Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Guangdong Haid Group Co., Limited
2020 Annual Report
Stock Code: 002311
Date of Approval for Publication: 17 April 2021
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Section I. Important Notes, Table of Contents and Definitions
The board of directors (the "Board"), the supervisory committee, the directors,
the supervisors and the senior management of Guangdong Haid Group Co.,
Limited (the "Company") hereby warrant the truthfulness, accuracy and
completeness of the information presented in this report, guarantee that there
are no misrepresentations, misleading statements or material omissions
contained in this annual report, and are individually and collectively responsible
for the authenticity, accuracy and completeness of the information contained in
this report.
Mr. Hua Xue, head of the Company, and Mr. Shaolin Yang, head in charge of
accounting work and head of the accounting department (Accounting Officer),
declare that they warrant the truthfulness, accuracy and completeness of the
financial statements in the annual report.
All directors were present in person at the Board meeting to consider and
approve this annual report.
The Report contains forward-looking statements such as future plans, which do
not constitute any specific undertakings by the Group to its investors. Investors
are advised to pay attention to investment risks.
Risk Warning:
1. Risk of Periodical Fluctuations in the Feed Industry due to Abnormal
Weather and Epidemic Diseases during Animal Production
The feed industry mainly serves the downstream animal feeding industry. The
abnormal changes in natural elements such as precipitation and typhoon may
lead to fluctuations of the inventory of livestock or aquatic products and even
the large-scale outbreak of animal diseases. This thus affects the demand for
feed and likely causes the risk of periodic and regional fluctuations of the latter.
With the environmental changes and the expansion of animal production
industry, animal epidemic diseases may also occur occasionally. For instance, the
African swine fever virus broke out across China in August 2018; and
PRRSV-mediated pig disease, shrimp-relevant EMS epidemic disease and
poultry-relevant “H7N9” disease all occurred recently. The outbreak of animal
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diseases will directly inhibit the scale of animal production and reduce the
demand for feed in the short term; major animal epidemic diseases may dampen
the demand from end-consumers, leading to a downturn of the animal
production industry, and further affect the feed demand, giving rise to adverse
effects on the production and operation of feed enterprises.
Risk management methods: (1) The Company is currently fully deploying
factories and developing local markets in 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 weather anomalies and natural disasters in local areas. (2)
The Company's feed varieties cover pig feed, chicken feed, duck feed, goose feed
and other livestock feed and fish feed, shrimp feed and other aquatic feed. With
a variety of products and a well-balanced structure, it can effectively mitigate
the risk of single breed species and has strong comprehensive risk-relieve
capability.
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 and soybeans (soybean meal). In recent years, the
domestic and international markets of agricultural product have been closely
linked. Changes in the planting area and harvest of crops in major
grain-producing countries, purchasing and storage and subsidy policies, import
and export policies, political conflicts between countries, international trade
relations, fluctuations in logistics capacity and conditions of shipping, exchange
rates, and others may cause great fluctuations in prices of agricultural products,
which, in turn, has a certain impact on the cost of feed and farming. With the
strengthening of the internationalization in trade of agricultural products, the
factors for changes in the prices of agricultural products have become more
complex and the price fluctuations have therefore increased. If the Company
fails to understand the changes in the trade of feed raw materials in a timely
manner and promptly implement strategic management and risk control of
procurement, the Company may face the risk of rising procurement costs.
Risk management methods: (1) The Company divides raw material into
different categories and implements a combination of centralized procurement
of staple category and local procurement of regional varieties, which not only
guarantees the advantages of large-scale raw material procurement, but also
obtains localization advantages from rapid response in respect of regional
procurement; (2) The Company continuously invests in the construction of the
raw material procurement research system. The team of the professional raw
material information research department is relatively mature. It conducts
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strategic procurement through the real-time tracking, research and judgment of
the domestic and foreign bulk raw material market trends, and implements
position risk management for bulk raw materials through futures hedging, raw
materials trade and other tools to effectively control procurement risks; (3) The
Company has accumulated extensive experience in research and development of
animal nutrition and feed formulation technologies, and has research and
development team composed of nearly 2,000 employees. Large amounts of funds
are invested on research and development each year, focusing on animal
nutrition requirements, feed formulation technology, animal farming and
genetic improvement, comprehensive investigation on healthy animal farming
strategies, and other research areas. The Company has a profound
understanding of animal nutritional requirements and higher level of expertise
in comprehensive utilization of raw materials. Therefore, in case of raw material
price fluctuations, it can quickly adjust the formula to control the reasonable
feed nutrient level and formula costs.
3. Risk of Structural, Regional and Scale Adjustment to Farming Industry under
Environmental Protection Regulations and Policies
In recent years, the State has introduced a series of environmental protection
laws and regulations including the new Environmental Protection Law (环保法),
the Regulations on Prevention and Control of Pollution from Large -Scale
Production of Livestock and Poultry (畜禽规模养殖污染防治条例), Action Plan
for Prevention and Treatment of Water Pollution (水污染防治行动计划), the
Guiding Opinions on Adjusting the Layout of Pig Production in the Southern
Water Network Region (关于促进南方水网地区生猪养殖布局调整优化的指导
意见), and the antibiotic ban, which stipulate the pollution prevention and
control of animal production industry, 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 been set up throughout the country, and pig farms in the banned
areas in the southern water network area are gradually relocating. The
implementation of environmental protection policies will speed up the
withdrawal of private pig farming farmers, reduce the backward production
capacity failing to meet environmental protection standards and with a small
scale, and enable large -scale farmers to continuously expand their production
capacity and improve the farming scale and structure; In addition, the
establishment of banned areas and restricted areas will enforce adjustments to
the pig production capacity in all places across the country. The adjustments to
the scale composition of pig production and the relocation of pig production area
will certainly have a profound impact on the existing capacity layout, market
share, pricing power and business model of the feed industry. The impact of
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enforced environmental protection policies on the pig growing and feed
industries puts existing competitive companies in the marke t at risk of reshuffle.
Risk management methods: (1) The Company continually improves its
capability to serve farmers. In addition to feed products, the Company is also
engaged in the industrial chain of animal healthcare products, vaccines and
finance and has a strong tie to large-scale farmers; (2) The feed varieties of the
Company cover 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 layout
and 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 large
environmental carrying capacity, and to obtain the market share of new animal
farming areas. (4) The Company continues to increase R&D investment, and its
research results in key technologies of microbial fermented feed and feed
antibiotic substitutes have been effectively applied to foster the advancement
and development of the industry.
4. Risk of Exchange Rate Fluctuations
The global procurement of raw materials has become the norm. The scale of
overseas investment and overseas operations of the Company is also rapidly
expanding. The scale of cross-border fund settlement and the stock of overseas
assets have grown substantially, involving the currency types of various related
countries. Currency exchange rate fluctuations are subject to different influence
factors, and exchange rate fluctuations in any currency may have a certain
impact on the settlement cost and asset value of the region.
Risk management methods: (1) Based on the business scale, business model, and
settlement characteristics in different regions and countries, the Company
strictly controls the exchange rate risks, carefully selects settlement currencies,
and strives to achieve relatively balanced regional fund inflow and outflow
through structural arrangements of financing sources and financing types; (2)
The expansion of two-way fluctuations in the RMB exchange 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 cycle characteristics of import and export
operations. And forward foreign exchange settlement and sale, swaps, foreign
exchange options and other financial instruments are flexibly used to lock the
exchange rate risks, control procurement and sales costs, and control the
possible risk resulted from exchange rate fluctuations.
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
The proposed profit distribution plan of the Company was considered and
passed by the Board: on the basis of the total number of shares on the date of
record minus the repurchased shares when the plan is implemented in the future,
the Company will distribute cash dividend of RMB 3.2 (tax inclusive) and 0
bonus share (tax inclusive) for every 10 existing shares held by all shareholders
without capitalization of capital reserve.
This report has been prepared in both Chinese and English. Should there be any
discrepancies or misunderstandings between the two versions, the Chinese
version shall prevail. The complete published Chinese 2020 Annual Report is
available at
http://www.cninfo.com.cn/new/disclosure/detail?stockCode=002311&announcem
entId=1209723720&orgId=9900009032&announcementTime=2021-04-20.
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Table of Contents
Section I. Important Notes, Table of Contents and Definitions ......................................................1
Section II. Company Profile and Key Financial Indicators ......................................... 8
Section III. Business Overview ................................................................................ 14
Section IV. Discussion and Analysis of Operations .................................................. 24
Section V. Material Matters ...................................................................................... 64
Section VI. Share Changes and Shareholder Information ....................................... 107
Section VII. Preferred Shares ................................................................................. 120
Section VIII. Convertible Corporate Bonds ............................................................ 121
Section IX. Directors, Supervisors, Senior Management and Staff ......................... 123
Section X. Corporate Governance .......................................................................... 136
Section XI. Corporate Bonds .................................................................................. 146
Section XII. Financial Statements .......................................................................... 147
Section XIII. Documents Available for Reference .................................................. 327
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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 2020 to 31 December 2020
last year, the same period of last year the period from 1 January 2019 to 31 December 2019
the end of the period 31 December 2020
the beginning of the period or the year 1 January 2020
CSRC China Securities Regulatory Commission
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Section II. Company Profile and Key Financial Indicators
I. Company profile
Stock name Haid Group Stock code 002311
Stock exchanges on which the
Shenzhen Stock Exchange
shares are listed
Chinese name of the Company 广东海大集团股份有限公司
Chinese abbreviation of the
海大集团
Company
English name of the Company
Guangdong Haid Group Co., Limited
(if any)
English abbreviation of the
HAID GROUP
Company (If any)
Legal representative of the
Hua Xue
Company
Room 701 , Building 2，Haid Mansion，No. 42，Road 4, Wangbo, Nancun Town, Panyu Dist，
Registered address
Guangzhou，China.
Postal code of registered
511445
address
Room 701 , Building 2，Haid Mansion，No. 42，Road 4, Wangbo, Nancun Town, Panyu Dist，
Office address
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
Board Secretary Securities Affairs Representative
Name Zhijian Huang Jiewen Lu and Huafang Yang
Room 701 , Building 2，Haid Mansion， Room 701 , Building 2，Haid Mansion，
Correspondence address No. 42，Road 4, Wangbo, Nancun Town, No. 42，Road 4, Wangbo, Nancun Town,
Panyu Dist， Guangzhou，China Panyu Dist， Guangzhou，China
Telephone 8620-39388960 8620-39388960
Facsimile 8620-39388958 8620-39388958
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Email address zqbgs@haid.com.cn zqbgs@haid.com.cn
III. Information disclosure and places for inspection
Securities Times, China Securities Journal, Securities Daily, Shanghai
Designated media for information disclosure
Securities News
Designated websites for the publication of
www.cninfo.com.cn
the Annual Report as approved by CSRC
Places for inspection of the Company’s
Securities Department of the Company
Annual Report
IV. Change in registration
Organisation registration code No change
Change of principal activities since its
No change
listing (if any)
Change of the controlling shareholder (if
No change
any)
V. Other relevant information
CPAs 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
Wenyuan Guan and Shuxia Zhang
Public Accountants
Sponsors engaged by the Company to continuously perform its supervisory function during the reporting period
√ Applicable □ Not applicable
Name Office address Representative Period of supervision
111 Fuhua First Road, Futian
China Merchants Securities Co., Ziqiang Kang and Xiaoliang From 16 April 2020 to 31
Street, Futian District,
Ltd. Shen December 2021
Shenzhen
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
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□ Yes √ No
Increase/decrease
for the year as
2020 2019 2018
compared to the
prior year
Operating income (RMB) 60,323,862,405.94 47,612,587,464.50 26.70% 42,156,628,800.11
Net profit for the year attributable
to shareholders of the parent 2,522,730,419.35 1,648,762,579.59 53.01% 1,437,281,732.28
company (RMB)
Net profit for the year attributable
to shareholders of the parent
2,459,587,964.11 1,580,784,060.76 55.59% 1,394,557,560.67
company after deducting the
non-recurring gain or loss (RMB)
Net cash flows from operating
485,259,232.03 3,246,980,705.08 -85.06% 1,035,764,006.33
activities (RMB)
Basic earnings per share (RMB per
1.60 1.06 50.94% 0.9
share)
Diluted earnings per share (RMB
1.60 1.05 52.38% 0.9
per share)
Rate of return on equity on
23.87% 19.54% 4.33% 20.21%
weighted average basis
Increase/decrease
as at the end of
As at the
As at the end of 2019 the year compared As at the end of 2018
end of 2020
to the end of
the prior year
Total assets (RMB) 27,526,958,371.19 18,854,315,218.31 46.00% 17,365,663,861.06
Total equity attributable to
shareholders of the parent 13,972,788,864.41 9,103,789,731.01 53.48% 7,745,939,076.96
company (RMB)
Whether the lower of the net profit for the year attributable to shareholders of the parent company before and after deducting the
non-recurring gain or loss was negative for the last three accounting years, and the latest independent auditor’s report indicated that
there was uncertainty about the Company’s ability to continue as a going concern
□ Yes √ No
Whether the lower of the net profit for the year attributable to shareholders of the parent company before and after deducting the
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non-recurring gain or loss was negative
□ Yes √ No
VII. Differences in accounting data under domestic and overseas accounting standards
1. Differences between the net profit and net assets disclosed in accordance with international accounting
standards and China accounting standards in the financial report
□ Applicable √ Not applicable
There was no difference between the net profit and net assets disclosed in accordance with international accounting standards and
China accounting standards in the financial report during the reporting period.
2. Differences between the net profit and net assets disclosed in accordance with overseas accounting
standards and China accounting standards in the financial report
□ Applicable √ Not applicable
There was no difference between the net profit and net assets disclosed in accordance with overseas accounting standards and China
accounting standards in the financial report during the reporting period.
VIII. Key Financial Indicators by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Operating income 10,491,833,608.90 15,394,090,966.02 17,919,935,213.06 16,518,002,617.96
Net profit for the year attributable
to shareholders of the parent 303,687,270.44 800,326,429.80 969,441,641.84 449,275,077.27
company
Net profit for the year attributable
to shareholders of the parent
305,340,906.20 795,522,343.88 932,527,077.82 426,197,636.21
company after deducting the
non-recurring gain or loss
Net cash flows from operating
-264,442,060.74 549,798,766.13 -694,709,163.42 894,611,690.06
activities
Whether the above indicators or their aggregated amounts have any material difference with the respective amounts as disclosed in
the quarterly report or interim report
□ Yes √ No
IX. Items and Amounts of Non-recurring Gains or Losses
√ Applicable □ Not applicable
Unit: RMB
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Item Amount for 2020 Amount for 2019 Amount for 2018 Explanation
Gain or loss on disposal of non-current
-8,506,037.63 -699,384.34 -581,071.09
assets
Government grants charged to current profit
or loss (excluding government grants given
in the Company’s ordinary course of 123,628,058.53 53,217,210.55 66,315,959.91
business at fixed quotas or amounts as per
government’s uniform standards)
Investment costs for acquisition of
subsidiaries, associates and joint venture less
1,749,131.53 3,199,250.94
than gains from the fair value of identifiable
net assets of the investees
Except for the effective hedging activities
related to the Company's ordinary activities,
profit or loss arising from changes in fair
value of financial assets held for trading,
derivative financial assets, financial
liabilities held for trading, and derivative
292.58 4,383,792.92 -175,206.74
financial liabilities, and investment income
from disposal of financial assets held for
trading, derivative financial assets, financial
liabilities held for trading, derivative
financial liabilities, and other debt
investments
Reversal of provision for bad and doubtful
debt where accounts receivable and contract 3,118,886.26 3,818,866.10 3,466,834.57
assets are individually tested for impairment
Profits or losses from external entrusted
18,750.00
loans
Other non-operating incomes and expenses,
-43,325,417.81 19,284,324.06 -12,961,386.26
except for the above
Other gain or loss satisfied the definition of
5,465,542.39 1,263,559.84
non-recurring gain or loss
Less: impact of Income tax 9,094,660.10 17,653,550.72 11,931,518.80
Less: impact of non-controlling interests（net
4,446,548.12 3,037,533.07 2,672,999.82
of tax）
Total 63,142,455.24 67,978,518.83 42,724,171.61 --
Notes for the Company’s non-recurring gain or loss items as defined in the Explanatory Announcement on Information Disclosure for
Companies Offering Their Securities to the Public No.1 - Non-recurring Gain or Loss (公开发行证券的公司信息披露解释性公告
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第 1 号——非经常性损益) and the non-recurring gain or loss items as illustrated in the Explanatory Announcement on Information
Disclosure for Companies Offering Their Securities to the Public No.1 - Non-recurring Gain or Loss (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-recurring gain or loss items as defined or illustrated in the Explanatory Announcement on Information Disclosure for
Companies Offering Their Securities to the Public No.1 - Non-recurring Gain or Loss (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.
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Section III. Business Overview
I. Principal Operations of the Company during the Reporting Period
(I) Principal operations, main products and business models of the Company during the reporting period
The Company develops industrial chains with the aim of providing overall solutions to animal farming. It has
created a vertically integrated aquaculture business, and its livestock & poultry industry chain is being built
steadily. The Company's principal products include high-quality animal seedlings, feeds, animal healthcare
products, and pig farming. The Company’s businesses cover the research and development（R&D）, design,
production, sales, service and related activities for various products. Specifically, the Company's products include
feeds for chickens, ducks, geese, pigs, fishes, shrimps and crabs, farmed species such as pig, shrimp, fish fry and
chickens, as well as chemical and biological products, veterinary medicine, vaccines and other products needed
for the production of livestock, poultry and aquatic animals.
1. Principal operations and products
(1) Provision of feeds, seedlings and animal healthcare products for animal farming
Feed business is the core foundation of the Company. With a deep understanding of the critical points of
production, the Company has developed its aquatic seedlings and animal healthcare business into key segments
that facilitate the growth of the feed business -- thanks to over a decade of relentless efforts. In the feed sector, the
Company has gathered a wide range of customer resources over the past two decades. It provides customers with
high-quality animal seedlings with high demands in the market and cost-effective feed products, and its farming
technical services spur the development of vaccines, veterinary medicines, biological products and other animal
healthcare products, providing comprehensive solutions to help farmers achieve success. Therefore, the Company
enables customers to achieve sustainable animal farming while implementing better control over the cost and
gaining competitive advantages in respect of end products.
(2) Extended development of animal farming and product processing
Based on the successful development of feeds, seedlings and animal healthcare products, the Company has
extended its core competitive edges in animal farming, and therefore in recent years, has commenced efforts to
develop animal farming and food processing business. In livestock & poultry business, the Company currently
focuses on pig farming and is steadily expanding into pig and poultry slaughtering. In aquaculture, it uses its
high-quality seedlings, feeds and animal healthcare products to farm and process speciality aquatic products such
as fishes and prawns. As the R&D investment in aquatic products yields results, the Company plans to involve in
the farming and processing of high-quality fishes and shrimps.
2. Major business models
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The Company started up from the feed business. Its rich customer resource helps deeply understand and explore
customer needs. This results in a continually expanded profile of products and service to the customer, which
gradually extends from feed to high tech areas with increased value-added products, such as animal seedlings,
veterinary medicines and vaccine products. The scale of production and sales of high value-added products has
gradually expanded and resulted in a greater proportion in income structure year by year. In recent years, through
the extension of the industrial chain, the Company has further attempted to enter into areas of farming and food
processing. The business model has been developed and extended in an orderly manner with various industrial
segments interactively supporting and developing each other.
(1) Feeds, seedlings and animal healthcare products
In particular, for the feed business which has the largest scale, the business management is mainly carried out with
the business model of centralized procurement of raw materials, distribution of production layout, sales of
products accompanied 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
materials. Such operations can achieve better procurement cost advantages and risk control, because of being
closer to the market, convenient in logistics and rich in resources. Currently, the Company had feed factories
distributed in nearly 100 cities in China and Southeast Asia; Distribution together with direct sales is the
Company's main sales model. Focusing on localized marketing, the Company has fully established distribution
channels to efficiently solve farmers' capital and transportation needs. Through service stations established in
main production areas, the technical service teams directly visit farmers to provide professional services for
farming and have achieved functional complementation and collaboration with sales organization and
management 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 the
Company to provide services and constitute a package of integrated solutions for farmers.
The business models for seedlings and animal healthcare products reflect the distinctive features of research and
development with technology as the guide, differentiated products as the carrier, and service support as the main
promotion strategy. Seedlings and animal healthcare products demand a long period of investment in research and
development. Technology accumulation needs better predictability and market insight, and strong originality of
products. To provide better service support, it is necessary to invest in long term and to build service teams with
advanced technology, knowledge, and experience. Therefore, a multi-tiered research and development system has
been chosen for the business management model, supplemented by a production base that has a relatively high
starting point for investment and a marketing strategy with a more aggressive power.
(2) Animal farming and processing business
The Company's pig farming segment is in its early stage of development, which adopts both the "self-breeding +
farming community" model and "Company + family farm" model. The "self-breeding + farming community"
model means that seedlings are introduced and bred to create a farming system of grandparent - parent -
commercial pig, under which reproduction is separated from breeding to ensure that the farming process is safe
and controllable. The "Company + family farms" model means that the Company provides family farmers with
necessary products for farming, such as seedlings, feeds, and vaccines, and reaches agreement with them on the
main technical requirements for farming, while the farmers are directly responsible for animal rearing and transfer
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the products to the Company for sales.
The Company is also a new player in the aquatic animal farming and processing sector, and its primary aquatic
products are fishes, prawns and other specialty products. With its strengths in high-quality seedlings, feeds, animal
healthcare and technologies, the Company is capable of standardized large-scale farming, supplying sustainable,
healthy, traceable aquatic products (processed products) to large catering enterprises and fresh food platforms.
The Company has set up specialized function departments including research institute, procurement center,
financial center, operation and development center, marketing center, process and information management center,
human resource center and Haid College at its headquarters, and set up multiple regional/business divisions
according to regions or business categories. Each professional center aims at acquiring technical and management
leadership in its field and provides technical and management standards as well as integrated and professional
management and service support for large regions/business divisions and various branches and subsidiaries. All
regional/business divisions build management platforms, give full play to the collaboration mechanism for R&D,
procurement, production and management, strengthen the ability to swiftly respond to the market, fully explore
market potential, and enhance refined management efficiency of all business sectors.
(II) Development stage and periodic characteristics of and position of the Company in the industries where the
Company operated during the reporting period
1. Industry development stage
Driven by consumption upgrade, increasing awareness of food safety, technological innovation, introduction of
more stringent environmental protection regulations, and pandemics, China's farming industry has entered the
stage of industrialized, large-scale, intensive and intelligent development. However, due to resources, technologies,
land and other objective factors, the large-scale development level varies product from product. In particular,
poultry farming is at the highest level of industrialized, large-scale and intensive development, followed by pig
farming, whereas aquatic products and cattle & sheep are in their early development stage. With the intensification
development of the farming industry as well as the improvement of farming techniques, sectors such as feeds and
animal healthcare products are moving towards increasingly intensive development, and industry integration is
accelerating. Specially:
China's feed industry began its development in the 1980s. After more than 40 years of development, the total
volume of feed production in China has continuously ranked the top in the world in recent years. The national
feed output grew in 2020. According to the Overview of the Development of the National Feed Industry in 2020
(《2020 年全国饲料工业发展概况》) released jointly by the Ministry of Agriculture and Rural Affairs and the
China Feed Industry Association, China's total output of feeds exceeded 250 million tons in 2020, representing a
year-on-year increase of 10.4%, including pig feeds of 89.225 million tons (up 16.4%), poultry feeds of 125.277
million tons (up 8.17%), and aquatic feeds of 21.23 million tons (down 3.6%). The level of industry concentration
continued to rise. In 2020, China has 33 feed enterprise groups with an annual feed output of more than 1 million
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tons, accounting for 54.6% of the country's total output. It is expected that the numbers of players will drop further
as the industry consolidation continues. Superior enterprises will make good use of the opportunity of industry
consolidation and their scale advantages to extend the industrial chain or develop diversified businesses through
mergers and acquisitions as well as construction of new production capacities. Confronted with the development
bottlenecks in terms of capital pressure, talent pressure, technical pressure and service capacity, SMEs will
gradually be merged by dominant enterprises or eliminated from the market.
The high-quality animal seedlings have a huge market space. However, most of high-quality seedlings for farmed
species, especially aquatic seedlings, are currently under-supplied. There are fewer new strains with proprietary
intellectual property right, and the production capacity is small. It is far from meeting the demands of the animal
farming industry to upgrade and progress. In a longer period, there will be pressure in respect of achieving
research and development progress and increasing production supply capacity.
The market demand of animal healthcare products has grown rapidly. In particular, with the uprising of
consumption, the upgrading of farming species has significantly increased the demand for health, safety, and
green farming. The concept of prevention over treatment has been increasingly accepted by a wide range of
farmers. The help of reasonable animal healthcare product investment for farming is mainly reflected in the direct
effects of a reduced disease risk, improved health and safety-added values of products, controllable farming costs,
and improved farming efficiency, as well as a number of extended effects including reduced labor intensity and
improved industrial chain extension capability. In the future, the capacity of the animal healthcare industry will
see a greater room for further development on the basis of the current situation, and dominant enterprises will cash
in major market development opportunities.
The pig farming business is rapidly moving towards large -scale, intensive, and factory-oriented development. The
outbreak of African swine fever (ASF) in 2018 the COVID-19 pandemic in 2020 have accelerated consolidation
in the industry. Small-scale farmers and private farmers quickly withdraw from the market, while large companies
are expected to expand their farming size rapidly amid the pandemic by virtue of their superiority in investments,
technology and the epidemic prevention and control system. Thus, large family farms with strong epidemic
prevention capacity are expected to become the key players other than large enterprises.
China's aquatic product industry is dominated by farming and supplemented by fishing. In recent years, the
summer fishing moratorium policy has expanded the farming of aquatic products at a faster pace. With the
adoption of intelligent and automatic technologies, farming capacity has been enhanced rapidly, and large-scale
farming will accelerate the growth of aquaculture business. With the rising consumption, the development of the
catering industry and the increasing awareness of food safety, the demand for reliable, safe and high-quality
aquatic animal protein is steadily growing. The change in consumption structure will drive the supply of high-end
aquatic products. Farming enterprises with high-quality seedlings and strong technical and financial strengths are
poised to become leaders in the field of aquaculture. The market space will be much broader amid the continuous
technological innovation in the sector.
2. Periodic characteristics of the industry
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The cycle of the animal production industry is mainly determined by the supply end (feeding capacity). The cycle
of feed, animal healthcare products, seedlings and other industries follow the same cycle.
China is a country with a large population. Residents have a huge food consumption demand which remains
relatively 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 animal
production 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 is
greater than the consumer demand, the terminal price of the farmed species will fall, resulting in farming loss and
sluggish 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-grade
feed products, the enthusiasm of feed feeding, the sensitivity of feed product prices, and the effective transfer of
feed raw material price fluctuations, etc., the cyclical factors of the feed industry, including seedlings and animal
healthcare, offset each other, with a limited impact on feed products. The feed industry features a weak cycle.
3. Position of the Company in the industries in which the Company operates
The Company is a large integrated enterprise.
For feed business, although the industrial concentration is increasing, the sector remains decentralized. In 2020,
the Company sold 14.66 million tons of feed, accounting for approximately 5.80% of China's total feed output. It
ranked second among all Chinese feed producers, with an increased market share, but there is still much room for
improvement. The Company's aquatic feed ranks at the forefront of the domestic industry due to its technological
and scale leadership; and the livestock and poultry feed ranks among the top ten in the industry and in a leading
position in technology and industry scale in the regional market. The Company ranks among the top ten feed
enterprises 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 a
leading role in the industry in respect of technology and market shares.
The Company is recognized as a Key National Leading Enterprise for Industrialization of Agriculture, a
State-Level Enterprise Technology Center, and is among the top 500 Chinese companies, the top 500 Chinese
manufacturing companies, the top 500 privately-held companies in China, the 2020 Fortune China 500, and
China's Agricultural Flagship Enterprise in 2020.
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II. Material Changes of Major Assets
1. Material Changes of Major Assets
Major assets Description
During the reporting period, the Company’s equity assets decreased by 1.34% from the
Equity assets
beginning of the period, mainly because investees declared cash dividends.
During the reporting period, the Company’s fixed assets increased by 22.31% from the
beginning of the period, mainly because the Company’s projects under construction were
Fixed assets transferred to fixed assets after completion and being put into production in the year, as
well as due to the acquisition of new companies and the increase in purchase and
construction of production equipment.
During the reporting period, the Company’s intangible assets increased by 12.03% from
Intangible assets the beginning of the period, mainly due to the new land use rights, software use rights
and trademark rights, etc.
During the reporting period, the construction in progress of the Company increased by
Construction in progress 142.00% from the beginning of the period, mainly due to the new factory buildings and
equipment that were not ready for their intended use.
During the reporting period, the Company’s inventories increased by 62.56% from the
beginning of the period, mainly due to the increase in stocks of raw materials for
Inventories
production and the inventory of consumptive biological assets at the end of the period as
a result of the rising prices of agricultural commodities.
2. Major Assets Overseas
□ Applicable √ Not applicable
III. Analysis of Core Competitiveness
The Company's products and services are centered on the needs of the animal production industry. Its core
competitiveness is represented by the capability of creating values for customers while carrying out the mission of
changing rural China. Specifically, its core competitive edges include a diversified and complete product
configuration, outstanding single product advantage, comprehensive farming technology service capabilities,
industrial layout and the ability to organize the development of the industrial chain-related links, the lean
management capability, and an attractive system of talent incentive and development.
