procedures or control measures; (3) The Company has no control systems for the accounting treatment of non-conventional or special transactions; or (4) There are one or multiple deficiencies in controls over the financial reporting process and there is no reasonable assurance that the financial statements prepared are truthful and accurate. An ordinary deficiency refers to any deficiency that is neither a material deficiency nor a serious deficiency. | other material deficiencies in the Company. Serious deficiencies: (1) The Company provides any guarantee or conducts any derivative financial instrument transaction without due authorization or performance of the corresponding information disclosure duty; (2) A severe loss of key talent occurs; (3) The Company is punished or a materially adverse impact is made to its image due to deviation from governing policies, measurement errors, etc.; (4) The independent auditor identifies any other serious deficiencies in the Company. An ordinary deficiency refers to any deficiency that is neither a material deficiency nor a serious deficiency. | |
| Quantitative standard | Material deficiency: misstated amount > 3% of gross profit, misstated amount ＞3% of net asset value. Serious deficiency: 1% of gross profit＜misstated amount≤3% of gross profit, 1% of net asset value < misstated amount ≤ 3% of net asset value. Ordinary deficiency: misstated amount ≤1% of gross profit, misstated amount ≤1% of net asset value. | Material deficiency: Direct loss caused to the Company (hereinafter referred to as “loss amount”) > 3% of gross profit, loss amount ＞3% of net asset value. Serious deficiency: 1% of gross profit＜loss amount≤3% of gross profit, 1% of net asset value < loss amount ≤ 3% of net asset value. Ordinary deficiency: loss amount ≤1% of gross profit, loss amount ≤1% of net asset value. |
| Number of material financial-reporting internal control deficiencies | 0 | |
| Number of material non-financial-reporting internal control | 0 | |
| deficiencies | |
| Number of serious financial-reporting internal control deficiencies | 0 |
| Number of serious non-financial-reporting internal control deficiencies | 0 |
X Independent Auditor’s Report or Verification Report on Internal Control
Verification report on internal control
| Opinion paragraph in the verification report on internal control | |
| In our opinion, Guangdong Haid Group Co., Limited maintained, in all material respects, effective internal control over financial reporting as of 31 December 2019, based on the Basic Rules on Enterprise Internal Control (《企业内部控制基本规范》) and other control standards. | |
| Independent auditor’s report on internal control disclosed or not | Disclosed |
| Disclosure date | 21 April 2020 |
| Index to such report disclosed | http://www.cninfo.com.cn |
| Type of the verification opinion | Unmodified unqualified opinion |
| Material non-financial-reporting internal control deficiencies | None |
Indicate whether any modified opinion is expressed in the CPA firm’s verification report on the Company’s internal control.
□ Yes √ No
Indicate whether the CPA firm’s verification report on the Company’s internal control is consistent with the internal controlself-assessment report issued by the Company’s Board.
√ Yes □ No
Section XI. Corporate BondsDoes the Company have any corporate bonds publicly offered and listed on the stock exchange, which were unduebefore the date of this Report’s approval or were due but could not be redeemed in full?No.
Section XII. Financial StatementsIndependent Auditor’s Report
| Audit Opinion | Unmodified unqualified audit opinion |
| Audit Report sign-off Date | April 18th 2020 |
| Audit Institution Name | Grant Thornton China (Special General Partnership) |
| Audit Report Number | |
| Name of Certified Public Accountant | Wenyuan Guan, Shuxia Zhang |
To the Shareholders of Guangdong Haid Group Co., Limited,OpinionWe have audited the financial statements of Guangdong Haid Group Co., Limited (the “Company”), whichcomprise the consolidated balance sheet as at December 31, 2019, and the consolidated income statement,consolidated statement of changes in shareholders’ equity and consolidated statement of cash flows for the yearthen ended, and the notes to the consolidated financial statements.In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, theconsolidated financial position of the Company as at December 31, 2019, and its consolidated financialperformance and its consolidated cash flows for the year then ended in accordance with Accounting Standards forBusiness Enterprises.Basis for OpinionWe conducted our audit in accordance with China Standards on Auditing. Our responsibilities under thosestandards are further described in the Auditor’s Responsibilities for the Audit of the consolidated FinancialStatement section of our report. We are independent of the Company in accordance with the Code of Ethics forChinese Certified Public Accountant (the “Ethics Code”) together with the ethical requirements that are relevantto our audit of the financial statements, and we fulfilled our other ethical responsibilities in accordance with theserequirements and the Ethics Code. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.Key audit mattersThe key audit matters are those matters that, in our professional judgment, are of most significance in ouraudit of the financial statements of the current period. These matters are addressed in the context of our audit
of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separateopinion on these matters.(I) Revenue RecognitionPlease refer to Note III. 27 and Note V. 47 in the Notes to the Financial Statements for the disclosure ofrevenue recognition.
1. Description
Haid Group is mainly engaged in feed production and sales. In 2019, Haid Group’s operating income wasRMB 47,612.59 million. As operating income is one of the key performance indicators of Haid Group, thereis an inherent risk of management manipulating the timing of revenue recognition to achieve specific goals orexpectations, we identify revenue recognition as a key audit matter.
2. How Our Audit Addressed the Key Audit Matter
(1) We understood and assessed the effectiveness of the management’s design and operation of key internalcontrol related to revenue recognition and tested the effectiveness of key control implementation;
(2) We carried out a spot check on significant sales contracts to identify the contract terms and conditionsrelated to the risk and remuneration transfer in respect of commodity ownership and evaluated whether theCompany’s accounting policy of revenue recognition complied with the accounting standards for businessenterprises;
(3) We performed analytical procedures to access the reasonableness of changes in revenue and grossmargin; examined the monthly average sales price of the Company’s major products, and compared it withthe data in the prior period;
(4) We obtained the archival information of the new significant customers, searched their relevantinformation through public channels and conducted assessment on whether they were related parties of theCompany.
(5) To test the authenticity and completeness of revenue, we inspected the supporting documents related torevenue recognition, including extracting sales statements to review the related sales contracts, delivery notes,bills of lading, weighing notes, bank receipts, and monthly customer sales statements. We verified andanalyzed the sales data in the Company’s logistics system and financial system.
(6) We inspected the sales returns and exchanges records to evaluate if there were any significant or unusualsales return or exchange that impacted the Company’s revenue recognition.
(7) To evaluate the accuracy and completeness of revenue, we performed confirmation procedures onrevenue.
(8) We performed revenue cut-off testing as of the balance sheet date in conjunction with inventoryobservation procedures to evaluate whether revenue was recognized in the appropriate period.(II) Expected Credit Losses on Accounts ReceivablePlease refer to Note III. 10 (6), Note III. 34, Note III. 35 and Note V. 5 in the Notes to the FinancialStatements for the disclosure of expected credit losses on accounts receivable.
1. Description
As of December 31, 2019, the balance of the Company’s accounts receivable was RMB1,021.75 million,including provision of bad and doubtful debts of RMB142.24 million. The Company’s management assessedthe expected credit losses on accounts receivable individually and collectively based on the consideration ofpast events, current situations and predictions of future economic conditions. Except for accounts receivablewith provision of bad and doubtful debts made individually, the management classified the accountsreceivable into corresponding portfolios based on similar credit risk characteristics. For accounts receivableclassified into portfolios, the management prepared comparison table of the accounts receivable aging andexpected credit loss rate based on the historical credit losses in conjunction with the current situation andpredictions of future economic conditions, and calculated the expected credit losses.As the Company involved significant accounting estimate and judgment in making the expected credit losseson accounts receivable, and the impact was significant, we identify expected credit losses on accountsreceivable as a key audit matter.
2. How Our Audit Addressed the Key Audit Matter
1) We understood and assessed the effectiveness of the management’s design and operation of key internalcontrol related to expected credit losses on accounts receivable.
2) For accounts receivables that measure expected credit losses based on portfolio of credit riskcharacteristics, we evaluated the appropriateness of portfolio classification, reviewed the appropriateness ofthe historical losses rate and prospective adjustment calculated based on the migration rate model, reviewedif the expected credit losses was adequate.
3) We selected samples based on the distribution of accounts receivable as at balance sheet date and therevenue in the current year to perform confirmation procedure on accounts receivable. We performedalternative produces for un-returned confirmations.
4) For accounts receivables with significant balance as at balance sheet date or long aged, we selectedsamples to examine customers’ operation situation, historical payment records and subsequent payment afterthe balance sheet date.(III) Impairment in GoodwillPlease refer to Note III. 22 and Note V.23 in the Notes to the Financial Statements for disclosure ofimpairment in goodwill.
1. Description
As of December 31, 2019, the balance of the Company’s goodwill was RMB 349.07 million, with anallowance of RMB 42.59 million for impairment in goodwill. The Company’s management shall testgoodwill at least annually to determine whether any impairment loss shall be recognized, and adjusted thebook value of goodwill according to the impairment test value. To estimate the recoverable amounts involvesestimating the present value of the future cash flows the asset groups are expected to generate. Whenestimating, the management needs to make significant judgments and assumptions, including thedetermination of key parameters such as the future selling price, the cost of production, the operating expense,the discount rate and the growth rate. As the goodwill impairment test involved a complex process and thesignificant judgments of the Company’s management, we paid attention to the goodwill impairment duringour audit as a key audit matter.
2. How Our Audit Addressed the Key Audit Matter
1) We obtained an understanding of the key internal controls associated with impairment in goodwill,evaluated the effectiveness of their design and operation.
2) We analyzed the key assumptions and methods adopted by the management in identifying the asset groupsof goodwill and reviewed whether the management’s judgement on the goodwill impairment sign wasreasonable, as well as evaluated the appropriateness of the valuation methods used by the management inestimating the cash flows.
3) We evaluated the appropriateness of the recoverable amount estimates of goodwill asset groups preparedby the management by comparing the financial data with the actual operating data, the operating plans andthe budgets approved by the management.
4) We discussed with the management about the possibility of changes to the key assumptions, as well asevaluated the appropriateness of the key assumptions such as the future revenue growth rate, the forecastgross margin percentage, the expense ratio and the discount rate that the management used in estimating thecash flows.
5) We compared the relevant asset groups’ actual results with their corresponding estimates made in the prioryear to evaluate the reliability of the management’s estimates on cash flows.
6) We reviewed whether the calculation of the net present value of future cash flows was accurate.Other InformationThe Company’s management is responsible for the other information. The other information comprises all ofthe information included in the Company’s 2019 Annual Report other than the financial statements and ourauditor’s report thereon.Our opinion on the financial statements does not cover the other information and we do not express any formof assurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to read the other informationand, in doing so, consider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materially misstated.If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact. We have nothing to report in this regard.Responsibilities of Management and Those Charged with Governance for Financial StatementsThe Company’s management is responsible for the preparation of the financial statements that give a fairview in accordance with CAS, and for designing, implementing and maintaining such internal control as themanagement determines is necessary to enable the preparation of financial statements that are free frommaterial misstatement, whether due to fraud or error.In preparing the financial statements, the management is responsible for assessing the Company’s ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern and using the goingconcern basis of accounting unless the management either intends to liquidate the Company or to ceaseoperations, or have no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s financial reporting process.Auditor’s Responsibilities for Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are freefrom material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes ouropinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with China Standards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,they could reasonably be expected to influence the economic decisions of users taken on the basis of thesefinancial statements.As part of an audit in accordance with CAS, we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud orerror, design and perform audit procedures responsive to those risks, and obtain audit evidence that issufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe Company’s internal control.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimatesand related disclosures made by the management.
(4) Concluded on the appropriateness of the management’s use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events or conditionsthat may cast significant doubt on the Company’s ability to continue as a going concern. If we concluded thata material uncertainty exists, we are required to draw attention in our auditor’s report to the relateddisclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, furtherevents or conditions may cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, including thedisclosures, and whether the financial statements represent the underlying transactions and events in amanner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Company to express an opinion on the financial statements. We are responsiblefor the direction, supervision and performance of the Company audit. We remain solely responsible for ouraudit opinion.We communicated with those charged with governance regarding, among other matters, the planned scopeand timing of the audit and significant audit findings, including any significant deficiencies in internalcontrol that we identified during our audit.
We also provided those charged with governance with a statement that we have complied with relevantethical requirements regarding independence, and communicated with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, relatedsafeguards.From the matters communicated with those charged with governance, we determine those matters that are ofmost significance in the audit of the financial statements of the current period and are therefore the key auditmatters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosureabout the matter or when, in extremely rare circumstances, we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.
Consolidated and Parent Company Balance Sheet
[English translation for reference only]Prepared by Guangdong Haid Group Co., Limited
Unit: RMB
| Item | Note V | As at 31/12/2019 | As at 31/12/2018 | ||
| Consolidated | Company | Consolidated | Company | ||
| Current assets: | |||||
| Cash at bank and on hand | 1 | 1,849,735,912.84 | 835,484,081.66 | 1,735,409,838.58 | 1,236,624,716.15 |
| Held-for-trading financial assets | 2 | 28,583,495.35 | 18,432,715.85 | - | - |
| Financial assets at fair value through profit or loss | 3 | - | - | 49,672,592.73 | 49,293,017.73 |
| Derivative financial assets | - | - | - | - | |
| Notes receivable | 4 | 10,722,401.32 | - | 10,509,311.36 | - |
| Accounts receivable | 5 | 1,021,751,432.56 | - | 1,096,136,255.70 | - |
| Accounts receivable financing | - | - | - | - | |
| Prepayments | 6 | 452,844,423.19 | 4,383,870.87 | 424,850,022.62 | 22,254,307.76 |
| Other receivables | 7 | 186,236,378.57 | 6,904,805,047.57 | 502,215,573.25 | 6,996,953,598.79 |
| Including: Interest receivables | 8,069.14 | - | 1,794,497.12 | 8,630.13 | |
| Dividend receivables | - | - | - | 35,271,940.95 | |
| Inventories | 8 | 4,463,319,035.43 | 23,596,543.22 | 4,843,780,132.17 | 17,550.00 |
| Contract assets | - | - | |||
| Assets held for sale | 9 | 28,946,788.99 | - | - | - |
| Non-current assets due within one year | 10 | 903,000.00 | - | 903,000.00 | - |
| Other current assets | 11 | 691,897,026.52 | 7,995,946.84 | 628,751,210.59 | 34,776,246.75 |
| Total current assets | 8,734,939,894.77 | 7,794,698,206.01 | 9,292,227,937.00 | 8,339,919,437.18 | |
| Non-current assets: | |||||
| Debt investments | - | - | - | - | |
| Loans and advances to customers | 12 | 15,281,255.35 | - | 157,600.00 | - |
| Available-for-sale financial assets | 13 | - | - | 323,421,350.00 | 292,900,000.00 |
| Other debt investments | - | - | |||
| Held-to-maturity investments | - | - | - | - | |
| Long-term receivables | 14 | 48,844,850.63 | 1,627,302.50 | 17,519,129.52 | 1,527,302.50 |
| Long-term equity investments | 15 | 62,614,691.35 | 4,053,854,039.62 | 38,614,535.85 | 3,103,551,860.05 |
| Other investments in equity instruments | - | - | - | - | |
| Other non-current financial asset | 16 | 255,521,350.00 | 225,000,000.00 | - | - |
| Investment properties | 17 | 30,645,502.71 | 14,317,378.50 | 46,397,156.64 | 36,316,499.75 |
| Fixed assets | 18 | 6,298,328,342.41 | 230,056,977.11 | 4,555,480,833.77 | 206,423,560.87 |
| Construction in progress | 19 | 657,751,195.76 | 19,384,268.98 | 724,011,706.23 | 17,989,781.29 |
| Productive biological assets | 20 | 165,272,087.28 | - | 56,828,507.31 | - |
| Oil and natural gas assets | - | - | - | - | |
| Right-of-use asset | - | - | - | - | |
| Intangible assets | 21 | 1,122,210,364.05 | 106,977,723.95 | 928,766,148.39 | 91,340,568.10 |
| Development expenses | 22 | 14,914,419.56 | - | 2,776,367.58 | - |
| Goodwill | 23 | 349,068,366.52 | - | 380,610,061.82 | - |
| Long-term deferred expenses | 24 | 241,325,867.74 | 23,316,596.39 | 231,144,073.09 | 20,848,132.10 |
| Deferred tax assets | 25 | 591,920,121.34 | 267,443,309.22 | 456,499,156.68 | 190,619,356.04 |
| Other non-current assets | 26 | 265,676,908.84 | 8,145,708.44 | 311,209,297.18 | 2,659,873.34 |
| Total non-current assets | 10,119,375,323.54 | 4,950,123,304.71 | 8,073,435,924.06 | 3,964,176,934.04 | |
| Total assets | 18,854,315,218.31 | 12,744,821,510.72 | 17,365,663,861.06 | 12,304,096,371.22 | |
| Current liabilities: | |||||
| Short-term loans | 27 | 3,020,892,004.18 | 2,313,032,093.55 | 2,715,954,867.69 | 2,168,367,337.60 |
| Held-for-trading financial liabilities | 28 | 2,633,510.00 | 996,670.00 | - | - |
| Financial liabilities at fair value through profit or loss | 29 | - | - | 46,271,790.00 | 32,630,290.00 |
| Derivative financial liabilities | - | - | - | - | |
| Notes payable | - | - | - | - | |
| Accounts payable | 30 | 1,917,055,340.85 | 25,086,884.14 | 1,512,857,075.94 | 3,323,382.83 |
| Advances from customers | 31 | 1,548,283,455.21 | - | 1,307,260,014.70 | - |
| Contract liabilities | - | - | - | - | |
| Payroll payable | 32 | 691,556,025.73 | 113,898,495.24 | 596,600,236.73 | 121,078,753.60 |
| Taxes payable | 33 | 106,556,060.79 | 1,045,722.46 | 118,589,643.19 | 2,024,745.82 |
| Other payables | 34 | 382,083,114.86 | 2,624,459,870.36 | 461,701,978.92 | 1,872,126,815.24 |
| Including: Interest payables | - | - | 25,144,934.16 | 17,572,923.73 | |
| Dividend payables | 1,159,042.39 | - | 6,250,397.10 | - | |
| Liabilities held for sale | - | - | - | - | |
| Non-current liabilities due within one year | 35 | 48,838,331.24 | 45,139,661.24 | 31,352,957.13 | 27,891,871.77 |
| Other current liabilities | 36 | 187,961,887.41 | 19,441,864.89 | 160,521,969.41 | 24,112,595.05 |
| Total current liabilities | 7,905,859,730.27 | 5,143,101,261.88 | 6,951,110,533.71 | 4,251,555,791.91 | |
| Non-current liabilities: | |||||
| Long-term loans | 37 | 821,661,042.98 | 220,290,277.78 | 1,842,910,000.00 | 1,499,750,000.00 |
| Debentures payable | - | - | - | - | |
| Lease liability | - | - | - | - | |
| Long-term payables | 38 | 85,596,111.44 | 38,712,712.67 | 115,622,929.75 | 79,288,904.41 |
| Long-term payroll payable | 39 | 66,078,784.25 | - | 64,891,859.13 | - |
| Provisions | - | - | - | - | |
| Deferred income | 40 | 120,386,515.06 | 14,564,630.31 | 68,368,132.23 | 9,166,812.14 |
| Deferred tax liabilities | 25 | 112,742,726.55 | 14,632,099.92 | 98,834,372.34 | 24,340,746.74 |
| Other non-current liabilities | - | - | - | - | |
| Total non-current liabilities | 1,206,465,180.28 | 288,199,720.68 | 2,190,627,293.45 | 1,612,546,463.29 | |
| Total liabilities | 9,112,324,910.55 | 5,431,300,982.56 | 9,141,737,827.16 | 5,864,102,255.20 | |
| Owners’ equity: | |||||
| Share capital | 41 | 1,580,357,494.00 | 1,580,357,494.00 | 1,581,211,084.00 | 1,581,211,084.00 |
| Other equity instruments | - | - | - | - | |
| Including：Preference share | - | - | - | - | |
| Perpetual debt | - | - | - | - | |
| Capital reserve | 42 | 2,118,792,106.43 | 2,202,920,835.86 | 2,010,778,182.22 | 2,089,547,854.24 |
| Less:Treasury stock | 43 | 172,540,566.20 | 172,540,566.20 | 251,038,100.40 | 251,038,100.40 |
| Other comprehensive income | 44 | 5,292,263.90 | - | 7,600,777.65 | - |
| Specific reserve | - | - | - | - | |
| Surplus reserve | 45 | 634,407,803.71 | 634,407,803.71 | 518,730,727.06 | 518,730,727.06 |
| Retained earnings | 46 | 4,937,480,629.17 | 3,068,374,960.79 | 3,878,656,406.43 | 2,501,542,551.12 |
| Total equity attributable to owners of the Company | 9,103,789,731.01 | 7,313,520,528.16 | 7,745,939,076.96 | 6,439,994,116.02 | |
| Non-controlling interests | 638,200,576.75 | - | 477,986,956.94 | - | |
| Total shareholders' equity | 9,741,990,307.76 | 7,313,520,528.16 | 8,223,926,033.90 | 6,439,994,116.02 | |
| Total liabilities and shareholders' equity | 18,854,315,218.31 | 12,744,821,510.72 | 17,365,663,861.06 | 12,304,096,371.22 |
Legal Representative: Hua Xue Person in Charge of Accounting Function: ShaolinYangPerson in Charge of Accounting Department: Shaolin Yang
Consolidated and Parent Company Income Statement[English translation for reference only]Prepared by Guangdong Haid Group Co., Limited
Unit: RMB
| Item | Note V | 2019 | 2018 | ||
| Consolidated | Company | Consolidated | Company | ||
| I.Operating income | 47 | 47,612,587,464.50 | 801,491,539.77 | 42,156,628,800.11 | 661,222,883.80 |
| Less: Operating costs | 47 | 42,223,411,917.10 | 333,183,369.63 | 37,615,586,184.77 | 285,175,292.67 |
| Taxes and surcharges | 48 | 60,616,092.81 | 4,786,024.41 | 53,140,738.34 | 2,767,521.84 |
| Selling and distribution expenses | 49 | 1,562,696,499.51 | 8,752,800.43 | 1,377,926,458.68 | 5,641,884.77 |
| General and administrative expenses | 50 | 1,190,746,169.15 | 307,640,882.34 | 967,112,552.40 | 270,389,544.81 |
| Research and | 51 | 416,009,959.72 | 150,757,403.12 | 309,167,320.66 | 107,532,183.91 |
| development expenses | |||||
| Financial expenses | 52 | 211,949,889.53 | 72,769,221.15 | 219,052,330.92 | 38,461,499.24 |
| Including: Interest expenses | 226,706,748.45 | 192,491,251.13 | 189,458,281.87 | 218,389,144.61 | |
| Interest income | 32,415,237.75 | 130,741,914.61 | 32,211,787.13 | 243,898,312.87 | |
| Add: Other income | 53 | 52,346,144.86 | 11,814,738.58 | 56,101,876.75 | 21,096,700.35 |
| Investment income ("-" for losses) | 54 | 160,042,248.95 | 1,233,790,116.18 | 151,089,721.85 | 1,380,654,166.66 |
| Including: Income from investment in associates and joint ventures | 13,127,173.32 | 8,990,725.43 | 6,349,268.04 | 1,415,674.66 | |
| Income from derecognized of financial assets measured at amortized cost ("-" for losses) | - | - | - | - | |
| Net exposure hedge income ("-" for losses) | - | - | - | - | |
| Gains from changes in fair value ("-" for losses) | 55 | 8,048,044.27 | -13,614,360.73 | 12,578,735.85 | 32,371,124.09 |
| Credit impairment loss ("-" for losses) | 56 | -23,069,181.57 | -238,316.40 | - | - |
| Impairment loss on assets ("-" for losses) | 57 | -50,187,230.29 | - | -66,011,371.18 | -456,330.36 |
| Gains from assets disposal ("-" for losses) | 58 | 3,880,771.91 | 97,384.38 | 66,161.29 | 108,699.39 |
| II.Operating profit ("-" for losses) | 2,098,217,734.81 | 1,155,451,400.70 | 1,768,468,338.90 | 1,385,029,316.69 | |
| Add: Non-operating income | 59 | 34,597,910.64 | 18,369,229.09 | 26,850,623.85 | 1,020,334.93 |
| Less: Non-operating expenses | 60 | 38,793,929.24 | 1,312,862.99 | 29,115,910.11 | 3,837,704.11 |
| III.Profit before income tax ("-" for losses) | 2,094,021,716.21 | 1,172,507,766.80 | 1,766,203,052.64 | 1,382,211,947.51 | |
| Less: Income tax expenses | 61 | 304,514,610.16 | 15,737,000.28 | 282,262,891.74 | 14,541,184.65 |
| IV.Net profit for the year ("-" for losses) | 1,789,507,106.05 | 1,156,770,766.52 | 1,483,940,160.90 | 1,367,670,762.86 | |
| (I) Classification according to operation |
| continuity | |||||
| Including: Net profit from continuing operations ("-" for net loss) | 1,789,507,106.05 | 1,156,770,766.52 | 1,483,940,160.90 | 1,367,670,762.86 | |
| Net profit from discontinued operations ("-" for net loss) | - | - | - | - | |
| (II) Classification according to attribute | |||||
| Including: owners of the company ("-" for net loss) | 1,648,762,579.59 | 1,156,770,766.52 | 1,437,281,732.28 | 1,367,670,762.86 | |
| Non-controlling interests ("-" for net loss) | 140,744,526.46 | - | 46,658,428.62 | - | |
| V.Other comprehensive income, net of tax | -2,824,205.77 | - | 6,647,951.72 | - | |
| Other comprehensive income (net of tax) attributable to owners of the company | -2,308,513.75 | - | 10,372,192.53 | - | |
| (I) Items that will not be reclassified to profit or loss | - | - | - | - | |
| (I) Items that may be reclassified to profit or loss | -2,308,513.75 | - | 10,372,192.53 | - | |
| 1. Translation differences arising from translation of foreign currency financial statements | -2,308,513.75 | - | 10,372,192.53 | - | |
| Other comprehensive income (net of tax) attributable to non-controlling interests | -515,692.02 | - | -3,724,240.81 | - | |
| VI.Total comprehensive income for the year | 1,786,682,900.28 | 1,156,770,766.52 | 1,490,588,112.62 | 1,367,670,762.86 | |
| Attributable to owners of the company | 1,646,454,065.84 | 1,156,770,766.52 | 1,447,653,924.81 | - | |
| Attributable to non-controlling interests | 140,228,834.44 | - | 42,934,187.81 | - | |
| VII.Earnings per share |
| 1.Basic earnings per share | 1.06 | 0.90 | |||
| 2.Diluted earnings per share | 1.05 | 0.90 |
Legal Representative: Hua Xue Person in Charge of Accounting Function: ShaolinYangPerson in Charge of Accounting Department: Shaolin Yang
Consolidated and Parent Company Cash Flow Statement[English translation for reference only]Prepared by Guangdong Haid Group Co., Limited
Unit: RMB
| Item | Note V | 2019 | 2018 | ||
| Consolidated | Company | Consolidated | Company | ||
| I.Cash flows from operating activities | |||||
| Cash received from sales of goods or rendering of services | 49,705,675,429.92 | 12,436,542.60 | 42,363,896,562.98 | 8,332,610.14 | |
| Cash received from interest, handling fee and commission | 19,945,475.46 | - | 6,884,283.07 | - | |
| Refund of taxes | 48,400,096.51 | 29,991,402.22 | 3,976,919.18 | - | |
| Cash received relating to other operating activities | 62 | 743,034,724.14 | 45,195,700,504.09 | 195,267,579.00 | 41,512,928,148.04 |
| Sub-total of cash inflows | 50,517,055,726.03 | 45,238,128,448.91 | 42,570,025,344.23 | 41,521,260,758.18 | |
| Cash paid for goods and services | 42,501,531,813.58 | 11,395,794.60 | 37,973,414,188.87 | 18,480,816.33 | |
| Net increase in loans and advances to customers | 393,174,508.66 | - | 38,061,650.95 | - | |
| Cash paid to and on behalf of employees | 2,451,482,886.43 | 327,384,279.58 | 2,016,327,516.26 | 222,416,623.80 | |
| Taxes payments | 491,222,772.04 | 29,724,618.22 | 426,702,091.03 | 39,624,617.16 | |
| Cash paid relating to other operating activities | 62 | 1,432,663,040.24 | 43,955,295,776.89 | 1,079,755,890.79 | 42,795,594,148.00 |
| Sub-total of cash outflows | 47,270,075,020.95 | 44,323,800,469.29 | 41,534,261,337.90 | 43,076,116,205.29 | |
| Net cash flows from operating activities | 63 | 3,246,980,705.08 | 914,327,979.62 | 1,035,764,006.33 | -1,554,855,447.11 |
| II.Cash flows from investing activities | |||||
| Cash received from disposal of investments | 956,266,418.22 | 314,666,943.70 | 2,457,440,496.06 | 1,931,379,749.20 | |
| Cash received from investment gains | 97,253,227.58 | 1,182,430,736.93 | 166,471,732.10 | 1,397,231,774.19 | |
| Cash received from disposal of fixed assets, intangible assets and other long-term assets | 24,536,424.57 | 242,488.07 | 6,105,301.75 | 544,017.66 | |
| Net proceeds from disposal of subsidiaries or other business units | 19,638,476.78 | - | - | 2,238,220.00 | |
| Cash received relating to other investing activities | - | - | - | - | |
| Sub-total of cash inflows | 1,097,694,547.15 | 1,497,340,168.70 | 2,630,017,529.91 | 3,331,393,761.05 | |
| Cash paid to acquire fixed assets, intangible assets and other long-term assets | 2,324,812,735.79 | 58,130,506.13 | 1,865,168,774.84 | 70,540,678.28 | |
| Payment for acquisition of investments | 856,376,669.90 | 963,788,421.82 | 2,402,156,863.96 | 2,616,900,961.00 | |
| Net payments for acquisition of subsidiaries and other business units | 32,449,955.99 | - | 361,835,034.57 | 103,551,689.52 | |
| Cash paid relating to other investing activities | 62 | 1,023,267.79 | - | 6,408,820.50 | - |
| Sub-total of cash outflows | 3,214,662,629.47 | 1,021,918,927.95 | 4,635,569,493.87 | 2,790,993,328.80 | |
| Net cash flows from investing activities | -2,116,968,082.32 | 475,421,240.75 | -2,005,551,963.96 | 540,400,432.25 | |
| III.Cash flows from financing activities | |||||
| Cash received from investors | 18,454,808.10 | 552,501.00 | 136,908,348.00 | 70,964,548.00 | |
| Including: Proceeds from non-controlling owners of subsidiaries | 17,742,307.10 | - | 65,943,800.00 | - | |
| Cash received from | 7,994,282,918.63 | 5,503,415,120.00 | 10,116,305,455.54 | 8,348,492,403.47 |
| borrowings | |||||
| Cash received from other financing activities | 62 | 168,624.69 | - | 37,170,911.00 | 37,170,911.00 |
| Sub-total of cash inflows | 8,012,906,351.42 | 5,503,967,621.00 | 10,290,384,714.54 | 8,456,627,862.47 | |
| Repayments of borrowings | 8,712,869,548.16 | 6,632,093,487.60 | 7,847,774,255.00 | 6,450,594,963.03 | |
| Payment for dividends, profit distributions or interest | 740,985,630.07 | 673,297,183.20 | 614,429,249.87 | 606,766,251.69 | |
| Including: Dividends and profits paid to non-controlling owners of subsidiaries | 28,896,451.17 | - | 42,490,812.96 | - | |
| Cash paid relating to other financing activities | 62 | 46,695,215.56 | 20,405,206.58 | 88,128,013.51 | 34,000,331.32 |
| Sub-total of cash outflows | 9,500,550,393.79 | 7,325,795,877.38 | 8,550,331,518.38 | 7,091,361,546.04 | |
| Net cash flows from financing activities | -1,487,644,042.37 | -1,821,828,256.38 | 1,740,053,196.16 | 1,365,266,316.43 | |
| IV.Effect of foreign exchange rate changes on cash and cash equivalents | 23,729,268.53 | 24,038,713.62 | 13,626,961.96 | -5,857,072.90 | |
| V.Net increase in cash and cash equivalents | -333,902,151.08 | -408,040,322.39 | 783,892,200.49 | 344,954,228.67 | |
| Add: Cash and cash equivalents at the beginning of the period | 2,158,167,759.86 | 1,236,058,716.15 | 1,374,275,559.37 | 891,104,487.48 | |
| VI.Cash and cash equivalent at the end of the period | 1,824,265,608.78 | 828,018,393.76 | 2,158,167,759.86 | 1,236,058,716.15 |
Legal Representative: Hua Xue Person in Charge of Accounting Function: ShaolinYangPerson in Charge of Accounting Department: Shaolin Yang
Consolidated Statements of Changes in Owners’ Equity[English translation for reference only]Prepared by Guangdong Haid Group Co., Limited
Unit: RMB
| Item | Year ended 31/12/2019 | |||||||||||
| Attributable to shareholders' equity of the parent company | Non-controlling interests | Total of shareholders' equity | ||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: treasury shares | Other comprehensive income | Specific reserve | Surplus reserve | Retained earnings | |||||
| Preference share | Perpetual debt | Others | ||||||||||
| I. Balance at the end of last year | 1,581,211,084.00 | - | - | - | 2,010,778,182.22 | 251,038,100.40 | 7,600,777.65 | - | 518,730,727.06 | 3,878,656,406.43 | 477,986,956.94 | 8,223,926,033.90 |
| Add: Changes in accounting policies | - | - | - | - | - | - | - | - | - | - | - | - |
| Correction of prior period errors | - | - | - | - | - | - | - | - | - | - | - | - |
| Adjustments for business combinations involving enterprises under common control | - | - | - | - | - | - | - | - | - | - | - | - |
| Others | - | - | - | - | - | - | - | - | - | - | - | - |
| II. Balance at the beginning of the year | 1,581,211,084.00 | - | - | - | 2,010,778,182.22 | 251,038,100.40 | 7,600,777.65 | - | 518,730,727.06 | 3,878,656,406.43 | 477,986,956.94 | 8,223,926,033.90 |
| III.Changes in equity during the year( "- "for decrease) | -853,590.00 | - | - | - | 108,013,924.21 | -78,497,534.20 | -2,308,513.75 | - | 115,677,076.65 | 1,058,824,222.74 | 160,213,619.81 | 1,518,064,273.86 |
| (I) Total comprehensive income | - | - | - | - | - | - | -2,308,513.75 | - | - | 1,648,762,579.59 | 140,228,834.44 | 1,786,682,900.28 |
| (II) Shareholders' contribution | -853,590.00 | - | - | - | 10,888,051.86 | -70,933,160.20 | - | - | - | - | 48,525,325.89 | 129,492,947.95 |
| s and decrease of capital | ||||||||||||
| 1.Contribution by ordinary shareholders | -853,590.00 | - | - | - | -5,545,900.60 | -70,933,160.20 | - | - | - | - | 47,724,233.45 | 112,257,903.05 |
| 2.Contribution by other equity instruments | - | - | - | - | - | - | - | - | - | - | - | - |
| 3. Equity settled share-based payments | - | - | - | - | 17,414,992.86 | - | - | - | - | - | 801,092.44 | 18,216,085.30 |
| 4. Others | - | - | - | - | -981,040.40 | - | - | - | - | - | - | -981,040.40 |
| (III) Appropriation of profits | - | - | - | - | - | -7,564,374.00 | - | - | 115,677,076.65 | -589,938,356.85 | -28,540,540.52 | -495,237,446.72 |
| 1. Appropriation for surplus reserves | - | - | - | - | - | - | - | - | 115,677,076.65 | -115,677,076.65 | - | - |
| 2. Appropriati | - | - | - | - | - | - | - | - | - | - | - | - |
| on to general reserve | ||||||||||||
| 3. Distributions to shareholders | - | - | - | - | - | -7,564,374.00 | - | - | - | -474,261,280.20 | -23,809,602.33 | -490,506,508.53 |
| 4. Others | - | - | - | - | - | - | - | - | - | - | -4,730,938.19 | -4,730,938.19 |
| (IV) Transfer within equity | - | - | - | - | - | - | - | - | - | - | - | - |
| 1.Share capital increased by capital reserves transfer | - | - | - | - | - | - | - | - | - | - | - | - |
| 2.Share capital increased by surplus reserves transfer | - | - | - | - | - | - | - | - | - | - | - | - |
| 3.Transfer of surplus reserve to | - | - | - | - | - | - | - | - | - | - | - | - |
| offset losses | ||||||||||||
| 4. Changes in defined benefit pension schemes transferred to retained earnings | - | - | - | - | - | - | - | - | - | - | - | - |
| 5. Transfer other comprehensive income to retained earning | - | - | - | - | - | - | - | - | - | - | - | - |
| 6.Others | - | - | - | - | - | - | - | - | - | - | - | - |
| (V) Specific Reserve | - | - | - | - | - | - | - | - | - | - | - | - |
| 1. Appropriation during the year | - | - | - | - | - | - | - | - | - | - | - | - |
| 2. Utilization during the | - | - | - | - | - | - | - | - | - | - | - | - |
| year | ||||||||||||
| (VI)Others | - | - | - | - | 97,125,872.35 | - | - | - | - | - | - | 97,125,872.35 |
| IV.Balance at the end of the year | 1,580,357,494.00 | - | - | - | 2,118,792,106.43 | 172,540,566.20 | 5,292,263.90 | - | 634,407,803.71 | 4,937,480,629.17 | 638,200,576.75 | 9,741,990,307.76 |
| Item | Year ended 31/12/2018 | |||||||||||
| Attributable to shareholders' equity of the parent company | Non-controlling interests | Total of shareholders' equity | ||||||||||
| Share capital | Other equity instruments | Non-controlling interests | Less:treasury shares | Other comprehensive income | Specific reserve | Surplus reserve | Retained earnings | |||||
| Preference share | Perpetual debt | Others | ||||||||||
| I. Balance at the end of last year | 1,575,237,054.00 | - | - | - | 1,849,285,839.41 | 302,540,781.00 | -2,771,414.88 | - | 381,963,650.77 | 2,973,520,338.94 | 362,234,787.13 | 6,836,929,474.37 |
| Add: Changes in accounting policies | - | - | - | - | - | - | - | - | - | - | - | - |
| Correction | - | - | - | - | - | - | - | - | - | - | - | - |
| of prior period errors | ||||||||||||
| Adjustments for business combinations involving enterprises under common control | - | - | - | - | - | - | - | - | - | - | - | - |
| Others | - | - | - | - | - | - | - | - | - | - | - | - |
| II. Balance at the beginning of the year | 1,575,237,054.00 | - | - | - | 1,849,285,839.41 | 302,540,781.00 | -2,771,414.88 | - | 381,963,650.77 | 2,973,520,338.94 | 362,234,787.13 | 6,836,929,474.37 |
| III.Changes in equity during the year( "- "for decrease) | 5,974,030.00 | - | - | - | 161,492,342.81 | -51,502,680.60 | 10,372,192.53 | - | 136,767,076.29 | 905,136,067.49 | 115,752,169.81 | 1,386,996,559.53 |
| (I) Total comprehensive income | - | - | - | - | - | - | 10,372,192.53 | - | - | 1,437,281,732.28 | 42,934,187.81 | 1,490,588,112.62 |
| (II) Shareholders' contributions and decrease of capital | 5,974,030.00 | - | - | - | 78,666,740.59 | -42,608,730.60 | - | - | - | - | 69,838,830.92 | 197,088,332.11 |
| 1.Contribution by ordinary shareholders | 5,974,030.00 | 51,265,457.40 | -42,608,730.60 | - | - | - | - | 65,943,800.00 | 165,792,018.00 | |||
| 2.Contribution by other equity instruments | - | - | - | - | - | - | - | - | - | - | - | - |
| 3. Equity settled share-based payments | - | - | - | - | 32,414,924.98 | - | - | - | - | - | 1,609,910.93 | 34,024,835.91 |
| 4. Others | - | - | - | - | -5,013,641.79 | - | - | - | - | - | 2,285,119.99 | -2,728,521.80 |
| (III) Appropriation of profits | - | - | - | - | - | -8,893,950.00 | - | - | 136,767,076.29 | -532,145,664.79 | -42,300,348.27 | -428,784,986.77 |
| 1. Appropriation for | - | - | - | - | - | - | - | - | 136,767,076.29 | -136,767,076.29 | - | - |
| surplus reserves | ||||||||||||
| 2. Appropriation to general reserve | - | - | - | - | - | - | - | - | - | - | - | |
| 3. Distributions to shareholders | - | - | - | - | - | -8,893,950.00 | - | - | - | -395,378,588.50 | -42,300,348.27 | -428,784,986.77 |
| 4. Others | - | - | - | - | - | - | - | - | - | - | - | - |
| (IV) Transfer within equity | - | - | - | - | - | - | - | - | - | - | - | - |
| 1.Share capital increased by capital reserves transfer | - | - | - | - | - | - | - | - | - | - | - | - |
| 2.Share capital increased by surplus reserves transfer | - | - | - | - | - | - | - | - | - | - | - | - |
| 3.Transfer of surplus reserve to offset losses | - | - | - | - | - | - | - | - | - | - | - | - |
| 4. Changes in defined benefit pension schemes transferred to retained earnings | - | - | - | - | - | - | - | - | - | - | - | - |
| 5. Transfer other comprehensive income to retained earning | - | - | - | - | - | - | - | - | - | - | - | - |
| 6.Others | - | - | - | - | - | - | - | - | - | - | - | - |
| (V) Specific Reserve | - | - | - | - | - | - | - | - | - | - | - | - |
| 1. Appropriation during | - | - | - | - | - | - | - | - | - | - | - | - |
| the year | ||||||||||||
| 2. Utilization during the year | - | - | - | - | - | - | - | - | - | - | - | - |
| (VI)Others | - | - | - | - | 82,825,602.22 | - | - | - | - | - | 45,279,499.35 | 128,105,101.57 |
| IV.Balance at the end of the year | 1,581,211,084.00 | - | - | - | 2,010,778,182.22 | 251,038,100.40 | 7,600,777.65 | - | 518,730,727.06 | 3,878,656,406.43 | 477,986,956.94 | 8,223,926,033.90 |
Legal Representative: Hua Xue Person in Charge of Accounting Function: ShaolinYangPerson in Charge of Accounting Department: Shaolin Yang
Parent Company Statements of Changes in Owners’ Equity[English translation for reference only]Prepared by Guangdong Haid Group Co., Limited
Unit: RMB
| Item | Year ended 31/12/2019 | ||||||||||
| Share capital | Other equity instruments | Capital reserve | Less:treasury shares | Other comprehensive income | Specific reserve | Surplus reserve | Retained earnings | Total of shareholders' equity | |||
| Preference share | Perpetual debt | Others | |||||||||
| I. Balance at the end of last year | 1,581,211,084.00 | - | - | - | 2,089,547,854.24 | 251,038,100.40 | - | - | 518,730,727.06 | 2,501,542,551.12 | 6,439,994,116.02 |
| Add: Changes in accounting policies | - | - | - | - | - | - | - | - | - | - | - |
| Correction of prior period errors | - | - | - | - | - | - | - | - | - | - | - |
| Others | - | - | - | - | - | - | - | - | - | - | - |
| II. Balance at the beginning of the year | 1,581,211,084.00 | - | - | - | 2,089,547,854.24 | 251,038,100.40 | - | - | 518,730,727.06 | 2,501,542,551.12 | 6,439,994,116.02 |
| III.Changes in equity during the year( "- "for decrease) | -853,590.00 | - | - | - | 113,372,981.62 | -78,497,534.20 | - | - | 115,677,076.65 | 566,832,409.67 | 873,526,412.14 |
| (I)Total comprehensive income | - | - | - | - | - | - | - | - | - | 1,156,770,766.52 | 1,156,770,766.52 |
| (II) Shareholders' contributions and decrease of capital | -853,590.00 | - | - | - | 12,670,184.70 | -70,933,160.20 | - | - | - | - | 82,749,754.90 |
| 1.Contribution by ordinary shareholders | -853,590.00 | - | - | - | -5,545,900.60 | -70,933,160.20 | - | - | - | - | 64,533,669.60 |
| 2.Contribution by other equity instruments | - | - | - | - | - | - | - | - | - | - | - |
| 3. Equity settled share-based payments | - | - | - | - | 18,216,085.30 | - | - | - | - | - | 18,216,085.30 |
| 4. Others | - | - | - | - | - | - | - | - | - | - | - |
| (III) Appropriation of profits | - | - | - | - | - | -7,564,374.00 | - | - | 115,677,076.65 | -589,938,356.85 | -466,696,906.20 |
| 1. Appropriation for surplus reserves | - | - | - | - | - | - | - | - | 115,677,076.65 | -115,677,076.65 | - |
| 2. Appropriation to general reserve | - | - | - | - | - | - | - | - | - | - | - |
| 3. Distributions to shareholders | - | - | - | - | - | -7,564,374.00 | - | - | - | -474,261,280.20 | -466,696,906.20 |
| 4. Others | - | - | - | - | - | - | - | - | - | - | - |
| (IV) Transfer within equity | - | - | - | - | - | - | - | - | - | - | - |
| 1.Share capital increased by capital reserves transfer | - | - | - | - | - | - | - | - | - | - | - |
| 2.Share capital increased by surplus reserves transfer | - | - | - | - | - | - | - | - | - | - | - |
| 3.Transfer of | - | - | - | - | - | - | - | - | - | - | - |
| surplus reserve to offset losses | |||||||||||
| 4. Changes in defined benefit pension schemes transferred to retained earnings | - | - | - | - | - | - | - | - | - | - | - |
| 5. Transfer other comprehensive income to retained earning | - | - | - | - | - | - | - | - | - | - | - |
| 6.Others | - | - | - | - | - | - | - | - | - | - | - |
| (V) Specific Reserve | - | - | - | - | - | - | - | - | - | - | - |
| 1. Appropriation during the year | - | - | - | - | - | - | - | - | - | - | - |
| 2. Utilization during the year | - | - | - | - | - | - | - | - | - | - | - |
| (VI)Others | - | - | - | - | 100,702,796.92 | - | - | - | - | - | 100,702,796.92 |
| IV.Balance at the end of the year | 1,580,357,494.00 | - | - | - | 2,202,920,835.86 | 172,540,566.20 | - | - | 634,407,803.71 | 3,068,374,960.79 | 7,313,520,528.16 |
| Item | Year ended 31/12/2018 | ||||||||||
| Share capital | Other equity instruments | Capital reserve | Less:treasury shares | Other comprehensive income | Specific reserve | Surplus reserve | Retained earnings | Total of shareholders' equity | |||
| Preference share | Perpetual debt | Others | |||||||||
| I. Balance at the end of last year | 1,575,237,054.00 | - | - | - | 1,914,381,221.12 | 302,540,781.00 | - | - | 381,963,650.77 | 1,666,017,453.05 | 5,235,058,597.94 |
| Add: Changes in accounting policies | - | - | - | - | - | - | - | - | - | - | - |
| Correction of prior period errors | - | - | - | - | - | - | - | - | - | - | - |
| Others | - | - | - | - | - | - | - | - | - | - | - |
| II. Balance at the beginning of the year | 1,575,237,054.00 | - | - | - | 1,914,381,221.12 | 302,540,781.00 | - | - | 381,963,650.77 | 1,666,017,453.05 | 5,235,058,597.94 |
| III.Changes in equity during the | 5,974,030.00 | - | - | - | 175,166,633.12 | -51,502,680.60 | - | - | 136,767,076.29 | 835,525,098.07 | 1,204,935,518.08 |
| year( "- "for decrease) | |||||||||||
| (I)Total comprehensive income | - | - | - | - | - | - | - | - | - | 1,367,670,762.86 | 1,367,670,762.86 |
| (II) Shareholders' contributions and decrease of capital | 5,974,030.00 | - | - | - | 85,290,293.31 | -42,608,730.60 | - | - | - | - | 133,873,053.91 |
| 1.Contribution by ordinary shareholders | 5,974,030.00 | - | - | - | 82,147,943.11 | -42,608,730.60 | - | - | - | - | 130,730,703.71 |
| 2.Contribution by other equity instruments | - | - | - | - | - | - | - | - | - | - | - |
| 3. Equity settled share-based payments | - | - | - | - | 3,142,350.20 | - | - | - | - | - | 3,142,350.20 |
| 4. | - | - | - | - | - | - | - | - | - | - | - |
| Others | |||||||||||
| (III) Appropriation of profits | - | - | - | - | - | -8,893,950.00 | - | - | 136,767,076.29 | -532,145,664.79 | -386,484,638.50 |
| 1. Appropriation for surplus reserves | - | - | - | - | - | - | - | - | 136,767,076.29 | -136,767,076.29 | - |
| 2. Appropriation to general reserve | - | - | - | - | - | - | - | - | - | - | - |
| 3. Distributions to shareholders | - | - | - | - | - | -8,893,950.00 | - | - | - | -395,378,588.50 | -386,484,638.50 |
| 4. Others | - | - | - | - | - | - | - | - | - | - | - |
| (IV) Transfer within equity | - | - | - | - | - | - | - | - | - | - | - |
| 1.Share capital increased by capital | - | - | - | - | - | - | - | - | - | - | - |
| reserves transfer | |||||||||||
| 2.Share capital increased by surplus reserves transfer | - | - | - | - | - | - | - | - | - | - | - |
| 3.Transfer of surplus reserve to offset losses | - | - | - | - | - | - | - | - | - | - | - |
| 4. Changes in defined benefit pension schemes transferred to retained earnings | - | - | - | - | - | - | - | - | - | - | - |
| 5. Transfer other comprehensive income to retained | - | - | - | - | - | - | - | - | - | - | - |
| earning | |||||||||||
| 6.Others | - | - | - | - | - | - | - | - | - | - | - |
| (V) Specific Reserve | - | - | - | - | - | - | - | - | - | - | - |
| 1. Appropriation during the year | - | - | - | - | - | - | - | - | - | - | - |
| 2. Utilization during the year | - | - | - | - | - | - | - | - | - | - | - |
| (VI)Others | - | - | - | - | 89,876,339.81 | - | - | - | - | - | 89,876,339.81 |
| IV.Balance at the end of the year | 1,581,211,084.00 | - | - | - | 2,089,547,854.24 | 251,038,100.40 | - | - | 518,730,727.06 | 2,501,542,551.12 | 6,439,994,116.02 |
Legal Representative: Hua Xue Person in Charge of Accounting Function: ShaolinYangPerson in Charge of Accounting Department: Shaolin Yang
I Company Profile1．Company’s InformationGuangdong Haid Group Co., Limited (formerly known as “Guangdong Haid Industrial Co., Ltd.” or“Guangdong Haid Group Limited”, and hereinafter referred to as the “Company”) is a share limited companyregistered in Guangdong Province, which was incorporated with joint investments from natural persons HuaXue, Yingzhuo Xu, Tan Lili, Luo Qiang and Xiewu Jiang. The Company was registered with the GuangdongProvince Administration for Industry and Commerce on January 8, 2004. It has obtained the business licenseissued by the Guangdong Province Administration for Industry and Commerce with a unified social creditcode of 914400007578948436. The Company’s headquarter and register address is located in Room 701,Block 2, No. 42, Wanbo 4th Road, Nancun Town, Panyu District, Guangzhou City, Guangdong Province.On May 17, 2007, as per the Reply on Approval of Change of Guangdong Haid Group Limited toForeign-Invested Limited Liability Company (SZP [2007] No. 905) issued by the Ministry of Commerce ofthe People’s Republic of China, Guangdong Haid Group Limited as a whole changed into Guangdong HaidGroup Co., Limited with December 31, 2006 as the base day. The Company went public on the ShenzhenStock Exchange in November 2009.As of December 31, 2019, the total shares of the Company were 1,580,357,494, of which 26,864,989 wererestricted shares, accounting for 1.70% of the total shares, and 1,553,492,505 were non-restricted shares,accounting for 98.30% of the total shares.The Company and its subsidiaries (hereinafter referred to as the “Group”) competes in the feed industry, themain products include aquatic and livestock feed, high-quality aquatic animal seedlings, animal healthproducts, biological products, pig breeding and so on, covering all business links such as R & D, design,production, sales and service of various products.The financial statements and notes have been approved by the ninth meeting of the fifth board of directors ofthe Company on April 18, 2020.
2. Scope of Consolidated Financial Statements
A total of 317 subsidiaries were included in the scope of the consolidated financial statements of the currentyear. 50 entities were added into and 5 entities were removed from the consolidation scope of the currentyear when compared to that of last year. For further information, please refer to “VI Changes inConsolidation Scope” and “VII Interests in Other Entities” herein.II Basis of preparation
The financial statements are prepared in accordance with the Accounting Standards for Business Enterprisesand corresponding application guidance, interpretations and other related provisions issued by the Ministry
of Finance (collectively, " Accounting Standards for Business Enterprises "). In addition, the Group alsodisclosed the relative financial information according to the Explanatory Announcement No. 15 onInformation Disclosure for Companies Offering Their Securities to the Public—General Requirements forFinancial Reporting (2014 version) issued by the China Securities Regulatory Commission.The financial statements of the Company have been prepared on going concern basis.The accounting of the Group is based on the basis of accrual accounting and measured at historical cost inaddition to certain financial instruments. Non-current assets held for sale are measured at the lower of thefollowing two amounts: (a) The amount of the fair value less estimated costs; (b) The book value when it wasrecognized as held for sale. If the assets were impaired, there would be provision of impairment according torelevant regulations.III Significant accounting policies and accounting estimates
The Group determines revenue recognition policy according to its production and operation characteristicsand relative requirement in Accounting Standards for Business Enterprises. For more information aboutaccounting policy, please refer to Note III.27.
1. Compliance with the Statement of Accounting Standards for Business Enterprises
The financial statements have been prepared in compliance with the Accounting Standards for BusinessEnterprises to truly and completely present the Company’s and consolidated financial position as atDecember 31, 2019 and the Company’s and consolidated operating results and cash flows for the year endedDecember 31, 2019.
2. Accounting Period
The accounting period of the Company is from 1 January to 31 December.
3. Operating Cycle
The Group has regarded 12 months as one operating cycle.
4. Functional currency
The Company and its domestic subsidiaries use Renminbi (“RMB”) as its functional currency. The overseassubsidiary engages in overseas operations need to determine their functional currency according to the maineconomic environment in which they operate. The financial statements of the Company have been preparedin RMB.
