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海大集团:2019年年度报告(英文版)
2020-05-23 20:37:13  4435K
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广东海大集团股份有限企业2019年年度报告全文Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,LimitedGuangdongHaidGroupCo.,Limited2019AnnualReportStockCode:002311StockAbbreviation:HaidGroupBondCode:128102BondAbbreviation:HaidConvertibleBondsDateofApprovalforPublication:21April2020Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited1SectionI.ImportantNotice,TableofContentsandDefinitionsTheboardofdirectors(the"Board"),thesupervisorycommittee,thedirectors,thesupervisorsandtheseniormanagementoftheGuangdongHaidGroupCo.,Limited(the"Company")herebywarrantthetruthfulness,accuracyandcompletenessoftheinformationpresentedinthisreport,guaranteethattherearenomisrepresentations,misleadingstatementsormaterialomissionscontainedinthisannualreport,andareindividuallyandcollectivelyresponsiblefortheauthenticity,accuracyandcompletenessoftheinformationcontainedinthisreport.Mr.HuaXue,headoftheCompany,andMr.ShaolinYang,headinchargeofaccountingworkandheadoftheaccountingdepartment(AccountingOfficer),declarethattheywarrantthetruthfulness,accuracyandcompletenessofthefinancialstatementsintheannualreport.AlldirectorswerepresentinpersonattheBoardmeetingtoconsiderandapprovethisannualreport.TheReportcontainsforward-lookingstatementssuchasfutureplans,whichdonotconstituteanyspecificundertakingsbytheGrouptoitsinvestors.Investorsareadvisedtopayattentiontoinvestmentrisks.RiskWarning:I.RiskofPeriodicalFluctuationsintheFeedIndustryduetoAbnormalWeatherandEpidemicDiseasesduringAnimalProductionThefeedindustrymainlyservesthedownstreamanimalfeedingindustry.Theabnormalchangesinnaturalelementssuchasprecipitationandtyphoonmayleadtofluctuationsoftheinventoryoflivestockoraquaticproductsandeventhelarge-scaleoutbreakofanimaldiseases.Thisthusaffectsthedemandforfeedandlikelycausestheriskofperiodicandregionalfluctuationsofthelatter.Withtheenvironmentalchangesandtheexpansionofanimalproductionindustry,humanandanimalepidemicdiseasesmayalsooccuroccasionally.Forinstance,theCOVID-19epidemicstartedtowreakhavocontheworldinJanuary2020;theAfricanswinefevervirusbrokeoutacrossChinainAugust2018;andPRRSV-mediatedpigdisease,shrimp-relevantEMSepidemicdiseaseandpoultry-relevant“H7N9”diseasealloccurredrecently.TheoutbreakofFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited2animaldiseaseswilldirectlyinhibitthescaleofanimalproductionandreducethedemandforfeedintheshortterm;majoranimalandhumanepidemicdiseasesmayalsoleadtocompulsorymeasuresimposedbythegovernmenttorestricthumanandgoodscirculationtocutofftheinfectionsources,whichmaydampenthedemandfromend-consumers,leadingtoadownturnoftheanimalproductionindustry,andfurtheraffectthefeeddemand,givingrisetoadverseeffectsontheproductionandoperationoffeedenterprises.Riskmanagementmethods:(1)TheCompanyiscurrentlyfullydeployingfactoriesanddevelopinglocalmarketsinmajorareasinSouthernChina,CentralChina,EasternChinaandNorthernChinaandoverseasmarketsinSoutheastAsia,etc.andtheexpansionofregionaldistributioncaneffectivelycopewiththeriskofweatheranomaliesandnaturaldisastersinlocalareas.(2)TheCompany'sfeedvarietiescoverpigfeed,chickenfeed,duckfeedandotherlivestockfeedandfishfeed,shrimpfeedandotheraquaticfeed.Withavarietyofproductsandawell-balancedstructure,itcaneffectivelydealwiththeriskofsinglebreedspeciesandhasstrongcomprehensiveanti-riskcapability.(3)TheCompanyhassetupprofessionalfunctionaldepartmentsatitsheadquarters,andtheGrouphassetupmultipleregional/businessdivisionsaccordingtoregionsorbusinesscategories.Eachprofessionalcenteraimsatacquiringtechnicalandmanagementleadershipinitsfieldandprovidestechnicalandmanagementstandardsaswellasintegratedandprofessionalmanagementandservicesupportformultipleregional/businessdivisionsandvariousbranchesandsubsidiaries.TheflatandprofessionalmanagementstructureandanefficientmanagementteamenabletheCompanytoallocatevariousresourcesinatimelymannerduringtheepidemic,andmaketargetedanti-epidemicarrangementsfordifferentbusinessesandregions.II.RiskofDrasticPriceFluctuationsofMajorRawMaterialsThefeedingredientsmainlyconsistofvariouskindsofstapleagriculturalproductssuchascornandsoybeans(soybeanmeal).Inrecentyears,thedomesticandinternationalmarketsofagriculturalproducthavebeencloselylinked.Changesintheplantingareaandharvestofcropsinmajorgrain-producingcountries,purchasingandstorageandsubsidypolicies,importandexportpolicies,fluctuationsinlogisticscapacityandcostsofshipping,exchangerates,humanandanimalepidemicdiseasesandothersmaycausegreatfluctuationsininternationaltradeandpricesofagriculturalproducts,which,inturn,hasacertainimpactonthecostoffeedandfarming.Withthestrengtheningoftheinternationalizationintradeofagriculturalproducts,thefactorsforchangesinthepricesofagriculturalproductshavebecomemorecomplexandthepricefluctuationshavethereforeincreased.IfrawmaterialpricesfluctuateandtheCompanyfailstounderstandthechangesinthetradeoffeedrawmaterialsinaFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited3timelymannerandpromptlyimplementstrategicmanagementandriskcontrolofprocurement,theCompanymayfacetheriskofrisingintegratedprocurementcosts.Riskmanagementmethods:(1)TheCompanydividesrawmaterialintodifferentcategoriesandimplementsacombinationofcentralizedprocurementofstaplecategoryandlocalprocurementofregionalvarieties,whichnotonlyguaranteestheadvantagesoflarge-scalerawmaterialprocurement,butalsoobtainslocalizationadvantagesfromrapidresponseinrespectofregionalprocurement;(2)TheCompanycontinuouslyinvestsintheconstructionoftherawmaterialprocurementresearchsystem.Theteamoftheprofessionalrawmaterialinformationresearchdepartmentisrelativelymature.Itconductsstrategicprocurementthroughthereal-timetracking,researchandjudgmentofthedomesticandforeignbulkrawmaterialmarkettrends,andimplementspositionriskmanagementforbulkrawmaterialsthroughfutureshedging,rawmaterialstradeandothertoolstoeffectivelycontrolprocurementrisks;(3)TheCompanyhasaccumulatedrichexperienceinresearchanddevelopmentofanimalnutritionandfeedformulatechnologies,andhasresearchanddevelopmentteamcomposedofover1,000members.Largeamountsoffundsarespentonresearchanddevelopmenteachyear,focusingonanimalnutritionrequirements,feedformulatechnology,animalfarmingandgeneticimprovement,comprehensiveinvestigationonhealthyanimalfarmingstrategies,andotherresearchareas.TheCompanyhasaprofoundunderstandingofanimalnutritionalrequirementsandhigherlevelofexpertiseincomprehensiveutilizationofrawmaterials.Therefore,incaseofrawmaterialpricefluctuations,itcanquicklyadjusttheformulatocontrolthereasonablefeednutrientlevelandformulacosts.III.RiskofStructural,RegionalandScaleAdjustmenttoFarmingIndustryunderEnvironmentalProtectionRegulationsandPoliciesInrecentyears,theStatehasintroducedaseriesofenvironmentalprotectionlawsandregulationsincludingthenewEnvironmentalProtectionLaw(环保法),theRegulationsonPreventionandControlofPollutionfromLarge-ScaleProductionofLivestockandPoultry(畜禽规模养殖污染防治条例),ActionPlanforPreventionandTreatmentofWaterPollution(水污染防治行动计划),andtheGuidingOpinionsonAdjustingtheLayoutofPigProductionintheSouthernWaterNetworkRegion(关于促进南方水网地区生猪养殖布局调整),the"13thFive-YearPlan"onEcologicalandEnvironmentalProtection(“十三五”生态环境保护规划),whichstipulatethepollutionpreventionandcontrolofanimalproductionindustry,increasethepollutioncontrolofanimalproductionindustry,andespeciallylimittheproductionscaleintheregionsofkeywaterFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited4sourcesanditssurroundingareas.Accordingtotheregulationsandpoliciesofthecentralgovernment,bannedareasandrestrictedareashavebeensetupthroughoutthecountry,andpigfarmsinthebannedareasinthesouthernwaternetworkareaaregraduallyrelocating.Theimplementationofenvironmentalprotectionpolicieswillspeedupthewithdrawalofprivatepigfarmingfarmers,reducethebackwardproductioncapacityfailingtomeetenvironmentalprotectionstandardsandwithasmallscale,andenablelarge-scalefarmerstocontinuouslyexpandtheirproductioncapacityandimprovethefarmingscaleandstructure;Inaddition,theestablishmentofbannedareasandrestrictedareaswillenforceadjustmentstothepigproductioncapacityinallplacesacrossthecountry.Theadjustmentstothescalecompositionofpigproductionandtherelocationofpigproductionareawillcertainlyhaveaprofoundimpactontheexistingcapacitylayout,marketshare,pricingpowerandbusinessmodelofthefeedindustry.Theimpactofenforcedenvironmentalprotectionpoliciesonthepiggrowingandfeedindustriesputsexistingcompetitivecompaniesinthemarketatriskofreshuffle.Riskmanagementmethods:(1)TheCompanycontinuallyimprovesitscapabilitytoservefarmers.Inadditiontofeedproducts,theCompanyisalsoengagedintheindustrialchainofseedlings,animalhealthcareproducts,farmingandfinanceandhasastrongstickinesstolarge-scalefarmers;(2)ThefeedvarietiesoftheCompanycoverlivestock,poultry,andaquaticanimalsandtheproductlineisabundant.Theproductionlinesforpigfeed,chickenfeed,duckfeedandpelletedfishfeedcanbeshared.TheCompanycanrapidlyshifttheproductionlayoutandmakeadjustmentstoadapttothechangesintheindustrybyadjustingtheproductioncapacityinallplaces.(3)TheCompanyadoptsmultiplemodelstospeeduptheproductionlayoutinareaswithrichresourcesandstrongenvironmentalcarryingcapacity,andtoseizethemarketshareofnewanimalfarmingareas.IV.RiskofExchangeRateFluctuationsTheglobalprocurementofrawmaterialshasbecomethenorm.ThescaleofoverseasinvestmentandoverseasoperationsoftheCompanyisalsorapidlyexpanding.Thescaleofcross-borderfundsettlementandthestockofoverseasassetshavegrownsubstantially,involvingthecurrencytypesofvariousrelatedcountries.Currencyexchangeratefluctuationsaresubjecttodifferentinfluencefactors,andexchangeratefluctuationsinanycurrencymayhaveacertainimpactonthesettlementcostandassetstockvalueoftheregion.Riskmanagementmethods:(1)Basedonthebusinessscale,businessmodel,andsettlementcharacteristicsindifferentregionsandcountries,theCompanystrictlycontrolstheexchangeraterisks,carefullyselectssettlementcurrencies,Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited5andstrivestoachieverelativelybalancedregionalfundinflowandoutflowthroughstructuralarrangementsoffinancingsourcesandfinancingtypes;(2)Theexpansionoftwo-wayfluctuationsintheRMBexchangeratehasbecomethenewnormal.TheCompanyfurtherenhancesitsawarenessofforeignexchangeriskmanagement,andarrangessettlementmodelsbasedontheprocurementandsalesstrategiesandcyclecharacteristicsofimportandexportoperations.Andforwardforeignexchangesettlementandsale,swaps,foreignexchangeoptionsandotherfinancialinstrumentsareflexiblyusedtolocktheexchangeraterisks,controlprocurementandsalescosts,andcontrolthepossibleriskbroughtaboutbyexchangeratefluctuations.(3)TheCompanysetsupanoverseascapitalpooltoachievecentralizedmanagementofforeignexchanges,increasetheutilizationefficiencyofforeignexchanges,aswellasreducetheriskofexchangeratefluctuationsinthesettlementandpaymentofexchanges.(4)Intheoverseasbusinessoperations,duetothehighcostofexchangeratelock-in,theCompanygivesplaytotheadvantageofthehighinterestratesofthelocalcurrenciesandchoosesappropriatetermdepositschemesforhighinterestincometooffsetthedepreciationriskofthelocalcurrencies.TheproposedprofitdistributionplanoftheCompanywasconsideredandpassedbytheBoard:onthebasisofthetotalnumberofsharesontheregistrationdatewhentheplanisimplementedinthefuture,theCompanywilldistributecashdividendofRMB3.5(taxinclusive)and0bonusshare(taxinclusive)forevery10existingsharesheldbyallshareholderswithoutcapitalizationofcapitalreserve.ThisreporthasbeenpreparedinbothChineseandEnglish.Shouldtherebeanydiscrepanciesormisunderstandingsbetweenthetwoversions,theChineseversionshallprevail.ThecompletepublishedChinese2019AnnualReportisavailableat&stockCode=002311&announcementId=1207538986&announcementTime=2020-04-21.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited6TableofContentsSectionI.ImportantNotice,TableofContentsandDefinitions...................................................1SectionII.CompanyProfileandKeyFinancialIndicators.........................................8SectionIII.BusinessOverview................................................................................13SectionIV.DiscussionandAnalysisofOperations..................................................21SectionV.MaterialMatters......................................................................................50SectionVI.ShareChangesandShareholderInformation.........................................87SectionVII.PreferredShares...................................................................................97SectionVIII.ConvertibleCorporateBonds..............................................................98SectionIX.Directors,Supervisors,SeniorManagementandStaff...........................99SectionX.CorporateGovernance..........................................................................113SectionXI.CorporateBonds..................................................................................125SectionXII.FinancialStatements..........................................................................126SectionXIII.DocumentsAvailableforReference..................................................370Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited7DefinitionsItemDefinitionCompany,Group,HaidGroupGuangdongHaidGroupCo.,LimitedBoardtheboardofdirectorsofGuangdongHaidGroupCo.,LimitedSupervisoryCommitteethesupervisorycommitteeofGuangdongHaidGroupCo.,LimitedGeneralMeetingthegeneralmeetingofGuangdongHaidGroupCo.,LimitedCompanyLawtheCompanyLawofthePeople’sRepublicofChinaSecuritiesLawtheSecuritiesLawofthePeople’sRepublicofChinaArticlesofAssociationtheArticlesofAssociationofGuangdongHaidGroupCo.,LimitedRMBRenminbireportingperiod,theperiod,theyeartheperiodfrom1January2019to31December2019lastyear,thesameperiodoflastyeartheperiodfrom1January2018to31December2018theendoftheperiod31December2019thebeginningoftheperiodortheyear1January2019CSRCChinaSecuritiesRegulatoryCommissionFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited8SectionII.CompanyProfileandKeyFinancialIndicatorsI.CompanyprofileStockabbreviationHaidGroupStockcode002311StockexchangesonwhichthesharesarelistedShenzhenStockExchangeChinesenameoftheCompany广东海大集团股份有限企业ChineseabbreviationoftheCompany海大集团EnglishnameoftheCompany(ifany)GuangdongHaidGroupCo.,LimitedEnglishabbreviationoftheCompany(Ifany)HAIDGROUPLegalrepresentativeoftheCompanyHuaXueRegisteredaddressRoom701,Building2,HaidMansion,No.42,Road4,Wangbo,NancunTown,PanyuDist,Guangzhou,China.Postalcodeofregisteredaddress511445OfficeaddressRoom701,Building2,HaidMansion,No.42,Road4,Wangbo,NancunTown,PanyuDist,Guangzhou,ChinaPostalcodeofofficeaddress511445WebsiteoftheCompanyEmailaddresszqbgs@haid.com.cnII.ContactpersonsandcontactmethodsSecretarytotheBoardSecuritiesAffairsRepresentativeNameZhijianHuangJiewenLu、HuafangYangCorrespondenceaddressRoom701,Building2,HaidMansion,No.42,Road4,Wangbo,NancunTown,PanyuDist,Guangzhou,ChinaRoom701,Building2,HaidMansion,No.42,Road4,Wangbo,NancunTown,PanyuDist,Guangzhou,ChinaTelephone8620-393889608620-39388960Facsimile8620-393889588620-39388958Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited9Emailaddresszqbgs@haid.com.cnzqbgs@haid.com.cnIII.InformationdisclosureandplacesforinspectionDesignatedmediaforinformationdisclosureSecuritiesTimes,ChinaSecuritiesJournal,SecuritiesDaily,ShanghaiSecuritiesNewsDesignatedwebsitesforthepublicationoftheAnnualReportasapprovedbyCSRCPlacesforinspectionoftheCompany’sAnnualReportSecuritiesDepartmentoftheCompanyIV.ChangeinregistrationOrganisationregistrationcodeNochangeChangeofprincipalactivitiessinceitslisting(ifany)NochangeChangeofthecontrollingshareholder(ifany)NochangeV.OtherrelevantinformationCPAsengagedbytheCompanyNameofCPAsGrantThorntonChina(SpecialGeneralPartnership)CPAs’OfficeAddress5thFloor,ScitechPalace22JianguomenWaiAvenue,ChaoyangDistrict,BeijingNameoftheSigningCertifiedPublicAccountantsWenyuanGuanandShuxiaZhangSponsorsengagedbytheCompanytocontinuouslyperformitssupervisoryfunctionduringthereportingperiod□Applicable√NotapplicableFinancialAdvisorsengagedbytheCompanytocontinuouslyperformitssupervisoryfunctionduringthereportingperiod□Applicable√NotapplicableVI.MajoraccountingdataandfinancialindicatorsRetrospectiveadjustmenttoorrestatementoftheaccountingdataforprioryearsbytheCompany□Yes√No20192018Increase/decreasefortheyearascomparedtothe2017Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited10prioryearTotalOperatingIncome(RMB)47,612,587,464.5042,156,628,800.1112.94%32,556,634,127.38NetprofitsfortheyearattributabletoshareholdersoftheCompany(RMB)1,648,762,579.591,437,281,732.2814.71%1,207,225,209.35NetprofitsfortheyearattributabletoshareholdersoftheCompanyafterdeductingthenon-operatinggainandloss(RMB)1,580,784,060.761,394,557,560.6713.35%1,162,756,461.48Netcashflowsfromoperatingactivities(RMB)3,246,980,705.081,035,764,006.33213.49%494,221,455.85Basicearningspershare(RMBpershare)1.060.9017.78%0.78Dilutedearningspershare(RMBpershare)1.050.9016.67%0.78Rateofreturnonequityonweightedaveragebasis19.54%20.21%-0.67%20.01%Asattheendof2019Asattheendof2018Increase/decreaseasattheendoftheyearcomparedtotheendoftheprioryearAsattheendof2017Totalassets(RMB)18,854,315,218.3117,365,663,861.068.57%13,160,456,702.93TotalequityattributabletoownersoftheCompany(RMB)9,103,789,731.017,745,939,076.9617.53%6,474,694,687.24VII.Differencesinaccountingdataunderdomesticandoverseasaccountingstandards1.DifferencesbetweenthenetincomeandnetassetsdisclosedinaccordancewithinternationalaccountingstandardsandChinaaccountingstandardsinthefinancialreport□Applicable√NotapplicableTherewasnodifferencebetweenthenetincomeandnetassetsdisclosedinaccordancewithinternationalaccountingstandardsandChinaaccountingstandardsinthefinancialreportduringthereportingperiod.2.DifferencesbetweenthenetincomeandnetassetsdisclosedinaccordancewithoverseasaccountingstandardsandChinaaccountingstandardsinthefinancialreport□Applicable√NotapplicableFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited11TherewasnodifferencebetweenthenetincomeandnetassetsdisclosedinaccordancewithoverseasaccountingstandardsandChinaaccountingstandardsinthefinancialreportduringthereportingperiod.VIII.KeyFinancialIndicatorsbyQuarterUnit:RMBQ1Q2Q3Q4TotalOperatingIncome8,874,920,365.4012,189,372,705.0314,448,270,108.2812,100,024,285.79NetprofitsfortheyearattributabletoshareholdersoftheCompany122,489,585.76551,430,216.83738,553,472.12236,289,304.88NetprofitsfortheyearattributabletoshareholdersoftheCompanyafterdeductingthenon-operatinggainandloss120,051,433.64543,171,630.64708,579,905.05208,981,091.43Netcashflowsfromoperatingactivities-678,764,341.961,007,122,610.851,672,826,361.801,245,796,074.39Whethertheaboveindicatorsortheiraggregatedamountshaveanymaterialdifferencewiththerespectiveamountsasdisclosedinthequarterlyreportorinterimreport□Yes√NoIX.ItemsandAmountsofNon-operatingGainsorLosses√Applicable□NotapplicableUnit:RMBItemAmountfor2019Amountfor2018Amountfor2017ExplanationGainorlossondisposalofnon-currentassets-699,384.34-581,071.09-12,825,316.16Governmentsubsidieschargedtocurrentprofitorloss(exclusiveofgovernmentsubsidiesgivenintheCompany’sordinarycourseofbusinessatfixedquotasoramountsaspergovernment’suniformstandards)53,217,210.5566,315,959.9159,725,956.70GainequaltotheamountbywhichinvestmentcostsfortheCompanytoobtainsubsidiaries,associatesandjointventuresarelowerthantheCompany’senjoyablefairvalueofidentifiablenetassetvalueofinvesteeswhenmakinginvestments3,199,250.94122,148.00Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited12Gainorlossonchangesinfairvalueofheld-for-tradingfinancialassetsandliabilities&financialassetsandliabilitiesatfairvaluethroughprofitorloss(exclusiveofeffectiveportionofhedgesthatariseintheCompany’sordinarycourseofbusiness)4,383,792.92-175,206.74-73,004.67Accountreceivablesthatareindividuallytestedforimpairmentandreversalofcontractassetsimpairment3,818,866.103,466,834.571,359,508.00Non-operatinggainsandlossesotherthanabove19,284,324.06-12,961,386.262,623,429.25Othergainsandlossesthatmeetthedefinitionofnon-operatinggain/loss5,465,542.391,263,559.841,259,316.26Less:Incometaxeffects17,653,550.7211,931,518.808,012,841.86Less:Non-controllinginterestseffects(netoftax)3,037,533.072,672,999.82-289,552.35Total67,978,518.8342,724,171.6144,468,747.87--NotesfortheCompany'snon-operatinggainorlossitemsasdefinedintheExplanatoryAnnouncementonInformationDisclosureforCompaniesOfferingTheirSecuritiestothePublicNo.1-Non-operatingGainsorLosses(公开发行证券的企业信息披露说明性公告第1号——非经常性损益)andthenon-operatinggainorlossitemsasillustratedintheExplanatoryAnnouncementonInformationDisclosureforCompaniesOfferingTheirSecuritiestothePublicNo.1-Non-operatingGainsorLosses(公开发行证券的企业信息披露说明性公告第1号——非经常性损益)definedasitsrecurringgainorlossitems□Applicable√NotapplicableNonon-operatinggainorlossitemsasdefinedorillustratedintheExplanatoryAnnouncementonInformationDisclosureforCompaniesOfferingTheirSecuritiestothePublicNo.1-Non-operatingGainsorLosses(公开发行证券的企业信息披露说明性公告第1号——非经常性损益)weredefinedbytheCompanyasitsrecurringgainorlossitemsduringthereportingperiod.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited13SectionIII.BusinessOverviewI.PrincipalOperationsoftheCompanyDuringTheReportingPeriod(I)PrincipalbusinessesandproductsandmajorbusinessmodelsoftheCompanyduringthereportingperiod1.PrincipalbusinessesandproductsCenteringontheproductsandservicesneededintheanimalproductionprocess,theCompany’sbusinessescovertheresearchanddevelopment,design,production,sales,serviceandallothertypesofactivitiesofvariousproducts.Itsmainproductsincludefeedsforaquaticanimals,feedsforlivestockandpoultry,high-qualityaquaticanimalseedlings,animalhealthcareproducts,biologicalproducts,andpigfarming.Theproductionandsaleoffeedsforaquaticanimals,livestockandpoultryaretheCompany'smostimportantbusinesses,andtheCompanyhasalsoaccumulatedawiderangeofcustomerresourcesthroughthefeedbusiness;theCompanycanbetterhelpcustomerstoachieveanimalfarmingsuccessbyprovidingcustomerswithqualityanimalseedlingsthatarescarceinthemarket;Cost-effectiveanimalhealthproductsincludingvaccines,veterinarydrugsandbiologicalproducts,supplementedbyefficientoverallanimalfarmingsolutions,enablecustomerstoachievehealthyanimalfarmingwhileimplementingbettercontroloverthecostandgainingcompetitiveadvantageinrespectofendproducts.Specifically,theCompany'sproductsmainlyincludefeedsforchickens,ducks,pigs,fishandshrimps,farmedspeciessuchaspig,shrimpandfishfry,aswellasbiologicalproducts,veterinarydrugs,vaccinesandotherproductsneededintheproductionoflivestock,poultryandaquaticanimals.2.MainBusinessModelTheCompanystartedupfromthefeedbusiness.Itsrichcustomerresourcehelpstohavedeepunderstandingofandexplorationofcustomerneeds.Thisresultsinacontinuallyenlargedprofileofproductsandservicetothecustomer,whichgraduallyextendsfromfeedtohightechareaswithincreasedadded-valuesuchasanimalseedlings,veterinarydrugsandvaccineproducts.Thescaleofproductionandsalesofhighvalue-addedproductshasgraduallyexpanded,andtheproportionthereofinincomestructurehasalsobeenincreasingyearbyyear.Inrecentyears,throughtheextensionoftheindustrialchain,theCompanyhasfurtherattemptedtoenterintosuchareasaspigfarmingandfoodprocessing.Thebusinessmodelhasbeendevelopedandextendedinanorderlymannerwithvariousindustrialsegmentsinteractivelysupportinganddevelopingeachother.Inparticular,forthefeedbusinesswhichhasthelargestscale,thebusinessmanagementismainlycarriedoutwiththebusinessmodelofcentralizedprocurementofrawmaterials,distributedproductionlayout,salesofproductsaccompaniedwithtechnicalservices.Theadoptionofacentralizedprocurementmodelcomposedof"group+regionalcenter",combinedwithhedgingandothermethods,foragriculturalproductsandotherbulkrawmaterialscanachievebetterprocurementcostadvantagesandriskcontrol;withthegoalofbeingtheclosesttothemarket,convenientinlogisticsandrichinresources,theCompanyconductdistributedlayoutproductionanditsfactoriesFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited14currentlyaremainlydistributedinnearly100citiesinChinaandSoutheastAsia;Distribution+directsalesistheCompany'smainsalesmodel.Focusingonlocalizedmarketing,theCompanyhasfullyestablisheddistributionchannelstoefficientlysolvefarmers'capitalandtransportationneeds.TheCompany’sownprofessionaltechnologyandserviceteamsconsistingofalargenumberofmembersdirectlyvisitfarmerstoprovidefarmingtechnicalservicesandhaveachievedfunctionalcomplementationandcollaborationwithsalesorganizationandmanagementteamsintermsofsalesandserviceaswellaschannelandfarmers;high-qualityanimalseedlings,biologicalProducts,veterinarydrugsandvaccineshavebecomeindispensableproductsandtoolsfortheCompanytoprovideservicesandconstituteapackageofoverallsalesprogramsandsolutions.Thebusinessmodelsforseedlingsandanimalhealthcareproductsreflectthedistinctivefeaturesofresearchanddevelopmentandtechnologyastheguide,differentiatedproductsasthecarrier,andservicesupportasthemainpromotionstrategy.Seedlingsandanimalhealthcareproductsinvolvealongperiodofinvestmentinresearchanddevelopment.Technologyaccumulationneedsbetterpredictabilityandmarketinsight,andstrongoriginalityofproducts.Toprovidebetterservicesupport,itisnecessarytoinvestinthelongtermandtobuildserviceteamswithrichtechnology,knowledge,andexperience.Therefore,amulti-tieredresearchanddevelopmentsystemhasbeenchosenforthebusinessmanagementmodel,supplementedbyaproductionbasethathasarelativelyhighstartingpointforinvestmentandamarketingstrategywithastrongeraggressivepower.TheCompany'spigfarmingbusinessstartedatanearlystage,andadoptsthebusinessmodelof"company+farmer",whichmeansthattheCompanyprovidesfarmerswithnecessaryproductssuchasseedlings,feed,vaccines,etc.,thefarmerscompletethefarmingprocessafteragreeingonthemaintechnicalrequirementsforthefarmingprocessandthentheCompanyrepurchasesthefinishedproductsforsales.Asthelandresourcesforpigfarmingareontherise,theCompanyisgraduallyexpandingitsself-supportingproductionbases.TheCompanyhassetupprofessionalfunctionaldepartmentsincludingresearchinstitute,procurementcenter,financialcenter,operationanddevelopmentcenter,marketingcenter,processandinformationmanagementcenter,andhumanresourcecenteratitsheadquarters.Eachprofessionalcenteraimsatacquiringtechnicalandmanagementleadershipinitsfieldandprovidestechnicalandmanagementstandardsaswellasintegratedandprofessionalmanagementandservicesupportforlargeregions/businessdivisionsandvariousbranchesandsubsidiaries.TheGrouphassetupmultipleregional/businessdivisionsaccordingtoregionsorbusinesscategories.Theregional/businessdivisionsmainlyorganizeandmanagetheproduction,salesandserviceofbranchesandsubsidiaries.(II)DevelopmentstageandperiodiccharacteristicsofandpositionoftheCompanyintheindustrieswheretheCompanyoperatedduringthereportingperiod1.IndustrydevelopmentstageChina'sfeedindustrydevelopmentstartedinthe1980s.Afteroverfortyyearsofdevelopment,China’stotalamountoffeedranksthefirstintheworld.Inrecentyears,thenationalfeedproductionwassteadyinslowergrowthandhasenteredastageofstabledevelopmentandindustrialrestructuringandupgrading.Duetotheaggravatedcompetitionamongenterprises,thenumberoffeedenterprisesdecreasedfrommorethan10,000inFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited152010toover5,000in2019.Itisexpectedthattheconsolidationwouldcontinueandthenumberwouldbefurtherreduced.In2019,China’sfeedproduction(around1/4oftheglobalproduction)maintainedasteadygrowth,exceeding200milliontonnesforthefifthconsecutiveyearandbeingthelargestintheworldfortheninthconsecutiveyear.Theindustrywillgraduallyshifttolarge-scaleandintensifieddevelopment,butfeedenterpriseswillbesubjecttofurtherdifferentiation.Superiorenterpriseswillmakegooduseoftheopportunityofindustryconsolidationandtheirscaleadvantagestoextendtheindustrialchainordevelopdiversifiedbusinessesthroughmergersandacquisitionsaswellasconstructionofnewproductioncapacities;confrontedwiththedevelopmentbottlenecksintermsofcapitalpressure,talentpressure,technicalpressureandservicecapacity,SMEswillgraduallybemergedbydominantenterprisesoreliminatedfromthemarket.Thehigh-qualityanimalseedlingshaveahugemarketspace.However,mostofthehigh-qualityseedlingsforfarmedspecies,especiallyaquaticseedlings,arecurrentlyunder-supplied.Therearefewernewstrainswithproprietaryintellectualpropertyright,andtheproductioncapacityissmall.Itisfarfrommeetingtheneedsoftheanimalfarmingindustrytoupgradeandprogress.Inalongerperiod,therewillbepressureinrespectofachievingresearchanddevelopmentprogressandimprovingproductionsupplycapacity.Themarketdemandofanimalhealthcareindustryhasgrownrapidly.Inparticular,withtheupgradingofconsumption,theupgradingoffarmingspecieshassignificantlyincreasedthedemandforhealth,safety,andgreenfarming,andtheconceptofpreventionovertreatmenthasbeenincreasinglyacceptedbyawiderangeoffarmers.Thehelpofreasonableanimalhealthcareproductinvestmentforfarmingismainlyreflectedinthedirecteffectsofareduceddiseaserisk,increasedhealthandsafetyaddedvalueofproducts,controllablefarmingcosts,andimprovedfarmingefficiency,aswellasanumberofextendedeffectsincludingreducedlaborintensityandimprovedindustrialchainextensioncapability.Inthefuture,themarketcapacityoftheanimalhealthcareindustrywillseeagreaterroomforcontinuousdevelopmentonthebasisofthecurrentsituation,anddominantenterpriseswillusherinmajormarketdevelopmentopportunities.Thepigfarmingbusinessisrapidlymovingtowardslarge-scale,intensive,andfactory-orienteddevelopment.TheoutbreakoftheAfricanswinefeverin2018hasacceleratedconcentrationintheindustry.Small-scalefarmersandfamily-basedprivatefarmersquicklywithdrawfromthemarket,whilelargecompaniesareexpectedtoexpandtheirfarmingsizerapidlyduringtheepidemicbyvirtueoftheirsuperiorityinfunds,technologyandtheepidemicpreventionandcontrolsystem.InDecember2019,thelivepiginventorydecreasedby27.5%yearonyear;andthefertilesowinventorydecreasedby31.32%yearonyear.2.PeriodiccharacteristicsoftheindustryThecycleoffeed,animalhealthcareproducts,seedlingsandotherindustriesisrelatedtothatoftheanimalproductionindustry.Thecycleoftheanimalproductionindustryismainlydeterminedbythesupplyend(feedingcapacity).Chinaisacountrywithalargepopulation.Residentshaveahugefoodconsumptiondemandwhichremainsrelativelyrigidandstableforacertainperiodoftime.Therefore,thesupplyendoftheanimalproductionindustry(animalfarmingcapacity)determinesthepriceofthefarmedspeciesandthusdeterminesthecycleoftheanimalproductionindustry.Ingeneral,thefeedindustrywilllagbehindthecycleoftheanimalproductionindustry.Whentheanimalfarmingcapacityissmallerthanthedemand,theterminalpriceofthefarmedspecieswillFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited16increase,theprofitofthefarmingwillbeconsiderable,andthefarmingcyclewillhaveahighdegreeofprosperity.However,duetothereductionofthefarmingcapacity,feeddemandwilldecline.Whenthefarmingamountisgreaterthantheconsumerdemand,theterminalpriceofthefarmedspecieswillfall,resultinginfarminglossandsluggishfarmingcycle.However,duetothelargeramountofanimalfarming,thereisagreaterdemandforfeed.Astheprosperityoftheanimalfarmingindustrydirectlyaffectsthefarmers'choiceofhigh-qualityorlow-gradefeedproducts,theenthusiasmoffeedfeeding,thesensitivityoffeedproductprices,andtheeffectivetransferoffeedrawmaterialpricefluctuations,etc.,thecyclicalfactorsofthefeedindustryoffseteachother,withalimitedimpactonfeedproducts.Thefeedindustryfeaturesaweakcycle.Thehigh-qualityaquaticseedlingsandanimalhealthcareindustryareinaperiodofrapidgrowth,withnoobviousperiodiccharacteristics,andtheyareinaperiodofrapiddevelopmentoftheindustryasawhole.3.PositionoftheCompanyintheindustriesinwhichtheCompanyoperatesTheCompanyisalargeintegratedenterprise.Firstly,China'sfeedindustryisstillrelativelydecentralized.TheCompanyranksamongthetopfiveinthenationalfeedindustry.Itsold12.29milliontonnesoffeedin2019,representingapproximately5.37%ofthecountry'stotalfeedproduction.ThemarketshareoftheCompanyhasfurtherenlarged,withampleroomforfurthergrowth.TheCompany'saquaticfeedranksattheforefrontofthedomesticindustryduetoitstechnologicalandscaleleadership;andthelivestockandpoultryfeedranksamongthetoptenintheindustryandinaleadingpositionintechnologyandindustryscaleintheregionalmarket.TheCompanyranksamongthetoptenfeedenterprisesintheworldintermsofproductionandsalesscale.TheCompanyhasbeengraduallyexpandingfeed,seedlingsandanimalhealthcaremarketsinVietnam,India,Indonesia,Ecuador,etc.TheCompany'shigh-qualityfishandshrimpfry,andanimalhealthcareproductsforaquaticspeciesareplayingaleadingroleintheindustryinrespectoftechnologyandmarketscale.TheCompanyisrecognizedasaKeyNationalLeadingEnterpriseforIndustrializationofAgriculture,aState-LevelEnterpriseTechnologyCenter,andamongthetop500Chinesecompaniesin2019,thetop500Chinesemanufacturingcompanies,thetop500privately-heldcompaniesinChinaandthe2018FortuneChina500.II.MaterialChangesofMajorAssets1.MaterialChangesofMajorAssetsMajorassetsDescriptionFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited17EquityassetsDuringthereportingperiod,theCompany’sequityassetsdecreasedby12.13%fromthebeginningoftheperiod,ofwhichinvestmentsinminority-ownedenterprisesdecreasedby20.99%,mainlyduetothetransferofequityinterestsinGuangdongGFHulianMicro-LoanCo.,Ltd..FixedassetsDuringthereportingperiod,theCompany’sfixedassetsincreasedby38.26%fromthebeginningoftheperiod,mainlybecausetheCompany’sprojectsunderconstructionweretransferredtofixedassetsaftercompletionandbeingputintoproductionintheyear,theincreaseinpurchaseandconstructionofproductionequipment.IntangibleassetsDuringthereportingperiod,theCompany’sintangibleassetsincreasedby20.83%fromthebeginningoftheperiod,mainlyduetothenewlandandsoftwareuserights.ConstructioninprogressDuringthereportingperiod,theconstructioninprogressoftheCompanydecreasedby9.15%fromthebeginningoftheperiod,mainlyduetothetransferofconstructioninprogressinlastyeartofixedassetsuponreachingthescheduledusablestatus.2.MajorAssetsOverseas□Applicable√NotapplicableIII.AnalysisofCoreCompetitivenessAstheCompany'sproductsandservicesarecenteredontheneedsoftheanimalproductionindustry,theCompany'scorecompetitivenessisalsocomprehensivelyrepresentedbyadiversifiedandcompleteproductconfiguration,outstandingsingleproductadvantage,comprehensivefarmingtechnologyservicecapabilities,industriallayoutandtheabilitytoorganizethedevelopmentoftheindustrialchain-relatedlinks,aswellasthedelicacymanagementcapability.1.DiverseandcompleteproductconfigurationCenteringontheanimalfarmingchain,aftermanyyearsoftechnologicalinvestment,transformationofresearchanddevelopmentachievements,productaccumulation,productionlayout,etc.,theCompany'sproductconfigurationhasreachedarelativelyrichandcompletestateandcoveredthewholeprocessofanimalfarmingincludingfeed,functionalfeed,seedlings,drugs,vaccines,biologicalproducts,etc.anditisstillindevelopment.Withrespecttofeedproducts,theCompanyisoneofthefewfeedproducersinChinathatcanproducefeedforfish,shrimps,pigs,meatpoultryandeggpoultry.Anditisfairlycompetitiveinalltheproductcategories,withalargemarketshareinmajormarkets.Productconfigurationcapabilityrequiresstronginsightsintocustomerdemands,researchanddevelopmentorganizationcapability,resultsconversioncapability,investmentinconstructionofproductionbases,processingorganizationcapability,marketingpromotioncapability,andtechnicalservicecapability.TheCompanyhasrichtechnicalresearchreservesandaresearchanddevelopmentteamcomposedofmorethan1,600members.Itannuallyinvestsaconsiderableamountinresearchanddevelopmentandresearchanddevelopmentpersonnelincludesmulti-disciplinarytalentsinthefieldsofanimalnutrition,veterinarymedicine,animalfarmingandgeneticimprovement,animalfarmingstrategyoptimization,bioengineering,biochemistryandFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited18machinery.ThefasttransformationofresearchanddevelopmentresultsandclearandrapidimplementationofinvestmentsupportingstrategiescontributetotheCompany'sstrongproductconfigurationcapability.Forexample,forfeedformulatechnology,theCompany,throughmorethan20yearsofaccumulationincontinuousresearchanddevelopment,hasestablishedahugedatabaseofanimalnutritionrequirementsandreservedavarietyofrawmaterialformulatechnologies.Morethan1,000setsofcomparativeexperimentalresultsareaddedtothedatabaseofcorenutritionalneedsofanimalsandrawmaterialsutilizationtoconverttechnologiesintoproductivity.Therefore,theCompanyhasastrongcapacityintermsoforganizationandcontinuousoptimizationofproductformulasandadaptationtochanges.Toquicklyadjusttheformulawhentherawmaterialpricesfluctuatecanensureacquisitionofcostcompetitiveadvantages.TheCompanynowhasamarketingteamconsistingofmorethan6,000memberswhovisitfarmsorfarmingsitestoknowtheanimalfarmingsituation.Therefore,theCompanyhasdetaileddatasourcesforterminalconsumptionhabits,animalgrowthperformanceafterfeedutilization,animalfarmingstrategyandanimalfarmingneeds,andcanaccuratelygraspthedemandsoffarmersandpreciselyproposetechnicalrequirementsonproductdesigntosupportfullconcentrationoftheCompany'stechnicalresourcesoncustomer'scoreneeds.2.ClearandexcellentproductpoweristheCompany'smostimportantcompetitiveadvantageForallseriesofproducts,theCompanyisdedicatedtocreatingproductpowerthatissignificantlyaheadofitscompetitorsandhasinvestedheavilyintheexplicitexpressionofproductpower.Despiteofahighprice,high-endproductshavetheobviousadvantageofultimatepursuitofanimalsurvivalrate,growtheffects,andgrowthefficiencyandhaveaprominentbrandeffect.Onthebasisofensuringleadingproductionefficiency,middle-endproductsareclosetothecompetitors'productpricingandarepursuingoutstandingcostperformance.Therefore,inlightoftheindustry’soverallgoodfarmingbenefits,theCompany’scustomers,withthesupportofintegratedproducts,canobtainsignificantlyhigherreturnsthanthoseofthesametypeoffarmers;intheeventthattheindustry’sfarmingbenefitsdeclineandeventheentireindustrysufferslosses,theCompany’scustomerscansufferfromlessorevennoloss.ThemanifestationofproductpowerrequiresthesupportofvariousinternalprofessionalcapabilitiesoftheCompany:theresearchanddevelopmentcapabilitiesofanimalnutritionandrawmaterialutilization,productformulatechnologycapability,rawmaterialvalueprocurementcapability,efficientinternaloperationcapabilityareallindispensable.Forexample,inrespectofsupportofvaluepurchasecapacity,theCompany’spurchaseteamhasoutstandingprofessionalcapabilities.Theteamisyoungandspecialized,anditperformsdivisionoflaboraccordingtosubdividedrawmaterialcategories.Thewideindustryperspectiveandalargeamountofinformationacquisitionandanalysisensuretracking,research,andjudgmentofthemarkettrendsofbulkrawmaterialsathomeandabroadinarealtimewayandutilizationoffuturesinstrumentsforhedgingofbulkrawmaterialstoeffectivelycontrolthepurchasepriceriskandpositionrisk.Theprominentpurchasecapabilitycanidentifynumerousrawmaterialpurchaseopportunities,makingcostadvantagesforfeedproductsandtradeofrawmaterialspossible.TheCompanyisthefirstcompanytosuccessfullyachievecentralizedpurchaseintheindustry.Ithasobviousadvantagesinrespectoflarge-scalepurchases.Besides,itissophisticatedinthecombinedapplicationofpurchasetoolsincludingspotgoods,futuresandoptions,aswellasflexibleapplicationmethods.ForwardvaluepurchaseandriskpositionmanagementalsohelptheCompanytogainpurchasingcostadvantages.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited19AnotherexampleistheCompany'sabilitytosupportefficientoperations.BypromotingtheapplicationofSAP,EPSandothermanagementsoftware,theCompanyhasastronginformation-basedsystem,andinternaloperationsaregraduallybecomingmorestreamlined,standardized,andmoredata-based.Theroleofdata-basedoperationistofindouttheefficientandenergy-savingoperationmethodbycomparingthebigdataofbranches;theroleofprocess-basedoperationandstandardizationistogreatlyimprovetheinternalreproducibility.Thehighlyefficientoperationcapabilityisanimportantsupportfortheeffectiveorganizationofprofessionalproductionofvariousproducts.3.ComprehensiveanimalfarmingtechnicalservicesisanimportantinitiativefortheCompanytocoordinateproductchainandcontinuouslyacquirenewcustomersandimprovecustomer'sstickinessIn2006,theCompanytooktheleadintheindustrytoprovidecomprehensivetechnicalservicestofarmers,andpositionedtheCompanyasaservice-orientedenterpriseandanenterprisethatprovidesanimalfarmingsolutionstofarmers.TheCompanyprovidesfarmerswithfull-processproductandtechnicalservicesupportincluding"seedlings-stockingmode-environmentalcontrol–animalepidemicprevention-feed-marketinformation"toensurethatfarmerscanusethemostadvancedfarmingtechnologytoensurefarmers’growingsuccessandprofitability.TheCompanyhasaserviceteamcomposedofmorethan6,000talentswiththemostexperienceandmostpassionintheindustry;ithasalsoaccumulatedavarietyofadvancedanimalfarmingmodelsbasedonlocalcharacteristics;itshundredsofhighlyefficientservicestationsinfarmingconcentratedareasthroughoutthecountrycansimultaneouslyprovidetechnicalservicesfortensofthousandsoffarmers.TheCompany'srelativelycompleteservicesystemintheindustrycangivefullplaytoitsproductforcestrengthsandprovidesafullrangeoftechnicalservicesforfarming,whichcaneffectivelyamplifythebenefitsforcustomers,therebyincreasingthestickinessofcustomers.ThecomprehensiveanimalfarmingtechnicalserviceshavebecomeanimportantbrandlabeloftheCompanyandanimportantmeansfortheCompanytoobtaincustomersandincreasethestickinessofcustomers.4.TheCompany'sexistingindustriallayoutadvantagesupportstheCompanytoquicklyorganizethecomprehensivedevelopmentofmultiplelinksintheindustrialchain,reserveofnewbusinessesinorder,andtheincreasinglyprominentindustrialcomprehensiveadvantages.TheCompany'sfeedproductsincludeafullrangeoffeedproductssuchaslivestockandpoultryfeedandaquaticfeed.Theproductlineiscompleteandtheproductmixfeaturesendowthecompanywithastronganti-riskcapability.Differentkindsoffeedproductshavedifferenttechnicalcontents,differentgrossprofitmargins,anddifferentmarketcharacteristicsandoperationalrisks.TheCompany'sproductmixmakesitpossiblefortheCompanytoobtainhighergrossprofitmarginsthantheindustry'sgenerallevel,andtobettercontrolthemarketoperationalriskscausedbyanimalepidemicdiseasesandimbalanceofsupplyanddemandandensurestheCompany'sstablerevenuefromsalesoffeedproductsandmaintainarapidgrowthmuchhigherthanthatoftheindustry.Overtheyears,theCompanyhasorderlydevelopedhigh-qualityaquaticanimalseedlings,aquaticanimalhealthcareproducts,livestockandpoultryvaccines,veterinarydrugs,animalhealthcareproductsforlivestockandpoultry,pigfarmingandotherbusinessesandthecoretechnologiesinindustrialchainhavegraduallygainedadvantagesintermsoftechnology,industriallayoutandindustrialcollaboration,thusfosteringmorenewbusinessFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited20growthpointsandprofitgrowthpointsfortheCompanyandlayingasoundfoundationfortheCompanytofurtheramplifythemultipliereffectsoftheindustrialchainandcreatecomparativecompetitiveadvantages.5.ContinuouslybuildingexcellentoperationmanagementteamandfinemanagementcapabilityTheCompanyhasahard-working,dedicated,professionalandsuperbmanagementteamwithaconsistentphilosophy.Mostofthemembersoftheteamaregraduatedfromagriculturalinstitutionsofhigherlearningandhaveastrongprofessionalbackground.Themanagementhasaprofoundandcomprehensiveunderstandingofthefeedindustryandhasaccumulatedrichpracticalexperienceandformedmagnificentandunifiedvisionsandgoals,strongindustryinsight,leadershipandexecutiveforce,enablingthemtoadapttotherapidchangesinthefeedindustryandtheCompany's…

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广东海大集团股份有限企业2019年年度报告全文Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,LimitedGuangdongHaidGroupCo.,Limited2019AnnualReportStockCode:002311StockAbbreviation:HaidGroupBondCode:128102BondAbbreviation:HaidConvertibleBondsDateofApprovalforPublication:21April2020Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited1SectionI.ImportantNotice,TableofContentsandDefinitionsTheboardofdirectors(the"Board"),thesupervisorycommittee,thedirectors,thesupervisorsandtheseniormanagementoftheGuangdongHaidGroupCo.,Limited(the"Company")herebywarrantthetruthfulness,accuracyandcompletenessoftheinformationpresentedinthisreport,guaranteethattherearenomisrepresentations,misleadingstatementsormaterialomissionscontainedinthisannualreport,andareindividuallyandcollectivelyresponsiblefortheauthenticity,accuracyandcompletenessoftheinformationcontainedinthisreport.Mr.HuaXue,headoftheCompany,andMr.ShaolinYang,headinchargeofaccountingworkandheadoftheaccountingdepartment(AccountingOfficer),declarethattheywarrantthetruthfulness,accuracyandcompletenessofthefinancialstatementsintheannualreport.AlldirectorswerepresentinpersonattheBoardmeetingtoconsiderandapprovethisannualreport.TheReportcontainsforward-lookingstatementssuchasfutureplans,whichdonotconstituteanyspecificundertakingsbytheGrouptoitsinvestors.Investorsareadvisedtopayattentiontoinvestmentrisks.RiskWarning:I.RiskofPeriodicalFluctuationsintheFeedIndustryduetoAbnormalWeatherandEpidemicDiseasesduringAnimalProductionThefeedindustrymainlyservesthedownstreamanimalfeedingindustry.Theabnormalchangesinnaturalelementssuchasprecipitationandtyphoonmayleadtofluctuationsoftheinventoryoflivestockoraquaticproductsandeventhelarge-scaleoutbreakofanimaldiseases.Thisthusaffectsthedemandforfeedandlikelycausestheriskofperiodicandregionalfluctuationsofthelatter.Withtheenvironmentalchangesandtheexpansionofanimalproductionindustry,humanandanimalepidemicdiseasesmayalsooccuroccasionally.Forinstance,theCOVID-19epidemicstartedtowreakhavocontheworldinJanuary2020;theAfricanswinefevervirusbrokeoutacrossChinainAugust2018;andPRRSV-mediatedpigdisease,shrimp-relevantEMSepidemicdiseaseandpoultry-relevant“H7N9”diseasealloccurredrecently.TheoutbreakofFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited2animaldiseaseswilldirectlyinhibitthescaleofanimalproductionandreducethedemandforfeedintheshortterm;majoranimalandhumanepidemicdiseasesmayalsoleadtocompulsorymeasuresimposedbythegovernmenttorestricthumanandgoodscirculationtocutofftheinfectionsources,whichmaydampenthedemandfromend-consumers,leadingtoadownturnoftheanimalproductionindustry,andfurtheraffectthefeeddemand,givingrisetoadverseeffectsontheproductionandoperationoffeedenterprises.Riskmanagementmethods:(1)TheCompanyiscurrentlyfullydeployingfactoriesanddevelopinglocalmarketsinmajorareasinSouthernChina,CentralChina,EasternChinaandNorthernChinaandoverseasmarketsinSoutheastAsia,etc.andtheexpansionofregionaldistributioncaneffectivelycopewiththeriskofweatheranomaliesandnaturaldisastersinlocalareas.(2)TheCompany'sfeedvarietiescoverpigfeed,chickenfeed,duckfeedandotherlivestockfeedandfishfeed,shrimpfeedandotheraquaticfeed.Withavarietyofproductsandawell-balancedstructure,itcaneffectivelydealwiththeriskofsinglebreedspeciesandhasstrongcomprehensiveanti-riskcapability.(3)TheCompanyhassetupprofessionalfunctionaldepartmentsatitsheadquarters,andtheGrouphassetupmultipleregional/businessdivisionsaccordingtoregionsorbusinesscategories.Eachprofessionalcenteraimsatacquiringtechnicalandmanagementleadershipinitsfieldandprovidestechnicalandmanagementstandardsaswellasintegratedandprofessionalmanagementandservicesupportformultipleregional/businessdivisionsandvariousbranchesandsubsidiaries.TheflatandprofessionalmanagementstructureandanefficientmanagementteamenabletheCompanytoallocatevariousresourcesinatimelymannerduringtheepidemic,andmaketargetedanti-epidemicarrangementsfordifferentbusinessesandregions.II.RiskofDrasticPriceFluctuationsofMajorRawMaterialsThefeedingredientsmainlyconsistofvariouskindsofstapleagriculturalproductssuchascornandsoybeans(soybeanmeal).Inrecentyears,thedomesticandinternationalmarketsofagriculturalproducthavebeencloselylinked.Changesintheplantingareaandharvestofcropsinmajorgrain-producingcountries,purchasingandstorageandsubsidypolicies,importandexportpolicies,fluctuationsinlogisticscapacityandcostsofshipping,exchangerates,humanandanimalepidemicdiseasesandothersmaycausegreatfluctuationsininternationaltradeandpricesofagriculturalproducts,which,inturn,hasacertainimpactonthecostoffeedandfarming.Withthestrengtheningoftheinternationalizationintradeofagriculturalproducts,thefactorsforchangesinthepricesofagriculturalproductshavebecomemorecomplexandthepricefluctuationshavethereforeincreased.IfrawmaterialpricesfluctuateandtheCompanyfailstounderstandthechangesinthetradeoffeedrawmaterialsinaFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited3timelymannerandpromptlyimplementstrategicmanagementandriskcontrolofprocurement,theCompanymayfacetheriskofrisingintegratedprocurementcosts.Riskmanagementmethods:(1)TheCompanydividesrawmaterialintodifferentcategoriesandimplementsacombinationofcentralizedprocurementofstaplecategoryandlocalprocurementofregionalvarieties,whichnotonlyguaranteestheadvantagesoflarge-scalerawmaterialprocurement,butalsoobtainslocalizationadvantagesfromrapidresponseinrespectofregionalprocurement;(2)TheCompanycontinuouslyinvestsintheconstructionoftherawmaterialprocurementresearchsystem.Theteamoftheprofessionalrawmaterialinformationresearchdepartmentisrelativelymature.Itconductsstrategicprocurementthroughthereal-timetracking,researchandjudgmentofthedomesticandforeignbulkrawmaterialmarkettrends,andimplementspositionriskmanagementforbulkrawmaterialsthroughfutureshedging,rawmaterialstradeandothertoolstoeffectivelycontrolprocurementrisks;(3)TheCompanyhasaccumulatedrichexperienceinresearchanddevelopmentofanimalnutritionandfeedformulatechnologies,andhasresearchanddevelopmentteamcomposedofover1,000members.Largeamountsoffundsarespentonresearchanddevelopmenteachyear,focusingonanimalnutritionrequirements,feedformulatechnology,animalfarmingandgeneticimprovement,comprehensiveinvestigationonhealthyanimalfarmingstrategies,andotherresearchareas.TheCompanyhasaprofoundunderstandingofanimalnutritionalrequirementsandhigherlevelofexpertiseincomprehensiveutilizationofrawmaterials.Therefore,incaseofrawmaterialpricefluctuations,itcanquicklyadjusttheformulatocontrolthereasonablefeednutrientlevelandformulacosts.III.RiskofStructural,RegionalandScaleAdjustmenttoFarmingIndustryunderEnvironmentalProtectionRegulationsandPoliciesInrecentyears,theStatehasintroducedaseriesofenvironmentalprotectionlawsandregulationsincludingthenewEnvironmentalProtectionLaw(环保法),theRegulationsonPreventionandControlofPollutionfromLarge-ScaleProductionofLivestockandPoultry(畜禽规模养殖污染防治条例),ActionPlanforPreventionandTreatmentofWaterPollution(水污染防治行动计划),andtheGuidingOpinionsonAdjustingtheLayoutofPigProductionintheSouthernWaterNetworkRegion(关于促进南方水网地区生猪养殖布局调整),the"13thFive-YearPlan"onEcologicalandEnvironmentalProtection(“十三五”生态环境保护规划),whichstipulatethepollutionpreventionandcontrolofanimalproductionindustry,increasethepollutioncontrolofanimalproductionindustry,andespeciallylimittheproductionscaleintheregionsofkeywaterFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited4sourcesanditssurroundingareas.Accordingtotheregulationsandpoliciesofthecentralgovernment,bannedareasandrestrictedareashavebeensetupthroughoutthecountry,andpigfarmsinthebannedareasinthesouthernwaternetworkareaaregraduallyrelocating.Theimplementationofenvironmentalprotectionpolicieswillspeedupthewithdrawalofprivatepigfarmingfarmers,reducethebackwardproductioncapacityfailingtomeetenvironmentalprotectionstandardsandwithasmallscale,andenablelarge-scalefarmerstocontinuouslyexpandtheirproductioncapacityandimprovethefarmingscaleandstructure;Inaddition,theestablishmentofbannedareasandrestrictedareaswillenforceadjustmentstothepigproductioncapacityinallplacesacrossthecountry.Theadjustmentstothescalecompositionofpigproductionandtherelocationofpigproductionareawillcertainlyhaveaprofoundimpactontheexistingcapacitylayout,marketshare,pricingpowerandbusinessmodelofthefeedindustry.Theimpactofenforcedenvironmentalprotectionpoliciesonthepiggrowingandfeedindustriesputsexistingcompetitivecompaniesinthemarketatriskofreshuffle.Riskmanagementmethods:(1)TheCompanycontinuallyimprovesitscapabilitytoservefarmers.Inadditiontofeedproducts,theCompanyisalsoengagedintheindustrialchainofseedlings,animalhealthcareproducts,farmingandfinanceandhasastrongstickinesstolarge-scalefarmers;(2)ThefeedvarietiesoftheCompanycoverlivestock,poultry,andaquaticanimalsandtheproductlineisabundant.Theproductionlinesforpigfeed,chickenfeed,duckfeedandpelletedfishfeedcanbeshared.TheCompanycanrapidlyshifttheproductionlayoutandmakeadjustmentstoadapttothechangesintheindustrybyadjustingtheproductioncapacityinallplaces.(3)TheCompanyadoptsmultiplemodelstospeeduptheproductionlayoutinareaswithrichresourcesandstrongenvironmentalcarryingcapacity,andtoseizethemarketshareofnewanimalfarmingareas.IV.RiskofExchangeRateFluctuationsTheglobalprocurementofrawmaterialshasbecomethenorm.ThescaleofoverseasinvestmentandoverseasoperationsoftheCompanyisalsorapidlyexpanding.Thescaleofcross-borderfundsettlementandthestockofoverseasassetshavegrownsubstantially,involvingthecurrencytypesofvariousrelatedcountries.Currencyexchangeratefluctuationsaresubjecttodifferentinfluencefactors,andexchangeratefluctuationsinanycurrencymayhaveacertainimpactonthesettlementcostandassetstockvalueoftheregion.Riskmanagementmethods:(1)Basedonthebusinessscale,businessmodel,andsettlementcharacteristicsindifferentregionsandcountries,theCompanystrictlycontrolstheexchangeraterisks,carefullyselectssettlementcurrencies,Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited5andstrivestoachieverelativelybalancedregionalfundinflowandoutflowthroughstructuralarrangementsoffinancingsourcesandfinancingtypes;(2)Theexpansionoftwo-wayfluctuationsintheRMBexchangeratehasbecomethenewnormal.TheCompanyfurtherenhancesitsawarenessofforeignexchangeriskmanagement,andarrangessettlementmodelsbasedontheprocurementandsalesstrategiesandcyclecharacteristicsofimportandexportoperations.Andforwardforeignexchangesettlementandsale,swaps,foreignexchangeoptionsandotherfinancialinstrumentsareflexiblyusedtolocktheexchangeraterisks,controlprocurementandsalescosts,andcontrolthepossibleriskbroughtaboutbyexchangeratefluctuations.(3)TheCompanysetsupanoverseascapitalpooltoachievecentralizedmanagementofforeignexchanges,increasetheutilizationefficiencyofforeignexchanges,aswellasreducetheriskofexchangeratefluctuationsinthesettlementandpaymentofexchanges.(4)Intheoverseasbusinessoperations,duetothehighcostofexchangeratelock-in,theCompanygivesplaytotheadvantageofthehighinterestratesofthelocalcurrenciesandchoosesappropriatetermdepositschemesforhighinterestincometooffsetthedepreciationriskofthelocalcurrencies.TheproposedprofitdistributionplanoftheCompanywasconsideredandpassedbytheBoard:onthebasisofthetotalnumberofsharesontheregistrationdatewhentheplanisimplementedinthefuture,theCompanywilldistributecashdividendofRMB3.5(taxinclusive)and0bonusshare(taxinclusive)forevery10existingsharesheldbyallshareholderswithoutcapitalizationofcapitalreserve.ThisreporthasbeenpreparedinbothChineseandEnglish.Shouldtherebeanydiscrepanciesormisunderstandingsbetweenthetwoversions,theChineseversionshallprevail.ThecompletepublishedChinese2019AnnualReportisavailableat&stockCode=002311&announcementId=1207538986&announcementTime=2020-04-21.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited6TableofContentsSectionI.ImportantNotice,TableofContentsandDefinitions...................................................1SectionII.CompanyProfileandKeyFinancialIndicators.........................................8SectionIII.BusinessOverview................................................................................13SectionIV.DiscussionandAnalysisofOperations..................................................21SectionV.MaterialMatters......................................................................................50SectionVI.ShareChangesandShareholderInformation.........................................87SectionVII.PreferredShares...................................................................................97SectionVIII.ConvertibleCorporateBonds..............................................................98SectionIX.Directors,Supervisors,SeniorManagementandStaff...........................99SectionX.CorporateGovernance..........................................................................113SectionXI.CorporateBonds..................................................................................125SectionXII.FinancialStatements..........................................................................126SectionXIII.DocumentsAvailableforReference..................................................370Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited7DefinitionsItemDefinitionCompany,Group,HaidGroupGuangdongHaidGroupCo.,LimitedBoardtheboardofdirectorsofGuangdongHaidGroupCo.,LimitedSupervisoryCommitteethesupervisorycommitteeofGuangdongHaidGroupCo.,LimitedGeneralMeetingthegeneralmeetingofGuangdongHaidGroupCo.,LimitedCompanyLawtheCompanyLawofthePeople’sRepublicofChinaSecuritiesLawtheSecuritiesLawofthePeople’sRepublicofChinaArticlesofAssociationtheArticlesofAssociationofGuangdongHaidGroupCo.,LimitedRMBRenminbireportingperiod,theperiod,theyeartheperiodfrom1January2019to31December2019lastyear,thesameperiodoflastyeartheperiodfrom1January2018to31December2018theendoftheperiod31December2019thebeginningoftheperiodortheyear1January2019CSRCChinaSecuritiesRegulatoryCommissionFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited8SectionII.CompanyProfileandKeyFinancialIndicatorsI.CompanyprofileStockabbreviationHaidGroupStockcode002311StockexchangesonwhichthesharesarelistedShenzhenStockExchangeChinesenameoftheCompany广东海大集团股份有限企业ChineseabbreviationoftheCompany海大集团EnglishnameoftheCompany(ifany)GuangdongHaidGroupCo.,LimitedEnglishabbreviationoftheCompany(Ifany)HAIDGROUPLegalrepresentativeoftheCompanyHuaXueRegisteredaddressRoom701,Building2,HaidMansion,No.42,Road4,Wangbo,NancunTown,PanyuDist,Guangzhou,China.Postalcodeofregisteredaddress511445OfficeaddressRoom701,Building2,HaidMansion,No.42,Road4,Wangbo,NancunTown,PanyuDist,Guangzhou,ChinaPostalcodeofofficeaddress511445WebsiteoftheCompanyEmailaddresszqbgs@haid.com.cnII.ContactpersonsandcontactmethodsSecretarytotheBoardSecuritiesAffairsRepresentativeNameZhijianHuangJiewenLu、HuafangYangCorrespondenceaddressRoom701,Building2,HaidMansion,No.42,Road4,Wangbo,NancunTown,PanyuDist,Guangzhou,ChinaRoom701,Building2,HaidMansion,No.42,Road4,Wangbo,NancunTown,PanyuDist,Guangzhou,ChinaTelephone8620-393889608620-39388960Facsimile8620-393889588620-39388958Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited9Emailaddresszqbgs@haid.com.cnzqbgs@haid.com.cnIII.InformationdisclosureandplacesforinspectionDesignatedmediaforinformationdisclosureSecuritiesTimes,ChinaSecuritiesJournal,SecuritiesDaily,ShanghaiSecuritiesNewsDesignatedwebsitesforthepublicationoftheAnnualReportasapprovedbyCSRCPlacesforinspectionoftheCompany’sAnnualReportSecuritiesDepartmentoftheCompanyIV.ChangeinregistrationOrganisationregistrationcodeNochangeChangeofprincipalactivitiessinceitslisting(ifany)NochangeChangeofthecontrollingshareholder(ifany)NochangeV.OtherrelevantinformationCPAsengagedbytheCompanyNameofCPAsGrantThorntonChina(SpecialGeneralPartnership)CPAs’OfficeAddress5thFloor,ScitechPalace22JianguomenWaiAvenue,ChaoyangDistrict,BeijingNameoftheSigningCertifiedPublicAccountantsWenyuanGuanandShuxiaZhangSponsorsengagedbytheCompanytocontinuouslyperformitssupervisoryfunctionduringthereportingperiod□Applicable√NotapplicableFinancialAdvisorsengagedbytheCompanytocontinuouslyperformitssupervisoryfunctionduringthereportingperiod□Applicable√NotapplicableVI.MajoraccountingdataandfinancialindicatorsRetrospectiveadjustmenttoorrestatementoftheaccountingdataforprioryearsbytheCompany□Yes√No20192018Increase/decreasefortheyearascomparedtothe2017Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited10prioryearTotalOperatingIncome(RMB)47,612,587,464.5042,156,628,800.1112.94%32,556,634,127.38NetprofitsfortheyearattributabletoshareholdersoftheCompany(RMB)1,648,762,579.591,437,281,732.2814.71%1,207,225,209.35NetprofitsfortheyearattributabletoshareholdersoftheCompanyafterdeductingthenon-operatinggainandloss(RMB)1,580,784,060.761,394,557,560.6713.35%1,162,756,461.48Netcashflowsfromoperatingactivities(RMB)3,246,980,705.081,035,764,006.33213.49%494,221,455.85Basicearningspershare(RMBpershare)1.060.9017.78%0.78Dilutedearningspershare(RMBpershare)1.050.9016.67%0.78Rateofreturnonequityonweightedaveragebasis19.54%20.21%-0.67%20.01%Asattheendof2019Asattheendof2018Increase/decreaseasattheendoftheyearcomparedtotheendoftheprioryearAsattheendof2017Totalassets(RMB)18,854,315,218.3117,365,663,861.068.57%13,160,456,702.93TotalequityattributabletoownersoftheCompany(RMB)9,103,789,731.017,745,939,076.9617.53%6,474,694,687.24VII.Differencesinaccountingdataunderdomesticandoverseasaccountingstandards1.DifferencesbetweenthenetincomeandnetassetsdisclosedinaccordancewithinternationalaccountingstandardsandChinaaccountingstandardsinthefinancialreport□Applicable√NotapplicableTherewasnodifferencebetweenthenetincomeandnetassetsdisclosedinaccordancewithinternationalaccountingstandardsandChinaaccountingstandardsinthefinancialreportduringthereportingperiod.2.DifferencesbetweenthenetincomeandnetassetsdisclosedinaccordancewithoverseasaccountingstandardsandChinaaccountingstandardsinthefinancialreport□Applicable√NotapplicableFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited11TherewasnodifferencebetweenthenetincomeandnetassetsdisclosedinaccordancewithoverseasaccountingstandardsandChinaaccountingstandardsinthefinancialreportduringthereportingperiod.VIII.KeyFinancialIndicatorsbyQuarterUnit:RMBQ1Q2Q3Q4TotalOperatingIncome8,874,920,365.4012,189,372,705.0314,448,270,108.2812,100,024,285.79NetprofitsfortheyearattributabletoshareholdersoftheCompany122,489,585.76551,430,216.83738,553,472.12236,289,304.88NetprofitsfortheyearattributabletoshareholdersoftheCompanyafterdeductingthenon-operatinggainandloss120,051,433.64543,171,630.64708,579,905.05208,981,091.43Netcashflowsfromoperatingactivities-678,764,341.961,007,122,610.851,672,826,361.801,245,796,074.39Whethertheaboveindicatorsortheiraggregatedamountshaveanymaterialdifferencewiththerespectiveamountsasdisclosedinthequarterlyreportorinterimreport□Yes√NoIX.ItemsandAmountsofNon-operatingGainsorLosses√Applicable□NotapplicableUnit:RMBItemAmountfor2019Amountfor2018Amountfor2017ExplanationGainorlossondisposalofnon-currentassets-699,384.34-581,071.09-12,825,316.16Governmentsubsidieschargedtocurrentprofitorloss(exclusiveofgovernmentsubsidiesgivenintheCompany’sordinarycourseofbusinessatfixedquotasoramountsaspergovernment’suniformstandards)53,217,210.5566,315,959.9159,725,956.70GainequaltotheamountbywhichinvestmentcostsfortheCompanytoobtainsubsidiaries,associatesandjointventuresarelowerthantheCompany’senjoyablefairvalueofidentifiablenetassetvalueofinvesteeswhenmakinginvestments3,199,250.94122,148.00Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited12Gainorlossonchangesinfairvalueofheld-for-tradingfinancialassetsandliabilities&financialassetsandliabilitiesatfairvaluethroughprofitorloss(exclusiveofeffectiveportionofhedgesthatariseintheCompany’sordinarycourseofbusiness)4,383,792.92-175,206.74-73,004.67Accountreceivablesthatareindividuallytestedforimpairmentandreversalofcontractassetsimpairment3,818,866.103,466,834.571,359,508.00Non-operatinggainsandlossesotherthanabove19,284,324.06-12,961,386.262,623,429.25Othergainsandlossesthatmeetthedefinitionofnon-operatinggain/loss5,465,542.391,263,559.841,259,316.26Less:Incometaxeffects17,653,550.7211,931,518.808,012,841.86Less:Non-controllinginterestseffects(netoftax)3,037,533.072,672,999.82-289,552.35Total67,978,518.8342,724,171.6144,468,747.87--NotesfortheCompany'snon-operatinggainorlossitemsasdefinedintheExplanatoryAnnouncementonInformationDisclosureforCompaniesOfferingTheirSecuritiestothePublicNo.1-Non-operatingGainsorLosses(公开发行证券的企业信息披露说明性公告第1号——非经常性损益)andthenon-operatinggainorlossitemsasillustratedintheExplanatoryAnnouncementonInformationDisclosureforCompaniesOfferingTheirSecuritiestothePublicNo.1-Non-operatingGainsorLosses(公开发行证券的企业信息披露说明性公告第1号——非经常性损益)definedasitsrecurringgainorlossitems□Applicable√NotapplicableNonon-operatinggainorlossitemsasdefinedorillustratedintheExplanatoryAnnouncementonInformationDisclosureforCompaniesOfferingTheirSecuritiestothePublicNo.1-Non-operatingGainsorLosses(公开发行证券的企业信息披露说明性公告第1号——非经常性损益)weredefinedbytheCompanyasitsrecurringgainorlossitemsduringthereportingperiod.