Stock Code: 603609 Stock Abbreviation (English): Wellhope
Liaoning Wellhope Agri-Tech Joint Stock Co., Ltd.
2019 Annual Report
March 2020
Important StatementsI. The Board of Directors, Supervisory Board, Directors, Supervisors and SeniorManagement of Liaoning Wellhope hereby warrant that there are no false representations,misleading statements or material omissions in this annual report, jointly and severallyaccept full responsibility for the truthfulness, accuracy and completeness of the contentsof this report.II. All the Board Directors attended the board meeting.III. SuyaJincheng CPA LLP has issued the auditor's report with an unqualified opinion forthe Company.IV. The Company's Chairman Jin Weidong and the Director of internal audit ZhangWenliang warrant the truthfulness, accuracy and completeness of the informationpresented in the financial statements in this annual report.V. The profit distribution plan for the reporting period has been deliberated by the Boardof Directors.The plan for 2019 dividend distribution will be: based on total share capital on the equityregistration date when the 2019 annual dividend distribution will be implemented, theCompany will distribute dividends of RMB 2.20 yuan per 10 shares (tax included) to allshareholders. This dividend distribution plan has been deliberated and approved by theBoard of Directors, pending submission to the Shareholders' Meeting.VI. Risk Statement of Forward-looking StatementsThe forward-looking descriptions in this report in terms of plans, development strategiesand other information cannot be deemed the Company's commitment to investors. Pleasebeware of the investment risks.VII. There has been no occurrence of the Company's non-business capital being occupiedby controlling shareholders and their related parties.VIII. There has been no occurrence of the Company violating its decision-makingprocedure while providing external guarantees.IX. Material Risk WarningThe Company describes possible risks in detail in this report. Please refer to "PossibleRisks" in Section IV "Business Operations Analysis".X. This annual report has been issued in both Chinese and English versions. In case there isany discrepancy or inconsistency between the two versions, the Chinese version shallprevail. The disclosed Chinese version of 2019 Annual Report can be obtained at:
www.sse.com.cn.
Contents
Section I Glossary ...... 4
Section II Company Profile and Key Financial Information ...... 5
Section III Business Overview ...... 9
Section IV Business Operations Analysis ...... 29
Section V Important Disclosures ...... 78
Section VI Changes in Common Shares and Shareholder Information ...... 98
Section VII Preference Share ...... 105
Section VIII Directors, Supervisors, Senior Management and Employees ...... 106
Section IX Corporate Governance ...... 113
Section X Corporate Bond ...... 115
Section XI Financial Statements ...... 116
Section XII Reference ...... 261
Section I GlossaryI. Glossary
| CSRC | refers to | China Securities Regulatory Commission |
| SSE | refers to | Shanghai Stock Exchange |
| Wellhope, Liaoning Wellhope, the Company | refers to | Liaoning Wellhope Agri-Tech Joint Stock Co., Ltd. |
| Reporting Period | refers to | January 1, 2019-December 31, 2019 |
| Wulian Heli | refers to | Wulian Heli Equity Investment Partnership (LP), one of the shareholders of Wellhope |
| Royal De Heus | refers to | Koninklijke De Heus B.V., the parent company of De Heus Mauritius Ltd., the biggest feed company in the Netherlands |
| Company Constitution | refers to | The Constitution of Liaoning Wellhope Agri-Tech Joint Stock Co., Ltd. |
| Shareholders' Meeting | refers to | The Shareholders' Meeting of Liaoning Wellhope Agri-Tech Joint Stock Co., Ltd. |
| Board of Directors | refers to | The Board of Directors of Liaoning Wellhope Agri-Tech Joint Stock Co., Ltd. |
| Supervisory Board | refers to | The Supervisory Board of Liaoning Wellhope Agri-Tech Joint Stock Co., Ltd. |
| Corporate Law | refers to | The Corporate Law of the People's Republic of China |
| Securities Law | refers to | The Securities Law of the People's Republic of China |
| Premix | refers to | Also known as additive premix, it is a well-proportioned mixture prepared by two or more than two kinds of feed additives and carrier or diluents according to appropriate proportion. It is a general name for compound premix, microelement premix and vitamin premix. |
| Concentrate Feed | refers to | It is a well-proportioned mixture consisted of protein feed, mineral feed and feed additives according to appropriate proportion, it can be made into compound feed by mixing with energy feed in a specified proportion. |
| Compound Feed | refers to | Based on the nutritional needs of animals, more feed raw materials and feed additives are industrially processed according to feed formula, it can be directly used for feeding animals. |
| Broiler breeders, parent stock | refers to | Broiler breeders lay eggs, the chicks hatched from its eggs are the commercial day old chicks, which have good genetic characteristics of table purpose. |
| Commercial broiler | refers to | Fattening from day old chick, used for food |
| Cage-reared | refers to | A method of farming as opposed to floor-reared, i.e., with the special cage as a symbol, a complete set of processes that compose of customized feed, artificial insemination, on-site management, etc. |
Section II Company Profile and Key Financial InformationI. Company information
| Company name (English) | Liaoning Wellhope Agri-Tech Joint Stock Co., Ltd. |
| Abbreviation (English) | Wellhope |
| Company name (Chinese) | 辽宁禾丰牧业股份有限公司 |
| Abbreviation (Chinese) | 禾丰牧业 |
| Legal Representative | Jin Weidong |
| Secretary of the Board | Representative of securities affairs | |
| Name | Zhao Xin | Yang Guolai |
| Address | No. 169, Huishan Street, Shenbei New District, Shenyang, Liaoning, P. R. of China | No. 169, Huishan Street, Shenbei New District, Shenyang, Liaoning, P. R. of China |
| Tel | 024-88081409 | 024-88081409 |
| Fax | 024-88082333 | 024-88082333 |
| hfmy@wellhope.co | hfmy@wellhope.co |
| Registered address | No. 169, Huishan Street, Shenbei New District, Shenyang, Liaoning, P. R. of China |
| Postal code | 110164 |
| Office address | No. 169, Huishan Street, Shenbei New District, Shenyang, Liaoning, P. R. of China |
| Postal code | 110164 |
| Company website | www.wellhope-ag.com |
| hfmy@wellhope.co |
| Media designated by the Company for disclosing information | China Securities Journal, Shanghai Securities News, Securities Times |
| Website designated by the CSRC for publishing the annual report | www.sse.com.cn |
| Place where the Company prepares its annual report | Securities Department of the Company |
| Stock information | |||
| Stock Type | Stock Exchange for Listing | Stock Abbreviation | Stock Code |
| A share | Shanghai Stock Exchange | Wellhope(禾丰牧业) | 603609 |
VI. Other information
| Accounting firm (local) | Name | SuyaJincheng CPA LLP |
| Office address | 22nd-23rd F, Central International Plaza, No. 105-6 North Zhongshan Road, Nanjing, Jiangsu Province, China | |
| Name of signatory CPA | Zhou Jiawen, Wang Lei | |
| The sponsor the performs the responsibility of continuous supervision during the reporting period | Name | GF Securities |
| Office address | GF Securities Tower, 26 Machang Road, Tianhe District, Guangzhou, China | |
| Name of signatory sponsor representative | Huang Haisheng, He Yu | |
| Period of conducting continuous supervision | 2019 |
| Item | 2019 | 2018 | Year-on-Year change % | 2017 |
| Operating revenue | 17,792,091,973.58 | 15,750,798,120.67 | 12.96 | 13,695,843,458.67 |
| Net profit attributable to the shareholders of the Company | 1,199,347,355.96 | 551,928,618.35 | 117.30 | 471,024,473.92 |
| Net profit attributable to the shareholders of the Company deducting non-recurring gains and losses | 1,190,975,760.51 | 542,459,604.74 | 119.55 | 389,607,877.28 |
| Net cash flow from operating activities | 1,111,605,966.58 | 501,404,915.59 | 121.70 | 611,390,370.75 |
| As at the end of 2019 | As at the end of 2018 | Year-on-Year change % | As at the end of 2017 | |
| Net assets attributable to the shareholders of the Company | 5,698,139,557.54 | 3,851,915,758.64 | 47.93 | 3,390,304,242.88 |
| Total assets | 9,149,772,043.85 | 6,930,694,562.43 | 32.02 | 5,985,861,995.54 |
| Item | 2019 | 2018 | Year-on-Year change % | 2017 |
| Basic earnings per share (yuan per share) | 1.34 | 0.66 | 103.03 | 0.57 |
| Diluted earnings per share (yuan per share) | 1.34 | 0.66 | 103.03 | 0.57 |
| Basic earnings per share deducting non-recurring gains and losses (yuan per share) | 1.33 | 0.65 | 104.62 | 0.47 |
| Weighted average return on equity (%) | 24.57 | 15.30 | Increased 9.27 percentage points | 14.72 |
| Weighted average return on equity deducting non-recurring gains and losses (%) | 24.40 | 15.04 | Increased 9.36 percentage points | 12.17 |
VIII. Key financial figures by quarters in 2019
Unit: yuan Currency: RMB
| Item | Q1 | Q2 | Q3 | Q4 |
| Operating revenue | 3,512,085,453.86 | 4,215,314,550.89 | 5,015,825,872.21 | 5,048,866,096.62 |
| Net profit attributable to the shareholders of the Company | 140,999,877.50 | 218,008,761.68 | 354,079,351.53 | 486,259,365.25 |
| Net profit attributable to the shareholders of the Company deducting non-recurring gains and losses | 134,261,140.24 | 224,035,659.24 | 346,464,664.86 | 486,214,296.17 |
| Net cash flow from operating activities | 13,296,100.82 | 283,272,880.40 | 286,342,572.40 | 528,694,412.96 |
| Item | 2019 | 2018 | 2017 |
| Gains or losses on disposal of non-current assets | -3,146,106.63 | -3,713,387.32 | 60,743,353.24 |
| Government grants charged to current gains or losses (excl. the government grants that are closely related to the Company's ordinary course of business and gained constantly at fixed quotas or amounts as per certain standards based on the state polices) | 22,363,695.79 | 19,471,241.10 | 34,132,205.99 |
| Income generated from investment costs for acquiring subsidiaries, associated companies and joint ventures are lower than the fair value of the investee’s net identifiable assets acquired by the Company | 1,844.71 | ||
| Gains or losses on debt restructuring | -1,147,367.47 | ||
| Gain or loss on fair value changes in trading financial assets and liabilities, and investment income from disposal of trading financial assets and liabilities as well as available-for-sale financial assets (excl. the effective portion of hedges that arise in the Company's ordinary course of business) | -181,164.67 | ||
| Gains or losses on fair-value changes in trading financial assets and liabilities, derivative financial assets and liabilities, and the income from disposal of trading financial assets and liabilities, derivative financial assets and liabilities as well as other debt investment (excl. the effective portion of hedges that arise in the Company's ordinary course of business) | 4,418,219.50 | 2,821,414.45 | |
| Non-operating income and expense other than those described above | -15,858,496.27 | -3,208,527.84 | -1,240,061.60 |
| Other gain and loss items that meet the definition of non-recurring gains and losses | 820,378.27 | ||
| Non-controlling interests effects | 3,972,264.26 | -590,792.81 | -4,164,352.40 |
| Income tax effects | -4,200,204.18 | -4,163,566.50 | -7,873,383.92 |
| Total | 8,371,595.45 | 9,469,013.61 | 81,416,596.64 |
X. Item measured at fair value
Unit: yuan Currency: RMB
| Item | Opening balance | Closing balance | Change | Effects on current profit |
| Derivative financial assets | 2,042,527.60 | 3,912,584.30 | 1,870,056.70 | 577,449.00 |
| Total | 2,042,527.60 | 3,912,584.30 | 1,870,056.70 | 577,449.00 |
Section III Business OverviewI. Principal Business, Operation Model and Circumstance of Related Industries in theReporting PeriodPrincipal business of Wellhope (hereinafter referred to as "the Company") primarilyconsists of feed production and sale, feed raw materials trade, broiler integration business,hog raising business and related businesses. When steadily develop feed business, theCompany aims to take 5-8 years to swiftly promote broiler integration and hog raisingbusinesses, forging a complementary operation model fueled by broiler and hogintegration businesses to further heighten its market power in animal husbandry industry.
1. Feed and feed raw materials trade
A. Industry overviewIn 2019, affected by some factors in terms of declined hog inventories and waves ininternational trade situation, the output value and production of China’s commercial feeddecreased, whilst the adjustment of product mix accelerated and large-scale enterprisesmaintained stable operations. According to the statistics of China Feed IndustryAssociation, the production of commercial feed in 2019 reached 228.854 million tons,representing a year-on-year decrease of 3.7%. Swine feed amounted to 76.632 milliontons, decreased by 26.6% as compared with prior year, among which feed for piglet, sowand finisher dropped by 39.2%, 24.5% and 15.9% respectively. Layer feed, broiler feed,ruminant feed and aquatic feed recorded 31.166 million tons, 84.648 million tons, 11.089million tons and 22.029 million tons with the year-on-year growth rate of 9.6%, 21.0%,
9.0% and 0.3% respectively. In terms of the overall feed production, the share of swinefeed reduced to 33.5% from previous 43.9%, whilst poultry feed increased to 50.6% from
41.4%. The output value of feed realized RMB 709.77 billion and operating revenuereached RMB 685.85 billion, decreased by 9.8% and 11.5% respectively.In 2019, China’s hog inventories experienced a continuous slide due to African Swine Fever(referred to as ASF hereof). According to the statistics of www.boyar.com, the deliveries ofhog in 2019 reduced by 28.2% as compared with prior year, whilst pork productiondecreased by 25.64%. At the end of 2019, domestic hog inventories dropped off by 48.38%,whilst breeding sows reduced by 27.61% and commercial (sow) accounted for over 30% of
total sows, which brought a great uncertainty in production performance. ASF acceleratedthe reshuffle in feed and hog raising industries, causing unprecedented impacts on theindustrial chain. Consumption of swine feed fell sharply, feed producers lowered prices tooccupy market share, making a fierce competition in the industry.At the same time, feed product structure was facing obvious changes. On one hand, ASFdrove the development of broiler, layer and ruminant animal raising. In 2019, chickenproduction increased by 15%, beef and mutton by 3% and eggs by around 5.7% (accordingto the statistics released by the Ministry of Agriculture and Rural Affairs). Changes ofdomestic meat consumption fueled the consumptions of poultry, ruminant and aquaticfeed. On the other hand, some swine feed producers enlarged the production of poultry,aquatic and ruminant feed to ensure working rate, which intermediately pushed theincrease of production.Driven by the central and local-level policies, the restocking of swine in 2020 has beengradually recovered and the demand of swine feed is expected to increase, whilst poultry,ruminant and aquatic feed are hopefully keeping growth. From July 1, 2020, China willcompletely ban the use of antibiotics in feed, the animal husbandry industry is ushering ina new era of reducing and restricting antibiotics in farming. The prohibition of antibiotics isa global trend and also a prerequisite for ensuring food safety. In 2020, domestic feedproducers will face new challenges and only the fittest could survive.B. Business profileThe Company manufactures and sells animal feed for swine, poultry, ruminant, aquaticand fur-farmed animals, and the products are marketed in 29 provinces and regions acrossChina. It has also built feed plants in Nepal, Indonesia and the Philippines, etc. Driven bythe principle of “constantly working on new products, never following the beaten path”,the Company always designs tailor-made products for animals in different growth stagesand it is committed to offering farmers integrated services in terms of animal raising,disease prevention as well as operation management, helping them to achieve the besteconomic benefits.The subsidiary trade companies mainly trade in feed raw materials in terms of fish meal,soybean meal and co-products of corn, also engage in feed additives including amino acid,antioxidant, mold inhibitors and vitamin. In addition, the trade companies are the sales
agents of animal health products such as vaccines and veterinary medicine produced byglobal strategic suppliers. Meanwhile, the Company also launched pet clinics business. Atpresent, its trade business distributes in Northeast China, Northern China, Eastern China,Southwest China, Guangdong Province and other regions, some products have beenexported to Nepal, Mongolia and other countries.
2. Broiler integration business
A. Industry overviewIn 2019, the supply of white feather broiler fell short of demand, with the overall profitsreaching an unprecedented high.In terms of supply, production increased in a large scale within the year, but still behindthe demand. In 2019, breeder farms updated over 1.3 million sets of grandparent stock,but the willingness of moulting fell sharply and forced moulting basically disappeared.Meanwhile, parent stock farms took measures to increase production, boosting the supplyof commercial chick increasing by 13.7% as compared with prior year. However, althoughthe production capacity increased sharply, the tight supply of white feather broiler was notchanged still. As a result, the price of day old chick had been breaking records, the peakexceeded RMB 13 per chick, whilst the price of broiler parts products has also remainedhigh, the lowest price still surpassed the average price of 2018.In terms of demand, gaining from the high pork prices that powered the increasingdemand for protein substitutes and the recovering demand of chicken product, thedemand from all consumption channels of white feather broiler increased sharply in 2019.H7N9 flu had basically vanished since 2018, which presented that the biggest negativefactor for white feather broiler consumption disappeared and led a recovery growth ofconsumption, whilst pork shortage due to ASF enlarged the substitutional demand ofchicken. In 2019, consumption of white feather broiler increased by 16.3% nationwide, percapita consumption rose by about 16.2%, the increase rate of demand exceeded that ofproduction, which led to record high prices of broiler parts products, with the averageprice as RMB 12,380 per ton, weekly highest price as RMB 17,000 per ton, monthly asRMB 14,000 per ton.In 2020, white feather broiler industry will face the increase both in production and sales,the bloom both in supply and demand. According to the study of a third party, it is
estimated that China’s hog deliveries will decrease by around 30% and pork productiondropped off 20% as compared with prior year. Although COVID-19 constrains consumptionin a short term, pork supply of the year still faces huge shortage, moreover, the productionof yellow feather broiler, 817 type of broiler and duck suffers losses due to the epidemic,the consumer demand of white feather broiler will have a large increasing space.Therefore, it is very likely that the market for 2020 will still be booming. Besides, due tothe increase of production, price of day old chicks reduced compared with that of 2019,profits in the industrial chain will be redistributed, the profit share of slaughtering willincrease obviously.Overall, ASF led to a large increase in the substitutional demand of white feather broiler,and relying on the advantages of chicken that featured by high protein, low fat and lowcholesterol, the change of domestic meat consumption structure has been speeded upand the share of chicken consumption has risen quickly. COVID-19 may have a short-termimpact on the industry, but the white feather broiler will bear less stress than the yellowfeather broiler, 817 type of broiler and duck. In the mid-long term, COVID-19 may hardlyreverse the increasing trend of white feather broiler consumption, on the other hand, itwill further accelerate the upgrading of white feather broiler. Regulations on the industryare becoming more strict, unqualified players will be weeded out, the leading position oflarge integrated enterprises will become more obvious.Explanation: Above statistics come from industry analysis reports of www.boyar.cnB. Business profileThe Company's broiler integrated chain covers more than 40 holding and associatedcompanies, which are mainly located in the provinces of Liaoning, Hebei, Henan, Jilin andShandong, etc. It has established three business units in terms of broiler raising, raw meatprocessing and further processing, which contains breeding, hatching, feed producing,commercial broiler raising, slaughtering and processing of raw meat, further processing ofprepared and cooked food. The integrated operation can effectively ensure the productionand supply of all operating segments, and facilitate the Company to control food safetyacross the entire chain. Meanwhile, through standardized management and streamlineoperation, the Company consolidates the controls of bio-safety, drug residue andin-process hygiene to achieve traceable food safety. Based on the total slaughtering
volume of the holding and associated companies, the Company's white-feather broilerbusiness has reached the first echelon of the industry by scale and become one of theleading suppliers of white feather broiler products nationwide.
◆ Broiler raising: This unit covers breeder raising, day old chick hatching, commercialbroiler rearing and feed production. The Company formulates scientific and rationalfeeding programs, light programs and disease prevention system to provide qualified eggsfor the hatching farms. Meanwhile, it has established thorough management system in thehatching process, introduced intelligent facilities that are available for hatching in batches,also equipped high-efficient and energy-saving hatcher and environment control systemfor supplying healthy day old chicks. Entering commercial broiler sector, the Companymainly raises broiler by self-owned farms and contract(out-sourcing) farms under thepattern of unifying nine aspects, including unified site selection and planning, unifiedconstruction standards, unified day old chicks supply, unified disease prevention, unifiedfeed supply, unified medicine supply, unified technological guidance, unified testing andunified slaughtering and processing. Guided by scientific raising standards, all the farmsapply three-tier cage system, and automate all the processes from feed intake, watertemperature to moisture control, etc., meanwhile, the farms combine crop planting withanimal raising to reduce manure pollution and promote resource recycling. The deliverybody weight of commercial broiler can reach over 3.0 kg with the livability of over 95%,and the European production index (shortened as EPI in the following parts) exceeds 390,receiving wide recognition from the cooperative farms.
◆Raw meat processing: The Company has 15 holding and associated slaughtering entities,which are equipped with state-of-the-art production lines with an annual slaughteringcapacity of 650 million-750 million broilers. Driven by all-in and all-out inspection andquarantine, every single entity has established a total quality guarantee system andtraceability system to monitor all the processes. Meanwhile, the Company constantlystrengthens and improves slaughtering and processing techniques by ways of systematicpre-job training and skill promotion training as well as conducting "6S" management (i.e.,Seiri, Seiton, Seiketsu, Shitsuke, Seiso, Safety), making the killing-out percentage and percapita slaughtering efficiency stand out among companies with similar scale. The Companymainly supplies broiler parts products to meat processing companies, supermarkets andchain fast-food stores, including Shineway Group, Jinluo Group, Yurun Group, RT-MART,McDonalds, KFC, Yoshinoya, Wallace, Dili Fresh Food, Yonghui Superstores, RT-MART andcatering companies and other local fresh food markets, etc., as well as to other regionssuch as Hong Kong, Macao, and some countries in terms of Mongolia and Bahrain.◆Further processing: Relying on the advantage of integration, the Company useshigh-quality chicken supplied by self-owned slaughtering entities as raw materials, andintroduces efficient and energy-saving production equipment to process preparedproducts. At present it supplies over 100 kinds of further-processed chicken products,which are mainly sold to large restaurant chains, supermarkets, local markets, enterprisesand school cantons. Under the backdrop of continuous expansion of consumer demand,the Company expands its exporting business of cooked food to the markets of Japan andSouth Korea.
3. Hog raising business
A. Industry overviewAffected by ASF, China's hog inventories severely reduced in 2019, meanwhile, the"bio-safety" has raised the entry barriers for hog raising industry, weeded out unqualifiedplayers and deeply changed the supply and demand. Moreover, domestic hog prices rosesharply, chicken played a prominent role in the alternative consumption of pork and ASFaccelerated the adjustment of meat consumption.On the supply side, ASF has hit China's hog industry particularly hard and broke the
original production capacity. In 2019, the deliveries of hog in China reduced by 28.2% ascompared with prior year, whilst pork production decreased by 25.64%. At the end of theyear, hog inventories dropped off by 48.38%, whilst breeding sows reduced by 27.61% andcommercial (sow) accounted for over 30% of total sows, which brought a great uncertaintyin production performance. ASF has triggered a new round of "Reshuffle" in the hogindustry, unqualified players were squeezed out of the market. However, the fiercecompetition continuously compressed the living space of small and medium-sizedback-yard farms, whilst large group companies took this opportunity to actively expandbusinesses to seize market share relying on their capital, talents, technology and otherresources.On the demand side, pork price rose to the peak in the second half of 2019, the averagehog price nationwide was 21.74 yuan per kg, while at the end of October, hog price soaredto the record high of 40 yuan per kg and the pork price steep rose to 60 yuan per kgthereupon in early November. However, the higher price discouraged pork consumption,whilst pork purchased for group meal declined significantly. Food processing plants wereforced by cost pressure to change raw materials into chicken, vegetarian food and otheringredients, making the adjustment of domestic meat consumption structure accelerate.In 2020, China enters the era of "Post-African Swine Fever", the bio-safety system isbecoming increasingly mature. Probability of widespread outbreaks in the future becomessmall, but it’s still difficult to avoid small-scale outbreaks. ASF has restrained the density ofhog raising, which will hinder the recovery of domestic hog production. Judging from thefactors such as hog production cycle and sow production performance, China's hogindustry will still present a tight supply in 2020. According to the estimation of athird-party, in 2020, the deliveries of hog in China are expected to drop off about 30% andthe pork production decrease about 20%. Although COVID-19 has curtailed consumptionin a short term, there is still a big gap in pork supply throughout the year, “Stabilizing hogproduction and guaranteeing pork supply" is still the main theme of hog industry.To conclude, ASF has broken the original industrial structure and accelerated theelimination of unqualified players. After a short period of pains, the consolidation of theindustry will be further enhanced. While a large number of small back-yard farms quit, themarket share of large group companies will rapidly increase. In the long run, the integrated
operation that contains large-scale breeding, slaughtering and further processing willbecome the general trend of the industry.B. Business profileThrough self-construction and joint venture, the Company has actively built farms andexpanded businesses in Liaoning, Jilin, Heilongjiang, Henan, Hebei, Anhui provinces andother areas suitable for hog raising. Among these projects, the farms located in Hebei andHeilongjiang provinces were jointly built by the Company and Hunan Jiahe Agriculture andAnimal Husbandry Company, top-15 in hog raising industry nationwide, the farms locatedin Anhui province were jointly constructed with Anhui Haoxiang Agriculture and AnimalHusbandry Company, a leading enterprise in agricultural integration in Anhui province anda member of the National Hog Joint Breeding Cooperation Group, other farms wereself-built. At present, the Company's hog raising business mainly adopts the operationmodel that compose of breeder raising and sales, commercial piglet sales, finisher raisingvia self-owned farms and family farms(contract). At the same time, the farms built theboar station to reserve excellent boars to maintain its breeding advantages. Throughestablishing strict bio-safety system, advanced breeding system and scientific feedingmanagement system, the Company is devoting to crafting an integrated chain thatcontains breeding, hog raising, marketing, slaughtering and processing.
a. Building farms with high-standard:
In compliance with the principle of moderate scale for every single farm along with thesite planning of multi-point layout, the Company strictly controls bio-safety anddynamically combines hog raising with planting via eco-friendly technologies to protectenvironment. Driven by the goal of building first-rate modern farms, Fushun farm located
in Liaoning province was jointly designed by well-known domestic experts andArchitectural Design and Research Institute of Tsinghua University CO. LTD., breeder farmlocated in Jilin province introduced advanced and efficient Dutch farm managementtechnology, whilst the farms located in Hebei and Henan provinces introduced Danishbreeding management system. All newly-built and under-construction projects have beenequipped with advanced production technology and equipment. In particular, theCompany has carefully designed the bio-safety systems for farms. Through automatic andinformation-based means such as smart feeding system, environmental control equipmentand production management software, the intelligent hog raising system has beenestablished to realize a hog raising model based on equipment, environment andinformation, so as to create a comfortable growth environment for animals and improveproduction efficiency.b. All-round system operation:
In terms of genetic selection and breeding: The Company introduces high-qualitybreeders with French, American and Danish gene to match different business areas toprovide parent stock with pure blood and clear pedigree, truly grasps the source to supplyexcellent breeders, commercial piglets and finishers to the market and strengthens thecontrol of downstream industries to quickly enhance the Company's core competitivenessin the field of hog raising, which is conducive to forge the synergy effect among hog raisingbusiness with feed and other businesses.In terms of nutrition and supply: Relying on Europe's technical practices andself-accumulated experiences in swine feed technology and hog industry, the Companyhas established a system-wide database to dynamically formulate nutrition for animals.According to the data and conditions of raw materials and hog markets, the Companytimely and dynamically adjusts the diet nutrition, feed processing technique and productportfolios to realize tailor-made nutrition, accurate production and precise feeding, as wellas to reduce operating cost, improve production performance and provide marketablecommercial hog.In terms of bio-safety prevention: Relying on well-designed bio-safety prevention system,all the Company’s subordinated farms have been strictly equipped with bio-safety facilities
and equipment, applied corresponding quarantine and blocking schemes for the areaswith different safety level in the farm, meanwhile, all the farms are continuouslyoptimizing and upgrading related facilities. Besides, a professional team has been set upoutside each farm to conduct off-site bio-safety work, especially for breeder farm (thereshould be no other farms within at least 3 kilometers). In the meantime, the Company hasestablished a diagnostic system for ASF by fluorogenic quantitative PCR, and implementedmonitoring and early warning of risk points through real-time patrol inspection bybio-safety supervision department and engineering department to ensure farm safety. Inaddition, the Company regularly trains the staff in the farms about bio-safety principlesand daily operation details, and continuously improves the safety awareness of all staff viavarious means such as job rotation and inspection notification.In terms of feeding management: The Company's farms adopt benchmarkingmanagement to enhance internal operation and reduce costs in the aspect of bio-safetyprevention, production performance, equipment and facilities, etc. At the same time, thefarms analyze key indicators related to production and other data through internalmanagement system to immediately adjust diet, environmental control, immune healthcare and herd structure to ensure the orderly feeding management.II. Core Competitiveness Analysis within the Reporting PeriodCore competitiveness of the Company lies in a highly educated, experienced, loyal andstable management team, rationally planned and steady-development based corporatestrategy, increasingly matured and competitive integrated operation model, systematic,scientific and continuously innovative technology system, development-oriented andstrongly rooted corporate culture.
1. Highly educated, loyal and stable management team
Talents are the primary resources and the core competitiveness of the Company. Themanagement team, led by seven founders, are highly educated with professionalbackground. They have deep insights into the core value and corporate culture of theCompany. They are united, stable and have always been fighting in the front line ofbusiness operation with strong cohesion. The seven founders, who are praised as "SevenPioneers of the Industry”, always hold together and fight together, the high solidarity of
the start-up shareholders has become the Company's most significant competitiveness,whilst “Unity is Power” is also part of the core culture. Almost all the middle and seniormanagers are internally selected and cultivated by the Company, the core members havebeen granted with many forms of medium and long-term incentives, they have strongsense of ownership and devote themselves to the sustainable development of theCompany. For the past 25 years, the management team has maintained high stability,almost no chief director or above leaves the Company. In regard of over 100 generalmanagers, besides those who are adjusted due to substandard performance, few of themquit the job. Meanwhile, newly promoted members of the management team born in the1980s and 1990s are selected from key talents cultivation programs, such as “SeedlingPlan” and “Sunflower Program”. They love the Company, highly recognize the corporateculture and have become the backbone force of the management team. The Company alsoattaches great importance to the continuous learning and ability improvement of thesemanagers, providing them with different training programs, including ExecutiveDevelopment Program, Leadership Training Camp, etc., which include strict training,appraisal rules and opportunities for managers to study from some leading companies athome and abroad so as to expand their horizons for further progress. The main reasonthat causes the failure of some domestic companies has been an “unstable and disunitedmanagement team”. In contrast, the highly educated, loyal and stable management teamis one of our core competitiveness, boost the Company’s confidence to move forward.Continuous talent growth and supply can be attributed to the advanced human resourcepolicy. In terms of talent introduction, the Company always adheres to the principle ofhigh-standard recruitment and upholds the core culture of "knowledge is power, unity isstrength". In terms of talent training, the Company formulates progressive anddual-channel training system according to its strategic goals and the need of staffdevelopment to offer a targeted platform to help them to grow. In terms of talentincentives, the Company continuously improves and optimizes the remuneration policy,provides a fair, just and merit-based environment for rewarding employees. It alsoconducts separate performance appraisal system for the sales team and administrativedepartments to keep the team dynamic. At the same time, driven by the principle of"sharing bumper harvest", the Company shares its development achievements with
managers in various ways, such as holding shares in parent company and subsidiaries,profit sharing and elasticity welfare. In 2018, the Company carried out the restrictive stockincentive program, where 372 core talents received the incentives. Through this program,the interests of Company, shareholders and key-employees have been combined to ensurethe sustainable and stable development of the Company and ultimately achieve a win-winsituation for all. Judging from the Company’s performance in 2019 and various assessmentdata, the stock incentive program has achieved significant results.
2. Rationally planned and well-developed corporate strategy
Based on in-depth understanding of domestic and global politics, economies andindustries trends, the Company always pays attention to its sustainable development andrisk control, focuses on operation quality and investment return of new projects. Driven bya stable and conscientious attitude towards investment, the Company rationalizes itsbusiness distribution, develops step by step instead of investing and expanding businessesrashly, to maintain the rationality and safety of industrial structures, in order to avoid allkinds of risks regarding business operation and take long-term development as thecorporate development goal.Rationally planned and well-developed corporate strategy reflects in the followingaspects:
a. Business divisionsThe Company started its business from premix. With many years of exploration in feedindustry, the Company has become one of the top 10 commercial feed producersnationwide. In 2008, the Company entered broiler integration business after strategicconsiderations. After 11 years of efforts, production capacity of white feather broiler ofthe Company’s holding and associated companies has reached a high position, with itsmanagement and key technical indicators ranking the top both at home and abroad. In2018, in order to seize the opportunity and reduce risks, the Company decided to take hograising as a strategic business after evaluation and market investigation, it cultivatedtalents and quickly formed core competitive of hog raising business by cooperation andproprietorship. In 2018, the Company further confirmed its development strategy in thenext ten years, i.e., whilst stabilizing the feed business, further develop broiler and hogintegration businesses to create an operation pattern powered by these two
complementary engines. Such business layout with high risk hedging will not lead theCompany to the woes and ebbs due to tremendous blow or sharp downturn suffered byone of the businesses.b. Operation modelThe Company has gradually formed an industrial chain with high competitiveness andcapability of risk prevention in the fields of feed production and selling, animal raising,slaughtering and further processing, which enables all business divisions to connect closely,reduce the cost of intermediate processes, lower trading risks, improve profit margin andensure food safety. Such industrial chain has become the development trend foragricultural companies under an increasingly complex and changing economy.c. Market expansionInstead of rapidly expanding nationwide markets supported by the success of feedbusiness in Northeast regions and broiler integration business, the Company, with richexperiences in market expanding, insists on exploring new markets based on overallanalysis and investigations, entering the markets step by step in Northeast, Northern China,Henan, Shandong provinces and other areas. It moves forward steadily and pursuesasset-light operation, always makes much account of operation efficiency and returns oninvestment, adheres to the strategy of “dominating the market gradually through makingthe existing businesses stronger and accumulating capital”.d. Product portfolioThe Company has a full range of feed products. The sales volume and development ofswine, poultry, ruminant and aquatic feed products have achieved great achievementsrespectively, which could avoid operational risks caused by diseases in certain animals orother circumstances.e. Financial risk controlThe Company always attaches great importance to financial risk control. Since going public,it has gradually improved internal control system, regulated corporate governancestructure and enhanced the awareness of risk control to avoid financial risks. TheCompany takes a vertical management in finance, managing loans, cashes and guaranteepolicies in a centralized manner to improve capital usage efficiency, lower capital costs and
ensure capital safety. The Company effectively controls liabilities and financial costsaccording to economic circumstances, industry development and internal operations. Theasset-to-liability ratio was 28.97% at the end of reporting period. Entering 2020, corporaterisk control becomes critically important especially under the complicated economycaused by COVID-19. Thus, the Company will further improve its risk control managementwhilst maintain stable operation.
3. Perfecting and competitive industrial layout
The Company’s industrial layout advantages mainly reflect in location and industrialstructure.a. Geography locationThe head office of the Company is located in Shenyang of Liaoning province, with its mainbusinesses mainly distributing in Northern China, especially in the Northeast regions.Northeast China is a potential growth area for animal husbandry designated by thegovernment, where is suitable for agricultural companies to expand business supported byits high-quality raw materials, mild climates, low raising density and relatively low humanresource costs. For instance, corn produced by Northeast regions has the characteristics of"high bulk density, low toxicity and low moisture", which enables the Company to reducepurchasing costs whilst ensuring feed product quality. Meanwhile, white feather broilerproduction of Liaoning, Jilin, Henan, Hebei and Shandong provinces where theCompany’s white feather broiler integration mainly distributed, accounts for over 75% ofnational production, and these areas are the most important regions for developing whitefeather broiler industry in China, with a good basis for white broiler raising and moremature marketing system. Moreover, the Company actively explores overseas markets inanswering the call of “the Belt and Road Initiative”, building plants in the Philippines,Indonesia and Nepal, where animal husbandry develops well with high potential.b. Industrial structureCentered on agricultural and animal husbandry industries, the Company adopts the layoutstrategy of "diversification and integration" to constantly optimize its industrial structure,and its anti-risk capacity and sustained profitability have been increasingly heightened. Interms of diversification, the Company is steadily developing its feed business and at thesame time vigorously promoting its broiler and hog integration businesses, striving to build
an operation model powered by these two integration businesses. The staggeredfluctuations in broiler and hog industries can effectively reduce the risks from cyclicalswing and promote information sharing and collaborative development among theCompany’s different business divisions. In terms of integration, both from seeing thehistory of agricultural and animal husbandry enterprises in developed countries and seeingChina's rapidly changing industrial landscape, the integrated business model is theinevitable direction for China’s agricultural and animal husbandry companies. After yearsof development in the raw materials trading, feed, animal raising, slaughtering, furtherprocessing and food businesses, the Company has basically formed an industrial chainwith competitiveness and risk prevention capability and it is gradually perfecting thesupporting capability of each business in the chain, whilst constantly standardizing andoptimizing know-how and operation system to further enhance the synergy effect amongthem.
4. Systematic, scientific and continuously innovative R&D systemThe Company’s R&D system always lives up to the mission of “using advanced technology,excellent service and outstanding products to promote the development of China’slivestock industry, conserving resources, protecting the environment, providing foodsecurity and benefiting the society”. Driven by the market-oriented and customer-orientedprinciple and the goals of “safe products, stable quality, tailor-made nutrition andpowering business performance”, the R&D team are constantly innovating technology anddeveloping new products.a. Excellent R&D teamRelying on a relatively complete industrial chain, the Company has built a R&D teamspecialized in animal raising, product formulating, manufacturing and other technologiesin the fields of feed, poultry, hog, biological feed additive, etc. Assisted by more than onehundred masters, doctors, professors and senior experts who have profound knowledgeand experiences, the R&D team apply cutting-edge technology into practice to boost theCompany’s know-how improvement. Relying on powerfully technical strength, theCompany has received national and local level of accreditations and honors, includingNational-recognized Enterprise Technology Center, National and Local CollaborativeEngineering Research Center for New Biological Feed, Branch Center of Feed Processing of
National Agricultural Product Processing, Comprehensive Trial Farm for National HogRaising Industry Technology System, Agricultural Products Further Processing andBio-pharmaceutical Industry Cluster of Liaoning Province, Innovation Team for FeedTechnology and Safety of Liaoning Province.b. Competitive R&D cooperationIn 2006, the Company partnered with Royal De Heus, a centurial-old Dutch company, tofully draw on its global reach, advanced technical resources, leading know-how and acentury of management experience, making breakthroughs in safe and high quality feed,precise and efficient nutrition as well as antibiotic free technology. The Company's R&Dteam has maintained regular, high-frequency technical exchange with Royal De Heus,which enables the Company to keep abreast of the world's latest technologies. Meanwhile,by combing with self-owned 25-year’s technology with the latest technology in theindustry, the Company is committed to providing customers with better quality productsand technical service, it has also established technical cooperation and other cooperativeprojects such as "Academician Workstation" and " Official Research Base for PostdoctoralFellows".c. Fruitful research achievementsIn recent years, the Company has launched over 70 research projects with more than 10new products and technologies developed every year, by far 62 patents have beenauthorized, including 44 patents for invention. It also received 2 prizes of national-levelawards related to science and technology progress, 1 technological invention award andnearly 20 provincial and ministerial-level science and technology awards. In 2019, theCompany participated in formulating 2 national standards, i.e. Feeding Standard for Starterand Growing-finishing Pig, Formula Feed for Layer and Broiler, also participated informulating another 7 community standards, i.e. Concentrate Supplement withCo-fermented Bacteria and Enzyme for Lactating Cow organized by Beijing Bio-feedIndustry Technology Innovation Strategic Alliance, etc. The Company, as an organizer,cooperated with other 8 companies to undertake the major sci-tech project of Liaoningprovince from 2019 to 2021, i.e., Feed Quality and Safety Control and Low Protein Feed.Meanwhile, as one of the important participants, the Company also took part in theproject of Formulating Technology for New-type Amino Acid Used in Feed and Swine Feed
with Low Protein led by Professor Qiao Shiyan of China Agricultural University, won thesecond prize of National Science and Technology Invention Award in December 2019.In front of the continued influence of ASF, in 2019 the Company successfully developedline of products named “Wellhope Immune Nutrition”. In view of the shortages of hoginventories and high price, the Company immediately launched high yield and fast-growingproducts, whilst due to the demand of fattening more than 120 kg hog in some regions, ittimely developed super-large swine feed. The technology research has significantlycontributed to the growth of the Company’ swine feed under the negative influence of ASF.Meanwhile, the Company also improved feed conversion ratio of broiler feed and thefeeding program of layer, as well as increased input in ruminant and aquatic feed, tosignificantly heighten its product strength, which were widely recognized by the market. InJuly 2020, feed industry will usher in the era of antibiotic-free, the Company has figuredout comprehensive schemes to completely substitute the antibiotics in feed, which haveachieved good results, thereby it is convinced to face the new era.Moreover, the Company has also made great progress in broiler raising. By developing andformulating different types and combinations of feeding and raising models, the Companyfurther improved feed conversion rate, reduced mortality and culling rate, and promotedgrowth potential. It also made significant breakthrough in three-tier cage system andbenefited from this, some of its technologies, including minimum ventilation for cagedbroiler, automatic controls of housing environment, ventilation and air inlet, automaticbackwash water system and the control rate of weekly weight-gain, reached top levelamong peers in the industry. Meanwhile, by applying PCR, the early warning techniqueand HTSI, the monitoring technique, the Company can monitor the disease to realize earlydiscovery and diagnosis as well as early treatment to prevent disease.In the field of hog raising, by adopting the technologies of molecular markers, target genesequencing and statistic of production traits, the Company has established full phenotypedatabase and genotype database for new Danbred swine in the Northeast regions.Through association analysis, specialized strain cultivation of Danbred swine can improvebreeding efficiency, save costs and heighten the accuracy of breeder selection. Meanwhile,relying on know-how of formulating precise nutrition for high-yield sow, the Company hasaccurately divided the feeding program of gilt into three stages to meet its growth needs.
During the gestation period, the Company adopts a two-stage feeding model with "highand low" nutrition, by doing this, the constipation of sow has been below 5%, and thedelivery time has been shortened by about one hour, 90% of sows can be controlled within2-4 hours, whilst it can quickly realize maximum feed intake after delivery and the averagefeed intake during lactation period increases by 0.5-1.0kg, meanwhile, the breeding rate ofsows can reach more than 92% after one week of weaning and the average weaningweight of piglets increase by at least 10%. This achievement has reached the leading levelnationwide. Furthermore, the Company has determined the main means to test ASF forfarms, formulated operation requirements and provided timely trainings to guaranteehealthy operation of farms.d. Top-class testing ability and databaseThe Company's R&D and testing center has been accredited as National Laboratory byCNAS (China National Accreditation Service for Conformity Assessment), equipped withadvanced testing equipment and composed of three types of testing rooms in terms ofphysics and chemistry, microbiology and precision instruments. From micro to macro, thetesting center is able to ensure the quality security in every step. The Company hasbecome one of the first companies capable of testing for prohibited additives, and as anational key laboratory, its test results can be recognized in 60 countries or regions aroundthe world. Meanwhile, the Company has established self-owned raw material databaseand also shares data resources of the Dutch partner, using regression equations tocalculate the energy dynamics of raw material, basing on the production performance andfeed intake to precisely formulate animal nutrition with lowest cost to achieve the bestcost-effective.
5. Constantly enhanced and full-fledged Wellhope Brand
The Company has successfully established its product and corporate brand in domestichusbandry industry over the past 25 years. As the husbandry industry keeps evolving, itsbrand effect will be further highlighted.a. Product brandOver the years, relying on leading-edge technology, high quality products and continuouslyimproved customer service, the Company's brand has been widely recognized and trustedby customers. With the outbreak of ASF, the demand of products with high nutrition and
immunization rose, moreover, high pork price fueled the need of products with high yieldand fast weight-gain. Under the backdrop of this, the sales volume of the Company’s swinefeed realized a year-on-year growth rate of 7.7%, which can prove the high-qualitypositioning and market recognition of the Company's products. The brand “Wellhope” hasbeen honored as Liaoning Province Famous-brand Product, Liaoning Province FamousTrademark, China Famous Brand, China’s Top 500 Most Valuable Brands, Most InfluentialBrand in National Animal Husbandry Industry, Trustworthy Product in China's FeedIndustry, etc. In 2019, the Company won the Liaoning Governor's Quality Award for itsexcellent business management and product strength.b. Corporate brandDriven by the core values of "Integrity, Responsibility, Win-Win", some of the Company’sbusinesses are joint ventures with partners, it has been working together with manypartners for more than 10 or even 20 years, including a 14-year’s good relationship withRoyal De Heus. These successful cases of cooperation can adequately prove that“Wellhope”, as a corporate brand, has been well recognized and trusted by its partners.Meanwhile, the strength of the Company's brand can also be proved by long-termstrategic partnerships with a number of multinational and domestic suppliers, by financialinstitutions granting loans on credit due to our good reputation. As an employer brand,“Wellhope” has been recognized and favored by employees as well as pursued by jobseekers. In 2019, in the recommendation and selection of national model enterprise orindustrial park with harmonious labor relations initiated by the Ministry of HumanResources and Social Security, the Company was awarded as "National Model Enterprisewith Harmonious Labor Relations", commended by the National Tripartite Evaluation andCommendation Office, meanwhile, the Company was awarded "Best Employer" again byZhaopin.com. In March 2020, the Company's online recruitment even attracted more than500 fresh graduates and experienced job hunters.
6. Development-oriented and deeply rooted corporate culture
After 25 years of development, the Company has formed development-oriented andwidely recognized corporate values of "Integrity, Responsibility, Win-Win", meanwhile, itsmanagement culture of "Innovation, Efficiency, Self-Discipline" has been deeplyentrenched in the mind and practice of staff.
The core culture, represented by Wellhope Vision, declared at the very beginning ofestablishment, which is mainly described as "Always put customers’ needs first andconstantly work on new products, never follow the beaten path, always conduct businesshonestly, always aim to provide value to our society and to maintain sustained growththrough technology, innovation, and creative work”, and by Wellhope Mission, describedas "Save resources, protect the environment, provide food security and benefit thesociety", has been the basic principle of business operation of the Company and powers itsfurther progresses.2019 was the year for the Company to vigorously publicize and further implement itscorporate culture into practice, a series of activities were held throughout the year. 4times of live streaming were held for executives to share their stories related to theCompany's culture, 12 vice presidents and above level managers shared their stories tohelp staff to understand the essence of corporate culture, attracting more than 250,000visitors. Meanwhile, the Company updated publicity materials for corporate culture,collected relevant stories to promote the corporate culture in a way that was closer toemployees' work and life. Moreover, the Company is preparing to formulate the CorporateCode of Conduct, which will keep the corporate culture in line with behaviors, integratethe practice of core values with all staff’s performance appraisal. Now the Company is wellon its way to constantly exploring more effective ways to entrench culture in employees'practices, making the corporate culture further contribute to its development.In the face of the COVID-19 epidemic in 2020, the Company is one of the first agriculturalenterprises to resume work. In order to maintain operations and meet customer’s demand,many managers and employees overcame many difficulties and actively returned to work,doing their best to organize production and ensure supply, their devotions and passions tojob touched us deeply. All these stems from the strength of the Company's culture, thesense of mission and responsibility as well as love for the Company. The history of theCompany fully proves that each time when the Company faces difficulties and trials, itscorporate culture assists the Company to defeat hard time and to soar to broader horizons.
Section IV Business Operations AnalysisI. Overview
In 2019, the import of major agricultural products and the original agricultural supplychain were impacted by changeable world’s political and economic situations and theSino-US trade friction. Meanwhile, as the rampant spread of ASF in China has become anormal phase, hog price soared whilst the deliveries dropped sharply. ASF changed thelayout and structure of hog industry and further accelerated the reshuffle of feed and hogindustries. Facing unfavorable factors at home and abroad, the Company's managementteam overcame difficulties, concentrated on operations to seize opportunities andaccelerate business distribution, whilst all staff had clear goals and high morale to powerthe Company’s progress. Moreover, the Company has always maintained a healthy andrapid development, achieving growth in operating revenue and net profit attributable toits parent company for 6 consecutive years. The Company's sales volume and operatingperformance both reached new record highs in 2019 and its profitability and position inthe industry continued to improve. Since going public in 2014, the compound growth ratesof the Company's operating revenue, net profit attributable to the parent company andnet profit attributable to the parent company deducting non-recurring gains and profitshave reached 13%, 38% and 42% respectively, highlighting its long-term growth potential.
1. Business highlight
During the reporting period, total operating revenue of the Company realized RMB 17.792billion, total profit reached RMB 1.582 billion, the net profit attributable to theshareholders of the Company realized RMB 1.199 billion and the net profit attributable tothe shareholders deducting non-recurring gains and losses reached RMB 1.191 billion,achieving year-on-year growth rate of 12.96%,128.79%,117.30% and 119.55% respectively.The weighted average return on equity reached 24.57%, increased by 9.27 percentagepoints compared with prior year, whilst the asset-liability ratio was 28.97%, which hasbeen lower than 40% since going public, significantly bettering than the industry averagelevel.