1. Diverse and complete product configurations to provide farmers with complete products and solutions covering
the whole production process
Centering on the animal farming chain, after many years of technological investment, transformation of research
and development achievements, product accumulation, production layout, etc., the Company's product
configuration has reached a relatively diversified and complete state and covered the whole process of animal
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farming including feed, functional feed, seedlings, drugs, vaccines, biological products, etc. and it is still under
further development. With respect to feed products, the Company is one of the few feed producers in China that
can produce feed for fish, shrimps, pigs, meat poultry and egg poultry. And it is fairly competitive in all the
product categories, with a large market share all in major markets. Product configuration capability requires strong
insights into customer demands, R&D capability, results conversion capability, investment in construction of
production facilities, processing organization capability, marketing promotion capability, and technical service
capability.
The Company has rich technical research reserves and an R&D team composed of more than 2,000 employees. It
annually invests a considerable amount in R&D, with expertise in multi-disciplinary fields of animal nutrition,
veterinary medicine, animal farming and genetic improvement, animal farming strategy optimization,
bioengineering, biochemistry and machinery. The fast transformation of R&D outcomes, and rapid
implementation of investment supporting strategies contribute to the Company's strong product configuration
capability.
For example, for feed formulations, the Company, through more than 20 years of accumulation in continuous
research and development, has established a huge database of animal nutrition requirements and reserved a variety
of raw material formula technologies. Thousands of sets of comparative experimental results are added to the
database of core nutritional needs of animals and raw materials utilization to convert technologies into
productivity. Therefore, the Company has a strong capacity in terms of organization and continuous optimization
of product formulas and adaptation to changes. To quickly adjust the formula when the raw material prices
fluctuate can achieve cost competitive advantages.
The Company has teams for technical services and marketing with a deep understanding of its technologies and
products, who visit farms or farming sites to know the actual farming situation in a timely manner. Therefore, the
Company has detailed data sources for terminal consumption habits, animal growth performance after feed
utilization, epidemic disease prevention, animal farming strategy and animal farming needs, and can accurately
grasp the demands of farmers and precisely propose technical requirements on product design to support full
concentration of the Company's technical resources on customer's core needs.
The Company provides farmers with comprehensive farming solutions covering seedlings, farming technologies,
disease prevention, farming model, health and environmental protection solutions. Meanwhile, business
development lays a more solid foundation for R&D and technological innovation that pave the way for the further
development of the industry.
2. Clear and excellent product performance is the Company's most important competitive advantage
For all series of products, the Company is dedicated to creating product superiority that is significantly ahead of
its competitors and has invested heavily in the explicit expression of product performance.
Despite of a high price, high-end products have the obvious advantage of ultimate pursuit of animal survival rate,
growth efficiency and have a prominent brand effect. On the basis of ensuring leading production efficiency,
middle-end products are close to the competitors' product pricing and are pursuing outstanding cost
competitiveness. Therefore, in light of the industry’s overall good farming benefits, the Company’s customers,
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with the support of integrated products, can obtain significantly higher returns than other farmers; in the event that
the industry’s farming benefits decline and even the entire industry suffers losses, the Company’s customers can
suffer less or even no loss.
The manifestation of product power requires the support of various internal professional capabilities of the
Company: the research and development capabilities of animal nutrition and raw material utilization, product
formula technology capability, raw material value procurement capability, efficient internal operation capability
are all indispensable. For example, in respect of support of purchase capacity, the Company’s procurement team
has outstanding professional capabilities. The team is young and specialized, and it performs division of labor
according to subdivided raw material categories. The wide industry perspective and a large amount of information
acquisition and analysis ensure tracking, research, and judgment of the market trends of bulk raw materials at
home and abroad in a real time and utilization of futures instruments for hedging of bulk raw materials to
effectively control the purchase price risk and position risk. The prominent purchase capability can identify
numerous raw material purchase opportunities, making cost advantages for feed products and trade of raw
materials possible. The Company is the first company to successfully achieve centralized purchase in the industry.
It has clear advantages in respect of large-scale purchases. Besides, it is sophisticated in the combined application
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, the business sharing system and other management software, the Company has a strong information-based
system, and internal operations are streamlined, standardized, and data-based. The role of data-based operation 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. The platform-based
management mechanism enables swift allocation of production, R&D, procurement and personnel resources to
respond to the market and match the market and customer needs in a more flexible, fast and efficient fashion.
Efficient operation capacity underpins effective organization of specialized production of all kinds of products.
3. The comprehensive animal farming technical service system is an important initiative for the Company to
coordinate product chain, create value for customers and continuously acquire new customers and improve
customer royalty
In 2006, the Company took the lead in the industry to provide comprehensive technical services to farmers, and
positioned the Company as a service-oriented enterprise providing animal farming solutions to 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 – finance support" to
ensure that farmers can use the most advanced farming technology to ensure farmers’ growing success and
profitability. The Company has a technical service team composed of nearly 8,000 talents with the most
experience and most passion in the industry; it has also accumulated a variety of advanced animal farming models
based on local characteristics; its hundreds of highly efficient service stations in farming concentrated areas
throughout the country can simultaneously provide technical services for tens of thousands of farmers. The
Company's relatively complete service system in the industry can give full play to its product strengths and
provides a full range of technical services for farming, which can effectively amplify the benefits for customers,
thereby boosting customer royalty.
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The Company started farming technical services by aquaculture services. After over a decade of efforts to build
professional teams and platforms, the Company's process and concept of farming technical service system have
penetrated all aspects of products, technologies, R&D, market and operation, significantly driving the growth of
the aquatic animal feeds and animal healthcare products. Besides, the process and concept have been gradually
applied to poultry and pig farming. In recent years, the Company has achieved remarkable results in boosting the
development of livestock and poultry business by setting up livestock and poultry service stations.
The comprehensive animal farming technical services have become an important brand label of the Company and
an important means to create value for customers, obtain customers and boost customer royalty.
4. The Company's existing industrial layout advantage supports the Company to quickly organize the
comprehensive development of multiple links in the industrial chain, reserve of new businesses in order, and the
increasingly prominent industrial comprehensive advantages.
The Company's feed products include a full range of feed products for livestock, poultry and aquatic feeds. The
product line is complete and the product mix features endow the company with a strong anti-risk capability.
Different kinds of feed products have different technical contents, different gross profit margins, and different
market characteristics and operational risks. The Company's product mix makes it possible for the Company to
obtain higher gross profit margins than the industry's general level, and to better control the market operational
risks caused by animal epidemic diseases and imbalance of supply and demand and ensures the Company's stable
revenue from sales of feed products and maintain a rapid growth much higher than that of the industry.
Over the years, the Company has orderly developed high-quality aquatic animal seedlings, aquatic animal
healthcare products, livestock and poultry vaccines, veterinary drugs, animal healthcare products for livestock and
poultry, pig farming and other businesses. The core technologies in industrial chain have gradually gained
advantages 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 solid foundation for the Company to further
amplify the multiplier effects of the industrial chain and create comparative competitive advantages.
5. Continuously building excellent operation management team and lean management capability to promote
sustainability
The Company has a hard-working, dedicated, professional management team with a consistent philosophy. Most
of the members of the team are graduated from agricultural institutions of higher learning and have a strong
technical background. The management has a profound and comprehensive understanding of the feed industry and
has accumulated extensive 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 feed industry
and the Company's ever-increasing operational management requirements in terms of academic background,
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+″ model
have also constantly impacted the industry. To promote the transformation and innovation of the industry and
create corporate mechanism and culture, i.e. the collective learning capacity that can quickly respond to changes
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enabling the Company to continuously create value for customers, is the foundation for the Company to gain
sustainable competitive advantages.
From producing aquafeed premixture to manufacturing compound feeds for various aquatic species including
freshwater fish, marine fish, and shrimps, from having leading advantages in aquatic feeds at the beginning to
gradually having apparent advantages extended to feed for livestock and poultry, from simple feed production
operation to provision of comprehensive services including seedlings, animal healthcare and animal farming
technical 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 of
development from scratch to become stronger and larger and to rank the forefront of the industry, relying on the
collective learning ability of the Company’s management and all employees. Affected by this culture and benefits
from this capacity, the Company keeps learning and growing.
6. The sound talent training system and effective incentive mechanism promote the sustained and stable
development of the Company
The Company continues to foster an organizational climate where talent training is valued. Haid College and the
Human Resources Center have built a training system covering the whole career of employees, all businesses of
the Company and all positions. A learning ecosystem that combines popular education and elite training has been
established and standardized. In addition, the Company provides skill training programs appropriate to the
development of employees at all levels with a view to quickly nurturing more internal professionals. With the
Company's continuous business development and further expansion of business network, many young
professionals who are young, enthusiastic, energetic, and have new ideas in this new era have become the
mainstay of the Company's middle management and core technology teams. Through school-enterprise
cooperation and industry-education integration programs, the Company recruits a large number of outstanding
graduates every year, who compose a talent reserve that supports sustainable corporate development. China
Vocational Education Group of Modern Fishery and Rural Revitalization College, established by the Company,
have encouraged many farmers to participate in the cultivation of technical and industrial talents. The internal and
external talent development systems can generate professionals for the Company and empower industry
development, thus promoting the progress of the industry as a whole.
Since its listing, the Company has implemented equity incentive plans and employee stock ownership plans for
core management members and core technical experts at many levels. It has put in place a mechanism of
long-term and short-term incentives and constraints under which the interests of the management members and
core technical experts are consistent with the interests of all shareholders. Performance targets are set and linked
to incentives to ensure the accomplishment of the Company's development strategies and business objectives so
that the Company can maintain sustained and stable growth.
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Section IV. Discussion and Analysis of Operations
I. Overview
(I) Industry situation
The outbreak of the COVID-19 pandemic in 2020 had a significant impact on the food and beverage consumption
of Chinese people. As the pandemic has been under control, the Chinese economy has managed to recover, but the
overall consumption remains in the doldrums. The international trade relations in the context of the geopolitical
landscape became increasingly complex, and the agro-product prices went up sharply and fluctuated considerably.
COVID-19 created uncertainties as to the development of the traditional real economy, which, coupled with the
low food consumption and rising agro-product prices as well as the resurgence of ASF, brought many difficulties
to feed and farming sectors. Tremendous changes took place in the industry development landscape.
Pig farming and feed sectors. Hog in stock continued to increase steadily. In 2020, 527.04 million pigs were
produced and 406.5 million pigs were in stock, which recovered to 76% and 95% of 2018's levels, respectively,
according to the Statistical Communiquéon 2020 National Economic and Social Development (《2020年国民经
济和社会发展统计公报》) released by the National Bureau of Statistics of the PRC. Pig prices fluctuated at high
levels throughout the year, and farming was very lucrative. Thanks to the steady growth of pig in stock and a low
base over the last year, China's total output of pig feed for the whole year was 89.225 million tons, an increase of
16.4% over the same period last year, indicating a return to about 90% of the levels before the outbreak of ASF in
2018 and 2017. Driven by the high profitability of pig farming, traditional large-scale pig feed enterprises shifted
their focus to pig farming business, while reducing or even stopping investment in the pig feed sector. Small pig
feed enterprises were in a worsening situation as they faced difficulties in material procurement (supply and cost
control) and were not recognized in terms of biological prevention and control capabilities. Against the backdrop
of the outbreak of ASF, the competitive landscape of the pig feed sector underwent profound changes, and there
was a market reshuffle.
Poultry farming and feed sectors. Poultry farming was stuck in a long-term downturn cycle. In the first half of
2020, as the COVID-19 pandemic affected consumption, especially live poultry consumption, live poultry prices
fell to the bottom. In the second half, due to the gradual increase in pork supply, the consumption share taken by
others was recovered. As a result, the poultry farming sector (yellow chickens and meat ducks) remained
loss-making from the end of 2019 to the end of 2020. China's total poultry feed output for the whole year was
125.277 million tons, up 8.17% over year on year. Although the sales volume increased from the prior year,
poultry feed sector faced pressure from the ongoing loss-making situation and a sharp rise in raw material prices,
remaining subdued. The poultry farming and feed sectors fell from their highs in 2019 to the bottom, with many
SMEs and large enterprises struggling to survive, or shutting down, or managing to achieve a business
transformation.
Aquaculture and feed sectors. The aquaculture sector was at a low level before a rise, achieving good profitability
throughout the year. In the first half of 2020, in the wake of the COVID-19 pandemic, the "Xinfadi" incident, and
floods in some regions, the seedling, circulation and consumption of aquatic products were all considerably
affected. Especially, in recent years, as crayfish and bullfrog are popular among Chinese consumers, the demand
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for aquatic products has more than halved; thus, the farming and feed sectors have all suffered heavy losses.
However, due to the drop in the deployment of aquatic seedlings in the first half of the year, the supply of aquatic
products remained tight in the second half of the year. Therefore, the prices of aquatic products were better in the
second half, generating good profits. Furthermore, the decrease in aquatic products in stock resulted in weak
demand for aquatic feeds. The total domestic aquatic feed output in China for the whole year was 21.236 million
tons, down 3.6% year on year. The decline in feed demand further intensified market competition, with many
enterprises recording a drop in sales volume and profits.
On the one hand, these were attributable to COVID-19, low consumption, a big climb in raw material prices,
intensifying competition and other operating uncertainties. On the other hand, many SMEs in the feed sector shut
down in the middle of the year, as a result of the industry-wide technological progress, enhanced management,
expansion of economies of scale, accelerating efforts to industrialize agriculture, and the introduction of more
stringent policies. Consequently, industry consolidation increased faster.
(II) Review of the Company's businesses
During the reporting period, the Company, in adherence to the principle of creating value for customers, continued
its efforts to build value chains with the aim of providing better customer services, and comprehensively upgraded
its services. It increased R&D investment and market research on raw materials, optimized product structure, and
enhanced product competitiveness. It built an efficient platform-based management model to offer customers the
best cost-effective products and services in a more flexible and efficient way. The Company carried out Harvest
Operation and Thunder Operation. Internally, it created a climate where all employees strove for excellence,
conducted benchmarking management, enhanced product competitiveness; externally, it constantly expanded
market shares and built more competitive edges over competitors. During the reporting period, the Company
continued to enhance its product competitiveness and brand competitiveness, with growth in all the business
segments of feeds, animal healthcare products, seedlings and farming. It recorded operating income of RMB
60,323.8624 million, an increase of 26.70% over the last year. The net profit for the year attributable to the
shareholders of the parent company stood at RMB 2,522.7304 million, up 53.01% year on year. Thus, the
Company's competitive advantages have been further strengthened.
1. A sound farming service system was built, focusing on feeds, seedlings and animal healthcare products
The Company has forged strong synergy among feeds, seedlings and animal healthcare products to increase the
benefits from farming services. High-quality seedlings and animal healthcare products based on services have
created a strong driver for feed sales. At the same time, competitive feed products have become the driving force
and key source of customers for seedlings and animal healthcare products. Feeds, seedlings and healthcare
products have become the three key business segments that underpin the sustainable development of the
Company.
(1) Feed business
During the reporting period, despite all the difficulties and operating uncertainties, the Company, in adherence to
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the principle of creating values for customers, managed to sell feed of 14.66 million tons (excluding 540,000 tons
of self-use feed for farming business), a steady and rapid increase of 19.33% year on year, and the gross profit
margin was 10.32%, down by 0.52 percentage point from the prior year (if adjustment to recognized income and
cost under accounting standards in the year is excluded, the gross profit margin rose by 0.11 percentage point year
on year under the same statistical standard as last year).
The sales volume of poultry feed expanded by 20% year on year, and the gross profit margin declined by 0.86
percentage point year on year. To respond to the substantial increase in the agro-product prices, the Company
leveraged its technical strengths to adjust product formulas in time to mitigate the relevant impact and control feed
costs. In the meanwhile, the Company actively acquired customers as large-scale farming companies, providing
them with customized and personalized solutions and products in line with their farming conditions, market
positioning and demands. The Company also joined hands with large-scale farming companies to achieve win-win
outcomes through industrial chain cooperation. During the reporting period, the Company, based on its
aquaculture service system that has been continuously refined for many years, established livestock & poultry
farming service stations in key markets to provide farmers with animal healthcare solutions, vaccine products and
other related services, helping them enhance their farming value. On the basis of high-quality products,
development of big customers and farming services, the Company's sales volume grew considerably; especially, in
the core poultry feed markets -- South China and North China -- the Company's market share expanded
significantly. In the newly developed poultry feed market -- Southeast Asia, the sales volume more than doubled.
Besides, the Company's poultry feed profitability was higher than that of the industry, with evident competitive
edges.
The sales volume of pig feed rose by 37% year on year, and the gross profit margin was up by 0.94 percentage
point compared to last year. These indicated that the Company achieved rapid breakthroughs in pig feed business,
with record-high gross profit margin. As for product competitiveness, the Company built more than 30 pig feed
test sites across China, which have a number of doctors and masters specializing in the development of new pig
feed products. Thus, the Company enhanced its ability to commercialize and apply R&D achievements. According
to the nutritional needs of each process of pig production, health improvement and other needs, the Company
continued to roll out more pig feed products to better improve disease resistance, uniformity, growth rate and
birth rate of pigs. The rollout and promotion of high-end products and comprehensive technical service methods
such as anti-ASF further expanded the Company's pig feed market influence and enhanced competitiveness. Sow
feed, creep feed, concentrate and suckling pig feed continued to be high cost-effective, further optimizing the
product structure. In particular, the development of the northern market was accelerated fully, with sales volume
close to two times higher than that before ASF (2018), and some products were exceptionally popular among local
customers. In the context of epidemic prevention, the Company, by leveraging digital means for transformation of
technical services, developed the online and offline service model of "Internet + Services". It offered farmers
online training and answered their questions through live streaming, video, WeChat official accounts,
communities and other new media means. The training programs covered such topics as farming model
improvement & plan optimization, disease prevention and control, farming fund planning and arrangement,
market conditions, and market forecast and analysis. Furthermore, on the basis of the on-site testing and services
of offline livestock & poultry farming service stations, the Company provided technical services covering the
entire farming process. These programs helped farmers enhance their profitability as well as disease prevention
and control capacity. The optimization and improvement of the pig feed product structure, successful development
of the northern market and the establishment of the service system all demonstrated the great enhancement of
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Company's capacities in R&D, resource allocation, production, service and operation of pig feed products. The
Company's product competitiveness and brand recognition have been fully acknowledged by the market, and there
is still huge room for growth in the pig feed market of the Company in the next few years.
The sales volume of aquatic feed rose by 10% year on year, and the gross profit margin was on par with the prior
year. Due to the COVID-19 pandemic in the first half of the year, the transportation and seedling of aquatic
products were affected. The seedling season was missed, leading to a decline in seedling volume. The principal
farming areas of ordinary aquatic products (four common fishes and other traditional aquatic products) were in
Central China, with Hubei Province as one of the key areas. Affected by COVID-19, the seedling of aquatic
products in Hubei dropped significantly, and the feed demand for the whole year reduced substantially. Also, some
areas in Central China were hard hit by floods in the middle of the year, directly leading to a 9% drop in the
Company's annual sales volume of aquatic feed. The aquatic feed profit in Central China was under pressure.
Besides, crayfish feed in Central China was also severely impacted by the decline in consumption, with a flat sales
volume and a decline in profit. Other varieties and regions registered notably good market performance. Driven by
the Company's feeds, seedlings and animal healthcare products, the sales volumes of shrimp and crab feed and
high-grade floating fish feed all climbed, with the annual sales volume of shrimp and crab feed (including crayfish
feed in Central China) by 25%. In particular, the annual sales volume of shrimp and crab feed in East China made
recorded a record-high increase of more than 50% year on year, far above the market average. The production
capacity of high-grade floating fish feed (fish, sea bass, etc.) somewhat expanded, and the products maintained
highly competitive, with the annual sales volume rising more than 30% over last year. Especially, the annual sales
of California perch feed went up by more than 60%. The Company's structure of aquatic feeds was optimized
notably, with shrimp and crab feed and high-grade floating fish feed accounting for 47% of aquatic feeds. The
gross profit margin of aquatic products for the whole year was flat, and the gross profit per ton achieved
year-on-year growth, despite the overall poor performance of original aquatic feeds.
(2) Animal healthcare products
During the reporting period, the Company registered sales revenue of animal healthcare products of RMB 665
million, an increase of 15.78% year on year and a gross profit margin of 51%. The Company comprehensively
enhanced the professionalism of aquatic animal healthcare services through tool upgrading, service deepening and
product innovation and created a new high-tech service platform called Aquatic Epoch Service Station. By
referring to the advanced technologies of human medicine and veterinary medicine, intelligent monitoring, the
Company applied professional testing and accurate diagnosis and treatment to the aquaculture sector and
effectively commercialized its R&D achievements made over the years. It built a "Tertiary A Hospital" for the
aquatic farming sector, which includes testing, diagnosis, prevention, treatment and training -- a comprehensive
service platform that integrates industry products and leading technologies. During the reporting period, the
Company's aquatic animal healthcare products were considerably affected by the decline in crayfish farming, with
the annual sales revenue up by 9.24% year on year, representing a deceleration. Drawing upon the practices in
development of aquatic services, the Company commenced the construction of livestock & poultry service
stations with professional veterinarians and service engineers, with the aim of making them service-oriented
suppliers of livestock & poultry farming services. They will provide a wide range of products of seedlings,
medicine and devices for farming to quickly apply and commercialize advanced products and technologies of the
Company. Thus, the Company's service system will be more comprehensive, professional, accurate and efficient.
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(3) Seedling business
During the reporting period, the Company's revenue from seedling business amounted to RMB 586 million, an
increase of 66% over the last year, with a gross profit margin of 53%. Seedlings are the basis of farming and the
foundation of developing farming sector. Guided by the principle of "driving agricultural development with
technologies and giving priority to developing improved varieties", the Company has forged synergy between its
seedling business and animal healthcare products, which plays a vital role in giving full play to the advantages of
the Company's industrial chains. The Company's seedlings primarily include fish fry and shrimp fry. In terms of
fish fry, the Company has built five R&D bases and more than 20 production bases. Through more than 10 years
of R&D efforts, the Company has achieved fruitful results in the selection, improvement, reproduction and
large-scale development of improved varieties. The Company is able to supply California perch fry all year round.
It has addressed the off-season supply problem, greatly improving the farming efficiency and advancing industrial
progress as well as feed sales growth. Thanks to years of R&D, the Company has created and adopted a
controllable, standardized production and management model for shrimp seedlings, covering breeding,
propagation and reproduction, especially in the breeding of white shrimp. Its self-breeding varieties have clear
advantages and have been recognized by farmers. During the reporting period, the sales revenue of shrimp
seedlings grew by 68% year on year, and the gross profit margin climbed by more than 8 percentage points. The
Company is committed to rendering green, healthy, high-quality and high-yield aquatic seedlings to customers. Its
further strengthening and investment in production, study, research, education, reproduction and promotion will
provide a more solid foundation for the development of its industrial chains.
2. The industrial chains of farming and processing businesses were extended on the basis of enhancing core
competitiveness
(1) Pig farming business registered revenue of RMB 3,794 million, up 175.46% year on year, with a gross profit
margin of 30%. The annual hog output was nearly 1 million. During the reporting period, resurgences of ASF took
place in some areas, and anti-ASF became a new normal. Through nearly two years of efforts, the Company has
built a pig farming team with professional technologies, veterinary technologies and environmental treatment
technologies, as well as good anti-ASF methods. Operationally, pig farming and production, veterinary medicine,
breeding, nutrition, cost control and other systems have been basically put in place, leading to a substantial rise in
the survival rate of pigs. The Company will continue to build a modern, technology-based and intensive pig
farming model. With the continuous construction of independent pig farms, the cost of pig farming of the
Company will be better controlled in the future.
(2) The poultry industry chain generated revenue of RMB 1,805 million, representing an increase of 81.27% over
the same period last year. The scale of the poultry industry chain is still small at present. During the reporting
period, the poultry farming sector was in the doldrums, and the Company's poultry industry chain suffered a slight
loss. The Company's poultry industry chain includes poultry farming and meat poultry slaughtering, which are
extended businesses on the basis of the principal businesses and are in their early development stage. As the
Company gains a better understanding of the market and terminal, the poultry industry chain, feeds and animal
healthcare products will support mutually in development, so that the Company can better understand the industry
in exploring the development of the industrial chain and more effectively leverage its competitive edges of the
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industrial chain.
(3) As for the aquaculture business, the Company carried out special aquaculture business during the reporting
period, which is still in its early development stage. By leveraging its advantages in special aquatic feeds,
seedlings and technical services established for many years, and in-depth research and understanding of the
market, the Company will be able to go further in the development of special aquatic industry chain.
3. Trade business
During the reporting period, the Company recorded revenue from raw materials trade of RMB 4,405 million,
down 15.28% year on year. During the reporting period, the agro-product prices fluctuated dramatically, with the
prices of major feed raw materials such as corn and soybean meal on a continuous rise. The Company gave
priority to ensuring its own production demand during the procurement of agro-products, resulting in a decline in
raw materials trade.
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 operating income
Unit: RMB
2020 2019
% of operating % of operating Increase/decrease
Amount Amount
income income
Total operating
60,323,862,405.94 100% 47,612,587,464.50 100% 26.70%
income
By industry
Feed industry 53,955,776,608.48 89.44% 44,871,383,878.06 94.24% 20.25%
Farming industry 6,368,085,797.46 10.56% 2,741,203,586.44 5.76% 132.31%
By product
Feed sales 48,765,213,907.42 80.84% 38,985,186,067.96 81.88% 25.09%
Animal healthcare
664,662,163.91 1.10% 574,064,192.41 1.21% 15.78%
products sales
Agricultural sales 6,368,085,797.46 10.56% 2,741,203,586.44 5.76% 132.31%
Trade business 4,404,959,107.51 7.30% 5,199,456,961.28 10.92% -15.28%
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Other 120,941,429.64 0.20% 112,676,656.41 0.24% 7.33%
By region
Southern China 34,089,748,602.32 56.51% 26,044,702,214.86 54.70% 30.89%
Eastern China 8,782,920,530.71 14.56% 6,301,474,741.13 13.23% 39.38%
Northern China 21,128,275,963.35 35.02% 16,583,504,018.01 34.83% 27.41%
Central China 12,591,006,531.74 20.87% 10,075,744,770.11 21.16% 24.96%
Overseas 5,586,714,516.28 9.26% 4,285,189,298.17 9.00% 30.37%
Combined offset -21,854,803,738.46 -36.23% -15,678,027,577.78 -32.93% -39.40%
Note: Sales of agricultural products include sales of seedlings, pigs, poultry and aquatic products.
(2) Industries, products or regions accounting for over 10% of operating income or operating profit of the
Company
√ Applicable □ Not applicable
Unit: RMB
Increase/decreas
Increase/decreas e Increase/decrease
e of operating of operating of gross profit
income as costs margin as
Gross profit
compared to the
Operating income Operating costs as compared to compared to the
margin
corresponding the corresponding
period of the corresponding period of the
prior year period of the prior year
prior year
By industry
Feed industry 53,955,776,608.48 48,350,322,343.75 10.39% 20.25% 20.58% -0.25%
Farming
6,368,085,797.46 4,941,457,315.68 22.40% 132.31% 132.62% -0.11%
industry
By product
Feed sales 48,765,213,907.42 43,734,476,976.26 10.32% 25.09% 25.82% -0.52%
Animal
healthcare 664,662,163.91 328,469,521.22 50.58% 15.78% 24.51% -3.46%
products sales
Agricultural
6,368,085,797.46 4,941,457,315.68 22.40% 132.31% 132.62% -0.11%
sales
Trade business 4,404,959,107.51 4,257,457,841.99 3.35% -15.28% -15.59% 0.35%
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By region
Southern China 34,089,748,602.32 29,852,879,701.80 12.43% 30.89% 30.88% 0.01%
Eastern China 8,782,920,530.71 8,176,185,580.43 6.91% 39.38% 40.22% -0.56%
Northern China 21,128,275,963.35 19,899,292,170.13 5.82% 27.41% 27.27% 0.10%
Central China 12,591,006,531.74 11,747,755,245.47 6.70% 24.96% 24.60% 0.28%
Overseas 5,586,714,516.28 4,940,394,296.64 11.57% 30.37% 29.91% 0.31%
Under the circumstances that the statistics specification for the Company’s principal operations data experienced adjustment in the
reporting period, the principal operations data upon adjustment of the statistics specification at the end of the reporting period in the
latest year
□ Applicable √ Not applicable
(3) Whether revenue from sales in kind is higher than revenue from services
√ Yes □ No
Increase/
By industry Item Unit 2020 2019
decrease
Sales volume 10,000 tones 1,466.07 1,228.64 19.32%
Feed industry Production output 10,000 tones 1,469.58 1,259.01 16.73%
Inventories 10,000 tones 18.64 15.13 23.20%
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 product
Unit: RMB
2020 2019
% of total Increase/decre
By industry Item % of total
Amount operating Amount ase
operating costs
costs
Feed industry Material costs 46,208,636,806.18 95.57% 38,314,454,972.39 95.55% 20.60%
Feed industry Labor costs 577,162,499.20 1.19% 502,192,987.50 1.25% 14.93%
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Manufacturing
Feed industry 1,381,867,251.75 2.86% 1,250,454,649.07 3.12% 10.51%
expenses
Contract
Feed industry performance 152,737,782.34 0.32%
costs
Feed industry Others 29,918,004.28 0.06% 32,057,368.59 0.08% -6.67%
Total of feed
48,350,322,343.75 100.00% 40,099,159,977.55 100.00% 20.58%
industry
Farming industry Material costs 3,977,617,606.06 80.49% 1,798,900,558.11 84.68% 121.11%
Farming industry Labor costs 632,978,273.06 12.81% 211,537,541.78 9.96% 199.23%
Manufacturing
Farming industry 323,797,587.09 6.56% 113,813,839.66 5.36% 184.50%
expenses
Contract
Farming industry performance 7,063,849.47 0.14%
costs
Total of farming
4,941,457,315.68 100.00% 2,124,251,939.55 100.00% 132.62%
industry
By product
Unit: RMB
2020 2019
% of total Increase/decre
By product Item % of total
Amount operating Amount ase
operating costs
costs
Feed sales Material costs 41,661,229,143.22 95.26% 33,027,101,264.23 95.02% 26.14%
Feed sales Labor costs 568,414,674.05 1.30% 493,259,024.87 1.42% 15.24%
Manufacturing
Feed sales 1,370,569,543.68 3.13% 1,239,282,995.49 3.57% 10.59%
expenses
Contract
Feed sales performance 134,263,615.31 0.31%
costs
Total feed sales 43,734,476,976.26 100.00% 34,759,643,284.59 100.00% 25.82%
Animal
healthcare Material costs 289,949,820.97 88.27% 243,706,084.30 92.38% 18.98%
products sales
Animal
Labor costs 8,747,825.15 2.66% 8,933,962.63 3.39% -2.08%
healthcare
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products sales
Animal
Manufacturing
healthcare 11,297,708.07 3.44% 11,171,653.58 4.23% 1.13%
expenses
products sales
Animal Contract
healthcare performance 18,474,167.03 5.632%
products sales costs
Total animal
healthcare 328,469,521.22 100.00% 263,811,700.51 100.00% 24.51%
products sales
Agricultural sales Material costs 3,977,617,606.06 80.49% 1,798,900,558.11 84.68% 121.11%
Agricultural sales Labor costs 632,978,273.06 12.81% 211,537,541.78 9.96% 199.23%
Manufacturing
Agricultural sales 323,797,587.09 6.56% 113,813,839.66 5.36% 184.50%
expenses
Contract
Agricultural sales performance 7,063,849.47 0.14%
costs
Total agricultural
4,941,457,315.68 100.00% 2,124,251,939.55 100.00% 132.62%
sales
Trade business Sales costs 4,257,457,841.99 100.00% 5,043,647,623.86 100.00% -15.59%
Total of trade
4,257,457,841.99 100.00% 5,043,647,623.86 100.00% -15.59%
business
Other Sales costs 29,918,004.28 100.00% 32,057,368.59 100.00% -6.67%
(6) Change of scope of consolidation during the reporting period
√ Yes □ No
During the year, the scope of consolidation included 389 subsidiaries. For details, please refer to the Note "VII.