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited13SectionIII.BusinessOverviewI.PrincipalOperationsoftheCompanyDuringTheReportingPeriod(I)PrincipalbusinessesandproductsandmajorbusinessmodelsoftheCompanyduringthereportingperiod1.PrincipalbusinessesandproductsCenteringontheproductsandservicesneededintheanimalproductionprocess,theCompany’sbusinessescovertheresearchanddevelopment,design,production,sales,serviceandallothertypesofactivitiesofvariousproducts.Itsmainproductsincludefeedsforaquaticanimals,feedsforlivestockandpoultry,high-qualityaquaticanimalseedlings,animalhealthcareproducts,biologicalproducts,andpigfarming.Theproductionandsaleoffeedsforaquaticanimals,livestockandpoultryaretheCompany'smostimportantbusinesses,andtheCompanyhasalsoaccumulatedawiderangeofcustomerresourcesthroughthefeedbusiness;theCompanycanbetterhelpcustomerstoachieveanimalfarmingsuccessbyprovidingcustomerswithqualityanimalseedlingsthatarescarceinthemarket;Cost-effectiveanimalhealthproductsincludingvaccines,veterinarydrugsandbiologicalproducts,supplementedbyefficientoverallanimalfarmingsolutions,enablecustomerstoachievehealthyanimalfarmingwhileimplementingbettercontroloverthecostandgainingcompetitiveadvantageinrespectofendproducts.Specifically,theCompany'sproductsmainlyincludefeedsforchickens,ducks,pigs,fishandshrimps,farmedspeciessuchaspig,shrimpandfishfry,aswellasbiologicalproducts,veterinarydrugs,vaccinesandotherproductsneededintheproductionoflivestock,poultryandaquaticanimals.2.MainBusinessModelTheCompanystartedupfromthefeedbusiness.Itsrichcustomerresourcehelpstohavedeepunderstandingofandexplorationofcustomerneeds.Thisresultsinacontinuallyenlargedprofileofproductsandservicetothecustomer,whichgraduallyextendsfromfeedtohightechareaswithincreasedadded-valuesuchasanimalseedlings,veterinarydrugsandvaccineproducts.Thescaleofproductionandsalesofhighvalue-addedproductshasgraduallyexpanded,andtheproportionthereofinincomestructurehasalsobeenincreasingyearbyyear.Inrecentyears,throughtheextensionoftheindustrialchain,theCompanyhasfurtherattemptedtoenterintosuchareasaspigfarmingandfoodprocessing.Thebusinessmodelhasbeendevelopedandextendedinanorderlymannerwithvariousindustrialsegmentsinteractivelysupportinganddevelopingeachother.Inparticular,forthefeedbusinesswhichhasthelargestscale,thebusinessmanagementismainlycarriedoutwiththebusinessmodelofcentralizedprocurementofrawmaterials,distributedproductionlayout,salesofproductsaccompaniedwithtechnicalservices.Theadoptionofacentralizedprocurementmodelcomposedof"group+regionalcenter",combinedwithhedgingandothermethods,foragriculturalproductsandotherbulkrawmaterialscanachievebetterprocurementcostadvantagesandriskcontrol;withthegoalofbeingtheclosesttothemarket,convenientinlogisticsandrichinresources,theCompanyconductdistributedlayoutproductionanditsfactoriesFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited14currentlyaremainlydistributedinnearly100citiesinChinaandSoutheastAsia;Distribution+directsalesistheCompany'smainsalesmodel.Focusingonlocalizedmarketing,theCompanyhasfullyestablisheddistributionchannelstoefficientlysolvefarmers'capitalandtransportationneeds.TheCompany’sownprofessionaltechnologyandserviceteamsconsistingofalargenumberofmembersdirectlyvisitfarmerstoprovidefarmingtechnicalservicesandhaveachievedfunctionalcomplementationandcollaborationwithsalesorganizationandmanagementteamsintermsofsalesandserviceaswellaschannelandfarmers;high-qualityanimalseedlings,biologicalProducts,veterinarydrugsandvaccineshavebecomeindispensableproductsandtoolsfortheCompanytoprovideservicesandconstituteapackageofoverallsalesprogramsandsolutions.Thebusinessmodelsforseedlingsandanimalhealthcareproductsreflectthedistinctivefeaturesofresearchanddevelopmentandtechnologyastheguide,differentiatedproductsasthecarrier,andservicesupportasthemainpromotionstrategy.Seedlingsandanimalhealthcareproductsinvolvealongperiodofinvestmentinresearchanddevelopment.Technologyaccumulationneedsbetterpredictabilityandmarketinsight,andstrongoriginalityofproducts.Toprovidebetterservicesupport,itisnecessarytoinvestinthelongtermandtobuildserviceteamswithrichtechnology,knowledge,andexperience.Therefore,amulti-tieredresearchanddevelopmentsystemhasbeenchosenforthebusinessmanagementmodel,supplementedbyaproductionbasethathasarelativelyhighstartingpointforinvestmentandamarketingstrategywithastrongeraggressivepower.TheCompany'spigfarmingbusinessstartedatanearlystage,andadoptsthebusinessmodelof"company+farmer",whichmeansthattheCompanyprovidesfarmerswithnecessaryproductssuchasseedlings,feed,vaccines,etc.,thefarmerscompletethefarmingprocessafteragreeingonthemaintechnicalrequirementsforthefarmingprocessandthentheCompanyrepurchasesthefinishedproductsforsales.Asthelandresourcesforpigfarmingareontherise,theCompanyisgraduallyexpandingitsself-supportingproductionbases.TheCompanyhassetupprofessionalfunctionaldepartmentsincludingresearchinstitute,procurementcenter,financialcenter,operationanddevelopmentcenter,marketingcenter,processandinformationmanagementcenter,andhumanresourcecenteratitsheadquarters.Eachprofessionalcenteraimsatacquiringtechnicalandmanagementleadershipinitsfieldandprovidestechnicalandmanagementstandardsaswellasintegratedandprofessionalmanagementandservicesupportforlargeregions/businessdivisionsandvariousbranchesandsubsidiaries.TheGrouphassetupmultipleregional/businessdivisionsaccordingtoregionsorbusinesscategories.Theregional/businessdivisionsmainlyorganizeandmanagetheproduction,salesandserviceofbranchesandsubsidiaries.(II)DevelopmentstageandperiodiccharacteristicsofandpositionoftheCompanyintheindustrieswheretheCompanyoperatedduringthereportingperiod1.IndustrydevelopmentstageChina'sfeedindustrydevelopmentstartedinthe1980s.Afteroverfortyyearsofdevelopment,China’stotalamountoffeedranksthefirstintheworld.Inrecentyears,thenationalfeedproductionwassteadyinslowergrowthandhasenteredastageofstabledevelopmentandindustrialrestructuringandupgrading.Duetotheaggravatedcompetitionamongenterprises,thenumberoffeedenterprisesdecreasedfrommorethan10,000inFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited152010toover5,000in2019.Itisexpectedthattheconsolidationwouldcontinueandthenumberwouldbefurtherreduced.In2019,China’sfeedproduction(around1/4oftheglobalproduction)maintainedasteadygrowth,exceeding200milliontonnesforthefifthconsecutiveyearandbeingthelargestintheworldfortheninthconsecutiveyear.Theindustrywillgraduallyshifttolarge-scaleandintensifieddevelopment,butfeedenterpriseswillbesubjecttofurtherdifferentiation.Superiorenterpriseswillmakegooduseoftheopportunityofindustryconsolidationandtheirscaleadvantagestoextendtheindustrialchainordevelopdiversifiedbusinessesthroughmergersandacquisitionsaswellasconstructionofnewproductioncapacities;confrontedwiththedevelopmentbottlenecksintermsofcapitalpressure,talentpressure,technicalpressureandservicecapacity,SMEswillgraduallybemergedbydominantenterprisesoreliminatedfromthemarket.Thehigh-qualityanimalseedlingshaveahugemarketspace.However,mostofthehigh-qualityseedlingsforfarmedspecies,especiallyaquaticseedlings,arecurrentlyunder-supplied.Therearefewernewstrainswithproprietaryintellectualpropertyright,andtheproductioncapacityissmall.Itisfarfrommeetingtheneedsoftheanimalfarmingindustrytoupgradeandprogress.Inalongerperiod,therewillbepressureinrespectofachievingresearchanddevelopmentprogressandimprovingproductionsupplycapacity.Themarketdemandofanimalhealthcareindustryhasgrownrapidly.Inparticular,withtheupgradingofconsumption,theupgradingoffarmingspecieshassignificantlyincreasedthedemandforhealth,safety,andgreenfarming,andtheconceptofpreventionovertreatmenthasbeenincreasinglyacceptedbyawiderangeoffarmers.Thehelpofreasonableanimalhealthcareproductinvestmentforfarmingismainlyreflectedinthedirecteffectsofareduceddiseaserisk,increasedhealthandsafetyaddedvalueofproducts,controllablefarmingcosts,andimprovedfarmingefficiency,aswellasanumberofextendedeffectsincludingreducedlaborintensityandimprovedindustrialchainextensioncapability.Inthefuture,themarketcapacityoftheanimalhealthcareindustrywillseeagreaterroomforcontinuousdevelopmentonthebasisofthecurrentsituation,anddominantenterpriseswillusherinmajormarketdevelopmentopportunities.Thepigfarmingbusinessisrapidlymovingtowardslarge-scale,intensive,andfactory-orienteddevelopment.TheoutbreakoftheAfricanswinefeverin2018hasacceleratedconcentrationintheindustry.Small-scalefarmersandfamily-basedprivatefarmersquicklywithdrawfromthemarket,whilelargecompaniesareexpectedtoexpandtheirfarmingsizerapidlyduringtheepidemicbyvirtueoftheirsuperiorityinfunds,technologyandtheepidemicpreventionandcontrolsystem.InDecember2019,thelivepiginventorydecreasedby27.5%yearonyear;andthefertilesowinventorydecreasedby31.32%yearonyear.2.PeriodiccharacteristicsoftheindustryThecycleoffeed,animalhealthcareproducts,seedlingsandotherindustriesisrelatedtothatoftheanimalproductionindustry.Thecycleoftheanimalproductionindustryismainlydeterminedbythesupplyend(feedingcapacity).Chinaisacountrywithalargepopulation.Residentshaveahugefoodconsumptiondemandwhichremainsrelativelyrigidandstableforacertainperiodoftime.Therefore,thesupplyendoftheanimalproductionindustry(animalfarmingcapacity)determinesthepriceofthefarmedspeciesandthusdeterminesthecycleoftheanimalproductionindustry.Ingeneral,thefeedindustrywilllagbehindthecycleoftheanimalproductionindustry.Whentheanimalfarmingcapacityissmallerthanthedemand,theterminalpriceofthefarmedspecieswillFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited16increase,theprofitofthefarmingwillbeconsiderable,andthefarmingcyclewillhaveahighdegreeofprosperity.However,duetothereductionofthefarmingcapacity,feeddemandwilldecline.Whenthefarmingamountisgreaterthantheconsumerdemand,theterminalpriceofthefarmedspecieswillfall,resultinginfarminglossandsluggishfarmingcycle.However,duetothelargeramountofanimalfarming,thereisagreaterdemandforfeed.Astheprosperityoftheanimalfarmingindustrydirectlyaffectsthefarmers'choiceofhigh-qualityorlow-gradefeedproducts,theenthusiasmoffeedfeeding,thesensitivityoffeedproductprices,andtheeffectivetransferoffeedrawmaterialpricefluctuations,etc.,thecyclicalfactorsofthefeedindustryoffseteachother,withalimitedimpactonfeedproducts.Thefeedindustryfeaturesaweakcycle.Thehigh-qualityaquaticseedlingsandanimalhealthcareindustryareinaperiodofrapidgrowth,withnoobviousperiodiccharacteristics,andtheyareinaperiodofrapiddevelopmentoftheindustryasawhole.3.PositionoftheCompanyintheindustriesinwhichtheCompanyoperatesTheCompanyisalargeintegratedenterprise.Firstly,China'sfeedindustryisstillrelativelydecentralized.TheCompanyranksamongthetopfiveinthenationalfeedindustry.Itsold12.29milliontonnesoffeedin2019,representingapproximately5.37%ofthecountry'stotalfeedproduction.ThemarketshareoftheCompanyhasfurtherenlarged,withampleroomforfurthergrowth.TheCompany'saquaticfeedranksattheforefrontofthedomesticindustryduetoitstechnologicalandscaleleadership;andthelivestockandpoultryfeedranksamongthetoptenintheindustryandinaleadingpositionintechnologyandindustryscaleintheregionalmarket.TheCompanyranksamongthetoptenfeedenterprisesintheworldintermsofproductionandsalesscale.TheCompanyhasbeengraduallyexpandingfeed,seedlingsandanimalhealthcaremarketsinVietnam,India,Indonesia,Ecuador,etc.TheCompany'shigh-qualityfishandshrimpfry,andanimalhealthcareproductsforaquaticspeciesareplayingaleadingroleintheindustryinrespectoftechnologyandmarketscale.TheCompanyisrecognizedasaKeyNationalLeadingEnterpriseforIndustrializationofAgriculture,aState-LevelEnterpriseTechnologyCenter,andamongthetop500Chinesecompaniesin2019,thetop500Chinesemanufacturingcompanies,thetop500privately-heldcompaniesinChinaandthe2018FortuneChina500.II.MaterialChangesofMajorAssets1.MaterialChangesofMajorAssetsMajorassetsDescriptionFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited17EquityassetsDuringthereportingperiod,theCompany’sequityassetsdecreasedby12.13%fromthebeginningoftheperiod,ofwhichinvestmentsinminority-ownedenterprisesdecreasedby20.99%,mainlyduetothetransferofequityinterestsinGuangdongGFHulianMicro-LoanCo.,Ltd..FixedassetsDuringthereportingperiod,theCompany’sfixedassetsincreasedby38.26%fromthebeginningoftheperiod,mainlybecausetheCompany’sprojectsunderconstructionweretransferredtofixedassetsaftercompletionandbeingputintoproductionintheyear,theincreaseinpurchaseandconstructionofproductionequipment.IntangibleassetsDuringthereportingperiod,theCompany’sintangibleassetsincreasedby20.83%fromthebeginningoftheperiod,mainlyduetothenewlandandsoftwareuserights.ConstructioninprogressDuringthereportingperiod,theconstructioninprogressoftheCompanydecreasedby9.15%fromthebeginningoftheperiod,mainlyduetothetransferofconstructioninprogressinlastyeartofixedassetsuponreachingthescheduledusablestatus.2.MajorAssetsOverseas□Applicable√NotapplicableIII.AnalysisofCoreCompetitivenessAstheCompany'sproductsandservicesarecenteredontheneedsoftheanimalproductionindustry,theCompany'scorecompetitivenessisalsocomprehensivelyrepresentedbyadiversifiedandcompleteproductconfiguration,outstandingsingleproductadvantage,comprehensivefarmingtechnologyservicecapabilities,industriallayoutandtheabilitytoorganizethedevelopmentoftheindustrialchain-relatedlinks,aswellasthedelicacymanagementcapability.1.DiverseandcompleteproductconfigurationCenteringontheanimalfarmingchain,aftermanyyearsoftechnologicalinvestment,transformationofresearchanddevelopmentachievements,productaccumulation,productionlayout,etc.,theCompany'sproductconfigurationhasreachedarelativelyrichandcompletestateandcoveredthewholeprocessofanimalfarmingincludingfeed,functionalfeed,seedlings,drugs,vaccines,biologicalproducts,etc.anditisstillindevelopment.Withrespecttofeedproducts,theCompanyisoneofthefewfeedproducersinChinathatcanproducefeedforfish,shrimps,pigs,meatpoultryandeggpoultry.Anditisfairlycompetitiveinalltheproductcategories,withalargemarketshareinmajormarkets.Productconfigurationcapabilityrequiresstronginsightsintocustomerdemands,researchanddevelopmentorganizationcapability,resultsconversioncapability,investmentinconstructionofproductionbases,processingorganizationcapability,marketingpromotioncapability,andtechnicalservicecapability.TheCompanyhasrichtechnicalresearchreservesandaresearchanddevelopmentteamcomposedofmorethan1,600members.Itannuallyinvestsaconsiderableamountinresearchanddevelopmentandresearchanddevelopmentpersonnelincludesmulti-disciplinarytalentsinthefieldsofanimalnutrition,veterinarymedicine,animalfarmingandgeneticimprovement,animalfarmingstrategyoptimization,bioengineering,biochemistryandFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited18machinery.ThefasttransformationofresearchanddevelopmentresultsandclearandrapidimplementationofinvestmentsupportingstrategiescontributetotheCompany'sstrongproductconfigurationcapability.Forexample,forfeedformulatechnology,theCompany,throughmorethan20yearsofaccumulationincontinuousresearchanddevelopment,hasestablishedahugedatabaseofanimalnutritionrequirementsandreservedavarietyofrawmaterialformulatechnologies.Morethan1,000setsofcomparativeexperimentalresultsareaddedtothedatabaseofcorenutritionalneedsofanimalsandrawmaterialsutilizationtoconverttechnologiesintoproductivity.Therefore,theCompanyhasastrongcapacityintermsoforganizationandcontinuousoptimizationofproductformulasandadaptationtochanges.Toquicklyadjusttheformulawhentherawmaterialpricesfluctuatecanensureacquisitionofcostcompetitiveadvantages.TheCompanynowhasamarketingteamconsistingofmorethan6,000memberswhovisitfarmsorfarmingsitestoknowtheanimalfarmingsituation.Therefore,theCompanyhasdetaileddatasourcesforterminalconsumptionhabits,animalgrowthperformanceafterfeedutilization,animalfarmingstrategyandanimalfarmingneeds,andcanaccuratelygraspthedemandsoffarmersandpreciselyproposetechnicalrequirementsonproductdesigntosupportfullconcentrationoftheCompany'stechnicalresourcesoncustomer'scoreneeds.2.ClearandexcellentproductpoweristheCompany'smostimportantcompetitiveadvantageForallseriesofproducts,theCompanyisdedicatedtocreatingproductpowerthatissignificantlyaheadofitscompetitorsandhasinvestedheavilyintheexplicitexpressionofproductpower.Despiteofahighprice,high-endproductshavetheobviousadvantageofultimatepursuitofanimalsurvivalrate,growtheffects,andgrowthefficiencyandhaveaprominentbrandeffect.Onthebasisofensuringleadingproductionefficiency,middle-endproductsareclosetothecompetitors'productpricingandarepursuingoutstandingcostperformance.Therefore,inlightoftheindustry’soverallgoodfarmingbenefits,theCompany’scustomers,withthesupportofintegratedproducts,canobtainsignificantlyhigherreturnsthanthoseofthesametypeoffarmers;intheeventthattheindustry’sfarmingbenefitsdeclineandeventheentireindustrysufferslosses,theCompany’scustomerscansufferfromlessorevennoloss.ThemanifestationofproductpowerrequiresthesupportofvariousinternalprofessionalcapabilitiesoftheCompany:theresearchanddevelopmentcapabilitiesofanimalnutritionandrawmaterialutilization,productformulatechnologycapability,rawmaterialvalueprocurementcapability,efficientinternaloperationcapabilityareallindispensable.Forexample,inrespectofsupportofvaluepurchasecapacity,theCompany’spurchaseteamhasoutstandingprofessionalcapabilities.Theteamisyoungandspecialized,anditperformsdivisionoflaboraccordingtosubdividedrawmaterialcategories.Thewideindustryperspectiveandalargeamountofinformationacquisitionandanalysisensuretracking,research,andjudgmentofthemarkettrendsofbulkrawmaterialsathomeandabroadinarealtimewayandutilizationoffuturesinstrumentsforhedgingofbulkrawmaterialstoeffectivelycontrolthepurchasepriceriskandpositionrisk.Theprominentpurchasecapabilitycanidentifynumerousrawmaterialpurchaseopportunities,makingcostadvantagesforfeedproductsandtradeofrawmaterialspossible.TheCompanyisthefirstcompanytosuccessfullyachievecentralizedpurchaseintheindustry.Ithasobviousadvantagesinrespectoflarge-scalepurchases.Besides,itissophisticatedinthecombinedapplicationofpurchasetoolsincludingspotgoods,futuresandoptions,aswellasflexibleapplicationmethods.ForwardvaluepurchaseandriskpositionmanagementalsohelptheCompanytogainpurchasingcostadvantages.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited19AnotherexampleistheCompany'sabilitytosupportefficientoperations.BypromotingtheapplicationofSAP,EPSandothermanagementsoftware,theCompanyhasastronginformation-basedsystem,andinternaloperationsaregraduallybecomingmorestreamlined,standardized,andmoredata-based.Theroleofdata-basedoperationistofindouttheefficientandenergy-savingoperationmethodbycomparingthebigdataofbranches;theroleofprocess-basedoperationandstandardizationistogreatlyimprovetheinternalreproducibility.Thehighlyefficientoperationcapabilityisanimportantsupportfortheeffectiveorganizationofprofessionalproductionofvariousproducts.3.ComprehensiveanimalfarmingtechnicalservicesisanimportantinitiativefortheCompanytocoordinateproductchainandcontinuouslyacquirenewcustomersandimprovecustomer'sstickinessIn2006,theCompanytooktheleadintheindustrytoprovidecomprehensivetechnicalservicestofarmers,andpositionedtheCompanyasaservice-orientedenterpriseandanenterprisethatprovidesanimalfarmingsolutionstofarmers.TheCompanyprovidesfarmerswithfull-processproductandtechnicalservicesupportincluding"seedlings-stockingmode-environmentalcontrol–animalepidemicprevention-feed-marketinformation"toensurethatfarmerscanusethemostadvancedfarmingtechnologytoensurefarmers’growingsuccessandprofitability.TheCompanyhasaserviceteamcomposedofmorethan6,000talentswiththemostexperienceandmostpassionintheindustry;ithasalsoaccumulatedavarietyofadvancedanimalfarmingmodelsbasedonlocalcharacteristics;itshundredsofhighlyefficientservicestationsinfarmingconcentratedareasthroughoutthecountrycansimultaneouslyprovidetechnicalservicesfortensofthousandsoffarmers.TheCompany'srelativelycompleteservicesystemintheindustrycangivefullplaytoitsproductforcestrengthsandprovidesafullrangeoftechnicalservicesforfarming,whichcaneffectivelyamplifythebenefitsforcustomers,therebyincreasingthestickinessofcustomers.ThecomprehensiveanimalfarmingtechnicalserviceshavebecomeanimportantbrandlabeloftheCompanyandanimportantmeansfortheCompanytoobtaincustomersandincreasethestickinessofcustomers.4.TheCompany'sexistingindustriallayoutadvantagesupportstheCompanytoquicklyorganizethecomprehensivedevelopmentofmultiplelinksintheindustrialchain,reserveofnewbusinessesinorder,andtheincreasinglyprominentindustrialcomprehensiveadvantages.TheCompany'sfeedproductsincludeafullrangeoffeedproductssuchaslivestockandpoultryfeedandaquaticfeed.Theproductlineiscompleteandtheproductmixfeaturesendowthecompanywithastronganti-riskcapability.Differentkindsoffeedproductshavedifferenttechnicalcontents,differentgrossprofitmargins,anddifferentmarketcharacteristicsandoperationalrisks.TheCompany'sproductmixmakesitpossiblefortheCompanytoobtainhighergrossprofitmarginsthantheindustry'sgenerallevel,andtobettercontrolthemarketoperationalriskscausedbyanimalepidemicdiseasesandimbalanceofsupplyanddemandandensurestheCompany'sstablerevenuefromsalesoffeedproductsandmaintainarapidgrowthmuchhigherthanthatoftheindustry.Overtheyears,theCompanyhasorderlydevelopedhigh-qualityaquaticanimalseedlings,aquaticanimalhealthcareproducts,livestockandpoultryvaccines,veterinarydrugs,animalhealthcareproductsforlivestockandpoultry,pigfarmingandotherbusinessesandthecoretechnologiesinindustrialchainhavegraduallygainedadvantagesintermsoftechnology,industriallayoutandindustrialcollaboration,thusfosteringmorenewbusinessFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited20growthpointsandprofitgrowthpointsfortheCompanyandlayingasoundfoundationfortheCompanytofurtheramplifythemultipliereffectsoftheindustrialchainandcreatecomparativecompetitiveadvantages.5.ContinuouslybuildingexcellentoperationmanagementteamandfinemanagementcapabilityTheCompanyhasahard-working,dedicated,professionalandsuperbmanagementteamwithaconsistentphilosophy.Mostofthemembersoftheteamaregraduatedfromagriculturalinstitutionsofhigherlearningandhaveastrongprofessionalbackground.Themanagementhasaprofoundandcomprehensiveunderstandingofthefeedindustryandhasaccumulatedrichpracticalexperienceandformedmagnificentandunifiedvisionsandgoals,strongindustryinsight,leadershipandexecutiveforce,enablingthemtoadapttotherapidchangesinthefeedindustryandtheCompany'sever-increasingoperationalmanagementrequirementsintermsofacademicbackground,knowledgestructure,industryexperienceandage.Inrecentyears,theindustryisinaneraofdramaticchangeswithtremendouschangesinindustrydevelopment,scaleoffarmersandneedsofcustomers.Emergingindustriesincludingruralfinanceand″Internet+″modelhavealsoconstantlyimpactedtheindustry.Topromotethetransformationandinnovationoftheindustryandcreatecorporatemechanismandculture,i.e.thecollectivelearningcapacitythatcanquicklyrespondtochangesenablingtheCompanytocontinuouslycreatevalueforcustomers,isthefoundationfortheCompanytogainsustainablecompetitiveadvantages.Fromproducingaquafeedpremixturetomanufacturingcompoundfeedsforvariousaquaticspeciesincludingfreshwaterfish,marinefish,andshrimps,fromhavingleadingadvantagesinaquaticfeedsatthebeginningtograduallyhavingapparentadvantagesextendedtofeedforlivestockandpoultry,fromsimplefeedproductionoperationtoprovisionofcomprehensiveservicesincludingseedlings,animalhealthcareandanimalfarmingtechnicalservicesforfarmers,andfrombusinessoperationonlyinSouthernChinatoexpansiontoCentralChina,EasternChina,NorthernChina,SoutheastAsiaandSouthAmerica,theCompanyhasexperiencedtheprocessofdevelopmentfromscratchtobecomestrongerandlargerandtoranktheforefrontoftheindustry,relyingonthecollectivelearningabilityoftheCompany’smanagementandallemployees.Affectedbythiscultureandbenefitsfromthiscapacity,theCompanykeepslearningandgrowing.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited21SectionIV.DiscussionandAnalysisofOperationsI.Overview(I)IndustrysituationIn2019,Chinaexperiencedadecreaseinfeedproduction,fiercercompetitioninthefeedindustry,acontinuousfallinthenumberoffeedproducersandincreasingmarketconcentrationintheindustry.AffectedbytheAfricanSwineFever(ASF),pigproductionandlivestockinventorysufferedsubstantialdecline,resultinginsurgingporkpricesandswitchingsomedemandsfromporktopoultrymeat.Astheconversionrateofpoultrymeatismuchhigherthanpork,feedproductionacrossthecountryhasexperienceddecreasefrom“structured”adjustment.In2019,thetotaloutputofindustrialfeedreached228,854,000tons,ayear-on-yeardecreaseof3.7%.Theoutputofpigfeedwas76,632,000tons,ayear-on-yeardecreaseof26.6%;poultryfeedwas115,814,000tons,ayear-on-yearincreaseof22.0%;aquaticfeedwas22,029,000tons,ayear-on-yearincreaseof0.3%.Thesubstantialadjustmenttothefeedvarietiesandstructureposedhugechallengestotheindustryandmanyfeedcompanieshadnochoicebuttodevelopnewfeedproductsandnewmarketsordirectlywithdrawfrommarketcompetition.In2019,thenumberoffeedmanufacturersthatwereinactualproductionwithbasicallynormalratesofoperationsdecreasedto5,016,representingadeclineof33.05%from7,492registeredin2017.Largeleadingfeedmanufacturerscontinuedtoincreasecapacity,leadingtofasterenhancementinindustrialconcentration.Intermsoffarming,pigfarmingwassluggishatfirstandthenwentupturn;poultryfarmingcontinuedtherisingmomentum;aquaculturewasinrelativerecession.AffectedbyASF,thescaleofpigfarmingwentdownsubstantially,andtheendpricesandfarmingprofitswereatlowlevelsatfirst,followedbyriseslater,withanewhighinthefourthquarter.However,duetothebigepidemicrisksfacingfarmingindustry,theincreaseinfarmingwasmainlyseeninlargecompanies.Medium-andsmall-sizedcompaniesandindividualfarmerswithdrewfromthemarketatafasterspeed.Asaresult,poultryfarmingwelcomedahugealternativedevelopmentopportunity.Thedecreaseinpigsupplygaverisetorobustdemandsforpoultrymeatandeggs,resultingincontinuousgrowthinpoultryfarmingandaboominoverallprofitsoftheindustrialchain(includingbreeding,farmingandslaughtering)withdifferencesinprofitdistributionindifferentstages.Intermsofaquaculture,duetoitsrelativelyweakerroleinsubstitutingpigsupply,theindustrialexpectationswerenotmetandtheindustrywassluggishthroughouttheyear.Thescaleofspecialaquaticproducts,suchascrayfish,crabs,mandarinfishandchannaargus,remainedsmall,withconsiderablefluctuationsinpricesduetoshort-termsupply-demandrelations.Buttheconsumptiontrendofspecialaquaticproductsgraduallyreplacingtraditionalvarietiesremainedunchanged.(II)ProductionandoperationoftheCompanyDuringtheReportingPeriod,thebusinessscaleofanimalfeed,aquaticbreeding,animalhealthproducts,animalhusbandryandtradecontinuedtogrowonallfronts.For2019,theoperatingincomeamountedtoRMB47.613billion,upby12.94%year-on-year;andthenetprofitsattributabletotheownersoftheCompanyreachedRMB1.649billion,upby14.71%year-on-year.1.TheCompanyhascompleteproductlinesintheanimalfeedbusiness,possessescorecompetitivenessforpig,Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited22poultryandaquaticfeedandwitnessescontinuedincreaseinmarketshares.TheCompanypossessedcompetitiveedgesinvarieties,ensuringstableandcontinuousgrowthinitstotalfeed.FromtheoutbreaksoffloodinCentralChinain2016andthebirdfluin2017toASFin2018and2019,animalfarmingandfeedindustrieshavebeengreatlyaffectedbynaturaldisastersandepidemicsinrecentyears,leadingtobigfluctuationsinthefarmingsizeandpriceoffarmingvarietiesandshiftsinfeeddemands.Takingtheadvantageinthefullspectrumofitsproductpipelineandcorecompetitivenessforallproducts,theCompanyhasmaderapidadjustmenttoitsstrategicplans,productioncapacityandpersonneldeploymentinresponsetomarketchanges.Theseeffortseffectivelymitigatedtheimpactfromnaturaldisasters,epidemics,andgreatfluctuationsfromtheindustryandledtostableandcontinuousgrowthinitstotalfeedoutput.DuringtheReportingPeriod,despiteofadeclineoftotalfeedproductionacrossthecountry,theCompany’ssalesvolumeoffeedreached12.29milliontons,upby15%year-on-year,accountingfor5.37%ofthecountry’stotalfeedoutputandobtaininghighermarketshares.(1)Intermsofpigfeed,theCompany’ssalesvolumedecreasedby28%year-on-year,butwithslightincreaseingrossprofitmarginandhugeprogressinproducttechnology,structureoptimization,serviceandbrandbuilding.AffectedbyASF,livestockinventoryofpigsfellsubstantiallythroughoutChina,particularlyinSouthChina,theCompany’scoremarket,whichsawayear-on-yeardecreaseof70%-80%indemandsforbothlivestockinventoryandpigfeedinthesecondhalfyear.Mostfeedcompaniesshutdowntheiroperationorwereforcedtoshiftbusiness.Inthedifficultperiod,theCompanyfocusedonthedevelopmentofproducttechnologyforpigfeedbusiness,dealtwithnewnutrition,formulaandtechnologydemandstriggeredbyASFthroughtechnologicalinnovation,investmentintechnologyandupgradinginproductionprocess,inabidtobuildproductcompetitivenessforpigfeed.DuringtheReportingPeriod,withimprovementtotheproductstructure,theCompany’spigfeedproductsgaveoutstandingperformanceinanumberofaspects,includingimprovingphysicalfitness,maintaininghealthandfacilitatinggrowth.Theproportionofhi-techandhighgross-profitproducts,suchassowfeed,creepfeed,concentrateandsucklingpigfeed,increasedsubstantiallyfrom18%in2015to27%thisyear.Atthesametime,byfocusingonitsanti-epidemicservices,theCompanyprovidedpighealthproductsandveterinarydrugs.Inaddition,toaddresscustomers’pressingdemands,theCompanyconductedspecializedonlinetrainingonepidemicpreventiontechnology(Atotalof15sessionswereheldwith1,879,500views)andorganizedateamofflinetoperformtechnologyservicesandtrainingonepidemicpreventionandtoothextractionforfarmers.Bydoingso,theCompanybuilttheimageofanindustrialleaderinepidemicprevention,setupaservicesystemforpigfeedandstrengthenedcustomerstickiness.Throughtheeffortsofitsteam,theCompanygainedrecognitionfrommanycustomersforitspigfeedbrand,withkeysalesregionsexpandingfromtheoriginalSouthandCentralChinatoNorthandSouthwestChina.Growthwasmaintainedinthenumberoffarmingcustomersandsaleschannelsandincreasewasseeninmarketshares;thegrossprofitmarginfrompigfeedproductsroseby0.5percentagepoint,layingasolidfoundationforsubsequentrecoveryofpigfeed.(2)Intermsofpoultryfeed,theCompany’ssalesvolumewentupby35%year-on-year,withcontinuousexpansionintheadvantagesoftechnology,scaleandmarket.Thegrossprofitmarginincreasedbynearly2percentagepointswithhugeenhancementinprofitability,presentingapictureofsimultaneousincreasesinbothvolumeandprofits.Throughyearsoftechnicaldevelopmentandexperience,theCompanyhasbuiltincreasinglyobviousadvantageintechnology.Ithascompletedthedevelopmentofthenutritionsystemandtheformulasystemforitsexistingadvantagedbreeds,includingCherryValleyducks,white-featherbroilers,layingducksandlayinghens,enablingittoexerciseprecisenutritionmanagementandleadingtomaterialimprovementsincostFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited23controlcapability;ithasmademarkedprogressinthetechnicaldevelopmentofnewbreeds,includingMuscovyducks,hybridMuscovyducks,geese,quailsandnativebreedsofchicken,withbasicdevelopmentinthenutritionsystemandtheformulasystemandevidenteffectofproductstrength.Byvirtueofitstechnicaladvantage,theCompanyexerciseddifferentiatedcompetitionfornewlydevelopedbreeds,resultinginsubstantialincreaseinprofits.Forexample,withhighprofitmarginsofgoosefeedandtheCompany’spreciseproductionpositioningandprominentproductstrength,thesalesvolumeofgoosefeedexperienceddoubleincreaseduringtheReportingPeriod.Thesubstantialgrowthinanumberofnewproductsdrovecontinuousoptimizationinpoultryfeedstructureandincreaseingrossprofitmargin.Furthermore,theCompanydulyexpandedcapacityandreasonablyadjustedthemanagementmodelinkeymarketsofpoultryfeed,leadingtofurtherimprovementinoperatingefficiency.Equippedwiththetechnicalcapacity,productcapacity,advantageinscaleandoperatingefficiencyofabovetheindustrialaveragelevel,theCompanyhasbuilthugemarketcompetitiveedgesforpoultryfeedandcontinuouslyimprovedtheproductdefenseline,drivingquickincreaseinitstotalfeedandprofits.(3)Intermsofaquaticfeed,theCompany’ssalesvolumeroseby13%year-on-year,maintainedgrowthfarhigherthantheindustrialaverageandfurtherimprovedthevarietystructure.DuringtheReportingPeriod,duetotheinconspicuouseffectofsubstitutingportconsumptionandtheabsorptionofthehigh-speedgrowthinfarmingsizeforthepreviousyears,theCompany’sspecialaquaticproducts(includingweeverandchannaargus)thathadgrownrapidlyinrecentyearssuffereddeclineininventoryandshrinkageinfeeddemands.Byvirtueofitsadvantageintechnology,serviceandindustrialchain,theCompanymanagedtoachievegrowthinthesalesvolumebyabout10%withfurtherincreaseinmarketshares.Meanwhile,theCompanymadevigorouseffortstodevelopspecialfeedmarketsforcrayfish,crabsandgoldenpomfret,leadingtomorethan70%growthinsalesvolumeduringtheReportingPeriod.Asaresult,theCompany’ssalesvolumeofspecialaquaticfeedsustainedgrowthbyover20%throughouttheyearwithslightincreaseingrossprofitmargin.Holdingfirmconfidenceinconsumptionupgrading,specialaquacultureandincreaseindemandsforspecialaquaticfeed,theCompanyhasmaderesoluteeffortstospendonthedevelopmentofresourcesandtechnology,developnewproductmarket,seizeandincreasemarketshares,buildcapacityforspecialaquaticfeedacrossthecountry,andpreserveitsleadingadvantageintechnologyandproductioncapacity.DuringtheReportingPeriod,thecapacityforspecialaquaticfeedthatwascompletedandbeingbuiltbytheCompanyexceeded1milliontons,layingasolidfoundationforgrowthinsalesvolumeinthenextfewyears.Generalaquatic(includingtraditionalaquaticproductssuchasthefourmajorChinesecarps)feedfacedexceptionallyfiercecompetitionwithcompressedoverallindustrialprofitsthroughouttheyearduetoincreasingcompetitionfromthebusinessshiftofmanypigfeedcompanies.Inthesecondhalfyear,quitemanynewcompetitorswithdrewfromthemarketwithfasterindustrialreshuffleandconcentration.In2019,theCompany’ssalevolumeofgeneralaquaticfeedbasicallyleveledwiththepreviousyearandgrossprofitmarginfellby2.28percentagepoints.Insummary,thesalesvolumeofaquaticfeedfortheyeargrewby13%,whichwasmuchhigherthantheindustrialaverage.Theproductstructurecontinuedtoimprovewithhugepotentialinthegrowthofspecialaquaticfeed.Despitetheimpactfromthedecreaseingrossprofitmarginofgeneralaquaticfeed,whichcausedadropof0.69percentagepointyear-on-yearintheoverallgrossprofitmargin,theindustrialconcentrationwasgoingfaster,andtheCompany’smarketsharescontinuedtorisewithobviouscompetitiveedgeinindustrialchain.2.Throughindustrialchainbuilding,theCompanydevelopedcomprehensivecompetitivenessinmultipledimensionsandensuredstableandsustainedgrowthIntermsofindustrialchaindevelopment,theCompanyadoptsabasicstrategyofincreasingsizebasedonFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited24specializationandextendingindustrialchainbasedoncorecompetitiveness.Bycenteringaroundthefeedbusinessandbasedonimprovingspecialization,theCompanyhasdevelopedtheupstreamanddownstreamoftheindustrialchainoffarming,aquaticbreeding,poultryslaughtering,animalhealthandrawmaterialstradetogeneratesynergisticeffectwiththefeedbusiness,improveitsprofitabilityandanti-riskcapacity,andensurestableandsustainedgrowth.TheCompany’ssalesbusinessofagriculturalproductsincludefarming,aquaticanimalfryproductionandpoultryslaughtering.