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海大集团:2017年年度报告(英文版) 下载公告
公告日期:2018-06-12
Guangdong Haid Group Co., Limited
    2017 Annual Report
                  Stock Code: 002311
            Stock Abbreviation: Haid Group
     Date of Approval for Publication: 19 April 2018
                                     Full text of 2017 Annual Report of Guangdong Haid Group Co., Limited
Section I. Important Notice, Table of Contents and Definitions
The board of directors (the \"Board\"), the supervisory committee, the directors,
the supervisors and the senior management of the Guangdong Haid Group Co.,
Limited (the \"Company\") hereby warrant the truthfulness, accuracy and
completeness of the information presented in this report, guarantee that there
are no misrepresentations, misleading statements or material omissions
contained in this annual report, and are individually and collectively responsible
for the authenticity, accuracy and completeness of the information contained in
this report.
Mr. Hua Xue, head of the Company, Ms. Li Tian, head in charge of accounting
work, and Mr. Shaolin Yang, head of the accounting department (Accounting
Officer), declare that they warrant the truthfulness, accuracy and completeness
of the financial statements in the annual report.
All directors were present in person at the Board meeting to consider and
approve this annual report.
The Report contains forward-looking statements such as future plans, which do
not constitute any specific undertakings by the Group to its investors. Investors
are advised to pay attention to investment risks.
The proposed profit distribution plan of the Company was considered and
passed by the Board: on the basis of the total number of shares on the
registration date when the plan is implemented in the future, the Company will
distribute cash dividend of RMB 2.50 (tax inclusive) and 0 bonus share (tax
inclusive) for every 10 existing shares held by all shareholders without
capitalization of capital reserve.
This report has been prepared in both Chinese and English. Should there be any
discrepancies or misunderstandings between the two versions, the Chinese
version shall prevail. The complete published Chinese 2017 Annual Report may
be obtained at http://www.cninfo.com.cn.
                                      Full text of 2017 Annual Report of Guangdong Haid Group Co., Limited
Risk Warning
I.   Risk of Periodical Fluctuations in the Feed Industry due to Abnormal
     Weather and Animal Epidemic Diseases during Animal Production
The feed industry mainly serves the downstream animal feeding industry. The
abnormal changes in natural elements such as weather, precipitation and
typhoon may lead to fluctuations of the inventory of livestock or aquatic
products and even the large-scale outbreak of animal diseases. This thus affects
the demand for feed and likely causes the risk of periodic and regional
fluctuations of the latter. With the environmental changes and the expansion of
animal production industry, animal epidemic diseases may also occur
occasionally. For instance, H7N9 virus-mediated animal disease broke out early
this year. PRRSV-mediated pig disease and shrimp-relevant EMS epidemic
disease all occurred recently. The outbreak of animal diseases will directly
inhibit the scale of animal production and reduce the demand for feed in the
short term; major animal epidemic diseases may also dampen the demand from
end-consumers, leading to a downturn of the animal production industry, and
further affect the feed demand, giving rise to adverse effects on the production
and operation of feed enterprises.
Risk response measures: (1) The Company is currently fully deploying factories
and developing local markets in major areas in Southern China, Central China,
Eastern China and Northern China and overseas markets in Southeast Asia, etc.
and the expansion of regional distribution can effectively cope with the risk of
weather anomalies and natural disasters in local areas. (2) The Company's feed
varieties cover pig feed, chicken feed, duck feed and other livestock feed and fish
feed, shrimp feed and other aquatic feed. With a variety of products and a
well-balanced structure, it can effectively deal with the risk of single breed
species and has strong comprehensive anti-risk capability.
II. Risk of Drastic Price Fluctuations of Major Raw Materials
The feed ingredients are mainly various kinds of staple agricultural products,
mainly corn and soybeans (soybean meal). In recent years, the domestic and
international agricultural product markets have been closely linked. Changes in
the planting area and harvest of major grain-producing countries, purchasing
and storage and subsidy policies, import and export policies, fluctuations in
logistics capacity and costs of shipping, exchange rates and others may cause
great fluctuations in prices of agricultural products, which, in turn, has a certain
impact on the cost of feed and farming. With the strengthening of the
internationalization of trade of agricultural products, the factors for changes in
the prices of agricultural products have become more complex and the price
                                      Full text of 2017 Annual Report of Guangdong Haid Group Co., Limited
fluctuations have therefore increased. If raw material prices fluctuate and the
Company fails to understand the changes in feed raw materials in a timely
manner and promptly implement strategic management and risk control of
procurement, the Company may face the risk of rising integrated procurement
costs.
Risk response measures: (1) The Company divides raw material varieties and
implements a combination of centralized procurement of large varieties and
local procurement of regional varieties, which not only guarantees the
advantages of large-scale raw material procurement, but also obtains
localization advantages from rapid response in respect of regional procurement;
(2) The Company continuously invests in the construction of the raw material
procurement research system. The team of the professional raw material
information research department is relatively mature. It conducts strategic
procurement through the real-time tracking, research and judgment of the
domestic and foreign bulk raw material market trends, and implements position
risk management for bulk raw materials through futures hedging, raw materials
trade and other tools to effectively control procurement risks; (3) The Company
has accumulated rich experience in research and development of animal
nutrition and feed formula technologies, and has research and development
team composed of nearly 1,000 members. Large amounts of funds are spent on
research and development each year, focusing on animal nutrition requirements,
feed formula technology, animal farming and genetic improvement,
comprehensive investigation on healthy animal farming strategies, and other
research areas. The Company has a profound understanding of animal
nutritional requirements and higher level of expertise in comprehensive
utilization of raw materials. Therefore, in case of raw material price fluctuations,
it can quickly adjust the formula to control the reasonable feed nutrient level
and formula costs.
III. Risk of Structural, Regional and Scale Adjustment to Farming Industry
    under Environmental Protection Regulations and Policies
In recent years, the State has introduced a series of environmental protection
laws and regulations including the new Environmental Protection Law (环保法),
the Regulations on Prevention and Control of Pollution from Large-Scale
Production of Livestock and Poultry (畜禽规模养殖污染防治条例), Action Plan
for Prevention and Treatment of Water Pollution (水污染防治行动计划), and
the Guiding Opinions on Adjusting the Layout of Pig Production in the
Southern Water Network Region (关于促进南方水网地区生猪养殖布局调整),
the \"13th Five-Year Plan\" on Ecological and Environmental Protection (“十三五”
                                     Full text of 2017 Annual Report of Guangdong Haid Group Co., Limited
生态环境保护规划), which stipulate the pollution prevention and control of
animal production industry, increase the pollution control of animal production
industry, and especially limit the production scale in the regions of key water
sources and its surrounding areas. According to the regulations and policies of
the central government, banned areas and restricted areas have been set up
throughout the country, and pig farms in the banned areas in the southern water
network area are gradually relocating. The implementation of environmental
protection policies will speed up the withdrawal of private pig farming farmers,
reduce the backward production capacity failing to meet environmental
protection standards and with a small scale, and enable large -scale farmers to
continuously expand their production capacity and improve the farming scale
and structure; In addition, the establishment of banned areas and restricted
areas will enforce adjustments to the pig production capacity in all places across
the country. The adjustments to the scale composition of pig production and the
relocation of pig production area will certainly have a profound impact on the
existing capacity layout, market share, pricing power and business model of the
feed industry. The impact of enforced environmental protection policies on the
pig growing and feed industries puts existing competitive companies in the
market at risk of reshuffle.
Risk response measures: (1) The Company continually improves its capability to
serve farmers. In addition to feed products, the Company is also engaged in the
industrial chain of animal healthcare products, vaccines and finance and has a
strong stickiness to large-scale farmers; (2) The feed varieties of the Company
cover livestock, poultry, and aquatic animals and the product line is abundant.
The production lines for pig feed, chicken feed, duck feed and pelleted fish feed
can be shared. The Company can rapidly shift the production layout and make
adjustments to adapt to the changes in the industry by adjusting the production
capacity in all places. (3) The Company adopts multiple models to speed up the
production layout in areas with rich resources and strong environmental
carrying capacity, and to seize the market share of new animal farming areas.
IV. Risk of Exchange Rate Fluctuations
The global procurement of raw materials has become the norm. The scale of
overseas investment and overseas operations of the Company is also rapidly
expanding. The scale of cross-border fund settlement and the stock of overseas
assets have grown substantially, involving the currency types of various related
countries. Currency exchange rate fluctuations are subject to different influence
factors, and exchange rate fluctuations in any currency may have a certain
impact on the settlement cost and asset stock value of the region.
Risk response measures: (1) Based on the business scale, business model, and
                                     Full text of 2017 Annual Report of Guangdong Haid Group Co., Limited
settlement characteristics in different regions and countries, the Company
strictly controls the exchange rate risks, carefully selects settlement currencies,
and strives to achieve relatively balanced regional fund inflow and outflow
through structural arrangements of financing sources and financing types; (2)
The expansion of two-way fluctuations in the RMB exchange rate has become
the new normal. The Company further enhances its awareness of foreign
exchange risk management, and arranges settlement models based on the
procurement and sales strategies and cycle characteristics of import and export
operations. And forward foreign exchange settlement and sale, swaps, foreign
exchange options and other financial instruments are flexibly used to lock the
exchange rate risks, control procurement and sales costs, and control the
possible risk brought about by exchange rate fluctuations.
                                                       Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                                           Table of Contents
Section I. Important Notice, Table of Contents and Definitions ................................... 1
Section II. Company Profile and Key Financial Indicators .......................................... 8
Section III. Business Overview ................................................................................... 12
Section IV. Discussion and Analysis of Operations .................................................... 18
Section V. Material Matters ......................................................................................... 48
Section VI. Share Changes and Shareholder Information .......................................... 83
Section VII. Preferred Shares ...................................................................................... 93
Section VIII. Directors, Supervisors, Senior Management and Staff ......................... 94
Section IX. Corporate Governance ........................................................................... 105
Section X. Corporate Bonds ...................................................................................... 118
Section XI. Financial Statements .............................................................................. 119
Section XII. Documents Available for Reference ..................................................... 331
                                                  Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Definitions
                          Item                                               Definition
Company, Group, Haid Group                Guangdong Haid Group Co., Limited
Board                                     the board of directors of Guangdong Haid Group Co., Limited
Supervisory Committee                     the supervisory committee of Guangdong Haid Group Co., Limited
General Meeting                           the general meeting of Guangdong Haid Group Co., Limited
Company Law                               the Company Law of the People’s Republic of China
Securities Law                            the Securities Law of the People’s Republic of China
Articles of Association                   the Articles of Association of Guangdong Haid Group Co., Limited
RMB                                       Renminbi
reporting period, the period, the year    the period from 1 January 2017 to 31 December 2017
last year, the same period of last year   the period from 1 January 2016 to 31 December 2016
the end of the period                     31 December 2017
the beginning of the period or the year   1 January 2017
CSRC                                      China Securities Regulatory Commission
                                                                Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Section II. Company Profile and Key Financial Indicators
I. Company profile
Stock abbreviation                 Haid Group                              Stock code
Stock exchanges on which the
                             Shenzhen Stock Exchange
shares are listed
Chinese name of the Company 广东海大集团股份有限公司
Chinese abbreviation of the
                            海大集团
Company
English name of the Company
                            Guangdong Haid Group Co., Limited
(if any)
English abbreviation of the
                            HAID GROUP
Company (If any)
Legal representative of the
                            Hua Xue
Company
                                   Room 701 , Building 2,Haid Mansion,No. 42,Road 4, Wangbo, Nancun Town, Panyu Dist,
Registered address
                                   Guangzhou,China.
Postal code      of   registered
address
                                   Room 701 , Building 2,Haid Mansion,No. 42,Road 4, Wangbo, Nancun Town, Panyu Dist,
Office address
                                   Guangzhou,China
Postal code of office address      511445
Website of the Company             www.haid.com.cn
Email address                      zqbgs@haid.com.cn
II. Contact persons and contact methods
                                                Secretary to the Board                    Securities Affairs Representative
Name                                            Zhijian Huang                             Jiewen Lu
                                                Room 701 , Building 2,Haid Mansion,No. Room 701 , Building 2,Haid Mansion,No.
Correspondence address                          42,Road 4, Wangbo, Nancun Town, Panyu 42,Road 4, Wangbo, Nancun Town, Panyu
                                                Dist, Guangzhou,China                  Dist, Guangzhou,China
Telephone                                       8620-39388960                             8620-39388960
Facsimile                                       8620-39388958                             8620-39388958
Email address                                   zqbgs@haid.com.cn                         zqbgs@haid.com.cn
III. Information disclosure and places for inspection
                                                           Securities Times, China Securities Journal, Securities Daily, Shanghai
Designated media for information disclosure
                                                           Securities News
Designated websites for the publication of
                                                           www.cninfo.com.cn
the Annual Report as approved by CSRC
Places for inspection of the Company’s
                                                           Securities Department of the Company
Annual Report
                                                                Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
IV. Change in registration
Organisation registration code                 No change
Change of principal activities since its
                                         No change
listing (if any)
Change of the controlling shareholder (if
                                          No change
any)
V. Other relevant information
CPAs engaged by the Company
Name of CPAs                           GP Certified Public Accountants (Special General Partnership)
CPAs’ Office Address                  Rooms 1001-1008, No. 555 Dongfeng East Road, Yuexiu District, Guangzhou
Name of the Signing Certified
                                       Hongfei Xian, Xujia Li
Public Accountants
Sponsors engaged by the Company to continuously perform its supervisory function during the reporting period
□ Applicable √ Not applicable
Financial Advisors engaged by the Company to continuously perform its supervisory function during the reporting period
□ Applicable √ Not applicable
VI. Major accounting data and financial indicators
Retrospective adjustment to or restatement of the accounting data for prior years by the Company
□ Yes √ No
                                                                                      Increase/decrease
                                                                                        for the year as
                                    2017                        2016
                                                                                       compared to the
                                                                                          prior year
Total      Operating
                                 32,556,634,127.38           27,185,309,985.32                         19.76%       25,567,402,483.20
Revenue (RMB)
 Net         income
attributable      to
                                  1,207,225,209.35               855,810,234.81                        41.06%          779,978,258.90
shareholders of the
Company (RMB)
Net    income     after
non-operating gains or
losses attributable to            1,162,756,461.48               816,352,234.72                        42.43%          729,504,640.30
shareholders of the
Company (RMB)
Net cash flows from
operating   activities             494,221,455.85               1,142,154,547.73                       -56.73%       1,414,063,050.71
(RMB)
Basic earnings per
                                               0.78                         0.55                       41.82%                     0.51
share (RMB per share)
Diluted earnings per
                                               0.78                         0.55                       41.82%                     0.51
share (RMB per share)
Rate of return on net
assets on weighted                         20.01%                        16.17%                         3.84%                   16.72%
average basis
                                                                                       Increase/decrease
                                  As at the
                                                      As at the end of 2016             as at the end of         As at the end of 2015
                                 end of 2017
                                                                                      the year compared
                                                                  Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                                                                                            to the end of
                                                                                           the prior year
Total assets (RMB)             13,160,456,702.93              10,287,890,139.45                             27.92%   8,184,667,625.29
Net assets attributable
to shareholders of the            6,474,694,687.24                5,649,592,278.17                          14.60%   5,000,608,576.55
Company (RMB)
VII. Differences in accounting data under domestic and overseas accounting standards
1. Differences between the net income and net assets disclosed in accordance with international accounting
standards and China accounting standards in the financial report
□ Applicable √ Not applicable
There was no difference between the net income and net assets disclosed in accordance with international accounting standards and
China accounting standards in the financial report during the reporting period.
2. Differences between the net income and net assets disclosed in accordance with overseas accounting
standards and China accounting standards in the financial report
□ Applicable √ Not applicable
There was no difference between the net income and net assets disclosed in accordance with overseas accounting standards and
China accounting standards in the financial report during the reporting period.
VIII. Key Financial Indicators by Quarter
Unit: RMB
                                                  Q1                       Q2                      Q3                    Q4
Total Operating Revenue                     5,466,140,158.09            9,066,197,604.49      11,970,006,572.85      6,054,289,791.95
Net income attributable to
                                                  57,814,687.60          460,896,918.93          630,641,258.63         57,872,344.19
shareholders of the Company
Net income after non-operating
gains or losses attributable to                   53,005,262.14          445,002,543.48          618,360,055.73         46,388,600.13
shareholders of the Company
Net cash flows from operating
                                             -271,051,793.43              73,446,266.50           25,379,842.27       666,447,140.51
activities
Whether the above indicators or their aggregated amounts have any material difference with the respective amounts as disclosed in
the quarterly report or interim report
□ Yes √ No
IX. Items and Amounts of Non-operating Gains or Losses
√ Applicable □ Not applicable
Unit: RMB
                     Item                          Amount for 2017       Amount for 2016      Amount for 2015        Explanation
Gain or loss on disposal of non-current assets         -12,825,316.16         -4,691,026.41       20,193,457.41
Government subsidies charged to current
profit or loss (exclusive of government
subsidies given in the Company’s ordinary             59,725,956.70         45,252,629.88        45,995,654.25
course of business at fixed quotas or amounts
as per government’s uniform standards)
Gain equal to the amount by which
investment costs for the Company to obtain                122,148.00                                  444,836.24
subsidiaries, associates and joint ventures are
                                                          Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
lower than the Company’s enjoyable fair
value of identifiable net asset value of
investees when making investments
Gain or loss on changes in fair value of
trading financial assets and liabilities &
income from disposal of trading financial
assets and liabilities and available-for-sale        -73,004.67         5,830,256.01
financial assets (exclusive of effective
portion of hedges that arise in the Company’
s ordinary course of business)
Reversed portion of impairment allowance
for accounts receivable which are tested           1,359,508.00
individually for impairment
Non-operating gains and losses other than
                                                   3,882,745.51         2,614,994.30       -2,469,484.39
above
Less: Income tax effects                           8,012,841.86       11,733,737.26        13,296,016.08
      Less: Non-controlling interests effects
                                                    -289,552.35        -2,184,883.57          394,828.83
(net of tax)
Total                                             44,468,747.87       39,458,000.09        50,473,618.60 --
Notes for the Company's non-operating gain or loss items as defined in the Explanatory Announcement on Information Disclosure
for Companies Offering Their Securities to the Public No.1 - Non-operating Gains or Losses (公开发行证券的公司信息披露解释
性公告第1号——非经常性损益) and the non-operating gain or loss items as illustrated in the Explanatory Announcement on
Information Disclosure for Companies Offering Their Securities to the Public No.1 - Non-operating Gains or Losses (公开发行证券
的公司信息披露解释性公告第1号——非经常性损益) defined as its recurring gain or loss items
□ Applicable √ Not applicable
No non-operating gain or loss items as defined or illustrated in the Explanatory Announcement on Information Disclosure for
Companies Offering Their Securities to the Public No.1 - Non-operating Gains or Losses (公开发行证券的公司信息披露解释性公
告第1号——非经常性损益) were defined by the Company as its recurring gain or loss items during the reporting period.
                                                           Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Section III. Business Overview
I. Principal Operations of the Company During The Reporting Period
Whether the Company needs to comply with the disclosure requirements of specific industries
No
(I) Principal businesses and products and major business models of the Company during the reporting period
1. Principal businesses and products
Centering on the products and services needed in the animal production process, the Company’s businesses cover
the research and development, design, production, sales, service and all other types of activities of various
products. Its main products include feeds for aquatic animals, feeds for livestock and poultry, high-quality aquatic
animal seedlings, animal healthcare products, biological products, and pig farming.
The production and sale of feeds for aquatic animals, livestock and poultry are the Company's most important
businesses, and the Company has also accumulated a wide range of customer resources through the feed business;
the Company can better help customers to achieve animal farming success by providing customers with quality
animal seedlings that are scarce in the market; Cost-effective animal health products including vaccines,
veterinary drugs and biological products, supplemented by efficient overall animal farming solutions, enable
customers to achieve healthy animal farming while implementing better control over the cost and gaining
competitive advantage in respect of end products.
Specifically, the Company's products mainly include feeds for chickens, ducks, pigs, fish and shrimps, farmed
species such as pig, shrimp and fish fry, as well as biological products, veterinary drugs, vaccines and other
products needed in the production of livestock, poultry and aquatic animals.
2. Main Business Model
The Company started up from the feed business. Its rich customer resource helps to have deep understanding of
and exploration of customer needs. This results in a continually enlarged profile of products and service to the
customer, which gradually extends from feed to high tech areas with increased added-value such as animal
seedlings, veterinary drugs and vaccine products. The scale of production and sales of high value-added products
has gradually expanded, and the proportion thereof in income structure has also been increasing year by year. In
recent years, through the extension of the industrial chain, the Company has further attempted to enter into such
areas as pig farming and food processing. The business model has been developed and extended in an orderly
manner with various industrial segments interactively supporting and developing each other.
In particular, for the feed business which has the largest scale, the business management is mainly carried out with
the business model of centralized procurement of raw materials, distributed production layout, sales of products
accompanied with technical services. The adoption of a centralized procurement model composed of \"group +
regional center\", combined with hedging and other methods, for agricultural products and other bulk raw materials
can achieve better procurement cost advantages and risk control; with the goal of being the closest to the market,
convenient in logistics and rich in resources, the Company conduct distributed layout production and its factories
currently are mainly distributed in nearly 100 cities in China and Southeast Asia; Distribution + direct sales is the
Company's main sales model. Focusing on localized marketing, the Company has fully established distribution
channels to efficiently solve farmers' capital and transportation needs. The Company’s own professional
technology and service teams consisting of a large number of members directly visit farmers to provide farming
technical services and have achieved functional complementation and collaboration with sales organization and
management teams in terms of sales and service as well as channel and farmers; high-quality animal seedlings,
biological Products, veterinary drugs and vaccines have become indispensable products and tools for the
Company to provide services and constitute a package of overall sales programs and solutions.
                                                      Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
The business models for seedlings and animal healthcare products reflect the distinctive features of research and
development and technology as the guide, differentiated products as the carrier, and service support as the main
promotion strategy. Seedlings and animal healthcare products involve a long period of investment in research and
development. Technology accumulation needs better predictability and market insight, and strong originality of
products. To provide better service support, it is necessary to invest in the long term and to build service teams
with rich technology, knowledge, and experience. Therefore, a multi-tiered research and development system has
been chosen for the business management model, supplemented by a production base that has a relatively high
starting point for investment and a marketing strategy with a stronger aggressive power.
The Company's pig farming business started at an early stage, and adopts the business model of \"company +
farmer\", which means that the Company provides farmers with necessary products such as seedlings, feed,
vaccines, etc., the farmers complete the farming process after agreeing on the main technical requirements for the
farming process and then the Company repurchases the finished products for sales. The Company also has some
self-supporting production bases and will further expand the scale of production.
The Company has set up professional functional departments including technology research institute, procurement
center, financial center, factory operation center, marketing center, process and information management center,
and human resource center at its headquarters. Each professional center aims at acquiring technical and
management leadership in its field and provides technical and management standards as well as integrated and
professional management and service support for large regions/business divisions and various branches and
subsidiaries. The Group has set up multiple regional / business divisions according to regions or business
categories. The regional / business divisions mainly organize and manage the production, sales and service of
branches and subsidiaries.
(II) Development stage and periodic characteristics of and position of the Company in the industries where the
Company operated during the reporting period
1. Industry development stage
China's feed industry development started in the 1980s. After over forty years of development, China’s total
amount of feed ranks the first in the world. In recent years, the national feed production was steady in slower
growth and has entered a stage of stable development and industrial restructuring and upgrading. Due to the
aggravated competition among enterprises, the number of feed enterprises decreased from more than 10,000 in
2010 to over 6,000 in 2015. It is expected that the consolidation would continue and the number would be further
reduced. According to the development goals under the \"13th Five Year Plan\" for National Feed Industry
(2016-2020)(全国饲料工业“十三五”发展规划(2016-2020)) as promulgated by the Ministry of Agriculture, the
national feed production will reach 220 million tonnes by 2020, representing an increase of 10% as compared to
200 million tonnes in 2015. The industry will gradually shift to large -scale and intensified development, but feed
enterprises will be subject to further differentiation. Superior enterprises will make good use of the opportunity of
industry consolidation and their scale advantages to extend the industrial chain or develop diversified businesses
through mergers and acquisitions as well as construction of new production capacities; confronted with the
development bottlenecks in terms of capital pressure, talent pressure, technical pressure and service capacity,
SMEs will gradually be merged by dominant enterprises or eliminated from the market.
The high-quality animal seedlings have a huge market space. However, most of the high-quality seedlings for
farmed species, especially aquatic seedlings, are currently under-supplied. There are fewer new strains with
proprietary intellectual property right, and the production capacity is small. It is far from meeting the needs of the
animal farming industry to upgrade and progress. In a longer period, there will be pressure in respect of achieving
research and development progress and improving production supply capacity.
The market demand of animal healthcare industry has grown rapidly. In particular, with the upgrading of
consumption, the upgrading of farming species has significantly increased the demand for health, safety, and
green farming, and the concept of prevention over treatment has been increasingly accepted by a wide range of
farmers. The help of reasonable animal healthcare product investment for farming is mainly reflected in the direct
effects of a reduced disease risk, increased health and safety added value of products, controllable farming costs,
                                                     Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
and improved farming efficiency, as well as a number of extended effects including reduced labor intensity and
improved industrial chain extension capability. In the future, the market capacity of the animal healthcare industry
will see a greater room for continuous development on the basis of the current situation, and dominant enterprises
will usher in major market development opportunities.
The pig farming business is rapidly moving towards large -scale, intensive, and factory-oriented development. In
addition to changes in the scale and capabilities of the farming entities, the farming areas also show obvious
features of moving northwards and westwards. Small-scale farmers and family-based private farmers quickly
withdraw from the market. With the rapid advancement of farming technology, the automation of farming process
has been significantly improved and the techniques of animal waste treatment for environmental protection have
also been notably enhanced. The farming industry will continue to maintain the characteristics of large -scale and
industrialization development in the medium term.
2.   Periodic characteristics of the industry
The cycle of feed, animal healthcare products, seedlings and other industries is related to that of the animal
production industry. The cycle of the animal production industry is mainly determined by the supply end (feeding
capacity).
China is a country with a large population. Residents have a huge food consumption demand which remains
relatively rigid and stable for a certain period of time. Therefore, the supply end of the animal production industry
(animal farming capacity) determines the price of the farmed species and thus determines the cycle of the animal
production industry. In general, the feed industry will lag behind the cycle of the animal production industry.
When the animal farming capacity is smaller than the demand, the terminal price of the farmed species will
increase, the profit of the farming will be considerable, and the farming cycle will have a high degree of prosperity.
However, due to the reduction of the farming capacity, feed demand will decline. When the farming amount is
greater than the consumer demand, the terminal price of the farmed species will fall, resulting in farming loss and
sluggish farming cycle. However, due to the larger amount of animal farming, there is a greater demand for feed.
As the prosperity of the animal farming industry directly affects the farmers' choice of high-quality or low-grade
feed products, the enthusiasm of feed feeding, the sensitivity of feed product prices, and the effective transfer of
feed raw material price fluctuations, etc., the actual cycle of the feed industry is more complicated.
The high-quality aquatic seedlings and animal healthcare industry are in a period of rapid growth, with no obvious
periodic characteristics, and they are in a period of rapid development of the industry as a whole.
3. Position of the Company in the industries in which the Company operates
The Company is a large integrated enterprise.
Firstly, China's feed industry is still relatively decentralized. The Company ranks among the top five in the
national feed industry. It sold 8.49 million tonnes of feed in 2017, representing approximately 4.3% of the
country's total feed production. There is still room for increase in market share. The Company's aquatic feed ranks
at the forefront of the domestic industry due to its technological and scale leadership; and the livestock and
poultry feed ranks among the top ten in the industry and in a leading position in technology and industry scale in
the regional market. The Company ranks among the top ten feed enterprises in the world in terms of production
and sales scale.
The Company has a relatively leading share in the aquatic feed market in Vietnam, India, Malaysia and other
countries in Southeast Asia, and ranks among the top five in the aquatic feed industry.
The Company's high-quality fish and shrimp fry, and animal healthcare products for aquatic species are playing a
leading role in the industry in respect of technology and market scale.
     The Company is recognized as a Key National Leading Enterprise for Industrialization of Agriculture, a
     State-Level Enterprise Technology Center, and among top 500 Chinese manufacturing companies and Forbes
     \"Top 50 Listed Companies in Asia\".
                                                            Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
II. Material Changes of Major Assets
1. Material Changes of Major Assets
Major assets                             Description
                                         During the reporting period, the Company’s equity assets decreased by 0.85% from the
Equity assets
                                         beginning of the period.
                                         During the reporting period, the company’s fixed assets increased by 20.81% from the
                                         beginning of the period, mainly because the Company’s projects under construction were
Fixed assets                             transferred to fixed assets after completion and being put into production in the year, the
                                         increase in purchase and construction of production equipment and the acquisition of
                                         equity interests of certain companies, resulting in an increase in the value of fixed assets.
                                         During the reporting period, the Company’s intangible assets increased by 39.55% from
                                         the beginning of the period, which was mainly due to the consolidation of newly
Intangible assets
                                         acquired enterprises’ intangible assets and the increase in land use rights as a result of the
                                         expansion of production scale.
                                         During the reporting period, the construction in progress of the Company increased by
                                         58.65% from the beginning of the period, mainly due to the addition of new plant and
Construction in progress
                                         equipment investment in the newly established companies and companies in production
                                         that have not yet reached the scheduled usable status in the year.
2. Major Assets Overseas
□ Applicable √ Not applicable
III. Analysis of Core Competitiveness
Whether the Company needs to comply with the disclosure requirements of specific industries
No
As the Company's products and services are centered on the needs of the animal production industry, the
Company's core competitiveness is also comprehensively represented by a diversified and complete product
configuration, outstanding single product advantage, comprehensive farming technology service capabilities,
industrial layout and the ability to organize the development of the industrial chain-related links, as well as the
delicacy management capability.
1. Diverse and complete product configuration
Centering on the animal farming chain, after many years of technological investment, transformation of research
and development achievements, product accumulation, production layout, etc., the Company's product
configuration has reached a relatively rich and complete state and covered the whole process of animal farming
including feed, functional feed, seedlings, drugs, vaccines, biological products, etc. and it is still in development.
Product configuration capability requires strong insights into customer demands, research and development
organization capability, results conversion capability, investment in construction of production bases, processing
organization capability, marketing promotion capability, and technical service capability.
The Company has rich technical research reserves and a research and development team composed of more than
1,000 members. It annually invests more than RMB 200 million in research and development and research and
development personnel includes multi-disciplinary talents in the fields of animal nutrition, veterinary medicine,
animal farming and genetic improvement, animal farming strategy optimization, bioengineering, biochemistry and
machinery. The fast transformation of research and development results and clear and rapid implementation of
investment supporting strategies contribute to the Company's strong product configuration capability.
For example, for feed formula technology, the Company, through more than 10 years of accumulation in
                                                       Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
continuous research and development, has established a huge database of animal nutrition requirements and
reserved a variety of raw material formula technologies. More than 1,000 sets of comparative experimental results
are added to the database of core nutritional needs of animals and raw materials utilization to convert technologies
into productivity. Therefore, the Company has a strong capacity in terms of organization and continuous
optimization of product formulas and adaptation to changes. To quickly adjust the formula when the raw material
prices fluctuate can ensure acquisition of cost competitive advantages.
The Company now has a marketing team consisting of more than 5,000 members who visit farms or farming sites
to know the animal farming situation. Therefore, the Company has detailed data sources for terminal consumption
habits, animal growth performance after feed utilization, animal farming strategy and animal farming needs, and
can accurately grasp the demands of farmers and precisely propose technical requirements on product design to
support full concentration of the Company's technical resources on customer's core needs.
2. Clear and excellent product power is the Company's most important competitive advantage
For all series of products, the Company is dedicated to creating product power that is significantly ahead of its
competitors and has invested heavily in the explicit expression of product power.
Despite of a high price, high-end products have the obvious advantage of ultimate pursuit of animal survival rate,
growth effects, and growth efficiency and have a prominent brand effect. On the basis of ensuring leading
production efficiency, middle-end products are close to the competitors' product pricing and are pursuing
outstanding cost performance. Therefore, in light of the industry’s overall good farming benefits, the Company’s
customers, with the support of integrated products, can obtain significantly higher returns than those of the same
type of farmers; in the event that the industry’s farming benefits decline and even the entire industry suffers losses,
the Company’s customers can suffer from less or even no loss.
The manifestation of product power requires the support of various internal professional capabilities of the
Company: the research and development capabilities of animal nutrition and raw material utilization, product
formula technology capability, raw material value procurement capability, efficient internal operation capability
are all indispensable. For example, in respect of support of value purchase capacity, the Company’s purchase team
has outstanding professional capabilities. The team is young and specialized, and it performs division of labor
according to subdivided raw material categories. The wide industry perspective and a large amount of information
acquisition and analysis ensure tracking, research, and judgment of the market trends of bulk raw materials at
home and abroad in a real time way and utilization of futures instruments for hedging of bulk raw materials to
effectively control the purchase price risk and position risk. The prominent purchase capability can identify
numerous raw material purchase opportunities, making cost advantages for feed products and trade of raw
materials possible. The Company is the first company to successfully achieve centralized purchase in the industry.
It has obvious advantages in respect of large-scale purchases. Besides, it is sophisticated in the combined
application of purchase tools including spot goods, futures and options, as well as flexible application methods.
Forward value purchase and risk position management also help the Company to gain purchasing cost advantages.
Another example is the Company's ability to support efficient operations. By promoting the application of SAP,
EPS and other management software, the Company has a strong information-based system, and internal
operations are gradually becoming more streamlined, standardized, and more data-based. The role of data-based
operation is to find out the efficient and energy-saving operation method by comparing the big data of branches;
the role of process-based operation and standardization is to greatly improve the internal reproducibility. The
highly efficient operation capability is an important support for the effective organization of professional
production of various products.
3. Comprehensive animal farming technical services is an important initiative for the Company to coordinate
product chain and continuously acquire new customers and improve customer's stickiness
In 2006, the Company took the lead in the industry to provide comprehensive technical services to farmers, and
positioned the Company as a service-oriented enterprise and an enterprise that provides animal farming solutions
to farmers. The Company provides farmers with full-process product and technical service support including \"fry -
stocking mode - environmental control – animal epidemic prevention - feed - market information\" to ensure that
farmers can use the most advanced farming technology to ensure farmers’ growing success and profitability. The
                                                    Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Company has a service team composed of more than 5,000 talents with the most experience and most passion in
the industry; it has also accumulated a variety of advanced animal farming models based on local characteristics;
its hundreds of highly efficient service stations in farming concentrated areas throughout the country can
simultaneously provide technical services for tens of thousands of farmers. The Company's relatively complete
service system in the industry can give full play to its product force strengths and provides a full range of
technical services for farming, which can effectively amplify the benefits for customers, thereby increasing the
stickiness of customers.
The comprehensive animal farming technical services have become an important brand label of the Company and
an important means for the Company to obtain customers and increase the stickiness of customers.
4. The Company's existing industrial layout advantage supports the Company to quickly organize the
comprehensive development of multiple links in the industrial chain, reserve of new businesses in order, and the
increasingly prominent industrial comprehensive advantages.
The Company's feed products include a full range of feed products such as livestock and poultry feed and aquatic
feed. The product line is complete and the product mix features endow the company with a strong anti-risk
capability. Different kinds of feed products have different technical contents, different gross profit margins, and
different market characteristics and operational risks. The Company's product mix makes it possible for the
Company to obtain higher gross profit margins than the industry's general level, and to better control the market
operational risks caused by animal epidemic diseases and imbalance of supply and demand and ensures the
Company's stable revenue from sales of feed products and maintain a rapid growth much higher than that of the
industry.
Over the years, the Company has orderly developed high-quality aquatic animal seedlings, aquatic animal
healthcare products, livestock and poultry vaccines, veterinary drugs, animal healthcare products for livestock and
poultry, pig farming and other businesses and the core technologies in industrial chain have gradually gained
advantages in terms of technology, industrial layout and industrial collaboration, thus fostering more new business
growth points and profit growth points for the Company and laying a sound foundation for the Company to further
amplify the multiplier effects of the industrial chain and create comparative competitive advantages.
5. Continuously building excellent operation management team and fine management capability
The Company has a hard-working, dedicated, professional and superb management team with a consistent
philosophy. Most of the members of the team are graduated from agricultural institutions of higher learning and
have a strong professional background. The management has a profound and comprehensive understanding of the
feed industry and has accumulated rich practical experience and formed magnificent and unified visions and goals,
strong industry insight, leadership and executive force, enabling them to adapt to the rapid changes in the feed
industry and the Company's ever-increasing operational management requirements in terms of academic
background, knowledge structure, industry experience and age.
In recent years, the industry is in an era of dramatic changes with tremendous changes in industry development,
scale of farmers and needs of customers. Emerging industries including rural financeand ″Internet+″ model
have also constantly impacted the industry. To promote the transformation and innovation of the industry and
create corporate mechanism and culture, i.e. the collective learning capacity that can quickly respond to changes
enabling the Company to continuously create value for customers, is the foundation for the Company to gain
sustainable competitive advantages.
From producing aquafeed premixture to manufacturing compound feeds for various aquatic species including
freshwater fish, marine fish, and shrimps, from having leading advantages in aquatic feeds at the beginning to
gradually having apparent advantages extended to feed for livestock and poultry, from simple feed production
operation to provision of comprehensive services including seedlings, animal healthcare and animal farming
technical services for farmers, and from business operation only in Southern China to expansion to Central China,
Eastern China, Northern China, Southeast Asia and South America, the Company has experienced the process of
development from scratch to become stronger and larger and to rank the forefront of the industry, relying on the
collective learning ability of the Company’s management and all employees. Affected by this culture and benefits
from this capacity, the Company keeps learning and growing.
                                                      Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Section IV. Discussion and Analysis of Operations
I.    Overview
(I) Industry situation
In 2017, the domestic economy was stable as a whole and has shifted from a high-speed growth stage to a
high-quality development stage. Consumption has grown in a faster and better way and become the main driving
force for economic growth and the mainstay to support the economy. The stabilization of economic recovery and
consumption upgrade drove the overall upgrade of the entire farming industry.
In 2017, the overall development of the animal production industry was still in good conditions with obvious
adjustments to the industrial structure. There was a very evident trend of large -scale, factory-like, healthy and
safe, and characteristic agriculture development. The consumption power was strong. However, the periodical
effects of sporadic factors including epidemic diseases on individual farming varieties as well as the impact of
stricter environmental management requirements and executive standards on the farming scale and regional
changes have led to greater differences in the aquatic products, pig and poultry farming industries.