2. Business review
A. Feed businessIn the reporting period, the Company's holding and associated companies totallymanufactured 4.96 million tons feed with a year-on-year growth rate of 17%. Among feedentities, 16 plants produced 100,000 tons feed per year respectively (9 holding and 7associated), Dalian Heyuan, one of the subsidiaries, produced over 420,000 tons feed thisyear. Meanwhile, the entities included in the consolidated scope produced 2.62 milliontons feed in 2019, increased by 11.29%, the sales volume of swine feed increased despite
the negative influences of ASF, poultry, ruminant and aquatic feed also achieved recordhighs. In 2019, feed business contributed towards the operating revenue of RMB 7.786billion with a year-on-year growth rate of 6.68%, the gross profit rate reached 12.52% by agrowth of 0.51 percentage points. Although under the adverse situation of ASF, both salesvolume and gross margin of the Company’s feed business grew.Feed sales volume in 2019:
Explain: Total feed sales volume in the table belongs to the companies included in theconsolidated scope.a. Innovating marketing to increase market share--Swine feed: Sales volume reached 0.909 million tons, increased by 7.70% on ayear-on-year base, of which the sales volume of starter feed with high gross profit marginincreased by 14.14% and piglet feed increased by 13.05%. In order to cope with ASF, theCompany accelerated product innovation, carried out researches on high-nutrition feed toimprove animal’s immune and launched well-received flagship products named "WellhopeImmune Nutrition". The Company also adjusted feed process parameters, includinghigh-temperature pelleting and other measures to control the epidemic from the source.Meanwhile, it took the advantages of technology, brand and sales network to implementaccurate research, service and marketing, also provided technical services and guidance tocustomers via online platforms such as live broadcasting, official WeChat and Kuaishou. Byholding a series of live broadcasting courses and inviting many domestic and foreignexperts to deeply analyze ASF and explain deep insight into the countermeasures, thecustomers’ stickiness and loyalty have been continuously improved. Due to high hog price,only live hog can make money, thereby farmers prefer feed products with good quality,strong service and outstanding brand, in the meantime, the outbreak of ASF acceleratedthe pace of weeding out unqualified players. Supported by these factors, although
| Item | 2019 (10,000 tons) | 2018 (10,000 tons) | Year-on-Year Change |
| Pig feed | 90.91 | 84.41 | 7.70% |
| Poultry feed | 106.67 | 93.38 | 14.23% |
| Ruminant feed | 44.80 | 40.29 | 11.18% |
| Aquatic feed | 15.77 | 14.64 | 7.71% |
| Other feed | 3.61 | 2.49 | 45.25% |
| Total | 261.76 | 235.21 | 11.29% |
domestic hog inventories plummeted, the market share of the Company's swine feed stillincreased significantly.--Ruminant feed: Sales volume reached 0.448 million tons with a year-on-year growth rateof 11.18%. Among them, the sales volume of beef cattle and mutton sheep realized 0.204million tons with a year-on-year growth rate of 32%, increased by 70% compared with2017, which has maintained high growth for many consecutive years. In recent years,some domestic dairy enterprises and farms have gradually turned to self-produced feed.Great changes have taken place in the supply and demand of the market, while the marketspace for commercial dairy cattle feed is getting smaller and smaller. Disorderlycompetition in beef cattle and mutton sheep industries is also increasingly fierce. Whilestabilizing the market share of dairy cattle, the Company made great efforts to developand promote beef cattle and mutton sheep products in virtue of its brand influence andservice strengths. Centering on middle and high-end market, the Company hascontinuously increased the market share of beef cattle and mutton sheep, which hasbecome the main growth point of the Company's ruminant feed.--Poultry feed: Sales volume reached 1.067 million tons with a year-on-year growth rate of
14.23%, among them, layer feed increased by 12% and broiler feed increased by 16%,whilst duck and goose feed increased by 354%. The Company began to lay out broilerintegration business in 2008, and it has successively explored the businesses of egg andpullet rearing in recent years. In the future, it plans to gradually build layer integrationbusiness to promote the rapid development of layer feed and further increase marketshare.--Aquatic feed: Sales volume realized 0.158 million tons with a year-on-year growth rate of
7.71%. According to the changes in domestic aquaculture, the Company strategicallyadjusted the portfolio of aquatic feed, increased the percentage of shrimp and crab feed,heightened related research input and market development, the sales volume of shrimpand crab feed increased by 87% compared with prior year. Now the Company’s aquaticfeed has been accumulating location advantage and brand effect.b. Heightening feed plant operation to improve quality, efficiency and to reduce costsIn 2019, the Company closely centered on market demand, gave full play to synergy effect
among functional departments, finely controlled the production plan and paid closeattention to product quality and fine management to reduce costs and improve efficiency.The Company's intelligent premix factory, equipped with the largest production capacityand the most advanced equipment and facilities in China, was officially put into operationand the products can be traced back to the whole process. While doing a good job inproduction, the Company continued to enhance strategic partnerships with many largeraw material suppliers at home and abroad, saved costs and improved the profitability ofproducts through further centralized purchasing and basis.B. Broiler integration businessThe Company's broiler integration business has been developing rapidly in recent years,with steady improvement in production scale, supporting capacity and profitability.According to broilers totally slaughtered by its holding and associated companies, theCompany has now entered the first echelon of China's white broiler industry.In 2019, the white broiler industry ushered in a historic strong cycle with higher profit levelthroughout the year. Relying on accurate prediction of the market trend, the Companyseized the opportunity to accelerate the layout externally and strengthen leanmanagement internally, achieving a historic breakthrough.a. Accelerating external investment and actively expanding the production scaleAccording to the development strategy, in recent years the Company has been activelyexpanding production capacity, training and reserving a large number of talents andtechnical backbones. This year, the Company grasped the opportunity to rapidly expandproduction scale under the short supply, newly built 5 breeder farms, 2 hatching farms and450 commercial broiler houses. The Company's holding and associated companies raised421 million white broilers with a year-on-year growth rate of 36%, totally slaughtered 524million broilers with a year-on-year growth rate of 15%, whilst totally produced 1.338million tons of broiler parts products with a growth rate of 18%. In addition, this year, theCompany signed strategic framework agreements with Taiqian County People'sGovernment and Yixian County People's Government respectively to build two newprojects, which will provide the new capacity of 100 million day old chicks, 180 millionraised and slaughtered broilers and 20,000 tons cooked food per year. Thereby, the
industrial chain of the Company's white broiler business and comprehensivecompetitiveness will be further enhanced.b. Strengthening lean management internally to create cost-efficiency advantagesThe Company's broiler integration business has always adhered to lean management,where all regions cooperate with each other and all companies operate independently.Through benchmarking management, the Company continuously optimized its operationindicators, improved per capita efficiency and reduced cost. With the goal of "enablinginternally supplied broilers to fully meet the Company’s slaughtering demand", thebusiness unit of broiler raising hade made great efforts to vigorously promote broilerproduction to increase synergy effect with slaughtering unit, also improved productionsafety and efficiency to heighten production performance. At present, the Company’sproduction performance ranks top level among peers, such as, the average delivery weightof commercial broiler can reach 3kg, with an average liveability of more than 95% and theEuropean benefit index of more than 390. Meanwhile, driven by optimizing operating costand product mix, the business unit of raw meat processing has constantly automatedslaughtering equipment, improved efficiency and product competitiveness. Moreover, thebusiness unit of further processing has been committed to further improving itsproduction scale and product quality, strengthening the safety and added value of endproducts and striving to expand foreign markets.c. Continuously optimizing industrial chain, deeply promoting prepared food businessIn 2019, 80% of the Company’s slaughtered broilers were supplied by its self-owned farmsand contract farms, increased by 12 percentage points over last year. The number ofself-produced broilers gradually approached to the Company’s slaughtering needs, theindustrial chain has been continuously optimized. In terms of prepared food business, theCompany further improved product portfolios according to customer needs and furtherdeveloped high-quality and cost-effective products, which steadily increased added valueof products and brand premium. Meanwhile, after successfully opening and stabilizing themarkets in Liaoning, Jilin, Heilongjiang and Inner Mongolia provinces, the Companycontinued to expand markets in North and East China and quickly seized Japan's high-endcooked food market and has been looking for new opportunities in overseas market. In
2019, the Company’s holding and associated companies produced and sold 15,000 tons ofprepared food, increased by 52% compared with the same period of prior year. Theindustrial chain quickly extended to the end users and the brand influence continued toincrease.C. Hog raising BusinessThe Company re-formulated its strategic plan in 2018 and planned to take 5-8 years tocreate a complementary operation model powered by two engines in terms of broiler andhog integration businesses, thus the core strategic position of hog raising business hasbeen confirmed. In 2019, faced with the unfavorable environment that ASF spread theentire industry, as a newly developing hog raising player, the Company took a number ofmeasures to actively push related businesses, including high-quality breeder raising andsales, piglet sales, expanding finisher raising, also cultivated hog slaughtering and relatedbusiness in the industrial chain. During the reporting period, 270,000 heads of hog havebeen delivered to the market by the Company's holding and associated companies.a. Rapid developing existing farms and active promoting of capacity expansionDuring the reporting period, the Company actively overcame the impact of the epidemicand rapidly developed its farms, in addition, the Company actively promoted capacityexpanding and prepared for several projects in Henan, Hebei, Anhui, Heilongjiang andother regions. In the meantime, the Company's new projects in Liaoning and Jilinprovinces have been put into operation respectively. During the reporting period, theCompany’s farms actively refined their internal management and strengthened talentsrecruiting and training.In 2019, the Company seized the opportunity of shortage of hog inventories to expandbusiness. Currently, the sow farms with different scale have been under construction,which are expected to be completed and put into operation after August 2020. It plans tocooperate with Anhui Haoxiang Agriculture and Animal Husbandry to rebuild 3 new farmsin Anhui province in 2020, the sow farms and finisher farms cooperated with JiaheAgriculture and Animal Husbandry in Heilongjiang province is expected to graduallyrelease production capacity in 2020, and sow farms in North China are planned to be putinto operation in the third or fourth quarters of 2020. At the same time, the Company's
new projects in Liaoning and Jilin provinces were put into operation in 2019, among which,the first phase of Shangnian breeder farm in Fushun city was officially put into operation inApril 2019. Currently, it has sold high-quality commercial piglets to the market andreceived good feedback. It plans to build follow-up projects such as the second phase ofparent stock farm, meanwhile, Fushun Guanmenshan breeder farm was put into operationin December 2019 and is expected to sell commercial piglets in October 2020. Jilin Hefengbreeder farm was put into operation in December 2019 and commercial piglets areexpected to be sold in July 2020.In addition to above projects, the Company is preparing to build the breeder farm inLingyuan Lijiayingzi village, which is expected to be completed by the end of 2020. The500,000 heads of hog integration project built by the Company in cooperation with AohanBanner People's Government has been designed, which is scheduled to be built in theautumn of 2020.In 2019, while actively expanding its production capacity, the Company continued to refineits breeding technology and optimize herd structure, meanwhile, it constantly optimizedand upgraded the equipment and environmental control facilities of self-built farms andcontract farms. Moreover, the Company further improved management support forcontract farms and provided them guidance and services, including herd management,feeding procedures and disease prevention, etc., to help farmers improve theirmanagement level and increase benefits.In terms of talent training, Lingyuan breeder farm, a subsidiary of the Company, as thedesignated trial farm for national hog raising industry and the Company’s training base fortalents, actively trained technical staff for different hog projects of the Company, whilststeadily promoted its own hog breeding business. At the same time, the Companyvigorously reserves outstanding talents through internal selection, external recruitmentand other means to reserve talents for hog raising business.b. Entering hog slaughtering business to complete the industrial chainIn 2019, the Company and its partner registered Chifeng Fuxinyuan Food Co., Ltd., whichhas two hog slaughtering and processing lines, with an annual production capacity of 1million heads of hog and a 20,000-ton low-temperature storage house. The start-up of this
project will further improve the Company's industrial chain and enhance marketcompetitiveness.c. Strictly preventing ASF to ensure production safetyAs ASF became the periodically normal phase, during the reporting period, the "Anti- ASF"supervision team of the Company's head office in conjunction with the bio-safetysupervision departments and engineering departments of its subordinated farms,continuously upgraded the prevention system, equipped or transformed the facilities forpreventing ASF, optimized bio-safety operation procedures and carried out all-roundsupervision through cameras, patrol inspection and other means to ensure theimplementation of preventing measures. At the same time, the farm’s decontaminationdepartment strictly set up a three-level system to comprehensively clean vehicles andmaterials close to the farm, whilst the professional testing center conducted defensivetests inside and outside the farm to ensure production safety. The Company has alsocontinuously improved its support for contract farms, provided comprehensive guidanceand services such as safe material supply, ASF monitoring and professional support teams,so that farmers can safely raise hogs in closed environment.d. Feed raw materials trade business:
During the reporting period, the Company's raw material trade business realized the salesrevenue of RMB 2.75 billion, decreased by 16.02% compared with the same period ofprior year. The main reason was that soybean meal, as the Company’s main product line,faced abnormal market price fluctuations affected by Sino-US trade friction, which had agreat impact on the Company's purchase and sales businesses and caused losses. Fishmeal, another major product, was also affected by fluctuations in exchange rates, whichreduced final profits. In 2019, the IT construction for trade business has basicallycompleted. Rapid data analysis and accurate marketing management have made theoperation of the trade business more standardized and efficient.D. Other worka. In 2019, the Company participated in formulating 2 national standards, i.e. FeedingStandard for Starter and Growing-finishing pig, Formula feeds for Layers and Broilers, alsoparticipated in formulating another 7 community standards, i.e. Concentrate Supplement
with Co-fermented Bacteria and Enzyme for Lactating Cow organized by Beijing Bio-feedIndustry Technology Innovation Strategic Alliance. The Company, as an organizer,cooperated with other 8 companies to undertake the major sci-tech project of Liaoningprovince from 2019 to 2021, i.e. Feed Quality and Safety Control and Low Protein Feed.Meanwhile, the Company participated in related projects, including Joint Building ChickenNet Energy Nutrition Technology System, which is chaired by Professor Guo Yuming ofChina Agricultural University, and the Application of Fermented Feed for Piglet underAntibiotic-free Raising together with Zhejiang University. As one of the importantparticipants, the Company also took part in the project of Formulating Technology forNew-type Amino Acid Used in Feed and Swine Feed with Low Protein led by ProfessorQiao Shiyan of China Agricultural University, won the second prize of National Science andTechnology Invention Award. So far, the Company has won 3 types of national-levelsci-tech awards. The project of Research and Application of Biological Feed Additive jointlycompleted by the Company and the researcher Ding Hongbiao of the Institute of Feed ofthe Chinese Academy of Agricultural Sciences, won the second prize of the ShennongAgricultural Science and Technology Award. As the leading organizer, the project ofResearch and Promotion of Energy-saving and Eco-friendly Animal Feed won the secondprize of Science and Technology Award of Liaoning Province. Moreover, the "W.in 5i88"product was honored as 2019 China’s Outstanding Swine Feed Star -Innovation Award. In2019, the Company newly applied for 14 patents and 6 authorized patents, including 4patents for invention, thus, its authorized patents amounted to 62, including 44 patentsfor invention.b. Implementing talent strategy via multiple measuresThe Company has always taken talents as its most valued resource and share profits withthe employees, it has innovated in introducing, cultivating, evaluating and incentingtalents and created a competitive employer brand. During the reporting period, theCompany achieved the performance appraisal objective for the first locking-up periodstated in its 2018 Restricted Stock Incentive Plan, achieved a win-win situation with itsemployees. Meanwhile, the Company focused on improving salary system, building talentpools to form a high-quality and innovative staff team with high potentiality, which has laida solid foundation for its long-term and healthy development. Furthermore, the Company
always sticks to publicize its corporate culture to make the core value of “Integrity,Responsibility and Win-Win” and the management culture of “Innovation, Efficiency andSelf-Discipline” deeply entrench in the behaviors of staff, so as to further enhance thevitality and cohesion of the Company. In 2019, the Company received the honor of Top 10Enterprise with Outstanding Corporate Culture in animal husbandry and feed industries.c. Further promoting performance excellence modelThe project of “Management Improvement based on Performance Excellence Model” hasfinished its introduction and project evaluation and entered it’s the phase of furtherpromotion. In 2018, the Company revised its strategic layout and development goals forthe next three years and ten years, improved function line strategies and furtherconfirmed their KPI. Meanwhile, it formulated the “Strategic Management Approaches ofWellhope”, defining requirements of annual strategic management and reorganizinginternal operation system. Relying on continuous promotion of this management modeland self-improvement, it will generate internal force, constantly improve the Company'soverall management level and core competitiveness, and gradually achieve excellentmanagement performance.d. Fully deepening IT applicationIn 2019, the Company fully deepened its IT application. It reorganized its informationresources for group control, feed, broiler integration, raw materials trade, pet clinics,engineering management to build a solid foundation for data management. Meanwhile, itbuilt a mixed cloud-based system architecture on the basis of HUAWEI cloud serving toestablish a flexible and agile IT system and achieve off-site disaster recovery. Furthermore,the Company completed the innovative application of information technology in its feedbusiness division, including ecosphere management, business process reengineering anddecision data analysis, it also finished to apply IT system in the sectors of breeder, hatchery,feed and broiler raising in the demonstrated entities of its broiler integration business, andit built an ERP system for raw material trade business that connected business processwith financial management, it also completed the interface connection between thebusiness system and financial system in its pet clinics and started to introduce ERP systemin its hog raising business.
E. Honors received in 2019--China’s Top 100 Public Company by Corporate Value in the Main Board Market for 2016,2017, 2018--China’s Top 100 Enterprise in Light Industry for 2018, ranking 40--China’s Top 100 Enterprise in Light Industry Technology, ranking 21--China’s Top 50 Enterprise in Light Industry and Food Industry, ranking 12--Top 5 Valuable Brand in Agriculture for 2018--Listed in High-quality Pioneers of China’s Public Company--National Harmonious Labor Relationship Model Enterprise--Rated Level-A in Information Disclosure by Shanghai Stock Exchange in 2018 and 2019--Liaoning Province Governor’s Quality AwardII. Operations AnalysisAs at December 31, 2019, the Company's total assets recorded RMB 9.15 billion, theowner’s equity attributable the Company reached RMB 5.70 billion, increased by 32.02%and 47.93% respectively compared with the end of prior year, meanwhile, its operatingrevenue realized RMB 17.79 billion and the net profit attributable to the shareholders ofthe Company reached RMB 1.20 billion, recorded the growth rate of 12.96% and 117.30%respectively.
1. Analysis of primary business
A. Analysis of changes of income and cash flow
Unit: yuan Currency: RMB
| Item | 2019 | 2018 | Change % |
| Operating revenue | 17,792,091,973.58 | 15,750,798,120.67 | 12.96 |
| Operating costs | 15,792,020,015.55 | 14,421,297,677.40 | 9.50 |
| Sales expenses | 487,217,524.04 | 420,646,753.59 | 15.83 |
| Administrative expenses | 275,560,691.30 | 227,941,858.19 | 20.89 |
| R&D expenses | 65,209,116.65 | 61,100,349.28 | 6.72 |
| Financial expenses | 76,392,967.30 | 74,900,937.42 | 1.99 |
| Net cash flow from operating activities | 1,111,605,966.58 | 501,404,915.59 | 121.70 |
| Net cash flow from investing activities | -874,207,823.29 | -509,731,536.62 | not applicable |
| Net cash flow from financing activities | 378,955,170.80 | 166,992,723.63 | 126.93 |
revenue of feed and broiler integration businesses; the operating cost recorded RMB 15.79billion with a growth rate of 9.50 %, mainly due to the increase in sales volume and salesrevenue.a. Primary business analyzed by industries, product classification and regions
Unit: yuan Currency: RMB
| Analyzed by Industries | ||||||
| Industry | Operating revenue | Operating cost | Gross profit margin % | YoY change of revenue % | YoY change of cost % | YoY change of gross profit margin % |
| Feed | 7,785,871,895.11 | 6,810,914,502.60 | 12.52 | 6.68 | 6.06 | Increased by 0.51 percentage points |
| Broiler integration | 6,599,207,553.65 | 5,810,795,248.86 | 11.95 | 41.37 | 32.74 | Increased by 5.73 percentage points |
| Raw materials trade | 2,749,950,323.12 | 2,646,038,315.07 | 3.78 | -16.02 | -16.18 | Increased by 0.18 percentage points |
| Hog raising | 202,271,755.12 | 156,213,008.49 | 22.77 | 74.63 | 29.74 | Increased by 26.72 percentage points |
| Related businesses | 445,780,890.36 | 364,178,194.88 | 18.31 | 15.58 | 7.57 | Increased by 6.08 percentage points |
| Analyzed by Product Categories | ||||||
| Product | Operating revenue | Operating cost | Gross profit margin % | YoY change of revenue % | YoY change of cost % | YoY change of gross profit margin % |
| Feed | 7,785,871,895.11 | 6,810,914,502.60 | 12.52 | 6.68 | 6.06 | Increased by 0.51 percentage points |
| Broiler integration | 6,599,207,553.65 | 5,810,795,248.86 | 11.95 | 41.37 | 32.74 | Increased by 5.73 percentage points |
| Raw materials trade | 2,749,950,323.12 | 2,646,038,315.07 | 3.78 | -16.02 | -16.18 | Increased by 0.18 percentage points |
| Hog raising | 202,271,755.12 | 156,213,008.49 | 22.77 | 74.63 | 29.74 | Increased by 26.72 percentage points |
| Related businesses | 445,780,890.36 | 364,178,194.88 | 18.31 | 15.58 | 7.57 | Increased by 6.08 percentage points |
| Analyzed by Regions | ||||||
| Region | Operating revenue | Operating cost | Gross profit margin % | YoY change of revenue % | YoY change of cost % | YoY change of gross profit margin % |
| East China | 2,318,264,879.54 | 2,114,066,506.00 | 8.81 | 31.71 | 29.70 | Increased by 1.42 percentage points |
| North China | 2,182,297,415.77 | 1,958,166,930.40 | 10.27 | -18.89 | -21.69 | Increased by 3.21 percentage points |
| Northeast China | 8,618,028,827.69 | 7,422,506,070.75 | 13.87 | 7.97 | 2.69 | Increased by 4.43 percentage points |
| Central and South China | 2,749,166,429.97 | 2,547,675,975.73 | 7.33 | 46.34 | 48.42 | Decreased by 1.30 percentage points |
| Southwest China | 678,514,121.33 | 654,379,720.40 | 3.56 | 8.22 | 6.91 | Increased by 1.18 percentage points |
| Northwest China | 926,338,963.71 | 795,009,358.52 | 14.18 | 62.09 | 60.46 | Increased by 0.87 percentage points |
| Oversea | 310,471,779.35 | 296,334,708.10 | 4.55 | 33.19 | 27.45 | Increased by 4.30 percentage points |
in-depth lean management. As a result, its operation ability and profitability in broilerintegration were continuously improved and the scale of broiler raising and slaughteringwas greatly increased, which drove a year-on-year growth rate of 41.37% in the operationrevenue of broiler integration. Meanwhile, in response to the changes in the feed market,the Company has continuously strengthened the researches on feed products, marketdevelopment and services to further improve product performance and marketcompetitiveness. The feed sales volume has increased by 11.29%, whilst the operatingrevenue increased by 6.68% on a year-on-year base.--Analyzed by geographical region:
During the reporting period, the Company's sales volume in North China decreased by
18.89% compared with the same period prior year, mainly because of the selection anddistribution of dealers in these regions were changed. However, total sales revenue grewsteadily, mainly due to the high sales prices of chicken product and hog in 2019, and theproduction scale of feed, broiler integration and hog raising businesses have beenexpanding continuously.b. Analysis of sales volume
| Product | Production volume (10,000 tons) | Sales volume (10,000 tons) | Inventory (10,000 tons) | YoY change of production volume % | YoY change of sales volume % | YoY change of inventory % |
| Feed | 263.80 | 261.76 | 5.36 | 12.31 | 11.29 | 61.45 |
| By Industry | Item | 2019 | % of total costs | 2018 | % of total costs | YoY change % |
| Feed | Raw material | 6,249,372,402.87 | 95.14 | 6,119,294,900.03 | 95.63 | 2.13 |
| Feed | Labor cost | 74,966,723.16 | 1.14 | 71,606,347.71 | 1.12 | 4.69 |
| Feed | Depreciation | 79,197,047.98 | 1.21 | 79,320,489.62 | 1.24 | -0.16 |
| Feed | Energy (electricity, coal, steam) | 79,658,096.87 | 1.21 | 63,975,504.94 | 1.00 | 24.51 |
| Feed | Other manufacturing expenses (excl. energy and depreciation) | 85,185,696.24 | 1.30 | 64,591,463.96 | 1.01 | 31.88 |
| Feed | Total production cost | 6,568,379,967.12 | 100.00 | 6,398,788,706.26 | 100.00 | 2.65 |
| Broiler | Raw material | 5,063,037,156.10 | 85.28 | 3,834,135,178.16 | 85.95 | 32.05 |
| Broiler | Labor cost | 229,677,924.71 | 3.87 | 195,744,620.92 | 4.39 | 17.34 |
| Broiler | Depreciation | 27,153,097.83 | 0.46 | 21,215,626.45 | 0.48 | 27.99 |
| Broiler | Energy (electricity, coal, steam) | 48,744,698.51 | 0.82 | 40,266,523.62 | 0.90 | 21.06 |
| Broiler | Other manufacturing expenses (excl. energy and depreciation) | 568,606,302.57 | 9.58 | 369,288,818.78 | 8.28 | 53.97 |
| Broiler | Total production cost | 5,937,219,179.72 | 100.00 | 4,460,650,767.93 | 100.00 | 33.10 |
| By Product | Item | 2019 | % of total costs | 2018 | % of total costs | YoY change of cost % |
| Feed | Raw material | 6,249,372,402.87 | 95.14 | 6,119,294,900.03 | 95.63 | 2.13 |
| Feed | Labor cost | 74,966,723.16 | 1.14 | 71,606,347.71 | 1.12 | 4.69 |
| Feed | Depreciation | 79,197,047.98 | 1.21 | 79,320,489.62 | 1.24 | -0.16 |
| Feed | Energy (electricity, coal, steam) | 79,658,096.87 | 1.21 | 63,975,504.94 | 1.00 | 24.51 |
| Feed | Other manufacturing expenses (excl. energy and depreciation) | 85,185,696.24 | 1.30 | 64,591,463.96 | 1.01 | 31.88 |
| Feed | Total production cost | 6,568,379,967.12 | 100.00 | 6,398,788,706.26 | 100.00 | 2.65 |
| Broiler | Raw material | 5,063,037,156.10 | 85.28 | 3,834,135,178.16 | 85.95 | 32.05 |
| Broiler | Labor cost | 229,677,924.71 | 3.87 | 195,744,620.92 | 4.39 | 17.34 |
| Broiler | Depreciation | 27,153,097.83 | 0.46 | 21,215,626.45 | 0.48 | 27.99 |
| Broiler | Energy (electricity, coal, steam) | 48,744,698.51 | 0.82 | 40,266,523.62 | 0.90 | 21.06 |
| Broiler | Other manufacturing expenses (excl. energy and depreciation) | 568,606,302.57 | 9.58 | 369,288,818.78 | 8.28 | 53.97 |
| Broiler | Total production cost | 5,937,219,179.72 | 100.00 | 4,460,650,767.93 | 100.00 | 33.10 |
d. Top 5 customers and suppliersThe sales revenue of top 5 customers reached RMB 925.65 million, contributing towards
5.20% of the Company's total sales revenue, of which, the sales revenue related to sellproducts to the related parties reached RMB 592.88 million, accounting for 3.33% of thetotal annual sales.The purchase orders of top 5 suppliers reached RMB 2.39 billion, accounting for 15.82% ofthe Company's purchase orders during the reporting period, of which, the orders relatedto purchase products from the related parties reached RMB 186.97 million, accounting for
1.24% of the annual purchase orders.
--Other Explanation:
Top 5 Customers
| Customer | Business type | Sales revenue (RMB 10,000) | % of total operating revenue |
| Customer 1 | Delivery broiler | 20,458.22 | 1.15 |
| Customer 2 | Fish meal | 19,868.29 | 1.11 |
| Customer 3 | Chicken product | 19,298.66 | 1.08 |
| Customer 4 | Delivery broiler | 18,961.91 | 1.07 |
| Customer 5 | Delivery broiler | 13,977.62 | 0.79 |
| Total | 92,564.71 | 5.20 |
| Supplier | Business type | Purchase amount (RMB 10,000) | % of total Purchase amount |
| Supplier 1 | Soybean meal, soybean oil, etc. | 136,452.71 | 9.05 |
| Supplier 2 | Soybean meal, soybean oil, rapeseed meal, etc. | 29,213.44 | 1.94 |
| Supplier 3 | Corn | 27,739.74 | 1.84 |
| Supplier 4 | Soybean meal | 26,461.30 | 1.75 |
| Supplier 5 | Delivery broiler | 18,697.35 | 1.24 |
| Total | 238,564.54 | 15.82 |
| Item | 2019 | 2018 | Change % |
| Sales expense | 487,217,524.04 | 420,646,753.59 | 15.83% |
| Administrative expense | 275,560,691.30 | 227,941,858.19 | 20.89% |
| R&D expense | 65,209,116.65 | 61,100,349.28 | 6.72% |
| Financial expense | 76,392,967.30 | 74,900,937.42 | 1.99% |
D. R&D Input
Unit: yuan Currency: RMB
| R&D expenditure | 65,209,116.65 |
| Capitalized R&D expenditure | 0 |
| Total R&D expenditure | 65,209,116.65 |
| % of total operating revenue | 0.37 |
| R&D headcount | 171 |
| % of the Company's headcount | 3.20 |
| Percentage of capitalized R&D expenditure | 0 |
b. Broiler feed:
The Company continuously applied and promoted the Pellet-Mash-Pellet feeding mode,and further studied on the post coating technology for liquid ingredients. Meanwhile,powered by scientific diet and nutrition program, as well as good bio-safety andenvironmental control, the performance of white feather broiler has been furtherimproved, such as when promoting the body weight of broiler reaching 3 kg, the feedconversion rate has been further decreased as well.c. Layer feed:
The Company constantly optimized the nutrition and feeding programs of chick and pullet,also upgraded 12%-layer premix products, and developed new feed lines for duck, quailand goose. It also started research projects cooperated with China Agricultural Universityand Jilin Academy of Agricultural Sciences in regard of the rational use of raw materials,improvement of gut health and egg shell quality. Meanwhile, the Company also preparedlayer feed without soybean meal and improved the fermenting process of biological feed,which showed good effect on enhancing heat stress resistant in summer and egg quality,increased economic benefits of customers.d. Ruminant feed:
The Company continuously improved the quality of compounds for calves and growingheifers with the aim to increase lifelong economic profit of dairy cattle. Meanwhile, itoffered tailor-made compounds and precise ration program for dairy farms to graduallypromote customers’ farms to realize precise feeding. Moreover, the Company offered aseries of feeding program for finishing lambs to reduce the incidence of urinary stone andimprove the profit for customers. In the area of beef cattle, centered on decliningmetabolic disease and bettering the carcass quality, the Company developed new productsthat further heightened dressing percentage of beef cattle and improved customer’sbenefits.e. Aquatic feed:
The Company formulated a set of fish feeding and water management techniques inwinter aquaculture, which significantly decreased feed conversion ratio to save feedconsumption, improved the economic benefits of fish farming customers. At the same
time, by using traditional Chinese medicine extract and fermentation technology, itdeveloped fish feed with high immune to decline the morbidity, also launched shrimp andcrab feed with high nutrition to improve immune and the advantage of easy-to-process. Italso developed eco-friendly feed with low nitrogen and phosphorus excretion for whiteshrimp culture, which reduced the demand of water source and operating cost.Furthermore, the Company also launched starter feed suitable for special fish, whichenhanced the livability of fry and growing performance to increase customer’s profit.f. Technology about antibiotic-free feed/reducing the use of antibiotic in farm:
China’s feed industry will step into a new era of antibiotic-free in July 2020. Regarding this,the Company has conducted more than 100 researches and tests about antibioticalternatives for feed from 2013 to 2019, reserved several programs to entirely substitutefeed antibiotics. In 2019, the Company promoted and applied alternative programs in itsfarms and certain markets, which showed stable results to realize the goal of balancednutrition, stable and easy to digest, good animals' health, strong immune and anti-stress.At the same time, the Company guided farmers to continuously improve bio-safety, farmmanagement, feeding program and other aspects, striving to achieve non-antibiotic infeed and reduce the use of antibiotic throughout farms.E. Cash flow
Unit: yuan Currency: RMB
| Item | 2019 | 2018 | Change % |
| Cash inflow of operating activities | 18,665,159,099.25 | 16,387,473,689.22 | 13.90% |
| Cash outflow of operating activities | 17,553,553,132.67 | 15,886,068,773.63 | 10.50% |
| Net cash flow from operating activities | 1,111,605,966.58 | 501,404,915.59 | 121.70% |
| Cash inflow of investing activities | 348,000,132.83 | 61,627,106.73 | 464.69% |
| Cash outflow of investing activities | 1,222,207,956.12 | 571,358,643.35 | 113.91% |
| Net cash flow from investing activities | -874,207,823.29 | -509,731,536.62 | Not applicable |
| Cash inflow of financing activities | 2,365,290,378.12 | 1,818,096,102.83 | 30.10% |
| Cash outflow of financing activities | 1,986,335,207.32 | 1,651,103,379.20 | 20.30% |
| Net cash flow from financing activities | 378,955,170.80 | 166,992,723.63 | 126.93% |
| Net cash flow | 619,185,607.71 | 148,523,982.16 | 316.89% |
2. Assets and liabilities
Unit: yuan Currency: RMB
| Item | Closing balance of 2019 | % of total assets | Closing balance of 2018 | % of total assets | YoY change % | Explanation |
| Monetary capital | 1,554,781,324.13 | 16.99 | 928,902,753.06 | 13.40 | 67.38 | In 2019, all business divisions developed rapidly, cash flow generated from business operating increased; the Company issued non-public stock to designated investors in 2019, increased the net flow from financing activities |
| Trading financial assets | 40,000,000.00 | 0.44 | 0.00 | 0.00 | Not applicable | Undue financial products |
| Derivative financial assets | 3,912,584.30 | 0.04 | 2,042,527.60 | 0.03 | 91.56 | In order to avoid risk of price fluctuations in the spot market, the Company increased its position of futures assets |
| Notes receivable | 3,696,180.25 | 0.04 | 13,611,778.44 | 0.20 | -72.85 | Decrease of bills and letters of credit honoured at maturity |
| Available-for-sale financial assets | 0.00 | 0.00 | 3,680,000.00 | 0.05 | -100.00 | The new standards for financial instruments in accounting policies were implemented, available-for-sale financial assets were classified into other equity instruments investment |
| Long-term equity investment | 2,070,047,882.51 | 22.62 | 1,354,820,455.99 | 19.55 | 52.79 | Associated companies had good performance, the long-term equity investment calculated according to the equity method increased |
| Other equity instruments investment | 5,760,839.23 | 0.06 | 0.00 | 0.00 | Not applicable | Newly added other equity instruments investment |
| Fixed assets | 2,023,113,939.02 | 22.11 | 1,516,702,438.29 | 21.88 | 33.39 | Fix assets for broiler and hog raising increased, including houses and equipment |
| Productive biological asset | 94,826,312.88 | 1.04 | 30,484,794.88 | 0.44 | 211.06 | External purchased and self-raised broiler and hog breeders increased |
| Other non-current assets | 337,463,267.56 | 3.69 | 197,497,688.18 | 2.85 | 70.87 | Raising business in 2019 realized rapid development, the production scale of contract farms increased, which led to the increase of |
| prepayments of feeding fees | ||||||
| Advance receipt | 209,529,248.68 | 2.29 | 161,173,916.67 | 2.33 | 30.00 | Advances on sales increased |
| Tax payable | 37,680,953.84 | 0.41 | 28,744,792.72 | 0.41 | 31.09 | The profit increased, which led to the increase of corporate income tax |
| Non-current liabilities due within one year | 70,593,717.62 | 0.77 | 32,999,999.96 | 0.48 | 113.92 | Long-term borrowings and long-term payables due within one year increased |
| Long-term borrowings | 174,330,000.00 | 1.91 | 118,500,000.00 | 1.71 | 47.11 | Long-term bank borrowing increased |
| Long-term payable | 11,025,000.09 | 0.12 | 23,345,833.38 | 0.34 | -52.78 | Long-term payables due within one year increased |
| Deferred income | 31,841,250.00 | 0.35 | 20,252,967.41 | 0.29 | 57.22 | The deferred income generated by the government grant received during this period increased |
| Deferred income tax liabilities | 396,995.58 | 0.00 | 0.00 | 0.00 | Not applicable | In 2019, the Company’s subordinated small and micro enterprises enjoyed the one-time pre-tax deduction policy for fixed assets, the carrying value of assets was greater than tax base, which generated taxable temporary differences |
3. Analyses of agriculture, forestry, animal husbandry and fishery industries relating to
business operationsA. Fundamental state of industry and the Companya. Industrial policies and their impacts on the Company(a) The No. 1 Document issued by the CPC Central Committee proposes to foster anumber of multinational agricultural group companiesIn February 2019, the No. 1 Document was released, which was divided into eight parts ofa total of more than 10,000 words, still centered on the significant importance of the workrelated to agriculture, farmers and rural areas. This was the 16th time for the No. 1Document focusing on rural issues since 2004.The Document underlined that different level of governments should support andpromote agricultural export, and it’s necessary to enhance international cooperationabout agriculture among countries of the Belt and Road Initiative and cultivate someinternational enterprises to improve cooperation in the files of agriculture.The Company always devotes to international cooperation and market exploration. In 2006,the Company established a strategic partnership with Royal De Heus, the largestfamily-owned feed group in the Netherlands, and has become a Sino-Dutch joint-venturecontrolled by Wellhope. Both sides had close cooperation in R&D, purchasing, investmentand other aspects. The Company has a broad vision, international resources andmanagement experience, and has built feed plants in the Philippines, Indonesia, Nepal andother countries. At the same time, the Company actively launches imports and exports infeed, raw material trade and food, keeping abreast with the Belt and Road Initiative, henceit had reputed as Outstanding Feed Company by International Cooperation of the Belt andRoad Initiative in 2018 by China’s Feed Industry Association.(b) The era of antibiotic-free is comingAfter releasing thePilot Program for Reducing the Use of Veterinary Antibiotic and thePlan of Pilot Program (2018-2021)in July 10, 2019, the Ministry of Agriculture and RuralArea issued requirements in No. 194 Announcement that all commercial feed producersshall stop using antibiotics to promote growth of animals and the commercial feed withantibiotics shall be banned in the market from December 31, 2020. In the past four years,the government has been steadily promoting to reduce antibiotics in animal husbandry
industry, while the issue of No. 194 Announcement means that feed industry is ushering inthe era of antibiotic-free.The Company has a leading R&D team and a solid foundation of research. Since partneringwith Royal De Heus in 2006, the Company has been studying technical thoughts andexperiences about antibiotic-free feed and making significant progresses. The Company'scomprehensive strategy for antibiotic-free feed is not only to find alternative additives, butalso to consider the selection and cleaning of raw materials, pretreatment of raw materialsand removal of anti-nutritional factors, the reasonable use of fiber materials, in addition, italso considers the level of nutrients, processing technology, feeding management andsupporting solutions for farms, etc.Withdrawal of growth-promoting antibiotics from feed poses less pressure on the growthand performance of aquatic, ruminant, layer and duck. Broiler in the middle and lategrowth period and piglets below 25 kg body weight will bear the brunt. After years oftechnical accumulations, the Company's broiler feed has already achieved antibiotic-freetwo years ago and broiler realized good production performance. As for swine feed, as ofearly February 2020, the Company’s antibiotic-free feed program has been validated insome of its subsidiaries and contract farms for nearly six months and been proved feasible,the trials in some designated regions have been running for three months with stableresults.The Company will launch antibiotic-free products later, and up to the end of June in 2020,all feed products will be transferred to antibiotics-free.(c) Revised Food Safety Law Enforcement Regulations come into effect, the market willusher in toughest supervisionIn recent years, food safety in China have been improving, but at present thecircumstances of small-scale, fragmented food industry with low enter barriers have notbeen fully changed, and the farm-to-table industry chain is too long and too large withmany risk points.In October 2019, Premier Li Keqiang issued the Decree of State Council and issued
the newedition ofFood Safety Regulation of the People’s Republic of China, which not onlyprovided clear regulatory initiatives to address specific issues, but also strengthened thepenalties for violations of the law through the policy of "implementing penalties to
individuals". The Regulation came into force from December 1, 2019 and the marketwould be subject to the most stringent supervision since then.The Company has always attached great importance on food safety and built its foodsafety system to control risk. These measures taken by the Company detail in Section IVhereof—Possible Risks.(d) The State Council and different level of government offices issued policies intensivelyto promote stable production and hog supplyIn 2019, a significant decline in hog production led to an overall increase in livestock prices,which drove the CPI upturn. In order to stabilize hog production and ensure pork supply,about 50 policies have been issued throughout the year by the State Council and othergovernment offices to significantly support the recovery of hog production from ASFprevention, transportation and logistics to financial subsidies and other aspects.Under the backdrop of declining hog inventories and the intensive policies issued tostabilize hog production and pork supply, the Company's hog raising business and swinefeed business have made significant progresses this year.In terms of hog raising, the Company has always paid great attention to bio-safety. Strictcontrol and overall guarantee system help the Company to overcome risks brought by ASF.Meanwhile, the Company develops its hog businesses to cover high-quality breeder raisingand sales and piglet sales, explores finisher raising via self-owned farms and contract farms,and further cultivates hog slaughtering to extend the industrial chain.In terms of swine feed, as a leading enterprise across agriculture and animal husbandry inNortheast China, the Company always adheres to integrity operation and supplying highquality product, which has obtained higher brand awareness and recognition. In this year,the Company deeply strengthened its R&D strength, product quality, customer service andmarket exploration, its products have been well received by more and more customersdue to stable performance and after-sales services. Hog feed of the Company in 2019 wona great share of market with an increase of 7.7% in sales volume.b. The position of the Company in the industry, competitive advantages and
disadvantages(a) The position of the Company in the industryAs the Outstanding National Leading Enterprise of Agricultural Integration, the Company
stands in the leading position among peers in Northeast regions, it also has high brandinfluence in North, East, Central, Northwest and other regions across China. In terms offeed business, the Company’s Chairman is the Vice President of China Feed IndustryAssociation and it has been rated as the National Top 10 Leading Feed Enterprise.Meanwhile, the Company’s broiler integration business has been developing rapidly inrecent years, with quickly improved supporting capacity and production scale. Based onthe total slaughter volume of the holding and associated companies, the Company hasnow entered the first echelon of China’s white-feather broiler industry. Although theCompany's entered hog raising business relatively late, it is rapidly expanding this business,and its production capacity will be gradually released in near years.Furthermore, the Company has received many honors, including National-recognizedEnterprise Technology Center, High-Technology Enterprise, China’s Top 500 Enterprisesfrom 2015-2017, China’s Top 100 Public Company by Corporate Value in the Main BoardMarket for 2016, 2017 and 2018, Level-A in Information Disclosure by Shanghai StockExchange in 2018 and 2019, Liaoning Province Governor’s Quality Award in 2018.(b) Competitive advantages:
Detailed in “Core Competence”.(c) Competitive disadvantages:
In recent years, due to the change of market structure and competition mode as well asthe development strategy, the Company is accelerating the layout in new businesses, newregions and new projects. This process is complex and changeable with great uncertaintyand poses new challenges to the Company.c. Company business model, upstream & downstream circumstances? Upstream & downstream circumstances(a) Upstream industryThe upstream raw materials of the Company's feed business mainly include corn, soybeanmeal and fish meal, etc. The upstream products of the broiler integration business mainlycover grandparent and parent breeder.In terms of corn, domestic corn prices in 2019 showed a trend of falling first, then risingand then falling, with the overall price fluctuating upward. In the first quarter, the
concentrated supply led the price of corn to go down from a high level. Meanwhile,temporary reserve auctions boosted corn prices in the second quarter and changes inSino-US trade relations led to a sharp rebound in corn prices under the help of marketsentiment. In the second half of the year, affected by ASF, domestic corn prices fluctuateddownward. Under the influence of policies and market factors, the supply and demandsides continued to shift.As for soybean meal, the price fluctuation in 2019 was relatively severe. In the first quarter,terminal demand dropped sharply and soybean meal prices went down. The escalation ofSino-US trade friction in the second quarter, coupled with the backward planting scheduleof US beans, led to a unilateral upward trend in domestic soybean meal prices in May anda shock adjustment in June. In the second half year, Sino-US trade negotiationsexperienced ups and downs. On December 13, an agreement was finally reached on thefirst phase. Soybean meal prices also presented a wide fluctuation in the second half year,reached the peak in October, then continuously showed a callback.As for fish meal, the price trend in 2019 could be divided into the following stages. Marketprices remained basically stable in the first quarter. In the second quarter, domestic fishmeal prices rose driven by a series of foreign beneficial factors. After June, foreign fishmeal prices fell and domestic fish meal also fluctuated downward. In late October, thesupply of domestic fish meal was tight with stable price. In December, due to factors suchas low quota, poor fishery harvesting and ban on fishing, the price of imported fish mealsoared and domestic fish meal followed suit.In terms of broiler, grandparent stock was renewed exceeded 1.3 million sets in 2019,promoted the inventories to return to a high level. However, since August, the number offorced molting decreased rapidly, and the phenomenon of forced molting had beenbasically eliminated by the end of the year. In terms of parent stock, the sales volume ofparent chicks reached 50 million sets in 2019 with a year-on-year growth rate of 20%,reaching a five-year high. Generally speaking, the production capacity of white broilersincreased significantly in 2019, whilst the price of day old chick is expected to drop off in2020, the profitability of each segment in the industrial chain will be restructured and theprofits contributed by the slaughtering sector will increase significantly.Note: The statistical data in above industry information come from Industry Analysis
Report of www. Boyar.cn.(b) Downstream industryFeed industry is the front end of the animal husbandry industry chain and its downstreamconnects with the animal raising industry, slaughtering industry and the terminalconsumption of meat products. The Company mainly produces feed for swine, poultry andruminant animals, so the demand of the Company's feed business is greatly affected bythe market conditions of hog, layer, broiler, ruminant and the terminal consumptionstructure.As for hog, the inventories of hog dropped sharply under the backdrop of ASF. With theconsumption of pork inventories, the shortage of pork supply began to widen in the thirdquarter, and the prices of hog and pork rose rapidly, which became an important factorthat contributed to the increased CPI. High-priced pork has inhibited terminalconsumption, and a suite of policies on stabilizing hog production and guaranteeing porksupply have been issued intensively, which promoted the high price of hog to fall back to arelatively rational range later this year, while the market has maintained a low supply anddemand for a long time.In terms of layer, in 2019, the restocking of domestic day old chick accelerated and theinventories of layer continued to increase, making the supply of eggs higher than theaverage level in the past four years. Although there were signs of overcapacity in theindustry, the substitutional demand for eggs supported high egg price due to the hugeshortage in pork. In the second half year, the egg price reached an all-time high and thebenefit of layer rearing was also close to the highest within ten years.In terms of broiler, as ASF has greatly reduced the inventories of hog that caused a shortsupply of pork, so chicken, as the most suitable substitute, assumed the important task ofbalancing supply and demand. This year, broiler suppliers actively took measures toincrease production capacity, the body weight generally increased and the deliveries havereached the highest level since 2016. In spite of this, the broiler industry was still in shortsupply, poultry prices remained high and the broiler industry chain recorded new-highprofits.In terms of ruminant, policies regarding poverty alleviation and stabilizing mutton sheepraising and increasing beef cattle in some provinces have ensured the sound development
of beef cattle and mutton sheep industries this year. The markets showed a flourishingsupply and demand, an increasing production and sales volume with steadily increasedbenefits. The protein shortage caused by ASF increased the demand for beef, mutton anddairy products, which led a high price remained and a tight balance of overall supply anddemand.In terms of terminal consumption, under the influence of ASF, severely reduced China'shog inventories and sharply increased pork prices drove the prices of livestock and poultryproducts to a high level in 2019, and the consumption demand for "protein substitutes"represented by chicken increased significantly. In addition, chicken, featured by highprotein, low fat and low cholesterol, were also more and more favored by people, whichfurther accelerated the adjustment of meat consumption structure in China andsignificantly increased the percentage of chicken consumption.d. Primary technology--Feed technologyIn 2019, by considering circumstance of domestic raw materials, market trends and theneeds of customers, supported by advanced know-how and service concept of Royal DeHeus, the Company continued to pursue technological innovations in various fields toadjust its technology regarding different product lines.(a) Grain-saving and eco-friendly feed formulation: China's animal husbandry industry isfacing problems such as shortage of feed raw materials and environmental pollutions,through applying corn by-products and unconventional protein materials, the Companyhas reduced the use of corn, soybean meal and other grain in animal feed, and developedfeed products with lower soybean meal. By applying enzyme preparations to lowerphosphorus and protein, it has realized a significant decline of excretion of nitrogen andphosphorus.(b) Intestinal health control: Through controlling raw material quality and applying thetechnics in terms of fermentation, enzymolysis and pelleting, the Company has declinedthe antigens and anti-nutritional factors in raw materials. Meanwhile, the biologicalbarrier effect of intestinal tract has been improved by applying functional additives toreduce infection of pathogenic bacteria and intestinal inflammation, which can promoteintestinal health to boost the growth performance of animals.
(c) Precisely dynamic feed formulation and hardening and tempering pellet diet inhigh-temperature: The Company actively exchanged latest technology with ChinaAgricultural University regarding dynamically processing feed materials and relateddatabase. Meanwhile, the Company is studying the technical scheme of hardening andtempering pellet diet in high-temperature that can reduce the loss of heat sensitivematerials to enhance the products competitiveness and improve bio-safety level of animalfeed.(d) Applying functional dietary fiber in sow feed: The Company continued to verify andapply this technology in the farms and achieved remarkable results in high-yielding sows,such as the Danbred, which has been standing in the leading position in China. By adding avariety of non-fermentable dietary fiber and supplementing with cationic salts, the dietaryfiber content in feed can be increased to improve the intestinal health, solve theconstipation of high-yielding sows, whilst to enhance the satiety of gestation sows, reducestereotypical behaviors to relieve parturition stress. More importantly, by doing this, itcan improve postpartum appetite, increase feeding intake to realize better milkproduction during lactation period, thereby to improve the reproductive performance ofhigh-yielding sows, reduce mortality and raising cost to increase economic benefits forcustomers.(e) Balanced nutrition in laying feed: Along with improved genetic potential, producing500 eggs in 100 weeks has become the trend in large-scale layer rearing, but there areproblems like decreased production, higher mortality and weak egg shells in prolongedproduction period. Based on balancing nutrition in terms of energy and amino acids inlaying feed and selecting suitable raw materials, as well as applying controlling program offatty liver syndrome, the persistency and production period of layer has been effectivelyextended and reduced the mortality and strengthened egg quality.(f) TMR (total mixed ration) program with high crude protein for growing heifers:
According to nutritional requirement of growing heifers, the Company has developed totalmixed ration diet with high crude protein for growing heifers instead of traditional feedingprogram with low crude protein to stimulate the development of mammary gland and theskeletal muscle, so as to assure that the growing heifers would be ready for first breedingaround the age of 13 months with appropriate height and body weight. In this way, the
time for heifer period has been shortened and more time would be available for cattle tomilk and thus heighten its lifelong profit.(g) The strategy of improving carcass quality of finishing beef cattle: In order to improvethe dressing percentage and the meat percentage, the Company has selected functionaladditives in compounds to better the rumen health of beef cattle, which has significantlyimproved the dry matter intake and stimulated the deposit of muscle by regulating theenergy metabolism of animals.(h) Overwintering feeding management for fish: Most of aquatic animals arepoikilotherms, whose body temperature change with the ambient water temperature.During the cold winter, aquatic animals always suffer low water temperature, barely feedintake and deterioration of water quality. Starvation for long time results in highpercentage of body weight loss and a series of health problems, even increases themortality after overwintering. Considering related factors such as the changes of watertemperature, physical & chemical indexes and the physiological characteristics of fishduring the winter, the Company has refined the nutritional standards for various fish andcrustacean, developed a series of special overwintering feed and formulated differentfeeding solutions, which could reduce the percentage of body mass loss, enhance theimmunity of fish and reduce the risk of morbidity, etc.(i) Antibiotic-free feed and reducing the use of antibiotic in farm: The Company hasconducted more than 100 researches and experiments on antibiotic substitution from2013 to 2019. So far, the feed for growing-finishing pig, sow, layer, broiler, ruminant andaquatic can all achieve antibiotic-free. In July 2020, the feed industry will usher in the eraof antibiotic-free, the Company has reserved comprehensive schemes to completelysubstitute antibiotics, which have been promoted and applied in sell-owned farms andsome regional markets. The effect of these schemes has been proved stable and canachieve the goals of balancing nutrition, stability, easy-to-digest, healthy status, strongimmunity and anti-stress. At the same time, the Company guides the farmers tocontinuously improve bio-safety, farm management, feeding program and other aspects,striving to achieve antibiotic free and reduce the use of antibiotic throughout the farm.--Animal raising technology(a) Broiler raising technology: After years of researches and practices, the Company has
formulated different types and combinations of feeding and raising models to fullyimprove feed conversion ratio, reduce mortality and culling rate, and promote animal’sgrowth potential. The Company’s broiler raising management and know-how have realizedmajor breakthroughs and good profits, especially for its three-tier cage system. Some of itstechnologies, including minimum ventilation for caged broiler, automatic controls ofhousing environment, ventilation and air inlet, automatic backwash water system and thecontrol rate of weekly weight-gain, reached top level among peers in the industry.Meanwhile, by applying PCR, the early warning technique and HTSI, the monitoringtechnique, the Company can monitor the disease to realize early discovery and diagnosisas well as early treatment to prevent disease. Furthermore, the Company adopts thefermentation technology to treat chicken manure to protect the environment, whilst, itsindependently designed ventilation model and solar energy utilization technology cansimplify ventilation and heat preservation to reduce electricity consumption, save coal andmitigate air pollution to realize sustainable development.(b) Nutrition and feeding program for pullet: The body weight and uniformity of pulletdetermine the performance of layers in production period. Through the Company’sscientific nutrition design of diet, good control of bio-security and house environment, thepullet can grow quickly and develop well under high density rearing. The average bodyweight, shank length, uniformity of body weight of 60-day-old pullet stand in the leadinglevel of the market.(c) Specialized strain cultivation technology: The Company has established the fullphenotype database and genotype database of new Danbred pig in Northeast regions bycombining gene marker, target gene sequencing and production traits. Throughassociation analysis, specialized strain cultivation of Danbred pig can improve breedingefficiency, save costs and heighten the accuracy of breeder selection.(d) Key technology of accurate nutrition and feeding model for high-yielding sow: Relyingon know-how of formulating precise nutrition for high-yielding sow, the Company hasaccurately designed staged-nutrition, formula selection and nutritional standards toinnovate the feeding program for sow, which has been divided into three stages to meetits growth needs, making the gilt bones stronger, muscle and other protein deposits better,the reproductive system and body condition more mature. Compared with one-stage
feeding and strictly restrictive feeding, the breeding rate of gilt has increased by about 5%.In the meantime, second birth syndrome has been greatly reduced with lower eliminationrate before the third parity. During the gestation period, the Company adopts a two-stagefeeding model with "high and low" nutrition, by doing this, the constipation of sow hasbeen below 5%, and the delivery time has been shortened by about one hour, 90% of sowscan be controlled within 2-4 hours, whilst it can quickly realize maximum feed intake afterdelivery and the average feed intake during lactation period increases by 0.5-1.0kg,meanwhile, the breeding rate of sows reaches more than 92% after one week of weaningand the average weaning weight of piglets increases by at least 10%. This achievement hasreached the leading level nationwide.(e) Proven diagnostic technique of ASF: The epidemic disease prevention has long beenconsidered the key point of pig farm management, which will cause serious consequencesin case of loophole, the prevention efforts directly determine the farms to live or die,especially under the high pressure of ASF. In the absence of vaccines and effectivetreatments, diagnostic techniques have been the only effective way to monitor and controlASF. Among many diagnostic technologies, the quantitative real time PCR method hasbecome an important tool for routine diagnosis of ASF recommended by OIE due to itsadvantages of sensitivity, specificity, speediness and stability, which is also the maindiagnosis to test ASF adopted by the Company. At present, Wellhope has formulatedstandardized operation requirements and targeted professional trainings for the operationprocess involved in the detection system to ensure safe, efficient and reliablemanipulations. Since implementing the quantitative real time PCR, it has monitored andeliminated the pathogen risks for hundreds of times, and more than 10,000 heads of pighave been diagnosed and investigated, which provide a strong guarantee for the healthyoperation of farm.B. Production and sales circumstancea. Production and sales modeThe Company has established a complete system of "purchasing-producing-selling”, itproduces feed products by orders with the sales model of selling on commission and directselling. Regarding small and medium-sized back-yard farms, they buy feed from the dealers,and the large-scale farms buy products directly from the Company.
Where a co-production model with farmers (applicable)The Company raised broilers by self-owned farms and contract farms. Regarding thecontract farms, the Company signs contracts with farmers to clear and definite the rightsand obligations for each party, and it conducts centralized management for these farms byunified site selection and design, unified supply of day old chicks, unified diseaseprevention and disinfection, unified supply of feed, unified supply of animal healthproducts, unified technical guidance, unified detection and unified slaughtering andprocessing. In the reporting period, the broilers raised by the contract farms meet therepurchasing standards required by the Company, no breach of contract.b. Main products distribution and selling
| Main Product | Channel | Sales volume (10,000 tons) | Sales revenue (RMB 10,000) | Sales cost (RMB 10,000) | YoY change of sales volume % | YoY change of sales revenue % | YoY change of sales cost % |
| Feed | Direct selling | 118.25 | 353,922.53 | 307,594.82 | 18.71 | 13.67 | 12.88 |
| Feed | Selling on commission | 143.51 | 424,664.66 | 373,496.63 | 5.83 | 1.47 | 1.03 |
which has small risk of receivables collection.In 2019, small-scale customers contributed to 5.48% of the Company's total sales revenuewith RMB 427 million, bringing a small impact on operation.C. Information of the Company divided by industry segments
Unit: 10,000 yuan Currency: RMB
| Main products | Number of raising (10,000 broilers) | Number of sales (10,000 broilers) | Sales revenue | Sales cost | Gross profit margin % | Deliveries (10,000 broilers) | Inventory (10,000 broilers) |
| White feather broiler | 10,856 | 9,803 | 285,808.62 | 239,198.33 | 16.31 | 9,803 | 1,411 |
| Feed | Volume | Payment | Average Price/ton |
| Self-produced | 446,296 tons | 121,955.23 | 2,732.61 yuan |
| Externally purchased | 35,122 tons | 9,787.73 | 2,786.78 yuan |
5. Main holding and associated companies
Unit: 10,000yuan
| Company | Core business | Registered capital | Total assets | Net assets | Net profit |
| Shenyang Wellhope Ruminant Feed | Feed production and selling | 550.00 | 14,359.06 | 12,174.70 | 1,953.27 |
| Beijing Sanyuan Wellhope Agri-Tech | Feed production and selling | 1,000.00 | 22,877.15 | 19,830.11 | 1,103.28 |
| Shenyang Wellhope Agri-Tech | Feed production and selling | 8,210.00 | 18,605.65 | 13,117.31 | 1,643.30 |
| Xi’an Wellhope Feed Sci-Tech | Feed production and selling | 500.00 | 16,149.38 | 13,583.82 | 3,688.54 |
| Dandong Wellhope Chengsan Agri-Tech | Broiler raising and feed | 8,000.00 | 78,061.95 | 56,126.64 | 28,541.42 |
| Tai’an Jiuguhe Agriculture Development | Broiler raising and feed | 1,060.00 | 41,701.73 | 26,785.38 | 12,406.49 |
| Anshan Jiuguhe Food | Broiler slaughtering, processing and selling | 4,320.00 | 53,564.50 | 37,083.96 | 14,059.01 |
| Linghai Jiuguhe Feed | Broiler raising and feed | 1,755.00 | 17,895.97 | 16,473.00 | 8,542.03 |
| Huluodao Jiuguhe Feed | Broiler raising and feed | 1,085.00 | 20,632.93 | 11,056.64 | 5,464.95 |
| Huluodao Jiuguhe Food | Broiler slaughtering, processing and selling | 7,370.00 | 27,996.76 | 18,610.97 | 7,080.44 |
| The impact of the net profit of subsidiary or the investment income from associated company on the net profit of the Company reaching 10% or above | |||||||
| Company | Core business | Registered capital | Total assets | Net assets | Net profit | Operating revenue | Operating profit |
| Beipiao Hongfa Food | Feed, parent stock, day old chick, broiler raising and slaughtering | 3,000.00 | 152,912.47 | 126,327.04 | 57,414.77 | 314,798.88 | 57,394.51 |
| Dalian Heyuan Agri-Tech | Feed, parent stock, day old chick, broiler raising | 10,000.00 | 121,428.37 | 78,313.99 | 42,211.70 | 255,888.56 | 42,442.95 |
| Dalian Chengsan Animal Husbandry | Broiler raising and feed | 1,008.61 | 191,625.10 | 141,179.01 | 60,477.75 | 320,377.75 | 60,825.08 |
III. Outlook on the Company's Future Development
1. Industry outlook
China is a large agricultural producer with a population of 1.4 billion. In China, agriculturehas always been regarded as a strategic industry that provides security and stability toresidents and lays the foundation of national economy. This is not only because agricultureis the source of food and clothing for mankind and the basis of survival, but also because itis the pillar of the independence and development of other industries.China has paid great attention to agricultural development. Along with latest changes ininternational trade, resources and environment, technological conditions, industrialstructure, policies and regulations and other factors, the development of agriculture hasalso ushered in a new phase. In 2017, the "No.1 Central Document" put forward views onfurther promoting agricultural supply-side structural reform, and in 2018, the "No.1Central Document" completed the top-level design of the rural revitalization strategy,whilst in 2019, the "Document" further pointed out the special importance of the workrelated to agriculture, rural areas and farmers under the complicated situation ofeconomic downturn and profound changes in the external environment. In the context ofdeepening supply-side reform and gradual transformation and upgrading of the industry,the livestock industry has been facing many challenges, whilst the Company have a newopportunity for growth.A. Increasingly heightened industry consolidation weeding out unqualified playersAlong with the fierce competition taking place in the feed industry, extra-large companiesare constantly expanding their businesses, medium-sized producers are seeking businessopportunities, whilst small producers are gradually squeezed out of the market. Regardingto large companies, they utilize their advantages in technology, cost, brand, managementand capital to continuously improve their total factor productivity and rapidly expandproduction scale and seize market shares through mergers and building new plants, thosesmall and medium-sized feed producers have gradually been weeded out in increasinglyfierce competition due to their lower technical level, higher operation costs, weaker brandreputation, lack of management skills and financial pressure. Under the background of ASFbecoming the periodically normal phase and the continuous transformation and upgradingof production, feed industry accelerates to weed out unqualified producers, which leads to
increasingly heightened consolidation. Statistics from the China Feed Industry Associationshowed that, in 2019, there were 621 large-scale feed plants with a production capabilityover 100,000 tons per year, where disappeared 35 plants compared with prior year. Theseplants produced 106.597 million tons of feed, with a year-on-year increase of 3.7%, whichcontributed towards 46.6% of China’s total feed production, rose by 3.3 percentage points.Meanwhile, there were 31 large-scale feed groups with an annual output of more than 1million tons, accounting for 50.5% of China’s total feed output.B. Continuously extended industrial chainAnimal husbandry industry consists of several industries such as feed production, animalhealth product, livestock and poultry raising, slaughtering and processing, etc., whilst itsupstream connects to the planting industry and downstream serves agricultural andsideline food processing industry, where a variety of related industries form an organicwhole. As competition becomes intensified to weed out unqualified players, large-scalecompanies are continuously expanding markets, whilst for reasons of risk control, profitgrowth, food safety and other needs, besides conducting mergers and acquisitions, theextra-large players gradually integrate resources to continuously extend to upstream anddownstream industries so as to create stronger competitive advantages and anti-riskcapabilities. Under the development trend of integration, seizing resources across thewhole industry chain has become the mainstream.C. Constantly strengthened environment protection promoting the concept of greendevelopment being practicedIn recent years, China has put forward a series of regulations on environmental protection,such as the revision of the Environmental Protection Law, the promulgation of theEnvironmental Protection Tax Law, and the release of the Regulations on PollutionPrevention of Scale Raising of Livestock and Poultry and the Action Plan for PollutionPrevention of the Agricultural and Rural Pollution, etc. These successively launchedpolicies have showed China's determination to increase supervision on environmentalprotection in animal husbandry industry and local governments have also issued certainnew regulations in regard of farm removal, ban of raising and restriction of farms, whichwill further weed out unqualified players and facilitate to reshuffle animal husbandryindustry.