(1)Farmingmainlyincludespigfarming.DuringtheReportingPeriod,theCompanyrealizedasalesrevenueofRMB1.371billionfrompigbusiness,upby53.36%year-on-year.InthecontextofASF,theCompanybuiltitsownpigfarmsinthefirsthalfyearandfocusedonincreasingthebusinessscalebypurchasingpigletsfromexternalpartiesaccordingtotheprincipleofprudence.Coreattentionwasemphasizedontheestablishmentofabiologicalepidemicpreventionsystem,optimizationofeachbranchpointincludinganimalproduction,animalhealth,selectivebreeding,nutritionandcost-control.Meanwhileemphasiswasalsogiventoteam-buildingandreservinglandresources.Asofnow,theCompanyhasreservedsufficientlandforpigfarmconstructioninGuangdong,Guangxi,Hunan,HubeiandGuizhou,establishedafarmingteamcomprisingmorethan1,000members,andequippedthefarmingteamwithindustrialleadingcapacityforASFpreventionandcontrol.Inthesecondhalfyear,asithadsetupasoundepidemicpreventionsystemandtreatmentmethods,theCompanyexpeditedtheconstructionpaceofself-ownedpigfarms,leadingtofurtherexpansioninpigfarmingscale.(2)TheCompanyrealizedasalesrevenueofRMB354millionfromaquaticbreeding,upby26.43%year-on-year.Intermsofshrimpbreed,theCompanywillcontinuedtoimprovethesystemandstandardizethemanagementmodel;inrespectoffishbreed,itwillfocusonthebreedingandreproductionofspecialaquatics.TheCompanyhasformedadvantagesinindustrialchainforaquaticbreedingandfeedandanimalhealth,allowingitselftoprovidefarmerswithintegratedsolutions.(3)Benefitingfromtheboominpoultryindustrialchain,theCompanyrealizedasalesrevenueofRMB828million,upby46.55%year-on-year,withslightincreaseintheprofitability.Withregardtoanimalhealthbusiness,theCompanyrealizedasalesrevenueofRMB574million,upby21.28%year-on-year,withanincreaseof6.72percentagepointsinthegrossprofitmargin.TheCompany’sanimalhealthproductsincludemicroecologics,vaccinesandveterinarydrugsforaquaticanimals,livestockandpoultry.Overyears’development,theCompanyhasformedacomprehensiveservicesystemandsoundinternaldistributionchannelsforitsaquaticanimalhealthsegmentastheproductandservicemodelsarebeingupgradedcontinuously.Inaddition,theCompanyenjoysprominentadvantagesinthecostperformanceofcoreproductsandsustainedincreaseinmarketshares.Itfocusesonvaccines,veterinarydrugsandotherrelatedproductsforthelivestockandpoultryhealthsegmentasaresponsetothehugeroomofmarketdemandsforlivestockandpoultryhealthproducts.Inrecentyears,theCompanyhasmadeeffortstoaccumulateandimproveitscapacityfortheR&D,productionandsupplyoflivestockandpoultryhealthproducts.In2019,itstartedtobuildthelivestockandpoultryhealthservicesystemtointegratetheproductsintothesystemthrougheffectiveorganizationandgrasptheopportunitytosubstitutefarmers’originalanimalhealthproducts.Intermsofrawmaterialstrade,duetoChina-U.S.tradefrictionsandthedecreaseindomesticdemandsforcorn,theCompanybegantoshrinkitstradescaleinthesecondhalfyear.DuringtheReportingPeriod,theCompanyrealizedasalesrevenueofRMB5.199billion,withthegrossprofitmarginroughlyequivalenttothepreviousyearandstableprofits.3.TheCompanyfocusedontheresearchinanimalnutrition,reproductionandbreedingandfarmingmodel,builtFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited25nutritionsystemsandformulasystemsfortheentirefarmingprocessofvariousbreeds,createdspecializedanddifferentiatedterminalproducts,enhancedproductcompetenceandbuiltatechnology-drivenfarmingcompanyR&DprovidesthebasisforthesurvivaloftheCompanywhilecontinuousincreaseinR&DspendingservesasthebasisforthedevelopmentoftheCompany.DuringtheReportingPeriod,theCompanyspentRMB428milliononR&D(includingR&Dexpensesanddevelopmentexpenditure),upby37.93%year-on-year.Byfocusingonbreeding/nutrition/health/farmingandfood,theCompanybuiltanindustrialleadingR&Dsystemforthewholeindustrialchain.Whileraisingthespendingonapplicationtechnology,theCompanyfocusedonstrengtheningthebuildingoftechnologyplatformsforvariousbusinessmodulesontheindustrialchainandformedathree-levelR&Dsystemcoveringfromtheresearchinplatformtechnologyandthedevelopmentofapplicationtechnologytotheapplicationofsystemsolutions.TheCompany’sR&Dteamcurrentlycomprisesmorethan1,600members,includingover300holdingPhDDegreeandMaster’sDegree(ThewholeGrouphasatotalof878employeesholdingPhDDegreeandMaster’sDegree),providingadequateHRfoundationfortheimprovementoftheCompany’sR&Dsystem.DuringtheReportingPeriod,theCompanymadesubstantialachievementsintechnologyR&D,includingbreakthroughsinthebreedingofholandricchannaargusandholandrictilapia,globalleadingformulatechnologyforlow-fishmealandnon-fishmeal,andindustrialleadingconvertedapplicationofantibiotic-freetechnologyinfeed.Intermsofindustry-education-researchcollaboration,theCompanyhasconductedvariousformsofsuchcollaborationwithmorethan50domesticandforeigncollegesandresearchinstitutes.Thecollaborationmodesincludejointlybuildingindustry-education-researchcollaborationbases,academicians’workstationsandkeylaboratories,andjointlysolvingindustrialkey,common,prospectiveandemergencyproblems.DuringtheReportingPeriod,theCompanyundertookandinvolvedin55governmentprojectsintotal,includingsevenstate-level,34provincial,11municipalandthreedistrict-levelprojects.Inaddition,theCompanyworkedwithSouthChinaAgriculturalUniversityandInstituteofAnimalHealth,GuangdongAcademyofAgriculturalSciences,torespectivelyundertakeoneprojectontechnology-basedemergencypreventionandcontroloverASFinGuangdongProvince,beingResearchandApplicationofComprehensiveEmergencyASFPreventionandControlTechnology(《非洲猪瘟应急综合防控技术研究及应用》)andResearchandApplicationofPreciseASFTestingTechnology(《非洲猪瘟精准检测技术研究与应用》).TheprojectshaveledtosuccessfuldevelopmentofnucleictestkitsforASFvirus,providingemergencymeasuresfortheindustry.Asthe“totalbanonantibiotics”enterscountdown,theCompanyismakingactivestepstoimplementgreen,antibiotic-freeandhealthyfarmingthroughtechnologyinnovationandpromotethesustainabledevelopmentoffarmingindustry.DuringtheReportingPeriod,theCompanyundertookResearchandApplicationofKeyTechnologyintheBiosynthesisofAntibiotic-freeFeed,aprojectundertheKeyFieldR&DProgramofGuangdongProvince,togetherwithSouthChinaAgriculturalUniversity,YunnanNormalUniversityandShandongYoutellBiotechCo.,Ltd..Through“researchandapplicationofkeytechnologyinthemicrobialfermentationoffeed”and“researchandapplicationofkeytechnologyinthesubstitutionofantibioticsinfeed”,theCompanyaimstomakebreakthroughsinkeytechnologyinthebiosynthesisofantibiotic-freefeed,providesystematicsolutionsforsubstitutesoffeedcontainingantibiotics,demonstrateandpromotethesolutions,andthusleadindustrialprogressanddevelopment.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited26II.AnalysisofPrincipalOperations1.OverviewPleasesee"I.Overview"under"DiscussionandAnalysisofOperations"forrelevantinformation.2.Revenueandcost(1)ComponentsofrevenueUnit:RMB20192018Increase/decreaseAmount%ofrevenueAmount%ofrevenueTotaloperatingincome47,612,587,464.50100.00%42,156,628,800.11100.00%12.94%ByindustryFeedindustry44,871,383,878.0694.24%40,415,026,750.3695.87%11.03%Farmingindustry2,741,203,586.445.76%1,741,602,049.754.13%57.40%ByproductSalesoffeed38,985,186,067.9681.88%34,965,196,221.2082.94%11.50%Salesofanimalhealthcareproducts574,064,192.411.21%473,324,165.981.12%21.28%Salesofagriculturalproducts2,741,203,586.445.76%1,741,602,049.754.13%57.40%Tradingbusiness5,199,456,961.2810.92%4,874,822,732.9311.57%6.66%Others112,676,656.410.24%101,683,630.250.24%10.81%ByregionSouthernChina26,044,702,214.8654.70%25,268,338,101.6559.94%3.07%EasternChina6,301,474,741.1313.23%5,944,635,932.6414.10%6.00%NorthernChina16,583,504,018.0134.83%13,048,253,974.3730.95%27.09%CentralChina10,075,744,770.1121.16%9,410,967,930.3522.32%7.06%Overseas4,285,189,298.179.00%2,982,432,421.867.08%43.68%Combinedoffset-15,678,027,577.78-32.93%-14,497,999,560.76-34.39%8.14%Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited27(2)Industries,productsorregionsaccountingforover10%ofrevenueoroperatingincomeoftheCompany√Applicable□NotapplicableUnit:RMBRevenueOperatingcostsGrossprofitmarginIncrease/decreaseofrevenueascomparedtothecorrespondingperiodoftheprioryearIncrease/decreaseofoperatingcostsascomparedtothecorrespondingperiodoftheprioryearIncrease/decreaseofgrossprofitmarginascomparedtothecorrespondingperiodoftheprioryearByindustryFeedindustry44,871,383,878.0640,099,159,977.5510.64%11.03%11.04%-0.01%Farmingindustry2,741,203,586.442,124,251,939.5522.51%57.40%41.35%8.80%ByproductSalesoffeed38,985,186,067.9634,759,643,284.5910.84%11.50%11.74%-0.20%Salesofanimalhealthcareproducts574,064,192.41263,811,700.5154.04%21.28%5.80%6.72%Salesofagriculturalproducts2,741,203,586.442,124,251,939.5522.51%57.40%41.35%8.80%Tradingbusiness5,199,456,961.285,043,647,623.863.00%6.66%6.80%-0.12%ByregionSouthernChina26,044,702,214.8622,810,102,142.1812.42%3.07%1.61%1.26%EasternChina6,301,474,741.135,830,841,389.777.47%6.00%5.56%0.39%NorthernChina16,583,504,018.0115,635,306,528.365.72%27.09%27.67%-0.42%CentralChina10,075,744,770.119,428,408,033.616.42%7.06%6.28%0.68%Overseas4,285,189,298.173,802,870,898.3411.26%43.68%42.92%0.48%UnderthecircumstancesthatthestatisticsspecificationfortheCompany’sprincipaloperationsdataexperiencedadjustmentinthereportingperiod,theprincipaloperationsdatauponadjustmentofthestatisticsspecificationattheendofthereportingperiodinthelatestyear□Applicable√NotapplicableFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited28(3)Whetherrevenuefromsalesinkindishigherthanrevenuefromservices√Yes□NoByindustryItemUnit20192018Increase/decreaseFeedindustrySales10,000tonnes1,228.641,070.1414.81%Productionoutput10,000tonnes1,259.011,065.3718.18%Inventories10,000tonnes15.1312.5920.17%Explanationonwhytherelateddatavariedbymorethan30%□Applicable√Notapplicable(4)PerformanceofmaterialsalescontractsoftheCompanyduringthereportingperiod□Applicable√Notapplicable(5)CompositionofoperatingcostsByindustryandproductUnit:RMBByindustryItem20192018Increase/decreaseAmount%ofoperatingcostsAmount%ofoperatingcostsFeedindustryMaterialcosts38,314,454,972.3995.55%34,607,873,095.7195.83%10.71%FeedindustryLabourcosts502,192,987.501.25%407,312,350.011.13%23.29%FeedindustryManufacturingexpenses1,250,454,649.073.12%983,253,333.822.72%27.18%FeedindustryOthers32,057,368.590.08%114,321,062.980.32%-71.96%Totaloffeedindustry40,099,159,977.55100.00%36,112,759,842.52100.00%11.04%FarmingindustryMaterialcosts1,798,900,558.1184.68%1,239,184,793.4182.46%45.17%FarmingindustryLabourcosts211,537,541.789.96%174,088,889.2011.58%21.51%FarmingindustryManufacturingexpenses113,813,839.665.36%89,552,659.645.96%27.09%Totaloffarming2,124,251,939.55100.00%1,502,826,342.25100.00%41.35%Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited29industryUnit:RMBByproductItem20192018Increase/decreaseAmount%ofoperatingcostsAmount%ofoperatingcostsSalesoffeedMaterialcosts33,027,101,264.2395.02%29,729,810,330.6595.57%11.09%SalesoffeedLabourcosts493,259,024.871.42%400,649,491.111.29%23.11%SalesoffeedManufacturingexpenses1,239,282,995.493.57%975,889,966.203.14%26.99%Totalsalesoffeed34,759,643,284.59100.00%31,106,349,787.96100.00%11.74%SalesofanimalhealthcareproductsMaterialcosts243,706,084.3092.38%235,330,337.6894.38%3.56%SalesofanimalhealthcareproductsLabourcosts8,933,962.633.39%6,662,858.902.67%34.09%SalesofanimalhealthcareproductsManufacturingexpenses11,171,653.584.23%7,363,367.622.95%51.72%Totalsalesofanimalhealthproducts263,811,700.51100.00%249,356,564.20100.00%5.80%SalesofagriculturalproductsMaterialcosts1,798,900,558.1184.68%1,239,184,793.4182.46%45.17%SalesofagriculturalproductsLabourcosts211,537,541.789.96%174,088,889.2011.58%21.51%SalesofagriculturalproductsManufacturingexpenses113,813,839.665.36%89,552,659.645.96%27.09%Totalsalesofagriculturalproducts2,124,251,939.55100.00%1,502,826,342.25100.00%41.35%TradingbusinessSalescosts5,043,647,623.86100.00%4,722,496,795.03100.00%6.80%Totaloftradingbusiness5,043,647,623.86100.00%4,722,496,795.03100.00%6.80%OthersSalescosts32,057,368.59100.00%34,556,695.33100.00%-7.23%Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited30Notes:(6)Changeofscopeofconsolidationduringthereportingperiod√Yes□NoDuringtheyear,thescopeofconsolidationincluded317subsidiaries.Fordetails,pleaserefertotheNote7"Interestsinotherentities"inXII"FinancialReport".ThescopeofconsolidationoftheCompanyinthisyearincreasedby50andreducedby5ascomparedwiththelastyear.Fordetails,pleaserefertotheNote6"Changeinscopeofconsolidation"inXII"FinancialReport".(7)Significantchangeinoradjustmentofthebusinesses,productsorservicesoftheCompanyduringthereportingperiod□Applicable√Notapplicable(8)SalestomajorcustomersandmajorsuppliersSalestomajorcustomersoftheCompanyTotalsalestotop5customers(RMB)1,155,482,902.95Totalsalestotop5customersasapercentageofthetotalsalesfortheyear2.43%Salestotop5customerswhoarerelatedpartiesasapercentageofthetotalsalesfortheyear0.00%Informationontop5customersoftheCompanyNo.NameofcustomerSales(RMB)Asapercentageofthetotalsalesfortheyear(%)1No.1249,938,129.380.52%2No.2235,310,604.570.49%3No.3230,210,223.690.48%4No.4224,979,824.200.47%5No.5215,044,121.110.45%Total--1,155,482,902.952.43%Otherexplanationofmajorcustomers√Applicable□NotapplicableThetopfivecustomersoftheCompanyaremainlycustomersofthetradingbusiness.ThetopfivecustomershavenorelatedFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited31relationshipwiththeCompany.TheCompany’sdirectors,supervisors,seniormanagement,coretechnicalpersonnel,shareholdersholdingmorethan5%ofshares,defactocontrollersandotherrelatedpartiesdonothavedirectorindirectinterestinthemajorcustomers.Thetopfivecustomersaccountedfor2.43%oftotalannualsales.TheCompany’ssalesrevenuedoesnotdependonsingleortopfivecustomers.MajorsuppliersoftheCompanyTotalpurchasesfromtop5suppliers(RMB)3,371,497,511.40Totalpurchasesfromtop5suppliersasapercentageofthetotalpurchasesfortheyear8.12%Totalpurchasesfromtop5supplierswhoarerelatedpartiesasapercentageofthetotalpurchasesfortheyear0.00%Informationontop5suppliersoftheCompanyNo.NameofsupplierPurchases(RMB)Asapercentageofthetotalpurchasesfortheyear(%)1No.1903,847,742.132.18%2No.2889,382,484.802.14%3No.3752,931,209.881.81%4No.4413,913,697.171.00%5No.5411,422,377.420.99%Total--3,371,497,511.408.12%Otherexplanationofmajorsuppliers√Applicable□NotapplicableThetopfivesuppliersoftheCompanyhavenorelatedrelationshipwiththeCompany.TheCompany’sdirectors,supervisors,seniormanagement,coretechnicalpersonnel,shareholdersholdingmorethan5%ofshares,defactocontrollersandotherrelatedpartiesdonothavedirectorindirectinterestinthemajorsuppliers.Thetopfivesuppliersaccountedfor8.12%oftotalannualsales.TheCompany’ssalesrevenuedoesnotdependonsingleortopfivesuppliers.3.ExpensesUnit:RMB20192018Increase/decreaseReasonsformaterialchangesSellinganddistributionexpenses1,562,696,499.511,377,926,458.6813.41%Mainlyduetotheincreaseinsalesservicepersonnelandtheirsalaryandbenefits,theexpansionoftheCompany'soperatingscale,theFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited32increaseinmarketdevelopmentandpromotionalcostscausedbynewmarketsbeingputintooperationandnewproductsbeingputintothemarketGeneralandadministrativeexpenses1,190,746,169.15967,112,552.4023.12%MainlyduetotheexpansionoftheCompany'soperatingscale,theincreaseinmanagementpersonnelandtheirsalaryandbenefits,andtheincreaseinexpensesonemployeetrainingsFinancialexpenses211,949,889.53219,052,330.92-3.24%Aslightyear-on-yeardecline,basicallyflatwithlastyearResearchanddevelopmentexpenditure416,009,959.72309,167,320.6634.56%MainlyduetoahigherexpenseonR&Dmaterials,ahighernumberofR&DpersonnelandhighersalariesfortheR&Dpersonnelinabidtoenhancetheresearchanddevelopment4.Researchanddevelopmentexpenditure√Applicable□NotapplicableForfurtherinformation,pleasereferto“I.Overview”in“SectionIV.DiscussionandAnalysisofOperations”.ResearchanddevelopmentexpenditureoftheCompany20192018PercentagechangeResearchanddevelopmentheadcount1,6231,20035.25%Ratioofresearchanddevelopmentpersonnel7.81%6.90%0.91%Researchanddevelopmentexpenditure(RMB)428,148,011.70310,403,708.9637.93%Researchanddevelopmentexpendituretorevenue0.90%0.74%0.16%Capitalizedamountofresearchanddevelopmentexpenditure(RMB)0.005,396,408.67-100.00%Capitalizedresearchanddevelopmentexpendituretoresearchanddevelopmentexpenditure0.00%1.74%-1.74%Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited33Reasonsforsignificantchangeintotalresearchanddevelopmentexpendituretorevenue√Applicable□NotapplicableResearchanddevelopmentexpenditureincreasedby37.93%in2019,representingahigherpercentageinrevenue.ThisismainlybecausetheCompanycontinuedtoincreaseitsexpenditureonthebasicelementsofresearchanddevelopment,includingpersonnel,equipmentandmaterials,forlong-termstrategicdevelopment.Reasonsforsignificantchangeincapitalizationrateofresearchanddevelopmentexpenditureandexplanationsthereon√Applicable□NotapplicableTheresearchanddevelopmentprojectswithintheCompanywerestillintheresearchanddevelopmentstageinthereportingperiod,andhavenotyetreachedtheconditionswheretheycanbecapitalizedandtransferredtointangibleassets.That’swhythecapitalizedresearchanddevelopmentexpendituredecreasedby100%inthecurrentyearcomparedtolastyear.5.CashflowsUnit:RMBItem20192018Increase/decreaseSub-totalofcashinflowsfromoperatingactivities50,517,055,726.0342,570,025,344.2318.67%Sub-totalofcashoutflowsfromoperatingactivities47,270,075,020.9541,534,261,337.9013.81%Netcashflowsfromoperatingactivities3,246,980,705.081,035,764,006.33213.49%Sub-totalofcashinflowsfrominvestingactivities1,097,694,547.152,630,017,529.91-58.26%Sub-totalofcashoutflowsfrominvestingactivities3,214,662,629.474,635,569,493.87-30.65%Netcashflowsfrominvestingactivities-2,116,968,082.32-2,005,551,963.96-5.56%Sub-totalofcashinflowsfromfinancingactivities8,012,906,351.4210,290,384,714.54-22.13%Sub-totalofcashoutflowsfromfinancingactivities9,500,550,393.798,550,331,518.3811.11%Netcashflowsfromfinancingactivities-1,487,644,042.371,740,053,196.16-185.49%Netincreaseincashandcashequivalents-333,902,151.08783,892,200.49-142.60%Explanationonmaineffectsofmaterialchanges√Applicable□Notapplicable1.Netcashflowsfromoperatingactivitiesincreasedby213.49%ascomparedtothecorrespondingperiodoftheFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited34prioryearmainlyduetohigheroperatingincome,profits,accountsreceivableandinventoryturnoverefficiency.2.Netcashflowsfrominvestingactivitiesdecreasedby5.56%ascomparedtothecorrespondingperiodoftheprioryearmainlyduetotheexpansionoftheCompany'sscaleandtheincreaseinfixedassetinvestments.3.Netcashflowsfromfinancingactivitiesdecreasedby185.49%ascomparedtothecorrespondingperiodoftheprioryearmainlybecausetheCompanyrepaidcertainmediumandlong-termloansinanadjustmenttothefinancingstructureaccordingtoitsfinancingplanning.Explanationonmainreasonsleadingtothematerialdifferencebetweennetcashflowsfromoperatingactivitiesduringthereportingperiodandnetincomefortheyear√Applicable□NotapplicableDuringthereportingperiod,thenetcashflowsfromoperatingactivitiesoftheCompanyamountedtoRMB3,246.9807million,whichwasRMB1,457.4736millionmorethanthenetincomeofRMB1,789.5071million.Thedifferencewasmainlyduetotheincreaseinoperatingefficiencyassociatedwithaccountsreceivables,inventoryturnoverrate,etc.III.AnalysisofNon-PrincipalOperations□Applicable√NotapplicableIV.AnalysisofAssetsandLiabilities1.MaterialchangesofassetitemsTheCompanyadoptedthenewaccountingstandardsgoverningfinancialinstruments,revenueandleasesin2019forthefirsttime,andadjustedtherelevantfinancialstatementitemsatthebeginningoftheyearofadoption√Applicable□NotapplicableUnit:RMBAsattheendof2019Asatthebeginningof2019PercentagechangeDescriptionofmajorchangesAmountAsapercentageoftotalassetsAmountAsapercentageoftotalassetsCashatbankandonhand1,849,735,912.849.81%1,735,409,838.589.99%-0.18%Attheendoftheperiod,thepercentageintotalassetsdecreasedby0.18percentagepoint,flatwiththeendoftheprioryear;andthebalanceincreasedby6.59%year-on-year,whichwasmainlyduetotheincreaseinthescaleoftheCompany'soperations.Accounts1,021,751,432.565.42%964,844,422.765.56%-0.14%Attheendoftheperiod,thepercentageFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited35receivableintotalassetsdecreasedby0.14percentagepoint,andthebalanceincreasedby5.90%year-on-year,whichwasmainlyduetotheincreaseinthescaleoftheCompany'soperations.Inventories4,463,319,035.4323.67%4,843,780,132.1727.89%-4.22%Attheendoftheperiod,thepercentageintotalassetsdecreasedby4.22percentagepoints,andthebalancedecreasedby7.85%year-on-year,whichwasmainlyduetothedecreaseinstockingofrawmaterialsusedinproduction.Investmentproperties30,645,502.710.16%46,397,156.640.27%-0.11%Attheendoftheperiod,thepercentageintotalassetsdecreasedby0.11percentagepoint,andthebalancedecreasedby33.95%year-on-year,whichwasmainlyduetothetransferofsomeleased-outpropertiestoself-occupiedfixedassets.Long-termequityinvestments62,614,691.350.33%38,614,535.850.22%0.11%Attheendoftheperiod,thepercentageintotalassetsincreasedby0.11percentagepoint;andthebalanceincreasedby62.15%year-on-year,whichwasmainlyduetotheincreaseininvestmentsinassociates.Fixedassets6,298,328,342.4133.41%4,555,480,833.7726.23%7.18%Attheendoftheperiod,thepercentageintotalassetsincreasedby7.18percentagepoints,andthebalanceincreasedby38.26%year-on-year,whichwasmainlyduetotheproductioncapacityexpansionprojectsunderconstructionbeingcompleted,putintoproductionandconvertedintofixedassets.Constructioninprogress657,751,195.763.49%724,011,706.234.17%-0.68%Attheendoftheperiod,thepercentageintotalassetsdecreasedby0.68percentagepoint,andthebalancedecreasedby9.15%year-on-year,whichwasmainlyduetotheprojectsunderconstructionbeingcompleted,putintoproductionandconvertedintofixedassets.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited36Short-termloans3,020,892,004.1816.02%2,715,954,867.6915.64%0.38%Attheendoftheperiod,thepercentageintotalassetsincreasedby0.38percentagepoint,andthebalanceincreasedby11.23%year-on-year,whichwasmainlyduetotheincreaseinshort-termborrowingsandtherepaymentofcertainmediumandlong-termborrowingsinanadjustmenttothefinancingstructure.Long-termloans821,661,042.984.36%1,842,910,000.0010.61%-6.25%Attheendoftheperiod,thepercentageintotalassetsdecreasedby6.25percentagepoints,andthebalancedecreasedby55.42%year-on-year,whichwasmainlyduetotherepaymentofcertainmediumandlong-termborrowings.Goodwill349,068,366.521.85%380,610,061.822.19%-0.34%Attheendoftheperiod,thepercentageintotalassetsdecreasedby0.34percentagepoint,andthebalancedecreasedby8.29%year-on-year,whichwasmainlyduetotheallowancesforimpairmentincertaingoodwill.Explanationsonrelevantdata:1.Asattheendofthereportingperiod,thebookvalueofinventoriesoftheCompanywasRMB4,463.3190million,whicharemainlyrawmaterialsforproduction,merchandiseinventoriesandconsumptivebiologicalassets.InventoryfallingpricereservesofRMB12.1181millionhavebeensufficientlyprovidedforcertaininventorygoodswhosecostsarelowerthanthenetrealizablevalue.Theotherinventoryturnoverisnormal.2.Asattheendofthereportingperiod,thebookvalueoffixedassetsoftheCompanywasRMB6,298.3283million.ExceptthatimpairmentprovisionsofRMB0.9823millionhavebeensufficientlyprovidedforcertainbuildingsandfinanceleasefixedassetswhoserecoverableamountsarelowerthanthebookvalue,theotherfixedassetsareinnormaluseandtherehasbeennosignificantchangeinprofitability.3.Asattheendofthereportingperiod,thebookvalueofgoodwilloftheCompanywasRMB349.0684million,representing3.83%ofthenetassetsattributabletotheshareholdersoftheCompany.Attheendoftheperiod,aftertheCompanyallocatesgoodwilltotherelevantassetgroupandusesthefinancialforecastdataapprovedbythemanagementasthebenchmarktopredictfuturecashflows,theCompanydiscountsthegoodwillatdiscountedrateandcalculatesthepresentvalueoffuturecashflowsfromtherelatedassetgroupaftertheallocationofgoodwill.Uponcalculation,exceptthatthepresentvaluesofthefuturecashflowsoftheassetgroupsofcertainsubsidiaries,bothsubsidiariesoftheCompany,werelessthantheirbookvaluesandprovisionsofRMB42.5903millionforimpairmentofgoodwillweremade,thegoodwillofotherassetgroupsdidnotshowsignsofimpairment.2.Assetsandliabilitiesmeasuredatfairvalue√Applicable□NotapplicableFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited37Unit:RMBItemOpeningbalanceProfitorlossfromchangeinfairvalueduringtheperiodCumulativefairvaluechangechargedtoequityImpairmentprovidedduringtheperiodPurchasesduringtheperiodDisposalduringtheperiodOtherchangesClosingbalanceFinancialassets2.Derivativefinancialassets49,672,592.73-21,089,097.3828,583,495.35Sub-totaloffinancialassets49,672,592.73-21,089,097.3828,583,495.35Others(note)323,421,350.0019,600,000.0087,500,000.00255,521,350.00Totaloftheabove373,093,942.73-21,089,097.3819,600,000.0087,500,000.00284,104,845.35Financialliabilitiesheldfortrading46,271,790.0043,638,280.002,633,510.00Note:Non-currentfinancialassetsmeasuredatfairvalueContentsofotherchangesWhethertherewereanymaterialchangesonthemeasurementattributesofmajorassetsoftheCompanyduringthereportingperiod□Yes√No3.RestrictiononassetrightsasattheendofthereportingperiodAsattheendofthereportingperiod,theCompanystillhadrestrictedassetsofaroundRMB24.5087million,whichweremainlylandreclamationdeposits,letterofcreditdeposits,depositsforcustomsdutiesandloandeposits.V.AnalysisofInvestments1.Overview√Applicable□NotapplicableInvestmentsduringthereportingperiod(RMB)Investmentsduringthecorrespondingperiodofprioryear(RMB)Change1,336,744,184.761,232,329,580.758.47%Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited382.Materialequityinvestmentsduringthereportingperiod□Applicable√Notapplicable3.Materialnon-equityinvestmentsduringthereportingperiod□Applicable√Notapplicable4.Financialassetsmeasuredatfairvalue√Applicable□NotapplicableUnit:RMBAssetclassInitialinvestmentcostProfitorlossfromchangeinfairvalueduringtheperiodCumulativefairvaluechangechargedtoequityPurchasesduringtheperiodDisposalduringtheperiodAccumulativereturnoninvestmentClosingbalanceSourceoffundFutures2,942,875.007,207,904.500.000.000.000.0010,150,779.50OwnedfundsDerivativefinancialassets46,729,717.73-28,297,001.880.000.000.000.0018,432,715.85OwnedfundsOthers(note)323,421,350.000.0019,600,000.0087,500,000.009,550,737.01255,521,350.00OwnedfundsTotal373,093,942.73-21,089,097.380.0019,600,000.0087,500,000.009,550,737.01284,104,845.35--Note:Non-currentfinancialassetsmeasuredatfairvalue5.Useofproceeds□Applicable√NotapplicableTheCompanydidnotuseanyraisedfundsduringthereportingperiod.VI.DisposalofMaterialAssetsandEquityInterest1.Disposalofmaterialassets□Applicable√NotapplicableTheCompanydidnotdisposeofanymaterialassetinthereportingperiod.2.Disposalofmaterialequityinterest√Applicable□NotapplicableFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited39TransactionpartyEquityinterestsdisposedDateofdisposalSellingprice(RMB’0,000)AmountcontributedbytheequityintereststonetprofitoftheCompanyfromperiod-beginningtodateofdisposal(RMB’0,000)EffectofthedisposalontheCompanyAmountcontributedbythesaletonetprofitoftheCompanyas%oftheCompany’snetprofit(%)PricingprincipleRelatedtransactionornotRelationshipbetweentransactionpartyandtheCompanyOwnershipfullytransferredornotExecutedasscheduledornot,ifnot,statereasonandactionstakenDisclosuredateIndextodisclosedinformationInforeHoldingGroupCo.,Ltd.A16.50%interestinGuangdongGFHulianMicro-LoanCo.,Ltd.26November20198,688.27379.5Noadverseimpact0.27%AccordingtonetassetvalueNo——YesYes22October2019AnnouncementNo.2019-074onDisposalofInterestinMinority-OwnedEnterprisedisclosedonthedesignatedmediaforinformationdisclosuredated22OctoberFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited402019VII.Analysisofmajorsubsidiariesandinvestees√Applicable□NotapplicableMajorsubsidiariesandinvesteesaccountingforover10%ofthenetincomeoftheCompanyUnit:RMB’0,000NameofcompanyTypeofcompanyPrincipalactivitiesRegisteredcapitalTotalassetsNetassetsRevenueOperatingprofitNetincomeGuangdongHinterBiotechnologyGroupCo.,Ltd.SubsidiaryProductionandsalesofpremixture8,000.0074,648.8565,663.47126,907.8960,431.0051,676.84QingyuanHaibeiBio-technologyCo.,Ltd.SubsidiaryProductionandsalesofpremixture,additivesandmicro-ecologicalproducts100.0082,905.5259,383.398,658.4237,188.7131,886.93Acquisitionanddisposalofsubsidiariesduringthereportingperiod√Applicable□NotapplicableNameofcompaniesMethodstoacquireanddisposeofsubsidiariesduringthereportingperiodImpactonoverallproductionandoperationandresultsGaotangHuayuPigFarmingCo.,Ltd.BusinesscombinationnotundercommoncontrolNomaterialeffectsontheresultsoftheperiodAlaerRuitaiBiologicalProteinCo.,Ltd.BusinesscombinationnotundercommoncontrolNomaterialeffectsontheresultsoftheperiodPingnanHaidFeedCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodLinyiHedongHaidingAgricultureandAnimalHusbandryDevelopmentCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodLinyiHaidingFeedTechnologyCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodJingtaiHaijingFisheryTechnologyCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited41QinzhouQinnanYitunEcologicalAgricultureCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodGuangzhouShunkangAquaticFarmingCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodVietnamHaibeiBiotechnologyCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodPTHisenorTechnologyIndonesiaNewlyestablishedNomaterialeffectsontheresultsoftheperiodTianjinRongchuanFeedCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodZhangzhouHaijingMarineBiotechnologyCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodZhanjiangRongdaFeedCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodHuainanHaidBio-FeedCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodMaomingHaidBiotechnologyCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodBinzhouDingxinFarmingServiceCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodGuangzhouRonghaiFarmingTechnologyCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodHubeiHaililiangFertilizerCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodSichuanRongchuanFeedCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodYulinHaidFeedCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodZhongshanRonghaiAcquaticFarmingCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodSichuanHaileAgricultureandAnimalHusbandryCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodGuangzhouXingnongEcologicalAgricultureandAnimalHusbandryDevelopmentCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodHuayuanYitunEcologicalAgricultureCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodGuangzhouHaiyinFinancing&GuarantyCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited42GuangzhouRongdaAquaticTechnologyCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodHaidMarinoCIA.LTDA.NewlyestablishedNomaterialeffectsontheresultsoftheperiodQinzhouHailongFeedCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodLinyiBairongAquaticFarmingCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodDeyangDachuanBiotechnologyCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodXinxingHaifengAgricultureandAnimalHusbandryCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodHuai’anHuilongFeedCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodHainanHaidBiotechnologyCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodYiyuanHaiyingFoodCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodLiuzhouHaidFeedCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodHaidEgyptCo.,LtdNewlyestablishedNomaterialeffectsontheresultsoftheperiodZhaoqingRonghaiFarmingTechnologyCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodSihongHaidingFeedCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodJunanHaidingFeedCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodZoupingHaiyingFoodCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodYichangZhihaiAgricultureandAnimalHusbandryCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodZhanjiangHaijingMarineBiotechnologyCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodBaojingYitunEcologicalAgricultureCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodJiangmenRonghaiFarmingTechnologyCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited43YingdeYitunPigFarmingCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodGao’anHaidBiotechnologyCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodRuyuanYitunPigFarmingCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodLinyiHaidingFarmingCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodHengnanYitunEcologicalAgricultureCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodShanggaoHaidBiotechnologyCo.,Ltd.NewlyestablishedNomaterialeffectsontheresultsoftheperiodHainanHaiweiFeedCo.,Ltd.DisposalofequityinterestsNomaterialeffectsontheresultsoftheperiodZouchengMulianZhongxingEcologicalAgricultureTechnologyCo.,Ltd.De-registeredNomaterialeffectsontheresultsoftheperiodGuangzhouYoujuFeedTradingCo.,Ltd.De-registeredNomaterialeffectsontheresultsoftheperiodGuangdongMutaiBiotechnologyCo.,Ltd.De-registeredNomaterialeffectsontheresultsoftheperiodChangzhouHairongAquaticFarmingServiceSpecializedCooperativeAssociationDe-registeredNomaterialeffectsontheresultsoftheperiodDescriptionofmajorsubsidiariesandinvestees1.GuangdongHinterBiotechnologyGroupCo.,Ltd.ismainlyengagedinfeedpremixturewhicharemainlysoldtootherinternalbranchesandsubsidiariesoftheCompanyandotherfeedcompaniesintheindustry.ThegrossprofitoftheproductishigherthanthatoftheCompany'scompoundfeedproducts.Duringthereportingperiod,itsrevenueandprofitweregoodandrecordedanetincomeofRMB517million(includinginternalandexternalsales).2.QingyuanHaibeiBio-technologyCo.,Ltd.ismainlyengagedinanimalhealthcareproductsandfeedadditives,whicharemainlysoldtointernalfeedcompanies,farmersanddistributors.ItsproductgrossmarginishigherthanthatoftheCompany'scompoundfeedproducts.Duringthereportingperiod,itrecordedanetincomeofRMB319million(includinginternalandexternalsales).VIII.StructuredEntitiesControlledbytheCompany□Applicable√NotapplicableFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited44IX.OutlookontheFutureDevelopmentoftheCompany(I)DevelopmentstatusoftheindustryAccordingtothe"13thFive-YearDevelopmentPlanforNationalFeedIndustry"(2016-2020)(全国饲料工业“十三五”发展规划(2016-2020))issuedbytheMinistryofAgriculture,duringthe"13thFive-Year"period,asChina’seconomicdevelopmenthasenteredintoaperiodofnewnormal,thefarmingindustryhasenteredanewstageofproductionslowdown,structuraloptimization,qualityupgrade,layoutadjustmentandindustrialintegrationandthedevelopmentofthefeedindustryfacesmanychallengesintermsofmarketspace,technologicalupgradingandindustrialintegration.1.FeeddemandisstableandtheoverallindustrycontinuestogrowAccordingtothedevelopmentgoalsunderthe"13thFive-YearDevelopmentPlanforNationalFeedIndustry"(2016-2020)(全国饲料工业“十三五”发展规划(2016-2020)),thenationalindustrialfeedproductionisexpectedtoreach220milliontonnesin2020.Accordingtoanimalspecies,thereare94milliontonnesofpigfeed,60milliontonnesoffeedforpoultryformeat,31milliontonnesoffeedforpoultryforeggs,20milliontonnesofaquaticfeed,10milliontonnesofruminantfeed,1.2milliontonnesofpetfeed,and3.8milliontonnesofotheranimalfeeds.Itisexpectedthatthetotalamountoffeedwillincreaseby20milliontonnesinthenextfiveyears,representingagrowthrateofapproximately10%,andtheannualaverageincreasewillbeapproximately4milliontonnes,representingagrowthrateofapproximately1.9%.2.ItismoreapprentfortechnologytodriveindustryprogressInthedifferentiationandintegrateddevelopmentofthefeedindustry,technologyhasplayedanincreasinglyimportantroleintheindustrialcompetition.Theglobalagriculturalproductsarebecomingmoreandmorecloselyrelated.Weatherconditionsandtradefrictionsincertainregionswillcauselargefluctuationsinthepricesofagriculturalproducts.Animalfarmingrequirements,feedformulaadjustments,andrawmaterialsubstitutiontechnologiesarethecorefieldsoffeedtechnologycompetition.Forothertechnologies,vigorousdevelopmentofbiologicalfeedtechnology,continuousincreaseinthetypesandthecontinuousexpansionoffunctionsoffeedmicrobes,enzymepreparations,etc.haveshowntremendouspotentialsinpromotingthereductionoftheuseoffeedantibioticsandefficientutilizationoffeedresources,andwillbecomenewthresholdofcompetitionintheindustry.3.ItismoreurgenttoconductindustrialintegrationThegrowthofthetotalamountoffeedhassloweddown,andthecompetitionamongenterpriseshasbeenfierce.Leadingenterpriseshaveacceleratedtheirinvestmentinindustriesandforeigncountries.Thefeedenterpriseswithstrongoverallstrengthhaveadvantagesincapital,management,technology,andtalents.Theywillfurtheracceleratethepaceofenteringthefarmingindustryandbuildingtheentireindustrychaininordertoenhancesustainabledevelopmentcapability.ThefeedindustryinemergingmarketssuchasSoutheastAsia,NortheastAsia,andAfricaisinarapidgrowthperiod,andthe"goingglobal"initiativeisincreasinglyimportantforChina'sfeedcompaniestoexpandtheirdevelopmentspace.