[年报]禾丰股份(603609):禾丰股份2021年年度报告（英文版）
原标题:禾丰股份:禾丰股份2021年年度报告（英文版） April 2022 Important Statements I. The Board of Directors, Supervisory Board, Directors, Supervisors and Senior Management of Wellhope hereby warrant that there are no false representations, misleading statements or material omissions in this annual report, jointly and severally accept full responsibility for the truthfulness, accuracy and completeness of the contents of this report. II. All Directors attended the Board Meeting. III. SuyaJincheng CPA LLP has issued a standard audit report for Wellhope. IV. Wellhope's Chairman Jin Weidong and the Director of internal audit Zhang Wenliang warrant the truthfulness, accuracy and completeness of the information presented in the financial statements in this annual report. V. The dividend plan for the reporting period has been deliberated by the Board of Directors. The plan for 2021 dividend distribution will be: In 2021, Wellhope will not pay dividends, issue bonus stock, and convert capital reserve into share capital, the undistributed profit will be carried forward to the next year. According to Rules on Share Repurchase of Public Companies issued by the CSRC, Wellhope paid RMB 200,003,612.37 to repurchase its shares in 2021, which was regarded as cash dividend, accounting for 168.74% of RMB 118,530,518.15, the Company's net profit attributable to shareholders in 2021. VI. Risk Statement of Forward-looking Statements The forward-looking descriptions in this report such as plans, development strategies and other information cannot be deemed the Company's commitment to investors. Please beware of the investment risks. VII. There has been no occurrence of the Company's non-business capital being occupied by controlling shareholder and his related parties. VIII. There has been no occurrence of the Company violating its decision-making procedure while providing external guarantees. IX. There has been no occurrence that more than half of the directors can’t guarantee the authenticity, accuracy and completeness of the annual report disclosed by the Company. X. Material Risk Warning Wellhope describes possible risks in detail, please refer to "Possible Risks" in Section III "Business Operations Analysis". XI. This annual report has been issued in both Chinese and English versions. In case there is any discrepancy or inconsistency between the two versions, the Chinese version shall prevail. The disclosed Chinese version of 2021 Annual Report can be obtained at: www.sse.com.cn. Contents Section I Glossary ............................................................................................................................... 4 Section II Company Profile and Key Financial Information ................................................................. 5 Section III Business Operation Analysis ................................................................................................ 9 Section IV Corporate Governance ...................................................................................................... 56 Section V Environment and Social Responsibility ............................................................................. 72 Section VI Important Disclosures ....................................................................................................... 85 Section VII Changes in Common Shares and Shareholder Information .............................................. 92 Section VIII Preference Share ............................................................................................................... 97 Section IX Corporate Bond ................................................................................................................. 98 Section X Financial Statements ......................................................................................................... 99
I. Glossary
Section II Company Profile and Key Financial Information I. Company Information
II. Contact Person
III. Basic Information of the Company
IV. Place where the Annual Report is Prepared
V. Stock Information
VII. Key Accounting Data and Financial Performance Indicators in the Latest Three Years 1. Key accounting data Unit: yuan Currency: RMB
other factors, led to a heavy loss in the Company's swine raising business. B. The costs of day old chick and feed increased year-on-year, and the consumption in the market was not profitable. The profit of the Company’s broiler integration business turned from profit to loss. VIII. Key Financial Figures by Quarters in 2021 Unit: yuan Currency: RMB
IX. Extraordinary Items Unit: yuan Currency: RMB
X. Item Measured at Fair Value Unit: yuan Currency: RMB
Section III Business Operation Analysis I. Business Operation Analysis 1. Overview of the performance in 2021 In 2021, the agriculture and animal husbandry industries faced severe challenges. In terms of feed, the feed raw materials fluctuated with high prices, the consumption demands for feed in the second half of the year were slowed down as a result of the downward animal raising industry. Pig prices slumped continuously despite the higher-than-expected recovery of production capacity. In terms of broiler industry, the entire market was deteriorated caused by the high price of day old chick, soaring feed cost and sluggish customer consumption. Against such a backdrop, all employees of Wellhope joined hands to forge ahead and overcome difficulties by vigorously expanding new markets, optimizing marketing strategies, reducing internal costs and heightening working efficiency, as well as improving operational capability. Besides, measures have also been taken to enhance the management of accounts receivable, reasonably arrange capital expenditures, accelerate inventory turnover to ensure sufficient cash flow. Under the concerted efforts made