In 2017, the aquaculture industry had the highest degree of prosperity. Due to the sluggish price of fish in the past
few years, the willingness for farming has continued to decline and supply growth has lagged behind the growth
in demand. Because of environmental protection, the cage farming areas along the coasts and lakes have been
reduced or cleared up, and restrictions or bans on farming have forced some farmers to permanently withdraw
from the market. In addition, the floods in central and eastern China in 2016 caused a significant reduction in the
supply of aquatic products in 2017, and thus the prices of aquatic products were relatively good throughout the
year. At the end of 2017, the average prices of carp, silver carp, grass carp, and crucian increased by 1.1%, 12.5%,
7.0% and 1.3% year-on-year, respectively (data source: Ministry of Commerce), which promoted the increase in
enthusiasm of farmers for feeding, and there was a strong will to increase investment in animal healthcare and
other aspects, which ultimately harvested good farming benefits.
After pig price experienced a high level in 2016, pig price declined overall in 2017, showing a trend of descending
from the high level at the early period. The average price of pig for the whole year was RMB15.37 / kg,
representing a year-on-year decrease of 17.45% (data source: Ministry of Agriculture); for pig farmers, pig
farming was still profitable in 2017, but the profitability was significantly lower than that in 2016. However, the
large -scale development of pig farming developed at a very rapid pace. Large-scale enterprises have substantially
increased their investment in pig farming. The trend of regional migration of pig farming was also very clear
towards northern and western China. Since large -scale enterprises are more rational in making decisions on
production and the decision cycle is longer, the fluctuation of pig farming scale will decrease in the future.
In the first half of 2017, poultry farming was severely hit by the outbreak of H7N9 epidemic disease. The price of
eggs and poultry meat once fell to the lowest level in nearly 10 years and the last 3 years. In the first half of the
year, the overall loss of the poultry farming industry was serious; in the second half of the year, poultry farming
was also subject to further regulation under environmental protection policies. With the continuous decrease in the
farming output and slaughtering and supply amount dropped, the price of poultry and eggs recovered and the
profitability of farming improved rapidly.
In 2017, there was sufficient supply of raw materials for bulk agricultural products with price rise and fall
alternating in the year, and the overall situation was still at a historically low level. Soybean meal price continued
to drop in the context of global soybean high yield expectations in the first half of the year and began to rise in the
second half of the year. The price of soybean meal fluctuated and was at a lower level. The year 2017 was the
second year for the reform of the corn collection and storage system. In terms of supply, the planting area
continued to decrease, resulting in a decrease in output, and the demand showed a slow growth. The price of corn
rose in 2017 after reaching a low level in 2016, but the price for the whole year was at the lowest level in the past
decade.
                                                     Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
(II) Production and operation of the Company
During the reporting period, the Company operated in a good condition, achieving better results of sales volume
and profit. The operating revenue amounted to RMB 32,556.63 million, representing a year-on-year increase of
19.76%; the operating income was RMB 1,475.87 million, up by 47.00% year-on-year; the total income increased
by 41.96% year-on-year to RMB1,482.06 million; the net income attributable to the shareholders of the Company
reached RMB 1,207.23 million, representing a year-on-year increase of 41.06%. All business segments
maintained steady growth.
1. In the reporting period, the Company sold 8.49 million tonnes of feed, representing a year-on-year increase of
15.77%; sales revenue amounted to RMB 26,534.95 million, up 22.43% year-on-year and the gross profit margin
increased by 1.86 percentage points over the same period of last year. With the high growth of sales volume and
profit, the product mix optimizes continuously, the proportion of high-end products increased and profitability was
further enhanced.
(1) The sales volume of aquatic products increased by 22.72% year-on-year. The industry chain had clear
competitive advantages. The product structure was continuously optimized and the gross profit margin of products
increased significantly. The Company continued to make investments in the industrial chain of aquaculture and
formed its competitive advantages in terms of key aspects including seedlings, feed, animal healthcare and
technical services. It engaged in differentiated competition in the industry chain to maintain industry-leading
competitive advantages and higher product gross profit. During the reporting period, the domestic consumption of
aquatic products was significantly upgraded, and the high-value aquatic products consumer market and farming
market experienced significant growth. With the technological advantages in high-grade aquatic feed, the
Company’s sales volume increased rapidly, of which the sales of high-grade expanded feed increased by more
than 40% throughout the year and the gross profit margin increased by 4.5 percentage points. In addition,
benefited from the higher price prosperity of aquatic products, the profits of bulk aquatic products farming were
considerable, and farmers favoured high-quality and high-efficiency feed varieties; the Company continued to
upgrade its products and continuously increased the sales ratio of high-margin products and functional feeds. The
aquatic feed saw an increase in both sales volume and gross profit margin. During the reporting period, the gross
profit margin of aquatic feed increased by 4.1 percentage points as a whole and profitability was greatly enhanced.
(2) Sales volume of pig feed increased by 31.94% year-on-year with a stable gross margin, and will enter a
high-speed development period. During the reporting period, the national environmental protection policies
further promoted structural adjustment to the pig farming industry, small private farmers accelerated their exit
from the market, and large-scale farmers and industrialized enterprises accelerated development; as the Company
adhered to the strategic positioning of products and unremittingly pursued product power based on technology,
purchase, and research and development, the effects of product power of the Company’s pig fed were reflected in
a more obvious way in respect of large -scale farmers. Meanwhile, with the continuous expansion of pig farming
scale of the Company, the Company gained a profound understanding of pig farming. The farming technology
service system was in the stage of implementation and promotion and the product force advantages of pig feed
were more prominent. On the basis of original advantages, the Company has been actively deploying capacity in
new markets for development of business including Central China, Northwest China, Northeast China and
overseas markets, as well as constantly converted new technologies and products in the industrial chain of animal
healthcare for livestock and poultry, vaccines and farming into competitive advantages. The Company's pig feed
business will enter a period of high-speed growth.
(3) The sales of poultry feed increased by 7.78% year-on-year. Although the gross profit margin is under pressure,
there is still potential for development. In the first half of the year, due to the outbreak of H7N9 epidemic disease
in China, the overall live poultry market was weak and prices remained low. The price of eggs affected by
multiple factors including epidemic disease, moulting and supply also fell to the lowest level in nearly a decade.
As both poultry for meat and poultry for egg have long been in serious losses, the demand for poultry feed has
dropped significantly. In light of the fierce competition and the market downturn, the Company has relied on the
leading technical advantages to convert the technology research and development into product force and has
introduced new products to improve product competitiveness; at the same time, by virtue of the Company's
professional purchase capacity and efficient operational efficiency and four-in-one linkage mechanism, the sales
of the Company’s poultry feed maintained stable growth and the market share further increased. With the
recovery of the farming industries of poultry for meat and poultry for egg, the Company's poultry feed will have a
                                                    Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
larger room for growth.
2. The sales of animal healthcare products amounted to RMB 395.03 million, representing an increase of 37.48%
year-on-year, and the gross profit margin was 49.73% which continued to stabilize at about 50%. The animal
healthcare products for livestock and poultry have become a new growth point.
The Company's animal healthcare products include micro-ecological products, vaccines and veterinary drugs used
for aquatic products and livestock and poultry and currently are mainly for aquatic products.
With the improvement of farmers' professional level and the tightening of national food safety regulation, the
importance of raising farming efficiency by using animal healthcare products to improve the farming environment
has been increasingly accepted and recognized by farmers, and the farming benefits as promoted by the
Company’s micro-ecological agents have been gradually reflected among farmers. Driven by consumption
upgrade and the increment of the high-end aquaculture market, the market space for aquatic product protection
products will maintain stable growth.
With the continuous development of animal healthcare products for livestock and poultry, the application of new
research and development achievements including eco-friendly micro-ecological biochemicals, and the in-depth
development of quality services, the animal healthcare products will strongly boost services and help sustainable
management of channels and have become an important profit growth point for the Company.
3. The sales of agricultural products amounted to RMB 1,206.31 million, representing an increase of 33.34% over
the same period of last year. The Company's agricultural products business includes pig farming and sales of
aquatic seedlings.
The number of Company's slaughter pig was 460,000, representing an increase of 43% over the same period of
last year. During the reporting period, the Company adjusted the strategic layout and core work of the pig feeding
segment in a timely manner in light of market changes and environmental protection policies. Externally, the
Company accelerated the land layout in Southern China, Central China, Southwest China and other areas and has
already signed strategic cooperation agreements with the governments of Guangxi, Guizhou, Hunan, Hubei,
Shaanxi, etc. striving to rapidly acquire the land resources required for development in the coming years.
Internally, the Company focused on reducing the cost of farming, training talent team and creating farming
technology system. During the reporting period, the Company's basic capacities for further plan and layout as well
as operation of pig farming business were promoted simultaneously and good results have been achieved.
The quality of the Company’s seedlings was excellent, giving rise to stable revenue growth. In many regions and
in respect of many varieties, the excellent quality rapidly drove the sales growth of the Company’s aquatic feed.
The Company continued to upgrade the system in various aspects including parent shrimp management, water
treatment, feed supply, biological epidemic prevention, quality control, and personnel management, and achieved
major technological breakthroughs in autonomous farming. The quality of shrimp disease resistance continued to
increase. The survival rate and output volume have shown obvious advantages, and good market reputations have
been established in the main major farming areas in Eastern China, Northern China, and Southern China. After
more than ten years of research and development and meticulous cultivation, the Company’s fish species
including grass carp, tilapia, crucian, bream, pelteobagrus eupogon and snakehead have gained market
recognition.
4. The sales of trading business totalled RMB 4,353.76 million, representing a year-on-year increase of 2.17%.
The Company's trading business products are mainly feed ingredients and gradually extend to other related
products. After years of industrial focus development, the Company has achieved full centralized procurement of
bulk agricultural products and formed strong purchase cost advantages through large -scale spot purchase
combined with the application of futures, options and other instruments which also provide important support for
the Company’s product competitiveness and profitability. In recent years, while satisfying internal demands for
production raw materials, the Company has extended its purchase advantages to other peer feed companies, raw
material traders, and large-scale farmers. The expertise in judgment on raw material market conditions and the
professional advantages of centralized purchase have been directly converted into the Company’s earnings and
become the Company's new profit growth point.
                                                                  Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
II. Analysis of Principal Operations
1. Overview
Please see \"I. Overview\" under \"Discussion and Analysis of Operations\" for relevant information.
2. Revenue and cost
(1) Components of revenue
Unit: RMB
                                              2017
                                                                                                                         Increase/decrease
                                Amount               % of revenue             Amount              % of revenue
Total         operating
                            32,556,634,127.38                     100%     27,185,309,985.32            100%                    19.76%
revenue
By industry
Feed industry               31,350,326,470.87                   96.29%     26,280,649,751.56                   96.67%                   19.29%
Farming industry             1,206,307,656.51                    3.71%       904,660,233.76                     3.33%                   33.34%
By product
Sales of feed               26,534,947,550.95                   81.50%     21,673,873,678.25                   79.73%                   22.43%
Sales    of animal
                               395,033,183.99                    1.21%       287,340,897.65                     1.06%                   37.48%
healthcare products
Sales of agricultural
                             1,206,307,656.51                    3.71%       904,660,233.76                     3.33%                   33.34%
products
Trading business             4,353,761,813.66                   13.37%      4,261,344,692.32                   15.67%                    2.17%
Others                          66,583,922.27                    0.21%        58,090,483.34                     0.21%                   14.62%
By region
Southern China              21,435,646,148.66                   65.84%     18,185,227,200.58                   66.89%                   17.87%
Eastern China                4,541,380,412.75                   13.95%      3,068,502,222.74                   11.29%                   48.00%
Northern China               6,882,406,834.60                   21.14%      4,486,782,547.65                   16.50%                   53.39%
Central China                7,668,641,426.51                   23.55%      6,046,309,086.84                   22.24%                   26.83%
Overseas                     2,418,687,862.14                    7.43%      3,013,630,172.30                   11.09%                  -19.74%
Combined offset            -10,390,128,557.28                   -31.91%    -7,615,141,244.79                 -28.01%                    36.44%
(2) Industries, products or regions accounting for over 10% of revenue or operating income of the
Company
√ Applicable □ Not applicable
Whether the Company needs to comply with the disclosure requirements of specific industries
No
Unit: RMB
                                                                                                       Increase/decrease     Increase/decrease
                                                                                 Increase/decrease
                                                                                                                             of gross profit
                                                                                 of revenue as         of operating costs    margin           as
                                                                    Gross profit compared to the       as compared to        compared to the
                    Revenue                   Operating costs                    corresponding
                                                                    margin                             the corresponding     corresponding
                                                                                 period of the prior   period of the prior   period of the prior
                                                                                 year                  year                  year
By industry
Feed industry             31,350,326,470.87     27,920,191,508.46         10.94%            19.29%                16.82%                 1.88%
                                                               Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Farming industry        1,206,307,656.51       1,059,387,183.96       12.18%               33.34%              46.14%            -7.69%
By product
Sales of feed         26,534,947,550.95       23,468,493,455.70       11.56%               22.43%              19.90%             1.86%
Sales of animal
healthcare                395,033,183.99         198,573,484.79       49.73%               37.48%              31.80%             2.17%
products
Sales of
agricultural            1,206,307,656.51       1,059,387,183.96       12.18%               33.34%              46.14%            -7.69%
products
Trading business        4,353,761,813.66       4,229,945,384.53        2.84%                2.17%               1.90%             0.26%
By region
Southern China        21,435,646,148.66       18,957,595,573.59       11.56%               17.87%              16.98%             0.68%
Eastern China           4,541,380,412.75       4,160,666,861.55        8.38%               48.00%              47.30%             0.43%
Northern China          6,882,406,834.60       6,502,468,671.11        5.52%               53.39%              52.65%             0.46%
Central China           7,668,641,426.51       7,159,492,089.72        6.64%               26.83%              24.23%             1.95%
Overseas                2,418,687,862.14       2,159,967,320.72       10.70%              -19.74%             -24.43%             5.54%
Under the circumstances that the statistics specification for the Company’s principal operations data experienced adjustment in the
reporting period, the principal operations data upon adjustment of the statistics specification at the end of the reporting period in the
latest year
□ Applicable √ Not applicable
(3) Whether revenue from sales in kind is higher than revenue from services
√ Yes □ No
                                                                                                                         Increase/
     By industry                 Item                 Unit                    2017
                                                                                                                         decrease
                       Sales                  10,000 tonnes                           849.08                 733.43              15.77%
Feed industry          Production output      10,000 tonnes                           855.89                 737.89              15.99%
                       Inventories            10,000 tonnes                            17.36                  10.55              64.55%
Explanation on why the related data varied by more than 30%
√ Applicable □ Not applicable
During the reporting period, the growth rate of the Company's production output and sales was basically the same, with a
sales-output ratio of 99.20%. As the Company's feed kept a stable growth during the reporting period, the inventories as at the end of
the period increased accordingly, and the total feed inventory at the end of the period increased by 64.55% year-on-year.
(4) Performance of material sales contracts of the Company during the reporting period
□ Applicable √ Not applicable
(5) Composition of operating costs
By industry and product
Unit: RMB
                                                      2017
   By industry            Item                               % of operating                            % of operating Increase/decrease
                                            Amount                                    Amount
                                                                 costs                                     costs
Feed industry      Material costs       26,732,784,022.65            95.75% 22,856,462,187.38                  95.63%            16.96%
Feed industry      Labour costs            312,782,570.85             1.12%          270,522,591.59             1.13%            15.62%
Feed industry      Manufacturing           775,075,975.45             2.77%          662,615,654.20             2.77%            16.97%
                                                           Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                   expenses
Feed industry      Others              99,548,939.51              0.36%     110,894,637.38              0.46%          -10.23%
Total of feed
                                    27,920,191,508.46           100.00% 23,900,495,070.55            100.00%           16.82%
industry
Farming industry Material costs       881,166,875.53             83.18%     587,876,311.29             81.10%          49.89%
Farming industry Labour costs         119,219,016.89             11.25%     104,388,495.81             14.40%          14.21%
                   Manufacturing
Farming industry                       59,001,291.54              5.57%       32,656,275.69             4.50%          80.67%
                   expenses
Total of farming
                                     1,059,387,183.96           100.00%     724,921,082.79           100.00%           46.14%
industry
Unit: RMB
                                                  2017
   By product            Item                            % of operating                        % of operating Increase/decrease
                                        Amount                                Amount
                                                             costs                                 costs
Sales of feed      Material costs   22,399,293,007.64            95.45% 18,652,890,562.34              95.30%          20.08%
Sales of feed      Labour costs       305,549,069.49              1.30%     265,909,061.19              1.36%          14.91%
                   Manufacturing
Sales of feed                         763,651,378.57              3.25%     654,079,214.84              3.34%          16.75%
                   expenses
Total sales of
                                    23,468,493,455.70           100.00% 19,572,878,838.37            100.00%           19.90%
feed
Sales of animal
healthcare         Material costs     179,915,386.55             90.61%     137,513,433.40             91.27%          30.83%
products
Sales of animal
healthcare         Labour costs          7,233,501.36             3.64%        4,613,530.40             3.06%          56.79%
products
Sales of animal
                   Manufacturing
healthcare                              11,424,596.88             5.75%        8,536,439.36             5.67%          33.83%
                   expenses
products
Total sales of
animal health                         198,573,484.79            100.00%     150,663,403.16           100.00%           31.80%
products
Sales of
agricultural       Material costs     881,166,875.53             83.18%     587,876,311.29             81.10%          49.89%
products
Sales of
agricultural       Labour costs       119,219,016.89             11.25%     104,388,495.81             14.40%          14.21%
products
Sales of
                   Manufacturing
agricultural                           59,001,291.54              5.57%       32,656,275.69             4.50%          80.67%
                   expenses
products
Total sales of
agricultural                         1,059,387,183.96           100.00%     724,921,082.79           100.00%           46.14%
products
Trading business Material costs      4,153,575,628.46            98.19%    4,066,058,191.64            97.95%            2.15%
                 Purchase
Trading business                       76,369,756.07              1.81%       85,209,446.45             2.05%          -10.37%
                 expenses
Total of trading
                                     4,229,945,384.53           100.00%    4,151,267,638.09          100.00%             1.90%
business
Others             Sales costs         23,179,183.44            100.00%       25,685,190.93          100.00%            -9.76%
 (6) Change of scope of consolidation during the reporting period
√ Yes □ No
                                                             Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
During the year, the scope of consolidation included 228 newly established subsidiaries. For details, please refer to the Note 7
\"Interests in other entities\" in XI \"Financial Report\". The scope of consolidation of the Company in this year increased by 76 and
reduced by 6 as compared with the last year. For details, please refer to the Note 6 \"Change in scope of consolidation\" in XI
\"Financial Report\".
(7) Significant change in or adjustment of the businesses, products or services of the Company during the
reporting period
□ Applicable √ Not applicable
(8) Sales to major customers and major suppliers
Sales to major customers of the Company
Total sales to top 5 customers (RMB)                                                                                 1,927,259,444.48
Total sales to top 5 customers as a percentage of the total sales for the
                                                                                                                               5.92%
year
Sales to top 5 customers who are related parties as a percentage of the
                                                                                                                               0.00%
total sales for the year
Information on top 5 customers of the Company
                                                                                                        As a percentage
    No.                 Name of customer                           Sales (RMB)                          of the total sales
                                                                                                        for the year (%)
1          No. 1                                                            523,699,681.50                                     1.61%
2          No. 2                                                            514,325,790.42                                     1.58%
3          No. 3                                                            481,912,258.93                                     1.48%
4          No. 4                                                            326,259,909.91                                     1.00%
5          No. 5                                                             81,061,803.72                                     0.25%
Total      --                                                           1,927,259,444.48                                       5.92%
Other explanation of major customers
√ Applicable □ Not applicable
The Company recognised the amount of revenue according to the full amount method or net amount method based on the transaction
with customers. The top five customers of the Company are mainly customers of the trading business. The top five customers have
no related relationship with the Company. The Company’s directors, supervisors, senior management, core technical personnel,
shareholders holding more than 5% of shares, de facto controllers and other related parties do not have direct or indirect interest in
the major customers. The top five customers accounted for 5.92% of total annual sales. The Company’s sales revenue does not
depend on single or top five customers.
Major suppliers of the Company
Total purchases from top 5 suppliers (RMB)                                                                           2,281,220,790.33
Total purchases from top 5 suppliers as a percentage of the total
                                                                                                                               8.29%
purchases for the year
Total purchases from top 5 suppliers who are related parties as a
                                                                                                                               0.00%
percentage of the total purchases for the year
Information on top 5 suppliers of the Company
                                                                                                      As a percentage of
    No.                   Name of supplier                      Purchases (RMB)                       the total purchases
                                                                                                        for the year (%)
1               No. 1                                                       617,747,769.91                                     2.24%
                                                              Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
2            No. 2                                                         488,396,524.32                                         1.77%
3            No. 3                                                         425,671,721.61                                         1.55%
4            No. 4                                                         408,902,304.80                                         1.49%
5            No. 5                                                         340,502,469.69                                         1.24%
Total        --                                                          2,281,220,790.33                                         8.29%
Other explanation of major suppliers
√ Applicable □ Not applicable
The Company recognised the amount of revenue according to the full amount method or net amount method based on the transaction
with suppliers. The top five suppliers of the Company have no related relationship with the Company. The Company’s directors,
supervisors, senior management, core technical personnel, shareholders holding more than 5% of shares, de facto controllers and
other related parties do not have direct or indirect interest in the major suppliers. The top five suppliers accounted for 8.29% of total
annual sales. The Company’s sales revenue does not depend on single or top five suppliers.
3. Expenses
Unit: RMB
                                                                              Increase/
                                    2017                   2016                                    Reasons for material changes
                                                                              decrease
                                                                                            Mainly due to the expansion of the
                                                                                            Company's operating scale, new production
Selling and distribution                                                                    capacity being put into operation and new
                                1,070,474,010.85         761,033,415.86 40.66%
expenses                                                                                    products being put into the market, and the
                                                                                            increase in sales service personnel and their
                                                                                            salary and market development costs
                                                                                            Mainly due to the expansion of the
                                                                                            Company's operating scale, the increase in
General               and
                                1,047,237,762.73         756,304,596.69 38.47%              management personnel and their salary and
administrative expenses
                                                                                            the Company’s continuous increase in
                                                                                            investment in research and development
                                                                                            Mainly due to the increase in interest
                                                                                            expenses as a result of the increase in
Finance expenses                   80,452,779.18           70,268,699.78 14.49%
                                                                                            short-term borrowings and the interests
                                                                                            thereon
4. Research and development expenditure
√ Applicable □ Not applicable
I. The Company owns a state-certified enterprise technology center, and has been recognized by the national,
provincial, and municipal departments as the research and development sub-center for national feed processing
technology, Guangdong Key Engineering Technology Research and Development Center, Guangdong Innovative
Technology Enterprise, Guangdong Agricultural Science and Technology Innovation Center, and Guangdong New
Type Research and Development Institution,etc. The Company has formed a domestic first-class enterprise
technology innovation system and its core competitiveness through independent research and development,
technology introduction, transformation of scientific and technological achievements, cooperation of production,
teaching and research, and other means.
1. In respect of research and development team, as at the end of the reporting period, the Company had a research
and development team composed of more than 1,000 members. Due to the reasonable structure of talent team,
perfect incentive mechanism and continuous introduction of first-class research and development talents, the
Company has built a high-level technology innovation team led by leading experts and based on the Company’s
self-owned scientific research team. The Company has approved the construction of \"Haid Central Research
Institute\" which will further reorganize and rationalize existing resources on the basis of the existing Haid
                                                     Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Research Institute and further increase research and development investment and personnel training efforts, and
build a more efficient management mechanism and operating mechanism to tackle the basic, critical,
forward-looking and emergent technical problems confronted by the Company and in the industry. It will become
the Company's future core technology \"incubator\" and the \"birthplace\" of scientific and technological
achievements. In the future, it will further guide and assist branches and subsidiaries in positioning design of new
products and provide strategic services for the long-term development of the Company. It is an important support
for the Company to carry out technical reserves, enhance the development stamina, and form new economic
growth points and prompt the Company to further maintain competitiveness and industry leading level, leading to
more domestic and foreign leading high-tech achievements, to help the Company achieve the great goal of
\"becoming a globally leading agricultural and pastoral enterprise\" and further promote the rapid progress and
development of the farming industry in our province and even the whole country.
2. In terms of research and development investment, during the reporting period, the Company invested a total of
RMB 258 million in research and development, accounting for 0.79% of the Company's revenue and 21.40% of
the Company's net income for the current period. The Company rewards key technicians and scientific research
management personnel who have made outstanding contributions in the process of technological innovation;
encourages key scientific research personnel to apply advanced technologies to break through research and
development bottlenecks and ensure that technological innovation has a good environment and power source.
3. The Company's core innovative technologies. With the mission of \"prospering agriculture and transforming
rural China through relying on science and technology\", the Company adheres to independent innovation and
carries out nearly one thousand independent research and development experiments each year. Based on the
development characteristics of modern agriculture and the current difficulties and challenges faced by farming
environment, the Company carried out research centering on the \"animal nutrition, disease prevention and control,
high-quality seed, animal healthcare products, healthy farming programs, and product optimization and
upgrading\" and other aspects, established its own technologies, and transformed achievements in branches and
subsidiaries. The Company's core innovative technologies include:
(1) Selective breeding: The Company has developed a family selective breeding technology system for aquatic
animals including grass carp, tilapia, Penaeus vannamei, and pelteobagrus eupogon and a variety of fish
gynogenesis technology and sex control technology systems, and established a breeding database. After many
generations of breeding, many varieties have achieved remarkable results in terms of economic traits (such as
growth rate, survival rate, body type, single sex, etc.), and new products have rapidly occupied most of the
markets in Eastern China, Central China, and Southern China with good response. The technological level is
leading domestically.
Over the years, the Company has been actively engaged in research and development of breeding with
well-known fisheries academies in China and has produced a number of fine varieties of which, three fine
varieties were announced in April 2017 by the Ministry of Agriculture as new species of aquatic products:
1) Megalobrama amblycephala \"Huahai No. 1\" is bred using the technologies of family selective breeding, group
selective breeding and paternity test for fish after 4 consecutive generations of breeding with the 680 groups of
wild megalobrama amblycephala collected from Liangzi Lake and Yuni Lake in Hubei and Poyang Lake in
Jiangxi in 2007 to 2008 as the base groups and growth speed and survival rate as the target traits. Under the same
breeding conditions, compared to megalobrama amblycephala not subject to selective breeding, the growth speed
and survival rate of 1 old fish improved by over 24% and over 22%, respectively; the growth speed and survival
rate of 2 years old fish improved by over 22% and over 20%, respectively. It is suitable for breeding in fresh water
bodies that are controllable manually throughout the country.
2) Litopenaeus vannamei \"Haixingnong No. 2\" is bred using the technologies of BLUP (best linear unbiased
prediction) selective breeding technology after 5 consecutive generations of breeding with the 8 batches of
litopenaeus vannamei introduced from Hawaii, Florida and Guam of the United States and Singapore in 2020 to
2011 as the base groups and growth speed and survival rate as the target traits. Under the same breeding
conditions, compared to shrimp seeds not subject to selective breeding and certain imported shrimp seeds, the
growth speed and survival rate of 100 days old litopenaeus vannamei improved by over 11% and over 13%,
respectively. It is suitable for breeding in artificially controllable seawater and brackish water bodies throughout
the country.
                                                     Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
3) Changzhu hybrid siniperca chuatsi is the F1 generation bred with the female siniperca chuatsi, which are
fished from Dongting Lake and have undergone 4 generations of group selective breeding, as the female parent
and the male siniperca scherzeri, which are fished from Pearl River and have undergone 2 generations of group
selective breeding, as the male parent. Under the same culture conditions, the average survival rate of 7-
month-old fish is 20% higher than that of female parent siniperca chuatsi, and the average body weight of 7-
month-old fish was 3.2 times that of male parent siniperca scherzeri. It is suitable for breeding in the artificially
controllable fresh water bodies in the Pearl River and Yangtze River basins in China.
(2) Development of new types of raw materials and alternative technologies: Based on the search for new types of
raw materials and the processing and improvement of new types of raw materials, as well as the research on
amino acid balance and activity factors, a low fish meal formula technology has been realized on aquatic animals
and been granted a number of national invention patents. The related technology won the second prize for national
technological invention, the national harvest prize for agriculture, animal husbandry and fishery, and has reached
the international leading technology level.
(3) Development of functional additives: Independent innovation was carried out in terms of enzyme preparations,
Chinese herbal medicines, micro-organisms, fish cream, small peptides, and amino acid utilization technologies,
and a number of patented technologies were obtained, and the Company presided over the preparation of the
industry standard Feedstuff Fish Cream (饲料原料鱼浆), and the enzymic preparation won the second prize of the
Guangdong Provincial Science and Technology Award and has reached the domestic leading technology level.
(4) Disease prevention and control: A comprehensive basic research has been conducted on aquatic products,
animal pathogens and pathology of livestock and poultry, and a series of disease prevention and control
technology programs have been established, leading the domestic technology level.
(5) Accurate premixture and feeds: Based on different farming models, farming species, the Company has
established a scientific nutrition database for aquatic products, livestock and poultry and developed a series of
precision premixture and compound feeds to provide comprehensive nutrition and ensure energy conservation and
environmental protection. The technical level of aquatic products has reached the international leading level, and
the technical level of livestock and poultry has reached the domestic leading level.
As at the end of the reporting period, the Company had a total of 232 patents, including 145 invention patents, 82
utility model patents, and 5 exterior design patents, relating to the development and utilization technologies for
new raw materials, the application technologies for functional feed additives, the energy conservation and
environment protection feed formulas for aquatic products, livestock and poultry and preparation methods thereof,
animal disease control methods for aquatic products, livestock and poultry, etc. Through accumulation in more
than ten years of continuous research and development, the Company has established a large database of animal
nutrition needs, which stores a variety of raw material formula technologies and over a thousand groups of
comparative experimental results accumulated each year. Therefore, the Company has the capacity to rapidly
adjust formula and convert technology into productivity when raw material prices fluctuate and continuously
upgrade products to provide farmers with more advanced farming solutions and overall solutions to ensure the
farming income of farmers.
II. Based on the continuous increase in its research and development investment, the Company has also actively
undertaken a number of national and provincial-level scientific research projects including: 47 research projects
underway including national special development project of strategic emerging industry, national comprehensive
experimental station for shrimp industrial technology, public welfare project of National Oceanic Administration,
the construction of the Guangdong Provincial Academician Workstation, the important project of the Guangdong
Provincial Science and Technology Department, and the modern agricultural science and technology innovation
alliance construction project of Guangdong Provincial Department of Agriculture. The development of the
projects not only promoted the technical progress of the industry, but also improved the theoretical and technical
level of the research and development personnel.
1. Guangdong Provincial Academician Workstation
The project Guangdong Provincial Academician Workstation was approved in December 2012. The Company
invited Maohua Wang, an academician from China Agricultural University, Xiwen Luo, an academician from
                                                    Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
South China Agricultural University, and Haoran Lin, an academician from Sun Yat-Sen University, to settle in the
station. Following the principle of \"business needs-based, project construction as the core, enterprise development
as the main part, outcome and effectiveness as fundamental\", the Company has developed a top-level design
scheme and conducted joint research to complete the research of \"establishment of platform, introduction of
achievements, cultivation of talents, construction of base\" and achieved a batch of innovation results for
intelligent management of aquatic products of leading domestic level, and transformation and application the
achievements in the Company.
In June 2017, Guangdong Provincial Science and Technology Department organized relevant experts to conduct
meeting acceptance for the construction project of Guangdong Provincial Academician Workstation, i.e. the
Internet of Things Technology Based Intelligent Aquaculture System Academician Workstation of Guangdong
Haid Group (广东省海大集团基于物联网技术的智能水产养殖系统院士工作站). Through on-site report and
discussion, the expert team fully affirmed the academician workstation established by the Company and the
results obtained, and unanimously voted to pass the project acceptance. This indicates that the Company has
successfully completed the academician workstation construction project after more than four years! The smooth
implementation of the project has ensured the Company 's leading position under the development trend of \"Smart
Agriculture\" and indirectly promoted the information-based development of farming industry in Guangdong
Province!
2. The Company's Postdoctoral Workstation
The establishment of postdoctoral workstation was approved by the Office of National Postdoctoral Management
Committee in May 2007. At present, the Company has cooperated with Ocean University of China, Institute of
Hydrobiology, Chinese Academy of Sciences, Sun Yat-Sen University and other universities or scientific research
institutes in recruitment of 19 post-doctors. So far, 9 post-doctors have completed their research and left the
workstation and 10 are still in the workstation. It is the postdoctoral workstation with the largest number of
recruitment and the most complete management. The establishment of the postdoctoral workstation not only
improves and enriches the personnel training mechanism, but also increases peer-to-peer learning, expands project
collaboration and results output, and enhances service management. In addition, it has important practical
significance for promoting the gathering and cultivation of high-level talents and stimulating the innovative
development of industry.
3. Guangdong Modern Agricultural Science and Technology Innovation Center
In October 2017, the Company’s \"Guangdong Haid Grass Carp Technology Innovation Center (Base)\" and
\"Guangdong Haid Veterinary Biological Products Science and Technology Innovation Center (Base)\" were
recognized by Department of Science and Technology of Guangdong Province as modern agricultural innovation
platforms of Guangdong Province. The purpose of construction of Guangdong Modern Agricultural Science and
Technology Innovation Center is to improve the province's agricultural science and technology innovation system,
strengthen the construction of agricultural science and technology innovation platform, integrate superior
innovation resources, cultivate superior innovation teams, and enhance the independent innovation capability of
agricultural science and technology. This time, the Company was selected as one of the first modern agricultural
science and technology innovation centers of Guangdong Province, which is the result of years of continuous
improvement in the scientific research level of the Company.
(1) “Guangdong Haid Grass Carp Technology Innovation Center (Base)” is mainly based on grass carp as the
priority industry in Guangdong Province and the main product of the Company's research and development,
production and sales for many years. It has the largest market share in Guangdong Province and is also obtained
by the Company, based on the market, after obtaining a number of intellectual property rights, high-tech products,
brand-name products, national standards and other research and development results in many years of independent
research and development. The center will also focus on resolving the key common problems involved in seedling
farming, feed nutrition, disease prevention and control, and farming technology through the optimization and
innovation of resources to continuously improve product technology and service capabilities.
(2) \"Guangdong Haid Veterinary Biological Products Science and Technology Innovation Center (Base)\" is the
Company’s another provincial-level scientific and technological innovation platform after being awarded the title
of \"Guangdong New Type Research and Development Institution\". The platform will always focus on animal
                                                           Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
disease detection, research and development of new vaccines and research and development of veterinary immune
adjuvants, etc., The center will engage in the research and development of animal diseases related biological
products, incubating more independent intellectual property rights and self-owned brands for enterprises, training
and introducing more outstanding high-end talents, and creating frontier agricultural science and technology
research and development centers to promote the development of livestock and poultry farming industry of
Guangdong Province.
4. Key Laboratory for Micro-Ecological Resources for farming and Utilization of Ministry of Agriculture
In December 2017, the Company was awarded the title of \"Key Laboratory for Micro-Ecological Resources for
Farming and Utilization of Ministry of Agriculture\", another national science and technology innovation platform
following the National Enterprise Technology Center . It is also the sole enterprise key laboratory in this direction
of the field set up rely on enterprise. The laboratory will further expand the infrastructure construction, increase
research and development investment, accelerate the construction of a talent team, and carry out basic research on
application and innovation of frontier technology. It will solve major, key and common technological problems
that restrict the development of the industry, create a good scientific research atmosphere, and conscientiously
implement the \"open, flow, cooperative and sharing\" operating mechanism to actively promote the exchange and
cooperation between enterprises, promote the transformation of scientific and technological achievements, and
constantly enhance the ability of independent innovation and core competitiveness of enterprises, thus to promote
the common development and progress of agricultural science and technology.
Research and development expenditure of the Company
                                                   2017                           2016                   Percentage change
Research and development
                                                                1,089                           947                       14.99%
headcount
Ratio of research and
                                                                7.19%                         7.58%                        -0.39%
development personnel
Research and development
                                                      258,307,038.10                 196,130,256.16                       31.70%
expenditure (RMB)
Research and development
                                                                0.79%                         0.72%                        0.07%
expenditure to revenue
Capitalized amount of research
and development expenditure                               9,066,389.79                26,748,847.59                       -66.11%
(RMB)
Capitalized research and
development expenditure to
                                                                3.51%                       13.64%                        -10.13%
research and development
expenditure
Reasons for significant change in total research and development expenditure to revenue
□ Applicable √ Not applicable
Reasons for significant change in capitalization rate of research and development expenditure and explanations thereon
□Applicable √Not applicable
5. Cash flows
Unit: RMB
                                                                                                              Increase/
                Item                               2017
                                                                                                              decrease
Subtotal of cash inflows from
                                                   33,674,711,087.06              28,175,942,178.59                       19.52%
operating activities
Subtotal of cash outflows from
                                                   33,180,489,631.21              27,033,787,630.86                       22.74%
operating activities
                                                            Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Net cash flows from operating
                                                        494,221,455.85                1,142,154,547.73                     -56.73%
activities
Subtotal of cash inflows from
                                                      5,838,680,823.75                3,766,376,069.79                      55.02%
investing activities
Subtotal of cash outflows from
                                                      6,910,126,307.27                4,762,729,368.54                      45.09%
investing activities
Net cash flows from investing
                                                     -1,071,445,483.52                 -996,353,298.75                      -7.54%
activities
Subtotal of cash inflows from
                                                      4,444,218,932.29                2,626,566,616.07                      69.20%
financing activities
Subtotal of cash outflows from
                                                      4,017,826,193.07                2,383,634,916.72                      68.56%
financing activities
Net cash flows from financing
                                                        426,392,739.22                  242,931,699.35                      75.52%
activities
Net increase in cash and cash
                                                       -162,818,229.01                  405,440,041.65                    -140.16%
equivalents
Explanation on main effects of material changes
√ Applicable □ Not applicable
1. Net cash flows from operating activities decreased by 56.73% as compared to the corresponding period of the prior year mainly
due to the expansion of the Company's scale and the increase in raw material stocking as a result of procurement strategy
adjustments;
2. Net cash flow from investing activities decreased by 7.54% as compared to the corresponding period of the prior year mainly due
to the expansion of the Company's scale and the increase in asset investment and the use of futures margin;
3. Net cash flows from financing activities increased by 75.52% as compared to the corresponding period of the prior year mainly
due to the increase in short-term borrowings and the granted restricted shares subscribed by employees during the reporting period.