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited454.Seedlingsandanimalhealthcareindustrieswillrapidlygrowinlongerperiodsduetotechnologicaladvancementandfarmingupgrades.Focusingonthedevelopmentofthefarmingindustry,thedevelopmenttrendofthefeedbusinessalsoindicatestoalargeextentthatthehigh-qualityanimalseedlingswillhaveahugedevelopmentdemandinthelongterm.Strengtheninganimalhealthcareisanimportanttrendfeatureoffutureanimalfarmingdevelopment.Productdemandwillgrowrapidly.(II)ProspectsforthefuturedevelopmentoftheCompanyTheCompany'sdevelopmentstrategyistobecomealeadinghigh-techfarmingandanimalhusbandrycompanywithsustainabledevelopmentcapabilityinChina.TheCompany'sdevelopmentisbasedon"creatingvalueforcustomers".TheCompanywillcloselyfocusonthefarmingsectortoprovidefarmerswithcomprehensivesolutions,includingfeed,seedling,animalhealthcareproductsandfarmingtechnologyservices,andmeetotherneedsoffarmersanddistributorsforfinancialservices,etc.toeffectivelyenhancetheprofitabilityoftheCompany'sfarmersanddistributorsandrealizethewin-windevelopmentoftheCompanyanditscustomers.ThebasicstrategyforthedevelopmentoftheCompany'sindustrialchainistoscaleuponthebasisofspecializationandtoextendtheindustrialchainbasedoncorecompetitiveness.TheCompanywillfocusonfeedproductsasitscorebusiness.Atthesametime,itwillactivelydeveloprawmaterials,animalhealthcareproducts,seedling,farming,circulation,andfoodprocessingbusinesses,cultivatetheCompany'sprofessionalcapabilitiesintheentireindustrychain,andbuilditscomprehensivecorecompetitivenessintheindustrychain.(III)Possiblerisks1.RiskofPeriodicalFluctuationsintheFeedIndustryduetoAbnormalWeatherandEpidemicDiseasesduringAnimalProductionThefeedindustrymainlyservesthedownstreamanimalfeedingindustry.Theabnormalchangesinnaturalelementssuchasprecipitationandtyphoonmayleadtofluctuationsoftheinventoryoflivestockoraquaticproductsandeventhelarge-scaleoutbreakofanimaldiseases.Thisthusaffectsthedemandforfeedandlikelycausestheriskofperiodicandregionalfluctuationsofthelatter.Withtheenvironmentalchangesandtheexpansionofanimalproductionindustry,humanandanimalepidemicdiseasesmayalsooccuroccasionally.Forinstance,theCOVID-19epidemicstartedtowreakhavocontheworldinJanuary2020;theAfricanswinefevervirusbrokeoutacrossChinainAugust2018;andPRRSV-mediatedpigdisease,shrimp-relevantEMSepidemicdiseaseandpoultry-relevant“H7N9”diseasealloccurredrecently.Theoutbreakofanimaldiseaseswilldirectlyinhibitthescaleofanimalproductionandreducethedemandforfeedintheshortterm;majoranimalandhumanepidemicdiseasesmayalsoleadtocompulsorymeasuresimposedbythegovernmenttorestricthumanandgoodscirculationtocutofftheinfectionsources,whichmaydampenthedemandfromend-consumers,leadingtoadownturnoftheanimalproductionindustry,andfurtheraffectthefeeddemand,givingrisetoadverseeffectsontheproductionandoperationoffeedenterprises.Riskmanagementmethods:(1)TheCompanyiscurrentlyfullydeployingfactoriesanddevelopinglocalmarketsinmajorareasinSouthernChina,CentralChina,EasternChinaandNorthernChinaandoverseasmarketsinFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited46SoutheastAsia,etc.andtheexpansionofregionaldistributioncaneffectivelycopewiththeriskofweatheranomaliesandnaturaldisastersinlocalareas.(2)TheCompany'sfeedvarietiescoverpigfeed,chickenfeed,duckfeedandotherlivestockfeedandfishfeed,shrimpfeedandotheraquaticfeed.Withavarietyofproductsandawell-balancedstructure,itcaneffectivelydealwiththeriskofsinglebreedspeciesandhasstrongcomprehensiveanti-riskcapability.(3)TheCompanyhassetupprofessionalfunctionaldepartmentsatitsheadquarters,andtheGrouphassetupmultipleregional/businessdivisionsaccordingtoregionsorbusinesscategories.Eachprofessionalcenteraimsatacquiringtechnicalandmanagementleadershipinitsfieldandprovidestechnicalandmanagementstandardsaswellasintegratedandprofessionalmanagementandservicesupportforlargeregions/businessdivisionsandvariousbranchesandsubsidiaries.TheflatandprofessionalmanagementstructureandanefficientmanagementteamenabletheCompanytoallocatevariousresourcesinatimelymannerduringaepidemic,andmaketargetedarrangementsfordifferentbusinessesandregions.2.RiskofDrasticPriceFluctuationsofMajorRawMaterialsThefeedingredientsmainlyconsistofvariouskindsofstapleagriculturalproductssuchascornandsoybeans(soybeanmeal).Inrecentyears,thedomesticandinternationalmarketsofagriculturalproducthavebeencloselylinked.Changesintheplantingareaandharvestofcropsinmajorgrain-producingcountries,purchasingandstorageandsubsidypolicies,importandexportpolicies,fluctuationsinlogisticscapacityandcostsofshipping,exchangerates,humanandanimalepidemicdiseasesandothersmaycausegreatfluctuationsininternationaltradeandpricesofagriculturalproducts,which,inturn,hasacertainimpactonthecostoffeedandfarming.Withthestrengtheningoftheinternationalizationintradeofagriculturalproducts,thefactorsforchangesinthepricesofagriculturalproductshavebecomemorecomplexandthepricefluctuationshavethereforeincreased.IfrawmaterialpricesfluctuateandtheCompanyfailstounderstandthechangesinthetradeoffeedrawmaterialsinatimelymannerandpromptlyimplementstrategicmanagementandriskcontrolofprocurement,theCompanymayfacetheriskofrisingintegratedprocurementcosts.Riskmanagementmethods:(1)TheCompanydividesrawmaterialintodifferentcategoriesandimplementsacombinationofcentralizedprocurementofstaplecategoryandlocalprocurementofregionalvarieties,whichnotonlyguaranteestheadvantagesoflarge-scalerawmaterialprocurement,butalsoobtainslocalizationadvantagesfromrapidresponseinrespectofregionalprocurement;(2)TheCompanycontinuouslyinvestsintheconstructionoftherawmaterialprocurementresearchsystem.Theteamoftheprofessionalrawmaterialinformationresearchdepartmentisrelativelymature.Itconductsstrategicprocurementthroughthereal-timetracking,researchandjudgmentofthedomesticandforeignbulkrawmaterialmarkettrends,andimplementspositionriskmanagementforbulkrawmaterialsthroughfutureshedging,rawmaterialstradeandothertoolstoeffectivelycontrolprocurementrisks;(3)TheCompanyhasaccumulatedrichexperienceinresearchanddevelopmentofanimalnutritionandfeedformulatechnologies,andhasresearchanddevelopmentteamcomposedofover1,000members.Largeamountsoffundsarespentonresearchanddevelopmenteachyear,focusingonanimalnutritionrequirements,feedformulatechnology,animalfarmingandgeneticimprovement,comprehensiveinvestigationonhealthyanimalfarmingstrategies,andotherresearchareas.TheCompanyhasaprofoundunderstandingofanimalnutritionalrequirementsandhigherlevelofexpertiseincomprehensiveutilizationofrawmaterials.Therefore,incaseofrawmaterialpricefluctuations,itcanquicklyadjusttheformulatocontrolthereasonablefeednutrientlevelandformulacosts.3.RiskofStructural,RegionalandScaleAdjustmenttoFarmingIndustryunderEnvironmentalProtectionFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited47RegulationsandPoliciesInrecentyears,theStatehasintroducedaseriesofenvironmentalprotectionlawsandregulationsincludingthenewEnvironmentalProtectionLaw(环保法),theRegulationsonPreventionandControlofPollutionfromLarge-ScaleProductionofLivestockandPoultry(畜禽规模养殖污染防治条例),ActionPlanforPreventionandTreatmentofWaterPollution(水污染防治行动计划),andtheGuidingOpinionsonAdjustingtheLayoutofPigProductionintheSouthernWaterNetworkRegion(关于促进南方水网地区生猪养殖布局调整),the"13thFive-YearPlan"onEcologicalandEnvironmentalProtection(“十三五”生态环境保护规划),whichstipulatethepollutionpreventionandcontrolofanimalproductionindustry,increasethepollutioncontrolofanimalproductionindustry,andespeciallylimittheproductionscaleintheregionsofkeywatersourcesanditssurroundingareas.Accordingtotheregulationsandpoliciesofthecentralgovernment,bannedareasandrestrictedareashavebeensetupthroughoutthecountry,andpigfarmsinthebannedareasinthesouthernwaternetworkareaaregraduallyrelocating.Theimplementationofenvironmentalprotectionpolicieswillspeedupthewithdrawalofprivatepigfarmingfarmers,reducethebackwardproductioncapacityfailingtomeetenvironmentalprotectionstandardsandwithasmallscale,andenablelarge-scalefarmerstocontinuouslyexpandtheirproductioncapacityandimprovethefarmingscaleandstructure;Inaddition,theestablishmentofbannedareasandrestrictedareaswillenforceadjustmentstothepigproductioncapacityinallplacesacrossthecountry.Theadjustmentstothescalecompositionofpigproductionandtherelocationofpigproductionareawillcertainlyhaveaprofoundimpactontheexistingcapacitylayout,marketshare,pricingpowerandbusinessmodelofthefeedindustry.Theimpactofenforcedenvironmentalprotectionpoliciesonthepiggrowingandfeedindustriesputsexistingcompetitivecompaniesinthemarketatriskofreshuffle.Riskmanagementmethods:(1)TheCompanycontinuallyimprovesitscapabilitytoservefarmers.Inadditiontofeedproducts,theCompanyisalsoengagedintheindustrialchainofseedlings,animalhealthcareproducts,farmingandfinanceandhasastrongstickinesstolarge-scalefarmers;(2)ThefeedvarietiesoftheCompanycoverlivestock,poultry,andaquaticanimalsandtheproductlineisabundant.Theproductionlinesforpigfeed,chickenfeed,duckfeedandpelletedfishfeedcanbeshared.TheCompanycanrapidlyshifttheproductionlayoutandmakeadjustmentstoadapttothechangesintheindustrybyadjustingtheproductioncapacityinallplaces.(3)TheCompanyadoptsmultiplemodelstospeeduptheproductionlayoutinareaswithrichresourcesandstrongenvironmentalcarryingcapacity,andtoseizethemarketshareofnewanimalfarmingareas.4.RiskofExchangeRateFluctuationsTheglobalprocurementofrawmaterialshasbecomethenorm.ThescaleofoverseasinvestmentandoverseasoperationsoftheCompanyisalsorapidlyexpanding.Thescaleofcross-borderfundsettlementandthestockofoverseasassetshavegrownsubstantially,involvingthecurrencytypesofvariousrelatedcountries.Currencyexchangeratefluctuationsaresubjecttodifferentinfluencefactors,andexchangeratefluctuationsinanycurrencymayhaveacertainimpactonthesettlementcostandassetstockvalueoftheregion.Riskmanagementmethods:(1)Basedonthebusinessscale,businessmodel,andsettlementcharacteristicsindifferentregionsandcountries,theCompanystrictlycontrolstheexchangeraterisks,carefullyselectssettlementcurrencies,andstrivestoachieverelativelybalancedregionalfundinflowandoutflowthroughstructuralarrangementsoffinancingsourcesandfinancingtypes;(2)Theexpansionoftwo-wayfluctuationsintheRMBexchangeratehasbecomethenewnormal.TheCompanyfurtherenhancesitsawarenessofforeignexchangeriskFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited48management,andarrangessettlementmodelsbasedontheprocurementandsalesstrategiesandcyclecharacteristicsofimportandexportoperations.Andforwardforeignexchangesettlementandsale,swaps,foreignexchangeoptionsandotherfinancialinstrumentsareflexiblyusedtolocktheexchangeraterisks,controlprocurementandsalescosts,andcontrolthepossibleriskbroughtaboutbyexchangeratefluctuations.(3)TheCompanysetsupanoverseascapitalpooltoachievecentralizedmanagementofforeignexchanges,increasetheutilizationefficiencyofforeignexchanges,aswellasreducetheriskofexchangeratefluctuationsinthesettlementandpaymentofexchanges.(4)Intheoverseasbusinessoperations,duetothehighcostofexchangeratelock-in,theCompanymakesuseofthehighinterestratesofthelocalcurrenciesandmakestermdepositsproperlyforhighinterestincometooffsetthedepreciationriskofthelocalcurrencies.X.ReceptionofResearchInvestigations,CommunicationsandInterviews1.Registrationtableofreceptionofresearchinvestigations,communicationsandinterviewsduringthereportingperiod√Applicable□NotapplicableReceptiontimeReceptionmethodReceptionobjecttypeIndexofbasicinformationonresearchinvestigation16April2019ByphoneInstitutionFordetails,pleaserefertotheTableofInvestorRelationsActivityRecordsofGuangdongHaidGroupCo.,Limited2019-001)publishedonthewebsiteofon17April20196May2019FieldresearchInstitutionFordetails,pleaserefertotheTableofInvestorRelationsActivityRecordsofGuangdongHaidGroupCo.,Limited2019-002)publishedonthewebsiteofon8May201930July2019ByphoneInstitutionFordetails,pleaserefertotheTableofInvestorRelationsActivityRecordsofGuangdongHaidGroupCo.,Limited2019-003)publishedonthewebsiteofon31July201921October2019ByphoneInstitutionFordetails,pleaserefertotheTableofInvestorRelationsActivityRecordsofGuangdongHaidGroupCo.,Limited2019-004)publishedonthewebsiteofon23October201928November2019FieldresearchInstitutionFordetails,pleaserefertotheTableofInvestorRelationsActivityRecordsofGuangdongHaidGroupCo.,Limited2019-005)publishedonthewebsiteofon2DecemberFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited49201916December2019FieldresearchInstitutionFordetails,pleaserefertotheTableofInvestorRelationsActivityRecordsofGuangdongHaidGroupCo.,Limited2019-006)publishedonthewebsiteofon18December2019Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited50SectionV.MaterialMattersI.ProfitDistributionforOrdinarySharesoftheCompanyandCapitalizationofCapitalReservesFormulation,implementationoradjustmentofprofitdistributionpolicyforordinaryshares,especiallythecashdividendduringthereportingperiod√Applicable□NotapplicableAccordingtotheProposalon2018ProfitDistributionPlan(《关于2018年度利润分配预案的议案》)asconsideredandapprovedatthe2018annualgeneralmeetingconvenedon6May2019,thedistributionplanisasfollows:Basedon"thetotalnumberofsharesontheregistrationdatewhentheplanisimplementedinthefuture",acashdividendofRMB3.00(taxinclusive)wastobepaidforevery10shares.On27June2019,dividenddistributionwascompleted.TheCompany’sprofitdistributionpolicy,dividenddistributionpolicy,dividendstandards,anddividendratiosarewell-definedandclear.Independentdirectorshavedulyperformedtheirdutiesandfunctions.Minorityshareholdershavetheopportunitytofullyexpresstheirviewsandconcern,whichisinlinewiththeArticlesofAssociationandtherequirementsoftheconsiderationprocedures.Theconditionsandproceduresfortheadjustmentorchangeoftheprofitdistributionpolicyarecompliantandtransparent,andthelegalrightsandinterestsofsmallandmediuminvestorsarefullyprotected.ParticularsofCashDividendPolicyWhetherthepolicyisincompliancewiththerequirementsoftheArticlesofAssociationortheresolutionspassedatthegeneralmeeting;YesWhetherthebasisandratioofthedistributionofdividendsarewell-definedandclear;YesWhethertherelevantdecisionmakingprocedureandsystemaresound;YesWhethertheindependentdirectorshavedulyperformedtheirdutiesandfunctions;YesWhetherthereareenoughopportunitiesforminorityshareholderstoexpresstheirviewsandconcerns,andwhethertheirlegalinterestsaresufficientlyprotected,etc;YesWhethertheconditionsandproceduresarelegalandtransparentinrespectofcashdividendpolicywithadjustmentsandchanges;NotapplicableThedividenddistributionplansforordinaryshares(proposed)andtheproposalsoncapitalizationofcapitalreserves(proposed)overthepastthreeyears(thereportingperiodinclusive)Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited511.2017annualdividenddistributionplanoftheCompanyBasedontheCompany’stotalsharecapitalof1,581,514,354shares,acashdividendofRMB2.50(taxinclusive)per10shareswasdistributedandtotalcashdividenddistributedamountedtoRMB395,378,588.50.Theremainingundistributedprofitswerecarriedforwardtothefollowingyear.2.2018annualdividenddistributionplanoftheCompanyBasedontheCompany’stotalsharecapitalof1,580,870,934shares,acashdividendofRMB3.00(taxinclusive)per10shareswasdistributedandtotalcashdividenddistributedamountedtoRMB474,261,280.20.Theremainingundistributedprofitswerecarriedforwardtothefollowingyear.3.2019annualdividenddistributionplanoftheCompanyOn18April2020,theProposalon2019ProfitDistributionPlan(关于2019年度利润分配预案的议案)wasconsideredandapprovedattheninthmeetingofthefifthsessionoftheBoard.TheCompanyproposedtodistributeRMB3.5(taxinclusive)per10sharesbasedon"thetotalnumberofsharesontheregistrationdatewhentheplanisimplementedinthefuture".Theproposedtotalamountofdividendshallnotexceedtheprofitofthecompany(parentcompany)availablefordistributiontoshareholdersasat31December2019.Theremainingundistributedprofitswillbecarriedforwardtothefollowingyear.CashdividendsforordinarysharesoftheCompanyoverthepastthreeyears(thereportingperiodinclusive)Unit:RMBYearofdistributionAmountofcashdividends(taxinclusive)NetprofitsfortheyearattributabletoshareholdersoftheCompanyintheconsolidatedfinancialstatementsduringtheyearofdistributionAsapercentageofnetprofitsfortheyearattributabletoshareholdersoftheCompanyintheconsolidatedfinancialstatementsAmountofcashdividendsdistributionthroughothermeans(suchassharerepurchase)AsapercentageofnetincomeattributabletoordinaryshareholdersoftheCompanyintheconsolidatedfinancialstatementsTotalamountofcashdividends(includingothermeans)AsapercentageofnetprofitsfortheyearattributabletoshareholdersoftheCompanyintheconsolidatedfinancialstatements2019[Note]553,125,122.901,648,762,579.5933.55%0.000.00%553,125,122.9033.55%2018474,390,280.201,437,281,732.2833.01%0.000.00%474,390,280.2033.01%2017395,378,588.501,207,225,209.3532.75%0.000.00%395,378,588.5032.75%Note:Accordingtothe2019profitdistributionplanoftheCompanyasconsideredandapprovedattheninthmeetingofthefifthFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited52sessionoftheBoardoftheCompany:TheCompanyproposedtodistributeRMB3.50(taxinclusive)per10sharesbasedon“thetotalnumberofsharesontheregistrationdatewhentheplanisimplementedinthefuture”.Theproposedtotalamountofdividendshallnotexceedtheprofitofthecompany(parentcompany)availablefordistributiontoshareholdersasat31December2019.AccordingtotheCompany'stotalsharecapitalof1,580,357,494sharesasat18April2020,theCompany's2019annualcashdividendisexpectedtobeRMB553,125,122.90.TheCompanymadeaprofitandhadpositiveretainedprofitavailableforordinaryshareholdersofparentcompanyduringthereportingperiodwithoutcashdividendforordinarysharesbeingproposed□Applicable√NotapplicableII.ProposalsonProfitDistributionandCapitalizationofCapitalReservesDuringThisReportingPeriod√Applicable□NotapplicableNumbersofbonusshareper10shares(share(s))0Dividenddistributionper10shares(RMB)(taxinclusive)3.5Conversionper10shares(share(s))0Sharebaseofthedistributionproposal(shares)TotalnumberofsharesontheregistrationdatewhentheplanisimplementedinthefutureAmountofcashdividend(RMB)(taxinclusive)553,125,122.90Amountofcashdividendsdistributionthroughothermeans(suchassharerepurchase)(RMB)0.00Totalamountofcashdividends(includingothermeans)(RMB)553,125,122.90Distributableprofits(RMB)3,068,374,960.79Percentageoftotalamountofcashdividends(includingothermeans)tototalincomesdistribution100%CashdividendpolicyForprofitdistributionofcompanieswhichareinthegrowthperiodwithsignificantcapitalexpenditurearrangement,thepercentageforcashdividendshallrepresentatleast20%oftheprofitsdistributionforthecurrentyearParticularsofprofitdistributionandcapitalizationofcapitalreservesAccordingtotheauditreportissuedbyGrantThorntonChina(SpecialGeneralPartnership),theCompany(parentcompany)achievedanetincomeofRMB1,156,770,766.52andmadeprovisionforstatutorysurplusreservesofRMB115,677,076.65,withoutallocationtodiscretionaryrevenuereservein2019.Asat31December2019,theprofitavailablefordistributiontoshareholdersamountedtoRMB3,068,374,960.79.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited53Basedonthegoodoperatingconditionsandprofitabilityin2019,aswellastheCompany'sbusinessscaleandfuturegrowth,thelegitimatedemandsofinvestorsandcontinuousreturntoshareholders,theCompanyformulatedthe2019annualprofitdistributionplanasfollows:TheCompanyproposedtodistributeRMB3.50(taxinclusive)per10sharesbasedon"thetotalnumberofsharesontheregistrationdatewhentheplanisimplementedinthefuture".Theproposedtotalamountofdividendshallnotexceedtheprofitofthecompany(parentcompany)availablefordistributiontoshareholdersasat31December2019.Theremainingundistributedprofitswillbecarriedforwardtothefollowingyear.Inordertolookaftertheshareholders’immediateandlong-terminterestsinabetterwayonthepremiseofguaranteeingtheCompany'snormaloperationsandlong-termdevelopment,theCompanyputforwardtheabove-mentionedprofitdistributionplan.Thepreparationoftheabove-mentionedprofitdistributionplanisinlinewiththeCompanyLawandtheArticlesofAssociation,andtheDividendDistributionPlanoftheCompanyfortheNextThreeYears(2019-2021)(《未来三年(2019-2021年)分红回报规划》).Thedistributionplanislegal,compliantandreasonableandinlinewiththeCompany'sdistributionpolicy.TheindependentdirectorsoftheCompanyexpressedtheirindependentopinionsthattheCompany's2019profitdistributionplangivesfullconsiderationtothereturnstoinvestorsandisinlinewiththeactualsituationofthecompanywithoutanyprejudicetotheinterestsofshareholders,inparticularminorityshareholders.Thisproposalwillbesubmittedtothe2019annualgeneralmeetingforfinalapproval.III.PerformanceofUndertakings1.UndertakingsmadebypartiesinvolvedinundertakingsincludingtheCompany’sbeneficialcontrollers,shareholders,relatedparties,biddersandtheCompanyduringthereportingperiodorpriorperiodsbutsubsistingtotheendofthereportingperiod√Applicable□NotapplicableUndertakingPartyinvolvedinundertakingTypeofundertakingDetailsofundertakingUndertakingdateTermParticularsontheperformanceUndertakingonshareholdingstructurereformationUndertakingmadeinofferingdocumentsorshareholdingalternationdocumentsUndertakingmadeduringassetFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited54reconstructionUndertakingmadeoninitialpublicofferingorrefinancingHuaXueUndertakingonhorizontalcompetition,relatedpartytransactionandcapitaloccupation1.Mr.HuaXueguaranteesnoprejudicetotheinterestsofHaidGroupanditsothershareholdersbyvirtueofhiscapacityasthedefactocontroller.2.Mr.HuaXueguaranteesthat,aslongasheservesasthedefactocontrollerofHaidGroup,heandhiswholly-ownedsubsidiaries,controlledsubsidiariesandactuallycontrolledcompanies(exceptHaidGroup)willnotengageinbusinessactivitiesthat,directlyorindirectly,competewithorconstitutecompetitivethreattotheprincipalbusinessesormajorproductsofHaidGroupinanyform,includinginvestment,acquisitionormergerofcompanies,enterprisesorothereconomicorganizationstheprincipalbusinessesormajorproductsofwhicharethesamewithorsimilartothoseofHaidGroup.27November2009LongtermInstrictperformanceHuaXueOtherundertaking1.IpromisenottointerveneintheCompany’smanagementactivities,andnottoencroachontheCompany'sinterests.2.BeforetheimplementationoftheCompany'spublicofferingsofconvertiblecorporatebonds,iftheChinaSecuritiesRegulatoryCommission(CSRC)makesothermeasuresforfillingreturnsandnewregulatoryprovisionsontheircommitments,andtheabovecommitmentscannotmeettherequirementsoftheCSRC,IpromisetoissueasupplementarycommitmentaccordingtothelatestregulationsoftheCSRC.3.CommitmentsincludeeffectivelyfulfillingtheCompany'scommitmenttofillinreturnandanyothermeasuresthatImadetofillinreturn.IfIviolatethesecommitmentsandcauselossestothecompanyorinvestors,IamwillingtobearthecompensatoryliabilityoftheCompany6August2019From6August2019to18March2026InstrictperformanceFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited55orinvestorsaccordingtolaw.GuangzhouHaihaoInvestmentCo.,Ltd.Undertakingonhorizontalcompetition,relatedpartytransactionandcapitaloccupation1.ItguaranteesnoprejudicetotheinterestsofHaidGroupandothershareholdersofHaidGroupbyvirtueofitscapacityasthecontrollingcontroller.2.GuangzhouHaihaoguaranteesthat,aslongasitisthecontrollingshareholderofHaidGroup,itanditswholly-ownedsubsidiaries,controlledsubsidiaries(exceptHaidGroup)andactuallycontrolledcompanieswillnotengageinbusinessactivitiesthat,directlyorindirectly,competewithorconstitutecompetitivethreattotheprincipalbusinessesormajorproductsofHaidGroupinanyform,includinginvestment,acquisitionormergerofcompanies,enterprisesorothereconomicorganizationstheprincipalbusinessesormajorproductsofwhicharethesamewithorsimilartothoseofHaidGroup.27November2009LongtermInstrictperformanceGuangzhouHaihaoInvestmentCo.,Ltd.Otherundertaking1.HaihaoInvestmentpromisesnottointerveneinHaidGroup’smanagementactivities,andnottoencroachonitsinterests.2.BeforetheimplementationofHaidGroup'spublicofferingsofconvertiblecorporatebonds,iftheChinaSecuritiesRegulatoryCommission(CSRC)makesothermeasuresforfillingreturnsandnewregulatoryprovisionsontheircommitments,andtheabovecommitmentscannotmeettherequirementsoftheCSRC,HaihaoInvestmentpromisestoissueasupplementarycommitmentaccordingtothelatestregulationsoftheCSRC.3.CommitmentsincludeeffectivelyfulfillingHaidGroup'scommitmenttofillinreturnandanyothermeasuresthatHaihaomadetofillinreturn.IfHaihaoviolatesthesecommitmentsandcauseslossestoHaidGrouporits6August2019From6August2019to18March2026InstrictperformanceFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited56investors,itiswillingtobearthecompensatoryliabilityofHaidGrouporitsinvestorsaccordingtolaw.HuaXue,LiTian,YingzhuoXu,QiCheng,JianfangGui,JianguoHe,YunguoLiu,GuoxiangLiu,XueqiaoQian,ShaolinYang,XiewuJiang,GuochengMi,ZhongzhuChen,MingzhongChenandZhijianHuangOtherundertaking1.Ipromisenottotransferintereststootherunitsorindividualsforfreeorunderunfairconditions,orinotherwaytodamagecompanyinterests.2.Ipromisetoregulatepersonalbusinessconsumptionbehavior.3.IpromisenottousetheCompany'sassetstoengageininvestmentandconsumptionactivitiesunrelatedtotheperformanceofmyduties.4.IpromisethatthesalarysystemformulatedbytheboardofdirectorsortheremunerationandappraisalcommitteeislinkedtotheimplementationoftheCompany'sreturncompensationmeasures.5.IpromisethattheexerciseconditionsofequityincentivearelinkedtotheimplementationoftheCompany'sreturncompensationmeasures.6.Fromthedateofissuanceofthiscommitmenttothedatebeforethecompletionofthispublicissuanceofconvertiblecorporatebondsbythelistedcompany,ifChinaSecuritiesRegulatoryCommissionmakesothernewregulatoryprovisionsonreturncompensationmeasuresandcommitments,andtheabovecommitmentsfailtomeettheprovisionsofChinaSecuritiesRegulatoryCommission,IpromisetoissuesupplementarycommitmentsinaccordancewiththelatestregulationsoftheChinaSecuritiesRegulatoryCommissionatthattime.7.IpromisetoimplementtheCompany'srelevantreturncompensationmeasuresandanycommitmentsrelatedtothereturncompensationmeasuresIhavemade.IfIviolatethesecommitmentsandcauselossestotheCompanyorinvestors,Ishallbearthecompensation6August2019From6August2019to18March2026InstrictperformanceFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited57responsibilitytotheCompanyorinvestorsinaccordancewiththelaw.EquityincentiveundertakingsGuangdongHaidGroupCo.,LimitedOtherundertakingTheCompanyguaranteesnoprovisionloansorfinancialassistanceinotherformstotheincentivetargetsforacquisitionofrelevantinterestsundertheRestrictedSharesandShareOptionsPlanofGuangdongHaidGroupCo.,Limited(广东海大集团股份有限企业限制性股票及股票期权计划),includingprovisionofguaranteesfortheirloans.4March2015From4March2015to3March2019ExpiredGuangdongHaidGroupCo.,LimitedOtherundertakingTheCompanyguaranteesnoprovisionofloansorfinancialassistanceinotherformstotheincentivetargetsforacquisitionofrelevantinterestsunderthe2016RestrictedSharesIncentivePlanofGuangdongHaidGroupCo.,Limited(广东海大集团股份有限企业2016年限制性股票激励计划),includingprovisionofguaranteesfortheirloans.15February2017From15February2017to23March2022InstrictperformanceOtherundertakingsmadetotheCompany’sminorityshareholdersGuangdongHaidGroupCo.,LimitedDividendundertakingSpecificconditions,proportionsandintervalsofcashdividends:Thefollowingconditionsshallbesatisfiedwhenthecompanymakesdistributionofcashdividends:(1)Theprofitsandtheaccumulativedistributableprofit(i.e.,taxaftertheCompanymakesuplossesandmakeallocationtoreserves)realizedbythecompanyintheyearorhalfyearispositiveinvalueandthecashflowissufficient.ThedistributionofcashdividendwillnotaffecttheCompany'ssubsequentoperations;(2)TheauditorhasissuedastandardunqualifiedauditreportontheCompany'sannualfinancialreport(iftheCompanydistributestheinterimdividend,theauditorshallhaveissuedastandardunqualifiedauditreportontheCompany'sfinancialreportforthepreviousyear;(3)TheCompanyhasno18April2016From18April2016to17April2019ExpiredFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited58planonmaterialexternalinvestmentormajorcashoutlayswithinthenexttwelvemonths(exceptproceeds-financedinvestmentprojects).AmajorinvestmentplanmeansthattheaccumulatedexpenditureoftheCompanytobeusedforexternalinvestmentandpurchaseofassetsorequipmentwithinthenexttwelvemonthswillreachorexceed30%oftheCompany'slatestauditednetassets.(4)OthercircumstancesinwhichtheBoardconsidersitisnotsuitablefordistributionofcashdividends.Incompliancewiththeaboveconditions,theCompanywill,inprinciple,makeadistributionofcashdividendonceayear.TheBoardoftheCompanymayproposeinterimcashdividendsbasedontheprofitabilityoftheCompanywhentherelevantregulationsallow.Inprinciple,theCompany'sprofitsaccumulatedincasheverythreeyearsshouldnotbelessthan30%oftheannualaveragedistributableprofitrealizedinthethreeyears.GuangdongHaidGroupCo.,LimitedDividendundertakingSpecificconditions,proportionsandintervalsofcashdividends:Thefollowingconditionsshallbesatisfiedwhenthecompanymakesdistributionofcashdividends:(1)Theprofitsandtheaccumulativedistributableprofit(i.e.,taxaftertheCompanymakesuplossesandmakeallocationtoreserves)realizedbythecompanyintheyearorhalfyearispositiveinvalueandthecashflowissufficient.ThedistributionofcashdividendwillnotaffecttheCompany'ssubsequentoperations;(2)TheauditorhasissuedastandardunqualifiedauditreportontheCompany'sannualfinancialreport(iftheCompanydistributestheinterim6May20196May2019to5May2022InstrictperformanceFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited59dividend,theauditorshallhaveissuedastandardunqualifiedauditreportontheCompany'sfinancialreportforthepreviousyear;(3)TheCompanyhasnoplanonmaterialexternalinvestmentormajorcashoutlayswithinthenexttwelvemonths(exceptproceeds-financedinvestmentprojects).AmajorinvestmentplanmeansthattheaccumulatedexpenditureoftheCompanytobeusedforexternalinvestmentandpurchaseofassetsorequipmentwithinthenexttwelvemonthswillreachorexceed30%oftheCompany'slatestauditednetassets.