5. Accounting Treatment for Business Combination Involving Entities under Common Control and that not underCommon Control
(1) Business combinations involving enterprises under common control
For a business combination involving enterprises under common control, the assets acquired and liabilitiesassumed are measured based on their carrying amounts in the consolidated financial statements of theultimate controlling party at the combination date, except for adjustments due to different accounting policies.The difference between the carrying amount of the net assets acquired and the consideration paid for thecombination is adjusted against share premium in the capital reserve (share capital premium), with anyexcess adjusted against retained earnings.For a business combination involving enterprises under common control achieved in stages that involvesmultiple exchange transactions.In the individual financial statements, the share of the book value of combined party’s net assets in theultimate controller ’s consolidated financial statements which calculated by the share ratio in combinationdate is regarded as the initial investment cost of this investment; the difference between the initial investmentcost and the sum of the book value of the investment before combination and the book value of newconsideration paid in combination date, is adjusted against share premium in the capital reserve (share capitalpremium), with any excess adjusted against retained earnings.In the consolidated financial statements, the assets acquired and liabilities assumed are measured based ontheir carrying amounts in the consolidated financial statements of the ultimate controlling party at thecombination date, except for adjustments due to different accounting policies; the difference between thesum of the book value of the investment before combination and the book value of new consideration paid incombination date, and the book value of the net asset acquired in the combination, is adjusted against sharepremium in the capital reserve (share capital premium), with any excess adjusted against retained earnings.The long-term equity investment held by the merging party before acquiring control of the combined party,the changes in profit or loss, other comprehensive income and other owner’s equity recognized from the laterof the date acquired the former equity and the date which the merging party and merged party under finalcommon control by the same party’s to the merge date, should be written off the retained earnings in thebeginning and current gains and loss of the comparative statement period separately.
(2) Business combinations involving enterprises not under common control
For business combinations involving enterprises not under common control, the consideration costs includeacquisition-date fair value of assets transferred, liabilities incurred or assumed and equity securities issued bythe acquirer in exchange for control of the acquiree. At the acquisition date, the acquired assets, liabilitiesand contingent liabilities of the acquiree are measured at their fair value. The acquiree’s identifiable asset,liabilities and contingent liabilities, are recognized at their acquisition-date fair value.
Where the combination cost exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable netassets, the difference is recognized as goodwill, and subsequently measured on the basis of its cost lessaccumulated impairment provisions. Where the combination cost is less than the acquirer’s interest in the fairvalue of the acquiree’s identifiable net assets, the difference is recognized in profit or loss for the currentperiod after reassessment.For a business combination achieved in stages that involves multiple exchange transactionsIn the individual financial statements, the initial investment cost is the sum of the book value of the equityinvestment held by the purchased party before the purchase date and the new investment cost on the purchasedate. The equity investment is recognized as other comprehensive income by using equity method, this partof other comprehensive income is not adjusted in the purchase date, when disposal this investment, using thesame basis as the investee directly dispose of related assets or liabilities for accounting treatment; equityrecognized due to changes in the other equity of the investee (other than the changes in net profit and loss,other comprehensive income and profit distribution), is transferred to the gain or loss in the disposal periodwhen this investment is disposed. If the equity investment held before the purchase date is measured at fairvalue, the cumulative change in fair value that was originally included in other comprehensive income istransferred to profit or loss in the current period when the cost method is used.In the consolidated financial statements, the cost of combination amount to the sum of the consideration paidat the acquisition date and the fair value of equity investment of the acquire held prior to the acquisition datein consolidated financial statements. The cost of equity investment of the acquire held prior to the acquisitiondate shall be re-measured at the fair value at the acquisition date, the difference between the fair value andpar value shall be recognized as investment income. Other comprehensive income related with equityinvestment held prior to the purchase date shall be transferred to investment income for the current period,except for the comprehensive income arising from the movement of net liabilities or assets in the formersubsidiary’s re-measurement of defined benefit plan.
(3) The accounting treatment with the transaction cost in business combination
The overhead for the business combination, including the expenses for audit, legal services, valuationadvisory, and other administrative expenses, are recorded in profit or loss for the current period whenincurred. The transaction costs of equity or debt securities issued as the considerations of businesscombination are included in the initial recognition amount of the equity or debt securities.
6. Consolidated financial statements
(1) Scope of consolidated financial statements
The scope of consolidated financial statements is based on control. Control exists when the Company haspower over the investee; exposure, or rights to variable returns from its involvement with the investee and
has the ability to affect its returns through its power over the investee. A subsidiary is an entity that iscontrolled by the Company (including enterprise, a portion of an investee as a deemed separate component,and structured entity controlled by the enterprise).
(2) Basis of preparation of consolidated financial statements
The consolidated financial statements are prepared by the Company based on the financial statements of theCompany and its subsidiaries and other relevant information. When preparing consolidated financialstatements, the accounting policies and accounting periods of the subsidiaries should be consistent with thoseestablished by the Company, and all significant intra-group balances and transactions are eliminated.Where a subsidiary or business was acquired during the reporting period, through a business combinationinvolving enterprises under common control, the financial statements of the subsidiary or business areincluded in the consolidated financial statements as if the combination had occurred at the date that theultimate controlling party first obtained control.Where a subsidiary or business was acquired during the reporting period, through a business combinationinvolving enterprises not under common control, the identifiable assets and liabilities of the acquiredsubsidiaries or business are included in the scope of consolidation from the date that control commences.The portion of a subsidiary’s equity that is not attributable to the parent is treated as non-controlling interestsand presented separately in the consolidated balance sheet within shareholders’ equity. The portion of netprofit or loss of subsidiaries for the period attributable to non-controlling interests is presented separately inthe consolidated income statement below the “net profit” line item. When the amount of loss for the currentperiod attributable to the non-controlling shareholders of a subsidiary exceeds the non-controllingshareholders’ share of the opening owners’ equity of the subsidiary, the excess is still allocated against thenon-controlling interests.
(3) Purchase stock equities from minority shareholders of its subsidiaries
For acquisition of minority interests or disposals of interests in a subsidiary that do not result in the loss ofcontrol over the subsidiary the carrying amounts of the parent's interests and minority interests are adjustedto reflect the changes in their relative interests in the subsidiary. The difference between the amount by whichthe minority interests are adjusted and the fair value of the consideration paid or received is adjusted tocapital reserve. If the capital reserve is not sufficient to absorb the difference, the excess is adjusted againstretained earnings.
(4) Disposal of subsidiaries
When the Company loses control over a subsidiary because of disposing part of equity investment or otherreasons, the remaining part of the equity investment is re-measured at fair value at the date when the controlis lost. A gain or loss is recognised in the current period and is calculated by the aggregate of consideration
received in disposal and the fair value of remaining part of the equity investment deducting the sum of theshare of net assets book value and goodwill in proportion to previous shareholding percentage in the formersubsidiary since acquisition date and the goodwill.Other comprehensive income related to the former subsidiary is transferred to profit or loss when the controlis lost, except for the comprehensive income arising from the movement of net liabilities or assets in theformer subsidiary’s re-measurement of defined benefit plan.
(5) The treatment of disposal of investments through multiple transactions until loss of controlWhere the terms, conditions and economic impact of each transaction that disposes of equity step by stepthrough multiple transactions until loss of control meet one or more of the following conditions, theCompany will combine multiple transactions into bundled transaction for accounting treatment:
① They are entered into at the same time or in contemplation of each other;
② These transactions as a whole can achieve a complete business result;
③ The occurrence of one transaction depends on the occurrence of at least one other transaction;
④ A transaction alone is uneconomical, but it is economical when considered together with othertransactions.In the individual financial statements, where each transaction that disposes of equity until it loses control isnot "bundled transaction", recognize the book value of the long-term equity investment corresponding toevery equity disposal, the difference between income tax and the book value of disposed long-term equityinvestment shall recognize in investment income in the current period; where each transaction is “"bundledtransaction", before the loss of control, the difference between the price of each disposal and the book valueof the long-term equity investment corresponding to the disposed equity is first recognized as othercomprehensive income, and then transferred to the current loss when the control is lost.In the consolidated financial statements, when the Company disposal of investments step by step throughmultiple transactions until loss of control, the evaluation of remaining share and accounting for the disposalof equity gain or loss can refer to the aforementioned "treatment of loss of control of the subsidiary". Beforethe loss of control, the difference between the price of each disposal and the corresponding share of the netasset book value of the subsidiary since the purchase date corresponding to the disposal of the investmentshall be treated as follows:
①If transaction is “bundled transaction", the difference can be recognized as other comprehensive income.When the control is lost, it shall be transferred to the profit and loss of the current period.
②If transaction is not “bundled transaction", the difference can be recognized as other comprehensive
income. When the control is lost, it shall be transferred to the profit and loss of the current period.
7. Joint arrangement classification and accounting treatment for joint operation
A joint arrangement is an arrangement of which two or more parties have joint control. The Companyclassifies joint arrangements into joint operations and joint ventures.
(1) Joint operations
A joint operation is a joint arrangement whereby the joint operators have rights to the assets, and obligationsfor the liabilities, relating to the arrangement.The Group recognizes the following items relating to its interest in a joint operation, and account for them inaccordance with relevant accounting standards:
A、its solely-held assets, and its share of any assets held jointly;B、its solely-assumed liabilities, and its share of any liabilities assumed jointly;C、its revenue from the sale of its share of the output arising from the joint operation;D、its share of the revenue from the sale of the output by the joint operation;E、its solely-incurred expenses, and its share of any expenses incurred jointly.
(2) Joint ventures
A joint venture is a joint arrangement whereby the joint ventures have rights to the net assets of thearrangement.The Group adopts equity method under long-term equity investment in accounting for its investment in jointventure.
8. Cash and cash equivalents
Cash comprises cash in hand and deposits that can be readily withdrawn on demand. Cash equivalentsinclude short-term, highly liquid investments that are readily convertible to known amounts of cash and aresubject to an insignificant risk of change in value.
9. Foreign currency transactions and translation of foreign currency financial statements
(1) Foreign currency transactions
Foreign currency transactions are translated to the functional currency of the Company at the spot exchange
rates or approximate the spot exchange rates [usually, it refers to the middle rate of the foreign exchange ratepublished by the People’s Bank of China] on the dates of the transactions.Monetary items denominated in foreign currencies are translated to Renminbi at the spot exchange rate at thebalance sheet date. The resulting exchange differences between the spot exchange rate on balance sheet dateand the spot exchange rate on initial recognition or on the previous balance sheet date are recognized in profitor loss. Non-monetary items that are measured at historical cost in foreign currencies are translated toRenminbi using the exchange rate at the transaction date. Non-monetary items that are measured at fair valuein foreign currencies are translated using the exchange rate at the date the fair value is determined. Theresulting exchange differences are recognized in profit or loss.
(2) Translation of foreign currency financial statements
When translating the foreign currency financial statements of overseas subsidiaries, assets and liabilities offoreign operation are translated to Renminbi at the spot exchange rate at the balance sheet date. Equity items,excluding “retained earnings”, are translated to Renminbi at the spot exchange rates at the transaction dates.Income and expenses of foreign operation are translated to Renminbi at the rates determined under asystematic and rational method that approximate the spot exchange rates at the transaction dates.Cash flow statement of foreign operation is translated to Renminbi at the spot exchange rates at the cash flowoccurrence dates. Effect of foreign exchange rate changes on cash and cash equivalents is presentedseparately as “Effect of foreign exchange rate changes on cash and cash equivalents” in the cash flowstatement.The resulting translation differences are recognised in other comprehensive income in shareholders’ equity ofbalance sheet.The translation differences accumulated in owner’s equity with respect to a foreign operation are transferredto profit or loss in the period when the foreign operation is disposed.
10. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one enterprise and a financialliability or an equity instrument of another enterprise.
(1) Recognition and derecognition of financial instruments
A financial asset or a financial liability is recognized when the Group becomes a party to the contractualprovisions of a financial instrument.If one of the following criteria is met, a financial asset is derecognized:
A. The contractual rights to the cash flows from the financial asset expire; orB. The financial asset was transferred, and the transfer qualifies for derecognition in accordance with criteriaset out below in “Transfer of Financial Assets”.A financial liability (or part of it) is derecognized when its contractual obligation (or part of it) is dischargedor cancelled or expires. If the Group (as a debtor) makes an agreement with the creditor to replace the currentfinancial liability with assuming a new financial liability, and contractual provisions are different insubstance, the current financial liability is derecognized and a new financial liability is recognized.If the financial assets are traded regularly, the financial assets are recognized and derecognized at thetransaction date.
(2) Classification and measurement of financial assets
The Group classifies financial assets into three categories at initial recognition according to the businessmodel for managing financial assets and the contractual cash flow characteristics of financial assets: financialassets measured at amortized cost, financial assets at fair value through other comprehensive income andfinancial assets at fair value through profit or loss.
Financial assets measured at amortized costThe Group classifies financial assets that meet the following conditions and are not designated as fair valuethrough profit or loss and are classified as financial assets measured at amortized cost:
? The business model for managing this financial asset is to collect contractual cash flows;? The contract terms of the financial asset stipulate that the cash flow generated on a specific date is only
for the payment of principal and interest based on the outstanding principal.After initial recognition, the effective interest rate method is adopted to measure such financial assets atamortized cost. Gains or losses arising from financial assets that are measured at amortized cost and are notpart of any hedging relationship are included in profit or loss when they are derecognized, amortizedaccording to the effective interest rate method, or recognized for impairment.
Financial assets at fair value through other comprehensive incomeThe Group classifies financial assets that meet the following conditions and are not designated as fair valuethrough profit or loss and are classified as financial assets at fair value through other comprehensive income:
? The business model for managing the financial asset is aimed at both collecting contractual cash flowand selling the financial asset;? The contract terms of the financial asset stipulate that the cash flow generated on a specific date is onlyfor the payment of principal and interest based on the outstanding principal.After initial recognition, this kind of financial assets measure at fair value. Interest, impairment losses orgains calculated by the effective interest rate method and exchange gains and losses are included in thecurrent profit and loss, and other gains or losses are included in other comprehensive income. When they arederecognized, the accumulated gains or losses previously included in other comprehensive income aretransferred out of other comprehensive income and included in the current profit and loss.Financial assets at fair value through current gain and lossExcept for the above financial assets measured at amortized cost and financial assets at fair value throughother comprehensive income, the Group classifies all remaining financial assets as financial assets measuredat fair value through current gain and loss. In the initial recognition, to eliminate or significantly reduceaccounting mismatches, the Group irrevocably designates some financial assets that should be measured atamortized cost or measured at fair value through other comprehensive income as financial assets at fair valuethrough current gain and loss.After the initial recognition, for subsequent measurement of such financial assets at fair value, the resultinggains or losses (including interest and dividend income) are included in the current profit and loss unless thefinancial asset is part of the hedging relationship.Business model for managing financial assets and evaluation of contractual cash flow characteristics of financial assetsThe business model for managing financial assets refers to how the Group manages financial assets togenerate cash flows. The business model determines whether the source of the cash flow of financial assetsmanaged by the Group is to collect contractual cash flows, sell financial assets, or both. The Groupdetermines the business model for managing financial assets based on objective facts and on the basis ofspecific business objectives determined by key management personnel for the management of financialassets.The Group evaluates the contractual cash flow characteristics of financial assets to determine whether thecontractual cash flow generated by the relevant financial assets on a specific date is only the payment forprincipal and interest based on the outstanding principal amount. Among them, principal refers to the fairvalue of financial assets at initial recognition; interest includes the time value of money, the credit riskassociated with the amount of outstanding principal in a specific period, and the consideration of other basicborrowing risks, costs, and profits. In addition, the Group evaluates contract terms that may result in changesin the time distribution or amount of contractual cash flows of financial assets to determine whether it meets
the requirements of the contractual cash flow characteristics described above.Only when the Group changes the business model for managing financial assets, all affected related financialassets are reclassified on the first day of the first reporting period after the business model is changed,otherwise the financial assets cannot be reclassified after initial recognition.Financial assets are measured at fair value at initial recognition. For financial assets measured at fair valueand whose changes are included in profit or loss, the relevant transaction costs are directly included in thecurrent profit and loss; for other kind of financial assets, related transaction costs are included in the initialrecognized amount. For accounts receivable arising from the sale of products or the provision of laborservices that do not contain or do not consider significant financing components, the Group recognizes theamount to be expected received as the initial recognition amount.
(3) Classification and measurement of financial liabilities
The Company classifies financial liabilities into different categories at initial recognition: financial liabilitiesat fair value through profit or loss, and financial liabilities measured at amortized cost. For financialliabilities at fair value through profit or loss, any related directly attributable transaction costs are charged toprofit or loss; for other categories of financial liabilities, any related directly attributable transaction costs areincluded in their initial costs.Financial liabilities at fair value through profit or lossFinancial liabilities at fair value through profit or loss include financial liabilities held for trading andfinancial liabilities designated to financial liabilities at fair value through profit or loss on initial recognition.Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fairvalue, and changes therein and any dividend or interest income earned on the financial liabilities arerecognized in profit or loss.Financial liabilities measured at amortized costOther financial liabilities are measured at amortized cost using the effective interest method. Gains and lossesarising from derecognition or amortization is recognized in profit or loss for the current period.Financial guarantee contractThe financial guarantee contract is not a financial liability designated as measured at fair value and itschanges are included in the current profit and loss, it is measured at fair value during initial recognition, andsubsequently measured in accordance with the higher of the loss provision for the estimated liabilitydetermined using the expected credit loss model and the balance after the initial recognition amount deductsthe accumulated amortization amount.
The distinction between financial liabilities and equity instrumentA financial liability is recognized if one of the following conditions is satisfied:
A. a contractual obligation to deliver cash or another financial asset to another entity;B. a contractual obligation to exchange financial assets or financial liabilities with another entity underconditions that are potentially unfavorable to the Company;C. a non-derivative contract that will or may be settled in the Company’s own equity instruments and theCompany is obliged to deliver a variable number of the Company’s own equity instruments;D. a derivative contract that will or may be settled in the Company’s own equity instruments, except for aderivative contract that is settled by the exchange of a fixed number of the Company’s own equityinstruments for a fixed amount of cash or other financial assets.An equity instrument is a contract that evidences a residual interest in the assets of the Company afterdeducting all of its liabilities.If the Group does not have an unconditional right to avoid delivering cash or another financial asset to settlea contractual obligation, the obligation meets the definition of a financial liability.If a financial instrument will or may be settled in the Group’s own equity instruments, classification of theinstrument depends on whether the Group’s own equity instruments work as the replacement of cash or otherfinancial instrument, or represent the investor’s residual interest in the Group’s assets after deducting all itsliabilities. In the former case, the instrument is classified as a financial liability; in the latter case, theinstrument is classified as an equity instrument.
(4) Derivative financial instruments and embedded derivative instruments
Derivative financial instruments of the Group are initially measured at their fair value at the date a derivativecontract entered into and subsequently measured at their fair value. Derivative financial instruments ofpositive fair value are recognized as assets; those of negative fair value are recognized as liabilities. Anygains or losses arising from changes in fair value which do not meet the requirements of hedge accountingare directly recognized to profit or loss for the current period.For hybrid instruments containing embedded derivatives, if the main contract is a financial asset, the relevantprovisions of the financial asset classification apply to the hybrid instrument as a whole. If the main contractis not a financial asset, and the hybrid instrument is not measured at fair value and its changes are included inthe current profit and loss for accounting treatment, the embedded derivative does not have a closerelationship with the main contract in terms of economic characteristics and risks, and has the sameconditions as the embedded derivative, if the separate tool meets the definition of the derivative, the
embedded derivative is split from the mixed tool as a separate derivative financial instrument processing. Ifthe embedded derivative cannot be measured separately at the time of acquisition or on the subsequentbalance sheet date, the hybrid instrument as a whole is designated as a financial asset or financial liabilitymeasured at fair value through profit or loss.
(5) Fair value of financial instruments
Determination of fair value of financial assets and financial liabilities please refers to Note III.11.
(6) Impairment of financial assets
Based on expected credit losses, the Group performs impairment accounting for the following items andconfirms the loss provision:
? Financial assets carried at amortized cost? Receivables and debt investments measured at fair value through other comprehensive income;? Lease receivables? Financial guarantee contract (except those measured at fair value through profit and loss, the transfer offinancial assets does not meet the conditions for derecognition or continue to involve in the transferredfinancial assets)
Measurement of expected credit lossesExpected credit loss refers to the weighted average of the credit losses of financial instruments weighted bythe risk of default. Credit loss refers to the difference between all contractual cash flows receivable under thecontract discounted by the Group at the original effective interest rate and all cash flows expected to received,that is, the present value of all cash shortages.The company considers reasonable and well-founded information about past events, current conditions andforecasts of future economic conditions, using the risk of default as a weight, calculate theprobability-weighted amount of the present value of the difference between the contractual cash flowreceivable and the cash flow expected to be received, to confirm the expected credit loss.The Group separately measures the expected credit losses of financial instruments at different stages. If thecredit risk of financial instruments has not increased significantly since the initial recognition, it is in the firststage and the Group measures the loss reserve according to the expected credit losses in the next 12 months;if the credit risk of a financial instrument has increased significantly since the initial recognition but no creditimpairment has occurred, it is in the second stage, the Group measures the loss provision according to theexpected credit loss of the entire life of the instrument; if the financial instrument has suffered creditimpairment since its initial recognition, it is in the third stage, the Group measures the loss allowance based
on the expected credit loss for the entire duration of the instrument.For financial instruments with lower credit risk on the balance sheet date, the Group assumes that its creditrisk has not increased significantly since its initial recognition, and measures loss provisions based onexpected credit losses within the next 12 months.The expected credit loss for the entire duration refers to the expected credit loss caused by all possible defaultevents during the entire expected duration of the financial instrument. The expected credit loss in the next 12months refers to the event of financial instrument default that may occur within 12 months after the balancesheet date (if the expected duration of the financial instrument is less than 12 months, the estimated duration),expected credit losses are part of the expected credit losses for the entire duration.When measuring expected credit losses, the longest period that the Group needs to consider is the longestcontract period for companies facing credit risk (including consideration of renewal options).If the financial instruments in the first and second stages and with lower credit risk, the Group calculatesinterest income based on the book balance before the impairment reserve and actual interest rate. If thefinancial instruments in the third stages, the Group calculate interest income based on its book balance minusthe amortized cost after the provision for impairment and the actual interest rate.
1) Bills receivable, accounts receivables
Regarding bills receivable and accounts receivable, regardless of whether there is a significant financingcomponent, the Group has always measured its loss reserves based on the amount equivalent to the expectedcredit losses throughout the lifetime.When a single financial asset cannot estimate the expected credit loss information at a reasonable cost, theGroup divides the group of notes receivable and accounts receivable according to the characteristics of creditrisk, calculates the expected credit loss on the basis of the group, and determines the group based on thefollowing:
A、Bills receivable? Group 1 of Bills receivable: Bank acceptance bills? Group 2 of Bills receivable: Commercial acceptance bills? Group 3 of Bills receivable: Usance letters of creditB、 Accounts receivable? Group 1 of accounts receivable: Feed receivables and related customers receivables? Group 2 of accounts receivable: Receivable from the related parties within the consolidated scope
? Group 3 of accounts receivable: Receivables from raw materials customersFor bills receivable divided into portfolios, the Group refers to historical credit loss experience, combinedwith current conditions and predictions of future economic conditions, calculates expected credit lossesthrough default risk exposure and expected credit loss rate for the entire duration.For the accounts receivable divided into portfolios, the Group refers to the historical credit loss experience,combined with the current situation and the prediction of the future economic situation, to prepare acomparison table of the aging / overdue days of the accounts receivable and the expected credit loss rate ofthe entire duration, to calculate expected credit losses.
2) Other receivables
The Group divides other receivables into several groups based on the characteristics of credit risk, calculatesthe expected credit losses on the basis of the group, and determines the basis of the combination as follows:
? Group 1 of other receivables: Security deposits? Group 2 of other receivables: Futures margin? Group 3 of other receivables: Accounts with external parties? Group 4 of other receivables: Performance compensation? Group 5 of other receivables: Petty cash? Group 6 of other receivables: Receivable from the related parties within the consolidated scope? Group 7 of other receivables: OthersFor other receivables that are divided into portfolios, the Group calculates the expected credit loss throughthe default risk exposure and the expected credit loss rate within the next 12 months or the entire duration.
3) Loans and advances
For the issuance of loans and advances, the Group calculates the expected credit loss through the default riskexposure and the expected credit loss rate within the next 12 months or the entire duration.
4) Long-term account receivables
The Group's long-term receivables include financial lease receivables, security deposit receivables, andcontract receivables from installment receivables etc.The Group divides the financial lease receivables, security deposit receivables, and installment receivablescontracted receivables into several groups based on the characteristics of credit risk. The expected credit
losses are calculated on the basis of the group and determines the group based on the following:
A、Payables for finance leases? Group 1 of finance leases: Receivable from the related parties within the consolidated scope? Group 2 of finance leases: Receivable from other customersB、Other long-term receivables? Group 1 of long-term receivables: Security deposits receivable? Group 2 of long-term receivables: Receivable by installments for subcontracting? Group 3 of long-term receivables: Other receivablesAs for receivable by installments for subcontracting and security deposits receivable, the Group refers tohistorical credit loss experience, combined with current conditions and predictions of future economicconditions, calculates expected credit losses through default risk exposure and expected credit loss rate forthe entire duration.Other than receivable by installments for subcontracting and security deposits receivable, other receivablesand lone-term receivables that are classified as groups, the Group calculates the expected credit loss throughthe default risk exposure and the expected credit loss rate within the next 12 months or the entire duration.
5) Loan investment and other loan investment
As for the loan investment and other loan investment, the Group calculates the expected credit loss based onthe nature of the investment, various types of counterparties and risk exposures, through the default riskexposure and the expected credit loss rate within the next 12 months or the entire duration.Assessment of significant increase in credit riskThe Group compares the risk of default of financial instruments on the balance sheet date with the risk ofdefault on the initial recognition date to determine the relative change in the default risk of financialinstruments during the expected lifetime to evaluate whether the credit risk of financial instruments hasincreased significantly since initial recognition.After confirming whether the credit risk of financial instruments has increased significantly since initialrecognition, the Group considers reasonable and evidence-based information that can be obtained withoutunnecessary extra cost or effort, including forward-looking information. The information considered by theGroup includes:
? The debtor fails to pay the principal and interest according to the contract expiration date;
? Severe deterioration of external or internal credit ratings (if any) of financial instruments that haveoccurred or are expected;? The serious deterioration of the debtor ’s operating results that has occurred or is expected;? Existing or expected changes in technology, market, economy or legal environment will have asignificant adverse effect on the debtor ’s ability to repay the Group.Based on the nature of financial instruments, the Group assesses whether credit risk has increasedsignificantly on the basis of individual financial instruments or a combination of financial instruments. Whenassessing based on a combination of financial instruments, the Group can classify financial instruments basedon common credit risk characteristics, such as overdue information and credit risk ratings.Financial assets that have suffered credit impairment
The Group assesses at the balance sheet date whether financial assets measured at amortized cost and creditinvestments measured at fair value through other comprehensive income have suffered credit impairment.When one or more events that adversely affect the expected future cash flow of a financial asset occur, thefinancial asset becomes a financial asset that has suffered credit impairment. Evidence of credit impairmentof financial assets includes the following observable information:
? The issuer or debtor has major financial difficulties;? The debtor violates the contract, such as interest or principal payment default or overdue;? Due to economic or contractual considerations related to the debtor ’s financial difficulties, the Groupgrants the debtor concessions under no other circumstances;? The debtor is likely to go bankrupt or undergo other financial restructuring;? The financial difficulties of the issuer or the debtor cause the active market of the financial asset todisappear.
Presentation of expected credit loss provisionsIn order to reflect the changes in the credit risk of financial instruments since initial recognition, the Groupremeasures the expected credit losses on each balance sheet date, and the resulting increase or reversal of theloss provision should be counted as an impairment loss or gain into the profit and loss of the current period.For financial assets measured at amortized cost, the loss allowance offsets the book value of the financialasset listed on the balance sheet; for debt investments that are measured at fair value through othercomprehensive income, the Group recognizes its loss allowance in other comprehensive income and does notoffset the book value of the financial asset.
OffsetIf the Group no longer reasonably expects that the contractual cash flows of financial assets can be recoveredin whole or in part, it directly writes down the book balance of the financial asset. Such write-downsconstitute the derecognition of related financial assets. This situation usually occurs when the Groupdetermines that the debtor has no assets or a source of income to generate sufficient cash flow to cover theamount that will be written down. However, in accordance with the Group's procedures for recovering duepayments, the write-down of financial assets may still be affected by the execution activities.If the financial asset that has been written down is recovered later, it is included in the current profit and lossas the reversal of the impairment loss.
(7) Transfer of financial assets
Transfer of financial assets is the transfer or delivery of financial assets to another party (the transferee) otherthan the issuer of financial assets.A financial asset is derecognized if the Group transfers substantially all the risks and rewards of ownership ofthe financial asset to the transferee. A financial asset is not derecognized if the Group retains substantially allthe risks and rewards of ownership of the financial asset to the transferee.The Group neither transfers nor retains substantially all the risks and rewards of ownership of the financialasset, and the accounting treatment is shown as following: if the Group has forgone control over the financialasset, the financial assets is derecognized, and new assets and liabilities are recognized. If the Group retainscontrol over the financial asset, the financial asset is recognized to the extent of its continuing involvement inthe transferred financial asset, and an associated liability is recognized.
(8) Offset between financial assets and financial liabilities
When the Group has the legal right to offset the recognized financial assets and financial liabilities, is able tocarry out the legal right and plans to settle by net amount or realize the financial assets and pay off financialliabilities, the amount after offsetting financial assets and financial liabilities each other is presented in thebalance sheet. Financial assets and financial liabilities are presented separately in the balance sheet and notallowed to offset each other.
11. Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at the measurement date.The Group measures related assets or liabilities at fair value assuming the assets or liabilities are exchanged
in an orderly transaction in the principal market; in the absence of a principal market, assuming the assets orliabilities are exchanged in an orderly transaction in the most advantageous market. Principal market (or themost advantageous market) is the market that the Group can normally enter into a transaction onmeasurement date. The Group adopts the presumptions that would be used by market participants inachieving the maximized economic value of the assets or liabilities.For financial assets or financial liabilities with active markets, the Group uses the quoted prices in activemarkets as their fair value. Otherwise, the Group uses valuation technique to determine their fair value.Fair value measurement of a non-financial asset takes into account market participants’ ability to generateeconomic benefits using the asset in its best way or by selling it to another market participant that would bestuse the asset.The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient dataare available to measure fair value, maximizing the use of relevant observable inputs, and using unobservableinputs only if the observable inputs aren’t available or impractical.Fair value level for assets and liabilities measured or disclosed at fair value in the financial statements aredetermined according to the significant lowest level input to the entire measurement: Level 1 inputs arequoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at themeasurement date; Level 2 inputs are inputs other than quoted prices included within Level 1 that areobservable for the assets or liabilities, either directly or indirectly; Level 3 inputs are unobservable inputs forthe assets or liabilities.At the balance sheet date, the Group revalues assets and liabilities being measured at fair value continuouslyin the financial statements to determine whether to change the levels of fair value measurement.
12. Inventories
(1) Classification
Inventories include raw materials, finished goods, work in progress, consumptive biological assets and workin process-outsourced etc.
(2) Measurement method of cost of inventories
Inventories are initially measured at cost. Raw materials and finished goods are calculated using weightedaverage method, for the measurement and amortization of consumptive biological assets, please refer to NoteIII.19.
(3) Basis for determining the net realizable value and method for provision for obsolete inventoriesNet realizable value is the estimated selling price in the ordinary course of business less the estimated costs
of completion and the estimated costs necessary to make the sale and relevant taxes. The net realizable valueis measured based on the verified evidences and considerations for the purpose of holding inventories and theeffect of post balance sheet events.Any excess of the cost over the net realizable value of inventories is recognised as a provision for obsoleteinventories, and is recognised in profit or loss. The Group usually recognises provision for decline in value ofinventories by a single inventory item (if the inventories are with various types of inventory and lower unitprices, it recognizes by category). If the factors caused the value of inventory previously written-down havedisappeared, the provision for decline in value of inventories previously made is reversed.
(4) Inventory count system
The Company maintains a perpetual inventory system
13. Assets held for sale and discontinued operations
(1) Classification and measurement of non-current assets or disposal groups held for saleThe Group classifies a non-current asset or disposal group as held for sale when the carrying amount of thenon-current asset or disposal group will be recovered through a sale transaction (including an exchangetransaction of non-monetary assets with commercial substance) rather than through continuing use.Above mentioned non-current assets do not include investment properties subsequently measured with thefair value model, biological assets measured at fair value less costs to sell, assets arising from employeebenefits, financial assets, deferred tax assets and contractual rights under insurance contracts.The disposal group is a group of assets to be disposed of, by sale or otherwise, together as a whole in a singletransaction, and liabilities directly associated with those assets that will be transferred in the transaction. Incertain circumstances, disposal groups include goodwill acquired in a business combination.A non-current asset or disposal group is classified as held for sale when all the following criteria are met:
According to the customary practices of selling such asset or disposal group in similar transactions, thenon-current asset or disposal group is available for immediate sale in its present condition; The sale is highlyprobable to occur, that is, the Group has made a resolution on a sale plan and entered into a legally bindingpurchase agreement with other parties. The sale is expected to be completed within one year. The Group thatis committed to a sale plan involving loss of control of a subsidiary classifies all the investment in thatsubsidiary as held for sale in its separate financial statements, and classifies all the assets and liabilities ofthat subsidiary as held for sale in its consolidated financial statements, when the classification criteria forheld for sale are met, regardless of whether the Group retains a non-controlling interest in its formersubsidiary after the sale.
Non-current assets or disposal groups held for sale are initially and subsequently measured at the lower ofcarrying amount and fair value less costs to sell. Any excess of the carrying amount over the fair value lesscosts to sell is recognised as an impairment loss in profit or loss. The impairment loss recognised for adisposal group firstly reduces the carrying amount of goodwill allocated to the disposal group, and thenreduces the carrying amount of other non-current assets pro rata on the basis of the carrying amount of eachnon-current asset in the disposal group.The Group recognises a gain for any subsequent increase in fair value less costs to sell of an asset, but not inexcess of the cumulative impairment loss that has been recognised after classified as held for sale. Thereduced carrying amount of goodwill is not recovered.The Group does not depreciate (or amortise) a non-current asset while it is classified as held for sale or whileit is part of a disposal group classified as held for sale. Interest and other expenses attributable to theliabilities of a disposal group classified as held for sale continue to be recognised. If an investment or a partof investment in an associate or a joint venture is classified as held for sale, equity method is not used for thepart classified as held for sale, while equity method is used for the rest part (the part not classified as held forsale) continually. When the Group does not have material impact on an associate or a joint venture due to thesale transaction, it stops using equity method.The Group measures a non-current asset that ceases to be classified as held for sale at the lower of:
①its carrying amount before the asset or disposal group was classified as held for sale, adjusted for anydepreciation, amortisation or impairment that would have been recognised had the asset or disposal group notbeen classified as held for sale, and②its recoverable amount.
(2) Discontinued operations
The Group classifies a component as a discontinued operation either upon disposal of the operation or whenthe operation meets the criteria to be classified as held for sale if it is separately identifiable and satisfies oneof the following conditions:
①It represents a separate major line of business or a separate geographical area of operations;②It is part of a single coordinated plan to dispose of a separate major line of business or a separategeographical area of operations;③It is a subsidiary acquired exclusively with a view to resale.
(3) Presentation
The Group presents a non-current asset classified as held for sale and the assets of a disposal group classifiedas held for sale as “Assets held for sale” in balance sheet. The liabilities of a disposal group classified as heldfor sale is presented as “Liabilities held for sale” in balance sheet.The Group presents profit or loss from discontinued operations separately from profit or loss from continuingoperations in income statement. Impairment loss and reversal amount and any disposal gain or loss of anon-current asset or disposal group classified as held for sale that does not meet the definition of adiscontinued operation is included in profit or loss from continuing operations. Any gain or loss fromcontinuing operation of discontinued operations, including impairment loss and reversal amount, anddisposal gain or loss is included in profit or loss from discontinued operations.A disposal group which is planned to cease operation rather than for sale, and meets the criteria of a part ofdiscontinued operation, the Group presents it as discontinued operation from the date of ceaseWhere an operation is classified as discontinued in the current period, profit or loss from continuingoperations and profit or loss from discontinued operations are separately presented in the income statementfor the current period. If the Group ceases to classify a discontinued operation as held for sale, theinformation previously presented in discontinued operations is reclassified and included in income fromcontinuing operations for all periods presented.
14. Long-term equity investments
Long-term equity investments include equity investments in subsidiaries and equity investments in jointventures and associates. An associate is an enterprise over which the Company has significant influence.
(1) Determination of initial investment cost
The initial cost of a long-term equity investment acquired through a business combination involvingenterprises under common control is the Company’s share of the carrying amount of the subsidiary’s equityin the consolidated financial statements of the ultimate controlling party at the combination date. For along-term equity investment obtained through a business combination not involving enterprises undercommon control, the initial cost is the combination cost.A long-term equity investment acquired other than through a business combination: A long-term equityinvestment acquired other than through a business combination is initially recognised at the amount of cashpaid if the Company acquires the investment by cash, or at the fair value of the equity securities issued if aninvestment is acquired by issuing equity securities.
(2) Subsequent measurement and recognition of profit or loss
Long-term equity investments in subsidiaries are accounted for using the cost method, unless the investmentis eligible for holding for sale; an investment in a joint venture or an associate is accounted for using the
equity method for subsequent measurement.For a long-term equity investment which is accounted for using the cost method, except for cash dividends orprofit distributions declared but not yet distributed that have been included in the price or consideration paidin obtaining the investments, the Group recognises its share of the cash dividends or profit distributionsdeclared by the investee as investment income for the current period.For a long-term equity investment which is accounted for using the equity method, where the initial cost of along-term equity investment exceeds the Company’s interest in the fair value of the investee’s identifiable netassets at the date of acquisition, the investment is initially recognised at cost. Where the initial investmentcost is less than the Company’s interest in the fair value of the investee’s identifiable net assets at the date ofacquisition, the investment is initially recognised at the investor’s share of the fair value of the investee’sidentifiable net assets, and the difference is recognised in profit or loss.Under the equity method, the Company recognises its share of the investee’s profit or loss and othercomprehensive income as investment income or losses and other comprehensive income respectively, andadjusts the carrying amount of the investment accordingly. Once the investee declares any cash dividends orprofit distributions, the carrying amount of the investment is reduced by the amount attributable to theCompany. Changes in the Company’s share of the investee’s owners’ equity, other than those arising from theinvestee’s net profit or loss, other comprehensive income or profit distribution (referred to as “other changesin owners’ equity”), is recognised directly in the Company’s capital reserve (other capital reserve), and thecarrying amount of the investment is adjusted accordingly. In calculating its share of the investee’s net profitsor losses, other comprehensive income and other changes in owners’ equity, the Group recognises investmentincome and other comprehensive income after making appropriate adjustments to align the accountingpolicies or accounting periods with those of the Group based on the fair value of the investee’s identifiablenet assets at the date of acquisition.When the Company becomes capable of exercising joint control or significant influence (but not control)over an investee due to additional investment or other reasons, on the conversion day, the Company uses thefair value of the previously-held equity, together with additional investment cost, as the initial investmentcost under the equity method. The difference between the fair value and carrying amount of thepreviously-held equity, and the accumulated changes in fair value included in other comprehensive income,shall be transferred to profit or loss for the current period upon commencement of the equity method.When the Company can no longer exercise joint control of or significant influence over an investee due topartial disposal of the equity investment or other reasons, the remaining equity investment shall beaccounting for using Accounting Standard for Business Enterprises No. 22 - Recognition and Measurementof Financial Instruments, and the difference between the fair value and the carrying amount of the remainingequity investment shall be charged to profit or loss for the current period at the date of the loss of jointcontrol or significant influence. Any other comprehensive income previously recognised under the equity
method shall be accounted for on the same basis as would have been required if the Company had directlydisposed of the related assets or liabilities for the current period upon discontinuation of the equity method.Other movement of owner’s equity related to original equity investment is transferred to profit or loss for thecurrent period.When the Company can no longer exercise control over an investee due to partial disposal of the equityinvestment or other reasons, and the remaining equity after disposal can exercise joint control of orsignificant influence over an investee, the remaining equity is adjusted as using equity method fromacquisition. When the remaining equity can no longer exercise joint control of or significant influence overan investee, the remaining equity investment shall be accounted for using Accounting Standard for BusinessEnterprises No. 22-Recognition and Measurement of Financial Instruments, and the difference between thefair value and the carrying amount of the remaining equity investment shall be charged to profit or loss forthe current period at the date of loss of control.When the Company can no longer exercise control over an investee due to new capital injection by otherinvestors, and the Company can exercise joint control of or significant influence over an investee, theCompany recognizes its share of the investee’s new added net assets using new shareholding percentage. Thedifference between its new share of the investee’s new added net assets and its decreased shareholdingpercentage of the original investment is recognized in profit or loss. And the Company adjusts to the equitymethod using the new shareholding percentage as if it uses the equity method since it obtains the investment.Unrealised profits and losses resulting from transactions between the Group and its associates or jointventures are eliminated to the extent of the Group’s interest in the associates or joint ventures. Unrealisedlosses resulting from transactions between the Group and its associates or joint ventures are eliminated in thesame way as unrealised gains but only to the extent that there is no impairment.
(3) Criteria for determining the existence of joint control or significant influence over an investee
Joint control is the contractually agreed sharing of control of an arrangement, which exists only whendecisions about the relevant activities require the unanimous consent of the parties sharing control. Whenassessing whether the Company can exercise joint control over an investee, the Company first considerswhether no single participant party is in a position to control the investee’s related activities unilaterally, andthen considers whether strategic decisions relating to the investee’s related activities require the unanimousconsent of all participant parties that sharing of control. All the parties, or a group of the parties, control thearrangement collectively when they must act together to direct the relevant activities. When more than onecombination of the parties can control an arrangement collectively, joint control does not exist. A party thatholds only protective rights does not have joint control of the arrangement.Significant influence is the power to participate in the financial and operating policy decisions of an investeebut does not have control or joint control over those policies. When determining whether the Company canexercise significant influence over an investee, the effect of potential voting rights (for example, warrants,
share options and convertible bonds) held by the Company or other parties that are currently exercisable orconvertible shall be considered.When the Company, directly or indirectly through subsidiaries, owns 20% of the investee (including 20%) ormore but less than 50% of the voting shares, it has significant influence over the investee unless there is clearevidence to show that in this case the Company cannot participate in the production and business decisions ofthe investee, and cannot form a significant influence. When the Company owns less than 20% of the votingshares, generally it does not have significant influence over the investee, unless there is clear evidence toshow that in this case the Company can participate in the production and business decisions of the investeeso as to form a significant influence.
(4) Held-for-sale equity investments
Accounting for an entity investment, or a portion of an equity investment, in an associate or a joint venturethat is classified as held for sale refers to Note III.13.Any remaining equity investment that has not been classified as held for sale shall be accounted for using theequity method.When an equity investment in an associate or a joint venture previously classified as held for sale no longermeets the criteria to be so classified, it is accounted for using the equity method retrospectively as from thedate of its classification as held for sale.
(5) Method of impairment testing and impairment provision
For investments in subsidiaries, associates and joint ventures, refer to Note III. 22 for the Company’s methodof asset impairment.
15. Investment property
Investment properties are properties held either to earn rental income or for capital appreciation or for both.The Group’s investment properties include leased land use rights, land use right held and provided for totransfer after appreciation and leased building and construction.Investment properties are initially measured at acquisition cost, and depreciated or amortized using the samepolicy as that for fixed assets or intangible assets.For the impairment of the investment properties accounted for using the cost model, refer to Note III.22.
16. Fixed assets
(1) Recognition of fixed assets
Fixed assets represent the tangible assets held by the Company for use in production of goods, use in supplyof services, rental or for administrative purposes with useful lives over one accounting year.Fixed assets are only recognised when its related economic benefits are likely to flow to the Company and itscost can be reliably measured.Fixed asset are initially measured at cost.
(2) Depreciation of fixed assets
The cost of a fixed asset is depreciated using the straight-line method since the state of intended use, unlessthe fixed asset is classified as held for sale. Not considering impairment provision, the estimated useful lives,residual value rates and depreciation rates of each class of fixed assets are as follows:
| Class | Estimated useful life （years） | Residual value rate % | Depreciation rate % |
| Plant and buildings | 5-40（Note） | 5 | 19.00-2.38 |
| Machinery and equipment | 3-12 | 5 | 31.67-7.92 |
| Motor vehicles | 5 | 5 | 19.00 |
| Electronic equipment | 3-5 | 5 | 31.67-19.00 |
| Others | 3-5 | 5 | 31.67-19.00 |
Note 1: For the immovable building on the leased land, the depreciation period shall adopt the shorter periodbetween the land usage right lease term and the PPE’s expected service period.Note 2: The Group shall own the permanent ownership of the land purchased in India and Ecuador. As theland’s service life is uncertain, the Group has not calculated and withdrawn corresponding depreciation, andthe impairment test shall be conducted every year.For impaired fixed assets, cumulative amount of impairment provision is deducted in determining thedepreciation rate.
(3) For the impairment of the fixed assets, please refer to Note III. 22.
(4) Recognition, measurement and depreciation of fixed assets acquired under finance leasesFixed assets under finance leases are recognised if they meet one or more of the following criteria:
①The ownership of leased assets is transferred to the Group by the end of the lease term.
②The Company has the option to purchase the asset at a price that is expected to be sufficiently lower thanthe fair value at the date of the option becomes exercisable for it to be reasonably certain, at the inception of
the lease, that the option will be exercised.
③Even if the ownership of assets is not transferred, the lease term covers the major part of the useful life ofthe asset.
④At the inception of lease, the present value of minimum lease payments amount to substantially all of thefair value of leased asset.
⑤Leased assets are of a specialized nature that only the Group can use them without major modifications.An asset acquired under a finance lease is measured at an amount equal to the lower of its fair value and thepresent value of the minimum lease payments, each determined at the inception of the lease. Long-termpayable is recorded at an amount equal to the sum of all future minimum lease payments. The differencebetween the carrying amount of the leased assets and the minimum lease payments is accounted for asunrecognised finance charges. Initial direct costs attributable to a finance lease incurred during the process oflease negotiation and the signing of the lease agreement, including service charges, attorney's fees, travellingexpenses and stamp duty, that are incurred by the Group are added to the carrying amount of the leased asset.Unrecognised finance charges are recognised as finance charge for the period using the effective interestmethod over the lease term.Depreciation is accounted for in accordance with the accounting policies of fixed assets. If there isreasonable certainty that the Group will obtain ownership of a leased asset at the end of the lease term, theleased asset is depreciated over its estimated useful life. Otherwise, the leased asset is depreciated over theshorter of the lease term and its estimated useful life.
(5) Useful lives, estimated residual values and depreciation methods are reviewed at least at each year-end.The Company adjusts the useful lives of fixed assets if their expected useful lives are different with theoriginal estimates and adjusts the estimated net residual values if they are different from the originalestimates.
(6) Overhaul costs
Overhaul costs occurred in regular inspection are recognized in the cost if there is undoubted evidence toconfirm that this part meets the recognition criteria of fixed assets, otherwise, the overhaul costs arerecognized in profit or loss for the current period. Depreciation is provided during the period of regularoverhaul.
17. Construction in progress
Construction in progress is recognized based on the actual construction cost, including all expendituresincurred for construction projects, capitalized borrowing costs and any other costs directly attributable tobringing the asset to working condition for its intended use.Construction in progress is transferred to fixed asset when it is ready for its intended use.For the impairment of construction in progress, please refer to Note III. 22.
18. Borrowing costs
(1) Capitalization criteria
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifyingasset shall be capitalized as part of the cost of that asset. Other borrowing costs are expensed in profit orloss as incurred. The capitalization of borrowing costs shall commence only when the following criteria aremet:
① capital expenditures have been incurred, including expenditures that have resulted in payment of cash,transfer of other assets or the assumption of interest-bearing liabilities;
② borrowing costs have been incurred;
③ the activities that are necessary to prepare the asset for its intended use or sale have commenced.
(2) Capitalization period
The capitalization of borrowing costs ceases when the asset under acquisition or construction becomes readyfor its intended use, the borrowing costs incurred thereafter are recognized in profit or loss for the currentperiod.Capitalization of borrowing costs is suspended during periods in which the acquisition or construction of afixed asset is interrupted abnormally and the interruption lasts for more than 3 months, until the acquisitionor construction is resumed.
(3) Capitalization rate of borrowing costs and calculation basis of capitalized amountFor interest expense actually incurred on specific borrowings, the eligible capitalized amount is the netamount of the borrowing costs after deducting any investment income earned before some or all of the fundsare used for expenditures on the qualifying asset. To the extent that the Company borrows funds generallyand uses them for the purpose of obtaining a qualifying asset, the Company shall determine the amount ofborrowing costs eligible for capitalization by applying a capitalization rate to the expenditures on that asset,
the capitalization rate shall be the weighted average of the borrowing costs applicable to the borrowings ofthe Company that are outstanding during the period, other than borrowings specifically for the purpose ofobtaining a qualifying asset.In the capitalization period, exchange differences of specific borrowings in foreign currency shall becapitalized; exchange differences of general borrowings in foreign currency is recognized in profit or loss forthe current period.
19. Biological Assets
(1) Criteria for determining biological assets
Biological assets refer to assets composed of living animals and plants. Biological assets that meet thefollowing conditions at the same time are recognized:
①The enterprise owns or controls the biological asset due to past transactions or events;
②The economic benefits or service potential related to the biological asset are likely to flow into theenterprise;
③The cost of the biological asset can be measured reliably.
(2) Classification
The Group’s living assets include consumable biological assets and productive biological assets.
①consumable biological assets
Consumable biological assets refer to biological assets held for sale or will harvest as agricultural products inthe future, including livestock for sale, etc. Consumable biological assets are initially measured at cost. Thecost of self-propagating or breeding expendable biological assets is the necessary expenditure that can bedirectly attributed to the asset before the asset is sold or stored, including borrowing costs that meet thecapitalization requirements. Subsequent expenditures such as management and rearing expenses forconsumable biological assets after storage are included in the profit and loss in the current period.When harvesting or selling consumable biological assets, the moving weighted average method is used tocarry forward the cost at the book value.
②productive biological assets
Productive biological assets refer to biological assets held for the purpose of producing agricultural products,providing labor services or leasing, including livestock production, etc. Productive biological assets areinitially measured at cost. The cost of a self-propagating productive biological asset is the necessary
expenditure that can be directly attributed to the asset before the asset reaches its intended production andoperation objectives, including borrowing costs that meet the capitalization conditions.The management and rearing expenses of productive biological assets after the intended production andoperation objectives are achieved are included in the current profit and loss.The depreciation of productive biological assets is calculated using the average method of years. Afterdeducting the residual value according to the estimated service life of various biological assets, thedepreciation accrued in each period is determined.The Group reviews the service life, estimated net residual value and depreciation method of productivebiological assets at least at the end of the year. If there is a change, it is treated as a change in accountingestimates.The difference between the disposal income of productive biological assets sale, inventory loss, death ordamage, after deducting its book value and related taxes is included in the current profit and loss.
(3) Treatment of impairment of biological assets
If the net realizable value of the expendable biological asset is lower than its book value, the provision for thedecline in the price of biological assets shall be made according to the difference between the net realizablevalue and the book value, and shall be included in the current profit and loss. If the influencing factors of theimpairment of expendable biological assets have disappeared, the amount of write-down shall be restoredand transferred back within the amount of provision for falling price that has been accrued, the amounttransferred back is included in the current profit and loss.For the impairment of productive biological assets, please refer to Note III. 22.
20. Intangible assets
Intangible assets include land use rights, patented technologies, software use rights, trademark rights, andnon-patent technologies etc.Intangible assets are stated at actual cost upon acquisition and the useful economic lives are determined at thepoint of acquisition. When the useful life is finite, amortization method shall reflect the pattern in whichthe asset’s economic benefits are expected to be realized. If the pattern cannot be determined reliably, thestraight-line method shall be used. An intangible asset with an indefinite useful life shall not be amortized.The Group shall review the useful life and amortization method of an intangible asset with a finite useful lifeat least at each year end. Changes of useful life and amortization method shall be accounted for as a changein accounting estimate.An intangible asset shall be derecognized in profit or loss when it is not expected to generate future economic
benefits.For the impairment of intangible assets, please refer to Note III. 22.
21. Research and development expenditure
Expenditure on an internal research and development project is classified into expenditure incurred duringthe research phase and expenditure incurred during the development phase.Expenditure during the research phase is expensed when incurred.Expenditure during the development phase is capitalized if the product or process is technically andcommercially feasible; the Group intends to complete the development; the intangible asset can generateeconomic benefits, including there is evidence that the products produced using the intangible asset has amarket or the intangible asset itself has a market; if the intangible asset is for internal use, there is evidencethat there is usage for the intangible asset; there is sufficient support in terms of technology, financialresources and other resources in order to complete the development and use or sell the intangible asset; anddevelopment costs can be measured reliably. Other development expenditure is recognized as an expense inthe period in which it is incurred.Research and development projects of the Group will enter into the development phase when they meet theabove conditions, technical and economic feasibility research is finished and necessary approval of theproject is obtained.Capitalized expenditure on the development phase is presented as “development costs” in the balance sheet,and is transferred to intangible assets when the project is completed to its intended use.
22. Impairment of assets
The impairment of long-term equity investments in subsidiaries, associates and joint ventures, investmentproperties measured using a cost model, fixed assets, construction in progress, productive biological assetsmeasured using a cost model, intangible assets, goodwill, etc. (Excluding inventories, deferred tax assets andfinancial assets) is determined as follows:
At each balance sheet date, the Company determines whether there is any indication of impairment. If anyindication exists, the recoverable amount of the asset is estimated. In addition, the Company estimates therecoverable amounts of goodwill, intangible assets with indefinite useful lives and intangible assets not readyfor use at each year-end, irrespective of whether there is any indication of impairment.The recoverable amount of an asset is the higher of its fair value less costs to sell and its present value ofexpected future cash flows. The recoverable amount is estimated for each individual asset. If it is not possibleto estimate the recoverable amount of each individual asset, the Company determines the recoverable amount
for the asset group to which the asset belongs. An asset group is the smallest identifiable group of assets thatgenerates cash inflows that are largely independent of the cash inflows from other assets or asset groups.An impairment loss is recognized in profit or loss when the recoverable amount of an asset is less than itscarrying amount. A provision for impairment of the asset is recognized accordingly.For goodwill impairment test, the carrying amount of goodwill arising from a business combination isallocated reasonably to the relevant asset group since the acquisition date. If the carrying amount of goodwillis unable to be allocated to asset group, the carrying amount of goodwill will be allocated to asset portfolio.Asset group or portfolio of asset group is asset group or portfolio of asset group which can be benefit fromsynergies of a business combination and is not greater than the reportable segment of the Company.In impairment testing, if impairment indication exists in asset group or portfolio of asset group containingallocated goodwill, impairment test is first conducted for asset group or portfolio of asset group that does notcontain goodwill, and corresponding recoverable amount is estimated and any impairment loss is recognized.Then impairment test is conducted for asset group or portfolio of asset group containing goodwill bycomparing its carrying amount and its recoverable amount. If the recoverable amount is less than the carryingamount, impairment loss of goodwill is recognized.Once an impairment loss is recognized, it is not reversed in a subsequent period.
23. Long-term deferred expenses
Long-term deferred expenses are recorded at the actual cost, and amortized using a straight-line methodwithin the benefit period. For long-term deferred expense that cannot bring benefit in future period, theCompany recognized its amortized cost in profit or loss for the current period.