Explanation on main reasons leading to the material difference between net cash flows from operating activities during the reporting
period and net income for the year
√ Applicable □ Not applicable
During the reporting period, the net cash flows from operating activities of the Company amounted to RMB 494.22 million, which
was RMB 732.24 million less than the net income. The difference was mainly due to the increase in stocking of raw materials.
III. Analysis of Non-Principal Operations
□ Applicable √ Not applicable
IV. Analysis of Assets and Liabilities
1. Material changes of asset items
Unit: RMB
                      As at the end of 2017          As at the end of 2016
                                          As a                           As a   Percentage
                                      percentage                     percentage change           Description of major changes
                       Amount                         Amount
                                        of total                       of total
                                         assets                         assets
                                                                                           At the end of the period, the percentage
                                                                                           in total assets decreased by 4.43%,
                                                                                           which was mainly due to the increase in
Monetary assets    1,392,046,440.33      10.58% 1,544,038,368.64         15.01%     -4.43%
                                                                                           the scale of the Company's operations,
                                                                                           payment for raw materials, and
                                                                                           investment funds.
Accounts                                                                                   At the end of the period, the percentage
                     760,285,344.09       5.78%     575,469,413.38       5.59%       0.19% in total assets increased by 0.19%,
receivable
                                                                                           which was basically the same with that
                                                            Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                                                                                            at the end of the same period of the
                                                                                            previous year
                                                                                           At the end of the period, the percentage
                                                                                           in assets increased by 5.71%, mainly
Inventories          3,383,848,292.19   25.71% 2,057,360,267.29         20.00%       5.71%
                                                                                           due to the increase in the Company’s
                                                                                           raw material stocking
                                                                                           At the end of the period, the scale of
                                                                                           investment properties was basically the
Investment
                       78,309,684.87     0.60%       78,797,688.32       0.77%      -0.17% same with that at the end of the same
properties
                                                                                           period of last year, with no significant
                                                                                           change in the percentage in assets
                                                                                           At the end of the period, the percentage
                                                                                           in total assets increased by 0.11% as
Long-term equity                                                                           compared with the beginning of the
                       32,554,508.11     0.25%       14,655,965.08       0.14%       0.11%
investments                                                                                period, which was caused by the
                                                                                           increase in investment due to the
                                                                                           acquisition of Shandong Daxin Group
                                                                                           At the end of the period, there was no
                                                                                           significant change in the percentage in
                                                                                           assets. Compared with the beginning of
                                                                                           the period, the increase was mainly due
                                                                                           to the projects under construction being
Property,  plant
                 3,760,863,514.36       28.58% 3,112,968,819.59         30.26%      -1.68% completed, put into production and
and equipment
                                                                                           converted into fixed assets, the increase
                                                                                           in purchase and construction of
                                                                                           production equipment, and the transfer
                                                                                           of fixed assets of newly acquired
                                                                                           companies
                                                                                           At the end of the period, there was no
                                                                                           significant change in the percentage in
Construction    in                                                                         assets. Compared with the beginning of
                      331,973,573.26     2.52%      209,254,285.27       2.03%       0.49%
progress                                                                                   the period, the increase was mainly due
                                                                                           to the expansion of the Company's scale
                                                                                           and new capacity construction
                                                                                           At the end of the period, there was a
                                                                                           year-on-year increase of 43.22%,
                                                                                           mainly due to the increase in external
                                                                                           investment by the Company and the
Short-term                                                                                 repayment of principal and interest of
                     2,303,898,763.70   17.51% 1,608,616,105.38         15.64%       1.87%
borrowings                                                                                 matured corporate bonds at the end of
                                                                                           2016, resulting in an increase in the size
                                                                                           of short-term borrowings, and there was
                                                                                           no significant change in the percentage
                                                                                           in assets
                                                                                           At the end of the period, there was no
                                                                                           significant change in the percentage in
                                                                                           assets, which was mainly due to that the
Goodwill              294,540,631.48     2.24%      181,675,925.85       1.77%       0.47% increased amount of investment in
                                                                                           merger and acquisition of companies
                                                                                           exceeded the due amount of owner’s
                                                                                           equity.
                                                                                           At the end of the period, there was no
                                                                                           significant change in the percentage in
                                                                                           assets. Compared with the beginning of
                                                                                           the period, the increase was mainly due
Intangible assets     846,002,659.79     6.43%      606,251,777.43       5.89%       0.54%
                                                                                           to the consolidation of intangible assets
                                                                                           from newly merged enterprises and the
                                                                                           increase in new land use rights due to
                                                                                           the expansion of production scale
Explanations on relevant data:
1. Inventories are mainly raw materials for production and trade, and merchandise inventories. The main inventory turnover is
normal. Inventory falling price reserves have been sufficiently provided for certain inventory goods whose prices are lower than the
                                                                 Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
market price.
2. The major assets in fixed assets are in normal use and there has been no significant change in profitability.
3. As at the end of the reporting period, the book value of goodwill of the Company was RMB 294.54 million, representing 4.55% of
the net assets attributable to the shareholders of the Company. At the end of the period, after the Company allocates goodwill to the
relevant asset group and uses the financial forecast data approved by the management as the benchmark to predict future cash flows,
the Company discounts the goodwill at discounted rate and calculates the present value of future cash flows from the related asset
group after the allocation of goodwill. Except that the present value of the future cash flows of the asset group of Vietnam
Haixingnon, a subsidiary of the Company, was less than its book value and provision for impairment of goodwill was made, the
goodwill of other companies did not show signs of impairment.
2. Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB
                                         Profit or loss
                                                                            Impairment
                                        from change in     Cumulative                      Purchases        Disposal
                        Opening                                               provided                       during
      Item                                 fair value   fair value change                  during the                   Closing balance
                        balance                                                during
                                             during     charged to equity                    period        the period
                                                                             the period
                                           the period
Financial assets
2. Derivative
                      25,129,490.00 -15,528,350.00                                                                        9,601,140.00
financial assets
Subtotal of
                      25,129,490.00 -15,528,350.00                                                                        9,601,140.00
financial assets
Total of the
                      25,129,490.00 -15,528,350.00                                                                        9,601,140.00
above
Financial
                       1,768,330.00 -17,002,979.55                                                                       18,771,309.55
liabilities
Whether there were any material changes on the measurement attributes of major assets of the Company during the reporting period
□ Yes √ No
3. Restriction on asset rights as at the end of the reporting period
As at the end of the reporting period, the Company still had restricted assets of RMB 17.77 million, which were mainly letter of
credit deposits.
V. Analysis of Investments
1. Overview
√ Applicable □ Not applicable
                                                             Investments during
               Investments during the
                                                         the corresponding period of                           Change
              reporting period (RMB)
                                                              prior year (RMB)
                               694,684,513.00                                259,981,350.00                                   167.21%
2. Material equity investments during the reporting period
√ Applicable □ Not applicable
Unit: RMB
Name                     For Invest                       Period         Progress Estimated Profit Law Date
         Principal                  Shareh Source Partner        Product                                       Disclosure
of                       m ment                           of             as                 or loss suit of
         activities                 olding of fund (s            type              return                      index (if any
investee                 of amount                        invest         at    the          from is      discl
                                                         Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                    inve                                 ment            date of                  invest    invo   osur
                    stm                                                  balance                  ment      lved   e
                    ent                                                  sheet                    for the   or     (if
                                                                                                  period    not    any)
                                                                                      The      net
                                                                                      income
                                                                                      realized by
                                                                                      Daxin
                                                                                      Group in
       Sales      of                                                                  2017 was
       feed     raw                                                                   not    less
       materials,                                                                     than RMB
       additives;                                                        The          50 million,                       Announcem
       science and                                                       property     the                               ent on the
       technology                                                        rights of    accumulat                         Acquisition
       research,                                                         the          ed       net                      of     Partial
       technology                                                        assets       income                            Equity
       promotion,                                                        involved     realized in                       Interests of
       technology                                                        have all     2017 and                          Daxin
                                                  Fei
       developme                                                         been         2018 was                          Group and
                                                  Xing,
       nt,                                                               transferr    not    less                       External
                                                  Jianbin
       technical                                                         ed; the      than RMB                          Investment
Shando                                            g Liu,
       advice,                                                           claims       105                          15 (Announce
ng                                                Haibo
       technical Acq 298,77                                              and          million,                     Sept ment     No.
Daxin                                     Own     Yu,     Long
       services      uisit 6,000.0 60.00%                        Feed    debts        and      the 0.00     No     emb 2017-076)
Group                                     funds   Yuqin term
       and           ion 0                                               involved     accumulat                    er   published in
Co.,                                              Wang,
       technical                                                         have all     ed       net                 2017 China
Ltd.                                              Xianlai
       exchanges                                                         been         income                            Securities
                                                  Duan,
       of livestock                                                      transferr    realized in                       Journal,
                                                  Mingju
       and                                                               ed and       2017      to                      Securities
                                                  n Yang
       poultry;                                                          included     2019 was                          Times,
       import and                                                        in     the   not    less                       Securities
       export of                                                         consolid     than RMB                          Daily and on
       goods;                                                            ation on     165                               the website
       foreign                                                           31           million,                          of
       investment                                                        Decemb       and      the                      www.cninfo.
       and                                                               er 2017.     total net                         com.cn
       manageme                                                                       income
       nt with its                                                                    realized in
       own funds.                                                                     2017      to
                                                                                      2020 was
                                                                                      not    less
                                                                                      than RMB
                                                                                      million.
                           298,77
Total    --         --     6,000.0 --    --       --     --      --      --           0.00        0.00      --     --     --
3. Material non-equity investments during the reporting period
□ Applicable √ Not applicable
4. Financial assets measured at fair value
√ Applicable □ Not applicable
Unit: RMB
                                   Profit or loss                                        Accumu
                                                      Cumulative     Purchases Disposal lative
                      Initial     from change in                                                             Closing           Source of
   Asset class                                     fair value change during the during     return
                 investment cost fair value during                                                           balance             fund
                                                   charged to equity   period the period     on
                                     the period                                          investme
                                                               Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                                                                                                     nt
                                                                                                                                 Owned
Futures                19,569,140.00    -9,968,000.00                                                            9,601,140.00
                                                                                                                                 funds
Derivative                                                                                                                       Owned
                        5,560,350.00    -5,560,350.00                                                                    0.00
financial assets                                                                                                                 funds
Total                  25,129,490.00   -15,528,350.00                0.00       0.00         0.00     0.00       9,601,140.00 --
5. Use of proceeds
√ Applicable □ Not applicable
(1) General use of proceeds
√ Applicable □ Not applicable
Unit: RMB0’000
                                                          Total
                                                                                       Proportion
                                    Total              amount of     Total
                                                                                         of total                                  Total
                                               Total    proceeds amount of
                                 amount of                                             amount of
                                            amount of     with   accumulat                          Total     Use and             amount
                          Total   utilised                                             accumulat amount of status of
           Fundraising                      accumulat change          ed                                                          of idle
  Year                 amount of proceeds                                                   ed
             method                              ed      in use   proceeds                        unutilised unutilised          proceeds
                        proceeds during the                                             proceeds
                                              utilised   during      with                         proceeds proceeds              for over
                                  current                          change                  with
                                             proceeds      the                                                                    2 years
                                   period                                                change
                                                       reporting    in use
                                                                                          in use
                                                         period
           Private                                                                                               Not
2013                       75,842.63 16,696.15      77,336.3           0 35,696.88        47.07%             0
           Placement                                                                                             applicable
Total      --              75,842.63 16,696.15      77,336.3           0 35,696.88        47.07%             0 --
Description of the general use of proceeds
I. Basic information on proceeds
(I) Actual amount of proceeds and the time for funds to be available
As approved by China Securities Regulatory Commission with the Reply on Approval of Non-public Issuance of Shares by
Guangdong Haid Group Co., Limited (Zheng Jian Xu Ke [2013] No. 867), Guangdong Haid Group Co., Limited (hereinafter
referred to as the \"Company\") was allowed to issue not more than 100,580,000 shares. In this issuance, the Company actually issued
68,500,000 RMB denominated ordinary shares ( A shares) with a par value of RMB 1 per share in a non-public way. The issuance
price was RMB 11.34 per share and the total amount of proceeds raised was RMB 776,790,000.00. After deducting the expenses
related to the issuance of RMB 18,363,740.44, the actual net proceeds raised amounted to RMB 758,426,259.56. GP Certified Public
Accountants Co., Ltd. conducted verification and issued a Verification Report (Guang Kuai Suo Yan Zi [2013] No. 13004060030)
for the above-mentioned proceeds on 19 November 2013.
(II) Overall use and balance of proceeds
1. Overall use of proceeds
Unit: RMB 0’000
                                             Item                                                            Amount
 I. Total proceeds                                                                                                          77,679.00
    Less: Issuance expenses                                                                                                  1,836.37
  II. Net proceeds                                                                                                          75,842.63
    Accumulated proceeds directly invested in proceeds-financed projects                                                    77,336.30
    Including: Accumulated proceeds directly invested in proceeds-financed projects                                     16,696.15
                                                                 Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
 in the current period
   Accumulated interest income (net of bank charges, etc.)                                                              1,493.67
         Including: interest income for the current period (net of bank charges, etc.)                                       89.49
 III. Closing balance of proceeds                                                                                             0.00
2. Balance of proceeds
As at the end of the reporting period, the closing balance of the proceeds was RMB 0.00.
II. Management of proceeds
In order to standardize the management and use of proceeds and protect the rights and interests of investors, the Company has
prepared the Rules on Special Deposit and Use Management of Proceeds of Guangdong Haid Group Co., Limited (《广东海大集团
股份有限公司募集资金专项存储及使用管理制度》) in accordance with the Company Law of the People's Republic of China (中
华人民共和国公司法), the Securities Law of the People's Republic of China (《中华人民共和国证券法》) and the Notice on
Further Strengthening the Management of Proceeds from Public Offering by Joint Stock Limited Companies issued by China
Securities Regulatory Commission (《中国证监会关于进一步加强股份有限公司公开募集资金管理的通知》) and relevant
requirements of the Shenzhen Stock Exchange. In accordance with the requirements of the Management Rules, the Company
implemented special deposit for the proceeds, and implemented strict approval procedures for the use of proceeds to ensure that the
proceeds were used exclusively. After receipt of proceeds, special accounts were opened for each proceeds-financed project. The
Company opened a total of 15 special accounts for proceeds-financed projects, and all the accounts were completed during the
reporting period. The information on special accounts for proceeds-financed projects is as follows:
   No.                    Company name                                        Bank account                          Remarks
               Hunan Dongting Haid Feed Co.,           Guangzhou Branch Sales Department of China Bohai
     1                                                                                                           Cancelled
               Ltd.                                    Bank Co., Ltd. 2001044947000162
                                                       Guangzhou Xinyuan Sub-branch of Ping An Bank
     2         Honghu Haid Feed Co., Ltd.                                                                        Cancelled
                                                       Guangzhou Panyu Sub-branch of Bank of
     3         Xiangtan Haid Feed Co., Ltd.                                                                      Cancelled
                                                       Communications 441162949018010049520
                                                       Guangzhou Xinyuan Sub-branch of Ping An Bank
     4         Sanming Haid Feed Co., Ltd.                                                                       Cancelled
                                                       Guangzhou Xinyuan Sub-branch of Ping An Bank
     5         Jingzhou Haid Feed Co., Ltd.                                                                      Cancelled
                                                       Guangzhou Xinyuan Sub-branch of Ping An Bank
     6         Suqian Haid Feed Co., Ltd.                                                                        Cancelled
                                                       Guangzhou Panyu Sub-branch of Bank of
     7         Huaihua Haid Feed Co., Ltd.                                                                       Cancelled
                                                       Communications 441162949018010049693
                                                       Guangzhou Branch of Deutsche Bank (China) Co.,
     8         Anhui Haid Feed Co., Ltd.                                                                         Cancelled
                                                       Limited    4504411091
     9         Yangjiang Haid Feed Co., Ltd.           Guangzhou Branch Sales Department of China Bohai          Cancelled
                                                       Bank Co., Ltd. 2001044879000167
                                                       Guangzhou Xinyuan Sub-branch of Ping An
    10         Wuhan Zeyi Investment Co., Ltd.                                                                   Cancelled
                                                       Bank11014565932001
                                                       Guangzhou Panyu Tian’an Technology Sub-branch of
    11         Nantong Haid Bio-Tech Co., Ltd.                                                                   Cancelled
                                                       Bank of China 666562249805
               Guangdong Haid Group Co.,               Guangzhou Panyu Tian’an Technology Sub-branch of
    12                                                                                                           Cancelled
               Limited                                 Bank of China 712062015719
                                                            Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                                                                                                                Special account
             Guangdong Haid Group Co.,             Guangzhou Panyu Tian’an Technology Sub-branch of            for wealth
    13                                                                                                          management of
             Limited                               Bank of China 650963093733
                                                                                                                proceeds,
                                                                                                                Cancelled
                                                                                                                Special account
             Guangdong Haid Group Co.,             Tian’an Sub-branch of Guangzhou Rural Commercial            for wealth
    14                                                                                                          management of
             Limited                               Bank 08031098000000098
                                                                                                                proceeds,
                                                                                                                Cancelled
                                                                                                                Special account
             Guangdong Haid Group Co.,             Guangzhou Panyu Sub-branch of Bank of                        for wealth
    15                                                                                                          management of
             Limited                               Communications 441162949018010047648
                                                                                                                proceeds,
                                                                                                                Cancelled
Note 1: The special account (account no.: 712062015719) opened by Guangdong Haid Group Co., Limited with Guangzhou Panyu
Tian’an Technology Sub-branch of Bank of China was mainly used to receive funds from various proceeds-financed investment
projects and was cancelled after transferring of the proceeds to the special accounts for proceeds of the companies implementing the
proceeds-financed investment projects.
Note 2: Due to the completion of the proceeds-financed investment projects, the special accounts of Jingzhou Haid Feed Co., Ltd.,
Anhui Haid Feed Co., Ltd., Suqian Haid Feed Co., Ltd., Huaihua Haid Feed Co., Ltd., Hunan Dongting Haid Feed Co., Ltd.,
Honghu Haid Feed Co., Ltd., Xiangtan Haid Feed Co., Ltd., Sanming Haid Feed Co., Ltd. have been canceled.
Note 3: Due to changes in the entity for using proceeds, the proceeds in the special account of Wuhan Zeyi Investment Co., Ltd.
have all been transferred to the special accounts for proceeds-financed investment project of Honghu Haid Feed Co., Ltd. and
Suqian Haid Feed Co., Ltd., and the special account of Wuhan Zeyi. Investment Co., Ltd. has been cancelled.
Note 4: Due to changes in the entity for using proceeds, the proceeds in the special account of Nantong Haid Bio-Tech Co., Ltd.
have all been transferred to the special accounts for proceeds-financed investment project of Xiangtan Haid Feed Co., Ltd. and
Huaihua Haid Feed Co., Ltd., and the special account of Nantong Haid Bio-Tech Co., Ltd. has been cancelled.
Note 5: Due to partial changes in the proceeds, the remaining proceeds in the special account of Yangjiang Haid Feed Co., Ltd. have
all been transferred to the special accounts for proceeds-financed investment project of Sanming Haid Feed Co., Ltd. and the special
account of Yangjiang Haid Feed Co., Ltd. has been cancelled.
Note 6: as considered and approved at the 2015 annual general meeting, Guangdong Haid Group Co., Limited opened a special
account (account no.: 650963093733) with Guangzhou Panyu Tian’an Technology Sub-branch of Bank of China and the
accumulated income from wealth management have been transferred to the special account for proceeds-financed investment project
of Sanming Haid Feed Co., Ltd. Such special account for wealth management has been cancelled.
Note 7: The accumulated income of wealth management in Guangdong Haid Group Co., Limited’s special account (account no.
441162949018010047648) with Guangzhou Panyu Sub-branch of Bank of Communications and a special account (account no.
08031098000000098) with Tian’an Sub-branch of Guangzhou Rural Commercial Bank has been transferred to the special account
for proceeds-financed investment project of Xiangtan Haid Feed Co., Ltd. The two special accounts for wealth management have
been cancelled.
The Company and subsidiaries implementing proceeds financed investment projects have signed the Tripartite Supervision
Agreement for Proceeds (募集资金三方监管协议) and the Quartet Supervision Agreement (募集資金四方監管協議) for Proceeds
with the sponsor GF Securities Co., Ltd. and the banks with which special accounts for proceeds were opened. There are no major
differences between the supervision agreements with the tripartite supervision and quartet supervision agreements entered into with
the Shenzhen Stock Exchange. There is no problem with execution of tripartite supervision and quartet supervision agreements.
(2) Commitment of proceeds
√ Applicable □ Not applicable
Unit: RMB 0’000
    Committed         Change      Total    Total Invested Accumulat Investmen            Expect       Return   Expected Significa
 investment project in project committed investme amount      ed        t                 date       realised   return     nt
and excess proceeds (including investment   nt    during   invested progress               of       during the  being    change
                                                            Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                       partial      of      after    the    amount as       as    operation      reporting   achieved     in
                      change)    proceeds adjustme reportin     at     at the end  of the         period      or not    project
                                            nt (1)    g     the end of   of the    project
                                                    period the period Period (3)
                                                                (2)
                                                                       =(2)/(1)
Committed investment project
Probiotics project of
Wuhan Zeyi with
the annual output of
                                                                                                             Not
RMB 300 million       Yes        15,037.63                                 0.00%                                        Yes
                                                                                                             applicable
(hereinafter referred
to as \"Wuhan Zeyi
Probiotics Project\")
Compound feed
project of Nantong
Haid with the
annual output of                                                                                             Not
                      Yes        12,790                                    0.00%                                        Yes
180,000 tonnes                                                                                               applicable
(hereinafter referred
to as \"Nantong Haid
Project\" )
Compound feed
project of Jingzhou
Haid with the
annual output of                                                                     1 January
                      No         10,660      10,660             10,712.34 100.49%              961.1         Yes        No
200,000 tonnes
(hereinafter referred
to as \"Jingzhou Haid
Project\")
Compound feed
project of Dongting
Haid with the
annual output of                                                                     30 April
                      No         11,260      11,260     2,013.7 11,282.89 100.20%             -283.43        No         No
200,000 tonnes
(hereinafter referred
to as \"Dongting
Haid Project\")
Compound feed
project of Yangjiang
Haid with the
annual output of                                                                     31 March
                      Yes        11,660      4,234.67           4,234.67   100.00%            726.72         Yes        Yes
200,000 tonnes
(hereinafter referred
to as \"Yangjiang
Haid Project\")
Compound feed
project of Anhui
Haid with the
annual output of
                      No         14,435      14,435             14,493.46 100.40%    December 486.96         Yes        No
240,000 tonnes
(hereinafter referred
to as \"Anhui Haid
Project\")
Compound feed
project of Honghu
Haid with the
annual output of                                                                     30   June
                      No                     9,527.36 2,602.02 9,601.19    100.77%             436.9         Yes        No
220,000 tonnes
(hereinafter referred
to as \"Honghu Haid
Project\")
                                                                 Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Compound feed
project of Suqian
Haid with the
annual output of
                      No                         5,510.27           5,620.71    102.00%    December -19.93          No          No
200,000 tonnes
(hereinafter referred
to as \"Suqian Haid
Project\")
Compound feed
project of Xiangtan
Haid with the
annual output of                                                                           30   June
                      No                         7,390      4,927.42 8,027.81   108.63%              -384.31        No          No
240,000 tonnes
(hereinafter referred
to as \"Xiangtan
Haid Project\")
Compound feed
project of Sanming
Haid with the
annual output of                                                                                                    Not
                      No                         7,869.25 5,299.64 7,917.9      100.62%    December -306.68                    No
200,000 tonnes                                                                                                      applicable
(hereinafter referred
to as \"Sanming Haid
Project\")
Compound feed
project of Huaihua
Haid with the
annual output of                                                                           30   June
                      No                         5,429.3 1,853.37 5,445.33      100.30%              -410.64        No          No
240,000 tonnes
(hereinafter referred
to as \"Huaihua Haid
Project\")
Subtotal of
committed                                        76,315.8 16,696.1
                        --           75,842.63                     77,336.3     --         --           1,206.69    --          --
                                                 5        5
investment project
Direction of proceeds
None
                                                 76,315.8 16,696.1
Total                   --           75,842.63                     77,336.3     --         --           1,206.69    --          --
                                                 5        5
Information on and
reasons for failure to
                       Suqian Haid Project, Xiangtan Haid Project, Huaihua Haid Project and Dongting Haid Project have just been
meet the planned
                       newly put into production and are still at a start-up stage, and thus require large investment in respect of market
progress or expected
                       and technical resources, resulting in losses.
benefits (by specific
projects)
Explanations on
material changes in Not applicable
project feasibility
Amount, use and      Not applicable
progress of use of
over-raised proceeds
                        Applicable
Changes in              Happened in previous years
implementation          1. As considered at the eighth meeting of the third session of the Board and the 2014 second non-operating
location of             general meeting, it was agreed to change the implementation entity and location of “Wuhan Zeyi Project”. The
proceeds-financed       previous implementation entity \"Wuhan Zeyi Company\" was changed into \"Honghu Haid Feed Co., Ltd.\" and
investment projects     \"Suqian Haid Feed Co., Ltd.\" and the implementation location was changed from the previous \"Huangpi
                        District, Huhan, Hubei\" to \"Honghu City of Hubei Province\" and \"Xiangyang County, Suqian, Jiangsu
                        Province\". The amount of investment in the implementation project did not change. 2. According to the
                                                              Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                       Proposal Regarding Change of Certain Proceeds-financed Investment Projects ( 关于变更部分募集资金投资
                       项目的议案》) as considered and approved at the 2015 first non-operating general meeting convened by the
                       Company on 23 March 2015, it was agreed to change the \"compound feed project of Nantong Haid with the
                       annual output of 180,000 tonnes\" into \"compound feed project of Xiangtan Haid with the annual output of
                       240,000 tonnes\" and \"compound feed project of Huaihua Haid with the annual output of 240,000 tonnes\" and
                       change the implementation location from the previous \"Nantong City, Jiangsu\" into \"Xiangtan City, Hunan\"
                       and \"Zhongfang County, Huaihua City, Hunan Provicne\". The amount of investment in the implementation
                       project did not change. 3. As considered at the twentieth meeting of the third session of the Board and the 2015
                       annual general meeting, it was agreed to change the use of certain proceeds for the \"compound feed project of
                       Yangjiang Haid with the annual output of 200,000 tonnes\" to \"compound feed project of Sanming Haid with
                       the annual output of 200,000 tonnes\". The remaining proceeds for Yangjiang Haid Project amounted to RMB
                       74.58 million (including interest income of RMB 0.33 million). The previous implementation entity was
                       changed from the previous \"Yangjiang Haid Company\" into \"Sanming Haid Feed Co., Ltd. \" and the
                       implementation location was changed from the previous \"Yangjiang, Guangdong\" into \"Sanming, Fujian\".
Adjustment to the   Not applicable
implementation
methods of
proceeds-financed
investment projects
                       Applicable
                       1. GP Certified Public Accountants Co., Ltd. issued the Verification Report on Pre-investment in
                       Proceeds-financed Investment Projects with Self-raised Funds by Guangdong Haid Group Co., Limited
                       (Guang Kuai Suo Zhuan Zi [2013] No. 13004060052)(《广会所专字[2013]第13004060052号“关于广东海大
                    集团股份有限公司以自筹资金预先投入募集资金投资项目的鉴证报告”》) on 7 December 2013. The
                    amount of self-raised funds for pre-investment in proceeds-financed investment projects was RMB 40,67
Pre-investment and
                    million including RMB 0.18 million for Wuhan Zeyi Project, RMB 20,57 million for Jingzhou Haid Project,
replacement of
                    RMB 1,08 million for Dongting Haid Project, RMB 0.48 million for Yangjiang Haid Project and RMB 18,36
proceeds-financed
                    million for Anhui Haid Project.
investment projects
                      2. According to the Proposal Regarding Change of Proceeds-Financed Investment Projects (關於變更募集資
                    金投資項目的議案) as considered at the 2014 third non-operating general meeting convened by the Company
                    on 12 September 2014, it was agreed to change \"Wuhan Zeyi Probiotics Project\" into \"Honghu Haid Project\"
                    and \"Suqian Haid Project\". The funds of RMB 0.18 million which had been replaced in Wuhan Zeyi Project
                    were all transferred to the special account for proceeds of Wuhan Zeyi. Therefore, as at December 31, 2017,
                    the Company had replaced all the self-raised proceeds for pre-investment in proceeds-financed investment
                    projects amounting to RMB 40.49 million.
                       Applicable
                       According to the Proposal Regarding Use of Partial Idle Proceeds for Replenishment of Working Capital (《关
Temporary              于使用部分闲置募集资金暂时补充流动资金的议案》) as considered and approved at the seventeenth
replenishment of       meeting of the third session of the Board convened by the Company on 24 October 2015, it was agreed to use
working capital with   idle proceeds of RMB 340 million for temporary replenishment of working capital for a term from 24 October
idle proceeds          2015 to23 October 2016. On 12 May 2016, the Company returned all the idle proceeds used for temporary
                       replenishment of working capital to the special account for proceeds, and informed the sponsor and its
                       representative of the return of proceeds. As at December 31, 2017, there was no temporary replenishment of
                       working capital with idle proceeds.
Balance of proceeds
for project
                    Not applicable
implementation and
reasons therefor
Use and direction of
                     Not applicable
unused proceeds
Use of proceeds and
problems disclosed
                    Not applicable
or
other issues
                                                                 Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
(3) Change in use of proceeds
□ Applicable √ Not applicable
The Company did not have any change in use of proceeds during the reporting period.
VI. Disposal of Material Assets and Equity Interest
1. Disposal of material assets
□ Applicable √ Not applicable
The Company did not dispose of any material asset in the reporting period.
2. Disposal of material equity interest
□ Applicable √ Not applicable
VII. Analysis of major subsidiaries and investees
√ Applicable □ Not applicable
Major subsidiaries and investees accounting for over 10% of the net income of the Company
Unit: RMB
Name    of Type of        Principal       Registered                                                              Operating
                                                           Total assets       Net assets        Revenue                             Net income
company    company        activities      capital                                                                 profit
Guangdong
Hinter                 Production
Biotechnolo Subsidiary and sales of        80,000,000.00     912,131,054.63    798,741,631.70 1,056,517,430.86     375,924,031.65    322,884,440.77
gy Group               premixture
Co., Ltd.
                       Production
Qingyuan
                       and sales of
Happy
                       premixture,
Bio-technol Subsidiary                      1,000,000.00     374,733,215.32    239,940,940.79    675,942,518.49    274,476,386.28    235,179,464.96
                       additives and
ogy Co.,
                       micro-ecologi
Ltd.
                       cal products
Description of major subsidiaries and investees
1. Guangdong Hinter Biotechnology Group Co., Ltd. is mainly engaged in feed premixture which are mainly sold to other internal
branches and subsidiaries of the Company and other feed companies in the industry. The gross profit of the product is higher than that
of the Company's compound feed products. During the reporting period, its revenue and profit were good and recorded a net income
of RMB 323 million.
2. Qingyuan Happy Bio-technology Co., Ltd. is mainly engaged in animal healthcare products and feed additives, which are mainly
sold to internal feed companies, farmers and distributors. Its product gross margin is higher than that of the Company's compound
feed products. During the reporting period, it recorded a net income of RMB 235 million.
Acquisition and disposal of subsidiaries during the reporting period
√ Applicable □ Not applicable
                                                        Methods to acquire and
                                                                                                       Impact on overall production and
            Name of companies                            dispose of subsidiaries
                                                                                                            operation and results
                                                       during the reporting period
                                                         Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                                         Business combination not under common No material effects on the results of the
Qingdao Huaxin Feed Co., Ltd.
                                         control                               period
                                         Business combination not under common No material effects on the results of the
Weifang Daxin Feed Co., Ltd.
                                         control                               period
                                         Business combination not under common No material effects on the results of the
Yantai Daxin Feed Co., Ltd.
                                         control                               period
                                         Business combination not under common No material effects on the results of the
Linyi Yihe Feed Co., Ltd.
                                         control                               period
                                         Business combination not under common No material effects on the results of the
Jiangsu Daxin Feed Co., Ltd.
                                         control                               period
                                         Business combination not under common No material effects on the results of the
Qingdao Daxin Feed Co., Ltd.
                                         control                               period
Shandong Daxin Agriculture and Animal Business combination not under common No material effects on the results of the
Husbandry Technology Co., Ltd.        control                               period
Qingdao Zhizhuxia Pig Farming Service Business combination not under common No material effects on the results of the
Co., Ltd.                             control                               period
Yantai Zhizhuren Animal Husbandry Co., Business combination not under common No material effects on the results of the
Ltd.                                   control                               period
Laizhou Zhizhuren Animal Husbandry Co., Business combination not under common No material effects on the results of the
Ltd.                                    control                               period
                                         Business combination not under common No material effects on the results of the
Shandong Daxin Group Co., Ltd.
                                         control                               period
Hunan Jinhuilong Agriculture and Animal Business combination not under common No material effects on the results of the
Husbandry Development Co., Ltd.         control                               period
Yueyang Jinhuilong Agriculture and Business combination not under common No material effects on the results of the
Animal Husbandry Development Co., Ltd. control                           period
Jiaozuo Jinhuilong Agriculture and Animal Business combination not under common No material effects on the results of the
Husbandry Development Co., Ltd.           control                               period
Jiangsu Jinhuilong Agriculture and Animal Business combination not under common No material effects on the results of the
Husbandry Development Co., Ltd.           control                               period
                                         Business combination not under common No material effects on the results of the
Shijiazhuang Huilong Feed Co., Ltd.
                                         control                               period
                                         Business combination not under common No material effects on the results of the
Handan Huilong Feed Co., Ltd.
                                         control                               period
                                         Business combination not under common No material effects on the results of the
Guigang Dongsheng Farming Co., Ltd.
                                         control                               period
                                         Business combination not under common No material effects on the results of the
Liyang Jiuhe Feed Co., Ltd.
                                         control                               period
Guangzhou Deliv Information Technology                                            No material effects on the results of the
                                       Disposal of equity interests
Co., Ltd.                                                                         period
Zixing Yitun Ecological Agriculture Co.,                                          No material effects on the results of the
                                         Newly established
Ltd.                                                                              period
Changning Yitun Ecological Agriculture                                            No material effects on the results of the
                                       Newly established
Co., Ltd.                                                                         period
                                                                                  No material effects on the results of the
Haid Farming Co., Ltd.                   Newly established
                                                                                  period
                                                                                  No material effects on the results of the
Linxi County Haiying Food Co., Ltd.      Newly established
                                                                                  period
                                                                                  No material effects on the results of the
Binzhou Haiding Feed Co., Ltd.           Newly established
                                                                                  period
                                                                                  No material effects on the results of the
Dali Haiwang Feed Co., Ltd.              Newly established
                                                                                  period
                                                                                  No material effects on the results of the
Guiyang Haid Zhihai Feed Co., Ltd.       Newly established
                                                                                  period
Huaian Hailong Feed Co., Ltd.            Newly established                        No material effects on the results of the
                                                               Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                                                                                        period
Zhaoqing Gaoyao             Haid   Biological                                           No material effects on the results of the
                                                Newly established
Technology Co., Ltd.                                                                    period
                                                                                        No material effects on the results of the
Fuzhou Haid Feed Co., Ltd.                      Newly established
                                                                                        period
Heze Dingtao District Hairong Farming                                                   No material effects on the results of the
                                      Newly established
Professional Cooperative Association                                                    period
Guigang Qintang District Yitun Ecological                                               No material effects on the results of the
                                          Newly established
Agriculture Co., Ltd.                                                                   period
Pingnan Yitun Ecological Agriculture Co.,                                               No material effects on the results of the
                                          Newly established
Ltd.                                                                                    period
Pingguo Yitun Ecological Agriculture Co.,                                               No material effects on the results of the
                                          Newly established
Ltd.                                                                                    period
Guiping Yitun Ecological Agriculture Co.,                                               No material effects on the results of the
                                          Newly established
Ltd.                                                                                    period
Hengyang Yitun Ecological Agriculture                                                   No material effects on the results of the
                                      Newly established
Co., Ltd.                                                                               period
Hengshan Yitun Ecological Agriculture                                                   No material effects on the results of the
                                      Newly established
Co., Ltd.                                                                               period
Guangzhou Youying Feed Trading Co.,                                                     No material effects on the results of the
                                    Newly established
Ltd.                                                                                    period
Guangzhou Zhongcangsheng Trading Co.,                                                   No material effects on the results of the
                                      Newly established
Ltd.                                                                                    period
Guangzhou Cangyouliang Trading Co.,                                                     No material effects on the results of the
                                    Newly established
Ltd.                                                                                    period
Shaoguan Haid Biological Technology                                                     No material effects on the results of the
                                                Newly established
Co., Ltd.                                                                               period
Guangzhou Punong Investment                                                             No material effects on the results of the
                                                Newly established
Management Co., Ltd.                                                                    period
Guangzhou Yuannong Investment                                                           No material effects on the results of the
                                                Newly established
Management Co., Ltd.                                                                    period
Guangzhou Zecan Investment                                                              No material effects on the results of the
                                                Newly established
Management Co., Ltd.                                                                    period
Ganzhou Haid Biological Technology Co.,                                                 No material effects on the results of the
                                        Newly established
Ltd.                                                                                    period
                                                                                        No material effects on the results of the
Xuzhou Haid Hexin Feed Co., Ltd.                Newly established
                                                                                        period
                                                                                        No material effects on the results of the
Jiaxiang Haiying Food Co., Ltd.                 Newly established
                                                                                        period
                                                                                        No material effects on the results of the
Shandong Fengying Food Co., Ltd.                Newly established
                                                                                        period
Henan Haihe Agriculture and Animal                                                      No material effects on the results of the
                                   Newly established
Husbandry Technology Co., Ltd.                                                          period
                                                                                        No material effects on the results of the
Qujing Zhihai Feed Co., Ltd.                    Newly established
                                                                                        period
                                                                                        No material effects on the results of the
Yibin Zhihai Feed Co., Ltd.                     Newly established
                                                                                        period
                                                                                        No material effects on the results of the
Kinghill holdings pte.ltd                       Newly established
                                                                                        period
                                                                                        No material effects on the results of the
Kinghill pte.ltd                                Newly established
                                                                                        period
                                                                                        No material effects on the results of the
Kinghill resources pet.ltd                      Newly established
                                                                                        period
                                                                                        No material effects on the results of the
Kinghill agri pte.ltd                           Newly established
                                                                                        period
                                                         Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Guigang Gangbei District Yitun Ecological                                         No material effects on the results of the
                                          Newly established
Agriculture Co., Ltd.                                                             period
Shaoxing Haid Biological Technology Co.,                                          No material effects on the results of the
                                         Newly established
Ltd.                                                                              period
                                                                                  No material effects on the results of the
Foshan Haid Hangbiao Feed Co., Ltd.      Newly established
                                                                                  period
Shaanxi Haid Agriculture and Animal                                               No material effects on the results of the
                                    Newly established
Husbandry Co., Ltd                                                                period
                                                                                  No material effects on the results of the
Yangling Haid Feed Co., Ltd.             Newly established
                                                                                  period
                                                                                  No material effects on the results of the
Lanzhou Haid Feed Co., Ltd.              Newly established
                                                                                  period
                                                                                  No material effects on the results of the
Xuchang Haihe Feed Co., Ltd.             Newly established
                                                                                  period
Anyang Haihe Agriculture and Animal                                               No material effects on the results of the
                                    Newly established
Husbandry Technology Co., Ltd                                                     period
                                                                                  No material effects on the results of the
Indonesia Haid Agriculture Co., Ltd.     Newly established
                                                                                  period
Binyang Yitun Ecological Agriculture Co.,                                         No material effects on the results of the
                                          Newly established
Ltd.                                                                              period
Duyun Yitun Ecological Agriculture Co.,                                           No material effects on the results of the
                                        Newly established
Ltd.                                                                              period
Rongjiang Yitun Ecological Agriculture                                            No material effects on the results of the
                                       Newly established
Co., Ltd.                                                                         period
Yicheng Yitun Ecological Agriculture Co.,                                         No material effects on the results of the
                                          Newly established
Ltd.                                                                              period
Guangdong Haid Poverty Alleviation                                                No material effects on the results of the
                                   Newly established
Investment Development Co., Ltd.                                                  period
Zhangzhou Longwen Hairong Farming                                                 No material effects on the results of the
                                  Newly established
Service Professional Cooperative                                                  period
                                                                                  No material effects on the results of the
Haid Pet Food Co., Ltd.                  Newly established
                                                                                  period
                                                                                  No material effects on the results of the
Haid Pet Food (Weihai) Co., Ltd.         Newly established
                                                                                  period
                                                                                  No material effects on the results of the
Anyang Haiyue Feed Technology Co., Ltd. Newly established
                                                                                  period
                                                                                  No material effects on the results of the
HAID (ECUADOR) FEED CIA.LTDA             Newly established
                                                                                  period
                                                                                  No material effects on the results of the
Tengzhou Fengcheng Feed Co., Ltd.        Newly established
                                                                                  period
                                                                                  No material effects on the results of the
Jiyuan Haihe Jinyu Feed Co., Ltd.        Newly established
                                                                                  period
                                                                                  Established in January 2017 and cancelled
Jiangxi Youju Trading Co., Ltd.          Established/Cancelled                    in October 2017; No material effects on the
                                                                                  results of the period
                                                                                  No material effects on the results of the
Gaozhou Weihe Liancheng Feed Co., Ltd. Cancelled
                                                                                  period
                                                                                  No material effects on the results of the
Baoding Haid Feed Co., Ltd.              Cancelled
                                                                                  period
Dongyuan Hailong Ronghe Feed Research                                             No material effects on the results of the
                                      Cancelled
Co., Ltd.                                                                         period
                                                                                  No material effects on the results of the
Hebi Haiding Feed Co., Ltd.              Cancelled
                                                                                  period
                                                         Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
VIII. Structured Entities Controlled by the Company
□ Applicable √ Not applicable
IX. Outlook on the Future Development of the Company
(I) Development status of the industry
According to the \"13th Five-Year Development Plan for National Feed Industry\" (2016-2020) (全国饲料工业“十
三五”发展规划(2016-2020 )) issued by the Ministry of Agriculture, during the \"13th Five-Year\" period, as
China’s economic development has entered into a new normal, the farming industry has entered a new stage of
production slowdown, structural optimization, quality upgrade, layout adjustment and industrial integration and
the development of the feed industry faces many challenges in terms of market space, technological updating and
industrial integration.