by all employees, Wellhope remained one of the few enterprises that made profits despite the first big drop in the Company's performance. Wellhope’s operating revenue reached RMB 29.47 billion with a year-on-year increase of 23.73%, the net profit attributable to shareholders of the Company recorded RMB 119 million, decreased by 90.40%, the net profit attributable to shareholders deducting extraordinary items recorded RMB 135 million, declined 89.04%. At the end of the reporting period, the total assets reached RMB 12.97 billion, rising 11.38% compared with the end of the prior year, whilst the equity attributable to the owners of parent company recorded RMB 6.46 billion, declining 4.27% compared with the end of the prior year. 2. Review of the Company’s business progress A. Feed business In 2021, the feed raw materials witnessed remarkably fluctuations with high prices, the market of animal raising industry changed complexly, making the transformation and upgrading of the feed industry accelerated, the polarization in feed industry has become increasingly remarkably. At a time when opportunities and risks coexisted, the Company, as an industrial leader, leveraged its advantages of corporate brand and technology to speed up the reform of feed business, bravely explored new markets and refined internal operation to constantly develop and optimize its system capabilities. In 2021, the total output of feed produced by the Company's holding and associated companies reached 8.03 million tons, up 15.04% year on year, and the feed sold to the markets recorded 4.33 million tons, up 12.54% year on year. Feed sales volume of companies included in the consolidated scope in 2021
a. Upgrading strategic positioning and strengthening internal collaboration Feed business has been always identified as the primary business of the Company. In 2021, when revising strategies, the Company further enhanced the strategic position of feed business, proposing higher requirements for the core capabilities of feed business while granting more resources to feed business. Within the reporting period, to develop feed business, the Company promoted the collaboration and interconnection among technology department, purchasing department and marketing department, making the marketing and sales departments as well as the function departments could be strategically connected to share pressure and performance. With science-based procedure design and targeted appraisal mechanism, the collaboration capabilities among these departments have been enhanced continuously. Besides, the Company launched the "Xiaohe Smart Customer Sevice" project to promote online management of feed business, which has further intensified the management of the process of marketing activities, optimized the customer service system, and powered the sales personnel with an information platform. Under the efforts made by all these departments jointly, the Company successfully maintained an industry-leading net profit per ton in a market environment where the price of feed raw materials remained high, significantly improving its core capabilities of feed business. b. Promoting organizational structure and talents team to vigorously support the sales team In 2021, the head office of the Company, based on the original structure of the technology department, purchasing department and marketing department, established three research institutes, including Technology R&D Institute, Market Trend Research Institute, and Market Research Institute. The Technology R&D Institute was established to develop the formulas of various types of feed products and research animal raising technologies, the Market Trend Research Institute was designed to study the industry trend as well as the status quo of the upstream and downstream industries, especially the changes in the price of feed raw materials, the Market Research Institute was set up to analyze and study the market structure, competitors and customer demands. Meanwhile, based on regional management, the Company set up marketing business lines for different feed varieties to provide professional service with specialized personnel and specialized business lines. With the cooperation between regional management and business line management, the Company’s differentiated market system, which improved the quality and speed of customer development significantly. Besides, these three institutes and various business lines have taken measures to attract key professional talents and optimize resource allocation constantly, with the purpose of providing more support for front-line marketing personnel. c. Improving technical service to seize resources in the new market In 2021, the Company further expanded its input in market expansion and upgraded the technical service system, witnessing a rapid increase in the proportion of large-scale farms and a steady-state growth of feed sales volume. In northeastern China, the Company, by taking its relative advantages in raw material purchasing, has vigorously developed large-scale farm customers while enriching its sales strategies by making using of the new media and diversified platforms, which has strengthened the brand advantages of the Company’s products in medium-sized farms and back-yard farms. In other areas, the Company divided its market into five regions in terms of North China, Shandong region, Central China, West China and East China. By promoting the decentralized management mode and formulating specific market expansion solutions according to the characteristics of different regions, the Company has increased its sales units steadily to fill the gap in the market gradually. Besides, the Company launched Wellhope 6M management service solution for large-scale farms, which contained 6 strategies aimed at reducing costs and increasing