Interests in Other Entities" in Section XII “Financial Report". The scope of consolidation of the Company in this
year increased by 78 and reduced by 6 as compared with the last year. For details, please refer to the Note "VI.
Change in Consolidation Scope" in Section XII "Financial Report".
(7) Significant change in or adjustment of the businesses, products or services of the Company during the
reporting period
□ Applicable √ Not applicable
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(8) Sales to major customers and major suppliers
Sales to major customers of the Company
Total sales to top 5 customers (RMB) 1,478,247,841.14
Total sales to top 5 customers as a percentage of the total
2.45%
sales for the year
Sales to top 5 customers who are related parties as a
0.00%
percentage of the total sales for the year
Information on top 5 customers of the Company
As a percentage
No. Name of customer Sales (RMB) of the total sales
for the year (%)
1 No. 1 488,455,184.26 0.81%
2 No. 2 307,099,971.95 0.51%
3 No. 3 237,149,622.61 0.39%
4 No. 4 224,001,055.82 0.37%
5 No. 5 221,542,006.50 0.37%
Total -- 1,478,247,841.14 2.45%
Other explanation of major customers
√ Applicable □ Not applicable
The top five customers of the Company are mainly customers of the trade business. The top five customers have no related
relationship with the Company. The Company’s directors, supervisors, senior management, core technical personnel, shareholders
holding more than 5% of shares, actual controller and other related parties do not have direct or indirect interest in the major
customers. The top five customers accounted for 2.45% of total annual sales. The Company’s sales revenue does not depend on
single or top five customers.
Major suppliers of the Company
Total purchases from top 5 suppliers (RMB) 5,649,597,067.41
Total purchases from top 5 suppliers as a percentage of
11.96%
the total purchases for the year
Total purchases from top 5 suppliers who are related
0.00%
parties as a percentage of the total purchases for the year
Information on top 5 suppliers of the Company
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As a percentage of
No. Name of supplier Purchases (RMB) the total purchases
for the year (%)
1 No. 1 2,230,205,414.68 4.72%
2 No. 2 1,175,967,239.49 2.49%
3 No. 3 766,229,585.66 1.62%
4 No. 4 743,550,935.36 1.57%
5 No. 5 733,643,892.22 1.55%
Total -- 5,649,597,067.41 11.96%
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, se nior
management, core technical personnel, shareholders holding more than 5% of shares, actual controller and other related parties do
not have direct or indirect interest in the major suppliers. The top five suppliers accounted for 11.96% of total annual purchases. The
Company’s purchases do not depend on single or top five suppliers.
3. Expenses
Unit: RMB
Increase/
2020 2019 Reasons for material changes
decrease
Mainly because the Company adopted
the new accounting standard governing
Selling and distribution revenue for the current period, and
1,342,844,756.41 1,562,696,499.51 -14.07%
expenses product transport expenses and port
charges were recognized in operating
costs as contract performance costs
Mainly due to the expansion of the
Company's operating scale, the
General and
1,558,972,459.50 1,190,746,169.15 30.92% increase in management personnel and
administrative expenses
their salary and benefits, and the
increase in office expenses
Financial expenses 236,239,259.96 211,949,889.53 11.46% Increase in bank loans
Mainly due to a higher number of
Research and
479,306,685.65 416,009,959.72 15.22% R&D personnel and higher salaries for
development expenses
the R&D personnel in a bid to enhance
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the research and development
4. Research and development investments
√ Applicable □ Not applicable
R&D provides the basis for the survival of the Company while continuous increase in R&D spending serves as the
basis for the sustainable development of the Company. During the reporting period, the Company spent RMB491
million on R&D (including R&D expenses and development costs), up by 14.63% year on year. By focusing on
breeding/nutrition/health/farming and food, the Company built an industrial leading R&D system for the whole
industrial chain. While raising the spending on application technology, the Company focused on strengthening the
building of technology platforms for various business modules on the industrial chain and formed a three-level
R&D system covering from the research in platform technology and the development of application technology to
the application of system solutions. The Company’s R&D team currently comprises more than 2,100 members,
including nearly 500 holding PhD and Master’s Degree (The whole Group has a total of 1,084 employees holding
PhD Degree and Master’s Degree), providing adequate HR foundation for the improvement of the Company’s
R&D system.
During the reporting period, the Company continued to make R&D investment for all the industry chains, and
adopted a three-tier R&D system while focusing on strengthening the first- and second-tier R&D platforms, thus
ensuring the sustainable output and rapid commercialization of technological achievements. The first-tier R&D
platform mainly focuses on basic and forward-looking research on the development prospects of the industry with
a view to gathering strengths for the Company's continuous technological innovation, the second-level R&D
platform concentrates on addressing common market issues to continuously enhance product competitiveness; the
third-level R&D platform aims to help farmers address the problems that they encounter during farming. The
basic research has constantly improved the Company's databases with core competitiveness, such as "Animal
Nutrition and Feed Formula Database", "Microbial Strain Database", and "Molecular Genetics and Breeding
Database". At the same time, the Company has conducted more in-depth, forward-looking research to produce
technology reserves for areas with higher added value, such as breeding, vaccines and animal healthcare products,
as well as more and more comprehensive varieties, e.g., aquatic products, poultry, and pig diseases in relation to
the vaccine field. In addition, in view of the prominent common problems faced by the feed sector in 2020, like
full antibiotic ban, accurate nutrition, shortage of raw material resources, mismatch between formula and process/
technology, the Company has done technical research and made breakthroughs in related fields, thus further
enhancing the independent innovation capacity and market competitiveness.
In terms of industry-education-research collaboration, the Company has conducted various forms of such
collaboration with more than 50 domestic and foreign colleges and research institutes. The collaboration modes
include jointly building industry-education-research collaboration bases, academicians’ workstations and key
laboratories. The Company actively carried out horizontal projects, took part in government projects, and joined
forces to solve key, common, prospective and emergency problems facing the sector. During the reporting period,
the Company undertook and was involved in 26 ongoing government projects in total, including eight state-level,
eight provincial, seven municipal and three district-level projects. During the reporting period, the Company
actively supplied talents to the industry and other enterprises through the "Enterprise Postdoctoral Research
Workstation in Panyu Energy-Saving Science & Technology Park". It has recruited and nurtured 41 postdoctoral
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talents in collaboration with Ocean University of China, Institute of Hydrobiology, Chinese Academy of Sciences,
Sun Yat-sen University, among other universities and research institutes.
In 2020, with the implementation of the full antibiotic ban, the Company leveraged its technology reserves built
up over years and creatively integrated internal and external resources to make breakthroughs and layouts in feed
technology, farming management, environmental control, biological control, and other areas. It addressed piglet
diarrhea and chicken coccidiosis that arose after antibiotic ban, ensuring success in the comprehensive promotion
of antibiotic-free feeds and market stability. Therefore, the Company won the trust of farmers. The company will
continue active actions to pursue green and healthy farming using antibiotic-free feeds and driven by
technological innovations, to foster the sustainable development of the farming sector. The Company aims to
make breakthroughs in key technologies in the biosynthesis of antibiotic-free feeds, provide systematic solutions
for substitutes of feed containing antibiotics, and demonstrate and promote solutions to propel industrial progress
and development.
Research and development investments of the Company
2020 2019 Percentage change
Research and development
2,162 1,623 33.21%
headcount
Ratio of research and
8.24% 7.81% 0.43%
development personnel
Research and development
490,795,848.72 428,148,011.70 14.63%
investments (RMB)
Research and development
investments as % of operating 0.81% 0.90% -0.09%
income
Capitalized amount of research
and development investments 12,836,233.50 0.00 100.00%
(RMB)
Capitalized research and
development investments as %
2.62% 0.00% 2.62%
of total research and
development investments
Reasons for significant change in total research and development investments as % of operating income
□ Applicable √ Not applicable
Reasons for significant change in capitalization rate of research and development investments and explanations thereon
□ Applicable √ Not applicable
5. Cash flows
Unit: RMB
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Increase/
Item 2020 2019
decrease
Sub-total of cash inflows from
62,715,373,846.39 50,517,055,726.03 24.15%
operating activities
Sub-total of cash outflows for
62,230,114,614.36 47,270,075,020.95 31.65%
operating activities
Net cash flows from operating
485,259,232.03 3,246,980,705.08 -85.06%
activities
Sub-total of cash inflows from
4,079,849,668.13 1,097,694,547.15 271.67%
investing activities
Sub-total of cash outflows for
8,400,395,782.73 3,214,662,629.47 161.32%
investing activities
Net cash flows from investing
-4,320,546,114.60 -2,116,968,082.32 -104.09%
activities
Sub-total of cash inflows from
13,992,384,966.94 8,012,906,351.42 74.62%
financing activities
Sub-total of cash outflows for
9,978,234,208.90 9,500,550,393.79 5.03%
financing activities
Net cash flows from financing
4,014,150,758.04 -1,487,644,042.37 369.83%
activities
Net increase in cash and cash
186,622,412.65 -333,902,151.08 155.89%
equivalents
Explanation on main effects of material changes
√ Applicable □ Not applicable
1. Net cash flows from operating activities decreased by 85.06% as compared to the corresponding period of the
prior year mainly due to the increase in expenditures and prepayments with respect to raw materials at the end of
the period as a result of the rising prices of raw materials.
2. Net cash flows from investing activities decreased by 104.09% as compared to the corresponding period of the
prior 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 increased by 369.83% as compared to the corresponding period of the
prior year mainly due to the issuance of convertible corporate bonds and the increase in bank loans.
Explanation on main reasons leading to the material difference between net cash flows from operating activities
during the reporting period and net profit for the year
√ Applicable □ Not applicable
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During the reporting period, the net cash flows from operating activities of the Company amounted to RMB
485.2592 million, which was RMB 2,364.5519 million less than the net profit of RMB 2,849.8111 million. The
difference was mainly due to the increase in expenditures and prepayments with respect to raw materials at the
end of the period as a result of the rising prices of agricultural commodities.
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 standard governing revenue in 2020 for the first time, and adjusted the relevant financial
statement items at the beginning of the year of adoption
Applicable
Unit: RMB
As at the end of 2020 As at the beginning of 2020
Percentag
As % of As % of Description of major changes
Amount Amount e change
total assets total assets
At the end of the period, the percentage
in total assets decreased by 2.34
percentage points; and the balance
Cash at bank and
2,056,471,632.75 7.47% 1,849,735,912.84 9.81% -2.34% increased by 11.18% from the
on hand
beginning of the period, which was
mainly due to the increase in the scale
of the Company's operations.
At the end of the period, the percentage
in total assets decreased by 1.54
percentage points; and the balance
Accounts
1,067,301,941.46 3.88% 1,021,751,432.56 5.42% -1.54% increased by 4.46% from the beginning
receivable
of the period, which was mainly due to
the increase in the scale of the
Company's operations.
At the end of the period, the percentage
in total assets increased by 2.69
percentage points; and the balance
increased by 62.56% from the
Inventories 7,255,350,539.93 26.36% 4,463,319,035.43 23.67% 2.69%
beginning of the period, which was
mainly due to the increase in stocks of
raw materials for production and the
inventory of consumptive biological
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assets at the end of the period as a
result of the rising prices of agricultural
commodities.
At the end of the period, the percentage
in total assets decreased by 0.05
percentage point; and the balance
decreased by 3.98% from the
Investment
29,426,486.24 0.11% 30,645,502.71 0.16% -0.05% beginning of the period, which was
properties
mainly due to the accumulated
depreciation and amortization and
translation of financial statements
denominated in foreign currencies.
At the end of the period, the percentage
in total assets decreased by 0.11
percentage point; and the balance
Long-term equity
59,465,879.68 0.22% 62,614,691.35 0.33% -0.11% decreased by 5.03% from the
investments
beginning of the period, which was
mainly because investees declared cash
dividends.
At the end of the period, the percentage
in total assets decreased by 5.42
percentage points; and the balance
increased by 22.31% from the
beginning of the period, which was
mainly because the Company’s projects
Fixed assets 7,703,538,937.81 27.99% 6,298,328,342.41 33.41% -5.42% under construction were transferred to
fixed assets after completion and being
put into production in the year, as well
as due to the acquisition of new
companies and the increase in purchase
and construction of production
equipment.
At the end of the period, the percentage
in total assets increased by 2.29
percentage points; and the balance
Construction in increased by 142% from the beginning
1,591,741,924.42 5.78% 657,751,195.76 3.49% 2.29%
progress of the period, which was mainly due to
the new factory buildings and
equipment that were not ready for their
intended use.
At the end of the period, the percentage
Short-term loans 4,735,948,585.16 17.20% 3,020,892,004.18 16.02% 1.18% in total assets increased by 1.18
percentage points; and the balance
40
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
increased by 56.77% from the
beginning of the period, which was
mainly due to the increase in
short-term loans from banks as a result
of a larger business scale.
At the end of the period, the percentage
in total assets decreased by 0.14
percentage point; and the balance
Long-term loans 1,161,404,700.00 4.22% 821,661,042.98 4.36% -0.14% increased by 41.35% from the
beginning of the period, which was
mainly due to the increase in long-term
loans from banks.
2. Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB
Impairm
Cumulative
Gain or loss ent
fair value Purchases Disposal
from changes in provided Other
Item Opening balance changes during the during Closing balance
fair value during during changes
recognized period the period
the period the
in equity
period
Financial
assets
1.
Held-for-tradi
ng financial
assets
28,583,495.35 80,310,028.27 86,719,309.28
(exclusive of
derivative
financial
assets)
Sub-total of
financial 28,583,495.35 80,310,028.27 86,719,309.28
assets
Others (note) 255,521,350.00 252,000,000.00 3,103,787.36 504,417,562.64
Total of the
284,104,845.35 80,310,028.27 252,000,000.00 3,103,787.36 591,136,871.92
above
Financial
2,633,510.00 -92,290,287.58 127,446,229.19
liabilities
41
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Note: Others include bank’s wealth management products and non-current financial assets measured at fair value.
Contents of other changes
Whether 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 66.2911 million, which were mainly
land reclamation deposits, letter of credit deposits, deposits for customs duties and loan deposits.
V. Analysis of Investments
1. Overview
√ Applicable □ Not applicable
Investments during
Investments during the
the corresponding period of Change
reporting period (RMB)
prior year (RMB)
3,390,357,467.37 1,336,744,184.76 153.63%
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 investments
(1) Securities investments
□ Applicable √ Not applicable
The Company did not make any securities investment in the reporting period.
(2) Derivatives investments
√ Applicable □ Not applicable
Unit: RMB’0,000
42
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Closing
investm
Rela ent
Relate Openi Closin
tions Initial Impair amount Actual
d-part Type ng Purch g
Count hip invest Sold ment as % of gain/l
y of Start End invest ased invest
erpart with ment in the allowa the oss in
transa deriva date date ment in the ment
y the amoun period nce (if Compa the
ction tive amoun period amoun
Com t any) ny’s period
or not t t
pany closing
net
assets
Future
s
Non contra
Future
-rela cts of 31
s 1 Jan. 6,278. 16,50 22,78 -4,042
ted Not corn, 0 Dec. 1.63%
compa 2020 52 8.85 7.37 .71
part soybe 2020
ny
y an
meal,
etc.
Non Forwa
Comm -rela rd and 31
1 Jan. 60,24 29,82 30,41 -522.0
ercial ted Not swap 0 Dec. 2.18%
2020 4.85 8.12 6.73 6
bank part contra 2020
y cts
66,52 16,50 29,82 53,20 -4,564
Total 0 -- -- 3.81%
3.37 8.85 8.12 4.10 .77
Funding source Self-funded
Legal matters involved (if
N/A
applicable )
Disclosure date of the
announcement about the board’s
17 March 2020
consent for the derivative
investment (if any)
Disclosure date of the
announcement about the general
12 May 2020
meeting’s consent for the
derivative investment (if any)
43
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
1. The hedging business was compatible with the production and operation of the Company. The
Company strictly controlled the positions of futures and options, conducted foreign exchange
hedging transactions in strict accordance with its projected collection period, payment period
and amount, and reasonably made use of futures, options, portfolios of the aforementioned
products, foreign exchange hedging and other instruments to have a lock on the Company's costs
and expenses of raw materials of animal feeds and other related products.
2. Relevant departments and personnel strictly controlled the scale of hedging funds, reasonably
planned and used the margin, and gave operation instructions in strict accordance with the
Company's futures trading management policies. No operation could be carried out unless it had
been approved in light of related regulations. The Company will reasonably allocate funds for its
hedging business.
3. In accordance with the Guidelines of the Shenzhen Stock Exchange for the Standard
Risk analysis of positions held in Operation of Listed Companies (《深圳证券交易所上市公司规范运作指引》), the Futures
derivatives during the reporting Management Policy (《期货管理制度》) and the Measures for Futures Management (《期货管
period and explanation of control 理办法》) have been formulated, which clearly stipulate the approval authority, internal review
measures (Including but not process and risk handling procedures for hedging business. The Company has established a
limited to market risk, liquidity special team for commodity hedging operation and a monitoring team for commodity hedging
risk, credit risk, operational risk, operation, and developed corresponding business procedures. Relevant business and activities
legal risk, etc.) were controlled through the implementation of authorization, position restraint, internal audit
and other measures.
4. The Company has formulated the Policy for the Management of Foreign Exchange Hedging
Business (《外汇套期保值业务管理制度》), which clearly stipulates the limit of foreign
exchange hedging business, the scope of varieties, approval authority, internal review
procedures, responsible departments and persons, information isolation measures, internal risk
reporting policies and risk handling procedures. The Policy is in conformity with the relevant
requirements of regulatory authorities, meets the needs of actual operation, and contains
effective risk control measures.
5. The Securities Department of the Company conducted regular and irregular inspections of the
hedging transaction business, and supervised the implementation of risk management policies
and risk management procedures by the personnel taking charge of the hedging transaction
business, to timely prevent operational risks in the business.
Changes in market prices or fair
Since the Company's varieties of commodity hedging transactions were traded at futures
value of derivative products
exchanges, with transparent markets and active transactions, the transaction price and the
during the reporting period,
settlement unit price of the day could fully reflect the fair value of the derivatives. The varieties
specific methods used and
of foreign exchange hedging transactions were measured at the fair value on the date of contract
relevant assumption and
signing between the Company and commercial banks, and their fair value was subsequently
parameter settings shall be
measured based on the valuation notices issued by each commercial bank at the end of the
disclosed for analysis of fair value
period.
of derivatives
44
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
The Company conducted accounting processing of hedging business in accordance with the
Explanation of significant
stipulations in the Accounting Standards for Business Enterprises No. 22 - Recognition and
changes in accounting policies
Measurement of Financial Instruments (《企业会计准则第 22 号——金融工具确认和计量》),
and specific financial accounting
the Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets (《企业
principles in respect of the
会计准则第 23 号——金融资产转移》), the Accounting Standards for Business Enterprises No.
Company's derivatives for the
24 - Hedging Accounting (《企业会计准则第 24 号——套期会计》) and the Accounting
reporting period as compared to
Standards for Business Enterprises No. 37 - Presentation of Financial Instruments (《企业会计
the previous reporting period
准则第 37 号——金融工具列报》) as well as their guidelines.
1. The commodity hedging business of the Company was carried out in strict accordance with
relevant policies. Therefore, the Company effectively controlled the cost of raw materials
related to production and trade as well as related products, and effectively prevented and
mitigated risks. The relevant approval procedures for the Company to use its own funds to carry
out hedging business in commodity futures and options markets were in compliance with
relevant national laws and regulations as well as provisions in the Articles of Association (《公
司章程》). The Company has established a sound organizational structure and developed the
Futures Management Policy ( 《期 货管理 制度》) for commodity hedging. There is no
circumstance where the interest of the Company and its entire shareholders has been damaged.
Special opinions expressed by 2. The decision-making procedures of the Company for foreign exchange hedging business were
independent directors concerning in compliance with relevant national laws and regulations as well as provisions in the Articles of
the Company's derivatives Association. The Company made use of foreign exchange hedging instruments to reduce
investment and risk control exchange rate risks and financial expenses and control operational risks on the basis of normal
production and operation. There is no circumstance where the interest of the Company, its entire
shareholders and especially, its minority shareholders has been damaged. At the same time, the
Company has formulated the Policy for the Management of Foreign Exchange Hedging
Business 《外汇套期保值业务管理制度》). By strengthening internal control and implementing
risk prevention measures, specific operation standards have been developed for the Company's
foreign exchange hedging business.
In summary, it is approved that the Company and its majority-owned subsidiaries carry out
commodity hedging business and foreign exchange hedging business within the considered
limit.
5. Use of raised funds
√ Applicable □Not applicable
(1) Overall use of raised funds
√ Applicable □Not applicable
Unit: RMB’0,000
Total Total raised Total Total Proportion Total Use and Raised
Total
Year for Method of raised funds that raised accumulativ of total raised ownership funds
raised
fund-raising fund-raising funds that have been funds e raised accumulativ funds that change of that
funds
have used with funds with e raised have not unused raised have
45
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
been used accumulativel altered altered funds with been used funds been
in the y purposes purposes altered yet left
current during purposes unused
period the for
reportin over
g period two
years
In addition to
temporary
replenishmen
t of working
capital and
cash
Public
management,
offering of
92,548.0 189,535.9 the unused
2020 convertible 283,000 92,548.09 0 0 0.00% 0
9 5 amount of
corporate
raised funds
bonds
was deposited
in the special
bank account
for
fund-raising
projects.
92,548.0 189,535.9
Total -- 283,000 92,548.09 0 0 0.00% -- 0
9 5
Explanation of the overall use of raised funds
Upon the approval of the China Securities Regulatory Commission (hereinafter referred to as "CSRC") through the issuance of the
Approval on the Public Offering of Convertible Corporate Bonds by Guangdong Haid Group Co., Limited (《关于核准广东海大集
团股份有限公司公开发行可转换公司债券的批复》) (Zheng Jian Xu Ke [2020] No. 205), the Company was allowed to issue
convertible corporate bonds with a total face value of RMB 2,830 million to the public. Actually, the Company issued 28.3 million
convertible corporate bonds with a face value of RMB 100 each to the public, and raised RMB 2,830 million of funds in total. After
deducting the fees related to the issuance, the actual net raised funds was RMB 2,810,854,200. The availability of the
above-mentioned raised funds has been verified by Grant Thornton China (Special General Partnership), which issued the Capital
Verification Report (《验资报告》) (Grant Thornton Yan Zi [2020] No. 440ZC0065) on 26 March 2020.
On 18 April 2020, the Proposal on Replacing Self-raised Funds That Has Been Invested in Fund-raising Investment Projects with the
Raised Funds (《关于以募集资金置换预先已投入募集资金投资项目的自筹资金的议案》) on the Ninth Meeting of the Fifth
Board of Directors. The Company replaced the self-raised funds that had been invested with the raised funds of RMB 393,920,200.
The interval between this replacement with raised funds and the arrival of raised funds is shorter than six months.
As at the end of 2020, the Company used RMB 925,480,900 of raised funds, accrued RMB 9,986,100 of interest income (with banks'
handling fees deducted), temporarily replenished RMB 1,365 million of working capital with idle raised funds, and carried out cash
management with an amount of RMB 250 million with idle raised funds. The balance of its special account for raised fund deposit
46
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
was RMB 280,359,500.
(2) Committed projects of raised funds
√ Applicable □Not applicable
Unit: RMB’0,000
Whether Investment Date Whether
Committed Total The Accumulative Benefits Whether
projects Adjusted progress when the there are
investment committed investment investment recorded the
have been total as at the projects material
projects and investment amount amount as at during estimated
altered investment end of the are ready changes
investment of with during the the end of the the benefits
(including amount reporting for their in the
excessive raised raised reporting reporting reporting are
partial (1) period (3) intended project
funds funds period period (2) period reached
alternation) ＝(2)/(1) use feasibility
Committed investment projects
Animal feed
project of
Nantong Haid
with an annual
output of 30 June
No 7,144.21 7,144.21 3,749.66 3,749.66 52.49% N/A No
240,000 tons 2021
(hereinafter
referred to as
the "Nantong
Haid project")
Animal feed
project of
Qingyuan Haid
with an annual
30
output of
No 6,493.11 6,493.11 5,454.88 5,454.88 84.01% September N/A No
240,000 tons
2021
(hereinafter
referred to as
the "Qingyuan
Haid project")
Animal feed
project of
Huai'an
Hailong with an 31
annual output No 16,123.49 16,123.49 8,417.86 8,417.86 52.21% December N/A No
of 200,000 tons 2021
(hereinafter
referred to as
the "Huai'an
47
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Hailong
project")
Animal feed
project of
Nanning Haid
with an annual
output of 30 June
No 23,589.07 23,589.07 11,086.46 11,086.46 47.00% N/A No
480,000 tons 2022
(hereinafter
referred to as
the "Nanning
Haid project")
Animal feed
project of
Zhaoqing
Gaoyao with an
annual output
30 April
of 240,000 tons No 4,679.43 4,679.43 4,679.43 4,679.43 100.00% -239.03 No No
2020
(hereinafter
referred to as
the "Zhaoqing
Gaoyao
project")
Animal feed
project of
Fuzhou Haid
with an annual
output of 30 June
No 29,075.05 29,075.05 8,665.06 8,665.06 29.80% N/A No
180,000 tons 2022
(hereinafter
referred to as
the "Fuzhou
Haid project")
Animal feed
project of
Qingyuan
Haibei with an
annual output 30 June
No 15,053.58 15,053.58 2,064.63 2,064.63 13.72% N/A No
of 30,000 tons 2022
(hereinafter
referred to as
the "Qingyuan
Haibei project")
48
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Animal feed
project of
Shaoguan Haid
with an annual
31
output of
No 13,964.32 13,964.32 9,705.42 9,705.42 69.50% December N/A No
400,000 tons
2021
(hereinafter
referred to as
the "Shaoguan
Haid project")
Animal feed
project of
Qingyuan
Hailong with an
annual output 31
of 720,000 tons No 36,955.3 36,955.3 16,245.61 16,245.61 43.96% December N/A No
(hereinafter 2022
referred to as
the "Qingyuan
Hailong
project")
Animal feed
project of
Yicheng Haid
with an annual
31
output of
No 16,509.88 16,509.88 1,459.78 1,459.78 8.84% December N/A No
380,000 tons
2022
(hereinafter
referred to as
the "Yicheng
Haid project")
Animal feed
project of
Hexian Haid
with an annual
output of 30 June
No 21,344.95 21,344.95 8,643.84 8,643.84 40.50% N/A No
300,000 tons 2022
(hereinafter
referred to as
the "Hexian
Haid project")
Animal feed 30 June
No 17,069.03 17,069.03 5,624.81 5,624.81 32.95% N/A No
project of 2022
49
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Kaifeng Haid
with an annual
output of
300,000 tons
(hereinafter
referred to as
the "Kaifeng
Haid project")
Animal feed
project of
Zhanjiang Haid
with an annual
31
output of
No 20,380.33 18,465.75 0.00% December N/A No
200,000 tons
2022
(hereinafter
referred to as
the "Zhanjiang
Haid project")
Animal feed
project of Yulin
Haid with an
annual output 31
of 450,000 tons No 31,186.61 31,186.61 2,512.4 2,512.4 8.06% December N/A No
(hereinafter 2022
referred to as
the "Yulin Haid
project")
Animal feed
project of
Sichuan
Rongchuan
with an annual
output of 30 June
No 23,431.64 23,431.64 4,238.25 4,238.25 18.09% N/A No
200,000 tons 2022
(hereinafter
referred to as
the "Sichuan
Rongchuan
project")
Subtotal of
committed
-- 283,000 281,085.42 92,548.09 92,548.09 -- -- -239.03 -- --
investment
projects
50
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Investment of excessive raised funds
N/A
Total -- 283,000 281,085.42 92,548.09 92,548.09 -- -- -239.03 -- --
Cases and
reasons for
failing to reach
The Zhaoqing Gaoyao project was recently put into operation, with a comparatively short operation period. Due to
the planned
the impact of the COVID-19 in the first half, the resumption of production was postponed. The expense of fixed
progress or
asset amortization and the period expense were high. As a result, losses incurred.
predicted return
(by specific
projects)
Explanations of
the material
changes in the N/A
project
feasibility
Amount, use, N/A
and use
progress of
excessive raised
funds
Implementation N/A
of location
changes in the
investment
projects with
the raised funds
Implementation N/A
of method
adjustments to
the investment
projects with
the raised funds
√Applicable
Early
investment and On 9 April 2020, Grant Thornton China issued the Verification Report on the Early Investment of Self-raised Funds
placement in the Investment Projects with Raised Funds by Guangdong Haid Group Co., Limited 《关于广东海大集团股份有
concerning the 限 公 司以 自 筹资 金 预先 投入 募 集资 金 投资 项目 的 鉴证 报告 》 ) (Grant Thornton Zhuan Zi (2020) No.
investment 440ZA4433). The Company invested RMB 393,920,200 of self-raised funds in the raised fund projects in the
projects with preliminary stage. On 18 April 2020, the Proposal on Replacing Self-raised Funds That Has Been Invested in
Fund-raising Investment Projects with the Raised Funds ( 关于以募集资金置换预先已投入募集资金投资项目的
the raised funds
自筹资金的议案》) on the Ninth Meeting of the Fifth Board of Directors. The Company replaced the self-raised
51
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
funds that had been invested with the raised funds of RMB 393,920,200. The interval between this replacement with
raised funds and the arrival of raised funds is shorter than six months.