1. Feed demand is stable and the overall industry continues to grow
According to the development goals under the \"13th Five -Year Development Plan for National Feed Industry\"
(2016-2020) (全国饲料工业“十三五”发展规划(2016-2020)), the national industrial feed production is expected
to reach 220 million tonnes in 2020. According to animal species, there are 94 million tonnes of pig feed , 60
million tonnes of feed for poultry for meat, 31 million tonnes of feed for poultry for eggs, 20 million tonnes of
aquatic feed , 10 million tonnes of ruminant feed, 1.2 million tonnes of pet feed, and 3.8 million tonnes of other
animal feeds. It is expected that the total amount of feed will increase by 20 million tonnes in the next five years,
representing a growth rate of approximately 10%, and the annual average increase will be approximately 4 million
tonnes, representing a growth rate of approximately 1.9%.
2. It is more apprent for technology to drive industry progress
In the differentiation and integrated development of the feed industry, technology has played an increasingly
important role in the industrial competition. The global agricultural products are becoming more and more closely
related. Weather conditions and trade frictions in certain regions will cause large fluctuations in the prices of
agricultural products. Animal farming requirements, feed formula adjustments, and raw material substitution
technologies are the core fields of feed technology competition. For other technologies, vigorous development of
biological feed technology, continuous increase in the types and the continuous expansion of functions of feed
microbes, enzyme preparations, etc. have shown tremendous potentials in promoting the reduction of the use of
feed antibiotics and efficient utilization of feed resources, and will become new threshold of competition in the
industry.
3. It is more urgent to conduct industrial integration
The growth of the total amount of feed has slowed down, and the competition among enterprises has been fierce.
Leading enterprises have accelerated their investment in industries and foreign countries. The feed enterprises
with strong overall strength have advantages in capital, management, technology, and talents. They will further
accelerate the pace of entering the farming industry and building the entire industry chain in order to enhance
sustainable development capability. The feed industry in emerging markets such as Southeast Asia, Northeast Asia,
and Africa is in a rapid growth period, and the \"going global\" initiative is increasingly important for China's feed
companies to expand their development space.
4. Seedlings and animal healthcare industries will rapidly grow in longer periods due to technological
advancement and farming upgrades.
Focusing on the development of the farming industry, the development trend of the feed business also indicates to
a large extent that the high-quality animal seedlings will have a huge development demand in the long term.
Strengthening animal health care is an important trend feature of future animal farming development. Product
demand will grow rapidly.
                                                     Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
(II) Prospects for the future development of the Company
The Company's development strategy is to become a leading high-tech farming and animal husbandry company
with sustainable development capability in China. The Company's development is based on \"creating value for
customers\". The Company will closely focus on the farming sector to provide farmers with comprehensive
solutions, including feed, seedling, animal healthcare products and farming technology services, and meet other
needs of farmers and distributors for financial services, etc. to effectively enhance the profitability of the
Company's farmers and distributors and realize the win-win development of the Company and its customers.
The basic strategy for the development of the Company's industrial chain is to scale up on the basis of
specialization and to extend the industrial chain based on core competitiveness. The Company will focus on feed
products as its core business. At the same time, it will actively develop raw materials, animal healthcare products,
seedling, farming, circulation, and food processing businesses, cultivate the Company's professional capabilities in
the entire industry chain, and build its comprehensive core competitiveness in the industry chain.
(III) Possible risks
1. Risk of Periodical Fluctuations in the Feed Industry due to Abnormal Weather and Animal Epidemic Diseases
during Farming
The feed industry mainly serves the downstream farming industry. The abnormal changes in weather, rain,
typhoon, and other natural factors affecting the farming process may cause fluctuations in the amount of livestock
or aquatic products on hand and even the large -scale outbreak of diseases, thus affecting the demand for feed and
resulting in risk of periodic or regional demand fluctuations. With the environmental changes and large-scale
development of farming industry, animal epidemic diseases may also occur occasionally including \"H7N9 virus\"
which broke out early this year, \"PRRSV\" with pigs occurred recently, \"EMS epidemic disease\" outbroke in
shrimp aquaculture and other diseases, which will directly inhibit the scale of farming and reduce the demand for
feed in the short term; major animal epidemic disease may also dampen the end-consumer demand, leading to a
downturn of the farming industry, and further affect the feed demand, giving rise to adverse effects on the
production and operation of feed enterprises.
Risk response measures: (1) The Company is currently fully deploying factories and developing local markets in
major farming areas in Southern China, Central China, Eastern China and Northern China and overseas markets in
Southeast Asia, etc. and the expansion of regional distribution can effectively cope with the risk of weather
anomalies and natural disasters in local areas. (2) The Company's feed varieties cover pig feed, chicken feed, duck
feed and other livestock feed and fish feed, shrimp feed and other aquatic feed. With a variety of products and a
well-balanced structure, it can effectively deal with the risk of a single breed species and has strong
comprehensive anti-risk capability.
2. Risk of Drastic Price Fluctuations of Major Raw Materials
The feed ingredients are mainly various kinds of bulk agricultural products, mainly corn and soybeans (bean pulp).
In recent years, the domestic and international agricultural product markets have been closely linked. Changes in
the planting area and harvest of major grain-producing countries, purchasing and storage and subsidy policies,
import and export policies, fluctuations in logistics capacity and costs of shipping, exchange rates and others may
cause great fluctuations in prices of agricultural products, which, in turn, has a certain impact on the cost of feed
and farming. With the strengthening of the internationalization of trade of agricultural products, the factors for
changes in the prices of agricultural products have become more complex and the price fluctuations have therefore
increased. If raw material prices fluctuate and the Company fails to understand the changes in feed raw materials
in a timely manner and promptly implement strategic management and risk control of procurement, the Company
may face the risk of rising integrated procurement costs.
Risk response measures: (1) The Company divides raw material varieties and implements a combination of
centralized procurement of large varieties and local procurement of regional varieties, which not only guarantees
the advantages of large-scale raw material procurement, but also obtains localization advantages from rapid
response in respect of regional procurement; (2) The Company continuously invests in the construction of the raw
material procurement research system. The team of the professional raw material information research department
                                                     Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
is relatively mature. It conducts strategic procurement through the real-time tracking, research and judgment of
the domestic and foreign bulk raw material market trends, and implements position risk management for bulk raw
materials through futures hedging, raw materials trade and other tools to effectively control procurement risks; (3)
The Company has accumulated rich experience in research and development of animal nutrition and feed formula
technologies, and has research and development team composed of nearly 1,000 members. A large number of
funds are spent on research and development each year, focusing on animal nutrition requirements, feed formula
technology, variety farming and selection of elite germplasm, healthy farming model, and other research
directions. The Company has a profound understanding of animal nutritional requirements and higher
requirements on the technical level of comprehensive utilization of raw materials. Therefore, in case of raw
material price fluctuations, it can quickly adjust the formula to control the reasonable feed nutrient level and
formula costs.
3. Risk of Scale, Structural and Regional Adjustment to Farming Industry under Environmental Protection
Regulations and Policies
In recent years, the State has introduced a series of environmental protection laws and regulations including the
new Environmental Protection Law (环保法), the Regulations on Prevention and Control of Pollution from Large
-Scale Farming of Livestock and Poultry (畜禽规模养殖污染防治条例), Water Pollution Control Action Plan
(水污染防治行动计划), and the Guiding Opinions on Promoting the Adjustment and Optimization of Pig
Farming in the Southern Water Network Region (关于促进南方水网地区生猪养殖布局调整优化的指导意见),
the \"13th Five-Year Plan\" on Ecological Environmental Protection (“十三五”生态环境保护规划), which
stipulate the pollution prevention and control of livestock and poultry farming industry, increase the pollution
control of livestock and poultry farming industry, and especially limit the farming scale in the regions of key
water sources and surrounding water systems. According to the regulations and policies of the central government,
banned areas and restricted areas have been set up throughout the country, and pig farms in the banned areas in
the southern water network area are gradually relocating. The implementation of environmental protection
policies will speed up the withdrawal of private pig farming farmers, reduce the backward production capacity
failing to meet environmental protection standards and with a small scale, and enable large -scale farmers to
continuously expand their production capacity and improve the farming scale and structure; In addition, the
establishment of banned areas and restricted areas will also result in adjustments to the pig farming capacity in all
places and across the country. The adjustments to farming scale and structure and regional adjustment to
production capacity will certainly have a profound impact on the existing capacity layout, market share, pricing
power and business model of the feed industry. The impact of environmental protection policies on the pig
farming and feed industries puts existing competitive companies in the market at risk of reshuffle.
Risk response measures: (1) The Company continually improves its capability to serve farmers. In addition to feed
products, the Company is also engaged in the industrial chain of animal healthcare products, vaccines and finance
and has a strong stickiness to large-scale farmers; (2) The feed varieties of the Company cover livestock and
poultry, aquatic products and the product line is abundant. The production lines for pig feed, chicken feed, duck
feed and pelleted fish feed can be shared. The Company can rapidly shift the production layout and make
adjustments to adapt to the changes in the industry by adjusting the production capacity in all places. (3) The
Company adopts multiple models to speed up the production layout in areas with rich resources and strong
environmental carrying capacity, and to seize the market share of new farming areas.
4. Risk of Exchange Rate Fluctuations
The global procurement of feed raw materials has become the norm. The scale of overseas investment and
overseas operations of the Company is also rapidly expanding. The scale of cross-border fund settlement and the
stock of overseas assets have grown substantially, involving the currency types of various related countries.
Currency exchange rate fluctuations are subject to different influence factors, and exchange rate fluctuations in
any currency may have a certain impact on the settlement cost and asset stock value of the region.
Risk response measures: (1) Based on the business scale, business model, and settlement characteristics in
different regions and countries, the Company strictly controls the exchange rate risks, carefully selects settlement
currencies, and strives to achieve relatively balanced regional fund inflow and outflow through structural
arrangements of financing sources and financing types; (2) The expansion of two-way fluctuations in the RMB
exchange rate has become the new normal. The Company further enhances its awareness of foreign exchange risk
                                                           Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
management, and arranges settlement models based on the procurement and sales strategies and cycle
characteristics of import and export operations. And forward foreign exchange settlement and sale, swaps, foreign
exchange options and other financial instruments are flexibly used to lock the exchange rate risks, control
procurement and sales costs, and control the possible risk brought about by exchange rate fluctuations.
X. Reception of Research Investigations, Communications and Interviews
1. Registration table of reception of research investigations, communications and interviews during the
reporting period
√ Applicable □ Not applicable
                          Reception     Reception object
    Reception time                                                  Index of basic information on research investigation
                           method            type
                                                           For details, please refer to the Table of Investor Relations Activity
5 January 2017         Field research   Institution        Records of Guangdong Haid Group Co., Limited 2017-001) published
                                                           on the website of www.cninfo.com.cn on 6 January 2017
                                                           For details, please refer to the Table of Investor Relations Activity
23 March 2017          Field research   Institution        Records of Guangdong Haid Group Co., Limited 2017-002) published
                                                           on the website of www.cninfo.com.cn on 24 March 2017
                                                           For details, please refer to the Table of Investor Relations Activity
24 March 2017          Field research   Institution        Records of Guangdong Haid Group Co., Limited 2017-003) published
                                                           on the website of www.cninfo.com.cn on 27 March 2017
                                                           For details, please refer to the Table of Investor Relations Activity
17 May 2017            Field research   Institution        Records of Guangdong Haid Group Co., Limited 2017-004) published
                                                           on the website of www.cninfo.com.cn on 19 May 2017
                                                           For details, please refer to the Table of Investor Relations Activity
17 May 2017            Field research   Individual         Records of Guangdong Haid Group Co., Limited 2017-004) published
                                                           on the website of www.cninfo.com.cn on 19 May 2017
                                                           For details, please refer to the Table of Investor Relations Activity
14 July 2017           Field research   Institution        Records of Guangdong Haid Group Co., Limited 2017-005) published
                                                           on the website of www.cninfo.com.cn on 17 July 2017
                                                           For details, please refer to the Table of Investor Relations Activity
                       Telephone
18 August 2017                       Institution           Records of Guangdong Haid Group Co., Limited 2017-006) published
                       communication
                                                           on the website of www.cninfo.com.cn on 18 August 2017
                                                           For details, please refer to the Table of Investor Relations Activity
6 September 2017       Field research   Institution        Records of Guangdong Haid Group Co., Limited 2017-007) published
                                                           on the website of www.cninfo.com.cn on 8 September 2017
                                                           For details, please refer to the Table of Investor Relations Activity
                       Telephone
31 October 2017                      Institution           Records of Guangdong Haid Group Co., Limited 2017-008) published
                       communication
                                                           on the website of www.cninfo.com.cn on 2 November 2017
                                                           For details, please refer to the Table of Investor Relations Activity
3 November 2017        Field research   Institution        Records of Guangdong Haid Group Co., Limited 2017-009) published
                                                           on the website of www.cninfo.com.cn on 8 November 2017
                                                           For details, please refer to the Table of Investor Relations Activity
8 November 2017        Field research   Institution        Records of Guangdong Haid Group Co., Limited 2017-010) published
                                                           on the website of www.cninfo.com.cn on 10 November 2017
                                                                  Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Section V. Material Matters
I. Profit Distribution for Ordinary Shares of the Company and Capitalization of Capital
Reserves
Formulation, implementation or adjustment of profit distribution policy for ordinary shares, especially the cash dividend during the
reporting period
√ Applicable □ Not applicable
According to the Proposal on 2016 Profit Distribution Plan (关于2016年度利润分配预案的议案) as considered
and approved at the 2016 annual general meeting convened on 17 May 2017, the distribution plan is as follows:
Based on \"the total number of shares on the registration date when the plan is implemented in the future\", a cash
dividend of RMB 3.00 (tax inclusive) was to be paid for every 10 shares. On 30 June 30, 2017, dividend
distribution was completed.
The Company’s profit distribution policy, dividend distribution policy, dividend standards, and dividend ratios are
well-defined and clear. Independent directors have duly performed their duties and functions. Minority
shareholders have the opportunity to fully express their views and concern, which is in line with the Articles of
Association and the requirements of the consideration procedures. The conditions and procedures for the
adjustment or change of the profit distribution policy are compliant and transparent, and the legal rights and
interests of small and medium investors are fully protected.
Particulars of Cash Dividend Policy
Whether the policy is in compliance with the requirements of the
Articles of Association or the resolutions passed at the general Yes
meeting;
Whether the basis and ratio of the distribution of dividends are
                                                                          Yes
well-defined and clear;
Whether the relevant decision making procedure and system are
                                                                          Yes
sound;
Whether the independent directors have duly performed their
                                                                          Yes
duties and functions;
Whether     there    are   enough     opportunities      for   minority
shareholders to express their views and concerns, and whether Yes
their legal interests are sufficiently protected, etc;
Whether the conditions and procedures are legal and transparent
                                                                          Not applicable
in respect of cash dividend policy with adjustments and changes;
The dividend distribution plans for ordinary shares (proposed) and the proposals on capitalization of capital reserves (proposed) over
the past three years (the reporting period inclusive)
                                                                Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
1. The Company's 2015 semi-annual and 2015 annual dividend distribution plan
(1) 2015 semi-annual dividend distribution plan
Based on the Company’s total share capital of 1,537,363,254 shares, a cash dividend of RMB 0.65 (tax inclusive)
per 10 shares was distributed and total cash dividend distributed amounted to RMB 99,928,611.51. The remaining
undistributed profits were carried forward to the following year.
(2) 2015 annual dividend distribution plan
Based on the Company’s total share capital of 1,540,555,704 shares, a cash dividend of RMB 2.5 (tax inclusive)
per 10 shares was distributed and total cash dividend distributed amounted to RMB 385,138,926. The remaining
undistributed profits were carried forward to the following year.
2. 2016 annual dividend distribution plan of the Company
Based on the Company’s total share capital of 1,575,965,054 shares, a cash dividend of RMB 3.00 (tax inclusive)
per 10 shares was distributed and total cash dividend distributed amounted to RMB 472,798,516.20. The
remaining undistributed profits were carried forward to the following year.
3. 2017 annual dividend distribution plan of the Company
On 19 April 2018, the Proposal on 2017 Profit Distribution Plan (关于2017年度利润分配预案的议案) was
considered and approved at the twelfth meeting of the fourth session of the Board. The Company proposed to
distribute RMB 2.50 (tax inclusive) per 10 shares based on \"the total number of shares on the registration date
when the plan is implemented in the future\". The proposed total amount of dividend shall not exceed the profit of
the company (parent company) available for distribution to shareholders as at 31 December 2017. The remaining
undistributed profits will be carried forward to the following year.
Cash dividends for ordinary shares of the Company over the past three years (the reporting period inclusive)
Unit: RMB
                                                  Net income                    As a
                                                 attributable to             percentage
                                                                                                    Amount
                                                    ordinary                of net income                          Ratio of cash
                                                                                                    of cash
                           Amount of            shareholders of              attributable                            dividends
                                                                                                   dividends
 Year of distribution    cash dividends         the Company in               to ordinary                            distribution
                                                                                                  distribution
                         (tax inclusive)        the consolidated            shareholders                              through
                                                                                                    through
                                                    financial                   of the                              other means
                                                                                                  other means
                                                   statements                 Company
                                                during the year                 in the
                                                                Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                                                    of distribution           consolidated
                                                                                financial
                                                                               statements
2017 [Note]                  394,886,263.50          1,207,225,209.35                       32.71%            0.00             0.00%
2016                         472,798,516.20            855,810,234.81                       55.25%            0.00             0.00%
2015                         485,067,537.51            779,978,258.90                       62.19%            0.00             0.00%
Note: According to the 2017 profit distribution plan of the Company as considered and approved at the 12th meeting of the 4th
session of the Board of the Company: The Company proposed to distribute RMB 2.50 (tax inclusive) per 10 shares based on “the
total number of shares on the registration date when the plan is implemented in the future”. The proposed total amount of dividend
shall not exceed the profit of the company (parent company) available for distribution to shareholders as at 31 December 2017.
According to the Company's total share capital of 1,579,545,054 shares as at 19 April 2018, the Company's 2017 annual cash
dividend is expected to be RMB 394,886,263.50.
The Company made a profit and had positive retained profit available for ordinary shareholders of parent company during the
reporting period without cash dividend for ordinary shares being proposed
□ Applicable √ Not applicable
II. Proposals on Profit Distribution and Capitalization of Capital Reserves During This
Reporting Period
√ Applicable □ Not applicable
Numbers of bonus share per 10 shares (share(s))        0
Dividend distribution per 10 shares (RMB ) (tax
                                                       2.50
inclusive)
Conversion per 10 shares (share(s))
                                                       Total number of shares on the registration date when the plan is implemented in
Share base of the distribution proposal (shares)
                                                       the future
Total cash dividend (RMB ) (tax inclusive)             Expected to be RMB 394,886,263.50
Distributable profits (RMB )                           1,666,017,453.05
Percentage of cash dividend to total incomes
                                                       100%
distribution
Cash dividend policy
For profit distribution of companies which are fully developed with significant capital expenditure arrangement, the percentage for
cash dividend shall represent at least 20% of the profits distribution for the current year
Particulars of profit distribution and capitalization of capital reserves
According to the audit report issued by GP Certified Public Accountants(SGP), the Company (parent company) achieved a net
income of RMB 853,204,717.28 and made provision for statutory surplus reserves of RMB 85,320,471.73, without allocation to
discretionary revenue reserve in 2017. As at 31 December 2017, the profit available for distribution to shareholders amounted to
                                                              Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
RMB 1,666,017,453.05.
Based on the good operating conditions and profitability in 2017, as well as the Company's business scale and future growth, the
legitimate demands of investors and continuous return to shareholders, the Company proposed to carry out the 2017 profit
distribution on the premise of guaranteeing the Company's normal operations and long-term development: The Company proposed
to distribute RMB 2.50 (tax inclusive) per 10 shares based on \"the total number of shares on the registration date when the plan is
implemented in the future\". The proposed total amount of dividend shall not exceed the profit of the company (parent company)
available for distribution to shareholders as at 31 December 2017. The remaining undistributed profits will be carried forward to the
following year.
The preparation of the above-mentioned profit distribution plan is in line with the Company Law and the Articles of Association, and
the Dividend Distribution Plan of the Company for the Next Three Years (2016 2018) (《关于公司未来三年(2016-2018年)分红
回报规划》). The distribution plan is legal, compliant and reasonable and in line with the Company's distribution policy.
The independent directors of the Company expressed their independent opinions that the Company's 2017 profit distribution plan
gives full consideration to the returns to investors and is in line with the actual situation of the company without any prejudice to the
interests of shareholders, in particular minority shareholders. Therefore, they approved the 2017 profit distribution plan.
The 2017 profit distribution plan of the Company is subject to consideration at the 2017 annual general meeting.
III. Performance of Undertakings
1. Undertakings made by parties involved in undertakings including the Company’s beneficial controllers,
shareholders, related parties, bidders and the Company during the reporting period or prior periods but
subsisting to the end of the reporting period
√ Applicable □ Not applicable
                                                                                                                                 Particu
                      Party involved    Type of                                                                 Underta          lars on
    Undertaking              in        undertakin                    Details of undertaking                      king     Term     the
                       undertaking         g                                                                      date            perfor
                                                                                                                                  mance
Undertaking on
shareholding
structure
reformation
Undertaking made
in offering
documents
or shareholding
                                                             Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
alternation
documents
Undertaking made
during asset
reconstruction
                                                 1. Mr. Hua Xue guarantees no prejudice to the interests of
                                                 Haid Group and its other shareholders by virtue of his
                                                 capacity as the de facto controller. 2. Mr. Hua Xue
                                   Undertaki
                                                 guarantees that, as long as he serves as the de facto
                                   ng on
                                                 controller of Haid Group, he and his wholly-owned
                                   horizontal
                                                 subsidiaries, controlled subsidiaries and actually                              In
                                   competitio
                                                 controlled companies (except Haid Group) will not                       Long    strict
                    Hua Xue        n, related                                                                  Novemb
                                                 engage in business activities that, directly or indirectly,             term    perfor
                                   party                                                                       er 2009
                                                 compete with or constitute competitive threat to the                            mance
                                   transaction
                                                 principal businesses or major products of Haid Group in
                                   and capital
                                                 any form, including investment, acquisition or merger of
                                   occupation
                                                 companies, enterprises or other economic organizations
Undertaking made                                 the principal businesses or major products of which are
on initial public                                the same with or similar to those of Haid Group.
offering or                                      1. It guarantees no prejudice to the interests of Haid
refinancing                                      Group and other shareholders of Haid Group by virtue of
                                                 its capacity as the controlling controller. 2. Guangzhou
                                   Undertaki
                                                 Haihao guarantees that, as long as it is the controlling
                                   ng on
                                                 shareholder of Haid Group, it and its wholly-owned
                                   horizontal
                    Guangzhou                    subsidiaries, controlled subsidiaries (except Haid Group)                       In
                                   competitio
                    Haihao                       and actually controlled companies will not engage in                    Long    strict
                                   n, related                                                                  Novemb
                    Investment                   business activities that, directly or indirectly, compete               term    perfor
                                   party                                                                       er 2009
                    Co., Ltd.                    with or constitute competitive threat to the principal                          mance
                                   transaction
                                                 businesses or major products of Haid Group in any form,
                                   and capital
                                                 including investment, acquisition or merger of companies,
                                   occupation
                                                 enterprises or other economic organizations the principal
                                                 businesses or major products of which are the same with
                                                 or similar to those of Haid Group.
                                                 The Company guarantees no provision loans or financial
                                                 assistance in other forms to the incentive targets for                  From
                                                 acquisition of relevant interests under the Restricted
                                                                                                                                 In
                    Guangdong      Other         Shares and Share Options Plan of Guangdong Haid                         March
                                                                                                               4 March           strict
Equity incentive    Haid     Group undertakin
                                                 Group Co., Limited (广东海大集团股份有限公司限制 2015                           perfor
undertakings        Co., Limited   g                                                                                     to 3
                                                                                                                                 mance
                                                                                                                         March
                                                 性 股 票 及 股 票 期 权 计 划 ), including provision of
                                                 guarantees for their loans.
                    Guangdong      Other         The Company guarantees no provision of loans or 15                      From In
                                                             Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                      Haid    Group undertakin financial assistance in other forms to the incentive targets February 15        strict
                      Co., Limited   g           for acquisition of relevant interests under the 2016 2017           Februa perfor
                                                 Restricted Shares Incentive Plan of Guangdong Haid                  ry        mance
                                                 Group Co., Limited (广东海大集团股份有限公司2016
                                                                                                                     to 23
                                                                                                                     March
                                                 年 限 制 性 股 票 激 励 计 划 ), including provision of
                                                 guarantees for their loans.
                                                 Specific conditions, proportions and intervals of cash
                                                 dividends: The following conditions shall be satisfied
                                                 when the company makes distribution of cash dividends:
                                                 (1) The profits and the accumulative distributable profit
                                                 (i.e., tax after the Company makes up losses and make
                                                 allocation to reserves) realized by the company in the
                                                 year or half year is positive in value and the cash flow is
                                                 sufficient. The distribution of cash dividend will not
                                                 affect the Company's subsequent operations; (2) The
                                                 auditor has issued a standard unqualified audit report on
                                                 the Company's annual financial report (if the Company
                                                 distributes the interim dividend, the auditor shall have
                                                 issued a standard unqualified audit report on the
                                                                                                                     From
                                                 Company's financial report for the previous year; (3) The
                                                 Company has no plan on material external investment or                        In
                      Guangdong      Dividend                                                                        April
                                                 major cash outlays within the next twelve months (except 18 April             strict
Other undertakings Haid       Group undertakin
                                                 proceeds-financed     investment   projects).   A    major 2016               perfor
made to the           Co., Limited   g                                                                               to   17
                                                 investment plan means that the accumulated expenditure                        mance
Company’s minority                                                                                                  April
                                                 of the Company to be used for external investment and
shareholders                                     purchase of assets or equipment within the next twelve
                                                 months will reach or exceed 30% of the Company's latest
                                                 audited net assets. (4) Other circumstances in which the
                                                 Board considers it is not suitable for distribution of cash
                                                 dividends. In compliance with the above conditions, the
                                                 Company will, in principle, make a distribution of cash
                                                 dividend once a year. The Board of the Company may
                                                 propose interim cash dividends based on the profitability
                                                 of the Company when the relevant regulations allow. In
                                                 principle, the Company's profits accumulated in cash
                                                 every three years should not be less than 30% of the
                                                 annual average distributable profit realized in the three
                                                 years.
                                     Undertaki As a director, supervisor or senior management of the           21    From Perfor
                      Kangsen Mai ng on          Company, I shall report to the Company my shareholding August       21        mance
                                     reduction in the Company and the changes thereof. During my term 2013           Augus compl
                                                              Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                                     of           of office, the number of shares transferred each year shall            t 2013 eted
                                     shareholdi not exceed 25% of the total number of shares of the                      to     18
                                     ng           Company held by me. The shares of the Company held by                  Februa
                                                  me are not transferable within one year from the date of               ry
                                                  listing of the Company's shares. Within half a year after I
                                                  leave office, I will not transfer the shares held by me in
                                                  the Company. Within six months after I report my
                                                  demission, the number of shares sold through trading on
                                                  the stock exchange shall not exceed 50% of the total
                                                  number of shares of the Company held by me.
                                                  As a director, supervisor or senior management of the
                                                  Company, I shall report to the Company my shareholding
                                                  in the Company and the changes thereof. During my term                 From
                                                  of office, the number of shares transferred each year shall
                                     Undertaki
                                                  not exceed 25% of the total number of shares of the                    Nove
                                     ng on                                                                                           Perfor
                                                  Company held by me. The shares of the Company held by 27               mber
                                     reduction                                                                                       mance
                    Xiewu Jiang                   me are not transferable within one year from the date of      Novemb 2009
                                     of                                                                                              compl
                                                  listing of the Company's shares. Within half a year after I er 2009 to         7
                                     shareholdi                                                                                      eted
                                                  leave office, I will not transfer the shares held by me in             Decem
                                     ng
                                                  the Company. Within six months after I report my                       ber
                                                  demission, the number of shares sold through trading on
                                                  the stock exchange shall not exceed 50% of the total
                                                  number of shares of the Company held by me.
                    Hua Xue,
                    Yingzhuo Xu,
                    Li Tian,                      As a director, supervisor or senior management of the
                    Xiaojun                       Company, I shall report to the Company my shareholding
                    Shang,                        in the Company and the changes thereof. During my term
                    Chengping                     of office, the number of shares transferred each year shall
                                     Undertaki
                    Lu, Xinchun                   not exceed 25% of the total number of shares of the
                                     ng on                                                                                           In
                    Li, Erxuan                    Company held by me. The shares of the Company held by 27
                                     reduction                                                                           Long        strict
                    Deng,                         me are not transferable within one year from the date of      Novemb
                                     of                                                                                  term        perfor
                    Zhenxiong Qi,                 listing of the Company's shares. Within half a year after I er 2009
                                     shareholdi                                                                                      mance
                    Jing Wang, Jia                leave office, I will not transfer the shares held by me in
                                     ng
                    Chen,                         the Company. Within six months after I report my
                    Mingzhong                     demission, the number of shares sold through trading on
                    Chen,                         the stock exchange shall not exceed 50% of the total
                    Xueqiao Qian,                 number of shares of the Company held by me.
                    Shaolin Yang,
                    Zhijian Huang
Whether
undertakings        Yes
performed on time
                                                               Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Specific reasons
why undertakings
were not performed Not applicable
on time and next
steps
2. Description on the Company’s assets and items in meeting original profit forecast and its explanation as
there is profit forecast for assets and items of the Company and the reporting period is still within the
profit forecast period
√ Applicable □ Not applicable
                                                                               Reasons for
   Earnings                               Expected results   Actual results                    Date of
                   Forecast    Forecast                                         failure to
 forecast asset                            for the current   for the current                  previous       Index of previous forecast
                     start       end                                            reach the
  or project                               period (RMB       period (RMB                       forecast               disclosure
                     time        time                                          forecast (if
     name                                      0’000)           0’000)                      disclosure
                                                                               applicable)
                                                                                                           For details, please refer to the
                                                                                                           Announcement on the
                                                                                                           Acquisition of Partial Equity
                                                                                                           Interests of Daxin Group and
                                                                                                           External Investment 《关于收
                                                                                                                               (
  Shandong                        31                                                             15        购大信集团部分股权暨对外
                   1 January                                                      Not
 Daxin Group                   December           5,000.00          6,435.63                  September
                     2017                                                      applicable
   Co., Ltd.                     2017                                                           2017       投资的公告》)
                                                                                                           (Announcement No.
                                                                                                           2017-076) published in China
                                                                                                           Securities Journal, Securities
                                                                                                           Times, Securities Daily and
                                                                                                           on the website of
                                                                                                           http://www.cninfo.com.cn.
Undertaking of the Company's shareholders and counterparties on operating results in reporting year
√ Applicable □ Not applicable
Jianbing Liu, Haibo Yu, Yuqin Wang, Xianlai Duan and Mingjun Yang, former shareholders of Shandong Daxin
Group Co., Ltd. (formerly known as Shandong Daxin Group Co., Limited, hereinafter referred to as \"Daxin
Group\"), the acquisition target of the Company, made undertakings on the net income (i.e., net income attributable
to shareholders of the company, before or after the non-operating income and loss, whichever is lower; the case is
the same below) to be realized in four full accounting years from 2017 to 2020:
(1) Daxin Group will achieve a net income of not less than RMB 50 million in 2017, the accumulated net income
of not less than RMB 105 million in 2017 and 2018, the accumulated net income of not less than RMB 165
                                                            Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
million in 2017 to 2019, and the accumulated net income of not less than RMB 230 million in 2017 to 2020.
(2) If the accumulated net income for the current year fails to reach the committed amount, the undertaking party
shall pay the Company compensation = (accumulated net income for the current year - actual accumulated net
income of the current year) / total committed amount of RMB 230 million * total transaction amount of RMB
298,776,000 – net compensation paid by the undertaking party to the Company. The accumulated compensation
amount is limited to the total transaction price of the underlying assets. If the actual accumulated net income for
any year during the results undertaking period is not less than the accumulated net income undertaken, the
Company shall return all the compensation that has been paid by the undertaking party to the undertaking party.
(3) Increase shareholding in Haid Group through purchase of shares from the secondary market within 6 months
after receipt of the second installment of payment for equity transfer with an amount of RMB 60 million. After
Daxin Group’s fulfillment of the annual results goals for 2017 and 2018 or payment of sufficient compensation in
case of non-fulfillment of the goals, the undertaking party may release the lock-up for 50% of the
above-mentioned shares additionally purchased; After Daxin Group’s fulfillment of the annual results goals for
2017 to 2020 or payment of sufficient compensation in case of non-fulfillment of the goals, the undertaking party
may release the lock-up for the remaining 50% of the above-mentioned shares.
According to the 2017 Audit Report of Shandong Daxin Group Co., Ltd. (山东大信集团有限公司2017年度审计
报告) issued by GP Certified Public Accountants (Special General Partnership) (Guang Kuai Shen Zi [2018] No.
G17036521306), Daxin Group's 2017 audited net income attributable to shareholders of the company was RMB
67,41 million and the net income attributable to the shareholders of the company after non-operating income or
loss was RMB 64,36 million. The undertaking on results of 2017 was fulfilled.
Daxin Group completed the industrial and commercial registration procedures for share transfer on 22 December
2017 and was included in the consolidation scope of the Company on December 31, 2017. In 2017, the operating
results of Daxin Group did not affect the operating results of the Company's consolidated statements.
IV. Appropriation of Funds of the Company by the Controlling Shareholder and Its Related
Parties for Non-Operating Purposes
□ Applicable √ Not applicable
There was no appropriation of funds of the Company by the controlling shareholder and its related parties for non-operating purposes
during the reporting period.