efficiency (e.g., system evaluation strategy, problem analysis strategy, cost structure strategy, pig herd management strategy, precise nutrition strategy, customized solution strategy) to sort out, analyze and rank complex problems related to farms. Designed with 73 operation appraisal indicators, the solution covered 1,123 key inspection points of the farms, and could rapidly identify the key problems for farms with the 22 precision management tools designed for the solution, which could help customers make feasible and effective solutions. By constantly attracting technical service experts and expanding the scale of the service team, the Company has improved its overall service capability and increased the proportion of large-scale farms significantly. B. Broiler integration business In 2021, the cost of the upstream business of broiler industry increased, whilst the downstream consumption decreased. In such a context, the profits dropped precipitously, which marked an unprecedented downward trend in this industry. Under such adverse conditions, the Company, taking ensuring safety, improving efficiency, enhancing ecosystem and increasing profits as the development policy, slowed down the expansion pace of broiler integration business. Instead, the Company took measures to improve its operational capability and reduce costs, improve the layout of the industrial chain while ensuring safety to expand its market share steadily. In 2021, the holding and associated companies slaughtered 693 million broilers with a year-on-year increase of 8.5%, totally produced and sold 1.8 million tons of broiler parts products, increased by 7.0%, produced 28,000 tons of prepared food and cooked food with a year-on-year increase of 7.3%, among which, the export volume of cooked food recorded 3,488 tons, increased by 15.9% compared with the same period of last year. a. Slowing down the expansion pace and improving the layout of the industrial chain In 2021, the projects newly invested in the past two years in the broiler industry were put into production densely, leading to a periodical surplus of supply. In this regard, the Company slowed down the development pace of the broiler business in 2021, and moderately increased the production capacity of broiler breeding and raising, heightened the proportion of self-supplied day old chicks and live broilers to match the industrial chain as planned. In additions, the Company constantly enhanced production management, improved operation indicators. Meanwhile, in response to the changes in the market, the Company dynamically adjusted the policies on feeding fees for contract farm owners according to the production time and stage of farms, so as to ensure proper allocation of profits between the Company and farm owners. As for the slaughtering business, in the second half of 2021, the Company reduced the target yield in the previous plan according to the estimations on the market trend, actively slowed down the pace of expansion, and maintained stable development with existing production capacity. Attaching equal importance to short-term profits and long-term development, the Company increased the production and sales scale of new projects not producing at full capacity by centralizing resources, with the purpose of crossing the break-even point as soon as possible. b. Squeezing costs and expenses, heightening cost and efficiency management In 2021, despite the downturn broiler industry, the Company insisted on lean management of its broiler integration business by continuously optimizing production indicators, improving operation efficiency, strictly controlling product quality and rationally squeezing the cost and expenses, which has further enhanced its operational capability. As for broiler raising business, the Company boosted the informatization in this sector to improve the data analysis ability and decision-making efficiency. Meanwhile, the Company made efforts to ensure the quality of self-produced day old chicks, diversified options of outsourcing chicks, constantly modified and improved Breeding Site Management Manual, achieving growth of production performance steadily. As for slaughtering business, the Company continued to improve its production efficiency, reduce operation costs, and strengthen quality management. At the same time, the Company continuously explored the operation modes of automatic production lines, also designed automatic configuration of production lines according to the reality of plants by considering multiple elements in terms of production scale, product positioning, product mix, customer structure, which has laid a solid foundation for future transformation and upgrading of businesses. c. Expanding the market vigorously and optimizing marketing strategy In 2021, as COVID-19 lingered and market consumption stayed at a low level, the delivery of frozen broiler products faced various challenges. Meanwhile, with the higher-than-expectation recovery of the production capacity of live pigs, demands for chicken have been further squeezed reduced and pork with cheap price was taking a big bite out of chicken. To cope with this unfavorable situation, the Company’s slaughtering entities, with the multi-brand strategy, accelerated the expansion of the sales channel of broiler parts products, and occupied market shares rapidly on the condition of reaching a balance between production and sales. Meanwhile, the Company further improved the quality of broiler products and increased the proportion of fresh products to realize the highest comprehensive value with the best product portfolio. The Company also explored high-quality customers, and improved the ecological niche sustainably. As for prepared food and cooked food businesses, the Company has improved its core capabilities and brand influence by