(4)OthercircumstancesinwhichtheBoardconsidersitisnotsuitablefordistributionofcashdividends.Incompliancewiththeaboveconditions,theCompanywill,inprinciple,makeadistributionofcashdividendonceayear.TheBoardoftheCompanymayproposeinterimcashdividendsbasedontheprofitabilityoftheCompanywhentherelevantregulationsallow.Inprinciple,theCompany'sprofitsaccumulatedincasheverythreeyearsshouldnotbelessthan30%oftheannualaveragedistributableprofitrealizedinthethreeyears.HuaXue,LiTian,YingzhuoXu,XiaojunShang,ChengpingLu,XinchunLi,ErxuanDeng,ZhenxiongQi,JingWang,JiaChen,MingzhongChen,XueqiaoQian,ShaolinYang,ZhijianHuangUndertakingonreductionofshareholdingIncompliancewiththelawsandregulationsgoverningshareholdingreductionsbydirectors,supervisorsandseniormanagement27November2009LongtermInstrictperformanceWhetherundertakingsYesFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited60performedontimeSpecificreasonswhyundertakingswerenotperformedontimeandnextstepsNotapplicable2.DescriptionontheCompany’sassetsanditemsinmeetingoriginalprofitforecastanditsexplanationasthereisprofitforecastforassetsanditemsoftheCompanyandthereportingperiodisstillwithintheprofitforecastperiod√Applicable□NotapplicableEarningsforecastassetorprojectnameForecaststarttimeForecastendtimeExpectedresultsforthecurrentperiod(RMB0’000)Actualresultsforthecurrentperiod(RMB0’000)Reasonsforfailuretoreachtheforecast(ifapplicable)DateofpreviousforecastdisclosureIndexofpreviousforecastdisclosureShandongDaxinGroupCo.,Ltd.1January201731December201916,50015,123.84DaxinGroupspecializesinproducingandmarketingfeedforpigs.TheAfricanswinefeverhadamaterialimpactonDaxinGroup.That’swhyitfailedtofulfillthe2019earningsundertaking.15September2017Fordetails,pleaserefertotheAnnouncementontheAcquisitionofPartialEquityInterestsofDaxinGroupandExternalInvestment(《关于收购大信集团部分股权暨对外投资的公告》)(AnnouncementNo.2017-076)publishedinChinaSecuritiesJournal,SecuritiesTimes,SecuritiesDailyandonthewebsiteofFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited61nfo.com.cn.UndertakingoftheCompany'sshareholdersandcounterpartiesonoperatingresultsinreportingyear√Applicable□NotapplicableJianbingLiu,HaiboYu,YuqinWang,XianlaiDuanandMingjunYang(hereinafterreferredtoas“theundertakingparty”),formershareholdersofShandongDaxinGroupCo.,Ltd.(formerlyknownasShandongDaxinGroupCo.,Limited,hereinafterreferredtoas"DaxinGroup"),theacquisitiontargetoftheCompany,madeundertakingsonthenetincome(i.e.,netincomeattributabletoshareholdersofthecompany,beforeorafterthenon-operatingincomeandloss,whicheverislower;thecaseisthesamebelow)toberealizedinfourfullaccountingyearsfrom2017to2020:(1)DaxinGroupwillachieveanetincomeofnotlessthanRMB50millionin2017,theaccumulatednetincomeofnotlessthanRMB105millionin2017and2018,theaccumulatednetincomeofnotlessthanRMB165millionin2017to2019,andtheaccumulatednetincomeofnotlessthanRMB230millionin2017to2020.(2)Iftheaccumulatednetincomeforthecurrentyearfailstoreachthecommittedamount,theundertakingpartyshallpaytheCompanycompensation=(accumulatednetincomeforthecurrentyear-actualaccumulatednetincomeofthecurrentyear)/totalcommittedamountofRMB230million*totaltransactionamountofRMB298,776,000–netcompensationpaidbytheundertakingpartytotheCompany.Theaccumulatedcompensationamountislimitedtothetotaltransactionpriceoftheunderlyingassets.Iftheactualaccumulatednetincomeforanyyearduringtheresultsundertakingperiodisnotlessthantheaccumulatednetincomeundertaken,theCompanyshallreturnallthecompensationthathasbeenpaidbytheundertakingpartytotheundertakingparty.(3)TheundertakingpartywillincreaseshareholdinginHaidGroupthroughpurchaseofsharesfromthesecondarymarketwithin6monthsafterreceiptofthesecondinstallmentofpaymentforequitytransferwithanamountofRMB60million.AfterDaxinGroup’sfulfillmentoftheannualresultsgoalsfor2017and2018orpaymentofsufficientcompensationincaseofnon-fulfillmentofthegoals,theundertakingpartymayreleasethelock-upfor50%oftheabove-mentionedsharesadditionallypurchased;AfterDaxinGroup’sfulfillmentoftheannualresultsgoalsfor2017to2020orpaymentofsufficientcompensationincaseofnon-fulfillmentofthegoals,theundertakingpartymayreleasethelock-upfortheremaining50%oftheabove-mentionedshares.Accordingtothe2017AuditReportofShandongDaxinGroupCo.,Ltd.(山东大信集团有限企业2017年度审计报告)(GuangKuaiShenZi[2018]No.G17036521306)andthe2018AuditReportofShandongDaxinGroupCo.,Ltd.(山东大信集团有限企业2018年度审计报告)(GuangKuaiShenZi[2019]No.G18031440261)issuedbyGPCertifiedPublicAccountants(SpecialGeneralPartnership),aswellasthe2019AuditReportofShandongDaxinGroupCo.,Ltd.(山东大信集团有限企业2019年度审计报告)(GrantThorntonShenZi(2020)No.440FC0812)issuedbytheGuangzhoubranchofGrantThorntonChina(SpecialGeneralPartnership),DaxinGroup's2017-2019auditednetincomeattributabletoshareholdersofthecompanywasRMB167.7250millionandthenetincomeattributabletotheshareholdersofthecompanyafterexcludingnon-operatingincomeorlosswasRMB151.2384million.Therefore,DaxinGrouphasfailedtofulfillthe2017-2019earningsundertaking.Accordingtotheaforesaidearningsundertaking,theundertakingpartyshallpaytheCompanycompensation=Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited62(accumulatednetincomeforthecurrentyear-actualaccumulatednetincomeofthecurrentyear)/totalcommittedamountofRMB230million*totaltransactionamountofRMB298,776,000–netcompensationpaidbytheundertakingpartytotheCompany,thatis,(165,000,000-151,238,400)/230,000,000*298,776,000-0=17,876,700.AccordingtothewayofpaymentoftheearningscompensationasagreeduponbytheCompanyandtheundertakingparty,theaforesaidcompensationduefromtheundertakingpartyshallbedeductedfromthefifthinstallmentofpaymentforequitytransfer.ThecompletionofperformancecommitmentanditsinfluenceongoodwillimpairmenttestTheCompanyadoptsthemethodofdiscountingtheexpectedfuturecashflowtocalculatethepresentvalueoffuturecashflowofrelatedassetsandthegoodwillimpairmentafterdiscountingatthepretaxdiscountratebyconsideringtherisksofrelatedassetsintheirindustriesandenvironment.Inviewofthecompletionoftheperformancecommitmentsabove,itsfuturerecoverableamountandbudgetdataofDaxinGroup,theCompanyhasaccruedRMB3.3284millionofgoodwillimpairmentreservesforthegoodwillformedbytheacquisitionofDaxinGroup.IV.AppropriationofFundsoftheCompanybytheControllingShareholderandItsRelatedPartiesforNon-OperatingPurposes□Applicable√NotapplicableTherewasnoappropriationoffundsoftheCompanybythecontrollingshareholderanditsrelatedpartiesfornon-operatingpurposesduringthereportingperiod.V.OpinionsoftheBoard,theSupervisoryCommitteeandIndependentDirectors(IfAny)Regardingthe"ModifiedAuditReport"fortheReportingPeriodIssuedbytheAccountants□Applicable√NotapplicableVI.ReasonforChangesinAccountingPolicies,AccountingEstimatesandAccountingMethodsasComparedtotheFinancialReportforthePriorYear√Applicable□Notapplicable1.Forthechangesinaccountingpoliciesandaccountingestimatesascomparedtothefinancialreportfortheprioryear,pleaserefertoNoteIII,35inPartXII“FinancialReport”.2.Duringthereportingperiod,theCompanycommunicatedproperlywiththeformerCPAfirmGPCertifiedPublicAccountants(SGP)regardingthechangeofCPAfirmandobtaineditsunderstandingandsupport.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited63VII.ReasonforRetrospectiveRestatementtoCorrectMajorAccountingErrorsDuringtheReportingPeriod□Applicable√NotapplicableDuringthereportingperiod,therewasnomajoraccountingerrorwhichshallbesubjecttoretrospectiverestatement.VIII.ReasonforChangesinScopeoftheConsolidatedFinancialStatementsasComparedtotheFinancialReportforthePriorYear√Applicable□NotapplicableDuringtheyear,thescopeofconsolidationincluded317subsidiaries.Fordetails,pleaserefertotheNote7"Interestsinotherentities"inXII"FinancialReport".ThescopeofconsolidationoftheCompanyinthisyearincreasedby50andreducedby5ascomparedwiththelastyear.Fordetails,pleaserefertotheNote6"Changeinscopeofconsolidation"inXII"FinancialReport".IX.EngagementorDismissalofAccountingFirmsCurrentaccountingfirmengagedNameofthedomesticaccountingfirmGrantThorntonChina(SpecialGeneralPartnership)Remunerationofthedomesticaccountingfirm(RMB’0,000)360Continuedtermofserviceofthedomesticaccountingfirm1NameofcertifiedpublicaccountantsofthedomesticaccountingfirmWenyuanGuan,ShuxiaZhangContinuedtermofserviceofcertifiedpublicaccountantsofthedomesticaccountingfirmWenyuanGuan:1yearShuxiaZhang:2yearsNameoftheoverseasaccountingfirm(ifany)NotapplicableRemunerationoftheoverseasaccountingfirm(RMB’0,000)(ifany)0Continuedtermofserviceoftheoverseasaccountingfirm(ifany)NotapplicableNameofcertifiedpublicaccountantsoftheoverseasaccountingfirm(ifany)NotapplicableContinuedtermofserviceofcertifiedpublicaccountantsoftheoverseasaccountingfirm(ifany)NotapplicableWhethertoappointanotheraccountingfirmduringthecurrentperiod√Yes□NoWhethertochangetheaccountingfirmduringtheaudit□Yes√NoWhethertheapprovalprocedurewasexecutedregardingthechangeofaccountingfirmFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited64√Yes□NoDetaileddescriptionofthereappointmentandchangeofaccountingfirmThroughdeliberationandapprovalofthe5thmeetingofthe5thboardofdirectorsandthe4thextraordinarygeneralmeetingofshareholdersin2019,GrantThorntonChina(SpecialGeneralPartnership)wasappointedastheauditinstitutionoftheCompanyin2019.TheboardofdirectorsauditcommitteeoftheCompanyhasreviewedthequalificationofGrantThorntonChina(SpecialGeneralPartnership)andfoundthatitmeetstherelevantrequirementsforprovidingannualauditservicesfortheCompany,andagreedtoappointGrantThorntonChina(SpecialGeneralPartnership)astheCompany’s2019financialreportauditinstitution.GrantThorntonChina(SpecialGeneralPartnership)isqualifiedtoauditsecuritiesandfuturesrelatedbusinesseswithdecadesofexperienceandabilitytoprovideauditservicesforlistedcompanies,anditcanmeettherequirementsoftheCompany’sfinancialauditandrelatedspecialauditwork.Particularsonrecruitmentofaccountingfirms,financialconsultantsorsponsorsforinternalcontrolandauditingpurposes□Applicable√NotapplicableX.SuspensioninTradingorDelistingUponPublicationofAnnualReport□Applicable√NotapplicableXI.MattersRelatedtoBankruptcyandReorganisation□Applicable√NotapplicableTherewasnomatterrelatedtobankruptcyandreorganisationduringthereportingperiod.XII.MaterialLitigationandArbitration□Applicable√NotapplicableDuringthereportingperiod,theCompanywasnotinvolvedinanymateriallitigationandarbitration.XIII.PunishmentandRectification□Applicable√NotapplicableTherewasnopunishmentandrectificationoftheCompanyduringthereportingperiod.XIV.CredibilityoftheCompany,ItsControllingShareholdersandBeneficialControllers□Applicable√NotapplicableXV.ImplementationoftheEquityIncentivePlan,EmployeeShareholdingPlanorOtherEmployeeIncentiveMeasuresoftheCompany√Applicable□Notapplicable(I)RestrictedSharesandShareOptionIncentivePlanFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited651.Decision-makingproceduresandapproval(1)On3March2015,theCompanyconvenedthe2015firstnon-operatinggeneralmeetingtoconsiderandapprove,bywayofspecialresolutions,theRestrictedSharesandShareOptionIncentivePlanofGuangdongHaidGroupCo.,Limited(广东海大集团股份有限企业限制性股票与股票期权激励计划)anditssummary(hereinafterreferredtoas"RestrictedSharesandShareOptionIncentivePlan"),theProposalRegardingtheMeasuresforImplementationandAssessmentoftheRestrictedSharesandShareOptionIncentivePlanofGuangdongHaidGroupCo.,Limited(《关于<广东海大集团股份有限企业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》),theProposalRegardingAuthorisationoftheBoardofDirectorsattheGeneralMeetingtoHandleMattersRelatedtotheRestrictedSharesandShareOptionIncentivePlan(《关于股东大会授权董事会办理企业限制性股票与股票期权激励计划相关事宜的议案》)andotherproposals.(2)On4March42015,theCompanyconvenedthethirteenthmeetingofthirdsessionoftheBoardtoconsiderandapprovetheProposalRegardingGrantofRestrictedSharesandShareOptionstotheTargetsoftheRestrictedSharesandShareOptionIncentivePlanofGuangdongHaidGroupCo.,Limited(《关于向<广东海大集团股份有限企业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》),pursuanttowhichtheCompanygranted14,395,000restrictedsharesto168targetsofrestrictedsharesincentivesatthepriceofRMB5.64pershare;10,425,000shareoptionsto291targetsofshareoptionincentivesattheexercisepriceofRMB11.41persharewiththegrantdateof4March2015.ThesourceoftheunderlyingsharesoftherestrictedsharesandshareoptionsundertheplanweretheRMBdenominatedordinarysharesissuedbytheCompanytotheincentivetargetsbywayofprivateplacement.On20March2015,theCompanycompletedregistrationforgrantoftheabove-mentionedrestrictedsharesandshareoptions.2.ImplementationduringthereportingperiodDuringthereportingperiod,theoptionincentivetargetschosetoexercise76,950optionsinthethirdexerciseperiodoftheRestrictedSharesandShareOptionIncentivePlan(《限制性股票与股票期权激励计划》).Togetherwiththe12,900optionsthatwereexercisedattheendoflastyearbutnotyetregistered,thesharecapitaloftheCompanyincreasedby89,850sharesintotalduringthereportingperiod.3.Incentivetargets'exerciseofinterestsduringthereportingperiodandinterestsaccumulativelygrantedbutnotyetexercisedasattheendofthereportingperiodDuringthereportingperiod,thenumberofoptionsexercisedinthethirdexerciseperiodofrestrictedsharesandshareoptionincentiveplanwas76,950;asattheendofthereportingperiod,theunexercisedshareoptionsundertheRestrictedSharesandShareOptionIncentivePlanwere0.(II)2016RestrictedShareIncentivePlan1.Decision-makingproceduresandapproval(1)On15February2017,theCompanyconvenedthe2017firstnon-operatinggeneralmeetingtoconsiderandapprovethe2016RestrictedShareIncentivePlanofGuangdongHaidGroupCo.,Limited(Revision)(广东海大集团股份有限企业2016年限制性股票激励计划(修订稿))anditssummary(hereinafterreferredtoas"2016Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited66RestrictedShareIncentivePlan")andtheProposalRegardingAuthorisationoftheBoardofDirectorsattheGeneralMeetingtoHandleMattersRelatedtothe2016RestrictedShareIncentivePlan(《关于提请股东大会授权董事会办理企业2016年限制性股票激励计划相关事宜的议案》)andrelatedresolutions,pursuanttowhichtheCompanywasapprovedtoissuenomorethan46millionrestrictedsharestoincentivetargetsbywayofprivateplacementofwhich41,601,300shareswouldbefirstgrantedto1,484incentivetargetsatthegrantpriceofRMB7.48pershare,and4,398,700restrictedshareswouldbereserved.(2)On13March2017,theCompanyconvenedthesixthmeetingofthefourthsessionoftheBoardtoconsiderandapprovetheProposalonAdjustmenttotheNumberofInterestsunderthe2016RestrictedShareIncentivePlanoftheCompany(《关于调整企业2016年限制性股票激励计划权益数量的议案》),pursuanttowhichthenumberofincentivetargetsoffirstgrantwaschangedfrom1,484into1,373andtherestrictedsharesnotgrantedyetwereadjustedfrom41,601,300sharesto40,283,200shares.(3)On13March2017,theCompanyconvenedthesixthmeetingofthefourthsessionoftheBoardtoconsiderandapprovetheProposalonGrantofRestrictedSharestoIncentiveTargetsunderthe2016RestrictedShareIncentivePlanoftheCompany(《关于向企业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》),pursuanttowhichtheCompanywasapprovedtogrant40,283,200sharesto1,373incentivetargetsforthefirsttimewith13March2017asthefirstgrantdateandthegrantpriceofRMB7.48pershare.On20March2017,theCompanycompletedtheregistrationofgrantofalltheabove-mentionedrestrictedshares.(4)On27October2017,theCompanyconvenedthetenthmeetingofthefoursessionoftheBoardtoconsiderandapprovetheProposalRegardingAdjustmentstotheMattersRelatedtotheEquityIncentivePlanandCancellationofCertainRestrictedShares(《关于调整企业股权激励计划相关事项及注销部分股票期权的议案》)andtheProposalRegardingRepurchaseofCertainRestrictedSharesforCancellation(《关于回购注销部分限制性股票的议案》),pursuanttowhichtheCompanywasapprovedtorepurchasethe618,800unlockedrestrictedshareswhichhadbeengrantedtothecertainincentivetargetswhohaveresignedorterminatedthelaborcontractforcancellation,thenumberofincentivetargetsofthefirstgrantwasadjustedto1,336andtherepurchasepriceofrestrictedshareswasadjustedtoRMB7.18pershare.On28December2017,theCompanycompletestherepurchaseforcancellationforalltheabove-mentionedrestrictedsharesandthecancellationforalltheabove-mentionedshareoptions.(5)On8December2017,theCompanyconvenedtheeleventhmeetingofthefourthsessionoftheBoardtoconsiderandapprovetheProposalRegardingtheGrantofReservedRestrictedSharestoIncentiveTargetsunderthe2016RestrictedShareIncentivePlanoftheCompany(《关于向企业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》),pursuanttowhichtheCompanywasapprovedtogrant4,398,700reservedrestrictedsharesto399incentivetargetswiththegrantpriceofRMB10.44pershareand8December2017asthegrantdate.UponauditandconfirmationbytheShenzhenStockExchangeandShenzhenBranchofChinaSecuritiesDepositoryandClearingCorporationLimited,theCompanycompletedtheregistrationforgrantofreservedrestrictedsharesto360incentivetargets.4,308,000reservedrestrictedsharesweregrantedandthelistingdateoftherestrictedshareswouldbe24January2018.2.Implementationduringthereportingperiod(1)Thesecondunlockingperiodofthefirstgrantandthefirstunlockingperiodofthereservegrantofthe2016Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited67RestrictedShareIncentivePlanOn13April2019,theCompanyconvenedtheseventeenthmeetingofthefourthsessionoftheBoardtoconsiderandapprovetheProposalontheSatisfactionoftheUnlockingConditionsoftheRestrictedShareIncentivePlan(《关于股权激励计划符合解锁条件的议案》).TheBoardwasoftheviewthattheunlockingconditionshadbeensatisfiedforthesecondunlockingperiodofthefirstgrantandforthefirstunlockingperiodofthereservegrantunderthe2016RestrictedShareIncentivePlan(Revised)(《2016年限制性股票激励计划(修订稿)》)andthusapprovedtheincentivetargetstounlocktherelevantsharesasprescribed.Inthesecondunlockingperiodofthefirstgrantofthe2016RestrictedShareIncentivePlan(《2016年限制性股票激励计划》),thenumberofrestrictedsharesavailableforlistingandtradingwas7,471,740;andinthefirstunlockingperiodofthereservegrant,thenumberofrestrictedsharesavailableforlistingandtradingwas1,188,360.(2)Repurchaseforcancellationforthe2016RestrictedShareIncentivePlanOn13April2019,theCompanyconvenedtheseventeenthmeetingofthefourthsessionoftheBoardtoconsiderandapprovetheProposalRegardingRepurchaseofCertainRestrictedSharesforCancellation(《关于回购注销部分限制性股票的议案》).Duetodemission,terminationofemploymentorfailuretopassthe2018annualpersonalperformanceappraisalof28incentivetargetsinthefirstgrantofrestrictedsharesand18incentivetargetsinthereservegrant,theCompanywasagreedtorepurchaseandcancel309,400restrictedsharesinthefirstgrantand120,600restrictedsharesinthereservegrantthathadbeengrantedtotheaforesaidincentivetargetsbuthadnotyetreachedtheunlockingconditions.On19June2019,theCompanycompletedtherepurchaseforcancellationoftheabove-mentionedrestrictedshares.On18October2019,theCompanyconvenedthefifthmeetingofthefifthsessionoftheBoardtoconsiderandapprovetheProposalontheAdjustmenttotheRepurchasePriceoftheStockIncentivePlan(《关于调整股权激励计划回购价格的议案》).DuetotheimplementationoftheCompany’s2018annualequitydistribution,theCompanywasapprovedtoadjusttherepurchasepriceofthefirstgrantedrestrictedsharesunderthe2016RestrictedShareIncentivePlan(Revised)(《2016年限制性股票激励计划(修订稿)》)toRMB6.63pershare,andadjusttherepurchasepriceofthereservedrestrictedsharestoRMB9.89pershare.On18October2019,theCompanyconvenedthefifthmeetingofthefifthsessionoftheBoardtoconsiderandapprovetheProposalRegardingRepurchaseofCertainRestrictedSharesforCancellation(《关于回购注销部分限制性股票的议案》).Duetothedismissionorterminationofemploymentof29restrictedshareincentivetargetsinthefirstgrantand14restrictedshareincentivetargetsinthereservegrant,theCompanywasapprovedtorepurchaseforcancellationthe431,400restrictedsharesinthefirstgrantandthe82,040restrictedsharesinthereservegrantoftheabove-mentionedincentivetargetswhichhadbeengrantedbutfailedtosatisfytheunlockingconditions.On30December2019,theCompanycompletedtherepurchaseforcancellationoftheabove-mentionedrestrictedshares.3.Incentivetargets'exerciseofinterestsduringthereportingperiodandinterestsaccumulativelygrantedbutnotyetexercisedasattheendofthereportingperiodAsattheendofthereportingperiod,thenumberofrestrictedshareswhichhadbeengrantedbutnotunlockedunderthe2016RestrictedShareIncentivePlanwas24,701,140shares.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited68Insummary,duringthereportingperiod,duetoimplementationofthe2016RestrictedShareIncentivePlan(2016年限制性股票激励计划),incentivetargetschosetoexercise76,950options;andtheCompanyrepurchasedatotalof943,440restrictedsharesforcancellation.Asattheendofthereportingperiod,theCompanyhadgrantedatotalof24,701,140restrictedshareswhichhadnotbeenunlocked.(III)Explanationsforothercircumstancesduetotheimplementationofthe2016RestrictedShareIncentivePlan(2016年限制性股票激励计划)duringthereportingperiod1.Forinformationongrantofintereststoandexerciseofinterestsbydirectorsandseniormanagement,pleaserefertoI."Changesinrestrictedshares"undersectionVIinthisreport.2.Explanationonchangesinsharecapitalcausedbyimplementationofthe2016RestrictedShareIncentivePlan(2016年限制性股票激励计划).Duringthereportingperiod,thetotalsharesoftheCompanyincreasedby89,850sharesduetoincentivetargets’independentexerciseofoptions;anddecreasedby943,440sharesduetorepurchaseofrestrictedsharesforcancellation.Aftertheabove-mentionedchanges,thetotalnumberofsharesoftheCompanyasattheendoftheperiodchangedfrom1,581,211,084sharesto1,580,357,494shares.Fordetailsofthechanges,pleaserefertotheIandIIundersectionVIofthisreport.3.AccountingtreatmentmethodforoptionincentiveandeffectsofequityincentivecostontheresultsoftheCompanyAccordingtorelevantprovisionsundertheAccountingStandardsforBusinessEnterprisesNo.11-Share-basedPayment(企业会计准则第11号–股份支付),theCompanywill,oneachbalancesheetdateinthewaitingperiod,amendthenumberofrestrictedshares/shareoptionsthatareexpectedtobeunlockable/exercisableaccordingtothelatestavailableinformationofchangesinthenumberofincentivetargetsallowedtounlockrestrictedshares/exerciseoptions,completionofperformanceindicatorsandotherfollow-upinformationandincludetheservicesobtainedinthecurrentperiodintherelevantcostsorexpensesandcapitalreservesatfairvalueoftherestrictedshares/exerciseoptionsonthegrantdate.TheimplementationoftheaboveequityincentiveplanwillnothaveasignificantimpactontheCompany'sfinancialpositionandoperatingresultsduringthereportingperiodandinthefuture.(IV)EmployeeStockOwnershipPlanforCoreTeam1.On15February2017,theProposalRegardingtheEmployeeStockOwnershipPlanforCoreTeamofGuangdongHaidGroupCo.,Limited(Revised)andItsSummary(《关于<广东海大集团股份有限企业核心团队员工持股计划(修订稿)>及其摘要的议案》)wasapprovedatthefirstextraordinarygeneralmeetingof2017,pursuanttowhichtheCompanywasapprovedtopreparetheEmployeeStockOwnershipPlanforCoreTeamofGuangdongHaidGroupCo.,Limited(Revised)(广东海大集团股份有限企业核心团队员工持股计划(修订稿))(hereinafterreferredtoasthe“EmployeeStockOwnershipPlan”)inaccordancewithrelevantlawsandregulations.Assuch,theEmployeeStockOwnershipPlanwouldpermanentlyexistandbelaunchedeachyearunlessdeterminationasdeterminedbytheStockOwnershipPlanManagementCommitteeandconsiderationandFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited69approvalbytheBoardandgeneralmeeting;andtheCompanywouldformulatespecificplansundertheEmployeeStockOwnershipPlan.ItwasagreedtosetspecialfundsofRMB12millionasthecapitalsourcefortheFirstPlanoftheEmployeeStockOwnershipPlan(hereinafterreferredtoasthe“FirstPlanoftheStockOwnershipPlan”).Asat21March2017,undertheFirstPlanoftheStockOwnershipPlan,"GFYuanchiHaidCoreNo.1TargetedAssetManagementProgram(广发原驰海大核心1号定向资产管理计划)"purchased720,187sharesfromthesecondarymarket.On29December2017,thevestingofthefirstvestingperiodoftheabove-mentionedpurchasedshareswascompleted,with40%oftheseshares,i.e.288,075shares,beingvested.On29December2018,thevestingofthesecondvestingperiodoftheabove-mentionedpurchasedshareswascompleted,with30%oftheseshares,i.e.216,056shares,beingvested.On31December2019,thevestingofthethirdvestingperiodoftheabove-mentionedpurchasedshareswascompleted,with30%oftheseshares,i.e.216,056shares,beingvested.Asof31December2019,thetotal720,187sharesundertheFirstPlanoftheStockOwnershipPlanhadbeenvested,withthevestingparticularsinlinewiththeFirstPlanoftheStockOwnershipPlan.On31December2019,thelockupperiodfortheFirstPlanoftheStockOwnershipPlanexpiredandtheunlockingconditionshadbeensatisfied.Therefore,startingfrom31December2019,allthe720,187sharesundertheFirstPlanoftheStockOwnershipPlanhavebeenallowedfortrading.Asoftheendofthereportingperiod,720,187shareswereheldundertheFirstPlanoftheStockOwnershipPlan,accountingfor0.05%ofthethentotalsharecapital.Duringthereportingperiod,nochangeoccurredtotheholdersoftheFirstPlanoftheStockOwnershipPlanandtheirholdings.2.On14May2018,theProposalRegardingtheSecondPlanoftheEmployeeStockOwnershipPlanforCoreTeamofGuangdongHaidGroupCo.,LimitedandItsSummary(《关于<广东海大集团股份有限企业核心团队员工持股计划之二期计划>及其摘要的议案》)(hereinafterreferredtoasthe“SecondPlanoftheStockOwnershipPlan”)wasapprovedatthe2017annualgeneralmeeting.Assuch,theCompanywasapprovedtoimplementtheSecondPlanoftheEmployeeStockOwnershipPlan.AspecialfundofRMB38,511,460.57wouldbeestablishedandtherelatedemployeeswouldraisenomorethanRMB50,000,000.ThetotalnumberofemployeestoparticipateintheSecondPlanoftheStockOwnershipPlanwouldbenomorethan30,including4directors,supervisorsandseniormanagement,aswellasnomorethan26othercorepersonnel.Asof11July2018,the"GFYuanchiHaidCoreNo.2TargetedAssetManagementProgram”(广发原驰海大核心2号定向资产管理计划)purchased4,386,186sharesoftheCompany’sstockfromthesecondarymarketfortheSecondPlanoftheStockOwnershipPlan,ofwhich1,908,436shareswerepurchasedwiththespecialfund.On28December2018,thefirstvestingofthesaidsharespurchasedwiththespecialfundwascompleted,with40%oftheseshares,i.e.763,374shares,beingvested;andon31December2019,thesecondvestingofthesaidsharespurchasedwiththespecialfundwascompleted,with30%oftheseshares,i.e.572,531shares,beingvested.Andthesharespurchasedwiththeemployees’self-raisedcapitalwouldbevestedonthethirdvestingdayofthesharespurchasedwiththespecialfundaccordingtotheirpaymentpercentage.Asoftheendofthereportingperiod,1,908,436shareswereheldundertheSecondPlanoftheStockOwnershipPlan,accountingfor0.12%ofthethentotalsharecapital.Duringthereportingperiod,nochangeoccurredtotheholdersoftheSecondPlanoftheStockOwnershipPlanandtheirholdings.3.On6May2019,theProposalRegardingtheThirdPlanoftheEmployeeStockOwnershipPlanforCoreTeamofGuangdongHaidGroupCo.,LimitedandItsSummary(《广东海大集团股份有限企业核心团队员工持股计划之三期计划》及其摘要的议案》)(hereinafterreferredtoasthe“ThirdPlanoftheStockOwnershipPlan”)wasFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited70approvedatthe2018annualgeneralmeeting.Assuch,theCompanywasapprovedtoimplementtheThirdPlanoftheEmployeeStockOwnershipPlan.AspecialfundofRMB30,180,630.23wouldbeestablishedasthecapitalsource.ThetotalnumberofemployeestoparticipateintheThirdPlanoftheStockOwnershipPlanwouldbenomorethan30,including4directors,supervisorsandseniormanagement,aswellasnomorethan26othercorepersonnel.Asof4November2019,the"GFYuanchiHaidCoreEmployeeStockOwnershipPlanNo.3SingleAssetManagementProgram”(广发原驰海大核心员工持股计划3号单一资产管理计划)purchased888,500sharesoftheCompany’sstockfromthesecondarymarketfortheThirdPlanoftheStockOwnershipPlan.On31December2019,thefirstvestingofthesaidsharespurchasedwiththespecialfundwascompleted,with40%oftheseshares,i.e.355,400shares,beingvested.Asoftheendofthereportingperiod,888,500shareswereheldundertheThirdPlanoftheStockOwnershipPlan,accountingfor0.06%ofthethentotalsharecapital.Duringthereportingperiod,nochangeoccurredtotheholdersoftheThirdPlanoftheStockOwnershipPlanandtheirholdings.XVI.SignificantRelatedPartyTransactions1.Relatedpartytransactionsassociatedwithday-to-dayoperation√Applicable□NotapplicableRelatedpartyRelatedpartyrelationshipTypesoftherelatedpartytransactionsSubjectmatteroftherelatedpartytransactionsPricingbasisoftherelatedpartytransactionsPriceofrelatedpartytransactionsAmountofrelatedpartytransactions(RMB’0,000)PercentageastheamountofsimilartransactionsAmountoftransactionsapproved(RMB’0,000)WhetherexceedingapprovedcapSettlementofrelatedpartytransactionsMarketpriceofavailablesimilartransactionDisclosuredateDisclosureindexFoshanHaihangXingfaAgricultureandAnimalHusbandryDevelopmentCo.,Ltd.AssociateSalesofproductsandcommoditiesSalesoffeedandotherproductsMarketpriceThepriceofeachtransactionshallbedeterminedbybothpartiesthroughnegotiationbasedontheuniform6,622.910.15%6,210YesOnnormalcommercialtermsorinaccordancewithrelevantagreementsNotapplicable16April2019AnnouncementonDay-to-dayRelatedPartyTransactionin2019(AnnouncementNo.2019-007)publishFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited71marketpriceasquotedexternallybytheselleratthetimeoftransaction.edon16April2019inthemediadesignatedforinformationdisclosureGuizhouFuhaiChemicalCo.,Ltd.AssociatePurchaseofrawmaterialsPurchaseofrawmaterialsMarketpriceThepriceofeachtransactionshallbedeterminedbybothpartiesthroughnegotiationbasedontheuniformmarketpriceasquotedexternallybytheselleratthetimeoftransaction.11,653.470.28%10,585YesOnnormalcommercialtermsorinaccordancewithrelevantagreementsNotapplicable16April2019AnnouncementonDay-to-dayRelatedPartyTransactionin2019(AnnouncementNo.2019-007)publishedon16April2019inthemediadesignatedforinformationdisclosureTotal----18,276.38--16,795----------ParticularsonrefundofbulksaleNotapplicableFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited72Actualperformanceofday-to-daytransactionstobeconductedintheperiodforwhichthetotaltransactionamountisestimatedbycategoriesduringthereportingperiod(ifany)NotapplicableReasonsforlargedifferencesbetweentransactionpricesandmarketreferenceprices(ifapplicable)Notapplicable2.Relatedpartytransactioninconnectionwithpurchaseorsaleofassetsorequityinterest□Applicable√NotapplicableTherewasnorelatedpartytransactionoftheCompanyinconnectionwithpurchaseorsaleofassetsorequityinterestduringthereportingperiod.3.Relatedpartytransactionconnectedtojointexternalinvestment□Applicable√NotapplicableTherewasnorelatedpartytransactionoftheCompanyconnectedtojointexternalinvestmentduringthereportingperiod.4.Relatedcreditors’rightsanddebtstransactions√Applicable□NotapplicableWhethertherewererelatedcreditors’rightsanddebtsfornon-operatingpurposes□Yes√NoTherewerenorelatedcreditors’rightsanddebtsfornon-operatingpurposesoftheCompanyduringthereportingperiod.5.Othersignificantrelatedpartytransactions□Applicable√NotapplicableTherewasnoothersignificantrelatedpartytransactionoftheCompanyduringthereportingperiod.XVII.MaterialContractsandImplementation1.Custody,contractingandleasing(1)Custody□Applicable√NotapplicableTherewasnocustodyoftheCompanyduringthereportingperiod.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited73(2)Contracting□Applicable√NotapplicableTherewasnocontractingoftheCompanyduringthereportingperiod.