V. Opinions of the Board, the Supervisory Committee and Independent Directors (If Any)
Regarding the \"Modified Audit Report\" for the Reporting Period Issued by the Accountants
□ Applicable √ Not applicable
                                                              Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
VI. Reason for Changes in Accounting Policies, Accounting Estimates and Accounting
Methods as Compared to the Financial Report for the Prior Year
√ Applicable □ Not applicable
     (1) Change in accounting policies
         Change in accounting policies and reasons therefor                                      Remarks
 According to the Accounting Standards for Enterprises No. 16 -         In accordance with the Accounting Standards for
 Government Grants (企业会计准则第16号–政府补助) (Cai Kuai
                                                                        Enterprises No. 16 - Government Grants (企业会计准则
 [2017] No. 15) issued by the Ministry of Finance on 12 June 2017,
 based on the substance of economic business, the government
                                                                        第16号–政府补助) (Cai Kuai [2017] No. 15) prepared by
 grants associated with corporate daily activities shall be included
 in other income. The government grants not associated with             the Ministry of Finance, the Company adopted prospective
 corporate daily activities shall be included in non-operating gain     application approach for treatment of government grants
 and loss.                                                              as at 1 January 2017, and made adjustments to the
                                                                        government grants increased in the period from 1 January
                                                                        2017 to the date of implementation of the standards in
                                                                        accordance with such standards.
                                                                        Accumulated effects on the 2017 financial statements are
                                                                        as follows:
                                                                        \"Other income\" increased by RMB 41,395,359.88
                                                                        \"Non-operating gain\" decreased by RMB 42,362,026.88
                                                                        \"Financial expenses\" decreased by RMB 966,667.00
 According to the \"Notice on Revision and Issuance of the Format        Accumulated effects on the 2016 financial statements are
 of General Corporate Financial Statements\" Cai Kuai [2017] No.         as follows:
 30 issued by the Ministry of Finance, profit or loss from disposal
                                                                        \"Gains on disposal of assets\" increased by RMB
 of non-current assets as presented in \"non-operating gain\" and
                                                                        3,383,608.77
 \"non-operating loss\" shall be reclassified to \"gains on disposal of
 assets\", and adjustments shall be made to the comparative data in      \"Non-operating gain\" decreased by RMB 3,622,351.07
 the comparable period.
                                                                        \"Non-operating expenditure\" decreased by RMB
                                                                        238,742.30
                                                                        Accumulated effects on the 2017 financial statements are
                                                                        as follows:
                                                                        \"Gains on disposal of assets\" increased by RMB
                                                                        6,037,071.03
                                                                        \"Non-operating gain\" decreased by RMB 7,016,250.08
                                                                        \"Non-operating expenditure\" decreased by RMB
                                                              Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                                                                          979,179.05
  According to the Accounting Standards for Enterprises No. 42 –         Not applicable。
  Held-for-sale   Non-current     assets,   Disposal   Groups     and
  Discontinued Operations (企业会计准则第42号–持有待售的非
  流动资产、处置组和终止经营) (Cai Kuai [2017] No. 13) which
  was issued by the Ministry of Finance on 28 April 2017 and
  implemented from 28 May 2017, for the held-for-sale non-current
  assets, disposal groups and discontinued operations as at the date
  of implementation, it is required to adopt the prospective
  application approach for treatment.
Apart from the above-mentioned changes in accounting policies, there was no other change in accounting policies of the Company in
the year.
(2) Change in significant accounting estimates
In the year, there was no change in the major accounting estimates of the Company.
VII. Reason for Retrospective Restatement to Correct Major Accounting Errors During the
Reporting Period
□ Applicable √ Not applicable
During the reporting period, there was no major accounting error which shall be subject to retrospective restatement.
VIII. Reason for Changes in Scope of the Consolidated Financial Statements as Compared to
the Financial Report for the Prior Year
√ Applicable □ Not applicable
In the year, a total of 228 subsidiaries were included in the scope of the consolidated financial statements of the Company. For details,
please refer to Note VII \"Equity in other entities\" in XI \"Financial Report\". The scope of consolidation of the Company during the
year had 76 more companies included and 6 companies excluded compared to the prior year. For details, please refer to Note VI
\"Changes in the scope of consolidation\" in XI \"Financial Report\".
                                                                Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
IX. Engagement or Dismissal of Accounting Firms
Current accounting firm engaged
Name of the domestic accounting firm                                 GP Certified Public Accountants (SGP)
Remuneration of the domestic accounting firm (RMB ’0,000)
Continued term of service of the domestic accounting firm
Name of certified public accountants of the domestic accounting
                                                                     Hongfei Xian, Xujia Li
firm
Continued term of service of certified public accountants of the
                                                                     Hongfei Xian 2 years, Xujia Li 1 year
domestic accounting firm
Name of the overseas accounting firm (if any)                        Not applicable
Remuneration of the overseas accounting firm (RMB ’0,000) (if
any)
Continued term of service of the overseas accounting firm (if
                                                                     Not applicable
any)
Name of certified public accountants of the overseas accounting
                                                                     Not applicable
firm (if any)
Continued term of service of certified public accountants of the
                                                                     Not applicable
overseas accounting firm (if any)
Whether to appoint another accounting firm during the current period
□ Yes √ No
Particulars on recruitment of accounting firms, financial consultants or sponsors for internal control and auditing purposes
□ Applicable √ Not applicable
X. Suspension in Trading or Delisting Upon Publication of Annual Report
□ Applicable √ Not applicable
XI. Matters Related to Bankruptcy and Reorganisation
□ Applicable √ Not applicable
There was no matter related to bankruptcy and reorganisation during the reporting period.
XII. Material Litigation and Arbitration
□ Applicable √ Not applicable
During the reporting period, the Company was not involved in any material litigation and arbitration.
XIII. Punishment and Rectification
□ Applicable √ Not applicable
                                                           Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
There was no punishment and rectification of the Company during the reporting period.
XIV. Credibility of the Company, Its Controlling Shareholders and Beneficial Controllers
□ Applicable √ Not applicable
XV. Implementation of the Equity Incentive Plan, Employee Shareholding Plan or Other
Employee Incentive Measures of the Company
√ Applicable □ Not applicable
(I) Restricted Shares and Share Option Incentive Plan
1. Decision-making procedures and approval
(1) On 3 March 2015, the Company convened the 2015 first non-operating general meeting to consider and
approve, by way of special resolutions, the Restricted Shares and Share Option Incentive Plan of Guangdong Haid
Group Co., Limited (广东海大集团股份有限公司限制性股票与股票期权激励计划 ) and its summary
(hereinafter referred to as \"Restricted Shares and Share Option Incentive Plan\"), the Proposal Regarding the
Measures for Implementation and Assessment of the Restricted Shares and Share Option Incentive Plan of
Guangdong Haid Group Co., Limited (《关于<广东海大集团股份有限公司限制性股票与股票期权激励计划实
施考核管理办法>的议案》), the Proposal Regarding Authorisation of the Board of Directors at the General
Meeting to Handle Matters Related to the Restricted Shares and Share Option Incentive Plan (《关于股东大会授
权董事会办理公司限制性股票与股票期权激励计划相关事宜的议案》) and other proposals.
(2) On 4 March 4 2015, the Company convened the thirteenth meeting of third session of the Board to consider
and approve the Proposal Regarding Grant of Restricted Shares and Share Options to the Targets of the Restricted
Shares and Share Option Incentive Plan of Guangdong Haid Group Co., Limited 《关于向<广东海大集团股份有
                                                                            (
限公司限制性股票与股票期权激励计划>激励对象授予限制性股票与股票期权的议案》), pursuant to which
the Company granted 14,395,000 restricted shares to 168 targets of restricted shares incentives at the price of
RMB 5.64 per share; 10,425,000 share options to 291 targets of share option incentives at the exercise price of
RMB 11.41 per share with the grant date of 4 March 2015. The source of the underlying shares of the restricted
shares and share options under the plan were the RMB denominated ordinary shares issued by the Company to the
incentive targets by way of private placement. On 20 March 2015, the Company completed registration for grant
of the above-mentioned restricted shares and share options.
2. Implementation during the reporting period
                                                    Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
(1) The first unlocking/exercise period of Restricted Shares and Share Option Incentive Plan
1) On 26 March 2016, the Company convened the twenty-third meeting of the third session of the Board to
consider and approve the Proposal on the Satisfaction of the Unlocking/Exercise Conditions of the First
Unlocking/Exercise Period of Restricted Shares and Share Option Incentive Plan (《关于限制性股票与股票期权
激励计划第一个解锁/行权期符合解锁/行权条件的议案》). The Board was of the view that the restricted shares
and share options held by incentive targets had satisfied the unlocking/exercise conditions of the first
unlocking/exercise period and thus approved the unlocking of restricted shares /exercise of share options in the
first unlocking/exercise period. In the first unlocking/exercise period of restricted shares and share options, the
number of restricted shares available for listing and trading was 7,823,200 shares and the number of exercisable
options was 5,233,200. The exercise term was from 28 April 2016 to 3 March 2017.
2) From 1 January to 3 March 2017, the option incentive targets exercised 99,800 options. As at 3 March 2017, 3
option incentive targets failed to exercise options as the first exercise period ended. 78,400 share options not
exercised in the first exercise period lost efficacy. On 13 March 2017, the Company convened the sixth meeting of
the fourth session of the Board to consider and approve the Proposal Regarding Proposed Cancellation of Invalid
Share Options upon Expiry of the First Exercise Period (《关于限制性股票与股票期权激励计划第一个行权期
结束拟注销失效股票期权的议案》), pursuant to which the aforementioned 78,400 invalid share options were
cancelled. On 31 March 2017, the Company completed the cancellation of the aforementioned 78,400 invalid
share options.
(2) The second unlocking/exercise period of Restricted Shares and Share Option Incentive Plan
On 25 April 2017, the Company convened the seventh meeting of the fourth session of the Board to consider and
approve the Proposal Regarding Quantity Adjustments to Interests under Restricted Shares and Share Option
Incentive Plan and Repurchase for Cancellation/Cancellation of Restricted Shares and Share Options due to
Failure of Satisfaction of the Unlocking/Exercise Conditions of the Second Unlocking/Exercise Period of
Restricted Shares and Share Option Incentive Plan (《关于限制性股票与股票期权激励计划权益数量调整及第
二个解锁/行权期不符合解锁/行权条件并予以回购注销/注销的议案》), pursuant to which, due to the
demission and voluntary waiver of certain inventive targets and the dissatisfaction of unlocking/exercise
conditions of the second unlocking/exercise period, the number of inventive targets of the Company was adjusted
to 394; the number of unlocked restricted shares was adjusted to 5,493,600 shares, the number of restricted shares
subject to repurchase for cancellation was 5,846,400 shares, and the repurchase price was RMB 3.61 per share;
the number of unexercised share options was adjusted to 3,725,400 options and the number of share options
subject to cancellation was 3,893,400 options. On 19 and 20 June 2017, the Company completed cancellation for
all the above-mentioned share options and repurchase for cancellation for all the above-mentioned restricted
shares, respectively.
                                                     Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
(3) Repurchase for cancellation for Restricted Shares and Share Option Incentive Plan
On 27 October 2017, the Company convened the tenth meeting of the fourth session of the Board to consider and
approve the Proposal on Adjustments to Relevant Matters of the Stock Incentive Plan of the Company and
Cancellation of Certain Share Options (《关于调整公司股权激励计划相关事项及注销部分股票期权的议案》)
and the Proposal Regarding Repurchase of Certain Restricted Shares for Cancellation (《关于回购注销部分限制
性股票的议案》). In respect of the Restricted Shares and Share Option Incentive Plan (限制性股票与股票期权激
励计划) of the Company, due to demission or termination of labour contract of certain incentive targets, the
number of incentive targets of the Company was adjusted to 383, the number of restricted shares which had been
granted but not unlocked was adjusted to 5,384,400 shares and the number of restricted shares which had been
granted and were subject to repurchase for cancellation was 109,200 shares. The repurchase price was RMB 3.31
per share; the number of share options which had been granted but not exercised was 3,620,400, the number of
share options which had been granted and was subject to cancellation was 105,000. On 26 December 2017, the
Company completed cancellation for the above-mentioned share options and the purchase for cancellation for the
above-mentioned restricted shares.
3. Incentive targets' exercise of interests during the reporting period and interests accumulatively granted but not
yet exercised as at the end of the reporting period
During the reporting period, the number of options exercised in the first exercise period of restricted shares and
share option incentive plan was 99,800; the number of cancelled invalid share options in the first exercise period
was 78,400, the number of share options failing to meet the exercise conditions in the second exercise period was
3,893,400, the number of restricted shares failing to meet the exercise conditions in the second exercise period
which had been repurchased for cancellation was 5,846,400, and the number of restricted shares repurchased from
the staff who have resigned or terminated the labour contract for cancellation was 109,200 and 105,000,
respectively.
As at the end of the reporting period, the granted and unlocked restricted shares and unexercised share options
under the Restricted Shares and Share Option Incentive Plan were 5,384,400 shares and 3,620,400 options,
respectively.
(II) 2016 Restricted Share Option Incentive Plan
1. Decision-making procedures and approval
1) On 15 February 2017, the Company convened the 2017 first non-operating general meeting to consider and
approve the 2016 Restricted Share Option Incentive Plan of Guangdong Haid Group Co., Limited (Revision) (广
                                                    Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
东海大集团股份有限公司2016年限制性股票激励计划(修订稿)) and its summary (hereinafter referred to as
\"2016 Restricted Share Option Incentive Plan\") and the Proposal Regarding Authorisation of the Board of
Directors at the General Meeting to Handle Matters Related to the 2016 Restricted Share Option Incentive Plan
(《关于提请股东大会授权董事会办理公司2016年限制性股票激励计划相关事宜的议案》) and related
resolutions, pursuant to which the Company was approved to issue no more than 46 million restricted shares to
incentive targets by way of private placement of which 41,601,300 shares would be first granted to 1,484
incentive targets at the grant price of RMB 7.48 per share, and 4,398,700 restricted shares would be reserved.
2) On 13 March 2017, the Company convened the sixth meeting of the fourth session of the Board to consider and
approve the Proposal on Adjustment to the Number of Interests under the 2016 Restricted Share Option Incentive
Plan of the Company (《关于调整公司2016年限制性股票激励计划权益数量的议案》), pursuant to which the
number of incentive targets of first grant was changed from 1,484 into 1,373 and the restricted shares not granted
yet were adjusted from 41,601,300 shares to 40,283,200 shares.
3) On 13 March 2017, the Company convened the sixth meeting of the fourth session of the Board to consider and
approve the Proposal on Grant of Restricted Shares to Incentive Targets under the 2016 Restricted Share Option
Incentive Plan of the Company 《关于向公司2016年限制性股票激励计划激励对象授予限制性股票的议案》),
                              (
pursuant to which the Company was approved to grant 40,283,200 shares to 1,373 incentive targets for the first
time with 13 March 2017 as the first grant date and the grant price of RMB 7.48 per share. On 20 March 2017, the
Company completed the registration of grant of all the above-mentioned restricted shares.
4) On 27 October 2017, the Company convened the tenth meeting of the four session of the Board to consider and
approve the Proposal Regarding Adjustments to the Matters Related to the Equity Incentive Plan and Cancellation
of Certain Restricted Shares (《关于调整公司股权激励计划相关事项及注销部分股票期权的议案》) and the
Proposal Regarding Repurchase of Certain Restricted Shares for Cancellation (《关于回购注销部分限制性股票
的议案》), pursuant to which the Company was approved to repurchase the the 618,800 unlocked restricted shares
which had been granted to the certain incentive targets who have resigned or terminated the labor contract for
cancellation, the number of incentive targets of the first grant was adjusted to 1,336 and the repurchase price of
restricted shares was adjusted to RMB 7.18 per share. On 28 December 2017, the Company completes the
repurchase for cancellation for all the above-mentioned restricted shares and the cancellation for all the
above-mentioned share options.
5) On 8 December 2017, the Company convened the eleventh meeting of the fourth session of the Board to
consider and approve the Proposal Regarding the Grant of Reserved Restricted Shares to Incentive Targets under
the 2016 Restricted Share Option Incentive Plan of the Company (《关于向公司2016年限制性股票激励计划激
励对象授予预留限制性股票的议案》), pursuant to which the Company was approved to grant 4,398,700
                                                     Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
reserved restricted shares to 399 incentive targets with the grant price of RMB 10.44 per share and 8 December
2017 as the grant date. Upon audit and confirmation by the Shenzhen Stock Exchange and Shenzhen Branch of
China Securities Depository and Clearing Corporation Limited, the Company completed the registration for grant
of reserved restricted shares to 360 incentive targets. 4,308,000 reserved restricted shares were granted and the
listing date of the restricted shares would be 24 January 2018.
2. Incentive targets' exercise of interests during the reporting period and interests accumulatively granted but not
yet exercised as at the end of the reporting period
As at the end of the reporting period, the above-mentioned shares were still in the lock-up period; the number of
restricted shares which had been granted but not unlocked under the 2016 Restricted Share Option Incentive Plan
was 39,664,400 shares.
In summary, during the reporting period, due to implementation of the Restricted Shares and Share Option
Incentive Plan (限制性股票与股票期权激励计划) and the 2016 Restricted Share Option Incentive Plan (2016年
限制性股票激励计划), the Company accumulatively granted 40,283,200 restricted shares and 99,800 options to
incentive targets; the Company repurchased a total of 6,574,400 restricted shares for cancellation and cancelled an
aggregate of 3,998,400 share options. As at the end of the reporting period, the Company had granted a total of
45,048,800 restricted shares which had not been unlocked and 3,620,400 share options which had not been
exercised.
(III) Explanations for other circumstances due to the implementation of the Restricted Shares and Share Option
Incentive Plan (限制性股票与股票期权激励计划) and 2016 Restricted Share Option Incentive Plan (2016年限
制性股票激励计划) during the reporting period
1. For information on grant of interests to and exercise of interests by directors and senior management, please
refer to I. 2 \"Changes in restricted shares\" under section VI in this report.
2. Explanation on changes in share capital caused by implementation of the Restricted Shares and Share Option
Incentive Plan   (限制性股票与股票期权激励计划) and 2016 Restricted Share Option Incentive Plan (2016年限
制性股票激励计划).
During the reporting period, the total shares of the Company increased by 99,800 shares due to incentive targets’
independent exercise of options; increased by 40,283,200 due to the grant of restricted shares to incentive targets;
and decreased by 6,574,400 shares due to repurchase of restricted shares for cancellation. After the
above-mentioned changes, the total number of shares of the Company as at the end of the period changed from
                                                     Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
1,541,428,454 shares to 1,575,237,054 shares. For details of the changes, please refer to the I.1 under section VI
of this report.
3. Accounting treatment method for option incentive and effects of equity incentive cost on the results of the
Company
According to relevant provisions under the Accounting Standards for Business Enterprises No. 11 - Share-based
Payment (企业会计准则第11号–股份支付), the Company will, on each balance sheet date in the waiting period,
amend the number of restricted shares / share options that are expected to be unlockable / exercisable according to
the latest available changes in the number of incentive targets allowed to unlock restricted shares/exercise options,
completion of performance indicators and other follow-up information and include the services obtained in the
current period in the relevant costs or expenses and capital reserves at fair value of the restricted shares/exercise
options on the grant date.
The implementation of the above equity incentive plan will not have a significant impact on the Company's
financial position and operating results during the reporting period and in the future.
(IV) Employee Stock Ownership Plan for Core Team
1. On 6 December 2016, the Company convened the fourth meeting of the fourth session of the Board and the
fourth meeting of the fourth session of the Supervisory Committee to consider and approve the Proposal
Regarding the Employee Stock Ownership Plan for Core Team of Guangdong Haid Group Co., Limited (Draft)
and Its Summary (关于《广东海大集团股份有限公司核心团队员工持股计划(草案)》及其摘要的议案),
pursuant to which the Company was approved to prepare the Employee Stock Ownership Plan for Core Team of
Guangdong Haid Group Co., Limited (Draft) (廣東海大集團股份有限公司核心團隊員工持股計劃(草案)) in
accordance with relevant laws and regulations.
2. On 19 January 2017, the Company convened the fifth meeting of the fourth session of the Board and the fifth
meeting of the fourth session of the Supervisory Committee to consider and approve the Proposal Regarding the
Employee Stock Ownership Plan for Core Team of Guangdong Haid Group Co., Limited (Revised Draft) and Its
Summary (关于《广东海大集团股份有限公司核心团队员工持股计划(草案修订稿)》及其摘要的议案). On
15 February 2017, the Company convened the 2017 first non-operating general meeting to consider and approve
the Proposal Regarding the Employee Stock Ownership Plan for Core Team of Guangdong Haid Group Co.,
Limited (Revision) and Its Summary (关于《广东海大集团股份有限公司核心团队员工持股计划(修订稿)》
及其摘要的议案) (hereinafter referred to as the \"Employee Stock Ownership Plan for Core Team\"), pursuant to
which the Employee Stock Ownership Plan for Core Team would permanent exist and be launched each year
unless determination as determined by the Stock Ownership Plan Management Committee and consideration and
                                                                          Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
approval by the Board and general meeting; the capital for the initial stock ownership plan would be RMB 12
million and the total number of employees under the initial Employee Stock Ownership Plan for Core Team shall
not exceed 20 including 4 director(s), supervisor(s) and senior management and not more than 16 other staff.
3. As at 21 March 2017, the Company's initial Employee Stock Ownership Plan for Core Team \"GF Yuanchi 
Haid Core No. 1 Targeted Asset Management Program (广发原驰海大核心1号定向资产管理计划)\" purchased
720,187 shares, representing 0.047% of the Company's total share capital as at the date of the announcement on
completion of the purchase, in the secondary market. According to the Employee Stock Ownership Plan for Core
Team, the lock-up period for the Company's shares purchased under the initial Employee Stock Ownership Plan
for Core Team shall be 12 months from 22 March 2017.
4. On 29 December 2017, the Management Committee of Employee Stock Ownership Plan for Core Team
considered and approved the Proposal Regarding Vesting in the First Vesting Period under the initial stock
ownership plan, and determined that the shares for the first vesting period available to holders of the initial stock
ownership plan shall be 40% of the above-mentioned shares of the Company purchased, i.e. 288,075 shares, and
that the shares shall be registered under the name of all holders by way of internal registration, including 86,600
shares for Ms. Li Tian, Mr. Xueqiao Qian, Mr. Shaolin Yang and Mr. Zhijian Huang, and 201,475 shares for other
9 core employees. The lock-up period for the shares to be vested shall be from 29 December 2017 to the date on
which the shares of the third vesting period under the initial stock ownership plan are registered under the name of
holders. During the reporting period, there was no change in the position or resignation of holders under the initial
stock ownership plan, or other circumstances that disqualified them to participate in the stock ownership plan.
XVI. Significant Related Party Transactions
1. Related party transactions associated with day-to-day operation
√ Applicable □ Not applicable
                                                                        Amount Percent Amount                               Market
                                      Subject Pricing
                           Types                                           of        age        of      Whethe Settlem       price
                                       matter     basis     Price of
              Related      of the                                        related    as the transacti        r     ent of         of     Disc
                                       of the     of the    related
    Related       party   related                                        party      amount     ons      exceedi related availabl losu Disclosure
                                       related   related     party
     party    relations    party                                        transacti     of      approve     ng      party          e          re      index
                                       party      party     transacti
                  hip     transacti                                       ons       similar     d       approve transacti similar date
                                      transacti transacti        ons
                            ons                                         (RMB ’0 transac (RMB ’         d cap        ons   transacti
                                        ons         ons
                                                                         ,000)       tions    0,000)                             on
Foshan                                           On         The                                                  On                              Announcem
Haihang                                          normal price of                                                 normal                          ent on
                          Sales of
and                                   Sales of commer each                                                       commer                          Day-to-day
                          products                                                                                          Not         Apri
Agricultu Associat                    feed and cial         transacti                                            cial                            Related
                          and                                           2,997.92 0.09%          2,800 Yes                   applicab l
re and        e                       other      terms or on shall                                               terms or                        Party
                          commo                                                                                             le
Animal                                products in           be                                                   in                              Transaction
                          dities
Husbandr                                         accorda determi                                                 accorda                         (Announce
y                                                nce with ned by                                                 nce with                        ment No.
                                                                Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Develop                                  relevant both                                          relevant                 2017-040)
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Guizhou              Purchas Purchas
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                                         in       ion         8,849.91 0.31%     7,000 Yes      in         applicab l    China
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                                                               Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                                                  transacti
                                                  on.
                                                              11,847.8
Total                                    --       --                       --    9,800 --        --       --      --    --
Particulars on refund of bulk sale       Not applicable
                                         On 27 April 2017, the Company disclosed the Announcement on Day-to-day Related Party
                                         Transaction (《关于公司日常关联交易的公告》), pursuant to which it was expected that the
Actual performance of day-to-day         annual sales of feed to Foshan Haihang and Agriculture and Animal Husbandry
transactions to be conducted in the      Development Co., Ltd. would not exceed RMB 28 million; during the reporting period, the
period for which the total transaction   Company actually sold feed amounting to RMB 29,98 million to Foshan Haihang and
amount is estimated by categories        Agriculture and Animal Husbandry Development Co., Ltd.; it was expected that the purchase
during the reporting period (if any)     of materials from Guizhou Fuhai Chemical Co., Ltd. would not exceed RMB 70 million in
                                         2017; during the reporting period, the Company actually purchased materials amounting to
                                         RMB 88,50 million. During the reporting period, the day-to-day transactions of the
                                         Company were normal.
Reasons for large differences between
transaction prices and market            Not applicable
reference prices (if applicable)
2. Related party transaction in connection with purchase or sale of assets or equity interest
□ Applicable √ Not applicable
There was no related party transaction of the Company in connection with purchase or sale of assets or equity interest during the
reporting period.
3. Related party transaction connected to joint external investment
□ Applicable √ Not applicable
There was no related party transaction of the Company connected to joint external investment during the reporting period.
4. Related creditors’ rights and debts transactions
□ Applicable √ Not applicable
The Company did not have any related creditors’ rights and debts transactions during the reporting period.
5. Other significant related party transactions
□ Applicable √ Not applicable
There was no other significant related party transaction of the Company during the reporting period.
                                                            Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
XVII. Material Contracts and Implementation
1. Custody, contracting and leasing
(1) Custody
□ Applicable √ Not applicable
There was no custody of the Company during the reporting period.
(2) Contracting
□ Applicable √ Not applicable
There was no contracting of the Company during the reporting period.
(3) Leasing
□ Applicable √ Not applicable
There was no leasing of the Company during the reporting period.
2. Significant guarantees
√ Applicable □ Not applicable
(1) Guarantees
Unit: RMB 0’000
External guarantees of the Company and its subsidiaries (excluding guarantees to subsidiaries)
                       Date of the
                       related
                       announcem                                                                                               Guarantee
                       ent           Amount of Guarantee date          Guarantee      Type             of            Fulfilled to related
Name of obligee                                                                                              Term
                       disclosing    guarantee   (agreement date)      provided       guarantee                      or not    parties
                       the                                                                                                     or not
                       guarantee
                       amount
Hunan Animal Farm
                                                                                      Joint       liability Two
Food Co., Ltd. [Note                             18 December 2014 700                                                Yes       No
                                                                                      guarantee              years
1]
                                                                       Total        actual        external
Total external guarantees approved
                                                                       guarantees        during       the 700
during the reporting period (A1)
                                                                       reporting period (A2)
Guarantees between the Company and its subsidiaries
                                                            Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                      Date of the
                      related
                      announcem                                                                                              Guarantee
                                                                          Guarantee
                      ent            Amount of Guarantee           date               Type          of              Fulfilled to related
Name of obligee                                                           provided                        Term
                      disclosing     guarantee   agreement date)                      guarantee                     or not   parties or
                                                                          [Note 2]
                      the                                                                                                    not
                      guarantee
                      amount
                      28     April                                                    Joint   liability
                                     39,375      15 April 2015            3,316.17                        2 years   Yes      No
                      2015                                                            guarantee
                                                                                      Joint   liability
                                                 09 May 2016              794.56                          2 years   No       No
                                                                                      guarantee
                                                                                      Joint   liability
                                                 11 April 2016            3,683.62                        2 years   No       No
Sheng Long Bio-Tech                                                                   guarantee
International Co., Ltd 29    March                                                    Joint   liability 16
                                     68,600      29 March 2016            9,158.99                                  Yes      No
                      2016                                                            guarantee           months
                                                                                      Joint   liability
                                                 27 June 2016             2,755.97                        2 years   No       No
                                                                                      guarantee
                                                                                      Joint   liability
                                                 26 September 2016 4,825.29                               2 years   No       No
                                                                                      guarantee
                                                                                      Joint   liability
                                                 12 May 2017              6,534.2                         1 year    No       No
                                                                                      guarantee
                                                                                      Joint   liability
                                                 31 May 2017              11,284.79                       1 year    No       No
                      27     April                                                    guarantee
                                     92,250
Haid International    2017                                                            Joint   liability
                                                 28 June 2017             6,534.2                         1 year    No       No
Group Limited                                                                         guarantee
                                                                                      Joint   liability
                                                 04 July 2017             14,377.65                       1 year    No       No
                                                                                      guarantee
                      27 October
                                     32,671
Sheng Long Bio Tech 29       March                                                    Joint   liability
                                     2,800       28 July 2016             326.71                          1 year    Yes      No
(M) SDN. BHD          2016                                                            guarantee
                                                                                      Joint   liability
                                                 1 January 2017           815.99                          1 year    No       No
Haid Feed Co.,        20 August                                                       guarantee
                                     4,900
Limited               2016                                                            Joint   liability 6
                                                 1 April 2017             661.93                                    Yes      No
                                                                                      guarantee           months
Hai Duong Haid        27     April                                                    Joint   liability 6
                                     8,250       16 March 2017            74.88                                     Yes      No
Company Limited       2017                                                            guarantee           months
55 wholly-owned       27     April 50,000        3 January 2017           15,300      Joint   liability 12          Yes      No
                                                                    Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
subsidiaries and            2017                                                              guarantee               months
holding subsidiaries
Haid Feed Co.,              27      April                                                     Joint       liability
                                             12,000      12 November 2017 948.64                                      2 years   No       No
Limited                     2017                                                              guarantee
ShengLong Bio-Tech
                            27      April
(India) Private                              3,750
Limited
Sheng Long Bio Tech 27              April                                                     Joint       liability
                                             750         2 August 2018         326.71                                 1 year    No       No
(M) SDN. BHD                2017                                                              guarantee
Sheng Long Bio-Tech 27              April                                                     Joint       liability
                                             75,750      30 August 2017        9,158.99                               1 year    No       No
International Co.,Ltd) 2017                                                                   guarantee
Total     amount       of     guarantee                                        Total amount of guarantee
provided for subsidiaries approved                                             provided      for      subsidiaries
                                                                    275,421                                                               90,879.29
during                                                                         during the reporting period
the reporting period (B1)                                                      (B2)
Total     amount       of     guarantee                                        Total balance of guarantee
provided for subsidiaries approved                                             provided for subsidiaries as at
                                                                    391,096                                                               62,040.61
as at the end of the reporting period                                          the end of the reporting period
(B3)                                                                           (B4)
Guarantees between subsidiaries
                            Date of the
                            related
                            announcem                                                                                                    Guarantee
                            ent              Amount of Guarantee           date Guarantee     Type              of              Fulfilled to related
Name of obligee                                                                                                       Term
                            disclosing       guarantee   agreement date)       provided       guarantee                         or not   parties or
                            the                                                                                                          not
                            guarantee
                            amount
Total amount of guarantee provided (i.e. sum of the above three guarantee amounts)
                                                                               Total       amount        of
Total     amount       of     guarantee
                                                                               guarantee     during     the
approved    during     the       reporting                          275,421                                                               91,579.29
                                                                               reporting             period
period (A1+B1+C1)
                                                                               (A2+B2+C2)
                                                                               Total       balance       of
Total     amount       of     guarantee
                                                                               guarantee as at the end
approved as at the end of the                                       391,096                                                               62,040.61
                                                                               of the reporting period
reporting period (A3+B3+C3)
                                                                               (A4+B4+C4)
The percentage of total amount of guarantee provided (i.e.
                                                                                                                                               9.58%
A4+B4+C4) to the net assets of the Company
                                                                                                                                          Of which:
                                                              Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Balance of guarantee provided for shareholders, beneficial controllers
and its related parties (D)
Balance of guarantee directly or indirectly provided for obligors
                                                                                                                                401.59
with gearing ratio over 70% (E)
Total amount of guarantee provided in excess of 50% of net assets (F)
Sum of the above three amount of guarantee (D+E+F)                                                                              401.59
Explanations on liability to guarantee occurred during the reporting
period or possible joint liability for satisfaction for undue guarantee                                                 Not applicable
(if any)
Explanations on provision of guarantee in violation of established
                                                                                                                        Not applicable
procedures
Note 1: On 3 July 2015, the Company entered into the Equity Transfer Agreement on Acquisition of 65% Equity Interests in Hunan
Innovation Biotechnology Limited (关于收购湖南创新生物科技有限公司65%股权之股权转让协议) (hereinafter referred to as
the \"Equity Transfer Agreement\") with Qingding Li, Xian’ai Wen, Xianhua Wen and Hunan Innovation Biotechnology Limited
(hereinafter referred to as \"Hunan Innovation\") in relation to the Company’s acquisition of 65% equity interests aggregately held by
Qingding Li, Xian’ai Wen and Xianhua Wen in Hunan Innovation Biotechnology Limited. The acquisition within the approval scope
of the general manager and thus was not submitted to the Board for approval. Prior to this equity transfer, Hunan Innovation provided
a joint liability guarantee for a current fund loan of RMB 7 million of Hunan Animal Farm Food Co., Ltd. (hereinafter referred to as
\"Animal Farm\"). According to the equity transfer agreement, the equity transferors Qingding Li, Xian’ai Wen and Xianhua Wen
undertook that Animal Farm would repay the aforementioned loan of RMB 7 million and interests thereon before 10 December 2015,
and assumed joint and several liability for the guarantee of Hunan Innovation. As at the end of the reporting period, Animal Farm had
repaid the above-mentioned loan of RMB 7 million and Hunan Innovation’s guarantee responsibility for Animal Farm had been
released. As at the end of the reporting period, the Company’s external guarantee balance was zero.
Note 2: The \"Guarantee provided\" in the table is converted at the middle rate of exchange at the end of the reporting period.
(2) External guarantees against the rules and regulations
□ Applicable √ Not applicable
There was no external guarantee provided by the Company which was against the rules and regulations during the reporting period.
3. Entrusted cash and asset management
(1) Entrusted wealth management
√ Applicable □ Not applicable
Entrusted wealth management during the reporting period
Unit: RMB 0’000
                              Fund source for entrusted Amount      of    entrusted                         Overdue        outstanding
Type                                                                                  Undue balance
                              wealth management       wealth management                                     amount
                                                            Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Wealth management
                           Owned funds                                130,000                    10,000
products of banks
Wealth management
                           Raised funds                                    5,700                       0
products of banks
Total                                                                 135,700                    10,000
Particulars of high risk wealth management products with individual significant amount or low security, poor liquidity, and
non-principal guaranteed
□ Applicable √ Not applicable
Unable to recover the principal of entrusted wealth management or other circumstances that may result in impairment
□ Applicable √ Not applicable
(2) Entrusted loans
□ Applicable √ Not applicable
The Company did not have any entrusted loan during the reporting period.
4. Other material contracts
□ Applicable √ Not applicable
The Company did not have any other material contract during the reporting period.
XVIII. Fulfillment of Social Responsibility
1. Fulfillment of social responsibility
With the mission of “prospering agriculture and transforming rural China through relying on science and
technology”, the Company adopts the philosophy of \"service-oriented: create value for customers; people-first:
realize value of employees; market-based: create benefits for the society\".
(1) Protection of the rights and interests of shareholders and creditors
The Company has established a relatively complete legal person governance structure and improved the internal
control system in accordance with the Company Law, the Securities Law, and the Code of Corporate Governance
for Listed Companies to effectively guarantee the rights and interests of all shareholders and creditors; the
Company strictly follows relevant laws. regulations, rules and other provisions in fulfillment of information
disclosure obligations to disclose information truthfully, accurately, completely, and in a timely manner to ensure
that all shareholders have equal opportunities to obtain information; pays attention to communication and
exchange with investors, strengthens communication with investors through multi-level and multi-channel
approaches including telephone, e-mail, and investor relations interactive platforms, etc.; and has prepared a stable
profit distribution policy to proactively reward shareholders. The Company's cash dividend amount since its
listing has reached RMB 1.662 billion and the cash dividend in nearly three years amounts to RMB 1.23 billion
(excluding the 2017 dividend distribution which is subject to consideration at the general meeting).
                                                     Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
(2) Protection of employees' rights and interests
Adhering to the people-centered principle, the Company has formulated relevant management systems for labor
employment and security in accordance with the provisions of the Labor Law, Labor Contract Law and other
relevant laws and regulations as well as the Company’s actual conditions to guarantee the legal rights and interests
of employees from the system level. The Company focuses on production safety and employee labor safety and
proactively creates opportunities for employees to improve their abilities and qualities; various professional or
skill trainings are carried out through Haid School on a regular or irregular basis; the Company continuously
shares the Company’s development achievements with employees, and has launched equity incentive plan,
employee stock ownership plan, profit sharing, etc. The remuneration and assessment committee of the Board
fully listens to employees' opinions and formulates salary system plan each year; the Company shoulders
corporate social responsibilities and helps employees whose families are in trouble due to major accidents, major
diseases, disability, or death. The Company has set up the \"Haid Group Employee Mutual Aid Fund\" for which the
Company, executives and other employees donate a certain amount of donations each year to form a pool of funds,
which is implemented by the Executive Committee. In 2017, the Company provided a total of RMB 1,113,000 to
52 employees in difficulties.
(3) Protection of the rights and interests of suppliers, customers and consumers
The Company has always adhered to the principles of \"integrity, equality, and mutual benefit\" and proactively
constructs and develops strategic partnerships with suppliers and customers. It stresses communication and
coordination with related parties to jointly build a platform for trust and cooperation, and makes investments in
small loan and commercial factoring businesses and industrial funds to solve the financing difficulties of some
upstream and downstream operators, reduce the pressure caused by accounts receivable, improve the upstream
and downstream production and management problems, and improve the industrial chain. It takes advantage of
the combination of industrial capital and financial capital and effectively fulfills its social responsibilities to
suppliers, customers, and consumers.
(4) Environmental Protection
The Company highly values environmental protection work, takes environmental protection as an important task,
and includes environmental protection, energy saving and emission reduction into the important agenda. In strict
accordance with relevant environmental protection regulations and corresponding standards, the Company
effectively and comprehensively treats waste water, waste gas, and waste residues, and regularly maintains,
improves, and renews the Company's environmental protection-related equipment. Over the years, it has
proactively fulfilled its corporate responsibility of environmental protection.
(5) Proactive participation in social welfare undertakings
As the development of enterprises originates from the society, repaying the society is the due responsibility of
enterprises. The Company earnestly fulfills its social responsibilities and has paid taxes in accordance with the law,
cared for the disadvantaged groups in the society, and supported education.