D. Great concern of food safety highlighting the strengths of large group companiesIn recent years, food safety in China have been improving, but at present thecircumstances of small-scale, fragmented food industry with low enter barriers have notbeen fully changed, and the farm-to-table industry chain is too long and too large withmany risk points. In October 2019, Premier Li Keqiang issued the Decree of State Counciland released the new edition of Food Safety Regulation of the People’s Republic of China,which not only provided clear regulatory initiatives to address specific issues, but alsostrengthened the penalties for violations of the law through the policy of "implementingpenalties to individuals". The Regulation came into force from December 1, 2019 and themarket would be subject to the most stringent supervision since then. In the future, foodsafety and standardability of the industry will become more important; strict food safetysupervision will further squeeze out unqualified players, whilst highlight the strengths oflarge integration company.E. Bio-safety becoming a key factor in the coming Post-ASF eraDisease has always been one of the major risks faced by the livestock industry. ASF wasdiscovered in August 2018 in China, spread to more than 20 provincial-level administrativeregions in the next six months, severely hit China’s hog industry. Affected by ASF, China'shog inventories deeply reduced in 2019, meanwhile, the "bio-safety" has raised the entrybarriers for hog raising industry, the living space of small and medium-sized back-yardfarms were continuously compressed, whilst large group companies took this opportunityto actively expand business and quickly seize market share relying on their capital, talents,technology and other resources. In the future, China will enter the era of "Post-AfricanSwine Fever", the bio-safety system is becoming increasingly mature. Probability ofwidespread outbreaks in the future becomes small, but small outbreaks may beunavoidable. ASF has restrained the density of hog raising, which will hinder the recoveryof domestic hog production until a safe and reliable vaccine becomes available, thus thegrowth rate of China's hog production will be hindered, the original cyclical fluctuation ofthis industry that is similar to the "Cobweb model" caused by imbalanced supply anddemand will be weakened, and a new supply and demand model will be gradually formed.
F. High pork prices curb end demand, which accelerates the adjustment of meatconsumption structureIn 2019, ASF has hit China’s hog industry particularly hard, with severe production capacitylosses and a significant increase in hog and pork prices, which fueled the prices of livestockand poultry products to record highs, becoming the main factor driving the CPI upwardthis year. Excessive pork price has obviously stressed consumption, pork purchases fromthe group meal dropped significantly and food producers were forced to shift rawmaterials towards chicken and vegetarian food, leading a significant increase in alternativedemand for chicken and an accelerated adjustment in the structure of meat consumption.In addition, featured by high protein, low fat and cholesterol, chicken has been wellrecognized by residents, and white feather broilers have a big advantage over hogs interms of growth rate and raising cost. The above factors together resulted in theaccelerated adjustment of the structure of meat consumption in China, which significantlyincreased chicken consumption. Currently, per capita chicken consumption in China is lessthan 10 kg per year, which is lower compared to 42 kg per year in the US, 48 kg per year inBrazil and 18 kg per year in the EU, therefore we are convinced that chicken consumptionhas great growth potential.
2. Development strategy of the Company
The Company's long-term development goal is to become one of the world's leadingenterprises across agriculture, animal husbandry and food industries. In the next threeyears, it is necessary to "steadily develop feed business, accelerate the progress towardsintegration business and to become an enterprise with leading-edge quality and efficiency,to complete the phased layout of food business and obtain food brand advantages incertain regions (2020-2022)".According to three-year plan and based on the analysis and prediction of economic andindustrial trends in 2020, the Company has confirmed its business strategy for 2020:
upholding the core values of integrity, responsibility and win-win, and the managementculture of innovation, high efficiency and self-discipline, the Company is well on its way tosteadily developing feed business, vigorously promoting broiler integration and hog raisingbusinesses and exploring the phased layout of food business, further enhancing itsoperating capability, optimizing the organizational structure and improving collaborative
management, strengthening brand building and risk control, innovating the incentivemechanism and heightening talents cultivation, technological innovation, informationresources, investment and financing management, gradually creating an integratedoperation model powered by two engines in terms of broiler and hog integrationbusinesses, and eventually becoming an enterprise with leading-edge quality andefficiency across agriculture, animal husbandry and food industries.At the beginning of 2020, stressed by the COVID-19 and ASF, all the Company's staffresponded quickly and overcame the difficulties, resumed production as soon as possibleto achieve the goal of "ensuring staff safety, guaranteeing production and supply,stabilizing sales and development”, and fulfilled the responsibilities of safeguardingresidents’ meat supply, the sales volume of the Company’s feed business are expected toincrease by more than 40% from January to March.
3. Business plan for 2020
2020 is the year for Wellhope to heighten its strategic change, the Company will fullyimplement the excellent performance mode to improve operation and leverage thestrengths of corporate culture, talents, market and brand accumulated over the years.While continuing to steadily develop feed and raw materials trade businesses, Wellhopewill enlarge the input in broiler integration business and promote its in-depthmanagement, whilst further expand hog raising business, taking 5 to 8 years to craft anoperation model driven by two complementary engines in terms of broiler and hogintegration businesses, focusing on achieving the management strength of "leading-edgequality and efficiency" that creates synergies and reduces costs among all business, tobecome one of the world’s leading enterprises across agriculture, animal husbandry andfood industries as well as a manufacturer of safe and high-quality meat products.A. Feed and raw material trade businessThe Company will keep a close eye on the market, face the problems caused by ASF andCOVID-19 epidemic, further enhance brand strength as a leading enterprise, seize theopportunity of rapidly increased production scale of hog and poultry raising, strive toboost swine feed business and increase the sales volume of feed with high profit margin,constantly improve and innovate customer service systems to help customers to tide overthe difficulties and grow business. While accelerating the pace of swine feed, the Company
will seize the opportunity of meat consumption structure changing to heighten itsmarketing of poultry and ruminant feed, further improve the product strength andcustomer service, strive to achieve a large increase in poultry and ruminant feed.Meanwhile, as for raw material trade, driven by IT application, lean management andstandardized operation, Wellhope will strive to realize accurate decision-making andgreatly increase efficiency and benefits. Overall, in 2020, the Company will continue todeepen internal reform, optimize the organizational structure, innovate the incentivepolicies, further reduce the production cost and period expense ratio, strengthenpersonnel management, to ensure operation system more efficient and competitive.B. Broiler integration businessIn 2020, under the backdrop of ASF and COVID-19, the Company will try to turn the crisisinto opportunities, seize the opportunities arising from consolidated industry, furtherimprove the production capacity through in-depth management and mergers andacquisitions, whilst accelerate the pace of broiler raising and cooked food business.Moreover, great efforts will be made to promote the scale of slaughtering business andfurther improve the percentage of high-value-added products and the chain structure, andgradually enable the supply of self-raised broilers can fully meet the slaughtering needs.The Company will strive to achieve the goal of raising over 460 million broilers in 2020 andslaughtering over 560 million birds (including holding and associated companies together).Meanwhile, the Company will continue to strengthen lean management andbenchmarking management to improve internal operation continuously, reduce costs andbeef up efficiency to heighten product competence, moreover, it will attach greatimportance to improve broiler raising technology and build bio-safety system, focus onproduct innovation, quality and safety as well as market promotion to further increase thepercentages of fresh products, processed raw meat and further processed products as wellas the exported products. The Company will continue to pursue safety and efficiencyimprovements for the business unit of broiler raising, to chase quality and structureimprovement for processing business and to achieve further improvement in scale andquality for further processing business.The Company will unswervingly expand and strengthen its broiler integration business,seize the opportunity brought by industry movements, give full play to its advantages and
take 5-8 years to realize the goal of slaughtering 1 billion white feather broilers per yearand to provide each Chinese resident with one Wellhope broiler per year.C. Hog raising businessRelying on explorations from 2018 to 2019, the Company has further clarified and beenconvinced for its strategy of entering hog raising business. In 2020, along with welloperating the existing breeder farms, the Company will actively seek opportunities formergers and acquisitions in hog raising and slaughtering businesses to speed up themarket distribution in the dominant regions. Meanwhile, the Company will strengthen tobuild professional talents team, innovate the incentive mechanism for talents engaged inhog raising business and strengthen the bio-safety management in farms, also focus on thesafety and epidemic prevention of self-owned farms and contract farmers. With theprogress of newly built project, the production capacity will be gradually released,Wellhope’s holding and associated companies will strive to achieve the goal of delivering600,000 heads of hog in 2020 (without considering the uncertainties caused by ASF).D. Other businessesThe Company will make efforts to seize opportunities in terms of improved raising scale,technologies and bio-safety system, to carry out accurate marketing, heighten customerservice, and develop in coordination with the main business for win-win results. In themeantime, it will deepen to expand markets abroad, well manage the integrated operationin some countries in the field of hog and broiler, train talents and refine brand to furtherimprove business scale and operation quality of the existing international business.E. Key points of transformation and management in 2019◇ Safety is the first priority.◇ Uphold the driven rules for operation management: "Code of conduct of managers","Strict management regarding three aspects" (strict intracompany management, strictperformance appraisal and strict self-discipline).◇ Continue to promote excellent performance management to deepen reform andcomplete business transformation and upgrading.◇ Focus on talents echelon building, and innovating incentive systems.◇ Fully conduct lean management, gradually achieve leading-edge quality and efficiency.◇ Enhance the management of financing and risk control, ensure the healthy and
sustainable development.◇ Systematically Implement brand strategy to enhance the core competitiveness.◇ Speed up IT application, provide data for supporting decision-making and enhancingoperating efficiency.◇ Focus on process management and result-oriented management with appropriatesupervision.◇ Hold a series of activities to celebrate the 25th anniversary of the Company,thoroughly implement the corporate culture into practice, and further empoweremployees, benefit customers and the society.
4. Possible risks
A. Risks of fluctuations in raw material pricesMost costs of the feed business come from raw materials. The production changes inproducing areas, import policies, storage and subsidies, exchange rate fluctuations,logistics costs and other factors may trigger fluctuations in the raw material market, whichwill affect the Company's feed business costs and gross profit margins. With deepenedinternationalization of the trade of agricultural products in recent years, thesupply-demand relationship and trading price of raw materials have been affected bymarket conditions such as spot and futures at home and abroad, and the price trend hasbecome more complex followed by increasingly fierce fluctuations, which furtherincreases the difficulties of the Company’s cost management. In addition, the fluctuationsof COVID-19, Sino-US trade relations, international political and economic environmentand other factors have also made the purchase price of raw materials more variable.Solutions:
(a) The Company has established strategic partnerships with many top domestic andforeign raw material suppliers, and strategically reduced purchasing costs throughthree-level purchasing mode in terms of headquarters’ centralized purchasing, regions’price compare purchasing and local departments’ purchasing of different varieties.(b) The Company combines its raw material trading business with purchasing management,i.e., the professional and practical raw materials’ purchasing team conducts targetedforward-looking researches and real-time tracking on the market, makes great efforts to
reduce the purchasing price, such as uniformly managing different varieties, adopting spotpurchasing and futures together.(c) The purchasing team works closely with the R&D team to further optimize thepurchasing cost by way of re-formulating the feeds i.e., changing the composition of thefeed to use cheaper alternative raw materials while achieving the same results, which canfurther optimize purchasing costs.(d) The Company and Royal De Heus have set up an information sharing channel, whichmakes the two sides can timely share the market trends, such as raw materials, additives,etc. In addition, the two sides may carry out joint purchasing cooperation in the future,which will greatly enhance the overall bargaining power.B. Risks of fluctuations in livestock and poultry pricesAnimal husbandry industry is a typical cyclical industry and the hysteretic nature of theadjustment of supply causes the prices fluctuating periodically. At present, China's animalhusbandry industry is still dominated by back yard farms and small-scale farms, these farmowners show the character of non-rational decision-making, especially an obvious “herdeffect”, which further aggravates the cyclical fluctuations in the market price.Solutions:
(a) In terms of strategy, while steadily developing feed and feed raw materials tradebusinesses, the Company has increased its input in broiler integration business andquickened the expanding of hog raising business to create an operating model powered bybroiler and hog integration businesses, which can effectively reduce the risks brought bythe cyclic fluctuations in the industries.(b) In terms of business, the Company's broiler integration business has established anindustrial chain, whilst it also expanded hog slaughtering business in 2019 to extend itsbusiness to the downstream industries. The continuously improved industrial chainstructure enables the price fluctuation of each sector in the chain to be fully hedged, so asto maximize the price fluctuation of the whole industrial chain.(c) In terms of management, the Company has always been committed to improving theproduction standard and operation model of each business sector, reducing overalloperating costs by optimizing the production indicators and improving per capita efficiency.
Costs advantage can mitigate the negative impacts on the Company when the industry isdownward and improve the overall profitability when facing a booming industry.C. Risks of serious animal diseaseFeed and animal raising are the Company's two core businesses. Disease outbreak is oneof the main risks faced by animal raising companies. Once a disease happens, it will causepanic in the market, which will reduce the demands, then lessen the production andincomes as well as increase costs. Whilst the feed industry mainly serves downstreamanimal raising industry, the downstream market will directly affect the performance offeed business. As an unpredictable emergency, an explosive disease will undoubtedly havea strong impact on the Company's operations.Solutions:
(a) The Company attaches great importance to regional distribution and businessstructure, which is the most direct way to divert the risk of epidemic.(b) The Company continues to improve the prevention technology of major epidemics,completes the early warning system and strives to control epidemics effectively beforespreading.(c) When the epidemic comes, the speed of response is particularly critical, the faster toresponse, the less to loss. The Company has set an emergency command system for majorepidemics to minimize losses when they occur.(d) The Company has constantly strengthened the analysis and research capabilities formajor epidemics, enhance animal’s immunity from the perspective of animal nutrition andveterinary services.(e) For ASF, the Company has formed a relatively complete prevention system fromproduct researches to farm management. Specific prevention measures detailed in SectionIV hereof-Hog Raising Business.D. Risks of the industrial pattern adjustment caused by environmental protectionpoliciesChina has put forward some environmental protection regulations in recent years, such as
Environmental Protection Tax Law, etc., which show the government's determination to
increase supervision on environmental protection in animal husbandry industry, whilst thelocal governments have also issued certain new regulations. It can be seen that thecontinuously strengthened environmental protection is the trend of the industry also anunavoidable reality, which will further weed out unqualified players and re-shuffle theindustry.Solutions:
During the start-up period, the Company had input "Save Resources, Committed toEnvironmental Protection" as part of its Vision. During the past 25 years, the Company hasalways considered saving resources and protecting the environment as its importantmission, taken strict compliance with laws and regulations and implementation ofenvironmental protection requirements as key performance appraisal indicator formanagers.(a) Regarding to raising and slaughtering, in the face of increasingly strict environmentalprotection requirements, the Company have comprehensively identified environmentalrisk points, and formulated emergency plan for environmental emergencies so as tomaintain the stable operation. For the key pollutant discharge plants, the Company hasdeveloped a complete self-monitoring program, which can find problems to repair,eliminate hidden dangers in a timely manner, it also continuously increases investment inenvironmental protection, such as personnel and funds, to ensure these plants alwayscomplying with national standards.(b) Regarding to feed production, the Company has always implemented nationalenvironmental protection standards with the most rigorous attitude, established completeprevention and control measures for waste gas, noise, wastewater, solid waste and otherpollution generated during the production process. It uses environmental-friendly rawmaterials and additives in feed formulations and also continuously develops safe andenvironment-friendly daily ration to reduce the emissions of heavy metals, nitrogen andphosphorus.E. Risks of exchange rate fluctuationsThe Company's international business started early and developed rapidly. The exchangerate fluctuations have released great influence on raw material purchasing, product export
and overseas investment, presenting as follows: Firstly, international development hasmade the global purchasing of raw materials becoming normally, therefore, the risks ofexchange rate fluctuations are particularly evident in the raw materials which are based onoversea supply. Secondly, the Company’s export business of broiler products is growingrapidly with customers from many countries and regions around the world, and theexchange rate fluctuations are inevitably caused by the settlements of multiple currencies.Finally, due to the large overseas investment and overseas operations, the cross-bordercapital transactions and settlements will also be affected by exchange rate fluctuations.Solutions:
(a) Closely focus and study on the dynamic international foreign exchange market,enhance the awareness of preventing foreign exchange risk, and improve the research andforecasting capabilities of the foreign exchange market.(b) Improve the bargaining power in foreign trade transaction by enhancing thecompetitiveness of products, and use RMB for settlement, reduce the exchange rate risksby adding insured value clause and the exchange rate risk allocation clause in the contract.(c) Make full use of foreign exchange forwards, swaps and options (combination) andother instruments to maintain the exchange rate for foreign exchange exposure.(d) According to specific conditions of different countries, based on the principle of "usingforeign currencies in foreign trade", reasonably match the income and debts to control theexchange rate risks.F. Risks of food safetyIn recent years, there have been some food safety incidents in China, which affectedconsumers' confidence in food safety. China has continuously improved the legislation onfood safety and food sources, conducted forceful measures on handling food violations.Once the food safety incident is triggered by poor quality supervision, it will directlydamage the interests of consumers and cause panic, which may greatly impact thedownstream demand and affect the brand and performance of the enterprises.Solutions:
(a) Regarding to feed business, the Company has established a three-level quality
management mechanism and testing system which consists of headquarters, regions andlocal departments, adopted ISO 9001, ISO 22000, ISO-IEC 17025 and other internationalstandards, thoroughly implemented a series of quality standards to realize the wholeprocess control of the products and established the traceability system. The Companyworks hard to popularize near-infrared detection technology to improve detectionefficiency and share data in time, by doing this, it can quickly realize risk warning andmonitor heavy metals, harmful microorganisms and mycotoxins, providing an importantguarantee for feed products. In addition, by drawing on the experiences of Europeanantibiotic-free feed, and basing on current situation in China, the Company has realizedsignificant progresses in antibiotic alternatives. By the end of June 2020, the Company willchange all feed to antibiotic-free product.(b) Regarding to broiler integration business, the integrated operation can ensure theample supply of raw materials and strictly control the whole process from feed production,poultry rearing, slaughtering, meat and food processing. Through standardizedmanagement and streamline operation, it can integrate bio-safety, drug residue controland in-process hygiene to achieve food safety traceability.
Section V Important DisclosuresI. Common Stock Profit Distribution or Capital Reserve Converted into Share Capital
1. Cash dividend
Driven by the goal of realizing long-term and sustainable development, the Company hasestablished a sustainable, stable and scientific profit distribution system for investorsbasing on considering its actual operation, shareholders’ need, social factors such ascapital costs, external financing environment, current and future profitability, cash flowstatus, project investment and capital demand, bank credit and debt financingenvironment, etc.The Company made Three-Year’s Shareholder Dividend Plan (2017-2019) in 2017, and atleast every three years it will review the dividend plan and evaluate the ongoing profitdistribution policy and make necessary modification based on the opinions ofshareholders (especially non-controlling shareholders), independent directors andsupervisory board directors.During the reporting period, the Company distributed dividends for 2018 in June 2019:
based on the total share capital on the equity registration date when distributingdividends for 2018, distributed cash dividends of RMB 1.8 yuan per 10 shares (tax included)to all shareholders, amounted to RMB 166,014,791.28.The Company's 2019 profit distribution plan will be: based on the total share capital onthe equity registration date when distributing dividends, it will distribute cash dividends ofRMB 2.2 yuan per 10 shares (tax included) to all shareholders. This profit distribution planwill be submitted to the Shareholders' Meeting.
2. Plan or scheme of common stock profit distribution or capital reserve converted intoshare capital in the latest three years
Unit: yuan Currency:RMB
| Year | Dividend per 10 shares (yuan, tax included) | Amount of cash dividends (tax included) | The net profit attributable to the common shareholders of the Company in the year of distributing cash dividend | Percentage of net profit attributable to the common shareholders of the Company in the consolidated statements % |
| 2019 | 2.20 | 202,906,967.12 | 1,199,347,355.96 | 16.92 |
| 2018 | 1.80 | 166,014,791.28 | 551,928,618.35 | 30.08 |
| 2017 | 1.00 | 83,117,646.90 | 471,024,473.92 | 17.65 |
II. Execution of Commitment
| Background of making commitment | Type of commitment | Commitment party | Content | Date of making commitment and validity | Whether there is a time limit | Whether performs strictly |
| Commitment relating to IPO | Handling horizontal competition | Nature person shareholders holding more than 5% of the shares | I warrant and commit that I will not directly or indirectly develop, operate or assist in the operation or participate in or engage in any activity that is competitive with the business of Liaoning Wellhope, if Liaoning Wellhope will increase any business scope after the date of signing this commitment, I promise to give up the business. | March 2,2011, long-term valid | yes | yes |
| Handling related party transaction | Legal person shareholders holding more than 5% of the shares-Heli Investment | Our company warrants and commits that our company will not directly or indirectly develop, operate or assist in the operation or participate in or engage in any activity that is competitive with the business of Liaoning Wellhope, if Liaoning Wellhope will increase any business scope after the date of signing this commitment, our company promises to give up the business. | March 2,2011, long-term valid | yes | yes | |
| Restriction of selling shares | Jin Weidong, Wang Fengjiu, Shao Caimei, Wang Zhongtao, Ding Yunfeng | When selling shares within two years after the expiration of the lock-up period, the selling price shall not be lower than the offering price. After going public, if the closing price of the Company's stock of 20 consecutive trading days within 6 months is lower than the offering price, or the closing price in the end of 6 months later is lower than the offering price, the above lock-up period shall be automatically extended for 6 months. (if the Company conducts ex-right, ex-dividend for reasons of distributing cash dividend, capital reserve converted into share capital, issuing new shares, etc., the price of selling stock and closing price shall be conducted ex-right and ex-dividend in accordance with relevant provisions of China Securities Regulatory Commission and Shanghai Stock Exchange.) | April 2, 2014, within two years after the expiration of the lock-up period | yes | yes | |
| Restriction of selling shares | Jin Weidong, Wang Fengjiu, Shao Caimei, Wang Zhongtao, Ding Yunfeng | After IPO, if I plan to selling shares after the expiration of the lock-up period, I will announce the selling plan prior to 3 trading days before selling shares. Specific arrangement will be as follows: 1. the number of selling shares: if selling shares within 2 years after the expiration of the lock-up, the number of selling shares will be no more than 5 million shares, if the Company will conduct placing, capital reserve converted into share capital, etc., which will change the share capital, the number of selling shares shall make corresponding adjustment; 2. Way of selling shares: the shares shall be sold through the centralized bidding trading system | April 2, 2014, within two years after the expiration of the lock-up period | yes | yes |
| and block trading system of Shanghai Stock Exchange. If the total number of unrestricted shares planned to be sold within the next month is expected to exceed 1% of the total number of shares, the shares shall be transferred through the blocking trading system. 3. Selling price: if selling shares within 2 years after the expiration of the lock-up, the selling price shall be not lower than the IPO price (if the Company conducts ex-right, ex-dividend for reasons of distributing cash dividend, capital reserve converted into share capital, issuing new shares, etc., the price of selling stock or buying stock shall be conducted ex-right and ex-dividend in accordance with relevant provisions of China Securities Regulatory Commission and Shanghai Stock Exchange) 4. Time limit of selling shares: the time limit of selling shares shall be within six months from the date of announcing the selling plan. After the expiration of time limit, if intending to continue to sell shares, shall perform the announcement of selling shares again in accordance with the above arrangement. If above commitments cannot be fulfilled, the proceeds from selling shares shall belong to the Company and shall be paid to the designated account of the Company within 5 days of receiving such income. | ||||||
| Other | Jin Weidong, Wang Fengjiu, Shao Caimei, Wang Zhongtao, Ding Yunfeng | The controlling shareholder Jin Weidong and persons acting in concert with him undertake that there are no false records, misleading statements or material omissions in the prospectus of IPO and its summary, and shall bear individual and joint legal liabilities for its authenticity, accuracy and completeness. | long-term valid | yes | yes | |
| Other | Liaoning Wellhope | The Company undertakes that there are no false records, misleading statements or material omissions in the prospectus of IPO and its abstract, and it shall bear individual and joint legal liabilities for its authenticity, accuracy and completeness. | long-term valid | yes | yes | |
| Commitment relating to re-Financing | Dividend | Liaoning Wellhope | Liaoning Wellhope Three-Year’s Shareholder Dividend Return Plan (2017-2019) | December 15, 2017, three years | yes | yes |
III. Changes in Accounting Policies and Estimates made by the CompanyFor details, please refer to Financial Report- Significant Accounting Policies and Estimates,Changes in Significant Accounting Policies and Estimates.IV. Accounting Firm Engaged by the Company
Unit: 10,000 yuan Currency: RMB
| Accounting Firm (Local) | SuyaJincheng CPA LLP |
| Payment | 110 |
| Length of Service | 9 years |
| Name | Payment | |
| Accounting Firm of Internal Control | SuyaJincheng CPA LLP | 35 |
| Sponsor | Huang Haisheng, He Yu |
| Overview | Query URLs |
| On November 21, 2018, the Company held the 7th meeting of the 6th Session of Board of Directors, deliberating and approving 2018 Restricted Stock Incentive Plan (draft) and its Summary, and on January 9, 2019, the Company finished the registration of restricted stock. | For details, please refer to The Announcement of Granting Result of Liaoning Wellhope 2018 Restricted Stock Incentive Plan issued by the Company on the website of Shanghai Stock Exchange "www.sse.com.cn" on January 11, 2019. (Announcement No. 2019-001) |
VIII. Significant Related Party Transaction
Related transactions related to Day-to-Day OperationsMatters do not disclose in the Company's extraordinary announcement
Unit: 10,000 yuan Currency: RMB
| Related Party | Relationship | Transaction type | Transaction content | Pricing principle | Transaction amount | Settlement mode |
| Anshan Fengsheng Food | Associated company | Selling product | Delivery broiler | Comparable uncontrolled price | 20,458.22 | Transfer of account |
| Anshan Jiuguhe Food | Associated company | Selling product | Delivery broiler | Comparable uncontrolled price | 18,961.91 | Transfer of account |
| Beipiao Hongfa Food | Associated company | Selling product | Feed raw material | Comparable uncontrolled price | 559.34 | Transfer of account |
| Dalian Chengsan Animal Husbandry | Associated company | Selling product | Feed raw material | Comparable uncontrolled price | 377.73 | Transfer of account |
| Dalian Chengsan Animal Husbandry | Associated company | Selling product | Feed raw material | Comparable uncontrolled price | 716.10 | Transfer of account |
| Guangzhou Yikun Trading | Associated company | Selling product | Feed raw material | Comparable uncontrolled price | 19,868.29 | Transfer of account |
| Huludao Jiuguhe Food | Associated company | Selling product | Feed | Comparable uncontrolled price | 48.13 | Transfer of account |
| Jinzhou Jiufeng Food | Associated company | Selling product | Delivery broiler | Comparable uncontrolled price | 300.20 | Transfer of account |
| Linghai Jiuguhe Feed | Associated company | Selling product | Feed raw material | Comparable uncontrolled price | 5,258.89 | Transfer of account |
| Qingdao Shenfeng Agri-Tech | Associated company | Selling product | Feed raw material | Comparable uncontrolled price | 2,908.36 | Transfer of account |
| Schippers (Beijing) | Associated company | Selling product | Other | Comparable uncontrolled price | 70.56 | Transfer of account |
| Tai’an Jiuguhe Agriculture | Associated company | Selling product | Feed raw material | Comparable uncontrolled price | 9,803.51 | Transfer of account |
| Anshan Jiuguhe Food | Associated company | Purchasing product | Broiler product | Comparable uncontrolled price | 1,915.65 | Transfer of account |
| Dalian Chengsan Animal Husbandry | Associated company | Purchasing product | Delivery broiler | Comparable uncontrolled price | 18,697.35 | Transfer of account |
| Dandong Wellhope Chengsan | Associated | Purchasing | Delivery broiler | Comparable uncontrolled | 123.00 | Transfer of account |
| Agri-Tech | company | product | price | ||||
| Gongzhuling Corn Purchasing and Storing | Associated company | Purchasing product | Feed raw material | Comparable uncontrolled price | 36.09 | Transfer of account | |
| Guangzhou Yikun Trading | Associated company | Purchasing product | Feed raw material | Comparable uncontrolled price | 1,202.96 | Transfer of account | |
| Huludao Jiuguhe Food | Associated company | Purchasing product s | Broiler product | Comparable uncontrolled price | 351.67 | Transfer of account | |
| Jinzhou Jiufeng Food | Associated company | Purchasing product | Broiler product | Comparable uncontrolled price | 651.38 | Transfer of account | |
| Qingdao Shenfeng Agri-Tech | Associated company | Purchasing product | Feed | Comparable uncontrolled price | 1,153.91 | Transfer of account | |
| Shenyang Zhongwenjie Bio-Tech | Associated company | Purchasing product | Animal medicine and vaccine | Comparable uncontrolled price | 1.80 | Transfer of account | |
| Schippers (Beijing) | Associated company | Purchasing product | Other | Comparable uncontrolled price | 195.96 | Transfer of account | |
| Tai’an Jiuguhe Agriculture | Associated company | Purchasing product | Feed | Comparable uncontrolled price | 9,866.90 | Transfer of account | |
| Total | / | 113,527.91 | / | ||||
| Wholesale sales return | non | ||||||
| Interpretation of related party transaction | The Company and its associated companies know each other better, and have maintained long-term cooperation relationships, which can strengthen the trust of products produced by partners, reduce transaction cost, improve working efficiency and avoid trading disputes. Purchasing raw materials from related parties can ensure the quality. Moreover, by participating in the management and exerting influence on related companies can help them to maintain a long-term and stable supply, also help them reduce the marketing pressure. The purpose of conducting related party transactions is to satisfy the needs of the Company's production and operation, the purchasing or selling price is determined according to the market price of similar products. Such transactions do not violate relevant laws, Company Constitution, etc., and do not damage the rights and interests of shareholders. | ||||||
IX. Major contracts and performance
1. Cash management
Unit: 10,000 yuan, Currency: RMB
| Type | Source of fund | Amount | Undue balance |
| Wealth investment product of bank | Idle raised funds | 24,000 | 4,000 |
| Bank | Type | Amount | Start date | Maturity date | Source of fund | Interest | Annualized return | Real return | Whether recover |
| Shenyang Shenbei Branch of Industrial and Commercial Bank of China | Structured deposit | 10,000 | Jul. 1, 2019 | Dec. 23, 2019 | Idle raised funds | Breakeven floating income | 1.3%-4.2% | 201.37 | Yes |
| Shenyang Branch of Shanghai Pudong Development Bank | Structured deposit | 6,000 | Jul. 1, 2019 | Dec. 30, 2019 | Idle raised funds | Breakeven floating income | 3.9% | 116.35 | Yes |
| Shenyang Branch of China Minsheng Banking Corp | Structured deposit | 4,000 | Jul. 7, 2019 | Oct. 9, 2019 | Idle raised funds | Breakeven floating income | 3.65% | 36.80 | Yes |
| Shenyang Branch of China Minsheng Banking Corp | Structured deposit | 4,000 | Oct. 9, 2019 | Jan. 9, 2020 | Idle raised funds | Breakeven floating income | 3.70% |
B. Overview of targeted poverty alleviationLankao duck integration project was invested by the Company as the targeted povertyalleviation project in response to the call of Lankao County Party Committee and countygovernment, which implements the operating model of rearing ducks by the Company andcontract farms. In line with the principle of mutual benefit, equality and voluntariness, theCompany sign contracts with farmers and adopt unified supply of ducklings, feed,medicine, technical service and repurchasing, farmers are not required to prepare workingcapital. In 2019, Lankan duck company signed 3,738 contracts with 1,869 farmers,repurchased 19.32 million ducks with direct expenditure of RMB 12.30 million.Meanwhile, in order to help Laifeng County to fight against poverty, Beijing SanyuanAgri-Tech, one of the subsidiaries of the Company, donated RMB 200,000 to LaifengCounty government for rural revitalization.C. Figures of targeted poverty alleviation
Unit: 10,000 yuan, Currency: RMB
| Index | Details |
| 1. Overall | |
| of which: funds for poverty alleviation | 20 |
| 2. In details | |
| a. Society poverty alleviation | |
| Targeted poverty alleviation | 20 |
support poverty alleviation to contribute to the goal of securing a decisive victory inbuilding a moderately prosperous society in all respects.
2. Social responsibilities
The upstream of animal husbandry links planting industry, whilst the downstream servesagricultural and sideline food processing industries. It is related to national economy andpeople's livelihood, such as food supply and farmers' income, and shoulders importantmissions and responsibilities. At the start-up period, the Company announced its Visionand Mission to inside and outside the industry, indicating and admonishing all employeesabout social responsibilities and missions during the development process. Over the years,the Company has been strictly fulfilling its commitment and practicing corporateresponsibilities, and in 2018 the Company further refined its core values characterized by"Integrity, Responsibility, Win-win", once again stressed the importance of itsresponsibilities.A. Responsibilities to society and industrya. Practice of Wellhope Mission. The Company has taken “Using advanced technology,excellent service, and outstanding products to promote the development of China’s animalhusbandry industry, save resources, protect the environment, provide food security andbenefit the society” as its mission and ultimate goal since its establishment.Saving resources: China needs to use only 7% of the world's land to feed 22% of theworld's population. In response to increasing shortage of natural resources, the Companyconstantly innovates alternatives of raw materials and processing technologies to developlow-protein feed. Through applying corn by-products and unconventional protein, it hasreduced the use of corn, soybean meal and other grain in feed. In terms of raisingtechnology, the Company helps farmers to apply energy-saving technologies to improveresource utilization, for example, by using its ingenious ventilation mode and solar energyutilization technology to simplify ventilation and heat preservation, reduce electricityconsumption and save coal. In terms of broiler slaughtering, the Company equipshigh-efficient facilities and continuously conducts lean management to improveslaughtering operation and achieve efficient killing-out percentage and energy saving.Environment protection: Because animal husbandry has certain pollution to the
environment, the Company utilizes various ways such as technological innovation andequipment input to protect environment. In terms of technical innovation, it applieseco-friendly raw materials and additives in feed formulations and continuously developssafe and eco-friendly feed to reduce emissions of heavy metals, nitrogen and phosphorus.In terms of animal raising and slaughtering, the Company automates production lines andcontinuously improves the design, recycles wastes and combines planting with animalraising to realize environmental protection.Food safety: The Company has never forgotten its social responsibility and food safety, andtaken “becoming one of the world’s leading enterprises across agriculture, animalhusbandry and food industries as well as becoming a safe and high-quality foodmanufacturer” as its development goal. Its R&D testing center has been equipped withadvanced testing equipment and always conducted strict quality control of raw materialsand feed products to ensure safety of feed products. For the broiler business, theCompany takes strict farm-to-table controlling that integrates bio-safety, drug residuecontrol and processing hygiene to achieve traceable food safety. Meanwhile, the Companyhas always attached importance to the know-how of antibiotic-free. From 2013 to 2019, ithas carried out more than 100 studies and experiments on antibiotic substitutions,committed to achieving antibiotic-free feed and reducing the use of antibiotics in farms toensure food safety. With years of focuses of providing high quality, stable and safeproducts, the Company was honored as Outstanding Integrity Enterprise and LeadingEnterprise with Social Responsibility in the 17th Annual Meeting of China's Food Safety in2019. In the future, Wellhope will continue to pay attention to food safety and providesafe and high-quality products.b. Contributing to public charity givingThe Company has always persisted in the principle of contributing to its motherland byoperating excellent businesses and giving back to the society. Over the years, the Companyhas donated to disaster areas, disabled aid projects and related educational institutionsdirectly or through the Red Cross. Since the outbreak of COVID-19, the Company’s holdingand associated companies, some managers and employees, have raised funds of RMB 12million to support national and local-level government offices to defeat the disease. TheCompany has donated RMB 8.5 million as at the date of disclosing this annual report. The
Company also devotes to educational charity, it has continued to work with a supplier toparticipate in donation activities on the World Egg Day, providing high-quality eggs to poorpupils to care their healthy growth. Moreover, the Company provides awards and bursarysupports to many college students nationwide, also offers them opportunities to attend inholiday internships and summer camps. In 2019, the Company donated over RMB 3 millionof education funds and scholarships to Nanjing Agricultural University, ShenyangAgricultural University, Gansu Agricultural University and other universities. Its holding andassociated companies also actively participated in charitable activities organized bylocal-level governments. Many managers of the Company also devoted themselves topublic charity in different forms.c. Offering job opportunitiesAccording to the development needs, the Company holds job fair and campus recruitmentevery year, creating job opportunities for the society. In 2019, the Company recruitedmore than 300 undergraduates, masters and doctors from 28 universities across China andprovided systematic trainings to help them to grow rapidly. In the face of COVID-19, theCompany held online job recruitment by live broadcast to offer opportunities to ensureemployment of graduates and shoulder social responsibility.B. Responsibilities to shareholdersIn the course of development, the Company has always conducted business driven by theprinciple of honesty and trustworthiness, improved corporate governance and observedthe laws and compliance management. In 2019, the Company strictly implemented theregulations issued by China Securities Regulatory Commission, Shanghai Stock Exchange,its Company Constitution and other internal regulations, also actively adapted to thechanges in regulatory policies and continuously improved its corporate governance andthe effectiveness of information disclosure. In the reporting period, the Company honestlyand normatively disclosed 45 extraordinary announcements and 4 periodic reports viadesignated media, which truly and comprehensively displayed its business operations anddevelopment plan to the investors. Moreover, its annual information disclosure in 2018was appraised as A-level by Shanghai Stock Exchange. Entering 2019, it will continue tocarry out the principles of honesty driven, protect the legitimate rights and interests ofinvestors.
Meanwhile, driven by the principle of “sharing bumper harvest”, the Company hasformulated stable profit distribution policy for rewarding shareholders. Since going publicin 2014, its average dividend payout ratio was 22% with accumulated cash dividends ofRMB 443 million, accounting for 104.42% of funds raised from IPO. All the funds raised inIPO have been returned to investors by cash dividends.C. Responsibilities to staffa. Adhering to “sharing bumper harvest”Driven by the principle of “sharing bumper harvest”, the Company shares its achievementswith employees in various ways. In 2018, 372 key managers were granted with restrictedstock and the goal of performance appraisal in the first lock-up period regarding therestricted stock incentive plan had been achieved. This plan has achieved positive effectsindeed based on the profit of the Company and other evaluations in 2019. Moreover, ithas innovated incentive policies in hog raising business. By combining the interests of theCompany, shareholders with the core staff team in various ways to share achievementsand promote the sustainable development of the Company.b. Powering career development of staffIn strict accordance with national laws and regulations, the Company provides socialassurance and additional welfare to employees and also benefits their families. It alsoexpands welfare through internal resource sharing, pilot flexible benefits andcommendation awards to improve employees’ happiness index. In the meantime, theCompany continues to upgrade its three-level training system, fully uses WellhopeE-Learning College and external resource to provide more training resources to promotethe growth and value enhancement of employees. In the aspect of career development,the Company has created a “H-shaped” dual-channel development plan for employees tomake every single employee can choose suitable career development according to theirstrengths, aiming to help them to release potential abilities to achieve their career goals.c. Caring about employees’ lifeThe “Wings of Love” charitable foundation, established by the Company in 2007,continues to care employees. It gives certain rewards to the employees’ children who areadmitted to the universities, encouraging employees to cultivate talents for the society.
Meanwhile, it provides financial assistance to the families of employees in difficulty,helping them to tide over hard time. In 2019, the foundation has donated RMB 3.69million to employees. Moreover, the Company organizes different forms of activities tocontinuously enrich the work and life of employees every year. In March 2019, theCompany was honored as National Model Enterprise with Harmonious Labor Relations.D. Responsibilities to customersDriven by the concept of progressing together with customers, the Company is dedicatedto providing excellent and stable-quality products and services to customers. In terms ofproducts, the Company continues to develop feed products catering to market andcustomers’ needs. In terms of animal raising, it offers farmers systematic services such asraising model, feeding program, disease diagnosing and latest market information, alsoprovides them trainings and farm management solutions to improve operation skills.Meanwhile, the Company continuous to explore various methods for innovating customerservices, sending key technical experts to customers’ farms to assist them to build datamanagement system, collects and analyzes production data and formulates analysis reportof production performance to improve production. Facing the ASF, the Company has builtspecialized teams to provide customers related services in terms of safe products andtransportation, ASF prevention and solutions to resume production, etc. Meanwhile, theCompany actively conducts on-line technical services and management guidance,including holding live streaming and experts on line to help customers prevent ASF andreduce losses.
3. Environmental protection policy
A. Information of pollution dischargePuyang Wellhope Food Co., Ltd. (hereinafter referred to as "Puyang Wellhope"), a holdingsubsidiary of the Company, has been listed as a company with sewage & gas wasteemission of Puyang City, Dalian Zhongjia Wellhope Food Co., Ltd. (hereinafter referred toas "Zhongjia Food") and Dalian Huakang Xinxin Food Co., Ltd. (hereinafter referred to as"Huakang Food"), holding subsidiaries of the Company, have been listed as the companywith sewage & gas waste emission of Dalian City, Kaifeng Wellhope Meat Food Co., Ltd.(hereinafter referred to as "Kaifeng Wellhope"), a holding subsidiary of the Company, has
been listed as a company with sewage waste emission of Kaifeng City. Shenyang HuakangMeat Poultry Co., Ltd. (hereinafter referred to as "Shenyang Huakang"), a holdingsubsidiary of the Company, has been listed as a company with sewage waste emission ofShenyang City, Pingyuan Wellhope Food Processing Co., Ltd. (hereinafter referred to as"Pingyuan Wellhope"), a holding subsidiary of the Company, has been listed as thecompany with sewage & gas waste emission of Handan City, Changchun Wellhope FoodCo., Ltd. (hereinafter referred to as "Changchun Wellhope"), a holding subsidiary of theCompany, has been listed as the company with sewage & gas waste emission ofChangchun City. Details are presented as follows:
Puyang Wellhope: The main pollutants include waste gas and waste water, among whichwaste water mainly contains COD, ammonia nitrogen, total phosphorus, pH, suspendedsolids, biochemical oxygen requirement, animal and plant oil, total coliform and totalnitrogen. The waste gas mainly contains SO2, nitric oxide and particulate matter. Emissionmethod: 1 waste water emission outlet for sewage treatment located in the southeastcorner of the sewage monitoring station, 1 waste gas exhaust outlet distributed in theboiler room in the northeast corner of the plant. Puyang Wellhope strictly implements theDischarge Standard of Water Pollutants for Meat Processing Industry (GB 13457-1992)with the emission permit (9141092367412881xt001p) and the indirect emission limit inthe water inflow agreement of Nanle County Sewage Treatment Co., Ltd. (COD≤400mg/L,NH3-N≤35mg/L, total phosphorus≤2.5mg/L, BOD≤180mg/L, suspended solids≤220mg/L,total nitrogen≤40mg/L, pH value of 6-9), as well as follows the requirements of Boiler AirPollutant Emission Standard and emission permit (9141092367412881xt001p, i.e., theemission concentration of SO
shall be ≤10mg/Nm3, particulate≤≤5mg/Nm3 and NOX≤50mg/Nm?. Total discharge amount of main pollutants under the emission permit: COD
15.58 tons per year and ammonia nitrogen 2.95 tons per year. During the reporting period,the discharged pollutants amounted to 7.915 tons of COD and 0.48123 tons of ammonianitrogen controlled within the permitted scope, and the "three wastes" treatment met thestandard requirements without exceeding the standards.Kaifeng Wellhope: The main pollutant is waste water, which mainly contains COD,ammonia nitrogen, total phosphorus, pH, suspended solids, biochemical oxygenrequirements, animal and plant oil, total coliform and total nitrogen. Emission method: 1
waste water emission outlet for sewage treatment located in the east side the plant.Kaifeng Wellhope strictly implements Level 2 standard of Discharge Standard of WaterPollutants for Meat Processing Industry (GB 13457-1992) with the emission permit(91410212MA4057G88A001R) and the sewage emission limit of No. 2501 EnvironmentalEvaluation Criteria (COD≤100mg/L, NH3-N≤20mg/L, BOD≤40/L, suspendedsolids≤100mg/L, pH value of 6-8.5, coliform≤10000). At present its waste water dischargefollows the standard of new emission permit, i.e., COD≤350 mg/L, NH3-N≤30 mg/LD, totalnitrogen≤30 mg/L and total phosphorus≤3mg/L, other items follow EnvironmentalEvaluation Criteria. During the reporting period, the discharged pollutants amounted to
3.52 tons of COD and 0.72 tons of ammonia nitrogen controlled within the permittedscope, and the "three wastes" treatment met the standard requirements withoutexceeding the standard.Zhongjia Food: The main pollutants include waste gas and waste water, among whichwaste water mainly contains COD, ammonia nitrogen, total phosphorus, pH, suspendedsolids and total nitrogen. The waste gas mainly contains SO2, nitric oxide and particulatematter. Emission method: 1 waste water emission outlet for sewage treatment located inthe west side of the new sewage treatment workshop, 1 waste gas exhaust outletdistributed on the roof of the boiler room. Zhongjia Food strictly implements the locallevel of Integrated Wastewater Discharge Standard of Liaoning Province, DB 21.1627-2008(COD≤50mg/L, NH3-N≤8mg/L, total phosphorus≤0.5mg/L, suspended solids≤20mg/L, totalnitrogen≤15mg/L, pH value of 6-9) and follows the Boiler Air Pollutant Emission Standardfor waste gas emission (GB 13271-2014). During the reporting period, the dischargedpollutants were controlled within the permitted scope, and the "three wastes" treatmentmet the standard requirements without exceeding the standards.Shenyang Huakang: The main pollutant is waste water, which mainly contains COD,ammonia nitrogen, pH, suspended solids, total phosphorus and total nitrogen. Emissionmethod: 1 waste water emission outlet for sewage treatment located in the northeast ofthe sewage treatment station. Shenyang Huakang strictly implements level 3 standard ofIntegrated Wastewater Discharge Standard of Liaoning Province, the concentration ofmain pollutants discharged by the company's pollutant discharge permit follows COD＜450mg/L, ammonia nitrogen＜30mg/L, total nitrogen 50mg/L, total phosphorus≤5mg/L,
suspended solids＜300mg/L and pH value of 6-9, and the gas emission follows Boiler AirPollutant Emission Standard (GB13271-2014), i.e., SO2≤200mg/Nm3. During the reportingperiod, the discharged pollutants amounted to 84 tons of COD and 13.44 tons of ammonianitrogen controlled within the permitted scope, and the "three wastes" treatment met thestandard requirements without exceeding the standard.Huakang Food: The main pollutants include waste gas and waste water, among whichwaste water mainly contains COD, ammonia nitrogen, total phosphorus, pH, suspendedsolids and total nitrogen, water gas mainly includes SO2, nitric oxide and particulate matter.Emission method: 1 waste water emission outlet for sewage treatment located in thesoutheast corner of sewage treatment workshop and 1 waste gas exhaust outletdistributed on the roof of the boiler room. Huakang Food strictly implements the locallevel of Integrated Wastewater Discharge Standard of Liaoning Province, DB 21.1627-2008(COD≤50mg/L, i.e., 12.63 tons per year, NH3-N≤8mg/L, i.e., 2.02 tons per year) and followsthe Boiler Air Pollutant Emission Standard for waste gas emission (GB 13271-2014). Duringthe reporting period, the discharged pollutants amounted to 8.62 tons of COD, 0.63 tonsof ammonia nitrogen, 23.45 tons of SO2, 6.62 tons of nitric oxide and 13.17 tons ofparticulate matter, which were controlled within the permitted scope, and the "threewastes" treatment met the standard requirements without exceeding the standard.Pingyuan Wellhope: The main pollutants include waste gas and waste water, among which,the waste water mainly contains COD, ammonia nitrogen, suspended solids, BOD
andanimal and plant oil, the waste gas mainly contains SO
, nitrogen oxide and smoke.Emission method: 1 wastewater discharge outlet for sewage treatment distributed at theentrance of sewage monitoring station in the northeast corner of the plant, 3 waste gasexhaust outlets distributed in the east side of the boiler room. Pingyuan Wellhope strictlyimplements the wastewater discharge standard of Meat Processing Industry (GB13457-1992) and Level 2 Discharge Standard of Livestock and Poultry Slaughtering andProcessing (emission permit 91130423MA07LFUD6B001Q) and inlet water qualityrequirements of Linzhang County (COD≤100mg/L; SS≤100mg/L, ammonia nitrogen≤20mg/L; BOD≤40 mg/L , animal and plant oil 20mg/L, PH value of 6-8.5). Exhaust gasemission implements the Boiler Air Pollutant Emission Standard (GB 13271-2014) with theemission permit (91130423MA07LFUD6B001Q), i.e., SO2 emission concentration
≤50mg/m
, particulate emission concentration≤20mg/m
, and NOX emissionconcentration≤150 mg/m?. The total amount of main pollutants allowed under thecompany's emission permit: COD 39.45 tons per year, ammonia nitrogen 2.63 tons peryear, SO 2.31 tons per year, NOX 2.36 tons per year. During the reporting period, thedischarged pollutants were controlled within the permitted scope without exceeding thestandards.Changchun Wellhope: The main pollutants are waste water, mainly containing COD,ammonia nitrogen, total phosphorus, pH, suspended solids, biochemical oxygen demand,animal and plant oil, total coliform, total nitrogen. Emission method: 1 waste waterdischarge outlet for sewage treatment located at Xiajiadian Street, Dehui City. ChangchunWellhope strictly implements Level 2 standard of Pollution Discharge Standard of MeatProcessing Industry (GB 13457-1992) with the emission permit(91220183MA13WF2K34001Y), at present its sewage discharge follow COD≤100mg/L,NH3-N≤20mg/L, total nitrogen≤10mg/L and total phosphorus≤3mg/L. The total amount ofmain pollutants discharged by the company's sewage permit: COD 3.60 tons per year,ammonia nitrogen 0.79 tons per year. During the reporting period, the dischargedpollutants amounted to 3.52 tons of COD and 0.72 tons of ammonia nitrogen, both ofwhich were controlled within the permitted scope and the treatment of "three wastes"met the standard requirements without exceeding the standards.B. Circumstance of building and operating pollution control facilitiesPuyang Wellhope:
a. Sewage treatment: Puyang Wellhope has a 2000-tons-per-day sewage treatment station,which adopts the treatment process of "pretreatment-oil separation-A2O -disinfection" totreat the wastewater. Its environmental protection facilities are running normally, and thepollutant emission indexes all meet the required standards.b. Waste gas treatment: Gas generated by the waste water pool of the sewage treatmentstation is collected and purified by activated carbon adsorption and then dischargedthrough the 15-meters-high chimney in accordance with related standard; the traditionalcoal-fired boilers are replaced by gas-fired boilers, and all kinds of pollutants meet theemission standards.
Kaifeng Wellhope:
Sewage treatment: Kaifeng Wellhope has a 1500-tons-per-day sewage treatment station,which adopts the treatment process of "air floatation-A2O" to treat the wastewater. Itsenvironmental protection facilities are running normally, and the pollutant emissionindexes all meet required standards.Dalian Zhongjia:
a. Sewage treatment: Zhongjia Food has a 1200-tons-per-day sewage treatment station,which adopts the treatment process of "mechanical barrier-oil separator-regulationpool-hydrolysis pool- catalytic oxidation pool-sedimentation pool-sand filter" to treat thewastewater.b. Waste gas treatment: Dedusting smoke and dust by wet method and conductingdesulfurization by magnesium oxide. Discharging gas by a 25-meters-high chimney to haseffectively met related standards.Shenyang Huakang:
Sewage treatment: Shenyang Huakang has a 2220-tons-per-day sewage treatment station,which adopts the treatment process of "pretreatment- oil separation-A2O-disinfection" totreat wastewater. Its environmental protection facilities are running normally, and thepollutant emission indexes have reached all required standards.Huakang Food:
a. Sewage treatment: Huakang Food has 900-tons-per-day and 300-tons-per-day sewagetreatment stations that adopt the treatment process of "mechanical barrier-oilseparator-regulation pool-air flotation- hydrolysis pool-A2O-sedimentation pool-advancedtreatment -sand filter-clean water pool", which can achieve required standards.b. Waste gas treatment: Dedusting the smoke and dust by wet method and conductingdesulfurization by magnesium oxide. Gas emission meet all required standards.Pingyuan Wellhope:
a. Sewage treatment: Pingyuan Wellhope has a 1000-tons-per-day sewage treatmentstation, which adopts AO treatment process to dispose wastewater. Its environmental
protection facilities are running normally, and the pollutant emission indexes have reachedall required standards.b. Waste gas treatment:Gas generated by the waste water pool of the sewage treatmentstation is collected and purified by activated carbon adsorption and then dischargedthrough the 15-meters-high chimney in accordance with related standard; the traditionalcoal-fired boilers are replaced by gas-fired boilers with low carbon, all kinds of pollutantsmeet the emission standards.Changchun Wellhope:
Sewage treatment: Changchun Wellhope has a 1000-tons-per-day sewage treatmentstation, which adopts AO treatment process to dispose wastewater. Its environmentalprotection facilities are running normally, and the pollutant emission indexes have reachedall required standards.C. Environmental impact assessment of construction projects and other administrativepermits for environmental protectionDuring the reporting period, all the construction projects of the Company met therequirements of environmental impact assessment and other environmental protectionadministrative licenses. The Company has strictly implemented related environmentalprotection requirements.D. Emergency plan for environmental incidentAccording to the requirements of environmental protection authorities and relevant lawsand regulations, each plant of the Company has identified the site with potentialenvironmental risk and formulated the emergency plans for environmental incident;meanwhile, related companies conducted emergency exercises to improve self-helpcapability and continued to identify the hidden danger to ensure normal operations.E. Self-monitoring program for environmentIn accordance with requirements of self-monitoring environment and informationdisclosure, the pollutant discharging entities of the Company have formulatedself-monitoring programs to monitor environment and disclose information as scheduled.
Section VI Changes in Common Shares and Shareholder InformationI. Changes in Common Shares
1. Changes of common share
| Before changing | Increase/decrease in the reporting period | After changing | ||||
| Shares | Percentage % | Issuing new shares | Subtotal | Shares | Percentage % | |
| 1. Restricted shares | 91,127,927 | 91,127,927 | 91,127,927 | 9.88 | ||
| A. Shares held by the state | ||||||
| B. Shares held by state-owned corporation | ||||||
| C. Shares held by other domestic investors | 88,831,340 | 88,831,340 | 88,831,340 | 9.63 | ||
| including: Shares held by domestic corporation | 54,133,857 | 54,133,857 | 54,133,857 | 5.87 | ||
| Shares held by domestic natural person | 34,697,483 | 34,697,483 | 34,697,483 | 3.76 | ||
| D. Shares held by foreign investor | 2,296,587 | 2,296,587 | 2,296,587 | 0.25 | ||
| including: shares held by foreign corporation | 2,296,587 | 2,296,587 | 2,296,587 | 0.25 | ||
| Shares held by foreign natural person | ||||||
| 2. Non-restricted shares | 831,176,469 | 100.00 | 831,176,469 | 90.12 | ||
| A. RMB common shares | 831,176,469 | 100.00 | 831,176,469 | 90.12 | ||
| 3. Total common shares | 831,176,469 | 100.00 | 91,127,927 | 91,127,927 | 922,304,396 | 100.00 |
non-public issued 76,552,927 A-shares to 8 investors, and completed the registration ofnew shares on April 24, 2019. The total shares of the Company increased from845,751,469 shares to 922,304,396 shares.