(3)Leasing□Applicable√NotapplicableTherewasnoleasingoftheCompanyduringthereportingperiod.2.Significantguarantees√Applicable□Notapplicable(1)GuaranteesUnit:RMB0’000ExternalguaranteesoftheCompanyanditssubsidiaries(excludingguaranteestosubsidiaries)NameofobligeeDateoftherelatedannouncementdisclosingtheguaranteeamountAmountofguaranteeGuaranteedateGuaranteeprovidedTypeofguaranteeTermFulfilledornotGuaranteetorelatedpartiesornotCustomers(suchasfarmersanddealers)ofJiangsuHaiheAgricultureandAnimalHusbandryCo.,Ltd.27April2018402.0026April2018-Jointliabilityguarantee1yearYesNoCustomers(suchasfarmersanddealers)ofsevencontrolledsubsidiariesincludingHunanHaidBio-FeedCo.,Ltd.28June20181,556.904July2018544.11Jointliabilityguarantee1yearNoNoCustomers(suchasfarmersanddealers)forwhomShandongHaidingAgricultureandAnimalHusbandryCo.,Ltd.26October20181,100.0025October2018232.54Jointliabilityguarantee1yearNoNoFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited74providedguaranteesCustomers(suchasfarmersanddealers)ofelevencontrolledsubsidiariesincludingGuangxiHaidFeedCo.,Ltd.16April20191,500.006May2019822.70Jointliabilityguarantee1-3yearsNoNoCustomers(suchasfarmersanddealers)ofNanchangHaidBiotechnologyCo.,Ltd.22October2019600.0022October2019161.00Jointliabilityguarantee1yearNoNoCustomers(suchasfarmersanddealers)ofsubsidiary22October20191,500.0018October2019-Jointliabilityguarantee3yearsNoNoCustomers(suchasfarmersanddealers)ofsubsidiary26November2019800.0023November2019-Jointliabilityguarantee1yearYesNoTotalexternalguaranteesapprovedduringthereportingperiod(A1)4,400.00Totalactualexternalguaranteesduringthereportingperiod(A2)1,760.35Totalexternalguaranteesapprovedattheendofthereportingperiod(A3)7,458.90Totalbalanceofactualexternalguaranteesattheendofthereportingperiod(A4)1,505.55GuaranteesbetweentheCompanyanditssubsidiariesNameofobligeeDateoftherelatedannouncementdisclosingtheguaranteeamountAmountofguaranteeGuaranteedateGuaranteeprovidedTypeofguaranteeTermFulfilledornotGuaranteetorelatedpartiesornotShengLongBio-TechInternationalCo.,Ltd27April201775,75029November20172,792.58Jointliabilityguarantee2yearsYesNoShengLongBio-TechInternationalCo.,Ltd20April201899,3897May201811,239.69Jointliabilityguarantee2yearsYesNo2July20181,943.06Jointliabilityguarantee1yearYesNo23July20186,450.67Jointliabilityguarantee2yearsNoNoFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited7521December201810,303.07Jointliabilityguarantee2yearsNoNo25April20198,291.32Jointliabilityguarantee1yearNoNoShengLongBio-TechInternationalCo.,Ltd16April201988,01924May20193,633.9Jointliabilityguarantee2yearsNoNo8May201916,290.39Jointliabilityguarantee1yearNoNoHaidInternationalGroupLimited27October201734,88128March201834,881Jointliabilityguarantee7yearsNoNoHaidInternationalGroupLimited20April2018120,04217July20186,278.58Jointliabilityguarantee2yearsNoNo9July201812,093.03Jointliabilityguarantee1yearYesNo9July20186,976.2Jointliabilityguarantee1yearYesNo17July201813,952.4Jointliabilityguarantee2yearsYesNoHaidInternationalGroupLimited29August201855,235.2028December201815,347.64Jointliabilityguarantee2yearsYesNo31January201915,228.26Jointliabilityguarantee1yearNoNo3April20196,976.2Jointliabilityguarantee3monthsYesNo18April20192,092.86Jointliabilityguarantee3monthsYesNoHaidInternationalGroupLimited16April2019142,45014May201910,464.3Jointliabilityguarantee2monthsYesNo5August20192,790.48Jointliabilityguarantee3monthsYesNo19August20193,488.1Jointliabilityguarantee1monthYesNo10September201910,464.3Jointliabilityguarantee6monthsNoNo17September20194,185.72Jointliabilityguarantee6monthsNoNo7November20192,790.48Jointliabilityguarantee3monthsNoNoFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited76ShengLongBioTech(M)SDN.BHD20April201870025September2018279.05Jointliabilityguarantee1yearYesNoShengLongBioTech(M)SDN.BHD16April201977025September2019279.05Jointliabilityguarantee1yearNoNoHaidFeedCo.,Limited27April201712,00012November20171,795.2Jointliabilityguarantee2yearsYesNo8February2018256.38Jointliabilityguarantee2yearsYesNo16April201916,18422November20191,294.13Jointliabilityguarantee3yearsNoNo27December20191,248.43Jointliabilityguarantee2yearsNoNoShengLongBio-Tech(India)PrivateLimited20April20184,25412December20181,271.6Jointliabilityguarantee2yearsYesNo29August20187,70019April2019814.1Jointliabilityguarantee6monthsYesNo16April201912,13521June20191,760.68Jointliabilityguarantee1yearNoNo18October20191,535.48Jointliabilityguarantee6monthsNoNo2December2019684.71Jointliabilityguarantee3yearsNoNoHaiDuongHaidCompanyLimited27April20178,25030November20171,191.84Jointliabilityguarantee2yearsYesNo17April20182,040.85Jointliabilityguarantee2yearsNoNo20April201810,58419March2019490.98Jointliabilityguarantee2yearsNoNo16April201910,25015August2019490.96Jointliabilityguarantee2yearsNoNoChinaHaidaFeedGroup(HK)Limited16April2019196,68020May20191,466.9Jointliabilityguarantee2yearsNoNoPT.HAIDAAGRICULTUREINDONESIA16April20193,850PT.HAIDASURABAYATRADING16April20193,850GuangzhouYitunPig29June2019100,00025November24,813.89Jointliability10yearsNoNoFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited77IndustryInvestmentCo.,Ltd.2019guarantee82wholly-ownedorcontrolledsubsidiaries16April2019132,7501January2019127,832.31Jointliabilityguarantee1yearNoNoAlaerRuilihengBiologicalProteinCo.,Ltd.26November20192,737.1926November20192,737.19Jointliabilityguarantee2yearsNoNoTotalamountofguaranteeprovidedforsubsidiariesapprovedduringthereportingperiod(B1)709,675.19Totalamountofguaranteeprovidedforsubsidiariesduringthereportingperiod(B2)381,237.96Totalamountofguaranteeprovidedforsubsidiariesapprovedasattheendofthereportingperiod(B3)1,138,460.39Totalbalanceofguaranteeprovidedforsubsidiariesasattheendofthereportingperiod(B4)178,304.35GuaranteesbetweensubsidiariesNameofobligeeDateoftherelatedannouncementdisclosingtheguaranteeamountAmountofguaranteeGuaranteedateGuaranteeprovidedTypeofguaranteeTermFulfilledornotGuaranteetorelatedpartiesornotChinaHaidaFeedGroup(HK)Limited16April201940,0007May20191,008.35Jointliabilityguarantee1yearNoNoChinaHaidaFeedGroup(HK)Limited29June201910,000ShengLongBio-TechInternationalCo.,Ltd29June201914,700AlaerRuilihengBiologicalProteinCo.,Ltd.26November20193,273.3426November20190Pledge2yearsNoNoTotalamountofguaranteebetweensubsidiariesapprovedduringthereportingperiod(C1)67,973.34Totalamountofguaranteebetweensubsidiariesduringthereportingperiod(C2)1,008.35Totalamountofguaranteebetweensubsidiariesapprovedasattheendofthereportingperiod(C3)67,973.34Totalbalanceofguaranteebetweensubsidiariesasattheendofthereportingperiod(C4)0Totalamountofguaranteeprovided(i.e.sumoftheabovethreeguaranteeamounts)Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited78Totalamountofguaranteeapprovedduringthereportingperiod(A1+B1+C1)782,048.53Totalamountofguaranteeduringthereportingperiod(A2+B2+C2)384,006.66Totalamountofguaranteeapprovedasattheendofthereportingperiod(A3+B3+C3)1,213,892.63Totalbalanceofguaranteeasattheendofthereportingperiod(A4+B4+C4)179,809.90Thepercentageoftotalamountofguaranteeprovided(i.e.A4+B4+C4)tothenetassetsoftheCompany19.75%Ofwhich:Balanceofguaranteeprovidedforshareholders,beneficialcontrollersanditsrelatedparties(D)0Balanceofguaranteedirectlyorindirectlyprovidedforobligorswithgearingratioover70%(E)34,627.69Totalamountofguaranteeprovidedinexcessof50%ofnetassets(F)0Sumoftheabovethreeamountofguarantee(D+E+F)34,627.69Explanationsonliabilitytoguaranteeoccurredduringthereportingperiodorpossiblejointliabilityforsatisfactionforundueguarantee(ifany)NotapplicableExplanationsonprovisionofguaranteeinviolationofestablishedproceduresNotapplicableNotes:1.Theguaranteeamountsprovidedbysubsidiariesforexternalpartiesarecalculatedaccordingtotheequity-holdingpercentagesoftheCompanyinthosesubsidiaries.2.Theforeign-currencyguaranteesinthetableaboveareconvertedatthemiddlerateofexchangeattheendofthereportingperiod.Detailsaboutcompositeguarantees(2)Externalguaranteesagainsttherulesandregulations□Applicable√NotapplicableTherewasnoexternalguaranteeprovidedbytheCompanywhichwasagainsttherulesandregulationsduringthereportingperiod.3.Entrustedcashandassetmanagement(1)Entrustedwealthmanagement√Applicable□NotapplicableEntrustedwealthmanagementduringthereportingperiodUnit:RMB0’000Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited79TypeFundsourceforentrustedwealthmanagementAmountofentrustedwealthmanagementUnduebalanceOverdueoutstandingamountWealthmanagementproductsofbanksOwnedfunds43,00000Total43,00000Particularsofhighriskwealthmanagementproductswithindividualsignificantamountorlowsecurity,poorliquidity,andnon-principalguaranteed□Applicable√NotapplicableUnabletorecovertheprincipalofentrustedwealthmanagementorothercircumstancesthatmayresultinimpairment□Applicable√Notapplicable(2)Entrustedloans□Applicable√NotapplicableTheCompanydidnothaveanyentrustedloanduringthereportingperiod.4.Othermaterialcontracts□Applicable√NotapplicableTheCompanydidnothaveanyothermaterialcontractduringthereportingperiod.XVIII.FulfillmentofSocialResponsibility1.FulfillmentofsocialresponsibilityPleaserefertothe“HaidGroup:SocialResponsibilityReport2019”(《海大集团:2019年度社会责任报告》)disclosedbytheCompanyonthemediadesignatedforinformationdisclosure.2.PerformanceofSocialResponsibilityforTargetedpovertyalleviation(1)TargetedpovertyalleviationplanTheCompanyproactivelyrespondstothespiritundertheDecisionoftheCentralCommitteeoftheChineseCommunistPartyandtheStateCouncilonTacklingKeyProblemsinPovertyAlleviation(《中共中央、国务院关于打赢脱贫攻坚战的决定》)andOpinionsofChinaSecuritiesRegulatoryCommissiononGivingPlaytotheRoleofCapitalMarketinServingthePovertyAlleviationStrategyoftheState(《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》),andhasformulatedindustrialpovertyalleviationprogramsandworkplanstoassistaccretepovertyalleviation.ByleveragingontheadvantagesoftheCompanyintermsofindustry,talents,andresourcesanddirectinvestmentineducationassistanceandindustrialdevelopment,theCompanydevotedtoeducation,povertyalleviationthroughtransferemployment,andothersocialwelfareundertakingsandproactivelyperformssocialresponsibilities.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited80(2)SummaryoftargetedpovertyalleviationintheyearDuringthereportingperiod,theCompanyactivelypromotedtheimplementationofpovertyalleviationprojects.1)ProactivelycarryingoutpovertyalleviationprojectsthroughindustrialdevelopmentTheCompanyalwaysregardspovertyalleviationasanimportantissuefortheCompanytofulfillitssocialresponsibilities.Inimplementingthestrategiclayout,theCompanygivesprioritytoestablishmentofproductionbasesinpoorcounties/districts/villages(hereinafterreferredtoas"Poverty-strickenAreas").Duringthereportingperiod,theCompanyconductedinvestmentinestablishmentofquiteanumberofsubsidiariesandproactivelypushedforwardtheconstructionandoperationandtheprojectsinseveralPoverty-strickenAreasincludingHuayuanCountyandBaojingCountyintheTujiaandMiaoAutonomousPrefectureofXiangxiofHunanProvince,andShouCountyinHuainanCityofAnhuiProvince.Duringthereportingperiod,thetotalassetsofthebusinessprojectssetupforpovertyalleviationamountedtoapproximatelyRMB5.60million.Duringthereportingperiod,theCompany,asalways,proactivelyrespondedtothecalloftheCommitteeoftheCommunistPartyoftheGuangzhouMunicipalityandtheGuangdongProvinceandthegovernmentoftheGuangzhouMunicipalityforthecounterpartsupportprogram.Inordertocarryoutthe“100EnterprisesSupport100Villages”programofQingyuanCity,theleadersofsubsidiaryQingyuanHaibeipersonallyvisitedWoshuiVillageinWoshuiTownofLiannanCountyon3December2019toexploreeffectiveapproachesofpovertyalleviationthroughindustrialdevelopment.Thiswasaneffectivemovetohelpthepoorvillageandthepeopletheretodeveloptheirspecialtyindustryandcreatejobsandtohelpthemfighttheirownwayoutofpoverty.TheCompanyhasfullyfulfilleditssocialresponsibility.2)ProactivelycarryingoutpovertyalleviationthrougheducationSince2016,theCompanyhaspersistedincarryingoutpublicbenefitactivitiesthemedby"prosperingfarmersandsupportingeducation"andpaidcontinuousattentiontounderprivilegedchildreninruralareas.Duringthereportingperiod,theCompanycarriedouta“2019AutumnScholarships”eventatGuihouVillageinYanxiTownofChangtaiCountyofZhangzhouofFujian,providingscholarshipsofmorethanRMB50,000for25poorstudentsinthevillage(aboutRMB2,000foreach).3)ProactivelyparticipatinginsocialpovertyalleviationactivitiesDuringthereportingperiod,theCompanycontinuedtoimplementthepovertyalleviationplanningofthenational,provincialandmunicipalgovernments,andkeepaneyeonthoseinneed.Duringthereportingperiod,theCompanydonatedtopovertyalleviationfunds,helpedtargetedpoorfamilies,anddonatedtothegovernment’spovertyalleviationprograms.ItdonatedmoneyandsuppliesofRMB416,500topoverty-strickenareasinGuangxiProvince,FujianProvince,etc.,whichwereusedtohelpalleviatepoverty,improveeducation,improvethelivingenvironment,purchasesocialinsurance,etc.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited81(3)TargetedpovertyalleviationachievementsIndicatorsUnitofmeasurementQuantity/developmentsituationI.Generalinformation————Including:1.FundsRMB0'00041.65II.Sub-iteminvestment————1.Povertyeliminationthroughindustrialdevelopment————Including:1.1Typesofindustrialdevelopmentpovertyeliminationprojects——Agricultureandforestryindustrypovertyalleviation2.Povertyeliminationthroughshiftofoccupation————3.Povertyeliminationthroughrelocation————4.Povertyeliminationthrougheducation————Including:4.1InputoffundingpoorstudentsRMB0'00054.2NumberofpoorstudentsfundedNumberofpeople255.Povertyalleviationthroughimprovementinhealth————6.Povertyalleviationthroughecologicalprotection————7.Minimumguarantee————8.Socialpovertyalleviation————8.3InputtopovertyalleviationfundsRMB0'0000.59.Otherprojects————9.2InputRMB0'00036.15III.Awardsgranted(description,level)————Top10ChineseListedCompaniesinSocialResponsibility2017(SpecialAwardforContributionsinPovertyAlleviation)Guangdong-HongKong-MacauGreaterBayAreaCorporateSocialResponsibilityAward2017—ForContributionsinTargetedPovertyAlleviationAdvancedEntityinthePovertyAlleviationWorkoftheFeedIndustryin2018Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited82(4)SubsequenttargetedpovertyalleviationplanTheCompanywillcontinuetoproactivelyrespondtothecallofthecountrytogivefullplaytotheCompany'sadvantagesintermsofindustries,talentsandresources,engageintargetedpovertyalleviationwitharelentlesseffort,andpromoteorganicintegrationbetweeneconomicvaluecreationandsocialresponsibilityfulfillment.3.InformationonenvironmentalprotectionWhethertheCompanyanditssubsidiariesarekeypollutantdischargingunitsaspublishedbytheenvironmentalprotectionauthorityYesNameofthecompanyorsubsidiaryNamesofmajorpollutantsandcharacteristicpollutantsDischargemethodOutletquantityOutletdistributionEmissionconcentrationPollutantdischargestandardsTotaldischargeTotaldischargeapprovedExcessivedischargeZhuhaiRongchuanFeedCo.,Ltd.(ZhuhaiRongchuan)Exhaustgas:sulfurdioxide,nitrogenoxides,particles(others),dust,odorExhaustgas:organizeddischarge3Boilerexhaustgasoutlet;dustoutlet;sootexhaustgasoutlet;exhaustgasoutletExhaustgas:Sulfurdioxide<50mg/m3;nitrogenoxides<150mg/m3;particles(others)<20mg/m3;dust<120.12mg/m3;odor(dimensionless):977EmissionStandardofAirPollutantsforBoiler(GB13271-2014);EmissionLimitsofAirPollutants(DB-44/27-2001);EmissionStandardsforOdorPollutants(GB-14554-93)Exhaustgas<4,285.43millionm3yearExhaustgas:4,285.43millionm3/yearNoGuangzhouHaiweiFeedCo.,Ltd.(GuangzhouHaiwei)Sewage:COD,BOD5,ammonianitrogen,PHvalue,phosphate,animalandvegetableoilsMunicipalpipenetwork1TotaloutletCOD:75.1mg/l;PHvalue:6.98;BOD5:21.4mg/L;suspendedmatter:41mg/L;ammonianitrogen:0.089mg/L;phosphate:0.04mg/L;animalandvegetableoils<0.04mg/LThedischargelimitsofwaterpollutantsinGuangdong(DB-44/26-2001)thesecondtimeperiodsecond-levelSewage:4,800tons/yearSewage:5,300tons/yearNoSewage:Munic1TotalCOD:75.1mg/l;ThedischargelimitsofwaterpollutantsinSewagSewaNoFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited83COD,BOD5,ammonianitrogen,PHvalue,phosphate,animalandvegetableoilsipalpipenetworkoutletPHvalue:6.98;BOD5:21.4mg/L;suspendedmatter:41mg/L;ammonianitrogen:0.089mg/L;phosphate:0.04mg/L;animalandvegetableoils<0.04mg/LGuangdong(DB-44/26-2001)thesecondtimeperiodsecond-levele:4,800tons/yearge:5,300tons/yearExhaustgas:particles,sulfurdioxide,nitrogenoxides,carbonmonoxide,lampblack,odor,sootDischargeaftersewagetreatment4Boilerchimney,canteenchimney,workshopexhaustgasoutletParticles:20mg/m3;sulfurdioxide:6mg/m3;nitrogenoxide:90mg/m3;soot:0.14mg/m3;ozone(dimensionless):17;soot:11mg/m3EmissionStandardofAirPollutantsforBoilers(DB-44/765-2010)gasstandard;EmissionLimitsofAirPollutants(DB-44/27-2001)thesecondtimeperiodsecond-level;EmissionStandardofCookingFume(GB18483-2001);EmissionStandardsforOdorPollutantsExhaustgas:50.82millionm3/yearExhaustgas:64.27millionm3/yearNoGuangzhouDachuanFeedCo.,Ltd.(GuangzhouDachuan)Sewage:COD,BOD5,ammonianitrogen,PHvalue,suspendedmatter,animalandvegetableoilsMunicipalpipenetwork1SewageoutletCOD:70-100mg/L;ammonianitrogen:24-25mg/L;PHvalue:6-9;TP:<1mg/L;TA:160-170mg/LTheDischargeLimitsofWaterPollutantsinGuangdong(DB-44/26-2001)thesecondtimeperiodfirst-levelSewage:3,800tons/yearSewage:4,860tons/yearNoExhaustgas:particles,sulfurdioxide,nitrogenoxides,carbonmonoxide,odorDischargeaftersewagetreatment4Boilerexhaustgasoutlet;dustoutlet;sootexhaustgasoutlet;COD:10mg/L,BOD5:3.7m/L,ammonianitride:0.05mg/L,PHvalue:7.86(dimensionless):suspendedmatter:11mg/L0.12mg/LEmissionStandardofAirPollutantsforBoilers(DB-44/765-2010)gasstandard;EmissionLimitsofAirPollutants(DB-44/27-2001)thesecondtimeperiodsecond-levelandconcentrationlimitsofunorganizedemissionmonitoringpointforthesecondtimeperiod;EmissionStandardofCookingFume(GB18483-2001);EmissionStandardsforOdorPollutants(GB14554-93)boundarysecond-levelExhaustgas:105millionm3;odor:6tons/yearExhaustgas:1,586.205millionm3/yearNoFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited84exhaustgasoutletGaozhouSanheAnimalHusbandryCo.,Ltd.(“GaozhouSanhe”)Sewage:COD,ammonianitrogen,BOD,TP,suspendedmatterDischargeaftersewagetreatment1SewageoutletCOD:80-100mg/L;ammonianitride:0.5-0.9mg/L;TP:2.9mg/L;PHvalue:6-7;TA:50-70mg/LPollutantDischargeStandardsforLivestockandPoultryFarmingIndustry(DB44/613-2009)127,700tons128,000tonsNoLinxiCountyHaiyingFoodCo.,Ltd.(LinxiHaiying)Sewage:COD,ammonianitride,BOD,TP,TN,PH,suspendedmatter,animalandvegetableoils,fecalcoliform,anionicsurfactantExhaustgas:sulfurdioxide,nitrogenoxides,smokeblackness,particulatematter,odorconcentration,hydrogensulfide,ammoniaSewage:dischargedintothemunicipalpipenetworkafterreachingthestandardExhaustgas:organizeddischarge61sewage,2boilers,3exhaustgasesCOD:100mg/L;BOD:40mg/L;SS:100mg/L;ammonianitride:20mg/L;TN:40mg/L;TP:3mg/L;PHvalue:6-9;animalandvegetableoils:20mg/L;sulfurdioxide:10mg/m3nitrogenoxide:30mg/m3;particulatematter:5mg/m3;ammonia:4.9kg/h;hydrogensulfide:0.33kg/h;odorconcentration(dimensionless):2000Sewage:SecondarystandardofDischargestandardofWaterPollutantsforMeatPackingIndustry(GB13457-1992);Exhaustgas:EmissionstandardofAirPollutantsforBoiler(GB13271-2014)(XQLB[2018]No.91)EmissionStandardforOdorPollutants(GB14554-1993)10.129tons/year10.129tons/yearNoConstructionandoperationofpollutionpreventionandcontrolfacilitiesFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited851.Duringthereportingperiod,theCompany’skeypollutantdischargingsubsidiarieswereallequippedwithpollutionpreventionandcontrolfacilitiesasrequiredandallenvironmentalprotectionfacilitieswereoperatingnormally.2.GaozhouSanhe’sfarmswereequippedwithpollutionpreventionandcontrolfacilitiesasrequiredandallenvironmentalprotectionfacilitieswereoperatingnormally.3.InfactoriesofGuangzhouDachuanandGuangzhouHaiwei,thedustofwastegasisremovedthroughcycloneseparatorandpulsedustcollector,anditsstenchisremovedbysprayequipment.AfterthewastewateristreatedbyA2/oprocess,itisrecycledtothespraytower.Thewasteresidueishandedovertotheunitwithtreatmentqualificationforunifiedrecoveryandtreatment.4.ZhuhaiRongchuanadoptsotherenvironmental-protectionprocessaccordingtoitsownproductionsituation:thedustofwastegasisremovedthroughcycloneseparatorandpulsedustcollector,anditsstenchisremovedbychemicaldosingsprayequipment.Afterthewastewateristreatedbyairflotationandbiochemicaltreatment,itisrecycledtothespraytower,whichcansavewaterresources.5.LinxiHaiyingadoptsthespraytower,activatedcarbonandhotocatalysistohandlethewastegaseffectively,whichreducesthecontentofammoniaandhydrogensulfideinthewastegas.EnvironmentalImpactAssessmentandOtherEnvironmentalProtectionAdministrativeLicensingofConstructionProjectsAlltheaforementionedfeedfactoriespreparedenvironmentalimpactreportsbeforeprojectimplementationandsubmittedtotheenvironmentalauthorityforreviewandapprovalinaccordancewiththerequirementsofenvironmentallawsandregulations.Theycommencedprojectconstructionafterobtainingtheapprovalandcarriedoutconstructionworksstrictlyinaccordancewiththerequirementsofenvironmentalimpactassessment.Furthermore,theywentthroughtheproceduresfortheacceptanceofprojectcompletionforenvironmentalimpactassessmentinaccordancewithlawsandobtainedthepollutantdischargepermit.EmergencyplanforemergentenvironmentalincidentsTheCompanyhasformulatedtheMeasuresforManagementofSafetyandEnvironmentalProtectionIncidents(安全环保事故事件管理办法)in2018tostandardizetheCompany'ssafetyandenvironmentalaccidentreportingandinvestigationproceduresandenhancethelevelofaccidentmanagement.Meanwhile,aspertherulesforthepreventionofpollutionandotherpublichazardsintheEnvironmentalProtectionLawofthePeople’sRepublicofChina,anemergencyplansystemforurgentenvironmentalincidentshasalsobeformulatedandfiledwiththeenvironmentalprotectionandotherrelatedadministrations.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited86Self-monitoringprogramforenvironmentInaccordancewithnationalorlocalstandardsforpollutantdischarge(control),environmentalimpactassessmentreportsandofficialreplies,andtechnicalspecificationrequirementsofenvironmentmonitoring,theCompanyformulatesself-monitoringplansanddesignatesspecialpersonneltocarryoutroutinemonitoring,includingthemonitoringofthedischargeofwaterpollutantsandatmosphericpollutants.Somesubsidiariesappointexternalprofessionalinstitutionstocarryoutphasedenvironmentmonitoringandintensifytheirsupervisionoverenvironmentalprotectionthroughthecombinationofself-monitoringandprofessionalmonitoringbythirdparties.1.DuringtheReportingPeriod,GuangzhouDachuanappointedGuangzhouDelongEnvironmentalTestingTechnologyCo.,Ltd.,athird-partyindependentinstitutiontocarryoutmonitoringontheParticulatematter,gaseouspollutantsandodor.ThemonitoringreportwiththeNo.DL201905-A0603wasproduced,provingthattheresultsmetthestandards.2.DuringtheReportingPeriod,GuangzhouHaiweiappointedGuangdongAnnaTestingTechnologyCo.,Ltd.,athird-partyindependentinstitutiontotesttheammonia,hydrogensulfide,methylmercaptan,methylsulfide,dimethyldisulfideandodor.ThetestreportwiththeAnaTest(2019)No.121608wasproduced,provingthattheresultsmetthestandards.3.DuringtheReportingPeriod,ZhuhaiRongchuanappointedGuangdongSigorTestingTechnologyCo.,Ltd.,athird-partyindependentinstitutiontotesttheparticles,hydrogensulfide,ammonia,trimethylamine.ThetestreportwiththeNo.SGT-HJ19070401awasproduced,provingthattheresultsmetthestandards.4.DuringtheReportingPeriod,LinxiHaiyingappointedHebeiJingdingEnvironmentalMonitoringCo.,Ltd.athird-partyindependentinstitutiontotesttheconcentrationsofsulfurdioxide,nitrogenoxide,particulatematter,smokeblacknessandthePHvalueofwastewater,COD,ammonianitrogen,TP,TN,SS,animalandvegetableoils,BODS,fecalcoliformnumber,anionicsurfactant.Thetestreportwiththe2019(environment)No.0245wasproduced,provingthatresultsmetthestandards.OtherenvironmentalinformationthatshouldbedisclosedNoneOthersinformationonenvironmentalprotectionNoneFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited87XIX.OtherMattersofSignificance□Applicable√NotapplicableTheCompanydidnothaveanyothermattersofsignificancetobeexplainedduringthereportingperiod.XX.MattersofSignificanceofSubsidiariesoftheCompany□Applicable√NotapplicableFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited88SectionVI.ShareChangesandShareholderInformationIShareChanges1.ShareChangesUnit:shareBeforeIncrease/decreaseinReportingPeriod(+/-)AfterSharesPercentage(%)NewissueSharesasdividendconvertedfromretainedearningsSharesasdividendconvertedfromcapitalreservesOtherSubtotalSharesPercentage(%)1.Restrictedshares36,447,5142.31%-9,582,525-9,582,52526,864,9891.70%1.3Sharesheldbyotherdomesticinvestors36,447,5142.31%-9,582,525-9,582,52526,864,9891.70%2.Non-restrictedshares1,544,763,57097.69%89,8508,639,0858,728,9351,553,492,50598.30%2.1RMBcommonshares1,544,763,57097.69%89,8508,639,0858,728,9351,553,492,50598.30%3.Totalshares1,581,211,084100.00%89,850-943,440-853,5901,580,357,494100.00%Reasonsforsharechanges:√Applicable□Notapplicable1.BasedontheshareholdingsoftheCompany’sdirectors,supervisorsandseniormanagementintheCompanyattheendoflastyear,theirtradableshareswererecalculatedatthebeginningofthecurrentyear,resultinginchangesintheirsharesinlockup.2.ShareoptionswereexercisedundertheRestrictedShareandShareOptionIncentivePlan(《限制性股票与股票期权激励计划》).Duringthereportingperiod,theawardeesoftheRestrictedShareandShareOptionIncentivePlan(《限制性股票与股票期权激励计划》)chosetoexercise76,950shareoptionsinthethirdexerciseperiod.Thenumberoftheshareoptionsthatawardeeschosetoexercisebutwereunregisteredwas12,900asattheendoflastyear.Assuch,theCompany’stotalsharesincreasedby89,850shares.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited893.Certainrestrictedshareswererepurchasedandcancelledunderthe2016RestrictedShareIncentivePlan(Revised)(《2016年限制性股票激励计划(修订稿)》).(1)Ascertainawardeesofthe2016RestrictedShareIncentivePlan(Revised)(《2016年限制性股票激励计划(修订稿)》)hadresigned,beendismissedorfailedintheirindividualperformanceappraisalsof2018,amongothers,theCompanyrepurchasedandcancelledatotalof430,000restrictedsharesthathadbeengrantedtothesaidawardeesbutfailedtomeettheunlockingconditions.On16April2019,theCompanydisclosedtheAnnouncementonDecreaseinCapitalduetoRepurchaseandCancellationofCertainRestrictedShares(《关于回购注销部分限制性股票的减资公告》)(announcementNo.2019-012)andpublicizedthecapitaldecreasematterfor45days.Asof5June2018,theCompanyhadreturnedatotalofRMB3,373,056.00totherelevantawardeesincash,thusreducingthesharecapitalbyRMB430,000.00andthecapitalreservesbyRMB2,943,056.00.ThisdecreaseincapitalwasverifiedbyGPCertifiedPublicAccountants(LLP),whichissuedtheCapitalVerificationReportGHYZ[2019]No.G18031441713(广会验字[2019]G18031441713号《验资报告》).On19June2019,asconfirmedbytheShenzhenbranchofChinaSecuritiesDepositoryandClearingCo.,Ltd.,theCompanycompletedtherepurchaseandcancellationofthesaidrestrictedshareswiththesaidauthority.Assuch,theCompany’stotalsharesdecreasedby430,000shares.(2)Ascertainawardeesofthe2016RestrictedShareIncentivePlan(Revised)(《2016年限制性股票激励计划(修订稿)》)hadresignedorbeendismissed,amongothers,theCompanyrepurchasedandcancelledatotalof513,440restrictedsharesthathadbeengrantedtothesaidawardeesbutfailedtomeettheunlockingconditions.On22October2019,theCompanydisclosedtheAnnouncementonDecreaseinCapitalduetoRepurchaseandCancellationofCertainRestrictedShares(《关于回购注销部分限制性股票的减资公告》)(announcementNo.2019-070)andpublicizedthecapitaldecreasematterfor45days.Asof16December2019,theCompanyhadreturnedatotalofRMB3,671,557.60totherelevantawardeesincash,thusreducingthesharecapitalbyRMB513,440.00andthecapitalreservesbyRMB3,158,117.60.ThisdecreaseincapitalwasverifiedbyGrantThorntonChina(SpecialGeneralPartnership),whichissuedtheCapitalVerificationReportZTYZ[2019]No.440ZC0270(致同验字(2019)第440ZC0270号《验资报告》).On30December2019,asconfirmedbytheShenzhenbranchofChinaSecuritiesDepositoryandClearingCo.,Ltd.,theCompanycompletedtherepurchaseandcancellationofthesaidrestrictedshareswiththesaidauthority.Assuch,theCompany’stotalsharesdecreasedby513,440shares.Afterallthechangesabove,theCompany’stotalshareshavechangedfrom1,581,211,084sharesto1,580,357,494shares.Approvalofsharechanges:√Applicable□Notapplicable1.On13April2019,theProposalonRepurchaseandCancellationofCertainRestrictedShares(《关于回购注销部分限制性股票的议案》)wasreviewedandapprovedattheSeventeenthMeetingoftheCompany’sFourthBoard.As18awardeesofrestrictedsharesand18awardeesofreservedrestrictedsharesinthefirstgranthadresigned,beendismissedorfailedtopassthepersonalperformanceappraisalsof2018,amongothers,theCompanywasagreedtorepurchaseandcancel309,400restrictedsharesinthefirstgrantand120,600reservedrestrictedsharesthathadbeengrantedtotheseawardeesbutfailedtomeettheunlockingconditions.AndtheFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited90ProposalonRepurchaseandCancellationofCertainRestrictedShares(《关于回购注销部分限制性股票的议案》)hasbeenreviewedandapprovedatthe2018AnnualGeneralMeeting.2.On18October2019,theProposalonRepurchaseandCancellationofCertainRestrictedShares(《关于回购注销部分限制性股票的议案》)wasreviewedandapprovedattheFifthMeetingoftheCompany’sFifthBoard.As29awardeesofrestrictedsharesand14awardeesofreservedrestrictedsharesinthefirstgranthadresignedorbeendismissed,amongothers,theCompanywasagreedtorepurchaseandcancel431,400restrictedsharesinthefirstgrantand82,040reservedrestrictedsharesthathadbeengrantedtotheseawardeesbutfailedtomeettheunlockingconditions.AndtheProposalonRepurchaseandCancellationofCertainRestrictedShares(《关于回购注销部分限制性股票的议案》)hasbeenreviewedandapprovedattheFourthExtraordinaryGeneralMeetingof2019.Transferofshareownership:□Applicable√NotapplicableImplementationprogressofanysharerepurchase:□Applicable√NotapplicableImplementationprogressofanyreductionoftherepurchasedsharesthroughcentralizedbidding:□Applicable√NotapplicableEffectsofsharechangesonthebasicearningspershare,dilutedearningspershare,equitypershareattributabletothecommonshareholdersoftheCompanyandotherfinancialindicatorsoftheprioryearandthepriorperiod,respectively:□Applicable√NotapplicableOtherinformationthattheCompanyconsidersnecessaryorisrequiredbythesecuritiesregulatortobedisclosed:□Applicable√Notapplicable2.ChangeinRestrictedShares√Applicable□NotapplicableUnit:shareShareholderOpeningrestrictedsharesIncreasedinReportingPeriodUnlockedinReportingPeriodClosingrestrictedsharesReasonforlockupDateofunlockingLiTian1,347,90531,4801,379,385Sharesinlockupduetoherseniormanagementposition:31,480restrictedsharesweretransferredtohersharesinlockupduetoherseniormanagementpositionuponbeingunlockedduringthereportingperiod.NotapplicableLiTian125,92031,48094,440Restrictedshares:31,480restrictedshareswereunlocked30April2019Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited91duringthereportingperiod.XueqiaoQian251,67522,300273,975Sharesinlockupduetohisseniormanagementposition:22,300restrictedsharesweretransferredtohissharesinlockupduetohisseniormanagementpositionuponbeingunlockedduringthereportingperiod.NotapplicableXueqiaoQian89,20022,30066,900Restrictedshares:22,300restrictedshareswereunlockedduringthereportingperiod.30April2019ShaolinYang241,14022,44082,725180,855Sharesinlockupduetohisseniormanagementposition:1.Thesharesinlockupduetohisseniormanagementpositiondecreasedby82,725sharesupontherecalculationofhistransferablesharesintheyearaccordingtohisshareholdingson1January2019;2.22,440restrictedsharesweretransferredtohissharesinlockupduetohisseniormanagementpositionuponbeingunlockedduringthereportingperiod.NotapplicableShaolinYang89,76022,44067,320Restrictedshares:22,440restrictedshareswereunlockedduringthereportingperiod.30April2019ZhijianHuang302,11427,520329,634Sharesinlockupduetohisseniormanagementposition:27,520restrictedsharesweretransferredtohissharesinlockupduetohisseniormanagementpositionuponbeingunlockedduringthereportingperiod.NotapplicableZhijianHuang110,08027,52082,560Restrictedshares:27,520restrictedshareswereunlockedduringthereportingperiod.30April2019ZhongzhuChen465,700130,530335,170Restrictedshares:130,530restrictedshareswereunlockedduringthereportingperiod.NotapplicableQiCheng100,00030,00070,000Restrictedshares:70,000restrictedshareswereunlockedNotapplicableFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited92duringthereportingperiod.XiewuJiang89,04022,26066,780Restrictedshares:22,260restrictedshareswereunlockedduringthereportingperiod.NotapplicableGuoxiangLiu500,700140,530360,170Restrictedshares:140,530restrictedshareswereunlockedduringthereportingperiod.NotapplicableGuochengMi492,680138,920353,760Restrictedshares:138,920restrictedshareswereunlockedduringthereportingperiod.NotapplicableOtherrestrictedshareawardeesthanseniormanagement32,241,6009,037,56023,204,040Restrictedshares:1.Atotalof8,094,120restrictedshareswereunlockedduringthereportingperiod;2.Atotalof943,440restrictedshareswererepurchasedandcancelledduringthereportingperiod.30April2019Total36,447,514103,7409,686,26526,864,989----IIIssuanceandListingofSecurities1.Securities(ExclusiveofPreferredShares)IssuedinReportingPeriod□Applicable√Notapplicable2.ChangeinTotalShares,ShareholderStructureandAssetandLiabilityStructures√Applicable□Notapplicable1.Ascertainawardeesofthe2016RestrictedShareIncentivePlan(Revised)(《2016年限制性股票激励计划(修订稿)》)hadresigned,beendismissedorfailedintheirindividualperformanceappraisalsof2018,amongothers,theCompanyrepurchasedandcancelledatotalof430,000restrictedsharesthathadbeengrantedtothesaidawardeesbutfailedtomeettheunlockingconditions.On16April2019,theCompanydisclosedtheAnnouncementonDecreaseinCapitalduetoRepurchaseandCancellationofCertainRestrictedShares(《关于回购注销部分限制性股票的减资公告》)(announcementNo.2019-012)andpublicizedthecapitaldecreasematterfor45days.Asof5June2019,theCompanyhadreturnedatotalofRMB3,373,056.00totherelevantawardeesincash,thusreducingthesharecapitalbyRMB430,000.00andthecapitalreservesbyRMB2,943,056.00.ThisdecreaseincapitalwasverifiedbyGPCertifiedPublicAccountants(LLP),whichissuedtheCapitalVerificationReportGHYZ[2019]No.G18031441713(广会验字[2019]G18031441713号《验资报告》).On19June2019,asconfirmedbytheShenzhenbranchofChinaSecuritiesDepositoryandClearingCo.,Ltd.,theCompanycompletedtherepurchaseandcancellationofthesaidrestrictedshareswiththesaidauthority.Assuch,theCompany’stotalsharesdecreasedby430,000shares.