24. Employee benefits
(1) Scope of employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Company in exchange forservice rendered by employees or for the termination of employment relationship. Employee benefits includeshort-term employee benefits, post-employment benefits, termination benefits and other long-term employeebenefits. Benefits provided to the Company’s spouse, children, dependents, family members of deceasedemployees or other beneficiaries are also part of the employee benefits.According to liquidity, employee benefits are presented as “employee benefits payable” and “long-termemployee benefits payable” on the balance sheet.
(2) Short-term employee benefits
In the current period, the Company has accrued for the actual wages, bonuses, medical insurance foremployees based on standard rate, work injury insurance and maternity insurance and other social insuranceand housing fund incurred and these are recognized as liabilities and corresponding costs in the profit or loss.If these liabilities are not expected to be fully paid 12 months after the end of the reporting period in whichemployee renders the service to the Company, and if the financial impact is significant, these liabilities shallbe discounted using the net present value method.
(3) Post-employment benefits
Post-employment benefit plan includes defined contribution plans and defined benefit plans. Definedcontribution plans are post-employment benefit plans under which an enterprise pays fixed contributions intoa separate fund and will have no future obligations to pay the contributions. Defined benefit plans arepost-employment benefit plans other than defined contribution plans.Defined contribution plansDefined contribution plans include primary endowment insurance, unemployment insurance, etc.The Company shall recognize, in the accounting period in which an employee provides service, thecontribution payable to a defined contribution plan as a liability, with a corresponding charge to the profit orloss for the current period or the cost of a relevant asset.Defined benefit plansFor defined benefit plans, independent actuaries shall actuarial value at the balance sheet date to determinethe cost of rendering welfare under estimated accumulated welfare unit method. The Company shallrecognize the following components of employee benefits cost arising from defined benefit plan:
① service cost, comprising current service cost, past service cost and any gain or loss on settlement. Currentservice cost is the increase in the present value of the defined benefit plan obligation resulting from employeeservice in the current period. Past service cost is the increase or decrease in the present value of the definedbenefit plan obligation for employee service in prior periods, resulting from a plan amendment.
② net interest on the net defined benefit plan liabilities (assets), including interest income on plan assets,interest cost on the defined benefit plan obligation and interest on the effect of the asset ceiling.
③ changes as a result of re-measurement of the net defined benefit liability (asset).Item①and item②above should be recognized in profit or loss for the current period unless anotherAccounting Standard requires or permits the inclusion of the employee benefit costs in the cost of assets.Item③shall be recognized in other comprehensive income and shall not reclassified to profit or loss in asubsequent period, when the original defined benefit plan is terminated, all the parts originally included in
other comprehensive income are carried forward to undistributed profits within the scope of equity.
(4) Termination benefits
The Company provides for termination benefits to the employees and shall recognize an employee benefitsliability for termination benefits, with a corresponding charge to the profit or loss for the current period, atthe earlier of the following dates: When the Company cannot unilaterally withdraw the offer of thetermination benefits because of an employment termination plan or a redundancy proposal; or when theCompany recognizes the costs or expenses relating to a restructuring that involves the payment of thetermination benefits.For retirement plans within the Company and economic compensation before the formal retirement dateattributable to termination benefits, the salaries to pay retirement within the Company and social securitiesare recognized as one-off expense in profit or loss for the current period between the employees’ stoprendering service and formal retirement. Economic compensation after formal retirement date (such asformal endowment insurance) shall be accounted for as post-employment benefits.
(5) Other long-term employee benefits
Other long-term employee benefits provided by the Company to the employees satisfied the conditions forclassifying as a defined contribution plan; those benefits shall be accounted for in accordance with the aboverequirements relating to defined contribution plan. When the benefits satisfied a defined benefit plan, it shallbe accounted for in accordance with the above requirements relating to defined benefit plan, but themovement of net liabilities or assets in re-measurement of defined benefit plan shall be recorded in profit orloss for the current period or cost of relevant assets.
25. Provisions
A provision is recognized for an obligation related to a contingency if all the following conditions aresatisfied:
(1) The Company has a present obligation;
(2) It is probable that an outflow of economic benefits will be required to settle the obligation; and
(3) The amount of the obligation can be estimated reliably.
A provision is initially measured at the best estimate of the expenditure required to settle the related presentobligation. Factors pertaining to a contingency such as the risks, uncertainties and time value of money aretaken into account as a whole in reaching the best estimate. Where the effect of the time value of money ismaterial, provisions are determined by discounting the expected future cash flows. The Company reviews thecarrying amount of a provision at the balance sheet date and adjusts the carrying amount to the current best
estimate.If all or part of the expenditure necessary for settling the provision is expected to be compensated by a thirdparty, the amount of compensation is separately recognized as an asset when it is basically certain to bereceived. The recognized compensation amount shall not exceed the carrying amount of the provision.
26. Share payment and equity instruments
(1) Types of share payment
The Group's share-based payment is an equity-settled share-based payment. Specific equity instrumentsinclude restricted stocks and stock options issued by companies that give holders the right to purchase a fixedamount of the company's common stock at a fixed price.
(2) Determination method of fair value of equity instruments
Share-based payment settled in the form of equity for obtaining the service rendered by employees shall bemeasured based on the fair value of the equity instrument awarded to employees. If there is an active market,it shall be determined according to the quoted price in the active market; otherwise, it shall be determined byusing the valuation techniques, including reference to familiar situations and the price adopted by variousparties in recent market transactions, reference to the current fair value of other financial instruments of thesame nature, the discount cash flow method and the option pricing model etc.
(3) Basis for Determining the Best Estimate of Executable Equity InstrumentsOn each balance sheet date within the waiting period, the Group shall revise the number of equityinstruments that are expected to be exercised based on follow-up information such as the change in thenumber of employees with vesting rights and the completion of performance indicators, in which basis,expenses to be apportioned in each period shall be recognized. On the day of execution, the expected numberof executable equity instruments shall be consistent with the actual number of executable equity instruments.
(4) Accounting Treatments Related to the Implementation, Modification and Termination of Share-Based
Payment Plan
①Accounting Treatment on the Day of Awarding
For the equity incentive plan granted to employees by the Group for restricted stocks, the Group shallrecognize capital stock and capital reserve (share capital premium) on the grant date based on thesubscription money received from employees, and at the same time, the Group shall confirm the liabilitiesfor the repurchase obligation based on the total repurchase amount, which shall be included in treasury stocks,and listed in the balance sheet as an allowance item for shareholders’ equity.For the equity incentive plan granted to employees by the Group for stock options, the Group shall not
conduct any accounting treatment on the day of awarding.
②Accounting Treatment within the Waiting Period
If the equity-settled share-based payment is exchanged for employee-supplied services, and it can only beexecuted or unlocked when services are completed during the waiting period or when the requiredperformance conditions are met, on each balance sheet date within the waiting period, based on the bestestimate of the number of the executable or unlocking equity instruments, services obtained during thisperiod shall be included in relevant costs or expenses according to the fair value on the day when such equityinstruments are awarded to the employees, and corresponding capital reserves shall also be adjusted. Forequity incentive plans that have been revoked due to the failure in meeting corresponding vesting conditionswithin the waiting period, the Group shall write back various expenses related to the share-based paymentpreviously recognized.Restricted shares issued by the Group shall participate in profit distribution and the part belonging to cashdividends can be revoked. For the holders of future restricted stocks that are expected to be unlocked, theGroup’s cash dividends allocated to holders of restricted stocks shall be treated as profit distributions. Forthose who are expected not to unlock restricted stocks in the future, the Group’s cash dividends allocated toholders of restricted stocks shall be applied to offset related liabilities. If any subsequent informationindicates that the number of restricted stocks that cannot be unlocked is different from the previous estimate,it shall be treated as a change in accounting estimates.
③Accounting Treatment on the Day of Execution or Unlocking
When restricted stocks are regarded as the equity instrument for share-based payment, the Group shallrepurchase and cancel the stocks that have not met relevant restricted stocks unlocking requirements. Whenthe treasury stocks are canceled, the capital stock shall be reduced based on the total par value of thecanceled stocks, and portion of the costs of treasury stocks exceeding the total par value shall be applied torespectively offset the capital reserve (stock premium), the earned surplus and the undistributed profit; if thecosts of treasury stocks are less than the total par value, corresponding capital reserve (stock premium) shallincrease for the portion below the total par value. When the treasury stocks are transferred, the capital reserve(stock premium) shall accordingly increase for the portion of the transfer income higher than the costs oftreasury shares; the portion below the costs of treasury stocks shall be respectively applied to write down thecapital reserve (stock premium), surplus reserves, and undistributed profits. For stocks that are not requiredto be repurchased and meet relevant restrictive stock unlocking conditions, the Group shall write downcorresponding liabilities according to the carrying value of the liabilities corresponding to the unlockedshares, and write down the treasury stocks according to the carrying value of the treasury stockscorresponding to the unlocked shares. If there is any difference, the capital reserve (stock premium) shall beadjusted.
When stock options are regarded as the equity instrument for share-based payment, the Group shall includethat in the shareholders’ equity based on the subscription money paid by the employees while executing theirrights. Meanwhile, the capital reserve recognized within the waiting period shall be transferred into the stockpremium.
27. Revenue
(1) General principle
①Sale of goods
Revenue is recognized when all the following conditions are satisfied: significant risks and rewards ofownership of goods have been transferred to the buyer; the Company retains neither continuing managerialinvolvement to the degree usually associated with ownership nor effective control over the goods sold; it isprobable that the economic benefits will flow to the Company; and the revenue and costs can be measuredreliably.
②Rendering of services
Where the outcome of a transaction involving the rendering of services can be estimated reliably, revenue isrecognized by reference to the stage of completion.The stage of completion is based on the proportion of costs incurred to date to the estimated total costs/theprogress of work performed/the proportion of services performed to date to the total services to beperformed.Rendering of services can be estimated reliably when all the following conditions are satisfied:
A. The revenue can be measured reliably;B. It is probable that the economic benefits will flow to the Company;C. The stage of completion can be measured reliably;D. The costs incurred and to be incurred in the transaction can be measured reliably.Where the outcome cannot be estimated reliably, revenues are recognized to the extent of the costs incurredthat are expected to be recoverable, and an equivalent amount is charged to profit or loss as service cost;otherwise, the costs incurred are recognized in profit or loss and no service revenue is recognized.
③Royalties from intangible assets
Revenue is recognized when it is probable that the economic benefits will flow to the Company, and the
revenue can be measured reliably.
(2)Specific method
The specific methods of the Group's sales revenue recognition are as follows:
When the customer picks up the goods to the door or delivers the goods to the designated delivery location,and the customer has accepted the goods, the Group confirms the revenue.For the sale of commodities with sales return clauses, revenue recognition is limited to the amount ofaccumulated confirmed revenue that is unlikely to be materially reversed. The Group recognizes the liabilityaccording to the expected refund amount, and at the same time, the balance after deducting the estimated costof recovering the commodity (including the impairment of the value of the returned commodity) according tothe book value of the expected return of the commodity is recognized as an asset.The methods of the recognition of revenue from the transfer of the assets usage right are as follows:
According to the fact that the relevant economic benefits are likely to flow into the company, and the amountof revenue from the transfer of asset use rights can be reasonably estimated, the Group calculates anddetermines the time when the client uses the transfer asset and the price agreed in the relevant contract oragreement.
28. Government grants
A government grant is recognized when there is reasonable assurance that the grant will be received and thatthe Group will comply with the conditions attaching to the grant.If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received orreceivable. If a government grant is in the form of a transfer of a non-monetary asset, it is measured at fairvalue. If fair value cannot be reliably determined, it is measured at a nominal amount of RMB 1.Government grants related to assets are grants whose primary condition is that the Group qualifying for themshould purchase, construct or otherwise acquire long-term assets. Government grants related to income aregrants other than those related to assets.For government grants with unspecified purpose, the amount of grants used to form a long-term asset isregarded as government grants related to an asset, the remaining amount of grants is regarded as governmentgrants related to income. If it is not possible to distinguish, the amount of grants is treated as governmentgrants related to income.A government grant related to an asset is offset against the carrying amount of the related asset, orrecognized as deferred income and amortized to profit or loss over the useful life of the related asset on areasonable and systematic manner. A grant that compensates the Group for expenses or losses already
incurred is recognized in profit or loss or offset against related expenses directly. A grant that compensatesthe Group for expenses or losses to be incurred in the future is recognized as deferred income, and includedin profit or loss or offset against related expenses in the periods in which the expenses or losses arerecognized. Government subsidies measured in nominal amounts are directly included in the profit and loss.The Group uses the same method to deal with the same or similar government subsidy business.A grant related to ordinary activities is recognized as other income or offset against related expenses basedon the economic substance. A grant not related to ordinary activities is recognized as non-operating income.When a recognized government grant is reversed, carrying amount of the related asset is adjusted if the grantwas initially recognized as offset against the carrying amount of the related asset. If there is balance ofrelevant deferred income, it is offset against the carrying amount of relevant deferred income. Any excess ofthe reversal to the carrying amount of deferred income is recognized in profit or loss for the current period.For other circumstances, reversal is directly recognized in profit or loss for the current period.Interests from policy discount loans directly obtained by the Group are discounted to offset borrowing costs.
29. Deferred tax assets and deferred tax liabilities
Income tax comprises of current tax and deferred tax. Current tax and deferred tax are recognized in profit orloss except to the extent that they relate to transactions or items recognized directly in equity and goodwillarising from a business combination.Deferred tax assets and deferred tax liabilities arise from deductible and taxable temporary differencesrespectively, being the differences between the carrying amounts of assets and liabilities for financialreporting purposes and their tax bases.All the taxable temporary differences are recognized as deferred tax liabilities except for those incurred in thefollowing transactions:
(1) initial recognition of goodwill, or assets or liabilities in a transaction that is not a business combinationand that affects neither accounting profit nor taxable profit (or deductible loss);
(2) taxable temporary differences associated with investments in subsidiaries, associates and joint ventures,and the Company is able to control the timing of the reversal of the temporary difference and it is probablethat the temporary difference will not reverse in the foreseeable future.The Company recognizes a deferred tax asset for deductible temporary differences, deductible losses and taxcredits carried forward to subsequent periods, to the extent that it is probable that future taxable profits willbe available against which deductible temporary differences, deductible losses and tax credits can be utilized,except for those incurred in the following transactions:
(1) a transaction that is not a business combination and that affects neither accounting profit nor taxableprofit (or deductible loss);
(2) deductible temporary differences associated with investments in subsidiaries, associates and jointventures, the corresponding deferred tax asset is recognized when both of the following conditions aresatisfied: it is probable that the temporary difference will reverse in the foreseeable future; and it is probablethat taxable profits will be available in the future against which the temporary difference can be utilized.At the balance sheet date, deferred tax is measured based on the tax consequences that would follow from theexpected manner of recovery or settlement of the carrying amount of the assets and liabilities, using tax ratesenacted at the reporting date that are expected to be applied in the period when the asset is recovered or theliability is settled.The carrying amount of a deferred tax asset is reviewed at each balance sheet date, and is reduced to theextent that it is no longer probable that the related tax benefits will be utilized. Such reduction is reversed tothe extent that it becomes probable that sufficient taxable profits will be available.
30. Leases
A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of aleased asset to the lessee. An operating lease is a lease other than a finance lease.
(1) As a lessor
At the commencement of the lease term, the Company recognized the aggregate of the minimum leasereceipts determined at the inception of a lease and the initial direct costs as finance lease receivable, andrecognized unguaranteed residual value at the same time. The difference between the aggregate of theminimum lease receipts, the initial direct costs and the unguaranteed residual value, and the aggregate oftheir present value is recognized as unearned finance income. Unearned finance income is allocated to eachaccounting period during the lease term using the effective interest method.Income derived from operating leases is recognized in profit or loss using the straight-line method over thelease term. Initial direct costs are charged to profit or loss immediately.
(2) As a lessee
When the Company acquires an asset under a finance lease, the asset is measured at an amount equal to thelower of its fair value and the present value of the minimum lease payments, each determined at the inceptionof the lease. At the commencement of the lease term, the minimum lease payments are recorded as long-termpayables. The difference between the carrying amount of the leased assets and the minimum lease paymentsis accounted for as recognized d finance charges. Initial direct costs attributable to a finance lease that areincurred by the Company are added to the carrying amount of the leased asset. Unrecognized finance charges
arising from a finance lease are recognized using an effective interest method over the lease term.Depreciation is accounted for in accordance with the accounting policies of fixed assets.Rental payments under operating leases are recognized as part of the cost of another related asset or asexpenses on a straight-line basis over the lease term. Initial direct costs are charged to profit or lossimmediately.
31. Repurchase shares
Before the shares repurchased by the company are cancelled or transferred, they are managed as treasuryshares, and all expenditures for the repurchase of shares are converted into treasury stock costs. Theconsideration and transaction costs paid in share repurchase reduce the owner's equity, and no profit or loss isrecognized when repurchasing, transferring or canceling the company's shares.The transfer of treasury shares shall be included in the capital reserve based on the difference between theactual amount received and the book value of the treasury shares. If the capital reserve is insufficient to offset,the surplus reserve and undistributed profits shall be offset. Cancellation of treasury shares, reduce the sharecapital according to the par value and the number of shares cancelled, offset the capital reserve based on thedifference between the book balance of the treasury shares and the face value. If the capital reserve isinsufficient to offset, the surplus reserve and undistributed profits shall be offset.
32. Restricted stock
In the equity incentive plan, the company grants restricted stock to the motivated object, and the motivatedobject subscribes to the stock first. If the unlocking conditions specified in the equity incentive plan are notmet subsequently, the company will repurchase the shares at the price agreed in advance. If the restrictedstock issued to employees has completed the capital increase procedures such as registration and registrationin accordance with relevant regulations, on the date of grant, the company shall confirm the share capital andcapital reserve (equity premium) based on the subscription paid by the employees; at the same time, treasuryshares and other payables are recognized for repurchase obligations.
33. Hedge accounting
When initially specifying the hedging relationship, the Group officially designated the hedging tool and thehedged item, and there are formal written documents to record the hedging relationship, risk managementstrategy and risk management objectives. The content records include the hedging tool, the hedged item, thenature of the hedged risk and the hedge effectiveness evaluation method.The Group continuously evaluates the effectiveness of hedging to determine whether the hedging accountmeets the effectiveness requirements of using hedging accounting within the accounting period specified bythe hedging relationship. If it is not satisfied, the hedging relationship is terminated. The use of hedging
accounting should meet the following requirements for the effectiveness of hedging:
①There is an economic relationship between hedged items and hedging instruments.
②Among the value changes caused by the economic relationship between hedged items and hedginginstruments, the impact of credit risk does not dominate.
③The hedging ratio of the hedging relationship should be equal to the ratio of the number of hedged itemsactually hedged by the enterprise to the actual number of hedging instruments that hedge it，however, itshould not reflect the imbalance of the relative weight of the hedged item and the hedging instrument. Thisimbalance will cause the hedge to be invalid and may produce accounting results that are inconsistent withthe hedge accounting objectives.In one of the following situations, the Group shall terminate the use of hedge accounting:
①Due to changes in risk management objectives, the hedging relationship no longer meets the riskmanagement objectives.
②The hedging instrument has expired, is sold, the contract is terminated or has been exercised.
③There is no longer an economic relationship between the hedged item and the hedging instrument, or thevalue of the economic relationship between the hedged item and the hedging instrument changes, the impactof credit risk begins to dominate.
④The hedging relationship no longer satisfies other conditions for using hedging accounting methods.Fair value hedgeFair value hedging refers to hedging of the Group’s recognized assets or liabilities, confirmed commitmentsthat have not yet been recognized, or the fair value change risk exposure of the above-mentioned projectcomponents. This change in fair value originates from specific risks and will affect the company's profit orloss or other comprehensive income.For fair value hedging, gains or losses from hedging instruments are included in profit and loss. The gains orlosses resulting from the hedged risk exposure of the hedged item are included in profit and loss, whileadjusting the book value of the confirmed hedged item not measured at fair value.If the hedged item is a financial instrument (or its component) measured at amortized cost, the adjustment tothe book value of the hedged item is amortized at the effective interest rate recalculated on the amortizationdate and included in profit and loss.If the hedged item is an unrecognized confirmed commitment (or part of it), the cumulative change in fair
value due to the hedged risk after the hedging relationship which is designated is recognized as an asset orliability, and the relevant gain or loss is included in profit and loss for each relevant period. When fulfillingthe definite undertaking and acquiring assets or assuming liabilities, the initial recognition amount of theasset or liability is adjusted to include the cumulative changes in the fair value of the confirmed hedgeditems.Cash flow hedgingCash flow hedging refers to hedging of the risk of cash flow changes. This cash flow change originates fromthe specific risks related to the confirmed assets or liabilities, the expected transactions that are likely tooccur, or the above-mentioned project components, and will affect the profit and loss of the enterprise.The part of the gains or losses generated by the hedging instruments that are valid for hedging is used as acash flow hedge reserve and included in other comprehensive income. The portion that is invalid for hedging(that is, will recognized as other gains or losses after deducting other comprehensive income) is included inprofit and loss.For cash flow hedging, the hedged item is an expected transaction, and the expected transaction causes thegroup to subsequently confirm a non-financial asset or non-financial liability, or the expected transaction ofnon-financial asset or non-financial liability forms a suitable for a definite commitment applicable to fairvalue hedge accounting, the Group transfers out the amount of cash flow hedge reserve originally recognizedin other comprehensive income and includes it in the initial recognition amount of the asset or liabilityFor cash flow hedges that are not in the above situation, the Group transfers the amount of cash flow hedgingreserve originally recognized in other comprehensive income during the same period in which the expectedcash flow being hedged affects profit or loss, and is included in profit and loss.If the amount of the cash flow hedge reserve recognized in other comprehensive income is a loss, and all orpart of the loss is expected to be irreparable in the future accounting period, when the group is expected to beunable to make up, transfer the expected irreparable part out of other comprehensive income and include it inprofit and loss.When the Group terminates the use of hedging accounting for cash flow hedges, if the hedged future cashflow is expected to still occur, the amount of the accumulated cash flow hedge reserve recognized in othercomprehensive income will be retained until the expected transaction is actually occur, then it will be dealtwith in accordance with the above-mentioned accounting policies for cash flow hedges. If the hedged futurecash flow is expected to no longer occur, the amount of the accumulated cash flow hedge reserve recognizedin other comprehensive income is transferred out of other comprehensive income and included in profit andloss. The hedged future cash flow expectations are no longer highly likely to occur but may still be expectedto occur, in the case where expectations still occur, the amount of accumulated cash flow hedge reserve isretained until the expected transaction actually occurs, then the above cash accounting policy treatment of
flow hedging.
34. Significant accounting estimates and judgments
Estimates as well as underlying assumptions involved are reviewed on an ongoing basis, based on historicalexperience and other factors, including reasonableness of estimation about future events. The followings aresignificant accounting estimations and key assumptions that have a significant risk of causing a materialadjustment to the carrying amount of assets and liabilities within the next financial year:
Measurement of expected credit losses of accounts receivableThe Group calculates the expected credit loss of accounts receivable through the default risk exposure ofaccounts receivable and the expected credit loss rate, and determines the expected credit loss rate based onthe default probability and default loss rate. When determining the expected credit loss rate, the Group usesinternal historical credit loss experience and other data, and adjusts the historical data in combination withcurrent conditions and forward-looking information. When considering forward-looking information, theindicators used by the Group include the risk of economic downturn, changes in the external marketenvironment, technological environment and customer conditions. The Group regularly monitors and reviewsassumptions related to the calculation of expected credit losses.Impairment of goodwillThe Company performs impairment test for goodwill annually. Determining whether goodwill is impairedrequires an estimation of the value in use of the cash-generating units to which goodwill has been allocated.The value in use calculation requires the Company to estimate the future cash flows expected to arise fromthe cash-generating unit and a suitable discount rate in order to calculate the present value.Deferred tax assetTo the extent that there is likely to be enough taxable profits to offset losses, deferred tax assets should berecognized for all unutilized tax losses. This requires management to use a lot of judgment to estimate thetime and amount of future taxable profits, combined with tax planning strategies, to determine the amount ofdeferred income tax assets that should be recognized.
35. Changes in significant accounting policies, accounting estimates
(1) Changes in significant accounting policies
① New financial instruments standards
In 2017, the Ministry of Finance issued Accounting Standards for Business Enterprises No. 22-Recognitionand Measurement of Financial Instruments (Revision), Accounting Standards for Enterprises No.
23-Financial Asset Transfer (Revision), Accounting Standards for Business Enterprises No. 24-HedgingAccounting (Revision) and Accounting Standards for Business Enterprises No. 37-Presentation of FinancialInstruments (Revision) (hereinafter collectively referred to as "new financial instrument standards"). The17th meeting of the 4th Board of Directors of the Company, held on April 13, 2019, approved the Companyimplemented the new financial instruments standards from January 1, 2019, and adjusted the accountingpolicies. See Note III.10 for the changed accounting policy.The new financial instruments standard requires financial assets to be classified into the following threecategories based on the business model for managing financial assets and the contractual cash flowcharacteristics of financial assets: (1) Financial assets measured at amortized cost; (2) Financial assetsmeasured at fair value through other comprehensive income; (3) Financial assets measured at fair valuethrough profit or loss. If the main contract included in the hybrid contract is a financial asset, the embeddedcontract should not be split from the hybrid contract, instead, the relevant standards of the financial assetclassification should be applied to the hybrid contract as a whole.Except for financial guarantee contract liabilities, the adoption of new financial instrument standards has nosignificant impact on the Group's accounting policies for financial liabilities.On January 1, 2019, the Group did not designate any financial asset or financial liability as a financial assetor financial liability measured at fair value through profit or loss, nor did it revoke the previous designation.The new financial instrument standard replaces the method of confirming the impairment provision based onthe actual impairment loss provided by the original financial instrument standard with the “Expected CreditLoss Method”. The “Expected Credit Loss Method” model requires continuous assessment of the credit riskof financial assets. Therefore, under the new financial instruments standard, the Group ’s credit loss isrecognized earlier than the original financial instruments standard.On the basis of expected credit losses, the Group performs impairment accounting for the following itemsand recognizes loss provisions:
? Financial assets measured at amortized cost;? Receivables and debt investments measured at fair value through other comprehensive income? Lease receivables；? Financial guarantee contract (except those measured at fair value through profit and loss, the transfer offinancial assets does not meet the conditions for derecognition or continue to be involved in thetransferred financial assets).In accordance with the provisions of the new financial instrument standards, except for certain specificcircumstances, the Group retroactively adjusts the classification and measurement (including impairment) of
financial instruments, the difference between the original book value of financial instruments and the newbook value on the implementation date of the new financial instruments standard (that is, January 1, 2019) isincluded in retained earnings or other comprehensive income at the beginning of 2019. At the same time, theGroup did not adjust the comparative financial statements data.
On January 1, 2019, the comparison results of the classification and measurement of financial assets in accordance with the original financial instrument standard and thenew financial instrument standard are as follows:
A、Consolidated financial statement
| Original financial instrument standard | New financial instrument standard | ||||
| Item | Category | Book value | Item | Category | Book value |
| Financial assets measured at fair value through profit or loss | Measured at fair value through profit or loss | 49,672,592.73 | Held-for-trading financial assets | Measured at fair value through profit or loss | 49,672,592.73 |
| Held for sales financial asset | Measured at cost(equity instruments) | 323,421,350.00 | Other non-current financial assets | Measured at fair value through profit or loss | 323,421,350.00 |
| Accounts receivable | Measured at amortized cost | 1,096,136,255.70 | Accounts receivable | Measured at amortized cost | 964,844,422.76 |
| Other current assets | Measured at amortized cost | 628,751,210.59 | Other current assets | Measured at amortized cost | 760,043,043.53 |
| Financial liabilities measured at fair value through profit or loss | Measured at fair value through profit or loss | 46,271,790.00 | Held-for-trading financial liabilities | Measured at fair value through profit or loss | 46,271,790.00 |
B、Parent company’s financial statement
| Original financial instrument standard | New financial instrument standard | ||||
| Item | Category | Book value | Item | Category | Book value |
| Financial assets measured at fair value through profit or loss | Measured at fair value through profit or loss | 49,293,017.73 | Held-for-trading financial assets | Measured at fair value through profit or loss | 49,293,017.73 |
| Held for sales financial asset | Measured at cost(equity instruments) | 292,900,000.00 | Other non-current financial assets | Measured at fair value through profit or loss | 292,900,000.00 |
| Financial liabilities measured at fair value through profit or loss | Measured at fair value through profit or loss | 32,630,290.00 | Held-for-trading financial liabilities | Measured at fair value through profit or loss | 32,630,290.00 |
On January 1, 2019, the classification of financial instruments and the adjustment of book value whenimplementing the new financial instruments standards are as follows:
A. Consolidated financial statements
| Item | Book value before adjustment (Dec 31,2018) | Reclassification | Remeasurement | Book value after adjustment (Jan 1,2019) |
| Assets： | ||||
| Financial assets measured at fair value through profit or loss | 49,672,592.73 | -49,672,592.73 | - | - |
| Held-for-trading financial assets | - | 49,672,592.73 | - | 49,672,592.73 |
| Accounts receivable | 1,096,136,255.70 | -131,291,832.94 | - | 964,844,422.76 |
| Other current assets | 628,751,210.59 | 131,291,832.94 | - | 760,043,043.53 |
| Held for sale financial assets | 323,421,350.00 | -323,421,350.00 | - | - |
| Other non-current financial assets | - | 323,421,350.00 | - | 323,421,350.00 |
| Liabilities： | ||||
| Financial liabilities measured at fair value through profit or loss | 46,271,790.00 | -46,271,790.00 | - | - |
| Held-for-trading financial liabilities | - | 46,271,790.00 | - | 46,271,790.00 |
B. The Company’s financial statements
| Item | Book value before adjustment (Dec 31,2018) | Reclassification | Remeasurement | Book value after adjustment (Jan 1,2019) |
| Assets： | ||||
| Financial assets measured at fair value through profit or loss | 49,293,017.73 | -49,293,017.73 | - | - |
| Held-for-trading financial assets | - | 49,293,017.73 | - | 49,293,017.73 |
| Held for sale financial assets | 292,900,000.00 | -292,900,000.00 | - | - |
| Other non-current financial assets | - | 292,900,000.00 | - | 292,900,000.00 |
| Liabilities： | ||||
| Financial liabilities measured at fair value through profit or loss | 32,630,290.00 | -32,630,290.00 | - | - |
| Held-for-trading financial liabilities | - | 32,630,290.00 | - | 32,630,290.00 |
The Group sets out the adjustment between the loss allowance at the end of 2018 measured according to theoriginal financial instrument standard and the loss allowance at the beginning of 2019 determinedaccording to the new financial instrument standard as follows:
A. Consolidated financial statements
| Measurement category | Book value before adjustment (Dec 31,2018) | Reclassification | Remeasurement | Book value after adjustment (Jan 1,2019) |
| Provision for bad and doubtful debts for bills receivable | - | - | - | - |
| Provision for bad and doubtful debts for accounts receivable | 133,901,012.10 | -1,999,368.01 | - | 131,901,644.09 |
| Provision for bad and doubtful debts for other receivable | 73,389,178.72 | - | - | 73,389,178.72 |
| Provision for bad and doubtful debts for other current assets | 121,050.00 | 1,999,368.01 | - | 2,120,418.01 |
| Provision for bad and doubtful debts for loans and advance | 2,400.00 | - | 2,400.00 | |
| Provision for bad and doubtful debts for long term receivables | - | - | - | - |
B. The Company financial statements
| Measurement category | Book value before adjustment (Dec 31,2018) | Reclassification | Remeasurement | Book value after adjustment (Jan 1,2019) |
| Provision for bad and doubtful debts for bills receivable | - | - | - | - |
| Provision for bad and doubtful debts for accounts receivable | - | - | - | - |
| Provision for bad and doubtful debts for other receivable | 1,343,039.99 | - | - | 1,343,039.99 |
| Provision for bad and doubtful debts for long term receivables | - | - | - | - |
① Changes in inventory accounting policies
Based on the need for refined management, in order to effectively coordinate financial and businessoperations and better achieve dynamic cost management, and further improve the Company's managementlevel, the Group plans to change the inventory accounting policy.After this inventory accounting policy changes, the product production cost accounting cycle can beshortened, moreover, the product cost can be calculated based on the cost of raw materials when consumed,which facilitates timely analysis of product volume, cost, and profit, and facilitates daily business analysis.Receipt and delivery of inventories were changed from "one-time weighted average method at the end ofthe month" to "moving weighted average method" for pricing.This accounting policy change has been approved by the 17th meeting of the fourth board of directors ofthe Company on April 13, 2019, and was implemented as of January 1, 2019.
② Financial statements format
In April 2019, the Ministry of Finance issued the ‘‘Notice of the Ministry of Finance on Revising andIssuing the General Financial Statements Format of the Year 2019’’ (No.6 of Caikuai [2019]), and the‘‘Notice of the Ministry of Finance on Revising and Issuing the General Financial Statements Format of theYear 2018’’ (No.15 of Caikuai [2018]) issued in June 2018 shall be abolished simultaneously; in September2019, the Ministry of Finance issued the ‘‘Notice of the Ministry of Finance on Revising and Issuing theFormat of Consolidated Financial Statements (Version 2019)’’ (No.16 of Caikuai [2019]), and the ‘‘Noticeof the Ministry of Finance on Revising and Issuing the Format of Consolidated Financial Statements for2018’’ (No.1 of Caikuai [2019]) shall be abolished simultaneously. According to No.6 of Caikuai [2019]and No.16 of Caikuai [2019], the Group has revised the financial statements format as follows:
Balance sheet: dividing the line item of ‘‘bills receivable and accounts receivable’’ into ‘‘bills receivable’’and ‘‘accounts receivable’’; dividing the line item of ‘‘bills payable and accounts payable’’ into ‘‘billspayable’’ and ‘‘accounts payable’’.The Company shall adjust the comparative amounts of the comparable periods.The revision of the financial statements format has no effect on the company's total assets, total liabilities,net profits and other comprehensive income.
(2) Changes in accounting estimates
There was no change in the Company’s accounting estimate during the reporting period.
(3) The first implementation of new financial instrument standards adjustment and the relevant items of thefinancial statements at the beginning of the year.
Consolidated balance sheet
| Item | 2018.12.31 | 2019.01.01 | Adjustment amount |
| Current asset： | |||
| Cash | 1,735,409,838.58 | 1,735,409,838.58 | - |
| Held-for-trading financial assets | - | 49,672,592.73 | 49,672,592.73 |
| Financial assets at fair value through profit or loss | 49,672,592.73 | - | -49,672,592.73 |
| Derivative financial assets | - | - | - |
| Notes receivable | 10,509,311.36 | 10,509,311.36 | - |
| Accounts receivable | 1,096,136,255.70 | 964,844,422.76 | -131,291,832.94 |
| Accounts receivable financing | - | - | - |
| Item | 2018.12.31 | 2019.01.01 | Adjustment amount |
| Prepayments | 424,850,022.62 | 424,850,022.62 | - |
| Other receivables | 502,215,573.25 | 502,215,573.25 | - |
| Including: Interest receivables | 1,794,497.12 | 1,794,497.12 | - |
| Dividend receivables | - | - | - |
| Inventories | 4,843,780,132.17 | 4,843,780,132.17 | - |
| Contract assets | - | - | - |
| Assets held for sale | - | - | - |
| Non-current assets due within one year | 903,000.00 | 903,000.00 | - |
| Other current assets | 628,751,210.59 | 760,043,043.53 | 131,291,832.94 |
| Total current assets | 9,292,227,937.00 | 9,292,227,937.00 | - |
| Non-current assets: | |||
| Loans and payments on behalf | 157,600.00 | 157,600.00 | - |
| Loan investment | - | - | - |
| Available-for-sale financial assets | 323,421,350.00 | - | -323,421,350.00 |
| Other loan investment | - | - | - |
| Held-to-maturity investments | - | - | - |
| Long-term receivables | 17,519,129.52 | 17,519,129.52 | - |
| Net assets of defined benefit plan | - | - | - |
| Long-term equity investments | 38,614,535.85 | 38,614,535.85 | - |
| Other equity investments | - | - | - |
| Other non-current financial asset | - | 323,421,350.00 | 323,421,350.00 |
| Investment properties | 46,397,156.64 | 46,397,156.64 | - |
| Fixed assets | 4,555,480,833.77 | 4,555,480,833.77 | - |
| Construction in progress | 724,011,706.23 | 724,011,706.23 | - |
| Productive biological assets | 56,828,507.31 | 56,828,507.31 | - |
| Oil and natural gas assets | - | - | - |
| Intangible assets | 928,766,148.39 | 928,766,148.39 | - |
| Development costs | 2,776,367.58 | 2,776,367.58 | - |
| Goodwill | 380,610,061.82 | 380,610,061.82 | - |
| Long-term deferred expenses | 231,144,073.09 | 231,144,073.09 | - |
| Deferred tax assets | 456,499,156.68 | 456,499,156.68 | - |
| Other non-current assets | 311,209,297.18 | 311,209,297.18 | - |
| Total non-current assets | 8,073,435,924.06 | 8,073,435,924.06 | - |
| Total assets | 17,365,663,861.06 | 17,365,663,861.06 | - |
| Item | 2018.12.31 | 2019.01.01 | Adjustment amount |
| Current liabilities: | |||
| Short-term loans | 2,715,954,867.69 | 2,715,954,867.69 | - |
| Held-for-trading financial liabilities | - | 46,271,790.00 | 46,271,790.00 |
| Financial liabilities at fair value through profit or loss | 46,271,790.00 | - | -46,271,790.00 |
| Derivative financial liabilities | - | - | - |
| Notes payable | - | - | - |
| Accounts payable | 1,512,857,075.94 | 1,512,857,075.94 | - |
| Advances from customers | 1,307,260,014.70 | 1,307,260,014.70 | - |
| Contract liabilities | - | - | - |
| Payroll payable | 596,600,236.73 | 596,600,236.73 | - |
| Taxes payable | 118,589,643.19 | 118,589,643.19 | - |
| Other payables | 461,701,978.92 | 461,701,978.92 | - |
| Including: Interest payables | 25,144,934.16 | 25,144,934.16 | - |
| Dividend payables | 6,250,397.10 | 6,250,397.10 | - |
| Liabilities held for sale | - | - | - |
| Non-current liabilities due within one year | 31,352,957.13 | 31,352,957.13 | - |
| Other current liabilities | 160,521,969.41 | 160,521,969.41 | - |
| Total current liabilities | 6,951,110,533.71 | 6,951,110,533.71 | - |
| Non-current liabilities: | |||
| Long-term loans | 1,842,910,000.00 | 1,842,910,000.00 | - |
| Debentures payable | - | - | - |
| Including: Preferred stock | - | - | - |
| Perpetual debt | - | - | - |
| Long-term payables | 115,622,929.75 | 115,622,929.75 | - |
| Long-term payroll payable | 64,891,859.13 | 64,891,859.13 | - |
| Provisions | - | - | - |
| Deferred income | 68,368,132.23 | 68,368,132.23 | - |
| Deferred tax liabilities | 98,834,372.34 | 98,834,372.34 | - |
| Other non-current liabilities | - | - | - |
| Total non-current liabilities | 2,190,627,293.45 | 2,190,627,293.45 | - |
| Total liabilities | 9,141,737,827.16 | 9,141,737,827.16 | - |
| Shareholders’ Equity： |
| Item | 2018.12.31 | 2019.01.01 | Adjustment amount |
| Share capital | 1,581,211,084.00 | 1,581,211,084.00 | - |
| Other equity instruments | - | - | - |
| Including: Preference share | - | - | - |
| Perpetual debt | - | - | - |
| Capital reserve | 2,010,778,182.22 | 2,010,778,182.22 | - |
| Less: Treasury stock | 251,038,100.40 | 251,038,100.40 | - |
| Other comprehensive income | 7,600,777.65 | 7,600,777.65 | - |
| Specific reserve | - | - | - |
| Surplus reserve | 518,730,727.06 | 518,730,727.06 | - |
| Retained earnings | 3,878,656,406.43 | 3,878,656,406.43 | - |
| Total equity attributable to owners of the company | 7,745,939,076.96 | 7,745,939,076.96 | - |
| Non-controlling interests | 477,986,956.94 | 477,986,956.94 | - |
| Total shareholders' equity | 8,223,926,033.90 | 8,223,926,033.90 | - |
| Total liabilities and shareholders’ equity | 17,365,663,861.06 | 17,365,663,861.06 | - |
Company’s Balance Sheet
| Item | 2018.12.31 | 2019.01.01 | Adjustment amount |
| Current asset： | |||
| Cash | 1,236,624,716.15 | 1,236,624,716.15 | - |
| Held-for-trading financial assets | - | 49,293,017.73 | 49,293,017.73 |
| Financial assets at fair value through profit or loss | 49,293,017.73 | - | -49,293,017.73 |
| Derivative financial assets | - | - | - |
| Notes receivable | - | - | - |
| Accounts receivable | - | - | - |
| Accounts receivable financing | - | - | - |
| Prepayments | 22,254,307.76 | 22,254,307.76 | - |
| Other receivables | 6,996,953,598.79 | 6,996,953,598.79 | - |
| Including: Interest receivables | 8,630.13 | 8,630.13 | - |
| Dividend receivables | 35,271,940.95 | 35,271,940.95 | - |
| Inventories | 17,550.00 | 17,550.00 | - |
| Item | 2018.12.31 | 2019.01.01 | Adjustment amount |
| Contract assets | - | - | - |
| Assets held for sale | - | - | - |
| Non-current assets due within one year | - | - | - |
| Other current assets | 34,776,246.75 | 34,776,246.75 | - |
| Total current assets | 8,339,919,437.18 | 8,339,919,437.18 | - |
| Non-current liabilities: | |||
| Loans investment | - | - | - |
| Available-for-sale financial assets | 292,900,000.00 | - | -292,900,000.00 |
| Other loan investment | - | - | - |
| Held-to-maturity investments | - | - | - |
| Long-term receivables | 1,527,302.50 | 1,527,302.50 | - |
| Net assets of defined benefit plan | - | - | - |
| Long-term equity investments | 3,103,551,860.05 | 3,103,551,860.05 | - |
| Other equity investments | - | - | - |
| Other non-current financial asset | - | 292,900,000.00 | 292,900,000.00 |
| Investment properties | 36,316,499.75 | 36,316,499.75 | - |
| Fixed assets | 206,423,560.87 | 206,423,560.87 | - |
| Construction in progress | 17,989,781.29 | 17,989,781.29 | - |
| Productive biological assets | - | - | - |
| Oil and natural gas assets | - | - | - |
| Intangible assets | 91,340,568.10 | 91,340,568.10 | - |
| Development costs | - | - | - |
| Goodwill | - | - | - |
| Long-term deferred expenses | 20,848,132.10 | 20,848,132.10 | - |
| Deferred tax assets | 190,619,356.04 | 190,619,356.04 | - |
| Other non-current assets | 2,659,873.34 | 2,659,873.34 | - |
| Total non-current assets | 3,964,176,934.04 | 3,964,176,934.04 | - |
| Total assets | 12,304,096,371.22 | 12,304,096,371.22 | - |
| Current liabilities: | |||
| Short-term loans | 2,168,367,337.60 | 2,168,367,337.60 | - |
| Held-for-trading financial liabilities | - | 32,630,290.00 | 32,630,290.00 |
| Financial liabilities at fair value through profit or loss | 32,630,290.00 | - | -32,630,290.00 |
| Derivative financial liabilities | - | - | - |
| Item | 2018.12.31 | 2019.01.01 | Adjustment amount |
| Notes payable | - | - | - |
| Accounts payable | 3,323,382.83 | 3,323,382.83 | - |
| Advances from customers | - | - | - |
| Contract liabilities | - | - | - |
| Payroll payable | 121,078,753.60 | 121,078,753.60 | - |
| Taxes payable | 2,024,745.82 | 2,024,745.82 | - |
| Other payables | 1,872,126,815.24 | 1,872,126,815.24 | - |
| Including: Interest payables | 17,572,923.73 | 17,572,923.73 | - |
| Dividend payables | - | - | - |
| Liabilities held for sale | - | - | - |
| Non-current liabilities due within one year | 27,891,871.77 | 27,891,871.77 | - |
| Other current liabilities | 24,112,595.05 | 24,112,595.05 | - |
| Total current liabilities | 4,251,555,791.91 | 4,251,555,791.91 | - |
| Non-current liabilities: | |||
| Long-term loans | 1,499,750,000.00 | 1,499,750,000.00 | - |
| Debentures payable | - | - | - |
| Including: Preferred stock | - | - | - |
| Perpetual debt | - | - | - |
| Long-term payables | 79,288,904.41 | 79,288,904.41 | - |
| Long-term payroll payable | - | - | - |
| Provisions | - | - | - |
| Deferred income | 9,166,812.14 | 9,166,812.14 | - |
| Deferred tax liabilities | 24,340,746.74 | 24,340,746.74 | - |
| Other non-current liabilities | - | - | - |
| Total non-current liabilities | 1,612,546,463.29 | 1,612,546,463.29 | - |
| Total liabilities | 5,864,102,255.20 | 5,864,102,255.20 | - |
| Shareholders’ Equity： | |||
| Share capital | 1,581,211,084.00 | 1,581,211,084.00 | - |
| Other equity instruments | - | - | - |
| Including: Preference share | - | - | - |
| Perpetual debt | - | - | - |
| Capital reserve | 2,089,547,854.24 | 2,089,547,854.24 | - |
| Less: Treasury stock | 251,038,100.40 | 251,038,100.40 | - |
| Item | 2018.12.31 | 2019.01.01 | Adjustment amount |
| Other comprehensive income | - | - | - |
| Specific reserve | - | - | - |
| Surplus reserve | 518,730,727.06 | 518,730,727.06 | - |
| Retained earnings | 2,501,542,551.12 | 2,501,542,551.12 | - |
| Total shareholders' equity | 6,439,994,116.02 | 6,439,994,116.02 | - |
| Total liabilities and shareholders’ equity | 12,304,096,371.22 | 12,304,096,371.22 | - |
IV Taxation
1. Main tax categories and rates
| Tax | Tax base | Tax rate |
| Value added tax(VAT) | Sales revenue or taxable income | Tax free（Note1、Note2）、3%（Note 3）、5%、6%、9%（Note 4）、10%（Note 5）、13%（Note 4）、16% |
| Corporate income tax | Taxable income | （for more information, please refer to Note IV. 2） |
| City maintenance and construction tax | Turnover tax payable | 1%、5%、7% |
| Educational surcharge | Turnover tax payable | 3% |
| Local education surcharge | Turnover tax payable | 2% |
Note 1: As per the Document CS [2001] No. 121 jointly issued by the Ministry of Finance and the StateAdministration of Taxation, the Company and its subsidiaries are exempted from VAT on their feedproducts, which has been filed with the competent tax authorities.Note 2: As the Interim Regulation of People’s Republic of China on Value-Added Tax says “agriculturalproducers are exempted from value-added tax on the self-produced agricultural products they sell” in itsitem 16, the Company and its subsidiaries are exempted from VAT on the self-produced agriculturalproducts they sell, which has been filed with the competent tax authorities.Note 3: According to the Notice of Ministry of Finance and State Administration of Taxation on Policy ofStreamlining and Combination of Value-Added Tax Levy Rates (CS [2014] No. 57), subsidiaries ofQingyuan Haibei Biotechnology Co., Ltd., Sichuan Hailinger Biopharmaceutical Co., Ltd. andShijiazhuang Weike Biotechnology Co., Ltd. qualify for a simple 3% VAT levy rate on their sales revenue,and VAT on other taxable revenue is subject to applicable tax rates.Note 4: According to the Announcement on the VAT Reform Policy issued jointly by the Ministry ofFinance, the General Administration of Taxation and the General Administration of Customs (Ministry of
Finance, General Administration of Taxation and General Administration of Customs Announcement No.39 of 2019), from April 1, 2019, if the company's VAT taxable sales behavior is originally subject to the 16%tax rate, the tax rate was adjusted to 13%; if the original 10% tax rate is applied, the tax rate was adjusted to9%.Note 5: In accordance with the VAT regulation of the Socialist Republic of Vietnam, feed and feed-relatedindustries are exempted from VAT starting from 2016. The freezer rental revenue of Sheng Long Bio Tech,a subsidiary incorporated by the Company in Vietnam, is subject to VAT tax rate at 10%.