2. Changes in restricted shares
| Name of shareholder | Opening restricted shares | Number of unrestricted shares in the reporting period | Increase of restricted shares in the reporting period | Restricted shares in the period end | Reason for restriction | Date of removing restriction |
| Sinosafe Assets Management- Industrial and Commercial Bank of China-Sinosafe Assets Management Stably Increasing Profit No. 12 Collection Asset Management Product | 29,527,559 | 29,527,559 | non-public issuing stock | April, 24, 2020 | ||
| Shenzhen Galaxy Investment Co., Ltd. | 4,921,259 | 4,921,259 | non-public issuing stock | April, 24, 2020 | ||
| Generali China Asset Management- China Minsheng Banking Corp- Generali China Asset-Non-public Offering Selection No. 103 Asset Management Product | 19,685,039 | 19,685,039 | non-public issuing stock | April, 24, 2020 | ||
| Wu Ying | 14,763,779 | 14,763,779 | non-public issuing stock | April, 24, 2020 | ||
| Employees who were granted restricted shares(totalling) | 14,575,000 | 14,575,000 | equity incentive | Within 12, 24, 36 months after completing restricted stock registration | ||
| Jin Weidong | 3,062,117 | 3,062,117 | non-public issuing stock | April, 25, 2022 | ||
| DE HEUS MAURITIUS | 2,296,587 | 2,296,587 | non-public issuing stock | April, 25, 2022 | ||
| Ding Yunfeng | 1,531,058 | 1,531,058 | non-public issuing stock | April, 25, 2022 | ||
| Wang Zhongtao | 765,529 | 765,529 | non-public issuing stock | April, 25, 2022 | ||
| Total | 91,127,927 | 91,127,927 | / | / |
II. The issuance and listing of securities
1. Securities issued as at the reporting period
Explanation: On November 9, 2018, in accordance with the approval of the CSRC, theCompany non-public issued 76,552,927 A-shares to 8 investors in April 2019, andcompleted the registration of new shares on April 24, 2019. The total shares of theCompany increased from 845,751,469 shares to 922,304,396 shares.
2. Changes in the Company’s total shares and the structures of shareholders, assetsand liabilitiesIn the reporting period, the Company finished non-public offering new shares andimplemented restricted stock incentive plan, making its share capital increase from831,176,469 shares to 922,304,396 shares. As at the end of the reporting period, JinWeidong directly held 149,549,498 shares of the Company, accounting for 16.21% of theshare equity, controlled 5.24% of the voting rights of the Company through holding WulianHeli Investment, and controlled 24.67% of the voting rights through signing the
Agreementof Acting in Concert with Ding Yunfeng(shareholding 8.88%), Wang Fengjiu(shareholding
5.33%), Shao Caimei(shareholding 5.40%) and Wang Zhongtao(shareholding 5.06%). JinWeidong is the actual controller of the Company, who totally controls 46.12% of theCompany’s voting rights. By the end of 2019, the Company's total assets reached RMB
9.15 billion, total liabilities were RMB 2.65 billion, its asset-liability ratio has dropped from
38.45% at the end of prior year to 28.97%, structure of assets and liabilities has beenfurther optimized.III. Shareholder and actual controller
1. Total shareholders
| Variety | Issuing date | Issuing price | Shares | Listing date | Number of approved transactions | Termination date |
| RMB common share | April 24,2019 | RMB 10.16 | 76,552,927 | April 24, 2019 | 0 |
| Total number of common shareholders as at December 31, 2019 | 30,359 |
| Total number of common shareholder at the end of February 2020 | 29,061 |
2. Top ten shareholders and top ten shareholders holding unrestricted shares as at theend of the reporting period
Unit: share
| Shareholding of top ten shareholders | |||||||
| Name of shareholder | Changes | Total shares held at the period-end | % | Restricted shares held | Pledged or Frozen | Nature of shareholder | |
| Status | Shares | ||||||
| Jin Weidong | 3,062,117 | 149,549,498 | 16.21 | 3,062,117 | Pledged | 56,270,000 | Domestic natural person |
| DE HEUS MAURITIUS | 2,296,587 | 82,303,939 | 8.92 | 2,296,587 | Non | Foreign legal person | |
| Ding Yunfeng | 1,531,058 | 81,929,558 | 8.88 | 1,531,058 | Pledged | 49,450,000 | Domestic natural person |
| Shao Caimei | -4,786,000 | 49,773,878 | 5.40 | Non | Domestic natural person | ||
| Wang Fengjiu | -938,400 | 49,146,202 | 5.33 | Pledged | 10,260,000 | Domestic natural person | |
| Zhang Tiesheng | 48,360,000 | 5.24 | Pledged | 6,600,000 | Domestic natural person | ||
| Wulian Heli Equity Investment Partnership (Limited Partnership) | 48,360,000 | 5.24 | Non | Domestic non-State- owned legal person | |||
| Wang Zhongtao | -525,771 | 46,625,229 | 5.06 | 765,529 | Non | Domestic natural person | |
| Sinosafe Assets Management- Industrial and Commercial Bank of China-Sinosafe Assets Management Stably Increasing Profit No. 12 Collection Asset Management Product | 29,527,559 | 29,527,559 | 3.20 | 29,527,559 | Unknown | Other | |
| Sinosafe Assets Management- Industrial and Commercial Bank of China-Sinosafe Assets Management Stably Increasing Profit No. 12 Collection Asset Management Product | 19,685,039 | 19,685,039 | 2.13 | 19,685,039 | Unknown | Other | |
| Top ten shareholders holding unrestricted shares | |||
| Name of shareholder | Unrestricted shares held | Shares by type | |
| Type | Shares | ||
| Jin Weidong | 146,487,381 | RMB common stock | 146,487,381 |
| Ding Yunfeng | 80,398,500 | RMB common stock | 80,398,500 |
| DE HEUS MAURITIUS | 80,007,352 | RMB common stock | 80,007,352 |
| Shao Caimei | 49,773,878 | RMB common stock | 49,773,878 |
| Wang Fengjiu | 49,146,202 | RMB common stock | 49,146,202 |
| Zhang Tiesheng | 48,360,000 | RMB common stock | 48,360,000 |
| Wulian Heli Equity Investment Partnership (Limited Partnership) | 48,360,000 | RMB common stock | 48,360,000 |
| Wang Zhongtao | 45,859,700 | RMB common stock | 45,859,700 |
| Gao Junsong | 9,874,372 | RMB common stock | 9,874,372 |
| Wang Zhenyong | 9,800,000 | RMB common stock | 9,800,000 |
| Relationship of above shareholders or statement made by the parties acting in concert | 1. Jin Weidong, Ding Yunfeng, Wang Fengjiu, Shao Caimei and Wang Zhongtao act in concert; 2. Jin Weidong is the actual controller of Wulian Heli Equity Investment Partnership; 3. No relation or concerted action is found among other shareholders. | ||
| No. | Name of shareholder | Restricted shares held | Public trading of restricted shares | Restriction condition | |
| Date available for public trading | Newly increased number of share available for public trading | ||||
| 1 | Sinosafe Assets Management- Industrial and Commercial Bank of China-Sinosafe Assets Management Stably Increasing Profit No. 12 Collection Asset Management Product | 29,527,559 | April 24, 2020 | Restricted period- 12 months | |
| 2 | Generali China Asset Management- China Minsheng Banking Corp- Generali China Asset-Non-public Offering Selection No. 103 Asset Management Product | 19,685,039 | April 24, 2020 | Restricted period- 12 months | |
| 3 | Wu Ying | 14,763,779 | April 24, 2020 | Restricted period- 12 months | |
| 4 | Shenzhen Galaxy Investment Co., Ltd. | 4,921,259 | April 24, 2020 | Restricted period- 12 months | |
| 5 | Jin Weidong | 3,062,117 | April 25, 2022 | Restricted period- 36 months | |
| 6 | DE HEUS MAURITIUS | 2,296,587 | April 25, 2022 | Restricted period- 36 months | |
| 7 | Ding Yunfeng | 1,531,058 | April 25, 2022 | Restricted period- 36 months | |
| 8 | Wang Zhongtao | 765,529 | April 25, 2022 | Restricted period- 36 months | |
| Relationship of above shareholders or statement made by the parties acting in concert | 1. Jin Weidong, Ding Yunfeng and Wang Zhongtao act in concert; 2. No relation or concerted action is found among other shareholders. | ||||
IV. Controlling shareholder and actual controller
1. Controlling shareholder
A. Natural person
| Name | Jin Weidong |
| Nationality | China |
| Whether acquire the right of abode in other countries or regions | No |
| Major occupation and position | Chairman of Liaoning Wellhope Agri-Tech Joint Stock Co., Ltd. |
2. Actual controller
A. Natural person
| Name | Jin Weidong |
| Nationality | China |
| Whether acquire the right of abode in other countries or regions | No |
| Major occupation and position | Chairman of Liaoning Wellhope Agri-Tech Joint Stock Co., Ltd. |
| Domestic and foreign listed companies once held by the actual controller in the past 10 years | Non |
Section VII Preference ShareNot Applicable
Section VIII Directors, Supervisors, Senior Management and EmployeesI. Changes in Shareholdings and Remuneration
1. Changes in shareholdings and remuneration of incumbent and outgoing directors, supervisors and senior management during thereporting period
| Name | Office title | Gender | Age | Start of tenure | End of tenure | Opening shareholding (shares) | Closing shareholding (shares) | Changes in shareholding (shares) in 2019 | Reason of changes | Pre-tax remuneration paid by the Company (10,000 yuan) | Whether obtain remuneration from related parties of the Company |
| Jin Weidong | Chairman | male | 57 | Feb. 3, 2015 | Feb. 1, 2021 | 146,487,381 | 149,549,498 | 3,062,117 | Buying non-public issuing stock | 62.07 | No |
| Ding Yunfeng | Director and President | male | 57 | Feb. 3, 2015 | Feb. 1, 2021 | 80,398,500 | 81,929,558 | 1,531,058 | Buying non-public issuing stock | 60 | No |
| Wang Fengjiu | Vice President | male | 51 | Feb. 3, 2015 | Feb. 1, 2021 | 50,084,602 | 49,146,202 | -938,400 | Selling shares in the secondary market | 48 | No |
| Shao Caimei | Director and Chief Technical Officer | female | 54 | Feb. 3, 2015 | Feb. 1, 2021 | 54,559,878 | 49,773,878 | -4,786,000 | Selling shares in the secondary market | 55.37 | No |
| Wang Zhongtao | Chairman of the Supervisory Board | male | 56 | Feb. 3, 2015 | Feb. 1, 2021 | 47,151,000 | 46,625,229 | -525,771 | Buying non-public issuing stock, selling shares in the secondary market | 56 | No |
| Wang Zhenyong | Vice President | male | 54 | Feb. 3, 2015 | Feb. 1, 2021 | 9,800,000 | 9,800,000 | 46.6 | No | ||
| Zhang Wenliang | Director and Chief Financial Officer | male | 60 | Feb. 3, 2015 | Feb. 1, 2021 | 8,565,100 | 8,565,100 | 39.6 | No | ||
| Zhao Xin | Director, Board Secretary, Chief HR Officer | female | 48 | Feb. 3, 2015 | Feb. 1, 2021 | 4,470,160 | 4,470,160 | 53 | No |
| Qiu Jiahui | Vice President | male | 48 | Feb. 3, 2015 | Feb. 1, 2021 | 56 | No | ||||
| Hu Jianmin | Independent Director | male | 61 | Feb. 3, 2015 | Feb. 1, 2021 | 6 | No | ||||
| Liu Huan | Independent Director | male | 65 | Feb. 3, 2015 | Feb. 1, 2021 | 6 | No | ||||
| Wang Zhe | Independent Director | female | 40 | Feb. 2, 2018 | Feb. 1, 2021 | 6 | No | ||||
| Jacobus Johannes de Heus | Director | male | 51 | Feb. 3, 2015 | Feb. 1, 2021 | - | No | ||||
| Marcus Leonardus van der Kwaak | Supervisor | male | 51 | Feb. 3, 2015 | Feb. 1, 2021 | - | No | ||||
| Yuan Minger | Supervisor | female | 50 | Feb. 3, 2015 | Feb. 1, 2021 | 16 | No | ||||
| Li Jun | Supervisor | male | 48 | Apr. 27,2016 | Feb. 1, 2021 | 28 | No | ||||
| Wei Yanjin | Supervisor | male | 62 | Jul. 20, 2016 | Mar. 26,2019 | - | No | ||||
| Ren Bingxin | Supervisor | male | 57 | Mar. 27,2019 | Feb. 1, 2021 | 5,429,500 | 5,429,500 | 25 | |||
| total | 406,946,121 | 405,289,125 | -1,656,996 | / | 563.64 | / |
| Name | Work experience |
| Jin Weidong | Male, born in 1963, master's degree, the core founder of Wellhope, Chairman of the Board, also holds the posts of President of Liaoning Feed Industry Association, member of Liaoning Province Standing Committee of the Chinese People's Political Consultative Conference, Vice President of China Feed Industry Association, Vice President of China Animal Husbandry Industry Association, Doctoral Advisor of Shenyang Agricultural University, Guest Professor of Remin University of China, Ocean University of China and Northeast Agricultural University, etc. |
| Ding Yunfeng | Male, born in 1963, bachelor's degree, one of the founders of Wellhope, now holds the posts of board director and President. |
| Wang Fengjiu | Male, born in 1969, master's degree, one of the founders of Wellhope, now holds the post of Vice President. |
| Shao Caimei | Female, born in 1966, Ph.D., one of the founders of Wellhope, the board director and CTO, also holds the posts of standing director of Animal Nutrition Branch of Chinese Association of Animal Science and Veterinary Medicine, member of Chinese Feed Industrial Standardization Technical Committee, etc. |
| Wang Zhongtao | Male, born in 1964, master's degree, one of the founders of Wellhope, now holds the post of Chairman of the supervisory board. |
| Wang Zhenyong | Male, born in 1966, Ph.D., joined Wellhope in 1996, now holds the post of Vice President, taking charge of international business. |
| Zhang | Male, born in 1960, master's degree, joined Wellhope in 1996, now holds the posts of board director and CFO. |
| Wenliang | |
| Zhao Xin | Female, born in 1972, bachelor's degree, joined Wellhope in 1995, now holds the posts of board director, board secretary, CHO. |
| Qiu Jiahui | Male, born in 1972, bachelor's degree, joined Wellhope in 2000, now holds the post of Vice President, taking charge of broiler integration business division. |
| Wang Zhe | Female, born in 1980, Ph.D., professor and doctoral advisor of School of Animal Husbandry and Veterinarian of Shenyang Agricultural University, independent director of Wellhope. |
| Hu Jianmin | Male, born in 1959, Ph.D., professor of School of Animal Husbandry and Veterinarian of Shenyang Agricultural University, independent director of Wellhope. |
| Liu Huan | Male, born in 1955, Chinese nationality, CPA, Deputy Dean of School of Tax Administration of Central University of Finance and Economics, independent director of Wellhope. |
| Jacobus Johannes de Heus | Male, born in 1969, the Dutch nationality, master's degree, CEO of Royal De Heus, board director of Wellhope. |
| Marcus Leonardus van der Kwaak | Male, born in 1969, the Dutch nationality, master's degree, CFO of Royal De Heus, supervisor of Wellhope. |
| Yuan Minger | Female, born in 1970, bachelor's degree, supervisory board director and audit manager of Wellhope. |
| Li Jun | Male, born in 1972, master's degree, joined Wellhope in 2004, holds the posts of supervisory board director and director of raw material trade business division and general manager of Liaoning Expert Trading Co., Ltd. |
| Wei Yanjin | Male, born in 1958, master's degree, joined Wellhope in 2001, President of related business division. |
| Ren Bingxin | Male, born in 1963, Ph.D. , once worked in Animal Husbandry and Veterinary Science Institute of Liaoning province, now holds the posts of the supervisory board director and technical director of Wellhope’s broiler integration business division. |
| Name | Other entity | Post | Start of tenure | End of tenure |
| Wang Zhe | Shenyang Agricultural University | Professor | 2015 | |
| Hu Jianmin | Shenyang Agricultural University | Professor | 2000 | |
| Hu Jianmin | Liaoning-Shenyang Agricultural Wellhope Bio-Tech Co., Ltd. | Board director | 2016 | |
| Liu Huan | School of Tax Administration of | Deputy dean and professor | 2010 |
| Central University of Finance and Economics | ||||
| Jacobus Johannes de Heus | Royal De Heus | CEO | 2002 | |
| Marcus Leonardus van der Kwaak | Royal De Heus | CFO | 2001 | |
| Jin Weidong | Beijing BOYAR Agriculture and Animal Husbandry Technology Co., Ltd. | Supervisor | 2010 |
| Decision-making procedure for remuneration | According to the Company's performance appraisal management, related regulations and the stipulations of the Remuneration and Performance Appraisal Committee of the Board of Directors. |
| Basis for determining remuneration | According to the remuneration level in the industry, the Company's business performance, job responsibilities, etc., and in accordance with the work plan made by the Board of Directors at the beginning of the year, in combination with individual’s work performance and other qualitative and quantitative indicators. |
| Actual payment | Paying in accordance with the annual performance of the Company, the work performance of senior managers and management ability, etc. |
| Total remuneration during the reporting period | Totally paid RMB 5.64 million to board directors, supervisory board directors and senior managers. |
| Name | Office title | Change | Reason |
| Wei Yanjin | Supervisor | outgoing | Personal reason |
| Ren Bingxin | Supervisor | new electing | new electing |
IV. Employees of the Parent Company and Major Subsidiaries
1. Headcount
| Full time employee of parent company | 235 |
| Full time employee of major subsidiaries | 5,112 |
| Total full time employees | 5,347 |
| The number of retired employees whose expenses are borne by the parent company and major subsidiaries | 16 |
| Functions | |
| Line | Employees |
| Production | 1,958 |
| Sales | 2,044 |
| Technology | 657 |
| Finance | 298 |
| Administration | 390 |
| Total | 5,347 |
| Educational backgrounds | |
| Educational background | Employees |
| Master's degree and above | 351 |
| Bachelor's degree | 1,922 |
| Junior college | 1,653 |
| Below junior college | 1,421 |
| Total | 5,347 |
outstanding employees. In 2018, 372 key talents were granted restricted stocks and signedperformance agreements. Exercise rights were implemented according to the results ofworking performance, to fully mobilize the enthusiasm and sense of ownership of keytalents and promote the rapid development of the Company's business in various fields.In strict accordance with national laws and regulations, the Company provides staff socialinsurances and housing fund, and on this basis, also provides commercial insurance tobenefit employees and their families. It also provides welfare protection for employeesthrough internal resource sharing, welfare system, pilot flexible welfare and other ways toimprove employees’ satisfaction.
3. Training plan
The Company has been committed to the growth and career development of itsemployees. Under the guidance of top-level strategy and human resource strategy, arelatively complete training system with three levels has been set up. In 2019, theCompany continued to optimize its training system and formulate annual training plan toemployees nationwide via various channels and ways.A. The Company constantly strengthens the progressive training system, which is operatedby three levels in terms of head office, regional center of each business division andbusiness unit of each subsidiary companies, they cooperate in many fields such as newstaff training, on- job skill training and business line manager training, etc. Meanwhile, theCompany has launched talent pool and related training programs to power the progress ofstaff and the Company, such as Sunflower training project for middle managers, Seedlingtraining for fresh graduates, etc. Furthermore, the New Employee Training Manual hasbeen operated online.B. Moreover, the Company has increasingly explored internal training courses by its owntrainers based on work scene and task module as well as new tools and methods. In 2019,the internal trainers produced 75 courses and 16 kinds of course list, among them, 80 newtrainers were promoted.C. Relying on on-line platform, the Company constantly promotes employee’s self-directedlearning. With more than 2,600 external courses and 300 self-owned course resources,and with the assistance of competitions and special topics, employees can freely andactively choose suitable courses, realizing an annual login rate of 94% and an online
learning rate of 75%. The Company also held a knowledge competition in 2019, 1,637 stafftook part in this competition, totally 98,927 staff participated in the competition within 3days.D. Furthermore, the Company energetically held live broadcast in 2019. At the beginningof the year, influence by African Swine Fever, the Company quickly organized the trainingfor ASF via live broadcast within one week, over 100,000 viewers attended thelive-streaming, helping employees and customers to learn practices about solutions to ASF.Using the live broadcast platform, the Company has totally conducted 43 live broadcaststhroughout the year with more than 450,000 visitors and 40,000 fans. Live broadcast,small video and clock-in have become the new normal for training, which also greatly savecosts and improve organizational efficiency.
4. Labor outsourcing
| The total number of working hours | 2,607,292.00 |
| Total amount of remuneration paid for outsourcing | RMB 50,953,348.29 |
Section IX Corporate GovernanceI. Overview of Corporate Governance
In accordance with the Corporation Law, the Securities Law, the Guidelines forGovernance of Listed Company and other requirements, the Company has constantlyimproved its corporate governance and persisted in normative operation, includingbuilding basic systems, standardizing operations, strengthening information disclosure,formulating relevant rules of procedure and working system. In the meantime, theCompany has established a relatively thorough internal control system to heighten theprotection for minority shareholders, and it also strictly fulfills the obligation ofinformation disclosure in a true, accurate, timely and complete manner in accordancewith relevant provisions to ensure that all shareholders have fair access to information.In 2019, the Company held a shareholders' meeting, 4 times of board meetings and 3times of supervisory board meetings. Meanwhile, the Shareholders' Meeting deliberatedand approved the proposals of revising the Company Constitution, the Rules of Procedureof the Board and Supervisory Board, Working Rules for Independent Director, Provision onRelated Party Transaction, to further consummate the Company’s governance structure.the Company’s operations, including the management of shareholders and shareholders’meeting, board member and board meeting, supervisory board and member, stakeholders,peer competition and related party transactions, information disclosure and transparency,meet the requirements of relevant authorities.II. Shareholders' Meeting Convened during the Reporting Period
| Meeting | Date | Query URLs of Resolution | Disclosing Date of Resolution |
| 2018 Annual Shareholders' Meeting | May 20, 2019 | www.sse.com.cn | May 21, 2019 |
published on the SSE website.III. Performance of Duties of the Board Director
| Name | Independent director or not | Attendance of Board Meeting | Shareholders' Meeting | |||||
| Number of attended board meetings in 2019 | Physical presence | Via Tele- communi | Via proxy | Number of absences | Whether continually fail to physically attend the meeting two times | Number of attended shareholders' meeting | ||
| Jin Weidong | no | 4 | 4 | 2 | 0 | 0 | no | 0 |
| Ding Yunfeng | no | 4 | 4 | 1 | 0 | 0 | no | 1 |
| Jacobus Johannes de Heus | no | 4 | 4 | 3 | 0 | 0 | no | 0 |
| Shao Caimei | no | 4 | 4 | 2 | 0 | 0 | no | 0 |
| Zhang Wenliang | no | 4 | 4 | 3 | 0 | 0 | no | 0 |
| Zhao Xin | no | 4 | 4 | 1 | 0 | 0 | no | 1 |
| Hu Jianmin | yes | 4 | 4 | 3 | 0 | 0 | no | 1 |
| Liu Huan | yes | 4 | 4 | 4 | 0 | 0 | no | 0 |
| Wang Zhe | yes | 4 | 4 | 3 | 0 | 0 | no | 1 |
| Number of board meetings held in 2019 | 4 |
| Including: on-site meeting | 0 |
| Number of meeting held via telecommunication | 1 |
| Number of meeting held via on-site meeting and telecommunication | 3 |
Section X Corporate BondNot applicable
Section XI Financial StatementsI. Audit Report
Audit ReportSuya Audit No. [2020]110To all the shareholders of Liaoning Wellhope Agri-Tech Joint Stock Co., Ltd.,
1. Opinion
We have audited the financial statements of Liaoning Wellhope Agri-Tech Joint Stock Co.,Ltd. (hereinafter referred to as "the Company"), which comprise the statement of financialposition as at December 31 2019, and the income statement, statement of changes inequity and cash flow statement for the year then ended, and notes to the financialstatements.In our opinion, the financial statements give a true and fair view of the financial positionof the Company as at December 31 2019, and of its operating performance and cash flowfor the year then ended, and have been properly prepared in compliance with theAccounting Standards for Business Enterprises ("the ASBE").
2. Basis for Opinion
We conducted our audits in accordance with China's CPA Auditing Standards. Ourresponsibilities under those standards are further described in the "Auditor’sResponsibilities for the Audit of the Financial Statements" section of our report. We areindependent of the Company in accordance with China CPA's Code of Ethics forProfessional Accountants ("the Code"), and we have fulfilled our other ethicalresponsibilities in accordance with the Code. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
3. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of mostsignificance in our audit of the financial statements in the current period. These matterswere addressed in the context of our audit of the financial statements as a whole, and informing our opinion thereon, and we do not provide a separate opinion on these matters.
| A. Confirmation and recognition of revenue | |
| Please refer to Important Accounting Policies and Accounting Estimates | |
| Key audit matters | How our audit addressed the key audit matter |
| The operating revenue of the Company's principal businesses, including feed and feed raw materials, broiler integration, grew faster in the reporting period, these revenues had been confirmed after receiving payment for products or finishing credit procedure or delivering products. In 2019, the operating revenue of Wellhope’s principal businesses realized RMB 17.78 billion, increase by RMB 2.04 billion compared with prior year with a growth rate of 12.96%, of which, the revenue of feed business increase by RMB 487.28 million with a growth rate of 6.68%, broiler integration business increased by RMB 1.93 billion with 41.37%. We took the operating revenue as a key audit matter. | Our audit procedures mainly include: a. Understood and evaluated the design of internal control in Wellhope’s sales process, and tested the effectiveness of the implementation of critical control. b. Through sampling sales contracts and interviewing the management, we analyzed and evaluated the major risks related to the recognition of sales revenue and the time point of compensation transfer, and evaluated the recognition policies of sales revenue. c. We carried out analytical review based on the circumstances of Wellhope business divisions, industry development and the actual situation of Wellhope to judge the rationality of changes in sales revenue and gross profit. d. We conducted the following procedures for sales revenue by sampling method to confirm the occurrence and cut-off of sales revenue: (a) Check the supporting documents related to revenue recognition, including sales contracts, sales orders, sales invoices, customer receipt, etc.; (b) Issuing external confirmations to confirm the balance of accounts receivable and the amount of sales revenue; (c) Regarding the sales revenue confirmed before and after the date of balance sheet, check the supporting documents detailed to customers’ signed receipt to assess whether the sales revenue had been recognized within the appropriate period. |
| B. Income from long-term equity investment recognized by the equity method. | |
| Please refer to Important Accounting Policies and Accounting Estimates | |
| Key audit matters | How our audit addressed the key audit matter |
| The income from long-term equity investment calculated by the equity method in the reporting period reached RMB 629.09 million, which had a great impact on current gains and losses, thus we took it as the key audit matter. | Our audit procedures mainly include: a. We reviewed and evaluated Wellhope’s internal control regarding the income from long-term equity investment measured by the equity method. b. We obtained related investee’s constitution, investment agreements and other documents to judge whether Wellhope had a significant effect on related investee and whether the accounting method was correct. c. We obtained related investee's audit reports and financial statements to review whether the income from investment calculated by the equity method was accurate. d. Regarding the investee with large investment income under the equity method, we reviewed the qualification of the audit institutions and its auditing circumstance, paid attention to the professional competence of other CPAs, and utilized the work reports of other CPAs; we also conducted analytical procedure regarding related information of investee, such as the operating revenue, operating costs and inventory, etc. |
e. Check whether the share of change in net assets ofinvestee confirmed by Wellhope’s shareholdingpercentage was correct.
4. Other Information
The management of the Company is responsible for the other information. The otherinformation comprises information covered by the Company's 2019 Annual Report, butexcludes the financial statements and our auditor's report thereon.Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to read theother information and, in doing so, consider whether the other information is materiallyinconsistent with the financial statements or our knowledge obtained during the audit orotherwise appears to be materially misstated.If, based on the work we have executed, we confirm that there is a material misstatementin the other information, we are required to report the fact. We have nothing to report inthis regard.
5. Responsibilities of the Management and Those Charged with Governance for FinancialStatementsThe management of the Company is responsible for preparing the financial statementsthat give a fair view in accordance with the ASBE, and for designing, executing andmaintaining requisite internal control to enable the preparation of the financialstatements that are free from material misstatement, whether due to fraud or error.In preparing the financial statements, the management is responsible for assessing theCompany’s ability to continue as a going concern, disclosing, as applicable, matters relatedto going concern and using the going concern basis of accounting unless the managementeither intends to liquidate the Company or to cease operation, or has no realisticalternative but to do so.Those charged with governance are responsible for overseeing the Company’s financialreporting process.
6. Auditor’s Responsibilities for the Audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statementsas a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor’s report that includes our opinion. Reasonable assurance is a high level ofassurance, but is not a guarantee that an audit conducted in accordance with the auditingstandards will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if, individually or in the aggregate,they could reasonably be expected to influence the economic decisions of users taken onthe basis of these financial statements.As part of an audit in accordance with the auditing standards, we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
A. Identify and assess the risks of material misstatement of the financial statements,whether due to fraud or error, design and perform audit procedures responsive to thoserisks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error, as fraud may involve collusion, forgery,intentional omissions, misrepresentations, or the override of internal control.B. Obtain an understanding of the internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances.C. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the management.D. Conclude on the appropriateness of the management’s use of the going concern basisof accounting and, based on the obtained audit evidence, whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company’sability to continue as a going concern. If we conclude that a material uncertainty exists,we are required by the auditing standards to draw the statements users’ attention in ourauditor’s report to the related disclosures in the financial statements, or, if suchdisclosures are inadequate, to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor’s report. However, future events orconditions may cause the Company to cease to continue as a going concern.
E. Evaluate the overall presentation, structure and content of the financial statements,including the disclosures, and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.F. Obtain sufficient and appropriate audit evidence regarding the financial information ofrelated entities or business activities within the Company to express an opinion on itsfinancial statements. We are responsible for guiding, overseeing and performing the auditof the Company, and solely responsible for our audit opinion.We communicate with those charged with governance regarding, among other matters,the planned scope and timetable of the audit and significant audit findings, including anynoteworthy deficiencies in the internal control that we identify during our audit.We also provide those charged with governance with a statement to declare that we havecomplied with the professional ethics related to independence, and communicate withthe governance on all relationships and other matters that may reasonably be consideredto affect our independence, as well as the relevant precautions.From the matters communicated with those charged with governance, we determinewhich matters are the most important for the audit of the current financial statements andthus constitute the key audit matters. We describe these matters in the audit report,unless laws and regulations prohibit the public disclosure of these matters, or in rare cases,if it is reasonably expected that the negative consequences of communicating a matter inthe audit report will outweigh the benefits in terms of the public interest, we determinethat the matter should not be communicated in the audit report.Jiangsu SuyaJincheng CPA LLP CPA: Zhou Jiawen(Project Partner)CPA: Wang Lei
China Nanjing March 27, 2020
II. Financial Statements
Consolidated Balance Sheet
Dec. 31, 2019Liaoning Wellhope Unit: yuan Currency: RMB
| Item | Dec. 31, 2019 | Dec. 31, 2018 |
| Current Assets: | ||
| Monetary capital | 1,554,781,324.13 | 928,902,753.06 |
| Tradable financial assets | 40,000,000.00 | |
| Derivative financial assets | 3,912,584.30 | 2,042,527.60 |
| Notes receivable | 3,696,180.25 | 13,611,778.44 |
| Accounts receivable | 362,060,802.38 | 397,891,678.23 |
| Prepayments | 222,064,368.55 | 185,899,348.53 |
| Other receivables | 85,600,811.75 | 98,997,213.04 |
| including: Interest receivable | ||
| Dividends receivable | 25,353,722.11 | 5,481,783.34 |
| Inventory | 1,568,373,133.15 | 1,410,869,192.26 |
| Other current assets | 121,711,175.93 | 118,636,045.77 |
| Total current assets | 3,962,200,380.44 | 3,156,850,536.93 |
| Non-current assets: | ||
| Available-for-sale financial assets | 3,680,000.00 | |
| Long-term equity investment | 2,070,047,882.51 | 1,354,820,455.99 |
| Other equity instruments investment | 5,760,839.23 | |
| Fixed assets | 2,023,113,939.02 | 1,516,702,438.29 |
| Construction in progress | 240,012,874.86 | 255,719,188.30 |
| Productive biological assets | 94,826,312.88 | 30,484,794.88 |
| Intangible assets | 245,564,167.39 | 206,387,940.29 |
| Goodwill | 290,425.67 | 290,425.67 |
| Long-term prepaid expenses | 134,504,217.80 | 177,903,367.82 |
| Deferred income tax assets | 35,987,736.49 | 30,357,726.08 |
| Other non-current assets | 337,463,267.56 | 197,497,688.18 |
| Total non-current assets | 5,187,571,663.41 | 3,773,844,025.50 |
| Total Assets | 9,149,772,043.85 | 6,930,694,562.43 |
| Consolidated Balance Sheet(continue) | Unit: yuan Currency: RMB | |
| Item | Dec. 31, 2019 | Dec. 31, 2018 |
| Current liabilities: | ||
| Short-term borrowings | 1,050,878,205.81 | 1,347,690,168.49 |
| Accounts payable | 659,216,483.84 | 572,729,779.31 |
| Advance receipt | 209,529,248.68 | 161,173,916.67 |
| Payroll | 62,549,364.12 | 49,731,930.35 |
| Taxes and surcharges payable | 37,680,953.84 | 28,744,792.72 |
| Other payables | 342,239,361.28 | 309,537,195.12 |
| including: Interest payable | 1,528,201.39 | 1,784,257.05 |
| Dividends payable | 1,434,027.14 | 526,000.00 |
| Non-current liabilities due within one year | 70,593,717.62 | 32,999,999.96 |
| Total current liabilities | 2,432,687,335.19 | 2,502,607,782.62 |
| Non-current Liabilities: | ||
| Long-term borrowings | 174,330,000.00 | 118,500,000.00 |
| Long-term payable | 11,025,000.09 | 23,345,833.38 |
| Deferred income | 31,841,250.00 | 20,252,967.41 |
| Deferred income tax liabilities | 396,995.58 | |
| Total Non-current liabilities | 217,593,245.67 | 162,098,800.79 |
| Total Liabilities | 2,650,280,580.86 | 2,664,706,583.41 |
| Owners' equity (or shareholders' equity): | ||
| Paid-up capital (or share capital) | 922,304,396.00 | 845,751,469.00 |
| Capital reserves | 882,723,066.29 | 153,824,536.37 |
| deduct: Treasury stock | 70,688,750.00 | 70,688,750.00 |
| Other comprehensive income | 6,122,835.30 | -1,316,942.00 |
| Surplus reserves | 352,059,456.90 | 272,882,920.19 |
| Undistributed profits | 3,605,618,553.05 | 2,651,462,525.08 |
| Total Equity attributable to the owners of parent company | 5,698,139,557.54 | 3,851,915,758.64 |
| Non-controlling interests | 801,351,905.45 | 414,072,220.38 |
| Total owners' equity (or shareholders' equity) | 6,499,491,462.99 | 4,265,987,979.02 |
| Total liabilities and owners' equity (or shareholders' equity) | 9,149,772,043.85 | 6,930,694,562.43 |
Consolidated Balance Sheet of Parent Company
Dec. 31, 2019
Unit: yuan Currency :RMB
| Item | Dec. 31, 2019 | Dec. 31, 2018 |
| Current assets: | ||
| Monetary capital | 1,039,575,222.99 | 750,589,871.09 |
| Tradable financial assets | 40,000,000.00 | |
| Derivative financial assets | 2,285,934.30 | 2,042,527.60 |
| Accounts receivable | 13,631,690.45 | 16,033,809.05 |
| Prepayments | 7,560,408.95 | 2,278,798.85 |
| Other receivables | 1,020,785,676.46 | 869,671,230.01 |
| including: Interest receivable | ||
| Dividends receivable | 33,977,209.35 | 15,225,270.58 |
| Inventory | 49,839,754.57 | 41,986,504.36 |
| Total current assets | 2,173,678,687.72 | 1,682,602,740.96 |
| Non-current assets: | ||
| Available-for-sale financial assets | 3,000,000.00 | |
| Long-term equity investment | 4,117,315,830.10 | 3,285,783,087.96 |
| Other equity instruments investment | 5,539,369.92 | |
| Fixed assets | 132,106,337.38 | 73,509,615.43 |
| Construction in progress | 5,163,075.76 | 56,425,656.79 |
| Intangible assets | 15,425,425.33 | 16,169,866.87 |
| Long-term prepaid expenses | 797,929.30 | 854,845.30 |
| Deferred income tax assets | 10,699,738.59 | 9,060,127.91 |
| Total non-current assets | 4,287,047,706.38 | 3,444,803,200.26 |
| Total assets | 6,460,726,394.10 | 5,127,405,941.22 |
| Current liabilities: | ||
| Short-term borrowings | 770,000,000.00 | 1,075,000,000.00 |
| Accounts payable | 34,960,859.00 | 7,636,692.77 |
| Advance receipt | 5,019,752.33 | 2,690,153.80 |
| Payroll | 4,611,910.56 | 2,749,116.65 |
| Taxes and surcharges payable | 4,624,045.02 | 4,166,334.74 |
| Other payables | 1,109,464,926.75 | 1,026,382,418.43 |
| including: Interest payable | 1,261,159.72 | 1,601,798.61 |
| Dividends payable | ||
| Non-current liabilities due within one year | 52,000,000.00 | 20,000,000.00 |
| Total current liabilities | 1,980,681,493.66 | 2,138,624,716.39 |
| Non-current liabilities: | ||
| Long-term borrowings | 174,000,000.00 | 118,000,000.00 |
| Deferred income | 21,520,000.00 | 7,425,000.00 |
| Deferred income tax liabilities | 8,972.25 | |
| Total non-current liabilities | 195,528,972.25 | 125,425,000.00 |
| Total liabilities | 2,176,210,465.91 | 2,264,049,716.39 |
| Owners' equity(or shareholders' equity): | ||
| Paid-up capital (or share capital) | 922,304,396.00 | 845,751,469.00 |
| Capital reserves | 875,861,339.55 | 160,705,065.92 |
| deduct: Treasury stock | 70,688,750.00 | 70,688,750.00 |
| Other Comprehensive income | 5,621,991.32 | -1,305,935.62 |
| Surplus reserves | 352,059,456.90 | 272,882,920.19 |
| Undistributed profits | 2,199,357,494.42 | 1,656,011,455.34 |
| Total owners' equity | 4,284,515,928.19 | 2,863,356,224.83 |
| Total liabilities and owners' equity (or shareholders' equity) | 6,460,726,394.10 | 5,127,405,941.22 |
Consolidated Income StatementJanuary-December, 2019
| Liaoning Wellhope | Unit: yuan Currency: RMB | |
| Item | 2019 | 2018 |
| 1. Total operating revenue | 17,792,091,973.58 | 15,750,798,120.67 |
| Including: Operating revenue | 17,792,091,973.58 | 15,750,798,120.67 |
| 2. Total operating costs | 16,722,910,797.89 | 15,230,738,485.17 |
| including: Operating costs | 15,792,020,015.55 | 14,421,297,677.40 |
| Taxes and surtaxes | 26,510,483.05 | 24,850,909.29 |
| Selling expenses | 487,217,524.04 | 420,646,753.59 |
| Administrative expenses | 275,560,691.30 | 227,941,858.19 |
| R&D expenses | 65,209,116.65 | 61,100,349.28 |
| Financial expenses | 76,392,967.30 | 74,900,937.42 |
| including: Interest expenses | 77,508,278.78 | 66,635,982.41 |
| Interest income | 9,696,477.31 | 4,414,083.01 |
| add: Other income | 11,495,398.41 | 14,165,463.22 |
| Income from investment | 637,479,444.82 | 286,014,954.24 |
| including: Income from investments in associated companies and joint ventures | 629,093,604.62 | 281,184,722.34 |
| Gain or loss from changes in fair value | 577,449.00 | -369,580.00 |
| Credit impairment loss | -26,344,201.05 | |
| Assets impairment loss | -98,459,269.89 | -124,028,241.87 |
| Gain or loss from assets disposal | 572,151.35 | -5,252,624.79 |
| 3. Operating profit | 1,594,502,148.33 | 690,589,606.30 |
| add: Non-operating income | 13,406,536.26 | 10,354,127.19 |
| deduct: Non-operating expenditure | 25,737,839.85 | 9,404,244.62 |
| 4. Pretax profit | 1,582,170,844.74 | 691,539,488.87 |
| deduct: Income tax expense | 84,706,528.93 | 86,850,335.00 |
| 5. Net profit | 1,497,464,315.81 | 604,689,153.87 |
| Net Profit from continuing operations | 1,497,464,315.81 | 604,689,153.87 |
| Net profit attributable to the shareholders of parent company | 1,199,347,355.96 | 551,928,618.35 |
| Non-controlling interests income | 298,116,959.85 | 52,760,535.52 |
| 6. Other comprehensive income, net of tax | 8,699,609.38 | -1,325,947.22 |
| Attributable to owners of parent company | 7,921,322.05 | -1,316,942.00 |
| a. Other comprehensive income that | -278,647.43 | |
| cannot be reclassified into gains or losses | ||
| (a) Changes in the fair value of other equity instruments | -278,647.43 | |
| b. Other comprehensive income that will be reclassified into the gains or losses | 8,199,969.48 | -1,316,942.00 |
| (a) Other comprehensive income that can be transferred in gains or losses under the equity method | 7,238,557.02 | -1,305,935.62 |
| (b) Exchange differences on translation of foreign currency financial statements | 961,412.46 | -11,006.38 |
| Attributable to non-controlling interests | 778,287.33 | -9,005.22 |
| 7. Total comprehensive income | 1,506,163,925.19 | 603,363,206.65 |
| Attributable to the owners of parent company | 1,207,268,678.01 | 550,611,676.35 |
| Attributable to non-controlling interests | 298,895,247.18 | 52,751,530.30 |
| 8. EPS | ||
| (1) Basic earnings per share (yuan per share) | 1.34 | 0.66 |
| (2) Diluted earnings per share (yuan per share) | 1.34 | 0.66 |
Consolidated Income Statement of Parent Company
January-December, 2019
Unit: yuan Currency: RMB
| Item | 2019 | 2018 |
| 1. Total operating revenue | 653,173,744.91 | 623,566,267.53 |
| deduct: Operating cost | 440,528,615.18 | 415,589,730.95 |
| Taxes and surtaxes | 1,565,707.59 | 1,514,878.36 |
| Selling expenses | 15,499,507.05 | 14,708,404.12 |
| Administrative expenses | 35,606,213.46 | 26,911,250.47 |
| R&D expenses | 19,801,103.17 | 24,141,364.43 |
| Financial expenses | 25,764,751.95 | 22,370,584.84 |
| including: Interest expenses | 56,712,261.00 | 49,300,111.55 |
| Interest income | 31,126,902.17 | 27,053,420.01 |
| add: Other income | 2,446,851.22 | 4,850,607.00 |
| Income from Investment | 699,355,097.82 | 321,116,524.32 |
| including: Income from investments in associated companies and joint ventures | 625,627,992.53 | 283,297,787.16 |
| Gain or loss from changes in fair value | 689,565.00 | -369,580.00 |
| Credit impairment loss | -15,937,167.84 | |
| Assets impairment loss | -30,418,264.45 | |
| Gain or loss from assets disposal | -22,077.70 | |
| 2. Operating profit | 800,940,115.01 | 413,509,341.23 |
| add: Non-operating income | 8,319,590.00 | 3,827,456.11 |
| deduct: Non-operating expenditure | 3,435,681.90 | 705,058.28 |
| 3. Pretax profit | 805,824,023.11 | 416,631,739.06 |
| deduct: Income tax expense | 16,371,114.85 | 12,667,136.02 |
| 4. Net profit | 789,452,908.26 | 403,964,603.04 |
| Net profit from continuing operations | 789,452,908.26 | 403,964,603.04 |
| 5. Other comprehensive income, net of tax | 7,238,557.02 | -1,305,935.62 |
| a. Other comprehensive income that cannot be reclassified into gains or losses | ||
| b. Other comprehensive income that will be reclassified into gains or losses | 7,238,557.02 | -1,305,935.62 |
| (a) Other comprehensive income that can be transferred in gains or losses under the equity method | 7,238,557.02 | -1,305,935.62 |
| 6. Total comprehensive income | 796,691,465.28 | 402,658,667.42 |
Consolidated Statement of Cash Flow
January-December, 2019Liaoning Wellhope Unit: yuan Currency: RMB
| Item | 2019 | 2018 |
| 1. Cash flow from operating activities | ||
| Cash received by selling goods, providing labor services | 18,515,520,875.71 | 16,234,878,306.02 |
| Tax refunds | 31,713,272.85 | 25,981,833.91 |
| Cash received from other activities related to operating | 117,924,950.69 | 126,613,549.29 |
| Sub-total of cash inflow of operating activities | 18,665,159,099.25 | 16,387,473,689.22 |
| Cash paid for goods purchase and labor services | 16,331,792,562.75 | 14,693,894,419.34 |
| Cash paid to and for employee | 664,160,201.72 | 575,676,082.13 |
| Tax payments | 126,114,944.41 | 131,636,206.28 |
| Cash paid to other activities related to operating | 431,485,423.79 | 484,862,065.88 |
| Sub-total of cash outflow of operating activities | 17,553,553,132.67 | 15,886,068,773.63 |
| Net cash flow from operating activities | 1,111,605,966.58 | 501,404,915.59 |
| 2. Cash flow from investing activities | ||
| Cash received from disinvestment | 267,623,915.25 | 28,502,239.82 |
| Cash received from return on investment | 39,407,633.67 | 18,281,844.61 |
| Net cash received from disposal of fixed assets, intangible assets and other long-lived assets | 5,272,664.08 | 11,789,308.39 |
| Net cash received from disposal of subsidiaries and other business units | 344,858.74 | 3,053,713.91 |
| Cash received from other activities related to investment | 35,351,061.09 | |
| Sub-total of cash inflow of investing activities | 348,000,132.83 | 61,627,106.73 |
| Cash paid for acquiring and building fixed assets, intangible assets and other long-lived assets | 752,328,478.91 | 427,473,918.37 |
| Cash paid for investments | 431,091,352.29 | 143,884,724.98 |
| Net cash paid for acquiring subsidiaries and other business units | 753,128.13 | |
| Cash paid to other activities related to investment | 38,034,996.79 | |
| Sub-total of cash outflow of investing activities | 1,222,207,956.12 | 571,358,643.35 |
| Net cash flow from investing activities | -874,207,823.29 | -509,731,536.62 |
| 3. Cash flow from financing activities | ||
| Cash received by absorbing investments | 833,019,100.67 | 96,474,856.62 |
| including: Capital contributed by non-controlling interests to subsidiaries | 77,295,000.00 | 25,786,106.62 |
| Cash received from borrowings | 1,512,771,597.45 | 1,680,490,000.00 |
| Cash received from other activities related to financing | 19,499,680.00 | 41,131,246.21 |
| Sub-total of cash inflow of financing activities | 2,365,290,378.12 | 1,818,096,102.83 |
| Repayments of borrowings | 1,723,732,178.39 | 1,469,954,166.66 |
| Cash paid for distributing dividends, profits, or paid for interests | 256,169,043.57 | 155,249,212.54 |
| including: Dividends or profits paid by subsidiaries to non-controlling interests | 3,804,074.08 | 4,409,000.00 |
| Cash paid to other activities related to financing activities | 6,433,985.36 | 25,900,000.00 |
| Sub-total of cash outflow of financing activities | 1,986,335,207.32 | 1,651,103,379.20 |
| Net cash flow from financing activities | 378,955,170.80 | 166,992,723.63 |
| 4. Effect of foreign exchange rate fluctuations on cash and cash equivalents | 2,832,293.62 | -10,142,120.44 |
| 5. Net increase in cash and cash equivalents | 619,185,607.71 | 148,523,982.16 |
| add: Opening balance of cash and cash equivalents | 889,204,873.97 | 740,680,891.81 |
| 6. Closing balance of cash and cash equivalents | 1,508,390,481.68 | 889,204,873.97 |
Consolidated Statement of Cash Flow of Parent Company
January-December, 2019
Unit: yuan Currency: RMB
| Item | 2019 | 2018 |
| 1. Cash flow from operating activities | ||
| Cash received by selling goods, providing labor services | 657,717,981.13 | 617,488,886.12 |
| Cash received from other activities related to operating | 48,571,846.31 | 536,969,369.05 |
| Sub-total of cash inflow of operating activities | 706,289,827.44 | 1,154,458,255.17 |
| Cash paid for goods purchase and labor services | 413,396,277.57 | 402,821,941.75 |
| Cash paid to and for employee | 28,770,817.79 | 25,121,026.30 |
| Tax payments | 19,458,354.60 | 17,800,791.44 |
| Cash paid to other activities related to operating | 35,097,588.50 | 422,473,394.25 |
| Sub-total of cash outflow of operating activities | 496,723,038.46 | 868,217,153.74 |
| Net cash flow from operating activities | 209,566,788.98 | 286,241,101.43 |
| 2. Cash flow from investing activities | ||
| Cash received from disinvestment | 242,076,974.20 | 37,848,161.29 |
| Cash received from return on investment | 83,541,669.81 | 53,246,572.37 |
| Net cash received from disposal of fixed assets, intangible assets and other long-lived assets | 54,912.63 | |
| Sub-total of cash inflow of investing activities | 325,673,556.64 | 91,094,733.66 |
| Cash paid for acquiring and building fixed assets, intangible assets and other long-lived assets | 12,973,326.66 | 19,033,211.74 |
| Cash paid for investments | 486,919,077.89 | 253,599,265.53 |
| Cash paid to other activities related to investing | 174,207,415.01 | |
| Sub-total of cash outflow of investing activities | 674,099,819.56 | 272,632,477.27 |
| Net cash flow from investing activities | -348,426,262.92 | -181,537,743.61 |
| 3. Cash flow from financing activities | ||
| Cash received by absorbing investments | 769,777,738.50 | 70,688,750.00 |
| Cash received from borrowings | 940,000,000.00 | 1,450,000,000.00 |
| Cash received from other activities related to financing | 87,172,401.90 | |
| Sub-total of cash inflow of financing activities | 1,796,950,140.40 | 1,520,688,750.00 |
| Repayments of borrowings | 1,157,000,000.00 | 1,277,000,000.00 |
| Cash paid for distributing dividends, profits, or paid for interests | 218,297,464.88 | 133,440,300.12 |
| Sub-total of cash outflow of financing activities | 1,375,297,464.88 | 1,410,440,300.12 |
| Net cash flow from financing activities | 421,652,675.52 | 110,248,449.88 |
| 4. Effect of foreign exchange rate fluctuations on cash and cash equivalents | 86.36 | -1,343.50 |
| 5. Net increase in cash and cash equivalents | 282,793,287.94 | 214,950,464.20 |
| add: Opening balance of cash and cash equivalents | 740,891,873.25 | 525,941,409.05 |
| 6. Closing balance of cash and cash equivalents | 1,023,685,161.19 | 740,891,873.25 |
Change Statement of Owner's Equity
January-December, 2019
Unit: yuan Currency: RMB
| Item | 2019 | ||||||||
| Equity Attributable to the Owners of Parent Company | Non-controlling interests | Total owners' equity | |||||||
| Share capital | Capital reserve | Deduct: treasury stock | Other comprehensive income | Surplus reserve | Undistributed profits | Subtotal | |||
| 1. Closing balance of prior period | 845,751,469.00 | 153,824,536.37 | 70,688,750.00 | -1,316,942.00 | 272,882,920.19 | 2,651,462,525.08 | 3,851,915,758.64 | 414,072,220.38 | 4,265,987,979.02 |
| add: Changes in accounting policies | -481,544.75 | -481,544.75 | -645.73 | -482,190.48 | |||||
| Other | -91,554.12 | 91,554.12 | |||||||
| 2. Opening balance of current period | 845,751,469.00 | 153,824,536.37 | 70,688,750.00 | -1,798,486.75 | 272,791,366.07 | 2,651,554,079.20 | 3,851,434,213.89 | 414,071,574.65 | 4,265,505,788.54 |
| 3. Changes of current period | 76,552,927.00 | 728,898,529.92 | 7,921,322.05 | 79,268,090.83 | 954,064,473.85 | 1,846,705,343.65 | 387,280,330.80 | 2,233,985,674.45 | |
| A. Total comprehensive income | 7,921,322.05 | 1,199,347,355.96 | 1,207,268,678.01 | 298,895,247.18 | 1,506,163,925.19 | ||||
| B. Capital contributed and reduced by owners | 76,552,927.00 | 728,898,529.92 | 805,451,456.92 | 92,189,157.70 | 897,640,614.62 | ||||
| a. Common stock invested by owners | 76,552,927.00 | 709,853,069.86 | 786,405,996.86 | 94,885,588.06 | 881,291,584.92 | ||||
| b. Amount of share-based payment included in the owner's equity | 22,783,015.06 | 22,783,015.06 | 22,783,015.06 | ||||||
| c. Other | -3,737,555.00 | -3,737,555.00 | -2,696,430.36 | -6,433,985.36 | |||||
| C. Profit distribution | 79,268,090.83 | -245,282,882.11 | -166,014,791.28 | -3,804,074.08 | -169,818,865.36 | ||||
| a. Appropriation of surplus reserves | 79,268,090.83 | -79,268,090.83 | |||||||
| b. Extraction of general risk provisions | |||||||||
| c. Dividend to owners (or shareholders) | -166,014,791.28 | -166,014,791.28 | -3,804,074.08 | -169,818,865.36 | |||||
| 4. Closing balance of current period | 922,304,396.00 | 882,723,066.29 | 70,688,750.00 | 6,122,835.30 | 352,059,456.90 | 3,605,618,553.05 | 5,698,139,557.54 | 801,351,905.45 | 6,499,491,462.99 |
| Item | 2018 | ||||||||
| Equity Attributable to the Owners of Parent Company | Non-controlling interests | Total owners' equity | |||||||
| Share capital | Capital reserve | Deduct: treasury stock | Other comprehensive income | Surplus reserve | Undistributed profits | Subtotal | |||
| 1. Closing balance of prior period | 831,176,469.00 | 103,593,300.06 | 232,486,459.89 | 2,223,048,013.93 | 3,390,304,242.88 | 355,960,084.62 | 3,746,264,327.50 | ||
| add: Changes in accounting policies | |||||||||
| Other | |||||||||
| 2. Opening balance of current period | 831,176,469.00 | 103,593,300.06 | 232,486,459.89 | 2,223,048,013.93 | 3,390,304,242.88 | 355,960,084.62 | 3,746,264,327.50 | ||
| 3. Changes of current period | 14,575,000.00 | 50,231,236.31 | 70,688,750.00 | -1,316,942.00 | 40,396,460.30 | 428,414,511.15 | 461,611,515.76 | 58,112,135.76 | 519,723,651.52 |
| A. Total comprehensive income | -1,316,942.00 | 551,928,618.35 | 550,611,676.35 | 52,751,530.30 | 603,363,206.65 | ||||
| B. Capital contributed and reduced by owners | 14,575,000.00 | 50,231,236.31 | 70,688,750.00 | -5,882,513.69 | 8,825,605.46 | 2,943,091.77 | |||
| a. Common stock invested by owners | 14,575,000.00 | 56,113,750.00 | 70,688,750.00 | 25,786,106.62 | 25,786,106.62 | ||||
| b. Amount of share-based payment included in the owner's equity | 1,997,989.57 | 1,997,989.57 | 1,997,989.57 | ||||||
| c. Other | -7,880,503.26 | -7,880,503.26 | -16,960,501.16 | -24,841,004.42 | |||||
| C. Profit distribution | 40,396,460.30 | -123,514,107.20 | -83,117,646.90 | -3,465,000.00 | -86,582,646.90 | ||||
| a. Appropriation of surplus reserves | 40,396,460.30 | -40,396,460.30 | |||||||
| b. Extraction of general risk provisions | |||||||||
| c. Dividend to owners (or shareholders) | -83,117,646.90 | -83,117,646.90 | -3,465,000.00 | -86,582,646.90 | |||||
| 4. Closing balance of current period | 845,751,469.00 | 153,824,536.37 | 70,688,750.00 | -1,316,942.00 | 272,882,920.19 | 2,651,462,525.08 | 3,851,915,758.64 | 414,072,220.38 | 4,265,987,979.02 |
Change Statement of Owner's Equity of Parent Company
January-December, 2019
Unit: yuan Currency: RMB
| Item | 2019 | ||||||
| Share capital | Capital reserve | Deduct: Treasury stock | Other comprehensive income | Surplus reserve | Undistributed profits | Total owners' equity | |
| 1. Closing balance of prior period | 845,751,469.00 | 160,705,065.92 | 70,688,750.00 | -1,305,935.62 | 272,882,920.19 | 1,656,011,455.34 | 2,863,356,224.83 |
| add: Changes in accounting policies | -310,630.08 | -310,630.08 | |||||
| Other | -91,554.12 | -823,987.07 | -915,541.19 | ||||
| 2. Opening balance of current period | 845,751,469.00 | 160,705,065.92 | 70,688,750.00 | -1,616,565.70 | 272,791,366.07 | 1,655,187,468.27 | 2,862,130,053.56 |
| 3. Changes of current period | 76,552,927.00 | 715,156,273.63 | 7,238,557.02 | 79,268,090.83 | 544,170,026.15 | 1,422,385,874.63 | |
| A. Total comprehensive income | 7,238,557.02 | 789,452,908.26 | 796,691,465.28 | ||||
| B. Capital contributed and reduced by owners | 76,552,927.00 | 715,156,273.63 | 791,709,200.63 | ||||
| a. Common stock invested by owners | 76,552,927.00 | 692,373,258.57 | 768,926,185.57 | ||||
| b. Amount of share-based payment that included in the owner's equity | 22,783,015.06 | 22,783,015.06 | |||||
| C. Profit distribution | 79,268,090.83 | -245,282,882.11 | -166,014,791.28 | ||||
| a. Appropriation of surplus reserves | 79,268,090.83 | -79,268,090.83 | |||||
| b. Dividend to owners (or shareholders) | |||||||
| c. Other | -166,014,791.28 | -166,014,791.28 | |||||
| 4. Closing balance of current period | 922,304,396.00 | 875,861,339.55 | 70,688,750.00 | 5,621,991.32 | 352,059,456.90 | 2,199,357,494.42 | 4,284,515,928.19 |
| Item | 2018 | ||||||
| Share capital | Capital reserve | Deduct: Treasury stock | Other comprehensive income | Surplus reserve | Undistributed profits | Total owners' equity | |
| 1. Closing balance of prior period | 831,176,469.00 | 102,593,326.35 | 232,486,459.89 | 1,375,560,959.50 | 2,541,817,214.74 | ||
| add: Changes in accounting policies | |||||||
| Other | |||||||
| 2. Opening balance of current period | 831,176,469.00 | 102,593,326.35 | 232,486,459.89 | 1,375,560,959.50 | 2,541,817,214.74 | ||
| 3. Changes of current period | 14,575,000.00 | 58,111,739.57 | 70,688,750.00 | -1,305,935.62 | 40,396,460.30 | 280,450,495.84 | 321,539,010.09 |
| A. Total comprehensive income | -1,305,935.62 | 403,964,603.04 | 402,658,667.42 | ||||
| B. Capital contributed and reduced by owners | 14,575,000.00 | 58,111,739.57 | 70,688,750.00 | 1,997,989.57 | |||
| a. Common stock invested by owners | 14,575,000.00 | 56,113,750.00 | 70,688,750.00 | ||||
| b. Amount of share-based payment that included in the owner's equity | 1,997,989.57 | 1,997,989.57 | |||||
| C. Profit distribution | 40,396,460.30 | -123,514,107.20 | -83,117,646.90 | ||||
| a. Appropriation of surplus reserves | 40,396,460.30 | -40,396,460.30 | |||||
| b. Dividend to owners (or shareholders) | -83,117,646.90 | -83,117,646.90 | |||||
| c.Other | |||||||
| 4. Closing balance of current period | 845,751,469.00 | 160,705,065.92 | 70,688,750.00 | -1,305,935.62 | 272,882,920.19 | 1,656,011,455.34 | 2,863,356,224.83 |
III. Basic Information of the Company
1. Overview of the Company
Approved by the People's Government of Liaoning Province, Liaoning Wellhope Agri-TechJoint Stock Co., Ltd. (hereinafter referred to as the Company) is a limited liability companyfounded by 23 natural persons, including Jin Weidong, Ding Yunfeng, etc., which wasregistered in Liaoning Province Administrative Bureau of Industry and Commerce onMarch 27th, 2003. The head office of the Company is located in Shenyang, currently itholds the business license with the number of 9121000074712989XU and the registeredcapital of RMB 922.30 million, registered address (headquarters address): No. 169,Huishan Street, Shenbei New District, Shenyang, Liaoning Province. Jin Weidong is thelegal representative.The Company's business scope covers feed and feed raw material trade, broilerintegration, hog raising, etc. The parent company covers feed and feed additivesprocessing, marketing; grain purchase (self-use); sales of feed raw materials; poultry andlivestock raising, seawater and freshwater aquaculture; agricultural and sideline productsprocessing; enterprise management service; supply chain management; informationservices (internet information services only), ordinary road freight (the business activitieswhich need to be approved by the law, shall receive the approval of relevant authorities).The financial statements have been approved to be disclosed by the 14th board meetingof the 6th Session of Board of Directors on March 27, 2020.