√Applicable
Temporary The Proposal on Temporary Replenishment of Working Capital with Partial Idle Raised Funds (《关于使用部分闲
replenishment 置募集资金暂时补充流动资金的议案》) was reviewed and approved on the Ninth Meeting of the Fifth Board of
of working Directors on 18 April 2020. It was approved that the Company could temporarily replenish working capital with no
capital with the more than RMB 1,400 million of idle raised funds. The use term should be less than 12 months upon the approval of
idle raised the Board of Directors.
funds As at 31 December 2020, the balance of the idle raised funds for temporary replenishment of working capital was
RMB1,365,000,000.
Surplus raised N/A
funds for
project
implementation
and reasons for
the surplus
Use and
ownership
In addition to temporary replenishment of working capital and cash management, the unused amount of raised funds
change of
was deposited in the special bank account for fund-raising projects.
unused raised
funds
Problems in the
use of raised
funds and N/A.
disclosure, or
other cases
(3) Altered projects of raised funds
□ Applicable √ Not applicable
There were no altered projects of raised funds by the Company 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.
52
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
2. Disposal of material equity interest
□ Applicable √ Not applicable
VII. Analysis of major subsidiaries and investees
√ Applicable □ Not applicable
Major subsidiaries and investees accounting for over 10% of the net income of the Company
Unit: RMB’0,000
Name of Type of Principal Registered Operating Operating
Total assets Net assets Net profit
company company activities capital income profit
Guangdong
Hinter Production
Biotechnolog Subsidiary and sales of 8,000 117,181.38 107,418.47 118,835.50 50,202.50 42,980.34
y Group Co., premixture
Ltd.
Acquisition and disposal of subsidiaries during the reporting period
√ Applicable □ Not applicable
Methods to acquire and
Impact on overall production and
Name of companies dispose of subsidiaries
operation and results
during the reporting period
Zhongshan Yugezi Business combination not under common control No material effects on the results of the period
Gaozhou Haiyuan Business combination not under common control No material effects on the results of the period
Dingsheng International Business combination not under common control No material effects on the results of the period
Taiwan Sheng Long Business combination not under common control No material effects on the results of the period
Yunnan Zhonggui Business combination not under common control No material effects on the results of the period
Guangdao Xingyuan Business combination not under common control No material effects on the results of the period
Qingdao Runguiyuan Business combination not under common control No material effects on the results of the period
Wujiaqu Taikun Business combination not under common control No material effects on the results of the period
Hainan Zhuangmei Business combination not under common control No material effects on the results of the period
Jiangxi Jiabo Business combination not under common control No material effects on the results of the period
Jiangxi Gunanbencao Business combination not under common control No material effects on the results of the period
Jiangxi Renxintang Business combination not under common control No material effects on the results of the period
Luoding Yitun Newly established No material effects on the results of the period
Lianzhou Yitun Newly established No material effects on the results of the period
53
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Methods to acquire and
Impact on overall production and
Name of companies dispose of subsidiaries
operation and results
during the reporting period
Long’an Yitun Newly established No material effects on the results of the period
Youxian Yitun Newly established No material effects on the results of the period
Wengyuan Yitun Newly established No material effects on the results of the period
Fufeng Yitun Newly established No material effects on the results of the period
Linyou Yitun Newly established No material effects on the results of the period
Laibin Yitun Newly established No material effects on the results of the period
Yantai Yitun Newly established No material effects on the results of the period
Guiyang Yitun Newly established No material effects on the results of the period
Yongji Haijingzhou Newly established No material effects on the results of the period
Yuncheng Haishengyuan Newly established No material effects on the results of the period
Changyi Haijingzhou Newly established No material effects on the results of the period
Nantong Haijingzhou Newly established No material effects on the results of the period
Shanwei Haijingzhou Newly established No material effects on the results of the period
Guangzhou Haijingzhou Newly established No material effects on the results of the period
Sanya Fengmu Newly established No material effects on the results of the period
Dong Nai Haid Breeding Newly established No material effects on the results of the period
Linyi Haiding Technical
Newly established No material effects on the results of the period
Service Co., Ltd.
Henan Haiding Newly established No material effects on the results of the period
Qingzhou Haiding Newly established No material effects on the results of the period
Linyi Haiding Lusheng Newly established No material effects on the results of the period
Qinggang Fengcheng Bozun Newly established No material effects on the results of the period
Suihua Fengcheng Bozun Newly established No material effects on the results of the period
Chengwu Fengcheng Newly established No material effects on the results of the period
Binhai Haiding Newly established No material effects on the results of the period
Linyi Dinghao Newly established No material effects on the results of the period
Hainan Bairong Newly established No material effects on the results of the period
Zhaoqing Baishengyuan Newly established No material effects on the results of the period
Chengdu Haiqi Newly established No material effects on the results of the period
Binzhou Haiying Newly established No material effects on the results of the period
Linyi Zhizhuxia Newly established No material effects on the results of the period
Laiyang Haihe Newly established No material effects on the results of the period
54
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Methods to acquire and
Impact on overall production and
Name of companies dispose of subsidiaries
operation and results
during the reporting period
Guangxi Ronghai Newly established No material effects on the results of the period
Mianyang Zhonggui Newly established No material effects on the results of the period
Chongqing Haizhi Newly established No material effects on the results of the period
Wengyuan Haifeng Newly established No material effects on the results of the period
Yingde Haifeng Agriculture
Newly established No material effects on the results of the period
and Animal Husbandry
Qingyuan Haichuan Newly established No material effects on the results of the period
Ezhou Haifeng Newly established No material effects on the results of the period
Yingde Haifeng Newly established No material effects on the results of the period
Qingyuan Guanghong Newly established No material effects on the results of the period
Guangzhou Haiqi Newly established No material effects on the results of the period
Guangdong Haid International
Newly established No material effects on the results of the period
Trade Co., Ltd.
Nansha Haid Newly established No material effects on the results of the period
Yancheng Haiwei Newly established No material effects on the results of the period
Hainan Haid Seed Industry Newly established No material effects on the results of the period
Wuzhou Haid Newly established No material effects on the results of the period
Dongguan Haiqi Newly established No material effects on the results of the period
Zhangzhou Haiheng Newly established No material effects on the results of the period
Deyang Dachuan Newly established No material effects on the results of the period
Mianyang Hailong Newly established No material effects on the results of the period
Meishan Haid Newly established No material effects on the results of the period
Guangzhou Nongzhidao Newly established No material effects on the results of the period
Yingkou Dachuan Newly established No material effects on the results of the period
Jieshou Haid Newly established No material effects on the results of the period
Anlu Haid Newly established No material effects on the results of the period
Jingzhou Haihe Newly established No material effects on the results of the period
Guangzhou Chenzhao Newly established No material effects on the results of the period
Yancheng Runchuan Newly established No material effects on the results of the period
Zigong Hailong Newly established No material effects on the results of the period
Guangxi Rongchuan Newly established No material effects on the results of the period
Dali Haid Newly established No material effects on the results of the period
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Methods to acquire and
Impact on overall production and
Name of companies dispose of subsidiaries
operation and results
during the reporting period
Guangzhou Haid Technology Newly established No material effects on the results of the period
Heshan Haiwei Newly established No material effects on the results of the period
Junan Dinghao Newly established No material effects on the results of the period
Shaoyang Yitun De-registered No material effects on the results of the period
Xinjiang Ruitai
De-registered No material effects on the results of the period
Biotechnology
Qufu Haiding De-registered No material effects on the results of the period
Hubei Sea Power De-registered No material effects on the results of the period
Yancheng Dachuan De-registered No material effects on the results of the period
Junan Dinghao De-registered No material effects on the results of the period
Description of major subsidiaries and investees
Guangdong Hinter Biotechnology Group Co., Ltd. is mainly engaged in feed premixture which are mainly sold to other internal
branches and subsidiaries of the Company and other feed companies in the industry. The gross profit of the product is higher than that
of the Company's compound feed products. During the reporting period, its operating income and profit were good and recorded a
net profit of RMB 430 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) Industry development and trend
The period covered by the 14th Five-Year Plan (2021-2025) will be the first five years in which China embarks on
a new journey to build the nation into a modern socialist country in all respects. The Opinions of the CPC Central
Committee and the State Council on Comprehensively Promoting Rural Revitalization and Accelerating
Modernization of Agriculture and Rural Areas (hereinafter the "Opinions on Rural Revitalization") (《关于全面推
进乡村振兴加快农业农村现代化的意见》) states that it is necessary to "enhance the ability to supply and
guarantee grain and important agro-products" and "expedite the building of a modern farming system". The
farming sector will move faster towards standardized, industrialized, large-scale, intelligent and capital-intensive
development, and the feed sector will enter a stage of fast integration. Industry giants will enjoy bigger advantages
and positions in the international market.
1. Structural development of the feed sector
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
During the 13th Five-Year Plan period from 2016 to 2020, China's total feed output grew by 21%, and the
industry experienced sustained growth. With the industrialized and large-scale development of the farming sector,
the feed application rate will rise to continuously drive the growth of total feed output. The continuous rise in per
capita disposable income, consumption upgrade, further urbanization and the change of consumption behaviors
will push up the demand for high-quality, characteristic and high-end meat products; the consumption of aquatic
products, beef and mutton will increase notably; the consumption of poultry and eggs will be stable; pork
consumption will decline. As a result, many feed varieties will undergo structural adjustments.
2. The industry integration will continue, and some companies will notably enhance their international
competitiveness
The growth of total feed output will slow down, and the competition among companies will be fierce. Due to
many factors, such as the epidemics and diseases, heightening awareness of food safety, pressure from
self-sufficiency in food, and uncertainties as to international trade, more and more SMEs in the industry will shut
down, presenting more opportunities for enterprises with great strengths in capital, management, technologies and
talents to integrate the market. Leading enterprises will expand rapidly into emerging markets such as Southeast
Asia, Northeast Asia, and Africa, which will significantly enhance their international competitiveness.
3. It is more apprent for technology to drive industry progress
In the differentiation and integrated development of the feed industry, technology has played an increasingly
important role in the industrial competition. The global agricultural products are becoming more and more closely
related. Weather conditions and uncertainties in international trade relations in certain regions will cause large
fluctuations in the prices of agricultural products. Animal nutrition requirements, feed formula adjustments, and
raw material substitution technologies are the core fields of feed technology competition. For other technologies,
vigorous development of biological feed technology, continuous increase in the types and the continuous
expansion of functions of feed microbes, enzyme preparations, etc. have shown tremendous potentials in
promoting the replacement of feed antibiotics and efficient utilization of feed resources, and will become new
threshold of competition in the industry.
4. Seedlings and animal healthcare industries will rapidly grow in longer periods due to technological
advancement and farming upgrades.
The Opinions on Rural Revitalization (《乡村振兴意见》) states that China will "further key scientific and
technological projects in agricultural biological breeding" and "intensify efforts to build improved variety
breeding & reproduction system to foster the integrated breeding, reproduction and promotion of improved
varieties." Focusing on the development of the farming industry, 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. Product demand will grow rapidly. As for aquaculture, with the upgrading of the
farming sector and the introduction of national access requirements for aquaculture seedling inspection and
quarantine, the seedling sector will undergo industry integration and a reshuffle. The demand for high-quality
brand seedlings recognized by the government will grow fast, and the value of aquatic seedlings in the farming
chain will become increasingly evident, including production/anti-disease/farming and other production and
profit-making processes. As the aquatic varieties and structure are upgraded, the profitability of conventional
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
varieties and their models will move downward. The consumption of famous, special and excellent varieties will
stimulate the upgrading of varieties and models. The steady rise in the number of large-scale farming bases and
the extension of back-end circulation and processing will cause regional or single-variety industry chain model
covering breeding, reproduction, farming and processing to take shape.
5. The farming sector will move faster towards large-scale, industrialized, intelligent and capital-intensive
development
Factors such as limited land, food safety, technological advancement and an increase in the proportion of young
employees will accelerate the efforts to make the farming sector industrialized, large-scale, intelligent and
capita-oriented. For the poultry farming, the large-scale development threshold has been rising. Pig farming is
moving fast towards large-scale development in the aftermath of the impact of ASF. The large-scale development
level of aquaculture is also improving. Ruminant animal farming is still in its early stage of large-scale operation.
The farming sector does not have sufficient funding in general, and listed farming companies with outstanding
performance are expanding their business network. Large real estate and technology companies are taking
advantage of strengths to enter the farming sector. While bringing capital, manpower, technologies and
management techniques to the sector, excellent enterprises will make farming automated, data-driven and
intelligent to promote the intelligent and industrialized development of the sector.
6. The development of the industrial chain will be more comprehensive and in-depth
The demand for food green and safety will foster the establishment of food traceability system and agricultural
standardization system. Large and excellent enterprises with great strengths in technology, talent and capital will
gradually improve the industrial chain layout, have the ability to control all business processes, including
seedlings, farming, feeds, animal healthcare products, slaughtering, transportation, and food processing, and
further prompt the industrial chain layout of large-scale excellent enterprises to be more efficient and in-depth. In
the meanwhile, the increasing awareness of food safety will spur professional exchanges among large-sized
enterprises in the production processes of the industry, ensuring that every production process is safe, controllable
and traceable, while boosting aggregation of industrial chain operations and accelerating industry integration.
(II) Prospects for the future development of the Company
The Company's development strategy is to become a leading high-tech farming and animal husbandry company
with sustainable development capability in China. The Company's development is based on "creating value for
customers". Centering around the upstream and downstream sectors of the animal farming business, the Company
focuses on links including seedling, animal healthcare, feed, animal farming, slaughtering and food processing.
With a complete industrial chain that leads the way in the industry, the Company will provide farmers with
comprehensive solutions, including feed, seedling, animal healthcare products and farming technology services,
and meet other needs of farmers and distributors for financial services, etc. to effectively enhance the profitability
of the farmers and distributors and realize the win-win development of the Company and its customers. Also, the
Company intends to promote rural revitalization through its "10 + 100 + 1000 + 10,000 Project" to accomplish the
sacred mission of changing rural China.
The basic strategy for the development of the Company's industrial chain is to scale up on the basis of
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
specialization and to extend the industrial chain based on core competitiveness. The Company will focus on feed
products 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 in
the entire industry chain, and build its comprehensive core competitiveness in the industrial chain.
(III) Possible risks and countermeasures
1. Risk of Periodical Fluctuations in the Feed Industry due to Abnormal Weather and Epidemic Diseases during
Animal Production
The feed industry mainly serves the downstream animal feeding industry. The abnormal changes in natural
elements such as precipitation and typhoon may lead to fluctuations of the inventory of livestock or aquatic
products and even the large-scale outbreak of animal diseases. This thus affects the demand for feed and likely
causes the risk of periodic and regional fluctuations of the latter. With the environmental changes and the
expansion of animal production industry, animal epidemic diseases may also occur occasionally. For instance, the
African swine fever virus broke out across China in August 2018; and PRRSV-mediated pig disease,
shrimp-relevant EMS epidemic disease and poultry-relevant “H7N9” disease all occurred recently. The outbreak
of animal diseases will directly inhibit the scale of animal production and reduce the demand for feed in the short
term; major animal epidemic diseases may dampen the demand from end-consumers, leading to a downturn of the
animal production industry, and further affect the feed demand, giving rise to adverse effects on the production
and operation of feed enterprises.
Risk management methods: (1) The Company is currently fully deploying factories and developing local markets
in 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 weather
anomalies and natural disasters in local areas. (2) The Company's feed varieties cover pig feed, chicken feed, duck
feed, goose feed and other livestock feed and fish feed, shrimp feed and other aquatic feed. With a variety of
products and a well-balanced structure, it can effectively mitigate the risk of single breed species and has strong
comprehensive risk-relieve capability.
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 and soybeans
(soybean meal). In recent years, the domestic and international markets of agricultural product have been closely
linked. Changes in the planting area and harvest of crops in major grain-producing countries, purchasing and
storage and subsidy policies, import and export policies, political conflicts between countries, international trade
relations, fluctuations in logistics capacity and conditions of shipping, exchange rates, and others may cause great
fluctuations in prices of agricultural products, which, in turn, has a certain impact on the cost of feed and farming.
With the strengthening of the internationalization in trade of agricultural products, the factors for changes in the
prices of agricultural products have become more complex and the price fluctuations have therefore increased. If
the Company fails to understand the changes in the trade of feed raw materials in a timely manner and promptly
implement strategic management and risk control of procurement, the Company may face the risk of rising
procurement costs.
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Risk management methods: (1) The Company divides raw material into different categories and implements a
combination of centralized procurement of staple category and local procurement of regional varieties, which not
only guarantees the advantages of large-scale raw material procurement, but also obtains localization advantages
from rapid response in respect of regional procurement; (2) The Company continuously invests in the construction
of the raw material procurement research system. The team of the professional raw material information research
department is relatively mature. It conducts strategic procurement through the real-time tracking, research and
judgment of the domestic and foreign bulk raw material market trends, and implements position risk management
for bulk raw materials through futures hedging, raw materials trade and other tools to effectively control
procurement risks; (3) The Company has accumulated extensive experience in research and development of
animal nutrition and feed formulation technologies, and has research and development team composed of nearly
2,000 employees. Large amounts of funds are invested on research and development each year, focusing on
animal nutrition requirements, feed formulation technology, animal farming and genetic improvement,
comprehensive investigation on healthy animal farming strategies, and other research areas. The Company has a
profound understanding of animal nutritional requirements and higher level of expertise in comprehensive
utilization of raw materials. Therefore, in case of raw material price fluctuations, it can quickly adjust the formula
to control the reasonable feed nutrient level and formula costs.
3. Risk of Structural, Regional and Scale Adjustment to Farming Industry under Environmental Protection
Regulations and Policies
In recent years, the State has introduced a series of environmental protection laws and regulations including the
new Environmental Protection Law (环保法), the Regulations on Prevention and Control of Pollution from
Large-Scale Production of Livestock and Poultry (畜禽规模养殖污染防治条例), Action Plan for Prevention and
Treatment of Water Pollution (水污染防治行动计划), the Guiding Opinions on Adjusting the Layout of Pig
Production in the Southern Water Network Region (关于促进南方水网地区生猪养殖布局调整优化的指导意
见), and the antibiotic ban, which stipulate the pollution prevention and control of animal production industry, 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 been set up
throughout the country, and pig farms in the banned areas in the southern water network area are gradually
relocating. The implementation of environmental protection policies will speed up the withdrawal of private pig
farming farmers, reduce the backward production capacity failing to meet environmental protection standards and
with a small scale, and enable large -scale farmers to continuously expand their production capacity and improve
the farming scale and structure; In addition, the establishment of banned areas and restricted areas will enforce
adjustments to the pig production capacity in all places across the country. The adjustments to the scale
composition of pig production and the relocation of pig production area will certainly have a profound impact on
the existing capacity layout, market share, pricing power and business model of the feed industry. The impact of
enforced environmental protection policies on the pig growing and feed industries puts existing competitive
companies in the market at risk of reshuffle.
Risk management methods: (1) The Company continually improves its capability to serve farmers. In addition to
feed products, the Company is also engaged in the industrial chain of animal healthcare products, vaccines and
finance and has a strong tie to large-scale farmers; (2) The feed varieties of the Company cover 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 layout and make adjustments
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
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 large environmental carrying
capacity, and to obtain the market share of new animal farming areas. (4) The Company continues to increase
R&D investment, and its research results in key technologies of microbial fermented feed and feed antibiotic
substitutes have been effectively applied to foster the advancement and development of the industry.
4. Risk of Exchange Rate Fluctuations
The global procurement of raw materials has become the norm. The scale of overseas investment and overseas
operations of the Company is also rapidly expanding. The scale of cross-border fund settlement and the stock of
overseas assets have grown substantially, involving the currency types of various related countries. Currency
exchange rate fluctuations are subject to different influence factors, and exchange rate fluctuations in any currency
may have a certain impact on the settlement cost and asset value of the region.
Risk management methods: (1) Based on the business scale, business model, and settlement characteristics in
different regions and countries, the Company strictly controls the exchange rate risks, carefully selects settlement
currencies, and strives to achieve relatively balanced regional fund inflow and outflow through structural
arrangements of financing sources and financing types; (2) The expansion of two-way fluctuations in the RMB
exchange 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 cycle
characteristics of import and export operations. And forward foreign exchange settlement and sale, swaps, foreign
exchange options and other financial instruments are flexibly used to lock the exchange rate risks, control
procurement and sales costs, and control the possible risk resulted from exchange rate fluctuations.
X. Reception of Research Investigations, Communications and Interviews
1. Registration table of reception of research investigations, communications and interviews during the
reporting period
√ Applicable □ Not applicable
Main
Type of Index to basic
Reception Communication discussions and
Date Place communication information on
method party information
party communication
provided
Bosera Funds, For details, please refer
Dacheng Fund, to the Table of Investor
Taikang Asset, Relations Activity
Southern Asset Records of Guangdong
Company Annual
Management, Haid Group Co.,
21 April 2020 Conference By phone Institution operating results
Penghua Fund, Limited 2020-001)
Room of the Company
Fullgoal Fund, published on the
Harvest Fund, website of
Ping An Fund, www.cninfo.com.cn on
etc. 23 April 2020
61
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Shenzhen
Jingzhi Assets,
China Securities
Journal,
BOCOM For details, please refer
Schroders, to the Table of Investor
China Asset Relations Activity
Management, The Company’s Records of Guangdong
Company
China Merchants operations and Haid Group Co.,
11 May 2020 Conference Field research Institution
Futures, development Limited 2020-002)
Room
Industrial strategy published on the
Securities, website of
CITIC www.cninfo.com.cn on
Securities, 13 May 2020
Bosera Funds,
GF Securities,
Zhong Ou AMC,
etc.
BOCOM
Schroders,
Harvest Fund,
Taikang Asset, For details, please refer
Fullgoal Fund, to the Table of Investor
UBS SDIC Relations Activity
Fund, GF Fund The Company’s Records of Guangdong
Company
Management, operations and Haid Group Co.,
11 May 2020 Conference By phone Institution
ICBC Credit development Limited 2020-002)
Room
Suisse Asset strategy published on the
Management, website of
Penghua Fund, www.cninfo.com.cn on
China Universal 13 May 2020
Asset
Management, E
Fund, etc.
BOCOM For details, please refer
Schroders, to the Table of Investor
Harvest Fund, The Company’s Relations Activity
Company Taikang Asset, interim Records of Guangdong
28 July 2020 Conference By phone Institution Fullgoal Fund, operating results Haid Group Co.,
Room UBS SDIC and development Limited 2020-003)
Fund, GF Fund strategy published on the
Management, website of
ICBC Credit www.cninfo.com.cn on
62
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Suisse Asset 29 July 2020
Management,
Penghua Fund,
China Universal
Asset
Management,
etc.
BOCOM
Schroders,
Harvest Fund,
For details, please refer
Taikang Asset,
to the Table of Investor
UBS SDIC
Relations Activity
Fund, GF Fund The Company’s
Records of Guangdong
Company Management, Q3 operating
Haid Group Co.,
26 October 2020 Conference By phone Institution ICBC Credit results and
Limited 2020-004)
Room Suisse Asset development
published on the
Management, strategy
website of
Penghua Fund,
www.cninfo.com.cn on
China Universal
28 October 2020
Asset
Management,
etc.
63
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Section V. Material Matters
I. Profit Distribution for Ordinary Shares of the Company and Capitalization of Capital
Reserve
Formulation, implementation or adjustment of profit distribution policy for ordinary shares, especially the cash
dividend during the reporting period
√ Applicable □ Not applicable
According to the Proposal on 2019 Profit Distribution Plan (《关于2019年度利润分配预案的议案》) as
considered and approved at the 2019 Annual General Meeting convened on 11 May 2020, the distribution plan is
as follows: Based on "the total number of shares on the date of record when the plan is implemented in the future",
a cash dividend of RMB 3.50 (tax inclusive) was to be paid for every 10 shares. On 20 May 2020, dividend
distribution was completed.
The Company’s profit distribution policy, dividend distribution policy, dividend standards, and dividend ratios are
well-defined and clear. Independent directors have duly performed their duties and functions. Minority
shareholders have the opportunity to fully express their views and concern, which is in line with the Articles of
Association and the requirements of the consideration procedures. The conditions and procedures for the
adjustment or change of the profit distribution policy are compliant and transparent, and the legal rights and
interests 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 Yes
meeting;
Whether the basis and ratio of the distribution of dividends are
Yes
well-defined and clear;
Whether the relevant decision making procedure and system are
Yes
sound;
Whether the independent directors have duly performed their
Yes
duties and functions;
Whether there are enough opportunities for minority
shareholders to express their views and concerns, and whether Yes
their legal interests are sufficiently protected, etc;
Whether the conditions and procedures are legal and transparent
Not applicable
in respect of cash dividend policy with adjustments and changes;
The dividend distribution plans for ordinary shares (proposed) and the proposals on capitalization of capital
reserve (proposed) over the past three years (the reporting period inclusive)
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1. 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. The retained
earnings were carried forward to the following year.
2. 2019 annual dividend distribution plan of the Company
Based on the Company’s total share capital of 1,580,357,494 shares, a cash dividend of RMB 3.50 (tax inclusive)
per 10 shares was distributed and total cash dividend distributed amounted to RMB 553,125,122.90. The retained
earnings were carried forward to the following year.
3. 2020 annual dividend distribution plan of the Company
The Company proposed to distribute RMB 3.20 (tax inclusive) per 10 shares based on "the total number of shares
exclusive of the repurchased shares (the number of shares eligible for profit distribution) on the date of record
when the plan is implemented in the future". The proposed total amount of dividend shall not exceed the profit of
the company (parent company) available for distribution to shareholders as at 31 December 2020. The retained
earnings 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
Amount
Total amount
of cash
of cash
Amount of dividend
dividends
cash dividends distribution
Net profit for the (including
as % through
year attributable other means)
of net profit for Amount
to ordinary other means as %
the year of cash as %
shareholders of
Total amount of net profit for
attributable to dividend
Amount of the parent of net profit for the year
of cash
Year of ordinary distribution
company in the year attributable to
cash dividends dividends
distribution shareholders of
the consolidated through attributable to ordinary
(tax inclusive) (including
the parent
other means ordinary shareholders of
financial other means)
company
statements (such as share shareholders of the parent
in the the parent
repurchase) company
during the year
consolidated company
in the
of distribution
financial in the
consolidated
statements consolidated
financial
financial
statements
statements
2020 531,587,440.32 2,522,730,419.35 21.07% 83,929,094.77 3.33% 615,516,535.09 24.40%
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
2019 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% 474,261,280.20 33.01%
Note: According to the 2020 profit distribution plan of the Company as considered and approved at the Seventeenth Meeting of the
Fifth Board of Directors: The Company proposed to distribute RMB 3.20 (tax inclusive) per 10 shares based on "the total number of
shares exclusive of the repurchased shares (the number of shares eligible for profit distribution) on the date of record when the plan is
implemented in the future". The proposed total amount of dividend shall not exceed the profit of the company (parent company)
available for distribution to shareholders as at 31 December 2020. The retained earnings will be carried forward to the following year.
According to the Company's total share capital of 1,661,210,751 shares as at 17 April 2021, the Company's 2020 annual cash
dividend is expected to be RMB 531,587,440.32.
The Company made a profit and had positive retained profit available for ordinary shareholders of parent company during the
reporting period without cash dividend for ordinary shares being proposed
□ Applicable √ Not applicable
II. Proposals on Profit Distribution and Capitalization of Capital Reserve during the
Reporting Period
√ Applicable □ Not applicable
Number of bonus share per 10 shares (share(s)) 0
Dividend distribution per 10 shares (RMB) (tax
3.2
inclusive)
Total number of shares exclusive of the repurchased shares on the
Share base of the distribution proposal (shares)
registration date when the plan is implemented in the future
Amount of cash dividend (RMB) (tax inclusive) 531,587,440.32
Amount of cash dividend distribution through other
83,929,094.77
means (such as share repurchase) (RMB)
Total amount of cash dividends (including other
615,516,535.09
means) (RMB)
Distributable profits (RMB ) 2,553,545,708.11
Total amount of cash dividends (including other
100%
means) as % of total profit distribution
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 profit of RMB 42,550,966.91 and made provision for statutory surplus reserves of RMB 4,255,096.69 (10% of the
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
net profit), without allocation to discretionary revenue reserve in 2020. As at 31 December 2020, the profit available for distribution
to shareholders amounted to RMB 2,553,545,708.11.