2. Corporate Income Tax
| Name of taxpayer | Abbr. | Income tax rate（%） | Note |
| Guangdong Haid Group Co., Limited | Haid Group | 25 | |
| Guangzhou Runchuan Investment Co., Ltd. | Guangzhou Runchuan | 25 | |
| Guangzhou Yitun Pig Industry Investment Co., Ltd. | Guangzhou Yitun | 25 | |
| Enping Fengwo Agriculture and Animal Husbandry Co., Ltd. | Enping Fengwo | 12.5; or free of income tax | Note 2; Note 3 |
| Yangxi Fengwo Ecological Agriculture Co., Ltd. | Yangxi Fengwo | Free of income tax | Note 2 |
| Yangjiang Yangdong Fengwo Agriculture and Animal Husbandry Co., Ltd. | Yangdong Fengwo | Free of income tax | Note 2 |
| Enping Yitun Ecological Agriculture Co., Ltd. | Enping Yitun | Free of income tax | Note 2 |
| Gaozhou Sanhe Animal Husbandry Co., Ltd. | Gaozhou Sanhe | Free of income tax | Note 2 |
| Yingde Yitun Ecological Agriculture Co., Ltd. | Yingde Yitun | Free of income tax | Note 2 |
| Hunan Yitun Ecological Agriculture Co., Ltd. | Hunan Yitun | Free of income tax | Note 2 |
| Hengyang Jisheng Agriculture and Animal Husbandry Development Co., Ltd. | Hengyang Jisheng | Free of income tax | Note 2 |
| Yueyang Yitun Agriculture and Animal Husbandry Co., Ltd. | Yueyang Yitun | Free of income tax | Note 2 |
| Guigang Qintang Yitun Ecological Agriculture Co., Ltd. | Qintang Yitun | Free of income tax | Note 2 |
| Pingnan Yitun Ecological Agriculture Co., Ltd. | Pingnan Yitun | Free of income tax | Note 2 |
| Pingguo Yitun Ecological Agriculture Co., Ltd. | Pingguo Yitun | Free of income tax | Note 2 |
| Guiping Yitun Ecological Agriculture Co., Ltd. | Guiping Yitun | Free of income tax | Note 2 |
| Hengyang Yitun Ecological Agriculture Co., Ltd. | Hengyang Yitun | Free of income tax | Note 2 |
| Hengshan Yitun Ecological Agriculture Co., Ltd. | Hengshan Yitun | Free of income tax | Note 2 |
| Guigang Gangbei Yitun Ecological Agriculture Co., Ltd. | Gangbei Yitun | Free of income tax | Note 2 |
| Name of taxpayer | Abbr. | Income tax rate（%） | Note |
| Duyun Yitun Ecological Agriculture Co., Ltd. | Duyun Yitun | Free of income tax | Note 2 |
| Rongjiang Yitun Ecological Agriculture Co., Ltd. | Rongjiang Yitun | Free of income tax | Note 2 |
| Binyang Yitun Ecological Agriculture Co., Ltd. | Binyang Yitun | Free of income tax | Note 2 |
| Yicheng Yitun Ecological Agriculture Co., Ltd. | Yicheng Yitun | Free of income tax | Note 2 |
| Zixing Yitun Ecological Agriculture Co., Ltd. | Zixing Yitun | Free of income tax | Note 2 |
| Changing Yitun Ecological Agriculture Co., Ltd. | Changning Yitun | Free of income tax | Note 2 |
| Guigang Donghuang Farming Co., Ltd. | Guigang Donghuang | Free of income tax | Note 2 |
| Shaoguan Zhenjiang Yitun Ecological Agriculture Co., Ltd. | Zhenjiang Yitun | Free of income tax | Note 2 |
| Shandong Yitun Ecological Agriculture Co., Ltd. | Shandong Yitun | Free of income tax | Note 2 |
| Yantai Zhizhuren Animal Husbandry Co., Ltd. | Yantai Zhizhuren | Free of income tax | Note 2 |
| Laizhou Zhizhuren Animal Husbandry Co., Ltd. | Laizhou Zhizhuren | Free of income tax | Note 2 |
| Qinzhou Yitun Ecological Agriculture Co., Ltd. | Qinzhou Yitun | Free of income tax | Note 2 |
| Feicheng Heruifeng Agricultural Science and Technology Co., Ltd. | Feicheng Heruifeng | Free of income tax | Note 2 |
| Weifang Xuheng Agricultural Science and Technology Co., Ltd. | Weifang Xuheng | Free of income tax | Note 2 |
| Linyi Yitun Ecological Agriculture Co., Ltd. | Linyi Yitun | Free of income tax | Note 2 |
| Gaotang Huayu Pig Farming Co., Ltd. | Gaotang Huayu | Free of income tax | Note 2 |
| Jianong (Lianyungang) Husbandry Technology Co., Ltd. | Lianyungang Jianong | Free of income tax | Note 2 |
| Guizhou Aikexin Pig Farming Co.,Ltd. | Guizhou Aikexin | Free of income tax | Note 2; Note23 |
| Binyang Heji Yitun Ecological Agriculture Co., Ltd. | Binyang Heji Yitun | Free of income tax | Note 2 |
| Shaoyang Yitun Ecological Agriculture Co., Ltd. | Shaoyang Yitun | Free of income tax | Note 2 |
| Qinzhou Qinnan Yitun Ecological Agriculture Co., Ltd. | Qinnan Yitun | Free of income tax | Note 2 |
| Huayuan Yitun Ecological Agriculture Co., Ltd. | Huayuan Yitun | Free of income tax | Note 2 |
| Baojing Yitun Ecological Agriculture Co., Ltd. | Baojing Yitun | Free of income tax | Note 2 |
| Yingde Yitun Pig Farming Co., Ltd. | Qiaotou Yitun Farming | Free of income tax | Note 2 |
| Ruyuan Yitun Pig Farming Co., Ltd. | Ruyuan Yitun | Free of income tax | Note 2 |
| Hengnan Yitun Ecological Agriculture Co., Ltd. | Hengnan Yitun | Free of income tax | Note 2 |
| Guangzhou Haiwei Feed Co., Ltd. | Guangzhou Haiwei | 15 | Note 1 |
| Guangzhou Rongchuan Feed Co., Ltd. | Guangzhou Rongchuan | 25 | |
| Foshan Haihang Feed Co., Ltd. | Foshan Haihang | 25 |
| Name of taxpayer | Abbr. | Income tax rate（%） | Note |
| Maoming Haihang Feed Co., Ltd. | Maoming Haihang | 25 | |
| Guangzhou Dachuan Feed Co., Ltd. | Guangzhou Dachuan | 15 | Note 1 |
| Hubei Haid Feed Co., Ltd. | Hubei Haid | 25 | |
| Guangdong Hinter Biotechnology Group Co., Ltd. | Guangdong Hinter | 15 | Note 1 |
| Guangzhou Haishengyuan Biotechnology Co., Ltd. | Guangzhou Haishengyuan | 25 | |
| Guangzhou Mutai Feed Technology Co., Ltd. | Guangzhou Mutai | 25 | |
| Guangzhou Haiyiyuan Biotechnology Co., Ltd. | Guangzhou Haiyiyuan | 20 | Note 18 |
| Shaanxi Haid Agriculture and Animal Husbandry Co., Ltd. | Shaanxi Haid | Free of income tax | Note 2 |
| Yangling Haid Feed Co., Ltd. | Yangling Haid | 15 | Note 7 |
| Gansu Haid Feed Co., Ltd. | Gansu Haid | 15、Free of income tax | Note 2; Note 7 |
| Weinan Haid Feed Co., Ltd. | Weinan Haid | 20 | Note 18 |
| Hunan Haid Bio-Feed Co., Ltd. | Hunan Haid | 25、12.5 | Note 3 |
| Guangzhou Haihe Feed Co., Ltd. | Guangzhou Haihe | 25 | |
| Liaocheng Haixin Enterprise Management Consulting Co., Ltd. | Liaocheng Haixin | 25 | |
| Anyang Haiyue Feed Technology Co., Ltd. | Anyang Haiyue | 20 | Note 18 |
| Zoucheng Haiyue Enterprise Management Consulting Co., Ltd. | Zoucheng Haiyue | 20 | Note 18 |
| Yinan Haiyue Biotechnology Co., Ltd. | Yinan Haiyue | 25 | |
| Lanzhou Haid Feed Co., Ltd. | Lanzhou Haid | 15 | Note 7 |
| Foshan Haipu Feed Co., Ltd. | Foshan Haipu | 25 | |
| Qingyuan Haibei Biotechnology Co., Ltd. | Qingyuan Haibei | 15 | Note 1 |
| Qingyuan Hailong Biotechnology Co., Ltd. | Qingyuan Hailong | 25 | |
| Zhanjiang Haid Feed Co., Ltd. | Zhanjiang Haid | 25 | |
| Jiangmen Haid Feed Co., Ltd. | Jiangmen Haid | 15 | Note 1 |
| Chengdu Haid Biotechnology Co., Ltd. | Chengdu Haid | 15 | Note 7 |
| Taizhou Haid Bio-Feed Co., Ltd. | Taizhou Haid | 25、12.5 | Note 3 |
| Jingzhou Haid Feed Co., Ltd. | Jingzhou Haid | 25 | |
| Ezhou Haid Feed Co., Ltd. | Ezhou Haid | 25 | |
| Dongguan Haid Feed Co., Ltd. | Dongguan Haid | 25 | |
| Fujian Haid Feed Co., Ltd. | Fujian Haid | 25 |
| Name of taxpayer | Abbr. | Income tax rate（%） | Note |
| Zhejiang Haid Feed Co., Ltd. | Zhejiang Haid | 25 | |
| Shaoxing Haid Biotechnology Co., Ltd. | Shaoxing Haid | 25 | |
| Guangxi Haid Feed Co., Ltd. | Guangxi Haid | 25 | |
| KINGHILL HOLDINGS PTE.LTD. | Kinghill Holdings | 17 | Note.12 |
| KINGHILL PTE.LTD. | Kinghill Pte. | 17 | Note.12 |
| Haid Egypt Co.,Ltd | Haid Egypt | 22.5 | Note.22 |
| KINGHILL RESOURCES PTE.LTD. | Kinghill Resources | 17 | Note.12 |
| VIETNAM HAIBEI BIOTECHNOLOGY CO.,LTD | Vietnam Haibei | Free of income tax | Note.10 |
| KINGHILL AGRI PTE.LTD. | Kinghill Agri | 17 | Note.12 |
| PT.HAIDA AGRICULTURE INDONESIA | Haida Indonesia | 25 | Note.20 |
| PT.HAIDA SURABAYA TRADING | Haida Surabaya | 25 | Note.20 |
| PT HISENOR TECHNOLOGY INDONESIA | Hisenor Indonesia | 25 | Note.20 |
| Jiangxi Haid Feed Co., Ltd. | Jiangxi Haid | 25 | |
| Guangzhou Haid Feed Co., Ltd. | Guangzhou Haid | 25 | |
| Guangdong Hisenor Group Co., Ltd. | Guangdong Hisenor | 12.5 | Note.3 |
| Zhanjiang Hisenor Marine Biotechnology Co., Ltd. | Zhanjiang Hisenor | 12.5 | Note.3 |
| Zhanjiang Haijingzhou Marine Biotechnology Co., Ltd. | Zhanjiang Haijingzhou | 12.5 | Note.3 |
| Hainan Hisenor Marine Biotechnology Co., Ltd. | Hainan Hisenor | 12.5 | Note.3 |
| Jingtai Haijingzhou Fishery Technology Co., Ltd. | Jingtai Haijingzhou | 12.5 | Note.3 |
| Zhangzhou Haijingzhou Marine Biotechnology Co., Ltd. | Zhangzhou Haijingzhou | 12.5 | Note.3 |
| Rongcheng Rongchuan Biotechnology Co., Ltd. | Rongcheng Rongchuan | 25 | |
| Rongcheng Yandunjiao Fish Meal Co., Ltd. | Rongcheng Yandunjiao | 25、Free of income tax | Note.4 |
| Fujian Haidsun Feed Co., Ltd. | Fujian Haidsun | 25、Free of income tax | Note.5 |
| Pucheng Haidsun Feed Co., Ltd. | Pucheng Haidsun | 20.0、Free of income tax | Note.5; Note.18 |
| Xinjiang Xiyu Haihua Resources Co., Ltd. | Xiyu Haihua | 25 | |
| Jinzhou Zhengyuan Grains Trading Co., Ltd. | Jinzhou Zhengyuan | 25 | |
| Yingkou Fengmu Agricultural Development Co., Ltd. | Yingkou Fengmu | 25 | |
| Guangzhou Haiyou Trade Co., Ltd. | Guangzhou Haiyou | 25 | |
| Alaer Ruiliheng Biological Protein Co., Ltd. | Alaer Ruiliheng | Free of income tax | Note.19 |
| Name of taxpayer | Abbr. | Income tax rate（%） | Note |
| Alaer Ruitai Biological Protein Co., Ltd. | Alaer Ruitai Biological | 25 | |
| Ningbo Fengmu Agricultural Development Co., Ltd. | Ningbo Fengmu | 25 | |
| Maoming Hailong Feed Co., Ltd. | Maoming Hailong | 25 | |
| Nanchang Haid Biotechnology Co., Ltd. | Nanchang Haid | 25 | |
| Zhuhai Rongchuan Feed Co., Ltd. | Zhuhai Rongchuan | 15 | Note.1 |
| Jieyang Haid Feed Co., Ltd. | Jieyang Haid | 25 | |
| Foshan Sanshuifanling Feed Co., Ltd. | Sanshui Fanling | 25 | |
| Dalian Haid Rongchuan Trading Co., Ltd. | Dalian Haid | 25 | |
| Haid International Group Limited | Haid International | 8.25、Free of income tax | Note.21 |
| China Haida Feed Group(HK)Limited | Haida HK | 16.5 | Note.9 |
| Rickworth Investments Limited | Rickworth | Free of income tax | Note.8 |
| Hong Kong Longreat Trading Co.,Limited | Hong Kong Longreat | 16.5 | Note.9 |
| HAID FEED COMPANY LIMITED | Dong Nai Haid | Free of income tax | Note.10 |
| Dancl Limited | Dancl | 16.5 | Note.9 |
| PANASIA TRADING RESOURCES LIMITED | Panasia Trading | Free of income tax | Note.8 |
| SHENG LONG INTERNATIONAL LTD. | Sheng Long International | Free of income tax | Note.8 |
| SHENG LONG BIO-TECH INTERNATIONAL CO.,LTD | Sheng Long Bio-Tech | 20、10 | Note.10 |
| LONG SHENG INTERNATIONAL CO.,LTD | Long Sheng International | 20、10 | Note.10 |
| Hisenor International Limited | Hisenor International | Free of income tax | Note.8 |
| HISENOR VIET NAM AQUATIC BREEDING CO.,LTD | Hisenor Viet Nam | Free of income tax | Note.10 |
| KEMBANG SUBUR INTERNATIONAL LTD. | Kembang Subur International | 24 | Note.11 |
| NAMDUONG VIETNAM AQUATIC HATCHERY CO.,LTD. | Namduong Vietnam | Free of income tax | Note.10 |
| SHENG LONG BIO TECH (M) SDN.BHD. | Sheng Long Malaysia | 24 | Note.11 |
| SHENG LONG AQUATIC TECHNOLOGY (M) SDN.BHD. | Sheng Long Aquatic Malaysia | 24 | Note.11 |
| Nano South Limited | Nano South | Free of income tax | Note.8 |
| Oceanic Forward Ventures Limited | Oceanic | Free of income tax | Note.8 |
| Name of taxpayer | Abbr. | Income tax rate（%） | Note |
| Power Spring Investments Limited | Power Spring | Free of income tax | Note.8 |
| Link Tide Limited | Link | Free of income tax | Note.8 |
| Changzhou Haid Bio-Feed Co., Ltd. | Changzhou Haid | 25、12.5 | Note.3 |
| Tianjin Haid Feed Co., Ltd. | Tianjin Haid | 25 | |
| Jiangmen A&T Xinhui Feed Co., Ltd. | A&T Xinhui | 25 | |
| Tianmen Haid Feed Co., Ltd. | Tianmen Haid | 25 | |
| Zhuhai Hailong Biotechnology Co., Ltd. | Zhuhai Hailong | 15 | Note.1 |
| Yangjiang Haid Feed Co., Ltd. | Yangjiang Haid | 25 | |
| Guigang Haid Feed Co., Ltd. | Guigang Haid | 25 | |
| Yiyang Haid Feed Co., Ltd. | Yiyang Haid | 25 | |
| Nantong Haid Biotechnology Co., Ltd. | Nantong Haid | 25 | |
| Yunnan Haid Biotechnology Co., Ltd. | Yunnan Haid | 15 | Note.1 |
| Guangzhou Hailong Feed Co., Ltd. | Guangzhou Hailong | 25 | |
| Zhaoqing Haid Feed Co., Ltd. | Zhaoqing Haid | 25 | |
| Wuhan Aquaera Biotechnology Co., Ltd. | Wuhan Aquaera | 25 | |
| Shenzhen Longreat Trading Co., Ltd. | Shenzhen Longreat | 25 | |
| LANKING PTE.LTD. | Lanking | 17 | Note.12 |
| Haid Lanking International Trading Inc. | Lanking America | Note.13 | Note.13 |
| LANKING NEMO(SG) PTE.LTD. | Lanking Nemo | 17 | Note.12 |
| SHENGLONG BIO-TECH(INDIA)PRIVATE LIMITED | Sheng Long India | 25 | Note.14 |
| LANKING RICKWORTH PTE.LTD. | Lanking Rickworth | 17 | Note.12 |
| Lanking Nano PTE.LTD. | Lanking Nano | 17 | Note.12 |
| HAI DUONG HAID COMPANY LIMITED | Hai Duong Haid | Free of income tax | Note.10 |
| HAI DAI COMPANY LIMITED | Hai Dai Feeding | Free of income tax | Note.10 |
| VINH LONG HAI DAI CO.,LTD | Vinh Long Hai Dai | Free of income tax | Note.10 |
| Hunan Dongting Haid Feed Co., Ltd. | Dongting Haid | 25 | |
| Zhangzhou Haid Feed Co., Ltd. | Zhangzhou Haid | 25 | |
| Anhui Haid Feed Co., Ltd. | Anhui Haid | 25 | |
| Xiangtan Haid Feed Co., Ltd. | Xiangtan Haid | 25 | |
| Guangzhou Changsheng Logistics Co., Ltd. | Changsheng Logistics | 20 | Note.18 |
| Guangzhou Cangyouliang Trading Co., Ltd. | Guangzhou Cangyouliang | 25 |
| Name of taxpayer | Abbr. | Income tax rate（%） | Note |
| Guangzhou Zhongcangsheng Commercial & Trading Co., Ltd. | Guangzhou Zhongcangsheng | 25 | |
| Guangzhou Danong Enterprise Management Co., Ltd. | Guangzhou Danong | 25 | |
| Dingtao Hairong Livestock Farming Service Specialized Cooperative | Dingtao Hairong | Free of income tax | Note.15 |
| Chengnan Development Zone Hairong Livestock Farming Service Specialized Cooperative | Chengnan Hairong | 20、Free of income tax | Note.16; Note.18 |
| Guigang Hairong Farming Service Specialized Cooperative | Guigang Hairong | 20、Free of income tax | Note.1; Note.18 |
| Zhangzhou Longwen Hairong Farming Service Specialized Cooperative | Zhangzhou Hairong | Free of income tax | Note.15 |
| Guangzhou Haifengchang Enterprise Management Co., Ltd. | Guangzhou Haifengchang | 25 | |
| Wuhan Zeyi Investment Co., Ltd. | Wuhan Zeyi | 25 | |
| Shandong Haiding Agriculture and Animal Husbandry Co., Ltd. | Shandong Haiding | 25 | |
| Suixian Yuliang Haiding Feed Co., Ltd. | Suixian Haiding | 25 | |
| Yuncheng Haiding Hongda Feed Co., Ltd. | Yuncheng Haiding | 25 | |
| Heze Development Zone Haiding Commercial & Trading Co., Ltd. | Heze Haiding Commercial & Trading | 20 | Note.18 |
| Dingtao Haiding Feed Co., Ltd. | Dingtao Haiding | 25 | |
| Liaocheng Haiding Feed Co., Ltd. | Liaocheng Haiding | 25 | |
| Shanxian Zhongyi Haiding Feed Co., Ltd. | Shanxian Haiding | 25 | |
| Xinxiang Haiding Feed Co., Ltd. | Xinxiang Haiding | 25 | |
| Xinxiang Hairuida Feed Co., Ltd. | Xinxiang Hairuida | 25 | |
| Heze Haiding Feed Technology Co., Ltd. | Heze Haiding Feed | 15 | Note.1 |
| Jining Haiding Feed Co., Ltd. | Jining Haiding | 25 | |
| Feixian Hairuida Feed Co., Ltd. | Feixian Hairuida | 25 | |
| Yinan Haiding Feed Co., Ltd. | Yinan Haiding | 25 | |
| Liaocheng Haiding Food Co., Ltd. | Liaocheng Food | 25 | |
| Qufu Haiding Commercial & Trading Co., Ltd. | Qufu Haiding | 25 | |
| Tengzhou Fengcheng Feed Co., Ltd. | Tengzhou Fengcheng | 20 | Note.18 |
| Binzhou Haiding Feed Co., Ltd. | Binzhou Haiding | 25 | |
| Jining Fengcheng Feed Co., Ltd. | Jining Fengcheng | 25 |
| Name of taxpayer | Abbr. | Income tax rate（%） | Note |
| Dong’e Dingxin Farming Service Co., Ltd. | Dong’e Dingxin | Free of income tax | Note.2 |
| Heze Haiding Ecological Farming Co., Ltd. | Heze Haiding Farming | Free of income tax | Note.2 |
| Linyi Haiding Feed Technology Co., Ltd. | Linyi Haiding | 25 | Note.24 |
| Linyi Hedong Haiding Agriculture and Animal Husbandry Development Co., Ltd. | Linyi Hedong Haiding | 25 | Note.25 |
| Binzhou Dingxin Farming Service Co., Ltd. | Binzhou Dingxin | Free of income tax | Note.2 |
| Junan Haiding Feed Co., Ltd. | Junan Haiding | 25 | |
| Sihong Haiding Feed Co., Ltd. | Sihong Haiding | 25 | |
| Linyi Dingxin Farming Co., Ltd. | Linyi Dingxin | Free of income tax | Note.2 |
| Xishui Haid Feed Co., Ltd. | Xishui Haid | 25 | |
| Hubei Haililiang Fertilizer Co., Ltd. | Hubei Haililiang | 25 | |
| Yancheng Haid Bio-Feed Co., Ltd. | Yancheng Haid | 25 | |
| Honghu Haid Feed Co., Ltd. | Honghu Haid | 25 | |
| Kaifeng Haid Feed Co., Ltd. | Kaifeng Haid | 25 | |
| Guangzhou Heshengtang Biotechnology Co., Ltd. | Guangzhou Heshengtang Biotechnology | 25 | |
| Guangzhou Heshengtang Veterinary Pharmaceutical Co., Ltd. | Guangzhou Heshengtang Pharmaceutical | 25 | |
| Guangdong Haid Livestock Veterinary Research Institute Co., Ltd. | Haid Livestock Veterinary Company | 25 | |
| Henan Haihe Agriculture and Animal Husbandry Technology Co., Ltd. | Henai Haihe | 25 | |
| Xuchang Haihe Feed Co., Ltd. | Xuchang Haihe | 25 | |
| Anyang Haihe Agriculture and Animal Husbandry Technology Co., Ltd. | Anyang Haihe | 25 | |
| Jiyuan Haihe Jinyu Feed Co., Ltd. | Jiyuan Haihe | 25 | |
| Suqian Haid Feed Co., Ltd. | Suqian Haid | 25 | |
| Huaihua Haid Feed Co., Ltd. | Huaihua Haid | 25 | |
| Guangzhou Meinong Investment Management Co., Ltd. | Guangzhou Meinong | 25 | |
| HAID (ECUADOR) FEED CIA.LTDA. | Haid Ecuador | Free of income tax | Note.17 |
| HAIDMARINO CIA.LTDA. | HAIDMARINO Food | Free of income tax | Note.17 |
| Name of taxpayer | Abbr. | Income tax rate（%） | Note |
| Guangdong Hairuite Pet Nitribution Technology Co., Ltd. | Guangdong Hairuite | 25 | |
| Guangzhou Haijian Investment Co., Ltd. | Guangzhou Haijian | 25 | |
| Foshan Nanhai Bairong Aquatic Farming Co., Ltd. | Nanhai Bairong | 12.5 | Note.3 |
| Zhaoqing Bairong Aquatic Farming Co., Ltd. | Zhaoqing Bairong | 12.5 | Note.3 |
| Yangxin Bairong Aquatic Farming Co., Ltd. | Yangxin Bairong | 12.5 | Note.3 |
| Jingzhou Bairong Aquatic Farming Co., Ltd. | Jingzhou Bairong | 12.5 | Note.3 |
| Linyi Bairong Aquatic Farming Co., Ltd. | Linyi Bairong | 12.5 | Note.3 |
| Hunan Innovation Biotechnology Limited | Hunan Innovation | 15 | Note.1 |
| Guangzhou Haishengke Investment Co., Ltd. | Guangzhou Haishengke | 25 | |
| Sichuan Hailinger Biopharmaceutical Co., Ltd. | Sichuan Hailinger | 25 | |
| Sanming Haid Feed Co., Ltd. | Sanming Haid | 25 | |
| Qingyuan Haid Biotechnology Co., Ltd. | Qingyuan Haid | 25 | |
| Qingyuan Hainong Agriculture and Animal Husbandry Co., Ltd. | Qingyuan Hainong | Free of income tax | Note.2 |
| Xuancheng Haid Biotechnology Co., Ltd. | Xuancheng Haid | 25 | |
| Guangdong Shunde Haid Biotechnology Co., Ltd. | Shunde Haid | 25 | |
| Jiaxing Haid Yongwang Bio-Feed Co., Ltd. | Jiaxing Haid | 25 | |
| Shijiazhuang Weike Biotechnology Co., Ltd. | Shijiazhuang Weike | 15 | Note.1 |
| Chongqing Haid Feed Co., Ltd. | Chongqing Haid | 25 | |
| Shenyang Haid Feed Co., Ltd. | Shenyang Haid | 25 | |
| Jiangsu Haihe Agriculture and Animal Husbandry Co., Ltd. | Jiangsu Haihe | 25 | |
| Xuzhou Haihe Feed Co., Ltd. | Xuzhou Haihe | 25 | |
| Lianyungang Haihe Feed Co., Ltd. | Lianyungang Haihe | 25 | |
| Xuzhou Haid Hexin Feed Co., Ltd. | Xuzhou Haid | 25 | |
| Anshan Dachuan Feed Technology Co., Ltd. | Anshan Dachuan | 25 | |
| Guangzhou Haiyuan Factoring Co., Ltd. | Guangzhou Haiyuan Factoring | 25 | |
| Heze Dingtao Hairong Farming Specialized Cooperative Association | Heze Hairong | Free of income tax | Note.15 |
| Haid Pet Care Co., Ltd. | Haid Pet | 25 | |
| Haid Pet Care (Weihai) Co., Ltd. | Weihai Pet | 25 | |
| Qujing Zhihai Feed Co., Ltd. | Qujing Zhihai | 25 |
| Name of taxpayer | Abbr. | Income tax rate（%） | Note |
| Dali Haiwang Feed Co., Ltd. | Dali Haiwang | 25 | |
| Yibin Zhihai Feed Co., Ltd. | Yibin Zhihai | 25 | |
| Guiyang Haid Zhihai Feed Co., Ltd. | Guiyang Zhihai | 25 | |
| Yichang Zhihai Feed Co., Ltd. | Yichang Zhihai | 25 | |
| Meishan Haid Zhihai Feed Co., Ltd. | Meishan Zhihai | 25 | |
| Ganzhou Haid Biotechnology Co., Ltd. | Ganzhou Haid | 25 | |
| Foshan Haid Hangbiao Feed Co., Ltd. | Foshan Haid | 25 | |
| Guangzhou Zecan Investment Management Co., Ltd. | Guangzhou Zecan | 25 | |
| Guangzhou Punong Investment Management Co., Ltd. | Guangzhou Punong | 25 | |
| Shandong Fengying Food Co., Ltd. | Shandong Fengying | 25 | |
| Jiaxiang Haiying Food Co., Ltd. | Jiaxiang Haiying | 25、Free of income tax | Note.6 |
| Linxi County Haiying Food Co., Ltd. | Linxi Haiying | 25、Free of income tax | Note.6 |
| Yiyuan Haiying Food Co., Ltd. | Yiyuan Haiying | 25、Free of income tax | Note.6 |
| Zouping Haiying Food Co., Ltd. | Zouping Haiying | 25、Free of income tax | Note.6 |
| Guangzhou Yuannong Investment Management Co., Ltd. | Guangzhou Yuannong | 25 | |
| Guangdong Haid Poverty Alleviation Investment Development Co., Ltd. | Guangdong Haid Poverty Alleviation | 25 | |
| Liyang Jiuhe Feed Co., Ltd. | Liyang Jiuhe | 25 | |
| Shaoguan Haid Biotechnology Co., Ltd. | Shaoguan Haid | 25 | |
| Shandong Daxin Group Co., Ltd. | Shandong Daxin | 25 | |
| Qingdao Daxin Feed Co., Ltd. | Qingdao Daxin | 25 | |
| Qingdao Huaxin Feed Co., Ltd. | Qingdao Huaxin | 25 | |
| Weifang Daxin Feed Co., Ltd. | Weifang Daxin | 25 | |
| Yantai Daxin Feed Co., Ltd. | Yantai Daxin | 25 | |
| Linyi Yihe Feed Co., Ltd. | Linyi Yihe | 25 | |
| Jiangsu Daxin Feed Co., Ltd. | Jiangsu Daxin | 20 | Note.18 |
| Shandong Daxin Agriculture and Animal Husbandry Technology Co., Ltd. | Shandong Daxin Agriculture and Animal Husbandry | 25 |
| Name of taxpayer | Abbr. | Income tax rate（%） | Note |
| Qingdao Zhizhuxia Pig Farming Services Co., Ltd. | Qingdao Zhizhuxia | 20 | Note.18 |
| Liaocheng Daxin Feed Co., Ltd. | Liaocheng Daxin | 25 | |
| Huanan Hailong Feed Co., Ltd. | Huanan Hailong | 25 | |
| Hunan Jinhuilong Agriculture and Animal Husbandry Development Co., Ltd. | Hunan Jinhuilong | 25 | |
| Yueyang Jinhuilong Biotechnology Co., Ltd. | Yueyang Jinhuilong | 25 | |
| Jiaozuo Jinhuilong Biotechnology Co., Ltd. | Jiaozuo Jinhuilong | 25 | |
| Shijiazhuang Huilong Feed Co., Ltd. | Shijiazhuang Huilong | 25 | |
| Handan Huilong Feed Co., Ltd. | Handan Huilong | 25 | |
| Huaian Huilong Feed Co., Ltd. | Huaian Huilong | 25 | |
| Fuzhou Haid Feed Co., Ltd. | Fuzhou Haid | 25 | |
| Zhaoqing Gaoyao Haid Biotechnology Co., Ltd. | Gaoyao Haid | 25 | |
| Nanning Haid Biological Technology Co., Ltd. | Nanning Haid | 25 | |
| Ganzhou Hailong Feed Co., Ltd. | Ganzhou Hailong | 25 | |
| Yancheng Dachuan Feed Co., Ltd. | Yancheng Dachuan | 25 | |
| Guangzhou Haiyuan Micro-Credit Co., Ltd. | Guangzhou Haiyuan Micro-Credit | 25 | |
| Guangdong Haid Biological Technology Co., Ltd. | Guangdong Haid Biological Technology | 25 | |
| Jiangmen Rongchuan Feed Co., Ltd. | Jiangmen Rongchuan | 25 | |
| Chongqing Zhihai Feed Co., Ltd. | Chongqing Zhihai | 25 | |
| Meizhou Haid Biological Technology Co., Ltd. | Meizhou Haid | 25 | |
| Yicheng Haid Biological Technology Co., Ltd. | Yicheng Haid | 25 | |
| Heshan Ronghai Feed Co., Ltd. | Heshan Ronghai | 25 | |
| Hexian Haid Biological Technology Co., Ltd. | Hexian Haid | 25 | |
| Pingnan Haid Feed Co., Ltd. | Pingnan Haid | 25 | |
| Guangzhou Shunkang Aquatic Farming Co., Ltd. | Guangzhou Shunkang | 25 | |
| Tianjin Rongchuan Feed Co., Ltd. | Tianjin Rongchuan | 25 | |
| Zhanjiang Rongda Feed Co., Ltd. | Zhanjiang Rongda | 25 | |
| Huainan Haid Biology Feed Co., Ltd. | Huainan Haid | 25 | |
| Maoming Haid Biological Technology Co., Ltd. | Maoming Haid | 25 | |
| Guangzhou Ronghai Farming Technology Co., Ltd. | Guangzhou Ronghai | 25 | |
| Zhongshan Ronghai Aquatic Farming Co., Ltd. | Zhongshan Ronghai | 12.5 | Note.3 |
| Name of taxpayer | Abbr. | Income tax rate（%） | Note |
| Guangzhou Rongda Aquatic Technology Co., Ltd. | Guangzhou Rongda | 12.5 | Note.3 |
| Jiangmen Ronghai Farming Technology Co., Ltd. | Jiangmen Ronghai | 12.5 | Note.3 |
| Sichuan Rongchuan Feed Co., Ltd. | Sichuan Rongchuan | 25 | |
| Yulin Haid Feed Co., Ltd. | Yulin Haid | 25 | |
| Sichuan Haile Agriculture and Animal Husbandry Co., Ltd. | Sichuan Haile | 25 | |
| Yichang Zhihai Agriculture and Animal Husbandry Co., Ltd. | Yichang Agriculture and Animal | 25 | |
| Guangzhou Xingnong Agriculture and Animal Husbandry Development Co., Ltd. | Guangzhou Xingnong | 25 | |
| Xinxing Haifeng Agriculture and Animal Husbandry Co., Ltd. | Xinxing Haifeng | Free of income tax | Note.2 |
| Sihui Haifeng Ecological Agriculture Co., Ltd. | Sihui Haifeng | Free of income tax | Note.2、Note.26 |
| Qingyuan Ronghai Farming Technology Co., Ltd. | Qingyuan Ronghai | 12.5 | Note.3; Note.27 |
| Guangzhou Haiyin Financing Guarantee Co.Ltd. | Guangzhou Haiyin Guarantee | 25 | |
| Qinzhou Hailong Feed Co., Ltd. | Qinzhou Hailong | 25 | |
| Deyang Dachuan Biological Technology Co., Ltd. | Deyang Dachuan | 25 | |
| Hainan Haid Biological Technology Co., Ltd. | Hainan Haid | 25 | |
| Liuzhou Haid Feed Co., Ltd. | Liuzhou Haid | 25 | |
| Jiangsu Dachuan Biological Technology Co., Ltd. | Jiangsu Dachuan | 25 | Note.28 |
| Zhaoqing Ronghai Farming Co., Ltd. | Zhaoqing Ronghai | 12.5 | Note.3 |
| Gaoan Haid Biological Technology Co., Ltd. | Gaoan Haid | 25 | |
| Shanggao Haid Biological Technology Co., Ltd. | Shanggao Haid | 25 |
Note 1: The Company’s subsidiaries Guangzhou Haiwei, Guangzhou Dachuan, Jiangmen Haid, GuangdongHinter, Qingyuan Haibei, Zhuhai Rongchuan, Zhuhai Hailong, Yunnan Haid, Heze Haiding Feed, HunanInnovation and Shijiazhuang Weike were recognized as high-tech enterprises by their respective provincialdepartments of science and technology, departments of finance, offices of the State Administration ofTaxation or local taxation bureaus for an effective period of three years. As such, they were subject to acorporate income tax rate of 15% in 2019.Note 2: The income of the company's subsidiaries enjoyed income from livestock and poultry farming freeof corporate income tax as per the Corporate Income Tax Law of the People’s Republic of China and the
Regulation on the Implementation of the Corporate Income Tax Law of the People’s Republic of China.Note 3: The Company’s subsidiaries Guangdong Hisenor, Zhanjiang Hisenor, Hainan Hisenor (recognizedas a high-tech enterprise by the provincial department of science and technology, department of finance,office of the State Administration of Taxation or local taxation bureau), Yangxin Bairong, Jingzhou Bairong,Qingyuan Ronghai, Nanhai Bairong, Zhaoqing Bairong, Enping Fengwo, Hunan Hadi, Taizhou Haid,Changzhou Haid, Zhongshan Ronghai, Guangzhou Rongda, Zanjiang Haijingzhou, Jingtai Haijingzhou,Zhangzhou Haijingzhou, Linyi Bairong, Jiangmeng Ronghai and Zhaoqing Ronghai were subject to acorporate income tax rate of half of 25% on their income from marine and/or inland aquaculture accordingto item 27 of the Corporate Income Tax Law of the People’s Republic of China and item 86 of theRegulation on the Implementation of the Corporate Income Tax Law of the People’s Republic of China andother income is subject to corporate income tax at a rate of 25%.Note 4: The Company’s subsidiary Rongcheng Yandunjiao was exempted from corporate income tax onfish and shrimp meal income for these products were primarily processed agricultural products as stated inthe Notice of the Ministry of Finance and State Administration of Taxation on Announcing the Scope ofPrimary Processing of Agricultural Products Covered by Preferential Policies on Corporate Income Tax (forTrial Implementation) (CS [2008] No. 149, as well as was subject to a corporate income tax of 25% onother income.Note 5: The Company’s subsidiaries Fujian Haidsun and Pucheng Haidsun were exempted from corporateincome tax on chicken meal income for this product was a primarily processed agricultural product asstated in the Notice of the Ministry of Finance and State Administration of Taxation on Announcing theScope of Primary Processing of Agricultural Products Covered by Preferential Policies on CorporateIncome Tax (for Trial Implementation) (CS [2008] No. 149, as well as were subject to a corporate incometax of 25% on other income. Among them, Pucheng Haisheng enjoys the general income tax reduction andexemption policy for small meager companiesNote 6: The Company’s subsidiaries Jiaxiang Haiying, Linxi Haiying, Yiyuan Haiying and ZoupingHaiying were exempted from corporate income tax on their income from selling slaughtered and cutpoultry for these products were primarily processed agricultural products as stated in the Notice of theMinistry of Finance and State Administration of Taxation on Announcing the Scope of Primary Processingof Agricultural Products Covered by Preferential Policies on Corporate Income Tax (for TrialImplementation) (CS [2008] No. 149, as well as were subject to a corporate income tax of 25% on otherincomeNote 7: The Company’s subsidiaries Chengdu Haid, Yangling Haid, Gansu Haid and Lanzhou Haid areenjoying a preferential corporate income tax rate of 15% for the period from 2013 to 2020, the period from2018 to 2020 and the period from 2019 to 2020(for Gansu Haid and Lanzhou Haid), respectively, asenterprises involved in the Western China Development program in accordance with the Notice of the
Ministry of Finance, the General Administration of Customs and the State Administration of Taxation onTax Policy Issues concerning Further Implementing the Western China Development Strategy (CS [2011]No. 58) and the Announcement of the State Administration of Taxation on Issues Concerning CorporateIncome Tax Related with EnhancingNote 8: Registered in the British Virgin Islands, the Company’s subsidiaries Rickworth, Panasia Trading,Sheng Long International, Hisenor International, Nano, Oceanic, Power Spring and Link are exemptedfrom corporate income tax according to the local tax law.Note 9: Registered in Hong Kong, the Company’s subsidiaries Haida HK, Hong Kong Longreat and Danclare subject to a profit tax rate of 16.50% according to the local tax law.Note 10: The Company’s subsidiaries Dong Nai Haid, Sheng Long Bio-Tech, Long Sheng International,Hisenor Vietnam, Namduong Vietnam, Hai Duong Haid, Hai Dai Company Limited, Vinh Long Hai Daiand Vietnam Haibei are registered in Vietnam. Among them:
①Dong Nai Haid and Hai Duong Haid are enjoying a preferential policy that exempt them from corporateincome tax for two years starting from the year it makes profit and grant them a halved corporate incometax rate in the subsequent four years. In 2019, Dong Nai Haid and Hai Duong Haid make profits in the firstyear and they are exempt from corporate income tax.
②Hai Dai Company Limited, Vinh Long Hai Dai and Vietnam Haibei are enjoying a preferential policythat exempt them from corporate income tax for two years starting from the year it makes profit and grantthem a halved corporate income tax rate in the subsequent four years. In 2019, Dong Nai Haid and HaiDuong Haid didn’t make profits and they are exempt from corporate income tax.
③Sheng Long Bio-Tech was subject to a preferential corporate income tax rate of 10%, tax rate of 20% forCold storage rental income, tax rate of 20% for raw material sales, animal insurance reduced by 50% at17%, and other income at 20% for making new investments in the local poor areas.
④Long Sheng International was subject to a preferential corporate income tax rate for making newinvestments in the local poor areas.(Feed output is less than 27,000 tons at 10%, and the excess is at 20%).
⑤Namduong Vietnam and Hisenor Vietnam farmed shrimp, they were exempted from corporate incometax as per the local tax law.Note 11: Registered in Malaysia, the Company’s subsidiaries Sheng Long Malaysia, Kembang SuburInternational and Sheng Long Aquatic Malaysia were subject to a corporate income tax rate of 24% as perthe local tax law.Note 12: Registered in Singapore, the Company’s subsidiaries Lanking, Lanking Nemo, Lanking
Rickworth, Lanking Nano, Kinghill Holdings, Kinghill Pte., Kinghill Resources and Kinghill Agri weresubject to a corporate income tax rate of 17% as per the local tax law.Note 13: Registered in the U.S., the Company’s subsidiary Lanking America is subject to variable tax ratesaccording to the country’s federal taxation system. For 2019, the subsidiary needed not to pay the federalcorporate income tax due to loss and only needed to pay the minimum tax of USD800 of California (8.84%of the taxable income for the corporate income tax required by California).Note 14: Registered in India, the Company’s subsidiary Sheng Long India was subject to a corporateincome tax rate of 25% as per the local tax law.Note 15: The Company’s subsidiaries Dingtao Hairong, Zhangzhou Hairong and Heze Hairong wereexempted from corporate income tax in 2019 on their income from agriculture, forestry, animal husbandryor fishery as per item 27, sub-item 1 of the Corporate Income Tax Law of the People’s Republic of China.Note 16: The Company’s subsidiaries Chengnan Hairong and Guigang Hairong were exempted fromcorporate income tax in 2018 on their income from agriculture, forestry, animal husbandry or fishery as peritem 27, sub-item 1 of the Corporate Income Tax Law of the People’s Republic of China. And other incomeare subject to a corporate income tax rate of 20% base on tax incentives for small profit-making enterprise(refer to Note.18).Note 17: The Company’s subsidiary Haid Ecuador and HAIDMARINO Food were registered in Ecuador.According to Ecuador ’s local tax laws, enterprises begin to enjoy the tax exemption period for 12 yearsafter issuing the first invoice, and the tax rate after the tax exemption period is 25%. Haid Ecuador andHAIDMARINO Food are in the construction period in 2019 and are exempt from corporate income tax.Note 18: For the Company’s subsidiary Anyang Haiyue, Tengzhou Fengcheng, Chengnan Hairong,Guigang Hairong, Weinan Haid, Zhoucheng Haiyue, Changsheng Logistics, Qingdao Zhizhuxia, JiangsuDaxin, Heze Haiding Commercial & Trading, Guangzhou Haiyiyuan and Pucheng Haisheng, according tothe Announcement of the State Administration of Taxation on the Issues Concerning the Implementation ofthe Inclusive Income Tax Relief Policy for Small and Small Profit Enterprises (State Administration ofTaxation Announcement No. 2 of 2019), from January 1, 2019 to December 31, 2021, the portion of theannual taxable income of a small meager profit enterprise that does not exceed 1 million yuan is reduced to25% of the taxable income, and the enterprise income tax is paid at a tax rate of 20%; for the portion of theannual taxable income exceeding 1 million yuan but not exceeding 3 million yuan, 50% shall be deductedfrom the taxable income and the enterprise income tax shall be paid at the rate of 20%.Note 19: The Company’s subsidiary Xinjiang Ruiliheng was exempted from corporate income tax onincome from cottonseed oil, cottonseed meal, boll hull, cotton linter, Chinese honeylocust fruit and greycotton for these products were primarily processed agricultural products as stated in the Notice of theMinistry of Finance and State Administration of Taxation on Announcing the Scope of Primary Processing
of Agricultural Products Covered by Preferential Policies on Corporate Income Tax (for TrialImplementation) (CS [2008] No. 149), as well as were subject to a corporate income tax of 25% on otherincome.Note 20: Registered in Indonesia, the Company’s subsidiaries Haida Indonesia, Haida Surabaya andHisenor Indonesia were subject to a corporate income tax rate of 25% as per the local tax lawNote 21: Registered in the British Virgin Islands, the Company’s subsidiary Haid International wasexempted from corporate income tax according to the local tax law. Meanwhile, as a Hong Kong taxableresident enterprise with its business premises in the city, Haid International was subject to a halved incometax rate of 8.25% on its treasury center business in 2019.Note 22: Registered in Egypt, the Company’s subsidiaries Haid Egypt was subject to a corporate incometax rate of 22.5% as per the local tax law.Note 23: The Company’s subsidiary Guiding Yitun Ecological Agriculture Co., Ltd. has changed its nameto “Guizhou Aikexin Pig Farming Co., Ltd.” in December 2019.Note 24: The Company’s subsidiary Linyi Haiding Youju Feed Technology Co., Ltd. has changed its nameto “Linyi Haiding Feed Technology Co., Ltd.” in March 2019.Note 25: The Company’s subsidiary Linyi Hedong Haiding Youju Agriculture and Animal HusbandryDevelopment Co., Ltd. has changed its name to “Linyi Hedong Haiding Agriculture and Animal HusbandryDevelopment Co., Ltd.” in March 2019.Note 26: The Company’s subsidiary Sihui Yitun Ecological Agriculture Co., Ltd. has changed its name to“Sihui Haifeng Ecological Agriculture Co., Ltd.” in September 2019.Note 27: The Company’s subsidiary Qingyuan Bairong Aquatic Farming Co., Ltd.has changed its name to“Qingyuan Ronghai Farming Technology Co., Ltd.” in August 2019.Note 28: The Company’s subsidiary Jiangsu Jinhuilong Biotechnology Co., Ltd. has changed its name to“Jiangsu Dachuan Biotechnology Co., Ltd.” in September 2019.
V Notes to Key Items in Consolidated Financial Statements
1. Cash at bank and on hand
| Item | As at 31/12/2019 | As at 31/12/2018 | ||||
| Foreign Currency | Exchange Rate | RMB | Foreign Currency | Exchange Rate | RMB | |
| Cash on hand: | —— | —— | 1,127,806.04 | —— | —— | 3,458,157.23 |
| RMB | - | - | 388,363.33 | - | - | 378,606.58 |
| USD | 1,758.38 | 6.976200 | 12,266.81 | 6,732.43 | 6.863200 | 46,206.02 |
| VND | 2,248,963,647.00 | 0.000300 | 674,689.09 | 10,261,332,383.24 | 0.000295 | 3,028,299.77 |
| EGP | 74,720.00 | 0.434652 | 32,477.20 | - | - | - |
| IDR | 559,291.29 | 0.000488 | 272.93 | 7,067,590.00 | 0.000474 | 3,346.90 |
| MYR | 2.00 | 1.698600 | 3.40 | - | - | - |
| INR | 201,745.00 | 0.097813 | 19,733.28 | 17,352.00 | 0.097854 | 1,697.96 |
| Cash in bank： | —— | —— | 1,788,428,202.67 | —— | —— | 1,637,357,730.01 |
| RMB | - | - | 1,344,826,231.05 | - | - | 1,303,524,178.45 |
| USD | 26,952,031.79 | 6.976200 | 188,022,764.17 | 17,180,244.20 | 6.863200 | 117,911,452.02 |
| VND | 727,341,107,442.09 | 0.000300 | 218,202,332.23 | 628,743,863,916.59 | 0.000295 | 185,553,380.15 |
| HKD | 546,065.44 | 0.895780 | 489,154.50 | - | - | - |
| EUR | 1,487.58 | 7.815500 | 11,626.18 | - | - | - |
| SGD | 180.87 | 5.173900 | 935.80 | - | - | - |
| EGP | 374,204.18 | 0.434652 | 162,648.60 | - | - | - |
| IDL | 38,651,239,496.32 | 0.000488 | 18,861,804.87 | 32,278,847,632.06 | 0.000474 | 15,285,996.86 |
| Item | As at 31/12/2019 | As at 31/12/2018 | ||||
| Foreign Currency | Exchange Rate | RMB | Foreign Currency | Exchange Rate | RMB | |
| MYR | 973,525.76 | 1.698600 | 1,653,630.86 | 2,269,659.57 | 1.647909 | 3,740,192.94 |
| INR | 165,592,246.53 | 0.097813 | 16,197,074.41 | 115,911,000.51 | 0.097856 | 11,342,529.59 |
| Other monetary funds： | —— | —— | 60,179,904.13 | —— | —— | 94,593,951.34 |
| RMB | - | - | 41,139,019.20 | - | - | 94,592,814.79 |
| USD | 2,729,406.40 | 6.976200 | 19,040,884.93 | 165.60 | 6.863200 | 1,136.55 |
| Total | —— | —— | 1,849,735,912.84 | —— | —— | 1,735,409,838.58 |
| Including: Total overseas deposits | —— | —— | 450,854,249.90 | —— | —— | 331,878,873.97 |
Note:
(1) Interest receivable included in cash in bank is RMB 961,599.30.
(2) For cash with restriction, please refer to Note V “64. Assets with restricted ownership or use right”.
2. Held-for-trading financial assets
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Held-for-trading financial assets | 28,583,495.35 | —— |
| Including: Debt instrument investments | - | —— |
| Equity instrument investments | - | —— |
| Derivative financial assets | 28,583,495.35 | —— |
| Others | - | —— |
| Total | 28,583,495.35 | —— |
Note:
(1) There were no held-for-trading financial assets as restrictively realizable as of the end of the reportingperiod.
(2) Derivative financial assets were the fair value of futures, swap, option and forward contracts.
3. Financial assets at fair value through profit or loss
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Held-for-trading financial assets | —— | 49,672,592.73 |
| Including: Derivative financial assets | —— | 49,672,592.73 |
| Total | —— | 49,672,592.73 |
Note: Derivative financial assets were the fair value of futures, swap, option and forward contracts.
4. Notes receivables
| Category | As at 31/12/2019 | As at 31/12/2018 | ||||
| Book value | Provision for bad and doubtful debts | Carrying amounts | Book value | Provision for bad and doubtful debts | Carrying amounts | |
| Bank acceptance bills | 5,816,473.71 | - | 5,816,473.71 | 8,096,644.82 | - | 8,096,644.82 |
| Usance letters of credit | 4,905,927.61 | - | 4,905,927.61 | 2,412,666.54 | - | 2,412,666.54 |
| Total | 10,722,401.32 | - | 10,722,401.32 | 10,509,311.36 | - | 10,509,311.36 |
(1) The Group had no notes receivables in pledge as of the end of the reporting period.
(2) Notes receivable endorsed or discounted by the Company that are not matured at the balance sheet date.
| Item | Amount derecognized at year end | Amount not-derecognized at year end |
| Bank acceptance bills | 16,400,000.00 | - |
| Total | 16,400,000.00 | - |
(3) As of the end of the reporting period, the Group had no notes that were reclassified into accounts receivabledue to note drawers not performing their obligations.
(4) Category by provision for bad and doubtful debts approach
| Category | As at 31/12/2019 | ||||
| Book value | Provision for bad and doubtful debts | Carrying amounts | |||
| Amount | Percentage (%) | Amount | Expected credit loss percentage (%) | ||
| Assessed for impairment individually | - | - | - | - | - |
| Assessed for impairment collectively | 10,722,401.32 | 100.00 | - | - | 10,722,401.32 |
| Including: | |||||
| Bank acceptance bills | 5,816,473.71 | 54.25 | - | - | 5,816,473.71 |
| Usance letters of credit | 4,905,927.61 | 45.75 | - | - | 4,905,927.61 |
| Total | 10,722,401.32 | 100.00 | - | - | 10,722,401.32 |
(Continued)
| Category | As at 1/1/2019 | ||||
| Book value | Provision for bad and doubtful debts | Carrying amounts | |||
| Amount | Percentage (%) | Amount | Expected credit loss percentage (%) | ||
| Assessed for impairment individually | - | - | - | - | - |
| Assessed for impairment collectively | 10,509,311.36 | 100.00 | - | - | 10,509,311.36 |
| Including: | |||||
| Bank acceptance bills | 8,096,644.82 | 77.04 | - | - | 8,096,644.82 |
| Usance letters of credit | 2,412,666.54 | 22.96 | - | - | 2,412,666.54 |
| Total | 10,509,311.36 | 100.00 | - | - | 10,509,311.36 |
(5) Recognitions or recoveries or reversals of provision for bad and doubtful debts in current period
| Amount of provision for bad and doubtful debts | |
| As at 31/12/2018 | - |
| Adjusted amount of the first implementation of new financial instruments standard | - |
| As at 1/1/2019 | - |
| Recognitions in current period | - |
| Recoveries or reversals in current period | - |
| Write off in current period | - |
| As at 31/12/2019 | - |
5. Accounts receivable
(1) Accounts receivable by aging
| Aging | As at 31/12/2019 |
| Within 1 year | 985,420,942.02 |
| 1 to 2 years | 68,386,011.26 |
| 2 to 3 years | 27,998,505.44 |
| 3 to 4 years | 24,182,331.50 |
| 4 to 5 years | 21,640,985.52 |
| More than 5 years | 36,361,428.76 |
| Subtotal | 1,163,990,204.50 |
| Less: provision for bad and doubtful debts | 142,238,771.94 |
| Total | 1,021,751,432.56 |
(2) Accounts receivable by the method of recognizing bad and doubtful debts
| Category | As at 31/12/2019 | As at 1/1/2019 | ||||||||
| Book value | Provision for bad and doubtful debts | Carrying Amount | Book value | Provision for bad and doubtful debts | Carrying Amount | |||||
| Amount | Percentage (%) | Amount | Expected credit loss (%) | Amount | Percentage (%) | Amount | Expected credit loss (%) | |||
| Assessed for impairment individually | 71,004,746.63 | 6.10 | 66,025,041.62 | 92.99 | 4,979,705.01 | 70,069,567.65 | 6.39 | 60,357,698.47 | 86.14 | 9,711,869.18 |
| Assessed for impairment collectively | 1,092,985,457.87 | 93.90 | 76,213,730.32 | 6.97 | 1,016,771,727.55 | 1,026,676,499.20 | 93.61 | 71,543,945.62 | 6.97 | 955,132,553.58 |
| Including: | ||||||||||
| Accounts receivable of feed and relevant customers | 1,051,437,723.73 | 90.33 | 75,440,942.46 | 7.18 | 975,996,781.27 | 979,613,796.25 | 89.32 | 70,598,524.77 | 7.21 | 909,015,271.48 |
| Accounts receivable of materials trade customers | 41,547,734.14 | 3.57 | 772,787.86 | 1.86 | 40,774,946.28 | 47,062,702.95 | 4.29 | 945,420.85 | 2.01 | 46,117,282.10 |
| Total | 1,163,990,204.50 | 100.00 | 142,238,771.94 | 12.22 | 1,021,751,432.56 | 1,096,746,066.85 | 100.00 | 131,901,644.09 | 12.03 | 964,844,422.76 |
Provision for bad and doubtful debts which were recognized individually
| Name | As at 31/12/2019 | |||
| Book Value | Provision for bad and doubtful debts | Expected credit loss (%) | Reason of provision | |
| Customer A | 13,606,809.47 | 13,606,809.47 | 100.00 | Estimated to be unrecoverable |
| Customer B | 5,540,546.52 | 5,169,224.53 | 93.30 | Estimated to be recoverable partly |
| Customer C | 4,801,489.19 | 4,801,489.19 | 100.00 | Estimated to be unrecoverable |
| Customer D | 3,435,545.95 | 3,435,545.95 | 100.00 | Estimated to be unrecoverable |
| Customer E | 2,480,000.00 | 2,480,000.00 | 100.00 | Estimated to be unrecoverable |
| Remaining individual customers | 41,140,355.50 | 36,531,972.48 | 88.80 | Estimated to be recoverable partly |
| Total | 71,004,746.63 | 66,025,041.62 | 92.99 | —— |
Provision for bad and doubtful debts which were recognized collectively:
Recognized collectively item 1: Accounts receivable of feed and relevant customers
| As at 31/12/2019 | |||
| Accounts receivable | Provision for bad and Doubtful debts | Expected credit loss (%) | |
| Within 1 year | 938,662,561.80 | 17,686,116.97 | 1.88 |
| 1 to 2 years | 62,934,468.54 | 18,309,635.19 | 29.09 |
| 2 to 3 years | 18,902,541.23 | 11,670,485.10 | 61.74 |
| 3 to 4 years | 11,190,155.79 | 8,539,000.81 | 76.31 |
| 4 to 5 years | 7,136,909.90 | 6,647,317.88 | 93.14 |
| More than 5 years | 12,611,086.47 | 12,588,386.51 | 99.82 |
| Total | 1,051,437,723.73 | 75,440,942.46 | 7.18 |
Recognized collectively item 2: Accounts receivable of material trade customers
| As at 31/12/2019 | |||
| Accounts receivable | Provision for bad and Doubtful debts | Expected credit loss (%) | |
| Within 1 year | 41,547,734.14 | 772,787.86 | 1.86 |
| Total | 41,547,734.14 | 772,787.86 | 1.86 |
Provision for bad and doubtful debts as of 31/12/2018:
| Category | As at 31/12/2018 | ||||
| Amount | Percentage% | Provision for bad and Doubtful debts | Percentage% | Carrying amount | |
| Individually significant and assessed for impairment individually | 46,902,225.22 | 3.81 | 40,331,971.79 | 85.99 | 6,570,253.43 |
| Collectively assessed for impairment | |||||
| Including: Aging group | 1,026,676,499.20 | 83.47 | 71,543,945.62 | 6.97 | 955,132,553.58 |
| Accounts receivable in factoring | 133,291,200.95 | 10.84 | 1,999,368.01 | 1.50 | 131,291,832.94 |
| Subtotal | 1,159,967,700.15 | 94.31 | 73,543,313.63 | 6.34 | 1,086,424,386.52 |
| Individually insignificant but assessed for impairment individually | 23,167,342.43 | 1.88 | 20,025,726.68 | 86.44 | 3,141,615.75 |
| Total | 1,230,037,267.80 | 100.00 | 133,901,012.10 | 10.89 | 1,096,136,255.70 |
(3) Recognitions or recoveries or reversals of provision for bad and doubtful debts in current period
| Amount of provision for bad and doubtful debts | |
| As at 31/12/2018 | 133,901,012.10 |
| Adjusted amount of the first implementation of new financial instruments standard | -1,999,368.01 |
| As at 31/12/2019 | 131,901,644.09 |
| Recognitions in current period | 29,242,665.32 |
| Recoveries or reversals in current period | 3,173,339.91 |
| Write off in current period | 15,732,197.56 |
| As at 31/12/2019 | 142,238,771.94 |
Recoveries or reversals of important provision for bad and doubtful debts in current period are as follow:
| Name of debtor | Reason for reversal | Recoveries approach | Original evidence for recognizing the provision for bad and doubtful debts | Recoveries or reversals amount |
| Name of debtor | Reason for reversal | Recoveries approach | Original evidence for recognizing the provision for bad and doubtful debts | Recoveries or reversals amount |
| Customer F | Receive payment | Receive payment | High possibility of bad and doubtful debts | 1,250,064.54 |
| Total | —— | —— | —— | 1,250,064.54 |
(4) Accounts receivable actually written off in current period
| Item | Write-off amount |
| Accounts receivable actually written off | 15,732,197.56 |
Important accounts receivable written off are as follow:
| Name of debtor | Nature of accounts receivable | Written-off amount | Reason for write-off | Approval procedures | Arising from related party transactions(Y/N) |
| Customer G | Payment for goods | 7,413,325.81 | Company closed | Conclusive evidence for irrecoverability was obtained and internal approval was given | N |
| Total | —— | 7,413,325.81 | —— | —— | —— |
(5) The receivables by debtor with top five closing balance
The total accounts receivable from the top five debtors with the largest closing balance amounted to RMB109,044,710.56, accounting for 9.37% of the total closing balance of accounts receivable, with the totalcorresponding closing balance of the provision for bad and doubtful debts being RMB 1,448,729.58.
(6) No accounts receivable was derecognized due to transfer of financial assets in current period.
(7) There were no such cases in current period where the Group had transferred an accounts receivable but
continued to be involved in the assets or liabilities associated with that account receivable.
6. Prepayments
(1) Prepayments by aging
| Aging | As at 31/12/2018 | As at 31/12/2018 | ||
| Amount | Percentage% | Amount | Percentage% | |
| Within 1 year | 450,795,490.61 | 99.55 | 423,040,576.54 | 99.57 |
| 1 and 2 years | 1,975,201.31 | 0.44 | 1,678,650.89 | 0.40 |
| 2 and 3 years | 7,641.39 | 0.00 | 39,566.69 | 0.01 |
| More than 3 years | 66,089.88 | 0.01 | 91,228.50 | 0.02 |
| Total | 452,844,423.19 | 100.00 | 424,850,022.62 | 100.00 |
Note: Prepayments over 1 year were mainly unsettled prepayment to supplier.。
(2) The prepayments by debtor with top five closing balance
The total amount of prepayments by debtor with top five closing balance was RMB 134,493,389.36,accounting for 29.70% of the closing balance of total prepayments.