2. Scope of the Consolidated Financial Statements
The scope of the Company's consolidated financial statements is determined on the basisof control, all the controlled subsidiaries are included in the consolidated financialstatements.The changes in the scope of the consolidated financial statements are shown in the tablebelow:
A. The subsidiaries which are newly included in the consolidation scope in the reportingperiod
| Company | Way of obtaining |
| Suizhong Renhe Fishery | Combination under different control |
| Harbin Baoweikang Bio-Tech | Combination under different control |
| Hebei Deheng Raising | Combination under different control |
| Shulan Fengtai Agriculture and Animal Husbandry | Invested |
| Shulan Fengtai Raising | Invested |
| Xi'an Linfeng Shengyi Trading | Invested |
| Linxi Helai Agri-Tech | Invested |
| Nanchang Wellhope Agri-Tech | Invested |
| Hengyang Wellhope Agri-Sci-Tech | Invested |
| Chongqing Dahongda Construction Engineering | Invested |
| Anhui Wellhope Haoxiang Agricultural Development | Invested |
| Lixin Xiangfeng Agriculture and Animal Husbandry | Invested |
| Lixin Hongfeng Agriculture and Animal Husbandry | Invested |
| Guangzhou Dashang Trading | Invested |
| Shandong Heyuan Food | Invested |
| Zhangwu Jiufeng Trading | Invested |
| Wafangdian Yifeng Agri-Tech | Invested |
| Company | Reason of excluding from the consolidation scope |
| Weifang Wellhope Xinhesheng Feed | Transferred |
| Luohe Hongfeng Poultry | Transferred |
| Dalian Tianyicheng Trading | Cancelled |
the reporting period, and there are no major issues affecting the ability of going concern.V. Important Accounting Policies and Accounting Estimates
The following important accounting policies and accounting estimates of the Company are
formulated in accordance with the Accounting Standards for Business Enterprises. The
business not mentioned is subject to relevant accounting policies in Accounting Standards
for Business Enterprises.
1. Declaration about compliance with Accounting Standards for Business Enterprises
The financial statements prepared by the Company are in line with the requirements of
Accounting Standards for Business Enterprises, which truly and completely reflect the
Company's financial position, operating results, changes in shareholders' equity, cash flow
and other relevant information during the reporting period.
2. Accounting period
The Financial Year of the Company starts from January 1 and ends on December 31 of the
Gregorian calendar.
3. Operating cycle
The Company takes a 12-month operating cycle.
4. Bookkeeping base currency
RMB
5. Accounting treatment methods for business combination under the same control or
the different control
(1) Accounting treatment methods for business combination under the same control
The Company adopts pooling of interest method to deal with the accounting of business
combination, which is under the same control.
On the date of combination, the assets and liabilities acquired by the Company in business
combination under the same control shall be measured according to the book value of
assets and liabilities of the combining party in the consolidated financial statements of the
final controlling party. The share of the book value of the owner's equity held by thecombining party, which is owned, by the final controlling party in the consolidatedstatement of the final controlling party is regarded as the initial investment cost oflong-term equity investment in the individual financial statements. The balance betweeninitial cost of investment of long-term equity investment and paid combining consideration(including paid cash, non-cash assets transferred, book value of occurred or assumed debtas well as the total face value of issued stocks), capital reserve (equity premium or capitalpremium) shall be adjusted; If the balance of capital reserve (equity premium or capitalpremium) is not sufficient for offset, the surplus reserves and undistributed profit shall beoffset successively.
(2) Accounting treatment methods for business combination under the different controlThe Company adopts acquisition method to deal with the accounting of businesscombination, which is under the different control.
① The identifiable assets, liabilities and contingent liabilities acquired in the business
combination under the different control are measured at fair value. Based on the fair valueof assets, liabilities incurred or assumed and issued equity securities paid out as thecombining consideration on the acquisition date, the balance between the fair value andthe book value of the Company is included into current gains and losses.
② Combined cost shall be confirmed according to the following conditions respectively:
(A) For the business combination realized by one-time transaction, the combined costsshall be confirmed by the sum of the fair values, on the acquisition date, of the assets paid,the liabilities occurred or assumed and the equity securities issued by the Company toobtain the control right on the acquiree and the contingent consideration complying withthe confirmation conditions. Combined cost is initial investment cost of such long-termequity investment.(B) For business combination realized step by step through multiple exchange transactions,the combined cost shall be the sum of the amount of equity investments held prior to theacquisition date that are re-measured at fair value on the acquisition date and theinvestment cost newly increased on the acquisition date. The long-term equity investment
in individual financial statements is the sum of the book value of the equity investmentheld before the acquisition date and the investment cost newly increased on theacquisition date. Exclude package deal.
③ The Company allocates the combined cost between the identifiable assets andliabilities acquired on the acquisition date.(A) Where other assets other than intangible assets obtained from the Acquiree in thebusiness combination (not only finite to the assets which have been originally confirmedby the Acquiree), the future economic benefits are expected to flow into the Company andthe fair values reliably measured, they shall be separately confirmed and measured at thefair values.(B) Where the fair value of the intangible assets of the Acquiree acquired by the Companyin business combination can be reliably measured, it shall be separately confirmed andmeasured at the fair value.(C) Where the acquiree's liabilities, other than contingent liabilities, acquired by theCompany in business combination, are expected to result in the outflow of economicbenefits from the Company and the fair value can be reliably measured, they shall beseparately confirmed and measured at the fair value.(D) Where the fair value of the contingent liabilities of the Acquiree acquired by theCompany in business combination can be reliably measured, they shall be separatelyconfirmed as liabilities and shall be measured at the fair values.(E) When the Company allocates the cost of business combination and confirms that it hasacquired identifiable assets and liabilities in the combination, it shall not consider thegoodwill and deferred income tax items that have been confirmed by the Acquiree beforethe combination.
④ Disposal of the balance of the business combination cost and the share of the fair value
of the identifiable net assets obtained from the Acquiree in the combination.(A) The balance between the business combination costs greater than the share of fairvalue of the identifiable net assets obtained from the Acquiree in the combination, shallbe confirmed as goodwill.
(B) The balance between the business combination cost less than the share of fair value ofthe identifiable net assets obtained from the Acquiree in the combination shall bedisposed pursuant to the following provisions.(a) The measurement of the fair values of the identifiable assets, liabilities and contingentliabilities obtained from the Acquiree as well as the combination costs shall be reviewed;(b) After the review, if the combined costs are still less than the fair value share of theidentifiable net assets obtained from the Acquiree in the combination, the balance shall beincluded into the current gains and losses.
(3) Disposal of relevant expenses accrued due to business combination by the Company
① All direct related expenses accrued due to business combination of the Company(including audit, legal service, assessment consultation and other agency expense andother relevant administrative expenses accrued due to business combination), shall beincluded into current gains and losses when accruing.
② The commission and service fee paid by the Company for issuing debt securities for themerger of enterprise shall be included in the initial measurement amount of debtsecurities.(A) If the bond is issued at the discount or par value, the amount of discount will beincreased.(B) If the bond is issued at premium, the premium amount shall be reduced in this part ofexpenses.
③ The commission and service fee paid by the Company for issuing equity securities asconsideration for the business combination shall be included in the initial measurementamount of equity securities.(A) When equity securities are issued at the premium, the cost shall be deducted from thecapital reserve (equity premium).(B) When equity securities are issued at par value or at discount, the retained earningsshall be written down from the fee.
6. Preparation methods for consolidated financial statements
(1) Uniform accounting policy and accounting period
All the accounting policies and accounting period adopted by subsidiaries included in theconsolidated financial statements shall be consistent with the Company. In case of anyinconsistency, adjustment according to the accounting policies and accounting period isnecessary when preparing consolidated financial statements.
(2) Preparation methods for consolidated financial statements
Based on the financial statements of the Company and its subsidiaries, according to otherrelevant information, the parent company prepares consolidated financial statementsafter adjusting the long-term equity investment in the subsidiaries according to the equitymethod to offset the impact of internal transactions among the Company and itssubsidiaries on the consolidated financial statements.
(3) The reflection of excess deficit of subsidiaries in consolidated financial statementsIn the consolidated financial statements, if the current loss shared by the parent companyexceeds its share of the owner's equity of the subsidiary company at the beginning of theperiod, the balance of write-downs shall be attributed to the owner's equity of the parentcompany(undistributed profits). If the current loss shared by the non-controllingshareholders of the subsidiaries exceeds its share of the owner's equity of the subsidiarycompany at the beginning of the period, the balance shall continually offset thenon-controlling interests.
(4) Disposal of increased or decreased number of subsidiaries during the report period
①Disposal of increased number of subsidiaries during the report period(A) Disposal of increased number of subsidiary due to business combination under thesame control during the report periodDuring the report period, if the number of subsidiary increases due to businesscombination under the same control, the Company shall adjust the opening balance ofconsolidated balance sheet, take the income, expenses and profit of such subsidiary fromthe beginning to the end of combination into the consolidated income statement, and thecash flow of the subsidiary from the acquisition date to the end of the report period shallbe included in the consolidated cash flow statement.(B) Disposal of increased number of subsidiary due to business combination under the
different control during the report periodDuring the report period, if the number of subsidiaries increases due to businesscombination under the different control, the Company shall not adjust the openingbalance of consolidated balance sheet, take the income, expenses and profit of suchsubsidiary from the acquisition date to the end of the report period into the consolidatedincome statement, and the cash flow of the subsidiary from the acquisition date to theend of the report period shall be included in the consolidated cash flow statement.
②Disposal of subsidiary during the report period
Where the company disposes a subsidiary during the report period, the opening balanceof the consolidated balance sheet shall not be adjusted, take the income, expenses andprofit of such subsidiary from the beginning of the beginning to the disposal date into theconsolidated profit statement, and include the cash flow of such subsidiary into theconsolidated cash flow statement, and the cash flow of the subsidiary from the beginningto the disposal date shall be included in the consolidated cash flow statement.
7. Confirmation standard of cash and cash equivalents
Cash shall include cash on hand of the Company, as well as bank deposit and othermonetary funds which can be used for payment at any time.The investments with short term (generally refer to three months from the acquisitiondate), high liquidity, convenience to convert into known amount of cash and with low riskof change in value owned by Company shall be confirmed as cash equivalent.
8. Foreign currency transactions and foreign currency statement translation
(1) Accounting methods of foreign currency transactions
①Initial confirmation of foreign currency transaction
For foreign currency transactions, the Company shall convert the amount of foreigncurrency into the amount of the book-keeping base currency according to the spotexchange rate (intermediate price) announced by the People's Bank of China on the dateof the transaction. Of which, for foreign currency exchange or related transactions, theCompany shall convert according to the exchange rate on the date of the transaction.
②Adjustment or settlement of balance sheet date or settlement date
On the balance sheet date or settlement date, the Company shall dispose the foreigncurrency monetary items and foreign currency non-monetary items according to thefollowing methods:
(A) Accounting treatment principle for foreign currency monetary itemFor foreign currency monetary items, on the balance sheet date or settlement date, theCompany adopts spot exchange rate (intermediate price) for conversion on the balancesheet date or settlement date to adjust the amount of the accounting base currency offoreign currency monetary items caused by exchange rate fluctuations, and treat them asexchange balances. Among them, the exchange balance between foreign currency loansrelated to the acquisition, construction or production of assets eligible for capitalization isincluded in the cost of assets eligible for capitalization. Other balance of exchange shall beincluded into current financial expense.(B) Accounting treatment principle for foreign currency non-monetary item(a) For the foreign non-monetary currency asset measured at historical cost, the Companyshall convert at spot rate (intermediate price) on transaction date with unchanging itsoriginal recording currency amount and without exchange balance.(b) For inventory measured at a lower cost between the cost and net realizable value, ifthe net realizable value is confirmed in foreign currency, the Company first converts thenet realizable value into the accounting standard currency, and then compares it with theinventory cost reflected by the accounting standard currency when determining the endvalue of the inventory.(c) For non-monetary items measured at fair values, if the fair value at the end of theperiod is reflected in foreign currency, the Company shall convert the foreign currency intothe amount of recording currency based on the spot exchange rate on the day when fairvalues are confirmed, then compare them with the original amount of recording currency,and the balance shall be treated as gains and losses from the changes in fair value andincluded into current gains and losses.
(2) Accounting treatment methods for foreign currency statement translation
①The Company shall conduct translation of the financial statements of overseas
operations as the following methods:
(A) The asset and liability items in the balance sheets shall be translated at a spotexchange rate on the balance sheet date, among the equity items of owner, except for theitems as “undistributed profits”, other items shall be translated at the spot exchange rateat the time when they are incurred.(B) The income and expense items in the profit statements shall be c translated at the spotexchange rate of the transaction date, or at a spot exchange rate which is confirmedthrough a systematic and rational method and which is approximate to the spot exchangerate on the transaction date.The balance in the financial statement of foreign currency translated by theabove-mentioned methods shall be listed in the owners’ equity item "OtherComprehensive Income" of consolidated balance sheet.
②The Company shall translate the financial statements of overseas operations inhyperinflation economy according to the following methods:
(A) The Company shall restate the balance sheet items by utilizing the general price index,restate the items of the income statement by utilizing the variation of the general priceindex, and then translate them at the spot exchange rate on the recent balance sheetdate.(B) If an overseas business is no longer situated in the hyperinflationary economy, theCompany shall stop the restatement and shall translate the restated financial statementsat the price of the cessation date.
③When the Company disposes any overseas operation, shall translate the balance offoreign currency financial statements related to the overseas business as shown belowunder the owner's equity items in the balance sheet, and the balance shall be transferredfrom the owner's equity items and disposed as current gains and losses; When theCompany disposes part of the overseas operations, shall calculate the balance according tothe proportion of the disposal of foreign currency financial statements, and dispose thebalance as the current gains and losses.
9. Financial Instrument
The financial instrument refers to a contract that forms the financial assets of one partyand the financial liabilities or equity instruments of the other party.
(1) Classification of financial instruments
①Classification of financial assets
According to the business model of financial assets management and the contractual cashflow characteristics of financial assets, the Company classifies financial assets into thefollowing three categories :(A) financial assets measured at amortized cost; (B) financialassets measured at fair value and the changes included in other comprehensive income(including financial assets designated to be measured at fair value and the changes areincluded in other comprehensive income);(C) financial assets measured at fair value andthe changes recorded in current gains or losses.
②Classification of financial liabilities
According to business characteristics and risk management requirements, the Companydivides the financial liabilities into the following two categories: (A) The financial liabilitiesmeasured at fair value and the changes included in current gains and losses(includingtrading financial liabilities and the financial liabilities designated to be measured at fairvalue and of the changes included in current gains or losses); (B) Other financial liabilities.
(2) Confirmation basis and method of measurement of financial instruments
①Confirmation basis of financial instruments
When becoming one party of financial instrument contract, the Company shall confirm afinancial asset or financial liability.
②Measurement method of financial instruments
(A)Financial assetsFinancial assets shall be measured at fair value when they are initially recognized.For financial assets measured at fair value and the changes booked into current gains orlosses, relevant transaction expenses shall be directly recorded into current gains or losses;for other financial assets, relevant transaction expenses shall be included in the initialrecognized amount. Accounts receivable or notes receivable arising from selling productsor providing labor services that do not contain a significant financing component or do not
consider the financing component of contracts that do not exceed one year, shall take theamount of consideration to which it is expected to be entitled as the initially recognizedamount.(a) Financial assets measured at amortized cost
After the initial recognition, the real interest method shall be adopted to implementfollow-up measurement of such financial assets at amortized cost. Gains or losses offinancial assets measured at amortized cost and not belong to part of any hedgingrelationship shall be recorded into current gains and losses when recognition is terminated,reclassified, amortized or recognized as impairment according to the real interest method.(b) Financial assets measured at fair value and the changes included in othercomprehensive incomeAfter the initial recognition, such financial assets shall be subsequently measured at fairvalue. The impairment loss or gain, exchange gain or loss and the interest calculated by thereal interest method shall be recorded into current gains or losses, other gains or lossesshall be booked into other comprehensive income. When the recognition is terminated,the accumulated gains or losses booked into other comprehensive income before shall betransferred out from other comprehensive income and booked into current gains or losses.Where the Company designates part of non-trading equity instrument investments as thefinancial assets that measured at fair value and the changes included in othercomprehensive income, relevant dividend income of such financial assets shall be includedin current gains or losses, and changes in fair value shall be included in othercomprehensive income. When the recognition is terminated, the accumulated gains orlosses recorded in other comprehensive income shall be transferred to retained income,and not recorded in current gains or losses.(c) Financial assets measured at fair value and the changes recorded in current gains andlosses.Besides the financial assets measured at amortized cost and those measured at fair valueand the changes included in other comprehensive income, the Company classifies otherfinancial assets as the assets measured at fair value and the changes included in currentgains or losses.In addition, in the initial recognition, in order to eliminate or significantly reduce
accounting mismatches, the Company designates some financial assets as the financialassets measured at fair value and the changes recorded into current gains or losses. Forsuch financial assets, the Company adopts fair value for follow-up measurement, and thechanges in fair value are recorded into current gains or losses.(B) Financial liabilities(a) Financial liabilities measured at fair value and the changes included in current gains orlossesTrading financial liabilities (including derivative instruments belonging to financialliabilities) shall be subsequently measured in accordance with the fair value, and thechanges in fair value shall be recorded into current gains or losses except for those relatedto hedge accounting. For the financial liabilities that are designated to be measured at fairvalue and the changes included in current gains or losses, in case the changes in the fairvalue of liabilities are caused by the changes in the Company's own credit risk shall beincluded in other comprehensive income, and when terminates such liabilities, theaccumulated changes in fair value shall be transferred to retained earnings. Other changesin fair value shall be booked into current gains or losses.(b) Financial liabilities measured at amortized costBesides the financial liabilities that do not meet the condition of derecognition or thefinancial liabilities formed by transferred financial assets or financial guarantee contract,other financial liabilities shall be measured at amortized cost, gains or losses arising fromthe termination of recognition or amortization shall be booked into current gains or losses.
(3) The confirmation basis and measurement method of financial assets transferIf the Company transfers almost all the risks and rewards in the ownership of financialassets, it shall terminate to recognize the financial assets and separately recognize therights and obligations generated or retained in the transfer as assets or liabilities; if almostall the risks and rewards in the ownership of financial assets are retained, the transferredfinancial assets shall continue to be recognized. If the Company neither transfers norretains almost all the risks and rewards on the ownership of the financial asset, it shalldeal with the following situations:
①If it does not retain control of the financial asset, the recognition of the financial assetshall be terminated, and the rights and obligations generated or retained in the transfer
shall be separately recognize as assets or liabilities;
②If the control of the financial asset is retained, the relevant financial asset shall berecognized according to the phases of transferred financial asset, and relevant liabilitiesshall be recognized accordingly.
(4) Terminating the recognition of financial liabilities
When the current obligation of the financial liability (or part thereof) has been discharged,the Company shall terminate the recognition of such financial liability (or part thereof) andrecord the difference between its book value and the consideration paid (includingnon-cash assets transferred or liabilities assumed) into the current gains or losses.
(5) Offsetting financial assets and financial liabilities
Financial assets and financial liabilities shall be listed separately in the balance sheet andshall not be offset mutually. However, if the following conditions are met at the same time,the net offset shall be shown in the balance sheet:
①The Company has the legal right to offset recognized amount, and such legal right iscurrently enforceable;
②The Company plans to implement net settlement, or simultaneously sell off thefinancial assets and liquidate such financial liabilities.
(6) Equity instrument
Equity instruments are the contracts that prove the ownership of the residual equity in theCompany's assets after deducting all liabilities. Instruments issued (including refinancing),repurchased, sold or written off by the Company shall be taken as the disposal of changesin equity. The company does not recognize changes in the fair value of equity instruments.Transaction expenses associated with equity transactions shall be deducted from equity.The Company shall take the distribution of equity instrument holders as profit distribution,and the stock dividends paid will not affect the total equity of shareholders.
(7) The method of recognizing the fair value of financial instruments
When implement initial recognition, if the fair value of the financial asset or financialliability is determined by quoting the same asset or liability in an active market or by othermeans other than valuation techniques of observable market data, the Company will deferthe difference between that fair value and the trading price. After the initial recognition,the Company recognizes the deferred difference as the gain or loss of the corresponding
accounting period based on the degree of change of a factor in the correspondingaccounting period.
(8) Impairment of financial assets
Regarding the financial assets measured at amortized cost and the debt instrumentinvestment measured at fair value and the changes recorded in other comprehensiveincome, the Company recognizes loss provision based on expected credit losses.
①Recognition method of impairment provision
(A)General methodAt each balance sheet date, the Company measures the expected credit losses of financialinstruments at different stages. If the credit risk of the financial instrument has notsignificantly increased since its initial recognition, it is in the first stage. The Companymeasures the loss provision according to the expected credit loss within the next 12months. If the credit risk of the financial instrument has significantly increased since itsinitial recognition but no credit impairment has occurred, it is in the second stage, theCompany measures the loss provision according to the expected credit loss of theinstrument during the whole period. If the financial instrument has experienced creditimpairment since its initial recognition, it is in the third stage, and the Company measuresthe loss provision according to the expected credit loss of the instrument during the wholeperiod. For the financial instruments (such as time deposit in commercial banks with highcredit rating, financial instruments with external credit rating of "investment grade" orabove), that have lower credit risk in the balance sheet date, assuming that the credit riskhas not increased significantly since the initial recognition, the Company measures the lossprovision according to expected credit loss within the next 12 month.(B)Simplified methodFor accounts receivable and revenue-related notes receivable that do not contain asignificant financing component or do not consider the financing component of contractsthat do not exceed one year, the Company measures the loss provision in accordance withthe expected credit loss for the entire duration.
②Criteria for determining whether credit risk has increased significantly since the initialrecognitionIf the probability of default of the financial asset recognized on the balance sheet date is
significantly higher than the probability of default at the time of initial recognition, thecredit risk of the financial asset is proved to be significantly increased.No matter which way used by the Company to assess whether a significant increase incredit risk, if the contract payment is overdue more than 30 (included), usually canpresume the credit risk of financial assets increase significantly, unless rational andevidence-based information is available to be obtained by the company at reasonable costto prove that the credit risk does not increase significantly even after 30 days of delayExcept for special cases, the Company uses the change of default risk within the next 12months as a reasonable estimate of default risk in the whole duration to determinewhether the credit risk has increased significantly since the initial recognition.
③ The combination method and determination basis of credit risk assessment based oncombinationThe Company respectively evaluates the credit risks of notes receivable, accountsreceivable and other receivables with the following characteristics. Such as: thereceivables in dispute with the other party or involving litigation or arbitration; receivableswith a clear indication that the debtor is likely to be unable to repay.When it is impossible to evaluate the information of the expected credit loss of eachfinancial asset at a reasonable cost, the Company divides the receivables into severalportfolios according to the credit risk characteristics and calculates the expected creditloss based on the portfolios.
| Portfolio | Accrual method |
| Bank's acceptance bill, commercial acceptance bill | For the notes receivable divided into portfolios, the expected credit loss shall be calculated based on the default risk exposure and the expected credit loss rate of the entire duration by referring to the experience of past credit losses and combining the current situation and the forecast of future economic conditions. It will not accrue the allowance for doubtful accounts of bank’s acceptance bill |
| Aging | For the accounts receivable divided into aging portfolios, the Company shall, by referring to the experience of past credit loss and combining with the current situation and the prediction of future economic situation, prepare a table comparing the aging of accounts receivable with the expected credit loss rate of the whole period to calculate the expected credit loss. |
| Other | The Company does not accrue allowance for doubtful accounts for the receivables from subsidiaries that have no significant recovery risk. |
10. Notes Receivable
The determination method and accounting arrangement method for the expected creditloss of the receivables received by the Company from January 1, 2019 have been shown in"Financial Instruments".
11. Accounts Receivable
The determination method and accounting arrangement method for the expected creditloss of the receivables received by the Company from January 1, 2019 have been shown in"Financial Instruments".
12. Other Receivable
The determination method and accounting arrangement method for the expected creditloss of the receivables received by the Company from January 1, 2019 have been shown in"Financial Instruments".
13. Inventory
(1) Classification of inventory
The Company's inventory is divided into raw materials, revolving materials (includingpackaging and low-value consumables), in process products, finished products (inventorygoods), expendable biological assets, commissioned processing materials and so on.
(2) Valuation method for delivery of inventory
The issued materials are calculated by weighted average method, and the issued goods arecalculated by weighted average method.
(3) Confirmation basis of net realizable value of inventory and the accrual method forinventory falling price reserves
① Confirmation basis of net realizable value of inventory
(A) For merchandise inventory (or finished products) for sale including materials for directsale, during the normal production and operation, the net realizable value shall beconfirmed by the amount of estimated sales price of the inventory deducting theestimated selling expenses and related taxes and dues.(B) The materials inventory needs to be processed, during the normal process ofproduction and management, the estimated sale price of the finished products minus the
estimated costs when finished the works, the estimated selling expenses and related taxpayments, the net realizable value can be confirmed.(C) For the inventory hold to execute sale contract or labor contract, its net realizable valueshall be calculated based on the contract price; In case inventory quantity hold by theCompany is more than the order quantity of the sale contract, the net realizable value ofthe exceeding part inventory shall be calculated based on general sale price.(D) But for materials held for production, etc., if the net realizable value of finishedproducts made from the materials is higher than the cost, the materials shall still bemeasured at the cost; If the decline of material prices indicates that the net realizablevalue of finished products is lower than the cost, the materials can be measured based onnet realizable value.(E) For consumable biological Assets: on the balance sheet date, the consumable biologicalassets shall be measured at the lower of cost and net realizable value, and the falling pricereserves shall be calculated by the same way as that for recognizing the falling pricereserves of inventory. If the influencing factors of impairment have disappeared, theamount of write-down shall be recovered and the amount of write-down shall be reversedback and recorded into the current gains or losses. If the Company changes the use ofconsumable biological assets, the cost after the change of use shall be determined by thebook value at the time of the change of use.
②Accrual method of inventory falling price reserves
The Company shall accrue inventory falling price reserves according to the lower of costand net realizable value of a single inventory item. For those inventories with largenumber and low unit price, the falling price reserves for inventory shall be accruedaccording to the categories.
(4) Inventory system
The Company adopts perpetual inventory system for the stock inventory and regularlyconducts physical inventory.
(5) The amortization method for revolving materials
① The amortization method of low-value consumption goods:
The Company adopts fifty percent amortization method for ring mould and woodenpallets, and one-time amortization method for other low-value consumables.
② Amortization method of packing material
The Company shall conduct amortization by once write-off process in case of receivingpacking materials.
14. Available-for-sale Assets
(1) Available-for-sale
① Range of non-current assets and disposal group of available-for-sale assets
When the Company recovers its book value mainly by selling (including the exchange ofnon-monetary assets with commercial substance) rather than continuing to usenon-current asset or disposal group, it classifies the non-current asset or disposal group asholding for sale.Disposal group refers to a group of assets disposed of as a whole through sale or othermeans in transaction, and liabilities directly related to these assets transferred in thetransaction.
② Confirmation condition for non-current assets and disposal group of available-for-sale
assets(A) The Company shall classify the non-current assets and the disposal group that meetthe following conditions as available-for-sale assets:
According to the usual practice of selling such assets or disposal groups in similartransactions, they can be sold immediately in the current situation.(B) They are likely to be sold, that is, the Company has made a decision on sale plan andobtained definite purchase commitment, and the sale is expected to be completed withinone year. They can be sold with the approval of the relevant authority or regulatoryauthority of the Company.
③ Accounting treatment method and reporting for non-current assets and disposal groupof available-for-sale assets.The Company shall measure the book value of assets and liabilities in non-current assetsor disposal groups according to relevant accounting standards before dividing non-current
assets or disposal groups into available for sale assets for the first time.When the Company initially measures or recalculates non-current assets or disposalgroups held for sale on the balance sheet date, if its book value is higher than the netamount of fair value minus selling expenses, the book value is written down to the netamount of fair value minus selling expenses, and the amount written down is confirmed asthe loss of assets impairment, which is recorded in the current gains and losses, and theprovision for holding impairment of assets for sale is made. For the amount of loss ofimpairment of assets confirmed by the disposal group held for sale, it shall firstly offset thebook value of goodwill in the disposal group, and then offset proportionally the book valueaccording to the proportion of the book value of each non-current asset in the disposalgroup. There is no depreciation or amortization of non-current assets held for sale.The non-current assets held for sale or assets in disposal groups held for sale shall notoffset each other with the liabilities in the disposal group held for sale and shall be shownas current assets and current liabilities respectively.If the Company loses control of its subsidiary Company due to the sale of its investment insubsidiary Company or other reasons, no matter whether the enterprise retains part ofequity investment after the sale, when the investment in subsidiary Company to be soldmeets the conditions for the classification of categories held for sale, the investment insubsidiary Company will be divided into categories held for sale as a whole in theindividual financial statements of the parent Company , and all assets and liabilities ofsubsidiaries will be divided into category of available-for-sale in the consolidated financialstatements.
(2) Discontinuing operation
Termination of business refers to a separate component of Company that meets one of thefollowing conditions and has been disposed of or classified as category held for sale:
① The constituent part represents an independent principal business or a principalbusiness region;
② The constituent part is a part intended for disposal planning of a major independent
business or a main business region;
③ The constituent part is a subsidiary Company specially acquired for resale.
15. Long-term equity investment
(1) Initial investment cost recognition of long-term equity investment
① The recognition of the initial investment cost of long-term equity investment formed bybusiness combination can be seen in the accounting treatment of business combinationunder the same control and under the different control in Note 5.
② Besides the long-term equity investment formed by business combination, the initialinvestment cost of the long-term equity investment obtained by other means shall berecognized in accordance with the following provisions:
(A) For long-term equity investment acquired through paying cash, the acquisition priceactually paid shall be taken as the initial investment cost. The initial investment costincludes the expenses directly related to the long-term equity investment obtained, taxesand other necessary expenses.(B) The long-term equity investment obtained by issuing equity securities (equityinstruments) is regarded as its initial investment cost according to the fair value of equitysecurities (equity instruments) issued. If there is conclusive evidence that the fair value oflong-term equity investment obtained is more reliable than that of equity securities(equity instruments) issued, the initial investment cost is confirmed on the basis of the fairvalue of long-term equity investment invested by investors. If the fees directly related tothe issuance of equity securities (equity instruments), including service fees andcommissions, are reduced by the issuance premium, and if the premium is insufficient tobe reduced, the surplus reserve and undistributed profits are reduced in turn. Long-termequity investment obtained by issuing debt securities (debt instruments) shall be treatedby issuing equity securities (equity instruments).(C) For the long-term equity investment obtained through debt restructuring, theCompany takes the fair value of the shares enjoyed by the creditor's rights into equity asits initial investment cost.(D) For long-term equity investment acquired through non-monetary assets exchange, ifnon-monetary assets exchange is of commercial substance and fair value of converted
assets can be reliably measured. The Company confirms its initial investment cost on thebasis of fair value of converted assets, unless there is solid evidence that the fair value ofconverted assets is more reliable. If the above-mentioned conditions cannot be met, thebook value of swap-out assets and related payable taxes shall be taken as the initialinvestment cost of swap-in long-term equity investments.The expenses, taxes and other necessary expenses incurred by the Company directlyrelated to the acquisition of long-term equity investment are included in the initialinvestment cost of long-term equity investment.No matter how the Company acquires long-term equity investment, the cash dividends orprofits declared but not yet paid in actual payments or consideration shall be accountedfor separately as the dividend receivable and shall not constitute the cost of long-termequity investment.
(2) The subsequent measurement and loss and profit confirmation method of long-termequity investment
① The long-term equity investment checked and calculated by cost method(A) The Company shall adopt method to calculate the long-term equity investment can becontrolled by the invested unit, that is, investment in subsidiaries.(B) For long-term equity investment calculated by cost method, except for cash dividendsor profits which have been declared but not yet paid in the actual price or consideration atthe time of investment, the Company, regardless of whether it belongs to the net profitsrealized by the invested units before and after investment, shall recognize the investmentincome according to the cash dividends or profits declared by the invested units.
② The long-term equity investment checked and calculated by equity method(A) A Company shall adopt the equity method to account for joint venture under the jointcontrol of the invested entity or joint venture with significant influence.(B) For long-term equity investment adopted equity method, if the initial investment costis more than the enjoyed share of net asset fair value identified by the invested units whenthe investment happens, the initial investment cost of the long-term equity interestinvestment shall not be adjusted; If the initial investment cost is less than the enjoyed
share of net asset fair value identified by the invested units when the investment happens,its balance shall be included into the current gains and losses and the initial investmentcost of the long-term equity investment shall be adjusted simultaneously.(C) After obtaining a long-term equity investment, the Company shall confirm theinvestment losses and profits and other comprehensive income respectively and adjustthe book value of the long-term equity investment in terms of the due owned or borneshare of the net gains or losses and other comprehensive income achieved by the investedunit. When confirming the net loss and profit of the invested unit that shall be owned orborne, confirmation shall be conducted for the net profit of the invested unit uponadjustment based on fair value of net identifiable assets of the invested unit whenobtaining the investment. However, if the Company is unable to reasonably confirm thefair value of the identifiable assets of the invested unit at the time of obtaining investment,the balance between the fair value of the identifiable assets of the invested unit at thetime of investment and book value is small or it is impossible to obtain relevantinformation of the invested unit due to other reasons, the Company shall directly calculateand confirm the investment gains and losses on the basis of the net book gains and lossesof the invested unit. The Company shall reduce correspondingly the book value of thelong-term equity investment according to the deserved portion of assigning cash dividendsor profit declared by the invested unit. As for other changes concerning owner's equity ofthe invested unit besides net profit or loss, other comprehensive income and profitdistribution, the Company shall adjust the book value of the long-term equity investmentand include them into the owner's equity.When affirming the investment income generated by the investment of joint ventures, theCompany offsets the unrealized internal transaction income between the Company andthe joint venture which belongs to the Company according to the share-holding ratio, andaffirms the investment gains and losses. The internal transaction loss occurred betweenthe Company and invested unit belongs to assets impairment loss, which shall beconfirmed in full amount. The Company shall offset the unrealized internal transactiongains and losses between subsidiaries incorporated into combination and joint ventures in
accordance with the above-mentioned principles, and confirm the investment gains andlosses.When net deficiency of the invested entity that confirmed to be borne, it shall be disposedas the following orders: The book value of the long-term equity investment shall be offsetat first. If the book value of long-term equity investment is not enough to be offset, theinvestment losses shall be confirmed continuously according to the limit that the bookvalue of other long-term equity investments substantially constitutes the net investmentin the invested entity, to offset the book value of long-term receivables; After the processabove, if the Company still shall share extra duty according to investment contract or theagreement, confirm beforehand liabilities according to estimated duty that shall beundertaken and include it in the current investment loss. If the invested unit realizes to beprofitable in the following period, the Company shall process it in the sequence contraryto the mentioned above after deducting the contribution of loss that hasn’t beenconfirmed, write down the book value that has been confirmed to be estimated liabilities,resume other book values that constitute the long-term interest and long-term equityinvestment of the invested unit in substance and meanwhile confirm investment income.
(3) The basis confirmed to have joint control and significant influence on the investedentity
① The basis confirmed to have joint control on the invested entity
The joint control refers to the control jointly performed towards certain arrangement asper the related agreements, and the related activities thereof must be agreed by all theparticipants who share the control rights before making decisions. The relevant activitiesgenerally include sale and purchase of goods or labor services, management of financialassets, acquisition and disposal of asset, R&D activities and financing activities. Jointventure refers to the joint venture arrangement that the Company has the right to arrangethe net assets of the Company. The joint venture arrangement in which the joint ventureparty enjoys assets related to arrangement and bears relevant liabilities is cooperationrather than joint venture.
② The basis confirmed to have significant influence on the invested entity
The significant influence refers to having the power to participate in the formulation offinancial and operating policies of an enterprise, but cannot control or jointly control theformulation of these policies together with other parties. When the Company can exertsignificant influence on the invested unit, the invested unit is its joint venture.
16. Fixed assets
(1). Confirmation conditions
The fixed assets refer to the tangible assets held for commodity production, renderingservice, lease or operation management with a service life of more than one accountingyear. The fixed assets are confirmed when the following conditions are met:
① The economic interests related to the fixed assets are likely to flow into the Company;
② The costs of the fixed assets can be calculated reliably.
(2). Method of depreciation
| Item | Method of depreciation | Period of depreciation（year） | RM value rate % | Yearly depreciation % |
| Office and buildings | straight-line service life depreciation | 10-40 | 3 | 2.43-9.70 |
| Machinery equipment | straight-line depreciation | 10 | 3 | 9.70 |
| Transportation equipment | straight-line depreciation | 4 | 3 | 24.25 |
| Other equipment | straight-line depreciation | 5 | 3 | 19.40 |
and the balance between the lower of the fair value of leased assets and the present valueof the minimum lease payment on the lease start date as the accounting value of thefinancing leased assets and the minimum rental payments as unconfirmed financing cost.Unconfirmed financial charges shall be amortized to each period in lease term accordingto effective interest method.
③ Method for depreciation of fixed assets under finance lease
The Company shall adopt the depreciation policy consistent with owned fixed asset toaccrue leasing asset depreciation. If it is reasonable to be certain that the lessee willobtain the ownership of the leasing asset when the lease term expires, the leasing assetshall be accrued depreciation within its service life. If it is not reasonable to be certain thatthe lessee shall obtain the ownership of the leasing asset at the expiry of the lease term,the leasing asset shall be accrued depreciation within the shorter one between the leaseterm and the service life of leasing asset.
17. Construction in progress
(1) Category of construction in process
Construction in process shall be calculated separately according to the approved projects
(2) The standard and time point for construction in process carried down fixed assetsAll expenditures of the construction in progress that incurred before it reaches theestimated serviceable condition shall be regarded as entry value of the fixed assets. Theself-operating engineering shall be measured according to direct materials, direct wages,direct mechanical construction costs, etc.; Package project is measured according to thepayable project price; The borrowing expenses that meet the capitalization conditions andoccur before the project under borrowing reaches its intended usable state shall becapitalized and included in the cost of the project under construction.If the fixed assets have reached the intended usable state but have not yet completed thefinal accounts, the Company shall, from the date of reaching the intended usable state,determine its cost according to the project budget, cost or actual cost of the project, aswell as the estimated value, transfer it to the fixed assets, and calculate the depreciationof the fixed assets in accordance with the Company's fixed assets depreciation policy;
After final account is completed, the Company shall adjust the original provisionallyestimated value according to actual cost, but not adjust the previously accrued amount ofdepreciation.
18. Borrowing cost
(1) Range of the borrowing cost
The borrowing cost of the Company shall include interest on borrowings, amortization ofdiscount or premium, auxiliary expenses, and exchange balance incurred from foreigncurrency borrowings.
(2) Borrowing cost principle
Where the incurred borrowing cost of the Company can be directly attributable to theacquisition and construction or production of assets eligible for capitalization, it shall becapitalized and reckoned in the costs of relevant assets; Other borrowing costs shall beconfirmed as costs on the basis of the actual amount accrued, and shall be included intothe current gains and losses.The term "assets eligible for capitalization" shall refer to the fixed assets, investment realestate, inventories and other assets, of which the acquisition and construction orproduction may take quite a long time to get ready for its intended use or for sale.
(3) Confirmation of the time period for capitalization of the borrowing cost
① Confirmation of the time point for capitalization of the borrowing costAfter assets expenditures and the borrowing expenses have happened, the necessaryacquisition and construction or production activities have already started in order to reachthe pre-confirmed usable or marketable state for the assets, the borrowing expenses canbegin capitalization. The asset expenses shall include the cash, transferred non-cash assetsor expenses that bearing debts paid for the acquisition and construction or production forassets eligible for capitalization
② Confirmation of the suspending time point for capitalization of the borrowing costsIf assets eligible for capitalization is interrupted abnormally during the course ofacquisition and construction or production, and the interruption lasts more than 3 months,the capitalization of borrowing costs shall be suspended. The borrowing costs occurred
during the interruption shall be confirmed as current gains or losses, until the acquisitionand construction or production activities of the asset restart, the capitalization ofborrowing costs shall be continued. If the interruption is a necessary step for making theacquired, built or produced assets which are eligible for capitalization reaching estimatedusable and marketable status, the capitalization of the borrowing costs shall be continued.
③ Confirmation of the suspending time point for capitalization of the borrowing costsWhen the acquired, built or produced assets which are eligible for capitalization can reachestimated usable and marketable state, shall stop capitalizing on borrowing costs; theborrowing costs incurred thereafter shall be confirmed as current gains and lossesaccording to the real amount.Where each part of the acquired, built or produced assets which are eligible forcapitalization is completed separately, and every single part is available to use or sellduring the continuing construction of other parts, and the acquisition and construction orproduction activities, which are necessary to make such part of asset reaching theestimated status of being available to use or sell, have already been completedsubstantially, shall stop capitalizing on the borrowing costs in relation to this part of asset.Where each part of the acquired, built or produced assets which are eligible forcapitalization is completed separately and but it cannot be available to use or sell till thewhole construction finishing, shall stop capitalizing on the borrowing costs when theassets can be completed entirely.
(4) The confirmation of the amount of the capitalization of borrowing costs
① The confirmation of the amount of the capitalization of borrowing interestsDuring the capitalization period, the interests' capitalization amount (including theamortization of discounts or premiums) in each accounting period shall be confirmedaccording to the following provisions:
(A) As for special borrowing costs arising from the acquisition and construction orproduction of assets which are eligible for capitalization, the amount shall be confirmedbased on the interests cost of the special borrowings costs occurred actually in the currentperiod deducting the interests' income earned from depositing the unused borrowing
costs or the income from temporary investment.(B) If ordinary borrowings used for acquisition and construction or production of assetswhich are eligible for capitalization, the interests' amount of ordinary borrowings to becapitalized shall be confirmed by the weighted average of the asset expenditures forcumulative capital expenditure that exceed the capital expenditure of specific borrowingsto multiply the capitalization rate of ordinary borrowings. The capitalization rate isconfirmed by the calculation of the weighted average interest rate of general borrowingcosts.(C) If there is any discount or premium of the borrowings, the number of discounts orpremiums amortized during each accounting period shall be confirmed by the effectiveinterest rate method, and an adjustment shall be made to the amount of interests in eachperiod.(D) Within period of the capitalization, the interest capitalization amount of eachaccounting period shall not exceed the amount of interest actually occurred to therelevant borrowings in the current period.
② The confirmation of the amount of the capitalization of borrowing auxiliary expenses(A) Article For the ancillary expense incurred to a specifically borrowings, those incurredbefore assets eligible for capitalization under acquisition, construction or production isready for the intended use or sale shall be capitalized at the incurred amount when theyare incurred, and shall be included into the costs of the asset eligible for capitalizationthose incurred after a qualified asset under acquisition and construction or production isready for the intended use or sale shall be confirmed as expenses on the basis of theincurred amount when they are incurred, and shall be recorded into the gains and lossesof the current period.(B) The auxiliary expenses arising from general borrowings shall be confirmed as expensesat the time of occurrence and shall be included into the gains and losses of the currentperiod.
③ The confirmation of the amount of the capitalization of the balance of exchangeDuring the period of capitalization, the exchange balance on foreign currency specific
borrowings shall be capitalized, and shall be included in the cost of assets eligible forcapitalization.
19. Biological assets
(1) Classification of biological assets
Biological assets refer to live animals and plants. The Company's biological assets aredivided into expendable biological assets and productive biological assets.
(2) Conformation conditions of biological assets
The Company shall confirm the biological assets that satisfy the following conditions at thesame time:
① The Company possesses or controls the biological asset as a result of past transactionor matter;
② The economic benefits or service potential concerning this biological asset are likely toflow into the Company;
③ The cost of the biological asset can be measured reliably.
(3) Depreciation of productive biological assets
The Company shall depreciate the productive biological assets that meet projectedproduction and operation, and reasonably confirm their service life, estimated net residualvalue and depreciation method according to nature, usage and expected realization of theeconomic benefits involved.The type, service life, anticipated net residual value and yearly depreciation of theCompany's productive biological assets are as follows:
| Type | Service life | Anticipated net residual value | Depreciation method |
| Breeder-Swine | 36 months | 20.00% | straight-line service life |
| Breeder-Broiler | 30 weeks | RMB 22.50 per broiler | workload |
methods of productive biological assets at regular intervals. If the expected number ofservice life or estimated net residual value is different from the original estimate, or ifthere is any significant change in the expected realization of the economic benefitsinvolved, it shall be treated as a change in accounting estimate.
20. Intangible assets
(1). Valuation methods, service life, and impairment test
①Initial measurement of intangible assets
(A) Initial measurement of outsourcing intangible assetsThe cost of outsourcing intangible assets, including acquisition price, relevant taxes anddues as well as other expenditures which is directly attributed to make intangible assets tothe estimated purpose. When the payment of purchased intangible assets price exceedingnormal credit conditions is delayed in payment, with financing nature in essence, theintangible assets cost shall be confirmed based on the present value of purchase price. Thebalance between the cost actually paid and the present value of the purchasing cost willbe included into the current gains and losses during the credit period except the part thatshall be capitalized.(B) Initial calculation for independently developed intangible assetsThe cost of self-developed intangible assets shall be confirmed according to the totalexpenditure incurred from meeting the capitalization conditions to reaching the intendedpurpose, and the expenditure already expended in the previous period shall not beadjusted.For the intangible assets researched and developed by the Company, the expenditureduring research stage shall be recorded into the current gains and losses as occurring; ifthe expenditures in development stage which don't meet the conditions of capitalizationshall be included into current gains and losses when it occurs. Those meeting thecondition of capitalization shall be confirmed as intangible assets. When the expendituresoccur during research or development stage cannot be distinguished, all the R&Dexpenditures occurred shall be included into the current gains and losses.
②Subsequent measurement of intangible assets
The service life shall be analyzed and confirmed by the Company when obtaining the
intangible assets. The intangible assets acquired by the Company include intangible assetswith finite service life and indefinite service life.(A) Subsequent calculation for intangible assets with finite service lifeFor intangible assets with limited service life, the Company will adopt the straight-linemethod to amortize them in phases during their service life from the time they reach theirintended purpose, without reserving residual value. The amortization amount ofintangible assets shall be included into current gains and losses. If the economic benefitsof an intangible asset are realized through product or other assets, the amortizationamount shall be included into the cost of the relevant assets.The categories of intangible assets, estimated service life, estimated net residual value andannual amortization rate are listed as follows:
| Categories | Estimated service life(year) | Estimated net residual value % | Annual amortization rate % |
| Land use rights | According to the useful life of land certificate | 0 | - |
| Computer software and other | 5-10 | 0 | 10-20 |
relevant experts for demonstration or comparing with those in the same industry andreferring to the Company's historical experience.(C) In accordance with the above method, if it is still unable to reasonably confirm thetime limit when the intangible assets can bring economic benefits for the Company, theintangible assets shall be deemed as the intangible assets with uncertain service life.
④Treatment of land use right
(A) The land use right acquired by the Company is usually confirmed as intangible assets,but if the land use right is used to earn rent or capital appreciation, it will be convertedinto investment real estate.(B) If the Company develops and constructs buildings such as factory buildings, it shalltreat the relevant land use rights and buildings separately.(C) The price paid for the acquisition of land and buildings shall be allocated between thebuilding and the right to use the land. If they cannot be reasonably distributed, they shallbe confirmed as fixed assets.
(2). Accounting policies of internal R&D expenditure
①The specific standard for the partition of the research stage and development stage ofthe Company internal R&D projectAccording to the actual situation of R&D, the Company divides R&D projects into twostages: research stage and development stage.(A) Research stageResearch stage refers to the stage for ingenious and planned investigation, researchactivities so as to acquire and understand new scientific or technical knowledge, etc.(B) Development stageDevelopment stage refers to before the commercial manufacture or use, the stage for theapplication of research achievement and other knowledge to a certain plan or design toproduce new or substantial improved materials, devices or products, etc.The expenditure of the internal R&D projects at the research stage shall be included intocurrent gains and losses when incurred.
②The specific standards for expenditure at development stage which meet capitalization
The expenditure of the internal R&D projects at the development stage shall be confirmedas the intangible assets when meeting the following conditions simultaneously:
(A) Complete the intangible assets to make them feasible to be used or sold in technology;(B) Possess the intention to complete the intangible assets and use or sell them;(C) The ways of intangible assets to generate economic benefits include the ability toprove the existence of the market where there are the products produced by theintangible assets or the existence of that of the intangible assets, and prove its usefulnessif intangible assets will be used internally;(D) There are sufficient technologies, financial resources and other resources supportingto complete the development of the intangible assets, and the Company is able to use orsell the intangible assets;(E) Expenditures that belong to the development stage of the intangible assets can bemeasured reliably.
21. Impairment of long-lived assets
The impairment test shall be made to long-term equity investments, investment propertymeasured by using the cost model, fixed assets, projects under construction, intangibleassets with finite service life and other long-term assets with signs of impairment on thebalance sheet date. If the impairment test result is indicated that the recoverable amountof assets is lower than its book value, it is withdrawn impairment reserves in accordancewith the balance and calculated into the impairment loss. The recoverable amount shall bethe higher one of the net amounts of the fair value of the assets deducted by the disposalexpenses and the present value of the expected future cash flow of the assets. Calculateand confirm the assets impairment reserves based on single asset; shall it be difficult toestimate the recoverable amount of single asset, the recoverable amount of the assetgroup shall be confirmed based on its belonging asset group. Asset group is the minimumasset portfolio that can generate cash inflow independently.Each year, the Company performs the impairment test on the goodwill and the intangibleassets with uncertain service life, no matter whether there are signs of impairment or not.When the Company conducts the impairment test on business reputation, as for the book
value of goodwill formed due to the business combination, it shall be amortized to relatedassets groups from the acquisition date according to the reasonable methods; The partthat is hard to be allocated to related assets groups shall be amortized to relatedcombined assets groups. When apportioning the book value of the goodwill to therelevant asset groups or combinations of asset groups, it shall be apportioned on the basisof the proportion of the fair value of each asset group or combination of asset groups tothe total fair value of the relevant asset groups or combinations of asset groups. Where itis difficult to measure the fair value reliably, it shall be apportioned on the basis of theproportion of the carrying value of each asset group or combination of asset groups to thetotal carrying value of the relevant asset groups or combinations of asset groups. Whenmaking an impairment test on the relevant asset groups or combinations of asset groupsincluding goodwill, if any evidence shows that the impairment of asset groups orcombinations of asset groups is possible, the Company first makes an impairment test onthe asset groups or combinations of asset groups not including goodwill, calculate therecoverable amount, compare it with the relevant carrying value and confirm thecorresponding impairment losses. The Company makes an impairment test of the assetgroups or combinations of asset groups containing business reputation, and compares thebook value of these relevant asset groups or combinations of asset groups (including thebook value of goodwill amortized thereto) and their recoverable amount. Where therecoverable amount of relevant assets or combinations of the asset groups is lower thanthe book value thereof, the depreciation of the goodwill losses shall be confirmed.Once the impairment loss of above-mentioned asset is confirmed, it shall not be reversedin following accounting periods.