During the reporting period, 1) the Company donated RMB 130,000 to the College of Animal Science and
                                                     Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Technology of Sichuan Agricultural University, the School of Life Sciences of Sun Yat-Sen University, the
College of Marine Sciences of South China Agricultural University and the College of Life Sciences and
Environment of Hengyang Normal University for the purpose of setting up scholarships and supporting teaching
activities. The Company also appointed 6 excellent employees to serve as innovation and entrepreneurial tutors
for college students. They provided professional skills training, career development guidance, innovation and
entrepreneurship education to trainees, and provided students with practical training opportunities.
2) The Company donated a total of RMB 120,000 to the Southwestern University of Chongqing, Shenzhen
Alumni Association of Huazhong Agricultural University, the Education Development Foundation of South China
Agricultural University, and the Education Development Foundation of Huazhong Agricultural University to
support the competition of students majoring in aquiculture, students’ innovation and entrepreneurship in
agriculture and bioengineering and pharmaceutical industry, healthy development of education, etc.
3) The Company invested RMB 400,000 in jointly setting up Zhongguancun National Science Modern
Agricultural Industry Technology Innovation Institute, a non-profit institution, with other listed agricultural
companies and large-scale agricultural enterprises. The institute is mainly engaged in academic research and
exchanges, consulting and training, etc. in the field of science and technology innovation of modern agricultural
industry; donated approximately RMB 47,000 to China Aquatic Products Processing and Marketing Alliance to
support shrimp industry research including quality and safety of shrimp, trade analysis, and industrial situation.
4) The Company and Hubei Vocational College of Bio-Technology took the lead to establish China Modern
Fishery Vocational Education Group, a cross-regional, cross-industry, multi-functional, multi-level and
comprehensive professional education cooperative organization with the nature of corporate legal person, through
cooperation with nationwide representative vocational colleges, industrial enterprises and scientific research
institutions (hereinafter referred to as \"Fishery Vocational Education\"). In 2017, Fishery Vocational Education
continued to organize a number of technical training, vocational education and other activities: a. In response to
the call of Hubei Provincial Department of Agriculture to cultivate new professional farmers, the Company, on the
platform of Honghu Haid, a holding subsidiary of the Company, organised a 7-day practical technical training
themed by \"new professional fishermen’s skill training\" to 167 farmers based on the investigation of aspirations
for employment and entrepreneurship of peasants in the villages and towns; b. The Company organised the
summer camp of \"I am a new fisherman\" was organized for the teachers and students in 37 universities and
provided new ideas of vocational education featured by knowing, loving and learning fishery for the students
majored in fishery through visiting fishing villages, knowing fishermen, experiencing fisheries and learning about
fishing enterprises; c. Fishery Vocational Education and China Agriculture Press jointly planned and edited new
training materials for professional fishermen, practiced farming techniques based on Haid Group's, compiled
technical textbooks according to the needs of fishermen, and guided fishermen's farming production planning. At
the same time, the Company cooperated with Rizhao Polytechnic to set up a smart online vocational education
learning platform; d. The Company, together with Jiangsu Agri-animal Husbandry Vocational College, Jiangxi
Biotech Vocational College, Hubei Vocational College of Bio-Technology, Sichuan Aquatic School, Hunan
Biological and Electromechanical Polytechnic and other colleges, proactively promoted the school-enterprise joint
cultivation projects to jointly explore vocational skills promotion and training programs for students.
5) The Company participated in 37 other public welfare activities and donated a total of approximately RMB
680,000 mainly used to care for children and the elderly, to care for the physical and mental health of residents, to
                                                      Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
improve the living environment of local residents, to fight against floods and disaster, etc.
2. Performance of Social Responsibility for Targeted poverty alleviation
(1) Targeted poverty alleviation plan
The Company proactively responds to the spirit under the Decision of the Central Committee of the Chinese
Communist Party and the State Council on Tackling Key Problems in Poverty Alleviation (《中共中央、国务院
关于打赢脱贫攻坚战的决定》) and Opinions of China Securities Regulatory Commission on Giving Play to the
Role of Capital Market in Serving the Poverty Alleviation Strategy of the State (《中国证监会关于发挥资本市场
作用服务国家脱贫攻坚战略的意见》), and has formulated industrial poverty alleviation programs and work
plans to assist accrete poverty alleviation. By leveraging on the advantages of the Company in terms of industry,
talents, and resources and direct investment in education assistance and industrial development, the Company
devoted to education, poverty alleviation through transfer employment, and other social welfare undertakings and
proactively performs social responsibilities.
(2) Summary of targeted poverty alleviation in the year
During the reporting period, the Company actively promoted the implementation of poverty alleviation projects.
1) Proactively carrying out poverty alleviation projects
The Company always regards poverty alleviation as an important issue for the Company to fulfill its social
responsibilities. In implementing the strategic layout, the Company gives priority to establishment of production
bases in poor counties / districts / villages (hereinafter referred to as \"Poverty-stricken Areas\"). As at the end of
2017, the Company had directly invested in 34 projects in national or provincial level Poverty-stricken Areas and
created 1,771 jobs for the local people; in particular, during the reporting period, the investment amount in the
Poverty-stricken Areas increased by RMB 225 million, contributing to local profit of RMB 40 million and
increasing 112 jobs.
In 2017, the Company conducted investment in establishment of 9 subsidiaries in several Poverty-stricken Areas
including Ganzhou in Jiangxi, Tancheng County in Shandong Province, Linxi County in Hebei Province, Huimin
County in Shandong Province, Dali City in Yunnan Province, Xiuwen County in Guizhou Province; and signed
cooperation framework agreements with governments of several poor counties to proactively promote the
implementation of projects:
a. The Company and Pingguo County People's Government signed a cooperation framework agreement to
establish a commercial pig farm and supporting feed production project. During the reporting period, the
Company has established Pingguo County Yitun Ecological Agriculture Co., Ltd. The project is located in
Pingguo County, a poverty-stricken county, and the Company has invested a total of RMB 940,000 in form of
                                                    Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
funds and goods.
b. The Company signed a strategic cooperation framework agreement with the People's Government of Rongjiang
County, Guizhou Province in relation to investment in establishment of a pig farming farm and supporting feed
production project. During the reporting period, the Company has established and established Rongjiang County
Yitun Ecological Agriculture Co., Ltd., and the project is located in Qianjiang County, a poverty-stricken county.
c. The Company signed a strategic cooperation framework agreement with the People's Government of Duyun
City, Guizhou Province, in relation to investment in establishment of a pig farm and supporting feed production
project. During the reporting period, the Company has established Duyun Yitun Ecological Agriculture Co., Ltd.
The project is located in Duyun City and the Company has invested a total of RMB 310,000.
d. The Company signed an investment framework agreement with Guigang Municipal People's Government of
Guangxi Zhuang Autonomous Region for the ecological and environment friendly pig farming project. During the
reporting period, the Company has successfully established Guiping Yitun Ecological Agriculture Co., Ltd. in
Guiping City, which will give full play to its own advantages and develop a new \"company + farmer\"
non-environmental pollution-free pig farming model, and supports farmers to participate in project construction.
The Company has established CITIC Agricultural Industry Fund Management Co., Ltd. (hereinafter referred to as
the \"Management Company\") with its own funds of RMB 5 million through cooperation with other partners, and
has participated in the China Securities Zhongfu (Lankao) Industrial Investment Fund (Limited Partnership)
(hereinafter referred to as the \"Poverty Alleviation Fund\") by holding the equity interests in the Management
Company. During the reporting period, the Poverty Alleviation Fund has contacted with poverty-stricken counties
in Henan Province, Hunan Province, Gansu Province, and Inner Mongolia Autonomous Region. The poverty
alleviation projects invested by the Company include further processing of agricultural products, import isolation
of live animals, information based education of middle and primary schools in Poverty-stricken Areas, tourism,
biological pesticides, special farming and so on.
2) Proactively carrying out poverty alleviation through education
Since 2016, the Company has persisted in carrying out public benefit activities themed by \"prospering farmers and
supporting education\" and paid continuous attention to underprivileged children in rural areas. During the
reporting period, the Company carried out public benefit activities themed by \"prospering farmers and supporting
education\" in Wangling Primary School and Miaoben Primary School in Zhongcheng Town and Changzhai
Village Primary School in Bakai Town, Rongjiang County, Guizhou Province and provided poor students with
living, school supplies and equipment with a value of RMB 22,000. At the same time, the Company proactively
advocated employees to proactively participate in the public benefit activities themed by \"prospering farmers and
supporting education\". During the reporting period, the total amount of donations made by the employees was
RMB 11,000, and the Company insisted on combination of poverty alleviation, education improvement, and
prompting ambition.
During the reporting period, the Company provided funds of RMB 61,500 to impoverished students in Baijiao
Town, Doumen District, Zhuhai City, Guangdong Province, Yanxi Town, Changtai County, Zhangzhou City,
Fujian Province and Pingnan County, Guigang City, Guangxi Zhuang Autonomous Region to assist their
                                                            Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
enrollment in universities.
During the reporting period, the Company and Guangxi Liuzhou Animal Husbandry and Veterinary Medicine
School signed an Agreement on Education on Demands for Targeted Poverty Alleviation through Education (教育
精准扶贫订单办学协议书) and established \"Haid Yitun\" education class. During the reporting period, the
company has donated RMB 20,000 for the education class and has provided training and education for 44 poor
students.
3) Proactively participating in social poverty alleviation
During the reporting period, the Company continued to implement the national, provincial, and municipal poverty
alleviation work arrangements and donated RMB 1.456 million on the Poverty Alleviation Day of Guangdong and
the Qinnan District Poverty Alleviation Day of Guangxi in 2017 to help poor villages to get out of poverty;
donated a total of approximately RMB 150,000 in the form of funds and goods to Shandong Poverty Alleviation
and Development Foundation, Changde Poverty Alleviation and Development Office, Laomadi Village, Zhushan
Town, Yiliang County, Kunming City, Yunnan Province, Musu Village, Shayuan Town, Maoming City,
Guangdong Province, and the Company's point-to-point poverty-stricken households in Nanchang City to help the
poor get out of poverty, improve their living environment and purchase social insurance for them.
(3) Targeted poverty alleviation achievements
                                                                                             Quantity/
                                                        Unit of
                   Indicators                                                              development
                                                   measurement
                                                                                             situation
I. General information                           ——               ——
  Including: 1. Funds                            RMB 0'000          22,688.1
            2. Cash converted from materials     RMB 0'000          2.24
            3.Number of registered poor people
                                                 person
who were helped to be out of poverty
II. Sub-item investment                          ——               ——
   1. Poverty elimination through industrial
                                                 ——               ——
development
                                                                    Agriculture and
Including: 1.1Types of industrial development                        forestry industry
                                                 ——
poverty elimination projects
                                                                    Poverty alleviation
           1.2Number of industrial development
                                                 item
poverty elimination projects
           1.3Invested amount to industrial      RMB 0'000          22,519.25
                                                             Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
development poverty elimination projects
             1.4Number of registered poor people
                                                    person
who were helped to relieve poverty
   2. Poverty elimination through shift of
                                                    ——             ——
occupation
Including: 2.1 Invested amount to vocational
                                                    RMB 0'000        2
skills training
              2.2 Number of person for vocational
                                                    person
skills training
              2.3 Number of registered poor
                                                    person
households who were helped to be employed
  3. Poverty elimination through relocation         ——             ——
  4. Poverty elimination through education          ——             ——
Including:    4.1 Input of funding poor students    RMB 0'000        6.15
              4.2 Number of poor students funded person
              4.3 Input of improving educational
                                                    RMB 0'000        2.24
resources in poor areas
  5. Poverty alleviation through improvement in
                                                    ——             ——
health
   6. Poverty alleviation through ecological
                                                    ——             ——
protection
  7. Minimum guarantee                              ——             ——
  8. Social poverty alleviation                     ——             ——
  9.Other projects                                  ——             ——
Including:    9.1. Number of projects               item
              9.2. Invested amount                  RMB 0'000        160.7
              9.3. Number of people documented
                  as poor people who were helped person
                  to relieve poverty
III. Awards granted (description, level)            ——             ——
(4) Subsequent targeted poverty alleviation plan
The Company will continue to proactively respond to the call of the country to give full play to the Company's
advantages in terms of industries, talents and resources, and engage in poverty alleviation.
3. Information on environmental protection
Whether the Company and its subsidiaries are key pollutant discharging units as published by the environmental
                                                                 Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
protection authority
Yes
              Names        of
              major
Name of the                                                            Emission    Pollutant                    Total
              pollutants        Discharge    Outlet     Outlet                                    Total                      Excessive
company or                                                             concentratio discharge                   discharge
              and               method       quantity   distribution                              discharge                  discharge
subsidiary                                                             n           standards                    approved
              characteristi
              c pollutants
                                                                                   Standards in
                                                                                   Table 5
                                                                                   under the      During the
                                                                                   Pollutant      reporting                  The total
                                                                       COD≤       Discharge      period, the                amount of
                                                                       400mg/L;    Standards      amount of                  sewage
              Sewage
                                                                       ammonia≤ for              sewage        The annual discharged
Gaozhou       ( COD ,
                                                                       80 mg/L;    Livestock      discharged total           has not
Sanhe         ammonia            Discharge
                                                                       BOD ≤      and Poultry shall not        discharge of exceeded the
Animal        nitrogen,         after                   Sewage
                                             1                         150 mg/L;   Farming        exceed        sewage is    standard; the
Husbandry BOD, total sewage                             outlet
                                                                       TP ≤8                     128,000       128,000      COD
Co., Ltd.     phosphorus, treatment                                                Industry (畜
                                                                       mg/L;                      tonnes per    tonnes per   discharge
[Note ]       suspended
                                                                       suspended                  year as       year.        indicator
              matter)                                                              禽养殖业污
                                                                       matter≤                   approved by                exceeded the
                                                                       200 mg/L                   the                        standard by
                                                                                   染物排放标
                                                                                                  discharge                  0.355 time.
                                                                                                  permit.
                                                                                   准)
                                                                                   (GB18596-
                                                                                   2001)
Note: The Company acquired 90% equity interests in Gaozhou Sanhe Animal Husbandry Co., Ltd. (hereinafter referred to as
\"Gaozhou Sanhe\") in 2015 and acquired 10% of minority interests in March 2016. After the acquisition of Gaozhou Sanhe, the
Company continued to reform and upgrade the farming technology and environmental protection equipment. As at the end of the
reporting period, the Company had invested a total of RMB 1.77 million in environmental protection projects and equipment.
Construction and operation of pollution prevention and control facilities
During the reporting period, Gaozhou Sanhe was equipped with pollution prevention and control facilities as
required and all environmental protection facilities were operating normally.
                                                   Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Environmental Impact Assessment and Other Environmental Protection Administrative Licensing of Construction
Projects
During the reporting period, Gaozhou Sanhe has obtained the Guangdong Provincial Pollutant Emission Permit
(广东省污染物排放许可证) with the number 4409812017000061.
Emergency plan for emergent environmental incidents
During the reporting period, Gaozhou Sanhe formulated the Emergency Management System for Urgent
Environmental Incidents (突发环境事件应急管理制度) to circumvent emergent environmental incidents and improve
the farms’ ability to prevent, warn and deal with emergent environmental incidents in surrounding areas, prevent
environmental risks, and control the spread of the situation to reduce environmental hazards and protect public
health and environmental safety. The Emergency Management System for Urgent Environmental Incidents (突发环
境事件应急管理制度) consists of 17 parts which mainly include: emergency management principles, emergency
management agencies, operating mechanisms, emergency training and drills. At the same time, the company
formulated the Measures for Management of Safety and Environmental Protection Incidents (安全环保事故事件管
理办法) in 2018 to standardize the company's safety and environmental accident reporting and investigation
procedures and enhance the level of accident management.
Self-monitoring program for environment
Gaozhou Sanhe has formulated a self-monitoring program for environment, installed an online monitoring system
for pollution sources, and assigned special personnel to conduct daily monitoring.
Other environmental information that should be disclosed
None
Others information on environmental protection
None
XIX. Other Matters of Significance
□ Applicable √ Not applicable
The Company did not have any other matters of significance to be explained during the reporting period.
                                          Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
XX. Matters of Significance of Subsidiaries of the Company
□ Applicable √ Not applicable
                                                                 Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Section VI. Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
                                 Before                  Increase/decrease in Reporting Period (+/-)                    After
                                                                  Shares
                                                                     as
                                                                   divide Shares
                                                                    nd         as
                                                                  conver dividend
                                          Percenta                                                                             Percentage
                             Shares                  New issue      ted     converte     Other      Subtotal      Shares
                                          ge (%)                                                                                  (%)
                                                                   from     d from
                                                                  retaine capital
                                                                     d      reserves
                                                                   earnin
                                                                    gs
1. Restricted shares         13,132,644     0.85%    40,283,200                        -6,736,400   33,546,800   46,679,444        2.96%
1.3 Shares held by
other domestic               13,132,644     0.85%    40,283,200                        -6,736,400   33,546,800   46,679,444        2.96%
investors
  Shares held by
domestic natural             13,132,644     0.85%    40,283,200                        -6,736,400   33,546,800   46,679,444        2.96%
persons
2. Non-restricted
                       1,528,295,810 99.15%              99,800                          162,000      261,800 1,528,557,610       97.04%
shares
2.1 RMB common
                       1,528,295,810 99.15%              99,800                          162,000      261,800 1,528,557,610       97.04%
shares
3. Total shares        1,541,428,454 100.00%         40,383,000                        -6,574,400   33,808,600 1,575,237,054    100.00%
Reasons for share changes:
√ Applicable □ Not applicable
1. Based on the shareholdings of the Company’s directors, supervisors and senior management in the Company at
the end of last year, their tradable shares were recalculated at the beginning of the current year, resulting in
changes in their shares in lockup.
2. Share options were exercised under the Restricted Share and Share Option Incentive Plan(《限制性股票与股
票期权激励计划》).
During the period from January 1, 2017 to March 3, 2017, the awardees of the Restricted Share and Share Option
                                                     Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Incentive Plan (《限制性股票与股票期权激励计划》) chose to exercise 99,800 share options in the first
exercise period, which thus increased the Company’s total shares by 99,800 shares.
3. Restricted shares were granted under the 2016 Restricted Share Incentive Plan (《2016年限制性股票激励计
划》).
On March 13, 2017, the Company granted 40,283,200 restricted shares to the 1,373 awardees of the 2016
Restricted Share Incentive Plan (《2016年限制性股票激励计划》). As of March 13, 2017, the Company had
received a total of RMB 301,318,336.00 from the 1,373 awardees for subscription of those restricted shares, of
which RMB 40,283,200.00 was added to the Company’s registered capital and the other RMB 261,035,136.00 to
capital reserves. This increase in capital was verified by GP Certified Public Accountants (LLP), which issued the
Capital Verification Report GHYZ [2017] No. G16041031261 (广会验字[2017]G16041031261号《验资报告》).
On March 20, 2017, as confirmed by the Shenzhen branch of China Securities Depository and Clearing Co., Ltd.,
the Company completed the registration of the said restricted shares with the Shenzhen branch of China Securities
Depository and Clearing Co., Ltd. As such, the Company’s total shares increased by 40,283,200 shares.
4. Certain restricted shares were repurchased and cancelled under the equity incentive plans.
(1) As certain awardees of the Restricted Share and Share Option Incentive Plan (《限制性股票与股票期权激励
计划》) had resigned for personal reasons, voluntarily given up the incentive or failed to meet the unlocking
conditions for the second unlocking period, among others, the Company intended to repurchase and cancel a total
of 5,846,400 restricted shares as invalid incentive. On April 27, 2017, the Company disclosed the Announcement
on Decrease in Capital due to Repurchase and Cancellation of Certain Restricted Shares (《关于回购注销部分限
制性股票的减资公告》 (announcement No. 2017-044) and publicized the capital decrease matter for 45 days. As
of June 12, 2017, the Company had returned a total of RMB 21,105,504.00 to the relevant awardees in cash, thus
reducing the share capital by RMB 5,846,400.00 and the capital reserves by RMB 15,259,104.00. This decrease in
capital was verified by GP Certified Public Accountants (LLP), which issued the Capital Verification Report
GHYZ [2017] No. G17029740018 (广会验字[2017]G17029740018号《验资报告》). On June 20, 2017, as
confirmed by the Shenzhen branch of China Securities Depository and Clearing Co., Ltd., the Company
completed the repurchase and cancellation of the said restricted shares with the said authority. As such, the
Company’s total shares decreased by 5,846,400 shares.
(2) As 3 awardees of the Restricted Share and Share Option Incentive Plan 《限制性股票与股票期权激励计划》
and 37 awardees of the 2016 Restricted Share Incentive Plan(revised draft)(《2016年限制性股票激励计划(修订
稿)》 had resigned for personal reasons or had their labor contract terminated by the Company, among others, the
Company intended to repurchase and cancel 109,200 and 618,800 restricted shares, respectively, that had been
granted to them but were still in lockup, totaling 728,000 shares. On October 31, 2017, the Company disclosed the
Announcement on Decrease in Capital due to Repurchase and Cancellation of Certain Restricted Shares ( 关于回
购注销部分限制性股票的减资公告》) (announcement No. 2017-086) and publicized the capital decrease matter
for 45 days. As of December 19, 2017, the Company had returned a total of RMB 4,804,436.00 to the relevant
awardees in cash, thus reducing the share capital by RMB 728,000.00 and the capital reserves by RMB
4,076,436.00. This decrease in capital was verified by GP Certified Public Accountants (LLP), which issued the
Capital Verification Report GHYZ [2017] No. G17029740029 (广会验字广会验字[2017]G17029740029号《验
资报告》). On December 26, 2017, as confirmed by the Shenzhen branch of China Securities Depository and
                                                              Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Clearing Co., Ltd., the Company completed the repurchase and cancellation of the said restricted shares with the
said authority. As such, the Company’s total shares decreased by 728,000 shares.
After all the changes above, the Company’s total shares have changed from 1,541,428,454 shares to
1,575,237,054 shares.
Approval of share changes:
√ Applicable □ Not applicable
1. On March 13, 2017, the Proposal on Granting Restricted Shares to Awardees under 2016 Restricted Share
Incentive Plan (《关于向公司2016年限制性股票激励计划激励对象授予限制性股票的议案》) was reviewed
and approved at the Sixth Meeting of the Company’s Fourth Board. As such, the Company was agreed to grant
40,283,200 restricted shares to 1,373 awardees at the price of RMB 7.48/share, with March 13, 2017 as the first
grant day.
2. On April 25, 2017, the Proposal on Adjustment to Equities under Restricted Share and Share Option Incentive
Plan & Repurchase and Cancellation/Cancellation of Incentive Restricted Shares due to Awardees Not Meeting
Unlocking/Exercise Conditions of Second Unlocking/Exercise Period (《关于限制性股票与股票期权激励计划
权益数量调整及第二个解锁/行权期不符合解锁/行权条件并予以回购注销/注销的议案》) was reviewed and
approved at the Seventh Meeting of the Company’s Fourth Board. As certain awardees had resigned, voluntarily
given up the incentive or failed to meet the unlocking/exercise conditions for the second unlocking/exercise
period, among others, the Company was agreed to repurchase and cancel a total of 5,846,400 restricted shares as
invalid incentive.
3. On October 27, 2017, the Proposal on Adjustments to Equity Incentive Plans and Cancellation of Certain Share
Options (《关于调整公司股权激励计划相关事项及注销部分股票期权的议案》) and the Proposal on
Repurchase and Cancellation of Certain Restricted Shares(《关于回购注销部分限制性股票的议案》) were
reviewed and approved at the Tenth Meeting of the Company’s Fourth Board. As 3 awardees of the Restricted
Share and Share Option Incentive Plan (《限制性股票与股票期权激励计划》) and 37 awardees of the 2016
Restricted Share Incentive Plan (revised draft) (《2016年限制性股票激励计划(修订稿)》) had resigned for
personal reasons or had their labor contract terminated by the Company, among others, the Company was agreed
to repurchase and cancel 109,200 and 618,800 restricted shares, respectively, that had been granted to them but
were still in lockup, totaling 728,000 shares. And the Proposal on Repurchase and Cancellation of Certain
Restricted Shares (《关于回购注销部分限制性股票的议案》) has been reviewed and approved at the Third
Special Meeting of the Company’s Shareholders in 2017.
Transfer of share ownership:
□ Applicable √ Not applicable
Effects of share changes on the basic earnings per share, diluted earnings per share, equity per share attributable to the common
shareholders of the Company and other financial indicators of the prior year and the prior period, respectively:
                                                                   Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
□ Applicable √ Not applicable
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable
2. Change in Restricted Shares
√ Applicable □ Not applicable
Unit: share
              Opening            Unlocked      in Increased         in Closing
Shareholder restricted           Reporting          Reporting            restricted     Reason for lockup                      Date of unlocking
              shares             Period             Period               shares
                                                                                        Her      shares   in   lockup   were
Li Tian            1,320,900              162,000                           1,158,900                                          January 1, 2017
                                                                                        recalculated on January 1, 2017
                                                                                        Restricted shares as incentive:
                                                                                        157,400 restricted shares were
Li Tian                315,000                                   -100         314,900 granted and 157,500 restricted
                                                                                        shares     were   repurchased    and
                                                                                        cancelled in the Reporting Period.
Xueqiao                                                                                 Shares in lockup due to his senior
                        73,500                                                 73,500
Qian                                                                                    management position
                                                                                        Restricted shares as incentive:
                                                                                        111,500 restricted shares were
Xueqiao
                       294,000                               -35,500          258,500 granted and 147,000 restricted
Qian
                                                                                        shares     were   repurchased    and
                                                                                        cancelled in the Reporting Period.
Shaolin                                                                                 Shares in lockup due to his senior
                       168,000                                                168,000
Yang                                                                                    management position
                                                                                        Restricted shares as incentive:
                                                                                        112,200 restricted shares were
Shaolin
                       126,000                                  49,200        175,200 granted and 63,000 restricted
Yang
                                                                                        shares     were   repurchased    and
                                                                                        cancelled in the Reporting Period.
Zhijian                                                                                 Shares in lockup due to his senior
                       230,244                                                230,244
Huang                                                                                   management position
                                                                                        Restricted shares as incentive:
                                                                                        137,600 restricted shares were
Zhijian
                       126,000                                  74,600        200,600 granted and 63,000 restricted
Huang
                                                                                        shares     were   repurchased    and
                                                                                        cancelled in the Reporting Period.
                                                   Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                                                                      Restricted shares as incentive: A
Other                                                                 total of 39,764,500 restricted
restricted                                                            shares were granted and a total of
                10,479,000                  33,620,600   44,099,600
share                                                                 6,143,900 restricted shares were
awardees                                                              repurchased and cancelled in the
                                                                      Reporting Period.
Total           13,132,644        162,000   33,708,800   46,679,444 --                                     --
II Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in Reporting Period
□ Applicable √ Not applicable
2. Change in Total Shares, Shareholder Structure and Asset and Liability Structures
√ Applicable □ Not applicable
(1) During the period from January 1, 2017 to March 3, 2017, the awardees of the Restricted Share and Share
Option Incentive Plan (《限制性股票与股票期权激励计划》) chose to exercise 99,800 share options in the first
exercise period, which thus increased the Company’s total shares by 99,800 shares.
(2) On March 13, 2017, the Company granted 40,283,200 restricted shares to the 1,373 awardees of the 2016
Restricted Share Incentive Plan (《2016年限制性股票激励计划》). This increase in capital was verified by GP
Certified Public Accountants (LLP), which issued the Capital Verification Report GHYZ [2017] No.
G16041031261 (广会验字[2017]G16041031261号《验资报告》). As such, the Company’s total shares increased
by 40,283,200 shares.
(3) On April 25, 2017, as certain awardees of the Restricted Share and Share Option Incentive Plan 《限制性股票
与股票期权激励计划》 had resigned for personal reasons, voluntarily given up the incentive or failed to meet the
unlocking conditions for the second unlocking period, among others, the Company repurchased and cancelled a
total of 5,846,400 restricted shares as invalid incentive. This decrease in capital was verified by GP Certified
Public Accountants (LLP), which issued the Capital Verification Report GHYZ [2017] No. G17029740018 (广会
验字[2017]G17029740029号《验资报告》). As such, the Company’s total shares decreased by 5,846,400 shares.
(4) On October 27, 2017, as 3 awardees of the Restricted Share and Share Option Incentive Plan ( 限制性股票与
股票期权激励计划》) and 37 awardees of the 2016 Restricted Share Incentive Plan(revised draft) (《2016年限制
性股票激励计划(修订稿)》) had resigned for personal reasons or had their labor contract terminated by the
Company, among others, the Company repurchased and canceled 109,200 and 618,800 restricted shares,
respectively, that had been granted to them but were still in lockup, totaling 728,000 shares. This decrease in
capital was verified by GP Certified Public Accountants (LLP), which issued the Capital Verification Report
                                                                   Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
GHYZ [2017] No. G17029740029(广会验字[2017]G17029740029号《验资报告》). As such, the Company’s total
shares decreased by 728,000 shares.
After all the changes above, the Company’s total shares have changed from 1,541,428,454 shares to
1,575,237,054 shares, and its capital reserves have increased by RMB 242,371,250.00.00. These changes have no
material impact on the Company’s assets or liabilities.
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at Period-End
Unit: share
                                                                                                              Preferred
                                                                                                              shareholders
                                                                        Preferred
                                  Common                                                                      with    resumed
                                                                        shareholders
                                  shareholders at                                                             voting rights at
Common                                                                  with    resumed
                                  month-end                                                                   month-end
shareholders at          13,092                                  13,787 voting rights at                 0
                                  prior           to                                                          prior           to
period-end                                                              period-end       (if
                                  disclosure      of                                                          disclosure      of
                                                                        any) (see note
                                  this Report                                                                 this Report (if
                                                                        8)
                                                                                                              any) (see note
                                                                                                              8)
5% or greater shareholders or top 10 shareholders
                                          Sharehold                                                                        Pledged    or   frozen
                                          ing                          Change                                              shares
                         Nature       of percentag                     during           Restricted   Non-restricted
Name of shareholder                                     Shares
                         shareholder      e        at                  Reporting        shares       shares
                                                                                                                           Status    Shares
                                          period-en                    Period
                                          d (%)
                         Domestic
Guangzhou Haihao         non-state-ow
                                          57.81%        910,589,359                 -                    910,589,359 Pledged          53,519,000
Investment Co., Ltd.     ned juridical
                         person
                         Foreign
Norges Bank – Own
                         juridical        2.34%          36,845,665       6,102,382                       36,845,665
Fund
                         person
National Social Security Other            1.95%          30,737,633     15,991,044                        30,737,633
                                                              Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Fund Portfolio 406
China Merchants Bank
Co., Ltd. - Orient Red
Ruifeng Flexible         Other            1.34%       21,089,613    16,823,436                     21,089,613
Allocation Mixed Fund
(LOF)
Bank of China Limited
-Dongfanghong
Ruihua Shanghai-Hong
Kong-Shenzhen
                         Other            1.26%       19,782,550     7,589,467                     19,782,550
Dynamic Asset
Allocation Mixed Type
Securities Investment
Fund
                         Foreign
Hong Kong Securities
                         juridical        1.21%       18,994,709    15,210,552                     18,994,709
Clearing Company Ltd.
                         person
                         State-owned
Central Huijin Asset
                         juridical        1.09%       17,187,600              -                    17,187,600
Management Ltd.
                         person
                         Domestic
Huatai Securities Co.,   non-state-ow
                                          1.03%       16,257,511     6,863,036                     16,257,511
Ltd.                     ned juridical
                         person
ICBC Credit Suisse
Fund-ICBC-Asset
                         Other            1.01%       15,834,175      -947,515                     15,834,175
Management for
Specific Clients
                         Foreign
CDPQ or la Caisse        juridical        0.85%       13,429,861    -1,509,500                     13,429,861
                         person
Strategic investor or general juridical
person becoming top-10 shareholder
                                          N/A
due to placing of new shares (if any)
(see note 3)
                                          Among the top 10 shareholders above, the first shareholder is the controlling shareholder of
                                          the Company, which is neither a related party nor an acting-in-concert party to the other
Related or acting-in-concert parties
                                          shareholders. It is unknown whether there is, among the other shareholders, any
among shareholders above
                                          acting-in-concert party as defined in the Administrative Measures On Acquisition Of Listed
                                          Companies (《上市公司收购管理办法》) or any related party.
Top 10 non-restricted shareholders
                                                            Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                                                                                                Type of shares
Name of shareholder                    Non-restricted shares held at period-end
                                                                                                Type             Shares
Guangzhou Haihao Investment Co.,                                                                RMB common
                                                                                  910,589,359                         910,589,359
Ltd.                                                                                            stock
                                                                                                RMB common
Norges Bank-Own Fund                                                              36,845,665                             36,845,665
                                                                                                stock
National Social Security Fund                                                                   RMB common
                                                                                   30,737,633                             30,737,633
Portfolio 406                                                                                   stock
China Merchants Bank Co., Ltd. -
                                                                                                RMB common
Orient Red Ruifeng Flexible                                                        21,089,613                             21,089,613
                                                                                                stock
Allocation Mixed Fund (LOF)
Bank of China Limited-
Dongfanghong Ruihua Shanghai-Hong
                                                                                                RMB common
Kong-Shenzhen Dynamic Asset                                                        19,782,550                             19,782,550
                                                                                                stock
Allocation Mixed Type Securities
Investment Fund
Hong Kong Securities Clearing                                                                   RMB common
                                                                                   18,994,709                             18,994,709
Company Ltd.                                                                                    stock
                                                                                                RMB common
Central Huijin Asset Management Ltd.                                               17,187,600                             17,187,600
                                                                                                stock
                                                                                                RMB common
Huatai Securities Co., Ltd.                                                        16,257,511                             16,257,511
                                                                                                stock
ICBC Credit Suisse Fund-ICBC-
                                                                                                RMB common
Asset Management for Specific                                                      15,834,175                             15,834,175
                                                                                                stock
Clients
                                                                                                RMB     common
CDPQ or la Caisse                                                                  13,429,861                             13,429,861
                                                                                                stock
Related or acting-in-concert parties
                                       Among the top 10 shareholders above, the first shareholder is the controlling shareholder of
among top 10 non-restricted common
                                       the Company, which is neither a related party nor an acting-in-concert party to the other
shareholders, as well as between top
                                       shareholders. It is unknown whether there is, among the other shareholders, any
10 non-restricted common
                                       acting-in-concert party as defined in the Measures for Administration of Takeover of Listed
shareholders and top 10 common
                                       Companies (《上市公司收购管理办法》) or any related party.
shareholders
Top 10 common shareholders
conducting securities margin trading   N/A
(if any) (see note 4)
Indicate by tick mark whether any of the top 10 common shareholders or the top 10 non-restricted common shareholders of the
Company conducted any promissory repo during the Reporting Period.
□ Yea √ No
                                                               Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
No such cases in the Reporting Period.
2. Controlling Shareholder
Nature of controlling shareholder: Controlled by a natural person
Type of controlling shareholder: Juridical person
                              Legal
Name      of    controlling                                            Unified   social   credit
                              representative/p Date of establishment                               Main business scope
shareholder                                                            code
                              erson in charge
                                                                                                   Investment with self-owned capital;
                                                                                                   wholesale of commodities (excluding
                                                                                                   commodities that require a permit or
                                                                                                   approval document to trade); retail
                                                                                                   sales   of   commodities   (excluding
Guangzhou            Haihao
                              Hua Xue           September 27, 2006     91440113793877530G          commodities that require a permit or
Investment Co., Ltd.
                                                                                                   approval document to trade); import
                                                                                                   and export of commodities (excluding
                                                                                                   commodities restricted to specific
                                                                                                   parties); and import and export of
                                                                                                   technologies
Controlling shareholder’s
holdings in other listed
companies at home or N/A
abroad     in    Reporting
Period
Change of the controlling shareholder during the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Actual Controller
Nature of actual controller: Domestic natural person
Type of actual controller: Natural person
Name of actual controller                        Nationality                     Right of residence in other countries or regions
Hua Xue                                          Chinese                         None
Main office titles                               Chairman of the Board, General Manager
Used-to-be-holding listed companies at home N/A
                                                               Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
and abroad in past 10 years
Change of the actual controller during the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Ownership and control relations between the actual controller and the Company:
                                                               Hua Xue
                                                                          39.75%
                                         Guangzhou Haihao Investment Co., Ltd.
                                                                            57.81%
                                          Guangdong Haid Group Co., Limited
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset management.
□ Applicable √ Not applicable
4. Other 10% or Greater Juridical-Person Shareholders
□ Applicable √ Not applicable
5. Holdings of the Company’s Controlling Shareholder, Actual Controller, Reorganizer and Other
Commitment Makers under Restricted Sales Condition
□ Applicable √ Not applicable
                                               Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Section VII. Preferred Shares
□ Applicable √ Not applicable
No preferred shares in the Reporting Period.