Based on the good operating conditions and profitability in 2020, as well as the Company's business scale and future growth, the
legitimate demands of investors and continuous return to shareholders, the Company formulated the 2020 annual profit distribution
plan as follows: The Company proposed to distribute RMB 3.20 (tax inclusive) per 10 shares based on "the total number of shares
exclusive of the repurchased shares (the number of shares eligible for profit distribution) on the date of record when the plan is
implemented in the future". The proposed total amount of dividend shall not exceed the profit of the company (parent company)
available for distribution to shareholders as at 31 December 2020. The retained earnings will be carried forward to the following
year.
In order to look after the shareholders’ immediate and long-term interests in a better way on the premise of guaranteeing the
Company's normal operations and long-term development, the Company put forward the above-mentioned profit distribution plan.
The preparation of the above-mentioned profit distribution plan is in line with the Company Law and the Articles of Association,
and the Dividend Distribution P lan of the Company for the Next Three Years (2019-2021) (《未来三年（2019-2021年）分红回报
规划》). The distribution plan is legal, compliant and reasonable and in line with the Company's distribution policy.
The independent directors of the Company expressed their independent opinions that the Company's 2020 profit distribution plan
gives full consideration to the returns to investors and is in line with the actual situation of the company without any prejudice to
the interests of shareholders, in particular minority shareholders.
This proposal will be submitted to the 2020 Annual General Meeting for final approval.
III. Performance of Undertakings
1. Undertakings made by parties involved in undertakings including the Company’s actual controller,
shareholders, related parties, acquirers and the Company during the reporting period or prior periods but
subsisting to the end of the reporting period
√ Applicable □Not applicable
Particulars on
Party involved Types of Details of Undertaking Term of
Undertaking the
in undertaking undertaking undertaking date undertaking
performance
Undertaking on shareholding structure
reformation
Undertaking made in offering
documents or shareholding alternation
documents
Undertaking made during asset
reconstruction
Undertaking 1. Mr. Hua
Undertaking made on initial public 27 November In strict
Hua Xue on horizontal Xue Long term
offering or refinancing 2009 performance
competition, guarantees no
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
related party prejudice to
transaction the interests of
and capital Haid Group
occupation and its other
shareholders
by virtue of
his capacity as
the actual
controller. 2.
Mr. Hua Xue
guarantees
that, as long as
he serves as
the actual
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
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
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.
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
Undertaking controller. 2.
on horizontal Guangzhou
Guangzhou
competition, Haihao
Haihao 27 November In strict
related party guarantees Long term
Investment 2009 performance
transaction that, as long as
Co., Ltd.
and capital it is the
occupation controlling
shareholder of
Haid Group, it
and its
wholly-owned
subsidiaries,
controlled
subsidiaries
(except Haid
Group) and
actually
controlled
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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.
1. Mr. Hua
Xue promises
not to From 6
intervene in August 2019
Refinancing
Hua Xue Haid Group’s 6 August 2019 to 31 Expired
commitment
management December
activities, and 2020
not to
encroach on
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
its interests. 2.
Before the
implementatio
n 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
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
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
investors, it is
willing to bear
the
compensatory
liability of
Haid Group or
its investors
according to
law.
1. Mr. Hua
Xue promises
not to
intervene in
Haid Group’s
management
activities, and
not to
encroach on
its interests. 2. From 6
Guangzhou
Before the August 2019
Haihao Refinancing
implementatio 6 August 2019 to 31 Expired
Investment commitment
n of Haid December
Co., Ltd.
Group's public 2020
offerings of
convertible
corporate
bonds, if the
China
Securities
Regulatory
Commission
(CSRC)
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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
investors, it is
willing to bear
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
the
compensatory
liability of
Haid Group or
its investors
according to
law.
1. I promise
not to transfer
interests to
other units or
individuals for
free or under
unfair
conditions, or
in other way
to damage
Hua Xue, Li company
Tian, interests. 2. I
Yingzhuo Xu, promise to
Qi Cheng, regulate
Jianfang Gui, personal
Jianguo He, business
Yunguo Liu, consumption From 6
Guoxiang Liu, behavior. 3. I August 2019
Refinancing
Xueqiao Qian, promise not to 6 August 2019 to 31 Expired
commitment
Shaolin Yang, use the December
Xiewu Jiang, Company's 2020
Guocheng Mi, assets to
Zhongzhu engage in
Chen, investment
Mingzhong and
Chen and consumption
Zhijian Huang activities
unrelated to
the
performance
of my duties.
4. I promise
that the salary
system
formulated by
the board of
directors or
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
the
remuneration
and appraisal
committee is
linked to the
implementatio
n of the
Company's
return
compensation
measures. 5. I
promise that
the exercise
conditions of
equity
incentive are
linked to the
implementatio
n 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
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
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
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
shall bear the
compensation
responsibility
to the
Company or
investors in
accordance
with the law.
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 From 15
Guangdong
Undertakings related to equity Other Restricted 15 February February 2017 In strict
Haid Group
incentives undertakings Share 2017 to 23 March performance
Co., Limited
Incentive Plan 2022
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.
Specific
conditions,
proportions
Guangdong From 6 May
Undertakings made to minority Dividend and intervals In strict
Haid Group 6 May 2019 2019 to 5 May
shareholders of the Company undertaking of cash performance
Co., Limited 2022
dividends:
The following
conditions
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
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
78
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
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 plan on
material
external
investment or
major cash
outlays within
the next
twelve months
(except
proceeds-finan
ced
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
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
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
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
distributable
profit realized
in the three
years.
Hua Xue, Li
Tian,
Yingzhuo Xu,
Qi Cheng,
Jianfang Gui,
In compliance
Jianguo He,
with the laws
Yunguo Liu,
and
Zhenxiong Qi,
regulations
Hua Wang, Undertaking
governing
Yongfang Mu, on reduction 27 November In strict
shareholding Long term
Guoxiang Liu, of 2009 performance
reductions by
Xueqiao Qian, shareholding
directors,
Shaolin Yang,
supervisors
Xiewu Jiang,
and senior
Guocheng Mi,
management
Zhongzhu
Chen,
Mingzhong
Chen and
Zhijian Huang
In compliance
with the laws
and
regulations
Undertaking
governing
Jing Wang, Jia on reduction 21 August In strict
shareholding 21 May 2021
Chen of 2013 performance
reductions by
shareholding
directors,
supervisors
and senior
management
In compliance
Xiaojun with the laws
Shang, Undertaking and
Chengping on reduction regulations 6 January
25 May 2010 Expired
Lu, Xinchun of governing 2020
Li, Erkang shareholding shareholding
Deng reductions by
directors,
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
supervisors
and senior
management
Whether undertakings performed on
Yes
time
Specific reasons why undertakings
were not performed on time and next N/A.
steps
2. Description on the Company’s assets and items in meeting original profit forecast and its explanation as
there is profit forecast for assets and items of the Company and the reporting period is still within the
profit forecast period
√ Applicable □ Not applicable
Expected Actual results Reasons for Date of Index of
Earnings
Forecast start Forecast end results for the for the current failure to reach previous previous
forecast asset or
time time current period period the forecast (if forecast forecast
project name
(RMB’0,000) (RMB’0,000) applicable) disclosure disclosure
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
Shandong Daxin 31 December 15 September
1 January 2017 23,000 23,463.36 Not applicable 信集团部分股
Group Co., Ltd. 2020 2017
权暨对外投资
的公告》)
(Announcemen
t No.
2017-076)
published in
China
Securities
Journal,
Securities
Times,
Securities
82
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Daily and on
the website of
http://www.cni
nfo.com.cn.
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 undertaking
party”), 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 on
the net profit (i.e., net profit attributable to shareholders of the parent company, before or after the non-recurring
gain or loss, whichever is lower; the case is the same below) to be realized in four full accounting years from 2017
to 2020:
(1) Daxin Group will achieve a net profit of not less than RMB 50 million in 2017, the accumulated net profit of
not less than RMB 105 million in 2017 and 2018, the accumulated net profit of not less than RMB 165 million in
2017 to 2019, and the accumulated net profit of not less than RMB 230 million in 2017 to 2020.
(2) If the accumulated net profit for the current year fails to reach the committed amount, the undertaking party
shall pay the Company compensation = (accumulated net profit for the current year - actual accumulated net profit
of the current year) / total committed amount of RMB 230 million * total transaction amount of RMB
298,776,000 – net compensation paid by the undertaking party to the Company. The accumulated compensation
amount is limited to the total transaction price of the underlying assets. If the actual accumulated net profit for any
year during the results undertaking period is not less than the accumulated net profit undertaken, the Company
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 the
secondary market within 6 months after receipt of the second installment of payment for equity transfer with an
amount of RMB 60 million. After Daxin Group’s fulfillment of the annual results goals for 2017 and 2018 or
payment of sufficient compensation in case of non-fulfillment of the goals, the undertaking party may release the
lock-up for 50% of the above-mentioned shares additionally purchased; After Daxin Group’s fulfillment of the
annual 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 Group
Co., 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) issued
by GP Certified Public Accountants (Special General Partnership), the 2019 Audit Report of Shandong Daxin
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)，
as well as the 2020 Audit Report of Shandong Daxin Group Co., Ltd. (山东大信集团有限公司2020年度审计报
告) (Grant Thornton Shen Zi (2021) No. 440C010291) issued by the Guangzhou branch of Grant Thornton China
(Special General Partnership), Daxin Group's 2017-2020 audited net profit attributable to shareholders of the
parent company was RMB 251.4587 million and the net profit attributable to the shareholders of the parent
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
company after excluding non-recurring gain or loss was RMB 234.6336 million. Therefore, Daxin Group has
fulfilled the 2017-2020 earnings undertaking.
According to the aforesaid earnings undertaking, the compensation of RMB 17.8767 million payable by the
undertaking party for failing to fulfill the 2017-2019 earnings undertaking was deducted from the fifth installment
of payment for equity transfer. As the undertaking party has fulfilled the 2017-2020 earnings undertaking,
according to the way of payment of the earnings compensation as agreed upon by the Company and the
undertaking party, the aforesaid deducted compensation of RMB 17.8767 million shall be added to the sixth
installment of payment for equity transfer.
The completion of performance commitment and its influence on goodwill impairment test
As Daxin Group has fulfilled the earnings undertaking, there was no need to make goodwill impairment reserves
at the end of the reporting period for the goodwill formed by the acquisition of Daxin Group.
IV. Appropriation of Funds of the Company by the Controlling Shareholder and Its Related
Parties 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 purposes
during 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 Accounting
Methods as Compared to the Financial Report for the Prior Year
√ Applicable □ Not applicable
For the changes in accounting policies and accounting estimates as compared to the financial report for the prior
year, please refer to Note III, 38 in Part XII “Financial Report”.
VII. Reason for Retrospective Restatement to Correct Major Accounting Errors During the
Reporting 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 to
the Financial Report for the Prior Year
√ Applicable □ Not applicable
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
During the year, the scope of consolidation included 389 subsidiaries. For details, please refer to the Note "VII.
Interests in Other Entities" in Section XII “Financial Report". The scope of consolidation of the Company in this
year increased by 78 and reduced by 6 as compared with the last year. For details, please refer to the Note "VI.
Change in Consolidation Scope" in Section XII "Financial Report".
IX. Engagement or Dismissal of Accounting Firm
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) 400
Continued term of service of the domestic accounting firm 2
Name of certified public accountants of the domestic accounting
Wenyuan Guan, Shuxia Zhang
firm
Continued term of service of certified public accountants of the Wenyuan Guan: 2 years
domestic accounting firm Shuxia Zhang: 3 years
Name of the overseas accounting firm (if any) Not applicable
Remuneration of the overseas accounting firm (RMB ’0,000) (if
0
any)
Continued term of service of the overseas accounting firm (if
Not applicable
any)
Name of certified public accountants of the overseas accounting
Not applicable
firm (if any)
Continued term of service of certified public accountants of the
Not applicable
overseas accounting firm (if any)
Whether to appoint another accounting firm during the current period
√ Yes □ No
Particulars on recruitment of accounting firms, financial consultants or sponsors for internal control and auditing purposes
□ Applicable √ Not applicable
X. 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
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
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 Shareholder and Actual Controller
□ Applicable √ Not applicable
XV. Imple mentation of the Equity Incentive Plan, Employee Shareholding Plan or Other
Employee Incentive Measures of the Company
√ Applicable □ Not applicable
(I) 2016 Restricted Share Incentive Plan
1. Decision-making procedures and approval
(1) On 15 February 2017, the Company convened the First Extraordinary General Meeting of 2017 to consider
and approve the 2016 Restricted Share Incentive Plan of Guangdong Haid Group Co., Limited (Revised) (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 the
General 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 which
the Company was approved to issue no more than 46 million restricted shares to awardees by way of private
placement of which 41,601,300 shares would be first granted to 1,484 awardees at the grant price of RMB 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 Board of Directors to consider
and approve the Proposal on Adjustment to the Number of Interests under the 2016 Restricted Share Incentive
Plan 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 the
number of awardees of the first grant was changed from 1,484 into 1,373 and the restricted shares not granted yet
were adjusted from 41,601,300 shares to 40,283,200 shares. The Proposal on Grant of Restricted Shares to
Incentive Targets under the 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限制性股票的议案》) was also considered and approved at the aforesaid meeting,
pursuant to which the Company was approved to grant 40,283,200 shares to 1,373 awardees for the first time with
13 March 2017 as the first grant date and the grant price of RMB 7.48 per share. On 20 March 2017, the Company
completed the registration of grant of all the above-mentioned restricted shares.
(3) On 8 December 2017, the Company convened the Eleventh Meeting of the Fourth Board of Directors to
consider and approve the Proposal Regarding the Grant of Reserved Restricted Shares to Awardees under the 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
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
限制性股票的议案》), pursuant to which the Company was approved to grant 4,398,700 reserved restricted shares
to 399 awardees with the grant price of RMB 10.44 per share and 8 December 2017 as the grant date. Upon audit
and confirmation by the Shenzhen Stock Exchange and Shenzhen Branch of China Securities Depository and
Clearing Corporation Limited, the Company completed the registration for grant of reserved restricted shares to
360 awardees. 4,308,000 reserved restricted shares were granted and the listing date of the restricted shares would
be 24 January 2018.
2. Implementation during the reporting period
(1) The third unlocking period of the first grant and the second unlocking period of the reserve grant of the 2016
Restricted Share Incentive Plan
On 18 April 2020, the Company convened the Ninth Meeting of the Fifth Board of Directors to consider and
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 been
satisfied for the third unlocking period of the first grant and for the second unlocking period of the reserve grant
under the 2016 Restricted Share Incentive Plan (Revised) (《2016年限制性股票激励计划（修订稿）》) and thus
approved the awardees to unlock the relevant shares as prescribed. In the third unlocking period of the first grant,
the number of restricted shares available for listing and trading was 10,950,083; and in the second unlocking
period of the reserve grant, the number of restricted shares available for listing and trading was 1,130,610.
(2) Repurchase for cancellation for the 2016 Restricted Share Incentive Plan
On 18 April 2020, the Company convened the Ninth Meeting of the Fifth Board of Directors to consider and
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 the resignation, decease caused by illness, etc. of 15 awardees in the first grant of
restricted shares and 7 awardees in the reserve grant, the Company was agreed to repurchase and cancel 115,597
restricted shares in the first grant and 52,710 restricted shares in the reserve grant that had been granted to the
aforesaid awardees but had not yet reached the unlocking conditions. On 19 June 2019, the Company completed
the repurchase for cancellation of the above-mentioned restricted shares. The Proposal Regarding Repurchase of
Certain Restricted Shares for Cancellation was then considered and approved at the 2019 Annual General Meeting.
On 4 June 2020, the Company convened the Tenth Meeting of the Fifth Board of Directors to consider and
approve 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 2019 annual equity distribution, the
Company was approved to adjust the repurchase price of the first granted restricted shares under the 2016
Restricted Share Incentive Plan (Revised) (《2016年限制性股票激励计划（修订稿）》) to RMB 6.28 per share,
and adjust the repurchase price of the reserved restricted shares to RMB 9.54 per share. On 19 June 2020, as
confirmed by the Shenzhen branch of China Securities Depository and Clearing Corporation Limited, the
Company completed the repurchase for cancellation of the above-mentioned restricted shares.
On 26 October 2020, the Company convened the Twelfth Meeting of the Fifth Board of Directors to consider and
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 the resignation, voluntary waiver, unprofessional conduct, damaging the
Company’s interests, etc. of 30 awardees in the first grant and 16 awardees in the reserve grant, the Company was
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
approved to repurchase for cancellation the 219,690 restricted shares in the first grant and the 43,360 restricted
shares in the reserve grant of the above-mentioned awardees which had been granted but failed to satisfy the
unlocking conditions. On 30 December 2020, as confirmed by the Shenzhen branch of China Securities
Depository and Clearing Corporation Limited, the Company completed the repurchase for cancellation of the
above-mentioned restricted shares.
3. Awardees' exercise of interests during the reporting period and interests accumulatively granted but not yet
exercised as at the end of the reporting period
In summary, during the reporting period, due to implementation of the 2016 Restricted Share Incentive Plan
(Revised) (2016年限制性股票激励计划（修订稿）), the Company repurchased a total of 431,357 restricted shares
for cancellation. As at the end of the reporting period, the Company had granted a total of 12,189,090 restricted
shares which had not been unlocked.
(II) 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. Explanation on changes in share capital caused by implementation of the 2016 Restricted Share Incentive Plan
(Revised) (2016年限制性股票激励计划（修订稿）).
During the reporting period, the total shares of the Company decreased by 431,357 shares in total due to
repurchase of restricted shares for cancellation.
2. Accounting treatment method for option incentive and effects of equity incentive cost on the results of the
Company
According to relevant provisions under the Accounting Standards for Business Enterprises No. 11 - Share-based
Payment (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 to
the latest available information of changes in the number of incentive targets allowed to unlock restricted
shares/exercise options, completion of performance indicators and other follow-up information and include the
services obtained in the current period in the relevant costs or expenses and capital reserve at fair value of the
restricted shares/exercise options on the grant date.
The implementation of the above equity incentive plan will not have a significant impact on the Company's
financial position and operating results during the reporting period and in the future.
(III) Employee Stock Ownership Plan for Core Team
1. On 15 February 2017, the Proposal Regarding the Employee Stock Ownership Plan for Core Team of
Guangdong 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 of
Guangdong 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）
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
(hereinafter referred to as the “Employee Stock Ownership Plan”) in accordance with relevant laws and
regulations. As such, the Employee Stock Ownership Plan would permanently exist and be launched each year
unless 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 Employee
Stock Ownership Plan. It was agreed to set special funds of RMB12 million as the capital source for the First Plan
of 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. 1
Targeted Asset Management Program (广发原驰海大核心1号定向资产管理计划)" purchased 720,187 shares
from the secondary market. On 29 December 2017, the vesting of the first vesting period of the above-mentioned
purchased shares was completed, with 40% of these shares, i.e. 288,075 shares, being vested. On 28 December
2018, 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 of
the 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 been
vested, 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 been
satisfied. Therefore, starting from 31 December 2019, all the 720,187 shares under the First Plan of the Stock
Ownership Plan have been allowed for trading.
As of 18 June 2020, shares held under the First Plan of the Stock Ownership Plan had been sold out by way of
centralized bidding, marking the completion of the implementation and the early termination of the First Stock
Ownership Plan. During the reporting period, no change occurred to the holders 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 Core
Team 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 Stock
Ownership Plan”) was approved at the 2017 Annual General Meeting. As such, the Company was approved to
implement the Second Plan of the Employee Stock Ownership Plan. A special fund of RMB38,511,460.57 would
be established and the related employees would raise no more than RMB50,000,000. As of 11 July 2018, 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 Second Plan of the Stock
Ownership Plan, of which 1,908,436 shares were purchased with the special fund. On 28 December 2018, the first
vesting of the said shares purchased with the special fund was completed, with 40% of these shares, i.e. 763,374
shares, being vested. On 31 December 2019, the second vesting of the said shares purchased with the special fund
was completed, with 30% of these shares, i.e. 572,531 shares, being vested. On 31 December 2020, the third
vesting of the said shares purchased with the special fund was completed, with 30% of these shares, i.e. 572,531
shares, being vested. The 2,477,750 shares purchased with the employees’ self-raised capital were vested
according to their payment percentage, including a total of 1,585,760 shares to directors and senior management
(Ms. Li Tian, Mr. Qi Cheng, Mr. Xueqiao Qian, Mr. Shaolin Yang, Mr. Zhijian Huang, Mr. Guoxiang Liu, Mr.
Xiewu Jiang, Mr. Guocheng Mi, and Mr. Zhongzhu Chen) and a total of 891,990 shares to other core employees.
As of 31 December 2020, the total 4,386,186 shares under the Second Plan of the Stock Ownership Plan had been
vested, with the vesting particulars in line with the Second Plan of the Stock Ownership Plan. On 31 December
2020, the lockup period for the Second Plan of the Stock Ownership Plan expired and the unlocking conditions
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
had been satisfied. Therefore, starting from 31 December 2020, all the 4,386,186 shares under the Second Plan of
the Stock Ownership Plan have been allowed for trading.
As of the end of the reporting period, 4,386,186 shares were held under the Second Plan of the Stock Ownership
Plan, accounting for 0.264% of the then total share capital. During the reporting period, no change occurred to the
holders 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 Team
of 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
of the Employee Stock Ownership Plan. A special fund of RMB30,180,630.23 would be established as the capital
source. As of 4 November 2019, the "GF Yuanchi Haid Core Employee Stock Ownership Plan No. 3 Single
Asset 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 888,500
shares of the Company’s stock from the secondary market for the Third Plan of the Stock Ownership Plan. On 31
December 2019, the vesting of the first vesting period of the above-mentioned purchased shares was completed,
with 40% of these shares, i.e. 355,400 shares, being vested. On 31 December 2020, the vesting of the second
vesting period of the above-mentioned purchased shares was completed, with 30% of these shares, i.e. 266,559
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 0.053% of the then total share capital. During the reporting period, no change occurred to the
holders 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
Percen
Amoun Market
Subject Pricing Amount of tage
Types t of Whethe Settlem price
matter basis Price of related as the
Related of the transac r ent of of
of the of the related party amoun Disclos
Related party related tions exceedi related availabl Disclos
related related party transaction t ure
party relations party approv ng party e ure date
party party transacti s of index
hip transacti ed approve transacti similar
transacti transacti ons (RMB ’0,0 similar
ons (RMB d cap ons transacti
ons ons 00) transac
’0,000) on
tions
Foshan Sales of The On Announ
Sales of
Haihang products price of normal Not cement
Associat feed and Market 21 April
Xingfa and each 8,066.18 0.13% 7,160 Yes commer applicab on
e other price 2020
Agricultu commo transacti cial le Day-to-
products
re and dities on shall terms or day
90
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Animal be in Related
Husbandr determi accorda Party
y ned by nce with Transac
Develop both relevant tion in
ment Co., parties agreeme 2020
Ltd. through nts (Annou
negotiat ncemen
ion t No.
based 2020-0
on the 26)
uniform publish
market ed on
price as 21
quoted April
external 2020 in
ly by the
the media
seller at designa
the time ted for
of informa
transacti tion
on. disclos
ure
The Announ
price of cement
each on
transacti Day-to-
on shall day
be On Related
determi normal Party
ned by commer Transac
both cial tion in
Guizhou Purchas Purchas
parties terms or Not 2020
Fuhai Associat e of raw e of raw Market 21 April
through 11,078.73 0.23% 16,884 No in applicab (Annou
Chemical e material material price 2020
negotiat accorda le ncemen
Co., Ltd. s s
ion nce with t No.
based relevant 2020-0
on the agreeme 26)
uniform nts publish
market ed on
price as 21
quoted April
external 2020 in
ly by the
91
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
the media
seller at designa
the time ted for
of informa
transacti tion
on. disclos
ure
Total -- -- 19,144.91 -- 24,044 -- -- -- -- --
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 Not applicable
amount is estimated by categories
during the reporting period (if any)
Reasons for large differences between
transaction prices and market Not applicable
reference prices (if applicable)
2. Related party transactions 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 the
reporting period.
3. Related party transactions 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
There were no related creditors’ rights and debts of the Company during the reporting period.
5. Other significant related party transactions
√ Applicable □ Not applicable
The Proposal on External Investment and Related Party Transactions (《关于对外投资暨关联交易的议案》) was
reviewed and approved on the Eleventh Meeting of the Fifth Board of Directors on 25 July 2020 and the First
Extraordinary General Meeting of 2020 on 14 August 2020. It was approved that the wholly-owned subsidiary of
the Company could transfer 33.47% of the fund share of Guangzhou Hengjuchang Venture Investment Partnership
(Limited Partnership) held by Guangzhou Haihao Investment Co., Ltd., the controlling shareholder of the
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Company, with its own capital of RMB 1,011,100, and assume the remaining capital contribution of RMB 669
million from Guangzhou Haihao Investment Co., Ltd. in the Partnership Agreement of Guangzhou Hengjuchang
Venture Investment Partnership (Limited Partnership) (《广州市恒聚昌创业投资合伙企业（有限合伙）之合伙
协议》) and all the rights and obligations under the Partnership Agreement. As at 16 April 2021, the transfer of the
above-mentioned share has been completed and registered for business change.
XVII. Material Contracts and Imple mentation
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)
Date of the
related
Guarante
announcem
e
ent Amount of Guarantee Type of Fulfilled
Name of obligee Guarantee date Term to related
disclosing guarantee provided guarantee or not
parties
the
or not
guarantee
amount
Customers (such as 28 June Joint liability
2,000 27 August 2019 72.62 1 year Yes No
farmers and dealers) 2018 guarantee
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of seven controlled
subsidiaries including Joint liability
15 May 2019 140.00 1-3 years No No
Hunan Haid Bio-Feed guarantee
Co., Ltd.
Customers (such as Joint liability
21 August 2019 32.45 1 year Yes No
farmers and dealers) guarantee
for whom Shandong
26 October
Haiding Agriculture 2,000
2018 Joint liability
and Animal 14 January 2020 101.20 1 year No No
guarantee
Husbandry Co., Ltd.
provided guarantees
Customers (such as Joint liability
27 August 2019 69.00 1 year Yes No
farmers and dealers) guarantee
of eleven controlled 16 April
1,500
subsidiaries including 2019 Joint liability
16 May 2019 436.50 1-3 years No No
Guangxi Haid Feed guarantee
Co., Ltd.
Customers (such as Joint liability
22 October 2019 257.40 1 year Yes No
farmers and dealers) guarantee
22 October
of Nanchang Haid 600
2019 Joint liability
Biotechnology Co., 18 March 2020 94.00 1 year No No
guarantee
Ltd.
Customers (such as Joint liability
24 December 2019 60.00 1 year Yes No
farmers and dealers) guarantee
of controlled 22 October
1,500
subsidiaries including 2019 Joint liability
16 March 2020 7.92 1 year No No
Zhanjiang Haid Feed guarantee
Co., Ltd.
Joint liability
Customers (such as 10 June 2020 188.00 1 year Yes No
17 March guarantee
farmers and dealers) 38,450
2020 Joint liability
of subsidiary 11 May 2020 1,893.40 1-3 years No No
guarantee
Joint liability
Customers (such as 14 August 2020 789.50 2-3 months Yes No
28 July guarantee
farmers and dealers) 52,850
2020 Joint liability
of subsidiary 14 August 2020 12,711.41 1 year Yes No
guarantee
Total actual external
Total external guarantees approved
91,300 guarantees during the 16,853.40
during the reporting period (A1)
reporting period (A2)
Total external guarantees approved Total balance of actual
98,900 15,348.01
at the end of the reporting period external guarantees at the end
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
(A3) of the reporting period (A4)
Guarantees between the Company and its subsidiaries
Date of the
related
Guarante
announcem
e
ent Amount of Guarantee Type of Fulfilled
Name of obligee Guarantee date Term to related
disclosing guarantee provided guarantee or not
parties
the
or not
guarantee
amount
16 April Joint liability
88,019 23 July 2019 65,822.44 1 year Yes No
2019 guarantee
Joint liability
21 May 2020 4,451.03 1-6 months Yes No
Sheng Long Bio-Tech 17 March guarantee
33,096
International Co.,Ltd 2020 Joint liability
21 July 2020 2,260.78 1 year No No
guarantee
28 July
-50,353
2020
27 October Joint liability
32,624.5 13 June 2018 32,624.50 7 years No No
2017 guarantee
Haid International 16 April Joint liability
142,450 7 May 2019 4,592.81 1 year Yes No
Group Limited 2019 guarantee
17 March
35,786
2020
16 April Joint liability
770 17 September 2019 391.49 6 months Yes No
Sheng Long Bio 2019 guarantee
Tech(M)SDN. BHD 17 March Joint liability
795 13 May 2020 130.50 4 months Yes No
2020 guarantee
16 April Joint liability
16,184 4 September 2019 6,500.51 2-5 months Yes No
2019 guarantee
Haid Feed Joint liability
12 May 2020 6,941.16 2-3 months Yes No
Co.,Limited 17 March guarantee
7,953
2020 Joint liability
20 October 2020 1,608.19 1 year No No
guarantee
16 April Joint liability
12,135 10 July 2019 6,555.52 2-11 months Yes No
ShengLong 2019 guarantee
Bio-Tech(India)Privat Joint liability
17 March 22 May 2020 1,152.53 4-5 months Yes No
e Limited 19,349 guarantee
2020
5 July 2020 4,674.58 Joint liability 1 year No No
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
guarantee
16 April Joint liability
10,250 4 October 2019 5,347.81 2-4 months Yes No
2019 guarantee
Joint liability
14 May 2020 4,471.50 2-3 months Yes No
Hai Duong Haid 17 March guarantee
11,403
Company Limited 2020 Joint liability
19 October 2020 1,639.00 1 year No No
guarantee
28 July
-647
2020
China Haida Feed 17 March
87,227
Group（HK）Limited 2020
16 April Joint liability
3,850 15 April 2020 2,075.40 2-3 months Yes No
2019 guarantee
PT.HAIDA
Joint liability
AGRICULTURE 4 June 2020 2,884.19 3-5 months Yes No
17 March guarantee
INDONESIA 15,905
2020 Joint liability
11 December 2020 302.81 1 year No No
guarantee
VINH LONG HAI 17 March
2,386
DAI CO.,LTD 2020
Joint liability
28 November 2019 24,813.89 10 years Yes No
29 June guarantee
100,000
2019 Joint liability
10 February 2020 24,352.31 10 years No No
guarantee
Guangzhou Yitun Pig
28 July Joint liability
Industry Investment 55,000 10 September 2020 41,527.16 10 years No No
2020 guarantee
Co., Ltd.