22. Long-term prepaid expenses
(1) Scope of long-term prepaid expense
The long-term prepaid expense refers to an expense that has incurred but shall beamortized by the current period and subsequent periods with the time limit of more than1 year (exclusive), and includes improvement expenditures incurred in fixed assets by wayof operating lease.
(2) Initial calculation for long-term prepaid expense
The long-term prepaid expense received initial calculation based on the actual cost.
(3) Amortization of long-term prepaid expense
Long-term prepaid expenses in benefit period will be of amortization average using thestraight-line method.
23. Employee remuneration
(1). The accounting treatment method of short-term remunerationShort-term remuneration refers to employee remuneration that needs to be paid in fullamount within 12 months after the end of annual report period that the employeeprovides related service, except for the remuneration given for labor relation removingwith the employee.Short-term remuneration includes: Employee salary, bonus, allowance and subsidy,employee welfare expenses, medical insurance premiums, industrial injury insurancepremium, birth insurance premium and other social insurance premiums, housingaccumulation fund, labor union expenditure and employee education expenditure,short-term compensated absence, short-term profit-sharing plan, non-monetary welfareand other short-term remunerations.The Company shall confirm the actual short-term remuneration accrued as liabilities andinclude it into current gains and losses or related asset cost during the accounting periodof services provided by staff.
(2). The accounting treatment method of post-employment welfare
The Company participates in the establishment of withdrawal plans, which include basicpension insurance premiums, unemployment insurance premiums and enterprise annuitypayments for employees in accordance with relevant regulations. The amount due fordeposit shall be confirmed as the debt of employee remuneration on the balance sheetdate in order to exchange for the service provided by employees during accounting period,and include into the current gains and losses or relevant asset cost.
(3). Accounting treatment method of dismissal welfare
Dismissal welfare refers to the remuneration for the employee when the Companyterminates the labor relationship with the employee before the labor contract expires or
when the Company encourages the employee to receive layoff voluntarily. If the Companyprovides dismissal welfare for staffs, the staff remuneration liability generating fromconfirming dismissal welfare on the earlier one of the following two dates shall beincluded into current gains and losses:
① When the Company cannot unilaterally withdraw the dismissal welfare provided by
labor relationship relief plan or reduction suggestion.
② When the Company confirms cost or expense relevant to the restructuring involved in
paying dismissal welfare.
(4). Accounting treatment method of other long-term employee benefitsOther long-term employee welfare refers to other welfares of all employees other thanshort-term remuneration, welfare after demission and dismisses welfare. At the end ofreport period, staff remuneration cost generating from other permanent staff welfare shallbe confirmed to the following constituent parts:
① Cost to serve.
② Net interest amount of net liabilities or net asset of other permanent staff welfares.
③ The change generating from the recalculation of net liability or net asset of otherpermanent staff welfares.In order to simplify the relevant accounting treatments, the total net amount of aboveitems is recorded into current gains and losses or relevant asset costs.
24. Estimated Liabilities
(1) Confirmation principles of estimated liabilities
When the external guarantees, pending litigation or arbitration, product quality assurance,loss of contract, the obligation of restructuring matters or the relevant business meetthree of the following conditions, it shall be confirmed as estimated liabilities:
① That obligation is a current obligation undertaken by the Company;
② It is likely to cause the economic benefit to flow out of the Company due to theperformance of the obligation;
③ The amount of the obligation can be measured reliably.
(2) Calculated method for estimated liabilities
The amount of the estimated liability is measured in accordance with the best estimate ofthe expenditure required for the contingency.
① If there is a sequent range for the necessary expenses and if all the outcomes withinthis range are equally likely to occur, the best estimate shall be confirmed in accordancewith the middle estimate within the range.
② In other cases, the best estimate shall be disposed according to the following cases
respectively:
(A) If the contingencies involve a single item, it shall be confirmed according to the mostlikely outcome.(B) If the contingencies involve two or more items, the best estimate shall be calculatedand confirmed according to all possible outcomes and the relevant probabilities.
25. Share-based payment
The share-based payments shall consist of equity-settled share-based payments andcash-settled share-based payments.
(1) Accounting treatment on the grant date
In addition to share-based payments of the immediate vesting, regardless of equity-settledshare-based payment or cash-settled share-based payment, the Company shall not acceptaccounting treatment on the grant date.
(2) Accounting treatment on each balance sheet date in the waiting periodIn the waiting period of each balance sheet date, services acquired in hiring employees orother parties shall be included in the cost, and the owner's equity or liabilities shall beconfirmed.As for share-based payments with market conditions, as long as employees meet all othernon-market conditions, the acquired service shall be confirmed. When the performanceconditions are non-market conditions, after the waiting period is fixed, if the subsequentinformation indicates that the estimation of feasible rights needs to be adjusted, theearlier estimate shall be modified.As for equity-settled share-based payment involving employees, according to fair value ofequity instruments in the grant date, it shall be included in cost and capital reserve (other
capital reserve), and its subsequent changes of fair value shall not be confirmed. As forcash-settled share-based payment involving employees, it shall be recounted according tofair value of equity instruments at each balance sheet date to recognize the cost andpayable employee remuneration.On each balance sheet date within the waiting period, the Company shall make the bestestimates according to the newly obtained changes in exercisable right staff numbervariation and other follow-up information, and amend the number of equity instrumentsof expected exercisable right.According to the fair value of the above-mentioned equity instruments and the number ofequity instruments with predicted feasible rights, the cumulative cost and expenseamount that shall be confirmed up to the current period is calculated, with the cumulativeconfirmed amount in the previous period subtracted, as the cost and expense amount thatshall be confirmed in the current period.
(3) Accounting Treatment on the Vesting Date
① As for equity-settled share-based payment, after vesting date, the confirmed cost andthe total owner equity shall no longer be adjusted. On the vesting date, the Company shallconfirm the share capital and share premium according to the exercise situation, and thecapital reserve (other capital reserve) in the waiting period shall be carried forward at thesame time.
② As for cash-settled share-based payment, after the vesting date, the Company shall nolonger confirm the cost, and changes in fair value of liabilities (staff remuneration) shall beincluded in current gains and losses (changes of profit or loss in fair value).
(4) Accounting treatment for using repurchased share as incentive stock option for staffWhere the Company rewards its employees in the form of share repurchase, when itrepurchases shares, it shall treat all the expenditures of the share repurchase as stockshares, and make a record. On each balance sheet date during the waiting period,according to the fair value of equity instruments on the granting date, the obtained staffservices are included in the cost and expenses, and the capital reserve (other capitalreserve) is increased. When the employee's right to purchase shares of Company receives
the price, the cost of the stocks in stock delivered to the employee and the accumulatedamount of capital reserve (other capital reserve) during the waiting period shall be resold,and the capital reserve (equity premium) shall be adjusted according to its balance.
26. Revenue
The revenues mainly consist of the income of selling goods, providing labor services, andtransferring the right to use assets. And the principles of income confirmation shall bedriven as below:
(1) Confirming principle of the revenue for selling products
The main risks and rewards of the property in the commodities have been transferred tothe acquiree by the Company; The Company retains neither continuing management rightrelated with the ownership nor effective control over the products sold; The amount ofrevenue can be measured in a reliable way; The relevant economic interests may beflowed into the Company; When the relevant cost incurred or to incur can be measuredreliably, it shall be confirmed as the realization of product sales income. The Company'ssales revenue, mainly includes feed products, feed raw materials, poultry products andraising business. The revenue shall be confirmed after receipt of payment or completion ofcredit procedures and delivery of products.
(2) Confirming principle of the revenue for providing labor services
① Principle of confirmation of labor income is to provide labor transactions in the case ofreliable estimationOn the balance sheet date, when the labor service transaction results rendered can bereliably estimated, the Company shall confirm the revenue from providing labor service bythe percentage-of-completion method.When the amount of income can be reliably measured, the relevant economic benefitsmay flow into the Company, the completion schedule of the transaction can be reliablyconfirmed, and the costs that have occurred and will occur in the transaction can bereliably measured, the results of the labor transaction can be reliably estimated.
②Confirmation principle of labor income under the condition that provide labortransactions in the case of unreliable estimation
On the balance sheet date, when the labor service transaction results provided by theCompany cannot be reliably measured, it shall confirm labor services income by thefollowing three kinds of condition.(A) If labor service cost incurred is estimated to be compensated in full amount, provisionof labor service income shall be confirmed according to the amount that has beenregained or can be regained by estimation and carry forward the labor service cost thathas accrued;(B) If the labor cost estimation that has occurred can be compensated partly, the laborrevenue shall be confirmed to provide as the labor cost amount that has occurred or canbe compensated, and the occurred labor cost will be carried over;(C) If the cost of labor services incurred is expected not to be compensated, the costincurred shall be included into current gains and losses (main business cost), and noincome from the provision of labor services will be confirmed.
(3) Confirmation principles of transferring the right to use assets
When the trade-related economic interest is likely flow into this Company, and therelevant revenue that can be reliably calculated, the realization of the revenue fromtransferring the right to use assets shall be confirmed.
27. Governmental grant
(1) Category of governmental grant
Government grant refers to the monetary assets or non-monetary assets that theCompany obtains from the government free of charge, including the government grantrelated to assets and income.The government grants pertinent to assets refer to the government assets that areobtained by enterprises used for purchase or construction, or forming the long-termassets by other ways.The government grants related to earnings refer to the government grants besides thegovernment grants related to assets.
(2) Confirmation principle and confirmation time-point of government grantConfirmation principle of government grant
①The Company can meet all attached conditions for governmental grant;②The Company is able to receive governmental grant.Government grant may be confirmed on condition that it meets the above conditionssimultaneously.
(3) Measurement for government grant
① If the government grants belong to monetary assets, shall be calculated according tothe received or receivable amount.
② Non-monetary assets of government grants shall be measured by the fair value; if thefair value cannot be obtained reliably, it shall be measured according to the nominalamount (the nominal amount is RMB 1).
(4) Accounting treatment method for government grants
① The government grant related to assets shall, when acquired, be deducted with thebook value of the relevant assets or confirmed as deferred income. If it is confirmed asdeferred income, it shall be divided into gains and losses in stages according to areasonable and systematic method during the service life of the relevant assets. Thegovernmental grants calculated according to the nominal amount shall be directly includedin the current gains and losses.
② Government grant related to the incomes shall be disposed separately according to the
conditions:
(A) If the grants are used to compensate for related expenses or losses in the later periodof the Company, it shall be confirmed as deferred income and included in the current gainsand losses during confirmation of relevant expenses or loss(B) Those used for compensating the related expenses or losses have been incurred shallbe included in current gains and losses directly or relevant offset cost as obtaining.
③ If government grants that include both asset-related and revenue-related parts can bedistinguished, they are treated separately in different parts. If it is difficult to distinguish, itshall be wholly confirmed as government grants related to incomes.
④ Government grants related to the day-to-day operation of the Company shall be
accounted for as other benefits or deducted with relevant costs in accordance with the
nature of its economic operations. Government grants unrelated to the daily activities ofenterprise are included in the income and expenditure of non-business activities. If thefinance allocates the discount funds directly to the Company, the Company will deduct therelevant borrowing costs from the corresponding discount.
⑤ If it is necessary to return governmental grants which have been confirmed, it shall bedisposed respectively according to the following conditions:
(A) If the book value of the relevant assets is deducted at the time of initial confirmation,the book value of the assets shall be adjusted.(B) If there is the deferred income concerned, the book balance of the deferred incomeshall be offset against, but the excessive part shall be included in the current gains andlosses.(C) In other circumstances, it shall be directly included in the gains and losses of thecurrent period.
28. Deferred income tax assets/deferred income tax liabilities
The Company adopts the balance sheet debt method to calculate the income tax.
(1) Confirmation of the deferred income tax assets and the deferred income tax liabilities
① When the Company obtains the assets or liabilities, it shall determine its tax basis. Onthe balance sheet date, the Company analyses and compares the book value of assets andliabilities with their tax basis, and the book value of assets and liabilities with their taxbasis. If there is temporary balance between the book value of assets and liabilities andtheir tax basis, the Company shall recognize deferred income tax liabilities or deferredincome tax assets respectively for taxable temporary balance or deductible temporarybalance if the relevant temporary balance occurs in the current period and meets theconfirmation conditions. Tax assets.
② Confirmation basis of deferred income tax assets
(A) The Company shall confirm the deferred income tax assets arising from a deductibletemporary balance to the extent of the amount of the taxable income which it is likely toobtain and which can be deducted from the deductible temporary balance. The amount oftaxable income likely to be obtained in the future period includes the amount of taxable
income realized in normal production and operation activities in the future period, and theamount of taxable income increased due to the return of temporary balance of taxableincome during the period of deductible temporary balance.(B) As for any deductible losses and tax deduction that can be carried over to the nextyears, the corresponding deferred income tax assets shall be confirmed to the extent thatthe amount of future taxable income to be offset for the deductible loss and tax to belikely obtained.(C) On the balance sheet date, the book value of deferred income tax assets shall bere-checked. If it is unlikely to obtain sufficient taxable income to deduct from the benefitof the deferred income tax asset, the carrying amount of the deferred income tax assetsshall be written down. The write-down amount shall be reversed when it is likely that thesufficient taxable income is available.
③ Confirmation basis of the deferred income tax liabilities
The Company shall confirm the current or past taxable temporary balance that shall bepaid but is not paid as deferred income tax liabilities. But it doesn’t include goodwill andtransaction formed by non- business combination and the temporary balance neitheraffects the accounting profit nor taxable income when transaction incurred.
(2) Measurement for the deferred income tax assets and the deferred income tax liabilities
① On the balance sheet date, the deferred income tax assets and deferred income taxliabilities shall be measured at the applicable tax rate of the period during which the assetsare expected to be recovered or the liabilities are expected to be settled.
② If the applicable tax rate varies, the deferred income tax assets and deferred incometax liabilities which have been confirmed are re-measured, excluding the deferred incometax assets and deferred income tax liabilities arising from any transactions or eventsdirectly confirmed as the owners' equities, the amount affected by them shall be includedinto the income tax expenses of the current period during which the change occurs.
③ When measuring deferred income tax assets and deferred income tax liabilities, theCompany adopts tax rates and tax basis consistent with the expected way of recoveringassets or paying off debts.
④ The Company shall not discount any deferred income tax asset and deferred income
tax liability.
29. Lease
(1). Accounting treatment method of operating lease
A tenant includes the rental payment of operation lease into the relevant cost of assets orcurrent gains and losses according to the straight-line method in each period of the leaseterm. The initial direct costs accrued to the Company shall be included into current gainsor losses. The contingent rental shall be included into the current gains or losses when it isactually accrued.A lessor includes the assets subject to operating lease in relevant items of its balancesheets in light of the nature of the asset. The rent in operating lease shall be confirmed ascurrent gains and losses during each lease term according to straight-line method. Theinitial direct costs accrued to the Company shall be included into current gains and losses.The depreciation of fixed assets in the operation lease assets shall be withdrawn byadopting depreciation policy of similar asset; other operation lease assets shall beamortized adopting systematic and reasonable method. The contingent rental shall beincluded into gains and losses of the current period when it is actually accrued.
(2). Accounting treatment methods of financial lease
As tenant, on the commencement date of the lease term, the lower one between fairvalue of leased asset and present value of minimum lease payments as account recordvalue of leased asset, and regard the minimum lease payments as account record value oflong-term payables, and their balance shall be treated as the unconfirmed financing costs.The initial direct costs such as commissions, attorney's fees and traveling expenses, stampduties, etc. directly attributable to the leased item incurred during the process of leasenegotiating and signing the leasing agreement shall be included into the rent asset value.The unconfirmed financing costs shall be amortized during each lease term, and thecurrent financing costs shall be confirmed adopting real interest method. The contingentrental shall be included into gains and losses of the current period when it is actuallyaccrued.On the commencement date of the lease term, a lessor recognizes the sum of the
minimum lease receipts on the lease commencement date and the initial direct costs asthe entry value in an account of the finance lease values receivable, and record theun-guaranteed residual value at the same time. The balance between the sum of theminimum lease collection amount, the initial direct expenses and the non-guaranteedresidual value, and the sum of their present values shall be confirmed as the unrealizedfinancing income. The unrealized financing income shall be allocated to each period duringthe lease term. The lessor shall calculate and recognize the financing income at the currentperiod by adopting the effective interest rate method. The contingent rental shall beincluded into the gains and losses of the current period when it is actually accrued.
30. Changes of important accounting policies and estimates
Important accounting policies
| Content and reason for the changes of accounting policies | Approval procedure | Note |
| In March 2017, China’s Ministry of Finance issued the Accounting Standards for Business Enterprise: No. 22 - Recognition and Measurement of Financial Instruments, No. 23 - Transfer of Financial Assets, No. 24 - Hedging Accounting, No. 37 - Presentation of Financial Instruments, the Company has implemented the new standards of financial instruments since January 1, 2019 | Board of Directors | See below |
| Contents | Items changed | Impacted amount(increase/decrease:yuan) | |
| December 31, 2018 Consolidated scope | December 31, 2018 Parent company | ||
| The Company divides notes receivable and receivables to notes receivable, accounts receivable respectively | Accounts receivable | 397,891,678.23 | 16,033,809.05 |
| Notes receivable | 13,611,778.44 | ||
| Notes receivable and accounts receivable | -411,503,456.67 | -16,033,809.05 | |
| The Company divides notes payable and accounts payable to notes payable, accounts payable respectively | Accounts payable | 572,729,779.31 | 7,636,692.77 |
| Notes payable | |||
| Notes payable and accounts payable | -572,729,779.31 | -7,636,692.77 | |
Consolidated balance sheet
Unit: yuan Currency: RMB
| Item | Dec. 31, 2018 | January 1, 2019 | Adjustment |
| Current Assets: | |||
| Monetary capital | 928,902,753.06 | 928,902,753.06 | |
| Derivative financial assets | 2,042,527.60 | 2,042,527.60 | |
| Notes receivable | 13,611,778.44 | 13,611,778.44 | |
| Accounts receivable | 397,891,678.23 | 397,891,678.23 | |
| Prepayments | 185,899,348.53 | 185,899,348.53 | |
| Other receivables | 98,997,213.04 | 98,997,213.04 | |
| including: Interest receivable | |||
| Dividends receivable | 5,481,783.34 | 5,481,783.34 | |
| Inventory | 1,410,869,192.26 | 1,410,869,192.26 | |
| Other current assets | 118,636,045.77 | 118,636,045.77 | |
| Total current assets | 3,156,850,536.93 | 3,156,850,536.93 | |
| Non-current assets: | |||
| Available-for-sale financial assets | 3,680,000.00 | -3,680,000.00 | |
| Long-term equity investment | 1,354,820,455.99 | 1,354,820,455.99 | |
| Other equity instruments investment | 3,197,809.52 | 3,197,809.52 | |
| Fixed assets | 1,516,702,438.29 | 1,516,702,438.29 | |
| Construction in progress | 255,719,188.30 | 255,719,188.30 | |
| Productive biological assets | 30,484,794.88 | 30,484,794.88 | |
| Intangible assets | 206,387,940.29 | 206,387,940.29 | |
| Goodwill | 290,425.67 | 290,425.67 | |
| Long-term prepaid expenses | 177,903,367.82 | 177,903,367.82 | |
| Deferred income tax assets | 30,357,726.08 | 30,357,726.08 | |
| Other non-current assets | 197,497,688.18 | 197,497,688.18 | |
| Total non-current assets | 3,773,844,025.50 | 3,773,361,835.02 | -482,190.48 |
| Total Assets | 6,930,694,562.43 | 6,930,212,371.95 | -482,190.48 |
| Current liabilities: | |||
| Short-term borrowings | 1,347,690,168.49 | 1,347,690,168.49 | |
| Accounts payable | 572,729,779.31 | 572,729,779.31 | |
| Advance receipt | 161,173,916.67 | 161,173,916.67 |
| Payroll | 49,731,930.35 | 49,731,930.35 | |
| Taxes and surcharges payable | 28,744,792.72 | 28,744,792.72 | |
| Other payables | 309,537,195.12 | 309,537,195.12 | |
| including: Interest payable | 1,784,257.05 | 1,784,257.05 | |
| Dividends payable | 526,000.00 | 526,000.00 | |
| Non-current liabilities due within one year | 32,999,999.96 | 32,999,999.96 | |
| Total current liabilities | 2,502,607,782.62 | 2,502,607,782.62 | |
| Non-current Liabilities: | |||
| Long-term borrowings | 118,500,000.00 | 118,500,000.00 | |
| Long-term payable | 23,345,833.38 | 23,345,833.38 | |
| Deferred income | 20,252,967.41 | 20,252,967.41 | |
| Total Non-current liabilities | 162,098,800.79 | 162,098,800.79 | |
| Total Liabilities | 2,664,706,583.41 | 2,664,706,583.41 | |
| Owners' equity (or shareholders' equity): | |||
| Paid-up capital (or share capital) | 845,751,469.00 | 845,751,469.00 | |
| Capital reserves | 153,824,536.37 | 153,824,536.37 | |
| deduct: Treasury stock | 70,688,750.00 | 70,688,750.00 | |
| Other comprehensive income | -1,316,942.00 | -1,798,486.75 | -481,544.75 |
| Surplus reserves | 272,882,920.19 | 272,791,366.07 | -91,554.12 |
| Undistributed profits | 2,651,462,525.08 | 2,651,554,079.20 | 91,554.12 |
| Total Equity attributable to the owners of parent company | 3,851,915,758.64 | 3,851,434,213.89 | -481,544.75 |
| Non-controlling interests | 414,072,220.38 | 414,071,574.65 | -645.73 |
| Total owners' equity (or shareholders' equity) | 4,265,987,979.02 | 4,265,505,788.54 | -482,190.48 |
| Total liabilities and owners' equity (or shareholders' equity) | 6,930,694,562.43 | 6,930,212,371.95 | -482,190.48 |
equity investment" were caused by the Company changing the accounting of long-termequity investment in Weifang Wellhope Xinhesheng Feed Co., Ltd. from cost method toequity method after losing the control of this company and implementing retroactiveadjustment of residual equity. Details please refer to the Note to changes in owners'equity.
Consolidated balance sheet of parent company
Unit: yuan Currency: RMB
| Item | Dec. 31, 2018 | January 1, 2019 | Adjustment |
| Current Assets: | |||
| Monetary capital | 750,589,871.09 | 750,589,871.09 | |
| Derivative financial assets | 2,042,527.60 | 2,042,527.60 | |
| Notes receivable | |||
| Accounts receivable | 16,033,809.05 | 16,033,809.05 | |
| Prepayments | 2,278,798.85 | 2,278,798.85 | |
| Other receivables | 869,671,230.01 | 869,671,230.01 | |
| including: Interest receivable | |||
| Dividends receivable | 15,225,270.58 | 15,225,270.58 | |
| Inventory | 41,986,504.36 | 41,986,504.36 | |
| Total current assets | 1,682,602,740.96 | 1,682,602,740.96 | |
| Non-current assets: | |||
| Available-for-sale financial assets | 3,000,000.00 | -3,000,000.00 | |
| Long-term equity investment | 3,285,783,087.96 | 3,284,867,546.77 | -915,541.19 |
| Other equity instruments investment | 2,689,369.92 | 2,689,369.92 | |
| Fixed assets | 73,509,615.43 | 73,509,615.43 | |
| Construction in progress | 56,425,656.79 | 56,425,656.79 | |
| Intangible assets | 16,169,866.87 | 16,169,866.87 | |
| Long-term prepaid expenses | 854,845.30 | 854,845.30 | |
| Deferred income tax assets | 9,060,127.91 | 9,060,127.91 | |
| Total non-current assets | 3,444,803,200.26 | 3,443,577,028.99 | -1,226,171.27 |
| Total Assets | 5,127,405,941.22 | 5,126,179,769.95 | -1,226,171.27 |
| Current liabilities: | |||
| Short-term borrowings | 1,075,000,000.00 | 1,075,000,000.00 |
| Accounts payable | 7,636,692.77 | 7,636,692.77 | |
| Advance receipt | 2,690,153.80 | 2,690,153.80 | |
| Payroll | 2,749,116.65 | 2,749,116.65 | |
| Taxes and surcharges payable | 4,166,334.74 | 4,166,334.74 | |
| Other payables | 1,026,382,418.43 | 1,026,382,418.43 | |
| including: Interest payable | 1,601,798.61 | 1,601,798.61 | |
| Dividends payable | |||
| Non-current liabilities due within one year | 20,000,000.00 | 20,000,000.00 | |
| Total current liabilities | 2,138,624,716.39 | 2,138,624,716.39 | |
| Non-current Liabilities: | |||
| Long-term borrowings | 118,000,000.00 | 118,000,000.00 | |
| Deferred income | 7,425,000.00 | 7,425,000.00 | |
| Total Non-current liabilities | 125,425,000.00 | 125,425,000.00 | |
| Total Liabilities | 2,264,049,716.39 | 2,264,049,716.39 | |
| Owners' equity (or shareholders' equity): | |||
| Paid-up capital (or share capital) | 845,751,469.00 | 845,751,469.00 | |
| Capital reserves | 160,705,065.92 | 160,705,065.92 | |
| deduct: Treasury stock | 70,688,750.00 | 70,688,750.00 | |
| Other comprehensive income | -1,305,935.62 | -1,616,565.70 | -310,630.08 |
| Surplus reserves | 272,882,920.19 | 272,791,366.07 | -91,554.12 |
| Undistributed profits | 1,656,011,455.34 | 1,655,187,468.27 | -823,987.07 |
| Total owners' equity (or shareholders' equity) | 2,863,356,224.83 | 2,862,130,053.56 | -1,226,171.27 |
| Total liabilities and owners' equity (or shareholders' equity) | 5,127,405,941.22 | 5,126,179,769.95 | -1,226,171.27 |
equity investment in Weifang Wellhope Xinhesheng Feed Co., Ltd. from cost method toequity method after losing the control of this company and implementing retroactiveadjustment of residual equity. Details please refer to the Note to changes in owners'equity.VI. Tax
1. Categories of taxes and tax rate
| Categories | Taxation basis | Tax rate |
| Value-added tax | Output VAT--deductable input VAT | 9%、10%、13%、16% ( VAT on sales) |
| Urban maintenance and construction tax | Turnover tax payable | 1%、5%、7% |
| Corporate income tax | Income tax payable | 15%、20%、25% |
| Extra charges of education funds | Turnover tax payable | 3% |
| Extra charges of local education funds | Turnover tax payable | 2% |
| Item | Closing balance | Opening balance |
| Cash on hand | 693,912.75 | 253,687.16 |
| Cash at bank | 1,507,696,568.93 | 888,951,186.81 |
| Other monetary capital | 46,390,842.45 | 39,697,879.09 |
| Total | 1,554,781,324.13 | 928,902,753.06 |
| including: total amount of funds deposited abroad | 719,833.99 | 523,693.62 |
Other explanation:
Guarantee deposits of letter of credit included in other monetary capital was RMB1,779,880.44, futures margin was RMB 44,610,962.01 in the end of the period.
2. Trading financial assets
Unit: yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Measured at fair value and whose changes are booked into current profits and losses | 40,000,000.00 | |
| including | ||
| Wealth management products | 40,000,000.00 | |
| total | 40,000,000.00 | |
| Item | Closing balance | Opening balance |
| Futures | 3,912,584.30 | 2,042,527.60 |
| total | 3,912,584.30 | 2,042,527.60 |
| Item | Closing balance | Opening balance |
| Bank's acceptance bill | 3,696,180.25 | 6,442,013.54 |
| Commercial acceptance bill | 851,559.80 | |
| Letter of credit | 6,318,205.10 | |
| total | 3,696,180.25 | 13,611,778.44 |
| Aging | Closing book balance |
| Within 1 year | 334,873,133.11 |
| 1-2 years | 38,053,142.80 |
| 2-3 years | 41,451,474.20 |
| Over 3 years | 58,040,694.84 |
| Total | 472,418,444.95 |
B. Categorized by bad debt accrual method
Unit: yuan Currency: RMB
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage % | Amount | Accruing percentage % | Amount | Percentage % | Amount | Accruing percentage % | |||
| Accruing bad debt provision individually | 38,365,146.19 | 8.12 | 35,941,019.04 | 93.68 | 2,424,127.15 | 37,991,261.32 | 7.61 | 35,163,112.98 | 92.56 | 2,828,148.34 |
| Accruing bad debt provision by grouping | 434,053,298.76 | 91.88 | 74,416,623.53 | 17.14 | 359,636,675.23 | 461,404,961.77 | 92.39 | 66,341,431.88 | 14.38 | 395,063,529.89 |
| including | ||||||||||
| Aging | 434,053,298.76 | 91.88 | 74,416,623.53 | 17.14 | 359,636,675.23 | 461,404,961.77 | 92.39 | 66,341,431.88 | 14.38 | 395,063,529.89 |
| total | 472,418,444.95 | / | 110,357,642.57 | / | 362,060,802.38 | 499,396,223.09 | / | 101,504,544.86 | / | 397,891,678.23 |
? Accruing bad debt provision individually
Unit: yuan Currency: RMB
| Name | Closing balance | |||
| Book balance | Bad debt provision | Accruing percentage % | Reason | |
| Customer 1 | 23,998,355.83 | 23,998,355.83 | 100.00 | Estimated to be uncollectible |
| Customer 2 | 4,734,285.00 | 4,734,285.00 | 100.00 | Estimated to be uncollectible |
| Customer 3 | 2,942,919.70 | 1,177,167.88 | 40.00 | According to estimated losses |
| Customer 4 | 927,022.22 | 370,808.89 | 40.00 | According to estimated losses |
| Customer 5 | 807,150.00 | 807,150.00 | 100.00 | Estimated to be uncollectible |
| Customer 6 | 691,950.00 | 691,950.00 | 100.00 | Estimated to be uncollectible |
| Customer 7 | 655,702.49 | 655,702.49 | 100.00 | Estimated to be uncollectible |
| Customer 8 | 642,738.60 | 642,738.60 | 100.00 | Estimated to be uncollectible |
| Customer 9 | 434,825.00 | 434,825.00 | 100.00 | Estimated to be uncollectible |
| Customer 10 | 337,150.00 | 337,150.00 | 100.00 | Estimated to be uncollectible |
| Customer 11 | 219,425.00 | 219,425.00 | 100.00 | Estimated to be uncollectible |
| Customer 12 | 189,425.00 | 189,425.00 | 100.00 | Estimated to be uncollectible |
| Customer 13 | 157,125.00 | 157,125.00 | 100.00 | Estimated to be uncollectible |
| Customer 14 | 90,783.00 | 90,783.00 | 100.00 | Estimated to be uncollectible |
| Customer 15 | 106,384.00 | 106,384.00 | 100.00 | Estimated to be uncollectible |
| Customer 16 | 56,000.00 | 56,000.00 | 100.00 | Estimated to be uncollectible |
| Customer 17 | 109,700.00 | 109,700.00 | 100.00 | Estimated to be uncollectible |
| Customer 18 | 256,166.38 | 256,166.38 | 100.00 | Estimated to be uncollectible |
| Customer 19 | 170,270.00 | 68,108.00 | 40.00 | According to estimated losses |
| Customer 20 | 183,899.57 | 183,899.57 | 100.00 | Estimated to be uncollectible |
| Customer 21 | 464,366.00 | 464,366.00 | 100.00 | Estimated to be uncollectible |
| Customer 22 | 112,102.80 | 112,102.80 | 100.00 | Estimated to be uncollectible |
| Customer 23 | 23,220.00 | 23,220.00 | 100.00 | Estimated to be uncollectible |
| Customer 24 | 54,180.60 | 54,180.60 | 100.00 | Estimated to be uncollectible |
| total | 38,365,146.19 | 35,941,019.04 | 93.68 | / |
? Accruing bad debt provision according to aging
Unit: yuan Currency: RMB
| Aging | Closing balance | ||
| Account receivable | Bad debt provision | Accruing percentage % | |
| Within 1 year | 330,061,447.51 | 16,503,072.39 | 5.00 |
| 1-2 years | 37,869,243.23 | 3,786,924.31 | 10.00 |
| 2-3 years | 19,993,302.00 | 7,997,320.81 | 40.00 |
| Over 3 years | 46,129,306.02 | 46,129,306.02 | 100.00 |
| total | 434,053,298.76 | 74,416,623.53 | |
| Category | Opening balance | Changes in current period | Closing balance | ||
| Accruing | Charge off or write-off | Other change | |||
| Accounts receivable | 101,504,544.86 | 9,898,584.12 | 840,340.07 | -205,146.34 | 110,357,642.57 |
| total | 101,504,544.86 | 9,898,584.12 | 840,340.07 | -205,146.34 | 110,357,642.57 |
| Item | Write-off amount |
| Actual write-off of accounts receivable | 840,340.07 |
| Name | Nature | Write-off amount | Reason | Whether generated by related party transactions |
| Customer 1 | Payment of products | 308,152.80 | Uncollectible long-term debt | No |
| total | / | 308,152.80 | / | / |
| Debtor | Closing balance | Percentage of the closing balance of total accounts receivable % | Bad debt provision |
| 1 | 24,042,357.79 | 5.09 | 1,202,117.89 |
| 2 | 23,998,355.83 | 5.08 | 23,998,355.83 |
| 3 | 21,356,822.76 | 4.52 | 1,067,841.14 |
| 4 | 20,997,862.10 | 4.44 | 1,049,893.11 |
| 5 | 8,293,237.00 | 1.76 | 7,130,907.00 |
| Total | 98,688,635.48 | 20.89 | 34,449,114.97 |
6. Prepayments
A. Presenting by aging
Unit: yuan Currency: RMB
| Aging | Closing balance | Opening balance | ||
| Amount | Percentage % | Amount | Percentage % | |
| Within 1 year | 217,146,116.15 | 97.79 | 181,416,954.06 | 97.59 |
| Over 1 year | 4,918,252.40 | 2.21 | 4,482,394.47 | 2.41 |
| Total | 222,064,368.55 | 100.00 | 185,899,348.53 | 100.00 |
| Company | Closing balance | Percentage of the closing balance of total prepayments % |
| 1 | 18,062,882.99 | 8.13 |
| 2 | 12,070,482.65 | 5.44 |
| 3 | 9,015,000.00 | 4.06 |
| 4 | 8,812,132.47 | 3.97 |
| 5 | 7,399,258.43 | 3.33 |
| Total | 55,359,756.54 | 24.93 |
| Item | Closing balance | Opening balance |
| Interest receivable | ||
| Dividends receivable | 25,353,722.11 | 5,481,783.34 |
| Other receivables | 60,247,089.64 | 93,515,429.70 |
| Total | 85,600,811.75 | 98,997,213.04 |
| Item | Closing balance | Opening balance |
| Dividends from long-term investment under the cost method | ||
| Dividends from long-term investment under the equity method | 25,353,722.11 | 5,481,783.34 |
| Total | 25,353,722.11 | 5,481,783.34 |
B. Other receivablesa. Presenting by aging
Unit: yuan Currency: RMB
| Aging | Closing book balance |
| Within 1 year | 25,517,642.94 |
| 1-2 years | 2,805,993.08 |
| 2-3 years | 56,216,558.50 |
| Over 3 years | 6,614,567.76 |
| Total | 91,154,762.28 |
| Nature | Closing book balance | Opening book balance |
| General operating receivables | 48,549,112.40 | 69,098,131.11 |
| Deposit and security | 14,096,016.42 | 8,459,232.04 |
| Export rebates receivable | 37,833.46 | 83,420.35 |
| Receivable from disposal of long-lived assets | 2,386,850.00 | |
| Receivable from disposal of investment | 28,471,800.00 | 28,471,800.00 |
| Total | 91,154,762.28 | 108,499,433.50 |
| Bad debt provision | First stage | Second stage | Third stage | Total |
| Expected credit losses over the next 12 months | Expected credit loss for the entire duration (no credit impairment) | Expected credit loss for the entire duration (credit impairment occurred) | ||
| Balance on January 1, 2019 | 10,478,041.43 | 4,505,962.37 | 14,984,003.80 | |
| Accruing in the reporting period | 16,455,616.93 | -10,000.00 | 16,445,616.93 | |
| Reversing back in the reporting period | 17,280.00 | 17,280.00 | ||
| Write off in the reporting period | 539,228.09 | 539,228.09 | ||
| Balance on December 31, 2019 | 26,950,938.36 | 3,956,734.28 | 30,907,672.64 |
d. Bad debt provision
Unit:yuan Currency: RMB
| Category | Opening balance | Changes in current period | Closing balance | ||
| Accruing | Collected or reversed | Charge off or write-off | |||
| Other receivables | 14,984,003.80 | 16,445,616.93 | 17,280.00 | 539,228.09 | 30,907,672.64 |
| total | 14,984,003.80 | 16,445,616.93 | 17,280.00 | 539,228.09 | 30,907,672.64 |
| Item | Write-off amount |
| Actual write-off of other receivables | 539,228.09 |
| Name | Nature | Write-off amount | Reason | Whether generated by related party transactions |
| Company 1 | Prepayment for raw materials | 539,228.09 | Expected to be uncollectable | No |
| Total | / | 539,228.09 | / | / |
| Company | Nature | Closing balance | Aging | Percentage of closing balance of total other receivables % | Closing balance of bad debt provision |
| 1 | Receivable from disposal of investment | 28,471,800.00 | 2-3 years | 31.23 | 11,388,720.00 |
| 2 | Temporary borrowing | 27,067,493.00 | 2-3 years | 29.69 | 10,826,997.20 |
| 3 | Guarantee deposit | 4,920,000.00 | less than 1 year | 5.40 | 246,000.00 |
| 4 | Temporary borrowing | 3,035,880.00 | less than 1 year | 3.33 | 151,794.00 |
| 5 | Prepayment for corn | 2,014,874.40 | 3-4 years | 2.21 | 2,014,874.40 |
| Total | / | 65,510,047.40 | / | 71.86 | 24,628,385.60 |
8. Inventory
A. Category of inventory
Unit: yuan Currency: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Falling price reserve | Book value | Book balance | Falling price reserve | Book value | |
| Raw material | 651,999,952.04 | 2,852,699.42 | 649,147,252.62 | 597,791,390.18 | 2,023,583.41 | 595,767,806.77 |
| Product in process | 55,837,226.60 | 653,313.59 | 55,183,913.01 | 20,992,307.08 | 637,575.55 | 20,354,731.53 |
| Finished product | 585,118,896.60 | 9,725,789.76 | 575,393,106.84 | 601,323,157.89 | 2,482,860.62 | 598,840,297.27 |
| Consumptive biological assets | 274,774,516.57 | 19,595,499.74 | 255,179,016.83 | 180,062,002.46 | 6,188,094.69 | 173,873,907.77 |
| Low priced and easily worn articles | 13,182,022.60 | 13,182,022.60 | 10,842,865.30 | 10,842,865.30 | ||
| Wrappage | 15,557,821.25 | 15,557,821.25 | 11,189,583.62 | 11,189,583.62 | ||
| Engineering construction | 4,730,000.00 | 4,730,000.00 | ||||
| Total | 1,601,200,435.66 | 32,827,302.51 | 1,568,373,133.15 | 1,422,201,306.53 | 11,332,114.27 | 1,410,869,192.26 |
| Item | Opening balance | Increased amount | Reduced amount | Closing balance | ||
| Accruing | Other | Reversing back or charging off | Other | |||
| Raw material | 2,023,583.41 | 1,014,376.63 | 185,260.62 | 2,852,699.42 | ||
| Product in process | 637,575.55 | 2,250,852.04 | 2,235,114.00 | 653,313.59 | ||
| Finished product | 2,482,860.62 | 19,616,686.66 | 12,373,757.52 | 9,725,789.76 | ||
| Consumptive biological assets | 6,188,094.69 | 17,360,385.74 | 3,952,980.69 | 19,595,499.74 | ||
| Total | 11,332,114.27 | 40,242,301.07 | 18,561,852.21 | 185,260.62 | 32,827,302.51 | |
| Item | Closing balance | Opening balance |
| Available for deducting VAT and prepaid tax | 121,711,175.93 | 118,636,045.77 |
| total | 121,711,175.93 | 118,636,045.77 |
10. Long-term equity investment
Unit: yuan Currency: RMB
| Investee | Opening balance | Changes in the current period | Closing balance | Other | Closing balance of impairment provision | ||||
| Additional investment | Decreased investment | Gains or losses on investments recognized under the equity method | Adjustment of other comprehensive income | Dividends or profits declared | |||||
| 1. Joint ventures | |||||||||
| Unphung Joint Venture Company | 4,167,616.44 | 4,167,616.44 | |||||||
| Nepal Wellhope Agri-tech Pvt. Ltd. | 7,501,575.10 | 7,501,575.10 | |||||||
| NEXUS WELL-HOPE AGRITECH INTERNATIONAL LIMITED | 17,900,000.00 | ||||||||
| subtotal | 11,669,191.54 | 11,669,191.54 | 17,900,000.00 | ||||||
| 2. Associated companies | |||||||||
| Qingdao Shenfeng | 15,869,483.64 | 1,454,165.33 | 3,750,000.00 | 13,573,648.97 | |||||
| Anshan Jiuguhe Food | 99,497,295.50 | 57,927,493.27 | 4,986,360.00 | 152,438,428.77 | |||||
| Tai’an Jiuguhe Agriculture | 64,730,262.77 | 51,548,986.17 | 4,986,360.00 | 111,292,888.94 | |||||
| Linghai Jiuguhe Feed | 33,937,715.81 | 32,265,495.00 | 3,800,000.00 | 62,403,210.81 | |||||
| Huludao Jiuguhe Food | 57,876,002.94 | 26,905,668.40 | 14,060,000.00 | 70,721,671.34 | |||||
| Dandong Wellhope Chengsan Food | 34,766,209.71 | 17,848,604.52 | 52,614,814.23 | ||||||
| Dandong Wellhope Chengsan Agri-Tech | 55,170,432.87 | 57,082,842.71 | 112,253,275.58 | ||||||
| Haicheng New Hongzunda Agri-Tech | 11,305,724.87 | 1,544,312.96 | 12,850,037.83 | ||||||
| Beipiao Hongfa Food | 251,972,960.58 | 200,951,677.50 | 10,780,000.00 | 442,144,638.08 | |||||
| Beijing Dahong | 16,852,987.18 | 3,234,994.94 | 20,087,982.12 | ||||||
| Hengfeng | |||||||||
| Tai'an Jiufeng Agri-Tech | 498,065.13 | 5,453,739.37 | 5,951,804.50 | ||||||
| Schipper(Beijing) | 1,081,661.30 | 189,216.47 | 1,270,877.77 | ||||||
| Shenyang Wenjie Bio-Tech | 12,057,026.09 | 385,878.90 | 12,442,904.99 | ||||||
| Huludao Jiuguhe Feed | 25,048,412.84 | 20,766,810.51 | 3,800,000.00 | 42,015,223.35 | |||||
| Jinzhou Jiufeng Food | 30,001,627.45 | 1,600,000.00 | 16,874,865.04 | 48,476,492.49 | |||||
| Zhangjiakou Jiahe Agriculture and Animal Husbandry | 60,757,671.84 | 7,387,637.15 | 68,145,308.99 | ||||||
| Tai'an Fengjiu Agri-Tech | 5,380,308.75 | 32,457,229.14 | 37,837,537.89 | ||||||
| Anshan Fengsheng Food | 19,697,339.60 | 10,732,965.16 | 30,430,304.76 | ||||||
| Dalian Chengsan Animal Husbandry | 251,767,836.43 | 102,186,395.46 | 353,954,231.89 | ||||||
| Tailai Jiahe Agriculture and Animal Husbandry | 21,155,152.08 | 35,000,000.00 | -29,020,598.46 | 27,134,553.62 | |||||
| Gongzhuling Corn Purchasing and Storing | 61,421,126.87 | 73,476.56 | 61,494,603.43 | ||||||
| Lankao Skyland Duck | 36,533,583.81 | 16,000,000.00 | 3,632,096.32 | 6,323,784.29 | 49,841,895.84 | ||||
| Hainan Nongken Wenfeng Wenchang Chicken | 401,914.99 | 1,225,000.00 | -555,372.59 | 1,071,542.40 | |||||
| Dunhua Wellhope Agri-Tech | 3,434,662.23 | 744,009.02 | 4,178,671.25 | ||||||
| Dunhua Fengda Agriculture and Animal Husbandry | 1,914,892.90 | 1,071,704.24 | 2,986,597.14 | ||||||
| PT KARKA NUTRI | 36,985,298.13 | 391,923.84 | 1,621,517.75 | 38,998,739.72 |
| INDUSTRI. | |||||||||
| GOLDEN HARVESTA INC. | 101,827,983.03 | -146,867.14 | 3,250,109.93 | 104,931,225.82 | |||||
| Guangrong Xinchuang | 12,471,059.83 | 30,727,497.50 | 2,051,975.84 | 2,366,929.34 | 47,617,462.51 | ||||
| Shenyang Zhongwenjia Bio-Tech | 4,000,000.00 | 60,534.77 | 4,060,534.77 | ||||||
| Shulan Fengtai Organic Fertilizer | 1,500,000.00 | 1,500,000.00 | |||||||
| Weifang Wellhope Xinhesheng Feed | 5,000,000.00 | -482,522.59 | 820,378.27 | 5,337,855.68 | |||||
| Liaoning Mubang Animal Husbandry Equipment Manufacturing | 1,791,476.38 | 1,791,476.38 | |||||||
| Anshan Yufeng Feed | -193,154.81 | -193,154.81 | |||||||
| Suizhong Renhe Fishery | 3,433,748.91 | 220,000.00 | 400,000.00 | -105,879.39 | 3,147,869.52 | ||||
| Dalian Wellhope Fish Meal | 5,333,693.74 | 390,754.67 | 5,724,448.41 | ||||||
| Liaoning Petmate Bio-Tech | 5,028,829.99 | 1,327,144.00 | -779,893.07 | 5,576,080.92 | |||||
| Guangzhou Yikun Trading | 537,451.04 | -429,193.31 | 108,257.73 | ||||||
| Guangzhou Pulihe Trading | 227,805.07 | 221,857.04 | -5,948.03 | ||||||
| Jilin Hengfeng Animal Health Products | 184,916.64 | 1,071,000.00 | 576,964.06 | 1,832,880.70 | |||||
| Shenyang Wanlitian Agriculture and Animal Husbandry | 1,023,509.57 | 800,000.00 | 424,192.67 | 2,247,702.24 | |||||
| Daqing Supply and Marketing Wellhope | 2,966,610.32 | 560,580.16 | 3,527,190.48 |
| Agri-Tech | |||||||||
| Heilongjiang Zhongyi Pasture Information Technology Service | 400,000.00 | 42,305.46 | 442,305.46 | ||||||
| Indonesia Max Livestock Technology | 1,460,475.96 | 1,460,475.96 | |||||||
| Dalian Sida Food | 34,000,000.00 | 1,802,062.02 | 35,802,062.02 | ||||||
| Subtotal | 1,343,151,264.45 | 134,331,117.46 | 621,857.04 | 629,093,604.62 | 7,238,557.02 | 55,634,373.81 | 820,378.27 | 2,058,378,690.97 | |
| Total | 1,354,820,455.99 | 134,331,117.46 | 621,857.04 | 629,093,604.62 | 7,238,557.02 | 55,634,373.81 | 820,378.27 | 2,070,047,882.51 | 17,900,000.00 |
11. Other equity instruments Investment
A. Other equity instruments Investment
Unit: yuan Currency: RMB
| Item | Closing balance | Opening balance |
| China-Russia Friendship Association of Liaoning Province | 10,000.00 | 10,000.00 |
| Hengshui Hejia Agriculture and Animal Husbandry | 1,454,281.94 | 1,454,281.94 |
| Hengshui Jiarun Agriculture and Animal Husbandry | 1,050,000.00 | |
| Xi'an Micro Monkey E-commerce | 175,087.98 | 175,087.98 |
| Jiayu Agriculture and Animal Husbandry in Xinji City | 900,000.00 | |
| Jiahe Agriculture and Animal Husbandry in Shenze County | 1,500,000.00 | |
| Dalian Xuelong Heniu Import and Export | 1,500,000.00 | |
| Henan Shanghui Feed Development | 127,230.32 | 107,852.76 |
| Shenyang Bononveit Animal Health | 61,696.77 | 78,682.20 |
| Beijing Haobang Swine Artificial Insemination Service | 32,542.22 | 321,904.64 |
| Total | 5,760,839.23 | 3,197,809.52 |
| Item | Dividend income recognized in the current period | Cumulative gains | Cumulative losses |
| China-Russia Friendship Association of Liaoning Province | |||
| Hengshui Hejia Agriculture and Animal Husbandry | 145,718.06 | ||
| Xi'an Micro Monkey E-commerce | 164,912.02 | ||
| Jiayu Agriculture and Animal Husbandry in Xinji City | |||
| Jiahe Agriculture and Animal Husbandry in Shenze County | |||
| Dalian Xuelong Heniu Import and Export | |||
| Henan Shanghui Feed Development | 372,769.68 | ||
| Shenyang Bononveit Animal Health | 18,303.23 | ||
| Beijing Haobang Swine Artificial Insemination Service | 100,000.00 | 67,457.78 | |
| Total | 100,000.00 | 769,160.77 |
12. Fixed assets
Unit: yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Fixed assets | 2,023,113,939.02 | 1,516,702,438.29 |
| Disposal of fixed assets | ||
| Total | 2,023,113,939.02 | 1,516,702,438.29 |
| Item | Buildings and structures | Machinery equipment | Transportation vehicle | Other equipment | Total |
| 1. Original value | |||||
| A. Opening balance | 1,289,641,808.28 | 965,871,551.46 | 97,684,289.71 | 63,904,358.83 | 2,417,102,008.28 |
| B. Increased amount | 440,468,960.82 | 301,019,591.93 | 17,582,235.93 | 11,915,949.02 | 770,986,737.70 |
| a. Purchased | 167,432,910.84 | 143,931,095.11 | 14,959,826.93 | 10,155,541.20 | 336,479,374.08 |
| b. Construction in progress transferred in | 261,288,665.60 | 145,202,426.36 | 2,353,002.75 | 1,541,756.60 | 410,385,851.31 |
| c. Increased by business combination | 11,747,384.38 | 11,886,070.46 | 269,406.25 | 218,651.22 | 24,121,512.31 |
| C. Decreased amount | 12,964,005.96 | 35,143,740.60 | 7,339,290.45 | 2,074,826.29 | 57,521,863.30 |
| a. Disposed or scrapped | 2,824,018.84 | 23,686,198.25 | 7,042,388.45 | 1,894,073.29 | 35,446,678.83 |
| b. Decreased by business combination | 10,139,987.12 | 11,457,542.35 | 296,902.00 | 180,753.00 | 22,075,184.47 |
| D. Closing balance | 1,717,146,763.14 | 1,231,747,402.79 | 107,927,235.19 | 73,745,481.56 | 3,130,566,882.68 |
| 2. Accumulated depreciation | |||||
| A. Opening balance | 307,757,445.38 | 426,982,299.43 | 76,353,459.85 | 44,045,455.43 | 855,138,660.09 |
| B. Increased amount | 64,788,232.08 | 95,323,640.56 | 10,038,802.99 | 9,365,797.03 | 179,516,472.66 |
| a. Accruing | 64,777,282.08 | 92,920,096.56 | 9,810,302.99 | 9,351,723.03 | 176,859,404.66 |
| b. Increased by business combination | 10,950.00 | 2,403,544.00 | 228,500.00 | 14,074.00 | 2,657,068.00 |
| C. Decreased amount | 1,805,220.51 | 21,106,096.56 | 6,095,930.98 | 1,672,819.76 | 30,680,067.81 |
| a. Disposed or scrapped | 1,746,351.81 | 19,500,985.96 | 5,991,879.26 | 1,603,567.92 | 28,842,784.95 |
| b. Decreased by | 58,868.70 | 1,605,110.60 | 104,051.72 | 69,251.84 | 1,837,282.86 |
| business combination | |||||
| D. Closing balance | 370,740,456.95 | 501,199,843.43 | 80,296,331.86 | 51,738,432.70 | 1,003,975,064.94 |
| 3. Impairment provision | |||||
| A. Opening balance | 29,496,073.35 | 15,584,842.90 | 99,538.65 | 80,455.00 | 45,260,909.90 |
| B. Increased amount | 30,465,249.40 | 27,319,696.80 | 104,850.08 | 327,172.54 | 58,216,968.82 |
| a. Accruing | 30,465,249.40 | 27,319,696.80 | 104,850.08 | 327,172.54 | 58,216,968.82 |
| C. Decreased amount | |||||
| a. Disposed or scrapped | |||||
| D. Closing balance | 59,961,322.75 | 42,904,539.70 | 204,388.73 | 407,627.54 | 103,477,878.72 |
| 4. Book value | |||||
| A. Closing book value | 1,286,444,983.44 | 687,643,019.66 | 27,426,514.60 | 21,599,421.32 | 2,023,113,939.02 |
| B. Opening book value | 952,388,289.55 | 523,304,409.13 | 21,231,291.21 | 19,778,448.40 | 1,516,702,438.29 |
| Item | Closing balance | Opening balance |
| Construction in progress | 240,012,874.86 | 255,719,188.30 |
| Engineering material | ||
| Total | 240,012,874.86 | 255,719,188.30 |
| Item | Closing balance | Opening balance | ||
| Book balance | Book value | Book balance | Book value | |
| Dalian Heyuan-Dayao hatching farm | 25,304,688.50 | 25,304,688.50 | 14,698,247.50 | 14,698,247.50 |
| Jilin Hefeng-pig farm | 4,607,316.99 | 4,607,316.99 | 11,889,319.05 | 11,889,319.05 |
| Dalian Zhongjia -workshop renovation | 2,226,208.39 | 2,226,208.39 | 18,742,578.01 | 18,742,578.01 |
| Liaoning Wellhope- intelligent premix plant | 56,425,656.79 | 56,425,656.79 | ||
| Shulan Fengtai-poultry house | 55,672,411.04 | 55,672,411.04 | ||
| Fushun Agriculture and Animal Husbandry-pig farm | 81,582,306.27 | 81,582,306.27 | 116,448,215.28 | 116,448,215.28 |
| Puyang Wellhope-broiler house | 6,345,004.05 | 6,345,004.05 | ||
| Shenyang Huakang- workshop renovation | 8,929,925.91 | 8,929,925.91 | ||
| Lankao Wellhope-premix project | 8,510,622.36 | 8,510,622.36 | ||
| Huai’an Wellhope- high-grade aquatic feed | 21,832,594.00 | 21,832,594.00 | ||
| Hainan Wellhope-feed production line with 200,000 tons per year | 13,326,858.52 | 13,326,858.52 | 3,392,062.06 | 3,392,062.06 |
| Pingyuan Food-second production line | 1,723,490.95 | 1,723,490.95 | ||
| Huakang Xinxin Food- refrigerated warehouse | 3,660,000.00 | 3,660,000.00 | ||
| Liaoning Wellhope-operation center | 2,319,079.26 | 2,319,079.26 | ||
| Gansu Wellhope-bulk feed workshop renovation | 2,132,421.08 | 2,132,421.08 | ||
| Anhui Wellhope-finished products workshop | 2,004,000.00 | 2,004,000.00 | ||
| Shenyang Wellhope-starter feed production line for piglet | 1,119,600.00 | 1,119,600.00 | ||
| Daqing Wellhope-livestock raising equipment | 1,324,452.00 | 1,324,452.00 | ||
| Liaoning Wellhope-office building decoration | 2,518,656.50 | 2,518,656.50 | ||
| Other constructions | 16,705,833.04 | 16,705,833.04 | 12,290,515.61 | 12,290,515.61 |
| Total | 240,012,874.86 | 240,012,874.86 | 255,719,188.30 | 255,719,188.30 |
B. Important constructions in progress
Unit: yuan Currency: RMB
| Project | Budget | Opening balance | Increased amount | Amount transferred in fixed assets | Other decreased amount | Closing balance | Percentage of accumulated input accounting for budget % | Construction progress % | Source of funds |
| Dalian Heyuan-Dayao hatching farm | 50,000,000.00 | 14,698,247.50 | 20,075,382.60 | 9,468,941.60 | 25,304,688.50 | 69.55 | 60% | Self-owned | |
| Jilin Hefeng-pig farm | 70,000,000.00 | 11,889,319.05 | 32,334,758.73 | 39,616,760.79 | 4,607,316.99 | 63.18 | 85% | Raised | |
| Dalian Zhongjia -workshop renovation | 40,000,000.00 | 18,742,578.01 | 4,222,041.47 | 20,738,411.09 | 2,226,208.39 | 96.46 | 96% | Self-owned | |
| Liaoning Wellhope- intelligent premix plant | 70,000,000.00 | 56,425,656.79 | 10,820,353.83 | 67,246,010.62 | 96.07 | 100% | Self-owned | ||
| Shulan Fengtai-poultry house | 67,256,185.00 | 55,672,411.04 | 55,672,411.04 | 82.78 | 75% | Self-owned | |||
| Fushun Agriculture and Animal Husbandry-pig farm | 300,300,000.00 | 116,448,215.28 | 120,109,594.84 | 154,975,503.85 | 81,582,306.27 | 78.77 | 80% | Raised | |
| Puyang Wellhope-broiler house | 28,762,478.67 | 18,799,332.70 | 12,454,328.65 | 6,345,004.05 | 65.36 | 67% | Self-owned |
| Shenyang Huakang- workshop renovation | 12,741,491.00 | 8,929,925.91 | 8,929,925.91 | 70.08 | 69% | Self-owned | |||
| Lankao Wellhope-premix project | 23,800,000.00 | 8,510,622.36 | 8,510,622.36 | 35.76 | 50% | Self-owned | |||
| Huai’an Wellhope- high-grade aquatic feed | 45,000,000.00 | 21,832,594.00 | 19,668,531.58 | 41,501,125.58 | 92.23 | 100% | Self-owned | ||
| Hainan Wellhope-feed production line with 200,000 tons per year | 60,000,000.00 | 3,392,062.06 | 9,934,796.46 | 13,326,858.52 | 22.21 | 22% | Self-owned | ||
| Pingyuan Food-second production line | 2,023,490.95 | 1,723,490.95 | 1,723,490.95 | 85.17 | 85% | Self-owned | |||
| Huakang Xinxin Food- refrigerated warehouse | 4,300,000.00 | 3,660,000.00 | 3,660,000.00 | 85.12 | 85% | Self-owned | |||
| Liaoning Wellhope-operation center | 6,000,000.00 | 2,319,079.26 | 2,319,079.26 | 38.65 | 50% | Self-owned | |||
| Gansu Wellhope-bulk feed workshop renovation | 2,626,021.00 | 2,132,421.08 | 2,132,421.08 | 81.20 | 81% | Self-owned |
| Anhui Wellhope-finished products workshop | 2,900,000.00 | 2,004,000.00 | 2,004,000.00 | 69.10 | 69% | Self-owned | |||
| Shenyang Wellhope-starter feed production line for piglet | 1,399,500.00 | 1,119,600.00 | 1,119,600.00 | 80.00 | 80% | Self-owned | |||
| Daqing Wellhope-livestock raising equipment | 1,620,000.00 | 1,324,452.00 | 1,324,452.00 | 81.76 | 81% | Self-owned | |||
| Liaoning Wellhope-office building decoration | 3,309,962.00 | 2,518,656.50 | 2,518,656.50 | 76.09 | 76% | Self-owned | |||
| 792,039,128.62 | 243,428,672.69 | 325,879,451.31 | 336,532,140.58 | 9,468,941.60 | 223,307,041.82 | / | / |
14. Productive biological asset
Productive biological assets using cost measurement model
Unit: yuan Currency: RMB
| Item | Animal husbandry | Total | |
| Breeder (broiler) | Breeder (hog) | ||
| 1. Original value | |||
| A. Opening balance | 29,698,340.93 | 3,942,160.43 | 33,640,501.36 |
| B. Increased amount | 40,762,641.23 | 84,770,756.65 | 125,533,397.88 |
| a. Externally purchased | 40,762,641.23 | 55,430,777.87 | 96,193,419.10 |
| b. Raised by own farm | 29,339,978.78 | 29,339,978.78 | |
| C. Decreased amount | 18,196,239.39 | 20,759,462.86 | 38,955,702.25 |
| a. Disposed | 18,196,239.39 | 20,759,462.86 | 38,955,702.25 |
| D. closing balance | 52,264,742.77 | 67,953,454.22 | 120,218,196.99 |
| 2. Accumulated depreciation | |||
| A. Opening balance | 2,175,083.04 | 980,623.44 | 3,155,706.48 |
| B. Increased amount | 30,530,615.09 | 3,650,977.17 | 34,181,592.26 |
| a. Accruing | 30,530,615.09 | 3,650,977.17 | 34,181,592.26 |
| C. Decreased amount | 10,615,433.24 | 1,329,981.39 | 11,945,414.63 |
| a. Disposed | 10,615,433.24 | 1,329,981.39 | 11,945,414.63 |
| D. Closing balance | 22,090,264.89 | 3,301,619.22 | 25,391,884.11 |
| 3. Impairment provision | |||
| 4. Book value | |||
| A. Closing book value | 30,174,477.88 | 64,651,835.00 | 94,826,312.88 |
| B. Opening book value | 27,523,257.89 | 2,961,536.99 | 30,484,794.88 |
| Item | Land use rights | Computer software and other | Total |
| 1. Original value | |||
| A. Opening balance | 240,859,888.90 | 9,451,008.10 | 250,310,897.00 |
| B. Increased amount | 43,571,525.11 | 3,386,610.29 | 46,958,135.40 |
| a. Purchased | 42,031,525.11 | 3,386,610.29 | 45,418,135.40 |
| b. Increased by business combination | 1,540,000.00 | 1,540,000.00 | |
| C. Decreased amount | 546,144.00 | 41,690.25 | 587,834.25 |
| a. Disposed | 7,040.25 | 7,040.25 | |
| b. Decreased by business combination | 546,144.00 | 34,650.00 | 580,794.00 |
| D. closing balance | 283,885,270.01 | 12,795,928.14 | 296,681,198.15 |
| 2. Accumulated amortization | |||
| A. Opening balance | 39,855,472.69 | 4,067,484.02 | 43,922,956.71 |
| B. Increased amount | 5,962,394.07 | 1,238,720.23 | 7,201,114.30 |
| a. Accruing | 5,739,094.07 | 1,238,720.23 | 6,977,814.30 |
| b. Increased by business combination | 223,300.00 | 223,300.00 | |
| C. Decreased amount | 7,040.25 | 7,040.25 | |
| a. Disposed | 7,040.25 | 7,040.25 | |
| b. Decreased by business combination |
| D. Closing balance | 45,817,866.76 | 5,299,164.00 | 51,117,030.76 |
| 3. Impairment provision | |||
| 4. Book value | |||
| A. Closing book value | 238,067,403.25 | 7,496,764.14 | 245,564,167.39 |
| B. Opening book value | 201,004,416.21 | 5,383,524.08 | 206,387,940.29 |
| Invested entity or matters forming goodwill | Opening balance | Increased amount | Decreased amount | Closing balance |
| Formed by business combination | Disposal | |||
| Dalian Zhongjia Food Co., Ltd. | 290,425.67 | 290,425.67 | ||
| Total | 290,425.67 | 290,425.67 |
| Item | Opening balance | Increased amount | Amortized amount | Other decreased amount | Closing balance |
| Broiler cages | 131,404,249.61 | 3,641,134.16 | 52,884,068.66 | 82,161,315.11 | |
| Land lease fee | 28,911,923.10 | 5,382,921.00 | 3,768,731.53 | 30,526,112.57 | |
| Fixed assets improvement | 14,506,104.02 | 4,815,304.71 | 2,794,716.77 | 149,185.62 | 16,377,506.34 |
| Other | 3,081,091.09 | 5,017,049.30 | 2,658,856.61 | 5,439,283.78 | |
| Total | 177,903,367.82 | 18,856,409.17 | 62,106,373.57 | 149,185.62 | 134,504,217.80 |
| Item | Closing balance | Opening balance | ||
| Deductible temporary difference | Deferred income tax assets | Deductible temporary difference | Deferred income tax assets | |
| Provision for the impairment of assets | 156,147,402.07 | 30,646,841.04 | 123,490,892.94 | 24,192,802.11 |
| Unrealized profit of internal transaction | 23,895,127.90 | 4,804,391.92 | 24,135,874.13 | 4,740,032.12 |
| Equity incentive expense | 3,243,114.20 | 508,474.55 | ||
| Changes in fair value | 112,115.92 | 28,028.98 | 629,750.00 | 94,462.50 |
| Deferred income | 8,291,717.40 | 1,330,429.35 | ||
| Total | 183,397,760.09 | 35,987,736.49 | 156,548,234.47 | 30,357,726.08 |
b. Deferred income tax liabilities that are not offset
Unit: yuan Currency: RMB
| Item | Closing balance | Opening balance | ||
| Taxable temporary differences | Deferred income tax liabilities | Taxable temporary differences | Deferred income tax liabilities | |
| Book value of asset greater than the tax base | 1,611,908.32 | 396,995.58 | ||
| Total | 1,611,908.32 | 396,995.58 | ||
| Item | Closing balance | Opening balance |
| Deductible temporary difference | 51,189,855.72 | 42,034,648.58 |
| Deductible losses | 234,143,729.40 | 169,916,278.85 |
| Total | 285,333,585.12 | 211,950,927.43 |
| Year | Closing balance | Opening balance | Note |
| 2020 | 26,306,707.29 | 25,063,480.88 | |
| 2021 | 37,833,545.02 | 43,093,813.02 | |
| 2022 | 38,752,564.40 | 41,661,829.48 | |
| 2023 | 40,585,903.64 | 51,299,045.25 | |
| 2024 | 77,825,369.67 | ||
| 2027 | 2,082,969.89 | 2,082,969.89 | |
| 2028 | 6,715,140.33 | 6,715,140.33 | |
| 2029 | 4,041,529.16 | ||
| Total | 234,143,729.40 | 169,916,278.85 |
| Item | Closing balance | Opening balance |
| Prepayments of long-lived assets | 44,490,695.92 | 102,807,235.63 |
| Prepayments of broiler raising fees to contract farms | 277,650,038.27 | 94,690,452.55 |
| Prepayments of house rent | 15,322,533.37 | |
| Total | 337,463,267.56 | 197,497,688.18 |
| Item | Closing balance | Opening balance |
| Guaranteed loan | 109,638,205.81 | 100,460,168.49 |
| Credit loan | 941,240,000.00 | 1,247,230,000.00 |
| Total | 1,050,878,205.81 | 1,347,690,168.49 |
subsidiary companies, including Lingyuan Wellhope, Chongqing Dahong Machinery andLiaoning Expert Trading Company.