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited932.Ascertainawardeesofthe2016RestrictedShareIncentivePlan(Revised)(《2016年限制性股票激励计划(修订稿)》)hadresignedorbeendismissed,amongothers,theCompanyrepurchasedandcancelledatotalof513,440restrictedsharesthathadbeengrantedtothesaidawardeesbutfailedtomeettheunlockingconditions.On22October2019,theCompanydisclosedtheAnnouncementonDecreaseinCapitalduetoRepurchaseandCancellationofCertainRestrictedShares(《关于回购注销部分限制性股票的减资公告》)(announcementNo.2019-070)andpublicizedthecapitaldecreasematterfor45days.Asof16December2019,theCompanyhadreturnedatotalofRMB3,671,557.60totherelevantawardeesincash,thusreducingthesharecapitalbyRMB513,440.00andthecapitalreservesbyRMB3,158,117.60.ThisdecreaseincapitalwasverifiedbyGrantThorntonChina(SpecialGeneralPartnership),whichissuedtheCapitalVerificationReportZTYZ[2019]No.440ZC0270(致同验字(2019)第440ZC0270号《验资报告》).On30December2019,asconfirmedbytheShenzhenbranchofChinaSecuritiesDepositoryandClearingCo.,Ltd.,theCompanycompletedtherepurchaseandcancellationofthesaidrestrictedshareswiththesaidauthority.Assuch,theCompany’stotalsharesdecreasedby513,440shares.Afterallthechangesabove,theCompany’stotalshareshavechangedfrom1,581,211,084sharesto1,580,357,494shares.3.ExistingStaff-HeldShares□Applicable√NotapplicableIIIShareholdersandActualController1.ShareholdersandTheirShareholdingsatPeriod-EndUnit:shareCommonshareholdersatperiod-end12,026Commonshareholdersatmonth-endpriortodisclosureofthisReport13,077Preferredshareholderswithresumedvotingrightsatperiod-end(ifany)(seenote8)0Preferredshareholderswithresumedvotingrightsatmonth-endpriortodisclosureofthisReport(ifany)(seenote8)05%orgreatershareholdersortop10shareholdersNameofshareholderNatureofshareholderShareholdingpercentageatperiod-end(%)SharesChangeduringReportingPeriodRestrictedsharesNon-restrictedsharesPledgedorfrozensharesStatusSharesFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited94GuangzhouHaihaoInvestmentCo.,Ltd.Domesticnon-state-ownedjuridicalperson57.62%910,589,359-910,589,359Pledged39,609,000HongKongSecuritiesClearingCompanyLtd.Foreignjuridicalperson4.55%71,913,31331,712,09771,913,313NorgesBank–ProprietaryFundForeignjuridicalperson1.43%22,648,217-8,965,57422,648,217IndustrialandCommercialBankofChina-InvescoGreatWallNewlyGrowthMixedSecuritiesInvestmentFundOther1.27%19,999,9225,766,71919,999,922CentralHuijinAssetManagementLtd.State-ownedjuridicalperson1.09%17,187,600-17,187,600AbuDhabiInvestmentAuthorityForeignjuridicalperson0.72%11,329,2541,906,10511,329,254BankofChina-InvescoGreatWallDingyiMixedSecuritiesInvestmentFund(LOF)Other0.70%11,110,000-720,00011,110,000NationalSocialSecurityFundPortfolio118Other0.52%8,176,6082,965,2188,176,608NationalSocialSecurityFundPortfolio104Other0.49%7,741,4757,741,4757,741,475BasicEndowmentInsuranceFundPortfolio1001Other0.46%7,270,4794,449,6247,270,479Strategicinvestororgeneraljuridicalpersonbecomingtop-10shareholderduetoplacingofnewshares(ifany)(seenote3)N/AFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited95Relatedoracting-in-concertpartiesamongshareholdersaboveAmongthetop10shareholdersabove,thefirstshareholderisthecontrollingshareholderoftheCompany,whichisneitherarelatedpartynoranacting-in-concertpartytotheothershareholders.Itisunknownwhetherthereis,amongtheothershareholders,anyacting-in-concertpartyasdefinedintheAdministrativeMeasuresOnAcquisitionOfListedCompanies(《上市企业收购管理办法》)oranyrelatedparty.Top10non-restrictedshareholdersNameofshareholderNon-restrictedsharesheldatperiod-endTypeofsharesTypeSharesGuangzhouHaihaoInvestmentCo.,Ltd.910,589,359RMBcommonstock910,589,359HongKongSecuritiesClearingCompanyLtd.71,913,313RMBcommonstock71,913,313NorgesBank–ProprietaryFund22,648,217RMBcommonstock22,648,217IndustrialandCommercialBankofChina-InvescoGreatWallNewlyGrowthMixedSecuritiesInvestmentFund19,999,922RMBcommonstock1,999,992CentralHuijinAssetManagementLtd.17,187,600RMBcommonstock17,187,600AbuDhabiInvestmentAuthority11,329,254RMBcommonstock11,329,254BankofChina-InvescoGreatWallDingyiMixedSecuritiesInvestmentFund(LOF)11,110,000RMBcommonstock11,110,000NationalSocialSecurityFundPortfolio1188,176,608RMBcommonstock8,176,608NationalSocialSecurityFundPortfolio1047,741,475RMBcommonstock7,741,475BasicEndowmentInsuranceFundPortfolio10017,270,479RMBcommonstock7,270,479Relatedoracting-in-concertpartiesamongtop10non-restrictedcommonshareholders,aswellasbetweentop10non-restrictedcommonshareholdersandtop10commonshareholdersAmongthetop10shareholdersabove,thefirstshareholderisthecontrollingshareholderoftheCompany,whichisneitherarelatedpartynoranacting-in-concertpartytotheothershareholders.Itisunknownwhetherthereis,amongtheothershareholders,anyacting-in-concertpartyasdefinedintheMeasuresforAdministrationofTakeoverofListedCompanies(《上市企业收购管理办法》)oranyrelatedparty.Top10commonshareholdersconductingsecuritiesmargintrading(ifany)(seenote4)Asattheendofthereportingperiod,theCompany’scontrollingshareholderGuangzhouHaihaoInvestmentCo.,Ltd.held6,000,000sharesintheCompanyinitsclientaccountofcollateralsecuritiesformargintrading.Exceptforthat,othershareholdersofthetop10Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited96commonshareholderswerenotengagedinmargintrading.Indicatebytickmarkwhetheranyofthetop10commonshareholdersorthetop10non-restrictedcommonshareholdersoftheCompanyconductedanypromissoryrepoduringtheReportingPeriod.□Yea√NoNosuchcasesintheReportingPeriod.2.ControllingShareholderNatureofcontrollingshareholder:ControlledbyanaturalpersonTypeofcontrollingshareholder:JuridicalpersonNameofcontrollingshareholderLegalrepresentative/personinchargeDateofestablishmentUnifiedsocialcreditcodeMainbusinessscopeGuangzhouHaihaoInvestmentCo.,Ltd.HuaXueSeptember27,200691440113793877530GInvestmentwithself-ownedcapital;wholesaleofcommodities(excludingcommoditiesthatrequireapermitorapprovaldocumenttotrade);retailsalesofcommodities(excludingcommoditiesthatrequireapermitorapprovaldocumenttotrade);importandexportofcommodities(excludingcommoditiesrestrictedtospecificparties);andimportandexportoftechnologiesControllingshareholder’sholdingsinotherlistedcompaniesathomeorabroadinReportingPeriodN/AChangeofthecontrollingshareholderduringtheReportingPeriod:□Applicable√NotapplicableNosuchcasesintheReportingPeriod.3.ActualControllerNatureofactualcontroller:DomesticnaturalpersonFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited97Typeofactualcontroller:NaturalpersonNameofactualcontrollerRelationshipwithactualcontrollerNationalityRightofresidenceinothercountriesorregionsHuaXueHimselfChineseNoneMainofficetitlesChairmanoftheBoard,GeneralManagerUsed-to-be-holdinglistedcompaniesathomeandabroadinpast10yearsN/AChangeoftheactualcontrollerduringtheReportingPeriod:□Applicable√NotapplicableNosuchcasesintheReportingPeriod.OwnershipandcontrolrelationsbetweentheactualcontrollerandtheCompany:IndicatebytickmarkwhethertheactualcontrollercontrolstheCompanyviatrustorotherwaysofassetmanagement.□Applicable√Notapplicable4.Other10%orGreaterJuridical-PersonShareholders□Applicable√Notapplicable5.HoldingsoftheCompany’sControllingShareholder,ActualController,ReorganizerandOtherCommitmentMakersunderRestrictedSalesCondition□Applicable√NotapplicableHuaXue39.75%GuangzhouHaihaoInvestmentCo.,Ltd.GuangdongHaidGroupCo.,Limited57.62%Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited98SectionVII.PreferredShares□Applicable√NotapplicableNopreferredsharesintheReportingPeriod.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited99SectionVIII.ConvertibleCorporateBonds□Applicable√NotapplicableNoconvertiblecorporatebondsintheReportingPeriod.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited100SectionIX.Directors,Supervisors,SeniorManagementandStaffIChangeinShareholdingsofDirectors,SupervisorsandSeniorManagementNameOfficetitleIncumbent/FormerGenderAgeStartingdateoftenureEndingdateoftenureOpeningshareholding(share)IncreaseinReportingPeriod(share)DecreaseinReportingPeriod(share)Otherincrease/decrease(share)Closingshareholding(share)HuaXueChairmanoftheBoardIncumbentMale50June6,2007July16,2022HuaXuePresident(GeneralManager)IncumbentMale50May25,2010July16,2022YingzhuoXuViceChairmanoftheBoardIncumbentMale52June6,2007July16,2022YingzhuoXuViceGeneralManagerFormerMale52June6,2007July16,2019LiTianDirectorIncumbentFemale48June7,2016July16,20221,965,1001,965,100LiTianViceGeneralManagerFormerFemale48June6,2007July16,2019QiChengDirectorIncumbentMale40July16,2019July16,202270,00070,000QiChengExecutiveVicePresident(ViceGeneralManager)IncumbentMale40July16,2019July16,2022JianfangGuiIndependentDirectorIncumbentMale64July16,2019July16,2022JianguoIndependentIncumbenMale58July16,2019July16,Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited101HeDirectort2022YunguoLiuIndependentDirectorIncumbentMale54July16,2019July16,2022XiaojunShangDirectorFormerFemale47May25,2010July16,2019ChengpingLuIndependentDirectorFormerMale75November13,2015July16,2019XinchunLiIndependentDirectorFormerMale58August21,2013July16,2019ErkangDengIndependentDirectorFormerFemale52August21,2013July16,2019ZhenxiongQiSupervisorIncumbentMale50June6,2007July16,2022JingWangSupervisorIncumbentFemale41May12,2014July16,2022JiaChenSupervisorIncumbentFemale38August21,2013July16,2022GuoxiangLiuVicePresident(ViceGeneralManager)IncumbentMale52July16,2019July16,2022360,170360,170XueqiaoQianVicePresident(ViceGeneralManager)IncumbentMale53July16,2019July16,2022454,500454,500XueqiaoQianChiefEngineerIncumbentMale53June6,2007July16,2022ShaolinYangVicePresident(ViceGeneralManager)IncumbentMale46July16,2019July16,2022330,900330,900ShaolinYangChiefFinancialIncumbentMale46October22,2012July16,2022Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited102OfficerXiewuJiangVicePresident(ViceGeneralManager)IncumbentMale52July16,2019July16,202266,78066,780GuochengMiVicePresident(ViceGeneralManager)IncumbentMale48July16,2019July16,2022431,600431,600ZhongzhuChenVicePresident(ViceGeneralManager)IncumbentMale50July16,2019July16,2022335,170335,170MingzhongChenVicePresident(ViceGeneralManager)IncumbentMale55June6,2007July16,2022ZhijianHuangVicePresident(ViceGeneralManager)andBoardSecretaryIncumbentMale42July26,2012July16,2022549,592137,348412,244Total------------4,563,8120137,34804,426,464Notes:1.BasedontheshareholdingsoftheCompany’sdirectors,supervisorsandseniormanagementintheCompanyattheendoflastyear,theirtradableshareswererecalculatedatthebeginningofthecurrentyear,resultinginchangesintheirsharesinlockup.2.TheopeningshareholdingsofMr.QiCheng,Mr.GuoxiangLiu,Mr.XiewuJiang,Mr.GuochengMiandMr.ZhongzhuChenrefertotheirshareholdingsatthedatewhentheywereelected/appointedasdirectorsofthefifthBoardorseniormanagementoftheCompany(July26,2019).Accordingly,theincreases/decreasesintheirshareholdingsinthereportingperiodrefertosuchincreases/decreasesduringtheperiodfromJuly26,2019toDecember31,2019.IIChangeinDirectors,SupervisorsandSeniorManagement√Applicable□NotapplicableNameOfficetitleTypeofchangeDateReasonFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited103LiTianViceGeneralManagerExpirationofofficetermJuly16,2019ContinuedtobetheCompany’sdirectorupontheexpirationofherofficetermasaViceGeneralManager.YingzhuoXuViceGeneralManagerExpirationofofficetermJuly16,2019ContinuedtobetheCompany’sdirectorupontheexpirationofhisofficetermasaViceGeneralManager.ShaojunShangDirectorExpirationofofficetermJuly16,2019ExpirationofofficetermChengpingLuIndependentDirectorExpirationofofficetermJuly16,2019ExpirationofofficetermXinchunLiIndependentDirectorExpirationofofficetermJuly16,2019ExpirationofofficetermErkangDengIndependentDirectorExpirationofofficetermJuly16,2019ExpirationofofficetermQiChengDirectorandExecutiveVicePresident(ViceGeneralManager)AppointedJuly16,2019ElectedbythegeneralmeetingandappointedbytheBoardGuifangJianIndependentDirectorAppointedJuly16,2019Re-electedbythegeneralmeetingJianguoHeIndependentDirectorAppointedJuly16,2019Re-electedbythegeneralmeetingYunguoLiuIndependentDirectorAppointedJuly16,2019Re-electedbythegeneralmeetingGuoxiangLiuVicePresident(ViceGeneralManager)AppointedJuly16,2019AppointedbytheBoardXueqiaoQianVicePresident(ViceGeneralManager)andChiefEngineerAppointedJuly16,2019AppointedbytheBoardShaolinYangVicePresident(ViceGeneralManager)andChiefFinancialOfficerAppointedJuly16,2019AppointedbytheBoardXiewuJiangVicePresident(ViceGeneralManager)AppointedJuly16,2019AppointedbytheBoardGuochengMiVicePresident(ViceGeneralAppointedJuly16,2019AppointedbytheBoardFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited104Manager)ZhongzhuChenVicePresident(ViceGeneralManager)AppointedJuly16,2019AppointedbytheBoardIIIBriefBiographiesProfessionalbackgrounds,mainworkingexperienceandcurrentresponsibilitiesintheCompanyoftheincumbentdirectors,supervisorsandseniormanagement:1.Directors(1)HuaXueMr.HuaXueisanengineer.HegraduatedfromCollegeofFisheriesofHuazhongAgriculturalUniversityin1992withamajorinspecialaquaculture;in1995,heobtainedthemaster’sdegreeinzoologyfromSchoolofLifeSciencesofSunYat-SenUniversity.AsoneofthefoundersoftheCompany,henowservesastheChairmanoftheBoardandPresident(GeneralManager)oftheCompany,aswellasanExecutiveDirectoroftheCompany’scontrollingshareholderGuangzhouHaihaoInvestmentCo.,Ltd.Hewas/istheExecutiveVicePresidentofChinaFeedIndustryAssociation(CFIA),ChairmanofChinaVocationalEducationGroupofModernFishery,ViceChairmanofChinaAssociationofYoungRuralEntrepreneurialLeaders(CAYREL),ChairmanofGuangdongHi-techEnterpriseAssociation(GDHTEA),ViceChairmanofGuangdongAgriculturalScienceandTechnologyInnovationAlliance,VicePresidentofGuangdongFeedIndustryAssociation,VicePresidentofGuangdongFisheriesAssociation,ViceChairmanofGuangdongAssociationofYoungScientists(GDAYS),ExecutiveViceChairmanofGuangdongShaanxiChamberofCommerce,theNPCMemberofthe14thNationalCongressoftheCommunistPartyofGuangzhou,amemberofthe11thChinesePeople’sPoliticalConsultationConferenceGuangzhouCommittee,ViceChairmanofthe15thExecutiveCommitteeofGuangzhouFederationofIndustryandCommerce,PresidentofGuangzhouAssociationofAgriculturalLeadingEnterprises,andHonoraryChairmanofGuangzhouFeedProfessionAssociation(GZFPA).Meanwhile,heisrecognizedas“LeadingEntrepreneurinChina’sFeedIndustry”bytheMinistryofAgriculture,and“Top30ExcellentEntrepreneursinChina”byChinaFeedIndustryAssociation(CFIA).Mr.HuaXueholds39.75%equityinterestsintheCompany'scontrollingshareholderGuangzhouHaihaoInvestmentCo.,Ltd.andistheactualcontrolleroftheCompany.(2)LiTianMs.LiTianisaChineseCertifiedPublicAccountantandCertifiedTaxAccountant.ShegraduatedfromBeijingWuziUniversityin1993withamajorinaccounting.From2002to2004,shestudiedandobtainedEMBAfromSunYat-senBusinessSchool.From1993to1996,shewasengagedinfinancialworkatGuangdongReclamationYanlingBuildingCo.,Ltd..From1996to2001,sheworkedforGuangzhouLingnanCertifiedPublicAccountantsandGuangdongKangyuanCertifiedPublicAccountantsinsuccession.InJanuary2004,shejoinedtheCompanyandsuccessivelyservedasChiefFinancialOfficer,BoardSecretary,ViceGeneralManagerandDirector.Currently,sheistheCompany’sdirectorandViceChairmanofGuangzhouInstituteofInternalAudit.(3)YingzhuoXuFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited105Mr.YingzhuoXuisalivestockspecialist.HegraduatedfromSouthChinaAgriculturalUniversitywithabachelor’sdegreeinAnimalHusbandryin1991andlaterobtainedamaster’sdegreeinbusinessadministrationfromHECParis.AsoneofthefoundersoftheCompany,henowservesastheCompany’sViceChairmanoftheBoard.Mr.YingzhuoXuholds27%equityinterestsinGuangzhouHaihaoInvestmentCo.,Ltd.,theCompany'scontrollingshareholder.(4)QiChengMr.QiChenggraduatedfromthemajorofAutomationofHuazhongUniversityofScienceandTechnologyin2002;studiedthemajorofWorldEconomyinSunYat-senUniversityfrom2005to2008andobtainedtheMaster’sdegree;studiedEMBAinCEIBSfrom2013to2015andobtainedMBA.From2002to2010,heservedasProcessEngineer,OperationManager,SupplyChainManagerandDirectorofTechnologyinGuangzhouProcter&GambleCo.,Ltd.;from2010to2017,heservedasOperationDirectorofEastAsia-PacificRegionandGlobalSupplyChainDirectorinEsselPropackCo.,Ltd..CurrentlyheservesasaDirector,anExecutiveVicePresident(ViceGeneralManager)andtheGeneralManageroftheSouthChinaRegionoftheCompany.(5)JianfangGuiDr.JianfangGuihasobtainedPhDandisadoctoralsupervisor,academicianoftheChineseAcademyofSciencesandofTheWorldAcademyofSciences.HegraduatedfromthemajorofCytobiologyofWuhanUniversityandobtainedtheBachelor’sdegreeinJanuary1982;obtainedtheMaster’sdegreeinGeneticsfromWuhanUniversityinDecember1984andjoinedinInstituteofHydrobiology,ChineseAcademyofSciencesinthesameyearandhassinceworkedthere.In1995,heobtainedtheDoctor’sdegreeofsciencefromInstituteofHydrobiology,ChineseAcademyofSciences.From1991to1994,hepaidworkvisitsandconductedpostdoctoralresearchinMedicalCollegeofOhioandUSSanDiego.From1995,heservedasResearcherandDoctoralSupervisorinInstituteofHydrobiology,ChineseAcademyofSciences.HeservedasExecutiveDeputyDirectorandDirectorofHydrobiologyfrom1999to2007,DirectorofStateKeyLaboratoryofFreshwaterEcologyandBiotechnologyfrom2001to2011,andIndependentDirectorofthe1stand2ndsessionsoftheBoardoftheCompanyfrom2007to2013.CurrentlyheservesasanIndependentDirectoroftheCompanyandaVicePresidentofChinaSocietyofFisheries.(6)JianguoHeDr.JianguoHehasobtainedPhDandisaprofessor,winnerof“TheNationalScienceFundforDistinguishedYoungScholars”andChiefScientistoftheStateShrimpandCrabIndustryTechnologySystem.HegraduatedfromthemajorofZoologyofSunYat-senUniversityandobtainedtheDoctor’sdegreeofsciencein1990.HehasbeenworkinginSunYat-senUniversitysince1991.HeservedasDeputyDirectorofCollegeofLifeSciences,SunYat-senUniversityfrom2000to2008,andDirectorofCollegeofMarineScience,SunYat-senUniversityfrom2008to2018.HiscurrentpositionsincludeProfessorofSunYat-senUniversity,DeputyDirectorofStateKeyLaboratoryofPestControlandResourceUtilization(SunYat-senUniversity),MemberofFisheriesAdvisoryCommitteeofMARA,DeputyDirectorofAquaculturalDiseaseControlExpertCommissionofMARA,PresidentofGuangdongZoologicalSociety,VicePresidentofChineseCrustaceanSociety,HeadofChina-ASEANCenterforJointResearchandPromotionofMarineAquacultureTechnologyandIndependentDirectoroftheCompany.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited106(7)YunguoLiuDr.YunguoLiuhasobtainedtheDoctor’sdegreeinmanagement(accounting)fromXiamenUniversity.HiscurrentpositionsandtitlesincludeProfessorofAccountingandDoctoralSupervisorinSunYat-senBusinessSchool(SYSBS),DirectorofSunYat-senUniversityCostandManagementAccountingResearchCenter,DirectorofSchoolofAccountancyinXinhuaCollegeofSunYat-senUniversity(aprivatecollege),MemberofManagementAccountingProfessionalCommitteeofChineseAccountingSociety,ExecutiveDirectorofCostResearchSocietyofChina,LeadingTalentinAccountancy(PhaseI)undertheMinistryofFinance,ThirdBatchofShortlistedCandidatesforSpecialSupportProgramoftheDevelopmentofStateLeadingTalentsinAccountancyundertheMinistryofFinance,ShortlistedCandidatefortheDevelopmentofAccountingCelebritiesundertheMinistryofFinance(2019),MemberofCGMANorthAsian100ThinkTankLeaders,andMemberofIMAChinaAcademicConsultationCommission.HisotherpositionsincludeIndependentDirectorofShenzhenHeungkongHoldingCo.,Ltd.(600162.SH),GuangdongDayaSmartKitchenAppliancesCo.,Ltd.(837009.OC)andChangweiInformationTechnologyDevelopmentCo.,Ltd..2.Supervisors(1)ZhenxiongQiDr.ZhenxiongQiisadoctoraldegreeholderandseniorengineer.HesuccessivelyparticipatedinakeyprogramofNationalNaturalScienceFoundationofChina,theNationalKeyTechnologiesR&DProgramofChinaduringthe8thFive-YearPlanPeriod,NationalClimb—BPlan,andprogramsoftheShandongandGuangdongProvincialNaturalScienceFunds.Meanwhile,hehasalsopublishedmanyresearchpapers,appliedformultipleinventionpatentsandbeengrantedaStateTechnologicalInventionAward(SecondPrize).SincehejoinedtheCompany,hehasbeenmainlyengagedinresearchesonanimalnutritionandfeed,aquaticfarminganddiseasecontrol.Hehasyearsofexperienceinproductdevelopment,grass-rootfarmingandtechnologypromotion.HeisnowtheChairmanoftheCompany’sSupervisoryCommittee.Mr.ZhenxiongQiholds0.1%equityinterestsintheCompany’scontrollingshareholderGuangzhouHaihaoInvestmentCo.,Ltd..(2)JingWangMs.JingWanggraduatedfromChinaUniversityofScienceandTechnology(USTC)withamajorinmanagementsciencein2001.From2006to2008,shestudiedandobtainedtheMBAdegreeatCheungKongGraduateSchoolofBusiness.From2001to2006,sherespectivelyworkedforiFLYTEKCo.,Ltd.,ShenzhenBWconsultingCo.,Ltd.,andTencentTechnologyCo.,Ltd..Fromearly2008to2010,sheworkedasaconsultantatIBMChina.FromFebruary2012on,shejoinedtheCompanyandiscurrentlyaSupervisorandtheDirectoroftheOperationandDevelopmentCenteroftheCompany.(3)JiaChenMs.JiaChengraduatedfromHunanUniversityofTechnologyandBusiness(formerlyknownas“HunanBusinessSchool”)in2005,majoringinfinancialmanagement;in2008,sheobtainedthemaster’sdegreeinmanagementfromSunYat-senBusinessSchool.FromJuly2008toJune2010,sheworkedforHyteraFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited107CommunicationsCo.,Ltd.andwasengagedinfinancialwork.InJuly2010,shejoinedtheCompanyandisnowtheAssistanttotheChiefFinancialOfficeroftheCompany’sBusinessDepartment.3.SeniorExecutives(1)GuoxiangLiuMr.GuoxiangLiuisanassistantresearchfellow.HegraduatedfromtheAcquacultureDepartmentofHuazhongAgriculturalUniversityin1992,majoringinspecialacquacultureprofessionalism.HeisnowaVicePresident(ViceGeneralManager)andtheCentralChinaGeneralManageroftheCompany,inadditiontobeingtheViceChairmanofHubeiProvinceFeedIndustryAssociation.Mr.GuoxiangLiuholds1.5%equityinterestsintheCompany’scontrollingshareholderGuangzhouHaihaoInvestmentCo.,Ltd..(2)XueqiaoQianDr.XueqiaoQianisanAssociateProfessorandhasobtainedthedoctoratedegreefromtheInstituteofHydrobiology,ChineseAcademyofScience.HesuccessivelypresidedoverorparticipatedintheHubeiProvincialNaturalScienceFundProject--DevelopmentandUtilizationofFeatherProteinsinFisheryFeeds,thedevelopmentprojectsoftheStateKeyLaboratoryofFreshwaterEcologyandBiotechnology--EffectsofNutritionLevelsandNutritionalHistoryonFish’sGrowthandActivities,ResearchontheFeedingBehaviorandChemicalSensationofAllogynogeneticCrucianCarp,andStudiesontheUtilizationofPlantProteinbyMainCulturedFreshwaterFish,theNSFCProject--StudiesontheComparativeNutritionalEnergeticsofFeedProteinRequirementsofCarnivorousFishandOmnivorousFish,andtheMOA’s948project--ArtificialPropagationandLarge-scaleAquacultureofPaddlefishetc..Further,hehaspublishedmorethan20papers,ofwhich,threepaperswerepublishedininternationalpublicationsandincludedinSCI.HejoinedtheCompanyin2004andismainlyengagedintheaquaticanimalnutritionandfeedresearchandthedevelopmentofnewfeedadditives.Now,heisaVicePresident(ViceGeneralManager)andtheChiefEngineeroftheCompany.Meanwhile,Mr.XueqiaoQianholds3%equityinterestsintheCompany’scontrollingshareholderGuangzhouHaihaoInvestmentCo.,Ltd..(3)ShaolinYangMr.ShaolinYanghasobtainedthemaster’sdegree.GraduatedfromSunYat-senUniversitywithamajorinBusinessAdministration,heisalsoasenioraccountant,certifiedpublicaccountant,andcertifiedtaxaccountant,andhasbeenselectedandlistedintotheexpertdatabaseofthehigh-techenterprisesofDepartmentofScienceandTechnologyofGuangdongProvince.FromDecember2008toApril2012,heservedasExecutiveDirector,CFOandJointSecretaryofKEEHOLDINGSCOMPANYLIMITED(HK.02011).FromMay/June2016tillnow,hehasservedasasupervisorofGuangdongAssociationofManagementAccountants(GAMA)andanoff-campustutorformastercandidatesinaccountingofSunYat-senBusinessSchool.InApril2012,hejoinedtheCompanyandiscurrentlytheCompany’sVicePresident(ViceGeneralManager)andCFO.(4)XiewuJiangMr.XiewuJiangisanaquaculturalengineer.HegraduatedfromthemajorofSpecialAquacultureofCollegeofFisheries,HuazhongAgriculturalUniversityin1992.Subsequently,hestudiedinthepostgraduateprogramofFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited108AquaticAnimalNutritionofSunYat-senUniversityandEMBAofSouthChinaUniversityofTechnology.Currently,heservesasVicePresident(DeputyGeneralManager)oftheCompanyandGeneralManagerofAquaculturalBreeding/PremixBU.HisotherpositionsincludeDirectorofGuangzhouMunicipalAgriculturalLeadingEnterprisesAssociationandVicePresidentofZhanjiangShrimpBreedSociety.Mr.XiewuJiangholds4.5%equityinterestsintheCompany’scontrollingshareholderGuangzhouHaihaoInvestmentCo.,Ltd..(5)GuochengMiMr.GuochengMigraduatedfromthemajorofFreshwaterFisheryofSouthwestAgriculturalUniversity.HejoinedintheCompanyin2010andcurrentlyservesasaVicePresident(ViceGeneralManager)andtheGeneralManagerofthePigFarmingBUoftheCompany.(6)ZhongzhuChenMr.ZhongzhuChengraduatedfromXiamenUniversityandobtainedMBAforseniormanagementpersonnelin2019.HejoinedintheCompanyin2004andcurrentlyservesasaVicePresident(ViceGeneralManager)andtheGeneralManageroftheShrimpFeedBUoftheCompany.(7)MingzhongChenMr.MingzhongChengraduatedfromMBAofHongKongBaptistUniversity.HispasttitlesincludeDeputytoZhuhaiMunicipalPeople’sCongressandMemberofShaowuMunicipalCPPCCandcurrentsocialtitlesincludeVicePresidentofGuangzhouMunicipalAgriculturalLeadingEnterprisesAssociation,VicePresidentoftheStandingCommitteeofPanyuDistrictFederationofIndustryandCommerceofGuangzhou,VicePresidentofthethreefederationsofGuangzhou(includingGuangzhouIndustrialEconomyFederation)andExecutiveVicePresidentofNancunGeneralChamberofCommerceofPanyuDistrict,Guangzhou.Hehaswonanumberofhonorsandtitles,suchas“ExcellentEntrepreneurforCaringforEmployeesinPanyuDistrict,Guangzhou”.HejoinedintheCompanyin2004andservedastheheadforprojectinvestmentandpreparationsandDirectorofPurchase.HecurrentlyservesasaVicePresident(ViceGeneralManager)oftheCompanyandisresponsibleforpublicrelations,brandimageandpromotionoftheCompany.(4)ZhijianHuangMr.ZhijianHuangisanaccountantandabachelor’sdegreeholder.HejoinedtheCompanyin2004andisnowaVicePresident(ViceGeneralManager)andtheBoardSecretaryoftheCompany.Postsconcurrentlyheldinshareholdingentities:√Applicable□NotapplicableNameShareholdingentityPostheldinshareholdingentityStartingdateoftenureEndingdateoftenureRemunerationorallowancefromshareholdingentityHuaXueGuangzhouHaihaoInvestmentCo.,Ltd.ExecutivedirectorSeptember27,2006NoneYingzhuoXuGuangzhouHaihaoInvestmentCo.,Ltd.SupervisorSeptember27,NoneFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited1092006NoteNonePostsheldconcurrentlyinotherentities:√Applicable□NotapplicableNameOtherentityPostheldinotherentityStartingdateoftenureEndingdateoftenureRemunerationorallowancefromtheentityHuaXueGuangzhouJuchangInvestmentCo.,Ltd.ExecutiveDirectorMarch9,2011June13,2019NoneHuaXueGuangdongAerocityHoldingCo.,Ltd.DirectorJanuary21,2015NoneJianfangGuiInstituteofHydrobiology,ChineseAcadamyofSciencesResearchfellowAugust1,1995YesJianguoHeSunYat-SenUniversityProfessorDecember1,1994YesYunguoLiuSunYat-SenUniversityProfessorDecember1,1992YesYunguoLiuGuangdongDayaSmartKitchenAppliancesCo.,Ltd.IndependentDirectorJune22,2017October12,2022YesYunguoLiuShenzhenHeungkongHoldingCo.,Ltd.IndependentDirectorMay6,2016May17,2022YesYunguoLiuChangweiInformationTechnologyDevelopmentCo.,Ltd.IndependentDirectorSeptember1,2016September1,2022YesXiewuJiangBangpuBreedingTechnologyCo.,Ltd.DirectorMay1,2019NoMingzhongChenGuangzhouGuanglanInvestmentCo.,Ltd.ExecutiveDirectorJuly26,2013September25,2019NoShaolinYangGuangdongAssociationofManagementAccountantsSupervisorMay18,2016May18,2021NoneShaolinYangSunYat-SenUniversityExtramuralTutorformaster’sdegreestudentsJune5,2016June5,2022YesNoteNonePunishmentsimposedintherecentthreeyearsbythesecuritiesregulatorontheincumbentdirectors,supervisorsandseniormanagementaswellasthosewholeftintheReportingPeriod:□Applicable√NotapplicableIVRemunerationofDirectors,SupervisorsandSeniorManagementDecision-makingprocedure,determinationbasisandactualpaymentsofremunerationfordirectors,supervisorsandseniormanagement:TheremunerationoftheCompany’sdirectors,supervisorsandseniormanagementisinstrictcompliancewiththeFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited110Company’sRulesofProcedureforMeetingsofShareholders(《股东大会议事规则》)andRulesofProcedureforBoard(《董事会议事规则》),aswellaswiththeCompanyLawandtheCompany’sArticlesofAssociation.TheremunerationisdeterminedaccordingtotheCompany’soperatingperformanceandthesepersonnel’sperformanceappraisalindicators.Remunerationofdirectors,supervisorsandseniormanagementintheReportingPeriod:Unit:RMB0,000NameOfficetitleGenderAgeIncumbent/FormerTotalbefore-taxremunerationfromtheCompanyRemunerationfromrelatedpartyHuaXueChairmanoftheBoardandPresident(GeneralManager)Male50Incumbent309.69NoYingzhuoXuViceChairmanoftheBoardMale52Incumbent119.67NoLiTianDirectorFemale48Incumbent264.48NoQiChengDirectorandExecutiveVicePresident(ViceGeneralManager)Male40Incumbent98.41NoJianfangGuiIndependentDirectorMale64Incumbent5.52NoJianguoHeIndependentDirectorMale58Incumbent5.52NoYunguoLiuIndependentDirectorMale54Incumbent5.52NoZhenxiongQiSupervisorMale50Incumbent125.22NoJingWangSupervisorFemale41Incumbent85.16NoJiaChenSupervisorFemale38Incumbent33.54NoGuoxiangLiuVicePresident(ViceGeneralManager)Male52Incumbent74.23NoXueqiaoQianVicePresident(ViceGeneralManager)andChiefEngineerMale53Incumbent134.13NoShaolinYangVicePresident(ViceGeneralManager)andChiefFinancialOfficerMale46Incumbent166.98NoXiewuJiangVicePresident(ViceGeneralManager)Male52Incumbent104.51NoGuochengMiVicePresident(ViceGeneralManager)Male48Incumbent84.93NoZhongzhuVicePresident(ViceMale50Incumbent189.31NoFulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited111ChenGeneralManager)MingzhongChenVicePresident(ViceGeneralManager)Male55Incumbent95.45NoZhijianHuangVicePresident(ViceGeneralManager)andBoardSecretaryMale42Incumbent103.69NoXiaojunShangFormerDirectorFemale47FormerNoXinchunLiFormerIndependentDirectorMale58Former6.57NoErkangDengFormerIndependentDirectorFemale52Former6.57NoChengpingLuFormerIndependentDirectorMale75Former6.57NoTotal--------2,025.67--Notes:1.AsQiCheng,JianfangGui,JianguoHe,YunguoLiu,GuoxiangLiu,XiewuJiang,GuochengMiandZhongzhuChenwereelectedasdirectorsofthefifthBoardandseniormanagementattheFirstExtraordinaryGeneralMeetingof2019andtheFirstMeetingoftheFifthBoard,theremunerationdataoftheirsinthetableabovearefortheperiodfromJuly2019toDecember2019.Theremunerationdataofothersareforthewholeyearof2019.2.XiaojunShang,XinchunLi,ErkangDengandChengpingLuquitasmembersofthefourthBoardoftheCompanyupontheexpirationoftheirofficetermsinJuly2019.Therefore,theremunerationdataoftheirsarefortheperiodfromJanuary2019toJuly2019.Equityincentivesfordirectors,supervisorsandseniormanagementintheReportingPeriod:□Applicable√NotapplicableVEmployees1.Numbers,FunctionsandEducationalBackgroundsofEmployeesNumberofin-serviceemployeesofParentCompany(HaidGroupexclusiveofsubsidiaries)1,244Numberofin-serviceemployeesofmajorsubsidiaries19,530Totalnumberofin-serviceemployees20,774TotalnumberofpaidemployeesinReportingPeriod20,774NumberofretireestowhomParentCompanyoritsmajorsubsidiariesneedtopayretirementpension0FunctionsFunctionEmployeesProduction9,240Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited112Sales6,186Technical1,623Financial1,302Administrative1,963Procurement460Total20,774EducationalbackgroundsEducationalbackgroundEmployeesDoctoraldegree71Master’sdegree807Bachelor’sdegree4,290Juniorcollege4,064Seniorhighschool,technicalsecondaryschoolandbelow11,542Total20,7742.EmployeeRemunerationPolicyWhilestrictlyabidingbyLaborContractLaw(《劳动合同法》)andotherrelatedlaws,regulations,departmentrulesandregulatorydocuments,theCompanyimplementsthefollowingprinciplesaccordingtothecharacteristicsoftheindustryandtheCompany’soperations:persistintheprincipleoflabor-baseddistributioncombiningduties,powerandinterests;implementtheprincipleoflinkingincomelevelswiththeCompany’sperformanceandworkgoals;implementtheprincipleofintegratingindividualremunerationwiththeCompany’slong-termintereststoensuresustainedgrowthinmainbusiness,preventshort-termbehaviorsandpromotetheCompany’ssustainedoperationsanddevelopment;sticktotheprincipleoflinkingremunerationwithperformanceappraisalwithequalemphasisonincentiveandrestraint;givecomprehensiveconsiderationtomarketchangesandmarketremunerationlevels.TheCompanyhasestablishedareasonablepostandremunerationsystemtoprovideemployeeswithcompetitivesalariesintheindustry,linkperformancewithremuneration,enhancestaffawarenessforteamworkandgivefullplaytoeveryemployee’senthusiasmandcreativity.3.EmployeeTrainingPlansTheCompanyalwaysemphasizesthedevelopmentofhumanresourcesandtalentswithafirmbeliefthatstaffdevelopmentisanimportantpowerandresourcefortheCompany’scontinuousdevelopment.TheCompanyhasestablishedanextensivetalentcultivationsystemcoveringnewemployees,keypersonnel,managers,assistantgeneralmanagers/vicegeneralmanagersandthegeneralmanager,possessesanexcellentcoursedevelopmentsystemandasystematicinternaltrainerdevelopmentsystemandcarriesoutbroad-basedandprecisetalentdevelopmentthroughfamoustrainercourses,outdoortraining,behaviorlearning,coachtutoring,onlinebroadcasting,onlinelearningandotherchannels.TheCompanyhasalsoestablishedaself-inspectionmechanismcovering“talentdevelopmentmechanism,talentdevelopmentplatformoperationandplanimplementation,talentassessmentandtalentmanagementself-inspectionreports”.Fulltextof2019AnnualReportofGuangdongHaidGroupCo.,Limited113HaidCollege,theCompany’sfunctionaldepartmentfortalentdevelopment,paysattentiontothedevelopmentoffarmerswhilemakingactivestepstoimprovestaffabilitiesandcompetencebasedontheGroup’sstrategiesandbusinesspractice.FacingthesevereASF,HaidCollegeworkedwithallemployeesrelatedtopigfeedtomakeliveonlinevideosandpracticaltrainingatbases.The15sessionsofHaidLecturesonAnti-ASFServicesopenedtothepubliccovered17subjectsintotalbroadcasthoursof1,800minutes,gaining1,879,500viewsandenhancingtheGroupstaff’sknowledgeandhandlingskillsofASF.The12sessionsofpracticaltrainingatbasesdevelopednearly200professionalanti-ASFengineerswhohelpedfarmerstosuccessfullyresumefarming.Asitcontinuestospeeduptheexpansionofinternationalbusiness,theCompanyisfacingincreasinglystrongerdemandsforinternationaltechnicalandmanagementprofessionals.In2019,theGroup’sfirstglobaltalenttrainingwassuccessfullyopenedinabidtoproactivelyrespondtointernationaldevelopment,buildaninternationaltalentresourcepool,completethereserveofoverseasexpatriates,andprepareforthebuildingandimprovementoftheGroup’sinternationalmechanismoftalentreserveasapilotmodel.The