accelerating the construction progress of new projects to expand the scale of basic production and sales rapidly, improving its ability to undertake large orders, and strengthening R&D of products to create knock-out products. C. Pig raising business In 2021, pig prices in China witnessed a higher-than-expected reduction. The era of gaining high profits from raising pig ended, while the industry getting stuck in periodical in-depth deficit, imposing huge capital pressure on those companies who were seeking radical expansion of production previously. At such a critical turning point, the Company faced all the challenges and made rational decisions, including phasing out inefficient sows, reducing production scale, constantly enhancing pig farm management to improve production performance, reducing costs and expenses, controlling the weight of pig, and improving the turnover speed to ensure capital safety. In 2021, the Company’s holding and associated companies marketed 639,000 heads of finishers, 588,000 piglets (215,000 heads sold to market, 373,000 sold to internal companies), 66,000 heads of pig breeders, totaling 1.293 million heads of pig (920,000 heads sold to market, and 373,000 sold to internal companies). a. Insisting on stable operation and phasing out inefficient sows From 2019 to the first quarter of 2021, despite the extremely high profit of pig raising industry, the Company insisted on stable operation with a calm mind, most farms were expanded production by asset-light mode. Meanwhile, the Company strictly controlled the quality of pig breeders. By the end of June 2021, the holding and associated companies had 79,000 sows in stock, with ternary hybrid breeding sows accounting for only 5.5% (the average level in the industry was 45%). With the inflection point of the market arriving, the Company phased out inefficient sows without hesitation, 20,000 heads of sows with low production performance in the third quarter were cut, and 9,000 sows were eliminated in the fourth quarter. By the end of 2021, the number of sows of the Company reduced to 50,000, including 30,000 heads of reproducible sows and 20,000 gilts. The entire production performance of sows has been further enhanced. Meanwhile, the Company also heightened the performance appraisal criterion for contact farms, terminated its cooperation with some fattening farms and outsourcing farms to slow down the development pace and reduce business pressure, which reduced the costs and expenses significantly and ensured capital safety. b. Continuously reducing costs and increasing efficiency, improving production performance significantly In 2021, the Company started to apply process-based performance management systems in its pig raising business sector, including three-level meeting, benchmark analysis and task list. Every month, the head office, regional branches, and pig farms held operation analysis meetings to identify key problems of each farm by applying the benchmark analysis management mode, formulated task lists to effectively implement the improvement plan. In addition, in 2021, the Company reviewed the structure of pig business again to optimize personnel configuration. By offering trainings for staff and introducing key technical talents, the Company has successfully improved the competence of technical and service personnel. The cost for piglet weaning and fattening have been reduced sharply supported by phasing out inefficient sows, improving asset quality, heightening technical skill of resident staff and enhancing farm operation. In the future, the Company will further improve its pig production performance, constantly increase the operation of pig farms and develop into a Company with industry-leading cost management and control. c. Enhancing African Swine Fever management, reducing epidemic prevention cost African Swine Fever prevention has been normalized for biosecurity and has become a key element affecting costs. In 2021, the Company, still taking biosecurity as a priority, reviewed the biosecurity control of feed mills, pig farms, and cooperative farms, and built a multi-level management and control system to prevent external cases and internal infection. Meanwhile, to ensure that every team member had a strong sense of responsibility and awareness, the Company took measures to improve the technical proficiency of teams and further improved the reward and punishment mechanisms. Through three years’ practice, the Company has accumulated rich experience in ASF prevention, reserved sufficient professional talents, and developed a mature prevention system. In 2022, the Company will combine ASF prevention with lean management gradually. On the condition of ensuring biosecurity, the Company will constantly verify the economic efficiency and effectiveness of prevention costs, improve the prevention procedure, and reduce the prevention cost of biosecurity. D. Raw material trade business In 2021, companies active in animal raising industry generally suffered losses, and the cost of feed and animal health products came under pressure, which brought certain challenges to the Company's trading business. However, the Company accurately studied on the market situation, seized the opportunity and obtained a better profit in fish meal, amino acid, calcium hydrogen and other raw material varieties with a large potential for growth. In addition, the Company actively took multiple measures to hedge the adverse impact of the industry, on the one hand, broadened the product category based on the original product line, expanded sales areas and promoted product sales. On the other hand, gave full play to the advantages of the professional team, improved the service to the farms to enhance market competitiveness. Furthermore, the Company developed the import business of foreign feed raw