21. Accounts payable
Unit: yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Accounts payable related to purchasing and expenses | 613,009,029.34 | 541,799,353.46 |
| Accounts payable related to long-lived assets | 46,207,454.50 | 30,930,425.85 |
| Total | 659,216,483.84 | 572,729,779.31 |
| Item | Closing balance | Opening balance |
| Sales proceeds | 209,529,248.68 | 161,173,916.67 |
| Total | 209,529,248.68 | 161,173,916.67 |
| Item | Opening balance | Increased amount | Decreased amount | Closing balance |
| 1. Short-term benefits | 48,645,762.59 | 634,476,932.06 | 622,121,416.68 | 61,001,277.97 |
| 2. Post-employeement benefits- defined contribution plan | 1,086,167.76 | 45,696,035.37 | 45,234,116.98 | 1,548,086.15 |
| 3. Termination benefits | 546,668.20 | 546,668.20 | ||
| 4. Other benefits due within one year | ||||
| Total | 49,731,930.35 | 680,719,635.63 | 667,902,201.86 | 62,549,364.12 |
| Item | Opening balance | Increased amount | Decreased amount | Closing balance |
| 1. Wages, bonuses, allowances and subsidies | 46,465,210.11 | 558,861,700.00 | 545,668,762.48 | 59,658,147.63 |
| 2. Staff benefits expenses | 38,235,752.17 | 38,235,752.17 | ||
| 3. Social insurance charges | 431,646.28 | 24,761,282.53 | 24,738,429.80 | 454,499.01 |
| including: Medical insurance premiums | 371,654.46 | 21,024,760.74 | 21,020,949.01 | 375,466.19 |
| Occupational injury insurance premium | 33,932.05 | 1,964,249.10 | 1,946,109.02 | 52,072.13 |
| Birth insurance premium | 26,059.77 | 1,772,272.69 | 1,771,371.77 | 26,960.69 |
| 4. Housing provident fund | 123,033.00 | 8,347,751.16 | 8,331,268.16 | 139,516.00 |
| 5. Employee labor union dues, employee education expense | 373,221.25 | 3,649,036.29 | 3,273,142.21 | 749,115.33 |
| 6. Short-term paid absences | 21,238.20 | 21,238.20 | ||
| 7. Short-term profit sharing plan | ||||
| 8. Other short-term benefits | 1,252,651.95 | 600,171.71 | 1,852,823.66 | |
| Total | 48,645,762.59 | 634,476,932.06 | 622,121,416.68 | 61,001,277.97 |
| Item | Opening balance | Increased amount | Decreased amount | Closing balance |
| Basic endowment insurance | 1,059,329.17 | 44,185,407.10 | 43,745,219.83 | 1,499,516.44 |
| Unemployment insurance expense | 26,838.59 | 1,510,628.27 | 1,488,897.15 | 48,569.71 |
| Enterprise annuity | ||||
| Total | 1,086,167.76 | 45,696,035.37 | 45,234,116.98 | 1,548,086.15 |
| Item | Closing balance | Opening balance |
| Value-added tax | 1,351,995.42 | 799,254.04 |
| Corporate income tax | 32,731,646.44 | 25,166,379.53 |
| Individual income tax | 729,362.56 | 422,794.82 |
| City maintenance and construction tax | 109,286.49 | 107,516.70 |
| Extra charges of education funds | 74,513.94 | 78,629.58 |
| House property tax | 697,937.54 | 669,396.33 |
| City and town land use tax | 1,343,282.00 | 1,088,230.44 |
| Stamp tax | 462,741.13 | 322,623.83 |
| Other | 180,188.32 | 89,967.45 |
| Total | 37,680,953.84 | 28,744,792.72 |
| Item | Closing balance | Opening balance |
| Interest payable | 1,528,201.39 | 1,784,257.05 |
| Dividends payable | 1,434,027.14 | 526,000.00 |
| Other payables | 339,277,132.75 | 307,226,938.07 |
| Total | 342,239,361.28 | 309,537,195.12 |
| Item | Closing balance | Opening balance |
| Interests of long-term loan that pay interests periodically and repay the principal due at maturity | 237,583.33 | 69,376.61 |
| Interest payable of short-term borrowing | 1,290,618.06 | 1,714,880.44 |
| Total | 1,528,201.39 | 1,784,257.05 |
B. Dividends payable
Unit: yuan Currency: RMB
| Item | Closing balance | Opening balance |
| Common stock dividends | 1,434,027.14 | 526,000.00 |
| Total | 1,434,027.14 | 526,000.00 |
| Item | Closing balance | Opening balance |
| Operational payables related to expenses and transactions | 204,082,682.75 | 138,332,488.07 |
| Investment related payables | 64,505,700.00 | 98,205,700.00 |
| Repurchasing obligations of non-restricted stock | 70,688,750.00 | 70,688,750.00 |
| Total | 339,277,132.75 | 307,226,938.07 |
| Item | Closing balance | Reason |
| Xinjiang Heyin Growth Equity Investment Partnership | 58,205,700.00 | Not up to the agreed payment date |
| Total | 58,205,700.00 | / |
| Item | Closing balance | Opening balance |
| Long-term borrowings due within 1 year | 52,000,000.00 | 20,000,000.00 |
| Long-term payables due within 1 year | 18,593,717.62 | 12,999,999.96 |
| Total | 70,593,717.62 | 32,999,999.96 |
| Item | Closing balance | Opening balance |
| Credit loan | 174,330,000.00 | 118,500,000.00 |
| Total | 174,330,000.00 | 118,500,000.00 |
| Item | Due date | Annual interest rate % | Closing balance |
| Shenyang Heping Branch of Agricultural Bank of China | Dec.21, 2021 | 4.9875 | 28,000,000.00 |
| Shenyang Heping Branch of Agricultural Bank of China | Oct. 28, 2022 | 4.8000 | 96,000,000.00 |
| Shenyang Hunnan Branch of China Construction Bank | Nov. 20, 2022 | 4.7500 | 50,000,000.00 |
| Chongqing Rural Commercial Bank | Oct. 24, 2021 | 0.00 | 330,000.00 |
| Sub-total | 174,330,000.00 |
29. Long-term payable
Unit: yuan Currency: RMB
| Item | Closing balance | Opening balance |
| long-term payable | 11,025,000.09 | 23,345,833.38 |
| Total | 11,025,000.09 | 23,345,833.38 |
| Item | Opening balance | Closing balance |
| Accrued financial lease outlay | 11,025,000.09 | 23,345,833.38 |
| Item | Opening balance | Increased amount | Decreased amount | Closing balance | Reason |
| Government grant | 20,252,967.41 | 15,590,000.00 | 4,001,717.41 | 31,841,250.00 | |
| total | 20,252,967.41 | 15,590,000.00 | 4,001,717.41 | 31,841,250.00 | / |
| Liability item | Opening balance | Amount of newly increased grant | Amount included in other income | Closing balance | Related to assets/ related to income |
| Lingyuan Wellhope 100,000 tons ruminant feed project | 4,000,000.00 | 500,000.00 | 3,500,000.00 | related to asset | |
| Lingyuan Wellhope corn purchasing and storage barn | 2,700,000.00 | 300,000.00 | 2,400,000.00 | related to asset | |
| Sci-tech grant for Changchun Wellhope feed R&D project | 866,717.41 | 866,717.41 | related to income | ||
| Shenyang city central industrial transformation and upgrading funds | 9,686,250.00 | 1,035,000.00 | 8,651,250.00 | related to asset | |
| Lingyuan Wellhope 50,000 tons organic fertilizer project | 3,000,000.00 | 300,000.00 | 2,700,000.00 | related to asset | |
| Research on organic and eco-friendly piglet starter feed resisting for weaning stress | 1,000,000.00 | 1,000,000.00 | related to income | ||
| 2019 provincial | 2,180,000.00 | 2,180,000.00 | related to |
| sic-tech major special project funds | asset | ||||
| Project funds related to benefit farming policy | 4,310,000.00 | 4,310,000.00 | related to asset | ||
| 2019 Central Government’s development funds for high-quality development of manufacturing industry (green manufacturing) | 8,100,000.00 | 8,100,000.00 | related to asset | ||
| Total | 20,252,967.41 | 15,590,000.00 | 4,001,717.41 | 31,841,250.00 | / |
| Opening balance | Changes(increase/decrease) | Closing balance | ||
| Issuing new shares | Subtotal | |||
| Total shares | 845,751,469.00 | 76,552,927.00 | 76,552,927.00 | 922,304,396.00 |
| Item | Opening balance | Increased amount | Decreased amount | Closing balance |
| Capital premium (share capital premium) | 147,495,090.70 | 709,853,069.86 | 3,737,555.00 | 853,610,605.56 |
| Other capital reserves | 6,329,445.67 | 22,783,015.06 | 29,112,460.73 | |
| Total | 153,824,536.37 | 732,636,084.92 | 3,737,555.00 | 882,723,066.29 |
33. Treasury stock
Unit: yuan Currency: RMB
| Item | Opening balance | Increased amount | Decreased amount | Closing balance |
| Repurchase of restricted stock | 70,688,750.00 | 70,688,750.00 | ||
| Total | 70,688,750.00 | 70,688,750.00 |
| Item | Opening balance | Amount in current period | Closing balance | ||
| Pre-tax | After-tax, attributable to parent company | After-tax, attributable to non-controlling interest | |||
| 1. Other comprehensive income that cannot be reclassified into gains or losses | -481,544.75 | -286,970.29 | -278,647.43 | -8,322.86 | -760,192.18 |
| Changes in the fair value of other equity instruments | -481,544.75 | -286,970.29 | -278,647.43 | -8,322.86 | -760,192.18 |
| 2. Other comprehensive income that will be reclassified into gains or losses | -1,316,942.00 | 8,986,579.67 | 8,199,969.48 | 786,610.19 | 6,883,027.48 |
| including: other comprehensive income that can be transferred in gains or losses under the equity method | -1,305,935.62 | 7,238,557.02 | 7,238,557.02 | 5,932,621.40 | |
| Translation balance of foreign currency financial statements | -11,006.38 | 1,748,022.65 | 961,412.46 | 786,610.19 | 950,406.08 |
| Total other comprehensive income | -1,798,486.75 | 8,699,609.38 | 7,921,322.05 | 778,287.33 | 6,122,835.30 |
| Item | Opening balance | Increased amount | Closing balance |
| Statutory surplus reserve | 272,791,366.07 | 79,268,090.83 | 352,059,456.90 |
| Total | 272,791,366.07 | 79,268,090.83 | 352,059,456.90 |
36. Undistributed profit
Unit: yuan Currency: RMB
| Item | 2019 | 2018 |
| Undistributed profit at the end of prior period before adjustment | 2,651,462,525.08 | 2,223,048,013.93 |
| Adjusting total undistributed profit at the beginning of current period | 91,554.12 | |
| Undistributed profit at the beginning of current period after adjustment | 2,651,554,079.20 | 2,223,048,013.93 |
| add: Net profit attributable to the owners of the parent company in current period | 1,199,347,355.96 | 551,928,618.35 |
| deduct: Extraction of statutory surplus reserve | 79,268,090.83 | 40,396,460.30 |
| Extraction of discretionary surplus reserve | ||
| Extraction of general risk provisions | ||
| Common stock dividends payable | 166,014,791.28 | 83,117,646.90 |
| Dividends of common stock transferred to share capital | ||
| Undistributed profit at the end of current period | 3,605,618,553.05 | 2,651,462,525.08 |
| Item | 2019 | 2018 | ||
| Revenue | Cost | Revenue | Cost | |
| Principal businesses | 17,783,082,417.36 | 15,788,139,269.90 | 15,742,792,774.42 | 14,415,344,771.04 |
| Other businesses | 9,009,556.22 | 3,880,745.65 | 8,005,346.25 | 5,952,906.36 |
| Total | 17,792,091,973.58 | 15,792,020,015.55 | 15,750,798,120.67 | 14,421,297,677.40 |
| Item | 2019 | 2018 |
| City maintenance and construction tax | 1,137,929.68 | 940,097.90 |
| Extra charges of education funds | 807,658.13 | 676,683.45 |
| House property tax | 6,831,387.45 | 6,978,501.15 |
| Land use tax | 10,819,153.17 | 10,539,729.72 |
| Vehicle and vessel use tax | 29,944.90 | 42,942.77 |
| Stamp tax | 5,826,905.19 | 5,211,980.74 |
| Environmental protection tax | 1,057,504.53 | 460,973.56 |
| Total | 26,510,483.05 | 24,850,909.29 |
39. Sales expenses
Unit: yuan Currency: RMB
| Item | 2019 | 2018 |
| Payroll | 205,619,077.91 | 162,608,694.49 |
| Travelling expense | 114,195,701.76 | 105,628,967.15 |
| Transportation and handling expense and vehicle expense | 79,208,314.37 | 81,816,784.59 |
| Service fee | 15,968,067.70 | 15,601,209.62 |
| Business entertainment expense | 20,982,184.66 | 15,315,493.59 |
| Business advertising expense | 13,494,317.66 | 10,584,270.74 |
| Lease expense | 6,181,904.43 | 5,970,164.05 |
| Meeting expenditure | 4,368,050.10 | 4,100,827.77 |
| Sales service charge | 4,927,406.41 | 2,780,212.04 |
| Office and communication fee | 5,134,153.70 | 2,704,622.28 |
| subtotal of other items | 17,138,345.34 | 13,535,507.27 |
| Total | 487,217,524.04 | 420,646,753.59 |
| Item | 2019 | 2018 |
| Payroll | 112,439,535.70 | 102,981,629.02 |
| Depreciation | 40,847,499.96 | 35,198,583.05 |
| Office and communication fee | 16,797,136.59 | 12,103,084.06 |
| Travelling expense | 9,014,660.58 | 8,776,171.14 |
| Repair charge | 11,342,686.18 | 5,451,152.88 |
| Lease expense | 5,146,925.10 | 5,177,268.87 |
| Amortization of intangible assets | 7,683,509.63 | 6,328,067.44 |
| Business entertainment expense | 7,482,966.92 | 5,231,882.50 |
| Water and electricity | 4,299,424.06 | 3,641,887.47 |
| Service fee | 9,642,037.71 | 5,654,971.79 |
| Heating fee | 6,817,865.20 | 4,116,865.94 |
| Other | 44,046,443.67 | 33,280,294.03 |
| Total | 275,560,691.30 | 227,941,858.19 |
| Item | 2019 | 2018 |
| Payroll | 25,431,025.81 | 20,252,008.67 |
| Design and testing fee | 17,512,053.59 | 28,296,665.97 |
| Material and appliance charge | 10,743,283.02 | 5,253,593.05 |
| Travel expense | 3,941,624.57 | 3,364,720.06 |
| Depreciation and amortization charge | 3,058,470.18 | 3,094,972.99 |
| Subtotal of other items | 4,522,659.48 | 838,388.54 |
| Total | 65,209,116.65 | 61,100,349.28 |
42. Financial expense
Unit: yuan Currency: RMB
| Item | 2019 | 2018 |
| Interest expenditure | 77,508,278.78 | 66,635,982.41 |
| deduct: interest income | -9,696,477.31 | -4,414,083.01 |
| add: exchange loss (deduct income) | 5,689,613.00 | 9,638,461.65 |
| add: service charge | 2,891,552.83 | 3,040,576.37 |
| Total | 76,392,967.30 | 74,900,937.42 |
| Item | 2019 | 2018 |
| Government grant charged in | 11,495,398.41 | 14,165,463.22 |
| Total | 11,495,398.41 | 14,165,463.22 |
| Item | 2019 | 2018 |
| Income from long-term equity investment measured by the equity method | 629,093,604.62 | 281,184,722.34 |
| Income from disposal of long-term equity investment | 3,624,691.43 | 1,374,325.45 |
| Income from disposal of financial assets measured at fair value and the changes included in current gains or losses | 195,571.87 | 3,190,994.43 |
| Income from holding other equity instrument investment | 100,000.00 | 100,000.00 |
| After loss of control, gains or losses obtained from remeasuring residual equity at fair value | 820,378.27 | 164,912.02 |
| Income from disposal of other equity instrument investment | 100,000.00 | |
| Income from holding trading financial assets | 3,545,198.63 | |
| Total | 637,479,444.82 | 286,014,954.24 |
| Source of income from changes in fair value | 2019 | 2018 |
| Income from fair value changes generated by derivative financial instruments | 577,449.00 | -369,580.00 |
| Total | 577,449.00 | -369,580.00 |
| Source of income from changes in fair value | 2019 | 2018 |
| Bad debt loss of other receivables | -16,445,616.93 | |
| Bad debt loss of account receivables | -9,898,584.12 | |
| Total | -26,344,201.05 |
47. Asset impairment loss
Unit: yuan Currency: RMB
| Item | 2019 | 2018 |
| Bad debt loss | -66,218,692.38 | |
| Inventory falling price loss | -40,242,301.07 | -9,791,880.79 |
| Impairment losses on long-term equity investments | -6,150,602.09 | |
| Impairment losses on fixed assets | -58,216,968.82 | -41,867,066.61 |
| Total | -98,459,269.89 | -124,028,241.87 |
| Item | 2019 | 2018 |
| Gains or losses from disposal of fixed assets | 1,177,420.87 | -1,939,342.38 |
| Gains or losses from disposal of construction in progress | -1,496,120.61 | |
| Gains or losses from disposal of intangible assets | -1,817,161.80 | |
| Gains or losses from disposal of productive biological asset | -605,269.52 | |
| Total | 572,151.35 | -5,252,624.79 |
| Item | 2019 | 2018 | Amount included in current non-recurring gains and losses |
| Total gains or losses from disposal of non-current assets | 54,984.56 | 247,406.47 | 54,984.56 |
| including: gains or losses from disposal of fixed assets | 247,406.47 | ||
| Government grants | 10,868,297.38 | 5,305,777.88 | 10,868,297.38 |
| Inventory profit gains | 351,193.28 | ||
| Insurance indemnity income | 2,001,544.16 | ||
| Other | 2,483,254.32 | 2,448,205.40 | 2,483,254.32 |
| Total | 13,406,536.26 | 10,354,127.19 | 13,406,536.26 |
| Item | 2019 | 2018 | Related to assets/related to earnings |
| Special fund for the development of foreign economic trade industry | 3,884,800.00 | 2,011,900.00 | related to income |
| Incentive fund for China's top 500 private enterprises | 2,000,000.00 | related to income | |
| Special fund for financial development in 2019 | 2,000,000.00 | related to income | |
| Support fund for enterprise development | 550,000.00 | related to income | |
| Subtotal for other projects under RMB 500,000 | 2,433,497.38 | 2,793,877.88 | related to income |
| Shenyang Mayor Quality Award | 500,000.00 | related to income | |
| Total | 10,868,297.38 | 5,305,777.88 | / |
50. Non-operating expenditure
Unit: yuan Currency: RMB
| Item | 2019 | 2018 | Amount included in current non-recurring gains and losses |
| Total losses from disposal of non-current assets | 7,397,933.97 | 4,698,080.39 | 7,397,933.97 |
| including: Lsses from disposal of fixed assets | 2,982,022.27 | 4,698,080.39 | 2,982,022.27 |
| Losses from scrapped productive biological assets | 4,415,911.70 | 4,415,911.70 | |
| Losses from debt restructuring | 1,147,367.47 | ||
| External donations | 3,782,783.00 | 1,064,405.00 | 3,782,783.00 |
| Special loss | 13,449,568.40 | 590,640.65 | 13,449,568.40 |
| Amercement outlay | 924,253.69 | 632,789.35 | 924,253.69 |
| other | 183,300.79 | 1,270,961.76 | 183,300.79 |
| Total | 25,737,839.85 | 9,404,244.62 | 25,737,839.85 |
| Item | 2019 | 2018 |
| Income tax expense | 90,037,145.50 | 80,735,273.83 |
| Deferred income tax expense | -5,330,616.57 | 6,115,061.17 |
| Total | 84,706,528.93 | 86,850,335.00 |
| Item | 2019 |
| Total profit | 1,582,170,844.74 |
| Income tax expenses calculated at statutory/applicable tax rates | 237,325,626.71 |
| Effects of subsidiaries that are subject to different tax rates | -80,518,036.66 |
| Effects of adjusting the income tax on previous periods | -3,401,269.07 |
| Effects of non-taxable income | -90,567,175.64 |
| Effects of non-deductible costs, expenses and losses | 4,637,521.77 |
| Effects of using deductible losses of unrecognized deferred income tax assets of prior period | -4,319,490.62 |
| Effects of deductible temporary difference or deductible loss of unrecognized deferred income tax assets of current period | 28,485,337.97 |
| Calculation and deduction of R&D expenditure | -3,615,589.36 |
| Other | -3,320,396.18 |
| Income tax expense | 84,706,528.93 |
53. Items in cash flow statement
A. Cash received from other activities related to operating
Unit: yuan Currency: RMB
| Item | 2019 | 2018 |
| Government grants | 33,951,978.38 | 20,320,148.27 |
| Interest income | 9,696,477.31 | 4,414,083.01 |
| Subtotal of transactions and other | 74,276,495.00 | 101,879,318.01 |
| Total | 117,924,950.69 | 126,613,549.29 |
| Item | 2019 | 2018 |
| Travelling expense | 127,151,986.91 | 114,405,138.29 |
| Transportation and handling expense and vehicle expense | 79,208,314.37 | 81,816,784.59 |
| R&D expenditure | 32,777,996.09 | 37,753,367.62 |
| Business entertainment expense | 28,465,151.58 | 20,547,376.09 |
| Office and communication fee | 21,931,290.29 | 14,807,706.34 |
| Service fee | 22,863,995.41 | 21,256,181.41 |
| Other operating expenses | 76,106,845.41 | 90,976,916.72 |
| Transactions and other | 42,979,843.73 | 103,298,594.82 |
| Total | 431,485,423.79 | 484,862,065.88 |
| Item | 2019 | 2018 |
| L/C Guarantee deposits decreased | 28,220,000.81 | |
| Cash received from acquiring subsidiaries | 7,131,060.28 | |
| Total | 35,351,061.09 |
| Item | 2019 | 2018 |
| Futures trading guarantee increased | 34,912,964.17 | |
| Net cash of disposal of subsidiaries | 3,122,032.62 | |
| Total | 38,034,996.79 |
| Item | 2019 | 2018 |
| Subsidiaries receive capital increase from non-controlling interests in advance | 19,499,680.00 | 40,000,000.00 |
| Cash received from disposal of subsidiaries' shareholdings | 1,131,246.21 | |
| Total | 19,499,680.00 | 41,131,246.21 |
F. Cash paid for other activities related to financing
Unit: yuan Currency: RMB
| Item | 2019 | 2018 |
| Cash paid for buying non-controlling interests of the subsidiary | 6,433,985.36 | 25,900,000.00 |
| Total | 6,433,985.36 | 25,900,000.00 |
| Further information | 2019 | 2018 |
| 1. Adjusting net profit to cash flow from operating activities | ||
| Net profit | 1,497,464,315.81 | 604,689,153.87 |
| add: Assets impairment provision | 124,803,470.94 | 124,028,241.87 |
| Depreciation of fixed assets, depletion of oil and gas assets, depreciation of productive biological assets | 208,991,452.47 | 166,814,214.58 |
| Amortization of intangible assets | 6,977,214.30 | 5,955,716.79 |
| Amortization of long-term unamortized expense | 61,409,487.93 | 41,650,758.04 |
| Losses on disposal of fixed assets, intangible assets and other long-lived assets | 20,792,517.81 | 4,450,673.92 |
| Losses on retirement of fixed assets | -572,151.35 | 5,252,624.79 |
| Losses due to changes in fair value | -577,449.00 | 369,580.00 |
| Financial expense | 82,145,120.02 | 76,778,102.85 |
| Investment losses | -637,479,444.82 | -286,014,954.24 |
| Decrease of deferred income tax assets | -5,727,612.15 | 6,115,061.17 |
| Increase of deferred income tax liabilities | 396,995.58 | |
| Decrease of inventory | -200,278,163.60 | -202,815,701.27 |
| Decrease of operating receivables | -223,764,950.58 | -168,481,074.50 |
| Increase of operating payables | 195,376,635.14 | 60,557,196.59 |
| Other | -18,351,471.92 | 62,055,321.13 |
| Net cash flow from operating activities | 1,111,605,966.58 | 501,404,915.59 |
| 2. Net changes in cash and cash equivalents | ||
| Closing balance of cash | 1,508,390,481.68 | 889,204,873.97 |
| deduct: opening balance of cash | 889,204,873.97 | 740,680,891.81 |
| add: Closing balance of cash equivalent | ||
| deduct: Opening balance of cash equivalent | ||
| Net increase in cash and cash equivalents | 619,185,607.71 | 148,523,982.16 |
| Amount | |
| Cash or cash equivalents paid for business combinations occurred in current period | 1,000,000.00 |
| including: Harbin Baoweikang Bio-Tech Co., Ltd. | 1,000,000.00 |
| deduct: Cash and cash equivalents held by the subsidiary on the acquiring date | 246,871.87 |
| including: Harbin Baoweikang Bio-Tech Co., Ltd. | 246,871.87 |
| add: Cash or cash equivalents paid for business combinations occurred in previous periods | |
| Net cash paid for acquiring subsidiaries | 753,128.13 |
C. Cash received from disposal of subsidiaries
Unit: yuan Currency: RMB
| Amount | |
| Cash or cash equivalents received from disposal of subsidiaries during the current period | 7,750,000.00 |
| including: Weifang Wellhope Xinhesheng Feed Co., Ltd. | 7,750,000.00 |
| deduct: Cash and cash equivalents held by the subsidiary on the date of losing control | 7,405,141.26 |
| including: Weifang Wellhope Xinhesheng Feed Co., Ltd. | 7,405,141.26 |
| add: Cash or cash equivalents received in current period from disposal of subsidiaries during previous periods. | |
| Net cash received from disposal of subsidiaries | 344,858.74 |
| Item | Closing balance | Opening balance |
| 1. Cash | 1,508,390,481.68 | 889,204,873.97 |
| including: Cash on hand | 693,912.75 | 253,687.16 |
| bank deposits available for payment at any time | 1,507,696,568.93 | 888,951,186.81 |
| 2. Cash equivalent | ||
| 3. Closing balance of cash and cash equivalents | 1,508,390,481.68 | 889,204,873.97 |
the "available-for-sale financial assets" into the item of “other equity instrument” thatmeasured at fair value and the changes recorded in "other comprehensive income". OnDecember 31, 2018, the changes in fair value of "available-for-sale financial assets" of theCompany was RMB -482,190.48, including “non-controlling interests” of RMB -645.73b.
Due to above reasons, the Company conducted retroactive adjustment for surplusreserve of RMB -91,554.12 and undistributed profit of RMB 91,554.12 in the consolidatedstatements.
56. Assets in which ownership or use rights are restricted
Unit: yuan Currency: RMB
| Item | Closing book value | Reason for restriction |
| Monetary capital | 44,610,962.01 | Futures margin |
| Monetary capital | 1,779,880.44 | L/C guarantee deposit |
| Total | 46,390,842.45 | / |
| Item | Closing balance of foreign currency | Translating exchange rate | Closing balance translated into RMB |
| Monetary capital | 2,865,709.69 | ||
| including: US dollar | 307,506.44 | 6.9762 | 2,145,227.79 |
| Euro | 82.90 | 7.8155 | 647.91 |
| Ruble | 6,392,773.68 | 0.1126 | 719,833.99 |
| Short-term borrowing | 78,638,205.81 | ||
| including: US dollar | 11,272,355.41 | 6.9762 | 78,638,205.81 |
| Accounts payable | 1,678,289.84 | ||
| including: Ruble | 14,904,724.24 | 0.1126 | 1,678,289.84 |
| Prepayment | 576,285.77 | ||
| including: Ruble | 5,117,936.29 | 0.1126 | 576,285.77 |
| Advance receipt | 609,122.81 | ||
| including: Ruble | 3,606,785.62 | 0.1126 | 406,128.39 |
| US dollar | 29,098.14 | 6.9762 | 202,994.42 |
| Account receivable | 17,150,053.33 | ||
| including: US dollar | 1,121,166.43 | 6.9762 | 7,821,481.26 |
| Hong Kong dollar | 10,413,909.74 | 0.89578 | 9,328,572.07 |
| Name of overseas business entity | Business place abroad | Recording currency | Currency selection basis |
| Russia Wellhope Agri-Tech | Russia | Ruble | Local currency |
58. Government grants
Unit: yuan Currency: RMB
| Category | Amount | Present item | Amount recorded in current gains or losses |
| Special fund for the development of foreign economic trade industry | 3,884,800.00 | non-operating income | 3,884,800.00 |
| Incentive fund for China's top 500 private enterprises | 2,000,000.00 | non-operating income | 2,000,000.00 |
| Special fund for financial development in 2019 | 2,000,000.00 | non-operating income | 2,000,000.00 |
| Supporting fund of Shenyang city for coal-fired boiler elimination | 1,158,500.00 | other income | 1,158,500.00 |
| Corn grant | 1,000,000.00 | other income | 1,000,000.00 |
| Bonus for outstanding manufacturing | 770,000.00 | other income | 770,000.00 |
| Research grants | 600,000.00 | other income | 600,000.00 |
| Supporting fund for enterprise development | 550,000.00 | non-operating income | 550,000.00 |
| Subtotal for other grants under 500,000 yuan | 2,433,497.38 | non-operating income | 2,433,497.38 |
| Subtotal for other grants under 500,000 yuan | 3,965,181.00 | other income | 3,965,181.00 |
| Deferred income transferred in current period | 4,001,717.41 | other income | 4,001,717.41 |
| Total | 22,363,695.79 | / | 22,363,695.79 |
| Investee | Date of acquiring | Acquisition cost | Shareholding % | Way of acquisition | Acquisition date | Basis for determining acquisition date | Investee's income from acquisition date to the period end | Investee's net profit from acquisition date to the period end |
| Suizhong Renhe Fishery | Apr. 8, 2019 | 550,000.00 | 55.00 | Cash | Apr. 8, 2019 | Control right shifting | 12,627,273.07 | 446,764.33 |
| Harbin Baoweikang Bio- Tech | Mar. 22, 2019 | 1,000,000.00 | 100.00 | Cash | Mar. 22, 2019 | Control right shifting | 19,189,900.08 | 325,331.53 |
| Hebei Deheng Farming | Jul. 17, 2019 | 6,300,000.00 | 100.00 | Cash | Jul. 17, 2019 | Control right shifting | 476,190.50 | -156,461.15 |
| Combined cost | Suizhong Renhe Fishery | Harbin Baoweikang Bio- Tech | Hebei Deheng Farming |
| Cash | 550,000.00 | 1,000,000.00 | 6,300,000.00 |
| Fair value of the equity, which held prior to the acquiring date, on the acquisition date | 400,000.00 | ||
| Total combined costs | 950,000.00 | 1,000,000.00 | 6,300,000.00 |
| deduct: Fair value share of identifiable net assets obtained | 950,000.00 | 1,000,000.00 | 6,301,844.71 |
| Goodwill or combined cost is less than the amount of the fair value share of the identifiable net assets obtained | -1,844.71 |
| Suizhong Renhe Fishery | Harbin Baoweikang Bio- Tech | Hebei Deheng Farming | ||||
| Fair value on acquisition date | Book value on acquisition date | Fair value on acquisition date | Book value on acquisition date | Fair value on acquisition date | Book value on acquisition date | |
| Assets: | 11,379,824.51 | 11,379,824.51 | 7,723,448.94 | 7,723,448.94 | 19,873,061.60 | 19,873,061.60 |
| Monetary capital | 7,681,060.28 | 7,681,060.28 | 246,871.87 | 246,871.87 | ||
| Account receivable | 2,215,989.95 | 2,215,989.95 | ||||
| Prepayment | 2,906,607.86 | 2,906,607.86 | ||||
| Other receivables | 1,209.68 | 1,209.68 | ||||
| Inventory | 637,729.06 | 637,729.06 | 2,352,769.58 | 2,352,769.58 | ||
| Fixed assets | 1,744,335.17 | 1,744,335.17 | 19,720,109.14 | 19,720,109.14 | ||
| Construction in progress | 152,952.46 | 152,952.46 | ||||
| Intangible assets | 1,316,700.00 | 1,316,700.00 | ||||
| Liabilities: | 10,379,824.51 | 10,379,824.51 | 6,723,448.94 | 6,723,448.94 | 13,571,216.89 | 13,571,216.89 |
| Accounts payable | 557,932.42 | 557,932.42 | 10,690,132.89 | 10,690,132.89 | ||
| Advance receipt | 2,510,150.70 | 2,510,150.70 | 4,637,675.18 | 4,637,675.18 | ||
| Payroll | 42,373.33 | 42,373.33 | 260,923.00 | 260,923.00 | ||
| Taxes and surcharges payable | 29,576.00 | 29,576.00 | ||||
| Dividends payable | 7,869,673.81 | 7,869,673.81 | 1,434,027.14 | 1,434,027.14 | ||
| Other payable | 21,864.87 | 21,864.87 | 2,620,161.00 | 2,620,161.00 | ||
| Net assets | 1,000,000.00 | 1,000,000.00 | 1,000,000.00 | 1,000,000.00 | 6,301,844.71 | 6,301,844.71 |
| deduct: Non-controlling interests | 50,000.00 | 50,000.00 | ||||
| Net assets acquired | 950,000.00 | 950,000.00 | 1,000,000.00 | 1,000,000.00 | 6,301,844.71 | 6,301,844.71 |
| Investee | Book value of the equity, which held prior to the acquiring date, on the acquisition date | Fair value of the equity, which held prior to the acquiring date, on the acquisition date | Gain or loss arising from remeasuring the equity held prior to the acquisition date by fair value | Determination method and main assumptions of fair value on the acquisition date |
| Suizhong Renhe Fishery | 400,000.00 | 400,000.00 | Reference transaction price |
2. Disposal of subsidiary
Unit: yuan Currency: RMB
| Subsidiary | Disposal price | Percentage of disposed shareholding % | Disposal way | Date of losing control | The difference of the share of such subsidiary's net asset held by the Company in the consolidated financial statements which caused by disposal price and disposal of investment | Residual shareholding on the date of losing control % | Booking value of residual equity on the date of losing control | Fair value of residual equity on the date of losing control | Gains or losses arising from remeasuring residual equity by fair value |
| Weifang Wellhope Xinhesheng Feed | 7,750,000.00 | 31 | Transferred | June 30, 2019 | 1,271,586.31 | 20 | 4,179,621.73 | 5,000,000.00 | 820,378.27 |
| Luohe Hongfeng Poultry Rearing | 1.00 | 51 | Transferred | June 30, 2019 | 2,808,277.31 |
| Subsidiary | Business site | Registered site | Business type | Shareholding % | Mode of acquisition | |
| Direct | Indirect | |||||
| Haicheng Xinzhongxin Wellhope Feed | Haicheng city | Haicheng city | production | 51.00 | investment | |
| Dalian Huakang Xinxin Food | Dalian city | Dalian city | production | 65.00 | investment | |
| Changchun Hengfeng Agriculture and Animal Husbandry | Changchun city | Changchun city | trading | 51.00 | investment | |
| Jinan Xinweita Trading | Jinan city | Jinan city | trading | 76.00 | investment | |
| Henan Wellhope Agri-Tech | Kaifeng city | Kaifeng city | production | 100.00 | investment | |
| Zhengzhou Wellhope Agri-Tech | Zhengzhou city | Zhengzhou city | production | 70.00 | investment | |
| Zhumadian Wellhope Agri-Tech | Zhumadian city | Zhumadian city | production | 90.00 | investment | |
| Jiaozuo Wellhope Feed | Jiaozuo city | Jiaozuo city | production | 98.30 | investment | |
| Nanyang Wellhope Feed | Nanyang city | Nanyang city | production | 70.00 | investment | |
| Zhangwu Wellhope Agriculture Development | Zhangwu county | Zhangwu county | production | 60.00 | investment | |
| Xifeng Qianyue Planting | Xifeng county | Xifeng county | production | 100.00 | investment | |
| Sanjiang Wellhope Agri-Tech | Jixian county | Jixian county | production | 100.00 | investment | |
| Jixian Expert Trading | Jixian county | Jixian county | trading | 100.00 | investment | |
| Gongzhuling Wellhope Agri-Tech | Gongzhuling city | Gongzhuling city | production | 100.00 | investment | |
| Shenyang Expert Trading | Shenyang city | Shenyang city | trading | 100.00 | investment | |
| Liaoning Skyland Livestock Equipment | Shenyang city | Shenyang city | production | 100.00 | investment | |
| Shenyang Wellhope Ruminant Feed | Shenyang city | Shenyang city | production | 100.00 | investment | |
| Shenyang Wellhope Extruded Feed | Shenyang city | Shenyang city | production | 100.00 | investment | |
| Shenyang Wellhope Aquatic Feed | Shenyang city | Shenyang city | production | 100.00 | investment | |
| Shenyang Jiahe Tianfeng Commerce and Trade | Shenyang city | Shenyang city | trading | 100.00 | investment | |
| Liaoning Wellhope Food | Beipiao city | Beipiao city | production | 60.00 | investment | |
| Haicheng Wellhope Agri-Tech | Haicheng city | Haicheng city | production | 100.00 | investment | |
| Tai'an Wellhope Feed | Tai'an county | Tai'an county | production | 100.00 | investment | |
| Lingyuan Wellhope Agri-Tech | Lingyuan city | Lingyuan city | production | 90.50 | investment | |
| Beijing Helai Sci-Tech | Beijing city | Beijing city | production | 100.00 | investment | |
| Beijing Wellhope Agri-Tech | Beijing city | Beijing city | trading | 100.00 | investment | |
| Beijing Sanyuan Wellhope Agri-Tech | Beijing city | Beijing city | production | 70.00 | investment | |
| Jilin Wellhope Agri-Tech | Jilin city | Jilin city | production | 100.00 | investment | |
| Jilin Hefeng Hog Breeding | Gongzhuling city | Gongzhuling city | production | 100.00 | investment | |
| Harbin Weierhao Trading | Harbin city | Harbin city | trading | 51.00 | investment | |
| Daqing Wellhope Bayi Nongda Animal Sci-Tech | Daqing city | Daqing city | production | 70.00 | investment | |
| Mudanjiang Wellhope Agri-Tech | Mudanjiang city | Mudanjiang city | production | 100.00 | investment | |
| Jinzhou Wellhope Agri-Tech | Jinzhou city | Jinzhou city | production | 100.00 | investment | |
| Gongzhuling Wellhope | Gongzhuling | Gongzhuling | production | 100.00 | investment |
| Ruminant Feed | city | city | ||||
| Heilongjiang Wellhope Agri-Tech | Harbin city | Harbin city | production | 100.00 | investment | |
| Tangshan Wellhope Feed | Tangshan city | Tangshan city | production | 80.00 | investment | |
| Cangzhou Helai Sci-Tech | Cangzhou city | Cangzhou city | production | 70.00 | investment | |
| Xi'an Wellhope Feed Sci-Tech | Xi'an city | Xi'an city | production | 85.00 | investment | |
| Gansu Wellhope Agri-Tech | Wuwei city | Wuwei city | production | 100.00 | investment | |
| Jining Wellhope Agri-Tech | Jining city | Jining city | production | 70.00 | investment | |
| Shanghai Wellhope Feed | Shanghai city | Shanghai city | production | 65.00 | investment | |
| Shanghai Hehong Trading | Shanghai city | Shanghai city | trading | 32.00 | 42.00 | investment |
| Zhejiang Pinghu Wellhope Agri-Tech | Pinghu city | Pinghu city | production | 85.00 | investment | |
| Huai'an Wellhope Feed | Huai'an city | Huai'an city | production | 100.00 | investment | |
| Qingdao Wellhope Agri-Tech | Pingdu city | Pingdu city | trading | 95.00 | investment | |
| Guangzhou Xiangshun Livestock Equipment | Guangzhou city | Guangzhou city | production | 56.00 | investment | |
| Hainan Wellhope Agri-Tech | Chengmai county | Chengmai county | production | 60.00 | investment | |
| Fuyu Wellhope Agri-Tech | Fuyu city | Fuyu city | production | 97.00 | investment | |
| Fuyu Wellhope Taolaizhao Poultry Raising | Fuyu city | Fuyu city | production | 97.00 | investment | |
| Changchun Wellhope Feed | Nong'an county | Nong'an county | production | 98.00 | investment | |
| Changtu Wellhope Feed | Changtu county | Changtu county | production | 100.00 | investment | |
| Lankao Wellhope Agri-Tech | Lankao county | Lankao county | production | 100.00 | investment | |
| Tongliao Wellhope Tianyi Prataculture | Tongliao city | Tongliao city | production | 51.00 | investment | |
| Liaoning Wellhope Purchasing & Trading | Shenyang city | Shenyang city | trading | 100.00 | investment | |
| Shenyang Wellhope Agri-Tech | Shenyang city | Shenyang city | production | 100.00 | investment | |
| Liaoning Expert Trading | Shenyang city | Shenyang city | trading | 100.00 | combined under the same control | |
| Shenyang Fame Bio-Tech | Shenyang city | Shenyang city | production | 100.00 | combined under the same control | |
| Shenyang Pufeng Commerce and Trade | Shenyang city | Shenyang city | trading | 100.00 | combined under the same control |
| Shenyang Huawei Pharmaceutical | Shenyang city | Shenyang city | production | 51.00 | combined under the same control | |
| Liaoning Wellhope Agriculture and Animal Husbandry Development | Shenyang city | Shenyang city | production | 100.00 | combined under different control | |
| Puyang Wellhope Food | Puyang city | Puyang city | production | 49.81 | combined under different control | |
| Jingzhou Wellhope Agricultural Sci-Tech | Jingzhou city | Jingzhou city | trading | 86.00 | investment | |
| Dalian Heyuan Wellhope Agri-Tech | Dalian city | Dalian city | production | 51.00 | investment | |
| Shenyang Nongda Wellhope Feed | Shenyang city | Shenyang city | production | 100.00 | investment | |
| Dalian Wellhope Feed | Dalian city | Dalian city | production | 100.00 | investment | |
| Xingcheng Wellhope Feed | Xingcheng city | Xingcheng city | production | 100.00 | investment | |
| Yunnan Wellhope Feed | Kunming city | Kunming city | production | 96.00 | investment | |
| Liaoning Godaji E-commerce | Shenyang city | Shenyang city | trading | 100.00 | investment | |
| Anhui Wellhope Agri-Tech | Haozhou city | Haozhou city | production | 70.00 | investment | |
| Shanxi Wellhope Agri-Tech | Yuanping city | Yuanping city | production | 100.00 | investment | |
| Pingyuan Wellhope Food | Handan city | Handan city | production | 100.00 | investment | |
| Shenyang Huaweida Animal Health Product | Shenyang city | Shenyang city | trading | 100.00 | investment | |
| Dalian Zhongjia Food | Dalian city | Dalian city | production | 100.00 | combined under different control | |
| Wellhope Food(Shenyang) | Shenyang city | Shenyang city | production | 100.00 | investment | |
| Changchun Wellhope Food | Changchun city | Changchun city | production | 85.00 | investment | |
| Pingyuan Wellhope Agri-Tech | Handan city | Handan city | production | 100.00 | investment | |
| Puyang Wellhope Agri-Tech | Puyang city | Puyang city | production | 100.00 | investment | |
| Chongqing Dahong Agriculture and Animal Husbandry Equipment | Chongqing city | Chongqing city | production | 50.00 | combined under different control | |
| Beijing Brilliant Dragon Commerce and Trade | Beijing city | Beijing city | trading | 51.00 | investment | |
| Tangshan Hejia Agriculture and Animal | Tangshan city | Tangshan city | production | 65.00 | investment |
| Husbandry | ||||||
| Tangshan Wellhope Sci-Tech | Tangshan city | Tangshan city | production | 70.00 | combined under different control | |
| Shenyang Huakang Xinxin Food | Shenyang city | Shenyang city | production | 85.00 | investment | |
| Kaifeng Wellhope Meat Food | Kaifeng city | Kaifeng city | production | 100.00 | investment | |
| Shenyang Huakang Broiler | Shenyang city | Shenyang city | production | 85.00 | investment | |
| Kaifeng Wellhope Agriculture and Animal Husbandry | Kaifeng city | Kaifeng city | production | 100.00 | investment | |
| Fushun Wellhope Agriculture and Animal Husbandry | Fushun city | Fushun city | production | 100.00 | investment | |
| Shenyang Wellhope Poultry | Shenyang city | Shenyang city | production | 100.00 | investment | |
| Shenyang Huakang Agriculture and Animal Husbandry | Shenyang city y | Shenyang city y | production | 100.00 | investment | |
| Dehui Wellhope Agri-Tech | Dehui city | Dehui city | production | 100.00 | investment | |
| Shenyang Tianjingde Trading | Shenyang city | Shenyang city | trading | 100.00 | investment | |
| Chongqing Wellhope Agri-Tech | Chongqing city | production | 65.00 | investment | ||
| Dahong Agriculture and Animal Husbandry Technology Research Institute Chongqing Branch | Chongqing city | production | 100.00 | investment | ||
| Russia Wellhope Agri-Tech | production | 55.00 | investment | |||
| Suizhong Renhe Fishery | Suizhong county | Suizhong county | production | 95.00 | ||
| Harbin Baiweikang Bio-Tech | Harbin city | Harbin city | production | 100.00 | ||
| Shulan Fengtai Agriculture and Animal Husbandry | Shulan city | Shulan city | production | 60.00 | investment | |
| Shulan Fengtai Farming | Shulan city | Shulan city | production | 51.00 | investment | |
| Xi'an Linfeng Shengyi Trading | Xi’an city | Xi’an city | trading | 100.00 | investment | |
| Linxi Helai Agri-Tech | Linxi city | Linxi city | production | 100.00 | investment | |
| Nanchang Wellhope Agri-Tech | Nanchang city | Nanchang city | production | 65.00 | investment | |
| Hengyang Wellhope Agri-Sci-Tech | Hengyang city | Hengyang city | production | 78.50 | investment | |
| Anhui Wellhope Haoxiang Agricultural Development | Lixin county | Lixin county | production | 100.00 | investment | |
| Lixin Xiangfeng | Lixin county | Lixin county | production | 100.00 | investment |
| Agriculture and Animal Husbandry | ||||||
| Lixin Hongfeng Agriculture and Animal Husbandry | Lixin county | Lixin county | production | 100.00 | investment | |
| Guangzhou Dashang Trading | Guangzhou city | Guangzhou city | trading | 51.00 | investment | |
| Shandong Heyuan Food | Weihai city | Weihai city | production | 65.00 | investment | |
| Wafangdian Yifeng Agri-Tech | Wafangdian city | Wafangdian city | production | 51.00 | investment | |
| Hebei Deheng Farming | Handan city | Handan city | production | 100.00 | combined under different control | |
| Dahongda Chongqing Construction Engineering | Chongqing city | Chongqing city | production | 100.00 | investment | |
| Zhangwu Jiufeng Trading | Zhangwu city | Zhangwu city | trading | 100.00 | investment |
| Subsidiary | Shareholding of non-controlling interests | Gain or losses attributable to non-controlling interests | Declared dividends to non-controlling interests | Closing balance of non-controlling interests |
| Dalian Heyuan Agri-Tech | 49.00 | 207,356,024.45 | 379,455,245.54 | |
| Xi'an Wellhope Feed Sci-Tech | 15.00 | 5,532,812.91 | 20,375,730.80 | |
| Beijing Sanyuan Wellhope Agri-Tech | 30.00 | 3,309,845.30 | 59,490,335.92 | |
| Tangshan Wellhope Feed | 15.00 | -228,356.25 | 10,471,116.05 |
C. Financial figures of important non-wholly owned subsidiary
Unit: yuan Currency: RMB
| Subsidiary | Closing balance | Opening balance | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Dalian Heyuan Agri-Tech | 647,431,144.31 | 566,852,586.60 | 1,214,283,730.91 | 406,157,814.72 | 24,986,023.48 | 431,143,838.20 | 387,238,954.52 | 386,397,787.09 | 773,636,741.61 | 384,749,243.08 | 38,499,083.34 | 423,248,326.42 |
| Xi'an Wellhope Feed Sci-Tech | 120,990,215.88 | 40,503,567.21 | 161,493,783.09 | 25,655,577.75 | 25,655,577.75 | 77,754,831.17 | 43,262,494.18 | 121,017,325.35 | 22,717,956.94 | 22,717,956.94 | ||
| Beijing Sanyuan Wellhope Agri-Tech | 203,102,041.98 | 25,669,497.12 | 228,771,539.10 | 30,470,419.37 | 30,470,419.37 | 180,774,234.54 | 26,952,555.35 | 207,726,789.89 | 22,111,712.84 | 22,111,712.84 | ||
| Tangshan Wellhope Feed | 50,349,221.33 | 73,444,222.46 | 123,793,443.79 | 53,986,003.46 | 53,986,003.46 | 47,477,540.37 | 77,434,251.30 | 124,911,791.67 | 53,739,426.35 | 53,739,426.35 | ||
| Subsidiary | 2019 | 2018 | ||||||
| Operation revenue | Net profit | Total comprehensive income | Cash flow from operating activities | Operation revenue | Net profit | Total comprehensive income | Cash flow from operating activities | |
| Dalian Heyuan Agri-Tech | 2,558,885,564.63 | 422,116,992.52 | 422,116,992.52 | 546,194,647.16 | 1,805,702,344.34 | 138,744,110.24 | 138,744,110.24 | 99,805,558.21 |
| Xi'an Wellhope Feed Sci-Tech | 507,204,197.17 | 36,885,419.43 | 36,885,419.43 | 49,487,674.37 | 387,215,020.67 | 21,517,306.35 | 21,517,306.35 | 27,803,030.51 |
| Beijing Sanyuan Wellhope Agri-Tech | 372,855,922.14 | 11,032,817.68 | 11,032,817.68 | 27,252,191.23 | 360,806,758.21 | 8,242,076.15 | 8,242,076.15 | 10,929,723.62 |
| Tangshan Wellhope Feed | 161,847,154.96 | -1,522,374.99 | -1,522,374.99 | 15,383,862.25 | 187,093,547.70 | -11,917,558.86 | -11,917,558.86 | 2,684,520.75 |
2. Transactions that change the share of owner's equity of the Company in subsidiarybut the Company still controls the subsidiaryA. Circumstance of the change of owner's equityDuring the current period, the Company transferred 8.00% of shareholdings of BeijingBrilliant Dragon, 5.00% of Shenyang Huakang Xinxin Food and 5.00% of Shenyang HuakangBroiler, non-controlling shareholders of Puyang Wellhope Food bought 10.19% of itsshareholding, and non-controlling shareholders of Hainan Wellhope Agri-Tech bought
40.00% of its shareholding.