                                                            Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Section VIII. Directors, Supervisors, Senior Management and Staff
I Change in Shareholdings of Directors, Supervisors and Senior Management
                                                                                         Increase       Decrease
                                                                             Opening                                   Other
                                                                                         in             in         Closing
            Office         Incumben                  Starting Ending      sharehold                     increase/d
Name                                  Gender   Age   date    of date   of           Reporting Reporting            shareholdi
            title          t/Former                  tenure     tenure    ing                           ecrease
                                                                                    Period    Period               ng (share)
                                                                          (share)                       (share)
                                                                                    (share)   (share)
            Chairman
                           Incumben                  June     6, June   7,
Hua Xue of           the              Male     48
                           t                         2007       2019
            Board
            General        Incumben                  May     25, June   7,
Hua Xue                               Male     48
            Manager t                                2010       2019
            Director
Yingzhuo and Vice Incumben                           June     6, June   7,
                                      Male     50
Xu          General        t                         2007       2019
            Manager
            Vice
                           Incumben                  June     6, June   6,
Li Tian     General                   Female   46                            1,965,200        157,400        157,500           1,965,100
                           t                         2007       2019
            Manager
                           Incumben                  June     7, June   7,
Li Tian     Director                  Female   46
                           t                         2016       2019
Xiaojun                    Incumben                  May     25, June   7,
            Director                  Female   45
Shang                      t                         2010       2019
            Independ
Chengpin                   Incumben                  Novembe June       7,
            ent                       Male     73
g Lu                       t                         r 13, 2015 2019
            Director
            Independ
Xinchun                    Incumben                  August     June    7,
            ent                       Male     56
Li                         t                         21, 2013 2019
            Director
            Independ
Erkang                     Incumben                  August     June    7,
            ent                       Female   50
Deng                       t                         21, 2013 2019
            Director
Qi
            Superviso Incumben                       June     6, June   7,
Zhenxion                              Male     48
            r              t                         2007       2019
g
            Superviso Incumben                       May     12, June   7,
Jing wang                             Female   39
            r              t                         2014       2019
                                                         Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
           Superviso Incumben                     August      June    7,
Jia chen                          Female   36
           r           t                          21, 2013 2019
           Vice
Mingzhon               Incumben                   June      6, June   7,
           General                Male     53
g Chen                 t                          2007        2019
           Manager
           Vice
           General
Zhijian    Manager Incumben                       July    26, June    7,
                                  Male     40                               474,992    137,600    63,000            549,592
Huang      and         t                          2012        2019
           Board
           Secretary
Xueqiao    Chief       Incumben                   June      6, June   7,
                                  Male     51                               490,000    111,500   147,000            454,500
Qian       Engineer t                             2007        2019
           Chief
Shaolin                Incumben                   October     June    7,
           Financial              Male     44                               392,000    112,200    63,000            441,200
Yang                   t                          22, 2012 2019
           Officer
Total      --          --         --       --     --          --           3,322,192   518,700   430,500          3,410,392
II Change in Directors, Supervisors and Senior Management
□ Applicable √ Not applicable
III Brief Biographies
Professional backgrounds, main working experience and current responsibilities in the Company of the incumbent directors,
supervisors and senior management:
1. Directors
(1) Hua Xue
Mr. Hua Xue, Chinese nationality, no permanent residency abroad, is an engineer. He graduated from College of
Fisheries of Huazhong Agricultural University in 1992 with a major in special aquaculture; in 1995, he obtained
the master’s degree in zoology from School of Life Sciences of Sun Yat-Sen University. As one of the founders of
the Company, he now serves as the Chairman of the Board and General Manager of the Company. At present, he
has held various social positions such as Executive Vice President of China Feed Industry Association (CFIA),
Vice Chairman of China Association of Young Rural Entrepreneurial Leaders (CAYREL), Chairman of China
Vocational Education Group of Modern Fishery, Chairman of Guangdong Hi-tech Enterprise Association
(GDHTEA), Vice Chairman of Guangdong Agricultural Science and Technology Innovation Alliance, Vice
President of Guangdong Feed Industry Association, Vice President of Guangdong Fisheries Association, NPC
Member of the 14th National Congress of the Communist Party of Guangzhou, Vice Chairman of the 14th
Executive Committee of Guangzhou Federation of Industry and Commerce, and President of Guangzhou
Association of Agricultural Leading Enterprises. Mr. Hua Xue holds 39.75% equity interests in the Company's
                                                   Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
controlling shareholder Guangzhou Haihao Investment Co., Ltd. and is the actual controller of the Company.
(2) Li Tian
Ms. Li Tian, Chinese nationality, no permanent residency abroad, is a Chinese Certified Public Accountant and
Certified Tax Accountant. She graduated from Beijing Wuzi University in 1993 with a major in accounting. From
2002 to 2004, she studied and obtained EMBA from Sun Yat-sen Business School. From 1993 to 1996, she was
engaged in financial work at Guangdong Reclamation Yanling Building Co., Ltd.. From 1996 to 2001, she
worked for Guangzhou Lingnan Certified Public Accountants and Guangdong Kangyuan Certified Public
Accountants in succession. In January 2004, she joined the Company and successively served as Chief Financial
Officer, Board Secretary, and Vice General Manager. Currently, she is the Company’s director and Vice General
Manager.
(3) Yingzhuo Xu
Mr. Yingzhuo Xu, Chinese nationality, no permanent residency abroad, is a livestock specialist. He graduated
from South China Agricultural University with a bachelor’s degree in Animal Husbandry in 1991 and later
obtained a master’s degree in business administration from HEC Paris. As one of the founders of the Company, he
now serves as the Company’s director and Vice General Manager. Mr. Yingzhuo Xu holds 27% equity interests in
Guangzhou Haihao Investment Co., Ltd., the Company's controlling shareholder.
(4) Xiaojun Shang
Ms. Xiaojun Shang, Singaporean citizen, has obtained the permanent residency in Hong Kong. She graduated
from NUS Business School with a bachelor’s degree (first class honors) in finance and banking management and
is currently a director of the Company. Ms. Xiaojun Shang is an executive director of CDH Nemo (HK) Limited
and CDH Investments Management (Hong Kong) Limited.
(5) Chengping Lu
Professor Chengping Lu, Chinese nationality, no permanent residency abroad, majors in Veterinary Science, and
now is a professor as well as doctoral tutor. He graduated from Agricultural College of Yangzhou University with
a major in veterinary medicine in 1968, and was admitted to Nanjing Agricultural College in 1978 for a master’s
degree in veterinary microbiology and immunology. In 1982, the Ministry of Education sent him to the Federal
Republic of Germany for advanced studies and doctoral studies. In 1985, he obtained the doctoral degree in
veterinary medicine from University of Munich. In the same year, he returned to work at Nanjing Agricultural
University as a professor. He served as a professor in 1992 and was approved by the Academic Degree Committee
of the State Council in 1993 as a tutor for doctoral students. Now he is a professor at Nanjing Agricultural
University. In addition, he has served as Deputy Chairman of National Veterinary Professional Degree Education
Steering Committee, Dean of College of Veterinary Medicine of Nanjing Agricultural College, Executive Deputy
Director of the Graduate School, member of the 4th Veterinary Science Research and Appraisal Team of the
Academic Degree Committee of the State Council, convener of the 5th and the 6th Veterinary Science Research
and Appraisal Team, the Secretary-General of the 1st National Veterinary Professional Education Steering
Committee, the Chairman of the 2nd National Veterinary Professional Education Steering Committee, member of
                                                   Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Chinese Society of Microbiology and Vic Chairman of the Professional Veterinary Committee, and the Overseas
Visiting Professor at Nihon University.
Professor Chengping Lu has long been committed to the research of veterinary microbiology and immunology
and aquatic animal pathogenic microorganisms and immunology, and played an important role in the timely
diagnosis and effective prevention and control of swine streptococcal disease broken out in Sichuan in 2005,
producing a good social impact. At the same time, the “Swine Streptococcus Disease Research and Prevention and
Control Technology” won the second prize of the National Science and Technology Progress Award in 2007; in
2008, he was appointed as a Chief Expert in the special non-profit industrial (agricultural) scientific and
technological project of “Swine Streptococcus Disease Biohazard Prevention and Control Technology Research
and Demonstration” by the Ministry of Agriculture; in May 2013, he was appointed by OIE (World Organization
for Animal Health) as the specialist in the OIE Swine Streptococcus Disease Diagnosis Reference Laboratory.
(6) Xinchun Li
Professor Xinchun Li, Chinese nationality, no permanent residency abroad, Ph.D. in Economics from Humboldt
University, is now a professor and doctoral tutor of Sun Yat-Sen Business School, an expert enjoying Special
government allowances of the State Council, and a Cheung Kong Scholar Chair Professor. From April 2004 to
March 2011, he was appointed as Dean of Sun Yat-sen Business School. He has long been engaged in the
research and teaching of corporate strategic management, family business management, and entrepreneurial
management. He was selected into the New Century National Hundred, Thousand and Ten Thousand Talent
Project (2005) approved by the Ministry of Human Resources, the Ministry of Science and Technology, and the
Ministry of Education, and the New Century Excellent Talents (2004) of the Ministry of Education as well as a
member of China National MBA Education Supervisory Committee. Now, he is also an independent director of
Guangzhou Yuetai Group Co., Ltd. (600393) and an independent director of Guangzhou Digital Media Co., Ltd.
(871828).
(7) Erkang Deng
Ms. Erkang Deng, Chinese nationality, no permanent residency abroad, is a Chinese CPA. She graduated from
South China University of Technology with a master’s degree in applied chemistry and studied EMBA in China
Europe International Business School (CEIBS) from 2004 to 2007. However, she ever worked for Guangdong
Kangyuan Certified Public Accountants, Guangzhou Securities Investment Banking Department, Guangzhou
Gaojin Technology Industry Group Co., Ltd., Guangzhou Yiwen Environmental Technology Co., Ltd., and
Guangdong Lihai Group Co., Ltd. in charge of business audit, taxation, listing recommendation, financial
management as well as investment & financing management etc.. Now, she is a director and Chief Financial
Officer of Changzhou Bbetter Film Technologies Co., Ltd..
2. Supervisors
(1) Zhenxiong Qi
                                                    Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Dr. Zhenxiong Qi, Chinese nationality, has no permanent residency abroad. In 1992, he graduated from Huazhong
Agricultural University with a major in freshwater aquaculture and later studied the master’s degree in aquatic
biology. In 1998, he graduated from Ocean University of China with a doctorate in aquaculture. He successively
participated in the State Key Program of National Natural Science Foundation of China—Studies on the
Optimization       of     Integrated      Aquaculture       Ecosystem       Structure      of     Shrimps,     the
National Key Technologies R & D Program of China during the 8th Five-Year Plan Period—Studies            on   the
Structural Optimization of Integrated Seawater and Pond Aquaculture System, National Climb—B Plan:
Comprehensive R&D of Coastal Mud Flat in Shandong Province and was partially involved in the Shandong
Provincial Natural Science Fund Project -- Saline-Alkali Soil Comprehensive R&D in Shandong Province.
Meanwhile, he has also published many research papers and applied for two invention patents. In the field of
animal nutrition and feed research, he has hosted or participated in a number of R&D projects in Guangzhou City
and Panyu District, including Application of Biotechnology to Develop New Feed Protein Sources and
Development, Demonstration and Promotion of Environment-friendly Shrimp Feeds; with respect to the aquatic
animal farming and disease prevention & control, he has hosted or participated in relevant researches such as
Demonstration and Promotion of the Healthy Farming Mode for Grass Carp, Study on the Prevention and
Treatment of Fish Diseases by Using Chinese Herbal Medicines and Application of Microecological Preparations
in Feed and Aquaculture, and has accumulated rich experience in aquaculture at the grass-roots level. From the
day when he joins the Company on, he has mainly engaged in researches on feed nutrition, aquaculture and
aquaculture ecology. From June 6, 2007 to May 25, 2010, May 25, 2010 to August 21, 2013, August 21, 2013 to
June 7, 2016, and June 7, 2016 till now, he respectively served as the supervisor of the 1st Supervisory Committee
of the Company, the 2nd Supervisory Committee of the Company, the 3rd Supervisory Committee of the
Company and the 4th Supervisory Committee of the Company. Besides, Mr. Qi Zhenxiong holds 0.1% equity
interests in the Company’s controlling shareholder Guangzhou Haihao Investment Co., Ltd..
(2) Jing Wang
Ms. Jing Wang, Chinese nationality, has no permanent residency abroad. In 2001, she graduated from China
University of Science and Technology (USTC) with a major in management science. From 2006 to 2008, she
studied and obtained the MBA degree at Cheung Kong Graduate School of Business. From 2001 to 2006, she
respectively worked for iFLYTEK Co., Ltd., Shenzhen BW consulting Co., Ltd., and Tencent Technology Co.,
Ltd.. From early 2008 to 2010, she worked as a consultant at IBM China. From February 2012 on, she joined the
Company and is currently the director of the Company’s factory operations center.
(3) Jia Chen
Ms. Jia Chen, Chinese nationality, has no permanent residency abroad. In 2005, she graduated from Hunan
Business School, majoring in financial management; in 2008, she obtained the master’s degree in management
from Sun Yat-sen Business School. From July 2008 to June 2010, she worked for Hytera Communications Co.,
Ltd. and was engaged in financial work. In July 2010, she joined the Company and is now the Company’s
Financial Manager.
3. Senior Executives
                                                     Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
(1) Mingzhong Chen
Mr. Mingzhong Chen, Chinese nationality, no permanent residency abroad, has obtained the master’s degree in
business administration from Hong Kong Baptist University. In March 2000, he joined Guangzhou HAID and
worked in the Company in January 2004. He served as the administrative and purchasing manager of several
subsidiaries of the Company, and later was transferred to serve as the Company’s purchasing director. Now, he is
a Vice General Manager of the Company.
(2) Xueqiao Qian
Dr. Xueqiao Qian, Chinese nationality, no permanent residency abroad, Associate Professor, has obtained the
doctorate from the Institute of Hydrobiology, Chinese Academy of Science. He successively presided over or
participated in the Hubei Provincial Natural Science Fund Project -- Development and Utilization of Feather
Proteins in Fishery Feeds, the development projects of the State Key Laboratory of Freshwater Ecology and
Biotechnology -- Effects of Nutrition Levels and Nutritional History on Fish’s Growth and Activities, Research on
the Feeding Behavior and Chemical Sensation of Allogynogenetic Crucian Carp, and Studies on the Utilization of
Plant Protein by Main Cultured Freshwater Fish, the NSFC Project -- Studies on the Comparative Nutritional
Energetics of Feed Protein Requirements of Carnivorous Fish and Omnivorous Fish, and the MOA’s 948 project
-- Artificial Propagation and Large-scale Aquaculture of Paddlefish etc.. Further, he has published more than 20
papers, of which, three papers were published in international publications and included in SCI. He joined the
Company in 2004 and is mainly engaged in the aquatic animal nutrition and feed research and the development of
new feed additives. Now, he is the chief engineer of the Company. Meanwhile, Mr. Xueqiao Qian holds 3%
equity interests in the Company’s controlling shareholder Guangzhou Haihao Investment Co., Ltd..
(3) Shaolin Yang
Mr. Shaolin Yang, Chinese nationality, no permanent residency abroad, has obtained the master’s degree.
Graduated from Sun Yat-sen University with a major in Business Administration, he is also a senior accountant,
certified public accountant, and certified tax accountant, and has been selected and listed into the expert database
of the high-tech enterprises of Department of Science and Technology of Guangdong Province. From June 2005
to January 2008, he served as Financial Manager of Guangzhou KYH Metal Co., Ltd., and from December 2008
to April 2012, he served as Executive Director, CFO and Joint Secretary of KEE HOLDINGS COMPANY
LIMITED (HK.02011). From May/June 2016 till now, he has served as a supervisor of Guangdong Association of
Management Accountants (GAMA) and an off-campus tutor for master candidates in accounting of Sun Yat-sen
Business School. In April 2012, he joined the Company and is currently the Company’s CFO.
(4) Zhijian Huang
Mr. Zhijian Huang, with Chinese nationality and no permanent residency abroad, is an accountant and a
bachelor’s degree holder. In 2004, he joined the Company and was engaged in financial work. He successively
served as the Financial Manager and the Securities Representative of the Company. And now he is a Vice General
Manager and the Board Secretary of the Company.
                                                            Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Posts concurrently held in shareholding entities:
√ Applicable □ Not applicable
                                                            Post held in                                 Compensation       or
                                                                         Starting date of Ending date of
Name              Shareholding entity                       shareholding                                 allowance      from
                                                                         tenure           tenure
                                                            entity                                       shareholding entity
                                                            Executive       September 27,
Hua Xue           Guangzhou Haihao Investment Co., Ltd.                                                             None
                                                            director        2006
                                                                            September 27,
Yingzhuo Xu       Guangzhou Haihao Investment Co., Ltd.     Supervisor                                              None
Note              None
Posts held concurrently in other entities:
√ Applicable □ Not applicable
                                                                                                          Compensation or
                                                             Post held in Starting date of Ending date of
Name              Other entity                                                                            allowance from the
                                                             other entity tenure           tenure
                                                                                                          entity
                                                             Executive
Hua Xue           Guangzhou Juchang Investment Co., Ltd.                        March 9, 2011                        None
                                                             Director
                  CDH     Investments    Management   (Hong Executive
Xiaojun Shang                                                                   October 1, 2010                      Yes
                  Kong) Limited                              Director
                                                             Executive          September 29,
Xiaojun Shang CDH Nemo (HK) Limited                                                                                  None
                                                             Director
                                                             Lecturer,
                                                             Associate
Chengping Lu      Nanjing Agriculture University                                June 20, 1985                        Yes
                                                             Professor and
                                                             Professor
                                                                                September       1,
Xinchun Li        Sun Yat-Sen University                     Professor                                               Yes
                                                             Independent
Xinchun Li        Guangzhou Yuetai Group Co., Ltd.                              May 3, 2012          May 13, 2018    Yes
                                                             Director
                                                             Independent
Xinchun Li        Guangzhou Digital Media Co., Ltd.                             May 10, 2016         May 9, 2019     Yes
                                                             Director
                                                             Director and
                  Changzhou Bbetter Film Technologies Co., Chief                November       23,
Erkang Deng                                                                                                          Yes
                  Ltd.                                       Financial
                                                             Officer
Mingzhong                                                    Independent
                  Guangzhou Guanglan Investment Co., Ltd.                       July 26, 2013                        None
Chen                                                         Director
                  Guangdong Association of Management
Shaolin Yang                                                 Supervisor         May 18, 2016         May 18, 2021    None
                  Accountants
                                                             Extramural
Shaolin Yang      Sun Yat-Sen University                                        June 5, 2016         June 5, 2019    Yes
                                                             Tutor        for
                                                           Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                                                                master’s
                                                                degree
                                                                students
Note             None
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and senior
management as well as those who left in the Reporting Period:
□ Applicable √ Not applicable
IV Compensation of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of compensation for directors, supervisors and senior
management:
The compensation of the Company’s directors, supervisors and senior management is in strict compliance with the
Company’s Rules of Procedure for Meetings of Shareholders ( 股东大会议事规则》 and Rules of Procedure for
Board (《董事会议事规则》), as well as with the Company Law and the Company’s Articles of Association. The
compensation is determined according to the Company’s operating performance and these personnel’s
performance appraisal indicators.
Compensation of directors, supervisors and senior management in the Reporting Period:
Unit: RMB ’0,000 (in RMB ten thousand)
                                                                                              Total before-tax
                                                                            Incumbent/Forme    compensation       Compensation
       Name             Office title              Gender         Age
                                                                                   r             from the        from related party
                                                                                                 Company
                  Chairman of the
Hua Xue           Board                and Male                   48        Incumbent                   322.32 None
                  General Manager
                  Director and Vice
Yingzhuo Xu                               Male                    50        Incumbent                   121.45 None
                  General Manager
                  Director and Vice
Li Tian                                   Female                  46        Incumbent                   246.77 None
                  General Manager
Xiaojun Shang     Director                Female                  45        Incumbent                         0 None
                  Independent
Xinchun Li                                Male                    56        Incumbent                         8 None
                  Director
                  Independent
Erkang Deng                               Female                  50        Incumbent                         8 None
                  Director
                  Independent
Chengping Lu                              Male                    73        Incumbent                         8 None
                  Director
Zhenxiong Qi      Supervisor              Male                    48        Incumbent                    91.49 None
                                                                          Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Jing Wang             Supervisor            Female                             39        Incumbent                           62.15 None
Jia Chen              Supervisor            Female                             36        Incumbent                           27.62 None
                      Vice        General
Mingzhong Chen                              Male                               53        Incumbent                           82.64 None
                      Manager
                      Board     Secretary
Zhijian Huang         and Vice General Male                                    40        Incumbent                          100.73 None
                      Manager
                      Chief     Financial
Shaolin Yang                                Male                               44        Incumbent                          103.83 None
                      Officer
Xueqiao Qian          Chief Engineer        Male                               51        Incumbent                          105.91 None
Total                 --                    --                      --                   --                              1,288.91 --
Equity incentives for directors, supervisors and senior management in the Reporting Period:
√ Applicable □ Not applicable
Unit: share
                                                         Exercise
                                                                                                                                 Price     for
                                                         price    for                                           Newly
                                                                          Market                                                 restricted
                             Exercisabl Exercised exercised                                        Unlocked granted
                                                                          price     at Opening                                   shares            Closing
                             e shares in shares      in shares      in                             shares   in restricted
Name          Office title                                                period-end restricted                                  newly             restricted
                             Reporting Reporting Reporting                                         Reporting shares         in
                                                                          (RMB/shar shares held                                  granted           shares held
                             Period        Period        Period                                    Period       Reporting
                                                                          e)                                                     (RMB/shar
                                                         (RMB/shar                                              Period
                                                                                                                                 e)
                                                         e)
              Director
              and     Vice
Li Tian                                0             0               0              0    315,000                  157,400                 7.48        314,900
              General
              Manager
              Board
              Secretary
Zhijian
              and     Vice             0             0               0              0    126,000                  137,600                 7.48        200,600
Huang
              General
              Manager
              Chief
Shaolin
              Financial                0             0               0              0    126,000                   112,200                7.48        175,200
Yang
              Officer
Xueqiao       Chief
                                       0             0               0              0    294,000                   111,500                7.48        258,500
Qian          Engineer
Total         --                       0             0               --             --   861,000            0     518,700                     --      949,200
                             1. The restricted shares of the Company’s directors and senior management in this table are in lockup. 2. As
Remark (if any)              the appraisal indicators of the Company’s 2016 annual operating performance failed to meet the
                             unlocking/exercise conditions as in the Restricted Share and Share Option Incentive Plan (《限制性股票与
                                                           Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                        股票期权激励计划》) the 5,493,600 restricted shares of all the awardees in the second unlocking period
                        should not be unlocked and should be repurchased and cancelled by the Company instead. A total of
                        430,500 restricted shares were repurchased from these directors and senior management, including 157,500
                        shares from Li Tian, 63,000 shares from Zhijian Huang, 63,000 shares from Shaolin Yang and 147,000
                        shares from Xueqiao Qian.
V Employees
1. Numbers, Functions and Educational Backgrounds of Employees
Number of in-service employees of Parent Company (Haid
Group exclusive of subsidiaries)
Number of in-service employees of major subsidiaries                                                                     14,667
Total number of in-service employees                                                                                     15,138
Total number of paid employees in Reporting Period                                                                       15,138
Number of retirees to whom Parent Company or its major
subsidiaries need to pay retirement pension
Functions
                            Function                                                       Employees
Production                                                                                                                6,214
Sales                                                                                                                     5,345
Technical                                                                                                                 1,089
Financial
Administrative                                                                                                            1,349
Procurement
Total                                                                                                                    15,138
Educational backgrounds
                     Educational background                                                Employees
Doctoral degree
Master’s degree
Bachelor’s degree                                                                                                        3,211
Junior college                                                                                                            2,870
Senior high school, technical secondary school and below                                                                  8,479
Total                                                                                                                    15,138
2. Employee Compensation Policy
(1) As per the Labor Contract Law of the People’s Republic of China, as well as other applicable national and
                                                    Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
local laws and regulations, in order to regulate compensation with effective procedures and standards, the
Company has formulated, taking its realities into consideration, a post and compensation system to help boost its
development at present and in the future through offering industry-competitive compensation to its employees and
aligning their performances to compensation to fully promote initiative and creativity among employees.
(2) The Company has formulated the Restricted Share and Share Option Incentive Plan (《限制性股票与股票期
权激励计划》), the 2016 Restricted Share Incentive Plan (Revised Draft)(《2016年限制性股票激励计划(修订
稿)》) and the Key Personnel Stock Ownership Plan (《核心团队员工持股计划》) to cover more employees
and more incentive means. These plans will help mobilize employees, bring more economic benefits, improve the
compensation and incentive mechanism and better the corporate governance.
3. Employee Training Plans
Employee training has always been a priority for the Company. It draws up annual training plans based on the
needs of the employees and the Company. A sound training system has been put in place to cover diversified
trainings in form and content, including the corporate culture training given to employees when they first join the
Company, the specific skill trainings and managerial expertise trainings provided when they become official
employees, and lectures given by experts and seminars, as well as trainings inside and outside the Company,
which has helped improve employees’ professional skills and quality.
4. Labor Outsourcing
□ Applicable √ Not applicable
                                                   Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Section IX. Corporate Governance
I Overview
Since its establishment, the Company has continuously regulated its operations and improved its internal
management system, comprehensively searched for any problem in the corporate governance, and rectified
existing problems. Meanwhile, the Company has not only strictly observed relevant laws and regulations
including Corporation Law and Securities Law etc., but also studied and implemented relevant requirements put
forward by various regulatory agencies such as China Securities Regulatory Commission (CSRC), Shenzhen
Stock Exchange, China Securities Regulatory Commission Guangdong Office so as to improve the corporate
governance structure and upgrade the Company’s standard operations. As of the end of the Reporting Period, the
Company believes that the actual situation of the corporate governance meets the requirements of the normative
documents, and has formed the corporate governance structure featuring a clear separation of powers and
responsibilities among the authorities, decision-making bodies, supervisory bodies and the management, clear
definition of their respective duties, checks and balances, scientific decision-making and coordinated operation.
1. The Establishment of the Company System
From the Company’s listing to the end of the Reporting Period, the Company has formulated and strictly
implemented various systems, including Articles of Association, Rules of Procedure of the Shareholders’ General
Meeting, Rules of Procedure of the Board, Working System of the Special Committee of the Board, Rules of
Procedure of the Supervisory Committee, Independent Director System, Working Rules of General Manager,
Code of Conduct of Directors, Supervisors and Senior Executives, Board Secretarial Work System, Related Party
and Related Transaction Management System, Special Reserve and Use Management System of Raised Funds,
Management Policy for Shares held by Directors, Supervisors and Senior Executives in the Company and Related
Changes, Administrative Measures for the External Provision of Financial Assistance, Assessment and
Management Methods for Stock Option Incentive Plans, Management Systems for Holding Subsidiaries,
Registration Management System for Insider Information, Insider Information Registration and Filing System,
Accountability System for Major Errors in Information Disclosure in Annual Reports, Futures Management
System, Working Rules for Annual Reports by the Audit Committee, Investment Decision Management System,
Investor Relations Management System, External Information User Management System, Information Disclosure
System, Internal Reporting System for Major Information, Dividend Management System, Information Disclosure
Management System for Debt Financing Instruments in the Inter-bank Bond Market, Investor Complaints
Management System, Future Foreign Exchange Settlement Management System, The Implementation and
Assessment Management Policies for the Restricted Stock Option and the Stock Option Incentive Plans, 2016
Annual Implementation and Assessment Management Policies for the Restricted Stock Option Assessment Plans
and Foreign Exchange Hedging Management System etc., and the established sound internal control system in
order to continuously improve the Company’s governance structure and enhance the Company’s governance
level.
2. Shareholders and Shareholders’ Meeting
                                                     Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
During the Reporting Period, the Company strictly adhered to applicable laws and regulations such as Corporation
Law, Rules of the Shareholders’ General Meeting of Listed Companies, Articles of Association, and Rules of
Procedure of the Shareholders’ General Meeting, and standardized the convening, holding and voting procedures
of the Shareholders’ General Meeting to ensure that all Shareholders could be equal, and fully exercise their rights.
In addition, as witnessed by the hired lawyers, the legitimacy of the meeting’s convening, holding and voting
procedures could be guaranteed, and relevant legitimate rights and interests of the Company and its shareholders
could be secured as well. In 2017, four shareholders’ meetings were convened and held by the Board in total; the
convening, holding and voting procedures of such meetings were witnessed by the lawyers and all were legal and
valid.
3. The Company and Controlling Shareholders
The Company has independent and complete businesses and independent management capabilities. It is
completely independent from the controlling shareholders in terms of business, personnel, assets, organization,
and finance. The controlling shareholders exercises their rights and assume corresponding obligations in
accordance with the law, and there is no direct or indirect interference with the Company’s decision-making and
business operation beyond the authority of the shareholders’ general meeting. Meanwhile, the Company’s Board,
Supervisory Committee, and various internal functional departments are capable of independent operations. As of
the Reporting Period, no controlling shareholder of the Company ever occupied the capital of the listed Company,
and no listed Company illegally provided any controlling shareholder with any guarantee.
4. Directors and the Board
Strictly in accordance with Corporation Law, Articles of Association, Rules of Procedure of the Board and
Independent Director System, the Company has elected and appointed various directors, and such election and
appointment procedures are open, fair and just. Besides, the composition and number of directors meet relevant
legal and regulatory requirements. The members for the Company’s 4th session of Board are all nominated,
approved and elected by the Board by means of the cumulative voting system. Currently, there are 7 directors,
including 3 independent directors. Independent directors occupy more than one third of all directors and their
qualifications are in accordance with Guidance Opinions on the Establishment of Independent Director System in
Listed Companies.
All directors of the Company have performed their duties in strict compliance with relevant laws, regulations, and
regulatory documents, attended all board meetings and carried out related works in a serious and responsible
manner, and firmly conformed to any statement and commitment made by directors. However, independent
directors have full right to know about the Company’s major issues and can issue independent opinions on major
issues without being influenced.
The Board has established the audit committee, the remuneration and appraisal committee, the strategy committee
and the nomination committee. Each committee can exercise its functions in accordance with its work rules and
make due contributions to the standardization of corporate governance. In the meantime, the Board is able to carry
out its work in strict accordance with relevant laws and regulations. All directors of the Company are honest and
trustworthy, diligent and responsible, attend corresponding board meetings and shareholders’ meetings with a
serious attitude, actively participate in relevant training, and are familiar with relevant laws and regulations.
                                                   Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
5. Supervisors and the Supervisory Committee
The Company has strictly observed Corporation Law, Articles of Association and other relevant regulations to
appoint supervisors. The 4th session of the Supervisory Committee consists of three supervisors, including two
shareholder supervisors and one employee supervisor. The number and composition of the Supervisory
Committee meet relevant requirements stipulated in applicable laws and regulations. However, the shareholder
representative supervisors are elected by adopting the cumulative voting system, and the employee supervisors are
elected and appointed by means of the employees’ assembly in the form of secret ballot. The number of
supervisors that served as directors or senior management personnel of the Company in recent two years does not
exceed one half of the total number of supervisors of the Company, and the number of supervisors nominated by a
single shareholder does not exceed one half of the total number of supervisors of the Company.
The Company’s supervisors can earnestly fulfill their responsibilities in accordance with Rules of Procedure of
the Supervisory Committee, effectively supervise and inspect the Company’s major issues, related transactions,
the use of funds raised, the legality and compliance of duties performed by the Company’s directors and senior
management, and maintain legitimate rights and interests of the Company and its shareholders.
6. Stakeholders
The Company fully respects and safeguards legitimate rights and interests of relevant stakeholders, realizes the
coordinated balance of interests of the society, shareholders, the Company, and employees etc., sincerely treats
suppliers and customers, earnestly cultivates every employee, develops the mutual benefit and win-win
cooperation with relevant stakeholders, and jointly promotes the Company’s sustained, healthy and rapid
development.
7. Information Disclosure and Transparency
Pursuant to relevant laws and regulations, the Company’s Information Disclosure System, Investor Relations
Management System and Information Disclosure Management System for Debt Financing Instruments in the
Inter-bank Bond Market, the Company has disclosed corresponding information in a true, accurate, complete and
timely manner to ensure that all shareholders have equal access to such information.
The Company has designated the board secretary in charge of the Company’s information disclosure and investor
relations management, and the securities department serves as the executive department for information disclosure
and investor relations management. The Company pays special attention to communicate with investors and will
strengthen communication with investors by various means such as telephone, e-mail, and investor relations
interactive platform etc.
8. Internal Audit System
The Company has established the complete internal audit system and set up the internal audit department in
charge of the effective internal supervision of the Company’s daily operations.
9. Investor Relations Management
                                                      Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
The Company has always attached great importance to the management of investor relations, carried out related
works in accordance with Investor Relations Management System and other systems, implemented the investor
relations management by various means such as Shenzhen Stock Exchange investor relations interactive platform,
investor hot-lines, and reception of investors etc., strengthened the communication with investors, and fully
guaranteed the investors’ right to know.
The corporate governance is a systematic and long-term project that requires continuous improvement. After the
Company is successfully listed, it is willing to accept supervisions from all parties, adhere to the scientific outlook
on development, constantly improve the corporate governance system, and strengthen the implementation of
various laws and regulations to promote the healthy development of the Company and enhance the overall
competitiveness.
The implementation of the Company’s special activities of corporate governance and that of the insider
information registration management system are described as follows:
1. The implementation of the Company’s special activities of corporate governance
(1) According to Guangdong Securities Regulatory Commission [2017] No. 11 Notice on Forwarding the Notice
on the Implementation of Law Propaganda and Education Activities on National Security Education Day, the
Group actively organized directors, supervisors, senior management personnel, and employees from the
headquarters and various subsidiaries to completely participate in such activities, and created a strong and good
atmosphere for such security education by means of training lectures, dissemination via the Internet platforms,
and drills. Through the successful implementation of the law propaganda and education activities, the Group has
extensively promoted the importance of national security and its own safety, effectively raised employees’ safety
awareness, and consciously safeguarded the national security and its own safety.
(2) According to relevant instructions and requirements stated in Guangdong Securities Regulatory Commission
[2017] No. 21 Notice on Launching the Special Publicity Campaign for Investor Protection, Rules Formulation,
and Risk Identification within the Jurisdiction, the Company focused on Investor Protection as the theme of the
publicity campaign, and carried out relevant activities by five stages--Insider Trading, Market Manipulation,
Information Disclosure Violations, Illegal Operations of Main Market Players, and Conventional Publicity.
During this period, the activity planning team led by the chairman of the Board, deputy general manager, secretary
of the Board, director of the Company’s president office successfully created a good and favorable atmosphere for
such publicity, and made full use of various platforms including newspapers and periodicals, and the Internet, and
various training seminars to enhance the level of knowledge in finance and law of investors and strengthen their
legal awareness and risk prevention awareness.
(3) According to Guangdong Securities Regulatory Commission [2017] No.98 Notice on Printing and Distributing
Information Disclosure and Warning Education Materials for Listed Companies, the Group organized directors,
supervisors, senior management personnel and related personnel to seriously study Compilation of Information
Disclosure Violations of Listed Companies compiled and published by China Securities Regulatory Commission
Guangdong Office, and some of these cases and content were discussed deeply. In this case, directors, supervisors
                                                           Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
and senior management of the Group made clear work instructions to relevant departments involved in such
information disclosure, and required relevant departments to learn lessons from these cases and attach great
importance to and strictly guarantee the authenticity, accuracy, completeness, timeliness and fairness of disclosed
information.
(4) In order to respond to the spirit of Guangdong Securities Regulatory Commission [2017] No. 113 Notice on
Conducting 2017 Publicity Campaign on National Constitution Day (December 4), thoroughly implement the
spirit of the 19th National Congress of the Communist Party of China, strengthen the concept of rule by law of the
people, and promote constitution awareness, the Group's Propaganda Department under the leadership of directors,
supervisors and senior management personnel applied various platforms to disseminate relevant legal propaganda
materials and work reports of the 19th National Congress of the Communist Party of China.
2. Formulation and Implementation of Confidential Information Insiders Registration and Management System
According to Corporation Law, Securities Law, Management Policies for Information Disclosure of Listed
Companies, Stock Listing Rules of Shenzhen Stock Exchange, Guidelines for the Operation of Listed Companies
on SME Boards of Shenzhen Stock Exchange, Regulations on the Establishment of Insiders Registration and
Management System by Listed Companies and other relevant laws, regulations, and Articles of Association,
Proposal of Establishing Insider Information Registration and Filing System was deliberated and approved at the
11th meeting of the 1st session of Board on April 13, 2010; Proposal of Deliberating Insider Information
Registration and Management System at the 18th meeting of the 2nd session of Board on December 29, 2011. The
two proposals were respectively disclosed on the website (http://www.cninfo.com.cn) on April 15, 2010 and on
December 31, 2011. The Company properly carried out corresponding information insider registration and
reporting works strictly according to relevant requirements and systems, and recorded and revealed the list of all
information insiders and relevant reports, communications, formulation, resolutions and disclosures before any
information was disclosed. If any special event is involved and the list of the information insider’s close relatives
(spouse, parents and offspring) was required, the Company also finished corresponding registration and reporting
work. During the Reporting Period, the Company notified all directors, supervisors, senior management personnel
and relevant information insiders that they were not allowed to buy and sell the Company’s stocks within the
window period by means of SMS and e-mail 30 days before the disclosure of regular reports and 10 days before
the disclosure of earnings forecasts and Preliminary Earnings Estimate, and conducted an internal audit on the
buying and selling of the Company’s stocks by directors, supervisors, senior management personnel and relevant
information insiders. During the Reporting Period, no information insider was ever involved in the illegal buying
and selling of the Company’s stocks, and no relevant personnel was suspected of being involved in insider trading
and was imposed some supervision measures and administrative penalties by competent regulatory departments.
Indicate by tick market whether there is any material incompliance with the regulatory documents issued by the CSRC governing the
governance of listed companies.
□ Yes √ No
No such incompliance.
                                                    Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
II The Company’s Independence from Controlling Shareholder in Business, Personnel, Asset,
Organizational Structure and Financial Affairs
With independent and complete business and self-dependent operating ability, the Company is completely
independent from its controlling shareholder in business, personnel, asset, organizational structure and financial
affairs. The controlling shareholder exercises its rights and shoulders its corresponding obligations according to
law, with no direct or indirect intervention in the Company’s decision-making and operating activities by going
beyond the General Meeting.
1. Independence in Business
The Company has an independent and complete business operation system, with all the necessary conditions and
abilities to carry out production and operational activities and extend its business in an independent manner.
Therefore, the Company is independent from its controlling shareholder in business, with no reliance on its
controlling shareholder or any of the controlling shareholder’s related parties.
2. Independence in Personnel
The Company’s senior management and key technical staff all work full time for and get paid by the Company.
None of them hold any post other than director or supervisor in or get paid by the controlling shareholder, the
actual controller or any other company under their control.
3. Independence in Asset
The Company owns its own production and operation venues, as well as is able to control all of its assets with
complete, clear ownership. None of the Company’s assets, capital or other resources is occupied to harm the
interests of the Company.
4. Independence in Organizational Structure
The Company has a sound, clear organizational structure. Its Board, Supervisory Committee and all other
functional departments are able to operate in an independent manner. The Company’s organizational structure is
complete independent from its controlling shareholder, with no interventions from the controlling shareholder of
any of its related parties in this respect. All the Company’s departments perform their duties independently, with
no overlap between the Company’s organizational structure and its controlling shareholder’s.
5. Independence in Financial Affairs
As per the applicable laws and regulations, the Company has put in place a sound, well-established financial
management system. It has an independent accounting system and an independent financial department with
professional financial staff, who hold no posts in the controlling shareholder or any of its related parties. The
Company has its own bank account, not sharing the same account with its controlling shareholder. And it pays its
own taxes by law. And the Company is able to use its self-owned capital at its sole discretion, with none of its
                                                             Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
capital being occupied by the controlling shareholder or it having to provide any guarantee for the controlling
shareholder against laws and regulations.