Joint liability
15 October 2020 6,999.99 1 month Yes No
28 July guarantee
195,000
2020 Joint liability
24 December 2020 20,000.00 1 year No No
guarantee
6 subsidiaries
including
17 March Joint liability
Shijiazhuang Weike 52,000 11 May 2020 11,900.00 1 year No No
2020 guarantee
Biotechnology Co.,
Ltd.
Qingyuan Hailong
28 July Joint liability
Biological Technology 350 17 August 2020 345.00 2-3 years No No
2020 guarantee
Co., Ltd.
Wholly-owned or 28 July Guarantee with
5,000 11 September 2020 721.00 1 year Yes No
controlled subsidiaries 2020 collateral
96
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
69 wholly-owned or 17 March Joint liability
157,050 1 January 2020 132,488.57 1 year No No
controlled subsidiaries 2020 guarantee
22 wholly-owned or 28 July
26,175
controlled subsidiaries 2020
Alaer Ruiliheng 26
Joint liability
Biological Protein November 2,737.19 26 November 2019 2,737.19 2 years No No
guarantee
Co., Ltd. 2019
Total amount of guarantee Total amount of guarantee
provided for subsidiaries approved provided for subsidiaries
653,475.00 420,311.86
during during the reporting period
the reporting period (B1) (B2)
Total amount of guarantee Total balance of guarantee
provided for subsidiaries approved provided for subsidiaries as at
1,062,494.69 240,303.71
as at the end of the reporting period the end of the reporting period
(B3) (B4)
Guarantees between subsidiaries
Date of the
related
Guarante
announcem
e
ent Amount of Guarantee Type of Fulfilled
Name of obligee Guarantee date Term to related
disclosing guarantee provided guarantee or not
parties
the
or not
guarantee
amount
29 June Joint liability
14,700 17 January 2020 1,776.78 2-5 months Yes No
2019 guarantee
17 March Joint liability
34,000 25 May 2020 19,279.49 1-6 months Yes No
Sheng Long Bio-Tech 2020 guarantee
International Co.,Ltd Joint liability
15 November 2020 1,646.53 1 month Yes No
28 July guarantee
50,353
2020 Joint liability
17 August 2020 4,957.90 1 year No No
guarantee
Nantong Haid
17 March Guarantee with
Biotechnology Co., 1,000 11 May 2020 1,000.00 1 year Yes No
2020 collateral
Ltd.
Hai Duong Haid 28 July
647
Company Limited 2020
Total amount of guarantee between Total amount of guarantee
subsidiaries approved during 86,000 between subsidiaries during 28,660.7
the reporting period (C1) the reporting period (C2)
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Total balance of guarantee
Total amount of guarantee between
between subsidiaries as at the
subsidiaries approved as at the end 100,700 4,957.9
end of the reporting period
of the reporting period (C3)
(C4)
Total amount of guarantee provided (i.e. sum of the above three guarantee amounts)
Total amount of guarantee Total amount of guarantee
approved during the reporting 830,775 during the reporting period 465,825.96
period (A1+B1+C1) (A2+B2+C2)
Total amount of guarantee Total balance of guarantee as
approved as at the end of the 1,262,094.69 at the end of the reporting 260,609.62
reporting period (A3+B3+C3) period (A4+B4+C4)
The percentage of total amount of guarantee provided (i.e. A4+B4+C4)
18.65%
to the net assets of the Company
Of which:
Balance of guarantee provided for shareholders, beneficial controllers
0
and its related parties (D)
Balance of guarantee directly or indirectly provided for obligors
165,268.27
with gearing ratio over 70% (E)
Total amount of guarantee provided in excess of 50% of net assets (F) 165,268.27
Explanations on liability to guarantee occurred during the reporting During the reporting period, the Company paid a total of RMB
period or possible joint liability for satisfaction for undue guarantee (if 61,600 for overdue guarantees and received a total of RMB 12,300
any) as counter-guarantee payments.
Explanations on provision of guarantee in violation of established
Not applicable
procedures
Notes:
1. The guarantee amounts provided by subsidiaries for external parties are calculated according to the equity-holding percentages of
the 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.
(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 period
Unit: RMB’0,000
98
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Fund source for entrusted Amount of entrusted Overdue outstanding
Type Undue balance
wealth management wealth management amount
Wealth management
Owned funds 160,500 0 0
products of banks
Wealth management
Raised funds 30,000 25,000 0
products of banks
Total 190,500 25,000 0
Particulars of high risk wealth management products with individual significant amount or low security, poor liquidity, and
non-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
Overview of entrusted loans during the reporting period
Unit: RMB’0,000
Total entrusted loans Source Undue balance Overdue outstanding amount
2,250 Owned funds 2,250 0
Particulars of high risk wealth entrusted loans with individual significant amount or low security, poor liquidity, and non-principal
guaranteed
□ Applicable √ Not applicable
Unable to recover the principal of entrusted loans or other circumstances that may result in impairment
□ Applicable √ Not applicable
4. Material contracts in day-to-day operations
□ Applicable √ Not applicable
5. Other material contracts
□ Applicable √ Not applicable
The Company did not have any other material contract during the reporting period.
XVIII. Fulfillme nt of Social Responsibility
1. Fulfillment of social responsibility
Please refer to the “Haid Group: Social Responsibility Report 2020” (《海大集团：2020年度社会责任报告》)
disclosed by the Company on the media designated for information disclosure.
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
2. Performance of social responsibility for targeted poverty alleviation
(1) Plan for targeted poverty alleviation
The Company actively responds to the national call for poverty alleviation and rural revitalization, adheres to the
corporate mission of "prospering agriculture with science and technology, changing rural China", gives full play to
its guidance and radiation role as an industrial leader, implements the industrial poverty alleviation model
featuring "five elements of empowerment", and adopts the five major elements, namely industrial chain, service,
product, model and technology, to empower underprivileged households. At the same time, the Company makes
continuous efforts to targeted poverty alleviation and educational poverty alleviation, and makes contributions to
help farmers become rich, activate the rural economy and promote agricultural transformation. In recent years, the
Company has planned modern agricultural projects in many national and provincial poverty-stricken counties,
helping local farmers get rid of poverty and become rich.
(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 development
The Company gave full play to the advantages of the whole industrial chain and built "seven pillars", including
industrial parks, technical service stations, engineers, industrial leaders for rural revitalization, seedlings, think
tanks and finance, so as to achieve strong intellectual support.
During the reporting period, the Company donated RMB 10 million on the Guangdong Poverty Alleviation Day as
well as the Bijie City Assistance Event to truly help poverty-stricken villages and households develop
characteristic local industries, achieve the goal of poverty relief and transform "blood transfusion" into "blood
creation". Haid Group fully fulfilled its social responsibilities and contributed positive energy to targeted poverty
alleviation.
The Company has successfully helped more than 200 households get rid of poverty and increase their income by
adopting the "enterprise + family farm" poultry husbandry and rearing model in nearly 30 villages, including
Xialan Village of Shihuipu Town, Babao Village of Shigutang Town and Xilian Village of Xiniu Town in Yingde,
Qingyuan.
The Company has set up an aquaculture company in Baidunzi Village, Shawo Town, Jingtai County, Gansu
Province, to help local farmers engage in aquaculture on the saline and alkaline land. Four zones, including two
aquatic seeding farms, a fishery center and an industrial demonstration area, were established, which have greatly
promoted the sustainable development of aquaculture on the saline and alkaline land and provided a new
development drive for targeted poverty alleviation and the development of beautiful villages.
During the reporting period, the Company won several national awards and honors for targeted poverty alleviation,
such as advanced private enterprise in the National "Ten Thousand Enterprises Helping Ten Thousand Villages"
campaign for targeted poverty alleviation, and the annual model enterprise award for targeted poverty alleviation.
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Its targeted poverty alleviation cases were selected and incorporated in the Enterprise Examples of China's
Poverty Alleviation (《中国扶贫的企业样本》).
2. Actively carrying out charitable projects for educational poverty alleviation
In June 2020, the Ministry of Agriculture and Rural Affairs issued the Notice of the General Office of the Ministry
of Agriculture and Rural Affairs on the Cultivation of High-Quality Farmers in 2020 《农业农村部办公厅关于做
好2020年高素质农民培育工作的通知》), which required in-depth implementation of the three-year campaign to
improve the quality and efficiency of education and training on farmers. The Company fully responded to the call
and cooperated with Nanfang Daily Media Group to jointly launch the "10 + 100 + 1000 + 10,000 Project", a
charitable education project for one million new professional farmers. In the future five years, training programs
for new professional farmers will be carried out. Particularly, 10 new agricultural industrial parks will be built;
100 strong industrial towns of rural revitalization will be developed; 1,000 technical service stations for rural
revitalization will be set up; 10,000 service engineers for rural revitalization will be trained; 10,000 industrial
leaders for rural revitalization will be incubated. By doing so, we will ultimately achieve the goal of cultivating
one million new professional farmers and stimulating the output value of RMB 100 billion.
Since 2016, the Company has persisted in carrying out public benefit activities themed by "prospering farmers and
supporting education" and paid continuous attention to underprivileged children in rural areas. During the
reporting period, the Company carried out the "Agriculture Revitalization and Education Assistance" charitable
activity at Dangjiu Primary School in Pingjiang Town, Rongjiang County, Guizhou Province, and actively
encouraged employees to participate in the "Agriculture Revitalization and Education Assistance" event. More
than RMB 20,000 of funds were donated to provide living supplies, and study articles and equipment for
underprivileged students. By doing so, the Company insisted on the combination of poverty alleviation, wisdom
development and nurture of ambition.
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. The Company donated to poverty
alleviation funds, helped targeted poor families, and donated to the government’s poverty alleviation programs. It
donated money and supplies to poverty-stricken areas in Guangxi Province, Fujian Province, Guizhou, etc., which
were used to help alleviate poverty, improve education, improve the living environment, purchase social insurance,
etc.
During the reporting period, the Company carried out the "1,000 Pigs to 1,000 Villages" event on its own initiative
during the Farmers' Harvest Festival. 1,144 pigs were delivered to 1,144 administrative villages under the
jurisdiction of Guangzhou Municipality to support villagers in need, including low-income villagers,
extremely-poor households, left-behind elderly persons, elderly persons of no family, children in hardship, and
poor and severely disabled persons.
(3) Subsequent targeted poverty alleviation plan
In the future, the Company will continue to actively respond to the call of China, closely combine the national
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
poverty alleviation strategy with its strategic development with policies as the orientation and the industry as the
foundation, and further consolidate the achievements of poverty alleviation. The Company will facilitate rural
revitalization, transform from "blood transfusion" to "blood creation", gradually improve the endogenous driving
force of poverty-stricken areas, continuously enhance the accuracy and sustainability of assistance, consolidate
and scale up the achievements of poverty alleviation, 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 authority
√ Yes □ No
Names of
major
Name of the Emission Pollutant Total
pollutants Discharge Outlet Outlet Total Excessive
company or concentratio discharge discharge
and method quantity distribution discharge discharge
subsidiary n standards approved
characteristi
c pollutants
Sewage:
Sewage: Suspended
pH,
discharged matter: 100
suspended Discharge
into the mg/L;
Guangzhou matter, Limits of
municipal ammonia
Haiwei COD, West gate of Water 22,246
pipe 1 oxygen / None
Feed Co., BOD5, the plant Pollutants tons/year
network (NH3-N):
Ltd. vegetable (DB44/26-2
after 15mg/L;
oils, 001)
reaching the COD:
cationic
standard 110mg/L
surfactant
Sulfur Emission St
dioxide: andard of Ai
35mg/Nm3; r Pollutants
particulate for Boiler
Exhaust
matter: 20 (DB44/765-
gas:
mg/Nm3; 2019),
Particles,
Guangzhou Discharge ammonia Emission St
nitrogen Boiler: 8
Haiwei after nitrogen: andard of Ai 160,000
oxides, 1 tons, 1 / None
Feed Co., sewage 150mg/Nm r Pollutants m3/year
sulfur boiler
Ltd. treatment 3; mercury for Boiler
dioxide,
and its (GB13271-
Ringelman
compounds: 2014),
emittance
0.05mg/Nm Emission
3; smoke Limits of
blackness: 1 Air
mg/Nm3 Pollutants
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
(DB44/27-2
001)
Level-1
standards
for the 2nd
time
interval of
the
Discharge
Limits of
COD: 86 Water
mg/L; SS: Pollutants COD: 3.14
TP, TN,
50 mg/L; of Maoming t/a; SS: 1.82
Gaozhou COD,
Discharge Within the ammonia City ( 茂名 t/a;
Sanhe ammonia
after sewage nitrogen: 市水污染物 ammonia
Animal nitrogen, 1 / None
sewage treatment 5.6 mg/L; 排放限 nitrogen:
Husbandry PH,
treatment zone TN: 69 值》); 0.2 t/a; TN:
Co., Ltd. suspended
mg/L; TP: Pollutant 2.52 t/a; TP:
matter
2.9 mg/L; Discharge 0.11 t/a
pH: 6-9 Standards
for
Livestock
and Poultry
Farming
Industry
( 畜禽养殖
业污染物排
放标准》)
COD: 53.4
COD: 3.49
mg/L; COD: 500
t/a;
ammonia mg/L;
Jiaxiang COD, ammonia
nitrogen: ammonia
Haiying ammonia-ni Discontinuo nitrogen:
1 Total outlet 11.3 mg/L; nitrogen: 45 / None
Food Co., trogen, TN, us discharge 0.682 t/a;
TN: 26.5 mg/L; TN:
Ltd. TP, pH TN: 1.53
mg/L; TP: 70 mg/L;
t/a; TP:
2.97 mg/L; TP: 8 mg/L
0.173 t/a
pH: 7.15
Sewage: TP, Discharged COD: 300 Secondary
Linxi
TN, COD, into the mg/L; standard of
County
ammonia municipal BOD: 250 the 9.39 9.39
Haiying 1 1 sewage None
nitrogen, pipe mg/L; SS: Discharge tons/year tons/year
Food Co.,
BOD, PH, network 300mg/L; Standard of
Ltd.
suspended after ammonia Water
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matter, reaching the nitrogen: Pollutants
vegetable standard 30mg/L; for Meat
oils, fecal TN: Packing
coliform 30mg/L; Industry
and anionic TP: 3 mg/L; ( 肉类加工
surfactant PH: 6-9; 工业水污染
vegetable 物排放标
oils: 准》)
50mg/L; (GB13457-
fecal 1992), and
coliform: the water
1000 intake
MPN/L; standards of
anionic wastewater
surfactant: treatment
50mg/L plants in
Hexi Town,
Linxi
County
Emission St
andard of Ai
r Pollutants
Sulfur for Boiler
dioxide: ( 锅炉大气
10mg/m3; 污染物排放
Exhaust
nitrogen 标准》)
gas:
oxide: (GB13271-
Nitrogen
30mg/m3; 2014);
oxides,
particulate Notice on
sulfur
Linxi matter: Treatment
dioxide,
County 2 boilers, 3 5mg/m3; of Nitrogen
smoke Organized 9.39 9.39
Haiying 5 exhaust ammonia: Oxides None
blackness, discharge tons/year tons/year
Food Co., gases 4.9kg/h; from
particulate
Ltd. hydrogen Boilers 《关
matter, odor
sulfide: 于开展燃气
concentratio
0.33kg/h; 锅炉氮氧化
n, hydrogen
odor 物治理工作
sulfide,
concentratio 的通知》)
ammonia
n (XQLB
(dimensionl [2018] No.
ess): 2000 91);
Emission
Standard for
Odor
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Pollutants
( 恶臭污染
物排放标
准》)
(GB14554-
1993)
Construction and operation of pollution prevention and control facilities
During the reporting period, the Company arranged different pollution prevention and control equipment for
different processes. Details are presented as follows:
(1) Combustion waste gas treatment: Circumstances permitted, low nitrogen natural gas boilers were arranged; in
areas where the natural gas pipeline network could not be arranged, high-quality and qualified fuels were adopted
as required; and cloth bag dust collectors and desulfurization and denitrification devices were installed to ensure
the waste gas treatment satisfies relevant standards.
(2) Process waste gas treatment: In view of process waste gas treatment, the cyclone + bag filter and other
equipment were prepared to treat dusty waste gas; for the process involving relatively large odor, superimposed
spraying equipment or biological deodorization equipment were added to further remove dust and odor.
(3) Production wastewater treatment: Since the wastewater was mainly farming wastewater, solid-liquid
separation + cover lagoon anaerobic + two-stage AO + Fenton treatment process were adopted for the wastewater
treatment process.
2. The Company paid more attention to the harmless treatment of animal husbandry, and the back-end facilities
was equipped with fermenters to achieve harmless and resource-based treatment.
3. The pollution prevention and control equipment arranged by the Company was under effective operation. The
concentration and total volume of pollutant discharge were within the scope of the discharge permit.
Environmental impact assessment and other environmental protection administrative licensing of construction
projects
All the aforementioned feed factories prepared environmental impact reports before project implementation and
submitted to the environmental authority for review and approval in accordance with the requirements of
environmental laws and regulations. They commenced project construction after obtaining the approval and
carried 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 impact
assessment in accordance with laws and obtained the pollutant discharge permit.
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Emergency plan for emergent environmental incidents
In accordance with the requirements in the Management Measures of Haid Group for Safety and Environmental
Protection Emergency Preparation and Response (《海大集团安全环保应急准备和响应管理办法》), the
Company has established a top-down organizational structure for emergency response and allocated personnel and
resources to enhance the response to risks and events of different degrees, and strengthen the collaboration
between various departments. At the same time, all branches and subsidiaries have formulated contingency plans
for environmental protection in accordance with the requirements of local environmental protection authorities
and have carried out drills under the contingency plans.
Self-monitoring program for environment
The Company has formulated environmental self-monitoring plans in accordance with the requirements of local
environmental protection authorities and contacted qualified monitoring units to conduct self-monitoring on a
regular basis. Besides, it disclosed relevant information or filed with local environmental protection authorities as
required. All self-monitoring activities were in compliance with the requirements of the environmental protection
evaluation and emission standards.
Other environmental information that should be disclosed
None
Other information on environmental protection
None
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
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Section VI. Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
Before Increase/decrease in Reporting Period (+/-) After
Shares
Shares
as
as
dividen
dividend
Percenta d Percenta
Shares New issue converte Other Subtotal Shares
ge (%) convert ge (%)
d from
ed from
retained
capital
earnings
reserves
1. Restricted
26,761,978 1.69% -12,051,801 -12,051,801 14,710,177 0.89%
shares
1.3 Shares held by
other domestic 26,761,978 1.69% -12,051,801 -12,051,801 14,710,177 0.89%
investors
Of which: shares
held by domestic 26,761,978 1.69% -12,051,801 -12,051,801 14,710,177 0.89%
natural persons
2. Non-restricted
1,553,595,516 98.31% 81,284,614 11,620,444 92,905,058 1,646,500,574 99.11%
shares
2.1 RMB
1,553,595,516 98.31% 81,284,614 11,620,444 92,905,058 1,646,500,574 99.11%
ordinary shares
3. Total shares 1,580,357,494 100.00% 81,284,614 -431,357 80,853,257 1,661,210,751 100.00%
Reasons for share changes:
√ Applicable □ Not applicable
1. Based on the shareholdings of the Company’s directors, supervisors and senior management in the Company 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. 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
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
（修订稿）》) had resigned, been dismissed or failed in their individual performance appraisals of 2019, among
others, the Company repurchased and cancelled a total of 168,307 restricted shares that had been granted to the
said awardees but failed to meet the unlocking conditions. On 19 June 2020, the Company completed the
repurchase and cancellation of the said restricted shares. As such, the Company’s total shares decreased by
168,307 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, signed a waiver on the corresponding restricted share incentives, damaged the
Company’s interests, among others, the Company repurchased and cancelled a total of 263,050.00 restricted
shares that had been granted to the said awardees but failed to meet the unlocking conditions. On 31 December
2020, the Company completed the repurchase and cancellation of the said restricted shares. As such, the
Company’s total shares decreased by 263,050.00 shares.
3. Restricted shares were unlocked under the restricted share incentive plan
On 8 May 2020, as the unlocking conditions had been satisfied for the third unlocking period of the first grant and
for the second unlocking period of the reserve grant under the 2016 Restricted Share Incentive Plan (Revised)
(《2016年限制性股票激励计划（修订稿）》), a total of 12,080,693 restricted shares were unlocked, including
10,950,083 restricted shares in the first grant and 1,130,610 restricted shares in the reserve grant.
4. “Haid Convertible Bonds” were converted to shares.
“Haid Convertible Bonds” were allowed to be converted to shares starting from 25 September 2020. As of 22
December 2020, 81,284,614 new shares were converted from “Haid Convertible Bonds”, increasing the
Company’s total shares by 81,284,614 shares.
After all the changes above, the Company’s total shares have changed from 1,580,357,494 shares to
1,661,210,751 shares.
Approval of share changes:
√ Applicable □ Not applicable
1. On 18 April 2020, the Company convened the Ninth Meeting of the Fifth Board of Directors to consider and
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 the resignation, decease caused by illness, etc. of 15 awardees in the first grant of
restricted shares and 7 awardees in the reserve grant, the Company was agreed to repurchase and cancel 115,597
restricted shares in the first grant and 52,710 restricted shares in the reserve grant that had been granted to the
aforesaid awardees but had not yet reached the unlocking conditions. 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》) was considered and
approved at the 2019 Annual General Meeting.
2. On 26 October 2020, the Company convened the Twelfth Meeting of the Fifth Board of Directors to consider
and 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 the resignation, voluntary waiver, unprofessional conduct, damaging the
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Company’s interests, etc. of 30 awardees in the first grant and 16 awardees in the reserve grant, the Company was
approved to repurchase for cancellation the 219,690 restricted shares in the first grant and the 43,360 restricted
shares in the reserve grant of the above-mentioned awardees which had been granted but failed to satisfy the
unlocking conditions. 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》) was considered and approved at the Second Extraordinary General Meeting of
2020.
3. With SZSE's consent in the document "SZS [2020] No. 279", the Company's convertible corporate bonds of
RMB 2,830 million have been listed on SZSE for trading since 16 April 2020. The convertible corporate bonds in
this offering can be converted to shares in the Company starting from 25 September 2020. And the convertible
corporate bonds were officially delisted on 31 December 2020.
Transfer of share ownership:
□ Applicable √ Not applicable
Implementation progress of any share repurchase
√ Applicable □Not applicable
On 26 October 2020, the Proposal on the Plan for Share Repurchase (《关于回购公司股份方案的议案》) was
reviewed and approved on the Twelfth Meeting of the Fifth Board of Directors of the Company. It was approved
that the Company could repurchase its shares with not less than RMB 300 million and not more than RMB 600
million of its own funds at a maximum repurchase price of RMB 70 per share. The implementation period of the
repurchase should not exceed 12 months from the date when the Board of Directors reviewed and approved the
plan for share repurchase. On 4 March 2020, the Proposal on Adjusting the Plan for Share Repurchase (《关于调
整回购股份方案的议案》) was reviewed and approved on the Sixteenth Meeting of the Fifth Board of Directors.
The following adjustment to the share repurchase plan of the Company was approved: The Company could
repurchase its shares with not less than RMB 400 million and not more than RMB 800 million of its own funds at
a maximum repurchase price of RMB 90 per share. Other terms of the share repurchase plan remained unchanged.
The Company conducted the repurchase through a securities account for repurchase by means of call auction for
the first time on 25 November 2020, and released the Announcement on the First Repurchase of the Company's
Shares (《关于首次回购公司股份的公告》) on 26 November 2020.
During the reporting period, the Company repurchased 1,438,596 shares by means of call auction, accounting for
0.09% of its total share capital. The highest transaction price was RMB 61.12 per share and the lowest transaction
price was RMB 54.63 per share. The total transaction amount was RMB 83,929,094.77 (excluding transaction
expenses).
On 6 April 2021, the Proposal on Terminating the Plan for Share Repurchase 《关于终止回购公司股份方案的议
案》) was reviewed and approved on the Seventeenth Meeting of the Fifth Board of Directors. From the first share
repurchase date on 25 November 2020 to the disclosure date for this announcement, the Company repurchased a
total of 11,466,690 shares by means of call auction and transaction, accounting for 0.69% of the total share capital
of the Company. The highest transaction price was RMB 76.00 per share and the lowest transaction price was
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
RMB 54.63 per share. The total transaction amount was RMB 791,371,488.37 (excluding transaction expenses),
accounting for 197.84% of the lower limit of RMB 400 million and 98.92% of the upper limit of RMB 800
million of the total amount specified in the share repurchase plan. The Company terminated this share repurchase
plan.
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 to
the ordinary shareholders of the parent company and other financial indicators of the prior year and the prior
period, respectively:
√ Applicable □ Not applicable
See “VI. Major accounting data and financial indicators” in Section II.
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
Increased
Unlocked in
Sharehold Opening in Closing
Reporting Reason for lockup Date of unlocking
er restricted shares Reporting restricted shares
Period
Period
Shares in lockup due to her senior
management position: 47,220 restricted
shares were transferred to her shares in
Li Tian 1,379,385 47,220 1,426,605 Not applicable
lockup due to her senior management
position upon being unlocked during the
reporting period.
Restricted shares: 47,220 restricted
Li Tian 94,440 47,220 47,220 shares were unlocked during the 8 May 2020
reporting period.
Shares in lockup due to his senior
management position: 33,450 restricted
Xueqiao shares were transferred to his shares in
273,975 33,450 307,425 Not applicable
Qian lockup due to his senior management
position upon being unlocked during the
reporting period.
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Restricted shares: 33,450 restricted
Xueqiao
66,900 33,450 33,450 shares were unlocked during the 8 May 2020
Qian
reporting period.
Shares in lockup due to his senior
management position: 33,660 restricted
Shaolin shares were transferred to his shares in
180,855 33,660 214,515 Not applicable
Yang lockup due to his senior management
position upon being unlocked during the
reporting period.
Restricted shares: 33,660 restricted
Shaolin
67,320 33,660 33,660 shares were unlocked during the 8 May 2020
Yang
reporting period.
Shares in lockup due to his senior
management position: 1. The shares in
lockup due to his senior management
position decreased by 103,011 shares
upon the recalculation of his transferable
Zhijian
226,623 41,280 267,903 shares in the year according to his Not applicable
Huang
shareholdings on 1 January 2020; 2.
41,280 restricted shares were transferred
to his shares in lockup due to his senior
management position upon being
unlocked during the reporting period.
Restricted shares: 41,280 restricted
Zhijian
82,560 41,280 41,280 shares were unlocked during the 8 May 2020
Huang
reporting period.
Shares in lockup due to his senior
management position: 153,480 restricted
shares were unlocked during the
Zhongzhu reporting period, of which 83,793 shares
69,687 69,687 Not applicable
Chen became tradable, and the rest 69,687
shares were transferred to his shares in
lockup due to his senior management
position.
Restricted shares: 153,480 restricted
Zhongzhu
335,170 153,480 181,690 shares were unlocked during the 8 May 2020
Chen
reporting period.
Restricted shares: 30,000 restricted
Qi Cheng 70,000 30,000 40,000 shares were unlocked during the 8 May 2020
reporting period.
Shares in lockup due to his senior
Qi Cheng 12,500 12,500 Not applicable
management position: 30,000 restricted
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
shares were unlocked during the
reporting period, of which 17,500 shares
became tradable, and the rest 12,500
shares were transferred to his shares in
lockup due to his senior management
position.
Restricted shares: 33,390 restricted
Xiewu
66,780 33,390 33,390 shares were unlocked during the 8 May 2020
Jiang
reporting period.
Shares in lockup due to his senior
management position: 33,390 restricted
shares were unlocked during the
Xiewu reporting period, of which 16,695 shares
16,695 16,695 Not applicable
Jiang became tradable, and the rest 16,695
shares were transferred to his shares in
lockup due to his senior management
position.
Restricted shares: 164,730 restricted
Guoxiang
360,170 164,730 195,440 shares were unlocked during the 8 May 2020
Liu
reporting period.
Shares in lockup due to his senior
management position: 164,730 restricted
shares were unlocked during the
Guoxiang reporting period, of which 90,043 shares
74,687 74,687 Not applicable
Liu became tradable, and the rest 74,687
shares were transferred to his shares in
lockup due to his senior management
position.
Restricted shares: 161,130 restricted
Guocheng
353,760 161,130 192,630 shares were unlocked during the 8 May 2020
Mi
reporting period.
Shares in lockup due to his senior
management position: 161,130 restricted
shares were unlocked during the
Guocheng reporting period, of which 107,900
131,070 131,070 Not applicable
Mi shares became tradable, and the rest
131,070 shares were transferred to his
shares in lockup due to his senior
management position.
Other Restricted shares: 1. A total of
restricted 23,204,040 11,813,710 11,390,330 11,382,353 restricted shares were 8 May 2020
share unlocked during the reporting period; 2.