7. Other receivables
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Interests receivable | 8,069.14 | 1,794,497.12 |
| Dividends receivable | - | - |
| Other receivable | 186,228,309.43 | 500,421,076.13 |
| Total | 186,236,378.57 | 502,215,573.25 |
(1) Interests receivable
①Interests receivable by category
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Loan interests receivable | 9,399.73 | 16,584.71 |
| Bank financing product interests receivable | - | 8,630.13 |
| Bank deposit interests receivable | - | 1,129,419.75 |
| Factoring interests receivable | - | 639,862.53 |
| Subtotal | 9,399.73 | 1,794,497.12 |
| Less: Provision for bad and doubtful debts | 1,330.59 | - |
| Total | 8,069.14 | 1,794,497.12 |
②Provision for bad and doubtful debts
| Provision for bad and doubtful debts | Stage 1 | Stage 2 | Stage 3 | Total |
| 12-month expected credit losses | Lifetime Expected credit losses (not occurred credit impairment) | Lifetime Expected credit losses (occurred credit impairment) | ||
| Balance at 31/12/2018 | - | - | - | - |
| Adjusted amount of the first implementation of new financial instruments standard | - | - | - | - |
| Balance at 1/1/2019 | - | - | - | - |
| In current period | ||||
| -Transfer into stage 2 | - | - | - | - |
| -Transfer into stage 3 | - | - | - | - |
| -Reversal back to stage 2 | - | - | - | - |
| -Reversal back to stage 1 | - | - | - | - |
| Accrual in current period | 1,330.59 | - | - | 1,330.59 |
| Reversal in current period | - | - | - | - |
| Sold off in current period | - | - | - | - |
| Write-off in current period | - | - | - | - |
| Other movement | - | - | - | - |
| Balance at 31/12/2019 | 1,330.59 | - | - | 1,330.59 |
(2) Dividends receivable
There was no dividends receivable in the Group at the end of current period.
(3) Other receivable
①Other receivable by aging
| Aging | As at 31/12/2019 |
| Within 1 year | 164,410,366.39 |
| 1 to 2 years | 17,427,622.50 |
| 2 to 3 years | 12,151,229.39 |
| 3 to 4 years | 3,715,808.56 |
| 4 to 5 years | 6,240,596.78 |
| More than 5 years | 45,947,545.07 |
| Subtotal | 249,893,168.69 |
| Less: Provision for bad and doubtful debts | 63,664,859.26 |
| Total | 186,228,309.43 |
②Other receivable by nature
| Nature | Book Value as at 31/12/2019 | Book value as at 31/12/2018 |
| Petty cash | 11,909,053.15 | 10,547,818.23 |
| Social security advances | 5,342,210.26 | 4,194,568.63 |
| Security deposits | 45,887,409.75 | 24,890,874.23 |
| Accounts with external parties | 101,221,352.84 | 390,943,782.87 |
| Insurance compensation | 2,953,508.09 | 3,812,976.26 |
| Futures margin | 62,785,183.41 | 137,489,684.00 |
| Government subsidies receivable | 17,876,735.58 | - |
| Others | 1,917,715.61 | 1,930,550.63 |
| Total | 249,893,168.69 | 573,810,254.85 |
③Provision for bad and doubtful debts
| Provision for bad and doubtful debts | Stage 1 | Stage 2 | Stage 3 | Total |
| 12-month expected credit losses | Lifetime Expected credit losses (not occurred credit impairment) | Lifetime Expected credit losses (occurred credit impairment) | ||
| Balance at 31/12/2018 | 21,415,319.53 | - | 51,973,859.19 | 73,389,178.72 |
| Adjusted amount of the first implementation of new financial instruments standard | - | - | - | - |
| Balance at 1/1/2019 | 21,415,319.53 | - | 51,973,859.19 | 73,389,178.72 |
| In current period | ||||
| -Transfer into stage 2 | - | - | - | - |
| -Transfer into stage 3 | -8,186.63 | - | 8,186.63 | - |
| -Reversal back to stage 2 | - | - | - | - |
| -Reversal back to stage 1 | - | - | - | - |
| Accrual in current period | -13,201,823.63 | - | 4,698,695.04 | -8,503,128.59 |
| Reversal in current period | - | - | 645,526.19 | 645,526.19 |
| Sold off in current period | - | - | - | - |
| Write off in current period | 543,536.68 | - | 32,128.00 | 575,664.68 |
| Other movement | - | - | - | - |
| Balance at 31/12/2019 | 7,661,772.59 | - | 56,003,086.67 | 63,664,859.26 |
Provision for bad and doubtful debts as of 31/12/2018
| Category | As at 31/12/2018 | ||||
| Amount | Percentage % | Provision for bad and doubtful debts | Percentage % | Carrying amount | |
| Individually significant and assessed for impairment individually | 58,320,027.80 | 10.16 | 49,796,172.62 | 85.38 | 8,523,855.18 |
| Collectively assessed for impairment | |||||
| Including: external Groups and not assessed for impairment individually | 375,822,856.48 | 65.50 | 21,415,319.53 | 5.70 | 354,407,536.95 |
| Groups of futures margin | 137,489,684.00 | 23.96 | - | - | 137,489,684.00 |
| Subtotal | 513,312,540.48 | 89.46 | 21,415,319.53 | 4.17 | 491,897,220.95 |
| Individually insignificant but assessed for impairment individually | 2,177,686.57 | 0.38 | 2,177,686.57 | 100.00 | - |
| Total | 573,810,254.85 | 100.00 | 73,389,178.72 | 12.79 | 500,421,076.13 |
④Recognitions or recoveries or reversals of provision for bad and doubtful debts in current period
| Category | As at 1/1/2019 | Movement in current period | As at 31/12/2019 | ||
| Recognitions | Recoveries or reversals | Write off | |||
| Other receivables | 73,389,178.72 | -8,503,128.59 | 645,526.19 | 575,664.68 | 63,664,859.26 |
| Total | 73,389,178.72 | -8,503,128.59 | 645,526.19 | 575,664.68 | 63,664,859.26 |
There were no important recoveries or reversals of provision for bad and doubtful debts in current period.
⑤Other receivables actually write-off
| Item | Write-off amount |
| Other receivables actually write-off | 575,664.68 |
There were no important written-off of other receivables in current period.
⑥Other receivables with top five ending balance
| Name of debtor | Payment nature | Book balance | Aging | Percentage of other receivables ending balance (%) | Provision for bad and doubtful debts |
| Customer H | Accounts with external party | 50,163,343.35 | 1-5 years and above | 20.07 | 45,888,283.87 |
| Customer I | Futures margin | 15,630,524.91 | Within 1 year | 6.25 | - |
| Customer J | Futures margin | 14,783,659.10 | Within 1 year | 5.92 | - |
| Customer K | Futures margin | 9,962,737.50 | Within 1 year | 3.99 | - |
| Customer L | Futures margin | 9,300,642.00 | Within 1 year | 3.72 | - |
| Total | —— | 99,840,906.86 | —— | 39.95 | 45,888,283.87 |
⑦There were no other receivables associated with government subsidies as of the period-end.
⑧No other receivables were derecognized due to transfer of financial assets in current period.
⑨There were no such cases in current period where the Group had transferred the other receivables butcontinued to be involved in the assets or liabilities associated with that other receivables.
8. Inventories
(1) Inventories by category
| Item | As at 31/12/2019 | As at 31/12/2018 | ||||
| Book value | Provision for impairment of inventories | Carrying amount | Book value | Provision for impairment of inventories | Carrying amount | |
| Raw material | 2,898,684,615.14 | 1,592,107.63 | 2,897,092,507.51 | 3,353,061,829.98 | - | 3,353,061,829.98 |
| Work in progress | 13,212,861.21 | - | 13,212,861.21 | 7,947,441.99 | - | 7,947,441.99 |
| Finished goods | 881,362,770.84 | 6,752,483.94 | 874,610,286.90 | 1,162,208,168.16 | 754,254.68 | 1,161,453,913.48 |
| Consumable biological assets | 682,176,887.52 | 3,773,507.71 | 678,403,379.81 | 321,316,946.72 | - | 321,316,946.72 |
| Total | 4,475,437,134.71 | 12,118,099.28 | 4,463,319,035.43 | 4,844,534,386.85 | 754,254.68 | 4,843,780,132.17 |
(2) Provision for impairment of inventories
| Item | As at 1/1/2019 | Additions during the year | Written back during the year | As at 31/12/2019 | ||
| Provision | Others | Reversals or write-off | Others | |||
| Raw material | - | 1,592,107.63 | - | - | - | 1,592,107.63 |
| Finished goods | 754,254.68 | 6,720,377.89 | - | 722,148.63 | - | 6,752,483.94 |
| Consumable biological assets | - | 3,773,507.71 | - | - | - | 3,773,507.71 |
| Total | 754,254.68 | 12,085,993.23 | - | 722,148.63 | - | 12,118,099.28 |
Provision for impairment of inventories (continued)
| Item | Evidence of net realizable value/remaining consideration and upcoming cost | Reasons for reversals or write-off of provision for impairment of inventories/provision for impairment of contract performance cost in the year |
| Raw material | Net realizable value lower than cost | —— |
| Finished goods | Net realizable value lower than cost | Goods have been sold |
| Consumable biological assets | Net realizable value lower than cost | —— |
(3) There were no capitalized borrowing costs among the closing balance of inventories
9. Assets and liabilities held for sale
| Item | As at 31/12/2019 | As at 31/12/2019 | ||||
| Book value | Provision for impairment | Carrying amount | Book value | Provision for impairment | Carrying amount | |
| Non-current assets held for sale | 33,327,600.41 | 4,380,811.42 | 28,946,788.99 | - | - | - |
| Including: Intangible asset | 23,951,257.04 | 3,148,319.68 | 20,802,937.36 | - | - | - |
| Construction in progress | 9,376,343.37 | 1,232,491.74 | 8,143,851.63 | - | - | - |
| Total | 33,327,600.41 | 4,380,811.42 | 28,946,788.99 | - | - | - |
Note: In November 2019, the Group’s management resolved to sell the land use right and construction inprogress to the third party due to the business adjustment. The land use right and construction in progressabove proposed for sale are presented as non-current assets held for sale in the financial statements.The Group recognized the impairment loss of RMB 4,380,811.42 to write down the carrying amount ofnon-current assets held for sale to its fair value less costs to sell.
(1) Provision for impairment of assets held for sale
| Item | As at 1/1/2019 | Additions during the year | Written back during the year | As at 31/12/2019 | |
| Reversals | Sales | ||||
| Non-current assets held for sale | - | 4,380,811.42 | - | - | 4,380,811.42 |
| Including: Intangible asset | - | 3,148,319.68 | - | - | 3,148,319.68 |
| Construction in progress | - | 1,232,491.74 | - | - | 1,232,491.74 |
| Total | - | 4,380,811.42 | - | - | 4,380,811.42 |
(2) Non-current assets held for sale
Assets held for sale as at 31/12/2019:
| Item | Carrying amount as at 31/12/2019 | Fair value as at 31/12/2019 | Estimated costs to sell | Timetable |
| Intangible asset | 20,802,937.36 | 22,997,161.99 | 2,194,224.63 | 2020 |
| Construction in progress | 8,143,851.63 | 9,002,838.01 | 858,986.38 | 2020 |
| Total | 28,946,788.99 | 32,000,000.00 | 3,053,211.01 | —— |
10. Non-current assets due within one year
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Long-term receivable due within one year | 903,000.00 | 903,000.00 |
| Total | 903,000.00 | 903,000.00 |
11. Other current assets
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Rental expense | 51,996,952.23 | 15,926,558.27 |
| Insurance expense | 3,055,795.56 | 2,081,319.14 |
| Miscellaneous prepaid expense | 12,264,104.51 | 5,888,370.47 |
| Input VAT to be deducted and approved | 95,597,765.09 | 114,057,676.06 |
| Overpaid taxes and charges | 14,045,826.90 | 46,563,412.66 |
| Loans and advances to customers | 481,129,986.87 | 7,948,950.00 |
| Factoring receivables | 31,526,605.54 | - |
| Wealth management products | - | 430,000,000.00 |
| Factoring fees | - | 3,794,989.52 |
| Others | 2,279,989.82 | 2,489,934.47 |
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Total | 691,897,026.52 | 628,751,210.59 |
(1) Loans and advances to customers due within one year
①Category by method of guarantee
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Secured loans | 487,225,743.79 | 8,070,000.00 |
| Add: Interests receivable | 1,295,414.27 | - |
| Subtotal | 488,521,158.06 | 8,070,000.00 |
| Less: Provision for impairment | 7,391,171.19 | 121,050.00 |
| Total | 481,129,986.87 | 7,948,950.00 |
②Category by overdue
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Not overdue | 486,862,626.67 | 8,070,000.00 |
| 1-90 days overdue | 304,128.78 | - |
| 91-180 days overdue | 58,988.34 | - |
| Add: Interests receivable | 1,295,414.27 | - |
| Subtotal | 488,521,158.06 | 8,070,000.00 |
| Less: Provision for impairment | 7,391,171.19 | 121,050.00 |
| Total | 481,129,986.87 | 7,948,950.00 |
(2) Factoring receivables by overdue
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Not overdue | 32,000,000.00 | - |
| Add: Interests receivable | 15,111.17 | - |
| Subtotal | 32,015,111.17 | - |
| Less: Provision for impairment | 488,505.63 | - |
| Total | 31,526,605.54 | - |
12. Loans and advances to customers
(1) Loans and advances to customers by method of guarantee
| Item | As at 31/12/2019 | As at 31/12/2018 | ||||
| Book value | Provision for impairment | Carrying amount | Book value | Provision for impairment | Carrying amount | |
| Secured loans | 502,695,709.61 | 7,589,155.94 | 495,106,553.67 | 8,230,000.00 | 123,450.00 | 8,106,550.00 |
| Add: Interests receivable | 1,325,299.61 | 20,611.06 | 1,304,688.55 | —— | —— | —— |
| Subtotal | 504,021,009.22 | 7,609,767.00 | 496,411,242.22 | 8,230,000.00 | 123,450.00 | 8,106,550.00 |
| Less: Due within one year | 488,521,158.06 | 7,391,171.19 | 481,129,986.87 | 8,070,000.00 | 121,050.00 | 7,948,950.00 |
| Total | 15,499,851.16 | 218,595.81 | 15,281,255.35 | 160,000.00 | 2,400.00 | 157,600.00 |
(2) Loans and advances to customers by overdue
| Item | As at 31/12/2019 | As at 31/12/2018 | ||||
| Book value | Provision for impairment | Carrying amount | Book value | Provision for impairment | Carrying amount | |
| Not overdue | 502,332,592.49 | 7,579,700.38 | 494,752,892.11 | 8,230,000.00 | 123,450.00 | 8,106,550.00 |
| 1-90 days overdue | 304,128.78 | 7,276.46 | 296,852.32 | - | - | - |
| 91-180 days overdue | 58,988.34 | 2,179.10 | 56,809.24 | - | - | - |
| Add: Interests receivable | 1,325,299.61 | 20,611.06 | 1,304,688.55 | —— | —— | —— |
| Subtotal | 504,021,009.22 | 7,609,767.00 | 496,411,242.22 | 8,230,000.00 | 123,450.00 | 8,106,550.00 |
| Less: Due within one year | 488,521,158.06 | 7,391,171.19 | 481,129,986.87 | 8,070,000.00 | 121,050.00 | 7,948,950.00 |
| Total | 15,499,851.16 | 218,595.81 | 15,281,255.35 | 160,000.00 | 2,400.00 | 157,600.00 |
(3) Provision for impairment of loans
| Provision for impairment of loans | Stage 1 | Stage 2 | Stage 3 | Total |
| 12-month expected credit losses | Lifetime Expected credit losses (not occurred credit impairment) | Lifetime Expected credit losses (occurred credit impairment) | ||
| Balance at 31/12/2018 | 123,450.00 | - | - | 123,450.00 |
| Adjusted amount of the first implementation of new financial instruments standard | - | - | - | - |
| Balance at 1/1/2019 | 123,450.00 | - | - | 123,450.00 |
| Provision for impairment of loans | Stage 1 | Stage 2 | Stage 3 | Total |
| 12-month expected credit losses | Lifetime Expected credit losses (not occurred credit impairment) | Lifetime Expected credit losses (occurred credit impairment) | ||
| In current period | - | - | - | - |
| -Transfer into stage 2 | - | - | - | - |
| -Transfer into stage 3 | - | - | - | - |
| -Reversal back to stage 2 | - | - | - | - |
| -Reversal back to stage 1 | - | - | - | - |
| Accrual in current period | 7,421,511.61 | 55,112.82 | 9,692.57 | 7,486,317.00 |
| Reversal in current period | - | - | - | - |
| Sold off in current period | - | - | - | - |
| Write off in current period | - | - | - | - |
| Due within one year and reclassify into other current assets or interests receivable | 7,326,365.80 | 55,112.82 | 9,692.57 | 7,391,171.19 |
| Balance at 31/12/2019 | 218,595.81 | - | - | 218,595.81 |
13. Available-for-sale financial asset
| Item | As at 31/12/2019 | As at 31/12/2018 | ||||
| Book value | Provision for impairment | Carrying amount | Book value | Provision for impairment | Carrying amount | |
| Available-for-sale equity instruments | —— | —— | —— | 337,976,300.00 | 14,554,950.00 | 323,421,350.00 |
| Including: Measured at fair value | —— | —— | —— | - | - | - |
| Measured at cost | —— | —— | —— | 337,976,300.00 | 14,554,950.00 | 323,421,350.00 |
| Total | —— | —— | —— | 337,976,300.00 | 14,554,950.00 | 323,421,350.00 |
14. Long-term receivables
(1) Long-term receivables by nature
| Item | As at 31/12/2019. | As at 31/12/2018 | Discounted rate scope | ||||
| Book value | Provision for impairment | Carrying amount | Book value | Provision for impairment | Carrying amount | ||
| Security deposits | 47,382,350.48 | - | 47,382,350.48 | 15,268,129.52 | - | 15,268,129.52 | |
| Amounts receivable by installments for subcontracting | 2,709,000.00 | - | 2,709,000.00 | 3,612,000.00 | - | 3,612,000.00 | 3.43%~5.75% |
| Less: Unrealized financing income | 343,499.85 | - | 343,499.85 | 458,000.00 | - | 458,000.00 | |
| Subtotal | 49,747,850.63 | - | 49,747,850.63 | 18,422,129.52 | - | 18,422,129.52 | |
| Less: Long-term receivables due within one year | 903,000.00 | - | 903,000.00 | 903,000.00 | - | 903,000.00 | |
| Total | 48,844,850.63 | - | 48,844,850.63 | 17,519,129.52 | - | 17,519,129.52 | |
Note: The closing long-term receivables primarily consisted of amounts receivable by installments for subcontracting, as well as security deposits for land rental andconsumption of electricity.
(2) There were no long-term receivables overdue in the Group.
(3) There were no long-term receivables derecognized in the Group in current period.
(4) There were no such cases in current period where the Group had transferred a long-term receivable but continued to be involved in the assets or liabilities associated with that
long-term receivable.
15. Long-term equity investments
| Investee | Balance as at 1/1/2019 | Movements during the year | Balance as at 31/12/2019 | Balance of provision for impairment as at 31/12/2019 | |||||||
| Increase in capital | Decrease in capital | Investment income recognized by equity method | Other comprehend-sive income | Other equity movements | Declared distribution of cash dividends or profits | Provision- for impairment | Other | ||||
| ①Associates | |||||||||||
| Foshan Haihang Xingfa Agriculture and Animal Husbandry Development Co., Ltd. | 5,995,685.63 | - | - | 4,485,606.50 | - | - | - | - | - | 10,481,292.13 | - |
| Guizhou Fuhai Chemicals Co, Ltd. | 19,363,049.36 | - | - | 9,866,121.66 | - | - | -4,500,000.00 | - | - | 24,729,171.02 | - |
| Qingdao Nongken Beidahuang Trade Development Co., Ltd. | 13,255,800.86 | - | - | -528,371.93 | - | - | - | - | - | 12,727,428.93 | - |
| Bangbu Zhongye Technology Co., Ltd. | - | 2,000,000.00 | - | -875,396.23 | - | - | - | - | 5,000,000.00 | 6,124,603.77 | - |
| Investee | Balance as at 1/1/2019 | Movements during the year | Balance as at 31/12/2019 | Balance of provision for impairment as at 31/12/2019 | |||||||
| Increase in capital | Decrease in capital | Investment income recognized by equity method | Other comprehend-sive income | Other equity movements | Declared distribution of cash dividends or profits | Provision- for impairment | Other | ||||
| Vietnam Haid Yingtaogu Co., Ltd. | - | 8,371,440.00 | - | 178,573.86 | - | - | - | - | 2,181.64 | 8,552,195.50 | - |
| Total | 38,614,535.85 | 10,371,440.00 | - | 13,126,533.86 | - | - | 4,500,000.00 | - | 5,002,181.64 | 62,614,691.35 | - |
Note:
(1) All the investees above are all associated companies.
(2) The Group’s shares to Bangpu Zhongye increased to 20% due to the withdrawal of some shareholders in May 2019, which led to the criteria of significant influence, thusthe Group transferred Bangpu Zhongyeinto long-term equity investments accounting treatment by equity method.
(3) During the reporting period, none of the long-term equity investments’ recoverable amount was lower than the carrying value, thus no provision for impairment oflong-term equity investments was recognized.
16. Other non-current financial assets
| Category | As at 2019.12.31 | As at 2018.12.31 |
| Equity instrument investments | 255,521,350.00 | —— |
| Total | 255,521,350.00 | —— |
17. Investment properties
(1) Investment properties measured at cost
| Item | Buildings | Land use rights | Total |
| I. Total original book value | |||
| 1. As at 31/12/2018 | 52,036,748.96 | - | 52,036,748.96 |
| 2. Additions during the year | 187,511.34 | 3,753,132.26 | 3,940,643.60 |
| (1) Purchases | - | 3,753,132.26 | 3,753,132.26 |
| (2) Transfers from fixed assets | 187,511.34 | - | 187,511.34 |
| 3. Decrease during the year | 20,725,201.73 | - | 20,725,201.73 |
| (1) Disposals | - | - | - |
| (2) Transfers into fixed assets | 20,725,201.73 | - | 20,725,201.73 |
| 4. As at 31/12/2019 | 31,499,058.57 | 3,753,132.26 | 35,252,190.83 |
| II. Total accumulated depreciation or amortization | |||
| 1. As at 31/12/2018 | 5,639,592.32 | - | 5,639,592.32 |
| 2. Additions during the year | 4,638,743.61 | - | 4,638,743.61 |
| (1) Depreciation or amortization | 3,983,825.25 | - | 3,983,825.25 |
| (2) Transfers from fixed assets or other non-current assets | 654,918.36 | - | 654,918.36 |
| 3. Decrease during the year | 5,671,647.81 | - | 5,671,647.81 |
| (1) Disposals | - | - | - |
| (2) Transfers into fixed assets | 5,671,647.81 | - | 5,671,647.81 |
| 4. As at 31/12/2019 | 4,606,688.12 | - | 4,606,688.12 |
| III. Provision for impairment | |||
| 1. As at 31/12/2018 | - | - | - |
| 2. Additions during the year | - | - | - |
| 3. Decrease during the year | - | - | - |
| 4. As at 31/12/2019 | - | - | - |
| IV. Carrying amount | |||
| 1. As at 31/12/2018 | 26,892,370.45 | 3,753,132.26 | 30,645,502.71 |
| Item | Buildings | Land use rights | Total |
| 2. As at 31/12/2019 | 46,397,156.64 | - | 46,397,156.64 |
(2) There was no investment property measured at fair value during the reporting period.
(3) Investment properties without ownership certificates
| Item | Carrying amount | Reason for pending |
| Buildings | 2,873,244.83 | In progress |
18. Fixed assets
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Fixed assets | 6,291,692,310.64 | 4,549,514,866.42 |
| Fixed assets pending for disposal | 6,636,031.77 | 5,965,967.35 |
| Total | 6,298,328,342.41 | 4,555,480,833.77 |
(1) Fixed assets
①Details of fixed assets
| Item | House and building | Machinery equipment | Transportation equipment | Electronic equipment | Others | Total |
| I. Original book value: | ||||||
| 1. As at 31/12/2018 | 3,219,741,315.72 | 3,092,556,011.28 | 198,447,691.07 | 228,130,423.76 | 125,859,554.83 | 6,864,734,996.66 |
| 2. Additions during the year | 989,073,658.14 | 1,126,194,096.82 | 58,859,341.34 | 59,410,251.81 | 54,330,762.32 | 2,287,868,110.43 |
| (1) Purchases | 54,439,245.91 | 84,609,490.44 | 46,405,097.95 | 39,361,635.53 | 39,553,346.47 | 264,368,816.30 |
| (2) Transfers from construction in progress | 883,427,465.68 | 1,016,471,174.72 | 10,724,080.49 | 28,811,719.66 | 28,148,318.55 | 1,967,582,759.10 |
| (3) Reclassifications of assets | 11,857,830.92 | 14,708,055.41 | 1,491,606.49 | -9,374,321.85 | -18,683,170.97 | - |
| (4) Transfers from other long-term assets | 20,725,201.73 | 1,399,993.16 | 3,968.69 | 409,824.74 | 5,123,320.89 | 27,662,309.21 |
| (5) Leasing fixed assets | 18,623,913.90 | 9,005,383.09 | 234,587.72 | 201,393.73 | 188,947.38 | 28,254,225.82 |
| 3. Decrease during the year | 8,622,461.30 | 53,216,676.18 | 14,646,433.27 | 6,518,585.02 | 3,751,394.49 | 86,755,550.26 |
| (1) Disposals or written-offs | 8,155,560.71 | 53,216,676.18 | 14,524,391.64 | 6,516,006.02 | 3,751,394.49 | 86,164,029.04 |
| (2) Transfers out when selling subsidiaries | 279,389.25 | - | 122,041.63 | 2,579.00 | - | 404,009.88 |
| Item | House and building | Machinery equipment | Transportation equipment | Electronic equipment | Others | Total |
| (3) Transfers into investment properties | 187,511.34 | - | - | - | - | 187,511.34 |
| 4. As at 31/12/2019 | 4,200,192,512.56 | 4,165,533,431.92 | 242,660,599.14 | 281,022,090.55 | 176,438,922.66 | 9,065,847,556.83 |
| II. Accumulated depreciation: | ||||||
| 1. As at 31/12/2018 | 743,924,717.57 | 1,241,880,718.31 | 113,176,083.82 | 137,902,115.57 | 77,354,243.79 | 2,314,237,879.06 |
| 2. Additions during the year | 130,818,328.53 | 300,522,133.43 | 28,932,012.57 | 41,120,375.14 | 17,500,200.69 | 518,893,050.36 |
| (1) Provision | 124,269,442.46 | 297,118,159.26 | 30,474,881.99 | 41,121,163.32 | 18,564,931.32 | 511,548,578.35 |
| (2) Transfers from other long-term assets | 5,671,647.81 | - | - | - | 1,672,824.20 | 7,344,472.01 |
| (3) Reclassifications of assets | 877,238.26 | 3,403,974.17 | -1,542,869.42 | -788.18 | -2,737,554.83 | - |
| 3. Decrease during the year | 5,647,253.00 | 35,018,003.37 | 10,254,027.66 | 5,446,843.95 | 3,591,806.43 | 59,957,934.41 |
| (1) Disposals or written-offs | 4,977,873.54 | 35,018,003.37 | 10,207,651.74 | 5,446,843.95 | 3,591,806.43 | 59,242,179.03 |
| (2) Transfers out when selling subsidiaries | 654,918.36 | - | - | - | - | 654,918.36 |
| (3) Transfers into investment properties | 14,461.10 | - | 46,375.92 | - | - | 60,837.02 |
| 4. As at 31/12/2019 | 869,095,793.10 | 1,507,384,848.37 | 131,854,068.73 | 173,575,646.76 | 91,262,638.05 | 2,773,172,995.01 |
| III. Provision for impairment: | ||||||
| 1. As at 31/12/2018 | 690,337.11 | 291,914.07 | - | - | - | 982,251.18 |
| 2. Additions during the year | - | - | - | - | - | - |
| (1) Provision | - | - | - | - | - | - |
| 3. Decrease during the year | - | - | - | - | - | - |
| (1) Disposals or written-offs | - | - | - | - | - | - |
| 4. As at 31/12/2019 | 690,337.11 | 291,914.07 | - | - | - | 982,251.18 |
| Item | House and building | Machinery equipment | Transportation equipment | Electronic equipment | Others | Total |
| IV. Carrying amount: | ||||||
| 1. As at 31/12/2019 | 3,330,406,382.35 | 2,657,856,669.48 | 110,806,530.41 | 107,446,443.79 | 85,176,284.61 | 6,291,692,310.64 |
| 2. As at 31/12/2018 | 2,475,126,261.04 | 1,850,383,378.90 | 85,271,607.25 | 90,228,308.19 | 48,505,311.04 | 4,549,514,866.42 |
②Temporarily idle fixed assets
| Item | Cost | Accumulated depreciation | Provision for impairment | Carrying amount | Note |
| House and building | - | - | - | - | |
| Machinery equipment | 17,538,574.52 | 7,711,397.02 | 291,914.07 | 9,535,263.43 | |
| Transportation equipment | 326,856.00 | 251,800.99 | - | 75,055.01 | |
| Electronic equipment | 1,141,879.76 | 883,065.66 | - | 258,814.10 | |
| Other | 77,750.00 | 43,987.57 | - | 33,762.43 | |
| Total | 19,085,060.28 | 8,890,251.24 | 291,914.07 | 9,902,894.97 |
③Fixed assets acquired under finance leases
| Item | Cost | Accumulated depreciation | Provision for impairment | Carrying amount |
| House and building | 18,623,913.90 | 89,794.68 | - | 18,534,119.22 |
| Machinery equipment | 9,005,383.09 | 90,010.34 | - | 8,915,372.75 |
| Transportation equipment | 234,587.72 | 4,787.48 | - | 229,800.24 |
| Electronic equipment | 3,951,051.85 | 1,630,464.75 | - | 2,320,587.10 |
| Other | 188,947.38 | 3,855.79 | - | 185,091.59 |
| Total | 32,003,883.94 | 1,818,913.04 | - | 30,184,970.90 |
④There were no fixed assets leased out under operating leases in current period.
⑤Fixed assets without ownership certificates
| Item | Carrying amount | Reason why certificates of ownership are pending |
| House and building | 413,061,805.89 | No ownership certificates for rented buildings on collective and state-owned land |
| House and building | 670,750,995.09 | In progress |
(2) Fixed assets pending for disposal
| Item | As at 31/12/2019 | As at 31/12/2018 | Reasons for disposals |
| House and building | 5,965,842.35 | 5,965,967.35 | They have already been scrapped |
| Machinery equipment | 666,282.21 | - | They have already been scrapped |
| Transportation equipment | 3,518.26 | - | They have already been scrapped |
| Electronic equipment | 388.95 | - | They have already been scrapped |
| Total | 6,636,031.77 | 5,965,967.35 |
19. Construction in progress
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Construction in progress | 657,751,195.76 | 724,011,706.23 |
| Construction materials | - | - |
| Total | 657,751,195.76 | 724,011,706.23 |
(1) Construction in progress
①Construction in progress
| Project | As at 31/12/2019 | As at 31/12/2018 | ||||
| Book value | Provision for impairment | Carrying amount | Book value | Provision for impairment | Carrying amount | |
| Supporting construction for animal health projects | 45,604,630.63 | - | 45,604,630.63 | 66,734,269.79 | - | 66,734,269.79 |
| Supporting construction for feed projects | 455,083,690.75 | - | 455,083,690.75 | 398,983,721.05 | - | 398,983,721.05 |
| Supporting construction for farming projects | 132,598,897.60 | - | 132,598,897.60 | 236,412,637.72 | - | 236,412,637.72 |
| Supporting construction for other projects | 24,463,976.78 | - | 24,463,976.78 | 21,881,077.67 | - | 21,881,077.67 |
| Total | 657,751,195.76 | - | 657,751,195.76 | 724,011,706.23 | - | 724,011,706.23 |
②Movements of major construction in progress
| Project | As at 31/12/2018 | Additions | Transfers to fixed assets | Transfers to intangible assets | Transfers to other long-term assets | Other decreases | Accumulated capitalized interest | Including: interest capitalized in 2019 | Interest rate for capitalization in 2019 (%) | As at 31/12/2019 |
| Supporting construction for animal health projects | 66,734,269.79 | 61,379,811.25 | 82,509,450.41 | - | - | - | - | - | - | 45,604,630.63 |
| Supporting construction for feed projects | 389,793,397.50 | 1,331,257,933.50 | 1,252,061,657.45 | 24,706,961.49 | 1,265,148.35 | 9,376,343.37 | - | - | - | 433,641,220.34 |
| Supporting construction for farming projects | 234,061,419.92 | 393,705,371.23 | 514,825,865.66 | - | 100,000.00 | 3,528,347.02 | - | - | - | 109,312,578.47 |
| Supporting construction for other projects | 17,989,781.29 | 52,987,969.06 | 15,035,407.93 | 36,558,073.44 | - | - | - | - | - | 19,384,268.98 |
| Total | 708,578,868.50 | 1,839,331,085.04 | 1,864,432,381.45 | 61,265,034.93 | 1,365,148.35 | 12,904,690.39 | - | - | - | 607,942,698.42 |
Note:
①There was no capitalized interest expense or foreign exchange losses on construction in progress in 2019.
②The other decrease of major construction in progress in current period was mainly transferring into theassets held for sale.
③There was no provision for impairment of construction in progress in the current period.
20. Productive biological assets
(1) Measured by cost
| Item | Animal husbandry-mature | Aquaculture-mature | Animal husbandry-immature | Aquaculture-immature | Total |
| I. Original book value | |||||
| 1. As at 31/12/2018 | 49,265,181.31 | 7,072,169.10 | 12,048,502.81 | 3,591,664.88 | 71,977,518.10 |
| 2. Additions during the year | 71,335,168.60 | 22,563,992.03 | 167,078,080.35 | 21,158,178.55 | 282,135,419.53 |
| (1) Purchase | 836,907.61 | 3,880,274.36 | 79,982,894.58 | 6,078,925.77 | 90,779,002.32 |
| (2) Brought forward from cost and expense | - | - | 50,498,677.32 | 9,962,191.47 | 60,460,868.79 |
| (3) Self-cultivated | 70,498,260.99 | 18,683,717.67 | 36,596,508.45 | 5,117,061.31 | 130,895,548.42 |
| 3. Decrease during the year | 35,241,785.25 | 24,988,345.31 | 94,817,380.44 | 19,621,736.89 | 174,669,247.89 |
| (1) Sale | - | 2,918,250.80 | 2,528,896.68 | 587,022.22 | 6,034,169.70 |
| (2) Dead or scrapped | 35,241,785.25 | 21,954,198.67 | 21,594,772.03 | 130,506.63 | 78,921,262.58 |
| (3) Transfers | - | - | 70,498,260.99 | 18,683,717.67 | 89,181,978.66 |
| Item | Animal husbandry-mature | Aquaculture-mature | Animal husbandry-immature | Aquaculture-immature | Total |
| into mature category | |||||
| (4) Transfers into consumable biological assets | - | - | 37,492.70 | 208,648.15 | 246,140.85 |
| (5) To research and development | - | 115,895.84 | - | 11,842.22 | 127,738.06 |
| (6) Other decrease | - | - | 157,958.04 | - | 157,958.04 |
| 4. As at 31/12/2019 | 85,358,564.66 | 4,647,815.82 | 84,309,202.72 | 5,128,106.54 | 179,443,689.74 |
| II Accumulated depreciation | |||||
| 1. As at 31/12/2018 | 12,486,187.46 | 2,662,823.33 | - | - | 15,149,010.79 |
| 2.Additions during the year | 13,598,266.14 | 21,031,654.40 | - | - | 34,629,920.54 |
| (1) Provision | 13,598,266.14 | 21,031,654.40 | - | - | 34,629,920.54 |
| (2)Other increase | - | - | - | - | - |
| 3. Decrease during the year | 14,031,580.78 | 21,575,748.09 | - | - | 35,607,328.87 |
| (1) Sale | - | 1,547,615.72 | - | - | 1,547,615.72 |
| (2) Dead or scrapped | 14,031,580.78 | 19,986,719.98 | - | - | 34,018,300.76 |
| (5) To research and development | - | 41,412.39 | - | - | 41,412.39 |
| 4. As at | 12,052,872.82 | 2,118,729.64 | - | - | 14,171,602.46 |
| Item | Animal husbandry-mature | Aquaculture-mature | Animal husbandry-immature | Aquaculture-immature | Total |
| 31/12/2019 | |||||
| III Provision for impairment | |||||
| 1. As at 31/12/2018 | - | - | - | - | - |
| 2. Additions during the year | - | - | - | - | - |
| (1) Provision | - | - | - | - | - |
| (2) Other increase | - | - | - | - | - |
| 3. Decrease during the year | - | - | - | - | - |
| (1) Disposals | - | - | - | - | - |
| (2) Other | - | - | - | - | - |
| 4. As at 31/12/2019 | - | - | - | - | - |
| IV Carrying amount | |||||
| As at 31/12/2019 | 73,305,691.84 | 2,529,086.18 | 84,309,202.72 | 5,128,106.54 | 165,272,087.28 |
| As at 31/12/2018 | 36,778,993.85 | 4,409,345.77 | 12,048,502.81 | 3,591,664.88 | 56,828,507.31 |
(2) There were no productive biological assets measured at fair value in current period.
21. Intangible assets
(1) Intangible assets
| Item | Land use rights | Patented technologies | Software use rights and trademark rights | Non-patented technologies | Other including marketing network | Total |
| I. Original book value | ||||||
| 1. As at 31/12/2018 | 713,267,904.83 | 32,853,025.49 | 193,237,243.23 | 177,897,459.35 | 64,071,447.75 | 1,181,327,080.65 |
| 2. Additions during the year | 256,427,312.95 | - | 39,052,994.16 | - | - | 295,480,307.11 |
| (1) Purchase | 207,585,473.69 | - | 820,241.48 | - | - | 208,405,715.17 |
| (2) Additions due to business combinations | 17,970,576.61 | - | - | - | - | 17,970,576.61 |
| (3) Transfers from constructions in progress | 23,232,361.49 | - | 38,232,752.68 | - | - | 61,465,114.17 |
| (4) Transfers from other long-term assets | 7,638,901.16 | - | - | - | - | 7,638,901.16 |
| 3. Decrease during the year | 43,872,020.01 | 7,500.00 | 568,538.46 | - | - | 44,448,058.47 |
| (1) Disposals | 1,330,000.00 | 7,500.00 | 568,538.46 | - | - | 1,906,038.46 |
| (2) Transfers into held-for-sale | 25,080,000.00 | - | - | - | - | 25,080,000.00 |
| (3) Transfers out when selling subsidiaries | 17,462,020.01 | - | - | - | - | 17,462,020.01 |
| 4. As at 31/12/2019 | 925,823,197.77 | 32,845,525.49 | 231,721,698.93 | 177,897,459.35 | 64,071,447.75 | 1,432,359,329.29 |
| II. Accumulated depreciation | ||||||
| 1. As at 31/12/2018 | 84,799,713.86 | 7,489,901.88 | 53,215,802.13 | 86,794,219.01 | 8,281,675.02 | 240,581,311.90 |
| Item | Land use rights | Patented technologies | Software use rights and trademark rights | Non-patented technologies | Other including marketing network | Total |
| 2. Additions during the year | 19,369,285.83 | 2,433,952.30 | 21,713,110.77 | 12,430,165.10 | 6,259,738.98 | 62,206,252.98 |
| (1) Provision | 18,185,313.11 | 2,433,952.30 | 21,713,110.77 | 12,430,165.10 | 6,259,738.98 | 61,022,280.26 |
| (2) Additions due to business combinations | 452,333.33 | - | - | - | - | 452,333.33 |
| (3) Other | 731,639.39 | - | - | - | - | 731,639.39 |
| 3. Decrease during the year | 4,551,890.52 | - | 66,329.48 | - | - | 4,618,220.00 |
| (1) Disposals | 275,487.03 | - | 66,329.48 | - | - | 341,816.51 |
| (2) Transfers into held-for-sale | 1,128,742.96 | - | - | - | - | 1,128,742.96 |
| (3) Transfers out when selling subsidiaries | 3,147,660.53 | - | - | - | - | 3,147,660.53 |
| 4. As at 31/12/2019 | 99,617,109.17 | 9,923,854.18 | 74,862,583.42 | 99,224,384.11 | 14,541,414.00 | 298,169,344.88 |
| III. Provision for impairment | ||||||
| 1. As at 31/12/2018 | - | - | - | 11,979,620.36 | - | 11,979,620.36 |
| 2. Additions during the year | - | - | - | - | - | - |
| (1) Provision | - | - | - | - | - | - |
| 3. Decrease during the year | - | - | - | - | - | - |
| (1) Disposals | - | - | - | - | - | - |
| 4. As at 31/12/2019 | - | - | - | 11,979,620.36 | - | 11,979,620.36 |
| IV. Carrying amount | ||||||
| 1. As at 31/12/2019 | 826,206,088.60 | 22,921,671.31 | 156,859,115.51 | 66,693,454.88 | 49,530,033.75 | 1,122,210,364.05 |
| 2. As at 31/12/2018 | 628,468,190.97 | 25,363,123.61 | 140,021,441.10 | 79,123,619.98 | 55,789,772.73 | 928,766,148.39 |
Note: The carrying amount of intangible assets arising from internal research and development is 9.34% of the total carrying amount of intangible assets at the period end.
(2) Land use rights without ownership certificates
| Item | Carrying amount | Reason why certificates of ownership are pending |
| Land use rights | 16,119,630.86 | In progress |
22. Development expenses
| Project | As at 31/12/2018 | Additions during the year | Decrease during the year | As at 31/12/2019 | ||
| Internal development | Others | Recog- nized as intangible assets | Recognized in profit or loss | |||
| Development of animal healthcare products and healthy cultivation models | 2,776,367.58 | 108,113,810.90 | - | - | 99,960,386.08 | 10,929,792.40 |
| Development of domestic animal selected farming technology | - | 35,871,371.90 | - | - | 31,886,744.74 | 3,984,627.16 |
| Development and application of feed formulation technology | - | 159,588,192.34 | - | - | 159,588,192.34 | - |
| Development and application of feed additives | - | 61,053,053.74 | - | - | 61,053,053.74 | - |
| Development of comprehensive platform | - | 63,521,582.82 | - | - | 63,521,582.82 | - |
| Total | 2,776,367.58 | 428,148,011.70 | - | - | 416,009,959.72 | 14,914,419.56 |
23. Goodwill
(1) Book value of goodwill
| Name of investee | As at 21/31/2018 | Additions during the year | Decrease during the year | As at 21/31/2019 |
| Business combination | Effect of translation of foreign currency statement | Disposals | |||
| Guangzhou Runchuan | 50,000.00 | - | - | - | 50,000.00 |
| Taizhou Haid | 578,247.88 | - | - | - | 578,247.88 |
| Guangzhou Haihe | 76,663.70 | - | - | - | 76,663.70 |
| Dongguan Haid | 2,831,241.61 | - | - | - | 2,831,241.61 |
| Sanshuifanling | 4,841,934.68 | - | - | - | 4,841,934.68 |
| Dalian Haid | 32,178.11 | - | - | - | 32,178.11 |
| Qingyuan Bairong | 1,218,130.86 | - | - | - | 1,218,130.86 |
| Zhanjiang Hiseno | 4,100,845.79 | - | - | - | 4,100,845.79 |
| Panasia Trading | 43,121,414.50 | - | 709,977.83 | - | 43,831,392.33 |
| Hisenor Vietnam | 5,559,509.35 | - | 91,535.23 | - | 5,651,044.58 |
| Kaifeng Haid | 8,838,854.56 | - | - | - | 8,838,854.56 |
| Guangzhou Heshengtang Pharmaceutical | 127,116.22 | - | - | - | 127,116.22 |
| Haid Livestock Veterinary Research Institute | 5,809,578.76 | - | - | - | 5,809,578.76 |
| Hunan Innovation | 19,210,769.76 | - | - | - | 19,210,769.76 |
| Sichuan Hailinger | 76,410,471.64 | - | - | - | 76,410,471.64 |
| Jiaxing Haid | 8,312,415.28 | - | - | - | 8,312,415.28 |
| Rongcheng Yandunjiao | 33,087.10 | - | - | - | 33,087.10 |
| Shandong Daxin | 115,902,036.20 | - | - | - | 115,902,036.20 |
| Hunan Jinhuilong | 2,400,475.64 | - | - | - | 2,400,475.64 |
| Feicheng Heruifeng | 57,092,523.20 | - | - | - | 57,092,523.20 |
| Weifang Xuheng | 30,507,361.78 | - | - | - | 30,507,361.78 |
| Jianong Lianyungang | 587,209.55 | - | - | - | 587,209.55 |
| Xinjiang Ruiliheng | 1,411,040.63 | - | - | - | 1,411,040.63 |
| Kembang Subur International | 343,028.78 | - | 5,647.83 | - | 348,676.61 |
| Gaotang Huayu | - | 1,455,358.51 | - | - | 1,455,358.51 |
| Total | 389,396,135.58 | 1,455,358.51 | 807,160.89 | - | 391,658,654.98 |
Note 1: When acquiring the non-controlling interests of a subsidiary, the Company records goodwill at the
amount by which the paid combination cost exceeds the Company’s share of the fair value of the acquiree’sidentifiable net assets obtained in the combination.The goodwill of RMB 50,000.00 on Guangzhou Runchuan: The Company acquired 10% shares inGuangzhou Runchuan at a cost of RMB 50,000.00 in September 2006, while the Company’s shares of thefair value of Guangzhou Runchuan’s identifiable net assets were RMB -29,095.34. Because the Companyhad borne all the loss of this subsidiary when it acquired 90% shares in Guangzhou Runchuan undercommon control in May 2004, the said acquisition cost of RMB 50,000.00 was recognized in goodwill.The goodwill of RMB 578,247.88 on Taizhou Haid: When acquiring 25% shares in Taizhou Haid inSeptember 2006, the Company recorded goodwill at RMB 578,247.88, the amount by which the acquisitioncost exceeded the Company’s share of the fair value of Taizhou Haid’s identifiable net assets.The goodwill of RMB 76,663.70 on Guangzhou Haihe: When acquiring 10% non-controlling shares inGuangzhou Haihe on March 31, 2007, the Company recorded goodwill at RMB 76,663.70, the amount bywhich the acquisition cost exceeded the Company’s share of the fair value of Guangzhou Haihe’sidentifiable net assets.Note 2: In a business combination involving enterprises not under common control, the Company recordsgoodwill at the amount by which the paid combination cost exceeds the Company’s share of the acquiree’sowners’ equity.The goodwill of RMB 2,831,241.61 on Dongguan Haid: When acquiring 68% shares in Dongguan Haidfrom a non-related party on May 20, 2007, the Company recorded goodwill at the amount by which theinvestment cost of RMB 6,800,000.00 exceeded the Company’s share of the acquiree’s owners’ equity.The goodwill of RMB 4,841,934.68 on Sanshuifanling: When acquiring 100% shares in Sanshuifanlingfrom a non-related party in April 2010, the Company recorded goodwill at the amount by which theinvestment cost of RMB 15,000,000.00 exceeded the Company’s share of the acquiree’s owners’ equity.The goodwill of RMB 32,178.11 on Dalian Rongchuan: When acquiring 60% shares in Sanshuifanlingfrom a non-related party in May 2010, the Company recorded goodwill at the amount by which theinvestment cost of RMB 30,000,000.00 exceeded the Company’s share of the acquiree’s owners’ equity.The goodwill of RMB 1,218,130.86 on Qingyuan Bairong: When acquiring 70% shares in QingyuanBairong from a non-related party in January 2010, the Company recorded goodwill at the amount by whichthe investment cost of RMB 1,500,000.00 exceeded the Company’s share of the acquiree’s owners’ equity.The goodwill of RMB 4,100,845.79 on Zhanjiang Hisenor: When the Company’s subsidiary GuangzhouHaid acquired 70% shares in Zhanjiang Hisenor (49% from the Company and 21% from non-controllinginterests) in January 2010, the amount by which Guangzhou Haid’s investment cost of RMB 1,370,000.00exceeded its share of the acquiree’s owners’ equity was recorded in goodwill.
The goodwill of RMB 43,831,392.33 on Panasia Trading: When the Company’s subsidiary HaidInternational acquired a stake in Panasia Trading in February 2012, the amount by which HaidInternational’s investment cost of USD15.80 million exceeded its share of the acquiree’s owners’ equitywas recorded in goodwill, with the effects of the translation of the investee’s foreign-currency-denominatedfinancial statements caused by exchange rate fluctuations after the acquisition.The goodwill of RMB 5,651,044.58 on Hisenor Vietnam: When the Company’s subsidiary HisenorInternational acquired shares in Hisenor Vietnam in June 2013, the amount by which HisenorInternational’s investment cost of USD 1.14 million exceeded its share of the acquiree’s owners’ equity wasrecorded in goodwill, with the effects of the translation of the investee’s foreign-currency-denominatedfinancial statements caused by exchange rate fluctuations after the acquisition.The goodwill of RMB 8,838,854.56 on Kaifeng Haid: When acquiring shares in Kaifeng Haid in March2013, the Company recorded goodwill at the amount by which the investment cost of RMB 12,382,353.63exceeded the Company’s share of the acquiree’s owners’ equity.The goodwill of RMB 127,116.22 on Guangzhou Heshengtang Pharmaceutical: When acquiring shares inGuangzhou Heshengtang Pharmaceutical in February 2013, the Company recorded goodwill at the amountby which the investment cost of RMB 2,330,000.00 exceeded the Company’s share of the acquiree’sowners’ equity.The goodwill of RMB 5,809,578.76 on Haid Livestock Veterinary Research Institute: When acquiringshares in Haid Livestock Veterinary Research Institute in March 2013, the Company recorded goodwill atthe amount by which the investment cost of RMB 50,500,000.00 exceeded the Company’s share of theacquiree’s owners’ equity.The goodwill of RMB 19,210,769.76 on Hunan Innovation: When acquiring shares in Hunan Innovative inAugust 2015, the Company recorded goodwill at the amount by which the investment cost of RMB1,000,000.00 exceeded the Company’s share of the acquiree’s owners’ equity.The goodwill of RMB 76,410,471.64 on Sichuan Hailinger: When acquiring shares in Sichuan Hailinger inJune 2015, the Company recorded goodwill at the amount by which the investment cost of RMB107,200,000.00 exceeded the Company’s share of the acquiree’s owners’ equity.The goodwill of RMB 8,312,415.28 on Jiaxing Haid: When acquiring shares in Jiaxing Haid in February2016, the Company recorded goodwill at the amount by which the investment cost of RMB 14,400,000.00exceeded the Company’s share of the acquiree’s owners’ equity.The goodwill of RMB 33,087.10 on Rongcheng Yandunjiao: When acquiring shares in RongchengYandunjiao in September 2016, the Company recorded goodwill at the amount by which the investmentcost of RMB 18,308,000.00 exceeded the Company’s share of the acquiree’s owners’ equity obtained in the
acquisition.The goodwill of RMB 115,902,036.20 on Shandong Daxin: When acquiring shares in Shandong Daxin inDecember 2017, the Company recorded goodwill at the amount by which the investment cost of RMB286,431,719.46 exceeded the Company’s share of the acquiree’s owners’ equity.The goodwill of RMB 2,400,475.64 on Hunan Jinhuilong: When acquiring shares in Hunan Jinhuilong inDecember 2017, the Company recorded goodwill at the amount by which the investment cost of RMB31,620,000.00 exceeded the Company’s share of the acquiree’s owners’ equity.The goodwill of RMB 57,092,523.20 on Feicheng Heruifeng: When acquiring shares in FeichengHeruifeng in June 2018, the Company recorded goodwill at the amount by which the investment cost ofRMB 200,370,280.00 exceeded the Company’s share of the acquiree’s owners’ equity.The goodwill of RMB 30,507,361.78 on Weifang Xuheng: When acquiring shares in Weifang Xuheng inJune 2018, the Company recorded goodwill at the amount by which the investment cost of RMB50,319,300.00 exceeded the Company’s share of the acquiree’s owners’ equity.The goodwill of RMB 587,209.55 on Jianong Lianyungang: When acquiring shares in JianongLianyungang in August 2018, the Company recorded goodwill at the amount by which the investment costof RMB 2.00 exceeded the Company’s share of the acquiree’s owners’ equity.The goodwill of RMB 1,411,040.63 on Xinjiang Ruiliheng: When acquiring shares in Xinjiang Ruilihengin October 2018, the Company recorded goodwill at the amount by which the investment cost of RMB11,000,000.00 exceeded the Company’s share of the acquiree’s owners’ equity.The goodwill of RMB 343,028.78 on Kembang Subur International: When acquiring shares in KembangSubur International in November 2018, the Company recorded goodwill at the amount by which theinvestment cost of USD 112,150.00 exceeded the Company’s shares of the acquiree’s owners’ equity, withthe effects of the translation of the investee’s foreign-currency-denominated financial statements caused byexchange rate fluctuations after the acquisition.The goodwill of RMB 1,455,358.51 on Gaotang Huayu: When acquiring shares in Xinjiang Ruiliheng inAugust 2019, the Company recorded goodwill at the amount by which the investment cost of RMB1,000,000.00 exceeded the Company’s share of the acquiree’s owners’ equity.Note 3: Performance commitment regarding Shandong Daxin and performance results
① Performance commitment
According to the Equity Transfer Agreement entered into on September 14, 2017 between the Company aswell as Jianbing Liu, Haibo Yu, Yuqin Wang, Fei Xing, Xianlai Duan and Mingjun Yang, the transferors
Jianbing Liu, Haibo Yu, Yuqin Wang, Xianlai Duan and Mingjun Yang undertook that the net income ofShandong Daxin shall not be lower than RMB 50 million in 2017; that the aggregated net income ofShandong Daxin shall not be lower than RMB 105 million in 2017 and 2018; that the aggregated netincome of Shandong Daxin shall not be lower than RMB 165 million in 2017, 2018 and 2019; and that theaggregated net income of Shandong Daxin shall not be lower than RMB 230 million in 2017, 2018, 2019and 2020, otherwise they shall compensate the Company for the gap, with the total net compensationamount subject to an upper limit of the total equity transaction price. Net income refers to the consolidatednet income attributable to owners of Shandong Daxin during the commitment period (the lower whendeducting the non-operating gains and losses).