materials, which brought new opportunities for business expansion. At the same time, with the help of information platform, the Company further improved the internal management of its trading companies, also reduced operating costs, improved operating efficiency, which would lay a solid foundation for the great development of future trade. E. Progress in other aspects a. Increasing talent configuration and improving purchasing capability During the reporting period, the Company has taken a large number of measures to improve team construction, purchasing mode, and business management specification of the purchasing system as well as enhance the interconnection between the technology department and the purchasing department. In 2021, young and highly-educated employees with abundant experiences joined in the purchasing team, which improved the study on raw materials and the market trend research capability. As for the purchasing mode, the Company improved the concentration ratio of purchasing, with certain areas having completed the transformation from three-level procurement to two-level procurement to enhance centralized decision-making and improve the efficiency of procurement management. As for business management, measures have been taken to improve the raw material supply chain management, making the supply channel could be selected flexibly according to market change, expanding the scope of the supplies to ensure the supply security. Meanwhile, the Company has also taken measures to deepen the collaboration between the technology department and the purchasing department. At a time of high raw material prices, the Company gained obvious advantages regarding alternative costs of raw materials through the interconnection between technology and raw material purchasing. b. Actively responding to changes, research and development making contributions In 2021, with the changing background of external unpredictable environment, sharp fluctuation of raw material prices, the COVID-19 cases, the impact of African Swine Fever, and the increasing market competition pressure, the Company insisted on R&D and innovation, pursued the production of feed products with higher quality and cost-effective, and looked for better alternative combinations, and upgraded on-site farming technology solutions. For feed business, the Company launched a new generation of creep feed, with better palatability, diarrhea-resistance. In the application of raw material alternative technology, the Company shared technical information with its partner Royal De Heus, continuously optimized the dynamic database and reserves a variety of efficient technologies for feed formulations. In terms of the iterative upgrading of feeding programs, the Company has achieved remarkable results in pig feeding management technology, beef cattle and sheep feeding program and poultry feeding technology. Over the years, the Company has unswervingly focused on the input in R&D. Now it has a technical team composed of hundreds of doctoral, master and senior experts. It also continued to introduce doctors with development potential as R&D or regional technology leaders, and the R&D expenses increased year by year. For more details about research and development, please refer to Section III. c. Enhancing benchmark management and building a process-based performance management system During the reporting period, the Company mainly focused on building a process-based performance management system, it accumulated experience through the mature management mode of broiler integration business and then applied such experiences in other business sectors. By implementing monthly three-level operation analysis meeting involving the head office, regional center, and subsidiaries, supporting by management methods and tools including inspection team, specialized project team and task list, the Company has formed a full set of PDCA circulation of process-based performance management. In 2021, the Company strengthened benchmark management and plan tracking, developed in-depth market insight, and reviewed management, which has achieved the implementation of the strategic goals and key tactical plans. For employees, the performance of the Company and individuals was tracked and managed effectively. Such a mode will be further improved and promoted in 2022, to constantly improve the performance of the Company and its employees. d. Strengthening capital operation, powering business development During the reporting period, in order to improve the long-term investment value of stocks and safeguard the interests of shareholders, the Company repurchased its shares by means of centralized bidding. In 2021, the Company has repurchased 20.96 million shares with a cumulative payment of RMB 200 million, the repurchased shares will be used to carry out employee stock ownership plans or equity incentive plans. As of the disclosure date of this report, the issuance of convertible bonds of the Company was being promoted as planned. The convertible bonds were expected to raise RMB 1.5 billion, and all the funds raised will be used for the development of the primary businesses and the realization of the strategic goals. F. Awards and recognitions in 2021 ? Being listed in the Fortune China 500 for the fifth time, ranking 409, up 91 places. ? Being selected as the first batch of national supply chain innovation and application demonstration enterprises ? Ranking 9th in China's top 100 enterprises of light industry technology ? Ranking 11th among the Top 50 enterprises in China's light industry and food industry ? Ranking 28th in China's top 200 light industry enterprises ? Being awarded the Dedication Medal of the Red Cross Society of China ? Obtaining the A-level Evaluation of information disclosure of Shanghai Stock Exchange in 2020-2021, （未完）  |