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Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
awardees A total of 431,357 restricted shares were
than repurchased and cancelled during the
senior reporting period.
managem
ent
Total 26,761,978 460,249 12,512,050 14,710,177 -- --
II Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) issued in reporting period
√ Applicable □Not applicable
Name of the Approved
Issuance Number of Final Disclo
stock and its Issuance offering and
price (or shares to be IPO Date trading Index to disclosed information sure
derivative date trading
interest rate) issued date date
securities volume
Stock
Convertible corporate bonds, convertible corporate bonds with detachable call warrant, corporate bonds
For details, please refer to the
Announcement on Public
Offering of Convertible
Corporate Bonds (《公开发行
可转换公司债券上市公告
Haid 23 15
19 March RMB 100 / 16 April 书》) numbered 2020-021 and
Convertible 28,300,000 28,300,000 December April
2020 piece 2020 disclosed on media designated
Bonds 2020 2020
by the Company, including
Securities Times, China
Securities Journal, Shanghai
Securities News, Securities
Daily and the cninfo website.
Other derivative securities
Information on the issuance of securities (excluding preferred shares) during the reporting period
Upon the approval of the China Securities Regulatory Commission (hereinafter referred to as "CSRC") through
the issuance of the Approval on the Public Offering of Convertible Corporate Bonds by Guangdong Haid Group
Co., Limited (《关于核准广东海大集团股份有限公司公开发行可转换公司债券的批复》) (Zheng Jian Xu Ke
[2020] No. 205), on 19 March 2020, the Company issued 28.3 million convertible corporate bonds with a face
value of RMB 100 each to the public, with a total amount of RMB 2,830 million and a term of six years.
With SZSE's consent in the document "SZS [2020] No. 279", the Company's convertible corporate bonds of RMB
2,830 million have been listed on SZSE for trading since 16 April 2020, with the abbreviation of "Haid
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Convertible Bonds" and the bond code of "128102".
The closing price of the Company's stock (stock code: 002311.SZ) was not lower than 120% (inclusive) of the
current conversion price of "Haid Convertible Bonds" of RMB 34.74/share (i.e. RMB 41.69/share) for at least
fifteen trading days out of thirty consecutive trading days from 25 September 2020 to 13 November 2020, which
had triggered the conditional redemption terms stipulated in the Prospectus for the Public Offering of Convertible
Corporate Bonds of Guangdong Haid Group Co., Limited (《广东海大集团股份有限公司公开发行可转换公司
债券募集说明书》) (hereinafter referred to as the "Prospectus"). On 16 November 2020, the Proposal on Early
Redemption of "Haid Convertible Bonds" (《关于提前赎回“海大转债”的议案》) was reviewed and approved on
the Thirteenth Meeting of the Fifth Board of Directors and the Eleventh Meeting of the Fifth Supervisory
Committee of the Company. The Company decided to exercise the conditional redemption right for "Haid
Convertible Bonds" and redeem all the "Haid Convertible Bonds" that had not been converted to shares at the
price of the face value of the bonds plus the accrued interest for the current period.
On 23 December 2020, the redemption date of "Haid Convertible Bonds", the trading and conversion of "Haid
Convertible Bonds" into shares were terminated. The Company has fully redeemed the "Haid Convertible Bonds"
registered with China Securities Depository and Clearing Corporation Limited Shenzhen Branch as at the closing
time of the redemption registration date (22 December 2020). On 31 December 2020, "Haid Convertible Bonds"
issued by the Company were officially delisted from the Shenzhen Stock Exchange.
2. Change in Total Shares, Shareholder Structure and Asset and Liability Structures
√ Applicable □Not applicable
(1) Conversion of convertible corporate bonds into shares
In accordance with the relevant laws and regulations as well as stipulations in the Prospectus 《募集说明书》), the
conversion period of "Haid Convertible Bonds" is from the first trading day (25 September 2020) after six months
from the final issuance date of convertible bonds (25 March 2020) to the maturity date of convertible bonds (18
March 2026, or postpone the date in case of a holiday). From 25 September 2020 to the redemption date of "Haid
Convertible Bonds" (23 December 2020), the face value of "Haid Convertible Bonds" reduced by RMB
2,823,906,100 due to conversion, and the bonds were converted into 81,284,614 shares accumulatively. After the
conversion, the total share capital of the Company increased by 81,284,614 shares
(2) Implementation of equity incentive plan
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, deceased due to illness, among others, the Company repurchased and cancelled a total of
168,307 restricted shares that had been granted to the said awardees but failed to meet the unlocking conditions.
On 21 April 2020, the Company disclosed the Announcement 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.
2020-028) and publicized the capital decrease matter for 45 days. As of 8 June 2020, the Company had paid a
total of RMB 1,228,802.56 for share repurchases, thus reducing the share capital by RMB 168,307.00 and the
capital reserve by RMB 1,060,495.56. The said matter was verified by Grant Thornton China (Special General
114
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Partnership), which issued the Capital Verification Report ZTYZ (2020) No. 440ZC00167 (致同验字(2020)第
440ZC00167 号《验资报告》). On 19 June 2020, as confirmed by the Shenzhen branch of China Securities
Depository and Clearing Co., Ltd., the Company completed the repurchase and cancellation of the said restricted
shares with the said authority. As such, the Company’s total shares decreased by 168,307 shares.
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, voluntarily signed a waiver on the corresponding restricted share incentives, committed
unprofessional conduct, damaged the Company’s interests, among others, the Company repurchased and
cancelled a total of 263,050 restricted shares that had been granted to the said awardees but failed to meet the
unlocking conditions. On 27 October 2020, the Company disclosed the Announcement 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. 2020-095) and publicized the capital decrease matter for 45 days. As of 11 December 2020,
the Company had paid a total of RMB 1,793,307.60 for share repurchases, thus reducing the share capital by
RMB 263,050.00 and the capital reserve by RMB 1,530,257.60. The said matter was verified by Grant Thornton
China (Special General Partnership), which issued the Capital Verification Report ZTYZ (2020) No. 440C001012
(致同验字（2020）第 440C001012 号《验资报告》). On 30 December 2020, as confirmed by the Shenzhen branch
of China Securities Depository and Clearing Co., Ltd., the Company completed the repurchase and cancellation of
the said restricted shares with the said authority. As such, the Company’s total shares decreased by 263,050
shares.
The above changes in the Company’s total shares did not result in the change of the Company’s actual controller.
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at Period-End
Unit: share
Preferred
shareholders
Ordinary Preferred with resumed
shareholders at shareholders with voting rights at
Ordinary
month-end resumed voting month-end
shareholders at 23,690 22,073 0 0
prior to rights at prior to
period-end
disclosure of period-end (if any) disclosure of
this Report (see note 8) this Report (if
any) (see note
8)
5% or greater shareholders or top 10 shareholders
Name of Nature of Shareh Shares Change Restricted Non-restrict Pledged or frozen shares
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shareholder shareholder olding during shares ed shares
percen Reporting
tage at Period
Status Shares
period
-end
(%)
Do mestic
Guangzhou Haihao
non-state-owne
Investment Co., Ltd. 53.91% 895,589,359 -15,000,000 895,589,359 Pledged 46,020,000
d juridical
(note)
person
Hong Kong Foreign
Securities Clearing juridical 2.74% 45,466,407 -26,446,906 45,466,407
Co mpany Ltd. person
Industrial and
Co mmercial Bank of
China－Invesco
Great Wall Newly Other 1.75% 28,999,257 8,999,335 28,999,257
Growth M ixed
Securities Investment
Fund
Foreign
Norges Bank –
juridical 1.20% 19,922,106 -2,726,111 19,922,106
Proprietary Fund
person
State-owned
Central Hu ijin Asset
juridical 1.03% 17,187,600 0 17,187,600
Management Ltd.
person
Industrial and
Co mmercial Bank of
China－Lo mbarda
China Shidai Other 0.87% 14,477,872 12,178,536 14,477,872
Xianfeng Stock
Founder Securities
Investment Fund
Bank o f China－
Invesco Great Wall
Dingyi M ixed Other 0.72% 11,999,944 889,944 11,999,944
Securities Investment
Fund (LOF)
Monetary Authority Foreign
of Macao－ juridical 0.69% 11,533,942 11,533,942 11,533,942
Proprietary Fund person
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National Social
Security Fund Other 0.60% 9,905,575 2,164,100 9,905,575
Portfolio 104
Foreign
Abu Dhabi
juridical 0.54% 8,925,515 -2,403,739 8,925,515
Investment Authority
person
Strategic investor or general
juridical person becoming top-10
N/A
shareholder due to placing of new
shares (if any) (see note 3)
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
Related or acting-in-concert
shareholders. It is unknown whether there is, among the other shareholders, any
parties among shareholders above
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
Type of shares
Name of shareholder Non-restricted shares held at period-end
Type Shares
Guangzhou Haihao Investment Co.,
895,589,359 RM B ordinary stock 895,589,359
Ltd. (note)
Hong Kong Securities Clearing
45,466,407 RM B ordinary stock 45,466,407
Co mpany Ltd.
Industrial and Co mmercial Bank of
China－Invesco Great Wall Newly
28,999,257 RM B ordinary stock 28,999,257
Growth M ixed Securit ies Investment
Fund
Norges Bank – Proprietary Fund 19,922,106 RM B ordinary stock 19,922,106
Central Hu ijin Asset Management
17,187,600 RM B ordinary stock 17,187,600
Ltd.
Industrial and Co mmercial Bank of
China－Lo mbarda Ch ina Shidai
14,477,872 RM B ordinary stock 14,477,872
Xianfeng Stock Founder Securit ies
Investment Fund
Bank o f China－Invesco Great Wall
Dingyi M ixed Securities Investment 11,999,944 RM B ordinary stock 11,999,944
Fund (LOF)
Monetary Authority of Macao－
11,533,942 RM B ordinary stock 11,533,942
Proprietary Fund
National Social Security Fund
9,905,575 RM B ordinary stock 9,905,575
Portfolio 104
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Abu Dhabi Investment Authority 8,925,515 RM B ordinary stock 8,925,515
Related or acting-in-concert
parties among top 10 Among the top 10 shareholders above, the first shareholder is the controlling shareholder of the
non-restricted ordinary Company, which is neither a related party nor an acting-in-concert party to the other
shareholders, as well as between shareholders. It is unknown whether there is, among the other shareholders, any
top 10 non-restricted ordinary acting-in-concert party as defined in the Measures for Administration of Takeover of Listed
shareholders and top 10 ordinary Companies (《上市公司收购管理办法》) or any related party.
shareholders
Note: As at the end of the reporting period, the Company’s controlling shareholder Guangzhou
Haihao Investment Co., Ltd. held 34,000,000 shares in the Company in its client account of
Top 10 ordinary shareholders
collateral securities for margin trading; and it lent out another 15,000,000 shares (not a
conducting securities margin
shareholding reduction as it retained ownership of these shares) in its refinancing securities
trading (if any) (see note 4)
lending business. Except for that, other shareholders of the top 10 ordinary shareholders were
not engaged in margin trading.
Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 non-restricted ordinary shareholders of the
Company 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 person
Type of controlling shareholder: Juridical person
Legal
Name of controlling representative/ Date of Unified social
Main business scope
shareholder person in establishment credit code
charge
Investment with self-owned capital; wholesale
of commodities (excluding commodities that
require a permit or approval document to
trade); retail sales of commodities (excluding
Guangzhou Haihao 914401137938775
Hua Xue 27 September 2006 commodities that require a permit or approval
Investment Co., Ltd. 30G
document to trade); import and export of
commodities (excluding commodities restricted
to specific parties); and import and export of
technologies
Change of the controlling shareholder during the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
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3. Actual Controller
Nature of actual controller: Domestic natural person
Type of actual controller: Natural person
Relationship with actual Right of residence in other
Name of actual controller Nationality
controller countries or regions
Hua Xue Himself Chinese None
Main office titles Chairman of the Board, and President (General Manager)
Used-to-be-holding listed
companies at home and abroad N/A
in past 10 years
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:
Hua Xue
39.75%
Guangzhou Haihao Investment Co., Ltd.
53.91%
Guangdong Haid Group Co., Limited
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 Other
Commitment Makers under Restricted Sales Condition
□ Applicable √ Not applicable
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Section VII. Preferred Shares
□ Applicable √ Not applicable
No preferred shares in the Reporting Period.
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Section VIII. Convertible Corporate Bonds
√ Applicable □ Not applicable
I Previous Price Adjustments for Conversion of Bonds into Shares
On 19 March 2020, the Company issued convertible corporate bonds with a total face value of RMB 2,830 million
(bond code: 128102, bond abbreviation: "Haid Convertible Bonds") to the public. The initial conversion price was
RMB 35.09 per share.
On 19 May 2020, the Company carried out the 2019 annual equity distribution and distributed cash dividends of
RMB 3.50 (including tax) for every 10 shares. Meanwhile, the conversion price of the Company's convertible
bonds was adjusted from RMB 35.09 per share to RMB 34.74 per share, with the adjusted conversion price
coming into force from 20 May 2020.
II Cumulative Conversion of Bonds into Shares
√ Applicable □ Not applicable
Proportion
Proportion of of the
Amount
the shares amount of
Accumulative of bonds
converted from bonds that
Abbreviation Starting/ending Total Accumulative quantity of that have
bonds to the have not
of bonds dates of issuance Total issuance amount of shares not been
total issued been
being conversion into volume amount conversion into converted converted
shares of the converted
converted shares (piece) shares (RMB) from bonds into
Company into shares
(shares) shares
before the to the total
(RMB)
conversion issuance
amount
Haid
25 September
Convertible 28,300,000 2,830,000,000.00 2,823,906,100.00 81,284,614 5.14% 0.00 0.00%
2020
Bonds
III Information on Top Ten Convertible Bond Holders
On 31 December 2020, "Haid Convertible Bonds" were officially delisted from the Shenzhen Stock Exchange.
There was no convertible bond holder.
IV Significant Changes in Profitability, Assets and Credit Standing of Guarantors
□ Applicable √ Not applicable
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V The Company's Liabilities as at the End of the Reporting Period, Credit Standing Changes
and Cash Arrangements for Debt Repayment For the Coming Year
1. Shanghai Brilliance Credit Rating & Investors Service Co., Ltd. issued the Follow-up Rating Report on
Convertible Corporate Bonds Publicly Issued by Guangdong Haid Group Co., Limited 《广东海大集团股份有限
公司公开发行可转换公司债券跟踪评级报告》) on June 18, 2020. The Company's corporate credit rating was
AA+, with a "Stable" outlook. The credit rating of Haid Convertible Bonds was AA+. These follow-up rating
results remain same as the results of the previous rating. For details of the above follow-up credit rating report,
please refer to www.cninfo.com.cn.
The closing price of the Company's stock was not lower than 120% (inclusive) of the current conversion price of
"Haid Convertible Bonds" of RMB 34.74/share (i.e. RMB 41.69/share) for at least fifteen trading days out of
thirty consecutive trading days from 25 September 2020 to 13 November 2020, which had triggered the
conditional redemption terms stipulated in the Prospectus for the Public Offering of Convertible Corporate Bonds
of Guangdong Haid Group Co., Limited (《广东海大集团股份有限公司公开发行可转换公司债券募集说明
书》). On 16 November 2020, the Proposal on Early Redemption of "Haid Convertible Bonds" (《关于提前赎回
“海大转债”的议案》) was reviewed and approved on the Thirteenth Meeting of the Fifth Board of Directors and
the Eleventh Meeting of the Fifth Supervisory Committee of the Company. The Company decided to exercise the
conditional redemption right for "Haid Convertible Bonds" and redeem all the "Haid Convertible Bonds" that had
not been converted to shares at the price of the face value of the bonds plus the accrued interest for the current
period (RMB 100.15 per piece). On 23 December 2020, the Company fully redeemed 60,939 pieces of "Haid
Convertible Bonds" that had not been converted into shares. On 31 December 2020, "Haid Convertible Bonds"
were officially delisted from the Shenzhen Stock Exchange.
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Section IX. Directors, Supervisors, Senior Management and Staff
I Change in Shareholdings of Directors, Supervisors and Senior Management
Increase Decrease
Opening Other Closing
in in
Office Incumbent/ Starting Ending sharehold increase/d sharehold
Name Gender Age date of date of Reporting Reporting
title Former tenure tenure ing ecrease ing
Period Period
(share) (share) (share)
(share) (share)
Chairman
6 June 16 July
Hua Xue of the Incumbent Male 51
2007 2022
Board
25 May 16 July
Hua Xue President Incumbent Male 51
2010 2022
Vice
Yingzhuo Chairman 6 June 16 July
Incumbent Male 53
Xu of the 2007 2022
Board
16
7 June
Li Tian Director Incumbent Female 49 January 1,965,100 1,965,100
2016
2021
16 July 16 July
Qi Cheng Director Incumbent Male 41 70,000 70,000
2019 2022
Executive
16 July 16 July
Qi Cheng Vice Incumbent Male 41
2019 2022
President
Independ
Jianfang 16 July 16 July
ent Incumbent Male 65
Gui 2019 2022
Director
Independ
Jianguo 16 July 16 July
ent Incumbent Male 59
He 2019 2022
Director
Independ
Yunguo 16 July 16 July
ent Incumbent Male 55
Liu 2019 2022
Director
Zhenxion Superviso 6 June 16 July
Incumbent Male 51
g Qi r 2007 2022
16
Jing Superviso 15 May
Former Female 42 Novembe
Wang r 2014
r 2020
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16
Superviso 21 August
Jia Chen Former Female 39 Novembe
r 2013
r 2020
16
Hua Superviso 16 July
Incumbent Male 34 Novembe
Wang r 2022
r 2020
16
Yongfang Superviso 16 July
Incumbent Female 32 Novembe 1,740 1,740
Mu r 2022
r 2020
Guoxiang Vice 16 July 16 July
Incumbent Male 53 360,170 90,000 270,170
Liu President 2019 2022
Xueqiao Vice 16 July 16 July
Incumbent Male 54 454,500 113,600 340,900
Qian President 2019 2022
Xueqiao Chief 6 June 16 July
Incumbent Male 54
Qian Engineer 2007 2022
Shaolin Vice 16 July 16 July
Incumbent Male 47 330,900 330,900
Yang President 2019 2022
Chief 22
Shaolin 16 July
Financial Incumbent Male 47 October
Yang 2022
Officer 2012
Xiewu Vice 16 July 16 July
Incumbent Male 53 66,780 66,780
Jiang President 2019 2022
Guocheng Vice 16 July 16 July
Incumbent Male 49 431,600 107,900 323,700
Mi President 2019 2022
Zhongzhu Vice 16 July 16 July
Incumbent Male 51 335,170 83,700 251,470
Chen President 2019 2022
Mingzhon Vice 6 June 16 July
Incumbent Male 56
g Chen President 2007 2022
Zhijian Vice 26 July 16 July
Incumbent Male 43 412,244 412,244
Huang President 2012 2022
Zhijian Board 26 July 16 July
Incumbent Male 43
Huang Secretary 2012 2022
Total -- -- -- -- -- -- 4,428,204 0 395,200 1,740 4,031,264
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. Ms. Jing Wang and Ms. Jia Chen had resigned before their tenures expired on 16 November 2020, and Mr. Hua Wang and Ms.
Yongfang Mu have been appointed as the new supervisors.
3. The opening shareholding of Supervisor Ms. Yongfang Mu is based on her shareholding when she was appointed as the
Supervisor.
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4. Director Ms. Li Tian has resigned before her tenure expired on 18 January 2021.
5. Mr. Xueqiao Qian was appointed as a Director on 3 February 2021.
II Change in Directors, Supervisors and Senior Management
√ Applicable □ Not applicable
Name Office title Type of change Date Reason
Jing Wang Supervisor Resignation 16 November 2020 Resignation
Jia Chen Supervisor Resignation 16 November 2020 Resignation
Hua Wang Supervisor Appointed 16 November 2020 Appointed
Yongfang Mu Supervisor Appointed 16 November 2020 Appointed
III Brief Biographies
Professional backgrounds, main working experience and current responsibilities in the Company of the incumbent
directors, 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 1992
with a major in special aquaculture; in 1995, he obtained the master’s degree in zoology from School of Life
Sciences of Sun Yat-Sen University. As one of the founders of the Company, he now serves as the Chairman of
the Board and President (General Manager) of the Company, as well as an Executive Director of the Company’s
controlling shareholder Guangzhou Haihao Investment Co., Ltd. He was/is the Executive Vice President of China
Feed Industry Association (CFIA), Chairman of China Vocational Education Group of Modern Fishery, Vice
Chairman of China Association of Young Rural Entrepreneurial Leaders (CAYREL), Chairman of Guangdong
Hi-tech Enterprise Association (GDHTEA), Vice Chairman of Guangdong Agricultural Science and Technology
Innovation Alliance, Vice President of Guangdong Feed Industry Association, Vice Chairman of Guangdong
Antibiotic-Free Feed Industry Alliance, Vice President of Guangdong Fisheries Association, Vice Chairman of
Guangdong Association of Young Scientists (GDAYS), Executive Vice Chairman of Guangdong Shaanxi
Chamber of Commerce, the NPC Member of the 14th National Congress of the Communist Party of Guangzhou,
a member of the 11th Chinese People’s Political Consultation Conference Guangzhou Committee, Vice Chairman
of the 15th Executive Committee of Guangzhou Federation of Industry and Commerce, President of Guangzhou
Association of Agricultural Leading Enterprises, and Honorary Chairman of Guangzhou Feed Profession
Association (GZFPA). Meanwhile, he is recognized as “Leading Entrepreneur in China’s Feed Industry” by the
Ministry of Agriculture, and “Top 30 Excellent Entrepreneurs in China” by China Feed Industry Association
(CFIA). Mr. Hua Xue holds 39.75% equity interests in the Company's controlling shareholder Guangzhou Haihao
Investment Co., Ltd. and is the actual controller of the Company.
(2) Li Tian
125
Full text of 2020 Annual Report of Guangdong Haid Group Co., Limited
Ms. Li Tian is a Chinese Certified Public Accountant and Certified Tax Accountant. She graduated from Beijing
Wuzi University in 1993 with a major in accounting. From 2002 to 2004, she studied and obtained EMBA from
Sun Yat-sen Business School. From 1993 to 1996, she was engaged in financial work at Guangdong Reclamation
Yanling Building Co., Ltd.. From 1996 to 2001, she worked for Guangzhou Lingnan Certified Public Accountants
and Guangdong Kangyuan Certified Public Accountants in succession. In January 2004, she joined the Company
and successively served as Chief Financial Officer, Board Secretary, Vice General Manager and Director. She
resigned before her tenure expired on 18 January 2021.
(3) Yingzhuo Xu
Mr. Yingzhuo Xu is one of the founders of the Company, and he now serves as the Company’s Vice Chairman of
the Board. He holds a bachelor’s degree and is a livestock specialist. He also holds a master’s degree in business
administration from HEC Paris. From 1991 to 1997, he worked for Guangdong Academy of Agricultural Sciences
in technology research and promotion with respect to feed for the animal husbandry industry. He served as a Vice
President and Director of the Company starting from 1998 before being a Vice Chairman of the Board of the
Company. Mr. Yingzhuo Xu holds 27% equity interests in Guangzhou Haihao Investment Co., Ltd., the
Company's controlling shareholder.
(4) Qi Cheng
Mr. Qi Cheng graduated from the major of Automation of Huazhong University of Science and Technology in
2002; studied the major of World Economy in Sun Yat-sen University from 2005 to 2008 and obtained the
Master’s degree; studied EMBA in CEIBS from 2013 to 2015 and obtained MBA. From 2002 to 2010, he served
as Process Engineer, Operation Manager, Supply Chain Manager and Director of Technology in Guangzhou
Procter & Gamble Co., Ltd.; from 2010 to 2017, he served as Operation Director of East Asia-Pacific Region and
Global Supply Chain Director in Essel Propack Co., Ltd.. Joining the Company in March 2017, he currently
serves as a Director, an Executive Vice President (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 Sciences
and of The World Academy of Sciences. He graduated from the major of Cytobiology of Wuhan University and
obtained the Bachelor’s degree in January 1982; obtained the Master’s degree in Genetics from Wuhan University
in December 1984 and joined in Institute of Hydrobiology, Chinese Academy of Sciences in the same year and
has 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 in
Medical College of Ohio and US San Diego. From 1995, he served as Researcher and Doctoral Supervisor in
Institute of Hydrobiology, Chinese Academy of Sciences. He served as Executive Deputy Director and Director of
Hydrobiology from 1999 to 2007, Director of State Key Laboratory of Freshwater Ecology and Biotechnology
from 2001 to 2011, and Independent Director of the 1st and 2nd sessions of the Board of the Company from 2007
to 2013. Currently he serves as a research fellow of the Institute of Hydrabiology, Chinese Academy of Sciences,
a Vice President of China Society of Fisheries, and an Independent Director of the Company.
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(6) Jianguo He
Dr. Jianguo He has obtained PhD and is a professor, winner of “The National Science Fund for Distinguished
Young Scholars” and Chief Scientist of the State Shrimp and Crab Industry Technology System. He graduated
from the major of Zoology of Sun Yat-sen University and obtained the Doctor’s degree of science in 1990. He has
been 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 University
from 2008 to 2018. His current positions include Professor of Sun Yat-sen University, Director of State Key
Laboratory of Pest Control and Resource Utilization, Member of Fisheries Advisory 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 of China-ASEAN Center for Joint
Research and Promotion of Marine Aquaculture Technology and Independent Director of the Company.
(7) Yunguo Liu
Dr. Yunguo Liu has obtained the Doctor’s degree in management (accounting) from Xiamen University. His
current positions and titles include Professor of Accounting and Doctoral Supervisor in Sun Yat-sen Business
School (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 of
Management Accounting Professional Committee of Chinese Accounting Society, Executive Director of Cost
Research Society of China, a management, accounting and consultancy expert of the Ministry of Finance, Leading
Talent in Accountancy (Phase I) under the Ministry of Finance, Third Batch of Shortlisted Candidates for Special
Support Program of the Development of State Leading Talents in Accountancy under the Ministry of Finance,
Shortlisted Candidate (2019) for the Development of Accounting Celebrities under the Ministry of Finance,
Member of CGMA North Asian 100 Think Tank Leaders, and Member of IMA China Academic Consultation
Commission. He is currently Independent Director of the Company, Shenzhen Heungkong 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 program
of National Natural Science Foundation of China, the National Key Technologies R & D Program of China during
the 8th Five-Year Plan Period, National Climb—B Plan, and programs of the Shandong and Guangdong
Provincial Natural Science Funds. Meanwhile, he has also published many research papers, applied for multiple
invention patents and been granted a State Technological Invention Award (Second Prize). Since he joined the
Company, he has been mainly engaged in researches on animal 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 Haihao Investment Co., Ltd..
(2) Hua Wang
127
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Mr. Hua Wang, Chinese Han nationality, is a member of the CPC, an economist and a political mentor. Hua Wang
majored in politics and administration and graduated from Southwest Jiaotong University in 2009. He obtained a
professional master's degree in political theory from Wuhan University in 2011. Hua Wang worked for China
Tunnel Construction Co. Ltd. Guangdong from July 2011 to March 2017, and worked for Guangdong Cinda Real
Estate Co., Ltd. from June 2017 to March 2019. He joined Guangdong Haid Group Co., Limited in April 2019,
and currently serves as the Senior Manager of the Group's Secretary Office.
(3) Yongfang Mu
Ms. Yongfang Mu, Chinese Han nationality, is an intermediate accountant. Yongfang Mu graduated from Henan
University of Economics and Law in June 2012, majoring in accounting. She joined Guangdong Haid Group Co.,
Limited in July 2012 and has held positions related to cost accounting, budget management and financial
management for the Company. She currently serves as Financial Director of the Company.
3. Senior Management
(1) Guoxiang Liu
Mr. Guoxiang Liu is an assistant research fellow. He graduated from the Aquaculture Department of Huazhong
Agricultural University in 1992, majoring in special aquaculture professionalism. He is now a Vice President
(Vice General Manager) and the Central China General Manager of the Company, in addition to being the Vice
Chairman of Hubei Province Feed Industry Association. Mr. Guoxiang Liu holds 1.5% equity interests in the
Company’s controlling shareholder Guangzhou Haihao Investment Co., Ltd..
(2) Xueqiao Qian
Dr. Xueqiao Qian, Chinese Han nationality, is an Associate Professor and has obtained the doctorate degree from
the Institute of Hydrobiology, Chinese Academy of Science. He successively presided over or participated in the
Hubei Provincial Natural Science Fund Project -- Development and Utilization of Feather Proteins in Fishery
Feeds, the development projects of the State Key Laboratory of Freshwater Ecology and Biotechnology -- Effects
of Nutrition Levels and Nutritional History on Fish’s Growth and Activities, Research on the Feeding Behavior
and Chemical Sensation of Allogynogenetic Crucian Carp, and Studies on the Utilization of Plant Protein by Main
Cultured Freshwater Fish, the NSFC Project -- Studies on the Comparative Nutritional Energetics of Feed Protein
Requirements of Carnivorous Fish and Omnivorous Fish, and the MOA’s 948 project -- Artificial Propagation and
Large-scale Aquaculture of Paddlefish etc.. Further, he has published more than 20 papers, of which, three papers
were published in international publications and included in SCI. He joined the Company in 2004 and is mainly
engaged in the aquatic animal nutrition and feed research and the development of new feed additives. Now, he is a
Vice President (Vice General Manager) and the Chief Engineer of the Company.