②Performance results
| Abbr. of company name | Year | Promised net income (RMB 0,000) | Actual net income (RMB 0,000) | Gap (RMB 0,000) | Fulfillment ratio |
| Shandong Daxin | 2017-2019 | 16,500.00 | 15,123.84 | -1,376.16 | 91.66% |
| 2017-2018 | 10,500.00 | 10,724.14 | 224.14 | 102.13% | |
| 2017 | 5,000.00 | 6,435.63 | 1,435.63 | 128.71% |
According to the performance commitment of Shandong Daxin as of this year, the original equity transferorof Shandong Daxin should pay performance compensation of RMB 17.88 million to the Group.
(2) Provision for impairment of goodwill
| Name of investee or events from which goodwill arose | As at 31/12/2018 | Additions during the year | Decreases during the year | As at 31/12/2019 | |
| Provisoion | Effect of translation of foreign currency statement | ||||
| Guangzhou Runchuan | - | 50,000.00 | - | - | 50,000.00 |
| Guangzhou Haihe | - | 76,663.70 | - | - | 76,663.70 |
| Hisenor Vietnam | 2,710,672.38 | 2,895,742.00 | 44,630.20 | - | 5,651,044.58 |
| Hunan Innovation | 4,038,440.41 | - | - | - | 4,038,440.41 |
| Sichuan Hailinger | 2,036,960.97 | 27,060,079.18 | - | - | 29,097,040.15 |
| Shandong Daxin | - | 3,328,423.01 | - | - | 3,328,423.01 |
| Kembang Subur International | - | 348,676.61 | - | - | 348,676.61 |
| Total | 8,786,073.76 | 33,759,584.50 | 44,630.20 | - | 42,590,288.46 |
Note: The Group calculates the receoverable amounts by discounting the expected future cash flows, whichwas prepared by management based on the past performance and expectation for future marketdevelopment. As of December 31, 2019, according to the impairment test results, the Group recognizedprovision for impairment of goodwill of RMB 42,590,288.46 (RMB 8,786,073.76 as of December 31,2018).
24. Long-term deferred expenses
| Item | As at 31/12/2018 | Additions during the year | Decreases during the year | As at 31/12/2019 | |
| Amortization for the year | Other decreases | ||||
| Rental expense | 147,459,607.01 | 44,096,398.90 | 32,987,161.58 | 6,951,461.77 | 151,617,382.56 |
| Forest restoration expense | 14,477,037.61 | 935,273.11 | 577,620.14 | - | 14,834,690.58 |
| Expense on obtaining operation rights of contracted assets | 25,788,461.01 | 6,474,054.28 | 2,299,583.79 | - | 29,962,931.50 |
| Improvement and decoration expense | 35,212,075.49 | 18,333,861.32 | 12,295,303.17 | 5,264,283.28 | 35,986,350.36 |
| Other | 8,206,891.97 | 3,721,776.78 | 3,004,156.01 | - | 8,924,512.74 |
| Total | 231,144,073.09 | 73,561,364.39 | 51,163,824.69 | 12,215,745.05 | 241,325,867.74 |
25. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets and deferred tax liabilities not offsetting
| Item | As at 31/12/2019 | As at 31/12/2018 | ||
| Deductible or taxable temporary differences | Deferred tax assets/ deferred tax liabilities | Deductible or taxable temporary differences | Deferred tax assets/ deferred tax liabilities | |
| Deferred tax assets: | ||||
| Provisions for impairment of assets | 159,342,357.19 | 34,622,196.69 | 149,536,013.78 | 29,943,107.06 |
| Organization cost | 17,230,681.38 | 208,759.57 | 44,241,731.89 | 893,075.47 |
| Depreciation | 10,329,774.13 | 1,314,044.77 | 10,860,816.22 | 1,566,603.82 |
| Amortisation | 1,056,851.12 | 264,212.78 | 1,476,831.03 | 362,282.26 |
| Deductible losses | 1,286,774,412.92 | 310,060,089.71 | 982,742,152.20 | 225,595,599.10 |
| Item | As at 31/12/2019 | As at 31/12/2018 | ||
| Deductible or taxable temporary differences | Deferred tax assets/ deferred tax liabilities | Deductible or taxable temporary differences | Deferred tax assets/ deferred tax liabilities | |
| Accrued expense | 11,342,976.96 | 2,835,744.25 | 12,134,402.72 | 3,033,600.68 |
| Unrealized profits of intra-group transactions | 277,163,923.78 | 39,778,231.42 | 193,297,711.72 | 42,951,995.56 |
| Gain/Loss on movements in fair value | 2,633,510.00 | 658,377.50 | 46,271,790.00 | 11,567,947.50 |
| Deferred income | 66,891,484.52 | 14,833,177.56 | 47,228,660.83 | 10,801,737.84 |
| Payroll payable | 149,723,509.39 | 31,933,727.69 | 145,981,486.49 | 32,539,714.11 |
| Equity incentive | 574,227,900.48 | 143,556,975.12 | 366,313,771.20 | 91,578,442.80 |
| Deductible advertising expense carryforwards | 10,917,596.70 | 2,729,399.18 | 2,215,067.59 | 553,766.90 |
| Accrued sales discounts | 90,253,291.04 | 9,025,329.10 | 51,112,835.77 | 5,111,283.58 |
| Guarantee compensation for expected losses | 413,332.80 | 99,856.00 | - | - |
| Subtotal | 2,658,301,602.41 | 591,920,121.34 | 2,053,413,271.44 | 456,499,156.68 |
| Deferred tax liabilities: | ||||
| Gain/Loss on movements in fair value | 19,183,065.85 | 4,795,766.46 | 49,672,592.73 | 12,418,148.18 |
| Depreciation | 247,347,574.66 | 52,176,147.65 | 132,776,496.97 | 29,031,853.46 |
| Amortization | 209,312,372.67 | 48,183,352.95 | 32,296,756.17 | 8,074,189.04 |
| Increase in value upon valuation | 30,349,837.94 | 7,587,459.49 | 214,707,267.41 | 49,310,181.66 |
| Subtotal | 506,192,851.12 | 112,742,726.55 | 429,453,113.28 | 98,834,372.34 |
(2) Details of unrecognized deferred tax assets
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Deductible losses | 35,976,457.45 | 1,571,559.09 |
| Provision for impairment of assets | 82,840,232.16 | 76,287,092.47 |
| Total | 118,816,689.61 | 77,858,651.56 |
Note: These deductible temporary differences and deductible losses were unrecognized as deferred tax assetsbecause it was uncertain whether sufficient taxable income could be obtained in the future.
(3) Expiration of deductible tax losses for unrecognized deferred tax assets
| Year | As at 31/12/2019 | As at 31/12/2018 | Note |
| 2019 | —— | 9,846.32 | |
| 2020 | 3,795.68 | 13,707.81 | |
| 2021 | 1,828,632.52 | 11,365.24 | |
| 2022 | 280,822.15 | 289,891.23 | |
| 2023 | 1,573,881.61 | 1,246,748.49 | |
| 2024 | 32,289,325.49 | —— | |
| Total | 35,976,457.45 | 1,571,559.09 |
26. Other non-current assets
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Prepayments for equipment and constructions | 166,177,606.84 | 233,983,903.99 |
| Prepayments for acquisition of other long-term assets | 99,498,252.15 | 77,225,393.19 |
| Other | 1,049.85 | - |
| Total | 265,676,908.84 | 311,209,297.18 |
27. Short-term loans
(1) Short-term loans by category
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Unsecured loans | 2,986,128,344.11 | 2,714,591,832.88 |
| Pledged loans | 34,763,660.07 | 1,363,034.81 |
| Total | 3,020,892,004.18 | 2,715,954,867.69 |
Note: Unsecured loans included guaranteed loans provided by inter-group members.
(2) There were no overdue short-term loans as of the end of current period.
28. Financial liabilities held for trading
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Financial liabilities held for trading | 2,633,510.00 | —— |
| Including: Derivative financial liabilities | 2,633,510.00 | —— |
| Total | 2,633,510.00 | —— |
29. Financial liabilities at fair value through profit or loss
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Financial liabilities held for trading | —— | 46,271,790.00 |
| Including: Derivative financial liabilities | —— | 46,271,790.00 |
| Total | —— | 46,271,790.00 |
Note: Financial liabilities held for trading were futures measured at fair value.
30. Accounts payable
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Accounts payable with aging below one year | 1,883,388,667.22 | 1,480,625,014.36 |
| Accounts payable with aging over one year | 33,666,673.63 | 32,232,061.58 |
| Total | 1,917,055,340.85 | 1,512,857,075.94 |
Significant accounts payable with aging over one year
| Item | Ending balance | Reason for unsettledness or carry-forward |
| Payables for construction and equipment | 6,408,694.98 | Projects unsettled |
| Payables for land | 1,080,000.00 | Settlement undue |
| Total | 7,488,694.98 | —— |
31. Advances from customers
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Advances from customers with aging below one year | 1,502,639,044.74 | 1,277,898,818.39 |
| Advances from customers with aging over one year | 45,644,410.47 | 29,361,196.31 |
| Total | 1,548,283,455.21 | 1,307,260,014.70 |
(1) Significant advances from customers with aging over one year
| Item | Ending balance | Reason for unsettledness or carry-forward |
| Advances for goods | 11,974,166.09 | Conditions for revenue recognition unmet |
| Total | 11,974,166.09 | —— |
32. Employee benefits payable
| Item | As at 31/12/2018 | Accrued during the year | Decreased during the year | As at 31/12/2019 |
| Short-term employee benefits | 596,475,453.28 | 2,449,965,435.60 | 2,355,872,113.14 | 690,568,775.74 |
| Post-employment benefits - defined contribution plans | 74,783.45 | 95,076,218.39 | 94,597,947.24 | 553,054.60 |
| Termination benefits | 50,000.00 | 3,158,763.59 | 2,774,568.20 | 434,195.39 |
| Other benefits due within one year | - | - | - | - |
| Total | 596,600,236.73 | 2,548,200,417.58 | 2,453,244,628.58 | 691,556,025.73 |
(1) Short-term employee benefits
| Item | As at 31/12/2018 | Accrued during the year | Decreased during the year | As at 31/12/2019 |
| Salaries, bonus, allowances | 466,672,645.84 | 2,185,398,229.16 | 2,077,598,410.31 | 574,472,464.69 |
| Staff welfare | 3,196,956.58 | 81,561,068.64 | 78,420,511.83 | 6,337,513.39 |
| Social insurances | 142,592.28 | 53,157,145.56 | 53,105,363.87 | 194,373.97 |
| Including: 1. Medical insurance | 123,796.87 | 43,520,780.34 | 43,503,650.36 | 140,926.85 |
| 2. Work-related injury insurance | 5,731.12 | 3,571,717.31 | 3,561,976.90 | 15,471.53 |
| 3. Maternity insurance | 9,679.44 | 4,515,521.20 | 4,517,096.84 | 8,103.80 |
| 4. Serious disease subsidies | 3,384.85 | 1,549,126.71 | 1,522,639.77 | 29,871.79 |
| Housing Fund | 53,642.00 | 20,966,630.78 | 20,855,846.81 | 164,425.97 |
| Labor union fees | 738,128.77 | 3,768,339.72 | 3,822,607.32 | 683,861.17 |
| staff and workers’ education fee | 493,842.64 | 8,766,676.27 | 8,619,616.37 | 640,902.54 |
| Short-term profit –sharing plan | 94,997,014.94 | 96,347,345.47 | 83,269,126.40 | 108,075,234.01 |
| Key personnel stock ownership plans | 30,180,630.23 | - | 30,180,630.23 | - |
| Total | 596,475,453.28 | 2,449,965,435.60 | 2,355,872,113.14 | 690,568,775.74 |
(2) Defined contribution plans
| Item | As at 31/12/2018 | Accrued during the year | Decreased during the year | As at 31/12/2019 |
| Post-employment benefits | 74,783.45 | 95,076,218.39 | 94,597,947.24 | 553,054.60 |
| Including: 1. Basic pension insurance | 50,413.53 | 92,040,077.70 | 91,559,440.13 | 531,051.10 |
| 2. Unemployment insurance | 24,369.92 | 3,036,140.69 | 3,038,507.11 | 22,003.50 |
| 3. Annuity | - | - | - | - |
| Total | 74,783.45 | 95,076,218.39 | 94,597,947.24 | 553,054.60 |
33. Taxes payable
| Item | As at 31/12/2019 | As at 31/12/2018 |
| VAT | 9,247,173.60 | 5,543,427.85 |
| City construction tax | 765,087.96 | 288,243.61 |
| Corporate income tax | 82,666,938.07 | 98,807,213.12 |
| Individual income tax | 5,544,728.31 | 4,245,340.11 |
| Property tax | 2,892,647.29 | 4,448,626.28 |
| Stamp tax | 2,288,272.68 | 1,837,340.80 |
| Educational surcharges | 568,667.34 | 222,894.49 |
| Land use tax | 1,927,824.05 | 2,714,156.21 |
| Environmental protection tax | 290,612.29 | 264,307.73 |
| Water resource tax | 156,829.20 | 65,522.50 |
| Tax withheld | 41,032.83 | 47,753.46 |
| Other | 166,247.17 | 104,817.03 |
| Total | 106,556,060.79 | 118,589,643.19 |
34. Other payables
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Interests payable | - | 25,144,934.16 |
| Dividends payable | 1,159,042.39 | 6,250,397.10 |
| Other payables | 380,924,072.47 | 430,306,647.66 |
| Total | 382,083,114.86 | 461,701,978.92 |
(1) Interests payable
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Interest payable on short-term loans | - | 17,556,882.27 |
| Interest payable for long-term loans | - | 7,588,051.89 |
| Total | - | 25,144,934.16 |
(2) Dividends payable
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Dividends payable to non-controlling interests | 1,159,042.39 | 6,250,397.10 |
| Total | 1,159,042.39 | 6,250,397.10 |
(3) Other payables
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Security deposits | 145,908,823.22 | 137,692,253.01 |
| Petty cash | 4,168,645.75 | 5,399,421.38 |
| Rents | 6,327,233.03 | 4,777,381.84 |
| Payables for equity transfer | 16,544,482.25 | 5,000,000.00 |
| Payables to external parties | 30,726,278.01 | 24,018,830.74 |
| Restricted stock repurchase commitments | 172,540,566.20 | 251,038,100.40 |
| Other | 4,708,044.01 | 2,380,660.29 |
| Total | 380,924,072.47 | 430,306,647.66 |
Significant other payables aging over 1 year
| Item | As at 31/12/2019 | Reason for no repayment |
| Payables for equity transfer | 5,000,000.00 | Payment conditions unmet |
| Security deposits | 11,000,000.00 | Execution of contract unfinished |
| Total | 16,000,000.00 | —— |
35. Long-term payables due within one year
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Long-term payables due within one year | 48,838,331.24 | 31,352,957.13 |
| Total | 48,838,331.24 | 31,352,957.13 |
(1) Long-term payables due within one year
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Obligations under finance leases | 4,749,031.24 | 4,301,957.13 |
| Obligations under equity transfers | 44,089,300.00 | 27,051,000.00 |
| Total | 48,838,331.24 | 31,352,957.13 |
36. Other current liabilities
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Utilities | 34,988,014.06 | 26,382,881.71 |
| Steam or other fuel or power charges | 19,669,806.62 | 10,399,718.09 |
| Transportation and warehousing charges | 15,167,471.95 | 14,509,324.58 |
| Office and meeting service charges | 13,346,945.97 | 10,291,181.08 |
| Travel charges | 14,114,721.54 | 11,009,221.81 |
| Rents | 1,637,155.75 | 802,469.20 |
| Vehicle charges | 12,681,404.97 | 9,423,641.61 |
| R&D charges | 1,981,360.04 | 979,622.79 |
| Business promotion charges | 8,992,606.94 | 7,881,307.35 |
| Maintenance charges | 3,638,528.04 | 1,594,468.19 |
| Entrusted cultivation charges | 35,389,281.96 | 40,598,063.29 |
| Output VAT to be transferred | 10,575,734.84 | 18,822,783.10 |
| Other | 15,778,854.73 | 7,827,286.61 |
| Total | 187,961,887.41 | 160,521,969.41 |
37. Long-term loans
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Unsecured loans | 821,661,042.98 | 1,842,910,000.00 |
| Subtotal | 821,661,042.98 | 1,842,910,000.00 |
| Less: long-term loans due within one year | - | - |
| Total | 821,661,042.98 | 1,842,910,000.00 |
Note: Unsecured loans included guaranteed loans provided by inter-group members.
38. Long-term payables
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Long-term payables | 85,596,111.44 | 115,622,929.75 |
| Special payables | - | - |
| Total | 85,596,111.44 | 115,622,929.75 |
(1) Long-term payables
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Obligations under equity transfers | 109,682,249.52 | 111,716,800.00 |
| Obligations under finance leases | 73,731,910.96 | 62,676,195.65 |
| Less: Unrecognized financing costs | 48,979,717.80 | 27,417,108.77 |
| Subtotal | 134,434,442.68 | 146,975,886.88 |
| Less: long-term payables due within one year | 48,838,331.24 | 31,352,957.13 |
| Total | 85,596,111.44 | 115,622,929.75 |
39. Long-term employee benefits payable
| Item | As at 31/12/2019 | As at 31/12/2018 |
| Post-employment benefits-net liabilities of defined benefit plans | - | - |
| Dismissal benefits | - | - |
| Long-term profit sharing plans | 174,154,018.26 | 159,888,874.07 |
| Subtotal | 174,154,018.26 | 159,888,874.07 |
| Less: Long-term employee benefits payable due within one year | 108,075,234.01 | 94,997,014.94 |
| Total | 66,078,784.25 | 64,891,859.13 |
40. Deferred income
| Item | As at 31/12/2018 | Additions during the year | Reductions during the year | As at 31/12/2019 | Reason for deferral |
| Government grant | 66,805,070.81 | 68,845,744.88 | 16,727,248.55 | 118,923,567.14 | Receipt of government grant |
| Rent income | 1,563,061.42 | 2,935,324.18 | 3,035,437.68 | 1,462,947.92 | Conditions for revenue recognition unmet |
| Total | 68,368,132.23 | 71,781,069.06 | 19,762,686.23 | 120,386,515.06 | —— |
Note: For the government grant which was recognized as deferred income, refer to Note XIV. 1.Government grant.
41. Share capital (Unit: share)
| Item | As at 31/12/2018 | Movements during the year (+, -) | As at 31/12/2019 |
| New issue | Bonus issue | Shares as dividend converted from public reserves | Other | Subtotal | |||
| Total shares | 1,581,211,084.00 | 89,850.00 | - | - | -943,440.00 | -853,590.00 | 1,580,357,494.00 |
Note: The changes in the total shares in current period were incurred by the exercise of share options underequity incentive plans in 2019.The restricted shares newly subscribed for and the repurchase of restrictedshares granted to employees but still in lockup due to the employees’ resignation or the termination of thelabor contracts with the employees.
42. Capital reserve
| Item | As at 31/12/2018 | Additions during the year | Reductions during the year | As at 31/12/2019 |
| Share premium(Note 1) | 1,732,902,228.90 | 20,954,034.93 | 7,259,655.10 | 1,746,596,608.73 |
| Other capital reserves(Note 2) | 277,875,953.32 | 114,549,609.47 | 20,230,065.09 | 372,195,497.70 |
| Total | 2,010,778,182.22 | 135,503,644.40 | 27,489,720.19 | 2,118,792,106.43 |
Note 1: Reasons for the changes in share premium
① The increases in share premium in current period primarily consisted of the premium arising from theexercise of incentive share options, the portion by which the amount paid to subscribe for restrictedstock exceeded the par value and the portion by which the payments received for sale of equityinterests in subsidiaries to non-controlling interests exceeded the Company’s shares of the subsidiaries’net assets on the transfer date.
② The decreases in share premium in current period were primarily incurred by the repurchase ofrestricted shares granted to employees but still in lockup due to the employees’ resignation, and theportion by which the payments for acquisition of equity interests in subsidiaries from non-controllinginterests exceeded the Company’s shares of the subsidiaries’ net assets on the transfer days.Note 2: Reasons for the changes in other capital reserves
① The increases in other capital reserves in current period primarily consisted of the share-based
payments with equity instruments attributable to the parent company in the implementation of shareoption and restricted share incentives (refer to XI), and the deferred income tax assets on the amountby which the deductible amount in the exercise of share options under the equity incentive planexceeded the recognized costs during the pending period being directly charged to other capitalreserves.
② The decreases in other capital reserves in current period were primarily incurred by the reclassificationinto share premium due to the exercise of incentive share options and the unlocking of restrictedshares.
43. Treasury Shares
| Item | As at 31/12/2018 | Additions during the year | Reductions during the year | As at 31/12/2019 |
| Restricted stock repurchase commitments | 251,038,100.40 | - | 78,497,534.20 | 172,540,566.20 |
Note: The decrease in current period was primarily incurred by equity distribution and the repurchase ofrestricted shares granted to employees but still in lockup due to the distribution of interest or employees’resignation or the termination of the labor contracts with the employees.
44. Other comprehensive income
| Item | As at 31/12/2018 | Movements during the year | As at 31/12/2019 | ||||
| Before-tax amount | Less: previously recognized amount transferred to profit or loss | Less: income tax expense | Net-of-tax amount attributable to shareholders of the Company | Net-of-tax amount attributable to non-controlling interests | |||
| I.Items that will not be reclassified to profit or loss | - | - | - | - | - | - | - |
| II.Items that may be reclassified to profit or loss | 7,600,777.65 | -2,824,205.77 | - | - | -2,308,513.75 | -515,692.02 | 5,292,263.90 |
| Including: Translation differences arising from translation of foreign currency financial statements | 7,600,777.65 | -2,824,205.77 | - | - | -2,308,513.75 | -515,692.02 | 5,292,263.90 |
| Item | As at 31/12/2018 | Movements during the year | As at 31/12/2019 | ||||
| Before-tax amount | Less: previously recognized amount transferred to profit or loss | Less: income tax expense | Net-of-tax amount attributable to shareholders of the Company | Net-of-tax amount attributable to non-controlling interests | |||
| Total | 7,600,777.65 | -2,824,205.77 | - | - | -2,308,513.75 | -515,692.02 | 5,292,263.90 |
Note: Net-of-tax amount of other comprehensive income during the year 2019 is RMB -2,824,205.77, inwhich net-of-tax amount of other comprehensive income attributable to shareholders of the Company isRMB -2,308,513.75, and net-of-tax amount of other comprehensive income attributable to non-controllinginterests is RMB -515,692.02.
45. Surplus reserve
| Item | As at 31/12/2018 | Additions during the year | Reductions during the year | As at 31/12/2019 |
| Statutory surplus | 518,730,727.06 | 115,677,076.65 | - | 634,407,803.71 |
| Total | 518,730,727.06 | 115,677,076.65 | - | 634,407,803.71 |
Note: As per the Company’s Articles of Association, 10% of its net income in 2019, i.e. RMB115,677,076.65, was appropriated to statutory surplus reserves.
46. Retained earnings
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 | Appropriation or distribution percentage |
| Retained earnings as at 31/12/2018 (before adjustment) | 3,878,656,406.43 | 2,973,520,338.94 | |
| Total adjustments for opening retained earnings（“+” for increase; “–” for decrease） | - | - | |
| Retained earnings as at 01/01/2019 (after adjustment) | 3,878,656,406.43 | 2,973,520,338.94 | |
| Add: Net profits for the year attributable to shareholders of the Company | 1,648,762,579.59 | 1,437,281,732.28 | |
| Less: Appropriation for statutory surplus reserve | 115,677,076.65 | 136,767,076.29 | 10% |
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 | Appropriation or distribution percentage |
| Dividends converted to general share capital | 474,261,280.20 | 395,378,588.50 | |
| Retained earnings as at 31/12/2019 | 4,937,480,629.17 | 3,878,656,406.43 |
47. Operating income and operating cost
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 | ||
| Income | Cost | Income | Cost | |
| Principal activities | 47,500,436,847.20 | 42,157,645,399.36 | 42,063,586,048.63 | 37,559,821,198.27 |
| Other operating activities | 112,150,617.30 | 65,766,517.74 | 93,042,751.48 | 55,764,986.50 |
| Total | 47,612,587,464.50 | 42,223,411,917.10 | 42,156,628,800.11 | 37,615,586,184.77 |
48. Taxes and surcharges
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Urban maintenance and construction tax | 4,107,302.77 | 2,266,665.90 |
| Educational surcharge | 1,902,068.76 | 1,109,094.63 |
| Local educational surcharge | 1,299,302.38 | 726,482.40 |
| Stamp duty | 18,975,794.55 | 18,172,714.35 |
| Property tax | 19,473,225.38 | 17,112,520.02 |
| Land usage tax | 12,197,005.15 | 11,395,616.42 |
| Environmental protection tax | 1,271,587.28 | 1,131,182.13 |
| Other | 1,389,806.54 | 1,226,462.49 |
| Total | 60,616,092.81 | 53,140,738.34 |
Note: For the criteria of taxes and surcharges accrued and paid, please refer to Note IV. Taxation
49. Selling and distribution expenses
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Employee compensation | 856,430,622.49 | 752,167,912.68 |
| Product transportation charges and port charges | 359,351,749.43 | 309,572,633.43 |
| Travel expense | 186,973,876.54 | 167,983,708.20 |
| Business promotion expense | 113,085,943.18 | 108,479,633.63 |
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Equity incentive expense | 3,868,403.14 | 7,253,250.43 |
| Other | 42,985,904.73 | 32,469,320.31 |
| Total | 1,562,696,499.51 | 1,377,926,458.68 |
50. General and administrative expenses
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Employee compensation | 708,884,901.71 | 563,662,350.60 |
| Travel expense | 64,588,567.02 | 54,985,035.30 |
| Office expense | 275,391,481.30 | 239,934,995.42 |
| Training and consulting service charges | 69,493,506.96 | 39,831,493.67 |
| Equity incentive expense | 10,620,351.90 | 19,717,103.07 |
| Other | 61,767,360.26 | 48,981,574.34 |
| Total | 1,190,746,169.15 | 967,112,552.40 |
51. Research and development expenses
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| labor | 212,584,892.45 | 157,537,878.14 |
| Materials | 104,914,562.32 | 83,379,047.36 |
| Travel expense | 20,054,034.21 | 14,738,823.94 |
| Office expense | 60,539,207.70 | 38,834,784.44 |
| Training and consulting service charges | 3,019,861.03 | 2,388,523.37 |
| Expense on R&D entrusted to external parties | 10,243,252.16 | 5,122,159.73 |
| Equity incentive expense | 2,835,008.26 | 5,236,488.93 |
| Other | 1,819,141.59 | 1,929,614.75 |
| Total | 416,009,959.72 | 309,167,320.66 |
52. Financial expenses
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Total interest expenses | 226,706,748.45 | 189,458,281.87 |
| Less: Interest income | 32,415,237.75 | 32,211,787.13 |
| Add: Net exchange losses/gains | -14,343,205.96 | 37,981,670.93 |
| Add: Unrecognized financing costs | 6,914,507.61 | 5,927,697.80 |
| Add: Bank charges | 25,087,077.18 | 17,896,467.45 |
| Total | 211,949,889.53 | 219,052,330.92 |
53. Other income
| Item (Source of other income) | Year ended 31/12/2019 | Year ended 31/12/2018 | Related to assets/ income |
| Government grant related to daily operating activities | 51,358,583.55 | 54,838,316.91 | Related to income |
| Other items arising in the daily operating activities that should be charged directly to other income | 987,561.31 | 1,263,559.84 | —— |
| Total | 52,346,144.86 | 56,101,876.75 | —— |
Note: For the details of government grant, refer to Note XIV. 1. Government grant.
54. Investment income
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Income from long-term equity investments accounted for using the equity method | 13,127,173.32 | 6,349,268.04 |
| Investment income from disposal of long-term equity investments | 21,411,361.70 | -647,232.38 |
| Investment income from holding held-for-trading financial assets | 115,951,864.28 | —— |
| Investment income from holding financial assets at fair value through profit or loss | —— | 16,363,273.98 |
| Investment income from holding available-for-sale financial assets | —— | 3,882,577.17 |
| Investment income from holding other non-current financial assets | 5,168,056.73 | —— |
| Interest income from debt investments | 1,112.64 | —— |
| Investment income from disposal of financial assets at fair value through profit or loss | —— | 125,317,041.78 |
| Investment income from disposal of available-for-sale financial assets | —— | -175,206.74 |
| Investment income from disposal of other non-current financial assets | 4,382,680.28 | —— |
| Total | 160,042,248.95 | 151,089,721.85 |
55. Gains/ (losses) from changes in fair value
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Held-for-trading financial assets | -39,635,272.73 | —— |
| Including: Financial assets at fair value through profit or loss | - | —— |
| Held-for-trading financial liabilities | 43,638,280.00 | —— |
| Including: Financial liabilities at fair value through profit or loss | - | —— |
| Financial assets at fair value through profit or loss | —— | 40,071,452.73 |
| Financial liabilities at fair value through profit or loss | —— | -27,492,716.88 |
| Other | 4,045,037.00 | - |
| Total | 8,048,044.27 | 12,578,735.85 |
56. Impairment losses of credit
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Impairment losses of receivables | -16,680,157.14 | —— |
| Impairment losses of Loans and factoring | -5,975,691.63 | —— |
| Impairment losses of guarantee | -413,332.80 | —— |
| Total | -23,069,181.57 | —— |
57. Impairment losses of assets
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Receivables | —— | -59,058,265.12 |
| Inventories | -12,085,993.23 | -754,254.68 |
| Assets held for sale | -4,380,811.42 | - |
| Goodwill | -33,720,425.64 | -6,075,401.38 |
| Provision for impairment of loans | —— | -123,450.00 |
| Total | -50,187,230.29 | -66,011,371.18 |
58. Gains from assets disposal
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Gains from disposals of long-term assets (“-’’ for losses) | 3,880,771.91 | 66,161.29 |
| Total | 3,880,771.91 | 66,161.29 |
59. Non-operating income
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 | Amount included in non-recurring gains or losses for the year ended 31/12/2019 |
| Gain on disposal of non-current assets resulted from damage or obsolescence | 215,203.19 | 99,724.11 | 215,203.19 |
| Government grants | 2,000.00 | 10,696,100.00 | 2,000.00 |
| Insurance compensation | 5,135,237.02 | 3,734,824.21 | 5,135,237.02 |
| Debt repayment income | 4,919,652.84 | 3,011,470.01 | 4,919,652.84 |
| Negative goodwill | 3,199,250.94 | - | 3,199,250.94 |
| Penalty income | - | 1,072,650.38 | - |
| Default income | - | 6,787,149.26 | - |
| Compensation of performance commitment | 17,876,735.58 | - | 17,876,735.58 |
| Other | 3,249,831.07 | 1,448,705.88 | 3,249,831.07 |
| Total | 34,597,910.64 | 26,850,623.85 | 34,597,910.64 |
60. Non-operating expenses
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 | Amount included in non-recurring gains or losses for the year ended 31/12/2019 |
| Gain on disposal of non-current assets resulted from damage or obsolescence | 26,206,721.14 | 16,103,150.79 | 26,206,721.14 |
| Donations | 2,330,135.98 | 3,152,583.60 | 2,330,135.98 |
| Other | 10,257,072.12 | 9,860,175.72 | 10,257,072.12 |
| Total | 38,793,929.24 | 29,115,910.11 | 38,793,929.24 |
61. Income tax expenses
(1) Details of income tax expenses
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Current tax expense for the year based on tax law and regulations | 334,571,473.63 | 332,944,051.45 |
| Changes in deferred tax assets/liabilities | -30,056,863.47 | -50,681,159.71 |
| Total | 304,514,610.16 | 282,262,891.74 |
(2) Reconciliation between income tax expenses and accounting profit is as follows:
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Profits/losses before tax | 2,094,021,716.21 | 1,766,203,052.64 |
| Expected income tax expenses at applicable tax rate | 523,505,429.05 | 441,550,763.16 |
| Effect of different tax rates applied by subsidiaries | -196,971,755.96 | -133,345,017.64 |
| Adjustment to income tax of previous years | 238,890.05 | -4,031,276.48 |
| Effect of non-taxable income | -14,544,839.78 | -9,469,895.91 |
| Effect of non-deductible costs, expenses and losses | 20,900,452.99 | 13,269,315.20 |
| Effect on opening balance of deferred tax due to changes in tax rate | -129,469.10 | 362,683.15 |
| Effect of using the deductible temporary differences or deductible losses for which no deferred tax asset was recognized in previous | -388,696.16 | 32,821.00 |
| Effect of deductible temporary differences or deductible losses for which no deferred tax asset was recognized this year | 3,670,152.02 | 2,838,380.11 |
| Effect of research and development expenses over-deduction | -31,765,552.95 | -28,944,880.85 |
| Income tax expenses | 304,514,610.16 | 282,262,891.74 |
62. Note for cash flow statement
(1) Cash inflows for other operating activities
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Operating receivables and payables | 585,240,127.90 | 86,263,336.51 |
| Fiscal subsidies | 104,810,902.32 | 61,396,009.27 |
| Interest income of deposit | 32,180,350.15 | 31,746,796.28 |
| Other | 20,803,343.77 | 15,861,436.94 |
| Total | 743,034,724.14 | 195,267,579.00 |
(2) Cash outflows for other operating activities
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Operating receivables and payables | 298,141,321.18 | 121,575,814.90 |
| Other expense | 1,134,521,719.06 | 958,180,075.89 |
| Total | 1,432,663,040.24 | 1,079,755,890.79 |
(3) Cash outflows for other investing activities
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Deposit of acquisitions of long-term assets | 1,023,267.79 | 5,513,846.93 |
| Net amount received from disposal of subsidiaries | - | 894,973.57 |
| Total | 1,023,267.79 | 6,408,820.50 |
(4) Cash inflows for other financing activities
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Bills, loans, deposit of letter of credit | 168,624.69 | 37,170,911.00 |
| Total | 168,624.69 | 37,170,911.00 |
(5) Cash outflows for other financing activities
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Bills, loans, deposit of letter of credit | 15,994,918.82 | 20,921,317.72 |
| Dividends expense | 196,265.24 | 163,361.67 |
| Restricted stock repurchase | 7,044,613.60 | 13,770,969.65 |
| Payment for financial leasing | 7,438,452.90 | 48,707,364.47 |
| Payment for acquisition of non-controlling interest in current and previous year | 10,694,778.06 | 4,565,000.00 |
| Expense of convertible loans | 5,326,186.94 | - |
| Total | 46,695,215.56 | 88,128,013.51 |
63. Supplementary information on cash flow statement
(1) Supplement to cash flow statement
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| 1. Reconciliation of net profit/loss to cash flows from operating activities： | ||
| Net profit/loss | 1,789,507,106.05 | 1,483,940,160.90 |
| Add: Provisions for impairment of assets | 50,187,230.29 | 66,011,371.18 |
| Provisions for impairment of credit | 23,069,181.57 | —— |
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Depreciation of fixed assets, depreciation of right of use assets, depreciation of investment properties, depletion of oil and gas assets, and depreciation of productive biological assets | 549,894,405.14 | 437,203,065.21 |
| Amortization of intangible assets | 61,022,280.26 | 55,842,173.05 |
| Amortization of long-term deferred expenses | 51,163,824.69 | 45,071,285.73 |
| Losses from disposal of fixed assets, intangible assets, and other long-term assets ("-" for gains) | -3,880,771.91 | -66,161.29 |
| Loss from scrapping of fixed assets ("-" for gains) | 15,471,990.78 | 14,400,142.84 |
| Loss from scrapping of productive biological assets ("-" for gains) | 10,519,527.17 | 1,603,283.84 |
| Losses from changes in fair value ("-" for gains) | -8,048,044.27 | -12,578,735.85 |
| Financial expenses ("-" for income) | 233,621,256.06 | 195,385,979.67 |
| Losses arising from investment ("-" for gains) | -160,042,248.95 | -151,089,721.85 |
| Decrease in deferred tax assets ("-" for increase) | -85,015,523.04 | -83,773,226.30 |
| Increase in deferred tax liabilities ("-" for decrease) | 9,990,710.06 | 33,179,160.20 |
| Decrease in gross inventories ("-" for increase) | 275,591,834.58 | -1,486,501,369.54 |
| Decrease in operating receivables ("-" for increase) | 5,946,433.30 | -454,074,739.00 |
| Increase in operating payables ("-" for decrease） | 357,503,096.39 | 865,169,605.82 |
| Expense of equity incentive | 18,216,085.30 | 34,024,835.91 |
| Other | 52,262,331.61 | -7,983,104.19 |
| Net cash flows from operating activities | 3,246,980,705.08 | 1,035,764,006.33 |
| 2. Investing and financing activities not requiring the use of cash: | ||
| Conversion of debt into capital | - | - |
| Convertible bonds due within one year | - | - |
| Acquisition of fixed assets under finance leases | - | - |
| 3. Change in cash and cash equivalents： | ||
| Cash as at 31/12/2019 | 1,824,265,608.78 | 1,728,167,759.86 |
| Less: cash as at 31/12/2018 | 1,728,167,759.86 | 1,374,275,559.37 |
| Add: cash equivalents as at 31/12/2019 | - | 430,000,000.00 |
| Less: cash equivalents as at 31/12/2018 | 430,000,000.00 | - |
| Net increase/decrease in cash and cash equivalents | -333,902,151.08 | 783,892,200.49 |
(2) Net cash flows from acquisition of subsidiaries during the year
| Item | Year ended 31/12/2019 |
| Cash or cash equivalents paid in current period for business combinations incurred during the year | 6,000,000.00 |
| Including: Gaotang Huayu | 1,000,000.00 |
| Xinjiang Ruitai Biological | 5,000,000.00 |
| Item | Year ended 31/12/2019 |
| Less: Cash and cash equivalents held by the subsidiaries on acquisition dates | 601,044.01 |
| Including: Gaotang Huayu | 242,881.69 |
| Xinjiang Ruitai Biological | 358,162.32 |
| Add: Cash or cash equivalents paid in Current Period for business combinations incurred in prior periods | 27,051,000.00 |
| Including: Shandong Daxin | 27,051,000.00 |
| Net cash flows for acquisition of subsidiaries | 32,449,955.99 |
(3) Net cash flows from disposals of subsidiaries during the year
| Item | Year ended 31/12/2019 |
| Cash or cash equivalents received in current period for disposals of subsidiaries incurred during the year | 19,638,476.78 |
| Including: Hainan Haiwei Feed Co., Ltd. | 19,638,476.78 |
| Less: Cash and cash equivalents held by the subsidiary on the date when the Company lost control | - |
| Including: Hainan Haiwei Feed Co., Ltd. | - |
| Add: Cash or cash equivalents received in current period for disposals of subsidiaries incurred in prior period | - |
| Net cash flows for disposals of subsidiaries | 19,638,476.78 |
Note: Hainan Haiwei Feed Co., Ltd. hereinafter referred to as “Hainan Haiwei”.
(4) Details of cash and cash equivalents
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| 1.Cash | 1,824,265,608.78 | 1,728,167,759.86 |
| Including: Cash on hand | 1,127,806.04 | 3,458,157.23 |
| Bank deposits available on demand | 1,786,779,910.34 | 1,637,357,730.01 |
| Other monetary funds available on demand | 36,357,892.40 | 87,351,872.62 |
| Cash at central bank available on demand | - | - |
| Amounts due from banks | - | - |
| Loans to banks | - | - |
| 2. Cash equivalents | - | 430,000,000.00 |
| Including: Bond investments with a maturity of 3 months or less | - | - |
| 3. Cash and cash equivalents as at 31/12/2019 | 1,824,265,608.78 | 2,158,167,759.86 |
| Including: Restricted cash and cash equivalents held by the Company or subsidiaries of the Group | - | - |
64. Assets with restricted ownership or use right
| Item | As at 31/12/2019 | Reason for restriction |
| Cash at bank and on hand | 24,508,704.76 | Deposits of land remediation, letter of credit, customs duty, loan |
| Total | 24,508,704.76 | —— |
65. Foreign currency translation
(1) Items in Foreign currency
| Item | Balance in foreign currency as at 31/12/2019 | Exchange rate | Balance translated to RMB as at 31/12/2019 |
| Cash at bank and on hand | —— | —— | 463,456,054.01 |
| Including: USD | 29,683,196.57 | 6.976200 | 207,075,915.91 |
| VND | 729,798,455,256.09 | 0.000300 | 218,939,536.58 |
| HKD | 546,065.44 | 0.895780 | 489,154.50 |
| EUR | 1,487.58 | 7.815500 | 11,626.18 |
| SGD | 180.87 | 5.173900 | 935.80 |
| EGP | 448,924.18 | 0.434652 | 195,125.79 |
| IDR | 38,651,798,787.61 | 0.000488 | 18,862,077.81 |
| MYR | 973,527.76 | 1.698600 | 1,653,634.25 |
| INR | 165,908,899.53 | 0.097813 | 16,228,047.19 |
| Bills receivable | —— | —— | 5,202,183.44 |
| Including: IDR | 607,112,500.00 | 0.000488 | 296,270.90 |
| INR | 50,156,038.00 | 0.097813 | 4,905,912.54 |
| Accounts receivable | —— | —— | 362,867,582.46 |
| Including: USD | 16,863,038.32 | 6.976200 | 117,639,927.93 |
| VND | 622,307,913,477.25 | 0.000300 | 186,692,374.04 |
| IDR | 36,217,568,985.60 | 0.000488 | 17,674,173.66 |
| MYR | 1,293,547.78 | 1.698600 | 2,197,220.26 |
| INR | 395,283,720.70 | 0.097813 | 38,663,886.57 |
| Other receivables | —— | —— | 183,330,950.50 |
| Including: USD | 24,656,766.62 | 6.976200 | 172,010,535.29 |
| VND | 3,794,489,632.00 | 0.000300 | 1,138,346.89 |
| IDR | 18,877,251,675.00 | 0.000488 | 9,212,098.82 |
| Item | Balance in foreign currency as at 31/12/2019 | Exchange rate | Balance translated to RMB as at 31/12/2019 |
| MYR | 46,329.68 | 1.698600 | 78,695.59 |
| INR | 9,112,018.93 | 0.097813 | 891,273.91 |
| Long-term receivables | —— | —— | 2,296,312.91 |
| Including: VND | 7,654,376,380.00 | 0.000300 | 2,296,312.91 |
| Shor-term loans | —— | —— | 1,175,201,789.29 |
| Including: USD | 64,835,254.80 | 6.976200 | 452,303,704.54 |
| VND | 1,134,881,409,777.00 | 0.000300 | 340,464,422.93 |
| HKD | 170,000,000.00 | 0.895780 | 152,282,600.00 |
| EUR | 25,000,000.00 | 7.815500 | 195,387,500.00 |
| MYR | 1,637,200.00 | 1.698600 | 2,780,947.92 |
| INR | 326,977,128.80 | 0.097813 | 31,982,613.90 |
| Accounts payable | —— | —— | 218,176,989.23 |
| Including: USD | 3,892,547.86 | 6.976200 | 27,155,192.38 |
| VND | 483,660,802,682.90 | 0.000300 | 145,098,240.80 |
| IDR | 75,258,939,239.59 | 0.000488 | 36,726,362.35 |
| MYR | 16,312.20 | 1.698600 | 27,707.90 |
| INR | 93,745,062.49 | 0.097813 | 9,169,485.80 |
| Employee benefits payable | —— | —— | 41,608,915.95 |
| Including: USD | 346,136.81 | 6.976200 | 2,414,719.61 |
| VND | 116,410,672,777.76 | 0.000300 | 34,923,201.83 |
| IDR | 1,748,545,248.00 | 0.000488 | 853,290.08 |
| MYR | 396,808.53 | 1.698600 | 674,018.97 |
| INR | 28,050,315.00 | 0.097813 | 2,743,685.46 |
| Taxes payable | —— | —— | 12,396,210.61 |
| Including: USD | 33,519.14 | 6.976200 | 233,836.22 |
| VND | 38,685,892,803.00 | 0.000300 | 11,605,767.84 |
| IDR | 880,418,480.42 | 0.000488 | 429,644.22 |
| INR | 1,298,010.84 | 0.097813 | 126,962.33 |
| Other payables | —— | —— | 2,705,635.85 |
| Including: USD | 56,144.25 | 6.976200 | 391,673.52 |
| VND | 1,618,710,302.00 | 0.000300 | 485,613.09 |
| INR | 18,692,292.88 | 0.097813 | 1,828,349.24 |
| Long-term loans | —— | —— | 352,882,713.09 |
| Item | Balance in foreign currency as at 31/12/2019 | Exchange rate | Balance translated to RMB as at 31/12/2019 |
| Including: USD | 50,583,801.08 | 6.976200 | 352,882,713.09 |
(2) Overseas business entities
| Name of business entity | Recording currency | Principal place of business | Basis for determination of recording currency |
| Kinghill Holdings | USD | Singapore | Major local currency |
| Kinghill Pte. | USD | Singapore | Major local currency |
| Haid Egypt | EGP | Egypt | Major local currency |
| Kinghill Resources | USD | Singapore | Major local currency |
| Vietnam Haibei | VND | Vietnam | Major local currency |
| Kinghill Agri | USD | Singapore | Major local currency |
| Haida Indonesia | IDR | Indonesia | Major local currency |
| Haida Surabaya | IDR | Indonesia | Major local currency |
| Hisenor Indonesia | IDR | Indonesia | Major local currency |
| Haid International | USD | Hong Kong | Major local currency |
| Haida HK | USD | Hong Kong | Major local currency |
| Rickworth | USD | Hong Kong | Major local currency |
| Hong Kong Longreat | USD | Hong Kong | Major local currency |
| Dong Nai Haid | VND | Vietnam | Major local currency |
| Dancl | USD | Hong Kong | Major local currency |
| Panasia Trading | USD | Hong Kong | Major local currency |
| Sheng Long International | USD | Hong Kong | Major local currency |
| Sheng Long Bio-Tech | VND | Vietnam | Major local currency |
| Long Sheng International | VND | Vietnam | Major local currency |
| Hisenor International | USD | Hong Kong | Major local currency |
| Hisenor Viet Nam | VND | Vietnam | Major local currency |
| Kembang Subur International | MYR | Malaysia | Major local currency |
| Namduong Vietnam | VND | Vietnam | Major local currency |
| Sheng Long Malaysia | MYR | Malaysia | Major local currency |
| Sheng Long Aquatic Malaysia | MYR | Malaysia | Major local currency |
| Nano | USD | Hong Kong | Major local currency |
| Oceanic | USD | Hong Kong | Major local currency |
| Power Spring | USD | Hong Kong | Major local currency |
| Name of business entity | Recording currency | Principal place of business | Basis for determination of recording currency |
| Link | USD | Hong Kong | Major local currency |
| Lanking | USD | Singapore | Major local currency |
| Lanking America | USD | The U.S. | Major local currency |
| Lanking Nemo | USD | Singapore | Major local currency |
| Sheng Long India | INR | India | Major local currency |
| Lanking Rickworth | USD | Singapore | Major local currency |
| Lanking Nano | USD | Singapore | Major local currency |
| Hai Duong Haid | VND | Vietnam | Major local currency |
| Hai Dai | VND | Vietnam | Major local currency |
| Vinh Long Hai Dai | VND | Vietnam | Major local currency |
| Haid Ecuador | USD | Ecuador | Major local currency |
| Haid Marino Cia | USD | Ecuador | Major local currency |
66. Hedging
The qualitative and quantitative information of hedged items, related hedging instruments and hedged riskswhich were disclosed according to the hedging categories:
(1) Cross-currency interest rate swaps
The Group adopted cross-currency interest rate swaps to reduce the risk of changes in fair value of foreigncurrency bank borrowings with floating interest rate, that is, foreign currency borrowings with floatinginterest rate were converted into RMB borrowings with fixed interest rate. The Group designated thepurchased cross-currency interest rate swaps as hedging instruments in 2019, and the terms of thecross-currency interest rate swaps were the same as those of the corresponding bank borrowings. TheGroup evaluated the effectiveness of hedging by the method of main terms comparison. The Group'smanagement believed that the cross currency interest rate swap contract was a highly effective hedginginstrument, and its main terms are as follow:
| Nominal amount | Due date | Exchange rate |
| Floating interests of HKD 170,000,000 | 31/1/2020 | The HKD interest rate after the 1-month Hong Kong interbank offered rate rises by 0.7% is converted into RMB fixed interest rate of 3.8% |
| Fixed interests of EUR 25 million | 31/3/2020 | Euro fixed interest rate of 0.5% is converted to RMB fixed interest rate of 3.96% |
| Fixed interests of USD 20 million | 7/8/2020 | The HKD interest rate after 0.8% increase of the one-month HSBC interbank offered rate is converted into RMB fixed interest rate of 3.7% |
(2) Foreign currency forwards
As at December 31, 2019, the Group held the following foreign exchange forwards, which were designatedas highly effective hedging instruments in 2019 to manage the foreign exchange exposure related to theexpected foreign currency sales.The Group evaluated the effectiveness of hedging by the comparison method of main terms. For the foreigncurrency forwards signed, whose terms were consistent with the terms of the expected transactions, and thegroup considered them highly effective. The main contents are as follow:
| Nominal amount | Due date | Exchange rate |
| Buying of HKD 170 million in RMB | 31/1/2020 | 0.8576 |
| Buying of USD 19 million in RMB | 19/3/2020 | 6.715 |
| Buying of USD 655 thousand in RMB | 19/3/2020 | 6.7664 |
| Buying of EUR 25 million in RMB | 31/3/2020 | 7.71 |
| Buying of EUR 20 million in RMB | 7/8/2020 | 7.04 |
The Group reduced the exchange rate fluctuation risk of foreign currency borrowings through foreignexchange forward (for details, refer to Note VIII (3) Market risk).Ⅵ Change in Consolidation Scope(I) Business Combinations Involving Enterprises Not under Common Control
1. Business Combinations Involving Enterprises Not under Common Control Incurred in Current Period
| Acquiree | Time of Acquisition | Acquisition cost (RMB) | Interest acquired (%) | Acquisition method | Acquisition date | Basis for determination of acquisition date | Revenue of acquire from acquisition date to period-end (RMB) | Net income of acquire from acquisition date to period-end (RMB) |
| Gaotang Huayu Pig Farming Co.,Ltd | 2019-8-16 | 1,000,000.00 | 100.00 | Acquisition | 2019-8-16 | Date when control over acquiree was obtained | - | -182,365.84 |
| Alaer Ruitai Biological Protein Co.,Ltd | 2019-11-15 | 16,440,800.00 | 100.00 | Acquisition | 2019-11-15 | Date when control over acquiree was obtained | - | -113,201.02 |
2. Costs of Combination and Goodwill
| Items | Gaotang Huayu Pig Farming Co.,Ltd | Alaer Ruitai Biological Protein Co.,Ltd |
| Costs of combination | ||
| Cash | 1,000,000.00 | 5,000,000.00 |
| Fair value of non-cash assets | - | - |
| Fair value of debt issued or borne | - | 11,440,800.00 |
| Fair value of equity securities issued | - | - |
| Fair value of contingent consideration | - | - |
| Fair value of equity interests held before acquisition date | - | - |
| Total costs of combination | 1,000,000.00 | 16,440,800.00 |
| Less: Share of fair value of identifiable net assets obtained | -455,358.51 | 19,640,050.94 |
| Amount by which goodwill/costs of combination were lower than share of fair value of identifiable net assets obtained | 1,455,358.51 | -3,199,250.94 |
Note: The fair value of the costs of combination was determined at the audited of appraised value approvedby both the acquirer and the acquiree.