The Company acquired 25.00% of shareholding Shenyang Huaweida Animal HealthProduct, 5.00% of Tangshan Wellhope Feed, 20.00% of Shenyang Tianjingde Commerce,increased investment in Yunnan Wellhope Feed to dilute 1.00% of non-controllingshareholder’s share.
B. The impact of the transaction on non-controlling interests and the equity attributable to the owners of parent company
Unit: yuan Currency: RMB
| Shenyang Huaweida Animal Health Product | Tangshan Wellhope Feed | Shenyang Tianjingde Commerce | Yunnan Wellhope Feed | Beijing Brilliant Dragon | Shenyang Huakang Xinxin Food | Shenyang Huakang Broiler | Puyang Wellhope Food | Hainan Wellhope Agri-Tech | |
| Cost of acquisition/disposal considerations | 2,590,684.72 | 3,265,881.29 | 577,419.35 | 250,000.00 | 687,058.18 | 7,642,312.50 | 18,000,000.00 | ||
| --Cash | 2,590,684.72 | 3,265,881.29 | 577,419.35 | 250,000.00 | 687,058.18 | 7,642,312.50 | 18,000,000.00 | ||
| total cost of acquisition/disposal considerations | 2,590,684.72 | 3,265,881.29 | 577,419.35 | 250,000.00 | 687,058.18 | 7,642,312.50 | 18,000,000.00 | ||
| deduct: Share of net assets in the subsidiary calculated by gained or disposed shareholdings | 2,590,684.72 | 2,973,144.29 | 577,419.35 | 790,566.00 | 687,058.18 | -928,537.00 | -745,586.00 | 13,718,704.50 | 17,087,457.00 |
| Balance | 292,737.00 | -540,566.00 | 928,537.00 | 745,586.00 | -6,076,392.00 | 912,543.00 | |||
| including: Adjusting capital reserve | 292,737.00 | -540,566.00 | 928,537.00 | 745,586.00 | -6,076,392.00 | 912,543.00 |
| Company name | Business site | Registered site | Business type | Shareholding % | Accounting treatment methods | |
| Direct | Indirect | |||||
| Beipiao Hongfa Food | Beipiao city | Beipiao city | production | 35.00 | equity method | |
| Anshan Jiuguhe Food | Tai'an county | Tai'an county | production | 41.55 | equity method | |
| Tai'an Jiuguhe Agriculture | Tai'an county | Tai'an county | production | 41.55 | equity method | |
| Dalian Chengsan Animal Husbandry | Dalian city | Dalian city | production | 20.00 | equity method | |
B. Financial figures of important joint ventures or associated companies
Unit: yuan Currency: RMB
| 2019 | 2018 | |||||||
| Beipiao Hongfa Food | Anshan Jiuguhe Food | Tai'an Jiuguhe Agriculture | Dalian Chengsan Animal Husbandry | Beipiao Hongfa Food | Anshan Jiuguhe Food | Tai'an Jiuguhe Agriculture | Dalian Chengsan Animal Husbandry | |
| Current assets | 808,320,727.52 | 433,236,440.94 | 225,516,906.39 | 1,467,906,023.75 | 503,634,934.55 | 417,277,140.35 | 283,786,492.81 | 780,819,026.16 |
| Non-current assets | 720,803,998.40 | 102,408,547.67 | 191,500,344.01 | 448,345,020.68 | 438,127,861.68 | 112,079,862.26 | 30,783,891.85 | 375,918,473.97 |
| Total assets | 1,529,124,725.92 | 535,644,988.61 | 417,017,250.40 | 1,916,251,044.43 | 941,762,796.23 | 529,357,002.61 | 314,570,384.66 | 1,156,737,500.13 |
| Current liabilities | 242,424,331.42 | 162,491,901.70 | 148,906,962.33 | 498,609,123.11 | 174,740,051.73 | 274,529,095.54 | 157,969,045.26 | 353,316,814.51 |
| Non-current liabilities | 23,430,000.00 | 2,313,480.78 | 256,500.00 | 5,851,807.11 | 47,100,000.00 | 12,578,401.85 | 812,500.00 | 16,328,633.74 |
| Total liabilities | 265,854,331.42 | 164,805,382.48 | 149,163,462.33 | 504,460,930.22 | 221,840,051.73 | 287,107,497.39 | 158,781,545.26 | 369,645,448.25 |
| Non-controlling interests | 224,864,512.85 | 111,098,427.82 | ||||||
| Equity attributable to shareholders of parent company | 1,263,270,394.50 | 370,839,606.13 | 267,853,788.07 | 1,186,925,601.36 | 719,922,744.50 | 242,249,505.22 | 155,788,839.40 | 675,993,624.06 |
| Share of net assets calculated by shareholdings | 442,144,638.08 | 154,083,856.35 | 111,293,248.94 | 237,385,120.27 | 251,972,960.58 | 100,654,669.42 | 64,730,262.77 | 135,198,724.82 |
| Adjustment | -1,645,427.58 | -360.00 | 116,569,111.62 | -1,157,373.92 | 116,569,111.61 | |||
| --Goodwill | 116,569,111.62 | 116,569,111.61 | ||||||
| --Unrealized profit of internal transaction | -1,645,427.58 | -1,157,373.92 | ||||||
| --Other | -360.00 | |||||||
| Book value of equity investment in joint venture | 442,144,638.08 | 152,438,428.77 | 111,292,888.94 | 353,954,231.89 | 251,972,960.58 | 99,497,295.50 | 64,730,262.77 | 251,767,836.43 |
| Operating | 3,147,988,768.25 | 2,268,540,275.94 | 1,962,268,400.56 | 3,203,777,482.74 | 2,587,369,620.08 | 1,856,147,804.84 | 1,212,886,039.39 | 2,550,658,470.89 |
| revenue | ||||||||
| Financial expense | 9,410,923.65 | 6,045,197.17 | 443,973.81 | 747,012.45 | 12,661,907.37 | 10,792,355.27 | 755,441.88 | 8,143,098.38 |
| Income tax expense | 2,130,807.75 | |||||||
| Net profit | 574,147,650.00 | 140,590,100.91 | 124,064,948.67 | 604,777,510.19 | 231,638,507.94 | 69,303,074.75 | 97,455,832.09 | 307,020,416.94 |
| Total comprehensive income | 574,147,650.00 | 140,590,100.91 | 124,064,948.67 | 604,777,510.19 | 231,638,507.94 | 69,303,074.75 | 97,455,832.09 | 307,020,416.94 |
| Dividends received from associated companies | 10,780,000.00 | 4,986,360.00 | 4,986,360.00 | 12,127,500.00 |
C. Financial information of unimportant joint ventures and associated companies
Unit: yuan Currency: RMB
| 2019 | 2018 | |
| Joint venture: | ||
| Book value of investment | 11,669,191.54 | 11,669,191.54 |
| Items calculated according to the shareholdings | ||
| --Net profit | 7,181,908.21 | 4,007,001.33 |
| --Other comprehensive income | 53,833.62 | -2,412,673.32 |
| --Total comprehensive income | 7,235,741.84 | 1,594,328.01 |
| Associated company: | ||
| Book value of investment | 998,548,503.29 | 675,182,909.17 |
| Items calculated according to the shareholdings | ||
| --Net profit | 216,479,052.22 | 81,585,071.51 |
| --Other comprehensive income | 7,238,557.02 | -1,305,935.62 |
| --Total comprehensive income | 223,717,609.24 | 80,279,135.89 |
B. Foreign exchange risksForeign exchange risk refers to the risk of loss caused by exchange rate movement. TheCompany's main business activities are settled in RMB, with a small amount of import andexport business, changes in exchange rate have little impact on the Company.
2. Credit risk
The maximum credit risk exposure that may cause financial losses to the Company mainlycomes from financial assets loss caused by the other party of contract failed to performduty.In order to reduce credit risk, the Company constantly strengthens the risk managementawareness of accounts receivable, and only deals with confirmed and reputable thirdparties. In accordance with the Company's policies, it is necessary to conduct credit auditand approval, carefully confirm the credit limit, implement other monitoring proceduresand take necessary measures to recover overdue claims.
3. Liquidity risk
In regard of managing liquidity risk, the Company monitors cash and cash equivalents, tosatisfy its operation demand, and to reduce the influence caused by cash flow fluctuation.The management of the Company supervises the usage circumstances of bank loans andensures the Company complying with the agreement of loan.XI. Disclosure of fair value
1. Fair value of assets and liabilities in the end of period
Unit: yuan Currency: RMB
| Item | Closing fair value | |||
| The first level of fair value measurement | The second level of fair value measurement | The third level of fair value measurement | Total | |
| Continuous fair value measurement | ||||
| 1. Trading financial assets | 40,000,000.00 | 40,000,000.00 | ||
| Financial assets measured at fair value and changes recorded into current gains or losses | 40,000,000.00 | 40,000,000.00 | ||
| 2. Other equity instrument investment | 5,760,839.23 | 5,760,839.23 | ||
| 3. Derivative financial assets | 3,912,584.30 | 3,912,584.30 | ||
| Total assets continuously measured at fair value | 3,912,584.30 | 45,760,839.23 | 49,673,423.53 | |
2. The determination basis of market price of the item measured at fair value of thesustainable and non-sustainable first level fair value measurementThe derivative financial assets of the Company are futures, which are measured by theunadjusted quoted price of the same assets or liabilities in the active market on thebalance sheet date.XII. Related party and transaction
1. Snapshot of joint ventures and associated companies
Circumstance of the joint ventures and associated companies, which had relatedtransactions with the Company in the period.
| Company | Relationship |
| Unphung Joint Venture Company | joint venture |
| Nepal Wellhope Agri-tech Pvt. Ltd. | joint venture |
| Anshan Fengsheng Food | associated company |
| Anshan Jiuguhe Food | associated company |
| Beipiao Hongfa Food | associated company |
| Dalian Chengsan Animal Husbandry | associated company |
| Dalian Wellhope Fish Meal | associated company |
| Daqing Supply and Marketing Wellhope Agri-Tech | associated company |
| Dandong Wellhope Chengsan Agri-Tech | associated company |
| Dunhua Wellhope Agri-Tech | associated company |
| Gongzhuling Corn Purchasing and Storing | associated company |
| Guangzhou Yikun Trading | associated company |
| Haicheng New Hongzunda Agri-Tech | associated company |
| Huluodao Jiuguhe Food | associated company |
| Huluodao Jiuguhe Feed | associated company |
| Jinzhou Jiufeng Food | associated company |
| Lankao Skyland Feed | associated company |
| Lankao Skyland Duck | associated company |
| Linghai Jiuguhe Feed | associated company |
| Qingdao Shenfeng Agri-Tech | associated company |
| Shenyang Wenjie Bio-Tech | associated company |
| Schipper(Beijing) | associated company |
| Suizhong Rehen Fishery | subsidiary(other explanation) |
| Tai'an Fengjiu Agri-Tech | associated company |
| Tai'an Jiufeng Agri-Tech | associated company |
| Tai'an Jiuguhe Agriculture Development | associated company |
| Tailai Jiahe Agriculture and Animal Husbandry | associated company |
| Zhangjiakou Jiahe Agriculture and Animal Husbandry | associated company |
| Beijing Dahong Hengfeng Agri-Tech | associated company |
| Shenyang Zhongwenjie Bio-Tech | associated company |
| Liaoning Mubang Animal Husbandry Equipment Manufacturing | associated company |
| Dunhua Fengda Agriculture and Animal Husbandry Development | associated company |
| Heilongjiang Zhongyi Pasture Information Technology Service | associated company |
55.00% of shareholding of Suizhong Renhe Fishery, the shareholding percentage changedfrom 40.00% to 95.00%, and the joint venture became a subsidiary.
2. Snapshot of other related party
| Related party | Relationship |
| Wulian Heli Equity Investment Partnership (Limited Partnership) | Other |
| DE HEUS MAURITIUS | Other |
| Jin Weidong | Other |
| Ding Yunfeng | Other |
| Shao Caimei | Other |
| Wang Fengjiu | Other |
| Wang Zhongtao | Other |
| Zhang Tiesheng | Other |
| Wang Zhenyong | Other |
| Zhang Wenliang | Other |
| Ren Bingxin | Other |
| Zhao Xin | Other |
| Qiu Jiahui | Other |
| Yuan Minger | Other |
| Li Jun | Other |
| Jacobus Johannes de Heus | Other |
| Marcus Leonardus van der Kwaak | Other |
| Hu Jianmin | Other |
| Liu Huan | Other |
| Wang Zhe | Other |
| Relate party | Transaction | 2019 | 2018 |
| Suizhong Rehen Fishery | feed raw materials | 4,063,349.71 | |
| Dalian Wellhope Fish Meal | feed raw materials | 74,187,322.55 | 89,540,418.85 |
| Anshan Jiuguhe Food | broiler product | 19,156,542.50 | 10,607,617.64 |
| Dalian Chengsan Animal Husbandry | delivery broiler | 186,973,531.46 | 165,113,902.72 |
| Huludao Jiuguhe Food | broiler product | 3,516,670.71 | 5,435,308.49 |
| Schipper(Beijing) | other | 1,959,646.55 | 428,182.58 |
| Guangzhou Yikun Trade | feed raw materials | 12,029,615.50 | 6,188,772.00 |
| Tai'an Fengjiu Agri-Tech | day old chick | 21,997,336.14 | 3,350,549.01 |
| Zhangjiakou Jiahe Agriculture and Animal Husbandry | piglet | 9,975,239.60 | 5,928,183.50 |
| Tai’an Jiuguhe Agriculture Development | feed | 98,668,970.35 | 12,429,921.60 |
| Haicheng New Hongzunda Agri-Tech | feed | 658,306.00 | 1,120,316.47 |
| Shenyang Wenjie Bio-Tech | other | 13,150,075.20 | 6,280,763.74 |
| Jinzhou Jiufeng Food | broiler product | 6,513,833.00 |
| Daqing Supply and Marketing Wellhope Agri-Tech | feed raw materials | 36,588,085.03 | 8,880,812.73 |
| Linghai Jiuguhe Feed | other | 638,607.11 | |
| Gongzhuling Corn Purchasing and Storing | feed raw materials | 360,872.66 | 970,780.18 |
| Qingdao Shenfeng Agri-Tech | feed | 11,539,082.78 | |
| Dandong Wellhope Chengsan Agri-Tech | delivery broiler | 1,230,045.91 | |
| Lankao Skyland Duck | feed | 301,315.88 | |
| Liaoning Mubang Animal Husbandry Equipment Manufacturing | equipment | 14,861,627.35 | |
| Shenyang Zhongwenjie Bio-Tech | animal medicine | 18,000.00 | |
| Total | 513,686,119.17 | 320,977,486.33 |
| Relate party | Transaction | 2019 | 2018 |
| Nepal Wellhope Agri-tech Pvt. Ltd. | feed | 199,620.44 | |
| Linghai Jiuguhe Feed | feed raw materials | 52,588,895.71 | 37,878,202.08 |
| Tai’an Jiuguhe Agriculture Development | feed raw materials | 98,035,082.01 | 68,389,964.35 |
| Anshan Jiuguhe Food | broiler | 189,619,141.00 | 158,951,429.95 |
| Qingdao Shenfeng Agri-Tech | feed raw materials | 29,083,613.37 | 18,359,677.35 |
| Beipiao Hongfa Food | feed raw materials | 5,593,402.11 | 7,260,089.78 |
| Huludao Jiuguhe Food | feed | 481,301.83 | 13,736,255.76 |
| Haicheng New Hongzunda Agri-Tech | feed raw materials | 38,303,436.30 | 33,009,620.76 |
| Dandong Wellhope Chengsan Agri-Tech | feed raw materials | 7,160,969.75 | 10,820,771.04 |
| Tai'an Jiufeng Agri-Tech | feed raw materials | 1,248,972.58 | 1,924,877.65 |
| Huludao Jiuguhe Feed | feed raw materials | 30,081,192.14 | 25,481,359.12 |
| Suizhong Rehen Fishery | feed | 111,724.14 | |
| Schipper(Beijing) | other product | 705,596.51 | 887,414.00 |
| Zhangjiakou Jiahe Agriculture and Animal Husbandry | feed | 23,746,562.54 | 23,059,889.84 |
| Dalian Wellhope Fish Meal | feed raw materials | 165,589.72 | 537,672.40 |
| Guangzhou Yikun Trade | feed raw materials | 198,682,941.12 | 145,040,015.85 |
| Jinzhou Jiufeng Food | broiler | 3,002,040.00 | 5,211,589.00 |
| Anshan Fengsheng Food | broiler | 204,582,154.82 | 99,451,627.68 |
| Dalian Chengsan Animal Husbandry | feed raw materials | 3,777,282.46 | 10,337,579.61 |
| Tailai Jiahe Agriculture and Animal Husbandry | feed | 14,596,398.75 | 41,863,178.67 |
| Daqing Supply and Marketing Wellhope Agri-Tech | feed raw materials | 34,314,134.88 | 29,511,060.56 |
| Lankao Skyland Duck | feed raw materials | 129,207.19 | |
| Lankao Skyland Feed | feed raw materials | 2,196,704.00 | |
| Dunhua Wellhope Agri-Tech | feed raw materials | 4,759,518.19 | 5,062,091.02 |
| Dunhua Fengda Agriculture and Animal Husbandry Development | delivery broiler | 857,264.00 | |
| Heilongjiang Zhongyi Pasture Information Technology Service | feed | 113,959.73 | |
| Total | 941,499,449.52 | 739,411,622.24 |
B. Related party guaranteeThe Company acted as guarantor
Unit: yuan Currency: RMB
| Guaranteed party | Amount of guarantee | Guarantee date | Guarantee maturity date | Whether the guarantee has been fulfilled |
| Lingyuan Wellhope Agri-Tech | 20,000,000.00 | May 28, 2019 | May 24, 2020 | No |
| Chongqing Dahong agricultural and animal husbandry machinery | 7,000,000.00 | Oct. 17, 2019 | Oct. 16, 2020 | No |
| Chongqing Dahong agricultural and animal husbandry machinery | 4,000,000.00 | Nov. 8, 2019 | Nov. 7, 2020 | No |
| Liaoning Expert Trading | 9,964,046.03 | Apr. 22, 2019 | Apr. 21, 2020 | No |
| Liaoning Expert Trading | 29,843,112.42 | Feb. 26, 2019 | Feb. 13, 2020 | No |
| Liaoning Expert Trading | 38,831,047.36 | Apr. 29, 2019 | May 20, 2020 | No |
| Related party | Borrowings | Starting date | Due date | Note |
| Lankao Skyland Duck | 27,067,493.00 | After transferring part of the equity, it became an associated company of the Company. | ||
| Weifang Wellhope Xinhesheng | 3,035,880.00 | After transferring part of the equity, it became an associated company of the Company. |
| Item | 2019 | 2018 |
| Remuneration for key management | 563.64 | 709.09 |
| Item | Related party | Closing balance | Opening balance | ||
| Book balance | Bad debt provision | Book balance | Bad debt provision | ||
| Accounts receivable | Dandong Wellhope Chengsan Agri-Tech | 285,000.00 | 14,250.00 | ||
| Accounts receivable | Anshan Jiuguhe Food | 21,356,822.76 | 1,067,841.14 | 29,448,163.62 | 1,472,408.18 |
| Accounts receivable | Zhangjiakou Jiahe Agriculture and Animal Husbandry | 3,618,629.61 | 180,931.48 | 4,185,015.26 | 209,250.76 |
| Accounts receivable | Guangzhou Yikun Trade | 24,042,357.79 | 1,202,117.89 | 3,492,893.69 | 174,644.68 |
| Accounts | Anshan Fengsheng Food | 6,249,082.04 | 312,454.10 | 6,876,402.60 | 343,820.13 |
| receivable | |||||
| Accounts receivable | Dalian Chengsan Animal Husbandry | 523,200.00 | 26,160.00 | 1,062,573.20 | 53,128.66 |
| Accounts receivable | Tailai Jiahe Agriculture and Animal Husbandry | 2,695,169.64 | 134,758.48 | 69,020.56 | 3,451.03 |
| Accounts receivable | Dunhua Wellhope Agri-Tech | 30,351.21 | 1,517.56 | ||
| Accounts receivable | Daqing Supply and Marketing Wellhope Agri-Tech | 525,195.44 | 26,259.77 | 711,060.56 | 35,553.03 |
| Accounts receivable | Haicheng New Hongzunda Agri-Tech | 234,200.00 | 11,710.00 | ||
| Accounts receivable | Tai’an Jiufeng Agri-tech | 218,159.00 | 10,907.95 | ||
| Accounts receivable | Heilongjiang Zhongyi Pasture Information Technology Service | 43,174.50 | 2,158.73 | ||
| Other receivables | Lankao Skyland Duck | 27,067,493.00 | 10,826,997.20 | 5,000,000.00 | 500,000.00 |
| Other receivables | Lankao Skyland Feed | 38,067,493.00 | 3,806,749.30 | ||
| Other receivables | Weifeng Wellhope Xinhesheng | 3,035,880.00 | 151,794.00 | ||
| Prepayment | Dunhua Fengda Agriculture and Animal Husbandry Development | 5,000,000.00 | |||
| Prepayment | Dalian Wellhope Fish Meal | 914,705.00 | 205,850.00 | ||
| Prepayment | Suizhong Rehen Fishery | 7,200,000.20 | |||
| Prepayment | Gongzhuling Corn Purchasing and Storing | 1,825,000.00 | |||
| Prepayment | Liaoning Mubang Animal Husbandry Equipment Manufacturing | 7,624,669.60 | |||
| Prepayment s | Guangzhou Yikun Trade | 4,997,400.00 |
| Item | Related party | Closing book balance | Opening book balance |
| Accounts payable | Dalian Wellhope Fish Meal | 2,716,351.95 | 3,543,366.00 |
| Accounts payable | Anshan Jiuguhe Food | 1,049,646.00 | 8,783,890.00 |
| Accounts payable | Tai’an Jiuguhe Agriculture Development | 7,077,312.65 | 6,143,639.40 |
| Accounts payable | Shenyang Wenjie Bio-Tech | 2,593,516.64 | 1,312,595.06 |
| Accounts payable | Gongzhuling Corn Purchasing and Storing | 313,608.00 | |
| Accounts payable | Suizhong Rehen Fishery | 539,819.05 | |
| Accounts payable | Dalian Chengsan Animal Husbandry | 4,749,094.21 | 10,604,874.78 |
| Accounts payable | Tai’an Fengjiu Agri-Tech | 138,708.74 | |
| Accounts payable | Jingzhou Jiufeng Food | 1,617,740.00 | |
| Accounts payable | Liaoning Mubang Animal Husbandry Equipment Manufacturing | 11,284,184.00 | |
| Accounts payable | Shenyang Zhongwenjie Bio-Tech | 18,000.00 | |
| Accounts payable | Daqing Supply and Marketing Wellhope | 457,060.50 |
| Agri-Tech | |||
| Advance receipt | Linghai Jiuguhe Feed | 7,860.00 | |
| Advance receipt | Huhudao Jiuguhe Feed | 564,892.50 | 53,613.00 |
| Advance receipt | Nepal Wellhope Agri-tech Pvt. Ltd. | 38,700.00 | 38,700.00 |
| Advance receipt | Tai’an Jiuguhe Agriculture Development | 281,300.00 | 1,502,000.00 |
| Advance receipt | Dunhua Wellhope Agri-Tech | 323,000.00 | |
| Advance receipt | Tai'an Jiufeng Agri-Tech | 49,892.50 | |
| Other payables | Nepal Wellhope Agri-tech Pvt. Ltd. | 2,999.41 | 2,999.41 |
| Other payables | Unphung Joint Venture Company | 71,682.43 | 71,682.43 |
| Other payables | Liaoning Mubang Animal Husbandry Equipment Manufacturing | 5,932,500.00 |
| Total amount of equity instrument granted by the Company during current period | |
| Total amount of exercised equity instruments |
Arrangement of restricted shares:
| Arrangement of removing trading restrictions | Time of removing trading restrictions | Percentage of unrestricted shares |
| First unrestricted period | The first trading day after 12 months from the date of finishing the registration of granted shares to the last trading day within 24 months from the date of finishing the registration of granted shares | 30.00% |
| Second unrestricted period | The first trading day after 24 months from the date of finishing the registration of granted shares to the last trading day within 36 months from the date of finishing the registration of granted shares | 30.00% |
| Third unrestricted period | The first trading day after 36 months from the date of finishing the registration of granted shares to the last trading day within 48 months from the date of finishing the registration of granted shares | 40.00% |
| Confirmation method of fair value of equity instrument at the grant date | Closing price at the grant date |
| Basis for determining the number of exercised equity instrument | It is expected that the conditions can be met and all the granted objects can exercise the equity |
| Accumulated amount of equity-settled share-based payment that recorded into capital reserve | 22,783,015.06 |
| Total expense recognized by equity-settled share-based payment | 22,783,015.06 |
| Period | Lease payable(10,000 yuan) |
| The first year after the balance sheet date | 3,294.80 |
| The second year after the balance sheet date | 3,317.16 |
| The third year after the balance sheet date | 3,107.23 |
| After the third year after the balance sheet date | 26,277.18 |
XV. Events after the balance sheet date
1. Circumstance of profit distribution
Unit: yuan Currency: RMB
| Profit or dividend planned to be distributed | 202,906,967.12 |
| Declared profit or dividend after receiving internal approval | 202,906,967.12 |
| Aging | Closing book balance |
| Within 1 year | 8,458,099.08 |
| 1-2 years | 5,257,913.25 |
| 2-3 years | 1,440,624.00 |
| Over 3 years | 28,017,011.19 |
| Total | 43,173,647.52 |
B. Categorized by bad debt provision method
Unit: yuan Currency: RMB
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage% | Amount | Accruing % | Amount | Percentage% | Amount | Accruing % | |||
| Accruing bad debt provision by grouping | 43,173,647.52 | 100.00 | 29,541,957.07 | 68.43 | 13,631,690.45 | 45,176,203.73 | 100.00 | 29,142,394.68 | 64.51 | 16,033,809.05 |
| including: | ||||||||||
| Aging | 43,173,647.52 | 100.00 | 29,541,957.07 | 68.43 | 13,631,690.45 | 44,933,347.23 | 99.46 | 29,142,394.68 | 64.86 | 15,790,952.55 |
| Other | 242,856.50 | 0.54 | 242,856.50 | |||||||
| Total | 43,173,647.52 | 100.00 | 29,541,957.07 | 68.43 | 13,631,690.45 | 45,176,203.73 | 100.00 | 29,142,394.68 | 64.51 | 16,033,809.05 |
| Aging | Closing balance | ||
| Accounts receivable | Bad debt provision | Accruing percentage % | |
| Within 1 year | 8,458,099.08 | 422,904.95 | 5.00 |
| 1 -2 year | 5,257,913.25 | 525,791.33 | 10.00 |
| 2-3 years | 1,440,624.00 | 576,249.60 | 40.00 |
| Over 3 years | 28,017,011.19 | 28,017,011.19 | 100.00 |
| Total | 43,173,647.52 | 29,541,957.07 | 64.83 |
C. Bad debt provision
Unit: yuan Currency: RMB
| Category | Opening balance | Changes in current period | Closing balance |
| Accruing | |||
| Aging | 29,142,394.68 | 399,562.39 | 29,541,957.07 |
| total | 29,142,394.68 | 399,562.39 | 29,541,957.07 |
| Debtor | Closing balance | Percentage of total accounts receivable % | Bad debt provision |
| 1 | 8,293,237.00 | 19.21 | 7,130,907.00 |
| 2 | 7,350,590.00 | 17.03 | 7,350,590.00 |
| 3 | 7,053,335.00 | 16.34 | 7,053,335.00 |
| 4 | 3,917,755.25 | 9.07 | 259,900.63 |
| 5 | 2,997,424.50 | 6.94 | 299,742.45 |
| Total | 29,612,341.75 | 68.59 | 22,094,475.08 |
| Item | Closing balance | Opening balance |
| Interest receivable | ||
| Dividends receivable | 33,977,209.35 | 15,225,270.58 |
| Other receivables | 986,808,467.11 | 854,445,959.43 |
| Total | 1,020,785,676.46 | 869,671,230.01 |
| Item | Closing balance | Opening balance |
| Dividends from long-term investment under cost method | 8,623,487.24 | 9,743,487.24 |
| Dividends from long-term investment under equity method | 25,353,722.11 | 5,481,783.34 |
| Total | 33,977,209.35 | 15,225,270.58 |
B. Other receivablea. Categorized by aging
Unit: yuan Currency: RMB
b. Categorized by nature
Unit: yuan Currency: RMB
| Nature | Closing book balance | Opening book balance |
| Operating receivable | 665,830.66 | 784,899.62 |
| Cash pledge and guarantee deposit | 259,200.00 | 200,000.00 |
| Related party- fund transfer | 980,333,632.11 | 832,356,370.02 |
| Receivables from disposal of investment | 28,471,800.00 | 28,471,800.00 |
| Total | 1,009,730,462.77 | 861,813,069.64 |
| Bad debt provision | First stage | Second stage | Third stage | Total |
| Expected credit losses over the next 12 months | Expected credit loss for the entire duration (no credit impairment) | Expected credit loss for the entire duration (credit impairment occurred) | ||
| Balance on January 1, 2019 | 7,367,110.21 | 7,367,110.21 | ||
| Accruing in the reporting period | 15,537,605.45 | 15,537,605.45 | ||
| Reversing back in the reporting period | 17,280.00 | 17,280.00 | ||
| Balance on December 31, 2019 | 22,921,995.66 | 22,921,995.66 |
| Aging | Closing book balance |
| Within 1 year | |
| Subtotal | 953,821,925.11 |
| 1-2 years | 100,110.00 |
| 2-3 years | 55,549,173.00 |
| Over 3 years | 259,254.66 |
| Total | 1,009,730,462.77 |
d. Bad debt provision
Unit:yuan Currency: RMB
| Category | Opening balance | Changes in current period | Closing balance | ||
| Accruing | Collected or reversed | Charge off or write-off | |||
| Aging | 7,367,110.21 | 15,537,605.45 | 17,280.00 | 22,921,995.66 | |
| total | 7,367,110.21 | 15,537,605.45 | 17,280.00 | 22,921,995.66 | |
| Company | Reversed or collected | Way of collection |
| Customer 1 | 17,280.00 | Returned money |
| Total | 17,280.00 | / |
| Company | Type | Closing balance | Aging | % of closing balance of total other receivables | Closing balance of bad debt provision |
| 1 | account current | 84,249,163.45 | within 1 year | 8.34 | |
| 2 | account current | 82,575,553.35 | within 1 year | 8.18 | |
| 3 | account current | 82,259,763.10 | within 1 year | 8.15 | |
| 4 | account current | 73,304,450.20 | within 1 year | 7.26 | |
| 5 | account current | 70,560,241.07 | within 1 year | 6.99 | |
| Total | / | 392,949,171.17 | / | 38.92 |
| Item | Closing balance | Opening balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Investment in subsidiaries | 2,113,924,536.04 | 2,113,924,536.04 | 1,956,908,795.47 | 1,956,908,795.47 | ||
| Investment in associates and joint ventures | 2,021,291,294.06 | 17,900,000.00 | 2,003,391,294.06 | 1,345,858,751.30 | 17,900,000.00 | 1,327,958,751.30 |
| Total | 4,135,215,830.10 | 17,900,000.00 | 4,117,315,830.10 | 3,302,767,546.77 | 17,900,000.00 | 3,284,867,546.77 |
| Company | Opening balance | Increase in current period | Decrease in current period | Closing balance |
| Haicheng Wellhope Feed | 12,526,045.83 | 94,470.00 | 12,620,515.83 | |
| Tai'an Wellhope Feed | 33,004,797.91 | 55,107.50 | 33,059,905.41 | |
| Shenyang Wellhope Ruminant Feed | 5,554,147.92 | 495,967.50 | 6,050,115.42 | |
| Liaoning Wellhope Agriculture and Animal Husbandry | 47,115,974.95 | 425,115.00 | 47,541,089.95 | |
| Shenyang Nongda | 44,231,529.17 | 362,135.00 | 44,593,664.17 |
| Wellhope Feed | ||||
| Xingcheng Wellhope Feed | 82,523,989.59 | 275,537.50 | 82,799,527.09 | |
| Dalian Wellhope Feed | 42,123,304.16 | 267,665.00 | 42,390,969.16 | |
| Jinzhou Wellhope Feed | 17,021,247.92 | 244,047.50 | 17,265,295.42 | |
| Changtu Wellhope Feed | 3,000,000.00 | 3,000,000.00 | ||
| Shenyang Wellhope Extruded Feed | 33,003,427.08 | 39,362.50 | 33,042,789.58 | |
| Shenyang Wellhope Aquatic Feed | 15,023,304.17 | 267,665.00 | 15,290,969.17 | |
| Shenyang Wellhope Agri-Tech | 82,186,362.50 | 850,230.00 | 83,036,592.50 | |
| Shenyang Wellhope Poultry | 5,483.33 | 62,980.00 | 68,463.33 | |
| Gongzhuling Wellhope Agri-Tech | 35,033,585.42 | 480,222.50 | 35,513,807.92 | |
| Jilin Wellhope Agri-Tech | 16,052,135.42 | 196,812.50 | 16,248,947.92 | |
| Gongzhuling Wellhope Ruminant Feed | 5,006,854.17 | 78,725.00 | 5,085,579.17 | |
| Sanjiang Wellhope Agri-Tech | 21,190,803.31 | 23,617.50 | 21,214,420.81 | |
| Mudanjiang Wellhope Agri-Tech | 23,255,122.96 | 31,490.00 | 23,286,612.96 | |
| Heilongjiang Wellhope Agri-Tech | 120,073,339.58 | 802,995.00 | 120,876,334.58 | |
| Beijing Helai Sci-Tech | 25,040,439.59 | 432,987.50 | 25,473,427.09 | |
| Beijing Wellhope Agri-Tech | 5,000,000.00 | 94,470.00 | 5,094,470.00 | |
| Huai'an Wellhope Feed | 30,021,247.92 | 244,047.50 | 30,265,295.42 | |
| Gansu Wellhope Agri-Tech | 40,007,539.58 | 110,215.00 | 40,117,754.58 | |
| Henan Wellhope Agri-Tech | 52,649,754.16 | 393,625.00 | 53,043,379.16 | |
| Lankao Wellhope Agri-Tech | 43,006,854.17 | 78,725.00 | 43,085,579.17 | |
| Shenyang Huaweida Animal Health Product | 6,168.75 | 70,852.50 | 77,021.25 | |
| Jilin Wellhope Hog Breeding | 15,000,000.00 | 15,000,000.00 | ||
| Shenyang Expert Trading | 30,000,000.00 | 30,000,000.00 | ||
| Shenyang Jiahe Tianfeng Commerce and Trade | 10,012,337.50 | 133,832.50 | 10,146,170.00 | |
| Liaoning Expert Trading | 50,057,575.00 | 23,842,357.50 | 73,899,932.50 | |
| Shenyang Pufeng Commerce and Trade | 15,499,788.72 | 15,499,788.72 | ||
| Liaoning Wellhope Purchasing & Trading | 30,022,618.75 | 259,792.50 | 30,282,411.25 | |
| Hainan Wellhope Agri-Tech | 25,000,000.00 | 13,164,884.20 | 38,164,884.20 | |
| Liaoning Skyland | 28,559,595.83 | 110,215.00 | 28,669,810.83 |
| Livestock Equipment | ||||
| Shenyang Fame Bio-Tech | 20,154,131.85 | 346,390.00 | 20,500,521.85 | |
| Pingyuan Wellhope Food | 147,273,304.17 | 267,665.00 | 147,540,969.17 | |
| Pingyuan Wellhope Agri-Tech | 21,933.33 | 251,920.00 | 273,853.33 | |
| Kaifeng Meat Food | 100,000,000.00 | 100,000,000.00 | ||
| Wellhope Food (Shenyang) | 3,002,741.67 | 2,157,450.00 | 5,160,191.67 | |
| Liaoning Godaji E-commerce | 10,009,595.83 | 488,095.00 | 10,497,690.83 | |
| Linxi Helai Agri-Tech | 9,023,617.50 | 9,023,617.50 | ||
| Xi'an Linfeng Shengyi Trading | 2,000,000.00 | 2,000,000.00 | ||
| Lingyuan Wellhope Agri-Tech | 16,671,247.91 | 244,047.50 | 16,915,295.41 | |
| Haicheng Xinzhongxin Feed | 5,901,808.98 | 102,342.50 | 6,004,151.48 | |
| Fuyu Wellhope Agri-Tech | 46,563,427.08 | 39,362.50 | 46,602,789.58 | |
| Changchun Wellhope Feed | 84,313,585.41 | 291,282.50 | 84,604,867.91 | |
| Daqing Wellhope Bayi Nongda Animal Sci-Tech | 13,730,966.67 | 165,322.50 | 13,896,289.17 | |
| Beijing Sanyuan Wellhope Agri-Tech | 7,155,589.58 | 1,653,225.00 | 8,808,814.58 | |
| Tangshan Wellhope Feed | 40,018,506.25 | 3,423,331.29 | 43,441,837.54 | |
| Cangzhou Helai Sci-Tech | 3,510,281.25 | 23,617.50 | 3,533,898.75 | |
| Shanxi Wellhope Agri-Tech | 40,003,427.08 | 39,362.50 | 40,042,789.58 | |
| Tangshan Hejia Agriculture and Animal Husbandry | 6,510,966.67 | 13,125,960.00 | 19,636,926.67 | |
| Tangshan Wellhope Sci-Tech | 21,002,741.67 | 31,490.00 | 21,034,231.67 | |
| Shanghai Wellhope Feed | 1,980,158.34 | 322,772.50 | 2,302,930.84 | |
| Pinghu Wellhope Agri-Tech | 864,393.75 | 165,322.50 | 1,029,716.25 | |
| Anhui Wellhope Agri-Tech | 32,208,225.00 | 37,957,450.08 | 70,165,675.08 | |
| Xi'an Wellhope Feed | 4,308,945.83 | 653,417.50 | 4,962,363.33 | |
| Zhengzhou Wellhope Agri-Tech | 3,918,966.67 | 125,960.00 | 4,044,926.67 | |
| Zhumadian Wellhope Agri-Tech | 9,006,854.17 | 55,107.50 | 9,061,961.67 | |
| Nanyang Wellhope Feed | 11,039,039.89 | 86,597.50 | 11,125,637.39 | |
| Jiaozuo Wellhope Feed | 49,154,797.92 | 55,107.50 | 49,209,905.42 | |
| Jingzhou Wellhope | 21,152,676.92 | 291,282.50 | 21,443,959.42 |
| Agri-Sci-Tech | ||||
| Qingdao Wellhope Agri-Tech | 28,531,529.16 | 362,135.00 | 28,893,664.16 | |
| Jining Wellhope Agri-Tech | 19,609,595.83 | 141,705.00 | 19,751,300.83 | |
| Yunnan Wellhope Feed | 4,802,741.67 | 19,481,490.00 | 24,284,231.67 | |
| Fuyu Wellhope Taolaizhao Poultry Raising | 5,628,741.67 | 31,490.00 | 5,660,231.67 | |
| Harbin Weierhao Trading | 3,574,112.50 | 396,705.00 | 3,970,817.50 | |
| Changchun Hengfeng Agriculture and Animal Husbandry Equipment | 19,191.66 | 220,430.00 | 239,621.66 | |
| Beijing Brilliant Dragon Commerce and Trade | 17,820.83 | 204,685.00 | 222,505.83 | |
| Shanghai Hehong Trading | 978,506.25 | 212,557.50 | 1,191,063.75 | |
| Jinan Xinweita Trading | 13,708.33 | 157,450.00 | 171,158.33 | |
| Zhangwu Wellhope Agriculture | 1,800,000.00 | 1,800,000.00 | ||
| Tongliao Wellhope Tianyi Prataculture | 10,200,000.00 | 10,200,000.00 | ||
| Chongqing Dahong Agriculture and Animal Husbandry Equipment | 9,595.83 | 110,215.00 | 119,810.83 | |
| Guangzhou Xiangshun Livestock Equipment | 2,954,112.50 | 47,235.00 | 3,001,347.50 | |
| Dalian Huakang Xinxin Food | 10,504,868.75 | 1,204,492.50 | 11,709,361.25 | |
| Dalian Heyuan Agri-Tech | 51,056,889.58 | 653,417.50 | 51,710,307.08 | |
| Dalian Zhongjia Food | 15,764.58 | 181,067.50 | 196,832.08 | |
| Shenyang Huakang Broiler | 1,727,416.67 | 425,115.00 | 2,152,531.67 | |
| Shenyang Huakang Xinxin Food | 1,721,933.33 | 251,920.00 | 1,973,853.33 | |
| Shenyang Huakang Agriculture and Animal Husbandry | 61,687.50 | 708,525.00 | 770,212.50 | |
| Changchun Wellhope Food | 8,513,708.33 | 157,450.00 | 8,671,158.33 | |
| Dehui Wellhope Agri-Tech | 4,112.50 | 47,235.00 | 51,347.50 | |
| Weifang Wellhope New Hesheng Feed | 12,750,000.00 | 12,750,000.00 | ||
| Puyang Wellhope Food | 20,017,135.42 | 196,812.50 | 20,213,947.92 | |
| Luohe Hongfeng Poultry | 4,080,000.00 | 4,080,000.00 | ||
| Puyang Wellhope Agri-Tech | 4,112.50 | 47,235.00 | 51,347.50 | |
| Kaifeng Wellhope Agriculture and Animal | 4,112.50 | 47,235.00 | 51,347.50 |
| Husbandry | ||||
| Liaoning Wellhope Food | 30,013,708.33 | 31,490.00 | 30,045,198.33 | |
| Russia Wellhope Agri-Tech | 1,000,000.00 | 10,700,000.00 | 11,700,000.00 | |
| Chongqing Wellhope Agri-Tech | 1,500,000.00 | 1,500,000.00 | ||
| Nanchang Wellhope Agri-Tech | 3,250,000.00 | 3,250,000.00 | ||
| Hengyang Wellhope Agri-Sci-Tech | 4,600,000.00 | 4,600,000.00 | ||
| Shulan Fengtai Agriculture and Animal Husbandry | 6,000,000.00 | 6,000,000.00 | ||
| Shulan Fengtai Raising | 5,100,000.00 | 5,100,000.00 | ||
| Total | 1,956,908,795.47 | 173,845,740.57 | 16,830,000.00 | 2,113,924,536.04 |
B. Investment in associates and joint ventures
Unit: yuan Currency: RMB
| Company | Opening balance | Increase or decrease in current period | Closing balance | Closing balance of impairment provision | |||
| Additional investment | Gains or losses on investments recognized under equity method | Adjustment of other comprehensive income | Declaring of paying dividend or profit | ||||
| 1. Joint Venture | |||||||
| Unphung Joint Venture Company | 4,167,616.44 | 4,167,616.44 | |||||
| Nepal Wellhope Agri-tech Pvt. Ltd. | 7,501,575.10 | 7,501,575.10 | |||||
| NEXUS WELL-HOPE AGRITECH INTERNATIONAL LIMITED | 17,900,000.00 | ||||||
| Subtotal | 11,669,191.54 | 11,669,191.54 | 17,900,000.00 | ||||
| 2. Associated Company | |||||||
| Qingdao Shenfeng | 15,869,483.64 | 1,454,165.33 | 3,750,000.00 | 13,573,648.97 | |||
| Anshan Jiuguhe Food | 100,654,669.42 | 56,770,119.35 | 4,986,360.00 | 152,438,428.77 | |||
| Tai’an Jiuguhe Agriculture | 64,730,262.77 | 51,548,986.17 | 4,986,360.00 | 111,292,888.94 | |||
| Linghai Jiuguhe Feed | 33,937,715.81 | 32,265,495.00 | 3,800,000.00 | 62,403,210.81 | |||
| Huludao Jiuguhe Food | 57,876,002.94 | 26,905,668.40 | 14,060,000.00 | 70,721,671.34 | |||
| Dandong Wellhope Chengsan Food | 34,766,209.71 | 17,848,604.52 | 52,614,814.23 | ||||
| Dandong Wellhope Chengsan Agri-Tech | 55,170,432.87 | 57,082,842.71 | 112,253,275.58 | ||||
| Haicheng New | 11,305,724.87 | 1,544,312.96 | 12,850,037.83 | ||||
| Hongzunda Agri-Tech | |||||||
| Beipiao Hongfa Food | 251,972,960.58 | 200,951,677.50 | 10,780,000.00 | 442,144,638.08 | |||
| Beijing Dahong Hengfeng Sci-Tech | 16,852,987.18 | 3,234,994.94 | 20,087,982.12 | ||||
| Tai'an Jiufeng Agri-Tech | 498,065.13 | 5,453,739.37 | 5,951,804.50 | ||||
| Schipper (Beijing) | 1,081,661.30 | 189,216.47 | 1,270,877.77 | ||||
| Shenyang Wenjie Bio-Tech | 12,057,026.09 | 385,878.90 | 12,442,904.99 | ||||
| Huluodao Jiuguhe Feed | 25,048,412.84 | 20,766,810.51 | 3,800,000.00 | 42,015,223.35 | |||
| Jinzhou Jiufeng Food | 30,001,627.45 | 1,600,000.00 | 16,874,865.04 | 48,476,492.49 | |||
| Zhangjiakou Jiahe Agriculture and Animal Husbandry | 60,757,671.84 | 7,387,637.15 | 68,145,308.99 | ||||
| Tai'an Fengjiu Agri-Tech | 5,380,308.75 | 32,457,229.14 | 37,837,537.89 | ||||
| Anshan Fengsheng Food | 20,445,173.72 | 9,985,131.04 | 30,430,304.76 | ||||
| Dalian Chengsan Animal Husbandry | 251,767,836.43 | 102,186,395.46 | 353,954,231.89 | ||||
| Tailai Jiahe Agriculture and Animal Husbandry | 21,155,152.08 | 35,000,000.00 | -29,020,598.46 | 27,134,553.62 | |||
| Gongzhuling Corn Purchasing and Storing | 49,529,442.90 | 73,476.56 | 49,602,919.46 | ||||
| Lankao Skyland Duck Meat | 39,310,461.52 | 16,000,000.00 | 3,632,096.32 | 6,323,784.29 | 52,618,773.55 | ||
| Hainan Nongken Wenfeng Wenchang Chicken | 401,914.99 | 1,225,000.00 | -555,372.59 | 1,071,542.40 | |||
| Dunhua Wellhope Agri-Tech | 3,434,662.23 | 744,009.02 | 4,178,671.25 |
| Dunhua Fengda Agriculture and Animal Husbandry | 1,914,892.90 | 1,071,704.24 | 2,986,597.14 | ||||
| PT KARKA NUTRI INDUSTRI. | 36,985,298.13 | 391,923.84 | 1,621,517.75 | 38,998,739.72 | |||
| GOLDEN HARVESTA INC. | 101,827,983.03 | -146,867.14 | 3,250,109.93 | 104,931,225.82 | |||
| Guangrong Xinchuang | 12,471,059.83 | 30,727,497.50 | 2,051,975.84 | 2,366,929.34 | 47,617,462.51 | ||
| Shenyang Zhongwenjie Bio-Tech | 4,000,000.00 | 60,534.77 | 4,060,534.77 | ||||
| Shulan Fengtai Organic Fertilizer | 1,500,000.00 | 1,500,000.00 | |||||
| Weifang Wellhope Xinhe sheng Feed | -915,541.19 | 5,000,000.00 | 433,018.60 | 4,517,477.41 | |||
| Liaoning Mubang Animal Husbandry Equipment Manufacturing | 1,791,476.38 | 1,791,476.38 | |||||
| Anshan Yufeng Feed | -193,154.81 | -193,154.81 | |||||
| subtotal | 1,316,289,559.76 | 95,052,497.50 | 625,627,992.53 | 7,238,557.02 | 52,486,504.29 | 1,991,722,102.52 | |
| Total | 1,327,958,751.30 | 95,052,497.50 | 625,627,992.53 | 7,238,557.02 | 52,486,504.29 | 2,003,391,294.06 | 17,900,000.00 |
4. Operating revenue and cost
Unit: yuan Currency: RMB
| Item | 2019 | 2018 | ||
| Revenue | Cost | Revenue | Cost | |
| Revenue from principal businesses | 649,240,507.19 | 439,956,536.80 | 622,265,592.28 | 414,962,519.59 |
| revenue from other businesses | 3,933,237.72 | 572,078.38 | 1,300,675.25 | 627,211.36 |
| Total | 653,173,744.91 | 440,528,615.18 | 623,566,267.53 | 415,589,730.95 |
| Item | 2019 | 2018 |
| Income from long-term equity investments under cost method | 71,426,000.00 | 46,691,821.24 |
| Income from long-term equity investments under equity method | 625,627,992.53 | 283,297,787.16 |
| Income from disposal of long-term equity investments | -4,079,999.00 | -12,064,078.53 |
| Income from disposal of financial assets that are measured at fair value and its changes are recorded in current gains and losses | 2,735,905.66 | 3,190,994.45 |
| Income from disposal of other equity instrument investments | 100,000.00 | |
| Income from tradable financial assets during the holding period | 3,545,198.63 | |
| Total | 699,355,097.82 | 321,116,524.32 |
| Item | Amount | Note |
| Gains or losses from disposal of non-current assets | -3,146,106.63 | |
| Government grants charged to current gains or losses (excl. the government grants which are closely related to the Company's ordinary course of business and gained constantly at fixed quotas or amounts as per certain standards based on the state polices) | 22,363,695.79 | |
| Income generated from investment costs for acquiring subsidiaries, associated companies and joint ventures are less than the fair value of the investee’s net identifiable assets acquired by the Company | 1,844.71 | |
| Gains or losses on fair-value changes in trading financial assets and liabilities, derivative financial assets and liabilities, and the income from disposal of trading financial assets and liabilities, derivative financial assets and liabilities as well as other debt investment (excl. the effective portion of hedges that arise in the Company's ordinary course of business) | 4,418,219.50 | |
| Non-operating income and expense other than those described above | -15,858,496.27 | |
| Other gain and loss items that meet the definition of non-recurring gains and losses | 820,378.27 | After the Company losing the control right to Weifang Wellhope Xinhesheng Feed Co., Ltd. in current period, the |
| gains generated by the residual equity re-measured by the fair value | ||
| Income tax effects | -4,200,204.18 | The main reason for the large income tax effect is that, there is a large loss on asset disposal and retirement by scrapping of Anhui subsidiary, but the income tax rate is 0 |
| Non-controlling interests effects | 3,972,264.26 | |
| Total | 8,371,595.45 |
| Profit in 2019 | Weighted average ROE % | EPS | |
| Basic EPS | Diluted EPS | ||
| Net profit attributable to common shareholders of the Company | 24.57 | 1.34 | 1.34 |
| Net profit attributable to common shareholders of the Company after deducting non-recurring gains and losses | 24.40 | 1.33 | 1.33 |
Section XII Reference
| Reference file directory | Financial statements with the signature and seal of the legal representative, the person in charge of the accounting work and the person in charge of the accounting department. |
| Reference file directory | The original audit report with the seal of the accounting firm and the signature and seal of the CPA. |
| Reference file directory | During the reporting period, all the original documents and original announcements of the Company that have been publicly disclosed in the newspapers designated by the CSRC. |