(3) Shaolin Yang
Mr. Shaolin Yang has obtained the master’s degree. Graduated from Sun Yat-sen University with a major in
Business 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 and
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Technology of Guangdong Province. From December 2008 to April 2012, he served as Executive Director, CFO
and Joint Secretary of KEE Holdings Company Limited (HK.02011). From May/June 2016 till now, he has served
as a supervisor of Guangdong Association of Management Accountants (GAMA) and an off-campus tutor for
master candidates in accounting of Sun Yat-sen Business School. In April 2012, he joined the Company and 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 of
Fisheries, 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 of
Aquacultural Breeding/Premix BU. His other positions include Director of Guangdong Feed Industry Association,
Vice President of Guangdong Marine Fishery Association, Director of Guangzhou Municipal Agricultural
Leading 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. He
joined in the Company in 2010 and currently serves as a Vice President (Vice General Manager) and the General
Manager of the Pig Farming BU of the Company.
(6) Zhongzhu Chen
Mr. Zhongzhu holds an MBA degree for senior management personnel from Xiamen University. He joined in the
Company in 2004 and currently serves as a Vice President (Vice General Manager) and the General 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 to
Zhuhai Municipal People’s Congress and Member of Shaowu Municipal CPPCC and current social titles include
Vice President of Guangzhou Municipal Agricultural Leading Enterprises Association, Vice President of the
Standing Committee of Panyu District Federation of Industry and Commerce of Guangzhou, Vice President of the
three federations of Guangzhou (including Guangzhou Industrial Economy Federation) and Executive Vice
President of Nancun General Chamber of Commerce of Panyu District, Guangzhou. He has won a number of
honors and titles, such as “Excellent Entrepreneur for Caring for Employees in Panyu District, Guangzhou”. He
joined in the Company in 2004 and served as the head for project investment and preparations and Director of
Purchase. He currently serves as a Vice President (Vice General Manager) of the Company and is responsible for
public relations, brand image and promotion of the Company.
(4) Zhijian Huang
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Mr. Zhijian Huang is an accountant and a bachelor’s degree holder. He joined the Company in 2004 and is now a
Vice President (Vice General Manager) and the Board Secretary of the Company.
Posts concurrently held in shareholding entities:
√ Applicable □ Not applicable
Remuneration or
Post held in
Ending date of allowance from
Name Shareholding entity shareholding Starting date of tenure
tenure shareholding
entity
entity
Guangzhou Haihao Investment Co., Executive
Hua Xue September 27, 2006 None
Ltd. director
Yingzhuo Guangzhou Haihao Investment Co.,
Supervisor September 27, 2006 None
Xu Ltd.
Posts held concurrently in other entities:
√ Applicable □ Not applicable
Remuneration or
Post held in Ending date of
Name Other entity Starting date of tenure allowance from
other entity tenure
the entity
Guangdong Aerocity Holding Co.,
Hua Xue Director 21 January 2015 None
Ltd.
Yingzhuo Zhuhai Haihao Industrial Investment Executive
20 March 2020 None
Xu Co., Ltd. Director
Yingzhuo Guangzhou Haihao Technology
Director 20 March 2020 None
Xu Industry Operation Co., Ltd.
Yingzhuo Guangdong Haihaowan Development Executive
22 April 2020 None
Xu Co., Ltd. Director
Yingzhuo Guangzhou Haihao Biotechnology Executive
29 April 2020 None
Xu Co., Ltd. Director
Yingzhuo Guangzhou Haoyue Biotechnology
Supervisor 29 May 2020 None
Xu Development Co., Ltd.
Jianfang Institute of Hydrobiology, Chinese Research
1 August 1995 Yes
Gui Acadamy of Sciences fellow
Jianguo He Sun Yat-Sen University Professor 1 December 1994 Yes
Yunguo Liu Sun Yat-Sen University Professor 1 December 1999 Yes
Guangdong Daya Smart Kitchen Independent
Yunguo Liu 22 June 2017 12 October 2022 Yes
Appliances Co., Ltd. Director
Shenzhen Heungkong Holding Co. , Independent
Yunguo Liu 6 May 2016 17 May 2022 Yes
Ltd. Director
Changwei Information Technology Independent
Yunguo Liu 1 September 2016 1 September 2022 Yes
Development Co., Ltd. Director
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Xiewu Bangpu Breeding Technology Co.,
Director 1 May 2019 None
Jiang Ltd.
Shaolin Guangdong Association of
Supervisor 18 May 2016 18 May 2021 None
Yang Management Accountants
Extramural
Tutor for
Shaolin
Sun Yat-Sen University master’s 5 June 2016 5 June 2022 Yes
Yang
degree
students
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and senior
management as well as those who left in the Reporting Period:
□ Applicable √ Not applicable
IV Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors
and 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 for
Board (《董事会议事规则》), as well as with the Company Law and the Company’s Articles of Association. The
remuneration is determined according to the Company’s operating performance and these personnel’s
performance appraisal indicators.
Remuneration of directors, supervisors and senior management in the Reporting Period:
Unit: RMB’0,000
Total before-tax
Remuneration
Incumbent/For remuneration
Name Office title Gender Age from related
mer from the
party
Company
Chairman of the Board and
Hua Xue Male 51 Incumbent 161.35 No
President (General Manager)
Yingzhuo Xu Vice Chairman of the Board Male 53 Incumbent 131.91 No
Li Tian Director Female 49 Incumbent 14.51 No
Director and Executive Vice
Qi Cheng President (Vice General Male 41 Incumbent 464 No
Manager)
Jianfang Gui Independent Director Male 65 Incumbent 12 No
Jianguo He Independent Director Male 59 Incumbent 12 No
Yunguo Liu Independent Director Male 55 Incumbent 12 No
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Zhenxiong Qi Supervisor Male 51 Incumbent 181.46 No
Jing Wang Supervisor Female 42 Former 92.25 No
Jia Chen Supervisor Female 39 Former 32.55 No
Hua Wang Supervisor Male 34 Incumbent 8.13 No
Yongfang Mu Supervisor Female 32 Incumbent 4.87 No
Vice President (Vice General
Guoxiang Liu Male 53 Incumbent 140.22 No
Manager)
Director, Vice President (Vice
Xueqiao Qian General Manager) and Chief Male 54 Incumbent 154.32 No
Engineer
Vice President (Vice General
Shaolin Yang Manager) and Chief Financial Male 47 Incumbent 186.78 No
Officer
Vice President (Vice General
Xiewu Jiang Male 53 Incumbent 292.24 No
Manager)
Vice President (Vice General
Guocheng Mi Male 49 Incumbent 356.28 No
Manager)
Vice President (Vice General
Zhongzhu Chen Male 51 Incumbent 337.77 No
Manager)
Vice President (Vice General
Mingzhong Chen Male 56 Incumbent 88.56 No
Manager)
Vice President (Vice General
Zhijian Huang Male 43 Incumbent 98.11 No
Manager) and Board Secretary
Total -- -- -- -- 2,781.31 --
Notes:
1. As Hua Wang and Yongfang Mu were elected as supervisors of the Fifth Supervisory Committee at the Second Extraordinary
General Meeting of 2020 and the Tenth Meeting of the Fifth Supervisory Committee, the remuneration data of theirs in the table
above are for the period from November 2020 to December 2020. Jing Wang and Jia Chen quit as members of the Fifth Supervisory
Committee before their tenures expired in November 2020. Therefore, the remuneration data of theirs are for the period from J anuary
2020 to October 2020.
2. The remuneration data of others are for the whole year of 2020.
Equity incentives for directors, supervisors and senior management in the Reporting Period:
□ Applicable √ Not applicable
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V Employees
1. Numbers, Functions and Educational Backgrounds of Employees
Number of in-service employees of Parent Company (Haid
1,433
Group exclusive of subsidiaries)
Number of in-service employees of major subsidiaries 24,808
Total number of in-service employees 26,241
Total number of paid employees in Reporting Period 26,241
Number of retirees to whom Parent Company or its major
0
subsidiaries need to pay retirement pension
Functions
Function Employees
Production 12,224
Sales 7,433
Technical 2,162
Financial 1,521
Administrative 2,316
Procurement 585
Total 26,241
Educational backgrounds
Educational background Employees
Doctoral degree 92
Master’s degree 992
Bachelor’s degree 5,267
Junior college 5,116
Senior high school, technical secondary school and below 14,774
Total 26,241
2. Employee Remuneration Policy
While strictly abiding by the Labor Law 《劳动法》), the Labor Contract Law 《劳动合同法》 and other national
and local related laws, regulations, department rules and regulatory documents, the Company implements the
following principles according to the characteristics of 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 work goals; implement the principle of integrating individual
remuneration with the Company’s long-term interests to ensure sustained and sound growth in main business,
prevent short-term behaviors and promote the Company’s sustained operations and development; stick to the
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principle of linking remuneration with performance appraisal with equal emphasis on incentive and restraint; give
comprehensive consideration to market changes and market remuneration levels. The Company has established a
reasonable post and remuneration system to provide employees with competitive salaries in the industry, link
performance with remuneration, align employees’ and the Company’s interests, enhance staff awareness for 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 staff
development is an important power and resource for the Company’s continuous development. The Company has
established an extensive talent cultivation system covering new employees, key personnel, managers, assistant
general managers/vice general managers and the general manager, possesses an excellent course development
system and a systematic internal trainer development system and carries out broad-based and precise talent
development through famous trainer courses, outdoor training, behavior learning, coach tutoring, online
broadcasting, online learning and other channels. The Company has also established a self-inspection mechanism
covering “talent development mechanism, talent development platform operation and plan implementation, talent
assessment and talent management self-inspection reports”.
Haid College, the Company’s functional department for talent development, carries out elite training and inclusive
education based on the Group’s strategies and business practice, so as to solve key problems for the organization
development. While actively creating opportunities for employees to improve their abilities and qualities, Haid
College actively responds to the national rural revitalization strategy. It has established the Haid Rural
Revitalization Education Institute and the Rural Revitalization Industrial Center to facilitate the training of one
million new professional farmers. With the Group's rapid development in 2020, cadre training has been fully
commenced, and resource platforms gradually came into being. As a result, a strong learning atmosphere has been
gradually formed in the organization. The talent training program for middle-level and grassroots management
cadres, which is a combination of online and offline activities, was launched by Haid College in cooperation with
regional/business divisions. Haid College provides courses, operational plans, evaluation standards and supporting
guidance, while regional/business divisions are in charge of specific implementation. Transformation of learning
results is completed through annual key tasks. The team coaching capability of managers is developed through
tutorial guidance. Online and offline course learning and transformation are guided by Drucker's thoughts and
theories in the Eight Essential Management Skills (《八项基本管理技能》) and the Executives and Organizations
(《经理人与组织》). Employees' abilities are improved through actual work tasks. Rapid mass empowerment is
conducted to satisfy the Group's need of cadre training. Relevant tasks have been orderly advanced at each center
and regional/business division. In order to provide development paths in personal capability enhancement and job
training for the Group's employees, the study roadmaps of 27 positions in 11 professional lines at 71 levels have
been completed, covering lines such as quality control, production, human resources and procurement. The
Second Talent Development Annual Conference provided solid support for the development of an organizational
atmosphere for talent training and the operation of the talent training system. The constant overseas talent training
has laid a foundation for the learning journey without boundaries.
Haid College continues to explore new models of talent development. To make its training more targeted and
diverse, the College has made full use of network, video and other forms and developed its own online learning
platform Haiwei (《海味》). The objectives of the platform include enhancing organizational learning abilities,
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improving the overall work competence of employees, and effectively communicating organizational experience.
As of the end of 2020, the platform had covered all major specialty lines, including QC, finance, HR, plant and
purchase, with administrators of functional centers, regions/business units, branches and subsidiaries organizing
their employees to study online, and administrators of specialty lines organizing their employees to enhance their
specialty skills. The online platform Haiwei has fully covered the Group's staff, with an annual online rate of
71.71%, a total annual online time of 626,896.82 hours, a total learning time of 326,183.49 hours, a per capita
online time of 33.81 hours for online trainees, and a per capita learning time of 17.6 hours for online trainees.
2,343 high-quality courses have been introduced; 1,694 professional courses have been internally studied. Online
classes on crayfish farming technology, aquatic new service engineers and shrimp farming for aquatic jobs are
offered. Besides, online classes on general skills, such as etiquette, Cantonese teaching, mind mapping, PPT
mastery, PPT presentation, Internet marketing, creative copywriting, copywriting skills, EXCEL, emotion
management, workplace influence and 365-day training mastery, are available. More than 4,000 people have been
covered. By combining the introduction of select external courses and the continuous development of internal
courses and integrating on-site and online training, the College makes learning more efficiently, enables staff to
improve their work skills and comprehensive competence, and achieves win-win results including both
improvement to individual professional abilities and sustainable development of the Company.
4. Labor Outsourcing
□ Applicable √ Not applicable
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Section X. Corporate Governance
I 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 strictly
implemented various systems, including the Articles of Association (《公司章程》), the Rules of Procedure of the
General Meeting 《股东大会议事规则》 the Rules of Procedure of the Board of Directors 《董事会议事规则》
the Working System of the Special Committee of the Board of Directors (《董事会专门委员会工作制度》), the
Rules of Procedure of the Supervisory Committee (《监事会议事规则》), the Independent Director System (《独
立董事制度》), the Working Rules of General Manager ( 总经理工作细则》), the Code of Conduct of Directors,
the Supervisors and Senior Management ( 董监高行为守则》), the Working System of the Board Secretary ( 董
事会秘书工作制度》), the Related Party and Related Party Transaction Management System (《关联方和关联交
易管理制度》), the Special Reserve and Use Management System of Raised Funds (《募集资金专项存储及使用
管理制度》), the Management Policy for Shares held by Directors, Supervisors and Senior Management in the
Company and Related Changes (《董监高所持本公司股份及其变动管理办法》), the Management Measures for
the External Provision of Financial Assistance (《对外提供财务资助管理办法》), the Controlled Subsidiary
Management System (《控股子公司管理制度》), the Management System for Information Insider Registration
(《内幕信息知情人登记管理制度》), the Accountability System for Major Errors in Information Disclosure in
Annual Reports (《年报信息披露重大差错责任追究制度》), the Futures Management System (《期货管理制
度》), the Working Rules for Annual Reports by the Audit Committee (《审计委员会年报工作规程》), the
Investment Decision-Making Management System (《投资决策管理制度》), the Investor Relations Management
System (《投资者关系管理制度》), the External Information User Management System (《外部信息使用人管
理制度》), the Information Disclosure System (《信息披露制度》), the Internal Reporting System for Substantial
Information 《重大信息内部报告制度》 the Dividend Management System 《分红管理制度》 the Information
Disclosure Management System for Debt Financing Instruments in the Inter-bank Bond Market (《银行间债券市
场债务融资工具信息披露管理制度》), the Investor Complaints Management System 《投资者投诉管理制度》
the Management Policies for the Implementation and Appraisal of the 2016 Restricted Share Incentive Plan
《2016 年限制性股票激励计划实施考核管理办法》), the Foreign Exchange Hedging Management System 《外
汇套期保值业务管理制度》), the Complaint and Complainant Protection System (《投诉举报及投诉举报人保
护制度》), the Management System for Securities Investments and Derivatives Trading (《证券投资与衍生品交
易管理制度》), etc., and the established sound internal control system in order to continuously improve the
Company’s governance structure 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 the
Company Law 《公司法》), the Rules of the General Meeting of Listed Companies 《上市公司股东大会规则》),
the Articles of Association (《公司章程》), and the Rules of Procedure of the General Meeting (《股东大会议事
规则》), as well as the Company’s internal control rules, and standardized the convening, holding and voting
procedures of the General Meeting to ensure that all shareholders could be equal, and fully exercise their rights. In
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addition, as witnessed by the hired lawyers, the legitimacy of the meeting’s convening, holding and voting
procedures could be guaranteed, and relevant legitimate rights and interests of the Company and its shareholders
could be secured as well. In 2020, three general meetings were convened and held by the Board in total; the
convening, holding and voting procedures of such meetings were witnessed by the lawyers and all were legal and
valid.
3. Directors and the Board of Directors
Strictly in accordance with the Company Law (《公司法》), the Articles of Association (《公司章程》), the Rules
of Procedure of the Board of Directors (《董事会议事规则》) and the Independent Director System (《独立董事
制度》), the Company has elected and appointed various directors, and such election and appointment procedures
are open, fair and just. Besides, the composition and number of directors meet relevant legal and regulatory
requirements. The members for the Company’s Fifth Board of Directors are all nominated, approved and elected
by the Board of Directors 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 their qualifications
are in accordance with the Guidance Opinions on the Establishment of Independent Director System in Listed
Companies (《关于在上市公司建立独立董事制度的指导意见》).
All directors of the Company have performed their duties in strict compliance with relevant laws, regulations, and
regulatory documents, attended all board meetings and carried out related works in a serious and responsible
manner, and firmly conformed to any statement and commitment made by directors. However, independent
directors have full right to know about the Company’s major issues and can issue independent opinions on major
issues without being influenced.
The Board of Directors has established the Audit Committee, the Remuneration and Appraisal committee, the
Strategy Committee and the Nomination Committee. Each committee can exercise its functions in accordance
with its work rules and make due contributions to the standardization of corporate governance. In the meantime,
the Board of Directors is able to carry out its work in strict accordance with relevant laws and regulations. All
directors of the Company are honest and trustworthy, diligent and responsible, attend corresponding board
meetings and general meetings with a serious attitude, actively participate in relevant training, and are familiar
with relevant laws and regulations.
4. Supervisors and the Supervisory Committee
The Company has strictly observed the Company Law (《公司法》), the Articles of Association (《公司章程》),
and other relevant regulations to appoint supervisors. The Fifth Supervisory Committee consists of three
supervisors, including two shareholder supervisors and one employee supervisor. The number and composition of
the Supervisory Committee meet relevant requirements stipulated in applicable laws and regulations. However,
the shareholder representative supervisors are elected by adopting the cumulative voting system, and the
employee supervisors are elected and appointed by means of the employees’ assembly in the form of secret ballot.
The number of supervisors that served as directors or senior management personnel of the Company in recent two
years does not exceed one half of the total number of supervisors of the Company, and the number of supervisors
nominated by a single shareholder does not exceed one half of the total number of supervisors of the Company.
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The Company’s supervisors can earnestly fulfill their responsibilities in accordance with the Rules of Procedure
of the Supervisory Committee (《监事会议事规则》), effectively supervise and inspect the Company’s major
issues, related party transactions, the legality and compliance of duties performed by the Company’s directors and
senior management, and maintain legitimate rights and interests of the Company and its shareholders.
5. Internal Audit System
The Company has established the complete internal audit system and set up the internal audit department in
charge of the effective internal supervision of the Company’s daily operations.
6. Stakeholders
The Company fully respects and safeguards legitimate rights and interests of relevant stakeholders, realizes the
coordinated balance of interests of the society, shareholders, the Company, and employees etc., sincerely treats
suppliers and customers, earnestly cultivates every employee, develops the mutual benefit and win-win
cooperation with relevant stakeholders, and jointly promotes the Company’s sustained, healthy and rapid
development.
7. Information Disclosure and Transparency
Pursuant to relevant laws and regulations, as well as the Company’s Information Disclosure System (《信息披露
制度》) and Investor Relations Management System (《投资者关系管理制度》), 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 investor
relations management, and the Securities Department serves as the executive department for information
disclosure and investor relations management. The Company pays special attention to communicate with investors
and will strengthen communication with investors by various means such as telephone, e-mail, and investor
relations interactive platform etc.
8. Investor Relations Management
The Company has always attached great importance to the management of investor relations, carried out related
works in accordance with the Investor Relations Management System (《投资者关系管理制度》) and other
systems, implemented the investor relations 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 fully guaranteed the investors’ right to know.
The corporate governance is a systematic and long-term project that requires continuous improvement. After the
Company is successfully listed, it is willing to accept supervisions from all parties, adhere to the scientific outlook
on development, constantly improve the corporate governance system, and strengthen the implementation of
various laws and regulations to promote the healthy development of the Company and enhance the overall
competitiveness.
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9. Insider Information Management
According to the Company Law (《公司法》), the Securities Law (《证券法》), the Administrative Methods for
Information Disclosure of Listed Companies (《上市公司信息披露管理办法》), the Stock Listing Rules of
Shenzhen Stock Exchange (《深圳证券交易所股票上市规则》), the Guidelines of the Shenzhen Stock Exchange
for the Standard Operation of Listed Companies (《深圳证券交易所上市公司规范运作指引》), the Regulations
on the Establishment of Insiders Registration and Management System by Listed Companies (《关于上市公司建
立内幕信息知情人登记管理制度的规定》) and other relevant laws, regulations, and the Articles of Association
(《公司章程》), the Company has established the Management System for Information Insider Registration (《内
幕 信息 知情人 登记管 理制 度》 ). The Company properly carried out corresponding information insider
registration and reporting works strictly according to relevant requirements and systems, and recorded and
revealed the list of all information insiders and relevant reports, communications, formulation, resolutions and
disclosures before any information was disclosed. During the Reporting Period, the Company notified all directors,
supervisors, senior management and relevant information insiders that they were not allowed to buy and sell the
Company’s shares within the window period by means of SMS and e-mail 30 days before the disclosure of regular
reports and 10 days before the disclosure of earnings forecasts and Preliminary Earnings Estimate, and conducted
an internal audit on the buying and selling of the Company’s shares and convertible corporate bonds by directors,
supervisors, senior management and relevant information insiders. During the reporting period, no information
insider was ever involved in the illegal buying and selling of the Company’s shares and convertible corporate
bonds, and no relevant personnel was suspected of being involved in insider trading and was imposed some
supervision measures and administrative penalties by competent regulatory departments.
Indicate by tick market whether there is any material incompliance with the regulatory documents issued by the
CSRC governing the governance of listed companies.
□ Yes √ No
No such incompliance.
II The Company’s Independe nce from Controlling Shareholder in Business, Personnel, Asset,
Organizational Structure and Financial Affairs
The Company has independent and complete businesses and independent management capabilities. It is
completely independent from the controlling shareholder in terms of business, personnel, assets, organization, and
finance. The controlling shareholder exercises its rights and assumes corresponding obligations in accordance
with the law, and does not affect the personnel appointment or dismissal of the listed Company, nor restricted the
duty fulfillment of the directors, supervisors, senior management or other personnel of the listed Company by
means other than exercising shareholder's rights specified in laws and regulations. There is no direct or indirect
interference with the Company’s decision-making and business operation beyond the authority of the general
meeting. Meanwhile, the Company’s Board of Directors, Supervisory Committee, and various internal functional
departments are capable of independent operations. There is no competition against the Company in the business
scope, business nature, customers and product substitutability. As of the 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.
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III Horizontal Competition
□ Applicable √ Not applicable
IV Annual and Extraordinary General Meetings Convened during the Reporting Period
1. General Meetings Convened during the Reporting Period
Investor
Meeting Type participation Date Disclosure date Index to disclosed information
ratio
Announcement on Resolutions of
2019 Annual General Meeting
(No. 2020-041) disclosed on
2019 Annual General
Annual 61.52% 11 May 2020 12 May 2020 Securities Times, China
Meeting
Securities Journal, Shanghai
Securities News, Securities Daily
and www.cninfo.com.cn
Announcement on Resolutions of
First Extraordinary General
Meeting of 2020 (No. 2020-076)
First Extraordinary
disclosed on Securities Times,
General Meeting of Extraordinary 73.74% 14 August 2020 15 August 2020
China Securities Journal,
2020
Shanghai Securities News,
Securities Daily and
www.cninfo.com.cn
Announcement on Resolutions of
Second Extraordinary General
Second Meeting of 2020 (No. 2020-105)
Extraordinary disclosed on Securities Times,
Extraordinary 59.62% 16 November 2020 17 November 2020
General Meeting of China Securities Journal,
2020 Shanghai Securities News,
Securities Daily and
www.cninfo.com.cn
2. Extraordinary General Meetings Convened at Request of Preferred Shareholders with Resumed Voting
Rights
□ Applicable √ Not applicable
V Performance of Duties by Inde pendent 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
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Due Attendances at
Attendances at Not attending
attendances at Attendances at board meetings Attendances at
Independent board meetings Absences at board meetings
board meetings board meetings by general
director through a board meetings in person for
in Reporting on site telecommunica meetings
proxy twice in a row
Period tion
Jianfang Gui 6 1 5 0 0 N/A 0
Jianguo He 6 6 0 0 0 N/A 2
Yunguo Liu 6 5 1 0 0 N/A 1
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 Company
Indicate 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 Directors
Indicate by tick mark whether any suggestions from independent directors were adopted by the Company.
√ Yes □ No
Suggestions of independent directors adopted or not adopted by the Company:
During the reporting period, the Company’s independent directors performed their duties in strict accordance with
the Company Law (《公司法》), the Code of Corporate Governance for Listed Companies in China (《上市公司
治理准则》), the Guidelines of the Shenzhen Stock Exchange for the Standard Operation of Listed Companies
( 深圳证券交易所上市公司规范运作指引》), the Directive on Establishment of Independent Director System in
Listed Companies (《关于在上市公司建立独立董事制度的指导意见》), the Independent Director System (《独
立董事制度》) and other applicable laws and regulations, as well as the Company’s Articles of Association (《公
司章程》). Upon an in-depth knowledge about the Company’s production and operation status obtained through
attending the Company’s board meetings and general meetings, as well as through on-site supervision, the
independent directors carefully exercised their voting rights and effectively performed their duties. The
independent directors issued independent, just opinions on the Company’s continuing related-party transactions,
profit distribution, 2019 Annual Internal Control Self-Assessment Report (《公司 2019 年度内部控制自我评价
报告》), provision of guarantees for external parties, repurchase and cancellation of certain restricted shares,
reappointment of the CPA firm, listing and advance redemption of convertible corporate bonds, and other matters
arising during the reporting period. All the independent directors’ suggestions and opinion were accepted by the
Company during the reporting period, which protected the interests of the Company as a whole, as well as the
legal interests of the shareholders, especially the minority shareholders.
VI Performance of Duties by Specialized Committees under the Board of Directors in the
Reporting Period
1. Performance of Duties by the Audit Committee under the Board of Directors
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The Audit Committee under the Fifth Board of Directors convened a total of six meetings during the reporting
period, at which the Company’s periodic reports, the related party transactions, the matter concerning the
occupation of the Company’s funds by its controlling shareholder or other related parties, changes to the
accounting policies, the work report of the internal audit department, etc. were reviewed, the person-in-charge of
internal audit was nominated, as well as the independent auditor for the convertible corporate bonds project and
for the annual financial statements was appointed. The Audit Committee also communicated with the external
auditors on the audit of the 2019 annual financial statements and the 2020 annual financial statements and urged
the audit progress. As such, the Audit Committee has faithfully fulfilled its supervision and examination duties.
2. Performance of Duties by the Remuneration and Appraisal Committee under the Board of Directors
The Remuneration and Appraisal Committee under the Fifth Board of Directors convened four meetings during
the reporting period to improve the post and remuneration systems, as well as to push forward the implementation
of the core team stock ownership plan and the repurchase and cancellation of restricted shares.
3. Performance of Duties by the Nomination Committee under the Board of Directors
The Nomination Committee under the Fifth Board of Directors convened two meetings during the reporting
period to review the core management candidates and offer advice.
4. Performance of Duties by the Strategy Committee under the Board of Directors
The Strategy Committee under the Fifth Board of Directors convened three meetings during the reporting period
to discuss and offer advice on the production capacity planning, the application for issuance of medium-term
notes and super short-term financing bonds, etc.
VII Performance of Duties by the Supervisory Committee
Indicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision in
the reporting period.
□ Yes √ No
The Supervisory Committee 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. All
appointed by and being responsible to the Board of Directors, senior management shoulders the operating
indicators set by the Board of Directors. The Remuneration and Appraisal Committee under the Board is
responsible for a year-end appraisal of senior 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 Company duly restricted its senior management as per the applicable laws and
regulations by strengthening the connection between performance appraisal and remuneration and incentives,
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aligning remuneration with appraisal results, and achieving differentiation in remuneration and incentives.
2. Incentive for Senior Management
For details, see “Part V Significant Events”, “XV Implementation of Equity Incentive Plans, Employee Stock
Ownership Plans or Other Employee Incentive Measures” herein.
IX Internal Control Assessment Report
1. Material Internal Control Deficiencies Identified for the Reporting Period
□ Yes √ No
2. Internal Control Self-Assessment Report
Disclosure date of internal control
20 April 2021
self-assessment report
Index to disclosed internal control self-
www.cninfo.com.cn
assessment report
Assessed entities’ combined assets as a
100.00%
percentage of consolidated total assets
Assessed entities’ combined operating
income as a percentage of consolidated 100.00%
operating income
Internal control deficiency identification standards
Type Financial-reporting related Non-financial-reporting related
A material deficiency refers to a deficiency Material deficiencies: (1) The internal
or a deficiency group that consists of control environment is invalid; (2) Any
multiple deficiencies that may cause a great leak of insider information about any
deviation from the control objective. It is investment in external parties, asset
considered a material financial-reporting restructuring, etc. against regulations
internal control deficiency if any of the causes any severe fluctuations in the
following cases occurs: (1) Any of the Company’s stock price or any materially
Company’s directors, supervisors or senior adverse impact on the Company’s image;
Nature standard management is involved in a serious fraud; (3) The violation of the Company’s
(2) The Company corrects its disclosed decision-making procedure in any
financial statements for multiple times; (3) significant event causes a significant
certified public accountants identifies a economic loss to the Company; or (4)
material misstatement in the current financial The independent auditor identifies any
statements which the Company has failed to other material deficiencies in the
identify during its internal control process; Company.
or (4) The Company’s Audit Committee and Serious deficiencies: (1) The Company
internal audit organ maintain invalid provides any guarantee or conducts any
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supervision over internal control. derivative financial instrument
A serious deficiency refers to a single transaction without due authorization or
deficiency or a deficiency group including performance of the corresponding
other deficiencies that is less serious than a information disclosure duty; (2) A severe
material deficiency but may still cause a loss of key talent occurs; (3) The
deviation from the control objective. It is Company is punished or a materially
considered a serious