3. Identifiable Assets and Liabilities of Acquirees at Acquisition Dated
| Items | Gaotang Huayu Pig Farming Co.,Ltd | Alaer Ruitai Biological Protein Co.,Ltd | ||
| Fair value at acquisition date | Carrying value at acquisition date | Fair value at acquisition date | Carrying value at acquisition date | |
| Asset: | 597,994.69 | 597,994.69 | 59,524,123.19 | 43,853,546.58 |
| Cash at bank and on hand | 242,881.69 | 242,881.69 | 358,162.32 | 358,162.32 |
| Long-term deferred expenses | 355,113.00 | 355,113.00 | - | - |
| Other current assets | - | - | 99,308.20 | 99,308.20 |
| Long-term receivables | - | - | 41,548,409.39 | 41,548,409.39 |
| Intangible assets | - | - | 17,518,243.28 | 1,847,666.67 |
| Liabilities | 1,053,353.20 | 1,053,353.20 | 39,884,072.25 | 35,966,428.10 |
| Tax payables | - | - | 3,951,963.00 | 34,318.85 |
| Other payables | 1,053,353.20 | 1,053,353.20 | 10,915,659.73 | 10,915,659.73 |
| Long-term payables | - | - | 25,016,449.52 | 25,016,449.52 |
| Net assets | -455,358.51 | -455,358.51 | 19,640,050.94 | 7,887,118.48 |
| Less: Non-controlling interests | - | - | - | - |
| Net assets obtained | -455,358.51 | -455,358.51 | 19,640,050.94 | 7,887,118.48 |
Note: The fair value of identifiable assets and liabilities was determined at the audited or appraised valueapproved by both the acquirer and the acquiree.(II) Disposal of Subsidiaries
1. Loss of Control over Subsidiary in Single Disposal
| Subsidiary | Price for equity disposal | Equity disposed (%) | Way of equity disposal | Date of loss of control | Determination basis for date of loss of control | Difference between the price for equity disposal and the Company’s share of subsidiary’s net assets in consolidated financial statements relevant to equity disposed | Goodwill related to the subsidiary in consolidated financial statements |
| Hainan Haiwei Feed Co., Ltd. | 19,638,476.78 | 100.00 | Sale | 2019-8-21 | Date when payment for equity transfer was received | 21,411,361.70 | - |
(Continued):
| Subsidiary | % equity held in subsidiary at date of loss of control | Carrying value of remnant equity in subsidiary at date of loss of control | Fair value of remnant equity in subsidiary at date of loss of control | Gain/loss arising from remeasurem-ent of remnant equity at fair value | Determination approach of fair value of remnant equity at date of loss of control and main assumptions made | Other comprehensive income associated with original equity investment in subsidiary reclassified into return on investment |
| Hainan Haiwei Feed Co., Ltd. | - | - | - | - | - | - |
Note: On August 20, 2019, Haid Group signed an equity transfer agreement with Haitong Yao, Zhaohui Jie,Zengsheng He, Zhigang Sun (all natural persons), transferring its 100% stake in Hainan Haiwei Feed Co.,Ltd. to the latter (52% to Haitong Yao, 16% to Zhaohui Jie, 16% to Zengsheng He and 16% to ZhigangSun). The transfer was completed when Haid Group received the payment for the transfer on August 21,2019. As such, Hainan Haiwei Feed Co., Ltd. has been deconsolidated since August 21, 2019.(III) Changes in Consolidation Scope due to Other Reasons
1. New Subsidiaries Incorporated in Current Period
| Subsidiary (abbr.) | Time of incorporation | Registered capital | Place of registration | Principal place of business |
| Qinnan Yitun | January 2019 | RMB 10,000,000.00 | Qinzhou, Guangxi Province, China | Qinzhou, Guangxi Province, China |
| Huayuan Yitun | July 2019 | RMB 10,000,000.00 | Xiangxi, Hunan Province, China | Xiangxi, Hunan Province, China |
| Baojing Yitun | November 2019 | RMB 10,000,000.00 | Baojing, Hunan Province, China | Baojing, Hunan Province, China |
| Qiaotou Yitun | November 2019 | RMB 10,000,000.00 | Qingyuan, Guang-dong Province, China | Qingyuan, Guangdong Province, China |
| Ruyuan Yitun | November 2019 | RMB 10,000,000.00 | Shaoguan, Guangdong Province, China | Shaoguan, Guangdong Province, China |
| Hengnan Yitun | December 2019 | RMB 10,000,000.00 | Hengyang, Hunan Province, China | Hengyang, Hunan Province, China |
| Haid Egypt Co.,Ltd | October 2019 | EGP 2,000,000.00 | Egypt | Egypt |
| Vietnam Haibei Biotechnology Co.,Ltd | January 2019 | VND 46.4 billion | Vietnam | Vietnam |
| PT Hisenor Technology Indonesia | January 2019 | USD 2,880,000.00 | Indonesia | Indonesia |
| Zhanjiang Haijingzhou | December 2019 | RMB 1,000,000.00 | Zhanjiang, Guangdong Province, China | Zhanjiang, Guangdong Province, China |
| Jingtai Haijingzhou | January 2019 | RMB 1,000,000.00 | Baiying, Gansu Province, China | Baiying, Gansu Province, China |
| Subsidiary (abbr.) | Time of incorporation | Registered capital | Place of registration | Principal place of business |
| Zhangzhou Haijingzhou | April 2019 | RMB 1,000,000.00 | Zhangzhou, Fujian Province, China | Zhangzhou, Fujian Province, China |
| Linyi Haiding | January 2019 | RMB 2,000,000.00 | Linyi, Shandong Province, China | Linyi, Shandong Province, China |
| Linyi Hedong Haiding | January 2019 | RMB 2,000,000.00 | Linyi, Shandong Province, China | Linyi, Shandong Province, China |
| Binzhou Dingxin | June 2019 | RMB 3,000,000.00 | Binzhou, Shandong Province, China | Binzhou, Shandong Province, China |
| Junan Haiding | November 2019 | RMB 2,000,000.00 | Linyi, Shandong Province, China | Linyi, Shandong Province, China |
| Sihong Haiding | November 2019 | RMB 2,000,000.00 | Sihhong, Jiangsu Province, China | Sihhong, Jiangsu Province, China |
| Linyi Dingxin | November 2019 | RMB 1,000,000.00 | Linyi, Shandong Province, China | Linyi, Shandong Province, China |
| Hubei Haililiang | June 2019 | RMB 1,000,000.00 | Xishui, Hubei Province, China | Xishui, Hubei Province, China |
| Haidmarino Cia.Ltda | July 2019 | USD 100,000.00 | Ecuador | Ecuador |
| Linyi Bairong | August 2019 | RMB 1,000,000.00 | Linyi, Shandong Province, China | Linyi, Shandong Province, China |
| Yiyuan Haiying | September 2019 | RMB 5,000,000.00 | Zibo, Shandong Province, China | Zibo, Shandong Province, China |
| Zouping Haiying | November 2019 | RMB 3,000,000.00 | Zouping, Shandong Province, China | Zouping, Shandong Province, China |
| Huaian Huilong | August 2019 | RMB 5,000,000.00 | Huaian, Jiangsu Province, China | Huaian, Jiangsu Province, China |
| Pingnan Haid | January 2019 | RMB 5,000,000.00 | Pingnan, Guangxi Province, China | Pingnan, Guangxi Province, China |
| Guangzhou Shunkang | January 2019 | RMB 300,000.00 | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China |
| Tianjin Rongchuan | February 2019 | RMB 200,000,000.00 | Tianjin | Tianjin |
| Zhanjiang Rongda | April 2019 | RMB 5,000,000.00 | Zhanjiang, Guangdong Province, China | Zhanjiang, Guangdong Province, China |
| Huainan Haid | May 2019 | RMB 30,000,000.00 | Huaina, Anhui Province, China | Huaina, Anhui Province, China |
| Subsidiary (abbr.) | Time of incorporation | Registered capital | Place of registration | Principal place of business |
| Maoming Haid | June 2019 | RMB 60,000,000.00 | Maoming, Guangdong Province, China | Maoming, Guangdong Province, China |
| Guangzhou Ronghai | June 2019 | RMB 10,000,000.00 | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China |
| Zhongshan Ronghai | July 2019 | RMB 10,000,000.00 | Zhongshan, Guangdong Province, China | Zhongshan, Guangdong Province, China |
| Guangzhou Rongda | August 2019 | RMB 1,000,000.00 | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China |
| Jiangmen Ronghai | November 2019 | RMB 1,000,000.00 | Jiangmen, Guangdong Province, China | Jiangmen, Guangdong Province, China |
| Sichuan Rongchuan | July 2019 | RMB 5,000,000.00 | Meishan, Sichuan Province, China | Meishan, Sichuan Province, China |
| Yulin Haid | June 2019 | RMB 5,000,000.00 | Yulin, Guangxi Province, China | Yulin, Guangxi Province, China |
| Sichuan Haile | June 2019 | RMB 30,000,000.00 | Chengdu, Sichuan Province, China | Chengdu, Sichuan Province, China |
| Yichang Zhihai | November 2019 | RMB 5,000,000.00 | Yichang, Hubei Province, China | Yichang, Hubei Province, China |
| Guangzhou Xingnong | July 2019 | RMB 20,000,000.00 | Guangzhou ,Guangdong Province, China | Guangzhou, Guangdong Province, China |
| Xinxing Haifeng | August 2019 | RMB 5,000,000.00 | Yunfu, Guangdong Province, China | Yunfu, Guangdong Province, China |
| Guangzhou Haiyin | August 2019 | RMB 250,000,000.00 | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China |
| Qinzhou Hailong | August 2019 | RMB 5,000,000.00 | Qinzhou, Guangxi Province, China | Qinzhou, Guangxi Province, China |
| Deyang Dachuan | August 2019 | RMB 5,000,000.00 | Deyang, Sichuan Province, China | Deyang, Sichuan Province, China |
| Hainan Haid | September 2019 | RMB 5,000,000.00 | Wenchang ,Hainan Province, China | Wenchang, Hainan Province, China |
| Subsidiary (abbr.) | Time of incorporation | Registered capital | Place of registration | Principal place of business | |
| Liuzhou Haid | September 2019 | RMB 5,000,000.00 | Liuzhou, Guangxi Province, China | Liuzhou, Guangxi Province, China | |
| Zhaoqing Ronghai | October 2019 | RMB 10,000,000.00 | Zhaoqing, Guangdong Province, China | Zhaoqing, Guangdong Province, China | |
| Gaoan Haid | November 2019 | RMB 5,000,000.00 | Yichun, Jiangxi Province, China | Yichun, Jiangxi Province, China | |
| Shanggao Haid | December 2019 | RMB 5,000,000.00 | Shanggao, Jiangxi Province, China | Shanggao, Jiangxi Province, China | |
2. Subsidiaries Deregistered in Current Period
| Subsidiary | Way of Equity disposal | Time of Equity disposal | Net assets at the date of disposal | Net profit from 2019/1/1 to the date of disposal |
| Changzhou Hairong Aquatic Farming Service Specialized Cooperative | Write-off | 2019-6-28 | - | - |
| Zoucheng Mulian Zhongxing Ecological Agriculture Technology Co., Ltd. | Write-off | 2019-6-20 | - | - |
| Guangzhou Youju Feed Trading Co., Ltd. | Write-off | 2019-9-19 | - | 169,035.43 |
| Guangdong Mutai Biological Technology Co., Ltd. | Write-off | 2019-9-12 | - | - |
VII Interests in Other Entities(I) Interests in Subsidiaries
1. Composition of the Group
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Guangzhou Runchuan | Guangzhou, Guangdong Province, China | Guangzhou,Guangdong Province, China | Investment | 100 | In a business combination involving enterprises under common control | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Guangzhou Yitun | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Investment and Trading | 100 | Incorporated | |
| Enping Fengwo | Enping, Guangdong Province, China | Enping, Guangdong Province, China | Production and Sale | 92 | Incorporated | |
| Yangxi Fengwo | Yangxi, Guangdong Province, China | Yangxi, Guangdong Province, China | Production and Sale | 98 | Incorporated | |
| Yangdong Fengwo | Yangdong, Guangdong Province, China | Yangdong, Guangdong Province, China | Production and Sale | 90 | Incorporated | |
| Enping Yitun | Enping, Guangdong Province, China | Enping, Guangdong Province, China | Production and Sale | 98 | Incorporated | |
| Gaozhou Sanhe | Gaozhou, Guangdong Province, China | Gaozhou, Guangdong Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Yingde Yitun | Yingde, Guangdong Province, China | Yingde, Guangdong Province, China | Production and Sale | 90 | Incorporated | |
| Hunan Yitun | Yueyang, Hunan Province, China | Yueyang, Hunan Province, China | Production and Sale | 86 | Incorporated | |
| Hengyang Jisheng | Hengyang, Hunan Province, China | Hengyang, Hunan Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Yueyang Yitun | Yueyang, Hunan Province, China | Yueyang, Hunan Province, China | Production and Sale | 92 | Incorporated | |
| Qintang Yitun | Guigang, Guangxi Province, China | Guigang, Guangxi Province, China | Production and Sale | 100 | Incorporated | |
| Pingnan Yitun | Pingnan, Guangxi Province, China | Pingnan, Guangxi Province, China | Production and Sale | 100 | Incorporated | |
| Pingguo Yitun | Pingguo, Guangxi Province, China | Pingguo, Guangxi Province, China | Production and Sale | 100 | Incorporated | |
| Guiping Yitun | Guiping, Guangxi Province, China | Guiping, Guangxi Province, China | Production and Sale | 100 | Incorporated | |
| Hengyang Yitun | Hengyang, Hunan Province, China | Hengyang, Hunan Province, China | Production and Sale | 100 | Incorporated | |
| Hengshan Yitun | Hengyang, Hunan Province, China | Hengyang, Hunan Province, China | Production and Sale | 100 | Incorporated | |
| Gangbei Yitun | Guigang, Guangxi Province, China | Guigang, Guangxi Province, China | Production and Sale | 100 | Incorporated | |
| Duyun Yitun | Duyun, Guizhou Province, China | Duyun, Guizhou Province, China | Production and Sale | 100 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Rongjiang Yitun | Rongjiang, Guizhou Province, China | Rongjiang, Guizhou Province, China | Production and Sale | 100 | Incorporated | |
| Binyang Yitun | Binyang, Guangxi Province, China | Binyang, Guangxi Province, China | Production and Sale | 100 | Incorporated | |
| Yicheng Yitun | Yicheng, Hubei Province, China | Yicheng, Hubei Province, China | Production and Sale | 100 | Incorporated | |
| Zixing Yitun | Chenzhou, Hunan Province, China | Chenzhou, Hunan Province, China | Production and Sale | 100 | Incorporated | |
| Changning Yitun | Hengyang, Hunan Province, China | Hengyang, Hunan Province, China | Production and Sale | 100 | Incorporated | |
| Guigang Donghuang | Guigang, Guangxi Province, China | Guigang, Guangxi Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Zhenjiang Yitun | Shaoguan, Guangdong Province, China | Shaoguan, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Shandong Yitun | Yantai, Shandong Province, China | Yantai, Shandong Province, China | Investment | 60 | Incorporated | |
| Yantai Zhizhuren | Yantai, Shandong Province, China | Yantai, Shandong Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Laizhou Zhizhuren | Yantai, Shandong Province, China | Yantai, Shandong Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Qinzhou Yitun | Qinzhou, Guangxi Zhuang Autonomous Region, China | Qinzhou, Guangxi Zhuang Autonomous Region, China | Production and Sale | 100 | Incorporated | |
| Feicheng Heruifeng | Tai’an, Shandong Province, China | Tai’an, Shandong Province, China | Production and Sale | 80 | In a business combination involving enterprises not under common control | |
| Weifang Xuheng | Weifang, Shandong Province, China | Weifang, Shandong Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Linyi Yitun | Linyi, Shandong Province, China | Linyi, Shandong Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Gaotang Huayu | Liaocheng, Shandong Province, China | Liaocheng, Shandong Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Jianong Lianyungang | Lianyungang, Jiangsu Province, China | Lianyungang, Jiangsu Province, China | Production and Sale | 82 | In a business combination involving enterprises not under common control | |
| Guizhou Aikexin | Qiannan, Guizhou Province, China | Qiannan, Guizhou Province, China | Production and Sale | 100 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Binyang Heji Yitun | Nanning, Guangxi Zhuang Autonomous Region, China | Nanning, Guangxi Zhuang Autonomous Region, China | Production and Sale | 100 | Incorporated | |
| Shaoyang Yitun | Shaoyang, Hunan Province, China | Shaoyang, Hunan Province, China | Production and Sale | 100 | Incorporated | |
| Qinzhou Qinnan Yitun | Qinzhou, Guangxi Province, China | Qinzhou, Guangxi Province, China | Production and Sale | 100 | Incorporated | |
| Huayuan Yitun | Xiangxi, Hunan Province, China | Xiangxi, Hunan Province, China | Production and Sale | 100 | Incorporated | |
| Baojing Yitun | Baojing, Hunan Province, China | Baojing, Hunan Province, China | Production and Sale | 100 | Incorporated | |
| Yingde Yitun | Qingyuan, Guangdong Province, China | Qingyuan, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Ruyuan Yitun | Shaoguan, Guangdong Province, China | Shaoguan, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Hengnan Yitun | Hengyang, Hunan Province, China | Hengyang, Hunan Province, China | Production and Sale | 100 | Incorporated | |
| Guangzhou Haiwei | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Production and Sale | 100 | In a business combination involving enterprises under common control | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Guangzhou Rongchuan | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Sale | 100 | In a business combination involving enterprises under common control | |
| Foshan Haihang | Foshan, Guangdong Province, China | Foshan, Guangdong Province, China | Production and Sale | 87.5 | In a business combination involving enterprises not under common control | |
| Maiming Haihang | Maiming, Guangdong Province, China | Maiming, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Guangzhou Dachuan | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Production and Sale | 100 | In a business combination involving enterprises under common control | |
| Hubei Haid | Wuhan, Hubei Province, China | Wuhan, Hubei Province, China | Production and Sale | 100 | In a business combination involving enterprises under common control | |
| Guangdong Hinter | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Production and Sale | 97 | 3 | Incorporated |
| Guangzhou Haishengyuan | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Trading | 100 | Incorporated | |
| Guangzhou Mutai | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Sale | 100 | Incorporated | |
| Guangzhou Haiyiyuan | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Trading | 100 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Shanxi Haid | Yangling, Shanxi Province, China | Yangling, Shanxi Province, China | Production and Sale | 67 | Incorporated | |
| Yangling Haid | Yangling, Shaanxi Province, China | Yangling, Shaanxi Province, China | Production and Sale | 100 | Incorporated | |
| Gansu Haid | Lanzhou, Gansu Province, China | Lanzhou, Gansu Province, China | Production and Sale | 100 | Incorporated | |
| Weinan Haid | Weinan, Shaanxi Province, China | Weinan, Shaanxi Province, China | Production and Sale | 100 | Incorporated | |
| Hunan Haid | Changde, Hunan Province, China | Changde, Hunan Province, China | Production and Sale | 100 | Incorporated | |
| Guangzhou Haihe | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Sale | 100 | Incorporated | |
| Liaocheng Haixin | Liaocheng, Shandong Province, China | Liaocheng, Shandong Province, China | Management consulting | 100 | Incorporated | |
| Anyang Haiyue | Tangyin, Henan Province, China | Tangyin, Henan Province, China | Management consulting | 100 | Incorporated | |
| Zoucheng Haiyue | Zoucheng, Shandong Province, China | Zoucheng, Shandong Province, China | Management consulting | 100 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Yinan Haiyue | Yinan, Shandong Province, China | Yinan, Shandong Province, China | Management consulting | 100 | Incorporated | |
| Lanzhou Haid | Lanzhou, Gansu Province, China | Lanzhou, Gansu Province, China | Production and Sale | 100 | Incorporated | |
| Foshan Haipu | Foshan, Guangdong Province, China | Foshan, Guangdong Province, China | Sale | 87.5 | Incorporated | |
| Qingyuan Haibei | Qingyuan, Guangdong Province, China | Qingyuan, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Qingyuan Hailong | Qingyuan, Guangdong Province, China | Qingyuan, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Zhanjiang Haid | Zhanjiang, Guangdong Province, China | Zhanjiang, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Jiangmen Haid | Jiangmen, Guangdong Province, China | Jiangmen, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Chengdu Haid | Xinjin, Sichuan Province, China | Xinjin, Sichuan Province, China | Production and Sale | 100 | Incorporated | |
| Taizhou Haid | Xinghua, Jiangsu Province, China | Xinghua, Jiangsu Province, China | Production and Sale | 100 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Jingzhou Haid | Jingzhou, Hubei Province, China | Jingzhou, Hubei Province, China | Production and Sale | 100 | Incorporated | |
| Ezhou Haid | Ezhou, Hubei Province, China | Ezhou, Hubei Province, China | Production and Sale | 100 | Incorporated | |
| Dongguan Haid | Dongguan, Guangdong Province, China | Dongguan, Guangdong Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Fujian Haid | Changtai, Fujian Province, China | Changtai, Fujian Province, China | Production and Sale | 100 | Incorporated | |
| Zhejiang Haid | Shaoxing, Zhejiang Province, China | Shaoxing, Zhejiang Province, China | Production and Sale | 100 | Incorporated | |
| Shaoxing Haid | Shaoxing, Zhejiang Province, China | Shaoxing, Zhejiang Province, China | Production and Sale | 100 | Incorporated | |
| Guangxi Haid | Qinzhou, Guangxi Zhuang Autonomous Region, China | Qinzhou, Guangxi Zhuang Autonomous Region, China | Production and Sale | 100 | Incorporated | |
| Kinghill Holdings | Singapore | Singapore | Investment | 100 | Incorporated | |
| Kinghill Pte. | Singapore | Singapore | Investment | 100 | Incorporated | |
| Haid Egypt Co.,Ltd | Egypt | Egypt | Production and Sale | 100 | Incorporated | |
| Kinghill Resources | Singapore | Singapore | Investment | 100 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Vietnam Haibei Biotechnology Co., Ltd | Vietnam | Vietnam | Production and Sale | 100 | Incorporated | |
| Kinghill Agri | Singapore | Singapore | Investment | 100 | Incorporated | |
| Haida Indonesia | Indonesia | Indonesia | Production and Sale | 100 | Incorporated | |
| Haida Surabaya | Indonesia | Indonesia | Trading | 100 | Incorporated | |
| PT Hisenor Technology Indonesia | Indonesia | Indonesia | Production and Sale | 100 | Incorporated | |
| Jiangxi Haid | Nanchang, Jiangxi Province, China | Nanchang, Jiangxi Province, China | Production and Sale | 100 | Incorporated | |
| Guangzhou Haid | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Trading | 100 | In a business combination involving enterprises not under common control | |
| Guangdong Hisenor | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Production and Sale | 70 | Incorporated | |
| Zhanjiang Hisenor | Zhanjiang, Guangdong Province, China | Zhanjiang, Guangdong Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Zhanjiang Haijingzhou | Zhanjiag, Guangdong Province, China | Zhanjiag, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Hainan Hisenor | Wenchang, Hainan Province, China | Wenchang, Hainan Province, China | Production and Sale | 100 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Jingtai Haijingzhou | Baiying, Gansu Province, China | Baiying, Gansu Province, China | Production and Sale | 55 | Incorporated | |
| Zhangzhou Haijingzhou | Zhangzhou, Fujian Province, China | Zhangzhou, Fujian Province, China | Production and Sale | 100 | Incorporated | |
| Rongcheng Rongchuan | Rongcheng, Shandong Province, China | Rongcheng, Shandong Province, China | Production and Sale | 100 | Incorporated | |
| Rongcheng Yandunjiao | Weihai, Shandong Province, China | Weihai, Shandong Province, China | Production and Sale | 51 | In a business combination involving enterprises not under common control | |
| Fujian Haidsun | Nanping, Fujian Province, China | Nanping, Fujian Province, China | Production and Sale | 50 | Incorporated | |
| Pucheng Haidsun | Pucheng, Fujian Province, China | Pucheng, Fujian Province, China | Production and Sale | 50 | Incorporated | |
| Xiyu Haihua | Urumqi, Xinjiang Autonomous Region, China | Urumqi, Xinjiang Autonomous Region, China | Trading | 51 | Incorporated | |
| Jinzhou Zhengyuan | Jinzhou, Liaoning Province, China | Jinzhou, Liaoning Province, China | Trading | 100 | Incorporated | |
| Yingkou Fengmu | Yingkou, Liaoning Province, China | Yingkou, Liaoning Province, China | Trading | 100 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Guangzhou Haiyou | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Trading | 100 | Incorporated | |
| Xinjiang Ruiliheng | Alaer, Xinjiang, China | Alaer, Xinjiang, China | Production and Sale | 50 | In a business combination involving enterprises not under common control | |
| Alaer Ruitai | Alaer, Xinjiang, China | Alaer, Xinjiang, China | Management consulting | 100 | In a business combination involving enterprises not under common control | |
| Ningbo Fengmu | Ningbo, Zhejiang Province, China | Ningbo, Zhejiang Province, China | Trading | 100 | Incorporated | |
| Maoming Hailong | Maoming, Guangdong Province, China | Maoming, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Nanchang Haid | Nanchang, Jiangxi Province, China | Nanchang, Jiangxi Province, China | Production and Sale | 100 | Incorporated | |
| Zhuhai Rongchuan | Zhuhai, Guangdong Province, China | Zhuhai, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Jieyang Haid | Jieyang, Guangdong Province, China | Jieyang, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Sanshuifanling | Foshan, Guangdong Province, China | Foshan, Guangdong Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Dalian Haid | Dalian, Liaoning Province, China | Dalian, Liaoning Province, China | Trading | 100 | In a business combination involving enterprises not under common control | |
| Haid International | Hong Kong | British Virgin Islands | Trading | 100 | Incorporated | |
| Haida HK | Hong Kong | Hong Kong | Trading | 100 | Incorporated | |
| Rickworth | Hong Kong | British Virgin Islands | Investment | 100 | Incorporated | |
| Hong Kong Longreat | Hong Kong | Hong Kong | Trading | 100 | Incorporated | |
| Dong Nai Haid | Dong Nai, Vietnam | Vietnam | Production and Sale | 100 | Incorporated | |
| Dancl | Hong Kong | Hong Kong | Trading | 100 | Incorporated | |
| Panasia Trading | Hong Kong | British Virgin Islands | Investment | 80 | In a business combination involving enterprises not under common control | |
| Sheng Long International | Hong Kong | British Virgin Islands | Investment | 100 | In a business combination involving enterprises not under common control | |
| Sheng Long Bio-Tech | Long An, Vietnam | Long An, Vietnam | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Long Sheng International | Khanh Hoa, Vietnam | Khanh Hoa, Vietnam | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Hisenor International | Hong Kong | British Virgin Islands | Investment | 100 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Hisenor Vietnam | Ninh Thuan, Vietnam | Ninh Thuan, Vietnam | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Kembang Subur International | Malaysia | Malaysia | Investment | 100 | In a business combination involving enterprises not under common control | |
| Namduong Vietnam | Vietnam | Vietnam | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Sheng Long Malaysia | Malaysia | Malaysia | Production and Sale | 100 | Incorporated | |
| Sheng Long Aquatic Malaysia | Malaysia | Malaysia | Production and Sale | 100 | Incorporated | |
| Nano | Hong Kong | British Virgin Islands | Investment | 100 | Incorporated | |
| Oceanic | Hong Kong | British Virgin Islands | Investment | 100 | Incorporated | |
| Power Spring | Hong Kong | British Virgin Islands | Investment | 100 | Incorporated | |
| Link | Hong Kong | British Virgin Islands | Investment | 100 | Incorporated | |
| Changzhou Haid | Liyang, Jiangsu Province, China | Liyang, Jiangsu Province, China | Production and Sale | 100 | Incorporated | |
| Tianjin Haid | Tianjin, China | Tianjin, China | Production and Sale | 97 | 3 | Incorporated |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| A&T Xinhui | Jiangmen, Guangdong Province, China | Jiangmen, Guangdong Province, China | Production and Sale | 80 | In a business combination involving enterprises not under common control | |
| Tianmen Haid | Tianmen, Hubei Province, China | Tianmen, Hubei Province, China | Production and Sale | 100 | Incorporated | |
| Zhuhai Hailong | Zhuhai, Guangdong Province, China | Zhuhai, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Yangjiang Haid | Yangjiang, Guangdong Province, China | Yangjiang, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Guigang Haid | Guigang, Guangxi Province, China | Guigang, Guangxi Province, China | Production and Sale | 100 | Incorporated | |
| Yiyang Haid | Yiyang, Hunan Province, China | Yiyang, Hunan Province, China | Production and Sale | 99 | 1 | Incorporated |
| Nantong Haid | Nantong, Jiangsu Province, China | Nantong, Jiangsu Province, China | Production and Sale | 100 | Incorporated | |
| Yunnan Haid | Kunming, Yunnan Province, China | Kunming, Yunnan Province, China | Production and Sale | 100 | Incorporated | |
| Guangzhou Hailong | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Production and Sale | 60 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Zhaoqing Haid | Gaoyao, Guangdong Province, China | Gaoyao, Guangdong Province, China | Production and Sale | 60 | Incorporated | |
| Wuhan Aquaera | Ezhou, Hubei Province, China | Ezhou, Hubei Province, China | Production and Sale | 100 | Incorporated | |
| Shenzhen Longreat | Shenzhen, Guangdong Province, China | Shenzhen, Guangdong Province, China | Trading | 70 | Incorporated | |
| Lanking | Singapore | Singapore | Trading | 100 | Incorporated | |
| Lanking America | The U.S. | The U.S. | Trading | 100 | Incorporated | |
| Lanking Nemo | Singapore | Singapore | Investment | 80 | Incorporated | |
| Sheng Long India | India | India | Investment | 100 | Incorporated | |
| Lanking Rickworth | Singapore | Singapore | Investment | 100 | Incorporated | |
| Lanking Nano | Singapore | Singapore | Investment | 100 | Incorporated | |
| Hai Duong Haid | Hai Duong, Vietnam | Vietnam | Production and Sale | 100 | Incorporated | |
| Hai Dai Company Limited | Vietnam | Vietnam | Production and Sale | 100 | Incorporated | |
| Vinh Long Hai Dai | Vietnam | Vietnam | Production and Sale | 100 | Incorporated | |
| Dongting Haid | Dongting, Hunan Province, China | Dongting, Hunan Province, China | Production and Sale | 100 | Incorporated | |
| Zhangzhou Haid | Zhangzhou, Fujian Province, China | Zhangzhou, Fujian Province, China | Production and Sale | 60 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Anhui Haid | Chizhou, Anhui Province, China | Chizhou, Anhui Province, China | Production and Sale | 100 | Incorporated | |
| Xiangtan Haid | Xiangtan, Hunan Province, China | Xiangtan, Hunan Province, China | Production and Sale | 100 | Incorporated | |
| Changsheng Logistics | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Transport service and trading | 100 | Incorporated | |
| Guangzhou Cangyouliang | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Trading | 100 | Incorporated | |
| Guangzhou Zhongcangsheng | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Trading | 51 | Incorporated | |
| Guangzhou Danong | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Investment | 100 | Incorporated | |
| Dingtao Hairong | Dingtao, Shandong Province, China | Dingtao, Shandong Province, China | Management consulting | 90.01 | Incorporated | |
| Chengnan Hairong | Jingzhou, Hubei Province, China | Jingzhou, Hubei Province, China | Management consulting | 90 | Incorporated | |
| Guigang Hairong | Guigang, Guangxi Province, China | Guigang, Guangxi Province, China | Management consulting | 90 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Zhangzhou Hairong | Zhangzhou, Fujian Province, China | Zhangzhou, Fujian Province, China | Management consulting | 90 | Incorporated | |
| Guangzhou Haifengchang | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Investment | 100 | Incorporated | |
| Wuhan Zeyi | Wuhan, Hubei Province, China | Wuhan, Hubei Province, China | Investment | 100 | Incorporated | |
| Shandong Haiding | Heze, Shandong Province, China | Heze, Shandong Province, China | Sale | 55 | Incorporated | |
| Suixian Haiding | Shangqiu, Henan Province, China | Shangqiu, Henan Province, China | Production and Sale | 41 | Incorporated | |
| Yuncheng Haiding | Heze, Shandong Province, China | Heze, Shandong Province, China | Production and Sale | 50 | Incorporated | |
| Heze Haiding Commercial & Trading | Heze, Shandong Province, China | Heze, Shandong Province, China | Sale | 100 | Incorporated | |
| Dingtao Haiding | Heze, Shandong Province, China | Heze, Shandong Province, China | Production and Sale | 100 | Incorporated | |
| Liaocheng Haiding | Liaocheng, Shandong Province, China | Liaocheng, Shandong Province, China | Production and Sale | 100 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Shanxian Haiding | Shanxian, Shandong Province, China | Shanxian, Shandong Province, China | Production and Sale | 92 | Incorporated | |
| Xinxiang Haiding | Xinxiang, Henan Province, China | Xinxiang, Henan Province, China | Production and Sale | 100 | Incorporated | |
| Xinxiang Hairuida | Xinxiang, Henan Province, China | Xinxiang, Henan Province, China | Production and Sale | 100 | Incorporated | |
| Heze Haiding | Heze, Shandong Province, China | Heze, Shandong Province, China | Production and Sale | 100 | Incorporated | |
| Jining Haiding | Zoucheng, Shandong Province, China | Zoucheng, Shandong Province, China | Production and Sale | 90 | Incorporated | |
| Feixian Hairuida | Linyi, Shandong Province, China | Linyi, Shandong Province, China | Production and Sale | 100 | Incorporated | |
| Yinan Haiding | Linyi, Shandong Province, China | Linyi, Shandong Province, China | Production and Sale | 100 | Incorporated | |
| Liaocheng Food | Donge, Shandong Province, China | Donge, Shandong Province, China | Trading | 100 | Incorporated | |
| Qufu Haiding | Qufu, Shandong Province, China | Qufu, Shandong Province, China | Sale | 92 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Tengzhou Fengcheng | Zaozhuang, Shandong Province, China | Zaozhuang, Shandong Province, China | Production and Sale | 100 | Incorporated | |
| Binzhou Haiding | Binzhou, Shandong Province, China | Binzhou, Shandong Province, China | Sale | 100 | Incorporated | |
| Jining Fengcheng | Jining, Shandong Province, China | Jining, Shandong Province, China | Production and Sale | 100 | Incorporated | |
| Dong’e Dingxin | Dong’e, Shandong Province, China | Dong’e, Shandong Province, China | Production and Sale | 51 | Incorporated | |
| Heze Haiding Farming | Heze, Shandong Province, China | Heze, Shandong Province, China | Production and Sale | 100 | Incorporated | |
| Linyi Haiding | Linyi, Shandong Province, China | Linyi, Shandong Province, China | Production and Sale | 75 | Incorporated | |
| Linyi Hedong Haiding | Linyi, Shandong Province, China | Linyi, Shandong Province, China | Production and Sale | 75 | Incorporated | |
| Binzhou Dingxin | Binzhou, Shandong Province, China | Binzhou, Shandong Province, China | Production and Sale | 80 | Incorporated | |
| Junan Haiding | Linyi, Shandong Province, China | Linyi, Shandong Province, China | Production and Sale | 90 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Sihong Haiding | Sihong, Jiangsu Province, China | Sihong, Jiangsu Province, China | Production and Sale | 100 | Incorporated | |
| Linyi Dingxin | Linyi, Shandong Province, China | Linyi, Shandong Province, China | Production and Sale | 90 | Incorporated | |
| Xishui Haid | Huanggang, Hubei Province, China | Huanggang, Hubei Province, China | Production and Sale | 100 | Incorporated | |
| Hubei Haililiang | Xishui, Hubei Province, China | Xishui, Hubei Province, China | Sale | 100 | Incorporated | |
| Yancheng Haid | Yancheng, Jiangsu Province, China | Yancheng, Jiangsu Province, China | Production and Sale | 100 | Incorporated | |
| Honghu Haid | Honghu, Hubei Province, China | Honghu, Hubei Province, China | Production and Sale | 100 | Incorporated | |
| Kaifeng Haid | Kaifeng, Henan Province, China | Kaifeng, Henan Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Guangzhou Heshengtang Biotechnology | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Guangzhou Heshengtang Pharmaceutical | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Haid Livestock Veterinary Research Institute | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Research and Trading | 100 | In a business combination involving enterprises not under common control | |
| Henai Haihe | Luoyang, Henan Province, China | Luoyang, Henan Province, China | Production and Sale | 67 | Incorporated | |
| Xuchang Haihe | Yuzhou, Henan Province, China | Yuzhou, Henan Province, China | Production and Sale | 100 | Incorporated | |
| Anyang Haihe | Tangyin, Henan Province, China | Tangyin, Henan Province, China | Production and Sale | 100 | Incorporated | |
| Jiyuan Haihe | Jiyuan, Henan Province, China | Jiyuan, Henan Province, China | Production and Sale | 80 | Incorporated | |
| Suqian Haid | Siyang, Jiangsu Province, China | Siyang, Jiangsu Province, China | Production and Sale | 100 | Incorporated | |
| Huaihua Haid | Huaihua, Hunan Province, China | Huaihua, Hunan Province, China | Production and Sale | 100 | Incorporated | |
| Guangzhou Meinong | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Investment | 100 | Incorporated | |
| Haid Ecuador | Ecuador | Ecuador | Production and Sale | 95 | Incorporated | |
| Haidmarino Cia.Ltda | Ecuador | Ecuador | Production and Sale | 51 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Guangdong Hairuite | Qingyuan, Guangdong Province, China | Qingyuan, Guangdong Province, China | Sale | 100 | Incorporated | |
| Guangzhou Haijian | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Investment | 100 | Incorporated | |
| Nanhai Bairong | Foshan, Guangdong Province, China | Foshan, Guangdong Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Zhaoqing Bairong | Zhaoqing, Guangdong Province, China | Zhaoqing, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Yangxin Bairong | Yangxin, Hubei Province, China | Yangxin, Hubei Province, China | Production and Sale | 100 | Incorporated | |
| Jingzhou Bairong | Jingzhou, Hubei Province, China | Jingzhou, Hubei Province, China | Production and Sale | 100 | Incorporated | |
| Linyi Bairong | Linyi, Shandong Province, China | Linyi, Shandong Province, China | Production and Sale | 100 | Incorporated | |
| Hunan Innovation | Hengyang, Hunan Province, China | Hengyang, Hunan Province, China | Production and Sale | 65 | In a business combination involving enterprises not under common control | |
| Guangzhou Haishengke | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Investment | 100 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Sichuan Hailinger | Chengdu, Sichuan Province, China | Chengdu, Sichuan Province, China | Production and Sale | 67 | In a business combination involving enterprises not under common control | |
| Sanming Haid | Sanming, Fujian Province, China | Sanming, Fujian Province, China | Production and Sale | 100 | Incorporated | |
| Qingyuan Haid | Qingyuan, Guangdong Province, China | Qingyuan, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Qingyuan Hainong | Qingyuan, Guangdong Province, China | Qingyuan, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Xuancheng Haid | Xuancheng, Anhui Province, China | Xuancheng, Anhui Province, China | Production and Sale | 100 | Incorporated | |
| Shunde Haid | Shunde, Guangdong Province, China | Shunde, Guangdong Province, China | Sale | 100 | Incorporated | |
| Jiaxing Haid | Jiaxing, Zhejiang Province, China | Jiaxing, Zhejiang Province, China | Production and Sale | 80 | In a business combination involving enterprises not under common control | |
| Shijiazhuang Weike | Jinzhou, Hebei Province, China | Jinzhou, Hebei Province, China | Production and Sale | 70 | In a business combination involving enterprises not under common control | |
| Chongqing Haid | Chongqing, China | Chongqing, China | Production and Sale | 100 | Incorporated | |
| Shenyang Haid | Shenyang, Liaoning Province, China | Shenyang, Liaoning Province, China | Production and Sale | 85 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Jiangsu Haihe | Xuzhou, Jiangsu Province, China | Xuzhou, Jiangsu Province, China | Sale | 67 | Incorporated | |
| Xuzhou Haihe | Xuzhou, Jiangsu Province, China | Xuzhou, Jiangsu Province, China | Production and Sale | 70 | Incorporated | |
| Lianyungang Haihe | Lianyungang, Jiangsu Province, China | Lianyungang, Jiangsu Province, China | Production and Sale | 100 | Incorporated | |
| Xuzhou Haid | Xuzhou, Jiangsu Province, China | Xuzhou, Jiangsu Province, China | Production and Sale | 100 | Incorporated | |
| Anshan Dachuan | Anshan, Liaoning Province, China | Anshan, Liaoning Province, China | Sale | 100 | Incorporated | |
| Guangzhou Haiyuan Factoring | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Factoring | 100 | Incorporated | |
| Heze Hairong | Heze, Shandong Province, China | Heze, Shandong Province, China | Management consulting | 20 | Incorporated | |
| Haid Pet | Weihai, Shandong Province, China | Weihai, Shandong Province, China | Sale | 100 | Incorporated | |
| Weihai Pet | Rongcheng, Shandong Province, China | Rongcheng, Shandong Province, China | Production and Sale | 100 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Qujing Zhihai | Qujing, Yunnan Province, China | Qujing, Yunnan Province, China | Production and Sale | 100 | Incorporated | |
| Dali Haiwang | Dali, Yunnan Province, China | Dali, Yunnan Province, China | Production and Sale | 70 | Incorporated | |
| Yibin Zhihai | Yibin, Sichuan Province, China | Yibin, Sichuan Province, China | Production and Sale | 100 | Incorporated | |
| Guiyang Zhihai | Guiyang, Guizhou Province, China | Guiyang, Guizhou Province, China | Production and Sale | 70 | Incorporated | |
| Yichang Zhihai | Yichang, Hubei Province, China | Yichang, Hubei Province, China | Sale | 72 | Incorporated | |
| Meishan Zhihai | Meishan, Sichuan Province, China | Meishan, Sichuan Province, China | Sale | 83 | Incorporated | |
| Ganzhou Haid | Ganzhou, Jiangxi Province, China | Ganzhou, Jiangxi Province, China | Production and Sale | 60 | Incorporated | |
| Foshan Haid | Foshan, Guangdong Province, China | Foshan, Guangdong Province, China | Production and Sale | 60 | Incorporated | |
| Guangzhou Zecan | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Investment | 100 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Guangzhou Punong | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Investment | 100 | Incorporated | |
| Shandong Fengying | Qufu, Shandong Province, China | Qufu, Shandong Province, China | Investment | 66 | Incorporated | |
| Jiaxiang Haiying | Jining, Shandong Province, China | Jining, Shandong Province, China | Slaughtering service | 90 | Incorporated | |
| Linxi Haiying | Xingtai, Hebei Province, China | Xingtai, Hebei Province, China | Slaughtering service | 90 | Incorporated | |
| Yiyuan Haiying | Zibo, Shandong Province, China | Zibo, Shandong Province, China | Slaughtering service | 62 | Incorporated | |
| Zouping Haiying | Zouping, Shandong Province, China | Zouping, Shandong Province, China | Slaughtering service | 75 | Incorporated | |
| Guangzhou Yuannong | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Investment | 100 | Incorporated | |
| Guangdong Haid Poverty Alleviation | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Commercial service | 100 | Incorporated | |
| Liyang Jiuhe | Liyang, Jiangsu Province, China | Liyang, Jiangsu Province, China | Production and Sale | 80 | In a business combination involving enterprises not under common control | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Shaoguan Haid | Shaoguan, Guangdong Province, China | Shaoguan, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Shandong Daxin | Qingdao, Shandong Province, China | Qingdao, Shandong Province, China | Investment and trading | 60 | In a business combination involving enterprises not under common control | |
| Qingdao Daxin | Qingdao, Shandong Province, China | Qingdao, Shandong Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Qingdao Huaxin | Qingdao, Shandong Province, China | Qingdao, Shandong Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Weifang Daxin | Qingzhou, Shandong Province, China | Qingzhou, Shandong Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Yantai Daxin | Yantai, Shandong Province, China | Yantai, Shandong Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Linyi Yihe | Tancheng, Shandong Province, China | Tancheng, Shandong Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Jiangsu Daxin | Huaiyin, Jiangsu Province, China | Huaiyin, Jiangsu Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Shandong Daxin Agriculture and Animal Husbandry | Weifang, Shandong Province, China | Weifang, Shandong Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Qingdao Zhizhuxia | Qingdao, Shandong Province, China | Qingdao, Shandong Province, China | Sale | 100 | In a business combination involving enterprises not under common control | |
| Liaocheng Daxin | Liaocheng, Shandong Province, China | Liaocheng, Shandong Province, China | Production and Sale | 100 | Incorporated | |
| Huai’an Hailong | Huai’an, Jiangsu Province, China | Huai’an, Jiangsu Province, China | Production and Sale | 100 | Incorporated | |
| Hunan Jinhuilong | Yueyang, Hunan Province, China | Yueyang, Hunan Province, China | Investment | 51 | In a business combination involving enterprises not under common control | |
| Yueyang Jinhuilong | Yueyang, Hunan Province, China | Yueyang, Hunan Province, China | Production and Sale | 65 | In a business combination involving enterprises not under common control | |
| Jiaozuo Jinhuilong | Jiaozuo, Henan Province, China | Jiaozuo, Henan Province, China | Production and Sale | 65 | In a business combination involving enterprises not under common control | |
| Shijiazhuang Huilong | Shijiazhuang, Hebei Province, China | Shijiazhuang, Hebei Province, China | Production and Sale | 65 | In a business combination involving enterprises not under common control | |
| Handan Huilong | Handan, Hebei Province, China | Handan, Hebei Province, China | Production and Sale | 65 | In a business combination involving enterprises not under common control | |
| Huai’an Huilong | Huai’an, Jiangsu Province, China | Huai’an, Jiangsu Province, China | Sale | 100 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Fuzhou Haid | Fuzhou, Fujian Province, China | Fuzhou, Fujian Province, China | Production and Sale | 100 | Incorporated | |
| Gaoyao Haid | Gaoyao, Zhaoqing, Guangdong Province, China | Gaoyao, Zhaoqing, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Nanning Haid | Nanning, Guangxi Zhuang Autonomous Region, China | Nanning, Guangxi Zhuang Autonomous Region, China | Production and Sale | 100 | Incorporated | |
| Ganzhou Hailong | Ganzhou, Jiangxi Province, China | Ganzhou, Jiangxi Province, China | Production and Sale | 100 | Incorporated | |
| Yancheng Dachuan | Yancheng, Jiangsu Province, China | Yancheng, Jiangsu Province, China | Production and Sale | 100 | Incorporated | |
| Guangzhou Haiyuan Micro-Credit | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Micro-credit service | 100 | Incorporated | |
| Guangdong Haid Biological Technology | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Research and Trading | 100 | Incorporated | |
| Jiangmen Rongchuan | Jiangmen, Guangdong Province, China | Jiangmen, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Chongqing Zhihai | Kaizhou, Chongqing Municipality, China | Kaizhou, Chongqing Municipality, China | Sale | 80 | Incorporated | |
| Meizhou Haid | Meizhou, Guangdong Province, China | Meizhou, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Yicheng Haid | Xiangyang, Hubei Province, China | Xiangyang, Hubei Province, China | Production and Sale | 100 | Incorporated | |
| Heshan Ronghai | Jiangmen, Guangdong Province, China | Jiangmen, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Hexian Haid | Ma’anshan, Anhui Province, China | Ma’anshan, Anhui Province, China | Research and Trading | 100 | Incorporated | |
| Pingnan Haid | Pingnan, Guangxi Province, China | Pingnan, Guangxi Province, China | Sale | 100 | Incorporated | |
| Guangzhou Shunkang | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Sale | 100 | Incorporated | |
| Tianjin Rongchuan | Tianjin | Tianjin | Production and Sale | 70 | Incorporated | |
| Zhanjiang Rongda | Zhanjiang, Guangdong Province, China | Zhanjiang, Guangdong Province, China | Sale | 100 | Incorporated | |
| Huainan Haid | Huainan, Anhui Province, China | Huainan, Anhui Province, China | Production and Sale | 100 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Maoming Haid | Maoming, Guangdong Province, China | Maoming, Guangdong Province, China | Sale | 75 | 25 | Incorporated |
| Guangzhou Ronghai | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Investment | 100 | Incorporated | |
| Zhongshan Ronghai | Zhongshan, Guangdong Province, China | Zhongshan, Guangdong Province, China | Production and Sale | 80 | Incorporated | |
| Guangzhou Rongda | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Production and Sale | 70 | Incorporated | |
| Jiangmen Ronghai | Jiangmen, Guangdong Province, China | Jiangmen, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Sichuan Rongchuan | Meishan, Sichuan Province, China | Meishan, Sichuan Province, China | Production and Sale | 100 | Incorporated | |
| Yulin Haid | Yulin, Guangxi Province, China | Yulin, Guangxi Province, China | Production and Sale | 100 | Incorporated | |
| Sichuan Haile | Chengdu, Sichuan Province, China | Chengdu, Sichuan Province, China | Investment and sale | 55 | Incorporated | |
| Yichang Zhihai | Yichang, Hubei Province, China | Yichang, Hubei Province, China | Production and Sale | 72 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Guangzhou Xingnong | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Investment | 100 | Incorporated | |
| Xinxing Haifeng | Yunfu, Guangdong Province, China | Yunfu, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Sihui Haifeng | Zhaoqing, Guangdong Province, China | Zhaoqing, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Qingyuan Ronghai | Qingyuan, Guangdong Province, China | Qingyuan, Guangdong Province, China | Production and Sale | 96.67 | 3.33 | In a business combination involving enterprises not under common control |
| Guangzhou Haiyin | Guangzhou, Guangdong Province, China | Guangzhou, Guangdong Province, China | Financing guarantee | 100 | Incorporated | |
| Qinzhou Hailong | Qinzhou, Guangxi Province,China | Qinzhou, Guangxi Province,China | Production and Sale | 100 | Incorporated | |
| Deyang Dachuan | Deyang, Sichuan Province, China | Deyang, Sichuan Province, China | Production and Sale | 100 | Incorporated | |
| Hainan Haid | Wenchang, Hainan Province, China | Wenchang, Hainan Province, China | Production and Sale | 100 | Incorporated | |
| Liuzhou Haid | Liuzhou, Guangxi Province, China | Liuzhou, Guangxi Province, China | Production and Sale | 100 | Incorporated | |
| Subsidiary (abbr.) | Principal place of business | Place of registration | Nature of business | The Group’s interest (%) | How subsidiary was obtained | |
| Direct | Indirect | |||||
| Jiangsu Dachuan | Huai’an Jiangsu Province, China | Huai’an Jiangsu Province, China | Production and Sale | 100 | In a business combination involving enterprises not under common control | |
| Zhaoqing Ronghai | Zhaoqing, Guangdong Province, China | Zhaoqing, Guangdong Province, China | Production and Sale | 100 | Incorporated | |
| Gaoan Haid | Yichun, Jiangxi Province, China | Yichun, Jiangxi Province, China | Production and Sale | 100 | Incorporated | |
| Shanggao Haid | Shanggao, Jiangxi Province, China | Shanggao, Jiangxi Province, China | Production and Sale | 100 | Incorporated | |
Note 1: Shandong Haiding previously held a 100% interest in Liaocheng Haiding. In May 2019, GenqiangZheng (natural person) acquired, at the price of RMB 160,000.00, 8% stake in Liaocheng Haiding fromShandong Haiding. As such, Shandong Haiding’s holding in Liaocheng Haiding decreased to 92%.Note 2: Guangzhou Meinong previously held an 85% stake in Haid (Ecuador) Feed Cia.Ltda, and thenon-controlling shareholder Zhiping Wang held the remaining 15% stake. In May 2019, GuangzhouMeinong and Liang Fang (natural persons) acquired 10% and 5% stakes in Haid (Ecuador) Feed Cia.Ltdafrom non-controlling shareholders Zhiping Wang at the price of USD 10,000.00 (Equivalent to RMB68,992.00) and USD 5,000.00 (Equivalent to RMB 34,496.00) respectively. As such, GuangzhouMeinong’s holding in Haid (Ecuador) Feed Cia.Ltda increased to 95%.Note 3: Hunan Jinhuilong previously held a 76.70% stake in Jiangsu Dachuan, and the non-controllingshareholders Yiguo Xiao held the remaining 23.30% stake. In September 2019, Guangdong Haid acquiredall the remaining stakes from Hunan Jinhuilong and Yiguo Xiao at the price of RMB 18,848,400.00 and5,725,800.00 respectively. As such, Guangdong Haid’s holding in Jiangsu Dachuan increased to 100%.
2. Major Non-Wholly-Owned Subsidiaries
(RMB ’0,000)
| Subsidiary (abbr.) | Non-controlling interests (%) | Profit/Loss of Current Period attributable to non-controlling interests | Dividends declared for non-controlling interests for Current Period | Closing balance of non-controlling interests |
| Foshan Haihang | 12.50 | 109.15 | 343.23 | 331.80 |
| Panasia Trading | 20.00 | 3,277.73 | 790.01 | 8,850.88 |
| Shandong Haiding | 45.00 | 3,521.30 | 399.56 | 6,005.22 |
| Shandong Daxin | 40.00 | 1,555.80 | - | 13,532.92 |
3. Key Financial Information of Major Non-Wholly-Owned Subsidiaries
(RMB ’0,000)
| Subsidiary (abbr.) | 2019.12.31 | 2018.12.31 | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Foshan Haihang | 6,177.48 | 6,477.52 | 12,655.00 | 7,714.52 | 2,286.12 | 10,000.63 | 10,875.98 | 2,490.15 | 13,366.13 | 8,848.06 | 6.98 | 8,855.04 |
| Panasia Trading | 87,244.02 | 38,438.28 | 125,682.31 | 78,937.20 | - | 78,937.20 | 69,406.37 | 24,007.48 | 93,413.85 | 59,773.83 | - | 59,773.83 |
| Shandong Haiding | 44,685.58 | 24,763.34 | 69,448.92 | 57,639.62 | 631.94 | 58,271.56 | 31,603.15 | 19,698.81 | 51,301.96 | 45,864.53 | 393.87 | 46,258.40 |
| Shandong Daxin | 22,389.04 | 19,950.00 | 42,339.04 | 6,093.60 | 2,438.10 | 8,531.69 | 16,279.12 | 21,954.17 | 38,233.29 | 5,639.00 | 2,675.86 | 8,314.86 |
(Continued)
| Subsidiary (abbr.) | 2019 | 2018 | ||||||
| Sales revenue | Net income | Total comprehensive income | Net cash flows from operating activities | Sales revenue | Net income | Total comprehensive income | Net cash flows from operating activities | |
| Foshan Haihang | 106,348.46 | 873.18 | 873.18 | 7,589.11 | 105,383.72 | 1,214.12 | 1,214.12 | 458.30 |
| Panasia Trading | 225,150.16 | 16,388.63 | 16,336.05 | 22,946.00 | 182,474.23 | 11,361.02 | 11,361.02 | 10,438.44 |
| Shandong Haiding | 500,189.22 | 6,820.77 | 6,820.77 | 9,847.38 | 362,727.43 | 2,262.95 | 2,262.95 | 4,961.48 |
| Shandong Daxin | 88,764.08 | 3,887.85 | 3,887.85 | 505.63 | 100,746.58 | 4,335.51 | 4,335.51 | 4,218.14 |
4. Transactions Incurring Changes in Share of Owner’s Equity in Subsidiaries but with Subsidiaries still underthe Company’s control
(1) Changes in Share of Owner’s Equity in Subsidiaries
See item VII in the Notes to Consolidated Financial Statements, (I), ‘1. Composition of the Group
(2) Effects of Such Transactions on Non-Controlling Interests and Equity Attributable to Shareholders of theCompany in Subsidiaries
| Item | Liaocheng Haiding | Haid (Ecuador) Feed Cia.Ltda. | Lanzhou Haid |
| Costs of purchase | 160,000.00 | 68,992.00 | 0.33 |
| --Cash | 160,000.00 | 68,992.00 | 0.33 |
| --Fair value of non-cash assets | - | - | - |
| Total costs of purchase | 160,000.00 | 68,992.00 | 0.33 |
| Less: Share of subsidiaries’ net assets relevant to equity interests purchased/disposal | -146,721.52 | -155,484.57 | -934,004.60 |
| Difference | 306,721.52 | -224,476.57 | -934,004.93 |
| Including: Adjustment to capital reserves | 306,721.52 | -224,476.57 | -934,004.93 |
(II) Interests in Associates
1. Financial Information of Insignificant Associates Combined
| Item | 2019.12.31 | 2018.12.31 |
| Associates: | ||
| Aggregated carrying value of investments | 62,614,691.35 | 38,614,535.85 |
| Aggregate of the following items calculated in proportion to shareholding | ||
| --Net income | 13,126,533.86 | 6,144,272.91 |
| --Other comprehensive income | - | - |
| --Total comprehensive income | 13,126,533.86 | 6,144,272.91 |
VIII Risks Management of Financial Instruments
The Group's main financial instruments include monetary funds, bills receivable, accounts receivable, otherreceivables, non-current assets due within one year, loans and advances, transactional financial assets, debtinvestment, other non-current financial assets, long-term receivables, accounts payable, other payables,short-term borrowings, transactional financial liabilities, non-current liabilities due within one year,long-term borrowings, and long-term payables. The details of various financial instruments have beendisclosed in the relevant notes. The risks associated with these financial instruments and the risk
management policies adopted by the Group to reduce these risks are described below. The management ofthe Group manages and monitors these risk exposures to ensure that the above risks are controlled within alimited range.Objectives and Policies of Risk ManagementThe Group’s goal in risk management is to achieve a proper balance between risk and return, and strive toreduce the adverse impact of any financial instrument risk on the company’s operations. Based on this riskmanagement objective, the Group has established relevant risk management policies to identify and analyzethe company’s risks, appropriately set corresponding acceptable risk levels and established the internalcontrol procedures to monitor the Group’s risk level. In addition, the Group will regularly review these riskmanagement policies and related internal control system to adapt to changes in market conditions or thecompany’s operating activities, and the Group’s internal audit department will regularly or randomly checkwhether the implementation of the internal control system complies with relevant risk managementpolicies.The main risks caused by the Group's financial instruments are credit risk, liquidity risk, and market risk(including exchange rate risk, interest rate risk, and commodity price risk).The Board of Directors is responsible for planning and establishing the Group's risk management structure,formulating the Group's risk management policies and related guidelines, and supervising theimplementation of risk management measures. The Group has formulated risk management policies toidentify and analyze the risks faced by the Group. These risk management policies specify specific risksand cover many aspects such as management of market risk, credit risk and liquidity risk. The Groupregularly assesses changes in the market environment and the Group’s operating activities to decidewhether to update the risk management policies and systems. The internal audit department of the Groupconducts regular verifications on risk management controls and procedures, and reports results to the auditcommittee of the Group.The Group diversifies the risks of financial instruments through appropriate diversified investments andbusiness portfolios, and reduces the risk of concentration in a single industry, specific region, or specificcounterparty by formulating appropriate risk management policies.