III Horizontal Competition
□ Applicable √ Not applicable
IV Annual and Special Meetings of Shareholders Convened during Reporting Period
1. General Meetings Convened during Reporting Period
                                      Investor
Meeting               Type                                  Date          Disclosure date Index to disclosed information
                                      participation ratio
                                                                                          Announcement on Resolutions of First
                                                                                          Extraordinary General Meeting in 2017
First Non-operating
                                                            February   15, February    16, (No. 2017-019) disclosed on Securities
General Meeting in Extraordinary           62.90%
                                                            2017          2017            Times,       China      Securities       Journal,
2017
                                                                                          Securities               Daily               and
                                                                                          www.cninfo.com.cn
                                                                                          Announcement on Resolutions of 2016
                                                                                          Annual        General       Meeting         (No.
2016 Annual General                                                                       2017-050)      disclosed      on     Securities
                      Annual               60.92%           May 17, 2017 May 18, 2017
Meeting                                                                                   Times,       China      Securities       Journal,
                                                                                          Securities               Daily               and
                                                                                          www.cninfo.com.cn
                                                                                          Announcement         on     Resolutions       of
Second                                                                                    Second Extraordinary General Meeting
Non-operating                                               September 13, September    14, in 2017 (No. 2017-073) disclosed on
                      Extraordinary        63.07%
General Meeting in                                          2017          2017            Securities     Times,     China      Securities
2017                                                                                      Journal,       Securities        Daily       and
                                                                                          www.cninfo.com.cn
                                                                                          Announcement on Resolutions of Third
                                                                                          Extraordinary General Meeting in 2017
Third Non-operating
                                                            November 20, November      21, (No. 2017-087) disclosed on Securities
General Meeting in Extraordinary           63.04%
                                                            2017          2017            Times,       China      Securities       Journal,
2017
                                                                                          Securities               Daily               and
                                                                                          www.cninfo.com.cn
2. Non-operating General Meetings Convened at Request of Preferred Shareholders with Resumed Voting
Rights
□ Applicable √ Not applicable
                                                             Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
V Performance of Duties by Independent Directors in Reporting Period
1. Attendances of Independent Directors at Board Meetings and Meetings of Shareholders
Attendances of independent directors at board meetings and meetings of shareholders
                    Due                             Attendances at
                                                                     Attendances at                   Not attending
                    attendances at Attendances at board meetings                                                       Attendances at
Independent                                                          board meetings Absences     at board meetings
                    board meetings board meetings by                                                                   meetings       of
director                                                             through      a board meetings in person for
                    in    Reporting on site         telecommunica                                                      shareholders
                                                                     proxy                            twice in a row
                    Period                          tion
Chengping Lu        7               3               4                0                0               N/A
Xinchun Li          7               5               2                0                0               N/A
Erkang Deng         7               2               5                0                0               N/A
Explanation for any independent director not attending board meetings in person for twice in a row:
Not applicable.
2. Objections Raised by Independent Directors on Matters of the Company
Indicate by tick mark whether any independent director raised any objection on any matter of the Company.
□ Yes √ No
No such cases in the Reporting Period.
3. Other Information about Performance of Duties by Independent Directors
Indicate by tick mark whether any suggestions from independent directors were adopted by the Company.
√ Yes □ No
Suggestions of independent directors adopted or non-adopted by the Company:
During the Reporting Period, the Company’s independent directors performed their duties in strict accordance
with the Code of Corporate Governance for Listed Companies in China, the Directive on Establishment of
Independent Director System in Listed Companies, the Rules for Independent Directors and other applicable laws
and regulations. Upon an in-depth knowledge about the Company’s production and operation status obtained
through attending the Company’s board meetings and meetings of shareholders, as well as through on-site
investigations, the independent directors carefully exercised their voting rights and effectively performed their
duties. The independent directors issued independent, just opinion on the Company’s deposit and use of raised
funds, provision of guarantees for external parties, credits and liabilities with related parties, internal control,
independent auditor engagement, investments in external parties, hedging business, profit distribution, equity
incentive and key personnel stock ownership plans arising during the Reporting Period. All the independent
directors’ suggestions and opinion were accepted by the Company during the Reporting Period, which protected
the interests of the Company as a whole, as well as the legal interests of the shareholders, especially the minority
shareholders.
                                                    Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
VI Performance of Duties by Specialized Committees under Board in Reporting Period
1. Performance of Duties by Audit Committee under Board
The Audit Committee under the fourth Board convened a total of six meetings during the Reporting Period, with
details as follows:
On January 4, 2017, the Audit Committee convened its first meeting in 2017, where a summary of the internal
audit in 2016 was presented, the internal audit plan for 2017 was discussed, and a detailed work plan for the
financial and internal control execution matters and other specialized audits was drawn up for the Company and
its subsidiaries.
On April 20, 2017, the Audit Committee convened its second meeting in 2017, where the accountants from GP
Certified Public Accountants LLP reported their audit on the Company’s 2016 annual financial statements and
communicated with the Company on the first draft of the independent auditor’s report for 2016.
On April 24, 2017, the Audit Committee convened its third meeting in 2017, where the Q1 2017 Financial
Statements and the Internal Audit Report (Q1 2017) were reviewed and approved.
On June 23, 2017, the Audit Committee convened its fourth meeting in 2017, where the Company’s accounting
policy changes were reviewed and approved upon careful discussion.
On August 4, 2017, the Audit Committee convened its fifth meeting in 2017, where the H1 2017 Financial
Statements and the Internal Audit Report (H1 2017) were reviewed and approved.
On October 24, 2017, the Audit Committee convened its sixth meeting in 2017, where the Q3 2017 Financial
Statements and the Internal Audit Report (Q3 2017) were reviewed and approved, and the internal audit plan for
2018 was discussed.
2. Performance of Duties by Compensation and Appraisal Committee under Board
The Compensation and Appraisal Committee under the fourth Board convened a total of five meetings during the
Reporting Period, with details as follows:
On March 7, 2017, the Compensation and Appraisal Committee convened its first meeting in 2017, where the
following matters were reviewed and approved: the cancellation of invalid share options under the Restricted
Share and Share Option Incentive Plan (,《限制性股票与股票期权激励计划》) the adjustments to the number of
equities under the 2016 Restricted Share Incentive Plan (Revised Draft) (《2016年限制性股票激励计划(修订
稿)》), the first grant of restricted shares under the 2016 Restricted Share Incentive Plan (Revised Draft (《2016
年限制性股票激励计划(修订稿)》) and a growth sharing incentive plan, among others.
On March 31, 2017, the Compensation and Appraisal Committee convened its second meeting in 2017, where a
post revision plan and a compensation plan were reviewed and approved.
                                                    Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
On April 20, 2017, the Compensation and Appraisal Committee convened its third meeting in 2017, where the
following matters were reviewed and approved: the adjustments to the number of equities under the Restricted
Share and Share Option Incentive Plan 《限制性股票与股票期权激励计划》 and the cancellation (or repurchase
and cancellation) of the invalid incentive for the unlocking (or exercise) conditions for the second unlocking (or
exercise) period not being met.
On October 24, 2017, the Compensation and Appraisal Committee convened its fourth meeting in 2017, where the
following matters were reviewed and approved: the adjustments to the numbers of equities under the Restricted
Share and Share Option Incentive Plan (《限制性股票与股票期权激励计划》) and the 2016 Restricted Share
Incentive Plan (Revised Draft (《2016年限制性股票激励计划(修改稿)》), as well as the repurchase and
cancellation of the corresponding restricted shares and the cancellation of the corresponding share options.
On November 29, 2017, the Compensation and Appraisal Committee convened its fifth meeting in 2017, where
the grant of reserved restricted shares to awardees under the 2016 Restricted Share Incentive Plan (Revised Draft
(《2016年限制性股票激励计划(修订稿)》) was reviewed and approved.
3. Performance of Duties by Nomination Committee under Board
The Nomination Committee under the fourth Board convened a total of two meetings during the Reporting Period,
with details as follows:
On January 4, 2017, the Nomination Committee convened its first meeting in 2017, where a proposal on the
nominated general manager for the strategic development division and another nominated general manager for the
Yitun pig business division, together with their qualifications, was reviewed.
On November 29, 2017, the Nomination Committee convened its second meeting in 2017, where a proposal on a
nominated assistant to the president in charge of segment operation and management, together with the assistant’s
qualifications, was reviewed.
4. Performance of Duties by Strategy Committee under Board
The Strategy Committee under the fourth Board convened a total of three meetings during the Reporting Period,
with details as follows:
On January 4, 2017, the Strategy Committee convened its first meeting in 2017, where the plan for commodity
futures, option hedging and foreign exchange hedging transactions was reviewed and approved.
On February 8, 2017, the Strategy Committee convened its second meeting in 2017 to discuss the investment
strategy for the big farming business in the future.
On June 20, 2017, the Strategy Committee convened its third meeting in 2017, where the following matters were
reviewed and approved: the incorporation of a microcredit subsidiary and the acquisition of a 60% stake in
Shandong Daxin Group Co., Ltd.
                                                                Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
VII Performance of Duties by Supervisory Board
Indicate by tick mark whether the Supervisory Board found any risk to the Company during its supervision in the Reporting Period.
□ Yes √ No
The Supervisory Board raised no objections in the Reporting Period.
VIII Appraisal of and Incentive for Senior Management
1. Appraisal of Senior Management
The Company has put in place a senior management selection, appraisal, incentive and restrictive system. All
appointed by and being responsible to the Board, senior management shoulders the operating indicators set by the
Board. The Compensation and Appraisal Committee under the Board is responsible for a year-end appraisal of
senior management’s service ability, performance of duties and fulfillment of objectives, among others. And then
the committee formulates a compensation plan for the Board’s review. During the Reporting Period, the Company
duly restricted its senior management as per the applicable laws and regulations by aligning their compensation
with their and the Company’s performances.
2. Incentive for Senior Management
For details, see “Part V Significant Events”, “XV Implementation of Equity Incentive Plans, Employee Stock
Ownership Plans or Other Employee Incentive Measures” herein.
IX Internal Control Assessment Report
1. Material Internal Control Deficiencies Identified for Reporting Period
□ Yes √ No
2. Internal Control Self-Assessment Report
Disclosure   date    of   internal   control
                                               April 20, 2018
self-assessment report
Index to disclosed internal control self-
                                               www.cninfo.com.cn
assessment report
Assessed entities’ combined assets as a
                                               100.00%
percentage of consolidated total assets
Assessed entities’ combined sales revenue
                                               100.00%
as a percentage of consolidated sales
                                                                  Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
revenue
Internal control deficiency identification standards
Type                                         Financial-reporting related                           Non-financial-reporting related
                                             A material deficiency refers to a deficiency
                                             or a deficiency group that consists of
                                             multiple deficiencies that may cause a great
                                             deviation from the control objective. It is
                                             considered a material financial-reporting
                                                                                                   Material deficiencies: (1) The internal
                                             internal control deficiency if any of the
                                                                                                   control environment is invalid; (2) Any
                                             following cases occurs: (1) Any of the
                                                                                                   leak of insider information about any
                                             Company’s directors, supervisors or senior
                                                                                                   investment in external parties, asset
                                             management is involved in a serious fraud;
                                                                                                   restructuring, etc. against regulations
                                             (2) The Company corrects its disclosed
                                                                                                   causes any severe fluctuations in the
                                             financial statements for multiple times; (3)
                                                                                                   Company’s stock price or any materially
                                             certified public accountants identifies a
                                                                                                   adverse impact on the Company’s image;
                                             material misstatement in the current financial
                                                                                                   (3) The violation of the Company’s
                                             statements which the Company has failed to
                                                                                                   decision-making      procedure        in    any
                                             identify during its internal control process;
                                                                                                   significant event causes a significant
                                             or (4) The Company’s Audit Committee and
                                                                                                   economic loss to the Company; or (4)
                                             internal     audit     organ    maintain    invalid
                                                                                                   The independent auditor identifies any
                                             supervision over internal control.
                                                                                                   other   material     deficiencies      in   the
                                             A serious deficiency refers to a single
                                                                                                   Company.
                                             deficiency or a deficiency group including
Nature standard                                                                                    Serious deficiencies: (1) The Company
                                             other deficiencies that is less serious than a
                                                                                                   provides any guarantee or conducts any
                                             material deficiency but may still cause a
                                                                                                   derivative      financial            instrument
                                             deviation from the control objective. It is
                                                                                                   transaction without due authorization or
                                             considered     a      serious   financial-reporting
                                                                                                   performance     of     the     corresponding
                                             internal control deficiency if any of the
                                                                                                   information disclosure duty; (2) A severe
                                             following cases occurs: (1) The Company
                                                                                                   loss of key talent occurs; (3) The
                                             does not select and adopt its accounting
                                                                                                   Company is punished or a materially
                                             policies as per the generally accepted
                                                                                                   adverse impact is made to its image due
                                             accounting standards; (2) The Company does
                                                                                                   to deviation from governing policies,
                                             not formulate anti-fraud procedures or
                                                                                                   measurement     errors,      etc.;    (4)   The
                                             control measures; (3) The Company has no
                                                                                                   independent auditor identifies any other
                                             control systems for the accounting treatment
                                                                                                   serious deficiencies in the Company.
                                             of non-conventional or special transactions;
                                                                                                   An ordinary deficiency refers to any
                                             or (4) There are one or multiple deficiencies
                                                                                                   deficiency that is neither a material
                                             in controls over the financial reporting
                                                                                                   deficiency nor a serious deficiency.
                                             process and there is no reasonable assurance
                                             that the financial statements prepared are
                                             truthful and accurate.
                                             An ordinary deficiency refers to any
                                             deficiency     that     is   neither   a   material
                                                                  Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
                                                 deficiency nor a serious deficiency.
                                                                                                Material deficiency: the direct loss
                                                                                                caused to the Company >= RMB 1
                                                 Material deficiency: misstated amount >=
                                                                                                million.
                                                 5% of net asset value.
                                                                                                Serious deficiency: RMB 0.5 million <=
                                                 Serious deficiency: 3% of net asset value <=
Quantitative standard                                                                           the direct loss caused to the Company <
                                                 misstated amount < 5% of net asset value.
                                                                                                RMB 1 million.
                                                 Ordinary deficiency: misstated amount < 3%
                                                                                                Ordinary deficiency: the direct loss
                                                 of net asset value.
                                                                                                caused to the Company < RMB 0.5
                                                                                                million.
Number of material financial-reporting
internal control deficiencies
Number               of               material
non-financial-reporting    internal    control 0
deficiencies
Number     of serious financial-reporting
internal control deficiencies
Number of serious non-financial-reporting
internal control deficiencies
X Independent Auditor’s Report or Assurance Report on Internal Control
Not applicable.
                                                  Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Section X. Corporate Bonds
Does the Company have any corporate bonds publicly offered and listed on the stock exchange, which were undue
before the date of this Report’s approval or were due but could not be redeemed in full?
No.
                                               Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
Section XI. Financial Statements
Independent Auditor’s Report
GKSZ [2018] No. G17036520013
To the Shareholders of Guangdong Haid Group Co., Limited
I Opinion
We have audited the financial statements of Guangdong Haid Group Co., Limited (the “Company”),
which comprise the consolidated and parent company balance sheets as of December 31, 2017, the
consolidated and parent company statements of income, cash flows and changes in owners’ equity
for the year then ended, as well as the notes to the financial statements.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
consolidated and parent company financial position of the Company at December 31, 2017, and the
consolidated and parent company operating results and cash flows for the year then ended, in
conformity with the Chinese Accounting Standards for Business Enterprises (CAS).
II Basis for Opinion
We conducted our audits in accordance with the Audit Standards for Chinese Registered
Accountants. Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for Audit of Financial Statements section of our report. We are independent of the
Company in accordance with the China Code of Ethics for Certified Public Accountants, and we
have fulfilled our other ethical responsibilities in accordance with the said Code of Ethics. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
III Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
(I) Allowance for Doubtful Accounts Receivable
1. Description
As of December 31, 2017, the balance of the Company’s accounts receivable stood at RMB 864.38
                                              Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
million, with an allowance of RMB 104.10 million for doubtful accounts receivable. For further
information, see note III of the financial statements, item 11 under the heading “Accounts
Receivable” and note V, item 4 under the heading “Accounts Receivable”. When assessing the
recoverability of an account receivable, the Company’s management shall consider the age of the
account, the payment history of the indebted and the indebted’s ability to pay, among others. As the
balance of the Company’s accounts receivable was of a large amount and it involved complex and
significant judgments of the Company’s management in making the allowance for doubtful
accounts receivable, we paid attention to the estimate of the allowance for doubtful accounts
receivable as a key audit matter.
2. How Our Audit Addressed the Key Audit Matter
1) We obtained an understanding of the management’s key internal controls over financial reporting
associated with credit risk control, recovery of accounts and estimate of allowance for doubtful
accounts receivable, and evaluated how effectively these internal controls were designed and
worked.
2) With respect to the overdue accounts receivable, we communicated with the management to
learn about the information about the major indebted parties and the management’s assessment on
the recoverability of these accounts.
3) We evaluated whether the management’s policy for doubtful accounts for the current period was
consistent with the prior year, evaluated the appropriateness of the methods and assumptions
adopted by the management in making the allowance for doubtful accounts receivable, and
reviewed whether the allowance was sufficient.
4) We implemented an external confirmation procedure on certain selected accounts receivable with
a significant balance and crosschecked the amounts recorded by the Company with the confirmation
results.
5) We checked the relevant payment history and the information about payments after the balance
sheet date.
(II) Impairment in Goodwill
1. Description
As of December 31, 2017, the balance of the Company’s goodwill stood at RMB 297.12 million,
with an allowance of RMB 2.58 million for impairment in goodwill. For further information, see
note III of the financial statements, item 22 under the heading “Impairments in Long-Lived Assets”
and note V, item 19 under the heading “Goodwill”. The Company’s management shall test goodwill
at least annually to determine whether any impairment loss shall be recognized. The management
tests goodwill for impairment by estimating the recoverable amounts of the asset groups that
goodwill is allocated to, and then comparing these recoverable amounts with the carrying value of
those asset groups and goodwill. To estimate the recoverable amounts involves estimating the
present value of the future cash flows the asset groups are expected to generate. When estimating,
the management needs to make significant judgments and assumptions, including the determination
of key parameters such as the future selling price, the cost of production, the operating expense, the
discount rate and the growth rate. As the goodwill impairment test involved a complex process and
the significant judgments of the Company’s management, we paid close attention to the goodwill
impairment during our audit.
                                              Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
2. How Our Audit Addressed the Key Audit Matter
We compared the relevant asset groups’ actual results in 2017 with their corresponding estimates
made in the prior year to evaluate the reliability of the management’s estimates on cash flows.
Meanwhile, by referring to industry practice, we evaluated the appropriateness of the valuation
methods used by the management in estimating the cash flows.
We compared the data used in the estimation of the cash flows with historical data. We also
evaluated the appropriateness of the key assumptions such as the future revenue growth rate, the
forecast gross margin percentage, the expense ratio and the discount rate that the management used
in estimating the cash flows. Additionally, we tested whether the calculation of the net present value
of future cash flows was correct.
IV Other Information
The Company’s management is responsible for the other information. The other information
comprises all of the information included in the Company’s 2017 Annual Report other than the
financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
V Responsibilities of Management and Those Charged with Governance for Financial
Statements
The Company’s management is responsible for the preparation of the financial statements that give
a fair view in accordance with CAS, and for designing, implementing and maintaining such internal
control as the management determines is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the management either intends to liquidate
the Company or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting
process.
VI Auditor’s Responsibilities for Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
                                               Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with CAS will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of these financial statements.
As part of an audit in accordance with CAS, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
(1) 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 those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists related
to events or conditions that may cast significant doubt on the Company’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required by CAS to draw
users’ attention in our auditor’s report to the related disclosures in the financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the financial statements. We are
responsible for the direction, supervision and performance of the Company audit. We remain solely
responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any noteworthy deficiencies
in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and communicate with them all relationships
and other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters
                                              Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
that were of most significance in the audit of the financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
GP Certified Public Accountants (SGP)                               Chinese CPA: Xian Hongei
                                                                      (Engagement Partner)
                                                                       Chinese CPA: Li Xujia
Guangzhou             China                                            April 19, 2018
                                                      Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
1. Consolidated Balance Sheet
[English translation for reference only]
Prepared by Guangdong Haid Group Co., Limited
Unit: RMB
                  Item                          December 31, 2017                        December 31, 2016
Current assets:
  Monetary assets                                            1,392,046,440.33                          1,544,038,368.64
  Settlement reserve
  Interbank loans granted
  Financial assets at fair value through
                                                                 9,601,140.00                             25,129,490.00
profit or loss
  Derivative financial assets
  Notes receivable                                              19,209,112.07                             12,647,272.79
  Accounts receivable                                         760,285,344.09                             575,469,413.38
  Prepayments                                                 744,735,722.57                             520,059,372.77
  Premiums receivable
   Reinsurance receivables
   Receivable reinsurance        contract
reserve
   Interest receivable                                           1,802,621.51                                112,525.00
  Dividends receivable
   Other receivables                                          360,198,872.96                             263,434,066.32
   Financial assets purchased under
resale agreements
   Inventories                                               3,383,848,292.19                          2,057,360,267.29
  Assets classified as held for sale
  Current portion of non-current assets
  Other current assets                                        214,976,686.51                             315,427,537.52
Total current assets                                         6,886,704,232.23                          5,313,678,313.71
Non-current assets:
  Loans and advances to customers
  Available-for-sale financial assets                         283,721,350.00                             304,326,300.00
  Held-to-maturity investments
  Long-term receivables                                        10,531,182.97                               9,983,818.73
  Long-term equity investments                                  32,554,508.11                             14,655,965.08
  Investment property                                          78,309,684.87                              78,797,688.32
  Property, plant and equipment                              3,760,863,514.36                          3,112,968,819.59
  Construction in progress                                    331,973,573.26                             209,254,285.27
  Engineering materials
  Proceeds from disposal of property,
plant and equipment
  Productive living assets                                     17,121,846.74                              19,186,575.33
  Oil and gas assets
  Intangible assets                                           846,002,659.79                             606,251,777.43
  R&D expense                                                    6,936,387.95                             11,618,835.13
  Goodwill                                                    294,540,631.48                             181,675,925.85
  Long-term prepaid expense                                   195,501,009.05                             134,504,180.12
  Deferred income tax assets                                  289,789,208.00                             217,581,144.58
                                          Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
  Other non-current assets                        125,906,914.12                              73,406,510.31
Total non-current assets                         6,273,752,470.70                          4,974,211,825.74
Total assets                                   13,160,456,702.93                          10,287,890,139.45
Current liabilities:
  Short-term borrowings                          2,303,898,763.70                          1,608,616,105.38
   Borrowings from central bank
   Customer deposits and deposits from
banks and other financial institutions
   Interbank loans obtained
   Financial liabilities at fair value
                                                   18,771,309.55                               1,768,330.00
through profit or loss
   Derivative financial liabilities
  Notes payable
  Accounts payable                               1,228,192,300.58                            939,144,383.10
  Advances from customers                        1,187,389,466.67                          1,158,082,274.10
  Financial    assets  sold under
repurchase agreements
  Handling charges and commissions
payable
  Payroll payable                                 532,053,872.59                             385,362,328.70
  Taxes payable                                    75,977,766.22                              44,679,597.65
  Interest payable                                   5,188,104.75                              3,230,460.23
  Dividends payable                                  8,880,810.40                              2,388,168.75
  Other payables                                  550,146,036.68                             129,411,103.47
  Reinsurance payables
   Insurance contract reserve
   Payables for acting trading of
securities
   Payables for underwriting of
securities
   Liabilities directly associated with
assets classified as held for sale
   Current portion of non-current
liabilities
   Other current liabilities                       97,919,123.92                              64,036,794.03
Total current liabilities                        6,008,417,555.06                          4,336,719,545.41
Non-current liabilities:
  Long-term borrowings
  Bonds payable
     Including: Preferred shares
    Perpetual bonds
  Long-term payables                              101,574,138.86                               2,388,168.77
  Long-term payroll payable                        72,463,249.40                              43,126,395.03
  Specific payables
  Provisions
  Deferred income                                  75,417,073.10                              74,939,304.70
  Deferred income tax liabilities                  65,655,212.14                              22,604,876.91
  Other non-current liabilities
Total non-current liabilities                     315,109,673.50                             143,058,745.41
Total liabilities                                6,323,527,228.56                          4,479,778,290.82
Owners’ equity:
                                                         Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
  Share capital                                                 1,575,237,054.00                             1,541,428,454.00
  Other equity instruments
     Including: Preferred shares
       Perpetual bonds
  Capital reserves                                              1,849,285,839.41                             1,512,859,968.55
  Less: Treasury shares                                           302,540,781.00                                40,893,365.00
  Other comprehensive income                                        -2,771,414.88                               15,148,924.06
  Specific reserve
  Surplus reserves                                                381,963,650.77                              296,643,179.04
  General reserve
  Retained earnings                                             2,973,520,338.94                             2,324,405,117.52
Total equity attributable to shareholders
of Company (Haid Group exclusive of                             6,474,694,687.24                             5,649,592,278.17
subsidiaries)
Non-controlling interests                                         362,234,787.13                              158,519,570.46
Total owners’ equity                                           6,836,929,474.37                             5,808,111,848.63
Total liabilities and owners’ equity                          13,160,456,702.93                           10,287,890,139.45
Legal representative: Hua Xue               Vice General Manager: Li Tian           Chief Financial Officer: Shaolin Yang
2. Balance Sheet of the Parent Company [English translation for reference only]
Unit: RMB
                  Item                            December 31, 2017                           December 31, 2016
             Current assets:
  Monetary assets                                                 908,775,398.48                             1,161,987,246.06
  Financial assets at fair value through
                                                                    2,295,520.00                                 7,458,190.00
profit or loss
  Derivative financial assets
  Notes receivable
  Accounts receivable                                                                                            1,548,577.42
  Prepayments                                                       2,658,800.00                                11,989,285.96
  Interest receivable                                                 964,410.93                                    36,164.38
  Dividends receivable                                             35,271,940.95
  Other receivables                                             5,186,480,721.39                             3,701,533,097.58
  Inventories                                                         526,200.00                                 4,170,868.62
  Assets classified as held for sale
  Current portion of non-current assets
  Other current assets                                            102,510,705.87                              201,281,530.72
Total current assets                                            6,239,483,697.62                             5,090,004,960.74
Non-current assets:
  Available-for-sale financial assets                             252,000,000.00                              251,000,000.00
  Held-to-maturity investments
  Long-term receivables                                             1,518,902.50                                 1,005,526.50
  Long-term equity investments                                  2,446,634,148.53                             1,871,785,950.62
  Investment property                                              57,508,103.78                                57,295,395.39
  Property, plant and equipment                                   188,151,399.29                              163,564,293.15
  Construction in progress                                          2,110,291.85                                26,957,781.08
  Engineering materials
                                              Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
  Proceeds from disposal of property,
plant and equipment
  Productive living assets
  Oil and gas assets
  Intangible assets                                    54,052,625.93                              46,584,862.82
  R&D expense
  Goodwill
  Long-term prepaid expense                            19,999,474.32                              11,191,772.06
  Deferred income tax assets                           99,958,215.87                              78,365,952.48
  Other non-current assets                               1,719,904.77                                805,616.72
Total non-current assets                             3,123,653,066.84                          2,508,557,150.82
Total assets                                         9,363,136,764.46                          7,598,562,111.56
Current liabilities:
   Short-term borrowings                             1,651,081,274.16                          1,350,935,350.00
   Financial liabilities at fair value
                                                       18,003,916.36                               1,707,930.00
through profit or loss
   Derivative financial liabilities
  Notes payable
  Accounts payable                                       3,841,782.78                              2,232,986.27
  Advances from customers                                                                            396,550.00
  Payroll payable                                     117,090,429.49                              68,918,622.16
  Taxes payable                                          6,008,234.23                              4,265,614.54
  Interest payable                                       4,568,756.23                              2,901,750.15
  Dividends payable                                      3,841,961.69                              2,388,168.75
  Other payables                                     2,192,507,455.76                          1,412,163,207.70
  Liabilities directly associated with
assets classified as held for sale
   Current portion of           non-current
liabilities
   Other current liabilities                             7,221,463.77                              4,306,052.86
Total current liabilities                            4,004,165,274.47                          2,850,216,232.43
Non-current liabilities:
  Long-term borrowings
  Bonds payable
     Including: Preferred shares
    Perpetual bonds
  Long-term payables                                  101,574,138.86                               2,388,168.77
  Long-term payroll payable
  Specific payables
  Provisions
  Deferred income                                      13,360,846.55                               5,822,940.10
  Deferred income tax liabilities                        8,977,906.64                              2,118,596.13
  Other non-current liabilities
Total non-current liabilities                         123,912,892.05                              10,329,705.00
Total liabilities                                    4,128,078,166.52                          2,860,545,937.43
Owners’ equity:
  Share capital                                      1,575,237,054.00                          1,541,428,454.00
  Other equity instruments
                                                      Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
     Including: Preferred shares
    Perpetual bonds
  Capital reserves                                            1,914,381,221.12                          1,569,915,182.39
  Less: Treasury shares                                         302,540,781.00                            40,893,365.00
  Other comprehensive income
  Specific reserve
  Surplus reserves                                              381,963,650.77                           296,643,179.04
  Retained earnings                                           1,666,017,453.05                          1,370,922,723.70
Total owners’ equity                                         5,235,058,597.94                          4,738,016,174.13
Total liabilities and owners’ equity                         9,363,136,764.46                          7,598,562,111.56
3. Consolidated Income Statement [English translation for reference only]
Unit: RMB
                     Item                              2017
1. Total operating revenue                                    32,556,634,127.38                        27,185,309,985.32
  Including: Sales revenue                                    32,556,634,127.38                        27,185,309,985.32
     Interest revenue
     Premium revenue
     Handling charge and commission
revenue
2. Total operating costs                                      31,270,302,771.79                        26,265,962,445.88
  Including: Cost of sales                                    28,979,578,692.42                        24,625,416,153.34
    Interest expense
    Handling charge and commission
expense
    Surrenders
     Net claims paid
     Net amount provided as insurance
contract reserve
     Expenditure on policy dividends
     Reinsurance premium expense
     Taxes and surtaxes                                          47,090,570.89                            33,744,344.90
     Selling expense                                           1,070,474,010.85                          761,033,415.86
     Administrative expense                                    1,047,237,762.73                          756,304,596.69
     Financial expenses                                          80,452,779.18                            70,268,699.78
      Impairment losses on assets                                45,468,955.72                            19,195,235.31
Add: Gain on changes in fair value (“-”
                                                                 -32,550,170.35                           26,088,100.00
for loss)
   Return on investment (“-” for loss)                        174,653,719.01                            55,176,421.39
      Including: Share of profit or loss of
                                                                   6,438,634.76                             3,578,379.82
joint ventures and associates
   Gains on foreign exchange (“-” for
loss)
   Gains on assets disposal (“-” for loss)                       6,037,071.03                             3,383,608.77
  Other income                                                   41,395,359.88
3. Operating income (“-” for loss)                           1,475,867,335.16                         1,003,995,669.60
  Add: Non-operating gain                                        28,416,521.26                            58,036,722.33
  Less: Non-operating loss                                       22,219,213.88                            18,054,107.31
4. Pretax income (“-” for loss)                              1,482,064,642.54                         1,043,978,284.62
  Less: Income tax expense                                      255,604,928.97                           171,398,030.44
5. Net income (“-” for net loss)                             1,226,459,713.57                          872,580,254.18
                                                          Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
  5.1 Net income from continuing
                                                                  1,226,459,713.57                            872,580,254.18
operations (“-” for net loss)
   5.2 Net income from discontinued
operations (“-” for net loss)
   Net income attributable to shareholders
                                                                  1,207,225,209.35                            855,810,234.81
of Company
   Net      income         attributable     to
                                                                     19,234,504.22                             16,770,019.37
non-controlling interests
6. Other comprehensive income, net of
                                                                    -16,856,264.57                             14,190,668.57
tax
   Attributable to shareholders of
                                                                    -17,920,338.94                             15,075,849.91
Company
     6.1 Items that will not be
reclassified to profit or loss
    6.1.1 Changes in net liabilities or
assets caused by remeasurements on
defined benefit pension schemes
    6.1.2       Share        of      other
comprehensive income of investees that
will not be reclassified to profit or loss
under equity method
     6.2 Items that may subsequently be
                                                                    -17,920,338.94                             15,075,849.91
reclassified to profit or loss
    6.2.1       Share        of      other
comprehensive income of investees that
will be reclassified to profit or loss under
equity method
    6.2.2 Gain/Loss on changes in fair
value of available-for-sale financial
assets
    6.2.3 Gain/Loss arising from
reclassification      of     held-to-maturity
investments to available-for-sale financial
assets
    6.2.4 Effective gain/loss on cash
flow hedges
    6.2.5 Differences arising from
translation              of            foreign
                                                                    -17,920,338.94                             15,075,849.91
currency-denominated                 financial
statements
    6.2.6 Other
   Attributable       to      non-controlling
                                                                      1,064,074.37                               -885,181.34
interests
7. Total comprehensive income                                     1,209,603,449.00                            886,770,922.75
   Attributable to shareholders of
                                                                  1,189,304,870.41                            870,886,084.72
Company
   Attributable       to      non-controlling
                                                                     20,298,578.59                             15,884,838.03
interests
8. Earnings per share
  8.1 Basic earnings per share                                                0.78                                          0.55
 8.2 Diluted earnings per share                                             0.78                                         0.55
Where business combinations involving entities under common control occurred in the current period, the net income achieved by
the acquirees before the combinations was RMB 0.00, with the amount for last year being RMB 0.00.
Legal representative: Hua Xue                                                               Vice General Manager: Li Tian
Chief Financial Officer: Shaolin Yang
                                                    Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
4. Income Statement of the Parent Company [English translation for reference only]
Unit: RMB
                   Item                             2017
1. Sales revenue                                           1,029,514,416.38                            562,873,872.87
  Less: Cost of sales                                       439,252,584.03                             183,773,462.03
     Taxes and surtaxes                                        3,995,041.77                              4,471,709.07
     Selling expense                                           7,711,441.89                              6,838,883.19
     Administrative expense                                 316,375,501.94                             206,147,858.73
     Financial expenses                                      111,099,746.02                            124,264,912.07
    Impairment losses on assets                             422,915.16                                -243,696.49
    Add: Gain on changes in fair value
                                                             -21,458,656.36                              6,733,070.00
(“-” for loss)
    Return on investment (“-” for loss)               755,967,175.94                           1,004,710,383.51
          Including: Share of profit or loss
                                                               4,968,619.45                              3,978,755.25
of joint ventures and associates
    Gains on assets disposal (“-” for
                                                                 -42,365.88                                 33,108.26
loss)
    Other income                                          14,689,716.12
2. Operating income (“-” for loss)                        899,813,055.39                           1,049,097,306.04
  Add: Non-operating gain                                      8,993,035.99                             22,511,838.38
  Less: Non-operating loss                                     2,500,860.63                              4,470,110.35
3. Pretax income (“-” for loss)                           906,305,230.75                           1,067,139,034.07
  Less: Income tax expense                                    53,100,513.47                             17,758,832.32
4. Net income (“-” for net loss)                          853,204,717.28                           1,049,380,201.75
  4.1 Net income from continuing
                                                            853,204,717.28                           1,049,380,201.75
operations (“-” for net loss)
   4.2 Net income from discontinued
operations (“-” for net loss)
5. Other comprehensive income, net of
tax
   5.1 Items that will not be reclassified
to profit or loss
     5.1.1 Changes in net liabilities or
assets caused by remeasurements on
defined benefit pension schemes
     5.1.2        Share        of      other
comprehensive income of investees that
will not be reclassified into profit or
loss under equity method
   5.2 Items that may subsequently be
reclassified to profit or loss
     5.2.1        Share        of      other
comprehensive income of investees that
will be reclassified into profit or loss
under equity method
     5.2.2 Gain/Loss on changes in fair
value of available-for-sale financial
assets
     5.2.3 Gain/Loss arising from
reclassification of held-to-maturity
investments        to     available-for-sale
financial assets
     5.2.4 Effective gain/loss on cash
flow hedges
     5.2.5 Differences arising from
translation            of            foreign
currency-denominated               financial
                                                     Fulltext of 2017 Annual Report of Guangdong Haid Group Co., Limited
statements
     5.2.6 Other
6. Total comprehensive income                                 853,204,717.28                           1,049,380,201.75
7. Earnings per share
   7.1 Basic earnings per share                                          0.55                                      0.68
   7.2 Diluted earnings per share                                        0.55                                      0.67
5. Consolidated Cash Flow Statement [English translation for reference only]
Unit: RMB
                   Item                              2017
1. Cash flows from operating activities:
   Proceeds from sale of commodities
                                                            33,544,235,792.90                         28,084,310,664.81
and rendering of services
   Net increase in customer deposits and
deposits from banks and other financial
institutions
   Net increase in loans from central
bank
   Net increase in loans from other
financial institutions
   Premiums received on original
insurance contracts
   Net proceeds from reinsurance
   Net increase in deposits and
investments of policy holders
   Net increase in proceeds from
disposal of financial assets at fair value
through profit or loss
   Interest, handling charges and
                                                                 3,813,764.79
commissions received
   Net increase in interbank loans
obtained
   Net increase in proceeds from
repurchase transactions
   Tax rebates                                                   4,055,969.22                             13,686,115.76
   Cash generated by other operating
                                                              122,605,560.15                             77,945,398.02
activities
Subtotal of cash generated by operating
                                                            33,674,711,087.06                         28,175,942,178.59
activities
   Payments for commodities and
                                                            30,201,765,337.10                         24,905,396,167.42
services
   Net increase in loans and advances to
                                                               83,000,000.00                             20,000,000.00
customers
   Net increase in deposits in central
bank and in interbank loans granted
   Payments for claims on original
insurance contracts
   Interest, handling charges and
commissions paid
   Policy dividends paid
  Cash paid to and for employees                             1,574,349,631.70                          1,252,613,654.29
  Taxes paid                                                  336,639,740.76                            304,263,224.59
  Cash used in other operating
                                                              984,734,921.65                            551,514,584.56
activities
Subtotal of cash used in operating
                                                            33,180,489,631.21                         27,033,787,630.86
activities
Net cash flows from operating activities                      494,221,455.85                           1,142,154,547.73
2. Cash flows from investing activities:
   Proceeds     from     disposal      of
                                                             5,669,875,07

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