1. Credit Risk
Credit risk refers to the risk that the counterparty fails to fulfill its contractual obligations, resulting infinancial losses to the Group.The Group manages credit risk by portfolio. Credit risk mainly arises from deposits, bills receivable,accounts receivable, other receivables, etc.The Group's deposits are mainly within financial institutions with good reputation and high credit ratings.
The Group expects that there is no significant credit risk in deposit.For bills receivable, accounts receivable, other receivables, loans and advances, the Group has set relevantpolicies to control credit risk exposure. The Group assesses the customer's credit qualification and sets thecorresponding credit period based on the customer's financial status, credit history and other factors such ascurrent market conditions. The Group will regularly monitor the customer's credit history and for customerswith poor credit history, the Group will use written reminders, shorten the credit period or cancel the creditperiod to ensure that the overall credit risk of the Group is within control.The debtors of the Group's receivables, loans and advances are customers distributed in different industriesand regions. The Group continues to conduct credit assessments on the financial status of receivables andloans, and purchase credit guarantee insurance when appropriate.The maximum exposure to credit risk of the Group is the carrying amount of each financial asset in thebalance sheet. The Group also faces credit risk due to the provision of financial guarantees. Please refer toNote XII. 2 for details.
2. Liquidity Risk
Liquidity risk refers to the risk that the Group encounters a shortage of funds when fulfilling its obligationto settle cash or other financial assets.Each subsidiary of the Group is responsible for its cash flow forecast. The Group Treasury Departmentmonitors the long-term and short-term capital needs at the group level based on the cash flow forecasts ofeach subsidiary. The Group coordinates the surplus funds within the group through the fund pool planestablished in the large banking financial institutions, and ensure that each member has sufficient cashreserves to meet the payment obligations due for settlement. In addition, the Group entered into financingcredit agreements with main business banks to meet short-term and long-term funding needs.The Group raises working capital through funds generated from operating business and bank and otherborrowings. As of December 31, 2019, the Group's unused bank loan amount was RMB 1,560,830.00million (December 31, 2018: RMB 845,588.00 million).
3. Market Risk
Market risk of financial instruments refers to the risk that the fair value or future cash flow of financialinstruments will fluctuate due to changes in market prices, including interest rate risk, exchange rate risk,and other price risks.Interest Rate RiskInterest rate risk refers to the risk that the fair value or future cash flows of financial instruments will
fluctuate due to changes in market interest rates. Interest rate risk can arise from confirmed interest-bearingfinancial instruments and unrecognized financial instruments.The Group's interest rate risk is mainly caused by long-term and short-term interest-bearing bank loan.Financial liabilities with floating interest rate expose the Group to cash flow interest rate risk, and financialliabilities with fixed interest rate expose the Group to fair value interest rate risk. The Group determines therelative proportion of fixed-rate and floating-rate contracts based on the market environment at the time,and maintains an appropriate combination of fixed and floating-rate instruments through regular review andmonitoring.For financial instruments held on the date of financial statement that expose the Group to fair value interestrate risk, the impact of the net profit and shareholder ’s equity in the above sensitivity analysis assumes thatinterest rates change on the date, and the Group remeasures the financial instruments based on the newinterest rate. For floating-rate non-derivative instruments held on the date of financial statement that exposethe Group to cash flow interest rate risk, the impact of the above-mentioned sensitivity analysis on netprofit and shareholder’s equity is based on annual estimated interest expense or income calculated by usingthe above-mentioned interest rate. The analysis of the previous year was based on the same assumptionsand methods.Exchange rate riskExchange rate risk refers to the risk that the fair value or future cash flows of financial instruments willfluctuate due to changes in foreign exchange rates. Exchange rate risk can arise from financial instrumentsdenominated in foreign currencies other than bookkeeping currency.The main operation of the Group is located in China and the main business is settled in RMB. Exchangerate risk comes from financial instruments denominated in currencies other than the bookkeeping currency.The raw materials purchased and imported by the Group have achieved a certain scale, and the transactionamount of subsidiaries set up by the Group overseas with other currencies other than RMB as thebookkeeping currency has also increased. Therefore, fluctuations in RMB exchange rate have exertedcertain impact on the company’s business operations.As of December 31, 2019, the Group’s foreign currency monetary items were mainly US dollar,Vietnamese dong, rupee, and ringgit financial assets and financial liabilities (see Note V. 65, (1) Foreigncurrency monetary items for details). Since other currencies are not frequently applied and the amountinvolved is smaller, their exchange rates changes will not have a significant impact on the company'soperating activities.The Group continuously monitors the scale of the Group’s foreign currency transactions and foreigncurrency assets and liabilities to minimize the foreign exchange risks it faces. Therefore, the Group avoidsforeign exchange risks by appropriately signing forward foreign exchange contracts or currency swap
contracts.Price riskOther price risk refers to the risk of fluctuations in market prices other than exchange rate risk and interestrate risk, regardless of whether these changes are caused by factors related to a single financial instrumentor its issuer, or due to factors related to all similar financial instruments that were traded within the market.The Company upholds the basic principle of serving spot goods -- the spot procurement program, andregards risk control as the core principle. Meanwhile, it will adopt one or more than one arbitrage tool forhedging to avoid the commodity price risk and credit risk etc., and changes in the fair value or cash flow ofthe arbitrage tool are expected to offset all or part of the changes in the fair value or cash flow of thehedged item, in which way, the impact of price fluctuations in raw materials and commodities onproduction and operations can thus be mitigated.IX Disclosures of Fair ValueThe level in which fair value measurement is categorized is determined by the level of the fair valuehierarchy of the lowest level input that is significant to the entire fair value measurement. The levels aredefined as follows:
Level 1 inputs: unadjusted quoted prices in active markets that are observable at the measurement date foridentical assets or liabilities.Level 2 inputs: inputs other than Level 1 inputs that are either directly or indirectly observable forunderlying assets or liabilities.Level 3 inputs: inputs that are unobservable for underlying assets or liabilities.
1. Items and Values Measured at Fair Value
As at December 31, 2019, assets and liabilities measured at fair value based on the three levels above areshown as follows.
| Item | Level 1 fair value measurement | Level 2 fair value measurement | Level 3 fair value measurement | Total |
| I. Recurring fair value measurement | ||||
| 1. Held-for-trading financial assets | 10,150,779.50 | 18,432,715.85 | - | 28,583,495.35 |
| (1) Debt instruments | - | - | - | - |
| (2) Equity instruments | - | - | - | - |
| Item | Level 1 fair value measurement | Level 2 fair value measurement | Level 3 fair value measurement | Total |
| (3) Financial assets designated at fair value through profit or loss | 10,150,779.50 | - | - | 10,150,779.50 |
| (4) Others | - | 18,432,715.85 | - | 18,432,715.85 |
| 2. Other non-current financial assets | - | - | 255,521,350.00 | 255,521,350.00 |
| Total assets measured at fair value on a recurring basis | 10,150,779.50 | 18,432,715.85 | 255,521,350.00 | 284,104,845.35 |
| 3. Held-for-trading financial liabilities | 2,633,510.00 | - | - | 2,633,510.00 |
| (1) Financial liabilities designated at fair value through profit or loss | 2,633,510.00 | - | - | 2,633,510.00 |
| Total liabilities measured at fair value on a recurring basis | 2,633,510.00 | - | - | 2,633,510.00 |
The Group recognizes transfers between different levels at the end of the current reporting period duringwhich such transfers are made. During 2019, there were no transfers between different levels of theGroup’s assets and liabilities.
2. Information about the Second Level of Fair Value Measurement
| Item | Fair value As at 31/12/2019 | Valuation techniques | Inputs |
| Derivatives： | |||
| Currency interest rate swap contract | 18,263,137.00 | Market comparison approach | Expected interest rate Contract interest rate Exchange rate Discount rate reflecting the credit risk of issuers |
| Foreign exchange forward contract | 169,578.85 | Market comparison approach | Expected interest rate Contract interest rate Exchange rate Discount rate reflecting the credit risk of issuers |
3. Quantitative information about the unobservable inputs used in the fair value measurement that aresignificant and are reasonably available.
| Item | Fair value As at 31/12/2019 | Valuation techniques | Unobservable inputs | Range (weighted average) |
| Equity instrument investments: | ||||
| Unlisted equity investments | 255,521,350.00 | Net assets | N/A | N/A |
4. Fair values of assets and liabilities not measured at fair value
Financial assets and financial liabilities measured at amortized cost of the Group include: cash at bank andon hand, bills receivable, accounts receivable, other receivables, other current assets (including factoringreceivables due within one year and loans and advances), short-term loans, bills payable, accounts payable,other payables, long-term loans due within one year, long-term payables, long-term loans and debenturespayable, etc.All financial instruments above measured at carrying amounts are not materially different from their fairvalue.X Related Parties and Related-Party Transactions
1. Controlling Related Party
| Name | Place of registration/address | Business scope | Registered capital | Percentage of shareholding in the Company % | Percentage of voting rights in the Company % |
| Guangzhou Haihao Investment Co., Ltd. (hereinafter referred to as “Guangzhou Haihao”) | Guangzhou, Guangdong Province, China | Investment, trading, import and export of commodities and technologies | 3,000.00 | 57.62 | 57.62 |
Note 1: Guangzhou Haihao, which is the ultimate controlling party of the Company, is established onSeptember 27, 2006. Mr. Hua Xue holds a 39.75% stake in Guangzhou Haihao, is the ultimate controller ofthe Group.In the reporting period, change of the registered capital of the parent company is as follows:
(RMB ’0,000)
| As at 31/12/2018 | Addition | Reduction | As at 31/12/2019 |
| 3,000.00 | - | - | 3,000.00 |
2. Information about the subsidiaries of the Company
For information about the subsidiaries of the Company, refer to Note VII.1.
3. Information about joint ventures and associates of the Company
Joint ventures and associates that have related party transactions with the Group during this year or theprevious year are as follows:
| Name of joint ventures or associates | Relationship with the Company |
| Foshan Haihang Xingfa Agriculture and Animal Husbandry Development Co., Ltd. | Association, the Group holds 49% of the stakes |
| Guizhou Fuhai Chemicals Co, Ltd. | Association, the Group holds 45% of the stakes |
4. Information on other related parties
| Name | Related party relationship |
| Luoding Xingfa Xingji Agriculture and Animal Husbandry Development Co., Ltd. | Subsidiary of Foshan Haihang Xingfa Agriculture and Animal Husbandry Development Co., Ltd. |
| Foshan Haihang Livestock and Acquaculture Specialized Cooperative | Subsidiary of Foshan Haihang Xingfa Agriculture and Animal Husbandry Development Co., Ltd. |
| Yingzhuo Xu | Director |
5. Transactions with related parties
(1) Purchases/sales
① Purchase of goods/receiving of services
| Related party | Nature of transaction | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Guizhou Fuhai Chemicals Co., Ltd. | Material | 116,534,661.29 | 88,717,187.28 |
② Sales of goods/rendering of services
| Related party | Nature of transaction | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Foshan Haihang Xingfa Agriculture and Animal Husbandry Development Co., Ltd. | Feed and animal healthcare products | 56,298,817.94 | 42,150,795.00 |
| Luoding Xingfa Xingji Agriculture and Animal Husbandry Development Co., Ltd. | Feed and animal healthcare products | 9,930,274.59 | 4,858,198.65 |
| Foshan Haihang Livestock and Acquaculture Specialized Cooperative | Feed and animal healthcare products | - | 868,239.51 |
Note: The price of the transaction between the company and the above-mentioned related parties is basedon the market price of the unified external quotation of the seller at the time of the transaction.
(2) Trust/contracting arrangement
No such cases during the Reporting Period.
(3) Lease
① As the lessor
| Lessee | Type of assets leased | Lease income recognized in 2019 | Lease income recognized in 2018 |
| Guangdong Haid Group Co., Limited | Houses and buildings | 51,428.52 | 51,428.57 |
Note: The price in the above lease with the related party was determined based on market prices uponmutual approval.
② As the lessee
No such cases during the Reporting Period.
(4) Guarantee
No such cases during the Reporting Period.
(5) Funding from related party
No such cases during the Reporting Period.
(6) Transfer of assets and debt restructuring
No such cases during the Reporting Period.
(7) Remuneration of key management personnel
The Company has 22 key management personnel in 2019 and 14 key management personnel in 2018.Information about remuneration is as follows:
(RMB ’0,000)
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Remuneration of key management personnel | 2,025.66 | 1,449.63 |
(8) Other related party transactions
No such cases during the Reporting Period.
6. Receivables from and payables to related parties
(1) Receivables from related parties
| Item | Related party | As at 31/12/2019 | As at 31/12/2018 | ||
| Book value | Provision for bad and doubtful debts | Book value | Provision for bad and doubtful debts | ||
| Account Receivables | Foshan Haihang Xingfa Agriculture and Animal Husbandry Development Co., Ltd. | 107,348.00 | 2,404.60 | - | - |
| Prepayment | Guizhou Fuhai Chemicals Co., Ltd. | - | - | 16,255.36 | - |
(2) Payables to related parties
| Item | Related party | 2019.12.31 | 2018.12.31 |
| Account Payables | Guizhou Fuhai Chemicals Co., Ltd. | 4,105,427.37 | 3,453,111.97 |
| Advances from customers | Foshan Haihang Xingfa Agriculture and Animal Husbandry Development Co., Ltd. | 3,388,563.26 | 369,855.46 |
| Other payable | Yingzhuo Xu | 19,999.00 | - |
XI Share-Based Payments
1. Total Share-Based Payments
| Total equity instruments granted by the Company in Current Period (share) | 0.00 |
| Total equity instruments exercised in Current Period (share) | 8,749,950.00 |
| Total equity instruments invalidated in Current Period (share) | 941,460.00 |
| Exercise price range and contractual residual maturity of closing outstanding share options | N/A |
| Exercise price range and contractual residual maturity of closing outstanding share options | (1) The repurchase price for the first phase of the 2016 Restricted Share Incentive Plan is RMB 6.63/share, with a residual maturity of 26 months. (2) The repurchase price for the 2016 Reserved Restricted Share Incentive Plan is RMB 9.89/share, with a residual maturity of 23 months. |
2. Share-Based Payments Settled with Equity
| Determination method for fair value of equity instruments at grant dates | Using Black-Scholes option pricing model to calculate fair value of the Company’s share options |
| Basis for determination of quantity of exercisable equity instruments | When the required performance conditions are met for the corresponding periods of the equity instrument incentive plans |
| Explanation of why estimates of Current Period are materially different from those of last year | N/A |
| Accumulated share-based payments settled with equity included in capital reserves | 181,236,352.28 |
| Total recognized expense on share-based payments settled with equity in Current Period | 18,216,085.30 |
3. Share-Based Payments Settled in Cash
No share-based payments were settled in cash during the Reporting Period.
4. Revisions and Termination of Share-Based Payments
| Revision of Share-Based Payment | The repurchase price of the restricted shares have been adjusted due to the annual equity distribution in 2018 |
| Termination of Share-Based Payment | N/A |
XII Commitments and Contingencies
1. Significant Commitments
As at December 31, 2019, there is no material commitment to be disclosed.
2. Contingencies
Contingent liabilities arising from guarantee provided to other entities and related financial effects.
(1) As at December 31, 2019, the Group provided guarantees for the following loans:
| Guarantee | Guarantee | Amount | Period | Note |
| 1.Subsidiaries | 178,304.35 | |||
| Wholly-owned subsidiaries and holding subsidiaries within the scope of consolidation | Bank loan financing and payable for raw material purchased | 175,817.16 | One year | |
| Alaer Ruiliheng | Equity acquisition | 2,487.19 | Two years after the expiration of the payment obligation | Provided guarantee for Alaer Ruiliheng to pay for the equity purchase of Alaer Ruitai |
| 2. Other companies | 1,664.00 | |||
| Farmers and distributors of 7 holding subsidiaries such as Hunan Haid | Guarantees for financings to purchase the Group’s products | 445.00 | One year | The amount of counter-guarantee does not exceed RMB 20 million |
| Guarantee | Guarantee | Amount | Period | Note |
| Farmers and distributors that are provided with guarantees by Shandong Haiding | Guarantees for financings to purchase the Group’s products | 296.80 | One year | The amount of guarantee does not exceed RMB 20 million |
| Farmers and distributors of 11 holding subsidiaries such as Guangxi Haid | Guarantees for financings to purchase the Group’s products | 761.20 | One to three years | The amount of counter-guarantee does not exceed RMB 15 million |
| Farmers and distributors of Nanchang Haid | Guarantees for financings to purchase the Group’s products | 161.00 | One year | The amount of guarantee does not exceed RMB 6 million |
| Total | 179,968.35 |
(2) As at December 31, 2019, the Group and financing units shared risks with customer financing:
| Risk-sharing Company | Item | Amount (RMB ’0,000) | Period | Note |
| Shandong Haiding | Risk-sharing for financings to purchase the Group’s products | 14.00 | Two years | Does not exceed RMB 3 million |
| Chengdu Haid | Risk-sharing for financings to purchase the Group’s products | 90.00 | One year | |
| Total | 104.00 |
As at December 31, 2019, there is no other contingency to be disclosed.XIII Post balance sheet date events
1. Material post balance sheet date events
| Item | Nature | Effect on the financial position and financial performance | Reason for effect cannot be estimated |
| Bond issuance | The Company's public issuance of convertible corporate bonds was approved in February 2020 by the China Securities Regulatory Commission's (Secure Supervisory Permit [2020] No. 205), for the public issuance of convertible corporate bonds with a total face value of RMB 2.83 billion to the public for a period of 6 years. As of March 25, 2020, the Company has completed the issuance of convertible corporate bonds. | Recognized debentures payable for RMB 2.83 billion and divided the liability component and equity component according to the new financial instruments regulations. | N/A |
2. Profit appropriations after the balance sheet date
| Profit distributions or dividends proposed | According to the profit distribution plan approved by the board of directors on April 18, 2020, it is planned to issue a cash dividend of RMB 3.50 (including tax) for every 10 shares base on the total share capital on the share registration date when the distribution plan is implemented. The distribution plan will be implemented after the general meeting of shareholders approves. |
| Profit distributions or dividends approved and declared | N/A |
3. Sales returns
As at April 18, 2020, there is no such item to be disclosed.
4. Other events after the balance sheet date
As at April 18, 2020, there is no such item to be disclosed.XIV Other Significant Events
1. Government grants
(1) Government grants recognized in deferred income, and subsequently measured using the gross presentationmethod
| Item | 2018.12.31 | Additions during the year | Recognition in profit and loss | Other changes | 2019.12.31 | Presentation item recognized in profit and loss | Related to asset/income |
| Development Support Fund | 73,890.08 | - | 69,423.96 | - | 4,466.12 | Other income | Related to income |
| Development Support Fund | 1,057,574.22 | - | 110,412.34 | - | 947,161.88 | Other income | Related to asset |
| Research grants | 6,405,119.72 | 6,405,000.00 | 5,914,688.25 | - | 6,895,431.47 | Other income | Related to income |
| Research grants | 2,869,259.69 | - | 545,928.57 | - | 2,323,331.12 | Other income | Related to asset |
| Grants for production activities | 2,110,512.41 | 5,331,000.00 | 2,290,449.00 | - | 5,151,063.41 | Other income | Related to income |
| Grants for production activities | 52,081,329.09 | 56,307,900.26 | 7,295,769.49 | - | 101,093,459.86 | Other income | Related to asset |
| Government incentive grants | 2,061,169.14 | - | 54,360.48 | - | 2,006,808.66 | Other income | Related to asset |
| Others | 146,216.46 | 300,000.00 | 446,216.46 | - | - | Other income | Related to income |
| Others | - | 501,844.62 | - | - | 501,844.62 | Related to asset | |
| Total | 66,805,070.81 | 68,845,744.88 | 16,727,248.55 | - | 118,923,567.14 |
(2) Government grants recognized in profit and loss, and subsequently measured using the gross presentationmethod
| Item | Recognized in profit and loss for the year ended 31/12/2018 | Recognized in profit and loss for the year ended 31/12/2019 | Presentation item recognized in profit and loss | Related to asset/income |
| Financial discount | 781,543.00 | 1,856,627.00 | Financial expenses | Related to income |
| Development Support Fund | 1,007,804.14 | 4,593,363.67 | Other income | Related to income |
| Development Support Fund | 359,439.94 | 110,412.34 | Other income | Related to asset |
| Research grants | 19,504,854.83 | 12,247,127.48 | Other income | Related to income |
| Research grants | 802,762.11 | 545,928.57 | Other income | Related to asset |
| Other grants | 1,264,038.38 | 10,013,367.51 | Other income | Related to income |
| Other grants | 1,307,500.00 | 736,588.00 | Other income | Related to income |
| Item | Recognized in profit and loss for the year ended 31/12/2018 | Recognized in profit and loss for the year ended 31/12/2019 | Presentation item recognized in profit and loss | Related to asset/income |
| Grants for production activities | 12,965,164.76 | 10,340,902.17 | Other income | Related to income |
| Grants for production activities | 6,842,777.59 | 7,295,769.49 | Other income | Related to asset |
| Grants related to daily business activities | 1,412,254.68 | - | Other income | Related to income |
| Government incentive grants | 2,344,660.00 | 5,420,763.84 | Other income | Related to income |
| Government incentive grants | 7,027,060.48 | 54,360.48 | Other income | Related to asset |
| Government incentive grants | 10,696,100.00 | 2,000.00 | Non-operating income | Related to income |
| Total | 66,315,959.91 | 53,217,210.55 |
XV Notes to the Company’s financial statements
1. Other Receivables
| Item | 2019.12.31 | 2018.12.31 |
| Interest receivable | - | 8,630.13 |
| Dividends receivable | - | 35,271,940.95 |
| Other receivables | 6,904,805,047.57 | 6,961,673,027.71 |
| Total | 6,904,805,047.57 | 6,996,953,598.79 |
(1) Interest Receivable
①Classification of interest receivable
| Item | 2019.12.31 | 2018.12.31 |
| Interest receivable on bank’s wealth management products | - | 8,630.13 |
| Sub-total | - | 8,630.13 |
| Less: Provision for bad and doubtful debts | - | - |
| Total | - | 8,630.13 |
(2) Dividends receivable
| Item | 2019.12.31 | 2018.12.31 |
| Foshan Haihang Feed Co., Ltd. | - | 35,271,940.95 |
| Item | 2019.12.31 | 2018.12.31 |
| Sub-total | - | 35,271,940.95 |
| Less: Provision for bad and doubtful debts | - | - |
| Total | - | 35,271,940.95 |
(3) Other receivables
①Other receivables categorized by aging
| Aging | 2019.12.31 |
| within 1 year | 6,897,063,603.96 |
| 1 to 2 years | 1,603,000.00 |
| 2 to 3 years | 7,699,000.00 |
| 3 to 4 years | 10,800.00 |
| 4 to 5 years | 10,000.00 |
| Sub-total | 6,906,386,403.96 |
| Less: Provision for bad and doubtful debts | 1,581,356.39 |
| Total | 6,904,805,047.57 |
②Other receivables categorized by nature
| Item | 2019.12.31 | 2018.12.31 |
| Petty cash | 1,674,647.25 | 4,636,095.42 |
| Guarantee deposit | 727,275.00 | 1,097,525.00 |
| Consolidated related party transactions | 6,845,648,020.61 | 6,842,788,267.90 |
| Futures margin | 22,457,875.50 | 102,685,800.00 |
| Others | 35,878,585.60 | 11,808,379.38 |
| Total | 6,906,386,403.96 | 6,963,016,067.70 |
③Provision for bad and doubtful debts
| Provision for bad and doubtful debts | Stage 1 | Stage 2 | Stage 3 | Total |
| 12-month expected credit losses | Lifetime expected credit losses (not occurred credit impairment) | Lifetime expected credit losses (occurred credit impairment) | ||
| Balance at 31/12/2018 | 1,343,039.99 | - | - | 1,343,039.99 |
| Provision for bad and doubtful debts | Stage 1 | Stage 2 | Stage 3 | Total |
| 12-month expected credit losses | Lifetime expected credit losses (not occurred credit impairment) | Lifetime expected credit losses (occurred credit impairment) | ||
| Adjusted amount of the first implementation of new financial instruments standard | - | - | - | - |
| Balance at 1/1/2019 | 1,343,039.99 | - | - | 1,343,039.99 |
| In current period | - | - | - | - |
| -Transfer into stage 2 | - | - | - | - |
| -Transfer into stage 3 | - | - | - | - |
| -Reversal back to stage 2 | - | - | - | - |
| -Reversal back to stage 3 | - | - | - | - |
| Accrual in current period | 238,316.40 | - | - | 238,316.40 |
| Reversal in current period | - | - | - | - |
| Sold off in current period | - | - | - | - |
| Write off in current period | - | - | - | - |
| Other movement | - | - | - | - |
| Balance at 31/12/2019 | 1,581,356.39 | - | - | 1,581,356.39 |
Provision for bad and doubtful debts as of 31/12/2018
| Category | As at 31/12/2018 | ||||
| Amount | Percentage % | Amount | Percentage % | Amount | |
| Individually significant and assessed for impairment individually | - | - | - | - | - |
| Collectively assessed for impairment | 6,963,016,067.70 | 100.00 | 1,343,039.99 | 0.02 | 6,961,673,027.71 |
| Including: external Groups and not assessed for impairment individually | 17,541,999.80 | 0.25 | 1,343,039.99 | 7.66 | 16,198,959.81 |
| Groups of other companies within consolidation | 6,842,788,267.90 | 98.28 | - | - | 6,842,788,267.90 |
| Groups of futures margin | 102,685,800.00 | 1.47 | - | - | 102,685,800.00 |
| Individually insignificant but assessed for impairment individually | - | - | - | - | - |
| Total | 6,963,016,067.70 | 100.00 | 1,343,039.99 | 0.02 | 6,961,673,027.71 |
④Recognitions or recoveries or reversals of provision for bad and doubtful debts in current period
| Category | As at 1/1/2019 | Movement in current period | As at 31/12/2019 | ||
| Recognitions | Recognitions | Recognitions | |||
| Other receivables | 1,343,039.99 | 238,316.40 | - | - | 1,581,356.39 |
| Total | 1,343,039.99 | 238,316.40 | - | - | 1,581,356.39 |
⑤There were no written-off of other receivables in current period.
⑥Other receivables with top five ending balance
| Name of debtor | Payment nature | Book balance | Aging | Percentage of other receivables ending balance (%) | Provision for bad and doubtful debts |
| First place | Consolidated related party payments | 321,113,547.34 | With one year | 4.65 | - |
| Second place | Consolidated related party payments | 278,478,914.69 | With one year | 4.03 | - |
| Third place | Consolidated related party payments | 259,635,067.77 | With one year | 3.76 | - |
| Fourth place | Consolidated related party payments | 258,480,338.62 | With one year | 3.74 | - |
| Fifth place | Consolidated related party payments | 227,476,013.96 | With one year | 3.29 | - |
| Total | —— | 1,345,183,882.38 | —— | 19.47 | - |
⑦There were no other receivables associated with government subsidies as of the period-end.
⑧No other receivables were derecognized due to transfer of financial assets in current period.
⑨There were no such cases in current period where the Group had transferred an other receivables butcontinued to be involved in the assets or liabilities associated with that other receivables.
2. Long-Term Equity Investments
| Item | 2019.12.31 | 2018.12.31 |
| Book value | Provision for bad and doubtful debts | Carrying amount | Book value | Provision for bad and doubtful debts | Carrying amount | |
| Investment in Subsidiary | 4,023,000,264.83 | - | 4,023,000,264.83 | 3,084,188,810.69 | - | 3,084,188,810.69 |
| Investment in Associate | 30,853,774.79 | - | 30,853,774.79 | 19,363,049.36 | - | 19,363,049.36 |
| Total | 4,053,854,039.62 | - | 4,053,854,039.62 | 3,103,551,860.05 | - | 3,103,551,860.05 |
(1) Investment in Subsidiary
| Investee (abbr.) | 2018.12.31 | Increase in Current Period | Decrease in Current Period | 2019.12.31 | Allowance for impairment provided in Current Period | Closing balance of provision for impairment |
| Hai Dai Company Limited | 18,428.00 | 4,759.68 | - | 23,187.68 | - | - |
| Hai Duong Haid Company Limited | 285,279.92 | 66,884.55 | - | 352,164.47 | - | - |
| Haid (Ecuador) Feed Cia.Ltda. | 47,408.35 | 31,176.38 | - | 78,584.73 | - | - |
| Haid Feed Company Limited | 362,610.36 | 76,288.41 | - | 438,898.77 | - | - |
| Haid International Group Limited | 219,003,053.27 | 1,266,134.68 | - | 220,269,187.95 | - | - |
| Hisenor Viet Namaquatic Breeding Co.,Ltd | 36,181.61 | 10,418.53 | - | 46,600.14 | - | - |
| Kinghill Holdings Pte.Ltd | - | 88,108,230.00 | - | 88,108,230.00 | - | - |
| Lanking Pte.Ltd. | 51,011.60 | 379,624,040.54 | - | 379,675,052.14 | - | - |
| PT Hisenor Technology Indonesia | - | 8,873.58 | - | 8,873.58 | - | - |
| PT.Haida Agriculture Indonesia | 163,261.61 | 80,210.63 | - | 243,472.24 | - | - |
| Investee (abbr.) | 2018.12.31 | Increase in Current Period | Decrease in Current Period | 2019.12.31 | Allowance for impairment provided in Current Period | Closing balance of provision for impairment |
| Sheng Long International Ltd. | 262,308.02 | - | - | 262,308.02 | - | - |
| Sheng Long Bio-Tech International Co.,Ltd | 478,066.56 | 127,103.24 | - | 605,169.80 | - | - |
| Sheng Long Bio-Tech(India)Private Limited | 163,831.42 | 37,174.00 | - | 201,005.42 | - | - |
| Vietnam Haibei Biotechnology Co.,Ltd | - | 8,383.38 | - | 8,383.38 | - | - |
| Vink Long Hai Dai Co.,Ltd | 10,201.21 | 11,523.73 | - | 21,724.94 | - | - |
| Anhui Haid | 11,100,532.15 | 147,422.31 | - | 11,247,954.46 | - | - |
| Anyang Haihe | 31,058.87 | 11,695.47 | - | 42,754.34 | - | - |
| Anshan Dachuan | 601,316.34 | 11,813.69 | - | 613,130.03 | - | - |
| Binyang Yitun | 67,131.82 | 989.29 | - | 68,121.11 | - | - |
| Changzhou Haid | 23,932,598.67 | 843,097.49 | - | 24,775,696.16 | - | - |
| Chengdu Haid | 16,455,469.40 | 210,220.26 | - | 16,665,689.66 | - | - |
| Chengnan Hairong | 70,011.97 | 6,799.55 | - | 76,811.52 | - | - |
| Dali Haiwang | 7,897.72 | 3,053.34 | - | 10,951.06 | - | - |
| Dalian Haid | 50,386,845.66 | - | - | 50,386,845.66 | - | - |
| Shanxian Haiding | 138,297.42 | 39,482.25 | - | 177,779.67 | - | - |
| Dingtao Haiding | 149,362.46 | 22,356.93 | - | 171,719.39 | - | - |
| Dingtao Hairong | 229,226.48 | 44,977.10 | - | 274,203.58 | - | - |
| Dongguan Haid | 21,155,785.84 | 160,351.68 | - | 21,316,137.52 | - | - |
| Duyun Yitun | 63,715.00 | 18,850.35 | - | 82,565.35 | - | - |
| Ezhou Haid | 3,120,361.93 | 197,804.19 | - | 3,318,166.12 | - | - |
| Enping Fengwo | 223,633.07 | 63,784.45 | - | 287,417.52 | - | - |
| Enping Yitun | 148,444.85 | 42,502.89 | - | 190,947.74 | - | - |
| Feixian Hairuida | 280,960.37 | 56,322.18 | - | 337,282.55 | - | - |
| Foshan Haid | 3,673,317.53 | 108,848.46 | - | 3,782,165.99 | - | - |
| Foshan Haihang | 22,952,190.50 | 159,670.39 | - | 23,111,860.89 | - | - |
| Investee (abbr.) | 2018.12.31 | Increase in Current Period | Decrease in Current Period | 2019.12.31 | Allowance for impairment provided in Current Period | Closing balance of provision for impairment |
| Foshan Haipu | 7,382,917.08 | 11,567.35 | - | 7,394,484.43 | - | - |
| Foshan Nanhai Bairong | 1,068,954.26 | 114,994.86 | - | 1,183,949.12 | - | - |
| Foshan Sanshuifanling | 15,723,803.23 | 86,509.05 | - | 15,810,312.28 | - | - |
| Fujian Haid | 101,511,401.16 | 252,334.21 | - | 101,763,735.37 | - | - |
| Gansu Haid | - | 8,665.27 | - | 8,665.27 | - | - |
| Ganzhou Haid | 2,701,293.50 | 23,408.59 | - | 2,724,702.09 | - | - |
| Ganzhou Hailong | 15,295.84 | 5,069,321.28 | - | 5,084,617.12 | - | - |
| Gaozhou Sanhe | 138,330.70 | 39,574.54 | - | 177,905.24 | - | - |
| Guangdong Haid Livestock | 51,516,769.37 | 120,146.89 | - | 51,636,916.26 | - | - |
| Guangdong Hairuite | 1,091,194.67 | 9,007,289.02 | - | 10,098,483.69 | - | - |
| Guangdong Hisenor | 1,888,119.63 | 224,725.40 | - | 2,112,845.03 | - | - |
| Guangdong Hinter | 83,987,616.43 | 410,849.39 | - | 84,398,465.82 | - | - |
| Guangdong Shunde Haid | 5,166,037.70 | 56,396.73 | - | 5,222,434.43 | - | - |
| Guangxi Haid | 109,649,628.91 | 89,209.96 | - | 109,738,838.87 | - | - |
| Guangzhou Haijian | 1,000,000.00 | - | - | 1,000,000.00 | - | - |
| Guangzhou Hailong | 3,090,335.84 | 31,143.21 | - | 3,121,479.05 | - | - |
| Guangzhou Haishengyuan | 11,642.38 | - | - | 11,642.38 | - | - |
| Guangzhou Haishengke | 1,000,000.00 | - | - | 1,000,000.00 | - | - |
| Guangzhou Haiyiyuan | 18,714.67 | - | - | 18,714.67 | - | - |
| Guangzhou Haiyin Financing Guarantee | - | 250,000,000.00 | - | 250,000,000.00 | - | - |
| Guangzhou Haiyuan Factoring | 50,104,442.34 | 7,788.92 | - | 50,112,231.26 | - | - |
| Guangzhou Haiyuan Micro-Credit | 500,018,801.48 | 102,888.44 | - | 500,121,689.92 | - | - |
| Guangzhou Mutai | 504,368.24 | 59,038.50 | - | 563,406.74 | - | - |
| Investee (abbr.) | 2018.12.31 | Increase in Current Period | Decrease in Current Period | 2019.12.31 | Allowance for impairment provided in Current Period | Closing balance of provision for impairment |
| Guangzhou Rongda | - | 186.29 | - | 186.29 | - | - |
| Guangzhou Dachuan | 14,016,958.31 | 549,323.72 | - | 14,566,282.03 | - | - |
| Guangzhou Danong | 500,000.00 | - | - | 500,000.00 | - | - |
| Guangzhou Haid | 13,922,127.71 | - | - | 13,922,127.71 | - | - |
| Guangzhou Haifengchang | 500,000.00 | - | - | 500,000.00 | - | - |
| Guangzhou Haihe | 550,000.00 | - | - | 550,000.00 | - | - |
| Guangzhou Haiwei | 15,841,819.75 | 115,339.06 | - | 15,957,158.81 | - | - |
| Guangzhou Heshengtang Veterinary Pharmaceutical | 19,472,324.42 | 141,901.53 | - | 19,614,225.95 | - | - |
| Guangzhou Heshengtang Biotechnology | 3,330,000.00 | - | - | 3,330,000.00 | - | - |
| Guangzhou Meinong | 50,000,000.00 | 75,500,000.00 | - | 125,500,000.00 | - | - |
| Guangzhou Rongchuan | 15,040,883.68 | 49,243.23 | - | 15,090,126.91 | - | - |
| Guangzhou Runchuan | 9,812,949.78 | - | - | 9,812,949.78 | - | - |
| Guangzhou Yitun | 1,527,035.46 | 547,714.19 | - | 2,074,749.65 | - | - |
| Guangzhou Shunkang | - | 45,452.68 | - | 45,452.68 | - | - |
| Guangzhou Xingnong | - | 4,061.77 | - | 4,061.77 | - | - |
| Guangzhou Changsheng Logistics | 10,304,640.30 | 1,539.20 | - | 10,306,179.50 | - | - |
| Guigang Donghuang | 22,376.86 | 4,334.72 | - | 26,711.58 | - | - |
| Guigang Gangbei Yitun | 130,922.67 | 45,181.20 | - | 176,103.87 | - | - |
| Guigang Haid | 5,986,209.50 | 157,350.61 | - | 6,143,560.11 | - | - |
| Guigang Hairong | 75,187.36 | 5,779.62 | - | 80,966.98 | - | - |
| Guigang Qintang Yitun | 12,282.92 | - | - | 12,282.92 | - | - |
| Guiyang Haid Zhihai | 28,805.39 | 15,180.86 | - | 43,986.25 | - | - |
| Haid Pet Care (Weihai) | 33,170.41 | 12,131.38 | - | 45,301.79 | - | - |
| Investee (abbr.) | 2018.12.31 | Increase in Current Period | Decrease in Current Period | 2019.12.31 | Allowance for impairment provided in Current Period | Closing balance of provision for impairment |
| Haid Pet | 10,075,077.92 | 31,963.10 | - | 10,107,041.02 | - | - |
| Hainan Haiwei | 5,000,000.00 | - | 5,000,000.00 | - | - | - |
| Hainan Hisenor | 1,061,860.56 | 73,761.65 | - | 1,135,622.21 | - | - |
| Hexian Haid | - | 1,349.85 | - | 1,349.85 | - | - |
| Henan Haihe | 6,736,768.35 | - | - | 6,736,768.35 | - | - |
| Heze Haiding | 512,338.21 | 140,949.48 | - | 653,287.69 | - | - |
| Heshan Ronghai | - | 52,491.73 | - | 52,491.73 | - | - |
| Hengshan Yitun | 240,171.97 | 55,441.01 | - | 295,612.98 | - | - |
| Hengyang Jisheng | 77,499.46 | 22,481.97 | - | 99,981.43 | - | - |
| Hengyang Yitun | - | 14,442.12 | - | 14,442.12 | - | - |
| Honghu Haid | 2,233,091.27 | 85,999.46 | - | 2,319,090.73 | - | - |
| Hubei Haid | 27,676,374.34 | 800,401.10 | - | 28,476,775.44 | - | - |
| Hunan Innovation | 1,468,667.70 | 82,802.38 | - | 1,551,470.08 | - | - |
| Hunan Dongting Haid | 5,468,211.03 | 87,007.80 | - | 5,555,218.83 | - | - |
| Hunan Haid | 18,772,571.61 | 185,463.05 | - | 18,958,034.66 | - | - |
| Hunan Jinhuilong | 51,000,000.00 | - | - | 51,000,000.00 | - | - |
| Hunan Yitun | 340,160.62 | 83,863.26 | - | 424,023.88 | - | - |
| Huaihua Haid | 329,544.27 | 5,095,586.99 | - | 5,425,131.26 | - | - |
| Huaian Hailong | - | 59,310.82 | - | 59,310.82 | - | - |
| Jining Haiding | 89,259.02 | 15,845.69 | - | 105,104.71 | - | - |
| Jiyuan Haihe | 8,336.48 | 4,814.04 | - | 13,150.52 | - | - |
| Jiaxing Haid | 14,508,922.76 | 35,131.32 | - | 14,544,054.08 | - | - |
| Jiangmen Haid | 83,025,418.05 | 203,531.66 | - | 83,228,949.71 | - | - |
| Jiangmen A&T Xinhui | 25,120,934.33 | 72,289.14 | - | 25,193,223.47 | - | - |
| Jiangsu Dachuan | - | 24,574,189.12 | - | 24,574,189.12 | - | - |
| Jiangsu Haihe | 6,845,593.25 | 30,582.16 | - | 6,876,175.41 | - | - |
| Jiangxi Haid | 74,353,542.76 | 107,874.52 | - | 74,461,417.28 | - | - |
| Jiaozuo Jinhuilong | 4,212.12 | 815.95 | - | 5,028.07 | - | - |
| Jieyang Haid | 972,330.21 | 150,977.09 | - | 1,123,307.30 | - | - |
| Jingzhou Bairong | 11,028.72 | 7,939.42 | - | 18,968.14 | - | - |
| Investee (abbr.) | 2018.12.31 | Increase in Current Period | Decrease in Current Period | 2019.12.31 | Allowance for impairment provided in Current Period | Closing balance of provision for impairment |
| Jingzhou Haid | 101,428,842.90 | 203,457.84 | - | 101,632,300.74 | - | - |
| Kaifeng Haid | 13,149,688.56 | 105,864.71 | - | 13,255,553.27 | - | - |
| Kaifeng Haid | 25,785.02 | - | - | 25,785.02 | - | - |
| Liyang Jiuhe | 64,426,224.82 | 126,985.39 | - | 64,553,210.21 | - | - |
| Lianyungang Haihe | 104,306.05 | 60,865.23 | - | 165,171.28 | - | - |
| Liaocheng Haiding | 116,698.65 | 27,793.63 | - | 144,492.28 | - | - |
| Linyi Hedong Haiding | - | 19,846.72 | - | 19,846.72 | - | - |
| Maoming Hailong | 93,827,062.97 | 136,811.96 | - | 93,963,874.93 | - | - |
| Nanchang Haid | 5,029,705.77 | 147,277.31 | - | 5,176,983.08 | - | - |
| Nanning Haid | 135,797.26 | 78,850.26 | - | 214,647.52 | - | - |
| Nantong Haid | 101,180,953.69 | 118,132.76 | - | 101,299,086.45 | - | - |
| Pingguo Yitun | 91,610.18 | - | - | 91,610.18 | - | - |
| Pingnan Haid | - | 5,604.11 | - | 5,604.11 | - | - |
| Pingnan Yitun | 140,786.06 | 43,223.40 | - | 184,009.46 | - | - |
| Qinzhou Yitun | - | 5,578.99 | - | 5,578.99 | - | - |
| Qingyuan Happy | 3,607,671.37 | 406,388.64 | - | 4,014,060.01 | - | - |
| Qingyuan Haid | 10,318,581.68 | 132,084.18 | - | 10,450,665.86 | - | - |
| Qingyuan Hailong | - | 17,994.90 | - | 17,994.90 | - | - |
| Qingyuan Hainong | - | 25,458.94 | - | 25,458.94 | - | - |
| Qingyuan Ronghai | 757,912.61 | 42,966.42 | - | 800,879.03 | - | - |
| Qujing Zhihai | 2,023,090.64 | 1,925.61 | - | 2,025,016.25 | - | - |
| Rongcheng Rongchuan | 36,565.26 | - | - | 36,565.26 | - | - |
| Rongjiang Yitun | 15,795.43 | - | - | 15,795.43 | - | - |
| Sanming Haid | 5,314,489.44 | 74,187.31 | - | 5,388,676.75 | - | - |
| Shandong Daxin | 286,437,656.05 | 10,616.61 | - | 286,448,272.66 | - | - |
| Shandong Haiding | 5,628,116.25 | 19,256.14 | - | 5,647,372.39 | - | - |
| Shaanxi Haid | 13,457,300.05 | 8,499.45 | - | 13,465,799.50 | - | - |
| Shaoguan Haid | 12,102.09 | 34,452.48 | - | 46,554.57 | - | - |
| Shaoguan Zhenjiang Yitun | 4,558.90 | 9,245.12 | - | 13,804.02 | - | - |
| Investee (abbr.) | 2018.12.31 | Increase in Current Period | Decrease in Current Period | 2019.12.31 | Allowance for impairment provided in Current Period | Closing balance of provision for impairment |
| Shenzhen Longgreat | 1,409,821.33 | - | - | 1,409,821.33 | - | - |
| Shenyang Haid | 2,743,841.46 | 60,596.05 | - | 2,804,437.51 | - | - |
| Shijiazhuang Huilong | - | 1,631.89 | - | 1,631.89 | - | - |
| Shijiazhuang Weike | 49,301,268.70 | 85,424.10 | - | 49,386,692.80 | - | - |
| Sichuan Haile | - | 7,940,000.00 | - | 7,940,000.00 | - | - |
| Sichuan Hailinger | 439,167.17 | 82,896.57 | - | 522,063.74 | - | - |
| Sihui Haifeng | 47,771.89 | - | - | 47,771.89 | - | - |
| Suixian Yuliang Haiding | 96,263.09 | 45,149.11 | - | 141,412.20 | - | - |
| Taizhou Haid | 20,069,860.14 | 259,282.36 | - | 20,329,142.50 | - | - |
| Tengzhou Fengcheng | 33,459.17 | 15,885.29 | - | 49,344.46 | - | - |
| Tianjin Haid | 149,155,038.05 | 159,062.54 | - | 149,314,100.59 | - | - |
| Tianjin Rongchuan | - | 83,491,161.48 | - | 83,491,161.48 | - | - |
| Tianmen Haid | 6,450,310.02 | 197,225.56 | - | 6,647,535.58 | - | - |
| Weinan Haid | - | 16,533.56 | - | 16,533.56 | - | - |
| Wuhan Aquaera | 5,315,854.14 | 18,317.35 | - | 5,334,171.49 | - | - |
| Wuhan Zeyi | 10,000,000.00 | - | - | 10,000,000.00 | - | - |
| Xishui Haid | 3,566,426.28 | 98,795.04 | - | 3,665,221.32 | - | - |
| Xiangtan Haid | 10,330,742.46 | 80,822.39 | - | 10,411,564.85 | - | - |
| Xinxiang Hairuida | - | 4,898.55 | - | 4,898.55 | - | - |
| Suqian Haid | 20,487,155.42 | 75,131.32 | - | 20,562,286.74 | - | - |
| Xuzhou Haid | 66,699.93 | 21,567.43 | - | 88,267.36 | - | - |
| Xuzhou Haihe | 64,714.81 | 7,124.78 | - | 71,839.59 | - | - |
| Xuchang Haihe | 15,757.52 | 3,851.23 | - | 19,608.75 | - | - |
| Xuancheng Haid | 5,283,654.22 | 74,850.78 | - | 5,358,505.00 | - | - |
| Yancheng Haid | 30,411,163.01 | 53,445.38 | - | 30,464,608.39 | - | - |
| Yangjiang Haid | 5,557,386.78 | 145,729.75 | - | 5,703,116.53 | - | - |
| Yangjiang Yangdong Fengwo | 121,353.78 | 35,134.13 | - | 156,487.91 | - | - |
| Yangxi Fengwo | 407,727.30 | 57,146.49 | - | 464,873.79 | - | - |
| Investee (abbr.) | 2018.12.31 | Increase in Current Period | Decrease in Current Period | 2019.12.31 | Allowance for impairment provided in Current Period | Closing balance of provision for impairment |
| Yangxin Bairong | 390,824.72 | 61,324.78 | - | 452,149.50 | - | - |
| Yangling Haid | 55,075.42 | 11,553.72 | - | 66,629.14 | - | - |
| Yinan Haiding | 194,436.45 | 12,215.85 | - | 206,652.30 | - | - |
| Yibin Zhihai | 85,563.84 | 46,277.77 | - | 131,841.61 | - | - |
| Yichang Zhihai | 12,120.89 | 795.07 | - | 12,915.96 | - | - |
| Yicheng Haid | - | 1,942.32 | - | 1,942.32 | - | - |
| Yicheng Yitun | 33,292.59 | 7,369.46 | - | 40,662.05 | - | - |
| Yiyang Haid | 50,822,735.12 | 135,276.83 | - | 50,958,011.95 | - | - |
| Yingde Yitun | 10,481.64 | 21,731.63 | - | 32,213.27 | - | - |
| Yueyang Yitun | 139,137.13 | 55,516.00 | - | 194,653.13 | - | - |
| Yunnan Haid | 6,541,028.72 | 149,179.59 | - | 6,690,208.31 | - | - |
| Yuncheng Haiding | 90,789.59 | 10,817.70 | - | 101,607.29 | - | - |
| Zhanjiang Haid | 17,322,343.77 | 365,660.04 | - | 17,688,003.81 | - | - |
| Zhanjiang Hisenor | 527,055.83 | 118,486.07 | - | 645,541.90 | - | - |
| Zhanjiang Rongda | - | 13,364.14 | - | 13,364.14 | - | - |
| Zhangzhou Haid | 12,648,310.94 | 122,775.40 | - | 12,771,086.34 | - | - |
| Zhangzhou Haijingzhou | - | 11,479.84 | - | 11,479.84 | - | - |
| Zhangzhou Longwen Hairong | 49,969.66 | 12,904.63 | - | 62,874.29 | - | - |
| Zhaoqing Bairong | 24,350.36 | 7,011.71 | - | 31,362.07 | - | - |
| Zhaoqing Gaoyao Haid | - | 7,500.58 | - | 7,500.58 | - | - |
| Zhaoqing Haid | 3,553,607.28 | 49,240.47 | - | 3,602,847.75 | - | - |
| Zhejiang Haid | 99,231,186.45 | 92,807.98 | - | 99,323,994.43 | - | - |
| Zhongshan Ronghai | - | 12,826.63 | - | 12,826.63 | - | - |
| Chongqing Haid | 5,274,849.70 | 39,248.75 | - | 5,314,098.45 | - | - |
| Zhuhai Hailong | 12,712,506.60 | 349,353.66 | - | 13,061,860.26 | - | - |
| Zhuhai Rongchuan | 35,523,328.68 | 597,673.26 | - | 36,121,001.94 | - | - |
| Zixing Yitun | - | 2,967.87 | - | 2,967.87 | - | - |
| Total | 3,084,188,810.69 | 943,811,454.14 | 5,000,000.00 | 4,023,000,264.83 | - | - |
(2) Investment in Associate and joint ventures
| Investee | 2018.12.31 | Movements during the year | 2019.12.31 | Closing Balance of Provision for Impairment | |||||||
| Increase in Current Period | Decrease in Current Period | Investment Profits or Losses Recognized under the Equity Method | Adjustment in Other Comprehensive income | Changes in Other Equity | Declare Cash Dividends or Profits | Provision for Impairment | Others | ||||
| ①Associates | |||||||||||
| Guizhou Fuhai Chemicals Co., Ltd. | 19,363,049.36 | - | - | 9,866,121.66 | - | - | -4,500,000.00 | - | - | 24,729,171.02 | - |
| Bangpu Zhongye Technology Co.,Ltd | - | 2,000,000.00 | - | -875,396.23 | - | - | - | - | 5,000,000.00 | 6,124,603.77 | - |
| Total | 19,363,049.36 | 2,000,000.00 | - | 8,990,725.43 | - | - | -4,500,000.00 | - | 5,000,000.00 | 30,853,774.79 | - |
3. Sales Revenue and Cost of Sales
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 | ||
| Income | Cost | Income | Cost | |
| Principal activities | 788,089,239.19 | 327,336,630.50 | 560,601,766.31 | 193,287,637.00 |
| Other operating activities | 13,402,300.58 | 5,846,739.13 | 100,621,117.49 | 91,887,655.67 |
| Total | 801,491,539.77 | 333,183,369.63 | 661,222,883.80 | 285,175,292.67 |
4. Investment income
| Item | Year ended 31/12/2019 | Year ended 31/12/2018 |
| Income from long-term equity investments accounted for using the cost method | 1,089,318,401.15 | 1,266,931,132.31 |
| Income from long-term equity investments accounted for using the equity method | 8,990,725.43 | 1,415,674.66 |
| Investment income from disposal of long-term equity investments | 14,638,476.78 | 378,220.00 |
| Investment income from held-for-trading financial assets | 111,291,775.81 | —— |
| Investment income from holding financial assets at fair value through profit or loss | —— | 95,184,439.22 |
| Investment income from holding available-for-sale financial assets | —— | 3,882,577.17 |
| Investment income from holding other non-current financial assets | 5,168,056.73 | —— |
| Investment income from disposal of non-current financial assets | 4,382,680.28 | —— |
| Others | - | 12,862,123.30 |
| Total | 1,233,790,116.18 | 1,380,654,166.66 |
XVI Supplementary Information
1. Non-Operating Gains and Losses in Current Period
| Item | Year ended 31/12/2019 | Note |
| Gain or loss on disposal of non-current assets | -699,384.34 | |
| Government subsidies charged to current profit or loss (exclusive of government subsidies given in the Company’s ordinary course of business at fixed quotas or amounts as per government’s uniform standards) | 53,217,210.55 | |
| Gain equal to the amount by which investment costs for the Company to obtain subsidiaries, associates and joint ventures are lower than the Company’s enjoyable fair value of identifiable net asset value of investees when making investments | 3,199,250.94 |
| Item | Year ended 31/12/2019 | Note |
| Gain or loss on changes in fair value of held-for-trading financial assets and liabilities & financial assets and liabilities at fair value through profit or loss (exclusive of effective portion of hedges that arise in the Company’s ordinary course of business) | 4,383,792.92 | |
| Account receivables that are individually tested for impairment and reversal of contract assets impairment | 3,818,866.10 | |
| Non-operating gain and loss other than above | 19,284,324.06 | |
| Other gains or losses that meet the definition of non-operating gains or losses | 5,465,542.39 | |
| Total amount of Non-operating gain and loss | 88,669,602.62 | |
| Less: Income tax effects | 17,653,550.72 | |
| Net amount of Non-operating gain and loss | 71,016,051.90 | |
| Less: Non-controlling interests effects (net of tax) | 3,037,533.07 | |
| Non-operating gain and loss attributable to the ordinary shareholders | 67,978,518.83 |
2. Return on Equity (ROE) and Earnings per Share (EPS)
| Net Income of Reporting Period | Weighted average ROE (%) | EPS | |
| Basic EPS | Diluted EPS | ||
| Net income attributable to ordinary shareholders of the listed company | 19.54 | 1.06 | 1.05 |
| Net income attributable to ordinary shareholders of the listed company after deducting the non-operating gain and loss | 18.74 | 1.01 | 1.00 |
Section XIII. Documents Available for ReferenceI. The 2019 Annual Report signed by the legal representative.II. The financial statements signed and sealed by the legal representative, the Vice General Manager and theChief Financial Officer.III. The original copy of the Independent Auditor’s Report signed and sealed by the CPAs, as well as sealed by the
CPA firm.IV. The originals of all the Company’s announcements and documents which were disclosed during the Reporting
Period on the Company’s designated newspapers for information disclosure, namely, China SecuritiesJournal, Securities Times, Securities Daily and Shanghai Securities News.V. All the said documents are available at the Securities Department of the Company.
Guangdong Haid Group Co., LimitedLegal representative: Hua Xue18 April 2020